FTC v. DIRECTV

Northern District of California

Case No. 15-cv-01129

Date Filed	#	Docket Text	What
2015-03-11	1	COMPLAINT against All Defendants. Filed byFederal Trade Commission. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Civil Cover Sheet)(Edmondson, Eric) (Filed on 3/11/2015) (Entered: 03/11/2015)	Case3:15-cv-01129 Document1 Filed03/11/15 Page1 of 11 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Case No. COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), for its Complaint alleges: 1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, and Section 5 of the Restore Online Shoppers’ Confidence Act (“ROSCA”), 15 U.S.C. § 8404, to obtain permanent injunctive relief, COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129 Document1 Filed03/11/15 Page2 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement of ill- gotten monies, and other equitable relief for Defendants’ acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and in violation of Section 4 of ROSCA, 15 U.S.C. § 8403, in connection with the advertising, marketing, and sale of Defendants’ multi-channel video programming subscription service. JURISDICTION, VENUE AND INTRADISTRICT ASSIGNMENT This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), 2. and 1345, and 15 U.S.C. §§ 45(a), 53(b), 57b, and 8404. 3. Venue is proper in this district under 28 U.S.C. § 1391(b), (c)(2), and (d), and 15 U.S.C. § 53(b). 4. Assignment to the San Francisco Division is proper because Defendants have advertised and sold direct-to-home digital television service in San Francisco County to thousands of consumers who reside in the county. PLAINTIFF 5. The FTC is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also enforces ROSCA, 15 U.S.C. §§ 8401 et seq., which prohibits certain methods of negative option marketing on the Internet. 6. The FTC is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and ROSCA, and to secure such equitable relief as may be appropriate in each case, including rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies. 15 U.S.C. §§ 53(b), 56(a)(2)(A), 56(a)(2)(B), 57b, and 8404. DEFENDANTS 7. DIRECTV, LLC is a California limited liability company with its principal place of business at 2260 East Imperial Highway, El Segundo, California 90245. At all times material to this Complaint, acting alone or in concert with others, DIRECTV, LLC has advertised, COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 2 Case3:15-cv-01129 Document1 Filed03/11/15 Page3 of 11 marketed, distributed, or sold direct-to-home digital television service to consumers throughout the United States. DIRECTV, LLC is owned directly or indirectly by DIRECTV. DIRECTV, LLC transacts or has transacted business in this district and throughout the United States. 8. DIRECTV is a Delaware corporation with its principal place of business at 2260 East Imperial Highway, El Segundo, California 90245. At all times material to this Complaint, acting alone, in concert with others, or through its subsidiaries, DIRECTV has advertised, marketed, distributed, or sold direct-to-home digital television services to consumers throughout the United States. Acting alone, in concert with others, or through its subsidiaries, DIRECTV transacts or has transacted business in this district and throughout the United States. COMMERCE 9. At all times material to this Complaint, Defendants have maintained a substantial course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS’ BUSINESS ACTIVITIES Introduction 10. Defendants are the largest provider of direct-to-home digital television service and the second largest provider in the multi-channel video programming distribution industry in the United States. As of December 31, 2013, Defendants had approximately 20.3 million subscribers in the United States. Defendants’ Subscription Service 11. Defendants offer their direct-to-home digital television service to consumers by subscription. Defendants’ subscription service consists of a programming package, a satellite dish and other necessary equipment, and installation and support services. 12. Defendants typically require consumers to agree to a mandatory 24-month contract to receive programming. Defendants typically assess an “early cancellation fee” against customers who cancel their subscription before the end of 24 months. Defendants’ early cancellation fee is typically $20 per month for each month remaining on a subscriber’s agreement. After 24 months, Defendants’ customers may become month-to-month subscribers. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 3 Case3:15-cv-01129 Document1 Filed03/11/15 Page4 of 11 Defendants’ Marketing Practices 13. Defendants typically market their subscription service by disseminating advertisements with reduced rates for their programming packages. The advertisements appear in a variety of media, including television, print, mail, and the Internet. The rates are typically a set monthly charge for the first year of a two-year customer agreement (“initial period”). In the second year of the agreement, Defendants substantially increase the monthly charges of their programming packages. This increase in the monthly charge is typically as much as 50 to 70 percent. Also, Defendants typically impose an additional $3 to $5 per month increase in the cost of the programming packages in the second year of the agreement. 14. In addition to the rates referenced in Paragraph 13, Defendants advertise that subscribers will receive additional premium channels, such as HBO, Cinemax and Showtime, free of charge for a limited period of time, e.g., three months. Consumers must affirmatively cancel these premium channels before the end of the initial period to avoid monthly charges. Defendants charge substantial monthly fees, typically around $48 per month, to consumers who take no action or otherwise remain silent. Defendants charge consumers for the premium channels without obtaining express informed consent. 15. Defendants’ marketing practices have been the focus of tens of thousands of consumer complaints and of actions by the attorneys general of all 50 states and the District of Columbia. Defendants’ Deceptive Advertising Campaigns 16. In numerous instances since 2007, Defendants have disseminated or have caused to be disseminated advertisements for Defendants’ subscription service, including but not limited to the attached Exhibits 1 through 3. These advertisements direct potential customers to Defendants’ telephone numbers and Internet website, www.directv.com. These advertisements contain the following statements regarding pricing for their subscription service: A. “All New! Limited Time Offer! . . . Now only $19.99*/mo.” (Exhibit 1) (October 2014). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 4 Case3:15-cv-01129 Document1 Filed03/11/15 Page5 of 11 B. 17. “Package offers starting at $24.99/mo. Limited Time.” (Exhibit 2) (August 2013). “Limited Time! $24.99/mo for 12 months.” (Exhibit 3) (July 2013). C. To the extent that Defendants’ advertisements described in Paragraph 16, above, contain any qualifying disclosures concerning the price consumers will pay after the initial period, any such disclosures are inadequate in terms of their content, presentation, proximity, prominence or placement such that consumers are unlikely to see or understand such disclosures. Similarly, to the extent that these advertisements contain any qualifying disclosures concerning the mandatory two-year contract length, any such disclosures are inadequate in terms of their content, presentation, proximity, prominence or placement such that consumers are unlikely to see or understand such disclosures. 18. Some of Defendants’ advertisements described in Paragraph 16, above, also contain statements that subscribers will receive premium channels free of charge for three months. For example, Exhibit 1 states “over 30 premium channels free for 3 months.” 19. To the extent that Defendants’ advertisements described in Paragraph 16, above, contain any qualifying disclosures concerning the offer of free premium channels, any such disclosures are inadequate in terms of their content, presentation, proximity, prominence or placement such that consumers are unlikely to see or understand such disclosures. In particular, these advertisements do not convey to consumers: A. B. C. D. That Defendants automatically enroll consumers in a negative option continuity plan with additional charges; That consumers must affirmatively cancel the negative option continuity plan before the end of a trial period to avoid additional charges; That Defendants use consumers’ credit or debit card information to charge consumers monthly for the negative option continuity plan; and The costs associated with the negative option continuity plan. COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129 Document1 Filed03/11/15 Page6 of 11 Defendants’ Deceptive Internet Sales Website 20. Consumers who visit Defendants’ website, www.directv.com, are required to navigate sequentially through at least eight webpages in order to select a programming package and purchase Defendants’ subscription service. These webpages include: (a) the Landing page, (b) the Programming Package Selection page, (c) the Receiver page, (d) the Shopping Cart pages, and (e) the Confirmation page. 21. In numerous instances since 2007, Defendants have disseminated or have caused to be disseminated webpages, including but not necessarily limited to those attached as Exhibit 4 (August 2013). These webpages typically contain statements that are identical or similar to the following: A. B. “Limited Time. 140+ channels. $24.99 month for 12 months” (Exhibit 4 at page 1); and “CHOICE: 150+ channels. Only $29.99 month for 12 months” (Exhibit 4 at page 2). 22. To the extent that Defendants’ webpages contain any qualifying disclosures concerning the price consumers will pay after the “discount” period, any such disclosures are inadequate in terms of their content, presentation, proximity, prominence, or placement such that consumers are unlikely to see or understand such disclosures. In particular, Defendants’ webpages do not convey that: A. B. Defendants require consumers to remain a subscriber for two years, a mandatory term which carries an early cancellation fee for the failure to do so; and Defendants charge significantly higher monthly prices for their programming packages during the second year of service. 23. Defendants’ webpages typically contain statements concerning an offer of free premium channels that are identical or similar to the following: “Free for 3 months. HBO + Starz + Showtime + Cinemax.” (Exhibit 4 at page 1). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 6 Case3:15-cv-01129 Document1 Filed03/11/15 Page7 of 11 24. To the extent that Defendants’ webpages contain any qualifying disclosures concerning the offer of free premium channels, any such disclosures are inadequate in terms of their content, presentation, proximity, prominence, or placement such that consumers are unlikely to see or understand such disclosures. In particular, Defendants’ webpages do not convey to consumers: A. B. C. D. That Defendants automatically enroll consumers in a negative option continuity plan under which Defendants charge consumers for access to premium channels after an initial free period, typically three months, unless consumers contact Defendants and cancel their access to the premium channels; That consumers must affirmatively cancel the negative option continuity plan before the end of the initial free period to avoid charges; That Defendants use consumers’ credit or debit card information to charge consumers for the negative option continuity plan; and The costs associated with the negative option continuity plan. Defendants’ Deceptive Telemarketing Presentation 25. Consumers who call the telephone number listed in Defendants’ advertisements described in Paragraph 16, above, speak with a telemarketer. Defendants’ telephonic sales presentations typically include statements concerning the initial monthly prices that consumers will pay for programming packages. Defendants’ telephonic presentations do not adequately disclose the monthly cost to consumers of the programming packages during in the second year of their subscription agreements. VIOLATIONS OF THE FTC ACT 26. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts or practices in or affecting commerce.” 27. Misrepresentations or deceptive omissions of material fact constitute deceptive acts or practices prohibited by Section 5(a) of the FTC Act. COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129 Document1 Filed03/11/15 Page8 of 11 COUNT I Failure to Disclose or Disclose Adequately Pricing of Defendants’ Satellite Television Subscription Service 28. In numerous instances, in connection with the advertising, marketing, promotion, offering for sale, and sale of Defendants’ subscription service, Defendants have represented, directly or indirectly, expressly or by implication, that their programming packages can be purchased by paying the advertised monthly prices, typically for a twelve-month period. 29. In numerous instances in which Defendants have made the representation set forth in Paragraph 28 of this Complaint, Defendants have failed to disclose, or to disclose adequately, to consumers certain material terms and conditions of the offer, including but not limited to: A. B. The mandatory two-year agreement period, which carries an early cancellation fee, for the subscription service; and The significantly higher price for programming packages, typically $25 to $45 per month higher, during the mandatory second year of the consumer’s agreement. This additional information would be material to consumers in deciding to purchase Defendants’ subscription services. 30. Defendants’ failure to disclose or disclose adequately the material information described in Paragraph 29, above, in light of the representation described in Paragraph 28 above, constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT II Failure to Disclose or Disclose Adequately Premium Channel Offer Terms 31. In numerous instances, in connection with the advertising, marketing, promotion, offering for sale, and sale of Defendants’ subscription service, Defendant have represented, directly or indirectly, expressly or by implication, that consumers could obtain certain premium channels for free for a certain period of time, typically three months. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 8 Case3:15-cv-01129 Document1 Filed03/11/15 Page9 of 11 32. In numerous instances in which Defendants have made the representation set forth in Paragraph 31 of this Complaint, Defendants have failed to disclose, or disclose adequately, to consumers the material terms and conditions related to the costs of the offer, including: A. B. C. That Defendants automatically enroll consumers in a negative option continuity plan with significant charges; That consumers must affirmatively cancel the negative option continuity plan before the end of the trial period to avoid charges; That Defendants use consumers’ credit or debit card information to charge consumers for the negative option continuity plan; and The costs associated with the negative option continuity plan. 33. D. Defendants’ failure to disclose or to disclose adequately the material information described in Paragraph 32 above, in light of the representation described in Paragraph 31 above, constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). VIOLATIONS OF THE RESTORE ONLINE SHOPPERS’ CONFIDENCE ACT 34. In 2010, Congress passed ROSCA, 15 U.S.C. §§ 8401 et seq., which became effective on December 29, 2010. Congress passed ROSCA because “[c]onsumer confidence is essential to the growth of online commerce. To continue its development as a marketplace, the Internet must provide consumers with clear, accurate information and give sellers an opportunity to fairly compete with one another for consumers’ business.” Section 2 of ROSCA, 15 U.S.C. § 8401. 35. Section 4 of ROSCA, 15 U.S.C. § 8403, generally prohibits charging consumers for goods or services sold in transactions effected on the Internet through a negative option feature, as that term is defined in the Commission’s Telemarketing Sales Rule (“TSR”), 16 C.F.R. § 310.2(u), unless the seller (1) clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information, (2) obtains the consumer’s COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129 Document1 Filed03/11/15 Page10 of 11 express informed consent before making the charge, and (3) provides a simple mechanism to stop recurring charges. 15 U.S.C. § 8403(1)–(3). 36. The TSR defines a negative option feature as: “an offer or agreement to sell or provide any goods or services, a provision under which the consumer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(u). 37. As described in Paragraphs 23-24, above, Defendants have advertised and sold access to premium channels, as part of their subscription service, to consumers through a negative option feature as defined by the TSR. See 16 C.F.R. § 310.2(u). 38. Pursuant to Section 5 of ROSCA, 15 U.S.C. § 8404, a violation of ROSCA is treated as a violation of a rule promulgated under Section 18 of the FTC Act, 15 U.S.C. § 57a. COUNT III Failure to Disclose All Material Terms 39. In numerous instances, Defendants have charged or attempted to charge consumers for access to premium channels, as part of its subscription service, through a negative option feature while failing to clearly and conspicuously disclose all material terms of the transaction before obtaining consumers’ billing information. 40. Defendants’ acts or practices, as described in Paragraph 39 above, constitute a violation of Section 4(1) of ROSCA, 15 U.S.C. § 8403(1), and are therefore treated as a violation of a rule promulgated under Section 18 of the FTC Act, 15 U.S.C. § 57a. COUNT IV Failure to Obtain Consumers’ Express Informed Consent 41. In numerous instances, Defendants have charged or attempted to charge consumers for access to premium channels, as part of their subscription service, through a negative option feature while failing to obtain consumers’ express informed consent before charging their credit card, debit card, bank account, or other financial account for those premium channels. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 10 Case3:15-cv-01129 Document1 Filed03/11/15 Page11 of 11 42. Defendants’ acts or practices, as described in Paragraph 41 above, constitute a violation of Section 4(2) of ROSCA, 15 U.S.C. § 8403(2), and are therefore treated as a violation of a rule promulgated under Section 18 of the FTC Act, 15 U.S.C. § 57a. PRAYER FOR RELIEF Wherefore, Plaintiff FTC, pursuant to Section 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b), 57b, Section 5 of ROSCA, 15 U.S.C. § 8404, and the Court’s own equitable powers, requests that the Court: A. Enter a permanent injunction to prevent further violations of the FTC Act and ROSCA by Defendants; B. Award such relief as the Court finds necessary to redress injury to consumers resulting from Defendants’ violations of the FTC Act and ROSCA, including but not limited to, rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies; and C. Award Plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper. Respectfully submitted, Jonathan E. Nuechterlein General Counsel /s/ Eric D. Edmonson Eric D. Edmondson Raymond E. McKown Erika Wodinsky Stacy Procter Jacob A. Snow Attorneys for Plaintiff Federal Trade Commission Dated: March 11, 2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 11
2015-03-11	2	Proposed Summons. (Edmondson, Eric) (Filed on 3/11/2015) (Entered: 03/11/2015)	Case3:15-cv-01129-MEJ Document2 Filed03/11/15 Page1 of 2 AO 440 (Rev. 06/12) Summons in a Civil Action UNITED STATES DISTRICT COURT for the __________ District of __________ Northern District of California FEDERAL TRADE COMMISSION Plaintiff(s) v. DIRECTV, a corporation, and DIRECTV, LLC a limited liability company Defendant(s) ) ) ) ) ) ) ) ) ) ) ) ) Civil Action No. 15-cv-01129 To: (Defendant’s name and address) SUMMONS IN A CIVIL ACTION DIRECTV c/o Clayton S. Friedman, Esq. Chad S. Hummel, Esq. and Linda A. Goldstein, Esq Manatt Phelps & Phillips, LLP 11355 W. Olympic Blvd. Los Angeles, CA 90064 A lawsuit has been filed against you. Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if you are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ. P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney, whose name and address are: Eric D. Edmonson, Erika Wodinsky, and Jacob A. Snow Federal Trade Commission 901 Market St., Ste. 570 San Francisco, CA 94103 If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court. Date: CLERK OF COURT Signature of Clerk or Deputy Clerk Case3:15-cv-01129-MEJ Document2 Filed03/11/15 Page2 of 2 AO 440 (Rev. 06/12) Summons in a Civil Action (Page 2) Civil Action No. 15-cv-01129 (This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l)) PROOF OF SERVICE This summons for (name of individual and title, if any) was received by me on (date) . (cid:117) I personally served the summons on the individual at (place) (cid:117) I left the summons at the individual’s residence or usual place of abode with (name) on (date) , and mailed a copy to the individual’s last known address; or , a person of suitable age and discretion who resides there, on (date) ; or (cid:117) I served the summons on (name of individual) designated by law to accept service of process on behalf of (name of organization) on (date) ; or (cid:117) I returned the summons unexecuted because (cid:117) Other (specify): , who is ; or My fees are $ for travel and $ for services, for a total of $ 0.00 I declare under penalty of perjury that this information is true. . . Date: Additional information regarding attempted service, etc: Server’s signature Printed name and title Server’s address
2015-03-11	3	Proposed Summons. (Edmondson, Eric) (Filed on 3/11/2015) (Entered: 03/11/2015)	Case3:15-cv-01129-MEJ Document3 Filed03/11/15 Page1 of 2 AO 440 (Rev. 06/12) Summons in a Civil Action UNITED STATES DISTRICT COURT for the __________ District of __________ Northern District of California FEDERAL TRADE COMMISSION Plaintiff(s) v. DIRECTV, a corporation, and DIRECTV, LLC a limited liability company Defendant(s) ) ) ) ) ) ) ) ) ) ) ) ) Civil Action No. 15-cv-01129 To: (Defendant’s name and address) SUMMONS IN A CIVIL ACTION DIRECTV, LLC c/o Clayton S. Friedman, Esq. Chad S. Hummel, Esq. and Linda A. Goldstein, Esq Manatt Phelps & Phillips, LLP 11355 W. Olympic Blvd. Los Angeles, CA 90064 A lawsuit has been filed against you. Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if you are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ. P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney, whose name and address are: Eric D. Edmonson, Erika Wodinsky, and Jacob A. Snow Federal Trade Commission 901 Market St., Ste. 570 San Francisco, CA 94103 If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court. Date: CLERK OF COURT Signature of Clerk or Deputy Clerk Case3:15-cv-01129-MEJ Document3 Filed03/11/15 Page2 of 2 AO 440 (Rev. 06/12) Summons in a Civil Action (Page 2) Civil Action No. 15-cv-01129 (This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l)) PROOF OF SERVICE This summons for (name of individual and title, if any) was received by me on (date) . (cid:117) I personally served the summons on the individual at (place) (cid:117) I left the summons at the individual’s residence or usual place of abode with (name) on (date) , and mailed a copy to the individual’s last known address; or , a person of suitable age and discretion who resides there, on (date) ; or (cid:117) I served the summons on (name of individual) designated by law to accept service of process on behalf of (name of organization) on (date) ; or (cid:117) I returned the summons unexecuted because (cid:117) Other (specify): , who is ; or My fees are $ for travel and $ for services, for a total of $ 0.00 I declare under penalty of perjury that this information is true. . . Date: Additional information regarding attempted service, etc: Server’s signature Printed name and title Server’s address
2015-03-11	4	NOTICE of Appearance by Erika Ruth Wodinsky (Wodinsky, Erika) (Filed on 3/11/2015) (Entered: 03/11/2015)	Case3:15-cv-01129-MEJ Document4 Filed03/11/15 Page1 of 2 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 /// /// /// /// UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, v. Case No. 15-cv-01129 NOTICE OF APPEARANCE OF ERIKA WODINSKY AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION a corporation, and DIRECTV, LLC, a limited liability company, Defendants. NOTICE OF APPEARANCE Case3:15-cv-01129-MEJ Document4 Filed03/11/15 Page2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, ERIKA WODINSKY, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of California and am admitted to practice in the Northern District of California. My address, telephone number, and email address are as follows: Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: March 11, 2015 /s/ Erika Wodinsky Erika Wodinsky Attorney Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE PAGE 2
2015-03-11	5	NOTICE of Appearance by Jacob Adam Snow (Snow, Jacob) (Filed on 3/11/2015) (Entered: 03/11/2015)	Case3:15-cv-01129-MEJ Document5 Filed03/11/15 Page1 of 2 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 /// /// /// /// UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, v. Case No. 15-cv-01129 NOTICE OF APPEARANCE OF JACOB A. SNOW AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION a corporation, and DIRECTV, LLC, a limited liability company, Defendants. NOTICE OF APPEARANCE Case3:15-cv-01129-MEJ Document5 Filed03/11/15 Page2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, JACOB A. SNOW, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of California and am employed by the United States government. My address, telephone number, and email address are as follows: Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: March 11, 2015 /s/ Jacob A. Snow Jacob A. Snow Attorney Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE PAGE 2
2015-03-11	6	NOTICE of Appearance by Stacy Rene Procter (Procter, Stacy) (Filed on 3/11/2015) (Entered: 03/11/2015)	Case3:15-cv-01129-MEJ Document6 Filed03/11/15 Page1 of 2 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 /// /// /// /// UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, v. Case No. 15-cv-01129 NOTICE OF APPEARANCE OF STACY PROCTER AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION a corporation, and DIRECTV, LLC, a limited liability company, Defendants. NOTICE OF APPEARANCE Case3:15-cv-01129-MEJ Document6 Filed03/11/15 Page2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, STACY PROCTER, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of California and am employed by the United States government. My address, telephone number, and email address are as follows: Federal Trade Commission 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 Phone: (310) 824-4343 Fax: (310) 824-4380 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: March 11, 2015 /s/ Stacy Procter Stacy Procter Attorney Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE PAGE 2
2015-03-11	7	NOTICE of Appearance by Raymond Edward McKown (McKown, Raymond) (Filed on 3/11/2015) (Entered: 03/11/2015)	Case3:15-cv-01129-MEJ Document7 Filed03/11/15 Page1 of 2 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 /// /// /// /// UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, v. Case No. 15-cv-01129 NOTICE OF APPEARANCE OF RAYMOND E. MCKOWN AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION a corporation, and DIRECTV, LLC, a limited liability company, Defendants. NOTICE OF APPEARANCE Case3:15-cv-01129-MEJ Document7 Filed03/11/15 Page2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, RAYMOND E. MCKOWN, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of California and am employed by the United States government. My address, telephone number, and email address are as follows: Federal Trade Commission 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 Phone: (310) 824-4343 Fax: (310) 824-4380 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: March 11, 2015 /s/ Raymond E. McKown Raymond E. McKown Attorney Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE PAGE 2
2015-03-11	8	Case assigned to Magistrate Judge Maria-Elena James. Counsel for plaintiff or the removing party is responsible for serving the Complaint or Notice of Removal, Summons and the assigned judge's standing orders and all other new case documents upon the opposing parties. For information, visit E-Filing A New Civil Case at http://cand.uscourts.gov/ecf/caseopening. Standing orders can be downloaded from the court's web page at www.cand.uscourts.gov/judges. Upon receipt, the summons will be issued and returned electronically. Counsel is required to send chambers a copy of the initiating documents pursuant to L.R. 5-1(e)(7). A scheduling order will be sent by Notice of Electronic Filing (NEF) within two business days. (ha, COURT STAFF) (Filed on 3/11/2015) (Entered: 03/11/2015)
2015-03-11	9	Initial Case Management Scheduling Order with ADR Deadlines: Case Management Statement due by 6/4/2015. Case Management Conference set for 6/11/2015 10:00 AM. (hdjS, COURT STAFF) (Filed on 3/11/2015) (Entered: 03/12/2015)	Case3:15-cv-01129-MEJ Document9 Filed03/11/15 Page1 of 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff (s), v. DIRECTV INC, Defendant(s). No. C 15-01129 MEJ ORDER SETTING INITIAL CASE MANAGEMENT CONFERENCE AND ADR DEADLINES IT IS HEREBY ORDERED that this action is assigned to the Honorable Maria-Elena James. When serving the complaint or notice of removal, the plaintiff or removing defendant must serve on all other parties a copy of this order , the Notice of Assignment of Case to a United States Magistrate Judge for Trial, and all other documents specified in Civil Local Rule 4-2. Counsel must comply with the case schedule listed below unless the Court otherwise orders. IT IS FURTHER ORDERED that this action is assigned to the Alternative Dispute Resolution (ADR) Multi-Option Program governed by ADR Local Rule 3. Counsel and clients shall familiarize themselves with that rule and with the material entitled ADispute Resolution Procedures in the Northern District of California@ on the Court ADR Internet site at cand.uscourts.gov/adr. A limited number of printed copies are available from the Clerk=s Office for parties in cases not subject to the court=s Electronic Case Filing program (ECF). IT IS FURTHER ORDERED that plaintiff or removing defendant serve upon all parties the brochure entitled AConsenting To A Magistrate Judge=s Jurisdiction In The Northern District Of California,@ additional copies of which can be downloaded from the following Internet site: http://www.cand.uscourts.gov. CASE SCHEDULE -ADR MULTI-OPTION PROGRAM Date 3/11/2015 5/21/2015 Event Complaint filed Last day to: $ meet and confer re: initial disclosures, early settlement, ADR process selection, and discovery plan $ $ file ADR Certification signed by Parties and Counsel (form available at cand.uscourts.gov) file either Stipulation to ADR Process or Notice of Need for ADR Phone Conference (form available at cand.uscourts.gov) Governing Rule FRCivP_26(f) & ADR L.R.3-5 Civil_L.R. 16-8 (b) & ADR L.R. 3-5(b) Civil_L.R. 16-8 (c) & ADR L.R. 3-5(b) & (c) Last day to file Rule 26(f) Report, complete initial FRCivP 26(a) (1) Civil Case3:15-cv-01129-MEJ Document9 Filed03/11/15 Page2 of 2 6/4/2015 6/11/2015 disclosures or state objection in Rule 26(f) Report and file Case Management Statement per attached Standing Order re Contents of Joint Case Management Statement (also available at cand.uscourts.gov) INITIAL CASE MANAGEMENT CONFERENCE (CMC) in Ctrm. B, 15th Floor, SF at 10:00 AM _L.R . 16-9 Civil _L.R. 16-10 If the Initial Case Management Conference is continued, the other deadlines are continued accordingly.
