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In re Digital Music Antitrust Litigation

United States District Court, S.D. New York

July 18, 2017

In re Digital Music Antitrust Litigation

          OPINION AND ORDER

          LORETTA A. PRESKA, Senior United States District Judge

         Before the Court is a motion for class certification pursuant to Federal Rules of Civil Procedure 23(b)(2) and 23(b)(3), (Mot. Class Cert., Mar. 19, 2014, ECF No. 227), and an accompanying memorandum of law. (Mem. Class Cert., Mar. 19, 2014, ECF No. 228). Several individual plaintiffs seek to represent a putative nationwide class of Digital Music purchasers. The operative complaint before the Court is the Fourth Consolidated Amended Complaint ("FCAC"), filed September 25, 2015 (FCAC Sept. 25, 2015, ECF. No 319) Defendants include Sony BMG Music Entertainment ("Sony BMG"), UMG Recordings Inc. ("UMG") Warner Music Group Corp WMG")

         Capitol Records, Inc., d/b/a EMI Music North America ("Capitol"), Capitol-EMI Music, Inc. ("Capitol EMI"), EMI Group North America, Inc. ("EMI North America"), and Virgin Records America, Inc. ("Virgin"), who have filed an opposition to the motion for class certification. (Def. Opp. Class Cert., June 16, 2016, ECF No. 353). Plaintiffs have in turn replied. (Pl. Reply Class Cert., Nov. 7, 2016, ECF No. 367).

         The parties have also filed motions and accompanying memoranda of law to exclude the opinions rendered by each other's experts. (See Pl. Mot. Exclude Aaron Read, Dec. 19, 2016, ECF No. 372; Def. Mot. Exclude Roger Noll, Dec. 19, 2016, ECF No. 375; Pl. Mot. Exclude Janusz Ordover, Dec. 19, 2016, ECF No. 376; Pl. Mot. Exclude Supp. Decl. Janusz Ordover, Jan. 19, 2017, ECF No. 388). Additionally, Plaintiffs have moved to strike the supplemental declaration of Janusz Ordover attached to Defendants' motion to exclude the opinion of Roger Noll. (Letter from Alexandra Bernay, Dec. 23, 2016, ECF No. 384). For reasons explained in detail below, (1) Plaintiffs' motion to exclude the opinion of Aaron Read is denied, (2) Defendants' motion to exclude the opinion of Professor Noll is denied, (3) Plaintiffs' motion to exclude Professor Ordover's opinion is denied except insofar as it relates to price variability for digital downloads and albums, (4) Plaintiffs' motion to exclude the supplemental declaration of Professor Ordover is granted, and (5) Plaintiffs' motion to strike the supplemental declaration of Professor Ordover is denied.

         The Court also finds that Plaintiffs have failed to satisfy Rule 23(a)'s typicality requirement for the reason that the proposed class members would be subject to unique unclean hands defenses, while the Proposed Class Representatives would not.

         Failure to satisfy the threshold criteria of Rule 23(a) precludes class certification pursuant to Rule 23(b).

         Plaintiffs seek to certify two separate classes. Pursuant to Federal Rule of Civil Procedure 23(b)(2), Plaintiffs move to certify a nationwide injunctive relief class consisting of all purchasers of music downloads sold by Defendants indirectly to persons and entities residing in the United States. Plaintiffs seek to "enjoin Defendants' collusive practices and policies that violate Section 1 of the Sherman Act (15 U.S.C. § 1), and operate to artificially maintain/inflate Digital Music prices in the U.S." (Pl. Mem. Class Cert, at 17-18). Because (1) there is no basis to Plaintiffs' claim that there is a threat of future harm to the proposed class and (2) Plaintiffs have failed to show that injunctive relief would inure to the benefit of all members of the class, the motion for class certification pursuant to Rule 23(b)(2) is denied.

