Expert Testimony of Economics Expert in Bauxite Antitrust Case Allowed

Plaintiff’s hired economics expert to opine on damages.  Defendants filed a motion to exclude on reliability factors.  The court denied the motion.

Facts: This case (Resco Products, Inc. v. Nanchuan Minerals Group Co., Ltd. et al – United States District Court – Western District of Pennsylvania – September 18th, 2015) is an antitrust action in which the plaintiff alleges that the defendant’s conspired to control the supply and fix the price of refractory grade bauxite (RGB) sold between 2003 and 2009.  This case will be of interest to environmental economics expert witnesses.

This particular part of the action involves a motion by the defendant to exclude the testimony of Dr. Russell Lamb, an economist, who will opine on damages.  The parties are not in dispute that Dr. Lamb is qualified to opine in this case, nor do they argue that Dr. Lamb’s testimony “fits” (they agree that his testimony will help the trier of fact in determining class-wide damages).  They do not agree on whether or not his testimony is reliable and the court addressed this matter.

Dr. Lamb calculated an “overcharge” and applied that to Chinese RGB export sales to estimate damages caused by the defendant.  He assumed that the antitrust charges against the defendants was true.  In order to calculate the overcharge, Dr. Jones compared the RBG export price before the proposed conspiracy to the price during the conspiracy.

Dr. Lamb used a method called multiple regression analysis to control for external factors that may influence the demand, production cost, and supply of exported RGB.  Dr. Lamb’s calculations stemmed from multiplying the total volume of RGB export sales occurring during the class period by the overcharge number.

Discussion: In it’s motion, the defendant’s do not dispute multiple regression analysis as a method for measuring damages in antitrust cases.  They state that Dr. Lamb, in his expert witness report, left out certain independent variables that effected RGB export prices from 2003 to 2009.  These variables include: 1) China’s quota on exports 2) An increase in Chinese RGB prices and 3) The closure of China’s bauxite kilns and mines.

The defense replied that any omission in these variables do not go to the reliability of the expert, but to the weight of the evidence, which can be discussed during trial.

The court, in it’s opinion, stated that multiple regression analysis is an accepted tool used to calculate damages in antitrust cases and that any failure to utilize certain variables go to the probative nature of the evidence, not its admissibility.  Also, there may be times where multiple regression analysis may not be admitted as the variables are too thin, but the defense would have to introduce evidence to support its case that the omitted variables would change the outcome of the analysis.

The court opined that the plaintiff showed that the multiple regression analysis is reliable and, thus, admissible.  In addition, the defense did not introduce any omitted evidence that would skew the results of the analysis.

Held: The motion to exclude Dr. Lamb’s testimony on reliability was denied.