"The Apple iPod iTunes Anti-Trust Litigation"

Filing 757

RESPONSE (re 751 Administrative Motion to File Under Seal Plaintiffs' Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment and to Exclude Expert Testimony of Roger G. Noll; Plaintiffs' Responsive Separate Statement in Support of ) filed byApple Inc.. (Attachments: # 1 Declaration of Amir Q. Amiri in Support of Apple's Response to Plaintiffs' Admin. Motion to File Under Seal, # 2 Proposed Order by Apple Granting Plaintiffs' Admin. Motion to File Under Seal, # 3 Exhibit - Apple's (Proposed) Redactions to Plaintiffs' Exhibit Nos. 1-3, and 54, # 4 Exhibit - Apple's (Proposed) Excerpt to Plaintiffs' Exhibit No. 22, # 5 Exhibit - Apple's (Proposed) Redactions to Plaintiffs' Exhibit Nos. 9-11; 14; 48; 50-53; and 62, # 6 Apple's (Proposed) Redactions to Plaintiffs' Memorandum of Law in Support of its Opposition to Motion for Summary Judgment, etc., # 7 Apple's (Proposed) Redactions to Plaintiffs' Responsive Separate Statement in Support of its Opposition to Motion for Summary Judgment, etc.)(Amiri, Amir) (Filed on 1/21/2014)

1 ROBBINS GELLER RUDMAN
& DOWD LLP
2 BONNY E. SWEENEY (176174)
THOMAS R. MERRICK (177987)
3 ALEXANDRA S. BERNAY (211068)
CARMEN A. MEDICI (248417)
4 JENNIFER N. CARINGAL (286197)
655 West Broadway, Suite 1900
5 San Diego, CA 92101
Telephone: [phone]
6 619/231-7423 (fax)
[e-mail]
7 [e-mail]
[e-mail]
8 [e-mail]
[e-mail]
9
Class Counsel for Plaintiffs
10
[Additional counsel appear on signature page.]
11
UNITED STATES DISTRICT COURT
12
NORTHERN DISTRICT OF CALIFORNIA
13
OAKLAND DIVISION
14
THE APPLE IPOD ITUNES ANTI-TRUST ) Lead Case No. C-05-00037-YGR
15 LITIGATION
)
) CLASS ACTION
16
)
) PLAINTIFFS’ RESPONSIVE SEPARATE
This Document Relates To:
17
) STATEMENT IN SUPPORT OF
) OPPOSITION TO DEFENDANT’S MOTION
ALL ACTIONS.
18
) FOR SUMMARY JUDGMENT AND TO
EXCLUDE EXPERT TESTIMONY OF
19
ROGER G. NOLL
20

DATE:
TIME:
CTRM:
JUDGE:

21

February 18, 2014
2:00 p.m.
5, 2nd Floor
Hon. Yvonne Gonzalez Rogers

22
23

UNREDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALED

24
25

*APPLE'S (PROPOSED) REDACTIONS*

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27
28

906565_2

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107:16-24, 77:24-78:10; Ex. 1, Noll
Damages Report at 4, 13-22, 45-47, 51-63;
Ex. 2, Noll Rebuttal at 14-18, 25-32.

2
3
4
All claims:
No antitrust
6 impact
5

7
8
9
10 All claims:
No antitrust
11 impact
12
13

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.

Disputed, misstates testimony and
irrelevant. Professor Noll’s answer was in
response to whether the size of
RealNetworks’ market share had an impact
on iPod demand.

Evidence: Deposition of Roger G.
Noll (May 16, 2013) at 81:6-12
(Amiri Decl. Ex. 10).

Ex. 51, 5/16/13 Noll Dep. at 81:6-12; see
also Plaintiffs’ Responses to Fact 2 and 3
above.

Fact 5: Plaintiffs have no evidence
of the number of people who
became locked in or locked out as a
result of the

Disputed and irrelevant. See Plaintiffs’
Responses to Fact 2 and 3 above.

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

14
15

Evidence: Amended Consolidated
Complaint (ECF No. 322).