         Pursuant to Federal Rule of Civil Procedure 23(b)(3), Plaintiffs also move to certify nine separate damages classes under the antitrust and/or consumer protection laws of California, the District of Columbia, Arizona, Florida, Iowa, Michigan, Minnesota, Nevada, and South Dakota, for persons and entities who, while residents or within those states, purchased Digital Music indirectly from the Defendants. (Pl. Mem. Class Cert, at 1). For reasons explained below, Plaintiffs have failed to satisfy Rule 23(b) (3)'s predominance and superiority requirements. Accordingly, the motion for class certification pursuant to Rule 23(b)(3) is denied.

         BACKGROUND

         The allegations in this long-lived litigation as set forth in the FCAC are well-known to the Court. See In re Digital Music Antitrust Litig., 812 F.Supp.2d 390 (S.D.N.Y. 2011) ("In re Digital Music II"); Starr v. Sony BMG Music Entm't, 592 F.3d 314 (2d Cir. 2010); In re Digital Music Antitrust Litig., 592 F.Supp.2d 435 (S.D.N.Y. 2008) ("In re Digital Music I") ■ The Court assumes familiarity with the alleged facts at issue, but in order to situate the discussion a brief summary follows. Defendants produce, license, and distribute music sold online ("Digital Music" or "Internet Music") and on compact discs ("CDs"). (FCAC ¶ 47). Together, they control eighty percent of the market for Digital Music in the United States. (FCAC ¶ 108). Plaintiffs allege that Defendants have conspired to restrain trade in and fix prices of Digital Music in order to sell CDs at supracompetitive prices. (FCAC ¶ 56).

         In the initial stages of the alleged conspiracy, Defendants Bertlesmann, Inc., Warner Music Group Corp., and EMI launched an online service called MusicNet, a joint venture entity owned and controlled by various Defendants. (FCAC ¶ 57). Defendants UMG and Sony Corporation of America launched a similar online music service called Duet, later renamed pressplay. (FCAC ¶ 57). It too was a joint venture. All Defendants signed distribution agreements with MusicNet and pressplay. (FCAC ¶ 57). These joint ventures, along with the Recording Industry Association of America, allowed Defendants to "maintain[] prices at artificially high levels, eliminate[] competition among the Defendants in the pricing and terms of Internet Music sales, and provide[] one of several forums in which the Defendants could discuss their general desires to restrain trade in Internet Music and come to agreement on the specifics." (FCAC % 57). Defendants also allegedly used these joint ventures to share licensing terms and pricing information and to police the alleged agreements, among other things. (FCAC ¶ 87).

         Plaintiffs also allege that Defendants used Most Favored Nation ("MFN") clauses in Defendants' licensing agreements in order to guarantee that a licensor would receive at least equivalent licensing terms as another licensor. (FCAC ¶¶ 58, 81). The alleged effect of the MFN agreements was to set a wholesale price floor for Digital Music of 70 cents per song. (FCAC ¶¶ 89-90). Plaintiffs allege that despite the fact that the price of distributing Digital Music fell to essentially zero, the wholesale price of Digital Music increased uniformly. (FCAC ¶¶ 89-90). This was due in material part to Defendants' enforcement of the MFN clauses, which Defendants attempted to hide. (FCAC ¶¶ 82, 90-91). In addition, Defendants allegedly fixed the terms of sale of Digital Music, including digital rights management terms ("DRM"), which restricted transfer of songs to portable players, among other things. (FCAC ¶¶ 59, 66). Plaintiffs allege that but for the conspiracy, a defendant may have removed DRMs to gain market share. (FCAC ¶ 66). Allegedly, both the wholesale price and DRMs included with Defendants' music was fixed among Defendants because of Defendants' collusion, even when they sold to unaffiliated retailers. (FCAC ¶ 59).

