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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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:
[phone]
Facsimile:
[phone]
[e-mail]
[e-mail]
Christopher Wolf (Admitted Pro Hac Vice)
HOGAN LOVELLS US LLP
Columbia Square
555 Thirteenth Street, NW
Washington, DC 20004
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
Clayton C. James (Admitted Pro Hac Vice)
HOGAN LOVELLS US LLP
One Tabor Center, Suite 1500
1200 Seventeenth Street
Denver, Colorado 80202
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
Attorneys for Defendant
APPLE INC., a California corporation
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION

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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

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MOTION TO STAY PROCEEDINGS
Case No. CV 10-5878 LHK

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NOTICE OF MOTION AND MOTION TO STAY PROCEEDINGS

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TO ALL PARTIES AND THEIR COUNSEL OF RECORD:

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PLEASE TAKE NOTICE THAT Defendant Apple Inc., through its attorneys of record

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herein, on July 21, 2011 at 1:30 p.m., or as soon thereafter as the matter may be heard by the

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Court, in the Courtroom of the Honorable Lucy H. Koh, located at the Robert F. Peckham Federal

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Building, 280 South First Street, Fifth Floor, San Jose, California, will, and hereby does, move

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the Court for an order staying proceedings in these actions pending resolution of the motion

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pending with the Judicial Panel on Multidistrict Litigation to transfer related actions for

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coordinated or consolidated pretrial treatment pursuant to 28 U.S.C. §1407. This motion will be

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made on the grounds that a stay of proceedings will conserve judicial resources and serve the

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interests of the parties. This motion also will be based upon this Notice; the attached

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Memorandum of Points an Authorities; the complete files and records of these actions; and such

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other matters and arguments as may come before the Court, including those raised in connection

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with reply briefing and oral argument relating to this motion.

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MEMORANDUM OF POINTS AND AUTHORITIES
I.

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INTRODUCTION
These consolidated actions are among seven virtually identical putative class actions (the

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“Actions”) pending in three different judicial districts throughout the country against defendant

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Apple Inc. (“Apple”) regarding the operation of three Apple products or services—the iPhone, the

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iPad, and the App Store. A stay of these actions is warranted to avoid duplicative and

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overlapping litigation, a waste of judicial resources, and potentially conflicting rulings in the

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Actions. On April 19, 2011, Apple filed with the Judicial Panel on Multidistrict Litigation (“the

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Panel”) a motion to transfer the Actions to the United States District Court for the Northern

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District of California for coordinated or consolidated pretrial treatment pursuant to 28 U.S.C.

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§1407 (“the MDL Motion”).1

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This Court clearly has the power to grant a stay, and a stay would promote judicial

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economy and avoid prejudice to the parties. For those reasons, federal courts have typically

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concluded that it is appropriate to stay preliminary pretrial proceedings while an MDL motion is

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pending. Where, as here, the Actions have just commenced and there has been little activity in

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the case, a brief stay pending determination of the MDL Motion will not prejudice Plaintiffs.

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Moreover, the need for a stay is immediate. Absent a stay, the Court and the parties will face

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imminent deadlines for motions directed at the pleadings, pretrial and other case management

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orders, exchange of initial disclosures, and commencement of discovery. Such duplicative

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proceedings prior to the MDL determination would inevitably result in duplication of effort by

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the parties, waste of judicial resources, and the risk of conflicting rulings.

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II.

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BACKGROUND
Apple, headquartered in Cupertino, California, is one of the nation’s leading technology

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companies. Apple manufactures and sells the iPhone, a revolutionary device combining three

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products—a mobile phone, a widescreen iPod with touch controls, and a breakthrough Internet

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communications device with desktop-class email, web browsing, searching and maps—into one

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Apple is seeking similar stays in the other actions in which Apple has been served with a
complaint.
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small and lightweight handheld device. Apple also manufactures and sells the iPad, a multi-

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purpose mobile device for browsing the web, reading and sending email, viewing photos,

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watching videos, listening to music, playing games, reading e-books and more. In conjunction

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with the manufacture and design of the iPhone and iPad, Apple offers the App Store, a service

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that allows customers to discover and download third-party software applications (“apps”) to their

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devices. At last count, more than 350,000 apps had been developed and made available in the

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App Store for use on Apple’s iPad and iPhone products. These apps enable iPhone and iPad

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users to perform a vast array of tasks from making restaurant reservations to finding up-to-date

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news reports to learning when the next city bus will arrive.