16
17
18
All claims:
19 No antitrust
impact
20
21
22

Ex. 58, Tucker Dep. at 12:20-13:5, 13:1619; Ex. 60, Charonosek Dep. at 26:9-11;
Ex. 1, Noll Damages Report at 4, 13-22,
45-47, 51-63; Ex. 2, Noll Rebuttal at 1418, 25-32.

23
24
25
26 All claims:
27 No antitrust
impact
28
906565_2

Disputed and irrelevant. This is not a
requirement to establishing liability and
has nothing to do with the determination of
whether the price of iPods was inflated due
to this conduct. Apple’s cite to the
complaint
is
unintelligible
and
meaningless. In any event, named plaintiff
Melanie Tucker testified: “Q. And how
did you choose an iPod rather than, say, an
iRiver at that point? A. Because all of
my music was already on my iTunes and
that would have the only way to keep my
music.”)
Named plaintiff Troy
Charonosek stated “I was locked out of the
music that I purchased, That was my main
complaint.”

Fact 7:

Disputed and irrelevant. As a matter of
both law and economics, Apple’s reliance
has no meaning in estimating what the
overcharge was as a result of its

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anticompetitive behavior.

2

Ex. 1, Noll Damages Report at 59-82; Ex.
2, Noll Rebuttal at 13-33 & Appendix B;
Ex. 48, Donnelly Dep. at 54, 59-60, Ex. 49,
Apple_AIIA001877793 at 795.

3
4

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

5

Fact 8:

Disputed.

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).

Ex. 48, Donnelly Dep. at 43-44; Ex. 2,
Noll Rebuttal at 33 & Appendix B. See
also Plaintiffs’ Responses to Fact 7 above.

Fact 9:

Disputed.

6
7
8 All claims:
No antitrust
9 impact
10
11
12
13
14
15

All claims:
16 No antitrust
impact
17
18
19

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).

20
21
22
23
All claims:
No antitrust
25 impact
24

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27
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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 51:1652:11, 109:10-21 (Amiri Decl., Ex.
11); Rebuttal Declaration of Roger
Noll at p. 7 (Amiri Decl., Ex. 8).

Ex. 62, 4/7/11 Noll Dep. at 211:16-212:9.
See also Plaintiffs’ Responses to Fact 7
above.
Disputed. Professor Noll stated: “[T]his
argument ignores the fact that iTunes 7.0
immediately locked out a customer who
has been using a portable digital media
player”; “The effect of lock-out is
immediate,
and
the
principal
anticompetitive effect of blocking
Harmony on iPod prices arises from the
general reduction in competition among
iPods and other portable digital media
players arising from the lock-out effect.”
Ex. 2, Noll Rebuttal at 27. See Plaintiffs’
Responses to Fact 2 and 3 above.

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

2
3
4
5 All claims:
No antitrust
6
impact
7

Evidence: Deposition of Roger
Noll (December 18, 2013) at 49:923 (Amiri Decl., Ex. 11); Rebuttal
Declaration of Roger Noll at p. 27
(Amiri Decl., Ex. 8).

8
9

Disputed in part. Professor Noll is
referring to new iPod owners – iTunes 7.0
immediately locked out a customer who
has been using a portable digital media
player that used the RealNetworks DRM
format and who had purchased downloads
from RMS. “The main immediate effect of
lock-in is the existing or established base.
It’s not the new people. And the new
people would just gradually through time
get added to the people who are affected by
lock-in in terms of their effect on the
demand for iPods.”
Ex. 50, 12/18/13 Noll Dep. at 49:9-2352:11. See Plaintiffs’ Responses to Fact 2
and 3 above.

10
11

13

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.

16

Evidence: Rebuttal Declaration of
Roger Noll at p. 27 (Amiri Decl.,
Ex. 8).

12
All claims:
14 No antitrust
impact
15

17
18
19
20 All claims:
No antitrust
21
impact
22

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 ¶¶ 9495 (Amiri Decl. Ex. 4).

23
24
25
26 All claims:
No antitrust
27 impact
28
906565_2

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.

