Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ABC Distributing, Inc. v. Living Essentials LLC

United States District Court, N.D. California

April 7, 2017

ABC DISTRIBUTING, INC., et al., Plaintiffs,
v.
LIVING ESSENTIALS LLC, et al., Defendants.

          ORDER DENYING MOTION FOR CLASS CERTIFICATION; DENYING MOTION TO STRIKE EXPERT REPORT RE: DKT. NOS. 151, 156

          NATHANAEL M. COUSINS United States Magistrate Judge.

         In this price discrimination case under the Robinson-Patman Act, plaintiffs allege that defendants sell 5-Hour Energy to wholesalers for different prices, to the disadvantage of small wholesalers. Plaintiffs seek to certify two classes of small wholesalers, defined by their competition with the large wholesaler, Costco. In response, defendants move to strike plaintiffs' class certification expert report.

         The Court finds that Dr. McDuff's expert report is admissible at this stage, but rejects its recommendations and conclusions. Thus, the Court DENIES defendants' motion to strike the expert report. The Court also DENIES the motion for class certification because individual claims predominate over class-wide claims in a Robinson-Patman case. In addition, the classes are impermissibly vague because it is defined by proximity to Costco, a party neither in this case nor accused of any wrongdoing.

         I. BACKGROUND

         Named plaintiffs ABC Distributing, Inc., Elite Wholesale, Inc., and Tonic Wholesale, Inc. are small wholesale food and sundry good distribution companies in California that supply products to local, independent businesses, such as grocery stores, convenience stories, and gas stations. SAC ¶ 7. Defendants Living Essentials, LLC and Innovation Ventures, LLC are Michigan companies, with their principal place of business in Michigan. Defendants manufacture 5-Hour Energy, a popular dietary supplement. SAC ¶¶ 18, 32. For its sales to California-based wholesalers, defendants use a broker, Paramount, to negotiate sales. SAC ¶ 40.

         5-Hour Energy is sold as a liquid 1.93-ounce bottle, and all bottles that defendants sell are of like grade and quality. SAC ¶¶ 32, 34. Defendants sell 5-Hour Energy to wholesalers in a package of twelve bottles, and master cases of eighteen twelve-packs. SAC ¶ 36. From 2011 to 2015, plaintiffs ordered 5-Hour Energy from defendants through Paramount. SAC ¶ 43. In 2011, plaintiffs Elite and ABC noticed that other wholesalers were consistently undercutting their prices for the sale of twelve-packs of 5-Hour Energy to retailers. SAC ¶ 45. Elice and ABC requested that Paramount provide a lower price, and Paramount agreed to give them an “everyday” discount of seven cents per bottle. SAC ¶ 49.

         On June 30, 2015, ABC executives learned that Costco was selling 5-Hour Energy to other wholesalers for less than the price that ABC was purchasing 5-Hour Energy from defendants. SAC ¶ 65. ABC's longtime customer, El Cajon Cash n Carry, purchased 5Hour Energy at such a favorable price from Costco that it offered to resell 5-Hour Energy to ABC. SAC ¶ 67.

         Plaintiffs sue defendants for unlawful price discrimination under the Robinson-Patman Act and California state law. The Court denied a motion to dismiss in this case, finding that plaintiffs sufficiently alleged an antitrust injury. Dkt. No. 67. After limited discovery, plaintiffs now move for class certification. Dkt. No. 151. In support of their motion, plaintiffs present the expert report and testimony of Dr. DeForest McDuff. In opposition, defendants present the expert report and testimony of Dr. Darrell Williams.

         All parties have consented to the jurisdiction of a magistrate judge. Dkt. Nos. 14, 15.

         II. DAUBERT MOTION

         Federal Rule of Evidence 702 provides that an expert witness may testify in the form of an opinion if “the testimony is the product of reliable principles and methods.” “The duty falls squarely upon the district court to ‘act as a gatekeeper to exclude junk science that does not meet Federal Rule of Evidence 702's reliability standards.'” Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 463 (9th Cir. 2014) (quoting Ellis v. Costco Wholesale Corp., 657 F.3d 970, 982 (9th Cir. 2011)). Rule 702 “assign[s] to the trial judge the task of ensuring that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand.” Daubert v. Merrel Dow Pharm., 509 U.S. 579, 597 (1993).

         The Court's duty is to evaluate the soundness of the expert's methodology, not the correctness of the expert's conclusions. Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010). “Shaky but admissible evidence is to be attacked by cross examination, contrary evidence, and attention to the burden of proof, not exclusion.” Id. The Court has broad discretion and flexibility in assessing an expert's reliability. Estate of Barbarin, 740 F.3d at 463.

         Here, defendants move to strike plaintiffs' expert, Dr. McDuff, on the basis that his report and testimony fail to establish both actual competition between proposed class members and antitrust injury. Dkt. No. 156. Defendants argue, “Dr. McDuff fails to make the necessary showings that would allow a single plaintiff under the Robinson-Patman Act to prove its claims at trial, let alone an entire class of wholesalers in California to prove their claims with common proof, on a class-wide basis.” Dkt. No. 156 at 6.

         The Court finds that these concerns are aimed at Dr. McDuff's conclusions. Typically, the Court acts as a gatekeeper to excise methodologically unsound opinions because otherwise, there is a risk the jury could over rely on an unfounded opinion. SeeDaubert, 509 U.S. at 595 (“Expert evidence can be both powerful and quite misleading because of the difficulty in evaluating it”). Here, the motion is before the Court, and the parties have provided the Court with the expert reports and deposition testimony from both sides. As the Court is capable of reviewing the materials presented, identifying ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.