Sitts et al v. Dairy Farmers of America, Inc. et al

Filing 261

OPINION AND ORDER denying 149 MOTION to Strike Untimely Expert Opinion; granting in part and denying in part 146 MOTION to Exclude Various Opinions of Plaintiff's Merits Expert Einer R. Elhauge; granting 148 MOTION to Preclude Certain Opinions and Testimony of Defendants' Expert Professor Edward A. Snyder. Signed by Judge Christina Reiss on 6/24/2020. (kp)

Case 2:16-cv-00287-cr Document 261 Filed 06/24/20 Page 1 of 23

o~sfi&t:;:i/if{o'Jr
UNITED STATES DISTRICT COURT
FOR THE
2020 JUN 24
DISTRICT OF VERMONT
GARRETT AND RALPH SITTS, LEON
ATWELL, VICTOR BARRICK, DANIEL
BAUMGARDER, WILLIAM BOARD,
GEORGE BOLLES, ROGER BOLLES, ANDY
BOLLINGER, THOMAS BOLLINGER,
LOGAN BOWER, DWIGHT
BRANDENBURG,BERNARD
BROUILLETTE, THOMAS BROUILLETTE,
AARON BUTTON, HESTER CHASE,
THOMAS CLARK, THOMAS
CLATTERBUCK, PAUL CURRIER, GERRY
DELONG, PETE AND ALICE DIEHL, MARK
DORING, MARK AND BARBARA DULKIS,
GLEN EA YES, MIKE EBY, WILLIAM
ECKLAND, DOUG ELLIOT, JAMES
ELLIOT, WENDALL ELLIOTT, MICHAEL
FAUCHER, DA YID AND ROBIN FITCH,
DUANE AND SUSAN FLINT, JOSEPH
FULTS, RICHARD GANTNER, STEFAN
AND CINDY GEIGER, WILLIAM GLOSS,
JOHN GWOZDZ, DAYID AND LAURIE
GRANT, JIM AND JOYCE GRAY, DENNIS
HALL, ROGER AND JOHN HAMIL TON,
NEVIN AND MARLIN HILDEBRAND, JAKE
AND HARLEN HILL YERO, RICHARD AND
TERRI HOLDRIDGE, PAUL HORNING,
TERRY AND ROBERT HUYCK, DONALD
SCOTT HYMERS, TERRY INCH, RANDY
AND LYNETTE INMAN, THEODORE
JA YKO, JACK KAHLER, JAMES AND
TERESA KEA TOR, JIM AND SHARON
KEILHOLTZ, GEORGE KEITH, LEE AND
ELLEN KLOCK, MIKE AND LISA
KRAEGER, FRED LACLAIR, TIM LAL YER,
FRANK AND JOHN LAMPORT, CORRINE
LULL, CHARLES AND GRETCHEN MAINE,
THOMAS AND DEBORA MANOS, FRED
MATTHEWS, RUSSELL MAXWELL,
GERRY MCINTOSH, STEPHEN MELLOTT,
JOHN AND DAYID MITCHELL, THOMAS
MONTEITH, WALT MOORE, RICHARD
AND SHEILA MORROW, DEAN MOSER,
MELISSA MURRAY AND SEAN QUINN,
THOMAS NAUMAN, CHARLES NEFF,

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BY

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DEPUTY CLER-R

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Case No. 2:16-cv-00287

Case 2:16-cv-00287-cr Document 261 Filed 06/24/20 Page 2 of 23

DAVID NICHOLS, MICHAEL NISSLEY,
LOU ANN PARISH, DANIEL PETERS,
MARSHA PERRY, CAROLYN AND DAVE
POST, JUDY LEE POST, SCOTT
RASMUSEU, BRIAN REAPE, DAVID AND
LYNETTE ROBINSON, BRIAN AND LISA
ROBINSON, CAL VIN ROES, BRADLEY
ROHRER, PAUL AND SARAH
ROHRBAUGH, ROBERTA RYAN, SCOTT
AND LIN SA WYER, S. ROBERT SENSENIG,
THOMAS AND DALE SMITH, DALE AND
SUSAN SMITH, DENNIS SMITH, DONALD
T. AND DONALD M. SMITH, ROGER AND
TAMMY, SMITH, TODD SNYDER,
RICHARD SOURWINE, DANNY
SOURWINE, RANDY SOWERS, SHANE
STALTER, GEORGE AND SHIRLEY
STAMBAUGH, TRACY STANKO, STEPHEN
SOURWINE, RICHARD SWANTAK,
GEORGE AND PATRICIA THOMPSON,
JEREMY THOMPSON, KEN AND JUDY
TOMPKINS, DANIEL VAUGHN, MARK
VISSAR, ERIC WAL TS, EDWARD
WALLDROFF, GERALD WETTERHAHN,
JR., EUGENE WILCZEWSKI, STEVE
WILSON,

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Plaintiffs,
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v.
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DAIRY FARMERS OF AMERICA, INC., )
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and DAIRY MARKETING SERVICES,
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LLC,
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Defendants.
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OPINION AND ORDER
DENYING DEFENDANTS' MOTION TO STRIKE EXPERT OPINION OF
EINER ELHAUGE, GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION TO EXCLUDE VARIOUS OPINIONS OF EINER
ELHAUGE, AND GRANTING PLAINTIFFS' MOTION TO PRECLUDE
CERTAIN OPINIONS AND TESTIMONY OF EDWARD SNYDER
(Docs. 146, 148 & 149)

