OR\G1NAL. 


UNITED STATES OF AMERICA 


FEDERAL TRADE COMMISSION 


OFFICE OF ADMINISTRATIVE LAW JUDGES 


) 


In the Matter of ) 

) 

McWANE, INC., ) 

a corporation, and ) DOCKET NO. 9351 

) 

STAR PIPE PRODUCTS, LTD., ) 

a limited partnership, ) 

Respondents. ) 

) 

ORDER DENYING MOTIONS INLIMINE TO PRECLUDE 

ADMISSION OF EXPERT OPINIONS AND TESTIMONY 

I. 

Currently pending are: (1) Complaint Counsel's Motion in Limine to Exclude 

Certain Opinions and Price Analyses in Dr. Parker Normann's Expert Report; and (2) 

Respondent's Motion in Limine to Exclude Opinion Testimony from Dr. Laurence 

Schumann. Each ofthe foregoing motions was filed July 27,2012, with the parties' 

respective oppositions filed on August 7, 2012. 

Having fully considered both motions in limine, and the oppositions thereto, and 

as more fully explained below, the motions are DENIED. 

II. 

A. Complaint Counsel's Motion in Limine Directed at Respondent's Expert 

Complaint Counsel's motion seeks an order precluding the admission of any 

evidence pertaining to price analyses and related opinions ofRespondent's proffered 

expert, Dr. Parker N ormann. As grounds for its motion, Complaint Counsel asserts that 

Dr. Normann's pricing analyses and related opinions are unreliable because the 

underlying pricing data contains errors, and because the pricing data does not accurately 

reflect actual transaction prices. 

Specifically, Complaint Counsel states that the pricing data upon which Dr. 

Normann relied in preparing his analyses and opinions contained incorrect "multipliers" 

(discounts off a list price)~ which when applied to the related list prices, resulted in 

incorrect "invoice" prices that were then used in Dr. Normann's analyses. According to 

Complaint Counsel, such errors affect 4.27% ofthe relevant 2008 McWane invoice data, 
with 21 % ofthe errors affecting January 2008 invoices. Complaint Counsel further 

contends that invoice price is an incorrect basis for any pricing analyses or opinions 

because it does not account for post-invoice adjustments such as freight discounts and 

rebates. Moreover, Complaint Counsel states, Dr. Normann's pricing analyses do not 

adjust or account for aggregation errors caused by month-to-month differences in both 

customer mix and order sizes, and also fail to account for other variables' potential 

effects on pricing, including the age of waterworks systems and treatment plants in 

municipalities, the state ofthe economy, and seasonal variations in supply and demand 

conditions. Complaint Counsel argues that the foregoing constitute gross and pervasive 

deficiencies, which render Dr. Normann's analyses and related opinions meaningless and 

unreliable. 

Respondent contends that the pricing data upon which Dr. Normann relied 

contained only a small number of anomalies, which even when removed do not affect Dr. 

Normann's conclusions, and that the vast majority ofthe sales transactions studied did 

not contain errors. In addition, Respondent contends that, contrary to Complaint 

Counsel's assertions, Dr. Norman did, when necessary, control for factors affecting 

prices, such as product mix and timing. According to Respondent, post-invoice price 

adjustments such as rebates or freight discounts are immaterial because the Complaint 

alleges improper conduct only as to job discounting, which is reflected in the invoice 

price. Based on the foregoing, Respondent argues that Dr. Normann's data is reliable and 

that Complaint Counsel's asserted deficiencies are best tested through cross-examination 

at trial, not preclusion. 

B. Respondent's Motion in Limine Directed at Complaint Counsel's Expert 

Respondent seeks an order precluding any expert opinions from Complaint 

Counsel's proffered expert, Dr. Laurence Schumann, because, according to Respondent, 

his opinions do not employ any economic expertise, but reflect only Dr. Schumann's 

interpretation ofthe record in the case, which interpretation is reserved for the trier of 

fact. Respondent contends that Dr. Schumann's opinions were not subjected to any 

statistical testing, and that absent such empirical testing, Dr. Schumann's opinions are 

nothing more than inadmissible "ipse dixit," i.e., unproven assertions.! Furthermore, 

according to Respondent, Dr. Schumann's opinions should be excluded because he 

ignores "overwhelming" evidence in the record, such as sworn statements denying the 

existence of any unlawful agreement that, Respondent asserts, contradicts Dr. 

