Case 4:12-cv-05404-YGR Document 193 Filed 02/16/18 Page 1 of 5
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`ZACK WARD, ET AL.,
`Plaintiffs,
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`vs.
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`APPLE INC.,
`Defendant.
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`CASE NO. 12-cv-05404-YGR
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`
`ORDER DENYING MOTION FOR CLASS
`CERTIFICATION
`Re: Dkt. No. 158
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`Now before the Court is plaintiffs’ motion for class certification pursuant to Federal Rule
`of Civil Procedure 23(b)(3). (Dkt. No. 158 (“Motion”).)1 Plaintiffs seek class certification in
`connection with their claims against defendant Apple Inc., which they describe as “arising out of
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`the undisclosed and unprecedented exclusivity agreements between Apple and AT&T Mobility
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`LLC (‘AT&T’) which locked Plaintiffs and all other iPhone consumers into using AT&T’s voice
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`and data service, even after their wireless services agreements (‘WSAs’) with AT&T expired and
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`even if they paid an early termination fee (‘ETF’) under the WSAs.” (Motion at 1.) Defendant
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`opposes. (Dkt. No. 174.)
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`Having carefully considered the papers submitted on the motion and oral arguments held
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`on February 6, 2018, and for the reasons set forth below, the Court DENIES plaintiffs’ motion.
`I.
`RELEVANT BACKGROUND
`The facts of the case are well known to the parties and counsel of record. The background
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`relevant to the instant motion is summarized as follows. On March 22, 2017, the Court granted in
`part and denied in part Apple’s motion for summary judgment. (Dkt. No. 146.)2 Based on certain
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`1 The parties have filed various administrative motions to seal documents in connection
`with plaintiffs’ motion. (See Dkt. Nos. 157, 173, 180.) The Court addresses each in a separate
`order.
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`2 The Court partially granted summary judgment on the basis that AT&T’s service during
`an iPhone customer’s initial two-year contract period is not a cognizable aftermarket. The Court
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`Northern District of California
`United States District Court
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`Case 4:12-cv-05404-YGR Document 193 Filed 02/16/18 Page 2 of 5
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`evidence submitted by plaintiffs, the Court found:
`Even though Apple was no longer bound to create iPhones that could only function
`on the GSM network after 2010, those who purchased iPhones prior to the end of
`exclusivity still had to remain on the GSM network. These consumers could have
`expected to switch to another GSM provider, like T-Mobile, at the end of the two-
`year contract with AT&T. However, as plaintiffs’ evidence suggests, AT&T did
`not begin providing unlock codes for such phones until April 2012. Consequently,
`these consumers would have been locked into renewing AT&T service, or else lose
`the cellular capabilities of their iPhones.
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`(Id. at 12.)
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`In light of the Court’s summary judgment order, plaintiffs now allege that “[b]y locking
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`the iPhones and refusing to give consumers the software codes needed to unlock them, Apple and
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`AT&T unlawfully prevented iPhone customers from exercising their legal right to switch
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`carriers.” (Motion at 6.) Among other injuries, plaintiffs allege that iPhone consumers were
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`unable to switch to a less expensive carrier and unable to use local carriers while traveling abroad,
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`thus incurring “exorbitant roaming charges.” (Id.)
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`Despite the passage of time and a trial date set for August 20, 2018, plaintiffs now offer an
`11-page expert declaration of Dr. Frederick R. Warren-Boulton in support of class certification,3
`which purportedly shows that “there are established and reliable econometric methodologies
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`available to prove antitrust impact and damages caused by Apple’s alleged anticompetitive
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`conduct on a class-wide basis.” (Id. at 8.) Dr. Warren-Boulton’s theories of impact and damages
`are based on the existence of two “but-for” worlds.4 According to Dr. Warren-Boulton, the timing
`and nature of the harm to members of the class, as well as the methodology for estimating that
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`harm, depends on the assumed but-for world. The Court summarizes each “but-for” world in turn.
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`The “Truthfully Exclusive” (“TE”) World is a world in which Apple would have
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`adequately informed prospective customers that neither it nor AT&T would unlock their iPhones
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`partially denied summary judgment on the basis that there was a triable issue as to a potential
`aftermarket for AT&T renewal service.
