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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
BERTELSMANN SE & CO. KGaA,
PENGUIN RANDOM HOUSE, LLC,
VIACOMCBS, INC., and
SIMON & SCHUSTER, INC,
Defendants.
FILED UNDER SEAL
Civil Action No. 1:21-cv-02886-FYP
UNITED STATES’ MOTION IN LIMINE TO EXCLUDE
EXPERT TESTIMONY FROM JENNIFER RUDOLPH WALSH
The United States moves the Court to exclude the expert testimony of Defendants’
rebuttal expert Jennifer Rudolph Walsh under Federal Rule of Evidence 702. Ms. Walsh was an
agent at a literary agency for thirty years before leaving her literary agency in 2019 to start a
different career. Her education is limited to a bachelor’s degree in Literature. Ms. Walsh’s
report, which she asserts is a rebuttal to the report of the United States’ economics expert
Nicholas Hill, is a lengthy description of the publishing industry taken from her memories as an
agent; after a twenty-six page description of her understanding of the book acquisition process
and what she believes motivates its participants based solely on her experience in one part of the
industry, she provides ten pages of unfounded conclusions (citing no record evidence) about the
impact of the merger, offering the ultimate opinion that “the merger will not adversely impact
competition in the acquisition of books by publishers.” Ms. Walsh is not an economist, has never
served as an expert, has no experience as a publisher acquiring books, has conducted no analysis
of the publishing industry as a whole, and has provided no references to the record in support of
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her conclusions. Ms. Walsh’s purported “expert” opinion testimony should be excluded because
she is not qualified to provide such testimony and because her testimony on such matters is
without foundation and therefore completely unreliable. At most, Ms. Walsh’s testimony should
be limited to her understanding of the operation of the publishing industry up to her 2019
retirement along with any relevant lay opinions that the Court may find useful pursuant to
Federal Rule of Evidence 701. Ms. Walsh has no relevant expert testimony to give in this matter
and should not be permitted to testify as such.
FACTUAL BACKGROUND
On May 4, 2022, the United States served on Defendants an expert report from economist
Dr. Nicholas Hill. Dr. Hill conducted an analysis of the proposed merger using applicable
merger guidelines and formed an opinion that the proposed merger would have material anti-
competitive effects on compensation for authors of manuscripts. He further concluded that the
deleterious effects of the merger are unlikely to be mitigated by any efficiencies. Dr. Hill’s
conclusions rest on a combination of extensive qualitative, quantitative, and modeling evidence
from the testimony and documents produced by Defendants and non-parties.
On June 3, Defendants submitted two expert reports to rebut Dr. Hill’s report: a report
from Dr. Edward Snyder, a professor in the Yale School of Management, and a report from Ms.
Walsh. Ms. Walsh’s report provides no analysis based on economic principles or methods.
Nonetheless, based solely on her former experience as an agent, Ms. Walsh provides conclusory
testimony about the lack of anti-competitive effects of the proposed merger. Ms. Walsh has no
background whatsoever in economics or antitrust law or guidelines. See Exhibit A (“Exh. A”),
Deposition of Jennifer Rudolph Walsh (“Walsh Dep.”), at 62-64.
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LEGAL STANDARD
Federal Rule of Evidence 702 provides that a witness who is qualified as an expert by
“knowledge, skill, experience, training, or education” can provide testimony if the expert’s
“scientific, technical, or other specialized knowledge will help the trier of fact to understand the
evidence or determine a fact in issue[.]” While an expert may be qualified based on practical
experience or training rather than a formal education in an area, “‘if the witness is relying solely
or primarily on experience, then the witness must explain how that experience leads to the
conclusion reached, why that experience is a sufficient basis for the opinion, and how that
experience is reliably applied to the facts.’” Rothe Development, Inc. v. Department of Defense,
et al., 107 F.Supp.3d 183, 196 (D.D.C. 2015) (quoting Fed. R. Evid. 702 advisory committee’s
note (2000)). If a court has determined that a witness qualifies as an expert within the meaning of
Rule 702, “the district court is required to address two questions, first whether the expert's
testimony is based on ‘scientific knowledge,’ and second, whether the testimony ‘will assist the
trier of fact to understand or determine a fact in issue.’” Meister v. Medical Engineering Corp.,
267 F.3d 1123, 1127 (D.C. Cir. 2001) (quoting Daubert v. Merrell Dow Pharmaceuticals, Inc.,
509 U.S. 579, 592 (1993)).
ARGUMENT
I.
Ms. Walsh Is Not Qualified to Offer Opinions on the Impact of the Merger.
Expert opinion testimony offered by a witness who does not qualify as an expert, or
which is outside her area of expertise, is inadmissible. Fed. R. Evid. 702. The opinions Ms.
