"The Apple iPod iTunes Anti-Trust Litigation"

Filing 236

MOTION to Modify Injunctive Relief Class Definition to Include iTMS Purchasers filed by Melanie Tucker. Motion Hearing set for 10/5/2009 09:00 AM in Courtroom 8, 4th Floor, San Jose. (Attachments: # 1 Proposed Order)(Merrick, Thomas) (Filed on 8/31/2009) Modified on 8/31/2009 (cv, COURT STAFF).

"The Apple iPod iTunes Anti-Trust Litigation"

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1 COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 2 JOHN J. STOIA, JR. (141757) BONNY E. SWEENEY (176174) 3 THOMAS R. MERRICK (177987) 655 West Broadway, Suite 1900 4 San Diego, CA 92101 Telephone: [phone] (fax) [e-mail] 6 [e-mail] [e-mail] 7 THE KATRIEL LAW FIRM 8 ROY A. KATRIEL (pro hac vice) 1101 30th Street, N.W., Suite 500 9 Washington, DC 20007 Telephone: [phone] (fax) [e-mail] 11 Co-Lead Counsel for Plaintiffs 12 [Additional counsel appear on signature page.] 13 UNITED STATES DISTRICT COURT 14 NORTHERN DISTRICT OF CALIFORNIA 15 SAN JOSE DIVISION 16 THE APPLE IPOD ITUNES ANTI-TRUST ) Lead Case No. C-05-00037-JW(RS) ) 17 LITIGATION ) CLASS ACTION ) 18 ) NOTICE OF MOTION AND MOTION TO This Document Relates To: ) MODIFY INJUNCTIVE RELIEF CLASS 19 ) DEFINITION TO INCLUDE iTMS ALL ACTIONS. 20 ) PURCHASERS 21 22 23 24 25 26 27 28 Judge: Date: Time: Ctrm: Hon. James Ware October 5, 2009 9:00 a.m. 8 ­ 4th Floor

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ALL PARTIES AND THEIR ATTORNEYS OF RECORD PLEASE TAKE NOTICE that on October 5, 2009 at 9:00 a.m., in Courtroom 8, 4th Floor of

3 the above-entitled Court, located at 280 South 1st Street, San Jose, California, Plaintiffs Somtai Troy 4 Charoensak, Mariana Rosen, and Melanie Tucker (collectively "Plaintiffs"), will, and hereby do, 5 respectfully move the Court to modify the injunctive relief class definition to include iTMS 6 purchasers. 7 I. 8 INTRODUCTION The Court in its Order of July 17, 2009 (Dkt. No. 228) has correctly pointed out that the

9 injunctive relief class of purchasers of iPods directly from Apple certified by order dated December 10 22, 2008 (Dkt. No. 196) ("Cert. Order") is somewhat underinclusive, for it does not encompass a 11 second category of customers included in the plaintiff class alleged in the Complaint: purchasers of 12 online digital audio or video files from Apple through its iTunes Music Store ("iTMS") who have 13 not also purchased an iPod either directly from Apple or at all. See Consolidated Complaint for 14 Violations of Sherman Antitrust Act, Clayton Act, Cartwright Act, California Unfair Competition 15 Law, Consumer Legal Remedies Act, and California Common Law of Monopolization, filed April 16 19, 2007 ("Complaint") (Dkt. No. 107), ¶31. Because Apple's alleged misconduct effectively limits 17 their choice of portable digital players on which to play their iTMS purchases, these purchasers share 18 with the existing injunctive relief class of iPod purchasers the same interest in: (a) enjoining Apple's 19 continued anticompetitive use of certain technological restrictions ("Fairplay") in video files as a 20 means to monopolize or attempt to monopolize the portable player market; and (b) remedying 21 Apple's past anticompetitive use of Fairplay in audio and video files by "unlocking" purchased files 22 so that they may be played on the purchaser's portable player of choice. As shown below, all of the 23 Rule 23 prerequisites to certification of an injunctive relief class of iTMS purchasers are satisfied for 24 the same reasons as in the case of the iPod injunctive relief class. The Court should, therefore, 25 modify the definition of the existing injunctive relief class as follows: 26 27 28
NOTICE OF MOTION AND MOTION TO MODIFY INJUNCTIVE RELIEF CLASS DEFINITION TO INCLUDE iTMS PURCHASERS - C-05-00037-JW(RS)

All persons or entities in the United States (excluding federal, state, and local government entities, Apple, its directors, officers, and members of their families)

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who: (a) purchased an iPod from Apple or (b) purchased audio or video files from the iTMS since April 28, 2003.1 Gen. Telephone Co. of Sw. v. Falcon, 457 U.S. 147, 160 , 102 S. Ct. 2364 (1982) ("Even after a

