Distribution, Competition, and Antitrust / IP Law

“And the Plaintiffs Don’t Have to Sue My Competitors Because? . . . .”

One of the pet peeves of antitrust defendants is that the joint-and-several liability rule often means that plaintiffs can pick and choose which defendants to sue. (Plaintiffs will say – that’s a design feature of the antitrust laws, and not a bug.) In Ward v. Apple, Inc., the Northern District of California made it harder for plaintiffs to do the picking and choosing. Yesterday, the Ninth Circuit pushed the pendulum back, making it more difficult for defendants to argue that the picking and choosing is problematic.

In a nutshell, the plaintiffs (a putative class of consumers) alleged that Apple conspired with AT&T Mobility (ATTM) to violate the antitrust laws in connection with Apple’s agreement with ATTM that ATTM would be the exclusive provider of voice and data services for the iPhone. According to plaintiffs, the exclusivity agreement enabled ATTM to charge supra-competitive prices for wireless services; Apple allegedly shared in ATTM’s revenues. Simplifying here a complex procedural history, the plaintiffs eventually brought suit against Apple only. Despite the general rule that plaintiffs can pick the tortfeasors they want to sue, the district court held that ATTM was a “necessary party” under Federal Rule of Civil Procedure 19.

The Ninth Circuit reversed and remanded for further proceedings. It held that an absent (alleged) antitrust co-conspirator can, under certain circumstances, be a required party under Rule 19 – at least where the absent party has “legally protected” interests to defend. However, it set the bar fairly high. In particular, the court rejected:

  • Apple’s argument that ATTM’s possible increased regulatory scrutiny gives ATTM a legally protected interest (though the court did not decide whether such scrutiny could ever constitute a sufficient interest);
  • The argument that reputational interests can make a party a required party under Rule 19; and
  • The argument that ATTM’s particular contract rights amounted to legally protected interests.

In short, it is once again harder – though not impossible – to argue that all alleged co-conspirators must be joined as defendants in an antitrust suit.

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About Howard Ullman

Antitrust, competition, and IP law enthusiast.

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