• DAMAGES ANALYSIS RECENT CASES

United States of America ex rel. Harrold E. (Gene) Wright v. Chevron USA, Inc., et al.
In this litigation filed under the whistleblower provisions of the False Claims Act, the Relator alleged that numerous producers systematically underpaid royalties due for natural gas produced on federal and Indian lands. Econ One was retained by counsel for the Relator to quantify alleged underpayments since the 1980s. Jane Kidd submitted several expert reports and provided deposition testimony.

One of the defendants, Chevron Corporation, paid $45.6 million to resolve claims by the U.S. against the Chevron, Texaco and Unocal companies. Those claims were the: 1) improper deduction from royalty values of the cost of boosting gas up to pipeline pressures; 2) use of affiliate transactions to falsely reduce the reported value of gas taken from federal and Indian leases; and 3) improper reporting of processed gas as unprocessed gas to reduce royalty payments. Another defendant, ExxonMobil, paid $32.2 million to resolve allegations that the Mobil Oil companies used affiliate transactions to reduce the reported value of gas, claimed excessive deductions, and otherwise understated the value of the gas reported. Dominion and Marathon Oil agreed to pay the United States $2.2 million and $4.7 million, respectively, to resolve claims that they improperly deducted from royalty values the cost of boosting gas up to pipeline pressures, and that Dominion improperly reported processed gas as unprocessed gas to reduce royalty payments.

Jim Hood, Attorney General ex rel. State of Mississippi v. Microsoft Corporation
The state of Mississippi sued Microsoft in connection with allegedly anticompetitive actions taken by Microsoft towards its competitors in the operating system market, as well as towards nascent competition from Netscape Communications Corp.\'s Navigator web browser and Sun Microsystems, Inc.\'s Java programming platform.
Econ One was retained by counsel for the plaintiffs to analyze both liability issues and damages. Since many of the relevant issues had been litigated previously, Econ One\'s effort also involved the review and analysis of numerous prior federal, state, and private lawsuits against Microsoft. Jeffrey Leitzinger submitted an expert report and provided deposition testimony in this matter. Prior to trial, the case settled for $100 million.

RoDa Drilling Company, et al. v. Richard Siegal, et al.
The plaintiffs in this case contributed substantial sums of money to an oil and gas investment program created and managed by the defendants based upon defendants’ representations of: (1) prior success with other investment programs; (2) the high returns to be achieved through the proposed investment program; and (3) the substantial tax advantages that the plaintiffs would receive. The plaintiffs alleged that this investment program failed to generate either the high returns or substantial tax advantages represented by the defendants. The plaintiffs also alleged that the defendants breached their fiduciary duties in their ongoing management of the investment program.
Econ One was retained by counsel for the plaintiffs to analyze damages for fraud and misrepresentation, breach of contract, and breach of fiduciary duty. Jeffrey Leitzinger submitted an initial expert report as well as two supplemental expert reports. He also provided deposition testimony and was scheduled to testify at trial. The parties settled just prior to trial.

In re: TFT-LCD Antitrust Litigation
In this case, the plaintiff class includes direct purchasers of TFT-LCD panels, which are used in products ranging from cell phones to televisions. The plaintiff class also includes direct purchasers of finished products from the defendants that contain TFT-LCD panels. The defendants are Japanese, Korean, and Taiwanese makers of TFT-LCD panels. The plaintiffs allege that the defendants conspired to fix the prices of the panels and products containing the panels at artificially high levels.
Econ One was retained to direct and conduct analysis for an outside expert relating to class certification and damages issues. Phillip Johnson supervised and directed these complex analyses, which involved numerous large and diverse transaction datasets produced by the defendants. Dr. Johnson and his team employed sophisticated econometric tools to demonstrate the relationships between prices of disparate types of products. Regression analysis was used to demonstrate a workable damages model, as well as to show the impact of increased panel prices on the defendants’ finished product prices.

Sharon Fried, et al. v. ADT Security Services, Inc.
In this ongoing class action case, the plaintiffs (purchasers of home security systems) allege that the defendant fraudulently concealed its knowledge that its home security systems would fail to work after February 2008 due to the change from analog to digital technology. Econ One was retained by the plaintiffs’ counsel to determine whether there was class-wide impact as a result of this alleged misconduct and also to measure damages arising from that misconduct. Dr. Russell Lamb has submitted an expert report and provided deposition testimony on both class certification issues and damages.

