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UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES 

08 02 2012 

In the Matter of ) 

) PUBLIC 

McWANE, INC., ) 

) 

Respondent., ) DOCKET NO. 9351 

) 

__________________________________________) 

MOTION IN LIMINE TO EXCLUDE CERTAIN OPINIONS AND PRICE ANALYSES 

IN DR. PARKER NORMANN’S EXPERT REPORT 

Complaint Counsel (“CC”) seeks to exclude any evidence related to the price analyses 

and related opinions of McWane’s economist, Dr. Parker Normann, because they are based on 

faulty data that are rife with errors and improper methodologies. The data used by Dr. Normann 

is so flawed that Dr. Lawrence Schumann, CC’s expert economist, opted not to use it. Indeed, 

Dr. Schumann 

See Castillo 

Decl., Tab 3, at 5-6. Not only does Dr. Normann fail to correct or account for these errors, he 

fails to properly control for variables that influence price, calculate error rates, validate his data 

through random sampling or other statistical analysis, or even throw out missing data points. 

 As a result, Dr. Normann’s opinions based on the data are patently unreliable. 

Even assuming arguendo the reliability of the data, Dr. Normann’s use of invoice price, rather 

than the actual transaction price paid by customers renders his conclusions regarding CC’s price 

fixing conspiracy allegations similarly unreliable because invoice prices do not represent the 

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actual price customers paid for fittings and therefore reveal nothing with respect to competition, 

collusion, or any other economic characteristic of the Fittings market. Finally, most of Dr. 

Normann’s opinions regarding CC’s monopolization allegations are based on this same set of 

defective data and are therefore also unreliable. While motions in limine are “discouraged,” a 

decision now to exclude the opinions and figures highlighted in Tab 1 will greatly expedite trial 

and should therefore be granted. 

I. BACKGROUND 

The Normann Report was produced on June 29, 2012, and Dr. Normann was deposed on 

July 23, 2012. See Castillo Decl., Tab B (Normann Report) & Tab C (Normann Deposition 

Transcript). Complaint Counsel met and conferred with counsel for Respondent regarding the 

issues in this Motion but could not resolve these issues. See Meet and Confer Statement. 

II. ARGUMENT 

Courts exclude expert testimony when it fails to meet the standards for relevance and 

reliability, and require any admissible expert opinions to be: (1) based on sufficient facts or data; 

(2) derived from reliable principles and methods; and (3) based on reliable methods to apply 

those principles and methods to the facts of the case. F.R.E 702; see also Kumho Tire v. 

Carmichael, 526 U.S. 137, 149-150 (1999); Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 

579, 591-595 (1993). Courts often strike down expert opinions based on data insufficiency and 

improper methodology when experts fail to use reliable data that has been tested and verified; 

and use poor methodologies, such as failing to calculate the error rate of the underlying 

methodology or to develop a means for controlling the error rate of a technique. See, e.g., Banta 

Props., Inc. v. Arch Specialty Ins. Co., 2011 U.S. Dist. LEXIS 152928, at *11-12 (S.D. Fl. 2011) 

(striking expert opinion on causation because expert failed to test her methodology, calculate its 

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rate of error, or maintain methods of control throughout her calculations); Lantec v. Novell, 2001 

U.S. Dist. LEXIS 24816, at *11-12 (D. Utah. 2001) (excluding expert testimony based on 

anecdotal evidence without using other means to verify the data calculations). 

Here, Dr. Normann’s opinions related to his pricing analyses should be excluded for two 

principal reasons. First, Dr. Normann relies on flawed data – it is not only riddled with errors, 

but it also does not reflect the true transaction price, or the price actually paid by customers. 

Second, Dr. Normann uses unreliable principles and methods to analyze the data. These 

problems apply to Dr. Normann’s pricing analyses for the horizontal claims as well as the 

monopolization claims. Because Dr. Normann’s graphs and other pricing analyses cannot 

reliably support any conclusions with respect to competition, collusion, or any other economic 

characteristic of the Fittings market, these analyses and all related opinions should be excluded. 

A. Dr. Normann Relies on Fatally Flawed Data 

Dr. Normann’s pricing analyses and related opinions should be excluded because they are 

based on data with widespread errors that have not been accounted for or fixed. They should 

also be excluded because Dr. Norman relied on the wrong data. Dr. Norman improperly based 

his opinions on invoice prices rather than the actual transaction prices paid by customers. 