         The core allegation is that Defendants' behavior sustained high prices for Digital Music, which made it less attractive to consumers and hampered the growth of Digital Music services generally. (FCAC ¶¶ 71-72). Plaintiffs point to eMusic, an independent competitor in the online music business, as an example of competitive pricing. It was the second-largest online retailer and charged - at retail - less than half of Defendants' wholesale price, and Defendants refused to do business with it. (FCAC ¶¶ 94-95). Plaintiffs allege that Defendants' motive to conspire was to support their ability to charge supracompetitive prices for CDs; they could do so because Digital Music was priced, through the alleged conspiracy, so as to be an unattractive or economically uncompetitive substitute. (FCAC ¶ 73).

         The procedural history of this case is also well-described in the Court's earlier opinions. See Starr, 592 F.3d at 320-21. From December 29, 2005, until July 2006, Plaintiffs filed various state court actions alleging that Defendants fixed the prices of Digital Music. Id. at 320. These actions were consolidated and transferred to this Court by the Judicial Panel on Multidistrict Litigation. Id. Plaintiffs filed a First Consolidated Amended Complaint in April 2007 and a Second Consolidated Amended Complaint in June 2007. Id.

         Defendants moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), which the Court granted by Memorandum and Order dated October 8, 2008, finding that Plaintiffs had failed to state a plausible claim under Twombly. See In re Digital Music I, 592 F.Supp.2d at 447. The Court of Appeals vacated the Court's Order and remanded for further proceedings consistent with its opinion. Starr, 592 F.3d at 317. The Defendants again moved to dismiss the action, which the Court granted in part and denied in part by Opinion and Order dated July 18, 2011. See In re Digital Music II, 812 F.Supp.2d at 420. Plaintiffs then filed the Third Consolidated Amended Complaint in August 2011. (ECF No. 159).

         Following the Court's 2011 Order, the parties proceeded to conduct discovery in advance of the instant motion for class certification. During that time, the parties have engaged in extensive discovery disputes -- most recently, Plaintiffs' motion to compel production of highly detailed transactional data, (Oct. 12, 2016, ECF No. 362) - resulting in a delay in resolving these proceedings of over five years. Plaintiffs filed the Fourth Consolidated Amended Complaint in September 2015. (Sept. 25, 2015, ECF No. 319).

         The Court turns first to the parties' motions to exclude the opinions of each other's experts.

         DISCUSSION

         I. Motions to Exclude

         a. Legal Standard

         The admissibility of expert testimony is governed by Federal Rule of Evidence 702, which provides:

If scientific, technical, or other specialized knowledge will assist the trieroffact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

Fed. R. Evid. 702.

         In order for the expert opinion to be admissible, the witness "must be qualified as an expert, the testimony must be reliable, and the testimony must assist the trier of fact." In re Fosamax Prods. Liab. Litig., 645 F.Supp.2d 164, 172 (S.D.N.Y. 2009).

         "Courts within the Second Circuit have liberally construed expert qualification requirements." In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liab. Litig., 2008 WL 1971538, at *5 (S.D.N.Y. May 7, 2008)(internal quotation marks omitted). "A witness's qualifications 'can only be determined by comparing the area in which the witness has superior knowledge, skill, experience, or education with the subject matter of the witness's testimony.'" In re Fosamax, 645 F, Supp. 2d at 172

         (quoting Carroll v. Otis Elevator Co., 896 F.2d 210, 212 (7th Cir. 1990)).

         The Advisory Committee's note to Rule 702 explains that the Rule was amended to include the three reliability-based requirements in response to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and its progeny, Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999), and General Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997). See Fed.R.Evid. 702 advisory committee's note. In Daubert, the Supreme Court interpreted Rule 702 to require district courts to act as gatekeepers by ensuring that expert scientific testimony "both rests on a reliable foundation and is relevant to the task at hand." 509 U.S. at 597. This requires "a preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue." Id. at 592-93; see also Kumho Tire, 526 U.S. 137 (holding that the gatekeeping function applies to all expert testimony, whether based on scientific, technical or other specialized knowledge).

