Sidibe v. Sutter Health

• Court: District Court, N.D. California
• Decided: March 2, 2025
• Docket: 3:12-cv-04854
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 San Francisco Division 11 DJENEBA SIDIBE, et al., Case No. 12-cv-04854-LB

12 Plaintiffs, PRETRIAL ORDER 13 v.

14 SUTTER HEALTH, et al., 15 Defendants. 16 17 The court issues this pretrial order pursuant to Federal Rule of Civil Procedure 16(e). 18 19 1. Trial Date and Length of Trial 20 Jury selection is on February 27, 2025. The trial begins March 3, 2025. Each side will have 21 thirty hours per side for opening statements, direct examination of witnesses, and cross- 22 examination of the opposing party’s witnesses, including all objections raised during the trial day, 23 and an additional one hour for closing argument. The trial will be on Monday through Friday from 24 8:30 a.m. to 1:30 p.m. (or slightly longer to finish a witness) and will include two ten- to fifteen- 25 minute breaks, depending on the number of court reporters. March 17 and 18 are dark days. With 26 this schedule, the evidence will be in by Friday, March 21, and an instructions conference will be 27 that afternoon. Closing arguments will be on Monday, March 24. 1 2. Procedures During Trial; Exhibit and Witness Lists; Witnesses 2 The court’s October 27, 2016, Case-Management and Pretrial Order has the court’s trial 3 procedures for the presentation of exhibits, depositions, and witness testimony, including specific 4 procedures for deposition excerpts.1 The parties have identified their witnesses on their separate 5 witness lists. If the parties identify the same witnesses, the defendant will examine the witness when 6 the plaintiffs call them (as opposed to recalling them). 7 8 3. Claims, Defenses, and Relief Sought 9 The claims in the case are in the summary-judgment order at ECF No. 962. See also Sidibe v. 10 Sutter Health, Inc., 103 F.4th 675, 704–05 (2024) (discussing tying claim). They are (1) unlawful 11 tying and an unlawful course of conduct, in violation of the Sherman Antitrust Act § 1 and 12 California’s Cartwright Act, and (2) a violation of California’s Unfair Competition Law (UCL). 13 Sutter denies the claims. The parties’ positions (claims, defenses, relief sought) are reflected in 14 their joint proposed pretrial order at ECF No. 1693 at 2–6. 15 16 4. Stipulations 17 The parties have reached some stipulations and must submit them at trial as an exhibit that can 18 be read into the record. The parties must stipulate to as many uncontested facts as they can. It will 19 shorten trial time. 20 21 5. Earlier Rulings 22 Except for the court’s earlier order granting Sutter’s MIL 3 to Exclude Pre-2006 Evidence and 23 the court’s rulings on CACI jury instructions 3405 and 3411, which the Ninth Circuit reversed, 24 there was no appeal of other orders and rulings. Sidibe, 103 F.4th at 705–06. They remain in effect 25 26

27 1 Pretrial Order – ECF No. 113 at 7–14. Citations refer to the Electronic Case File (ECF); pinpoint 1 and are law of the case.2 Arizona v. California, 460 U.S. 605, 618 (1983) (the doctrine “posits that 2 when a court decides upon a rule of law, that decision should continue to govern the same issues 3 in subsequent stages of the same case”) “[U]nder the law of the case doctrine as applied by the 4 Ninth Circuit, ‘it is error for a court upon retrial to reverse an identical evidentiary ruling made 5 during the first trial, barring clear error or a change in circumstances.” United States v. 6 Babichenko, No. 1:18-CR-00258-BLW, 2022 WL 1429836, at *1 (D. Idaho May 4, 2022) 7 (quoting United States v. Tham, 960 F.2d 1391, 1397 (9th Cir. 1991)).3 This means that the 140 8 evidentiary rulings issued in the daily evidentiary hearings are law of the case too. Also, “an issue 9 . . . waived on appeal[] cannot be revived on remand.” Facebook, Inc. v. Power Ventures, Inc., 252 10 F. Supp. 765, 775 (N.D. Cal. 2017). 11 12 6. Motions in Limine (MILs) 13 6.1 Plaintiffs’ MILs 14 6.1.1 MIL 10 to Exclude Legislation, Regulations, and Related Material — Denied 15 At the first trial, Sutter asked for judicial notice of statutes, regulations, and legislative 16 materials. The court held that the requests generally sought notice of relevant adjudicative facts but 17 could not be wholesale admitted because — in short — a Sutter sponsoring witness was needed to 18 establish their relevance to Sutter’s decision-making.4 19 In this trial, the plaintiffs challenge nineteen exhibits on Sutter’s exhibit list that fall into this 20 category. At the last trial, the court allowed Sutter to introduce three of the exhibits (following the 21 pocket-brief process), generally on the ground that they were relevant to decision-making in a 22 highly regulated environment. First, the court allowed the introduction of TX 7544 — Cal. Health 23 24 2 Orders – ECF Nos. 1166, 1167, 1193, 1318, 1330, 1382, 1417; J. Filing Re Evidentiary Rulings – ECF 25 No. 1655. 26 3 Joint Filing Re Evidentiary Rulings – ECF No. 1655 (summarizing rulings). 4 Order – ECF No. 1330 at 2; Opp’n to Pls.’ MIL 10 – ECF No. 1662-1 at 2–3; Tr., Ex. D22 – ECF 27 No. 1672 at 45 (p. 13) (“[T]he proper way to get . . . in evidence [regarding the regulatory context and 1 & Safety Code § 1375.7, which provides that no contractor can include a term that permits an 2 insurer to “change a material term of the contract, unless the change has been negotiated and agreed 3 to by the provider and the plan” — on the ground that it was relevant regulatory context for 4 decision-making. Blue Shield executive Tracy Barnes testified that these processes needed to be 5 followed to amend or change a contract.5 Second, the court admitted TX 8764 and 8765. Both 6 involve the California Department of Insurance’s (DOI’s) rulemaking about Cal. Gov’t Code § 7 11346.2(b). TX 8764 is the DOI’s notice of rulemaking regarding network-adequacy requirements 8 in Gov’t Code § 11346.2(b), and TX 8765 is the DOI’s responses to comments.6 The court held — 9 and the plaintiffs agreed — that witness Melissa Brendt could testify about them (assuming that 10 Sutter was aware of the concerns and the regulatory basis for decisions).7 11 The regulatory context necessarily informed Sutter’s decisions. As the Ninth Circuit held, 12 Sutter’s motive for adopting its contract terms is relevant. Sidibe, 103 F.4th at 688 (“Sutter’s 13 motives for adopting the challenged contract terms are therefore relevant to whether Sutter forced 14 health plans to agree to terms that prevented the health plans from steering patients to lower-cost, 15 non Sutter hospital.”) (cleaned up), 692 (“[T]he history of the restraint and the reasons for its 16 adoption are crucial factors under the rule of reason.”) (cleaned up), 693 (“Evaluating a party’s 17 motives is particularly important when applying the rule of reason’s fact-specific assessment.”) 18 (cleaned up). Antitrust cases consider intent and purpose when evaluating intent and purpose under 19 the rule of reason. United States v. U.S. Gypsum Co., 438 U.S. 422, 436 n.13 (1979). 20 Also, the exhibits are admissible only to demonstrate how the regulatory context affected 21 Sutter’s decision-making about its contracts, not for their truth.8 It is possible that some records will 22 be business records.9 23 24

