United States District Court, N.D. California
ORDER DENYING MOTION FOR CLASS CERTIFICATION; DENYING
MOTION TO STRIKE EXPERT REPORT RE: DKT. NOS. 151,
NATHANAEL M. COUSINS United States Magistrate Judge.
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.
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.
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.
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.
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
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.
parties have consented to the jurisdiction of a magistrate
judge. Dkt. Nos. 14, 15.
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).
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.
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.
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