Sitts v. Dairy Farmers of Am., Inc.
| Decision Date | 24 June 2020 |
| Docket Number | Case No. 2:16-cv-00287 |
| Court | U.S. District Court — District of Vermont |
| Parties | GARRETT AND RALPH SITTS, LEON ATWELL, VICTOR BARRICK, DANIEL BAUMGARDER, WILLIAM BOARD, GEORGE BOLLES, ROGER BOLLES, ANDY BOLLINGER, THOMAS BOLLINGER, LOGAN BOWER, DWIGHT BRANDENBURG, BERNARD BROUILLETTE, THOMAS BROUILLETTE, AARON BUTTON, HESTER CHASE, THOMAS CLARK, THOMAS CLATTERBUCK, PAUL CURRIER, GERRY DELONG, PETE AND ALICE DIEHL, MARK DORING, MARK AND BARBARA DULKIS, GLEN EAVES, MIKE EBY, WILLIAM ECKLAND, DOUG ELLIOT, JAMES ELLIOT, WENDALL ELLIOTT, MICHAEL FAUCHER, DAVID AND ROBIN FITCH, DUANE AND SUSAN FLINT, JOSEPH FULTS, RICHARD GANTNER, STEFAN AND CINDY GEIGER, WILLIAM GLOSS, JOHN GWOZDZ, DAVID AND LAURIE GRANT, JIM AND JOYCE GRAY, DENNIS HALL, ROGER AND JOHN HAMILTON, NEVIN AND MARLIN HILDEBRAND, JAKE AND HARLEN HILLYERD, RICHARD AND TERRI HOLDRIDGE, PAUL HORNING, TERRY AND ROBERT HUYCK, DONALD SCOTT HYMERS, TERRY INCH, RANDY AND LYNETTE INMAN, THEODORE JAYKO, JACK KAHLER, JAMES AND TERESA KEATOR, JIM AND SHARON KEILHOLTZ, GEORGE KEITH, LEE AND ELLEN KLOCK, MIKE AND LISA KRAEGER, FRED LACLAIR, TIM LALYER, FRANK AND JOHN LAMPORT, CORRINE LULL, CHARLES AND GRETCHEN MAINE, THOMAS AND DEBORA MANOS, FRED MATTHEWS, RUSSELL MAXWELL, GERRY MCINTOSH, STEPHEN MELLOTT, JOHN AND DAVID MITCHELL, THOMAS MONTEITH, WALT MOORE, RICHARD AND SHEILA MORROW, DEAN MOSER, MELISSA MURRAY AND SEAN QUINN, THOMAS NAUMAN, CHARLES NEFF, DAVID NICHOLS, MICHAEL NISSLEY, LOU ANN PARISH, DANIEL PETERS, MARSHA PERRY, CAROLYN AND DAVE POST, JUDY LEE POST, SCOTT RASMUSEU, BRIAN REAPE, DAVID AND LYNETTE ROBINSON, BRIAN AND LISA ROBINSON, CALVIN ROES, BRADLEY ROHRER, PAUL AND SARAH ROHRBAUGH, ROBERTA RYAN, SCOTT AND LIN SAWYER, S. ROBERT SENSENIG, THOMAS AND DALE SMITH, DALE AND SUSAN SMITH, DENNIS SMITH, DONALD T. AND DONALD M. SMITH, ROGER AND TAMMY, SMITH, TODD SNYDER, RICHARD SOURWINE, DANNY SOURWINE, RANDY SOWERS, SHANE STALTER, GEORGE AND SHIRLEY STAMBAUGH, TRACY STANKO, STEPHEN SOURWINE, RICHARD SWANTAK, GEORGE AND PATRICIA THOMPSON, JEREMY THOMPSON, KEN AND JUDY TOMPKINS, DANIEL VAUGHN, MARK VISSAR, ERIC WALTS, EDWARD WALLDROFF, GERALD WETTERHAHN, JR., EUGENE WILCZEWSKI, STEVE WILSON, Plaintiffs, v. DAIRY FARMERS OF AMERICA, INC., and DAIRY MARKETING SERVICES, LLC, Defendants. |
(Docs. 146, 148 & 149)
Plaintiffs allege claims pursuant to the Sherman Act, 15 U.S.C. §§ 1-2, for asserted antitrust violations committed by Defendants Dairy Farmers of America, Inc. ("DFA") and Dairy Marketing Services, LLC ("DMS") (collectively, "Defendants"). Pending before the court are three motions concerning expert witnesses. On January 17, 2020, Defendants moved to strike Professor Einer Elhauge's most recent expert report (the "Second Supplemental Expert Report") as an untimely and improper supplement under Fed. R. Civ. P. 26(e) and Fed. R. Civ. P. 37 (Doc. 149). On January 10, 2020, Defendants also moved to exclude portions of Professor Elhauge's opinions at trial on the basis that those opinions are either not the proper subjects of expert testimony or are insufficiently reliable (Doc. 146). On January 10, 2020, Plaintiffs moved to preclude a portion of the opinions of Defendants' expert, Edward Snyder, Ph.D., on the basis that his opinion regarding processing plant options for Plaintiffs is insufficiently reliable and reflects no specialized knowledge (Doc. 148). Both parties oppose the challenges to the opinions of their experts. The court held oral argument on March 27, 2020, at which time it took the pending motions under advisement.
