cotchett, pitre & mccarthy, llp kaplan fox & … · special master, the hon. rebecca...

PLAINTIFFS’ MPA IN OPPOSITION APPLE’S MOTION FOR SANCTIONS; Case No. 5:18-md-2827-EJD

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COTCHETT, PITRE & MCCARTHY, LLP Joseph W. Cotchett (SBN 36324) Mark C. Molumphy (SBN 168009) Brian Danitz (SBN 247403) Elle D. Lewis (SBN 238329) Gina Stassi (SBN 262263) San Francisco Airport Office Center 840 Malcolm Road, Suite 200 Burlingame, CA 94010 Telephone: 650-697-6000 Facsimile: 650-697-05777 [email protected] [email protected] [email protected] [email protected] [email protected]

KAPLAN FOX & KILSHEIMER LLP Laurence D. King (SBN 206423) Mario M. Choi (SBN 243409) 350 Sansome Street, Suite 400 San Francisco, CA 94104 Telephone: 415-772-4700 Facsimile: 415-772-4707 [email protected] [email protected] KAPLAN FOX & KILSHEIMER LLP Frederic S. Fox (pro hac vice) Donald R. Hall (pro hac vice) David A. Straite (pro hac vice) 850 Third Avenue New York, NY 10022 Telephone: 212-687-1980 Facsimile: 212-687-7714 [email protected] [email protected] [email protected]

Interim Co-Lead Class Counsel

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

IN RE: APPLE INC. DEVICE

PERFORMANCE LITIGATION

CASE NO. 5:18-MD-02827-EJD

PLAINTIFFS’ MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO APPLE’S MOTION FOR SANCTIONS

THIS DOCUMENT RELATES TO:

ALL ACTIONS.

Judge: Hon. Edward J. Davila

Courtroom: 4, 5th Floor

Hearing Date: May 30, 2019

Hearing Time: 9:00 a.m.

Case 5:18-md-02827-EJD Document 317 Filed 04/23/19 of 32

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TABLE OF CONTENTS

Page

I. INTRODUCTION ......................................................................................................................... 1 II. STATEMENT OF ISSUES TO BE DECIDED ............................................................................ 3 III. FACTUAL AND PROCEDUAL HISTORY ................................................................................ 4

A. The Negotiated Protective Order ............................................................................................. 4 B. Second Consolidated Amended Complaint ............................................................................. 5 C. Motion to Dismiss Briefing ..................................................................................................... 5 D. The March 7 Hearing ............................................................................................................... 6 E. Post-Hearing Exchange of Accusatory Letters ........................................................................ 8 F. There Were No Meet and Confers Regarding Defendant’s Motion for Sanctions .................. 9 G. Apple Rejects Plaintiffs’ Proposed Sealed Hearing Protocol ................................................ 10

IV. LEGAL STANDARD .................................................................................................................. 10 V. ARGUMENT ............................................................................................................................... 12

A. Apple’s Motion Fails To Establish A Protective Order Violation ......................................... 12 B. Apple’s Requested Sanctions Are Disproportionate and Should Be Denied ........................ 15

1. Disqualification Is An Extreme Remedy Not Justified On The Facts ............................. 17 2. The Absence of An Ethical Violation Requires Denying Apple’s Disqualification

Motion .............................................................................................................................. 18 3. The Absence Of Any Continuing Effect Also Requires Denying Apple’s Disqualification Motion ................................................................................................... 19 4. Apple Has Not Shown Prejudice; Disqualifying Lead Counsel Would Unfairly And

Significantly Prejudice Plaintiffs ..................................................................................... 20 5. Prohibiting Lead Counsel’s Access To Apple’s Documents is Equally Extreme And Should Be Denied ............................................................................................................ 23

VI. CONCLUSION ............................................................................................................................ 24


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TABLE OF AUTHORITIES

Page(s)

Cases

Adams v. Albertson,

2012 WL 1636064 (N.D. Cal. May 9, 2012) ..................................................................................... 10

Adriana Intern. Corp. v. Thoeren,

913 F.2d 1406 (9th Cir. 1990) ........................................................................................................... 21

Aoude v. Mobil Oil Corp.,

892 F.2d 1115 (1st Cir. 1989) ............................................................................................................ 17

Balfour Beatty Infrastructure, Inc. v. PB&A

2017 WL 956650, at *7 (N.D. Cal., 2017) ........................................................................................ 22

Bank v. Elec. Payment Servs

1997 WL 811552, at *19 n.17 (D. Del. Dec. 30, 1997) ..................................................................... 22

Chambers v. NASCO, Inc.,

501 U.S. 32 (1991) ............................................................................................................................. 17

Comden v. Superior,

20 Cal.3d 906 ..................................................................................................................................... 22

Computer Task Group, Inc. v. Brotby,

364 F.3d 1112 (9th Cir. 2004) ........................................................................................................... 15

In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig.,

658 F.2d 1355 (9th Cir. 1981) (Mot. ) ............................................................................................... 16

CornerStone Staffing Sols., Inc. v. James,

No. C 12-1527 RS, 2014 U.S. Dist. LEXIS 10531 (N.D. Cal. Jan. 28, 2014) .................................. 22

DCH Health Services Corp. v. Waite

95 Cal.App.4th 829 (2002) .................................................................................................... 12, 18, 20

DeLuca v. State Fish Co.,

217 Cal.App.4th 671 (2013) .............................................................................................................. 18

In re Dual-Deck Video Cassette Recorder Antitrust Litig.,

10 F.3d 693 (9th Cir. 1993) ............................................................................................................... 16

Fair Housing of Marin v. Combs,

285 F.3d 899 (9th Cir. 2002) ....................................................................................................... 10, 15


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Finjan, Inc. v. ESET, LLC

2019 U.S. Dist. LEXIS 54593 (S.D. Cal. Mar. 29, 2019) ................................................................. 16

FlatWorld Interactives LLC v. Apple Inc.,

No. 12-CV-01956-WHO, 2013 WL 4039799 (N.D. Cal. Aug. 7, 2013) .................................... 21, 22

Gregori v. Bank of America,

207 Cal.App.3d 291 (1989) ......................................................................................................... 12, 18

Hernandez v. Best Buy Stores, L.P.,

2015 WL 7176352 (S.D. Cal. 2015) (Mot. ) ...................................................................................... 17

Huston v. Imperial Credit Commer. Mortg. Inv. Corp.,

179 F. Supp. 2d 1157 (C.D. Cal. 2001) (Mot. ) ................................................................................. 16

Hyde & Drath v. Baker,

24 F.3d 1162 (9th Cir. 1993) ....................................................................................................... 11, 16

Kane v. Chobani, Inc.,

No. 12-CV-02425-LHK, 2013 U.S. Dist. LEXIS 109900 (N.D. Cal. Aug. 2, 2013) ........................ 17

Knox v. City of Fresno,

2016 WL 10647198 (E.D. Cal. 2016) (Mot. ) ................................................................................... 16

Krzyzanowski v. Orkin Exterminating Co. Inc.,

C-07-05362 SBA, 109 ....................................................................................................................... 12

Labor/Cnty. Strategy Ctr. v. Los Angeles Cnty. Metro. Transp. Auth.,

564 F.3d 1115 (9th Cir. 2009) ..................................................................................................... 11, 17

Layer2 Communs. Inc. v. Flexera Software LLC,

No. C-13-02131 DMR, 2014 U.S. Dist. LEXIS 77693 (N.D. Cal. June 5, 2014) ............................. 17

In re Lidoderm Antitrust Litigation,

14-MD-02521-WHO, 2015 WL 7566741 (N.D. Cal. November 25, 2015) ............................... 12, 22

Life Techs. Corp. v. Biosearch Techs., Inc.,

No. C-12-00852 WHA, 2012 U.S. Dist. LEXIS 63974 (N.D. Cal. May 7, 2012) ............................ 23

Lofton v. Verizon Wireless (VAW) LLC,

308 F.R.D. 276 (N.D. Cal. 2015) ....................................................................................................... 11

In re Marriage of Murchison,

245 Cal.App.4th 847 (2016) .............................................................................................................. 19

In re Marvel,

251 B.R. 869 (Bankr. N.D. Cal. 2000), aff’d 265 B.R. 605 (N.D. Cal. 2001) ............................. 11, 20


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Mendez v. Cty. of San Bernardino,

540 F.3d 1109 (9th Cir. 2008) ........................................................................................................... 11

Neal v. Health Net, Inc.,

100 Cal.App.4th 831 (2002) .............................................................................................................. 17

Nilsson, Robbins, Dalgarn, Berliner, Carson & Wurst v. Louisiana Hydrolec,

854 F.2d 1538 (9th Cir. 1988) ........................................................................................................... 10

Oaks Mgmt. Corp. v. Superior Court,

145 Cal. App. 4th 453 (2006) ............................................................................................................ 19

Optyl Eyewear Fashion Int’l Corp. v. Style Cos.,

760 F.2d 1045 (9th Cir.1985) ............................................................................................................ 11

Oracle Am., Inc. v. Innovative Tech. Distributors,

LLC, No. 11-CV-01043-LHK, 2011 WL 2940313 (N.D. Cal. July 20, 2011) ..................... 11, 13, 16

Palumbo v. Tele-Communications,

157 F.R.D. 129 (D.D.C. 1994) (Mot. ) .............................................................................................. 16

In re Pfizer Inc. Sec. Litig.,

282 F.R.D. 38 (S.D.N.Y. 2012) ......................................................................................................... 22

Primus Auto. Fin. Servs., Inc. v. Batarse,

115 F.3d 644 (9th Cir. 1997) ............................................................................................................. 17

In re Rubin,

769 F.2d 611 (9th Cir. 1985) ............................................................................................................. 10

Shepherd v. Am. Broad. Cos., Inc.