         To be scientifically valid, the subject of expert testimony must rest on "good grounds, based on what is known." Daubert, 509 U.S. at 590 (internal guotation marks omitted). In Daubert, the Court set forth a non-exclusive list of factors that district courts might consider in gauging the reliability of scientific testimony. Id. at 593-95. These factors include: (1) whether the theory has been tested; (2) whether the theory has been subjected to peer review and publication; (3) the known or potential rate of error and whether standards and controls exist and have been maintained with respect to the technique; and (4) the general acceptance of the methodology in the scientific community. Id. "Whether some or all of these factors apply in a particular case depends on the facts, the expert's particular expertise, and the subject of his testimony." In re Fosamax, 645 F.Supp.2d at 173 (citing Kumho Tire, 526 U.S. at 138), A district court has broad discretion both in determining the relevant factors to be employed in assessing reliability and in determining whether that testimony is in fact reliable. Kumho Tire, 526 U.S. at 153; Zuchowicz v. United States, 140 F.3d 381, 386 (2d Cir. 1998).

         Weighing whether the expert testimony assists the trier of fact goes primarily to relevance. Daubert, 509 U.S. at 591. Relevance can be expressed as a question of "fit" -- "whether expert testimony proffered in the case is sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute." Id. (citing United States v. Downing, 753 F.2d 1224, 1242 (3d Cir. 1985)). In addition, expert testimony is not helpful if it simply addresses "lay matters which a jury is capable of understanding and deciding without the expert's help." United States v. Mulder, 273 F.3d 91, 101 (2d Cir. 2001)(internal citation and quotation omitted). Finally, the testimony is not helpful if it "usurp[s] either the role of the trial judge in instructing the jury as to the applicable law or the role of the jury in applying that law to the facts before it." United States v. Duncan, 42 F.3d 97, 101 (2d Cir. 1994)(internal citation and quotation omitted).

         "In deciding whether a step in an expert's analysis is unreliable, the district court should undertake a rigorous examination of the facts on which the expert relies, the method by which the expert draws an opinion from those facts, and how the expert applies the facts and methods to the case at hand." Amorgianos v. Nat'l R.R. Passenger Corp., 303 F.3d 256, 267 (2d Cir. 2002). However, in accordance with the liberal admissibility standards of the Federal Rules of Evidence, only serious flaws in reasoning or methodology will warrant exclusion. Id. "As long as an expert's scientific testimony rests upon 'good grounds, based on what is known, ' it should be tested by the adversary process -- competing expert testimony and active cross-examination -- rather than excluded from jurors' scrutiny for fear that they will not grasp its complexities or satisfactorily weigh its inadequacies." Ruiz-Troche v. Pepsi Cola of Puerto Rico Bottling Co., 161 F.3d 77, 85 (1st Cir. 1998)(quoting Daubert, 509 U.S. at 596); see also Amorgianos, 303 F.3d at 267. If an expert's testimony lies within "the range where experts might reasonably differ, " the jury, and not the trial court, should "decide among the conflicting views of different experts." Kumho Tire, 526 U.S. at 153.

         b. Professor Roger G. Noll

         Professor Roger Noll is a Professor Emeritus of Economics at Stanford University and a Senior Fellow at the Stanford Institute for Economic Policy Research, where he is the Director of the Program on Regulatory Policy. (Noll Report at 1, Mar. 19, 2014, ECF No. 231). He has a Ph.D. in economics from Harvard University and has served as a consultant to the Antitrust Division of the U.S. Department of Justice, the U.S.

         Federal Trade Commission, the Federal Communications Commission, and the Senate Subcommittee on Antitrust and Monopoly. (Id.) Professor Noll has published widely in the field of antitrust economics and has taught the subject to undergraduate and graduate students for over 50 years. (Id.)

