representing the appellant in direct purchaser class i'd like to reserve five minutes for rebuttal we hear today on behalf of an anti trust class that was certified for the years two thousand and three through two thousand and eight the evidence of the conspiracy here was overwhelming it was sufficient the court held for our class to take to trial and go to a jury presenting this evidence for executives went to jail pleading guilty to bed raking and price fixing one expert dr frank and yet it granted summary judgment on two points the st point being whether or not the overcharge due to this conspiracy was passed through to the indirect purchaser class the consumers that purchased the computers and the nd point being damages that could be paid to the internet purchaser class after a trial would be limited to dell and h p computers only it was the indirect purchaser classes position that the scope of the conspiracy where all computers dell and h p are the gorillas in the room they represent fifty percent of the computer market in the united states the indirect purchasers presented evidence of a broad conspiracy one where the executives in the room agreed to erred in finding that there in direct purchase or had not presented sufficient evidence of past or the district court ruled that dr flames report was not record evidence and was not supported by sufficient market facts and that is where the indirect purchasers believe that he ignored the realms of record evidence that did exist starting st with the econometrics that we presented the overcharge to the class was demonstrated using real world data data we subpoenaed from one hundred different companies we ended up having usable data for twenty four companies but he essentially the district court essentially decided that that your theory was consistent with that data all those millions of data points right consistent with that is correct consistent with but it's as if he believed it was theoretical but this data was real world data that participants in the marketplace had produced to the plaintiffs he ruled that the methodology we used to test the pastor of the overcharge was methodologically sound he ruled that it was applied reasonably he had it there was no doubt promotion granted against it and under the supreme court's teaching in once he ruled that evidence was it miscible that the expert report wasn't miscible that it was should have been considered by a jury as evidence where the inference from that is that the overcharge was then passed through to the indirect purchaser class the representative miss of this real world data was not was not that it was deemed sufficient to go to the jury it represented a one hundred and one billion in revenue three hundred and twenty four million units were tested almost six hundred thousand separate models of computer say appreciate that but i'm hoping you're going to get to this point that i think the district court relied upon right which is that that you got past the  for sure and i can't really think of another case we've seen both of these things happen where somebody clears the hurdle and then it's a summary judgment i'll grant you that but what he seemed to say is that your expert and your evidence could account for right could account for this but in fact he thought that that it lacked evidentiary support and then a jury really didn't have that we didn't let it go to a jury right now to a reasonable jury couldn't decide that established passthrough so what's wrong with that it's a very narrow slice i appreciate that why is why was the two court wrong the district court was wrong because leaving aside all of the econometrics and the measurements that we made there was an enormous amount of evidence developed during the case and presented its  judgment that spoke to exactly what was happening in the market q well so forgive me for interrupting but so if you're going to could are you going to get to the that's what bothers me most that there were so many deposition soundbite from retailers saying well actually we don't pass through we wouldn't necessarily pass through so what about all of those you know i'm talking about best buy circuit city all of those i do and when you look at the questions that were asked to those retailers in the snippets that the defendants produced and in the paragraphs of the declarations the questions being posed were if costs were increased would you have passed that on to consumers and the answer to that is uniformly no and the reason for that is this cost didn't increase in this market they're not uniformly anything which is one of the problems that got they said well not necessarily or maybe not or if it were if it wasn't a big enough cost increase why would we do the paperwork so so but that is the question of whether or not it's a cost increase when asked the question  the costs were decreased to you best buy would you pass those on to the consumer and their answer to that is yes because of the intensely competitive market for computers so best buy if it's charging nine hundred dollars for a computer and it's supplier increase the cost which best buy said never happened it would not increase the cut cost to compute to consumers because it would no longer be competitive but when asked the question the market participants when asked would you decrease the cost to consumers if you were given a decrease by your suppliers their answer is uniformly yes and that is because of the function of the incredibly competitive retail market for electronic goods to consumers in the united states so that is the it's interact pursed his position that the defendants created a world that does not exist one where costs increase when those questions are asked and marcy market participants their answer is no an increase in cost is not passed on because that is not what happens in the real world when the question and the narrative is posed by the indirect purchaser and this is the version that we would present to the jury this was a cost to climbing market and when cost to any participant in the distribution channel happened there was a cost decrease of their purchase price they would then pass on that discount all the way to the consumer and there was plenty of record evidence that spoke to this so it was a difference between the internet purchasers evidence of a cost to cleaning market and questions posed by the defendants to witness participants that we believed presented a hypothetical that didn't exist in the real world there were no increase in costs therefore there could have been no increase in costs passed on setting that aside and the econometric measurements there were also documents that spoke to this issue and it's almost uncontested  defendants expert testified that he measured an expected one hundred percent just one hundred percent pastor at