Lalo v. Apple, Inc et al

Filing 72

MOTION to Stay Defendant Apple Inc.'s Notice of Motion and Motion to Stay Proceedings and Memorandum of Points and Authorities in Support Thereof filed by Apple, Inc. Motion Hearing set for 7/21/2011 01:30 PM in Courtroom 4, 5th Floor, San Jose before Hon. Lucy H. Koh. (Charlson, Michael) (Filed on 5/5/2011)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Michael L. Charlson (Bar No. 122125) Maren J. Clouse (Bar No. 228726) HOGAN LOVELLS US LLP 525 University Avenue, 4th Floor Palo Alto, California 94301 Telephone: (650) 463-4000 Facsimile: (650) 463-4199 Christopher Wolf (Admitted Pro Hac Vice) HOGAN LOVELLS US LLP Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 Telephone: (202) 637-5600 Facsimile: (202) 637-5910 Clayton C. James (Admitted Pro Hac Vice) HOGAN LOVELLS US LLP One Tabor Center, Suite 1500 1200 Seventeenth Street Denver, Colorado 80202 Telephone: (303) 899-7300 Facsimile: (303) 899-7333 Attorneys for Defendant APPLE INC., a California corporation UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION 18 19 20 21 22 23 24 25 26 In re iPhone Application Litigation Case No. CV-10-5878 LHK (PSG) DEFENDANT APPLE INC.’S NOTICE OF MOTION AND MOTION TO STAY PROCEEDINGS AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: July 21, 2011 Time: 1:30 p.m. Place: Courtroom 4 The Honorable Lucy H. Koh 27 28 H OGAN L OVEL LS US LLP ATT ORNE YS AT LA W PALO AL TO MOTION TO STAY PROCEEDINGS Case No. CV 10-5878 LHK 1 NOTICE OF MOTION AND MOTION TO STAY PROCEEDINGS 2 3 TO ALL PARTIES AND THEIR COUNSEL OF RECORD: 4 PLEASE TAKE NOTICE THAT Defendant Apple Inc., through its attorneys of record 5 herein, on July 21, 2011 at 1:30 p.m., or as soon thereafter as the matter may be heard by the 6 Court, in the Courtroom of the Honorable Lucy H. Koh, located at the Robert F. Peckham Federal 7 Building, 280 South First Street, Fifth Floor, San Jose, California, will, and hereby does, move 8 the Court for an order staying proceedings in these actions pending resolution of the motion 9 pending with the Judicial Panel on Multidistrict Litigation to transfer related actions for 10 coordinated or consolidated pretrial treatment pursuant to 28 U.S.C. §1407. This motion will be 11 made on the grounds that a stay of proceedings will conserve judicial resources and serve the 12 interests of the parties. This motion also will be based upon this Notice; the attached 13 Memorandum of Points an Authorities; the complete files and records of these actions; and such 14 other matters and arguments as may come before the Court, including those raised in connection 15 with reply briefing and oral argument relating to this motion. 16 17 18 19 20 21 22 23 24 25 26 27 28 H OGAN L OVEL LS US LLP ATT ORNE YS AT LA W PALO AL TO -1- MOTION TO STAY PROCEEDINGS Case No. CV 10-5878 LHK 1 2 MEMORANDUM OF POINTS AND AUTHORITIES I. 3 INTRODUCTION These consolidated actions are among seven virtually identical putative class actions (the 4 “Actions”) pending in three different judicial districts throughout the country against defendant 5 Apple Inc. (“Apple”) regarding the operation of three Apple products or services—the iPhone, the 6 iPad, and the App Store. A stay of these actions is warranted to avoid duplicative and 7 overlapping litigation, a waste of judicial resources, and potentially conflicting rulings in the 8 Actions. On April 19, 2011, Apple filed with the Judicial Panel on Multidistrict Litigation (“the 9 Panel”) a motion to transfer the Actions to the United States District Court for the Northern 10 District of California for coordinated or consolidated pretrial treatment pursuant to 28 U.S.C. 11 §1407 (“the MDL Motion”).1 12 This Court clearly has the power to grant a stay, and a stay would promote judicial 13 economy and avoid prejudice to the parties. For those reasons, federal courts have typically 14 concluded that it is appropriate to stay preliminary pretrial proceedings while an MDL motion is 15 pending. Where, as here, the Actions have just commenced and there has been little activity in 16 the case, a brief stay pending determination of the MDL Motion will not prejudice Plaintiffs. 