united states district court northern district of ... · online dvd rental ) no. c 09-2029 (pjh) 7...

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1 UNITED STATES DISTRICT COURT

2 NORTHERN DISTRICT OF CALIFORNIA

3 BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE

4

5 -----------------------------)

)

6 IN RE: )

ONLINE DVD RENTAL ) No. C 09-2029 (PJH)

7 ANTITRUST LITIGATION )

) Oakland, California

8 -----------------------------) Wednesday, March 9, 2011

(43 pages)

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10

11 TRANSCRIPT OF PROCEEDINGS

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13 APPEARANCES:

14

15 For Plaintiffs: Howrey, LLP

1299 Pennsylvania Avenue, N.W.

16 Washington, D.C. 20004

BY: ROBERT G. ABRAMS

17

Spector, Roseman, Kodroff & Willis, PC

18 1818 Market Street

25th Floor

19 Philadelphia, Pennsylvania 19103

BY: EUGENE A. SPECTOR

20

Saveri & Saveri, Inc.

21 706 Sansome Street

San Francisco, California 94111

22 BY: GUIDO SAVERI

23 Berman DeValerio

One California Street

24 Suite 900

San Francisco, California

25 BY: JOSEPH J. TABACCO JR.

Connie Kuhl, Certified Realtime Reporter

Official Reporter - USDC (415) 431-2020

Case4:09-md-02029-PJH Document346 Filed03/09/11 Page1 of 43

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1 APPEARANCES (cont.):

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3 For Defendant: Wilson, Sonsini, Goodrich & Rosati

(Netflix) 1301 Avenue of the Americas

4 40th Floor

New York, New York 10019

5 BY: JONATHAN M. JACOBSON

DYLAN JAMES LIDDIARD

6 MAURA L. REES

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1 Wednesday, March 9, 2011

2 (9:30 a.m.)

3 (In open court)

4 DEPUTY CLERK: 09-2029, In Re: Online DVD Rental

5 Antitrust Litigation.

6 Appearances?

7 MR. ABRAMS: Robert Abrams on behalf of the

8 plaintiffs, your Honor. Good morning.

9 THE COURT: Good morning.

10 MR. JACOBSON: Jonathan Jacobson on behalf of Netflix;

11 with Dylan Liddiard and Maura Rees, also from Wilson Sonsini.


13 MR. SAVERI: Guido Saveri on behalf of the plaintiffs.


15 MR. SPECTOR: Good morning. Eugene Spector on behalf

16 of plaintiffs.


18 MR. TABACCO: Joseph Tabacco on behalf of plaintiffs,

19 your Honor. Good morning.

20 THE COURT: All right. Now this matter's on for

21 hearing on the defendant's -- on Netflix' motion to decertify

22 the class. I've read the papers that you all have submitted

23 and I am prepared to listen to any argument you wish to make.

24 I find this very interesting.

25 MR. JACOBSON: Your Honor, as you know, I have tried




4

1 to be brief, and I'll try to be brief again.

2 This is the first time I think we've been the movant

3 before you. We've usually been the movee, or moved. But let

4 me briefly get into the issues here:

5 The basic reason we're here today is that a single

6 figure, $29 million, was determined to be split between classes

7 having separate lawsuits based on separate claims, and the

8 split necessarily pitted by definition the interests of one of

9 those groups against the other, and yet they were recommended

10 by the same counsel. The Netflix subscribers had an inherent

11 interest in wanting more and wanting the Blockbuster

12 subscribers to get less. The Blockbuster subscribers have a

13 necessary interest in wanting the obvious.

14 Your Honor, I believe that there are no cases before

15 you or that we've ever heard of in which a single figure has

16 been split among two groups without separate counsel being

17 there to represent the two. There have been settlements with

18 different allocations -- I'll get into that in a minute -- but

19 I don't believe there's ever been a case in which a split of a

20 predetermined sum has ever been approved without separate

21 counsel.

22 The only case really that comes close to this is the

23 Ortiz case where that was held -- to acquire separate counsel.

24 Now, there are four arguments that have basically been

25 advanced to uphold the split at issue here, and I want to talk




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1 about them briefly.

2 The first is that the settlement allocation is fair,

3 and plaintiffs cite two cases: City of Seattle, and the

4 Torrisi case, to argue that fairness is enough. And I think

5 that a fair reading of City of Seattle, the proposition is that

6 that proposition was specifically disapproved in Amchem. The

7 Amchem decision holds in the plainest of English that the only

8 fairness that matters is the fairness that results from having

9 separate counsel representing both sides. Those cases do not

10 survive the Amchem decision.

11 Second, plaintiffs rely on cases like Pet Food, and

12 your Honor raised the wage and hour cases of the last hearing

13 in which there have been groups who get different allocations

14 of a settlement amount. Now, none of those cases, to my

15 knowledge, your Honor, involve a split of a predetermined sum.

16 But more important, in each of these cases, the different

17 allocations were based on different extents of a single type of

18 injury.

19 Here we have different injuries being asserted in

20 different lawsuits: Blockbuster subscribers are complaining

21 about effects on Blockbuster subscribers, based on Blockbuster

22 prices, in a separate lawsuit.

23 The Netflix subscribers are complaining about effects

24 on -- based on alleged increases in the prices for Netflix

25 subscriptions. The injuries are different.




6

1 And in Pet Food, and in the wage and hour cases, you

2 may have had different types of issues as to why the extent of

3 the injury was different -- the statute of limitations may have

4 been at variance, there may be a state law statute as opposed

5 to a federal statute -- but fundamentally, to take the wage and

6 hour cases, you have a single employer that was treating

7 employees as exempt when, in effect, they should have been

8 treated on an hourly basis. And the differences in the

9 allocations were based on the extent of the injuries.

10 Same thing in Pet Food; same thing in the insurance

11 brokerage cases. Everyone suffered the same type of injury in

12 a single lawsuit. This is really not different than what you

13 have in every class certification case. In every case, they're

14 different in extent of damages. So in D-RAM, someone who

15 bought 10,000 512-meg chips has a different extent of the

16 injury from someone who bought 100,000 chips. That was never

17 thought to imperil class certification, because the type of

18 injury is the same, it's only the extent that's different. So

19 I don't think those cases provide any support for the split

20 that's at issue here.

