Karen Stromberg v. Qualcomm Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KAREN STROMBERG; SAMUEL No. 19-15159
ROECKER; THOMAS LAMMEL; MARY
GALLOWAY; DANIELLE LAGRAVE; D.C. No.
THOMAS MCMAHON; BOARDSPORTS 5:17-md-02773-
SCHOOL LLC; PATRICK BENAD; LHK
LINDSEY CARR; RENEE ACOSTA;
PATRICIA BURNESS; CAROL HARRIS;
ROBERT LINKS; NICHELLE LYONS; OPINION
NUALA VIGNOLES; RACHEL L.
MILLER; JOHN WILLIAM KIEFER III;
MATTHEW MITCHELL; SUSAN
GONZALEZ-PENDER; TERESE
RUSSELL; SARAH KEY; DALIA
ZATLIN; BETH CRANDALL; CLARISSA
SIMON; KENDALL MARTIN; RODRIGO
SAPLA; REBECCA DAVIS; THOMAS
MCMANUS; KIMBERLY SCAVONE;
MELISSA JU; CHRIS THOMPSON;
MARTHA COUNTESS; KAREN HOOD;
JAIME MARTIN; ADRIAN ESTEBAN;
JEFFREY DAVIS; ERICSSON
BROADBENT; PAUL SCOTT ERVIN;
CARALYN TADA; NAGORE MILES;
BETHANY RISING; JIYING SPENCER;
DAYAN CRUTCHER; CATHERINE
SCHMIDLIN; ALLISON TRIPP;
LINDSAY SMITH; KATIE SMITH;
KIRSTEN LUENZ; LAUREL VENER;
STEPHEN JUDGE; SETH SALENGER;
2 STROMBERG V. QUALCOMM
SCOTT HANSEN; JOSEPH
KOVACEVICH; MICHELLE REYNOLDS;
GEORGE MARUT; JANET ACKERMAN;
ALAN SCHLAIKJER; LORI LANDES;
JOYCE GRANTZ; GABRIELLE KURDT;
JOHN SOLAK; TODD ESPINOSA;
ANDREW WESTLEY; LAURA
HALLAHAN; MARY C. MCDEVITT;
PADRAIC J. BRENNAN; JASON
SCHWARTZ; SUZANNE BLOCK; KEVIN
CALERO; CARLO ENDOZO CARINGAL;
IAN CARSON; ANDRE CRUZ; LUCAS
RANGEL FERREIRA; MASOOD
JAVAHERIAN; DAVID KOPLOVITZ;
BRIAN LETULLE; DEIRDRE
MCELHANEY; CARMEN MINON;
ERICA MINON; GABRIEL MINON;
BETSY SANTIAGO; JAVIER SANTIAGO;
PETER YEE; ALICIA HADNETT;
DANIEL CARROLL; DEBRA GRASL;
AMANDA NEWSOME; DAVID
KREUZER; ARMANDO HERRERA;
EDEN WAGNER; NEIL WAGNER;
ALLAN ROTMAN; SHARI COLE;
PHILLIP JAMES ZACHARIAS; MARY
BETH CUMMINS; GUY SNOWDY;
CYNTHIA BAMBINI; GRANT
HAUSCHILD; DAVID FLOYD; KIM
COUGHLIN; BRANDON FULLER; LISA
PATNODE; NINA BARTOSHEVICH;
LEONIDAS MIRAS; JAMES CLARK,
Plaintiffs-Appellees,
and
STROMBERG V. QUALCOMM 3
JORDIE BORNSTEIN; CORDT BYRNE;
ELLIOT CARTER; JEFF CIOTTI;
DWIGHT DICKERSON; MATTHEW
CHRISTIANSON; LOGAN GRIESEMER;
RYAN HART; WILLIAM HORTON;
STEVE KRUG; GAIL MARGOLIS; KATE
MORTENSEN; ALYSSA NEE;
CHRISTOPHER WHALEN; STEPHAN
FARID WOZNIAK; CHRISTOPHER
ZAYAS-BAZAN; DAVID CARNEY;
JULIE EWALD; TOM PARKIN; BRIAN
DEPPERSCHMIDT; BRANDON STEELE;
KYLE WEBER; CRAIG HOUSENICK;
RYAN MARGULIS; RICHARD RIZZO;
GUY DIETRICH; JEFFREY M. KURZON;
SUSAN NAGY; NICOLAS YOUSIF;
SCOTT FREDERICK; CHARLES POON;
ANDREA HOGAN; TINA HEIM;
MONICA MORROW; MARK
CARDILLO; ALLISON SHIPP;
MICHELLE MACKAY; COLLEEN
SPARKE; JANET SILVERNESS;
MELANIE BARCLAY; TIFFANY RINGO;
HALLIE LINGO; CRYSTAL
HOHENTHANER; DANIEL K.
BRENDTRO; DANIEL DELIER; PAUL
NELSON; CATHERINE KADERAVEK;
KAREN CARLET; DAVID WARING;
LEON THEODORE LIPKA III,
Plaintiffs,
v.
4 STROMBERG V. QUALCOMM
QUALCOMM INCORPORATED,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of California
Lucy H. Koh, District Judge, Presiding
Argued and Submitted December 2, 2019
Submission Withdrawn March 3, 2020
Resubmitted September 21, 2021
San Francisco, California
Filed September 29, 2021
Before: Eugene E. Siler *, Jay S. Bybee, and
Ryan D. Nelson, Circuit Judges.
Opinion by Judge R. Nelson
*
The Honorable Eugene E. Siler Jr., Senior United States Circuit
Judge of the United States Court of Appeals for the Sixth Circuit, sitting
by designation.
STROMBERG V. QUALCOMM 5
SUMMARY **
Antitrust / Class Certification
The panel vacated the district court’s order certifying a
nationwide indirect purchaser class in an antitrust multi-
district litigation seeking injunctive and monetary relief
under §§ 1 and 2 of the Sherman Act and California law
against Qualcomm Incorporated, and remanded for
reconsideration of the plaintiffs’ claims given FTC v.
Qualcomm Inc., 969 F.3d 974 (9th Cir. 2020) (holding that
Qualcomm’s modem chip licensing practices did not violate
the Sherman Act, and there was nothing to be enjoined
because its exclusive dealing agreements with Apple did not
substantially foreclose competition and were terminated
years ago).
The plaintiffs, consumers who bought cellphones,
alleged that Qualcomm maintained a monopoly in modem
chips, harming consumers because the amount attributable
to an allegedly excessive royalty was passed through the
distribution chain to consumers in the form of higher prices
or reduced quality in cellphones. The district court certified
a damages class under Fed. R. Civ. P. 23(b)(3) and an
injunctive relief class under Rule 23(b)(2).
Vacating the Rule 23(b)(3) class certification order, the
panel held that the class was erroneously certified under a
faulty choice of law analysis because differences in relevant
state laws swamped predominance. The panel held that
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
6 STROMBERG V. QUALCOMM
California’s choice of law rules precluded the district court’s
certification of the nationwide Rule 23(b)(3) class because
other states’ laws, beyond California’s Cartwright Act,
should apply. As a result, common issues of law did not
predominate in the class as certified.
