Dispositions of Petitions for Allowance of Appeals Denied.
88). "To establish a § 1 violation, a plaintiff must produce evidence sufficient to show: (1) a combination or some form of concerted
action between at least two legally distinct economic entities; and (2) such combination or conduct constituted an unreasonable restraint of trade either per se or under the rule of reason.
Top Markets, Inc. v. Quality Markets, Inc.,
142 F.3d 90, 95-96 (2d Cir. 1998);
see Capital Imaging Associated, P.C. v. Mohawk Valley Medical Associates, Inc.,
996 F.2d 537, 542 (2d Cir. 1993). In determining whether certain concerted action amounts to an unreasonable restraint, the action "is either analyzed (1) through the per se standard, which presumes that the questionable conduct has anticompetitive effects without comprehensive inquiry into whether the concerted actions produced adverse anticompetitive effects, or (2) through the so called rule of reason, a case-by-case method that involves consideration of all of the circumstances of a case to decide whether certain concerted action should be prohibited because it amounts to an anti-competitive practice."
In re Baby Food Antitrust Litigation,
166 F.3d 112, 117-118 (3d Cir. 1999).
"To survive [Defendants'] motion for summary judgment, [Plaintiffs] must establish that there is a genuine issue of material fact as to whether [Defendants] entered into an illegal conspiracy that caused [Plaintiffs] to suffer a cognizable injury." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-586 (1986). This showing has two components: (1) "[Plaintiffs] must show more than a conspiracy in violation of the antitrust laws; they must show an injury to them resulting from the illegal conduct;" and (2) "the issue of fact must be genuine." Id. Plaintiffs "must come forward with `specific facts showing that there is a genuine issue for trial.'" Id.
1. Count I — Per Se Claim
Defendants allege that they are entitled to summary judgment as to Count 1 because Plaintiffs cannot show an agreement to fix wages. Plaintiffs contend that they have "extensive evidence meeting the Matsushita standard for circumstantial proof of a per se claim." See Plaintiffs' Opposition Memo. at 9.
"Generally, price-fixing [or in this case wage-fixing] agreements are considered a per se violation of the Sherman Act."In re Baby Food, 166 F.3d at 118 (citing United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218 (1940)). "Per se violations include those types of restraints on competition that are in and of themselves considered unreasonable because `their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable.'" Id. (quotingUnited States v. Cargo Service Stations, Inc., 657 F.2d 676, 682 n. 4 (5th Cir. Unit B 1981)); see Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5 (1958). "Although the Sherman Act's language is arguably broad enough to include a `purely tacit agreement to fix prices,' most courts agree `that an express, manifested agreement, and thus an agreement involving actual verbalized communication, must be proved in order for a price-fixing conspiracy to be actionable under the Sherman Act.'"In re Ethylene Propylene Diene Monomer (EPDM) Antitrust Litigation, 681 F. Supp.2d 141, 165 (D. Conn. 2009) (citing In re High Fructose Corn Syrup Antitrust Litigation, 295 F.3d 651, 654 (7th Cir. 2002)). "To prove the existence of an express, manifested agreement, the antitrust plaintiff should present `direct or circumstantial evidence that reasonably tends to prove that the manufacturer and others had a conscious commitment to a common scheme designed to achieve an unlawful objective.'" Id. (citing Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984) (internal quotation omitted)); see also Apex Oil Co. v. DiMauro, 822 F.2d 246, 252 (2d Cir. 1987) (holding that, "at a minimum," a jury must be able to conclude that "conspirators had a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement" (quotation omitted)). Antitrust law, however, "limits the range of permissible inferences from ambiguous evidence in a § 1 case." Matsushita, 475 U.S. at 588. "Thus in Monsanto Co. v. Stray-Rite Service Corp., 465 U.S. 752, 764 (1984), [the Supreme Court] held that conduct as consistent with permissible competition as with illegal conspiracy does not, standing along, support an inference of antitrust conspiracy." Id. Therefore, "a plaintiff seeking damages for a violation of § 1 must present evidence `that tends to exclude the possibility' that the alleged conspirators acted independently." Id. (citingMonsanto Co., 465 U.S. at 764).
Defendants contend that Plaintiffs do not have any direct evidence of an agreement to depress nurse pay and contend that "in order to rely on circumstantial evidence to prove a Section 1 conspiracy claim [Plaintiffs] `must first demonstrate that the defendants' actions were parallel.'" See Defendants' Memo. at 17-18 (quoting In re Beef Indus. Antitrust Litig., 907 F.2d 510, 514 (5th Cir. 1990)). Here, Plaintiffs do not purport to have direct evidence of a conspiracy, but instead argue they have extensive circumstantial proof of a per se claim.
