Case3:11-cv-06714-JW Document44 Filed05/07/12 Page1...
Transcript of Case3:11-cv-06714-JW Document44 Filed05/07/12 Page1...
1 FRANCIS M. GREGOREK (144785)gregorekwhafh.comRACHELE R. RICKERT (190634)[email protected]
-, WOLF HALDENSTEIN ADLER
4 FREEMAN & HERZ LLP750 B Street, Suite 2770San Diego, CA 92101Telephone: 619/239-4599
6 Facsimile: 619/234-4599
7 MARK C. RIFKIN (pro hac vice)rifkin@whaffi. corn
8 ALEXANDER H. SCHMIDT (pro hac vice)[email protected]
9 MICHAEL LISKOW (243899)[email protected] WOLF HALDENSTEIN ADLERFREEMAN & HERZ LLP
270 Madison Avenue
12New York, NY 10016Telephone: 212/545-4600
13 Facsimile: 212/545-4677
14 Plaintiffs’ Interim Class Counsel
15UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNiA17SAN FRANCISCO DIVISION18
19 IN RE APPLE iPHONE ANTITRUST ) No. C 11-06714 JWLITIGATION )0
)) PLAINTIFFS’ OPPOSITION TOLI
) DEFENDANT APPLE INC.’S MOTION22 ) TO DISMISS CONSOLIDATED
) COMPLAINT23 )
) DATE: June 11,201224 ) TIME: 9:00 a.m.
) DEPT.: 9, 19th Floor25
___________________________________
) JUDGE: Hon. Chief Judge James Ware
26
27
28 DOCUMENT SUBMITTED UNDER SEAL PURSUANT TO L.R. 79-5
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT - CASE NO. C 11-06714 JW
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page1 of 34
1 TABLE OF CONTENTS
2 PAGE
3I. ISSUES TO BE DECIDED 1
4 II. INTRODUCTION AND BACKGROUND 1
5 III. ARGUMENT 36
A. Legal Standards 37
8B. ATTM Is Not A “Necessary” Party Under Rule 19 3
9 1. ATTM’s Presence In This Litigation Is Not Required ToAccord Complete Relief Among The Existing Parties 4
10
115
123. ATTM Has Not Claimed Any Interest In The Litigation 6
134. ATTM Has No Interest That Might Be Impaired Or Impeded14 By A Judgment Against Apple 8
5. ATTM’s Service Contract Is Not Part Of This Case And The16 Court Will Not Need To Construe It 9
176. ATTM Is Not A Necessary Party Because It Is The Alleged
18 Monopolist 11
19 C. ATTM’S Joinder Is Not Feasible 15
20D. Even If ATTM Were A Necessary Party, It Is Not An “Indispensable”
21 Party Under Rule 19(b) 16
22 E. Plaintiffs Have Adequately Pleaded A Conspiracy To Monopolize Claim 2023
1. Legal Standards Under Rule 12(b)(6) 2124
2. Plaintiffs Have Amply Alleged That ATTM Had A Specific25 Intent To Monopolize The iPhone Voice And Data Aftermarket 2126
3. Plaintiffs Have Adequately Alleged A Cognizable Aftermarket 2327
IV. CONCLUSION 2528
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT - CASE NO. C 11-067143W
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page2 of 34
1 TABLE OF AUTHORITIES
2 PAGE
3 CASESAgron, Inc. v. Lin,
4 No. 03-05872, 2004 U.S. Dist. LEXIS 26605 (C.D. Cal. Mar. 16, 2004) 4
American Title Ins. Co. v. Lace/mv Corp.,6 861 F.2d 224 (9th Cir. 1988) 11
Appling v. State Farm Mut. Auto. Ins. Co.,
8 340 F.3d 769 (9th Cir. 2003) 9, 23
9 Ashcroft v. Iqbal,556 U.S. 662 (2009) 2110
Bell At/antic Corp. v. Twomb/y,550 U.S.544 (2007) 21
12Be/tz Travel Serv., Inc. v. mt ‘1 Air Transport Ass ‘n,13 620F.2d 1360(9thCir. 1980) 4,12
14Brae Asset Funding L. P. v. Applied Fin., LLC,
15 No. C 05-02490 WHA, 2006 U.S. Dist. LEXIS 60855 (N.D. Cal. Aug. 14, 2006) 7
16 Brew v. City ofEmeryville,17 138 F. Supp. 2d 1217 (N.D. Cal. 2001) 7
18 Brocklesby Transp., Div. ofKingsway Transps., Ltd. v. E. States Escort Servs.,
19No. 86-9270, 1990 U.S. Dist. LEXIS 10015 (S.D.N.Y. Aug. 6, 1990) 9
20 Clinton v. Babbitt,180 F.3d 1081 (9thCir. 1999) 6
21
22 Collins v. D.R. Horton, Inc.,505 F.3d 874 (9th Cir. 2007) 9, 23
23Cont ‘1 C’as. Co. v. Am. Nat. Ins. Co.,
24 417 F.3d 727 (7thCir. 2005) 1525
Datel Holdings Ltd. v. Microsoft Corp.,26 712 F. Supp. 2d 974(N.D. Cal. 2010) 25
27 Do/lens v. Target Corp.,
28 No. 11-03265 RMW, 2011 U.S. Dist. LEXIS 139477 (N.D. Cal. Dec. 5, 2011) 14
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT-CASE NO. C 11-06714 JW
— 11 —
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page3 of 34
El Ranco, Inc. v. First Nat ‘1 Bank,406 F.2d 12056 (9th Cir. 1968), cert. denied, 396 U.S. 875 (1969) 4
2Expeditors ml ‘1 of Wash., Inc. v. Expeditors (‘Japan), Lid,
3 224 F.R.D. 661 (W.D. Wash. 2004) 184
First Nat ‘1 Montana Bank v. Fed. Leasing, Inc.,5 110 F.R.D. 675 (D. Mont. 1986) 14
6 Fujitsu Ltd v. Belkin mt ‘l Inc.,782 F. Supp. 2d 868 (N.D. Cal. 2011) 21
8 Georgia v. Pennsylvania R, R.,324U.S.439(1945) 4
10 Grumman Sys. Support Corp. v. Data Gen. Corp.,125 F.R.D. 160 (N.D. Cal. 1988) 4
11Haas v. Jefferson National Bank ofMiami Beach,
12 442 F.2d 394 (5th Cir. 1971) 131,1.3
Howard Hess Dental Laboratories Inc. v. Dentsply mt ‘1, Inc.,14 602 F.3d237 (3d Cir. 2010) 24
15 Hulteen v. AT&T Coip.,
16 498 F.3d 1001 (9th Cir. 2007), rev’don other grounds, 556 U.S. 701 (2009) 23
17 Hunt- Wesson Foods, Inc. v. Ragu Foods, Inc.,
18627 F.2d 919 (9th Cir. 1980) 22
19 In re Apple & AT&TMAntitrust Litig.,No. 07-5152, 2011 U.S. Dist. LEXIS 138539 (N.D. Cal. Dec. 1,2011) 1, 15, 18,20
20
21In re Apple & AT&TMAntitrust Litig.,
596 F. Supp. 2d 1288 (N.D. Cal. 2008) 23,24,2522
In i’e Apple iPhone 3G & 3GS MMS” Mktg. & Sales Practices Lilig.,23 MDL No. 2112, 2012 U.S. Dist. LEXIS 43971 (E.D. La. Mar. 29, 2012) 1724
In re Apple iPhone 3G Prod Liab. Litig.,25 728 F. Supp. 2d 1065 (N.D. Cal. 2010) 17
26 In re Apple iPhone 3G Prod Liab. Litig.,
27 No. MDL C 09-02045(JW), 2011 U.S. Dist. LEXIS 138532 (N.D. Cal. Dec. 1, 2011) 17
28PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISSCASE NO. C 3:1 I-cv-06714 JW
— 111 —
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page4 of 34
In re Korean Air Lines Co. Antitrust Lilig.,No. 07-05107, 2008 U.S. Dist. LEXIS 111722(C.D. Cal. June 25, 2008) 21
2In re Microsoft Corp. Antitrust Litig.,
3 127 F. Supp. 2d728 (D. Md. 2001) 22
4hi re Static Random Access Memory ‘SRAM,i Antitrust Litig.,
5 580 F. Supp. 2d 896 N.D. Cal. 2008) 21,22
6 In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices,and Products Liability Litigation,785 F. Supp. 2d 883 (C.D. Cal. 2001) 14, 15
8In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices,
9 and Products Liability Litigation, No. 10-02151 JVS (FMOx), 2011 U.S. Dist.
10 LEXIS 151360 (C.D. Cal. Nov. 30, 2011) 14,15
11 Kendall v. Visa USA., Inc.,518 F.3d 1042 (9th Cir. 2008) 22
12
13 KnowiedgePlex, inc. v. Placebase, Inc.,No. C 08-4267 JF, 2008 U.S. Dist. LEXIS 103915 (N.D. Cal. Dec. 17, 2008) 10,20
14Kristian v. Comcast,
15 446 F.3d25 (lstCir. 2006) 2016
Laker Airways, Inc. v. British Airways, PLC,17 182F.3d 843 (llthCir. 1999) 12,13,19
18 Lawlor v. Nat. Screen Serv. Corp.,19 349 U.S.322 (1955) 4
20 Makah Indian Tribe v. Verity,
21910 F.2d 555 (9th Cir. 1990) 6, 19
22 McDonald v. Gen. Mill.s Inc.,387 F. Supp. 24 (E.D. Cal. 1974) 14
23
24 Metro. Life Ins. Co. v. 0 ‘Malley,392 F. Supp. 2d 1042 (N.D. Ill. 2005) 15
25Newcai Industries v. Ikon Office Solution,
26 513F.3d l038(9thCir.2008) 11,21,2327
Occidental Petroleum Corp. v. Buttes Gas & Oil Co.,28 331 F. Supp. 92 (C.D. Cal. 1971) 6
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISSCASE NO. C 3:11-cv-06714JW
- iv -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page5 of 34
Oculus Innovative Scis., Inc. v. Nofil Coip.,2007 U.S. Dist. LEXIS 8288 (N.D. Cal. Jan. 25, 2007) 6, 12
Parkiane hosiery Co., Inc. v. Shore,3 439U.S. 322 (1979) 9,23
4PC Specialists, Inc. Micros Systems, Inc.,
5 No. 10-CV-78 JLS (WVG), 2011 U.S. Dist. LEXIS 88088 (S.D. Cal. Aug. 9, 2011) 10
6 Philippines v. Pimentel,553 U.S. 851 (2008) 16
8 Process Specialties, Inc. v. Sematech, Inc.,No. 00-414, 2001 U.S. Dist. LEXIS 26261 (E.D. Ca. Nov. 8, 2001) 22
10 Provident Tradesmens Bank & Trust Co. v. Patterson,390 U.S. 102 (1968) 3, 6
11Robbins Music Corp. v. Alamo Music, Inc.,
12 119F.Supp.29(S.D.N.Y. 1954) 51—,1.)