Disputed.
See Plaintiffs’ Response to Fact 11 above.

Disputed. “The proper way to measure the
impact of enabling the
and using
iTunes 7.0 is not to assume that these
models contained the old blocking
technology from iTunes 4.7, which is the
implicit assumption in the proposal by
Professors Murphy and Topel.”
Ex. 50, 12/18/13 Noll Dep. at 53:19-54:17,
56:4-57:6, 93:13-25; Ex. 3, Supp. Noll
Rebuttal at 1-3,13-15. See also Plaintiffs’
Response to Fact 11 above.
Disputed.
See Plaintiffs’ Response to Fact 13 above.

Evidence: Expert Report of Robert
Topel (August 19, 2013) at ¶¶ 94PLTFS’ RESPONSIVE SEPARATE STATEMENT TO DEF’S SEPARATE STATEMENT ISO MSJ & TO
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95 (Amiri Decl. Ex. 4).

2

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.

3
4
All claims:
5 No antitrust
6 impact
7

Evidence: Deposition of Roger G.
Noll (May 16, 2013) at 68:2-70:16
(Amiri Decl. Ex. 10).

8
9
10
11
12 All claims:
No antitrust
13 impact
14
15
16

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.

19

22

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).

18
All claims:
20 No antitrust
impact
21

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24
25 All claims:
26 No antitrust
impact
27
28
906565_2

Further, Professor Noll stated that
consumer expectations about the durability
of Harmony’s relaunch may be a
continuing effect of 4.7, but because 7.0
was never undone, there is no way to test
whether this consumer expectation may
continue after 7.0 was issued.
Ex. 51, 5/16/13 Noll Dep. at 68:2-70:16.
See also Plaintiffs’ Response to Fact 13
above.
Disputed.
See Plaintiffs’ Response to Fact 13 above.

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.”

17

Disputed.

Disputed and incomplete.
The testimony cited here is from before
Apple submitted a Supplemental
Declaration from Augustin Farrugia on
July 2, 2013, which corrected certain of
Apple’s prior representations regarding
which models of iPods that came installed
with KVC.
See Ex. 59, Farrugia Supp. Decl.; Ex. 50,
12/18/13 Noll Dep. at 52:19-113:10; see
also Plaintiffs’ Response to Fact 13 above.

Fact 18: According to Dr. Noll,
disabling Harmony in 2006 was a
“market-defining event.”

Disputed, incomplete. Professor Noll
stated that “I think knocking Harmony out
of the market is the key event and – and
causing – causing RealNetworks longer to
Evidence: Deposition of Roger G.
try to compete to sell music to play on
Noll (May 16, 2013) at 48:24-49:17 iPods is the – is – is the market-defining
(Amiri Decl. Ex. 10).
event from the standpoint of what the

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pricing strategy of portable digital media
players would be.”

2

Ex. 51, 5/16/13 Noll Dep. at 48:24-49:17.

3
4
5
6 All claims:
No antitrust
7 impact
8
9
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.

11
12
13 All claims:
No antitrust
14 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).

15

17
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.

18
19
20
21
22 All claims:
No antitrust
23
impact
24

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27
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906565_2

Ex. 51, 5/16/13 Noll Dep. at 34:1-35:5.
Ex. 2, Noll Rebuttal at 18, 23-32. See also
Plaintiffs’ Response to Fact 17 above.

Disputed as phrased; incoherent. Plaintiffs
are not “challenging” “iTunes 7.0.”
Plaintiffs allege that Apple maintained and
enhanced its monopoly power in the
market for portable digital media players
by releasing iTunes 7.0. The technical
explanation of iTunes 7.0 cannot be as
simply stated as Apple states in Fact 20.
Dkt. No. 322, Amended Consolidated
Complaint; Ex. 4, Martin Report, ¶¶75-106;
see also Plaintiffs’ Response to Fact 17
above.

16

25

Disputed as phrased. The iTunes 7.0
variable includes within in it all relevant
aspects in determining the value of the
variable.