As a preliminary matter, Plaintiffs contend that they do not have to prove parallel conduct. The Supreme Court has made clear that under Section 1 of the Sherman Act "`the crucial question' is whether the challenged anticompetitive conduct `stem[s] from independent decision or from an agreement, tacit or express.'"Bell Atlantic Corp. v. Trombly, 550 U.S. 544, 553 (2007) (quoting Theatre Enterprises, Inc. v. Paramount Firm Distributing Corp., 346 U.S. 537, 540 (1954)). "While a showing of parallel `business behavior is admissible circumstantial evidence from which the fact finder may infer agreement,' it falls short of `conclusively establishing agreement or . . . itself constituting a Sherman Act offense.'" Id. (quoting Theatre Enterprises, 346 U.S. at 540-541). Defendants cite to In re Beef Indus. Antitrust Litig., 907 F.2d 510, 514 (1993), for the proposition that Plaintiffs must demonstrate that the defendants' actions were parallel to prove a Section 1 conspiracy claim. In this case, the Fifth Circuit held only that "[w]hen an antitrust plaintiff relies on circumstantial evidence of conscious parallelism to prove a § 1 claim, he must first demonstrate that the defendant's actions were parallel." Defendants cite to no case law that stands for the requirement that, to prevail, Plaintiffs must prove parallel pricing if they are not relying on conscious parallelism. Parallel pricing is merely "one such form of circumstantial evidence." In re Ethylene, 681 F. Supp.2d at 166. Accordingly, Plaintiffs need not prove parallel pricing in order to prevail on per-se claim based on circumstantial evidence. The issue, therefore, becomes whether Plaintiffs have alleged sufficient evidence to meet the Matsushita standard for circumstantial proof of a per se claim.
In Matsushita, 475 U.S. at 593-98, the Supreme Court held that a conspiracy case based on circumstantial evidence must be economically plausible and must exclude the possibility that the alleged conspirators acted independently.
a. Whether economically plausible
A conspiracy may be economically plausible if the defendants had a motive to engage in the conspiracy. In Matsushita, 475 U.S. at 592, the Court found that defendants had no motive to engage in a predatory pricing scheme absent some strong likelihood that the alleged conspiracy would eventually pay off. Because the Court did not find evidence that any alleged predatory pricing scheme was successful "petitioners had every incentive not to engage in the conduct with which they are charged, for its likely effect would be to generate losses . . . with no corresponding gains." Id. at 595. The Court held:
[t]hat being the case, the absence of any plausible motive to engage in the conduct charged is highly relevant to whether a `genuine issue for trial' exists . . . Lack of motive bears on the range of permissible conclusions that might be drawn from ambiguous evidence: if petitioners had no rational economic motive to conspire, and if their conduct is consistent with other, equally plausible explanations, the conduct does not give rise to an inference of conspiracy.
Matsushita,
475 U.S. at 596-97.
Courts have also found circumstantial evidence of an agreement through evidence of parallel pricing coupled with other "`plus factors' tending to establish that the defendants were not engaging merely in oligopolistic price maintenance or price leadership but rather in a collusive agreement to fix prices or otherwise restrain trade." City of Tuscaloosa v. Harcos Chemicals, Inc., 158 F.3d 548, 570 (11th Cir. 1998) (citing toDunnivant v. Bi-State Auto Parts, 851 F.2d 1575, 1583 (11th Cir. 1988); Gainsville Util. Dep't v. Fla. Power Light Co., 573 F.2d 292, 300-02 (5th Cir. 1978)); see In re Ethylene Propylene Diene Monomer Antitrust Litigation, 681 (D. Conn. 2009) ("[T]herefore, in addition to submitting evidence of parallel price increases, the plaintiffs must establish certain so-called `plus' factors, `which when viewed in conjunction with the parallel acts, can serve to allow a fact finder to infer a conspiracy.'") (quotingApex Oil Co. v. DiMauro, 822 F.2d 246 (2d Cir. 1987)).
The Court has already held that evidence of parallel pricing is not a prerequisite to a finding of an agreement based on circumstantial evidence. Plaintiffs argue that in a case involving wage fixing, as opposed to price fixing, parallel pricing would be unexpected because the factors in employment decisions permit a conspiracy to operate without highly coordinated prices changes. A conspiracy to depress wages can continue to exist despite slight temporary differences in pay scales because these differences will not result in large scale employee movement. This is so because the costs associated with changing jobs may outweigh slight differences in pay. Secondly, Plaintiffs allege the conspiracy to depress wages is accomplished, not by coordinating wages, but instead, through the economic theory of softened competition. This theory posits that because the hospitals knew that any increase they made in wages would be known to the other hospitals, there was no incentive to increase wages so as to be more competitive than the others.