Walsh offers about the competitive impact of the merger are well outside any area of expertise
she may have and should therefore be excluded.
3
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Ms. Walsh’s educational background consists of a bachelor’s degree in Literature from
Kenyon College. Exh. A, Walsh Dep., at 29. She began working at a literary agency during
college and proceeded to work at that agency and its successors for thirty years. Ms. Walsh
stepped down from her position as an agent in 2019 to focus on a touring event that has
subsequently closed. Exhibit B (“Exh. B”), Expert Report of Jennifer Rudolph Walsh (“Walsh
Report”), at 5-7. Ms. Walsh has never worked at a publishing company and has no formal
training in economics or merger analysis. Exh. A, Walsh Dep. at 21, 62-64, 73.
As to the competition among publishers in the market for anticipated top sellers, the
subject of this case, Ms. Walsh has experience only from her work as an agent at an agency that
, according to Penguin Random House’s own
document, see Exhibit C (“Exh. C”), BPRH-005427111, at -140, and even that experience ended
before most of the relevant time period of the data produced in this case.
1
Yet Ms. Walsh’s
opinions go far beyond her prior life experiences as a literary agent.
Despite her lack of education, training, or experience in economics, Ms. Walsh offers an
array of opinions regarding matters of economics. She offers opinions—without citing a bit of
record evidence—on the projected level of advances post-merger, output effects, availability of
alternative buyers, entry barriers, and competitive conditions. The numerous opinions far
outside her expertise include:
“It is my opinion, informed by my 30 years of experience as a top literary agent,
that the merger will not adversely impact competition in the acquisition of books
by publishers.” Exh. B, Walsh Report, at 3, ¶ 8.
“In my experience, publishers that are not thought of as part of the Big Five are
viable competitors for books at all advance levels, including for books that
receive advances above $250,000. There is nothing unique in the acquisition
1
Discovery documents in the case were produced for the period 2018 to 2021, and
testimony regarding industry data is thus focused on that time period.
4
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process for a book that receives an advance above $250,000—these books are
viewed the same as other books by publishers, and all publishers can compete to
acquire these books.” Exh. B, Walsh Report, at 28, ¶ 103.
“Beyond the Big Five, smaller publishers will also continue to compete
aggressively to acquire books. These publishers can compete to acquire any book,
with some more likely to compete than others depending on the particular book
that the agent is trying to sell. This will include books that obtain advances above
$250,000. And based on trends in the industry, new entrants to the industry—such
as those that I mentioned above—are likely to be increasingly competitive.” Exh.
B, Walsh Report, at 34, ¶ 117.
“It is my opinion that the merger will not result in fewer books being published.
In my experience, writers write books even if they receive a lower advance than
they had hoped or even if there is no publisher for that book. Writing is a creative
outlet for authors, and a decrease in the number of publishers in the market will
not impact their output.” Exh. B, Walsh Report, at 36, ¶ 124.
“If all of the Big Five publishers closed their doors tomorrow, writers will still
write, readers will still read, and the absence of a competitor or competition will
have no adverse impact on the industry.” Exh. B, Walsh Report, at 37, ¶ 125.
While an industrial organization economist may be qualified to offer opinions on such
topics after reviewing relevant data and the record evidence (including, for example, advance
data and data about head-to-head competition between the merging parties), Ms. Walsh is not so
qualified and has not reviewed the available data. See Exh. B, Walsh Report, Appendix A; see
also Exh. A, Walsh Dep. at 18-21. Accordingly, this testimony is inadmissible. See, e.g., Rothe,
107 F.Supp.3d at 203 (finding plaintiffs’ proffered expert, the vice president of the company, not
to be qualified to rebut defendants’ economists’ experts’ opinions); Ralston, 2011 WL 6002640,
at *6 (N.D. Cal. Nov. 30, 2011) (expert’s 30 years of experience training and consulting
mortgage brokers did not provide a sufficient basis to provide testimony about other brokers’
practices with regard to a specific loan package); Berlyn, Inc. v. Gazette Newspapers, Inc., 214 F.
Supp. 2d 530, 536 (D. Md. 2002) (“general business experience unrelated to antitrust economics
does not render a witness qualified to offer an opinion on complicated antitrust issues”); see also
5
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Va. Vermiculite, Ltd. v. W.R. Grace & Co.- Conn., 98 F. Supp. 2d 729, 733 (W.D. Va. 2000)
(“[M]arket analyses for antitrust markets generally require some expertise in the field of
industrial organization.”).
If Ms. Walsh were qualified based on her thirty years of experience as an agent to offer
expert opinions on antitrust economics issues in the publishing industry, the vast majority of the
fact witnesses identified on both parties’ lists would be more qualified, since many of them have
been working in the publishing industry for decades and continue to do so full-time—unlike Ms.
