In Re: iPhone/iPad Application Consumer Privacy Litigation

Filing 17

JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT, filed by Apple, Inc.. (McCabe, James) (Filed on 9/28/2011) Modified text on 9/29/2011 (dhm, COURT STAFF).

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JAMES F. MCCABE (SBN 104686)
[e-mail]
MORRISON & FOERSTER LLP
425 Market Street
San Francisco, California 94105-2482
Telephone: [phone]
Facsimile: 415.268.7522
BRYAN WILSON (SBN 138842)
[e-mail]
TERESA N. BURLISON (SBN 230854)
[e-mail]
MORRISON & FOERSTER LLP
755 Page Mill Road
Palo Alto, California 94304-1018
Telephone: [phone]
Facsimile: 650.494.0792
Attorneys for Defendant
APPLE INC., a California corporation

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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In Re iPhone Application Litigation

Case No.

11-MD-02250 LHK (PSG)

JOINT SUPPLEMENTAL CASE
MANAGEMENT STATEMENT

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Date:
Time:
Ctrm:
Judge:

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JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
11-MD-02250 LHK (PSG)

October 5, 2011
2:00 PM
4, 5th Floor
Honorable Lucy H. Koh

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Pursuant to Civil L-R 16-10(d), the parties to this action certify that they have met and
conferred, and jointly submit this Supplemental Case Management Statement.

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DESCRIPTION OF SUBSEQUENT CASE DEVELOPMENTS
On August 29, 2011, the Judicial Panel on Multidistrict Litigation issued a Conditional

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Transfer Order transferring seven actions to the Northern District of California for consolidated or

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coordinated pretrial treatment pursuant to 28 U.S.C. § 1407. Plaintiffs in two of the actions,

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O’Flaherty v. Apple Inc., No. 11-359 (S.D. Ill.) and Snyder v. Apple Inc., No. 11-784 (E.D. Mo.),

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filed a motion to vacate the Conditional Transfer Order on September 23, 2011. Opposition

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briefs are due on October 11, 2011.

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On September 20, 2011, the Court entered an order granting Apple’s and the Mobile

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Industry Defendants’ motions to dismiss the entire First Consolidated Class Action Complaint

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(“Complaint”). (September 20, 2011 Order Granting Defendants’ Motions to Dismiss For Lack

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of Article III Standing With Leave to Amend, Dkt. No. 8.) The Court dismissed Plaintiffs’ entire

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Complaint without prejudice pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure.

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Under the terms of the order, Plaintiffs have until November 21, 2011, to amend the consolidated

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complaint.

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LEADERSHIP STRUCTURE OF PLAINTIFFS’ COUNSEL
All Plaintiffs’ counsel have been served with the prior case management orders, the CTO

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and this Court’s Minute Order of September 9, 2011. To date, Interim Lead Counsel has not been

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contacted by any of the firms in the tag-along actions regarding a change to the current leadership

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structure. As we previously brought to the Court’s attention, virtually all of the tag-along cases

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filed have near identical allegations to the original Northern District cases. The exception to this

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was the Gupta v. Apple action, Case no. 3:11-cv-02110-LHK, filed by the Edelson McGuire firm,

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which dealt exclusively with geolocation. While geolocation issues were mentioned briefly in the

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First Amended Complaint the Edelson McGuire firm has pled unique allegations on geolocation

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in the complaint that they filed. Accordingly, Interim Class Counsel and the Executive Committee

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members believe that it would be beneficial to the class if the Court would allow Jay Edelson of

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Edelson McGuire to be added to the Executive Committee. Edelson McGuire will have sufficient
JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
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autonomy in addressing such issues so as to, in the judgment of Interim Lead Counsel, assure that

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any unique interests are adequately represented in the litigation or in any alternative dispute

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resolution. At this juncture, no other changes in leadership would serve the interests of the Class.

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DISCOVERY

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Plaintiffs’ Position
Plaintiffs anticipate serving the Defendants with a limited set of narrowly tailored

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discovery requests – fewer than five interrogatories and a corresponding number of document

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requests. Plaintiffs have shared with Apple their intention to seek limited discovery, and to work

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with Apple on tailoring the scope of such requests. Despite Plaintiffs’ good faith efforts, it

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appears that Apple opposes any and all discovery and intends to seek a stay of all discovery.

