"The Apple iPod iTunes Anti-Trust Litigation"

Filing 165

MOTION to Certify Class and Appoint Class Counsel filed by Melanie Tucker. Motion Hearing set for 11/10/2008 09:00 AM in Courtroom 8, 4th Floor, San Jose. (Attachments: # 1 Proposed Order [Proposed] Order Appointing Coughlin Stoia and The Katriel Law Firm as Co-Lead Class Counsel)(Sweeney, Bonny) (Filed on 7/21/2008) Modified on 12/2/2008 (cv, COURT STAFF).

"The Apple iPod iTunes Anti-Trust Litigation"

Doc. 165

1 COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 2 BONNY E. SWEENEY (176174) 655 West Broadway, Suite 1900 3 San Diego, CA 92101 Telephone: [phone] (fax) [e-mail] 5 THE KATRIEL LAW FIRM 6 ROY A. KATRIEL (pro hac vice) 1101 30th Street, N.W., Suite 500 7 Washington, DC 20007 Telephone: [phone] (fax) [e-mail] 9 Co-Lead Counsel for Plaintiffs 10 [Additional counsel appear on signature page.] 11 UNITED STATES DISTRICT COURT 12 NORTHERN DISTRICT OF CALIFORNIA 13 SAN JOSE DIVISION 14 THE APPLE IPOD ITUNES ANTI-TRUST ) Lead Case No. C-05-00037-JW(RS) 15 LITIGATION ) ) CLASS ACTION 16 ) ) NOTICE OF MOTION AND MOTION FOR This Document Relates To: 17 ) CLASS CERTIFICATION AND ) APPOINTMENT OF CLASS COUNSEL ALL ACTIONS. 18 ) JUDGE: Hon. James Ware 19 DATE: November 10, 2008 TIME: 9:00 a.m. 20 CTRM: 8-4th Floor 21 22 23 24 25 26 27 28

Dockets.Justia.com

1 2 3 I. 4 II. 5 6 7 III. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. V. C. D. B.

TABLE OF CONTENTS Page INTRODUCTION ...............................................................................................................1 PLAINTIFFS' FEDERAL ANTITRUST CLAIMS............................................................3 A. B. The Elements of Plaintiffs' Tying Claim.................................................................3 The Elements of Plaintiffs' Monopolization Claims ...............................................4

THE REQUIREMENTS OF RULE 23 ARE READILY SATISFIED IN THIS CASE ...................................................................................................................................5 A. Rule 23(a) Is Satisfied..............................................................................................6 1. 2. 3. 4. Numerosity...................................................................................................6 Commonality................................................................................................6 Typicality .....................................................................................................7 Adequacy .....................................................................................................8

Rule 23(b) Is Satisfied. ............................................................................................9 1. 2. Injunctive Relief under Rule 23(b)(2)..........................................................9 Monetary Relief under Rule 23(b)(3) ........................................................11 a. b. Predominance.................................................................................11 Superiority......................................................................................22

There Exists Readily Definable Classes of Apple Customers ...............................23 Appointment of Class Counsel ..............................................................................24

PLAINTIFFS' STATE LAW CLAIMS ............................................................................24 CONCLUSION..................................................................................................................25

