underlying price data, and Dr. McClave followed those instructions without understanding them or bringing
any independent expertise to bear. But that is not what occurred, '?

The few lines of testimony the defendants cite from Dr. McClave’s two-day deposition do not
accurately depict his understanding of the price reports. Elsewhere in his deposition, when asked whether
he undertook an independent investigation of whether the ‘Tampa prices reported in the Fertecon/PentaSul
newsletter reflected the various complex supply and demand factors at work in the sulfuric acid market,
Dr. McClave responded:

Well, certainly in the sense that I read most, ifnot all, of the issues of the publication which

reports the results of this [price] survey, and noted to my own level of interest that—and

satisfaction that in most of these —in many of these publications these factors which affect

supply and demand are discussed at some length.
* * *

..-Lalso saw a number of references in defendants’ documents — well, that’s probably
where | saw most of them — to this survey price, which indicated some dependence, some
telianee is maybe a better word, on that price from time to time in the defendants”
documents.
(McClave Dep., at 205). Later on, Dr. McClave related that the “data had been collected ina relatively
consistent way over time” and that because traders and producers were all parts of the process, “that
enhanced the reliability aspect” to Dr. McClave as a statistician. (McClave Dep. at 568). He also
indicated that it was a series utilized and relied upon in the industry over a long period of time. (d.). So
he isa bitmore familiar with the type of information that goes into the price reports— and the acceptance

of those reports in the industry — than the defendants’ motion concedes.

In conclusion, there was no need for the plaintiffs to have disclosed Boyd as. an expert witness

" Chemrex is similarly inapplicable. There, a physician relied upon the testresults and accompanying
opinion ofan industriat hygienist regarding the chemical composition ofa sealant compound, and the level of
exposure to those chemicals to which a user would be subjected. 1997 WL 223071, *6, 8.

20



§703.04[3] (collecting cases). Given the defendants’ evaluation of the reliability of the Fertecon price
compilations, which would appear to qualify as a party admission under Rule 801 (d)(2), it cannot be said
that Dr. McClave’s reliance on that data was unreasonable,”

Itis not just Dr. McClave and Dr, Stiroh, however, who relied on the Fertecon materials. The
Fertecon price compilations were found to be a permissible basis for the expert in J re Mulberry
Phosphates, Inc, 149 B.R. 702 (M.D-Fla. 1993}, where the court explained:

The expert presented... isa recognized expert in the phosphate industry, has been in

business for 60 years and employs 100 professionals, ... in preparing theirreport, relied

on the reports prepared by Blue, Johnson & Associates (Blue, Johnson) and Fertecon

Research Centre (Fertecon). Itis undisputed that Blue, Johnson and Fertecon are leaders

in the industry who regularly publish projections and market analyses, For instance, Blue,

Johnson publishes monthly fertilizer industry reports summarizing U.S. and international

fertilizer activity. Blue, Johnson also publishes industry forecasts annually. Fertecon also

regularly publishes forecasts for the fertilizer industry as well as weekly newsletters on the

sulfur sulfuric acid, ammonia and DAP sectors of the industry.

149 BR. at 709.

The Fertecon data is em ployed in reports to the Secretary of Commerce,
http:/tia.ita.doc. gov/download/ukraine-nme-status/comments ‘adhoc/adhoc-evrltr-and-cmt.pdf {Ad Hoc
Committee of Domestic Nitrogen Producers), testimony before the House Committee on Energy and
Commerce, http fenergycommerce.house.gov/l 08/Hearings/06102003hearing944/Liuzzil 521 .htm,and
in United States International Trade Commission publications.

http://hotdocs.usite.gow/docs/pubs/701_731/pub3821 pdf. The publication is cited in corporate filings with

the Securities Exchange Commission, as a search of the SECInfo website reveals.

* While not an admission of defendants other than the Noranda defendants, the evaluation of the
reliability of the Fertecon data by Norandaisa part of the overall mix of evidence to be evaluated under Rule
104 in determining the reliability of the data and the reasonableness of Dr. McClave’s reliance on it.

14


civil procedure.” 7; uf Racing Products, Ine. v. American Suzuki Motor Corp., No, 94 CS0392. 1998

WL 299300, #2 (N.DTE June 3,1 998); Brennan v. Paul Revere Life Insurance. Co., No.00C 0725,


to his damage report, although the agreed order that] signed on September 8" referred to the plaintiffs’

and defendants’ “damages experts” and “their expert opinions” which were to be disclosed by September
30,2005 and December 5, 2005, respectively. Nearthe end of. August 2005, the parties agreed that “all
expert discovery” would be extended. On September 28, 2005, J entered an order conditionally extending
the time for the plaintiffs’ expert to file his expert report. On October 4, 2005, Judge Coar approved this
order.

Itis telling that the defendants do not feel constrained by the language of the orders that they
contend hem in the defendants. Thus, abandoning any pretense at symmetrical application of the orders’
language, the defendants refer to their“expert witnesses” and their expert “reports” and make perfectly
clear that they have the right to call not one but multiple experts. (Defendants’ Memorandum, at 2).

Itisa basic principle of contract construction that the surest Buide to the parties’ intent is how they
construed the language as evidenced by their conduct. The same basic principle can be employed here.
Plaintiffs submitted Dr. Toltison’s expert report on October 28, 2005, in accord with Ji judge Coar’s order
of October 4, 2005, the language of which was. jointly crafted, or at least approved, by the defendants.
Given the current argument, one would have expected that upon receipt of the Tollison report, the
defendants’ lawyers would have immediately objected. But the defendants did nothing for two-and-a-half
months. Ifnotanineluctable conclusion, their prolonged silence permits an inference that the defendants
understood that the reference to “expert” and “expert report” was not intended to be restrictive and
permitted disclosure of more than one expert.

But there is yet more. Dr, Tollison was deposed on January 5-6, 2006. One purpose of the expert

disclosure rule is to allowthe opposing party o dispense with the expert’s deposition. SEC. v. Lipson,

5


under Rule 26(a}(2).

in the eastern United States. (Certain Defendants "Appendix of, Exhibits, Bx. K (“Tollison Dep.”)at 39).
He spent about an hour on the Phone with Ms, Erler, instructing her on the type of information to be

gathered. (Tollison Dep. at 40-4} ).

