784 F.3d 311 (6th Cir. 2015), 13-4466, Superior Prod. P'ship v. Gordon Auto Body Parts Co., Ltd.

Docket Nº:13-4466
Citation:784 F.3d 311
Opinion Judge:JULIA SMITH GIBBONS, Circuit Judge.
Attorney:James Allison Wilson, Jr., VORYS, SATER, SEYMOUR & PEASE LLP, Columbus, Ohio, for Appellant. J. Scott Ballenger, LATHAM & WATKINS LLP, Washington, D.C., for Appellees. James Allison Wilson, Jr., Kenneth J. Rubin, VORYS, SATER, SEYMOUR & PEASE LLP, Columbus, Ohio, Amanda M. Roe, VORYS, SATER, SEYM...
Judge Panel:Before: MERRITT, GIBBONS, and DONALD, Circuit Judges.
Case Date:April 22, 2015
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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784 F.3d 311 (6th Cir. 2015)




No. 13-4466

United States Court of Appeals, Sixth Circuit

April 22, 2015

Argued June 10, 2014

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Appeal from the United States District Court for the Southern District of Ohio at Columbus. No. 2:06-cv-00916--Edmund A. Sargus, Chief District Judge.


James Allison Wilson, Jr., VORYS, SATER, SEYMOUR & PEASE LLP, Columbus, Ohio, for Appellant.

J. Scott Ballenger, LATHAM & WATKINS LLP, Washington, D.C., for Appellees.


James Allison Wilson, Jr., Kenneth J. Rubin, VORYS, SATER, SEYMOUR & PEASE LLP, Columbus, Ohio, Amanda M. Roe, VORYS, SATER, SEYMOUR & PEASE LLP, Cleveland, Ohio, for Appellant.

J. Scott Ballenger, LATHAM & WATKINS LLP, Washington, D.C., John C. Albert, CRABBE, BROWN & JAMES LLP, Columbus, Ohio, Joanna Rosen, LATHAM & WATKINS LLP, San Francisco, California, Yi-Chin Ho, LATHAM & WATKINS LLP, Los Angeles, California, for Appellees.

Before: MERRITT, GIBBONS, and DONALD, Circuit Judges.


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Gordon Auto Body Parts (" Gordon" ), a Taiwanese company, was one of several early entrants into the United States market for replacement truck hoods. For a while, it faced competition solely from a handful of other Taiwanese manufacturers, at least some of whom participated in joint ventures with Gordon. Superior Production Partnership (trade name " PBSI" ) eventually entered the market for certain replacement hoods but found that it could not match the prices of Gordon and the Taiwanese firms. Believing that Gordon and the other firms were conspiring to drive it out of business with predatory prices, PBSI brought antitrust claims against Gordon.

The district court granted Gordon's motion for summary judgment after ruling on several discovery disputes. PBSI appeals both the resolution of the discovery disputes and the grant of summary judgment. Because PBSI has failed to make any showing that Gordon's prices were below an appropriate measure of cost, we affirm.


Gordon and a handful of other Taiwanese manufacturers produce an array of replacement parts for automobiles that have been in collisions. Before the mid-2000s, they were the only producers of replacement hoods for certain models of trucks in the American market. Gordon and at least two of the other Taiwanese manufacturers had formal agreements or joint ventures related to shared investments in plant equipment and production of parts.

PBSI started making replacement bumpers as early as the 1980s. In the early 2000s, its management decided to expand into the market for replacement hoods, eventually beginning production on its first hood in 2006. The company soon began manufacturing replacement hoods for four different trucks. Sometime before or shortly after PBSI's entry into these markets, Gordon and other Taiwanese manufacturers reduced their prices on the same hoods. Though PBSI had planned to expand into production of other replacement parts, it found the price competition in these first four markets sufficiently discouraging to nix those plans. PBSI's management now claims that it may be forced to exit the replacement hood market altogether.

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Believing its competitors' price changes to be illegal, PBSI filed a suit in federal district court with several antitrust claims, including violations of Sections 1 and 2 of the Sherman Act and Section 13(a) of the Clayton Act as amended by the Robinson-Patman Act. The core allegations of the complaint described a predatory pricing scheme among Gordon and other Taiwanese manufacturers to force PBSI to cease production of truck hoods. The complaint defined the relevant markets as those for the four replacement truck hood models in the United States.

