United States District Court, D. Maryland
IT'S MY PARTY, INC. and IT'S MY AMPHITHEATER, INC.,
LIVE NATION, INC
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[Copyrighted Material Omitted]
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For It's my Party, Inc., It's my Amphitheatre, Inc., doing business as Merriweather Post Pavilion, Plaintiffs: L Barrett Boss, LEAD ATTORNEY, Cozen O'Connor, Washington, DC; Abby Landau Sacunas, Rachel H Robbins, Robert William Hayes, PRO HAC VICE, Cozen O'Connor, Philadelphia, PA.
For Live Nation, Inc., Defendant: Franklin M Rubinstein, LEAD ATTORNEY, Wilson Sonsini Goodrich and Rosati, Washington, DC; Charles E Biggio, Chul Pak, Jonathan M Jacobson, Kimberley A Piro, Lucy Yen, Renata B Hesse, PRO HAC VICE, Wilson Sonsini Goodrich and Rosati, New York, NY.
For Rams Head Group, Movant: Edwin (Ted) H Staples, II, Staples Law Group LLC, Annapolis, MD.
J. Frederick Motz,
United States District Judge.
Plaintiffs It's My Party, Inc. (" IMP" ) and It's My Amphitheater, Inc. (" IMA" ) (collectively " plaintiffs" ) bring this lawsuit against Live Nation, Inc. (" Live Nation" ) under sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. § § 1, 2; and the Maryland Antitrust Act, Md. Code Ann. § § 11-201, 204 et seq. Plaintiffs allege that Live Nation has unreasonably restrained trade by exercising its market and monopoly power in the promotion and venue services markets.
Pending are numerous motions to exclude expert testimony, motions to strike various exhibits, and cross-motions for summary judgment. A hearing on these pending motions was held on November 7, 2014. For the reasons set forth below, the motions to strike exhibits are denied; all motions to exclude expert testimony are denied except for the motion to exclude the testimony of Einer Elhauge, which is granted in part; Live Nation's motion for summary judgment is granted; and plaintiffs' cross-motion for summary judgment is denied.
I. Factual History.
This case involves three parties in the concert industry: artists, local promoters, and national or global promoters. Artists who choose to showcase their music in live concerts have options for structuring their
tours, namely how to schedule and book the individual venues for concerts that comprise the tour. Artists often contract with promoters who select and book concerts at venues and provide advertising and marketing for the concert (or set of concerts) to draw attendance. (ECF No. 279 at p. 9). Some promoters are local and book concerts at specific venues. In such a case an artist might contract with several promoters in different parts of the country to book sets of shows that make up the artist's national tour. (ECF No. 255 at pp. 5-6). Other promoters, fewer in number, have a national reach and contract with an artist to solely market, promote, and negotiate with venues across the country to develop a tour. ( Id. at p. 6).
The chief difference between contracting with several, locally-based promoters and a single, national promoter is the form of the artist's compensation. Artists who contract with one or a few national promoters to organize their tours often receive a guaranteed payment from the promoter based on the number of shows organized by that promoter. Id. Artists who contract " locally" and book with several promoters in various parts of the country will often receive instead a percentage of the gross ticket sales from each concert. Id.
Another difference is that for national, " exclusive" tours, promoters sometimes " cross-collaterize" the tour. This means that the revenues from each individual concert are held in escrow by the promoter until the end of the tour. This practice enables the promoter to cover losses from concerts that underperformed with revenue from concerts that met or exceeded expectations. Id. This mechanism operates as a de facto insurance policy for the national promoter, enabling it to offer higher guaranteed compensation to artists.
Promoters book artists at venues, and accordingly arrange concerts with venue owners. Venues range in size, from small clubs to sports stadiums with over 60,000 seat capacities. Id. As artists' popularity grows over time, they perform at correspondingly larger venues on their tours. Thus an artist who performs at smaller clubs one year may perform at larger amphitheaters or indoor arenas years later. (ECF No. 279 at p. 10). Venues earn money through ticket sales (less the amount paid to the artist), concession sales of food and beverages, and parking.
Plaintiffs and Live Nation are both promoters, but vary in terms of size and scope. Plaintiff IMP has operated as a regional promoter for over thirty years, and it contracts with artists to perform at a variety of venues in the Baltimore and Washington, D.C. markets. (Hurwitz Decl., ECF No. 112 ¶ ¶ 10, 12). Live Nation's business operates on a global scale--as of 2012 Live Nation had promoted over 2,000 artists at venues throughout the United States and the world. (Siwek Rep., ECF No. 217-3 ¶ 5.2). Live Nation often serves as the exclusive promoter for artists on national tours, and uses cross-collaterization to offer artists higher guaranteed compensation. (ECF No. 255 at pp. 6-7). It has expanded its promotion capability over time through the purchase of other promoters, including Concert Productions International and House of Blues (" HOB" ) Entertainment. (ECF No. 279 at p. 12).
