In re Apple iPhone Antitrust Litigation

Filing 364

Discovery Order re: 352 Joint Statement Regarding Apple's Production of Documents Responsive to Consumer Plaintiffs' 2nd Set of Requests for Production of Documents. Signed by Judge Thomas S. Hixson on 1/8/2021. (cdnS, COURT STAFF) (Filed on 1/8/2021)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 8 9 10 IN RE APPLE iPHONE ANTITRUST LITIGATION Case No. 11-cv-06714-YGR (TSH) DISCOVERY ORDER Re: Dkt. No. 352 United States District Court Northern District of California 11 12 13 We’re here again on the Consumer Plaintiffs’ motion to compel concerning their request 14 for production (“RFP”) 47. This is the one that, as narrowed, requested aggregated global 15 revenues by month for each app available to U.S. customers, including revenues from foreign 16 transactions. The Consumer Plaintiffs previously argued that global revenue is relevant because it 17 relates to the profitability of being an app developer for Apple. The idea is that if app developers 18 can make a lot of money developing apps for the Apple App Store, that will incentivize more of 19 them to develop new apps or improve upon existing ones, benefiting consumers. By contrast, if 20 developers do not make much money selling apps through Apple’s App Store, then they have less 21 incentive to develop or improve content that is available through Apple’s App Store. The 22 Consumer Plaintiffs argue that when developers decide whether to develop or improve an app that 23 will be available through Apple’s app store, they presumably care about all the revenue they 24 would get from the app, not just the domestic revenue. 25 Last time the Court saw two problems with this motion to compel. See ECF No. 317. The 26 first was that this theory of relevance does not have a clear relationship with the injuries to 27 consumers or competition that are the basis for the Consumer Plaintiffs’ case. Unlike the 28 Developer Plaintiffs’ claims in the related 19-3074 action, the Consumer Plaintiffs allege a Kodak- 1 style aftermarket monopoly. ECF No. 228, Ex. A ¶¶ 73, 76-77, 53. Their theory is that iOS 2 devices are expensive, and this expense locks customers into the aftermarket for iOS applications 3 because switching costs (i.e., losing out on the money the customer paid for an iPhone, plus 4 spending more money to buy an Android phone) are high. Id. ¶ 73. The injury to customers from 5 Apple’s alleged monopoly in the app distribution aftermarket is that they can’t buy apps from 6 cheaper sources than Apple, such as directly from the developer. Id. ¶ 53. In addition, the fact 7 that Apple is the only game in town for getting apps reduces the supply of new apps because there 8 aren’t any stores other than Apple’s. Id. By contrast, discovery into how much money developers 9 can earn through Apple’s App Store – the discovery the Consumer Plaintiffs want to take here – seems to relate to developers’ willingness to make new or improved content available through 11 United States District Court Northern District of California 10 Apple’s App Store. But at least as pleaded in the operative complaint, this lawsuit seems to be 12 about consumers who want to buy cheaper apps, or more apps, from somewhere other than 13 Apple’s App Store. 14 And that brings us to the other problem the Court had with this motion. The Developer 15 Plaintiffs in 19-3074 are pursuing an antitrust theory that does indeed focus on the impact of 16 Apple’s policies on developers’ willingness to supply content for Apple’s App Store. The 17 Developer Plaintiffs allege that Apple’s commissions are a disincentive for developers to provide 18 that content. They also allege that Apple’s monopoly on app distribution makes it hard for 19 customers to find desired apps in the App Store, further disincentivizing developers to provide 20 quality apps to Apple’s App Store. 19-3074 ECF No. 53 ¶ 65; see also id. ¶¶ 4, 5. Thus, the 21 Developer Plaintiffs allege injuries to competition in what is delivered through Apple’s App Store. 22 This is the very theory of relevance the Consumer Plaintiffs rely on in their motion to compel. 23 Yet, the Developer Plaintiffs have not joined in this motion to compel but are instead working 24 cooperatively with Apple on a voluntary accommodation. 