Carlos Armando Amado v. Microsoft Corporation
This case involved post-trial litigation of a patent suit that Amado won against Microsoft. The patent at issue related to the integration by Microsoft of spreadsheet and database functionality in its Office line of products. A jury found Microsoft liable for patent infringement and awarded damages. The trial judge also awarded Amado a permanent injunction against Microsoft continuing to infringe the patents but he stayed that injunction pending Microsoft’s appeal. Following resolution of the appeal, the trial judge awarded damages for the period of the injunction that were based on the jury’s award in the trial. This damage award was appealed by Microsoft. The Court of Appeals then ruled that the trial judge must consider damages for the period of the injunction that were based on the economic circumstances that were faced by the parties following trial, including bargaining positions that reflected the finding of liability and the difficulty of the Defendant to “immediately comply” with the injunction. Econ One was retained by Amado’s counsel to analyze the economic circumstances and bargaining situation that would have been faced by the two parties, given the outcome of the trial and had the trial judge not stayed the injunction. Jeffrey Leitzinger filed a declaration that concluded that, given the circumstances, Microsoft would have been willing to pay a substantial license fee rather than face the severe disruptions to its business that would have been caused by halting the licensing of much of its Office sales.

California State Foster Parent Association, et al. v. John A. Wagner, Director of the California Department of Social Services, et al.
The plaintiffs in this case represent foster families who claim that the State of California has failed to meet federal obligations to increase foster family home (FFH) reimbursements in line with increases in the cost of caring for a child. The plaintiffs claim that, were the State to increase its reimbursements and meet its obligations, much (or even all) of the State’s incremental costs would be offset by the return of children to FFHs from more expensive placements, such as in-group homes. Econ One has been retained (on a pro bono basis) to evaluate the effect on foster care costs if the State were to increase its reimbursements. Phil Johnson demonstrated that the plaintiffs’ claim was correct. His analysis calculated the cost savings that would arise from an increase in the number of lower cost FFH placements and the associated decrease in the number of placements in settings that provide more expensive, unneeded services. Dr. Johnson has filed an expert report and is expected to give both deposition and trial testimony by the end of this year.

In Re: DVD Copy Control Association Inc. v. Kaleidescape, Inc.
Econ One was retained by counsel for Kaleidescape in a countersuit brought against the Digital Videodisc Copy Control Association (DVD CCA) for: (1) allegedly failing to follow the dispute resolution clause of its licensing agreement with Kaleidescape; and (2) the subsequent impact of the lawsuit brought by DVD CCA against Kaleidescape on the sale of Kaleidescape products related to its video servers. In a deposition, Mark Dwyer testified regarding the extent of damages suffered by Kaleidescape. Kaleidescape prevailed in the main complaint. The countersuit was dismissed due to confidentiality issues associated with the dispute resolution process.

City of San Antonio, et al. versus Hotels.com, et al.
This ongoing case involves alleged underpayment of hotel occupancy tax by some fifteen online travel companies in the State of Texas. The plaintiffs (a proposed class of 175 Texas cities including Austin, Dallas, Houston and San Antonio) allege that--contrary to the relevant tax statutes and ordinances--online travel companies have been remitting hotel occupancy tax to the plaintiffs based on the wholesale room price rather than the higher retail room price. Econ One has been retained on behalf of the plaintiffs. Jeff Leitzinger has submitted two expert reports showing that damages can be calculated formulaically for the entire class. He has given deposition testimony as well as testimony at an evidentiary Class Certification hearing in San Antonio in May 2007.

Arbitration: Agrium U.S., Inc. v. Union Oil Company of California
Agrium purchased a fertilizer manufacturing plant located on Alaska\\\'s Kenai Peninsula from the defendant in 2000. The purchase agreement included dedication of some of the defendant\\\'s natural gas reserves in Alaska to the fertilizer plant. Soon after Agrium took possession of the plant, the defendant announced that the reserves dedicated to the plant contained less natural gas than originally certified. Subsequently, the defendant began to curtail natural gas deliveries to the plant. This forced Agrium to curtail fertilizer production and shut down some production facilities. As the damages expert for Agrium, Jeff Leitzinger provided an expert report, deposition testimony and both direct and rebuttal testimony during the recent arbitration proceedings.