International Swimming League, Ltd. v. World Aquatics

Background

International Swimming League, Ltd. (ISL) sued World Aquatics, formerly known as the Fédération Internationale De Natation, alleging that World Aquatics’ General Rule 4 violated Section 1 of the Sherman Act. The rule prohibited national federations from affiliating with organizations not sanctioned by World Aquatics.

During the summary-judgment proceedings, World Aquatics moved under Federal Rule of Evidence 702 and the Supreme Court’s decision in Daubert v. Merrell Dow Pharmaceuticals, Inc. to exclude damages testimony from three ISL experts: Jonathan A. Jensen, Patrick Crakes, and Michael J. Wagner. The court had previously treated the motions as moot after granting World Aquatics summary judgment, but the Ninth Circuit later reversed that summary-judgment ruling and sent the case back. The court then considered the previously briefed expert-testimony motions.

Legal Standard

Rule 702 requires an expert to be qualified and to offer testimony that will help the factfinder, is based on sufficient facts or data, uses reliable principles and methods, and reliably applies those methods to the case. The court’s role is to assess the reliability and relevance of the expert’s basis and method, rather than decide whether the expert’s conclusions are ultimately correct. Weaknesses that affect the testimony’s weight or credibility generally may be addressed through cross-examination and contrary evidence instead of exclusion.

Jonathan A. Jensen

Jensen offered sports-marketing testimony about whether World Aquatics’ alleged conduct harmed ISL’s ability to attract sponsors and about the amount of sponsorship revenue ISL allegedly lost. His estimates included up to $1,759,788 for the 2018 event, $30,060,461 for the 2019 season, and $27,956,228 for the 2020 and 2021 seasons.

The court found that Jensen relied on sufficient facts and data, including quantitative information, academic research, sports-marketing materials, and reports concerning sponsorship exposure and comparable leagues. His report explained its data, assumptions, and methods. The court also held that his failure to account for every possible alternative cause of lost sponsorship revenue did not make his analysis so incomplete that it was inadmissible. The court recognized that antitrust damages may involve uncertainty and concluded that World Aquatics could challenge Jensen’s assumptions and omitted factors through cross-examination and other evidence.

The court also rejected World Aquatics’ arguments that Jensen’s estimates were unrealistic, unfairly prejudicial, or improperly expanded in his reply report. The court DENIED World Aquatics’ motion to exclude Jensen’s testimony.

Michael J. Wagner

Wagner offered economic-damages testimony. He estimated that ISL lost $40,703,289 in sponsorship profits and incurred $5,893,273 in increased expenses, for total damages of $46,596,562. His calculations used Jensen’s estimated sponsorship revenue, ISL’s records, expense estimates, and other information.

The court found Wagner’s testimony relevant because his accounting work involved reviewing and synthesizing financial records, selecting and adjusting inputs, and explaining the calculations in a way that would help a jury. The court rejected the argument that his work was merely basic arithmetic.

The court also found Wagner’s testimony sufficiently reliable. His failure to verify every input independently, his reliance on Jensen’s opinions, his treatment of alternative causes such as COVID-19 and ISL’s business practices, and his treatment of costs involving related entities were issues concerning the factual assumptions and credibility of his analysis. Because Wagner disclosed those assumptions, World Aquatics could challenge them at trial. The court DENIED World Aquatics’ motion to exclude Wagner’s testimony.

Patrick Crakes

Crakes offered sports-media testimony that the cancellation of ISL’s December 2018 event and the loss of Wasserman as a partner delayed ISL’s development, reduced its ability to obtain media distribution, and reduced resulting revenue. He opined that ISL probably would have obtained a major media-network distribution deal in 2019 if the event had occurred.

The court GRANTED World Aquatics’ motion to exclude Crakes’s testimony. Although Crakes described his industry experience and the sources he reviewed, the court could not discern the method he used to conclude that the event cancellation affected ISL’s viability or that ISL probably would have obtained a major distribution deal. The court found that his conclusions appeared to rest on personal opinions and speculation rather than a systematic assessment of the relevant facts.

The court also struck Crakes’s reply report. It found that the reply suffered from the same lack of an identifiable method and, to the extent it offered a more detailed method, introduced new analyses, opinions, and theories that were not in the opening report and therefore were improper rebuttal.

Disposition

The court’s conclusion states that it GRANTS World Aquatics’ motion to exclude Crakes and DENIES World Aquatics’ motions to exclude Jensen and Wagner. The order disposes of Docket Nos. 355, 356, and 357.