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A patent owner manufactured a disposable setting tool designed to replace the standard setting tool used in oil and gas production. The patent owner also manufactured the only power charge required in setting plugs with the disposable setting tool. Increasing sales of the disposable setting tool led to production backlogs. In response, the patent owner leased its patent to another manufacturer thereby concentrating on its sales of power charges. The two manufacturers agreed that the patent lessee would be the exclusive manufacturer of disposable setting tools. In time, the patent owner changed its position by continuing its own manufacturing, thereby infringing on the leased patent, and withholding power charges to the lessee’s customers. We found that the conduct of the patent owner was consistent with the antitrust allegations. We calculated the lessee’s lost profits on products the patent owner sold and the lessor’s lost profits on business that the lessee would have captured but the patent owner did not. The court found patent infringement and antitrust violations, awarding damages based upon our report and trial testimony.
The largest manufacturer of anesthesia equipment employed its own technicians to service its installed equipment. Its technicians faced growing competition from certified technicians employed by a host of Independent Service Organizations (ISOs). In an antitrust suit filed by several ISOs against the manufacturer, plaintiffs claimed that the manufacturer prevented technicians from obtaining required certifications through training schools exclusively run by the manufacturer. Additionally, the manufacturer allegedly ceased selling genuine machine parts directly to ISOs, thereby requiring ISOs to purchase parts from a third party at higher prices and restricted access. We reported that the conduct of the manufacturer was consistent with the antitrust allegations. We relied upon first-mover advantages literature to establish but-for market shares among all ISOs. These but-for market shares were used to derive the lost sales among the plaintiff ISOs. Our calculations and methodology were supported by the court in the Daubert motion and used successfully in trial.
A manufacturer of an improved, patented safety syringe filed an antitrust suit against several Group Purchasing Organizations (GPOs) and two leading manufacturers of older-designed safety syringes. Based upon documents obtained from one of the leading manufacturers, the improved safety syringe formed a relevant submarket. Allegedly, GPOs adopted policies preventing the introduction of the improved safety syringe in client hospitals and clinics. We developed methods of calculating economic damages using first-mover advantages literature to determine the manufacturer’s improved safety syringe but-for market share, including new entrants. The identification and timing of new entrants were based upon available materials and interviews with manufacturers. Incremental profit margins were established from competitors’ records to reflect economies of scale. The calculation methods were supported by the court.
An independent, off-campus college bookstore filed an antitrust suit against a major university and the firm retained to manage the university’s on-campus bookstore. The university and retained firm withheld textbook adoption lists from the off-campus bookstore thereby inhibiting the off-campus bookstore’s new and used textbook sales. The semester’s textbook adoption lists, compiled from the various college department heads, were essential to bookstore sales. Damages were based upon the before and after new and used textbook sales along with complementary sales of other store products.
Two major oil and gas producers and an investor constructed a pipeline designed to carry CO2 from Colorado to the Permian Basis. CO2 is used in enhanced oil recovery processes. The two major oil companies produced upstream and used downstream, paying royalties and taxes on CO2 profits, net of transportation costs. The CO2 was used by both oil companies. The pipeline was the only economical method of transporting CO2. There was no established formula for determining transportation costs. The royalty owners and the United States sued the owners of the pipeline for allegedly charging monopoly prices for transportation in order to reduce royalty payments and taxes on CO2 production. Our expert analysis responded to the work of two opposing economists. In contrast to opposing expert opinion, there is a defined market for transportation within which tariffs are determined. The pipeline is a monopolist in supplying transportation and establishing unregulated tariffs. Tariffs charged were above competitive prices. Although the two purchasers of CO2 did not equally share in the transportation profits, the two oil companies had methods through which they could jointly maximize profits.
The Attorney General of California, representing all California governmental entities, filed an antitrust suit against manufacturers of Portland cement, alleging price fixing above competitive levels. We concluded that the observed conduct of the manufacturers was consistent with the allegations, after reviews of records of manufacturers’ association meetings and deposition testimony. The case settled, and settlement distributions were based upon volumes of Portland cement purchased by every governmental entity in California—state, county, city, school districts, and others. We collected construction records to estimate the volume of Portland cement used by each governmental entity.
A class of oil royalty owners filed suit against the major oil companies in the U.S. alleging that the posted prices of crude oil at the wellhead were fixed below market prices. Key documents, including balancing agreements, supported the opinion that the evidence was consistent with the allegations of price fixing. The case settled. Damages were based upon calculated but-for prices. The calculations compared actual posted prices with imported prices of comparable grades of crude, adjusted for transportation costs. This was one of a series of similar cases.
A manufacturer of electronic dog collars used in training retrievers filed a patent infringement lawsuit against a competitor. The patent protected a specific feature that did not affect function but only appearance. As the primary defense, we conducted a telephone survey of recent purchasers of electronic dog collars to determine whether the patented feature affected their purchase decision. The evidence showed that virtually none of the purchasers valued the feature. In the expert report, we noted that the patent owner would not have been able to lease the patent since it had no market value.
