In re Rail Freight Fuel Surcharge Antitrust Litig.

PAUL L. FRIEDMAN, United States District Judge

TABLE OF CONTENTS

PART ONE: INTRODUCTION AND BACKGROUND ...31

I. INTRODUCTION...31

II. BACKGROUND ...33

A. The Alleged Conspiracy ...35

B. Appeal to the D. C. Circuit ...38

C. Class Certification Papers and Supplemental Briefing Before the Class Certification Hearing ...39

D. Supplemental Expert Reports ...40

PART TWO: ADMISSIBILITY OF EXPERT TESTIMONY UNDER DAUBERT ...40

I. INTRODUCTION...40

II. EXPERT TESTIMONY AT CLASS CERTIFICATION ...41

A. Rule 702 of the Federal Rules of Evidence ...41

B. Daubert Test Versus Rule 22(b) Reliability Standard ...42

III. DAUBERT ANALYSIS OF THE EXPERTS IN THIS CASE ...43

A. Dr. Gordon Rausser ...43

1. Dr. Rausser's Credibility in Light of his Involvement with Cascade Settlement Services ...43

a. Factual Background Regarding Dr. Rausser and Cascade ...43

b. Court's Conclusions Regarding Dr. Rausser's Credibility in the Daubert Context....47

2. Rule 702 Analysis of Dr. Rausser's Expert Opinion....49

a. Introduction....49

b. Qualitative Economic Analysis ...50

c. Documentary Record and Defendants' Transaction Data as Evidence of Class-wide Impact....53

d. Common Factors Model ...54

e. Damages Model....56

f. Legacy Contracts ...59

B. Dr. Joseph P. Kalt ...63

1. Aggressiveness and Coverage of Fuel Surcharges ...64

a. Earning Power ...65

b. Coverage: Application, Negotiation, and Discounting of Fuel Surcharges ...66

2. False Positives ...67

a. Variable Fuel Coefficient ...67

b. Legacy False Positives....70

c. Rates Equal to Variable Costs ...70

d. Pre-Class Period Fuel Surcharges....71

3. Structural Break Analysis....72

4. Ordinary Fuel Cost Recovery ...74

5. Uninjured Class Members ...75

C. Dr. Jeffrey J. Leitzinger ...76

1. Dr. Rausser's Research Methodology, Analysis, and Model Design....77

2. Constant Fuel Coefficient: Margin Compression and Fuel Price Hedging ...78

3. Constant Fuel Coefficient: Box-Cox Sensitivity Analysis ...79

4. Annual Fuel Shares....80 *31 D. Dr. Dennis W. Carlton ...81

1. Issues Already Discussed....82

2. Constant Fuel Coefficient: Fuel Pass-Through Rates....82

3. Fuel Shares and Shephard's Lemma....82

4. RCAF False Positives ...83

5. Uninjured Large Shippers....84

E. Dr. James T. McClave ...85

1. Dr. Kalt's Structural Break Analysis ...86

2. Uninjured Class Members and Customer Indicator Variable ...86

PART THREE: LEGAL STANDARD AND RULE 23(A) FINDINGS AND CONCLUSIONS ...87

I. LEGAL STANDARD FOR CLASS CERTIFICATION UNDER RULE 23 ...87

A. Requirements of Rule 23 of the Federal Rules of Civil Procedure ...88

B. Rigorous Analysis Post- Comcast ...90

II. RULE 23(A) FINDINGS AND CONCLUSIONS ...92

A. Two Implied Requirements ...92

1. Class Definition....92

2. Named Representatives Within the Putative Class....93

B. Four Express Requirements ...93

1. Numerosity....93

2. Commonality ...93

3. Typicality....94

4. Adequacy of Representation ...94

PART FOUR: RULE 23(B) FINDINGS AND CONCLUSIONS ...95

I. PREDOMINANCE...95

A. Violation of Antitrust Law ...96

B. Impact ...96

1. Plaintiffs' Theory of Liability....97

2. Antitrust Injury....99

3. Injury-in-Fact....101

a. Plaintiffs' Record Evidence of Class-wide Impact ...103

i. Documentary Evidence....103

ii. Coverage ...105

b. Defendants' Challenges to Dr. Rausser's Common Factors and Damages Models ...107

i. Dr. Rausser's Common Factors Model ...108

ii. Constant Fuel Coefficient: Whether Dr. Rausser's Damages Model is "Rigged" to Find Overcharges ...109

iii. Structural Break Analyses: Whether Dr. Rausser's Damages Model Shows Structural Breaks and Overcharges Throughout the Pre-Class and Class Periods....115

iv. False Positives: Whether Dr. Rausser's Model Includes Impermissible False Positives ...119

c. Issues Precluding a Finding of Predominance....122

i. Intermodal Shippers: Class Traffic Subject to Competitively Negotiated Formulas....122

ii. Legacy Shippers: Dr. Rausser's Damages Model Finds Unexplainable Overcharges....126

iii. Proposed Class Includes Too Many Uninjured Members ...132

C . Damages ...141

II. SUPERIORITY ...144

CONCLUSION ...145

PART ONE: INTRODUCTION AND BACKGROUND

I. INTRODUCTION

This matter is again before the Court on a motion of the direct purchaser plaintiffs for class certification under Rule 23 of the Federal Rules of Civil Procedure. The Court previously certified the class in *32 2012. See In re Rail Freight Fuel Surcharge Antitrust Litig. , 287 F.R.D. 1 , 74 (D.D.C. 2012) (" Rail Freight III "). On appeal, the United States Court of Appeals for the District of Columbia Circuit vacated this Court's prior decision and remanded for further consideration in light of intervening Supreme Court precedent in Comcast Corp. v. Behrend , 569 U.S. 27 , 133 S.Ct. 1426 , 185 L.Ed.2d 515 (2013). In re Rail Freight Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d 244 , 255 (D.C. Cir. 2013). After remand, this Court permitted the filing of extensive supplemental memoranda of law, the submission of additional and supplemental expert reports, and the taking of additional depositions of expert witnesses. See Stipulation and Order (Oct. 31, 2013) at 1-3 [Dkt. 694]; Scheduling Order (June 19, 2015) at 1-2 [Dkt. 772]. It also asked the parties to submit a joint statement of the legal issues to be addressed at the class certification hearing, see Order (Aug. 21, 2014) at 1-2 [Dkt. 725], which they did. Thereafter, the Court delayed the class certification hearing and its decision until after the Supreme Court decided Tyson Foods, Inc. v. Bouaphakeo , --- U.S. ----, 136 S.Ct. 1036 , 194 L.Ed.2d 124 (2016), and requested supplemental briefing on the impact of the Tyson Foods decision on the class certification questions in this case. See Order (Sept. 28, 2015) at 1-2 [Dkt. 785]. The Court held a class certification hearing spanning five days, with oral argument on the motion and expert testimony, on September 26-30, 2016.

Upon consideration of the parties' papers, the testimony and reports of the expert witnesses, the oral arguments presented by counsel, the relevant legal authorities, and the extensive record in this case, the Court concludes that plaintiffs have failed to establish by a preponderance of the evidence that all of the requirements of Rule 23 of the Federal Rules of Civil Procedure have been satisfied. Specifically, plaintiffs have failed to establish that "questions of law or fact common to class members predominate over any questions affecting only individual members" under Rule 23(b)(3). FED. R. CIV . P. 23(b)(3). While the documentary evidence is strong evidence of conspiracy and class-wide injury to so-called carload traffic, the damages regression model of plaintiffs' lead expert is flawed for three reasons: (1) a large portion of the class traffic reflected in his damages model was intermodal traffic-not carload traffic-that was subject to competitively negotiated fuel surcharge formulas established during the pre-class period and which never changed; (2) his damages model finds unexplainable overcharges with respect to legacy shippers-the very concern raised by the D.C. Circuit in its opinion in this case; and (3) there are too many uninjured shippers in the class who cannot be identified or sufficiently explained to satisfy the "all or virtually all" standard for predominance under Rule 23(b)(3) and the established case law. The Court therefore will deny the direct purchaser plaintiffs' motion for class certification. 1

*33 II. BACKGROUND

The Court has discussed the factual and procedural background of this case in prior decisions. See In re Rail Freight Fuel Surcharge Antitrust Litig. , 587 F.Supp.2d 27 , 29-31 (D.D.C. 2008) (" Rail Freight I "):

*34 In re Rail Freight Fuel Surcharge Antitrust Litig. , 593 F.Supp.2d 29 , 32, 34-35 (D.D.C. 2008) (" Rail Freight II "), aff'd , Fayus Enters. v. BNSF Ry. Co. , 602 F.3d 444 , 445-46, 454 (D.C. Cir. 2010) ; Rail Freight III , 287 F.R.D. at 11 -20 . It therefore will limit its discussion here accordingly.

This case involves the claim that defendants-BNSF Railway Company ("BNSF"); CSX Transportation, Inc. ("CSX"); Norfolk Southern Railway Company ("NS"); and Union Pacific Railroad Company ("UP")-engaged in a price-fixing conspiracy to coordinate their fuel surcharge programs as a means to impose supra-competitive total price increases on their shipping customers. See 2d Am. Compl. ¶¶ 1-2. A rail fuel surcharge ("FSC") "is a separately-identified fee that is charged by the railroads for ... agreed-upon transportation [services], purportedly to compensate for increases in the cost of fuel." Id. ¶ 2. Plaintiffs allege, however, that the four defendants, through their collective action, "conspired to impose Rail Fuel Surcharges that far exceeded any increases in the Defendants' fuel costs, and thereby collected billions of dollars of additional profits during the ... conspiracy." Id.

Plaintiffs have been divided into two putative classes: (1) the direct purchasers-those who allegedly purchased rail freight transportation from defendants from July 1, 2003, until December 31, 2008, and who were assessed a rail fuel surcharge for the transportation; and (2) the indirect purchasers-those who allegedly purchased rail freight transportation services indirectly from defendants. See Rail Freight III , 287 F.R.D. at 12 . Plaintiffs in both putative classes allege that defendants violated Section 1 of the Sherman Act, 15 U.S.C. § 1 , by conspiring to fix prices through the use of fuel surcharges, and seek recovery under Section 4 of the Clayton Act, 15 U.S.C. § 15 . See Rail Freight I , 587 F.Supp.2d at 29 ; 2d Am. Compl. ¶ 33.

In 2008, defendants moved to dismiss the claims of both putative classes. On November 7, 2008, the Court denied defendants' motion regarding the direct purchaser plaintiffs, concluding that the direct purchasers had sufficiently alleged an agreement in restraint of trade. See Rail Freight I , 587 F.Supp.2d at 32 . Shortly thereafter, on December 28, 2008, the Court denied in part and granted in part defendants' motion regarding the indirect purchaser plaintiffs, concluding that the indirect purchasers' state law claims were preempted and must be dismissed, but that the indirect purchasers' federal antitrust claim for injunctive relief could proceed. See Rail Freight II , 593 F.Supp.2d at 32 , 43 . The court of appeals affirmed this Court's dismissal of the indirect purchasers' state law claims. See Fayus Enters. v. BNSF Ry. Co. , 602 F.3d at 454 .

The direct purchaser plaintiffs (hereinafter, "plaintiffs" unless otherwise specified) have moved for class certification. The parties no longer dispute the class definition previously accepted by this Court. See infra at 92-93. The Court therefore will consider here whether, under Rule 23 of the Federal Rules of Civil Procedure, to certify a class of:

All entities or persons that at any time from July 1, 2003 until December 31, 2008 ("the Class Period") purchased rate-unregulated rail freight transportation services directly from one or more of the Defendants, as to which Defendants assessed a stand-alone rail freight fuel surcharge applied as a percentage of the base rate for the freight transport (or where some or all of the fuel surcharge was included in the base rate through a method referred to as "rebasing") ("Fuel Surcharge").

*35 Excluded from this Class definition are (a) Defendants, any subsidiaries or affiliates of Defendants, any of Defendants' co-conspirators, whether or not named as a Defendant in the Complaint, and all federal governmental entities, and (b) all entities or persons that paid a Fuel Surcharge directly to any of the Defendants solely pursuant to a railroad-shipper contract that was (i) entered into before July 1, 2003, and (ii) provided for a stand-alone Fuel Surcharge to be paid under a predetermined formula specifically set forth in the contract.

Class Mot. at 1 & n.1. This Court previously designated the eight named plaintiffs-Dust Pro, Inc.; Carter Distributing Company; Dakota Granite Company; Donnelly Commodities, Inc.; U.S. Magnesium LLC; Nyrstar Taylor Chemicals, Inc.; Olin Corporation; and Strates Shows, Inc.-as class representatives, and designated Quinn Emanuel Urquhart & Sullivan, LLP and Hausfeld LLP, as co-lead counsel. Rail Freight III , 287 F.R.D. at 74 . Those designations also are no longer in dispute. See infra at 94-95. On remand, plaintiffs again request that this case be certified as a class action for litigation and trial of plaintiffs' claim for price fixing under Section 1 of the Sherman Act, 15 U.S.C. § 1 , and defendants oppose plaintiffs' motion for class certification, arguing primarily that plaintiffs have failed to satisfy the predominance requirement of Rule 23(b)(3).

A. The Alleged Conspiracy

Plaintiffs allege that in early 2003 defendants entered into a conspiracy to increase their total revenues through the use of standardized, uniform, and supra-competitive fuel surcharges. Rail Freight I , 587 F.Supp.2d at 29 -30 . These defendants are the four largest Class I railroads, which are defined by the Surface Transportation Board ("STB") as having annual carrier operating revenues of at least $250 million. Rausser Merits Rep. at 26; see also 2d Am. Compl. ¶ 1. The four Class I railroads control about 90% of rail freight track miles and account for 94% of all rail freight revenue in the continental United States. See 2d Am. Compl. ¶ 4; Rausser Merits Rep. at 26. BNSF and UP operate in the western United States; CSX and NS operate in the east. See Rausser Merits Rep. at 38.

The defendant railroads are part of a large, integrated system. Class I railroads typically perform long-haul movement-moving shipments over long distances. See Rausser Merits Rep. at 30. Smaller regional and short-line railroads depend on interchanging traffic with larger Class I railroads. See id . at 47 . There are two basic types of rail traffic: intermodal traffic and carload traffic. See Class Opp. at 14 n. 19; Class Certification Hr'g Tr. (Sept. 26, 2016) at 183-84. As defendants define it, intermodal traffic travels by rail and one other mode of transportation such as truck or ship. Class Certification Hr'g Tr. (Sept. 26, 2016) at 186. "All other rail traffic is known as 'carload' traffic." Class Opp. at 14 n.19. Each railroad has a different published fuel surcharge formula for carload and intermodal traffic. Class Certification Hr'g Tr. (Sept. 26, 2016) at 188.

Before Congress passed the Staggers Rail Act of 1980, defendants would have had to apply to the Interstate Commerce Commission for approval of an across-the-board rate increase. Rail Freight I , 587 F.Supp.2d at 29 -30 . Following the deregulation of the railroad industry, at least 80% of all rail shipments now move under private transportation contracts, which are not rate regulated, or are otherwise exempt from rate regulation. Id. Plaintiffs allege that defendants determined that the most efficient way to increase their profits was through the imposition of "an across-the-board artificially high and uniform fuel surcharge," instead of attempting to renegotiate *36 all of their individual contracts, see id . at 30 , or attempting to fix each base rate separately, which plaintiffs say "would have been extremely complex, very costly, and effectively unmanageable." Rausser Merits Rep. at 52 n.94.

The total freight price for a shipping customer, called the "all-in rate," consists of a base rate and a fuel surcharge applied as some percentage of the base rate. See Class Opp. at 3; Rausser Merits Rep. at 76. The base rate incorporates fixed costs such as the costs of organizing a particular shipment; building and maintaining railroad tracks, bridges, and other structures; and the railroad's markup of price over costs. Rausser Merits Rep. at 76. Plaintiffs allege that defendants imposed "an across-the-board artificially high and uniform fuel surcharge" as a percentage multiplier of the base rate, thereby permitting defendants "to raise total freight prices widely by a given percentage." Rail Freight I , 587 F.Supp.2d at 30 . In effect, according to plaintiffs, the allegedly conspiratorial fuel surcharges operated like a tax, increasing the total price of shipping by a set percentage. Rausser Merits Rep. at 112-13. Plaintiffs contend that this "approach yielded defendants billions of dollars of additional profits because the surcharge raised rates far beyond the real increased cost of fuel." Rail Freight I , 587 F.Supp.2d at 30 .

Plaintiffs maintain that it took defendants some trial and error to reach the point of conspiracy. Before the class period, plaintiffs say that defendants "operated as a price-discriminating, interdependent, but non-collusive oligopoly." Class Mem. at 8. And for many years before the class period, defendants "confronted a long-term, structural decline in rail freight rates." Id. "Between 2000 and early 2003, the three-year period preceding the Class Period," plaintiffs contend that defendants "unilaterally took various actions designed to increase rail freight prices and revenues." Id. at 9. As plaintiffs describe it, "[t]hese uncoordinated actions included, among other things, unilateral attempts to apply stand-alone fuel surcharges, which were designed to take advantage of future rising fuel prices and intended as revenue enhancement steps." Id. (internal quotation marks and citations omitted). But plaintiffs contend that defendants "acting on their own had limited success when trying to boost revenues through fuel surcharges." Id. ; see Pls. Supp. Reply at 2. Plaintiffs contend that these pre-class period "fuel surcharges were applied only sporadically to a limited number of shippers," because defendants were concerned about competition-"losing business to other [railroads] that did not apply fuel surcharges." Class Mem. at 9-10; see Pls. Supp. Reply at 1.

According to plaintiffs, another barrier to broad application of fuel surcharges prior to the alleged conspiracy was the wide use of "the so-called Rail Cost Adjustment Factor, or 'RCAF.' " Class Mem. at 11. The RCAF "is a weighted index that accounts for all significant input costs, including fuel." Id. Plaintiffs assert that wide use of the RCAF impeded broad application of fuel surcharges because defendants "recognized that imposing a stand-alone fuel surcharge where fuel price increases were already covered by the RCAF would be perceived by shippers as double dipping." Id. (internal quotation marks omitted).

