Ninth Circuit Rules IPod Consumer Class Action Is Out Of Tune And Out Of Court

The U.S. Court of Appeals for the Ninth Circuit has affirmed the dismissal of a proposed class action alleging Apple Inc. violated antitrust laws in promoting the iPod and its iTunes Music Store.

The three-judge panel ruled that the monopolization claims of the plaintiff, consumer Stacie Somers, failed as a matter of law for several reasons.

The court found that Somers could not seek review of the district court’s order denying certification of a class of indirect purchasers of the iPod because she had abandoned her underlying individual monopolization claim alleging Apple had inflated iPod prices in violation of Section 2 of the Sherman Act.

The court found that Somers’ monopolization claim for damages based on a diminution in iPod value – a claim that had not been previously advanced by the plaintiff – was barred.  Somers’ damage theory was that Apple’s software updates deflated the value of her already-purchased iPod – not that she paid an inflated price for the product.  The court stated that allowing Somers to proceed on a theory that she was damaged by the deflated value of an already-purchased product “would lead to litigation on contradictory, duplicative theories of recovery necessitating ‘evidentiary complexities and uncertainties.’”

The court noted that, in contrast to Somers’ deflated value theory, the plaintiff in a related direct purchaser action is seeking damages based on the theory that the software upgrades inflated iPod prices.

The court also held that Somers failed to alleged sufficient facts to establish antitrust injury in support of her monopolization claim for damages from purchases of overpriced music downloads.

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