State of New York et al v. Deutsche Telekom AG et al, No. 1:2019cv05434 - Document 302 (S.D.N.Y. 2019)
Court Description: ORDER granting 253 Motion in Limine; granting 256 Motion in Limine. For the reasons stated above, it is hereby ORDERED that the motion in limine ( Dkt. No. 253) of defendants Deutsche Telekom AG, T-Mobile US, Inc., Softbank Group Corp., and S print Corporation (collectively, "Defendants") to exclude evidence of foreign market studies and related testimony and opinions at the trial of this action is GRANTED; and it is further ORDERED that the motion in limine (Dkt. No. 256) of De fendants to exclude evidence related to and including the stock price opinion of Carl Shapiro at the trial of this action is GRANTED. The Court will defer ruling on the motion in limine (Dkt. No. 263) of Defendants to exclude at the trial of this action the testimony of Catherine Sandoval and any related commencement of trial. SO ORDERED. (Signed by Judge Victor Marrero on 12/2/2019) (ks)
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State of New York et al v. Deutsche Telekom AG et al Doc. 302 USDC SDNY DOCUMENT ELECTRONICALLY FILED /f¾,L 7 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK DOC#: DATE FILED: T -~ -----------------------------------x STATE OF NEW YORK, et al., ' Civ. 5434 f9 (VM) l Plaintiffs, ~ECISION AND ORDER - against - Il DEUTSCHE TELEKOM AG, et al., Defendants. -----------------------------------x VICTOR MARRERO, United States District J*dge. ! Plaintiffs, Connecticut, the States Hawaii, of New i York, ! Mciryland, Illinois, California, Michigan, i Minnesota, Oregon, Massachusetts, of Columbia and Wisconsin, Pennsylvania, (collectively, the and Virginfa, Commonwealths of and the District the "Plaintiiff States"), acting by and through their respective Office& of their Attorneys General, brought this T-Mobile US, Sprint Inc. ( "T-Mobile") , Corporation foregoing ("Sprint," defendants, proposed acquisition Merger"). would produce in and coLlectively seeking to of Sprint by T-Mobile claim that the of substantially the market for retail Act, codified with the enjoin the Proposed Merger effect services, and (the "Proposed an telecommunications Clayton Deutsche Telekom AG, Softbank Group Corp. , "Defendants") Plaintiff States competition the action against mobile lessening wireless in violation of Section 7 of at 15 U.S.C. Section 18. Dockets.Justia.com Defendants counter that the Proposed Merger would in fact increase competition in the relevant United States wireless markets and that Plaintiff States have thus failed to state a claim for relief. A bench trial is scheduled December 9 through December 20, three motions in limine States from presenting market studies and including the ("Shapiro") , "Stock an at No. Motion," Dkt. No. opinions in· this trial: to evidence (3) action, and the procedures of any Commission ("FCC") respect the No. to 2 63) . and the future foreign (see Dr. Carl Shapiro States ( see "Second action following reasons, of legal particularly Federal Proposed Merger . ( see For the of testimony including of Plaintiff opinions testimony by law professor Catherine Sandoval regarding from evidence related to and Plaintiff and Court preclude ( 1) Opinion" for 256); (2) this Defendants have filed testimony 253); Price expert 2019. seeking related "First Motion," Dkt. before it any ("Sandoval") Communications may take with "Third Motion," Dkt. the Court GRANTS the First and Second Motions and defers decision on the Third Motion until trial commences. I. "The purpose of LEGAL STANDARDS an in limine motion is to aid the trial process by enabling the Court to rule in advance of 2 trial on the relevance of certain forecasted evidence, to issues that are at, argument lengthy trial." Palmieri 1996) definitely v. 88 quotation (internal for trial, F.3d marks 136, without of, interruption or Defaria, set 141 as the (2d Cir. court's omitted). A determination of a motion in limine is preliminary and may be subject to change as Capital Mgmt., L.P. v. the case Schneider, unfolds. 551 F. Supp. See Highland 2d 173, 176 (S.D.N.Y. 2008). Federal relevant Rule of evidence Evidence is ("FRE") generally 402 provides admissible,· that and FRE 403 provides that evidence that is relevant may nonetheless be excluded outweighed wasting if by, time, evidence. Fed. its among or R. probative other is considerations, needlessly Evict. " [ e] vidence is relevant if: value presenting 402, 403. (a) substantially undue delay, cumulative Under FRE 401, it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action." Fed. R. Evict. 401. FRE 702 governs the admissibility of expert testimony and provides that a qualified expert may testify if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in 3 issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case. Fed. R. Evict. 