25 5 Tr., Ex. D3 – ECF No. 1571 at 113 (p. 1859). 26 6 Joint Letter Br. – ECF No. 1489 at 6 (synopsizing exhibits). 7 Tr., Ex. D3 – ECF No. 1571 p. 2913. 27 8 Opp’n to Pls.’ MIL 10 – ECF No. 1662-1 at 7 (does not offer them for the truth of the matter asserted). 1 Another issue is the plaintiffs’ challenge to Table 3, which assumes that Sutter’s out-of-network 2 rates are 90 percent of billed charges. The DOI’s estimate of out-of-network rates (assuming 3 knowledge by sponsoring witnesses) is relevant to Sutter’s decision, again, only as context for 4 Sutter’s practices, not for the truth. It is an estimate, but that goes to weight, not admissibility, and 5 can be tested through cross-examination.10 6 This evidence about regulatory points of reference informing Sutter’s practices is different 7 than other investigations against Sutter that involved whether its practices were anticompetitive. 8 The first are adjudicative facts that are admissible when foundation is laid that Sutter considered 9 them in its contracting practices. Fed. R. Evid. 201(a).11 For the second category, the court already 10 held that the plaintiffs cannot elicit testimony about the California Attorney General’s 11 investigation and outcome: it was not a complete investigation, the allegations never reached 12 verdict, and a jury might decide the case based on the fact of a different case, not the evidence in 13 this case.12 Any relevance is substantially outweighed by the danger of unfair prejudice. Fed. R. 14 Evid. 403(b). Courts recognize the prejudice under Rule 403(b) from the admission of the fact of 15 other litigation or investigations against a defendant. In re Cathode Tube (CRT) Antitrust Litig., 16 No. C-07-5944 JST, 2016 WL 7803893, at *2 (N.D. Cal. Nov. 15, 2016) (if a jury hears that the 17 European Commission found the defendants liable, “it will be very difficult for the jury not to find 18 them liable as well”); Hynix Semiconductor, Inc. v. Rambus, Inc., No. CV-00-20905 RMW, 2008 19 WL 282376, at *4 (N.D. Cal. Jan. 28, 2008) (excluding FTC decision because of “the undue 20 weight or even de facto collateral estoppel effect that a jury would accord to the FTC’s liability 21 opinion”); Aetna, Inc. v. Blue Cross Blue Shield of Mich., No. 15-15346, 2015 WL 1646464, at 22 *10 (E.D. Mich. Apr. 14, 2015) (excluding evidence of cases brought against Blue Cross by the 23 DOJ, the Michigan AG, and plaintiffs in a class action that were “resolved without any finding of 24 liability against Blue Cross [because] . . . any reference to those cases would be more prejudicial 25 26 10 Pls.’ MIL 10 – ECF No. 1662 at 5–6; Opp’n to id. – ECF No. 1662-1 at 9. 27 11 Order – ECF No. 1330. 1 than probative . . . [and] would result in litigating the issues brought by the DOJ, the Michigan AG 2 and the [class-action] plaintiffs. . . . There are sufficient issues raised in the instant case without 3 litigating the issues brought in the other cases.”). 4 Evidence from the proceedings (such as admissions) — if anonymized — could be relevant.13 5 In sum, the court holds that the regulatory context is relevant to Sutter’s motives and decisions, 6 not for the truth. Sidibe, 103 F.4th at 688. The hurdle for Sutter on exhibits like these is that it must 7 establish foundation for them (meaning, knowledge of the regulatory context that informed the 8 witness’s decisions). This could be through business records or witness testimony. Assuming 9 foundation, objections go to weight, not admissibility. 10 6.1.2 MIL 11 to Exclude Evidence of Arbitrations and Legal Proceedings — Denied 11 At the first trial, the court granted Sutter’s MIL 2 and precluded the introduction of certain 12 litigation against Sutter, including the California AG and UBET cases (discussed in part in the last 13 section). (It allowed the use of admissible evidence from the litigation, such as admissions.) Three 14 categories of evidence were at issue in MIL 2: (1) the California AG/UBET cases; (2) California’s 15 lawsuit to block the merger of Alta Bates and Summit Medical Center in 1999; and (3) other 16 enforcement actions against Sutter by the U.S. DOJ, the FTC, and OSHA.14 17 In MIL 11, the plaintiffs want to preclude evidence of arbitrations or other litigation (not just 18 litigation against Sutter), including consent decrees that Sutter reached. They want to use 19 admissible evidence from them, including “admissions found in the ‘findings of fact and 20 conclusions of law’ from the Alta Bates-Summit merger.” They contend that the court’s earlier 21 ruling on Sutter’s MIL 2 precludes the evidence, which is in any event inadmissible and, for the 22 arbitrations, also prejudicial under Rule 403. And if Sutter is allowed to introduce evidence of 23 other legal proceedings such as arbitrations, the plaintiffs want to rebut it with the California- 24 UBET cases.15 Sutter counters that the plaintiffs seek to exclude three categories of evidence, with 25 26 13 Order – ECF No. 1167 at 8. 27 14 Id.; Def.’ MIL 2 – ECF No. 1043-1 at 2–3. 1 only one category at issue in MIL 2: (1) two orders to rebut evidence that the plaintiffs offer about 2 the Summit merger litigation, (2) evidence admitted in the first trial (over the plaintiffs’ 3 objections) about Sutter’s arbitrations against Kaiser (and not appealed), and (3) a 1999 settlement 4 agreement with Health Net, excluded by the court as too attenuated and now back in play because 5 pre-2006 evidence is admissible under the Ninth Circuit’s ruling.16 At the argument on MIL 11, 6 the parties focused exclusively on the arbitrations.17 7 Preliminarily, the earlier MIL 2 and the court’s order addressed only litigation against Sutter, 8 not the evidence at issue in MIL 11. 9 First, as to evidence about the Summit merger litigation, there may be admissible evidence, 10 which must be anonymized (as the court directed previously).18 The plaintiffs made no offer of 11 proof, and thus admissibility cannot be evaluated now. It can be at trial, where Sutter can object to 12 its admissibility. Sutter points out that findings and expert opinions that the plaintiffs identified in 13 past submissions are inadmissible hearsay.19 See SanDisk Corp. v. Kingston Tech. Co., 863 F. 14 Supp. 2d 815, 819 (W.D. Wis. 2012) (excluding deposition testimony of expert from another case 15 as inadmissible hearsay); Rosco, Inc. v. Mirror Lite Co., No. CV-96-5658 (CPS), 2006 WL 16 2844400, at *7 (E.D.N.Y. Sept. 29, 2006) (proposed findings of fact have no evidentiary 17 significance); City of Cleveland v. Cleveland Elec. Illuminating Co., 538 F. Supp. 1257 (N.D. 18 Ohio 1980) (same). If there is admissible evidence, Sutter is entitled to rebut it. It lists two orders 19 as possible rebuttal evidence to show the denial of California’s motion to enjoin the merger: Exs. 20 P26 (TX 8342) & P28 (TX 9544). (P28 is California v. Sutter Health Sys., 84 F. Supp. 2d 1057 21 (N.D. Cal. 2000)). 22 Second, as to the arbitrations, the court allowed the evidence previously, over the plaintiffs’ 23 objection.20 The plaintiffs did not appeal the issue and instead argued on appeal that the court 24