the distribution level so you have the o e m s making the computers you have distributors that sell them and then you have the retailers at the dr lerner acknowledged one hundred percent pastor at that overcharge at the distributor level down to the retailer level dr snyder another of the defendants experts he testified in the same courthouse in trial on behalf of to sheeba one of the defendants that he had measured eighty six percent pass through a computer sold at best buy he said it was routine he said he absolutely expect to see that level of pastoral and yet in a different that was in the l c d brought summary judgment and opposed it to sheeba was a party so it was a hard counsel it's easy to imagine this one is this one's tough for me and i spend a lot of your time on it but it's easy to imagine other variables it's a different component we don't have the information in this record as to in my view speaking on behalf of to sheeba at the time in a different came right but there's but the same measurements of pastor there is no unique pass through regression model that is applied in optical disk drives versus the l c d case dr snyder didn't measure passed through of the l c d in the computer he measures passed through at the computer level there's not a component level passed through this measured and so in that way it's directly applicable to this case that in that aside let's look look look at the documents they mirror exactly what it was that dr flam measured through his regression model we see in them this intense pressure to reduce the costs of the major system components what are the documents that are strongest for your distress it says it's looking at the eight dollars centimeter support and it's saying there's a cost savings of between zero dollars thirty five cents and a dollar on an optical to strive if they leave out this eight centimeter support they acknowledge that it would be worse for class members and yet they make documents show and the testimony of acer another o e m confirms acer testified at two o fifty eight dollars that it would choose between components that went into a computer to make sure that it met the price point that it intended so this is the argument that goes to the price points of computers that it's not possible the overcharge was passed through because there were certain sticky price points in the market but dr flame measured that through through donek regression models which are was broadly used by the s government again accepted by the court as a common methodology that was reliably applied he used these had don extend measure that at a price point let's say again a computer of nine hundred dollars being sold at best buy that if there was an overcharge that attached to this optical to strive that the o e m s and retailers work together to swap out parts that would take a lesser value computer being sold to that class member does he give examples when that happened or does he say that he thinks that would have happened he we gave a large number examples of the documents and the testimony for example of where it actually happened where the nuclear component part was substituted there are the examples in the record after you and taking away a part of a computer it makes it a lesser value computer to the class member there's plenty of record testimony that discusses how the optical disk drive is a key component one of the critical ones in the computer one of the ones that has a larger value it's called by down a critical component to sheeba refer to it as a key part it's comparable in alternative should be discussed and this entire document is a feature comparison across models so where dell is not able to meet its cost target because for example one of the critical or all of the critical components are too high to grade the quality of the other components e r one thousand six hundred and eighty seven another document talks about market driving competition and price pressure creates the need for better produced b o m costs and there it just discussing two dollars different models that it's going to put forward the flambe declaration at one thousand two hundred and ninety nine dollars cites documents demonstrating where the cost of the optical disk drive itself was required the redesign of the computer and this shows the practice at work economic theory says that the total cost of the computer is the value of all of its parts and that basic economic theory was demonstrated by dr flam both through his  but also the deposition testimony and the documents that were in the record before the court would you like me to briefly address the dell and h p limitation to the scope of the conspiracy you try move you were let me just briefly say i would there were two versions of this conspiracy that were proffered by the two parties the st from the internet purchasers was that this was a broad conspiracy targeting the computer market the version proffered by the defendants was that there were twenty two separate agreements believe that was not a compelling narrative but let's assume for a minute that they were right let's assume that they did target only dell and h p even then in a conspiracy a criminal conspiracy for example there's a pinkerton charge that's given to the jury they are liable for the natural consequences of their acts the record i just say in the interest of time i think you have a strong argument on this point ok thank you your honor of reserve yes my time evidence sufficient to create a genuine issue for trial as to the essential elements of their claim injury causation and damages because the evidence the their expert testimony was not sufficient to permit a reasonable jury to infer that any o t c overcharge was consistently passed through all the levels of the distribution chain down to the indirect purchaser class members this court should affirm that decision for two reasons plaintiff's experts theory of injury in his opinion lack of validation by evidence record in that regard there there was testimony from rd party retailers and a distributor not just regarding cost increases being passed through but they did testify and this is on page twenty six dollars of our brief in the long footnote and all the record cites are there a number of them did testify as to cost changes or specifically cost decreases that those would not consistently be passed on that includes doe h p wal mart not only was the evidence insufficient to support the theory that the expert put forward which i again here is one hundred percent pass through all of the time there was contradictory undisputed record of a dense that question that theory we have the same situation in this case your honor so the answer to judge by his question is that it is that's not a principle that comes from our case law the problem is i think your problem or your