17 Moreover, the need for a stay is immediate. Absent a stay, the Court and the parties will face 18 imminent deadlines for motions directed at the pleadings, pretrial and other case management 19 orders, exchange of initial disclosures, and commencement of discovery. Such duplicative 20 proceedings prior to the MDL determination would inevitably result in duplication of effort by 21 the parties, waste of judicial resources, and the risk of conflicting rulings. 22 II. 23 BACKGROUND Apple, headquartered in Cupertino, California, is one of the nation’s leading technology 24 companies. Apple manufactures and sells the iPhone, a revolutionary device combining three 25 products—a mobile phone, a widescreen iPod with touch controls, and a breakthrough Internet 26 communications device with desktop-class email, web browsing, searching and maps—into one 27 1 28 H OGAN L OVEL LS US LLP ATT ORNE YS AT LA W PALO AL TO Apple is seeking similar stays in the other actions in which Apple has been served with a complaint. -1- MOTION TO STAY PROCEEDINGS Case No. CV 10-5878 LHK 1 small and lightweight handheld device. Apple also manufactures and sells the iPad, a multi- 2 purpose mobile device for browsing the web, reading and sending email, viewing photos, 3 watching videos, listening to music, playing games, reading e-books and more. In conjunction 4 with the manufacture and design of the iPhone and iPad, Apple offers the App Store, a service 5 that allows customers to discover and download third-party software applications (“apps”) to their 6 devices. At last count, more than 350,000 apps had been developed and made available in the 7 App Store for use on Apple’s iPad and iPhone products. These apps enable iPhone and iPad 8 users to perform a vast array of tasks from making restaurant reservations to finding up-to-date 9 news reports to learning when the next city bus will arrive. 10 All the plaintiffs in the Actions allege that some third-party app developers—or, more 11 precisely, the apps that they developed—improperly collect, use, and distribute iPhone and iPad 12 users’ personal information. Each complaint alleges that Apple allowed, or failed to prevent, the 13 app developers’ conduct in violation of federal and state privacy laws. These copy-cat actions 14 were filed in rapid succession following the release of a Wall Street Journal article entitled “Your 15 Apps Are Watching You” on December 18, 2010. In that article, the press reported on whether 16 the use of certain apps resulted in the collection and transmission of personally identifying user 17 information. All of the complaints originally filed refer to that article. The Actions are all in 18 preliminary stages, and no responses to the complaints have been filed. 19 III. 20 ARGUMENT A. 21 22 All Proceedings Should Be Stayed Pending Resolution Of Apple’s MDL Motion. This Court has broad discretion and authority to stay proceedings before it. Such power to 23 stay is “incidental to the power inherent in every court to control the disposition of the causes on 24 its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v. N. 25 Am. Co., 299 U.S. 248, 254 (1936); Rivers v. The Walt Disney Co., 980 F. Supp. 1358, 1362 26 (C.D. Cal. 1997) (granting motion to stay proceedings pending Panel’s resolution of transfer 27 motion). 28 H OGAN L OVEL LS US LLP ATT ORNE YS AT LA W PALO AL TO Moreover, federal courts have routinely concluded that it is appropriate to stay -2- MOTION TO STAY PROCEEDINGS Case No. CV 10-5878 LHK 1 preliminary pretrial proceedings while a motion to transfer is pending before the Panel, both to 2 conserve judicial resources and to avoid prejudice to the parties. Milrot v. Apple Inc., 2010 WL 3 3419699, at *1 (S.D. Fla. Aug. 27, 2010) (staying individual action pending MDL transfer of 4 multi-district litigation related to Apple’s iPhone 4 because case was not procedurally advanced 5 and stay would increase judicial economy); Good v. Prudential Ins. Co. of Am., 5 F. Supp. 2d 6 804, 809 (N.D. Cal. 1998) (“Courts frequently grant stays pending a decision by the MDL 7 Panel”); see also Sanborn v. Asbestos Corp., Ltd, 2009 WL 195922, at *2 (N.D. Cal. Jan. 27, 8 2009) (quoting Good, 5 F. Supp. 2d at 809). See also Tran, et al. v. Apple, Inc., et al., Case No. 9 09-CV-04242-JW (N.D. Cal. Oct. 16, 2009), Order Granting Defendants’ Unopposed Motion to 10 Stay Proceedings (Dkt. No. 29) (stay of proceedings pending resolution of MDL motion to 11 transfer to that court); In re Apple iPod Nano Litig., Case No. 05-CV-04244-RMW (N.D. Cal. 12 Feb. 6, 2006), Order Granting Defendant Apple Computer, Inc.’s Motion to Stay Proceedings 13 (Dkt. No. 26) (same). 