US Airways v. Sabre Holdings Corporation

Background

Sabre moved under Federal Rules of Evidence 702 and 403 to exclude certain opinions and testimony from US Airways’s economics experts, Joseph Stiglitz and Daniel Kasper. Rule 702 governs the admissibility of qualified expert testimony; Rule 403 permits exclusion of relevant evidence when its unfair prejudice or other specified dangers substantially outweigh its value. The court stated that it would not conduct a Rule 403 analysis for arguments the parties did not make in this or other expert-testimony motions.

Stiglitz’s Market-Reaction Opinions

Sabre challenged what it characterized as Professor Stiglitz’s six-step “snowball” theory of causation. Sabre argued that the opinions were unreliable because they speculated about how market participants would behave in a hypothetical world without the challenged provisions of Sabre’s contract with US Airways, rather than using an economic model or sufficient supporting evidence.

The court rejected that argument. It explained that the six steps identified by Sabre were not Stiglitz’s required chain of events. Instead, Stiglitz opined that removing the provisions could produce meaningful competition through one or more possible reactions by other airlines, travel agents, or global distribution systems. The court held that his testimony was based on reliable economic principles applied to the facts. It also stated that expert testimony in economics may involve professional judgment and that reasonable experts may differ. The court therefore denied Sabre’s request to exclude Stiglitz’s testimony about other market participants’ conduct in the hypothetical world.

Government and Regulatory Statements

Sabre also sought to bar Stiglitz and Kasper from relying on or referring to statements made by government agencies when developing rules for the global distribution system industry. The court noted that a related motion had been granted in part as to statements by the Department of Justice and denied in part as to regulatory statements.

For the current motion, the court held that the experts could rely on the challenged statements if the statements were admitted into evidence. Under Federal Rule of Evidence 703, an expert may also rely on facts or data that experts in the field would reasonably use, even if those materials are not themselves admissible, subject to limits on disclosure to the jury.

The court found that the regulatory statements could provide relevant background about government regulation, the source of Sabre’s initial market power, regulators’ expectations about competition after deregulation, and Sabre’s early conduct and its effect on expected competition. Sabre could argue that the statements were outdated or flawed after the appellate court’s two-sided-market framework. The court also stated that Sabre could seek a jury instruction explaining that government findings were not determinative of the verdict. The court concluded that Sabre had not identified prejudice that could not be addressed through such an instruction.

Disposition

The court denied Sabre’s motion to exclude the expert testimony, ordered that Stiglitz’s testimony about the conduct of other market participants in the hypothetical world was admissible, and permitted Stiglitz and Kasper to reference the challenged regulatory statements. The Clerk was directed to close the motion at Docket No. 1092.