Conwood Co. v. United States Tobacco Co.

Conwood Company (Conwood) (plaintiff) and the United States Tobacco Company (USTC) (defendant) each manufactured snuff, a form of smokeless tobacco. Conwood had a 13.5 percent market share. USTC had a 77 percent market share. Conwood brought a monopolization suit against USTC, alleging predatory practices that excluded Conwood from the market in certain areas. At trial, USTC conceded that it had a monopoly share of the relevant market but denied engaging in exclusionary conduct. Conwood argued that if it had not been subject to USTC’s illegal exclusionary tactics, Conwood would have had a 22 to 25 percent market share. Conwood's case relied on the expert testimony of Richard Leftwich, who used statistical tests to assess Conwood's claims. Leftwich's regression analysis showed that in states where Conwood had a market share foothold of between 15 and 20 percent, Conwood experienced higher market share growth in the relevant time period than in states where it did not have a market share foothold. Leftwich used a before-and-after test to compare Conwood’s growth rates in foothold and non-foothold states in the periods before and after USTC's exclusionary conduct began. Finally, Leftwich used a yardstick test to compare Conwood’s growth rates in the snuff market to its growth rates in the loose-leaf tobacco market, in which USTC did not participate. The results of these tests supported Conwood's contention that, if not for USTC's exclusionary tactics, Conwood would have had a larger share of the snuff market. Leftwich estimated Conwood’s damages at between $313 and $488 million. The jury found USTC guilty and awarded $350 million in damages. Under the Clayton Act, the award was tripled to $1.05 billion. USTC appealed, arguing that the trial court incorrectly relied on Leftwich’s testimony.