UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

________________________________________________

)

In the Matter of )

)

CHICAGO BRIDGE & IRON COMPANY N.V., )

)

a foreign corporation )

)

CHICAGO BRIDGE & IRON COMPANY )

)

a corporation, )

) Docket No. 9300

and )

)

PITT-DES MOINES, INC. )

)

a corporation. )

)

________________________________________________)

To: The Honorable D. Michael Chappell

Administrative Law Judge

COMPLAINT COUNSEL’S OPPOSITION TO RESPONDENTS’

MOTION TO STRIKE IMPEACHMENT OF DR. BARRY HARRIS

Complaint Counsel respectfully requests that the tribunal deny Respondents’ motion to strike or

disregard portions of the cross-examination testimony of Dr. Barry Harris. In support of this request,

Complaint Counsel states the following:

1. Complaint Counsel properly impeached Dr. Harris’s direct testimony that it is

inappropriate to compare budget prices and firm prices by confronting Dr. Harris with sworn

statements by an experienced CB&I estimator. 
2

Dr. Harris testified on direct that comparisons between budget prices and actual prices are

inappropriate:

As a general matter, budget prices – not as a general matter, always, budget prices are

not appropriate to be compared with actual prices.

Trial Tr. 7274:22-24.

Comparison between actual price and a budget price? I don’t believe its appropriate.

Trial Tr. 7275:3-4.

I think it’s just not an appropriate comparison and again it’s a budget price.

Trial Tr. 7279:15-16. Dr. Harris further criticized, in his direct testimony, Dr. Simpson’s analysis of

prices:

He [Dr. Simpson] also I think he does postmerger pricing comparisons inappropriately. 

We spent some time on that. The biggest problem is his use of budget prices, but there

are other problems as well.

Trial Tr. 7339:23-7340:1.

During the cross examination of Dr. Harris, Complaint Counsel and counsel for Respondents

confirmed to the tribunal that the examination of Dr. Harris that Respondents now move to strike is

impeachment relating to statements made by Dr. Harris in his direct testimony:

 JUDGE CHAPPELL: How is this within the scope of the direct exam?

MR. KRULLA: This is to impeach the witness' repeated testimony over and over

again, testimony by this witness that margins in budget prices and margins in firm bids

are not comparable. This is impeachment, Your Honor.

JUDGE CHAPPELL: Did he testify to what was just said?

MR. KELLEY: He's testified that budget prices are not actual prices, yes, Your

Honor, he did. 
3

JUDGE CHAPPELL: I'll allow it for impeachment. Go ahead. The objection is

overruled.

Trial Tr. 7602:11-25.

2. Respondents move to strike the portion of the cross examination of Dr. Harris in which

Complaint Counsel asked Dr. Harris if he is aware that Respondents had retained an expert on budget

prices. Trial Tr. 7600:19-7601:8. It is proper impeachment of Dr. Harris’s testimony regarding the

relationship between budget prices and final prices for Complaint Counsel to inquire whether Dr. Harris

is aware that Respondents had retained an expert on the subject of budget prices. Respondents’

decision not to call their budget price expert does not make it improper for Complaint Counsel to

inquire of Dr. Harris whether he is aware that Respondents had retained an expert on budget prices.

3. Respondents move to strike or disregard Respondents’ counsel’s statement, during the

deposition of Dr. Harris, that Dr. Harris should not be examined further regarding use of budget prices

because “in fact we have an expert who is specifically testifying about the use of budget prices.” Trial

Tr. 7603:14-16. The portion of Dr. Harris’s cross examination testimony that Respondents move to

strike (Trial Tr. 7603:1-19) is proper impeachment of Dr. Harris because it calls into question the

foundation for his direct testimony regarding use of budget prices. Complaint Counsel requests that the

Tribunal deny Respondents’ motion to strike the testimony at Trial Tr. 7603:1-19, as already instructed

by Your Honor’s overruling of Respondents’ objection at Trial Tr. 7604:12-13. The trial transcript

testimony at 7603:1-19 cites the Harris deposition. Nowhere in Trial Tr. 7603:1-19 is any portion of

CX 1578 referenced.
4

4. Respondents move to strike the portions of Dr. Harris’s cross examination in which Dr.

Harris was asked about Mr. Vaughn’s experience working for CB&I for 36 years. Respondents move

to strike not only the portion of the transcript in which Complaint Counsel asked Dr. Harris to read a

statement by Mr. Vaughn contained in his expert report concerning his experience (Trial Tr. 7604:24-

7605:8), but also Complaint Counsel’s questions to Dr. Harris regarding Mr. Vaughn’s 36 years of

experience working for CB&I. Trial Tr. 7604:15-23. It is proper impeachment of an expert witness to

identify to the expert witness the existence of an experienced employee of CB&I whose sworn

statements will be used in the course of impeaching the expert witness. 