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Plaintiffs allege claims pursuant to the Sherman Act, 15 U.S.C. §§ 1-2, for
asserted antitrust violations committed by Defendants Dairy Farmers of America, Inc.
("DFA") and Dairy Marketing Services, LLC ("DMS") (collectively, "Defendants").
Pending before the court are three motions concerning expert witnesses. On January 17,
2020, Defendants moved to strike Professor Einer Elhauge's most recent expert report
(the "Second Supplemental Expert Report") as an untimely and improper supplement
under Fed. R. Civ. P. 26(e) and Fed. R. Civ. P. 37 (Doc. 149). On January 10, 2020,
Defendants also moved to exclude portions of Professor Elhauge's opinions at trial on the
basis that those opinions are either not the proper subjects of expert testimony or are
insufficiently reliable (Doc. 146). On January 10, 2020, Plaintiffs moved to preclude a
portion of the opinions of Defendants' expert, Edward Snyder, Ph.D., on the basis that his
opinion regarding processing plant options for Plaintiffs is insufficiently reliable and
reflects no specialized knowledge (Doc. 148). Both parties oppose the challenges to the
opinions of their experts. The court held oral argument on March 27, 2020, at which time
it took the pending motions under advisement.
Plaintiffs are represented by Dana A. Zakarian, Esq., Elizabeth A. Reidy, Esq.,
Gary L. Franklin, Esq., Joel G. Beckman, Esq., Michael Paris, Esq., and William C.
Nystrom, Esq. Defendants are represented by Alfred C. Pfeiffer, Jr., Esq., Elyse M.
Greenwald, Esq., Ian P. Carleton, Esq., Jennifer L. Giordano, Esq., Margaret M. Zwisler,
Esq., Molly M. Barron, Esq., Sarah M. Ray, Esq., and W. Todd Miller, Esq.

I.

Factual and Procedural Background.
Plaintiffs are 116 dairy farmers who opted out of a settlement approved by this

court in a class action case, Allen v. Dairy Farmers ofAmerica, Inc., No. 5:09-cv-230. In
support of their claims that Defendants allegedly conspired to suppress the price of raw
Grade A milk, Plaintiffs seek to rely on the testimony of their proffered antitrust expert,
Professor Elhauge.
Professor Elhauge is the Petrie Professor of Law at Harvard University and a coauthor of several leading treatises on antitrust law and economics. Numerous federal
courts have determined that Professor Elhauge is qualified to opine on antitrust

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economics. See, e.g., In re EpiPen Mktg., Sales Practices & Antitrust Litig., 2020 WL
1164869, at *23 (D. Kan. Mar. 10, 2020) (holding that Professor Elhauge was qualified
to provide expert opinions in light of his "extensive expertise applying economics and
econometrics to antitrust issues"); In re Mushroom Direct Purchaser Antitrust Litig.,
2015 WL 5767415, at *4 (E.D. Pa. July 29, 2015) (denying challenge to Professor
Elhauge's qualifications and noting he "has been described as a highly qualified antitrust
titan" who has "demonstrated his command of the technical issues related to multiple
regression analysis in the antitrust context") (internal quotation marks, alterations, and
citations omitted).
In his initial expert report and subsequent supplemental reports, Professor Elhauge
uses a regression analysis to evaluate whether market conditions were consistent with the
existence of a monopsony and in furtherance of his calculation of damages caused by the
alleged conspiracy. Plaintiffs disclosed his first expert report on October 3, 2018.
In a report submitted on November 30, 2018, Defendants' expert witness, Daniel
A. Sumner, Ph.D., identified errors in Professor Elhauge's data set. Professor Elhauge
responded to this criticism by agreeing that his initial data set was flawed and by
submitting a supplemental expert report on January 18, 2019. On February 5, 2019,
Defendants moved to strike Professor Elhauge's first supplemental expert report,
asserting that it was untimely and constituted an improper supplemental disclosure
pursuant to Fed. R. Civ. P. 26(e). On May 3, 2019, Defendants also moved to strike
Professor Elhauge's opinion that Defendants possess monopsony power without
considering the market power of their alleged co-conspirators on the basis that the
opinion was not included in Professor Elhauge's earlier expert disclosures and was
proffered for the first time at his deposition. On July 23, 2019, the court denied
Defendants' motions, finding that Professor Elhauge had properly supplemented his
expert witness opinion to provide a more reliable proxy for calculating damages and
Defendants elicited the undisclosed opinion regarding monopsony power at Professor
Elhauge's deposition and thus could not be heard to complain regarding its untimely
disclosure.
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Thereafter, Dr. Sumner submitted a second supplemental expert report on
December 16, 2019 wherein he identified what he deemed a further error in Professor
Elhauge' s regression analysis based on its use of a proxy that "approximate[d] the
location adjustment for [a] farmer without delivery data by using the location adjustment
for [an]other farmer in the same zip code and Federal Order[.]" (Doc. 150-5 at 7, ,i 9.)
Plaintiffs attribute the error to the voluminous data set produced by Defendants which
was missing various zip codes and which Professor Elhauge's Stata database software
erroneously processed by treating a period(.) in the data field (which is a computergenerated placeholder for missing data) as its own zip code. On December 27, 2019,
Professor Elhauge submitted his Second Supplemental Expert Report to correct this
mistake by adding "ifzip!=." to the computer code and re-running his regression analysis
with a smaller data set, yielding what he claims is evidence of antitrust impact and
damages of 98.7 cents per cwt.

II. Conclusions of Law and Analysis.
A.

Whether to Strike Professor Elhauge's Second Supplemental Expert
Report (Doc. 149).

Defendants seek to strike Professor Elhauge's Second Supplemental Expert Report
on the basis that it is not an appropriate supplement pursuant to Fed. R. Civ. P. 26(e) and
therefore should be excluded pursuant to Fed. R. Civ. P. 37. The issue is whether the
Second Supplemental Expert Report merely corrects an honest mistake or substitutes an
alternative methodology for an earlier flawed approach.
Rule 26(e) requires a party to "supplement or correct its disclosure or response
... in a timely manner if the party learns that in some material respect [its] disclosure or
response is incomplete or incorrect[.]" Fed. R. Civ. P. 26(e)(l). The rule further provides
that "additions or changes to [expert disclosures]" must be made "by the time the party's
pretrial disclosures under Rule 26(a)(3) are due." Fed. R. Civ. P. 26(e)(2). Pursuant to
Rule 26(a)(3), "[u]nless the court orders otherwise, these disclosures must be made at
least [thirty] days before trial." Fed. R. Civ. P. 26(a)(3).