21 Now, plaintiffs also try to excuse the process. And I

22 think their argument -- and I have tremendous respect for the

23 lawyers on the other side -- but I think their arguments show a

24 fundamental disregard for the basic issue of adequate

25 representation. The argument that the Blockbuster state case




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1 lawyer approved the settlement, and that that's sufficient, is,

2 with all respect, an insult to the process. That lawyer was

3 not involved in the settlement, had nothing to do with the term

4 sheet. Became involved only at the very end when he wrote a

5 letter to the state court judge stating: I've been excluded

6 from the process. Well, if he'd been excluded from the

7 process, how can his later ratification uphold the process? I

8 just don't think it's a reasonable argument.

9 There's also an argument the individual counsel for

10 the individual plaintiffs were at the fund again after the

11 fact; they weren't involved in the negotiations, but all of

12 these individual counsel are on the long list that you will see

13 on the docket sheet of the counsel representing both the

14 Blockbuster subscribers and the Netflix subscribers. They have

15 the same conflict that lead counsel have.

16 They also want to rely on -- to forgive the process on

17 Judge Phillips' statement the settlement was fair. We're not

18 arguing it was fair or unfair. Our view is that -- you know,

19 is that the right amount here is zero for both groups. But the

20 statement that -- of Judge Phillips that it's fair is no

21 different than the statement of the District Court in Amchem,

22 that the settlement was fair. Or the statement of the district

23 court in Ortiz, that the settlement was fair. Fairness again

24 is determined under Amchem and Ortiz by the process, by having

25 separate counsel represent both sides.




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1 Now, finally, we're told that there should be an

2 arbitration before Judge Legge, and that that will fix the

3 process. And again, that shows the same disrespect for the

4 basic issue that the entire argument has made: The proposed

5 arbitration is one in which lawyers for the Netflix group in

6 the arbitration are ones who are counsel of record in the case

7 representing both sides. And similarly for the Blockbuster,

8 these are lawyers who are counsel of record in these cases for

9 both sides. So to suggest that that is an appropriate fix is,

10 I think, a very difficult argument.

11 The other argument is that this is a litigation class

12 and that there's a difference between that and settlement

13 classes. And there are for certain purposes, but not for

14 adequacy of representation. Adequacy of representation is an

15 element for class certification under Rule 23, whether for

16 litigation purposes or for settlement purposes. The Culver

17 against Milwaukee decision by Judge Posner is a litigation case

18 which upheld a decertification based on the same sort of

19 conflict that we have here.

20 Now, the relief we're asking for you is significant

21 relief. We're asking you to decertify a class that you've

22 already certified. We understand that that's a big ask from

23 us. But Rule 23 doesn't have exceptions for cases where a case

24 has previously been certified based on information that is no

25 longer valid. And the information that we have here




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1 demonstrates that there is no adequacy of representation. The

2 same lawyers have been representing both sides in a context

3 where they split a single figure. And there are no cases that

4 permit that.

5 And it's a problem, further, going forward. If we

6 maintain class certification, what if Netflix -- I don't think

7 we're going to settle these cases. I want to be very, very

8 open with you on that. We just don't think there's any merit

9 to them.

10 But what if we did want to settle with one of the

11 groups and then the other? How would we do that? Given these

12 lawyers are representing both sets of plaintiffs, how would we

13 do that? What would be the argument to separate the

14 Blockbuster subs from the Netflix subs in that context? We're

15 basically being faced with an all-or-nothing proposition.

16 Your Honor, the adequacy of representation problem

17 here is serious, and we respectfully submit that it's fatal.

18 THE COURT: Thank you. Your response?

19 MR. ABRAMS: Good morning, your Honor. Bob Abrams on

20 behalf of plaintiffs.

21 As you read in the briefs, and as you've heard, there

22 are two basic assumptions behind plaintiffs' motion for

23 decertification in the Netflix class. The first one is:

24 There's the conflict between Netflix and Blockbuster

25 subscribers in the settlement.




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1 The second is: Assume there is a conflict -- which we

2 argue and believe there is none. They say that a conflict in

3 the settlement should be remedied by decertifying the

4 litigation class. It's never been done. It doesn't make

5 sense. Any case that deals with the issue deals with, if

6 there's a conflict in the settlement class, you deal with the

7 settlement class. You don't decertify the different class.

8 But I want to speak to the first point first, which is

9 the lack of a conflict in the settlement class. There are

10 three fundamental facts that pertain to that issue, and they're

11 clear in the record. There's no dispute that the Netflix and

12 Blockbuster subscriber claims are common. This court found

13 that they were common. They share common goals, objectives and

14 strategies.

15 Secondly, Netflix concedes -- and this court has made

16 it perfectly clear -- that Blockbuster subscribers have

17 additional hurdles in this case. Standing is one. Class

18 certification is still another. And just yesterday, Netflix

19 filed for summary judgment in the Blockbuster case.

20 Third, Netflix does not argue that the two-to-one

21 allocation -- that's really what we're talking about in the

22 partial settlement with Wal-Mart -- that those moneys do not

23 fairly reflect an appropriate allocation between Blockbuster

24 and Netflix subscribers.

25 So from that foundation, I go to the point that there




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1 is no requirement -- there's no requirement that subclasses

2 have separate representation in class actions. You heard

3 counsel mention, and they dismissed in their papers, Torrisi

4 and City of Seattle on the grounds, largely, that they were

5 before Amchem and Ortiz, the Supreme Court cases. Well, that

6 does not make them bad law. And in fact, it is our position

7 that Amchem and Ortiz support us in what was done with the

8 settlement in this case.

9 THE COURT: But are these two classes really

10 subclasses? Aren't they two separate class actions?

11 MR. ABRAMS: Well --

12 THE COURT: When I think of subclasses, I think of two

13 of -- an umbrella class action with two classes falling under

14 it all filed under the same case number. That's what's on my

15 docket.

16 Here I have two different class actions, two different

17 cases. How does that make them subclasses?

18 MR. ABRAMS: Frankly, they don't have to be

19 subclasses. They could have all been one class, just like you

20 have in Pet Foods, which I will talk about. We did that, we

21 separated them for administrative purposes in the settlement.

22 They didn't have to be separated, they could be one class as

23 opposed to subclasses.

24 These cases were filed, as you say, as two separate

25 cases. This court has recognized, however, that they're




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1 clearly related through the entirety of these proceedings. And

2 in opinions the Court has written and in arguments back and

3 forth from all parties, everybody's recognized it's

4 fundamentally the same claim, except the Blockbuster

5 subscribers' claim is derivative of what happens in the Netflix

6 case. If we prove our case against Netflix, under the umbrella

7 theory, that's how the Blockbuster subscribers will recover

8 damages. That's the basis for them. And if we don't prevail,

9 they won't recover damages.

