In re Marriott Int'l, Inc., Customer Data Sec. Breach Litig.
| Decision Date | 03 May 2022 |
| Docket Number | MDL No. 19-md-2879 |
| Parties | IN RE: MARRIOTT INTERNATIONAL, INC., CUSTOMER DATA SECURITY BREACH LITIGATION Consumer Actions |
| Court | U.S. District Court — District of Maryland |
The Consumer Plaintiffs ("Plaintiffs") of this MDL have filed a motion to certify a number of classes. Among the various classes that Plaintiffs have asked the Court to certify are thirteen classes or subclasses for classwide damages, to be tried along with the injunctive or declaratory relief class and various liability issues for which they also seek certification. Mot. for Class Cert., ECF Nos. 858 (redacted), 859 (sealed), 863 (sealed), 865 (sealed).1 Certification of the damages classes is sought pursuant to Federal Rule of Civil Procedure 23(b)(3), so it is necessary for Plaintiffs to show that common issues of law and or fact predominate over individual issues, and that class certification would be superior to any other means of determining damages, in the event that liability is found.
Plaintiffs rest their hope of certifying classwide damages classes on one of their designated expert witnesses, Jeffrey T. Prince, Ph.D., a highly credentialed economist and Professor at the Kelley School of Business at Indiana University. Defendants Marriott and Accenture2 ("Defendants") seek to undermine Dr. Prince's classwide damages models with their own highly credentialed economist, Catherine Tucker, Ph.D., a Professor of Management Science and Marketing at Massachusetts Institute of Technology.
As might be expected, when the Court and the parties conferred to set a schedule for discovery in advance of class certification motions, deadlines were set for Dr. Prince to file his Federal Rule of Civil Procedure 26(a)(2) expert report, Dr. Tucker to file hers, Dr. Prince to file a rebuttal, and for them both to be deposed. Deadlines also were set for filing class certification motions, and for motions to challenge the admissibility of expert testimony, colloquially referred to as " Daubert "3 motions. In a perfect world, the deadlines for all these events would line up in harmonious sequence, and, at first, they did. But given the complexity of this case, and issues related to the completion of discovery, the sequencing became less than ideal.
Dr. Prince's Rule 26(a)(2) initial report was filed on July 12, 2021. Expert Class Cert. Rep. of Jeffrey T. Prince, Ph.D. ("Prince Initial Rep."), ECF No. 859-4 (sealed). He was deposed on August 13, 2021. Deposition of Jeffrey T. Prince ("Prince Dep. 1"), ECF No. 891-2 (sealed). Dr. Tucker's Rule 26(a)(2) report was filed on September 7, 2021, Expert Rep. of Catherine Tucker, Ph.D. ("Tucker Rep."), ECF No. 894-5 (sealed), and Defendants filed their Daubert motion challenging Dr. Prince's methodology on September 20, 2021. Defs.’ Mot. to Exclude (" Daubert Mot."), ECF Nos. 894 (sealed), 895 (redacted). Dr. Tucker was deposed on September 29, 2021, Deposition of Catherine Tucker ("Tucker Dep."), ECF No. 916-4 (sealed), and Dr. Prince filed his Rule 26(a)(2) rebuttal report on October 12, 2021. Rebuttal Rep. of Jeffrey T. Prince, Ph.D. ("Prince Rebuttal Rep."), ECF No. 916-1 (sealed). Plaintiffs filed their opposition to Defendants’ Daubert motion on October 25, 2021. Pls.’ Opp'n, ECF Nos. 916 (sealed), 922 (redacted). Defendants did not file a reply to Plaintiffs’ opposition to their Daubert motion, but an animated dispute arose regarding Defendants’ contention that Dr. Prince had materially changed his methodology with respect to his two classwide damages models between the filing of his original report, and his rebuttal report. Defs.’ Letter Corresp., ECF No. 930. Plaintiffs were equally animated in denying that Dr. Prince had changed his methodology, and once more the Special Master, Judge (Ret.) John Facciola, was called upon to intervene, following which I ordered that Dr. Prince was to be re-deposed for limited purposes, and that Judge Facciola would preside. Letter Order of November 30, 2021, ECF No. 940. Following Dr. Prince's second deposition, the parties filed letter motions: Defendants seeking to strike Dr. Prince's "new" opinions and methodology, Defs.’ Letter Mot., ECF Nos. 961 (sealed), 963 (redacted); and Plaintiffs opposing this motion, and requesting, in turn, that I "strike" Dr. Prince's second deposition. Pls.’ Letter Mot., ECF No. 964. I did neither, but instead ordered that Dr. Tucker be afforded an opportunity to file a rebuttal report addressing Dr. Prince's rebuttal report and testimony in his second deposition. Letter Order of January 18, 2022, ECF No. 967. Dr. Tucker's second report was filed on February 18, 2022. Suppl. Expert Rep. of Catherine Tucker, Ph.D. ( ), ECF Nos. 984 (sealed), 985 (redacted).
