In re Wholesale Grocery Products Antitrust Litigation

946 F.3d 995

IN RE: WHOLESALE GROCERY PRODUCTS ANTITRUST LITIGATION

JFM Market Corp.; MJF Market Corp., Plaintiffs - Appellants

v.SuperValu, Inc., Defendant - Appellee

C&S Wholesale Grocers, Inc., Defendant

No. 18-2780

United States Court of Appeals, Eighth Circuit.

Submitted: October 15, 2019

Filed: December 20, 2019

Eric F. Citron, Charles Hardy Davis, Goldstein & Russell, Bethesda, MD, Edward T. Dangel, III, Dangel & Mattchen, Edgartown, MA, for Plaintiffs-Appellants.

Eric Phillip Barstad, Jeffrey Sullivan Gleason, Geoffrey H. Kozen, Stephen Paul Safranski, Karl Craig Wildfang, Robins & Kaplan, Minneapolis, MN, Martin Richard Lueck, Long Lake, MN, for Defendant-Appellee.

Before COLLOTON, BEAM, and KELLY, Circuit Judges.

BEAM, Circuit Judge.

JFM Market Corp. and MJF Market Corp. (collectively, "Village Market") appeal from the district court’s¹ order granting SuperValu, Inc.’s motion to exclude expert testimony, motion for summary judgment, and its denial of Village Market’s motion seeking class certification in this ongoing multidistrict litigation.² We affirm.

I. BACKGROUND

Village Market, Massachusetts corporations that operate supermarkets in the Greater Boston area, sued SuperValu and C&S Wholesale Grocers, Inc., for antitrust violations under the Sherman and Clayton Acts, 15 U.S.C. §§ 1, 15. Plaintiffs in this multidistrict litigation are retail grocers who, in 2009, alleged SuperValu and C&S, two of the largest grocery product wholesalers (measured by sales volume) in the United States, conspired by way of an Asset Exchange Agreement ("AEA") to allocate territory and customers.

SuperValu was C&S’s largest competitor in New England, where C&S was the primary wholesaler. However, C&S did not compete with SuperValu in the Midwest, where SuperValu’s main competitor was Fleming Companies (Fleming). In 2003, Fleming declared bankruptcy and C&S announced its intention to acquire Fleming’s Midwest wholesale grocery distribution business, which would have resulted in C&S becoming SuperValu’s major competitor in the Midwest. As a result of this impending shift in the market, C&S and SuperValu entered into the AEA at issue here, which provided that SuperValu would receive Fleming’s Midwestern operations, and in turn, SuperValu would transfer its New England operations to C&S. The AEA included reciprocal non-compete provisions. The class plaintiffs alleged that the elimination of competition between SuperValu and C&S in regional markets by way of this AEA allowed each defendant to charge supra-competitive prices to their retail customers. They alleged this conspiracy to allocate territory and customers injured their business and property, and they sought treble damages and attorney’s fees.

The district court resolved the instant case by granting summary judgment in favor of SuperValu, after the district court granted SuperValu’s motion to exclude Village Market’s proposed expert’s testimony. In support of its claim, Village Market offered the expert opinion of economist Dr. Levy to establish the antitrust injury caused by the AEA; i.e., evidence from which a jury could reasonably infer that C&S’s prices were supra-competitive as a direct result of the AEA. The district court held that the competitive benchmark selected by Dr. Levy was unreliable. To demonstrate how Village Market’s costs would have changed over time without the AEA, Dr. Levy selected as a benchmark Stop & Shop, the largest retail grocery chain in New England and C&S’s largest purchaser of wholesale groceries. Levy opined that Stop & Shop, although not an independent grocer and much larger than the class plaintiffs, served as a reliable and relevant benchmark, not as a direct comparable, but as a reference regarding the change in price that it paid as a reasonable reflection of the change in the price paid by the independent grocers absent the AEA. According to Levy, Stop & Shop’s size and its ability to self supply limited the impact of any increased market power obtained by C&S through the AEA.

The district court found Levy’s benchmark analysis unreliable because it was premised on what the court found to be an unfounded assumption that independent retailers’ charges, including Village Market’s, followed the same pattern as Stop & Shop’s absent the AEA. Too, the district court held that Dr. Levy failed to control for non-conspiratorial factors as required to demonstrate antitrust impact. Village Market challenges each of the district court’s conclusions on appeal.