10 When counsel mentioned Torrisi, he didn't mention

11 that the question was whether separate representation was

12 required, and the Ninth Circuit said no. That's never been

13 changed. Now, when the Supreme Court decided Amchem, there

14 were a number of points made in that opinion that are very

15 significant to today. One is: The settlement and complaint

16 were filed simultaneously. Well, why is that important? It's

17 important because the risks and distinctions between the groups

18 were never explored.

19 In this case, the risks and distinctions between the

20 group have been explored for a year and a half. This court's

21 recognized them, and the parties have recognized them.

22 The Amchem case was aimed at protecting potential

23 plaintiffs whose claim might be extinguished in that case. It

24 was to settle all pending and future asbestos litigation

25 claims, and "pending and future" was the key point in that




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1 case.

2 It was recognized as such in Ortiz, two years later,

3 where the Supreme Court said, quote, "It is obvious after

4 Amchem that a class division between holders of present and

5 future claims, some of the latter involving no physical injury,

6 and to claimants not yet born, requires division into

7 homogeneous subclasses under Rule 23(c)(4)(B), with separate

8 representation to eliminate conflicting interests of counsel."

9 That doesn't mean that in every class action, there

10 have to be -- that has to be separate representation of

11 subclasses.

12 And in Pet Foods the Third Circuit 2010, a case well

13 after Amchem and Ortiz, recognizes that, that the Pet Foods

14 case was the case with tainted pet foods, and there was a

15 purchase owner claims, and there were then injury claims.

16 Settlement was with one class with one set of lawyers. Just

17 like it could have been here. We could have had -- we didn't

18 have to have subclasses. It was an administrative approach.

19 It doesn't substantively matter. But in Pet Foods, there was a

20 $250,000 cap for the purchase-only group. And so objectors

21 came into court and said -- and said, Hey, wait a minute, we

22 didn't get our fair due; we should have had separate counsel,

23 because most of the money is going to the injury group.

24 The Third Circuit said: No. The Third Circuit

25 said -- highlighted two key points:




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1 One, all claims were economic, as they are here; and,

2 all claims were for past damages, as it is here. It wasn't

3 like Amchem or Ortiz when there was a mixture of past and

4 future damages, which was the key point in those Supreme Court

5 decisions.

6 Now, in addition to the focus on past and future

7 claims, Amchem recognized other safeguards. And I mention that

8 because those safeguards were put in place here by us. And I'm

9 going to read you first a sentence from Amchem on the safeguard

10 issue. It's at Page 627, and it says:

11 "The settling parties in sum achieved a global

12 compromise with no structural assurance of fair and adequate

13 representation for the diverse groups and individuals affected.

14 Although the named parties alleged a range of complaints, each

15 served generally as representative for the whole, not for a

16 separate constituency."

17 Well, what did we do here to comport with what the

18 Supreme Court just said in terms of structural safeguards?

19 First, counsel representing only Blockbuster and only Netflix

20 approved and signed the agreement. Now, counsel says, Well,

21 but those are counsel in the state court case for Netflix and

22 for Blockbuster. There are counsel in this case as well, just

23 for Blockbuster or Netflix. They represent those people. And

24 counsel makes it sound like we put a gun to the head of every

25 one of those people to sign the settlement agreement. They




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1 weren't -- that's true, they were not a part of the

2 negotiations. I was a part of the negotiations. There were a

3 few people in the negotiations, because when you have 60 law

4 firms involved, and you have as many plaintiffs as we have, I

5 frankly don't know how to do it otherwise until you strike a

6 deal and then you see if it's acceptable to your group. That's

7 what was done. And it wasn't -- there's no gun to the head of

8 these people, and they all signed it. And they all inquired

9 about it before they did sign it.

10 If they thought two-to-one was unfair, they certainly

11 presumably wouldn't have signed it, and they didn't say it.

12 And if you look at City of Seattle, you'll see that

13 Kravath was the lawyer for Chemical Bank throughout the whole

14 process, for both groups. That wasn't the issue. The issue

15 was: Did you have people that were involved that could

16 represent these groups, and we did.

17 And I would say to the Court, these people were not --

18 clearly not excluded from the process.

19 Secondly, there are eight Netflix class

20 representatives and six Blockbuster class representatives, and

21 they're represented by 13 law firms. Now, Netflix says that

22 those people didn't understand the rights and what was really

23 happening in this settlement. They don't cite any testimony

24 from the 18 depositions they took of those plaintiffs on that

25 point. They talk about Alan Levy, and they give your Honor




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1 some testimony from Alan Levy -- who, by the way, was not on

2 the phone call with counsel when the settlement was explained,

3 so what did he have to do? He had to talk to his lawyer, his

4 individual lawyer, and that's what he did do.

5 And then he made the decision to sign the settlement.

6 And they don't mention Andrea Resnick. Well, she's a

7 class rep; she was a litigation associate at Pillsbury. And

8 she worked for the -- in the law department at the University

9 of California for the past 22 years. She knew her

10 responsibilities and what was entailed here, as do we believe

11 everybody else did because we explained it do them.

12 Third, they say, Well, Judge Phillips, we can just

13 push him aside because his view is sort of -- and they

14 analogize it to the District Court in these cases. He was a

15 neutral mediator. This was a, if you will, a hard-fought

16 mediation to come to a settlement. He was a neutral mediator,

17 paid equally by both sides, and he said the two-to-one ratio,

18 quote, "is a fair reflection of the relative strength of the

19 two subclass's claims."

20 He also shows, by the process that we went through,

21 there was no collusion here, which is the real focus of this

22 kind of inquiry.

23 The next structural point that I would mention to your

24 Honor is that the ultimate allocation depends on who files

25 claims. And by that I mean -- and I -- obviously, this is the




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1 extreme, but if no Netflix subscribers file and all Blockbuster

2 subscribers file, they get all the money. There is -- they say

3 it's a zero sum game. It is not a zero sum game, which is

4 where one client benefits if the other client loses. That's

5 not what this is.

6 Furthermore, the cases say that the Court should

7 consider the challenges that would result from the Netflix

8 approach in reaching a settlement, and I'm referring really to

9 the short word "Balkanization", but I also, when I said that to

10 your Honor last time we were here, I mentioned the Package Ice

11 case, and I read one sentence from it, and I will do so again,

12 with your indulgence, and it is that, quote, "The Court must be

13 skeptical of defendant's motives as it seems unlikely that

14 concerns they raise arise from any legitimate concern to

15 protect the class."

