James S. Dugan, associate, Zelle LLP
In the longstanding In Re Apple iPhone Antitrust Litigation, Case 4-11-cv-06714 (N.D. Cal. filed November 8, 2021), Judge Yvonne Gonzalez Rogers of the Northern District of California issued an order on November 8, 2021, denying the Consumer Plaintiffs’ (“Plaintiffs”) request to file a fourth amended complaint in their monopolization suit against Apple. Plaintiffs sought to add a claim under California’s Unfair Competition Law (“UCL”) following success on a UCL claim in the related action, Epic Games, Inc. v. Apple Inc. (“Epic Games/Apple”). The Court identified various points in the protracted litigation at which Plaintiffs had an opportunity to add such a UCL claim but opted not to. Analyzing the request under Federal Rules of Civil Procedure 15 and 16 (“Rule 15” and “Rule 16”), the Court concluded that allowing a fourth amended complaint would improperly “modify the trial and pre-trial schedule” and “reopen the pleadings for additional Rule 12 motions.” The order provides an instructive analysis of motions for leave to amend when it is not entirely clear whether Rule 15 or Rule 16 governs the request. In addition to denying the request to amend, the Court also denied Apple’s motion to compel Plaintiffs to submit a trial plan.
In Re Apple iPhone Antitrust Litigation was initially filed over a decade ago and suffered additional delay in part due to the COVID-19 pandemic and an appeal to the U.S. Supreme Court, which ruled that app users had standing to sue Apple for the alleged overcharges paid in the App Store. On a number of occasions in the recent history of the litigation, Plaintiffs either amended their complaint without adding a UCL claim or did not request to amend their complaint at all. The Court summarized these instances, beginning with Plaintiffs’ decision not to request to amend in June of 2020 when the parties stipulated to a revised schedule and reset the trial date for July 11, 2022. Similarly, Plaintiffs did not request to amend their complaint in January of 2021, when the briefing schedule was again extended at the parties’ request.
When Plaintiffs did amend, they elected not to include a UCL claim despite such a claim being included in the complaints for two related actions. The complaints in both the Developer Class case and the Epic Games/Apple case included a UCL claim prior to the filing of the Consumer Plaintiffs’ most recent amended complaint. In addition, throughout the preparation for the expedited trial in the Epic Games/Apple case, “the Court repeatedly requested input from the Consumer Plaintiffs and the Developer Plaintiffs including their perspectives on the legal issues being litigated, including the UCL.” However, as the Court recounted, “Not once did the Consumer Plaintiffs request to amend their complaint.”
Following a bench trial in the Epic Games/Apple case, the Court issued an opinion on September 10, 2021, which included “a finding against Apple on the UCL claim.” Shortly thereafter, “counsel for Consumer Plaintiffs filed the instant motion, never really explaining why they never alleged a UCL claim but merely stating that they would be ‘remiss not to,’ given the Court’s decision in the Epic Games/Apple case.”
The Court first had to decide whether the motion for leave to amend should be evaluated under Rule 15 or Rule 16 as the parties disputed which applied in this instance. “Two potential rules apply,” noted the Court: Rule 15(a) which governs “Amendments before Trial” and Rule 16(b) which governs “Modifying a Case Schedule.” “Rule 15(a) generally governs when parties may amend their pleadings and Rule 16(b) governs amendments that would alter the Court’s pretrial schedule.” Apple argued that Rule 16 applied because if the motion was granted it “would result in a change to the Court’s scheduling order.” Plaintiffs countered that Rule 16 did not apply because the Court had not “entered a scheduling order that sets a deadline for amendments to the pleadings.” Noting that the case law within the Northern District was mixed and acknowledging “the lengthy procedural history” of the case, the Court opted to apply both Rule 15 and 16 in evaluating the request.