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Apple has consistently sought to delay discovery in this case, despite those efforts being rebuffed

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by this Court. Plaintiffs believe the Defendants’ position puts form over substance, and will

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cause unnecessary delay in the litigation of the case and, ultimately, any ADR procedure that may

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be ordered by the Court. However, if the Court is inclined to entertain a stay of discovery,

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Plaintiffs request an opportunity to fully brief the issue, as the case law does not favor stays in

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general or in a situation such as the one before this Court. Further, Plaintiffs do not believe that

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the instant Case Management Statement is an appropriate vehicle for that legal argument.

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Defendants’ Position

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In light of Plaintiffs’ failure to establish the Court’s jurisdiction, counsel for Apple asked

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that Plaintiffs’ counsel agree to stay discovery unless and until Plaintiffs file a complaint that

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adequately alleges a case or controversy. Plaintiffs’ counsel have refused to do so. Defendants

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therefore ask the Court to stay discovery.

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It is well established in the Ninth Circuit that a district court has wide discretion to stay

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discovery pending resolution of motions to dismiss, whether the motions are for lack of subject

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matter jurisdiction or failure to state a claim. Alaska Cargo Transp. Inc. v. Alaska R.R. Corp.,

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5 F.3d 378, 383 (9th Cir. 1993) (district court did not abuse discretion in staying discovery

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pending ruling on motions made under Rules 12(b)(1) and 12(b)(6)); Rutman Wine Co. v. W. & J.

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JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
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Gallo Winery, 829 F.2d 729, 738 (9th Cir. 1987) (affirming stay of discovery pending ruling on

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12(b)(6) motion); Jarvis v. Reagan, 833 F.2d 149, 155 (9th Cir. 1987) (same).

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Here, a Rule 12(b)(1) motion is not simply pending; it has been granted. It is not just

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possible that the complaint does not establish the Court’s jurisdiction; the Court has already found

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it does not. Under these circumstances, Apple and the Mobile Industry Defendants should not be

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put to the time and expense of having to respond to potentially onerous discovery, and discovery

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is therefore appropriately stayed.

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Plaintiffs in this case are now in the same position as a potential plaintiff who has yet to

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file a lawsuit and wishes to conduct pre-litigation discovery in order to develop a complaint that

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can survive a motion to dismiss. Such prospective plaintiffs are not permitted to invoke the

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Federal Rules of Civil Procedure to propound discovery. Rule 27(a) of the Federal Rules of Civil

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Procedure – “Depositions to Perpetuate Testimony, (a) Before an Action Is Filed” – contains a

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narrow exception for “a person who wants to perpetuate testimony about any matter cognizable in

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a United States court,” but the exception is inapplicable here, and, in any event, the case law

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makes clear that Rule 27 pre-litigation discovery aimed at shaping an unfiled complaint is an

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“[a]buse of the rule.” See State of Nev. v. O’Leary, 63 F.3d 932, 936 (9th Cir. 1995). Rule 27

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permits pre-litigation discovery only in narrow circumstances, in order to perpetuate testimony

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that could become unavailable if a potential party who cannot yet sue waits until after the

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commencement of litigation to obtain that testimony. F.R.C.P. 27(a); Martin v. Reynolds Metal

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Corp., 297 F.2d 49, 55 (9th Cir. 1961) (holding that a potential party is entitled to use Rule 27

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discovery “to preserve important testimony that might otherwise be lost”). However, Rule 27

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discovery is not permitted where the potential plaintiff seeks discovery of information that he or

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she “hopes will assist in the future when the petitioner applies for judicial relief.” State of Nev. v.

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O’Leary, 63 F.3d at 933. In fact, Rule 27 is designed to prohibit plaintiffs from trying to use the

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rule to engage in pre-litigation discovery where the reason for that discovery is only to help guide

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the development of a sustainable complaint. Id. at 936.

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Moreover, a stay of discovery is particularly appropriate here in light of the asymmetry of
the parties’ potential discovery burdens. Simply hoping that groundless claims will be “weeded
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out early in the discovery process through ‘careful case management’” is insufficient, as plaintiffs

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with “groundless claims” will be able “to take up the time of a number of other people,” creating

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enormous cost for the court and for the parties. Bell Atl. Corp. v. Twombly, 550 U.S. 554, 559

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(2007). As Judge Easterbrook noted in the article on which the Supreme Court relied in

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Twombly, “Judges can do little about impositional discovery when parties control the legal claims

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to be presented and conduct the discovery themselves.” Id. (quoting Easterbrook, Discovery as

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Abuse, 69 B.U.L. Rev. 635, 638 (1989)). Indeed, the threat of that “expense will push cost-

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conscious defendants to settle even anemic cases before reaching those proceedings.” Id. The

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Supreme Court acknowledged that Rules 8 and 12 operate, in part, to prevent economic

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distortions caused by discovery expense. Id. (noting that, because discovery costs permit even

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plaintiffs with “groundless claim[s]” to push for favorable settlement, deficient claims should “be

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exposed at the point of minimum expenditure of time and money by the parties and the court”).