         Defendants seek to exclude the opinion of Professor Noll on the grounds that it is "implausible as a matter of economics and antitrust theory and inconsistent with both the record and evidence and Prof. Noll's own data and analysis." (Def. Mem. Exclude Noll at 1, Dec. 19, 2016, ECF No. 380). Defendants' argument centers on the contention that Professor Noll has materially changed his theory of liability in the course of this litigation. In particular, Professor Noll has "always alleged that the Defendants conspired to fix wholesale prices for music downloads, " whereas Professor Noll's reply declaration "opines that Defendants conspired to fix the profit margins that Defendants would make on each sale of music downloads sold to online music distribution services." (Id.) Defendants claim that Professor Noll changed his analysis as a result of making a series of admissions during his deposition that allegedly exposed flaws in his methodology. (Id.)

         Having staked their Daubert motion entirely on the argument that Professor Noll has changed his antitrust theory from one of price-fixing to margin-fixing, Defendants' support for this assertion is remarkably thin. Defendants cite Professor Noll's reply declaration, where he states that "nearly all download products . . . have approximately the same profit margin at both wholesale and retail." (Def. Mem. Exclude Noll at 5 (citing Noll Reply at 38, Nov. 7, 2016, ECF No. 368)). Defendants also cite Professor Noll's assertion that the "validity of [his] method [] depends on whether different download products (with different prices) have approximately the same profit margin." (Id. (citing Noll Reply at 27))

         It is readily apparent, however, that none of the statements cited by Defendants aver that the conspiracy took the form of collusion on profit margins. The Court is not surprised that Professor Noll would cite profit margins as a measure of price collusion because prices and profit margins are inherently related. As Professor Noll explains in his supplemental declaration, "the percentage unit profit margin is the Lerner Index: L = (P - m)/P, where P is price and m is the marginal cost. Hence, if defendants agree to fix the price and if m is a constant, the price-fixing agreement also fixes the profit margin." (Noll Supp. Decl. at 5, Jan. 23, 2017, ECF No. 393). Accordingly, the mere mention of using differences in profit margins to measure the impact and damages of a price-fixing conspiracy between the Defendants does not imply that Professor Noll changed his theory of the liability between the Noll Report and the Noll Reply.

         Further, Defendants have ignored the many statements made by Professor Noll that are consistent with Plaintiffs' theory of a price-fixing conspiracy. (See, e.g., Noll Reply at 30 ("[I]f the goal of the defendants was in part to keep download prices high to reduce cannibalization of CD album sales. . . . More generally, because the purpose of collusion is to raise prices, members of a price-fixing cartel who charge some customers more than the collusive price are hardly guilty of violating the cartel agreement."); 37 ("The appropriate model for a market with heterogeneous products is that each product enjoys some market power. ... If download products compete in this way, collusively raising the prices of some products will cause an increase in the demand for and the prices of products."); 16 ("[I]f CDs are competitively priced and are perfect substitutes for downloads, then competition from CDs will force the price of downloads to the competitive level. Consequently, an attempt to engage in collusion to increase download prices above the competitive level would be unprofitable unless . . .")).

         Accordingly, Professor Noll has provided a single method to show common proof of the alleged price-fixing conspiracy and one formula for calculating damages, namely, "us[ing] the difference in the percentage mark-up of price over marginal cost between digital downloads and the competitive benchmark products (CDs) to measure the anticompetitive effect of collusion on the prices of downloads and to generate a common formula for calculating damages for all digital downloads." (Noll Supp. Decl. at 2).

         Defendants cite four reasons why Professor Noll's opinion is inadmissible, three of which rest on the predicate assumption that Professor Noll changed his theory of liability. First, Defendants argue that a margin-fixing theory is implausible because antitrust conspiracies generally require that the conspirators be able to observe, and thereby adhere to, each other's behavior. (Def. Mem. Exclude Noll at 1, 7-10). Defendants may well be correct that a margin-fixing conspiracy is implausible because of the difficulty of policing any such agreement by the co-conspirators. However, because Defendants mischaracterize Professor Noll's theory of the conspiracy, the Court rejects Defendants' argument as frivolous.

