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Optronic Technologies, Inc. v. Ningbo Sunny Electronic Co., Ltd.

United States District Court, N.D. California, San Jose Division

October 17, 2019

NINGBO SUNNY ELECTRONIC CO., LTD., et al., Defendants.



         After holding the final pretrial conference on October 10 and 11, 2019, the court issued an order addressing certain of the motions in limine and other pretrial motions (Dkt. No. 403) and continued the conference to October 16, 2019. This order addresses the four motions that remain pending: Orion's Motion to Exclude the Testimony of Mr. Redman (Dkt. No. 258), Defendants' Motion In Limine No. 6 (Dkt. No. 321), Defendants' Motion In Limine No. 8 (Dkt. No. 324), and Orion's Motion In Limine No. 1 (Dkt. No. 329).

         I. Orion's Motion to Exclude the Testimony of Mr. Redman (Dkt. No. 258)

         Orion seeks to exclude the testimony of Defendants' expert Mr. Jeffrey Dean Redman to the extent that he seeks to rebut the testimony of Dr. J. Douglas Zona, Orion's damages expert. In an earlier order, the court excluded his testimony offered in rebuttal of Orion's technical expert Dr. José Sasian. Dkt. No. 314 at 9-10. While Mr. Redman may be well qualified to testify as a damages expert in some cases, the court finds that he is not qualified to offer rebuttal testimony to Dr. Zona's specific analyses. The court grants Orion's motion for the reasons discussed below. Defendants, of course, may still rely on the rebuttal testimony of their other damages expert, Dr. Celeste Saravia.

         Dr. Zona's testimony is based on econometric analyses that employ regression models to calculate Orion's purported damages. The methodology Dr. Zona uses is known as the “dominant firm” model. Defendants do not dispute that the dominant firm model is a noncontroversial means of calculating antitrust damages. However, these analyses are outside of Mr. Redman's experience and training. He has 35 years of experience as an expert related to financial matters, has a B.S. in Management, and is a certified fraud examiner. He currently leads his own financial forensics firm and has previously worked at the financial consulting and accounting firm Ernst & Young. However, Mr. Redman has no training in econometrics and is neither an economist nor an accountant. Redman Dep. 29:6-11. He testified that for antitrust cases he could not remember ever calculating damages, running a regression, or calculating price elasticity or overcharges. Id. at 29:6-11, 48:12-19, 49:6-19, 55:8-10, 66:7-14, 98:10-21.

         Mr. Redman's general lack of relevant experience and training is apparent in his failure to understand Dr. Zona's specific calculations and analyses. Mr. Redman does not run his own regression nor criticize Dr. Zona's application of the model. Rather, he criticizes Dr. Zona for not using certain, case-specific data to calculate damages for overcharges. Redman Rep. ¶¶ 11, 19-24, 58. But, Mr. Redman does not appear to understand the methods and models that Dr. Zona used. Mr. Redman concedes that prior to this case he had not heard of the dominant firm model, that he could not explain the equation Dr. Zona used to calculate the damages rate used in the empirical model, that he does not understand what “pass through” means, that he is unfamiliar with the private cartel data Dr. Zona used, and that Dr. Zona's structural model are “outside [his] area of expertise.” Redman Dep. at 231:1-13; 241:4-242:13; 251:15-252:18; 255:5-7; 257:16-24; 258:10-17. Without understanding Dr. Zona's models and methods, Mr. Redman's rebuttal cannot be reliable. Fed.R.Evid. 702.