25 16 Opp’n to Pls.’ MIL 11 – ECF No. 1663-1 at 2. 26 17 Tr. – ECF No. 1686 at 25–44. 18 Order – ECF No. 1167 at 8. 27 19 Opp’n to Pls.’ MIL 11 – ECF No. 1663-1 at 7. 1 should have admitted findings from the Summit merger litigation.21 Sutter argues that it thus is 2 law of the case.22 The court also admitted it previously because it informed Sutter’s decisions to 3 negotiate its rates the way it did.23 The court can judicially notice the existence of the arbitration 4 awards, but not for the truth of the matter asserted in them, as it did with the adjudicative facts at 5 issue in MIL 10. Bucur v. Fedex Ground Package Sys., 2015 U.S. Dist. LEXIS 190203, at *3 n.2 6 (C.D. Cal. Sept. 10, 2015). 7 Third, the settlement agreement between Health Net and Sutter is exhibit P27 (TX 9541). The 8 plaintiffs contend that it is inadmissible under Federal Rule of Evidence 408.24 Because pre-2006 9 evidence is now admissible, Sutter contends that it bears on why Sutter chose to implement certain 10 contract terms: the plaintiffs challenge provisions that prohibit insurers from making unilateral 11 changes during the term of their contracts with Sutter, and the agreement shows that health plans 12 had a history of unilaterally changing contract terms to Sutter’s detriment.25 The agreement is 13 relevant for the reasons advanced by Sutter. It is not inadmissible under Rule 408, which precludes 14 evidence of settlement discussions “to prove or disprove the validity or amount of a disputed claim 15 or to impeach by a prior inconsistent statement or a contradiction.” Fed. R. Evid. 408(a). Rule 16 408(b) does not require exclusion of evidence offered for another purpose. There is no prejudice 17 under Rule 403. Exclusion is unwarranted at the MIL phase. But like all evidence from other legal 18 proceedings, admissibility turns on how it is used at trial. 19 Finally, the court previously excluded evidence about the California AG/UBET cases. The 20 reasons are reflected in part in the analysis of MIL 10. It is law of the case. The proffered evidence 21 does not open the door to the introduction of evidence about the California AG/UBET cases. 22 23 24 21 Opp’n to Pls.’ MIL 11 – ECF No. 1663-1 at 4–5 (citing Reply Br., Ex. D18 at 16). 25 22 Opp’n to Pls.’ MIL 11 – ECF No. 1663-1 at 9–10. 26 23 Tr., Ex. D3 – ECF No. 1582 at pp. 2905–06. 27 24 Pls.’ MIL 11 – ECF No. 1663 at 7–8. 25 1 6.1.3 MIL 12 to Exclude Evidence of Nonparty Legal Proceedings — Denied 2 At the first trial, Sutter introduced evidence about nonparty Sutter litigation and investigations 3 to show — like the regulatory context at issue in MIL 10 and the arbitrations at issue in MIL 11 — 4 the context for Sutter’s decisions when negotiating its contracts. The court allowed the evidence 5 primarily because it provided context for Sutter’s decisions and was fair cross-examination in 6 support of Sutter’s defenses. A Senate report was a business record that validated Sutter’s 7 decisions about the need for the non-par rate.26 Northbay’s litigation against Blue Shield was used 8 to cross-examine Blue Shield witness Tracy Barnes, who testified that Sutter’s 95-percent non-par 9 rate was higher than the rates they paid other providers, to contextualize his testimony because 10 Northbay’s prices were higher than Sutter’s.27 11 Sutter’s exhibit list has around twenty exhibits about the same nonparty (Blue Shield) and 12 around twenty exhibits involving the nonparty health plans, including agency investigations, 13 enforcement actions, and settlements. The plaintiffs want to exclude them as hearsay and 14 irrelevant.28 The rulings on MIL 10 and 11 drive the outcome here for the following reasons. 15 First, the court’s rulings are law of the case. 16 Second, the documents generally are offered not for the truth and instead — assuming the 17 proper foundation can be laid that a witness considered them — to explain the context for Sutter’s 18 negotiations of the contract provisions at issue in the litigation. As discussed above, Sutter’s 19 motive for adopting its contract terms is relevant. Sidibe, 103 F.4th at 688, 692–93; U.S. Gypsum 20 Co., 438 U.S. at 436 n.13. The Ninth Circuit emphasized not only purpose, but also history, 21 reversing a Rule 403 exclusion on the ground that it undervalued probative evidence. Sidibe, 103 22 F.4th at 688, 692–93, 703–04. The plaintiffs’ proposed blanket ban conflicts with this analysis if 23 Sutter can show a non-hearsay purpose tied to its defenses (e.g., rebutting anticompetitive intent). 24 25 26 26 Tr., Ex. D3 – ECF No. 1571 at pp. 3150–51 (testimony of Sutter witness Melissa Brendt). 27 27 Id. at pp. 1936–38. 1 Third, the documents are not categorically inadmissible. There are four categories. One is the 2 use of Ingenix data used to establish usual and customary rates paid for out-of-network services.29 3 The court allowed the evidence previously as relevant to the non-par rate.30 Another category is 4 documents about insurers’ violations of their obligations under the Knox-Keene Act, including by 5 failing to correctly reimburse non-contracted providers.31 These documents support Sutter’s 6 defenses to the plaintiffs’ claims about the non-par rate: they determined that the rates were 7 necessary. A third category is a consent agreement that Blue Cross reached with a state agency to 8 address complaints that Blue Cross did not provide adequate notice and disclosure of rate 9 changes.32 Sutter witness Melissa Brendt testified at the first trial that this context motivated 10 contract provisions that required insurers to discuss new products with Sutter before including 11 Sutter in the network.33 The final category is documents about insurers’ administrative limitations 12 in offering narrow networks or inaccuracies in provider directories. Sutter identifies these as 13 relevant to its alleged refusal to participate in transparency efforts and narrow/tiered networks.34 14 For example, exhibit P35 (TX 7698) is a state agency’s “Final Report: Non-Routine Survey of 15 Blue Shield of California.” The agency investigated because it received complaints that customers 16 were having difficulty finding in-network physicians. The agency determined that 18.2 percent of 17 physicians in the provider directory were not actually at the listed location and thus could not 18 accept members there.35 Ms. Brendt testified that these issues contributed to her concerns about 19 narrow networks and the potential impact on patients.36 20