Plaintiffs contend that beginning in the spring of 2003 "the four Defendants agreed to create and apply a common Fuel Surcharge"-linked to the price of oil on one of two oil indexes, the On-Highway Diesel Fuel ("HDF") index or the West Texas Intermediate ("WTI") index-"based on a percentage of base rates on an across-the-board basis to all members" of *37 plaintiffs' putative class. Class Mem. at 19. Under CSX's new, allegedly conspiratorial fuel surcharge program, the railroad would assess a 0.4% surcharge when the price of oil on the WTI index exceeded $23 per barrel, and an additional 0.4% for every dollar above $23. Id. Plaintiffs say that "[u]nlike its predecessor program, which required the price of oil to exceed the threshold price ($28 per barrel under the old program) for 30 consecutive days, CSX's new program would be based on the average price of oil from the preceding month." Id. at 19-20. And plaintiffs allege that BNSF, UP, and NS adopted "essentially uniform" programs, and all four defendants "remained in synch throughout the Class Period." Id. at 24. As plaintiffs describe it,

[t]he only differences in the Defendants' programs concerned the indices used and the thresholds chosen. The two indices chosen were closely related. The western railroads (BNSF and the UP) linked their fuel surcharge to the on-highway diesel fuel (HDF) index, whereas the eastern railroads (CSX and NS) linked their fuel surcharge to the West Texas Intermediate (WTI) index.

Id. at 24 n.76 (quoting Rausser Class Rep. at 54-55); see also Rausser Merits Rep. at 118. Although UP and BNSF used slightly different thresholds in their fuel surcharge programs, plaintiffs assert that this difference "had no practical effect":

The UP applied a fuel surcharge when the HDF was above the threshold of $1.35 per gallon and the BNSF applied a Fuel Surcharge when the HDF index was above $1.25 per gallon. CSX and NS both applied fuel surcharges when the WTI index was above $23 per barrel. The different thresholds used by UP and BNSF were not relevant to fuel surcharge amounts during the class period, because the indices were all above the threshold values for the entire Class Period. Consequently, the UP and BNSF Fuel Surcharge programs provided for identical fuel surcharge percentages once the $1.35 threshold was reached.

Class Mem. at 24 n.76 (quoting Rausser Class Rep. at 55); see also Rausser Merits Rep. at 119.

The next step in the alleged conspiracy, according to plaintiffs, was defendants' agreement and collective action to cause the American Association of Railroads ("AAR") to create a new cost escalation index, the All-Inclusive Index Less Fuel ("AIILF"), which removed fuel costs from the prior cost escalation index, the All-Inclusive Index ("AII"), upon which the RCAF was based. See Rail Freight I , 587 F.Supp.2d at 30 ; see Class Mem. at 27-28. Plaintiffs maintain that defendants reached this agreement during the October and December 2003 meetings of the AAR; the AIILF index was published in December of 2003. Rail Freight I , 587 F.Supp.2d at 30 ; see Class Mem. at 29. They point to a letter written by BNSF's chief economist, Sam Kyei, in which he stated:

In December 2003 [Matt Rose, BNSF's chief executive officer], single-handedly got the A.A.R. to establish a non-fuel RCAF index, now called the All-Inclusive Index Less Fuel.... In my 18-year railroad career, no one had ever succeeded in steering the A.A.R. to do this.... [T]he combination of sound price escalation using this index and a fuel surcharge should tremendously help our bottom-line for years to come. In fact,... the entire rail industry should benefit from the escalation options the index provides.

Class Mem. at 29-30 (quoting RD Ex. 122, Letter from Sam Kyei, to Matt Rose (Mar. 15, 2005), at BNSF-0070502).

At this point, plaintiffs allege that defendants, having coordinated their fuel surcharges *38 and created and published the AIILF, "worked tirelessly to achieve 100% Fuel Surcharge coverage across their customers." Class Mem. at 31. Plaintiffs say that following defendants' agreement to coordinate their fuel surcharges, defendants' fuel surcharge revenue "skyrocketed." Id. at 42 . For example, plaintiffs state that NS saw fuel surcharge revenue for certain businesses "grow exponentially from about $11.6 million in 2002, to about $61.7 million, $208 million, $650 million, and $974 million in 2003, 2004, 2005, and 2006, respectively." Id. at 42-43 . Plaintiffs say that because of the conspiracy, defendants "were able to reverse the long-term downward trend in rail freight rates and move rates sharply upward," id . at 43, at the expense of putative class members. Id. at 45 .

B. Appeal to the D.C. Circuit

Based on the allegations in the Second Consolidated Amended Class Action Complaint, the record, the arguments presented by counsel, and the existing case law regarding class certification, the Court certified the plaintiffs' class in 2012. Rail Freight III , 287 F.R.D. at 10 . Defendants sought an interlocutory appeal before the court of appeals. In re Rail Freight Fuel Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d at 247 . Before the D.C. Circuit issued its opinion, the Supreme Court decided Comcast Corp. v. Behrend , 569 U.S. 27 , 133 S.Ct. 1426 . The D.C. Circuit concluded that an interlocutory appeal was appropriate under Rule 23(f) of the Federal Rules of Civil Procedure in light of the Supreme Court's decision in Comcast , which vacated the Third Circuit decision relied on by this Court in its class certification opinion. See In re Rail Freight Fuel Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d at 250 -51 , 253-54 ; Rail Freight III , 287 F.R.D. at 26, 62 , 69 . The D.C. Circuit also pointed to potential pressure on defendants to settle and an "identified defect" in the damages model offered by plaintiffs' expert, Dr. Gordon Rausser. In re Rail Freight Fuel Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d at 251-52 , 254 .

Defendants argued to the D.C. Circuit that Dr. Rausser's damages model quantifies injury for all shippers, including so-called "legacy shippers," shippers who, as they describe, "were bound by rates negotiated before any conspiratorial behavior was alleged to have occurred." In re Rail Freight Fuel Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d at 252 . The D.C. Circuit concluded that this Court had not addressed "the defendants' concern that the damages model yielded false positives with respect to legacy shippers," and that the Supreme Court's recent Comcast decision "sharpens the defendants' critique of the damages model as prone to false positives." Id. at 253 ; see also id . at 254 .

In its initial opinion, this Court also relied on Mims v. Stewart Title Guaranty Co. , 590 F.3d 298 , 308 (5th Cir. 2009), and Kohen v. Pacific Investment Management Co. , 571 F.3d 672 , 677 (7th Cir. 2009), for the proposition that class certification is not precluded "simply because a class may include persons who have not been injured by the defendants' conduct." Rail Freight III , 287 F.R.D. at 40 . The D.C. Circuit stated in reference to those decisions that " Rule 23 not only authorizes a hard look at the soundness of statistical models that purport to show predominance-the rule commands it." In re Rail Freight Fuel Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d at 255 . The court of appeals vacated this Court's decision and remanded to permit it to consider defendants' arguments regarding false positives and legacy shippers in the first instance in light of Comcast . Id. at 254-55 . Consistent with the D.C. Circuit's mandate, the Court will address the changes to the Rule 23(b) predominance requirement after Comcast *39 and conduct a rigorous analysis of plaintiffs' and defendants' submissions regarding legacy shippers.

C. Class Certification Papers and Supplemental Briefing Before the Class Certification Hearing

To obtain class certification, plaintiffs must satisfy the four threshold requirements of Rule 23(a) -commonly referred to as numerosity, commonality, typicality, and adequacy-and the two additional requirements of Rule 23(b)(3) -predominance and superiority. See FED. R. CIV . P. 23(a)-(b). The central question before the Court relates to predominance: whether plaintiffs have met their burden to show that "questions of law or fact common to class members predominate over any questions affecting only individual members." FED. R. CIV . P. 23(b)(3) ; see Comcast Corp. v. Behrend , 569 U.S. at 33 , 133 S.Ct. 1426 . That question, in turn, focuses on whether plaintiffs have shown that the harm-that is, the impact-from the alleged conspiracy is capable of proof at trial through evidence that is common to the class rather than specific to its individual members. See Comcast Corp. v. Behrend , 569 U.S. at 33 , 133 S.Ct. 1426 ; In re RailFreight Fuel Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d at 252 .

On October 15, 2013, the Court heard argument on the parties' respective views on the scope of the remand in light of the D.C. Circuit's decision. The Court determined that the "D.C. Circuit neither explicitly nor implicitly restricted the scope of the remand to any single, narrow issue." Order (Oct. 16, 2013) at 2 [Dkt. 691]. The Court therefore permitted briefing on any issues that the parties believed would affect this Court's determination of whether plaintiffs have established that injury and damages could be established through common proof on a classwide basis. Id. Specifically, the Court asked the parties to address, at a minimum, the following issues in supplemental briefing:

(1) Whether [ Comcast ] and the D.C. Circuit's remand decision establish a more demanding standard for evaluating expert proof of class-wide injury than the standard previously applied by this Court; and if so, (a) how that standard should properly be articulated or characterized, and (b) whether plaintiffs have met their burden under such standard.

(2) Whether the damages model presented by plaintiffs' expert generates "false positives" of injury to legacy shippers; and if so, whether this defect affects the validity of the model and thereby precludes certification of the class.

(3) Whether [ Comcast ] and the D.C. Circuit's remand decision reflect a rejection of Fifth and Seventh Circuit precedents holding that "[c]lass certification is not precluded simply because a class may include persons who have not been injured by the defendants' conduct," Mims v. Stewart Title Guar. Co. , 590 F.3d 298 , 308 (5th Cir. 2009) (citing Kohen v. Pac. Inv. Mgmt. Co. , 571 F.3d 672 , 677 (7th Cir. 2009) ); and if so, the implications of such rejection in this case.

(4) Whether [ Comcast ] announced a new rule regarding the acceptability of individualized damages determinations under Rule 23(b)(3) of the Federal Rules of Civil Procedure ; and if so, the implications of such a rule in this case.

Id. at 2-3. In the parties' joint statement of proposed topics for class certification opening arguments, the parties added additional topics for discussion that they had also addressed in their supplemental briefs. See The Parties' Joint Statement of Proposed Topics for Class Certification Hearing Opening Arguments (Sept. 15, 2014) at 1-2 [Dkt. 727). After the parties submitted supplemental briefing, the Supreme Court granted certiorari in another *40 class action case, Tyson Foods, Inc. v. Bouaphakeo , and this Court postponed the class certification hearing pending the Supreme Court's decision in that case. Order (Sept. 28, 2015) at 1. The parties subsequently submitted supplemental briefing regarding the impact on this case, if any, of the Supreme Court's decision in Tyson Foods .

In their supplemental brief on remand, plaintiffs suggested that the "core question" on remand is "whether Dr. Rausser's model in fact shows damages for shipments that could not have been affected by the conspiracy." Pls. Supp. Mem. at 2. This is incorrect. The D.C. Circuit's mandate was not limited only to questions regarding legacy shippers-although that was a main focus of its concern. See Order (Oct. 16, 2013) at 2-3. Because the D.C. Circuit vacated this Court's decision in its entirety, the Court has considered all of the arguments presented by the parties, and again addresses all of the issues bearing on class certification under Rule 23.

D. Supplemental Expert Reports

In addition to supplemental briefing on legal issues, the parties have submitted supplemental expert reports in this case for two reasons. First, as the class certification decision was pending before the D.C. Circuit, the parties continued with merits discovery. Dr. Rausser has now produced merits reports, and defendants' experts have produced responses. Discovery in the merits portion of this case is now closed.

Second, the parties and this Court discovered only on remand a potential conflict of interest-namely, that for years Dr. Rausser has "consulted with and invested in companies that buy out class action claims for profit-including a claim or claims in this case-while serving as an expert witness in class action cases around the country." In re Rail Freight FuelSurcharge Antitrust Litig. , 75 F.Supp.3d 94 , 95-96 (D.D.C. 2014). This development created serious questions about Dr. Rausser's credibility as an expert in this case. The Court considered whether there was good cause to allow plaintiffs to reopen discovery for the purpose of adding supplemental experts. Id. at 98 . Defendants objected, but never moved to strike or exclude Dr. Rausser as an expert witness. See ibr.US_Case_Law.Schema.Case_Body:v1">id . at 95-96, 100 . After briefing and oral argument, the Court determined that plaintiffs had established good cause to supplement the expert testimony of Dr. Rausser because (1) "the plaintiff class would suffer significant prejudice without the report and testimony of a supplemental expert," (2) "there [was] no evidence in the record that plaintiffs or their counsel had knowledge of the information affecting Dr. Rausser's credibility," and (3) "granting the motion [would] not be unduly burdensome or prejudicial to defendants." Id. at 99 . The Court therefore permitted plaintiffs to file supplemental expert reports from Dr. Jeffrey J. Leitzinger and Dr. James T. McClave; defendants filed supplemental reports by Dr. Joseph P. Kalt and Dr. Dennis W. Carlton. At the class certification hearing on September 26-30, 2016, the Court heard testimony from all five experts-including Dr. Rausser-and arguments of counsel regarding the integrity of Dr. Rausser's work, his reliability, and his credibility. These issues will be addressed in Part Two of this Opinion regarding the admissibility of the expert testimony of each of the five proffered experts under Daubert and Rule 702.

PART TWO: ADMISSIBILITY OF EXPERT TESTIMONY UNDER DAUBERT

I. INTRODUCTION

While the interlocutory appeal was pending before the court of appeals and prior to the remand, plaintiffs moved to *41 exclude the opinions of defense expert Dr. Joseph P. Kalt. See In re Rail Freight Fuel Surcharge Antitrust Litig. , No. 07-0489, 2016 WL 2962186 , at *1 (D.D.C. May 20, 2016). Defendants opposed the motion, arguing that "the proper forum for considering the reliability of Dr. Kalt's methodology and the validity of his opinions [was] at the class certification hearing itself." Id . The Court denied plaintiffs' motion, concluding that it was not required to hold a Daubert hearing before and separate from the class certification hearing. Id . at *2-3. The Court recognized, however, that "the Daubert and Rule 23 standards are different," id . at *2, and that "a district court must 'conduct a Daubert inquiry before assessing whether the requirements of Rule 23 have been met.' " Id. (quoting In re Blood Reagents Antitrust Litig. , 783 F.3d 183 , 188 (3d Cir. 2015) ): see also Messner v. Northshore Univ.HealthSystem , 669 F.3d 802 , 812 (7th Cir. 2012). The Court therefore "will first address the relevance of all expert opinions and the reliability of the experts' methodology under Daubert and Rule 702, and then [separately] conduct the 'rigorous analysis' of all of the relevant evidence ... that is critical to proving the class certification requirements under Rules 23(a) and 23(b) of the Federal Rules of Civil Procedure." In re Rail Freight Fuel Surcharge Antitrust Litig. , 2016 WL 2962186 , at *2.

II. EXPERT TESTIMONY AT CLASS CERTIFICATION

A. Rule 702 of the Federal Rules of Evidence

" Rule 702 of the Federal Rules of Evidence effectively codifies the Supreme Court's decisions in Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. 579 , 113 S.Ct. 2786 , 125 L.Ed.2d 469 (1993), and Kumho Tire Co. v. Carmichael , 526 U.S. 137 , 119 S.Ct. 1167 , 143 L.Ed.2d 238 (1999)." FTC v. Whole Foods Mkt., Inc. , No. 07-1021, 2007 WL 7632283 , at *1 (D.D.C. July 27, 2007). Rule 702 provides that if the Court finds that "scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue," and if the Court finds that the witness "is qualified as an expert by knowledge, skill, experience, training, or education," then the Court may permit the witness to testify-so long as the witness's "testimony is based on sufficient facts or data," "the testimony is the product of reliable principles and methods," and the witness has "reliably applied the principles and methods to the facts of the case." FED. R. EVID . 702. The party seeking to introduce the expert testimony must demonstrate its admissibility under Rule 702 by a preponderance of the evidence. See Meister v. Med. Eng'r Corp. , 267 F.3d 1123 , 1127 n.9 (D.C. Cir. 2001) (citing Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. at 592 n.10, 113 S.Ct. 2786 ); Rothe Dev., Inc. v. Dep't of Defense , 107 F.Supp.3d 183 , 197 (D.D.C. 2015) (citation omitted).

"[T]he twin requirements for the admissibility of expert testimony are evidentiary reliability and relevance." FTC v. Whole Foods Mkt., Inc. , 2007 WL 7632283 , at *1. "With respect to evidentiary reliability, the Court's focus must be on the methodology or reasoning employed by application of the factors in Rule 702 and the non-exhaustive list of factors set forth in Daubert and Kumho ." Id. (citing Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. at 595 , 113 S.Ct. 2786 ). These factors include: "(1) whether the theory or technique can be and has been tested; (2) whether the theory or technique has been subjected to peer review and publication; (3) the method's known or potential rate of error; and (4) whether the theory or technique finds general acceptance in the relevant scientific community."

*42 Ambrosini v. Labarraque , 101 F.3d 129 , 134 (D.C. Cir. 1996) (citing Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. at 593 -94 , 113 S.Ct. 2786 ). The Court is not bound by only these factors when considering reliability. As the D.C. Circuit has noted, "[t]he test of reliability is 'flexible' and 'the law grants a district court the same broad latitude when it decides how to determine reliability as it enjoys [with] respect to its ultimate reliability determination.' " Gilmore v. Palestinian Interim Self-Gov't Auth. , 843 F.3d 958 , 972 (D.C. Cir. 2016) (emphasis in original) (quoting Kumho Tire Co. v. Carmichael , 526 U.S. at 142 , 119 S.Ct. 1167 ).

''With respect to relevance, the Court must determine whether the proffered testimony is sufficiently tied to the facts of the case and whether it will aid the factfinder in resolving a factual dispute." FTC v. Whole Foods Mkt., Inc. , 2007 WL 7632283 , at *1 (citing Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. at 592 -93 , 113 S.Ct. 2786 ). This is a consideration of "fit." Ambrosini v. Labarraque , 101 F.3d at 134 (citing Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. at 591 , 113 S.Ct. 2786 ). " 'Fit' is not always obvious, and scientific validity for one purpose is not necessarily scientific validity for other, unrelated purposes." Id. (citing Daubert v. Merrell Dow Pharm.,Inc. , 509 U.S. at 591 , 113 S.Ct. 2786 ).

