Pickett v. IBP: Judge Rules To Allow Testimony By Plaintiff’s Experts: Experts will testify in the most significant cattle industry trial since the 1920’s.

April 16, 2003

Pickett v. IBP: Judge Rules To Allow Testimony By Plaintiff’s Experts
Experts will testify in the most significant cattle industry trial since the 1920’s…

AgriNews, Billings, MT
By Leesa Kiewel

On April 8, U.S. District Judge Lyle Strom, Middle District of Alabama, issued a decision in Pickett v. IBP to allow the plaintiff’s expert witnesses to testify that IBP’s captive supplies unlawfully depress cattle prices. The ruling came as a result of a March 13 hearing over IBP’s motion to strike the plaintiffs’ expert witnesses for failure to meet certain legal standards.

IBP had objected to testimony from Dr. Robert Taylor, an Alfa Eminent Scholar and agricultural economist at Auburn University; Dr. Bernard Siskin, who holds a doctorate in Applied Statistics from the University of Pennsylvania and is a former professor of statistics at Temple University; and Dr. Catherine Durham, an Assistant Professor of Economics and agricultural economist at Oregon State University. IBP had also motioned to strike the testimony of Mike Callicrate, a cattleman from St. Francis, KS, who is a plaintiff in Pickett v. IBP.

The “Pickett Case”, as it has become known, is the first class action suit ever certified under the Packers and Stockyards Act (P&SA), and has therefore become a precedent setting suit regarding the issue of captive supply cattle. The plaintiffs claim that IBP’s use of captive supply cattle has downwardly depressed the cash market price for fed cattle, constituting an unfair practice under the P&SA.

Judge Strom’s ruling clears the way for the case to go to trial, most likely in January 2004.
Supporters say the case could be the most significant event in the cattle industry since the government broke up the packer-cartel in the early 1920’s, if the jury rules in favor of the cattlemen involved in the class action suit.

Judge Strom’s 37 page ruling includes an individual analysis of IBP’s objections to the expert testimony. (A full text of the ruling and other case information can be found on the web at www.endcaptivesupply.com).

Dr. Robert Taylor: “There is no question that Dr. Taylor’s education, knowledge and experience qualify him to testify as an expert under Federal Rule of Evidence 702. Dr. Taylor plans to testify that, in his opinion, IBP’s use of captive supply caused low prices for fed cattle on the cash market. In reaching this opinion, Dr. Taylor created and analyzed over one hundred regression models, using data supplied to him by Dr. Bernard Siskin, a fellow plaintiff’s expert in this case. IBP argues that Dr. Taylor’s analysis demonstrates only that there is a correlation between captive supply and cash market prices, and not that captive supply causes low prices on the cash market…IBP claims that Dr. Taylor’s tests do not prove causation, and the Court should not permit Taylor to draw a conclusion regarding causation. If permitted to testify, Dr. Taylor will testify that IBP’s use of captive supply caused low prices on the cash market. Although IBP claims that Dr. Taylor has confused causation with correlation, the Court finds that Dr. Taylor’s opinion is sufficiently reliable to be admissable. Second, Dr. Taylor will testify that IBP’s use of captive supply had a downward effect of four percent on the cash market price for fed cattle. Based on the one hundred plus regression models, which he analyzed along with anecdotal evidence, he concluded that IBP’s practice caused a four percent downward effect on the price paid in the cash market. Third, Dr. Taylor plans to testify as to the aggregate damages in this case. Dr. Taylor is expected to testify that, in his opinion, IBP’s use of captive supply damaged the class members by a total of $573 million. Dr. Taylor reached this conclusion by considering data supplied to him…including the number of head of cattle in the class for each week during the class period. Dr. Taylor also acquired the average live weight for each week from the IBP Profit and Loss statement, and he then multiplied that number by the estimated price impact for the week. IBP claims that this damage calculation is incorrect because it is based on the assumption that captive supply had a uniform effect on the cash market price in all parts of the country. The Court finds that defendant’s objection to the foregoing proposed testimony of Dr. Taylor should be denied.”

According to Court documents, Dr. Bernard Siskin’s expert report explains how he was able to determine whether a particular purchase by IBP was a cash purchase or a captive supply purchase. In making his calculations, Dr. Siskin relied on data from various sources, including 1) IBP’s summary of its Monday Marketing Meetings; 2) IBP’s profit and loss statements for slaughter and processing; 3) various informational responses regarding how IBP operates and what its data represents; 4) various published literature concerning cattle purchases and captive supply; 5) computerized data supplied by IBP and 6) various publicly-available agricultural and economic data. Siskin has never before testified in an antitrust case or a case under the P&SA.

Regarding Dr. Siskin’s testimony Judge Strom wrote, “The important factor in this case is that Dr. Siskin was able to distinguish between captive supply sales and those on the cash market. That fact is relevant to which sales allegedly damaged members of the plaintiff’s case. The Court has reviewed IBP’s other arguments relating to Dr. Siskin’s testimony and finds them to be unpersuasive.”
Dr. Catherine Durham is expected to testify regarding the impact that captive supplies has on market prices along with testimony about her own econometric model that she developed, “which shows a significant and large impact of captive supply on fed cattle prices.”

IBP argued during the March 13 hearing that Dr. Durham’s testimony using her own models should be disallowed because they are allegedly based on “unrealistic assumptions.” IBP argued that Dr. Durham’s models assume that captive supply feedyards supply more cattle than they would have supplied had they sold on the cash market. Saying that Dr. Durham’s testimony is the “type of evidence that could assist the jury in understanding the evidence”, Judge Strom overruled IBP’s objection to Dr. Durham’s testimony.

With regard to the testimony of Mike Callicrate, Judge Strom’s ruling was concise. “IBP’s objection regarding Callicrate’s lack of independence is not well taken. Mike Callicrate’s vast experience as a feedyard operator and his many years in the cattle business provide him with sufficient experience and knowledge to testify to those matters contained within his expert report. IBP’s objection to Callicrate’s testimony will be overruled.”

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