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Zf Meritor LLC v. Eaton Corp.

United States District Court, Third Circuit

December 20, 2013




At Wilmington this 20th day of December, 2013, having reviewed defendant's motion for judgment as a matter of law, its motion to exclude opinion testimony of Dr. David W. DeRamus, and the papers filed in connection therewith, I issue my decision based on the following reasoning:

1. Background. The procedural history of this case is related in the decision of the United States Court of Appeals for the Third Circuit in ZF Meritor LLC v. Eaton Corp., 696 F.3d 254 (3d Cir. 2012). Of relevance to the pending motion, the Third Circuit concluded:

First, we hold that Plaintiffs' claims are not subject to the price-cost test, and instead must be analyzed as de facto exclusive dealing claims under the rule of reason. Second, we conclude that Plaintiffs presented sufficient evidence to support the jury's finding that Eaton engaged in anticompetitive conduct and that Plaintiffs suffered antitrust injury as a result. Third, we find no error in the District Court's decision to admit DeRamus's testimony on the issue of liability. Fourth, we hold that the District Court properly exercised its discretion in excluding DeRamus' damages testimony based on his expert report, but we conclude that the District Court abused its discretion by preventing DeRamus from submitting alternate damages calculations based on data already included in his initial report. Finally, we hold that Plaintiffs lack standing to pursue injunctive relief, and therefore, we will vacate the injunction issued by the District Court. We will remand to the District Court for further proceedings consistent with this opinion.

Id. at 303 (emphasis added). Defendant filed its motions rather than proceed to trial on the issue of damages.

2. Motion for judgment as a matter of law. Defendant justifies its course of action based on the rationale that DeRamus' amended damages report "fails to separate out damages that resulted from Eaton's lawful, above cost prices from the non-price conduct identified by the Third Circuit as anticompetitive." (D. I. 311 at 9) Defendant goes on to argue that DeRamus' opinion "that Eaton's prices were not separable' from Eaton's non-price conduct... is flatly inconsistent with the Third Circuit's ruling which expressly differentiated between Eaton's price and non-price conduct." (Id.)

3. I disagree with defendant's characterization of the Third Circuit's opinion. Rather than "expressly differentiating between Eaton's price and non-price conduct, " the Third Circuit merely rejected defendant's price-cost test, explaining that

here, Plaintiffs do not allege that price itself functioned as the exclusionary tool. As such, we conclude that the price-cost test is not adequate to judge the legality of Eaton's conduct. Although prices are unlikely to exclude equally efficient rivals unless they are below-cost, exclusive dealing arrangements can exclude equally efficient (or potentially equally efficient) rivals, and thereby harm competition, irrespective of below-cost pricing.... Where, as here, a dominant supplier enters into de facto exclusive dealing arrangements with every customer in the market, other firms may be driven out not because they cannot compete on a price basis, but because they are never given an opportunity to compete, despite their ability to offer products with significant customer demand.

696 F.3d at 281 (citations omitted). As noted by the Third Circuit, "[a]lthough the Supreme Court has created a safe harbor for above-cost discounting, it has not established a per se rule of non-liability under the antitrust laws for all contractual practices that involve above.:cost pricing." Id. at 278.

4. Contrary to defendant's contention, then, the Third Circuit by its decision did not mandate that plaintiffs "disaggregate business losses attributable to [defendant's] lawful lower prices." (D.I. 311 at 1) The Third Circuit simply recognized that, under the rule of reason, defendant's lower pricing was not "the clear driving force" behind defendant's anticompetitive conduct, but one of many factors to consider in the context of antitrust injury and damages. Defendant's motion for judgment as a matter of law is denied.

5. Motion to exclude the expert opinion of Dr. DeRamus. Once again I am being asked to consider whether the expert opinion of plaintiffs' expert should be excluded pursuant to Fed.R.Civ.P. 702 which, as described by the Third Circuit,

imposes an obligation upon a district court to ensure that expert testimony is not only relevant, but reliable.... As we have made clear, "the reliability analysis [required by Daubert] applies to all aspects of an expert's testimony: the methodology, the facts underlying the expert's opinion, [and] the link between the facts and the conclusion."...

696 F.3d at 291 (citations omitted). Therefore, "[w]here proffered expert testimony's 'factual basis, data, principles, methods, or their application are called sufficiently into question, ... the trial judge must determine whether the testimony has a reliable basis in the knowledge and experience of the relevant discipline."" Id. at 294 (citations omitted).

6. Plaintiffs contest defendant's objections to Dr. DeRamus' opinion, and argue that such objections are procedurally barred by the doctrines of law of the case and/or waiver. I disagree. As noted by defendant, I made clear during the pretrial proceedings that the original DeRamus expert report was so poorly crafted that I only had the time and resources to review the most glaring of its problems prior to trial. As a general proposition, I did not find the methodologies utilized by Dr. DeRamus to be the issue under Rule 702 but, rather, that the assumptions and facts manipulated under such methodologies were not grounded in reality. (See, e.g., D.I. 309, appendix vol. 1, exs. 1 and 2) Moreover, the Third Circuit in its decision specifically declared ...

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