2015-03-11	13	EXHIBIT 2 (VIDEO) re 1 Complaint filed byFederal Trade Commission. (Related document(s) 1 ) (hdjS, COURT STAFF) (Filed on 3/11/2015) (Entered: 03/17/2015)
2015-03-12	10	Summons Issued as to DIRECTV LLC, DIRECTV, Inc. (Attachments: # 1 Summons)(hdjS, COURT STAFF) (Filed on 3/12/2015) (Entered: 03/12/2015)	Case3:15-cv-01129-MEJ Document10 Filed03/12/15 Page1 of 2 AO 440 (Rev. 06/12) Summons in a Civil Action UNITED STATES DISTRICT COURT for the __________ District of __________ Northern District of California FEDERAL TRADE COMMISSION Plaintiff(s) v. DIRECTV, a corporation, and DIRECTV, LLC a limited liability company Defendant(s) ) ) ) ) ) ) ) ) ) ) ) ) Civil Action No. 15-cv-01129 MEJ To: (Defendant’s name and address) SUMMONS IN A CIVIL ACTION DIRECTV c/o Clayton S. Friedman, Esq. Chad S. Hummel, Esq. and Linda A. Goldstein, Esq Manatt Phelps & Phillips, LLP 11355 W. Olympic Blvd. Los Angeles, CA 90064 A lawsuit has been filed against you. Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if you are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ. P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney, whose name and address are: Eric D. Edmonson, Erika Wodinsky, and Jacob A. Snow Federal Trade Commission 901 Market St., Ste. 570 San Francisco, CA 94103 If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court. Date: 3/12/2015 NITE D U N O R T A T E S DISTRIC T S T C O CLERK OF COURT Richard W. Wieking U R T A I N R A LIFO C Signature of Clerk or Deputy Clerk H E R N DISTRICT O F Case3:15-cv-01129-MEJ Document10 Filed03/12/15 Page2 of 2 AO 440 (Rev. 06/12) Summons in a Civil Action (Page 2) Civil Action No. 15-cv-01129 (This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l)) PROOF OF SERVICE This summons for (name of individual and title, if any) was received by me on (date) . (cid:117) I personally served the summons on the individual at (place) (cid:117) I left the summons at the individual’s residence or usual place of abode with (name) on (date) , and mailed a copy to the individual’s last known address; or , a person of suitable age and discretion who resides there, on (date) ; or (cid:117) I served the summons on (name of individual) designated by law to accept service of process on behalf of (name of organization) on (date) ; or (cid:117) I returned the summons unexecuted because (cid:117) Other (specify): , who is ; or My fees are $ for travel and $ for services, for a total of $ 0.00 I declare under penalty of perjury that this information is true. . . Date: Additional information regarding attempted service, etc: Server’s signature Printed name and title Server’s address Case3:15-cv-01129-MEJ Document10-1 Filed03/12/15 Page1 of 2 AO 440 (Rev. 06/12) Summons in a Civil Action UNITED STATES DISTRICT COURT for the __________ District of __________ Northern District of California FEDERAL TRADE COMMISSION Plaintiff(s) v. DIRECTV, a corporation, and DIRECTV, LLC a limited liability company Defendant(s) ) ) ) ) ) ) ) ) ) ) ) ) Civil Action No. 15-cv-01129 MEJ To: (Defendant’s name and address) SUMMONS IN A CIVIL ACTION DIRECTV, LLC c/o Clayton S. Friedman, Esq. Chad S. Hummel, Esq. and Linda A. Goldstein, Esq Manatt Phelps & Phillips, LLP 11355 W. Olympic Blvd. Los Angeles, CA 90064 A lawsuit has been filed against you. Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if you are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ. P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney, whose name and address are: Eric D. Edmonson, Erika Wodinsky, and Jacob A. Snow Federal Trade Commission 901 Market St., Ste. 570 San Francisco, CA 94103 If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court. Date: 3/12/2015 S T NITE D U N O R T H E R N CLERK OF COURT A T E S DISTRIC T C O U R T A I N R A LIFO C Richard W. Wieking Signature of Clerk or Deputy Clerk DISTRICT O F Case3:15-cv-01129-MEJ Document10-1 Filed03/12/15 Page2 of 2 AO 440 (Rev. 06/12) Summons in a Civil Action (Page 2) Civil Action No. 15-cv-01129 (This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l)) PROOF OF SERVICE This summons for (name of individual and title, if any) was received by me on (date) . (cid:117) I personally served the summons on the individual at (place) (cid:117) I left the summons at the individual’s residence or usual place of abode with (name) on (date) , and mailed a copy to the individual’s last known address; or , a person of suitable age and discretion who resides there, on (date) ; or (cid:117) I served the summons on (name of individual) designated by law to accept service of process on behalf of (name of organization) on (date) ; or (cid:117) I returned the summons unexecuted because (cid:117) Other (specify): , who is ; or My fees are $ for travel and $ for services, for a total of $ 0.00 I declare under penalty of perjury that this information is true. . . Date: Additional information regarding attempted service, etc: Server’s signature Printed name and title Server’s address
2015-03-13	11	CERTIFICATE OF SERVICE by Federal Trade Commission re 10 Summons Issued, 9 Initial Case Management Scheduling Order with ADR Deadlines, 4 Notice of Appearance, 7 Notice of Appearance, 6 Notice of Appearance, 1 Complaint, 5 Notice of Appearance (Edmondson, Eric) (Filed on 3/13/2015) (Entered: 03/13/2015)	Case3:15-cv-01129-MEJ Document11 Filed03/13/15 Page1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Case No. 15-cv-01129-EMJ CERTIFICATE OF SERVICE Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, /// /// /// /// /// /// a limited liability company, Defendants. CERTIFICATE OF SERVICE 1 Case3:15-cv-01129-MEJ Document11 Filed03/13/15 Page2 of 2 CERTIFICATE OF SERVICE I hereby certify that on March 12, 2015, I served a true and correct copy of (1) (2) (3) (4) SUMMONS; COMPLAINT AND EXHIBITS; PROPOSED SUMMONS; NOTICE OF APPEARANCES FOR ERIKA WODINSKY, JACOB SNOW, RAY MCKOWN, AND STACY PROCTER; INITIAL CASE MANAGEMENT SCHEDULING ORDER WITH ADR DEADLINES; (5) (6) MAGJUDGEBROCHURE.WEBVERSION.SEPT2012; NOTICE_OF_MJ_ASSIGNMENT_ELECTION_FORM; (7) (8) ALL_JUDGES_STANDING_REV_NOV_2014; ECF REGISTRATION INFORMATION; (9) JUDGE MARIA-ELENA JAMES’S CASE MANAGEMENT STANDING ORDER (10) AND THE DISCOVERY STANDING ORDER; and (11) EXHIBIT 2 DVD on: Counsel for Defendants Chad Hummel, Esq. Clayton Friedman, Esq. Manatt, Phelps & Phillip LLP 11355 W. Olympic Blvd. Los Angeles, CA 90064 Phone: (310) 312-4000 Fax: (310) 312-4224 Email: [email protected]; [email protected] Dated: March 12, 2015 Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 CERTIFICATE OF SERVICE 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-03-16	12	NOTICE of Appearance by Boris Yankilovich (Yankilovich, Boris) (Filed on 3/16/2015) (Entered: 03/16/2015)	Case3:15-cv-01129-MEJ Document12 Filed03/16/15 Page1 of 2 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 /// /// /// /// UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, v. Case No. NOTICE OF APPEARANCE OF BORIS YANKILOVICH AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION a corporation, and DIRECTV, LLC, a limited liability company, Defendants. NOTICE OF APPEARANCE Case3:15-cv-01129-MEJ Document12 Filed03/16/15 Page2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, BORIS YANKILOVICH, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of California and am admitted to practice in the Northern District of California. My address, telephone number, and email address are as follows: Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: March 16, 2015 /s/ Boris Yankilovich Boris Yankilovich Attorney Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE PAGE 2
2015-03-17	14	CONSENT/DECLINATION to Proceed Before a US Magistrate Judge by DIRECTV LLC, DIRECTV, Inc... (Baker, Christian) (Filed on 3/17/2015) (Entered: 03/17/2015)	Case3:15-cv-01129-MEJ Document14 Filed03/17/15 Page1 of 2 MANATT, PHELPS & PHILLIPS, LLP CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 (310) 312-4224 Facsimile: MANATT, PHELPS & PHILLIPS, LLP CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415)291-7400 Facsimile: (415)291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 Plaintiff, v. DIRECTV, a corporation, and DECLINATION TO PROCEED BEFORE A MAGISTRATE JUDGE AND REQUEST FOR REASSIGNMENT TO A UNITED STATES DISTRICT JUDGE Div: Judge: Magistrate Judge Maria-Elena James San Francisco DIRECTV, LLC, a limited liability company, Date of Filing: Trial Date: March 11,2015 Not Set Defendants. DECLINATION TO PROCEED BEFORE MAGISTRATE JUDGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 >s & p w Case3:15-cv-01129-MEJ Document14 Filed03/17/15 Page2 of 2 REQUEST FOR REASSIGNMENT TO A UNITED STATES DISTRICT JUDGE The undersigned parties in the above-captioned civil matter hereby decline to consent to the assignment of this case to a United States Magistrate Judge for all further proceedings and hereby request the reassignment of this case to a United States District Judge, without waiver of any other rights in this matter. Dated: March 17,2015 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC DECLINATION TO PROCEED BEFORE MAGISTRATE JUDGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 >s & p vv
2015-03-18	15	CLERK'S NOTICE OF IMPENDING REASSIGNMENT TO A U.S. DISTRICT COURT JUDGE: The Clerk of this Court will now randomly reassign this case to a District Judge because either (1) a party has not consented to the jurisdiction of a Magistrate Judge, or (2) time is of the essence in deciding a pending judicial action for which the necessary consents to Magistrate Judge jurisdiction have not been secured. You will be informed by separate notice of the district judge to whom this case is reassigned. ALL HEARING DATES PRESENTLY SCHEDULED BEFORE THE CURRENT MAGISTRATE JUDGE ARE VACATED AND SHOULD BE RE-NOTICED FOR HEARING BEFORE THE JUDGE TO WHOM THIS CASE IS REASSIGNED. This is a text only docket entry; there is no document associated with this notice. (rmm2S, COURT STAFF) (Filed on 3/18/2015) (Entered: 03/18/2015)
2015-03-18	16	ORDER REASSIGNING CASE. Case reassigned to Judge Haywood S Gilliam, Jr for all further proceedings. Magistrate Judge Maria-Elena James no longer assigned to the case. Signed by Executive Committee on 3/18/15. (sv, COURT STAFF) (Filed on 3/18/2015) (Entered: 03/18/2015)	Case3:15-cv-01129-HSG Document16 Filed03/18/15 Page1 of 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA No. CV 15-01129 MEJ ORDER FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV INC, / Defendant. GOOD CAUSE APPEARING THEREFOR, IT IS ORDERED that this case is reassigned to the Honorable HAYWOOD S GILLIAM in the SAN FRANCISCO division for all further proceedings. Counsel are instructed that all future filings shall bear the initials HSG immediately after the case number. All dates presently scheduled are vacated and motions should be renoticed for hearing before the judge to whom the case has been reassigned. Briefing schedules, including ADR and other deadlines remain unchanged. See Civil L.R. 7-7(d). Matters for which a magistrate judge has already issued a report and recommendation shall not be rebriefed or noticed for hearing before the newly assigned judge; such matters shall proceed in accordance with Fed. R. Civ. P. 72(b). Dated: March 18, 2015 sv FOR THE EXECUTIVE COMMITTEE: Richard W. Wieking Clerk of Court A true and correct copy of this order has been served by mail upon any pro se parties. t t r r u u o o C C t t c c i i r r t t s s i i D D s s e e t t a a t t S S d d e e t t i i n n U U a a i i n n r r o o f f i i l l a a C C f f o o t t c c i i r r t t s s i i D D n n r r e e h h t t r r o o N N e e h h t t r r o o F F
2015-03-19	17	CLERK'S NOTICE SETTING CASE MANAGEMENT CONFERENCE FOR REASSIGNED CIVIL CASE. Notice is hereby given that a Case Management Conference has been set for June 16, 2015, before Judge Haywood S. Gilliam, Jr., at 2:00 p.m., in Courtroom 15, 18th Floor, 450 Golden Gate Avenue, San Francisco, CA. Case Management Statement due by June 9, 2015. (This is a text only docket entry, there is no document associated with this notice.) (ndr, COURT STAFF) (Filed on 3/19/2015) (Entered: 03/19/2015)
2015-03-19	18	CERTIFICATE OF SERVICE by Federal Trade Commission service of the STANDING ORDER FOR CIVIL CASES BEFORE DISTRICT JUDGE HAYWOOD S. GILLIAM (Edmondson, Eric) (Filed on 3/19/2015) (Entered: 03/19/2015)	Case3:15-cv-01129-HSG Document18 Filed03/19/15 Page1 of 2 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected] ; [email protected]; [email protected] ; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected] ; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG CERTIFICATE OF SERVICE a corporation, v. Plaintiff, FEDERAL TRADE COMMISSION , DIRECTV, and DIRECTV, LLC, /// /// /// /// /// a limited liability company, Defendants. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CERTIFICATE OF SERVICE 1 Case3:15-cv-01129-HSG Document18 Filed03/19/15 Page2 of 2 CERTIFICATE OF SERVICE I hereby certify that on March 19, 2015, I served a true and correct copy of the STANDING ORDER FOR CIVIL CASES BEFORE DISTRICT JUDGE HAYWOOD S. GILLIAM on: Counsel for Defendants Christian Baker, Esq. Chad Hummel, Esq. Clayton Friedman, Esq. Manatt, Phelps & Phillips LLP 11355 W. Olympic Blvd. Los Angeles, CA 90064 Phone: (310) 312-4000 Fax: (310) 312-4224 Email: [email protected]; [email protected]; [email protected] 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: March 19, 2015 Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 CERTIFICATE OF SERVICE 2
2015-04-02	19	ANSWER to Complaint byDIRECTV LLC, DIRECTV, Inc.. (Baker, Christian) (Filed on 4/2/2015) (Entered: 04/02/2015)	Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page1 of 10 CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310)312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415)291-7400 Facsimile: (415)291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 HSG Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. ANSWER OF DIRECTV AND DIRECTV, LLC Judge: Hon. Haywood S. Gilliam, Jr., United States District Court Judge Complaint Filed: March 11, 2015 Trial Date: Not Set Defendants DIRECTV and DIRECTV, LLC, by and through their undersigned counsel, hereby answer the Complaint ("complaint") filed by Plaintiff FEDERAL TRADE COMMISSION (hereinafter "Plaintiff or "FTC"), as follows: ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 'S & Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page2 of 10 ANSWER TO THE COMPLAINT 1. Paragraph 1 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. More specifically, Defendants generally and specifically deny that they have engaged in conduct that violates Section 5 of the FTC Act or Section 4 of ROSCA. Defendants have fully and adequately disclosed to potential and actual subscribers, at all times relevant to this action, all the material terms of their subscription satellite television services and offers, including, but not limited to, the pricing of television programming packages, the existence and length of consumer contract terms, the existence of early cancellation fees and the circumstances under which those may be imposed, and the terms relating to promotional offers for premium channels such as HBO, Showtime, and Cinemax. Defendants further deny that any equitable or statutory remedy as alleged is warranted. JURISDICTION. VENUE AND INTRADISTRICT ASSIGNMENT 2. Defendants admit the allegations of Paragraph 2, except to the extent that this Court may determine that the FTC lacks standing to assert any claims over which the Federal Communications Commission ("FCC") has exclusive enforcement authority. 3. Defendants admit that venue is proper in this judicial district, but reserve their right to seek a transfer to a more convenient venue should circumstances arise justifying a motion under, for example, 28 U.S.C. Section 1404(a). 4. Defendants admit that DIRECTV, LLC advertised and has sold satellite television subscription services in San Francisco County and deny the remaining allegations contained in Paragraph 4. 5. 6. PLAINTIFF Defendants admit the allegations of Paragraph 5. Defendants admit the allegations of Paragraph 6, except to the extent that the Court may determine that the FTC is not authorized or lacks standing to enjoin, or seek equitable relief relating to, conduct at issue in this case due to the FCC's exclusive enforcement authority. 2 ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 •s & Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page3 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 >s & DEFENDANTS 7. Defendants admit the allegations of Paragraph 7, except that DIRECTV, LLC is the entity that has engaged in the advertising, marketing, distribution, and selling activities of direct-to-home digital television services to consumers throughout the United States that are the subject of the complaint. 8. Defendants admit the allegations of Paragraph 8, except that they deny that defendant DIRECTV (the "named defendant DIRECTV") has directly engaged in the activities listed in this Paragraph. Hereinafter, any admissions by "Defendants" to allegations of the complaint are made solely with respect to and by DIRECTV, LLC (hereinafter "DIRECTV"), as the named defendant DIRECTV operates other business units which are not the subject of the complaint. All of the material allegations, if directed at the named defendant DIRECTV, are generally and specifically denied. COMMERCE 9. Defendants admit the allegations of Paragraph 9. DEFENDANTS' BUSINESS ACTIVITIES 10. Defendants admit the allegations of Paragraph 10, except that DIRECTV is the entity that, as of December 31, 2013, had 20.3 million subscribers in the United States. 11. Defendants admit that DIRECTV offers direct-to-home satellite television service to consumers by subscription, and that consumers who subscribe receive programming, necessary equipment, installation, and support services. Defendants deny any remaining allegations contained in Paragraph 11. 12. Defendants deny the allegations contained in Paragraph 12 except as follows: DIRECTV admits that it has made offers to consumers that provide introductory pricing discounts, no upfront or reduced costs for installation and equipment, and other benefits, in exchange for the consumer's agreement to purchase a minimum level of service for a period, typically, of 24 months. DIRECTV admits that, under the terms of such offers, which have been clearly and conspicuously disclosed to consumers, and in appropriate circumstances, it has the contractual right to assess and collect early cancellation fees, which have sometimes been $20 per 3 ANSWER Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page4 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 •s & month for each month remaining on a subscriber's agreement, should the subscriber breach their contractual obligation to maintain a required minimum level of service for the entire commitment period. Defendants further admit that DIRECTV'S customers may become month-to-month subscribers after 24 months. Defendants deny the remaining allegations of Paragraph 12. 13. Defendants admit that DIRECTV advertises for its products and services, including that it offers introductory promotional pricing for some of its programming packages, the terms of which vary by offer and have been and are clearly and conspicuously disclosed to consumers. Defendants further admit that DIRECTV advertises for its satellite television subscription services, including, in certain instances, promotional pricing offers, in a variety of media, including television, print, and the Internet. Defendants admit that the regular prices for satellite television subscription programming packages are periodically adjusted to reflect inflationary price increases and that the fact that its program pricing is subject to change has been and is clearly and conspicuously disclosed to consumers. Defendants admit that consumers who obtain the benefit of substantially discounted introductory first year pricing are typically charged the then-existing regular price of whatever programming package they choose during the second year of their subscription. Defendants deny the remaining allegations contained in Paragraph 13. 14. Defendants admit that DIRECTV'S programming subscriptions may include, at the election of consumers, certain premium channels such as HBO, Cinemax, and Showtime free of charge for a limited period of time, that consumers are thereafter charged the regular price for subscriptions to such premium channels at the end of the promotional period unless the consumer contacts DIRECTV to cancel one or more of the premium services, and that the material terms and conditions of these premium channel offers are clearly and conspicuously disclosed to consumers. Defendants deny the remaining allegations contained in Paragraph 14. 15. Defendants admit that DIRECTV, Inc. entered into a Multistate Settlement Agreement with 50 states and the District of Columbia and that the terms of that Agreement bound and continue to bind certain activities of DIRECTV relating to some of the identical issues addressed in this complaint. DIRECTV further admits that not a single state has brought an enforcement action for any alleged violation of the letter or spirit of that Agreement since it was 4 ANSWER Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page5 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 >s & effective (January 2011). Defendants lack knowledge sufficient to admit or deny the remaining allegations contained in Paragraph 15. 16. Defendants admit that DIRECTV has disseminated advertisements for its subscription services since 2007, and that Plaintiff attaches what it claims to be examples of portions of such advertisements as Exhibits 1 through 3, the contents of which speak for themselves. Defendants admit that the quoted sections in this Paragraph appear in the advertisements, and state that the material terms of the programming package offers are clearly, conspicuously, and prominently disclosed to consumers at multiple times and in multiple ways prior to the time that any consumer is financially committed to subscribe to DIRECTV service and a programming package. Defendants deny the remaining allegations contained in Paragraph 16. 17. 18. Defendants deny the allegations contained in Paragraph 17. Defendants admit that certain DIRECTV advertisements have described an offer for free premium channels for three months. Defendants further admit that Plaintiff attaches an example of a DIRECTV advertisement as Exhibit 1, the content of which speaks for itself. Defendants further admit that, in language not quoted in full in the complaint, the advertisement states, with respect to the offer: "Over 30 premium channels FREE for 3 months including HBO, SHOWTIME and Cinemax with SELECT or ULTIMATE Packages. All Packages require 24 mo agreement [...] IF BY THE END OF PROMOTIONAL PRICE PERIOD(S) CUSTOMER DOES NOT CONTACT DIRECTV TO CHANGE SERVICE, THEN ALL SERVICES WILL AUTOMATICALLY CONTINUE AT THE THEN-PREVAILING RATES." Defendants deny the remaining allegations contained in Paragraph 18. 19. 20. Defendants deny the allegations contained in Paragraph 19. Defendants admit that DIRECTV maintains the website, www.directv.com, on which consumers receive information about DIRECTV products and services and through which they may subscribe to its satellite television services. Defendants further admit that the website contains a landing page, programming package selection page, receiver selection page, a shopping cart page, and an order confirmation page, among other pages. Defendants deny the 5 ANSWER Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page6 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 >s & remaining allegations contained in Paragraph 20. 21. Defendants admit that Plaintiff attaches as Exhibit 4 printed copies of some selected web pages that appeared on one version of a subscription web flow on www.directv.com. the content of which speaks for itself. Defendants state that Exhibit 4 does not contain many relevant web pages or the text contained in or accessed through hyperlinks, roll-overs, mouse overs, light boxes, infohovers, pop-ups, and similar means of conveying information to consumers that are readily available to consumers who navigate DIRECTV'S website. In short, Defendants deny that Exhibit 4 depicts all relevant portions of a DIRECTV web flow, or even an example thereof. Defendants deny the remaining allegations contained in Paragraph 21. 22. 23. Defendants deny the allegations contained in Paragraph 22. Defendants admit that certain of DIRECTV web pages on www.directv.com contain text advertising its offers for free premium channels, and that Plaintiff attaches as Exhibit 4 what it contends are copies of selected web pages that appeared on one version of a subscription flow from www.directv.com. the content of which speaks for itself. Defendants deny that Exhibit 4 depicts all relevant portions of a DIRECTV web flow, or even an example thereof. Defendants deny the remaining allegations contained in Paragraph 23. 24. 25. Defendants deny the allegations contained in Paragraph 24. Defendants admit that consumers who call a telephone number listed in DIRECTV'S advertisements can speak with a telephone customer service representative. If the consumer wished to subscribe during such a call, the terms and conditions of subscriptions to DIRECTV'S satellite television services are fully and clearly disclosed. Defendants deny the remaining allegations contained in Paragraph 25. ALLEGATIONS RELATED TO THE FTC ACT 26. Paragraph 26 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 27. Paragraph 27 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any 6 ANSWER Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page7 of 10 such allegations. COUNT I 28. 29. 30. 31. 32. 33. Defendants deny the allegations contained in Paragraph 28. Defendants deny the allegations contained in Paragraph 29. Defendants deny the allegations contained in Paragraph 30. COUNT II Defendants deny the allegations contained in Paragraph 31. Defendants deny the allegations contained in Paragraph 32. Defendants deny the allegations contained in Paragraph 33. ALLEGATIONS RELATED TO ROSCA 34. Paragraph 34 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 35. Paragraph 35 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 36. Paragraph 36 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 37. Paragraph 37 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 38. Defendants deny the allegations contained in Paragraph 38. COUNT III 39. 40. Defendants deny the allegations contained in Paragraph 39. Defendants deny the allegations contained in Paragraph 40. COUNT IV 41. Defendants deny the allegations contained in Paragraph 41. s 7 ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 >s & Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page8 of 10 42. Defendants deny the allegations contained in Paragraph 42. AFFIRMATIVE DEFENSES By setting forth these affirmative defenses, Defendants do not assume the burden of proving any fact, issue, or element of a claim for relief where such burden properly belongs to Plaintiff. Moreover, nothing stated herein is intended to be construed as an acknowledgement that any particular issue or subject matter is relevant to Plaintiffs allegations. Nor shall anything stated or unstated constitute an admission of any kind. FIRST AFFIRMATIVE DEFENSE (Failure To State A Claim) The complaint fails to state sufficient facts to constitute a cause of action against Defendants. SECOND AFFIRMATIVE DEFENSE (Compliance With Applicable Law) Plaintiffs claims are barred because Defendants' conduct is not unlawful in that Defendants complied with applicable statutes and regulations. THIRD AFFIRMATIVE DEFENSE (Statute Of Limitations) Plaintiffs claims are barred in part or in whole by the statute of limitations applicable to this action. FOURTH AFFIRMATIVE DEFENSE (Laches) Plaintiffs claims are barred in part or in whole by the doctrine of laches. FIFTH AFFIRMATIVE DEFENSE (Estoppel) Plaintiffs claims are barred in part or in whole by the doctrine of estoppel. SIXTH AFFIRMATIVE DEFENSE (Waiver) Plaintiffs claims are barred in part or in whole by the doctrine of waiver. 8 ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 >s & Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page9 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 'S & SEVENTH AFFIRMATIVE DEFENSE (Lack Of Standing) Plaintiff lacks standing to assert certain claims alleged in the complaint pursuant to 15 U.S.C. §. 45(a)(1) and 47 U.S.C. § 303(v). EIGHTH AFFIRMATIVE DEFENSE (Primary Jurisdiction) Another federal agency has primary jurisdiction to assert certain claims alleged in the complaint pursuant to 15 U.S.C. § 45(a)(1) and 47 U.S.C. § 303(v). NINTH AFFIRMATIVE DEFENSE (Claim Preclusion) Plaintiff is precluded by 15 U.S.C § 45(a)(1) and 47 U.S.C. § 303(v) from asserting certain claims alleged in the complaint. TENTH AFFIRMATIVE DEFENSE (Good Faith Belief And Conduct) The acts and statements of Defendants were fair and reasonable and were performed in good faith based on all the relevant facts known to Defendants. Defendants acted with a good faith belief that they had good cause and/or legitimate business reasons to act as they did and did not directly or indirectly perform any acts that would constitute a violation of consumers' rights. As a consequence, Plaintiff is not entitled to any damages whatsoever. ELEVENTH AFFIRMATIVE DEFENSE (Reservation Of Other Affirmative Defenses) Defendants lack sufficient information of all the facts and evidence surrounding the subject incident and are therefore unable to ascertain at this time any additional affirmative defenses which Defendants may have. Therefore, Defendants expressly reserve the right to amend this Answer to assert such other affirmative defenses as may become apparent subsequent to the filing of this Answer, whether in discovery, at trial, or otherwise. DEFENDANTS' PRAYER FOR RELIEF WHEREFORE, DIRECTV and DIRECTV, LLC respectfully request that this Court: 9 ANSWER Case3:15-cv-01129-HSG Document19 Filed04/02/15 Page10 of 10 1. Dismiss Plaintiffs complaint with prejudice as to DIRECTV and DIRECTV, LLC; 2. Order that Plaintiff take nothing by reason of the complaint, that Plaintiff is entitled to no relief, and that judgment be rendered in favor of DIRECTV and DIRECTV, LLC; 3. Award DIRECTV and DIRECTV, LLC its costs and expenses incurred in connection with this action; and 4. Grant DIRECTV and DIRECTV, LLC such other relief as the Court deems proper. Dated: April 2, 2015 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 10 ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 'S &
2015-04-02	20	Certificate of Interested Entities by DIRECTV LLC, DIRECTV, Inc. (Baker, Christian) (Filed on 4/2/2015) (Entered: 04/02/2015)	Case3:15-cv-01129-HSG Document20 Filed04/02/15 Page1 of 2 CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310)312-4000 Facsimile: (310)312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415)291-7400 Facsimile: (415)291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 HSG Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CERTIFICATION OF INTERESTED ENTITIES OR PERSONS Judge: Hon. Haywood S. Gilliam, Jr., United States District Court Judge Complaint Filed: March 11, 2015 Trial Date: Not Set CERTIFICATION OF INTERESTED ENTITIES OR PERSONS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 'S & Case3:15-cv-01129-HSG Document20 Filed04/02/15 Page2 of 2 Pursuant to Civil L.R. 3-15, the undersigned certifies that the following listed persons, associations of persons, firms, partnerships, corporations (including parent corporations) or other entities (i) have a financial interest in the subject matter in controversy or in a party to the proceeding, or (ii) have a non-fmancial interest in that subject matter or in a party that could be substantially affected by the outcome of this proceeding: 1. DIRECTV, a publicly-traded Delaware corporation. 2. The DIRECTV Group, Inc., a Delaware corporation, indirectly wholly owned (through various wholly-owned subsidiaries) by DIRECTV. 3. DIRECTV, LLC, a California limited liability company, a wholly owned subsidiary of DIRECTV Holdings, LLC. 4. DIRECTV Holdings LLC, a Delaware limited liability company, a wholly owned subsidiary of The DIRECTV Group, Inc. 5. No entity or person owns more than 10% of the shares of DIRECTV. Dated: April 2, 2015 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 CERTIFICATION OF INTERESTED ENTITIES OR PERSONS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 'S &
2015-04-16	21	STIPULATION WITH PROPOSED ORDER for Extension of Time to File Motion to Strike Affirmative Defenses filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 4/16/2015) Modified on 4/16/2015 (dtmS, COURT STAFF). (Entered: 04/16/2015)	Case3:15-cv-01129-HSG Document21 Filed04/16/15 Page1 of 3 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, a corporation, Case No. 15-cv-01129 HSG STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, (“FTC”) and defendants DIRECTV and DIRECTV LLC (collectively “DIRECTV” or “Defendants”) hereby stipulate to a request for a court order extending the deadline for the FTC Pursuant to Civil Local Rules 6-1, 6-2 and 7-12, plaintiff Federal Trade Commission a limited liability company, Defendants. STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document21 Filed04/16/15 Page2 of 3 to file a motion to strike one or more of defendants’ affirmative defenses pursuant to Federal Rule of Civil Procedure 12(f). The parties request the filing deadline be extended from April 23 to May 15, 2015. The requested modification will not affect the schedule for the case. Pursuant to Civil Local Rule 6-2, the reasons for the requested modification are set forth in a supporting declaration accompanying this request. To wit, the attorneys for the Parties have agreed to meet and confer in person concerning the FTC’s objections to Defendants’ affirmative defenses. However, the schedules of both parties’ attorneys preclude meeting before April 23, 2015. We believe that having the proposed meeting, even if not required, may assist in focusing the issues to be raised in any motion to strike Defendants’ affirmative defenses, or obviate the need for such motion. filing of this document from all other signatories represented by a “conformed” signature. Pursuant to Civil Local Rule 5-1(i), I hereby attest that I have obtained concurrence in the Respectfully submitted, Jonathan E. Nuechterlein General Counsel /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission Dated: April 16, 2015 STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document21 Filed04/16/15 Page3 of 3 Dated: April 16, 2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Manatt, Phelps & Phillips, LLP /s/ Chad S. Hummell Chad S. Hummel Attorney for Defendants DIRECTV and DIRECTV, LLC PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: ________________ HONORABLE HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE NORTHERN DISTRICT OF CALIFORNIA STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) 3
2015-04-16	22	Declaration of ERIC D. EDMONDSON in Support of 21 STIPULATION WITH PROPOSED ORDER filed byFederal Trade Commission. (Related document(s) 21 ) (Edmondson, Eric) (Filed on 4/16/2015) Modified on 4/16/2015 (dtmS, COURT STAFF). (Entered: 04/16/2015)	Case3:15-cv-01129-HSG Document22 Filed04/16/15 Page1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission v. Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, Defendants. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129 HSG DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF STIPULATED REQUEST TO EXTEND THE DEADLINE FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE I, Eric D. Edmondson, declare as follows: 1. I am an attorney of record for plaintiff Federal Trade Commission (“FTC”) in the above-captioned matter. Pursuant to Civil Local Rule 6-2, I submit this declaration in support of DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) 1 Case3:15-cv-01129-HSG Document22 Filed04/16/15 Page2 of 2 AT&T, and DIRECTV and DIRECTV LLC’s (collectively, the “Parties”) Stipulated Request and Proposed Order for Extension of Time for Plaintiff FTC to File Motion to Strike Defendants’ Affirmative Defenses Pursuant to Strike Defendants’ Affirmative Defenses Pursuant to Federal Rule of Civil Procedure 12(f). 2. The FTC filed its complaint in this matter on March 11, 2015 (Dkt #1). Defendants DIRECTV and DIRECTV LLC filed their answer on April 2, 2015 (Dkt #19). Defendants’ answer contains eleven affirmative defenses. Pursuant to Federal Rule of Civil Procedure 12(f), the deadline for plaintiff FTC to file a motion to strike one or more of Defendants’ affirmative defenses is on or before April 23, 2015. 3. Attorneys for the Parties have agreed to meet and confer in person concerning the FTC’s objections to Defendants’ affirmative defenses, among other issues. However, the schedules of both parties’ attorneys preclude meeting before April 23, 2015. We believe that having the proposed meeting, even if not required, may assist in focusing the issues to be raised in any motion to strike Defendants’ affirmative defenses, or obviate the need for such motion 4. Attorneys for the Parties have discussed and agreed to extend the deadline for the FTC to file a motion to strike whereby the new filing deadline would be May 15, 2015. I declare under the penalty of perjury that the foregoing is true and correct. Executed in San Francisco, California on April 16, 2015. /s/ Eric D. Edmondson Eric D. Edmondson DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-04-17	23	ORDER by Judge Haywood S. Gilliam Jr. granting 21 Stipulated Request for an Extension of Time for Plaintiff to File Motion to Strike Defendants' Affirmative Defenses. (mklS, COURT STAFF) (Filed on 4/17/2015) (Entered: 04/17/2015)	Case3:15-cv-01129-HSG Document23 Filed04/17/15 Page1 of 3 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, a corporation, Case No. 15-cv-01129 HSG STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, (“FTC”) and defendants DIRECTV and DIRECTV LLC (collectively “DIRECTV” or “Defendants”) hereby stipulate to a request for a court order extending the deadline for the FTC Pursuant to Civil Local Rules 6-1, 6-2 and 7-12, plaintiff Federal Trade Commission a limited liability company, Defendants. STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document23 Filed04/17/15 Page2 of 3 to file a motion to strike one or more of defendants’ affirmative defenses pursuant to Federal Rule of Civil Procedure 12(f). The parties request the filing deadline be extended from April 23 to May 15, 2015. The requested modification will not affect the schedule for the case. Pursuant to Civil Local Rule 6-2, the reasons for the requested modification are set forth in a supporting declaration accompanying this request. To wit, the attorneys for the Parties have agreed to meet and confer in person concerning the FTC’s objections to Defendants’ affirmative defenses. However, the schedules of both parties’ attorneys preclude meeting before April 23, 2015. We believe that having the proposed meeting, even if not required, may assist in focusing the issues to be raised in any motion to strike Defendants’ affirmative defenses, or obviate the need for such motion. filing of this document from all other signatories represented by a “conformed” signature. Pursuant to Civil Local Rule 5-1(i), I hereby attest that I have obtained concurrence in the Respectfully submitted, Jonathan E. Nuechterlein General Counsel /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission Dated: April 16, 2015 STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Manatt, Phelps & Phillips, LLP /s/ Chad S. Hummell Chad S. Hummel Attorney for Defendants DIRECTV and DIRECTV, LLC PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: ________________ HONORABLE HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE NORTHERN DISTRICT OF CALIFORNIA Case3:15-cv-01129-HSG Document23 Filed04/17/15 Page3 of 3 Dated: April 16, 2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STIPULATED REQUEST AND PROPOSED ORDER FOR EXTENSION OF TIME FOR PLAINTIFF FTC TO FILE MOTION TO STRIKE DEFENDANTS’ AFFIRMATIVE DEFENSES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(f) 3 April 17, 2015
