Polk-Stamps v. Netflix, Inc. et al

Filing 24

Transcript of Proceedings held on 04/09/2009, before Judge Phyllis J. Hamilton. Court Reporter/Transcriber Lydia Zinn, Telephone number (415) 531-6587. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerks Office public terminal or may be purchased through the Court Reporter/Transcriber until the deadline for the Release of Transcript Restriction.After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. Release of Transcript Restriction set for 7/16/2009. (Zinn, Lydia) (Filed on 4/20/2009)

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Polk-Stamps v. Netflix, Inc. et al Doc. 24 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page1 of 44 Pages 1 - 43 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BEFORE THE HONORABLE PHYLLIS J. HAMILTON ) ) Plaintiffs, ) ) vs. ) ) WALMART.COM USA LLC, et al., ) ) Defendants. ) ) ___________________________________) O'CONNOR v. WALMART.COM ___________) ENDZWEIG v. WALMART.COM ) SCHMITZ v. WALMART.COM ) LYNCH, et al., v. WALMART.COM _) GROCE, et al., v. NETFLIX ) SIVEK v. WALMART.COM ) FARIS v. NETFLIX ) SLOBODIN v. NETLFLIX ) ANTHONY, et al., v. WALMART.COM ) POLK-STAMPS v. NETFLIX ) SHEELER v. WALMART.COM ) CHAPMAN v. NETFLIX _) OROZCO v. NETFLIX _) LANDELS, et al., v. NETFLIX _) GRIME v. NETFLIX _) MEYER v. WALMART.COM _) RANDALL v. WALMART.COM ) HIRSCH v. NETFLIX ) MISCIOSCIA v. NETFLIX ) PATRAS v. NETFLIX _) CHATELAIN v. NETFLIX _) WEINER v. WALMART.COM ) MILLROOD v. WALMART.COM ) KOBER v. WALMART.COM ) LACABE v. WALMART.COM _) ROY v. NETFLIX ) BRUNO, et al., v. WALMART.COM ) ZAKER v. NETFLIX ) PARIKH v. NETFLIX ) JOHNSON v. WALMART.COM ) Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Dockets.Justia.com ANDREA RESNICK, et al., NO. C 09-0002-PJH San Francisco, California Thursday April 9, 2009 2:30 p.m. NO. C 09-0096-PJH NO. C 09-0111-PJH NO. C 09-0116-PJH NO. C 09-0138-PJH NO. C 09-0139-PJH NO. C 09-1056-PJH NO. C 09-0180-PJH NO. C 09-0225-PJH NO. C 09-0236-PJH NO. C 09-0244-PJH NO. C 09-0274-PJH NO. C 09-0294-PJH NO. C 09-0297-PJH NO. C 09-0340-PJH NO. C 09-0349-PJH NO. C 09-0361-PJH NO. C 09-0368-PJH NO. C 09-0375-PJH NO. C 09-0377-PJH NO. C 09-0378-PJH NO. C 09-0391-PJH NO. C 09-0398-PJH NO. C 09-0399-PJH NO. C 09-0400-PJH NO. C 09-0402-PJH NO. C 09-0434-PJH NO. C 09-0445-PJH NO. C 09-0447-PJH NO. C 09-0496-PJH NO. C 09-0553-PJH Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page2 of 44 2 GANNON v. WALMART.COM WILLIAMS v. NETFLIX NOREM v. NETFLIX HADDAD v. NETFLIX CORNETT v. NETFLIX MACIAS v. NETFLIX RANDLE v. NETFLIX WIEBE v. NETFLIX APPEARANCES: For Plaintiffs: ) ) ) ) ) _) ) ) NO. NO. NO. NO. NO. NO. NO. NO. C C C C C C C C 09-0554-PJH 09-0678-PJH 09-0956-PJH 09-0958-PJH 09-0960-PJH 09-0961-PJH 09-0962-PJH 09-1274-PJH TRANSCRIPT OF PROCEEDINGS Howrey LLP 1299 Pennsylvania Avenue, NW Washington, D.C. 20004-2402 (202) 783-0800 (202) 383-6610 (fax) ROBERT G. ABRAMS THOMAS A. ISAACSON PAUL ALEXANDER Saveri & Saveri, Inc. 111 Pine Street, Suite 1700 San Francisco, CA 94111 (415) 217-6810 (415) 217-6813 (fax) GUIDO SAVERI R. ALEXANDER SAVERI Audet & Partners, LLP 221 Main Street, Suite 1460 San Francisco, CA 94105 (415) 568-2555 (415) 568-2556 (fax) WILLIAM M. AUDET AARON H. DARSKY Berger & Montague, P.C. 1622 Locust Street Philadelphia, PA 19103-6305 (215) 875-3000 (215) 875-4604 (fax) PETER RUSSELL KOHN BY: For Plaintiffs: BY: For Plaintiffs: BY: For Plaintiffs: BY: (Appearances Continued On Next Page) Reported By: Lydia Zinn, CSR #9223, RPR Official Reporter - U.S. District Court Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page3 of 44 3 1 2 3 4 APPEARANCES (CONT'D) For Plaintiffs: Hersh and Hersh 601 Van Ness Avenue, Suite 2080 San Francisco, CA 94102-6396 (415) 441-5544 (415) 441-7586 (fax) MARK E. BURTON, II Spector Roseman Kodroff & Willis, P.C. 1818 Market Street, 25th Floor Philadelphia, PA 19103 (215) 496-0300 EUGENE A. SPECTOR Berman DeValerio 425 California Street, Suite 2100 San Francisco, California 94104 (415) 433-3200 (415) 433-6382 (fax) JOSEPH J. TABACCO, JR. TODD A. SEAVER Wilson Sonsini Goodrich & Rosati 1301 Avenue of the Americas, 40th Floor New York, NY 10019-6022 (212) 999-5800 (212) 999-5899 (fax) JONATHAN M. JACOBSON SARA CIARELLI WALSH Susman Godfrey, L.L.P. 1000 Louisiana Street, Suite 5100 Houston, TX 77002-5096 (713) 653-7827 (713) 654-3380 (fax) NEAL STUART MANNE BY: 5 For Plaintiffs: 6 7 BY: 8 For Plaintiffs: 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY: For Defendant Walmart.com USA LLC: BY: For Defendant Netflix: BY: Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page4 of 44 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE CLERK: Calling Civil Case Number 09-002, Andrea Resnick, et al., versus Walmart.com, et al., and all related cases. THE COURT: All right. So I don't need you all to I identify yourselves yet. Let me just go through the list. want to see who's here on which case. I'm afraid, given the number, that there has been some presumption that there is -- that all the cases have been consolidated; but I did receive a case-management statement listing all 39 cases that have been filed in the Northern District or removed to the Northern District of California. And there is a service list on the case-management statement which lists a lot more attorneys than there appear to be here. So we'll go through it, and I'll find out who's here on which case. I have some preliminary matters to discuss. appreciate you all spending the time to prepare a case-management statement using the Northern District exemplar; however, today is not the day that we're going to go through and come up with a case-management plan for the entirety of the litigation. about. I wanted to take this opportunity to give you all some idea about what I expect in terms of the overall litigation, and to give you some guidance as you continue your Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 There are some preliminary matters that we'll talk I Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page5 of 44 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 meet-and-confer efforts in preparation of the second pretrial order. We'll issue one today, but only as to some preliminary matters. Now, starting first with the whole question of what cases are involved, you all are aware that the MDL has not yet entered an order consolidating and/or transferring any cases. It is anticipated that that will occur sometime in the near future. However, as it currently stands today, there are only 11 cases that were presented to the panel that are on the list. And that -- they are -- well, 11 from the Northern District, and one in the Western District of Washington. only a dozen cases. So there are As I understand from your papers, there are, in addition to the 39 cases filed here, 19 -- 18 or 19 cases filed in other states which may be transferred as tag-alongs. Now, I would like to avoid problems that I've had in my other MDL with -- and I recognize any number of you from that proceeding as well. And so I'm sure you're aware of some of these problems; but the -- the relationship between related cases filed here, cases filed elsewhere, and cases related to the MDL can complicate the docketing system for our court. I want to start off with everyone understanding what is expected of you in terms of filing requirements. Until the MDL is formalized, all of these cases are