Dang v. San Francisco Forty Niner's, Ltd et al

Filing 139

ORDER denying 83 Motion for Partial Summary Judgment. Signed by Judge Edward J. Davila on 5/13/2015. (ejdlc3S, COURT STAFF) (Filed on 5/13/2015) Modified on 5/13/2015 (ejdlc1S, COURT STAFF).

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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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United States District Court
Northern District of California

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MICHAEL VILLA, On Behalf of Himself
And All Others Similarly Situated,
Plaintiff,

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ORDER DENYING PLAINTIFFS’
MOTION FOR PARTIAL SUMMARY
JUDGMENT

v.

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Case No. 5:12-CV-05481-EJD

SAN FRANCISCO FORTY-NINERS,
LTD., et al.,

[Re: Dkt. No. 82]

Defendants.
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Plaintiff Michael Villa (“Villa” or “Plaintiff”) brings this putative class action against the

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National Football League (“NFL”), National Football League Properties (“NFLP”), 30 of the

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NFL’s member teams, and Reebok International, Ltd. (“Reebok”) (collectively, “Defendants”).

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Plaintiff Villa alleges that Defendants have engaged in anticompetitive behavior and entered into

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agreements in violation of California and federal antitrust laws. The alleged unlawful conduct

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comprises agreements related to the licensing of the NFL’s and its teams’ intellectual property for

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use in apparel intended for the consumer retail market. Villa now moves for Partial Summary

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Judgment as to liability on Counts I through III of his complaint. For the reasons explained below,

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Plaintiff’s Motion for Partial Summary Judgment is DENIED without prejudice.

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I.

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BACKGROUND
Plaintiff Patrick Dang initially filed suit on behalf of himself and a putative class of

California indirect purchasers in October 2012. Original Complaint, Docket Item No. 1. (Count
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Case No. 5:12-CV-05481-EJD
ORDER DENYING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT

IV, which was not the subject of this motion, was filed on behalf of a nationwide class. Id.) In

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June 2014 Plaintiffs amended their complaint to add Michael Villa as a Plaintiff and class

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representative. First Amended Complaint (“FAC”) ¶ 1, Docket Item No. 66. Except to add Villa,

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the complaints are identical. Villa alleges an exclusive licensing agreement between the

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individual NFL team defendants and NFLP violates California’s Cartwright Act, California’s

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Unfair Competition Law, and the federal Sherman and Clayton Acts. FAC ¶ 1, Dkt. No. 66.

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Plaintiff Villa named 30 NFL teams or their corporate entities as Co-Defendants for having been

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parties to this agreement. 1 FAC ¶¶ 6-35, Dkt. No. 66. In Count I Plaintiff alleges that a horizontal

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agreement between the NFL teams, NFLP, and the NFL violated the Cartwright Act. FAC ¶¶ 87-

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95, Dkt. No. 66. In Count II, Villa alleges a vertical agreement between all individual NFL team

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United States District Court
Northern District of California

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defendants, NFLP, the NFL, and Reebok also violates the Cartwright Act. FAC ¶¶ 96-102, Dkt.

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No. 66. In Count III, Plaintiff alleges a violation of California’s Unfair Competition Law against

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all defendants. FAC ¶¶ 104-108, Dkt. No. 66.
The NFL Defendants moved to dismiss for failure to state a claim in February 2013, which

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the Court denied in August 2013. Dkt. Nos. 29, 38. Reebok and the NFL Defendants

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subsequently answered the Complaint in August 2013. Dkt. Nos. 42, 43. The NFL Defendants

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moved for partial judgment on the pleadings in March 2014. Dkt. No. 51. The NFL Defendants

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and Reebok answered the First Amended Complaint in June 2014. Dkt. Nos. 69, 70. After the

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Court approved a motion to apply the pending motion for judgment on the pleadings to the newly

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filed First Amended Complaint, Dkt. No. 72, the Court denied judgment on the pleadings in

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August 2014. Dkt. No. 79. On the same day, the claims of initial plaintiff Dang were voluntarily

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dismissed without prejudice. Dkt. No. 80. Villa, however, continued ahead as the named plaintiff

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and putative Class Representative in Dang’s place.
In September 2014, Villa filed the instant motion for partial summary judgment (“Pl. Mot.