The panel vacated the Rule 23(b)(2) class certification
order in light of FTC v. Qualcomm.
The panel instructed that on remand, the district court
should address in the first instance the effect of FTC v.
Qualcomm on class certification, particularly on the classes’
ability to meet the threshold requirements of Rule 23(a) as
well as the viability of plaintiffs’ claims to move forward.
COUNSEL
Robert A. Van Nest (argued), Eugene M. Paige, Steven A.
Hirsch, Cody S. Harris, and Justina Sessions, Keker Van
Nest & Peters LLP, San Francisco, California; Gary A.
Bornstein and Yonatan Even, Cravath Swaine & Moore
LLP, New York, New York; Richard S. Taffet, Morgan
Lewis & Bockius LLP, New York, New York; Willard K.
Tom, Morgan Lewis & Bockius LLP, Washington, D.C.;
Geoffrey T. Holtz, Morgan Lewis & Bockius LLP, San
Francisco, California; for Defendant-Appellant.
Kalpana Srinivasan (argued), Susman Godfrey LLP, Los
Angeles, California; Joseph W. Cotchett (argued), Michael
A. Montaño (argued), Adam Zapala, and Tamarah Prevost,
Cotchett Pitre & McCarthy LLP, Burlingame, California;
Marc M. Seltzer (argued), Steven G. Sklaver, Amanda Bonn,
Oleg Elkhunovich, Krysta Kauble Pachman, and Lora
Krsulich, Susman Godfrey LLP, Los Angeles, California;
STROMBERG V. QUALCOMM 7
Joseph Grinstein, Susman Godfrey LLP, Houston, Texas;
Katherine M. Peaslee, Susman Godfrey LLP, Seattle,
Washington; Steve W. Berman, Hagens Berman Sobol
Shapiro LLP, Seattle, Washington; Jeffrey D. Friedman and
Rio S. Pierce, Hagens Berman Sobol Shapiro LLP, Oakland,
California; for Plaintiffs-Appellees.
Mary Helen Wimberly (argued) and Kristen C. Limarzi,
Attorneys; William J. Rinner, Chief of Staff and Senior
Counsel; Michael F. Murray, Deputy Assistant Attorney
General; Andrew C. Finch, Principal Deputy Assistant
Attorney General; Makan Delrahim, Assistant Attorney
General; Antitrust Division, United States Department of
Justice, Washington, D.C.; Jeff Landry, Attorney General;
Elizabeth Baker Murrill, Solicitor General; Louisiana
Department of Justice, Baton Rouge, Louisiana; Dave Yost,
Attorney General; Benjamin M. Flowers, State Solicitor;
Office of the Attorney General, Columbus, Ohio; Ken
Paxton, Attorney General; Kyle Hawkins, Solicitor General;
Office of the Attorney General, Austin, Texas; for Amici
Curiae United States of America and States of Louisiana,
Ohio, and Texas.
Kevin G. Clarkson, Attorney General, Office of the Attorney
General, Anchorage, Alaska; Eric Schmitt, Attorney
General, Office of the Attorney General, Jefferson City,
Missouri; for Amici Curiae States of Alaska and Missouri.
Ashley C. Parrish and Joshua N. Mitchell, King & Spalding
LLP, Washington, D.C.; Steven P. Lehotsky and Jonathan
D. Urick, U.S. Chamber Litigation Center, Washington,
D.C.; for Amicus Curiae Chamber of Commerce of the
United States of America.
8 STROMBERG V. QUALCOMM
Richard A. Samp and Cory L. Andrews, Washington Legal
Foundation, Washington, D.C., for Amicus Curiae
Washington Legal Foundation.
Randy M. Stutz, American Antitrust Institute, Washington,
D.C., for Amicus Curiae American Antitrust Institute.
Steven N. Williams, Joseph Saveri Law Firm Inc., San
Francisco, California, for Amici Curiae Choice of Law
Professors.
Scott Martin, Hausfeld LLP, New York, New York, for
Amici Curiae Economists and Professors.
Leslie A. Brueckner and Stephanie K. Glaberson, Public
Justice P.C., Oakland, California; Jefffrey R. White and
Amy L. Brogioli, American Association for Justice,
Washington, D.C.; Richard A. Koffman, Emmy L. Levens,
and Bo Uuganbayar, Cohen Milstein Sellers & Toll PLLC,
Washington, D.C.; Sandeep Vaheesan, Open Markets
Institute, Oakland Park, Florida; for Amici Curiae Public
Justice P.C., American Association for Justice, and Open
Markets Institute.
STROMBERG V. QUALCOMM 9
OPINION
R. NELSON, Circuit Judge:
Qualcomm Incorporated seeks interlocutory review of
the district court’s order certifying a nationwide class of up
to 250 million class members in an antitrust multi-district
litigation raising claims under the Sherman Act and
California state law. Because the district court erred in its
choice of law analysis and in light of FTC v. Qualcomm Inc.,
969 F.3d 974 (9th Cir. 2020), we vacate the class
certification order. On remand, the district court should
reconsider the viability of Plaintiffs’ claims given FTC v.
Qualcomm.
I
A
With its principal place of business in California,
Qualcomm is a global leader in cellular technology. Over
the years, Qualcomm has contributed notable technological
innovations to modern cellular communication standards
and holds thousands of cellular patents.
Some of Qualcomm’s patents are standard essential
patents (“SEPs”) covering technology that international
standard-setting organizations (“SSOs”) incorporated into
cellular communication standards, such as 3G CDMA or 4G
LTE. SSOs “are global collaborations of industry
participants that establish technical specifications to ensure
that products from different manufacturers are compatible
with each other.” FTC v. Qualcomm, 969 F.3d at 982–83
(internal quotation marks and citations omitted).
Manufacturers and suppliers must use technology covered in
Qualcomm’s SEPs if they want to practice 3G CDMA or 4G
10 STROMBERG V. QUALCOMM
LTE standards. Thus, a manufacturer or supplier wanting to
comply with 3G CDMA or 4G LTE standards will infringe
on Qualcomm’s SEPs unless they license those SEPs.
Before incorporating patented technology into a
standard, SSOs require that patent holders commit to license
their SEPs on fair, reasonable, and non-discriminatory
(“FRAND”) terms. FRAND commitments safeguard
against abuses like “patent holdup,” through which a SEP
holder demands excessive royalties from suppliers and
manufacturers of standard-compliant products and services.
See Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 876
(9th Cir. 2012) (citation omitted).
Qualcomm licenses its cellular patent portfolio,
including its SEPs, to original equipment manufacturers
(“OEMs”) with products, like cellphones, that incorporate
Qualcomm’s patented technologies. Though Qualcomm
licenses its patents at the level of completed cellphone
devices, it does not license its patents at the level of any
given cellphone component. When Qualcomm licenses its
patents, it receives a royalty that is typically 5% of the
device’s wholesale net selling price.