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In asserting that Professor Elhauge could and should have identified the software
error in his analysis independently, Defendants remind the court that it has held that "[i]f
an expert's report does not rely [on] any information that was previously unknown or
unavailable to him, it is not an appropriate supplemental report under Rule 26." (Doc.
129 at 9) (quoting Allen v. Dairy Farmers ofAm., Inc., 2014 WL 2040133, at *5 (D. Vt.
May 16, 2014) (alterations in original). While it is true that newly discovered evidence,
not reasonably available at the time of an initial expert witness opinion, is one ground for
supplementation, it is not the only ground. Where an expert "does not advance new
theories of liability or undermine the original report's conclusions[,]" a revised report that
corrects an "honest mistake[]" is an appropriate supplement. Associated Elec. Gas Ins.
Servs. v. Babcock & Wilcox Power Generation Grp., Inc., 2013 WL 4456640, at *4 (D.
Conn. Aug. 16, 2013) (ruling expert report revising earlier findings to account for
corrected calculations by second expert was a proper supplement); see also Sibley v.
Sprint Nextel Corp., 2013 WL 1819773, at *4 (D. Kan. Apr. 30, 2013) (permitting
supplementation of expert report where party "revised its code[,]" finding "this [is] a
technical correction of the sort to be expected given the extraordinarily large data set with
which the experts in this case were working").
Once Professor Elhauge learned of the processing error and corrected it, he
applied the same regression methodology he previously employed to reanalyze the data.
The Second Supplemental Expert Report is therefore a proper supplemental disclosure
under Rule 26(e). Cf Cedar Petrochems., Inc. v. Dongbu Hannong Chem. Co., 769 F.
Supp. 2d 269,279 (S.D.N.Y. 2011) (noting that exclusion of supplemental expert
evidence is warranted where "it expounds a wholly new and complex approach designed
to fill a significant and logical gap in the first report") (internal quotation marks,
alteration, and citation omitted). The question of whether the error in Professor Elhauge's
analysis could have been easily detected or is the result of inexcusable carelessness is
fodder for cross-examination. See Amorgianos v. Nat'/ R.R. Passenger Corp., 303 F.3d
256, 267 (2d Cir. 2002) ("A minor flaw in an expert's reasoning or a slight modification

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of an otherwise reliable method will not render an expert's opinion per se
inadmissible.").
Even if Professor Elhauge's Second Supplemental Expert Report were untimely or
otherwise improper pursuant to Rule 26(e), exclusion of the report as a sanction is not
always required. Instead, courts consider the following factors in determining the
appropriate sanction:
(1) the party's explanation for the failure to comply with the discovery
order; (2) the importance of the testimony of the precluded witness; (3) the
prejudice suffered by the opposing party as a result of having to prepare to
meet the new testimony; and (4) the possibility of a continuance.

Sofie!, Inc. v. Dragon Med. & Sci. Commc'ns, Inc., 118 F.3d 955,961 (2d Cir. 1997)

(citing Outley v. City of New York, 837 F.2d 587, 590-91 (2d Cir. 1988)).
The Second Supplemental Expert Report was timely submitted on December 27,
2019, far in advance of both the deadline set by the court and the deadline to supplement
expert disclosures pursuant to Rule 26. There is no indication that Professor Elhauge was
aware that his software did not function properly until Defendants' expert witness, Dr.
Sumner, pointed it out in his supplemental report submitted on December 16, 2019. In a
matter of days, Professor Elhauge had corrected his mistake and candidly admitted to its
existence.
Professor Elhauge's regression analysis is critical to Plaintiffs' case, which
arguably could not proceed without it. The prejudice suffered by Defendants is minimal
and, at Defendants' request, a continuance of trial has already been granted. As a result,
all of the Outley factors weigh in favor of allowing the Second Supplemental Expert
Report provided Plaintiffs proffer Professor Elhauge as a witness and pay Defendants'
reasonable costs of re-deposing him. See Browe v. CTC Corp., 2017 WL 5992333, at *6
(D. Vt. Dec. 1, 2017) (conditionally denying motion to exclude expert testimony and
ordering defendants to pay costs of plaintiffs' preparation for and taking of expert's
deposition); Lab Crafters, Inc. v. Flow Safe, Inc., 2007 WL 7034303, at *8 (E.D.N.Y.
Oct. 26, 2007) ("Courts to address this issue have stated that any prejudice to the
opposing party can be alleviated by allowing them to depose the expert prior to trial.").

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Defendants' motion to strike Professor Elhauge's Second Supplemental Expert
Report is therefore DENIED. Plaintiffs must proffer Professor Elhauge for deposition and
pay the reasonable costs incurred by Defendants in taking the deposition.
B.

Whether Certain of Professor Elhauge's Opinions Must Be Excluded
(Doc. 146).

Defendants ask the court to preclude Professor Elhauge from offering six
categories of opinions concerning: the existence of a conspiracy or conspiracies; whether
DFA operated in the best interest of its farmer members; the proper interpretation of
certain agreements entered into by Defendants; any party's motivation, mental state, or
credibility; a summary or narration of Plaintiffs' case whereby the facts are introduced
for the first and only time through Plaintiffs' expert witness; and regression analysis
which is allegedly unreliable and insufficiently tied to the facts.
Federal Rule of Evidence 702 provides that:
A witness who is qualified as an expert by knowledge, skill, experience,
training, or education may testify in the form of an opinion or otherwise if:
(a) the expert's scientific, technical, or other specialized knowledge will
help the trier of fact to understand the evidence or to determine a fact
m issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts
of the case.
Fed. R. Evid. 702.
The trial court is tasked with completing a "preliminary assessment of whether the
reasoning or methodology underlying" proffered expert testimony is reliable and will be
helpful to the jury. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 592-93 (1993).
The "inquiry envisioned by Rule 702 is ... a flexible one[,]" id. at 594 (footnote
omitted), and "'must be tied to the facts of a particular case[.]"' Amorgianos, 303 F.3d at
266 (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150 (1999)).
In conducting its analysis, "[t]he court ... assumes a 'gatekeeping' role 'to make
certain that an expert, whether basing testimony upon professional studies or personal
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experience, employs in the courtroom the same level of intellectual rigor that
characterizes the practice of an expert in the relevant field."' Estate of Puppolo v. Welch,
2017 WL 4042342, at* 13 (D. Vt. Sept. 12, 2017) (quoting Kumho Tire Co., 526 U.S. at
152). Although "[v ]igorous cross-examination, presentation of contrary evidence, and
careful instruction on the burden of proof are the ... appropriate means of attacking
shaky but admissible evidence[,]" Daubert, 509 U.S. at 596, an expert witness's opinion
must be "reliable at every step" to warrant admission. Amorgianos, 303 F .3d at 267.
1.

Opinions Regarding the Existence of a Conspiracy or
Conspiracies.

