Siddharth Hariharan, et al v. Adobe Systems, Inc., et al

Filing 8

Submitted (ECF) Amicus brief for review (by government or with consent per FRAP 29(a)). Submitted by The Chamber of Commerce of the United States of America, The California Chamber of Commerce, and the National Association of Manufacturers. Date of service: 11/14/2013. [8863367] (LJL)

Case No. 13-80223

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

IN RE HIGH-TECH EMPLOYEE ANTITRUST LITIGATION

On Petition for Permission to Appeal from the
United States District Court for the Northern District of California
The Honorable Lucy H. Koh, Presiding
Case No. 5:11-2509-LHK

AMICI CURIAE BRIEF OF THE CHAMBER OF COMMERCE OF THE
UNITED STATES OF AMERICA, THE CALIFORNIA CHAMBER OF
COMMERCE, AND THE NATIONAL ASSOCIATION OF
MANUFACTURERS
IN SUPPORT OF PETITION FOR RULE 23(F) APPEAL OF CLASS
CERTIFICATION ORDER
LEWIS J. LIMAN
LAWRENCE B. FRIEDMAN
JENNIFER KENNEDY PARK
CLEARY GOTTLIEB STEEN & HAMILTON LLP
One Liberty Plaza
New York, New York 10006
Tel.: [phone]
Fax: [phone]
Counsel for Amici Curiae
(Additional Counsel Listed on Signature Page)

CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rule of Appellate Procedure 26.1, Amici Curiae the
Chamber of Commerce of the United States of America, the California Chamber of
Commerce, and the National Association of Manufacturers state that they are not
subsidiaries of any corporation, and no publicly held corporation owns 10% or
more of their stock.

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TABLE OF CONTENTS
Page
CORPORATE DISCLOSURE STATEMENT .................................................... i
TABLE OF AUTHORITIES .............................................................................. iii
INTERESTS OF THE AMICI CURIAE .............................................................. 1
ARGUMENT ....................................................................................................... 3
I.

THE DISTRICT COURT’S EXPANSIVE INTERPRETATION
OF RULE 23 MISAPPLIES SUPREME COURT PRECEDENT ........... 3

II.

THE DISTRICT COURT’S APPLICATION OF
RULE 23 IS INCONSISTENT WITH DEFENDANTS’
DUE PROCESS RIGHTS ......................................................................... 6

III.

IMPROPER CERTIFICATION OF OVERBROAD
CLASSES IMPOSES COSTS AND BURDENS
DISPROPORTIONATE TO THE CLAIMS AT ISSUE .......................... 9

CONCLUSION .................................................................................................. 10

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TABLE OF AUTHORITIES
Page(s)
CASES
Am. Express Co. v. Italian Colors Rest.,
133 S. Ct. 2304 (2013) ......................................................................................... 3
Amchem Prods., Inc. v. Windsor,
521 U.S. 591 (1997) ......................................................................................... 4, 8
AT&T Mobility LLC v. Concepcion,
131 S. Ct. 1740 (2011) ......................................................................................... 9
Comcast Corp. v. Behrend,
133 S. Ct. 1426 (2013) ............................................................................. 3, 4, 5, 6
Coopers & Lybrand v. Livesay,
437 U.S. 463 (1978) ........................................................................................ 9-10
In re Static Random Access Memory (SRAM) Antitrust Litig.,
264 F.R.D. 603 (N.D. Cal. 2009) ......................................................................... 7
McLaughlin v. Am. Tobacco Co.,
522 F.3d 215 (2d Cir. 2008), abrogated on other grounds by
Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008).............................. 7
Philip Morris USA v. Williams,
549 U.S. 346 (2007) ............................................................................................. 6
Smith v. Bayer Corp.,
131 S. Ct. 2368 (2011) ......................................................................................... 8
Taylor v. Sturgell,
553 U.S. 880 (2008) ............................................................................................. 6
Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541 (2011) ............................................................................. 3, 4, 5, 7