21 29 Opp’n to id. – ECF No. 1664-1 at 7 (citing Exs. P42 (TX 9570), P48–P49 (TX 9601–TX 9602), and 22 P53 (TX 9624)). 30 Tr., Ex. D3 – ECF No. 1571 at p. 3151 (testimony of Sutter witness Melissa Brendt). 23 31 Opp’n to Pls.’ MIL 12 – ECF No. 1664-1 at 7 (citing Exs. P38 (TX9559), P39–P40 (TX 9564– 24 TX9565), P43–P46 (TX 9573–TX 9576), P50 (TX 9603)). 32 Id. at 8 (citing Ex. P55 (TX 9774)). 25 33 Tr., Ex. D3 – ECF No. 1571 at pp. 2976–77, 2978, 2980. 26 34 Opp’n to Pls.’ MIL 12 – ECF No. 1664-1 at 8 (citing Exs. P34–P35 (TX 7697–TX 7698), P36 (TX 7700)). 27 35 Id. (citing Ex. P35 (TX 7698)). 1 Fourth, for the reasons in the last section, the settlement agreements are not inadmissible under 2 Federal Rule of Evidence 408 or prejudicial under Rule 403. 3 Finally, the court is not wholesale admitting the documents. A Sutter witness cannot testify 4 about documents — even if they are non-hearsay public records — if Sutter did not consider 5 them.37 Sutter must lay foundation for the documents to use them. 6 6.1.4 MIL 13 to Prevent Sutter From Mischaracterizing the Claims — Denied 7 The plaintiffs contend that at the first trial, Sutter mischaracterized their claims by referencing 8 the operative complaint.38 Some context is necessary. 9 In the first trial, the plaintiffs cross-examined Sutter’s expert about his understanding of their 10 tying claim, asking whether he thought that the “tying claims are based on forcing network 11 participation in particular products for tying hospitals.” The expert responded that the theories 12 were “a little unclear” but that he understood that the tying claim was that Sutter had market 13 power in the tying hospital markets and was using the power to “forc[e] insurance companies to 14 purchase these — these hospital services in tied markets like in San Francisco.”39 The plaintiffs 15 then suggested that the expert was “focusing on the wrong paradigm” and the right paradigm was 16 that Sutter used systemwide contracting to impose contract terms on all hospitals, including out- 17 of-network hospitals.40 On redirect, Sutter asked the expert questions about the plaintiffs’ 18 contention that Sutter had used its tying hospitals to force insurers to include other unwanted tied 19 hospitals in network.41 The plaintiff made that claim in opening, saying that the “evidence will 20 show that Sutter often refused to allow for its hospitals to be excluded from health plan networks, 21 requiring the health plans to include tied hospitals in their network.”42 (The court described the 22 23

24 37 Opp’n to Pls.’ MIL 12 – ECF No. 1664-1 at 9 (pointing out that most are public records). 25 38 Pls.’ MIL 13 – ECF No. 1665 at 2. 26 39 Tr., Ex. D3 – ECF No. 1571 at p. 3931. 40 Id. at pp. 3932–35. 27 41 Id. at pp. 3970–75. 1 claim that way in its summary-judgment order too.43) The plaintiffs did not object to the redirect 2 examination. During it, Sutter characterized the theory as a “new theory.”44 3 The plaintiffs also reference Sutter’s brief on appeal, where Sutter contrasted the plaintiffs’ 4 opening statement (the alleged tying arrangements had prevented insurers from excluding tied 5 hospitals from their networks) to their closing argument (the tying claim was not about network 6 participation and instead was about purchasing hospitals or hospital services).45 7 The plaintiffs contend that the Ninth Circuit agreed with the plaintiffs’ characterization of their 8 claims: 9 Sutter first argues that it presented sufficient evidence at trial that it did not link the in-network participation of its tying hospitals and the in-network participation of its 10 tied hospitals. However, Plaintiffs alleged a second tying condition: not only the in- 11 network participation of Sutter’s tied hospitals but also the payment of supracompetitive non-par rates at Sutter’s tied hospitals. The fact that Sutter 12 presented evidence relevant to the network participation of its tied hospitals is not necessarily dispositive of whether Sutter engaged in tying at all. 13 14 Sidibe, 103 F.4th at 704. The plaintiffs assert that this is the operative articulation of the plaintiffs’ 15 claims, and thus is the law of the case, and, alternatively, that Sutter cannot mischaracterize the 16 plaintiffs’ claims.46 17 The plaintiffs can argue the two versions of the tying claim that the Ninth Circuit articulated.47 18 But the Ninth Circuit ruled only that there are two tying conditions. It did not address Sutter’s 19 redirect examination of its expert after the plaintiffs said that he focused on the wrong paradigm. 20 Also, Sutter points out that the parties can disagree about what is needed to establish the tying 21 claim. In Sutter’s view, network participation is critical to the claim, a view supported by the 22

23 43 Order – ECF No. 962 at 8 (the plaintiffs’ “theory of liability is that Sutter used its market power for inpatient services in the Tying Market to force the health plans to include (in their networks) Sutter 24 inpatient services in the Tied Markets and then had terms that prevented the health plans from excluding Sutter tied hospitals from the networks or establishing lower-cost networks”); Final Pretrial Order – 25 ECF No. 1167 at 3 (defining claims and defenses by reference to the summary-judgment order). 26 44 Tr., Ex. D3 – ECF No. 1571 at p. 3975. 45 Br., Ex. D20 – ECF No. 1671-1 at 429–35. 27 46 Pls.’ MIL 13 – ECF No. 1665 at 4–8. 1 plaintiffs’ damages model, which is based on Sutter’s allegedly raising prices for in-network 2 services (and not based just on the non-par rate’s allegedly resulting in higher charges for the 3 limited set of out-of-network services). Part of the theory of higher in-network prices is that Sutter 4 prevented steering (that is, prevented the use of narrow or tiered networks that would exclude 5 Sutter from network participation or put it in a disfavored tier).48 The Ninth Circuit did not address 6 these arguments when it defined the claim. Al-Safin v. Cir. City Stores, Inc., 394 F.3d 1254, 1258 7 (9th Cir. 2005) (“The doctrine does not apply to issues not addressed by the appellate court.”) 8 (cleaned up). Prior articulations of the claim could be relevant for other reasons too, including 9 understanding what the claim is now. Sutter doubts that the non-par rate is an antitrust tie because 10 it is a price, not a product.49 Even if it is, Sutter contends that the plaintiffs’ expert’s damages 11 study is based only on the network-inclusion theory, not the non-par theory.50 Network inclusion 12 was the theory in the operative complaint, meaning, “[d]id the seven tying hospitals cause the 13 inclusion of the four tied?” And Sutter asserts that “there was no evidence at the trial of that tie. I 14 don’t think there’s any evidence in the trial of the — of a tie caused by the nonpar rate.”51 (The 15 plaintiffs dispute this.52) 16 Alternatively, the plaintiffs want to preclude Sutter from relying on the operative complaint 17 because it is superseded by the pretrial order and the Ninth Circuit’s opinion.53 Patterson v. Hughes 18 Aircraft Co., 11 F.3d 948, 950 (9th Cir. 1993) (courts look “to the pretrial order in determining the 19 scope of the claims presented”). But a complaint does not lose all relevance. For example, 20 “reference to the complaint” may be “helpful in interpreting the language in the pretrial order.” DP 21 Aviation v. Smiths Indus. Aerospace & Def. Sys. Ltd., 268 F.3d 829, 842 n.8 (9th Cir. 2001); ILC 22 Trademark Corp. v. Aviator Nation, Inc., No. CV 17-7975-MWF (JPRx), 2019 WL 12536569, at *3 23

