1 THEODORE J. BOUTROUS JR., SBN 132099 STEVEN E. …

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DEFENDANTS’ MEMORANDUM IN SUPPORT 2:06-MDL-01745 SVW (VBKX) OF MOTION FOR CLASS DECERTIFICATION

Gibson, Dunn & Crutcher LLP

THEODORE J. BOUTROUS JR., SBN [email protected] STEVEN E. SLETTEN, SBN 107571 [email protected] THEANE EVANGELIS KAPUR, SBN 243570 [email protected] GIBSON, DUNN & CRUTCHER LLP 333 South Grand Avenue Los Angeles, California 90071-3197 Telephone: (213) 229-7000 Attorneys for Defendants Clear Channel Communications, Inc., Clear Channel Broadcasting, Inc., and Live Nation, Inc. [Additional counsel listed on next page]

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

WESTERN DIVISION

IN RE LIVE CONCERT ANTITRUST LITIGATION

Case No.: 2:06-MDL-01745 SVW (VBKx)

DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION FOR CLASS DECERTIFICATION

Hearing Date: December 5, 2011 Time: 1:30 p.m. Courtroom: 6 Judge: Honorable Stephen V. Wilson Trial Date: April 17, 2012

This document relates to:

Kevin J. MacLaughlan v. Clear Channel Communications, Inc., et al., 2:06-cv-05012 SVW (VBKx)

Malinda Riley v. Clear Channel Communications, Inc., et al., 2:06-cv-2381 SVW (VBKx)

Lauren J. Hammer v. Clear Channel Communications, Inc., et al., 2:06-cv-4987 SVW (VBKx)

Margaret A. Thompson v. Clear Channel Communications, Inc., et al., 2:06-cv-6704 SVW (VBKx)

Hayes Young v. Clear Channel Communications, Inc., et al., 2:06-cv-3701 SVW (VBKx)

Case 2:06-ml-01745-SVW -VBK Document 411 Filed 11/07/11 Page 1 of 30 Page ID #:6246

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DEFENDANTS’ MEMORANDUM IN SUPPORT 2:06-MDL-01745 SVW (VBKX) OF MOTION FOR CLASS DECERTIFICATION


Additional counsel: HARVEY I. SAFERSTEIN, SBN 49750 [email protected] MINTZ LEVIN COHN FERRIS GLOVSKY AND POPEO, P.C. 2029 Century Park East, Suite 1370 Los Angeles, California 90067 Telephone: (310) 586-3200 JONATHAN M. JACOBSON (Pro Hac Vice) [email protected] LUCY YEN, SBN 224559 [email protected] WILSON SONSINI GOODRICH & ROSATI Professional Corporation 1301 Avenue of the Americas, 40th Floor New York, New York 10019 Telephone: (212) 999-5800 COLLEEN BAL, SBN 167637 [email protected] WILSON SONSINI GOODRICH & ROSATI Professional Corporation One Market Plaza Spear Tower, Suite 3300 San Francisco, California 94105 Telephone: (415) 947-2000 Attorneys for Defendants Clear Channel Communications, Inc., Clear Channel Broadcasting, Inc., and Live Nation, Inc.


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i DEFENDANTS’ MEMORANDUM IN SUPPORT 2:06-MDL-01745 SVW (VBKX) OF MOTION FOR CLASS DECERTIFICATION


TABLE OF CONTENTS

I. INTRODUCTION ................................................................................................. 1

II. BACKGROUND .................................................................................................. 6

III. LEGAL STANDARD ......................................................................................... 8

IV. ARGUMENT ...................................................................................................... 8

A. Wal-Mart Requires The Court To Decide Whether The Alleged “Rock” Concerts Market Exists Before Concluding That Class Certification Is Appropriate ................................................................. 9

B. After Wal-Mart, The Court Must Determine Whether Plaintiffs’ Expert Satisfies The Daubert Standard For Admissibility ................ 14

C. Plaintiffs Cannot Satisfy The Commonality Or Predominance Requirements Of Rule 23 ................................................................... 16

1. Because There Is No Single “Rock” Concerts Market, Numerous Individualized Inquiries Will Be Needed to Resolve Plaintiffs’ Claims ....................................................... 17

2. Antitrust Injury Cannot Be Proven on a Classwide Basis ....... 20

D. Plaintiffs’ Proposed “Trial By Formula” Is Impermissible And Would Violate Defendants’ Due Process Rights ............................... 22

E. Plaintiffs’ List Of “Rock” Concerts Shows That Either The Classes Are Not Ascertainable, Or Plaintiffs Are Not Adequate Class Representatives ................................................................................... 24

V. CONCLUSION .................................................................................................. 25


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ii DEFENDANTS’ MEMORANDUM IN SUPPORT 2:06-MDL-01745 SVW (VBKX) OF MOTION FOR CLASS DECERTIFICATION


TABLE OF AUTHORITIES

Cases

Am. Honda Motor Co. v. Allen, 600 F.3d 813 (7th Cir. 2010) .................................................................................. 2, 14

Am. Surety Co. v. Baldwin, 287 U.S. 156 (1932) ..................................................................................................... 6

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) ................................................................................... 3, 16, 17, 25

Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998) ...................................................................................... 24

Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978) ..................................................................................................... 8

Cruz v. Dollar Tree Stores, Inc., 2011 U.S. Dist. LEXIS 73938 (N.D. Cal. July 7, 2011) .......................................... 1, 8

Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) ................................................................................................... 14

Dukes v. Wal-Mart Stores, Inc., 222 F.R.D. 137 (N.D. Cal. 2004) ................................................................................. 7

Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010) .......................................................................... 1, 7, 8, 12

Dukes v. Wal-Mart, Inc., 509 F.3d 1168 (9th Cir. 2007) ...................................................................................... 7

Dukes v. Wal-Mart, Inc., 474 F.3d 1214, 1225 (9th Cir. 2007) ....................................................................... 1, 6

Ellis v. Costco Wholesale Corp., 657 F.3d 970 (9th Cir. 2011) ............................................................................... passim

Forsyth v. Humana, Inc., 114 F.3d 1467 (9th Cir. 1997) .............................................................................. 11, 20

Heerwagen v. Clear Channel Commc’ns, 435 F.3d 219 (2d Cir. 2006) ................................................................................. 11, 12

In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 (3d Cir. 2009) ..................................................................... 10, 11, 20, 21


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iii DEFENDANTS’ MEMORANDUM IN SUPPORT 2:06-MDL-01745 SVW (VBKX) OF MOTION FOR CLASS DECERTIFICATION


In re Initial Pub. Offerings Sec. Litig., 471 F.3d 24 (2d Cir. 2006) ......................................................................................... 14

In re Live Concerts Antitrust Litig., 247 F.R.D. 98 (C.D. Cal. 2007) .......................................................................... passim

Lindsey v. Normet, 405 U.S. 56 (1972) ....................................................................................................... 6

McLaughlin v. Am. Tobacco Co., 522 F.3d 215 (2d Cir. 2008) ....................................................................................... 23

O’Connor v. Boeing N. Am., Inc., 197 F.R.D. 404 (C.D. Cal. 2000) ................................................................................. 8

Paladin Assocs., Inc. v. Montana Power Co., 328 F.3d 1145 (9th Cir. 2003) .............................................................................. 11, 20

Rebel Oil Co., Inc. v. Atlantic Richfield Co., 51 F.3d 1421 (9th Cir. 1995) ...................................................................................... 13

