In re Aluminum Phosphide Antitrust Litigation

893 F. Supp. 1497 (1995)

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In re Aluminum Phosphide Antitrust Litigation

United States District Court for the District of Kansas
893 F. Supp. 1497 (1995)

Facts

Sellers of aluminum phosphide products (sellers) (defendants) were found guilty of criminal price-fixing. Buyers of the products (purchasers) (plaintiffs) filed a class-action lawsuit against the sellers under the Sherman Act, § 1, seeking damages on behalf of various entities that bought the products during the time period that the illegal price-fixing conspiracy occurred, from January 1, 1988, through December 31, 1992. Aluminum phosphide prices had steadily declined in the years prior to the price-fixing conspiracy. Prices continued to drop even after the conspiracy period ended through October 1993. The overall decline in prices was attributed to lower demand, higher competition, and the entry of new sellers into the market. The sellers and purchasers agreed that the “before-and-after” economic model was the proper way to measure the purchasers’ damages. The before-and-after model involved comparing the actual prices during the conspiracy period to the expected prices that would have existed at that time if the conspiracy had not occurred. The purchasers tried to prove the claimed damages by offering the testimony of an expert economist, Dr. Richard Hoyt. Dr. Hoyt opined that, but for the price-fixing conspiracy, prices during the conspiracy period (i.e., between January 1, 1988, and December 31, 1992) would have been equivalent to the prices that prevailed during the first 10 months of 1993 (i.e., after the price-fixing conspiracy ended). Prices during the first 10 months of 1993 were significantly lower than the prices in the years before the conspiracy period. The before-and-after model required examining the pricing data for the period before the conspiracy, but Dr. Hoyt ignored that information. Under Dr. Hoyt’s analysis, the purchasers were owed damages greater than any other economist would have measured using the before-and-after model. The sellers motioned to exclude Dr. Hoyt’s testimony.

Rule of Law

Issue

Holding and Reasoning (Vratil, J.)

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