Premium Plus Partners, L.P. v. Davis

• Decision Date: 06 August 2009
• Docket Number: No. 04 C 1851.,04 C 1851.
• Citation: 653 F.Supp.2d 855
• Parties: PREMIUM PLUS PARTNERS, L.P., Plaintiff, v. Peter J. DAVIS, Jr., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

653 F.Supp.2d 855

PREMIUM PLUS PARTNERS, L.P., Plaintiff, v. Peter J. DAVIS, Jr., et al., Defendants.

No. 04 C 1851.

United States District Court, N.D. Illinois, Eastern Division.

August 6, 2009.

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Harry Rothenberg, Law Offices of Allen Rothenberg, New York, NY, Anthony F. Fata, Christopher B. Sanchez, Dominic J. Rizzi, Jennifer Winter Sprengel, Cafferty Faucher LLP, Marvin Alan Miller, Miller Law LLC, Nyran Rose Pearson, Chicago, IL, Bryan L. Clobes, Michael J. Willner, Cafferty Faucher, LLP, Philadelphia, PA, for Plaintiff.

Darren Brett Watts, Krafsur Law Group, Robert Y. Sperling, Joel Erik Connolly, Kari M. Rollins, Marie A. Lona, Norman K. Beck, Ronald Steven Betman, Winston & Strawn LLP, David E. Lieberman, Reed Smith LLP, Jack Samuel Tenenbaum, Chuhak & Tecson P.C., Thomas Michael Durkin, Thomas McGrath, Mayer Brown LLP, Chicago, IL, Marisa L. Megur, Steven M. Cohen, Cooley Godward Kronish LLP, Brian T. Frawley, Gandolfo V. Diblasi, Matthew S. Fitzwater, Sullivan & Cromwell, New York, NY, Jessica V. Barnett, John A. Shope, Nicholas C. Theodorou, Foley Hoag LLP, William H. Paine, Jonathan A. Shapiro, Wilmer Cutler Pickering Hale and Dorr Ltd., Boston, MA, Elizabeth Mone, Jesse T. Travis, Wilmer Cutler Pickering Hale and Dorr Ltd., Washington, DC, for Defendants.

MEMORANDUM OPINION

SAMUEL DER-YEGHIAYAN, District Judge.

This matter is before the court on Defendant Goldman Sachs & Company's (Goldman) renewed motion for summary judgment and on the parties' motions to strike. For the reasons stated below, we deny the renewed motion for summary judgment and grant in part and deny in part the motions to strike.

BACKGROUND

Plaintiff Premium Partners, L.P. (Premium) alleges that it held substantial short positions in 30-Year Treasury Options at 9:25 a.m. on October 31, 2001. Premium contends that Goldman and Defendant Massachusetts Financial Services Company (MFS) paid Defendant Peter J. Davis (Davis) to funnel to them nonpublic information that Davis discovered at a confidential United States Department of Treasury (Treasury Department) quarterly refunding meeting (Meeting), including a conference that took place between 9:00 a.m. and 9:25 a.m. on October 31, 2001. Davis allegedly learned during the Meeting that the Treasury Department would suspend the 30-Year Treasury Bond. Premium contends that when the information was released, the demand for 30-Year Treasury Bonds increased and, in turn, the costs increased for investors that had to cover short positions in 30-Year Treasury Futures and 30-Year Treasury Bond Options.

According to Premium, after the Meeting at 9:35 a.m., Davis called Defendant John M. Youngdahl (Youngdahl), who worked for Goldman, and at approximately 9:38 a.m. Davis called Defendant Steven E. Northern (Northern), who worked for MFS. Davis allegedly informed Youngdahl and Northern that the Treasury Department was going to suspend the 30-Year Treasury Bond. Goldman then allegedly immediately purchased $84 million in 30-Year Treasury Bonds and significant amounts of 30-Year Treasury Futures. MFS also allegedly immediately purchased $65 million in 30-Year Treasury Bonds before public disclosures. At 9:43 a.m. on October 31, 2001, a Treasury announcement was posted as a press release on the Treasury website and there was a formal announcement reported by Reuters at 9:57 a.m., Premium claims that Defendants manipulated the 30-Year Treasury Bond market, artificially influencing the price of 30-Year Treasury Bonds, Futures, and Options. Premium contends that Defendants' manipulation in turn required investors such as Premium to pay additional costs to cover short positions in 30-Year Treasury Futures and Options.