16 And the sixth point I make on the structure is, in

17 Netflix' argument, its practices and the case law says you've

18 got to stop somewhere. You could always divide and subdivide

19 and say this and that. And in fact, Ortiz mentioned that even

20 no allocation is allocation. If all the money went equally to

21 everybody, that's allocation, too. But there's no stopping

22 point, the way Netflix wants to approach it.

23 And your Honor may remember that they -- now they say

24 there's no separate representation required for each type of

25 plan. If you go back to the certification arguments, they said




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1 a separate counsel was required for each of the plans.

2 So you know, there has to be a rational approach to

3 it. There's no preclusion, which is the suggestion by counsel,

4 that you must have separate representation if you have two

5 groups. That is not the case.

6 I'll now turn to the second assumption, which is that

7 even if there is a conflict in the settlement class, which

8 obviously we don't think there is, it doesn't call for the

9 remedy they're seeking of decertification for purposes of

10 litigation. This court already found that "Blockbuster and

11 Netflix subscribers have a common interest in proving the

12 existence of the market allegation agreement, improving the

13 relevant market in online DVD rentals, and that Netflix had a

14 monopoly in the market, and that continued competition from

15 Wal-Mart would have caused prices to be lower."

16 When they say that this conflict and in the settlement

17 should lead to decertification here, they don't give you any

18 legal support, because they don't have any.

19 Secondly, if the courts do find a conflict in the

20 settlement class, the cases say you deal with it in the

21 settlement class. We are -- our position, of course, is there

22 is no conflict to deal with.

23 Thirdly, they're trying to end-run, if your Honor

24 remembers, the standing argument. They didn't have standing to

25 challenge the partial settlement. Well, what this is is an end




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1 run on that.

2 And finally, class counsel at the trial of this case

3 is going to present damages for the Netflix subscribers and

4 damages for the Blockbuster subscribers. They are easy to

5 compute. And as I said, one is -- Blockbuster is derivative of

6 the other.

7 Now, what this really is -- you don't have to scratch

8 the surface too much -- is, it's a motion to disqualify

9 plaintiffs' counsel in this case. That's what it is. And it's

10 frankly designed to achieve an improper tactical advantage.

11 And they know if they disqualify plaintiffs' counsel, that's a

12 huge step to getting rid of this case. And there is no real

13 basis --

14 THE COURT: Why is that?

15 MR. ABRAMS: Because they're getting rid of all of

16 plaintiffs' counsel. That's what they're saying: We all have

17 this purported conflict, and they even raised it as an ethical

18 violation. Now, your Honor, I know from --

19 THE COURT: I don't understand how that affects the

20 viability of the case.

21 MR. ABRAMS: Well, it affects the viability of the

22 lawyers representing the plaintiffs in the case.

23 THE COURT: Okay.

24 MR. ABRAMS: I mean, the point I'm really making --

25 well, the point I'm making with respect to that is, they say




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1 now, Page 1 of their brief, that, quote, "there are inherent

2 conflicts that require separate counsel for Netflix and

3 Blockbuster subscribers." If these are inherent conflicts,

4 these are conflicts that were there on Day 1. Well, they

5 didn't make any argument on Day 1 about this. They argued

6 statute of limitations and that we should be disqualified or

7 separated there. They always wanted us disqualified.

8 And the statute of limitations was dealt with by your

9 Honor.

10 Well, now, they're coming with this other purportedly

11 inherent conflict. If that was there on Day 1, they should

12 have argued it at the time of -- when they argued the statute

13 of limitations, the certification issue. We submit to the

14 Court that there is waiver of this argument because they didn't

15 do that.

16 And I -- and I would like to direct the Court to two

17 cases: One is from Judge Alsup, in Sky Spirits. And he quotes

18 your Honor on -- in saying, "Because an attempt to disqualify

19 the opposing attorney is often tactically motivated and

20 disruptive to the litigation process, disqualification is a

21 drastic measure that is generally disfavored" -- citing your

22 Visa case.

23 He then goes on to talk about delay, prejudice and

24 waiver in this opinion, and says, "It is also appropriate to

25 consider such factors as when movant learned of the




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1 conflict --" well, they say it was inherent; should have known

2 when they filed on their own about the purported conflict --

3 "whether the movant was represented by counsel during the

4 delay."

5 Yes.

6 "Why the delay occurred" -- and this in particular --

7 "whether the motion was delayed for tactical reasons."

8 And: "Whether disqualification would result in

9 prejudice to the nonmoving party."

10 And if I may just cite one other case, and it is

11 Andrews Farms vs. Calcot. I don't believe it is cited in our

12 brief. And so I will just say the cite is 2010 Lexis 11656,

13 it's the Eastern District of California, and I'll just mention

14 one point from it:

15 "ED erroneously equates a conflict among class members

16 for purposes of class certification with a conflict in attorney

17 representation for purposes of the rules of professional

18 conduct."

19 And that was what was done in the papers in this case

20 before your Honor.

21 And the Court goes on to say, quoting, or citing

22 Optical Eyewear Fashion, "The cost and inconvenience to clients

23 in the judicial system from misuse of the rules for tactical

24 purposes is significant. Because of this potential for abuse,

25 a disqualification motion should be subjected to particularly




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1 strict judicial scrutiny. Courts generally discourage rigid

2 application of disqualification rules in class action cases

3 because of the nature of class representation and the

4 importance of retaining counsel with the most experience on the

5 case."

6 Your Honor, the only violation alleged is a conflict

7 in the settlement class. And what defendant Netflix wants is

8 decertification of the Netflix litigation class, clearly a

9 drastic remedy. And we request the motion be denied.

10 Thank you.

11 THE COURT: Thank you. All right. Response briefly?

12 Before I rule?

13 MR. JACOBSON: Just a few minutes.

14 Your Honor, there was an awful lot there that was

15 simply inaccurate, and I think you know many of the things that

16 are inaccurate and I'm not going to belabor it.

17 But I do want to address a couple of things. There is

18 no case that says that if there is a conflict requiring

19 decertification of the settlement class, that that does not

20 equally affect the representation and the conflict and the

21 certification of the litigation class. There is no case.

22 There could be no such case, because in Amchem and Ortiz, the

23 decertification of the settlement class necessarily affected

24 the litigation classes as well. There is no such case. The

25 argument is simply made up.