B. Daubert Test Versus Rule 23(b) Reliability Standard

On remand, the parties have agreed that the Court must determine whether the plaintiffs have produced a reliable means of proving class-wide injury-in-fact sufficient to satisfy the predominance requirement of Rule 23(b)(3) of the Federal Rules of Civil Procedure. See Class Certification Hr'g Tr. (Sept. 26, 2016) at 26 (plaintiffs' opening argument); Defs. Supp. Opp. at 14. Previously, the Court certified the class under Rule 23 because plaintiffs had shown that Dr. Rausser's theory that injury-in-fact was capable of common proof was "plausible" and that his regression models were "workable." Rail Freight III , 287 F.R.D. at 62 . After Comcast, this is no longer enough. Rather, under Rule 23(b)(3), the Court must undertake a rigorous analysis and determine whether there is a "reliable means" of proving injury-in-fact and damages through common evidence. In re Rail Freight Fuel Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d at 252 -53 .

Both Daubert and Rule 23(b) require the Court to determine whether an expert's opinion is reliable. There is no indication, however, that the two reliability standards are one and the same, see In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d 412 , 417 (E.D. Pa. 2015), and the D.C. Circuit has not spoken to the issue. Although circuit courts of appeal have discussed generally how district courts must evaluate expert opinion at class certification, see WILLIAM B. RUBENSTEIN , NEWBERG ON CLASS ACTIONS § 7:24 (5th ed. 2017), only one court has discussed the scope of Daubert 's reliability inquiry when courts must also determine reliability under Rule 23(b) or the difference between the two reliability standards. See In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 415 -17 .

As Judge Gene Pratter noted in In re Processed Egg Products Antitrust Litigation , the line between Daubert and class-wide impact "might prove somewhat illusory." 81 F.Supp.3d at 416 . "[T]he reliability of the means of proving classwide impact frequently factors into the predominance determination in antitrust class actions," while, at the same time "the Daubert analysis requires the Court to determine whether the expert testimony is reliable"-thus presenting "potential complications ... relating to the scope of *43 the Daubert inquiry" at class certification. Id. at 415-16 . Judge Pratter emphasized that "the focus of the two inquiries is subtly different." Id. at 417 . " Daubert 'focuses on principles and methodology, not on the conclusions generated by principles and methodology.' " Id. (quoting In re TMI Litig. , 193 F.3d 613 , 670 (3d Cir. 1999) ). At class certification, the Court must "rule upon the conclusions generated by the principles and methodology," ibr.US_Case_Law.Schema.Case_Body:v1">id ., to the extent that they are relevant to determining whether plaintiffs have satisfied Rule 23(b). Amgen Inc. v. Conn. Ret. Plans & Tr. Funds , 568 U.S. 455 , 468, 133 S.Ct. 1184 , 185 L.Ed.2d 308 (2013). Rule 23 also requires "the Court to consider questions beyond the reliability" of expert testimony, such as whether the expert testimony is sufficient to demonstrate "common impact or that there is a reliable means of proving damages on a classwide basis." In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 417 .

Before the Court are the expert reports and testimony of five, often dueling, experts. Their key disputes relate to whether plaintiffs have proffered a reliable means of proving class-wide impact and damages with common evidence, with each expert attacking and/or bolstering the methods and conclusions of the others. The Court therefore will begin by examining the qualifications of each expert, the reliability of their methodologies, and the relevance of their opinions under Daubert and Rule 702, before turning to the "rigorous analysis" required under Rule 23. Although there may be some overlap in these inquiries, the Court will not consider any expert opinion in its Rule 23 analysis that does not first satisfy Daubert and Rule 702. See In re Blood Reagents Antitrust Litig. , 783 F.3d at 187 . The Court recognizes that "opinion testimony should not be uncritically accepted as establishing a Rule 23 requirement merely because the court holds the testimony should not be excluded under Daubert or for any other reason." In re Hydrogen Peroxide Antitrust Litig. , 552 F.3d 305 , 323 (3d Cir. 2009). A conclusion that an expert's testimony is admissible under Daubert therefore "does not preclude the Court from denying class certification." In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 417 .

III. DAUBERT ANALYSIS OF THE EXPERTS IN THIS CASE

A. Dr. Gordon Rausser

Dr. Gordon Rausser is plaintiffs' lead expert. He is the Robert Gordon Sproul Distinguished Professor at the University of California, Berkeley. Rausser Merits Rep. at 1. He received a B.S. in agriculture and statistics from California State University, Fresno and an M.S. and a Ph.D. in agricultural economics from the University of California, Davis. See Rausser Merits Reply, Ex. A at 3. He has held positions teaching economics and statistics at numerous universities and has published widely in those fields. See ibr.US_Case_Law.Schema.Case_Body:v1">id ., Ex. A at 3-48. Dr. Rausser has served as the chief economist at the Agency for International Development and as a senior staff economist on the Council of Economic Advisers. See ibr.US_Case_Law.Schema.Case_Body:v1">id ., Ex. A at 2, 50. In addition to his position at Berkeley, Dr. Rausser is a senior economic consultant, founder, and chairman of the board of directors of OnPoint Analytics. See id ., Ex. A at 1, 50. OnPoint Analytics is "an economic and statistical consulting firm that also provides data services." Rausser Merits Rep. at 4.

1. Dr. Rausser's Credibility in Light of his Involvement with Cascade Settlement Services

a. Factual Background Regarding Dr. Rausser and Cascade

Before turning to the Daubert analysis of Dr. Rausser's work and his expert opinion, the Court must discuss events that *44 have called into question Dr. Rausser's credibility as an expert in this case. In October of 2014, only a few days before the scheduled remand class certification hearing, the Court was informed that Dr. Rausser "for years, consulted with and invested in companies that buy out class action claims for profit-including a claim or claims in this case-while serving as an expert witness in class action cases around the country." In reRail Freight Fuel Surcharge Antitrust Litig. , 75 F.Supp.3d at 95 -96 . This information came to light only after the Court had certified the class, relying heavily on Dr. Rausser's expert opinions, and the D.C. Circuit had vacated that decision in light of Comcast and potential flaws in Dr. Rausser's damages model. See In re Rail Freight Fuel Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d at 255 . After numerous status conferences and hearing from both sides, the Court permitted plaintiffs to file supplemental expert reports "address[ing] the reliability and integrity of Dr. Rausser's opinions." In re Rail Freight Fuel Surcharge Antitrust Litig. , 75 F.Supp.3d at 100 . 2 Defendants' experts were allowed to submit responses. These events, in part, caused a two-year delay in holding the remand class certification hearing.

Although the Court has outlined some of these events in a previous opinion, it is appropriate to discuss those same facts here given the importance of Dr. Rausser's work to plaintiffs' motion for class certification. "On March 10, 2014, defendants' counsel received an email from an employee of Cascade Settlement Services ('Cascade') named Rod Montgomery." In re Rail Freight Fuel Surcharge Antitrust Litig. , 75 F.Supp.3d at 96 . Cascade "invests in class action lawsuits by buying out the claims of potential class plaintiffs." Id. at 96 n.2. "It also 'provides comprehensive filing services to maximize settlement proceeds for institutional investors and corporations.' " Id. (quoting Cascade Settlement Services, http://www.cascadesettlement.com/ (last visited Sept. 11, 2017)). Mr. Montgomery's e-mail stated in part:

I fear the company's involvement with Gordon Rausser, majority owner of OnPoint Analytics, could be a serious conflict of interest .... Mr. Rausser holds a non-voting percentage ownership in our company, specifically Cascade, LLC. I believe he has a 10% interest in the company. As a result, he stands to gain directly from any purchases of claims made in the Rail case. He has been able to keep the company apprised of all developments in the case given he has "insider" information. His [damages] model [ ] also might have indirect or direct benefit to him financially.

Id. at 96 (alteration in original). 3 Defendants did not immediately share this information with the Court or with plaintiffs' counsel. Id. In a previously scheduled deposition of Dr. Rausser on July 31, 2014, defendants' counsel asked him "whether there [is] any formal relationship between OnPoint Analytics and Cascade Settlement Services.' " Id. Dr. Rausser said no, but he added that OnPoint Analytics "has done *45 work for [Cascade] in the past." Id . In response to further questions, he "denied that he or OnPoint had any ownership or other financial interest in Cascade." Id. ; see also Defs. Ex. 1, Rausser Dep. (July 31, 2014) at 829.

After Dr. Rausser's July 31, 2014 deposition, plaintiffs produced an errata sheet that qualified his response to one of the questions. In re Rail Freight Fuel Surcharge Antitrust Litig. , 75 F.Supp.3d at 97 . The errata sheet stated that Dr. Rausser did not have an ownership interest in Cascade as a company, but that he did "have the right to share in distributions from certain claims [Cascade] manage[s], but those do not include claims in this case or any other case in which [he is] a testifying expert or OnPoint has performed any services." Id. ; see also Defs. Ex. 1, Errata to the Deposition of Gordon C. Rausser at 1-2.

After additional discovery, it appeared that there was a far more substantial relationship between Dr. Rausser, OnPoint Analytics, and Cascade than Dr. Rausser had acknowledged. In July of 2010, "after completion of Dr. Rausser's first class certification report but before the class certification briefing was completed, Dr. Rausser and OnPoint each began negotiations to enter business relationships with Cascade." In re Rail Freight Fuel Surcharge Antitrust Litig. , 75 F.Supp.3d at 97 ; see also Status Conference Tr. (Nov. 13, 2014) at 41. This Court held the initial class certification hearing on October 6 and 7, 2010. On October 14, 2010, OnPoint Analytics, the consulting firm of which Dr. Rausser is the chairman and founder, entered into "a modeling services agreement" with Cascade. Class Certification Hr'g Tr. (Sept. 27, 2016) at 334-38.

Dr. Rausser himself entered into an agreement with Cascade to provide consulting services on December 16, 2010. Class Certification Hr'g Tr. (Sept. 27, 2016) at 335. Under his consulting agreement, Dr. Rausser was to provide Cascade with " 'strategic services," "origination services," and "management services." Defs. Ex. 1, Consultation Agreement at 2. These services included, among other things, identifying cases and claims for purchase, modeling cases and claims, and marketing efforts. Class Certification Hr'g Tr. (Sept. 28, 2016) at 526. Dr. Rausser testified that there was an "oral understanding" with Cascade that he could not receive "any economic interest" for cases in which he was a testifying expert. Class Certification Hr'g Tr. (Sept. 27, 2016) at 340. This understanding was not reflected in his consulting agreement with Cascade or in OnPoint's agreement with Cascade. Class Certification Hr'g Tr. (Sept. 28, 2016) at 562; see also Defs. Ex. 1, Modeling Services Agreement.

Dr. Rausser's compensation for these services included "distributions from funds." Class Certification Hr'g Tr. (Sept. 27, 2016) at 336. In 2011, Cascade set up Cascade Settlement Services Fund 1 ("Fund 1"). Id. at 339. It appears that Cascade was also trying to set up a second fund at some point after 2011. Id. In general, these funds include claims from class actions that Cascade has purchased at a lower price in the hope of redeeming claims for a higher value later. See Class Certification Hr'g Tr. (Sept. 28, 2016) at 525. Dr. Rausser's consulting agreement entitled him to 10% of "any Distributions received by Cascade from any Fund during that quarter which is attributable to any Contract entered into during the Term." Defs. Ex. 1, Consultation Agreement at 3. In addition to his consulting agreement, Dr. Rausser invested approximately $1.3 million in Fund 1 through a subscription agreement and a promissory note. Class Certification Hr'g Tr. (Sept. 28, 2016) at 528-30.

*46 Dr. Rausser testified that he had no knowledge that there was a claim from this case in Fund 1 when his deposition was taken on July 31, 2014. Class Certification Hr'g Tr. (Sept. 27, 2016) at 343. Dr. Rausser apparently learned that there was a claim from this case in Fund 1 after his July 31, 2014 deposition, when defendants asked him about Cascade. Class Certification Hr'g Tr. (Sept. 28, 2016) at 558. He testified that he spoke with officials at Cascade, and they later sent him documentation indicating that the Rail Freight claim had been removed from Fund 1. Id.

Dr. Rausser's possible financial interest in this case, however, is not the only credibility concern. Cascade asked Dr. Rausser and his OnPoint Analytics colleague, Dr. Gareth Macartney, to discuss this case with them. See Class Certification Hr'g Tr. (Sept. 28, 2016) at 535. Dr. Rausser stated that he would answer any questions about this case as a courtesy so long as those questions could be answered from information in the public domain. Id. at 535-36. "[A] handful of times" during the four years that Dr. Rausser worked with Cascade, the company asked questions that could not be answered from information in the public domain, and Dr. Rausser testified that he did not respond to those questions. Class Certification Hr'g Tr. (Sept. 27, 2016) at 338.

Defendants also have asserted that some of the work that OnPoint produced for meetings with Cascade conflicts with Dr. Rausser's expert opinion in this case. See Class Certification Hr'g Tr. (Sept. 30, 2016) at 1174-75. Specifically, they point to a memorandum from Dr. Macartney to Dr. Rausser, created before a meeting with Cascade, in which Dr. Macartney stated that " Rail Freight claim filing will be complex because":

(a) [t]he class definition excludes legacy contracts and mileage[ ] based Fuel Surcharges, but includes NS "re-based" Fuel Surcharges ...; (b) Fuel Surcharges depended on the price of oil and were therefore different depending on the timing of the shipment; (c) Fuel Surcharges were different in their underlying indexes (HDF or WTI), thresholds and conversion formulas for different Railroads and different shipper categories (such as Intermodal, Carload and Coal); (d) [t]here were (very rare) instances of exceptional Fuel Surcharges, with slightly non-standard formulas; (e) Interline shipments; [and] (f) [t]he estimate overcharge will vary by time (it was greater when the price of oil was high) and may vary by shipper category (such as Intermodal, Coal etc.), or some other dimension.

Defs. Ex. 1, Memorandum from Dr. Gareth Macartney to Dr. Gordon Rausser (Feb. 1, 2011), at OPA_GR_SUB_00227-28.

Dr. Rausser did not actually receive any compensation from Cascade. He terminated his consulting agreement in 2014 before receiving any payments-apparently after his connection to Cascade came to light in this case. Class Certification Hr'g Tr. (Sept. 27, 2016) at 336, 338-39. There was no indication at the hearing that Dr. Rausser received a distribution from Fund 1. Dr. Rausser unsuccessfully attempted to sell his investment in Fund 1 to other investors, and he then gifted the investment to the University of California "to support a master's degree program in development practice, focusing on students from less developed countries." Id. at 344. Dr. Rausser testified that he saw no problem with his arrangement with Cascade, but "looking back in time, and given the appearances of some potential lack of objectivity or some potential conflict of interest, it's clear that [he] did not exercise sound judgment." Id. at 338.

*47 b. Court's Conclusions Regarding Dr. Rausser's Credibility in the Daubert Context

Defendants have not moved to exclude or disqualify Dr. Rausser. Nor did the parties submit briefing specifically addressing the question whether it was appropriate for the Court to consider Dr. Rausser's credibility in its Rule 702 analysis. Dr. Rausser's affiliation with Cascade and his investments in Fund 1, however, were discussed at length at the remand class certification hearing. The Court has found no precedent-and counsel for the parties have provided none-directly addressing issues similar to those presented by Dr. Rausser's involvement with Cascade. 4

As this Court has stated, Dr. Rausser's "credibility has been drawn into serious question" after the discovery of his consulting arrangement and investments with Cascade. In reRail Freight Fuel Surcharge Antitrust Litig. , 75 F.Supp.3d at 96 . Typically, any attempt by the Court to evaluate the "credibility of opposing experts and persuasiveness of competing scientific studies" conflates "the questions of the admissibility of expert testimony and the weight appropriately to be accorded such testimony by a fact finder." Ambrosini v. Labarraque , 101 F.3d at 141 ; cf . Elcock v. Kmart Corp. , 233 F.3d 734 , 751 (3d Cir. 2000). The Court sees two principal issues with respect to Dr. Rausser's credibility: (1) the potential conflict of interest based on his financial interest in Fund 1 and (2) the possibility that Dr. Rausser or his colleague, Dr. Macartney, provided Cascade with information that potentially is inconsistent with the opinions or conclusions Dr. Rausser has provided in support of plaintiffs' motion for class certification in this case. Given the unique circumstances presented by Dr. Rausser's involvement with Cascade, the Court has carefully considered whether it is necessary to exclude Dr. Rausser's expert opinion and concludes that it is not.

With respect to whether Dr. Rausser's potential Financial interest in Cascade Fund I created a conflict of interest under Rule 702, there is very little relevant case law. The most analogous situation is where an expert testifies on the basis of a contingency fee. Numerous courts have concluded that this practice is unethical, and some courts have found it a proper basis to exclude or disqualify an expert because the expert has a direct financial interest in the outcome of the litigation. See , e.g. , Straughter v. Raymond , No. 08-2170, 2011 WL 1789987 , at *2 (C.D. Cal. May 9, 2011) (collecting cases). But see Tagatz v. Marquette Univ. , 861 F.2d 1040 , 1042 (7th Cir. 1988) (noting that an expert's potential conflict of interest, such as a contingency fee arrangement, is a credibility determination for the fact-finder). In addition, at least one court has excluded testimony from an expert witness who was the only shareholder of the plaintiff company and therefore had "the only direct financial stake in the outcome of [the] litigation." See Perfect 10. Inc. v. Giganews, Inc. , No. 11-7098, 2014 WL 10894452 , at *5 (C.D. Cal. Oct. 31, 2014) (emphasis in original). In Perfect 10, Inc. v. Giganews, Inc. , the court noted that district courts "reserve the power to disqualify an expert for rare or extreme cases," but courts may exercise that power "to achieve 'important policy objectives ... include[ing] preventing conflicts of interest and maintaining the integrity of the judicial process.' " Id. at *4 (quoting *48 English Feedlot, Inc. v. Norden Labs., Inc. , 833 F.Supp. 1498 , 1504 (D. Colo. 1993) ).

