Wednesday, February 13, 2019

250 million consumers v. Qualcomm: trial in 2019 no longer realistic

Only two things worked out well for Qualcomm on the litigation front this year: the Lasinski cross-examination and the fact that the United States Court of Appeals for the Ninth Circuit allowed Qualcomm's interlocutory appeal of Judge Lucy H. Koh's certification of a class of up to 250 million consumers suing Qualcomm for a partial refund of what those people paid for their smartphones (seeking $5 billion in total, or roughly $20 on average per person who bought a smartphone in the U.S. during the relevant period, which started in March 2011).

Other than that, the first month and a half of this year have been a near-total disaster for Qualcomm, especially since its Chinese and German injunctions appear to have been worked around and some of Qualcomm's offensive cases have recently failed.

The Ninth Circuit has set the following schedule for the interlocutory appeal of class certification:

  • Mediation Questionnaire due on 02/06/2019.

  • Transcript ordered by 02/22/2019. Transcript due 03/25/2019.

  • Appellant Qualcomm Incorporated opening brief due 05/03/2019.

  • Appellees' answering brief due 06/03/2019.

  • Appellant's optional reply brief is due 21 days after service of the answering brief.

If the related trial, originally scheduled for June, ever takes place, it won't happen this year, realistically. Judge Koh put the related pretrial proceedings on hold in January. After briefing, the Ninth Circuit will have to schedule a hearing, and then make a decision. This is all going to take time.

Theoretically, if both parties wanted to accelerate things, they could save time, but in the current situation that's not foreseeable. What they need more than anything else so they can even determine their preferred pace is (i) Judge Koh's ruling on the FTC's complaint (which the consumer class action is directly related to) and (ii) the Supreme Court's Apple v. Pepper (App Store commission case) opinion. I believe the FTC is going to score at least a partial victory over Qualcomm and that Apple is going to lose the App Store case (not referring to the case as a whole, just to the question before the Supreme Court), and then it will depend on the reasoning (the Supreme Court may decide Apple v. Pepper in consumers' favor with or without overruling the Illinois Brick doctrine).

For Qualcomm, the class action is a pain in the neck for at least four reasons:

  • With so many people being potentially entitled to a partial refund of what they paid for their phones, even a seemingly small per-class-member amount would still result in a sizable total payout.

  • Any payout, unless the amount was just laughable relative to the size of the class, would stigmatize Qualcomm forever as a company that owed consumers money for indirectly overcharging them.

  • As long as there's a class action connected to the FTC case, a settlement would have to be run by Judge Koh. And at this stage there is no indication that Qualcomm can even settle with the FTC on the terms it wants.

  • The consumer class can bring all sorts of motions that Qualcomm doesn't like, such as the antisuit motion that Judge Koh dismissed without prejudice only for timing reasons last year (timing was, by the way, described by this blog as the relatively most interesting argument Qualcomm had raised against that motion).

The problem with the schedule for mediation is that it will take place at a time when Judge Koh may still be working on her FTC v. Qualcomm opinion, and even though the Supreme Court held the Apple v. Pepper hearing in November, it may also need more time, especially since different justices appear to have different preferences for how to achieve the result that all of them but the Chief Justice appear to consider to be the right one.

All things considered, I'd be surprised if mediation succeeded under these circumstances.

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