individual cases, which means anything that's filed in one case Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 So Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page6 of 44 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 only applies to that one case. So if you want to file something that pertains to all 39, you have to file in each of the dockets. After the MDL is formalized, then you only have to file the -- let's see. I have specific rules. You only have to file in the MDL, unless it's a document that pertains to an individual case only, or if it's a terminating document. If it's a terminating document, that always needs to go under the case number of the original member case in addition to the MDL; but we're still only talking about 12 cases. With regard to the cases that are not members of the MDL, if you want this matter treated in some kind of consolidated fashion -- and, as I understand it, both sides agreed to the consolidation of the cases -- there has to be some formal act taken to make it part of the MDL. case is simply not enough. I've already related all of the Northern District cases to the lead case -- the Resnick case -- but you're also going to have to ask the MDL to make the other cases part -members of the MDL, in order to have consolidated treatment. If you don't do that, then anything filed will apply to only the 12 cases that the Panel has directly consolidated and sent to me, and the other remaining 28 cases are on their own. Okay? Everybody clear with that? Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Relating the Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page7 of 44 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I assume that this can be done. experienced in this regard. You all are I'm sure you know how to make application with the MDL to do what you need to do to get it all under the same umbrella; but I just want you to start out being mindful of what you're filing, so that we don't have the difficulties that I've experienced before in having to go through and clean up the docket. baby-sit the docket. We don't have the time to And I'd simply like you all to take that This responsibility to make sure that you're filing correctly. is more a problem for the plaintiffs' counsel than it is for defense counsel. So let's -- I think I'd like to find out from you all what your plan is in terms of consolidating beyond the 12 cases. Obviously, there's been some discussion, because you all are -- have filed this statement on behalf of 39 different firms, so obviously, you're further along than I am on this. So I'd like some of you to tell me what you've done or what you anticipate doing. MR. G. SAVERI: to meet the Court again. Although there are many cases -- individual cases -that have been filed, all the attorneys for all of the individuals -- individual cases that have been filed have selected Mr. Abrams to speak on behalf of all of them, with the exception of a few cases that were filed down in Santa Clara Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Your Honor, good afternoon. Pleasure Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page8 of 44 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 County, and they were moved to the other court. motion pending to send them back. There's a Mr. Audet, who is here, will be speaking for those few cases; but with reference to all the other cases, all of the attorneys are in agreement -- at least, for the presentation of this conference today -- that Mr. Abrams would be speaking for all of them. And he has the authority to speak on behalf of all the plaintiffs' cases. THE COURT: Okay. So he would be making the statement. MR. G. SAVERI: THE COURT: On behalf of the 35; not on state cases? Right. And I may say that my good MR. G. SAVERI: friend, Mr. Jacobson, who we all know from the DRAM case, is representing Netflix. And it's nice to see Mr. Jacobson again. And now here we We started three or four years ago together. are again. I don't know if it's good or bad, your Honor. This is Neal Manne, from the Susman office -- an old friend of mine who's going to represent Wal-Mart. superb lawyer and a good friend. with him, or Mr. Jacobson. them. So that's -THE COURT: Mr. Saveri. Thank you for the introductions, He's a And we should have no trouble So I will take care of both of All right? All right. MR. G. SAVERI: THE COURT: Let's hear from Mr. Abrams, though. So you've had discussions with counsel representing Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page9 of 44 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 all of the various different cases that have been filed? MR. ABRAMS: Yes, your Honor. And I -- and we've had discussions with all of those counsel, along with defense counsel. And I do have authority to speak on behalf of the 12 cases you said, as well as all those that we filed on behalf of this joint statement. We ask that, in an effort to make it easier -frankly, I did not appreciate -- I appreciated it, but not as fully as you said it -- what you just said. those coördinated. That's in our interests. We will get all of It's in the defendants' interests. will be done. THE COURT: It's in the Court's interests, and it I mean, because the alternative is, if they're not -- if they simply remain as related to the MDL, I'm going to go forward with the MDL, as I'm required to do; but the others are going to be stayed. that. I'm sure you don't want So if you want all of them to be active at the same time, we need them under the same umbrella. MR. ABRAMS: THE COURT: MR. ABRAMS: THE COURT: Yeah. Okay. Okay. Okay. So there are some other things We will do that. that we need to talk about. MR. JACOBSON: Your Honor, just a couple of housekeeping matters, just so that you have everything Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page10 of 44 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 straight. THE COURT: Mm-hm. There are a bunch of federal cases. I believe tag-along So at MR. JACOBSON: They are all essentially identical. notices have been filed with respect to all of them. some point, they should all be here. THE COURT: statement? MR. JACOBSON: Yes. Yes, your Honor. Those are the ones in Exhibit C to your There should have been -- and if there are not, we'll make sure there promptly are -- tag-along notices filed with respect to those cases. THE COURT: court case. The -- There are 18 federal cases, and one state So are you referring to just the federal cases? That's what I'm trying to clarify. MR. JACOBSON: So there are four California state cases that were removed here that are subject to a motion for remand. There's an additional California state case that has not been removed. And there is a Florida state case that was removed yesterday. will stick. The Florida case -- I'm quite confident the removal And we will be filing a tag-along notice as soon You can't do it until you get one. as we get a docket number. So that will be coming here in due course. Where this is quite different from DRAM is that, although we we do have separate California Cartwright Act cases Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page11 of 44 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 here, we do not have a multiplicity of cases brought under different state laws. As you may recall in DRAM, many of the cases were brought before the Class Action Fairness Act was