1. Dr. Normann Used Data Sets That Were Rife With Plain Errors 

Dr. Normann bases his conclusions on raw data that contains serious defects and do not 

reliably reflect the prices paid by customers. McWane prices its Fittings based on a national list 

price and multipliers based on that list price for various states and regions around the country. 

For example, if a Fitting list price were $100, and the New York multiplier were .37, the 

published price for that Fitting purchased in New York would be $37. Any additional discounts 

applied to a specific Fitting would further reduce the $37 price. 

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These errors affect 

 The extent of these errors may be far worse. We can 

only detect errors when 

There may be many additional errors 

 These errors would cause a bias in prices, but we 

have no way of measuring the extent to which the price data contain this sort of error. 

The data set is so seriously flawed that any conclusions drawn from the analysis of the 

price data is likely to be erroneous and misleading, and should therefore be excluded. 

2. Dr. Normann Used the Wrong Data 

Even if the data used by Dr. Normann were not fatally flawed, Dr. Normann improperly 

relied upon the wrong data. Dr. Normann relied on invoice price, rather than actual 

1

 Castillo Decl., Tab 2 at ¶ 15, fn 6. 

2

 Castillo Decl., Tab 3, at 88-89.
 

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transactional price paid by the customer.3 

These flaws are further compounded by Dr. Norman’s failure to adjust or account for 

aggregation errors caused by month-to-month differences in both customer mix and order sizes. 

 Thus, failure to control for customer mix and order size 

will cause average prices and price indices to rise or fall irrespective of any changes in the 

degree of competition or collusion. 

 Yet this critical information is not reflected in the pricing analyses and Dr. Normann 

does not address it in any form – thereby rendering all of his conclusions based on the pricing 

3

 Castillo Decl., Tab 3, at 6-7. 

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data unreliable and potentially misleading. See generally Haggerty v. Upjohn Co., 950 F. Supp. 

1160, 1164 (S.D. Fl. 1996) (court excluding expert opinions due to expert’s reliance on the 

wrong data). 

In summary, Dr. Normann’s conclusions based on his pricing analyses should be 

excluded because it relies on garbage data: garbage in, garbage out. See also Castillo Decl., Tab 

2, at 20-63 (describing data errors underlying Dr. Normann’s opinions). 

B.	 Dr. Normann’s Empirical Analyses Do Not Comport with Basic Statistical and 

Econometric Methods 

Even if the data were not fatally flawed, Dr. Normann’s failure to control for the many 

factors that directly and substantially impact prices would render his analysis and conclusions 

meaningless.4

 This gross omission is fatal to Dr. Normann’s entire analysis. “The major issue 

faced by any attempt to estimate the effect of a merger on price, as with any intervention using 

nonexperimental data, is the method used to control for other confounding factors that may also 

have changed at the time of the event.”5

 Although this quote refers specifically to the estimation 

of the effect of a merger on price, the underlying principle applies to “any intervention using 

nonexperimental data,” and so the issue of controlling for confounding factors is equally 

applicable here. 

To do so requires that one control for all other factors that might affect price besides the 

event of interest, at least when data are generated in actual markets rather than in controlled 

5

 See Ashenfelter and Hosken, “The Effect of Mergers on Consumer Prices: Evidence from Five Mergers 

on the Enforcement Margin,” Journal of Law and Economics 53 (2010) (emphasis added); Ashenfelter et al., 

Generating Evidence to Guide Merger Enforcement, CEPS Working Paper No. 183, Princeton University, available 

at http://www.princeton.edu/ceps/workingpapers/183ashenfelter.pdf. 

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laboratory settings. Only by controlling the “other confounding factors that may also have 

changed at the time of the event,” is the effect of the event of interest isolated from the 

confounding factors that also affect price. Thus, “the major issue” in measuring the impact of an 

event such as a price-fixing agreement on prices is to properly control for all of the other factors 

besides the price-fixing agreement that might impact prices. Only by doing so can the effect of 

the price-fixing agreement be determined. 

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In the Fittings market, factors such as the age of waterworks systems and treatment plants 

in municipalities, municipal finances, housing starts, the “great recession,” prices of diesel fuel 

used by trucking, railroad, and shipping companies; and seasonal factors may affect demand and 

supply conditions and, therefore, prices. 