Rodney v. Nw. Airlines, Inc., 146 Fed. App’x 783 (6th Cir. 2005) ..................................................................... 11, 13

Scott v. First Am. Title Ins. Co., 2011 WL 3880485 (E.D. Ky. Aug. 31, 2011) .............................................................. 1

Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) ...................................................................................... 25

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) ........................................................................................ passim

Walter v. Hughes Commc’ns, Inc., 2011 WL 2650711 (N.D. Cal. July 6, 2011) .......................................................... 1, 16


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1 DEFENDANTS’ MEMORANDUM IN SUPPORT 2:06-MDL-01745 SVW (VBKX) OF MOTION FOR CLASS DECERTIFICATION


I. INTRODUCTION

When this Court certified the classes in this action, it observed that “the result

might have been vastly different if the MDL panel had selected a district court in a

different circuit to serve as the MDL court” because of the “very narrow prism

permitted” by the Ninth Circuit’s decision in Dukes v. Wal-Mart, Inc., 474 F.3d 1214,

1225 (9th Cir. 2007). In re Live Concerts Antitrust Litig., 247 F.R.D. 98, 155 & n.53

(C.D. Cal. 2007); see also Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir.

2010) (en banc) (affirming class certification order that failed to resolve factual

disputes, did not apply Daubert, and endorsed a “Trial by Formula”), rev’d, Wal-Mart

Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). Because the “narrow prism” that

constrained this Court at class certification has since been squarely rejected by the

Supreme Court, the Court should revisit class certification and decertify the classes.

In light of the Supreme Court’s “landmark decision” in Wal-Mart—a decision

that, among other things, “represents a significant restatement of the commonality

requirement” and repudiates the panel and en banc opinions that previously bound this

Court—courts around the country are now reassessing past class certification

decisions. Scott v. First Am. Title Ins. Co., No. 07-52-DLB-CJS, 2011 WL 3880485 at

*6 (E.D. Ky. Aug. 31, 2011); Walter v. Hughes Commc’ns, Inc., No. 09-2136 SC,

2011 WL 2650711, at *7 (N.D. Cal. July 6, 2011); see, e.g., Cruz v. Dollar Tree

Stores, Inc., Nos. 07-2050 SC, 07-4012 SC, 2011 U.S. Dist. LEXIS 73938 (N.D. Cal.

July 7, 2011) (decertifying class after Wal-Mart). Indeed, the Ninth Circuit recently

vacated a class certification decision and remanded for application of the Wal-Mart

standard. See Ellis v. Costco Wholesale Corp., 657 F.3d 970 (9th Cir. 2011). Here,

the Court should reevaluate the propriety of class treatment because its initial approach

to certification necessarily tracked several key aspects of the Ninth Circuit’s panel and

en banc decisions in Dukes that the Supreme Court has expressly overruled.

Wal-Mart compels decertification of the classes certified in this action for at

least four distinct reasons:


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Overlap With the Merits. This Court previously concluded that the Ninth

Circuit’s decision in Dukes precluded it from resolving factual disputes, making

determinations on the merits, or weighing competing expert testimony. See Live

Concerts, 247 F.R.D. at 105-16. Wal-Mart, however, expressly rejected that decision,

and made clear that courts are required to perform a “rigorous analysis” that will

“[f]requently . . . entail some overlap with the merits of the plaintiff’s underlying

claim” to determine if the requirements of Rule 23 are satisfied. Wal-Mart, 131 S. Ct.

at 2551. Therefore, under Wal-Mart, the Court must resolve factual disputes relevant

to class certification, including whether there is a single product market of all “rock”

concerts potentially linking together Plaintiffs’ claims, as opposed to numerous distinct

markets that would preclude class treatment.

Daubert at Class Certification. This Court also previously interpreted Dukes as

precluding a Daubert analysis at the class certification stage. Live Concerts, 247

F.R.D. at 116 n.17. But the Supreme Court in Wal-Mart strongly suggested that

Daubert does apply at the class certification stage. See Wal-Mart, 131 S. Ct. at 2553-

54 (“The District Court concluded that Daubert did not apply to expert testimony at

the certification stage of class-action proceedings. . . . We doubt that is so . . . .”); see

also Ellis, 657 F.3d at 982; Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815-16 (7th

Cir. 2010). The testimony of Plaintiffs’ expert, Dr. Owen R. Phillips, is plainly

unreliable and therefore not admissible under Daubert, see Dkt. 403, Defendants’

Motion to Exclude Testimony of Dr. Owen R. Phillips, and in any event falls far short

of satisfying Rule 23’s criteria. See Wal-Mart, 131 S. Ct. at 2552-54 (reversing class

certification where expert’s testimony failed to provide the “glue” necessary to hold

the class together).

Commonality and Predominance. The Supreme Court explained in Wal-Mart

that Rule 23(a)’s commonality requirement is not satisfied merely through the “raising

of common ‘questions’—even in droves.” Wal-Mart, 131 S. Ct. at 2551 (internal

quotation marks and citation omitted). Instead, commonality requires Plaintiffs to


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demonstrate that there is a “common contention” for which a “determination of its

truth or falsity will resolve an issue that is central to the validity of each one of the

claims in one stroke.” Id. None of the supposedly common questions that Plaintiffs

previously identified satisfy this definition. Rather, even if their expert’s testimony is

deemed admissible, it is clear that resolution of Plaintiffs’ claims necessarily depends

on numerous individual inquiries into the unique circumstances of each concert and

ticket purchase. Plaintiffs thus cannot satisfy Rule 23(a)’s commonality requirement,

let alone the “far more demanding” predominance requirement of Rule 23(b)(3).

Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 624 (1997).

Trial by Formula. This Court previously endorsed Plaintiffs’ plan to use

various methods of averaging and statistical analysis to “prove” an essential element of

their claims—whether each class member was injured—on a classwide basis. See Live

Concerts, 247 F.R.D. at 136-47. This approach, which fails to account for the unique

circumstances of each individual concert and ticket purchase, would preclude

Defendants from introducing evidence showing that particular class members suffered

no injury at all. Plaintiffs’ proposal is the embodiment of a “Trial by Formula”—a

“novel project” that the Supreme Court unanimously rejected because it would prevent

defendants from litigating individualized defenses and thus would result in an

impermissible alteration of substantive law. Wal-Mart, 131 S. Ct. at 2561.

* * *

In addition to the dramatically changed legal landscape, post-certification factual

developments in these cases also strongly support decertification. In granting class

certification, the Court relied on Plaintiffs’ representations that, after discovery, they

would be in a position to (1) determine objectively which concerts were in the “rock”

category, and (2) prove using a reliable method that Defendants’ conduct raised ticket

prices above the competitive level for each concert at issue. Specifically, Plaintiffs

claimed they would:


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• Define a “rock” concert market, a necessary predicate for class certification, by objective proof—including the testimony of an independent music expert—and would define the market based on aggregate cross-elasticity of demand and supply. See Dkt. 405, Declaration of Lucy Yen in Support of Defendants’ Motion to Exclude Testimony of Dr. Owen R. Phillips (“Yen Decl.”), Ex. 2 (Class Cert. Hr’g Tr.) at 10-11, 32, 79, 82-83; see also Yen Decl., Ex. 1 (Phillips Dep.) at 66-72.

• Prove that all class members paid prices above competitive levels through methodologies that would control for other factors affecting individual ticket prices, such as artist popularity, population growth, and price ceilings imposed by the artist. See Live Concerts, 247 F.R.D. at 135-39, 143; Yen Decl., Ex. 2 (Class Cert. Hr’g Tr.) at 41-43, 50-51.

