Blue Dane Simmental Corp. v. American Simmental Ass'n

• Decision Date: 02 June 1999
• Docket Number: 98-1617,98-1615,98-1727,98-1815,Nos. 98-1557,s. 98-1557
• Citation: 178 F.3d 1035
• Parties: , 1999-1 Trade Cases P 72,546, RICO Bus.Disp.Guide 9708, 50 U.S.P.Q.2d 1952 BLUE DANE SIMMENTAL CORPORATION; Roland Nuss; Ron Vlasin; Dennis Behrhorst, Plaintiffs/Appellants, v. AMERICAN SIMMENTAL ASSOCIATION; Tom Risinger, Defendants/Appellees, John Doe, Defendant, Risinger Ranches, Inc., Defendant/Appellee. Blue Dane Simmental Corporation; Roland Nuss; Ron Vlasin; Dennis Behrhorst, Plaintiffs/Appellees, v. American Simmental Association; Defendant/Appellant, Tom Risinger; John Doe; Risinger Ranches, Inc., Defendants. Blue Dane Simmental Corporation; Roland Nuss; Ron Vlasin; Dennis Behrhorst, Plaintiffs/Appellees, v. American Simmental Association; Defendant, Tom Risinger, Defendant/Appellant, John Doe, Defendant, Risinger Ranches, Inc., Defendant/Appellant. Blue Dane Simmental Corporation; Roland Nuss; Ron Vlasin; Dennis Behrhorst, Plaintiffs/Appellees, v. American Simmental Association; Defendant/Appellant, Tom Risinger; John Doe; Risinger Ranches, Inc., Defendants. Blue Dane Simmental Corporation; Roland Nuss; Ron Vlasin; Dennis Behrhorst, Plaintiffs/Appellees, v. American Simmental Association; Defendant, Tom Risinger, Defendant/Appellant, John Doe, Defendant, Risinger Ranches, Inc., Defendant/Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

178 F.3d 1035,

1999-1 Trade Cases P 72,546, RICO Bus.Disp.Guide 9708,

50 U.S.P.Q.2d 1952

BLUE DANE SIMMENTAL CORPORATION; Roland Nuss; Ron Vlasin;

Dennis Behrhorst, Plaintiffs/Appellants, v. AMERICAN SIMMENTAL ASSOCIATION; Tom Risinger, Defendants/Appellees, John Doe, Defendant, Risinger Ranches, Inc., Defendant/Appellee.

Blue Dane Simmental Corporation; Roland Nuss; Ron Vlasin;

Dennis Behrhorst, Plaintiffs/Appellees, v. American Simmental Association; Defendant/Appellant, Tom Risinger; John Doe; Risinger Ranches, Inc., Defendants.

Blue Dane Simmental Corporation; Roland Nuss; Ron Vlasin;

Dennis Behrhorst, Plaintiffs/Appellees, v. American Simmental Association; Defendant, Tom Risinger, Defendant/Appellant, John Doe, Defendant, Risinger Ranches, Inc., Defendant/Appellant.

Blue Dane Simmental Corporation; Roland Nuss; Ron Vlasin;

Dennis Behrhorst, Plaintiffs/Appellees, v. American Simmental Association; Defendant/Appellant, Tom Risinger; John Doe; Risinger Ranches, Inc., Defendants.

Blue Dane Simmental Corporation; Roland Nuss; Ron Vlasin;

Dennis Behrhorst, Plaintiffs/Appellees, v. American Simmental Association; Defendant, Tom Risinger, Defendant/Appellant, John Doe, Defendant, Risinger Ranches, Inc., Defendant/Appellant.

Nos. 98-1557, 98-1615, 98-1617, 98-1727, 98-1815.

United States Court of Appeals, Eighth Circuit.

Submitted Feb. 10, 1999.

Filed June 2, 1999.

Joy Shiffermiller of Lincoln, NE, argued, for appellant.

Krista L. Kester, Lincoln, NE, argued (Murray Obgorn and Gene Summerlin, on the brief), for American Simmental.

Jefferson Downing, Lincoln, NE, argued (Gary L. Young, on the brief), for Risinger.

BEFORE: WOLLMAN, ¹ LOKEN, and MORRIS S. ARNOLD, Circuit Judges.

WOLLMAN, Chief J.

Blue Dane Simmental Corporation, Roland Nuss, Ron Vlasin, and Dennis Berhorst (plaintiffs) appeal the grant of judgment as a matter of law entered by the district court ² in favor of the American Simmental Association (ASA), Tom Risinger, and Risinger Ranches (defendants). We affirm.

I.

The ASA was organized in 1968 as a non-profit corporation for "the development, recording, registration, and promotion of the Simmental breed of cattle in the United States of America." To catalog Simmental cattle within the United States, the ASA maintains what is known as an open herdbook. In this system, breeders may register animals that are less than 100% Simmental. In contrast, a closed herdbook system limits registration to animals that are 100% of a particular breed. Prior to 1988, the ASA registered cattle as either "percentage" or "purebred." Percentage cattle had either one-half, three-quarters, or seven-eighths Simmental blood. Purebred Simmentals were females of at least seven-eighths blood, or males of at least fifteen-sixteenths blood. Purebred animals were considered 100% Simmental for calculating the percentage of Simmental blood in their offspring, regardless of their actual percentage of Simmental blood.

Initially, the ASA did not recognize a difference between purebred domestic animals and purebred Simmental from the original herds of Austria, France, Germany, or Switzerland. Some breeders, however, sought official acknowledgment that some animals were "original," or from European herds. In response to growing demand from its membership, the ASA passed a "foreign ancestry rule" in 1988. ³ This rule made no mention of genetic purity, directing focus only on the country of origin to determine whether an animal qualified for foreign ancestry designation. As a result of the rule, between 75,000 and 80,000 purebred animals were given a foreign ancestry designation.