Schumann's opinions. 

Complaint Counsel responds that statistical tests are not a necessary methodology 

for a social science, such as economics, and that Daubert does not imply that economic 

opinion that is not based on statistical analysis must be barred. Complaint Counsel 

asserts that the available pricing data in this case is flawed and does not permit reliable 

statistical testing. However, Complaint Counsel states, Dr. Schumann's opinions do rely 

on other reliable methodologies, such as economic theories, principles, and models. 

1 See http://www.merriam-webster.comldictionary/ipse%20dixit. 

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Complaint Counsel notes that, among other things, Dr. Schumann reviewed the record 

and applied a variety of economic concepts, such as oligopolistic interdependence, to 

draw conclusions about the relevant market and the behavior ofRespondent and others in 

the market. Dr. Schumann's opinions, and the underlying methodology, are best tested, 

Complaint Counsel argues, through vigorous cross-examination. 

In addition, Complaint Counsel states that Dr. Schumann did not ignore the sworn 

statements denying any unlawful agreement, but considered the statements and concluded 

that the denials did not fairly meet the allegations of the Complaint. Finally, Complaint 

Counsel asserts that Dr. Schumann's opinions are not offered to replace the function of 

the trier offact, but to assist the trier offact by placing the evidence in an economic 

context. 

III. 

A. Applicable Legal Standards 

As stated most recently in the Order Denying Respondent's Motion to Preclude 

Complaint Counsel's Proposed Proffer of Investigational Hearing Transcripts at Trial, 

issued August 15,2012: 

"Motion in limine" refers "to any motion, whether made before or during 

trial, to exclude anticipated prejudicial evidence before the evidence is 

actually offered." Luce v. United States, 469 U.S. 38,40 n.2, 105 S. Ct. 

460,83 L. Ed. 2d 443 (1984); see also In re Motor Up Corp., Docket 

9291, 1999 FTC LEXIS 207, at *1 (August 5, 1999). Although the 

Federal Rules ofEvidence do not explicitly authorize in limine rulings, the 

practice has developed pursuant to the court's inherent authority to 

manage the course oftrials. Luce, 469 U.S. at 41 nA. The practice has 

also been used in Commission proceedings. E.g., In re Telebrands Corp., 

Docket 9313, 2004 FTC LEXIS 270 (April 26, 2004); In re Dura Lube 

Corp., Docket 9292, 1999 FTC LEXIS 252 (Oct. 22, 1999). 

Evidence should be excluded on a motion in limine only when the 

evidence is clearly inadmissible on all potential grounds. Hawthorne 

Partners v. AT&T Technologies, Inc., 831 F. Supp. 1398, 1400 (N.D. Ill. 

1993); see also Sec. Exch. Comm 'n v. U.S. Environmental, Inc., No. 94 

Civ. 6608 (PKL) (AJP), 2002 U.S. Dist. LEXIS 19701, at *5-6 (S.D.N.Y. 

October 16, 2002). Courts considering a motion in limine may reserve 

judgment until trial, so that the motion is placed in the appropriate factual 

context. U.s. Environmental, 2002 U.S. Dist. LEXIS 19701, at *6; see, 

e.g., Veloso v. Western Bedding Supply Co., Inc., 281 F. Supp. 2d 743, 750 

(D.N.J. 2003). 

In addition, "[iJn limine rulings are not binding on the trial judge, and the 

judge may change his mind during the course of a trial." In re Daniel 

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Chapter One, No. 9329, 2009 FTC LEXIS 85, at *20 (Apr. 20, 2009) 

(citations omitted). "Denial of a motion in limine does not necessarily 

mean that all evidence contemplated by the motion will be admitted at 

trial. Denial merely means that without the context oftrial, the court is 

unable to determine whether the evidence in question should be 

excluded." Id. (quoting Noble v. Sheahan, 116 F. Supp. 2d 966,969 (N.D. 