702. A trial expert's qualified testimony foundation, or unsupported speculation." Inc., 509 is U.S. speculative simply 579, or court based 590 must rests on decide on "subjective v. Merrell (1993). If expert it should be belief Dow where In this regard, it concludes or Pharm., testimony excluded. Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 21 1996). a reliable a Daubert conjectural, whether is See (2d Cir. a court may exclude expert evidence "that there is simply too great an analytical gap between the data and the opinion proffered." Gen. Elec. Co. Additionally, v. an Joiner, expert 522 "may U.S. not give 136, 146 (1997). testimony stating ultimate legal conclusions" or otherwise usurp the role of the trial judge. In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liab. Litig., MDL No. (S.D.N.Y. May 7, 2008) 1358, 2008 WL 1971538, at *13 (quoting United States v. Bilzerian, 926 F.2d 1285, 1294 (2d Cir. 1988)). II. Defendants any materials structure, request or FIRST MOTION that expert the Court testimony competitiveness, or 4 exclude from trial regarding competitive the market effects of mergers in wireless communications markets located outside of the United States, Canada and Europe. 254.) They argue foreign markets including particularly markets in (See "Defs. First Mem. of Law," Dkt No. that introducing evidence of mergers would risk time-consuming in mini-trials regarding the comparability and relevance of those foreign mergers to the Proposed Merger, and that consideration of the foreign mergers at trial would be of no probative value because of their unique factual circumstances. 1-2, 4-5. ) laid out Defendants relia.ble a consideration further of argue that methodology studies involving ( See id. Shapiro has to foreign at not justify his markets, and that he fails to analyze the specific factual circumstances at issue in those studies or their relevance to the present action. (See id. at 3.) Plaintiff States oppose the First Motion, arguing that no case law supports the proposition that a court cannot consider out-of-market evidence to understand how a merger may affect the relevant market. Law" at 4, Dkt. No. 278~) (See "Pls. First Mem. Of Plaintiff States claim that such evidence is relevant because studies analyzing the effects of mergers in foreign wireless markets that reduce the number of competitors from four to three may be probative of the effects of the Proposed Merger, 5 which would reduce the number of major mobile network operators in the United States from States add four to (See t~ree. Defendants' that id. at arguments 2-3.) Plaintiff regarding the reliability of Shapiro's analysis bear on the weight of the evidence rather than its admissibility. In reply, foreign Defendants assert that while evidence markets circumstances, is not necessarily such considering inappropriate in believe conditions that (See id. at 5.) this case because in irrelevant evidence there foreign is markets from in all would be no basis are to similar enough to conditions in United States markets to render the foreign evidence market probative. ( See Def s. First the Court is sufficiently relevant and Reply Mem. Law, No. of Dkt. 287, at 1.) While not categorically barred considering evidence of mergers in foreign markets, nevertheless exclude such evidence at this time. finds that the foreign markets relevance is of wireless dubious at best. from it will The Court services mergers Despite the in apparent similarity between mergers in foreign and domestic markets involving a similar number of competitors, numerous salient factors, including market structure, regulatory frameworks, and consumer demographics, infrastructure 6 may differ significantly and likely yield only an apples-to-oranges comparison. Even assuming that evidence of foreign wireless services mergers was relevant, though, the Court finds that the limited probative value of such evidence would outweighed by the undue delay that would result consideration the results uniform at trial. of studies (see Pls. As Plaintiff States Mero. of Law at from its acknowledge, regarding foreign mergers First be 3), are not and the admission of such evidence risks lengthy argument over the countless factors that render comparable or incomparable, foreign mergers either probative or not probative in relation to the Proposed Merger. The Court concludes that trial time would be better spent developing the evidence of the Proposed Merger's competitive effects that can be derived from the relevant United States markets at issue, rather than wasting time litigating whether and how mergers in foreign wireless markets might conceivably predict those competitive effects. Accordingly, the Court grants the First Motion. III. SECOND MOTION In their Second Motion, unreliable any evidence Defendants seek to exclude as related to Shapiro's Stock Price Opinion, which evaluates changes in the stock prices of T- 7 Mobile both and Sprint's major shortly before regarding Stock the Price and after notable Merger. (See concludes that Proposed Opinion competitors, AT&T