In 1992, the rule was amended by changing "foreign ancestry" to "fullblood." Thus, any animal whose pedigree was completely traced to the herdbooks of Austria, France, Germany, or Switzerland within five generations was known as fullblood.

Although the rule identified fullbloods as cattle traced to European herdbooks, the members of the ASA continued to disagree as to how fullblood should be defined. Some members believed that fullblood referred to animals with varying percentages of Simmental ancestry, while others thought that it meant "no known ancestry of another breed." In 1994, the ASA amended the rule a third time, defining fullblood animals as Simmentals with no known ancestry from another breed. In addition, the 1994 rule contained a grandfather clause that permitted all animals previously classified as fullblood to retain that classification.

The current controversy involves a dispute over the classification of animals registered by Risinger. In 1991, Risinger filed an application to register nineteen animals the genetic material of which he had purchased the exclusive right to sell within the United States and Mexico. Based upon the documentation that was received by the ASA, seven of the animals were designated as foreign ancestry under the 1988 rule in November 1991. The remaining twelve animals were registered as fullblood under the 1992 rule in April 1992.

Plaintiffs subsequently discovered that some of the Risinger animals contained Angus ancestry. In particular, two bulls, Manor Washington and Manor Westerner, had in their pedigree a German bull named Pirol. Pirol was 97% Simmental, the remaining 3% was confirmed to be Angus. Plaintiffs filed a protest with the ASA, seeking to revoke the animals' classification as fullblood. In addition, they opposed the adoption of the 1994 rule change, objecting to the grandfather clause which would allow the Risinger animals to retain their fullblood registration. At the American Simmental conference on February 24, 1994, Gianluca Brenni, president of Blue Dane, explained the problems with the 1994 rule and the Risinger cattle and moved to table the 1994 rule. His motion lost, and the 1994 rule was adopted by a vote of 1,228 to 118.

On April 14, 1994, plaintiffs initiated the present action, alleging violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. § 1962, the Sherman Act, 15 U.S.C. §§ 1 and 4(a), and the Lanham Act, 15 U.S.C. § 1125, and raising state law negligence claims. After a nine-day jury trial, the district court entered judgment as a matter of law in favor of defendants under Fed.R.Civ.P. 50. The district court then denied defendants' motion for attorney fees under the Lanham Act, 15 U.S.C. § 1117.

Plaintiffs appeal, arguing that the district court erred in excluding testimony from its economic expert regarding causation, by not submitting its RICO, Sherman Act, Lanham Act, and negligence claims to the jury, and by excluding specific exhibits at trial. ⁴ Defendants cross-appeal the denial of attorney fees.

II.

A.

Plaintiffs argue that the district court erred by excluding the testimony of Dr. Alan Baquet, an agricultural economist, under Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). We review the district court's ruling for an abuse of discretion. See Kumho Tire Co. v. Carmichael, --- U.S. ----, ----, 119 S.Ct. 1167, 1171, 143 L.Ed.2d 238, ---- (1999); National Bank of Commerce, of El Dorado, Ark. v. Dow Chem. Co., 133 F.3d 1132, 1132 (8th Cir.1998) (per curiam). Moreover, "[t]hat standard applies as much to the trial court's decisions about how to determine reliability as to its ultimate conclusion." Kumho, --- U.S. at ----, 119 S.Ct. at 1176.

When evaluating the admissibility of expert testimony under Federal Rule of Evidence 702, the district court must look to both the relevancy and the reliability of the testimony. See Kumho, --- U.S. at ----, 119 S.Ct. at 1174; Daubert, 509 U.S. at 589, 113 S.Ct. 2786; Jaurequi v. Carter Mfg. Co., 173 F.3d 1076 (8th Cir.1999). This gate-keeping function is applicable to " 'technical' and other 'specialized' " expert testimony, in addition to the testimony of scientific experts. Kumho, --- U.S. at ----, 119 S.Ct. at 1171 (quoting Fed.R.Evid. 702).

Dr. Baquet was to testify that the introduction of the nineteen Risinger animals into the fullblood Simmental market in the United States caused the market value of all American Simmentals to drop substantially. To support this testimony, he noted that prior to the introduction of the Risinger animals, both the Canadian and American Simmental markets were dropping. Following the introduction of these animals, the United States market dropped another 53%, while the Canadian market dropped only 26%. Dr. Baquet attributed this 27% difference in market price to the introduction of the Risinger Simmentals.

In determining that the testimony was not reliable, the district court did not dispute that Dr. Baquet was an adequately qualified expert witness. Instead, it found that the methodology he employed was unreliable, stating that the analysis was "simplistic." The court noted that Dr. Baquet attributed the entire difference in market price within the United States and Canada to the Risinger fullbloods, despite the fact that these animals made up a tiny fraction of the market, nineteen out of 138,169 total head.

The district court noted that at least one other independent variable contributed to the falling cattle markets, as it was undisputed that both the Canadian and American markets were falling prior to the introduction of the Risinger animals. Furthermore, during his deposition Dr. Baquet admitted that various factors contribute to particular cattle breeds losing market value. He stated that generally an economist would attempt to identify and evaluate all of the independent variables significantly affecting changes in the value of a breed. Dr. Baquet acknowledged that he had neglected to consider any variables other than the introduction of the Risinger fullbloods.

Plaintiffs argue that the proper remedy for defendants would be to challenge this methodology through cross-examination and introduction of rebuttal expert testimony. They contend that Dr. Baquet's research method, called a before-and-after model,...