IMA was formed in 2004 to operate the Merriweather Post Pavilion (" Merriweather" ), an outdoor amphitheater venue in Columbia, Maryland that hosts a variety of concerts, including those by popular artists
such as The Who and Led Zeppelin. (ECF No. 112 ¶ 67). Merriweather has a 19,000 fan capacity, with 5,000 " fixed" seats. ( Id. ¶ 2; ECF No. 255 at p. 9). Live Nation " owns, operates, leases or has exclusive booking rights at venues throughout the United States," including the Nissan Pavilion (" Nissan" ). (ECF No. 255 at p. 4). Nissan is an outdoor amphitheater in Bristow, Virginia that is similar to Merriweather but has a slightly larger 25,000 fan capacity, with 10,000 " fixed" seats. (ECF Nos. 217-3 ¶ 7.7; 255 at p. 9). In the Baltimore-Washington, D.C. area there are several arenas and amphitheaters of approximately the same size, including the Verizon Center (indoor arena, 19,000 fan capacity) and Filene Center at Wolf Trap (outdoor amphitheater, 7,000 fan capacity). (ECF No. 255 at p. 9).
In addition to being uncovered, outdoor amphitheaters are different from indoor arenas because they typically contain both fixed seats and lawn space on which fans can sit or stand. (ECF No. 279 at p. 9). Some may consider amphitheaters to be superior to similarly-sized indoor arenas due to " better sight lines," equipment designed specifically for artist concerts, and overall flexibility. Id. The unpredictability of weather, however, is obviously a disadvantage of performing at outdoor amphitheaters.
II. Procedural History.
Plaintiffs filed their complaint on March 5, 2009, alleging several antitrust violations by Live Nation. (ECF No. 1). I denied Live Nation's motion to dismiss and (first) motion for summary judgment. (ECF Nos. 35; 101). The denial of Live Nation's motion for summary judgment was without prejudice and with leave to refile at the close of expert discovery. Live Nation brought the pending motion for summary judgment on March 21, 2014. (ECF No. 205). Live Nation also filed motions to exclude four of plaintiffs' experts, and plaintiffs responded with motions to exclude two of Live Nation's experts. Plaintiffs also filed a pending cross-motion for partial summary judgment on July 31, 2014. (ECF No. 279).
I. Admissibility of Expert Testimony under Rule 702.
Expert testimony is admissible under Rule 702 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. Rule 702 is broad and applies to subjects beyond the purely scientific. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999).
In short, the question is whether an expert is qualified, and whether his opinion is reliable. E.g., Berlyn, Inc. v. Gazette Newspapers, Inc., 214 F.Supp.2d 530, 534 (D. Md. 2002). Courts should focus on the reliability of the expert's " principles and methodology," not the conclusions. Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir. 1999).
By answering that question, district courts " play a gatekeeping function in deciding whether to admit" the testimony. United States v. Crisp, 324 F.3d 261, 265 (4th Cir. 2003). The gatekeeper judge must navigate two often competing principles: although Rule 702 was intended to liberalize the introduction of relevant expert testimony, expert witnesses " have the potential to be both powerful and quite misleading." Westberry, 178 F.3d at 261. Courts often refer to a non-exhaustive list of factors to help decide whether the expert testimony is admissible. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 593-94, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). District courts have broad discretion when exercising their gatekeeping function, and the precise factors and the manner in which they are applied depends on the factual circumstances of each case. See generally Gross v. King David Bistro, Inc., 83 F.Supp.2d 597, 598 (D. Md. 2000) (holding that district judges should assess expert testimony " based on the unique situations involved in each case" ); see also Kumho Tire Co., 526 U.S. at 142 (noting that a district court has " latitude when it decides how to determine reliability" ). Finally, even expert testimony based on sound methodology should be excluded if it is based on unsound or incorrect assumptions. E.g., Tyger Constr. Co. v. Pensacola Constr. Co.., 29 F.3d 137, 142 (4th Cir. 1994).
The proponent of the expert testimony bears the burden of producing evidence supporting its contentions and demonstrating that the testimony is reliable, relevant, and based on sound methodology. A proponent need not prove that the expert testimony is " irrefutable or certainly correct," because opinions based on reliable methodology can be tested through the adversarial process. Westberry, 178 F.3d at 261.
II. Summary Judgment.
Summary judgment is appropriate when the record shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine dispute about a material fact exists only " if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When reviewing a motion for summary judgment, the court must look at the facts and inferences drawn from there in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).
Although the moving party bears the burden to demonstrate the absence of any genuine issue of material fact,
Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970), the non-moving party may not merely rest upon allegations or denials in pleadings, but must, by affidavit or other evidentiary showing, set out specific facts showing a genuine issue remains for trial. Fed.R.Civ.P. 56(c)(1)(A). A court should enter summary judgment where a non-moving party fails to make a sufficient showing to establish the elements essential to the party's claim and on which the party will bear the burden of proof at trial. See Celotex, 477 U.S. at 322.