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1 2 3 CASES

TABLE OF AUTHORITIES Page

4 Amchem Products, Inc. v. Windsor, 521 U.S. 591, 117 S. Ct. 2231, 138 L. Ed. 2d 689 (1997).......................................1, 11, 23 5 Anderson Foreign Motors, Inc. v. New England Toyota Distrib., Inc., 6 475 F. Supp. 973 (D. Mass. 1979) .....................................................................................16 7 Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 105 S. Ct. 2847, 86 L. Ed. 2d 467 (1985)...................................................19 8 Bafus v. Aspen Realty, Inc., 9 236 F.R.D. 652 (D. Idaho 2006) ................................................................................ passim 10 Behrend v. Comcast Corp., No. 03-6604, 2007 WL 2972601 (E.D. Pa. Oct. 10, 2007) .................................................5 11 Betaseed, Inc. v. U&I, Inc., 12 681 F.2d 1203 (9th Cir. 1982) ...........................................................................................14 13 Blackie v. Barrack, 524 F.2d 891 (9th Cir. 1975) ...........................................................................................6, 8 14 Bogosian v. Gulf Oil Corp., 15 561 F. 2d 434 (3rd Cir. 1977) ............................................................................................16 16 Cascade Health Solutions v. PeaceHealth, 515 F.3d 883 (9th Cir. 2008) .....................................................................................3, 4, 19 17 Collins v. Int'l Dairy Queen, Inc., 18 168 F.R.D. 668 (M.D. Ga. 1996) ............................................................................... passim 19 Cost Mgmt. Servs., Inc. v. Washington Natural Gas Co., 99 F.3d 937 (9th Cir. 1996) .................................................................................................5 20 Datagate, Inc. v. Hewlett-Packard Co., 21 60 F.3d 1421 (9th Cir. 1995) .........................................................................................3, 13 22 Digidyne Corp. v. Data Gen. Corp., 734 F.2d 1336 (9th Cir. 1984) ................................................................................... passim 23 Dukes v. Wal-Mart, Inc., 24 509 F.3d 1168 (9th Cir. 2007) ...................................................................................5, 8, 22 25 Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 112 S. Ct. 2072, 119 L. Ed. 3d............................................................ passim 26 Eisen v. Carlisle & Jacquelin, 27 417 U.S. 156, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974).......................................................5 28
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3 Estate of Garrison v. Warner Bros., Inc., No. CV 95-8328 RMT, 1996 WL 407849 4 (C.D. Cal. June 25, 1996) ..............................................................................................7, 20 5 Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534 (9th Cir 1983) ........................................................................................17, 20 6 Fortner Enters., Inc. v. United States Steel Corp., 7 394 U.S. 495, 89 S. Ct. 1252, 22 L. Ed. 2d 495 (1969).................................................3, 12 8 George Lussier Enters., Inc. v. Subaru of New England, Inc., No. CIV 99-109-B, 2001 WL 920060 9 (D.N.H. Aug. 3, 2001) ...........................................................................................11, 13, 23 10 Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) .....................................................................................6, 7, 8 11 Hanon v. Dataproducts Corp., 12 976 F.2d 497 (9th Cir. 1992) ...............................................................................................7 13 Hardy v. City Optical, Inc., 39 F.3d 765 (7th Cir. 1994) ...............................................................................................17 14 Hawaii v. Standard Oil Co. of Cal., 15 405 U.S. 251, 92 S. Ct. 885, 31 L. Ed. 2d 184 (1972).........................................................2 16 Hill v. A-T-O, Inc., 535 F.2d 1349 (2d Cir. 1976).............................................................................................17 17 Hill v. A-T-O, Inc., 18 80 F.R.D. 68 (E.D.N.Y. 1978) .....................................................................................16, 21 19 Image Tech. Servs., Inc. v. Eastman Kodak Co., No. C 87-1686 BAC, 1994 WL 508735 20 (N.D. Cal. Sept. 2, 1994) ........................................................................................... passim 21 In re Catfish Antitrust Litig., 826 F. Supp. 1019 (N.D. Miss. 1993)..................................................................................9 22 In re Corrugated Container Antitrust Litig. 23 No. 310, 1979 WL 1751 (S.D. Tex. Dec. 21, 1979) ..................................................................................................22 24 In re Domestic Air. Transp. Antitrust Litig., 25 137 F.R.D. 677 (N.D. Ga. 1991)....................................................................................9, 22 26 In re Dynamic Random Access Memory (DRAM) Antitrust Litig., No. M 02-1486 PJH, 2006 WL 1530166 27 (N.D. Cal. June 5, 2006) ............................................................................................ passim 28
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3 In re Indus. Silicon Antitrust Litig., No. 95-1131, 1998 WL 1031507 4 (W.D. Pa. Oct. 13, 1998) ...................................................................................................22 5 In re Live Concert Antitrust Litig., 247 F.R.D. 98 (C.D. Cal. 2007) ................................................................................. passim 6 In re Lorazepam & Clorazepate Antitrust Litig., 7 202 F.R.D. 12 (D.D.C. 2001)...............................................................................................5 8 In re NASDAQ Market Makers Antitrust Litig., 169 F.R.D 493 (S.D.N.Y. 1996) ........................................................................................22 9 In re Playmobil Antitrust Litig., 10 35 F. Supp 2d 231 (E.D.N.Y. 1998) ................................................................................1, 6 11 In re Relafen Antitrust Litig., 221 F.R.D. 260 (D. Mass. 2004)........................................................................................24 12 In re Rubber Chems. Antitrust Litig., 13 232 F.R.D. 346 (N.D. Cal. 2005)............................................................................... passim 14 In re Sugar Indus. Antitrust Litig., No. MDL 201, 1976 WL 1374 15 (N.D. Cal. May 21, 1976) ..................................................................................................21 16 In re Tableware Antitrust Litig., 241 F.R.D. 644 (N.D. Cal. 2007)............................................................................... passim 17 In re Visa Check/Mastermoney Antitrust Litig., 18 192 F.R.D. 68 (E.D.N.Y. 2000), aff'd, 280 F.3d 124 (2d Cir. 2001) ............................................................................. passim 19 Jefferson Parish Dist. No. 2 v. Hyde, 20 466 U.S. 2117, 104 S. Ct. 1551, 80 L. Ed. 2d 2.................................................................12 21 Krehl v. Baskin-Robbins Ice Cream Co., 78 F.R.D. 108 (C.D. Cal. 1978) ...........................................................................................6 22 Linney v. Cellular Alaska P'ship., 23 151 F.3d 1234 (9th Cir. 1998) ...........................................................................................10 24 Little Caesar Enters., Inc. v. Smith, 172 F.R.D. 236 (E.D. Mich. 1997) ............................................................................ passim 25 Mailand v. Burckle, 26 20 Cal. 3d 367, 143 Cal. Rptr. 1 (1978).............................................................................24 27 Martino v. McDonald's System, Inc., 81 F.R.D. 81 (N.D. Ill. 1979).............................................................................................18 28
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3 Milonas v. Amerada Hess Corp., No. 73 CIV 4263 (JMC), 1976 WL 1312 4 (S.D.N.Y. Aug. 19, 1976) ............................................................................................13, 17 5 Molski v. Gleich, 318 F.3d 937 (9th Cir. 2003) .............................................................................................10 6 Moore v. Jas. H. Matthews & Co., 7 550 F.2d 1207 (9th Cir. 1977) ................................................................................... passim 8 Moore v. Jas. H. Matthews & Co., 682 F.2d 830 (9th Cir. 1982) .............................................................................................21 9 Northern Pac. Ry. Co. v. United States, 10 356 U.S. 1, 78 S. Ct. 514, 2 L. Ed. 2d 545 (1958).........................................................3, 16 11 Nova Designs, Inc. v. Scuba Retailers Ass'n, 202 F.3d 1088 (9th Cir. 2000) ...........................................................................................24 12 O'Connor v. Boeing North Am., Inc., 13 184 F.R.D. 311 (C.D. Cal. 1998) .......................................................................................23 14 Paladin Assocs., Inc. v. Montana Power Co., 328 F.3d 1145 (9th Cir. 2003) ...........................................................................................17 15 Probe v. State Teachers' Ret. Sys., 16 780 F.2d 776 (9th Cir. 1986) .............................................................................................10 17 Rebel Oil Co., Inc. v. Atlantic Richfield Co., 51 F.3d 1421 (9th Cir. 1995) .........................................................................................5, 18 18 Rick-Mik Enters., Inc. v. Equilon Enters., LLC, 19 ___ F.3d ___, 2008 WL 2697793 (9th Cir. July 11, 2008)..............................................3, 4 20 Slattery v. Apple Comp., Inc., No. C 05-00037 JW, 2005 WL 2204981 21 (N.D. Cal. Sept. 9, 2005) .............................................................................................1, 4, 5 22 Slaven v. BP Am., Inc., 190 F.R.D. 649 (C.D. Cal. 2000) .......................................................................................23 23 Spectrum Sports v. McQuillan, 24 506 U.S. 447, 113 S.Ct. 884, 122 L. Ed. 2d 247 (1993)......................................................5 25 Tele Atlas N.V. v. Navteq Corp., 397 F. Supp. 2d 1184 (N.D. Cal. 2005) ...............................................................................4 26 Thomas & Thomas Rodmakers, Inc. v. Newport Adhesives & Composites, Inc., 27 209 F.R.D. 159 (C.D. Cal. 2002) .........................................................................................7 28
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3 Tucker v. Apple Comp., Inc., 493 F. Supp. 2d 1090 (N.D. Cal., 2006) .................................................................... passim 4 Tuolumne v. Sonora Cmty. Hosp., 5 236 F.3d 1148 (9th Cir. 2001) .................................................................................4, 15, 24 6 Twin City Sportservice, Inc. v. Charles O. Finley & Co., Inc., 512 F.2d 1264 (9th Cir. 1975) ...........................................................................................20 7 United States Steel Corp. v. Fortner Enters., Inc., 8 429 U.S. 610, 97 S. Ct. 861, 51 L. Ed. 2d 80 (1977).........................................................12 9 United States v. Loew's, Inc., 371 U.S. 38 (1962).............................................................................................................14 10 Valentino v. Carter-Wallace, Inc., 11 97 F.3d 1227 (9th Cir. 1996) .............................................................................................22 12 Westways World Travel, Inc. v. AMR Corp., 218 F.R.D. 223 (C.D. Cal. 2003) .........................................................................................9 13 Xiufang Situ v. Leavitt, 14 No. C 06-2841 TEH, 2007 WL 127993 (N.D. Cal. Jan. 12, 2007) .....................................................................................................9 15 Zenith Radio Corp. v. Hazeltine Research, Inc., 16 395 U.S. 100, 89 S. Ct. 1562, 23 L. Ed. 2d 129 (1969).....................................................20 17 STATUTES, RULES AND REGULATIONS 18 15 U.S.C. §1................................................................................................................................ passim 19 §2................................................................................................................................ passim 20 California Business & Professions Code §16700 et seq. ....................................................................................................................24 21 Federal Rules of Civil Procedure 22 Rule 23 ....................................................................................................................... passim Rule 23(a).....................................................................................................................6, 7, 8 23 Rule 23(a)(1)........................................................................................................................6 Rule 23(a)(2)........................................................................................................................6 24 Rule 23(a)(3)........................................................................................................................7 Rule 23(a)(4)..................................................................................................................8, 24 25 Rule 23(b) ............................................................................................................................9 Rule 23(b)(2)..................................................................................................................9, 10 26 Rule 23(b)(3)..................................................................................................................6, 11 Rule 23(g)(1)......................................................................................................................24 27 28
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1 2 3 SECONDARY AUTHORITIES 4 6 A. Conte & H. Newberg, Newberg on Class Actions, §18:1 (4th ed. 2002) ................................2 §4:32 ..................................................................................................................................23 5 §18.8.....................................................................................................................................7 §18.14...................................................................................................................................8 6 §18:24 ..................................................................................................................................9 §18:26 ................................................................................................................................11 7 §18:27 ................................................................................................................................21 §18:30 ................................................................................................................................15 8 §18:5 ....................................................................................................................................6 9 Press Release, Apple, Apple launches iTune Plus Higher Quality DRM-Free Tracks Now Available on the iTunes Store Worldwide May 30, 2007 ..........................................10 10 Press Release, Apple, iTunes Music Store Catalog Tops One Million Songs 11 Aug. 10, 2004.....................................................................................................................12 12 S. Jobs, Thoughts on Music Feb. 6, 2007...........................................................................10, 13, 16 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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ALL PARTIES AND THEIR ATTORNEYS OF RECORD PLEASE TAKE NOTICE that on November 10, 2008 at 9:00 a.m., in Courtroom 8, 4th