Plaintiffs are represented by Dana A. Zakarian, Esq., Elizabeth A. Reidy, Esq., Gary L. Franklin, Esq., Joel G. Beckman, Esq., Michael Paris, Esq., and William C. Nystrom, Esq. Defendants are represented by Alfred C. Pfeiffer, Jr., Esq., Elyse M. Greenwald, Esq., Ian P. Carleton, Esq., Jennifer L. Giordano, Esq., Margaret M. Zwisler, Esq., Molly M. Barron, Esq., Sarah M. Ray, Esq., and W. Todd Miller, Esq.
Plaintiffs are 116 dairy farmers who opted out of a settlement approved by this court in a class action case, Allen v. Dairy Farmers of America, Inc., No. 5:09-cv-230. In support of their claims that Defendants allegedly conspired to suppress the price of raw Grade A milk, Plaintiffs seek to rely on the testimony of their proffered antitrust expert, Professor Elhauge.
Professor Elhauge is the Petrie Professor of Law at Harvard University and a co-author of several leading treatises on antitrust law and economics. Numerous federal courts have determined that Professor Elhauge is qualified to opine on antitrusteconomics. See, e.g., In re EpiPen Mktg., Sales Practices & Antitrust Litig., 2020 WL 1164869, at *23 (D. Kan. Mar. 10, 2020) (); In re Mushroom Direct Purchaser Antitrust Litig., 2015 WL 5767415, at *4 (E.D. Pa. July 29, 2015) () (internal quotation marks, alterations, and citations omitted).
In his initial expert report and subsequent supplemental reports, Professor Elhauge uses a regression analysis to evaluate whether market conditions were consistent with the existence of a monopsony and in furtherance of his calculation of damages caused by the alleged conspiracy. Plaintiffs disclosed his first expert report on October 3, 2018.
In a report submitted on November 30, 2018, Defendants' expert witness, Daniel A. Sumner, Ph.D., identified errors in Professor Elhauge's data set. Professor Elhauge responded to this criticism by agreeing that his initial data set was flawed and by submitting a supplemental expert report on January 18, 2019. On February 5, 2019, Defendants moved to strike Professor Elhauge's first supplemental expert report, asserting that it was untimely and constituted an improper supplemental disclosure pursuant to Fed. R. Civ. P. 26(e). On May 3, 2019, Defendants also moved to strike Professor Elhauge's opinion that Defendants possess monopsony power without considering the market power of their alleged co-conspirators on the basis that the opinion was not included in Professor Elhauge's earlier expert disclosures and was proffered for the first time at his deposition. On July 23, 2019, the court denied Defendants' motions, finding that Professor Elhauge had properly supplemented his expert witness opinion to provide a more reliable proxy for calculating damages and Defendants elicited the undisclosed opinion regarding monopsony power at Professor Elhauge's deposition and thus could not be heard to complain regarding its untimely disclosure.
Thereafter, Dr. Sumner submitted a second supplemental expert report on December 16, 2019 wherein he identified what he deemed a further error in Professor Elhauge's regression analysis based on its use of a proxy that "approximate[d] the location adjustment for [a] farmer without delivery data by using the location adjustment for [an]other farmer in the same zip code and Federal Order[.]" (Doc. 150-5 at 7, ¶ 9.) Plaintiffs attribute the error to the voluminous data set produced by Defendants which was missing various zip codes and which Professor Elhauge's Stata database software erroneously processed by treating a period (.) in the data field (which is a computer-generated placeholder for missing data) as its own zip code. On December 27, 2019, Professor Elhauge submitted his Second Supplemental Expert Report to correct this mistake by adding "ifzip!=." to the computer code and re-running his regression analysis with a smaller data set, yielding what he claims is evidence of antitrust impact and damages of 98.7 cents per cwt.
Defendants seek to strike Professor Elhauge's Second Supplemental Expert Report on the basis that it is not an appropriate supplement pursuant to Fed. R. Civ. P. 26(e) and therefore should be excluded pursuant to Fed. R. Civ. P. 37. The issue is whether the Second Supplemental Expert Report merely corrects an honest mistake or substitutes an alternative methodology for an earlier flawed approach.
Rule 26(e) requires a party to "supplement or correct its disclosure or response . . . in a timely manner if the party learns that in some material respect [its] disclosure or response is incomplete or incorrect[.]" Fed. R. Civ. P. 26(e)(1). The rule further provides that "additions or changes to [expert disclosures]" must be made "by the time the party's pretrial disclosures under Rule 26(a)(3) are due." Fed. R. Civ. P. 26(e)(2). Pursuant to Rule 26(a)(3), "[u]nless the court orders otherwise, these disclosures must be made at least [thirty] days before trial." Fed. R. Civ. P. 26(a)(3).
In asserting that Professor Elhauge could and should have identified the software error in his analysis independently, Defendants remind the court that it has held that "[i]f an expert's report does not rely [on] any information that was previously unknown or unavailable to him, it is not an appropriate supplemental report under Rule 26." (Doc. 129 at 9) (quoting Allen v. Dairy Farmers of Am., Inc., 2014 WL 2040133, at *5 (D. Vt. May 16, 2014) (alterations in original). While it is true that newly discovered evidence, not reasonably available at the time of an initial expert witness opinion, is one ground for supplementation, it is not the only...
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