point is that the experts report is unsupported by the  evidence and to get to judge by his point the expert dr flam testified to one hundred percent pass through one hundred percent of the time is that right that's correct your honor and that's the burden that the plaintiffs for at summary judgment to present sufficient specific facts to permit a reasonable inference that his theory actually occurred in market reality and we it's our position that the evidence such as it is from the percipient witnesses that we've put forward that that calling to doubt his theory that there can be no reasonable inference such that there is a genuine issue for trial in this point so i would like to take a minute to address the documents that ms scarlett raised as what she called her best her best evidence so and i'll start by just telling the court i don't want to spend too much time going through all of them one by one but there are some categories to which these documents fall into that i think  helpful to understand there are if you go through the plaintiff's briefs in this case a total of sixteen documents that they say are the evidence that the district court they claim ignored that summary judgment first of all none of those documents were presented to the court in their opposition to the summary judgment motion two of them were raised at the summary judgment hearing the other fourteen were not presented as creating a genuine dispute a fact sufficient to defeat summary judgment that's despite the extended colloquy at the summary judgment hearing where the district court repeatedly pressed the plaintiff counsel for any evidence in support of their quality adjusted the area injury counsel pointed repeatedly to testimony by the retailer circuit city and then raised two of these dell and h p documents which which that this is a document where each key is stating that it will continue to use a d v d rom and change it changing it would impact six dollars to our g m and not a good option for us i believe is the quote from the document the document shows h p deciding not to upgrade the d d and it's this to model from a d v d rom to the d v d writer because of the greater cost but obviously upgrading the o d t itself is what we're talking about here is going to result in a higher cost it's a better o d d so this is not an example of a higher but for o t cost being offset by swapping out some other component only shows dell seeking to say that again on the cost of the a d t itself it does discuss removing an eight dollars centimeter support feature but it also discusses if you look at the document in its whole retaining another feature which is an emergency object that's maintained to deal with the risk of stock media that could be caused by removing the aids and meter support feature so there's no quality reduction when you look at the overall product shown in this document also importantly that is a document that most states the class period it's from february of two thousand and nine so it's not even within the class period scarlett also mentioned that the acer testimony is consistent with that the plaintiffs have selectively quoted from that deposition the deponent was asked a direct question whether they ever substituted or swapped out or adjusted features configuration of their computers to offset the cost the answer was clearly no and she said the deponent said that was because doing so could impact smooth smooth operation of their production line the other documents that that are within the set fall into a number of categories i mention one category that's documents that post date the class period there's actually three of those sixteen dell h t itself or changing other features that have no connection at all to hitting a specific focal price point and remember that's the reason why this quality adjustment theory was put forth at classification in the start was because of focal point pricing there had to be in flames words a way that that was dealt with because his regressions were showing one hundred percent pass through it must be he said that the computer o e m s were adjusting quality because two and nor do they show in any case any of these documents that these changes to configuration ever occurred that this decision making ever happened in the market was ever implemented to offset an o d t cost were cited in dr flaunts report under his heading documentary evidence of impact indirect purchasers and those were found not probative of the issue court recognized this isn't an issue that it will need to reach at all if it affirms on the pass through decision the district court did rule that the conspiracy that could survive summary judgment was limited to one targeting dell and h p the class plaintiffs knew this was a possible outcome and that's why the issue was discussed below the reason they had that class cert and proposed an h p and dell subclass was for this precise reason and now they have the problem of causation there is a rule of and i trust injury that requires a showing that the you can only recover for injuries that are caused by and traceable to the end i competitive aspect of the conduct and not any lawful conduct or other market factors that's clear in the case law that's the same for sherman act versus current right act there has to be a causal link between the and i trust violation and that damages that are sought by the pla fairness they know that and they and they advanced a theory to explain why if those two because they were the eight hundred pound gorilla if that move the markets if that others could be affected so could you speak to that why are they wrong about that yes and that is for the same reason that analysis regarding passthrough is not sufficient standing alone with with the absence of market facts to validate it here there is no evidence in the record whatsoever of any mechanism through which pricing conduct more dell and h p could somehow permeate the rest of the market now they make they make a lot of the fact that these are powerful buyers dell and h p obviously they're buying high volumes of this product it's not remarkable at all that they're going to be achieving some of the best pricing in the industry so the fact that others might have been charged more does not show causation and the analysis that dr pflum performs that granger causalities and the kohen a gratian and those are again those are correlations they don't demonstrate legal causation and with regard to granger we're not aware of that ever being used to support legal causation in the summary judgment context where where plaintiff class members do need to establish the element of injury i would like the court to respect reconsider this argument should it need to reach it a taiwanese company that's been was in the o d t manufacturing business in the past into leaving the