"The Apple iPod iTunes Anti-Trust Litigation"

Filing 758

Administrative Motion to File Under Seal Apple's Opposition to Plaintiffs' Motion to Strike 750 filed by Apple Inc.. (Attachments: # 1 Proposed Order Granting Motion to Seal, # 2 Declaration of David Kiernan in Support of Motion to Seal, # 3 Exhibit 1 - 2 to Kiernan Declaration in Support of Motion to Seal, # 4 Opposition to Plaintiffs' Motion to Strike (ECF No. 750) REDACTED, # 5 Opposition to Plaintiffs' Motion to Strike (ECF No. 750) UNREDACTED, # 6 Declaration of Kiernan in Support of Apple's Opposition, # 7 Exhibit 1 to Kiernan Declaration in Support of Apple's Opposition REDACTED, # 8 Exhibit 1 to Kiernan Declaration in Support of Apple's Opposition UNREDACTED, # 9 Proposed Order Denying Plaintiffs' Motion to Strike)(Kiernan, David) (Filed on 1/27/2014)

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Robert A. Mittelstaedt (State Bar No. 60359)
[e-mail]
Craig E. Stewart (State Bar No. 129530)
[e-mail]
David C. Kiernan (State Bar No. 129530)
[e-mail]
Amir Q. Amiri (State Bar No. 271224)
[e-mail]
JONES DAY
555 California Street, 26th Floor
San Francisco, CA 94104
Telephone: [phone]
Facsimile:
+1.415.875.5700
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]
APPLE’S OPPOSITION TO
PLAINTIFFS’ MOTION TO STRIKE
SUPPLEMENTAL EXPERT REPORT
OF KEVIN M. MURPHY AND
ROBERT H. TOPEL, DATED
DECEMBER 20, 2013
Date:
Time:
Courtroom:

February 18, 2014
2:00 PM
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[REDACTED - PUBLIC VERSION]

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Apple’s Opp. to Pls’ Motion to Strike
C-05-00037-YGR

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TABLE OF CONTENTS

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Page

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INTRODUCTION .......................................................................................................................... 1
BACKGROUND ............................................................................................................................ 2
ARGUMENT .................................................................................................................................. 7
A. Plaintiffs’ Motion Violates Local Rule 7-3 .................................................................... 7
B. Apple Has Complied With Rule 26 and This Court’s Scheduling Order ....................... 8
C. Plaintiffs’ Argument For Rule 37 Sanctions Is Misplaced ........................................... 10
CONCLUSION ............................................................................................................................. 12

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Apple's Opp. to Pls' Motion to Strike
C-05-00037-YGR

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TABLE OF AUTHORITIES

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Page

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CASES

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Apple Inc. v. Samsung Elecs. Co.,
No. 11-cv-01846-LHK, 2011 BL 304343, *3 (N.D. Cal. Dec. 2, 2011) .................................. 8

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AZ Holding, L.L.C. v. Frederick,
No. CV-08-0276-PHX-LOA, 2009 U.S. Dist. LEXIS 74515 (D. Ariz. Aug. 10, 2009) ........ 11
Glass Dimensions, Inc. v. State Street Bank & Tr. Co.,
290 F.R.D. 11 (D. Mass. 2013) ......................................................................................... 10, 11
In re Graphics Processing Units Antitrust Litigation,
253 F.R.D. 478 (N.D. Cal. 2008) .............................................................................................. 9
O’Connor v. Boeing N. Am., Inc.,
No. CV 97-1554 DT, 2005 U.S. Dist. LEXIS 46233 (C.D. Cal. Sept. 12, 2005)................... 12
Oak Point Partners, Inc. v. Lessing,
No. 11-03328 LHK, 2012 U.S. Dist. LEXIS 133407 (N.D. Cal. Sept. 18, 2012) .................... 8
Park West Radiology v. CareCore Nat’l LLC,
675 F. Supp. 2d 314 (S.D.N.Y. 2009) ........................................................................... 8, 10, 11
Silgan Containers v. Nat’l Union Fire Ins.,
No. C 09-05971-RS, 2011 U.S. Dist. LEXIS 35010 (N.D. Cal. March 23, 2011) ................... 8
Storage Tech. Corp. v. Cisco Sys.,
No. C 00-1176 SI, 2001 U.S. Dist. LEXIS 25876 (N.D. Cal. Nov. 27, 2001) ....................... 11
Wendt v. Host Int’l Inc.,
125 F.3d 806 (9thCir. 1997).............................................................................................. 11, 12
OTHER AUTHORITIES
Fed. R. Civ. P. 26 ................................................................................................................... passim