The "plus factors," however, are relevant to the determination of whether circumstantial evidence points to a conspiracy. Such "plus factors" include: (1) a motive to conspire, which can be evidence that the industry is susceptible to price-fixing; (2) noncompetitive behavior, i.e., evidence that the defendants acted contrary to their economic self interest; and (3) evidence of a traditional conspiracy, such as a high level of inter-firm communications that would suggest that the defendants consciously agreed not to compete.In re Ethylene, 681 F. Supp.2d at 166 (citing to Apex Oil, 822 F.2d at 253; In re Flat Glass Antitrust Litig., 385 F.3d 350, 360 (3d Cir. 2004)).
Plaintiffs allege they have "strong circumstantial proof of the existence of the conspiracy. This proof includes the fact that: (1) Defendants' actions would be contrary to their economic interest if no conspiracy existed; (2) the structural characteristics of the market show that Plaintiff's allegations make economic sense; (3) the high degree of cooperation among Defendants created relationships conducive to reaching and maintaining a wage agreement; and (4) Defendants exchanged current prices.
(1) Contrary to Economic Interest
First, Plaintiffs argue that the information exchanges would be contrary to the Defendant's economic interest if no conspiracy existed. They argue that: (1) "no hospital, facing a shortage of nurses, would directly disclose its pay structure to a competitor absent an agreement among those hospitals that the recipient will not use the information as a genuine competitor would do — to bid away nurses;" (2) "it is equally contrary to a hospital's independent self interest to operate short of critical staff without using the information it obtains from rivals to try and fill its vacancies from lower paying hospitals in the area;" and (3) "it makes no sense to freely give valuable market intelligence gained from one rival to another rather that use it to one's own advantage." See Plaintiffs' Opposition Memo. at 9-12.
(2) Structure of the Market shows agreement makes economic sense
Second, Plaintiffs contend that the "structural characteristics of this market show that Plaintiffs' allegations made economic sense." See Plaintiffs' Opposition Memo. at 13. They point to factors in the market such as: (1) the high cost of switching jobs; (2) the frequency of information exchanges; and (3) the potential for enormous gains because nurses represent the "largest single cost for the hospitals." See Plaintiffs' Opposition Memo. at 13-14.
(3) High Degree of Cooperation
Third, Plaintiffs allege that circumstantial evidence is particularly shown by the Defendants' continual and pervasive direct hospital-to-hospital exchanges of proprietary information about the amount they pay their nurses in the face of endemic shortages of nurses. In In re Ethylene, 681 F. Supp.2d at 173 the court explained:
[w]ithout doubt, the key plus factor at summary judgment is the plaintiffs' evidence of an actual manifest agreement, i.e., evidence that includes `customary indications of
traditional conspiracy,' or `proof that the defendants got together and exchanged assurances of common action or otherwise adopted a common plan even though no meetings, conversations, or exchanged documents are shown.' The plaintiffs have submitted documents memorializing meetings and discussions about prices and capacity issues they contend give rise to an inference of illegal collusion. Those documents indicate that the defendants were extremely chummy and treated each other more like colleagues than traditional competitors, and that the defendants' executives often communicated immediately before or after a . . . price increase.
The court held that "the plaintiffs' evidence of the frequent and friendly communications between the defendants and the secrecy of their meetings [was] sufficient to allow a reasonable jury to infer that the defendants participated in an unlawful price-fixing conspiracy."
In this case, Defendant Hospitals exchanged wage information "through numerous e-mails, telephone calls, and in-person conversations at job fairs and professional association meetings." Plaintiffs' Opposition Memo. at 2; see Plaintiff's Response to Defendants' Statement of Undisputed Facts at paragraphs 8, 18, 23, 25, 49, 71, 72, 97, 103, 106, 130, 137. These communications discussed, among other things, staff RN pay ranges, RN new graduate rates, and shift differentials. Id. Plaintiffs maintain that "Defendants typically collected this information prior to budgeting and implementing RN pay adjustments." Id. Most significantly, these information exchanges contained current and future RN compensation information. Id.;see Todd v. Exxon Corp., 275 F.3d 191, 211 (2d Cir. 2001) ("The Supreme Court has made clear that `[e]xchanges of current price information, of course, have the greatest potential for generating anti-competitive effects and although not per se unlawful have consistently been held to violate the Sherman Act.'" (quoting Gypsum, 438 U.S. at 441 n. 16)).