Publications or documents from the defendants’ expert, Dr. Stiroh. Exhibit 13 breaks the information down
by region, and indicates the share of | the market for non-fertilizer sulfuric acid the defendants enjoyed in

Northeast, Southeast and Midwest regions of the United States,

21


smelting plants would shut down or reduce their capacity in favor of selling Noranda-Falconbridge waste
acid. (id, at 5-6). He also discussed efforts he felt were directed at controlling prices. (/d., at 7-8).

The argument that there is a difference between Dr. Tollison’s conclusion at his deposition that the
defendants conspired with each other and his report that they entered into an alliance to avoid market
competition is based on an attitude that treats words as ends and notas vehicles to convey meaning. Pope
v. Atlantic Coastline RR, 345 U.S. 379, 390 (1953)(Frankfurter, J., dissenting). Dr. Tollison’s views are
merely alternative phrasings of his conclusion that the defendants agreed to commitan unlawful act, which
is the definition of conspiracy. United States v. Recio, 537 U.S. 270, 274 (2003). Justice Holmes’
timeless admonition provides the answer to the defendants” semantic argument: “We must think things, not
words, or at least we must constantly translate our words into facts for which they stand, if we are to keep
to the real and the true.” Holmes, Law and Science and Science and Law, 12 Harv.L.Rev. 443, 460
(1889). Compare NLRB v. Seven-Up Battling Co. of Miami, 344 U.S. 344, 348 (1953) We prefer
to deal with... realities and to avoid entering into the bog of logomachy, as we are invited to....”).

CONCLUSION
For the foregoing reasons, the Motion of Certain Defendants To Bar The Testimony of Dr.

McClave and Dr. Tollison [# 277] is DENT!

} Cm
ENTERED: V (J

UNI ES MAGISTRATE JUDGE

DATE: 5/24/06

27



effect of the termination on plaintiff's sales. /d., at 591, Similarly, in Loeffel Steet I, the plaintiff's expen
velied upon data gathered by plaintiffs employees, 372 F, -Supp.2d at 1119. Dr. Tollison’s use of Ms,
Erlerasadata gatherer is unobjectionable, especially since the data employed was taken not from the
plaintiffs, but from documents from the defendants’ own files. (Exhibits to Plaintiffs’ Response, Ex. | 2;
Tollison Dep. at 41 ).

The defendants’ objection to Ms. Erler’s having divided the eastern United States into regional

markets consists ofan unsupported, undeveloped, single-sentence assertion in their opening brief. Their

about how markets should be defined.” No cases are cited to support the contention, Perfunctory and
undeveloped arguments are generally considered waived. Perry y, Sullivan, 207 F 3d 379, 383 (7* Cir,
2000) (single-sentence argument unsupported by citation to authority deemed waived), Beyond that, the
defendants appear to be Taising issues that are not yet ripe for resolution,

The burden ison the plaintiffs to establish the televant geographic market, Toys “R” Us, Ine. v.
FTC, 221 F.3d 928, 937 (7" Cir. 2000} citing United States v. EL duPont de Nemours & Co., 351
U.S.377(1956). And the issue of relevant Seographic market is a question for the jury. Holleb & Co.
v. Produce Terminal Cald Storage Co., 532 F.2d 29, 33 (7* Cir, 1976); Coastal Fuels of Puerto
Rico, inc. v. Carribean Petroleum Corp., 79 F.3d 182, 197 (1 Cir. 1996); Thurman industries, Ine.
v. Pay ‘n’ Pak Stores, Inc., 875 F.2d 1369, 1374 (9" Cir. 1 989), Obviously, it is far too early — this is,
after all, what defendants call a Rule 26(a)(2) motion — to reach any conclusions about the relevant
geographic market or plaintiffs’ proofregarding that issue. The plaintiffs will, of course, have to provide

a factual basis sufficient to justify its delineation of the relevant market. Baxley-DeLamar Monuments,

23


Dr. McClave: Well, l think Lasked something along those lines, and his answer was,
“Well, that's sortof, Proprietary information, but what I dois—I know the marketplace and
I know people in the marketplace, and I talk to a lot of people.”

(Defendants’ Memorandum, at 6-7). The exchange proves rather more than the defendants
acknowledge, and tacitly assumes that Boyd’s methodology is governed by principles relating to “surveys,”

Dr./Mr, Boyd is unquestionably knowledgeable about the sulfuric acid market and prices over time.
Inhis role as the gatherer of information essential to the publication ofa widely used and highly respected
industry journal, he was not Just a kibitzer ~ to borrow one of Judge Posner’s bons mots. Jessup v.
Luther, 277 F.3d 926, 929 7" Cir. 2002). Rather, he appeared to be a systematic gatherer of price and
other data that he obtained through his discussions with, as he putit, a lot of, people. A number of cases
have concluded that interviews (far less focused and systematic than what occurred overtime here} can
be a reliable source of data upon which to base expert opinion. See 4 Weinstein’s Federal Evidence,
supra $703.04[3]. Boyd's “interviews” —if they can be called that —were not episodic, but were regular
and continuous activities that enabled him to publish for more than two decades a newsletter that had
become common currency in the industry and that was sufficiently reliable that at least some of the
defendants (i.e., Noranda and DuPont) used the information in their business affairs.

Ina supplemental brief, Marsulex repeats the assumption in the opening brief that what is involved
here are surveys by Boyd and argues that survey results must be presented through expert testimony and
since they are not, Dr. McClave is relying on unreliable data and his testimony must be barred. Citation
to two trademark cases, Sears, Roebuck and Co. v. Menard, inc.,No. 01-9843, 2003 WL 168642, *]
(N.D.II. Jan. 24, 2003); Simon Property Group L.P. v, mySimon, ine., 104 F.Supp.2d 1033, 1038

(S.D.Ind. 2000), is the sum of the argument. There is no attempt to show that the principles relating to

18


In his expert report, Dr. McClave made no secret of his use of the PentaSul/Fertecon price figures.