The Court concludes that it should not exclude Dr. Rausser under Rule 702 on the basis of his potential financial interest in this case. Dr. Rausser's alleged financial interest here is not similar to an expert testifying on the basis of a contingency fee. And, unlike the expert in Perfect 10, Inc. v. Giganews, Inc. , Dr. Rausser is neither the sole investor in Fund 1 nor the sole shareholder of Cascade. See 2014 WL 10894452 , at *5. It also is not apparent to the Court that Dr. Rausser submitted his expert reports knowing that he had or potentially had a direct financial interest in the outcome of this litigation. At the outset of his negotiations with Cascade, Dr. Rausser was aware that Cascade sought to buy claims in this case, Class Certification Hr'g Tr. (Sept. 28, 2016) at 533-34, and he identified claims from this case for Cascade's investment portfolio. See Defs. Ex. 1, E-mail from Dr. Gordon Rausser, to John Chilcott (May 21, 2013, 6:02 PM), at OPA_GR_SUB_00880. Dr. Rausser testified, however, that he had no knowledge that a claim from this case was in Fund 1-the only Cascade fund in which he had invested-prior to submitting his six expert reports in this case. Class Certification Hr'g Tr. (Sept. 28, 2016) at 558. When he called Cascade to check after his deposition in July of 2014, only then did he discover that a claim from this case was in Fund 1. Id. From these facts alone, the Court is not convinced that Dr. Rausser should be excluded under Rule 702.

The Court next turns to the issue that Dr. Rausser-or his colleague, Dr. Macartney-possibly disclosed information to Cascade or gave it advice that is inconsistent with his expert opinion. The Third Circuit has noted specific instances where it may be appropriate for a district court to consider an expert's credibility at the Rule 702 stage. In Elcock v. Kmart Corp. , the Third Circuit stated:

[C]onsider a case in which an expert witness, during a Daubert hearing, claims to have looked at the key data that informed his proffered methodology, while the opponent offers testimony suggesting that the expert had not in fact conducted such an examination. Under such a scenario, a district court would necessarily have to address and resolve the credibility issue raised by the conflicting testimony in order to arrive at a conclusion regarding the reliability of the methodology at issue. We therefore recognize that, under certain circumstances, a district court, in order to discharge its fact-finding responsibility under Rule 104(a), may need to evaluate an expert's general credibility as part of the Rule 702 reliability inquiry.... [T]he fact that an expert witness falsely reported his salary on an income tax return [by contrast] has little if any bearing on the reliability of a diagnostic test he frequently employs, but the fact that the expert lied about whether his methodology had been subjected to peer review, or intentionally understated the test's known rates of error, is a different matter entirely.

233 F.3d at 751 n.8.

Defendants have asserted that Dr. Rausser and his OnPoint Analytics associate, Dr. Macartney, provided Cascade with information about the potential damages claims in this case that is inconsistent with the damages calculations he has offered in his reports. See Class Certification Hr'g Tr. (Sept. 30, 2016) at 1174-75. Defendants assert that Dr. Rausser's damages model provides for a weekly average overcharge for every shipper, regardless of their differences, even though he told Cascade that "the claims filing process in [this] case was going to be complex ... [and] the estimated overcharge will vary by time and may *49 vary by shipper category." Id . at 1175. Under the Third Circuit's approach, this evidence goes to the weight to be given to Dr. Rausser's expert opinion, not to its admissibility under Rule 702. See Elcock v.Kmart Corp. , 233 F.3d at 751 n.8. There is no allegation that Dr. Rausser lied about his methodologies or his work product in such a way that the Court would need to exclude Dr. Rausser's opinion for lack of reliability under Rule 702.

Dr. Rausser testified that he did not "exercise sound judgment" in his involvement with Cascade. Class Certification Hr'g Tr. (Sept. 27, 2016) at 338. Despite his testimony that he saw no problem with his arrangement with Cascade, see ibr.US_Case_Law.Schema.Case_Body:v1">id ., Dr. Rausser was keenly aware that his consulting arrangement could appear to be a conflict of interest. In an e-mail to John Chilcott, a co-founder of Cascade, Dr. Rausser stated that Cascade's marketing department needed to stop using his name and likeness in "marketing materials for use in the Rail Freight case ... so as to avoid any conflict with [his] role as an expert witness." Defs. Ex. 1, E-mail from Dr. Gordon Rausser, to John Chilcott (May 21, 2013, 6:02 PM), at OPA_GR_SUB_00881. The Court agrees that, at the very least, Dr. Rausser did not exercise sound judgment. Dr. Rausser has cost both parties considerable time and money in litigating this case and has put his professional reputation at risk.

While Dr. Rausser's involvement with Cascade raises serious concerns regarding his credibility as an expert in this case, the Court will not exclude him or his expert opinions on this basis under Daubert and Rule 702. The Court heard extensive testimony and oral argument regarding the reliability of Dr. Rausser's work in support of class certification and will consider those arguments as it proceeds to evaluate the reliability of Dr. Rausser's methods and opinions under Daubert and Rule 702.

2. Rule 702 Analysis of Dr. Rausser's Expert Opinion

a. Introduction

The Court has "broad discretion in determining whether to admit or exclude expert testimony." U.S. ex rel. Miller v. Bill Harbert Int'l Constr., Inc. , 608 F.3d 871 , 895 (D.C. Cir. 2010) (quoting United States v. Gatling , 96 F.3d 1511 , 1523 (D.C. Cir. 1996) ). While defendants have not moved to exclude any of the plaintiffs' experts under Daubert and Rule 702 -including Dr. Rausser-the Court has recognized that district courts must first "conduct a Daubert inquiry before assessing whether the requirements of Rule 23 have been met." In reBlood Reagents Antitrust Litig. , 783 F.3d at 188 ; see supra at 40-41. The Court therefore addresses the admissibility of Dr. Rausser's expert opinion even though defendants have not raised any specific Daubert challenges to his work.

In addition to the twin requirements that expert testimony must be reliable and relevant, FTC v. Whole Foods Mkt., Inc. , 2007 WL 7632283 , at *1, an expert witness also must be "qualified" under Rule 702. An expert may be qualified by "knowledge, skill, experience, training, or education." FED. R. EVID . 702. The parties stipulated to Dr. Rausser's expertise as an expert in economics and econometrics. Class Certification Hr'g Tr. (Sept. 27, 2016) at 330. Based on Dr. Rausser's education and experience, the Court finds that he is qualified as an expert in economics and econometrics.

While the D.C. Circuit was considering the interlocutory appeal of this Court's decision to certify the class, the parties continued with discovery in this case. In addition to his initial class certification expert reports, Dr. Rausser has submitted merits reports and supplemental reports, *50 primarily addressing the D.C. Circuit's concern about whether his damages model produces false positives. Dr. Rausser by now has submitted six expert reports in this case: (1) Corrected Expert Report of Gordon Rausser (May 27, 2010); (2) Corrected Expert Reply Report of Gordon Rausser (Sept. 20, 2010); (3) Expert Report of Gordon Rausser (Oct. 15, 2012); (4) Expert Reply Report of Gordon Rausser (June 12, 2013); (5) Supplemental Expert Report of Gordon Rausser (Dec. 19, 2013); and (6) Supplemental Reply Expert Report of Gordon Rausser (May 28, 2014).

Dr. Rausser's expert opinions can be grouped into five categories; (1) an economic analysis of the rail freight industry and defendants' conduct; (2) an analysis of defendants' transaction data as evidence of common impact; (3) a common factors analysis, (4) a damages model; and (5) a post-remand "legacy decomposition," which is an in-depth analysis of the legacy shipments identified by defendants. The Court will address each aspect of Dr. Rausser's expert opinion and determine its admissibility under Rule 702.

b. Qualitative Economic Analysis

Dr. Rausser begins his expert opinion with an analysis of the documentary evidence in this case. See generally Rausser Merits Rep. at 11-112. At the class certification hearing, Dr. Rausser characterized the first question he examined as whether "there [is] factual support from the discovery record for an agreement [to collude]." Class Certification Hr'g Tr. (Sept. 27, 2016) at 346. Under Rule 704 of the Federal Rules of Evidence, the Court may not exclude evidence "just because it embraces an ultimate issue" in the case. FED. R. EVID . 704(a). But in an antitrust case, an expert may not opine as to whether there was a conspiracy or an agreement to engage in price fixing; that is a question for the fact-finder. See In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 421 ; In re Urethane Antitrust Litig. , No. 04-1616, 2012 WL 6681783 , at *3 (D. Kan. Dec. 21, 2012). An expert may opine as to whether particular conduct, "assuming [it] occurred, [is] consistent with a conspiracy," but an expert "may not give any opinion concerning ... whether a particular event actually occurred." In re UrethaneAntitrust Litig. , 2012 WL 6681783 , at *3. In certain portions of his expert reports and testimony, Dr. Rausser comes too close to offering opinions that certain events in fact occurred for the Court to admit these statements.

At the class certification hearing, Dr. Rausser attempted to testify that defendants "agreed to" (1) "[c]reate aggressive new formulas and apply FSCs as broadly as possible"; (2) create "[p]olicies to ensure their common goal of achieving 100% FSC coverage"; (3) create "[p]olicies against negotiating, discounting, waiving, or offsetting FSCs"; and (4) "[e]ffectuate an across-the-board rate increase." Pls. Ex. 1 at 3; see also Class Certification Hr'g Tr. (Sept. 27, 2016) at 348-50. Dr. Rausser testified that this opinion was based on a number of documents in the record that he reviewed. Class Certification Hr'g Tr. (Sept. 27, 2016) at 349-50. 5

*51 Because this portion of Dr. Rausser's expert testimony seeks to establish that there was in fact an agreement to collude based only on facts in the documentary record, the Court will exclude this portion of his testimony. The Court will also exclude those statements in Dr. Rausser's expert reports in which he opines that defendants intended or agreed to collude and that such actions were pretextual. See , e.g. , Rausser Merits Reply at 31, 91, 94; Rausser Supp. Reply at 5.

As part of his economic analysis in part IV of his Merits Report, Dr. Rausser explains characteristics of the U.S. rail freight industry that make the industry conducive to price fixing. See Rausser Merits Rep. at 11-51. According to Dr. Rausser, these factors are that (1) the alleged cartel members have market power; (2) "there is little threat of entry by non-cartel competitors"; (3) the "product or service is homogenous and interchangeable"; (4) the demand for the product or service "is relatively inelastic"; and (5) "the pricing of the product or service is well understood and easily communicated among industry participants." Id. at 11 . Dr. Rausser opines that "[a]ll of these factors are present in the rail freight industry in which the Defendants operate." Id.

More specifically, Dr. Rausser notes in Part IV that the four defendant railroads "are responsible for the vast majority of shipments in every sizeable state" in the United States. Rausser Merits Rep. at 12. The four defendants "account for over 90% of the track miles" in the continental United States and about "94% of all rail freight revenue" in the continental United States. Id. at 26 ; see also Class Certification Hr'g Tr. (Sept. 27, 2016) at 348. Because railroads incur high fixed costs to create and maintain railroad infrastructure, the current railroads have a competitive advantage, and there are "significant barriers to entry" for potential competitors. Rausser Merits Rep. at 32. Dr. Rausser states that "[a] price-fixing conspiracy is most effective in situations where demand for the conspirators' goods or service is sufficiently inelastic so that they can sustain artificially high prices without enough customers turning away so as to make the price increase unprofitable." Id. at 36 . 6 According to Dr. Rausser, "an analysis of the industry reveals that the Defendants' businesses are concentrated in commodities and distances over which rail is the most cost-efficient transport option and therefore the demand that they faced was in general inelastic." Id. at 38-39 ; see also Class Certification Hr'g Tr. (Sept. 27, 2016) at 348. Lastly, Dr. Rausser explains that freight railroad companies "use common types of price authority documents"-such as contracts, private price quotes, and tariffs-which allow defendants to monitor each other's pricing behavior, "notwithstanding the extent of private contracting." Rausser Merits Rep. at 45-46; see also Class Certification Hr'g Tr. (Sept. 27, 2016) at 348.

This portion of Part IV of Dr. Rausser's Merits Report is admissible. An expert is permitted to testify "as to whether an industry's market structure makes it *52 particularly susceptible to collusion." In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 421 ; see also In re Urethane Antitrust Litig. , 2012 WL 6681783 , at *3. Dr. Rausser has reviewed defendants' market share, geographic scope, and services offered to determine that the U.S. rail freight industry is susceptible to price fixing. See Rausser Merits Rep. at 11-49. This opinion certainly is within the scope of Dr. Rausser's expertise as an economist, see In re Processed EggProds. Antitrust Litig. , 81 F.Supp.3d at 423 , and there is no indication that Dr. Rausser's analytical methods are unreliable or based on insufficient data. The Court concludes that his opinions and discussion of these matters would "help the trier of fact to understand the evidence or to determine a fact in issue" and therefore are admissible. FED. R. EVID . 702(a).

Part V of Dr. Rausser's Merits Report is a closer call. In Part V of his economic analysis, Dr. Rausser explains that-after a review of the documentary evidence-he concludes that defendants' class period behavior "is consistent with" a price-fixing conspiracy and is "evidence of collusion." See Rausser Merits Rep. at 52-112. The former characterization is admissible expert opinion; the latter is not. To summarize his relevant opinion, Dr. Rausser states that defendants' behavior was "starkly different" during the class period, when compared to the pre-class period. Id. at 53. According to Dr. Rausser, a review of the documentary evidence shows that before the class period, defendants "act[ed] in a unilateral fashion and without [the] benefit of coordination, [and] faced difficulties in forcing shippers to accept their original fuel surcharges due to competitive circumstances." Id. at 55. He states that during the pre-class period fuel surcharges "were not applied consistently to all contracts and were often modified or waived in favor of base rate increases." Id. at 56. But during the class period, he says, defendants "coordinate[d] the development and implementation of their Fuel Surcharge programs," id . at 58; see also id . at 58-70, and they adopted policies against negotiating with shippers and sought universal coverage to increase application of fuel surcharges. Id. at 67, 70-72.

As previously noted, economic experts may testify as to "whether certain conduct is indicative of collusion," In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 420 , or "consistent" with a conspiracy. In re Urethane Antitrust Litig. , 2012 WL 6681783 , at *3. Such testimony necessarily involves consideration of the defendants' conduct in the case. For example, Dr. Rausser states that "[t]he Fuel Surcharge program furthered the cartel's collusive interest, but was inconsistent with Defendants pursuing their independent, unilateral self-interest." Rausser Merits Rep. at 99. "This is precisely the type of inquiry an economist can be expected to make using his expertise." In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 424 . In addition, it can be helpful "for an expert to put events into an economic context." In re Urethane Antitrust Litig. , 2012 WL 6681783 , at *3. To the extent that Dr. Rausser, after reviewing the documentary record, opines as to whether defendants' behavior is consistent with collusion, this is permissible expert opinion. To the extent that he concludes that there was in fact collusion, it is not. The Court concludes that most, but not all, of Part V of Dr. Rausser's qualitative economic analysis is within the scope of his expertise as an economist and is relevant under Rule 702 to "help the trier of fact to understand the evidence or to determine a fact in issue." FED. R. EVID . 702(a) ; see also FTC v. Whole Foods Mkt., Inc. , 2007 WL 7632283 , at *1. 7

*53 c. Documentary Record and Defendants' Transaction Data as Evidence of Class-wide Impact

Dr. Rausser asserts that defendants' transaction data indicate that defendants implemented the alleged "Fuel Surcharge strategy across the board and that the prices paid by Class Members increased as a result." Rausser Merits Rep. at 113. According to Dr. Rausser, the transaction data demonstrate that defendants' fuel surcharge formulas were "highly similar." Id. at 114 ;. see id . at 114-27. Based upon a review of the documentary evidence, he also states that defendants' policies assured class-wide impact because: (1) defendants intended to achieve universal fuel surcharge coverage, (2) there was a common policy of not discounting base rates, and (3) defendants' policies provided them with a pretext of fuel cost recovery. See id . at 127-29. Dr. Rausser then states that the transaction data confirm these conclusions. Id. at 129-44 .

This portion of Dr. Rausser's opinion also required a review of the documentary record. It is a "sound economic practice to review the factual record and formulate a hypothesis that can be tested using economic theory," so "examination of the factual record is necessary to determine which tests to run and to confirm that the stories drawn from the data and from the factual record are consistent." In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 424 . The Court will admit the subsections of Dr. Rausser's analysis that illustrate whether the transactional data demonstrate, for example, widespread application of fuel surcharges or a lack of discounting to shippers. This expert opinion is relevant to the issues to be decided at class certification and is within the scope of Dr. Rausser's expertise.

The Court need not, however, admit bald conclusions based on the documentary record regarding defendants' intent or whether the fuel surcharge programs were pretextual. Dr. Rausser includes these statements in some of his discussion of the documentary record and the defendants' transaction data. See , e.g. , Rausser Class Rep. at 102-03, 111; Rausser Merits Rep. at 127, 129, 145. "[T]he cases are clear that an economist's testimony is not admissible where he or she simply reads and interprets evidence of collusion as any juror might, or where an economist infers intent to collude from mere documentary evidence, unrelated to his or her economic expertise." In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 421 ; see Cityof Tuscaloosa v. Harcros Chems., Inc. , 158 F.3d 548 , 565 (11th Cir. 1998). Such opinion is beyond the scope of Dr. Rausser's expertise as an economist, and the Court will exclude it as unreliable. See Goodman v. Harris County , 571 F.3d 388 , 399 (5th Cir. 2009) ; Dome Patent,L.P. v. Rea , 59 F.Supp.3d 52 , 85 (D.D.C. 2014). The Court will conduct its own review of the documentary record in this case as it relates to common impact. See infra at 102-07.

In his common impact analysis, Dr. Rausser also explains how economic principles suggest that "captive shippers"-"shippers in remote regions served by only one railroad"-were also injured in the conspiracy. Rausser Merits Rep. at 144.

*54 Dr. Rausser offers this opinion to rebut defendants' argument that captive shippers could not suffer antitrust injury. See Class Certification Hr'g Tr. (Oct. 7, 2010) at 172. He provides transaction data from one captive shipper, Nevada Power, to support his conclusion. Id . at 146-47 . This opinion is within the scope of Dr. Rausser's economic expertise and relevant to the issues to be decided. Whether transaction data from only one captive shipper is worth much goes to its probative value, not its admissibility under Daubert .

d. Common Factors Model

Dr. Rausser's common factors model is one piece of quantitative evidence that plaintiffs offer to prove common impact, Class Certification Hr'g Tr. (Sept. 27, 2016) at 321, and is a necessary step in determining whether a regression model can quantify class-wide damages. See Rausser Merits Rep. at 10-11. As the Court noted in its previous opinion, Dr. Rausser states that the common factors model and the damages model "together reveal that impact can be established at trial with evidence common to the class." Rail Freight III , 287 F.R.D. at 25 ; see also Rausser Class Reply at 91-92, 99-100. This is also true on remand.

