In re Apple iPhone Antitrust Litigation

United States District Court for the Northern District of California · Property

PropertyFederal Arbitration Actnon-signatory arbitrationequitable estoppelRule 19necessary partyantitrust co-conspiratormotion to compel arbitration

Facts

Plaintiffs alleged that Apple entered an exclusivity agreement with AT&T Mobility, LLC making ATTM the exclusive authorized provider of iPhone voice and data services in the United States for five years and enforcing that exclusivity through SIM locks and undisclosed unlock codes. Plaintiffs alleged Apple and ATTM conspired to monopolize an aftermarket for iPhone voice and data services, and that Apple also monopolized or attempted to monopolize an aftermarket for iPhone applications. Plaintiffs did not name ATTM as a defendant in this action. Apple, a non-signatory to ATTM's wireless service agreement, sought to compel arbitration based on equitable estoppel and also sought dismissal for failure to join ATTM.

Issue

Whether Apple, as a non-signatory, could compel arbitration against Plaintiffs under equitable estoppel on this complaint, and whether ATTM was a necessary party that had to be joined under Rule 19 for the voice-and-data conspiracy claims. The court also had to determine whether joinder of ATTM was feasible.

Rule

A non-signatory defendant may compel arbitration against a signatory plaintiff under equitable estoppel only if two requirements are met: the dispute's subject matter is intertwined with the contract containing the arbitration clause, and the parties' relationship justifies estopping the signatory from denying an obligation to arbitrate with the non-signatory. Under Rule 19(a), an absent party must be joined if complete relief cannot be accorded or if adjudicating the claims requires evaluation of the absent alleged antitrust co-conspirator's conduct in a way that substantially implicates that party's interests. Joinder is feasible unless venue is improper, the absentee is not subject to personal jurisdiction, or joinder would destroy subject matter jurisdiction.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nora Kim bought a smart-home hub in Seattle and separately signed a service contract with Cascadia Wireless Services that contained an arbitration clause. She later sued the hub manufacturer, Harbor Peak Devices, alleging only that Harbor Peak blocked rival home-automation apps through software updates and concealed that restriction from customers. Harbor Peak never signed Cascadia's service contract.

If Harbor Peak moves to compel arbitration based on equitable estoppel, how should the court rule?

Explanation. A non-signatory may compel arbitration against a signatory only if two requirements are met, including that the subject matter of the dispute is intertwined with the contract providing for arbitration. Here, the claims concern the manufacturer's unilateral app restrictions and are not tied to the service contract. The majority opinion denied arbitration on similar reasoning where claims might pertain solely to the manufacturer's solitary conduct and were not alleged to arise from the service agreement.