3 Floor of the above-entitled Court, located at 280 South 1st Street, San Jose, California, Plaintiffs 4 Melanie Tucker, Mariana Rosen, and Somtai Troy Charoensak (collectively, "Plaintiffs"), will, and 5 hereby do, respectfully move the Court for class certification and to appoint the law firms of 6 Coughlin Stoia Geller Rudman & Robbins LLP ("Coughlin Stoia") and The Katriel Law Firm as Co7 Lead Class Counsel. 8 I. 9 INTRODUCTION Plaintiffs respectfully seek certification of their claims that Defendant Apple, Inc. ("Apple"

10 or "AAPL") violated antitrust laws when, beginning in April 2003, Apple encrypted online audio 11 and video recording files purchased from its online music store ("the iTunes Store") so that they 12 could only be played on portable digital media players manufactured by Apple (collectively, 13 "iPods"). Given Apple's overwhelming market power in the online recordings markets, Plaintiffs 14 allege that Apple's unremitting policy of incompatibility constitutes an unlawful tying arrangement 15 in violation of Section 1 of the Sherman Act. Apple furthermore allegedly obtained, maintained 16 and/or attempted to obtain a monopoly of the online audio and video recordings and portable digital 17 media player markets through a series of anticompetitive actions beyond the initial tie, precluding 18 competition from other portable player makers in violation of Section 2 of the Sherman Act. 19 Plaintiffs seek injunctive relief requiring Apple to remedy the "lock-in" predicament it has created 20 for iPod purchasers, and damages for the supracompetitive price paid for iPods. The Court has 21 already ruled that Plaintiffs have alleged viable federal antitrust claims. See Slattery v. Apple Comp., 22 Inc., No. C 05-00037 JW, 2005 WL 2204981, at *3 (N.D. Cal. Sept. 9, 2005); Tucker v. Apple 23 Comp., Inc., 493 F. Supp. 2d 1090 (N.D. Cal., 2006); see generally, Eastman Kodak Co. v. Image 24 Tech. Servs., Inc., 504 U.S. 451, 462, 112 S. Ct. 2072, 119 L. Ed. 3d 265 (1992). 25 As the Supreme Court and numerous other courts have recognized, few cases are better

26 candidates for class-wide resolution than antitrust actions. Amchem Products, Inc. v. Windsor, 521 27 U.S. 591, 625, 117 S. Ct. 2231, 138 L. Ed. 2d 689 (1997) ("Predominance is a test readily met in 28 certain cases alleging . . . violations of the antitrust laws."); In re Playmobil Antitrust Litig., 35 F.
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1 Supp 2d 231, 238 (E.D.N.Y. 1998) ("Antitrust claims are well suited for class actions."). And, in 2 turn, class actions "play a particularly vital role in the private enforcement of antitrust [laws]." In re 3 Tableware Antitrust Litig., 241 F.R.D. 644, 648 (N.D. Cal. 2007); accord In re Dynamic Random 4 Access Memory (DRAM) Antitrust Litig., No. M 02-1486 PJH, 2006 WL 1530166, at *3 (N.D. Cal. 5 June 5, 2006) ("DRAM") (same); see generally 6 A. Conte & H. Newberg, Newberg on Class 6 Actions, §18:1, at 3-6 (4th ed. 2002) ("Newberg"). In the words of the Supreme Court: 7 8 9 10 11 12 13 * 14 15 16 17 Congress has given private citizens rights of action for injunctive relief and damages for antitrust violations without regard to the amount in controversy. 28 U.S.C. §1337; 15 U.S.C. §15. Rule 23 of the Federal Rules of Civil Procedure provides for class actions that may enhance the efficacy of private actions by permitting citizens to combine their limited resources to achieve a more powerful litigation posture.1 * * Every violation of the antitrust laws is a blow to the free-enterprise system envisaged by Congress. This system depends on strong competition for its health and vigor, and strong competition depends, in turn, on compliance with antitrust legislation. In enacting these laws, Congress had many means at its disposal to penalize violators. It could have, for example, required violators to compensate federal, state, and local governments for the estimated damage to their respective economies caused by the violations. But, this remedy was not selected. Instead, Congress chose to permit all persons to sue to recover three times their actual damages every time they were injured in their business or property by an antitrust violation. By offering potential litigants the prospect of a recovery in three times the amount of their damages, Congress encouraged these persons to serve as "private attorneys general."

18 Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251, 262, 92 S. Ct. 885, 31 L. Ed. 2d 184 (1972). 19 Given the salutary role of the class mechanism in private antitrust actions, any doubt under Rule 23 20 is to be resolved in favor of certification. Tableware, 241 F.R.D. at 648; In re Rubber Chems. 21 Antitrust Litig., 232 F.R.D. 346, 350 (N.D. Cal. 2005). 22 Plaintiffs' claims against Apple are ideally suited for class treatment because, as shown

23 below, every element of those claims can and will be established by evidence and economic analysis 24 common to all iPod purchasers. Indeed, as confirmed in the declaration of esteemed Stanford 25 economist, Professor Emeritus Roger G. Noll ("Noll Decl."), based on his expertise, preliminary 26 27 28
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Unless otherwise noted, citations are omitted and emphasis is added, here and throughout.

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1 research and the exemplar data provided by Apple as the prelude to full discovery, there are 2 established and reliable econometric methodologies available to prove liability, antitrust impact and 3 damages caused by Apple's alleged anticompetitive conduct on a class-wide basis. Sweeney Decl., 4 Ex. 1 (Declaration of Roger G. Noll, dated July 15, 2008).2 5 6 7 8 II. 9 10 Accordingly, Plaintiffs respectfully seek certification of the following class: "All persons or entities in the United States (excluding federal, state and local governmental entities, Apple, its directors, officers and members of their families) who since April 28, 2003 purchased an iPod directly from Apple." PLAINTIFFS' FEDERAL ANTITRUST CLAIMS A. The Elements of Plaintiffs' Tying Claim

"A tying arrangement is a device used by a competitor with market power in one market (for

11 the `tying' product) to extend its market power into an entirely distinct market (for the `tied' 12 product)." Datagate, Inc. v. Hewlett-Packard Co., 60 F.3d 1421, 1423 (9th Cir. 1995); see generally 13 Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 5-6, 78 S. Ct. 514, 2 L. Ed. 2d 545 (1958); 14 Fortner Enters., Inc. v. United States Steel Corp., 394 U.S. 495, 499, 89 S. Ct. 1252, 22 L. Ed. 2d 15 495 (1969). Ties are prohibited where a seller "exploits," "controls," "forces," or "coerces" a buyer 16 of a tying product into purchasing a tied product. Rick-Mik Enters., Inc. v. Equilon Enters., LLC, 17 ___ F.3d ___, 2008 WL 2697793, at *6 (9th Cir. July 11, 2008); Cascade Health Solutions v. 18 PeaceHealth, 515 F.3d 883, 913 (9th Cir. 2008)). Here, Plaintiffs will prove that Apple engaged in 19 just such conduct when it intentionally encrypted recordings purchased from the iTunes Store with 20 Apple's proprietary FairPlay/DRM so as to restrict portable play-back to Apple's own iPods. 21 The tying arrangement "is one of the few practices that the Supreme Court has determined to