Schnabel v. Lui,14 302F.3d 1023 (9thCir. 2002) 3
15 School District v. Secretary ofthe United States Department ofEducation,16 584F.3d253 (6thCir. 2009) 10
17 Shakey ‘s, Inc. v. Covait,
18704 F.2d426(9thCir. 1983) 5
19 Shell Oil Co. v. Aetna Cas. & Sur. Co.,158 F.R.D. 395 (N.D. III. 1994) 18
20Shermoen v. United States,
982F.2d1312(9thCir.1992) 622
Sprewell v. Golden State Warriors,23 266 F.3d 979 (9thCir. 2001) 24
24Standard Oil Co. v. Moore,
25 251 F.2d 188 (9th Cir. 1957), cert. denied, 356 U.S. 975 (1958) 4
26 Sulit v. Slep-Tone Entm ‘t,
27 No. 06-00045. 2007 U.S. Dist. LEXIS 89258 (N.D. Cal. Nov. 19, 2007) 18
28PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’ S MOTION TO DISMiSSCASENO. C3:II-cv-06714JW
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page6 of 34
Swartz v. KPMG LLP,476 F.3d 756 (9th Cir. 2007) 12
2Syufy Enterprises v. A inerican Multicinema, Inc.,
3 793 F.2d 990 (9th Cir. 1986) 164
Teamsters Local Union No. 171 v. Keal Driveaway Co.,5 173 F.3d 915 (4th Cir. 1999) 3
6 Temple v. Synthes Corp.,
7 498U.S.5(1990) 12
8 Tex. Indus., Inc. v. RadcflffMaterials, Inc.,451 U.S.630(1981) 5,9
10 Thomas, Head and Greisen Emps. Tiust v. Buster,95 F.3d 1449 (9th Cir. 1996) 6, 7
11US. cx rd. Morongo Band ofMission Indians v. Rose,12 34F.3d901(9thCir.1994) 7,8,19
13US v. Bowen,
14 172 F.3d 682 (9th Cir. 1999) 3,7, 16
15 u v. Socony- Vacuum Oil Co.,16 310U.S.150(1940) 4
17 Universal Grading Serv. v. Ebay, Inc.,
18No. C-09-2755 RMW, 2011 U.S. Dist. LEXIS 25193 (N.D. Cal. Mar. 8,2011) 7
19 Valley Power Sys. v. GE,CV 11010726 CAS (JCx), 2012 U.S. Dist. LEXIS 26228 (C.D. Cal. Feb. 27, 2012) 15
20
21Vasquez v. Hillery,
474 U.S. 254 (1986) 2322
Walker Distrib. Co. v. Lucky Lager Brewing Co.,23 323 F.2d 1(9th Cir. 1963) 424
Wallach v. Eaton Coip.,25 814 F. Supp. 2d 428 (D. Del. 2011) 22
26 William Inglis & Sons Baking Co. v. lIT Cont ‘I Baking Co., Inc.,27 668 F.2d 1014 (9th Cir. 1982) 4
28PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISSCASE NO. C3:II-cv-06714JW
-vi -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page7 of 34
1 STATUTES
Cal. Civ. Code-, § 1654 25
4 Civil Local Rule7-5(b) 7
6 F.R.Civ.P.8(a) 21
7 8(e) 2112(b)(6) 2, 20, 218 12(b)(7) 3,5,619 passim19(a) 3
10 19(a)(1)(B) 6
1119(a)(1)(B)(i) 8I 9(a)(1 )(B)(ii) 9
12 19(a)(2)(ii) 1419(a)(3) 15
13 19(b) 3,6,1619(b)(i) 161419(b)(3) 16
15 19(b)(4) 20
16 28 U.S.C.
17 § 1447(e) 14
18 OTHER AUTHORITIES19
7 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE20 Section 1623. pp. 346-48 (1986) 4
21
22
23
24
25
26
27
28PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISSCASE NO. C 3:1 I-cv-06714 JW
-vii-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page8 of 34
1 Plaintiffs Robert Pepper, Stephen Fl. Schwartz, Edward W. Hayter, Harry Bass, Eric
2 Terrell, James Blackwell, and Crystal Boykin (Plaintiffs”), by and through Plaintiffs’ Interim
3 Class Counsel, hereby oppose the motion by Defendant Apple Inc. (“Apple”) to dismiss Plaintiffs’
4 Consolidated Class Action Complaint (‘Complaint”).
5 L ISSUES TO BE DECIDED
6 A. Is nonparty AT&T Mobility LLC (“ATTM”) a necessary party pursuant to Federal
7 Rule of Civil Procedure 19(a)?
8 B. If so, is ATTM an indispensible party pursuant to Rule 19(b) such that this case
9 must be dismissed in ATTM’s absence?
10 C. Does Count III of the Complaint state a claim against Apple upon which relief can
11 be granted?
12INTRODUCTION AND BACKGROUND
13As the Court is aware, this is the second action arising out of the monopolization of the
14afiermarkets for iPhone voice and data service and for iPhone applications (or “apps”). On
15December 1, 2011, the Court stayed the first action in favor of arbitration under the arbitration
16clause in ATTM’s Wireless Service Agreement (“WSA”). In re Apple & AT&TMAntitrustLitig.,
17No. 07-5152, 2011 U.S. Dist. LEXIS 138539 (N.D. Cal. Dec. 1, 2011) (“Apple/A TTM Litig.”).
18The Court based its decision, in large part, on those plaintiffs’ own express references in that case
to ATTM’s WSA in the complaint and in their class certification motion. Id. at *26..27 & n.22.19
20Because they believe that ATTM’s service contract is entirely unnecessary to proving
21their antitrust claims, these new Plaintjffs have not named ATTM as a defendant and have not
22relied upon its WSA in the new action. Despite recognizing these obvious factual differences,
23Apple blurs the bright-line distinction between the two cases, sometimes treating the new
24Plaintiffs as if they were parties in the prior action — which they were not — and as if they, too, rely
25upon the WSA — which they do not — in a transparent attempt to drag ATTM and its service
contract into this case solely to invoke an arbitration clause and class action waiver that A TTM26
27included in its WSA but that Apple did not include in its own Terms ofService (“TOS”).
28This is Apple’s second bite at moving to dismiss the antitrust claims under Fed. R. Civ. P.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMiSS CONSOLIDATEDCOMPLAINT—CASE NO. C 11-06714 JW
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page9 of 34
1 19 in the new action. Apple moved to dismiss the original Pepper complaint, and Plaintiffs
2 opposed that motion. ECF Nos. 14, 23. After the Court consolidated the Pepper and Terrell
3 actions, Plaintiffs filed their Consolidated Complaint, which was entirely identical to the original
4 Pepper complaint, thus mooting Apple’s original motion. ECF Nos. 25, 26.’
5 Apple’s revamped motion still proves its own flaws. First, Apple still cannot deny that an
6 antitrust co-conspirator is simply not a necessary or indispensable party in this Circuit. More than
7 70 years of binding Supreme Court and Ninth Circuit precedent firmly establishes that a plaintiff
8 injured by an antitrust conspiracy may pursue any conspirator, regardless of his role in the
9 conspiracy, for the entire harm the plaintiff has suffered, and obtain complete relief from him
10 alone. Second, ATIM has not claimed any interest in this action and, even if it had done so,
11 disposition of the action will not impair or impede ATTM’s ability to protect such interests or
12 leave Apple subject to any risk of incurring multiple or inconsistent obligations. ATTM sought to
13 compel arbitration and was quite willing to have the first case proceed in its absence. Since Apple
14 is liable to Plaintiffs for all their damages, ATTM is better off not being a party to this litigation.
15 Third, despite Apple’s revamped argument, Plaintiffs’ antitrust conspiracy theory does not
16 “turn[j on whether consumers provided ‘contractual consent to the five-year Exclusivity
17 Agreement between Apple and ATTM” in A TTM’s WSA. Defendant Apple’s Notice of Motion
18 and Motion to Dismiss; Memorandum of Points and Authorities in Support Thereof (“Apple Br.”)
19 at 5 (quoting Complaint ¶ 8). It is undisputed that the WSA does not provide that consent; no one,
20 not even Apple, ever has argued otherwise. But since there is abundant other evidence that
21 Plaintiffs never consented to the five-year lock-up, Plaintiffs do not need to rely on the WSA to
22 prove their case. Plaintiffs’ antitrust theory will not “turn on” the WSA any more than it will turn
23 on Apple’s own iTunes TOS, which likewise does not provide consent to the five-year lock-up.
24 Apple does not “need” ATTM as a co-defendant to litigate this case, and ATTM does not
25 want to be in court. Apple “needs” ATTM to become a party and move to compel individual
26
27 Following the “dress rehearsal” briefing, Apple revised its motion, dropping somearguments, changing other arguments, and adding an entirely new motion to dismiss Plaintiffs’28 voice and data aftermarket monopolization claim under Rule 12(b)(6).
PLAINTIFFS’ OPPOSiTION TO DEFENDANT APPLE iNC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT CASE NO. C 11-06714 JW
-2-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page10 of 34
I arbitration under its WSA so that Apple can, in turn, also move to compel individual arbitration
2 under ATTM’s contract. Apple’s Rule 12(b)(7) motion is mere pretext for it to avoid billions of
3 dollars of liability to millions of iPhone consumers who were harmed by its anticompetitive
4 conspiracy with ATTM. This is not the purpose of Rule 19.
5 Finally, responding to Plaintiffs’ observation that Apple had not moved to dismiss the
6 Pepper Complaint for failure to state a claim or plead the ATTM WSA as an essential fact the first
7 time around, Apple now argues in its revised motion that “Plaintiffs killed their conspiracy to
8 monopolize theory by dropping ATTM from the case.” Apple Br. at 18. Leaving apart the fact
9 that ATTM wasn’t “dropped” — it never was in this case — Apple’s argument is flat wrong, just as
10 it was when the Court denied its identical motion to dismiss in the prior action. Nothing of
11 consequence has changed to compel a different outcome this time.
