A DC-area concert promoter brought action under Sherman Act and the Maryland Antitrust Act, alleging that the Defendant, a global promoter, unreasonably restrained trade by exercising its market and monopoly power in the promotion and venue services markets. Defendant moved to exclude plaintiff’s expert testimony and his findings.
Promoters book artists at venues and arrange concerts with venue owners. Venues range from small clubs to sports stadiums with over 60,000 seat capacities. Plaintiffs and Defendant are promoters, but Plaintiff operated as a regional promoter for over 30 years. It contracts with artists to perform at venues around Washington, D.C. The defendant’s business operates globally.
A Harvard law professor was Plaintiffs’ key expert witness. He defined the venue and promotion markets that form the basis of plaintiffs’ claims, and also analyzed Defendant’s share and control of those markets. Defendant challenged his testimony based on his methodology underpinning his definition of the market for venues and his opinions and conclusions regarding Defendant’s alleged tying and foreclosure of those markets.
District Court Judge Frederick Motz of the U.S. District Court of Maryland wrote in his decision that even expert testimony based on sound methodology should be excluded if it is based on unsound or incorrect assumptions. Factors is such a determination are: (1) whether the particular scientific theory can be (and has been) tested; (2) whether the theory has been subjected to peer review and publication; (3) the known or potential rate of error; (4) the existence and maintenance of standards controlling the technique’s operation; and (5) whether the technique has achieved general acceptance in the relevant scientific or expert community.
The judge went on to explain that the proponent of the expert testimony bears the burden of producing evidence supporting its contentions and demonstrating that the testimony is reliable, relevant, and based on sound methodology. He need not prove that the expert testimony is “irrefutable or certainly correct,” because opinions based on reliable methodology can be tested through the adversarial process.
The judge excluded the expert’s definition of the venue market, specifically its foundation in the concept that some artists “prefer amphitheaters.” The fact that the market was so narrowly drawn was beneficial to Plaintiffs, who, in order to succeed on any claim, had to prove that Defendant possesses market power, which is easier if the market is restricted.
The crux of the expert’s market definition was his claim that a subset of artists preferred amphitheaters and would not substitute different venues for them—even if the price to perform at them substantially increased. This supposition allowed the expert to exclude any venue that was not an amphitheater from the market definition—including three nearby large arenas. The expert offered both anecdotal and quantitative evidence to support this claim. However, the judge found that neither was based on “sufficient facts or data” as required by Federal Rule of Evidence 702. As a result, his testimony wasn’t “the product of reliable principles and methods” and must be excluded.
The expert’s analysis identified only what percentage of revenue artists make from each type of show. His findings didn’t indicate whether a change in the price to artists for amphitheaters (i.e., offering a lower guarantee) would induce greater demand for arenas or other venues. Accordingly, Judge Motz found that using the expert’s findings that certain artists preferred amphitheaters wasn’t following “reliable principles and methods” as required by Rule 702.
The expert’s attempt to offer subjective proof of artist preference was similarly unreliable. To support this claim, he relied on the deposition of the front man of the band Nine Inch Nails, who stated that amphitheaters had significant advantages over arena venues. However, Judge Motz ruled that the fact that the singer enjoyed performing in amphitheaters more than in non-amphitheaters didn’t result in the type of “preference” that the expert proposed. The artist even noted that this preference “plays a small factor, but not a huge one.” This conclusion defied reality, as Nine Inch Nails performed only 35% of their “major venue” shows at amphitheaters.
The judge also found it problematic that when the expert implemented his results, he changed his definition of the category of artists who preferred amphitheaters. The expert did this without providing significant explanation.
Last, the judge held that categorizing any artist who plays more than 50% of their shows at amphitheaters was arbitrary. The problem was that the expert purported to define artist preference based on the percentage of shows performed at an amphitheater in a given time period and altered the rule for what constituted “preference” depending on which calculation best served him. The result was a defined market that suited the needs of Plaintiffs and excluded potentially reasonable substitute venues within the area.
In sum, the judge concluded that the methods utilized by the expert to create a category of artists who “prefer amphitheaters” was unreliable. Each piece of evidence that he used was rebuked, and more importantly, the methodology he employed to reach his conclusions wasn’t based on sound logic or reasoning. Accordingly, Judge Motz excluded the “preferring amphitheaters” categorization under Rule 702 and held that this alone was enough to exclude the entire “venue market” definition that the expert offered.