• Prove that even sold out concerts were priced above competitive levels with evidence that “Clear Channel artificially restricts the supply of tickets to rock concerts through the selection of smaller venues in order to charge supracompetitive prices.” Live Concerts, 247 F.R.D. at 140.

• Achieve the “daunting task” of identifying class members through objective and reasonably ascertainable criteria. Dkt. 261 at 7.

Discovery is now closed. The post-discovery report filed by Plaintiffs’ expert,

Dr. Phillips, demonstrates that Plaintiffs have not lived up to their promises. Dr.

Phillips’ report—Plaintiffs’ only evidence on the issue—fails to demonstrate by a

preponderance of the evidence that a single “rock concert” market exists. Dr. Phillips

abandoned any effort to measure cross-elasticity of demand, and instead employed a

“pragmatic” approach that is devoid of any economic analysis. He simply assumed

that there was no product market smaller than rock (e.g., classic rock), nor larger than

rock (e.g., rock and pop). Yen Decl., Ex. 3 (Phillips Dep.) at 116:2-6; 150:21-151:3.

Even Plaintiffs’ efforts to assemble a coherent list of all “rock concerts” have failed.

Plaintiffs never retained the supposed independent music expert that they repeatedly

claimed would be essential to classify rock artists and to separate them from pop,

country, jazz, blues, and other genres. Instead, Dr. Phillips took it upon himself to

decide what constituted a “rock” concert based on his own “subjective

determination[s],” even though he is not a music expert. See id. at 123:9-126:11.


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Plaintiffs have likewise failed to demonstrate that they have a reliable

methodology of proving classwide injury. Contrary to his representations at class

certification, Dr. Phillips’ implementation of the methodologies he sketched out in

general terms in his class certification reports have failed to control for differences in

artist popularity, population, or anything else. Id. at 278:11-22; Yen Decl., Ex. 4

(Phillips Dep.) at 474:25-475:22. Nor did he even attempt to control for prices

dictated by the artist, even though the record shows that artist control over ticket prices

often results in prices below the competitive level. See, e.g., Dkt. 406, Declaration of

Arthur E. Fogel in Support of Defendants’ Motion to Exclude Testimony of Dr. Owen

R. Phillips (“Fogel Decl.”) ¶¶ 2-4 (explaining artist control over ticket pricing). For

example, concerts by the popular band Blink 182 were priced at just $1 per ticket, and

dozens more were priced well below $20 per ticket. And, as they have conceded,

Plaintiffs have no evidence to back up their allegation that the supply of tickets at sold

out concerts was restricted. See Yen Decl., Ex. 14 (Pls.’ Am. Resp. to Defs.’ Third Set

of Interrogs.), No. 6.

Plaintiffs also have not come up with a reasonably ascertainable class of “rock”

concertgoers using objective criteria. While Plaintiffs have, indeed, provided a list of

purported “rock” concerts for which they are seeking damages, they have done so

using a subjective methodology that led to the exclusion of artists that are widely

considered to be rock, and the inclusion of artists with no connection to the rock genre.

Plaintiffs’ list of purportedly relevant concerts proves that either the classes as defined

are not ascertainable, or that Plaintiffs are not adequately representing the class by

failing to seek damages for all potential class members.

These recent legal and factual developments confirm that Plaintiffs cannot

satisfy the requirements for class certification. As the Supreme Court made clear in

Wal-Mart, “Rule 23 does not set forth a mere pleading standard.” 131 S. Ct. at 2551.

Rather, Plaintiffs must prove that the requirements for class certification are met. Id.

But Plaintiffs’ only evidence—the flawed opinions of Dr. Phillips—cannot satisfy their


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burden under Rule 23. Individual, rather than common, issues abound, and the only

way to proceed to trial on a classwide basis would be through the use of an

impermissible shortcut—a discredited “Trial by Formula” that will deprive Defendants

of due process. See id. at 2561; Lindsey v. Normet, 405 U.S. 56, 66 (1972) (“Due

process requires that there be an opportunity to present every available defense.”

(quoting Am. Surety Co. v. Baldwin, 287 U.S. 156, 168 (1932)). Because Plaintiffs’

claims cannot be tried on a classwide basis, the Court should decertify the classes.

II. BACKGROUND

This MDL proceeding consists of twenty-two substantively identical civil

antitrust class actions brought against Defendants Clear Channel Communications,

Inc., Clear Channel Broadcasting, Inc., and Live Nation, Inc. Plaintiffs allege that

Defendants engaged in monopolization and attempted monopolization of the live rock

concert tickets market that resulted in class members paying supra-competitive ticket

prices. On October 22, 2007, the Court certified five Rule 23(b)(3) classes, one for

each of five regions (Chicago, Los Angeles, Denver, Boston, and New York/New

Jersey). In re Live Concerts Antitrust Litig., 247 F.R.D. 98, 155 (C.D. Cal. 2007). The

classes in each region include “[a]ll persons who purchased tickets to any live rock

concert in the [region] directly from any of the Defendants or their affiliates or

predecessors or agents during the period from June 19, 1998 to the present.” Id. In

determining that the requirements for class certification were met, the Court closely

adhered to the Ninth Circuit’s initial panel decision in Dukes v. Wal-Mart, Inc., 474

F.3d 1214 (9th Cir. 2007), and accordingly declined to apply Daubert, did not weigh

the testimony of the parties’ competing experts, and left unresolved any factual

disputes on issues touching on the merits of Plaintiffs’ claims. See Live Concerts, 247

F.R.D. at 105-16.

The initial Dukes panel opinion upon which the Court relied was later

withdrawn and superseded by a different opinion, then reheard en banc, and ultimately

reversed by the Supreme Court. See Dukes v. Wal-Mart, Inc., 509 F.3d 1168 (9th Cir.


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2007); Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010) (en banc), rev’d,

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). The Court stayed this case

until the Ninth Circuit issued its en banc opinion in Dukes. Dkt. 215. After the Ninth

Circuit en banc court again affirmed the district court’s class certification decision in

Dukes, the Court lifted the stay and denied, in a summary order, Defendants’ motion

for reconsideration. Dkt. 240 (“The Court has reconsidered the admitted evidence and

its previous Order in light of the standard set forth in Dukes v. Wal-Mart Stores, Inc.,

603 F.3d 571 (9th Cir. 2010). Having done so, the Court finds no reason to modify its

conclusion.”). On June 20, 2011, however, the Supreme Court reversed the Ninth

Circuit’s en banc decision, and set out a standard for class certification that is

incompatible with the Ninth Circuit’s various opinions in Dukes. See Wal-Mart, 131

S. Ct. at 2550-57; see also Ellis v. Costco Wholesale Corp., 657 F.3d 970, 974 (9th

Cir. 2011) (recognizing that Wal-Mart “alter[ed] existing case law” relating to class

certification).