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Summ. J.”). Dkt. No. 83. Two days later, Villa moved for class certification (“Pl. Mot. Class

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Certification”). Dkt. No. 88. The NFL Defendants and Reebok filed their response brief (“Def.

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The Complaint names every NFL team except the Baltimore Ravens and Chicago Bears as
defendants. FAC ¶¶ 6-35, Dkt. No. 66.
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Case No. 5:12-CV-05481-EJD
ORDER DENYING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT

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Opp’n. Summ. J.”) in October 2014. Dkt. No. 102. Plaintiffs filed their reply brief (“Pl. Reply”)

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in November 2014. Dkt. No. 107. The matter was argued before the Court and submitted for

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decision on January 22, 2015. Dkt. No. 131.

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II.

LEGAL STANDARD
A motion for summary judgment should be granted if “there is no genuine dispute as to

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any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a);

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Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). The moving party bears the

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initial burden of informing the court of the basis for the motion and identifying the portions of the

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pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the
absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

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United States District Court
Northern District of California

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If the moving party meets this initial burden, the burden then shifts to the non-moving

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party to go beyond the pleadings and designate specific materials in the record to show that there

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is a genuinely disputed material fact. Fed. R. Civ. P. 56(c); Celotex, 477 U.S. at 324. The court

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must draw all reasonable inferences in favor of the party against whom summary judgment is

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sought. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
However, the mere suggestion that facts are in controversy, as well as conclusory or

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speculative testimony in affidavits and moving papers, is not sufficient to defeat summary

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judgment. See Thornhill Publ’g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Instead,

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the non-moving party must come forward with admissible evidence to satisfy the burden. Fed. R

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Civ. P. 56(c); see Hal Roach Studios, Inc. v. Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir.

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1990).

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A genuine issue for trial exists if the non-moving party presents evidence from which a

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reasonable jury, viewing the evidence in the light most favorable to that party, could resolve the

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material issue in his or her favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986);

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Barlow v. Ground, 943 F.2d 1132, 1134-36 (9th Cir. 1991). Conversely, summary judgment must

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be granted where a party “fails to make a showing sufficient to establish the existence of an

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element essential to that party’s case, on which that party will bear the burden of proof at trial.”

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Celotex, 477 U.S. at 322.
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III.

DISCUSSION
Plaintiff moves for partial summary judgment as to liability. Pl. Mot. Summ. J. 1, Dkt. No.

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83. Defendants counter, arguing Plaintiff’s motion is procedurally improper prior to class

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certification under the “one-way intervention” rule. Def. Opp’n Summ. J. 2, Dkt. No. 102. In

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response, Plaintiff argues Defendants are estopped from making this argument after twice moving

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themselves to dispose of the lawsuit. Pl. Reply 1, Dkt. No. 1. For the reasons discussed below,

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the one-way intervention rule applies and the motion must be denied. Because the Court finds

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motion procedurally improper, the Court declines to address the substantive arguments and will

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limit the following analysis to the one-way intervention rule.
A. Federal Rule of Civil Procedure 23(c) and One-Way Intervention

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United States District Court
Northern District of California

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Defendants argue the Court cannot rule on a dispositive motion until a class is certified and

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notice is distributed. Def. Opp’n Summ. J. 2, Dkt. No. 102. While district courts typically rule on

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class certification first, Rule 23 and its sub-rules are flexible and do not preclude summary

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judgment prior to class certification. Wright v. Schock, 742 F.2d 541, 543 (9th Cir. 1984)

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(explaining that the rules deliberately avoid a mechanical approach). The federal rules do

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establish, however, that a district court must rule on class certification as soon as “practicable.”