62 F.3d 1469 (D.C. Cir. 1995) ........................................................................................................... 17

Tuttle v. Combined Ins. Co.,

222 F.R.D. 424 (E.D. Cal. 2004), aff’d, 225 F. App’x 620 (9th Cir. 2007) ...................................... 17

In re Twitter Inc. Secs. Litig.,

326 F.R.D. 619 (N.D.Cal. 2018) ........................................................................................................ 22

United States v. Kahre,

737 F.3d 554 (9th Cir. 2013) ............................................................................................................. 17

Visa U.S.A. v. First Data Corp.,

241 F.Supp.2d 1100 (N.D. Cal. 2003) ............................................................................................... 11

Visto Corp. v. Seven Networks, Inc.,

2006 U.S. Dist. LEXIS 91453 (E.D. Tex. Dec. 19, 2006) (Mot. ) .................................................... 23


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Other Authorities

Fed. R. Civ. P. 37(b)(2)(A) ...................................................................................................................... 12

Fed. R. Civ. P. 37 (b)(2)....................................................................................................................... 2, 10


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PLAINTIFFS’ OPPOSITION APPLE’S MOTION FOR SANCTIONS; Case No. 5:18-md-2827-EJD

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I. INTRODUCTION

Apple’s overreaching Motion for Sanctions (the “Motion”) is a manufactured controversy, the

latest scorched-earth tactic designed to frustrate the litigation process and extract procedural advantage.

As discovery has revealed in explicit detail, Apple secretly throttled millions of iPhones to conceal a

growing problem with its batteries. Forced to confront these disturbing and, at times, embarrassing facts

alleged in the Second Amended Complaint (“SAC”), Apple now seeks sanctions on Plaintiffs’ counsel

for referring to these allegations to oppose Apple’s motion to dismiss at a court hearing that Apple itself

noticed. Most troubling, Apple now has used the pendency of its Motion as a basis to delay all discovery,

including the production of its records and depositions of its employees.1 Apple’s Motion is thus

properly understood as a litigation and public relations tactic, and not based on any good faith concern

about the handling of confidential materials. It should be denied for the following reasons.

First and most importantly, Plaintiffs did not violate the Stipulated Protective Order, Dkt. No.

224 (“P.O.”) during the March 7, 2019 hearing (the “Hearing”). The Parties negotiated a custom P.O.

specifically for this case. As Apple concedes in the Motion, Section 14.7 of the custom P.O. expressly

authorizes Plaintiffs to introduce Apple’s Protected Material2 during court proceedings without prior

permission of Apple and even without notice to Apple before the hearing. Plaintiffs need only advise

the Court at the time of introduction that material is protected. The burden then immediately shifts to

Apple to argue for continued protection. This efficient and user-friendly process was drafted by Apple

and is not in any of the N.D. Cal. model protective orders. It was later approved by the Discovery

Special Master, the Hon. Rebecca Westerfield (Ret.).

Plaintiffs meticulously complied with Section 14.7, first by identifying the relevant material in

their complaint and opposition papers and filing such material provisionally under seal prior to the

Hearing, and then precisely identifying at the podium which under-seal documents were about to be

read into the record prior to reading them at the Hearing. Apple failed to argue for “continued

protection” as required by Section 14.7. Even after noting that the Court was open to the public and

asking that the transcript be sealed pending review, Apple counsel later quoted the same (and additional)

1 See Declaration of Mark C. Molumphy dated April 23, 2019 (“Molumphy Decl.”), Ex. I. 2 “Protected Material” is material designated “confidential” or “highly confidential” under the P.O.


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Protected Material, as would be expected when the very purpose of the Hearing on Apple’s motion to

dismiss was to discuss the sufficiency of the allegations in the SAC. Perhaps Apple’s counsel now

regrets agreeing to the process, or not making timely argument for continued protection prior to or during

the Hearing – or perhaps, as discussed below, Apple now senses yet another opportunity to protract

discovery. No matter the motive, it cannot reasonably be disputed that Plaintiffs provided notice that

sealed (and thus protected) material would be used at the Hearing. Therefore, there was no violation.

Second, even if Section 14.7 of the P.O. could be interpreted to require parties to utter additional

cautionary words prior to quoting Protected Material – which it does not – the relief Apple seeks,

terminating Mr. Cotchett and Mr. Molumphy as Lead Counsel, is unprecedented and grossly

disproportionate to the alleged violation. At most, Apple raises a minor procedural question about the

parties’ own negotiated process to comply with the “advisory” duties in Section 14.7 – i.e., what type

of notice or cautionary words must be included in pre-trial briefs or spoken in open court. Consistent

with their conduct throughout this case, the distinguished attorneys whose professional integrity Apple

unfairly attacks acted in good faith and consistent with their ethical obligations at the Hearing, the first

time Section 14.7’s notification process had come into play in this case. These same attorneys, after

Apple challenged their conduct, then prepared and proposed a Protocol to avoid similar issues at future

hearings.

Conversely, Apple has not presented evidence of improper behavior, and conceded at the

Hearing that any deviation from the agreed-upon process was unintentional. Apple also cites no law or

facts that would support the sanction of disqualification under FRCP 37(b)(2) or the Court’s inherent

authority, which require “extreme circumstances” and a level of bad faith and willfulness that is not

present here. Apple’s request that the Court prohibit Mr. Cotchett and Mr. Molumphy from viewing

confidential documents would equally preclude participation in this case given Apple’s improper mass

designation of virtually all of its documents as Highly Confidential-Attorney’s Eyes Only or

Confidential.

Third, Apple can show no prejudice. Although Mr. Chorba asserted members of the public were

in the courtroom (Hearing Transcript (“Tr.”) at 31:14-18; “There are [members of the public present]

Your Honor, and I, with care, did not object.”), the Hearing was not reported anywhere and Apple had


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the opportunity to move to seal portions of the transcript.3 Ironically, Apple’s own publicly-filed Motion

attaches correspondence disclosing some of the same “Confidential” information that it now seeks

sanctions against Plaintiffs’ counsel for discussing at the Hearing.

Nor can Apple show prospective harm, as it must. During this case Plaintiffs’ counsel have

handled hundreds of thousands of documents marked Highly Confidential – Attorneys’ Eyes Only by

Apple, drafted and filed a Second Consolidated Amended Complaint partially under seal based on these

documents, and engaged in numerous proceedings and court filings involving Apple’s designated

documents. There has never before been any issue regarding Plaintiffs’ meticulous efforts to comply

with the P.O. Moreover, once this issue arose, Plaintiffs’ counsel took the initiative to prepare a two-

page protocol for introducing designated materials at future hearings based on guidance from the Federal

Judicial Center. Apple rejected any proposal that did not include disqualification of counsel.

Finally, Apple utterly failed to meet and confer in a good faith attempt to resolve the issues

raised in its Motion. Rather, after an initial exchange of letters, each side accusing the other of violating

the P.O., Apple’s counsel waited weeks and only raised its intent to move for disqualification at the end

of a discovery meet and confer call on other matters, gave Plaintiffs less than 24 hours to agree to a

hearing date, and then refused to discuss the matter further. After Plaintiffs’ counsel prepared a proposed

protocol for future hearings, Apple sent a letter stating there was “no dispute” about the interpretation

of the P.O. and filed its Motion for Sanctions less than 20 minutes later. Apple now refuses to produce

additional documents or employees for depositions pending resolution of its Motion. Apple’s conduct

does not reflect a serious desire to resolve the parties’ issues, but rather tactical and punitive motives to

delay this case and malign their adversaries.

II. STATEMENT OF ISSUES TO BE DECIDED

Whether Plaintiffs’ Co-Lead Counsel, Joseph Cotchett and Mark Molumphy, should be

sanctioned, disqualified or prohibited from accessing Apple’s documents based on their oral argument

in opposing Apple’s Motion to Dismiss on March 7, 2019.

