It's My Party, Inc. v. Live Nation, Inc.

88 F.Supp.3d 475

IT'S MY PARTY, INC. and It's My Amphitheater, Inc.

v.LIVE NATION, INC.

Civil No. JFM–09–00547.

United States District Court, D. Maryland.

Signed Feb. 19, 2015.

L. Barrett Boss, Cozen O'Connor, Washington, DC, Abby Landau Sacunas, Rachel H. Robbins, Robert William Hayes, Cozen O'Connor, Philadelphia, PA, for It's My Party, Inc. and It's My Amphitheater, Inc.

Franklin M. Rubinstein, Renata B. Hesse, Wilson Sonsini Goodrich and Rosati, Washington, DC, Charles E. Biggio, Chul Pak, Jonathan M. Jacobson, Kimberley A. Piro, Lucy Yen, Wilson Sonsini Goodrich and Rosati, New York, NY, for Live Nation, Inc.

OPINION

J. FREDERICK MOTZ, District Judge.

Plaintiffs It's My Party, Inc. (“IMP”) and It's My Amphitheater, Inc. (“IMA”) (collectively “plaintiffs”) bring this lawsuit against Live Nation, Inc. (“Live Nation”) under sections 1 and 2 of the Sherman Anti–Trust Act, 15 U.S.C. §§ 1, 2 ; and the Maryland Antitrust Act, Md.Code Ann. §§ 11–201, 204 et seq. Plaintiffs allege that Live Nation has unreasonably restrained trade by exercising its market and monopoly power in the promotion and venue services markets.¹

Pending are numerous motions to exclude expert testimony, motions to strike various exhibits, and cross-motions for summary judgment. A hearing on these pending motions was held on November 7, 2014. For the reasons set forth below, the motions to strike exhibits are denied; all motions to exclude expert testimony are denied except for the motion to exclude the testimony of Einer Elhauge, which is granted in part; Live Nation's motion for summary judgment is granted; and plaintiffs' cross-motion for summary judgment is denied.

BACKGROUND

I. Factual History.

This case involves three parties in the concert industry: artists, local promoters, and national or global promoters. Artists who choose to showcase their music in live concerts have options for structuring their tours, namely how to schedule and book the individual venues for concerts that comprise the tour. Artists often contract with promoters who select and book concerts at venues and provide advertising and marketing for the concert (or set of concerts) to draw attendance. (ECF No. 279 at p. 9). Some promoters are local and book concerts at specific venues. In such a case an artist might contract with several promoters in different parts of the country to book sets of shows that make up the artist's national tour. (ECF No. 255 at pp. 5–6). Other promoters, fewer in number, have a national reach and contract with an artist to solely market, promote, and negotiate with venues across the country to develop a tour. (Id. at p. 6).

The chief difference between contracting with several, locally-based promoters and a single, national promoter is the form of the artist's compensation. Artists who contract with one or a few national promoters to organize their tours often receive a guaranteed payment from the promoter based on the number of shows organized by that promoter. Id. Artists who contract “locally” and book with several promoters in various parts of the country will often receive instead a percentage of the gross ticket sales from each concert. Id.

Another difference is that for national, “exclusive” tours, promoters sometimes “cross-collaterize” the tour. This means that the revenues from each individual concert are held in escrow by the promoter until the end of the tour. This practice enables the promoter to cover losses from concerts that underperformed with revenue from concerts that met or exceeded expectations. Id. This mechanism operates as a de facto insurance policy for the national promoter, enabling it to offer higher guaranteed compensation to artists.

Promoters book artists at venues, and accordingly arrange concerts with venue owners. Venues range in size, from small clubs to sports stadiums with over 60,000 seat capacities. Id. As artists' popularity grows over time, they perform at correspondingly larger venues on their tours. Thus an artist who performs at smaller clubs one year may perform at larger amphitheaters or indoor arenas years later. (ECF No. 279 at p. 10). Venues earn money through ticket sales (less the amount paid to the artist), concession sales of food and beverages, and parking.

Plaintiffs and Live Nation are both promoters, but vary in terms of size and scope. Plaintiff IMP has operated as a regional promoter for over thirty years, and it contracts with artists to perform at a variety of venues in the Baltimore and Washington, D.C. markets. (Hurwitz Decl., ECF No. 112 ¶¶ 10, 12).² Live Nation's business operates on a global scale-as of 2012 Live Nation had promoted over 2,000 artists at venues throughout the United States and the world. (Siwek Rep., ECF No. 217–3 ¶ 5.2). Live Nation often serves as the exclusive promoter for artists on national tours, and uses cross-collaterization to offer artists higher guaranteed compensation. (ECF No. 255 at pp. 6–7). It has expanded its promotion capability over time through the purchase of other promoters, including Concert Productions International and House of Blues (“HOB”) Entertainment. (ECF No. 279 at p. 12).

