1104245_1 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

LAWRENCE E. JAFFE PENSION PLAN, On 

Behalf of Itself and All Others Similarly 

Situated, 

Plaintiff, 

vs. 

HOUSEHOLD INTERNATIONAL, INC., et 

al., 

Defendants. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

Lead Case No. 02-C-5893 

(Consolidated) 

CLASS ACTION 

Honorable Jorge L. Alonso 

PLAINTIFFS’ MOTION AND MEMORANDUM IN SUPPORT 

OF MOTION TO STRIKE EXPERT REBUTTAL REPORTS OF 

ALLEN FERRELL, CHRISTOPHER JAMES AND BRADFORD CORNELL 

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 1 of 12 PageID #:79653
- 1 - 

1104245_1 

I. INTRODUCTION 

Plaintiffs respectfully move the Court for an Order striking the Expert Rebuttal Reports of 

Allen Ferrell, Christopher James, and Bradford Cornell. The three “rebuttal” reports, filed on 

December 21, 2015 (“December 21 Reports”) (Dkt. Nos. 2074-2, 2074-3, and 2074-4) along with 

defendants’ reply brief in support of their Daubert motion to exclude Professor Fischel (Dkt. No. 

2073), violate this Court’s September 8, 2015 Order (“September 8 Order”) (Dkt. No. 2042) which 

allowed defendants to serve expert rebuttal reports only in the event that “plaintiffs provided an 

alternative loss-causation model in their rebuttal report.” September 8 Order at 6. Since Fischel did 

not provide a new loss causation model in his rebuttal report, defendants were not permitted to serve 

rebuttal reports from their three new experts. In addition to violating the September 8 Order, the 

December 21 Reports contain opinions and analysis that should have been included in the experts’ 

initial reports. Accordingly, Ferrell, James and Cornell’s rebuttal reports should be stricken in their 

entirety. 

II. ARGUMENT 

The September 8 Order set the following schedule for supplemental expert reports and the 

Daubert motion: 

September 23, 2015 – Plaintiffs serve Dr. Fischel’s supplemental report. 

October 23, 2015 – Defendants (1) file a Daubert motion, if appropriate, explaining 

the perceived flaws in Dr. Fischel’s analysis with respect to “firm-specific, nonfraud 

related information” and any other flaws that they perceive in his analysis that were 

not raised before and rejected by Judge Guzmán; and (2) serve their expert report 

responding to Dr. Fischel’s supplemental report and, if appropriate, identifying 

“some significant, firm-specific, nonfraud related information that could have 

affected the stock price.” Id. 

November 23, 2015 – Plaintiffs (1) file their response to the Daubert motion with 

respect to Dr. Fischel, if any; and (2) serve their expert report in rebuttal to 

defendants’ expert report, which, if appropriate, “account[s] for the specific 

information [identified by defendants] or provid[es] a[n] [alternate] loss-causation 

model.” Id.

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 2 of 12 PageID #:79654
- 2 - 

1104245_1 

December 21, 2015 – Defendants (1) file a reply in support of their Daubert motion 

with respect to Dr. Fischel, if any; and (2) if plaintiffs provided an alternate losscausation model in their rebuttal report, serve their expert’s rebuttal to that report. 

January 20, 2016 – Expert depositions are completed.

September 8 Order at 6. 

In accordance with the schedule, plaintiffs served Fischel’s supplemental report regarding 

firm-specific, non-fraud related information on September 23, 2015. On October 23, 2015, 

defendants, as permitted by the September 8 Order, filed a Daubert motion in which they argued that 

there were flaws in Dr. Fischel’s analysis with respect to “firm-specific, nonfraud related 

information,” as well as a handful of other arguments (including some arguments raised before and 

rejected by Judge Guzmán). At that time, defendants also served their expert reports responding to 

Professor Fischel’s supplemental report, attempting to identify “some significant, firm-specific, 

nonfraud related information that could have affected the stock price.” Id.

1

 On November 23, 2015, 

plaintiffs, again pursuant to the express terms of the September 8 Order, filed their response to the 

Daubert motion with respect to Professor Fischel and served Fischel’s rebuttal report which, 

“account[s] for the specific information [identified by defendants].” Although permitted to do so, 

Fischel’s rebuttal report did not “provid[e] a[n] [alternative] loss-causation model.” Id. On 

December 21, 2015, defendants were allowed to “(1) file a reply in support of their Daubert motion 

with respect to Dr. Fischel, if any; and (2) if plaintiffs provided an alternate loss-causation model 

in their rebuttal report, serve their expert’s rebuttal to that report.” Id. (emphasis added). Thus, 

only if Fischel introduced an alternative damages model in his November 23, 2015 report were 

defendants’ experts allowed to provide a second report. 