If there is insufficient evidence for a reasonable jury to render a verdict in favor of the non-moving party, there is no genuine issue of material fact, and summary judgment may be granted. See Anderson, 477 U.S. at 248. The court must not yield its obligation " to prevent factually unsupported claims and defenses from proceeding to trial." Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 526 (4th Cir. 2003). Conversely, the motion should be denied if factual issues exist " that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson, 477 U.S. at 250.
Pending are three groups of motions filed by both sides: to strike exhibits, to exclude expert testimony, and for summary judgment. The admissibility of the six contested experts is discussed first before determining whether summary disposition of plaintiffs' claims is proper.
I. Motions to Exclude Expert Testimony.
Plaintiffs and Live Nation have each filed motions to exclude testimony of the opposing party's proposed expert witnesses. Live Nation moves to strike four of plaintiffs' expert witnesses: Einer Elhauge (ECF No. 212), Joshua Baron (ECF No. 210), Chris Bigelow (ECF No. 211), and Stephen Siwek (ECF No. 214). Plaintiffs move to strike the testimony of two of defendant's witnesses: Benjamin Klein (ECF No. 221) and Michael Smith (ECF No. 219).
Elhauge, a Harvard law professor, is plaintiffs' key expert witness. He defines the venue and promotion markets that form the basis of plaintiffs' claims, and also analyzes Live Nation's share and control of these markets. Plaintiffs other witnesses testify about the history of, and general practices in, the concert industry (Baron), food and beverage prices at concert venues (Bigelow), and plaintiffs' damages (Siwek). Live Nation's two experts that plaintiffs seek to exclude are offered for the purpose of rebutting Elhauge's testimony (Klein) and plaintiffs' damages calculations (Smith).
I find that portions of Elhauge's testimony are inadmissible under Federal Rule of Evidence 702, and Live Nation's motion to exclude his testimony will be granted in part. The remaining motions to exclude
will be denied--I find that there are not significant grounds to exclude the other five witnesses.
A. Portions of Einer Elhauge's Testimony Are Inadmissible.
Elhauge's analysis is the foundation of plaintiffs' claims. He defines the venue and promotion markets and calculates Live Nation's market share of each. Live Nation challenges his testimony on three grounds: his qualifications, the methodology underpinning his definition of the market for venues, and his opinions and conclusions regarding Live Nation's alleged tying and foreclosure of those markets. After briefly discussing Live Nation's first challenge, I turn to the second objection. The third is more properly brought as a challenge to the merits of plaintiffs' claims, rather than the admissibility of Elhauge's testimony, and is discussed in the section of this opinion addressing the merits of plaintiffs' claims.
I deny the motion to exclude Elhauge based on his qualifications. The Federal Rules of Evidence state that experts are qualified as such based on their " knowledge, skill, experience, training, or education." Fed.R.Evid. 702. " The use of the disjunctive" in this rule " indicates that a witness may be qualified as an expert on any one of the five listed grounds." Friendship Heights Assocs. v. Vlastimil Koubek, A.I.A., 785 F.2d 1154, 1159 (4th Cir. 1986). Elhauge has an extensive background in the study of antitrust law and regulation, and he has taught on the subject for more than a decade. (Elhauge CV, ECF No. 251-4). Although lacking a formal economics degree, Elhauge has a law degree, and he has taken relevant courses in economics, statistics and economic analysis of law. (Elhauge Rep., ECF No. 217-1 ¶ 11). Thus, the argument to exclude him based on his qualifications should not be accorded significant weight. It is unsurprising that seven prior courts have also reached this conclusion. E.g., Natchitoches Parish Hosp. Serv. Dist. v. Tyco Intern., Ltd., No. 05-12024, 2009 WL 3053855, at *3 (D. Mass. Sept. 21, 2009) (holding that " Professor Elhauge is qualified in the narrower field of antitrust economics" ).
Elhauge's definition of the venue market, specifically its foundation in the concept that some artists " prefer amphitheaters," will be excluded. According to Elhauge, the relevant product market for venues in this case is the market for " major amphitheaters." This is defined by precise parameters--concerts by artists who " prefer amphitheaters," in amphitheaters having a capacity of 8,000 or more, which actually draw 8,000 or more fans, and that are performed only from May to September. (ECF No. 111 ¶ ¶ 22, 27-32). The only two venues that fit into this category in the Baltimore/Washington metro area are Merriweather and Nissan. Filene Center, an amphitheater in Vienna, Virginia, with a reported capacity of approximately 7,000 seats, is excluded. (Klein Reb., ECF No. 217-5 ¶ 38). Also left out are non-amphitheater arena venues in the area, specifically the Verizon Center, 1st Mariner arena, and the Patriot Center, which together represented 39% of concert tickets sold from 2006-2010 in the Baltimore-D.C. area. (ECF No. 263 at p. 2 n.1). The ...