"The Apple iPod iTunes Anti-Trust Litigation"

Filing 740

Administrative Motion to File Under Seal filed by Apple Inc.. (Attachments: # 1 Declaration Kiernan Declaration ISO Administrative Motion to Seal, # 2 Proposed Order Granting Motion to Seal, # 3 Exhibit Rdacted Version of Defendant's Notice of Motion and Motion for Summary Judgment and to Exclude Expert Testimony of Roger G. Noll, # 4 Exhibit SEALED Version of Motion for Summary Judgment and to Exclude Testimony, # 5 Exhibit REDACTED - Separate Statement ISO MSJ, # 6 Exhibit SEALED - Separate Statement ISO MSJ, # 7 Exhibit REDACTED - Exhibit 3 to Amiri Decl., # 8 Exhibit SEALED - Exhibit 3 to Amiri Dec, # 9 Exhibit REDACTED - Exhibit 4 to Amiri Dec, # 10 Exhibit SEALED - Exhibit 4 to Amiri Dec, # 11 Exhibit REDACTED - Exhibit 5 to Amiri Dec, # 12 Exhibit SEALED - Exhibit 5 to Amiri Dec, # 13 Exhibit REDACTED - Exhibit 6 to 8 to Amiri Dec, # 14 Exhibit SEALED - Exhibits 6 to 8 to Amiri Dec, # 15 Exhibit REDACTED - Exh 9 to Amiri Dec, # 16 Exhibit SEALED - Exh 9 to Amiri Dec, # 17 Exhibit REDACTED - Exh 10 to Amiri Dec, # 18 Exhibit SEALED - Exh 10 to Amiri Dec, # 19 Exhibit REDACTED - Exh 11 to Amiri Dec, # 20 Exhibit SEALED - Exh 11 to Amiri Dec, # 21 Exhibit SEALED - Exh 13 to Amiri Dec, # 22 Exhibit REDACTED - Exh 14 to Amiri Dec, # 23 Exhibit SEALED - Exh 14 to Amiri Dec, # 24 Exhibit SEALED - Exh 15 to Amiri Dec, # 25 Exhibit SEALED - Exh 16 to Amiri Dec, # 26 Exhibit SEALED - Exh 17 to Amiri Dec, # 27 Exhibit SEALED - Exh 18 to Amiri Dec, # 28 Exhibit SEALED - Exh 19 to Amiri Dec)(Kiernan, David) (Filed on 12/21/2013)

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Robert A. Mittelstaedt #60359
[e-mail]
Craig E. Stewart #129530
[e-mail]
David C. Kiernan #215335
[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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OAKLAND DIVISION

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THE APPLE iPOD iTUNES ANTITRUST
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. C 05-00037 YGR
[CLASS ACTION]
DEFENDANT’S SEPARATE
STATEMENT IN SUPPORT OF
MOTION FOR SUMMARY
JUDGMENT AND TO EXCLUDE
EXPERT TESTIMONY OF ROGER G.
NOLL
Date:
February 18, 2014
Time:
2:00 pm
Courtroom: 5

[Public Version - Redacted]

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Defendant’s Separate Statement
C 05-00037 YGR

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Claim/Issue No.

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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Evidence: Expert Report of Robert H.
Topel (August 19, 2013) ¶ 27, n. 40 (Amiri
Decl. Ex. 4).
Fact 2: Consumers would not be expected
to be using Harmony in large numbers in
2005 or 2006 because Harmony had already
been lawfully disabled by iTunes 4.7
previously.
Evidence: Deposition of Roger G. Noll
(May 16, 2013) at 147:20-148:5 (Amiri
Decl. Ex. 10).

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Opposing Party’s Response
and Supporting Evidence

Fact 1:

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Moving Party’s Undisputed Material
Facts and Supporting Evidence

All claims: No
antitrust impact

Fact 3: Plaintiffs have no evidence
regarding what portion of RealNetworks’
sales was to iPod owners or potential iPod
purchasers.
Evidence: Deposition of Roger G. Noll
(May 16, 2013) at 116:18-23 (Amiri Decl.
Ex. 10).
Fact 4: In determining whether
had
any impact, the relevant sales of Harmony
music are to consumers who were iPod
owners or potential iPod purchasers.
Evidence: Deposition of Roger G. Noll
(May 16, 2013) at 81:6-12 (Amiri Decl. Ex.
10).
Fact 5: Plaintiffs have no evidence of the
number of people who became locked in or
locked out as a result of the
Evidence: Deposition of Roger G. Noll
(May 16, 2013) at 107:16-24 (Amiri Decl.
Ex. 10).
Fact 6: The named plaintiffs do not allege
that they were locked in or locked out as a
result of the
Evidence: Amended Consolidated
Complaint (ECF No. 322).
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Defendant’s Separate Statement
C 05-00037 YGR

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Fact 7:

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All claims: No
antitrust impact

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Evidence: Deposition of Roger G. Noll
(Dec. 18, 2013) at 78:20-82:4 (Amiri Decl.
Ex. 11).