12 III. ARGUMENT
A. Legal Standards
Rule 12(b)(7) permits a defendant to assert the “failure to join a party under Rule 19” by
15motion before filing a responsive pleading. Fed. R. Civ, P. 12(b)(7).2 Under Rule 19, the Court
16must first determine whether the absent party is “necessary.” US. v. Bowen, 172 F.3d 682, 688
17(9th Cir. 1999). If the absent party is not necessary, the inquiry ends and the motion to dismiss
18should be denied. Schnabel v. Lul, 302 F.3d 1023, 1031 (9th Cir. 2002) (if absent party is not
19“necessary” under Rule 19(a), “it cannot be indispensable under Rule 19(b)”). If the absent party
20is “necessary,” the Court then must determine whether joinder is feasible. Bowen, 172 F.3d at 688
21(citing Fed. R. Civ. P. 19(a) & (b)). Finally, if joinder is not feasible, the Court must decide
22whether the absent party is “indispensable,” i.e., whether in “equity and good conscience,” the
23action can continue without it. Bowen, 172 F.3d at 688 (citing Fed. R. Civ. P. 19(b)).
B. ATTM Is Not A “Necessary” Party Under Rule 19(a)
A party is “necessary” under Rule 19 only: (1) when complete relief is not possible in the25
262 Dismissal for failure to join an indispensible party “is a drastic remedy ... which should be
27 employed only sparingly.” Teamsters Local Union No. 171 v. Keal Driveaway Co., 173 F.3d 915,918 (4th Cir. 1999) (citing Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102,
28 112 n.lO (1968)).
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLiDATEDCOMPLAINT - CASE NO. C 11-06714 JW
-3-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page11 of 34
1 party’s absence, or (2) when the absent party claims a legally protected interest in the action and
2 the absent party is “so situated that disposing of the action in the person’s absence may: (i) as a
3 practical matter impair or impede the person’s ability to protect the interest; or (ii) leave an
4 existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent
5 obligations because of the interest.” Fed. R. Civ. P. 19(a)(l)(A) & (B).
6 1. ATTM’s Presence In This Litigation Is Not Required ToAccord Complete Relief Among The Existing Parties
ATTM is not needed as a defendant for the Court to fashion complete relief between the8
parties. Under binding Supreme Court and Ninth Circuit law, all antitrust conspirators are liable
fr the acts of their co-conspirators. US. v. Socony- Vacuum Oil Co., 310 U.S. 150, 253-54 (1940)10
(antitrust conspirators are liable for the acts of their co-conspirators); Beltz Travel Serv., Inc. v.11
Int’l Air Transport Ass’n, 620 F.2d 1360, 1367 (9th Cir. 1980) (citing Socony-Vacuum, 310 U.S.12
at 253-54); El Ranco, Inc. v. First Nat ‘1 Bank, 406 F.2d 1205, 1216 (9th Cir. 1968), cert. denied,13
396 U.S. 875 (1969); Standard Oil Co. v. Moore, 251 F.2d 188, 211 (9th Cir. 1957), cert. denied,14
356 U.S. 975 (1958).15
For that reason, “antitrust co-conspirators ... are not indispensable parties to [an] antitrust16
action under Rule 19.” Grumman Sys. Support Coip. v. Data Gen. Corp., 125 F.R.D. 160, 16517
(N.D. Cal. 1988) (emphasis added) (citing 7 WRIGHT & MILLER, FEDERAL PRACTICE &18
PRoCEDURE Section 1623, pp. 346-48 (1986); Lawlor v. Nat. Screen Serv. Corp., 349 U.S. 32219
(1955)). Thus, antitrust plaintiffs may sue only one co-conspirator and can recover all of their20
damages caused by the conspiracy from that lone defendant. Georgia v. Pennsylvania R.R., 32421 -
U.S. 439, 436 (194); William Inglis & Sons Baking Co. v. ITT C’ont’l Baking Co., Inc., 668 F.2d22 . . .1014, 1053 (9th Cir. 1982) (plaintiffs “not required to sue all of the alleged conspirators inasmuch23
as antitrust coconspirators are jointly and severally liable for all damages caused by the24 . . .
conspiracy”) (citation omitted); Walker Distrib. Co. v. Lucky’ Lager Brewing Co., 323 F.2d 1, 825 . .. .(9th Cir. 1963) (plaintiff need not sue all conspirators; he may choose to sue but one ) (citation26
omitted); Agron, Inc. Lin, No. 03-05872, 2004 U.S. Dist. LEXIS 26605, at *40 (C.D. Cal. Mar.27
16, 2004) (“plaintiff is not required to name all co-conspirators when bringing suit”) (citing28
William Inglis & Sons, 668 F.2d at 1052-53). When such “joint and several liability exists, thePLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT - CASE NO. C 11-06714 JW
-4-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page12 of 34
I plaintiff has the privilege of selecting his defendant.” Robbins Music Corp. v. Alamo Music, Inc.,
2 119 F.Supp. 29, 31 n.6 (S.D.N.Y. 1954).
3 If Apple is found liable for conspiring with ATTM to monopolize the voice and data
4 services aflermarket, Plaintiffs can recover 100% of their damages from Apple, and they are not
5 required to name ATTM as a defendant. Moreover, Apple has no claim for indemnification or
6 contribution against ATTM, its co-conspirator. See Tex. Indus., Inc. v. Radclff Materials, Inc.,
7 451 U.S. 630, 638-47 (1981) (federal courts have refused to imply right of contribution among
8 antitrust violators under Sherman Act or Clayton Act).
9 Apple has cited no authority to refute these bedrock principles in either the first or second
10 version of its Rule 12(b)(7) motion. There is no dispute that the Court can accord complete relief
I I among the parties already before it.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
2.
inconsistent obligations.”
Apple’s first argument is that ATTM is a necessary party because
without leaving it “subject to substantial risk of incurring
Apple Br. at 8 (citing Rule 19(a)(1)(B)(ii)). I
discredited.
Apple Br. at 8. Apple’s argument is easily
Apple relies upon the Declaration of Eddie Cue in Support of Defendant Apple Inc.’s
Motion to Dismiss (“Cue Deci.”) (ECF No. 38) and two heavily redacted agreements (which never
have been disclosed to Plaintiffs’ counsel) as the factual support for its argument. “A written
contract must be read as a whole and every part interpreted with reference to the whole.”
Shakey ‘s, Inc. v. Covalt, 704 F.2d 426, 434 (9th Cir. 1983). Since Mr. Cue produced only portions
of the contracts, he prevents the Court from reading them as a whole or interpreting them properly,
PLAINTIFFS’ OPPOSiTION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT - CASE NO. C 11-06714 JW
-5-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page13 of 34
and Apple cannot meet its heavy burden of proof under Rule 12(b)(7).3
2
3
4
6
7
8
9
10 Finally, once the full extent of Apple’s obligations under its agreements with ATTM are
11 established, the Court will be able to enter an order that provides equitable relief to Plaintiffs
12 See Fed. R. Civ. P. 19(b)(2); see also
13 Thomas, Head and Greisen Emps. Trust v. Buster, 95 F.3d 1449, 1460 n.1 8 (9th Cir. 1996) (the
14 ‘district court was able to craft appropriate and meaningful relief in the absence of Westwood”)
15 (citation omitted); Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F. Supp. 92 (C.D.
16 Cal. 1971) (court could shape relief to prevent prejudice to absent parties’ interests).
17 For these reasons, Apple has not proven any genuine risk that it will incur inconsistent
18 obligations to Plaintiffs and to ATTM.
19 3. ATTM Has Not Claimed Any Interest In The Litigation
20 In opposing the first version of Apple’s motion, Plaintiffs noted that ATTM is not a
21 necessary party under Rule 19(a) because it has not “claim[ed] an interest related to the subject of
22 the action.” Fed. R. Civ. P. l9(a)(1)(B); ECF No. 23 at 11. Under binding Ninth Circuit
23 precedent, “[jloinder is contingent ... upon an initial requirement that the absent party claim a
24
__________________________
25 A motion to dismiss under Rule 1 2(b)(7) is fact specific. Makah Indian Tribe v. Verily,910 F.2d 555, 558 (9th Cir. 1990) (citing Provident Tradesmens, 390 U.S. at 118-19). The
26 moving party bears the burden of proof in support of its Rule 12(b)(7) motion. Shermoen v.United States, 982 F.2d 1312, 1317 (9th Cir. 1992) (citing Makah Indian Tribe, 910 F.2d at 558
27 (“moving party has the burden of persuasion in arguing for dismissal”); Oculus Innovative Scis.,Inc. v. Nofil Corp., No. C 06-01686 SI, 2007 U.S. Dist. LEXIS 8288, at *6 (N.D. Cal. Jan. 25,
28 2007) (citing Clinton v. Babbitt, 180 F.3d 1081, 1088 (9th Cir. 1999)).
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DiSMISS CONSOLIDATEDCOMPLAINT - CASE NO. C 11-06714 JW
-6-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page14 of 34
1 legally protected interest relating to the subject matter of the action.” Bowen, 172 F.3d at 689
2 (joinder unnecessary where absent party aware of action and chose not to claim an interest)
3 (emphasis added and omitted). See also Thomas, Head and Greisen, 95 F.3d at 1460 n.18 (absent
4 party not indispensable because it “had not claimed an interest in [the defendant’s] limited
5 partnership interest at the time of the default judgment”).
6 In response to Plaintiffs’ argument, Apple now offers the Declaration of Shari Lahlou
7 (“Lahlou Dccl.”), which purports to set forth ATTM’s “interest” in the litigation.4 Despite the
8 second-hand assertions by Ms. Lahlou, who was counsel for ATTM in the prior action, A TTM has
9 not sought to intervene as a party here, nor has it claimed any interest in this litigation. When, as
10 here, the Court can afford complete relief without the absent party and the absent party itself does
11 not claim an interest in the action, the absent party is not “necessary” under Rule 19.
1 2 It is obvious that ATTM claims no interest in this litigation. In the first case, ATTM
13 moved to compel arbitration long before Apple did. Had ATTM’s motion been successful, the
14 litigation would have proceeded against Apple alone. At the time, ATTM claimed no interest in
15 the litigation; it preferred that it proceed in its absence. As the Ninth Circuit held in US. ex rel.