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TABLE OF AUTHORITIES (cont’d)
Page(s)
RULES AND STATUTES
28 U.S.C. § 2072(b) ............................................................................................. 8
Fed. R. App. P. 29(c)(5) ....................................................................................... 1
Fed. R. Civ. P. 23 ........................................................................................ passim
OTHER AUTHORITIES
A. Mitchell Polinsky and Steven Shavell, The Uneasy Case for Product Liability,
123 Harv. L. Rev. 1437 (2010) .......................................................................... 10
Carlton Fields, The 2013 Carlton Fields Class Action Survey (2013),
available at http://www.classactionsurvey.com ................................................. 10
Manual for Complex Litigation (Fourth) (2004) ................................................. 8

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INTERESTS OF THE AMICI CURIAE 1
Amici Curiae, with the consent of all parties, respectfully submit this brief in
support of Defendants-Petitioners’ Rule 23(f) Petition to appeal the district court’s
class certification order (the “Order”).
The Chamber of Commerce of the United States (“the Chamber”) is the
world’s largest business federation, representing 300,000 direct members and
indirectly representing an underlying membership of more than three million U.S.
businesses and professional organizations. Among its members are companies and
organizations of every size and in every industry sector. A principal function of
the Chamber is to represent the interests of its members by filing amicus briefs in
cases involving issues of vital concern to the nation’s business community.
The California Chamber of Commerce (“CalChamber”) is a nonprofit
business association with more than 13,000 members, both individual and
corporate, representing virtually every economic interest in the state. For over 100
years, CalChamber has been the voice of California business. Although
CalChamber represents several of the largest corporations in California, 75% of its
members have 100 or fewer employees. CalChamber acts on behalf of the
Pursuant to Rule 29(c)(5) of the Federal Rules of Appellate Procedure,
Amici hereby state that this brief was not authored in whole or in part by counsel
for any party, and no such counsel or any party made a monetary contribution
intended to fund the preparation or submission of this brief. No person or entity
other than Amici, their members, or their counsel made a monetary contribution
intended to fund the preparation or submission of this brief.

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business community to improve the state’s economic and employment climate by
representing business on a broad range of legislative, regulatory, and legal issues.
CalChamber participates as amicus curiae only in cases, like this one, that have a
significant impact on California businesses.
The National Association of Manufacturers (“the NAM”) is the largest
manufacturing association in the United States, representing small and large
manufacturers in every industrial sector and in all 50 states. Manufacturing
employs nearly 12 million men and women, contributes more than $1.8 trillion to
the U.S. economy annually, has the largest economic impact of any major sector,
and accounts for two-thirds of private-sector research and development. The NAM
is the leading advocate for a policy agenda that helps manufacturers compete in the
global economy and create jobs across the United States.
Amici support the Rule 23(f) Petition to ensure the district courts in this
Circuit undertake the rigorous analysis required under Federal Rule of Civil
Procedure 23 before permitting a case to proceed as a class action. As the
Petitioners explain, the district court here certified a class composed of 60,000
employees holding 2,400 diverse job titles at seven different companies that
produce a diverse range of goods and services. It did so based on purported
average impact and a few anecdotal experiences regarding the alleged antitrust
violations, and disregarded the predominance of individualized questions and

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answers over common ones. Amici are concerned that the decision below will
dramatically increase their members’ exposure to class action lawsuits, including
in cases where there is no proof that any meaningful number of putative class
members has suffered any impact or damages caused by the alleged violation.
ARGUMENT
I.