22 be illegal per se under the Sherman Act, §1." Datagate, 60 F.3d at 1423; see also Eastman Kodak, 23 504 U.S. at 461-62 (reaffirming theory of per se liability). Indeed, "[a] per se tying violation is 24 proscribed without examining the actual market conditions, when the seller has such power in the 25 26 All "Ex." and "Exs." references are to the Declaration of Bonny E. Sweeney ("Sweeney Decl.") in Support of Plaintiffs' Motion for Class Certification and Appointment of Class Counsel, 27 filed concurrently herewith. 28
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1 tying product or service market that the existence of forcing is probable, . . . and there is a substantial 2 potential for impact on competition." Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1157 (9th 3 Cir. 2001) (internal quotes omitted). 4 As this Court has already held, to establish a per se illegal tying arrangement, Plaintiffs need

5 to show but three elements: 6 7 8 1. 2. 3. A tie between two separate products or services sold in relevant markets; Sufficient economic power in the tying products market to affect the tied market; and An effect on a not-insubstantial volume of commerce in the tied product market.

9 Slattery, 2005 WL 2204981, at *3; Tucker, 493 F. Supp. 2d at 1096; see also Tele Atlas N.V. v. 10 Navteq Corp., 397 F. Supp. 2d 1184, 1191 (N.D. Cal. 2005) (citing Slattery, 2005 WL 2204981); 11 Rick-Mik Enters., 2008 WL 2697793, at *5-*6 (recently reiterating the same three elements for per 12 se tying claim); PeaceHealth, 515 F.3d at 913 (same). Some courts consider a fourth element of a 13 per se claim: that the defendant has an economic interest in the tied product. Tuolumne, 236 F.3d at 14 1158. If a per se analysis does not apply, to establish a Section 1 tying claim Plaintiffs would in 15 addition have to show "an unreasonable restraint on competition in the relevant market." Tuolumne, 16 236 F. 3d at 1157. 17 Because none of the elements of a Section 1 tying claim turns on the individual

18 circumstances of a particular product purchaser, courts both within and outside of the Ninth Circuit 19 have consistently certified tying claims for class-wide resolution. See, e.g., Bafus v. Aspen Realty, 20 Inc., 236 F.R.D. 652 (D. Idaho 2006) (certifying tying claims); see generally Image Tech. Servs., 21 Inc. v. Eastman Kodak Co., No. C 87-1686 BAC, 1994 WL 508735 (N.D. Cal. Sept. 2, 1994) 22 (same); In re Visa Check/Mastermoney Antitrust Litig., 192 F.R.D. 68 (E.D.N.Y. 2000), aff'd, 280 23 F.3d 124 (2d Cir. 2001) (same); Little Caesar Enters., Inc. v. Smith, 172 F.R.D. 236 (E.D. Mich. 24 1997) (same); Collins v. Int'l Dairy Queen, Inc., 168 F.R.D. 668 (M.D. Ga. 1996) (same). 25 26 27 28 B. The Elements of Plaintiffs' Monopolization Claims

To prove their Section 2 monopolization claims, Plaintiffs must show: 1. 2. That Apple possesses monopoly power in the relevant market; That Apple willfully acquired or maintained that power; and -4-

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3.

That Apple's conduct has caused antitrust injury.

2 Slattery, 2005 WL 2204981, at *4; Tucker, 493 F. Supp. 2d at 1099; see generally Eastman Kodak, 3 504 U.S. at 481; Cost Mgmt. Servs., Inc. v. Washington Natural Gas Co., 99 F.3d 937, 949 (9th Cir. 4 1996); Moore v. Jas. H. Matthews & Co., 550 F.2d 1207, 1218 (9th Cir. 1977). To establish their 5 Section 2 attempted monopolization claim, Plaintiffs must show: 6 7 1. 2. A specific intent by Apple to monopolize the relevant market; Predatory or anticompetitive conduct by Apple designed to control prices or destroy

8 competition; 9 10 3. 4. A dangerous probability of success; and Causal antitrust injury.

11 Slattery, 2005 WL 2204981, at *4; Tucker, 493 F. Supp. 2d at 1102; see generally Rebel Oil Co., 12 Inc. v. Atlantic Richfield Co., 51 F.3d 1421, 1433 (9th Cir. 1995); Spectrum Sports v. McQuillan, 13 506 U.S. 447, 456, 113 S.Ct. 884, 122 L. Ed. 2d 247 (1993). 14 Because, once again, none of these elements turns on the individual circumstances of any

15 particular product purchaser, courts likewise have long certified Section 2 monopolization and 16 attempted monopolization claims for class-wide resolution. See, e.g., Behrend v. Comcast Corp., 17 No. 03-6604, 2007 WL 2972601, at *12-*14 (E.D. Pa. Oct. 10, 2007); In re Lorazepam & 18 Clorazepate Antitrust Litig., 202 F.R.D. 12, 29-30 (D.D.C. 2001); Eastman Kodak, 1994 WL 19 508735, at *4. 20 III. 21 "In determining the propriety of a class action, the question is not whether the plaintiff or 22 plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the 23 requirements of Rule 23 are met." Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178, 94 S. Ct. 2140, 24 40 L. Ed. 2d 732 (1974) (internal quotes omitted). Arguments evaluating the weight of evidence or 25 the merits of a case are improper at the class certification stage. Dukes v. Wal-Mart, Inc., 509 F.3d 26 1168, 1177 (9th Cir. 2007). Nor may a court weigh the merits of conflicting expert evidence. 27 Dukes, 509 F.3d. at 1179-80; see In re Live Concert Antitrust Litig., 247 F.R.D. 98, 135 (C.D. Cal. 28
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THE REQUIREMENTS OF RULE 23 ARE READILY SATISFIED IN THIS CASE

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1 2007) (challenges to expert opinions constitute merits determinations not properly resolved at the 2 class certification stage). And the Court is, of course, "bound to take the substantive allegations of 3 the complaint as true." Tableware, 241 F.R.D. at 648 (quoting Blackie v. Barrack, 524 F.2d 891, 4 901 n.17 (9th Cir. 1975)). 5 6 7 A. Rule 23(a) Is Satisfied. 1. Numerosity

The numerosity requirement is met if "the class is so numerous that joinder of all members is

8 impracticable." Fed. R. Civ. P. 23(a)(1). "A finding of numerosity may be supported by common 9 sense assumptions, and it is especially appropriate in antitrust actions brought under Rule 23(b)(3)." 10 Tableware, 241 F.R.D. at 648 (quoting In re Playmobil, 35 F. Supp 2d at 239); accord In re Rubber 11 Chemicals, 232 F.R.D. at 350. "A potential class of 1,700 members is, a fortiori, sufficiently 12 numerous to preclude joinder." Krehl v. Baskin-Robbins Ice Cream Co., 78 F.R.D. 108, 114 (C.D. 13 Cal. 1978). The fact that a class is geographically dispersed supports class certification. DRAM, 14 2006 WL 1530166, at *3. 15 Here, Apple itself reports that it sold over 51,000,000 iPods during the fiscal year 2007 alone.