Besides licensing technology, Qualcomm also designs
and sells semiconductor devices known as modem chips
(“chips”) to OEMs. Chips enable cellphones to connect with
cellular networks as well as provide other functions.
Qualcomm is the leading supplier of CDMA and premium
LTE chips worldwide.
B
In a separate action brought in January 2017, the Federal
Trade Commission (“FTC”) sued Qualcomm, alleging that
Qualcomm engaged in unfair methods of competition in
STROMBERG V. QUALCOMM 11
violation of the Federal Trade Commission Act (“FTCA”)
and the Sherman Act. Afterward, many follow-on consumer
antitrust class actions were filed against Qualcomm,
generally alleging that Qualcomm’s conduct violated federal
and state antitrust and consumer protection laws based on
similar claims of anti-competitive conduct. The Judicial
Panel on Multidistrict Litigation centralized these consumer
class actions as a consolidated class action in the United
States District Court for the Northern District of California
before the same judge presiding over the separate FTC
action.
Plaintiffs in this multidistrict litigation are consumers
who bought cellphones and allege that Qualcomm
maintained a monopoly in chips by: (1) engaging in a “no-
license-no-chips” policy by which Qualcomm sold chips
only to OEMs that paid above-FRAND royalty rates to
license Qualcomm’s SEPs; (2) refusing to license its SEPs
to rival chip suppliers; and (3) entering into exclusive
dealing arrangements with Apple that prevented rival chip
suppliers from competing with Qualcomm to supply Apple’s
chip demand. Plaintiffs contend these practices harmed
consumers because the amount attributable to the allegedly
excessive royalty—the amount above the FRAND royalty—
was passed through the distribution chain to consumers in
the form of higher prices or reduced quality in cellphones.
Plaintiffs seek injunctive and monetary relief against
Qualcomm, asserting violations of Sections 1 and 2 of the
Sherman Act as well as California’s Cartwright Act and
Unfair Competition Law (“UCL”).
Sections 1 and 2 of the Sherman Act are “particularly
‘important to the preservation of economic freedom and our
free-enterprise system.’” FTC v. Qualcomm, 969 F.3d
at 988 (quoting United States v. Topco Assocs., Inc.,
12 STROMBERG V. QUALCOMM
405 U.S. 596, 610 (1972)). Section 1 prohibits “[e]very
contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the
several States.” 15 U.S.C. § 1. Section 2 also makes it
illegal to “monopolize any part of the trade or commerce
among the several States.” Id. § 2. Direct purchasers—
meaning those who buy the relevant product directly from
the alleged antitrust violator—can bring antitrust suits for
treble damages under the Sherman Act. See id. § 15. But
the Supreme Court has long held that indirect purchasers—
meaning those who purchase the relevant product through
middlemen—are barred from seeking damages for alleged
Sherman Act violations. See Ill. Brick Co. v. Illinois,
431 U.S. 720 (1977). Here, Plaintiffs are “indirect
purchasers who are two or more steps removed from
[Qualcomm] in a distribution chain” and thus cannot seek
damages for the alleged Sherman Act violations. See Apple
Inc. v. Pepper, 139 S. Ct. 1514, 1520 (2019) (emphasis
omitted).
After the Supreme Court’s Illinois Brick decision, many
states enacted Illinois Brick repealer laws, authorizing
indirect purchasers to bring antitrust damages suits under
state laws. For instance, California’s Cartwright Act, though
modeled after the Sherman Act, permits indirect purchasers
to bring antitrust claims and recover treble damages. Cal.
Bus. & Prof. Code § 16700 et seq. Currently, thirty-five
states and the District of Columbia effectively repealed
Illinois Brick (known as “repealer states”) in one form or
another, but fifteen states have not (known as “non-repealer
states”). See Practical Law Antitrust, State Illinois Brick
Repealer Laws Chart, Westlaw, https://bit.ly/3foROqr.
In addition to the Sherman Act and California’s
Cartwright Act, Plaintiffs brought a claim under California’s
STROMBERG V. QUALCOMM 13
UCL, Cal. Bus. & Prof. Code § 17200 et seq., which
generally prohibits any “unlawful, unfair or fraudulent”
conduct. Id. § 17200. Plaintiffs’ UCL claim is based on the
Sherman and Cartwright Act violations. See Cel-Tech
Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 539–
40 (Cal. 1999) (explaining that the UCL “borrows violations
of other laws and treats them as unlawful practices that the
unfair competition law makes independently actionable”
(internal quotation marks and citation omitted)). Because
neither party identified any material difference between the
federal and state claims beyond the availability of damages,
the district court generally treated Plaintiffs’ state law claims
together with the federal claims.
C
Plaintiffs sought certification under Federal Rule of Civil
Procedure 23 (“Rule 23”) for an indirect purchaser class
comprising “[a]ll natural persons and entities in the United
States who purchased, paid for, and/or provided
reimbursement for some or all of the purchase price for all
UMTS, CDMA (including CDMAone and cdma2000)
and/or LTE cellular phones . . . for their own use and not for
resale from February 11, 2001 . . . .” This class would
number between 232.8 and 250 million people, and the
lower bound on damages to the consumer class was
estimated as $4.84 billion. Opposing class certification,
Qualcomm argued that (1) Plaintiffs provided no model that
could prove antitrust impact using common evidence on a
class-wide basis; (2) the proposed class’s size and
heterogeneity violated due process, was unmanageable, and
therefore not superior; and (3) indirect purchasers in non-
repealer states lack standing to seek antitrust damages.
The district court certified Plaintiffs’ class under Rule
23(b)(2) and (b)(3). Because the Cartwright Act mirrors
14 STROMBERG V. QUALCOMM
federal antitrust law, Plaintiffs’ UCL claim is premised at
least in part upon the Sherman and Cartwright Act
violations, and the parties did not identify any material
differences between the federal and state claims, the district
court treated Plaintiffs’ federal and state law claims together
when certifying the class. After concluding that the
proposed class satisfied the requirements of Rule 23(a), the
district court held that the proposed class satisfied Rule
23(b)(3)’s predominance and superiority requirements. As
to predominance, the district court concluded that common
questions predominate overall and as to the elements of the
federal antitrust claim—particularly, as to antitrust violation,
antitrust impact, and damages.
The district court also concluded that Plaintiffs can seek
damages on behalf of the entire nationwide class under the
Cartwright Act. In so concluding, the district court applied
California’s choice of law rules and determined that
California has sufficient contacts with the claims of each
class member. The district court then applied California’s
three-step governmental interest test to determine whether
other state law, besides California law, should apply.
