Federal Judge James Ware of the Northern District of California has certified a class of iPod purchasers, allowing an antitrust class action to proceed against Apple Computer, Inc. (“Apple”). 

The plaintiffs in The Apple iPod iTunes Antitrust Litigation contend that Apple violated state and federal antitrust laws by monopolizing markets for digital music downloads and portable digital media players, excluding competing portable digital media devices, and charging supracompetitive prices for iPods. 

The amended consolidated class action complaint, filed on January 26, 2010, charges that Apple engaged in these alleged suppressions of competition by: (1) offering protected music files encoded with FairPlay, Apple’s proprietary software, thereby rendering music files sold by iTunes inoperable on competitors’ portable digital media devices; and (2) making Apple’s portable digital media devices (e.g., iPod) incapable of playing protected music content sold by competing digital music stores.

On May 19, 2011, the court granted summary judgment for Apple on plaintiffs’ claims relating to iTunes 4.7 and denied summary judgment for Apple on plaintiffs’ claims relating to iTunes 7.0. 

The court’s certification order dealt with the issue of whether to certify a putative class consisting of “[a]ll persons or entities in the United States (excluding [certain individuals and entities]) who purchased an iPod directly from Apple between September 12, 2006 and March 31, 2009.”  Specific models of iPods covered by the class definition are provided in the court’s November 22, 2011 Order and include iPod Standard, Classic, and Special Models; iPod shuffle Models; iPod touch Models; and iPod nano Models. 

Quoting the recent Supreme Court opinion in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), Judge Ware applied the applicable – albeit ambiguous – standard for deciding a motion for class certification: “A trial court’s ‘rigorous analysis’ under Rule 23 will frequently ‘entail some overlap with the merits of the plaintiff’s underlying claim.’”  Judge Ware held that the court’s earlier decisions that the plaintiffs met the certification requirements of Rules 23(a) and 23(b)(3) still stand.  Therefore, the balance of the certification order focused on two issues: (1) whether the plaintiffs provided sufficient evidence to establish that antitrust impact and damages may be shown through accepted class-wide methodologies; and (2) whether resellers—as opposed to end-user consumers—should be included in the class.  

First, with respect to the plaintiffs’ methodologies to prove impact and damages on a class-wide basis, the court considered whether the plaintiffs intended to use “generalized proof common to the class” and whether the common issues would “predominate.”  The court relied on its previous determination that the plaintiffs offered an adequate method of proof and, in particular, found the three methodologies offered by plaintiffs sufficient, at least for class certification purposes. 

Second, with respect to the inclusion of resellers, the court was persuaded by plaintiffs’ arguments that resellers should be included in the certified class.  The court relied on Meijer, Inc. v. Abbot Labs., 251 F.R.D. 431, 433 (N.D. Cal. 2008) and Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 489-92 (1968) for the proposition that a reseller’s ability to raise prices and effectively pass the overcharge to its customers is irrelevant as to whether the reseller suffered an injury.  Since the possibility that resellers may pass on any overcharge was found to be irrelevant to the issue of injury, the court included resellers in the class.

Delaware Judge J. Travis Laster has approved a settlement requiring Del Monte Corp. and Barclays Capital Inc. to pay $89.4 million to Del Monte shareholders to resolve claims relating to the March 2011 acquisition of Del Monte by funds affiliated with Kohlberg Kravis Roberts & Co. L.P., Vestar Capital Partners, and Centerview Partners.

Under the terms of the March 2011 sale of Del Monte, shareholders were entitled to receive $19 for each share of Del Monte common stock held.  The completion of the acquisition prompted investors to file suit in Delaware alleging that they were not being fairly compensated for their shares in the buyout and accusing Barclays of manipulating the acquisition of Del Monte to boost its revenues.  Investors also accused Barclays of not disclosing its conflict of interest in receiving $23.5 million to advise Del Monte on the deal while also receiving up to $24 million for financing the buyers.

Other investors also filed suit in federal court in California alleging that Kohlberg Kravis Roberts & Co. and Vestar Capital engaged in bid rigging and colluded on the offer amount for Del Monte Corp.  In this antitrust suit, shareholders alleged that the two private equity firms originally competed to buy Del Monte before joining forces to artificially drive down the sale price.  Following the filing of this suit, the Antitrust Division of the U.S. Department of Justice launched a probe into the antitrust claims.