Plaintiffs also argue that certain features of the information exchanges make it impossible for Defendants to yield pro-competitive results. These include: (1) the information exchange occurred "in the face of an acknowledged local shortage of nurses;" (2) "the information exchange is not public, that is, not shared with participants on both sides of the market;" and (3) "the information is shared directly with competitors, not through third parties who protect the anonymity of the shared data." Plaintiffs' Opposition Memo. at 11-12.
Considering the circumstantial evidence as a whole and construing it in the light most favorable to Plaintiff's, a reasonable jury could conclude that Defendants were engaged in collusive behavior.
b. Whether the Evidence Excludes the Possibility that the Alleged Conspirators Acted Independently
"Establishing an antitrust case on the basis of circumstantial evidence necessarily means that the evidence . . . is susceptible to differing inferences — the inference that, on the one hand, the defendants were engaged in illegally collusive behavior or that, on the other hand, they were merely engaged in lawful, independent [wage setting]." In re Ethylene, 681 F. Supp.2d at 167. Therefore, pursuant to Monsanto, 465 U.S. at 764, andMatsushita, 475 U.S at 1356, Plaintiffs "must present evidence that `tends to exclude the possibility' that the alleged conspirators acted independently." "Important facts to evaluate in this analysis include: (1) whether the Defendants' actions, if taken independently, would be contrary to their economic self-interest; (2) whether the defendants have been uniform in their actions; and (3) whether the defendants have exchanged or have had the opportunity to exchange information relative to the alleged conspiracy; and (4) whether the defendants have a common motive to conspire." Re/Max Intern., Inc. v. Realty One, Inc., 173 F.3d 995, 1009 (6th Cir. 1999); see Wallace v. Bank of Bartlett, 55 F.3d 1166, 1168 (6th Cir. 1995). "Ordinarily, an affirmative answer to the first of these factors will consistently tend to exclude the likelihood of independent conduct." Id.
Here, Plaintiffs argue that if Defendants set compensation independently, their actions would have been contrary to their economic self interest. They maintain that during a nursing shortage it would be against Defendants' best interests to exchange wage information because, absent an agreement, rivals would use the information to "poach" nurses and compete against each other. A rival would not be likely to exchange current and future wage information without entering into a prior agreement protecting it from competitors. The fact that but-for a wage agreement, Defendants would be acting against economic self interest is persuasive evidence that Defendants did not act independently. Accordingly, Plaintiffs have provided sufficient evidence of an agreement to with withstand summary judgment as to Count I.
2. Count 2 — Rule of Reason Claim
Defendants contend they are entitled to summary judgment as to Count II because Plaintiffs cannot show that Defendants' information exchanges harmed competition. Count II of Plaintiffs' Complaint alleges that "defendants and their co-conspirators have engaged in a continuing agreement to regularly exchange detailed and non-public information about the compensation being paid or to be paid to their RN employees" and that "[t]his agreement is an unreasonable restraint of trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1." In United States v. Citizens Southern National Bank, 422 U.S. 86, 113 (1975), the Supreme Court held that "the dissemination of price information is not itself a per se violation of the Sherman Act." "Where the violation lies in the information exchange itself — as opposed to merely using the information exchange as evidence upon which to infer a price-fixing agreement . . . [the] exchange can be found unlawful under a rule of reason analysis." Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir. 2001); see Battipaglia v. N.Y. State Liquor Auth., 745 F.2d 166, 174-75 (2d Cir. 1984). Under the rule of reason analysis, the "test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition." F.T.C. v. Indiana Federation of Dentists, 476 U.S. 447, 458 (2009) (quoting Chicago Board of Trade v. United States, 246 U.S. 231, 238 (1918)). "Before a factfinder may consider the harms and benefits of the challenged behavior, a plaintiff initially must show that `the challenged action had an actual adverse effect on competition as a whole in the relevant market; to prove it has been harmed as an individual competitor will not suffice.'"Top Markets, Inc., 142 F.3d at 96 (quotingCapital Imaging, 996 F.2d at 543 (emphasis in original)). To satisfy this burden, Plaintiff must either: (1) show an actual adverse effect on competition; or (2) establish that Defendants had sufficient market power to cause an adverse effect on competition. See Top Markets, Inc., 142 F.3d at 96; see K.M.B. Warehouse Distributors, Inc. v. Walker Mfg. Co., 61 F.3d 123, 128-129 (2d Cir. 1995);Capital Imaging, 996 F.2d at 546 ("The plaintiffs may satisfy this burden without detailed market analysis by offering proof of actual detrimental effects, such as reduction of output. Yet, where the plaintiff is unable to demonstrate actual effects, it must at least establish that defendants possess the requisite market power so that their arrangement has the potential for genuine adverse effects on competition.") (internal citation omitted). "If plaintiff satisfies this burden, the burden then shifts to defendant to offer evidence that its conduct had pro-competitive effects." Arkansas Carpenters Health and Welfare Fund v. Bayer AG, 604 F.3d 98, 104 (2d Cir. 2010). "If defendant is able to offer such proof, the burden shifts back to plaintiff, who must prove that any legitimate competitive effects could have been achieved through less restrictive alternatives." Id.