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Fed. R. Civ. P. 23(c)(1). The Ninth Circuit in Wright said the use of the word “practicable” is a

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signal to judges to “weigh the particular circumstances of particular cases and decide concretely

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what will work.” Id. (citations omitted). As a companion to Rule 23(c)(1), Rule 23(c)(2)

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prescribes the distribution of notice to all Rule 23(b)(3) 2 class members who are identifiable

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through reasonable effort. 3 Fed. R. Civ. P. 23(c)(2). This rule exists in part to protect defendants

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from unfair “one-way intervention,” where the members of a class not yet certified can wait for

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the court’s ruling on summary judgment and either opt in to a favorable ruling or avoid being

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bound by an unfavorable one. American Pipe & Const. Co. v. Utah, 414 U.S. 538, 547 (1974)

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Rule 23(b)(3) authorizes certification when the court finds the questions of law or fact common
to all class members predominate over any individual questions, and that a class action is superior
to other available methods for adjudicating the controversy. Fed. R. Civ. P. 23(b)(3).
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Plaintiff has filed for class certification under Rules 23(b)(2) and 23(b)(3). Pl. Mot. Class Cert.
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Case No. 5:12-CV-05481-EJD
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(explaining the rule was amended to remedy this “recurrent source of abuse”); see also

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Schwarzschild v. Tse, 69 F.3d 293, 295 (9th Cir. 1995). The doctrine is “one-way” because a

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plaintiff would not be bound by a decision that favors the defendant but could decide to benefit

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from a decision favoring the class. Id. After amendment, the rule no longer left defendants

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vulnerable, as the California Supreme Court has vividly analogized, to “being pecked to death by

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ducks.” Fireside Bank v. Super. Ct., 40 Cal.4th 1069, 1078 (2007) (discussing class action

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devices including Fed. R. Civ. P. 23). “One plaintiff could sue and lose; another could sue and

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lose; and another and another until one finally prevailed; then everyone else would ride on that

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single success.” Id. This doctrine continues to be applied by courts in the Ninth Circuit. See,
e.g., Centeno v. Quigley, No. 14-CV-00200-MJP, 2015 WL 432537, at *2-3 (W.D. Wash. Feb. 2,

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Northern District of California

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2015) (Pechman, C.J.); Khasin v. Hershey Co., No. 12-CV-01862-EJD, 2014 WL 1779805, at *2-

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3 (N.D. Cal. May 5, 2014) (Davila, J.); Corns v. Laborers Int’l Union of N. Am., No. 09-CV-

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04403-YGR, 2014 WL 1319363, at *4 (N.D. Cal. March 31, 2014) (Gonzalez Rogers, J.).
Here, Defendants face the exact one-sided risk that prompted changing the rule. See

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American Pipe, 414 U.S. at 547; accord Schwarzschild v. Tse, 69 F.3d at 295. The Court has not

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yet ruled whether to certify Plaintiff’s proposed class under Fed. R. Civ. P. 23. See Dkt. No. 88.

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Therefore, Plaintiff’s motion for partial summary judgment, if unsuccessful, would not prevent

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putative class members from filing their own suits with hope for a more favorable ruling. This is

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the very “one-way intervention” problem warned of in the cases cited supra. Accordingly, the

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one-way intervention rule applies and Plaintiff’s motion must be denied.

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B. Defendants’ Motions Under Rules 12(b)(6) and 12(c) and Waiver

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One-way intervention notwithstanding, Plaintiff argues that Defendants waived the right to

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invoke this doctrine “by twice having moved themselves (unsuccessfully) to resolve this case on

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the merits prior to class certification.” Pl. Reply 1, Dkt. No. 107. Plaintiff refers the Court to

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Defendants’ Motion to Dismiss (under Rule 12(b)(6)) and Defendants’ Motion for Partial

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Judgment on the Pleadings (Rule 12(c)), which both test the sufficiency of the complaint. 4 Dkt.

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See Pillsbury, Madison & Sutro v. Lerner, 31 F.3d 924, 928 (9th Cir. 1994) (giving the standard
applied under Rule 12(b)(6)); Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co., Ltd., 132
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Nos. 29, 51. However, Plaintiffs do not cite any judicial decisions applying waiver to one-way

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intervention under an analogous set of facts.