THE DISTRICT COURT’S EXPANSIVE INTERPRETATION OF
RULE 23 MISAPPLIES SUPREME COURT PRECEDENT
Federal Rule of Civil Procedure 23 imposes “stringent requirements” that

“in practice exclude most claims.” Am. Express Co. v. Italian Colors Rest., 133 S.
Ct. 2304, 2310 (2013). A class may not be certified where individual questions
“will inevitably overwhelm questions common to the class.” Comcast Corp. v.
Behrend, 133 S. Ct. 1426, 1433 (2013). An exacting application of Rule 23 is
necessary because class actions are “‘an exception to the usual rule that litigation is
conducted by and on behalf of the individual named parties only.’” Comcast, 133
S. Ct. at 1432 (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01 (1979)).
The opinion below dramatically departs from these basic principles and
contravenes Supreme Court precedent in both letter and spirit. The Supreme Court
has held that a question can be “common” under Rule 23(a)(2) only if “‘a
classwide proceeding [can] generate common answers.’” Wal-Mart Stores, Inc. v.
Dukes, 131 S. Ct. 2541, 2551 (2011) (citation omitted). The Court has recently
and clearly instructed that the Rule 23(b)(3) predominance requirement is an “even

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more demanding” inquiry than Rule 23(a)(2)’s commonality requirement.
Comcast, 133 S. Ct. at 1432; see also Amchem Prods., Inc. v. Windsor, 521 U.S.
591, 623-24 (1997). But, contrary to this clear direction, the district court gave the
words “questions of law or fact common to class members” in Rule 23(b)(3)
virtually no weight. See Order at 15, 24, 83-84. The court recognized that finding
commonality under Rule 23(a)(2) requires the availability of common answers,
Order at 15, but failed to recognize the same requirement for Rule 23(b)(3) and
emphasized “common evidence” instead of common answers, Order at 22-24.
This approach is directly contrary to Supreme Court precedent. See Dukes, 131 S.
Ct. at 2551; Amchem Prods., 521 U.S. at 623-24.
The district court compounded that error by first giving one alleged common
issue—whether there was an “overarching conspiracy” to engage in
anticompetitive behavior—undue weight because defendants indicated that they
would vigorously contest the existence of an antitrust violation. Order at 24, 8384. Relying on price-fixing examples that are inapposite here, see infra pages 6-7,
the court improperly concluded that the fact that defendants disputed this
underlying question was sufficient on its own to render it a predominate question.
Order at 83-84. The court then essentially elided the question of whether antitrust
impact and damages required individualized proof for each putative class member
by holding that statistical methods measuring only average and aggregate effects

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across all class members were sufficient to show that common issues would
predominate when evaluating the element of antitrust impact. See Order at 31-32,
51-52, 84. That holding contradicts both Dukes—which “requires the plaintiff to
demonstrate that the class members ‘have suffered the same injury,’” not merely
that an injury to a few class members created an aggregate impact on the class,
131 S. Ct. at 2551 (citation omitted)—and Comcast, which teaches that the formula
for calculating damages must be tailored to individual injury, see 133 S. Ct. at
1433-34. Indeed, if the district court’s reasoning were correct, a broad class could
be certified any time a plaintiff was able plausibly to allege a conspiracy, even if
there was no evidence that any more than a few members have suffered injury.
Such a rule cannot be reconciled with the clear teachings in Dukes and Comcast.
Plaintiffs could attempt to use it to manufacture predominance not only in every
antitrust case but in virtually any type of Rule 23(b)(3) action.
Although the court further attempted to justify its lax reading of Rule 23 in
terms of efficiency, Order at 85-86, “[i]t is only where this predominance exists
that economies can be achieved by means of the class action device.” See Fed. R.
Civ. P. 23(b)(3) advisory committee’s note (1966). A careful predominance
analysis can yield efficiency; a bare desire for efficiency cannot produce
predominance.

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II.