Ill. 2000». 

(quoting in partIn Re POM Wonderfol LLC, 2011 FTC LEXIS 77, at *3-4 (May 5, 


2011». 


When ruling on the admissibility of expert opinions, in particular, courts consider 

whether the expert is qualified in the relevant field and examine the methodology the 

expert used in reaching the conclusions at issue. See, e.g., Daubert v. Merrell Dow 

Pharmaceuticals, Inc., 509 U.S. 579 (1993) and the many cases applying Daubert, 

including Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 153-54 (1999). However, 

as noted in In re Daniel Chapter One, 2009 FTC LEXIS 85, the court's role as a 

"gatekeeper," pursuant to Daubert, to prevent expert testimony from unduly confusing or 

misleading ajury, has little application in a bench trial. 2009 FTC LEXIS 85, at *21-22 

(Apr. 20, 2009), citing Clarkv. Richman, 339 F. Supp. 2d 631, 648 (M.D. Pa. 

2004) (stating that "[a]s this case will be a bench trial, the court's 'role as a gatekeeper 

pursuant to Daubert is arguably less essential. "'); Albarado v. Chouest Offihore, LLC, 

Civil Action No. 02-3504 Section "1"(4),2003 U.S. Dist. LEXIS 16481, at *2-3 (E.D. 

La. Sept. 5,2003) (stating that "[g]iven that this case has been converted into a bench 

trial, and thus that the objectives ofDaubert . .. are no longer implicated, the Court finds 

that defendant's motion should be denied at this time. Following the introduction ofthe 

alleged expert testimony at trial, the Court will either exclude it at that point, or give it 

whatever weight it deserves."). Rather 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 ofproof to test "shaky but admissible evidence." In re Daniel Chapter One, 

2009 FTC LEXIS 85, at *21; see Fierro v. Gomez, 865 F. Supp. 1387, 1396 n.7 (N.D. 

Cal. 1994) (quoting Daubert, 509 U.S. at 596». 

B. 	 Analysis 

1. 	 Complaint Counsel's Motion in Limine Directed at Respondent's 

Expert 

Based upon the foregoing legal standards, Complaint Counsel's Motion in Limine 

is denied. Complaint Counsel's criticisms ofDr. Normann's data are based largely on the 

opinions ofits proffered expert, Dr. Schumann; however, the validity of Dr. Schumann's 

opinions in this regard has yet to be determined. See In re Daniel Chapter One, 2009 

FTC LEXIS 85, at *23-24 (Apr. 20, 2009) (denying motion in limine to exclude expert 

where alleged inadequacies in opinions were based upon Complaint Counsel's version of 

the facts, which had yet to be proved at trial). 

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In addition, it is readily apparent from a review of Complaint Counsel's criticisms 

of Dr. Normann's data, and Respondent's responses thereto, that the challenge to Dr. 

Normann's pricing analyses is not that they have no basis, but that the bases, according to 

Complaint Counsel, are flawed. Thus, the motion presents "a classic disagreement 

between experts that goes to the credibility of each expert's opinions, not to the reliability 

oftheir methodology" for purposes of admissibility. Cook v. Rockwell Int 'I Corp., 580 

F. Supp. 2d 1071, 1092 (D. Colo. 2006). As recognized by Lantec, Inc. v. Novell, Inc, a 

case cited by Complaint Counsel, "the 'perceived flaws' in an expert's testimony often 

should be treated as 'matters properly to be tested in the crucible ofthe adversarial 

system,' not as 'the basis for truncating that process.'" 2001 U.S. Dist. LEXIS 24816, at 

*5 (D. Utah 2001 (quoting United States v. 14.38 Acres o/Land, 80 F.3d 1074, 1079 (5th 

Cir.1996». Compare Haggerty v. Upjohn Co., 950 F. Supp. 1160, 1167 (S.D. Fla. 