He explained that various economic forces combined tocomplicate the supply/demand relationship in the
sulfuric acid market, and that this was captured in the Fertecon reports. According to Dr. McClave, the
Fertecon newsletter had been published for nearly twenty years and is relied upon by consumers, buyers,
traders, and even governmenta gencies. (Certain Defendants’ A lppendix of Exhibits, Ex.H (“McClave
Rep.”)at5). He indicated thatthe prices reported in the newsletter are derived from current information
supplied by consumers, producers, and traders who regularly deal in the sulfuric acid market. Dr. McClave
felt the “Tampa market price” as reported in the newsletters was a “particularly relevant benchmark” for
his report. As it tums out, so too do the defendants and their experts.

The defendants contend that the use of these price reports is improper because Dr. McClave is
relying on another expert’s “information, studies and data.” Relying on Dura Automotive, 285 F.3d 609
{7" Cir. 2002); Le effel Steel Prods., Ine. v. Delta Brands, Inc., 387 F Supp.2d 794 {N.D.IE.
2005)(Loeffel Steel 1) and Grant v, Chemrex, Jnc., No. 93-0350, 1997 WL 223071 (N.D.UL Apr. 28,
1997), the defendants argue that Rule 26(a}(2) required Boyd to have been disclosed asan expert, and
since he was not, Dr. McClave cannot testify. In the words of Dura Automotive, without the
PentaSul/Fertecon data Dr. McClave’s opinion would “‘rest [] on air.” (Defendants' Memorandum, at
5-7).

‘These cases did nottum on Rule 26, but on the contours of Rute 703, Federal Rules of Evidence
~arule that is unmentioned in the defendants’ submissions. Rule 703 provides that “the facts or data in
the particular case upon which an expert bases an opinion or inference may be those perceived by ormade
known to the expert at or before the hearing. Ifofa type reasonably relied upon by experts in the particular

10


Cf Sherrod. Lingle,223 F.3d 605, 613 (7 Cir. 2000)(7" Cir.1998)(no indication opposing party had

been harmed or unfairly surprised).

The final bit of“evidence” that makes unacceptable the defendants’ current claim of prejudice is
that it was not raised until the reply brief. Apart from the fact that an argument that is not developed or
adequately supported until the reply brief is deemed waived,’ the defendants’ delay in raising the issue
suggests that the prejudice arguments essentially an afterthought. NutraSweet Co. v. X-L Engineering
Co, 227 F.3d 776 (7" Cir. 2000), on which the defendants rely, is not particularly relevant. There, it was
unquestioned that the defendant missed the deadline for filing its expert report, and the plaintiffimmediately
moved to bar the expert witness from testifying. /d, at 782. In addition, the harm in NutraSweet was self-
evident insofar as the trial was just six weeks away by the time the defendant submitted its expert report.
fd., at 786.

Literalism has its place. Butnot here. The evidence of intent in the choice of form used by the
partics in applying for expert discovery extensions is inconclusive given the history of the parties’ usage of
the plural and singular form in the applications and in not disapproving at least one order that referred to
“experts.” Learned Hand has rightly observed that there is no more likely way to misapprehend the
meaning of any language than to read the words literally, forgetting the object which the documentasa
whole was meant to secure. Central Hanover Bank & Trust Co. v. CIR, 159 F.2d 167 (28 Cir.}, cert.
denied, 331 U.S. 836 (1947). Even words such as jurisdiction are notoriously plastic and thus cannot

always be construed literally, See Steel Co. v. Citizens for Better Environment, $23 U.S. 83 (1998);

> See United States v. Alhatabi, 443 F.3d 605 (7 Cir. 2006); Harper v. Vigilant Insurance. Co.,
433 F.3d 521, 528 (7" Cir. 2005); Coker v. Trans World Airlines, Inc., 165 F.3d 579, 586 (7" Cir. 1999).

7


46 F.Supp.2d 758, 763 n.3 (N.D.IIl. 1999). Other purposes include the minimization of the expense of

deposing experts, the shortening of direct examination, and the prevention of ambush at trial. Ortiz-Lopez

v. Sociedad Espanola de Auxilio Mutuo Y Beneficiencia de Puerto Rico, 248 F.3d 29, 35 (1* Cir,

2001 {cases cited). The Advisory Committee Notes, which are informative, Williamson v. United. ‘States,

512 U.S, 594, 614-615 (1994) (Kennedy, J., concurring), explain the design of Rule 26 this way:
The information disclosed under the former rule in answering interrogatories about the

"substance" of expert testimony was frequently so sketchy and vague that it rarely

dispensed with the need to depose the expert and often was even of little help in preparing
for a deposition of the witness.
* * *

Revised subdivision (b)(4)(A) authorizes the deposition of expert witnesses. Since

depositions of experts required to prepare a written report may be taken only after the

report has been served, the length of the deposition of such experts should be reduced,

and in many cases the report may eliminate the need for a deposition.

Fed.R.Civ.P. 26(a)(2)(B)(advisory committee note to 1993 amendment).

‘The defendants do not so much as suggest that plaintiffs’ disclosure of Dr. Tollison’s expert opinion
on October 28" had any adverse effect on their deposition of Dr. Tollison. (Defendanis’ Memorandum,
at 10-11). Indeed, it went off without a hitch, and almost three months passed without a word of complaint
about the now claimed tardy disclosure. Ofcourse, inferences from silence are often perilous. Butnotin
acontext where some prompt outcry would be expected. See Richman v, Sheahan, 415 F.Supp.2d 929,
940(N.D.IIE 2006)(delay in challenging expert report and lack of effect on deposition belied any claim of
adverse effect). Ifthe defendants felt they were prejudiced by the belated disclosure of Dr. Tollison’s
Teport, itis doubtful that they would have gone ahead with the deposition instead of filing a motion to bar.

dnve Sulfuric Acid Antitrust Litigation, 231 F.R.D.331, 340 (N.D.UL. 2005)(claim of severe prejudice

by lack of responses to discovery requests was undermined by party taking the depositions in any event).

