"The Apple iPod iTunes Anti-Trust Litigation"

Filing 147

Reply Memorandum re 137 MOTION to Amend/Correct Notice of Motion and Motion to Compel Defendant Apple, Inc.'s Production of Documents Relating to Class Certification Reply in Support of Plaintiffs' Motion to Compel Defendant Apple, Inc.'s Production of Documents Relating to Class Certification filed byPlaintiffs. (Sweeney, Bonny) (Filed on 1/2/2008)

"The Apple iPod iTunes Anti-Trust Litigation"

Doc. 147

1 COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 2 BONNY E. SWEENEY (176174) GREGORY S. WESTON (239944) 3 655 West Broadway, Suite 1900 San Diego, CA 92101 4 Telephone: [phone] (fax) 5 [e-mail] [e-mail] 6 THE KATRIEL LAW FIRM 7 ROY A. KATRIEL (pro hac vice) 1101 30th Street, N.W., Suite 500 8 Washington, DC 20007 Telephone: [phone] (fax) [e-mail] 10 Co-Lead Counsel for Plaintiffs 11 [Additional counsel appear on signature page.] 12 UNITED STATES DISTRICT COURT 13 NORTHERN DISTRICT OF CALIFORNIA 14 SAN JOSE DIVISION 15 THE APPLE IPOD ITUNES ANTI-TRUST ) Lead Case No. C-05-00037-JW(RS) 16 LITIGATION ) ) CLASS ACTION 17 ) ) REPLY IN SUPPORT OF PLAINTIFFS' This Document Relates To: 18 ) MOTION TO COMPEL DEFENDANT ) APPLE, INC.'S PRODUCTION OF ALL ACTIONS. 19 ) DOCUMENTS RELATING TO CLASS CERTIFICATION 20 DATE: January 16, 2008 21 TIME: 9:30 a.m. COURTROOM; 4, 5th Floor 22 JUDGE: Magistrate Judge Richard Seeborg 23 24 25 26 27 28

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1 I. 2

INTRODUCTION In Apple's Opposition to Motion to Compel Production of Documents "Relating to Class

3 Certification," filed December 21, 2007 ("Opposition"), Apple fails to rebut Plaintiffs' showing that 4 the information sought by this motion is relevant to class certification, and fails to demonstrate that 5 production of the data would impose anything other than a de minimis burden on Apple. For these 6 reasons, this Court should grant Plaintiffs' motion to compel. 7 II. 8 9 THE FINANCIAL DATA PLAINTIFFS SEEK IN REQUESTS FOR PRODUCTION NO. 10 AND NO. 19 ARE RELEVANT TO CLASS CERTIFICATION As Plaintiffs demonstrated in their opening papers, profit and cost data are relevant to their

10 class certification motion, and are routinely used in antitrust class certification expert reports.1 11 In In re Dynamic Random Access Memory (DRAM) Antitrust Litigation ("DRAM Antitrust"),

12 for example, Judge Hamilton, in certifying the class, found that "the three damage methodologies 13 identified by [Plaintiffs' economist] ­ have been upheld by numerous courts." In re Dynamic 14 Random Access Memory Antitrust Litig., No. M 02-1486 PJH, 2006 U.S. Dist. LEXIS 39841, at *46 15 (N.D. Cal. June 5, 2006). One of those three widely recognized methodologies for proving damages 16 ­ the "operating margin approach" ­ requires examination of the defendant's revenue and cost data. 17 See id., at *48. While plaintiffs are not required at the class certification stage to conduct a full18 blown damage analysis, they must advance a "plausible methodology" and demonstrate that the 19 evidence they intend to present at trial will rely upon common proof. Id., citing In re Bulk 20 [Extruded]Graphite Prod. Antitrust Litig., Civ. No. 02-6030 (WHW), 2006 U.S. Dist. LEXIS 16619, 21 at *44 (D.N.J. Apr. 4, 2006); In re Industrial Diamonds Antitrust Litig., 167 F.R.D. 374, 384 22 (S.D.N.Y. 1996). 23 24 Defendant devotes much of its Opposition to rehashing its assertion that Plaintiffs' theory is "unprecedented" and contrary to the spirit of the antitrust laws. Opposition at 1:23-2:18. Though 25 Plaintiffs disagree with most of the statements in this portion of Defendant's Opposition and could in detail, it twice already 26 reply rejected by more than suffices to note that Defendant's rehashed arguments haveJW, 2005 WL been Judge Ware. See Slattery v. Apple Computer, Inc., No. C 05-00037 27 2204981 (N.D. Cal. Sept. 9, 2005); Tucker v. Apple Computer, Inc., 493 F. Supp. 2d 1090 (N.D. Cal. 2006). 28 Reply in Support of Plaintiffs' Motion to Compel Defendant Apple, Inc.'s Production of Documents Relating to Class Certification - C-05-00037-JW(RS) -11