 

1

 In the October 23, 2015 filings, defendants abandoned their loss causation and damages 

expert from the first trial, Dr. Mukesh Bajaj, and now seek to replace him with three new experts. 

Defendants’ attempt to switch experts is the subject of Plaintiffs’ Motion to Preclude Defendants 

from Substituting New Experts, filed on November 24, 2015. Dkt. Nos. 2068, 2070.

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 3 of 12 PageID #:79655
- 3 - 

1104245_1 

Fischel did not provide an alternative damages model in his November 23, 2015 report. In 

fact, in his September 23, 2015 report, Fischel explained that there was no non-fraud information 

specific to Household that distorted either his original leakage model or his original specific 

disclosure model. Defendants’ experts had their opportunity to respond to Fischel’s opinions on 

both his specific disclosure and leakage models in their October 23, 2015 reports. And defendants’ 

three new experts did so in those initial responsive reports. There is simply no basis for defendants’ 

experts to submit additional rebuttal reports. 

Incredibly, in their December 21 Reports, each of defendants’ experts admits that they are 

not responding to any alternative damage model in Fischel’s November 23, 2015 Second Rebuttal 

Report, but rather are just responding to Fischel’s criticism of their October 23, 2015 reports. See

Ferrell’s December 21, 2015 report at page 4, ¶7 (“I have been asked by counsel for Household to 

assess Professor Fischel’s Second Rebuttal Report’s response to my Initial Report and whether it 

properly accounts for significant firm-specific, nonfraud information.”); James’ December 21, 2015 

report at page 3, ¶5 (“I have been asked by counsel for Defendants to respond to the assertions 

regarding my Initial Report discussed in Fischel’s Second Rebuttal Report.”); and Cornell’s 

December 21, 2015 report at page 3, ¶3 (“I have been asked by counsel for Defendants to review and 

respond to the Second Rebuttal Report of Daniel R. Fischel dated November 23, 2015.”). 

Defendants’ attempts to get a fourth, fifth and sixth bite at the apple clearly violate the 

Court’s order. Although most of the opinions and analyses in the December 21 Reports are 

repetitive of their October 23 reports, there are also some new opinions and analysis that should have 

been part of defendants’ October 23 filing. For example, Ferrell and James both challenge Fischel’s 

unchanged models in various new ways: 

• Ferrell has now submitted a “corrected Fischel regression” that uses different inputs 

than Fischel used (including a new index) to purportedly find fewer statistically 

significant dates than the 14 dates in Fischel’s Specific Disclosures Model. 

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 4 of 12 PageID #:79656
- 4 - 

1104245_1 

• In Ferrell’s October 23, 2015 report, he identified four non-statistically significant 

days that supposedly were impacted by non-fraud news. Now, in his December 21, 

2015 report, based on his new analysis, he identifies 10 additional dates. 

• Ferrell has a new “structural break” argument to support his “corrected Fischel 

Regression” analysis. 

• Ferrell and James now challenge the “estimation period” used by Professor Fischel. 

• Ferrell has a brand new inflation per share analysis of $0.52 to $4.19; previously 

none of defendants’ experts, old or new, had attributed even a single penny of 

artificial inflation to the fraud. 

• Defendants’ experts prepared new exhibits that should have been included in their 

October 23, 2015 reports. 

All of this new analysis is improper under the Court’s Order. First, the Order allowed 

defendants to submit additional reports only if Fischel produced an alternative loss-causation model. 

Although the rebuttal reports plainly are not permitted by the September 8 Order, defendants did not 

seek leave to file the reports and have provided no reason why they should be permitted. 

Second, the experts’ new analysis should have, and could have, been included in the 

October 23 reports. There were no changes to Fischel’s regression and peer index between his 

September 23 and November 23 reports; these features of Fischel’s event study have remained 

constant throughout the case and are the same as they were before and during the first trial. Thus, if 

Ferrell’s opinion is that the “corrected Fischel regression,” and not Fischel’s regression, is 

appropriate, he should have disclosed that analysis in October when his report was due. 

Additionally, if Ferrell and James believe that Fischel’s estimation period – which he has used 

consistently since his first report more than seven years ago – was wrong, they should have pointed 

that out in October. Likewise, Ferrell should have disclosed in the October 23 report his opinion that 

there are 10 additional days on which he believes company-specific nonfraud news “may have” 

impacted Household’s stock price, even in the absence of a statistically significant price reaction. 

