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In re Blood Reagents Antitrust Litigation

United States District Court, E.D. Pennsylvania

July 19, 2017

IN RE BLOOD REAGENTS ANTITRUST LITIGATION THIS DOCUMENT RELATES TO ALL ACTIONS MDL No. 09-MD-2081

          MEMORANDUM

          DuBois, J.

         I. INTRODUCTION

         In these consolidated antitrust actions, plaintiffs allege that the two leading producers of blood reagents- Ortho Clinical Diagnostics, Inc. (“defendant” or “Ortho”), and Immucor, Inc.[1](“Immucor”)-conspired to unreasonably restrain trade and commerce in violation of § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. Presently before the Court is Ortho's Motion to Exclude the Expert Testimony and Reports of John C. Beyer, Ph.D. The Court previously rejected several Daubert challenges to Dr. Beyer's testimony as part of its October 19, 2015, Memorandum and Order recertifying the present class. For the reasons that follow, Ortho's Motion to Exclude is denied.

         II. BACKGROUND

         The relevant facts are set forth in detail in the Court's Memoranda of August 22, 2012, and October 19, 2015, certifying and recertifying the Class, [2] and the Court's Memorandum of July 19, 2017, granting in part and denying in part Ortho's Motion for Summary Judgment. In this Memorandum, the Court only includes the facts necessary to explain its decision.

         The Court held a hearing on plaintiffs' initial Motion for Class Certification on July 26, 2012. Ortho's economics expert, Dr. Peter Bronsteen, testified at the hearing. Plaintiffs' economics expert, Dr. John C. Beyer, was unable to attend the July 26th hearing, but his testimony was presented to the Court by video, recorded on August 6, 2012. The Court granted plaintiffs' initial motion for class certification by Order dated August 22, 2012. Ortho petitioned the United States Court of Appeals for the Third Circuit for leave to appeal pursuant to Federal Rule of Civil Procedure 23(f), and that petition was granted on October 25, 2012.

         The granting of plaintiffs' initial Motion for class certification was based on the Third Circuit's class certification opinion in Behrend v. Comcast Corporation, which was thereafter reversed by the United States Supreme Court. Based on that reversal, the Third Circuit vacated this Court's class certification opinion and directed this Court on remand to “decide in the first instance which of [defendant's] reliability attacks, if any, challenge those aspects of plaintiffs' expert testimony offered to satisfy Rule 23 and then, if necessary, to conduct a Daubert inquiry before assessing whether the requirements of Rule 23 have been met.” In re Blood Reagents Antitrust Litig., 783 F.3d 183, 188 (3d Cir. 2015).

         On June 26, 2015, the parties submitted post-remand briefing. The Court held a hearing on the post-remand class certification issues on July 21, 2015. After a lengthy and thorough inquiry of the testimony of plaintiffs' expert Dr. Beyer, the Court rejected Ortho's Daubert challenges to his testimony. The class, consisting of “all individuals and entities who purchased traditional blood reagents in the United States directly from defendants [Immucor] and [Ortho] at any time from November 4, 2000 through the present, excluding defendants, and their respective parents, subsidiaries and affiliates, as well as any federal government entities, ” was recertified on October 19, 2015. Pursuant to Case Management Order No. 4 dated January 26, 2016, Ortho filed its Motion to Exclude the Expert Testimony and Reports of John C. Beyer, Ph. D., and its Motion for Summary Judgment.[3] For the reasons stated below, Ortho's Motion to Exclude is denied.

         III. APPLICABLE LAW

         Federal Rule of Evidence 702 provides that:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

         “Faced with a proffer of expert scientific testimony . . . the trial judge must determine . . . whether the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to understand or determine a fact in issue.” Daubert v. Merrell Dow Pharms., 509 U.S. 579, 592 (1993). This gatekeeping function extends beyond scientific testimony to testimony based on “technical” and “other specialized” knowledge. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999).

         Rule 702 has “a liberal policy of admissibility.” Pineda v. Ford Motor Co., 520 F.3d 237, 243 (3d Cir. 2008) (quoting Kannankeril v. Terminix Int'l., Inc., 128 F.3d 802, 806 (3d Cir. 1997)). As such, the “rejection of expert testimony is the exception and not the rule.” Fed.R.Evid. 702 advisory committee's note. “Rule 702 embodies three distinct substantive restrictions on the admission of expert testimony: qualifications, reliability, and fit.” Elcock v. Kmart Corp., 233 F.3d 734, 741 (3d Cir. 2000); Daubert, 509 U.S. at 597. The party offering the expert opinion must prove each of these requirements by a preponderance of the evidence. In re TMI Litig., 193 F.3d 613, 663 (3d Cir. 1999).

         Only the reliability and fit restrictions of Daubert are at issue in this case. The reliability requirement “means that the expert's opinion must be based on the ‘methods and procedures of science' rather than on ‘subjective belief or unsupported speculation'; the expert must have ‘good grounds' for his or her belief.” In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 742 (3d Cir 1994).

