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Dr. Leslie Marx testifies for plaintiffs in price-fixing trial that ends with $400 million settlement

On April 5, 2016, The Dow Chemical Company (Dow) entered into a settlement with a coalition of eleven corporate victims of an alleged price-fixing conspiracy for $400 million in the matter In re Urethane Antitrust Litigation. The settlement was reached after Leslie Marx, PhD, Bates White Partner and Robert A. Bandeen Professor at Duke University, provided critical expert testimony for the plaintiffs on causation and damages.

The plaintiffs accused Dow and other producers of agreeing to fix, raise, or stabilize the prices of urethane chemicals from 1994 to 2003. Plaintiffs had previously opted out of a class action alleging a conspiracy for a shorter time period (1999−2003). The $400 million settlement with Dow occurred during the defense case, after Dr. Marx testified.

“Dr. Marx’s testimony was a key factor in achieving this resolution. She took sophisticated economic and statistical concepts and explained them to the jury in a simple, concise, and persuasive way,” said James Martin, of Zelle LLP, who presented Dr. Marx’s testimony to the jury. Dr. Marx testified that, in her opinion, the alleged conspiracy caused the plaintiffs to pay $608 million in overcharges.

Bates White and Dr. Marx provided analysis on the issues of whether and to what extent the plaintiffs were overcharged as a result of the alleged conspiracy. Assisted by a team of economists at Bates White, Dr. Marx, co-author of The Economics of Collusion, researched the urethanes business, studied defendants’ alleged conduct, and employed an econometric model of damages. Using defendants’ transaction data, Bates White developed median price lines for the three major categories of urethane chemicals. The econometric model related the prices of these three urethane chemicals to relevant noncollusive cost and demand factors, such as chemical feedstock costs and demand from the production of automobiles, appliances, carpeting, and furniture. In a second step of the analysis, the econometric model accounted for individual factors that affect each plaintiff’s transaction prices. Using the econometric model, Dr. Marx estimated an overcharge on each and every plaintiff transaction.

The trial began on March 7, 2016, in Newark, NJ, in the US District Court for the District of New Jersey. “Dr. Marx is a natural teacher and she created a palpable connection with the jurors, who hung on her every word,” said Richard Leveridge, of Adams Holcomb LLP. “I was very impressed with her work ethic and preparation as well as her poise and confidence on the witness stand.”

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