A large retailer of rare coins purchased rare coins from a large distributor with the assurance that its prices were not to exceed the lowest prices paid among its other purchasing retailers—a most-favored-nations clause. The retailer filed suit alleging that it paid higher prices than what the agreement required. We examined the purchasing records of the distributor, which included thousands of differing types of rare coins. With hundreds of differing types of rare coins, statistical analyses were completed, defining relevant groups of rare coins. Regression analysis was used to compare the prices paid by the plaintiff compared to the lowest prices paid among other purchasers. The statistical results formed the damage model.
A natural gas pipeline faced severe consequences from downstream natural gas price deregulation with existing upstream take-or-pay purchasing contracts in place. These contracts established prices to be paid to natural gas producers when downstream prices were fixed by regulation. Deregulation of prices led to lower downstream prices, leaving the pipeline with persistent losses. Its only path of mediating losses was to lower volumes taken and lower payments to producers, which was a breach of the take-or-pay purchasing contracts. We used engineering studies to project future, efficient production volumes and resulting payments in contrast to the opposing expert’s claims. This was one of a series of similar cases.
In Federal Court in Alabama, a retailer of industrial tools claimed that one of its retail competitors received lower wholesale prices and thus benefited from advantageous price discrimination (Robinson-Patman). We concluded that there were several fatal errors in methodology and execution in the opposing expert’s report. From previous cases we understood the primary factors involved in determining wholesale discounts specific to each retailer. The opposing expert ignored these factors. The plaintiff dropped the case after expert depositions were completed.
This case set the record for the largest damage award in the state of Ohio. Plaintiffs, composed of the class of all dealers, alleged that the manufacturer of medium and heavy trucks engaged in price discrimination through its sales to dealerships throughout the U.S. The judge ruled shortly before trial that the manufacturer did engage in price discrimination so that the questions for trial were related only to damages. The damage award totaled $2.0 billion. However, we were not allowed to fully contest the work of the plaintiffs’ economic expert. The Ohio Court of Appeals reversed the lower court’s decision, remanding the decision for further proceedings. In the second trial, we presented regression analysis demonstrating that pricing to dealers reflected the differing demand conditions within local markets. Thus, pricing to dealers was procompetitive. The second trial found no manufacturer’s liability, thereby erasing the $2.0 billion damage award. This was one of three such cases.
A large manufacturer of laundry detergent sold its products through retail grocery outlets. A competitor sold its products through distributors using direct household contacts. The competitor allegedly disparaged the large manufacturer’s products during household visits. The large manufacturer filed suit, claiming product disparagement. We tested the plaintiff’s through a telephone survey of households, first noting those who had and those who had not been visited by the competitor’s distributors. Second, the survey respondent was asked if he or she knew of the disparaging information. Statistically, the probability of being aware of the disparaging information was significantly higher when the household was visited (0.28 versus 0.72). Accordingly, the liability was established. The defendant’s expert failed to address this question.
A defined class of former and current smokers in Louisiana filed suit against cigarette manufacturers seeking damages to compensate for the costs of future physical exams designed for early detection of tobacco-related diseases. A physician calculated economic damages. We examined the damage calculations and discovered multiple fatal errors: 1) the magnitude was unreasonable, exceeding the Louisiana GDP, 2) the calculations were based upon the assumption that 100% of former and current Louisiana smokers would receive the physical exams, and 3) the calculations included the costs of smokers that would have been deceased due to unrelated causes. The Louisiana case was followed by the national case, tried in Washington, D.C. federal court.
The Resolution Trust Corporation (RTC) filed a number of lawsuits against directors and officers of several savings & loans that had failed. We developed explanations of the causes of such failures which did not include any of the RTC’s allegations or any actions or omissions among directors and officers. With sufficient research, we concluded that the failures were caused by 1) changes in banking regulations permitting banks to set their own rates paid on deposit accounts, thereby capturing deposits from savings & loans, 2) changes in the Federal Tax Code which eliminated the deduction of losses from syndications which previously supported higher real estate prices, commonly reflected in real estate holdings as loan collateral, and 3) the collapse of oil prices in 1986 which significantly affected the economies in oil-producing states. These explanations were successfully used in multiple expert reports and were published in the Banking Law Journal.
A manufacturer of paint and related products was sued twice by purchasers of its spackling compounds that contain asbestos. Both lawsuits were settled, but it expected many more asbestos-related lawsuits. Anticipating additional suits, it filed suit against the manufacturer of the spackling compounds on the grounds that the fact of the inclusion of asbestos was withheld from the paint manufacturer. The calculated damages consisted of the use of three separate models used in bankruptcy proceedings involving firms facing future asbestos-related lawsuits. The models included the average settlement values of claims related to mesothelioma, lung cancer, and asbestosis. There were four depositions of the economic expert taken before trial. The court admitted the calculations and testimony in response to a Daubert motion. The court and the jury accepted the methodology and calculations.