After discovery commenced, PBSI served requests for production on Gordon. Of particular relevance here, PBSI sought (i) " [a]ll documents and communications relating to the cost of production and manufacture of" the four types of hoods for several years in each market and (ii) " [a]ll documents which evidence, relate to, or refer to communications between or among Gordon" and other Taiwanese manufacturers or " any agreement regarding pricing, sharing or use of tooling or refraining from competition" in the United States or elsewhere. Gordon responded to the cost documentation request with what were apparently summaries of its manufacturing costs and contracts with suppliers; PBSI rejected this production as inadequate to determine Gordon's cost-calculation methods and verify its actual costs incurred. PBSI therefore moved to compel production of all cost documentation--including invoices and accounts payable records--underlying the summaries. Gordon objected that this scale of production would be unduly burdensome.

Gordon did produce tooling1 and production agreements among the Taiwanese firms covering two of the four truck hoods but objected to the requests for agreements covering other parts as irrelevant. Gordon claimed that any such agreements did not concern the " relevant markets." Gordon also insisted that the remaining agreements " only involve[d] the equal sharing of the cost to produce the manufacturing tool/die for [other parts], and do not involve pricing of the part[s]." PBSI moved to compel production of these agreements as well.

The magistrate judge granted PBSI's motion in part. As to cost documentation, the judge agreed that PBSI was " entitled to do some comparison of the documents from which the summaries ha[d] been drawn . . . to identify the frequency with which the summaries do not reflect information correctly[,]" but he also expressed concern at the burden of producing " every single piece of paper generated by Gordon over the relevant time period which relates to the costs of the products at issue." Faced with significant uncertainty about the relative merits of these claims, the judge settled on an " auditing" procedure by which the parties would agree on a subset of the underlying cost data necessary to " allow [PBSI] to verify or dispute the accuracy of the summary information[.]" If the " results . . . reveal[ed] substantial discrepancies between the summary information and the backup documents," the judge would be willing to compel further production. As to the agreements among the Taiwanese competitors, the magistrate essentially agreed with Gordon that any agreements relating to joint tooling or die production were irrelevant to predatory pricing of the truck hoods, but the judge admitted that he " c[ould not] tell" whether any parts " production agreements" outside of tooling arrangements, namely, " pricing agreements and [other] agreements which might limit competition," had been turned over. The

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magistrate " assume[d] either that any such agreements [had] already been produced, or that they do not exist."

With respect to the cost data, there is no indication in the record that PBSI objected to this order or asked for reconsideration by the district court until approximately 18 months later when it filed a second, separate motion to compel. In that motion, PBSI reasserted its position that Gordon should produce " all [b]ackup [c]ost [d]ocumentation." By this time, Gordon had produced cost data for five fiscal quarters under an agreement with PBSI negotiated pursuant to the magistrate judge's initial decision. When the magistrate judge denied this second motion to compel, PBSI filed an objection with the district court. The district court construed the second motion to compel as an attack on the conclusion of the magistrate's order denying in part the first motion to compel, found the " auditing procedure" in the magistrate's first order to be a " reasonable compromise between [the parties'] competing interests," and affirmed denial of the second motion to compel.

With respect to the competitor agreements, PBSI filed a motion to " Compel[] Compliance with, or for Clarification of," the magistrate's order on the initial motion to compel. PBSI specifically sought clarification that Gordon should produce any competitor agreements relating to production of parts other than the four truck hoods, as evidence of a " proclivity" for collusion. The magistrate admitted that the previous order " did not address directly the relevance of production agreements for other parts." But he nonetheless refused to compel production of any agreements for other parts. The judge thought it " extremely unlikely that PBSI can make a convincing argument that such evidence is admissible under either Fed.R.Evid. 403 or 406, so that the request is not reasonably likely to lead to the discovery of relevant evidence based" on PBSI's " proclivity" theory. PBSI filed a timely objection with the district court, but the district court affirmed the decision for essentially the same reasons articulated by the magistrate.

PBSI and Gordon also submitted expert reports from economists Henry McFarland and Robert Hall, respectively. Both experts submitted second reports addressing each other's initial findings. We explain these reports in more detail below. Each party moved to exclude the expert testimony of the other. The district court denied PBSI's motion to exclude Hall's reports, but granted in part Gordon's motion to exclude McFarland's reports. The court specifically excluded McFarland's opinions on " predatory intent" and recoupment, the latter of which, in the court's view, was intertwined with McFarland's comparison of prices and costs.

Gordon then moved for summary judgment on all antitrust claims, claiming there was no genuine dispute of material fact on either the issue of below-cost pricing or recoupment of losses. In the...

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