Applying that test, the district court first concluded that non-
repealer states’ antitrust laws were materially different from
California’s Cartwright Act on the issue of damages
recovery. The district court then determined that California
has an interest in applying its law to this case because
Qualcomm is a California business and the Cartwright Act
(by allowing damages recovery) benefits consumers. But,
according to the district court, non-repealer states have no
interest in applying their laws here because non-repealer
laws disadvantage resident consumers and are not intended
to protect out-of-state businesses. As a result, the district
court held that California’s Cartwright Act applied to the
STROMBERG V. QUALCOMM 15
nationwide class, allowing the consumer class to sue for
antitrust damages under Rule 23(b)(3).
Besides certifying the class under Rule 23(b)(3), the
district court certified a Rule 23(b)(2) injunctive relief class.
According to the district court, the class satisfied 23(b)(2)’s
requirements because Qualcomm’s allegedly
anticompetitive conduct—i.e., the practices to be enjoined—
are generally applicable to the whole class.
Qualcomm seeks interlocutory review under Rule 23(f)
of the district court’s class certification order. On appeal,
Qualcomm challenges the district court’s finding of Rule
23(b)(3) predominance, arguing that antitrust impact cannot
be shown by common evidence, the class improperly
includes millions of iPhone purchasers suffering no antitrust
impact, and California law cannot apply to the nationwide
class. Qualcomm also argues that the class is unmanageable
and not a superior method of adjudicating the claims as
required by Rule 23(b)(3) and that the class failed to meet
Rule 23(b)(2)’s requirements for injunctive relief.
After this case was submitted, this court issued its
opinion in FTC v. Qualcomm, 969 F.3d 974. We directed
the parties to file supplemental briefs addressing the effect
of that decision, if any, on this case. Qualcomm urges us to
remand to the district court with instructions to dismiss
because FTC v. Qualcomm means that Plaintiffs lack any
viable foundation for their claims. Plaintiffs argue that FTC
v. Qualcomm does not affect this Rule 23(f) interlocutory
appeal and that the impact, if any, of FTC v. Qualcomm on
Plaintiffs’ claims requires further development before this
court can weigh in.
16 STROMBERG V. QUALCOMM
II
We review the district court’s class certification rulings
for abuse of discretion and “review for clear error any
findings of fact the district court relied upon in its
certification order.” Senne v. Kan. City Royals Baseball
Corp., 934 F.3d 918, 926 (9th Cir. 2019). “A district court
abuses its discretion where it commits an error of law, relies
on an improper factor, omits a substantial factor, or engages
in a clear error of judgment in weighing the correct mix of
factors.” Id. (citing Stockwell v. City & Cnty. of San
Francisco, 749 F.3d 1107, 1113 (9th Cir. 2014)). A district
court’s choice of law determination is reviewed de novo, but
its underlying factual findings are reviewed for clear error.
Zinser v. Accufix Rsch. Inst., Inc., 253 F.3d 1180, 1187 (9th
Cir. 2001), amended 273 F.3d 1266 (9th Cir. 2001).
III
Rule 23 governs class certification. “The party seeking
class certification has the burden of affirmatively
demonstrating that the class meets the requirements of
[Rule] 23.” Mazza v. Am. Honda Motor Co., 666 F.3d 581,
588 (9th Cir. 2012) (citing Wal-Mart Stores, Inc. v. Dukes,
564 U.S. 338, 350 (2011)). As a threshold matter, a class
must first meet the four requirements of Rule 23(a):
(1) numerosity, (2) commonality, (3) typicality, and
(4) adequacy of representation. Senne, 934 F.3d at 927. In
addition to Rule 23(a)’s requirements, the class must meet
the requirements of at least one of the “three different types
of classes” set forth in Rule 23(b). Id. (quoting Leyva v.
Medline Indus., Inc., 716 F.3d 510, 512 (9th Cir. 2013)). On
appeal, Qualcomm does not contest that Plaintiffs met Rule
23(a)’s requirements; rather, it contests class certification
under Rule 23(b)(3) and (b)(2).
STROMBERG V. QUALCOMM 17
Under Rule 23(b)(3), a court must find that “the
questions of law or fact common to class members
predominate over any questions affecting only individual
members, and that a class action is superior to other available
methods for fairly and efficiently adjudicating the
controversy.” This “inquiry focuses on ‘the relationship
between the common and individual issues’ and ‘tests
whether proposed classes are sufficiently cohesive to
warrant adjudication by representation.’” Vinole v.
Countrywide Home Loans, Inc., 571 F.3d 935, 944 (9th Cir.
2009) (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011,
1022 (9th Cir. 1998)).
Rule 23(b)(2), however, requires that “the party
opposing the class has acted or refused to act on grounds that
apply generally to the class, so that final injunctive relief or
corresponding declaratory relief is appropriate respecting
the class as a whole.” Rule 23(b)(2) “requirements are
unquestionably satisfied when members of a putative class
seek uniform injunctive or declaratory relief from policies or
practices that are generally applicable to the class as a
whole.” Parsons v. Ryan, 754 F.3d 657, 688 (9th Cir. 2014)
(citing Rodriguez v. Hayes, 591 F.3d 1105, 1125 (9th Cir.
2010)).
Qualcomm asserts that the class did not meet the
requirements of Rule 23(b)(2) and (b)(3). Even though
Qualcomm raises various 23(b)(3) predominance arguments
on appeal, we hold that the 23(b)(3) class was erroneously
certified under a faulty choice of law analysis because
differences in relevant state laws swamp predominance.
Therefore, we vacate the 23(b)(3) class certification order.
We also vacate the 23(b)(2) class certification order in light
of FTC v. Qualcomm. On remand, the district court should
address in the first instance the effect of FTC v. Qualcomm
18 STROMBERG V. QUALCOMM
on certification, particularly on the 23(b)(3) and (b)(2)
classes’ ability to meet the threshold requirements of Rule
23(a) as well as the viability of Plaintiffs’ claims to move
forward. 1
A
After considering Qualcomm’s various arguments, we
hold that most fundamentally the district court failed to
properly analyze California’s choice of law rules to
determine the applicable state laws. When properly
analyzed, California’s choice of law rules preclude the
district court’s certification of the 23(b)(3) class because the
laws of other states—beyond California’s Cartwright Act—
should apply. As a result, common issues of law do not
predominate in the class as currently certified.
“Understanding which law will apply before making a
predominance determination is important when there are
variations in applicable state law.” Zinser, 253 F.3d at 1189.
“[V]ariances in state law [can] overwhelm common issues
and preclude predominance for a single nationwide class.”
Mazza, 666 F.3d at 596. To determine which laws will apply
and consequently whether 23(b)(3) predominance can be
met, courts must conduct a choice of law analysis.
When state claims are brought, federal courts apply the
choice of law rules of the forum state—here, California. See
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496
(1941). Under California’s choice of law rules, the class
1
Because we vacate and remand the 23(b)(2) class so the district
court can reconsider certification given FTC v. Qualcomm, we need not
reach Qualcomm’s argument that the 23(b)(2) class failed to meet the
Rule 23(b)(2) cohesiveness requirement, which—as Qualcomm later
concedes in its reply brief—we rejected in Senne, 934 F.3d 918.