Defendants argue Professor Elhauge's opinion that Defendants engaged in a
conspiracy or multiple conspiracies must be excluded because it is an impermissible legal
conclusion as well as an opinion on the ultimate question for the jury. Plaintiffs agree that
they will not ask Professor Elhauge whether there is a "conspiracy" or whether an
individual or an entity is a "co-conspirator," but argue they should be free to ask him to
explain Defendants' economic incentives to undertake certain actions and enter into
certain agreements, as well as the effects of those actions on the relevant market and its
participants.
Although Federal Rule of Evidence 704 provides that "[a]n opinion is not
objectionable just because it embraces an ultimate issue[,]" Fed. R. Evid. 704, an expert
witness opinion that states a legal conclusion or "communicat[es] a legal standardexplicit or implicit-to the jury" is inadmissible. Hygh v. Jacobs, 961 F .2d 3 59, 364 (2d
Cir. 1992). As a result, in the antitrust context, an expert "cannot testify to whether a
party's conduct was 'anticompetitive' or 'unlawful' under the Sherman Act, but can, for
example, testify about factors that would tend to show anticompetitive conduct in a
market and describe why, in the expert's opinion, those factors are present in [the] case at
hand." SourceOne Dental, Inc. v. Patterson Cos., Inc., 2018 WL 2172667, at *1
(E.D.N.Y. May 10, 2018) (citing US. Info. Sys., Inc. v. Int'/ Bhd. of Elec. Workers Local

Union No. 3,313 F. Supp. 2d 213, 240-41 (S.D.N.Y. 2004)). Economic experts in
antitrust cases have also been permitted to "explain how certain conduct could affect a

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market through the use of hypothetical statements[.]" Fleischman v. Albany Med. Ctr.,
728 F. Supp. 2d 130, 152 (N.D.N.Y. 2010) (quoting U.S. Info. Sys., Inc., 313 F. Supp. 2d
at 240); see also id. (permitting expert opinion that "information exchanges, engaged in
by the [d]efendant hospitals, made it easier for [d]efendants to form and maintain a wage
agreement"). 1
In his report, Professor Elhauge opines that "Defendants have engaged in a multifaceted conspiracy with processors and other cooperatives to reduce competition, acquire
monopsony power, and suppress raw milk prices in the market for raw milk sales in
Order l." (Doc. 147-1 at 6, i14.) He further describes specific agreements entered into by
Defendants as "anticompetitive[.]" Id. These types of opinions are inadmissible because
they usurp the function of the court as well as the role of the jury in determining whether
Plaintiffs have proved their case. See Gordon v. NE. Cent. R.R., 2019 WL 4068639, at *3
(D. Vt. Aug. 28, 2019) (excluding "testimony [that] will 'usurp either the role of the trial
judge in instructing the jury as to the applicable law or the role of the jury in applying
that law to the facts before it'") (quoting United States v. Lumpkin, 192 F.3d 280, 289 (2d
Cir. 1999)); see also Union Carbide Corp. v. Montell N. V., 28 F. Supp. 2d 833, 843
(S.D.N.Y. 1998) (ruling an expert witness may not testify that "conduct was either 'anticompetitive' or 'unlawful'").
Without objection, Defendants' motion is GRANTED and Professor Elhauge may
not proffer legal conclusions in his testimony or tell the jury what result it should reach at
trial.

1

See also DPWN Holdings (USA), Inc. v. United Air Lines, Inc., 2019 WL 1515231, at *7
(E.D.N.Y. Feb. 21, 2019) (holding antitrust expert could not testify "that defendants' conduct
was anticompetitive or unlawful" nor "provide any type of conclusion about whether a pricefixing conspiracy existed or whether anticompetitive conduct occurred" but could explain "that
the market was not competitive and explain how he reached that conclusion) (internal alterations,
quotation marks, and citation omitted); TC Sys. Inc. v. Town of Colonie, NY, 213 F. Supp. 2d
171, 182 (N.D.N.Y. 2002) (excluding portions of expert opinion that stated impermissible legal
conclusions and "merely [told] the jury what result to reach[,]" but permitting opinions regarding
why a local law constituted a barrier to entry into the market at issue).

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2.

Opinions Regarding the Best Interests of Cooperative Members.

Defendants ask the court to preclude Professor Elhauge from testifying that
Defendants did not act in the best interests of their dairy farmer cooperative members
because that opinion is not related to his area of expertise, 2 is not derived by a scientific
methodology, and "flows circularly from his inadmissible conclusion that [Defendants]
engaged in a conspiracy[.]" (Doc. 146 at 12.) They further assert that this "best interests"
opinion should be excluded as irrelevant to the test for Capper-Volstead immunity.
Plaintiffs respond that Professor Elhauge will explain how Defendants' economic
interests were at odds with those of their farmer members without offering any legal
opinion regarding Capper-Volstead immunity.
The Capper-Volstead Act, 7 U.S.C. § 291, "gives farmers the right to combine into
cooperative monopolies[,]" Fairdale Farms, Inc. v. Yankee Milk, Inc., 635 F.2d 1037,
1040 (2d Cir. 1980), but does not shield cooperatives from liability for anticompetitive
behavior such as restraining trade or suppressing competition. Id. at 1044 ("Neither may
[a cooperative] use its legitimately acquired monopoly power in such a manner as to stifle
or smother competition."). To be shielded from antitrust liability by the Capper-Volstead
Act, a cooperative must be "operated for the mutual benefit of the members thereof{.]" 7
U.S.C. § 291.
Professor Elhauge specifically disclaimed any opinion regarding the applicability
of the Capper-Volstead Act at his deposition. Instead, he opines that Defendants' roles as
a cooperative-producer, milk marketer, and processor of raw Grade A milk give rise to
inherent conflicts of interest that incentivize Defendants to suppress the price of raw
2

Contrary to Defendants' suggestion, Professor Elhauge is not required to have any personal
expertise with dairy farming or agricultural cooperatives. See TC Sys. Inc., 213 F. Supp. 2d at
175 (rejecting challenge to antitrust expert's qualifications based on expert's lack of experience
in telecommunications industry and noting that "[a]n economist, through his or her educational
training, is qualified to educate the fact finder about ... broad economic principles and market
forces"). Nor is he required to be an economist if, by virtue of his knowledge, skill, experience,
training, or education, he is qualified to offer an opinion that will be helpful to the jury. See Fed.
R. Evid. 701; see also In re Mushroom Direct Purchaser Antitrust Litig., 2015 WL 5767415, at*
5 ("There is no serious question that Prof[essor] Elhauge 'posses[es] skill or knowledge' in
conducting regression analysis in antitrust cases[.]") (citation omitted).

