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08 13 2012 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES
 

) 

In the Matter of ) 

) PUBLIC 

McWANE, INC., ) 

Respondent. ) DOCKET NO. 9351 

) 

__________________________________________) 

COMPLAINT COUNSEL’S MEMORANDUM IN OPPOSITION TO 

MCWANE’S MOTION IN LIMINE TO 

EXCLUDE TESTIMONY FROM DR. LAURENCE SCHUMANN 

Complaint Counsel intends to call at trial Dr. Laurence Schumann as an expert economist 

in industrial organization. McWane seeks to exclude Dr. Schumann’s testimony in its entirety, 

but has not met its burden to exclude any of Dr. Schumann’s opinions, much less all of them. 

Rather than separately discussing the varied methodologies supporting Dr. Schumann’s opinions, 

McWane ignores them, and seeks to prevent consideration of all of Dr. Schumann’s opinions 

with two ill-founded charges: that Dr. Schumann does not use statistical tests; and that Dr. 

Schumann does not cite the testimony in which McWane and its co-conspirators { 

} 

Statistical testing may aid the social scientist, i.e., an expert economist, but it is not 

essential to sound analysis.1

 Here, Dr. Schumann concludes that the available data does not 

permit reliable statistical testing, and instead he uses other reliable methodologies consistent with 

well-established economic principles. 

1

 For example, the 2010 FTC/DOJ Horizontal Merger Guidelines discuss numerous non-statistical techniques for 

defining relevant markets. Although Dr. Schumann applies these techniques in opining that there is a relevant 

market consisting of purchasers of ductile iron pipe fittings pursuant to Buy-American specifications, McWane 

apparently would exclude that testimony as “junk science” for want of statistical tests. 

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Dr. Schumann considered McWane’s and its co-conspirators’ { } but he opined 

they did not fairly meet the Complaint’s charges. That opinion should not be excluded simply 

because he fails to cite evidence that McWane favors. That opinion, like Dr. Schumann’s other 

opinions, can be fully tested through vigorous cross-examination before the Court. Accordingly, 

McWane’s motion should be denied. 

I.	 Dr. Schumann, a Qualified Expert Economist, Uses Well-Established Economic 

Principles to Review the Record and Form His Opinions, Which Will Assist the 

Trier of Fact 

Expert testimony is admissible if it meets three criteria: first, the expert’s testimony must 

be within his qualifications; second, the methodology used to formulate the expert’s opinions 

must be based on reliable and practical application of the expert’s professional analytical tools; 

and third, the expert’s testimony must assist the trier of fact to understand the evidence or 

determine a fact in issue. See F,R,E, 702; Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 

592 (1993); Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 153-54 (1999). In re Daniel 

Chapter One, 2009 FTC Lexis 85, at *21 (Apr. 20, 2009) (“courts traditionally consider whether 

the expert is qualified in the relevant field and examine the methodology the expert used to reach 

the conclusions at issue.”) (citations omitted). 

This court has stated that “[m]otions in limine are discouraged.” Scheduling Order, at ¶ 

8. More specifically, this Court has previously held that, “[r]ather than excluding expert 

testimony, the better approach under Daubert in a bench trial is to permit the expert testimony 

and allow ‘vigorous cross-examination, presentation of contrary evidence’ and careful weighing 

of the burden of proof to test ‘shaky but admissible evidence.’” Daniel Chapter One, 2009 FTC 

Lexis 85 at *21-22 (quoting Daubert, 509 U.S. at 596) (citations omitted). 

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McWane’s motion ignores these injunctions and fails to satisfy any standard for 

exclusion of expert testimony. First, Dr. Schumann’s relevant economic expertise is 

unquestioned. See Resp. Mtn., Exh. 1 at 1, 85-87. Second, Dr. Schumann competently applies 

his professional analytical tools — economic principles, theories, and models — to the observed 

facts. See U.S. Info. Sys., Inc. v. Int’l Bhd. of Elec. Workers Local Union No. 3, 313 F. Supp. 2d 

213, 220 (S.D.N.Y. 2004) (admitting expert testimony after expert economist applied “standard 

economic definition for market power” and monopolization theory to facts of case). Finally, Dr. 

Schumann’s discussion of the relevant economic concepts — including oligopolistic 

interdependence, facilitation practices that employ communications to rig the oligopoly game, 

and communication of assent to price-fixing offers by taking communicative actions that are 

otherwise inconsistent with a firm’s unilateral self-interests — provides a useful framework for 

the Court to understand McWane’s collusive and anticompetitive acts. Similarly, Dr. Schumann 

competently uses his professional analytical tools to such tasks as market definition, including 

identifying price discrimination markets, to enable the trier of fact to understand the competitive 

implications of McWane’s restrictive practices in the relevant market. 