&


consumer confusion surveys in trademark cases, 5 McCarthy on Trademarks §§ 32:170-178 (4th

ed.2002), are relevant to and control the Fertecon/PentaSut compilation of sulfuric acid prices.

It is not for a court to do the work the lawyers have chosen not to do, Bretford Mfg., Inc. v.
Smith System Mfg. Corp., 419 F.3d 576, 581 (7th Cir. 2005); United States y. Lanzotti, 199 F.3d 954,
960 (7th Cir. 1999), and tendenti ously and uncritically calling what Boyd did a“survey” does not make
the constraining principles applicable to consumer confusion surveys in trademark cases, C; of King v.
Federal Bureau of Prisons, 415 F3d 634, 636 (7" Cir. 2005) (Posner, J -); Tomic v. Catholic Dioceses
of Peoria, 442 F.3d 1036, 1039 (7" Cir. 2006). The question here, as always, is one of underlying
reality rather than forms oriabels. See Bowen v, Gilliard, 483 US, 587,605 (1 987); WB. Worthen Co.
ex. rel. Board of Commissioners v. Kavanaugh, 295 U.S. 56, 62 ( 1935}(Cardozo, J.}.

This case cannot be equated to Loeffel Steel Ii. There, the expert did not bring to bear his own
expertise on underlying data. Rather, he was essentially repeating the expert opinions of others, who could
not testify because they had not been disclosed as experts. This was precisely the situation that troubled
the court in Dura Automotive. To allow the disclosed experts in Dura Automotive and in Loeffel Stee?
totestify would have made them the “mouthpiece” for the non-testifying expert in violation of the hearsay
rule, Dura Automotive, 285 F.3d at 612, 614; Loeffel Steel Hf 387 F.Supp.2d at 807-09. See also
TK-7 Corp. v. Estate of Barbouti, 993 F.2d 722, 734 (10" Cir. 1993)."' The only way Loeffel Stee?

Hor Dura Automotive would apply here is if Boyd had instructed Dr. McClave on what to do with the

"In Loeffal Stee? I, the non-testifying experts had provided to the disclosed (valuation) expert the
very methodology he utilized and about which he knew nothing beyond whathe was told, He brought to bear
absolutely no expertise. In Dura Automotive, the testifying expert based his opinions on certain models that
involved a succession of expert opinions and judgments none of which the testifying expert was conversant
with. And, the modeling techniques employed were not “cut and dried;” they were, in fact, “controversial.”

19


products, natural gas liquids and related markets. (http://www, pentasul.com/). The defendants refer to
Boyd as “Dr.,” the plaintiffs do not, and the PentaSul website makes no claim either way.
Foralmost two decades, Fertecon has published, among other things, weeddy, current information
newsletters that include ranges of sulfuric acid prices in certain regions of the world forthe week. The
prices are listed by United States dollars perton.’ Thus, for the week of November 21 ,2005, the World

Sulfuric Acid Weekly reported:

Sulphuric Acid Price Indications
Nov. 7 Nov. 14 Nov. 21 Trend / Notes

US Gulf ex-terminal 45-50 45-50 45-50
Tampa, ‘st cfr consumer 40-45 40-45 40-45
South US /st cr consumer 64-63 54-68 84-68
NW Europe cfr consumer €42.48 €42-48 €42-48 H2-2005.
- above at current $ rate 50-57 49-56 49-56
Hamburg - ARA fob export 25-30 28-30 25-30
Mediterranean fob export 25-30 25-30 25-30
Chite cfr northern terminal 70-75 70-75 70-75 2005, 60-63 for 2006

(http://www.pentasul,com/sac| 1-29. pdf). The prices, according to the newsletter, are derived from the

“most recent concluded contract or spot business or competitive offers.”

> According to one of the defendants? experts, Dr. Lauren Stiroh, Mr. Boyd — she does not refer to
him as Dr. — calls each participant in the market on a weekly basis and “elicits the price range, volume, and
time period in which each agent has conducted recent sulfuric acid transactions. After having conversations
with several of the market participants, Dr. Boyd has a good feel for the market conditions and a sense for

which numbers are the most representative.” (Piaintiffs’ Response to Marsulex’s Summary Position, Ex.
2, Stiroh Ex. 17 at 2).


Dr. McClave: None other than the fact that the results of the damage modeling are
consistent with, in my opinion, the allegations of — of anti-competitive behavior,

(McClave Dep. at 63; Defendants’ Memorandum, at 9). This kind of, Tesponsive testimony is not the kind

have any other opinions as to this case that we haven't discussed?" You generally don't
Want to know the answer to that question. if. you don't ask it and the opinions are not

provided either in the report, in the deposition, or otherwise "in writing” (under Rule
26(e)(1), the undisclosed opinions are Presumptively excluded under Rule 37(c}(1).

Joseph, Gregory P., “Expert Approaches”, 28 LITIGATION 20, 21 (Summer 2002),

Defendants also find fault with portions of Dr. McClaye’s deposition iestimony where he Stated that


JN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
)
In Re SULFURIC ACID ANTITRUST } MDL Docket No. 1536
LITIGATION ) Case No. 03 C 4576
)
) Magistrate Judge
} Jeffrey Cole
)

MEMORANDUM OPINION AND ORDER

As thisis the seventh opinion in this case, the background of the litigation need not be revisited.’
The present controversy involves the testimony of plaintiffs’ expert economic witnesses, Drs. James
McClave, a statistician, and Robert Totlison,an economist, whom the defendants contend should not be
allowed to testify because: 1) Dr. Tollison’s identity and his opinions were not timely disclosed under Rules
26(a)(2)(B) and (C) in accordance with Judge Coar’s scheduling order; 2) the plaintiffs failed to disclose
the identity and opinions of two individuals (Mr. Boyd and Ms. Erler), whom the defendants say provided
expert opinion on which Drs, McClave and Tollison relied; and 3) Drs. McClave and Tollison improperly
offered opinions that were not contained in the expert reports disclosed by plaintiffs during their depositions.
The sanction mandated by the Federal Rules of Civil Procedureis, say the defendants, that the reports of
Drs. McClave and Tollison must be stricken and that they be precluded them testifying at trial.
Alternatively, the defendants seek to bar any opinions that: (J}improperly rely upon information provided

by non-disclosed third-party experts; and/or (2) were not properly disclosed in the expert's report.

