US Airways v. Sabre Holdings Corporation

Background

US Airways moved to exclude certain proposed trial testimony from Sabre’s economics expert, Professor Kevin Murphy, under Federal Rules of Evidence 401, 402, 403, 702, and 703. The objections concerned three areas: Murphy’s opinion about the relevant antitrust market and Sabre’s market share; factual testimony and factual assertions allegedly outside his expertise; and testimony allegedly duplicative of Sabre expert Dr. Robert Topel’s testimony.

Relevant-Market Opinion

Murphy proposed to testify that the relevant market included all ways air travel was distributed and that Sabre’s share of total United States passengers in 2013 was 23.4 percent. US Airways argued that this opinion was not based on a reliable method because Murphy had not conducted empirical studies measuring whether global distribution system services and other ticket-distribution methods were reasonably interchangeable or had cross-elastic demand.

The court rejected that argument. It held that expert market-definition testimony does not necessarily require empirical studies and may rely on qualitative information and real-world market conditions, including how consumers purchase travel and how airlines view competition. The court treated US Airways’ criticisms of Murphy’s analysis as issues affecting the weight of his opinion rather than its admissibility. Murphy’s opinion about the relevant market and Sabre’s market share was allowed.

Factual Testimony and Factual Assertions

The parties had stipulated that Murphy could not summarize the evidence and conclude that US Airways obtained pricing concessions from Sabre in exchange for providing full content. The court nevertheless found that the challenged portions of Murphy’s rebuttal report could be used because they recited facts on which he relied in forming his opinions.

At trial, Murphy could briefly explain the objective facts underlying his opinions. He could testify about economic incentives and disincentives, including that global distribution systems would be expected to seek full content in exchange for concessions on other contract terms, including price. He could also testify about alleged procompetitive benefits of full content to travel agencies and travelers, including increased efficiency and price transparency. He could not gather and interpret the evidence as a lawyer would in a closing argument or extensively rehash the evidence.

Duplicative Expert Testimony

US Airways sought to exclude overlapping opinions by Murphy and Topel concerning incentive payments to travel agents, direct commissions in the absence of Sabre’s incentive payments, reasons firms can earn economic profits without market power, and costs to travel agents and travelers in a world without Sabre’s challenged conduct.

The court granted this part of the application under Rule 403, which permits exclusion of evidence when its value is substantially outweighed by risks such as needless presentation of cumulative evidence. Cumulative opinions by multiple experts on the same subject were barred. Counsel could choose which expert would present each opinion, and a second expert could rely on the first expert’s opinion by reference without repeating it and its supporting explanation.

Disposition

The order states that the motion was granted in part and denied in part. The market opinion and market-share testimony were allowed; a brief recitation of facts underlying Murphy’s opinions was allowed; and duplicative expert opinions were not allowed. The Clerk was directed to close docket entry 1099. The opinion’s opening paragraph identifies US Airways as the party making the motion, while the concluding order refers to “Sabre’s motion.”