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1 And the Milwaukee case I mentioned to you is quite on

2 point. Doesn't involve a settlement, but it does involve the

3 same sort of conflict affecting a pure litigation class. There

4 was no settlement in that case. So that argument was just made

5 up, and with all respect, is just completely wrong.

6 Second, I made a note of this: I heard counsel say

7 that there could be one class here. Well, of course, that's

8 not true, and if he wants to file a motion to certify a

9 combined Blockbuster sub and Netflix class, go ahead. All

10 right. That motion, with all respect, will be denied, because

11 this is not a homogenous group, it is an entirely heterogenous

12 group. As we've laid out in our papers, there are a lot of

13 Blockbuster subs who never got any increase at all. The

14 increase was ignored to them. So he doesn't really mean that

15 when he says it.

16 His principal arguments, he says there's separate

17 counsel in this case for Netflix subs and Blockbuster subs. If

18 that's so, I don't know who they are. They're all listed on

19 the docket sheet as representing both sides. They all signed

20 both consolidated complaints. I just think that's entirely

21 made up, your Honor, and in any event, that sort of post hoc

22 ratification of a settlement that was represented by a counsel

23 representing both sides in a split context just doesn't solve

24 the problem.

25 And -- I said I'd be brief, and I will be brief. I'm




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1 just going to read you one passage of Amchem which disposes of

2 Torrisi and disposes of City of Seattle, and the passage at

3 Page 622 says, "Federal courts lack authority to substitute for

4 Rule 23 certification criteria, a standard never adopted, that

5 if a settlement is fair, then certification is proper."

6 Your Honor, there is no question that there is a

7 conflict here. There was a split of the sum. That there may

8 be different allocations based on who claims how much out of

9 the pie doesn't address the basic problem. And your Honor, I

10 believe that decertification is required.

11 THE COURT: All right. You all have conflated in your

12 papers and in your arguments some of the issues that arise

13 necessarily from the motion for decertification with some of

14 the issues that arose at the last hearing with respect to the

15 preliminary approval of the class, and I'm trying to distill

16 the two into two separate motions because they are two separate

17 motions and I'd like to deal with each one of them separately.

18 I deferred ruling on the last motion until after I was

19 able to read the papers and hear the arguments on this motion,

20 based upon counsel's representation that there was some impact,

21 and clearly there is some overlap in the arguments.

22 But starting first with the decertification, I just

23 have a couple of comments. I mean, one of the reasons I've

24 enjoyed the antitrust cases that I've had over the last 10

25 years so much is that there appears to be an effort on the part




25

1 of counsel on these cases to minimize the hyperbole. I've

2 always thought that you've given these pure legal disputes some

3 thoughtful analysis, and it's been interesting and a challenge

4 for me to try to help you all figure out the answers.

5 This motion's a little messier than what I have grown

6 to expect from you all. You've thrown in a lot of stiff, the

7 kitchen sink, in this motion. There are all these various

8 different bits and pieces and standards that don't really fit

9 on all fours with this particular issue. And I understand,

10 there's no law, and so you're trying to fit it in, etc., etc.

11 I don't view this as an attempt at disqualifying

12 counsel. I don't see a disqualification motion in here. So I

13 don't look at it that way.

14 And you all probably are not going to be surprised

15 that I don't agree with either side completely. There are some

16 arguments that each side has made that I think are valid, and

17 my resolution of this particular issue is not going to make

18 either side particularly happy.

19 But nonetheless, this is how I look at it, with regard

20 to the decertification issue:

21 I totally disagree with you, Counsel, that this is not

22 what is intended by the term "zero sum game". I mean, what we

23 have here is a situation where the one class -- and I don't

24 call them subclasses, there's the Blockbuster subscriber class

25 and the Netflix subscriber class. I had not begun to look at




26

1 these as subclasses because, as I indicate, they're two

2 separate actions, as far as I can tell. One is derivative of

3 the other, but that doesn't make it a subclass.

4 In any event, one class would recover -- recovery for

5 one class clearly is affected by and comes at the expense of

6 the other class. I think that's classic zero sum game.

7 And the real question -- and so I do feel that under

8 those circumstances that it is in the best interest of both

9 classes that an allocation of any settlement amount be

10 negotiated separately for each side. It probably won't

11 surprise you I have my own view as to what kind of a split

12 would be appropriate, and whether or not a two to one is

13 appropriate. Might not surprise you at all that my view isn't

14 the same. So I cannot imagine that there's not some room there

15 for arguments to be made by both sides. Each of these two

16 classes have a separate interest in a recovery as large as they

17 can possibly make it. And I don't think that that -- those

18 interests are served by having one counsel negotiate a

19 settlement and determine what the split should be.

20 So I do find that the defense has raised a legitimate

21 issue with respect to a conflict in the settlement of the

22 action, vis-a-vis the Wal-Mart defendant.

23 Now, the difficulty, however, is: What is the result?

24 What is the remedy, having found that there is a conflict?

25 What is the remedy? I agree that there should be separate




27

1 counsel. And plaintiffs' counsel has acknowledged in your

2 briefs that indeed there is -- there are other procedures. I'm

3 not in favor of having yet some other arbitrator, some other

4 third party inject him or herself into the proceeding. I think

5 there needs to be further negotiation with two attorneys

6 representing each of the two classes.

7 But this motion is geared toward the litigation class

8 that has already been certified for the Netflix subscribers. I

9 just fail to see the connection between the two.

10 So I'm just not persuaded by the defense arguments

11 that finding a conflict in the settlement of both classes as to

12 one defendant necessarily gives rise to any implication with

13 regard to the Netflix subscriber class that was certified for

14 all purposes and not just a limited purpose. So I'm not

15 prepared and not willing to grant the motion to decertify the

16 Netflix subscribers' litigation class. That motion is denied.

17 But notwithstanding that, I'm going to turn now to the

18 other motion that was pending, because the way in which it

19 should be resolved is certainly going to have some impact upon

20 the other motion.

21 Now, as I've indicated, with regard to the issues

22 raised by the defendant, I do agree there should be two

23 counsel. And -- for the two classes. And that impacts the

24 ruling that I am prepared to make with regard to the

25 preliminary approval that was on calendar last month.




28

1 First of all, I wouldn't approve it, without the

2 protection of both classes by being represented by individual

3 counsel in terms of the negotiation and the allocation of any

4 settlement fund.

