Demartini et al v. Microsoft Corporation

Filing 290

ORDER by Judge Jacqueline Scott Corley denying 276 Motion to Hold Separate. (ahm, COURT STAFF) (Filed on 11/7/2023)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DANTE DEMARTINI, et al.,
Plaintiffs,

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United States District Court
Northern District of California

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Case No. 3:22-cv-08991-JSC
ORDER RE: MOTION TO HOLD
SEPARATE

v.
MICROSOFT CORPORATION,

Re: Dkt. No. 276

Defendant.

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Plaintiffs filed this action under Sections 7 and 16 of the Clayton Act seeking to enjoin a

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proposed merger between Microsoft Corporation and Activision Blizzard, Inc. The Court denied

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Plaintiffs’ motion for a preliminary injunction concluding, among other things, Plaintiffs had not

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demonstrated a likelihood of irreparable injury. (Dkt. No. 189.) After overcoming various

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hurdles, including a separate action brought by the Federal Trade Commission, see FTC v.

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Microsoft, No. 23-2880, and foreign regulatory actions, the merger closed on October 13, 2023.

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Four days before the merger closed, Plaintiffs filed the now pending “motion to hold separate”

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noticed for hearing on November 16, 2023. (Dkt. No. 276.) After carefully considering the

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arguments and briefing submitted, the Court concludes oral argument is unnecessary, see Civ.

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L.R. 7-1(b), VACATES the hearing, and DENIES Plaintiffs’ motion.

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DISCUSSION

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Plaintiffs “seek an order requiring Microsoft to maintain Activision Blizzard as a

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separate subsidiary of Microsoft and to preclude Microsoft from (a) merging any of Activision’s

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business units with Microsoft; or (b) taking action that would irreparably harm Activision’s

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ability to compete as an independent company—such as eliminating any of Activision’s business

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units or gaming studios—until Plaintiffs can be heard on the merits.” (Dkt. No. 276 at 5.1)
As a threshold matter, Plaintiffs offer no legal basis for their motion. The authority they

United States District Court
Northern District of California

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rely on for the Court’s broad equitable power and power to issue a “hold separate order” arose in

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the context of a motion for injunctive relief. See F.T.C. v. Exxon Corp., 636 F.2d 1336, 1344

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(D.C. Cir. 1980) (discussing the propriety of a hold separate order as a less drastic remedy courts

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should consider when ruling on a motion for preliminary injunction). The Court already

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considered and denied Plaintiffs’ motion for a preliminary injunction. (Dkt. No. 189.) To the

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extent Plaintiffs seek to have the Court reconsider its ruling, Plaintiffs have not shown a basis for

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reconsideration. See Kona Enterprises, Inc. v. Est. of Bishop, 229 F.3d 877, 890 (9th Cir. 2000)

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(“a motion for reconsideration should not be granted, absent highly unusual circumstances, unless

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the district court is presented with newly discovered evidence, committed clear error, or if there is

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an intervening change in the controlling law.”) (internal citation omitted).
Further, as Plaintiffs’ appeal of the Court’s denial of their preliminary injunction is

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pending, this Court is divested of jurisdiction over the matters on appeal. See Nat. Res. Def.

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Council, Inc. v. Sw. Marine Inc., 242 F.3d 1163, 1166 (9th Cir. 2001) (“Once a notice of appeal is

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filed, the district court is divested of jurisdiction over the matters being appealed.”). On an appeal

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from a preliminary injunction order, “[t]he district court [only] retains jurisdiction during the

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pendency of an appeal to act to preserve the status quo.” Id. While the Court noted Microsoft’s

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representation that it intended to maintain Activision as a subsidiary, it did not order Microsoft to

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do so. (Dkt. No. 189 at 8.) Nor did Plaintiffs request that it do so. Instead, Plaintiffs inexplicably

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waited five months, until the eve of the merger’s closing, to file a motion requesting injunctive

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relief noticed to be heard well after the merger was to have—and in fact did—close. Plaintiffs

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argue the hold separate order is necessary to preserve divestiture as a remedy. Plaintiffs could and

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should have raised this argument earlier. Plaintiffs offer no basis for such extraordinary relief

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now.

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//

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Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the
ECF-generated page numbers at the top of the documents.
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CONCLUSION

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For the reasons stated above, Plaintiffs’ motion to hold separate is denied.

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Plaintiffs’ administrative motion to seal is DENIED as Microsoft, the party who designated

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the at-issue material as confidential, did not submit a declaration in support of sealing and the time

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to do so has run. See Civ. L.R. 79-5(f)(3). (Dkt. No. 275.)

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The November 16, 2023 case management conference is CONTINUED to December 21,
2023 at 1:30 p.m. via Zoom video. An updated statement is due December 14, 2023.
This Order disposes of Docket Nos. 275, 276.

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United States District Court
Northern District of California

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IT IS SO ORDERED.
Dated: November 7, 2023

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JACQUELINE SCOTT CORLEY
United States District Judge

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