Here Defendants argue that Plaintiffs cannot establish "a relevant market" or "that Defendants' information exchanges actually caused any anticompetitive suppression of nurse compensation." See Defendants' Memo. at 23.
a. Actual Adverse Effect on Competition
"In order to fulfill this requirement, the plaintiff must show more than just that he was harmed by defendants' conduct." K.M.B. Warehouse, 61 F.3d at 127; see Borger v. Yamaha Int'l Corp., 625 F.2d 390, 397 (2d Cir. 1980). "The overarching standard is whether defendants' actions `diminish overall competition, and hence consumer welfare.'" Id. (quoting Graphic Prods. Distribs. v. Itek Corp., 717 F.2d 1560, 1571, 1573 (11th Cir. 1983). An actual adverse effect can be shown "by examining factors like reduced output, increased prices and decreased quality." Virgin Atlantic Airways Ltd. v. British Airways PLC, 257 F.3d 256, 264 (2d Cir. 2001).
In this case, Plaintiffs argue that they "have presented evidence of adverse effects on competition arising from Defendants' agreement to trade nurse compensation data" by producing "both evidence that the Albany hospital nurse market is characterized by significant and persistent shortage of nurses . . . and evidence of depressed wages." Plaintiffs' Opposition Memo. at 19. Plaintiffs have introduced the expert testimony of Prof. Ashenfelter who employs economic methodology to show that RN wages were depressed during the class period and that nurses were underutilized in the Albany area. Ashenfelter compared the actual wages paid to staff nurses in the Defendant hospitals with actual wages paid to agency nurses to determine how much staff nurses should have been paid. He also used actual employment data in the Albany area and nationwide when determining utilization rates. This evidence, if believed, shows an actual adverse effect on all RNs in the defendants hospitals; that their wages were depressed and that hospitals were underutilizing staff nurses. C.f. Top Markets, Inc., 142 F.3d at 96 (unable to satisfy burden because "failed to demonstrate an actual detrimental effect on competition" because "[i]t relied almost entirely on the [an affidavit], which discussed potentially higher prices but failed to allege prices were actually higher, failed to provide proof that the plaintiff's exclusion from the market had resulting in any decrease in quality of service to area shoppers, and failed to allege that other supermarkets were excluded from the market."); Virgin Atlantic Airways Ltd. v. British Airways PLC, 257 F.3d 256, 264 (unable to satisfy burden because plaintiff does not provide any hard data to support their expert's calculations and expert testimony rooted in hypothetical assumptions cannot substitute for actual market data"). Plaintiffs have likewise offered the expert testimony of Prof. Vistnes to explain the mechanism by which information exchanges lead to suppressed wages through the economic theory of softened competition. Evidence of suppressed wages and underutilization in conjunction with an explanation of how these information exchanges can lead to softened competition is sufficient to satisfy Plaintiffs' burden on summary judgment. Because Plaintiff' have demonstrated actual adverse effects they do not have to make a showing of sufficient market power. See Capital Imaging, 996 F.2d at 546 ("The plaintiffs may satisfy this burden without detailed market analysis by offering proof of actual detrimental effects, such as reduction of output."). Accordingly, Plaintiffs have provided sufficient evidence of anticompetitive effect to with withstand summary judgment as to Count II.
3. Whether Plaintiffs have Evidence to Prove Harm to Competition or Injury-in-Fact
Defendants contend they are entitled to summary judgment because Plaintiffs have failed to provide evidence of harm to competition or injury in fact. They allege that because Ashenfelter's benchmark methodology and analysis is speculative and lacks factual support it fails to prove anticompetitive effects and injury to the class. Defendants reargue the same points made in their joint motion to exclude the expert testimony Orley Ashenfelter. For the reasons stated previously in this opinion, the methodology is admissible for proving harm to competition and injury in fact. Accordingly, Plaintiffs have provided sufficient evidence of harm to competition or injury in fact to withstand summary judgment.