The Supreme Court flatly rejected the class certification standards applied by the

Ninth Circuit in the panel and en banc opinions in Dukes. Indeed, although the Dukes

en banc majority purported to endorse a more substantial review of merits issues

overlapping the Rule 23 inquiry than the initial Dukes panel decision, it ultimately

affirmed a district court decision that expressly did not conduct such a review, see

Dukes v. Wal-Mart Stores, Inc., 222 F.R.D. 137, 155 (N.D. Cal. 2004) (refusing to

“engage . . . in a merits evaluation of the expert opinions”), and in the end applied an

incorrect legal standard later rejected by the Supreme Court, see Dukes, 603 F.3d at

633-34 (Ikuta, J. dissenting) (criticizing majority’s argument that requiring “significant

proof” of a general policy of discrimination conflated class certification and the

merits); Wal-Mart, 131 S. Ct. at 2553 (requiring “significant proof” of a general policy

of discrimination). Moreover, the Supreme Court rejected multiple other aspects of the

Dukes en banc decision, including its conception of the commonality requirement, its

failure to require the district court to apply Daubert or weigh expert testimony, and its


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acceptance of “Trial by Formula.” See Dukes, 603 F.3d at 599-613, 624-27. As

shown below, Wal-Mart requires decertification.

III. LEGAL STANDARD

“A district court’s order to grant class certification is subject to later

modification, including class decertification.” Cruz v. Dollar Tree Stores, Inc., Nos.

07-2050 SC, 07-4012 SC, 2011 U.S. Dist. LEXIS 73938 (N.D. Cal. July 7, 2011);

accord Dkt. 261 at 6-7. “The standard used by the courts in reviewing a motion to

decertify is the same as the standard used in evaluating a motion to certify.” O’Connor

v. Boeing N. Am., Inc., 197 F.R.D. 404, 410 (C.D. Cal. 2000).

In determining whether the requirements of Rule 23 have been met, a court must

engage in a “rigorous analysis” that frequently “will entail some overlap with the

merits of the plaintiff’s underlying claims.” Wal-Mart, 131 S. Ct. at 2551. “The

Supreme Court has also noted that the ‘[e]valuation of many of the questions entering

into determination of class action questions is intimately involved with the merits of

the claims. The typicality of the representative’s claims or defenses, the adequacy of

the representative, and the presence of common questions of law or fact are obvious

examples.’” Ellis, 657 F.3d at 980 (quoting Coopers & Lybrand v. Livesay, 437 U.S.

463, 469 n.12 (1978)).

IV. ARGUMENT

This case involves the pricing of thousands of live music concerts over five

years. Each concert was individually produced and priced. See Fogel Decl. ¶¶ 2-4. In

each case, the price could not be set without the approval of the artist. See id. And the

product is so highly differentiated that being a fan of one artist may mean affirmatively

disliking another, seemingly similar artist. Finally, each product is not available all the

time. Thus whether a Rolling Stones concert might affect the price of another concert,

or vice versa, depends not only on whether enough fans view the Rolling Stones and

the other artist to be good substitutes, but also on when and where the Rolling Stones


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and the other artist play. In short, there are many moving parts affecting the pricing of

concerts that Plaintiffs have not adequately accounted for.

The classes should be decertified because it is now beyond dispute that Plaintiffs

cannot prove that the requirements of Rule 23 are met. Plaintiffs’ single “rock”

concerts product market definition is unsupported by the evidence adduced in

discovery after class certification was granted. As the record now demonstrates, there

are, in reality, a multitude of smaller, distinct relevant product markets, and thus

resolution of this case will require an individualized inquiry into the effect of

Defendants’ alleged conduct with respect to each of these distinct relevant markets.

The record also now shows that numerous class members paid prices that were at or

below the competitive price for concert tickets, and could not possibly have been

injured. Knowing that individualized inquiries would be necessary to determine

whether each class member has suffered an injury, Plaintiffs propose to conduct an

impermissible “Trial by Formula” that will prevent Defendants from presenting

evidence that proves many class members were not injured. Finally, Plaintiffs’ flawed

list of what they claim to be the “rock” concerts at issue shows that either the certified

classes are not ascertainable, or that Plaintiffs are not adequate class representatives

because they have declined to pursue the claims of all class members.

A. Wal-Mart Requires The Court To Decide Whether The Alleged “Rock” Concerts Market Exists Before Concluding That Class Certification Is Appropriate

When this Court granted class certification in 2007, the testimony of Dr.

Phillips—the sole evidence Plaintiffs proffered in support of class certification—was

essentially assumed to be true by this Court. While the Court did engage in “a more

detailed analysis” of the evidence submitted by the parties at class certification, this

analysis was “a limited inquiry” that did not involve “too much probing,” and

specifically “preclude[d] the Court from conducting a Daubert analysis or weighing

expert testimony.” Live Concerts, 247 F.R.D. at 115-16 & n.17 (emphasis added). The

Court explained that the Ninth Circuit’s decision in Dukes forbade a district court from


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“weighing conflicting evidence when determining whether the Rule 23 requirements

are satisfied,” and further that “a district court [was] not permitted to discount the

testimony of a plaintiff expert merely because the defendant has challenged some

aspect of the expert’s opinion.” Id. at 110, 115. The Court therefore expressly

declined to weigh the competing expert testimony offered by the parties, explaining

that under Dukes, “[w]here both plaintiffs and defendants have proffered expert

testimony, the court must avoid resolving a ‘battle of the experts’ in a motion for class

certification.” Id. Because the Court was at the time working with the Ninth Circuit’s

incorrect legal standard, Defendants’ attempt to rebut Dr. Phillips’ report with their

own expert testimony was repeatedly rejected as going to the “merits.” See, e.g., id. at

143 (“[T]he Court cannot consider [Defendants’ expert] Hausman’s claims because

they relate to the merits.”); id. at 142 (“While Hausman’s observation is certainly

correct, the Court is not permitted to weigh the merits of the case at the class

certification stage.”).

Wal-Mart, however, makes clear that “Rule 23 does not set forth a mere

pleading standard,” and therefore a “party seeking class certification must

affirmatively demonstrate his compliance with the Rule—that is, he must be prepared

to prove that there are in fact sufficiently numerous parties, common questions of law

or fact, etc.” Wal-Mart, 131 S. Ct. at 2551. The Supreme Court recognized that in

conducting the “rigorous analysis” necessary to determine if Rule 23 has been

satisfied, it “cannot be helped” that there will be “some overlap with the merits of the

plaintiff’s underlying claim.” Id.; see also In re Hydrogen Peroxide Antitrust Litig.,

552 F.3d 305, 323 (3d Cir. 2009) (holding in antitrust case that “[e]xpert opinion with

respect to class certification, like any matter relevant to a Rule 23 requirement, calls

for rigorous analysis” and that “[w]eighing conflicting expert testimony at the

certification stage is not only permissible; it may be integral to the rigorous analysis

Rule 23 demands”). As the Ninth Circuit recently explained, after Wal-Mart “it is not

correct to say a district court may consider the merits to the extent that they overlap


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with class certification issues; rather, a district court must consider the merits if they

overlap with the Rule 23(a) requirements.” Ellis, 657 F.3d at 981; see also id. (“[T]he

merits of the class members’ substantive claims are often highly relevant when

determining whether to certify a class.”).

In applying the Ninth Circuit’s flawed class certification standards in place at

the time, rather than the correct legal standards later clarified by the Supreme Court in

Wal-Mart, the Court’s class certification order left unresolved the central disputed

issue between the parties and the competing experts: Whether there is one identifiable

“rock” concerts relevant market, or instead numerous distinct product markets. See

Live Concerts, 247 F.R.D. at 130 (“Despite vigorous argument from both parties, the

Court cannot resolve this dispute over market definition in a motion for class

certification.”). Wal-Mart, however, requires that this factual dispute be resolved now,

with Plaintiffs bearing the burden of proof, because until then it will be impossible to

determine whether the commonality or predominance requirements are satisfied.

