The State of Texas et al v. Penguin Group (USA) Inc. et al
OPINION & ORDER. Apple's November 15, 2013 motion to dismiss the States' Action for lack of standing, or to compel the States to seek class certification, is denied. (Signed by Judge Denise L. Cote on 4/15/2014) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------IN RE: ELECTRONIC BOOKS ANTITRUST
--------------------------------------THE STATE OF TEXAS, et al.,
PENGUIN GROUP (USA) INC., et al.,
11 MD 2293 (DLC)
Related to all
12 Civ. 3394 (DLC)
OPINION & ORDER
For the Defendant Apple Inc.
Theodore J. Boutrous, Jr.
Daniel G. Swanson
Gibson, Dunn & Crutcher, LLP
333 South Grand Avenue
Los Angeles, California 90071
Gibson, Dunn & Crutcher, LLP
1050 Connecticut Avenue, NW
Washington, D.C. 20036
O’Melveny & Myers, LLP
1625 Eye Street, NW
Washington, DC 20006
For the State of Texas on Behalf of the Plaintiff States
Office of the Attorney General of Texas
P.O. Box 12548
Austin, TX 78711
For the State of Connecticut on Behalf of the Plaintiff States
Gary M. Becker
Office of the Attorney General of Connecitcut
55 Elm Street
Hartford, CT 06106
DENISE COTE, District Judge:
This Opinion addresses a motion to dismiss claims against
Apple, Inc. (“Apple”) following a trial on those claims.
Opinion issued last July, this Court determined that plaintiff
States, suing in parens patriae capacity, and the United States
of America (“DOJ”) had succeeded at trial in showing that Apple
had violated the nation’s antitrust laws.
United States v.
Apple Inc., 952 F. Supp. 2d 638, 645 (S.D.N.Y. 2013) (“Liability
Apple now moves to dismiss the antitrust action
filed by the States.
Apple contends that the States lack
standing to assert their claims against Apple or, at the very
least, that the States should be required seek class
certification under Rule 23 of the Federal Rules of Civil
Procedure before seeking to recover damages from Apple due to
its antitrust violations.
For the following reasons, Apple’s
motion is denied.
In 2011 and 2012, thirty-one States, the District of
Columbia, and the Commonwealth of Puerto Rico (collectively, the
“States” and the “State Action”), DOJ and a putative class
(collectively, “the Plaintiffs”) brought three separate lawsuits
against Apple and five major book publishing companies for
violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. §
1 (“Sherman Act”). 1
The Plaintiffs alleged that Apple and the
book publishers conspired to unlawfully raise the retail price
for trade e-books.
All of the book publishers settled before a
trial on liability that was held in June of 2013.
Plaintiffs who participated in the liability trial were DOJ and
Following the trial, this Court found that Apple
had violated the Sherman Act in an Opinion issued on July 10.
permanent injunction was entered against Apple on September 5.
United States v. Apple, Inc., 11 MD 2293 (DLC), 2013 WL 4774755
(S.D.N.Y. Sept. 5, 2013).
The States are now engaged in litigation to recover damages
for consumers in their jurisdictions who were harmed by Apple’s
violation of the Sherman Act.
The States and the class are
scheduled to try their damages claims against Apple on July 14,
In a fourth action, forty-nine States and certain U.S.
Territories settled litigation against three of the five
See generally In re Elec. Books Antitrust Litig., 11 MD
2293 (DLC), 2014 WL 1282298 (S.D.N.Y. Mar. 28, 2014).
On November 15, 2013, Apple filed this motion to dismiss
for lack of jurisdiction or, in the alternative, to compel the
States to seek class certification.
submitted on December 13.
The motion was fully
In this motion, Apple argues that the
States lack standing to pursue Apple for damages that will be
awarded to their citizens.
Apple appears to argue that the States lack both Article
III standing and standing pursuant to the judicially crafted
doctrine known as prudential standing.
examining both of these challenges to the ability of the States
to pursue their claim for damages, it is important to consider
the current procedural posture of the case.