4. Whether Plaintiffs have Evidence to Prove Causation
Defendants argue that Plaintiffs cannot prove the alleged anti-trust injury was caused by Defendants' alleged violation of the antitrust laws. They allege that the only way causation can be shown is to "`conduct an empirical inquiry into the effect of the information exchange on compensation decisions and resulting compensation outcomes' which `requires a close examination of the scope, nature, and timing, of information exchanges juxtaposed against outcomes captured by actual compensation data.'" Defendants' Mem. at 33 (quoting Willig Report paragraph 76). Defendants submit that their own expert, Prof. Willig, "reviewed the information exchanges in painstaking detail — exchange by exchange — and evaluated their effects on Defendants' actual compensation decisions" finding no "systemic or causal link between RN compensation and the information exchanges." Id. at 35. Accordingly, Defendants contend that "Plaintiffs present[ed] no evidence that, in the absence of the direct information exchanges" would nurses have made more money. Id.
"The requirement that an antitrust plaintiff demonstrate that the alleged illegal acts were the cause of its damages is well established." Sound Ship Bldg. Corp. v. Bethlehem Steel Co. (Inc.), 533 F.2d 96, 98 (1976); See Zenith Radio Corp. v. Hazeltine Research Inc., 395 U.S. 100, 114 n. 9 (1969). This can be satisfied by setting forth "a theory or . . . set of facts in the depositions and other documents . . . [to] show a causal link."See Sound Ship Bldg., 533 F.2d at 98.
In this case Plaintiffs have set forth a theory of causation supported by expert testimony and economic theory. Plaintiffs' expert, Prof. Vistnes, is offered to explain how the theory of softening of competition and how information exchanges of current information can lead to depressed wages. Plaintiffs also offer the testimony of Ashenfelter to provide evidence that the wages were indeed suppressed. Plaintiffs argue that Dr. Vistnes' analysis does not allow for "evidence linking specific exchange of pay data to some specific pay decision, because that is not how the theory of softening competition works."
For purposes of summary judgment, the Court finds Plaintiffs' theory persuasive for inferring causation. Accordingly, Plaintiffs' evidence is sufficient to withstand Defendants' joint motion for summary judgment.
d. Plaintiff's Motion to Exclude Portions of Expert Testimony of Robert Willig
Robert Willig is Defendants' expert witness retained to: (1) "assess the collusion and information exchange claims and their alleged effect on the compensation of members of the class"; (2) "opine on whether conditions in the Albany area have been conducive to the alleged coordination and conspiracy;" and (3) "to examine and respond to the analysis and opinion on these issues set forth by Plaintiffs' experts." See Defendants' Opposition Memo. at 1.
Plaintiffs argue that "the Court should prohibit Prof. Willig from offering any opinion in this case concerning: (1) [w]hether the fact discovery record in this case is probative or not of the alleged conspiracy; and (2) [t]he information the Defendants did or did not consider in making their compensation decisions, and the effect or lack of effect particular information had on such decisions." See Plaintiffs' Memo. at 6-7. Plaintiffs argue these opinions "supplant the role of the jury" because "[t]he jury is fully capable of reading the same lay documents and lay deposition testimony as Prof. Willig and deciding whether they contain evidence of the conspiracy and what they show about the basis of Defendants' compensation decisions." Id. at 1. Accordingly, Plaintiffs contend that "Willig's interpretation of the meaning and significance of such documents and deposition testimony on pure factual questions is inadmissible under the Federal Rules of Evidence." Id. Defendants oppose this motion arguing that "Prof. Willig's testimony satisfies the requirements for admissibility of expert testimony under Fed. Rule of Evidence 702." See Defendants' Opposition Memo. at 1.