24 48 Id. at 6–7. 25 49 Tr. – ECF No. 1686 at 54. 26 50 Id. at 57. 51 Id. at 58. 27 52 Id. at 65–68. 1 (C.D. Cal. Apr. 16, 2019) (superseded complaints may retain relevance for context or admissions); 2 Charles A. Wright & Arthur R. Miller, Fed. Prac. & Proc. § 1527, Effect of the Pretrial Conference 3 at Trial (4th ed. 2023) (“Although federal judges generally recognize the binding effect of pretrial 4 orders, particularly the order that is entered after the final pretrial conference just before the trial, 5 this does not mean that the order is rigidly and pointlessly adhered to at trial. The decision to bind 6 the parties to the order is viewed as a matter of judicial discretion.”). 7 Referencing the operative complaint may have probative value in testing the plaintiffs’ 8 consistency or expert understanding. The practical utility here is expert testimony about damages 9 (and not party consistency or admissions). At the MIL stage, the court cannot say categorically 10 that the probative value is substantially outweighed by prejudice, given the relevance to damages. 11 Of course, Sutter cannot frame the claim in the complaint as the operative claim: that would 12 confuse the jury and be inconsistent with the Ninth Circuit’s decision. Theories of a case, after all, 13 can evolve. Also, the court will instruct the jury on the law, including the elements of the claims. 14 Those instructions — and the constantly reiterated instruction at trial that what the lawyers say is 15 argument, not evidence — would address what is a modest risk. There was one stray remark by 16 counsel about “a new theory,” it seems unlikely that the complaint will figure prominently in the 17 new trial, and presumably the issues with damages mostly will be confined to the experts and their 18 damages theories. 19 Finally, it is not possible to address the issue more now. The court cannot guess what Sutter 20 might say at trial or police its defense in advance. Another practical reality is that the plaintiffs can 21 rebut Sutter’s characterizations. 22 6.1.5 MIL 14 to Exclude Evidence of Purpose for Systemwide Contracting — Denied 23 Sutter has disclosed two exhibits to establish why it shifted to systemwide contracting.54 The 24 plaintiffs want to exclude them on the ground that the evidence is irrelevant to their tying claim 25 and “is not a legitimate procompetitive justification under the Rule of Reason.”55 The court denies 26

27 54 Opp’n to Pls.’ MIL 14 – ECF No. 1666-1. 1 the motion: Sutter does not offer the evidence to justify its alleged tying or restraint of trade and 2 instead offers it to show its purpose in adopting systemwide contracting. 3 There are two documents. One is a January 12, 1998, letter from Sutter to Blue Cross 4 terminating two contracts because BlueCross would not agree to rates that would allow Sutter 5 hospitals to cover their costs. In it, Sutter explains that under the existing contracts, “Sutter Health 6 providers [were] not recovering their costs of providing care.” Sutter proposed rates that “would 7 be market competitive and would allow Sutter Health’s affiliates to cover their costs of providing 8 patient care to Blue Cross enrollees.”56 The second is an April 15, 1998, memorandum. Sutter’s 9 CFO explained that it was “requesting a new systemwide rate structure that would cover costs and 10 provide for a minimal return.”57 It also said that “most of our hospitals and physician groups are 11 not even covering the costs of providing care to Blue Cross patients. We simply can’t continue to 12 accept rates that don’t cover our costs.”58 13 Sutter contends that the documents “echo the points in the two memoranda plaintiffs 14 highlighted in their appeal.”59 On appeal, the plaintiffs contended that they should have been 15 allowed to put in evidence regarding Sutter’s purpose in adopting systemwide contracting, 16 including two memoranda from the late 1990s: a 1997 Sutter memo and a 1998 memo from 17 Sutter’s CFO. Sidibe, 103 F.4th at 694–95. The Ninth Circuit reversed, holding that this error in 18 excluding pre-2006 evidence was compounded by the failure to instruct the jury to consider 19 Sutter’s anticompetitive purpose. Id. at 705–06. 20 The first document that the plaintiffs referenced on appeal was a 1997 memorandum that 21 discussed Sutter’s desire to negotiate higher rates with Blue Cross because the existing rates were so 22 low that several Sutter hospitals were losing money on inpatient services provided to Blue Cross 23 members.60 The second was a 1998 memorandum that described the benefits from being part of the 24

