Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Egg producer’s expert testimony allowed in price fixing suit, (Jul 20, 2016)

By Linda O’Brien, J.D., LL.M.

In a price fixing class action brought against egg producers, the direct purchasers of egg products were unable to exclude the report, opinions, and testimony of an egg producer’s expert. In denying the plaintiffs’ motion to exclude, the federal district court in Philadelphia determined that the egg producer’s expert’s report showed circumstantial evidence of the egg producer’s non-participation in the alleged conspiracy and provided scientific and technical analysis that would assist the jury in understanding the evidence (In re Processed Egg Products Antitrust Litigation, July 19, 2016, Pratter, G.).

In September 2008, grocery stores, commercial food manufacturers, restaurants, and other food service providers that purchased shell eggs and egg products filed a series of class action suits against egg producers and trade association groups for manipulating the supply of eggs and egg products and thereby affecting domestic prices for those goods. The direct action plaintiffs (DAPs) and indirect purchaser plaintiffs sought to exclude the testimony of Dr. Jesse David, an economist retained by defendant Rose Acre Farms, Inc.

David proposed to testify that during the alleged conspiracy period, Rose Acre’s flock increased in size, thereby challenging the plaintiffs’ inference that Rose Acre participated in the limit-the-flock conspiracy. In his report, David concluded that Rose Acre pursued a business strategy consistent with unilateral self-interest and Rose Acre’s conduct was inconsistent with the plaintiffs’ allegations that it participated in a conspiracy to restrict supply.

The plaintiffs’ contention that David’s opinion was inadmissible because its subject matter was irrelevant to the jury’s ultimate analysis was rejected. The court noted that, to accept the plaintiffs’ position, it was speculative as to what the evidence or outcome of the trial would be. Moreover, the existence of an alleged agreement to limit supply was disputed. The plaintiffs’ pretrial characterization of their case as one relying on direct rather than circumstantial evidence did not foreclose the defendant from offering circumstantial evidence of its own self-interest or to show that it did not agree with the alleged conspiracy. The plaintiffs had not yet proven the existence of a conspiracy or Rose Acre’s participation in it. Evidence of Rose Acre’s flock expansion would be circumstantial evidence that no such agreement existed, according to the court.

Also rejected was the plaintiffs’ contention that David’s testimony regarding the number of birds that an egg company owns was straightforward and expert testimony was not required. The court reasoned that the topics covered and analysis provided in David’s report exceeded the knowledge of the average juror. In his report, David compiled data from 17 Rose Acre farms over 15 years and extrapolated the increase in total inventory over that time period. He used the data to draw comparisons between U.S. hen layer data and regression models proposed by the plaintiffs’ experts, and concluded that Rose Acre’s flock increased faster than the national average. The data and opinions in David’s report drew upon scientific, technical, or other specialized knowledge that would assist a jury to understand the evidence.

Finally, the plaintiffs’ general characterizations of David’s opinion as "legally irrelevant" and "prejudicial" failed to provide any specific reasoning why such prejudice would outweigh the probative value of his testimony. In the court’s view, David’s report provided circumstantial evidence of Rose Acre’s non-participation in the alleged conspiracy and responded to the arguments raised by the plaintiffs’ experts. The specific probative value of his evidence need not be measured, aside from finding that its value was not substantially outweighed by the unspecified prejudicial effect contended by the plaintiffs, the court concluded.

The case is No. 2:08-md-02002-GEKP.

Attorneys: Mindee J. Reuben (Weinstein Kitchenoff & Asher LLC) and Michael D. Hausfeld (Hausfeld LLP) for Direct Purchaser Plaintiffs. Stephen M. Rummage (Davis Wright Tremaine LLP) for National Food Corp. Jan P. Levine (Pepper Hamilton LLP) for United Egg Producers, Inc. William M. Goodman (Kasowitz, Benson, Torres & Friedman LLP) for NuCal Foods, Inc. Samantha L. Southall (Buchanan Ingersoll & Rooney PC) for Hillandale Gettysburg LP.

Companies: National Food Corp.; United Egg Producers, Inc.; NuCal Foods, Inc.; Hillandale Gettysburg LP

Cases: Antitrust PennsylvaniaNews