The California claimants petitioned Judge Laster to allow an opt-out in order to pursue the federal antitrust claims in California.  Judge Laster refused to include an opt-out provision in certifying the shareholders as a class, noting that the antitrust claims were based on the same facts as those in the Delaware case and had been considered by attorneys for the shareholders in reaching the settlement.  The judge further noted that attorneys in the California case had yet to file an amended complaint following the dismissal of its antitrust lawsuit by a federal judge in August.

As part of the settlement, Del Monte agreed to pay $65.7 million in cash to be released from these and further shareholder claims and Barclays agreed to contribute $23.7 million.  Although the settlement bars shareholders from filing other lawsuits, the judge noted that the settlement will not affect the ongoing investigation by the Antitrust Division.

U.S. District Judge Patrick Schiltz has issued a stay in Butler v. NBA, the basketball players’ antitrust class action against the National Basketball Association and its 30 member teams, to give the parties time to work out a settlement.

The District of Minnesota federal judge issued the stay order after being informed by the players that the two sides have “tentatively agreed” to resolve their labor dispute.

On November 14, 2011, during the NBA lockout and after months of unsuccessful negotiations over the new collective bargaining agreement (“CBA”), the parties were unable to reach agreement and the players disavowed the National Basketball Players Association (“NBPA”) as their bargaining representative.  The players rebranded the NBPA as a trade association.

The next day, a number of basketball players filed two antitrust class action complaints against the NBA and its 30 member teams.  Initially, two separate lawsuits were filed in federal court – one in the Northern District of California and one in the District of Minnesota. 

The basketball players’ complaints alleged violations of Section 1 of the Sherman Act as well as breach of contract and tortious interference claims.  The players preemptively argued that in light of their disavowal of their bargaining representative, the defendants’ actions were not protected from antitrust scrutiny by any labor exemptions.

The cases were consolidated in the District of Minnesota after plaintiffs in the Northern District of California filed a notice of voluntary dismissal without prejudice.  The District of Minnesota, fresh from its decision in Brady v. NFL, in which football players brought a similar antitrust action against the NFL, was again positioned to resolve professional athletes’ antitrust claims against their league.

However, renewed negotiations proved fruitful.  The November 29, 2011, order staying litigation was followed by the players’ December 1, 2011, decision to authorize the NBPA to serve as their collective bargaining representative with the league.

The major negotiating issues are believed to be largely resolved.  The details of the new CBA are currently under negotiation.  NBA basketball is expected to return in a few weeks, on Christmas day.

A high-profile battle between two Pittsburgh-area health care networks that has already been fought in federal district and appellate courts is now headed to mediation.

In West Penn Allegheny Health System, Inc., v. UPMC, Judge Arthur Schwab of the U.S. District Court for the Western District of Pennsylvania ordered the parties to try an alternative form of dispute resolution after West Penn Allegheny Health System moved for leave to file a second amended complaint alleging an antitrust conspiracy against the larger University of Pittsburgh Medical Center (“UPMC”).    

In 2009, West Penn sued UPMC and Highmark, a dominant health insurance provider in western Pennsylvania, for damages stemming from an alleged agreement with Highmark to reimburse UPMC at a higher rate than West Penn.  West Penn argued that such an agreement put it at a competitive disadvantage against UPMC.  West Penn has struggled financially.  It recently agreed to be acquired by Highmark, which led to West Penn dropping Highmark from the lawsuit.

Judge Schwab had dismissed West Penn’s complaint in October 2009, finding that West Penn had not alleged any antitrust injury.  The U.S. Court of Appeals for the Third Circuit, however, reversed the dismissal and remanded for further proceedings.

Before deciding on West Penn’s motion for leave to file a second amended complaint, Judge Schwab ordered the parties to try mediation, which is to be concluded by the end of January 2012.  If the parties have not resolved their dispute by that time, Judge Schwab has ordered the parties may engage in expedited discovery on the motion to replead, focusing on the issues of prejudice, delay, and futility.