3 Like Apple, Plaintiffs’ Opposition only cites to excerpts from the Hearing transcript that were not

designated as confidential by either party in the pending sealing motion. Plaintiffs’ counsel wrote

Apple’s counsel to confirm they were following the same procedure used by Apple and Apple’s counsel

confirmed that they have no objection to referencing undesignated portions of the transcript.


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III. FACTUAL AND PROCEDUAL HISTORY

A. The Negotiated Protective Order

Even before consolidation and appointment of leadership, counsel in the related actions

attempted to negotiate a protective order to govern the exchange of discovery material. Plaintiffs’

counsel leading those early discussions included eventual Lead Counsel, as well as Law & Briefing

Committee co-chair Amy Keller. Molumphy Decl., ¶ 3. Plaintiffs’ counsel made clear that the Court’s

two model orders for patent cases, the “Patent Local Rule 2-2 Interim Model Protective Order” (the

“Model Order for Patent Cases”) and the related “Model Protective Order for Litigation Involving

Patents, Highly Sensitive Confidential Information and/or Trade Secrets” (the “Model Order for

Sensitive Cases”), were inappropriate for the needs of this case. Id. Rather, a negotiated order would

be needed and could only be negotiated by Lead Counsel after consolidation. Id. Apple counsel agreed

in concept, and all parties reported this understanding to the Court on April 13, 2018 in the First

Supplemental Joint CMC Statement. Dkt. No. 3 at 12.

Lead Counsel were appointed on May 15, 2018 (Dkt. No. 99) and on or about June 2, 2018

Apple counsel circulated a proposed first draft protective order. Molumphy Decl. at ¶ 7. As previously

agreed by the parties, the draft was not just a copy of one of the model patent orders. Rather, it contained

important changes and terms reflecting the nature of this consumer class action and the public’s right of

access to court proceedings, absent a compelling need for secrecy. Id.

Specifically, with respect to the use of Protected Material at court hearings, the Model Order for

Patent Cases and the Model Order for Sensitive Cases both limited the use of Protected Material in open

court unless the receiving party gives prior notice that the party “reasonably expect[s] a deposition,

hearing or other proceeding to include Protected Material,” and notice must be given sufficiently early

to give the producing party time to obtain an “agreement to be bound” from all who will be present at

the hearing. See, e.g., Model Order for Sensitive Cases, § 5.2(b). However, consistent with Plaintiffs’

wishes, Apple removed this onerous procedure and instead proposed a much more user-friendly Section

14.7 (as it appears in the final P.O.) merely requiring a party to advise the Court at the time of

introduction of that the information is protected, and triggering the designating party’s burden to request

that protection be continued. Molumphy Decl., ¶ 9. There were no further discussions between the


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parties about the process for notifying the other, let alone whether any specific “advisory” words or

statements were required to be used. Id. While many other provisions were hotly negotiated for months

and some disputes even required guidance from Judge Westerfield, Section 14.7 did not. Plaintiffs

accepted Apple’s proposed low-burden procedure and all parties signed the stipulated P.O. on October

12, 2018. Discovery Special Master Westerfield entered the Order on October 15, 2018. Dkt. No. 224.

B. Second Consolidated Amended Complaint

On October 1, 2018, Plaintiffs filed their Second Consolidated Amended Complaint (“SAC”),

which incorporated extensive new details based on documents produced by Apple during the course of

discovery. Because these documents – and the allegations citing or based on these documents – were

almost all designated as either “Confidential” or “Highly Confidential—Attorneys’ Eyes Only” by

Apple, the publicly-filed version of the SAC had to be heavily redacted and the unredacted version was

submitted under seal pursuant to the P.O. and the Court’s Local Rules. Dkt. Nos. 243 and 244.

C. Motion to Dismiss Briefing

On January 24, 2019, Apple filed its Notice of Motion and Motion to Dismiss the SAC and

supporting Memorandum of Points and Authorities. Dkt. No. 297. Apple moved to dismiss 18 separate

counts in the SAC, claiming that the SAC’s theories were “substantively unchanged” from the initial

complaint and, with respect to omission-based claims, that “plaintiffs have not substantiated their theory

with any actual, specific factual allegations (despite receiving over 6.5 million pages of documents since

August).” Id. at 14:13-15.

On February 14, 2019, Plaintiffs filed and submitted under seal their Opposition Memorandum

of Points and Authorities, referring to and attaching documents that had been produced by Apple. Dkt.

Nos. 280 and 280-1. Responding to Apple’s claim that the SAC failed to sufficiently allege new facts,

Plaintiffs’ Opposition detailed the SAC’s substantial allegations derived from documents produced by

Apple during discovery. See, e.g., Opposition at 1-7, 12-13, 15, 17-18, 20. Thus, like the SAC itself,

significant portions of the Opposition brief were redacted and filed provisionally under seal as they were

derived from documents designated by Apple as Highly Confidential-Attorneys Eyes Only. Plaintiffs’

Opposition brief prominently and repeatedly featured a recitation of a timeline of Apple’s response to

the relevant technical issues. Plaintiffs’ Opposition was accompanied by a Declaration by Mr. Cotchett


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which attached three documents filed provisionally under seal based on Apple’s designation of those

documents as Highly Confidential-Attorneys Eyes Only. Dkt. No. 280-1.

On February 25, 2019, Apple filed its Reply Memorandum responding to Plaintiffs’ Opposition.

Apple fully understood that Plaintiffs introduced and were relying on Apple’s internal documents

produced under the P.O. in their SAC and Opposition, and attempted to rebut their significance it its

Reply by claiming they “confirm” that Apple’s engineering teams “effectively” developed a software

“upgrade” that addressed the “realities” of the battery limitations. Apple also challenged Plaintiffs’

allegations regarding its response to the technical issues, claiming that Plaintiffs’ referenced discussions

between engineers showed that they “recognized the UPO issue, acted quickly to address it, and

internally debated the solution.” Dkt. No. 286 at 11:10-11.

Thus, there can be no dispute that, by the time of the March 7, 2019 Hearing, the Court had

received, and both Parties had introduced and addressed in their respective motion to dismiss papers,

both the SAC’s allegations and the underlying “Confidential” and “Highly Confidential” documents

upon which they were based.

D. The March 7 Hearing

On March 7, 2019, the Court held a Hearing on Apple’s Motion to Dismiss. Neither party moved

to seal the courtroom, which was open to the public. Before the Hearing, Mr. Cotchett approached Mr.

Chorba and told him that he was going to read to the Court portions of the email exhibits that he had

attached to his declaration and that the parties should set a date to go back to Judge Layne Philips (Ret.).

See Declaration of Joseph W. Cotchett (“Cotchett Decl.”), ¶ 3. Mr. Chorba responded that he would

discuss it with Apple. Id.

The Hearing commenced and Mr. Chorba presented Apple’s argument. Mr. Chorba did not ask

the Court to seal the courtroom or to take other measures relating to conduct of oral argument. To the

contrary, Mr. Chorba proceeded to make several arguments found in Apple’s motion papers and

emphasize the lack of additional details in the SAC despite the production of “six and a half million

pages of documents that Apple produced last August.” Id. Mr. Chorba also engaged in a dialogue with

the Court about the level of detail required in a complaint, and the specificity of allegations in the SAC

under Rule 9(b). Id.


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Mr. Molumphy argued next, and after some general responses to Mr. Chorba, began to identify

specific allegations in the SAC that were based on Apple’s own document production. Notably, Mr.

Molumphy introduced this argument by first making clear that he was referencing portions of the SAC

derived from discovery and gave the specific pages from Plaintiffs’ Opposition brief where such

allegations were discussed:

So we’ve now had the benefit of four months of discovery, internal records, internal

e-mails, reports from engineers, management. We have alleged in painstaking

detail, I would submit, close to a summary judgment type of brief in our Complaint

evidence. Not cute language from plaintiff’s attorneys. Quotations from Apple’s

own engineers, their own employees. We detailed a chronology beginning in 2014,

but certainly ramping up in 2015, ‘16, and ‘17 of an internal situation within

Apple’s corridors that is diametrically different than the situation that Mr. Chorba,

Apple’s litigation counsel, tried to convince you.

The defect, the allegations of knowledge within Apple were certainly not known to

the consumers, and we’ve detailed those in our complaint. I can run through some

of those, but I would just point to pages 17, 18, and 19 of our memorandum where

we talk about some of these details.

See Tr. at 18-20. After this introduction, Mr. Molumphy went on to provide the Court with a

generalized recitation of the timeline of Apple’s response to the UPO problem, (e.g., Tr. at 19:15-20:9).

Apple’s counsel, Mr. Chorba, did not object to this argument at any time.