         The test of reliability is “flexible” and “the law grants a district court the same broad latitude when it decides how to determine reliability as it enjoys in respect to its ultimate reliability determination.” Kumho Tire, 526 U.S. at 141-42. In determining whether the reliability requirement is met, courts examine the following non-exclusive list of factors:

(1) whether a method consists of a testable hypothesis; (2) whether the method has been subject to peer review; (3) the known or potential rate of error; (4) the existence and maintenance of standards controlling the technique's operation; (5) whether the method is generally accepted; (6) the relationship of the technique to methods which have been established to be reliable; (7) the qualifications of the expert witness testifying based on the methodology; and (8) the non-judicial uses to which the method has been put.

United States v. Mitchell, 365 F.3d 215, 235 (3d Cir. 2004) (citing In re Paoli, 35 F.3d at 742 n.8). These factors are neither exhaustive nor applicable in every case. Kannankeril, 128 F.3d at 806-07.

         Under the Daubert reliability prong, parties “do not have to demonstrate to the judge by a preponderance of the evidence that the assessments of their experts are correct, they only have to demonstrate by a preponderance of evidence that their opinions are reliable.” In re Paoli, 35 F.3d at 744. “The evidentiary requirement of reliability is lower than the merits standard of correctness.” Id. “As long as an expert's scientific testimony rests upon good grounds, based on what is known, it should be tested by the adversary process-competing expert testimony and active cross-examination-rather than excluded from jurors' scrutiny for fear that they will not grasp its complexities or satisfactorily weigh its inadequacies.” Mitchell, 365 F.3d at 244 (citations and internal quotation marks omitted).

         For expert testimony to meet the Daubert “fit” requirement, it must “help the trier of fact to understand the evidence or to determine a fact in issue.” Fed.R.Evid. 702. “This condition goes primarily to relevance. Expert testimony which does not relate to any issue in the case is not relevant and, ergo, non-helpful.” Daubert, 509 U.S. at 591 (citations and internal quotation marks omitted). “‘Fit' is not always obvious, and scientific validity for one purpose is not necessarily scientific validity for other, unrelated purposes.” Id.

         IV. DISCUSSION

         In its Motion, Ortho seeks to exclude the expert testimony and reports of plaintiffs' economics expert, Dr. Beyer. The Court notes at the outset that Dr. Beyer's reports are not admissible evidence. For purposes of this Motion, the Court considers Dr. Beyer's opinions as expressed in both his testimony and reports.

         The Court addresses the Daubert arguments as presented by the parties without considering the impact of its ruling on summary judgment on Dr. Beyer's testimony. The Court considers its conclusion on liability at summary judgment, specifically its conclusion that the 2005 and 2008 price increases were not the product of collusion, to be separate from a determination of the damages period. As Ortho states in its Reply Memorandum in support of its Motion for Summary Judgment,

Nor is it sufficient for Plaintiffs to argue that the 2001 price increases had an effect that persisted throughout the class period. While that argument, if credited, might address the class certification issues of common impact and damages, it does not resolve the distinct liability issue of whether there was any unlawful price coordination beyond 2001.

         Ortho's Summ. J. Reply Br. at 9. As Judge Baylson observed in Domestic Drywall, “[t]he parties should not confuse this [conspiracy period] window with the possibly different time period for the calculation of damages. It is possible that [plaintiffs] may be able to prove damages for a broader time period than the scope of discovery and liability.” In re Domestic Drywall Antitrust Litig., No. 13-2437, 2016 WL 3453147, at *4 n.5 (E.D. Pa. June 22, 2016).

         Plaintiffs offer Dr. Beyer's opinions on evidence of collusive behavior and antitrust impact and damages. Ortho raises numerous challenges, many of which were previously addressed by this Court in its opinion granting plaintiffs' second Motion for class certification, to Dr. Beyer's testimony and reports, which can be grouped into five main categories. Ortho argues that (1) Dr. Beyer's opinions on damages and liability are inconsistent; (2) Dr. Beyer's opinion on the 2004 Group Purchasing Organizations (GPOs) contract cancellations is unreliable; (3) Dr. Beyer's “Operation Create Value” (OCV) benchmark is unreliable and lacks fit with the facts of this case; (4) Dr. Beyer's proposed benchmarks for prices after 2005 are not reliable; and (5) Dr. Beyer's use of one annual but-for price is incompatible with price dispersion in the actual world. The Court addresses each of Ortho's challenges in turn.

         A. Whether Dr. Beyer's Opinions on Damages and Plaintiff's Liability Case Are Inconsistent

         Ortho challenges Dr. Beyer's testimony on the ground that his opinions on damages are inconsistent with his opinion on liability. That is not an issue for Daubert purposes. The correct inquiry on a Daubert challenge is whether or not Dr. Beyer's opinions on damages align with plaintiffs' liability case. In opining on damages, Dr. Beyer accepted plaintiffs' “allegations of the conspiracy in the Complaint to be true, ” as Ortho notes. Ortho Mot. to Exclude the Expert Testimony of Dr. Beyer 5; Mot., Ex. 2, Tr. of Apr. 22, 2016, Dep. of Dr. John Beyer (“Beyer Apr. Dep.”), 65:9-16. Ortho also states that the Complaint alleges a “continuing conspiracy.” Mot. 5; Mot., Ex. 3, Consolidated Am. Class Action Compl. (“CAC”), Feb. 16, 2009, ¶¶ 132-133. In an effort to establish alleged ...


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