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Fact 8:

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All claims: No
antitrust impact

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Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at ¶ 78 (Amiri Decl. Ex.
3); Expert Report of Robert Topel (August
19, 2013) at ¶ 127 (Amiri Decl. Ex. 4);
Deposition of Mark Donnelly (Dec. 20,
2010) at 72:2-12 (Amiri Decl. Ex. 18).
Fact 9:

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All claims: No
antitrust impact
Evidence: Deposition of Roger G. Noll
(April 7, 2011) at 213:2-10; . Deposition of
Mark Donnelly (Dec. 20, 2010) at 72:2-12
(Amiri Decl. Ex. 18).

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All claims: No
antitrust impact

Fact 10: Under plaintiffs’ theory, the
number of consumers who were locked in
to purchasing iPods would have
progressively increased during the damage
period as consumers purchased more music
from iTS.
Evidence: Deposition of Roger Noll (Dec.
18, 2013) at 51:16-52:11, 109:10-21 (Amiri
Decl., Ex. 11); Rebuttal Declaration of
Roger Noll at p. 7 (Amiri Decl., Ex. 8).

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Defendant’s Separate Stmt
C 05-00037 YGR

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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Evidence: Deposition of Roger Noll
(December 18, 2013) at 49:9-23 (Amiri
Decl., Ex. 11); Rebuttal Declaration of
Roger Noll at p. 27 (Amiri Decl., Ex. 8).
Fact 12: The lock-in effect on consumers
who purchased a new iPod for the first time
after September 2006 would not be an
important factor affecting iPod prices for
most of the damage period.
Evidence: Rebuttal Declaration of Roger
Noll at p. 27 (Amiri Decl., Ex. 8).

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Fact 11: The impact on demand from lockin of iPod purchasers would not occur until
they purchased a replacement player which
occurred on average 18-24 months after
their initial purchase.

All claims: No
antitrust impact

Fact 13: By turning the iTunes 4.7 variable
off, Dr. Noll’s regression treated iTunes 4.7
as having no effect on prices after the
was released.
Evidence: Expert Report of Robert Topel
(August 19, 2013) at ¶¶ 94-95 (Amiri Decl.
Ex. 4).
Fact 14: By turning the iTunes 4.7 variable
off, Dr. Noll’s regression treated the but-for
world as one in which iTunes 4.7 did not
exist.
Evidence: Expert Report of Robert Topel
(August 19, 2013) at ¶¶ 94-95 (Amiri Decl.
Ex. 4).
Fact 15: Under plaintiffs’ theory, the
increase in prices caused by iTunes 4.7
would persist even after the
was
issued because the initial shutdown of
Harmony in 2004 could have caused
consumers to permanently abandon
Harmony.
Evidence: Deposition of Roger G. Noll
(May 16, 2013) at 68:2-70:16 (Amiri Decl.
Ex. 10).

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Defendant’s Separate Stmt
C 05-00037 YGR

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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Evidence: Expert Report or Kevin Murphy
(August 19, 2013) at ¶ 102 (Amiri Decl. Ex.
3); Expert Report of Robert Topel (August
19, 2013) at ¶¶ 92-93 (Amiri Decl. Ex. 4).
Fact 17: Dr. Noll admitted that “the effect
on prices [from iTunes 7.0] is not
necessarily limited to just the products that
were sold that had 7.0 in them.”
Evidence: Deposition of Roger G. Noll
(May 16, 2013) at 46:2-4 (Amiri Decl. Ex.
10); Deposition of Roger G. Noll (Dec. 18,
2013) at 64:16-65:21 (Amiri Decl. Ex. 11).
Fact 18: According to Dr. Noll, disabling
Harmony in 2006 was a “market-defining
event.”
Evidence: Deposition of Roger G. Noll
(May 16, 2013) at 48:24-49:17 (Amiri Decl.
Ex. 10).
Fact 19: Dr. Noll’s regression includes a
single “iTunes 7.0” variable that he asserts
measures the alleged unlawful overcharge
in iPod prices.
Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at p. 81 (Amiri Decl. Ex.
3); Expert Report of Robert Topel (August
19, 2013) at ¶ 80 (Amiri Decl. Ex. 4).
Fact 20: Plaintiffs challenge only the
aspect of iTunes 7.0.