Disputed;
incoherent;
improper
assumptions built into the “fact.”

Adding additional variables with no
additional explanatory power to the
equation is unnecessary and can cause
problems with the regression. “The goal of
the hedonic price equation is to explain as
much of the variation in price as possible,
Evidence: Expert Report of Kevin
Murphy (August 19, 2013) at ¶¶ 80, using measures of product features.”
108 (Amiri Decl. Ex. 3); Expert
Report of Robert Topel (August 19, In addition, the iTunes 7.0 variable
includes within in it all relevant aspects in
2013) at ¶ 48 (Amiri Decl. Ex. 4).
determining the value of the variable.
Ex. 2, Noll Rebuttal at 29-31; see Ex. 3,
Supp. Noll Rebuttal at 7-13; Ex. 51,
5/16/13 Noll Dep. at 34:1-35:5; see also
Plaintiffs’ Response to Fact 17 above.

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2
3
All claims:
4 No antitrust
5 impact

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

6
7
8
9
10
11
12 All claims:
13 No antitrust
impact
14
15

Disputed as phrased. “Because no issue in
this litigation hinges on monetizing the
value of any particular technical feature of
an iPod, nothing is gained by adding more
characteristics that do not increase the
explanatory power of the regression but
reduce the precision of the estimates of the
coefficients.” “I’m not aware of
Evidence: Deposition of Roger G.
any . . . that would add statistical
Noll (May 16, 2013) at 30:22-32:31 significance to the regression equation
(Amiri Decl. Ex. 10).
without being so highly multicollinear that
they would destroy the coefficient
estimates.”
Ex. 2, Noll Rebuttal at 8, 31-32; Ex. 50,
12/18/13 Noll Dep. at 34:10-35-13. See
also Plaintiffs’ Response to Fact 22 above.

17
18

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.

19
20
21
22 All claims:
No antitrust
23 impact
24
25

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).

Disputed. “Because no issue in this
litigation hinges on monetizing the value of
any particular technical feature of an iPod,
nothing is gained by adding more
characteristics that do not increase the
explanatory power of the regression but
reduce the precision of the estimates of the
coefficients.” “I’m not aware of any that
would add statistical significance to the
regression equation without being so
highly multicollinear that they would
destroy the coefficient estimates.”
Ex. 2, Noll Rebuttal at 8, 31-32; Ex. 50,
12/18/13 Noll Dep. at 34:10-35-13. See
also Plaintiffs’ Response to Fact 22 above.

26
27

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Ex. 2, Noll Rebuttal at 5, 8, 30-32; Ex. 50,
12/18/13 Noll Dep. at 34:10-35:13; see
also Plaintiffs’ Response to Fact 21 above.

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).

16

28

Disputed. Adding more variables that have
a minimal effect on the explanatory power
of a regression is worse than simply being
unnecessary. “I’m not aware of any that
would add statistical significance to the
regression equation without being so
highly multicollinear that they would
destroy the coefficient estimates.”

All claims:

Fact 25: By failing to control for

Disputed. See Plaintiffs’ Response to Fact

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1 No antitrust
impact
2
3
4

6
7

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.

8
9
10
11
12 All claims:
No antitrust
13 impact
14
15
16
17
18
19
20

All claims:
21 No antitrust
impact
22
23
24
All claims:
26 No antitrust
impact
27
28
906565_2

24.

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).

5

25

the relevant product characteristics,
Dr. Noll’s regression erroneously
attributes iPod price changes to the
that are actually the result of
the omitted variables.

Disputed; incoherent; incomplete; vague as
to “fundamental to all regression analysis
[sic].” Apple’s statement overreaches, as
Professor Noll states:

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.

Disputed; incomplete.
This is not
necessarily correct and overreaches.
“Clustering does not apply to Apple’s
transactions data because the data are not a
sample, let alone a clustered sample.”

Evidence: Expert Report of Robert
Topel (August 19, 2013) at pp. 3435 (Amiri Decl. Ex. 4).