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Fed. R. Civ. P. 26(a)...................................................................................................................... 10

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Fed. R. Civ. P. 26(a)(2)(D)(ii)......................................................................................................... 9

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Fed. R. Civ. P. 26(a)(2)(E) .............................................................................................................. 8

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Fed. R. Civ. P. 26(a)(3) ................................................................................................................... 2

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Fed. R. Civ. P. 26(e).......................................................................................................... 1, 2, 8, 10

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Fed. R. Civ. P. 26(e)(1)(A) ....................................................................................................... 8, 10
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C-05-00037-YGR

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TABLE OF AUTHORITIES
(continued)

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Fed. R. Civ. P. 37 ................................................................................................................ 1, 10, 11

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Fed. R. Civ. P. 37(c)(1) ........................................................................................................... 10, 11

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Fed. R. Civ. P. 56 ............................................................................................................................ 1

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Northern District of California Civil Local Rule 3-4(c)(2)............................................................. 7
Northern District of California Civil Local Rule 7-3 ...................................................................... 7
Northern District of California Civil Local Rule 7-3(a) ............................................................. 1, 7

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Apple's Opp. to Pls' Motion to Strike
C-05-00037-YGR

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rebuttal does attempt to contradict or rebut, the new regressions do no such thing. As detailed

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above, Murphy’s and Topel’s initial reports were directed at Noll’s original regression models,

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and showed that they were unreliable and incapable of showing impact or damages. They also

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included computations of statistical significance and estimated damages correcting for various

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flaws in the original regressions. Rather than defending his original models and attacking the

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computations in Murphy’s and Topel’s initial reports, however, Noll abandoned them and

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introduced new regressions with significantly different specifications. See Glass Dimensions,

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Inc. v. State Street Bank & Tr. Co., 290 F.R.D. 11, 18 (D. Mass. 2013) (case cited by plaintiffs,

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holding that report was not true rebuttal because it included opinions that did not contradict or

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rebut opinions in defendants’ report).
But even if Noll’s new regressions could be viewed as rebuttal, Apple’s supplemental

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disclosure would still be proper under Rule 26(e). No amount of finessing or diversion by

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plaintiffs can change two key facts relevant to this motion: first, the regression models in Noll’s

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rebuttal are significantly different from the models in his original report—some of the changes

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respond to Murphy and Topel’s initial reports, but the changes to the iTunes 4.7 and 7.0 variables

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do not; and second, the computations and recalculations in the initial reports responded to Noll’s

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original models and needed to be updated to respond to his revised models. Under these

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circumstances, it was appropriate under Rule 26 for Apple’s experts to update their analysis and

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computations in response to the new regressions. See Park West, 675 F. Supp. 2d at 326 (denying

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motion to strike because supplemental report that “updated [ ] calculations . . . with newly

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available information, complie[d] with [Rule 26(e)(1)(A)].”).

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In short, under plaintiffs’ approach, they would be permitted to make fundamental

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changes to their impact and damages models as part of a rebuttal report, without Apple having

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any opportunity to respond or rerun its calculations based on the new regressions. Nothing in the

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Federal Rules of Civil Procedure or in the Court’s scheduling order permits that unfairness.

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C.

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Rule 37(c)(1) does not apply here. It authorizes sanctions where a party “fails to provide

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Plaintiffs’ Argument For Rule 37 Sanctions Is Misplaced.

information . . . as required by Rule 26(a) or (e) . . . unless the failure was substantially justified
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Apple’s Opp. to Pls’ Motion to Strike
C-05-00037-YGR

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or is harmless.” But plaintiffs do not and cannot claim that Apple should have provided earlier

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any information set forth in the Murphy/Topel supplemental report. Apple could not be expected

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to anticipate that Noll would abandon his original regression models and substitute other models

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in his “rebuttal” report.