16 Morongo Band of Mission fndians v. Rose, 34 F.3d 901, 908 (9th Cir. 1994), it is “inappropriate
17 for one defendant to attempt to champion [the] absent party’s interests” when, as here, the absent
18The Court should strike the Declaration of Shari Ross Lahlou (ECF No. 39) pursuant to
19 Civil Local Rule 7-5(b) because it improperly makes various statements concerning ATTM’sknowledge, intent and motive ( 2-3) without providing a proper foundation. Ms. Lahlou is not
20 an ATTM witness — she is outside counsel for ATTM in another case. As such, she is in noposition to claim first-hand, personal knowledge of ATTM’s interests or intentions here.21 Whatever she knows about ATTM’s interests and intentions came from inadmissible hearsay
,,,, statements made to her by ATTM personnel. “It is not sufficient for the declarant to state that heor she has personal knowledge of the facts stated. Rather, the declarant must state facts showing
23 his or her connection to the matters stated, establishing the source of the information.” Brew v.City of Emeiyville, 138 F. Supp. 2d 1217, 1227 cN.D. Cal. 2001) (striking declaration). Despite
24 claiming personal knowledge of ATTM’s interests and intent, Ms. Lahlou has not established thesource of her personal knowledge. Ms. Lahlou’s other statements (J 2) are merely her improper
25 conclusions, opinions, and legal argument. See Universal Grading Serv. v. Eba) Inc., No.C-09-2755 RMW, 2011 U.S. Dist. LEXIS 25193 (N.D. Cal. Mar. 8, 2011) (striking declaration
26 pursuant to Civil Local Rule 7-5(b) because it “contains numerous legal conclusions andarguments and lacks proper foundation.”); Brae Asset Funding, L.P. v. Applied Fin., LLC, No. C
27 05-02490 WHA, 2006 U.S. Dist. LEXIS 60855, at *16 (N.D. Cal. Aug. 14, 2006) (strikingdeclaration as “full of legal argument and conclusions by the hearsay declarant ... an attorney for
28 [the defendant], in violation of Civil Local Rule 7-5(b)”).
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT CASE NO. C 11-06714 JW
-7-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page15 of 34
I party “did not feel that it was necessarily in his interest to remain a party in this action.”
2 Nothing has changed since then. ATTM still does not wish to defend antitrust claims in
3 this Court (or any other). If it is joined, ATTM undoubtedly will immediately move to compel
4 arbitration in the new case just as it did in the first case. In Rose, the Ninth Circuit explained that
5 the absent party’s “voluntary dismissal indicates that [hel himself did not feel that it was
6 necessarily in his interest to remain a party in this action. This is the best evidence that fhisJ
7 absence would not impair or impede his ability to protect his interests.” Rose, 34 F.3d at 908
8 (emphasis added). In exactly the same way, the “best evidence” that ATTM’s absence will not
9 impair or impede its ability to protect its own interests is: (i) its decision not to seek to intervene in
10 this case, and (ii) its effort to be dismissed from the prior litigation in favor of arbitration.
11 Apple is not genuinely concerned with ATTM’s ability to protect its interests. Rather,
12 Apple is trying to force ATTM to be joined as a defendant to defend claims that have not been
13 asserted against ATTM in this case before this Court (where ATTM does not want to be) in order
14 to invoke the arbitration clause in ATTM’s WSA a defense which Apple does not believe it can
15 assert in ATIM’s absence. See Apple Br. at 2 n.2 (if ATTM is joined as a defendant, “Apple will
16 file a motion to compel arbitration of Plaintiffs’ claims”). As in Rose, Apple’s real motive here is
17 securing the dismissal of the action against it, not in protecting ATTM. Rose, 34 F.3d at 908 n.6
18 (“Rose is only interested in securing dismissal of the action against him, not in joining Miller.”).
19 4. ATTM Has No Interest That Might Be Impaired Or ImpededBy A Judgment Against Apple
20Because ATTM has not claimed any interest in this litigation, the Court can end the
21 . . . . . .“necessary party” inquiry there. Even if All M had claimed an interest in this action, however, it22
still would not be a necessary party because the litigation will not impair or impede ATTM’s23
ability to protect any interest cognizable under Rule 19. See Fed. R. Civ. P. 19(a) (1)(B)(i). If24
ATTM is found in this case to have conspired with Apple. neither Plaintiffs nor any other iPhone25
consumer will be able to use that finding to prejudice ATTM in a separate action or arbitration.26
Neither resjudicata nor collateral estoppel can be used against ATTM in a subsequent proceeding27
28
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT—CASE NO. C 11-06714 JW
-8-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page16 of 34
1 based upon this litigation because ATTM is not a party to this litigation.3 Furthermore, as
2 explained in Section 1I1.B.l above, if Apple is found liable to Plaintiffs, it has no right of
3 contribution or indemnification against ATTM, so it will not be able to use an adverse finding here
4 in a claim against ATTM. See Tex. Indus., 451 U.S. at 638-47 (neither Sherman Act nor Clayton
5 Act confers right of contribution among antitrust violators).
6 Rather than being impeded or impaired, ATTM’s interests are better served by not being a
7 defendant in this action since Plaintiffs will recover all of their damages from Apple and ATTM
8 will essentially become immune — which certainly explains why it has not sought to intervene.
9 Nor will ATTM’s absence leave Apple subject to any risk of incurring multiple or
10 inconsistent obligations. See Fed. R. Civ. P. 19(a) (l)(B)(ii). “One of the purposes of joinder
11 under Rule 19 is to protect the defendant from multiple suits by joining all parties whose claims
12 are necessary for a full adjudication on the merits of a particular claim.” Brocklesby Transp., Div.
13 ofKingsway Transps., Ltd v. E. States Escort Servs., No. 86-9270, 1990 U.S. Dist. LEXIS 10015,
14 at *5 (S.D.N.Y. Aug. 6, 1990). As Plaintiffs have explained in Section III.B.2 above,
15
16 Additionally, Apple would have no liability to ATTM if Apple alone is held liable to these
17 Plaintiffs and the Class in this action. Apple is not more liable in ATTM’s absence, nor would it
18 be less liable in ATTM’s presence. Indeed, even after Plaintiffs noted that Apple did not contend
19 the first time around that it might suffer any prejudice from ATTM’s absence, Apple still has not
20 done so in its revamped motion. Thus, Apple concedes that this factor is inapplicable.
21 5. ATTM’s Service Contract Is Not Part Of This Case And TheCourt Will Not Need To Construe It
22In opposing Apple’s first motion to dismiss, Plaintiffs noted that Apple never explained (or
23even tried to explain) how a contract that is not even mentioned in a Complaint can possibly be
24“key to the case.” ECF No. 23 at 16. Apple rephrased its argument this time:
25
26 Traditional res judicata and collateral estoppel require the same parties or their privies inboth actions. Parkiane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 327 (1979). Even offensive and
27 defensive non-mutual collateral estoppel require that the party being estopped must have litigatedand lost the issue in a prior action. Id.; Collins v. D.R. Horton, Inc., 505 F.3d 874, 882 (9th Cir.
28 2007); Appling v. State Farm Mul. Auto, Ins. Co., 340 F.3d 769, 775 (9th Cir. 2003).
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT - CASE NO. C 11-06714 .1W
I
-9-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page17 of 34
i [6 Apple Br. at 9. However, as Apple still admits, ATTM and its
2 service contract are not part of this case. See Apple Br. at 1 (Plaintiffs “dropp[ed] ATTM as a
3 named defendant” and have “not referr[ed] to the WSA by name”). In its revamped motion, Apple
4 still has not explained (or even tried to explain) how a contract that is not even mentioned in the
5 Complaint can possibly form the basis for Plaintiffs’ claims. It simply cannot.
6 At the core of Apple’s argument is its new assertion that “Plaintiffs have asked this court
7 to adjudicate the legality of the WSA ... under the antitrust laws.” Apple Br. at 9. Apple’s
8 assertion is completely baseless. Nowhere have Plaintiffs asked the Court to determine the
9 legality of ATTM’s WSA or invalidate it in any way — under the antitrust laws or otherwise.
10 Apple has not cited a paragraph, a sentence, or even a phrase from the Complaint saying or
ii implying as much, and Plaintiffs are confident that Apple never will be able to do so.
12 Apple also argues that a contract cannot be “interpreted” without all the parties to the
13 contract present. Apple Br. at 9. The cases Apple cites for that broad proposition, however, do
14 not support Apple’s argument that ATTM is either necessary or indispensable in this case. For
15 example, in PC Specialists, Inc. v. Micros Systems, Inc., No. 10-CV-78 JLS (WVG), 2011 U.s.
16 Dist. LEXIS 88088, at *7..8 (S.D. Cal. Aug. 9, 2011) (citations omitted), the Southern District held
17 only that all parties to a contract must be present “in actions to void a contract and in actions to
18 determine rights and obligations under a contract.” Here, Plaintiffs do not seek to void ATTM’s
19 WSA, nor do they seek to determine any disputed rights or obligations under it.7
20
__________________________
216
22 To the extent Apple’s argument addresses the Exclusivity Agreement, it isfundamentally inconsistent with the well-settled law (discussed above) that all the parties to an
23 antitrust conspiracy — such as the Exclusivity Agreement — need not be joined as co-defendants.Another case cited by Apple, KnowledgePlex, Inc. v. Placebase, Inc., No. C 08-4267 iF,
2008 U.S. Dist. LEXIS 103915 (N.D. Cal. Dec. 17, 2008), was a breach of contract case that did25 not involve joint tortfeasors or co-conspirators and the parties to the contract were not prohibited
from seeking contribution from one another, as ATTM and Apple are here. Apple also cites a26 concurring opinion in School District v. Secretary of the United States Department of Education,
584 F.3d 253 (6th Cir. 2009), for the unremarkable statement that “all parties to a contract are27 necessary in an action challenging its validity or interpretation,” but the majority opinion held
that the absent parties were not necessary parties because they declined to participate in the28 proceedings, just as ATTM has here. Id. at 303 (emphasis added).
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT CASE NO. C 11-06714 JW
- 10-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page18 of 34
1 Because ATTM’s service contract is not pertinent to Plaintiffs’ claims, the Court will not
2 be required to construe or interpret it. Apple argues that ATTM’s agreement relates to whether
3 these Plaintiffs agreed to the five-year lock-up in the voice and data aftermarket. Apple Br. at 4
4 and 58 Neither Apple nor ATTM ever have contended that iPhone purchasers contractually
5 agreed in ATTM’s WSA to give them that monopoly power. To prove the negative fact — that
6 they did not consent to a five-year restraint in the aftermarket — Plaintiffs will not need to rely
7 upon ATTM’ s WSA, since Apple (and A TTM) already judicially admitted in the prior litigation
8 that all iPhone customers were required sign a two-year service contract to obtain A TTM
9 wireless service.9 See Declaration of Rachele R. Rickert In Support Of Plaintiffs’ Opposition To
10 Defendant Apple Inc.’s Motion To Dismiss Consolidated Complaint (“Rickert Dccl.”), Ex. L,
11 ¶ 30; Id., Ex. M, ¶ 30, 79. ATTM also judicially admitted that “iPhone customers incur a $175
12 Early Termination Fee if they cancel their ATTM service plan prior to expiration of their
13 two-year service agreement.” Id,, Ex. L, ¶ 83 (emphasis added).1°
14 Even if Apple (and ATTM) had not judicially admitted the relevant terms of ATTM’s
15 WSA, Plaintiffs still would not and need not rely on it because all those terms were disclosed and
16 readily available on ATTM’s website throughout the Class Period. See Rickert Dccl., Exs. A-K.