Ex. 2, Noll Rebuttal at 10-11, 33-47. See
generally Ex. 54, Wooldridge Decl. See
also Plaintiffs’ Response to Fact 26.

Fact 28: If clustering issues are not
corrected, the standard errors will
be miscalculated and will under- or
over-estimate the model’s
precision.

Disputed as phrased; incomplete; vague.
This is not necessarily correct and
overreaches. If there are “clustering
issues,” they may under- or over-estimate a
model’s precision. However, “[c]lustering
does not apply to Apple’s transactions data
because these data are not a sample, let
alone a clustered sample.”

“[T]he appropriate residual error for a
transaction is a single observation on the
difference between estimated and actual
price for the transaction, not for each unit
in the transaction. Thus, the appropriate
Evidence: Rebuttal Declaration of
procedure to test for within-cluster
Roger G. Noll (November 25,
2013) at 36-38 (Amiri Decl., Ex. 8); correlation of errors is to examine the
residual errors of transactions, not the
Deposition Transcript of Roger G.
Noll (December 18, 2013) at 23:9- residual errors of the price of each unit
24:7 (Amiri Decl. Ex. 11); Expert
sold.”
Report of Robert Topel (August 19,
2013) at pp. 32-33 (Amiri Decl. Ex. Ex. 2, Noll Rebuttal at 10-11, 33-47; Ex. 3,
Supp. Noll Rebuttal at 3-7; see generally
4).
Ex. 54, Wooldridge Decl.

Evidence: Deposition of Roger G.
Noll (Dec. 18, 2013) at 25:15-20

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(Amiri Decl. Ex. 11); Expert Report
of Robert Topel (August 19, 2013) Ex. 50, 12/18/13 Noll Dep. at 25:15-27:8.
See also Plaintiffs’ Response to Fact 27.
at pp. 34-37 (Amiri Decl. Ex. 4);
Expert Report of Kevin Murphy
(August 19, 2013) at pp. 50-51
(Amiri Decl. Ex. 3).

2
3
4

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

5
6
7
8 All claims:
No antitrust
9 impact

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

10

Disputed, incomplete. Dr. Noll stated that
“[t]here are many such tests and many such
corrections . . . So the corrections for
autocorrelation of residuals are not
something that actually matters in the vast
majority of cases because the -- it’s almost
never the case there’s no correlation in
residual errors, but it’s almost never the
case that making a correction for the auto-- the correlation that does exist matters in
terms of the regression.”

11
Ex. 50, 12/18/13 Noll Dep. at 24:9-25:3.
See also Plaintiffs’ Response to Fact 27.

12
13
14
15
16 All claims:
No antitrust
17 impact
18
19
20
21
22
23 All claims:
24 No antitrust
impact
25
26
27

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.

Disputed.
See Plaintiffs’ Response to Fact 29. Ex. 3.

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, 45:23-46:9
(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.
Evidence; Supp. Report of Kevin
M. Murphy & Robert H. Topel at
pp. 5-6 (Amiri Decl., Ex. 14)

Disputed. Professor Noll stated: “[T]he
empirical analysis that Professors Murphy
and Topel present . . . does not show that
residual errors are correlated. Instead, this
analysis shows that the two samples
generate similar estimates of the mean
residual error, which is to be expected if
the samples are drawn randomly . . . Thus,
the analysis of residual errors by Professors
Murphy and Topel does not actually test
whether residual errors are correlated
within a cluster.”

28
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See Plaintiffs’ Response to Fact 29. Ex. 3.

2

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.

3
4
5
6
7 All claims:
No antitrust
8
impact
9

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

10
11
12
13
14
15
All claims:
No antitrust
17 impact
16

18
19
20
21
All claims:
22 No antitrust
23 impact
24
25
26 All claims:
No antitrust
27
impact
28
906565_2

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).
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.

