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Gumwood HP Shopping Partners L.P. v. Simon Property Group Inc.

United States District Court, N.D. Indiana, South Bend Division

October 19, 2016

GUMWOOD HP SHOPPING PARTNERS, L.P., Plaintiff,
v.
SIMON PROPERTY GROUP, INC., Defendant.

          OPINION AND ORDER

          JON E. DEGUILIO JUDGE UNITED STATES DISTRICT COURT

         This is an antitrust case in which the plaintiff, Gumwood HP Shopping Partners, L.P., asserts claims for a restraint of trade, monopolization, and attempted monopolization against Simon Property Group, Inc., the defendant. In short, Gumwood claims that Simon improperly prevented retailers from leasing at Gumwood's new shopping center, Heritage Square, which was poised to compete against Simon's established University Park Mall and a new outdoor shopping area that was under construction at that mall. The Court has denied cross motions for summary judgment and this case is set for trial.

         Now before the Court are motions filed by each party seeking to strike expert testimony from the opposing party's expert witness. In this order, the Court addresses the aspects of those motions that relate to the experts' opinions concerning liability. For the reasons that follow, both motions are granted in part and denied in part. The Court will address the aspects of those motions that relate to the experts' damages opinions in a separate order.

         I. STANDARD OF REVIEW

         Rule 702 governs the admission of testimony by expert witnesses. Under that rule, a witness “who is qualified as an expert by knowledge, skill, experience, training, or education” may offer an opinion if the following criteria are met:

(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. A court has a gatekeeping role to ensure that expert testimony meets these criteria. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993); C.W. ex rel. Wood v. Textron, Inc., 807 F.3d 827, 834-35 (7th Cir. 2015). As the Seventh Circuit has emphasized, though, a court does not assess “‘the ultimate correctness of the expert's conclusions.'” Textron, 807 F.3d at 834 (quoting Schultz v. Akzo Nobel Paints, LLC, 721 F.3d 426, 431 (7th Cir. 2013)). Rather, a court must focus “solely on principles and methodology, not on the conclusions they generate.” Schultz, 721 F.3d at 432 (quoting Daubert, 509 U.S. at 595). “So long as the principles and methodology reflect reliable scientific practice, ‘vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.'” Id. (quoting Daubert, 509 U.S. at 596).

         II. DISCUSSION

         Each party has retained an expert to offer various opinions that relate to the existence of liability in this case. The Court first addresses Simon's objections to Gumwood's expert, and then Gumwood's objections to Simon's expert.

         A. Dr. Frech

         Gumwood's expert witness is Dr. H.E. Frech III. Dr. Frech holds a Ph.D. in economics and is a professor of economics. He was retained in this matter to offer opinions relating to both Simon's liability and the resulting damages. As to his liability opinions, Simon argues that he should not be permitted to offer opinions concerning the tenant negotiations and the existence of tying and coercion, and opinions that Simon has market power.

         1. Tenant Negotiations, Tying, and Coercion

         Simon first objects to various factual opinions by Dr. Frech relating to the content and effect of Simon's negotiations with prospective tenants, including Ann Taylor, Charming Shoppes, and other retailers. In particular, Simon objects to Dr. Frech offering factual narratives about the parties' negotiations with the retailers, and opining about what Simon did and said, what its intent was, and that it coerced the retailers. For example, in his initial report, Dr. Frech engages in an extended recitation of evidence concerning Ann Taylor's negotiations with Simon and Gumwood. [Frech Report ¶¶ 141-67]. In the course of that narrative, he offers opinions such as that “Simon threatened not to renew or grant leases at important Simon properties unless the retailer agreed not to lease from Heritage Square (and sometimes to instead lease at University Park Mall), ” and that “[t]hrough its tying activities, Simon coerced Ann Taylor to move away from its preferred option of locating at Heritage Square.” [Frech Report ¶¶ 153, 159]. In his supplemental report, Dr. Frech further opines “that tying did occur and that it was often directed at inducing tenants to either break their relationship with Heritage Square or not to form a relationship.” [Frech Supp. Report ¶ 34]. Simon objects to this testimony on a number of grounds, including that factual findings of this sort are outside of Dr. Frech's expertise, that this testimony would not be helpful to the jury, and that he relied on insufficient facts in forming his opinions.