17 Despite Apple’s fanciful argument, the Court will not need to refer to ATTM’s service
18 contract, let alone interpret or construe it, in this case.
19 6. ATTM Is Not A Necessary Party Because It Is The AllegedMonopolist
20Apple again argues that ATTM is necessary because it (rather than Apple) is “the alleged
21monopolist” whose participation in the voice and data service aftermarket is challenged in the
22
23 8 Under Newcal Industries v. Ikon Office Solution, 513 F.3d 1038, 1048 (9th Cir. 2008), the24 relevant question is whether Apple and ATTM possessed “market power that arises solely from
contractual rights that consumers knowingly and voluntarily give to the defendant.”25 A party’s “statement in an answer is a judicial admission ... which ha[s] the effect of
withdrawing a fact from issue and dispensing wholly with the need for proof of the fact.”26 American Title Ins. Co. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988) (citation omitted).
27 10 The same is true of Plaintiffs’ allegations regarding excessive international roamingcharges. Like the two-year term and the termination fee, those charges were spelled out in detail
28 in ATTM’s website throughout the Class Period. See Rickert Dccl., Exs. N-R.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT — CASE NO. C 11-06714 JW
-11-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page19 of 34
1 litigation. Apple Br. at 2 & 10. No authority supports Apple’s argument. To the contrary, Ninth
2 Circuit precedent firmly establishes that an antitrust plaintiff can recover all of his damages from a
3 single conspirator regardless of the defendant’s role in the conspiracy. See Beltz, 620 F.2d at
4 1366-67 (“If Beltz can establish the existence of a conspiracy in violation of the antitrust laws and
5 that appellees were a part of such a conspiracy, appellees will be liable for the acts of all members
6 of the conspiracy in furtherance of the conspiracy, regardless of the nature of appellees’ own
7 actions”) (emphasis added). “Participation by each conspirator in every detail in the execution
8 of the conspiracy is unnecessary to establish liability.” Swartz v. KPMG LLP, 476 F.3d 756, 764-
9 65 (9th Cir. 2007) (quoting Beltz, 620 F.2d at 1367). That ATTM was the participant in the
10 wireless service aftermarket is legally irrelevant to Apple’s liability.
11 In response to this overwhelming authority, which Plaintiffs cited in their opposition to
12 Apple’s first motion, Apple now baldly asserts (still citing no contrary authority) that “Rule 19
13 and cases applying it are clear that, for a ‘conspiracy to monopolize’ claim under Section 2, the
14 alleged monopolist itself must be joined.” Apple Br. at 11. No case has ever held a monopolist is
15 a necessary or indispensable party based on the technical differences between Section 1 and
16 Section 2 of the Sherman Act. Indeed, Ninth Circuit precedent undermines Apple’s nonsensical
17 argument: Betz was an action under Sections 1 and 2 of the Sherman Act, and the Ninth Circuit
18 drew no distinction between the claims in holding each conspirator fully liable for the acts of all
19 the co-conspirators regardless of the nature of its own actions. Beltz, 620 F.2d at 1366-67.
20 Laker Airways, Inc. v. British Airways, PLC, 182 F.3d 843, 847-48 (11th Cir. 1999), which
21 Apple cites in support of its supposed “active participant” exception to the well-established rule
22 that antitrust co-conspirators are not necessary or indispensable, is an outlier that has not been
23 accepted in the Ninth Circuit. As Apple concedes, the Ninth Circuit recognizes no such
24 exception to the general rule. Apple Br. at 11 n.5 (citing Oculus, 2007 U.S. Dist. LEXIS 8288, at
25 *7..8). In Oculus, Judge Illston denied a Rule 19 motion because, according to the Advisory
26 Committee Notes to Rule 19(a), “a tortfeasor with the usual “joint-and-several” liability is merely
27 a permissive party to an action against another with like liability.” Oculus, 2007 U.S. Dist.
28 LEXIS 8288, at *7 (emphasis added) (citing Temple v. Synthes Corp., 498 U.S. 5, 7 (1990)). In an
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT CASE NO. C 11-06714 JW
- 12 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page20 of 34
1 antitrust case such as this, where one co-conspirator is fully liable for all the harm caused by the
2 conspiracy regardless of its degree of participation, it makes no difference whether the absent
3 party was the “active participant” or not.
4 Apple’s “active participant” argument also overlooks the fact that it, too, was an active
5 participant in the conspiracy to monopolize the voice and data aftermarket. For example,
6 Plaintiffs allege that Apple not only withheld the unlock codes from iPhone consumers who tried
7 to switch carriers (Complaint 3, 51, 55, 59), it also programmed the iPhones to stop working if
8 they were used on any wireless network other than ATTM’s (Complaint ¶J 3, 8, 44-47, 55, 59).”
9 Furthermore, the Eleventh Circuit recognized that its decision in Laker Airways was driven
10 by the unique facts of that case. After noting the widely held view that joint tortfeasors do not
11 need to be joined in one lawsuit, the Eleventh Circuit concluded that the particular non-party in
12 that case, a company (“ACL”) appointed by the British government to coordinate take-off and
13 landing slots at British airports, had interests that were “more significant than those of a routine
14 joint tortfeasor.” Laker Airways. 182 F.3d at 848. Because of that unique fact, the Eleventh
15 Circuit determined that ACL’s continued existence, which was predicated on its “neutrality” in
16 coordinating the airport “slots,” was in jeopardy.’2 The court determined that ACL was a
17 necessary party not because it was the “active participant,” but rather because an adverse decision
18 in the case might put it out of business. A judgment against Apple poses no similar existential
19 threat to ATTM, whose interest in this case is no greater than that of a “routine joint tortfeasor.”
20 None of the other cases cited by Apple is any more relevant. Haas v. Jefferson National
21 Bank ofMiami Beach, 442 F.2d 394 (5th Cir. 1971), is easily distinguished because it was not an
22 antitrust case and it did not involve joint tortfeasors. The named defendant in Haas risked
23 “incurring double, multiple, or otherwise inconsistent obligations” if the non-party shareholder,
24 whose potential claim competed with that of the plaintiff, were not joined. Id. at 398 (quoting
25
_________________________
ATTM also is not a necessary party because it is not alleged to have conspired with Apple26 to monopolize the applications aftermarket. Complaint ¶J 85-95. Apple alone is alleged to have27
monopolized that aftermarket. Apple does not argue otherwise.12 British law mandates “that the Secretary of State for Transport withdraw its approval of an
28 appointed coordinator if its behavior is not neutral.” Laker Airways, 182 F.3d. at 848.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT - CASE NO. C 11-06714 JW
- 13 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page21 of 34
1 Fed. R. Civ. P. 1 9(a)(2)(ii)). ATTM has no competing claim against Apple. Moreover, since
2 Apple and ATTM have no contribution or indemnification rights, Apple does not face any risk of
3 double or multiple exposure or inconsistent obligations (nor does Apple claim to).’3
4 Dollens v. Target Corp.. No. 11-03265 RMW, 2011 U.S. Dist. LEXIS 139477 (N.D. Cal.
5 Dec. 5, 2011), a slip-and-fall case where the plaintiff sought to amend her complaint to substitute a
6 Target employee as a “Doe” defendant, was decided under 28 U.S.C. § 1447(e), not under Rule
7 19. As Judge Whyte noted, “[wjhile [the employeel may not be strictly necessary as a party,
8 however, courts have found that amendment under § 1447(e) is a less restrictive standard than
9 Rule 19 and joinder may be permitted where the proposed defendant is closely related to the cause
10 of action.” Id. at *4 (emphasis added) (citation omitted). The Court permitted the plaintiff to join
11 the employee under the relaxed standard. Id. at *7 Plaintiffs are not seeking to join ATTM here,
12 and Apple has not moved under section 1447(e). The Court should not consider Apple’s Rule 19
13 motion under that less restrictive, inapplicable standard.
14 Finally, the Toyota decisions, In re Toyota Motor Coip. Unintended Acceleration
15 Marketing, Sales Practices, and Products Liability Litigation, 785 F. Supp. 2d 883 (C.D. Cal.
16 2001), and In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, and
17 Products Liability Litigation, No. 10-02151 JVS (FMOx), 2011 U.S. Dist. LEXIS 151360 (C.D.
18 Cal. Nov. 30, 2011), arose in a product liability and deceptive marketing case, not an antitrust
19 case. The defendants, domestic Toyota entities, moved to dismiss in the absence of Toyota’s
20 foreign subsidiary or affiliated entities (over which the court lacked jurisdiction). The court found
21
_______________________
McDonald v. Gen. Mills, Inc., 387 F. Supp. 24 (E.D. Cal. 1974) and First Nat ‘1 Montana22 Bank v. Fed. Leasing, Inc., 110 F.R.D. 675 (D. Mont. 1986), are not antitrust cases and are23 distinguishable for the same reason. In McDonald, an employment discrimination case, the absent
party was necessary to “avoid inconsistent relief or sole responsibility” on the part of the24 defendant. 387 F. Supp. at 38. The antitrust laws allow Apple alone to be held liable to Plaintiffs
for the entire harm caused by the conspiracy, and a judgment against it will satisfy Plaintiffs’25 claims without any risk of an inconsistent adjudication against ATTM. Likewise, in First Nat ‘1
Montana Bank, the absent party (another shareholder whose potential claim competed with the26 plaintiff shareholder’s claim) was found to be necessary in a breach of contract case to prevent the
risk that the defendant would shoulder all of the liability “in the event that an indemnity action is27 unsuccessful.” 110 F.R.D. at 678. Since there is no right of indemnification between antitrust
conspirators like Apple and ATTM, and because ATTM has no competing potential claim against28 Apple, those concerns are inapposite here.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT—CASE NO. C I 1-06714 JW
- 14-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page22 of 34
1 the foreign entities were necessary parties because they, not the domestic defendants, were
2 responsible for the design, manufacture, repair, and marketing of the allegedly defective vehicles.
3 Toyota, 785 F. Supp. 2d at 905; Toyota, 2011 U.S. Dist. LEXIS 151360, at *160..61. The court
4 could not grant the plaintiffs complete relief because the domestic parent could not be held liable
5 for the actions of the absent foreign subsidiary or affiliates. Toyota, 785 F. Supp. 2d at 906.