passed. So we had all sorts of procedural complications there that we do not anticipate encountering here. At the end of the day, we should have possibly some cases in California state court, but everything else should be here so that, between your Honor and the Superior Court, we should have everything here. And so the management should be a good deal more simple here than it was in DRAM. THE COURT: clarifying that. Now, there are a lot of -- there are a number of things that need to be resolved before we can talk about things like the case scheduling, and motions for class certification, and what have you. And one of those things is, as I mentioned, All right. Okay. Thank you for we need to settle the MDL. I mean, there needs to be the formal order. need to get the tag-along notices submitted. You all You need to make sure that all of the other member cases are under the MDL umbrella. I am not going to set a schedule until -- at least, not a schedule for all pretrial matters until that's done. Shortly after that is done or -- and you can certainly be working on it while you're working on the procedural matters -- is the consolidated complaint. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page12 of 44 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 You all provide different proposals as to when the consolidated complaint should be done. Clearly, you should -- I assume you contemplated consolidating the complaint, including everyone. So it's probably better to do that after we've gotten everyone, you know, on my docket, or maybe simultaneously with that. And it would also seem to me that at the same time, you need to be talking about the plaintiffs' lead counsel's structure, and what have you. I will simply tell you what my preferences are, and you can take those into account; but obviously, you're free to agree to whatever you wish that's reasonable. As most of you know, I don't generally want to be involved, and hope not to be involved in the determination as to lead counsel. I mean, it would seem to me if you've all been this coöperative, you can make that decision yourselves. And in terms of the organizational structure, whether or not there's somebody from the East who's sitting on the executive committee and -- I don't really want to be involved in that, and would hope that you all could make whatever determination you want. I'll simply tell you what I'd like; and that is that there be, obviously, lead counsel designated who's primarily responsible for the presentation of briefs and making oral argument on any motions that are presented. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page13 of 44 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And I would also like liaison counsel. Whether or not lead counsel and liaison counsel are the same is of no moment to me; although I would prefer -- because liaison counsel is someone who my staff can call to get something done, to get extra copies, to have things redone, et cetera, I would prefer that whoever serves as liaison counsel be someone who's local. And it doesn't matter with regard to lead counsel. Doesn't matter who you select; but my preference would be Mr. Tabacco's firm, Mr. Saveri's firm -- I mean, I've seen you all a lot. My staff is obviously comfortable calling you. You're comfortable calling my staff to figure out what needs to be done. So just so that I have somebody that we can get a pretty quick response from, if necessary, as liaison counsel; but everything else is just up to you. And what I would anticipate is that you simply submit to me a stipulation on that. So, as far as I can tell, you need to -- we need to set a deadline for that process. And the consolidated amended complaint should be filed shortly after that process has been completed. right? And I would anticipate that taking place after all the other cases have been brought here. So we're not talking All about something that's going to happen in the next couple of weeks. I imagine it will take 30 to 60 days to get some of these things figured out. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page14 of 44 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Any ideas about that? MR. ABRAMS: My experience, your Honor, which I don't think really will hold the day, because they do it any way they want, is the MDL should rule fairly promptly in this case. argued the MDL. I The Panel said in that argument it seems to me -- and I will tell you what I said about this Court, because -- but it seems to me this case belongs in the Northern District of California. I said, "I never met Judge Hamilton. but she is holding this conference. of a statement. I don't know, She did require the filing I would presume that she's going to be willing I said, "I don't know that, because I never to take the case." met Judge Hamilton." The judge -- the chief judge of the Panel, whose name I now forget, said it seems -- and to other people arguing -the case really belongs in the Northern District. think it will be here shortly. We did -- and I should have said this before. We had I would filed amended statements with the MDL as to the cases that have been filed. So when they send it to you, now, there probably I just don't has been a case or two since our last one. recall. They should send it with all those cases. We will -THE COURT: Everything I've gotten from them thus far has only listed the 12. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page15 of 44 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Okay. that. MR. ABRAMS: I don't doubt it. And we'll deal with You know, so I can't really say whether it will be tomorrow, next week, or next month. THE COURT: MR. ABRAMS: THE COURT: MR. ABRAMS: Yeah. But who knows? Yeah. We don't have to -- We will be prepared promptly to file a We proposed within 30 days of consolidated amended complaint. getting an order from the MDL, it will be filed. THE COURT: Within 30 days of the final decision. MR. ABRAMS: THE COURT: Yes, your Honor. Even if the MDL decides, for some reason, And not to consolidate, the 39 cases are still on my docket. we'll -MR. ABRAMS: We can do that. And we're prepared to say to your Honor in -- and, by the way, under the rules, your Honor's orders would hold, even if the case went somewhere else. Another judge could revisit them, but your Honor's orders would hold. THE COURT: MR. ABRAMS: this case. Sure. We are prepared to move forward with We are prepared in a short amount of time to file a motion for lead counsel in the plaintiffs' structure of the Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page16 of 44 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 case. And I'm hopeful that that's not going to be a big issue. And we are prepared, as I just said, to file for -- file an amended consolidated complaint. days. If you'll excuse me. THE COURT: Within 30 days of the MDL's decision, And we -- as I said, within 30 then, you would be prepared to file the motion or stipulation? MR. ABRAMS: For lead counsel? We could do that -- well, we could do that with the cases you have here, but it's probably best to wait until all of the cases are before you for that motion. And we can file a consolidated complaint, but we probably should wait for the MDL to send it to you; but within 30 days of that, we will be -- we can file. You can order, and we can file an amended consolidated complaint. Within, let's