2015-05-15	24	STIPULATION WITH PROPOSED ORDER re 19 Answer to Complaint -- Stipulated Request and [Proposed] Order for Filing of Amended Answer filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Proposed Order)(Hummel, Chad) (Filed on 5/15/2015) (Entered: 05/15/2015)	Case3:15-cv-01129-HSG Document24 Filed05/15/15 Page1 of 3 CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 HSG Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. STIPULATED REQUEST AND [PROPOSED] ORDER FOR FILING OF AMENDED ANSWER Judge: Hon. Haywood S. Gilliam, Jr., United States District Judge Complaint Filed: March 11, 2015 Trial Date: Not Set STIPULATED REQUEST AND [PROPOSED] ORDER FOR FILING OF AM. ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S Case3:15-cv-01129-HSG Document24 Filed05/15/15 Page2 of 3 1 2 3 4 5 6 7 8 9 Pursuant to Civil Local Rule 7-12 and Federal Rule of Civil Procedure 15(a)(2), plaintiff Federal Trade Commission and defendants DIRECTV and DIRECTV, LLC hereby stipulate and agree as follows: WHEREAS, 1. 2. Defendants filed their Answer on April 2, 2015 [Dkt. No. 19]. On April 16, 2015, Plaintiff’s counsel sent a letter to Defendants’ counsel regarding a potential motion to strike certain affirmative defenses in Defendants’ Answer. 3. On May 6, 2015, the parties’ counsel met to discuss the case, including the issues raised in Plaintiff’s April 16 letter. 10 4. On May 8, 2015, Defendants’ counsel sent a letter to Plaintiff’s counsel proposing 11 to amend the Answer to address some of the issues raised in Plaintiff’s April 16 letter. 12 5. 13 Answer. Plaintiff’s counsel has agreed to Defendants’ proposal of filing an Amended 14 15 THEREFORE, Plaintiff and Defendants stipulate and agree that Defendants may file an Amended 16 Answer no later than May 18, 2015. 17 18 19 20 21 22 23 24 25 26 27 28 Dated: May 15, 2015 FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission Dated: May 15, 2015 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorney for Defendants DIRECTV and DIRECTV, LLC Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, Chad S. Hummel hereby attests that concurrence in the filing of this document has been obtained from Eric D. Edmondson. M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 2 STIPULATED REQUEST AND [PROPOSED] ORDER FOR FILING OF AM. ANSWER Case3:15-cv-01129-HSG Document24 Filed05/15/15 Page3 of 3 PURSUANT TO STIPULATION, IT IS SO ORDERED. ORDER Dated: May ____, 2015 HON. HAYWOOD S. GILLIAM, JR. United States District Judge 3 STIPULATED REQUEST AND [PROPOSED] ORDER FOR FILING OF AM. ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S Case3:15-cv-01129-HSG Document24-1 Filed05/15/15 Page1 of 3 CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 HSG Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. STIPULATED REQUEST AND [PROPOSED] ORDER FOR FILING OF AMENDED ANSWER Judge: Hon. Haywood S. Gilliam, Jr., United States District Judge Complaint Filed: March 11, 2015 Trial Date: Not Set STIPULATED REQUEST AND [PROPOSED] ORDER FOR FILING OF AM. ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S Case3:15-cv-01129-HSG Document24-1 Filed05/15/15 Page2 of 3 1 2 3 4 5 6 7 8 9 Pursuant to Civil Local Rule 7-12 and Federal Rule of Civil Procedure 15(a)(2), plaintiff Federal Trade Commission and defendants DIRECTV and DIRECTV, LLC hereby stipulate and agree as follows: WHEREAS, 1. 2. Defendants filed their Answer on April 2, 2015 [Dkt. No. 19]. On April 16, 2015, Plaintiff’s counsel sent a letter to Defendants’ counsel regarding a potential motion to strike certain affirmative defenses in Defendants’ Answer. 3. On May 6, 2015, the parties’ counsel met to discuss the case, including the issues raised in Plaintiff’s April 16 letter. 10 4. On May 8, 2015, Defendants’ counsel sent a letter to Plaintiff’s counsel proposing 11 to amend the Answer to address some of the issues raised in Plaintiff’s April 16 letter. 12 5. 13 Answer. Plaintiff’s counsel has agreed to Defendants’ proposal of filing an Amended 14 15 THEREFORE, Plaintiff and Defendants stipulate and agree that Defendants may file an Amended 16 Answer no later than May 18, 2015. 17 18 19 20 21 22 23 24 25 26 27 28 Dated: May 15, 2015 FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission Dated: May 15, 2015 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorney for Defendants DIRECTV and DIRECTV, LLC Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, Chad S. Hummel hereby attests that concurrence in the filing of this document has been obtained from Eric D. Edmondson. M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 2 STIPULATED REQUEST AND [PROPOSED] ORDER FOR FILING OF AM. ANSWER Case3:15-cv-01129-HSG Document24-1 Filed05/15/15 Page3 of 3 PURSUANT TO STIPULATION, IT IS SO ORDERED. ORDER Dated: May ____, 2015 HON. HAYWOOD S. GILLIAM, JR. United States District Judge 3 STIPULATED REQUEST AND [PROPOSED] ORDER FOR FILING OF AM. ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S
2015-05-15	25	Proposed Amended Answer re 24 Stipulation with Proposed Order. by DIRECTV LLC, DIRECTV, Inc. (Hummel, Chad) (Filed on 5/15/2015) Modified on 5/15/2015 (dtmS, COURT STAFF). (Entered: 05/15/2015)	Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page1 of 17 CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 HSG Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. NOTICE OF LODGING OF AMENDED ANSWER OF DEFENDANTS DIRECTV AND DIRECTV, LLC Judge: Hon. Haywood S. Gilliam, Jr., United States District Judge Complaint Filed: March 11, 2015 Trial Date: Not Set NOTICE OF LODGING OF AMENDED ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page2 of 17 TO THE COURT, ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that Defendants DIRECTV and DIRECTV, LLC (“Defendants”) hereby lodge Defendants’ Amended Answer with the Court to be considered in support of the concurrently filed Stipulated Request and [Proposed] Order for Filing of Amended Answer. The Amended Answer is hereby attached as Exhibit A. Dated: May 15, 2015 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorney for Defendants DIRECTV and DIRECTV, LLC 2 NOTICE OF LODGING OF AMENDED ANSWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page3 of 17 EXHIBIT A Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page4 of 17 CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 HSG Plaintiff, AMENDED ANSWER OF DIRECTV AND DIRECTV, LLC v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Judge: Hon. Haywood S. Gilliam, Jr., United States District Court Judge Complaint Filed: March 11, 2015 Trial Date: Not Set Defendants DIRECTV and DIRECTV, LLC, by and through their undersigned counsel, hereby answer the Complaint (“complaint”) filed by Plaintiff FEDERAL TRADE COMMISSION (hereinafter “Plaintiff” or “FTC”), as follows: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page5 of 17 1 2 3 4 5 6 7 8 9 ANSWER TO THE COMPLAINT 1. Paragraph 1 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. More specifically, Defendants generally and specifically deny that they have engaged in conduct that violates Section 5 of the FTC Act or Section 4 of ROSCA. Defendants have fully and adequately disclosed to potential and actual subscribers, at all times relevant to this action, all the material terms of their subscription satellite television services and offers, including, but not limited to, the pricing of television programming packages, the existence and length of consumer contract terms, the existence of early cancellation fees and the circumstances 10 under which those may be imposed, and the terms relating to promotional offers for premium 11 channels such as HBO, Showtime, and Cinemax. Defendants further deny that any equitable or 12 statutory remedy as alleged is warranted. 13 14 JURISDICTION, VENUE AND INTRADISTRICT ASSIGNMENT 2. Defendants admit the allegations of Paragraph 2, except to the extent that this 15 Court may determine that the FTC lacks standing to assert any claims over which the Federal 16 Communications Commission (“FCC”) has exclusive enforcement authority. 17 3. Defendants admit that venue is proper in this judicial district, but reserve their 18 right to seek a transfer to a more convenient venue should circumstances arise justifying a motion 19 under, for example, 28 U.S.C. Section 1404(a). 20 4. Defendants admit that DIRECTV, LLC advertised and has sold satellite television 21 subscription services in San Francisco County and deny the remaining allegations contained in 22 Paragraph 4. 23 24 25 5. 6. PLAINTIFF Defendants admit the allegations of Paragraph 5. Defendants admit the allegations of Paragraph 6, except to the extent that the 26 Court may determine that the FTC is not authorized or lacks standing to enjoin, or seek equitable 27 relief relating to, conduct at issue in this case due to the FCC’s exclusive enforcement authority. 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 2 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page6 of 17 1 2 3 4 5 6 7 8 9 DEFENDANTS 7. Defendants admit the allegations of Paragraph 7, except that DIRECTV, LLC is the entity that has engaged in the advertising, marketing, distribution, and selling activities of direct-to-home digital television services to consumers throughout the United States that are the subject of the complaint. 8. Defendants admit the allegations of Paragraph 8, except that they deny that defendant DIRECTV (the “named defendant DIRECTV”) has directly engaged in the activities listed in this Paragraph. Hereinafter, any admissions by “Defendants” to allegations of the complaint are made solely with respect to and by DIRECTV, LLC (hereinafter “DIRECTV”), as 10 the named defendant DIRECTV operates other business units which are not the subject of the 11 complaint. All of the material allegations, if directed at the named defendant DIRECTV, are 12 generally and specifically denied. 13 14 15 16 9. 10. COMMERCE Defendants admit the allegations of Paragraph 9. DEFENDANTS’ BUSINESS ACTIVITIES Defendants admit the allegations of Paragraph 10, except that DIRECTV is the 17 entity that, as of December 31, 2013, had 20.3 million subscribers in the United States. 18 11. Defendants admit that DIRECTV offers direct-to-home satellite television service 19 to consumers by subscription, and that consumers who subscribe receive programming, necessary 20 equipment, installation, and support services. Defendants deny any remaining allegations 21 contained in Paragraph 11. 22 12. Defendants deny the allegations contained in Paragraph 12 except as follows: 23 DIRECTV admits that it has made offers to consumers that provide introductory pricing 24 discounts, no upfront or reduced costs for installation and equipment, and other benefits, in 25 exchange for the consumer’s agreement to purchase a minimum level of service for a period, 26 typically, of 24 months. DIRECTV admits that, under the terms of such offers, which have been 27 clearly and conspicuously disclosed to consumers, and in appropriate circumstances, it has the 28 contractual right to assess and collect early cancellation fees, which have sometimes been $20 per M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 3 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page7 of 17 1 2 3 4 5 6 7 8 9 month for each month remaining on a subscriber’s agreement, should the subscriber breach their contractual obligation to maintain a required minimum level of service for the entire commitment period. Defendants further admit that DIRECTV’s customers may become month-to-month subscribers after 24 months. Defendants deny the remaining allegations of Paragraph 12. 13. Defendants admit that DIRECTV advertises for its products and services, including that it offers introductory promotional pricing for some of its programming packages, the terms of which vary by offer and have been and are clearly and conspicuously disclosed to consumers. Defendants further admit that DIRECTV advertises for its satellite television subscription services, including, in certain instances, promotional pricing offers, in a variety of 10 media, including television, print, and the Internet. Defendants admit that the regular prices for 11 satellite television subscription programming packages are periodically adjusted to reflect 12 inflationary price increases and that the fact that its program pricing is subject to change has been 13 and is clearly and conspicuously disclosed to consumers. Defendants admit that consumers who 14 obtain the benefit of substantially discounted introductory first year pricing are typically charged 15 the then-existing regular price of whatever programming package they choose during the second 16 year of their subscription. Defendants deny the remaining allegations contained in Paragraph 13. 17 14. Defendants admit that DIRECTV’s programming subscriptions may include, at the 18 election of consumers, certain premium channels such as HBO, Cinemax, and Showtime free of 19 charge for a limited period of time, that consumers are thereafter charged the regular price for 20 subscriptions to such premium channels at the end of the promotional period unless the consumer 21 contacts DIRECTV to cancel one or more of the premium services, and that the material terms 22 and conditions of these premium channel offers are clearly and conspicuously disclosed to 23 consumers. Defendants deny the remaining allegations contained in Paragraph 14. 24 15. Defendants admit that DIRECTV, Inc. entered into a Multistate Settlement 25 Agreement with 50 states and the District of Columbia and that the terms of that Agreement 26 bound and continue to bind certain activities of DIRECTV relating to some of the identical issues 27 addressed in this complaint. DIRECTV further admits that not a single state has brought an 28 enforcement action for any alleged violation of the letter or spirit of that Agreement since it was M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 4 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page8 of 17 1 2 3 4 5 6 7 8 9 effective (January 2011). Defendants lack knowledge sufficient to admit or deny the remaining allegations contained in Paragraph 15. 16. Defendants admit that DIRECTV has disseminated advertisements for its subscription services since 2007, and that Plaintiff attaches what it claims to be examples of portions of such advertisements as Exhibits 1 through 3, the contents of which speak for themselves. Defendants admit that the quoted sections in this Paragraph appear in the advertisements, and state that the material terms of the programming package offers are clearly, conspicuously, and prominently disclosed to consumers at multiple times and in multiple ways prior to the time that any consumer is financially committed to subscribe to DIRECTV service 10 and a programming package. Defendants deny the remaining allegations contained in Paragraph 11 16. 12 13 17. 18. Defendants deny the allegations contained in Paragraph 17. Defendants admit that certain DIRECTV advertisements have described an offer 14 for free premium channels for three months. Defendants further admit that Plaintiff attaches an 15 example of a DIRECTV advertisement as Exhibit 1, the content of which speaks for itself. 16 Defendants further admit that, in language not quoted in full in the complaint, the advertisement 17 states, with respect to the offer: “Over 30 premium channels FREE for 3 months including HBO, 18 SHOWTIME and Cinemax with SELECT or ULTIMATE Packages. All Packages require 24 mo 19 agreement […] IF BY THE END OF PROMOTIONAL PRICE PERIOD(S) CUSTOMER DOES 20 NOT CONTACT DIRECTV TO CHANGE SERVICE, THEN ALL SERVICES WILL 21 AUTOMATICALLY CONTINUE AT THE THEN-PREVAILING RATES.” Defendants deny 22 the remaining allegations contained in Paragraph 18. 23 24 19. 20. Defendants deny the allegations contained in Paragraph 19. Defendants admit that DIRECTV maintains the website, www.directv.com, on 25 which consumers receive information about DIRECTV products and services and through which 26 they may subscribe to its satellite television services. Defendants further admit that the website 27 contains a landing page, programming package selection page, receiver selection page, a 28 shopping cart page, and an order confirmation page, among other pages. Defendants deny the M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 5 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page9 of 17 1 2 3 4 5 6 7 8 9 10 11 remaining allegations contained in Paragraph 20. 21. Defendants admit that Plaintiff attaches as Exhibit 4 printed copies of some selected web pages that appeared on one version of a subscription web flow on www.directv.com, the content of which speaks for itself. Defendants state that Exhibit 4 does not contain many relevant web pages or the text contained in or accessed through hyperlinks, roll-overs, mouse- overs, light boxes, infohovers, pop-ups, and similar means of conveying information to consumers that are readily available to consumers who navigate DIRECTV’s website. In short, Defendants deny that Exhibit 4 depicts all relevant portions of a DIRECTV web flow, or even an example thereof. Defendants deny the remaining allegations contained in Paragraph 21. 22. 23. Defendants deny the allegations contained in Paragraph 22. Defendants admit that certain of DIRECTV web pages on www.directv.com 12 contain text advertising its offers for free premium channels, and that Plaintiff attaches as Exhibit 13 4 what it contends are copies of selected web pages that appeared on one version of a subscription 14 flow from www.directv.com, the content of which speaks for itself. Defendants deny that Exhibit 15 4 depicts all relevant portions of a DIRECTV web flow, or even an example thereof. Defendants 16 deny the remaining allegations contained in Paragraph 23. 17 18 24. 25. Defendants deny the allegations contained in Paragraph 24. Defendants admit that consumers who call a telephone number listed in 19 DIRECTV’s advertisements can speak with a telephone customer service representative. If the 20 consumer wished to subscribe during such a call, the terms and conditions of subscriptions to 21 DIRECTV’s satellite television services are fully and clearly disclosed. Defendants deny the 22 remaining allegations contained in Paragraph 25. 23 24 ALLEGATIONS RELATED TO THE FTC ACT 26. Paragraph 26 contains legal conclusions to which no response is required. To the 25 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 26 such allegations. 27 27. Paragraph 27 contains legal conclusions to which no response is required. To the 28 extent any statements in this Paragraph are considered factual allegations, Defendants deny any M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 6 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page10 of 17 such allegations. COUNT I 28. 29. 30. 31. 32. 33. Defendants deny the allegations contained in Paragraph 28. Defendants deny the allegations contained in Paragraph 29. Defendants deny the allegations contained in Paragraph 30. COUNT II Defendants deny the allegations contained in Paragraph 31. Defendants deny the allegations contained in Paragraph 32. Defendants deny the allegations contained in Paragraph 33. ALLEGATIONS RELATED TO ROSCA 34. Paragraph 34 contains legal conclusions to which no response is required. To the 1 2 3 4 5 6 7 8 9 10 11 12 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 13 such allegations. 14 35. Paragraph 35 contains legal conclusions to which no response is required. To the 15 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 16 such allegations. 17 36. Paragraph 36 contains legal conclusions to which no response is required. To the 18 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 19 such allegations. 20 37. Paragraph 37 contains legal conclusions to which no response is required. To the 21 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 22 such allegations. 23 24 25 26 27 28 38. 39. 40. 41. Defendants deny the allegations contained in Paragraph 38. COUNT III Defendants deny the allegations contained in Paragraph 39. Defendants deny the allegations contained in Paragraph 40. COUNT IV Defendants deny the allegations contained in Paragraph 41. M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 7 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page11 of 17 1 2 3 4 5 6 7 8 9 42. Defendants deny the allegations contained in Paragraph 42. AFFIRMATIVE DEFENSES By setting forth these affirmative defenses, Defendants do not assume the burden of proving any fact, issue, or element of a claim for relief where such burden properly belongs to Plaintiff. Moreover, nothing stated herein is intended to be construed as an acknowledgement that any particular issue or subject matter is relevant to Plaintiff’s allegations. Nor shall anything stated or unstated constitute an admission of any kind. FIRST AFFIRMATIVE DEFENSE (Failure To State A Claim) 10 The complaint fails to state sufficient facts to constitute a cause of action against 11 Defendants. 12 13 14 SECOND AFFIRMATIVE DEFENSE (Compliance With Applicable Law) Plaintiff’s claims are barred because Defendants’ conduct is not unlawful in that 15 Defendants complied with applicable statutes and regulations. 16 17 18 THIRD AFFIRMATIVE DEFENSE (Statute Of Limitations) Counts III and IV of the Complaint are barred in part or in whole by the 3-year statute of 19 limitations under 15 U.S.C. § 57b(d), or alternatively by the 4-year statute of limitations under 28 20 U.S.C. § 1658. 21 22 23 FOURTH AFFIRMATIVE DEFENSE (Laches) Plaintiff’s claims are barred in part or in whole by the doctrine of laches on grounds that 24 include, but are not limited to, the following facts and circumstances: in December 2010 and 25 effective January 2011, after a lengthy investigation and negotiation with a multi-state group of 26 attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District 27 of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues 28 addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 8 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page12 of 17 1 2 3 4 5 6 7 8 9 introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against 10 the company on the issues implicated by the multi-state agreement until 2015. Regardless of the 11 nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, 12 monetary, or other equitable relief extending back for almost a decade based on at least the 13 foregoing. 14 15 16 FIFTH AFFIRMATIVE DEFENSE (Estoppel) Plaintiff’s claims are barred in part or in whole by the doctrine of estoppel on grounds that 17 include, but are not limited to, the following facts and circumstances: in December 2010 and 18 effective January 2011, after a lengthy investigation and negotiation with a multi-state group of 19 attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District 20 of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues 21 addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: 22 introductory discount price offers for satellite TV program packages, the requirement of a two 23 year commitment to obtain the introductory pricing, how long the promotional price remains in 24 effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and 25 roll to pay premium channel offers. The FTC was invited to participate in the negotiation and 26 resolution of those issues before the settlement was finalized but declined. There has never been 27 an enforcement proceeding brought against DIRECTV by any state or the District of Columbia 28 based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 9 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page13 of 17 1 2 3 4 5 6 7 8 9 agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other equitable relief extending back for almost a decade based on at least the foregoing. SIXTH AFFIRMATIVE DEFENSE (Waiver) Plaintiff’s claims are barred in part or in whole by the doctrine of waiver on grounds that 10 include, but are not limited to, the following facts and circumstances: in December 2010 and 11 effective January 2011, after a lengthy investigation and negotiation with a multi-state group of 12 attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District 13 of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues 14 addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: 15 introductory discount price offers for satellite TV program packages, the requirement of a two 16 year commitment to obtain the introductory pricing, how long the promotional price remains in 17 effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and 18 roll to pay premium channel offers. The FTC was invited to participate in the negotiation and 19 resolution of those issues before the settlement was finalized but declined. There has never been 20 an enforcement proceeding brought against DIRECTV by any state or the District of Columbia 21 based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that 22 agreement in designing its advertising disclosures. The FTC has been aware of the multi-state 23 agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against 24 the company on the issues implicated by the multi-state agreement until 2015. Regardless of the 25 nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, 26 monetary, or other equitable relief extending back for almost a decade based on at least the 27 foregoing. 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 10 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page14 of 17 1 2 3 4 5 6 7 8 9 SEVENTH AFFIRMATIVE DEFENSE (Claim Preclusion) Plaintiff’s claims are barred in part or in whole by the doctrine of claim preclusion on grounds that include, but are not limited to, the following facts and circumstances: in December 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of 10 a two year commitment to obtain the introductory pricing, how long the promotional price 11 remains in effect, the disclosure of the regular price, the possible imposition of early cancellation 12 fees, and roll to pay premium channel offers. The FTC was invited to participate in the 13 negotiation and resolution of those issues before the settlement was finalized but declined. There 14 has never been an enforcement proceeding brought against DIRECTV by any state or the District 15 of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the 16 requirements of that agreement in designing its advertising disclosures. The FTC has been aware 17 of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any 18 formal action against the company on the issues implicated by the multi-state agreement until 19 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to 20 seek injunctive, monetary, or other equitable relief extending back for almost a decade based on 21 at least the foregoing. To the extent any new issues are raised by Plaintiff in this lawsuit, which 22 Defendants deny, those issues also should, and could, have been addressed in the nationwide 23 settlement agreement. 24 25 EIGHTH AFFIRMATIVE DEFENSE (Issue Preclusion) 26 Plaintiff’s claims are barred in part or in whole by the doctrine of issue preclusion on 27 grounds that include, but are not limited to, the following facts and circumstances: in December 28 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 11 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page15 of 17 1 2 3 4 5 6 7 8 9 group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District 10 of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the 11 requirements of that agreement in designing its advertising disclosures. The FTC has been aware 12 of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any 13 formal action against the company on the issues implicated by the multi-state agreement until 14 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to 15 seek injunctive, monetary, or other equitable relief extending back for almost a decade based on 16 at least the foregoing. To the extent any new issues are raised by Plaintiff in this lawsuit, which 17 Defendants deny, those issues also should, and could, have been addressed in the nationwide 18 settlement agreement. 19 20 NINTH AFFIRMATIVE DEFENSE (Previous Nationwide Settlement Agreement) 21 Plaintiff’s claims are barred in part or in whole on grounds that include, but are not limited 22 to, the following facts and circumstances: in December 2010 and effective January 2011, after a 23 lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV 24 entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 25 substantially similar judgments and consent orders. The issues addressed by the investigation and 26 in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for 27 satellite TV program packages, the requirement of a two year commitment to obtain the 28 introductory pricing, how long the promotional price remains in effect, the disclosure of the M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 12 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page16 of 17 1 2 3 4 5 6 7 8 9 regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other 10 equitable relief extending back for almost a decade based on at least the foregoing. 11 12 13 TENTH AFFIRMATIVE DEFENSE (Good Faith Belief And Conduct) The acts and statements of Defendants were fair and reasonable and were performed in 14 good faith based on all the relevant facts known to Defendants. Defendants acted with a good 15 faith belief that they had good cause and/or legitimate business reasons to act as they did and did 16 not directly or indirectly perform any acts that would constitute a violation of consumers’ rights. 17 As a consequence, Plaintiff is not entitled to any damages whatsoever. 18 19 20 ELEVENTH AFFIRMATIVE DEFENSE (Reservation Of Other Affirmative Defenses) Defendants lack sufficient information of all the facts and evidence surrounding the 21 subject incident and are therefore unable to ascertain at this time any additional affirmative 22 defenses which Defendants may have. Therefore, Defendants expressly reserve the right to 23 amend this Answer to assert such other affirmative defenses as may become apparent subsequent 24 to the filing of this Answer, whether in discovery, at trial, or otherwise. 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S DEFENDANTS’ PRAYER FOR RELIEF WHEREFORE, DIRECTV and DIRECTV, LLC respectfully request that this Court: 1. LLC; 314531387.1 Dismiss Plaintiff’s complaint with prejudice as to DIRECTV and DIRECTV, 13 AMENDED ANSWER Case3:15-cv-01129-HSG Document25 Filed05/15/15 Page17 of 17 2. Order that Plaintiff take nothing by reason of the complaint, that Plaintiff is entitled to no relief, and that judgment be rendered in favor of DIRECTV and DIRECTV, LLC; 3. Award DIRECTV and DIRECTV, LLC its costs and expenses incurred in connection with this action; and 4. Grant DIRECTV and DIRECTV, LLC such other relief as the Court deems proper. Dated: May 15, 2015 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 14 AMENDED ANSWER
2015-05-18	26	Order granting 24 Stipulation entered by Hon. Haywood S Gilliam, Jr. (This is a text-only entry generated by the court. There is no document associated with this entry.) (Entered: 05/18/2015)
2015-05-18	27	AMENDED ANSWER to 1 Complaint byDIRECTV LLC, DIRECTV, Inc.. (Hummel, Chad) (Filed on 5/18/2015) (Entered: 05/18/2015)	Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page1 of 14 CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 HSG Plaintiff, AMENDED ANSWER OF DIRECTV AND DIRECTV, LLC v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Judge: Hon. Haywood S. Gilliam, Jr., United States District Court Judge Complaint Filed: March 11, 2015 Trial Date: Not Set Defendants DIRECTV and DIRECTV, LLC, by and through their undersigned counsel, hereby answer the Complaint (“complaint”) filed by Plaintiff FEDERAL TRADE COMMISSION (hereinafter “Plaintiff” or “FTC”), as follows: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page2 of 14 1 2 3 4 5 6 7 8 9 ANSWER TO THE COMPLAINT 1. Paragraph 1 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. More specifically, Defendants generally and specifically deny that they have engaged in conduct that violates Section 5 of the FTC Act or Section 4 of ROSCA. Defendants have fully and adequately disclosed to potential and actual subscribers, at all times relevant to this action, all the material terms of their subscription satellite television services and offers, including, but not limited to, the pricing of television programming packages, the existence and length of consumer contract terms, the existence of early cancellation fees and the circumstances 10 under which those may be imposed, and the terms relating to promotional offers for premium 11 channels such as HBO, Showtime, and Cinemax. Defendants further deny that any equitable or 12 statutory remedy as alleged is warranted. 13 14 JURISDICTION, VENUE AND INTRADISTRICT ASSIGNMENT 2. Defendants admit the allegations of Paragraph 2, except to the extent that this 15 Court may determine that the FTC lacks standing to assert any claims over which the Federal 16 Communications Commission (“FCC”) has exclusive enforcement authority. 17 3. Defendants admit that venue is proper in this judicial district, but reserve their 18 right to seek a transfer to a more convenient venue should circumstances arise justifying a motion 19 under, for example, 28 U.S.C. Section 1404(a). 20 4. Defendants admit that DIRECTV, LLC advertised and has sold satellite television 21 subscription services in San Francisco County and deny the remaining allegations contained in 22 Paragraph 4. 23 24 25 5. 6. PLAINTIFF Defendants admit the allegations of Paragraph 5. Defendants admit the allegations of Paragraph 6, except to the extent that the 26 Court may determine that the FTC is not authorized or lacks standing to enjoin, or seek equitable 27 relief relating to, conduct at issue in this case due to the FCC’s exclusive enforcement authority. 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 2 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page3 of 14 1 2 3 4 5 6 7 8 9 DEFENDANTS 7. Defendants admit the allegations of Paragraph 7, except that DIRECTV, LLC is the entity that has engaged in the advertising, marketing, distribution, and selling activities of direct-to-home digital television services to consumers throughout the United States that are the subject of the complaint. 8. Defendants admit the allegations of Paragraph 8, except that they deny that defendant DIRECTV (the “named defendant DIRECTV”) has directly engaged in the activities listed in this Paragraph. Hereinafter, any admissions by “Defendants” to allegations of the complaint are made solely with respect to and by DIRECTV, LLC (hereinafter “DIRECTV”), as 10 the named defendant DIRECTV operates other business units which are not the subject of the 11 complaint. All of the material allegations, if directed at the named defendant DIRECTV, are 12 generally and specifically denied. 13 14 15 16 9. 10. COMMERCE Defendants admit the allegations of Paragraph 9. DEFENDANTS’ BUSINESS ACTIVITIES Defendants admit the allegations of Paragraph 10, except that DIRECTV is the 17 entity that, as of December 31, 2013, had 20.3 million subscribers in the United States. 18 11. Defendants admit that DIRECTV offers direct-to-home satellite television service 19 to consumers by subscription, and that consumers who subscribe receive programming, necessary 20 equipment, installation, and support services. Defendants deny any remaining allegations 21 contained in Paragraph 11. 22 12. Defendants deny the allegations contained in Paragraph 12 except as follows: 23 DIRECTV admits that it has made offers to consumers that provide introductory pricing 24 discounts, no upfront or reduced costs for installation and equipment, and other benefits, in 25 exchange for the consumer’s agreement to purchase a minimum level of service for a period, 26 typically, of 24 months. DIRECTV admits that, under the terms of such offers, which have been 27 clearly and conspicuously disclosed to consumers, and in appropriate circumstances, it has the 28 contractual right to assess and collect early cancellation fees, which have sometimes been $20 per M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 3 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page4 of 14 1 2 3 4 5 6 7 8 9 month for each month remaining on a subscriber’s agreement, should the subscriber breach their contractual obligation to maintain a required minimum level of service for the entire commitment period. Defendants further admit that DIRECTV’s customers may become month-to-month subscribers after 24 months. Defendants deny the remaining allegations of Paragraph 12. 13. Defendants admit that DIRECTV advertises for its products and services, including that it offers introductory promotional pricing for some of its programming packages, the terms of which vary by offer and have been and are clearly and conspicuously disclosed to consumers. Defendants further admit that DIRECTV advertises for its satellite television subscription services, including, in certain instances, promotional pricing offers, in a variety of 10 media, including television, print, and the Internet. Defendants admit that the regular prices for 11 satellite television subscription programming packages are periodically adjusted to reflect 12 inflationary price increases and that the fact that its program pricing is subject to change has been 13 and is clearly and conspicuously disclosed to consumers. Defendants admit that consumers who 14 obtain the benefit of substantially discounted introductory first year pricing are typically charged 15 the then-existing regular price of whatever programming package they choose during the second 16 year of their subscription. Defendants deny the remaining allegations contained in Paragraph 13. 17 14. Defendants admit that DIRECTV’s programming subscriptions may include, at the 18 election of consumers, certain premium channels such as HBO, Cinemax, and Showtime free of 19 charge for a limited period of time, that consumers are thereafter charged the regular price for 20 subscriptions to such premium channels at the end of the promotional period unless the consumer 21 contacts DIRECTV to cancel one or more of the premium services, and that the material terms 22 and conditions of these premium channel offers are clearly and conspicuously disclosed to 23 consumers. Defendants deny the remaining allegations contained in Paragraph 14. 24 15. Defendants admit that DIRECTV, Inc. entered into a Multistate Settlement 25 Agreement with 50 states and the District of Columbia and that the terms of that Agreement 26 bound and continue to bind certain activities of DIRECTV relating to some of the identical issues 27 addressed in this complaint. DIRECTV further admits that not a single state has brought an 28 enforcement action for any alleged violation of the letter or spirit of that Agreement since it was M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 4 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page5 of 14 1 2 3 4 5 6 7 8 9 effective (January 2011). Defendants lack knowledge sufficient to admit or deny the remaining allegations contained in Paragraph 15. 16. Defendants admit that DIRECTV has disseminated advertisements for its subscription services since 2007, and that Plaintiff attaches what it claims to be examples of portions of such advertisements as Exhibits 1 through 3, the contents of which speak for themselves. Defendants admit that the quoted sections in this Paragraph appear in the advertisements, and state that the material terms of the programming package offers are clearly, conspicuously, and prominently disclosed to consumers at multiple times and in multiple ways prior to the time that any consumer is financially committed to subscribe to DIRECTV service 10 and a programming package. Defendants deny the remaining allegations contained in Paragraph 11 16. 12 13 17. 18. Defendants deny the allegations contained in Paragraph 17. Defendants admit that certain DIRECTV advertisements have described an offer 14 for free premium channels for three months. Defendants further admit that Plaintiff attaches an 15 example of a DIRECTV advertisement as Exhibit 1, the content of which speaks for itself. 16 Defendants further admit that, in language not quoted in full in the complaint, the advertisement 17 states, with respect to the offer: “Over 30 premium channels FREE for 3 months including HBO, 18 SHOWTIME and Cinemax with SELECT or ULTIMATE Packages. All Packages require 24 mo 19 agreement […] IF BY THE END OF PROMOTIONAL PRICE PERIOD(S) CUSTOMER DOES 20 NOT CONTACT DIRECTV TO CHANGE SERVICE, THEN ALL SERVICES WILL 21 AUTOMATICALLY CONTINUE AT THE THEN-PREVAILING RATES.” Defendants deny 22 the remaining allegations contained in Paragraph 18. 23 24 19. 20. Defendants deny the allegations contained in Paragraph 19. Defendants admit that DIRECTV maintains the website, www.directv.com, on 25 which consumers receive information about DIRECTV products and services and through which 26 they may subscribe to its satellite television services. Defendants further admit that the website 27 contains a landing page, programming package selection page, receiver selection page, a 28 shopping cart page, and an order confirmation page, among other pages. Defendants deny the M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 5 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page6 of 14 1 2 3 4 5 6 7 8 9 10 11 remaining allegations contained in Paragraph 20. 21. Defendants admit that Plaintiff attaches as Exhibit 4 printed copies of some selected web pages that appeared on one version of a subscription web flow on www.directv.com, the content of which speaks for itself. Defendants state that Exhibit 4 does not contain many relevant web pages or the text contained in or accessed through hyperlinks, roll-overs, mouse- overs, light boxes, infohovers, pop-ups, and similar means of conveying information to consumers that are readily available to consumers who navigate DIRECTV’s website. In short, Defendants deny that Exhibit 4 depicts all relevant portions of a DIRECTV web flow, or even an example thereof. Defendants deny the remaining allegations contained in Paragraph 21. 22. 23. Defendants deny the allegations contained in Paragraph 22. Defendants admit that certain of DIRECTV web pages on www.directv.com 12 contain text advertising its offers for free premium channels, and that Plaintiff attaches as Exhibit 13 4 what it contends are copies of selected web pages that appeared on one version of a subscription 14 flow from www.directv.com, the content of which speaks for itself. Defendants deny that Exhibit 15 4 depicts all relevant portions of a DIRECTV web flow, or even an example thereof. Defendants 16 deny the remaining allegations contained in Paragraph 23. 17 18 24. 25. Defendants deny the allegations contained in Paragraph 24. Defendants admit that consumers who call a telephone number listed in 19 DIRECTV’s advertisements can speak with a telephone customer service representative. If the 20 consumer wished to subscribe during such a call, the terms and conditions of subscriptions to 21 DIRECTV’s satellite television services are fully and clearly disclosed. Defendants deny the 22 remaining allegations contained in Paragraph 25. 23 24 ALLEGATIONS RELATED TO THE FTC ACT 26. Paragraph 26 contains legal conclusions to which no response is required. To the 25 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 26 such allegations. 27 27. Paragraph 27 contains legal conclusions to which no response is required. To the 28 extent any statements in this Paragraph are considered factual allegations, Defendants deny any M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 6 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page7 of 14 such allegations. COUNT I 28. 