In fact, the Second Circuit rejected an attempt to certify a nationwide class

action involving the very claims at issue here precisely because the plaintiff failed to

prove that there was a national geographic market for “rock” concerts at class

certification. See Heerwagen v. Clear Channel Commc’ns, 435 F.3d 219, 227-31 (2d

Cir. 2006). Similarly, the Sixth Circuit has held that “a court may consider an antitrust

plaintiff’s failure to define the market as part of its class certification analysis” and

affirmed a denial of class certification after concluding that the market definition of

“all non-stop scheduled flights into and out of each of Northwest’s hubs fail[ed] as a

matter of law.” Rodney v. Nw. Airlines, Inc., 146 Fed. App’x 783, 788 (6th Cir. 2005).

Plaintiffs cannot prove their monopolization claims without establishing the

relevant market applicable to such claims. See Paladin Assocs., Inc. v. Montana

Power Co., 328 F.3d 1145, 1163 n.22 (9th Cir. 2003); Forsyth v. Humana, Inc., 114

F.3d 1467, 1475 (9th Cir. 1997); Live Concerts, 247 F.R.D. at 122. “[A] plaintiff

claiming monopolization is obligated to establish the relevant market because the


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power to control prices or exclude competition only makes sense with reference to a

particular market.” Heerwagen, 435 F.3d at 229. And if there are numerous distinct

product markets instead of a single “rock” concerts market, each of these relevant

markets would have to be separately examined, since “acquir[ing] monopoly power in

some relevant market containing some ‘rock’ concerts is not the same question as

whether [Defendants] acquired monopoly power in some other relevant market

containing a different set of concerts” and “a hypothetical finding of abuse in one

product market [does not] establish the existence of abuse in another market.” Yen

Decl., Ex. 7 (Ordover Rep.) ¶ 36; accord Heerwagen, 435 F.3d at 229. The Court

simply cannot decide whether Plaintiffs have satisfied the commonality or

predominance requirements without first determining whether there is one or instead

numerous relevant markets at issue. Because market definition overlaps with the Rule

23 inquiry here, it must be resolved at this stage. See Wal-Mart, 131 S. Ct. at 2551.

Requiring plaintiffs to prove the existence of a single relevant market at class

certification is consistent with the Supreme Court’s holding in Wal-Mart that the

plaintiffs there needed to provide “‘significant proof’ that Wal-Mart ‘operated under a

general policy of discrimination’” in order to establish commonality in an employment

discrimination suit under Title VII. Id. at 2553 (rejecting Ninth Circuit’s holding that

“significant proof” of a “general policy of discrimination” was a merits issue

inappropriate for resolution at the class certification stage); see Dukes, 603 F.3d at 596

n.17 (arguing that to require plaintiffs to prove a general policy of discrimination

would “conflate[] the class certification and merits phases of the litigation”). Market

definition serves a similar function here: Without proof of a single relevant market

Plaintiffs cannot establish commonality. Therefore, Plaintiffs must prove at this stage

the existence of their alleged single “rock” concerts market, just like the Wal-Mart

plaintiffs were required to prove the existence of a general policy of discrimination.

See Wal-Mart, 131 S. Ct. at 2553.


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In declining to resolve the market definition issue at class certification, the Court

noted that it was “typically a jury question.” Live Concerts, 247 F.R.D. at 141; cf.

Rebel Oil Co., Inc. v. Atlantic Richfield Co., 51 F.3d 1421, 1435 (9th Cir. 1995)

(market definition appropriate to resolve on summary judgment). But Wal-Mart

demonstrates that Plaintiffs must establish at the time they seek class certification that

their alleged relevant market actually exists, even if they will have to do so again

before a jury at trial. See 131 S. Ct. at 2552 n.6. As the Supreme Court explained by

analogy, “[p]erhaps the most common example of considering a merits question at the

Rule 23 stage arises in class-action suits for securities fraud.” Id. And in that context,

Rule 23(b)(3)’s predominance requirement “would often be an insuperable barrier to

class certification, since each of the individual investors would have to prove reliance

on the alleged misrepresentation. But the problem dissipates if the plaintiffs can

establish the applicability of the so-called ‘fraud on the market’ presumption, which

says that all traders who purchase stock in an efficient market are presumed to have

relied on the accuracy of a company’s public statements.” Id. The Court therefore

explained that “[t]o invoke this presumption, the plaintiffs seeking 23(b)(3)

certification must prove that their shares were traded on an efficient market, an issue

they will surely have to prove again at trial in order to make out their case on the

merits.” Id. (citation omitted)

Here, Plaintiffs’ alleged “rock” concerts market definition serves the same role

as the “fraud on the market” presumption in a securities fraud class action. See

Rodney, 146 Fed. App’x at 788-89 (relying on case law requiring securities fraud

plaintiffs to prove an “efficient market” at class certification to conclude that an

antitrust plaintiff’s failure to define the relevant market supported denial of class

certification). Plaintiffs seek to use the purported existence of a single market in which

all the class members participated in order to show that the commonality and

predominance requirements of Rule 23 are met. Plaintiffs therefore must both prove

the existence of a single “rock” concerts relevant market before a jury at trial, and


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before the Court at the class certification stage by a preponderance of the evidence. If

they cannot do so, resolution of their monopolization claims will require numerous

mini-trials each focused on a separate market, thus precluding class certification. In

short, just like securities fraud plaintiffs who are unable to invoke the “fraud on the

market” presumption at the class certification stage, Plaintiffs here will be unable to

meet the requirements for class certification if they cannot prove that there is a single

relevant market. See In re Initial Pub. Offerings Sec. Litig., 471 F.3d 24, 42-43 (2d

Cir. 2006) (vacating class certification order because plaintiffs could not prove that the

relevant securities market was efficient).

B. After Wal-Mart, The Court Must Determine Whether Plaintiffs’ Expert Satisfies The Daubert Standard For Admissibility

In granting class certification, the Court followed the Ninth Circuit’s guidance in

Dukes and expressly declined to apply the standards of Daubert v. Merrell Dow

Pharms., Inc., 509 U.S. 579 (1993), to the testimony of Plaintiffs’ expert witness, Dr.

Phillips. See Live Concerts, 247 F.R.D. at 116 n.17 (“Dukes clearly precludes the

Court from conducting a Daubert analysis . . . .”); see also id. at 155 (“When the Court

is at liberty to conduct a full Daubert analysis, Defendants’ arguments may very well

carry the day.”). Wal-Mart dispels the flawed notion that a Daubert analysis of expert

testimony is not required at the class certification stage. Wal-Mart, 131 S. Ct. at 2553-

54 (“The District Court concluded that Daubert did not apply to expert testimony at

the certification stage of class-action proceedings. . . .We doubt that is so . . . .”).

Indeed, after Wal-Mart, the Ninth Circuit has likewise indicated that Daubert applies

at the class certification stage. Ellis, 657 F.3d at 982; see also Am. Honda Motor Co.

v. Allen, 600 F.3d 813, 815-16 (7th Cir. 2010). Therefore, the Court must now conduct

the Daubert analysis that it was not able to conduct before. As explained more fully in

Defendants’ Motion to Exclude, the testimony of Plaintiffs’ expert Dr. Phillips is

unscientific and unreliable, and therefore does not meet the standards for admissibility

under Daubert.