16 Sweeney Decl. Ex. 2 (Apple Inc., Annual Report (Form 10-K), at 42 (Sept. 29, 2007)); see generally 17 Sweeney Decl., Ex. 1 (Noll Decl. at 46) (there are "estimated to be over 110 million [iPod] users"). 18 Because the number of direct iPod purchasers in the United States is unquestionably in the millions, 19 numerosity is easily satisfied. Compare Tableware, 241 F.R.D. at 648-49 (numerosity satisfied with 20 lesser numbers); Bafus, 236 F.R.D. at 655 (same); Little Caesar, 172 F.R.D. at 242 (same); Collins, 21 168 F.R.D. at 673 (same); Eastman Kodak, 1994 WL 508735, at *1 (same). 22 23 2. Commonality

Commonality is satisfied where "there are questions of law or fact common to the class."

24 Fed. R. Civ. P. 23(a)(2). The commonality requirement is permissively construed, such that "[t]he 25 existence of shared legal issues with divergent factual predicates is sufficient, as is a common core of 26 salient facts coupled with disparate legal remedies within the class." Hanlon v. Chrysler Corp., 150 27 F.3d 1011, 1019 (9th Cir. 1998). In the antitrust context, "[a]n allegation of . . . tying [or] 28 monopolization . . . will establish a common question." Newberg, §18:5, at 16-20.
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1

Here, the legal issues common to all class members include virtually every element of the

2 federal antitrust claims alleged against Apple: Are the markets for online digital recordings and 3 portable players separate? What are Apple's respective market shares? Does Apple enjoy market 4 power in these markets? Does Apple have an unremitting policy of applying its encryption 5 ("FairPlay") restrictions? Has Apple used those restrictions to obtain, maintain or attempt to obtain 6 monopoly power in the portable player market? If Apple is liable, how are damages to be 7 calculated? These and many other common issues focusing on the alleged common conduct of 8 Apple are squarely raised in this action, amply satisfying commonality. Compare Tableware, 241 9 F.R.D. at 649 (commonality satisfied based on alleged common practice by defendant); Bafus, 236 10 F.R.D. at 656 (same); Little Caesar, 172 F.R.D. at 242 (same); Collins, 168 F.R.D. at 673-74 (same); 11 Eastman Kodak, 1994 WL 508735, at *1 (same). 12 13 3. Typicality

The third Rule 23(a) requirement, typicality, is met where "the claims . . . of the

14 representative parties are typical of the claims . . . of the class." Fed. R. Civ. P. 23(a)(3). Under 15 Rule 23(a)(3), "representative claims are `typical' if they are reasonably co-extensive with those of 16 absent class members; they need not be substantially identical." Hanlon, 150 F.3d at 1020; accord 17 Eastman Kodak, 1994 WL 508735, at *2. "The test of typicality is whether other members have the 18 same or similar injury, whether the action is based on conduct which is not unique to the named 19 plaintiffs, and whether other class members have been injured by the same course of conduct." 20 Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). In the antitrust context, typicality 21 "will be established by plaintiffs and all class members alleging the same antitrust violation by the 22 defendants." Estate of Garrison v. Warner Bros., Inc., No. CV 95-8328 RMT, 1996 WL 407849, at 23 *2 (C.D. Cal. June 25, 1996); accord Newberg, §18.8, at 29. The typicality requirement is to be 24 "liberally construed." Thomas & Thomas Rodmakers, Inc. v. Newport Adhesives & Composites, 25 Inc., 209 F.R.D. 159, 164 (C.D. Cal. 2002). 26 Here, Plaintiffs all purchased iPods directly from Apple, allege precisely the same antitrust

27 claims on behalf of themselves and every other member of the proposed class of iPod purchasers, 28 and seek relief for the same alleged injury. Consolidated Complaint for Violations of Sherman
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1 Antitrust Act, Clayton Act, Cartwright Act, California Unfair Competition Law, Consumer Legal 2 Remedies Act and California Common Law of Monopolization, filed April 14, 2007, ("CCAC"), 3 ¶¶26, 72-78. Typicality is established. Compare Tableware, 241 F.R.D. at 653 (typicality 4 requirement satisfied); Bafus, 236 F.R.D. at 656 (same); Little Caesar, 172 F.R.D. at 242-3 (same); 5 Collins, 168 F.R.D. at 674 (same); Eastman Kodak, 1994 WL 508735, at *2 (same). 6 7 4. Adequacy

The fourth requirement of Rule 23(a) is that "the representative parties will fairly and

8 adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). Adequacy under Rule 9 23(a)(4) turns on two basic questions: "(1) do the named plaintiffs and their counsel have any 10 conflicts of interest with other class members and (2) will the named plaintiffs and their counsel 11 prosecute the action vigorously on behalf of the class?" Hanlon, 150 F.3d at 1020; accord Dukes, 12 509 F.3d at 1185. To disqualify class representatives or class counsel, perceived conflicts of interest 13 "must go to the heart of the litigation, relating to the subject matter of the suit." Newberg, §18.14, at 14 40-41; accord Blackie, 524 F.2d at 909. 15 Here, the interests of the Plaintiffs and the rest of the proposed class are entirely aligned: as

16 direct purchasers of iPod players from Apple, all share the same interest in determining whether 17 Apple's use of FairPlay violated antitrust law, whether competition was thereby stifled, whether 18 Plaintiffs and class members were unlawfully "locked-in" to iPods as portable players and/or 19 whether they paid supracompetitive prices for those iPods. DRAM, 2006 WL 1530166, at *6 20 (adequacy of representation met because "the named plaintiffs allege that all members of the 21 proposed class paid artificially inflated prices as a result of defendants' [antitrust violation] during 22 the relevant class period, that all suffered similar injury as a consequence of the conspiracy, and that 23 all seek the same relief."). There are simply no conflicts precluding class certification. Compare 24 Tableware, 241 F.R.D. at 649 (no conflict precluding certification of antitrust claims); Bafus, 236 25 F.R.D. at 657 (same); Little Caesar, 172 F.R.D. at 244 (same); Collins, 168 F.R.D. at 674-5 (same). 26 Nor is there any basis to doubt that Mr. Charoensak, Ms. Rosen, and Ms. Tucker are highly

27 motivated advocates for the proposed class. They have retained legal counsel with considerable 28 experience in the prosecution of major class and antitrust litigation. Sweeney Decl., Exs. 3-4 (Firm
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1 Resumes of Coughlin Stoia Geller Rudman & Robbins LLP and The Katriel Law Firm, 2 respectively); see also Order Consolidating Related Cases; Appointing Co-Lead Counsel, dated 3 March 21, 2007 ("March 21, 2007 Order"). Furthermore, all three proposed class representatives 4 have already given day-long depositions, have submitted their iPods for a forensic inspection by 5 Apple's counsel, and have produced voluminous (and needlessly intrusive) documentation to Apple 6 as part of the discovery process, including: copies of all music files stored on their personal 7 computers; copies of their iTunes Purchase history; iTunes account names and passwords; copies of 8 receipts documenting their iPod purchases from Apple; and lists of every Compact Disc they 9 currently own. Sweeney Decl., ¶¶3-4. Mr. Charoensak, Ms. Rosen, and Ms. Tucker are assuredly 10 committed proposed class representatives. See March 21, 2007 Order. 11 12 13 B. Rule 23(b) Is Satisfied. 1. Injunctive Relief under Rule 23(b)(2)

Under Rule 23(b)(2), a class is appropriately certified where defendants have acted or refused

