The U.S. Court of Appeals for the Ninth Circuit is going to weigh in on a $5 billion consumer class action against Qualcomm Inc. over its IP licensing practices.
A two-judge motions panel granted Qualcomm’s petition for an interlocutory appeal on Wednesday. Qualcomm asked the Ninth Circuit to intervene last October, saying the class of some 250 million cellphone purchasers is unprecedented and that U.S District Judge Lucy Koh, who is overseeing the case, had “casually dismissed the due-process and manageability issues” it would present.
The order comes as Koh is hearing a bench trial in the Federal Trade Commission’s antitrust case against Qualcomm, which accuses the chip giant of inflating mobile device prices through heavy-handed licensing tactics.
The consumer class relies on many of the same antitrust theories advanced by the FTC. Trial in the class action had been scheduled for June, but Koh stayed the case Wednesday, pending a ruling from the Ninth Circuit.
Wednesday’s order was issued without substantive comment and is not a ruling on the merits, which will probably be decided by a different panel of judges. Still, it’s a likely signal that at least one of the judges had some concerns about the class certification order, said Ben Feuer of the California Appellate Law Group.
“The Ninth Circuit has definitely been smacked down for allowing unusually large or unwieldy class actions in the past,” said Feuer, a former Ninth Circuit clerk, pointing to Wal-Mart Stores v. Dukes as one example. Feuer said he “wouldn’t be delighted” if he were in the consumers’ shoes.
The consumers accuse Qualcomm of having inflated prices by, among other things, threatening to cut off the supply of cellphone modem chips to manufacturers who balk at licensing Qualcomm patents that are essential to meeting wireless industry standards. Consumers and the FTC call the practice “no license, no chips.”
Koh certified a class of nearly 250 million purchasers last September, describing the evidence they advanced as “substantial,” “strong” and “compelling.”
Qualcomm went to the Ninth Circuit the next month. Koh’s analysis was “deficient in process, reasoning, and result,” the company argued in a petition signed by Keker, Van Nest & Peters partner Robert Van Nest.
Specifically, Van Nest accused Koh of improperly applying California antitrust law to a nationwide class contrary to Ninth Circuit precedent; relying on a “pass-through” theory that other courts have rejected, and dismissing due process and manageability concerns.
The consumers are led by Susman Godfrey partner Kalpana Srinivasan and Cotchett, Pitre & McCarthy partner Joseph Cotchett. They argued that Koh’s order was correct and that any appeal could have waited until after trial. “If ever a defendant had the resources to litigate a class action through trial and appeal if it so chooses, it is Qualcomm,” Srinivasan had argued in opposition.