In short, Dr. Schumann’s expert report and testimony meets this Court’s expert opinion 

admissibility standards. McWane’s quarrel with Dr. Schumann’s methods and opinions is best 

addressed through vigorous cross-examination and presentation of contrary evidence at trial. 

II.	 McWane Mischaracterizes the Legal Standard Governing its Request and Misstates 

Dr. Schumann’s Testimony 

McWane ignores all of Dr. Schumann’s work and fails to argue why any of his individual 

opinions should be excluded. Moreover, McWane applies the wrong standard to social science 

testimony and obscures the record by misstating Dr. Schumann’s report and testimony. 

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A.	 McWane Ignores Kuhmo Tire and Incorrectly Applies Natural Science 

Standards to Dr. Schumann’s Social Science Testimony 

In its motion, McWane falsely attacks Dr. Schumann for “not employ[ing] any test at 

all,” Resp. Mtn., at 2, because Dr. Schumann did not employ statistical tests. But statistical tests 

are hardly the only appropriate methodology utilized by expert economists. 

McWane’s improper insistence on statistical tests as the sole appropriate methodology 

might be warranted in suits involving certain natural science questions, but it has no applicability 

to the social science questions before this court. In Daubert, the Supreme Court warned that its 

“discussion is limited to the scientific context because that is the nature of the expertise offered 

here.” 509 U.S. at 590 n.9, 594 (assessing methodology underlying expert opinion as “a flexible 

one”). When applying Daubert to disciplines other than the natural sciences, the Court in 

Kumho Tire noted the distinction between technical and “other specialized knowledge,” such as 

economics, and the natural sciences. Accordingly, the Kumho Tire Court stressed that judges 

have “considerable leeway in deciding in a particular case how to go about determining whether 

particular expert testimony is reliable.” 526 U.S. at 151-52. 

This leeway is particularly important where, as here, the expert testimony offered is in a 

social science, onto which the Daubert factors “do not map easily.” See Durmishi v. National 

Cas. Co., 720 F. Supp. 2d 862, 881-82 (E.D. Mich. 2010) (denying defendant’s motion to strike 

expert testimony because the expert relied on “the knowledge of the industry that informs his 

method”). Daubert does not imply that no economic opinion may be rendered unless statistical 

analysis can be competently done, as McWane’s motion implies. Such a rule would deprive 

courts of the ability to rely on other analytical tools and opinions that a court might find helpful. 

After careful consideration of the price data produced by McWane and its coconspirators, Dr. Schumann concluded that the data presented { } 

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Mann Decl., Tab 1 at 5, and that { 

} Id. at 6. Indeed, any statistical or empirical work using the flawed data 

would fail the Daubert standard for reliability and should be excluded.3 

But economists are not statisticians and their analytical methods are not limited to 

reviewing data work. In antitrust litigation, economists routinely use their expertise to review 

the record to ascertain the economic significance of facts when forming their opinions. See, e.g., 

U.S. Info. Sys., 313 F. Supp. 2d at 236 (finding expert testimony to be admissible because “he 

has applied his expertise to the facts of the case”); see also Kuhmo Tire, 526 U.S. at 151. Indeed, 

Dr. Normann, McWane’s economist, relies solely on documents and testimony to form some of 

his opinions. Mann Decl., Tab 2 at 31-32. 

In U.S. Information Systems, Inc., the court admitted an economist’s expert opinions 

his “ultimate conclusions . . . based on the application of ‘standard economic methodology’ to 

the facts at hand.” U.S. Info. Sys., 313 F. Supp. 2d at 237. 

Dr. Schumann applied a similar method. For example, he identifies nine different 

economic factors that are conducive to coordination and explicit collusion. Dr. Schumann 

explains the nine factors, applies them to the record evidence, and concludes that { 

} Resp. Mtn., Exh. 1 at 34. This is exactly the type 

based solely on deposition testimony. Specifically, the court approved of the economist 

applying “economic principles to determine whether the situation described was one that tended 

to show economic indicators of market dominance and monopoly leveraging,” and then drawing 

2

 Although McWane asserts that Dr. Schumann’s concern about the data “was made-up or overblown.” Resp. Mtn., 

at 4, n.2. Counsel for McWane acknowledged the problems with the data. See Mann Decl., Tab 3.
 3

 Complaint Counsel filed a Motion In Limine, on July 27, 2012, to exclude conclusions Dr. Normann draws from
 

this corrupt data. 