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Plaintiffs have no data available to determine whether the operating margin methodology

2 could be used in this case to estimate damages.2 The cost and revenue information is solely in 3 Apple's hands. 4 Request No. 19 narrowly seeks the data necessary to use the operating margin methodology

5 for estimating damages: 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Reply in Support of Plaintiffs' Motion to Compel Defendant Apple, Inc.'s Production of Documents Relating to Class Certification - C-05-00037-JW(RS) -22

All Documents necessary to allow the calculation for each quarter since the introduction of the iPod for each model that iPod has sold, the number of iPods that have been purchased, Apple's total revenue from the sale of each iPod model and Apple's Cost of Manufacturing and cost of sale for each iPod model. Request No. 19 (emphasis added). For these reasons, the requested data are relevant to class certification and should be produced. Defendant states that Plaintiffs "neglect to mention" that it produced "sales information." Opposition at 4:20-24. However, Apple has steadfastly refused to produce any iPod cost data, and Plaintiffs seek both cost and sales data for the various iPod models. Apple also argues that Plaintiffs' motion should be denied because a Plaintiff in one of the two consolidated cases filed a motion for class certification without the benefit of the data Plaintiffs now seek through this motion. This argument fails as a matter of logic. The standard under the Discovery Order currently in effect is whether Plaintiffs' requests are related to class certification and/or impose a de minimis burden. See generally Order re: Plaintiffs' Motion for Administrative Relief, entered July 20, 2007 ("Discovery Order"). Both standards are met here.

Plaintiffs do, however, have some data that could be used to model the other two damages methodologies approved by Judge Hamilton in DRAM Antitrust and by numerous other courts ­ the "before/after" methodology, which compares prices during the period of anticompetitive conduct to prices in effect either prior to or after the anticompetitive conduct period, and the "yardstick" approach, which compares pricing trends in the subject market to pricing trends in a comparable market not affected by anticompetitive conduct. DRAM Antitrust, 2006 U.S. Dist. LEXIS 39841, at *48. While plaintiffs do not possess all of the transactional data necessary to conduct a final analysis under either of these alternative approaches (and are not required to at class certification), some of this data is available from public sources or has been produced by Apple.

1 III. 2 3 4

THE DE MINIMIS BURDEN OF PRODUCTION PROVIDES A SECOND AND INDEPENDENTLY SUFFICIENT BASIS FOR COMPELLING PRODUCTION OF THE UNREDACTED SPREADSHEETS AND THE IPOD DATA THAT DEFENDANT ADMITS IT COMPILES "IN ITS ORDINARY COURSE OF BUSINESS" Judge Ware's Discovery Order also allows "the production of documents whose production

5 would impose only a de minimis burden on either party." Id. at 2:1-2 Apple does not dispute that 6 simply providing unredacted copies of spreadsheets it has already produced in redacted form 7 imposes anything other than a de minimis burden. Thus production of these spreadsheets should be 8 compelled. 9 Regarding the iPod data, Defendant provided a declaration of one of its employees stating

10 that "[i]n its ordinary course of business" it "analyzes the financial performance of the iPod on a 11 worldwide . . . basis" and that producing United States revenue and cost data would take only "two 12 to three days." See Declaration of Charles Lancaster in Support of Apple's Opposition to Motion to 13 Compel Production of Documents Relating to Class Certification, filed December 21, 2007 14 ("Lancaster Decl.") at 2:8-9. 15 Plaintiffs submit that production requiring only "two to three days" would, in Judge Ware's