The common factors model is a regression analysis that examines "whether the Defendants' rail freight prices are based on factors that are common to all shipments ... as opposed to factors specific to particular shippers." Rausser Merits Rep. at 113; see also Class Certification Hr'g Tr. (Sept. 27, 2016) at 366. "A regression is a statistical tool designed to express the relationship between one [dependent] variable, such as price, and [independent] variables that may affect the first variable." In re High-Tech Emp. Antitrust Litig. , No. 11-2509, 2014 WL 1351040 , at *5 n.7 (N.D. Cal. Apr. 4, 2014) (quoting In re Aftermarket Auto. LightingProds. Antitrust Litig. , 276 F.R.D. 364 , 371 (C.D. Cal. 2011) ). Regression analysis is a commonly accepted statistical tool, see id . at *14, and is useful "(1) in determining whether a particular effect is present; (2) in measuring the magnitude of a particular effect; and (3) in forecasting what a particular effect would be, but for an intervening event." Daniel L. Rubinfeld, Reference Guide on Multiple Regression , in REFERENCE MANUAL ON SCIENTIFIC EVIDENCE 303, 306 (3d ed. 2011) ("Rubinfeld").

Through his common factors analysis, Dr. Rausser identified seven factors, or variables, that explain the variation in rail freight pricing. See Rausser Merits Rep. at 113, 159. These factors are: (1) weight of cargo, (2) distance traveled, (3) interline or non-interline, (4) route taken, (5) commodity type, (6) car type, and (7) timing/seasonality. See Pls. Ex. 1 at 8; Rausser Merits Rep., Table 52. In Dr. Rausser's analysis, each common factor had to have a "statistically significant effect on price, i.e. , not one that is just due to random variation in the data." Rausser Merits Rep. at 160. Dr. Rausser determined that these seven "common factors predominate in Defendants' pricing of rail freight and that, once they are accounted for, a very high proportion of the variation in freight prices can be explained." Id. at 113; see also Class Certification Hr'g Tr. (Sept. 27, 2016) at 366. According to Dr. Rausser, these seven factors explain 75% of the variation in rail freight prices, which is "a high explanatory power." Class Certification Hr'g Tr. (Sept. 27, 2016) at 366; see also Rausser Merits Rep. at 159-60. Dr. Rausser states that "[i]t is rarely, if ever, possible to explain 100% of the variation in prices in any market-there is always some random variation that remains, especially for large data sets." Rausser Merits Rep. at 160. Dr. Rausser concludes that his common factors analysis "confirms that it is possible for a regression model to control for *55 the factors that determine freight rates in assessing what portion of the higher prices observed in the Class Period are attributable to the alleged conspiracy." Id . at 113.

Dr. Kalt asserts that Dr. Rausser's common factors model does not establish common impact. Class Certification Hr'g Tr. (Sept. 29, 2016) at 867. As defendants explain, the common factors model does not show that "those common factors affect the class members' rates in the same and predictable way." Class Certification Hr'g Tr. (Sept. 30, 2016) at 1182. For example, a shipment's route-whether a long or short distance-drastically affects the price paid by a shipper, and so "route" is a differentiating factor rather than a common factor. Class Certification Hr'g Tr. (Sept. 27, 2016) at 239-41; see also Kalt Class Rep. ¶¶ 130-31. Contrary to Dr. Kalt's assertion, however, plaintiffs do not offer Dr. Rausser's common factors model alone as proof of common impact. Plaintiffs argue that the common factors model and the damages model together establish that there is class-wide evidence of impact capable of proof at trial. See Rail Freight III , 287 F.R.D. at 25 ; Rausser Class Reply at 91-92, 99-100. The purpose of the common factors model is to establish whether there are common factors that explain the variation in rail freight pricing, and if Dr. Rausser can control for those factors when determining whether overcharges are attributable to the alleged conspiracy. Rausser Merits Rep. at 160. The Court finds that Dr. Rausser's common factors model is reliable under Daubert and Rule 702 for the purpose for which it is offered-to determine the principal factors that explain the variation in rail freight pricing.

Defendants also argue that Dr. Rausser's common factors model omits key variables such as the earning power of a particular fuel surcharge, any information about individual shippers, or whether the shipper had previously paid a fuel surcharge. See Class Certification Hr'g Tr. (Sept. 26, 2016) at 173-74. Defendants' expert, Dr. Kalt, testified that because there is no variable related to fuel surcharges in the common factors model, there is no explanation in the model of how a fuel surcharge affected a shipper's rate. See Class Certification Hr'g Tr. (Sept. 29, 2016) at 869. In general, "an expert's 'failure to include variables will affect the analysis' probativeness, not its admissibility.' " In re Wireless Tel. Servs. Antitrust Litig. , 385 F.Supp.2d 403 , 427 (S.D.N.Y. 2005) (quoting Bickerstaff v. Vassar Coll. , 196 F.3d 435 , 449 (2d Cir. 1999) ); see also Bazemore v. Friday , 478 U.S. 385 , 400, 106 S.Ct. 3000 , 92 L.Ed.2d 315 (1986) (same). But a common factors model can be "so incomplete as to be inadmissible as irrelevant." In re Wireless Tel. Servs. Antitrust Litig. , 385 F.Supp.2d at 427 (quoting Bickerstaff v. Vassar Coll. , 196 F.3d at 449 ); cf . In re Processed Egg Prods. Antitrust Litig. , 81 F.Supp.3d at 430 (noting that a court "must determine whether [any] absent factors in [the] common factors analysis are so important as to render [the] analysis unreliable"). In the Court's view, Dr. Rausser has not omitted so many variables from his model as to render it either irrelevant or unreliable-and ultimately inadmissible-under Rule 702. See In re Processed Egg Prods.Antitrust Litig. , 81 F.Supp.3d at 430 . Dr. Rausser's common factors model is run on sufficiently robust, reliable data, and it is relevant to the question of whether there is proof of common impact. The Court therefore concludes that Dr. Rausser's common factors model is admissible under Rule 702. Defendants' arguments go to the weight to be given to Dr. Rausser's expert opinion at class certification, not its reliability under Daubert and Rule 702.

*56 e. Damages Model

"Damages calculations in antitrust cases seek to compare plaintiffs' actual experience in the real world with what the plaintiffs' experience would have been, 'but for' the antitrust violation." In re Pool Prods. Distribution Mkt. Antitrust Litig. , 166 F.Supp.3d 654 , 678 (E.D. La. 2016) (citing ABA SECTION OF ANTITRUST LAW , ANTITRUST LAW DEVELOPMENTS 783 (7th ed. 2012)). Plaintiffs offer Dr. Rausser's damages model as evidence that both classwide impact and damages are susceptible to common proof. See , e.g. , Rausser Merits Rep. at 170. Because Dr. Rausser has updated his damages model during the course of this litigation, the Court will refer to his most recent damages model, which incorporates additional data from the STB. See Class Certification Hr'g Tr. (Sept. 27, 2016) at 370. The parties refer to this version of the damages model as Dr. Rausser's "STB model." See id . at 311, 402.

Dr. Rausser's damages model is a log-log, reduced form pricing regression that builds upon the common factors model. Rausser Supp. Reply at 21; Pls. Ex. 1 at 11. A log-log model is a type of regression analysis in which "all of the variables included in the model (other than indicator variables and fixed effects) [are] specified as the natural logarithms of their reported values." Leitzinger Rep. ¶ 109. Dr. Rausser controls for the seven explanatory variables identified in the common factors model to remove "the effect of these factors [on prices and] to isolate the effect of the alleged conspiracy on freight rates." Rausser Merits Rep. at 164. He then adds a number of variables beyond the seven common factors "to summarize the forces of demand and supply." Class Certification Hr'g Tr. (Sept. 27, 2016) at 369; see Rausser Merits Rep. at 168, 187. Dr. Rausser captures the effect of the conspiracy through "a Class Period variable, which takes the value one during the Class Period and zero in the [pre-class] benchmark period ...." Rausser Supp. Reply at 22.

Dr. Rausser's damages model also incorporates a constant fuel coefficient. Log-log models are also known as "constant elasticity models" because "the single coefficient estimate associated with each explanatory variable align conceptually with the circumstance in which the elasticity is constant." Leitzinger Rep. ¶ 109. "[T]he coefficient estimated for an explanatory variable in a log-log specification provides what economists refer to as elasticity- i.e. , the percentage change in the variable of interest (here, shipping rates) as a result of a small percentage change in the explanatory variable." Id. Using the STB data from 1999 to 2008, Dr. Rausser constructed a regression model to determine the elasticity relationship between fuel prices and variable costs, which he calculated to be 0.103. Rausser Supp. Reply at 44-45; see also supra note 6. Here, "elasticity" refers to the sensitivity of the all-in rate to changes in the price of fuel, but the calculation of the ratio remains the same. An elasticity of 0.103 means "that a 100% increase in fuel costs would be associated with a 10.3% increase in variable costs per ton-mile." Rausser Supp. Reply at 44-45. 8 Dr. Rausser then incorporates 0.103 as a constant fuel coefficient in the damages model. Id. at 45.

Dr. Rausser's damages model uses a benchmark comparison between a period *57 before the alleged conspiracy occurred and a period affected by the alleged conspiracy. Rausser Supp. Reply at 22. Dr. Rausser selected a three-and-one-half year benchmark period-the period before the alleged conspiracy-that includes more than 50 million transactions. Class Certification Hr'g Tr. (Sept. 27, 2016) at 368. In 2013, Dr. Rausser incorporated data from the STB, which included another 2 million transactions, into the pre-class benchmark period. Id . at 370; Pls. Ex. 1 at 11. Dr. Rausser's damages model incorporates 40 million transactions in his class period. Pls. Ex. 1 at 11; Class Certification Hr'g Tr. (Sept. 27, 2016) at 370-71. 9

After running his damages model on 100% of the available transaction data, Dr. Rausser found that the damages model reveals "a structural break in the relationship between fuel prices and freight rates, coincidental with the start of the conspiracy." Rausser Merits Rep. at 170; see also Class Certification Hr'g Tr. (Sept. 27, 2016) at 400. According to Dr. Rausser, "[i]n the absence of an intervening event, such as an agreement among the Defendants as alleged by Plaintiffs, the historical relationship between freight rates and fuel prices would generally be expected to continue," and "the data instead show the existence of a statistically significant structural break in that relationship[,] which is consistent with the record evidence of the alleged conspiracy." Rausser Merits Rep. at 7; see also Class Certification Hr'g Tr. (Sept. 27, 2016) at 374-75. This structural break at the beginning of the class period can, in Dr. Rausser's view, constitute common evidence of class-wide impact. Rausser Merits Rep. at 170.

Using defendants' transaction data from the pre-class period as a benchmark, Dr. Rausser also concludes that a common methodology "shows that freight rates were higher during the Class Period than [can] be explained by economic forces other than the alleged price-fixing conspiracy." Rausser Merits Rep. at 10. Dr. Rausser calculated an average weekly overcharge of 9.8% during the class period, Rausser Supp. Reply at 47, for a total of approximately $7.9 billion in damages. Rausser Merits Reply at 250 & Table 105. 10

At the remand class certification hearing, Dr. Rausser testified that his model is "consistent with economic logic" and "fully aligned with the discovery record." Class Certification Hr'g Tr. (Sept. 27, 2016) at 371, 377; see also Pls. Ex. 1 at 12. Dr. Rausser also conducted 50 tests to evaluate the robustness and reliability of the damages model. See Pls. Ex. 1 at 12; Class Certification Hr'g Tr. (Sept. 27, 2016) at 375-76. These tests included removing categories of shippers, changing the measurements of key variables, and testing for any non-randomness in the error term. See Pls. Ex. 1 at 12; Class Certification Hr'g Tr. (Sept. 27, 2016) at 375-76. Dr. Rausser determined that these tests did not show significant changes in the model or changes in the potential overcharges, and he concluded that his damages model was robust and reliable. Class Certification Hr'g Tr. (Sept. 27, 2016) at 376.

*58 "[R]egression analysis is generally a reliable method for determining damages in antitrust cases and is 'a mainstream tool in economic study.' " In re High-Tech Emp. Antitrust Litig. , 2014 WL 1351040 , at *14 (quoting In re Indus. Silicon Antitrust Litig. , No. 95-2104, 1998 WL 1031507 , at *2 (W.D. Pa. Oct. 13, 1998) ). Dr. Rausser's use of a class period variable to capture the effect of the conspiracy is also a widely accepted method to compute damages in price-fixing cases. See Johnathan B. Baker & Daniel L. Rubinfeld, Empirical Methods in Antitrust Litigation: Review and Critique , AM. L. & ECON. REV . 386, 392 (1999). Although defendants and their experts criticize Dr. Rausser's use of a log-log model with a constant fuel coefficient, see infra at 109-15, arguments about whether an expert should have used an alternative method typically are not grounds for exclusion under Daubert , See In re UrethaneAntitrust Litig. , 2012 WL 6681783 , at *7. "[A]rguments about which method is superior for use in this case" go to the weight of Dr. Rausser's opinions, not to their admissibility under Rule 702. Id.

Dr. Kalt also argues that Dr. Rausser committed data error when using the STB data to calculate fuel elasticity because Dr. Rausser did not account for a known change in the way the STB reported variable costs for intermodal shippers. See Kalt Class Rep. ¶¶ 58-64. To correct for the error, Dr. Kalt recommended excluding the STB intermodal data-24% of the data-before calculating fuel elasticity. Id . ¶ 59. Dr. Kalt then calculates a higher fuel coefficient of 0.222, which would result in lower damages. Id . ¶¶ 59-60. Dr. Rausser replies that Dr. Kalt has misinterpreted how he used the STB data and that Dr. Kalt provides no real support for why the appropriate response to a minor reporting change by the STB is to exclude relevant data. Rausser Supp. Reply at 53. According to Dr. Rausser, the STB has never reported that "the costs it calculated for that period were inaccurate, unreliable or unusable for research purposes." Id. Dr. Kalt's criticisms do not show that the STB data were irrelevant or unreliable; he simply disputes Dr. Rausser's use of the data. Again, the Court concludes that these arguments go to the weight of the opinion, rather than to the admissibility. See In re Scrap Metal Antitrust Litig. , 527 F.3d 517 , 531-32 (6th Cir. 2008).

Defendants argue that Dr. Rausser's model generates false positives, particularly when the model is run on subsets of data, such as legacy shipments or local carload shipments (under pre-class period fuel surcharges). See , e.g. , Kalt Class Rep. ¶¶ 42-43, 73-75; Kalt Class Sur-Reply ¶¶ 9, 42-43, 45. As Judge Pratter noted in In re Processed Egg Products AntitrustLitigation ."[i]t is intuitive that what would adequately describe the data as a whole might not accurately describe a certain subset of the data-and curious results like those noted by Defendants are to be expected." 81 F.Supp.3d at 434 . Dr. Rausser created the damages model using sufficient data and widely accepted methods, and the model is testable by defendants' experts and plaintiffs' supplemental experts. This is sufficient for admissibility under Rule 702 and Daubert . Id. But "just because the Court has found Dr. Rausser's [damages] model reliable enough for Daubert purposes does not mean that Defendants cannot argue that the curious results uncovered [by their experts] make the regression model unconvincing for purposes for class certification." Id. The Court will fully explore defendants' criticisms regarding the damages model's alleged propensity for false positives, see infra at 118-122, 126-32, but that is an examination appropriately for class certification, not for Daubert .

*59 Dr. Rausser's damages model was the focus of the D.C. Circuit's decision under Rule 23, and it is at the heart of the parties' arguments on remand. But the Court finds no reasons to exclude Dr. Rausser's damages model as irrelevant or unreliable under Daubert . Dr. Rausser's model incorporates millions of data points, provided by the defendants and the STB. In constructing his damages model, Dr. Rausser used methods widely accepted in antitrust cases. The Court therefore concludes that Dr. Rausser's damages model is admissible under Daubert and Rule 702. The Court, however, will conduct a rigorous analysis, as instructed by the D.C. Circuit, regarding whether Dr. Rausser's model is a reliable means of proving class-wide impact and damages.

f. Legacy Contracts

On appeal, defendants argued that Dr. Rausser's damages model yields overcharges for "legacy contracts, i.e. , those shippers who, during the Class Period, were bound by rates negotiated before any conspiratorial behavior was alleged to have occurred." In re RailFreight Fuel Surcharge Antitrust Litig.-MDL No. 1869 , 725 F.3d at 252 . Defendants initially sought to test Dr. Rausser's damages model on legacy contracts because Dr. Rausser had "identified a set of legacy shipments in his original class certification report, purportedly to ensure that 'unaffected' shippers were not included in the class." Defs. Supp. Opp. at 46 (citing Rausser Class Rep. at 120-21). Shippers with only legacy contracts are not members of the class; they have been excluded from the class definition proposed by plaintiffs and accepted by the Court. See infra at 92-93. The legacy shippers issue arose in this litigation because defendants have asserted that legacy shippers are a "clean" group of shippers-who were unaffected by the alleged conspiracy-and therefore can be used to test whether Dr. Rausser's damages model shows overcharges for only those shippers harmed by the conspiracy. See Defs. Supp. Opp. at 46-48. Defendants' first class certification expert, Dr. Robert D. Willig, tested the damages model on legacy shipments and found overcharges, or "false positives," a critique which defendants presented on appeal. See In re Rail Freight Fuel Surcharge Antitrust Litig. - MDL No. 1869 , 725 F.3d at 252 .