When Mr. Molumphy completed his argument, and as Mr. Chorba rose to respond, Mr. Cotchett

then indicated he wanted to follow up and discuss his declaration. Indeed, Mr. Cotchett introduced his

arguments by advising the Court and Apple that he would refer to the exhibits to his declaration:

I submitted a declaration and the declaration is very, very important here . . . The

reason I submitted a declaration in support here is to show you all of the documents

they have submitted [are] just the tip of the iceberg, and I want to take 30 seconds

to go over that. . . . The first three items in my declaration are e-mails that are

completely contrary . . . .

See Tr. at 27:21-28:18. Mr. Cotchett then read a portion of exhibits 2 and 3 of his declaration to the

Court. Cotchett Decl. ¶ 6. The quoted excerpts contained no technical information, only plain-spoken

admissions by Apple employees regarding the impact of Apple’s conduct on consumers.

After Mr. Molumphy and Mr. Cotchett completed their arguments, Mr. Chorba stated:

The first and most important thing I want to address, however, and I know counsel

did not do this intentionally, we have a protective order. We have some very

confidential documents. There were reference completely out of context to


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documents and to specifications. I’d like to designate the transcript as confidential

pursuant to our protective order and before its released have an opportunity to go

through it because some of what they read from are indisputably “Attorneys Eyes

Only Documents,” and so I would just like to do that at the outset.

See Tr. at 30:25-31:9.

Mr. Cotchett responded that Plaintiffs did not object to designating the transcript as

“confidential” pending the parties’ review, and Mr. Chorba thanked counsel. Id. at 31:12-13. The

Court then noted that “the court is open right now to the Public,” which Mr. Chorba acknowledged,

before informing the Court that he didn’t object before because he didn’t want to “interrupt counsel.”

Id. at 31:14-21.

However, right after noting that members of the public might be present in the courtroom, Mr.

Chorba then launched into his rebuttal argument and referred to some of the same arguments,

information, and documents that had just been referenced by Plaintiffs’ counsel. Id. at 33:24; 34:22-

25; 40:22-41:1.

E. Post-Hearing Exchange of Accusatory Letters

On March 8, 2019, i.e., the day after the March 7 Hearing and telling the Court that Plaintiffs’

counsel did not violate the P.O. “intentionally,” Mr. Chorba sent a letter addressed to Mr. Cotchett and

Mr. Molumphy “concerning their blatant violation” of Section 14.7 of the P.O. by reading from the SAC

and their Opposition without giving Apple the opportunity to first seek to protect such information from

public disclosure, and “reserving all rights.” See Molumphy Decl. Ex. A. On March 12, 2019, Mr.

Cotchett sent a responsive letter stating there was no violation of the P.O., describing how the Court and

the parties had been advised of Plaintiffs’ use of the material, and noting that Apple’s letter only

highlighted Apple’s own violation of the P.O. by its mass designations of documents as Highly

Confidential, without any reasoned basis, creating practical problems for the parties. Mr. Cotchett noted

that Plaintiffs also reserved all rights based on Apple’s violation. Id., Ex. B. On March 13, 2019, Mr.

Chorba sent a second letter disputing Mr. Cotchett’s positions, and on March 15, 2019, Mr. Cotchett

responded by letter disputing Mr. Chorba’s positions. Id., Exs. C and D.

This exchange of correspondence, in a one-week window, does not constitute a serious effort to

“meet and confer” to resolve the underlying dispute here, i.e., the appropriate procedure under the P.O.

to ensure that the parties, the public, and the Court have the opportunity to raise, brief, consider and


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resolve issues relating to use of Protected Material at a hearing and whether the hearing must be sealed

from the public. The letters certainly did not discuss, much less attempt to resolve, the premise of the

instant motion, i.e., whether Lead Counsel should be sanctioned and disqualified.

F. There Were No Meet and Confers Regarding Defendant’s Motion for Sanctions

Following the above-referenced exchange of letters, the rhetoric seemed to end and the Parties

resumed their focus on the litigation – specifically Apple’s pending production of documents and the

scheduling of deposition dates for Apple’s employees. In this regard, on March 21, 2019, pursuant to

Local Rule 30-1, Plaintiffs wrote Mr. Chorba and asked to meet and confer about scheduling the first

wave of Apple employee depositions during April and May 2019. Molumphy Decl., ¶ 28. During the

following week of March 24, the parties engaged in a series of meet and confer calls regarding discovery

issues; each time, Apple’s counsel said it was still working on but not yet able to provide deposition

dates. Id.

On April 2, 2019, during another meet and confer call, Mr. Chorba joined and, after stating that

he had to leave the call to take care of other matters, informed Plaintiffs’ counsel – for the first time –

that Apple intended to file a motion for sanctions against Mr. Molumphy and Mr. Cotchett. Id., ¶ 29.

Mr. Chorba initially refused to state what sanctions relief he was seeking. Id. After four separate

requests, Mr. Chorba finally admitted that Apple was seeking disqualification of counsel and would not

entertain further discussions. Id. Mr. Chorba then informed Plaintiffs’ counsel (again, for the first time)

that Apple would not be producing any additional documents, or providing deposition dates for their

employees, pending resolution of its motion. Id. At 5:49 p.m. that evening, Mr. Chorba sent Plaintiffs’

counsel an email giving them until 2:00 p.m. the following day to confirm a hearing date. Id. To be

clear, there were no meet and confer discussions conducted on this or any other call concerning the

motion or requested disqualification relief.

On April 3, 2019, disregarding Plaintiffs’ counsel’s request for a call to discuss the alleged

violation of the P.O. and alternatives to ensure all parties were on the same page for future hearings, Mr.

Chorba contacted the Court to schedule a hearing on Apple’s threatened motion for sanctions.4

4 On April 4, 2019, Apple filed a motion to seal excerpts of the Hearing transcript. Notably, Apple’s

motion asked to seal argument presented by both Plaintiff’s counsel, Mr. Molumphy and Mr. Cotchett,

as well as by Apple’s counsel, Mr. Chorba. See Dkt. No. 311.


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G. Apple Rejects Plaintiffs’ Proposed Sealed Hearing Protocol

By Friday, April 5, 2019, Apple had not yet filed its Motion or contacted Plaintiffs. That

weekend, in an effort to move the ball forward and resolve the issue without Court intervention, Mr.

Molumphy prepared a simple, two-page “Sealed Hearing Protocol” for Apple’s consideration that

established: (1) a written procedure for the parties to use to notify the Court of the introduction of

Protected Material for use at a hearing and, (2) to the extent a designating party then seeks to seal the

hearing, an expedited procedure to brief and for the Court to consider and resolve any such motion. On

Sunday, April 7, 2019, Mr. Molumphy sent the Protocol to Apple for its consideration. Molumphy Decl.

¶ 32 and Ex. F. Notably, Mr. Molumphy’s Protocol was based on the Procedural Checklist published

by the Federal Judicial Center for use by federal district courts, entitled, “Sealing Court Records and

Proceedings: A Pocket Guide (2010),” and designed – to the extent possible – for the parties to present

and resolve any sealing motions prior to hearings at which Protective Material may be discussed. Id.,

Ex. E. Thus, it was meant to resolve and prevent any issues going forward.

On April 9, at 9:52 a.m., Mr. Chorba responded by letter, rejected the Protocol, and conditioned

any further meet and confer on Mr. Molumphy and Mr. Cotchett first agreeing to their own

disqualification. Id., Ex. G. Even this offer was illusory, as just minutes later, at 10:11 a.m., Apple filed

its Motion seeking sanctions. Id., ¶ 33 and Ex. H.

IV. LEGAL STANDARD

A court has authority to impose sanctions under Rule 37(b)(2) of the Federal Rules of Civil

Procedure when a party “fails to obey an order to provide or permit discovery.” “In the Ninth Circuit,

[Rule 37] sanctions are appropriate only in ‘extreme circumstances’ and where the violation is ‘due to

willfulness, bad faith, or fault of the party.’” Fair Housing of Marin v. Combs, 285 F.3d 899, 905 (9th

Cir. 2002); see also Adams v. Albertson, 2012 WL 1636064, at *1 (N.D. Cal. May 9, 2012) (same).

“Rule 37 sanctions are subject to certain limitations in that they must be just …. A sanction is ‘just’ if

the trial court considered the relevant factors and if the severity of the sanction is warranted by the

conduct involved.” Nilsson, Robbins, Dalgarn, Berliner, Carson & Wurst v. Louisiana Hydrolec, 854

F.2d 1538, 1546 (9th Cir. 1988). Additionally, under Rule 37(b), “[t]he degree to which a party is

prejudiced … is an important factor in determining the severity of the sanction to be imposed.” In re


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Rubin, 769 F.2d 611, 617 (9th Cir. 1985). Likewise, “good or bad faith may be a consideration in

determining whether imposition of sanctions would be unjust.” Hyde & Drath v. Baker, 24 F.3d 1162,

1171 (9th Cir. 1993). Apple cannot show the prejudice or bad faith required to support the requested

sanctions.