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of analysis a qualified expert economist may perform to assist the trier of fact, especially where 

sound data to conduct econometric or statistical analysis is not available. 

McWane’s reliance on City of Moundridge v. Exxon Mobil Corp., 2009 U.S. Dist. Lexis 

123954 (D. D.C. Sept. 30, 2009), is misplaced. The district court in City of Moundridge granted 

summary judgment for the defendants because the plaintiffs relied solely on their expert’s report, 

which “offered no explanation[s] to connect . . . fact[s] to his opinion[s].” Id. at *40. That is not 

the case here. Dr. Schumann religiously connects the record facts to his opinions. For example, 

Dr. Schumann discusses how one co-conspirator’s {
 

} is inconsistent with unilateral conduct, and how it is only comprehensible in the context 

of a pre-existing price-fixing agreement. Specifically, Dr. Schumann states that, {
 

} Resp. Mtn., 

Exh. 1 at 45. Indeed, Dr. Schumann describes { 

Id. Then, in the context of oligopoly theory, Dr. Schumann connects these facts to his opinion 

that { 

} Id. at 44 

Additionally, Dr. Schumann reaches his conclusion that McWane, Sigma and Star {
 

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} by first identifying specific facts and then connecting 

them to this conclusion. The facts Dr. Schumann connects, include: { 

} Id. at 48-56. 

Dr. Schumann likewise connects the facts concerning the marketing and pricing of 

Fittings in the context of projects having different requirements to his economic understanding of 

discrimination markets. Together, this led him to opine that { 

} Id. at 15-16. 

B. McWane Misstates Dr. Schumann’s Report and Testimony 

McWane’s claim that Dr. Schumann “ignores substantial evidence that flatly contradicts 

his opinion” is meritless. Resp. Mtn., at 5. For this, McWane points only to { 

} Id. 

As McWane is well-aware, Dr. Schumann considered this evidence, but concluded that 

{ } simply do not meet the Complaint’s charges, 

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which involve something other than the { } that most lay people 

associate with price-fixing. As Dr. Schumann explained: 

{ 

Resp. Mtn., Exh. 2 at 99:14-24. Here again, Dr. Schumann does exactly what an expert 

economist should do: he reviews the record evidence and applies economic principles to put 

them in the context for the trier of fact. 

McWane’s reliance on General Electric Co. et al., v. Joiner, 522 U.S. 136 (1997) fails. 

The Joiner Court affirmed the district court’s exclusion of expert testimony because the studies 

the expert relied upon where flawed. 522 U.S. at 143-46. Without those studies to rely on, the 

Joiner Court found the expert’s opinion to only consist of ipse dixit. Id. at 146. That is not the 

case here. As explained above, Dr. Schumann relies on time-tested, well-established economic 

principles and theories to analyze the facts of this case. 

Finally, it is for the trier of fact to weigh the evidence and determine whether it fairly 

supports the Complaint’s charges. But the Court is not required to weight that evidence as a 

predicate to the admissibility of expert opinions. Dr. Schumann understands that in the end his 

opinions are to assist the trier of fact, who will ultimately decide the issues. Resp. Mtn., Exh. 2 

at 15:13-19; 20:5-14. 

Conclusion 

For these reasons, this Court should deny McWane’s motion. 

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Dated: August 13, 2012 Respectfully submitted, 

 s/ Andrew K. Mann 

Edward D. Hassi, Esq. 

Linda Holleran, Esq. 

Joseph R. Baker, Esq. 

Thomas H. Brock, Esq. 

Michael J. Bloom, Esq. 

Jeanine K. Balbach, Esq. 

J. Alexander Ansaldo, Esq. 

Andrew K. Mann, Esq.

 Monica M. Castillo, Esq. 

Counsel Supporting the Complaint 

 Bureau of Competition

 Federal Trade Commission

 Washington, DC 20580 

 Telephone: (202) 326-2470 

 Facsimile: (202) 326-3496 

 Electronic Mail: ehassi@ftc.gov 

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UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES
 

) 

In the Matter of ) 

) PUBLIC 

McWANE, INC., ) 

Respondent. ) DOCKET NO. 9351 

) 

__________________________________________) 

DECLARATION OF ANDREW K. MANN 

Pursuant to 28 U.S.C. § 1746, I make the following statement: 

1.	 My name is Andrew K. Mann. I am making this statement in In the Matter of McWane, 

Inc., FTC Docket No. 9351, in support of Complaint Counsel’s Memorandum in 

Opposition to McWane, Inc.’s Motion in Limine to Exclude Opinion Testimony from Dr. 