The court of appeals in its opinion focused on "defendants' concern that [Dr. Rausser's] damages model yielded false positives with respect to legacy shippers" and referenced Dr. Rausser's "concession" that his damages model measured overcharges to both legacy shippers and class members. In re Rail Freight Fuel Surcharge Antitrust Litig.-MDLNo. 1869 , 725 F.3d at 253 . The D.C. Circuit remanded the case for this Court to consider, in light of the decision in Comcast , defendants' argument that Dr. Rausser's damages model is prone to false positives and therefore "detects injury where none could exist." Id. at 252 . Although the court of appeals noted that Dr. Rausser conceded that his damages model measures "overcharges to legacy shippers and class members alike," id. at 253 , Dr. Rausser on remand maintains that it has always been his opinion that legacy shippers would have been harmed by the alleged conspiracy, regardless of whether they are included in the class definition chosen by plaintiffs' counsel. Rausser Supp. Rep. at 20. 11

*60 With respect to legacy shipments, Dr. Rausser states that defendants' false positives argument is based on a "false premise" that "the alleged conspiracy could not have affected shipments under legacy contracts, because the FSC formulas embedded in those contracts were agreed upon between railroad and shipper before the alleged conspiracy was [underway]." Rausser Supp. Rep. at 4. There are two bases from which Dr. Rausser concludes that legacy shipments during the class period were harmed: (1) there was a change in the economic environment during the class period and all shipments, including legacy shipments, were affected by the alleged conspiracy, id . at 5, and (2) his analysis of legacy contracts-his so-called "legacy decomposition"-indicates that many of the identified legacy shipments were not "true" legacy shipments because the shipments were not moved under contracts that were bound by rates negotiated before the start of the alleged conspiracy. Id . at 6. Based on these findings, Dr. Rausser concludes that his damages model is not prone to false positives and reliably calculates overcharges for legacy shipments. Id . at 37. Defendants challenge both aspects of Dr. Rausser's expert opinion regarding legacy shipments.

The Court first addresses Dr. Rausser's expert opinion that there was a change in the economic environment such that all shipments during the class period-including legacy shipments-were harmed by the alleged conspiracy. According to Dr. Rausser, "[w]hen FSC formulas were first embedded in legacy contracts, actual FSC rates were small and transient, and had very little economic effect on shippers." Rausser Supp. Rep. at 5. During the class period, he says, "when [the] model finds overcharges on shipments that have been identified as legacy shipments, FSC rates were very high and had a sizeable economic effect on shippers, every month for years." Id. To support this conclusion, Dr. Rausser cites examples from the documentary record. See , e.g. , id . at 7-10. He notes that fuel surcharges were only "theoretically billable" in the pre-class period because shippers often resisted fuel surcharge application through negotiation and waivers. Id. at 8-10. Dr. Rausser opines that, absent an alleged conspiracy, resistance to the application of fuel surcharges would have continued during the class period. See id . at 11. To put it another way, "[i]t is reasonable to expect that, in an environment of competition, Defendants would have yielded to resistance from shippers (including legacy shippers) and reduced or offset the dramatically increasing FSC rates that Defendants applied during the Class Period, either by adjusting those FSC rates, re-pricing base rates or offering other concessions." Id. at 5.

Defendants challenge this opinion, arguing that Dr. Rausser has offered no quantitative analysis to support this proposition. Defs. Supp. Opp. at 56. Dr. Kalt opines that Dr. Rausser's "enforcement theory assumes that, having negotiated for contractual protection against the risk of rising fuel prices, the railroads (absent conspiracy) would then have waived the very protection for which they had negotiated," and that "[s]uch an extreme hypothesis requires strong evidence, but there is none ..." Kalt Class Rep. ¶ 118. Dr. Kalt also looked to the transaction data to determine whether Dr. Rausser's opinion-that absent a conspiracy, legacy shippers would have been able to renegotiate their fuel surcharges or obtain waivers-is consistent with defendants' transaction data. See Class Certification Hr'g Tr. (Sept. 29, 2016) at 826-27.

To determine what level of waivers would be needed to explain the overcharges calculated by the damages model for legacy shipments, Dr. Kalt applied the 2.9% waiver rate identified by Dr. Rausser *61 for the pre-class period to the but-for world during the class period. Kalt Class Rep. ¶ 115. 12 Dr. Kalt determined that defendants would have needed to waive 75.5% of fuel surcharges on legacy shipments to explain the overcharges, that is, to show no overcharges for legacy shipments. Id. From this finding, Dr. Kalt concludes that "[t]here is simply no support for such massive non-collection of FSCs in [Dr.] Rausser's pre-Class benchmark period or in the anecdotes that he cites." Id. ; see also Class Certification Hr'g Tr. (Sept. 29, 2016) at 837-39.

This dispute goes to the weight to be accorded each expert's opinion under Rule 23(b), not to its admissibility under Daubert and Rule 702. See Robinson v. District of Columbia , 75 F.Supp.3d 190 , 200 (D.D.C. 2014) (citing Joy v. Bell Helicopter Textron, Inc. , 999 F.2d 549 , 567 (D.C. Cir. 1993) ). To support his opinion, Dr. Rausser principally relies on the documentary record from the pre-class and class periods. See Rausser Supp. Rep. at 5, 7-11. The opinion is relevant to the issues to be decided under Rule 23(b), namely whether plaintiffs have offered reliable means of proving class-wide injury. See FED. R. EVID . 702(a). The Court may admit expert opinion even where-as here-the factual bases for the opinion are weak. See Robinson v. District of Columbia , 75 F.Supp.3d at 200 . The Court will determine what weight to afford Dr. Rausser's opinion, given its limited support, under Rule 23.

Second, Dr. Rausser offers his "legacy decomposition" analysis to demonstrate that the majority of legacy shipments were affected by the alleged conspiracy. See Rausser Supp. Rep. at 35-75. According to Dr. Rausser, "an examination of the contracts that the Defendants have identified as legacy contracts-the computed overcharges [that] form the basis of the Defendants' false positive argument-reveals that many of those contracts simply do not satisfy the description of legacy contracts that the Defendants provided to the Court of Appeals in support of their argument." Id. at 6.

All four defendants provided plaintiffs with transaction data and potential methods for identifying which transactions related to legacy contracts, which included "a total of 29,374,608 legacy shipments during the Class Period." Rausser Supp. Rep. at 37; see id . at 24-26. After reviewing the data, Dr. Rausser concluded that 68.68% of legacy shipments (or 13,029,917 shipments) moved under contracts that were either (1) "self-adjusting or adjustable to conspiratorial FSC formulas prevailing as of the date of shipment (rather than the effective date of the contract) or (2) were created once the conspiracy was beginning (after March 1, 2003)." Id. at 37-38 & Table 28. Specifically, Dr. Rausser determined that the legacy shipments for which he has adequate fuel surcharge data fall into one of four categories: (1) 42.68% of legacy shipments moved under contract provisions with "self-adjusting fuel surcharges," meaning that the contract provision stated that the shipper would pay the fuel surcharge existing at the time of the shipment, rather than a fuel surcharge price agreed upon before the alleged conspiracy ("Category 1"); (2) 26.00% of legacy shipments moved under a fuel surcharge provision created during the conspiracy period ("Category 2"); (3) 5.36% of legacy shipments moved under contract provisions entered into during the formation of the conspiracy, March 1 through July 1, 2003; and (4) 6.36% of *62 legacy shipments moved under contracts entered into on or after July 1, 2003. Id. at 38 & Table 28. In other words, these four categories of shipments-totaling 80.4%-were not legacy shipments at all. 13

Dr. Rausser asserts that these figures are actually understated because defendants' methods for identifying legacy shipments overestimate the number of legacy shipments. See Rausser Supp. Rep. at 38-39. Dr. Rausser states that there is a more accurate method for identifying legacy shipments for one defendant, NS. See id . at 38. When using his preferred method for identifying NS legacy shipments, Dr. Rausser finds that 81.86% of the total legacy shipments fall into his categories 1 and 2 as opposed to only 68.68%. Id. at 39 & Table 31. Based on the available legacy contract data, Dr. Rausser concludes that defendants' description of legacy contracts is fundamentally flawed and that the majority of legacy contracts were harmed by the alleged conspiracy. Id. at 35-36.

Dr. Kalt does not specifically challenge Dr. Rausser's legacy decomposition analysis; nor did he replicate Dr. Rausser's analysis. See Class Certification Hr'g Tr. (Sept. 29, 2016) at 968, 988. He focused on other critiques of the reliability of Dr. Rausser's damages model. Id. Defendants, however, offer numerous challenges to Dr. Rausser's legacy decomposition analysis. Defendants assert that Dr. Rausser's conclusions are misleading because Dr. Rausser excluded from his analysis approximately 10.4 million of the 29.3 million legacy shipments identified by defendants. Defs. Supp. Opp. at 51; see also Rausser Supp. Rep. at 37 & n.124; OD Ex. 4, Rausser Dep. (Mar. 4, 2014) at 100, 112. Dr. Rausser stated that he excluded the 10.4 million legacy shipments because there was no fuel surcharge program information in the transaction data he was provided for those shipments. See Rausser Supp. Rep. at 37 & n.124; OD Ex. 4, Rausser Dep. (Mar. 4, 2014) at 108-09. When Dr. Rausser concludes that 68.68% of the legacy shipments are not "true" legacy shipments, he is referring to 68.68% of the 18,972,173 legacy shipments for which he had adequate fuel surcharge information, not all legacy shipments. His conclusions therefore relate only to approximately two-thirds of the legacy shipments identified by defendants.

Defendants point to the BNSF legacy shipment data as a specific example of how Dr. Rausser's conclusions are misleading, given that he excluded 10.4 million shipments from his analysis. Defs. Supp. Opp. at 51. Dr. Rausser excluded all of the BNSF intermodal data as part of the 10.4 million shipments that he excluded from his legacy decomposition analysis. These BNSF intermodal shipments accounted for 68% of BNSF's identified legacy shipments. Rausser Supp. Rep. at 45 & n.160. After excluding all of the BNSF intermodal shipments from his analysis, Dr. Rausser concluded that 89.7% of all-that is, the remaining-BNSF legacy shipments were not "true" legacy shipments. See id . at 45-46. In response to questioning by defendants at a deposition, Dr. Rausser acknowledged that he is simply concluding *63 that 89.7% of approximately 32% of the BNSF legacy shipments previously identified are not true legacy shipments. See OD Ex. 4, Rausser Dep. (Mar. 4, 2014) at 245.

Defendants also fault Dr. Rausser for placing legacy contracts in his "Category 1" for self-adjusting contracts without verifying whether the "self-adjustment" had any impact on the fuel surcharge formula. Defs. Supp. Opp. at 53-54. Put differently, Dr. Rausser did not verify that the self-adjusting contracts were actually adjusted to higher, allegedly conspiratorial fuel surcharges. Defendants point to UP's intermodal legacy shipments, which Dr. Rausser said were moved under "self-adjusting" contracts. See Rausser Supp. Rep. at 52. Defendants note that Dr. Rausser previously conceded "that the only adjustments to UP's intermodal formula 'had the effect of reducing the fuel surcharge .' " Defs. Supp. Opp. at 52 (emphasis in original) (quoting Rausser Merits Reply at 172). According to defendants, "if the Class Period adjustments reduce the fuel surcharge, as Dr. Rausser previously admitted, that makes the damages model's findings of overcharges harder to explain." Id.

Defendants argue that Dr. Rausser's failure to account for whether any adjustments or class period formulas were higher during the class period is especially important given that he opines that 68.68% of the identified legacy shipments fall into his Category 1 (self-adjusting contracts) and Category 2 (formula applied which did not exist during the alleged conspiracy). These omissions in Dr. Rausser's legacy decomposition analysis, defendants argue, illustrate that his analysis provides "no useful information" on the question of whether the damages model detects injury where none could exist. Defs. Supp. Opp. at 54.

The Court concludes that Dr. Rausser's methods for his legacy decomposition analysis are reliable under Rule 702. Dr. Rausser's methodology is sound, and he has explained for why he excluded 10.4 million legacy shipments from his analysis; the transaction data did not have adequate fuel surcharge program information. See Rothe Dev., Inc. v. Dep't of Defense , 107 F.Supp.3d at 198 . Defendants' experts have not offered any suggestion that Dr. Rausser could have identified the fuel surcharge program information for those excluded shipments. Given that Dr. Rausser could review only two-thirds of the identified legacy shipments, however, the Court will decide what weight to afford Dr. Rausser's legacy decomposition analysis under Rule 23.

B. Dr. Joseph P. Kalt

The Court next turns to Dr. Joseph P. Kalt, the primary expert upon whom defendants rely to counter the expert opinions of Dr. Rausser. Dr. Kalt is the Ford Foundation Professor (Emeritus) of International Political Economy at the John F. Kennedy School of Government at Harvard University and a senior economist with Compass Lexecon, an economic consulting firm. Kalt Class Rep. ¶ 1. He holds a B.A. in economics from Stanford University and a Ph.D. in economics from the University of California, Los Angeles. Id. , App. A at 2. Dr. Kalt has taught economics and statistics at Harvard since 1978. Id. , App. A at 1. Dr. Kalt has published widely on issues related to government regulation and antitrust enforcement, and has delivered presentations on the rail industry to the United States House of Representatives, the United States Senate, and the STB. Id. , App. A at 12-14. Plaintiffs stipulated to Dr. Kalt's qualifications under Rule 702 as an expert in the fields of economics and econometrics. Class Certification Hr'g Tr. (Sept. 27, 2016) at 330. The Court therefore finds that Dr. Kalt is qualified as an expert in the fields of economics *64 and econometrics based on his education and experience.

As noted supra at 40-41, the Court has already denied plaintiffs' motion to exclude Dr. Kalt on Daubert grounds before the class certification hearing. In re Rail Freight Fuel Surcharge Antitrust Litig. , 2016 WL 2962186 , at *3. The Court explained that there was no requirement to decide the reliability of an expert's methodology in advance of the class certification hearing, only that it be confident that an expert meets the Daubert reliability standard before it moves on to consider the plaintiffs' satisfaction of the requisites of Rule 23. Id. at *1-2. The Court did not then address "each of the six separate bases asserted by plaintiffs for the exclusion of Dr. Kalt's opinions" because

most, if not all of them, are not valid Daubert arguments at all because they do not challenge the principles or methodologies that Dr. Kalt employed. Rather, they are attacks on Dr. Kalt's theories or his responses to the opinions, regression analyses, and models of plaintiffs' experts. The Court will determine at the class certification hearing-consistent with Daubert and Rule 702 -the relevance, reliability, admissibility, and weight it should afford the reports, testimony, and opinions of all experts.

Id. at *2. The Court now proceeds to a discussion of Dr. Kalt's expert opinions and plaintiffs' bases for seeking to exclude them under Daubert and Rule 702. See generally Kalt Daubert Mot. Dr. Kalt completed three expert reports in this case: (1) Kalt Merits Report (Mar. 1, 2013); (2) Kalt Class Report (May 6, 2014); and (3) Kalt Class Sur-Reply (July 21, 2014). 14

The Court considers Dr. Kalt's expert opinion to consist of five topics: he (1) disputes Dr. Rausser's analysis concerning the aggressiveness and coverage of fuel surcharges in the pre-class period and class period; (2) notes the "false positives" generated by Dr. Rausser's damages model and addresses the possible causes, including Dr. Rausser's use of a constant as opposed to a variable fuel coefficient; (3) offers a structural break analysis to demonstrate that Dr. Rausser's damages model generates structural breaks and overcharges throughout the pre-class and class periods; (4) opines that Dr. Rausser's damages model does not allow defendants ordinary fuel cost recovery; and (5) criticizes Dr. Rausser's damages model as unreliable for generating shipments with negative overcharges, including shippers whose every shipment had negative overcharges (so-called "uninjured class members"). The Court will determine admissibility under Rule 702 for Dr. Kalt's opinions with respect to each of these arguments, considering, where appropriate, the plaintiffs' reasons for seeking to exclude Dr. Kalt contained in their Daubert motion.

1. Aggressiveness and Coverage of Fuel Surcharges

Dr. Kalt disputes Dr. Rausser's contentions that class period fuel surcharges were fundamentally different from pre-class *65 period fuel surcharges due to the uniform application of more onerous fuel surcharges formulas and a refusal to negotiate offsets or discounts during the class period. See , e.g. , Kalt Class Rep. ¶¶ 93-118. Put differently, Dr. Kalt challenges Dr. Rausser's claim that class period fuel surcharges were fundamentally different from pre-class period fuel surcharges. Dr. Kalt bases his opinion on his study of the raw "actual market data, the actual transactions that [Dr.] Rausser uses and [that] he says show the effects of the alleged conspiracy in this case." Class Certification Hr'g Tr. (Sept. 29, 2016) at 823.

a. Earning Power

Dr. Kalt introduces the metric of "earning power"-"the percentage surcharge rates generated by the FSC formulas for the same fuel prices"-to explain why class period fuel surcharges were not in fact more onerous or aggressive than pre-class period fuel surcharges. Kalt Class Rep. ¶ 95 & Figure 17. Dr. Kalt contends that Dr. Rausser's damages model is a model "solely of all-in rates" that is unreliable insofar as it includes "no variable that captures the presence or absence of a fuel surcharge" or "that captures whether it was aggressive or not aggressive." Class Certification Hr'g Tr. (Sept. 29, 2016) at 824. Dr. Kalt argues that the revenue defendants generated from class period fuel surcharges is nearly identical to, if not less than, the revenue defendants would have generated if they had applied the competitively negotiated fuel surcharges from the pre-class period to all class period traffic. Kalt Class Rep. ¶¶ 98-99 & Figures 18, 19.

Plaintiffs argue that Dr. Kalt's earning power metric is unreliable under Daubert because it is inconsistent with the "discovery record" and "market realities" during the pre-class period, which had only modest fuel surcharge coverage and permitted discounting of those fuel surcharges that did exist. See Kalt Daubert Mot. at 12. Plaintiffs contend that looking at the earning power of pre-class period fuel surcharges "tells us nothing about the perceived 'earning power' at the time of" the conspiratorial conduct because "[n]o railroad had a crystal ball to tell it what fuel prices would be in the coming years." Id. at 15-16 (emphasis in original). In plaintiffs' view, Dr. Kalt's earning power argument is just a "redux" of the same expert opinion of his that the district court excluded in In re Electronic Books Antitrust Litigation , No. 11-MD-2293, 2014 WL 1282298 (S.D.N.Y. Mar. 28, 2014). Kalt Daubert Mot. at 11-12.