5 But additionally -- I've been thinking about this for

6 the last couple of weeks, and in reading these papers, I have

7 other problems with the settlement. I raised some of them last

8 time. Most of the things that I raised with you all last --

9 the last calling of the case, though, had to do with the notice

10 and other things. Most of those things can be corrected. Even

11 the issue raised with regard to the attorney's fees, and I'm

12 still not sure I understand which pots include which sums going

13 to what. But those are things that I think we could probably

14 work out in the long run.

15 But the real problem I'm having are with a couple of

16 inconsistencies that I see down the road, or the potential for

17 inconsistencies. Now, before I get to those, let me just back

18 up real quick so that I can make sure I'm covering the issues

19 that you all raised in your motions.

20 With regard to the preliminary approval of the

21 settlement with Wal-Mart of both classes, the Netflix

22 litigation class and the Blockbuster conditional certification

23 request, for settlement purposes only, the defendants raised

24 essentially three objections:

25 One having to do with the conflicts between the two




29

1 subclasses, which I've addressed. And one with regard to the

2 conflict with Netflix's counsel, which I haven't addressed, but

3 which I don't believe would be a basis for denying the

4 settlement. I wasn't persuaded by any -- well, there wasn't

5 any authority provided there, persuasive or otherwise, that

6 would lead me to conclude that because of the Greenberg Traurig

7 issue, that the settlement should be rejected. In my view,

8 there's simply no nexus.

9 While it certainly would have been better had there

10 been a waiver of some sort obtained, if it had been handled in

11 a different way -- for sure, there was some negligence on the

12 part of the firm for not bringing that conflict to its client's

13 attention, in my view -- I don't see that as having any effect

14 on whether or not the settlement ought to be approved.

15 And then there was the issue -- so there were mainly

16 three issues. The first two are the two different conflict

17 issues between the two classes, and with counsel. And I'm not

18 persuaded that either one of those issues is a basis for

19 rejecting the settlement.

20 Moreover, I don't find that Netflix really has

21 standing to object. Everyone agrees that the standard is that

22 a nonsettling defendant has standing only as to those matters

23 for which it can show some kind of formal legal prejudice. I

24 don't believe either of those two issues comes within that

25 definition of formal legal prejudice.




30

1 There was a third objection, however, and that was to

2 the certification of the settlement class, that has given me

3 some pause -- I'm concerned about it. Not only for the reasons

4 raised by Netflix, but for the reasons that have arisen just by

5 virtue of my review of the settlement. And there -- and I

6 think there are two conflicts that I'm really concerned about.

7 Now, what happens, for instance, if the -- if the

8 Court finds that Rule 23 is satisfied for purposes of a

9 settlement, conditional settlement class for Blockbuster, just

10 as against Wal-Mart, but finds the converse to be true with

11 regard to this same class as it appears to Netflix? As against

12 Netflix? Which is not part of the settlement. That's one

13 inconsistency is that that could potentially form a problem.

14 And lastly -- I'll give you all a chance to talk in a

15 minute. I'm just trying to get all of my thoughts out here.

16 And the other one is -- I think it's probably more

17 critical, and that's the standing issue. Now, I have -- still

18 have serious doubts, which is why I permitted, notwithstanding

19 the denial of the last motion to dismiss filed by Netflix, I

20 still have serious doubts as to the ability to show antitrust

21 injury and standing with regard to the Blockbuster class. And

22 so one of the concerns that -- one of my concerns is that if a

23 class is conditionally certified, what happens if I later find

24 that there's no standing to the extent that that impacts the

25 Netflix settlement class because there's this allocation? I




31

1 mean, I don't know what Wal-Mart's position is as to whether or

2 not either class is entitled to more. I assume they don't care

3 one way or the other. But I'm sure the Netflix subscribers who

4 would stand to get perhaps the whole amount if the Blockbuster

5 class isn't certified might care.

6 And my reluctance in certifying the class is primarily

7 based upon my concerns as to whether or not I'm going to

8 ultimately find there is sufficient standing for the

9 Blockbuster class to even go forward. That's one of the main

10 aspects of my reluctance.

11 And then, of course, the defense did raise issues that

12 I was also thinking about with regard to whether or not

13 individual issues predominate with regard to the Blockbuster

14 class. Rule 23 still applies when we talk about conditional

15 certification. I'm not entirely convinced today that I could

16 find that the 23(b)(3) issues are satisfied by the Blockbuster

17 class, given what I already know. I've had motions already,

18 I've already formed some opinions which have been expressed,

19 with regard to the Blockbuster class. And I'm just not

20 entirely persuaded that it's the right thing to do, to go

21 forward with this now.

22 So that's where I am.

23 I'll allow each of you to be heard on that before I

24 make a final determination, but my inclination is -- is to

25 deny -- without prejudice, obviously -- my approval,




32

1 preliminarily, on this until after the issues have been a

2 little fully more addressed, primarily the whole standing

3 issue.

4 Okay. So if you would like to be heard before I make

5 a final determination, each of you may do so.

6 MR. JACOBSON: Your Honor, briefly, I think we fully

7 understand the issues. Obviously I need to confer with my

8 client. Would the Court entertain a 1292(b) motion on denial

9 of decertification? Is that something you'll consider?

10 THE COURT: I'll always consider it. Obviously if you

11 want to file that, particularly since I've made a finding that

12 indeed there is a conflict -- I can certainly understand.

13 MR. JACOBSON: Thank you.

14 THE COURT: If you want to file the motion, I'll

15 certainly consider it.

16 MR. TABACCO: Your Honor, this is coming here up at

17 the last minute -- Joseph Tabacco. We've been involved on the

18 executive committee of this case since its inception. We

19 happen to represent, as do several other of the law firms, both

20 the Netflix plaintiff and Blockbuster plaintiff.

21 First off, just let me quickly address the issue that

22 you raised about if I certify a Blockbuster class for

23 settlement purposes and then we later determine that it really

24 can't stand up as a litigation class, how does that work?

25 There are many instances where exactly that happens. We just




33

1 had that actually in the In Re: New Motor Vehicles litigation

2 in the First Circuit with -- before Judge Hornby, who's of long

3 tenure from the bench; he's written quite a bit on this area.

4 In that case, he actually certified a litigation class. The

5 defendants then took it up to the First Circuit; the First

6 Circuit decertified the litigation class. In the meantime, we

7 actually settled partially with one of the defendants in that

8 case, Toyota, and that settlement was not immediately

9 preliminarily approved. The judge says, Let's see what happens

10 with class certification in the litigation context.