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Thus, the best alternative for protecting against the expense of discovery is to require an

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adequately pleaded complaint to be filed prior to allowing discovery to proceed. Id. Here,

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Plaintiffs do not even have a complaint on file sufficient to invoke the subject-matter jurisdiction

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of the Court.

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The Supreme Court’s comment in Twombly was made in part with regard to the cost of

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economic experts in antitrust cases, but the comment is equally applicable here. Indeed,

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e-discovery costs can be comparable to, if not in excess of, expert costs in antitrust cases. In

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consumer class action cases, there is an enormous disparity in the parties’ vulnerability to the

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imposition of e-discovery costs – plaintiffs generally have virtually nothing to produce, while

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defendants may have exabytes of electronic data in which relevant documents might be found.

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See, e.g., Schwartz and Appel, Rational Pleading in the Modern World of Civil Litigation,

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33 Harv. J.L. & Pub. Pol’y 1107, 1141 (2010) (noting that the average large organization receives

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300 million e-mail messages a month, which, in response to discovery requests, must be reviewed

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by attorneys document-by-document, resulting in millions of dollars in costs to defend a case).

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While commercial litigants may exercise restraint in what they demand of their opponents, lest

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JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
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they receive equally burdensome demands in return, there is no “do unto others” restraint in class

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action plaintiffs’ approach to discovery.

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Here, as this Court’s September 20 Order makes abundantly clear, Plaintiffs have been

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unable to articulate a basis for federal court jurisdiction, and unless and until they do (which will

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require curing the myriad deficiencies set forth in the Court’s Order, a task Defendants believe

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Plaintiffs will be unable to accomplish consistent with their obligations under the Federal Rules),

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they should not be permitted to use federal court mechanisms that will impose unrecoverable

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expense on the Defendants. Moreover, the Defendants have represented to the Court that they

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“each have taken and are taking appropriate steps to ensure the preservation of evidence related to

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the matters alleged in the Consolidated Complaint,” (5-18-11 Initial Joint Case Management

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Statement, Docket No. 105), and Plaintiffs will suffer no prejudice whatsoever – much less unfair

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prejudice – by having to file a complaint that can pass Rule 12(b)(1) and 12(b)(6) muster before

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being permitted to serve discovery. Additionally, given the Court’s instruction to Plaintiffs that

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“[i]n any amended complaint, Plaintiffs must identify what action each Defendant took that

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caused Plaintiffs’ harm, without resort to generalized allegations against Defendants as a whole,”

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(Dkt. No. 8 at 12) it is probable that even if Plaintiffs can file a complaint sufficient to invoke the

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Court’s jurisdiction, not all of the existing Defendants will be included in such a complaint. In

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fact it is most likely that none of the Mobile Industry Defendants will be left. Defendants

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therefore respectfully ask that the Court stay discovery pending further order of the Court.

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ALTERNATIVE DISPUTE RESOLUTION

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The Defendants do not believe a discussion of ADR is appropriate unless and until

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Plaintiffs are able to file a complaint that can survive a motion to dismiss.

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JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
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Dated: September 28, 2011

MORRISON & FOERSTER LLP

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By: /s/ James F. McCabe
James F. McCabe

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Attorneys for Defendant
APPLE INC., a California corporation

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Dated: September 28, 2011

DURIE TANGRI LLP

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By: /s/ Michael H. Page
Michael H. Page
DURIE TANGRI LLP
MICHAEL H. PAGE
[e-mail]
JOSEPH C. GRATZ
[e-mail]
GENEVIEVE P. ROSLOFF
[e-mail]
217 Leidesdorff Street
San Francisco, CA 94111
Telephone: [phone]
Facsimile: 415-236-6300
Attorneys for Defendant
ADMOB, INC.