Walsh. Relative to those witnesses, Ms. Walsh’s ability to talk about present and future facts
related to literary agents (much less the publishing industry as a whole) is thus limited. See, e.g.,
Exh. A, Walsh Dep. at 50 (acknowledging that she cannot “speak comprehensively” about
compensation practices of different literary agencies); id. at 57 (agreeing that a CEO of a Big
Five publisher would qualify as an expert in the publishing industry).
II.
Ms. Walsh’s Opinions Are Not Reliable Because She Has Presented No
Methodology for Her Conclusions.
Even if she were qualified to offer expert opinions on antitrust economics, Ms. Walsh’s
opinions about the impact of the merger should also be excluded because she presents no support
for her conclusions. “[N]othing in either Daubert or the Federal Rules of Evidence requires a
district court to admit opinion evidence that is connected to existing data only by the ipse dixit of
the expert.” Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 157 (1999) (quoting General
Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997)). Expert opinions must have “a traceable,
analytical basis in objective fact.” Bragdon v. Abbott, 524 U.S. 624, 653 (1998).
Here, Ms. Walsh’s opinions about the industry are her own assertions supported by
nothing, not even an analysis of materials from the agency she worked for. See Exh. A, Walsh
Dep., at 27 (acknowledging that she did not rely on any client files in preparing her report).
6
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There is not a single citation to a document supporting her opinions. She only identifies three
items as those she relied upon: the Complaint, Dr. Hill’s report, and subpoena responses from
one small publisher. See Exh. B, Walsh Report, Appendix A. Summarizing the basis for her
opinion that the merger will not harm authors and will have no adverse impact on the industry,
for example, Ms. Walsh describes as follows her belief that the publishing industry weathered
the merger of Penguin and Random House unharmed: “some in the industry thought the 2013
merger between Penguin and Random House would harm competition for content acquisition. In
my experience, that merger had no impact on author advances.” Exh. B, Walsh Report at 27,
¶ 100. Ms. Walsh simply asks the Court to credit her testimony because she pronounces her
opinion. But, as Federal Rule of Evidence 702 makes clear, those kinds of opinions must only be
provided by persons trained in economics whose opinions are solidly grounded in the record
evidence. The fact that Ms. Walsh believes anecdotally or subjectively that advances were not
impacted by the Penguin-Random House merger does not make it so; her ipse dixit is irrelevant
and, moreover, directly contrary to the evidence in the case that she did not analyze. Ms. Walsh
did not review the industry data that was gathered in this case, did not read the internal company
documents that speak to the post-merger advance levels, did not review the testimony of fact
witnesses who were privy to the effects of the merger, and did not address the opinions of either
Dr. Hill or Dr. Snyder, who reviewed the data relevant to the merger and developed conclusions
based on that data. Ms. Walsh’s opinion about the impact of a future merger cannot be based on
her “experience” of the impact of a past merger that relies on no data or industry-wide analysis.
To the extent Ms. Walsh seeks to opine on the antitrust concepts that undergird the legal
and factual analysis at issue here, such as the relevant market, market share, and price impact, as
described above, she has no basis to do so. She is not familiar with any of the concepts that
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guide an antitrust analysis; she testified that she has not reviewed the Merger Guidelines,
2
has
never done a market share analysis, does not have any experience in defining product markets for
antitrust purposes, has no experience analyzing unilateral effects, and did not perform any
quantitative analysis to inform herself about the impact of the merger on prices in the publishing
industry. See Exh. A, Walsh Dep., at 63-64, 70. Ms. Walsh does not address the burden-shifting
framework that guides courts’ inquiry into an alleged Section 7 violation, nor could she, because
she did not analyze concentration in the relevant market. There is no foundation for Ms. Walsh’s
personal experience to overcome the burden-shifting framework based on market data that
applies to this merger case. Therefore, Ms. Walsh should be precluded from testifying about her
opinions about the impact of the merger (including the entirety of Sections I and VI of her
report).
III. If Ms. Walsh Is Permitted To Testify as a Lay Witness, Her Testimony Should Be
Appropriately Limited.
Stripped of her opinions about the impact of the merger, what remains of Ms. Walsh’s
report are her general observations of the tools agents use to sell books. Those tools will be
discussed by lay witness agents, editors, and third-party publishers. Cloaking testimony about
how books are sold in expert garb arbitrarily gives her testimony greater weight than the (up-to-
date) experience of the numerous other industry players planning to testify – authors, agents at
other literary agencies, and editors and executives at defendants’ and third-party publishing
2
U.S. Dep’t of Justice & Fed. Trade Comm’n, Horizontal Merger Guidelines (2010).
8
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houses. Thus, to the extent she is permitted to testify, Ms. Walsh should be permitted to do so
only as a lay witness under Federal Rule of Evidence 701.