11 Ultimately what happened is that he granted summary

12 judgment as to the nonsettling defendants. So that there was

13 actually ultimately never a certification of litigation class.

14 That withstood the ruling by the First Circuit.

15 Nonetheless, last August he issued a very thoughtful

16 opinion going through the reasons why he could go ahead and

17 certify a settlement class to approve the Toyota settlement.

18 And in the context of that published opinion -- I think it's

19 August 15th of 2010; I don't have the cite off the top of my

20 head -- he recognized that at the inception of the case, the

21 plaintiffs had set forth a theory -- maybe it was a theory that

22 had some risk down the road. In that case, we had asserted a

23 Sherman Act claim on behalf of people who may not have

24 purchased directly on a group boycott theory. He dismissed the

25 case, he dismissed that claim, and the complaint was amended to




34

1 allege state court causes of action. But he said, Because

2 there was at least the possibility that that claim had

3 viability at the time Toyota settled, that that would allow me

4 to certify a settlement class so that the defendant who had

5 negotiated that settlement would get what they bargained for,

6 which was not the threat of further litigation down the road by

7 somebody else -- because here in this case, if Wal-Mart

8 bargained for and paid money to get settlements of Blockbuster

9 and Netflix, in the absence --

10 THE COURT: But it seems in that instance, though,

11 that's all that was left in the case. Everything else had been

12 resolved. Correct?

13 MR. TABACCO: Not at the time of the settlement. At

14 the time of the settlement -- the settlement was incident to --

15 in 2006. Summary judgment was granted in the spring of 2010.

16 He then had the Toyota settlement, that was all that was left.

17 That's correct, if that's your question.

18 THE COURT: Right. But if that was all that was left

19 here, I wouldn't have any difficulty either. But we're not in

20 the same posture. There's still other hurdles that I'm aware

21 of that are coming that we need to get past, in my view, before

22 I can conditionally certify anything with regard to

23 Blockbuster. I don't have any problem -- but you all told me

24 at the last hearing that the settlement could not be

25 bifurcated. I wouldn't have any problem with approving the




35

1 settlement preliminarily or otherwise as to the Netflix

2 subscribers. I've already certified the class. If they wish

3 to settle, fine. My only problem is with the Blockbuster.

4 MR. TABACCO: And I think that's really ultimately the

5 debate, which is not going to be repeated this morning, is

6 really just a question of, you're attempting to measure the

7 viability of one claim versus the other claim. And that really

8 goes, as you said, to your ideas about a plan of allocation.

9 Which claim has more viability than the other has? And of

10 course we'd put forth the two-to-one. That's just one

11 approach.

12 Your Honor has expressed concern that that may not

13 have been done in the appropriate way, but obviously that can

14 be revisited and that can be addressed.

15 But ultimately, even if the Blockbuster claim has a

16 minimal viability, it doesn't mean that there isn't a theory

17 that the defendants aren't entitled to get releases from -- and

18 settlements, so that if the class is not certified here, that

19 someone doesn't come knocking on their door next week and file

20 a new lawsuit. That's why defendants settle.

21 THE COURT: I understand that, but it's all tied up,

22 in my view, as to the fairness to the Netflix subscribers.

23 MR. TABACCO: Sure.

24 THE COURT: It's all part and parcel.

25 MR. TABACCO: And I think what your Honor is -- has




36

1 indicated is that you need to see more safeguards put in place

2 to ensure that those interests are not compromised in any way.

3 THE COURT: Yeah. And there's one further issue, and

4 that is: What you all are asking is for preliminary

5 determination as to what's fair, reasonable and adequate.

6 Granted, that determination is made at the final hearing, but

7 you're asking for a kind of preliminary showing.

8 This case presents some difficulty for me, because you

9 all have essentially said, We think that you can find that it's

10 fair or it's reasonable or it's adequate because our mediator

11 has said so; because we say so; and because the named

12 plaintiffs say so. But no one has given me an independent

13 basis upon which to come to my own conclusion about that.

14 The -- unlike most other cases, it's not -- the settlement's

15 not tethered to anything. I have no basis for determining that

16 this is a reasonable amount other than the fact that other

17 people have said so. There's nothing to look at. I don't even

18 know what they base their conclusion on. And that's just

19 not -- does not make me very comfortable in approving this.

20 MR. TABACCO: I recall, your Honor, in other cases

21 that I've been before you on, that -- and we've discussed it --

22 that your -- the way you view preliminary approval, if we can

23 satisfy you on preliminary approval, final approval is often

24 not a problem. And I think there's obviously things that we

25 could do -- seems to me the solution here is for us to kind of




37

1 go back to the drawing board on the preliminary approval issue

2 so that you have what you need in terms of an adequate record.

3 It's similar to what Judge Hornby want through when he

4 had, all of a sudden this Toyota settlement that was out there,

5 and he's already granted summary judgment. I guess in that

6 respect, the settlement looked terrific. And you know, an

7 argument could be made that getting any money for the

8 Blockbuster people, given the risks and uncertainties, would be

9 a good result. But that's a record that you need to have

10 developed.

11 THE COURT: Right.

12 MR. TABACCO: Before you can make a determination.

13 THE COURT: Right. And it's always much more

14 difficult getting preliminary approval, from me, than final

15 approval.

16 MR. TABACCO: That's what I told these guys.

17 THE COURT: Okay.

18 Mr. Jacobson?

19 MR. JACOBSON: Nothing further. We do have a

20 housekeeping matter on the motion for summary judgment that we

21 filed.

22 THE COURT: We can deal with that.

23 Nothing else on this? All right. I'm going to, for

24 the reasons expressed, I'm going to deny, without prejudice,

25 the motion to a preliminary approval. Essentially it's -- I




38

1 expect I'm simply deferring it. I don't call it that because

2 it stays on my docket and I have to report it. So I'm going to

3 deny it. You're going to have to renew it. In any event,

4 you'll to have file new papers anyway to give me the

5 additional. But I have told you what my concerns are, and you

6 all can address those, and we can revisit it once you've

7 clarified those issues for me.

8 That takes care of both motions today. I've ruled on

9 them. You can determine whether or not you want to file a

10 request for certification of the issue on the denial of the

11 request for decertification. I'm very, very busy. I'm not

12 going to write a long order. I'm going to write two sentences.