14 to act in a manner generally applicable to the class, rendering injunctive relief or declaratory relief 15 appropriate to the class as a whole. Westways World Travel, Inc. v. AMR Corp., 218 F.R.D. 223, 16 240 (C.D. Cal. 2003). It is sufficient if class members complain of a company pattern or practice 17 that is generally applicable to the class as a whole, even if not all class members have been injured 18 by the challenged practice. Xiufang Situ v. Leavitt, No. C 06-2841 TEH, 2007 WL 127993, at *10 19 (N.D. Cal. Jan. 12, 2007). Antitrust claims may be certified under Rule 23(b)(2) when injunctive 20 relief is sought. Newberg, §18:24, at 79 (and cases cited therein); See, e.g., In re Visa

21 Check/Mastermoney, 192 F.R.D. at 87 (certifying Rule 23 (b)(2) class); In re Catfish Antitrust Litig., 22 826 F. Supp. 1019, 1046 (N.D. Miss. 1993) (same); In re Domestic Air. Transp. Antitrust Litig., 137 23 F.R.D. 677, 696 (N.D. Ga. 1991) (same). 24 Plaintiffs' first and foremost goal is to enjoin Apple from continuing to obstruct

25 interoperability between online audio and video recordings sold through the iTunes Store and 26 competing portable digital media players. Without question, Apple has in this regard acted in a 27 consistent and unwavering manner toward all proposed class members: Steve Jobs, Apple's own 28 CEO, confirmed that "music purchased from Apple's iTunes Store will only play on iPods."
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1 Sweeney Decl., Ex. 5 (S. Jobs, Thoughts on Music, Feb. 6, 2007 available at 2 www.apple.com/hotnews/thoughtsonmusic/) ("[Apple] envelopes [sic] each song purchased from the 3 iTunes Store in special and secret software so that it cannot be played on unauthorized devices."). 4 Compare Little Caesar, 172 F.R.D. at 268. If Apple's deliberate incompatibility is determined by 5 the factfinder to have been unlawful, then declaratory or injunctive relief precluding Apple's 6 alteration of the digital entertainment files and "unlocking" the recordings would certainly be 7 "appropriate . . . to the class as a whole." In re Visa Check/MasterMoney, 192 F.R.D. at 88-89. 8 Plaintiffs here seek to enjoin Apple: (a) from rendering online digital audio and video recordings 9 sold through the iTunes Store inoperable with portable digital media players other than the iPod; and 10 (b) to "unlock" the iTunes Store recordings previously purchased so that they may be played on 11 portable digital media players other than iPods (a feat which is known to be technically 12 accomplishable because Apple currently does this for some recordings).3 13 Plaintiffs' additional prayer for money damages does not preclude Rule 23(b)(2)

14 certification. The Ninth Circuit has repeatedly held that "`class actions certified under Rule 23(b)(2) 15 are not limited to actions requesting only injunctive or declaratory relief, but may include cases that 16 also seek monetary damages.'" Linney v. Cellular Alaska P'ship., 151 F.3d 1234, 1240 (9th Cir. 17 1998) (quoting Probe v. State Teachers' Ret. Sys., 780 F.2d 776, 780 (9th Cir. 1986)); see also 18 Molski v. Gleich, 318 F.3d 937, 949-50 (9th Cir. 2003) (facts and circumstances of each case 19 determine the plaintiffs' fundamental intent in bringing the suit). If this Court deems it appropriate, 20 notice and the opportunity to opt-out can be given in a Rule 23(b)(2) certification. Molski, 318 F.3d 21 at 951 n.16; but see In re Visa Check/MasterMoney, 192 F.R.D. at 88-89 (notice to injunctive class 22 not required by the Court). 23 24 25 26 Sweeney Decl., Ex. 6 (Press Release, Apple, Apple launches iTune Plus Higher Quality DRM-Free Tracks Now Available on the iTunes Store Worldwide, May 30, 2007 available at 27 http://www.apple.com/pr/library/2007/05/30itunesplus.html). 28
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1 2

2.

Monetary Relief under Rule 23(b)(3)

Under Rule 23(b)(3), the Court may certify a class if it determines: (1) that the questions of

3 law or fact common to the members of the class predominate over any questions affecting only 4 individual members; and (2) that a class action is superior to other available methods for the fair and 5 efficient adjudication of the controversy. The "predominance" and "superiority" factors are closely 6 related: when common issues predominate, class actions achieve Rule 23's objectives of economy 7 and efficiency by minimizing costs and avoiding the confusion that would result from inconsistent 8 outcomes. Tableware, 241 F.R.D. at 651. 9 10 a. Predominance

"The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently

11 cohesive to warrant adjudication by representation." Amchem Products, 521 U.S. at 623. To 12 predominate, common questions "need not be dispositive of the litigation." Tableware, 241 F.R.D. 13 at 651. In antitrust cases, issues of tying, monopolization and attempted monopolization have been 14 viewed as central issues which satisfy the predominance requirement. Newberg, §18:26, at 86-89. 15 Indeed, as shown below and confirmed by Professor Noll, each element of Plaintiffs' Section 1 tying 16 and Section 2 monopolization claims can and will be proved in this case through evidence common 17 to every member of the proposed classes. 18 19 (i) Section 1 Tying Claims

An element-by-element analysis confirms that Plaintiffs' Section 1 tying claim is comparable

20 to the tying claims certified for class resolution in Bafus and Eastman Kodak, because each element 21 squarely raises issues that can and will be proved by common evidence. 22 Separate Tying and Tied Products. The tied products must not be simply integral

23 components of some larger product. Eastman Kodak, 504 U.S. at 462. The question of distinctness 24 between product markets is certainly one "readily amenable to common proof." George Lussier 25 Enters., Inc. v. Subaru of New England, Inc., No. CIV 99-109-B, 2001 WL 920060, at *8 (D.N.H. 26 Aug. 3, 2001); accord In re Visa Check/Mastermoney, 192 F.R.D. at 87 (and authorities cited 27 therein). Plaintiffs can, if need be, show through common evidence that the two products offered by 28 Apple could be offered separately. See, e.g., Digidyne Corp. v. Data Gen. Corp., 734 F.2d 1336,
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1 1339 (9th Cir. 1984); see also Eastman Kodak, 504 U.S. at 462-63 (where items have been sold 2 separately, distinct product markets exist). 3 Sufficient Power in the Tying Product Market. The next element involves proof that the

4 defendant had "sufficient economic power in the tying product market to restrain appreciably 5 competition in the tied product market." Moore, 550 F.2d at 1214; see generally United States Steel 6 Corp. v. Fortner Enters., Inc., 429 U.S. 610, 620, 97 S. Ct. 861, 51 L. Ed. 2d 80 (1977) ("the 7 question is whether the seller has some advantage not shared by his competitors in the market for the 8 tying product"). "Possession by the seller of . . . monopoly power [in the tying product market] is 9 sufficient to establish per se illegality, . . . ." (Digidyne, 734 F.2d at 1339-40) and "[t]he existence of 10 [market] power ordinarily is inferred from the seller's possession of a predominate share of the 11 market." Eastman Kodak, 504 U.S. at 464; Jefferson Parish Dist. No. 2 v. Hyde, 466 U.S. 2117, 104 12 S. Ct. 1551, 80 L. Ed. 2d 2 (same).4 13 Here, Plaintiff will establish Apple's domination of the online audio and video recordings

