Deloach, et al. v. Philip Morris Companies Inc., et al., No. 00-CV-1235 (U.S.D.C., M.D. NC)

Cigarette manufacturers and leaf buyers allegedly conspired to fix prices at tobacco auctions from 1996-2000. Under a former federal tobacco program, quotas were granted on the basis of demand for tobacco. Holders of quota could then either grow tobacco or rent the quota. If demand fell, the amount of quota granted would fall accordingly.
Higher tobacco prices caused by the alleged price-fixing conspiracy decreased demand and the amount of quota granted.

Nathan Associates worked on behalf of a class of tobacco growers and quota holders under the former program to calculate damages incurred by quota holders during the period of the alleged conspiracy. We calculated the monetary damages using the amounts of quota lost and the values of the quota.

Because a holder would only use quota to grow tobacco if it were more profitable than renting it, we conservatively estimated values on the basis of market rental rates.

To secure reliable and valid information on those rates we designed and conducted separate stratified random surveys of tobacco growers, interviewing 500 growers of burley tobacco and 500 growers of flue-cured tobacco.

For each year from 1996 to 2000, growers were asked how many pounds of tobacco quota were rented for cash and at what price.

Using the survey data, we estimated average annual rental prices, weighted by the amounts of cash-rented quota, by tobacco type and year for 1996-2000, and then estimated statistical margins of error for the averages. The estimated annual averages of rental prices for tobacco quota were used in the calculation of damages. The parties reached a settlement before the trial.

Details

Office

Arlington

Client

Client

Dates

1900 - 2100

Country

United States

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