A court’s “inherent power” to issue sanctions must be made based on a specific finding of “bad

faith.” Lofton v. Verizon Wireless (VAW) LLC, 308 F.R.D. 276, 285 (N.D. Cal. 2015). The bad faith

requirement is a “high threshold.” Id. at 285. It encompasses more than mere negligence or even

recklessness, Mendez v. Cty. of San Bernardino, 540 F.3d 1109, 1131–32 (9th Cir. 2008), but rather

“willful misconduct or recklessness that is coupled with an improper purpose,” or conduct “tantamount

to bad faith.” Lofton, 308 F.R.D. at 285. The burden is on the moving party to demonstrate that the

opposing party acted with the necessary bad faith or improper purpose. Id.

A party asserting contempt for violation of a court order must establish that the accused party

“‘(1) [ ] violated the court order, (2) beyond substantial compliance, (3) not based on a good faith and

reasonable interpretation of the order, (4) by clear and convincing evidence.’” Labor/Cnty. Strategy Ctr.

v. Los Angeles Cnty. Metro. Transp. Auth., 564 F.3d 1115, 1123 (9th Cir. 2009) (quoting In re Dual-

Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993).

“Because of their susceptibility to tactical abuse, ‘[m]otions to disqualify are strongly

disfavored,’ and ‘should be subjected to particularly strict judicial scrutiny.’” Oracle Am., Inc. v.

Innovative Tech. Distributors, LLC, No. 11-CV-01043-LHK, 2011 WL 2940313, at *4 (N.D. Cal. July

20, 2011) (citations omitted) see also Visa U.S.A. v. First Data Corp., 241 F.Supp.2d 1100, 1104 (N.D.

Cal. 2003); In re Marvel, 251 B.R. 869 (Bankr. N.D. Cal. 2000), aff’d 265 B.R. 605 (N.D. Cal. 2001)

(“A motion for disqualification of counsel is a drastic measure which courts should hesitate to impose

except when of absolute necessity. They are often tactically motivated; they tend to derail the efficient

progress of litigation.”); Optyl Eyewear Fashion Int'l Corp. v. Style Cos., 760 F.2d 1045, 1050 (9th

Cir.1985) (such requests “should be subjected to particularly strict judicial scrutiny.”). “[A]s courts are

increasingly aware, motions to disqualify counsel often pose the very threat to the integrity of the judicial

process that they purport to prevent. Such motions can be misused to harass opposing counsel, to delay

the litigation, or to intimidate an adversary into accepting settlement on terms that would not otherwise


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be acceptable.” Gregori v. Bank of America, 207 Cal.App.3d 291, 300-301 (1989). Courts presume

that, unless proven otherwise, lawyers behave in an ethical manner. DCH Health Services Corp. v. Waite

95 Cal.App.4th 829, 834 (2002). “Disqualification is only justified where the misconduct will have a

‘continuing effect’ on judicial proceedings.” Krzyzanowski v. Orkin Exterminating Co. Inc., C-07-05362

SBA, 109 WL 4050674 at *4 (N.D. Cal. November 20, 2009) (emphasis in original), citing Baugh v.

Garl, 137 Cal.App.4th 737, 744 (2006). In other words, “the purpose of a disqualification must be

prophylactic; an attorney may not be disqualified purely as a punitive or disciplinary measure.” In re

Lidoderm Antitrust Litigation, 14-MD-02521-WHO, 2015 WL 7566741 at *5 (N.D. Cal. November 25,

2015).

V. ARGUMENT

A. Apple’s Motion Fails To Establish A Protective Order Violation

In order for Rule 37 sanctions to apply, a party must violate a court order. Fed. R. Civ. P.

37(b)(2)(A) (“If a party. . . fails to obey an order to provide or permit discovery. . . the court where the

action is pending may issue further just orders.”). If a party has not violated an order, Rule 37 sanctions

do not apply. Here, Sanctions are not warranted because Plaintiffs complied with the P.O.

At its core, this dispute arises from a disagreement between the parties about the negotiated

procedure for notifying the Court of their intent to use materials designated confidential at a hearing.

As described above, the relevant language governing this process was customized by the parties for this

case and, at least as contemplated, meant to make things easier to apply. Thus, in drafting Section 14.7

of the P.O., the parties specifically chose not to adopt the standard language from this Court’s Model

Order for Patent Cases and Model Order for Sensitive Cases: i.e., “Parties shall give the other parties

notice if they reasonably expect a deposition, hearing or other proceeding to include Protected Material

so that the other parties can ensure that only authorized individuals who have signed the

“Acknowledgment and Agreement to Be Bound” (Exhibit A) are present at those proceedings.” See,

e.g., Model Order for Patent Cases at § 5.2(b). By omitting this provision, which requires advanced

notice so that undertakings may be executed, the parties anticipated a less burdensome process, requiring

only that “[a] Party who seeks to introduce Protected Material at a hearing, pretrial or other proceeding

shall advise the Court at the time of introduction that the information is protected.” Dkt. 224 at § 14.7.


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The P.O. does not identify a specific process or manner to advise the Court or the other parties, nor does

the P.O. mandate any specific language that has to be used.

This modification distinguishes the P.O. in this case from Oracle Am. v. Google Inc., the one

case cited by Apple even remotely similar to the situation found here, in which the parties did not modify

the Northern District’s Model Protective Order provision. See 3:10-cv-03561-WHA, Dkt. No. 66 at §

5.2(b). That central point is ignored by Apple – Oracle violated a provision of a model patent order

that was removed here.

Plaintiffs satisfied Section 14.7. First, Plaintiffs identified and introduced the Protected Material

in their Opposition to Apple’s Motion to Dismiss, as well as the relevant portions of the SAC, both filed

with the Court prior to the Hearing. Apple then addressed this information, at length, in its Reply brief.

Plainly, as the Hearing approached, Apple knew that the parties would discuss the SAC and the motion

to dismiss briefs – after all, the entire reason to have the Hearing was to consider the adequacy of the

SAC, and to present oral argument on the motion and opposition relating to the SAC. Indeed, Mr.

Molumphy cited the same timeline of Apple’s response to the battery issues and alleged defect featured

prominently and repeatedly in Plaintiffs’ Opposition brief. Similarly, the two documents discussed

during Mr. Cotchett’s argument were specifically attached to his Declaration in support of Plaintiffs’

Opposition brief. See Dkt No. 280-1, Exhibits 2 and 3. Plaintiffs’ prominent inclusion and introduction

of this information in their Opposition briefing, and filing these same documents under seal prior to the

Hearing, was sufficient to advise the Court and Apple that this information would be used at the Hearing

meant to consider these very briefs, arguments, allegations and supporting evidence (which Apple had

challenged as insufficient).

Second, Plaintiffs stated both before and during oral argument that they were going to discuss

these materials before they did so, with no objection from Apple until after both Mr. Molumphy and

Mr. Cotchett completed their arguments. Before the Hearing, Mr. Cotchett walked up to Mr. Chorba,

shook his hand, and told Mr. Chorba that he was going to read to the Court portions of the email exhibits

to his declaration. Cotchett Decl. ¶ 3. Mr. Molumphy also introduced his remarks by actually

referencing the portions of the Complaint derived from discovery, and the very pages from the

Opposition brief where they were discussed. Indeed, he did so to respond to Apple’s argument,


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completed just moments earlier, that the SAC failed to add allegations derived from Apple’s documents

to cure pleading defects previously identified by the Court. As Mr. Molumphy stated at the introduction

of his argument:

So we’ve now had the benefit of four months of discovery, internal records, internal

e-mails, reports from engineers, management. We have alleged in painstaking

detail, I would submit, close to a summary judgment type of brief in our Complaint

evidence. Not cute language from plaintiff’s attorneys. Quotations from Apple’s

own engineers, their own employees. We detailed a chronology beginning in 2014,

but certainly ramping up in 2015, ‘16, and ‘17 of an internal situation within

Apple’s corridors that is diametrically different than the situation that Mr. Chorba,

Apple’s litigation counsel, tried to convince you.

The defect, the allegations of knowledge within Apple were certainly not known to

the consumers, and we’ve detailed those in our complaint. I can run through some

of those, but I would just point to pages 17, 18, and 19 of our memorandum where

we talk about some of these details.

Tr. at 18:20-19:14. Mr. Molumphy went on to cite generalized facts alleged in both the SAC and

Opposition brief without any objection from Apple, and Mr. Chorba then addressed the same timeline

of events in his response after noting the Hearing was open to the public. Nonetheless, Apple cites this

general recitation of Apple’s response to the UPO problem in seeking sanctions.

Mr. Cotchett also introduced his arguments by specifically advising the Court and Apple that he

would refer to the exhibits to his declaration:

I submitted a declaration and the declaration is very, very important here . . . The

reason I submitted a declaration in support here is to show you all of the documents

they have submitted [are] just the tip of the iceberg, and I want to take 30 seconds

to go over that. . . . The first three items in my declaration are e-mails that are

completely contrary. . . .