Disputed. Dr. Noll stated “Economists use
several methods to identify a relevant
market. In some cases, economists estimate
the cross-elasticity of demand . . . In most
cases data limitations preclude econometric
estimation of cross elasticity of
demand . . . If reliable estimation of crosselasticity of demand is not feasible,
economists look for indirect evidence that
products are close substitutes: similarity of
components
and
functional
uses,
statements outside the context of litigation
by executives and industry analysts about
their beliefs about which products are close
competitors, and surveys of buyers about
which products they considered before
buying a product that is a candidate to be
included in a relevant market.” Ex. 1, Noll
Damages Report at 23-42; Ex. 2, Noll
Rebuttal at 23-24.
Irrelevant. There is no requirement that
this test be performed to determine a
relevant market. Professor Noll uses
commonly accepted methodology to
establish a relevant market.
See Ex. 1, Noll Damages Report at 22-47
& Exhibits 2-8; see also Plaintiffs’
Response to Fact 32.
Disputed and irrelevant. There is no
requirement that surveys or statements of
executives in the industry are used to
establish a product market. However,
Professor Noll does present survey
evidence and statements from industry
executives

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

Ex. 1, Noll Damages Report at n.5, n.22,
n.70, n.82; id. at 40-41, 47, 50; see also
Plaintiffs’ Response to Fact 32.

Fact 35: Dr. Noll does not profess
to have any industry or other
experience that would make him an
expert on what consumers consider

Disputed. Professor Noll is a renowned
antitrust expert who has testified and
submitted reports and declarations in
numerous antitrust cases. His reports and

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1

to be substitutes for digital music
and music players.

2

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

3
4
5

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.

6
7
8
9
10 All claims:
No antitrust
11 impact
12

Ex. 1, Noll Damages Report at 3. See also
id., Appendix A (23 page C.V.).
Disputed. Professor Noll examines many
other portable digital media players,
including those that Apple themselves
listed as examples of competitors. Because
the market is portable digital music
players, Professor Noll did not examine
obvious non-portable or non-digital (or
both) media players.
Ex. 1, Noll Damages Report at 7-12; 2532, 39, 40-41 & Exhibits 2-7.

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).

13
14
15
16
17
18
19
20 All claims:
No antitrust
21 impact
22
23
24

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.

Disputed and irrelevant. Professor Noll
stated: “Professor Murphy does not show
that CDs, illegal file sharing, and ondemand streaming services are equally
close substitutes for iTS as a competing
source of permanent downloads. The Noll
Merits Report (pp. 31-42) explains why
these other sources of recordings are not as
close substitutes for iTS as other Internet
Evidence: Declaration of Roger
sites that sell permanent downloads of
Noll on Liability and Damages
recordings. Briefly, the success of sites like
(April 3, 2013) at pp. 32-42 (Amiri iTS, RMS, Amazon and others
Decl., Ex. 6); Expert Report of
demonstrates that many consumers do not
Kevin Murphy (August 19, 2013) at want to obtain recordings in a way that
¶ 125 (Amiri Decl. Ex. 3).
infringes copyrights.”
Ex. 1, Noll Damages Report at 31-42; Ex.
2, Noll Rebuttal at 16.

25
26
All claims:
27 No antitrust
impact
28
906565_2

testimony were obtained using widely
accepted economic methods that have
demonstrated impact and damages. He has
45 years of experience in analyzing the
economics of the communication industry.

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

Disputed and irrelevant. Professor Noll
examined data in a FCC “annual report”
indicated that smart phones are now
competitive substitutes for portable digital

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iPods.

2

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

3
4

Ex. 1, Noll Damages Report at 29-31.

5
6
7
8

All claims:
9 No antitrust
impact
10

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.

Irrelevant.
See Plaintiffs’ Response to Fact 38.

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

11
12
13
14
15
16 All claims:
No antitrust
17 impact
18
19

Fact 40: Dr. Noll excludes ondemand and non-interactive
streaming music from the market
because those services were not
fully available on mobile devices
during the class period.
Evidence: Declaration of Roger
Noll on Liability and Damages
(April 3, 2013) at pp. 33-39 (Amiri
Decl., Ex. 6).