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Courts have clearly emphasized that one-way intervention is implicated during the

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determination of liability stage. See American Pipe, 414 U.S. at 547 (“members of the claimed

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class could in some situations await developments in the trial or even final judgment on the merits.

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. . . [I]f a judgment precluded the possibility of a favorable determination, such putative members

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. . . would not be bound”); accord Schwarzschild, 69 F.3d at 295 (“the Advisory Committee on

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Federal Rules concluded that class members should be brought in prior to the determination of

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defendant’s liability”) (emphases added). The same reasoning was employed in Williams v. Lane,
129 F.R.D. 636, 647 (N.D. Ill. 1990), which Plaintiff cites in support. “[B]y proceeding as they

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Northern District of California

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did to a full adjudication of the merits of their liability, defendants implicitly waived the right to

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complain about improper certification.” Id. (emphasis added). Here, at the partial summary

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judgment stage, the one-way intervention rule is clearly applicable.

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Plaintiff argues that Rule 12 motions are “judgment[s] on the merits,” Federated Dept.

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Stores, Inc. v. Moitie, 452 U.S. 394, 398 n. 3 (1981), and therefore Defendants waived their

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procedural protections by filing motions under that rule. Pl. Reply at 1, Dkt. No. 107. However,

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this interpretation would represent a significantly broader holding than the authorities discussed

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above, and Plaintiff’s cited cases are unpersuasive. In Khasin, the plaintiff raised one-way

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intervention in an attempt to bar defendant’s motion for summary judgment – the exact opposite of

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the instant case. 2014 WL 1779805, at *2-*3. The Court found nothing prevented a defendant

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from waiving its one-way intervention protection by choosing to move for summary judgment. Id.

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at *3. Here, this is not a choice Defendants have made, instead urging the Court to wait until after

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class certification is decided. Def. Opp’n Summ. J. 2, Dkt. No. 102. Khasin, then, merely

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confirms a defendants’ right to “take its chances on stare decisis rather than res judicata.”

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Schwarzschild, 69 F.3d at 297 (citation omitted). Plaintiff’s other case in support, partially

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addressed supra, is Williams. 129 F.R.D. at 647. There, strikingly dissimilar to the instant facts,

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F.3d 526, 529 (9th Cir. 1997) (giving the standard for Rule 12(c)).
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the Illinois district court explained that Rule 23(b)(2) certification had already taken place and the

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parties had already proceeded to a full determination of liability before one-way intervention was

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raised. Id. at 646. The Williams court was reluctant to grant defendants “a second bite of the

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apple” after having lost on the issue of liability. Id. at 647. Unlike the defendant in Williams,

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Defendants here have not “willingly waived protection of the bar against one-way intervention,”

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nor have they “agreed to be bound by the adverse judgment as to all class members who did not

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opt out.” 5 Id.
The Ninth Circuit’s holding in Schwarzschild was clearly limited to occasions when

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defendants intentionally assume the risk: “[The rationale for a one-way intervention rule]
disappears when the defendant himself moves for summary judgment before a decision on class

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United States District Court
Northern District of California

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certification. In such a situation, . . . only the slender reed of stare decisis stands between [the

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defendant] and the prospective onrush of litigants.” 69 F.3d at 297 (citations omitted). As the

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only Ninth Circuit decision addressing how a defendant might waive one-way intervention, this

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Court is bound to follow it, and Plaintiff’s motion is accordingly denied.

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IV.

CONCLUSION

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For the foregoing reasons, the motion is DENIED without prejudice.

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IT IS SO ORDERED.

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Dated: May 13, 2015
______________________________________
EDWARD J. DAVILA
United States District Judge

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A closer look at Williams further illustrates the stark differences: “Instead of insisting on
prejudgment notice, defendants sat on their hands hoping to obtain a favorable judgment on the
merits.” Id. at 648. Calling this attempt an “abysmal[]” failure, the court continued, “To allow
defendants to defeat the class members’ damage claims on the ground they now advance would
make a mockery of the tortuous proceedings in this case over the past nine years.” Id. at 648-49.
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Case No. 5:12-CV-05481-EJD
ORDER DENYING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT