1. One Metropolitan Square-2700
In Re URETHANE ANTITRUST LITIGATION Case No. 04-MD-1616 JWL THE DOW VERDICT—LESSONS ON CONSPIRACY, CLASS CERT., AND COMCAST
DRI ANTITRUST & CONSUMER PROTECTION SLG
Glenn E. Davis
One Metropolitan Square-2700
St. Louis, MO
Privileged: Attorney-client Communication/ Attorney Work Product

2. Background on the URETHANE ANTITRUST MDL
MDL consolidation of multiple class actions and two direct actions (56 opt-out plaintiffs) against manufacturers of two types of urethane products.
Polyester Polyol
Polyether Polyol (“PPP’s”)
Chemicals used individually and systems for production of foam used in automotive, furniture, and other applications
Prior closed Antitrust Division Investigation 2007
Cases filed in November 2004 and thereafter
Defendants: Bayer AG, Huntsman International LLC, BASF SE, Lyondell Chemical Co., and Dow Chemical Co.

3. BACKGROUND cont’d
Plaintiffs claimed defendants engaged in price fixing and market allocation scheme
July 29, 2008 Court certified a class of purchasers of PPP urethane products & systems from defendants from January 1, 1999 to December 31, 2004
All defendants except Dow (on polyether cases) settled
Bayer-$55 m (2006)
Huntsman- $33 m (2011)
BASF- $51 m (2011)
Court denied Dow’s summary judgment motion on the class claims. In re Urethane Antitrust Litig., 2012 WL (D. Kan. Dec. 18, 2012)

4. Summary judgment issues
Initial summary judgment order found evidence sufficient to create fact issues for trial:
Existence of conspiracy involving Dow
Affirmative acts of concealment to toll SOL’s (pretextual & false reasons for price increases)
Fraudulent concealment requirement of due diligence
Second summary judgment motion denied
Pre-class period conspiracy evidence
Individual plaintiff Lubrizol (contract price increase limitations) and Vitafoam Canada (5th Amendment invocation) issues

5. ON TO TRIAL AND JURY VERDICT
Four week jury trial
Jury returned verdict for plaintiffs on 2/20/13:
Dow participated in PPP price fixing conspiracy
Caused plaintiffs to pay more for chemicals than they would absent conspiracy
No overpayments prior to 11/24/00 (4 year SOL period prior to filing)
Damages: $400,049,039.00
Trebled: $1, (Yikes. $1.2 Billion)

6. POST TRIAL MOTIONS Motion to De-Certify the Class
Invoking post-certification developments
Comcast v. Behrend; expert failed to address other causes
Variation between jury findings and expert theory/time period of class claim
Too late
Motion for Judgment as a Matter of Law or New Trial
No class-wide impact or damages
No direct evidence/insufficient circumstantial or indirect conspiracy evidence
Verdict form did not require jury finding on conspiracy time period
Instructional error—length and definition of conspiracy/evidence of competition among defendants
Jury required to find evidence that excludes the possibility of independent action
Failure to give instruction of document retention program
Failure to give bias instruction on witness with DOJ grant of immunity
Imposition of joint and several liability violates Due Process/Fifth Amendment
District Court denies all post-trial motions on May 15, 2013
The Appellate teams are now hard at work ( Plaintiffs engage Paul Clement)

7. CONSPIRACY EVIDENCE AND ISSUES
Incongruence of 5 year price fixing conspiracy Plaintiffs alleged with jury award for 4 years; no conspiracy matching allegations
Court: “The absurdity of its premise—that Dow could escape liability…because plaintiffs alleged a longer conspiracy than found by the jury—convinces the Court that it should not create new law….”
Dow disputes sufficiency of conspiracy evidence:
No direct evidence of conspiracy
Parallel conduct expected in oligopoly
Pricing discussions “not extensive”
Market conditions drove price increases
Downstream pricing data and market information shows non-collusive explanations for independent price increases
No reasonable inference of collusion wrongdoing versus equally plausible inference of independent business reasons for price increases