' See Ture Sulfuric Acid Antitrust Litigation, 2006 WL 991039, April 10, 2006, (N.D.I11. 2006); 231
F.R.D. 351 (N.D.fil. 2005); 230 F.R.D, 527; 231 F.R.D. 331; 231 F.R.D. 320; 2005 WL 1994105 QN.D.IL.
2005).



1018-19 (1* Cir. 1993), Wantanabe Realty Corp. v. City of New York, 2004 WL 188088 at *2
(S.D.N.¥. 2004); Fournier v. Erickson, 242 F.Supp.2d 318, 338 {S.D.N.Y. 2003). Since the Fertecon
information falls within a hearsay exception, the vice found (and disapproved) in Dura Automotive and
Loeffel Steel is absent here.

But even if recourse must be had to Rule 703, the defendants’ argument fails. The defendants do
not contend that statisticians and economists in antitrust cases cannot rely on pricing data. Nor do they
seriously argue in their opening brief that the pricing information in the Fertecon/PentaSul newsletter is not
the type of “facts or data” referred to in Rule 703. (Defendants' Memorandum, at 4-7). The argument,
appearing in the reply brief, is that “it is impossible to determine if Dr. Boyd’s price survey is valid and
reliable without an understanding of the methodolo: gy he used to conduct his survey.” (Reply, at 3). But
contentions — especially undeveloped ones - first raised ina reply briefare waived. Harper, 433 F.3d at
528; Coker, 165 F.3d at 586. Apart from any question of waiver, the reliability of the Fertecon/PentaSut
data and its availability under Rule 703 are not o pen tO serious question.

The defendants’ briefs would lead one to believe that they have no knowledge of Dr./Mr. Boyd,
who is made to appear as almost an alchemist-like figure, whose price compilations are the result ofsome
unfathomable sorcery, We may pass quickly over this claim, for we have it on the highest authority —the
defendants themselves — that the price data are at least reasonably reliable. Indeed, Noranda executives
have gone farther and, in internal corporate documents, have said that “Fertecon is the most reliable
reporter of [sulfuric] acid pricing.” (Exhibits to Plaintiffs’ Response, Ex. 8)(Emphasis supplied). Indeed,
so reliable {and apparently ubiquitous) is the newsletter that the Noranda defendants’ attorneys earlier

argued it should have put the plaintiffs on notice of the Noranda-DuPont joint venture when it was reported

12


field in forming opinions or inferences upon the subject, the facts or data need not be admissible in evidence
in order for the opinion or inference to be admitted.” See also Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 595 (1 993). Dura Automotive and Loeffel Steei made clear that
Rule 703 was not an exception to the hearsay rule, and that one expert could not be the mouthpiece for
another. Ifthe latter had not been properly disclosed, he could not testify, and in that event the former’s
testimony would rest on air.

‘Thus, the underlying issue in this case is not whether Boyd had been timely disclosed as an expert,
but whether Dr. McClave could reasonably rely on the Fertecon pricing data as permitted either by Rule
703 or some other rule of evidence. The defendants’ argument that he could not is doubly deficient. First,
it ignores Rule 803(17) of the Federal Rules of Evidence, which provides that “[mJarket quotations,
tabulations, lists, directories or other published compilations, generally used and relied upon by the public
or by persons in particular occupations” are not excluded by the hearsay rule even thought the declarant
is available as a witness. Asan exception to the hearsay rule, compilations that fall within the Rule, are, by
definition, sufficiently reliable that they may be admitted into evidence without cross-examination.*

The Fertecon information falls within the plain and unambiguous text of the Rule, and the reasons
that underlie the Rule apply here: the task of finding every person who teported price information to the
newsletter would be manifestly impossible, and the evidence is undisputed that the weekly newsletter is
widely used in the industry and by various agencies of government, and by the defendants themselves. Cf.

United States v. Woods, 321 F.3d 361, 363 G3" Cir. 2003); United States v. Cassiere, 4 F.3d 1006,

“Thus, the concern defense counsel expressed at oral argument that cross examination would be all
but impossible is not relevant if Rule 803(17) applies.

il


United Phosphorus Lid. v. Angus Chemical Co, , 322 F.3d 942, 948 (7" Cir. 2002\en banc) and id.
at 953 (Wood, J., dissenting), cert. denied 540 U.S. 1003 (2003). The same is true of “shall” and “may.”
‘Thus, controlling significance cannot be ascribed to the fact that the Jast order in the sequence used the
singular rather than the plural form in referring to expert discovery.

B.
The Plaintiffs Did Not Improperly Fail To Disclose Dr. Boyd As An Expert Witness

The defendants’ motionis, at least ostensibly, about the untimely disclosure of expert witnesses
under Rule 26(a)(2)(A) and (C). In reality, the motion necessarily implicates Rules 703 and 803 C7of
the Federal Rules of Evidence, for if either of these rules allowed Dr. McClave to rely on the Fertecon
materials, there could be no violation of Rule 26's disclosure requirements. The title of the defendants?
motion and its exclusive reliance on Rule 26 neither determine what the motion is substantively, nor define
or limit analysis to that Rule. Compare Bartholet v. Reishauer 4.G., 953 F.2d 1073, 1078 (7th Cir.
1992); Shannon v, Shannon, 965 F.2d 542, 552-52 (7th Cir. 1992); United Airlines v. US. Bank,
NA, 406 P.3d 918, 923 (7" Cir. 2005)(“Temporary restraining orders that extend past 20 days are
reviewable as preliminary injunctions no matter what the rendering judge may call them.”).