3 certification order is entered, the judge remained free to modify it in . . . light of subsequent 4 development in the litigation."). 5 II. 6 Plaintiffs contend that Apple unlawfully rendered the digital audio and video files sold 7 through iTMS incompatible with portable players other than its own iPod player, so as to use its 8 massive market power in the former market to monopolize or attempt to monopolize the latter 9 10 market, are subject to . . . unannounced, unilateral, and one-sided changes to their rights to listen to 11 the music they purchased from Apple by Apple's enormous market power." Id., ¶55. Plaintiffs have 12 accordingly alleged monopolization and attempted monopolization claims under Section 2 of the 13 federal Sherman Act (Counts Two and Three) and under California's Common Law (Count Seven), 14 and have challenged Apple's conduct under California's Unfair Competition Law (Count Five) and 15 California's Consumer Legal Remedies Act (Count Six). 16 The Court has certified an injunctive relief class of purchasers of iPods directly from Apple, 17 regardless of whether they purchased iTMS files. (Dkt. No. 198) Although the Rule 23(b)(2) 18 injunctive relief class likely encompasses most of the customers adversely affected by Apple's 19 alleged misconduct, iTMS purchasers who did not purchase an iPod are similarly constrained in their 20 choice of portable players by Apple's actions to defeat interoperability. If Apple's conduct is proven 21 unlawful, such iTMS purchasers would be as entitled as iPod purchasers to injunctive relief in the 22 form of: (a) removal of Fairplay from their past purchases of iTMS audio and video files; and (b) an 23 24
1 This Complaint and the Court's December 22, 2008 25 Certificationdefinition is the same as defined in the ¶31. Order. Cert. Order at 13; Complaint,

SUMMARY OF THE iTMS INJUNCTIVE RELIEF CLASS CLAIMS

market. Complaint, ¶¶ 21-22, 24.2 "Consumers, locked into Apple's monopoly in the Online Music

26

Plaintiffs' Section 1 rule of reason tying claim is currently before the Court on Apple's Rule 12(c) motion for judgment on the pleadings. Should the Court deny that motion, Plaintiffs intend to 27 seek class-wide relief for that claim as well. 28
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1 order prohibiting Apple from imposing Fairplay or other technological restrictions impeding 2 interoperability on future purchases of iTMS audio and video files.3 3 III. 4 LEGAL ARGUMENT The decision to certify a class is committed to the discretion of the court within the

5 guidelines of Rule 23. Cert. Order at 3. Plaintiffs bear the burden of establishing that each of the 6 four requirements of Rule 23(a) and at least one of the requirements of Rule 23(b) have been met. 7 Id. at 3-4. 8 9 10 A. The Requirements of Rule 23(a) Are Met 1. Numerosity

Numerosity is satisfied if the proposed class is such that joinder of all members is

11 "impracticable." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). Apple has sold 12 over 5 billion digital music files from April 28, 2003 to present. See Press Release, Apple, iTunes 13 Store Tops Over Five Billion Songs Sold (June 19, 2008) (available at

14 http://www.apple.com/library/2008/06/19itunes.html). In February 2008, Apple announced that it 15 had over 50 million iTMS customers. See Press Release, Apple, Apple iTunes Now Number Two 16 Music Retailer in the U.S. (Feb. 26, 2008) (available at http://apple.com/pr/library/2008/02/ 17 26itunes.html). As with the iPod injunctive relief class, here there is no basis for Apple to contest, or 18 for the Court to doubt, numerosity. Cert. Order at 5. 19 20 2. Commonality

Recognizing that the commonality requirement is to be "construed permissively," the Court

21 in certifying the iPod injunctive relief class found the requirement satisfied as to Plaintiffs' 22 monopoly and attempted monopoly claims because for each claim Plaintiff will be required to prove 23 the existence of the relevant markets, Apple's willful acquisition of maintenance of monopoly power 24 within those markets and anticompetitive injury ­ all questions surrounding Apple's behavior 25 26 While Apple is currently selling iTMS music files without Fairplay, if Plaintiffs succeed in this litigation they will seek injunctive relief prohibiting Apple from once again using FairPlay or 27 other technological restrictions to limit iTMS interoperability with non-iPod portable devices. 28
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1 deemed "undoubtedly common to the class." Cert. Order at 5, 7-8. The proposed iTMS injunctive 2 relief class raises the same common issues of market definition, market power and antitrust injury. 3 4 3. Typicality

Typicality requires that the claims and defenses of the representative parties be "reasonably

