U.S. STANDARDS FOR DISMISSAL OF CLAIMS AND EVALUATION OF EXPERT TESTIMONY

1. Judge Sarah S. Vance, Eastern District of Louisiana U.S. STANDARDS FOR DISMISSAL OF CLAIMS AND EVALUATION OF EXPERT TESTIMONY Standards for Dismissal and Evaluation of Expert Testimony

2. Dismissal Before Trial • Court may dismiss non-meritorious antitrust cases at two stages before trial: • At pleading stage (“motion to dismiss”); • Following factual development (“motion for summary judgment”). • Court must evaluate motions and responses under appropriate legal standards. Standards for Dismissal and Evaluation of Expert Testimony

3. Dismissal at the Pleading Stage • Complaint: a plaintiff begins a civil case with a “short and plain statement” of its claim. • Motion to Dismiss: a defendant may move to dismissthe complaint on grounds that it fails to state a claim – even assuming the facts claimed are true. • Old standard: it appears “beyond doubt” that plaintiff can prove“no set of facts”in support of his claim that would entitle him to relief (Conley v. Gibson (1957)). • Rationale was that pleading technicalities should not result in dismissal. Standards for Dismissal and Evaluation of Expert Testimony

4. New Standard for Dismissal for Failure to State a Claim • Bell Atlantic v. Twombly(2007) • Claim: telephone companies conspired to restrain competition in the local telephone and high speed internet markets all over U.S. • Factual allegations: telephone companies engaged in parallel anticompetitive conduct and agreed not to compete, as shown by failure to pursue attractive business opportunities in each other’s territories. • Test: there must be sufficient factual allegations to make the claim plausible on its face. • Allegations of parallel business conduct and bare assertions of conspiracy are not sufficient. • Factual content must suggest preceding agreement. • Holding: factual allegations, taken as true, were as consistent with independent action as with agreement, and thus did not make claim “plausible” on its face. Standards for Dismissal and Evaluation of Expert Testimony

5. Response of Lower Courts • Dismissal rates of antitrust cases at pleading stage has increased since Twombly. • Potential reasons for dismissal: • Only non-exclusionary business practices alleged in monopolization case; • Insufficient allegations indicating unlawful agreement; • Insufficient allegations indicating antitrust injury; • Insufficient allegations about relevant market; • Plaintiff lacks standing; • A defendant has immunity. • Implication of dismissal: no discovery into allegations of wrongful conduct. Standards for Dismissal and Evaluation of Expert Testimony

6. Summary Judgment • Summary judgment: a defendant may move for summary judgment after factual investigation has been conducted. • Standard: party must show that there are “no genuine issues of material fact” for trial and that party is entitled to judgment as a matter of law. • Court considers evidence, such as: • Sworn statements of experts; • Sworn depositions of parties and witnesses; • Relevant documents. • Plaintiff must come forward with evidence to show that there are material facts in issue for trial. Standards for Dismissal and Evaluation of Expert Testimony

7. Modern Test for Summary Judgment • Monsanto (1984): in actions requiring proof of agreement, plaintiff must produce evidence that tends to exclude the possibility of independent action before it is entitled to have a jury determine liability. • Matsushita (1986): courts must consider the economic plausibility of plaintiff’s claim when they decide whether to grant summary judgment. • If claim makes no economic sense, plaintiff must come forward with more persuasive evidence than is otherwise necessary to avoid summary judgment. Standards for Dismissal and Evaluation of Expert Testimony

8. Summary Judgment – Evaluation of Evidence • Court does not weigh conflicting evidence. • Evidence is viewed as a whole, in light most favorable to the opponent of summary judgment. • All reasonable inferences are drawn in favor of party opposing motion. • “Plausibility” is less than “probability.” Standards for Dismissal and Evaluation of Expert Testimony

9. Examples • Potential reasons for summary judgment: • Claim is not economically plausible; • Plaintiffs established no competitive injury; • Evidence of agreement does not tend to exclude possibility of independent action; • No evidence of relevant market and market power. • Example: monopolization claim based on predatory pricing dismissed when: • No evidence of defendant’s cost of production; • No support for proposed market definition; • No evidence of barriers to entry. • Example: price fixing claim dismissed when no evidence that plaintiff purchased product from any defendant. Standards for Dismissal and Evaluation of Expert Testimony