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Grade A milk even though their farmer members would benefit from higher prices. His
"best interests" opinion thus addresses competing economic incentives as well as conduct
that would be atypical in a competitive market. These topics are well within Professor
Elhauge's specialized knowledge as an antitrust expert and fit the facts of this case. See
Allen v. Dairy Mktg. Servs., LLC, 2013 WL 6909953, at *11 (D. Vt. Dec. 31, 2013)
(holding expert witness may "opine regarding the identity of coconspirators, their
economic incentives to participate in the conspiracy (including the incentives of their
management), and whether the climate of a specific market was consistent with a
conspiracy") (internal quotation marks and citation omitted).
Although the Capper-Volstead Act may permit cooperatives to own processing
plants, it does not authorize them to profit from that ownership at the expense of their
own members in violation of the antitrust laws. Professor Elhauge's opinion is confined
to this narrower proposition:
To be clear, I am not opining that a dairy cooperative having interests in
dairy processing is in and of itself conspiratorial and/or anticompetitive
conduct. Rather, I am highlighting that such interests create a conflict of
interest that can explain the motivation behind a conspiracy to suppress raw
milk prices - i.e. to favor the profitability of processing operations especially when understood in context of all of the defendants' conduct
explained in this report.
(Doc. 147-1 at 71, ,-r 134.)
Because Professor Elhauge's "best interests" opinion pertains to matters within his
expertise and does not offer a legal conclusion regarding Capper-Volstead immunity,
Defendants' motion to exclude this portion of Professor Elhauge's opinion is DENIED.

3.

Opinions Regarding Contract Terms.

Defendants assert that Professor Elhauge should be prohibited from interpreting
contract provisions, including characterizing certain contracts as "full supply" without
relying on any commonly understood economic definition of that term. They further
argue that Professor Elhauge should not be permitted to interpret certain Docu Ware
Access Agreements as containing "antisolicitation" provisions.

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"Generally, the proper interpretation of a contract is a question of law" for the
court to decide. Rounds v. Malletts Bay Club, Inc., 2016 VT 102, ,i 16, 203 Vt. 473, 479,
157 A.3d 1101, 1105; see also Ascent Healthcare Solutions, Inc. v. Dumont, 2012 WL
1599868, at *4 (D. Vt. May 7, 2012) ("Whether ambiguity exists and the interpretation of
an unambiguous contract are questions of law, not fact."). If the court determines that a
contract's meaning is ambiguous, "the issue then becomes a mixed question of law and
fact." B & C Mgmt. Vt., Inc. v. John, 2015 VT 61, ,J 11, 199 Vt. 202,207, 122 A.3d 511,
514; see also Marx & Co. v. Diners' Club, Inc., 550 F.2d 505, 510 (2d Cir. 1977) ("The
question of interpretation of [a] contract is for the jury and the question of legal effect is
for the judge.") (internal quotation marks and citation omitted).
Although interpretation of an unambiguous agreement is the province of the judge,
expert witness testimony may explain how a contract operates in the marketplace. For
example, in Cary Oil Co. v. MG Ref & Mktg., Inc., an expert witness was permitted to
testify "regarding the financial and logistical ability of [p]laintiffs to absorb certain
volumes of petroleum under the [c]ontracts" at issue where he applied a "relatively
straightforward analysis" to draw conclusions regarding what would happen if certain
options in the agreements were exercised. 2003 WL 1878246, at *3 (S.D.N.Y. Apr. 11,
2003). Similarly, in a suit regarding a partnership dispute, "[e]xpert testimony was
admissible for the purpose of explaining the meaning of the technical contract terms" in
the partnership agreement. Moore v. Tristar Oil & Gas Corp., 528 F. Supp. 296, 310
(S.D.N.Y. 1981).
In this case, in denying summary judgment, the court observed that "additional
information" would be necessary to determine whether certain contracts were "full
supply" agreements. (Doc. 130 at 24 n.8.) At oral argument, Plaintiffs emphasized that
Professor Elhauge's opinions concerning the full supply contracts and DocuWare Access
Agreements rely in part on admissions made by Defendants' representatives in
depositions and documentary evidence and the opinions he offers at trial will therefore
depend on the state of the record. Until that record is established, or Plaintiffs anticipate
in good faith that it will be furnished by a subsequent witness, Professor Elhauge will not

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be permitted to interpret non-technical contractual terms for the jury. He may, however,
opine as to how a contract or contractual term operates in the marketplace.
For the foregoing reasons, Defendants' motion to exclude Professor Elhauge's
opinions is GRANTED IN PART with regard to interpretation of non-technical
contractual terms and CONDITIONALLY DENIED IN PART with regard to the
operation of contracts or contractual terms in the marketplace.

4.

Opinions Regarding Parties' Mental States, Motivations, or
Credibility.

Defendants assert that some of Professor Elhauge's opinions as to why Defendants
made certain business decisions would "tell the jury which witnesses to believe and
which to discredit." (Doc. 146 at 16.) Plaintiffs agree that Professor Elhauge will not
opine as to the credibility of witnesses but will opine as to the economic motivations of
the various market participants.
While the "intent, motives[,] or states of mind of corporations, regulatory agencies
and others have no basis in any relevant body of knowledge or expertise[,]" In re Rezulin
Prods. Liab. Litig., 309 F. Supp. 2d 541, 546 (S.D.N.Y. 2004) (footnote omitted), experts
in antitrust cases frequently testify concerning economic incentives, the market behaviors
they are likely to induce, and the market events or conditions that may contribute to
monopsony power. See DPWN Holdings (USA), Inc. v. United Air Lines, Inc., 2019 WL
1515231, at *7 (E.D.N.Y. Feb. 21, 2019) (holding that antitrust expert could "point to
factors that would tend to show anticompetitive conduct in a market" and "indicate
whether he believed those factors existed" in the case). Thus, while Professor Elhauge
may not ascribe a particular motivation to Defendants or their representatives or call their
credibility into question, he may explain why a particular action would be inconsistent
with normal market incentives or why certain payments or compensation are consistent
with the existence of a quid pro quo. See Anderson News, L.L. C. v. Am. Media, Inc., 899
F.3d 87, 98 (2d Cir. 2018) (holding that, consistent with Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 588 (1986), an antitrust plaintiff must show that "the