The Court disagrees. In In re Electronic Books Antitrust Litigation , Judge Denise Cote of the United States District Court for the Southern District of New York excluded Dr. Kalt's expert opinion on Daubert grounds because his analysis misclassified data in such a way as to be "misleading," 2014 WL 1282298 , at *10, relied on a theory of analysis ungrounded in "any literature within the field of econometrics," id . at *8, based its conclusions on data for which there was no date, id . at *9-10, and failed to "control for systematic factors." Id. at *10 . There is no comparison between the defects Judge Cote found and Dr. Kalt's earning power argument here. Notably, plaintiffs do not take issue with the statistical rigor underlying Dr. Kalt's earning power metric-only its fit as it relates to the facts of this case and its applicability to legal conclusions pertinent to class certification. See Kalt Daubert Mot. at 14-15. But those alleged deficiencies in earning power as a method of statistical analysis go to its weight and not its admissibility. See Bazemore v. Friday , 478 U.S. at 400 , 106 S.Ct. 3000 (reversing exclusion of regression analysis that failed to properly select the appropriate variables); see also Hemmingsv. Tidyman's Inc. , 285 F.3d 1174 , 1188 (9th Cir. 2002) ("[I]n most *66 cases, objections to the inadequacies of a study are more appropriately considered an objection going to the weight of the evidence rather than its admissibility."). The Court therefore concludes that Dr. Kalt's earning power analysis satisfies Daubert and Rule 702.

b. Coverage: Application, Negotiation, and Discounting of Fuel Surcharges

Notwithstanding whether the class period fuel surcharges were more onerous or aggressive than those in the pre-class period, Dr. Kalt also disputes Dr. Rausser's claims regarding the coverage or application of fuel surcharges during the pre-class period as opposed to the class period. See , e.g. , Kalt Class Rep. ¶¶ 101-15. Dr. Kalt argues that defendants increasingly "included FSC provisions with very high frequency" in new contracts they entered into between January 2002 and the start of the alleged conspiracy in March 2003, when those provisions appear in "at least 60%" of new contracts. Id. ¶ 105 & Figure 21. He asserts that this indicates that the shift toward more widespread application of fuel surcharges began in the pre-class period, before the onset of the alleged conspiracy. Id. ¶ 105. Dr. Kalt then suggests that fuel surcharge coverage did not spike during the class period, and remained well below the 100% or near universal coverage Dr. Rausser claims. Id. ¶¶ 105-06. Dr. Kalt disputes what he describes as Dr. Rausser's "no escape" or "conspiracy-as-enforcement" theory, i.e. , the idea that, even if fuel surcharge coverage remained relatively constant from the pre-class period to the class period, defendants stopped discounting and offsetting fuel surcharges during the class period. Id. ¶ 109. Specifically, Dr. Kalt argues that shippers negotiated and obtained discounts on class period fuel surcharges, and that Dr. Rausser's evidence to the contrary is grounded only in "selective anecdotes." Id. ¶ 113. Dr. Kalt also ran an exercise showing that NS's "collection rate" for fuel surcharges only modestly increased from 97.1% in 2002 to 98.5% in 2006. Id. ¶ 111 & Figure 22. 15

Dr. Kalt draws two conclusions from this data. First, he concludes that Dr. Rausser failed to accurately model an aspect of the "but-for world," namely, the level of fuel surcharge coverage or application that would have existed during the class period in the absence of the alleged conspiracy. Kalt Class Rep. ¶¶ 15-20. Dr. Kalt explains that Dr. Rausser's failure to model coverage is manifest when one asks, "what level of non-enforcement of FSCs would the but-for world require to eliminate overcharges found by [Dr.] Rausser's model?" Id. ¶¶ 114-15 & Figure 23. Dr. Kalt claims that, "in the but-for world Defendants would have had to have waived or otherwise not collected 82.5% of FSC revenue in order for all-in but-for prices to be pushed to the level implied by [Dr.] Rausser's damage calculations for class shippers." Id. ¶ 115 (emphasis in original). Put differently, Dr. Kalt suggests that, absent the alleged conspiracy, shippers would have had to negotiate waivers of 82.5% of their class period fuel surcharges in order to justify the damages Dr. Rausser's model estimates.

Second, Dr. Kalt asserts that a shipper's ability to obtain a fuel surcharge waiver or discount during the class period depended entirely on "shipper-specific facts and circumstances" that Dr. Rausser did not model. See Kalt Class Rep. ¶¶ 119-21. Those circumstances include, inter alia , "whether the shipper ha[d] feasible access to non-Defendant railroads; the ability to switch to trucks or barges; the importance and bargaining power of a shipper to a Defendant; the knowledge and importance of rail shipping costs in a shipper's overall *67 costs of doing business; and myriad other elements of leverage and bargaining that would have enhanced or diminished a shipper's ability to renegotiate, waive, or breach contract terms so as to escape putatively excessive fuel surcharges." Id. ¶ 110. According to Dr. Kalt, Dr. Rausser's theory that shippers were harmed from the aggressive enforcement of fuel surcharges-regardless of a change in their fuel surcharge-turns on highly individualized inquiries. Id .

Dr. Kalt's exercises attempt to demonstrate (1) that Dr. Rausser's "no escape" or "conspiracy-as-enforcement" hypothesis is inconsistent with defendants' pre-class period waiver rates, and (2) the importance of shipper-specific facts and circumstances for determining whether a shipper would have received a waiver in absence of the conspiracy. Plaintiffs make no argument that the transaction data upon which Dr. Kalt built his exercises are irrelevant or unreliable-nor could they, because it is the same data upon which Dr. Rausser built his models. The Court therefore concludes that Dr. Kalt's exercises relating to discounting and negotiation of fuel surcharges are valid expert opinions admissible under Daubert and Rule 702.

2. False Positives

Dr. Kalt next tested Dr. Rausser's damages model in three circumstances and found overcharges "where there should be none," which Dr. Kalt labels "false positives": (1) legacy shipments, (2) rates equal to variable costs, and (3) pre-class period fuel surcharges. Kalt Class Rep. ¶ 5. 16 The Court will address each of the ways Dr. Kalt tested Dr. Rausser's model for false positives and the reason that Dr. Kalt posits for each of these the false positives-Dr. Rausser's use of a constant fuel coefficient-as well as the objections plaintiffs have raised to Dr. Kalt's analysis under Daubert . The Court begins with a discussion of the debate between Dr. Kalt and Dr. Rausser concerning whether a constant or variable fuel coefficient should have been used in Dr. Rausser's damages model.

a. Variable Fuel Coefficient

Dr. Kalt argues that Dr. Rausser's damages model yields false positives when run on legacy shipments, rates equal to variable costs, and pre-class period fuel surcharges because it uses a constant fuel elasticity coefficient instead of a variable fuel coefficient. Kalt Class Rep. ¶¶ 45, 49. 17 Dr. Kalt considers this to be a fatal flaw in Dr. Rausser's work, id . ¶ 44, an "economic error" that violates "simple mathematics." Id. ¶ 13. He also says it is inconsistent with the approaches of each econometric study Dr. Rausser cites in his Merits Report, and "renders [Dr. Rausser's] models unambiguously unreliable." Id . ¶ 13; see also id . ¶ 54.

*68 Dr. Kalt believes that a variable fuel coefficient is the only appropriate metric because "as fuel becomes a larger share of railroads' overall costs, a given percentage change in fuel prices will generate a larger percentage change in competitive rail rates." Kalt Class Rep. ¶ 44. Dr. Kalt ran exercises to show that Dr. Rausser's constant fuel coefficient impermissibly allows Dr. Rausser's model to transform defendants' ordinary fuel cost recovery, i.e. , their ability to pass through increases in fuel costs to shippers, into damages. Id. ¶¶ 51-53 & Figure 9. Dr. Kalt contends that Dr. Rausser's model generates unrealistically low but-for prices, which-by virtue of its data construction-causes it to interpret as damages the fuel costs that defendants would pass through to shippers ( i.e. , recover) in the ordinary course of business. Id. 18

At the class certification hearing, Dr. Kalt used what plaintiffs call his "teaching tool" to explain why fuel price elasticity is variable. Class Certification Hr'g Tr. (Sept. 29, 2016) at 852-54; see also Kalt Daubert Mot. at 22-29. The teaching tool attempts to show how fuel price elasticity varies by comparing two situations where defendants have overall costs of $100, but in one instance fuel costs $10 and in the other fuel costs $20. Class Certification Hr'g Tr. (Sept. 29, 2016) at 852. Assuming that fuel costs double (from $10 to $20 in the first instance and from $20 to $40 in the second) and defendants can pass through all fuel costs to shippers, there will be different elasticities for the two situations. Id. at 854. In the first instance where fuel costs doubled from $10 to $20, overall costs grew from $100 to $110 and the elasticity-the change in overall cost (10%) divided by the change in fuel price (100%)-is 0.100. Kalt Class Rep. ¶¶ 52-53. In the situation where fuel costs doubled from $20 to $40, overall costs grew from $100 to $120 and the elasticity-the change in overall cost (20%) divided by the change in fuel price (100%)-is 0.200. Class Certification Hr'g Tr. (Sept. 29, 2016) at 854. Dr. Kalt believes this exercise demonstrates that a constant fuel coefficient as used by Dr. Rausser cannot account for the substantial changes in fuel prices during the class period. Kalt Class Rep. ¶ 45. 19 Dr. Kalt also states that Dr. Rausser should have used a variable fuel coefficient, which is a per se characteristic of a ''translog production function," as opposed to the constant fuel coefficient in the damages model. See Class Certification Hr'g Tr. (Sept. 29, 2016) at 858; see also id . at 856-57. 20

*69 Plaintiffs argue that Dr. Kalt's teaching tool is "purely theoretical," and "untethered to basic economic theory, the factual record, and even [Dr. Kalt's] past testimony in the case." Kalt Daubert Mot. at 26 (internal quotation marks and citation omitted). They also contend that Dr. Kalt's opinion that Dr. Rausser should have used a variable fuel coefficient is similar to Dr. Kalt's opinion that was excluded in In re Electronic Books Antitrust Litigation , 2014 WL 1282298 , at *11. In In re Electronic Books Antitrust Litigation , Judge Cote excluded Dr. Kalt's opinion that the plaintiffs' model was flawed because the plaintiffs' expert had failed to insert a "buzz variable" into the model. Id. That is qualitatively different from the question the Court confronts here: whether a model with a constant elasticity-which the parties sometimes refer to as a "log-log" model-or a model with a variable elasticity-which the parties sometimes refer to as a "translog" model-is the most appropriate and reliable in regression analysis generally, and as applied, to Dr. Rausser's model. The Court therefore declines plaintiffs' invitation to apply Judge Cote's reasoning concerning Dr. Kalt's "buzz" variable in this case.

The Court already has determined that Dr. Rausser's use of a constant fuel elasticity coefficient is a widely accepted econometric method and that "arguments about which method is superior for use in this case" go to weight, not admissibility. In re Urethane AntitrustLitig. , 2012 WL 6681783 , at *7 ; see also supra at 55-56, 58 . The use of a variable fuel coefficient is also an accepted econometric method, as indicated in some of the econometric literature that Dr. Rausser cited favorably in his Merits Reply Report. See Rausser Merits Reply at 247 & nn.735-36; see , e.g. , Laura Padilla Angulo, Labour Inputs Substitution During Corporate Restructuring: A Translog Model Approach for US Freight Railroads , 45 APPLIED ECON . 2547-62 (2012); John D. Bitzan & Theodore E. Keeler, Productivity Growth and Some of its Determinants in the Deregulated U.S. Railroad Industry , 70 S. ECON. J. 232-53 (2003). While there is a robust debate in this case over the use of log-log and translog models in regression analysis, the Court finds that Dr. Kalt's "chosen approaches have a firm basis in contemporary econometrics and cannot simply be dismissed as objectively wrong." In re Air Cargo ShippingServs. Antitrust Litig. , 2014 WL 7882100 , at *58 ; see also In re Vitamin C Antitrust Litig. , No. 06-MD-1738, 2012 WL 6675117 , at *5 (E.D.N.Y. Dec. 21, 2012). (internal quotation marks and citation omitted) (challenges to "disciplines that require the use of professional judgment... may be ultimately viewed as matters in which reasonable experts may differ"). Rule 702"is broad enough to permit testimony that is the product of competing principles or methods in the same field of expertise." FED. R. EVID . 702 advisory committee's note to 2000 amendment (citing Heller v. Shaw Indus., Inc. , 167 F.3d 146 , 160 (3d Cir. 1999) ). The Court concludes that Dr. Kalt's recommendation to use a variable fuel coefficient-or translog production function-is grounded in the econometric literature and sufficiently reliable under Daubert and Rule 702 to be admitted. With respect to plaintiffs' argument *70 that Dr. Kalt's teaching tool is inconsistent with the facts of this case, the Court will consider what weight to afford Dr. Kalt's opinion in its class certification determination under Rule 23. See Robinson v. District of Columbia , 75 F.Supp.3d at 200 (internal quotation marks and citation omitted) ("[I]t is not proper for the Court to exclude expert testimony merely because the factual bases for an expert's opinion are weak.").

b. Legacy False Positives

Dr. Kalt finds that Dr. Rausser's damages model calculates a 9.7% average weekly overcharge for legacy shipments, which Dr. Kalt defines as shipments "made during the Class Period under a price authority which was adopted during the pre-Class Period" before the conspiracy allegedly began. Kalt Class Rep. ¶¶ 5-6. According to Dr. Kalt, the "injury or damage for the legacy traffic" in Dr. Rausser's damages model is "virtually indistinguishable from what it produces for class traffic." Class Certification Hr'g Tr. (Sept. 29, 2016) at 834; see also Kalt Class Rep. ¶ 38 & Figure 2 (showing overcharges for specific legacy shipper-price authorities).

Recall that Dr. Rausser's primary response to charges that his damages model produces false positives for legacy shipments is his opinion regarding the change in the economic environment during class period and his so-called legacy decomposition analysis. See supra at 59-64. Dr. Rausser maintains that legacy shippers would have been harmed by the alleged conspiracy because in the but-for world they would have been able to renegotiate their contracts and obtain waivers from their fuel surcharges. Rausser Supp. Rep. at 5. Dr. Kalt objects to Dr. Rausser's legacy shippers opinion because Dr. Rausser cannot explain the high "level of waivers in the but-for world [that] would be needed to explain the legacy damages." Class Certification Hr'g Tr. (Sept. 29, 2016) at 837. Specifically, Dr. Kalt calculated that defendants in the but-for world would have needed to waive or discount 75.5% of fuel surcharges to explain the overcharges that Dr. Rausser's model produces when applied to legacy shipments. Kalt Class Rep. ¶ 114 & Figure 23. Dr. Kalt contends that such a but-for world is unrealistic because, during the pre-class period, NS's "collection rate" transaction data indicates that defendants only discounted or waived approximately 2.9% of fuel surcharges. Id . ¶ 111 & Figure 22.

The Court finds that Dr. Kalt's work regarding legacy shippers and their ability to obtain waivers in the but-for world relevant and reliable for the purposes of Rule 702 and Daubert . Dr. Kalt's work is based on available transaction data from one of the defendants, NS. Plaintiffs have made no argument as to why this data is insufficient or how Dr. Kalt's methods are unsound. To the extent that plaintiffs and Dr. Rausser assert that Dr. Kalt's work is inconsistent with the factual record, those arguments do not challenge the reliability of Dr. Kalt's methods but go to the weight to afford Dr. Kalt's opinion under Rule 23(b)(3). See Robinson v.District of Columbia , 75 F.Supp.3d at 200 .

c. Rates Equal to Variable Costs

Dr. Kalt next undertook an exercise in which he modified Dr. Rausser's damages model to set all-in rates equal to defendants' variable costs- i.e. , "run[ning] the model as if rates never got higher than variable costs"-and he again found "false positives." Kalt Class Rep. ¶¶ 61-64; see also ibr.US_Case_Law.Schema.Case_Body:v1">id ., App. C, Figure C.II.4 (testing Dr. Rausser's damages model before the addition of the STB data); Class Certification Hr'g Tr. (Sept. 29, 2016) at 849-50. According to Dr. Kalt, when shippers pay all-in rates that are no higher than defendants' variable costs, "[t]here's no claim *71 that such pricing at variable costs would generate overcharges" because defendants would only be recovering their shipping costs, including fuel, and no more. Class Certification Hr'g Tr. (Sept. 29, 2016) at 849. In this exercise, Dr. Kalt found "positive weekly overcharges for more than 33% of shipments when rates just equal costs," which is a counterintuitive result because defendants should not be collecting overcharges if they are simply recovering their variable costs. See Kalt Class Rep. ¶ 63 & Figure 11. The conclusion Dr. Kalt draws from this exercise is that Dr. Rausser's model "has this characteristic of converting rising fuel prices ... into damages." Class Certification Hr'g Tr. (Sept. 29, 2016) at 851.

Plaintiffs move to exclude Dr. Kalt's false positives exercise setting rates equal to variable costs under Daubert because it improperly assumes that "railroads always price above cost" when in reality they "price to market." See Kalt Daubert Mot. at 20-21. 21 Class Certification Hr'g Tr. (Sept. 28, 2016) at 519-20. They claim that Dr. Kalt tested Dr. Rausser's model for something that Dr. Rausser never intended. But as defendants point out, the purpose of Dr. Kalt's exercise is to create a counterfactual "test of hypothetical pricing free of any possible overcharge," and the "equations and specifications" in Dr. Kalt's exercise "remain exactly as constructed by Dr. Rausser." Kalt Daubert Opp. at 32. The Court therefore denies plaintiffs' request to exclude Dr. Kalt's false positives exercise setting rates equal to variable costs under Daubert and Rule 702.

d. Pre-Class Period Fuel Surcharges

Next Dr. Kalt applied fuel surcharge formulas negotiated during the non-conspiratorial pre-class period to local carload traffic during the class period-but not to interline or intermodal traffic-and found that those pre-conspiracy fuel surcharges "would have generated more than $133 million more in FSC payments by Class Members than those Class Members' actual FSC payments." Kalt Class Rep. ¶ 39 & Figure 3; see also id . ¶ 100 & Figure 19. From this, Dr. Kalt concludes that the "earning power of the purportedly conspiratorial [fuel surcharge] provisions was less than the earning power of the published pre-'conspiracy' provisions." Id. ¶ 100. Plaintiffs do not explicitly challenge this exercise on Daubert grounds. Dr. Rausser contends, however, that Dr. Kalt cherry-picked data by applying a pre-class period fuel surcharge formula not reflective of "all carload shipments" or "not the[ ] main" formula. See Rausser Supp. Reply at 31-32. Plaintiffs' criticism is essentially that Dr. Kalt selectively mined data from Dr. Rausser's damages model-choosing local carload traffic to the exclusion of all other class period transaction data-to create his pre-class period fuel surcharge false positives exercise. Dr. Kalt explained that Dr. Rausser's "[d]ata do not permit comparable analyses for interline and intermodal traffic," a claim plaintiffs do not challenge. Kalt Class Rep. ¶ 99 n. 143.

