The opinion of the court was delivered by: Richard D. Bennett United States District Judge
THIS DOCUMENT RELATES TO: * ALL ACTIONS
This class action concerns an alleged price-fixing conspiracy in the market for titanium dioxide.*fn1 Plaintiffs Haley Paint Company and Isaac Industries, Inc., and Intervening Plaintiff East Coast Colorants, LLC d/b/a Breen Color Concentrates (collectively, "Plaintiffs") claim that Defendants E.I. du Pont de Nemours & Co., Huntsman International LLC, Kronos Worldwide Inc., and Millennium Inorganic Chemicals, Inc. (collectively, "Defendants") engaged in an unlawful conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, to fix, raise, or maintain the price of titanium dioxide in the United States. Plaintiffs allege that as a consequence of the unlawful conspiracy, Defendants were successful in charging artificially inflated prices for titanium dioxide products.
Presently pending before this Court is the Defendants' Motion to Exclude Expert Testimony (ECF No. 408) of the Plaintiffs' three proposed experts, Professor George L. Priest, Dr. Bruce W. Hamilton, and Dr. Russell L. Lamb. The parties' submissions have been reviewed and a hearing was held on April 17, 2013. For the reasons articulated below, Defendants' Motion to Exclude Expert Testimony (ECF No. 408) will be GRANTED IN PART and DENIED IN PART. Specifically, the Plaintiffs' proposed rebuttal expert, Professor Priest, will be EXCLUDED because his testimony is inadmissible under Rule 702 of the Federal Rules of Evidence and the Supreme Court's holding in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). The testimony of the Plaintiffs' proposed experts Dr. Hamilton and Dr. Lamb will not be excluded, and the Motion will be DENIED as to those two witnesses.
The facts of this case are fully set forth in the Memorandum Opinion issued on August 28, 2012 (ECF No. 337). An abbreviated factual summary is repeated here to introduce the pending motion.
Plaintiffs Haley Paint Company and Isaac Industries, Inc., and Intervening Plaintiff East Coast Colorants, LLC d/b/a Breen Color Concentrates (collectively, "Plaintiffs") claim that Defendants E.I. du Pont de Nemours & Co., Huntsman International LLC, Kronos Worldwide Inc., and Millennium Inorganic Chemicals, Inc. (collectively, "Defendants"), who are the market leaders in the production of titanium dioxide, conspired to fix, raise, maintain, and stabilize the price of titanium dioxide when demand for the product declined. The conspiracy is alleged to have occurred from February 1, 2003, through the present (the "class period").
On February 9, 2010, the Plaintiffs filed suit, and they submitted an Amended Complaint (ECF No. 51) on April 12, 2010, initiating this class action lawsuit. The Plaintiffs' Amended Complaint alleges a price-fixing conspiracy in violation of the Sherman Act, 15 U.S.C. § 1. On August 28, 2012, this Court issued a Memorandum Opinion (ECF No. 337) certifying a class of titanium dioxide purchasers who are alleged to have sustained injury when they paid artificially inflated prices for the product. The class is defined as "[a]ll persons and entities who purchased titanium dioxide in the United States directly from one or more Defendants or Tronox,*fn2 or from any predecessors, parents, subsidiaries, or affiliates thereof, between February 1, 2003, and the present." Order Granting Mot. Certify 2, ECF No. 338.
Defendants have now moved to exclude the testimony of the Plaintiffs' three proposed experts, Professor George L. Priest, Dr. Bruce W. Hamilton, and Dr. Russell L. Lamb. They invoke this Court's gatekeeping function under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals., Inc., 509 U.S. 579 (1993), insisting that the proposed testimony of these experts must be excluded, because it is directed improperly to the ultimate legal issue in the case and is based on methods that are neither scientific nor reliable. For the reasons stated below, the Defendants' Motion to Exclude Expert Testimony (ECF No. 408) is GRANTED IN PART, specifically as to Professor Priest, and DENIED IN PART, as to Dr. Hamilton and Dr. Lamb.
Rule 702 of the Federal Rules of Evidence provides that an expert witness 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 in 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. In applying Rule 702, a court acts as a gatekeeper, excluding unreliable expert testimony. Daubert, 509 U.S. at 600.
Daubert set forth a non-exclusive checklist for trial courts to use in assessing the reliability of scientific expert testimony. The specific factors a court may consider include:
(1) whether the particular scientific theory can be (and has been) tested;
(2) whether the theory has been subjected to peer review and publication;
(3) the known or potential rate of error;
(4) the existence and maintenance of standards controlling the technique's operation; and
(5) whether the technique has achieved general acceptance in the relevant scientific or expert community.
United States v. Crisp, 324 F.3d 261, 266 (4th Cir. 2003) (quoting Daubert, 509 U.S. at 592-94). The same analysis applies where the expert testimony relates to matters of technical, rather than scientific, expertise. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999).
"Rather than provide a definitive or exhaustive list, Daubert merely illustrates the types of factors that will bear on the inquiry." United States v. Prince-Oyibo, 320 F.3d 494, 498 (4th Cir. 2003) (internal citations omitted); see also Crisp, 324 F.3d at 266-67. In determining whether proffered expert testimony is reliable, the district court has broad discretion to consider whatever factors bearing on validity that the court finds to be useful; the particular factors will depend upon the unique circumstances of the expert testimony involved, and no single factor is necessarily dispositive. See Kumho Tire, 526 U.S. at 152-53. "The court, however, should be conscious of two guiding, and sometimes competing, principles: (1) 'that Rule 702 was intended to liberalize the introduction of relevant expert evidence'; and (2) 'that due to the difficulty of evaluating their testimony, expert witnesses have the potential to be both powerful and quite misleading.'" Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir. 1999).
