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Antitrust Plaintiff’s Damages Expert May Rely in Part on Lawful Conduct, Despite Defendants’ Claim that to Do So Disproves Causation

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From Discover Fin. Servs. V. Visa USA, Inc., 2008 U.S. Dist. LEXIS 82441 (S.D.N.Y. Oct. 11, 2008):

The crux of Defendants' challenge with respect to Dr. Jerry Hausman is that he improperly relies upon lawful conduct, including MasterCard's acquiring ban, and thus "disproves causation by ruling in alternative causes that fully explain Discover's decision not to use third-party acquirers." ***

Defendants contend that Dr. Hausman's methodology in constructing his damages model is unreliable given that alternative causes can fully explain Discover's decision not to use third-party acquirers. In support, Defendants point to Dr. Hausman's own statement that "'[b]ecause virtually all acquirers in the United States acquired for both Visa and MasterCard during the relevant time frame, the CPP was a complete bar against third-party acquiring' beginning in 1996." *** According to Defendants, this statement demonstrates that other lawful conduct — not challenged in the present case — was alone sufficient to prevent Discover from using third-party acquirers. *** As a result, Discover should be precluded from proffering Dr. Hausman's testimony to establish this alleged causal link.***

In response, Discover submits that, as a matter of law, it is enough to establish that Defendants' allegedly unlawful conduct substantially contributed to Discover's inability to engage in third-party acquiring.... The Court agrees with Discover and, for the reasons set forth below, finds that Dr. Hausman's opinion is admissible.

In order to recover damages in an antitrust action, a plaintiff

must have proved that some damage occurred to it as a result of defendant's alleged antitrust violation, and not some other cause. Plaintiff is not required to prove that defendant's alleged antitrust violation was the sole cause of its injury; nor need plaintiff eliminate all other possible causes of injury. It is enough if plaintiff has proved that the alleged antitrust violation was a material cause of its injury. However, if . . . that plaintiff's injury was caused primarily by something other than the alleged antitrust violation, . . . that plaintiff has failed to prove that it is entitled to recover damages from defendant.

ABA Section of Antitrust Law, Model Jury Instructions in Civil Antitrust Cases (2005) at F-3. See also Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 114 n.9 (1969); Litton Sys. v. AT&T, 700 F.2d 785, 828 n.49 (2d Cir. 1983) ("Although [plaintiff] was required to prove a "causal connection" between its injury and [defendant's] illegal conduct, it was sufficient to demonstrate that [defendant's] conduct was a substantial or materially contributing factor."). Thus, Discover need not prove that the issuing ban was the only cause of its alleged failure to use third-party acquirers.

Testimony not inadmissible under Rule 702.

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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