25 56 January 12, 1998, Letter, Ex. P58 (TX 9772) – ECF No. 1658-5 at 3. 26 57 April 15, 1998, Mem., Ex. P59 (TX 9616) – ECF No. 1658-6 at 4. 58 Id. at 8. 27 59 Opp’n to Pls.’ MIL 14 – ECF No. 1666-1 at 4. 1 Sutter system, including strategic planning, risk sharing, greater access to capital, financial and 2 operational oversight, shared technology, clinical integration, and centralized contracting.61 The 3 Ninth Circuit held that these should have been admitted because they supported the plaintiffs’ 4 “theory . . . that Sutter used its systemwide contracts to impose tying arrangements and other 5 anticompetitive contract terms.” Id. at 694. Sutter contends that if the plaintiffs are allowed to 6 introduce the memoranda as relevant to Sutter’s purpose, Sutter can introduce its contemporaneous 7 evidence to provide context for, and to rebut the plaintiffs’ reading of, the plaintiffs’ two 8 memoranda. It offers the evidence only about its purpose, not to offer a competitive justification for 9 its systemwide contracting. It points out that the Ninth Circuit held that systemwide contracting is 10 lawful, which is law of the case.62 Id. at 689 (“systemwide contracting is itself lawful”). 11 It is law of the case that business justification is not an affirmative defense to the plaintiffs’ 12 tying claim. Sidibe v. Sutter Health, Inc., No. 12-cv-04854-LB, 2021 WL 4812445, at *5 (N.D. 13 Cal. Sept. 17, 2021). Sutter is not offering the evidence for that reason and instead offers it to 14 rebut the plaintiffs’ evidence and to establish its purpose in adopting systemwide contracting.63 15 The plaintiffs have put Sutter’s purpose at issue and plan to introduce evidence from the same time 16 period. Sutter put on evidence in the first trial that it did not tie its hospitals together and that its 17 contracts did not prevent changes to network participation, adopt a higher price for out-of-network 18 participation, prevent steering, or otherwise restrain competition. It will do so in the second trial 19 and offers its evidence to show the purpose for its centralized contracting practices: negotiate more 20 effectively, reduce the cost structure, and ensure that its hospitals received reasonable value for 21 their services to cover costs and invest in patient care.64 22 The plaintiffs’ cases are distinguishable and do not change the conclusion that the evidence is 23 relevant to Sutter’s purpose in adopting systemwide contracts. As Sutter points out, the cases 24 involved restraints of trade like price-fixing, bid-rigging, and boycotts. United States v. Socony- 25 26 61 Id. (citing November 20, 1998, Mem., Ex. D23). 62 Id. at 5. 27 63 Id. at 7. 1 Vacuum Oil Co., 310 U.S. 150, 228 (1940) (in price-fixing case, “the offers of proof . . . were 2 properly excluded, insofar as they bore on the nature of the restraint and the purpose or end sought 3 to be attained”); Freeman v. San Diego Ass’n of Realtors, 322 F.3d 1133, 1152 (9th Cir. 2003) 4 (defendant sought “to justify not only fixing prices, but intentionally fixing prices at a 5 supracompetitive level”); United States v. Marr, No. 14-CR-00580-PJH, 2017 WL 1540815, at 6 *11 (N.D. Cal. Apr. 28, 2017) (granting MIL “precluding defendants from offering evidence or 7 argument justifying the bid rigging agreements”); United States v. Aiyer, 33 F.4th 97, 123 (2d Cir. 8 2022) (district court “properly concluded that ‘[e]vidence of pro-competitive effects, or the lack of 9 harm, is not relevant;’” the indictment charged the defendant with entering into “a conspiracy to 10 fix prices and rig bids”); PLS.Com, LLC v. Nat’l Ass’n of Realtors, 32 F.4th 824, 836 (9th Cir. 11 2022) (“[S]paring consumers the need to patronize competing firms is not a procompetitive 12 justification for a group boycott.”). 13 In sum, as discussed above, the Ninth Circuit held that Sutter’s motive for adopting its contract 14 terms is relevant. It also ruled that the pre-2006 evidence is relevant. Sidibe, 103 F.4th at 686, 688, 15 692–93, 703–04. Sutter is entitled to put in evidence of its purpose in adopting systemwide 16 contracts. The court denies the motion to exclude the evidence. 17 At the hearing, the plaintiffs also asked that Sutter be barred from arguing in closing that the 18 benefits are procompetitive and offset anticompetitive effects under the Rule of Reason.65 That 19 concern will be addressed through the jury instructions, which will limit what Sutter can argue. A 20 limiting instruction also can clarify that the evidence is admissible only to show Sutter’s purpose. 21 6.2 Sutter’s MILs 22 6.2.1 MIL 7 to Exclude Strategy Advantage Documents — Denied in Part 23 Before the first trial, the court granted Sutter’s MIL 4 to exclude the same evidence: 24 The challenged documents are a 2006 memorandum summarizing statements that Sutter executives made about Sutter’s marketing position . . . . An outside consultant 25 — hired by Sutter as part of its Marketing Task Force to understand market needs 26 and define its product strategy — prepared the memorandum and based it on her interviews with the executives. They are like a brainstorming session, eliciting the 27 executives’ views on what Sutter did (or did not do) right and how it could improve. 1 They have nothing to do with contracting practices. Sutter contends that they are not 2 business records because (1) there was a delay between the interviews and the consultant’s drafting the documents (meaning, that she did not prepare the 3 documents “at or near the time” of the act), and (2) the record is untrustworthy because the consultant does not remember the precise processes that she used for 4 taking notes and turning them into memoranda, and she made basic fact errors (such as getting a title and a name wrong). It also contends that the documents are not party 5 admissions (partly due to the inaccuracies in them and partly because the plaintiffs 6 cannot show that the persons made them in a representative capacity). Sutter also contends that the documents are irrelevant and any probative value is substantially 7 outweighed by undue prejudice under Rule 403. 8 Generally, the business-records foundation could be laid, and Sutter’s objections might go to weight, not admissibility. But the memorandum, which stitches together 9 the interviews without attribution, is confusing. Also, the individual interviews are 10 not obviously party admissions (although perhaps a foundation could be laid) in the classic sense: a party making statements about the issue such that the statements are 11 evidence about the issue. Here, the statements do have some relevance to the issues in the litigation (e.g., there is discussion about pricing and quality) but they have 12 nothing to do with contracting. In early 2006, they necessarily look back at years that 13 precede the class period by over five years. Any marginal relevance to the relevant time period is substantially outweighed by the danger of confusion of the issues and 14 the same sideshow concerns discussed in [the order granting] MIL 3 [and excluding pre-2006 evidence]. The court grants the motion.66 15 16 On appeal, the Ninth Circuit identified the memo’s account of an interview with future Sutter 17 CEO Sarah Krevens (then CEO of two Sutter hospitals). She said, “Related to the health plans, we 18 force them to pay us more. They do pay us more, and they don’t like us. In some cases, they have 19 paid us more than the market. We’re working on it, though. There are lots of reasons why we 20 pushed the health plans. Mainly, we pushed them because we could.” The Ninth Circuit held that 21 “these admissions are highly relevant to Plaintiffs’ theory of the case.” Sidibe, 103 F. 4th at 694. 22 When coupled with other evidence — the contemporaneous memos (one from the CFO) 23 (discussed in the last section) and the CFO’s deposition testimony that “Sutter implemented 24 systemwide contracting with the purpose of achieving higher pricing” — it would have “bolstered 25 Plaintiffs’ allegations that Sutter used systemwide contracting to link in-network participation in, 26 27 1 or supracompetitive non-par rates at, its tying and tied hospitals (the first element of a tying 2 claim).” Id. at 695. 3 The evidence here falls into the bucket of evidence — previously excluded as too old — that 4 now is relevant. And Ms. Krevens’s statement is an admission, given the Ninth Circuit’s opinion, 5 assuming that it can be authenticated. The court said as much in its earlier ruling. Presumably, 6 other statements could be admissions too, assuming that they meet the requirements of Federal 7 Rule of Evidence 801(d)(2) and can be authenticated, either by the consultant or the person 8 making the statement. Finally, a business-records foundation possibly could be laid. Any evidence 9 must still be relevant. 10 Foundation can be laid more easily for admissions than for business records. The plaintiffs 11 have not identified admissions other than Ms. Krevens’s statement. If there are others, the 12 plaintiffs can identify them and lay the foundation for their admissibility, probably through the 13 consultant. Sutter can object both to foundation and whether the statements are opposing party 14 statements within the meaning of Rule 801(d)(2). 15 To admit the memo as a business record, the plaintiffs must show that “(A) the record was 16 made at or near the time by — or from information transmitted by — someone with knowledge; 17 (B) the record was kept in the course of a regularly conducted activity of a business, organization, 18 occupation, or calling, whether or not for profit; (C) making the record was a regular practice of 19 that activity; (D) all these conditions are shown by the testimony of the custodian or another 20 qualified witness, or by a certification . . . [and] (E) the opponent does not show that the source of 21 information or the method or circumstances of preparation indicate a lack of trustworthiness.” Fed. 22 R. Evid. 803(6). “The proponent of the evidence bears the burden of laying the proper foundation 23 for the admission.” City of Long Beach v. Standard Oil of Cal., 46 F.3d 929, 937 (9th Cir. 1995) 24 (district court properly concluded handwritten notes were not a business record). 25 26 27 1 Sutter identifies the potential problems with admitting the memorandum as a business record: 2 (1) when did the author draft it, (2) was it during the course of a regularly conducted business 3 activity, (3) is it accurate, and (4) there are issues regarding hearsay within hearsay.67 4 Foundation requires a sponsoring witness. Sutter’s objections are best addressed at trial in the 5 context of that sponsoring witness. The plaintiffs as the designating party must proffer the witness 6 on the two-day cycle described below in section 12. If the parties do not work the issue out, then 7 they must provide all information required by section 12, including the particular evidence 8 relevant to determining the issues (and cannot rely on the exhibits on the docket that are part of 9 voluminous filings). 10 6.2.2 MIL 8 to Exclude Late-Disclosed Witness — Denied 11 At the time of the first trial, CalPERS’s Rule 30(b)(6) witness was Kathleen Donneson, who 12 was deposed but did not testify.68 On December 5, 2024, CalPERS told the plaintiffs that Ms. 13 Donneson had retired and could no longer serve as its representative. On December 9, 2024, when 14 the parties exchanged witness lists, the plaintiffs designated Kristin Owens, a current CalPERS 15 employee, as CalPERS’s Rule 30(b)(6).69 Sutter moved to exclude Ms. Owens under Federal Rule 16 of Civil Procedure 37(c)(1) on the ground that the plaintiffs failed to timely disclose Ms. Owens 17 under Rule 26 and the late disclosure prejudiced Sutter’s trial preparation.70 The plaintiffs counter 18 that the disclosure was timely and harmless and offer Sutter a deposition of Ms. Owens.71 The 19 issue is whether the plaintiffs’ disclosure is substantially justified or harmless. It is. 20 A party must disclose “the name, and if known, the address and telephone number of each 21 individual likely to have discoverable information,” identifying the subjects of the information, that 22 the party will use to support its claims and defenses. Fed. R. Civ. P. 26(a)(1)(A). A party must 23 supplement or correct an incomplete disclosure in a timely manner. Fed. R. Civ. P. 26(e)(1). A 24