8. PLAINTIFFS EVIDENCE DIRECT INDIRECT (Plus Factors)
Direct testimony on agreements among subordinate executives
Price discussions among executives at functions
INDIRECT (Plus Factors)
Parallel, lockstep conduct in price announcements and increases
Communications at or near time of price increases and releases
Pricing control effective
Efforts to maintain secrecy of pricing communications
Acts contrary to self interest
Oligopoly structure
Expert opinion on supracompetitive prices and enforcement mechanisms
“The totality of the evidence
was sufficient to tip the scales
beyond evidence that could
reasonably be consistent
with competitive behavior.”
District Judge John W. Lungstrum
Mem. & Order 5/15/13

9. THE INTERVENING COMCAST DECISION
Class of 2million Comcast cable subscribers alleged actual and attempted monopolization in regional concentration of operations (swap agreements)
Alleged 4 theories of harm
Supreme Court found certification improper under Fed. R. Civ. P. 23(b)(3)
Expert failed to isolate damages to sole theory of harm remaining in damages model offered in support of certification
Plaintiffs must establish damages can be proven with class-wide evidence for common issues to predominate

10. The Class Certification Issues
Dow’s Comcast argument
Plaintiffs expert could not does not directly link price increases to anticompetitive conduct
Jury rejected damage model from same expert (James McClave) in Comcast
McClave multiple regression model estimated damages: 1999 to 2003
Jury found no injury prior to 2000
Focus on Rule 23(b)(3) requirements for rigorous analysis versus relaxed burden on damages/injury once some fact of injury is shown at trial
McClave theory based on multiple theories (price fixing, market & customer allocation) while only one was tried
Comcast “offers powerful confirmation that the class in this case should be decertified.” (Dow brief).
Judge Lungstrum: “Dow had every opportunity to cross-examine him about whether the impact on plaintiffs could have resulted from soother wrongdoing.”

11. CLASS CERT ISSUES (Cont’d)
Dow had McClave’s report since 4/11 but did not raise decertification until the eve of trial
Prejudice to class members
No timely objection at trial; McClave theory defined by trial testimony; neither side introduced possibility of market allocation theory of harm
Court accepts plaintiffs argument that classwide measurement does not mean that some class members may have unquantifiable damages or mitigated damages
No authority that existence of some zero damages class members defeat certification
Contrary conclusion would bless an improper fail-safe class

12. TAKEAWAYS
Cautionary tale replete with outstanding real life fact patterns for compliance illustrations
Docket rich with issues and valuable pre-trial discovery and other pleadings, trial motions and post-trial briefs
Fundamental issues to watch
How will the 10th Circuit deal with the case? Cf. Abraham v. Intermountain Health Care Inc., 461 F. 3d 1249, (10th Cir. 2006)(plaintiff must present evidence that tends to exclude the possibility of independent action)
Will the Supreme Court be interested in revisiting the joint and several liability constitutional challenge?
In what circumstances can a defendant be confident in “legitimate business reasons” to counter conspiracy allegations at trial? Cf. Blomkest Fertilizer, Inc. v. Potash Corp. of Saskatchewn, Inc., 203 F. 3d 1028, (8th Cir. 2000)(parsing allegations counter-justifications individually to reject conspiracy)
Conspiracy evidence change?
Rejection of parsing evidence approach.
Distinction between pleading standard for conspiracy and sufficient proof at trial.
Plaintiffs burden does not require absolute exclusion or evidence that tends to exclude possible independent conduct

13. TAKEAWAYS Class Certification and Comcast
Skepticism on injury and common impact arguments in overcharge price fixing cases
Raise and preserve every issue every step of the way
Comcast not a panacea; raise at class hearing stage if viable
Big win will embolden the network of plaintiffs antitrust counsel