The defendants argue that in preparing his damage model and formulating his opinion Dr. McClave
improperly relied upon data and information provided by an undisclosed expert, Robert Boyd. Beyond
the characterization of Boyd asa “Dr.” and as an expert whom the plaintiffs failed to identify, they provide
essentially no other information. The facts regarding Boyd are these: Robert Boyd is the President of
PentaSul, Inc.— formerly Fertecon —a company that (according to its website and information obtained

in discovery in the case) provides information, data and consulting services on sulfur, sulfuric acid, sulphur


Memorandum, at 7-8) and treads dangerously close to, ifit does not actually cross, the line where skeletal
arguments are not considered. Huck Store Fixture Coy NEBR. > 327 F.3d 528, 537 (7" Cir,
2003 i(single-page argument deemed waived); United, States v, Spiller, 261 F.3d 683, 692.9 (7 Cir,
2001 (skeletal arguments deemed wai ved). Defendants assert, without sup porting case law, that Dr.
Toltison erred in his teliance on Ms, Erler’s data because he failed to determine his own market definition

and was not sufficiently familiar with hers, Wefendanis * Memorandum, at 8). Defendants do not

expound on either theory, however, so it is difficult to assess their Position.

requisite assurances are there, the assistant’s work need not be introduced into evidence. Judge Posner
has called such assistants “gofers or data gatherers.” Dura Automotive, 285 F.3d at 613. See also
NutraSweet Co. y, ACL Engineering Co,, 227 F.3d 776, 790 (7" Cir, 2000)(no requirement that an
expert "personally perceive the subject of his anal lysis"); Loeffel Steet Products, ine. v, Delta Brands,

tne. 372 F.Supp.2d It 04, 1119 (ND. 2005) Loeffel Steet A(expert's opinion based on data gathered

and supplied by others).


Coar’s ruling on an application to extend the final date for dispositive motions. Judge Coar then granted

the parties’ motion to approve the new schedule on October 4, 2005. On October 28, 2005, plaintiffs
submitted the expert reports of both Dr. McClave and Dr. Tollison. Defendants deposed Dr. McClave
on December 14-15, 2005, and Dr. Tollison on January 5-6, 2006. Noclaim regarding the timing of the
disclosure or its effect on the ability to depose Dr. Tollison was made until the present motion.

1.
ANALYSIS

A.
The Plaintiffs Did Not Fail To Timely Disclose Dr. Toltison As An Expert Witness

Time and again lawyers are warned of the importance of adhering to deadlines. As Judge
Easterbrook has warned, ignoring deadlines is the surest ‘way to lose acase, United States v. Golden
Elevator, Inc., 27 F 3d 301, 302 (7" Cir, 1994). See also Raymond v. Ameritech Corp., 442 F.3d
600, 604-05 (7" Cir, 2006); Harris v. Owens-Corning Fiberglass Corp., 102 F.3d 1429, 1433 (7
Cir.1996); In re Sulfuric Acid Antitrust Litigation, 231 F.R.D.331,332(N.D.U. 2005). Adherence
todeadlines for disclosure of expert witnesses and their: Teports is especially important under Rule 26,
Federal Rules of Civil Procedure. The argument presently advanced by the defendants is that the plaintiffs
failed to disclose Dr. Tollison as an expert and to provide his expert report by the August 29, 2005
deadline. The argument is based on a hyper-literal parsing of the discovery orders, which were phrased
in the singular form —“expert” and “export report” ~and only mentioned Dr. McClave. (Defendants’
Memorandum, at 10-11).

In the evolution of the discovery deadlines, the parties used indiscriminately the plural and singular
form in referring to their experts. The plaintiffs proposed a schedule that referred only to their expert and

4


http:'Avww.secinfo.com/d]14D5a,1932.htm (Cargill, Inc.); http/Avww.secinfo.com/dsvRs.4fBx4.htm (Terra
Industries). The International Fertilizer Industry Association lists Fertecon asa resource for questions on
pricing, http://www. fertilizer org/ifa/F orm/pub_trad.asp, and uses its data at its conferences.
hitp:/Awww. fertitizer.org /ifa’publicat/PDF/1I 998 biblio_84.pdf.* Itis simply beyond reasonable debate
that Dr. McClave could reasonably rely on the Fertecon data.

Finally, although his conclusion is not outcome-determinative, Dr. McClave testified that the kind
of price data involved in the Fertecon teports is relied on by experts in his field, and that he was satisfied
that the pricing information was reliable, {McClave Dep. at 205). The expert retained by Marsulex and
Chemtrade was not so sure, but Rule 703 does not Tequire unanimity ofexpert opinion on this question.
Nor could it, for the reality is “[aln expert can be found to testify to the truth to almost any factual theory,
no matter how frivolous.” Weinstein, Improving Expert Testimony, 20 U-Ri ch.L. Rev. 473, 482 (1986),°
The judge’s role under Rule 104 of the Federal Rules of Evidence is to make an independent evaluation
of reasonableness. That calculus is not dependent upon either expert’s opinion, and the considerations that
come into play cannot be captured ina formula. See McLaughlin, 4 Weinstein’s Federal Evidence,

§703.04[2] (2 ed. 2005).""

§ At oral argument it was suggested that an appropriate test of reliabi lity is use by a government
agency.

? See also Graham, Expert Witness Te estimony and the Federal Rules of Evidence: Insuring
Assurance of Trustworthiness (1986) Il_L.Rev. 43, 45 (“Today practicing lawyers can locate quickly and
easily an expert witness to advocate nearly anything the lawyers desire. “); (“A Ph.D. can be found to swear
to almost any ‘expert’ proposition no matter how false or foolish.”) Huber, Safety and the Second Best:
The Hazards of Public Risk Management in the Courts, 85 Colum.L Rev. 277, 333 (1985); Loeffel Steet
Products v. Delta Brands, 372 F.Supp.2d 1104, 1106 (N.DUL 2005)(collecting cases).

'° Dr. Topel, the Marsulex and Chemtrade expert, while criticizing Dr. McClave’s reliance on the
(continued...)