         In Virginia Vermiculite Ltd. v. W.R. Grace & Co.-Conn , a district court excluded damages testimony in an antitrust case because the expert lacked the requisite expertise. 98 F.Supp.2d 729, 732 (W.D. Va. 2000). The court noted that the witness at issue had experience with determining markets for investment purposes, but that did not transfer to determining markets for antitrust analyses: “Though related to a relevant market determination in an antitrust issue, there are differences between an analysis for business investment and an analysis for antitrust purposes.” Id. The court further noted that the at-issue witness “lack[ed] a clear understanding of basic economic principles. For instance, [the witness] admitted he was unfamiliar with the dominant firm theory in economics.” Id. at 734. In Rothe Dev., Inc. v. Dep't of Def., the district court excluded the testimony of a witness seeking to rebut two expert reports from economists, one of which used regression analyses. 107 F.Supp.3d 183, 203 (D.D.C. 2015), aff'd sub nom. Rothe Dev., Inc. v. United States Dep't of Def., 836 F.3d 57 (D.C. Cir. 2016). The court noted that the witness had never run a regression before, and found that “[b]ased on [the witness's] own admissions regarding his lack of training, education, knowledge, skill, and experience in any statistical or econometric methodology, [he] is plainly unqualified to testify as an expert with respect to [the opposing experts'] reports.” Id.; see also In re Worldcom, Inc., 371 B.R. 33, 42 (Bankr. S.D.N.Y. 2007) (excluding testimony of a witness because “[t]here is no nexus between his credentials and the subject matter of his testimony.”).

         Mr. Redman has impressive credentials, but he is not qualified to rebut Dr. Zona's testimony because it addresses issues outside of Mr. Redman's expertise and understanding. The court grants the motion to exclude Mr. Redman's testimony offered in rebuttal of Dr. Zona.

         II. Defendants' Motion In Limine No. 6 (Dkt. No. 321)

         Defendants seek an order to prevent Orion from offering evidence or argument related to punitive damages. Orion does not dispute that it may not seek punitive damages on its claims under federal law or California's Unfair Competition Law. The parties disagree as to whether punitive damages are available to Orion on its claim under California's Cartwright Act.

         As an initial matter, Orion objects to this motion on the ground that it is a motion for summary judgment masquerading as a motion in limine. Federal courts in California, though, have considered whether to allow the introduction of evidence going to remedies-including punitive damages-in motions in limine. See, e.g., Carpenter v. Forest Meadows Owners Ass'n, 2011 WL 3207778, at *15-19 (E.D. Cal. July 27, 2011). The court finds this motion is properly before the court.

         The Cartwright Act allows a victorious plaintiff to obtain treble damages, injunctive relief, and reasonable attorneys' fees. Cal. Bus. & Prof. Code § 16750(a). This array of remedies arises from the Cartwright Act's “focus[] on the punishment of violators for the larger purpose of promoting free competition.” Clayworth v. Pfizer, Inc., 49 Cal.4th 758, 783 (2010). “Private damage awards are just a tool by which the[] procompetitive purposes [of the Cartwright Act] are carried out: The main purpose of the anti-trust laws is to protect the public from monopolies and restraints of trade, and the individual right of action for treble damages is incidental and subordinate to that main purpose.” Id. (citations and quotations omitted).Under the Cartwright Act, the award of treble damages is “mandatory.” Uneedus v. Cal. Shoppers, Inc., 86 Cal.App.3d 932, 942 (1978).

         The court finds that because treble damages are mandatory, punitive damages are precluded under the Cartwright Act. Under California law, punitive damages, like treble damages, are a “way of punishing the defendant.” Cal. Civ. Code § 3294(a). “[W]here a statute provides a remedy that is punitive in nature, a plaintiff may not recover punitive damages in addition to the punitive statutory damages.” Doran v. Embassy Suites Hotel, 2002 WL 1968166, at *2 (N.D. Cal. Aug. 26, 2002). In Turnbull & Turnbull v. ARA Transp., Inc., the Court of Appeal held that where a plaintiff was entitled to mandatory treble damages on predatory pricing claims based on California's Unfair Practices Act, that plaintiff was “not entitled to both remedies, ” -i.e., punitive and treble damages-and could only receive the mandatory treble damages. 219 Cal.App.3d 811, 826-27 (1990), reh'g denied and opinion modified (May 19, 1990). If Orion prevails on its Cartwright Act claim, then it will be entitled to mandatory treble damages; thus, punitive damages would not be available to Orion. Defendants' motion in limine No. 6 is granted.

         III. Defendants' Motion In Limine No. ...

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