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For example, Dr. Phillips’ “analysis violates the basic economic principles used

to define relevant markets.” Yen Decl., Ex. 7 (Ordover Rep.) ¶ 20. Instead of starting

at the individual concert level and adding close substitutes until the “the narrowest

group of products over which a hypothetical monopolist profitably could impose a

‘small but significant non-transitory increase in price’” was identified, as required

under the Department of Justice and Federal Trade Commission’s Horizontal Merger

Guidelines, Dr. Phillips “starts with a product grouping that includes all ‘rock’

concerts and then considers whether the concerts of artists classified under other music

genres might also warrant inclusion in the relevant market.” Id. Rather than analyzing

what concerts would be good substitutes for other concerts, Dr. Phillips’ analysis

instead consists of an effort to label artists as either rock or not rock through

“subjective determination[s]” based on his “opinion.” See Yen Decl., Ex. 3 (Phillips

Dep.) at 116:10-14, 123:9-18. Indeed, it is not surprising that Dr. Phillips struggled at

his deposition to provide any guiding principle that would distinguish between artists

who were or were not “rock.” See, e.g., id. at 129:3-22, 139:25-143:3 (discussing

classification of Burt Bacharach as “rock”). There is simply no “economics”

supporting Dr. Phillips’ analysis of the market definition. His “rock” concert market is

therefore arbitrary, unreliable, and unverifiable.

Dr. Phillips’ methodology for calculating whether class members paid supra-

competitive prices is similarly unscientific and unreliable. Dr. Phillips simply assumed

that any concert promoted by Clear Channel would necessarily be priced above the

competitive level because he believes that its monopoly power was “pervasive.” See,

e.g., id. at 68:17-21 (only way that Clear Channel concerts could ever be priced at a

competitive level would be if it was to go “out of business”); Yen Decl., Ex. 4 (Phillips

Dep.) at 511:6-13. But the mere existence of monopoly power proves nothing. Any

firm, even a firm with “pervasive” monopoly power, can choose to set prices at or

below the competitive level. Because of his erroneous assumption that any Clear

Channel concert had to be overpriced, Dr. Phillips absurdly concluded that a $1


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concert ticket for a major artist, Blink 182, was above the competitive level and instead

should have been priced at 82 cents. Yen Decl., Ex. 3 (Phillips Dep.) at 61:7-15, 62:7-

12. Dr. Phillips even claims that a concert ticket priced at a single penny would be

supra-competitive. Yen Decl., Ex. 4 (Phillips Dep.) at 511:6-13.

For these reasons, and those outlined in Defendants’ Motion to Exclude, Dr.

Phillips’ testimony is inadmissible under Daubert and should be stricken. But even if

his testimony were admissible under Daubert, it is clear that Dr. Phillips’ baseless

opinions are utterly unpersuasive and fail to satisfy the requirements of Rule 23. Cf.

Wal-Mart, 131 S. Ct. at 2554 (“[E]ven if properly considered [under Daubert],

Bielby’s testimony does nothing to advance respondents’ case. . . . If Bielby admittedly

has no answer to [the essential question on which the theory of commonality depends],

we can safely disregard what he has to say.”). Because Plaintiffs’ only source of

evidence in support of class certification, the testimony of Dr. Phillips, is insufficient

to satisfy the requirements of Rule 23, the classes should be decertified.

C. Plaintiffs Cannot Satisfy The Commonality Or Predominance Requirements Of Rule 23

Wal-Mart confirms that Plaintiffs’ claims lack sufficient commonality to meet

the requirements of Rule 23(a), let alone the “far more demanding” predominance

requirement of Rule 23(b)(3). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 624

(1997); Wal-Mart, 131 S. Ct. at 2550-51; see also Walter, 2011 WL 2650711, at *10

(holding, after Wal-Mart, that the failure to “satisf[y] the commonality requirement”

necessarily means that “the Court cannot find that common questions predominate”).

After Wal-Mart, to establish commonality Plaintiffs must prove the existence

not just of common questions, but of common questions that have the potential to

generate common answers. Wal-Mart, 131 S. Ct. at 2550-51. Class treatment is

appropriate only where the “claims . . . depend upon a common contention” that is

“capable of classwide resolution—which means that determination of its truth or

falsity will resolve an issue that is central to the validity of each one of the claims in


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one stroke.” Id. at 2551. “‘What matters to class certification . . . is not the raising of

common ‘questions’—even in droves—but, rather the capacity of a classwide

proceeding to generate common answers apt to drive the resolution of the litigation.’”

Id. (citation omitted). And to satisfy the predominance requirement—a requirement

that the Supreme Court has called a “vital prescription” that “tests whether proposed

classes are sufficiently cohesive to warrant adjudication by representation”—common

questions must predominate over any individual issues. Amchem, 521 U.S. at 623-24.

The Court previously identified four supposedly common issues that it found

satisfied the commonality and predominance requirements: “market definition,

monopoly power, anticompetitive conduct, and casual antitrust injury.” Live Concerts,

247 F.R.D. at 117. But none of these issues are the kind of common questions that, if

answered, would resolve an issue “central to the validity” of each of the claims in “one

stroke.” Wal-Mart, 131 S. Ct. at 2551. First, answering the market definition question

here is a threshold issue that will only resolve whether Plaintiffs’ claims are all

premised on the same relevant market of “rock” concerts, or instead on numerous

distinct relevant markets. In other words, knowing the relevant market will reveal the

nature of Plaintiffs’ monopolization claims, but will say nothing about their validity.

Second, because the class members participated in numerous distinct markets—not the

single market for “rock” concerts that Plaintiffs allege—the questions whether

Defendants had monopoly power or engaged in anticompetitive conduct cannot be

resolved on a classwide basis. Instead, resolving these two elements is only possible

after examining each of the distinct markets that are present in this case. Finally,

antitrust injury is not a common question because it can only be proven through an

analysis of the unique circumstances of each concert and ticket purchase.

1. Because There Is No Single “Rock” Concerts Market, Numerous Individualized Inquiries Will Be Needed to Resolve Plaintiffs’ Claims

Plaintiffs allege, and their expert Dr. Phillips purports to confirm, that there is a

single product market for “rock” concerts in each region. Dr. Phillips, however,


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cannot prove that this market exists because he has “fail[ed] to define the relevant

market according to the core principle relating to the reasonable interchangeability of

products in the eyes of consumers.” Yen Decl., Ex. 7 (Ordover Rep.) ¶ 64. If Dr.

Phillips had actually examined evidence of consumer preferences, as Defendants’

expert Dr. Ordover did, he would have concluded that all “rock” artists are not

reasonable substitutes for each other and that instead class members were actually

participating in numerous distinct markets. See id. ¶¶ 51-64. Because Dr. Phillips

employed no quantitative analysis, and instead relied on subjective determinations and

simplistic assumptions, his analysis resulted in conclusions that defy common sense.

There is no dispute that the Department of Justice and Federal Trade

Commissions’ Horizontal Merger Guidelines and the basic economic concepts of

substitutability and cross-price elasticity are the appropriate standards for defining a

market. See id. ¶¶ 37-38. But while Dr. Phillips references these standards, he fails to

apply them. See id. As Dr. Ordover explains, Dr. Phillips “puts into a single market

all concerts that he classifies as ‘rock’ based on his subjective perceptions without any

analysis to support such a massive amalgamation of highly differentiated products into

a single market.” Id. ¶ 38. And Dr. Phillips fails to start “his analysis with a single

artist’s concert(s) or some small group of artists and then expanding out by including

additional concerts that are sufficiently close substitutes to warrant inclusion.” Id.