14 markets through common (and likely undisputed) evidence of Apple's market share during the 15 pertinent time period. In August 2004, Apple announced it had "more than [a] 70 percent market 16 share of the legal downloads for singles and albums." Sweeney Decl., Ex. 7 (Press Release, Apple, 17 iTunes Music Store Catalog Tops One Million Songs, (Aug. 10, 2004) available at 18 www.apple.com/pr/library/2004/aug/10itms.html). During virtually every quarter of the class 19 period, Apple has publicly stated its market share of the online digital recordings markets. See, e.g., 20 Sweeney Decl., Exs. 8-11 (AAPL ­ Q4 2004 Earnings Conference Call (Oct. 13, 2004); AAPL ­ Q3 21 2005 Earnings Conference Call (July 13, 2005); AAPL ­ Q2 2006 Earnings Conference Call (Apr. 22 19, 2006); APPL ­ Q1 2007 Earnings Conference Call (Jan. 17, 2007), respectively). And, 23 according to Jobs, through the end of 2006 alone, Apple sold some 2 billion songs encrypted with 24 On 25 does not, . .the other hand, it is important to note that " [t]he standard of `sufficient economic power' . require that the defendant have a monopoly or even a dominant position throughout the market for the tying product. Our tie-in cases have made unmistakably clear that the economic 26 power over the tying product can be sufficient even though the power falls far short of dominance power with respect to some 27 and even though the accord exists only 734 F.2d at 1339-40. of the buyers in the market." Fortner, 394 U.S. at 502-03; Digidyne, 28
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1 FairPlay. Sweeney Decl., Ex. 5 (see supra, Jobs, Thoughts on Music). Apple's dominance in the 2 tying product market ­ if disputed at all ­ will plainly be proved through common evidence. See, 3 e.g., In re Visa Check/MasterMoney, 192 F.R.D. at 87 ("Class-wide determination of defendants' 4 market power is warranted."); Milonas v. Amerada Hess Corp., No. 73 CIV 4263 (JMC), 1976 WL 5 1312, at *4 (S.D.N.Y. Aug. 19, 1976) (sufficiency of market power given alleged unremitting policy 6 was a common question for class-wide resolution); see generally Sweeney Decl., Ex. 1 (Noll Decl., 7 at 10-12, 29-47). 8 Effect on Commerce in the Tied Product. Showing a "non-insubstantial effect on the

9 volume of commerce in the tied product" is another element of Plaintiffs' tying claim that is "readily 10 amenable" to common proof. George Lussier, 2001 WL 920060, at *8 (citing Little Caesar, 172 11 F.R.D. at 266). In particular, Plaintiffs need only show that the total net revenue derived from tied 12 product sales is "not de minimis." Moore, 550 F.2d at 1216; Digidyne, 734 F.2d at 1341 & 1347. 13 Far from de minimis, Apple's revenue from the direct sales of iPods have easily exceeded $1 billion. 14 See, e.g., Sweeney Decl., Ex. 2, Apple, Inc. Annual Report 2007 (Form 10-K), at 42; Sweeney Decl., 15 Ex. 12 (Defendant Apple, Inc.'s Answer and Defenses to Plaintiffs' Consolidated Complaint, filed 16 June 6, 2007 ("Answer")), ¶25 (admitting that "Apple's publicly disclosed revenue and profit data 17 speak for themselves . . . ."). Cf. Datagate, 60 F.3d at 1425-26 (test met by $100,000 in annual 18 sales); Moore, 550 F.2d at 1216 (test met $60,800 in dollar volume). To the extent Apple attempts 19 to dispute this rather obviously satisfied element, it will be resolved by common evidence. 20 Apple's Interest in the Tied Product. All proposed class members by definition purchased

21 their iPods directly from Apple, and Apple can hardly deny that it sells the iPods.5 Sweeney Decl., 22 Ex. 12 (Answer, ¶9). Again, should Apple somehow contest its interest in iPod sales, it would only 23 raise an additional question of fact common to the class as a whole. 24 25 26 See also Sweeney Decl., Ex. 13 (Reply in Support of Motion to Dismiss Antitrust Claims, filed November 11, 2006) ("Apple MTD Reply") at 11 n.9 (admitting that Apple digital music files 27 and iPods are priced on Apple's website). 28
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1

Potential Affirmative Defenses. The business justification defenses asserted by Apple in its

2 Motion to Dismiss the Tucker complaint ­ e.g., that Apple was "required" by music labels to use 3 FairPlay, that without FairPlay Apple's online music store "would not exist" ­ only serve to 4 reinforce predominance, by raising additional issues that are indisputably common in character to 5 the class. Sweeney Decl., Ex. 14 (Defendant's Notice of Motion and Motion to Dismiss Antitrust 6 Claims, filed August 21, 2006) ("Apple MTD")) at 1. Plaintiff in response will demonstrate by 7 further common evidence that these defenses are purely "pretextual." Eastman Kodak, 504 U.S. at 8 484; see, e.g., Sweeney Decl., Ex. 15 (Warner Music Group F1Q07 Earnings Call Feb. 8, 2007 9 available at http://seekingalpha.com/article/26496-warner-music-group-f1q07-qtr-end-12-31-0610 earnings-call-transcript) (Warner Music Group Chairman and CEO advocating label support for 11 interoperability while preserving DRM); see generally Sweeney Decl., Ex. 1 (Noll Decl. at 15-16, 12 49-51).6 In its Answer Apple also asserts additional, undeniably common defenses. For example, 13 Apple contends that its actions purportedly did not result in any adverse effects on competition, that 14 any such effects were supposedly outweighed by pro-competitive benefits, and that Apple allegedly 15 did not act with the purpose or intent to suppress or restrain competition. See Sweeney Decl., Ex. 12 16 (Answer at 15). Plaintiffs will in response demonstrate the availability of less restrictive

17 alternatives. Moore, 550 F.2d at 1217; Betaseed, 681 F.2d at 1228; see also Sweeney Decl., Ex. 1 18 (Noll Decl., at 13-14, 49-51). For present purposes, though, it suffices that none of the purported 19 business justifications offered by Apple would require consideration of the individual circumstances 20 of the particular iPod purchase.7 21 Rule of Reason Analysis. If for some reason a per se analysis is not applied, Plaintiffs will

22 through common evidence prove that Apple's tie-in policy unreasonably suppresses competition in 23 24 Plaintiffs note, however, that Apple cannot insulate itself from liability by claiming that it was forced into illegal conduct by another party. United States v. Loew's, Inc., 371 U.S. 38, 51-52 25 (1962) (fact that guarantor of loan required defendant to obtain tie-in did not constitute a defense); 26 Betaseed, Inc. v. U&I, Inc., 681 F.2d 1203, 1225 (9th Cir. 1982) (citing Loew's, 371 U.S. 38). 7 Yet another common issue, Apple also bears the burden of showing that the tie-in was 27 reasonable for the entire time it was in effect. Betaseed, 681 F.2d at 1215. 28
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1 the tied product market for portable digital media players. Tuolumne, 236 F.3d at 1158. Under the 2 rule of reason's burden-shifting scheme, Plaintiffs must first "`delineate a relevant market and show 3 that the defendant plays enough of a role in that market to impair competition significantly.'" Id. at 4 1159. Plaintiffs would make that showing here through common evidence of Apple's dominance in 5 both the online recordings and portable digital media player markets. See, e.g., Sweeney Decl., Exs. 6 8-11 (APPL ­ Q4 2004 Earnings Conference Call (Oct. 13, 2004); APPL ­ Q3 2005 Earnings 7 Conference Call (July 13, 2005); APPL ­ Q2 2006 Earnings Conference Call (Apr. 19, 2006); 8 APPL ­ Q1 2007 Earnings Conference Call (Jan. 17, 2007), respectively) Sweeney Decl., Ex. 16 9 (AAPL ­ Q4 2005 Earnings Conference Call (Oct. 11, 2005)). 10 Coercion. Defendants sometimes challenge predominance on the theory that "coercion" is

11 an element of a Section 1 tying claim that must be established as to each individual member of the 12 class. Newberg, §18:30, at 112-13; see generally Little Caesar, 172 F.R.D. at 253-58 (explaining 13 courts' shorthand use of "coercion" terminology). Such an argument is unavailing here for at least 14 three reasons. 15 First, "[t]he Ninth Circuit ... does not require any showing of such actual coercion in tying

16 claims." Bafus, 236 F.R.D. at 657. As explained in Moore: 17 18 19 Although some cases in other circuits have required a showing of actual coercion, . . . our reading of the Supreme Court's opinions supports the view that coercion may be implied from a showing that an appreciable number of buyers have accepted burdensome terms, such as a tie-in, and there exists sufficient economic power in the tying product market . . . .