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In any event, Apple's supplement was timely served, two days after Noll’s deposition on

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his rebuttal report, and was “substantially justified” because Apple had no opportunity to respond

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to the new regressions before that time. Plaintiffs have already deposed Murphy and Topel at

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length about their Supplemental Report. They have also submitted a new report by Noll

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responding to the Supplemental Report. Thus, they have not been prejudiced in any cognizable

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way, and to the extent that plaintiffs argue that Apple should have anticipated the rebuttal report,

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any alleged “failure” to do so was “harmless” under Rule 37(c)(1). Park West, 675 F. Supp. 2d at

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326 (finding sanctions unwarranted where defendants redeposed expert and were permitted to

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submit a surrebuttal). Plaintiffs suggest, without any evidentiary support, that Noll’s final report

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may have improved with more time. But they had approximately the same amount of time to

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evaluate the 15-page Supplement Report as Apple and its economists had to evaluate Noll’s 52-

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page rebuttal report. And they fail to point to any respect in which Noll’s report would have been

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better.

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The Rule 37 cases cited by plaintiffs do not help them. In most of those cases, the court

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refused to strike the untimely reports as an unduly harsh sanction. Wendt v. Host Int’l Inc., 125

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F.3d 806, 814 (9th Cir. 1997) (finding exclusion to drastic because opposing party had sufficient

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time to depose and rebut contested expert report); Glass Dimensions, 290 F.R.D. at 18 (refusing

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to strike report and instead allowing defendants 30 days to serve a supplemental report); AZ

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Holding, L.L.C. v. Frederick, No. CV-08-0276-PHX-LOA, 2009 U.S. Dist. LEXIS 74515 (D.

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Ariz. Aug. 10, 2009) (refusing to exclude late-disclosed expert as “unduly harsh and

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unwarranted”). And the two cases in which the court actually struck the reports do not aid

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plaintiffs. In Storage Tech. Corp. v. Cisco Sys., No. C 00-1176 SI, 2001 U.S. Dist. LEXIS 25876,

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at *10-11 (N.D. Cal. Nov. 27, 2001), the court struck an expert report because it was filed in

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support of a reply brief, thus depriving the moving party any opportunity to respond to it. And in
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Apple’s Opp. to Pls’ Motion to Strike
C-05-00037-YGR

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O’Connor v. Boeing N. Am., Inc., No. CV 97-1554 DT, 2005 U.S. Dist. LEXIS 46233 (C.D. Cal.

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Sept. 12, 2005), the court found the supplemental report improper because it contained new

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opinions that “widen[ed] the trial issues at the eleventh hour” and were based on information

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known at the time the “initial Rule 26 disclosures.” What drove those decisions is that one party

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had waited to the “eleventh hour” to disclose opinions and severely prejudiced the other party by

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preventing any opportunity to respond. This is not the case here, at least not with respect to

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Apple’s disclosures.

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Even if the Wendt factors were the appropriate test here, plaintiffs’ motion should still be
denied. All of the expert opinions are now before the Court to consider in ruling on Apple’s

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Motion for Summary Judgment. Striking the supplemental report will not hasten the end of this

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case or alleviate this Court’s calendar. Plaintiffs suffer no prejudice because they do not need

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time to depose the experts or complete a new rebuttal report—they have already done both. On

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the other hand, the risk of prejudice to Apple, the public policy favoring disposition on the merit

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and the availability of a less drastic approach (e.g., permitting Noll’s second rebuttal report to

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which Apple has no objection) all weigh against plaintiffs’ exclusion request—as does the fact

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that the need for a supplemental report was occasioned by the new regressions and changes in

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theory contained in Noll’s rebuttal report.

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CONCLUSION

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For these reasons, plaintiffs’ Motion to Strike the Supplemental Report of Kevin Murphy

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and Roger Topel should be denied.

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Dated: January 27, 2014

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Respectfully submitted,
Jones Day

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By:/s/David C. Kiernan
David C. Kiernan
Counsel for Defendant
APPLE INC.

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Apple’s Opp. to Pls’ Motion to Strike
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