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conspiratorial explanation is more likely than not") (internal quotation marks and citation
omitted).
Certain of Professor Elhauge's opinions, however, are more problematic and
impermissibly address credibility. For example, he describes Defendants' explanation
regarding why they ceased marketing milk for independent farmers and cooperatives as
"pretextual[,]" (Doc. 14 7-1 at 122), which arguably carries a connotation of deceit.
Similarly, he characterizes other explanations as "conclusory[,]" not "persuasive[,]" and
"not to be credited[.]" (Doc. 146 at 16.) These types of opinions are inadmissible. See

Nimely v. City ofNew York, 414 F.3d 381, 398 (2d Cir. 2005) ("Thus, this court, echoed
by our sister circuits, has consistently held that expert opinions that constitute evaluations
of witness credibility, even when such evaluations are rooted in scientific or technical
expertise, are inadmissible under Rule 702."); United States v. Scop, 846 F.2d 135, 142
(2d Cir. 1988) (ruling "witnesses may not opine as to the credibility of the testimony of
other witnesses").
In addition, Professor Elhauge may not opine as to a party's true motivation, as
this also suggests that a proffered motive is false. See Lippe v. Bairnco Corp., 288 B.R.
678,688 (S.D.N.Y. 2003) (excluding an expert witness opinion regarding the
"defendants' 'real purpose,' their true motivation, in engaging in [a] transaction[]"); see

also Scentsational Techs., LLC v. Pepsi, Inc., 2018 WL 1889763, at *8 (S.D.N.Y. Apr.
18, 2018) ( excluding opinions that defendant did not act "in good faith" and that
"emotions were running undoubtedly high") (internal alterations omitted).
For the foregoing reasons, Defendants' motion is GRANTED insofar as it seeks to
preclude Professor Elhauge' s opinions regarding the credibility and motive of any party
or witness.

5.

Opinions Summarizing Plaintiffs' Theory of the Case.

Defendants argue that Plaintiffs intend to use Professor Elhauge' s testimony to
parrot Plaintiffs' view of the case and introduce facts that should be admitted only
through lay witnesses based upon personal knowledge. They further assert that testimony
that simply "explain[s]" the facts involves "no science, technical, or specialized
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knowledge" that would qualify it as an expert opinion. (Doc. 146 at 18.) At oral
argument, Plaintiffs disclaimed any intent to use Professor Elhauge to narrate their case
and stated that Professor Elhauge will refer to and rely upon only evidence that will be
admitted through exhibits and fact witnesses.
"Expert testimony is not admissible if it merely serves as a conduit to construct a
factual narrative" because such testimony will not be helpful to the finder of fact.
SourceOne Dental, Inc., 2018 WL 2172667, at *7 (citing Highland Capital Management,

L.P. v. Schneider, 379 F. Supp. 2d 461,469 (S.D.N.Y. 2005)); see also Rotman v.
Progressive Ins. Co., 955 F. Supp. 2d 272, 283 (D. Vt. 2013) (observing that "[t]o the
extent [an expert witness] merely repeats or recasts the testimony of [a fact witness] in
order to arrive at a theory of causation, he is not testifying as an expert witness based
upon specialized knowledge, but rather is acting as a conduit for another witness's
testimony in the guise of an expert's opinion"); Estate of Puppo lo, 2017 WL 4042342, at
* 16 ( finding expert opinion that simply communicated "the opinions of [p ]laintiff and her
counsel" was inadmissible). "It is therefore inappropriate for experts to act as a vehicle to
present a factual narrative of interesting or useful documents for a case, in effect simply
accumulating and putting together one party's 'story."' Scentsational Techs., LLC, 2018
WL 1889763, at *4.
However, "an expert may and often must rely on facts" and "state them in a
report." Id. Where an expert uses record evidence "to describe the setting in which the
parties were operating" and "applies economic principles to determine whether the
situation described was one that tended to show economic indicators of' anticompetitive
behavior, his or her opinions are admissible. US. Info. Sys., Inc., 313 F. Supp. 2d 213 at
237.
At this juncture, any concern regarding the manner of presenting Professor
Elhauge's testimony is premature. See Luitpold Pharm., Inc. v. Ed. Geistlich Sohne A.G.
Fur Chemische lndustrie, 2015 WL 5459662, at *12 (S.D.N.Y. Sept. 16, 2015) ("It is
frankly unclear whether [expert witness] intends to offer such testimony live or whether
any factual narrative in his report simply provides the foundation for his opinions.").
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Plaintiffs represent that, at trial, they will establish the factual foundation for Professor
Elhauge's analyses, and he may rely upon that evidence consistent with Fed. R. Evid.
703. Defendants' motion to exclude is therefore DENIED WITHOUT PREJUDICE.

6.

Admissibility of Professor Elhauge's Regression Analysis,
Damages Calculation, and Opinions Regarding Antitrust
Impact.

Defendants seek to exclude opinions based on Professor Elhauge's regression
analysis for two reasons. First, they contend that because Professor Elhauge's software
erroneously processed observations missing zip code data, his regression analysis is
unreliable because the error "infects an additional [ten] percent of his data" and "treat[s]
all those transactions as if they fell within the same [zip] code, when in reality the farms
at issue are located across [twenty-three] states." (Doc. 146 at 7-8.) And second,
Defendants assert that Professor Elhauge relies too extensively on averaged values in
calculating the premiums paid for milk in the relevant market, yielding an analysis which
does not "fit" the facts of this case.
Under Daubert, the court must examine "whether the expert's technique can be
challenged in some objective sense, or whether it is instead simply a subjective,
conclusory approach that cannot reasonably be assessed for reliability" and "whether the
theory or method has been generally accepted by the relevant scientific community." US.

Info. Sys., Inc., 313 F. Supp. 2d at 227 (citing Daubert, 509 U.S. at 593-94). "In
undertaking this flexible inquiry, the district court must focus on the principles and
methodology employed by the expert, without regard to the conclusions the expert has
reached or the district court's belief as to the correctness of those conclusions."