1S


Campania Mgmt. Co. v, Rooks, Pitts, & Poust, 290 F.3d 843, 853 (7" Cir, 2002). Moreover, the

cases uniformly recognize that trade and industry publications and compilations can be appropriate sources
of facts and data upon which an expert can reasonably rely. See, ¢, §., Inve Potash Antitrust Litigation,
159 F.R.D. 682, 696-98 (D.Minn. 1995) (plaintiff s expert based his opinion ona variety of publicly
available information relating to the potash industry, including industry summaries of monthly potash prices);
Midwestern Machinery vy. Northwest Airlines, Inc., 211 F.R.D. 362, 566 (D.Minn. 2001)(fare
information from doth private and governmental reports relating to the airline business); RMED Intern,

Ine. vy. Sloan's Supermarkets, inc., No. 94 Ciy. 5587, 2000 WL 3 10352, *3 (S.D.N.Y. March 24,
2000)(press releases, newspaper reports, and industry publicati ons); Inve Natural Gas Ci ommodities
Litigation, 231 F.R.D.171, 182 {S.D.N.Y. 2005)(price listings in industry publications as opposed to

actual spot prices). The defendants’ contrary contention is unsupported and unamplified, and thus need

not be considered. FTC y. World Media Brokers, 415 F.3d 758, 766 (7" Cir, 2005); Estate of
Moreland v, Dieter, 395 F.3d 747, 759 (7 Cir.2005).

The only objectionre garding Dr. McClave’s use of the Fertecor/PentaSul price reports that the
defendants attempt to support is that “Dr. McClave has absolutely no knowledge of whether Dr. Boyd's
price survey is valid and reliable” and if allowed to offer his opinions, Dr. McClave would be, in effect,
vouching for the accuracy and reliability of the information. (Defendants ’ Memorandum, at 4-7). The
conclusion, which begs the ultimate question under Rule 703 and does not follow from its premises, is
based on the followin 2 brief exchange at Dr. M cClave’s deposition:

Defendants’ Counsel: Do you have an understanding of how [Dr.] Boyd conducted these

surveys I believe you mentioned?

17


permit Plaintiffs’ Expert Thirty (30) Days Therefrom to Furnish Report). Plaintiff proposed a

schedule whereby “Plaintiffs? expert shall file his damage teport on or before October 24, 2005,” Gd. Ex.
A). In their supporting memorandum, plaintiffs explained that their expert, Dr. James McClave, had to
have certain data and explanations thereof in order to prepare his export report. (Memorandum ofLaw
in Support of Motion, at 1)(“Defendant’s Memorandum”). No other expert or expert report was
mentioned in these submissions, In a declaration attached to the memorandum, Dr. McClave indicated he
had been retained to provide an opinion regarding the issue of economic damages. (/d., Ex. 1,99, 23).

Ultimately, the parties reached an agreement regarding the production of the transaction data and
attendant explanations, and the plaintiffs’ motion to compel was denied as moot on August 25,2005. Also,
in “accordance with the agreement of the parties, all expert discovery [was] extended.” The parties
submitted an agreed order, which I signed on September 8"", that amended the schedule: “Plaintiffs”
damages experts shall disclose their expert opinions by September 36, 2005.” (Emphasis supplied),

On September 22TM plaintiffs moved for yet another modification of the discovery schedule
occasioned by the difficulties plaintiffs and theirnamed expert, Dr. Mc Clave, were having understanding
the transaction data in the format produced by the defendants. Anextension was necessary, the plaintifis
said, in order for Dr. McClave to assimilate all of the transaction data into his damage model. The plaintiffs
Proposed the following new deadlines: “Plaintiffs? expert: October 28, 2005; Defense expert: January 10,
2006; Plaintiffs’ rebuttal: February 15,2006; Close expert discovery: March 3, 2006; Dispositive motions:
April 3, 2006.” (Plaintiffs Motion to Modify the Order Entered September 8, 2005, at 8).

The parties subsequently agreed to the newly proposed schedule. Because it included an extension

of the deadline for dispositive motions, on September 28, 2005, I granted the motion subject to Judge

3


model would, of course, be necessarily consistent with liability, or necessarily assume liability.
Confederated Tribes of Siletz Indians of Or. v. Weyerhaeuser Co. » 411 F.3d 1030, 1045 a
2005 properly relied upon the fundamental assumption that defendant maintained artificially high costs in
the market); Avery Dennison Corp. v. Four Pillars Enterprise Co,, 45 Fed.Appx. 479, 487 (6" Cir,
Sept. 3, 2002)(damages model relied assumed central questions of | liability in the case, which were Properly
presented to the jury); Rossi v. Standard Roofing, Inc., 156 F.3d 452, 485-86 (3 Cir. 1 998); Aspen
Highlands Skiing Corp. v, Aspen Skiing Co., 738 F.2d } 509, 1524 (10" Cir. | 984\{admission of
testimony by plaintiff's expert on damages was not an abuse of. discretion, notwithstanding that there may
have been considerable evidence contradicting expert's assumptions); JamSports and Entertainment,

LLC v. Paradama Productions, Inc., No. 02 C 2298, 2004 WL 2966947, *3 (N.D.IN. Nov. 24,

2004)(damages model relied upon numerous disputed issues). That is how Dr. McClave, not surprisingly,
testified. Itis certainly not cause for barring his testimony ai trial.

‘There is also the claim that Dr. Tollison improperty testified that the “behavior of the defendants
over the course of time, 1988 to J uly 2001, is consistent with a conspiracy to reduce output and raise
prices of sulfuric acid.” (Tollison Dep. at 9; Defendants "Memorandum, at 10). The argument that this
opinion is not to be found in Dr. Tollison's expert report overlooks paragraph 13 of his Teport, which stated
that Noranda and Falconbridge “joined together to dispose of their sulfuric acid ---and entered into an
alliance to poo! their acid and sell it jointly.” They did 80, according to Dr. Tollison, “with the objective.
- to dispose of their sulfuric acid without entering into price competition or depressing the price of acid.”
(Appendix to Memorandum of Law in Support of Certain Defendants * Motion, at 4-5). Dr. Tollison

then went on te describe the Noranda-Falconbridge Strategy of “displacement by agreement,” whereby

26


I.
BACKGROUND

Under Judge Coar’s July 21, 2004 scheduling order, fact discovery was to close by April 29,
2005, while expert discovery was toend by December 16, 2005. Plaintiffs were to disclose their expert
witnesses by June 30,2005. Plaintiff sought an extension ofall dates in that order by 90 days on March
15, 2005, On March 21, 2005, Judge Coar granted plaintiffs” motion “to the extent that discovery is
extended only to July 1, 2005 and only 40 days of depositions. Discovery extended and ordered closed
by July 1, 2005. No further extensions will be allowed.”