American Elec. Power Co., Inc., 582 F.3d 309, 333 (2d Cir.
The issue of standing is customarily raised at the initial
stages of a case.
In this litigation, however, no party
questioned the standing of the States to seek damages from the
The class action, which has been certified, represents
consumers in jurisdictions other than the litigating States.
See In re Elec. Books Antitrust Litig., 11 MD 2293 (DLC), 2014
WL 1282293 (S.D.N.Y. Mar. 28, 2014).
publishers and Apple for a violation of the antitrust laws.
Indeed, each of the five publishers has settled with the States
and paid significant sums of money to them.
Apple first raised
the issue of the States’ standing after a liability and
injunctive relief trial had been held between Apple and the
States and a judgment entered against Apple.
Because the issue
of standing implicates this Court’s jurisdiction over the claims
raised by the States, Apple has not waived its right to raise
the issue even at this late date and this Opinion carefully
considers its challenge.
The issue of standing is generally resolved on the basis of
At that stage, “general factual allegations of
injury resulting from the defendant’s conduct may suffice.”
But, on occasion, factual issues remain to
be explored, and in those circumstances, a court may draw on the
“evidence adduced at trial” to resolve the standing issue.
Gladstone Realtors v. Vill. of Bellwood, 441 U.S. 91, 115 n.31
Since standing issues are “not mere pleading
requirements but rather an indispensable part of the plaintiff's
case, each element [of standing] must be supported in the same
way as any other matter on which the plaintiff bears the burden
of proof, i.e., with the manner and degree of evidence required
at the successive stages of the litigation.”
of Wildlife, 504 U.S. 555, 561 (1992).
Lujan v. Defenders
Thus, while Apple and
the States have relied during their discussions of the standing
issue almost exclusively on the assertions made in the States’
complaint, this Opinion will also draw freely from the record
created at trial, and this Court’s Liability Opinion, to address
the questions of injury, causation, and redressability that
underlie Apple’s assertion that the States lack standing to seek
“[S]tanding jurisprudence contains two strands: Article III
standing, which enforces the Constitution's case-or-controversy
requirement, and prudential standing, which embodies judicially
self-imposed limits on the exercise of federal jurisdiction.”
Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004)
These two doctrines will be addressed in
I. Article III Standing
Apple contends that the States lack Article III standing to
maintain a damages action against Apple premised on its
involvement in the e-books price fixing conspiracy.
The duty to
examine the standing of a plaintiff to pursue a claim in federal
court arises from the Constitutional limitation of “federal
court jurisdiction to ‘Cases’ and ‘Controversies.’”
Massachusetts v. E.P.A., 549 U.S. 497, 516 (2007).
words confine federal courts to examining questions presented
“in an adversary context and in a form historically viewed as
capable of resolution through the judicial process.”
(quoting Flast v. Cohen, 392 U.S. 83, 95 (1968)).
constitutional context explains the function of the standing
“[T]he gist of the question of standing is whether
petitioners have such a personal stake in the outcome of the
controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court so
largely depends for illumination.”
Id. at 517 (citation
The ordinary test for Article III standing is wellestablished.
From Article III's limitation of the judicial power to
resolving “Cases” and “Controversies,” and the
separation-of-powers principles underlying that
limitation, we have deduced a set of requirements that
together make up the “irreducible constitutional
minimum of standing.” The plaintiff must have
suffered or be imminently threatened with a concrete
and particularized “injury in fact” that is fairly
traceable to the challenged action of the defendant
and likely to be redressed by a favorable judicial
Lexmark Int'l, Inc. v. Static Control Components, Inc., 2014 WL
1168967, at *6 (U.S. Mar. 25, 2014) (quoting Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560 (1992)).
There are circumstances, however, in which a court may
“short cut” the Lujan standing analysis and lessen a litigant’s
obligation “to meet all the normal standards for
redressability and immediacy.”
Am. Elec. Power Co., 582 F.3d at
337 (citing Massachusetts, 549 U.S. at 516-17).
