In re Urethane Antitrust Litigation (Tenth Circuit).

185 Pages·2013·1.56 MB·English

Appellate Case: 13-3215 Document: 01019168761 Date Filed: 12/06/2013 Page: 1

No. 13-3215

UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
___________________________________

IN RE URETHANE ANTITRUST LITIGATION

____________________________________

The Dow Chemical Company,
Appellant
_____________________________________
On Appeal from the United States District Court
For the District of Kansas
The Honorable John W. Lungstrum
D.C. No. 04-md-1616-JWL
________________
APPELLANT’S OPENING BRIEF
________________

Charles J. Kalil Carter G. Phillips
Executive Vice President, General Counsel Counsel of Record
And Corporate Secretary Joseph R. Guerra
Duncan A. Stuart C. Frederick Beckner III
Associate General Counsel Kathleen Moriarty Mueller
THE DOW CHEMICAL COMPANY Jeffrey S. Beelaert
2030 Dow Center SIDLEY AUSTIN LLP
Midland, MI 48674 1501 K Street, NW
Telephone: [phone] Washington, D.C. 20005
Telephone: [phone]
Facsimile: [phone]

Oral Argument Requested
December 6, 2013
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TABLE OF CONTENTS
TABLE OF AUTHORITIES ................................................................................... iii
GLOSSARY ............................................................................................................ vii
STATEMENT OF PRIOR OR RELATED CASES ............................................. viii
CORPORATE DISCLOSURE STATEMENT ........................................................ ix
JURISDICTIONAL STATEMENT .......................................................................... 1
ISSUES PRESENTED ............................................................................................... 1
INTRODUCTION AND STATEMENT OF THE CASE ......................................... 1
STATEMENT OF FACTS ........................................................................................ 5
SUMMARY OF ARGUMENT ............................................................................... 22
STANDARD OF REVIEW ..................................................................................... 25
ARGUMENT ........................................................................................................... 26
I. THE DISTRICT COURT ERRED IN CERTIFYING THE CLASS ........... 26
A. Wal-Mart Precludes Class Certification ............................................. 27
1. Dow Was Entitled To Show, In Individualized
Proceedings, That Particular Class Members Suffered No
Injury Or Damages .................................................................... 29
2. The District Court Violated Wal-Mart By Allowing The
Class To Proceed On The Basis Of Assumed,
“Extrapolated” Impact And Damages ....................................... 34
B. Comcast Precludes Class Certification ............................................... 40
1. McClave’s Models Do Not Purport To Determine The
Impact And Damages Resulting From The Conspiracy
Plaintiffs Sought To Prove At Trial .......................................... 41
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2. The District Court Erred By Allowing The Class To
Proceed On The Basis Of Regression Models That Do
Not Reliably Predict Prices In A Competitive Market ............. 44
3. The Jury’s Verdict Confirms McClave’s Models Predict
Overcharges Where None Exists .............................................. 50
II. PLAINTIFFS FAILED TO ESTABLISH ANTITRUST LIABILITY
AS A MATTER OF LAW ............................................................................. 53
A. The Evidence Does Not Support A Finding That Defendants
Implemented Any Conspiracy ............................................................. 54
B. Plaintiffs Failed As A Matter Of Law To Demonstrate That
Lyondell Participated In The Alleged Conspiracy .............................. 59
III. DOW IS ENTITLED TO A NEW TRIAL BECAUSE THE
DAMAGES AWARD IS BASED ON SPECULATION, AND THE
RESULTING JUDGMENT VIOLATES THE SEVENTH
AMENDMENT ............................................................................................. 62
A. The Damages Award Is Based Upon Speculation .............................. 63
B. The Judgment Violates The Seventh Amendment .............................. 64
CONCLUSION ........................................................................................................ 67
STATEMENT OF COUNSEL AS TO ORAL ARGUMENT ................................ 68
CERTIFICATE OF COMPLIANCE ....................................................................... 69
CERTIFICATE OF DIGITAL SUBMISSION AND PRIVACY
REDACTIONS ........................................................................................................ 70
CERTIFICATE OF SERVICE ................................................................................ 71
ADDENDUM