25 67 Def.’s MIL 7 – ECF No. 1668-1 at 6–14. 26 68 Def.’s MIL 8 – ECF No. 1669-1 at 2. 69 Opp’n to id. – ECF No. 1669-2 at 2 (citing Brownstein Decl., Ex. P76). 27 70 Def.’s MIL 8 – ECF No. 1669-1 at 2. 1 failure to do so bars use of the witness at trial “unless the failure was substantially justified or is 2 harmless.” Fed. R. Civ. P. 37(c)(1). The plaintiffs have the burden of proving substantial 3 justification or harmlessness. Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1107 4 (9th Cir. 2001). 5 The court denies the motion. 6 First, the failure to identify Ms. Owens earlier was substantially justified. Fed. R. Civ. P. 7 37(c)(1). The plaintiffs disclosed CalPERS in their 2016 initial disclosures and supplemented with 8 Ms. Owens on December 9, 2024, two business days after they learned of the issue. This contrasts 9 with longer delays, like the fifteen-month delay in Ollier v. Sweetwater Union High School 10 District, which warranted exclusion. 768 F.3d 843, 863 (9th Cir. 2014). Sutter contends that the 11 plaintiffs must show that Ms. Donneson is unavailable because she is outside the court’s subpoena 12 power, see Fed. R. Civ. P. 45(c)(1), or is otherwise unavailable, see Fed. R. Civ. P. 32(a)(4) and 13 Fed. R. Evid. 804(a). But practically, her retirement precludes her from representing CalPERS as a 14 Rule 30(b)(6) witness, justifying substitution. 15 Second, the late disclosure is harmless. Sutter deposed Ms. Donneson in 2018, received 16 documents from CalPERS, and can depose Ms. Owens. Unlike Ingenco Holdings, LLC v. Ace Am. 17 Ins. Co., where late disclosures disrupted schedules, the prior discovery and the ability to depose 18 Ms. Owens mitigate prejudice.72 Ms. Owens will testify only about (1) what CalPERS is and what 19 it covers, (2) the types of insurance it provided during the damages period, and (3) premiums paid 20 for fully insured products. All are topics familiar to Sutter from prior discovery. A deposition can 21 confirm this scope, distinguishing this case from Ollier, where last-minute discovery burdened the 22 opposing party. 23 This ruling aligns with courts allowing substitute Rule 30(b)(6) witnesses when prior 24 designees leave employment. See Green Payment Sols., LLC v. First Data Merch. Servs. Corp., 25 2019 WL 4221402, at *1 (C.D. Cal. July 2, 2019) (permitting substitution with safeguards like 26 depositions and limiting testimony to prior designee’s scope). The court imposes similar limits 27 1 here: Ms. Owens’s testimony is restricted to the topics Ms. Donneson addressed in her deposition, 2 ensuring no unfair surprise. 3 6.2.3 MIL 9 to Exclude Dr. Tenn’s Study — Denied 4 Sutter moved to exclude a study by Dr. Steven Tenn (then an economist at the FTC) on the price 5 effects of the Sutter-Summit merger on the grounds that it is inadmissible hearsay and that its use by 6 the plaintiffs’ expert, Dr. Tasneem Chipty, violates Federal Rule of Evidence 703.73 The plaintiffs 7 do not dispute that the study is hearsay but counter that Dr. Chipty may rely on and disclose the 8 study’s findings under Rule 703 as a basis for her expert opinions on market definition and 9 competitive effects, consistent with the Ninth Circuit’s ruling in Sidibe. 103 F.4th at 698.74 The 10 court denies Sutter’s motion: Dr. Chipty’s reliance on the report is permissible under Rule 703, the 11 jury can consider it, and the Ninth Circuit’s decision compels this outcome. 12 Under Rule 703, an expert may base an opinion on facts or data that are not admissible if 13 “experts in the particular field would reasonably rely on those kinds of facts or data in forming an 14 opinion on the subject.” If such data are otherwise inadmissible, the proponent may disclose them 15 to the jury “only if their probative value in helping the jury evaluate the opinion substantially 16 outweighs their prejudicial effect.” Id. Rule 703 permits experts to rely on hearsay, such as 17 academic studies, if the reliance is reasonable. But the rule does not allow experts to “parrot” 18 inadmissible evidence without independent analysis. Wendell v. GlaxoSmithKline LLC, 858 F.3d 19 1227, 1236 (9th Cir. 2017); In re Citric Acid Litig., 191 F.3d 1090, 1102 (9th Cir. 1999). District 20 courts have broad discretion to assess admissibility under Rule 703 and balance probative value 21 against prejudice under Rule 403. United States v. Hankey, 203 F.3d 1160, 1172 (9th Cir. 2000). 22 In Sidibe v. Sutter Health, the Ninth Circuit reversed this court’s exclusion of pre-2006 23 evidence, including Dr. Tenn’s study, finding it “highly relevant” and “probative” of market 24 definition and the purpose and effects of Sutter’s conduct under the Cartwright Act. 103 F.4th at 25 698. The court held that excluding the evidence under Rule 403 was an abuse of discretion where 26

27 73 Def.’s MIL 9 – ECF No. 1670-1 at 2. 1 its probative value was not substantially outweighed by risks of confusion, prejudice, or delay. 2 The court emphasized that Rule 403 “tilts . . . toward the admission of evidence in close cases.” Id. 3 at 691–92, 702. 4 The analysis here turns on three considerations: (1) Dr. Chipty’s permissible reliance on Dr. 5 Tenn’s study under Federal Rule of Evidence 703; (2) the probative value of the study; and (3) the 6 context of the Ninth Circuit’s decision criticizing the court’s exclusion of pre-2006 evidence. 7 6.2.3.1 Admissibility of Dr. Tenn’s Study Under Rule 703 8 Sutter contends that Dr. Tenn’s study is inadmissible hearsay under Federal Rule of Evidence 9 801(c), Dr. Chipty cannot reasonably rely on it under Rule 703, and a contrary ruling merely 10 transmits hearsay to the jury.75 The plaintiffs concede the study is hearsay if offered for its truth 11 but assert it is admissible under Rule 703 as a basis for Dr. Chipty’s expert opinions, not as 12 substantive evidence.76 13 Dr. Chipty’s reliance on Dr. Tenn’s study is permissible under Rule 703. As an antitrust 14 economist, Dr. Chipty reasonably relies on retrospective studies like Dr. Tenn’s to assess market 15 power and competitive effects, a practice that is established in the field. Phillip E. Areeda & 16 Herbert Hovenkamp, Antitrust Law ¶ 942 (5th ed. 2023) (economists routinely use peer-reviewed 17 studies to inform market analysis). Dr. Tenn’s study was published in the International Journal of 18 the Economics of Business and has been cited by courts. E.g., FTC v. Advocate Health Care 19 Network, 841 F.3d 460, 472 (7th Cir. 2016). It bears the hallmark of reliability.77 Dr. Chipty does 20 not parrot the study and instead integrates it with her own analyses of market data, documents, and 21 econometric models.78 See Moonberg Entm’t Ltd. v. BabyBus (Fujian) Network Tech. Co., 2023 22 WL 4108838, at *15 (N.D. Cal. June 21, 2023) (permitting expert reliance on inadmissible data 23 when it is supplemented by independent analysis). 24 25 26 75 Def.’s MIL 9 – ECF No. 1670-1 at 2–3, 6–11. 76 Opp’n to id. – ECF No. 1670-2 at 7–11. 27 77 Id. at 5–6 (citing other evidence to support reliability). 1 Sutter contends that Dr. Chipty’s reliance is unreasonable because she did not independently 2 verify Dr. Tenn’s data.79 This misreads Rule 703. Experts need not replicate underlying data but 3 must demonstrate that their reliance aligns with field standards. Daubert v. Merrell Dow Pharms., 4 Inc., 509 U.S. 579, 595 (1993). Sutter’s expert, Dr. Gowrisankaran, relied on Dr. Tenn’s study, 5 undercutting any critique of its reliability.80 Ramirez v. Debs-Elias, 407 F.3d 444, 449 (1st Cir. 6 2005) (expert reliance on scholarly literature upheld where customary in the field). 7 6.2.3.2 Disclosure to the Jury 8 Sutter contends that even if Dr. Chipty appropriately relied on the study, disclosing its findings 9 to the jury is unwarranted because the plaintiffs have not rebutted Federal Rule of Evidence 703’s 10 presumption against disclosure of otherwise inadmissible evidence.81 The plaintiffs counter that 11 disclosure is warranted given the study’s probative value, as recognized by the Ninth Circuit.82 12 Sidibe, 103 F.4th at 698. 13 Dr. Chipty may disclose the study’s findings to the jury. The study’s probative value — 14 demonstrating that Sutter raised prices 29–72 percent post-merger despite Kaiser’s proximity — is 15 significant for assessing market definition and competitive effects. These are key issues in this 16 retrial. The Ninth Circuit found it “probative” of whether “Kaiser and Sutter compete in the same 17 market” and of “the purpose and effects of Sutter’s conduct.” Id. This result aligns with the Ninth 18 Circuit’s holding that historical evidence can illuminate intent and effects under the rule of reason. 19 Id. at 692–93. 20 Under Federal Rule of Evidence 703, disclosure is permissible if the probative value 21 “substantially outweighs” prejudice. The Ninth Circuit in Sidibe rejected the exclusion of evidence 22 under Rule 403, noting that “damaging” evidence does not equate to “unfair prejudice.”83 It also 23