Massachusetts, the Supreme Court described the power of the
legislative branch to affect the Article III standing inquiry
through the creation of a procedural right.
549 U.S. at 516–17.
In Massachusetts, the procedural right at stake was created
through a federal statute allowing litigants to challenge EPA
See 42 U.S.C. § 7607(b)(1).
The Massachusetts Court
Congress has . . . authorized this type of challenge
to EPA action. That authorization is of critical
importance to the [Article III] standing inquiry:
Congress has the power to define injuries and
articulate chains of causation that will give rise
to a case or controversy where none existed before .
. . .
When a litigant is vested with a procedural right,
that litigant has standing if there is some
possibility that the requested relief will prompt
the injury-causing party to reconsider the decision
that allegedly harmed the litigant.
Massachusetts, at 516, 518 (citation omitted).
The Court noted,
however, that in exercising its power to define injuries and
articulate chains of causation that give rise to a case or
controversy where none may have existed before, “Congress must
at the very least identify the injury it seeks to vindicate and
relate the injury to the class of persons entitled to bring
Id. at 516.
Massachusetts is particularly apt since Congress has
specifically authorized the filing of an antitrust lawsuit by a
State as parens patriae to recover damages for injury to its
Section 15c of Title 15, United States Code (“Section
15c”), provides in pertinent part:
Any attorney general of a State may bring a civil
action in the name of such State, as parens patriae on
behalf of natural persons residing in such State, in
any district court of the United States having
jurisdiction of the defendant, to secure monetary
relief as provided in this section for injury
sustained by such natural persons to their property by
reason of any violation of sections 1 to 7 of this
15 U.S.C. § 15c (emphasis added).
A parens patriae action is a
vehicle through which a State seeks “to protect quasi-sovereign
Purdue Pharma L.P. v. Kentucky, 704 F.3d 208, 215
(2d Cir. 2013)(citation omitted).
“The parens patriae (i.e.,
‘parent of the country’) doctrine has its antecedent in the
common-law concept of the royal prerogative, that is, the king's
inherent power to act as the guardian for those under legal
disabilities to act for themselves.”
Id. (citation omitted).
Section 15c further provides that the State may obtain
“monetary relief threefold the total damage sustained as
described” above, plus costs and a reasonable attorney’s fee.
Id. at § 15c(a)(2).
Finally, the statute requires the State to
Sections 1 to 7 are addressed to contracts and trusts in
restraint of trade. See 15 U.S.C. §§ 1-3.
give notice of its parens patriae action to its citizens and an
opportunity to elect to exclude themselves from the claim for
monetary relief being made on their behalf by the State.
As Apple recognizes, “the States have a quasi sovereign
interest in protecting their citizens from ongoing economic
See Alfred L. Snapp & Son, Inc. v. Puerto Rico, ex rel.,
Barez, 458 U.S. 592, 607 (1982) (“a State has a quasi-sovereign
interest in the health and well-being -- both physical and
economic -- of its residents in general”).
In suing to recover
treble damages on behalf of their injured consumers the States
aim, inter alia, to deter further economic harm and to obtain
relief for the injury inflicted on their economies and their
See BE & K Const. Co. v. N.L.R.B., 536 U.S. 516, 541
(2002) (Breyer, J., concurring in part)(referring to antitrust
“treble damages” as “a considerable deterrent”).
As articulated in their pleading, the States have
identified their own and their citizens’ concrete injury from
Apple’s conspiracy with the publishers to raise e-book prices.
In their Second Amended Complaint, the States allege that “[b]y
preventing the competitive pricing of e-books, Defendants have
deprived the Plaintiff States and their consumers of the
benefits of competition . . . .”
The States also allege that
“[a]s a direct and proximate result of the unlawful conduct
alleged above, the general economies of the Plaintiff States
have sustained injury . . . .”
They further contend that the
“Defendants' activities also had and continue to have a
substantial effect upon the trade and commerce within each of
the Plaintiff States.”
