Federal Trade Commission v. Amazon.com, Inc.

District Court, W.D. Washington·Decided August 22, 2025·No. 2:23-cv-00932·Unknown

Opinion

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4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 FEDERAL TRADE COMMISSION, CASE NO. 2:23-cv-00932-JHC 8

ORDER DENYING DEFENDANTS’ 9 Plaintiff, MOTION TO EXCLUDE DR. NEALE MAHONEY’S TESTIMONY 10 v. 11 AMAZON.COM, INC; NEIL LINDSAY, individually and as an officer of 12 Amazon.com, Inc.; RUSSELL GRANDINETTI, individually and as an 13 officer of Amazon.com, Inc.; JAMIL GHANI, individually and as an officer of 14 Amazon.com, Inc.,

15 Defendants. 16

17 I 18 INTRODUCTION 19 This matter comes before the Court on Defendants’ Rule 702 Motion to Exclude Dr. 20 Neale Mahoney’s Testimony. Dkt. # 323. The Court has considered the materials filed in 21 support of and in opposition to the motion, the rest of the file, and the governing law. The Court 22 finds oral argument unnecessary. Being fully advised, for the reasons below, the Court DENIES 23 the motion. 24 1 II BACKGROUND 2 The FTC sued Amazon.com, Inc. and three of the company’s executives, Neil Lindsay, 3 Russell Grandinetti, and Jamil Ghani, claiming that they violated Section 5(a) of the Federal 4 Trade Commission Act (FTC Act), 15 U.S.C. § 45(a), and Section 4 of the Restore Online 5 Shoppers’ Confidence Act (ROSCA), 15 U.S.C. § 8403. Dkt. # 67 at 1–2. The FTC alleges that 6 Defendants tricked, coerced, and manipulated consumers into subscribing to Amazon Prime. Id. 7 at 2. According to the FTC, this was accomplished by failing to disclose the material terms of 8 the subscription clearly and conspicuously and by failing to obtain the consumers’ informed 9 consent before enrolling them. Id. The FTC also alleges that Amazon did not provide simple 10 mechanisms for subscribers to cancel their Prime memberships. Id. at 3. 11 Dr. Neale Mahoney, Ph.D. is a Professor of Economics at Stanford University. Dkt. # 12 370-32 at 8. He received a Ph.D. and M.A. in Economics from Stanford University. Id. And he 13 has taught economics courses at both Stanford University and the University of Chicago’s Booth 14 School of Business. Id. The FTC requested that Mahoney provide an expert opinion on (1) 15 “Whether Amazon’s Cancellation Survey provides a reliable basis from which to draw 16 inferences regarding the behavior of its customers”; (2) “The extent to which customers were 17 unintentionally enrolled in Amazon Prime, and how much such consumers paid to Amazon in 18 Prime membership fees during their memberships”; and (3) “The extent to which customers 19 attempted to cancel their Amazon Prime memberships and believed that they had done so but did 20 not in fact complete the cancellation process, as well as how much such customers subsequently 21 paid to Amazon in Prime membership fees.” Id. at 9. 22 Relevant here, Mahoney’s report offers five opinions: First, Amazon’s Cancellation Survey 23 provides a reliable basis to conclude that a significant number of Prime enrollees unintentionally 24 1 enrolled in Amazon Prime. Id. at 10. Second, unintentional enrollments in Amazon Prime 2 through the at-issue “upsells” led to millions of dollars in harm. Id. at 10–11. Third, a 3 significant number of Prime customers who entered Amazon’s cancellation process did not

4 complete the process and continued to pay Prime subscription fees to Amazon. Id. at 11. 5 Fourth, Prime benefit usage patterns shows that a significant number of Prime subscribers exited 6 the cancellation process with the mistaken belief that they had cancelled their Prime subscription. 7 Id. Fifth, Prime subscribers who exited the cancellation process with the mistaken belief that 8 they had cancelled their Prime subscriptions led to millions of dollars in harm. Id. 9 Defendants move to exclude Mahoney’s expert testimony. Dkt. # 323. They contend 10 that his testimony on unintentional Prime enrollments and cancellations is neither relevant nor 11 reliable. Id. at 8–14. 12 III DISCUSSION 13 A. Legal Standards 14 Federal Rule of Evidence 702 governs the admissibility of expert testimony. Under Rule 15 702, a witness “who is qualified as an expert by knowledge, skill, experience, training, or 16 education may testify in the form of an opinion or otherwise” provided that 17 (a) the expert’s scientific, technical, or other specialized knowledge will help the 18 trier of fact to understand the evidence or to determine a fact in issue;

19 (b) the testimony is based on sufficient facts or data;

20 (c) the testimony is the product of reliable principles and methods; and

21 (d) the expert’s opinion reflects a reliable application of the principles and methods to the facts of the case. 22

Fed. R. Evid. 702. 23 24 1 Courts must ensure “that an expert’s testimony both rests on a reliable foundation and is 2 relevant to the task at hand.” Hyer v. City & Cnty. of Honolulu, 118 F.4th 1044, 1055 (9th Cir. 3 2024) (quoting Elosu v. Middlefork Ranch Inc., 26 F.4th 1017, 1024 (9th Cir. 2022)). They have

4 “broad discretion” in making such evidentiary rulings. Id. (citing City of Pomona v. SQM N. Am. 5 Corp., 866 F.3d 1060, 1065 (9th Cir. 2017)). 6 Expert testimony is relevant if it “will assist the trier of fact to understand the evidence or 7 to determine a fact in issue.” Daubert v. Merrell Dow Pharms., Inc. (“Daubert I”), 509 U.S. 8 579, 589 (1993) (citing Fed. R. Evid. 702(a)). “The relevancy bar [for expert testimony] is low, 9 demanding only that the evidence ‘logically advances a material aspect of the proposing party’s 10 case.’” Messick v. Novartis Pharms. Corp., 747 F.3d 1193, 1196 (9th Cir. 2014) (quoting 11 Daubert v. Merrell Dow Pharm., Inc. (“Daubert II”), 43 F.3d 1311, 1315 (9th Cir. 1995)). 12 “Shaky but admissible evidence is to be attacked by cross examination, contrary evidence, and

13 attention to the burden of proof, not exclusion.” Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 14 2010). 15 Courts apply four factors in determining whether expert testimony is reliable. These 16 include “1) whether a theory or technique can be tested; 2) whether it has been subjected to peer 17 review and publication; 3) the known or potential error rate of the theory or technique; and 4) 18 whether the theory or technique enjoys general acceptance within the relevant scientific 19 community.” United States v. Hankey, 203 F.3d 1160, 1167 (9th Cir. 2000) (citing Daubert I, 20 509 U.S. at 592–94). But this list of factors is neither exhaustive nor intended to be applied in 21 every case. Id. (citing Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150 (1999)). A court “not 22 only has broad latitude in determining whether an expert’s testimony is reliable, but also in

23 deciding how to determine the testimony’s reliability.” Hangarter v. Provident Life & Accident 24 Ins.

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Federal Trade Commission v. Amazon.com, Inc., (W.D. Wash. 2025).

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