What the above chronology reveals is that the record upon which the parties based their Daubert filings (the last of which was made on October 25, 2021) changed materially after the briefing was concluded: Dr. Prince filed a substantial rebuttal report, he was deposed, and Dr. Tucker filed a substantial report addressing Dr. Prince's rebuttal report and deposition. In addition, I have had the benefit of an expert "tutorial" with both Dr. Prince and Dr. Tucker, during which I was able to question them directly and hear their views with regard to the damages issues.4
Having carefully reviewed all the experts’ reports, their depositions, Defendants’ motion, and Plaintiffs’ opposition, as well as the academic literature that figured prominently in the development of Dr. Prince's methodology, I am DENYING, for the purposes of ruling on the pending motions for class certification, Defendants’ motion to exclude Dr. Prince's classwide model for determining "overpayment damages" (the difference between what the class plaintiffs actually paid for a Starwood hotel room, and the price that Starwood would have been able to charge in a hypothetical "but-for" world in which consumer willingness to pay for a Starwood room had shifted in response to consumer knowledge of Starwood's inadequate data security), and GRANTING Defendants’ motion to exclude Dr. Prince's model for calculating the "market value" of Plaintiffs’ personally identifiable information ("PII") that was compromised due to the data breach.5
It is important to understand the limited scope of this ruling. For reasons that I will explain, I conclude that the methodology described by Dr. Prince (which he tested using the limited amount of "New" Data Storage ("NDS") database information then available to him) is sufficient for me to rule on whether Dr. Prince's "overpayment damages" model meets admissibility standards under Federal Rule of Evidence 702 for purposes of ruling on class certification. This is because he has not yet had the opportunity to fully test this methodology on non-bellwether class member data contained in the Starwood NDS database, on which the model depends in order to actually calculate the amount of overpayment damages. Defendants objected to producing NDS database information relating to any but the bellwether class members until after a ruling on class certification, and Dr. Prince was unable to test his overpayment damages model in the context of the members of a specific certified class, which I conclude is necessary in order to evaluate Dr. Tucker's criticisms of the reliability of Dr. Prince's methodology in general, and as to whether the model produces reliable results when applied to the particular facts of a specific certified class. But, I have concluded that Dr. Prince has identified a reliable methodology for determining overpayment damages in general, and tested it on the bellwether plaintiffs’ NDS database information. This is sufficient for purposes of considering his methodology in ruling on Plaintiffs’ motion to certify classwide damages classes. Once Dr. Prince has had access to the NDS database with respect to the non-bellwether class members in the specific classes for which I have granted Plaintiffs’ motion for class certification, and he has calculated his classwide overpayment damages, I will order that Dr. Prince provide a supplemental report setting forth these calculations and allow Defendants to depose him on his final calculations. I will then allow Dr. Tucker to provide a supplemental report and give Plaintiffs an opportunity to depose her. At that time, I will allow limited additional briefing on the admissibility of Dr. Prince's overpayment damages and make a final ruling. If I exclude Dr. Prince's damages model and calculations, I will de-certify the classwide damages classes.
As for Dr. Prince's model for calculating classwide loss of market value of class member compromised PII, however, I agree with Defendants that Dr. Prince's methodology does not meet the requirements of Rule 702, principally because he failed to articulate (and test, using NDS data for the bellwether plaintiffs) a particular method for determining the number of times a particular class member's PII was "sold" in his hypothetical market for PII, without which he cannot determine classwide damages. I explain below the basis for my rulings.
Defendants challenge the admissibility of Dr. Prince's formulaic models for calculating classwide damages for Plaintiffs. As already noted, they style their motion as a Daubert challenge, based on the now-famous case of Daubert v. Merrell Dow Pharm. Inc. , 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) and its progeny, Kumho Tire Co. v. Carmichael , 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) and Gen. Elec. Co. v. Joiner , 522 U.S. 136, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997) (collectively, " Daubert "). As a preliminary matter, it is not yet a settled matter that a full-blown Daubert challenge should be entertained by the court when deciding a class certification motion. 3 William B. Rubenstein, et al., Newberg on Class Actions §...
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