THE DISTRICT COURT’S APPLICATION OF RULE 23 IS
INCONSISTENT WITH DEFENDANTS’ DUE PROCESS RIGHTS
Rule 23’s class action prerequisites are not only designed to facilitate

efficient, streamlined adjudication of claims, but are also intended to protect the
due process rights of the parties. Taylor v. Sturgell, 553 U.S. 880, 901 (2008)
(Rule 23’s “procedural protections” are “grounded in due process”). Its
requirements protect the rights of absent class members—who will (absent opting
out) ultimately be bound by any class action settlement or verdict—to pursue their
particular interests on their own terms, and the rights of defendants “‘to present
every available defense.’” Philip Morris USA v. Williams, 549 U.S. 346, 353
(2007) (quoting Lindsey v. Normet, 405 U.S. 56, 66 (1972)). Faithful adherence to
the requirements of section (b)(3) is particularly important because this section
contains essential “procedural safeguards” requiring courts to take a “close look”
to ensure that common questions predominate over individual ones. Comcast, 133
S. Ct. at 1432.
By misapplying Rule 23(b)(3)’s requirements to sidestep questions that
require individualized inquiry, the district court’s Order is inconsistent with due
process. See Order at 31-32, 78, 82-84. The ruling—if permitted to stand—would
upend the law of class actions. In antitrust cases such as those cited by the district
court, see Order at 83, the courts certified classes because the nature of the antitrust
charge and the definition of the class were such that the courts found common
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issues as to antitrust injury and damages. See, e.g., In re Static Random Access
Memory (SRAM) Antitrust Litig., 264 F.R.D. 603, 611-15 (N.D. Cal. 2009). Not
one of those cases supports the district court’s decision to certify this class without
first confirming that the evidence established an injury common to all class
members susceptible to resolution through class-wide proof—and that individual
damages could be calculated using a class-wide formula.
By holding that the questions of antitrust injury and damages each involved
a common question because they “may be” addressed by statistical evidence, the
court also committed the same error identified in Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. at 2555. The Supreme Court made clear in Dukes that an aggregate
determination of injury and damages based on the harm suffered by a small portion
of the class would offend due process because it would likely result in a damages
figure that reflects neither the number of plaintiffs actually injured by defendants
nor the amount of economic harm suffered. See id. at 2555-56, 2558-59, 2561; see
also McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 231 (2d Cir. 2008), abrogated
on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008).
As Dukes shows, certification of a class based on a purported average
plaintiff’s experience will improperly affect the substantive rights of litigants. It
will subject each of the individual absent class members to judgment based on
aggregate “average” proof that may have no relevance to their individual factual

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circumstances. It will undermine a defendant’s ability to invoke defenses based on
individualized circumstances of antitrust injury and damages. And, as a practical
matter, it will change the burdens of proof for both plaintiffs (by effectively
increasing the ease with which absent class members can prove their claims) and
defendants (by effectively making them disprove liability for claims that absent
class members are not personally prosecuting). See 28 U.S.C. § 2072(b)
(procedural rules like Rule 23 cannot be used to “abridge, enlarge or modify any
substantive right”); Amchem, 521 U.S. at 613 (holding that Rule 23 must be
interpreted in accord with the Rules Enabling Act).
Moreover, where plaintiffs have opted not to sue individually and subject
themselves to the jurisdiction of the court, but rather to remain “absent members”
of a class action, it becomes virtually impossible for the defendant to defend itself.
A person who is a member of an uncertified class is not a party before the court,
see Smith v. Bayer Corp., 131 S. Ct. 2368, 2379-81 (2011), and even after a class
has been certified, courts have been reluctant to permit discovery of absent class
members, see Manual for Complex Litigation (Fourth) § 21.41, at 302-03 (2004).
Thus, overbroad class certification impairs defendants’ opportunity to raise
potential defenses against absent persons who would be the beneficiaries of a class
judgment. That is no way to conduct proceedings that the Supreme Court has
repeatedly stressed should be undertaken cautiously to preserve due process rights.

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III.

