The Tenth Circuit Court of Appeals issued its opinion in In re Urethane Antitrust Litigation: Dow Chemical Co. v. Seegott Holdings, Inc. on Monday, September 29, 2014.
A class of plaintiffs brought suit against Dow Chemical Company and other manufacturers of polyurethane products, alleging price fixing in violation of the Sherman Antitrust Act and the Clayton Antitrust Act. A jury returned a verdict against Dow for $400,049,039. The district court entered judgment for the plaintiffs, denying Dow’s motions for decertification of the class and judgment as a matter of law. Dow appealed, arguing (1) class certification was improper because common questions did not predominate over individualized questions; (2) the district court should have excluded the testimony of the plaintiffs’ expert witness on statistics; (3) the evidence on liability was insufficient; and (4) the damages award lacked an evidentiary basis and the resulting judgment violated the Seventh Amendment. The Tenth Circuit addressed each contention in turn.
Dow argued that it was entitled to show in individualized proceedings that certain class members could not have been injured by the price fixing. The Tenth Circuit conceded that some class members could have avoided the price fixes by negotiating lower prices or switching to substitute products, but found no error in the district court’s finding that class-wide issues predominated over individual issues, because the key elements of the price fixing claim raised common questions that were capable of class-wide proof. Dow also argued that the plaintiffs’ expert, Dr. McClave, used unacceptable regression and extrapolation models to prove class-wide impact and damages. The Tenth Circuit noted that Dr. McClave had not yet testified when the court certified the class, so it could not have relied on his opinions. Although Dr. McClave had testified by the time Dow moved to decertify, the Tenth Circuit found no error in the trial court’s denial of the decertification motion, noting it was filed late — on the day before trial — and also that liability was not proven through a sample of class members so Dr. McClave’s extrapolation methods to prove damages had no bearing on proof of liability.
Dow also contended the district court erred in allowing Dr. McClave’s testimony. The Tenth Circuit disagreed, finding that many of Dow’s complaints spoke to the weight of the evidence and not admissibility. Dow had numerous complaints about the methods Dr. McClave used to determine that price fixing had occurred and to calculate damages. Dow also contended that Dr. McClave skewed the results of his findings in favor of plaintiffs. However, the Tenth Circuit found no error in the district court’s decision to resolve that “swearing match” in favor of the plaintiffs.
Dow challenged the sufficiency of the evidence regarding liability, arguing the district court erred in denying its motion for judgment as a matter of law. The Tenth Circuit found the evidence, viewed in a light most favorable to plaintiffs, sufficed as to (1) implementation of the alleged price fixing agreement, (2) the conspiracy as to another polyurethane manufacturer, Lyondell, and (3) the jury’s consideration of Dr. McClave’s models. The Tenth Circuit first addressed the price fixing agreements, noting the plaintiffs introduced evidence of admissions by industry insiders, collusive behavior, susceptibility of the industry to collusion, and setting of prices at a supra-competitive level, in addition to showing parallel price increases. Regarding the participation of Lyondell, the plaintiffs did not need to prove its collusion because there was sufficient evidence to implicate Dow even without evidence of collusion with Lyondell. Next, Dow argued that because the jury found no injury for part of the period evaluated by Dr. McClave, his models were necessarily invalid. The Tenth Circuit disagreed, noting that Dow’s “series of inferences” did not allow it to disturb the jury’s verdict.
Finally, Dow contended that because the jury varied downward from Dr. McClave’s calculation of damages, the entire award had no evidentiary basis and violated the Seventh Amendment. The Tenth Circuit found many possible reasons for the jury’s variance, none of which required reversal. Dow claimed the district court’s decision to allocate the damages award based on Dr. McClave’s model took from the jury the question of liability and assessment of damages. However, this argument failed, because the cases on which Dow relied were inapposite.
The Tenth Circuit affirmed the judgment of the district court.