"The Apple iPod iTunes Anti-Trust Litigation"

Filing 582

SUPPLEMENTAL OBJECTIONS to Reply Declaration of Roger C. Noll and Supplemental Opposition To Class Certification Motion by Apple Inc.. (Kiernan, David) (Filed on 4/11/2011) Modified on 4/12/2011 (cv, COURT STAFF).

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Robert A. Mittelstaedt #60359
[e-mail]
Craig E. Stewart #129530
[e-mail]
David C. Kiernan #215335
[e-mail]
Michael T. Scott #255282
[e-mail]
JONES DAY
555 California Street, 26th Floor
San Francisco, CA 94104
Telephone:
[phone]
Facsimile:
[phone]
Attorneys for Defendant
APPLE INC.

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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THE APPLE iPOD iTUNES ANTI-TRUST
LITIGATION

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_____________________________________

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This Document Relates To:

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ALL ACTIONS

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Lead Case No.
[Class Action]

C 05-00037 JW (HRL)

APPLE’S SUPPLEMENTAL
OBJECTIONS TO REPLY
DECLARATION OF ROGER C.
NOLL AND SUPPLEMENTAL
OPPOSITION TO CLASS
CERTIFICATION MOTION
Date:
April 18, 2011
Time:
9:00 a.m.
Courtroom: 8, 4th Floor

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Apple's Supp. Obj. To Noll Reply Decl. C 05-00037JW (HRL)

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On April 4, 2011, Apple filed its objections (Doc. 572) to the Reply Declaration of Roger

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C. Noll (Doc. 551) filed on March 28, 2001 with Plaintiffs’ class certification reply papers. In

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those reply papers, Plaintiffs argued that Professor Noll had run a “working regression analysis”

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that “demonstrates that impact and damages can be proven by relying on common proof.” Doc.

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550, pp. 2, 8. Apple objected to Professor Noll’s purported analysis on the ground, among others,

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that Professor Noll’s regression lacks foundation and any indicia of reliability. Doc. 572, pp. 2-3.

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Apple now submits these supplemental objections and opposition in light of Professor Noll’s

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testimony at his deposition on April 7, 2011. At that deposition, Professor Noll confirmed the

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validity of Apple’s objection by admitting that his regression model does not work and is not

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reliable.

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Professor Noll’s testimony is addressed more fully in Apple’s opposition to Plaintiffs’

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motion to exclude the opinion of Michelle Burtis and in the supporting declaration of Michelle

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Burtis, which Apple is filing today. As those documents describe, Professor Noll admitted:
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His regression is not a workable, valid damages model: “I do not regard this as a

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damage model.” Noll Dep. at 90.1 “I am not here to defend as the final damages

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equation that which I have done because it’s obviously incomplete.” Id. at 110.
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He does not know whether his model contains specification errors—i.e., errors in

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constructing the model that could bias the results. When asked whether there is a

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“factor that’s been excluded from this regression that leads to the wrong answer,” he

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admitted “I don’t know that. That’s why I wouldn’t offer this as a damages model.”

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Id. at 91. He conceded that his model is “not proof that this is the right specification.”

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Id. at 92.
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His model does not account for such things as Apple’s pricing strategy. Id. at 185

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(“Q. Does your current regression in your reply report account for the fact that Apple

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changed its retail prices and wholesale prices, list prices infrequently? A. No, that’s

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why it’s not a damage model.”).

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The cited pages from the Noll deposition are found in Exhibit 1 to the Kiernan Declaration
submitted in support of Apple’s opposition to the motion to exclude.

Apple's Supp. Obj. To Noll Reply Decl. C 05-00037JW (HRL)

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The results of his model may reflect a “spurious correlation”—i.e., attributing to the

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launch of Harmony a price change that was actually caused by another factor. Id. at

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87-89.

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He thus cannot draw any “causal inferences from that regression” (id. at 90), including

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any inference on the pivotal question for which Plaintiffs offer his testimony—i.e.,

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whether Apple’s software update that shut down Harmony caused any change in the

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price of iPods. As he summarized, “I cannot rule out anything based on the regression

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I have because I’m not relying on it for anything.” Id. at 130-131.

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In short, Professor Noll has admitted that, rather than producing a reliable model, he has

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simply taken a set of data, input it into an incorrectly specified computer model and produced

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unreliable results that are not probative on any relevant issue. For this reason, as well as the other

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reasons stated in Apple’s previously filed objections, the Court should exclude Noll’s reply

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declaration and give his purported regression no weight.

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Alternatively, should the Court not exclude Noll’s reply declaration, Apple respectfully

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requests that the Court consider in connection with Plaintiffs’ motion for class certification the

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memorandum and supporting Burtis Declaration that Apple is filing today in opposition to

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Plaintiffs’ motion to exclude the opinion of Dr. Burtis.

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Dated: April 11, 2011

JONES DAY

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By:

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Attorneys for Defendant
APPLE INC.

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/s/ Robert A. Mittelstaedt
Robert A. Mittelstaedt

SFI-672476v1

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Apple's Supp. Obj. To Noll Reply Decl. C 05-00037JW (HRL)