In Re: Apple iPhone 3G and 3GS MMS Marketing and Sales Practices Litigation

Filing 227

STATUS REPORT /Position Statement Regarding Concepcion and Discovery by Defendant Apple Inc.(Reference: ALL CASES)(Urquhart, Quentin)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
IN RE: APPLE iPHONE 3G AND 3GS
“MMS” MARKETING AND SALES
PRACTICES LITIGATION

CIVIL ACTION

THIS DOCUMENT RELATES TO:

SECTION “J”
JUDGE BARBIER

MDL No. 2116

All Actions
MAGISTRATE JUDGE WILKINSON
APPLE’S POSITION STATEMENT REGARDING CONCEPCION AND DISCOVERY
Pursuant to the Court’s July 20, 2011 Order and in anticipation of the status conference
scheduled for September 22, 2011, defendant Apple Inc. (“Apple”) respectfully submits its
position statement regarding the impact of AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740
(2011). (“Concepcion”) on the actions herein. As set forth below, plaintiffs’ claims against both
ATTM and Apple must be ordered to arbitration. Moreover, this result is clear as a matter of
law; discovery is neither necessary nor appropriate.
I.

STATUS OF THE MDL
This MDL consists of twenty-three underlying actions (the “Actions”). On June 4, 2010,

plaintiffs filed first amended complaints in sixteen of the Actions. Defendant AT&T Mobility
(“ATTM”) filed a motion to compel arbitration based on the arbitration agreement each plaintiff
signed when purchasing his or her iPhone and wireless service. Apple and ATTM also filed
motions to dismiss each of the Actions.

On November 17, 2010, the Court stayed proceedings as to both defendants pending the
United States Supreme Court’s decision in Concepcion. (See Dkt. No. 206.) On April 27, 2011,
the Supreme Court held that ATTM’s arbitration clause, and the class action waiver therein, is
enforceable. Concepcion, 131 S. Ct. at 1753.
II.

THE IMPACT OF CONCEPCION
As set forth in ATTM’s filing herein, Concepcion holds that the arbitration clause

contained in ATTM’s wireless service agreement is enforceable. The wireless service agreement
considered in Concepcion is the same one that plaintiffs in this case entered into when they
purchased their iPhones and related ATTM wireless service.

Concepcion overruled the

California Supreme Court’s decision in Discover Bank v. Superior Court, 36 Cal. 4th 148, 113
P.3d 1100 (2005), which had held that that class action waivers in arbitration agreements were
unconscionable and unenforceable. Conception concluded that the Discover Bank rule was
preempted by the Federal Arbitation Act. Concepcion thus establishes that plaintiffs’ claims in
this MDL must be arbitrated pursuant to the terms of the service agreement that plaintiffs entered
into with ATTM.
Plaintiffs’ amended complaints, and in particular their opposition to Apple’s motion to
dismiss, make clear that their claims against Apple, as well as their claims against ATTM, are
predicated on ATTM’s service agreement. Accordingly, plaintiffs’ claims against Apple, like
their claims against ATTM, are subject to arbitration.
Under the doctrine of equitable estoppel, a non-signatory to an arbitration agreement can
compel a signatory to arbitrate where: (1) the complaint raises allegations of substantially
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interdependent and concerted misconduct by both a signatory and one or more non-signatories;
or (2) this alleged misconduct is founded in and intertwined with the underlying contractual
obligations. Fifth Circuit law is clear on this issue, and the law of the other Circuits is in accord.
Grigson v. Creative Artists Agency, LLC., 210 F.3d 524, 527-28 (5th Cir. 2000) (citing MA
Dealer Serv. Corp. v. Franklin¸ 177 F.3d 942, 947 (11th Cir. 1999)); Sourcing Unlimited, Inc. v.
Asimco Int’l, Inc., 526 F.3d 38, 47 (1st Cir. 2008) (where subject of suit against non-signatory
was intertwined with scope of arbitration agreement, arbitration was appropriate); Brown v. Gen.
Steel Domestic Sales, LLC, No. CV 08-00779 MMM (SHx), 2008 U.S. Dist. LEXIS 97832, at
*25 (C.D. Cal. May 19, 2008) (compelling arbitration of claims against non-signatory defendants
where they involved same questions of fact and law as claims against signatory defendant).
As Apple will argue in its motion to compel arbitration, that rule applies squarely here.
Faced with the fact that Apple never represented that MMS was available on iPhone 3G and
Apple’s clear disclaimer respecting the timing of MMS on iPhone 3GS, plaintiffs now rest their
claims against Apple as well as against ATTM on their service agreements with ATTM.
Accordingly, plaintiffs’ claims against Apple are inextricably intertwined with their claims
against ATTM and must be arbitrated.