Fed.R. Evidence 702 provides that "[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert . . . may testify thereto." "For an expert's testimony to be admissible under this Rule, however, it must be directed to matters within the witness' scientific, technical, or specialized knowledge and not to lay matters which a jury is capable of understanding and deciding without the expert's help." Andrews v. Metro North Commuter R. Co., 882 F.2d 705, 708 (1989); see McGowan v. Cooper Indus., Inc., 863 F.2d 1266, 1272 (6th Cir. 1988); Scott v. Sears, Roebuck Co., 789 F.2d 1052, 1055-56 (4th Cir. 1986); United States v. Binder, 769 F.2d 565, 602 (9th Cir. 1985); Strong v. E.I. DuPont de Nemours Co., 667 F.2d 682, 685-86 (8th Cir. 1981). Furthermore, the testimony must "assist the trier of fact." Nimely v. City of New York, 414 F.3d 381, 397 (2d Cir. 2005). "Expert testimony that `usurp[s] either the role of the trial judge in instructing the jury as to the applicable law or the role of the jury in applying that law to the facts before it,' by definition does not `aid the jury in making a decision'; rather, it `undertakes to tell the jury what result to reach,' and this `attempts to substitute the expert's judgment for the jury's.'" Nimely, 414 F.3d at 397 (quoting Bilzerian, 926 F.2d at 1294; United States v. Duncan, 42 F.3d 97, 101 (2d Cir. 1994)).
1. Whether Willig can Testify as to the Absence of Conspiracy Evidence
Plaintiffs' argue that Willig makes overly broad statements concerning the absence of conspiracy evidence. They argue that these statements "offer factual conclusions based solely on [Willig's] lay understanding of fact evidence" and are, thus, inadmissible. Plaintiffs' Reply Memo. at 1. Defendants counter that experts are entitled to offer testimony that "embraces an ultimate issue to be decided by the trier of fact." Fed.R.Evid. 704(a);see United States v. Bilzerian, 926 F.2d 1285, 1294 (2d Cir. 1991) (an expert witness may "opine on an issue of fact within the jury's province" and "factual conclusions may be included in an expert's testimony" as long as the expert does not state "ultimate legal conclusions based on those facts.").
The specific statements to which Plaintiffs object are: (1) "I have seen no evidence suggesting that such an agreement [to suppress nurse wages] existed;" (2) "there is no evidence to indicate that non-base wages, much less base wages, were the focal point of any alleged conspiracy;" (3) "[a]fter reviewing these information exchange documents, I have not found any evidence that suggests the presence of an agreement to fix wages or any evidence that rivals punished deviators that implemented significant rate increases of the type shown by AMC and NEH;" and (4) "[t]here is no evidence that a conspiracy was particularly directed at nurses in speciality departments." Plaintiffs' Memo. at 2.
Defendants contend that Willig's testimony "was informed by economic principles . . . regarding the importance of `focal points', the economic incentives for hospitals to cheat on an alleged agreement to suppress RN wages, and the factors that make monitoring and enforcing such an agreement more difficult in this market." Defendants' Opposition Memo. at 6. Therefore, they contend, Willig is not "offering his lay understanding of purely factual evidence, but interpreting that evidence in light of economic principles with which the average juror will be unfamiliar." Id.
In this case, Prof. Willig is not, as Plaintiffs suggest, merely looking at the evidence and determining that he does not think the evidence indicates the existence of a conspiracy. Instead, he is looking at the evidence and interpreting the likelihood of a conspiracy based on certain well accepted economic factors. "Economic literature recognizes three elements required for collusion to have sustained impact on a market: the parties to the alleged agreement must be able to `(1) reach consensus on the terms or focal point of an agreement, (2) detect cheating on the agreement, and (3) push deviations from the agreement.'" Defendants' Opposition Memo. at 7 (quoting Expert Report of Robert D. Willig at paragraph 9). Based on these elements Willig opines that: (1) "without `focal point corresponding to the actual terms of the alleged agreement, a Defendants could not know how to comply with the alleged conspiracy, monitor adherence to it by its rivals, or effectively enforce it;'" and (2) "`[m]arket conditions and the characteristics of the . . . services offered' affect the likelihood that collusion will lead to anticompetitive outcomes." Id. (quoting Expert Report of Robert D. Willig at paragraphs 11 and 9). He further opines that the type of agreement suggested by the Plaintiffs is unlikely based on the economic state of the market and the way in which the information exchanges took place. These opinions are informed by his background knowledge in economics and his ability to apply the facts to this information. A juror would not have this expertise or the ability to apply the factual information to Willig's background knowledge. Accordingly, his opinions maybe helpful to the jury and are admissible. 2. Whether Willig can Testify as to the Information Defendants Considered in Making their Compensation Decisions, and the Effect of that Information on their Decisions
Plaintiffs argue that Willig's opinions regarding statements about Defendants' use of each other's compensation information are "outside the scope of his expertise, and invade[] the jury's province" because they are factual conclusions based on "nothing more than his reading of the factual record." Plaintiffs' Memo. at 3. They contend that "Prof. Willig has absolutely no economic principle or method of analysis for divining what factored into Defendants' compensation decisions."Id.