13 Okay? So you can make that determination immediately.

14 MR. JACOBSON: We will either file, this week, a

15 statement that we are not going to seek such a motion; or,

16 within several days, we will file a 1292.

17 THE COURT: Okay. All right.

18 Then the only other thing then is the motion that -- I

19 understand you filed something recently.

20 MR. JACOBSON: Yes, your Honor. As you'll recall, in

21 denying our second motion to dismiss the Blockbuster complaint,

22 you invited us to file an early summary judgment motion on the

23 standing issue for reasons that we've actually talked about

24 today. I didn't want to be in a position where that motion had

25 not been filed and we were arguing today -- I didn't want to be




39

1 viewed as having held something back. So we filed it

2 yesterday. We filed it on the traditional 35-day schedule. I

3 have communicated to Mr. Abrams that we will give him the time

4 that he needs to respond, and that we will work with chambers

5 in terms of getting a schedule that's amenable to the Court.

6 So I want to make clear that we're not trying to steamroll

7 anyone here.

8 THE COURT: Okay.

9 MR. JACOBSON: And we know you're busy, and we know

10 that having a hearing on this in 35 days would be great for us,

11 and lousy for you. So --

12 THE COURT: I can't hear it in 35 days. I can hear it

13 the following week. And I'm going to be -- right?

14 DEPUTY CLERK: You have already like 15 motions on

15 April 20th. You can't do anything else on the 20th.

16 (Off the record)

17 THE COURT: Well, what I'd like is I'd like to be able

18 to hear it on the 20th.

19 MR. JACOBSON: The 20th of April?

20 THE COURT: What I'd like to do is to be able to hear

21 it on that day, if I can. The 20th. I won't be here on the

22 13th. But the 20th.

23 MR. JACOBSON: Fine with us.

24 THE COURT: That's what I'd like. If it becomes clear

25 to me that I'm not going to be -- I'm going to have to do a lot




40

1 of jockeying with my calendars over the next couple of months.

2 So if it becomes clear to me that I can't hear it on that day,

3 I'll let you know as soon as possible, but I'd like you all to

4 brief it so that it's ready to be heard on that day, if I can

5 hear it on that day.

6 MR. JACOBSON: Not a problem for us.

7 MR. SAVERI: Guido Saveri, your Honor. I would just

8 like to address one point that might not have much to do with

9 the motions here, but I would respectfully request my

10 adversary, counsel for Netflix, to be careful on statements

11 that he's making that the only reason that we accepted a

12 Netflix settlement or Wal-Mart settlement was to protect my

13 fees. That's accusing us of taking a dive, and I've never

14 taking a dive in any settlement that I've ever put together.

15 And that insinuation that that is the only purpose, reason, why

16 we settled the case is just to protect our fees, I think is

17 uncalled for and has nothing to do with the case. And if you

18 want to get into details, I can get into details...

19 THE COURT: I don't. I don't.

20 MR. SAVERI: I can tell you what happened in D-RAM,

21 how we treated him. So I just resent those -- that's impugning

22 my integrity and I really don't appreciate it.

23 THE COURT: Okay.

24 MR. SAVERI: And I've practiced too long to get it

25 now.




41

1 THE COURT: Yes?

2 MR. ABRAMS: Your Honor, can I say we will do our best

3 to accommodate the April 20th date. If that -- there's some

4 circumstances going on that may make that difficult. I don't

5 know. But if it does, can we talk to your chambers and arrange

6 a convenient date for you?

7 THE COURT: There is not going to be a convenient date

8 for me. There's not going to be a better day for me.

9 MR. ABRAMS: I hear you.

10 THE COURT: There's not. So I'd like you to try to --

11 I mean, if you can. Because I've pushed it off an additional

12 week. You can take that additional week for your opposition,

13 which will give you three weeks instead of two.

14 MR. ABRAMS: I -- absolutely. We'll do our best.

15 THE COURT: Anything else?

16 Oh, wait. Was there an attempt to file this brief

17 under seal? That's what I think was brought to my attention.

18 MR. JACOBSON: Yes, because of confidential

19 information, not from us, but from Blockbuster and Amazon. So

20 it's something that we candidly would have preferred not to

21 file under seal, but we have no choice.

22 THE COURT: It's rare. I don't know that I've ever

23 approved filing of an entire brief under seal. Why can't you

24 simply redact the references to confidential or private

25 information?




42

1 MR. JACOBSON: We will file a redacted version

2 forthwith.

3 THE COURT: And then file the unredacted version so I

4 can review it to determine whether or not it really meets the

5 very high standard for --

6 MR. JACOBSON: Again, it's not our materials, and

7 we've filed the administrative motion. We have not heard from

8 Blockbuster, Amazon, since we just filed it yesterday.

9 Candidly, we don't think there's anything in here that would

10 warrant the sealing of any piece of it, but that will have to

11 be determined by people other than us.

12 THE COURT: And you've filed the request to seal it

13 because it was designated as --

14 MR. JACOBSON: Highly confidential.

15 THE COURT: Highly confidential.

16 MR. JACOBSON: By two nonparties. So we had no

17 choice.

18 THE COURT: So that doesn't cut it, in and of itself.

19 So what I will simply instruct you to do is to tell them that

20 you're filing the redacted and unredacted version -- you're

21 going to file a redacted; provide chambers with an unredacted

22 copy so I can review it along with your motion. If they wish

23 to have their concerns considered, they need to submit

24 something in writing within four days. We'll treat it as we

25 would any other nine administrative motion.




43

1 MR. JACOBSON: We will communicate that.

2 And the last thing I would -- I have never intended

3 to -- I thought I made a statement earlier that I have

4 tremendous respect -- and I want to be very clear I'm not

5 impugning the integrity of Mr. Saveri. I've always had great

6 respect for him, and nothing that we've argued was intended to

7 suggest otherwise.

8 THE COURT: I didn't even hear the reference that he

9 says that you made. So...

10 All right. Anything else?

11 MR. ABRAMS: No, your Honor.

12 THE COURT: All right. Then we're adjourned.

13 MR. JACOBSON: Thank you.

14 (Adjourned)

15 oOo

16

17 CERTIFICATE OF REPORTER

18

I, Connie Kuhl, Official Reporter for the United

19 States Court, Northern District of California, hereby certify

that the foregoing proceedings were reported by me, a certified

20 shorthand reporter, and were thereafter transcribed under my

direction into written form.

21

22 ________________________________________

23 Connie Kuhl, RMR, CRR

Wednesday, March 9, 2011

24

25




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