25 The Court observed that “Proceeding with this motion to compel by Plaintiffs who seem to 26 have no standing to request this information, while the Plaintiffs that do seem to have standing are 27 trying to work out a voluntary accommodation, would discourage cooperation and encourage 28 discovery fights, which is inconsistent with the ‘just, speedy, and inexpensive determination of 2 1 every action and proceeding.’ Fed. R. Civ. Proc. 1.” ECF No. 317 at 3. The Court also observed 2 that “[t]he divergent paths taken by the Consumer and Developer Plaintiffs for this RFP are also in 3 tension with the Coordination Order. See ECF No. 194 ¶ 1 (‘Plaintiffs shall coordinate discovery 4 efforts to minimize expenses and facilitate the orderly and efficient progress of the Related App 5 Store Actions. Consumer Plaintiffs and Developer Plaintiffs shall consult in good faith and 6 engage in reasonable efforts to coordinate discovery and jointly resolve any disputes concerning 7 discovery they are seeking so as to avoid duplication and unnecessary burden.’).” Id. 8 Nonetheless, the Consumer Plaintiffs argued that this information was important for their 9 showing of classwide injury in their upcoming motion for class certification. So, the Court gave them an opportunity to submit an expert declaration to demonstrate the relevance of this 11 United States District Court Northern District of California 10 information to their claims. The Consumer Plaintiffs have now done this in the joint filing at ECF 12 No. 352, and this filing does not change the Court’s mind. 13 The five-paragraph expert declaration makes the basic economic argument that Apple’s 14 commission likely results in higher prices for customers who buy apps on Apple’s App Store and 15 probably also reduces output by reducing incentives for developers to make new or higher quality 16 apps for the App Store. However, the Court understood that already. 17 The Consumer Plaintiffs’ section of the joint letter brief makes no mention of their pleaded 18 theories of antitrust injury and simply presents argument as if they were the Developer Plaintiffs. 19 However, the theory of consumer injury alleged in their operative complaint is the inability to buy 20 cheaper and more apps from places other than Apple’s App Store. The effect of Apple’s policies 21 on the supply and quality of what is sold through the App Store is what the Developer Plaintiffs 22 are suing over (among other things). 23 At oral argument, the Consumer Plaintiffs agreed that the injury to consumers and 24 competition they allege is the lack of alternatives to Apple’s App Store. They also agreed that the 25 discovery they are seeking in RFP 47 is really directed to the supply and quality of what is 26 available within Apple’s App Store. However, they argued that the result of there being no 27 alternatives to Apple’s store is that consumers are stuck with whatever is available in that store, 28 and so discovery into what that consists of is relevant in that sense. That is an attenuated theory of 3 1 relevance, and the Consumer Plaintiffs do not dispute that this discovery is more central to the 2 Developer Plaintiffs’ claims. 3 And those plaintiffs are trying to work cooperatively with Apple on a voluntary 4 accommodation instead of moving to compel this type of information. The parties’ joint filing 5 confirms that this remains true. ECF No. 352 at 1 n.1 (“The Developer Plaintiffs are still 6 requesting that Apple produce this data, but they and Apple agreed to defer the issue.”). 7 Allowing the Consumer Plaintiffs to pursue this discovery while the Developer Plaintiffs – for whom it is more relevant and important – work cooperatively with Apple would be a poor 9 exercise of judicial discretion for the reasons the Court previously explained. What the Consumer 10 Plaintiffs are doing in pressing this issue now is pretty much the opposite of what Judge Gonzalez 11 United States District Court Northern District of California 8 Rogers told them to do in the Coordination Order. Further, since the requested discovery has at 12 most an attenuated relationship to the injuries to consumers or competition alleged by the 13 Consumer Plaintiffs, they have also not made the case that they need this information for their 14 class certification motion. Their motion to compel RFP 47 is therefore denied. 15 IT IS SO ORDERED. 16 17 Dated: January 8, 2021 18 THOMAS S. HIXSON United States Magistrate Judge 19 20 21 22 23 24 25 26 27 28 4

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