Tr. at 27:21-28:18.

Of course, like the allegations cited by Mr. Molumphy, the informal communications between

Apple engineers quoted by Mr. Cotchett – all of which were filed with the Court weeks before the

Hearing – contain no trade secrets or proprietary information; just candid, plain-spoken remarks

regarding the impact of Apple’s conduct on consumers. Certainly, and consistent with Section 14.7,

Plaintiffs advised the Court and Apple that they would introduce this information at the Hearing before

doing so and Apple had ample opportunity to object or seek protective measures if it wanted to do so.


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However, Apple now argues that Plaintiffs’ filings and prefatory remarks were not explicit

enough to “advise” the Court that Plaintiffs would actually read from the SAC or their Opposition briefs

at the Hearing. The argument is absurd. That was the entire point of the Hearing. Indeed, Apple’s own

counsel referred to the same allegations from the SAC and repeatedly referred to the same supposedly

confidential information during his argument after acknowledging that the courtroom was open to the

public.5

In any event, as noted above, after the Hearing, Plaintiffs then offered a proposed “Protocol” to

establish a certain, agreed-to procedure for introducing designated materials at future hearings, and for

teeing-up any sealing motions so that the parties, and absent class members, could participate before a

hearing is kept secret from the public, premised on the Federal Judicial Center’s guidance to federal

courts. Plaintiffs provided this Protocol to Apple before it filed the Motion and offered to meet and

confer if Apple had any suggested edits. Further, because no hearing was scheduled at the time, there

was no time urgency requiring resolution of this issue with motion practice. Nonetheless, Apple rejected

the proposal out of hand, and conditioned any further meet and confer on the issue on Mr. Molumphy

and Mr. Cotchett first agreeing to disqualification. Under these circumstances, Apple’s true motivation

here is rather self-evident (and it has nothing to do with its supposed concern for protecting “the interests

of the class” (Motion at 17:12-28)).

In sum, Plaintiffs intended to (and in fact did) comply with the negotiated procedure in Section

14.7 of the P.O. To the extent the Court finds that additional notice or certain cautionary words could

or should have been used, the solution is to clarify a process for future hearings – just as Plaintiffs’

counsel tried to do here, without success.

B. Apple’s Requested Sanctions Are Disproportionate and Should Be Denied

Rule 37 sanctions “are appropriate only in ‘extreme circumstances’ and where the violation is ‘due

to willfulness, bad faith, or fault of the party.’” Fair Housing of Marin v. Combs, 285 F.3d 899, 905 (9th

Cir. 2002), cert. denied, 537 U.S. 1018 (2002) (citations omitted); Computer Task Group, Inc. v. Brotby,

5At the Hearing, Apple’s counsel repeatedly referred to many of the same SAC allegations, documents

and information (Tr. at 33:24; 34:22-25; 40:22-41:1), even after acknowledging that the Hearing was

not closed to the public. (Tr. at 31:14-18). Apple then moved to seal its own statements in the Hearing

transcript. See Dkt. No. 311. Even Apple’s Motion for Sanctions attaches correspondence between

counsel that references a “Highly Confidential” document upon which sanctions are now sought. See

Ex. B to Mot., Dkt. 313-3, at 2.


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364 F.3d 1112, 1115 (9th Cir. 2004); Hyde & Drath v. Baker, 24 F.3d 1162, 1171 (9th Cir. 1994) (good

or bad faith is a consideration in determining whether imposition of sanctions would be unjust).

The Court should find that sanctions of any kind are not warranted under the circumstances, let

alone the draconian and punitive measures urged by Apple. In Finjan, Inc. v. ESET, LLC, No. 17CV183

CAB, 2019 U.S. Dist. LEXIS 54593 (S.D. Cal. Mar. 29, 2019), the district court declined to impose

sanctions under Rule 37 where, as here, “the Protective Order [was] not exceptionally clear,” finding

that these “circumstances ma[d]e an award of expenses unjust.” Id. at *23 (citing Fed. R. Civ. P.

37(b)(2)(C)). Id. Here, as in Finjan “[t]he violations [if any] were not willful or in bad faith. On the

contrary, they seem to be the result of an erroneous, but not unreasonable interpretation of the Protective

Order.” Id.; see also Dual-Deck, 10 F.3d at 695 (“[A] person should not be held in contempt if his action

appears to be based on a good faith and reasonable interpretation of the court’s order.” (internal quotes

and ellipsis omitted)).

The relief Apple seeks is unprecedented and grossly disproportionate to the alleged violation.

Oracle Am. v. Google Inc., 3:10-cv-03561-WHA, upon which Apple relies (Mot. at 12), does not support

the requested sanctions. In Oracle, Judge Alsup referred the motion to the Magistrate only for a

determination of expenses related to the preparation of a motion to seal the transcript, nothing more.

Judge Alsup specifically held that the additional requested finding of contempt of court “seems heavy

handed, perhaps even vindictive.” Id., 3:10-cv-03561-WHA, Dkt. No. 2065 at 2 (emphasis added).

Oracle is also distinguishable on the facts because, unlike this case, in Oracle the parties agreed to use

the onerous hearing procedures in one of the model patent protective orders, unlike here. See Id., 3:10-

cv-03561-WHA, Dkt. No. 66 at § 5.2(b). Apple’s other cases are equally inapposite and do not support

disqualification in these circumstances. See Huston v. Imperial Credit Commer. Mortg. Inv. Corp., 179

F. Supp. 2d 1157, 1173 (C.D. Cal. 2001) (Mot. at 10, 17) (conflict of interest where attorney was

previously an officer of defendant and worked on IPO which was related to the securities action);

Palumbo v. Tele-Communications, 157 F.R.D. 129, 133 (D.D.C. 1994) (Mot. at 17) (conflict of interest

where attorney was previously a board member and shareholder of defendant’s affiliate); Knox v. City

of Fresno, 2016 WL 10647198, at *3 (E.D. Cal. 2016) (Mot. at 18) (declining to exclude expert witness;

awarding attorney’s fees); In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig.,


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658 F.2d 1355, 1356 (9th Cir. 1981) (Mot. at 9) (vacating order disqualifying counsel from representing

witnesses at depositions); Hernandez v. Best Buy Stores, L.P., 2015 WL 7176352, at *15 (S.D. Cal.

2015) (Mot. at 9) (denying sanctions and disqualification; “[T]he Court will not leap to the conclusion

that plaintiff’s counsel engaged in abusive or unethical practices.”).

1. Disqualification Is An Extreme Measure Not Justified On The Facts

“Because motions to disqualify are often tactically motivated and can be disruptive to the

litigation process, disqualification is a drastic measure that is generally disfavored and imposed only

when absolutely necessary. Kane v. Chobani, Inc., No. 12-CV-02425-LHK, 2013 U.S. Dist. LEXIS

109900, at *49-50 (N.D. Cal. Aug. 2, 2013) (declining to disqualify plaintiff’s counsel based on

“hypothetical disclosures” by defendant’s expert) (citing Ramirez v. Trans Union, LLC, No. 12-00632,

2013 U.S. Dist. LEXIS 39120, 2013 WL 1164921, at *2 (N.D. Cal. Mar. 20, 2013)). In order to

determine whether to disqualify counsel, the Court applies California law. Layer2 Communs. Inc. v.

Flexera Software LLC, No. C-13-02131 DMR, 2014 U.S. Dist. LEXIS 77693, at *14 (N.D. Cal. June 5,

2014). “[T]he purpose of a disqualification must be prophylactic; an attorney may not be disqualified

purely as a punitive or disciplinary measure.” Neal v. Health Net, Inc., 100 Cal.App.4th 831, 844 (2002).

“In order to impose sanctions under its inherent power, the court must make a specific finding

that the attorney acted in bad faith.” Tuttle v. Combined Ins. Co., 222 F.R.D. 424, 428 (E.D. Cal. 2004),

aff’d, 225 F. App’x 620 (9th Cir. 2007); see also Chambers v. NASCO, Inc., 501 U.S. 32, 49 (1991)

(“invocation of the inherent power” as the basis for sanctions “would require a finding of bad faith”);

Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 650 (9th Cir. 1997) (“Because the district court’s

inherent powers are so potent, we require courts levying sanctions to assess an attorney’s individual

conduct and to make an explicit finding that he or she acted in bad faith.”).6 Apple has failed to come

6 Due to its punitive effect, some courts have applied the clear and convincing evidence standard to

disqualification motions. See Tuttle, 222 F.R.D. at 428 (citing cases for the proposition that “clear and

convincing evidence of the abusive conduct is required; a mere preponderance of evidence is not

enough.”); Shepherd v. Am. Broad. Cos., Inc. 62 F.3d 1469, 1477 (D.C. Cir. 1995) (clear and convincing

evidence required for sanctions under Court’s inherent power); Aoude v. Mobil Oil Corp., 892 F.2d

1115, 1118 (1st Cir. 1989) (same); cf. United States v. Kahre, 737 F.3d 554, 574 (9th Cir. 2013) (clear

and convincing evidence required to disqualify prosecuting attorney). A party asserting contempt for

violation of a court order must establish that the accused party “‘(1) [ ] violated the court order, (2)

beyond substantial compliance, (3) not based on a good faith and reasonable interpretation of the order,

(4) by clear and convincing evidence.’” Labor/Cnty. Strategy Ctr., 564 F.3d at 1123.