         The Court agrees this testimony would not help the jury “to understand the evidence or to determine a fact in issue, ” Fed.R.Evid. 702(a), as this particular testimony merely involves making credibility judgments and resolving factual disputes, which the jury is capable of doing on its own. To be helpful to the jury, as is required under rule 702(a), an expert must actually draw on their expertise in reaching their conclusions and must testify to something more than what the jury can understand or decide for itself. Ancho v. Pentek Corp., 157 F.3d 512, 519 (7th Cir. 1998). Thus, expert testimony that does little more than offer a credibility opinion is typically not admissible. Goodwin v. MTD Prods., Inc., 232 F.3d 600, 609 (7th Cir. 2000) (noting that, in general, “an expert cannot testify as to credibility issues, ” since “credibility questions are within the province of the trier or fact”); United States v. Benson, 941 F.2d 598, 604 (7th Cir. 1991) (“Credibility is not a proper subject for expert testimony; the jury does not need an expert to tell it whom to believe, and the expert's ‘stamp of approval' on a particular witness' testimony may unduly influence the jury.”). Unless the expert uses their expertise to add something to the jury's ability to understand the evidence or evaluate a witness' credibility, those matters are left to the jurors to decide for themselves. United States v. Hall, 93 F.3d 1337, 1343- 44 (7th Cir. 1996). Likewise, an expert typically “cannot be presented to the jury solely for the purpose of constructing a factual narrative upon record evidence.” Newman ex rel. Newman v. McNeil Consumer Healthcare, No. 10 C 1541, 2013 WL 9936293, at *6 (N.D. Ill. Mar. 29, 2013).

         Here, as Dr. Frech acknowledged, and as Simon notes, the presence of tying depends primarily on what was actually communicated or conveyed between Simon and the retailers. In order to establish the coercion that is essential to a tying claim, Gumwood must show that Simon refused or threatened to refuse to give retailers leases in other properties unless the retailers also leased at University Park or stayed out of Heritage Square. On that topic, Gumwood will offer documents and testimony that it contends show that Simon did convey such a condition to the retailers. In response, Simon will offer testimony from other witnesses denying that Simon conveyed such a condition. Thus, the jury will hear directly from the individuals who actually took part in the negotiations, will see documents related to those discussions, and can then decide which evidence is more credible. Dr. Frech's expertise as an economist offers the jury no assistance in deciding who or what to believe, so his opinions that Simon coerced the retailers, and the factual narratives accompanying those opinions, are not admissible as expert testimony.

         Gumwood defends these opinions by arguing that it is common for economists to assimilate and characterize facts in writing scholarly literature, so Dr. Frech has an appropriate expertise. That argument fails to address, however, what value Dr. Frech's expertise as an economist adds to the jury's ability to understand this evidence and decide these particular questions. An economist's expertise would be valuable in deciding, for example, what effect certain facts may have on a party's ability to exercise market power. As to tying, an economist might also be asked to analyze whether or how certain facts in the record meet the applicable standard for coercion. The opinions at issue here do not offer that sort of analysis, though, and Gumwood has not shown that an economist has any relative advantage over the jury in determining what parties actually said to each other.

         Dr. Frech recognized as much, too, at least in part. Before opining in his supplemental report that Simon in fact engaged in tying, Dr. Frech noted that “[t]his is primarily a factual issue, to be decided by the finder of fact, mostly based on documentary evidence and fact witnesses.” [Frech Supp. Report ¶ 34]. After that disclaimer, he proceeded to state that “if it is helpful to the finder fact, it is my opinion . . . that tying did occur . . . .” [Id.] Likewise, when asked at his deposition about the statement in his report that Ann Taylor preferred Heritage Square to University Park, Dr. Frech acknowledged that “that's very . . . much a fact thing, ” and he “doubt[ed] an economist would be asked something like that.” [DE 194-1 p. 68].[1] Moreover, even when Dr. Frech defended his opinions, his explanations made clear that his assessment of the evidence on these issues was not aided by his expertise as an economist. For example, when asked why he believed that Simon coerced Ann Taylor when even Ann Taylor's executives denied any such coercion, Dr. Frech said that “you have to read the tenants' testimony with a grain of salt” because they might be embarrassed to admit that they were “pushed around” by Simon. [DE 194-1 p. 51-53]. That is hardly the product of expertise in economics.