Instead, Dr. Phillips assumes his conclusion by “starting with all ‘rock’ concerts as the

narrowest reasonable product grouping.” Id. Dr. Phillips’ analysis simply “assumes

away the possibility of narrower relevant markets and in doing so ignores the smallest

relevant market principle espoused in the Horizontal Merger Guidelines.” Id.

When confronted at his deposition with this fundamental defect in his analysis,

Dr. Phillips’ only explanation for why he did not start with a smaller market, such as

an individual concert or concerts within a specific subgenre of “rock” music such as

heavy metal, was that he had made “a subjective determination” that “rock” music was

the smallest possible market. See Yen Decl., Ex. 3 (Phillips Dep.) at 123:9-126:11; see


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also Yen Decl., Ex. 7 (Ordover Rep.) ¶¶ 48-50. In other words, Dr. Phillips’ core

conclusion regarding market definition was predetermined and based on nothing more

than his own subjective opinions instead of actual evidence of consumer preferences or

substitutability between various artists. In short, Dr. Phillips’ “assessment of the

relevant market amounts to little more than an assertion that a broad genre

classification for music forms a reasonable proxy for the boundaries surrounding a

large set of products that consumers purportedly view as reasonably interchangeable.”

Yen Decl., Ex. 7 (Ordover Rep.) ¶ 69.

Further compounding this error, Dr. Phillips failed to test his “subjective

determination” against any actual evidence of consumer preferences. He “did not

undertake any data analysis designed to gauge the extent to which consumers view

‘rock’ concerts (or discrete groups of concerts) as reasonable substitutes” but instead

relied solely “on subjective assessments in dictionaries and other qualitative sources to

form his conclusion on the relevant markets—even though a wealth of information on

consumers’ concert-going behavior is available.” Id. ¶ 51.

In contrast, Dr. Ordover examined actual data of consumer ticket purchases, and

came to two important conclusions that directly undermine Dr. Phillips’ “subjective

determination” of the relevant market. See id. ¶¶ 51-64. First, Dr. Ordover was able to

conclude, based on his analysis of ticket purchases, that “not all ‘rock’ concerts are

sufficiently close substitutes to warrant inclusion in a single relevant market.” Id. ¶ 51.

Second, Dr. Ordover found that “many ‘non-rock’ concerts are closer substitutes for

many ‘rock’ concerts than are many other ‘rock’ concerts.” Id. For example,

consumers attending concerts of multiple artists classified as “rock” by Dr. Phillips,

including Rod Stewart, Lenny Kravitz, and Matchbox Twenty, were more likely to see

concerts of artists classified as non-“rock” than they were to see concerts by other

“rock” artists. Id. ¶ 59. In other words, supposedly non-“rock” artists are likely better

substitutes for certain “rock” artists than the artists that Dr. Phillips included in the

“rock” market. Id. This evidence shows “that there is no economic basis underlying


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Dr. Phillips’ delineation of the relevant market boundaries according to his designation

of artists as ‘rock’ or ‘non-rock.’” Id. ¶ 57.

Without a single “rock” concerts market, Plaintiffs have no “glue” that can tie

together their divergent claims and allow for a classwide determination of whether

Defendants actually monopolized, or attempted to monopolize, a relevant market. Cf.

Wal-Mart, 131 S. Ct. at 2552 (“Here respondents wish to sue about literally millions of

employment decisions at once. Without some glue holding the alleged reasons for all

those decisions together, it will be impossible to say that examination of all the class

members’ claims for relief will produce a common answer to the crucial question why

was I disfavored.”). Instead, resolution of Plaintiffs’ monopolization claims will

require an analysis of Defendants’ market power and allegedly anticompetitive

conduct in numerous distinct markets. This is the antithesis of commonality and

predominance, and would force the Court to conduct a multitude of mini-trials on the

core issue of liability. Simply put, if Plaintiffs cannot prove that there is a single

“rock” concerts market, the classes must be decertified.

2. Antitrust Injury Cannot Be Proven on a Classwide Basis

Even if Plaintiffs could establish a single “rock” concerts market (which they

cannot), the classes should still be decertified because Plaintiffs cannot prove on a

classwide basis that each class member was injured as a result of Defendants’ alleged

monopolization. Determining whether class members were injured here does not

simply relate to overall damages. On the contrary, causal antitrust injury is an

essential element that each class member must prove in order to establish liability. See

Paladin Assocs., 328 F.3d at 1163 n.22; Forsyth, 114 F.3d at 1475; Live Concerts, 247

F.R.D. at 122. And courts have recognized that an analysis of antitrust injury “is

critically important for the purpose of evaluating Rule 23(b)(3)’s predominance

requirement because it is an element of the claim that may call for individual, as

opposed to common, proof.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at

311. Accordingly, “the task for plaintiffs at class certification is to demonstrate that


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the element of antitrust [injury] is capable of proof at trial through evidence that is

common to the class rather than individual to its members.” Id. at 311-12.

Plaintiffs allege that they were injured because they paid supra-competitive

prices for concert tickets as a result of Defendants’ conduct. Yet because of the unique

market dynamics of the concert industry, determining whether each class member paid

a price above the competitive level will require thousands of concert-by-concert, and

potentially millions of ticket-by-ticket, inquiries. In fact, Dr. Phillips agreed at his

initial deposition that “you would need to analyze the facts as to each concert to

determine whether, in fact, the price was at or above the competitive level.” Yen

Decl., Ex. 1 (Phillips Dep.) at 241:23-242:3.

Individualized analysis of whether each class member was injured is especially

critical in this case because the record shows that significant portions of the class could

not have possibly paid ticket prices above the competitive level. Over 40% of the

concerts identified by Dr. Phillips as “rock” concerts were sell outs. Yen Decl., Ex. 13

(Phillips Dep., Ex. 1076). By definition, tickets for a sold out concert are priced at or

below the competitive price level. See Yen Decl., Ex. 3 (Phillips Dep.) at 179:20-

180:5. Indeed, Dr. Phillips has testified that he agrees that the price of a concert ticket

is at the competitive level if it is “just low enough to sell the concert out but high

enough so that there’s no excess demand for tickets provided that the venue has not

been artificially restricted in size.” Yen Decl., Ex. 2 (Class Cert. Hr’g Tr.) at 58:18-23.

This admission makes clear that Dr. Phillips “would agree with the proposition that

ticket prices for sold-out shows, assuming no artificial restriction of capacity, did not

exceed the competitive level.” See Yen Decl., Ex. 7 (Ordover Rep.) ¶ 145.

At his recent deposition, Dr. Phillips admitted that any suggestion of artificial

restrictions on capacity was based on nothing more than “theoretical” speculation. See

Yen Decl., Ex. 3 (Phillips Dep.) at 73:20-74:5. Indeed, Dr. Phillips has specifically

conceded that he has no evidence that Defendants ever artificially restricted the venue

size or the number of concerts for any artist. Id. at 180:6-181:15; Yen Decl., Ex. 4


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(Phillips Dep.) at 399:15-400:6; Yen Decl., Ex. 14 (Pls.’ Am. Resp. to Defs.’ Third Set

of Interrogs.), No. 6. And, in any event, it cannot be the law that a promoter must

compel an artist to perform at the largest possible venue, or repeatedly until demand is

fully satisfied, or risk antitrust liability. Concerts are inherently unique products, and

both venue size and exclusivity are critical components of the consumer experience. It

is obvious that a Rolling Stones concert held one night only at an intimate 200-person

club is in no way the same product as a Rolling Stones concert at Dodgers Stadium,

even if the exact same songs are played. Unlike commodity goods, increasing the

quantity of concert tickets available is simply not possible without fundamentally

altering the product itself. Moreover, a concert promoter has no ability to even

increase the quantity of concerts for any given artist because artists have the ability to

determine when and where they will go on tour. See Fogel Decl. ¶¶ 23-25.