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forward with any evidence, let alone clear and convincing evidence, that Lead Counsel acted in bad faith

when presenting Plaintiffs’ argument at the March 7 Hearing.

2. The Absence of an Ethical Violation Requires Denial of Disqualification

Apple argues that disqualification is warranted because of supposed violations of California

Rules of Professional Conduct (“CRPC”) 3.4(f), 3.10(a), and 8.4(d). Mot. at 10, 15. Courts presume

that, unless proven otherwise, lawyers behave in an ethical manner. DCH Health Services Corp., 95

Cal.App.4th at 834. Even a violation of the California Rules of Professional Conduct does not

automatically compel disqualification. Gregori, 207 Cal.App.3d at 303. The court must be mindful of

“competing policy considerations,” fairness to the moving party, and the “hardship to the disqualified

attorney’s innocent client.” Id. at 300. “Disqualification [of counsel] is a drastic course of action that

should not be taken simply out of hypersensitivity to ethical nuances or the appearance of impropriety.”

DeLuca v. State Fish Co., 217 Cal.App.4th 671, 685–86 (2013).

No violation of CRPC 3.4(f). CRPC 3.4(f) provides: “A lawyer shall not . . . knowingly disobey

an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid

obligation exists.” Apple has not and cannot show a violation of CRPC 3.4(f). As discussed supra,

Section IV-A, Lead Counsel complied with the negotiated terms of Section 14.7 of the P.O. by

introducing the designated information in Plaintiffs’ briefing and making clear both before and during

oral argument that they were going to discuss these materials before they did so, without objection from

Apple until after both Mr. Molumphy and Mr. Cotchett completed their arguments. Accordingly, Apple

cannot show that Mr. Molumphy and Mr. Cotchett “disobey[ed] an obligation under the rules of a

tribunal,” let alone that they did so “knowingly.” Apple’s counsel admitted this fact at the time when

he stated on the record: “I know counsel did not do this intentionally.” Tr. at 31 (emphasis added).

Accordingly, Apple has not and cannot show a violation of CRPC 3.4(f).

At its core this dispute arises from a disagreement between the parties about the negotiated

procedure for introducing materials designated confidential at a hearing. To remedy any ambiguity and

avoid misunderstandings going forward, Plaintiffs proposed to Apple a Protocol addressing the “advice”

provision in Section 14.7 of the P.O. and establishing a clear procedure for introducing designated

materials to be used at a hearing. Unfortunately, Apple rejected the proposal out of hand.


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No violation of CRPC 3.10(a) or 8.4(d). CRPC 3.10(a) provides: “A lawyer shall not threaten

to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute.”

CRPC 8.4(d) provides: “It is professional misconduct for a lawyer to . . . engage in conduct that is

prejudicial to the administration of justice.” Apple’s further argument that the Court should disqualify

Lead Counsel for violating CRPC 3.10(a) and CRPC 8.4(d) based on Mr. Cotchett’s letter of March 12

responding to Mr. Chorba’s letter of March 8 is frivolous. Without any meet and confer, Mr. Chorba’s

March 8 letter accused Lead Counsel of a “blatant” violation of the P.O. and threatened to initiate

litigation on the issue. Mr. Cotchett’s responded that there was no violation and reserved Plaintiffs’

own rights to seek relief based on Apple’s and its counsel’s own violation of the P.O. by its mass

designations of documents as Highly Confidential. That response was entirely appropriate. Meet and

confer letters between seasoned litigation counsel do not prejudice the administration of justice. Indeed,

the comments to Rule 8.4 make clear that the rule applies to “criminal acts” and acts of “moral turpitude,

dishonesty, or corruption.” CRPC 8.4 cmt. 3 and 4. The comments to Rule 3.10 similarly makes clear

that “[t]his rule does not apply to a threat to bring a civil action” or to a “a threat to initiate contempt

proceedings for a failure to comply with a court order.” CRPC 3.10 cmt. 2 and 3. Apple’s claim is

baseless, intended solely to harass, and is itself sanctionable. Apple’s Motion is a perfect example of

the type of abusive litigation tactic that has led the Supreme Court and the Ninth Circuit to strongly

disfavor such motions.

3. The Absence of any Continuing Effect Requires Denial of Disqualification

Apple’s Motion fails to set forth any legal or evidentiary basis that could possibly justify

disqualification, or any other type of sanction. Even if any ethical duties had been violated here, which

they were not, disqualification would still be impermissible because there is no “‘substantial continuing

effect on future judicial proceedings’” in this case arising from any such violation. Oaks Mgmt. Corp.

v. Superior Court, 145 Cal. App. 4th 453, 463 (2006); see also In re Marriage of Murchison, 245

Cal.App.4th 847, 852 (2016) (“[A] court is limited to exercising [its] inherent authority [to disqualify

counsel] only when the misconduct ‘will have a continuing effect on the judicial proceedings.’”)

(citations omitted).


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Apple argues that it should be “shielded” against future violations by Plaintiffs’ counsel and that

hypothetical “future misconduct . . . will further delay these proceedings.” Motion at 18-19. The

argument is belied by the facts. The alleged violation was an isolated event at a Hearing before this

Court. The genesis of the alleged violation is a disagreement between the parties regarding the

requirements of the P.O. they negotiated. The possibility of future harm is also contradicted by Lead

Counsel’s conduct in this case. During the pendency of this case, Plaintiffs’ counsel have handled more

than seven million pages of documents marked Highly Confidential – Attorneys’ Eyes Only or

Confidential by Apple, researched, drafted and filed a SAC partially under seal based on these

documents, and engaged in numerous proceedings and court filings involving Apple’s designated

documents. There has never before been any issue regarding Plaintiffs’ good faith efforts to comply

with the P.O. To the contrary, Plaintiffs’ counsel have bent over backwards to ensure that Protected

Material is properly protected, including notifying Apple and its counsel when it appears that it has

inadvertently filed privileged or Protected Material with the Court.

As noted above, Plaintiffs’ counsel also offered to draft a new Protocol to ensure there were no

similar issues arising in future hearings. Apple’s claimed concern about future violations is also belied

by Mr. Molumphy’s and Mr. Cotchett’s long and distinguished service as officers of this Court and

members of the Bar. In sum, Apple does not and cannot show a substantial continuing effect on future

judicial proceedings. In re Marvel, 251 B.R. at 871 (“To be justified, a motion to disqualify must be

based on present concerns and not concerns which are merely anticipatory and speculative.”) (citing In

re Coordinated Pretrial Proceedings, 658 F.2d at 1361); DCH Health Servs. Corp. v. Waite, 95 Cal.

App. 4th 829, 833 (2002) (speculative contentions are insufficient to justify disqualification of counsel).

4. Apple Has Not Shown Prejudice; Disqualifying Lead Counsel Would Unfairly

and Significantly Prejudice Plaintiffs

Even if Apple’s arguments had merit, which they do not, the balance of hardships would still

weigh strongly against disqualification. If Apple’s Motion is granted, Plaintiffs and the Class would

lose the benefit of the knowledge of the experienced attorneys who have been working on this case since

its inception who are diligently and zealously representing the interests of the named Plaintiffs and

absent Class members. In stark contrast, Apple has shown no credible evidence of prejudice.


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A party “suffers prejudice if the [other party’s] actions impair the [] ability to go to trial or

threaten to interfere with the rightful decision of the case.” Adriana Intern. Corp. v. Thoeren, 913 F.2d

1406, 1412 (9th Cir. 1990) citing United States for Use and Benefit of Wiltec Guam, Inc. v. Kahaluu

Constr. Co., 857 F.2d 600, 604 (9th Cir. 1988). Here, Apple suffered no prejudice from Plaintiffs’ oral

argument at the Hearing. This is not a case where a party tries to bring in new evidence out of the blue;

to the contrary, here all of the information presented at the Hearing was already before the Court in

Plaintiffs’ SAC and briefing on the Motion to Dismiss. Although, the Hearing was open to the public,

there was no evidence of any member of the public obtained or used any information and the Hearing

was not even reported in the press. The transcript was then treated as confidential at Apple’s request,

and with Mr. Cotchett’s agreement, pending the parties’ review and any motions to seal. Moreover,

Apple never sought to close the courtroom, even after acknowledging it was public, and Apple’s counsel

himself then cited to much of the same designated materials (which statements Apple then sought to seal

(see Dkt. No. 311)).