         The parties also argue over whether Dr. Frech relied on sufficient facts in reaching his opinion, as he conceded that he “did not spend a lot of time” reviewing the deposition of Ann Taylor's lead negotiator, and he first offered his opinion that Ann Taylor was coerced before he even had access to the testimony of Ann Taylor's representatives, as he believed “[t]he record was strong enough without that.” [DE 194-1 p. 48-49]. Regardless of whether that would present an independent basis for excluding this testimony, these arguments illustrate how admitting this type of testimony would actually distract instead of assist the jury, and would delay the trial. Permitting Dr. Frech to offer these opinions would require a detour into exploring what documents Dr. Frech had access to, how thoroughly he considered them, and what weight he gave to them and why. Laboring through that process would be wasteful when the relevant evidence can-and will-be presented to the jury in the first instance to decide for itself what conclusions to draw about what Simon communicated to the retailers. See Hall, 93 F.3d at 1343 (“If the proffered testimony duplicates the jury's knowledge, Rule 403 might counsel exclusion of the expert testimony to avoid the risk of unduly influencing the jury.”); see generally Young v. James Green Mgmt., Inc., 327 F.3d 616, 624 (7th Cir. 2003) (upholding the exclusion of findings by the EEOC where the plaintiffs “pointed to no evidentiary material available to the EEOC that was not otherwise available to the jury during trial”). Moreover, the jurors will not be limited to reviewing paper records and transcripts, as was Dr. Frech, as they will observe the witnesses testify live or by video deposition, making them better positioned to evaluate credibility. Thus, even if these opinions passed Rule 702's admissibility thresholds, the Court would exclude this evidence under Rule 403, as the prejudice and delay would substantially outweigh the minimal value of Dr. Frech's opinions on these purely factual matters. Accordingly, the Court grants Simon's motion in this respect.[2]

         As an independent basis for excluding this testimony, Simon also argues that Dr. Frech relied on definitions of tying and coercion that are inconsistent with the law. Although these opinions are already being excluded for the reasons just explained, it is worth briefly addressing these arguments, as tying and coercion are fundamental concepts in this case. To establish that Simon's conduct was anticompetitive, Gumwood relies on a per se tying claim. That claim requires Gumwood to prove, among other elements, that Simon tied two different products (here, properties) together-that it required a retailer to lease at one property (a tied property) in order to obtain a lease at another property (a tying property) over which Simon had market power. Reifert v. S. Cent. Wisc. MLS Corp., 450 F.3d 312, 317 (7th Cir. 2006). Stated differently, a party imposes a tie when it coerces or forces a purchaser to buy the tied product in order to receive the tying product. Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 446 U.S. 2, 12-14 (1984).

         As Gumwood notes, Dr. Frech's reports define tying as “condition[ing] the sale of one or more goods, (the ‘tying' goods) on the sale of one or more other products (the ‘tied' goods), ” [Frech Report ¶ 138], and define “coercion” and “forcing” as “conditioning purchases in the tying market to purchasing a good in the tied market or to not purchasing a good in the tied market from a rival.” [Frech Supp. Report ¶ 18]. Those definitions are generally consistent with the law. Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 462 (1992) (defining a tying arrangement as “‘an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier'” (quoting N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5-6 (1958))). During his deposition, however, Dr. Frech defined those concepts far more broadly. For example, he testified that it would be coercive for Simon to “ask a favor” of a retailer. [DE 194-1 p. 81-82]. Further, he stated that a portfolio negotiation where nothing is final until everything is final would inherently constitute a tying arrangement. [Id. p. 123]. He also testified that drawing any connection at all between two markets, such as offering a discount at one mall if the retailer also leases at another mall, would constitute a coercive tying arrangement. [Id. p. 16-17, 19-21, 116-17].

         Those statements are inconsistent with the definitions of tying and coercion in the context of tying claims, and will not be permitted at trial. As the Court explained at summary judgment, the existence of a tie requires more than just a package deal or a request to purchase two products together. “[T]he essential characteristic of an invalid tying arrangement lies in the seller's exploitation of its control over the tying product to force the buyer into the purchase of a tied product . . . .” Jefferson Parish, 466 U.S. at 12 (emphasis added). “If instead the buyer is free to decline the tied product or to purchase the two products separately, ” ...


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