Laurence Schumann at Trial. All statements in this Declaration are based on my personal 

knowledge as a Staff Attorney for the U.S. Federal Trade Commission, Bureau of 

Competition, and if called upon to testify, I could competently do so. 

2.	 Tab 1 is a true and correct copy of CX2265, Rebuttal Expert Report of Laurence 

Schumann, Ph.D. 

3.	 Tab 2 is a true and correct copy of CX 2550, the June 29, 2012 Expert Report of Parker 

Normann, Ph.D and CX 2551, which contain replacement pages to the June 29, 2012 

Expert Report of Parker Normann, Ph.D. 

4.	 Tab 3 consists of true and correct copies of CX 2552, CX 2553, and CX 2554. 

Specifically, CX 2552 is an email sent on June 5, 2012, from William Lavery, counsel for 

McWane, to Michael J. Bloom, with carbon copies to Jeanine Balbach and Linda 

Holleran, counsel supporting the complaint, regarding “Questions re McWane 
   

 

 

 

 

 

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Spreadsheet.” CX 2553 is an email sent on June 5, 2012, from William Lavery, counsel 

for McWane, to Michael J. Bloom, with carbon copies to Jeanine Balbach and Linda 

Holleran, counsel supporting the complaint, regarding “Question Re Data in McWane 

Spreadsheet.” CX 2554 is an email sent on April 18, 2012, from William Lavery, 

counsel for McWane, to Linda Holleran, counsel supporting the complaint, with carbon 

copies to Michael J. Bloom, counsel supporting the complaint, and 

JElmer@maynardcooper.com, counsel for McWane, re “Data questions.” 

Pursuant to 28 U.S.C. § 1746, I declare, under the penalty of perjury, that the foregoing is 

true and correct to the best of my knowledge, information, and belief. Executed this 13th day of 

August, 2012, at Washington, D.C. 

 Respectfully submitted, 

 s/ Andrew K. Mann 

 Andrew K. Mann

 Counsel Supporting the Complaint 

 Bureau of Competition

 Federal Trade Commission

 600 Pennsylvania Ave., N.W.

 Washington, DC 20580 

(202) 326-2481 

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CONFIDENTIAL EXHIBIT 

REDACTED IN ENTIRETY 

TAB 1 
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CONFIDENTIAL EXHIBIT 

REDACTED IN ENTIRETY 

TAB 2 
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CONFIDENTIAL EXHIBIT 

REDACTED IN ENTIRETY 

TAB 3 
   

 

 

 

 

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CERTIFICATE OF SERVICE 

I hereby certify that on August 13, 2012, I filed the foregoing document electronically 

using the FTC’s E-Filing System, which will send notification of such filing to: 

Donald S. Clark 

Secretary

 Federal Trade Commission 

 600 Pennsylvania Ave., NW, Rm. H-113 

 Washington, DC 20580 

 I also certify that I delivered via electronic mail and hand delivery a copy of the 

foregoing document to: 

The Honorable D. Michael Chappell 

 Administrative Law Judge 

 Federal Trade Commission 

 600 Pennsylvania Ave., NW, Rm. H-110 

 Washington, DC 20580 

 I further certify that I delivered via electronic mail a copy of the foregoing document to: 

Joseph A. Ostoyich 

William C. Lavery 

Baker Botts L.L.P. 

The Warner 

1299 Pennsylvania Ave., NW 

Washington, DC 20004 

(202) 639-7700 

joseph.ostoyich@bakerbotts.com 

william.lavery@bakerbotts.com 

J. Alan Truitt 

Thomas W. Thagard III 

Maynard Cooper and Gale PC 

1901 Sixth Avenue North 

2400 Regions Harbert Plaza 

Birmingham, AL 35203 

(205) 254-1000 

atruitt@maynardcooper.com 

tthagard@maynardcooper.com 

Counsel for Respondent McWane, Inc. 
 

   

 

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CERTIFICATE FOR ELECTRONIC FILING 

 I certify that the electronic copy sent to the Secretary of the Commission is a true and 

correct copy of the paper original and that I possess a paper original of the signed document that 

is available for review by the parties and the adjudicator. 

August 13, 2012 By: s/ Thomas H. Brock 

Attorney