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All the plaintiffs in the Actions allege that some third-party app developers—or, more

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precisely, the apps that they developed—improperly collect, use, and distribute iPhone and iPad

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users’ personal information. Each complaint alleges that Apple allowed, or failed to prevent, the

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app developers’ conduct in violation of federal and state privacy laws. These copy-cat actions

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were filed in rapid succession following the release of a Wall Street Journal article entitled “Your

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Apps Are Watching You” on December 18, 2010. In that article, the press reported on whether

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the use of certain apps resulted in the collection and transmission of personally identifying user

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information. All of the complaints originally filed refer to that article. The Actions are all in

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preliminary stages, and no responses to the complaints have been filed.

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III.

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ARGUMENT
A.

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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

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stay is “incidental to the power inherent in every court to control the disposition of the causes on

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its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v. N.

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Am. Co., 299 U.S. 248, 254 (1936); Rivers v. The Walt Disney Co., 980 F. Supp. 1358, 1362

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(C.D. Cal. 1997) (granting motion to stay proceedings pending Panel’s resolution of transfer

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motion).

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Moreover, federal courts have routinely concluded that it is appropriate to stay
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preliminary pretrial proceedings while a motion to transfer is pending before the Panel, both to

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conserve judicial resources and to avoid prejudice to the parties. Milrot v. Apple Inc., 2010 WL

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3419699, at *1 (S.D. Fla. Aug. 27, 2010) (staying individual action pending MDL transfer of

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multi-district litigation related to Apple’s iPhone 4 because case was not procedurally advanced

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and stay would increase judicial economy); Good v. Prudential Ins. Co. of Am., 5 F. Supp. 2d

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804, 809 (N.D. Cal. 1998) (“Courts frequently grant stays pending a decision by the MDL

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Panel”); see also Sanborn v. Asbestos Corp., Ltd, 2009 WL 195922, at *2 (N.D. Cal. Jan. 27,

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2009) (quoting Good, 5 F. Supp. 2d at 809). See also Tran, et al. v. Apple, Inc., et al., Case No.

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09-CV-04242-JW (N.D. Cal. Oct. 16, 2009), Order Granting Defendants’ Unopposed Motion to

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Stay Proceedings (Dkt. No. 29) (stay of proceedings pending resolution of MDL motion to

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transfer to that court); In re Apple iPod Nano Litig., Case No. 05-CV-04244-RMW (N.D. Cal.

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Feb. 6, 2006), Order Granting Defendant Apple Computer, Inc.’s Motion to Stay Proceedings

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(Dkt. No. 26) (same).

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When considering a motion to stay based on a pending MDL motion, federal district

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courts examine (1) the interests of judicial economy and efficiency; (2) the hardship and inequity

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to the moving party if its motion is not granted; and (3) the extent to which the non-moving party

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will be prejudiced if proceedings are stayed. Rivers, 980 F. Supp. at 1362. An analysis of these

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factors clearly demonstrates the propriety of a stay here.

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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

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granted, rendering pre-consolidation proceedings in the coordinated cases duplicative and

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inefficient. Grant of the MDL Motion is likely because, as the Panel has recognized,

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consolidation is called for “when two or more complaints assert comparable allegations against

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identical defendants based upon similar transactions and events.” In re Air West Inc. Sec. Litig.,

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384 F. Supp. 609, 611 (J.P.M.L. 1974); see also In re Ford Motor Co. Crown Victoria Police

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Interceptor Prods. Liab. Litig., 229 F. Supp. 2d 1377, 1378 (J.P.M.L. 2002); In re Cuisinart Food

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Processor Antitrust Litig., 506 F. Supp. 651, 654-55 (J.P.M.L. 1981). Here, absent centralization,

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there will be seven actions proceeding in three jurisdictions involving overlapping factual

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allegations, claims, and putative classes. Moreover, a strong consideration favoring centralization

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is the specter of conflicting decisions regarding class certification. See, e.g., In re Haw. Hotel

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Room Rate Antitrust Litig., 438 F. Supp. 935, 936 (J.P.M.L. 1977) (“Section 1407 centralization

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is especially important to ensure consistent treatment of the class action issues.”); In re NorthStar

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Educ. Fin., Inc., 588 F. Supp. 2d 1370, 1370 (J.P.M.L. Dec. 3, 2008) (centralizing actions to

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prevent inconsistent pretrial rulings especially because of class certification issues). Here, all the

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cases are purported class actions on behalf of overlapping groups of putative class members, so

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the risk of conflicting class certification decisions is manifest. In sum, the relevant factors

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militate strongly in favor of MDL treatment. See Ramos-Martir v. Astra-Merck, Inc., 2005 WL

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3088372, at *1 (D.P.R. November 17, 2005) (“Given the possibility of transfer, the Court is

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inclined to agree with defendants as to the undesirability of expending judicial resources

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familiarizing ourselves with the intricacies of the instant case.”).