The specific statements to which Defendants object include: (1) "The evidence supports the position that the information received by Ellis from other hospitals did not form the basis of compensation decisions or negotiation strategies. Nor does it appear to have had an incremental impact on such decisions to the detriment of Ellis nurses;" (2) "Based on these facts, it seems likely that knowledge gained from this informal salary survey led to wage changes [at Ellis] that were higher than would otherwise have been negotiated;" (3) "Dr. Vistnes has not shown, and I have not found, instances where these information exchanges led to Ellis negotiating wages with the NYSNA below that which would have existed but for these exchanges;" (4) "The information received by St. Peter's was not the basis of compensation decisions, although St. Peter's considered certain information received. Nor does the information disclosed in these exchanges indicate that it had an incremental impact on compensation decisions that inured to the detriment of St. Peter's RNs;" (5) "There is no evidence or testimony indicating that St. Peter's used this information to modify its own shift differential practices in a manner that would have made its nurses worse off than without the information received by St. Peter's;" (6) "The information received by Seton was not the basis of compensation decisions, although Seton considered certain information from these exchanges. I find no evidence to suggest that the information subject to these exchanges had an incremental impact on compensation decisions that inured to the detriment of Seton RNs;" (7) "The information obtained from other hospitals appears to have contributed to Seton's decision to increase RN wages to remain market competitive;" (8) "Dr. Vistnes has not shown, and I have not found, instances where Seton set RN compensation at levels below that which would have existed but for these information exchanges;" and (9) "The information received by NEH does not appear to have been the basis for any compensation decision other than determining that its wages were not at competitive levels and required significant increases. I find no evidence to suggest that the information shared through these exchanges had an incremental impact on compensation decisions which made NEH's RNs worse off than they would have been but for these information exchanges." Plaintiffs' Memo. at 3-4.
According to Defendants, Willig conducted an "economic analysis of whether there [was] a causal link between the levels and changes in RN compensation and the [] information exchanges." Defendants' Opposition Memo. at 10. In order to complete this analysis, Willig examined the "scope, nature, and timing of information exchange juxtaposed against outcomes captured by actual compensation data." Id. He determined that evidence was lacking to prove a causal connection. Defendants contend that the proposed testimony "will help the jury by showing them there is no connection between the alleged conduct and actual compensation decisions." Id. at 11.
In addition to testifying regarding these findings, Defendants also seek to allow Willig to "opine at trial regarding both Defendants' [use of information exchanges] in the compensation setting process and the ultimate effect they had on RN compensation." Defendants' Opposition Memo. at 10. They argue that "Willig's analysis of the payroll data makes him especially qualified to render an opinion regarding the effect the information exchanges had on compensation decisions. Id. Expert witnesses are not permitted to testify as to the "knowledge, motivations, intent, state of mind, or purposes" of others. See In re Fosamaz Products Liability Litigation, 645 F. Supp.2d 164, 192 (S.D.N.Y. 2009); In re Rezulin Products Liability Litigation, 309 F. Supp.2d 531, 546 (S.D.N.Y. 2004) ("[T]he opinions of these witnesses on the intent, motives, or states of mind of corporations, regulatory agencies and others have no basis in any relevant body of knowledge or expertise."); Taylor v. Evans, 1997 WL 154010, at * 2 (S.D.N.Y. 1997) ("[M]usings as to defendants' motivations would not be admissible if given by any witness — lay or expert."). Willig's expertise as an economist does not give him any specialized knowledge to discern the thought processes of those setting compensation at Defendant Hospitals. Id. ("regulatory expertise does not give her the ability to read minds.") Likewise, his expertise does not allow him to discern the effect the information learned in the information exchanges had on others' compensation-setting decisions.
Accordingly, Willig is permitted to testify to his economic analysis comparing the timing of the information exchanges with the timing of compensation decisions and his opinion that he finds no connection or correlation between the two. Conversely, Willig will not be permitted to testify as to what information Defendants considered and the weight that information played in setting nurse compensation.
IV. CONCLUSION
For the foregoing reasons Defendants' Joint Motion to Exclude Expert Testimony of Orley Ashenfelter [Docket No. 355/358] is DENIED; Defendants' Joint Motion to Exclude Expert Testimony of Gregory Vistnes [Docket No. 344/356] is DENIED; Defendants' Joint Motion for Summary Judgment [Docket No. 345] is DENIED; and Plaintiffs' Motion to Exclude Portions of Expert Testimony of Robert Willig is GRANTED IN PART.
IT IS SO ORDERED