business in two thousand and six during which time it primarily w manufacturing ots for other entities other suppliers including philips as well as its own branded drives that were sold into the channel it was also the minority shareholder in a joint venture called p philips and told selling that interest in two thousand and six and it manufactured pursuant to philips instructions pursuant to the specifications that phillips received from h p and dell which philips then in turn sold limited scope of the conspiracy that survived summary judgment and because also the court below held that the bank you defendants were not vicariously liable for the conduct of phillips or p t s which would include their that the ben q defendants participated in the conspiracy as it's broader conspiracy that that somehow would suggest that they were implicated in this more narrow conspiracy however the clos put council themselves at the summary judgment hearing used this document to argue that it must be a broader conspiracy because the the personnel involved in that document were not the person or sponsible for the dell and h p business could you give me that your number again please yes e r two  says it is agreed to make an effort to stabilize the price in the future to realize reasonable profit yes or no that's the translation of the original original korean document i want to look i have so as i was saying the document itself does not in which they claim that he's supporting the fact that he did have pricing authority for these transactions but the document read in context and the document that he's talking about in his deposition is only showing pricing authority  and i see that i'm about to run out of time so i just want to leave the court with a couple of points this is this case is about a theory that was put forward at that class cert to deal with that reality is that the market that's the quality based injury theory that summary judgment the plaintiffs were unable to come up with any evidence to support the theory we're not saying that the regression methodologies that dr flom employed are unreliable certainly they passed obert we're not saying as counsel suggested that his report itself was not evidence the fact that he relied on transaction data that's completely circular that would be allowing the input into the model to validate the results that summary judgment are concerned with the courts conclude i'm sorry excuse me that summary judgment were concerned with the experts conclusions and the validity of those conclusions so again that summary judgment total absence of evidence to support the theory of injury reversing the district court on this issue would be inconsistent the precedent of the supreme court and if this the circuit and it decision affirming summary judgment to the extent the court is concerned would not mean that indirect purchaser cases can never get before the jury this is limited to the facts of this case unless or furthe attention one very stark error that was made in the district court order that is found at page fifteen where he held that the internet purchasers need to show that offsetting are passed through would have occurred at one hundred percent of the value of the overcharge meaning that no link in the supply chain would have swallowed any portion of the overcharge that is not the law and that is not what dr flamm ever testified to to be clear in direct purchasers do not need to show a maximum amount of value at every point in time right but wasn't that what dr flem decided that he absolutely did not if you look at his chart on excerpt of record one thousand three hundred and forty six through forty seven which is the chart that has all of the different pastor studies there there is a broad variation in the past through rates on his fixed effects model it was between sixty eight percent pass through to one hundred and fifty one percent passed through on his adamic model it was seventy seven percent pass through to one hundred and fifty one percent passed through there's something called over shifting that happens in highly competitive markets where pastor is greater than one hundred percent that was not challenge here but to conservatively measure damages dr flam kept any pastor at one hundred percent so while it was on average one hundred percent it was certainly not dr flames testimony ever that passed there was at one hundred percent one hundred percent of the time it was merely that pastor was uniformly positive i take your correction and i appreciate it thank you and touch turning to the retailer and the testimony of all the depositions and the declarations that are in the record regarding pas that presents itself the very fundamental disputed fact that exists here in the record the plaintiffs as the non movements for summary judgment were entitled to all inferences in their favor the district court credited none of the inferences in their favor on this point those declarations and deposition transcripts of those participants within this industry present a material question was the defendant's narrative correct that if a cost increase existed it would not have been passed on plaintiffs would presented evidence that in this cost declining market the costs would have the cost discounts would have been passed on in a uniformly positive way albeit not at one hundred percent one hundred percent of the time and that is exactly the type of triable question  fact that the jury should have had the opportunity to address even my colleagues citing to footnote twenty six there she brought your attention to a number of declarations those declarations were widely discredited during the litigation they were offered in support a classification opposition when we had the opportunity to post those declarations they either had zero foundation for that what they had put forward and at one of those depositions the witness actually for shuttle computers started to invoke the  amendment he was so concerned that what he had said under penalty of perjury was incorrect so it's surprising to still have those declarations of being cited by our opponents in footnote twenty six dollars in fact when witnesses were deposed and they had the chance to put forward the full discussion of the market it supported plaintiff's narrative of the case and it's that tale of the two competing government narratives that the indirect purchaser class feel they should have been able to present to the jury opposing counsel said the just two of the documents you talked about today where were being pointed to at the disc at the at the hearing before the district court is that right that may be right your honor i don't know that fact off the top of my had the hearing went for nearly an entire day i think the record was over six hours there were multiple summary judgments motions brought