16 words, "impose only a de minimis burden" on Defendant. Id.; Discovery Order at 2:1-2. However, 17 Plaintiffs did not ask for United States data, they simply requested: 18 19 20 21 22 23 24 25 26 27 28 All Documents necessary to allow the calculation for each quarter since the introduction of the iPod for each model that iPod has sold, the number of iPods that have been purchased, Apple's total revenue from the sale of each iPod model and Apple's Cost of Manufacturing and cost of sale for each iPod model. Request No. 19. While production of data broken down by region might be helpful, the words "United States" appear nowhere in any of Plaintiffs' requests for production of documents, much less the request at issue. Given Mr. Lancaster's admission, that "[i]n its ordinary course of business, Apple analyzes the financial performance of the iPod on a worldwide rather than a regional basis" (Lancaster Decl., at 2:8-9), production of the financial data Plaintiffs request, in the form that it presently exists, would certainly impose no more than a "a de minimis burden" on Defendant. Discovery Order at 2:1-2. Reply in Support of Plaintiffs' Motion to Compel Defendant Apple, Inc.'s Production of Documents Relating to Class Certification - C-05-00037-JW(RS)

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1 IV. 2

CONCLUSION The financial data Plaintiffs seek is discoverable under Judge Ware's recent Discovery Order

3 both on the basis of its clear relevancy to class certification, and independently on the grounds that it 4 would "impose only a de minimis burden" on Defendant. Discovery Order at 2:1-2. For the 5 foregoing reasons, Plaintiffs' motion to compel should be granted. 6 DATED: January 2, 2008 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Reply in Support of Plaintiffs' Motion to Compel Defendant Apple, Inc.'s Production of Documents Relating to Class Certification - C-05-00037-JW(RS) -4Respectfully submitted, COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP BONNY E. SWEENEY GREGORY S. WESTON

s/ BONNY E. SWEENEY BONNY E. SWEENEY 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: [phone] (fax) THE KATRIEL LAW FIRM ROY A. KATRIEL 1101 30th Street, N.W., Suite 500 Washington, DC 20007 Telephone: [phone] (fax) Co-Lead Counsel for Plaintiffs BONNETT, FAIRBOURN, FRIEDMAN & BALINT, P.C. ANDREW S. FRIEDMAN FRANCIS J. BALINT, JR. ELAINE A. RYAN TODD D. CARPENTER 2901 N. Central Avenue, Suite 1000 Phoenix, AZ 85012 Telephone: [phone] (fax) BRAUN LAW GROUP, P.C. MICHAEL D. BRAUN 12304 Santa Monica Blvd., Suite 109 Los Angeles, CA 90025 Telephone: [phone] (fax)

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S:\CasesSD\Apple Tying\RES00048157.doc

MURRAY, FRANK & SAILER LLP BRIAN P. MURRAY JACQUELINE SAILER 275 Madison Avenue, Suite 801 New York, NY 10016 Telephone: [phone] (fax) GLANCY BINKOW & GOLDBERG LLP MICHAEL GOLDBERG 1801 Avenue of the Stars, Suite 311 Los Angeles, CA 90067 Telephone: [phone] (fax) Additional Counsel for Plaintiffs

Reply in Support of Plaintiffs' Motion to Compel Defendant Apple, Inc.'s Production of Documents Relating to Class Certification - C-05-00037-JW(RS)

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CERTIFICATE OF SERVICE I hereby certify that on January 2, 2008, I electronically filed the foregoing with the Clerk of

3 the Court using the CM/ECF system which will send notification of such filing to the e-mail 4 addresses denoted on the attached Electronic Mail Notice List, and I hereby certify that I have 5 mailed the foregoing document or paper via the United States Postal Service to the non-CM/ECF 6 participants indicated on the attached Manual Notice List. 7 I certify under penalty of perjury under the laws of the United States of America that the

8 foregoing is true and correct. Executed on January 2, 2008. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 s/ BONNY E. SWEENEY BONNY E. SWEENEY COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 655 West Broadway, Suite 1900 San Diego, CA 92101-3301 Telephone: [phone] (fax) E-mail: [e-mail]

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