5. Complaint Counsel asked Dr. Harris to read excerpts from the sworn statements of this

former CB&I employee both to lay a foundation for impeachment questions put to Dr. Harris during the

cross examination and, as shown below, to impeach Dr. Harris’s testimony. Even if the Tribunal

determines to disregard Dr. Harris’s readings of statements by the former CB&I employee, the

questions posed by Complaint Counsel to Dr. Harris and his answers thereto are proper impeachment

and should not be disregarded. 

6. During cross examination, Dr. Harris testified: “So I understand your question to be if

as a result of the merger you could profitably raise price, if that were true, yes, it would show up in

higher profit margins, for the company.” Trial Tr. 7616:2-5. Complaint Counsel then asked Dr. Harris:

Q: If CB&I thought it had a lock on the market, its margin would be higher than if

prices were competitive; isn’t that true?” Trial Tr. 7616:6-8.

Instead of answering this yes or no question, Dr. Harris asked Complaint Counsel for clarification:

A: Could you explain to me what you mean by “a lock on the market.” 
5

Harris Tr. 7616:9-10. In order to clarify the phrase Complaint Counsel thereupon showed Dr. Harris,

and asked him to read, the context in which the phrase was used by a CB&I estimator. Trial Tr.

7616:11-13; 7618:9-20. Respondents move to strike these lines of Dr. Harris’s testimony although the

material was read by Dr. Harris to answer Dr. Harris’s request for clarification and to provide the

foundation for the succeeding three questions. After Dr. Harris read the statement by the retired CB&I

estimator, Complaint Counsel asked Dr. Harris the following series of questions, and Dr. Harris

provided the following answers:

Q: CB&I sets its margin level on jobs based on its assessment of the competition it

faces.

A: I would expect that most bidders, among the things they use is they consider the

competition they face.

Q: Anticompetitive effects of the acquisition can be observed by examining

margins.

A: The answer is maybe. You have to be very careful when you do that, but the

answer is maybe.

Q: It does not matter whether the margin is in a firm fixed price or in a budget

price; isn’t that correct?

A: Oh, that’s absolutely wrong.

Trial Tr. 7618:21-7619:8. Complaint Counsel then showed to Dr. Harris, and asked Dr. Harris to

read, a contrary statement by the CB&I estimator (Trial Tr. 7620:3-22), which laid the foundation for

the following impeachment question:

Q: So Mr. Vaughn disagrees, Dr. Harris, with your opinion that it does matter

whether the margin is in a firm fixed price or in a budget price?
6

Trial Tr. 7620:23-25. Dr. Harris stated in response that he cannot answer the question. Trial Tr.

7621:1-4. Complaint Counsel then asked Dr. Harris the following series of questions, and Dr. Harris

provided the following answers:

Q: The same philosophy is used by CB&I in setting margins for budget estimates

and firm bids.

A: I don’t think that’s accurate.

Q: It is common practice in CB&I to use pretty much the same range of margin

levels for budget estimates and for firm bids; isn’t that true?

A: I think that’s demonstrably incorrect. I mean –

Trial Tr. 7621:5-12. To impeach these statements by Dr. Harris, Complaint Counsel then confronted

Dr. Harris with contradictory statements by the experienced CB&I estimator (Trial Tr. 7621:13-

7622:5) and asked Dr. Harris:

Q: Do you still believe that it’s demonstrably false that it is common practice in

CB&I to use pretty much the same range of margin levels for budget estimates

and for firm bids?

Trial Tr. 7622:6-9. Dr. Harris’s answer was non-responsive:

A: The comparisons I’ve seen show much higher margins typically on budget

prices than on firm bids.

Trial Tr. 7622:10-11. Respondents move to strike Dr. Harris’s cross-examination testimony from page

7619 line 18 through page 7622 line 5, which includes not only impeachment through references to

statements by the CB&I estimator (Trial Tr. 7620:5-22; Trial Tr. 7621:16-7622:5), but also includes

questions posed to Dr. Harris regarding CB&I’s budget estimates and firm bids and Dr. Harris’s

responses to those questions. Trial Tr. 7620:23-7621:12. In the context of the above cross-
1

 See United States v. Warren, 453 F.2d 738, 742 (2d Cir. 1972); United States v. Dweck,

913 F.2d 365, 369 (7th Cir. 1990); and United States v. Jamieson, 806 F.2d 949, 952 (10th Cir.

1986).