20

Disputed in part and irrelevant. Professor
Noll analyzes the on-demand and
streaming music for nearly 7 pages and
concludes: “The insignificance of ondemand and non-interactive digital
streaming services is documented in
Exhibit 1, which shows the breakdown of
revenues to the record industry from
various sources . . . digital streaming
services were too small during the class
period to be a competitive restraint on
audio download services.”
Ex. 1, Noll Damages Report at 33-39.

21
22
23 All claims:
No antitrust
24
impact
25
26
27 All claims:
No antitrust
28
906565_2

media players. He also noted: “these data
indicate that smart phones did not begin to
have a competitively significant effect on
the market for portable digital media
players until after the end of the class
period.”

Fact 40: Support for mobile
Disputed and irrelevant.
devices is not relevant to consumers
See Plaintiffs’ Response to Fact 38.
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.
Evidence: Expert Report of Kevin
Murphy (August 19, 2013) at ¶ 126
(Amiri Decl. Ex. 3).
Fact 41:

Disputed. Professor Noll states: “[t]he
issue is whether the decline indicates that

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1

Additional Fact 45: Apple viewed
Harmony as a serious threat and worked
to disable it immediately.

2
3
4 All Claims:
Antitrust
5 Impact
6
7
8
9 All Claims:
Antitrust
10 Impact
11

See Ex. 23, Apple_AIIA00090441; Ex.
36, Apple_AIIA00093875; Ex. 37,
Apple_AIIA00090427; Ex. 38,
Apple_AIIA00090428; Ex. 39,
Apple_AIIA00329373; Ex. 40,
Apple_AIIA00093265; Ex. 34,
Apple_AIIA00090485; Ex. 56,
Apple_AIIA00093859; Ex. 42,
Apple_AIIA00094563; Ex. 11, Farrugia
Dep. at 195:10-196:13, 202:22-205:21.
Additional Fact 46: Disabling Harmony
enabled Apple to maintain and enhance
its monopoly.
See Ex. 1, Noll Damages Report at 52-57.
Additional Fact 47:

12 All Claims:
Antitrust
13 Impact
14

See Ex. 2, Noll Rebuttal Report at 11-12.

15

Additional Fact 48:

All Claims:
16 Antitrust
Impact
17

See Ex. 1, Noll Damages Report at 68-90.

18

I attest that the evidence cited herein fairly and accurately disputes the facts as asserted.

19 DATED: January 13, 2014
20
21
22

ROBBINS GELLER RUDMAN
& DOWD LLP
BONNY E. SWEENEY
THOMAS R. MERRICK
ALEXANDRA S. BERNAY
CARMEN A. MEDICI
JENNIFER N. CARINGAL

23
24
25

s/ Bonny E. Sweeney
BONNY E. SWEENEY

27

655 West Broadway, Suite 1900
San Diego, CA 92101
Telephone: [phone]
619/231-7423 (fax)

28

Class Counsel for Plaintiffs

26

906565_2

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2
3
4
5
6
7
8
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THE KATRIEL LAW FIRM
ROY A. KATRIEL
1101 30th Street, N.W., Suite 500
Washington, DC 20007
Telephone: [phone]
202/330-5593 (fax)
BONNETT, FAIRBOURN, FRIEDMAN
& BALINT, P.C.
ANDREW S. FRIEDMAN
FRANCIS J. BALINT, JR.
ELAINE A. RYAN
2325 E. Camelback Road, Suite 300
Phoenix, AZ 85016
Telephone: [phone]
602/274-1199 (fax)
BRAUN LAW GROUP, P.C.
MICHAEL D. BRAUN
10680 West Pico Blvd., Suite 280
Los Angeles, CA 90064
Telephone: [phone]
310/836-6010 (fax)

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14
15
16
17
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19

GLANCY BINKOW & GOLDBERG LLP
BRIAN P. MURRAY
122 East 42nd Street, Suite 2920
New York, NY 10168
Telephone: [phone]
212/382-3944 (fax)
GLANCY BINKOW & GOLDBERG LLP
MICHAEL GOLDBERG
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
Telephone: [phone]
310/201-9160 (fax)

20
Additional Counsel for Plaintiffs
21
22
23
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27
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