Additionally, there is evidence that a significant number of concerts are

intentionally priced below the competitive level. This is because numerous artists

insist on setting ticket prices below the competitive level “with the intention to make

their concerts more accessible to their fanbase and/or to more generally build (or

maintain) goodwill in the marketplace.” Yen Decl., Ex. 7 (Ordover Rep.) ¶ 149. The

objectively low $1 price of Blink 182 concert tickets—irrationally dubbed as an

example of supra-competitive pricing by Dr. Phillips—is one of many examples of

this. And the existence of a vibrant secondary market, in which tickets are sold far

above face value, confirms that many concerts are priced below the competitive level.

It is now clear that many class members cannot possibly prevail on their

monopolization claims because they have not suffered any injury at all. It is also clear

that it is not possible to determine which class members were or were not injured on a

classwide basis. Therefore the Court should decertify the classes.

D. Plaintiffs’ Proposed “Trial By Formula” Is Impermissible And Would Violate Defendants’ Due Process Rights

Recognizing that it will require thousands of individualized inquiries to


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determine whether each class member was injured, Plaintiffs rely on an impermissible

shortcut that seeks to “prove” the antitrust injury element on a classwide basis through

the use of formulas, averages, and estimates. Rather than examine the unique

circumstances of each concert and the prices paid by each class member, Dr. Phillips

has outlined various “models” that rely on averaging to “estimate” whether class

members paid supra-competitive prices. See Yen Decl., Ex. 5 (Phillips Rep.) ¶¶ 260-

75. This Court earlier endorsed this plan to use various statistical methods rather than

individual inquiries, and concluded that these methods would enable Plaintiffs to

establish injury through common evidence. See Live Concerts, 247 F.R.D. at 136-47.

But allowing Plaintiffs to substitute averages and estimates for actual evidence is

contrary to Wal-Mart and would deprive Defendants of their due process right to

present every defense. See Wal-Mart, 131 S. Ct. at 2561; Lindsey v. Normet, 405 U.S.

56, 66 (1972); McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 231-32 (2d Cir. 2008).

Plaintiffs’ approach to proving antitrust injury here is indistinguishable from the

“Trial by Formula” method that was unanimously rejected by the Supreme Court in

Wal-Mart. Rather than determining on an individual basis whether each class member

was subjected to discrimination, the plaintiffs in Wal-Mart instead sought to establish

liability through a “Trial by Formula” in which a percentage of valid claims from a

statistical sample of the class would be extrapolated across the entire class, without

ever allowing for any individualized proceedings. Wal-Mart, 131 S. Ct. at 2561. The

Supreme Court “disapprove[d]” of this “novel project,” explaining that it would violate

the Rules Enabling Act’s prohibition on modifying or enlarging substantive rights by

stripping Wal-Mart of “its statutory defenses to individual claims.” Id.

Here, Plaintiffs plan to use averages based on estimates and forecasts of

competitive prices of an ill-defined “market” for rock concert tickets, and then

extrapolate these results across the entire class. See, e.g., Yen Decl., Ex. 3 (Phillips

Dep.) at 55:15-59:25. Indeed, despite previously admitting that proving injury would

require a concert-by-concert analysis, Dr. Phillips never performed such an analysis


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and instead simply lumped together all concerts. See id. Like in Wal-Mart, Plaintiffs’

proposal for a “Trial by Formula” will preclude Defendants from raising individualized

defenses. For example, Defendants will have no opportunity to show that a concert

was sold out or that tickets were sold above face value on the secondary market.

After Wal-Mart, Plaintiffs cannot rely on the shortcuts of formulas and

averaging in place of individualized proof. And without these shortcuts, there is

simply no way to determine whether each class member was injured by paying supra-

competitive prices without resorting to thousands of mini-trials. Faced with this

dilemma, the solution is to decertify the classes. See Wal-Mart, 131 S. Ct. at 2561;

Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331, 343 (4th Cir. 1998)

(“That [a] shortcut was necessary in order for this suit to proceed as a class action

should have been a caution signal to the district court . . . .”); Cruz, 2011 U.S. Dist.

LEXIS 73938, at *18, 23 (decertifying class because of “Trial by Formula”).

E. Plaintiffs’ List Of “Rock” Concerts Shows That Either The Classes Are Not Ascertainable, Or Plaintiffs Are Not Adequate Class Representatives

The Court has previously explained that Plaintiffs face the “daunting task” of

satisfying their burden to identify the relevant class members through objective

criteria, and that if they fail to do so the Court could decertify the classes as not

ascertainable. Dkt. 261 at 7. In what appears to be their attempt to complete this

“daunting task” of objectively identifying class members, Plaintiffs have now revealed

a list of “rock” concerts, generated by Dr. Phillips, for which they are pursuing

damages. But, as discussed above, there is nothing objective about how Dr. Phillips

categorized artists as rock or non-rock. See Yen Decl., Ex. 3 (Phillips Dep.) at 116:10-

14, 123:9-18 (admitting that artist categorization was a “subjective determination”).

Dr. Phillips even admitted that his methodology for categorizing artists involved him

forming an opinion about an artist’s genre after “some listening” to their music. See

id. at 159:18-19. And if any more was needed to prove that Plaintiffs have failed to

adequately and objectively identify the class, anyone with even a passing familiarity


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with popular music and the rock genre would conclude that Dr. Phillips’ list of relevant

“rock” concerts is obviously flawed. For example, the list excludes concerts of the

Kinks and Simon & Garfunkel, two acts widely considered to be rock, yet includes

concerts of artists with no connection to the genre, such as R&B singer Erykah Badu

and traditional Japanese drum group Kodo. Because Plaintiffs have not overcome the

inherent difficulty of objectively identifying the members of classes that are premised

on such an amorphous concept as rock music, the classes should be decertified.

Even if it were possible to objectively identify those concerts that are truly

within the rock genre (it is not), decertification would still be warranted because

Plaintiffs would not be adequate representatives of any such class. Plaintiffs’ list of

concerts for which they are seeking damages excludes concerts by artists that would be

included in any reasonable definition of “live rock concerts.” And yet Plaintiffs’ entire

case is built around this flawed list. Indeed, it is this list that Dr. Phillips used in both

his analysis of the market definition and antitrust injury. By deliberately seeking not to

recover for “[a]ll persons who purchased tickets to any live rock concert” (e.g.,

purchasers of tickets to Kinks concerts), Live Concerts, 247 F.R.D. at 155 (emphasis

added), Plaintiffs cannot possibly satisfy Rule 23’s adequacy of representation

requirement. See, e.g., Amchem, 521 U.S. at 625-27 (interests of class members must

be aligned); Staton v. Boeing Co., 327 F.3d 938, 957 (9th Cir. 2003) (class

representatives must vigorously prosecute the action on behalf of the class); cf. Wal-

Mart, 131 S. Ct. at 2541 (warning of “incentives for class representatives to place at

risk potentially valid monetary claims” in order to obtain class certification).

V. CONCLUSION

For the foregoing reasons, the classes should be decertified.

DATED: November 7, 2011 GIBSON, DUNN & CRUTCHER LLP

By: /s/ Theodore J. Boutrous Jr. Theodore J. Boutrous Jr.

Attorneys for Defendants


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