After all, one of the express purposes of that report was to identify “some significant, firm-specific, 

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 5 of 12 PageID #:79657
- 5 - 

1104245_1 

nonfraud related information that could have affected [Household’s] stock price.” Ferrell October 

23 report, ¶14. Furthermore, there was no valid basis for Ferrell to conceal his opinion that the fraud 

caused $0.52 to $4.19 of artificial inflation until after Fischel and plaintiffs’ opportunity to respond 

had passed. The questions of whether the fraud caused artificial inflation and how much it caused 

are fundamental loss causation opinions that should have been in the initial report, not on rebuttal. 

Finally, in addition to the new analysis, defendants’ experts add additional attacks previously made 

by defendants’ expert Bajaj towards Fischel’s models (but not included in the new experts’ October 

23 reports), which were already rejected by Judge Guzmán. See Bajaj report at 79-82, and n.318 

(Dkt. No. 2070-2) (attacking Fischel’s estimation period, model, and index used). These too could 

have and should have been included in the original reports. Indeed, Bajaj raised them (and the Court 

rejected them) more than six years ago. 

The Court’s current scheduling order provides for plaintiffs to file any motions to exclude the 

testimony of defendants’ new experts at a later date (as part of the Pretrial Order Submission 

pursuant to the Court’s Local Rules). If the Court denies plaintiffs’ November 24 motion to preclude 

defendants from substituting in the three new experts, plaintiffs will file motions to exclude some or 

all of each defendant’s expert testimony at that time. However, since these three additional reports 

are submitted in the context of defendants’ motion to exclude Fischel’s testimony, the December 21 

Reports should be stricken as a violation of the Court’s order. It is patently unfair to allow 

defendants’ experts to submit new opinions and analysis in their December 21 Reports that should 

have been set forth in their October 23, 2015 reports. Defendants’ gamesmanship – designating 

three new experts, offering six new reports, and offering new analyses of alleged “flaws” which were 

rejected in 2009 – has gone too far. Fischel offered no “alternate loss causation model” and 

defendants’ experts’ “rebuttal” reports should be stricken. 

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 6 of 12 PageID #:79658
- 6 - 

1104245_1 

III. CONCLUSION 

For the foregoing reasons, the December 21 Reports should be stricken. 

DATED: January 6, 2016 Respectfully submitted, 

ROBBINS GELLER RUDMAN 

 & DOWD LLP 

MICHAEL J. DOWD (135628) 

SPENCER A. BURKHOLZ (147029) 

DANIEL S. DROSMAN (200643) 

LUKE O. BROOKS (90785469) 

LAWRENCE A. ABEL (129596) 

s/ Luke O. Brooks 

 LUKE O. BROOKS 

655 West Broadway, Suite 1900 

San Diego, CA 92101 

Telephone: 619/231-1058 

619/231-7423 (fax) 

ROBBINS GELLER RUDMAN 

 & DOWD LLP 

JASON C. DAVIS (253370) 

Post Montgomery Center 

One Montgomery Street, Suite 1800 

San Francisco, CA 94104 

Telephone: 415/288-4545 

415/288-4534 (fax) 

ROBBINS GELLER RUDMAN 

 & DOWD LLP 

MAUREEN E. MUELLER 

120 East Palmetto Park Road, Suite 500 

Boca Raton, FL 33432 

Telephone: 561/750-3000 

561/750-3364 (fax) 

Lead Counsel for Plaintiffs 

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 7 of 12 PageID #:79659
- 7 - 

1104245_1 

MILLER LAW LLC 

MARVIN A. MILLER 

LORI A. FANNING 

115 S. LaSalle Street, Suite 2910 

Chicago, IL 60603 

Telephone: 312/332-3400 

312/676-2676 (fax) 

Liaison Counsel 

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 8 of 12 PageID #:79660
1104245_1 

CERTIFICATE OF SERVICE 

I hereby certify that on January 6, 2016, I authorized the electronic filing of the foregoing 

with the Clerk of the Court using the CM/ECF system which will send notification of such filing to 

the e-mail addresses for counsel of record denoted on the attached Service List. 

I certify under penalty of perjury under the laws of the United States of America that the 

foregoing is true and correct. Executed on January 6, 2016. 

 s/ Luke O. Brooks 

 LUKE O. BROOKS 

ROBBINS GELLER RUDMAN 

 & DOWD LLP 

655 West Broadway, Suite 1900 

San Diego, CA 92101-8498 

Telephone: 619/231-1058 

619/231-7423 (fax) 

E-mail: lukeb@rgrdlaw.com

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 9 of 12 PageID #:79661
1 

1074375_1 

Jaffe v. Household Int’l, Inc., No. 02-5893 (N.D. Ill. ) 

Service List 

Counsel E-mail address 

Stewart Theodore Kusper 

Giovanni Antonio Raimondi 

THE KUSPER LAW GROUP, LTD. 