29. 30. 31. 32. 33. Defendants deny the allegations contained in Paragraph 28. Defendants deny the allegations contained in Paragraph 29. Defendants deny the allegations contained in Paragraph 30. COUNT II Defendants deny the allegations contained in Paragraph 31. Defendants deny the allegations contained in Paragraph 32. Defendants deny the allegations contained in Paragraph 33. ALLEGATIONS RELATED TO ROSCA 34. Paragraph 34 contains legal conclusions to which no response is required. To the 1 2 3 4 5 6 7 8 9 10 11 12 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 13 such allegations. 14 35. Paragraph 35 contains legal conclusions to which no response is required. To the 15 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 16 such allegations. 17 36. Paragraph 36 contains legal conclusions to which no response is required. To the 18 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 19 such allegations. 20 37. Paragraph 37 contains legal conclusions to which no response is required. To the 21 extent any statements in this Paragraph are considered factual allegations, Defendants deny any 22 such allegations. 23 24 25 26 27 28 38. 39. 40. 41. Defendants deny the allegations contained in Paragraph 38. COUNT III Defendants deny the allegations contained in Paragraph 39. Defendants deny the allegations contained in Paragraph 40. COUNT IV Defendants deny the allegations contained in Paragraph 41. M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 7 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page8 of 14 1 2 3 4 5 6 7 8 9 42. Defendants deny the allegations contained in Paragraph 42. AFFIRMATIVE DEFENSES By setting forth these affirmative defenses, Defendants do not assume the burden of proving any fact, issue, or element of a claim for relief where such burden properly belongs to Plaintiff. Moreover, nothing stated herein is intended to be construed as an acknowledgement that any particular issue or subject matter is relevant to Plaintiff’s allegations. Nor shall anything stated or unstated constitute an admission of any kind. FIRST AFFIRMATIVE DEFENSE (Failure To State A Claim) 10 The complaint fails to state sufficient facts to constitute a cause of action against 11 Defendants. 12 13 14 SECOND AFFIRMATIVE DEFENSE (Compliance With Applicable Law) Plaintiff’s claims are barred because Defendants’ conduct is not unlawful in that 15 Defendants complied with applicable statutes and regulations. 16 17 18 THIRD AFFIRMATIVE DEFENSE (Statute Of Limitations) Counts III and IV of the Complaint are barred in part or in whole by the 3-year statute of 19 limitations under 15 U.S.C. § 57b(d), or alternatively by the 4-year statute of limitations under 28 20 U.S.C. § 1658. 21 22 23 FOURTH AFFIRMATIVE DEFENSE (Laches) Plaintiff’s claims are barred in part or in whole by the doctrine of laches on grounds that 24 include, but are not limited to, the following facts and circumstances: in December 2010 and 25 effective January 2011, after a lengthy investigation and negotiation with a multi-state group of 26 attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District 27 of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues 28 addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 8 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page9 of 14 1 2 3 4 5 6 7 8 9 introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against 10 the company on the issues implicated by the multi-state agreement until 2015. Regardless of the 11 nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, 12 monetary, or other equitable relief extending back for almost a decade based on at least the 13 foregoing. 14 15 16 FIFTH AFFIRMATIVE DEFENSE (Estoppel) Plaintiff’s claims are barred in part or in whole by the doctrine of estoppel on grounds that 17 include, but are not limited to, the following facts and circumstances: in December 2010 and 18 effective January 2011, after a lengthy investigation and negotiation with a multi-state group of 19 attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District 20 of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues 21 addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: 22 introductory discount price offers for satellite TV program packages, the requirement of a two 23 year commitment to obtain the introductory pricing, how long the promotional price remains in 24 effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and 25 roll to pay premium channel offers. The FTC was invited to participate in the negotiation and 26 resolution of those issues before the settlement was finalized but declined. There has never been 27 an enforcement proceeding brought against DIRECTV by any state or the District of Columbia 28 based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 9 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page10 of 14 1 2 3 4 5 6 7 8 9 agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other equitable relief extending back for almost a decade based on at least the foregoing. SIXTH AFFIRMATIVE DEFENSE (Waiver) Plaintiff’s claims are barred in part or in whole by the doctrine of waiver on grounds that 10 include, but are not limited to, the following facts and circumstances: in December 2010 and 11 effective January 2011, after a lengthy investigation and negotiation with a multi-state group of 12 attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District 13 of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues 14 addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: 15 introductory discount price offers for satellite TV program packages, the requirement of a two 16 year commitment to obtain the introductory pricing, how long the promotional price remains in 17 effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and 18 roll to pay premium channel offers. The FTC was invited to participate in the negotiation and 19 resolution of those issues before the settlement was finalized but declined. There has never been 20 an enforcement proceeding brought against DIRECTV by any state or the District of Columbia 21 based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that 22 agreement in designing its advertising disclosures. The FTC has been aware of the multi-state 23 agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against 24 the company on the issues implicated by the multi-state agreement until 2015. Regardless of the 25 nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, 26 monetary, or other equitable relief extending back for almost a decade based on at least the 27 foregoing. 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 10 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page11 of 14 1 2 3 4 5 6 7 8 9 SEVENTH AFFIRMATIVE DEFENSE (Claim Preclusion) Plaintiff’s claims are barred in part or in whole by the doctrine of claim preclusion on grounds that include, but are not limited to, the following facts and circumstances: in December 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of 10 a two year commitment to obtain the introductory pricing, how long the promotional price 11 remains in effect, the disclosure of the regular price, the possible imposition of early cancellation 12 fees, and roll to pay premium channel offers. The FTC was invited to participate in the 13 negotiation and resolution of those issues before the settlement was finalized but declined. There 14 has never been an enforcement proceeding brought against DIRECTV by any state or the District 15 of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the 16 requirements of that agreement in designing its advertising disclosures. The FTC has been aware 17 of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any 18 formal action against the company on the issues implicated by the multi-state agreement until 19 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to 20 seek injunctive, monetary, or other equitable relief extending back for almost a decade based on 21 at least the foregoing. To the extent any new issues are raised by Plaintiff in this lawsuit, which 22 Defendants deny, those issues also should, and could, have been addressed in the nationwide 23 settlement agreement. 24 25 EIGHTH AFFIRMATIVE DEFENSE (Issue Preclusion) 26 Plaintiff’s claims are barred in part or in whole by the doctrine of issue preclusion on 27 grounds that include, but are not limited to, the following facts and circumstances: in December 28 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 11 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page12 of 14 1 2 3 4 5 6 7 8 9 group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District 10 of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the 11 requirements of that agreement in designing its advertising disclosures. The FTC has been aware 12 of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any 13 formal action against the company on the issues implicated by the multi-state agreement until 14 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to 15 seek injunctive, monetary, or other equitable relief extending back for almost a decade based on 16 at least the foregoing. To the extent any new issues are raised by Plaintiff in this lawsuit, which 17 Defendants deny, those issues also should, and could, have been addressed in the nationwide 18 settlement agreement. 19 20 NINTH AFFIRMATIVE DEFENSE (Previous Nationwide Settlement Agreement) 21 Plaintiff’s claims are barred in part or in whole on grounds that include, but are not limited 22 to, the following facts and circumstances: in December 2010 and effective January 2011, after a 23 lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV 24 entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 25 substantially similar judgments and consent orders. The issues addressed by the investigation and 26 in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for 27 satellite TV program packages, the requirement of a two year commitment to obtain the 28 introductory pricing, how long the promotional price remains in effect, the disclosure of the M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 12 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page13 of 14 1 2 3 4 5 6 7 8 9 regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other 10 equitable relief extending back for almost a decade based on at least the foregoing. 11 12 13 TENTH AFFIRMATIVE DEFENSE (Good Faith Belief And Conduct) The acts and statements of Defendants were fair and reasonable and were performed in 14 good faith based on all the relevant facts known to Defendants. Defendants acted with a good 15 faith belief that they had good cause and/or legitimate business reasons to act as they did and did 16 not directly or indirectly perform any acts that would constitute a violation of consumers’ rights. 17 As a consequence, Plaintiff is not entitled to any damages whatsoever. 18 19 20 ELEVENTH AFFIRMATIVE DEFENSE (Reservation Of Other Affirmative Defenses) Defendants lack sufficient information of all the facts and evidence surrounding the 21 subject incident and are therefore unable to ascertain at this time any additional affirmative 22 defenses which Defendants may have. Therefore, Defendants expressly reserve the right to 23 amend this Answer to assert such other affirmative defenses as may become apparent subsequent 24 to the filing of this Answer, whether in discovery, at trial, or otherwise. 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S DEFENDANTS’ PRAYER FOR RELIEF WHEREFORE, DIRECTV and DIRECTV, LLC respectfully request that this Court: 1. LLC; 314531387.1 Dismiss Plaintiff’s complaint with prejudice as to DIRECTV and DIRECTV, 13 AMENDED ANSWER Case3:15-cv-01129-HSG Document27 Filed05/18/15 Page14 of 14 2. Order that Plaintiff take nothing by reason of the complaint, that Plaintiff is entitled to no relief, and that judgment be rendered in favor of DIRECTV and DIRECTV, LLC; 3. Award DIRECTV and DIRECTV, LLC its costs and expenses incurred in connection with this action; and 4. Grant DIRECTV and DIRECTV, LLC such other relief as the Court deems proper. Dated: May 15, 2015 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 314531387.1 14 AMENDED ANSWER
2015-05-26	28	ADR Certification (ADR L.R. 3-5 b) of discussion of ADR options (Hummel, Chad) (Filed on 5/26/2015) (Entered: 05/26/2015)	Case3:15-cv-01129-HSG Document28 Filed05/26/15 Page1 of 1
2015-05-26	29	NOTICE of need for ADR Phone Conference (ADR L.R. 3-5 d) (Hummel, Chad) (Filed on 5/26/2015) (Entered: 05/26/2015)	Case3:15-cv-01129-HSG Document29 Filed05/26/15 Page1 of 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA Federal Trade Commission v. DIRECTV and DIRECTV, LLC Plaintiff(s), Defendant(s). CASE NO. 14-CV-04785-EMC NOTICE OF NEED FOR ADR PHONE CONFERENCE Counsel report that they have met and conferred regarding ADR and that they: 0 • have not yet reached an agreement to an ADR process request an Early Settlement Conference with a Magistrate Judge Date of Case Management Conference June 16,2015 The following counsel will participate in the ADR phone conference: Name Eric Edmondson Party Representing Federal Trade Commission Phone No. (415) 848-5179 E-Mail Address [email protected] Jacob Snow Federal Trade Commission (415) 848-5125 [email protected] Clayton Friedman DIRECTV and DIRECTV, LLC (714) 338-2704 [email protected] Chad Hummel DIRECTV and DIRECTV, LLC (310) 312-4197 [email protected] Civil Local Rule 16-8 and ADR Local Rule 3-5 require that lead trial counsel participate in a telephone conference with a member of the ADR Legal Staff before the Case Management Conference. The ADR Unit [email protected]) will notify you of the date and time of your phone conference. . Dated: May 14, 2015 Dated: May 26, 2015 /s/ Eric Edmondson Attorney for Plaintiff /s/ Chad Hummel Attorney for Defendant Rev 12.05 When filing this document in ECF, please be sure to use the ADR Docket Event entitled \A/hon filinn -f-hio rlr\r»i imcmf in P O P nlckoco h o onrci fn i "Notice of Need for ADR Phone Conference (ADR L.R. 3-5 d)." Case3:15-cv-01129-HSG Document29 Filed05/26/15 Page2 of 2 Filer's Attestation: Pursuant to Local Rule 5-l(i)(3), Chad Hummel hereby attests that concurrence in the filing of this document has been obtained. 314570559.1
2015-05-26	30	ADR Certification (ADR L.R. 3-5 b) of discussion of ADR options (Edmondson, Eric) (Filed on 5/26/2015) (Entered: 05/26/2015)	Case3:15-cv-01129-HSG Document30 Filed05/26/15 Page1 of 1
2015-05-28	31	ADR Clerk's Notice Setting ADR Phone Conference on June 11, 2015 at 10:30 AM Pacific time. Please note that you must be logged into an ECF account of counsel of record in order to view this document. (cmf, COURT STAFF) (Filed on 5/28/2015) (Entered: 05/28/2015)	Case3:15-cv-01129-HSG Document31 Filed05/28/15 Page1 of 3 ALTERNATIVE DISPUTE RESOLUTION PROGRAM UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA 450 GOLDEN GATE AVENUE SAN FRANCISCO, CA 94102 TEL: (415) 522-2199 FAX: (415) 522-4112 Writer’s Direct Contact: 415-522-2059 [email protected] HOWARD A. HERMAN DIRECTOR G. DANIEL BOWLING ADR PROGRAM STAFF ATTORNEY May 28, 2015 To: Re: Counsel of Record ADR Phone Conference Scheduling Notice Case No. 15-01129 HSG Federal Trade Commission v. DIRECTV, Inc. Dear Counsel: I have received the Notice of Need for ADR Phone Conference filed in this case, and I have scheduled the ADR Phone Conference call for June 11, 2015 at 10:30 AM Pacific time. The conference will be conducted by one of the ADR Program’s legal staff, whose biographies appear on the following page. Please take note that at the appointed time, all parties shall call the following number and use the access code to join the call: Dial-in Number: Access Code: 712-432-0265 651415 Please contact me with any scheduling concerns at 415-522-2059, or email [email protected]. Thank you for your attention to this matter. Sincerely, /s/ Claudia Forehand ADR Program Case Administrator Case3:15-cv-01129-HSG Document31 Filed05/28/15 Page2 of 3 ADR PHONE CONFERENCE A phone conference has been scheduled under ADR L. R. 3‐5 because you indicated on your Notice of Need for ADR Phone Conference either (1) you have not reached an agreement to an ADR process or (2) you have tentatively agreed to a settlement conference before a magistrate judge. Purpose The purpose of the conference is to help the parties select or design an ADR process most likely to benefit the particular case. The court offers the following ADR options: < < < Arbitration (non‐binding or binding) Early Neutral Evaluation (ENE) Mediation In only a limited number of cases that would most benefit from the option, the court also offers an Early Settlement Conference with a Magistrate Judge. If this is the option you prefer, during the ADR phone conference you will discuss your reasons for this preference and consider whether a different ADR process may be better suited for this case. If, after the ADR phone conference, you still prefer the option of an Early Settlement Conference with a Magistrate Judge, the ADR legal staff may make a recommendation to the judge regarding the case’s suitability for this option. The assigned judge will then decide whether to refer the case to an Early Settlement Conference with a Magistrate Judge. Additionally, with the court's approval, you may substitute a private ADR procedure for a court process. Participants (See ADR L.R. 3‐5(d)(1)) Counsel who will be primarily responsible for handling the trial of the matter shall participate in the conference. Clients and their insurance carriers are encouraged to participate as well. Logistics (See ADR L.R. 3‐5(d)(2)) For the convenience of the parties and in lieu of ADR L.R. 3‐5(d)(2), the court has a arranged for a dial‐in conference line for this call. The call‐in service that the court uses does require a long‐distance telephone call. If the cost of calling the number presents a problem, please contact the ADR Office and other arrangements will be made. In the event that the conferencing service experiences technical problems, plaintiff’s counsel shall assume responsibility for the call in keeping with ADR L.R. 3‐5(d)(2). It is the responsibility of the attorney for the first‐listed plaintiff to make sure all parties receive a copy of these instructions. Attorney and Client Preparation (See ADR L.R. 3‐5(d)(3)) The phone conference will be conducted by one of the court’s ADR Program legal staff. (Their biographies are below.) You will be asked your views as to which ADR process you favor and will be encouraged to ask questions about the available ADR options. To prepare for the conference, please review with your clients the ADR Local Rules and the booklet entitled Dispute Resolution Procedures in the Northern District of California or the designated portions of the ADR Internet Site (www.adr.cand.uscourts.gov). The court has reserved one‐half hour for the conference call. Case3:15-cv-01129-HSG Document31 Filed05/28/15 Page3 of 3 Exemption from the ADR Phone Conference Requirement Stipulation to an ADR Process (See ADR L.R. 3‐5(c)) 1) You will be exempted from participating in the phone conference if, before the date of the conference, you file a stipulation and proposed order selecting an ADR process other than an Early Settlement Conference with a Magistrate Judge and send, fax or email a copy to the ADR Unit, at the address, fax number or email address listed below. If you intend to stipulate to an Early Settlement Conference with a Magistrate Judge, you must participate in an ADR phone conference. Termination of Case 2) Please call the ADR Unit to remove the case from the phone conference calendar if your case is dismissed or otherwise terminated before the date set for the phone conference. BIOGRAPHIES OF ADR PROGRAM LEGAL STAFF Director, ADR Program Howard A. Herman has been with the Northern District since February 1997. Mr. Herman previously Howard A. Herman served as Director of ADR Programs for Contra Costa County Superior Court. He also spent four years as a settlement conference attorney for the United States Court of Appeals for the Ninth Circuit, ultimately serving as the co‐director of that court's settlement conference program. Mr. Herman has practiced as a civil litigator with the firms of Graham & James and Kindel & Anderson in San Francisco. He is a 1983 graduate of Hastings College of the Law and a 1979 graduate, with high honors, of the University of California at Berkeley. Mr. Herman currently teaches negotiation and mediation at Hastings College of the Law. He has experience as a mediator, mediation trainer, and early neutral evaluator. ADR Program Staff Attorney G. Daniel Bowling Daniel Bowling joined the ADR Program as Staff Attorney in March 2006 and has been mediating since 1986. He has taught mediation and negotiation at Latrobe School of Law in Melbourne, Australia, at Osgoode Hall School of Law, York University in Toronto, at Hastings College of Law, and at Howard Law School in Washington, DC. He is a co‐editor and co‐author of Bringing Peace into the Room: The Personal Qualities of the Mediator and their Impact on Conflict Resolution (Jossey‐Bass, 2003), and co‐author of Chapter 6, “The Mediation Process” in A Litigator's Guide to Effective Use of ADR in California (Cal SEB, 2005). He co‐founded the first mediation organization in South Carolina, the Low Country Mediation Network. As Executive Director of the Society of Professionals in Dispute Resolution (SPIDR), he managed the merger among SPIDR, the Academy of Family Mediators, and the Conflict Resolution Education Network, and served as the first CEO of the Association of Conflict Resolution (ACR). He practiced law and was Public Defender in Charleston, SC and was on the founding faculty of Antioch School of Law. He graduated from Harvard Law School and has practiced yoga and meditation for over thirty years. He currently serves as President of the Board of Spirit Rock Insight Meditation Center in Woodacre, CA.
2015-06-01	32	MOTION to Strike 27 Amended Answer to Complaint DIRECTV's FOURTH THROUGH NINTH AFFIRMATIVE DEFENSES filed by Federal Trade Commission. Responses due by 6/15/2015. Replies due by 6/22/2015. (Attachments: # 1 Declaration of Jacob A. Snow In Support Of Motion To Strike, # 2 Proposed Order Proposed Order Granting Motion To Strike)(Snow, Jacob) (Filed on 6/1/2015) (Entered: 06/01/2015)	Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page1 of 14 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S MOTION TO STRIKE DIRECTV’S AFFIRMATIVE DEFENSES FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page2 of 14 I. II. TABLE OF CONTENTS INTRODUCTION .............................................................................................................. 1 LEGAL STANDARD ......................................................................................................... 2 III. ARGUMENT ...................................................................................................................... 3 A. Laches Is Not Available When the Government Is Enforcing a Public Right or Protecting a Public Interest. .................................................................................... 4 B. DIRECTV’s Estoppel Defense Must Fail Because DIRECTV Does Not Allege That the FTC Engaged in Affirmative Misconduct. ............................................... 4 The FTC Cannot Waive a Violation of Federal Law. ............................................. 6 DIRECTV’s Amended Answer Does Not Adequately Plead Claim or Issue C. D. Preclusion. ............................................................................................................... 6 E. “Previous Nationwide Settlement Agreement” Is Not an Affirmative Defense. .. 10 CONCLUSION ................................................................................................................. 10 IV. FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page3 of 14 CASES TABLE OF AUTHORITIES Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152 (9th Cir. 2002) ............................ 8, 10, 11 Arizona v. California, 530 U.S. 392 (2000) .................................................................................. 11 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ....................................................................................... 3, 6 Bell Atlantic v. Twombly, 550 U.S. 544 (2007) .............................................................................. 3 Borges Colon v. Roman-Abreu, 438 F.3d 1, 19 (1st Cir. 2006).................................................... 11 FTC v. Bronson Partners, LLC, 2006 WL 197357 (D. Conn. Jan. 25, 2006) ............................ 5, 7 Ganley v. Cnty. of San Mateo, 2007 WL 902551 (N.D. Cal. Mar. 22, 2007) ................................ 2 Heckler v. Cmty. Health Serv. of Crawford Cnty., 467 U.S. 51 (1984) .......................................... 6 Hernandez v. Dutch Goose, Inc., 2013 WL 5781476 (N.D. Cal. Oct. 25, 2013) ........................... 3 J&J Sports Prod., Inc. v. Mendoza-Govan, 2011 WL 1544886 (N.D. Cal. Apr. 25, 2011) ........... 4 Jaa v. I.N.S., 779 F.2d 569 (9th Cir. 1986) ..................................................................................... 6 Mukherjee v. I.N.S., 793 F.2d 1006 (9th Cir. 1986)........................................................................ 6 O’Sullivan v. AMN Servs., Inc., 2012 WL 2912061 (N.D. Cal. July 16, 2012) ........................... 11 Perez v. Gordon & Wong, 2012 WL 1029425 (N.D. Cal. Mar. 26, 2012) ........................... 3, 4, 10 Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880 (9th Cir. 1983) ................................................ 3 U.S. v. Amwest Surety Ins. Co., 54 F.3d 601 (9th Cir. 1995).......................................................... 7 U.S. v. King Features Entm't, Inc., 843 F.2d 394 (9th Cir. 1988) .................................................. 7 United States v. Marolf, 173 F.3d 1213 (9th Cir. 1999) ................................................................. 5 United States v. Power Eng'g Co., 303 F.3d 1232 (10th Cir. 2002) ........................................... 8, 9 United States v. Ruby Co., 588 F.2d 697 (9th Cir. 1978) ............................................................... 5 Washington v. Lowe's HIW Inc., 2014 WL 7183855 (N.D. Cal. Dec. 16, 2014) ........................... 9 Wyshak v. City Nat’l Bank, 607 F.2d 824 (9th Cir. 1979) .............................................................. 3 RULES Fed. R. Civ. P. 8(b)(1)..................................................................................................................... 2 Rule 12(b)(6) ................................................................................................................................... 8 Rule 12(f) ........................................................................................................................................ 8 FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page4 of 14 NOTICE OF MOTION TO STRIKE AFFIRMATIVE DEFENSES Pursuant to Civil Local Rule 7-2 and Federal Rule of Civil Procedure 12(f), the Federal Trade Commission (the “FTC,” or “Plaintiff”) hereby moves to strike six of DIRECTV and DIRECTV, LLC’s (collectively, “DIRECTV” or “defendant”) asserted affirmative defenses as insufficient and prejudicial. For the reasons set forth below, the Court should strike the affirmative defenses of laches, estoppel, waiver, claim preclusion, issue preclusion, and “previous nationwide settlement agreement” from DIRECTV’s amended answer (Dkt. No. 27) (“Amended Answer”). I. INTRODUCTION The FTC’s complaint alleges that DIRECTV’s advertisements deceive consumers by failing to adequately disclose 1) that DIRECTV’s satellite-television subscriptions carry a mandatory two-year agreement; 2) that DIRECTV’s second-year monthly subscription price is substantially higher than the conspicuously advertised first-year price; and 3) that DIRECTV automatically begins charging consumers for a premium-channel package after a three-month trial period unless consumers affirmatively opt out. DIRECTV’s Amended Answer includes eleven affirmative defenses. See Amended Answer at 8–13. Six of these defenses are insufficient as a matter of law, and should therefore be disposed of at the pleading stage. DIRECTV should not be permitted to use these defenses to unnecessarily expand discovery and motion practice. DIRECTV’s Fourth Affirmative Defense (laches) should be stricken because 1) laches is not available when—as the FTC does here—the government brings a suit to enforce a public right or protect a public interest; and 2) DIRECTV’s does not (and cannot) properly plead facts that establish the elements of laches. DIRECTV’s Fifth Affirmative Defense (estoppel) is insufficiently pled. Pleading estoppel against the government requires—in addition to the usual legal requirements— allegations of affirmative misconduct and the threat of a serious injustice absent the estoppel. DIRECTV’s Amended Answer does not meet the basic elements of estoppel, much less the more demanding showing necessary to estop the government. FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page5 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’s Sixth Affirmative Defense (waiver) is inapplicable in this case for two reasons. First, the FTC cannot waive the requirements of the Federal Trade Commission Act or the Restore Online Shoppers Confidence Act. And second, DIRECTV does not allege that the FTC intentionally relinquished a known right, which are necessary elements of waiver. DIRECTV’s Seventh Affirmative Defense (claim preclusion) fails because 1) the FTC was not a party to the multistate settlement that DIRECTV asserts has preclusive effect; and 2) the terms of that settlement explicitly foreclose DIRECTV using it to evade liability for violating federal law. DIRECTV’s Eighth Affirmative Defense (issue preclusion) is inapplicable to this case. DIRECTV asserts that its 2010 settlement with numerous states has some preclusive effect in this action. But the multistate settlement explicitly avoided resolving any legal or factual issues (which is a necessary element of an issue-preclusion defense). Issue preclusion based on the multistate settlement is therefore unavailable. DIRECTV’s Ninth Affirmative Defense (Previous Nationwide Settlement Agreement) should be stricken because DIRECTV’s Amended Answer fails to identify any basis for this defense in law. DIRECTV also fails to explain how this purported defense differs—if at all— from DIRECTV’s fourth through eighth affirmative defenses. II. LEGAL STANDARD Federal Rule of Civil Procedure 8(b)(1) requires a party to “state in short and plain terms its defenses to each claim asserted against it.” Fed. R. Civ. P. 8(b)(1). Federal Rule of Civil Procedure 12(f) permits the Court to strike “an insufficient defense” from a pleading. While motions to strike under Rule 12(f) are generally disfavored, “they are proper when a defense is insufficient as a matter of law.” Ganley v. Cnty. of San Mateo, No. C06-3923 TEH, 2007 WL 902551, at 1 (N.D. Cal. Mar. 22, 2007). A Rule-12(f) motion to strike serves “to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial.” Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 887 (9th Cir. 1983). The key to determining the sufficiency of a pleading is “whether it gives plaintiff fair notice of the defense.” Wyshak v. City Nat’l Bank, 607 F.2d 824, 827 (9th Cir. 1979). FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 2 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page6 of 14 In Bell Atlantic v. Twombly, 550 U.S. 544, (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court clarified what constitutes fair notice. Perez v. Gordon & Wong Law Group, P.C., No. 11-CV-03323-LHK, 2012 WL 1029425, at 6 (N.D. Cal. March 26, 2012). Twombly and Iqbal held that pleadings must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (internal quotations omitted). Fair-notice pleading under Rule 8, in other words, “does not unlock the doors of discovery for a [party] armed with nothing more than conclusions.” Id. at 678–79. Authority in the Northern District of California consistently applies Twombly and Iqbal to affirmative defenses. Hernandez v. Dutch Goose, Inc., No. 13-cv-03537 LB, 2013 WL 5781476, at 4 n.2 (N.D. Cal. Oct. 25, 2013) (“According to the court’s own research, it appears that every judge in this district to have taken up the issue has concluded that Iqbal and Twombly apply to the pleading of affirmative defenses.”) (citing 19 Northern District of California cases reaching the same conclusion). This authority directs that affirmative defenses are subject to the same heightened pleading standards as claims, and affirmative defenses should not be added to the case “simply upon some conjecture that it may somehow apply.” Perez, 2012 WL 1029425, at 7. The possibility that, after discovery, a defendant “may prove a set of facts” justifying an affirmative defense does not render that defense sufficiently pled. J&J Sports Productions, Inc. v. Mendoza-Govan, No. C 10-05123 WHA, 2011 WL 1544886, at 4 (N.D. Cal. Apr. 25, 2011). III. ARGUMENT In support of the six affirmative defenses the FTC seeks to strike, DIRECTV offers just one paragraph of factual support. The following language is repeated verbatim under each of the DIRECTV’s six affirmative-defense headings at issue: [I]n December 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page7 of 14 negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other equitable relief extending back for almost a decade based on at least the foregoing. Amended Answer, pp. 8, 9, 10, 11, 12–13. In order to comply with Iqbal, these six sentences must allege facts supporting plausible defenses based on laches, estoppel, waiver, claim preclusion, issue preclusion, and “previous nationwide settlement agreement.” They fail to do so. A. Laches Is Not Available When the Government Is Enforcing a Public Right or Protecting a Public Interest. Laches is not available as an affirmative defense against the government in a suit by its agency to “enforce a public right or protect a public interest.” United States v. Ruby Co., 588 F.2d 697, 705 n. 10 (9th Cir. 1978); FTC v. Bronson Partners, LLC, No. 3:04CV1866(SRU), 2006 WL 197357, at 1 (D. Conn. Jan. 25, 2006) (striking laches affirmative defense to FTC deceptive-advertising suit). In this case, the FTC is protecting a public interest, and laches therefore is not available as an affirmative defense. DIRECTV’s laches defense should be stricken for this reason alone. DIRECTV’s laches defense fails for the additional reason that the Amended Answer lacks facts sufficient to render the defense plausible. In order to plead laches, DIRECTV must allege that: 1) the FTC inexcusably delayed the pursuit of its claim; and 2) prejudice resulted from that delay. United States v. Marolf, 173 F.3d 1213, 1218 (9th Cir. 1999). DIRECTV fails to satisfy this standard. B. DIRECTV’s Estoppel Defense Must Fail Because DIRECTV Does Not Allege That the FTC Engaged in Affirmative Misconduct. DIRECTV’s Amended Answer fails to allege both the basic requirements of an estoppel defense as well as the additional requirements necessary to plead estoppel against the FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page8 of 14 government. In the Ninth Circuit, estoppel is available against a nongovernmental party 1) who has made a knowing false representation or concealment of material facts to a party ignorant of the facts; 2) with the intention that the other party should rely on it; and 3) where the other party actually and detrimentally relies on it. Mukherjee v. I.N.S., 793 F.2d 1006, 1008 (9th Cir. 1986). When estoppel is asserted against the government, as DIRECTV attempts to do here, a more demanding showing is required because the “[g]overnment may not be estopped on the same terms as any other litigant.” Heckler v. Cmty. Health Serv. of Crawford Cnty., 467 U.S. 51, 60 (1984). First, estoppel against the government must rest on “affirmative misconduct going beyond mere negligence.” Mukherjee, 793 F.2d at 1008 (citing Morgan v. Heckler, 779 F.2d 544, 545 (9th Cir. 1985)). Unexplained delay does not constitute affirmative misconduct. Jaa v. I.N.S., 779 F.2d 569, 572 (9th Cir. 1986) (citing I.N.S. v. Miranda, 459 U.S. 14, 18–19 (1982)). Second, even affirmative misconduct will not support estoppel unless “the government’s wrongful conduct threatened to work a serious injustice and… the public’s interest would not be unduly damaged by the imposition of estoppel.” Id. (citing, among other cases, Worley v. Harris, 666 F.2d 417, 421 (9th Cir. 1982)). DIRECTV’s Amended Answer fails to allege facts sufficient to satisfy any of the requirements necessary to plead the affirmative defense of estoppel against the government. DIRECTV does not allege (nor can it allege, consistent with Rule 11) that the FTC made a false representation to, or concealed material facts from, DIRECTV. DIRECTV does not allege that the FTC intended that DIRECTV rely on a false representation or concealment of material facts. DIRECTV does not allege that it actually and detrimentally relied on any false representation or concealed material facts. And critically, DIRECTV does not allege—as it must—affirmative misconduct by the FTC. Finally, DIRECTV does not explain how the FTC’s conduct “threatens to work a serious injustice” or how the public’s interest will not be damaged by imposing estoppel on the FTC in this matter. An answer with such fundamental deficiencies does not meet the pleading requirements of Iqbal, and DIRECTV’s estoppel affirmative defense should therefore be stricken. FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page9 of 14 C. The FTC Cannot Waive a Violation of Federal Law. As an initial matter, the Court should strike DIRECTV’s waiver defense because the FTC cannot waive the requirements of an act of Congress. FTC v. Bronson Partners, LLC, 2006 U.S. Dist. LEXIS 3315, at 6 (D. Conn. Jan. 25, 2006) (citing SEC v. Morgan, Lewis & Bockius, 209 F.2d 44, 49 (3d Cir. 1954)). Even if the affirmative defense of waiver were available against the FTC, DIRECTV’s Amended Answer fails even to allege a plausible waiver defense. Waiver is the “intentional relinquishment of a known right with knowledge of its existence and the intent to relinquish it.” U.S. v. King Features Entm't, Inc., 843 F.2d 394, 399 (9th Cir. 1988). Here, DIRECTV appears to seek an “implied” waiver—that is, a waiver inferred from the FTC’s alleged conduct—which only exists “where there is ‘clear, decisive and unequivocal’ conduct which indicates a purpose to waive the legal rights involved.” U.S. v. Amwest Surety Ins. Co., 54 F.3d 601, 602–03 (9th Cir. 1995) (quoting Groves v. Prickett, 420 F.2d 1119, 1125 (9th Cir. 1970)). Rather than alleging that the FTC intentionally relinquished a known right, DIRECTV alleges only that the FTC “was invited to participate in the negotiation and resolution of [the settlement agreement with the states] before the settlement was finalized but declined.” Amended Answer at 10. But this allegation, even if true, is nowhere near a “clear, decisive, and unequivocal” indication that the FTC intended to relinquish its claims in this case. For this additional reason, DIRECTV’s affirmative defense should be stricken. D. DIRECTV’s Amended Answer Does Not Adequately Plead Claim or Issue Preclusion. DIRECTV asserts, again based on the same identical paragraph of facts, that the FTC’s action is barred under the doctrines of claim and issue preclusion. DIRECTV’s Amended Answer suggests that the judgments entered pursuant to the multi-state settlement should be afforded preclusive effect. See Amended Answer at 11, 12–13. Contrary to this assertion, black- letter preclusion law forecloses giving the multi-state consent judgments any preclusive effect. DIRECTV’s preclusion defenses should therefore be stricken. FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page10 of 14 1. Claim Preclusion Claim preclusion, or res judicata, bars “successive litigation of the very same claim” following a final adjudication on the merits involving the same parties or their privies. Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1159 (9th Cir. 2002). Privity requires “at a minimum, a substantial identity between the issues in controversy and showing that the parties in the two actions are really and substantially in interest the same.” United States v. Power Eng'g Co., 303 F.3d 1232, 1240 (10th Cir. 2002). In general, “state and federal governments are separate parties for res judicata purposes, so that litigation by one does not bind another.” Id. (citing 18 CHARLES ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE, § 4458, at 503). Privity between state and federal governments only exists when a non-party “assumes control over the litigation.” Id. (citing Montana v. United States, 440 U.S. 147, 154 (1979)). Sufficient control over state litigation, for example, exists when the federal government: (1) required the [ ] lawsuit to be filed; (2) reviewed and approved the complaint; (3) paid the attorneys’ fees and costs; (4) directed the appeal [ ]; (5) appeared and submitted a brief as amicus in the [appeal]; (6) directed the filing of a notice of appeal to [the United States Supreme Court]; and (7) effectuated [the] abandonment of that appeal on advice of the Solicitor General. Id. (referencing the facts of Montana, 440 U.S. at 155)(alterations both original and added). DIRECTV does not allege anything approaching a sufficient level of control by the FTC over the multistate settlement. Quite the contrary, DIRECTV alleges that the FTC did not participate in the multistate action or settlement. Amended Answer p. 11 (“The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined.”). DIRECTV’s own allegations defeat its claim-preclusion defense, and alone justify striking that defense. Second, DIRECTV’s claim-preclusion defense should be stricken because the plain terms of the consent judgments with the states foreclose the very interpretation of that agreement that DIRECTV appears to now advance.1 DIRECTV alleges that it “entered into a nationwide 1 In ruling on the motion to strike, the Court may consider the contents of the judgments entered FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page11 of 14 agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders.” Amended Answer at 11. The Final Judgment and Permanent Injunction filed in California Superior Court lists 50 participating states in its Exhibit A. Declaration of Jacob Snow In Support Of Motion to Strike, ¶ 2, Ex. 1 (the “Multistate Judgment”).2 The Multistate Judgment contains key provisions that defeat DIRECTV’s purported preclusion defenses. First, the Multistate Judgment expressly states that the parties— DIRECTV and the People of the State of California—consented to the judgment “without trial or adjudication of any issue of law or fact.” Multistate Judgment 1–2 (emphasis added). Next, the Multistate Judgment states that it “may only be enforced by the parties hereto.” Id. ¶ 9.1. Moreover, contradicting DIRECTV’s assertion that the Multistate Judgment precludes the FTC’s federal claims, the Multistate Judgment states that “[n]othing in this Judgment shall be construed as relieving DIRECTV of the obligation to comply with all State and federal laws, regulations or rules, nor shall any of the provisions of this Judgment be deemed to be permission to engage in any acts or practices prohibited by such law, regulation, or rule.” Id. ¶ 13.1 (emphasis added). Finally, the definition of “Released Claims” in the Multistate Judgment is explicit that “claims pursuant to any other statute or regulation” are not released. Id. ¶ 13.1. That is, only the claims explicitly alleged in the state complaint were released. These provisions narrowly limit the scope of the Multistate Judgment’s preclusive effect. Perez, 2012 WL 1029425, at 4 (citing, among other Ninth-Circuit authority for the proposition that the terms of a settlement properly limit the scope of preclusion, United States ex. rel. Barajas v. Northrop Corp., 147 F.3d pursuant to DIRECTV’s settlement with the state attorneys general. DIRECTV relies upon and repeatedly references the multistate judgments in its Amended Answer. See Amended Answer at 8, 9, 10, 11, 12. Indeed, the judgments are foundational to DIRECTV’s preclusion-related affirmative defenses. See Amended Answer at 11–12. In the context of a motion to dismiss “a document is not ‘outside’ the complaint if the complaint specifically refers to the document and if its authenticity is not questioned.” Washington v. Lowe's HIW Inc., No. 3:14-CV-02984-CRB, 2014 WL 7183855, at 5 (N.D. Cal. Dec. 16, 2014, appeal dismissed (Feb. 25, 2015). Given the similarities between a motion to strike insufficient defenses under Rule 12(f) and a motion to dismiss under Rule 12(b)(6), the FTC may introduce documents referenced in DIRECTV’s answer. 2 DIRECTV alleges that the 51 judgments are “substantially similar,” (Amended Answer at 11– 12) and therefore the submitted California judgment is a representative sample of those 51 substantially similar judgments. FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page12 of 14 905, 911 (9th Cir. 1998)). In light of the Multistate Judgment’s express limitations, DIRECTV’s claim-preclusion defense should be stricken. 2. Issue Preclusion Issue preclusion, or collateral estoppel, “attaches only when an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment.” Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1159 (9th Cir. 2002) (citing Arizona v. California, 530 U.S. 392, 414 (2000))(internal quotations omitted). Issue preclusion has no application when “the party against whom the earlier decision is asserted did not have a ‘full and fair opportunity’ to litigate that issue.” Id. (citing Allen v. McCurry, 449 U.S. 90, 94–95 (1980))(internal quotations omitted). DIRECTV’s assertion of issue preclusion appears to be based on the consent judgments filed in state courts around the country. However, consent judgments—because they do not involve any actually litigated issues—are not ordinarily given issue-preclusive effect. Arizona v. California, 530 U.S. 392, 414 (2000); Amadeo, 290 F.3d at 1159 (“[I]n the case of a judgment entered by confession, consent, or default, none of the issues is actually litigated.”) (citing Restatement (Second) of Judgments, § 27 cmt. e (1982)). In fact, the Multistate Judgment is explicit on this point, stating that the judgment was entered “without trial or adjudication of any issue of law or fact.” Multistate Judgment 1–2. In light of this language, DIRECTV cannot (and thus does not) allege that the FTC had a full and fair opportunity to litigate any issue in the state actions. Perhaps unsurprisingly, DIRECTV’s Amended Answer does not identify any particular issue to which preclusion applies. See O’Sullivan v. AMN Servs., Inc., No. C-12-02125 JCS, 2012 WL 2912061, at 1 (N.D. Cal. July 16, 2012) (striking a waiver affirmative defense and noting that “[a]s to waiver, Plaintiff asks, what right is [Defendant] asserting has been waived?”). Nor does DIRECTV explain how any purportedly actively litigated and necessarily decided issues were decided. As the First Circuit wrote in Borges Colon v. Roman-Abreu, confronting a similar attempt to invoke issue preclusion, “[t]his argument makes no sense. Where there has FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page13 of 14 been no hearing, and therefore no findings, there can be no issue preclusion.” 438 F.3d 1, 19 (1st Cir. 2006). DIRECTV’s issue-preclusion defense should be stricken. E. “Previous Nationwide Settlement Agreement” Is Not an Affirmative Defense. DIRECTV’s final affirmative defense is titled “Previous Nationwide Settlement Agreement” and is followed by the same repeated paragraph of allegations. Amended Answer at 12. It is not clear from DIRECTV’s Amended Answer how this affirmative defense is related to the case, what purported legal basis exists to support it, or how it differs from DIRECTV’s other defenses based on identical facts. The law is clear that affirmative defenses cannot survive based on legal conclusions alone. Iqbal, 556 U.S. 678. But DIRECTV’s Amended Answer fails even to identify a legal basis upon which this defense could possibly rest. DIRECTV’s Ninth affirmative defense should be stricken as well. IV. CONCLUSION For the reasons stated above, the Court should strike DIRECTV’s affirmative defenses based on laches, estoppel, waiver, claim preclusion, issue preclusion, and “previous nationwide settlement agreement.” Dated: June 1, 2015 Respectfully Submitted, Jonathan E. Nuechterlein General Counsel __/s/ Jacob A. Snow____ Jacob A. Snow Eric D. Edmondson Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’s Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document32 Filed06/01/15 Page14 of 14 CERTIFICATE OF SERVICE This is to certify that on June 1, 2015, I served the counsel listed below with a true and correct copy of the attached Federal Trade Commission’s Motion To Strike Directv’s Affirmative Defenses by filing the above document with the Court’s ECF System. CHAD S. HUMMEL (Bar No. CA 139055) CLAYTON S. FRIEDMAN (Bar No. CA 245513) MICHAEL YAGHI (Bar No. CA 202720) MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 CHRISTIAN E. BAKER (Bar No. CA 247006) MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 I swear under penalty of perjury that the foregoing is true and correct. Executed this June 1, 2015 in San Francisco, California. __/s/ Jacob A. Snow_______
2015-06-02		ADR Remark: ADR Phone Conference is rescheduled to 6/10/2015 at 2:30 PM Pacific time. The call-in information remains the same. (cmf, COURT STAFF) (Filed on 6/2/2015) (Entered: 06/02/2015)
2015-06-09	33	JOINT CASE MANAGEMENT STATEMENT filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 6/9/2015) (Entered: 06/09/2015)	Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page1 of 22 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS, LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG INITIAL JOINT CASE MANAGEMENT STATEMENT & [PROPOSED] ORDER Case Management Conference Date: June 16, 2015 Time: 2:00 pm Courtroom: 15 (18th floor) v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Joint Case Management Statement – 15-cv-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page2 of 22 Pursuant to Civil Local Rule 16-9 and the Standing Order for All Judges of the Northern District of California, dated August 25, 2014, the parties jointly submit this INITIAL JOINT CASE MANAGEMENT STATEMENT (“Statement”) and [PROPOSED] ORDER. Counsel for Plaintiff and Defendants have conferred on at least three occasions and made diligent efforts to resolve all differences in the Statement and Proposed Order. Where we have been unable to reach agreement, the parties provide their respective positions for the Court’s consideration. Jurisdiction and Service 1. Plaintiff has properly served Defendants, and Defendants have answered the Complaint denying the material allegations and asserting affirmative defenses. Defendants do not contest personal jurisdiction. The parties agree that this Court has federal question subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345, and 15 U.S.C. §§ 45(a), 53(b), 57b, and 8404. Defendants do not contest that venue is proper in this Court under 28 U.S.C. § 1391(b), (c)(2), and (d), and 15 U.S.C. § 53(b). Facts 2. Plaintiff’s Position Defendants (together, “DIRECTV” or the “Company”) are the largest provider of direct- to-home digital television service and the second largest provider in the multi-channel video programming distribution industry in the United States, with more than 20 million subscribers in the United States as of December 31, 2013. DIRECTV sells subscriptions to direct-to-home digital television service, which includes a programming package, a satellite dish and other necessary equipment, and installation and support services. These subscriptions typically entail a 24-month contract term, subject to an early cancellation fee. In marketing its subscription service, DIRECTV disseminates across a variety of media, including television, print, mail, and the Internet, advertisements conveying specific monthly rates for its programming packages. In fact, these advertised rates are merely teaser (i.e., introductory) rates. Consumers who subscribe to DIRECTV’s service end up paying these advertised rates for only a limited duration, typically 12 months, after which they are forced to pay substantially higher monthly rates—as much as 50 to 70 percent more. Because DIRECTV Joint Case Management Statement – 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page3 of 22 typically enrolls consumers in two-year contracts, the consumer’s refusal to continue with the service under the hiked rates results in assessment of a cancellation fee—typically $20 for each month remaining on the contract. DIRECTV fails to adequately disclose to consumers the true nature and cost of the service. To the extent DIRECTV’s advertisements contain any qualifying disclosures, such disclosures are inadequate in their content, presentation, proximity, prominence, and/or placement, such that consumers are unlikely to see or understand them. In addition to failing to adequately disclose the true price and contract length of the television subscription service, DIRECTV fails to adequately disclose the truth about its premium channel offering. DIRECTV advertises that subscribers to its service will receive bonus premium channels, such as HBO, Cinemax, and Showtime, free of charge for a limited period of time. What the advertising does not adequately disclose, however, is that consumers who do not affirmatively cancel these premium channels before the end of the initial period will be automatically charged an additional subscription fee, typically around $48 per month, for them. To the extent DIRECTV’s advertisements contain any qualifying disclosures about the true nature and cost of the “free” premium channels offering, such disclosures are inadequate in their content, presentation, proximity, prominence, or placement, such that consumers are unlikely to see or understand them. DIRECTV has failed to provide adequate disclosures not only in its advertising campaigns, but also across the various means through which consumers purchase the service: the Company’s www.directv.com website and its telesales operation. Consumers who call the phone number(s) advertised in DIRECTV’s advertisements speak with the Company’s telemarketing agents. Those telemarketers typically include statements about the initial—advertised—monthly prices, but do not adequately disclose the higher second-year costs. Similarly, the www.directv.com webpages through which consumers must navigate to select and purchase the subscription service advertise the initial (low) monthly prices, but fail to adequately disclose that DIRECTV will require consumers to maintain subscriptions for two years, or pay early cancellation fees, and will charge significantly higher monthly rates during the second year of service. DIRECTV’s webpages also advertise the “free” premium channels offering, but do not Joint Case Management Statement – 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page4 of 22 adequately disclose that DIRECTV will automatically enroll consumers in a negative option continuity plan, under which it will charge consumers for access to premium channels after an initial period unless the consumer contacts DIRECTV and cancels premium channel access before the end of that period. In addition to failing to clearly and conspicuously disclose all the material terms of the subscription transaction before obtaining consumers’ billing information, DIRECTV’s website fails to obtain consumers’ express informed consent before charging them for the premium channels. DIRECTV has engaged in these practices since at least 2007. Its practices have resulted in tens of thousands of consumer complaints and actions by all 50 States and the District of Columbia. Nonetheless, DIRECTV’s practices persist to this date. Defendants’ Position At all times relevant to the Complaint, DIRECTV has communicated to consumers in its advertising, marketing, and subscription ordering processes all the material terms and conditions that apply to its introductory discount pricing offers for subscription television programming packages. Five years ago, effective January 2011, DIRECTV addressed and resolved the very same introductory pricing disclosure issues raised now by the FTC in a comprehensive settlement and restitution program with all fifty states and the District of Columbia. This multi- state settlement agreement resolved all the state “actions” referenced above. Since that time, not a single state has brought any enforcement action. The FTC was aware of and invited to participate in the settlement. It declined, and DIRECTV proceeded to rely on the terms of the settlement in designing and implementing its advertising disclosures for the next five years. The FTC does not and cannot contend that DIRECTV has ever failed to deliver the satellite programming services as advertised, that the advertised introductory package discounted prices are misrepresented, that DIRECTV’s advertising contains any false statements, or that DIRECTV does not disclose to consumers all material terms of its programming offers. No such allegations would have any merit. Rather, this case concerns only the prominence and adequacy of disclosures (which are unquestionably made) of the terms and conditions of DIRECTV’s Joint Case Management Statement – 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page5 of 22 programming offers, which the FTC actually misstates in its Complaint and in this CMC statement. Specifically, the FTC wrongly alleges in its Complaint and above that, in order to obtain discounted monthly introductory program package pricing, “DIRECTV will require consumers to maintain subscriptions for two years, or pay early cancellation fees, and will charge significantly higher monthly rates during the second year of service.” This is wrong. In fact, while it is true that DIRECTV offers introductory discounted monthly prices for its programming packages and that the discount typically lasts 12 months (although some offers contain a second year discount as well), it is not true, and has never been true, that a consumer must pay “significantly higher monthly rates during the second year” of the subscription commitment. Rather, in order to obtain the introductory discounted pricing, as well as free installation and no up-front costs for equipment, a consumer need only maintain a minimum level of programming of at least $29.99 per month for 24 months. A consumer need not keep the package selected initially upon subscription. If the consumer chooses only the required minimum level of programming in the second year, for many packages initially selected, the programming price would actually be lower in the second year. Of course, if the consumer elects to keep the package initially selected, the discount no longer applies in the second year, and the consumer would be charged the then-existing regular price for that package. If the consumer cancels the subscription or does not maintain the minimum level of service for 24 months, DIRECTV can assess an early cancellation fee (“ECF”) of up to $20 per month for each month remaining on the contract. This pricing regime is borne of competitive necessity. DIRECTV offers introductory discounted pricing to meet intense competition posed by cable television providers and DISH Network – each of which historically offers deeply discounted pricing and often advertises in ways less transparent than DIRECTV. Moreover, cable companies that offer a bundle of services are able to leverage the high profits they make on the Internet and phone service to subsidize television pricing. As a result of this competitive landscape, DIRECTV offers the introductory discounts but must assure that it can recoup its customer acquisition investment Joint Case Management Statement – 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page6 of 22 (currently estimated to be about $900 per new subscriber). In light of this per subscriber investment, on average, DIRECTV does not achieve a financial return until after month 24 of a consumer subscription. The possible imposition of an ECF for a consumer breach – an almost universally employed and familiar remedy by providers of contractual monthly subscription services like cell phone and television providers – is a fully justifiable liquidated damages measure or means of alternative contract performance. The fact that consumers have historically complained about ECFs is hardly surprising but is in no way indicative of a failure adequately to disclose material terms of the offer. Moreover, the percentage of consumers who have complained about these issues is statistically minuscule (less than one half of one percent) when compared to the total number of consumers who acquire DIRECTV each year. Indeed, regarding the adequacy of its disclosures, contrary to the FTC’s allegations recited above, DIRECTV will offer proof of the following in this case, demonstrating that it has never engaged in deceptive advertising in violation of Section 5 of the FTC Act or ROSCA: • DIRECTV provides satellite television services to subscribers throughout the United States and has, throughout the time period at issue, advertised its varying offers of discounted introductory monthly prices for its programming packages to new subscribers. While doing so, DIRECTV repeatedly discloses all the material facts of its offers. • DIRECTV’s advertising has appeared on television, in print ads in newspapers and like media, and on the Internet. Despite a five year investigation, other than four exemplar ads attached to the Complaint (which, as in the case of the sample web flow, are materially incomplete and therefore misleading as the FTC failed to attach the sections that contain the disclosures at issue), the FTC has not identified specific ads or even ad campaigns that it contends violate Section 5. Because the FTC’s general allegations date back to 2007, an eight year time period during which DIRECTV sponsored tens of thousands of ads, this poses an insurmountable problem of proof and will be the subject of early motion practice, should the FTC persist in refusing to specify the ads that are at issue. Joint Case Management Statement – 15-cv-01129-HSG 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page7 of 22 • Regardless of the lack of specificity in the FTC’s charging document, unlike other reported Section 5 false advertising cases, consumers cannot complete a purchase of the DIRECTV product based on DIRECTV advertising alone. Rather, in order to subscribe, consumers must follow a journey to subscription by either calling a toll-free number (e.g., 800-DIRECTV) or completing a detailed online subscription process on www.directv.com. Roughly one third of DIRECTV’s direct sales customers subscribe online, while the remainder subscribe by phone. At multiple points on the web and in the phone sales process, DIRECTV clearly and conspicuously discloses all the material terms of the chosen offer, reinforcing the same disclosures made in its advertisements. • After an order is placed, before installation of equipment, and before a consumer is charged, DIRECTV again communicates all the material terms of the offer in confirmation letters or emails and in the written contract that consumers sign. • Expert testimony will demonstrate that, given the reality of consumer behavior for high involvement products or considered purchases like satellite television, consumers do not act on introductory advertising alone (such as print or TV ads, which serve as invitations to further action), but rather conduct independent research about DIRECTV and its competitors. In light of the undisputed disclosures in the ads and in the DIRECTV subscription processes, so long as advertising does not deceive consumers into false perceptions about the terms and conditions of an offer, the advertising is not deceptive. This does not even take into account the pre-existing knowledge and experience about introductory pricing offers that consumers bring to the purchasing process. • Consumer survey evidence will demonstrate that DIRECTV’s print, Internet, and TV ads do not deceive consumers into false impressions about the terms and conditions required to obtain the introductory discounted pricing. There is no “first impression, misimpression” in this case. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Joint Case Management Statement – 15-cv-01129-HSG 7 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page8 of 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 • Consumer research evidence will demonstrate that DIRECTV subscribers overwhelmingly know the material terms of the offer – that introductory discounted pricing lasts twelve months, that they have a two year commitment, that an ECF may be imposed for early termination, that the price of the programing package initially selected will be higher when the promotional period ends, and that any free promotional premium channel offers are of limited duration and that they roll-to-pay absent consumer action to cancel. • Evidence about DIRECTV’s subscription processes, training, and quality control programs demonstrates DIRECTV’s commitment to full disclosure of the terms of its offers and that, contrary to the FTC’s allegations, DIRECTV repeatedly informs consumers at multiple points in the journey to subscription of all the material terms at issue. It is neither surprising nor probative of deception that a very limited set of consumers, for a host of legitimate reasons, might not be able to recite with particularity all the terms of the offer. • With respect to ROSCA, which applies only to subscription sales completed online, DIRECTV discloses all material terms of its premium channel roll-to-pay offers and in a manner fully consistent with the FTC’s own “dot-com” guidelines prior to the time that DIRECTV obtains credit card payment information, and it obtains express consent to the terms of its premium channel offers before a consumer’s credit card is charged for the programming services. The FTC’s Complaint, which follows (a) a nearly five year investigation, involving the issuance of multiple Civil Investigative Demands (“CIDs”) with which DIRECTV fully cooperated, into the subject advertising practices at issue and (b) the multi-state settlement agreement that established a comprehensive disclosure regime ensuring that consumers are not deceived about the very same topics at issue in this case, seeks unspecified “injunctive” and “monetary” relief. The Complaint fails to allege, and the FTC has refused to specify in this initial disclosure phase of the case, precisely what it would have this Court order in terms of injunctive relief or how it would even begin to calculate monetary redress for the conduct Joint Case Management Statement – 15-cv-01129-HSG 8 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page9 of 22 charged. This refusal is inexcusable in light of the FTC’s extensive pre-filing investigation. 3. Legal Issues Plaintiff’s Position The legal issues are (1) whether Defendants’ conduct is deceptive in violation of Section 5 of the Federal Trade Commission (“FTC”) Act, 15 U.S.C. § 45; (2) whether Defendants’ conduct violates the Restore Online Shoppers’ Confidence Act (“ROSCA”), 15 U.S.C. § 8403(1) and (2); and (3) whether the Court should order the equitable relief sought in the Complaint, including a permanent injunction, rescission or reformation of contracts, restitution, refunds of monies paid, and disgorgement of ill-gotten monies, as well as Plaintiff’s costs of bringing this action and additional relief that the Court determines just and proper. DIRECTV’s conduct is deceptive in violation of Section 5 of the FTC Act because the Company has failed to adequately disclose the requirement that consumers are enrolled in a 24- month subscription agreement, the substantial increase in the subscription price for second year of the agreement, and the premium channel negative option—material information to consumers deciding whether to purchase the service. See FTC v. Cyberspace.com LLC, 453 F.3d 1196, 1199 (9th Cir. 2006) (“a practice falls within [Section 5’s] prohibition (1) if it is likely to mislead consumers acting reasonably under the circumstances (2) in a way that is material”). “A solicitation may be likely to mislead by virtue of the net impression it creates even though the solicitation also contains truthful disclosures.” Id. (rejecting defendants’ contention that truthful “fine print notices” preclude liability for deception under Section 5). Therefore, the mere presence of a disclosure that, “by its placement, wording, colorization, spacing, and size of the text[, is] designed not be clear and conspicuous, but rather to mask information” is inadequate to avoid deception “because it simultaneously conceals, obscures, and suppresses the very information it purports to convey.” FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1068 (C.D. Cal. 2012). DIRECTV’s conduct violates ROSCA. In enrolling consumers into its premium channel offering, DIRECTV has charged consumers for services sold in transactions effected on the Internet through a negative option feature without (1) clearly and conspicuously disclosing all Joint Case Management Statement – 15-cv-01129-HSG 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page10 of 22 material terms of the transaction before obtaining the consumer’s billing information, and (2) obtaining the consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account, or other financial account for the service. This conduct violates two of ROSCA’s negative option provisions. See 15 U.S.C. § 8403(1) and (2). The FTC’s sought relief is appropriate because it is authorized under the FTC Act and ROSCA and is necessary to stop and remediate DIRECTV’s unlawful conduct. In addition to prospective injunctive relief to prevent DIRECTV from continuing to violate the FTC Act and ROSCA, Plaintiff seeks equitable monetary redress in the amount of total loss to consumers. See FTC v. Publishers Bus. Servs., Inc., 540 F. App’x 555, 558 (9th Cir. 2013), cert. denied, 134 S. Ct. 2724 (2014) (directing the district court to “base its calculation on the injury to the consumers, not on the net revenues received by defendants”); see also FTC v. Figgie Int’l, Inc., 994 F.2d 595, 606 (9th Cir. 1993) (rejecting defendant’s attempt to reduce the restitution amount because the product sold through deceptive advertising had some value). The dollar amount of equitable monetary redress will be ascertained through discovery. Defendants’ Position The legal and equitable issues that will be presented to the Court for determination include: 1. Whether DIRECTV has engaged in deceptive advertising in violation of the FTC Act (15 U.S.C. § 45(a)). The two cases cited by the FTC above, FTC v. Cyberspace.com LLC and FTC v. Commerce Planet, Inc., both involved entirely dissimilar acts that the courts found to have been deceptive marketing practices. The facts of those two cases are readily distinguishable from those at issue here. 2. Whether DIRECTV has complied with ROSCA (15 U.S.C. § 8403(1) and (2)). This is a case of first impression regarding the applicability of this statute to the conduct at issue. 3. Whether the Plaintiff is required to comply with Fed. R.Civ. P. 26(a)(1)(A) and provide an early disclosure of the specific injunctive relief sought and a “computation of each category of damages claimed by the disclosing party” based on the information reasonably available. Joint Case Management Statement – 15-cv-01129-HSG 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page11 of 22 4. Whether Plaintiff is barred under the doctrines of waiver, estoppel, laches, issue or claim preclusion, and / or other equitable principles from pursuing relief as a result of the multi-state settlement agreement described above. Motions 4. Current Motions: On June 1, 2015, Plaintiff filed a motion to strike certain affirmative defenses raised in DIRECTV’s Amended Answer. Plaintiff did not request a hearing. Pursuant to this Court’s Order dated June 1, 2015, Defendants will file an Opposition to the motion on June 15, 2015, and request that a hearing be scheduled on August 6, 2015. Anticipated Motions: Plaintiff does not plan to file any dispositive motions before the conclusion of fact discovery. Defendants intend to file a motion for partial summary judgment on the ROSCA claims. Defendants may also file a motion to compel under Fed. R.Civ. P. 37 to require plaintiff to comply with initial disclosure requirements and specify the relief it is seeking by its Complaint. Amendment of Pleadings 5. Defendants filed an Amended Answer on May 18, 2015. At this time, the parties do not plan to further amend their pleadings. Evidence Preservation 6. The parties have reviewed the Guidelines Relating to the Discovery of Electronically Stored Information (“ESI Guidelines”). The parties have met and conferred pursuant to Fed. R. Civ. P. 26(f) and ESI Guideline 2.02 regarding the preservation of evidence relevant to the issues in this case. The parties are committed to cooperating with the production of ESI in the most efficient and least burdensome manner as the nature and scope of such productions becomes better defined. Plaintiff has no specific knowledge of actions by Defendants, if any, taken to preserve documents and ESI relevant to this action, and thus has no position at this time as to whether the steps taken meet its obligations as required under the Federal Rules. Plaintiff reserves the right in its discretion to take discovery on this issue as warranted. Joint Case Management Statement – 15-cv-01129-HSG 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page12 of 22 The parties agree that neither party is required to preserve or produce in discovery the following categories of information, some of which is ESI: 1) voicemail messages, except where they are contained within the party’s email systems; 2) e-mail or other electronic messages sent to or from a personal digital assistant or smartphone (e.g., Blackberry or iPhone), provided that a copy of such e-mail or message is routinely saved and preserved elsewhere; 3) other electronic data stored on a personal digital assistant or smartphone, such as calendar or contact data or notes, provided that a copy of such information is routinely saved and preserved elsewhere; 4) temporary or cache files, including Internet history, web browser cache, and cookie files, wherever located; 5) server, system, or network logs; and 6) documents sent solely between outside counsel for Defendants (or persons employed by or acting on behalf of such counsel) or solely between counsel for the FTC (or persons employed by the FTC). Disclosures 7. The parties exchanged initial disclosures as required by Fed. R. Civ. P. 26(a)(1) on June 9, 2015. 8. Discovery A. Status of Discovery Plaintiff’s Position DIRECTV, LLC has provided to the FTC documents and ESI in response to two CIDs issued by the FTC prior to the filing of this action. DIRECTV emphasizes below the volume of documents produced during the FTC’s investigation. However, DIRECTV failed to fully comply with either CID. Although DIRECTV has produced some documents and information created prior to 2014, its production during the investigation has been inadequate. For example, DIRECTV has refused to produce over 25,000 documents responsive to the CIDs while failing to Joint Case Management Statement – 15-cv-01129-HSG 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page13 of 22 provide a privilege log or other basis for withholding the documents. Moreover, DIRECTV has yet to produce a working copy of its website, www.directv.com, or any copy tests, surveys, usability tests or other data collected in the ordinary course of business and relied upon by DIRECTV as evidence that consumers see and understand material disclosures in their advertisements and marketing materials. Defendants’ Position DIRECTV disputes that its responses to the CIDs have been inadequate and that it has “yet to produce” the categories of materials identified. The FTC never brought any action to enforce the CIDs. Indeed, at the in-person meeting with the FTC trial team on this matter on May 6, 2015, the FTC informed DIRECTV counsel that the CID issues are now “moot” and that the parties would confer about the scope of a privilege log. Regardless, the truth is that DIRECTV has provided to the FTC documents and ESI in response to two separate CIDs issued by the FTC prior to the filing of this action. Over the course of the five year investigation by the FTC into DIRECTV’s advertising, DIRECTV responded to two separate Civil Investigative Demands issued by the FTC on April 23, 2010 and December 13, 2013, which called for the production of no less than 53 categories of documents and written responses to no less than 26 interrogatories. In over 83 separate submissions, DIRECTV produced nearly half a million pages of documents from all custodians reasonably likely to have responsive materials covering a seven year time span. In addition, DIRECTV fully responded to multiple informal requests for information, including by producing witnesses for interviews (on subjects ranging from customer care and service, to web information tracking, to advertising review protocols) and providing detailed written information about its advertising, business, and web analytics. B. Production of Documents and ESI The parties have agreed to attempt to negotiate and jointly propose a stipulated e- discovery order consistent with the Court’s ESI Guidelines. The parties propose that in responding to an initial Fed. R. Civ. P. 34 request, the parties will meet and confer about the methods to search ESI in order to identify ESI that is subject to production and filter out ESI that Joint Case Management Statement – 15-cv-01129-HSG 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page14 of 22 is not subject to discovery. The parties shall designate liaisons to each other who are and will be knowledgeable about and responsible for discussing their respective ESI, and the parties will rely on the liaisons, as needed, to confer about ESI and to help resolve disputes without court intervention. Each such e-discovery liaison will be, or have access to those who are, knowledgeable about the technical aspects of e-discovery, including the location, nature, accessibility, format, collection, search methodologies, and production of ESI in this matter. Except as otherwise agreed, and where possible, the parties shall produce all documents and ESI in accordance with the most recent FTC Bureau of Consumer Protection Production Guide (“FTC Production Guide”) (provided by the FTC to Defendants’ outside counsel), except when producing documents and ESI received from non-parties. Documents previously produced by Defendants need not be reproduced due to any failure to meet the current FTC Production Guide. The parties shall produce all documents and ESI received from non-parties in the same manner and format in which the materials were originally produced by the non-party. Should either party issue any document subpoena on nonparties, the instructions in that subpoena shall request production conforming to the FTC Production Guide. C. Protective Order The parties have had discussions related to a proposed protective order governing the production and use of confidential materials. The parties plan to file a stipulated protective order prior to the Case Management Conference set for June 16, 2015. D. Proposed Discovery Plan i. Party Discovery a. Written Discovery The parties have agreed to modifications of the presumptive limits on discovery set forth in the FRCP as follows: Absent leave of Court, which may be obtained for good cause shown, each side may serve no more than 50 document requests, 50 interrogatories (including subparts), and 100 requests for admissions (not including requests for admission seeking the authentication of documents or other evidence). Joint Case Management Statement – 15-cv-01129-HSG 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page15 of 22 b. Depositions Plaintiff’s Position Absent leave of Court, which may be obtained for good cause shown, Plaintiff is permitted a maximum of 125 hours of deposition time for party-affiliated percipient (non-expert) witnesses regardless of the number of witnesses deposed, not including any depositions noticed under Fed. R. Civ. P. 30(b)(6). A deposition of a person designated by a party to provide testimony pursuant to FRCP Rule 30(b)(6) shall be treated as a single deposition regardless of the number of deposition topics that person may testify about. Such testimony shall not count toward the total hour limit described above; however, unless otherwise agreed to by the parties, each designee deponent’s testimony may last up to seven hours, as provided for by Fed. R. Civ. P. 30(d)(2). If any such Rule 30(b)(6) deponent cannot or does not satisfactorily testify on all topics for which he or she is designated, the noticing party shall be permitted to notice additional deposition(s) for the outstanding topics. Rationale for Plaintiff’s Position As noted above in Paragraph 8.A., Defendant DIRECTV, LLC made a limited production during the pre-Complaint investigation and did not fully comply with the FTC’s Civil Investigative Demands. The FTC has not taken any depositions of Defendants’ officers, directors, or employees, and has conducted only two interviews. Based on Plaintiff’s initial review of relevant materials, it believes there are at least 20 party-affiliated witnesses likely to have direct knowledge of facts directly relevant to the Complaint’s allegation. Therefore, a 125 hour limit appears appropriate at this time. Plaintiff expects that a number of these depositions will require fewer than the seven-hour limit imposed by Fed. R. Civ. P. 30(d)(1). Plaintiff believes that flexibility, efficiency, and fairness are best served by imposing a limit on depositions in terms of hours rather than number of deponents. Defendants’ Position DIRECTV believes that the presumptive limits on depositions set forth in Fed. R. Civ. P. Rule 30(a)(2), specifically, 10 depositions of 7 hours each are adequate for party-affilitated Joint Case Management Statement – 15-cv-01129-HSG 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page16 of 22 individual depositions in this matter. The FTC has failed to identify the party-affiliated witnesses it claims to need to depose, despite its 5 year investigation of this matter. DIRECTV has, in good faith, designated ten persons in its initial disclosures who are likely to have the relevant information related to the advertising at issue. DIRECTV would be prepared to stipulate to additional designee depositions under Fed. R.Civ. P. 30(b)(6) so long as the number of such depositions is limited to 10 additional designee depositions of 7 hours each, defined generally as follows: the deposition of a person designated by a party to provide testimony pursuant to Rule 30(b)(6) shall be treated as a single deposition regardless of the number of deposition topics that person may testify about. ii. Non-Party Discovery a. Written Discovery Parties shall request that non-parties simultaneously produce materials to both Plaintiff and Defendants, regardless of which party sought the materials. If, notwithstanding such request, the non-party does not produce copies to both sides, the issuing party will provide a copy of all materials produced to the other side within seven calendar days after receipt of the materials from the non-party. b. Non-Party Depositions The parties agree that each side shall be permitted a maximum of 150 hours of deposition time of non-parties, regardless of the number of deponents. This total time limitation will apply to the time questioning on the record regardless of which party noticed the deposition. E. Discovery of Expert Related Materials No party is required to preserve or produce in discovery the following documents: 1) any form of oral or written communications or correspondence between (1) the FTC, including its Commissioners, counsel, staff, employees, and agents and the FTC’s expert witnesses and expert witnesses’ staff; (2) Defendants’ outside counsel and Defendants’ expert witnesses and expert witnesses’ staff; (3) the expert witnesses and their respective staff; and (4) expert witnesses and other expert witnesses; and Joint Case Management Statement – 15-cv-01129-HSG 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page17 of 22 2) notes, drafts, written communications, data formulations or runs, or any database- related operations or other types of preliminary work created by, or for, expert witnesses or their staff; however, the protections against discovery contained in this paragraph shall not apply to any information or materials covered by Fed. R. Civ. P. 26(b)(4)(C)(i)-(iii). Class Actions 9. Not a class action. Related Cases 10. No related cases. Relief 11. Plaintiff’s Position: Plantiff FTC seeks the imposition of equitable relief (not legal damages), including: 1) A permanent injunction against DIRECTV; 2) An award of equitable monetary relief in an amount to be determined after discovery in the form of restitution, consumer redress, refunds of monies paid, and/or disgorgement of ill-gotten gains from DIRECTV; and 3) The imposition of various monitoring provisions; reimbursement of costs and expenses; and such other equitable relief as the Court may deem appropriate. Defendants’ Position: As described above, DIRECTV is prepared to move this Court for an Order requiring a detailed disclosure of the relief sought that complies with FRCP Rule 26 for initial disclosures and the Standing Order of this Court (Paragraph 11) regarding the contents of a joint case management statement. The distinction that the FTC attempts to draw above between legal “damages” (the term used in Rule 26(a)(1)(A)(iii) and in Paragraph 11 of this Court’s Standing Order) and “equitable monetary relief” is a distinction without a practical difference. The Standing Order requires that the FTC specify “all relief sought through complaint.” It is meaningless, and contrary to the letter and spirit of the rules, for the FTC merely to state that it seeks “restitution, consumer redress, refunds of moneys paid, and /or disgorgement of ill-gotten- Joint Case Management Statement – 15-cv-01129-HSG 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page18 of 22 gains,” particularly when the FTC has not specified the advertising that it asserts is or has been deceptive. It is also meaningless for the FTC simply to state that it seeks injunctive relief, without specifying precisely what conduct it would change so that the advertising, within the FTC’s view, would not be misleading within the meaning of Section 5 of the FTC Act. After 5 years of investigation into the practices at issue, greater specificity is required at this stage so that DIRECTV is on notice of the claims it must defend and can frame its defense. Settlement and ADR 12. The parties have discussed settlement, and the possible terms of settlement are understood by the parties. Pursuant to ADR Local Rule 3-5, the parties have reviewed the ADR Handbook, discussed it with their counsel, and come to the conclusion that no ADR process is likely to deliver benefits sufficient to justify the resources committed to its use at this time. The parties have agreed to schedule a settlement conference after the close of discovery. Consent to Magistrate Judge for All Purposes 13. Defendants have declined to consent to proceed before a Magistrate Judge for all purposes. 