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Fact 16: By turning off the iTunes 4.7
variable when he turned on the iTunes 7.0
variable, Dr. Noll causes the iTunes 7.0
variable to capture the continuing effect
from iTunes 4.7.

All claims: No
antitrust impact

Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at ¶ 113 (Amiri Decl. Ex.
3); Expert Report of Robert Topel (August
19, 2013) at ¶ 110 (Amiri Decl. Ex. 4).

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Defendant’s Separate Stmt
C 05-00037 YGR

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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Fact 22: Because iTunes 7.0 included
“unique attributes” that Dr. Noll’s model
ignores, the model cannot accurately
determine whether any price-elevating
impact of iTunes 7.0 was due to the
or
the other features of iTunes 7.0.

Fact 23: Dr. Noll recognizes that product
features are important determinants of price,
and thus his regression includes variables
for a few such characteristics (e.g. storage
capacity, photo and video capability, and
size).
Evidence: Deposition of Roger G. Noll
(May 16, 2013) at 30:22-32:31 (Amiri Decl.
Ex. 10).

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Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at ¶¶ 80, 108 (Amiri
Decl. Ex. 3); Expert Report of Robert Topel
(August 19, 2013) at ¶ 48 (Amiri Decl. Ex.
4).

Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at ¶ 113 (Amiri Decl. Ex.
3).

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Fact 21: Dr. Noll’s regression must control
for any unchallenged aspects of iTunes 7.0
that may be correlated with the
to
ensure that the coefficient on iTunes 7.0
captures only the price impact of the
challenged conduct.

All claims: No
antitrust impact

Fact 24: Dr. Noll’s model omits numerous
other characteristics that are likely to affect
price, including battery life, display size,
weight, screen resolution, and type of
connector.
Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at ¶ 110 (Amiri Decl. Ex.
3); Expert Report of Robert Topel (August
19, 2013) at ¶ 111 & Ex. 10 thereto (Amiri
Decl. Ex. 4).

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Defendant’s Separate Stmt
C 05-00037 YGR

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at ¶¶ 79-80 (Amiri Decl.
Ex. 3); Expert Report of Robert Topel
(August 19, 2013) at ¶ 110 (Amiri Decl. Ex.
4).
Fact 26: An assumption fundamental to all
regression analysis is that the errors or
residuals (the portion of the price that
cannot be explained by the explanatory
variables) are uncorrelated or independent
of one another.
Evidence: Rebuttal Declaration of Roger
G. Noll (November 25, 2013) at 36-38
(Amiri Decl., Ex. 8); Deposition Transcript
of Roger G. Noll (December 18, 2013) at
23:9-24:7 (Amiri Decl. Ex. 11); Expert
Report of Robert Topel (August 19, 2013)
at pp. 32-33 (Amiri Decl. Ex. 4).
Fact 27: If the errors within a group are
correlated (not independent) they are said to
be clustered and must be corrected before
calculating standard errors.
Evidence: Expert Report of Robert Topel
(August 19, 2013) at pp. 34-35 (Amiri Decl.
Ex. 4).
Fact 28: If clustering issues are not
corrected, the standard errors will be
miscalculated and will under- or overestimate the model’s precision.

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Fact 25: By failing to control for the
relevant product characteristics, Dr. Noll’s
regression erroneously attributes iPod price
changes to the
that are actually the
result of the omitted variables.

All claims: No
antitrust impact

Evidence: Deposition of Roger G. Noll
(Dec. 18, 2013) at 25:15-20 (Amiri Decl.
Ex. 11); Expert Report of Robert Topel
(August 19, 2013) at pp. 34-37 (Amiri Decl.
Ex. 4); Expert Report of Kevin Murphy
(August 19, 2013) at pp. 50-51 (Amiri Decl.
Ex. 3).

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Defendant’s Separate Stmt
C 05-00037 YGR

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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Fact 30: Dr. Noll did not employ any of the
standard procedures for testing whether the
errors in his regression are correlated such
that the independence assumption is
violated.
Evidence; Supp. Report of Kevin M.
Murphy & Robert H. Topel at pp. 5-6
(Amiri Decl., Ex. 14); Deposition of Roger
Noll (Dec. 18, 2013) at 27:9-32:8, 45:2346:9 (Amiri Decl., Ex. 11).
Fact 31: Had Dr. Noll run the tests to
determine if the errors in his regression
were correlated, he would have discovered
that errors within certain groups or clusters
are highly correlated, revealing that this
independence assumption is false.