STROMBERG V. QUALCOMM 19
action proponent bears the initial burden to show that
application of California law is constitutional on the basis
that California has “‘significant contact or significant
aggregation of contacts’ to the claims of each class
member.” Mazza, 666 F.3d at 589–90 (quoting Wash. Mut.
Bank v. Superior Court, 15 P.3d 1071, 1081 (Cal. 2001)
(citations omitted)). “Once the class action proponent makes
this showing, the burden shifts to the other side to
demonstrate ‘that foreign law, rather than California law,
should apply to class claims.’” Mazza, 666 F.3d at 590(quoting Wash. Mut. Bank, 15 P.3d at 1081).
California law cannot apply to the class claims if the
interests of other states outweigh California’s interest.
Mazza, 666 F.3d at 590. To make this determination, courts
use California’s three-step governmental interest test. Id.“First, the court determines whether the relevant law of each
of the potentially affected jurisdictions with regard to the
particular issue in question is the same or different.” Chen
v. Los Angeles Truck Ctrs., LLC, 444 P.3d 727, 730 (Cal.
2019) (citations omitted). “Second, if there is a difference,
the court examines each jurisdiction’s interest in the
application of its own law under the circumstances of the
particular case to determine whether a true conflict exists.”
Id. at 730–31 (citations omitted). Finally, “if the court finds
that there is a true conflict, it carefully evaluates and
compares the nature and strength of the interest of each
jurisdiction in the application of its own law to determine
which state’s interest would be more impaired if its policy
were subordinated to the policy of the other state, and then
ultimately applies the law of the state whose interest would
be the more impaired if its law were not applied.” Id. at 731
(internal quotation marks and citations omitted).
20 STROMBERG V. QUALCOMM
As an initial matter, the district court correctly concluded
that California has a constitutionally sufficient aggregation
of contacts to the claims of each class member. Qualcomm’s
principal place of business is in California; the class includes
residents of California as well as indirect purchasers who
bought cellphones in California; and Qualcomm made
business decisions and negotiated licenses related to its
allegedly anticompetitive conduct in California. See Mazza,
666 F.3d at 590 (citing Clothesrigger, Inc. v. GTE Corp.,
236 Cal. Rptr. 605, 612–13 (Ct. App. 1987)). Qualcomm
does not dispute there are sufficient contacts in California.
Instead, it argues that the district court misapplied the three-
step governmental interest test in making its predominance
determination. We agree.
1
There is no dispute that material differences exist
between California’s Cartwright Act and the antitrust laws
of other states. Non-repealer states do not allow indirect
purchasers to bring antitrust damages suits, while repealer
states—like California—do. See supra Section I.B. This
difference is material because it “will spell the difference
between the success and failure of a claim.” Mazza,
666 F.3d at 591. But the district court erred in its analysis at
the first step because it overlooked variations in the antitrust
laws of Illinois Brick-repealer states. Even among the
repealer states, there are significant variations in the scope
of repealer laws. For instance, state repealer laws vary as to
the type of law the repeal applies to; 2 who can sue for
2
Florida, Massachusetts, Missouri, and New Hampshire limit the
repeal to consumer protection statutes. See Mack v. Bristol-Myers
Squibb Co., 673 So. 2d 100, 108 (Fla. Dist. Ct. App. 1996); Ciardi v. F.
Hoffman-La Roche, Ltd., 762 N.E.2d 303, 312 (Mass. 2002); In re
STROMBERG V. QUALCOMM 21
damages; 3 and the amount or type of damages indirect
purchasers can recover. 4 Thus, the district court failed to
“determine[] . . . the relevant law of each of the potentially
affected jurisdictions,” as required under California’s
governmental interest test. Mazza, 666 F.3d at 590 (citation
omitted).
2
The district court also erroneously concluded that “while
California has an interest in applying its law, other states
have no interest in applying their laws to the current
dispute.” In re Qualcomm Antitrust Litig., 328 F.R.D. 280,
313 (N.D. Cal. 2018). True, as the district court noted,
California has an interest in applying its law to regulate and
deter Qualcomm (a resident California corporation) from
allegedly unlawful business activities in California. But
Lithium Ion Batteries Antitrust Litig., No. 13-MD-2420 YGR, 2014 WL
4955377, at *19 (N.D. Cal. Oct. 2, 2014) (quoting Gibbons v. J.
Nuckolls, Inc., 216 S.W.3d 667, 669 (Mo. 2007)); LaChance v. U.S.
Smokeless Tobacco Co., 931 A.2d 571, 582 (N.H. 2007).
3
Though Illinois allows indirect purchaser recovery, it precludes
class actions brought by indirect purchasers. 740 Ill. Comp. Stat.
Ann. 10/7. And, as another example, Alaska, Arkansas, Colorado, and
Idaho limit indirect purchaser claims to suits brought by the state
attorney general. See Alaska Stat. Ann. § 45.50.577(i); Ark. Code Ann.
§ 4-75-315(b); Colo. Rev. Stat. Ann. § 6-4-111(2); Idaho Code Ann.
§ 48-108(2).
4
For instance, Hawaii only permits indirect purchaser suits for
compensatory damages. Haw. Rev. Stat. Ann. § 480-13(a)(1).
Minnesota, New York, Rhode Island, South Dakota, and Vermont either
encourage or require that courts take steps necessary to avoid duplicative
recovery. Minn. Stat. Ann. § 325D.57; N.Y. Gen. Bus. Law § 340(6);
6 R.I. Gen. Laws § 6-36-7(d); S.D. Codified Laws § 37-1-33; Vt. Stat.
Ann. tit. 9 § 2465(b).
22 STROMBERG V. QUALCOMM
other states, including non-repealer states, have an interest
in how their markets are managed and how best to enforce
antitrust violations and regulate commerce in their states.
This court has not yet addressed California choice of law
analysis in the antitrust context. Cf. AT & T Mobility LLC v.
AU Optronics Corp., 707 F.3d 1106 (9th Cir. 2013)
(addressing only the constitutional limits of choice of law
analysis in an antitrust case, not California choice of law
rules themselves). But we have addressed California choice
of law rules in the tort context, Mazza, 666 F.3d 581, and
labor context, Senne, 934 F.3d 918.
Turning to the tort context in Mazza, Honda, a California
corporation, appealed the district court’s certification of a
nationwide 23(b)(3) class of consumers who alleged
misrepresentation in connection with their purchase of
certain vehicles. 666 F.3d at 587. This court held that the
district court abused its discretion in certifying a class under
California law containing class members who purchased or
leased vehicles in different jurisdictions with materially
different consumer protection laws. Id. at 590. In so doing,
we turned to California’s governmental interest test. Id.at 590–94.
First, we concluded that California law materially
differed from some of the laws of the forty-three other
jurisdictions. Id. at 591.