14 When considering a motion to stay based on a pending MDL motion, federal district 15 courts examine (1) the interests of judicial economy and efficiency; (2) the hardship and inequity 16 to the moving party if its motion is not granted; and (3) the extent to which the non-moving party 17 will be prejudiced if proceedings are stayed. Rivers, 980 F. Supp. at 1362. An analysis of these 18 factors clearly demonstrates the propriety of a stay here. 19 20 21 B. Judicial Resources Will Be Conserved If This Court Grants Defendant’s Motion For A Stay. Entry of a stay will conserve judicial resources because the MDL Motion is likely to be 22 granted, rendering pre-consolidation proceedings in the coordinated cases duplicative and 23 inefficient. Grant of the MDL Motion is likely because, as the Panel has recognized, 24 consolidation is called for “when two or more complaints assert comparable allegations against 25 identical defendants based upon similar transactions and events.” In re Air West Inc. Sec. Litig., 26 384 F. Supp. 609, 611 (J.P.M.L. 1974); see also In re Ford Motor Co. Crown Victoria Police 27 Interceptor Prods. Liab. Litig., 229 F. Supp. 2d 1377, 1378 (J.P.M.L. 2002); In re Cuisinart Food 28 Processor Antitrust Litig., 506 F. Supp. 651, 654-55 (J.P.M.L. 1981). Here, absent centralization, H OGAN L OVEL LS US LLP ATT ORNE YS AT LA W PALO AL TO -3- MOTION TO STAY PROCEEDINGS Case No. CV 10-5878 LHK 1 there will be seven actions proceeding in three jurisdictions involving overlapping factual 2 allegations, claims, and putative classes. Moreover, a strong consideration favoring centralization 3 is the specter of conflicting decisions regarding class certification. See, e.g., In re Haw. Hotel 4 Room Rate Antitrust Litig., 438 F. Supp. 935, 936 (J.P.M.L. 1977) (“Section 1407 centralization 5 is especially important to ensure consistent treatment of the class action issues.”); In re NorthStar 6 Educ. Fin., Inc., 588 F. Supp. 2d 1370, 1370 (J.P.M.L. Dec. 3, 2008) (centralizing actions to 7 prevent inconsistent pretrial rulings especially because of class certification issues). Here, all the 8 cases are purported class actions on behalf of overlapping groups of putative class members, so 9 the risk of conflicting class certification decisions is manifest. In sum, the relevant factors 10 militate strongly in favor of MDL treatment. See Ramos-Martir v. Astra-Merck, Inc., 2005 WL 11 3088372, at *1 (D.P.R. November 17, 2005) (“Given the possibility of transfer, the Court is 12 inclined to agree with defendants as to the undesirability of expending judicial resources 13 familiarizing ourselves with the intricacies of the instant case.”). 14 Accordingly, entry of a stay here will allow this Court to avoid duplicative pretrial 15 proceedings and needless expenditure of the Court’s resources. See Rivers, 980 F. Supp. at 1360. 16 Further, transfer of the Actions would potentially subject any pretrial rulings in this and the other 17 Actions to reconsideration by the transferee court. See id. at 1361; see also U.S. Bank, Nat’l 18 Ass’n v. Royal Indem. Co., 2002 WL 31114069, at *2 (N.D. Tex. Sept. 23, 2002) (without stay, 19 defendant would be “forced to conduct discovery and file dispositive motions with the Court 20 [and] an excessive amount of time, money and energy could potentially be wasted”); In re 21 Upjohn Co. Antibiotic Cleocin Prods. Liab. Litig., 81 F.R.D. 482, 486-87 (E.D. Mich. 1979), 22 aff’d, 664 F.2d 114 (6th Cir. 1981) (requiring transferee court to harmonize inconsistent pretrial 23 orders after consolidation). Similarly, there would be a significant risk of conflicting rulings by 24 courts in the other pending Actions that would have to be resolved by the transferee court. For all 25 these reasons, a stay is necessary and appropriate to promote the efficient use of judicial 26 resources.2 27 2 28 H OGAN L OVEL LS US LLP ATT ORNE YS AT LA W PALO AL TO If the Actions are transferred to this district, as Apple has requested, then Apple intends to work with all plaintiffs to propose an appropriate case management schedule for all the Actions. -4- MOTION TO STAY PROCEEDINGS Case No. CV 10-5878 LHK 1 C. 2 As the courts have recognized, failure to stay one of multiple actions pending 3 determination of an MDL motion imposes unnecessary burden and hardship on the defendant. 