say, two weeks of ruling -- or sending the MDL here, is my supposition for the statement -- we would be prepared to file a motion for the organizational structure of the plaintiffs' case. THE COURT: then? Okay. Then how about two deadlines, Within two weeks of the final decision of the MDL, consolidating the cases that are currently before them, the motion for appointment of lead counsel and organizational structure -MR. ABRAMS: THE COURT: Yes. -- or stipulation. I keep insisting Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page17 of 44 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stipulation, and not a motion; but one of the two will be filed within two weeks. Okay? Yes. And then within 30 days -- and then you MR. ABRAMS: THE COURT: all will do what the -- the defense will make sure that the tag-along actions are before the MDL. those pretty quickly. And -A couple of weeks. I think they act on MR. JACOBSON: THE COURT: That's pretty quickly in my world. And you all work on making sure that the other member cases are part of the MDL. MR. ABRAMS: THE COURT: Yes, your Honor. And then within 30 days of getting all -- I count 58 -- cases together, then the consolidated amended complaint. MR. ABRAMS: thing. So there's going to be an order transferring the cases, let's assume, to your Honor. THE COURT: And if it, indeed, includes all of them, I don't know if we're saying the same that's fine; but I just anticipate that it's not going to initially include -MR. ABRAMS: time that are filed. Well, there may be cases from time to And they would be tag-along cases that would be sent to your Honor. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page18 of 44 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cases. We could still -- you know, we could still -your Honor could still move forward with the cases that have been sent by the MDL. We can still file the amended consolidated complaint. THE COURT: Well, I want to make sure. I mean, it's one thing -- you talked with the attorneys with respect to the 39 cases; but you haven't, have you, with regard to the cases that would be designated tag-along cases from the other states? MR. ABRAMS: THE COURT: Well -Shouldn't they have some input into the consolidated amended complaint? MR. ABRAMS: They will be sent here as tag-along If history were to They're complaints that they file. tell us, they're all identical to our initial complaint; I mean, virtually identical. there. There are a couple of words here or And, as long as their complaints are the same, their consolidated amended complaint is going to encompass those claims. Now, I suppose if they had a tag-along case that raised new claims or causes of action, then the Court would have to deal with that as a separate issue, you know. can make up any claim. THE COURT: THE COURT: Mr. Jacobson. So, in other words, you're saying we I -- you don't really have to wait for the tag-alongs? Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page19 of 44 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Exactly. Court. that. MR. ABRAMS: Exactly. In general, I absolutely agree with MR. JACOBSON: What -- there is a possibility -- and in the Florida case, we have that possibility -- of a variation in the claims. The factual allegations of the Florida case are the same, but the relief sought is a bit different. What I think makes most sense -- and what we've done in other cases -- is to wait for the first batch of cases to come here, because we believe it's here. And you'll get a phone call before it happens, as I think you know from your prior experience, in any event. But let's say it comes here. Let's get Let's -- let's deal with the first batch of cases. those all in the consolidated amended complaint. And then when later cases are filed, have a case-management order that says they will be governed by the consolidated amended complaint unless they affirmatively opt out and state the reasons for doing so. most efficient. recall. I think that's the I think we actually did that in DRAM, as I And I think that would be the most efficient way of handling the case. MR. ABRAMS: I agree with that. We did that in DRAM, your Honor. MR. G. SAVERI: We took care of all the cases that were before the And if any tag-along cases came in, there was a Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page20 of 44 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 provision in the Order that you issued that said that they would be blended in, and all of the provisions of the Order would apply to them unless there was something unique in the cases. And I think that's probably the best way to go here. THE COURT: Okay. All right. So then the consolidated amended complaint, then, would only depend upon the initial action that's sent by the panel? MR. ABRAMS: THE COURT: Correct. And you seem to think that it's going to be something to the -- close to the 39 cases? MR. ABRAMS: THE COURT: then, from the Order? MR. ABRAMS: THE COURT: Terrific. Okay. That will work. I do. Okay. All right. So how about 30 days, Now, there are a couple of other things that I wanted to address today as well. Netflix account. One is that my household has a And it's actually -- I am pretty sure it's in I my husband's name, although he doesn't know how to use it. order all the movies. And it's very user friendly; but in any event, I am aware that several of the judges on the Panel filed a renunciation of interest; renunciation of interest in any class action. The canons require us, obviously, to recuse ourselves if we have a financial interest in the outcome. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 And, Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page21 of 44 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 obviously, being a class member of a certified class would qualify. It's not entirely clear that -- until the class is certified whether or not it's an issue. Indeed, there's some suggestion that it's not an issue until the class is certified. However, out of an abundance of caution, I would certainly like to avoid any disqualification in the case, particularly given the complicated procedural measures that we're getting ready to undertake. So it's my intention to also file a renunciation of any interest in the class; to opt out, if you will, preëmptively; to get that on file now; but I did want to just kind of talk to you all about just the -- as a practical matter, whether or not there are any other options that might be better. As I indicated, I'm pretty sure our household account is in my husband's name, so he would be the one actually opting out. I would renunciate simply because he's within the third degree of relationship that the canons require that I be concerned with; but it doesn't seem that there's much that he can do, other than opt out when and if he gets a notice in the mail. So I was thinking that maybe there's a better alternative; and that is you all have included in your case-management statement a definition of the class. What do you think about defining the class to not only exclude Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page22 of 44 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 defendants, but to exclude the Court and any members within three degrees and her staff? MR. ABRAMS: We're happy to do that, your Honor. Your Honor, we've done that in many And, in fact, it was MR. G. SAVERI: cases we've filed. rather interesting. We exclude everybody. We recently settled a cosmetic case a year And I got a call from one of the ago with Judge Armstrong. class members indicating that, you know -- I wonder whether your wife got some product when she went down and got the free product. And they told her not only was I excluded, but my wife was also excluded from participating in the settlement. So we put those right in the class definition. care of it. THE COURT: I think that would take care of any I mean, I could easily file That would take concern I have about my spouse. this renunciation. And we'll do it in each one of the cases. I just thought it would be easier to deal with my staff and my spouse in that way. MR. ABRAMS: I think that's an excellent idea. And I think, actually, what it really does is it deals with the future. concern. I can speak today and say the plaintiffs have no And I'll say it on the record. And it's not an issue; but the next plaintiff that comes along -- and I don't know -- I can't speak for him -THE COURT: Right. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page23 of 44 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ABRAMS: excellent idea. THE COURT: -- or her. So I think that's an So you all will do that. You will rewrite the class definition to include -MR. ABRAMS: THE COURT: MR. ABRAMS: Yes. -- include that broad exclusion? Yes, we will. Not to be too much of a wet blanket, MR. JACOBSON: but all of the credit-card cases -- and we have the same issue because all of the judges have credit cards. And the class definitions invariably do exclude the Court and any officers associated with the Court, which is fine; but most of the judges have also filed renunciations of interest as well. And I think, in your Honor's interests, just in an abundance of caution, you might want to consider that. THE COURT: No. My intention was to do both. I was concerned about making sure my spouse wasn't covered with it, so he wouldn't have to file something in each one of these; because otherwise, he'd have no opportunity to opt out until he was actually served with notice. MR. JACOBSON: Obviously, that's fine. THE COURT: to do both. No. I intend to do both. I would like I'm sorry. I did not understand that. And if plaintiffs' counsel agrees to the second alternative, I think that covers it. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page24 of 44 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stage. remand? MR. ABRAMS: THE COURT: Absolutely. All right. Okay. Now let's talk a little bit about the state cases. Who's representing the plaintiffs on the four Santa Clara cases? MR. AUDET: A-u-d-e-t. THE COURT: All right. Okay. Now, I understand you I am, your Honor. William Audet, filed a motion that's on my docket for May 13th for hearing. MR. AUDET: get kicked over. hearing. Yeah. And I assumed it would probably I did want to file the motion before today's I was concerned about -- one could read the statutes My hope that see I had to do it within a certain time period. is -- and we've been discussing with defense counsel working out a possible remand we're going to work on. working on a coördination order. Keith Eggelton. We've been I've worked in the past with I've had long talks with Mark Seltzer about working out a coördination order that would be to the benefit of everybody. And so that the state-court process -- the state court's involved, but the federal court sort of takes the lead, to be honest. THE COURT: So are you contemplating a stipulation to MR. AUDET: We -- I don't think we've gotten to that MR. JACOBSON: Yeah. We're not -- we're not at that Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page25 of 44 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stage. about. This is an issue I think Mr. Manne is prepared to talk MR. MANNE: THE COURT: MR. MANNE: It's Wal-Mart's. Wait. We are -- I can't hear you. Neal Manne, for the Wal-Mart defendants. It's Wal-Mart that removed certain of the California state court cases. We are having discussions with counsel about the possibility of a stipulated remand coördination orders. We haven't reached an agreement yet. We don't know if we will, but we're talking about it. And we have a -- I guess, an opposition brief due on April 22nd. before then. THE COURT: Mm-hm. Okay. All right. And we hope to resolve it one way or the other Well, obviously, I'm not going to deal with the question of whether or not the procedure should be stayed. I mean, that's up -- if the case is going to go back to the state court, that's up to them to decide. MR. MANNE: THE COURT: Right. If the case comes here and -- I mean, I would treat it just as I would all of the other -- I mean, if the case remains here -- as I would all the other cases. so I would assume that you all would continue with your discussions with plaintiffs' counsel. So I do think we need to resolve it sooner rather Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 And Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page26 of 44 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 than later, though. So it's going to remain on my docket for May 13 -- or whatever the hearing date is -- because it needs to be resolved then. So you either need to stipulate to remand, or I'm going to hear it and make a decision on that day. MR. MANNE: MR. AUDET: THE COURT: Yes, your Honor. Very good, your Honor. So that is out of the way. There were some issues with Have all of the And what about service? respect to service of the complaint. complaints -- at least, on the 39 cases -- been served? MR. JACOBSON: any issues on service. We have agreed through the case-management statement that when the consolidated amended complaint was ready, we will -- we have agreed explicitly to accept service of that. THE COURT: All right. So I think that resolves any issue. Yeah, your Honor. I'm not aware of MR. JACOBSON: And I'm not aware of any issue. THE COURT: in your statement. MR. JACOBSON: Yeah. My colleague, Ms. Walsh, points I I misunderstood, I think, what you said out that we have not been served with all of the cases yet. believe that's true for Wal-Mart as well; but again, I think it will be mooted when the consolidated amended complaint is Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page27 of 44 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 filed. THE COURT: purposes? MR. JACOBSON: THE COURT: Yes. There is a disagreement as to And you're suggesting 45 It doesn't really All right. So it's a non issue, for your All right. when the answer should be filed. days. Plaintiff is suggesting 30 days. matter to me, as long as it's done in a reasonable fashion. MR. JACOBSON: a Rule 12(b)(6). complaint. Certainly, we have a general idea of what's going to be in there from the ones that have been filed. On the Your Honor, there is consideration of That's hard to cast that until we've seen the assumption that they will adhere to what we've seen, we can do it; but without knowing, really, what's in the consolidated amended complaint, it seems that the extra 15 days in the context of this case is not, you know, a big -THE COURT: Well, what's the 12(b)(6) issue at this point that you see so far? MR. JACOBSON: There are a couple, but the first is whether there is sufficient allegation of a per se violation as alleged in the complaint. per se case. We think the case is plainly not a That's