Fleischman, 728 F. Supp. 2d at 144 (quoting Amorgianos, 303 FJd at 266).
The question of an expert opinion's "fit" depends on whether the opinion is
sufficiently relevant to the disputed facts and issues. See Daubert, 509 U.S. at 591 (noting
that expert testimony must be "sufficiently tied to the facts of the case" in order to "aid
the jury in resolving a factual dispute" to satisfy the fit requirement). An expert witness
opinion must therefore have a "valid scientific connection to the pertinent inquiry as a

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precondition to admissibility." Daubert, 509 U.S. at 592. "A proffered expert opinion
may fail to meet the fit requirement if it relates to facts or data that have not been
adequately established in the case." Amorgianos v. Nat'! R.R. Passenger Corp., 137 F.
Supp. 2d 147, 163 (E.D.N.Y. 2001) (internal quotation marks and citation omitted), aff'd,
303 F .3d at 256. "'Fit' is not always obvious, and scientific validity for one purpose is
not necessarily scientific validity for other, unrelated purposes." Daubert, 509 U.S. at
591.
Defendants' reliability challenge is based on a coding error in Professor Elhauge's
regression model which failed to correctly process missing zip codes in the vast data set
which Defendants produced to Plaintiffs. As Defendants concede, the coding error was
addressed and corrected in Professor Elhauge's Second Supplemental Expert Report. A
computer code problem is akin to a "mistake[] in arithmetic [that] can be corrected
(unlike the mistake of using an unreliable methodology)" and therefore does not render
the regression inadmissible, particularly where the problem has been redressed. Malletier
v. Dooney & Bourke, 525 F. Supp. 2d 558, 657 (S.D.N.Y. 2007); see also Encompass
Advisors, Ltd. v. Unapen, Inc., 2013 WL 6331157, at *3 (D. Conn. Dec. 5, 2013) (finding
objection based on unreliability moot where expert subsequently examined the subject at
issue and supplemented his disclosure).
Defendants further challenge Professor Elhauge's corrected regression analysis as
inadequate in light of the corresponding reduction in the data set. As Professor Elhauge
notes in his Second Supplemental Expert Report, his analysis is based on 801,560
observations out of a total of 1,169,902, or 69% of the data included in Defendants'
production. (See Doc. 150-7 at 4, ,r 3.) Professor Elhauge excluded a portion of the
observations because the discovery produced by Defendants lacked data for the variables
incorporated in his model. Because Defendants contributed to the missing data, "the
[c]ourt will not hold Plaintiffs [solely] responsible[.]" In re Dig. Music Antitrust Litig.,
321 F.R.D. 64, 76 (S.D.N.Y. 2017) (rejecting challenge to expert opinion where
defendants did not produce individualized data). Although a more robust data set might

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be preferable, there is no evidence that the resulting data set is so paltry that it renders
Professor Elhauge's entire regression analysis unreliable.
Defendants further object to the "fit" of Professor Elhauge's regression analysis on
the ground that it "masks important differences among the [P]laintiffs[,]" such as whether
they marketed their milk to processors directly or through cooperatives. (Doc. 146 at
24.) 3 This type of challenge goes to the weight of Professor Elhauge's opinion rather than
its admissibility as it pertains only to whether Professor Elhauge's regression analysis is
sufficiently detailed and illustrative to yield persuasive conclusions. See SourceOne

Dental, Inc., 2018 WL 2172667, at *6 (holding that "objections to [an expert witness's]
damages model [that] focus almost entirely on his factual inputs and assumptions rather
than his methodology ... go to the probative value of' the opinion and do not establish
its inadmissibility); see also Cincinnati Ins. Cos. v. Hectic Elec., Inc., 2010 WL 1472745,
at *3 (D. Vt. Apr. 9, 2010) (analyzing challenge to fit and concluding that expert's "use
of an accepted methodology which led him to reach a conclusion ... after an
investigation of data and facts[] is not so flawed as to render his opinions inadmissible").
Similarly, Professor Elhauge's thirteen-year average, while arguably atypical, is
supported by a reasonable explanation as to why it is a reliable measure of damages in the
facts and circumstances of this case. See Amorgianos, 303 F.3d at 267 (observing that the
"limitation on when evidence should be excluded accords with the liberal admissibility
standards of the federal rules and recognizes that our adversary system provides the
necessary tools for challenging reliable, albeit debatable, expert testimony").
To the extent that Defendants challenge other aspects of Professor Elhauge's
regression analysis, including the specific proxies he employed, their motion
asks the [c]ourt to take sides in a dispute between experts about the
intricacies of econometric modeling. That is not the proper function of a
Daubert motion. This is not a case in which an expert is unable to articulate
3

Defendants' reliance on class certification opinions considering the predominance of common
issues as required under Fed. R. Civ. P. 23(b) in support of their "fit" argument underscores that
the heart of their challenge is whether Plaintiffs may show individualized injury using Professor
Elhauge's analysis-a question that the court has already answered in the affirmative.

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a rationale for his methodology; nor is it a case where the proffered
rationale is patently flawed or unreasonable.
In re Vitamin C Antitrust Litig., 2012 WL 6675117, at *8 (E.D.N.Y. Dec. 21, 2012).

"Reasonable minds may differ as to whether [an expert's analysis] is probative of
[a disputed fact]. Resolving that question, however, is the near-exclusive province of the
jury." Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1049 (2016). Defendants are
free to explore the deficiencies in Professor Elhauge's regression analysis on crossexamination. They have not proffered persuasive reasons for excluding it entirely. Cf
Bouaphakeo, 136 S. Ct. at 1048-49 (noting that "[r]epresentative evidence that is

statistically inadequate or based on implausible assumptions could not lead to a fair or
adequate estimate" but "[o]nee a district court finds evidence to be admissible, its
persuasiveness is, in general, a matter for the jury"); see also Source One Dental, Inc.,
2018 WL 2172667, at *6 ("Cross-examination and impeachment at trial, and the contrary
opinions of defendants' experts are sufficient to expose any weaknesses in [expert
witness's] model.").
For the foregoing reasons, Defendants' motion to exclude is DENIED with regard
to Professor Elhauge's regression analysis.

C.

Whether to Exclude Portions of Dr. Snyder's Opinion (Doc. 148).

To counter Professor Elhauge's opinions, Defendants proffer the testimony of
their antitrust economics expert, Dr. Edward Snyder, who holds a Ph.D. in economics and
currently serves as a dean and professor in the Yale School of Management. Dr. Snyder
previously served on the business school faculties at the University of Virginia, the
University of Chicago, and the University of Michigan and has been qualified as an
antitrust expert by numerous federal district courts. In this case, he rebuts Plaintiffs'
allegations of a monopsony for raw Grade A milk in Order 1 by using a benchmark
analysis to compare the relevant market to other regions and industries during the
relevant time period. In the course of this analysis, he opines that "[s]ome 147 processing
plants operated in a typical year during the at-issue period" and "[h]ence, individual
farmers have many options for selling their milk." (Doc. 148-1 at 3, ,i 24.) Plaintiffs

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contend this opinion must be excluded because it is not the product of specialized
knowledge or expertise and because it is not helpful to the jury.
An expert opinion must be excluded "if ... the expert lacks good grounds for his
or her conclusions." Amorgianos, 303 F.3d at 267 (internal quotation marks and citations
omitted); see also Nimely, 414 F.3d at 396 (finding that if the "data, ... methodology, or
studies ... are simply inadequate to support the conclusions reached," the opinion is
unreliable and subject to exclusion) (internal quotation marks and citation omitted).
"' [T]he reliability analysis applies to all aspects of an expert's testimony: the
methodology, the facts underlying the expert's opinion, [and] the link between the facts
and the conclusion[.]'" Amorgianos, 303 F.3d at 267 (first alteration in original) (quoting

Heller v. Shaw Indus., Inc., 167 F.3d 146, 155 (3d Cir. 1999)). "[N]othing in either
Daubert or the Federal Rules of Evidence requires a district court to admit opinion
evidence that is connected to existing data only by the ipse dixit of the expert[,]" and the
court must exclude proffered expert witness testimony if it "conclude[ s] that there is
simply too great an analytical gap between the data and the opinion." Gen. Elec. Co. v.

Joiner, 522 U.S. 136, 146 (1997).
Even if the opinion is reliable, the court must also determine that it will be helpful
to the jury. See Nimely, 414 F.3d at 397 ("Rule 702 requires the district court to make a
third inquiry: whether the expert's testimony (as to a particular matter) will 'assist the
trier of fact."'). "[D]efendants' experts have a less demanding task" because "they have
no burden to produce models or methods of their own" and "need only attack those of
plaintiffs' experts." In re Zyprexa Prods. Liab. Litig., 489 F. Supp. 2d 230, 285
(E.D.N.Y. 2007). Nonetheless, even a rebuttal opinion "must meet Daubert's threshold
standards regarding the qualifications of the expert, sufficiency of the data, reliability of
the methodology, and relevance of the testimony." Scott v. Chipotle Mexican Grill, Inc.,
315 F.R.D. 33, 44 (S.D.N.Y. 2016). "[E]xpert testimony is not helpful ifit simply
addresses 'lay matters which a jury is capable of understanding and deciding without the
expert's help.'" In re Dig. Music Antitrust Litig., 321 F.R.D. at 75 (quoting United States

v. Mulder, 273 F.3d 91, 101 (2d Cir. 2001)); see also In re Elec. Books Antitrust Litig.,
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2014 WL 1282298, at* 12 (S.D.N.Y. Mar. 28, 2014) ("To be of assistance to the jury,
[expert] would have to bring his own expertise as an economist to bear on a subject.").
Dr. Snyder derived his opinion by assembling a list of processing plants in Order
1, eliminating those plants identified by Professor Elhauge as potential co-conspirators,
calculating the total capacity of the remaining plants, and calculating the distance from
those "free and clear" plants to the zip codes in Order 1. While Defendants contend Dr.
Snyder performed a "detailed empirical analysis[,]" (Doc. 164 at 7), his procedure more
closely approximates a mathematical and mapping exercise that employs no specialized
knowledge or expertise unavailable to the average juror. Although the data in question
was obtained from a number of sources, none of it required expert witness interpretation
and all of it could be obtained in some form from the public domain.
In formulating his opinion, Dr. Snyder did not investigate or analyze whether the
processing plants he deems "free and clear" are willing or able to buy from new sources
or are instead subject to long-term or full-supply contracts with other farmers that would
limit their capacity to accept Plaintiffs' milk. He also includes in his analysis processing
plants that purchase only organic or kosher milk without addressing the modifications
necessary for a milk producer to sell to a kosher or organic processer. As those
modifications are time-consuming and substantial, processing plants that he identifies as
"free and clear" options may not actually be available. See Doc. 147-1 at 29,149 (citing
statement by the Organic Trade Association that conversion from conventional to organic
milk production takes at least three years). Dr. Snyder acknowledged as much in his
deposition by conceding that a determination of actual availability would require further
analysis and that the plants he identifies might be better characterized as "potential"
options. (Doc. 148-2 at 4.)
A fact witness may be permitted to provide the information Dr. Snyder proffers
concerning the locations of processing plants relative to Order 1 zip codes. This same
information, however, should not be presented to the jury in the guise of an expert
witness opinion. "Expert evidence can be both powerful and quite misleading because of
the difficulty in evaluating it. Because of this risk, the judge in weighing possible
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prejudice against probative force under Rule 403 ... exercises more control over experts
than over lay witnesses." Daubert, 509 U.S. at 595 (internal quotation marks and citation
omitted). As Dr. Snyder's analysis does not require the application of any specialized
knowledge or expertise outside the ken of the average juror, and as it does not fit the facts
of this case, Plaintiffs' motion to exclude Dr. Snyder's opinion that during the alleged
conspiracy there were "many options" for Plaintiffs to sell their milk (Doc. 148-1 at 3,

,r 24) is GRANTED.
CONCLUSION
For the foregoing reasons, Defendants' motion to strike Professor Elhauge's
Second Supplemental Expert Report (Doc. 149) is DENIED and their motion to exclude
certain of Professor Elhauge's opinions (Doc. 146) is GRANTED IN PART and
DENIED IN PART. Plaintiffs' motion to preclude Dr. Snyder's opinion regarding the
availability of processing options (Doc. 148) is GRANTED.
SO ORDERED.
f\,\.,

Dated at Burlington, in the District of Vermont, this 'il 't day of June, 2020.
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