The opinion
USONUITTEHDE RSTNA DTIESST RDIICSTT ROIFC TN ECWOU YROTR K
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:
US AIRWAYS, INC., :
Plaintiff, :
: 11 Civ. 2725 (LGS)
-against- :
: ORDER
:
SABRE HOLDINGS CORP., et al., :
Defendants. :
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LORNA G. SCHOFIELD, District Judge:
WHEREAS, Plaintiff (“US Airways”) moves to exclude at trial certain proposed
testimony of Defendants’ (“Sabre”) economics expert, Professor Kevin Murphy, pursuant to
Federal Rules of Evidence 401, 402, 403, 702 and 703. US Airways seeks to prohibit
(1) affirmative testimony as to the relevant antitrust market for assessing Sabre’s market power
and anticompetitive conduct; (2) narrative fact testimony and conclusory factual assertions that
are outside Professor Murphy’s expertise as an economist; and (3) testimony duplicative of
Sabre’s expert, Dr. Robert Topel.
Opinion of the Relevant Market
US Airways seeks to bar Professor Murphy’s economic opinion that the “relevant market
is properly defined to include all of the ways in which air travel is distributed,” and that Sabre had
a relatively modest share of that market -- e.g., that “Sabre’s share of total US passengers in 2013
was only 23.4 percent.” (emphasis and formatting in original report). US Airways argues that
this opinion is inadmissible under Rule 702 because it is unsupported by reliable methodology in
the absence of any empirical studies of reasonable interchangeability or cross-elasticity of
demand between GDS services and other means of ticket distribution. This argument is
unavailing.
US Airways does not cite any binding or persuasive authority to support the proposition
that a reliable market definition must rest on empirical studies and cannot rely on so-called
“qualitative” data or analysis of real-world market conditions that suggest reasonable
interchangeability of use or cross-elasticity of demand, such as evidence of how consumers
purchase travel or how market participants (here the airlines) view competition. In contrast,
Sabre cites cases, also not binding, that explicitly permit expert testimony of market definition
that relies on such evidence. See, e.g., Sumotext Corp. v. Zoove, Inc., No. 16 Civ. 01370, 2020
WL 533006, at *11 (N.D. Cal. Feb. 3, 2020) (“Courts in this district and others have often
admitted expert testimony on market definition where the expert did not conduct an econometric
study.” (citing cases)); see also Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962)
(stating that a submarket’s boundaries “may be determined by examining such practical indicia as
industry or public recognition of the submarket as a separate economic entity, the product's
peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices,
[and] sensitivity to price changes . . . .”); US Airways, Inc. v. Sabre Holdings Corp., 938 F.3d 43,
64 (2d Cir. 2019) (quoting the same “practical indicia” language from Brown Shoe). Whether
empirical studies are more reliable or more convincing in this instance, or whether US Airways’
criticisms of Dr. Murphy’s analysis are sound, goes to the weight of his opinion and not its
admissibility.
Fact Testimony and Factual Assertions
The parties have stipulated -- as before (Dkt. No. 468) -- that Professor Murphy may not
“sum up” the evidence to conclude that US Airways extracted pricing concessions from Sabre in
exchange for providing full content. US Airways contends that this stipulation prevents Professor
Murphy from offering “the opinions in paragraphs 124, 127-147 and 235-243” of his report. The
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specific paragraphs of Professor Murphy’s rebuttal report to which US Airways objects are
permissible, as they recite facts on which Professor Murphy relied as the basis for his opinions.
Nevertheless, at trial there is a fine line between explaining the basis for an opinion and rehashing
the evidence in exquisite detail. As before (Dkt. No. 468), although Professor Murphy may not
gather and interpret the evidence as a lawyer would in closing argument to argue what the travel
agencies desire, Professor Murphy may testify about objective economic incentives and
disincentives in the circumstances of the parties; and he therefore may testify that one would
expect GDSs to seek full content in exchange for concessions on other contract terms, including
price. Professor Murphy also may testify about the procompetitive benefits of full content to
travel agencies and travelers, including that it promotes efficiency and results in price
transparency.
Duplicative Expert Testimony
US Airways seeks to bar duplicative opinions by Professor Murphy and Dr. Topel on the
following subjects: (a) Sabre’s incentive payments to travel agents reflect competition between
airlines for travel agent business; (b) airlines would increase direct commissions to travel agents
in the absence of Sabre’s incentive payments; (c) firms can earn economic profits for reasons
other than market power; and (d) travel agents and travelers would face higher costs in a world
without Sabre’s challenged conduct. Sabre counters that the application is premature and that
each of its experts will play a distinct role at trial. The application is granted in that cumulative
opinions of any expert on any subject will be barred. See Fed. R. Evid. 403. Counsel may elect
which expert will provide the opinions referenced above. If necessary, a second expert may rely
on the opinion of another expert by reference without again rendering the opinion and explaining
its justification.
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It is hereby ORDERED that Sabre’s motion to exclude at trial certain testimony from
Sabre’s expert, Kevin Murphy, is granted in part and denied in part. Dr. Murphy’s opinion about
the relevant market and Sabre’s share of that market is allowed. A brief recitation of the
specified facts on which Dr. Murphy relied in forming his opinions is allowed. Duplicative
expert opinions are not allowed. Counsel may elect which expert will provide which opinions.
The Clerk of Court is directed to close Dkt. No. 1099.
Dated: April 1, 2022
New York, New York «
UNITED STATES DISTRICT JUDGE