These allegations in their pleading were borne out at the
Based on the evidence adduced by the States
and DOJ at that trial, this Court found that Apple and the
defendant publishers “worked together to achieve the twin aims
of eliminating retail price competition and raising the prices
for trade e-books.”
Liability Opinion, 952 F. Supp. 2d at 686.
The result of that conspiracy was that “the actions taken by
Apple and the Publisher Defendants led to an increase in the
price of e-books.”
Id. at 685.
As set out in the Liability
Opinion, Apple and the major publishers agreed to price caps for
e-books, and upon execution of the conspiracy the publishers
raised their e-book prices to those price caps.
“collectively priced 85.7% of their New Release titles sold
through Amazon and 92.1% of their New Release titles sold
through Apple within 1% of the price caps.”
Id. at 682.
Based on this record, it is easy to conclude that the
States have Article III standing to bring this parens patriae
lawsuit against publishers and Apple for injunctive relief and
The States have met the test articulated in Lujan and
The States have both articulated and shown: 1) an
injury in fact to their economies, 2) a causal connection
between the injury and the conduct complained of, and 3) that it
is likely that the injury will be redressed by a favorable
Lujan, 504 U.S. at 560.
1. Injury in fact
The first prong of the Lujan test requires that a defendant
suffer an “injury in fact.”
“[A]n injury must be concrete,
particularized, and actual or imminent.”
Clapper v. Amnesty
Int'l USA, 133 S. Ct. 1138, 1147 (2013).
The States have demonstrated an injury in fact.
liability trial, the States demonstrated that Apple’s price
fixing conspiracy resulted in an e-books market devoid of price
competition –- an injury that is “actual,” not conjectural.
plaintiffs demonstrated that e-book prices rose precipitously as
the result of the price fixing conspiracy of which Apple was a
See Liability Opinion, 952 F. Supp. 2d at 682–85.
have long found that harm to States’ economies caused by
restraints of trade in violation of the antitrust laws
constitute injuries that are cognizable in federal court.
e.g., State of Ga. v. Pennsylvania R. Co., 324 U.S. 439, 451
The causation requirement of the Lujan test “ensures that
there is a genuine nexus between a plaintiff's injury and a
defendant's alleged conduct and is in large part designed to
ensure that the injury complained of is not the result of the
independent action of some third party not before the court.”
Am. Elec. Power Co., 582 F.3d at 345 (citation omitted).
meet this prong of the Lujan test, the injury alleged must be
“fairly traceable to the challenged action.”
Amnesty Int'l USA,
133 S. Ct. at 1147 (citation omitted).
The States have demonstrated causation between Apple’s
conduct and the injury to their economies.
As this Court
explained in detail in the Liability Opinion, Apple was not just
“a knowing and active member” of the price fixing conspiracy, it
“forcefully facilitated it.”
Liability Opinion, 952 F. Supp. 2d
Indeed, the “price fixing conspiracy would not have
succeeded without the active facilitation and encouragement of
Redressability requires “a substantial likelihood that the
requested relief will remedy the alleged injury in fact.”
Rock Const., Inc. v. N.Y. State Dep't of Econ. Dev., 438 F.3d
195, 204 (2d Cir. 2006) (citation omitted).
“A party need only
demonstrate that it would receive at least some relief to
Am. Elec. Power Co., Inc., 582 F.3d
at 347 (citation omitted).
A portion of the relief that the States sought by filing
this action they have already received, and will continue to
receive for years into the future.
runs for five years.
An injunction against Apple
The injunction ended practices at Apple
that were essential to the conspiracy, required Apple to reform
its antitrust law training and compliance processes, and put in
place a monitor to report periodically for at least two years on
Apple’s progress in making those reforms.
See generally United
States v. Apple Inc., 12 Civ. 2826 (DLC), 12 Civ. 3394 (DLC),
2014 WL 171159 (S.D.N.Y. Jan. 16, 2014).
At the damages portion of the trial, which will begin on
July 14, the States seek further redress for the injury to their
economies and to their citizens.
The treble damages the States
seek will send a clear message that violation of the antitrust
laws carries consequences.
