Applied Economic Consultants

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Case Studies

Morelock Enterprises, Inc. v. Weyerhaeuser Co.

Antritust damages for plaintiff

applEcon developed and implemented two methods to calculate the overcharge to purchasers of finished alder lumber, leading the judge to certify a class of direct purchasers and the jury to award the class $28 million.

Weyerhaeuser operates mills in the Pacific Northwest that buy hardwood sawlogs and sell finished lumber, primarily red alder, a species unique to the region. A class consisting of U.S. alder lumber purchasers alleged that Weyerhaeuser had monopolized the market for finished alder lumber by monopolizing the input market for sawlogs, driving up sawlog prices, overbuying sawlogs, and acquiring competitors. applEcon provided expert economic analysis for the plaintiffs that quantified the monopoly overcharges paid by the class, and showed that the overcharges were caused by the challenged conduct.

In a rare class action antitrust case that went all the way to a verdict, applEcon testified to damages. We communicated to the jury and stood cross-examination so effectively that our damages witness supplied the sole rebuttal testimony of the plaintiffs at trial. The jury returned a verdict for $28 million, trebled by the court to $84 million. The National Law Journal ranked this among the top 25 U.S. verdicts of the year.

applEcon earned the credibility that made our client successful in the Weyerhaeuser case by employing our usual approach: we learned about the Pacific Northwest hardwood lumber industry, we asked the right questions, researched them diligently, and found that even in an industry as elemental as lumber, issues at play were as diverse as the effect of production processes on profitability and the effect of foreign exchange rates on demand. We created a damages study that addressed the relevant industry-specific issues; we used multiple methods for robustness. We communicated our study clearly; we documented our evidence thoroughly. It is this way of working that lies at the heart of applEcon's record of success.