24 79 Def.’s MIL 9 – ECF No. 1670-1 at 8. 25 80 Tr. – ECF No. 1586 at 133 (p. 3939:2-4). 26 81 Def.’s MIL 9 – ECF No. 1670-1 at 9–12. 82 Opp’n to id. – ECF No. 1670-2 at 8–9. 27 83 Because Rule 703 inverts the Rule 403 inquiry and allows disclosure only if the probative value 1 recognized that alternatives (such as limiting instructions) mitigate risks. Id. at 702–03. Sutter’s 2 concerns about jury confusion (e.g., conflating merger effects with contract effects) or prejudice 3 (e.g., punishing past conduct) are valid but manageable. The study’s focus on the 1999 merger 4 predates the start of the class period in 2011, but its relevance to Kaiser’s competitive constraint 5 bridges that gap. A cautionary instruction can clarify its limited purpose — supporting Dr. 6 Chipty’s opinions, not proving the truth of Dr. Tenn’s findings — thereby reducing confusion or 7 undue prejudice. See United States v. 0.59 Acres of Land, 109 F.3d 1493, 1496 (9th Cir. 1997) 8 (limiting instructions cure prejudice). 9 Sutter’s reliance on In re Citric Acid Litig., 191 F.3d at 1102, is misplaced. There, the expert 10 offered no independent analysis, merely reciting hearsay. Here, Dr. Chipty’s testimony is 11 grounded in her broader expertise. The Ninth Circuit’s “cautious and sparing” application favors 12 admission absent overwhelming countervailing factors. Hankey, 203 F.3d at 1172. 13 6.2.3.2 Consistency with Sidibe v. Sutter Health 14 The Ninth Circuit’s ruling in Sidibe guides this decision. The court criticized this court’s prior 15 blanket exclusion of pre-2006 evidence, including Dr. Tenn’s study, as overly blunt, emphasizing 16 its relevance to market power and intent. 103 F.4th at 698, 704. While Sutter argues the study’s 17 merger focus is inapposite to contracting practices, Sidibe deemed it probative of broader 18 competitive dynamics, including Kaiser’s role, which is a central defense here. Id. Excluding it 19 risks repeating the reversible error of denying the plaintiffs evidence critical to rebut Sutter’s 20 market claims. 21 * * * 22 The court denies Sutter’s motion. Dr. Chipty may rely on Dr. Tenn’s study and explain the 23 bases of her opinions to the jury for her opinions on market definition and competitive effects. Dr. 24 Tenn’s study will not be admitted as substantive evidence. Sutter can propose a limiting 25 instruction. 26 27 1 7. Jury Instructions 2 The court will file its proposed instructions. There will be an instructions conference during 3 trial, before closing argument, to finalize any issues about the instructions. 4 5 8. Verdict Form 6 The court will file a proposed verdict form and will finalize it before closing argument. 7 8 9. Jury Questionnaire 9 The court used the parties’ agreed-to jury questionnaire. 10 11 10. Trial 12 By 3:00 p.m. each trial day, the parties must give notice of the order of proof for the second 13 trial day, including witnesses, evidence, and demonstratives. (They also must update their 14 previous order of proof for the next trial day to reflect any adjustments, which generally should be 15 limited to adjustments based on witness schedule and the flow of trial.) By 4:00 p.m., the parties 16 must meet and confer to resolve any objections. If they cannot resolve the objections, by 6:00 17 p.m., the objecting party must provide its position. By 7:00 p.m., the proffering party must provide 18 its response. The parties must file any dispute by 7:00 a.m. the next day in a joint letter (limited to 19 several paragraphs each) and attach all relevant exhibits and any previous ruling on the issue at the 20 last trial.84 (A different judge limits parties to three sentences each, something that the parties have 21 shown that they can do by their several-line objections to the opening slides.) By 8:00 a.m., the 22 parties must provide a chambers copy of the filing that includes cases supporting their positions. 23 The court will address any disputes at the end of the trial day. 24 This process will eliminate the last-minute issues raised by the parties, often late at night, 25 during the last trial. Resolution often took longer than the thirty minutes that the court allotted for 26 27 ] dispute resolution between 8:00 a.m. and 8:30 a.m. For context, the parties had 140 disputes last 2 |} trial that they could not resolve and raised formally with the court through the joint-letter process. 3 This will not happen again: this is a retrial, this order defines what is admissible generally, the 4 rules of evidence otherwise limit what is admissible, and there will be no last-minute issues 5 || because there should be no surprises and few objections. Indeed, there should be no 8:00 a.m. 6 || disputes because the parties will know what is coming two days before the evidence is offered. In 7 || the unlikely event that there is a dispute that requires consideration at 8:00 a.m., the pocket brief 8 || must be filed no later than 2:00 p.m. on the preceding trial day, and a chambers copy must be 9 || delivered by 2:30 p.m. If there are disputes that run past 8:30 a.m., the losing party’s trial time will 10 || be reduced by all argument time. 11 The trial has potential “hot” issues. Given the sophisticated lawyers on the case, they should 12 || anticipate them and have a pocket brief in hand — with supporting exhibits and authorities — to 13 aid the court’s resolution of the issues. 14 To the extent that the parties will call hostile witnesses, which means that the opposing party’s 15 “cross-examination” will be its direct examination, counsel must provide a list of all exhibits to be a 16 || used with the same witness on cross-examination (other than for impeachment). The parties will 2 17 || call their joint witnesses only once (which means that those witnesses will be called during the Z 18 || plaintiffs’ case). 19 IT ISSO ORDERED. 20 Dated: March 2, 2025 LAE 21 LAUREL BEELER 22 United States Magistrate Judge 23 24 25 26 27 28