10. Evaluation of Expert Testimony • Parties may hire economists to offer testimony on: • Market definition; • Market structure; • Market power; • Competitive significance of business conduct; • Antitrust injury; • Damages. • Federal Rule of Evidence 702: court may exclude economic expert testimony from consideration if: • Expert is not qualified; • Opinion is not relevant; • Opinion lacks reliable basis. Standards for Dismissal and Evaluation of Expert Testimony

11. Qualifications • Expert must have background, training, education or experience to testify on the matter at issue. • Professional economists are typically qualified to give opinions in antitrust cases. • One court excluded testimony of economist about existence of an agreement because he was not trained in modern oligopoly theory. Standards for Dismissal and Evaluation of Expert Testimony

12. Relevance • Expert’s testimony must establish a connection to a fact in issue and assist the fact-finder in understanding the evidence or determining facts in dispute. • If expert analyzes issue that is not relevant, testimony may be excluded on that issue. Standards for Dismissal and Evaluation of Expert Testimony

13. Reliability • Methods must be reliable. • Methods must be based on sufficient facts or data. • Expert opinion may not serve as a substitute for market facts – only as a guide to interpreting market facts. • “Fit”: methods must be applied in a reliable way to the facts. • Courts consider various factors: • Has method been tested? • Is method subject to peer review and publication? • Does method have known error rate? • Are there standards to control for error? • Is method accepted in professional community? Standards for Dismissal and Evaluation of Expert Testimony

14. Examples • Expert testimony may not be based on speculation, lack of analysis, improper assumptions, or lack of factual support. • Expert testimony rejected: • On market definition, when evidence contradicted proposed market, and when no recognized methodology linked data to conclusions reached; • On market definition, when expert did not include broad enough range of substitute products in market analysis; • When expert failed to take into account all relevant market variables; • When expert failed to separate effects of lawful and unlawful conduct; • When expert did not apply standard test used by his profession. Standards for Dismissal and Evaluation of Expert Testimony

15. Court Appointed Experts • Antitrust cases often become battles of economic experts. • Court may appoint its own expert to render an additional, neutral opinion. • When court appoints an expert, parties must be given opportunity to review his findings and cross-examine the opinions. Standards for Dismissal and Evaluation of Expert Testimony

16. Dismissal After Proponent’s Case – Civil Trial • Plaintiff must prove case “by a preponderance of the evidence.” • “Judgment as a Matter of Law” (JMOL): • After plaintiff is heard at trial, court may enter judgment against plaintiff if a reasonable jury would not have legally sufficient evidentiary basis to find for plaintiff. • Court views evidence in light most favorable to plaintiff and draws all reasonable inferences in favor of plaintiff. • JMOL appropriate if plaintiff in cartel case does not produce evidence tending to exclude possibility that defendants acted independently. Standards for Dismissal and Evaluation of Expert Testimony

17. New Trial – Civil Case • Court may grant new trial if jury verdict is against great weight of the evidence, the award was excessive or inadequate, or the trial was unfair or infected by prejudicial error. • Unlike JMOL, court may weigh evidence and need not view evidence in favor of jury verdict. Standards for Dismissal and Evaluation of Expert Testimony

18. Criminal Trial – Motion for Acquittal • Government must prove case “beyond a reasonable doubt.” • “Motion for Acquittal” • After government is heard at trial, court must enter judgment for defendant if there is insufficient evidence to support conviction. • Court views evidence in light most favorable to government. • Court may grant motion for acquittal only if rational jury would necessarily have a reasonable doubt as to defendant's guilt. Standards for Dismissal and Evaluation of Expert Testimony

19. New Trial – Criminal Case • Court may grant defendant’s request for new trial in criminal case if the interests of justice require a new trial. • Grounds: Verdict is against the weight of the evidence: • Evidence against the verdict must be sufficiently weighty that enforcement of verdict would be miscarriage of justice. • Court need not view evidence in light most favorable to verdict and may weigh evidence and evaluate credibility of witnesses. • Grounds: Newly discovered evidence. • New evidence must be material, unavailable at time of trial, and likely to produce acquittal at new trial. • New trial must be sought within three years of guilty verdict. • If defendant is acquitted, government cannot seek a new trial. Standards for Dismissal and Evaluation of Expert Testimony