6 There is no such corporate relationship between Apple and ATTM. Because Apple can be held
7 liable to Plaintiffs for the full amount of their damages and has no claim for indemnification or
8 contribution against ATTM, the Court can grant complete relief between the parties already before
9 it)4
10 Since ATTM is not a necessary party, Apple’s motion should be denied.
11 C. ATTM’S Joinder Is Not Feasible
12 Even if ATTM were a necessary party, it cannot be joined because it will immediately
13 move to compel arbitration of the claims against it. Since the Court granted a motion to compel
14 arbitration by ATTM in the prior case, Apple/AT&TMLitig., 2011 U.S. Dist. LEXIS 138539, it is
15 practically certain that it would compel arbitration as to ATTM in this case as well. Thus, if
16 ATTM were joined as a defendant, it would be dismissed for improper venue. See Cont ‘1 Cas. Co.
17 v. Am. Nat. Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005) (case dismissed for improper venue
18 because forum selection clause in contract required arbitration outside of district); Valley Power
19 Sys. v. GE, CV 11010726 CAS (JCx), 2012 U.S. Dist. LEXIS 26228 (C.D. Cal. Feb. 27, 2012)
20 (same); Metro. Life Ins. Co. v. O’Malley, 392 F. Supp. 2d 1042, 1045 (N.D. Ill. 2005) (granting
21 motion to dismiss for improper venue under Rule 12(b)(3) because proper venue was before
22 arbitrator). Because ATTM objects to being sued in court and insists that claims against it must be
23 individually arbitrated (and the Court has agreed), ATTM’s joinder is not feasible under Rule 19
24 (a)(3).
25
26
27 In Toyota, the district court also was concerned about concurrent litigation pending againstone of the absent foreign entities. Toyota, 2011 U.S. Dist. LEXIS 151360, at *163..64 n.16. There
28 is no separate class action now pending against ATTM asserting these antitrust claims.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT-CASE NO. C 11-06714 JW
- 15 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page23 of 34
D. Even If ATTM Were A Necessary Party, It Is Not An “Indispensable”1 Party Under Rule 19(b)
2 If the Court concludes that ATTM is a necessary party, because it cannot be joined as a
3 defendant, the Court must also consider whether it is “indispensable” under Rule 19(b). Because
4 “equity and good conscience” do not prevent this action from continuing without ATTM, it is not
5 “indispensable.” See Bowen, 172 F.3d at 688 (citing Fed. R. Civ. P. 19(b)).
6 First, as Plaintiffs have shown in Section III.B.4 above, any judgment against Apple
7 rendered in ATTM’s absence will not prejudice ATTM or impair its interests since it cannot be
8 used against ATTM in any subsequent court or arbitration proceeding. Apple cannot seek
9 contribution from ATTM in this antitrust case. Nor would Plaintiffs or any other iPhone
10 consumer be able to use an adverse judgment in this case against ATTM in a subsequent case
11 because: (i) resjudicata and collateral estoppel both require ATTM to have already litigated and
12 lost in this action before any adverse judgment here can be used against it in a subsequent action;
13 and (ii) Plaintiffs can recover all of their damages from Apple since Apple and ATTM are jointly
14 and severally liable. This latter reason is also why a judgment against Apple in ATTM’s absence
15 would be fully adequate.15 See Section III.B.1 above. Thus, a judgment rendered in ATTM’s
16 absence will not prejudice ATTM or the existing parties in the least and will be fully adequate.
17 See Fed. R. Civ. P. 19(b) (1) and (3).
18 Apple has not identified any genuine risk of prejudice to ATTM absent its joinder. Its
19 contention that ATTM “is a contracting party” and therefore needs to be joined is a red herring.
20 As demonstrated in Section llI.B.3 above, ATTM’s service contract is not in issue in this case,
21 these Plaintiffs do not seek to enforce or invalidate it, its terms are not in dispute, and, in any
22 event, ATTM already has admitted to what the contract says.
23
__________________________
24 Philippines v. Fimentel, 553 U.S. 851 (2008), cited by Apple, is not an antitrust case, doesnot involve joint tortfeasors or co-conspirators, and is factually unique because it involved a
25 human rights class action implicating numerous complex issues such as sovereign immunity.Apple’s reliance on Syufy Enteiprises v. American Multicinema, Inc., 793 F.2d 990 (9th Cir.
26 1986), is misplaced. The Ninth Circuit held that Syufy could not be liable for conspiring withunnamed co-conspirators to monopolize the film distribution market because there was no
27 evidence that any of the unnamed co-conspirators “had at least some awareness that the underlyingconduct was anticompetitive or monopolistic.” Id. at 1001. Syuj5’ did not involve Rule 19 and it
28 did not discuss “necessary” or “indispensable” parties at all.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT— CASE NO. C 11-06714 JW
- 16 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page24 of 34
1 In its reworked motion. Apple now argues that ATTM is indispensable because Plaintiffs’
2 antitrust claims against Apple “are ‘intertwined’ or ‘inextricably tied’ to claims implicating
3 ATTM.” Apple Br. at 6 (citing In re Apple iPhone 3G Prod. Liab. Litig., 728 F. Supp. 2d 1065,
4 1076 (N.D. Cal. 2010) (“iPhone 3G”)). Apple’s new argument misstates the holding in iPhone
5 3G. In that case, the Court did note that “the claims alleged against Defendant Apple are
6 inextricably tied to the claims alleged against Defendant ATTM.” Id. Flowever, the Court found
7 that ATTM was indispensable for a different reason: “because any adjudication of claims as to
8 Defendant Apple would necessarily require a determination of the sufficiency of ATTM’s 3G
9 network infrastructure.” Id. (emphasis added). The sufficiency of ATTM’s 3G network is not in
10 dispute here, making the analysis in iPhone 3G irrelevant.16 And, importantly, ATTM’s service
11 contract was irrelevant to the Court’s analysis of whether ATTM was an indispensable party in
12 that case, just as it is irrelevant here.
13 In In re Apple iPhone 3G & 3GS “MMS’ Mktg. & Sales Practices Litig., MDL No. 2112,
14 2012 U.S. Dist. LEXIS 43971, at *10 (E.D. La. Mar. 29, 2012) (“iPhone MMS”), also cited by
15 Apple in support of its reworked argument, the district court concluded it was required to interpret
16 ATTM’ s WSA not to adjudicate the plaintjffs’ claims, but rather to resolve Apple’s pending
17 motion to compel arbitration. Here, of course, there is no pending motion by Apple to compel
18 arbitration under ATTM’s WSA. iPhone MMS should not be interpreted to allow Apple to
19 “bootstrap” its way out of court on the basis of a motion it has not even made.’7
20
__________________________
21 Apple also argues that the Court confirmed its “analysis of the intertwined nature of theclaims against Apple and ATTM” in a subsequent decision in that case. Apple Br. at 6 (citing
22 iPhone 3G, No. MDL C 09-02045 JW, 2011 U.S. Dist. LEXIS 138532, at *..fl (N.D. Cal. Dec.1, 2011). The Court did not discuss the “intertwined nature of the claims against Apple and
23 ATTM” at all there. Rather, the Court merely repeated its prior finding that the plaintiffs’ claimsin that case “necessarily require a determination of the sufficiency of ATTM’s 3G network
24 infrastructure.” Id. at *10.
25 The differences between this case and the prior action are far more than mere “cosmeticmodifications.” Apple Br. at 7 (citing iPhone MMS at *29). These new Plaintiffs painstakingly
26 avoid any suggestion that (i) they are relying upon A TTM’s service contract to assert theirantitrust claims against Apple, (ii) their claims against Apple are intertwined with A TTM’s service
27 contract, or (iii) they will invoke A TTM’s service contract to certify their antitrust claims againstApple. Apple’s speculation that these Plaintiffs “have revealed that they intend to rely on the
28 WSA in seeking class certification,” Apple Br. at 15, is an unsupported and unjustified exercise in
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT—CASE NO. C 11-06714 JW
- 17-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page25 of 34
1 Moreover, the Court’s determination that the claims asserted against Apple in the prior
2 action were “intertwined” with ATTM’ s WSA because the plaintiffs in the prior action chose to
3 rely upon the contract throughout that litigation, Apple/A T&TM Litig., 2011 U.S. Dist. LEXIS
4 138539, at *25, 26, 27 n.22, has no bearing here. These new Plaintiffs in no way rely upon the
5 WSA in the new case. Because these Plaintiffs have chosen not to rely upon ATTM’s service
6 contract, their claims are not intertwined with ATTM or its WSA.
7 Apple’s argument that Plaintiffs’ claims are “explicitly tied to whether consumers gave
8 ‘contractual consent” to the aftermarket restrictions in ATTM’s service contract is also factually
9 flawed. Apple Br. at 7. For the reasons discussed in Section III.B.5 above, Plaintiffs need not rely
10 upon the WSA to prove they did not consent to the restraint on their conduct in the aftermarket.
11 Apple and ATTM have judicially admitted the two-year term of the WSA, which was prominently
12 displayed on ATTM’s website throughout the Class Period, as was Plaintiffs’ right to terminate
13 service with ATTM before the two-year term expired. See Rickert Dccl., Exs. A-M.18
14
___________________________
misdirection. That Apple wishes to burden these Plaintiffs in this new case unfairly witharguments made by different plaintiffs in the prior action is totally refuted by the record.