4 See Nielsen v. Merck & Co., 2007 WL 806510, at *2 (N.D. Cal. 2007) (noting prejudice to 5 defendant “from being forced to litigate the same jurisdictional issue in multiple forums”); 6 Arthur-Magna, Inc. v. Del-Val Fin. Corp., 1991 WL 13725, at *1 (D.N.J. 1991). These 7 considerations compel a stay here. Plaintiffs’ factual allegations in each case are that Apple 8 allowed third-party app developers to collect, transmit, and misuse supposedly personal 9 identifying information of iPhone and iPad users, and it follows that the discovery requests will Defendants Will Be Prejudiced Unless The Stay Is Granted. 10 mirror the similarities of the factual allegations. It is therefore inevitable that plaintiffs in the 11 multiple Actions will all serve Apple with similar discovery requests for documents, other written 12 discovery, and depositions. Defendants should not be made to analyze, investigate, and collect 13 information responsive to differing discovery requests on substantially similar issues. A 14 temporary stay is particularly imperative as a matter of fairness to Defendants’ witnesses, who 15 should not be required to appear for multiple depositions in the various Actions. 16 It would also impose substantial hardship on Defendants if they are required to litigate 17 motions to dismiss, motions for class certification, and other pretrial motions in no fewer than 18 three different courts. Moreover, the risk of conflicting rulings on these issues, and the class 19 certification issue in particular, would obviously be prejudicial to both Defendants and the 20 putative class members. This is especially so because all the Actions purport to assert claims on 21 behalf of overlapping classes of iPhone and iPad users. 22 D. Plaintiffs Will Suffer No Prejudice If This Court Orders A Stay. 23 Plaintiffs will not be prejudiced if this Court enters a stay pending determination of 24 Apple’s MDL Motion. To the contrary, Plaintiffs should have no more interest than Apple in 25 duplicative, wasteful, and potentially conflicting pretrial proceedings. Any delay necessarily will 26 be of limited duration, since the stay will be in effect only until the Panel issues its decision. See 27 also California ex rel. Vicente v. Eli Lilly and Co., 2007 WL 4358224, *1 (N.D. Cal. Dec. 13, 28 2007) (granting stay pending MDL transfer because “any delay from a stay is minimal”); H OGAN L OVEL LS US LLP ATT ORNE YS AT LA W PALO AL TO -5- MOTION TO STAY PROCEEDINGS Case No. CV 10-5878 LHK 1 Gonzales v. General Motors Corp., 2007 WL 2406871, *1 (N.D. Cal. Aug. 20, 2007) (“judicial 2 economy factor outweighs any prejudice Plaintiffs claim from a stay” pending MDL transfer). 3 Further, the case is in its infancy. See Milrot, 2010 WL 3419699, at *1 (case not procedurally 4 advanced at just under 60 days old with only complaint and premature motion for summary 5 judgment filed). Any possible inconvenience from such minimal delay is far outweighed by the 6 considerations of judicial economy and fairness addressed above. 7 IV. 8 CONCLUSION A stay is plainly warranted to prevent the prejudice resulting from duplicative, unfairly 9 burdensome discovery and motion practice and the risk of conflicting rulings. Judicial economy 10 also compels a stay of these actions. Therefore, Apple respectfully requests that this Court enter 11 an order staying all proceedings in these actions pending the Panel’s determination of the MDL 12 Motion. 13 14 Dated: May 5, 2011 HOGAN LOVELLS US LLP 15 By: /s/ Michael L. Charlson Michael L. Charlson 16 Attorneys for Defendant APPLE INC., a California corporation 17 18 19 20 21 22 23 24 25 26 27 28 H OGAN L OVEL LS US LLP ATT ORNE YS AT LA W PALO AL TO -6- MOTION TO STAY PROCEEDINGS Case No. CV 10-5878 LHK

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