14 F.4th 1059
9th Cir.2021Background
- Qualcomm, a California-based leader in cellular technology, holds thousands of patents including standard-essential patents (SEPs) licensed on FRAND terms and sells modem chips to OEMs; it licenses at the device (OEM) level and typically charges royalties tied to device wholesale price.
- Plaintiffs are nationwide indirect purchasers of cellphones who allege Qualcomm maintained a chip monopoly through a “no-license–no-chips” policy, refusals to license rivals, and exclusive Apple deals, causing over‑royalties to be passed through to consumers.
- Plaintiffs sued under Sections 1 and 2 of the Sherman Act (and state analogues), California’s Cartwright Act and UCL, and sought certification of a nationwide damages class under Rule 23(b)(3) and an injunctive class under Rule 23(b)(2).
- The district court certified both classes, applying California choice‑of‑law rules to apply the Cartwright Act nationwide and finding predominance and superiority satisfied for the 23(b)(3) class.
- The Ninth Circuit vacated the 23(b)(3) certification because the district court misapplied California’s governmental‑interest choice‑of‑law test (other states’ laws—particularly non‑repealer states—apply and swamp predominance); it also vacated the 23(b)(2) certification and remanded for reconsideration in light of this court’s decision in FTC v. Qualcomm.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether California law can be applied to a nationwide indirect‑purchaser damages class (choice of law / predominance) | California has sufficient contacts and its Cartwright Act should govern the class so common issues predominate | California’s choice‑of‑law test was misapplied; many states (especially Illinois‑Brick non‑repealer states) have different laws and interests that preclude a single nationwide rule | Vacated 23(b)(3): district court erred—other states’ laws (non‑repealer and varied repealer statutes) must be considered; choice‑of‑law differences defeat predominance and the nationwide damages class must be reexamined on remand |
| Whether state law variations among repealer states are immaterial to certification | Repealer states are similar enough that a single class can proceed under California law | Repealer statutes differ materially (scope, who may sue, damages remedies); these differences undermine predominance | Held that differences among repealer states are relevant; court directed the district court to reanalyze which states’ laws apply and whether common issues still predominate |
| Effect of this court’s FTC v. Qualcomm decision on class certification and merits (antitrust liability) | FTC v. Qualcomm does not resolve class certification; further development on the record is needed before deciding certification under Rule 23 | FTC v. Qualcomm undermines Plaintiffs’ core liability theory and may preclude class certification or dismissal | Court declined to resolve dismissal on appeal; vacated 23(b)(2) and remanded so the district court can reconsider certification (Rule 23(a) and (b)) in light of FTC v. Qualcomm |
| Appropriateness of Rule 23(b)(2) injunctive class given alleged conduct | Qualcomm’s practices are generally applicable and injunctive relief is appropriate for the class as a whole | FTC v. Qualcomm found many challenged practices not unlawfully anticompetitive; some exclusive deals ended long ago, undermining a uniform injunction | Vacated 23(b)(2) certification for reconsideration on remand in light of FTC v. Qualcomm; court did not decide merits of injunction here |
Key Cases Cited
- FTC v. Qualcomm Inc., 969 F.3d 974 (9th Cir. 2020) (held Qualcomm’s SEPs licensing and certain Apple agreements were not unlawful under the Sherman Act and vacated district court’s injunction)
- Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) (applied California governmental‑interest choice‑of‑law test and vacated nationwide class where state laws materially differed)
- Senne v. Kan. City Royals Baseball Corp., 934 F.3d 918 (9th Cir. 2019) (applied choice‑of‑law principles to class certification in labor context)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) (federal courts apply forum state’s choice‑of‑law rules)
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) (bars antitrust damages suits by indirect purchasers under federal law)
- Apple Inc. v. Pepper, 139 S. Ct. 1514 (2019) (discussed standing of direct purchasers under federal antitrust law)
- Wal‑Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (Rule 23(a) commonality and rigorous analysis at certification)
- Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455 (2013) (merits questions may be considered at class certification only insofar as they bear on Rule 23 prerequisites)