Antitrust Appeal Milks Reversal of Experts' Exclusions

By Robert Ambrogi Esq

There’s no use crying over spilled milk, they say, but it is bottled milk that may be causing tears for the nation’s second-largest milk bottler after a federal appeals court reinstated an antitrust case against it, primarily because the court below improperly excluded and disregarded expert testimony.

In an opinion issued Jan. 3, the 6th U.S. Circuit Court of Appeals held that the lower court should not have excluded the testimony of the expert witness plaintiffs relied on to define the relevant geographic market.  Additionally, the court held that the lower court erroneously disregarded the testimony of a second plaintiffs’ expert regarding the plaintiffs’ injuries.

The antitrust action was originally filed in the Eastern District of Tennessee by two retail grocery chains, Food Lion and Fidel Breto, against Dean Foods Co. and National Dairy Holdings, alleging that they conspired to divide markets and restrict output in the southeastern United States.

The district court granted summary judgment for the defendants, ruling that the plaintiffs could not provide sufficient proof of injury and could not establish the relevant antitrust geographic market, primarily because of the district court’s decision to exclude one expert’s testimony and disregard the other’s.

Incorrect Legal Standards

A key element of the plaintiffs’ antitrust claim was to define the relevant geographic market. To do this, they presented the expert testimony of Luke Froeb, a professor at Vanderbilt University and a former director of the Bureau of Economics at the Federal Trade Commission.

The district court initially excluded Froeb’s testimony – not under a Daubert analysis, but on the grounds that it did not adhere to requirements defined by the Supreme Court for discerning a geographic market. Subsequently, the magistrate judge assigned to the case issued an order excluding Froeb’s testimony under Daubert and Federal Rule of Evidence 702.

The magistrate judge’s order brought the issue back to the district judge for a second time. This time, the district court affirmed the magistrate judge’s Rule 702 exclusion, but said it was doing so as an alternative holding to its prior opinion.

After reviewing the district court’s ruling, the 6th Circuit concluded that it was wrong. “The district court’s reasoning in its decision to exclude Froeb’s testimony rests on an incomplete review of the facts and the application of incorrect legal standards,” the court said, in an opinion written by U.S. District Judge Gregory F. Van Tatenhove, from the Eastern District of Kentucky, sitting by designation.

One reason the district court excluded the testimony was that his findings were not based on facts that were in the record. This was a misapplication of the legal standard, the 6th Circuit said. In fact, Froeb’s report extensively cited facts from government studies, academic publications, and the record itself.

“[E]xpert reports must be based on proper facts, but each of those facts does not have to occupy an independent part of the record for an expert to be able to use them when crafting an opinion,” the court explained.

Sufficient Evidence of Injury

With regard to the plaintiffs’ second expert, Ronald W. Cotterill, an agricultural economics professor at the University of Connecticut, the defendants filed a Daubert motion objecting to his testimony. The magistrate judge denied the motion and found that the expert’s testimony was admissible.

The district court never formally ruled on the Daubert issue. However, the plaintiffs argued in their appeal that the district court’s order granting summary judgment contained language that was meant to overrule the magistrate judge’s Daubert ruling.

The 6th Circuit concluded that just the opposite was true, that although the district court never explicitly addressed defendants’ Daubert motion, the summary judgment opinion strongly suggested that the court agreed with the magistrate judge. Rather than having excluded the expert’s opinion, the district court simply did not believe it carried enough weight to establish that the plaintiffs suffered any injury.

Here again, the 6th Circuit disagreed with the district court. It found that the expert’s testimony was sufficient to establish evidence of antitrust injury. For that reason, the circuit court ruled, the plaintiffs were entitled to a trial to attempt to establish that injury and summary judgment was not warranted.

The circuit remanded the case to the district court for further proceedings consistent with its opinion.

The case is Food Lion, LLC, v. Dean Foods Company, No. 12-5457 (6th Cir. Jan. 3, 2014).

What are you thoughts?  Do you agree that the expert’s testimony was sufficient to establish evidence of antitrust injury?

Robert Ambrogi Esq

Robert Ambrogi Esq

We are proud to partner with an author of Bob’s caliber to provide exclusive articles for our legal clients and leading industry experts. Robert J. Ambrogi is a news media veteran and the only person ever to hold the top editorial positions at the two leading national U.S. legal newspapers, the National Law Journal and Lawyers Weekly USA. He is currently a Massachusetts lawyer who represents clients at the intersection of law, media and technology. He is also internationally known for his writing and blogging about the Internet and technology. Media and Technology Law Bob represents a range of businesses and individuals, concentrating in print and electronic media companies and the editorial, sales, marketing and technology professionals who work in them. He also counsels businesses and individuals in employment matters. Arbitration and Mediation An established professional in alternative dispute resolution, Bob has been an arbitrator since 1994, focusing on labor and employment and securities disputes. A mediator in a range of civil disputes, Bob completed the training required by Massachusetts law to protect confidentiality.

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