5 co-extensive with those of absent class members; they need not be substantially identical." 6 Cert. Order at 8 (quoting Hanlon, 150 F.3d at 1020). Here, again, typicality is as readily satisfied as 7 in the iPod injunctive relief class, because all three named Plaintiffs purchased online digital audio 8 and video files directly from Apple.4 Ex. 1, Deposition of Somtai Charoensak, taken January 12, 9 2007 at 22:1-3; Ex. 2, Deposition of Mariana Rosen, taken January 24, 2007 at 27:14-15; Ex. 3, 10 Deposition of Melanie Tucker, taken October 26, 2007 at 77:24-78:10. In no way is the iTMS 11 injunctive relief claim premised on conduct unique to any particular Plaintiff, and all have been 12 injured by the same alleged course of conduct by Apple in imposing the challenged technological 13 restrictions on the iTMS purchases. Cert. Order at 8-9. 14 15 4. Adequate Representation

In certifying the iPod injunctive relief class, the Court found that Plaintiffs had retained

16 competent counsel, participated extensively in the discovery process, and lacked any conflict of 17 interest with absent class members. Cert. Order at 9. These requirements are necessarily satisfied as 18 to the iTMS injunctive relief class as well, involving as they do the same class representatives and 19 the same class counsel. 20 21 B. The Requirements of Rule 23(b)(2) Are Met

As with the iPod injunctive relief class, Plaintiffs "seek a determination of Defendant's

22 liability, followed by injunctive relief to prohibit [Apple] from restricting the interoperability 23 between iTMS media purchases and non-iPod portable digital media players." Cert. Order at 10; 24 Complaint, ¶58. As the Court previously recognized, assuming that Plaintiffs are able to establish 25 26 All references to "Ex." and "Exs." are to the Declaration of Thomas R. Merrick in Support of Plaintiffs' Motion to Modify Injunctive Relief Class Definition to Include iTMS Purchasers, filed 27 concurrently. 28
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1 liability for Apple's restrictive technology practices, injunctive relief would be appropriate to halt 2 the practices and "unlock" the media already purchased from iTMS so that it may be played on non3 iPod portable players. Cert. Order at 10. 4 Furthermore, the Court rejected Apple's contention that the existence of a money damages

5 class somehow precluded the certification of an injunctive relief class under Rule 23(b)(2), a 6 proposition the Ninth Circuit has similarly repeatedly rebuffed. Cert. Order at 10-11 (citing Probe v. 7 State Teachers' Retirement Sys., 780 F.2d 776, 780 n.3 (9th Cir. 1986); Molski v. Gleich, 318 F.3d 8 937, 949-50 (9th Cir. 2003)). Plaintiffs do not assert any money damages claim based on iTMS 9 purchases. Complaint, ¶32 (damages class limited to iPod purchasers).5 Plaintiffs' `"first and 10 foremost goal"' (Cert. Order at 11) remains bringing an end to Apple's restrictive technology 11 practices (Complaint, ¶58) ­ a goal already partially accomplished when Apple in 2009 ceased 12 adding DRM to all iTMS music files. However, Apple continues: (a) to charge iTMS purchasers to 13 remove the DRM from earlier purchased audio files; and (b) to maintain all interoperability 14 restrictions on its current sales of iTMS video files. Further, Apple could at any time re-impose 15 DRM on iTMS music files, or add other technological restrictions limiting interoperability. The 16 need for class-wide injunctive relief from Apple's anticompetitive technological restrictions remains, 17 and that need extends to those iTMS purchasers who have not purchased an iPod. See §II, Direct 18 Purchaser Plaintiffs' Memorandum in Response to Court's July 17, 2009 Order as to Injunctive 19 Relief Sought, filed concurrently. 20 21 22 23 24 25 26
5 Accordingly, not seek any 27 certified by the CourtPlaintiffs do23(b)(3). Cert.modification the class of direct iPod purchasers under Rule Order at 13. 28

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1 IV. 2

CONCLUSION The proposed iTMS injunctive relief class is no less certifiable than the existing iPod

3 injunctive relief class. Plaintiffs' Motion to modify the injunctive relief class definition to include 4 iTMS purchasers who have not purchased an iPod is therefore well-taken, and should be granted. 5 DATED: August 31, 2009 6 7 8 9 10 11 12 13 14 15 16 Co-Lead Counsel for Plaintiffs 17 18 19 20 21 22 23 24 25 26 27 28 MURRAY, FRANK & SAILER LLP BRIAN P. MURRAY JACQUELINE SAILER 275 Madison Avenue, Suite 801
NOTICE OF MOTION AND MOTION TO MODIFY INJUNCTIVE RELIEF CLASS DEFINITION TO INCLUDE iTMS PURCHASERS - C-05-00037-JW(RS)

COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP JOHN J. STOIA, JR. BONNY E. SWEENEY THOMAS R. MERRICK

s/ Thomas R. Merrick THOMAS R. MERRICK 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)

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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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

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CERTIFICATE OF SERVICE I hereby certify that on August 31, 2009, 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 August 31, 2009. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 s/ Thomas R. Merrick THOMAS R. MERRICK 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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