To take with: Following the decision of the Supreme Court of the United States in COmcast Corp. vs. Behrend, 133 S.Ct. 1426 (2013), a class action plaintiff’s ability to obtain class certification can often rise or fall with the plaintiff’s ability to develop a class-wide damages model. In recent years, an economist armed with a choice-based “joint inquiry” has become the go-to method for developing a damages model, especially in a case asserting a market damages theory. The Ninth Circuit recently overturned the disqualification of such an expert, even though the district court found that the joint investigation had “major methodological flaws” and that the expert did not conform to “accepted principles.” in the scientific community. MacDougall v. Am. Honda Motor Co.., no. 20-56060, 2021 WL 6101256 (9th Cir. 21 Dec. 2021). Although unpublished, this decision will surely be relied upon by class action plaintiffs to defend themselves against challenges to the admissibility of a joint investigative analysis, however flawed.
In MacDougall, plaintiffs brought a putative class action lawsuit against American Honda Motor Co., Inc. (“Honda”), alleging breach of warranty claims and violations of various consumer protection laws, including the Consumer Legal Remedies Act and California Unfair Competition Law. According to the plaintiffs, certain models of Honda Odyssey minivans suffer from a defect that causes the torque converter to jerk or jerk when the vehicles are in motion. To calculate the collective damages, the plaintiffs relied on the testimony of Stefan Boedeker, economist and statistician. Boedeker relied on a joint survey, which asked consumers to choose between products with different sets of features or attributes. The survey responses were then used to determine a dollar value that consumers attach to each characteristic measured. In this case, Mr. Boedeker used the results of the joint study to measure the difference in value (and therefore the damage due) between the vehicles with and without the alleged defect.
After the discovery, the plaintiffs applied for class certification and, in response, Honda objected to class certification and sought to have Mr. Boedeker’s testimony expunged under Federal Rule 702 and Daubert. In a thorough opinion, the district court granted Honda’s motion to strike on the grounds that Mr. Boedeker’s underlying methodology made his report unreliable. MacDougall v. Am. Honda Motor Co.., SACV no. 17-1079-JGB-DFM, 2020 WL 5583534 (CD Cal. Sept. 11, 2020), rev’d and returned, no. 20-56060, 2021 WL 6101256 (9th Cir. 21 Dec. 2021).
The district court observed that, as a general rule, “technical deficiencies” in the administration of an expert’s report or disputes over an expert’s credentials weigh on the weight of the expert’s report, not on its admissibility. 2020 WL 5583534, at *9 (citing Fortune Dynamic Inc. v. Victoria’s Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1036 (9th Cir. 2010)). For this reason, the District Court did not consider a number of arguments raised by Honda about the joint survey, including focalism bias in survey questions, demographic disparities among survey respondents and Mr. Boedeker’s lack of expertise. But the district court ruled that “two major flaws” in Mr Boedeker’s report justified “removing the report in its entirety”. ID. at 5.
First, the district court found that the report did not sufficiently address supply-side considerations. Since the market price depends on both supply and demand, it is necessary to include accurate and realistic supply-side considerations in a joint investigation, such as the actual price of a product. Without these supply-side considerations, a joint investigation may grossly overestimate harm by measuring what a consumer is willing to pay for a given feature of a product, not the market price that consumers actually pay. Although Mr. Boedeker acknowledged the importance of supply-side considerations, the district court found that he did not use actual market prices in his investigation and “[b]By dissociating its choice of survey prices from actual prices, Boedeker’s methodology casts doubt on the reliability of its [damages] calculation.” ID. In deciding that Boedeker’s “speculative price assessment in its investigative choices is sufficient to nullify its report,” the district court collected cases “across the country” where courts “have ruled out joint analyzes based on choices that do not accurately account for supply- secondary considerations. ID. at 6.
Second, the district court found that Mr. Boedeker failed to use a final joint investigation pretest, an act typically performed to ensure that the questions are not confusing, misleading, and accurately measure the preferences of respondents. respondents. ID. at 7 O’clock. The district court ruled that the lack of pre-testing casts doubt on the reliability of survey responses and also pointed to a number of instances in the data demonstrating unreliability: 4% of the survey sample expressed confusion about the survey questions, with some choosing “absurd or illogical answers that reflected a misunderstanding of survey choices and instructions”, and “a remarkable 55.4% of individual responses reflected economically irrational choices about price levels, the presence of defects, or both”. ID. at 8. As two other examples, the district court noted that a respondent indicated that he was willing to pay an additional three million dollars for a vehicle with one defect than flawless, and another indicated a willingness to pay ten million dollars more for a defect-free vehicle.
“Overall,” the district court ruled, “the irrationality exhibited in the individual survey responses speaks to a deeply flawed joint study that produced unreliable results that do not reflect reality. [willingness to pay].” ID. The district court found that Mr. Boedeker’s underlying methodology rendered his report unreliable under Rule 702 and Daubert and granted Honda’s strike request.
The Ninth Circuit summarily overthrown. Without discussing the District Court’s extensive analysis, the Ninth Circuit observed that the “District Court relied on numerous cases that do not analyze the admissibility of conjoint analysis under Rule 702 Where Daubert … .” MacDougall, 2021 WL 6101256 to *1. The Ninth Circuit then concluded that “Honda’s challenges—among others, the absence of market considerations, the selection of specific attributes, and the use of averages to evaluate survey data – “go to the weight given to the survey, not its admissibility”. ID. (quoting Wendt v Host Int’l, Inc., 125 F.3d 806, 814 (9th Cir. 1997)).
From that position, Honda filed a motion for an extension of time to file a motion for a rehearing or a rehearing en banc. It remains to be seen whether the Ninth Circuit’s ruling will stand. If so, this decision, though unpublished, will almost certainly be cited for the proposition that attacks on joint investigations are about weight, not admissibility, absurd as it may be. some of the results.