Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Wis.: Expert testimony in cattle sexing technology antitrust action allowed, (Aug 10, 2016)

By Michael Menzhuber, J.D., LL.M.

Motions by a bull semen provider to exclude the testimony of a cattle sexing technology company’s two experts, during the damages phase of an action, which alleged antitrust and unfair competition against the technology company, were denied by the federal district court in Madison, Wisconsin. Similarly, the technology company’s motions to exclude testimony of certain experts for the provider were granted in part and denied in part (ABS Global, Inc. v. Inguran, LLC, August 9, 2016, Conley, W.).

ABS Global, Inc. provides bull semen to dairy and beef producers for artificial insemination. Inguran, LLC d/b/a Sexing Technologies (ST) provides sorting technology services to ABS and other companies to separate male and female bull sperm. ABS claimed that ST monopolized and exercised market power in the alleged "Sexed Bovine Semen Processing Market," in violation of Section 2 of the Sherman Act. In addition, ABS asserted that ST’s conduct in maintaining its monopoly in the sexed semen market was anticompetitive, and that ST engaged in unfair competition through its patent acquisitions and licenses.

After ruling, in a prior hearing, on each party’s motion in limine to exclude expert testimony on misappropriated trade secrets and contract issues, the court considered the parties remaining challenges to expert testimony on damages.

Damages. ABS sought to exclude certain testimony of W. Todd Schoettelkotte during the damage phases of the trial to rebut ABS’s position on damages related to its antitrust claim because he: (1) was a CPA with no expertise regarding bull semen; (2) had never run a study to test bovine sperm fertility; (3) did not know how such studies confirm pregnancy in a cow or heifer; and (4) did not properly rely on the opinion of any other expert in offering an opinion on the relative fertility rates using ST’s technology and the technology (GSS) ABS had available in June 2014, the starting date for determining ABS’s damages. The court, however, found that ST had already admitted evidence that a reasonable jury might find would support Schoettelkotte’s assumption. Consequently, it denied ABS’s motion.

ABS also sought to exclude similar testimony by ST’s economist Barry Harris on the basis that: (1) he had no expertise in bovine sperm fertility; (2) his fertility-related testimony was factually inaccurate; and (3) he relied on unreliable evidence. The court, however, was not convinced that Harris’ lack of expertise in bovine fertility, or his reliance on the evidence he cited, disqualified him for giving his opinion on the economic feasibility of a June 2014 launch of ABS’s GSS. Consequently, it denied ABS’s motion.

The court granted in part and denied in part ST’s motion to exclude testimony by ABS’s damages expert Jane Tereba on attorney fees and expenses. The court determined that a damages award (subject to threefold recovery) may include attorney fees and costs incurred due to anticompetitive conduct, separate and apart from any attorney fees incurred in pressing an antitrust claim itself. However, the court found that the jury was ill-equipped to determine which fees pertained to ABS’s patent defense. Consequently, the court determined that Tereba’s opinion on the specific amount of attorney fees and expenses ABS incurred as a result of ST’s alleged antitrust violation would not be presented to the jury.

The court denied ST’s motion to exclude Tereba’s interest-related opinions because her approach, as stated, was reliable enough to warrant inclusion over a Federal Rule of Civil Procedure 702 or Daubert objection. Furthermore, ST’s challenges to ABS’s interest-related damages went to the weight the jury should place on Tereba’s calculations, not the admissibility.

Reasonable royalties. The court also denied ST’s motion to exclude the testimony of Kevin Murphy about the amount of reasonable royalties because: (1) the starting point and adjustments that were a basis for his analysis were not so unreliable that his testimony on these issues would be inadmissible; and (2) his conclusions were based on a methodology that he adequately explained and ST did not effectively discredit.

The case is No. 14-cv-503-wmc.

Attorneys: David Timothy Pritikin (Sidley Austin LLP) and Michael J. Modl (Axley Brynelson, LLP) for ABS Global, Inc. Sarah Anne Zylstra (Boardman & Clark LLP) and Catherine Fairley Spillman (Akin Gump Strauss Hauer & Feld LLP) for Inguran, LLC.

Companies: ABS Global, Inc.; Inguran, LLC

Cases: Antitrust WisconsinNews