3
Ms. Walsh even stretches beyond her experience to recount purported facts for which she
has no personal knowledge. See, e.g., Exh. B, Walsh Report, at 9, ¶ 29 (“This can mean that an
editor, supported by the publishing house, might pay a high advance to acquire a book that she
really loves, even if she or her publishing house has doubts about its commercial prospects.”); id.
at 32–33, ¶ 112 (“As the recent entrants to the industry demonstrate, the barriers to entry for new
publishers are low and innovative publishers are emerging to disrupt the norms.”). Thus, a
number of her conclusions about the industry from her report are inadmissible under Rule 701.
Moreover, as Ms. Walsh admits, every agent and every author does things differently.
See Exh. B, Walsh Report at 19, ¶ 69 (“There are many different ways to sell books, and in my
experience every agent I supervised had a different approach for different projects.”); id. at 22,
¶ 81 (“Every author has different factors that matter to her.”). Consequently, she should not be
allowed to testify about the industry beyond her own agency. See, e.g., Exh. A, Walsh Dep., at
110 (“Q. Do you know whether other agents . . . approach, current, exclusive submissions in the
same way? A. I can’t speak to other agents, but from the agents that I worked with, we all -- we
all tended to approach them in a very similar fashion.”). She also cannot testify about her
3
Rule 701 provides:
If a witness is not testifying as an expert, testimony in the form of an opinion is limited to one
that is:
(a) rationally based on the witness’s perception;
(b) helpful to clearly understanding the witness’s testimony or to determining a fact in issue; and
(c) not based on scientific, technical, or other specialized knowledge within the scope of Rule
702.
9
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predictions about how the market will respond to a merger; such testimony necessarily
implicates specialized knowledge she does not have.
Thus, should Ms. Walsh be allowed to testify as a fact witness, her testimony should be
circumscribed by the same rules that apply to all other fact witnesses. She should be permitted to
offer only those facts about which she has personal knowledge about the industry through her
retirement from her agency in 2019.
CONCLUSION
For the reasons set forth above, the Court should exclude Ms. Walsh as an expert witness
because she utterly fails the requirements of Federal Rule of Evidence 702. She has neither the
technical or factual basis to offer opinions concerning the legal and economic matters at issue or
past publishing industry mergers. Thus, any testimony concerning the subjects of Sections I and
VI of her report and the opinions contained in other sections of her report should be entirely
excluded and any lay testimony Defendants offer from her should be limited to her personal
experiences and knowledge of the business of a literary agent.
Pursuant to the Court’s Standing Order and Local Rule 7(m), the parties have met and
conferred, and Defendants have stated that they will oppose this Motion.
Respectfully submitted,
Dated: July 8, 2022 /s/ John R. Read
John R. Read (DC Bar #419373)
Anna E. Cross (DC Bar #494788)
United States Department of Justice
Antitrust Division
450 Fifth Street, NW, Suite 4000
Washington, DC 20530
Telephone: (202) 725-0165
Fax: (202) 514-7308
Email: [email protected]
Counsel for Plaintiff United States of America
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CERTIFICATE OF SERVICE
I certify that on July 8, 2022, I served the foregoing and all accompanying documents on
the below individuals by electronic mail:
For Defendants Bertelsmann SE & Co. KGaA and
Penguin Random House LLC:
Daniel M. Petrocelli ([email protected])
M. Randall Oppenheimer
O'Melveny & Myers LLP
1999 Avenue of the Stars, 8th Floor
Los Angeles, CA 90067
Andrew J. Frackman ([email protected])
Abby F. Rudzin ([email protected])
Eamonn W. Campbell ([email protected])
O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Julia Schiller (jschiller@omm.com)
O’Melveny & Myers LLP
1625 Eye Street, NW
Washington, DC 20006
Debbie Feinstein
Arnold & Porter
601 Massachusetts Ave., NW
Washington, DC 20001
For Defendants ViacomCBS Inc. and
Simon & Schuster, Inc.:
Stephen Fishbein ([email protected])
Jessica Delbaum ([email protected])
Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022
Ryan Shores ([email protected])
Michael Mitchell
(michael.mitchell@shearman.com)
Shearman & Sterling LLP
401 9th Street NW, Suite 800
Washington, DC 20004
Rachel Mossman
(rachel.mossm[email protected])
Shearman & Sterling LLP
2828 North Harwood Street, Suite 1800
Dallas, TX 75201
Dated: July 8, 2022
/s/ Ihan Kim
Ihan Kim
U.S. Department of Justice
Antitrust Division
450 Fifth Street, NW, Suite 4000
Washington, DC 20530
Phone: 202-532-4283
E-mail: ihan.kim@usdoj.gov
Counsel for Plaintiff United States of America
11