The technique of testing pieces of data in a larger regression is common in the field of econometrics. See *72 In re Pool Prod. Distribution Mkt. Antitrust Litig. , MDL No. 2328, 2016 WL 2756437 , at *7 (E.D. La. May 12, 2016) ("Econometrics literature and antitrust case law support [the] use of sub-regressions to test the results of Dr. Rausser's regression models."), appeal dismissed (Oct. 27, 2016). "[T]esting [an econometrician's] own hypothesis using a finer lens in order to determine whether his results held true across the class ... provide[s] a way for the defendants to illustrate their central argument that the plaintiffs' case-in-chief overlooks significant intra-class variation." In re Air Cargo Shipping Servs. Antitrust Litig. , No. 06-MD-l175, 2014 WL 7882100 , at *16-17 (E.D.N.Y. Oct. 15, 2014), adopted by 2015 WL 5093503 , at *1 (E.D.N.Y. July 10, 2015). Because Dr. Kalt has "provided explanations for his methodological decisions that appear reasonable and grounded in econometrics literature[,]... defendants have met their burden of demonstrating that [his] analysis is sufficiently reliable to be admitted." See In re Vitamin C Antitrust Litig. , 2012 WL 6675117 , at *8. To the extent that plaintiffs' data-mining charge reveals "gaps" in Dr. Kalt's work, those implicate the weight to be given to his expert opinion, not its admissibility. See Campbell ex rel. Campbell v. Metro. Prop.& Cas. Ins. Co. , 239 F.3d 179 , 186 (2d Cir. 2001) (stating that where there are "gaps or inconsistencies" in an expert's opinion, "such arguments go to the weight of the evidence"). The Court finds Dr. Kalt's pre-class period fuel surcharge false positives exercise is reliable under Daubert and Rule 702 despite the narrow slice of the data on which Dr. Kalt based it.

3. Structural Break Analysis

Dr. Kalt conducted a "structural break analysis," wherein he ran statistical exercises to determine whether Dr. Rausser's model could "reliably detect the onset of [the] conspiracy." Class Certification Hr'g Tr. (Sept. 29, 2016) at 842. The goal of the exercises was to test Dr. Rausser's structural break hypothesis that, "if there's not another intervening event besides conspiracy, we can interpret a break [in the data] as being the result of conspiracy." Id. at 844. Dr. Kalt first conducted a structural break regression analysis of the full pre-class and class period data (2000-2008), and then conducted a structural break regression analysis of only the pre-class period data (2000-2003). Kalt Class Rep. ¶¶ 40-42.

Two novel terms related to Dr. Kalt's structural break exercises require explanation before proceeding. Dr. Kalt uses the terms "pseudo class period" and "pseudo pre-class period" to refer to the revised periods that, under his structural break exercise, occur when one changes the date from where Dr. Rausser found for a structural break-at the onset of the alleged conspiracy-to another date. The "pseudo pre-class period" is the period before the revised alleged conspiracy start date and the "pseudo class period" is the period after the revised alleged conspiracy start date. Dr. Kalt and others also refer to the "pseudo pre-class period" as the "pseudo benchmark period."

Dr. Kalt's full structural break analysis spanned 2000 to 2008 and found that "[t]he STB Model... finds statistically significant structural breaks and large overcharges every January and July between 2001 and 2007." Kalt Class Rep. ¶ 40. Dr. Kalt's second structural break analysis focused only on the pre-class period and found that structural breaks occurred each quarter from April 2000 to January 2003. Id. ¶¶ 41-42 & Figure 5; see also Kalt Class Sur-Reply ¶ 44 n.83. Dr. Kalt considers these "ubiquitous structural breaks" to be "themselves false positives," Kalt Class Rep. ¶ 9, because the damages "model is always finding structural breaks and evidence of overcharges, even in a period where nothing in the case or in the claims says we should find overcharges and structural *73 breaks." Class Certification Hr'g Tr. (Sept. 29, 2016) at 843. Dr. Kalt argues that the prevalence of structural breaks in Dr. Rausser's damages model-which both of his structural break analyses demonstrate-stems from the fact that Dr. Rausser's damages model uses as a benchmark all pre-class period transactions regardless of whether they include a fuel surcharge, but "his test period" or class period "is limited to transactions with an FSC." Kalt Class Rep. ¶ 42 n.65; see also Class Certification Hr'g Tr. (Sept. 29, 2016) at 845. As Dr. Kalt puts it, "the mis-matching of data effectively guarantees that average all-in rates in the test period will be higher than rates in the benchmark period." Kalt Class Sur-Reply ¶ 44 n.83.

From his structural break analysis, Dr. Kalt draws the conclusion that Dr. Rausser's model "doesn't have the ability to distinguish the vintaging effect from the alleged onset of conspiracy." Class Certification Hr'g Tr. (Sept. 29, 2016) at 848-49. By "vintaging," Dr. Kalt simply means changing the date one chooses to separate the pseudo benchmark period from the pseudo class period. Id. at 845, 848-49. Dr. Kalt suggests that "vintaging" is important because the prevalence of fuel surcharges in pre-class period contracts increased during the pre-class period leading up to Dr. Rausser's alleged July 2003 structural break. Kalt Class Sur-Reply ¶ 44 & n.83. Dr. Kalt found structural breaks at every date he tested earlier than July 2003 because, by testing an earlier benchmark, Dr. Kalt in effect shifted those pre-class period transactions with increasing fuel surcharge coverage into the pseudo class period, leaving the pseudo benchmark period with a small percentage of transactions with a fuel surcharge. See id .; see also Kalt Class Rep., Figure 21 (showing an increase in adoption of fuel surcharge coverage in 2002-2003). In Dr. Kalt's view, Dr. Rausser's model therefore arbitrarily ascribes the July 2003 structural break to the conspiracy when Dr. Rausser's data construction-increasing or decreasing the vintaging effect-actually caused the break. Kalt Class Rep. ¶¶ 41-42 & Figure 5.

Plaintiffs move to exclude Dr. Kalt's pre-class structural break analysis on Daubert grounds because Dr. Kalt's "work papers" show that he "makes the nonsensical finding that as fuel costs rose in the pre-class period, all-in freight rates actually decreased." Kalt Daubert Mot. at 20. In other words, plaintiffs attack Dr. Kalt's results from the pre-class structural break analysis by claiming that the coefficient for Dr. Kalt's "diesel price interaction variable" has the wrong sign ( i.e. , negative) because the coefficient implies that as fuel costs increase, all-in rates decrease, which runs contrary to basic economic principles. See Rausser Supp. Reply at 90-91; McClave Supp. Rep. at 9. Plaintiffs conclude that this negative sign is indicative of unreliable work by Dr. Kalt that the Court should exclude under Daubert . See Kalt Daubert Mot. at 20.

The Court understands that an inexplicable or unexpected coefficient can act as a canary in the coal mine that indicates that a regression model-although perhaps facially reliable-is producing counterintuitive results inconsistent with real-world behavior. But here "[t]he Court is not persuaded that the variable's negative coefficient deems" Dr. Kalt's pre-class structural break analysis "so unreliable ... that it fails Daubert 's reliability prong," because Dr. Kalt "provides [a] plausible explanation[ ] as to why the negative coefficient is not necessarily an unexpected outcome." In re High-Tech Emp. Antitrust Litig. , 2014 WL 1351040 , at *21. 22 He explains that the negative coefficient *74 exists only with respect to Dr. Rausser's latest damages model that uses the STB data, not his previous damages model without that data. Kalt Class Sur-Reply ¶ 40; see also Kalt Class Rep., App. C. Figure C.I.5. If the negative coefficient reflects anything, Dr. Kalt argues, it is that Dr. Rausser's latest damages model-which includes the STB data-is unreliable. Kalt Class Sur-Reply ¶ 43. Dr. Kalt also adds that the negative variable-the diesel fuel indicator variable-must be considered in tandem with the class indicator variable because both variables capture the effect of the alleged conspiracy. Id. ¶¶ 41-42 . When considering these two variables as a unit, Dr. Kalt opines that Dr. Rausser's damages model generates overcharges throughout the pre-class period. Id. ¶ 42 .

"This Court need not decide whether Dr. [Kalt's]... explanations are in fact correct, as '[t]he evidentiary requirement of reliability [under Daubert] is lower than the merits standard of correctness.' " In re High-Tech Emp. Antitrust Litig. , 2014 WL 1351040 , at *21 (quoting In re Paoli R.R. Yard PCB Litig. , 35 F.3d 717 , 744 (3d Cir. 1994) ); see also Primiano v.Cook , 598 F.3d 558 , 564 (9th Cir. 2010) (internal citations omitted) ("[T]he test under Daubert is not the correctness of the expert's conclusions but the soundness of his methodology."). The Court therefore rejects plaintiffs' argument that the existence of a negative coefficient on the diesel price interaction variable means that Dr. Kalt's pre-class structural break analysis is so unreliable as to warrant its exclusion under Daubert and Rule 702. The Court will decide what weight to afford Dr. Kalt's pre-class structural break analysis, given the negative sign on a significant variable, under Rule 23.

4. Ordinary Fuel Cost Recovery

Plaintiffs next move to exclude Dr. Kalt's expert opinions related to defendants' ordinary fuel cost recovery on Daubert grounds, arguing that because Dr. Kalt "ignores significant [record] evidence of fuel cost over-recovery," meaning that defendants passed through more than just increased fuel costs to shippers during the class period. See Kalt Daubert Mot. at 16-18. 23 This argument is not that Dr. Kalt's methodology is unreliable and therefore is not based on Daubert . Even if plaintiffs are correct that the factual record is at odds with Dr. Kalt's position on ordinary fuel cost recovery, "it is not proper for the Court to exclude expert testimony merely because the factual bases for an expert's opinion are weak." Boyar v.Korean Air Lines Co. , 954 F.Supp. 4 , 7 (D.D.C. 1996) (internal quotation marks and citation omitted). It is a matter to be addressed in the class certification determination stage and then, possibly, at trial. The Court therefore declines to exclude Dr. Kalt's expert opinion suggesting that Dr. Rausser's model turns ordinary fuel cost recovery *75 into overcharges under Daubert and Rule 702.

5. Uninjured Class Members

Dr. Kalt's final critique of Dr. Rausser's damages model concerns how it "find[s] no or negative " overcharges-that is, a putative class member "actually paid lower rates, on a net basis, on its class shipments than the damages model predicts that it would have paid in the but-for world." Kalt Class Rep. ¶ 14 & n. 18 (emphasis in original). Dr. Kalt looked at raw transaction data in Dr. Rausser's model and found that: (1) 65.2% of shippers have at least one shipment with negative overcharges; (2) 36.0% of all class shipments have negative overcharges; (3) 28.3% of all shippers have net negative overcharges across all of their shipments; and (4) 16.7% of all shippers have negative overcharges across all of their shipments. Kalt Class Rep. ¶¶ 73-74 & Figure 13. The 36% of class shipments with negative overcharges represents $15.2 billion of class revenue. Id. ¶ 74. Dr. Kalt also removed the problematic STB data from Dr. Rausser's damages model and used a higher fuel coefficient of 0.222, causing the number of shippers with net negative overcharges to jump from 28.0% to 43.5%. Id . ¶ 75 & Figure 14. At the class certification hearing, Dr. Kalt emphasized that Dr. Rausser himself concedes that at least 20.8% of all class shipments have net negative overcharges and 12.7% of all shippers have only negative overcharges across all of their shipments. Class Certification Hr'g Tr. (Sept. 29, 2016) at 862; see also Rausser Supp. Reply, Table 19. Dr. Kalt concludes from these examples of negative overcharges that there cannot be common proof of damages. Kalt Class Rep. ¶ 70.

Plaintiffs move to exclude Dr. Kalt's exercises with respect to uninjured class members under Daubert , arguing that Judge Cote excluded a similar opinion offered by Dr. Kalt in In re Electronic Books Antitrust Litigation , 2014 WL 1282298 , at *13. Kalt Daubert Mot. at 31. In In re Electronic Books Antitrust Litigation , Dr. Kalt argued that the plaintiffs' regression model found injury for "millions of transactions [that] occurred at prices below" the average "but-for prices." 2014 WL 1282298 , at *13. Judge Cote concluded that Dr. Kalt's work was unreliable because his "test, which simply compares the actual transaction price ( i.e. , the actual collusive price) to the predicted (average) competitive price, would flag as a 'false positive' the transaction where consumers received a 50% discount, since the actual price they paid ($12) is less than the average competitive price ($15)." Id . 24 Put differently, Judge Cote saw it as improper to label "uninjured" those plaintiffs who paid less than the but-for price calculated by the plaintiffs' regression model, but who nonetheless would have paid even less in the absence of the conspiracy. Unlike the situation confronted by Judge Cote in In re Electronic BooksAntitrust Litigation , however, the intent of Dr. Rausser's regression model here was not to calculate "elevation in prices due to price collusion for each" individual sale or shipment. See 2014 WL 1282298 , at *13 ; see also Rausser Supp. Reply at 47 (showing the output of Dr. Rausser's damages model is an average weekly overcharge). Rather, Dr. Rausser's damages model calculates an average weekly overcharge based on a class-wide average but-for price. It therefore is appropriate for Dr. Kalt to examine individual shipments at prices below Dr. Rausser's class-wide average but-for price. See Kalt Class Rep. ¶¶ 71-75. Dr. Kalt's exercise is built upon the same robust data as *76 Dr. Rausser's damages model and identifies a substantial number of shipments with no injury from the alleged conspiracy. Dr. Kalt's uninjured class members exercise is sufficiently reliable under Daubert and Rule 702 to warrant admissibility. The Court will consider whether the number of uninjured class members defeats a showing of predominance under Rule 23(b). See infra at 131-42.

C. Dr. Jeffrey J. Leitzinger

The Court next considers plaintiffs' supplemental expert, Dr. Jeffrey J. Leitzinger, whom plaintiffs retained to analyze the reliability of Dr. Rausser's work after the discovery of Dr. Rausser's connection to Cascade Settlement Services and the potential for damage to Dr. Rausser's credibility. See generally Leitzinger Rep. Dr. Leitzinger completed one expert report in this case. He is an economist and Managing Director of Econ One Research, Inc., an economic research and consulting firm. Id. ¶ 1. He holds a B.A. in economics from Santa Clara University and an M.A. and a Ph.D. in economics from the University of California, Los Angeles. He has been retained as an expert in numerous antitrust class action cases and is experienced in the use of regression models. Id. ; see also id., Ex. 1. Defendants stipulated to Dr. Leitzinger's qualifications as an expert in the fields of economics and econometrics. Class Certification Hr'g Tr. (Sept. 27, 2016) at 330. The Court therefore finds that Dr. Leitzinger is qualified as an expert in the fields of economics and econometrics under Rule 702 based on his education and experience.

The Court reads Dr. Leitzinger's expert opinion to address four topics of consequence and to have reached the following conclusions: (1) Dr. Rausser's research methodology, analysis, and model design were sound; (2) Dr. Rausser's 0.103 constant fuel coefficient is appropriately conservative due to "margin compression" and "fuel price hedging"; (3) Dr. Rausser's model is not rigged to produce damages because a "Box-Cox" sensitivity analysis shows fuel price elasticity estimates below 0.103; and (4) his own "fuel shares" exercise demonstrates that the annual variable fuel price elasticities never rose high enough to eliminate the overcharges generated by Dr. Rausser's damages model. The Court will determine the admissibility of each of Dr. Leitzinger's opinions under Daubert and Rule 702, considering, where appropriate, the opinions of defendants' experts, specifically Dr. Carlton.

At the outset, the Court notes that defendants devoted a large portion of their cross-examination of Dr. Leitzinger at the class certification hearing to discussing the exercises he did not perform. Class Certification Hr'g Tr. (Sept. 29, 2016) at 773-84. That testimony made explicit what is implicit in Dr. Leitzinger's expert report: he did not conduct any independent testing of his own regarding false positives or structural breaks, id . at 773-77; did not create his own common factors or damages models; did not perform a relevant market analysis; and did not otherwise confirm Dr. Rausser's overcharge estimates for specific commodities, routes, etc. Id. at 777-84. The Court does not consider these challenges to be Daubert arguments because they do not call into question the reliability of the work that Dr. Leitzinger actually performed. The Court notes that it is perfectly appropriate for Dr. Leitzinger to rely upon and not replicate these aspects of Dr. Rausser's work in order to comment on them. "[T]here is no indication that the work was outside his expertise as an economist (in which field Dr. [Leitzinger] is clearly qualified) such that he could not understand it. Indeed, part of Dr. [Leitzinger's] opinion is that Dr. [Rausser's] analysis is consistent with economic theory." In re Urethane Antitrust Litig. , 2012 WL 6681783 , at *4. The Court *77 therefore does not find Dr. Leitzinger unreliable under Daubert and Rule 702 based on the work he did not do.

1. Dr. Rausser's Research Methodology, Analysis, and Model Design

Dr. Leitzinger reviewed Dr. Rausser's reports, work papers, and deposition testimony and concluded that his work in this case "was reasonable and reliable" along five metrics of evaluation: (1) consistency with professional practice; (2) comprehensiveness of data; (3) reasonableness of research design; (4) proper and accurate analysis; and (5) adequacy of results to support conclusions. Leitzinger Rep. ¶¶ 3, 7, 10. Dr. Leitzinger found "no evidence of bias or deviation from sound economic principles in the manner in which [Dr. Rausser] designed his work, utilized the evidence, or drew his conclusions." Id. ¶ 10. Dr. Leitzinger confirmed Dr. Rausser's conclusion that the rail freight industry is susceptible to collusion with respect to a common pricing scheme. Id. ¶ 12. At no point did Dr. Leitzinger's report stray into an independent review of the documentary record to opine on whether there was or was not collusion in this case, as Dr. Rausser did. See supra at 50-51, 52. Dr. Leitzinger merely collected scholarly and governmental support for Dr. Rausser's expert opinion that defendants' alleged conspiratorial conduct in this case is consistent with collusion and not with the behavior of self-interested competitors. Leitzinger Rep. ¶¶ 21-34. That is permissible expert opinion because "[a]n economic expert may permissibly testify as to whether certain conduct is cons

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