Second, because the vehicle sales at issue took place in
forty-four different jurisdictions, we held that each state has
a strong interest in applying its own consumer protection
laws to those transactions. Id. at 592. We explained that
federalism provides that “each State may make its own
reasoned judgment about what conduct is permitted or
proscribed within its borders.” Id. at 591 (quoting State
STROMBERG V. QUALCOMM 23
Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 422
(2003)). “[E]very state has an interest in having its law
applied to its resident claimants.” Mazza, 666 F.3d at 592(alteration in original) (citation omitted). We thus concluded
that “states may permissibly differ on the extent to which
they will tolerate a degree of lessened protection for
consumers to create a more favorable business climate for
the companies that the state seeks to attract to do business in
the state.” Id. Likewise, each state has an interest in
balancing the products and prices offered to consumers with
the legal protections afforded to them as well as an interest
in “being able to assure individuals and commercial entities
operating within its territory that applicable limitations on
liability set forth in the jurisdiction’s law will be available to
those individuals and businesses in the event they are faced
with litigation in the future.” Id. at 592–93 (quoting McCann
v. Foster Wheeler LLC, 225 P.3d 516, 534 (Cal. 2010)).
Third, we held that the district court did not adequately
recognize that each foreign state has an interest in applying
its law to transactions within its borders and that foreign
states would be impaired in their ability to calibrate liability
to foster commerce if California law were applied to the
entire class. Mazza, 666 F.3d at 593. The district court
improperly elevated state interest in consumer protection to
a superordinate level while giving too little weight to each
state’s interest in promoting business—the exact type of
outcome the Class Action Fairness Act of 2005 (“CAFA”)
intended to avoid. Id. (citing Findings, CAFA § 2(a)(4),
Pub. L. 109–2, 119 Stat. 4, 5 (2005)). CAFA’s key purpose
was to correct the problem of “false federalism” in which
courts faced with interstate class actions dictate the
substantive law of other states by applying their own laws to
other states. Mazza, 666 F.3d at 593 (quoting S. Rep. No.
109–14, at 61 (2005), 2005 U.S.C.C.A.N. 3, 57).
24 STROMBERG V. QUALCOMM
In Mazza, we explained California recognizes that “with
respect to regulating or affecting conduct within its borders,
the place of the wrong has the predominant interest” and the
“place of the wrong” is said “to be the state where the last
event necessary to make the actor liable occurred.” 666 F.3d
at 593 (internal quotation marks and citations omitted). We
noted that “the last events necessary for liability as to the
foreign class members—communication of the
advertisements to the claimants and their reliance thereon in
purchasing vehicles—took place in the various foreign
states, not in California.” Id. at 594. Thus, the foreign states
had a strong interest in applying their laws to transactions
between their citizens and corporations doing business
within their state. Id. Further, California’s interest in
applying its law to residents of foreign states was attenuated.
Id. California did not need to apply its law to acts taking
place in other states where vehicles were purchased or leased
to achieve its interest in regulating those who do business
within its state. Id. As a result, the Mazza court vacated the
class certification order, concluding that “each class
member’s consumer protection claim should be governed by
the consumer protection laws of the jurisdiction in which the
transaction took place.” Id.In the labor context in Senne, minor league baseball
players brought a class action alleging wage and hour
violations under the Fair Labor Standards Act (“FLSA”) and
California, Arizona, and Florida law. 934 F.3d at 925. As
relevant here, the district court certified a California class
under Rule 23(b)(3) but denied certification for the proposed
Arizona and Florida 23(b)(3) classes. Id. at 926. On appeal,
we used California’s three-step governmental interest test to
determine which laws should apply to the proposed classes.
Id. at 928. We first held that California law should apply to
STROMBERG V. QUALCOMM 25
the 23(b)(3) California class for work performed in
California. Id. at 930–31.
We also reversed the district court’s determination that
choice of law considerations defeated predominance and
adequacy requirements for the proposed Arizona and Florida
23(b)(3) classes. Id. at 933. We held that Arizona law
should govern the Arizona class for work performed in
Arizona, and Florida law should govern the Florida class for
work performed in Florida. Id. at 937. In so holding, we
relied on the California choice of law principle, often used
in tort actions, that a state ordinarily has the predominant
interest in regulating conduct within its own borders. Id.
at 936–37 (citing Mazza, 666 F.3d at 591–92; State Farm,
538 U.S. at 422; McCann, 225 P.3d at 534). Arizona and
Florida wage and hour laws, when applied to work
performed in-state, promotes the states’ chosen balance
between protecting workers and fostering a hospitable
business environment within their states. Senne, 934 F.3d
at 937.
Though this court has not addressed California’s choice
of law rules in the antitrust context, we recently outlined
important antitrust principles in FTC v. Qualcomm, 969 F.3d
974. There, the FTC sued Qualcomm alleging violations of
Section 5 of the FTCA, 15 U.S.C. § 45 et seq., and Sections
1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. Id. at 986.
According to the FTC, Qualcomm violated these statutes by
engaging in anticompetitive conduct—the same conduct
complained of by Plaintiffs here—namely that Qualcomm:
(1) engaged in a “no-license-no-chips” policy by which
Qualcomm sold chips only to OEMs that paid above-
FRAND royalty rates to license Qualcomm’s SEPs;
(2) refused to license its SEPs to rival chip suppliers; and
(3) entered into exclusive dealing arrangements with Apple
26 STROMBERG V. QUALCOMM
that prevented rival chip suppliers from competing with
Qualcomm to supply Apple’s chip demand. See id. at 984–
86. After a ten-day bench trial, the district court ordered a
permanent, worldwide injunction prohibiting Qualcomm’s
core business practices and concluded that “Qualcomm’s
licensing practices are an unreasonable restraint of trade
under § 1 of the Sherman Act and exclusionary conduct
under § 2 of the Sherman Act.” Id. at 986–87 (quoting FTC
v. Qualcomm Inc., 411 F. Supp. 3d 658, 812 (N.D. Cal.
2019)).
On appeal, this court reversed the district court and
vacated its injunction. FTC v. Qualcomm, 969 F.3d at 1005.
We held that Qualcomm’s licensing practices did not violate
the Sherman Act, and the exclusive dealing agreements with
Apple did not substantially foreclose competition and were
terminated years ago; thus, “there is nothing to be enjoined.”
Id. We explained that (1) “Qualcomm’s practice of licensing
its SEPs exclusively at the OEM level does not amount to
anticompetitive conduct in violation of § 2, as Qualcomm is
under no antitrust duty to license rival chip suppliers,” and
“[t]o the extent Qualcomm has breached any of its FRAND
commitments, a conclusion we need not and do not reach,
the remedy for such a breach lies in contract and patent law;”
(2) “Qualcomm’s patent-licensing royalties and ‘no license,
no chips’ policy do not impose an anticompetitive surcharge
on rivals’ modem chip sales;” rather, “these aspects of
Qualcomm’s business model are ‘chip-supplier neutral’ and
do not undermine competition in the relevant antitrust
markets;” and (3) “Qualcomm’s 2011 and 2013 agreements
with Apple have not had the actual or practical effect of
substantially foreclosing competition in the CDMA modem
chip market.” Id. Underlying much of this court’s holding
in FTC v. Qualcomm is the principle that “the antitrust laws,
including the Sherman Act, were enacted for the protection
STROMBERG V. QUALCOMM 27
of competition,” and “actual or alleged harms to customers
and consumers outside the relevant markets are beyond the
scope of antitrust law.” 5 Id. at 993 (cleaned up) (internal
quotation marks and citations omitted).