C. Dr. Normann’s Opinions Regarding CC’s Monopolization Claims Suffer The Same 

Fatal Flaw 

Dr. Normann’s opinions with respect to McWane’s monopolization of a domestic-only 

Fittings market should be excluded as well. They rest on analyses that are grossly flawed. For 

example, 

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 One cannot sensibly conclude 

or infer much about either category of Fittings, or make even minimally useful comparisons 

between the categories, given Dr. Normann’s mischaracterization problem. And yet Dr. 

Normann relies on just such conclusions, inferences, and comparisons, and for that reason these 

Figures and related analyses and opinions should be struck. 

In numerous other instances, not only did Dr. Normann 

As we indicated previously, this is 

not a mere methodological quibble. It is a failure by Dr. Normann to have adhered to a 

reasonable standard of economic rigor and professional care, and it cannot yield reliable 

conclusions or inferences. Dr. Normann’s opinions with respect to McWane’s monopolization 

of a domestic-spec Fittings market consist of nothing more than just such conclusions and 

inferences. Accordingly, these Figures and related analyses and opinions too should be struck. 

III. CONCLUSION 

For the reasons stated above, Dr. Parker Normann’s pricing analyses and related 

opinions, as identified in Tab 1, should be excluded. 

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Dated: August 2, 2012 Respectfully submitted, 

s/ Linda Holleran 

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 ) 

) 

McWANE, INC., ) DOCKET NO. 9351 

Respondent. ) 

__________________________________________) 

PROPOSED ORDER 

On July 27, 2012, Complaint Counsel filed a Motion in Limine to Exclude Certain 

Opinions and Price Analyses in Dr. Parker Normann’s Expert Report (“Motion”). Upon 

consideration of this Motion, and Respondent’s opposition thereto, this Court GRANTS 

Complaint Counsel’s Motion. 

ORDERED:

 ___________________________ 

D. Michael Chappell 

Administrative Law Judge 

______________, 2012 
__________________________________________ 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES
 

) 

In the Matter of ) PUBLIC 

) 

McWANE, INC., ) DOCKET NO. 9351 

Respondent. ) 

__________________________________________) 

COMPLAINT COUNSEL’S MEET AND CONFER STATEMENT 

On July 26, 2012 Complaint Counsel met and conferred with counsel for 

Respondent McWane, Inc., regarding Complaint Counsel’s Motion in Limine to Exclude 

Certain Opinions and Price Analyses in Dr. Parker Normann’s Expert Report. After a 

good faith attempt to resolve the issue, both sides agreed that they were at an impasse. 

Dated: August 2, 2012 Respectfully submitted, 

s/ Linda Holleran 

 Linda Holleran

 Counsel Supporting the Complaint 

 Bureau of Competition

 Federal Trade Commission

 Washington, DC 20580 

(202) 302-4996 

lholleran@ftc.gov 
__________________________________________ 

 

 

 

 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES
 

) 

In the Matter of ) PUBLIC 

) 

McWANE, INC., ) DOCKET NO. 9351 

Respondent. ) 

__________________________________________) 

DECLARATION OF MONICA M. CASTILLO 

1.	 I have personal knowledge of the facts set forth in this declaration, and if called as a 

witness, I could and would testify competently under oath to such facts. 

2.	 I am an attorney at the Federal Trade Commission and Complaint Counsel in these 

proceedings. Attached to this declaration are the exhibits submitted in support of Motion 

in Limine to Exclude Certain Opinions and Price Analyses in Dr. Parker Normann’s 

Expert Report. 

3. Tab 1 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. The yellow highlighting reflects those portions 

of the report that Complaint Counsel believes should be excluded for the reasons set forth 

in the Motion. 

4. Tab 2 is a true and correct copy of the CX 2265, the Rebuttal Expert Report of Laurence 

Schumann, Ph.D. 

5. Tab 3 is a true and correct copy of the rough transcript of Parker Normann, Ph.D.’s July 

23, 2012 deposition. 
 

 

 

 

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I declare under penalty of perjury that the foregoing is true and correct. Executed this 

2nd day of August, 2012, at Washington, DC. 

s/ Monica M. Castillo 

 Monica M. Castillo

 Federal Trade Commission

 600 Pennsylvania Ave. NW 

 Washington, D.C. 

(202) 326-3211 

(202) 326-3496 Facsimile 

 Counsel Supporting the Complaint 
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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 2, 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 2, 2012 By: s/ Thomas H. Brock 

Attorney