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JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
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Dated: September 28, 2011

GIBSON, DUNN & CRUTCHER LLP

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By: /s/ Gail E. Lees
Gail E. Lees

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GAIL E. LEES
[e-mail]
S. ASHLIE BERINGER
[e-mail]
JOSHUA A. JESSEN
[e-mail]
GIBSON, DUNN & CRUTCHER LLP
1881 Page Mill Road
Palo Alto, California 94304
Telephone: [phone]
Facsimile: [phone]

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Attorneys for Defendants
FLURRY, INC. and PINCH MEDIA, INC.

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Dated: September 28, 2011

DLA PIPER LLP (US)

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By: /s/ Carter W. Ott
Carter W. Ott

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LUANNE SACKS
CARTER W. OTT
[e-mail]
DLA PIPER LLP (US)
555 Mission Street, Suite 2400
San Francisco, California 94105
Telephone: [phone]
Facsimile: [phone]
Attorneys for Defendant
MOBCLIX, INC.

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JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
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Dated: September 28, 2011

K&L GATES LLP

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By: /s/ Seth A. Gold
Seth A. Gold

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SETH A. GOLD (SBN 163220)
K&L GATES LLP
[e-mail]
10100 Santa Monica Boulevard, 7th Floor
Los Angeles, California 90067
Telephone: [phone]
Facsimile: [phone]

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RACHEL R. DAVIDSON (SBN 215517)
K&L GATES LLP
[e-mail]
Four Embarcadero Center, Suite 1200
San Francisco, California 94111
Telephone: [phone]
Facsimile: [phone]

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Attorneys for Defendant
TRAFFIC MARKETPLACE, INC.,
erroneously sued as
TRAFFICMARKETPLACE.COM, INC.

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Dated: September 28, 2011

COOLEY LLP

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By: /s/ Matthew D. Brown
Matthew D. Brown

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MICHAEL G. RHODES
[e-mail]
MATTHEW D. BROWN
[e-mail]
COOLEY LLP
101 California Street, 5th Floor
San Francisco, California 94111
Telephone: [phone]
Facsimile: [phone]

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Attorneys for Defendants
ADMARVEL, INC and MILLENNIAL
MEDIA INC.

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JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
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Dated: September 28, 2011

KAMBERLAW, LLC

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By: /s/Scott A. Kamber
Scott A. Kamber

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SCOTT A. KAMBER (pro hac vice)
[e-mail]
DAVID A. STAMPLEY (pro hac vice)
[e-mail]
KAMBERLAW, LLC
100 Wall Street, 23rd Floor
New York, New York 10005
Telephone: [phone]
Facsimile: [phone]

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DEBORAH KRAVITZ (SBN 275661)
[e-mail]
KAMBERLAW, LLP
141 North St.
Healdsburg, California 95448
Telephone: [phone]
Facsimile: [phone]

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INTERIM CLASS COUNSEL
ATTORNEYS FOR PLAINTIFFS
WILLIAM AUDET
JONAS P. MANN
MICHAEL A. MCSHANE
AUDET & PARTNERS LLP
221 Main Street, Suite 1460
San Francisco, California 94105
Telephone: [phone]
Facsimile: [phone]

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LIAISON COUNSEL FOR PLAINTIFFS
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ROBERT K. SHELQUIST
[e-mail]
LOCKRIDGE GRINDAL NAUEN P.L.L.P.
100 Washington Avenue S., Suite 2200
Minneapolis, MN 55401
Telephone: [phone]
Facsimile: [phone]

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JEFF S. WESTERMAN
[e-mail]
MILBERG LLP
One California Plaza
300 S. Grand Avenue, Suite 3900
Los Angeles, CA 90071
Telephone: [phone]
Facsimile: [phone]
JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
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JEREMY WILSON
[e-mail]
WILSON TROSCLAIR & LOVINS
302 N. Market Street, Suite 501
Dallas, Texas 75202
Telephone: [phone]

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EXECUTIVE COMMITTEE FOR
CONSOLIDATED PLAINTIFFS

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GENERAL ATTESTATION
I, James F. McCabe, am the ECF User whose ID and password are being used to file this

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JOINT CASE MANAGEMENT STATEMENT. In compliance with General Order 45, X.B., I

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hereby attest that all persons signing this stipulation have concurred in this filing.

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Date: September 28, 2011

/s/ James F. McCabe
James F. McCabe

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JOINT SUPPLEMENTAL CASE MANAGEMENT STATEMENT
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