1618 The other cases Apple cites also do not support its argument. In Sulit v. Slep-Tone Entm ‘t,No. 06-00045, 2007 U.S. Dist. LEXIS 89258 (N.D. Cal. Nov. 19, 2007), a breach of contract and
17 copyright dispute, the plaintiff was the founder and chief technology officer of the company hiredby the defendant to develop software. The court found that the company was indispensable
18 because it was the party with whom the defendant had contracted and, in its absence, the defendantmight be exposed to a risk of inconsistent obligations if it later sought to enforce its rights against
19 the defendant. Id. at *8. Apple has not claimed that it might be liable to ATTM and, for thereasons discussed in Section III.B.2 above, Apple has no risk of an inconsistent obligation to
20 ATTM here.
21 In Expeditors mt ‘1 of Wash., Inc. v. Expeditors (Japan), Ltd., 224 F.R.D. 661, 665 (W.D.Wash. 2004), also a breach of contract action, the court found a signatory to an asset purchase
22 agreement who was the recipient of the assets in question had to be joined as a party because“nothing would prevent it from bringing another action against Defendant under the same asset
23 purchase agreement ... and this is precisely what Fed. R. Civ. P. 19 was intended to prevent.” Asexplained in Sections III.B. I and IIJ.B.2 above, ATTM cannot sue Apple on a related claim in
24 another action if it is not joined as a party here. In Shell Oil Co. v. Aetna Cas. & Sur. Co., 158F.R.D. 395 (N.D. Ill. 1994), an action to declare rights under stacked insurance policies, the court
25 found that the carriers with underlying coverage (whose policies had to be exhausted before thedefendants’ policies “kicked in”) were indispensable parties because the court had to determine
26 their obligations to adjudicate the excess coverage obligations of the defendant carriers. As
27discussed in Section III.B.1 above, Apple’s liability is not dependent upon ATTM’s liability, andthe Court need not determine that ATTM is liable to these Plaintiffs before holding Apple liable to
28 them.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT— CASE NO. C 11-06714 JW
- 18 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page26 of 34
1 Apple’s argument that ATTM is “indispensable” because “any injunction would need to
2 prevent ATTM from selling locked iPhones” is sheer nonsense. Apple Br. at 14. Cellular phones
3 are regularly sold “locked,” and unlock codes are routinely provided to purchasers after the sale is
4 complete. Also, an injunction compelling Apple to release the unlock codes to all purchasers will
5 remedy prior locked iPhone sales by ATTM as well as by Apple.19
6 Apple’s argument that because ATTM is “the alleged monopolist at the center of this
7 case,” an adverse finding regarding ATTM’s scienter in this action would prejudice ATTM or
8 impair its interests ignores the inability of anyone, including Apple, to use such a finding against
9 ATTM in any subsequent action or arbitration since ATTM is not a party here and Apple cannot
10 seek contribution. See Section III.B.2 above. Finally, Apple’s vague, conclusory assertion that an
11 adverse judgment here would harm ATTM’s “business interests” is unavailing.20 Apple does not
12 explain how ATTM’s business interests would be harmed or even attempt to make any showing
13 that such harm is likely. As explained in Section 1TI.B.1 above, the Eleventh Circuit’s Laker
14 Airways case involved unique facts that are not present here; a judgment against Apple will not
15 threaten ATTM’s existence. See Laker Airways, 182 F.3d at 848.
16 ATTM’s decision to seek dismissal in favor of arbitration in the prior action and the near
17 certainty that it would do so again if joined here is conclusive evidence that it has no business
18 interest to protect by becoming a party in this action. Rose, 34 F.3d at 908 (party’s voluntary
19 dismissal is “best evidence that [hisi absence would not impair or impede his ability to protect his
20 interests”).
21 Any conspirator theoretically could experience the same vague, generalized business harm
22 that Apple presumes ATTM might suffer here whenever a plaintiff successfully sues its
23 co-conspirator under the antitrust laws. Yet, as explained fully in Section III.B.1 above, an
24 antitrust plaintiff has an absolute right to sue only one conspirator for all the harm caused by the
25
__________________________
19 Since 2009, iPhones have been sold at major retailers such as Radio Shack and Walmart.26 Tellingly, Apple has not argued that those retailers are also “indispensable” parties, even though
27its flawed rationale would apply to them as well.20 To be protected under Rule 19, an interest “must be more than a financial stake, and more
28 than speculation about a future event.” Makah Indian Tribe, 910 F.2d at 558.
PLAINTIFFS’ OPPOSiTION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT—CASE NO. C 11-06714 JW
- 19-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page27 of 34
1 conspiracy. KnowledgePlex Inc., 2008 U.S. Dist. LEXIS 103915, at *14, which Apple cites, is
2 distinguishable because it was a breach of contract case that did not involve joint tortfeasors or
3 co-conspirators who were prevented from seeking contribution from each other. Moreover, the
4 absent party in that case consented to the Courfs jurisdiction, and therefore “could be joined if
5 necessary.” Id. at *12.
6 Finally, Plaintiffs would not have an adequate remedy should this Court dismiss the case
7 for failure to join ATTM. See Fed. R. Civ. P. 19(b) (4). Because of this Court’s recent Order
8 compelling arbitration of the plaintiffs’ individual claims against ATTM and Apple in the prior
9 litigation, Apple/A T& TM Litig., 2011 U.S. Dist. LEXIS 138539, if the Court dismisses this case,
10 these Plaintiffs will have no way to pursue their claims against either Apple or ATTM. When the
11 cost of arbitrating a federal statutory claim is prohibitively expensive, arbitration is not an
12 adequate remedy. Antitrust cases, which “require[1 the outlay of substantial financial resources,”
13 are a paradigm of this inadequacy. See Kristian v. Comcast, 446 F.3d 25, 52 (1st Cir. 2006).21
14 These Plaintiffs’ antitrust claims are no exception to the basic rules. These Plaintiffs have
15 weighed the costs and risks and have concluded that they simply could not afford to bring this
16 enormously expensive Section 2 aftermarket monopolization case as individual arbitrations
17 against ATTM. Therefore, they validly exercised their right to sue only Apple in court.
18 E. Plaintiffs Have Adequately Pleaded A Conspiracy To MonopolizeClaim
19The second portion of Apple’s motion seeks dismissal under Rule 12(b)(6) of Count III of
20 . .
the Complaint for failure to state a claim that Apple and ATTM conspired to monopolize the
21aftermarket for iPhone voice and data services. Both of Apple’s arguments in support of that
22
___________________________
2321 Antitrust cases require “an elaborate factual inquiry” that entails millions of dollars ofattorneys’ time and hundreds of thousands or millions of dollars in expert fees. Id. at 58. Without
24 expert witness testimony, antitrust claims are “effectively precluded,” and because the plaintiff’sindividual damages are extremely small compared to the huge cost of investigating and
25 prosecuting an individual claim, “retaining expert witnesses is completely unrealistic andimpractical on an individual claim basis.” Id. Even though reasonable attorneys’ fees are awarded
26 to successful antitrust plaintiffs, few if any attorneys would risk investing the “large initial outlayin time and money” and lost “opportunity costs” required to investigate and prosecute a claim
27 where the recovery “at most is a few thousand dollars. Then, factoring in the uncertainty ofsuccess, the appeal for an attorney to take on an individual plaintiff’s antitrust claim shrinks even
28 further.” Id. at 59&n.21.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT CASE NO. C 11-06714 JW
- 20 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page28 of 34
1 motion — that Plaintiffs have not alleged (i) specific intent to monopolize on the part of ATTM, or
2 (ii) a cognizable antitrust aftermarket under Newcal, 513 F.3d 1038 — are without merit.
3 1. Legal Standards Under Rule 12(b)(6)
An antitrust complaint “must contain a ‘short and plain statement of the claim showing that
the pleader is entitled to relief.... Each averment ... shall be simple, concise, and direct.” In re
6 Static Random Access Memory (‘SRAM,.) Antitrust Litig., 580 F. Supp. 2d 896, 900 (N.D. Cal.
2008) (quoting Fed. R. Civ. P. 8(a), 8(e)). A complaint must establish the grounds entitling the
8 plaintiff to relief but need provide only sufficient factual allegations “to raise a right to relief
above the speculative level.” In re SRAM Antitrust Litig., 580 F. Supp. 2d at 900 (quoting Bell
10 Atlantic Coip. v. Twombly, 550 U.S. 544, 555 (2007)). The claim asserted must have “facial
11 plausibility” in that it “pleads factual content that allows the court to draw the reasonable inference
12 that the defendant is liable for the misconduct alleged.” Ashcro/i v. Iqbal, 556 U.S. 662, 678
13 (2009) (citing Twombly, 550 U.S. at 556). “Plausibility” “is not akin to a ‘probability
14 requirement,’ but it asks for more than a sheer possibility” that the accused wrongdoer has acted
15 unlawfully. Ashcroji, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556-57). The plaintiff’s
16 factual assertions must be accepted as true, though “[t]hreadbare recitals of the elements of a cause
17 of action, supported by mere conclusory statements, do not suffice.” Ashcroji. 556 U.S. at 678
18 (citation omitted). “Determining whether a complaint states a plausible claim for relief [is] a
19 context-specific task that requires the reviewing court to draw on its judicial experience and
20 common sense.” Id. at 679 (citation omitted). See also Fujitsu Ltd v. Belkin mt ‘i Inc., 782 F.
21 Supp. 2d 868, 886 (N.D. Cal. 2011) (reciting Rule l2(b)(6) standards).22
222. Plaintiffs Have Amply Alleged That ATTM Had A Specific
Intent To Monopolize The iPhone Voice And Data Aftermarket23 Apple’s argument that Plaintiffs have failed to plead ATTM’s specific intent to
24 monopolize does not pass the “straight face” test. Under Ninth Circuit precedent, specific intent to
25 monopolize is sufficiently pled by “identifying a written agreement” that evidences the intent to
26Despite Apple’s contrary argument, the Supreme Court has not “abrogated the usual
27 ‘notice pleading’ rule” in antitrust cases. Apple Br. at 17. Antitrust complaints remain subject tonotice pleading under Rule 8(a). In re Korean Air Lines Co. Antitrust Litig., No. 07-05 107, 2008
28 U.S. Dist. LEXIS 111722, at *29..31 (C.D. Cal. June 25, 2008).
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT CASE NO. C 11-06714 JW
-21-
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page29 of 34
1 monopolize. Kendall v. Visa US.A., Inc., 518 F.3d 1042, 1047 (9th Cir. 2008). Plaintiffs allege
2 that Apple and ATTM conspired to monopolize by entering into the written Exclusivity
3 Agreement — plainly; they intended to do so. Complaint ¶J 2, 7-10, 24-26, 30, 45, 54-55, 59,
4 61-62, 68, 81, 97, 100. That allegation alone adequately pleads ATTM’ s specific intent.23
5 Specific intent also may be alleged “by inference from conduct” and “the character of the
6 actions taken” by the conspirator, such that a complaint which “describe[s] in detail the allegedly
7 anticompetitive acts” will sufficiently plead specific intent. See Hunt- Wesson Foods, Inc. v. Ragu
8 Foods, Inc., 627 F.2d 919, 926 (9th Cir. 1980). Even if Plaintiffs were required to plead more
9 than the written Exclusivity Agreement, the Complaint bristles with allegations of both Apple’s
10 andATTM’s specific intent to monopolize the iPhone voice and data services aftermarket.24
11
________________________________
23 As Apple concedes, specific intent to monopolize “means participating in [a] course of12 conduct for the specific, shared purpose’ of creating or maintaining the alleged monopoly.”
