Last week a N.D. California judge refused to dismiss a long-running class action suit against Apple Inc., despite disqualifying the last remaining named plaintiff. The parties rested Friday in the multi-million dollar antitrust trial accusing Apple of holding a digital-music monopoly, without a lead plaintiff to represent the class.
The case began with three plaintiffs suing Apple nearly ten years ago, but two of them withdrew, and presiding judge, Yvonne Gonzalez Rogers, disqualified the third in the midst of trial. All were disqualified because they had not purchased a product at issue in the case, a covered model iPod, during the class period.
After information came to light that Marianna Rosen, the third named plaintiff, likely had not purchased a covered iPod, Apple filed for dismissal, alleging that plaintiff “suffered no damages and thus lack[ed] standing under Article III of the United States Constitution.”
Judge Rogers agreed that Ms. Rosen’s purchases rendered her “inadequate” to represent the whole class, but declined to dismiss the case because of what she felt was an obligation to “millions of absent class members” to let the case continue if another lead plaintiff could be identified.
After reading an online news story that said the case was close to collapsing for lack of a named plaintiff, Barbara Bennett, a Massachusetts consultant and ice dancer, who purchased a special-edition iPod Nano in 2006, contacted the attorneys suing Apple and offered to help. After an evidentiary hearing and deposition of Ms. Bennett last week, plaintiffs’ counsel moved to appoint Ms. Bennett as class representative.
Apple opposed the motion over the weekend, arguing, inter alia, that adding Ms. Bennett after discovery had closed, during trial, was highly prejudicial. In its brief, Apple cited several cases supporting its argument that the federal rules of civil procedure, as well as constitutional due process, prohibit lawyers from switching clients in the middle of a trial. Apple also noted that “[n]o case cited by Ms. Bennett permits a new plaintiff mid trial. So far as Apple is aware, it is literally unprecedented. It should be denied.”
Despite the dearth of support against a mid-trial replacement, Monday morning, before closing arguments, Judge Rogers appointed Ms. Bennett as the class representative.
Judge Rogers’ decision serves up a number of powerful arguments for appeal, and illustrates many of the problems with consumer class actions. The truth of the matter is that this case proceeded for nearly a year without an adequate class representative representing the millions of other Apple consumers who will never appear in court.
Indeed, at the end of 2013, evidence emerged that some iPod models included in the class definition did not have the software at issue. Despite this new information, the attorneys at Robbins Geller failed to investigate whether or not the named plaintiffs were still members of the class. As a result, from the end of 2013 until this week, plaintiffs’ lawyers proceeded without a plaintiff to protect the class from excessive fees, or the like.
This decision is certainly disheartening news for the defense bar. At bottom, it essentially means that plaintiffs’ attorneys can bring lawsuits without a valid representative, forcing companies to spend millions of dollars defending products that never caused any named plaintiff a problem. If this decision represents a new trend of leniency, it seems likely that we can count on seeing an increase in the already rampant abuse of the system by plaintiffs’ lawyers filing frivolous lawsuits simply to make a quick buck.
Update: After this post was written, the jury returned a verdict in favor of Apple. The eight-person jury was unanimous in its finding that Apple’s iTunes 7.0 was a genuine product improvement, and therefore did not violate antitrust laws.