`3 Dr. Warren-Boulton is an economist and principal at Microeconomic Consulting &
`Research Associates (“MiCRA”) in Washington, D.C.
`4 These are worlds that would have existed “but for” the alleged conspiracy between
`Apple and AT&T to monopolize the aftermarket for iPhone voice and data service.
`2
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`Northern District of California
`United States District Court
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`

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`Case 4:12-cv-05404-YGR Document 193 Filed 02/16/18 Page 3 of 5
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`when their initial service contracts with AT&T ended. In the TE World, Dr. Warren-Boulton
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`posits that providing this information would have reduced consumers’ willingness to pay, or
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`“reservation prices” of iPhone purchasers, by an amount equal to the present value of the lower
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`prices or higher quality on the service they could have expected to receive on their iPhones after
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`the expiration of their initial service contracts. (Dkt. No. 159-19 ¶ 8 (“Warren-Boulton Decl.”).)
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`On the other hand, the “Truthfully Non-Exclusive” (“TNE”) World is a world in which
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`Apple, upon request, would have agreed to unlock customers’ iPhones at the end of their initial
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`service contracts. Dr. Warren-Boulton postulates that the refusal of Apple and AT&T to unlock
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`phones increased the total cost of ownership in the as-is world through higher prices or lower
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`quality (or both) on the service received by iPhone purchasers. (Id.)
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`Beyond the two articulated theories, the expert’s declaration is devoid of analysis. Instead,
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`Dr. Warren-Boulton asserts that based on his preliminary review of certain data collected and
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`techniques employed by Dr. Simon J. Wilkie in a separate litigation involving Apple, Dr. Warren-
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`Boulton “do[es] not expect to encounter any insurmountable difficulty in applying [Dr. Wilkie’s]
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`techniques to form an estimate of harm to consumers” in the TE and TNE worlds. (Id. ¶¶ 22, 27.)
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`Thus, according to Dr. Warren-Boulton, in both worlds “there exists a common methodology and
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`data to reliably assess the existence and amount of damages to the Class members without the
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`need for individual inquiry.” (Id. ¶¶ 24, 29.)
`II.
`LEGAL FRAMEWORK
`The Court assumes familiarity with Rule 23, and a brief review of the relevant standards
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`will suffice for purposes of this Order. Under Rule 23(a), the Court may certify a class only if:
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`“(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions
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`of law or fact common to the class; (3) the claims or defenses of the representative parties are
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`typical of the claims or defenses of the class; and (4) the representative parties will fairly and
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`adequately protect the interests of the class.” Fed. R. Civ. P. 23(a). Where, as here, plaintiffs seek
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`to qualify for certification under Rule 23(b)(3), a class must meet two additional requirements:
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`Common questions must “predominate over any question affecting only individual members,” and
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`class resolution must be “superior to other available methods for the fair and efficient adjudication
`3
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`Northern District of California
`United States District Court
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`Case 4:12-cv-05404-YGR Document 193 Filed 02/16/18 Page 4 of 5
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`of the controversy.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 615 (1997).
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`“Considering whether questions of law or fact common to class members predominate
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`begins . . . with the elements of the underlying cause of action.” Erica P. John Fund, Inc. v.
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`Halliburton Co., 563 U.S. 804, 809 (2011) (internal quotation marks omitted). To prove a
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`conspiracy to monopolize in violation of Section 2 of the Sherman Act, plaintiffs must prove four
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`elements: “(1) the existence of a combination or conspiracy to monopolize; (2) an overt act in
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`furtherance of the conspiracy; (3) the specific intent to monopolize; and (4) causal antitrust
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`injury.” Paladin Assocs., Inc. v. Montana Power Co., 328 F.3d 1145, 1158 (9th Cir. 2003). “[I]n
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`the class action context, class certification is precluded where plaintiffs have not shown that the
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`fact of injury element can be proven for all class members with common evidence.” Allied
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`Orthopedic Appliances, Inc. v. Tyco Healthcare Grp. L.P., 247 F.R.D. 156, 165 (C.D. Cal. 2007).