and news announcements Second the Verizon, Motion.) Proposed The Merger would be anticompetitive because the increases in AT&T and Verizon's stock prices after positive news events regarding the Proposed Merger indicate that the merger would increase the potential higher for prices and anticompetitive coordination in the market for wireless telecommunications services. In particular, wittiout the Defendants allege that Shapiro ignored explanation filing of the how instant relevant stock prices, did not increase anticompetitive certain upon lawsuit the Opinion's coordination. Merger, 257, at 3-4.) ( "DOJ") conclusion (See have announcement . negotiated between Defendants, Price may events including impacted the why Verizon and AT&T's stock prices Proposed Department of Justice notable "Defs. and FCC, of the allegedly how the remedies and the might cut against regarding Second Defendants add United States Mem. the Stock anti-competitive of that Law," the Dkt. No. methodology underlying the Stock Price Opinion is unreliable because it failed to control affect for myriad factors stock price, that might and because academic 8 otherwise literature cited by Shapiro states that the correlation between a merger's likelihood and rival firms' a merger's potentially stock prices does not establish anticompetitive with any (See id. --- at 5-6.) meaningful degree of reliability. In opposition to the effects Second Motion, Plaintiff States argue that Shapiro's analysis is reliable and supported by academic literature, reflect the Second Mem. and contrary of that views Law" at Defendants' of their Dkt. 1, concerns merely expert. No. ( See 280.) "Pls. Moreover, Plaintiff States contend that Shapiro did not ignore major events regarding the Bloomberg News' Proposed Merger because he categorization of certain news relied on events as "Hot Headlines" and drew his sample from that set of news events. (See id. at 3.) analysis Shapiro's confounding Plaintiff States further argue that minimized factors on the the stock impact prices of at other issue by selecting a narrow window of time in which to assess major news announcements' Verizon, impacts on the stock prices of AT&T and specifically the five minutes after each news event. States that add Defendants' significance. and ( See id. Shapiro's concerns, highlighted minutes accounting testing the (See id. at 5.) 9 reply for before five at 3-4.) Plaintiff report addresses the news results and for events they statistical Defendants briefly reiterated their position in reply, criticizing Shapiro's methodological reliance on Bloomberg News articles and adding that efforts to gauge investors' views of the inappropriate Proposed in light Merger's competitive of more direct impact evidence that AT&T and Verizon would oppose the merger. are indicating ( See "Defs. Second Reply. Mem. of Law," Dkt No. 291, at 1-2.) Putting aside whether the Proposed Merger will have an anticompetitive effect could theoretically finds that the "sufficient and demonstrate Stock facts whether or Price data" stock that does justify the of reliability the an of the not Court rely on admission of related testimony and evidence under FRE 702. skeptical movements effect, Opinion to price The Court is opinion that extrapolates the likelihood of anticompetitive effects from between five period of timeframe chosen well seven over reviewed in variables to discrete a with news year. And respect order to minimize upon Shapiro's although to the articles each effect analysis, covering the news of such a narrow event was confounding a decision effectively asks the Court to entertain the notion that the Proposed hours' Merger is anticompetitive based worth of stock price movements. Shapiro's methodology for analyzing 10 on roughly one Even assuming that this limited dataset was reliable, and "if the analysis data, reliable is not based upon relevant opinion expert's the inadmissible." Laumann v. Nat'l Hockey League, 3d 299, 303 (S.D.N.Y. 2015). there is too great a data on derives Price which Opinion . or 117 F. be Supp. In short, the Court finds that gap between the small sample size of Shapiro from that will relies data to related and the conclusion justify admission evidence at this of that the time. he Stock See Gen Elec. Co., 522 U.S. at 146. Furthermore, of Shapiro's Opinion. there is cause to methodology with respect the to the reliability Stock Price While the choice to rely on Bloomberg News' Headlines" may reduce concerns selected the dataset himself, that Bloomberg News sort doubt of that there selected the rigorous analysis Shapiro is "Hot arbitrarily nothing to suggest "Hot Headlines" with the or carefully considered methodology that courts would normally expect of an expert. Indeed, as reliability Defendants note, of a it is difficult to accept the methodology announcement of the that excludes initial Proposed Merger from its dataset when assessing the Proposed Merger's effects. Reply