City of Tuscaloosa v. Harcros Chemicals

The city of Tuscaloosa and other municipalities in Alabama (collectively, the municipalities) (plaintiffs) purchased chlorine from Harcros Chemicals, Inc., and four other chemical companies (collectively, the chemical companies) (defendants). The municipalities sued the chemical companies in federal district court, alleging that the chemical companies violated § 1 of the Sherman Act by exchanging price information and concealing their collusion. At trial, the municipalities presented testimony from expert witnesses to support their claims. Economist Dr. Robert F. Lanzillotti, who had no direct information about the actions of the chemical companies, based his testimony on bidding patterns and concluded that the chemical companies could have easily engaged in collusive activity to fix prices. Statistician Dr. James T. McClave performed a statistical analysis on data used by Lanzillotti and argued that the chemical companies’ collusive behavior raised chlorine prices. The chemical companies filed motions for summary judgment, arguing that the expert testimonies presented by the municipalities should be excluded under the Daubert standard. The district court granted the motions for summary judgment, holding that Lanzillotti and McClave improperly based their testimonies on methods and theories that were not generally accepted in their fields. The municipalities appealed the ruling as to McClave’s testimony.