14. Other References The parties do not believe the case is suitable for reference to binding arbitration, a special master, or the Judicial Panel on Multidistrict Litigation. Narrowing of Issues 15. The parties do not believe that it is possible to narrow the issues at this time. The parties will continue to discuss the possibility of narrowing the issues and, concomitantly, the scope of discovery. Expedited Trial Procedure 16. The parties do not believe this case should be handled under the Expedited Trial Procedure of General Order No. 64, Attachment A. 17. Scheduling Plaintiff’s Position Plaintiff FTC proposes the following pretrial schedule: Joint Case Management Statement – 15-cv-01129-HSG 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page19 of 22 1) Close of Fact Discovery: April 22, 2016. 2) Initial Expert Reports and Related Fed. R. Civ. P 26(a)(2) Disclosures: April 25, 2016. 3) Rebuttal Expert Reports and Related Fed. R. Civ. P. 26(a)(2) Disclosures: June 10, 2016. 4) Close of Expert Discovery: July 26, 2016. 5) Proposed Date for Settlement Conference: August 4, 2016. 6) Deadline to file dispositive motion(s), including for complete or partial summary judgment: August 26, 2016. 7) Commencement of trial: November 2016 (date to be determined). Defendants’ Position Defendant DIRECTV proposes the following pretrial schedule, premised on the reasonable belief that responding to document (including ESI) discovery from the FTC and submitting to the contemplated scope of depositions will reasonably take a year: 1) Close of Fact Discovery: June 17, 2016. 2) Initial Expert Reports and Related Fed. R. Civ. P 26(a)(2) Disclosures: June 24, 2016. 3) Rebuttal Expert Reports and Related Fed. R. Civ. P. 26(a)(2) Disclosures: August 19, 2016. 4) Close of Expert Discovery: September 23, 2016. 5) Proposed Date for Settlement Conference: October 7, 2016. 6) Deadline to file dispositive motion(s), including for complete or partial summary judgment: October 28, 2016. 7) Commencement of trial: January 2017 (date to be determined). Joint Case Management Statement – 15-cv-01129-HSG 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page20 of 22 The parties would reserve their rights, for good cause, to request modifications of the foregoing schedule. Trial 18. The trial in this case will be a bench trial, and the parties request that all trial testimony be oral. DIRECTV submits that all evidence should be received subject to the Federal Rules of Evidence and relevant caselaw regarding, in particular, expert witness testimony. The trial date will be subject to the proceeding of this case and the Court’s calendar. While it is difficult to accurately estimate the length of the trial at this early stage, the parties expect the trial to last 20 court days. Disclosure of Non-Party Interested Entities or Persons 19. On April 2, 2015, Defendants filed their “Certification of Interested Entities or Persons” as required by Civil Local Rule 3-15 (Dkt. 20). Civil Local Rule 3-15 does not apply to Plaintiff, as it is a government agency. Professional Conduct 20. All attorneys of record for the parties have reviewed the Guidelines for Professional Conduct for the Northern District of California. Nationwide Service of Trial Subpoenas 21. Good cause having been shown in view of the geographic dispersion of potential witnesses in this action, the parties are permitted, pursuant to 15 U.S.C. § 53(b), to issue trial subpoenas that may run into any other federal district requiring witnesses to attend this Court. The availability of nationwide service of process, however, does not make a witness that is otherwise “unavailable” for purposes of Fed. R. Civ. P. 32 and Fed. R. Evid. 804, available under those rules. Joint Case Management Statement – 15-cv-01129-HSG 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page21 of 22 22. Such other matters as may facilitate the just, speedy, and inexpensive disposition of this matter None at this time. Dated: June 9, 2015 Dated: June 9, 2015 /s/ Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission /s/ Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Joint Case Management Statement – 15-cv-01129-HSG 21 Case3:15-cv-01129-HSG Document33 Filed06/09/15 Page22 of 22 CASE MANAGEMENT [PROPOSED] ORDER The above JOINT CASE MANAGEMENT STATEMENT & [PROPOSED] ORDER is approved as the Case Management Order for this case, and all parties shall comply with its provisions. [In addition, the Court makes the further orders stated below:] IT IS SO ORDERED. Dated: HONORABLE HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE Joint Case Management Statement – 15-cv-01129-HSG 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-06-10		Electronic filing error. E-filer's Attestation Required Pursuant to Local Rule 5-1(i). Re: 33 Joint Case Management Statement filed by Federal Trade Commission (dtmS, COURT STAFF) (Filed on 6/10/2015) (Entered: 06/10/2015)
2015-06-10	34	AFFIDAVIT re 33 Joint Case Management Statement by Federal Trade Commission. (Edmondson, Eric) (Filed on 6/10/2015) (Entered: 06/10/2015)	Case3:15-cv-01129-HSG Document34 Filed06/10/15 Page1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission v. Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, Defendants. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129 HSG DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF INITIAL JOINT CASE MANAGEMENT STATEMENT & [PROPOSED] ORDER I, Eric D. Edmondson, declare as follows: 1. I am an attorney of record for plaintiff Federal Trade Commission (“FTC”) in the above-captioned matter. DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF INITIAL JOINT CASE MANAGEMENT STATEMENT & [PROPOSED] ORDER 1 Case3:15-cv-01129-HSG Document34 Filed06/10/15 Page2 of 2 2. Pursuant to Civil Local Rule 16-9 and Fed. R. Civ. P. 26(f), counsel for Plaintiff FTC and Defendants DIRECTV and DIRECTV LLC, prepared and filed the Initial Joint Case Management Statement & [Proposed] Order on June 9, 2015. 3. The Initial Joint Case Management Statement & [Proposed] Order (Document Number 33) was filed with this Court via ECF at my direction. 4. Pursuant to Local Rule 5-1(i), I attest that I obtained the concurrence in the filing of the Initial Joint Case Management Statement & [Proposed] Order (Document Number 33) from counsel for Defendants, who is the other signatory to the document. I declare under the penalty of perjury that the foregoing is true and correct. Executed in San Francisco, California on June 10, 2015. /s/ Eric D. Edmondson Eric D. Edmondson 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF INITIAL JOINT CASE MANAGEMENT STATEMENT & [PROPOSED] ORDER 2
2015-06-10	35	NOTICE of Appearance by Clayton S Friedman (Friedman, Clayton) (Filed on 6/10/2015) (Entered: 06/10/2015)	Case3:15-cv-01129-HSG Document35 Filed06/10/15 Page1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION 16 FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 HSG 17 18 v. Plaintiff, NOTICE OF APPEARANCE OF CLAYTON FRIEDMAN 19 DIRECTV, a corporation, 20 and 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S DIRECTV, LLC, a limited liability company, Defendants. Div: Judge: Hon. Haywood S. Gilliam, Jr., San Francisco United States District Court Judge Date of Filing: Trial Date: March 11, 2015 Not Set NOTICE OF APPEARANCE Case3:15-cv-01129-HSG Document35 Filed06/10/15 Page2 of 2 TO THE COURT AND ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that Clayton Friedman (Bar No. CA 245513) ([email protected]), Manatt, Phelps & Phillips, LLP, 11355 West Olympic Blvd., Los Angeles, California, 90064, telephone number (310) 312-4000 and facsimile number (310) 312- 4224, hereby appears in the above-captioned action as counsel for Defendant DIRECTV and DIRECTV, LLC . Dated: June 10, 2015 314657106.1 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Clayton Friedman Clayton Friedman Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 2 NOTICE OF APPEARANCE
2015-06-12		ADR Remark: ADR Phone Conference held 6/10/2015 with Howard Herman. (cmf, COURT STAFF) (Filed on 6/12/2015) (Entered: 06/12/2015)
2015-06-15	36	RESPONSE (re 32 MOTION to Strike 27 Amended Answer to Complaint DIRECTV's FOURTH THROUGH NINTH AFFIRMATIVE DEFENSES ) filed byDIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Clayton S. Friedman, # 2 Exhibit 1 to Friedman Decl., # 3 Exhibit 2 to Friedman Decl., # 4 Exhibit 3 to Friedman Decl., # 5 Exhibit 4 to Friedman Decl., # 6 Exhibit 5 to Friedman Decl., # 7 Exhibit 6 to Friedman Decl., # 8 Proposed Order)(Hummel, Chad) (Filed on 6/15/2015) (Entered: 06/15/2015)	Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page1 of 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION 16 FEDERAL TRADE COMMISSION, No. 3:15-cv-01129 HSG 17 18 v. Plaintiff, 19 DIRECTV, a corporation, 20 and DIRECTV, LLC, a limited liability company, Defendants. 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S DEFENDANTS DIRECTV AND DIRECTV, LLC’S OPPOSITION TO FEDERAL TRADE COMMISSION’S MOTION TO STRIKE DIRECTV’S AFFIRMATIVE DEFENSES [Filed concurrently with 1. Declaration of Clayton S. Friedman in Support of Opposition to Motion to Strike 2. [Proposed] Order] Date: August 6, 2015 Time: Div: Judge: Hon. Haywood S. Gilliam, Jr., 2:00 p.m. San Francisco United States District Court Judge Date of Filing: Trial Date: March 11, 2015 Not Set DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page2 of 25 TABLE OF CONTENTS Page I. II. INTRODUCTION AND SUMMARY OF ARGUMENT ................................................. 1 LEGAL ARGUMENT ........................................................................................................ 2 A. B. Laches May Be Alleged as an Affirmative Defense Against the FTC ................... 5 DIRECTV Alleges All Necessary Elements of Its Estoppel Affirmative Defense .................................................................................................................... 9 C. Waiver May Be Alleged as an Affirmative Defense Against the FTC ................. 11 D. Claim and Issue Preclusion Have Been Adequately Pleaded as Affirmative Defenses to the FTC’s Claims .............................................................................. 13 1. 2. The Multistate Judgments Preclude the Litigation of the FTC’s Claims Alleged in Its Complaint ............................................................... 14 The Multistate Judgments Preclude Litigation of the Issues Alleged in the FTC’s Complaint ............................................................................. 15 DIRECTV Alleges a Valid Affirmative Defense Regarding the Previous Nationwide Settlement Agreement ....................................................................... 16 Leave To Amend Should Be Granted If the Court Is Inclined To Strike Any of DIRECTV’s Affirmative Defenses ................................................................... 18 E. F. III. CONCLUSION ................................................................................................................. 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S i DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page3 of 25 TABLE OF AUTHORITIES CASES Page Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975) ....................................................................................................................7 Arizona v. California, 530 U.S. 392 (2000) ..................................................................................................................16 Armstead v. City of Los Angeles, No. 14-CV-05675, 2014 WL 6896039 (C.D. Cal. Dec. 5, 2014) ...............................................2 Barnes v. AT&T Pension Benefit Plan—Nonbargained Program, 718 F.Supp.2d 1167 (N.D. Cal. 2010) ........................................................................................4 Boone v. Mechanical Specialties Co., 609 F.2d 956 (9th Cir. 1979) .......................................................................................................7 Borges Colon v. Roman-Abreu, 438 F.3d 1 (1st Cir. 2006) .........................................................................................................16 Brandenfels v. Heckler, 716 F.2d 553 (9th Cir. 1983) .....................................................................................................17 Budget Dress Corp. v. International Ladies’ Garment Workers’ Union, 25 F.R.D. 506 (S.D.N.Y. 1959) ..................................................................................................9 Carter-Wallace, Inc. v. Riverton Laboratories, Inc., 47 F.R.D. 366 (S.D.N.Y. 1969) ..................................................................................................9 Cayuga Indian Nation of N.Y. v. Pataki, 413 F.3d 266 (2d Cir. 2005) ........................................................................................................6 CBS, Inc. v. Merrick, 716 F.2d 1292 (9th Cir. 1983) ...................................................................................................13 Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (Cal. 1999) ..........................................................................................................8 Citing Jablon v. U.S. 657 F.2d 1064 (9th Cir. 1981) ...................................................................................................10 Clearfield Trust Co. v. United States, 318 U.S. 363 (1943) ................................................................................................................5, 6 Colaprico v. Sun Microsystems, Inc., 758 F.Supp. 1335 (N.D. Cal. 1999) ............................................................................................2 Costello v. United States, 365 U.S. 265 (1961) ....................................................................................................................9 Dodson v. Strategic Restaurants Acquisition Co. II, LLC, 289 F.R.D 595 (E.D. Cal. 2013) .................................................................................................3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S ii DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page4 of 25 TABLE OF AUTHORITIES (continued) Page EEOC v. Alioto Fish Co., 623 F.2d 86 (9th Cir. 1980) .........................................................................................................7 EEOC v. Bay Ridge Toyota, Inc., 327 F.Supp.2d 167 (E.D.N.Y. 2004) ..........................................................................................3 EEOC v. Dresser Industries, Inc., 668 F.2d 1199 (11th Cir. 1982) ...................................................................................................7 EEOC v. Joe Ryan Enterprises, Inc., 281 F.R.D. 660 (M.D. Ala. 2012) ...............................................................................................4 EEOC v. Liberty Loan Corp., 584 F.2d 853, 854 (8th Cir. 1978) .............................................................................................17 EEOC v. Timeless Invs. Inc., 734 F. Supp. 2d 1035 (9th Cir. 2010) .........................................................................................7 FTC v. Bronson Partners, LLC, No. 3:04CV1866(SRU), 2006 WL 197357 (D. Conn. Jan. 25, 2006) ..................................7, 11 Ganley v. County of San Mateo, No. C06-3923, 2007 WL 902551 (N.D. Cal. Mar. 22, 2007) .................................................2, 3 Harmon Indus., Inc. v. Browner, 191 F.3d 894 (8th Cir. 1999) .....................................................................................................14 Hernandez v. Dutch Goose, Inc., No. 13-cv-03537, 2013 WL 5781476 (N.D. Cal. Oct. 25, 2013) ...............................................3 Houseton v. Nimmo, 670 F.2d 1375 (9th Cir. 1982) ...................................................................................................17 JANA, Inc. v. United States, 936 F.2d 1265 (Fed. Cir. 1991) ...................................................................................................6 Johnson v. Willford, 682 F.2d 868 (9th Circ. 1982) .....................................................................................................9 Lavin v. Marsh, 644 F.2d 1378 (9th Cir. 1981) .............................................................................................10, 11 Morgan v. Heckler, 779 F.2d 544 (9th Cir. 1985) .....................................................................................................10 Mukherjee v. I.N.S., 793 F.2d 1006 (9th Cir. 1986) ...................................................................................................11 Newborn Bros. Co., Inc. v. Albion Engineering Co., 299 F.R.D. 90 (D.N.J. 2014) .......................................................................................................4 Occidental Life Insurance Co. v. EEOC, 432 U.S. 355 (1977) ................................................................................................................6, 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S iii DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page5 of 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES (continued) Page Oracle America, Inc. v. Micron Technology, Inc., 817 F.Supp.2d 1128 (N.D. Cal. 2011) ........................................................................................3 People of the State of California v. Intelligender, LLC, 771 F.3d 1169 (9th Cir. 2014) ...................................................................................................15 Perez v. Gordon & Wong Law Group, P.C. No. 11-CV-03323-LHK, 2012 WL 1029425 (N.D. Cal. Mar. 26, 2012) ...................................4 Roe v. City of San Diego, 289 F.R.D. 604 (S.D. Cal. 2013) ...............................................................................................18 S.E.R., Jobs for Progress, Inc. v. United States, 759 F.2d 1 (Fed. Cir. 1985) .........................................................................................................5 Saks v. Franklin Covey Co., 316 F.3d 337 (2d Cir. 2003) ......................................................................................................17 Scott v. Fed. Bond and Collection Serv., Inc. No. 10-CV-02825, 2011 WL 176846 (N.D. Cal. Jan. 19, 2011) ................................................4 SEC v. Des Champs, No. 2:08-CV-01279, 2009 WL 3068258 (D. Nev. Sept. 21, 2009) ..........................................11 SEC v. Morgan, Lewis & Bockius, 209 F.2d 44 (3d Cir. 1953) ........................................................................................................11 SEC v. Sands, 902 F.Supp. 1149 (C.D. Cal. 1995) ....................................................................................11, 12 Taylor v. Sturgell, 553 U.S. 880 (2008) ..................................................................................................................14 U.S. v. Gamboa-Cardenas, 508 F.3d 491 (9th Cir. 2007) .....................................................................................................11 U.S. v. ITT Rayonier, Inc., 627 F.2d 996 (9th Cir. 1980) .....................................................................................................14 U.S. v. King Features Entm’t, Inc. 843 F.2d 394 (9th Cir. 1988) .....................................................................................................13 U.S. v. Power Eng’g Co., 303 F.3d 1232 (10th Cir. 2002) .................................................................................................14 United States ex rel. Health Dimensions Rehabilitation, Inc. v. RehabCare Group, Inc., No. 4:12-CV-00848, 2013 WL 2182343 (E.D. Mo. 2013) .......................................................12 United States ex rel. Zissler v. Regents of the Univ. of Minn, 992 F.Supp 1097 (D. Minn. 1983) ............................................................................................13 United States v. Admin. Enters., Inc., 46 F.3d 670 (7th Cir. 1995) .........................................................................................................6 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S iv DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page6 of 25 TABLE OF AUTHORITIES (continued) Page United States v. Cherokee Nation of Oklahoma, 480 U.S. 700 (1987) ..................................................................................................................12 United States v. Eaton Shale Co., 433 F.Supp. 1256, 1259 (D. Colo. 1977) ....................................................................................6 United States v. Fowler, 913 F.2d 1382, 1386 (9th Cir. 1990) .........................................................................................12 United States v. Georgia-Pacific Corp., 412 F.2d 92 (9th Cir. 1970) .........................................................................................................9 United States v. Honeywell, Intern., Inc., 841 F.Supp.2d 112 (D.C. Cir. 2012) .........................................................................................12 United States v. Lazy FC Ranch, 481 F.2d 985 (9th Cir. 1973) .......................................................................................................9 United States v. Marolf, 173 F.3d 1213 (9th Cir. 1999) .................................................................................................8, 9 United States v. Martell, 844 F.Supp. 454, 459 (N.D. Ind. 1994) ......................................................................................5 United States v. Philip Morris, Inc., 300 F.Supp.2d 61 (D.C. Cir. 2004) ...........................................................................................12 United States v. RePass, 688 F.2d 154 (2d Cir. 1982) ......................................................................................................12 United States v. Rhodes, 788 F.Supp. 339 (E.D. Mich. 1992) ............................................................................................5 United States v. Ruby Co., 588 F.2d. 697 (9th Cir. 1978), cert. denied, 442 U.S. 917 (1979) ....................................7, 8, 10 United States v. Wharton¸ 514 F.2d 406 (9th Cir. 1975) .......................................................................................................9 Uriarte v. Schwarzenegger, No. 06-CV-1558, 2012 WL 1622237 (S.D. Cal. May 4, 2012) ..................................................3 Wagner v. Director, Federal Emergency Management Agency, 847 F.2d 515 (9th Cir. 1988) .....................................................................................................10 Watkins v. U.S. Army¸ 875 F.2d 699 (9th Cir. 1989) .................................................................................................9, 10 Weintraub v. Law Office of Patenaude & Felix, A.P.C., 299 F.R.D. 661 (S.D. Cal. 2014) .................................................................................................4 Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970 (9th Cir. 2010) .......................................................................................................5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S v DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page7 of 25 TABLE OF AUTHORITIES (continued) Page STATUTES 5 U.S.C.S. § 555(b) .........................................................................................................................18 5 U.S.C.S. § 706(1) .........................................................................................................................18 5 U.S.C. § 706(1) ............................................................................................................................17 5 U.S.C. § 706(2)(D) .......................................................................................................................17 FTC Act § 5 .......................................................................................................................................8 OTHER AUTHORITIES 18A CHARLES ALAN WRIGHT, ET AL., FED. PRAC. & PROC. JURIS. § 4443 (2d ed.)........................16 18A CHARLES ALAN WRIGHT, ET AL., FED. PRAC. & PROC. JURIS. § 4458 (2d ed.)........................14 SCHWARZER, TASHIMA & WAGSTAFFE, CAL. PRAC. GUIDE: FED. CIV. PROC. BEFORE TRIAL § 9:376 (The Rutter Group 2013) .......................................................................3 RULES Federal Rules of Civil Procedure 8(a)(2) ..........................................................................................4 Federal Rules of Civil Procedure Rule 8(b)(1) .................................................................................2 Federal Rules of Civil Procedure Rule 12(f).............................................................................2, 4, 5 vi DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S I. Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page8 of 25 INTRODUCTION AND SUMMARY OF ARGUMENT The FTC’s Motion to Strike DIRECTV’s equitable defenses must be denied. At this initial pleading stage, it is impossible for this Court to decide, as a matter of law, that the defenses of waiver, estoppel, laches, and preclusion (which are supported by a detailed factual recitation in the Amended Answer) could never apply in this case, either as to liability or remedy. There are sound reasons why motions of this type brought now, prematurely, by the FTC are highly disfavored. While it is true that equitable defenses might only rarely bar or limit relief in a civil lawsuit brought by a federal government agency, the relevant precedent in this Circuit and throughout the country does not foreclose the application of those defenses under these circumstances, in which: • The FTC was fully apprised of, invited to participate in, and did not object to a multistate settlement agreement (the “MSA,”) involving DIRECTV, effective January 2011, which has governed how DIRECTV constructed its monthly program price advertising across all media concerning the very same issues that the FTC now claims, many years later, have deceived consumers, the disclosures concerning the requirement of a two-year commitment in order to obtain introductory discount program pricing, the limited length of discount program pricing, pricing after the discount expires (the so- called “second year price”), the possible imposition of a fee for early cancellation (an “ECF”), and the terms of premium movie channel “roll-to-pay” offers.1 • All fifty states and the District of Columbia approved the disclosure regime, which was then entered by consent in the courts of each jurisdiction, and not one state has brought an enforcement action since. Plainly, if the states’ Attorneys General charged with consumer protection in fifty-one separate jurisdictions, each of which is charged with preventing deceptive practices of the kind that the FTC has now alleged, signed off on the way DIRECTV was to advertise on these issues, and not one has sought judicial intervention since, it cannot be that a fifty-second enforcement body (the FTC) may 1 See, generally, Declaration of Clayton Friedman (“Friedman Decl.”), filed concurrently herewith. That Declaration details the history of the negotiation with the states, the relevant interaction with the FTC, and how the MSA covers the conduct at issue here. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 1 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page9 of 25 1 2 3 4 5 6 7 8 9 10 11 12 13 • • permissibly and deliberately sit on the sidelines in 2010 when invited by DIRECTV to participate, wait more than 4 years, allow DIRECTV to follow the agreed protocols, and then sue. Fundamental fairness and equitable principles dictate otherwise. DIRECTV relied on the MSA for more than four years since 2011 in designing its advertising and paid substantial restitution to consumers relating to the challenged conduct. Discovery may reveal reasons why the FTC did not intervene or join in the settlement in 2010, why it allowed DIRECTV to advertise consistent with the multistate settlement, and why it was dilatory in filing this case—all to the severe prejudice of DIRECTV—and those reasons may demonstrate conclusively that this may be that rare instance in which it offends due process and equity to allow the FTC to pursue relief here. For these reasons, all described below, this Motion should be denied summarily. 14 Should this Court have any reservations whatsoever about that, DIRECTV respectfully requests 15 that the Court set this matter for hearing on August 6, 2015, at 2:00 p.m., a date on which counsel 16 for all parties are available. 17 18 II. LEGAL ARGUMENT Rule 8(b)(1) requires only that a party responding to a pleading “state in short and 19 plain terms its defenses to each claim asserted against it….” While under Rule 12(f) of the 20 Federal Rules of Civil Procedure “[t]he court may strike from a pleading an insufficient defense,” 21 motions requesting this relief are regarded with disfavor. Armstead v. City of Los Angeles, No. 22 14-CV-05675, 2014 WL 6896039, 12 (C.D. Cal. Dec. 5, 2014). Moreover, “[t]o determine that 23 an affirmative defense is insufficient as a matter of law, the court must be convinced that there are 24 no questions of fact, that any questions of law are clear and not in dispute, and that under no set 25 of circumstances could the defense succeed.” Ganley v. County of San Mateo, No. C06-3923, 26 2007 WL 902551, 1 (N.D. Cal. Mar. 22, 2007); Colaprico v. Sun Microsystems, Inc., 758 27 F.Supp. 1335, 1339 (N.D. Cal. 1999) (“motions to strike should not be granted unless it is clear 28 that the matter to be stricken could have no possible bearing on the subject matter of the M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 2 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page10 of 25 1 2 3 4 5 6 7 8 9 litigation”); Dodson v. Strategic Restaurants Acquisition Co. II, LLC, 289 F.R.D 595, 603 (E.D. Cal. 2013) (An affirmative defense will only be found insufficient when it “lacks merit under any set of facts the defendant might allege.”) (internal quote omitted). This very high bar has not been, and cannot be, met here by the FTC’s Motion. Additionally, after demonstrating that there is no issue of fact or any substantial question of law that would allow the affirmative defense to succeed, the FTC also must demonstrate that it would be prejudiced by the inclusion of the defense. See Oracle America, Inc. v. Micron Technology, Inc., 817 F.Supp.2d 1128, 1132 (N.D. Cal. 2011); EEOC v. Bay Ridge Toyota, Inc., 327 F.Supp.2d 167, 170 (E.D.N.Y. 2004). While the FTC summarily concludes in 10 the opening paragraph of its Motion that DIRECTV’s affirmative defenses are “prejudicial,” it 11 provides no explanation whatsoever in its brief. This is fatal to a motion seeking to strike an 12 affirmative defense. See Hernandez v. Dutch Goose, Inc., No. 13-cv-03537, 2013 WL 5781476 13 (N.D. Cal. Oct. 25, 2013) (While courts may differ on whether prejudice is a required element of 14 the motion, “a motion to strike is usually a waste of time and money without such a showing!”) 15 (citing SCHWARZER, TASHIMA & WAGSTAFFE, CAL. PRAC. GUIDE: FED. CIV. PROC. BEFORE TRIAL 16 § 9:376 (The Rutter Group 2013)). 17 “The key to determining the sufficiency of pleading an affirmative defense is 18 whether it gives the plaintiff fair notice of the defense.” Uriarte v. Schwarzenegger, No. 06-CV- 19 1558, 2012 WL 1622237, at 3 (S.D. Cal. May 4, 2012). “Fair notice generally requires that the 20 defendant state the nature and grounds for the affirmative defense” but “[i]t does not, however, 21 require a detailed statement of facts.” Id. (emphasis added). “[I]f, in naming a defense, Plaintiff 22 is put on notice of Defendant’s intent to pursue such a defense, it is sufficiently pleaded.” Ganley 23 v. County of San Mateo, 2007 WL 902551, at 2 (N.D. Cal. Mar. 22, 2007). 24 Here, DIRECTV specifically alleges the following facts in support of its 25 affirmative defenses in its Amended Answer: 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S [I]n December 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the 3 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page11 of 25 investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other equitable relief extending back for almost a decade based on at least the foregoing. These facts go far beyond the “fair notice” requirements, stating the nature and grounds of each affirmative defense. Even if the Court accepts the FTC’s argument and applies the heightened pleading standard of Twombly/Iqbal,2 it is clear that DIRECTV has met that standard. The Amended Answer does not simply list boilerplate affirmative defenses that are commonplace in most answers where many of the defenses alleged are irrelevant. Perez v. Gordon & Wong Law Group, P.C. No. 11-CV-03323-LHK, 2012 WL 1029425, at 8 (N.D. Cal. Mar. 26, 2012) (citing Barnes v. AT&T Pension Benefit Plan—Nonbargained Program, 718 F.Supp.2d 1167, 1172 (N.D. Cal. 2010) (the Twombly/Iqbal standard “serve[s] to weed out the boilerplate listing of affirmative defenses which is commonplace in most defendants’ pleadings where many of the defenses alleged are irrelevant to the claims asserted”). The Amended Answer also does not include “bare statements reciting mere legal conclusions.” Id. (citing Scott v. Fed. Bond and 2 The FTC’s Motion applies the standard discussed in both Twombly and Iqbal, but despite the case law cited in the Motion, no appellate court decision has addressed whether that standard should be applied to pleading affirmative defenses. There are well-reasoned arguments that the heightened standard does not apply because it is governed by Rule 8(a)(2), rather than Rule 12(f), at issue here. See Weintraub v. Law Office of Patenaude & Felix, A.P.C., 299 F.R.D. 661, 665 (S.D. Cal. 2014); EEOC v. Joe Ryan Enterprises, Inc., 281 F.R.D. 660, 662-663 (M.D. Ala. 2012); Newborn Bros. Co., Inc. v. Albion Engineering Co., 299 F.R.D. 90, 97 (D.N.J. 2014). Rule 8(a)(2) requires that a pleading that states a claim for relief contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Affirmative defenses do not involve claims or entitlement to relief. In any event, the FTC cannot demonstrate that the affirmative defenses do not meet even the heightened standard of Twombly/Iqbal. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 4 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page12 of 25 1 2 3 4 5 6 7 8 9 Collection Serv., Inc. No. 10-CV-02825, 2011 WL 176846, at 4 (N.D. Cal. Jan. 19, 2011). Thus, even accepting the FTC’s application of the Twombly/Iqbal standard, the challenged defenses provide “fair notice” to the FTC of DIRECTV’s alleged affirmative defenses. Moreover, the function of a Rule 12(f) motion is “to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010). That function and purpose will not be served here, because the issues and facts raised by the challenged defenses still will be litigated, as the MSA and judgments play a critical role in the history and content of DIRECTV’s advertising practices, in proving that the advertising since 2011 has not 10 been deceptive (as none of the fifty one jurisdictions could testify otherwise if they are also 11 truthfully testifying to having vigilantly performed their consumer protection duties), in proving 12 the extent and scope of any monetary relief that may be sought, and in proving the nature of any 13 injunction. 14 15 A. Laches May Be Alleged as an Affirmative Defense Against the FTC. In its Motion, the FTC concludes, with little discussion, that laches is not available 16 as an affirmative defense against the government. This bald conclusion is not supported in the 17 caselaw. A number of courts—including the Supreme Court—have indicated that the principle 18 barring the application of the defense of laches against the government may not always apply. 19 See, e.g., Clearfield Trust Co. v. United States, 318 U.S. 363, 369 (1943) (ruling that a federal 20 standard applied to determine whether delay was unreasonable and prejudicial and seeming to 21 assume that the sovereignty of the United States did not shield it from such defenses, and stating 22 that “[t]he fact that the drawee [of the check] is the United States and the laches those of its 23 employees are not material”); United States v. Martell, 844 F.Supp. 454, 459 (N.D. Ind. 1994) 24 (Seventh Circuit has held that laches may be asserted against the government); S.E.R., Jobs for 25 Progress, Inc. v. United States, 759 F.2d 1, 3 (Fed. Cir. 1985) (the court considered the 26 application of the doctrine against the government by assuming without deciding that such a 27 defense may be brought against the government); United States v. Rhodes, 788 F.Supp. 339 (E.D. 28 Mich. 1992) (finding that an exception lies where the government brings an action in contract M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 5 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page13 of 25 1 2 3 4 5 6 7 8 9 where the defense of laches is applicable to the government’s predecessor in interest); United States v. Admin. Enters., Inc., 46 F.3d 670, 672-73 (7th Cir. 1995) (listing potential scenarios in which a valid laches defense may be asserted, including when the United States acts as a holder of commercial paper (citing Clearfield Trust Co. v. United States, 318 U.S. 363, 369 (1943)); Cayuga Indian Nation of N.Y. v. Pataki, 413 F.3d 266, 278-79 (2d Cir. 2005) (agreeing with the Seventh Circuit that a laches defense may be asserted against the United States in three main situations: in the most egregious instances of laches, when there is no relevant statute of limitations, and when the government seeks to enforce private rights); cf. JANA, Inc. v. United States, 936 F.2d 1265, 1269 (Fed. Cir. 1991) (“[I]t is not entirely clear whether the defense of 10 laches may be asserted against the government.”). 11 For example, in United States v. Eaton Shale Co., the United States brought an 12 action against holders of a land patent to invalidate and cancel the patent on the grounds that six 13 mining claims upon which the patent was premised did not exist at the time of the issuance of the 14 patent. 