1996), relied upon by Complaint Counsel, which excluded expert opinions from 

consideration in opposition to summary judgment because the opinions had no scientific 

basis. 

Banta Properties v. Arch Specialty Insurance Co., 2011 U.S. Dist. LEXIS 152928 

(S.D. Fla. 2011), also cited by Complaint Counsel, is also inapposite. In that case, the 

court denied the motion to exclude expert opinion, rejecting the argument, inter alia, that 

the expert's opinion on causation failed to account for other possible causes of the 

damage at issue in the case. Id. at *9-12. The court held that the expert's failure to 

account for other possible causes "goes to the weight and credibility the jury should 

afford to [the] opinion," not its admissibility. Id. at * 11. In the instant case, it cannot be 

determined at this stage ofthe proceedings, outside the context oftrial, that the data upon 

which Dr. Normann relied is so flawed as to render his analyses and opinions 

"unreliable" and, therefore, excludable under Daubert. 

2. 	 Respondent's Motion in Limine Directed at Complaint Counsel's 

Expert 

The foregoing reasoning applies with equal force to Respondent's Motion in 

Limine, which is also denied. While Daubert clearly requires that expert opinion be 

based on something more than the expert's own bare assertions, Respondent's contention 

that only statistical testing can provide a proper foundation for expert opinion is 

unpersuasive, and the cases relied upon by Respondent are distinguishable. 

For example, the case of City o/Moundridge v. Exxon Mobil Corp., 2009 U.S. 

Dist. LEXIS 123954 (D.D.C. Sept. 30,2009), cited by Respondent, did not exclude 

expert testimony, and specifically stated that it was "unclear" whether or not the experts' 

opinions would be admissible. Id. at * 1 0 n.5, *40-42, and n.1 O. In Moundridge, in 

granting summary judgment, the court determined that each ofthe relevant expert 

opinions was wholly unsupported and speculative, and therefore were insufficient to 

create a triable issue of fact. Id. at *40-42, and n.1 O. In re Baby Food Antitrust 

Litigation, relied on by Respondent, did not involve a motion in limine, but whether the 

expert opinion at issue - along with other evidence - created a triable issue of fact to 

5 

defeat summary judgment. Jacob Blinder & Sons, Inc. v. Gerber Prods. Co. (In re Baby 

Food Antitrust Litig.), 166 F.3d 112, 117 (3d Cir. 1999). In that case, the expert's 

opinion that the defendants exchanged price information was based on nothing more than 

unreliable speculation where there was no other evidence in the record to support the 

opinion, and therefore could not defeat summary judgment. !d. at 135. In the instant 

case, whether the record does or does not support any opinions ofDr. Schumann, and 

whether such opinions are based upon valid economic principles, are issues best 

determined at trial, not by way of a motion in limine. 

Respondent has failed to demonstrate that Dr. Schumann's opinions are wholly 

unsupported for failure to be subjected to statistical testing. As acknowledged by the 

court in Moundridge, expert opinion may properly draw on economic experience and 

knowledge. 2009 U.S. Dist. LEXIS 123954, at *39. Moreover, it cannot be concluded at 

this stage ofthe proceedings that Dr. Schumann's opinions will not assist the trier of fact. 

Finally, whether Dr. Schumann's opinions gave proper consideration to evidence in the 

record that is contrary to his opinions is best tested by cross-examination at trial. 

IV. 

Having fully considered both motions and the oppositions thereto, and for all the 

foregoing reasons, Complaint Counsel's Motion in Limine to Exclude Certain Opinions 

and Price Analyses in Dr. Parker Normann's Expert Report is DENIED and 

Respondent's Motion in Limine to Exclude Opinion Testimony is DENIED. This Order 

is not a determination, and shall not be construed as a ruling, as to the admissibility of 

any expert testimony that may be offered at trial. 

ORDERED: 

D. Mi~l C a~ii 

ChiefAdministrative Law Judge 

Date: August 16, 2012 

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