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Allen v. Dairy Farmers of America, Inc.

United States District Court, Second Circuit

January 23, 2014

ALICE H. ALLEN, LAURANCE E. ALLEN, d/b/a Al-lens Farm, GARRET SITTS, RALPH SITTS, JONATHAN HAAR, CLAUDIA HAAR, and RICHARD SWANTAK, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
DAIRY FARMERS OF AMERICA, INC., and DAIRY MARKETING SERVICES, LLC, Defendants.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' DAUBERT MOTION TO EXCLUDE CERTAIN OPINIONS AND TESTIMONY OF PROF. JOSEPH KALT (Doc. 417)

CHRISTINA REISS, Chief District Judge.

Plaintiffs Alice H. Allen and Laurance E. Allen, d/b/a Al-lens Farm, Garret Sins and Ralph Sins, Jonathan and Claudia Haar, and Richard Swantak (collectively, "Plaintiffs") have brought this lawsuit against Defendants Dairy Farmers of America, Inc. ("DFA") and Dairy Marketing Services, LLC ("DMS") (collectively, "Defendants"), alleging five violations of the Sherman Act, 15 U.S.C. §§ 1-2: (1) conspiracy to monopolize/monopsonize in violation of § 2 of the Sherman Act; (2) attempt to monopolize/monopsonize in violation of § 2 of the Sherman Act; (3) unlawful monopoly/monopsony in violation of § 2 of the Sherman Act; (4) price fixing in violation of § 1 of the Sherman Act; and (5) conspiracy to restrain trade in violation of § 1 of the Sherman Act.

This matter came before the court on Plaintiffs' motion to exclude certain opinions and testimony of Defendants' expert witness, Joseph Kalt, Ph.D. (Doc. 417.) Plaintiffs assert that Dr. Kalt's opinions are both unreliable and irrelevant and therefore fail to satisfy the admissibility standards for expert testimony as required by Fed.R.Evid. 702 and Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993), and its progeny. (Doc. 417 at 8.) Plaintiffs also challenge Dr. Kalt's qualifications to testify about what Plaintiffs characterize as "cooperative governance." Id. at 22.

Defendants oppose the motion, arguing: "While the grounds for [Plaintiffs'] arguments are varied, each is built on a mischaracterization of the opinion in question, the method by which it was reached, and/or the issue to which it pertains. Once Plaintiffs' rhetoric is replaced with the actual substance of Dr. Kalt's opinions..., [Plaintiffs'] criticisms are quickly shown to be baseless." (Doc. 427 at 5.) Defendants filed their own motion to exclude certain opinions and testimony of Plaintiffs' expert witness, Dr. Gordon Rausser, Ph.D., which has been addressed in a separate Opinion and Order.

The court heard oral argument on both pending motions on August 1 and 5, 2013.

I. Factual and Procedural Background.

Plaintiffs allege that Defendants engaged in a wide-ranging conspiracy at both the processor and cooperative levels to fix, stabilize, and artificially depress prices for fluid Grade A milk and to allocate markets within Federal Milk Market Order 1 ("Order 1") among the co-conspirators.

Plaintiffs' proposed product market is fluid Grade A milk. Their proposed geographic market is Order 1 covering areas in Connecticut, Delaware, the District of Columbia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia.

The court has certified a class consisting of all dairy farmers, whether individuals, entities, or members of cooperatives, who produced and pooled fluid Grade A milk on Order 1 during any time from January 1, 2002 to the present.[1] Defendants and Defendants' co-conspirators are excluded from the class. Plaintiffs identify Defendants' co-conspirators as Dean Foods ("Dean"), HP Hood LLC ("Hood"), National Dairy Holdings ("NDH"), Farmland Dairies LLC ("Farmland"), Kraft, Dairylea Cooperative, Inc. ("Dairylea"), St. Albans Cooperative Creamery, Inc. ("St. Albans"), Agri-Mark, Inc. ("Agri-Mark"), Land O'Lakes, Inc. ("LOL"), and Maryland and Virginia Milk Producers Cooperative Association, Inc. ("MDVA").

Plaintiffs seek monetary damages in an amount which represents the additional amount Plaintiffs and other class members would have received for sales of fluid Grade A milk in the absence of the antitrust violations alleged, and treble damages under Section 4 of the Clayton Act, 15 U.S.C. § 15. In addition to their request for monetary relief, Plaintiffs seek an injunction prohibiting conduct found by the court or a jury to be illegal.

II. Conclusions of Law and Analysis.

Plaintiffs seek to exclude Dr. Kalt from testifying regarding the following topics: (1) his analyses and opinions concerning the relevant geographic market; (2) his opinions that are based on his univariate analysis regarding farmer prices and premiums; (3) his opinions that rely on United States Department of Agriculture ("USDA") survey data of announced prices that Plaintiffs argue are not representative of the actual prices paid by fluid milk processors; and (4) his opinions on "cooperative governance" matters, including specifically his opinions regarding the governance of dairy cooperatives.

A. Standard of Review.

"A district court's discretion to admit expert testimony is controlled by Rules 702, 703, and 403 of the Federal Rules of Evidence." United States v. Dukagjini, 326 F.3d 45, 51 (2d Cir. 2002). Rule 702 provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:
(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence ...

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