Here, we have an antitrust case and examine the relevant
state interests considering antitrust principles. Given those
principles, there is no basis for concluding that only
California has an interest. Non-repealer states’ Illinois Brick
laws are designed to regulate antitrust enforcement by
allocating recoverable antitrust damages in a way those
states think best promotes market competition. In other
words, the relevant interests are not simply about the benefit
or harm to resident consumers or liability to resident antitrust
defendants; rather the relevant interests are about harm to the
competitive process and in-state business activity.
As the Supreme Court explained in Apple, 139 S. Ct.
at 1524, “[t]he Illinois Brick Court listed three reasons for
barring indirect-purchaser suits: (1) facilitating more
effective enforcement of antitrust laws; (2) avoiding
complicated damages calculations; and (3) eliminating
duplicative damages against antitrust defendants.” These
reasons underlie non-repealer states’ interests in having their
laws apply here.
Allowing non-repealer states to apply their laws to class
members purchasing cellphones in-state furthers those
5
We recognize that the relevant market was “the market for CDMA
modem chips and the market for premium LTE modem chips,” not the
“much larger market of cellular services generally.” FTC v. Qualcomm,
989 F.3d at 992 (internal quotation marks and citation omitted).
Nevertheless, the point remains that antitrust differs from tort law
because antitrust is designed to protect competition rather than protect
the actual plaintiffs or defendants.
28 STROMBERG V. QUALCOMM
states’ determinations of how to “facilitat[e] more effective
enforcement of antitrust laws.” See id. The decision to bar
indirect purchaser damages recovery is a policy choice
regarding how a state wants antitrust laws to be enforced
within its borders so competition and business can be best
promoted in the state. Non-repealer laws reflect the state
calculation that antitrust enforcement is best served by
having indirect purchasers realize the benefit of antitrust
enforcement outside of court processes. For instance, even
if barred from suing for antitrust damages, indirect
purchasers in non-repealer states can realize the benefit of
antitrust enforcement when direct purchasers recover
antitrust damages and factor that recovery into their pricing
and business activity in-state, which can then be passed
through to consumers in the market.
Applying non-repealer laws to in-state cellphone
purchases would also further state interests in reducing the
risk that transactions within their borders expose businesses
to excessive and “complicated” antitrust litigation with
“duplicative damages” recovery. Id. By lowering this risk,
non-repealer states can attract more business in-state from
entities like Qualcomm (and those who do business with
Qualcomm) by creating a more favorable business
environment. Non-repealer laws can be understood as
choosing to run the risk of under-deterring antitrust violators
over overcompensating plaintiffs and complicating antitrust
enforcement; meanwhile repealer laws, like the Cartwright
Act, take the opposite approach. 6 While the district court
may disagree with non-repealer states’ chosen priorities,
6
The California Supreme Court has explained that the Cartwright
Act weighs “[t]he goal of deterring antitrust violations” over “concerns
that [plaintiffs] may receive a windfall.” Clayworth v. Pfizer, Inc.,
233 P.3d 1066, 1081–83 (Cal. 2010).
STROMBERG V. QUALCOMM 29
federalism forbids a court from “evaluating their underlying
wisdom” or inserting the court’s own preference into choice
of law analysis. Mazza, 666 F.3d at 593. Because non-
repealer states have a clear interest in applying their laws to
class members who purchased cellphones in their state, the
district court erred in concluding that only California has an
interest.
To the extent that, for choice of law purposes, this
antitrust case can be understood as a “tort-like suit[],” AT&T
Mobility, 707 F.3d at 1112, the district court still erred in
concluding non-repealer states have no interest under Mazza.
According to the district court, non-repealer laws are
designed to protect only in-state businesses from excessive
antitrust liability and thus non-repealer states have no
interest here because the sole defendant is an out-of-state
business. Under Mazza, however, the relevant state interest
is not confined to protecting only a resident company from
excessive liability. 666 F.3d at 593. Rather, a state’s
adherence to Illinois Brick may reflect a policy decision
“calibrat[ing] liability to foster commerce” in the state. Id.Thus, non-repealer states have an interest in furthering that
policy by “shielding out-of-state businesses from what the
state may consider to be excessive litigation” through
“applying its law to transactions within its borders.” Id.at 592–93.
The district court also reasoned that non-repealer states
have no interest because the indirect purchaser bar does not
“benefit” their residents. In doing so, the district court
distinguished non-repealer states’ interests at issue
(disadvantaging residents by barring damages) from those
foreign state interests recognized in Mazza (benefitting
residents by imposing liability on out-of-state businesses).
Id. at 591–93. But that reasoning ignores that residents can
30 STROMBERG V. QUALCOMM
still benefit from their state’s non-repealer laws, which
“calibrate liability” to benefit in-state commerce, leading to
“increase in commerce and jobs” and avoiding “higher
prices for consumers or a decrease in product availability.”
See id. at 592–93.
Even though it grounded most of its choice of law
analysis in the tort context, the district court failed to
evaluate state interests as the “place of the wrong.” Id.
at 593 (quoting Hernandez v. Burger, 162 Cal. Rptr. 564,
568 (Ct. App. 1980)). The place of the wrong is “the state
where the last event necessary to make the actor liable
occurred.” Mazza, 666 F.3d at 593 (citations omitted). In
the Mazza class action—where purchasers claimed Honda
misrepresented information while marketing vehicles—the
last events necessary for liability were the “communication
of the advertisements to the claimants and their reliance
thereon in purchasing vehicles.” Id. at 594. In other words,
the place of wrong was “the jurisdiction in which the
transaction took place.” Id. Here, the nationwide class
consists of downstream consumers—individuals who
bought cellphones from various retailers located throughout
the fifty states. The last events giving rise to liability would
be the consumer’s purchase of the cellphone, and thus the
“place of wrong” would be the state where the consumer
bought the cellphone. In most instances for non-California
residents, this would have occurred outside of California.
The place of the wrong, while not always controlling,
“remains a relevant consideration” in California’s
governmental interest test. Hernandez, 162 Cal. Rptr.
at 568. “[W]ith respect to regulating or affecting conduct
within its borders, the place of the wrong has the
predominant interest.” Mazza, 666 F.3d at 593 (quoting
Hernandez, 162 Cal. Rptr. at 568). Here, Illinois Brick laws
STROMBERG V. QUALCOMM 31
regulate antitrust enforcement to affect conduct consistent
with the state’s interest in promoting commerce. In other
words, even under the tort choice of law principles, non-
repealer states have a strong interest in applying their state
laws to Plaintiffs’ claims. Regardless of whether the district
court approaches step two under antitrust or tort principles,
it erred by dismissing non-repealer states’ interest in
applying their laws to in-state cellphone purchases.