20 550 F. 2d at 1217; accord Tucker, 493 F. Supp. 2d at 1097 ("there is no requirement that individual 21 purchaser plaintiffs must allege coercion at the individual level, rather than at the market level"). To 22 the extent coercion need be shown at all, therefore, Plaintiffs need only show that "an appreciable 23 number of buyers" have been coerced ­ a market-level showing made on a class-wide basis. See, 24 e.g., Bafus, 236 F.R.D. at 657 (following Moore); Eastman Kodak, 1994 WL 508735, at *3 (same); 25 see also Collins, 168 F.R.D. at 675-76 (rejecting argument that coercion must be proved 26 individually, so as to preclude class certification). Therefore, proof of market coercion ­ i.e., that 27 "an appreciable number of buyers have accepted" the tie-in, and that Apple holds "sufficient 28 economic power in the tying product market" does not require individual "state-of-mind"
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1 determinations from every class member so as to preclude class certification. Moore, 550 F. 2d at 2 1217; accord Bogosian v. Gulf Oil Corp., 561 F. 2d 434, 449-50 (3rd Cir. 1977) ("It has never been 3 an element of a plaintiff's case to disprove, nor even a permitted defense, that the tied product is 4 superior to others available on the market, or that even without the tie requirement plaintiff would 5 have purchased the tied product. . . . The issue is whether the seller acted in a certain way, not what 6 the buyer's state of mind would have been absent the seller's action."); Anderson Foreign Motors, 7 Inc. v. New England Toyota Distrib., Inc., 475 F. Supp. 973, 988 (D. Mass. 1979) ("The Supreme 8 Court's per se test is designed to eliminate detailed evidentiary inquiries of the type that would be 9 required to prove individual buyer coercion. . . . It is the nature of the test that it focuses not on the 10 buyer's state of mind but rather on the seller's actions."). 11 Second, Apple's announced "unremitting policy" of limiting portable play-back of the online

12 digital audio and video recordings to iPods obviates any need to show coercion. See Bogosian, 561 13 F.2d at 450 ("once a plaintiff proves that a defendant has conditioned the sale of one product upon 14 the purchase of another there is no requirement that he prove that his purchase was coerced by the 15 seller's requirement"); Hill v. A-T-O, Inc., 80 F.R.D. 68, 69 (E.D.N.Y. 1978) (in case of "unremitting 16 policy of tie-in," further evidence of coercion is unnecessary). There is no question here that under 17 Apple's "unremitting policy" of applying FairPlay to the online recordings, buyers may not exercise 18 free choice in choosing a portable digital media player on which to play those recordings ­ a classic 19 indicia of a tie proscribed under the Sherman Act. Northern Pacific Ry., 356 U.S. at 6. Indeed, 20 Apple has unabashedly announced and defended its unequivocal policy of applying FairPlay to the 21 online recordings it sells, such that "music purchased from Apple's iTunes store will only play on 22 iPods." See, e.g., Sweeney Decl., Ex. 5 (see supra, Jobs, Thoughts on Music) ("[Apple] envelopes 23 each song purchased from the iTunes store in special and secret software so that it cannot be played 24 on unauthorized devices."); Sweeney Decl., Ex. 12 (Answer, ¶50) (admitting that Apple has not 25 26 27 28
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1 licensed FairPlay to other portable player manufacturers).8 Common evidence of this sort shows that 2 Apple's position went far beyond mere persuasion, and in fact amounted to an "unremitting policy" 3 of tie-in between the iTunes Store's online digital audio and video recordings and the iPod. 4 Compare Hill v. A-T-O, Inc., 535 F.2d 1349, 1355 (2d Cir. 1976) (noting that "defendants admit to a 5 policy of never offering the [tying product] separately from the [tied product]"); see also Eastman 6 Kodak, 504 U.S. at 463 (conditioning established through evidence of defendant's policy to sell parts 7 to third parties only if they agreed not to buy services from independent service organizations). At a 8 minimum, the existence of Apple's "unremitting policy" is itself a common question, to be resolved 9 on a class-wide basis. See, e.g., Milonas, 1976 WL 1312, at*4 (the existence vel non of defendants' 10 "unremitting policy" certified for class-wide resolution). 11 Finally, even if evidence of some general "modicum" of involuntariness or coercion were

12 still required here, Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534, 540 (9th Cir 13 1983), certification remains appropriate because that modicum could be established generally by 14 circumstantial evidence common to the putative class as a whole rather than on a purchaser-by15 purchaser basis, such as evidence that Apple's actions "locked-in" a large number of (even if not 16 necessarily all) Apple customers to the use of iPods. Sweeney Decl., Ex. 1 (Noll Decl. at 14, 48-49); 17 See, e.g., Digidyne, 734 F.2d at 1342 (considering both direct and circumstantial evidence of 18 forcing); Paladin Assocs., Inc. v. Montana Power Co., 328 F.3d 1145, 1161 (9th Cir. 2003) 19 (suggesting that evidence of tie-in requirement sent to customers at large would allow inference of 20 coercion); Hardy v. City Optical, Inc., 39 F.3d 765, 770-71 (7th Cir. 1994) (coercion may be proved 21 on a classwide basis with evidence of a "blanket policy"), Moore, 550 F.2d at 1217 ("coercion may 22 be implied from a showing that an appreciable number of buyers have accepted burdensome 23 terms. . . . [In Siegel] we refused to accept appellant's individual coercion theory and we were not 24 troubled by the fact there was no evidence to show that each [class member] had been required to 25 26 See also Sweeney Decl., Ex. 14 (Apple MTD at 3 n.4); Sweeney Decl., Ex. 13 (Apple MTD Reply at 15) (arguing that Apple should not be required to license Fairplay or otherwise take steps to 27 allow the online recordings it sells to be played on non-iPod portable digital players). 28
NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION AND APPOINTMENT OF CLASS COUNSEL - C-05-00037-JW(RS)
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1 purchase the equipment, mixes, and packaging"); Collins, 168 F.R.D. at 675-76 (certifying tying 2 claim where proof of coercion focused on the defendants' conduct common to the putative class). 3 Once again, to the extent Apple asserts any such purported defense, doing so would only raise more 4 common issues that adds to predominance. Martino v. McDonald's System, Inc., 81 F.R.D. 81, 93 5 (N.D. Ill. 1979) ("Because the issues of coercion, market power, and fact of damage will be 6 classwide, we hold that common questions of law and fact predominate."). 7 8 (ii) Section 2 Monopolization Claims

Every element of Plaintiffs' Section 2 claim likewise raises common issues to be proved by

9 common evidence, so as to warrant class certification. Compare Live Concert, 2