On June 10, 2005, plaintiffs sought “a limited extension of 90 days to complete fact discovery, until
July 27, 2005 (together with a commensurate extension of the remaining deadlines in the schedule by the
same three month period)... .” (Memorandum in Support of Plaint{{s' Motion for Extension of
Discovery,at 1). Four days later, plaintiffs filed a motion that essentially reiterated their June 10" request,
but noted that in its order of March 21°, the court had not specifically extended all discovery deadlines.
(Plaintiffs’ Motion for Entry of Revised Scheduling Order, at 2), On June 20", Judge Coar granted
plaintiffs’ motion, setting the following new schedule: “Plaintiffs’ expert disclosure by 8/29/2005.
Defendants’ expert disclosure by 11/1/2005. Expert Discovery ordered closed by 2/14/2006.”

By the time fact discovery closed on July 1*, a raft of discovery motions had made their way to
court. Clearly, fact discovery had not been completed and, asa result, on August 18, 2005, plaintiffs filed
a motion for an order requiring the defendants to explain certain sales data they had produced and

permitting “Plaintiffs’ expert thirty (30) days therefrom to furnish report.” (Piaintiffs’ Motion... to


in the newsletter in January of 1989. (Response of the Noranda Defendants in Opposition to Plaintiffs’
Motion to Compel, at 5). They called Fertecon’s Sulphuric Acid Telefax a “widely-distributed trade
publication.” They obviously subscribed and may still. (dd, (Certain Defendants’ Appendix of Exhibits,
Ex. J (“McClave Dep.”) at 205 (discussing references to Fertecon/PentaSul reports throughout the
documents defendants produced in discovery). In addition, they produced a collection of excerpts from
these Fertecon faxes and newsletters as part of the files of Dr. Lauren Stiroh, the class expert economist
retained by the defendants. In re Sulfuric Acid Antitrust Litigation, 231 F.R.D, 351, 365 (N.D.II.
2005). According to the plaintiffs, there were approximately 4,400 pages of Fertecon/PentaSul materials
in Dr. Stiroh’s files. (Piaintiffs' Response to Certain Defendants’ Motion, at 7 n.3). In addition, she
referred to the price reports and the Fertecon/PentaSul newsletters as authoritative throughout her expert
teport of December 16, 2003. (Exhibits to Plaintiffs’ Response, Ex. 96

Thus, the question is whether an economic expert may base his opinions in an antitrust case ona
source that the defendants, themselves, have acknowledged is the most reliable reporter of pricing data in
the market. The answer is obvious. Rule 703 permits experts to based their opinions onall manner of.
underlying data that might otherwise not be admissible in evidence, including interviews, reports prepared

by third parties, ctinical and other studies, and technical publications. See 4 Weinstein’s Federal Evidence

> Marsulex, one of the moving defendants, is also clearly an avid reader of the Fertecon/PentaSul
newsletters, having produced dozens of issues from its files during discovery. (Plaintif{s' Response to
Certain Defendants’ Motion, at 7).

* It is no answer to suggest that this reliance cannot be taken into consideration and that she was
forced touse the price reports because I had deferred ruling on the admissibility of Dr. McClave’s report until
after all the reports were in and all the expert depositions taken. If Dr. McClave’s opinions were subject to
criticism because they were based on dubious data from the Fertecon newsletter, Dr. Stiroh would have said
so. She would not have conceded their authoritativeness on any level or to any degree,

13


All that Rule 703 requires is that the facts or data upon which Dr. McClave based his opinion be

ofa type reasonably relied upon by experts in the particular field in forming opinions or inferences upon
the subject. The Fertecon/PentaSul price datais the kind of data that case after case has found sufficient
under the Rule. See, e.g., Higgins v. Kinnebrew Motors, Inc., 547 F.2d 1223, 1226 (S" Cir.
1977)(Bureau of labor Statistics); Maiz v. Virani,253 F 3d 641 (11"* Cir. 200 1)(real estate investment
trust index); Sunstar, Inc. v. Aiberto-Culver Ca., Inc., 2004 WL 1899927 (N.D.IH, 2004)(Consumer
Price Index), Lieberman v. American Dietetic Ass ‘n, 1996 WL 521176, *5 (N.DLIL 1 996)\(Consumer
Price Index); in re Natural Gas Commodity Litigation, 2005 WL 3036505 (S.D.N.Y. 2005)(prices
reported in trade publications), reversed in Part on other grounds, 2006 WL 1044224; Williams v.
Security Nat. Bank of Sioux City, Towa, 358 F Supp.2d 782, 805-06 (N.D.lowa 200S{S&P index);
Devonshire v. Johnston Group First Advisors, 338 F.Supp.2d 823, 826 (N.D.Ohio 2004)(Dow Jones
and S&P indices).

Although the defendants contend that the Fertecon/PentaSul pricing data are not comparable to
other indices because their “underlying components and methodologies are publicly known and available,”

(Reply, at 2), there is nothing but this unadomed conclusion to support the claim. That is insufficient.

"(..continued)

Fertecon information, does not say that it was unreliable. He opines that there is no evidence that the
Fertecon prices are drawn from sufficiently competitive market conditions to be useful in the damage analysis
undertaken by Dr. McClave. (Exhibits to Plaintiffs’ Response, Ex.15 (Topel Rep.”), at 4-5). He also
takes Dr. McClave to task for only knowing that the price information is gathered through consumers,
producers and traders, but does not su iggest what more need be known. In addition, in support of his critique,
he asserts that Dr. McClave indicated that the best he could say for the price information is that “customers
of Fertecon use it for some purpose,” citing to page 568 of Dr. McClave’s deposition. (Topet Rep. at 9).
Such a comment does not appear on that page, however, and the fact that it is used by people in the industry
is what is significant for purposes of Rule 703.

16