3
Because it held that only California had an interest, the
district court failed to determine which states’ interests
would be more impaired if their policies were subordinated
to another state’s law, as required under the third step of the
governmental interest test. This was error.
As discussed above, non-repealer states have a strong
interest in applying their laws to those consumers who
bought cellphones in-state. Likewise, California’s interest is
attenuated where its law is applied to consumers purchasing
cellphones in non-repealer states. By applying California
law to the nationwide class of indirect purchasers, the district
court improperly impaired non-repealer state policy by
allowing California to set antitrust enforcement policy for
the entire country. This is the “false federalism” that CAFA
intended to correct. See Mazza, 666 F.3d at 593 (citing
Findings, CAFA § 2(a)(4); Pub. L. No. 109–2, 119 Stat. 4, 5
(2005) (noting that courts “making judgments that impose
their view of the law on other States and bind the rights of
the residents of those States” is an “abuse[ ]” of class
actions)). Here, more than one state’s law should apply to
the 23(b)(3) class. Mazza, 666 F.3d at 594 (noting the “false
premise that one state’s law must be chosen to apply to all
44 jurisdictions”). The non-repealer laws should control
those purchases occurring in non-repealer states and class
32 STROMBERG V. QUALCOMM
members with purchases in non-repealer states should be
carved out of the 23(b)(3) class. Even among the repealer
states, the various state laws are hardly uniform. Thus, it is
not clear that a single class of all repealer state Plaintiffs
could be certified under Rule 23(b)(3). That said, the district
court should reach that question in the first instance after
reconducting its choice of law analysis starting at step one.
We thus vacate and remand the 23(b)(3) class on choice of
law grounds.
B
As for the 23(b)(2) class, the district court did not specify
which claims that class would be entitled to pursue for
injunctive relief. But the identified variations in state law
regarding when indirect purchasers can sue for antitrust
damages are not implicated in the 23(b)(2) class.
Nonetheless, we also vacate the 23(b)(2) class so that on
remand the district court can reconsider certification of the
entire class given this court’s FTC v. Qualcomm decision,
particularly in light of the threshold requirements of Rule
23(a).
Qualcomm argues that FTC v. Qualcomm requires that
we remand with instructions to dismiss. According to
Qualcomm, that decision bars Plaintiffs from showing,
based on their liability theories, that Qualcomm’s conduct
harmed competition in the relevant markets. But FTC v.
Qualcomm’s effect remains unclear because neither party
adequately addressed the central focus of our Rule 23(f)
review—that is, how the decision affects the class’s ability
to meet Rule 23’s certification requirements.
This case and FTC v. Qualcomm have overlapping facts
and claims, and many of our conclusions in FTC v.
Qualcomm were conclusions of law. Thus, FTC v.
STROMBERG V. QUALCOMM 33
Qualcomm likely has preclusive effect on many issues raised
by Plaintiffs in this case. Ultimately, however, we are not
reviewing a motion to dismiss or motion for summary
judgment. Rather, our jurisdiction in this interlocutory
appeal is limited to class certification under Rule 23(f). 7
“Merits questions may be considered to the extent—but only
to the extent—that they are relevant to determining whether
the Rule 23 prerequisites for class certification are satisfied.”
Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 133 S. Ct. 1184,
1194–95 (2013).
In their supplemental briefs, the parties narrowly focused
on FTC v. Qualcomm’s effect on the class’s ability to meet
Rule 23(b)(3)’s predominance requirement. But before we
can address FTC v. Qualcomm’s effect on Rule 23(b)(3)
requirements, we must determine what state law or laws will
apply to the 23(b)(3) class. That analysis ultimately must
await the district court’s new choice of law analysis on
remand. See supra Section III.A.
Moreover, neither party addressed whether FTC v.
Qualcomm affects Plaintiffs’ ability to meet other class
certification requirements, like Rule 23(a)(2)’s commonality
requirement. See Dukes, 564 U.S. at 352, 359 (concluding
that “proof of commonality necessarily overlaps with
respondents’ merits contention” and that the employee class
could not be certified because it failed to meet Rule
7
This distinction commands the scope of our review. See, e.g.,
Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 457 (2016) (“When, as
here, ‘the concern about the proposed class is not that it exhibits some
fatal dissimilarity but, rather, a fatal similarity—[an alleged] failure of
proof as to an element of the plaintiffs’ cause of action—courts should
engage that question as a matter of summary judgment, not class
certification.’” (quoting Richard A. Nagareda, Class Certification in the
Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 107 (2009))).
34 STROMBERG V. QUALCOMM
23(a)(2)’s commonality requirement by not offering
significant proof that the employer operated under a general
policy of discrimination); Senne, 934 F.3d at 927 (“Class
certification is proper only if the trial court has concluded,
after a ‘rigorous analysis,’ that Rule 23(a) has been
satisfied.” (citations omitted)). Likewise, neither party fully
addressed the effect of FTC v. Qualcomm on the 23(b)(2)
class. Qualcomm mentioned that the 23(b)(2) class could
not be certified after FTC v. Qualcomm because the Apple
agreements were terminated years ago and the remaining
ongoing conduct was held not to be anticompetitive. But we
have held that the class’s ability to meet Rule 23(b)(2)
requirements “does not require an examination of the
viability or bases of the class members’ claims for relief.”
See Parsons, 754 F.3d at 688 (citations omitted). Thus, FTC
v. Qualcomm’s effect on 23(b)(2) certification requirements
remains another open question to be considered on remand.
We concluded in FTC v. Qualcomm that Qualcomm’s
SEP licensing practices, the same practices complained of
here, are lawful and not anticompetitive. 969 F.3d at 1005.
Because Plaintiffs’ arguments in this case overlap with those
brought in FTC v. Qualcomm, there would have to be some
extraordinary difference for Plaintiffs’ claims here to not fail
as a matter of law—for instance, differences between
Sherman Act claims brought by the government versus
private parties, differences between Sherman Act analysis
and other state laws that might apply, or difference in
Plaintiffs’ ability to meet their burden of proof under the rule
of reason. See id.
* * *
While FTC v. Qualcomm may well warrant dismissal of
Plaintiffs’ claims, that issue is not presently before us on
interlocutory appeal. Thus, we vacate the 23(b)(2) class and
STROMBERG V. QUALCOMM 35
remand with instructions for the district court to reconsider
certification of the entire class given FTC v. Qualcomm. If
the district court determines that FTC v. Qualcomm defeats
the class on Rule 23(a) grounds—a threshold requirement
before turning to Rule 23(b)—that would eliminate the need
to reconduct the choice of law analysis for the 23(b)(3) class.
See supra Section II.A. If the class meets Rule 23(a)’s
requirements, then the district court should determine the
effect of FTC v. Qualcomm on the 23(b)(2) class and, after
it has reconducted its choice of law analysis and determined
what state law applies to the class, the effect on the 23(b)(3)
class.
VACATED AND REMANDED.