         Second, Defendants argue that a margin-fixing theory is not consistent with evidence in the record, which shows that Defendants' margins on Digital Music varied dramatically as a result of variable royalty rates for different artists. (Id. at 2, 10-14) . Once again, the premise of Defendants' argument is incorrect: Plaintiffs allege a price-fixing conspiracy, not a margin-fixing conspiracy. Further, because Defendants have not produced cost data broken down by individual artist, (see Opp. Exclude Roger Noll, Jan. 19, 2017, ECF No. 388) - notwithstanding the vague assertions by record company executives that royalty rates differ, (see Def. Mem. Exclude Roger Noll at 12-13) -- the Court will not hold Plaintiffs responsible for failing to analyze data to which they did not have access. See In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 613 (8th Cir. 2011) ("While there is little doubt that bifurcated discovery may increase efficiency in a complex case such as this, it also means there may be gaps in the available evidence. Expert opinions may have to adapt as such gaps are filled by merits discovery, and the district court will be able to reexamine its evidentiary rulings.").

         Third, Defendants argue that a margin-fixing theory is unreliable because it assumes any music download above $0.00 includes an overcharge and therefore cannot discern between a collusive and non-collusive price. (Def. Mem. Exclude Noll at 3, 14-16). Again, Defendants' argument depends on a mischaracterization of Professor Noll's theory of liability and therefore lacks merit.

         Fourth, Defendants' only argument that does not depend on assuming a margin-fixing conspiracy contends that Professor Noll fails to account for relevant data concerning varied pricing throughout the class period that undermines Professor Noll's pass-through regression analysis, in particular by excluding all observations of retail sales at $.99. (Id. at 3, 16-17). However, Professor Noll explains that the pass-through regression tests the hypothesis that retail prices are 1.4 times wholesale prices, which is the ratio for hundreds of millions of transactions at the most common prices. (Noll Reply at 42). "Because these ratios tell us the retail price mark-up on a large fraction of sales, the point of the regression is to test whether products that are not at the standard prices also have essentially the same retail mark-up." (Id. at 44). Defendants fail to respond in their Daubert motion to Professor Noll's justification for excluding certain price data from the pass-through regression, and the Court does not find a flaw in his methodology serious enough to warrant exclusion. See Amorgianos, 303 F.3d at 267.

         Finally, citing Comcast Corp. v. Behrend, which held that "any model supporting a plaintiff's damages must be consistent with its liability case, " 133 S.Ct. 1426, 1433 (2013), Defendants conclude that Professor Noll's opinion is inadmissible "because it purports to assess liability and damages based on a margin-fixing conspiracy, whereas Plaintiffs' theory is that Defendants injured them with a wholesale price-floor conspiracy." (Def. Mem. Exclude Noll at 18). As explained above, Plaintiffs and Professor Noll have articulated a consistent price-fixing conspiracy regarding liability and in support of the damages model. Defendants' reliance on Comcast therefore fails.

         On December 16, 2016, Defendants filed a supplemental declaration by Professor Janusz Ordover in support of their motion to exclude Professor Noll's opinion. (Ordover Supp. Decl, Dec. 22, 2016, ECF No. 382). Plaintiffs moved to strike Professor Ordover's supplemental declaration on the grounds that it is a rebuttal to Professor Noll's reply declaration rather than a declaration in support of Defendants' Daubert motion. (Letter from Alexandra Bernay, Dec. 23, 2016, ECF No. 384). In their opposition to Defendants' motion to exclude, Plaintiffs also move to exclude Professor Ordover's supplemental declaration on the grounds that it is unreliable under Daubert.