Fact 32: Dr. Noll admits that economists
typically determine relevant markets by
estimating cross-elasticity of demand, but
he did not estimate cross-elasticity of
demand.
Evidence: Declaration of Roger Noll on
Liability and Damages (April 3, 2013) at
pp. 23-24 (Amiri Decl., Ex. 6).

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Evidence: Deposition of Roger Noll (Dec.
18, 2013) at 24:9-14 (Amiri Decl., Ex. 11).

Evidence; Supp. Report of Kevin M.
Murphy & Robert H. Topel at pp. 5-6
(Amiri Decl., Ex. 14)

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Fact 29: Dr. Noll admits that there are
standard procedures to test whether the
errors in a regression are correlated.

All claims: No
antitrust impact

Fact 33: Dr. Noll did not employ the
“hypothetical monopolist” test endorsed by
the Department of Justice.
Evidence: Declaration of Roger Noll on
Liability and Damages (April 3, 2013) at
pp. 23-24 (Amiri Decl., Ex. 6).

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Defendant’s Separate Stmt
C 05-00037 YGR

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All claims: No
antitrust impact

Evidence: Declaration of Roger Noll on
Liability and Damages (April 3, 2013) at
pp. 23-24 (Amiri Decl., Ex. 6).

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All claims: No
antitrust impact

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Fact 36: Dr. Noll refers only to CD players
and cell phones without discussing any
other potentially competing devices (such
as notebook computers and home stereos)
for playing digital music.

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All claims: No
antitrust impact
Evidence: Declaration of Roger Noll on
Liability and Damages (April 3, 2013) at
pp. 32-42 (Amiri Decl., Ex. 6); Deposition
of Arthur Rangel (December 17, 2010) at
48:4-10 (Amiri Decl., Ex. 13).

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Fact 35: Dr. Noll does not profess to have
any industry or other experience that would
make him an expert on what consumers
consider to be substitutes for digital music
and music players.
Evidence: Declaration of Roger Noll on
Liability and Damages (April 3, 2013) at
pp. 23-24 (Amiri Decl., Ex. 6).

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Fact 34: Dr. Noll asserts that economists
rely on surveys of buyers or statements of
executives in the industry to establish a
product market, but Dr. Noll does not
present any such evidence.

All claims: No
antitrust impact

Fact 37: Dr. Noll does not address whether
customers might substitute free downloads
from peer-to-peer file sharing sites for iTS
music, disregarding evidence that the
availability of free downloads was a major
challenge to the success of paid music
stores like iTS.
Evidence: Declaration of Roger Noll on
Liability and Damages (April 3, 2013) at
pp. 32-42 (Amiri Decl., Ex. 6); Expert
Report of Kevin Murphy (August 19, 2013)
at ¶ 125 (Amiri Decl. Ex. 3).

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Defendant’s Separate Stmt
C 05-00037 YGR

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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All claims: No
antitrust impact

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Fact 40: Support for mobile devices is not
relevant to consumers who purchased music
to play on other devices, and Dr. Noll
presents no analysis as to the volume of iTS
sales for use on such other devices.

Fact 41:

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Fact 40: Dr. Noll excludes on-demand and
non-interactive streaming music from the
market because those services were not
fully available on mobile devices during the
class period.

Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at ¶ 126 (Amiri Decl. Ex.
3).

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Fact 39: iPods never had the capability to
download music over wireless carriers’
networks during the class period. Only the
iPod touch could wirelessly download
music, but only over a Wi-Fi connection,
not a wireless carrier network.

Evidence: Declaration of Roger Noll on
Liability and Damages (April 3, 2013) at
pp. 33-39 (Amiri Decl., Ex. 6).

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Evidence: Declaration of Roger Noll on
Liability and Damages (April 3, 2013) at
pp. 29-31 (Amiri Decl., Ex. 6).

Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at ¶ 30 (Amiri Decl. Ex.
3).

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Fact 38: Dr. Noll assumes that cell phones
must be able to download music over
wireless carriers’ networks to be substitutes
for iPods.

All claims: No
antitrust impact

Evidence: Expert Report of Kevin Murphy
(August 19, 2013) at ¶ 126 (Amiri Decl. Ex.
3).

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Defendant’s Separate Stmt
C 05-00037 YGR

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I attest that the evidence cited herein fairly and accurately supports the facts as asserted.
Dated: December 20, 2013

JONES DAY

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By: /s/ Robert A. Mittelstaedt
Robert A. Mittelstaedt

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Counsel for Defendant APPLE INC.

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Defendant’s Separate Stmt
C 05-00037 YGR