13 Apple Br. at 17 (quoting In re Microsoft Corp. Antitrust Litig., 127 F. Supp. 2d 728, 731 (D. Md.2001) (emphasis added). It is impossible to imagine any better evidence of such a shared purpose
14 than a written agreement to exclude competition. Far less robust allegations have been foundsufficient. See, e.g., In re SRAM Antitrust Litig., 580 F. Supp. 2d at 901 (email and other
15 communications among co-conspirators sufficient); Wallach v. Eaton Corp., 814 F. Supp. 2d 428,441-42 (D. Del. 2011) (allegation that defendant’s officer met with co-conspirators and “was
16 uniformly told ... that they had accepted deals that were designed to put [competitor] out ofbusiness” pled co-conspirators’ intent). See also Process Specialties, Inc. v. Sernatech, Inc., No.
17 00-414, 2001 U.S. Dist. LEXIS 26261, at *22..23 (E.D. Ca. Nov. 8, 2001) (if a fact evincing intentto harm competition is alleged, question whether that fact satisfies plaintiff’s burden of proving
18 specific intent goes to the jury).
1924 The Complaint “describe[s] in detail the allegedly anticompetitive acts” and conduct byApple and ATTM from which their specific intent to become a monopolist can be easily inferred.
20 Hunt-Wesson Foods, 627 F.2d at 926. Many of the allegations describe Apple’s and ATTM’sjoint intent to violate the antitrust laws. See Complaint ¶ 55 (“Apple and ATTM agreed to
21 enforce ATTM’s exclusivity” by installing SIM card locks and “agreeing never to disclose theunlock codes to iPhone consumers who wished to replace the iPhone SIM card” and lawfully
22 switch carriers); id. ¶ 59 (“Apple and ATTM agreed” to prevent consumers from unlocking theSIM cards in order “to suppress lawful competition domestically by T-Mobile against A TTM in
23 the iPhone aftermarket”); id. ¶ 62 (“Apple and ATTM ... continued to abide by and enforce theother anticompetitive terms of their Agreement ... in order to continue to suppress competition in
24 the voice and data service aftermarket and to continue to enjoy the supracompetitive profits oftheir Agreement”); id. ¶ 69 (available “SIM card unlocking solutions reduced ATTM’s and
25 Apple’s share of the iPhone voice and data services aftermarket and threatened to reduce the
26supracompetitive revenues and profits they conspired to earn”) (emphasis added throughout).
Even paragraph 97 of the Complaint, which Apple says applies only to “Apple’s state of27 mind, not ATTM’s,” Apple Br. at 18, alleges specific intent as to both conspirators: “Apple
knowingly and intentionally conspired with ATTM with the specific intent to monopolize the28 iPhone Voice and Data Services Aftermarket. In furtherance of that conspiracy, Apple and its co
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT — CASE NO. C 11-06714 JW
- 22 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page30 of 34
3. Plaintiffs Have Adequately Alleged A Cognizable Aftermarket
2In the first action, Apple fully and fairly litigated whether this voice and data services
aftermarket claim is valid under Newcal. It has no right to re-litigate the issue,25 which is
controlled by the Court’s own authoritative precedent in Apple/A TTM Litig., 596 F. Supp. 2d
1288, 1303-04 (N.D. Cal. 2008). Apple recognizes as much. See Apple Br. at 20. Yet it cites no
6change in the law, no new facts, or any other changed circumstances that might justify asking this
Court to ignore its own precedent or reach a different conclusion. Apple never explains how the
8failure to name ATTM as a defendant and the omission of any reference to its WSA changes
anything.
10Tn analyzing the identical market definition allegation in the prior action, this Court ruled
11unequivocally that the plaintiffs there had adequately alleged a cognizable Newcal aftermarket:
The allegations in the Complaint recite facts, which, if presumed to be true, would12 support the existence of an aftermarket for iPhone voice and data services, under
the standard articulated by the Ninth Circuit in Neweal.
Apple/A TTMLitig., 596 F. Supp. 2d at 1303. That finding binds the present case. See Vasquez v.14
Hillery, 474 U.S. 254, 266 (1986) (“any detours from the straight path of stare decisis” occur for15
only “articulable reasons” and only with “facts newly ascertained”) (citation omitted); Hulteen v.16
AT&T Corp., 498 F.3d 1001, 1010 (9th Cir. 2007), rev’don other grounds, 556 U.S. 701 (2009)17
(explaining importance of stare decisis) (quoting Vasquez, 474 U.S. at 265-66)).18
This Court’s prior decision disposes of Apple’s now-rehashed arguments. Under Newcal,19
“the dispositive issue is whether Plaintiffs ‘knowingly placed [Defendants] in a monopoly20
position’ in the alleged voice and data services aftermarket.” Apple/A TTM Litig., 596 F. Supp. 2d21
at 1305 (quoting Newcal, 513 F.3d at 1049) (brackets in original). Citing the same supposed22
“disclosures” of its anticompetitive five-year agreement with ATTM on the iPhone box label, in23
24
_______________________________
conspirator agreed without Plaintiffs’ knowledge or consent to make ATTM the exclusive25 provider of voice and data services for the iPhone for five years...” Complaint ¶ 97 (emphasis
26added).25 See Parkiane Hosiery, 439 U.S. at 327; Collins, 505 F.3d at 882 (9th Cir. 2007) (party
27 estopped from same argument in later case that it fully and fairly litigated but lost in prior action);Appling, 340 F.3d at 775 (9th Cir. 2003) (same).
28
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT CASE NO. C 11-06714 JW
- 23 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page31 of 34
I newspaper articles and other items that Apple’s current motion cites, Apple argued in its motion
2 to dismiss the prior case that iPhone consumers “knowingly” placed Apple in a monopoly
3 position. See Apple Br. at 22-23 (citing Apple’s Request for Judicial Notice (Apple/A TTM Litig.,
4 No. 07-5152 (N.D. Cal. June 27, 2009) (ECF No. 123-7)) in the prior case). This Court rejected
5 Apple’s argument in the prior case, finding that, at best, Apple’s submissions gave rise to a
6 question of fact:
7 The fact that Apple disputes whether Plaintiffs “knowingly placed [Apple] in amonopoly position” merely creates a factual dispute better suited for resolution at a
8 later stage of this litigation.
Apple/A TTM Litig., 596 F. Supp. 2d at 1306 (brackets in original).
10In its present motion, Apple makes the exact same argument, relying on the same
11materials, as it did in the prior case. See Apple Br. at 2 1-23. By definition, stare decisis requires
12that Apple obtain the exact same result — denial of its motion to dismiss. What was a factual issue
13then remains a factual issue now.26
14Apple repeats the same empty argument that the Complaint’s lack of reliance on ATTM’s
15WSA requires dismissal. But as shown in Sections III.B.5 and II1.D above, the Court will not
16need to interpret or even consider the WSA to judge the legality of Apple and ATTM’s secret
17five-year agreement because there is a plethora of evidence outside of the WSA by which
18Plaintiffs can prove they did not “knowingly give” Apple a five-year monopoly — including
19judicial admissions by both Apple and ATTM as well as information disclosed on ATTM’s
20website. Given all the other evidence that Plaintiffs agreed to no restriction in the aftermarket
21other than a termination fee during the first two years, and did not agree to be bound to ATTM for
22 five years, the question “whether Plaintiffs ‘knowingly placed [Apple] in a monopoly position” is
23 26 The few cases Apple cites do not lead to a different result. In Sprewell v. Golden State
Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001), conclusory factual assertions in the plaintiffs24 complaint were rebutted by detailed factual findings in an arbitration decision the plaintiff
- attached to the same complaint. The court held that the plaintiff was bound by the prior ruling,2) just as Apple should be bound by this Court’s prior ruling here. In Howard Hess Dental
Laboratories Inc. v. Dentsply Int’l, Inc., 602 F.3d 237, 256 (3d Cir. 2010), the court refused to26 sustain a conclusory alternative theory of antitrust liability that was inconsistent with a well-pled
27theory asserted in the same complaint. The case did not even raise the issue presented here:whether a defendant like Apple can successfully move to dismiss in a later case a well-pled claim
28 that was already sustained in a related prior case.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMiSS CONSOLiDATED
COMPLAINT - CASE NO. C 11-06714 JW- 24 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page32 of 34
1 still — even without the WSA in the record — at most “a factual dispute better suited for resolution
2 at a later stage of this litigation.” Apple/ATTM Litig., 596 F. Supp. 2d at 1306 (brackets in
original).27
4 Newcal and this Court’s prior decision correctly applying it foreclose Apple’s argument.
IV. CONCLUSION
6For all the above reasons, Plaintiffs request the Court deny Apple’s motion to dismiss.
DATED: May 7, 2012 WOLF HALDENSTEIN ADLERFREEMAN & HERZ LLP
8FRANCIS M. GREGOREKRACHELE R. RICKERT
9
10 Is! Rachele R. RickertRACHELE R. RICKERT
11750 B Street, Suite 2770
12 San Diego, California 92101Telephone: 619/239-4599
13 Facsimile: 619/234-4599gregorekwhafb.com
15
16
17
18
19
20
21
27 In repeating its previously rejected argument that the original iPhone box somehowdiscloses the existence of ATTM’s five-year exclusivity agreement (even though the tiny, buried
‘ print on the box bottom mentions only a “two-year wireless service plan”), Apple cites Date!
24 Holdings Ltd. v. Microsoft Corp., 712 F. Supp. 2d 974 (N.D. Cal. 2010), to suggest that Plaintiffsare deemed to have accepted [the] terms” appearing on the box. Apple Br. at 22. But Date!
25 actually holds that ambiguous statements on product packaging — like that on Apple’s iPhone box- “are interpreted against the drafter,” id. at 990 (citing Cal. Civ. Code § 1654), and once a
26 “Plaintiff has shown an ambiguity in the relevant contract language [it] counsels against granting amotion to dismiss premised on Defendant’s contested interpretation of the provision, which
27 customers may not have understood.” Date!, 712 F. Supp. 2d at 989. Thus, Date! supports thisCourt’s prior holding that the iPhone box and other materials on which Apple relies, at best, raise
28 a factual question for the jury.
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMISS CONSOLIDATEDCOMPLAINT - CASE NO. C 11-06714 JW
- 25 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page33 of 34
WOLF HALDENSTEIN ADLER1 FREEMAN & HERZ LLP
MARK C. RIFKIN2 ALEXANDER H. SCHMIDT
MICHAEL LISKOW270 Madison Avenue
4 New York, New York 10016Telephone: 212/545-4600
5 Facsimile: 212/545-4677rifldn@whaffi. corn
6 [email protected]@whaffi.com
7Plaintiffs’ Interim Class Counsel
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 APPLE2:18872V3OPP
PLAINTIFFS’ OPPOSITION TO DEFENDANT APPLE INC.’S MOTION TO DISMiSS CONSOLIDATEDCOMPLAINT CASE NO. C 11-06714 JW
- 26 -
Case3:11-cv-06714-JW Document44 Filed05/07/12 Page34 of 34