Rule 16 analysis
“Rule 16 requires diligence and allows changes due to matters not reasonably foreseeable at the time the scheduling order was issued.” The Court was not convinced that diligence could be found in Plaintiffs’ request and swiftly denied it under a Rule 16 analysis. First noting that Rule 16 did apply because “the request to reopen pleadings to add a new claim would entirely disrupt an already tight schedule,” the Court reasoned that “Consumer Plaintiffs have utterly failed to explain their delay in raising this issue.” Analyzing Plaintiffs’ proposed amendments, the Court found that the “three new theories under the UCL and additional remedies” in conjunction with the addition of “generic bald allegations which would be subject to Rule 12 practice” justified a denial of the motion on Rule 16 grounds.
Rule 15 analysis
The Court proceeded to deny the motion under Rule 15 as well. Under Rule 15 the Court weighs five factors in ruling on a motion for leave to amend: (1) bad faith; (2) undue delay; (3) prejudice to the opposing party; (4) futility of the amendment; and (5) whether the movant has previously amended its pleadings to cure deficiencies.
The Court began with prejudice, citing case law for the proposition that “[p]rejudice is the touchstone of the inquiry under Rule 15(a)” and that the “need to reopen discovery” may be an indicator of prejudice. While acknowledging that “the UCL claim overlaps with the facts and theory set out in the operative complaint,” the Court still concluded that additional fact and expert discovery would be required. Further, the Court was not persuaded that briefing on class certification could be done with “succinct supplemental briefing.” Accordingly, the prejudice factor weighed against granting the motion.
The Court then proceeded with the undue delay factor, likewise finding that it weighed against granting the motion. The Court pointed to the numerous opportunities (outlined in the background section above) that Plaintiffs had to add a UCL claim to their complaint and reasoned, “Plaintiffs waited nearly two years after this case had come back to this Court from appeal before seeking leave to add the UCL claim, and only as a result of having read this Court’s decision.”
Discussed next, the futility factor was the first and only significant factor to weigh in favor of granting the motion for leave to amend. Apple argued that the claim for equitable relief under the UCL was futile because there was an adequate remedy at law. Rejecting this, the Court stated that “nothing precludes plaintiffs from seeking restitution under the UCL in the alternative from their other remedies sought” and that the claim was therefore not futile.
Following futility, the Court considered whether the amendment sought was a result of the repeated failure to cure deficiencies by amendments previously allowed. Stating that the “current motion for leave to amend does not seek to cure any deficiency,” the Court concluded that while the factor weighed in favor of granting the motion, it carried “little applicability in this context.”
Lastly, the Court examined the bad faith factor. Citing a sole supporting case, Apple argued that Plaintiffs acted in bad faith by waiting to bring the UCL claim until after the Epic Games/Apple opinion. The Court disagreed, stating that while the motion was unduly delayed, it did not “rise to the level of bad faith.” Despite this, however, the Court could not “discern any credible reason for delay.” Admonishing Plaintiffs’ counsel, the Court stated, “It appears counsel would like to benefit from 20-20 hindsight. Thus, the Court could view the motion as one of gamesmanship or the result of negligence in failing to allege a claim which was found to be successful.” Nonetheless, because there was a lack of bad faith, the Court found the factor to be neutral “in terms of granting the motion.”
Balancing the factors, the Court denied Plaintiffs’ motion under Rule 15: “To find otherwise, would require this Court to entirely modify the trial and pre-trial schedule in this action which already requires the parties to double track pretrial motions and trial preparation, and would reopen the pleadings for additional Rule 12 motions.”
Motion to compel plaintiffs to submit a trial plan
In summary fashion, the Court also denied Apple’s motion to compel Plaintiffs to submit a trial plan under Local Rule 7-11. The Court agreed with Plaintiffs that the motion improperly included “a procedural objection to plaintiffs’ motion for class certification . . . .” Stating that “the gravamen of the motion are arguments for denial of class certification including procedural objections,” the Court granted Plaintiffs’ motion to strike Apple’s motion to compel the submission of a trial plan and thus denied the latter as moot.
What’s next in In Re Apple iPhone Antitrust Litigation
The parties are awaiting a decision on class certification. A hearing on Plaintiffs’ motion for class certification was held on November 16, 2021, but ended without Judge Gonzalez Rogers issuing a ruling.