Thus, the States meet the
redressability prong even in the absence of the special
solicitude that must be afforded to them under Massachusetts.
As explained above, Massachusetts recognized that “a litigant to
whom Congress has accorded a procedural right to protect his
concrete interests . . . can assert that right without meeting
all the normal standards for redressability.”
549 U.S. at 518.
While Apple appears to challenge the existence of Article
III standing, it does not clearly explain why the States lack
the standing dictated by the Constitution.
Apple appears on the
one hand to concede that the States have standing to seek
injunctive relief against Apple, but to contest that they have
standing to seek damages arising from the same conduct by Apple.
Apple fails to explain how this can be so.
Apple’s concession that the States have standing to enter
federal court to put an end to the harm that Apple imposed on
their economies is incompatible with its argument that the
States do not have standing to recover damages in response to
that same harm.
The States have as concrete an interest in
deterring future harmful antitrust violations by pursuing treble
damages as they did in suing to stop such violations.
cited no authority to support the distinction it is advocating
here between the standing to seek an end to an antitrust
violation and the standing to seek damages for that violation.
In any event, to the extent there could be such a
distinction, the States have clearly demonstrated that they have
standing to bring a damages action.
It is explicitly authorized
by 15 U.S.C. § 15c, and the Supreme Court has held that the
creation of that procedural right by Congress is “of critical
importance to the standing inquiry.”
Massachusetts, 549 U.S. at
Nothing in the cases upon which Apple relies in this motion
suggests that the States do not have Article III standing.
Apple principally cites decisions addressed to prudential
standing, a separate doctrine which will be discussed below.
The Article III standing case which it emphasizes, Hollingsworth
v. Perry, 133 S. Ct. 2652 (2013), is inapposite.
Hollingsworth, proponents of a California ballot initiative
concerning same-sex marriage were denied standing to defend the
constitutionality of that initiative because they lacked a
“personal stake in defending its enforcement that is
distinguishable from the general interest of every citizen of
Id. at 2663 (quoting Lujan, at 504 U.S. at 560-
By contrast, the States have a long recognized interest in
protecting the health of their economies from antitrust
See Pennsylvania R. Co., 324 U.S. at 451.
Apple’s principal argument in this motion is that the
States do not have the requisite stake in a damages action
against Apple to meet the prudential standing limitations on the
maintenance of parens patriae actions.
Apple relies heavily on
the analysis of prudential standing in Alfred L. Snapp & Son,
458 U.S. at 607 (lawsuit brought by Puerto Rico against Virginia
apple growers for discrimination against Puerto Rican migrant
farmworkers), and Am. Elec. Power Co., 582 F.3d at 335-36
(lawsuit brought by eight states against utility companies as
contributors to elevated carbon dioxide levels).
In both cases,
the courts found that the parens patriae actions met the
prudential standing requirements.
The prudential standing doctrine is not derived from
Article III of the U.S. Constitution.
It is a judicially
See Lexmark, 2014 WL 1168967, at *6.
even when a plaintiff satisfies the standing requirements
dictated by the Constitution, “a plaintiff may still lack
standing under the prudential principles by which the judiciary
seeks to avoid deciding questions of broad social import where
no individual rights would be vindicated and to limit access to
the federal courts to those litigants best suited to assert a
Gladstone Realtors v. Vill. of Bellwood, 441
U.S. 91, 99–100 (1979).
While the Supreme Court has not yet
“exhaustively defined” the doctrine, it has explained that it
encompasses “at least three broad principles: “the general
prohibition on a litigant's raising another person's legal
rights, the rule barring adjudication of generalized grievances
more appropriately addressed in the representative branches, and
the requirement that a plaintiff's complaint fall within the
zone of interests protected by the law invoked.”
WL 1168967, at *6 (quoting Elk Grove Unified Sch. Dist., 542
U.S. at 12).