433 F.Supp. 1256, 1259 (D. Colo. 1977). The court found that laches was a “viable and 15 persuasive defense” against the government because, at the time the patent was issued, the 16 government had full knowledge of the facts necessary to cancel the patent. Id. at 1272. The court 17 discussed that the government waited twenty-one years to attack the patent, during which time the 18 defendant expended substantial sums of money for the use and maintenance of the land. Id. at 19 1272-73. The court also discussed that the lapse in time placed defendant at a disadvantage due 20 to the unavailability of witnesses, the difficulty in locating documents, and the inability to 21 reconstruct facts. Id. at 1273. 22 Additionally, the FTC’s proposed prohibition on the defense of laches to be 23 asserted against the government generally is not applied in suits by the EEOC. The Supreme 24 Court has stated that the federal courts should exercise discretional power, presumably under a 25 theory of laches, when the EEOC delays its prosecution. In Occidental Life Insurance Co. v. 26 EEOC, the court acknowledged procedural safeguards in EEOC regulations, but found it 27 “possible that despite these procedural protections a defendant in a Title VII enforcement action 28 might still be significantly handicapped in making his defense because of an inordinate EEOC M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 6 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page14 of 25 1 2 3 4 5 6 7 8 9 delay in filing the action….” Occidental Life Insurance Co. v. EEOC, 432 U.S. 355, 373 (1977). The court suggested that federal courts exercise their discretionary power “to locate ‘a just result’ in light of the circumstances peculiar to the case” in the event of an unexcused delay by the EEOC. Id. (citing Albemarle Paper Co. v. Moody, 422 U.S. 405, 424-25 (1975)); see also EEOC v. Dresser Industries, Inc., 668 F.2d 1199, 1200 (11th Cir. 1982) (holding that the doctrine of laches properly was applied to the EEOC’s claims after the EEOC delayed for years its Title VII case alleging discrimination against females in defendant’s hiring practices). The Ninth Circuit also has addressed the defense of laches in EEOC cases, stating that “[l]aches, an equitable bar to an action on the ground of unexcused or unreasonable prejudicial delay, may be used as a defense 10 to a Title VII action.” EEOC v. Alioto Fish Co., 623 F.2d 86, 88 (9th Cir. 1980) (citing Boone v. 11 Mechanical Specialties Co., 609 F.2d 956, 958-59 (9th Cir. 1979)); EEOC v. Timeless Invs. Inc., 12 734 F. Supp. 2d 1035 (9th Cir. 2010). Thus, contrary to the FTC’s argument, laches is available 13 as an affirmative defense against the government. 14 The FTC cites FTC v. Bronson Partners, LLC and United States v. Ruby Co. in its 15 Motion in an effort to strike the laches defense. Notably, Bronson Partners, LLC may not be 16 cited to this Court under the Ninth Circuit Rules.3 Moreover, Ruby does not expressly hold that 17 the defense of laches can never be asserted against the government. United States v. Ruby Co., 18 588 F.2d. 697, 703-04 (9th Cir. 1978), cert. denied, 442 U.S. 917 (1979). To the contrary, it 19 suggests that the door may be open. 20 In Ruby, the court reviewed the relevant Supreme Court and Ninth Circuit case law 21 on the issue of estoppel against the government, explaining its rationale for holding that the 22 “dictates of both morals and justice indicated that the Government [was] not entitled to 23 immunity” from equitable estoppel. Id. at 702-03. In a footnote, the court said: 24 25 26 27 28 In our view, this equity-policy consideration is also dispositive of another of the landowners’ contentions. They argue that the lapse of time since 1922 when the government was put on notice of the inaccuracy of the David survey requires application of the doctrine 3 The Federal Rules of Appellate Procedure for the Ninth Circuit, Rule 36-3, prohibits the citation to unpublished cases issued before January 1, 2007, so the case impermissibly cited by the FTC in its Motion—FTC v. Bronson Partners, LLC, No. 3:04CV1866(SRU), 2006 WL 197357 (D. Conn. Jan. 25, 2006)—should not serve as precedent here. M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 7 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page15 of 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of laches. The traditional rule is that the doctrine of laches is not available against the government in a suit by it to enforce a public right or protect a public interest…It may be that this rule is subject to evolution as was the traditional rule that equitable estoppel would not lie against the government…. Id. at 704 fn. 10 (citation omitted) (emphasis added). Thus, contrary to the FTC’s argument, Ruby does not stand for the proposition that laches will never lie against the government. Even accepting the FTC’s argument that laches does not apply when the government is enforcing a public right or protecting a public interest, however, the Motion still fails. The MSA and multistate judgments protected the public rights and interests allegedly at issue in the FTC’s Complaint. More specifically, the public rights of individuals who purchased DIRECTV services were enforced by the attorneys general of each state when the MSA was negotiated and judgments were entered. As a result, there is no enforceable public right upon which to overcome the defense of laches because those rights already have been enforced. Indeed, many state consumer protection laws are referred to as “little FTC Acts” since they mirror the FTC Act—thus, state and federal law are virtually the same. See, Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 197, fn. 2 (Cal. 1999) (“In looking to section 5 of the FTC Act, the majority may have been misled by this court’s previous statement that the unfair competition law had ‘its origin as one of the so-called ‘little FTC Acts’ of the 1930’s.... The term ‘little FTC Act’ instead denotes a group of state statutes enacted in the 1960’s and 1970’s; these statutes, promoted by the FTC among others, were meant to complement the deceptive practices jurisdiction of the FTC, not its antitrust jurisdiction, and they address deceptive trade practices, not antitrust threats to competition.”). The FTC also addresses the “plausibility” of the laches defense. Its reliance on United States v. Marolf, 173 F.3d 1213 (9th Cir. 1999), for the pleading standard of laches, however, is misplaced. Marolf did not involve a motion to strike a laches defense against the government, or the requirements for pleading a laches defense. Instead, the case discusses the denial of a motion under Federal Rule of Criminal Procedure 41(e) for return of a boat wrongfully seized by the government and whether the bar of the forfeiture statute of limitations may be M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 8 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page16 of 25 1 2 3 4 5 6 7 8 9 subject to the equitable defense of laches. Id. at 1218. In any event, DIRECTV has alleged delay and prejudice resulting from the instant litigation. Despite the FTC’s “plausibility” argument, it is impossible to conclude here that under no set of circumstances could the defense succeed.4 To assert the defense of laches, one must show (i) an unreasonable and unexcused delay by the party against whom the defense is asserted, and (ii) prejudice to the party asserting the defense. See Costello v. United States, 365 U.S. 265, 282 (1961). DIRECTV alleges that it entered into agreements with every state covering the same issues addressed in the instant litigation. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. 10 DIRECTV has relied, in part, on the requirements of the MSA in designing its advertising 11 disclosures, and the FTC has been aware of the MSA and DIRECTV’s advertising since late 2010 12 and did not take any formal action against the company on the issues implicated by the MSA until 13 2015, even after receiving an invitation to participate. Such allegations establish unreasonable 14 delay and prejudice to DIRECTV’s business. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. DIRECTV Alleges All Necessary Elements of Its Estoppel Affirmative Defense. In its Motion, the FTC concedes that a party may assert estoppel against the federal government. ECF 32, 4:27-5:8. In the Ninth Circuit, Watkins v. U.S. Army¸ 875 F.2d 699 (9th Cir. 1989) is the leading authority explaining that the affirmative defense of estoppel may be applied against the government. Reviewing previous decisions, the court stated the following: Our court has held that “‘where justice and fair play require it,’ estoppel will be applied against the government….” Johnson v. Willford, 682 F.2d 868, 871 (9th Cir. 1982), quoting United States v. Lazy FC Ranch, 481 F.2d 985, 988-89 (9th Cir. 1973))…Before the government will be estopped, however, two additional elements must be satisfied beyond those required for traditional estoppel.5 4 Moreover, a “motion to strike for insufficiency was never intended to furnish an opportunity for the determination of disputed and substantial questions of law.” Carter-Wallace, Inc. v. Riverton Laboratories, Inc., 47 F.R.D. 366, 367-68 (S.D.N.Y. 1969) (quoting Budget Dress Corp. v. International Ladies’ Garment Workers’ Union, 25 F.R.D. 506, 508 (S.D.N.Y. 1959)). 5 The court described the traditional elements of estoppel as follows: “(1) the party to be estopped must know the facts; (2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the former’s conduct to his injury.” 875 F.2d. at 709 (citing United States v. Wharton¸ 514 F.2d 406, 412 (9th Cir. 1975) and United States v. Georgia-Pacific Corp., 412 F.2d 92, 96 (9th Cir. 1970)). M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 9 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page17 of 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 First, “[a] party seeking to raise estoppel against the government must establish ‘affirmative misconduct going beyond mere negligence’; even then, ‘estoppel will only apply where the government’s wrongful act will cause a serious injustice, and the public’s interest will not suffer undue damage by imposition of the liability.’” Wagner v. Director, Federal Emergency Management Agency, 847 F.2d 515, 519 (9th Cir. 1988) (quoting Morgan v. Heckler, 779 F.2d 544, 545 (9th Cir. 1985)). 875 F.2d 699, 706-07 (9th Cir. 1989). The court went on to say that “[t]here is no single test for detecting the presence of affirmative misconduct; each case must be decided on its own particular facts and circumstances.” Id. at 707, citing Lavin v. Marsh, 644 F.2d 1378, 1382-83 fn. 6 (9th Cir. 1981). Although “[a]ffirmative misconduct does require an affirmative misrepresentation or affirmative concealment of a material fact by the government,”6 the government need “not intend to mislead a party.” Id. at 707.7 The court also noted that “[e]ven when affirmative misconduct has been shown, the government cannot be estopped unless its acts also threaten to work a serious injustice and the public’s interest will not be unduly damaged by the imposition of estoppel… This requirement involves a balancing of interests in individual cases.” Id. at 708 (citations omitted). These elements of an estoppel defense have been properly pleaded in the Amended Answer. For instance, DIRECTV alleges that the FTC was invited to participate in the negotiation and resolution of the issues raised in this litigation when they were addressed with each state and the District of Columbia; it declined to participate. Instead, the FTC waited over four years after the multistate judgments were entered to file the instant litigation. This delay resulted in serious injustice because multiple judgments already have been entered on all of the issues raised by the FTC’s Complaint. Additionally, the public will not be unduly harmed by the application of estoppel because, as alleged, the public’s interests have been protected by the MSA and multistate judgments on substantially the same terms demanded by the FTC in its Complaint. The public’s interest, therefore, has already been secured, so that the policy reasons guiding the case law cited in the FTC’s Motion are no longer applicable. Moreover, the FTC had an opportunity to participate, and chose not to. It cannot now claim to be enforcing an Act of 6 Citing United States v. Ruby Co., 588 F.2d. 697, 703-04 (9th Cir. 1978), cert. denied, 442 U.S. 917 (1979). 7 Citing Jablon v. U.S., 657 F.2d 1064, 1067, fn. 5 (9th Cir. 1981). M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 10 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page18 of 25 1 2 3 4 5 6 7 8 9 Congress, through an action duplicative of those in each state, even though the public’s rights are no longer threatened. On the face of the Amended Answer, therefore, DIRECTV asserts a viable estoppel defense. See, e.g., SEC v. Sands, 902 F.Supp. 1149, 1166 (C.D. Cal. 1995). But the FTC’s Motion requests that the Court make certain factual and legal determinations that require consideration of evidence. Mukherjee v. I.N.S., 793 F.2d 1006, 1009 (9th Cir. 1986) (citing Lavin v. Marsh, 644 F.2d 1378, 1382 fn. 6 (9th Cir. 1981)) (“The appropriateness of estoppel turns on the facts of the individual case.”). But “[t]he Court should not weigh the evidence for purposes of a motion to strike an affirmative defense.” Id. at 1166. Such a determination would be 10 premature. Just as in SEC v. Des Champs, it is improper for the Court to “delve into an 11 examination of the evidence before it at this time” to determine whether the FTC’s conduct, as 12 alleged in the Amended Answer, may constitute affirmative misconduct going beyond mere 13 negligence. SEC v. Des Champs, No. 2:08-CV-01279, 2009 WL 3068258, 3 (D. Nev. Sept. 21, 14 2009) (citing U.S. v. Gamboa-Cardenas, 508 F.3d 491, 502 (9th Cir. 2007)). For these reasons, 15 given the high standard, the FTC has not met its burden of showing that the estoppel affirmative 16 defense should be stricken. 17 If there is a question about affirmative misconduct, that should await an answer in 18 discovery and not at the pleading stage. 19 20 C. Waiver May Be Alleged as an Affirmative Defense Against the FTC. The FTC’s leading argument, that waiver cannot be a defense against the 21 government, relies on FTC v. Bronson Partners, an unpublished case that cannot be cited or serve 22 as precedent here, as discussed above. In any event, the FTC claims that it cannot waive a 23 violation of federal law. ECF 32, 6:1-19. Taken to its extreme, such a position would seem to 24 suggest that the FTC, as well as every other enforcement agency, has no discretion when it comes 25 to enforcing the law and it is required to pursue an enforcement action whenever one lies. That is 26 plainly wrong. In FTC v. Bronson Partners, LLC, the court summarily rejected the waiver 27 defense, stating that the FTC may not waive the requirement of an act of Congress. In so doing, 28 the court cited SEC v. Morgan, Lewis & Bockius, 209 F.2d 44, 49 (3d Cir. 1953). In that case, the M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 11 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page19 of 25 1 2 3 4 5 6 7 8 9 defendants argued that the SEC had, by virtue of its continued acquiescence in their failure to file, waived its right to require them to file a federally-mandated disclosure statement. The court rejected that argument, stating that “[t]he Commission cannot waive an act of Congress.” Neither of those cases, however, stands for the proposition that a waiver defense cannot ever be asserted against the United States. Indeed, the Supreme Court has recognized that the government may waive its claims; the only requirement is that “any waiver of such sovereign authority must be unmistakable.” United States v. Philip Morris, Inc., 300 F.Supp.2d 61, 66 (D.C. Cir. 2004) (citing United States v. Cherokee Nation of Oklahoma, 480 U.S. 700, 707 (1987)). 10 Further, in United States v. Fowler, the defendant argued that the government had 11 waived its right to reimbursement by voluntary payment of a flood insurance claim. 913 F.2d 12 1382, 1386 (9th Cir. 1990). The Ninth Circuit considered the argument on its merits and found 13 that the facts did not support a waiver claim. Id. There was no discussion, nor even a suggestion, 14 that waiver could never properly apply against the government. Id. Also, in SEC v. Sands, in 15 denying the SEC’s motion to strike defendants’ affirmative defense of waiver, the court stated— 16 even though the SEC was enforcing an act of Congress—that “[o]n the face of the complaint, the 17 Defendants assert a viable estoppel and waiver defense.” 902 F.Supp. 1149, 1166 (C.D. Cal. 18 1995) (“The Defendants allege that the SEC approved of certain registration statements filed by 19 Bancorp, failed to warn Defendants about certain fraudulent transactions, and accepted the 20 Defendants’ Wells submissions. Given the high standard, the SEC has not met its burden of 21 showing that the fourth affirmative defense should be stricken.”) 22 Courts in other circuits have similarly rejected waiver defenses on the merits, 23 without suggesting the inapplicability of the defense against the government. See, e.g., United 24 States v. RePass, 688 F.2d 154, 158 (2d Cir. 1982). Still others recognize that a waiver defense 25 may properly be asserted against the government, depending on the facts and circumstances. See, 26 e.g., United States v. Honeywell, Intern., Inc., 841 F.Supp.2d 112, 115-16 (D.C. Cir. 2012); 27 United States ex rel. Health Dimensions Rehabilitation, Inc. v. RehabCare Group, Inc., No. 4:12- 28 CV-00848, 2013 WL 2182343 1 (E.D. Mo. 2013) (rejecting government’s argument that as a M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 12 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page20 of 25 1 2 3 4 5 6 7 8 9 matter of law waiver cannot be asserted against it, observing, “[d]efendants are correct that the affirmative defense of waiver may be asserted against the Government”); United States ex rel. Zissler v. Regents of the Univ. of Minn, 992 F.Supp 1097, 1112 (D. Minn. 1983) (holding that genuine issues of material fact exist regarding whether the government intended to waive its right to seek recovery). Moreover, contrary to the FTC’s argument, there are no allegations that waiver was “implied,” requiring conduct indicating a purpose to waive the legal rights involved. ECF 32, 6:9-13. Instead, the Amended Answer clearly alleges that in 2010, the FTC was invited to participate in the negotiation of the very issues addressed in its Complaint, including introductory 10 discount price offers for satellite TV program packages, the requirement of a two-year 11 commitment to obtain the introductory pricing, how long the promotional price remains in effect, 12 the disclosure of the regular price, the possible imposition of early cancellation fees, and roll-to- 13 pay premium channel offers; the FTC declined that invitation and DIRECTV subsequently settled 14 with all 50 states and the District of Columbia. The Amended Answer therefore alleges an 15 “intentional relinquishment of a known right with knowledge of its existence and the intent to 16 relinquish it.” U.S. v. King Features Entm’t, Inc. 843 F.2d 394, 399 (9th Cir. 1988) (citing CBS, 17 Inc. v. Merrick, 716 F.2d 1292, 1295 (9th Cir. 1983). 18 Even if the allegations are that the waiver was “implied”—a determination that 19 cannot be made now without impermissibly weighing the evidence and deciding issues of fact or 20 questions of law—the Amended Answer still meets that burden. If the FTC was invited to 21 participate in the lengthy investigation and negotiation with a multistate group of attorneys 22 general regarding the very issues raised by the FTC’s Complaint, which resulted in a nationwide 23 agreement with 50 states and the District of Columbia, the implication alleged is that, by its 24 conduct, the FTC clearly intended to waive its legal rights to assert the claims it does now. D. Claim and Issue Preclusion Have Been Adequately Pleaded as Affirmative Defenses to the FTC’s Claims. The FTC’s statement that “black-letter preclusion law forecloses giving the multi- state consent judgments any preclusive effect,” ignores the law controlling both claim and issue 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 13 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page21 of 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 preclusion. 1. The Multistate Judgments Preclude the Litigation of the FTC’s Claims Alleged in Its Complaint. “Preclusion may flow from a state party to the United States…if the relationships established by a special statutory scheme warrant the conclusion—likely to be expressed in terms of ‘privity’—that preclusion is appropriate.” 18A CHARLES ALAN WRIGHT, ET AL., FED. PRAC. & PROC. JURIS. § 4458 (2d ed.) (citing Harmon Indus., Inc. v. Browner, 191 F.3d 894, 902-904 (8th Cir. 1999) and U.S. v. ITT Rayonier, Inc., 627 F.2d 996 (9th Cir. 1980)). In ITT Rayonier, Inc., the court concluded that the cooperative and concurrent state and federal enforcement schemes created by the National Pollutant Discharge Elimination System supported application of “virtual representation” principles; the result was to preclude the United States from relitigating an issue that a state agency had litigated and lost in state court. While the Supreme Court later disapproved, in certain contexts, the concept of “virtual representation” invoked by the Ninth Circuit, the Supreme Court did acknowledge that the rule against nonparty preclusion is subject to exceptions. Taylor v. Sturgell, 553 U.S. 880, 893-95, 904 (2008). Those exceptions include where (1) the non-party agreed to be bound; (2) there is a substantive legal relationship between the party to be bound (the non-party) and the party to the judgment; (3) the non-party is adequately represented by a party to the suit; (4) the non-party assumes control of the litigation prior to judgment; (5) the non-party later brings the same suit as the designated representative of a party bound by the initial judgment; or (6) a “special statutory scheme” imposes claim preclusion on non-parties and limits lawsuits. Id. The FTC concedes that a defense of claim preclusion can apply here, but relying on a Tenth Circuit ruling in U.S. v. Power Eng’g Co., 303 F.3d 1232 (10th Cir. 2002),8 argues only that privity between state and federal governments can exist only when the federal government assumes control over the litigation. ECF 32, 7:10-17. As discussed above, however, it is not the case that privity may only exist under these circumstances. Instead, the FTC could, and does, fit at least one of the exceptions enumerated in Taylor. 8 Notably, Power Eng’g Co. involved a motion for summary judgment, not a motion to strike as is the case here. M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 14 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page22 of 25 1 2 3 4 5 6 7 8 9 For instance, as discussed above, DIRECTV alleges that it entered into agreements with every state covering the very same issues addressed in the instant litigation. The FTC, therefore, was adequately represented by the government, including each state and the District of Columbia, when these issues previously were addressed. As discussed above, however, these arguments raise questions of fact and law and should not be addressed now on a motion to strike. Moreover, “[w]hen a government entity sues for the same relief that plaintiff [has] already pursued then the requisite closeness of interests for privity is present.” People of the State of California v. Intelligender, LLC, 771 F.3d 1169, 1179 (9th Cir. 2014). In Intelligender, LLC, the Ninth Circuit concluded that, in seeking restitution on behalf of individual members of a 10 certified settlement class, the State sought to obtain double recovery, and may be enjoined from 11 doing so. Id. Thus, the court found sufficient privity between the class members and the State 12 with respect to the claims for restitution. Id. Similarly here, the FTC is suing for the same relief 13 that all 50 states and the District of Columbia pursued. There is, therefore, privity among the 14 FTC and the states and the District of Columbia, thereby having a preclusive effect on the FTC’s 15 claims. At the very least, the implementation of the MSA’s restitution program must be 16 considered in this case to prevent double recovery. 17 Next, the FTC’s Motion requests that this Court decide questions of law and fact 18 regarding whether the MSA or multistate judgments amount to an adjudication of any claims 19 (despite that judgment was entered in each state and the District of Columbia), whether the 20 judgments may be enforced against the FTC, and whether DIRECTV was relieved of any 21 obligation to comply with state and federal laws. ECF 32, 7:24-8:14. The FTC also requests that 22 this Court specifically determine that the judgments did not release DIRECTV from any claims 23 that the FTC may allege. Id. at 8:15-9:2. These determinations, especially as they relate to 24 whether or not DIRECTV has been released from any future claims under the terms of the MSA 25 and multistate judgments, are not properly made pursuant to a motion to strike. 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 2. The Multistate Judgments Preclude Litigation of the Issues Alleged in the FTC’s Complaint. The FTC relies on case law confirming that there can be issue preclusion 15 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page23 of 25 1 2 3 4 5 6 7 8 9 occasioned by a settlement when it is clear “that the parties intend their agreement to have such an effect.” Arizona v. California, 530 U.S. 392, 414 (2000); see also 18A CHARLES ALAN WRIGHT, ET AL., FED. PRAC. & PROC. JURIS. § 4443 (2d ed.) (surveying case law discussing that preclusion may attach if it is clearly shown that the parties intended that the issue be foreclosed in other litigation). The preclusive effect of a judgment entered upon the stipulation and consent of the parties to the litigation, therefore, depends on the intent of the parties affected by that judgment; there can be no doubt that the determination of the intent of the parties involves questions of fact, not to be decided on a motion to strike. Moreover, in order to strike DIRECTV’s issue preclusion defense, the Court must 10 find that the multistate judgments were entered before any of the issues were “actually litigated.” 11 Arizona, supra, 530 U.S. at 414. That determination cannot be made on the record presented 12 here. In fact, it may be inferred from the multistate judgments that the parties intended the 13 judgments to have preclusive effects. 14 Borges Colon v. Roman-Abreu, cited by the FTC, is inapposite; the case did not 15 involve or discuss the preclusive effect of a judgment or whether parties to a judgment intended 16 there be preclusive effect. Instead, it involved a meritless argument that a municipal personnel 17 decision that plaintiffs failed to appeal precluded the further litigation of the issues raised in that 18 personnel decision. Borges Colon v. Roman-Abreu, 438 F.3d 1, 19 (1st Cir. 2006). There was no 19 hearing, no findings, and, therefore, no issue preclusion. Id. That is not the case here, where the 20 intent of the parties to preclude further litigation of issues addressed in the judgment must be 21 determined. E. DIRECTV Alleges a Valid Affirmative Defense Regarding the Previous Nationwide Settlement Agreement. The FTC’s Motion gives short shrift to the “Previous Nationwide Settlement Agreement” affirmative defense, concluding that the defense is a legal conclusion. The FTC is wrong. First, despite the FTC’s reliance on Iqbal, that case does not discuss legal conclusions of affirmative defenses. Second, any matter not in issue under a simple denial of allegations in the complaint is an affirmative defense and must be specially pleaded as such in the answer or else 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 16 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page24 of 25 waived. See Saks v. Franklin Covey Co., 316 F.3d 337, 350 (2d Cir. 2003). Lastly, this affirmative defense is based on law, including, inter alia, provisions of the Administrative Procedure Act (“APA”). For instance, Section 706(1) of the APA provides in pertinent part: To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall (1) compel agency action unlawfully withheld or unreasonably delayed; and (2) hold unlawful and set aside agency action, findings, and conclusions found to be (D) without observance of procedure required by law; . . . 5 U.S.C. § 706(1), (2)(D). Here, DIRECTV has affirmatively pleaded a defense pursuant to Section 706(1). This defense is not without precedent. In EEOC v. Liberty Loan Corp., the Eighth Circuit held that the EEOC’s lawsuit should be dismissed because the EEOC was found, as a matter of law, to be dilatory in filing suit against defendant. 584 F.2d 853, 854 (8th Cir. 1978). It found, after surveying the case law on this issue, that section 706(1) together with other provisions of the APA confer upon a reviewing court the power to dismiss agency action which has been unreasonably delayed to the prejudice of the defendant. This theory of dismissal based on Section 706(1) has been accepted by the Ninth Circuit. See, e.g., Brandenfels v. Heckler, 716 F.2d 553 (9th Cir. 1983) (after a hair treatment manufacturer filed a petition for reconsideration after the FDA withdrew approval of his new drug application, the court addressed the argument that the FDA delayed but affirmed the commissioner’s ruling because there was no showing that the delay was prejudicial); Houseton v. Nimmo, 670 F.2d 1375 (9th Cir. 1982) (Appellee employee brought suit against her employer, appellant Veterans Administration, with a Title VII claim of race and sex discrimination after the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 17 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE Case3:15-cv-01129-HSG Document36 Filed06/15/15 Page25 of 25 1 2 3 4 5 6 7 8 9 company refused to give appellee on-the-job training to qualify as a real estate appraiser. The Civil Service Commission Review (CSC) found discrimination and ordered appellant to commence a training program. Appellee sought enforcement of this order and appellant sought reconsideration. A 16-month period of stays and promised actions followed but no ruling was issued on appellant’s request. The district court then found the long delay to be a dismissal of appellant’s request and ordered enforcement of the CSC’s order. On appeal the court held that the Administrative Procedure Act, 5 U.S.C.S. §§ 555(b) and 706(1) gave the district court authority to declare the delay a dismissal of appellant’s reconsideration request.). For all of these reasons, the Court should not strike DIRECTV’s affirmative 10 defense regarding the “Previous Nationwide Settlement Agreement” from the Amended Answer. F. Leave To Amend Should Be Granted If the Court Is Inclined To Strike Any of DIRECTV’s Affirmative Defenses. “Unless it would prejudice the opposing party, courts freely grant leave to amend stricken pleadings.” Roe v. City of San Diego, 289 F.R.D. 604, 608 (S.D. Cal. 2013). If the Court is inclined to grant the FTC’s Motion and strike any of DIRECTV’s affirmative defenses, DIRECTV respectfully requests that the Court do so without prejudice and grant leave to amend the Amended Answer. III. CONCLUSION For the foregoing reasons, Defendants respectfully request that the Court deny Plaintiffs’ Motion. Dated: June 15, 2015 314702696 MANATT, PHELPS & PHILLIPS, LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M A NA TT, P HELP S & P HI LLI P S, LLP A T T O R N E Y S A T L A W L O S A N G E L E S 18 DIRECTV & DIRECTV’S OPPOSITION TO FTC’S MOTION TO STRIKE
2015-06-16	37	Minute Entry for proceedings held before Hon. Haywood S. Gilliam, Jr.: Case Management Conference held on 6/16/2015. FTR Time 2:18-2:29. Plaintiff Attorney Erika Wodinsky; Eric Edmondson; Jacob Snow. Defendant Attorney Chad Hummel; Christian Baker; Clayton Friedman. The Court sets the hearing date for the motion to strike (docket no. 32 ) on August 13, 2015 at 2:00 p.m. The Court states that he is inclined to grant the 10 month proposed schedule. Written scheduling order to issue. (This is a text minute entry, there is no document associated with this entry.) (ndrS, COURT STAFF) (Date Filed: 6/16/2015) (Entered: 06/17/2015)
2015-06-22	38	REPLY (re 32 MOTION to Strike 27 Amended Answer to Complaint ) filed byFederal Trade Commission. (Snow, Jacob) (Filed on 6/22/2015) Modified on 6/23/2015 (dtmS, COURT STAFF). (Entered: 06/22/2015)	Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page1 of 18 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S REPLY IN SUPPORT OF MOTION TO STRIKE DIRECTV’S AFFIRMATIVE DEFENSES Date: August 13, 2015 Time: 2:00 p.m. Judge: Hon. Haywood S. Gilliam, Jr. Location: San Francisco Courthouse Courtroom 15—18th Floor FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. II. Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page2 of 18 TABLE OF CONTENTS INTRODUCTION .............................................................................................................. 1 ARGUMENT ...................................................................................................................... 2 Twombly and Iqbal Apply To Pleading Affirmative Defenses. .............................. 2 A. B. The FTC Will Be Prejudiced By Significant Additional Discovery and Motion Practice If DIRECTV’s Defenses Are Not Stricken. .............................................. 2 C. Laches Is Not Available When The Government Is Enforcing The Public Interest. ................................................................................................................................. 3 D. DIRECTV Must—But Has Not—Alleged Affirmative Misconduct to Plead Estoppel................................................................................................................... 6 DIRECTV Has Not Alleged An Unmistakable Waiver. ........................................ 7 Claim Preclusion Is Inapplicable Because The FTC Was Not A Party To The E. F. State Settlements. .................................................................................................... 8 G. Issue Preclusion Is Inapplicable Because DIRECTV Does Not Allege That Any Issue Was Actually Litigated And Decided. ......................................................... 11 H. I. The Administrative Procedure Act Does Not Apply. ........................................... 12 Leave To Amend Should Be Denied. ................................................................... 12 III. CONCLUSION ................................................................................................................. 14 FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG i Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page3 of 18 CASES TABLE OF AUTHORITIES Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152 (9th Cir. 2002) ...................................... 12 Arizona v. California, 530 U.S. 392 (2000) .................................................................................. 13 Bennett v. Spear, 520 U.S. 154 (1997) ......................................................................................... 14 Boisvert v. Wai Fun Li, 2013 WL 4487509 (N.D. Cal. Aug. 20, 2013) ......................................... 8 Borges Colon v. Roman-Abreu, 438 F.3d 1 (1st Cir. 2006).......................................................... 13 California v. IntelliGender, LLC, 771 F.3d 1169 (9th Cir. 2014) ................................................ 12 Cayuga Indian Nation of N.Y. v. Pataki, 413 F.3d 266 (2d Cir. 2005)........................................... 7 Clearfield Trust Co. v. United States, 318 U.S. 363 (1943) ........................................................... 6 DeLa Cruz v. Piccari Press, 521 F. Supp. 2d 424 (E.D. Pa. 2007) ................................................ 3 Dodson v. Strategic Restaurants Acquisition Co. II, LLC, 289 F.R.D. 595 (E.D. Cal. 2013) ........ 4 Dreisbach v. Murphy, 658 F.2d 720 (9th Cir. 1981) ...................................................................... 8 FTC v. Bronson Partners, LLC, 2006 U.S. Dist. LEXIS 3315 (D. Conn. Jan. 25, 2006) .......... 7, 9 FTC v. Commerce Planet, 878 F. Supp. 2d 1048 (C.D. Cal. 2012) ............................................. 12 Greene v. Wells Fargo Bank, N.A., 2015 WL 972991 (N.D. Cal. Mar. 3, 2015) ........................... 7 Hells Canyon Pres. Council v. U.S. Forest Serv., 593 F.3d 923 (9th Cir. 2010) ......................... 14 Hernandez v. Dutch Goose, Inc., 2013 WL 5781476 (N.D. Cal. Oct. 25, 2013) ....................... 4, 5 Jaa v. I.N.S., 779 F.2d 569 (9th Cir. 1986) ..................................................................................... 9 NLRB v. PIE Nationwide, Inc., 894 F.2d 887 (7th Cir. 1990) .................................................... 7 Occidental Life Insurance Co. v. EEOC, 432 U.S. 355 (1977) ...................................................... 7 Perez v. Gordon & Wong Law Group, P.C., 2012 WL 1029425 (N.D. Cal. March 26, 2012) 4, 14 Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880 (9th Cir. 1983) ................................................ 4 Stephens v. Attorney Gen. of California, 23 F.3d 248 (9th Cir. 1994) ......................................... 11 Taylor v. Sturgell, 533 U.S. 880 (2008) .................................................................................. 10, 11 United States v. Administrative Enterprises, Inc., 46 F.3d 670 (7th Cir. 1995) ............................. 7 United States v. Charles, 213 F.3d 10 (1st Cir. 2000) .................................................................. 11 United States v. Eaton Shale Co., 433 F. Supp. 1256 (D. Colo. 1977) .......................................... 6 FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page4 of 18 United States v. Miller, 14 F.3d 761 (2d Cir. 1994) ..................................................................... 10 United States v. Philip Morris, 300 F. Supp. 2d 61 (D.D.C. 2004) ........................................ 5, 6, 7 United States v. Rhodes, 788 F. Supp. 339 (E.D. Mich. 1992) ....................................................... 6 United States v. Ruby Co., 588 F.2d 697 (9th Cir. 1978) ........................................................... 5, 6 United States v. Summerlin, 310 U.S. 414 (1940) .......................................................................... 5 STATUTES 15 U.S.C. § 45 ............................................................................................................................. 4, 8 5 U.S.C. § 551 ............................................................................................................................... 14 5 U.S.C. § 701 ............................................................................................................................... 14 5 U.S.C. § 704 ............................................................................................................................... 14 REGULATIONS 16 C.F.R. § 0.1 ................................................................................................................................ 