II. DISCUSSION

A. Expert Testimony

Our review of the district court’s decision regarding the admissibility of expert witness testimony is for an abuse of discretion. Barrett v. Rhodia, Inc., 606 F.3d 975, 980 (8th Cir. 2010). "We will not reverse a district court’s ruling on the admissibility of expert testimony ‘absent a clear and prejudicial abuse of discretion.’ " Id. (quoting Ahlberg v. Chrysler Corp., 481 F.3d 630, 635 (8th Cir. 2007) ); Synergetics, Inc. v. Hurst, 477 F.3d 949, 956 (8th Cir. 2007) ("Decisions concerning the admission of expert testimony lie within the broad discretion of the trial court, and these decisions will not be disturbed on appeal absent an abuse of that discretion." (quoting Peitzmeier v. Hennessy Indus., Inc., 97 F.3d 293, 296 (8th Cir. 1996) )). Federal Rule of Evidence 702 provides:

A witness who is qualified as an expert by knowledge, skills, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

"When considering expert testimony, a district court must ensure that ‘all scientific testimony is both reliable and relevant.’ " Barrett, 606 F.3d at 980 (quoting Marmo v. Tyson Fresh Meats, Inc., 457 F.3d 748, 757 (8th Cir. 2006) ). "A district court has great latitude in determining whether expert testimony meets the reliability requisites of Rule 702." Craftsmen Limousine, Inc. v. Ford Motor Co., 363 F.3d 761, 776 (8th Cir. 2004). "To satisfy the reliability requirement, the proponent of the expert testimony must show by a preponderance of the evidence both that the expert is qualified to render the opinion and that the methodology underlying his conclusions is scientifically valid." Marmo, 457 F.3d at 757-58.

The inquiry as to the reliability and relevance of the testimony is a flexible one designed to "make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field." Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). "To show that the expert testimony is relevant, the proponent must show that the reasoning or methodology in question is applied properly to the facts in issue." Marmo, 457 F.3d at 758. A court should not admit opinion evidence that "is connected to existing data only by the ipse dixit of the expert." Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). "[C]onclusions and methodology are not entirely distinct from one another." Id. "When the analytical gap between the data and proffered opinion is too great, the opinion must be excluded." Marmo, 457 F.3d at 758.

Directly at issue in the instant case is the district court’s exercise of its gatekeeping role. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). "In exercising [its] gatekeeping function, the trial court must first make a ‘preliminary assessment of whether the reasoning or methodology underlying the [proposed expert] testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue,’ focusing specifically on the methodology and not the conclusions." Synergetics, Inc., 477 F.3d at 955 (quoting Daubert, 509 U.S. at 592-93, 113 S.Ct. 2786 ). "Under Daubert, ‘any step that renders the analysis unreliable renders the expert’s testimony inadmissible. This is true whether the step completely changes a reliable methodology or merely misapplies that methodology.’ " Dodge v. Cotter Corp., 328 F.3d 1212, 1222-23 (10th Cir. 2003) (alteration omitted) (quoting Mitchell v. Gencorp Inc., 165 F.3d 778, 782 (10th Cir. 1999) ).

The district court in this matter was especially cognizant of its role as gatekeeper in its evaluation of Dr. Levy’s proffered expert testimony, fully recognizing that rejection of expert testimony is the exception rather than the rule. Indeed, cases are legion that under Daubert, liberal admission is prevalent, Johnson v. Mead Johnson & Co., LLC, 754 F.3d 557, 562 (8th Cir. 2014), and "[c]ourts should resolve doubts regarding the usefulness of an expert’s testimony in favor of admissibility." Marmo, 457 F.3d at 758. To be sure, however, there is a gatekeeping role to play. Daubert, 509 U.S. at 589, 113 S.Ct. 2786 ; see also Joiner, 522 U.S. at 142, 118 S.Ct. 512. Expert testimony is inadmissible if it is speculative, unsupported by sufficient facts, or contrary to the facts of the case. Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1057 (8th Cir. 2000).

The district court’s analysis at the summary judgment stage, as here, is paramount, as "we require district courts to rely only on admissible evidence at the summary judgment stage." In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 613 (8th Cir. 2011). "Because summary judgment ends litigation without a trial, the court must review the evidence in light of what would be admissible before either the court or jury." Id. However, no matter that a determination regarding the...