         Like Defendants' motion to exclude, the entirety of Professor Ordover's supplemental declaration incorrectly assumes that Professor Noll changed his theory of liability from a conspiracy of price-fixing to margin-fixing. As explained above, Defendants' premise is contradicted by substantial evidence in the record of this case. The Court of Appeals has instructed that expert analysis must be "reliable at every step, " Amorgianos, 303 F.3d at 267, and that "a trial judge should exclude expert testimony if it is . . . based on assumptions that are so unrealistic and contradictory as to suggest bad faith, " Zerega Ave. Realty Corp. v. Hornbeck Offshore Transp., LLC, 571 F.3d 206, 213-14 (internal citation and quotation marks omitted). Professor Noll propounds the same theory of liability on the basis of price-fixing in both the Noll Report and Noll Reply. Professor Ordover's supplemental declaration therefore amounts to little more than a frivolous strawman and is accordingly unreliable under Daubert. It will play no further role in the Court's consideration.

         On the other hand, Plaintiffs cite no authority that would prevent Defendants from supporting a Daubert motion to exclude the opposing side's expert with a declaration from their own expert witness. Professor Ordover writes in his supplemental declaration that Professor Noll changed his theory of liability, and Defendants rely upon Professor Ordover's supplemental declaration to argue that Professor Noll's opinion is unreliable. Even if the Court were to consider Professor Ordover's supplemental declaration an untimely sur-reply, "[u]ntimely expert submissions should be disregarded unless the proponent of the evidence can demonstrate that his delay in complying with the required deadlines was substantially justified or that it was harmless, that is, that it did not prejudice the other side." Bickham v. Coca Cola Refreshments USA, Inc., 2015 U.S. Dist. LEXIS 156066, at *11 (S.D.N.Y. Nov. 18, 2015). As the Court explains above, Professor Ordover's supplemental declaration is unreliable under Daubert and is therefore excluded. Accordingly, Plaintiffs have suffered no prejudice, and the motion to strike is denied.

         For the foregoing reasons, Defendants' motion to exclude the opinion of Professor Roger Noll is denied, Plaintiffs' motion to strike Professor Ordover's supplemental declaration is denied, and Plaintiffs' motion to exclude Professor Ordover's supplemental declaration is granted.

         c. Professor Janusz Ordover

         Professor Janusz Ordover is a Professor Emeritus of Economics and former Director of the Masters in Economics Program at New York University, where he taught for 43 years. (Ordover Decl. ¶ 1, June 16, 2016, ECF No. 354). His areas of specialization include industrial organization, antitrust, regulation economics, and the intersection between antitrust and intellectual property. (Id.) Professor Ordover earned his Ph.D. in economics from Columbia University. (Id. at Attachment 1). From 1991 to 1992, he served as Deputy Assistant Attorney General for Economics at the Antitrust Division of the United States Department of Justice. (Id. at 1). Professor Ordover has also served as an advisor on antitrust and regulatory issues to organizations including the American Bar Association, the World Bank, the Organization for Economic Cooperation and Development, the Inter-American Development Bank, and the governments of Poland, Hungary, Russia, the Czech Republic, Australia, and others. (Id. ¶ 2).

         Plaintiffs move to exclude the declaration of Professor Ordover on a variety of grounds. As an initial matter, the Court notes that it is incumbent upon Plaintiffs, not Defendants, to "present a damages model that can be used on a class-wide basis based on common proof." In re Fresh Del Monte Pineapples Antitrust Litig., 2008 WL 5661873, at *9 (S.D.N.Y. Feb. 20, 2008). Rebuttal experts, on the other hand, have a "less demanding task" because "they have no burden to produce models or methods of their own; they need only attack those of plaintiffs' expert[]." In re Zyprexa Prods. Liab. Litig., 489 F.Supp.2d 230, 285 (E.D.N.Y. 2007). Further, contradictory expert testimony does not control admissibility. So long as the rebuttal expert's testimony is reliable, it is the role of the factfinder to determine issues of trustworthiness and credibility through "conventional devices" of "cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof." Daubert, 509 U.S. at 596.