Plaintiffs focus almost exclusively on alleged

misrepresentations contained in their contract with ATTM, and Apple’s purported failure to
disclose them to plaintiffs. (See, e.g, Carbine FAC ¶¶ 7, 8, 12, 22.) Plaintiffs themselves have
urged this interpretation of their complaints, arguing that they are entitled to relief based on
Apple’s alleged “failure to disclose to iPhone purchasers – who are also captive AT&T
customers - that AT&T was contractually obligated to provide MMS to them” and Apple’s
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alleged “failure to disclose to iPhone purchasers . . . that AT&T would charge iPhone users for
MMS.” (See Plaintiffs’ Joint Opp’n to Apple’s Motions to Dismiss, Dkt. No. 204 at 8.)1
Further, plaintiffs’ only alleged harm – that ATTM charged class members “for something they
did not receive” – makes clear that their claims are predicated on their service contracts with
ATTM. (See, e.g., Carbine FAC, ¶¶ 10, 53-56.) In plaintiffs’ own words, “[t]his case sounds in
material omissions related to the obligation to provide MMS and . . . AT&T charging iPhone
users for MMS.” (Plaintiffs’ Joint Opp’n to Apple’s Motions to Dismiss at 10.)
Because of the potentially dispositive nature of Apple’s anticipated motions to compel
arbitration, Apple believes that the Court should address these motions before it considers the
outstanding motions to dismiss. Accordingly, Apple respectfully requests that the Court set a
schedule, pursuant to ATTM’s proposal, for the parties to file and brief motions to compel
arbitration, and postpone briefing and a hearing on the motions to dismiss pending resolution of
motions regarding arbitration.
III.

DISCOVERY
Apple does not believe discovery is necessary or appropriate at this time. Particularly in

light of Concepcion, plaintiffs’ claims must be arbitrated as a matter of law.

Plaintiffs’

complaints make clear on their face that plaintiffs’ claims against Apple are predicated on
ATTM’s service agreement, are inextricably intertwined with their claims against ATTM, and

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Plaintiffs go farther, responding to Apple’s argument regarding their failure to adequately allege
misrepresentations in advertisements by acknowledging that Apple’s own statements constitute a “small portion of
[p]laintiffs’ claims.” Rather, plaintiffs admit that their “primary claims for relief” are related to “Apple and AT&T
fail[ure] to disclose that AT&T would be obligated by contract to provide picture messaging services to iPhone
users.” (See Plaintiffs’ Joint Opp’n to Apple’s Motions to Dismiss at 9 (emphasis added).)

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must be arbitrated. There is no factual issue as to which discovery would be relevant or
appropriate.
Respectfully submitted,
__/s/ Quentin F. Urquhart___________
IRWIN FRITCHIE URQUHART & MOORE, LLC
QUENTIN F. URQUHART, JR. (#14475)
DAVID W. O’QUINN (#18366)
DOUGLAS J. MOORE (#27706)
400 Poydras Street, Suite 2700
New Orleans, Louisiana 70130
Telephone: [phone]
Facsimile: [phone]
PENELOPE A. PREOVOLOS (admitted pro hac vice)
ANDREW MUHLBACH (admitted pro hac vice)
HEATHER A. MOSER (admitted pro hac vice)
MORRISON & FOERSTER, LLP
425 Market Street
San Francisco, CA 94105-2482
Telephone: [phone]
Facsimile: [phone]
Counsel for Apple Inc.

CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing pleading has been electronically filed on
September 19, 2011, with the Clerk of Court by using the CM/ECF system which will send a
notice of electronic filing.
__/s/ Quentin F. Urquhart_ __

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