The proponent of expert testimony bears the burden of production to come forward with evidence to support its contention that an expert's testimony would be both reliable and helpful. See Bourjaily v. United States, 483 U.S. 171 (1987). Evaluating an expert's testimony under Daubert does not involve a determination that the testimony "is irrefutable or certainly correct." Westberry, 178 F.3d at 261. Indeed, the Court in Daubert reminded district courts that "[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence." 509 U.S. at 595.
The Defendants ask this Court to exclude the entire testimony of the
Plaintiffs' proposed experts on two grounds. First, the Defendants
argue that each expert's testimony is improper under Rule 704 of the
Federal Rules of Evidence, because it is directed to the ultimate
legal issue in this case. Second, they contend that the experts'
opinions are based on principles or methods that are neither
scientific nor reliable, and thus are inadmissible under Rule 702 and
the Supreme Court's holding in Daubert. The Plaintiffs, in response,
insist that Rule 704 permits each expert to opine that the conduct of
the Defendants during the class period was consistent with collusion
and inconsistent with competition. Moreover, the Plaintiffs maintain
that their experts used methodologies that are reliable under Daubert
have been employed by economists in price-fixing cases*fn3
for decades. This Court first addresses the Defendants'
argument under Rule 704 and then turns to Defendants' Daubert
I.Admissibility of Expert Opinions Concerning the Existence of a Cartel
The Defendants first argue that the Plaintiffs' three experts intend to testify regarding the ultimate legal issue in this case-whether the Defendants were members of a cartel that fixed the prices of titanium dioxide-and that such testimony is prohibited by Rule 704 of the Federal Rules of Evidence. Rule 704 permits the admission of expert testimony that "embraces an ultimate issue to be decided by the trier of fact." Fed. R. Evid. 704(a). In other words, "questions of fact that are committed to resolution by the jury are the proper subject of opinion testimony." United States v. McIver, 470 F.3d 550, 561 (4th Cir. 2006). Testimony that "states a legal standard or draws a legal conclusion," however, is inadmissible. Id. at 561-62.
In drawing the line between "a permissible legal opinion on an ultimate issue" and "an impermissible legal conclusion," the Fourth Circuit in McIver assigned great importance to whether "the terms used by the witness have a separate, distinct and specialized meaning in the law different from that present in the vernacular." Id. at 562 (quoting United States v. Barile, 286 F.3d 749, 760 (4th Cir. 2002)). It is for that reason, the Fourth Circuit explained, that courts have deemed inadmissible testimony that a dog bite constituted "deadly force," or that a product was "unreasonably dangerous." Id. (citing Miller v. Clark Cnty., 340 F.3d 959, 963 n.7 (9th Cir. 2003) and Strong v. E.I. DuPont de Nemours Co., 667 F.2d 682, 685-86 (8th Cir. 1981)).
The three experts in this case intend to opine, based on their economic analyses, that the Defendants' behavior is "consistent with collusion and inconsistent with competition." Pls.' Opp'n 5, ECF No. 413. This testimony is admissible under Rule 704(a), because it does not state a "legal standard or draw a legal conclusion." McIver, 470 F.3d at 562. Nor does it use terms with "distinct and specialized meaning in the law." Id. Instead, these experts intend to explain whether economic indicia of collusion were present during the class period. These opinions are not "determination[s] of purely legal issues"; rather, they are admissible "testimony concerning mixed questions of fact and law." U.S. Info. Sys. v. Int'l Bhd. of Elec. Workers Local Union No. 3, AFL-CIO, 313 F. Supp. 2d 213, 240 (S.D.N.Y 2004).
Courts regularly admit expert testimony regarding "whether conduct is indicative of collusion." Id. (citing In re Polypropylene Carpet Antitrust Litig., 93 F. Supp. 2d 1348, 1355 (N.D. Ga. 2000) (finding that an expert's testimony that market factors were consistent with a conspiracy would be helpful to the trier of fact)); see also In re Urethane Antitrust Litig., No. 04-1313-JWL, MDL No. 1616, 2012 WL 6681783, at *3 (D. Kan. Dec. 21, 2012) (allowing expert testimony that "certain events are consistent with collusion"). The Defendants cite two cases for the proposition that the expert testimony at issue is inadmissible because it embraces the legal conclusion that a cartel existed. In the first case, City of Tuscaloosa v. Harcros Chemicals, Inc., 158 F.3d 548, 565 (11th Cir. 1998), the U.S. Court of Appeals for the Eleventh Circuit found that testimony "regarding the existence of a conspiracy" was inadmissible because the trier of fact was capable of making that determination without an expert's assistance. The Eleventh Circuit's decision, however, hinged not on a violation of Rule 704 but on a determination that the expert's assertions were "outside his competence as a statistician." Id. Thus, the holding in City of Tuscaloosa is inapposite with regard to the Defendants' argument that Rule 704 prohibits the experts' testimony at issue.
The second case cited by the Defendants, Ohio ex rel. Montgomery v. Louis Trauth Dairy, Inc., 925 F. Supp. 1247, 1254 (S.D. Ohio 1996), in fact supports the admissibility of the Plaintiffs' expert testimony. In Louis Trauth Dairy, the District Court for the Southern District of Ohio ruled that a party's experts were permitted to testify as to "how their analysis are consistent with . . . evidence of conspiracy," but could not state "in the form of a legal conclusion" whether an illegal conspiracy existed. Id. Likewise, the Plaintiffs' experts in this case may testify as to certain indicia of collusion and cartel behavior. Such testimony does not fit the ...