IMPROPER CERTIFICATION OF OVERBROAD CLASSES
IMPOSES COSTS AND BURDENS DISPROPORTIONATE TO THE
CLAIMS AT ISSUE
By expanding both the availability of class certification and the size of the

classes certified, the district court’s erroneous rule, if applied in future cases, will
permit plaintiffs’ lawyers to extract what amounts to a rent from defendants in
quantities far disproportionate to any actual damages suffered by the class
members. The Supreme Court and the Judicial Conference Committee on Rules of
Practice and Procedure have long recognized that the decision to certify any class
has drastic ramifications and can be used to essentially force a defendant into
settling. See Fed. R. Civ. P. 23(f) advisory committee’s note (1998) (“An order
granting certification . . . may force a defendant to settle rather than incur the costs
of defending a class action and run the risk of potentially ruinous liability.”);
AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1752 (2011) (noting the in
terrorem effect of class actions as “[f]aced with even a small chance of a
devastating loss, defendants will be pressured into settling questionable claims”).
This pressure to settle is felt acutely in large class actions like this case,
where litigation can be prohibitively expensive, even when defendants have
meritorious defenses. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 476
(1978) (“Certification of a large class may so increase the defendant’s potential
damages liability and litigation costs that he may find it economically prudent to

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settle and to abandon a meritorious defense.”). Any benefit from such overbroad
class actions cannot outweigh the high costs associated with them, making them a
net detriment to society. In 2012, American companies were forced to spend $2.06
billion on legal fees in class action lawsuits. Carlton Fields, The 2013 Carlton
Fields Class Action Survey 7 (2013), available at
http://www.classactionsurvey.com. Faced with litigating overbroad class actions,
defendants may be forced to raise prices, lay off employees, or reduce employee
benefits; some may even face the prospect of bankruptcy.
The principal beneficiary of a lax application of Rule 23 is the legal
profession, which on average siphons off as much as 60 percent of a class action
settlement. See A. Mitchell Polinsky and Steven Shavell, The Uneasy Case for
Product Liability, 123 Harv. L. Rev. 1437, 1469-70 & n.137 (2010). In short,
when courts fail to adhere to the requirements of Rule 23, everyone loses but the
lawyers. This warrants clarifying the proper scope of class certification in an area
of repeated litigation in this Circuit.
CONCLUSION
Amici respectfully request the Court to grant the Rule 23(f) Petition.

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Dated: November 14, 2013
Respectfully submitted,
CLEARY GOTTLIEB STEEN & HAMILTON LLP
By: /s/ Lewis J. Liman
Lewis J. Liman
Lawrence B. Friedman
Jennifer Kennedy Park
One Liberty Plaza
New York, New York 10006
Telephone: [phone]
Counsel for the Chamber of Commerce of the
United States of America, the California Chamber
of Commerce, and the National Association of
Manufacturers
Amici Curiae
Of Counsel:
Kathryn Comerford Todd
Tyler R. Green
NATIONAL CHAMBER LITIGATION CENTER, INC.
1615 H Street, N.W.
Washington, DC 20062
Telephone: [phone]
Counsel for Amicus Curiae the Chamber of Commerce of the United States of
America

Erika Frank
CALIFORNIA CHAMBER OF COMMERCE
1215 K Street, Suite 1400
Sacramento, CA 95814
Telephone: [phone]
Counsel for Amicus Curiae the California Chamber of Commerce

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Linda E. Kelly
Quentin Riegel
Patrick Forrest
NATIONAL ASSOCIATION OF MANUFACTURERS
733 10th Street, N.W., Suite 700
Washington, DC 20001
Telephone: [phone]
Counsel for Amicus Curiae the National Association of Manufacturers

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CERTIFICATE OF SERVICE
I hereby certify that I electronically filed the foregoing with the Clerk of the
Court of the United States Court of Appeals for the Ninth Circuit using the
appellate CM/ECF system on November 14, 2013.
Participants in the case who are registered CM/ECF users will be served by
the appellate CM/ECF system.

By: /s/ Richard V. Conza
Richard V. Conza
CLEARY GOTTLIEB
STEEN & HAMILTON LLP
One Liberty Plaza
New York, New York 10006
Telephone: [phone]
Fax: [phone]
([e-mail])