20 North Clark Street, Suite 3000 

Chicago, IL 60602 

(312) 204-7938 

Tim S. Leonard 

JACKSON WALKER L.L.P. 

1401 McKinney Street, Ste. 1900 

Houston, TX 77010 

(713)752-4439 

Stewart.Kusper@Kusperlaw.com 

Giovanni.Raimondi@Kusperlaw.com 

tleonard@jw.com 

Counsel for Defendant David A. Schoenholz 

Dawn Marie Canty 

Gil M. Soffer 

KATTEN MUCHIN ROSENMAN LLP 

525 West Monroe Street 

Chicago, Illinois 60661 

(312)902-5253 

dawn.canty@kattenlaw.com 

gil.soffer@kattenlaw.com 

Counsel for Defendant William F. Aldinger 

David S. Rosenbloom, 

McDERMOTT WILL & EMERY, LLP 

227 West Monroe Street 

Chicago, IL 60606 

drosenbloom@mwe.com 

Counsel for Defendant Gary Gilmer 

R. Ryan Stoll 

Mark E. Rakoczy 

Andrew J. Fuchs 

Donna L. McDevitt 

Patrick Fitzgerald 

SKADDEN, ARPS, SLATE, MEAGHER & FLOM 

LLP 

155 North Wacker Drive 

Chicago, IL 60606 

rstoll@skadden.com 

mrakoczy@skadden.com 

Andrew.Fuchs@skadden.com 

Donna.McDevitt@skadden.com 

Patrick.Fitzgerald@skadden.com 

pclement@bancroftpllc.com 

zhudson@bancroftpllc.com 

TKavaler@cahill.com 

Jhall@cahill.com 

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 10 of 12 PageID #:79662
1074375_1 

Counsel E-mail address 

(312)407-0700 

Paul D. Clement 

D. Zachary Hudson 

BANCROFT PLLC 

1919 M Street NW, Ste. 470 

Washington, DC 20036 

(202)234-0090 

Thomas J. Kavaler 

Jason M. Hall 

CAHILL GORDON & REINDEL LLP 

80 Pine Street 

New York, NY 10005 

(212)701-3000 

Dane H. Butswinkas 

Steven M. Farina 

Leslie C. Mahaffey 

WILLIAMS & CONNOLLY LLP 

725 Twelfth Street NW 

Washington DC 20005 

202-434-5000 

Luke DeGrand 

Tracey L. Wolfe 

DEGRAND & WOLFE, P.C. 

20 South Clark Street 

Suite 2620 

Chicago, Illinois 60603 

(312) 236-9200 

(312) 236-9201 (fax) 

dbutswinkas@wc.com 

sfarina@wc.com 

lmahaffey@wc.com 

twolfe@degrandwolfe.com 

ldegrand@degrandwolfe.com 

Counsel for Defendant Household International Inc. 

Michael J. Dowd 

Spencer A. Burkholz 

Daniel S. Drosman 

Luke O. Brooks 

ROBBINS GELLER RUDMAN & DOWD LLP 

655 West Broadway, Suite 1900 

San Diego, CA 92101 

(619)231-1058 

miked@rgrdlaw.com 

spenceb@rgrdlaw.com 

dand@rgrdlaw.com 

lukeb@rgrdlaw.com 

jdavis@rgrdlaw.com 

mmueller@rgrdlaw.com 

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 11 of 12 PageID #:79663
1074375_1 

Counsel E-mail address 

619/231-7423 (fax) 

Jason C. Davis 

ROBBINS GELLER RUDMAN & DOWD LLP 

Post Montgomery Center 

One Montgomery Street, Suite 1800 

San Francisco, CA 94104 

(415)288-4545 

(415)288-4534 (fax) 

Maureen E. Mueller 

ROBBINS GELLER RUDMAN & DOWD LLP 

120 East Palmetto Park Road, Suite 500 

Boca Raton, FL 33432 

(561)750-3000 

(561)750-3364 (fax) 

Lead Counsel for Plaintiffs 

Marvin A. Miller 

Lori A. Fanning 

MILLER LAW LLC 

115 S. LaSalle Street, Suite 2910 

Chicago, IL 60603 

(312)332-3400 

(312)676-2676 (fax) 

Mmiller@millerlawllc.com 

Lfanning@millerlawllc.com 

Liaison Counsel for Plaintiffs 

Case: 1:02-cv-05893 Document #: 2086 Filed: 01/06/16 Page 12 of 12 PageID #:79664