Mem. of Law at case, the Court Stock Price 2-3.) concludes Opinion the would As that not 11 the trier (See Defs . . Second of evidence be helpful fact related in the in this to the manner contemplated by FRE 702. Accordingly, the Court grants the expert Defendants' Second Motion. IV. Defendants Finally, testimony THIRD MOTION of Sandoval, seek exclude to including any legal opinions or related evidence regarding the FCC's procedures, its review of the proposed merger, and future actions that the FCC may take. ( See Third Motion.) report amounts to interpretation of report concerns the FCC' s of speculation. legal FCC brief rules and setting regulations, forth her that her issues that have already been resolved by final discussion a Defendants argue that Sandoval's order approving the merger, future FCC action amounts (See "Defs. Third Mem. and that her to inadmissible of Law," Dkt. No. 264, at 2-4.) Opposing the Third Motion, Defendants' remedies experts that "Proposed devote significant Defendants Remedies"), Plaintiff States note that have which Law," Dkt. Defendants No. have at 1.) placed at 284, proposed are actions to be taken by the FCC. attention to contingent (See "Pls. Plaintiff issue the to the DOJ on (the future Third Mem. States FCC's argue of that policies, procedures, and future actions with respect to the Proposed Merger by focusing on the 12 Proposed Remedies, their potential impact on competition, and the FCC' s procedural approach to reviewing, approving, or enforcing the Proposed Remedies. (See id.) In reply, Defendants argue that Sandoval's opinion is not based on specialized knowledge or experience specific to mergers, but is instead merely speculation. Third Reply Mem. that they have of Law," Dkt. not placed No. the 2 98, FCC' s ( See "Def s. at 1.) legal They add framework at issue because their discussion of the FCC' s waiver review process occupied only two paragraphs, and that they believe it would be testimony appropriate try the regarding regulations. to the FCC's case with processes, no expert rules, and (See id. at 1-2.) Defendants correctly note that where expert reports read like legal briefs and threaten to usurp judges' to determine the relevant law, courts may duty reasonably exclude such evidence at trial. See TC Sys. Inc. v. Town of Colonie, 2002). New York, However, testimony relevant to 213 the regarding to interpret conclusions issues the law regarding F. Supp. extent agency in or that a procedures the set 2d 171, case forth the agency's and 181-82 (N.D.N.Y. qualified and practices does not speculation action, expert's that or is merely legal testimony and related evidence may be admissible at trial. See, e.g., 13 id. at (declining 182 to exclude anticipated trial testimony regarding FCC criteria prior to trial); Raley v. Hyundai Motor Co., No. 08 Civ. 376, 2010 WL 199976, at *4-5 (W. D. Okla. Jan. 14, 2010) ( allowing testimony on federal agency practice if relevant to an issue in the case). While is it clear not either that party must necessarily discuss FCC procedures at trial in this action, the Court appear to agrees have with put Plaintiff FCC States that and actions procedures through their own expert reports. Accordingly, Defendants at issue it would be inappropriate to exclude Sandoval's testimony at this early stage when Defendants may continue to put future FCC review and actions at issue during trial. If Plaintiff States can establish at trial that Sandoval is qualified to testify as an expert, the Court may provisionally States to present evidence regarding trial, insofar as such evidence allow Plaintiff FCC practices during does not amount to mere speculation regarding the agency's future behavior or legal argumentation determines is that irrelevant exclude or better suited Sandoval's or to such brief. testimony and unreliable, disregard a it retains evidence If the Court related evidence the during or ability to after the conclusion of trial. See Chill v. Calamos Advisors LLC, No. 14 15 Civ. 1014, 2018 WL 4778912, at *7 (S.D.N.Y. Oct. 3, 253) of 2018) . V. ORDER For the reasons stated above, it is hereby ORDERED that the motion in limine ( Dkt. defendants Deutsche Telekom AG, T-Mobile US, Group Corp., and Sprint No. Inc., Softbank Corporation (collectively, "Defendants") to exclude evidence of foreign market studies and related testimony and opinions at the trial of this action is GRANTED; and it is further ORDERED that the motion in limine (Dkt. No. 256) of Defendants to exclude evidence related to and including the stock price opinion of Carl Shapiro at the trial of this action is GRANTED. motion in limine the trial Sandoval of and The Court will defer ruling the (Dkt. No. 263) of Defendants to exclude at this any action the testimony evidence related until of Catherine after commencement of trial. SO ORDERED. Dated: on New York, New York 2 December 2019 U.S.D.J. 15 the
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