         i. Professor Ordover's opinion that class members illegally downloaded music

         Plaintiffs argue that Professor Ordover's assertion that a majority of the proposed class members illegally downloaded Digital Music is unreliable. (Pl. Mem. Exclude Ordover at 3, Dec. 20, 2016, ECF No. 378). Plaintiffs take particular issue with a May 2004 Ipsos Insight study because it was (1) commissioned by Defendant Sony, (2) conducted early in 2000 and therefore ignores the later class period, and (3) contradicted by findings in several other studies. (Id. at 3-4).

         Defendants' argument is meritless. Professor Ordover cites a number of authorities in addition to the 2004 Ipsos report, including Plaintiffs' own expert, Professor Noll, that support the proposition that illegal downloading of Digital Music was rampant during the class period. (See Ordover Decl. ¶ 103). These studies are consistent with the Court's prior finding that there was "widespread unauthorized downloading of Digital Music during the class period." (Mem. and Op., Oct. 9, 2008, ECF No. Ill) . In citing these studies, Professor Ordover does not seek to "establish a reliable connection showing that class members illegally downloaded, " (Pl. Reply Exclude Ordover, Feb. 2, 2017, ECF No. 398), as Plaintiffs contend. Rather, the purpose of Professor Ordover's observation is to show why individualized inquiries will be necessary to determine which class members engaged in such illegal downloading in order to offset their damages. (See Ordover Decl. SI 104 n. 121 ("I note that there is an overlap between consumers who downloaded music legally and consumers who pirated music.")). To the extent that Plaintiffs wish to dispute the interpretation of this evidence, a Daubert motion is an inappropriate stage in the litigation to do so. Campbell v. Metro. Prop. & Cas. Ins. Co., 239 F.3d 179, 186 (2d Cir. 2001) ("[T]he weight of the evidence is a matter to be argued to the trier of fact."). Rather, the Supreme Court has instructed that district courts must focus "solely on principles and methodology, not on the conclusions that they generate." Daubert, 509 U.S. at 595. Plaintiffs have raised no issues with Professor Orover's principles or methodology that would warrant exclusion of his analysis of this issue.

         ii. Professor Ordover's opinion that CDs are not a valid benchmark because of the lack of broadband internet penetration

         Plaintiffs seek to exclude Professor Ordover's opinion that CDs are not a valid benchmark for Digital Music because of the lack of broadband internet penetration during the class period. (Pl. Mem. Exclude Ordover at 5). Plaintiffs dispute Professor Ordover's finding of low broadband penetration in the United States applies specifically to music buyers, who may have had higher adoption rates. However, Plaintiffs ignore the fact that Professor Ordover is responding to an assertion made by their own expert, Professor Noll.

         In his Report, Professor Noll states that "for the large majority of consumers who own computers and high-speed Internet connections, the two products are functionally equivalent." (Noll Report at 6). Further, "if a consumer has the necessary electronic devices, a CD and a digital download are functionally equivalent in that either can be converted to the other at a small cost." (Id., at 20). A finding of functional equivalency affects Professor Noll's analysis in determining whether or not CDs and Digital Music are economic substitutes, thereby helping to define the relevant market. (Id. at 19, 20). Professor Ordover merely introduces evidence in the form of FCC and Pew Research reports showing that there were low levels of broadband penetration during the early years of the class period, (Ordover Decl. 1 47), which Professor Noll corroborates in his own declaration. (See Noll Report at 20 ("Early in the class period, the penetration of home computers and wireless devices with high speed Internet access was low . . ."). Plaintiffs may speculate that broadband penetration for class members is "likely" to be much higher than the United States as a whole, (see Pl. Reply Exclude Ordover at 5) - although the Court notes that Professor Noll has cited no ...


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