It is well-established that the limitations on parens
patriae standing set forth in cases like Snapp are prudential in
See, e.g., Massachusetts, 549 U.S. at 540 n.1 (Roberts,
C.J., dissenting) (describing the “requirements for parens
patriae standing” as “prudential”); Republic of Venezuela v.
Philip Morris, Inc., 287 F.3d 192, 199 n.* (D.C. Cir. 2002)
(“[T]he doctrine of parens patriae is merely a species of
prudential standing.”) (citation omitted); Serv. Emps. Int'l
Union Health & Welfare Fund v. Philip Morris, Inc., 249 F.3d
1068, 1073 (D.C. Cir. 2001) (same); Maryland People's Counsel v.
F.E.R.C., 760 F.2d 318, 321 (D.C. Cir. 1985) (parens patriae
standing limitations are “prudential . . . element[s] that the
courts must dispense with if Congress so provides”).
Because prudential standing is a judicially crafted
doctrine, “Congress may, by legislation, expand standing to the
full extent permitted by Art. III, thus permitting litigation by
one who otherwise would be barred by prudential standing rules.”
Gladstone Realtors, 441 U.S. at 100 (citation omitted); see also
Warth v. Seldin, 422 U.S. 490, 501 (1975) (“Congress may grant
an express right of action to persons who otherwise would be
barred by prudential standing rules. . . .
[S]o long as
[Article III standing] is satisfied, persons to whom Congress
has granted a right of action, either expressly or by clear
implication, may have standing to seek relief on the basis of
the legal rights and interests of others”).
In light of this authority, Apple’s reliance on prudential
standing principles to challenge the standing of the States to
bring this parens patriae action is unavailing.
passage of Section 15c, Congress has authorized the States to
bring this antitrust action in parens patriae.
As a result, so
long as they have shown they have standing under Article III,
the standing inquiry is at an end.
It is noteworthy that Apple
has not cited any decision rejecting a State’s lawsuit brought
under Section 15c, or more broadly, any decision by a court
invoking the prudential standing doctrine to examine a parens
patriae action where there is an express statutory authorization
for filing that lawsuit in federal court, much less a decision
dismissing such an action.
Because the prudential standing doctrine has no role to
play in analyzing the standing of the States to bring their
antitrust lawsuit, it is unnecessary to discuss either Snapp or
American Electric Power.
Suffice it to say, however, that
neither decision suggests that the States lack standing to bring
a claim for relief due to injuries suffered to their economies
from Apple’s illegal conduct.
Apple contends in a footnote that there may be a lurking
issue about the proper measurement of damages.
It contends that
the States must “prove the amount of damages allegedly suffered
by their economies, not the amount of damages allegedly suffered
by certain citizens within their respective jurisdictions.”
measurement of damages is not an issue of standing.
event, Apple is incorrect.
Congress has authorized the States
to recover damages on behalf of their citizens.
provides that the States are entitled to present a damages
calculation premised on the injuries incurred by their citizens
when they paid inflated prices for e-books.
15 U.S.C. §
In sum, the States have Article III standing.
abrogated any prudential standing parens patriae requirements
through the enactment of Section 15c.
Apple’s motion to dismiss
III. Class Certification
Apple argues that the States should be required to seek
class certification under Rule 23 of the Federal Rules of Civil
Apple urges the Court to read the requirements of
Rule 23 into Section 15c and contends that the failure to graft
the requirements of Rule 23 onto Section 15c’s procedures would
violate due process.
Rule 23 applies to class actions.
It permits one or more
members of a class to sue as a representative party on behalf of
all members of a class where the named plaintiffs’ claims are
typical of those belonging to class members and where other
procedural prerequisites are met.
Fed. R. Civ. P. 23.
15c parens patriae actions are not class actions.
Mississippi ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736,
744 (2014) (lawsuit by a State is not a class action, and
therefore not subject to the Class Action Fairness Act of 2005).
As a statutory matter, therefore, Section 15c actions are not
subject to the procedures set forth in Rule 23 that apply to
Moreover, the Clayton Act contains no provision
incorporating Rule 23’s requirements onto Section 15c, as the
Supreme Court has recognized.