7

examination questions put to Dr. Harris and his responses thereto, Complaint Counsel’s request to Dr.

Harris that he read relevant statements by CB&I’s estimator is proper impeachment. In any event, the

questions put to Dr. Harris regarding CB&I’s practices with respect to formulation of budget prices

and final prices is proper cross examination.

7. Complaint counsel further impeached Dr. Harris’s testimony regarding the

incomparability of budget prices and firm bid prices by asking him about PDM’s budget price and final

price for a project in Connecticut. Respondents also move to strike this impeachment testimony. 

Again, respondents move to strike not only the portion of the transcript in which Complaint Counsel

confronted Dr. Harris with the statement by an experienced CB&I estimator that the budget price and

final price were very close (Trial Tr. 7629:21-7630:5), but also the questions posed to Dr. Harris

regarding PDM’s prices for the project and his answers thereto. Trial Tr. 7624:20-7625:5. In the

context of the above cross-examination questions put to Dr. Harris and his responses thereto,

Complaint Counsel’s request to Dr. Harris that he read a relevant statement by CB&I’s estimator

regarding the project is proper impeachment. In any event, the questions put to Dr. Harris regarding

the prices for the project is proper cross examination.

8. The use of inconsistent statements in Mr. Vaughn’s deposition testimony, as excerpted

in Dr. Harris’s January 10 testimony and described above, is permissible not as substantive evidence

but to impeach Dr. Harris by contradiction.1 Evidence used to impeach a witness is independently
8

admissible as impeachment evidence, even if the evidence is inadmissible for other reasons. United

States v. Havens, 446 U.S. 620, 624-625 (1980); United States v. Abel, 469 U.S. 45, 55 (1984)

(“[T]here is no rule of evidence which provides that testimony admissible for one purpose and

inadmissible for another purpose is thereby rendered inadmissible; quite the contrary is the case.”); See

Lubbock Feed Lots, Inc. et al. v. Iowa Beef Processors, Inc., 630 F.2d 250, 262 (5th Cir. 1980)

(noting that even if a statement is otherwise inadmissible as hearsay, the same statement is admissible to

impeach by contradiction a witness’s testimony). Specifically, impeachment by contradiction is

applicable to experts. See DiStefano v. Otis Elevator Co., Inc., et al., 1997 U.S. Dist. LEXIS

14039, *3 (“exhibit is admissible for impeachment of Plaintiffs’ expert”); Jones v. Southern Pac. R.R.,

962 F.2d 447, 449 (5th Cir. 1992) (“Litigants are of course entitled to introduce extrinsic evidence to

contradict a witness’ testimony on matters that are material to the merits of the case.”)

WHEREFORE, Complaint Counsel respectfully request that Respondents’ motion be denied.

Dated: Washington, D.C. Respectfully submitted,

January 15, 2002

________________________

Rhett Krulla

Michael Franchak

Eric Sprague

Sebastian Lorigo

Counsel Supporting the Complaint

601 New Jersey Avenue, N.W.

Washington, D.C. 20001
9

202-326-2608
CERTIFICATE OF SERVICE

I, Michael A. Franchak, hereby certify that on this 15th day of January, 2003, I caused to be

served a true and correct copy of Complaint Counsel’s Opposition to Respondents’ Motion to Strike

Impeachment of Dr. Barry Harris, upon:

The Honorable D. Michael Chappell

Administrative Law Judge

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

Jeffrey Leon

Counsel for Respondents

Winston & Strawn

35 W. Wacker Drive

Chicago, IL 60601-9703

________________________

Michael A. Franchak
UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

________________________________________________

)

In the Matter of )

)

CHICAGO BRIDGE & IRON COMPANY N.V., )

)

a foreign corporation )

)

CHICAGO BRIDGE & IRON COMPANY )

)

a corporation, )

) Docket No. 9300

and )

)

PITT-DES MOINES, INC. )

)

a corporation. )

)

________________________________________________)

PROPOSED ORDER

Upon consideration of Respondents’ Motion to Strike Trial Testimony Relating to Exhibits CX

1577 and CX 1578, and Complaint Counsel’s opposition thereto, it is HEREBY ORDERED:

THAT Respondents’ Motion is denied.

________________________

D. Michael Chappell

Administrative Law Judge Date: ___________, 2003