IMA was formed in 2004 to operate the Merriweather Post Pavilion (“Merriweather”), an outdoor amphitheater venue in Columbia, Maryland that hosts a variety of concerts, including those by popular artists such as The Who and Led Zeppelin. (ECF No. 112 ¶ 67). Merriweather has a 19,000 fan capacity, with 5,000 “fixed” seats. (Id. ¶ 2; ECF No. 255 at p. 9). Live Nation “owns, operates, leases or has exclusive booking rights at venues throughout the United States,” including the Nissan Pavilion (“Nissan”). (ECF No. 255 at p. 4).³ Nissan is an outdoor amphitheater in Bristow, Virginia that is similar to Merriweather but has a slightly larger 25,000 fan capacity, with 10,000 “fixed” seats. (ECF Nos. 217–3 ¶ 7.7; 255 at p. 9).⁴ In the Baltimore–Washington, D.C. area there are several arenas and amphitheaters of approximately the same size, including the Verizon Center (indoor arena, 19,000 fan capacity) and Filene Center at Wolf Trap (outdoor amphitheater, 7,000 fan capacity). (ECF No. 255 at p. 9).

In addition to being uncovered, outdoor amphitheaters are different from indoor arenas because they typically contain both fixed seats and lawn space on which fans can sit or stand. (ECF No. 279 at p. 9). Some may consider amphitheaters to be superior to similarly-sized indoor arenas due to “better sight lines,” equipment designed specifically for artist concerts, and overall flexibility. Id. The unpredictability of weather, however, is obviously a disadvantage of performing at outdoor amphitheaters.

II. Procedural History.

Plaintiffs filed their complaint on March 5, 2009, alleging several antitrust violations by Live Nation. (ECF No. 1). I denied Live Nation's motion to dismiss and (first) motion for summary judgment. (ECF Nos. 35; 101). The denial of Live Nation's motion for summary judgment was without prejudice and with leave to refile at the close of expert discovery. Live Nation brought the pending motion for summary judgment on March 21, 2014. (ECF No. 205). Live Nation also filed motions to exclude four of plaintiffs' experts, and plaintiffs responded with motions to exclude two of Live Nation's experts.⁵ Plaintiffs also filed a pending cross-motion for partial summary judgment on July 31, 2014. (ECF No. 279).

STANDARDS

I. Admissibility of Expert Testimony under Rule 702.

Expert testimony is admissible under Rule 702 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.

Fed.R.Evid. 702. Rule 702 is broad and applies to subjects beyond the purely scientific.

Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). In short, the question is whether an expert is qualified, and whether his opinion is reliable. E.g., Berlyn, Inc. v. Gazette Newspapers, Inc., 214 F.Supp.2d 530, 534 (D.Md.2002). Courts should focus on the reliability of the expert's “principles and methodology,” not the conclusions. Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir.1999).

By answering that question, district courts “play a gatekeeping function in deciding whether to admit” the testimony. United States v. Crisp, 324 F.3d 261, 265 (4th Cir.2003). The gatekeeper judge must navigate two often competing principles: although Rule 702 was intended to liberalize the introduction of relevant expert testimony, expert witnesses “have the potential to be both powerful and quite misleading.” Westberry, 178 F.3d at 261. Courts often refer to a non-exhaustive list of factors to help decide whether the expert testimony is admissible. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 593–94, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).⁶ District courts have broad discretion when exercising their gatekeeping function, and the precise factors and the manner in which they are applied depends on the factual circumstances of each case. See generally Gross v. King David Bistro, Inc., 83 F.Supp.2d 597, 598 (D.Md.2000) (holding that district judges should assess expert testimony “based on the unique situations involved in each case”); see also Kumho Tire Co., 526 U.S. at 142, 119 S.Ct. 1167 (noting that a district court has “latitude when it decides how to determine reliability”). Finally, even expert testimony based on sound methodology should be excluded if it is based on unsound or incorrect assumptions.E.g., Tyger Const. Co. v. Pensacola Const. Co., 29 F.3d 137, 142 (4th Cir.1994).

The proponent of the expert testimony bears the burden of producing evidence supporting its contentions and demonstrating that the testimony is...