460 U.S. 557, 573 n.29 (1990).
See Illinois v. Abbot & Assocs.,
Not surprisingly, therefore,
Apple cites no authority for the proposition that Rule 23
applies to Section 15c actions.
To require the States to seek certification of a class
would also override the express intent of Congress.
the Hart-Scott-Rodino Antitrust Improvements Act (“Act”),
Congress intended to permit the States to enforce federal
antitrust laws without having to navigate the requirements of
As the Second Circuit has explained, Section 15c was
directed toward remedying inadequacies in the existing
scheme of enforcement which affected the usefulness of
private consumer class actions and were barriers to
suits brought by small consumers. The basic problems
addressed were the difficulty of achieving class
certification of consumer actions pursuant to Federal
Rules of Civil Procedure, Rule 23, and the complexity
of measuring and distributing damages in class
actions. In effect, the thrust of Title III of the
Act was to overcome obstacles to private class actions
through enabling state attorneys general to function
more efficiently as consumer advocates.
In re Grand Jury Investigation of Cuisinarts, Inc., 665 F.2d 24,
35 (2d Cir. 1981) (citation omitted); see also State of N.Y. by
Vacco v. Reebok Int'l Ltd., 96 F.3d 44, 46 (2d Cir. 1996)
(“Congress empowered state attorneys general to investigate and
prosecute antitrust abuses on behalf of consumers stymied by
Rule 23's certification and notification hurdles”). 4
Apple argues the Act violates due process by allowing
parens patriae actions to proceed without requiring the States
to move for class certification.
Apple points to the fact that
Rule 23’s requirements are “grounded in due process.”
Sturgell, 553 U.S. 880, 901 (2008).
There is no basis to find that the Act is unconstitutional
because Congress adopted the mechanism of a parens patriae
It is also not true, as Apple contends, that the injured
parties are the sole “real parties in interest” and that this
action is indistinguishable from a class action. As explained
above, the States are suing not merely to vindicate the rights
of their injured citizens, but also for relief from the injury
to their quasi-sovereign interests in the welfare of their
action to recover damages for citizens of the various States.
The fact that Rule 23’s own provisions are grounded in due
process does not mean that the Act does not also comport with
the constitutional imperative of due process.
Section 15c with Rule 23’s provisions well in mind.
notice and opt-out provisions to ensure that no consumer is
forced to be bound by any decision should he or she desire to
And Apple’s interests are protected by the
statute’s requirement that damages be proved and assessed only
by a “reasonable system,” subject to court oversight.
Given these provisions, it is not surprising that none
of the Supreme Court or Second Circuit cases which have
commented on Section 15c’s lack of Rule 23 protections has
raised any constitutional concerns.
See, e.g., Illinois v.
Abbott & Associates, Inc., 460 U.S. 557, 573 n.29 (1983); Reebok
Int'l Ltd., 96 F.3d at 46; In re Grand Jury Investigation of
Cuisinarts, 665 F.2d at 35.
Apple’s sole authority for suggesting that its due process
rights are being violated is Pfizer, Inc. v. Lord, 522 F.2d 612
(8th Cir. 1975).
Pfizer predates the Act, and was addressed to
parens patriae actions where none of the procedural safeguards
of the (not yet enacted) Act were in place.
See id. at 616
(discussing the importance of “notice and an opportunity [for a
party] to participate in or exclude themselves from the
Finally, in the related class action this Court certified a
class on March 28, 2014.
See In re Elec. Books Antitrust
Litig., 11 MD 2293 (DLC), 2014 WL 1282293 (S.D.N.Y. Mar. 28,
In doing so, the Court carefully examined and rejected
each of the challenges brought by Apple against certification.
None of those challenges gave cause for any concern that Apple’s
due process rights are at stake from an effort to obtain damages
for its violation of the federal antitrust laws.
Apple’s November 15, 2013 motion to dismiss the States’
Action for lack of standing, or to compel the States to seek
class certification, is denied.
New York, New York
April 15, 2014
United States District Judge
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