one of the issues that is addressed in the case-management Order. And would go further, and say that the allegations Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page28 of 44 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 under Twombly are insufficient to allege a per se violation. Whether we're actually going to go forward with a 12(b)(6) or not is a decision that has not been made. That is the subject of some discussions among the Susman firm and ours; but we don't want to agree to a schedule that pretermits our ability to file such a motion, and hence the request for a few extra days. THE COURT: MR. ABRAMS: THE COURT: MR. ABRAMS: Okay. May I? Sure. I don't want to stand here and argue before your Honor over 15 days, but what I do want to say to the Court is: it's pretty clear what the complaint will be. It was our complaint. And that's They saw it on January 2nd. what they're going to see when they see a consolidated amended complaint. I will go so far as to put myself out on a limb -and let them saw me off, if they can -- but you will not see a Twombly motion. I don't know what other kind of motion they may file, but I am -- I should tell your Honor I have been practicing for 35 years as a defense lawyer. a plaintiff lawyer. I was just in the fuel-surcharge cases. Twombly motion. We won the Twombly motion. We filed a I am in this case, obviously, as Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page29 of 44 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 line 20. Court. There's an agreement here. Twombly motion. There's no basis for a Now, the defendants in this case want to focus the And they keep talking about a "per se claim." We have a per se claim under Section 1. under Section 1. THE COURT: MR. ABRAMS: We have a rule-of-reason claim They say that you don't. Well, all we have to do -- I'll read it to you. THE COURT: I was a little confused, because they say that you don't allege a rule-of-reason claim. MR. ABRAMS: Yeah, we do. No, your Honor, that is not -- MR. JACOBSON: THE COURT: That's what you said. If it reads that way, that is poor There is MR. JACOBSON: drafting on our part. We did not mean to say that. certainly an allegation of -THE COURT: Page 18 of the case-management statement, MR. JACOBSON: Okay. Let me -- I'm wrong often enough that I should read this. THE COURT: It says defendants would then prevail on the merits, or plaintiffs would be required to pursue with their reliability under the rule of reason that they have not yet alleged. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page30 of 44 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. JACOBSON: Your Honor, we're not trying to say there that there's no allegation of a rule-of-reason claim here. We are -- what we are saying here is that the allegations of market impact in the complaint are insufficient, in our judgment, to adequately set forth a claim under the rule of reason. THE COURT: Oh. But any motion that would be filed MR. JACOBSON: under Twombly, I -- at least from Netflix's perspective, would be directed at knocking at the per se claim; not the rule-of-reason claim in the complaint. THE COURT: MR. MANNE: Okay. And, your Honor, my recollection on this is actually a little bit different. I think in the initial complaints that were filed, there was no reference to a rule-of-reason claim, and that it was only in relatively recent amended filings in some of the plaintiffs' cases that there was an express reference to a rule-of-reason claim. I don't think there was initially a rule-of-reason claim pled at all; but clearly now -- and that's what counts -- clearly now, there are at least some amended filings that do reference rule of reason. THE COURT: Well, I will -- I will go so far as to assume that plaintiffs will clear up any ambiguity in their Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page31 of 44 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 consolidated amended complaint. They've stated pretty clearly that they believe they're pursuing a per se violation and rule-of-reason violation and something else. MR. ABRAMS: Yes. Conspiracy to monopolize under Section 2, and an attempt to monopolize, and monopolization against Netflix under Section 2; but I would like to, your Honor, read for the Court and Mr. Manne paragraph 66 of the very first complaint -- our complaint -- that was filed in this case. And the second sentence says, Even if evaluated under the rule of reason, the Market Division Agreement is an unreasonable restraint of trade, in violation of Section 1 of the Sherman Act, 15 U.S.C. Section 1. That was filed on We pled it in the first complaint. January 2. We are telling your Honor it is both a per se claim There is no ambiguity about it. and a rule-of-reason claim. And there is a Section 2 claim as well that I just said. MR. JACOBSON: it up -THE COURT: Okay. -- because this is an issue in the All right. Your Honor, let me clear MR. JACOBSON: case. So what is alleged in the complaint is a Market Division Agreement, an agreement pursuant to which Wal-Mart Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page32 of 44 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 agreed to exit the on-line D.V.D. rental business. And Netflix, in turn, agreed not to enter the sale of new D.V.D.s. It is that alleged agreement which, A, we think is wholly unsubstantiated by any facts, and, B, which we do not believe is adequately pled under Twombly. And we haven't determined whether it's provident to make a motion like that, since it may result in amendments rather than ultimate dismissal. And that's pending further discussion among the defendants, and evaluation; but what is not alleged in the complaint is that the very public agreement that these parties did enter into -- a joint promotion agreement -- accompanied by a press release, and a news conference, and a show on C.N.B.C. on May 19th, 2005, pursuant to which Netflix agreed to promote D.V.D. sales of Wal-Mart, and Wal-Mart agreed, in turn, to promote its subscribers shifting over to Netflix -- we do not believe that that agreement, which did exist, which is in writing, which is undisputed, has been alleged in this complaint to constitute a violation of law. And, indeed, that agreement was looked at by the Federal Trade Commission, and given a big yawn on the basis that it had no conceivable impact on competition. So that is the difference that splits us here today. There's no question that the complaint alleges both a per se illegal Market Division Agreement. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Whether the allegations are Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page33 of 44 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sufficient under Twombly is a separate issue, but certainly the words are used that there's a per se division of market. There's also no question that the words are used that this division of markets that they say violated the rule of reason. What is not alleged in the complaint is whether the agreement that actually did exist that was announced publicly -- this case is so different from DRAM, which I know you have a lot of experience with. Samsung and Micron did not announce a press release when they had their meetings together. This is a fundamentally different case. So that -- I do want to clear that up before your Honor; but this is the issue that will be litigated by motion in this case, no matter what schedule is reached. MR. ABRAMS: THE COURT: MR. ABRAMS: May I, your Honor? Sure. Counsel appears to want to argue a motion to dismiss today. I'd like to tell your Honor what really happened in this marketplace. Counsel referred to an agreement. announced May 19, 2005. It was publicly They choose to call it a co-promotional agreement, whereby Netflix would not sell D.V.D.s, and Wal-Mart got out of the rental business. the bottom line. Let's look at the marketplace that existed in 2004. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 That's Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page34 of 44 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In the middle of 2004, Netflix had a three-out. could take -- well, you know -- three D.V.D.s. in June was 21.99. Wal-Mart's price was 18.96. That means you And their price And Blockbuster, the third renter of D.V.D.s -- their price was 19.99. And what did Wal-Mart do? Well, Wal-Mart dropped its price in November of 2004 to $17.36. Netflix followed suit in November of 2004, $17.99. And so does Blockbuster: What happens next? In January of '05, Wal-Mart drops its price to $12.97. And, instead of responding to that competition by lowering its price, what does Netflix do? Reed Hastings, the CEO of Netflix, calls John Fleming, the CEO of Walmart.com, and has a dinner. Publicly reported. They have a dinner. And they have $17.49. discussions over the next number of weeks. And what happens as a result of those discussions? The May 19 agreement that we just both talked about, whereby Wal-Mart gets out of the rental business; Netflix out of the sales business. Now, you might think: gee, does that make sense? Netflix has this great base of people that like to watch Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page35 of 44 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 D.V.D.s. D.V.D.s. year. Those same people are, quote, "voracious buyers" of A substantial number of those people buy 25 D.V.D.s a Why would you give up those sales, and, by the way, promote Wal-Mart -- promote Wal-Mart's sales of D.V.D.s to its customers? Wal-Mart now has 40 percent of the D.V.D. sales market in the U.S. Forty percent. Wal-Mart gets out of the rental business not because, as you read in the case-management statement -- because they're a failing business. I'll tell you why in a second. They're not a failing business. It's hard to believe Wal-Mart's a They got failing business at anything; but I'll tell you why. out because they got the market on sales. Now, we saw in the statement that Wal-Mart was failing. It didn't -- only had 1 percent of the market. Well, in The New York Times in October 2004, two months before this meeting, Kevin Swint, October 24, 2004 -- he was Walmart.com's director of entertainment and photo -- was quoted in The New York Times as saying that Wal-Mart's rental business had, quote, "grown beyond expectations," end quote. And he went on to say, quote, "We're really bullish about this service, and our customers are enthusiastic." This is right before their getting out of the business. Amy Colella, C-o-l-e-l-l-a, of Wal-Mart said, quote, Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page36 of 44 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 "It's a viable business for us, with growth potential." And she added that Wal-Mart had plans to additional distribution centers in 2005. That was said on December 29, 2004, shortly before this dinner. And, to top it off -- to top it off, Mr. Hastings, in a statement to investors after the dinner but before the May 19 announcement, said he, quote, "predicted," end quote, that the market would go from three firms to a more profitable two-firm market in the near future. Okay? That's a CEO. We plead Now, that's what we plead in our complaint. it as a per se violation. violation. We plead it as a rule-of-reason We say it's a conspiracy amongst these defendants And we say against Netflix to monopolize the rental market. that it was an attempt to monopolize and monopolization under Section 2. I say all that to your Honor in response to Counsel's characterization of our complaint. Now you have the plaintiffs' characterization of its complaint. THE COURT: Okay. Thanks for the preview of upcoming I don't really need to It's motions on the merits of the complaint. hear -- I don't really need to hear any response to that. all interesting. The case sounds interesting to me. I'm sure you all will present some interesting motions in the future -MR. JACOBSON: Thank you. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page37 of 44 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: -- but that's for the future. Let's talk about what we're going to deal with now. It's the -- the whole issue, though, is important to case management solely because of this plan that the defendants have proposed to approach the case in kind of four stages of discovery -- of discovery. four listed. Well, you say two, but there are There are four different discovery phases that are listed in the defendants' proposal on discovery. I am not really interested in four different phases. All right? Now, I don't generally enter case-management orders with the kind of detail -- the dates and deadlines with the kind of detail that you have proposed on the defense side. It's a little more -- yours is a little more complicated than the proposal submitted by the plaintiffs; but I want you all to go forward and meet and confer about it. I'm not going to set a discovery deadline or a class-certification deadline today. That will be in the next pretrial order; but I do want you all to understand what my preferences would be. First of all, with this notion that having an early summary-judgment motion and having focused discovery on that issue -- on the class-cert issues and on the rule-of-reason aspect of the agreement first -- I mean, that would make sense to me only if it really meant that it was going to be likely to Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page38 of 44 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 pare down the case substantially. Given that the defense has other theories besides the rule of reason, I'm not so sure that it doesn't unnecessarily complicate matters. It would make far more sense to me to -- if I were going to bifurcate the case, to bifurcate liability from damages, frankly, more than it would to do it in the phases that you anticipate. the defense proposal. So it's not likely I'm going to approve It's far too complicated, I think. And the line between what's necessary -- what discovery's necessary for class certification and for merits is often a very difficult line to delineate. So I -- it's not likely that I'm going to bifurcate or trifurcate in the way in which you all have suggested; but I want you to talk about it further. And hopefully you'll be able to come to some kind of an agreement about case scheduling before the next pretrial conference; but the deadlines that I want to set today are simply the deadline for the plaintiffs' structuring and lead plaintiffs' counsel's motion or stipulation deadline for filing the consolidated amended complaint. You may have the 45 days for filing your response. If you decide you want to file a 12(b) motion, that's fine. Keep in mind, however, I'm going to likely grant leave to amend. I'm sure they've all been taking notes about the -- the And I would suspect that the problems that you have with it. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page39 of 44 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 consolidated amended complaint will address any of the ambiguities that you believe exist with the current complaint. So perhaps a 12(b)(6) motion won't be necessary. I do want to take the opportunity to tell you all that I would appreciate if -- as you litigate this group of cases, that you keep in mind the constraints on the Court's resources. This is my second MDL. I don't get any additional resources for taking the MDL. And I expect this -- since it doesn't have all the different components that DRAM has brought me, I would expect this to be litigated as though it's one big antitrust case. I expect there to be coördination, so that I get one motion. I am hoping that the defense will agree, to the extent possible, that the Wal-Mart and Netflix interests are similar, and can be -- you all can join in and file a consolidated motion. I would expect you to be able to do that and -- depending upon the type of motion; but I expect you at least to give that consideration and to try. Keep in mind I have about 500 cases. All of my cases They're all are equally important to the litigants before me. equally important to me. Some are more time consuming than others, and I have to necessarily make that -- do that balancing for everything that comes across my desk; but I do expect you all, who are all experienced counsel -- and I know you know how to do it. And, in fact, you did it very well in Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page40 of 44 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the direct-purchaser portion of the DRAM case. So I know that you're able to do it, but you need to keep in mind when you present things to me, particularly motion practice -- one of the things I particularly appreciated in the direct-purchaser DRAM portion of the case was that I really did feel at the end of the day that the motions that were brought to me were necessary motions; necessary to keep the litigation going, and necessary to developing the various different aspects of the litigation so that they could be presented in a way that they could be resolved. I really don't like a lot of unnecessary motions and a lot of 12(b) motions. And I don't mean to suggest that yours would be unnecessary, but a lot of 12(b) motions that I see are totally a waste of my time. say, "Enough's enough. And usually after the third one, I I'm not going to let you file any And sometimes more," but they can go on and on and on and on. it's just totally unnecessary, and doesn't serve the purpose of advancing the litigation in any meaningful way. in mind. In terms of your presentations to the Court, just keep in mind: if you had 500 cases, how would you like the Do you want it as focused as can be; as You want user-friendly So keep that motion presented? concise as can be; as clear as can be? documents. tabs. You don't want stacks and stacks of things without I want something I want color coding, and all of that. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page41 of 44 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that's easy, so I can pick it up. attention: That's what gets my a nice, crisp, clearly written brief that's easy to Okay? So just keep read, and fine documents attached to it. that in mind. And I'm sure that you all have learned from the DRAM litigation how to do that. So I will issue an Order with respect to the deadlines that we've set today. There's only been a few. What I'd like is a further case-management conference after all of the cases are here, after the lead counsel has been decided. It's -- that's not a motion that I think I would need a hearing on, but I'll reserve decision on that until after I see if I get motions or a stipulation in that; but as soon as everything is settled, then we're going to want to talk about scheduling, class certification, dispositive motions, discovery, et cetera. So I'll leave it up to you all to contact Ms. Heuerman once it's all settled. And she'll give you a date over the phone, or we'll issue a notice once you tell me that you all are ready for that. conference in about 90 days. THE COURT: give you a date now? In about 90 days. Actually, why don't we I would anticipate a further And if everything's not settled, then you call her and you can change that. THE CLERK: THE COURT: July 9th. All right. July 9th, Thursday, 2:30 in Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page42 of 44 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the afternoon. Okay? Hearing no objections, that's when it will be. If, indeed, everything's not settled at that time, like I said, we have flexibility, and we'll move that date. In terms of -- just to give you a heads-up in terms of discovery, I will be, obviously, sending most discovery to Magistrate Judge Spero, who's also working on the DRAM case. He's got good procedures in place to handle the disputes. will ask you before the next case-management conference to prepare another joint case-management statement dealing with the scheduling issues. Okay. You can write that into the plan. So I That takes care of my issues. Does anyone else wish to raise any issues before I continue on with my calendar? MR. JACOBSON: Just one, your Honor. This is going to be a little antitrust case; not a big antitrust case. THE COURT: Can I hold you to that? Yeah. Well, you certainly have something In any event, I'm MR. JACOBSON: THE COURT: Okay. to do with that, so I'll take you at your word. it does sound like it will be an interesting case. certainly more than happy to work on it. MR. ABRAMS: Thank you, your Honor. MR. G. SAVERI: Mr. Jacobson, if he comes through, And that will take he's going to stipulate to adjustments. Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page43 of 44 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 care of everything. THE COURT: I don't know about -I'll keep my fingers crossed. John will do that very quickly, MR. G. SAVERI: right? MR. JACOBSON: THE COURT: unless you ask. Absolutely. Then we'll see you in July, All right. You can ask to have it advanced or to have it continued if the MDL matters have not been settled. MR. G. SAVERI: MR. ABRAMS: Thank you. Thank you. Thank you, your Honor. MR. JACOBSON: (At 2:35 p.m. the proceedings were adjourned.) - - - - Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587 Case4:09-cv-00244-PJH Document24 Filed04/20/09 Page44 of 44 CERTIFICATE OF REPORTER I, LYDIA ZINN, Official Reporter for the United States Court, Northern District of California, hereby certify that the foregoing proceedings in C. 09-002-PJH, Andrea Resnick, et al., v. Walmart.com USA LLC, et al., were reported by me, a certified shorthand reporter, and were thereafter transcribed under my direction into typewriting; that the foregoing is a full, complete and true record of said proceedings as bound by me at the time of filing. The validity of the reporter's certification of said transcript may be void upon disassembly and/or removal from the court file. ________________________________________ /s/ Lydia Zinn, CSR 9223, RPR Monday, April 20, 2009 Lydia Zinn, CSR, RPR Official Reporter - U.S. District Court (415) 531-6587

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