`III. DISCUSSION
`Apple does not dispute that plaintiffs have satisfied the threshold requirements of Rule
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`23(a) or the superiority requirement of Rule 23(b)(3). It contends only that the class definition is
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`overbroad and that plaintiffs have not established predominance. Accordingly, the Court limits it
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`discussion to Dr. Warren-Boulton’s hypotheses and whether they support class certification.
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`In order to prove common antitrust impact, plaintiffs must “establish, predominantly with
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`generalized evidence, that all (or nearly all) members of the class suffered damage as a result of
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`Defendants’ alleged anti-competitive conduct.” In re High-Tech Emp. Antitrust Litig., 289 F.R.D.
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`555, 567 (N.D. Cal. 2013) (internal quotation marks omitted) (modifications in original). Some
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`courts have stated that a court’s inquiry on class certification should be limited to whether
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`plaintiffs merely “intend” to present “generalized” evidence of antitrust impact. See, e.g, In re
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`Dynamic Random Access Memory (“DRAM”) Antitrust Litig., No. M 02-1486 PJH, 2006 WL
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`1530166, at *9 (N.D. Cal. June 5, 2006). However, in In re Graphics Processing Units Antitrust
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`Litigation (“In re GPU”), 253 F.R.D. 478 (N.D. Cal. 2008), the court explained that even under a
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`plausible methodology standard, “certification [should not be] automatic every time counsel
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`dazzle the courtroom with graphs and tables.” Id. at 491. “[C]onducting a thorough review of
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`Plaintiffs’ theory and methodology is consistent with the requirement that the Court conduct a
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`Northern District of California
`United States District Court
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`Case 4:12-cv-05404-YGR Document 193 Filed 02/16/18 Page 5 of 5
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`‘rigorous analysis’ to ensure that the predominance requirement is met.” In re High-Tech, 289
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`F.R.D. at 567 (citing Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1431 (2013)).
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`Here, the Court is unable to fulfill its obligation. Dr. Warren-Boulton’s declaration is
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`essentially lacking any data-driven analysis. Instead, he refers generically to an extant “common
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`methodology and data,” which he will supposedly use to “reliably assess the existence and amount
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`of damages to the Class members.” (Warren-Boulton Decl. ¶¶ 24, 29.) His failure to provide
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`“properly analyzed, reliable evidence that a common method of proof exists to prove impact on a
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`class-wide basis” is fatal. In re High-Tech, 289 F.R.D. at 570 (emphasis in original) (internal
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`quotation marks omitted). Indeed, he has failed to submit any semblance of a “functioning model
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`that is tailored to market facts in the case at hand.” In re GPU, 253 F.R.D. at 492 (noting courts in
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`the antitrust context are “increasingly skeptical of plaintiffs’ experts who offer only generalized
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`and theoretical opinions” that a particular methodology may be used to show class-wide impact
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`and injury using common proof) (internal quotation marks omitted). Dr. Warren-Boulton’s “but-
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`for” world hypotheses offer only theories of impact and damages, and theory alone “is not
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`sufficient to satisfy Rule 23(b)(3)’s requirements.” In re High-Tech, 289 F.R.D. at 570. Absent a
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`data-driven model, plaintiffs have failed to meet their “burden under Rule 23 to provide a viable
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`method for demonstrating class-wide antitrust injury based on common proof.” In re GPU, 253
`F.R.D. at 497.5
`IV. CONCLUSION
`For the foregoing reasons, plaintiffs’ motion for class certification is DENIED.
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`This Order terminates Docket Number 158.
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`IT IS SO ORDERED.
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`Dated:
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`YVONNE GONZALEZ ROGERS
`UNITED STATES DISTRICT COURT JUDGE
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`5 Because plaintiffs’ deficiency with respect to antitrust injury is dispositive as to
`predominance, certification of the proposed Rule 23(b)(3) class is not possible. Accordingly, the
`Court declines to address the scope of the proposed class definition.
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`Northern District of California
`United States District Court
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`February 16, 2018
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