Similarly, Apple’s assertion that Plaintiffs resorted to “self-help” by referring to the Protected

Material (Mot at 4, 14, 20) is blatantly false. While it is certainly true that Apple designated more than

99% of its documents as either Confidential or Highly Confidential, and Plaintiffs are separately filing

a motion based on that violation of the P.O., that does not mean that Plaintiffs were somehow motivated

to discuss the documents notwithstanding their designations. To the contrary, Plaintiffs’ counsel

complied with the P.O.’s procedure and referenced them only after first introducing them to the Court

and to Apple in their papers and again before presenting their substantive oral argument.

In contrast to the absence of prejudice to Apple, Plaintiffs would be severely prejudiced by

disqualification of Lead counsel. For more than a year now (and more than 11 months in a leadership

capacity), Lead Counsel have represented the named Plaintiffs and absent Class members in connection

with this large and complex consumer class action. During this time, Lead Counsel has conducted an

extensive factual investigation and detailed analyses of the highly technical facts, engaged and worked

with experts, collected and analyzed over seven million pages of Apple documents (nearly all of which

are designated Highly Confidential-Attorneys Eyes Only), drafted two consolidated complaints,

coordinated with the executive and steering committees, managed this litigation which involves 103


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domestic named plaintiffs, coordinated with a parallel state action in Santa Clara Superior Court, and

zealously represented Plaintiffs and the Class’ interests in meet and confers with Apple and in all

proceedings, both before this Court and the Special Master. Lead Counsel’s disqualification would have

a severe impact on “the progress of this litigation and the ability of [Plaintiffs] to effectively move the

case to conclusion without unnecessary costs.” In re Lidoderm Antitrust Litig., No. 14-MD-02521-

WHO, 2015 WL 7566741, at *7 (N.D. Cal. Nov. 25, 2015); Balfour Beatty Infrastructure, Inc. v. PB&A,

Inc., 2017 WL 956650, at *7 (N.D. Cal., 2017); see also FlatWorld Interactives LLC v. Apple Inc., No.

12-CV-01956-WHO, 2013 WL 4039799, at *5 (N.D. Cal. Aug. 7, 2013) (“Courts must be cognizant of

the ‘substantial hardship’ and the ‘monetary and other costs of finding a replacement’ on parties whose

counsel is disqualified.”) (quoting Gregori, 207 Cal.App.3d at 300); CornerStone Staffing Sols., Inc. v.

James, No. C 12-1527 RS, 2014 U.S. Dist. LEXIS 10531, at *14 (N.D. Cal. Jan. 28, 2014) (disqualifying

counsel is an “extreme’ remedy, “widely excessive vis-à-vis the alleged conduct” where the protective

order violation “caused little — if any — prejudice”).

The Court should also treat Apple’s feigned concern with the adequacy of Class representation

and protecting the interests of Class members with requisite skepticism. “When assessing the adequacy

of counsel, courts are generally skeptical of defendants’ ethical attacks on class counsel. . . . It is in a

defendant's best interests to object to class counsel who are, in fact, best suited to protect the class and

represent its interests.” See In re Pfizer Inc. Sec. Litig., 282 F.R.D. 38, 47-48 (S.D.N.Y. 2012); see also

Bank v. Elec. Payment Servs., Inc., 1997 WL 811552, at *19 n.17 (D. Del. Dec. 30, 1997) (defendant’s

argument contesting the adequacy of representation in a class action “is a bit like permitting a fox,

although with pious countenance, to take charge of the chicken house”); Comden v. Superior, 20 Cal.3d

906, 915 Court (1978) (“It would be naive not to recognize that [the] motion to disqualify” is nothing

more than an attempt to gain an improper “tactical” advantage over plaintiffs). For the same reasons,

Apple’s suggestion that the Class would be just as well represented with one rather than two lead

counsel firms, rings hollow. In re Twitter Inc. Secs. Litig., 326 F.R.D. 619, 628-29 (N.D.Cal. 2018)

(“[T]o state the obvious, Twitter's interests in this litigation are not aligned with those of the class. . . .

Thus, it is unlikely that Twitter has the class's interests in mind when it argues against the appointment

of additional counsel.”)


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5. Prohibiting Lead Counsel’s Access to Apple’s Documents is Equally Extreme

Recognizing that its Motion is unprecedented and unsupported by the facts, Apple also asks that

the Court prohibit Mr. Cotchett and Mr. Molumphy from viewing documents designated confidential by

Apple. This sanction would be tantamount to disqualification as it would effectively preclude Lead

Counsel’s participation in this case. This is especially true because Apple improperly mass designated

virtually all its documents (over seven million pages) as Highly Confidential-Attorney’s Eyes Only or

Confidential.

Apple’s cases involved egregious facts not present here and do not support this extreme sanction

in this case. In Visto Corp. v. Seven Networks, Inc., 2006 U.S. Dist. LEXIS 91453 (E.D. Tex. Dec. 19,

2006) (Mot. at 20), a patent infringement case, the attorneys’ conduct “involved bad faith and

willfulness” based on repeated violations of a patent prosecution bar throughout the course of the

litigation and additional actions taken by those attorneys to “obstruct[] counsel’s attempt to gain

information about the unauthorized behavior,” “and to “conceal” these activities after submitting a

stipulation on the issue to the court. Id.; see also Life Techs. Corp. v. Biosearch Techs., Inc., No. C-12-

00852 WHA, 2012 U.S. Dist. LEXIS 63974, at *35 n.8 (N.D. Cal. May 7, 2012) (distinguishing Visto).

In stark contrast, this case involves only a single hearing and a disagreement regarding the parties’

negotiated procedures under the P.O. – which Plaintiffs have attempted to rectify – and there are no

additional allegations of concealment or obstruction or any other conduct exhibiting willful or bad faith

violations of a court order.

Life Techs. Corp. v. Biosearch Techs., Inc. (Mot. at 19) is similarly distinguishable. In Life Techs.

the court barred a patent prosecutor from accessing Attorneys Eyes Only (“AEO”) documents for

“disclosure of 2,963 pages of AEO, proprietary scientific laboratory notebooks to the CEO of a

rival company” who then distributed the materials to employees, which proprietary notebooks “were a

flashpoint of conversation and [the rival CEO] excerpted portions of the notebook he indicated include

the author’s ‘eureka moment(s), which information “eventually made it to [the] testifying expert in [that]

litigation.’” 2012 U.S. Dist. LEXIS 63974, at *35. In these circumstances, the court found that a “harsh

sanction” was appropriate because Life Tech had suffered actual prejudice. Id. In stark contrast, here,

the information discussed at the Hearing—the generalized timeline of Apple’s response to the UPO


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problem and plain-spoken admissions regarding the harm Apple’s conduct caused consumers—did not

involve any trade secrets, let alone 2963 pages of lab notes. Moreover, although the March 7 Hearing

was open to the public, it was not reported in the press and the transcript remained sealed pending the

parties’ respective review and Apple’s sealing motion. In sum, Apple cannot show that it has been

prejudiced or that the alleged violation will have a substantial effect on future judicial proceedings.

VI. CONCLUSION

For the foregoing reasons, Apple’s Motion for Sanctions should be denied in its entirety.

DATED: April 23, 2019

Respectfully submitted,

COTCHETT, PITRE & MCCARTHY LLP

By: /s/ Mark C. Molumphy

Mark C. Molumphy

Joseph W. Cotchett (SBN 36324)

Mark C. Molumphy

Brian Danitz

Gina Stassi

San Francisco Airport Office Center

840 Malcolm Road, Suite 200

Burlingame, CA 94010

Telephone: 650-697-6000

Facsimile: 650-697-0577

[email protected]

[email protected]

[email protected]

[email protected]

DATED: April 23, 2019

KAPLAN FOX & KILSHEIMER LLP

By: /s/ Laurence D. King

Laurence D. King

Laurence D. King

Mario Choi

350 Sansome Street, Suite 400

San Francisco, CA 94104

Telephone: 415-772-4700

Facsimile: 415-772-4707

[email protected]

Frederic S. Fox (pro hac vice)

Donald R. Hall (pro hac vice)

David A. Straite (pro hac vice)


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.

850 Third Avenue

New York, NY 10022

Telephone: 212-687-1980

Facsimile: 212-687-7714

[email protected]

[email protected]

Interim Co-Lead Class Counsel


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ATTESTATION OF E-FILED SIGNATURE

I, Mark C. Molumphy, court-appointed interim lead counsel for the proposed Class, am the ECF

user whose ID and password are being used to file the foregoing. In compliance with Civil L.R. 5-

1(i)(3), I hereby attest that co-counsel have concurred in this filing.

/s/ Mark C. Molumphy

MARK C. MOLUMPHY