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TABLE OF AUTHORITIES
Page
CASES
Anixter v. Home-Stake Prod. Co.,
77 F.3d 1215 (10th Cir. 1996) ............................................................................ 61
In re Baby Food Antitrust Litig.,
166 F.3d 112 (3d Cir. 1999) ......................................................................... 56, 58
Bigelow v. RKO Radio Pictures, Inc.,
327 U.S. 251 (1946) ............................................................................................ 62
Bolden v. Walsh Const. Co.,
688 F.3d 893 (7th Cir. 2012) .............................................................................. 35
Carrera v. Bayer Corp.,
727 F.3d 300 (3d Cir. 2013) ............................................................................... 66
Cimino v. Raymark Indus., Inc.,
151 F.3d 297 (5th Cir. 1998) .............................................................................. 37
In re Citric Acid Litig.,
191 F.3d 1090 (9th Cir. 1999) ............................................................................ 58
Coleman Motor Co. v. Chrysler Corp.,
525 F.2d 1338 (3d Cir. 1975) ....................................................................... 52, 64
Comcast Corp. v. Behrend,
133 S. Ct. 1426 (2013) .................................................................................passim
Concord Boat Corp. v. Brunswick Corp.,
207 F.3d 1039 (8th Cir. 2000) ............................................................................ 62
Daubert v. Merrell Dow Pharm., Inc.,
509 U.S. 579 (1993) ............................................................................................ 44
Dimick v. Schiedt,
293 U.S. 474 (1935) ...................................................................................... 64, 66
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Garcia v. Mountain States Tel. & Tel. Co.,
315 F.2d 166 (10th Cir. 1963) ............................................................................ 63
Gates v. Rohm & Haas Co.,
655 F.3d 255 (3d Cir. 2011) ............................................................................... 35
Guides, Ltd. v. Yarmouth Grp. Prop. Mgmt., Inc.,
295 F.3d 1065 (10th Cir. 2002) .......................................................................... 26
Hardeman v. City of Albuquerque,
377 F.3d 1106 (10th Cir. 2004) .......................................................................... 25
Haslund v. Simon Prop. Grp., Inc.,
378 F.3d 653 (7th Cir. 2004) .............................................................................. 52
J.R. Simplot v. Chevron Pipeline Co.,
563 F.3d 1102 (10th Cir. 2009) .......................................................................... 26
James River Ins. Co. v. Rapid Funding, LLC,
658 F.3d 1207 (10th Cir. 2011) .......................................................................... 61
Klehr v. A.O. Smith Corp.,
521 U.S. 179 (1997) ............................................................................................ 66
Kumho Tire Co. v. Carmichael,
526 U.S. 137 (1999) ............................................................................................ 50
M.D. Mark, Inc. v. Kerr-McGee Corp.,
565 F.3d 753 (10th Cir. 2009) ............................................................................ 26
Matsushita Electric Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574 (1986) ............................................................................................ 58
MCI Commc’ns Corp. v. AT&T Co.,
708 F.2d 1081 (7th Cir. 1983) ............................................................................ 51
In re New Motor Vehicles Canadian Export Antitrust Litig.,
522 F.3d 6 (1st Cir. 2008) ................................................................................... 32
Novell Inc. v. Microsoft Corp.,
731 F.3d 1064 (10th Cir. 2013) .......................................................................... 26
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Phillips Petroleum Co. v. Shutts,
472 U.S. 797 (1985) ............................................................................................ 66
In re Rail Freight Fuel Surcharge Antitrust Litig.,
725 F.3d 244 (D.C. Cir. 2013) .....................................................................passim
Robinson v. Tex. Auto. Dealers Ass’n,
387 F.3d 416 (5th Cir. 2004) .............................................................................. 32
Rodriquez v. Nat’l City Bank,
726 F.3d 372 (3d Cir. 2013) ............................................................................... 35
Sloan v. State Farm Mut. Auto. Ins. Co.,
360 F.3d 1220 (10th Cir. 2004) .......................................................................... 62
U.S. Indus., Inc. v. Blake Const. Co.,
671 F.2d 539 (D.C. Cir. 1982) ............................................................................ 64
United States v. Garcia,
635 F.3d 472 (10th Cir. 2011) ............................................................................ 25
In re Urethane Antitrust Litig.,
No. 08-602 (10th Cir. Sept. 2, 2008) .................................................................. 11
USFL v. NFL,
842 F.2d 1335 (2d Cir. 1988) ............................................................................. 52
Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541 (2011) .................................................................................passim
Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc.,
725 F.3d 1213 (10th Cir. 2013) .................................................................... 25, 26
STATUTE
15 U.S.C. § 15 .......................................................................................................... 31
RULE
Fed. R. Evid. 702 ..................................................................................................... 44
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SCHOLARLY AUTHORITIES
2A Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of
Antitrust Principles and Their Application (2013) ............................................. 32
Franklin Fisher, Multiple Regression in Legal Proceedings, 80 Colum. L.
Rev. 702 (1980) ............................................................................................ 46, 50
Peter Kennedy, A Guide to Econometrics (6th ed. 2008) .................................. 48, 50
D. Leinweber, Stupid Data Miner Tricks: Overfitting the S&P 500 (1995),
available at http://nerdsonwallstreet.typepad.com/my_weblog/files/
dataminejune_2000.pdf ......................................................................................... 4
Daniel L. Rubinfeld, Reference Guide on Multiple Regression, in Manual on
Scientific Evidence 303 (3d ed. 2011) ................................................................ 48
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GLOSSARY
MDI Methylene diphenyl diisocyanate. It can be combined with a
polyether polyol to produce flexible foam, such as mattresses and
automobile seats.

TDI Toluene diisocyanate. It can be combined with a polyether polyol to
produce to produce rigid insulation or structural foam, such as
household and appliance insulation, adhesives, and sealants.

Polyether Chemicals that can be combined with TDI or MDI to make a
Polyols polyurethane.

Systems A set of chemicals, most commonly comprised of MDI with a
polyether polyol and additives, needed to make a particular
polyurethane product.

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STATEMENT OF PRIOR OR RELATED CASES
The district court’s initial class certification order was previously before this
Court on a petition to appeal pursuant to Rule 23(f) of the Federal Rules of Civil
Procedure. In re Urethane Antitrust Litig., No. 08-602 (10th Cir. Sept. 2, 2008).
This Court denied the petition. Id.

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CORPORATE DISCLOSURE STATEMENT
The Dow Chemical Company (“Dow”) is a publicly held corporation with
no parent corporation. No publicly held corporation owns more than 10 percent of
Dow’s stock.

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