EI News and Notes

Economists Ink: A Brief Analysis of Policy and Litigation

Aultman defeats monopolization and conspiracy claims

EI Principal Barry C. Harris testified at trial in Ohio state court on behalf of Aultman Healthcare. Aultman offers both clinical services and insurance products. Plaintiff Mercy Medical Center alleged that Aultman, through its insurance entity AultCare, overpaid insurance brokers to get them to steer customers to AultCare. Mercy further alleged that Aultman used this program to foreclose Mercy from patients and monopolize two hospital markets. Dr. Harris explained why Aultman’s payments were a normal part of the competitive process. He showed that the amount of business associated with the AultCare payments was too small to have caused foreclosure or monopolization and that Mercy’s performance was inconsistent with its claims. A jury found for Aultman on all of the antitrust counts. EI Vice Presidents Laura Malowane and Stephanie Mirrow assisted Dr. Harris.

Alpha Tire awarded damages

Plaintiff Alpha Tire claimed its designs for underground mining tires were unlawfully used by a distributor located in Dubai and a manufacturer located in China. Testifying for the plaintiff, EI Principal Philip B. Nelson presented evidence that the tire sales disclosed by defendants understated their true sales. He calculated profits that defendants would disgorge based on their disclosed sales and based on sales estimated using other defendant documents. The jury awarded the plaintiff $26 million in damages. Dr. Nelson was assisted by EI Senior Vice President Kent W Mikkelsen. Alpha was represented by Gilbert LLP.

California wins antitrust judgment

Recently the Ninth Circuit reversed a district court denial of summary judgment to the plaintiff in State of Cal. v. Safeway, et al. EI Principal J. Stephen Stockum was the economic expert for the plaintiff. The case involved a profit-sharing agreement among the major supermarkets in Southern California. The defendants argued that the agreement was necessary to prevent a labor union from targeting one supermarket chain at a time to win favorable terms in negotiations (so-called “whipsaw” tactics). The Ninth Circuit agreed with Stockum’s testimony that emphasized that the redistribution of profits among defendants dramatically reduced the incentives to promote and discount supermarket products sold to consumers.