Premium includes in its complaint Commodity Exchange Act (CEA), 7 U.S.C. § 1 et seq., claims brought against Goldman and Youngdahl (Count I), CEA claims brought against MFS and Northern (Count II), a CEA claim brought against Davis (Count III), Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq., claims brought against all Defendants (Count IV), civil conspiracy claims brought against Goldman, Youngdahl, and Davis (Count V), civil conspiracy claims brought against MFS, Northern, and Davis (Count VI), Sherman Antitrust Act claims brought against Goldman, Youngdahl, and Davis (Count VII), and Sherman Antitrust Act claims brought against MFS, Northern, and Davis (Count VIII).

The prior judge in this case granted in part and denied in part Defendants' motions to dismiss, dismissing all claims brought against Northern, and all state law claims (Counts IV-VI). The prior judge also dismissed all Sherman Antitrust Act claims without prejudice. Premium then indicated that the only remaining claims that it was pursuing were the CEA claims brought against Youngdahl, Goldman, and MFS. (4/11/08 Mot. Reinst. 4). Goldman and MFS each moved for summary judgment on the remaining claims pending against them. Premium also filed a motion for leave to conduct additional discovery and motions to strike. On July 30, 2008, 2008 WL 2952345, we granted MFS's motion for summary judgment in its entirety and we granted Goldman's motion for summary judgment to the extent that the CEA claim brought against Goldman is based on the trades of 30-Year Treasury Bonds. We denied without prejudice Goldman's motion for summary judgment to the extent that the CEA claim is based upon alleged purchases of 30-Year Treasury Futures. We also granted Premium's motion for leave to conduct appropriate discovery and denied without prejudice Premium's motions to strike. Goldman has now filed a renewed motion for summary judgment and the parties have filed motions to strike.

LEGAL STANDARD

Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). In seeking a grant of summary judgment, the moving party must identify "those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). This initial burden may be satisfied by presenting specific evidence on a particular issue or by pointing out "an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548. Once the movant has met this burden the non-moving party cannot simply rest on the allegations in the pleadings, but, "by affidavits or as otherwise provided for in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). A "genuine issue" in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Rather, a genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). The court must consider the record as a whole, in a light most favorable to the nonmoving party, and draw all reasonable inferences that favor the non-moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505; Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir.2000).

DISCUSSION

I. Goldman's Motion to Strike Reports and Testimony of Glen Donaldson

Goldman moves to strike the reports and testimony of Glen Donaldson (Donaldson), an expert hired by Premium for this case. Pursuant to Rule 702 and the analysis provided in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), in order for an expert opinion to be admissible: (1) "the witness must be qualified `as an expert by knowledge, skill, experience, training, or education,'" (2) "the expert's reasoning or methodology underlying the testimony must be scientifically reliable," and (3) "the testimony must assist the trier of fact to understand the evidence or to determine a fact in issue." Ervin v. Johnson & Johnson, Inc., 492 F.3d 901, 904 (7th Cir.2007) (quoting in part Fed.R.Evid. 702) (stating that the opinion must be "both relevant and reliable"). In assessing the reliability of an expert opinion, a court must consider factors such as "(1) whether the scientific theory can be or has been tested," "(2) whether the theory has been subjected to peer review and publication," and "(3) whether the theory has been generally accepted in the scientific community." Id.; Sheehan v. Daily Racing Form, Inc., 104 F.3d 940, 942 (7th Cir.1997) (stating that an "expert's failure to make any adjustment for variables bearing on the decision" at issue and "his equating a simple statistical correlation to a causal relation ... indicates a failure to exercise the degree of care that a statistician would use in his scientific work, outside of the context of litigation"); People Who Care v. Rockford Bd. of Educ., School Dist. No. 205, 111 F.3d 528, 537-38 (7th Cir.1997) (stating that "[a] statistical study is not inadmissible merely because it is unable to exclude all possible causal factors other than the one of interest," but "a statistical study that fails to correct for salient explanatory variables, or even to make the most elementary comparisons, has no value as causal explanation and is therefore inadmissible in a federal court"); Sanner v. Board of Trade of City of Chicago, 2001 WL 1155277, at *2-*6 (N.D.Ill.2001) (noting that the parties agreed that statistical...