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Accordingly, entry of a stay here will allow this Court to avoid duplicative pretrial

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proceedings and needless expenditure of the Court’s resources. See Rivers, 980 F. Supp. at 1360.

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Further, transfer of the Actions would potentially subject any pretrial rulings in this and the other

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Actions to reconsideration by the transferee court. See id. at 1361; see also U.S. Bank, Nat’l

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Ass’n v. Royal Indem. Co., 2002 WL 31114069, at *2 (N.D. Tex. Sept. 23, 2002) (without stay,

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defendant would be “forced to conduct discovery and file dispositive motions with the Court

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[and] an excessive amount of time, money and energy could potentially be wasted”); In re

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Upjohn Co. Antibiotic Cleocin Prods. Liab. Litig., 81 F.R.D. 482, 486-87 (E.D. Mich. 1979),

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aff’d, 664 F.2d 114 (6th Cir. 1981) (requiring transferee court to harmonize inconsistent pretrial

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orders after consolidation). Similarly, there would be a significant risk of conflicting rulings by

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courts in the other pending Actions that would have to be resolved by the transferee court. For all

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these reasons, a stay is necessary and appropriate to promote the efficient use of judicial

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resources.2

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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.
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C.

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As the courts have recognized, failure to stay one of multiple actions pending

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determination of an MDL motion imposes unnecessary burden and hardship on the defendant.

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See Nielsen v. Merck & Co., 2007 WL 806510, at *2 (N.D. Cal. 2007) (noting prejudice to

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defendant “from being forced to litigate the same jurisdictional issue in multiple forums”);

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Arthur-Magna, Inc. v. Del-Val Fin. Corp., 1991 WL 13725, at *1 (D.N.J. 1991). These

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considerations compel a stay here. Plaintiffs’ factual allegations in each case are that Apple

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allowed third-party app developers to collect, transmit, and misuse supposedly personal

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identifying information of iPhone and iPad users, and it follows that the discovery requests will

Defendants Will Be Prejudiced Unless The Stay Is Granted.

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mirror the similarities of the factual allegations. It is therefore inevitable that plaintiffs in the

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multiple Actions will all serve Apple with similar discovery requests for documents, other written

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discovery, and depositions. Defendants should not be made to analyze, investigate, and collect

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information responsive to differing discovery requests on substantially similar issues. A

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temporary stay is particularly imperative as a matter of fairness to Defendants’ witnesses, who

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should not be required to appear for multiple depositions in the various Actions.

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It would also impose substantial hardship on Defendants if they are required to litigate

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motions to dismiss, motions for class certification, and other pretrial motions in no fewer than

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three different courts. Moreover, the risk of conflicting rulings on these issues, and the class

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certification issue in particular, would obviously be prejudicial to both Defendants and the

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putative class members. This is especially so because all the Actions purport to assert claims on

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behalf of overlapping classes of iPhone and iPad users.

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D.

Plaintiffs Will Suffer No Prejudice If This Court Orders A Stay.

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Plaintiffs will not be prejudiced if this Court enters a stay pending determination of

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Apple’s MDL Motion. To the contrary, Plaintiffs should have no more interest than Apple in

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duplicative, wasteful, and potentially conflicting pretrial proceedings. Any delay necessarily will

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be of limited duration, since the stay will be in effect only until the Panel issues its decision. See

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also California ex rel. Vicente v. Eli Lilly and Co., 2007 WL 4358224, *1 (N.D. Cal. Dec. 13,

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2007) (granting stay pending MDL transfer because “any delay from a stay is minimal”);

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Gonzales v. General Motors Corp., 2007 WL 2406871, *1 (N.D. Cal. Aug. 20, 2007) (“judicial

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economy factor outweighs any prejudice Plaintiffs claim from a stay” pending MDL transfer).

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Further, the case is in its infancy. See Milrot, 2010 WL 3419699, at *1 (case not procedurally

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advanced at just under 60 days old with only complaint and premature motion for summary

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judgment filed). Any possible inconvenience from such minimal delay is far outweighed by the

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considerations of judicial economy and fairness addressed above.

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IV.

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CONCLUSION
A stay is plainly warranted to prevent the prejudice resulting from duplicative, unfairly

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burdensome discovery and motion practice and the risk of conflicting rulings. Judicial economy

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also compels a stay of these actions. Therefore, Apple respectfully requests that this Court enter

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an order staying all proceedings in these actions pending the Panel’s determination of the MDL

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Motion.

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Dated: May 5, 2011

HOGAN LOVELLS US LLP

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By: /s/ Michael L. Charlson
Michael L. Charlson

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Attorneys for Defendant
APPLE INC., a California corporation

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MOTION TO STAY PROCEEDINGS
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