7 FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page5 of 18 I. INTRODUCTION The FTC’s motion to strike should be granted because the challenged affirmative defenses are legally invalid and factually implausible. First, DIRECTV’s opposition essentially concedes that heightened legal standards apply to the affirmative defenses at issue when they are brought against the government. Laches is not available against a government suit brought—as this one is—in the public interest. Estoppel must be supported by allegations of “affirmative misconduct,” which are not present in DIRECTV’s amended answer. Waiver is not available (or at least must be unmistakable) against the government. Claim and issue preclusion cannot bind the federal government to actions of the states, which are separate and independent sovereigns. The Administrative Procedure Act is not applicable when an adequate remedy in court exists (and this case offers DIRECTV such a remedy). Second, DIRECTV’s affirmative defenses are factually implausible. DIRECTV’s answer describes the negotiation and settlement with state attorneys general in 2010 and 2011, then makes the following statement: “The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined.” The central allegation of this sentence bears repeating: When invited to participate in the state settlements, the FTC declined. Common sense dictates that refusing to participate in settlement negotiations would avoid being bound by any resulting agreement. But DIRECTV alleges the exact opposite. According to DIRECTV, when the FTC refused to join the state actions, the FTC’s claims in this case were waived and subject to estoppel. Once those state actions resolved, DIRECTV contends that the FTC’s claims became barred by claim and issue preclusion. One might ask: What could the FTC have done to avoid extinguishing its claims, under DIRECTV’s theory? For these reasons, DIRECTV’s affirmative defenses are insufficient and should be stricken. Moreover, DIRECTV’s request for leave to file a second amended answer should be denied. DIRECTV’s supporting declaration contains additional allegations, but none that cure FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 1 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page6 of 18 the deficiencies in DIRECTV’s amended answer.1 It is apparent that leave to amend will not revive DIRECTV’s insufficient defenses. The Court should dispose of these defenses with prejudice. II. ARGUMENT A. Twombly and Iqbal Apply to Pleading Affirmative Defenses. The consistent view of judges in this district—and the better view of the law—is that affirmative defenses must satisfy Twombly and Iqbal. Hernandez v. Dutch Goose, Inc., No. 13- cv-03537 LB, 2013 WL 5781476, at 4 n.2 (N.D. Cal. Oct. 25, 2013). DIRECTV’s arguments to the contrary have been considered and rightly rejected. See Perez v. Gordon & Wong Law Group, P.C., No. 11-CV-03323-LHK, 2012 WL 1029425, at 6–8 (N.D. Cal. Mar. 26, 2012) (analyzing and rejecting counterarguments to Twombly and Iqbal’s application to affirmative defenses); Dodson v. Strategic Rests. Acquisition Co. II, LLC, 289 F.R.D. 595, 598–603 (E.D. Cal. 2013) (same, looking outside the Northern District of California). DIRECTV also contends that its amended answer satisfies Twombly and Iqbal because it “does not simply list boilerplate affirmative defenses.” DIRECTV Opp. at 4. Courts applying Twombly and Iqbal have indeed stricken many boilerplate recitations of affirmative defenses. Alleging more than boilerplate is necessary, but it is not sufficient, to adequately plead an affirmative defense. The applicable standard is whether a pleading alleges facts that render the affirmative defense “plausible on its face.” Perez, 2012 WL 1029425, at 6. DIRECTV has not met that standard. B. The FTC Will Be Prejudiced By Significant Additional Discovery and Motion Practice If DIRECTV’s Defenses Are Not Stricken. The purpose of a Rule 12(f) motion to strike is to avoid wasting time and money litigating spurious issues. See Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1 For the purposes of the present motion to strike, the allegations in DIRECTV’s amended answer are assumed true. The Declaration of Clayton S. Friedman In Support Of DIRECTV’s Opposition (“Friedman Decl.”), however, is not properly considered in the context of a motion to strike. “Motions to strike are to be decided ‘on the basis of the pleadings alone.’” DeLa Cruz v. Piccari Press, 521 F. Supp. 2d 424, 429 (E.D. Pa. 2007). FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page7 of 18 1983). In this case, “the obligation to conduct expensive and potentially unnecessary and irrelevant discovery is a prejudice.” Hernandez, 2013 WL 5781476, at 5 n.2. DIRECTV’s opposition makes clear that DIRECTV will seek discovery from Federal Trade Commission attorneys regarding representations made in the investigation phase. DIRECTV Opp. at 3 (arguing that a showing of affirmative misconduct should await discovery). And DIRECTV will likely seek discovery from various states regarding the scope and purpose of the state consent judgments. See DIRECTV Opp. at 15–16 (“[T]here can be no doubt that the intent of the parties involves questions of fact, not to be decided on a motion to strike.”). If it is necessary for the FTC to defend against DIRECTV’s affirmative defenses, the FTC will require discovery (including depositions) of DIRECTV representatives who participated in the state negotiations or interacted with the FTC. The FTC will also need to prepare a motion for summary judgment on all of the affirmative defenses at issue in this motion.2 Significant prejudice will thus result if DIRECTV’s defenses are not stricken. C. Laches Is Not Available When The Government Is Enforcing The Public Interest. DIRECTV argues that the principle barring the assertion of a laches defense against the government “may not always apply.” DIRECTV Opp. at 6 (citing cases in support of that proposition). DIRECTV’s authority does not, however, undermine the Ninth Circuit’s guidance on using laches against the government: “[L]aches is not available against the government in a suit by it to enforce a public right or protect a public interest.” United States v. Ruby Co., 588 F.2d 697, 705 n.10 (9th Cir. 1978). This long-standing and well-established rule is known sometimes as the Summerlin rule, after United States v. Summerlin, 310 U.S. 414, 416 (1940). United States v. Philip Morris, 300 F.Supp.2d 61, 72–73 (D.D.C. 2004) (reviewing case law 2 Prejudice is evident here, but “[c]ourts differ on whether a movant must show prejudice in support of a motion to strike affirmative defenses—some courts have required a showing of prejudice only for motions to strike defenses as redundant, immaterial, impertinent, or scandalous but not for motions to strike insufficient affirmative defenses.” Hernandez, 2013 WL 5781476, at 5. FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page8 of 18 analyzing when laches can be asserted against the government, including many of the cases DIRECTV cites, and concluding that the Summerlin rule should govern). DIRECTV points out that Ruby allows for the possibility that laches may lie against the government even when public rights are enforced. The relevant portion of Ruby (which DIRECTV quotes selectively) states: The traditional rule is that the doctrine of laches is not available against the government in a suit by it to enforce a public right or protect a public interest. 30A C.J.S. EQUITY § 114 (1965). It may be that this rule is subject to evolution as was the traditional rule that equitable estoppel would not lie against the government. However, in the analogous estoppel situation, the invocation of the doctrine against the government requires a showing of affirmative misconduct. Even if there were some allowance for laches against the government, there is no reason why that doctrine should not be subject to at least the same strictures as estoppel. In any event, on the facts of this case, we deem the policy considerations so strong as to compel denial of the defense of laches. 588 F.2d at 705 n.10 (emphasis added); see DIRECTV Opp. at 7–8 (omitting emphasized portion of the above quote). Even under the most permissive reading of Ruby, DIRECTV must allege affirmative misconduct by the FTC in order to plead an affirmative defense of laches. DIRECTV has not done so. DIRECTV cites which identify instances where the government has been subject to laches. DIRECTV Opp. at 5–7. In many of these cases, however, consistent with the Summerlin rule, the government was enforcing private rights as opposed to furthering the public interest. For example, “the United States is subject to laches in certain restricted contexts, such as commercial suits.” Philip Morris, 300 F. Supp. 2d at 72 (describing Clearfield Trust Co. v. United States, 318 U.S. 363, 369 (1943)); United States v. Rhodes, 788 F. Supp. 339, 342–43 (E.D. Mich. 1992) (allowing a laches defense in a suit seeking repayment of a student loan when laches applied to the government’s predecessor in interest); United States v. Eaton Shale Co., 433 F.Supp. 1256, 1272 (D.Colo. 1977) (allowing a laches defense when the government delayed 21 years before asserting that a land patent was invalid). Next, DIRECTV’s cases involving the EEOC are not inconsistent with Ruby and Summerlin because the EEOC brings enforcement actions “on behalf of an individual claimant, FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page9 of 18 not on behalf of the public.” Philip Morris, 300 F.Supp.2d at 74 (citing Occidental Life Insurance Co. v. EEOC, 432 U.S. 355, 373 (1977)). The EEOC cases cited by DIRECTV, therefore, are consistent with Ruby’s bar against laches when the public interest is at stake. A line of cases in the Seventh Circuit, including NLRB v. PIE Nationwide, Inc., 894 F.2d 887 (7th Cir.1990) and United States v. Administrative Enterprises, Inc., 46 F.3d 670 (7th Cir. 1995) have suggested in dicta that laches may be available in other contexts. These cases find their origin in a single line of dicta from Occidental Life Insurance,3 which Philip Morris called “hardly compelling,” concluding that “[t]his is not language which can be read to overturn the long-standing Summerlin rule.” 300 F. Supp. 2d at 74 (tracing the Seventh Circuit cases to Occidental Life and rejecting the Seventh Circuit’s reading).4 DIRECTV also argues that the FTC’s cite to FTC v. Bronson Partners, LLC, 2006 U.S. Dist. LEXIS 3315 (D. Conn. Jan. 25, 2006), is improper. DIRECTV has misread Ninth Circuit Rule 36-3, which disallows citation to unpublished Ninth Circuit cases, not unpublished district court orders like Bronson Partners. Greene v. Wells Fargo Bank, N.A., No. C 15-00048 JSW, 2015 WL 972991, at 2 (N.D. Cal. Mar. 3, 2015). Next, DIRECTV argues that the Summerlin rule does not apply because the state consent judgments already bind DIRECTV, and thus “there is no public right upon which to overcome the defense of laches because those rights already have been enforced.” DIRECTV Opp. at 8. DIRECTV misconstrues the Summerlin rule. The question under Summerlin and Ruby is whether the government is acting to protect the public interest or seeking to enforce a private right. See Philip Morris, 300 F. Supp. 2d at 74 (noting that EEOC cases are brought “on behalf 3 Justice Stewart noted that “when a Title VII defendant is in fact prejudiced by a private plaintiff's unexcused conduct of [sic] a particular case, the trial court may restrict or even deny backpay relief. The same discretionary power to locate a just result in light of the circumstances peculiar to the case, can also be exercised when the EEOC is the plaintiff.” Occidental Life Ins. Co., 432 U.S. at 373. 4 A Second Circuit case DIRECTV cites, Cayuga Indian Nation of N.Y. v. Pataki, 413 F.3d 266, 278–79 (2d Cir. 2005), follows the Seventh Circuit’s general approach to laches, but makes clear that in the Second Circuit, consistent with the Summerlin rule, “laches is not available against the federal government when it undertakes to enforce a public right or protect the public interest.” Id. at 279 n.8 (citing United States v. Angell, 292 F.3d 333, 338 (2d Cir. 2002)). FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page10 of 18 of an individual claimant, not on behalf of the public.”). Whether a suit is in the public interest is not affected by the possibility that some state (or other) judgment has sought to partially vindicate similar interests. This case is brought in the public interest. Section 5 of the FTC Act, under which the FTC brings this case, is explicit that actions brought by the FTC are brought in support of the public interest. 15 U.S.C. § 45(b) (“[I]f it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership, or corporation a complaint stating its charges . . . .”) (emphasis added). Moreover, the FTC’s regulatory mandate is “to protect the public from unfair and deceptive acts and practices in the advertising and marketing of goods and services.” 16 C.F.R. § 0.1 (emphasis added).5 The Summerlin rule therefore bars DIRECTV’s laches defense. D. DIRECTV Must—But Has Not—Alleged Affirmative Misconduct To Plead Estoppel. Neither DIRECTV’s opposition nor the supporting declaration points to any affirmative misconduct by the FTC. This omission (among others) is fatal to DIRECTV’s estoppel affirmative defense. DIRECTV does not dispute the elements of pleading estoppel against the government. See DIRECTV Opp. at 9–10. Beyond the usual elements of estoppel (which DIRECTV also does not allege sufficient facts to support), DIRECTV must allege, first, “affirmative misconduct,” which must include an affirmative representation or affirmative concealment of a material fact by the FTC. Id. And second, DIRECTV must also allege that the FTC’s misconduct “threaten[s] to work a serious injustice and the public’s interest will not be unduly damaged by the imposition of estoppel.” Id. DIRECTV’s amended answer has done neither.6 5 Private rights are not at issue here because the FTC Act provides no private right of action. Boisvert v. Wai Fun Li, No. 13-CV-01590 NC, 2013 WL 4487509, at 3 (N.D. Cal. Aug. 20, 2013) (citing Dreisbach v. Murphy, 658 F.2d 720, 730 (9th Cir. 1981)). 6 The Friedman Declaration does not include any allegations that suggest affirmative misconduct by the FTC. Friedman Decl. ¶¶ 10–17 (describing Mr. Friedman’s interaction with FTC staff attorneys). FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page11 of 18 DIRECTV’s opposition recites the allegations from its answer and then asserts that the elements of estoppel are properly pleaded. Id. But the facts repeated by DIRECTV do not—and could not, consistent with Rule 11—identify any affirmative misconduct by the FTC. Rather, DIRECTV alleges only that the FTC declined to participate in the state settlements and “waited over four years . . . to file the instant action.” Id. An allegation of delay is not sufficient. Even unexplained delay (which DIRECTV has not alleged) does not constitute affirmative misconduct. Jaa v. I.N.S., 779 F.2d 569, 572 (9th Cir. 1986). DIRECTV’s claims of serious injustice and lack of harm to the public interest are also inadequately pleaded. DIRECTV’s statements regarding the state consent judgments do not identify a serious injustice arising from the FTC’s conduct. The FTC alleges in this case that DIRECTV has violated the FTC Act and the Restore Online Shoppers Confidence Act, federal claims which were not at issue in any state action. Extinguishing those federal claims, as DIRECTV requests, would not serve the public interest. The fact that DIRECTV is already bound by state judgments—which the FTC cannot enforce—does not support the imposition of estoppel. Finally, DIRECTV incorrectly suggests that weighing of evidence is necessary to determine whether the FTC’s conduct constitutes affirmative misconduct. DIRECTV Opp. at 11. Neither the FTC nor DIRECTV has introduced any material outside the pleadings that bears on DIRECTV’s estoppel defense or the FTC’s conduct. DIRECTV has simply failed to allege the elements of estoppel. No discovery or weighing of evidence is necessary. DIRECTV’s estoppel defense should be stricken. E. DIRECTV Has Not Alleged An Unmistakable Waiver. As explained above, the FTC’s cite to FTC v. Bronson Partners is proper, and that case stands for the proposition that the FTC cannot waive the requirements of the FTC Act. 2006 U.S. Dist. LEXIS 3315, at 6. DIRECTV has responded that waiver is available against the FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page12 of 18 government, but that “any waiver of . . . sovereign authority must be unmistakable.” DIRECTV Opp. at 12. Under either standard, DIRECTV’s allegations in support of waiver are insufficient.7 DIRECTV’s central assertion is that the FTC was informed of the state settlements and declined to participate. The most natural conclusion from these facts is that the FTC was avoiding waiver of any claim. The state settlements before the Court only reinforce that conclusion. The California state judgment states that “[n]othing in this Judgment shall be construed as relieving DIRECTV of the obligation to comply with all State and federal laws, regulations or rules, nor shall any of the provisions of this Judgment be deemed to be permission to engage in any acts or practices prohibited by such law, regulation, or rule.” Dkt. No. 32-1 (the “California Judgment”), ¶ 10.1; see also ¶ 13.1 (definition of “Released Claims” does not include “claims pursuant to any other statute or regulation.”). The District of Columbia judgment, submitted by DIRECTV, contains identical language. Friedman Decl. Ex. 1 (the “D.C. Judgment”), ¶ 10.1; see also ¶ 14.1 (definition of “Released Claims” does not include “claims pursuant to any other statute or regulation”). This language indicates that the FTC’s claims were not waived. F. Claim Preclusion Is Inapplicable Because The FTC Was Not A Party To The State Settlements. DIRECTV asserts in its opposition that its estoppel defense falls within the third exception to the rule against nonparty preclusion in Taylor v. Sturgell, 533 U.S. 880 (2008). That is, DIRECTV contends that the FTC was adequately represented in the state’s actions against DIRECTV (in which the FTC did not participate). DIRECTV Opp. at 14–15. This assertion disregards the independent sovereignty of state and federal governments. Based solely on some factual and legal similarities between the state actions and this case, DIRECTV asserts that the division between the federal government and the states should be disregarded for 7 The Friedman Declaration does not include any allegations that reflect an unmistakable waiver by the FTC. See Friedman Decl. ¶¶ 10–17 (describing Mr. Friedman’s interaction with FTC staff attorneys). Quite the contrary, the Friedman declaration alleges that the FTC issued a second Civil Investigative Demand to DIRECTV on December 13, 2013. In light of the additional CID described by Mr. Friedman, DIRECTV’s contention that the FTC had unmistakably waived all of its claims is even more implausible. FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page13 of 18 preclusion purposes. But DIRECTV misunderstands that “in our federal system state and national sovereignty are separate and distinct from one another, and each political entity has power to determine what are offenses against it and to try and punish such offenses independently.” United States v. Miller, 14 F.3d 761, 763 (2d Cir. 1994). For this reason, “state prosecution will collaterally estop the federal government only if federal authorities substantially controlled the state action or were virtually represented by the state court prosecutor.” United States v. Charles, 213 F.3d 10, 21 (1st Cir. 2000);8 Stephens v. Attorney Gen. of Cal., 23 F.3d 248, 249 (9th Cir. 1994) (holding that the “state would be bound by the prior [federal] determination only if state prosecutors had participated actively in the federal prosecution.”). DIRECTV has not alleged—and could not allege—that the FTC controlled the state actions. Even putting aside the independent sovereignty of state and federal governments, DIRECTV does not fall within Taylor’s third exception to the rule against non-party preclusion. That exception allows that, “in certain limited circumstances, a non-party may be bound by a judgment because she was adequately represented by someone with the same interests who was a party to the suit.” Taylor, 533 U.S. at 894 (internal quotations omitted). As Taylor explains, “[r]epresentative suits with preclusive effect on nonparties include properly conducted class actions . . . and suits brought by trustees, guardians, and other fiduciaries.” Id. In general, “[a] party’s representation of a nonparty is ‘adequate’ for preclusion purposes only if, at a minimum: (1) the interests of the nonparty and her representative are aligned; and (2) either the party understood herself to be acting in a representative capacity or the original court took care to protect the interests of the nonparty.” Id. at 900 (quotations and citations omitted). Neither of Taylor’s requirements for a non-party to be “adequately represented” are met here.9 As to the first requirement, the states and the federal government are independent 8 The Supreme Court later rejected the notion of “virtual representation” as a basis for privity in Taylor, 553 U.S. at 893–904. 9 The Friedman Declaration. does not include any allegations that suggest that the FTC controlled the state action. See Friedman Decl. ¶¶ 5–9 (describing the multistate investigation and settlement). It also does not allege any facts that would satisfy Taylor’s requirements for the FTC to be “adequately represented” by the states. Id. FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page14 of 18 sovereigns with different interests and priorities. And as for Taylor’s second requirement, DIRECTV has not alleged—nor could it allege—1) that the states understood themselves to be acting in a representative capacity for the FTC; or 2) that the state courts took care to protect the FTC’s interests. In fact, the state-court judgments reflect that the FTC’s interests were explicitly not protected because federal claims were carved out of the state consent judgments. California Judgment ¶¶ 10.1, 13.1; D.C. Judgment ¶¶ 10.1, 14.1.10 DIRECTV also argues that California v. IntelliGender, LLC, 771 F.3d 1169 (9th Cir. 2014) establishes privity between the states and the FTC. But neither IntelliGender’s holding nor its reasoning applies here. IntelliGender considered whether a state should be precluded from pursuing one remedy—restitution—already obtained by members of a federally certified class under the Class Action Fairness Act (“CAFA”). Id. at 1171-72. The Ninth Circuit held that, in such a situation, the state could not thereafter seek restitution for the same class members covered by the previous federal-court-approved class-action settlement. Id. at 1179–82. The Ninth Circuit found privity because the state was seeking restitution for the very same individuals who were members of a certified class in the prior federal action brought under the same statute (the California Unfair Competition Law). Id. at 1180–81. Here, there is no certified class or federal-court-approved settlement, and the states and the FTC have asserted different causes of action under different statutes. IntelliGender’s reasoning is plainly limited to the class- action context where identical claims are at issue. See IntelliGender, 771 F.3d at 1179–82.11 10 DIRECTV suggests that by bringing the state-court judgments before the Court, the FTC is improperly seeking evidentiary findings at the pleading stage. DIRECTV Opp. at 15. Not so. The state-court judgments are properly considered because they are referenced in DIRECTV’s answer. See FTC Motion at 7 n.1. And the content of those judgments render DIRECTV’s affirmative defenses implausible and therefore insufficient under Twombly and Iqbal. 11 Any hypothetical double recovery can be dealt with at the remedy stage, when the Court can determine equitable relief that avoids double recovery by deducting any prior payments from DIRECTV to consumers from a final remedial award. See, e.g., FTC v. Commerce Planet, 878 F.Supp.2d 1048, 1088–93 (C.D. Cal. 2012) (consumer loss calculated by subtracting money previously paid back to injured consumers through refunds and chargebacks from total consumer injury figure). FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page15 of 18 G. Issue Preclusion Is Inapplicable Because DIRECTV Does Not Allege That Any Issue Was Actually Litigated And Decided. DIRECTV does not deny that, in order for issue preclusion to apply, “an issue of fact or law [must be] actually litigated and determined by a valid and final judgment, and the determination [must be] essential to the judgment.” Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1159 (9th Cir. 2002). Further, there is no dispute that “settlements ordinarily occasion no issue preclusion” unless it is clear “that the parties intend their agreement to have [preclusive] effect.” See DIRECTV Opp. at 15–16 (citing Arizona v. California, 530 U.S. 392, 414 (2000)). Instead, DIRECTV makes the puzzling assertion that a determination of whether any issues were “actually litigated” “cannot be made on the record presented here.” DIRECTV Opp. at 16. The “record presented here” is entirely of DIRECTV’s making. And that record contains no suggestion that any issue in the settlements with the states was actually litigated and determined. The California state settlement, which the FTC submitted with its motion to strike, makes clear that the settlement was entered “without trial or adjudication of any issue of law or fact.” California Judgment at 1. The District of Columbia judgment submitted by DIRECTV has nearly identical language, stating that “[t]his Judgment is made without trial or adjudication of any issue of fact or law, or finding of liability of any kind.” D.C. Judgment ¶ 8.20. And the Friedman Declaration does not allege that active litigation or decision by the courts occurred. See Friedman Decl. ¶ 8. DIRECTV’s claim that the parties’ intent that the judgments have preclusive effects “may be inferred from the multistate judgments” is not plausible. DIRECTV Opp. at 16. DIRECTV distinguishes Borges Colon v. Roman-Abreu, 438 F.3d 1, 19 (1st Cir. 2006) because, in that case “there was no hearing, no findings, and, therefore, no issue preclusion.” DIRECTV Opp. at 16. But DIRECTV has not alleged that any hearing or findings took place in FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page16 of 18 connection with the multistate settlements.12 The Court’s admonition in Borges Colon—that the plaintiff’s argument seeking preclusion “makes no sense”—applies equally to DIRECTV. H. The Administrative Procedure Act Does Not Apply. DIRECTV’s opposition, for the first time, offers a potential legal foundation for its so- called “Previous Nationwide Settlement” defense from an unexpected source: The Administrative Procedure Act (“APA”). Nothing in DIRECTV’s amended answer suggests that DIRECTV might be asserting an affirmative defense based on the APA. DIRECTV’s amended answer fails to give the FTC notice of any defense that relies on the APA. It also fails to allege facts that would render such a defense plausible. Under the APA, two kinds of agency action are subject to judicial review. First, “agency action made reviewable by statute.” 5 U.S.C. § 704. And second, “final agency action for which there is no other adequate remedy in a court.” Id. DIRECTV does not identify what agency action it purports to challenge or why no remedy exists in this Court.13 The defense should be stricken. I. Leave To Amend Should Be Denied. Leave to amend affirmative defenses should be freely given where an amendment would not prejudice the moving party. Perez v. Gordon & Wong, 2012 WL 1029425, at *8 (N.D. Cal. Mar. 26, 2012). Nonetheless, leave to amend is not appropriate here, for two reasons. First, DIRECTV has already amended its answer once to address deficiencies identified by the FTC. On April 16, 2015 the FTC sent a letter to DIRECTV regarding a potential motion 12 The Friedman Declaration also does not allege that any hearing or determination of any issue occurred. See Friedman Decl. ¶¶ 5–9. 13 Even if DIRECTV had identified a challenged agency action, additional hurdles exist. An “agency action” is defined as the “whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act.” 5 U.S.C. § 551(13). And not all agency actions are reviewable under the APA. When a statute precludes judicial review or an agency action is “committed to agency discretion by law,” the APA does not authorize judicial review. 5 U.S.C. § 701 (a)(1)–(2). And unless specifically made reviewable by statute, only final agency actions are reviewable. To be final, it must be an action “by which rights or obligations have been determined, or from which legal consequences will flow.” Hells Canyon Pres. Council v. U.S. Forest Serv., 593 F.3d 923, 930 (9th Cir. 2010) (citing Bennett v. Spear, 520 U.S. 154, 177–78 (1997)). It is not apparent how DIRECTV imagines its defense meets these requirements. FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page17 of 18 to strike certain affirmative defenses. Dkt. No. 24 at 2. The parties met and conferred, and agreed that DIRECTV would file an amended answer. Id. DIRECTV filed its amended answer on May 18, 2015. Dkt. No. 27. The parties met and conferred again after DIRECTV filed its amended answer, and the FTC explained the bases for the present motion to strike. DIRECTV has had ample opportunity to adequately plead the disputed affirmative defenses. Second, leave to amend should be denied because the additional facts alleged in the Friedman Declaration would not remedy DIRECTV’s amended answer’s inadequacies.14 Laches is not available when the government is enforcing a public right, as the FTC is here. Estoppel against the government only exists in cases of government misconduct, and the Friedman Declaration does not allege anything approaching affirmative misconduct. See Friedman Decl. ¶¶ 10–17. Waiver by the government must be unmistakable, but the Friedman Declaration’s description of the FTC’s refusal to participate in the state settlements is anything but an unmistakable waiver.15 See id. Claim preclusion is unavailable because 1) the FTC was not a party (or a privy) to the state settlements; and 2) preclusion of federal claims was explicitly carved out of the state judgments. Neither of these facts is disputed in the Friedman Declaration. See id. ¶¶ 5–17, Ex. 1. Issue preclusion does not apply because, as is evident from DIRECTV’s answer, the Friedman Declaration, and the express terms of the consent judgments, no issues were actually litigated and decided in the state settlements. Id. ¶¶ 5–8, Ex. 1. The APA does not 14 The lack of factual support for DIRECTV’s affirmative defenses is striking here for another reason: DIRECTV is in possession of all the core facts that could support the disputed defenses. DIRECTV suggests that discovery is necessary to understand the nature of the FTC’s communications with DIRECTV’s counsel and DIRECTV’s interactions with the states during settlement negotiations. But DIRECTV was privy to all communications that could serve as a factual foundation for these defenses. Discovery is unnecessary to unearth facts that DIRECTV already possesses. Further leave to amend will serve no purpose. 15 To be clear, the FTC does not concede DIRECTV’s claim that the FTC was invited to participate but declined. The Friedman Declaration states only that certain FTC attorneys declined to participate in the state settlement. Only the Commission, not Commission staff, has the authority to initiate or decline to initiate an action in a court of law. 15 U.S.C. § 45 (“[I]f it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership, or corporation a complaint stating its charges . . . .”) (emphasis added). The Friedman Declaration makes no assertion that the Commission declined to participate. FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document38 Filed06/22/15 Page18 of 18 apply in this case because DIRECTV has an adequate remedy in this Court. The result of these conclusions is clear. More facts will not help DIRECTV. Leave to amend should be denied. III. CONCLUSION For the reasons stated above, the Court should strike DIRECTV’s affirmative defenses based on laches, estoppel, waiver, claim preclusion, issue preclusion, and “previous nationwide settlement agreement” with prejudice. Dated: June 22, 2015 Respectfully Submitted, _/s/ Jacob A. Snow_________ Jacob A. Snow Eric D. Edmondson Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’s Reply ISO Motion To Strike DIRECTV’s Affirmative Defenses Case No. 15-cv-01129-HSG 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-06-23	39	STIPULATION WITH PROPOSED ORDER Proposed Stipulated Protective Order Regarding Confidential Materials filed by Federal Trade Commission. (Attachments: # 1 Exhibit Exhibit A to Proposed Stipulated Protective Order (Acknowlegement Re Confidential Materials))(Edmondson, Eric) (Filed on 6/23/2015) (Entered: 06/23/2015)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page1 of 12 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS, LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG [PROPOSED] STIPULATED PROTECTIVE ORDER REGARDING CONFIDENTIAL MATERIALS Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. v. Having (i) met and conferred regarding the appropriate level of protection for confidential materials elicited or produced during the proceeding of this action, (ii) reviewed the [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 1 of 12 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page2 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PURPOSE AND LIMITATIONS: Disclosure and discovery activity in this action will Northern District of California’s Model Protective Order for Standard Litigation, adopting the Model Order’s provisions where appropriate and modifying them where necessary to accommodate the unique circumstances of this action, (iii) and worked diligently and cooperatively to resolve any differences between the parties and to arrive at a jointly-stipulated proposal, the parties hereby submit the following Proposed Stipulated Protective Order Regarding Confidential Materials. 1. involve the production of confidential, proprietary, or private information for which special protection from public disclosure and from use for any purpose other than prosecuting this litigation is warranted. Accordingly, Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (“Defendants”) hereby stipulate to and petition the Court to enter this Stipulated Protective Order Regarding “Confidential” Materials (the “Order”), as defined herein. The Parties acknowledge that this Order does not confer blanket protections on all disclosures or responses to discovery and that the protection it affords from public disclosure and use extends only to the information or items that are entitled to confidential treatment under applicable legal principles. The Parties further acknowledge that this Order does not automatically entitle them to file confidential information under seal; Civil Local Rule 79-5 sets forth the procedures that must be followed and the standards that will be applied when a Party seeks permission from the Court to file under seal. 2. DEFINITIONS: As used in this Order: a. “Materials” shall refer to any document, writing, recording, transcript of oral testimony, recorded or graphic matter, tangible object, and electronically stored information, or to any portion of the foregoing. Any Materials disclosed, provided, produced, or filed in this proceeding by any Person, whether a Party or Non-Party, that contain (1) Sensitive Personal Information as defined in paragraph 3, or (2) trade secrets or other competitively sensitive information (such as confidential research, development, technical, commercial, or financial information) not otherwise publicly accessible or available, as well as any [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 2 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 b. c. d. e. Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page3 of 12 information that discloses the substance of the contents of such Materials, may be designated as Confidential by any Party or by the Non-Party that discloses, produces, provides, or files the Materials. “Non-Party” shall refer to any Person who is not a Party. “Party” shall refer to any party to this action, including all of its officers, directors, employees, and contractors. “Person” shall refer to any natural person, partnership, corporation, association, or governmental or other legal entity, including, but not limited to, each Party and any Non-Party. “Sensitive Personal Information” shall include a Person’s Social Security number, taxpayer identification number, date of birth (other than year), home address, driver’s license number or other state identification number (or a foreign country equivalent), passport number, personal financial information, such as bank account, credit card, or debit card number(s), and medical records or other information relating to the Person’s treatment of physical or mental health or condition or to the provision of or payment for health care to the Person. CONFIDENTIAL MATERIALS: Consistent with Fed. R. Civ. P. 26(c), any Materials 3. disclosed, provided, produced, or filed in this proceeding by any Party or Non-Party that contain (1) Sensitive Personal Information, or (2) trade secrets or other competitively sensitive information (such as confidential research, development, technical, commercial, or financial information) not otherwise publicly accessible or available, as well as any information that discloses the substance of the contents of such Materials, may be designated as Confidential by any Party or by the Non-Party that discloses, produces, provides, or files the Materials. The designating Party or Non-Party may designate as Confidential only those portions of Materials that qualify for Confidential treatment under this Order. A designation that Materials are Confidential shall constitute a representation by the designating Party or Non-Party, in good faith and after careful determination, that the designated Materials, or portion thereof, are eligible for such designation pursuant this Order. Such designated Materials, as well as any [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 3 of 12 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page4 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Sensitive Personal Information shall be afforded all the protections of this Order information that discloses the substance or contents of such Materials, shall be treated as Confidential pursuant to and to the extent permitted by this Order. 4. afforded to other Confidential Materials, and also shall be secured by any receiving Party or Non-Party in such a manner as to minimize the possibility of disclosure, intentional or unintentional, to unauthorized Persons, including the physical storage thereof in a secure area or law office, the electronic storage thereof on a password-protected computer or system which may be accessed only by Persons authorized to have access to the Sensitive Personal Information pursuant to the terms of this Order, and the transmission thereof only to other authorized Persons by a trackable method with restricted delivery to such Persons. 5. Any Party or Non-Party who, as part of this proceeding, discloses, provides, or produces to any other Party, or files with the Court, materials that are Confidential under this Order shall designate such Materials as Confidential at the time of the disclosure, provision, production, or filing. Materials shall be designated as Confidential by placing on or affixing to the document or other medium containing Confidential Material (in such manner as will not interfere with the legibility thereof), or, if an entire folder or box of documents is confidential, by placing or affixing to that folder or box, the designation “CONFIDENTIAL – FTC v. DIRECTV., Case No. 15-cv-01129-HSG,” or any other appropriate notice that identifies this proceeding, together with an indication of the portion or portions of the document considered to be Confidential Material. Confidential Materials contained in electronic documents may also be designated as confidential by placing the designation “CONFIDENTIAL – FTC v. DIRECTV, Case No. 15- cv-01129-HSG,” or any other appropriate notice that identifies this proceeding, on the face of the CD or DVD or other medium on which the document is produced. Masked or otherwise redacted copies of Materials may be produced where the portions masked or redacted contain privileged matter, provided that the copy produced shall indicate at the appropriate point that portions have been masked or redacted and the reasons therefor. 6. the deponent’s counsel) fails to designate as Confidential appropriate portions of the deponent’s Notwithstanding paragraph 5, if during a deposition in this proceeding, a deponent (or [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 4 of 12 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page5 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Notwithstanding paragraph 5, any Party, within thirty days of receiving Confidential With respect to all Materials provided for inspection by a Party or its counsel, all deposition testimony on the record during the course of or at the close of the deposition, the deponent (or the deponent’s counsel) may, no later than ten days after the deposition transcript becomes available to the deponent, designate as Confidential those portions of the transcript that contain Confidential Materials. The Confidential designation may be accomplished by marking “CONFIDENTIAL” every page of the transcript that contains Confidential Materials, notifying all Parties of the transcript page and line numbers of the pages deemed to be Confidential, and marking the first and last such pages of such ranges as “CONFIDENTIAL – START” and “CONFIDENTIAL – END,” respectively. Until the earlier of the expiration of this ten-day period or the Confidential designation, the entire deposition transcript shall be treated as Confidential. 7. Materials from a Non-Party as part of this proceeding, may designate such Materials as Confidential. Until the earlier of the expiration of this thirty-day period or the Confidential designation, such Materials shall be treated as Confidential. 8. Confidential Materials shall be stamped “CONFIDENTIAL – FTC v. DIRECTV., Case No. 15- cv-01129-HSG” by the Party or Non-Party desiring such designation, or otherwise designated by such Party or Non-Party in writing, within thirty days of production. Until the end of such thirty-day period, the document production will be deemed to be designated Confidential in its entirety under the terms of this Order. A designation of Confidential by stamping or labeling need not be made until after counsel for the inspecting party has inspected the Materials and selected Materials to be copied. Making Materials available for inspection shall not constitute a waiver of any claim to designate such Materials as Confidential, and all Materials provided for inspection by a Party’s or Non-Party’s counsel shall be treated as though designated Confidential at the time of inspection. 9. the FTC, as part of Federal Trade Commission Matter Number 1023141, Materials entitled to confidentiality under the Federal Trade Commission Act, or any other federal statute or Any Party or Non-Party who previously disclosed, provided, or produced to or filed with [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 5 of 12 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page6 of 12 regulation, or under any federal court or FTC precedent interpreting such statute or regulation, may, within ninety days of entry of this Order, designate any such Materials as Confidential to the extent permitted by this Order. This designation may be accomplished by notifying all Parties of the Bates ranges (or other identifying information) of such Materials that are to be designated Confidential. Until the earlier of the expiration of this ninety-day period or the Confidential designation, such Materials shall be treated as Confidential. 10. the contents of Confidential Material (including through any writing or communication reproducing, paraphrasing, or otherwise disclosing the content of Confidential Materials) shall be limited to the following Persons: The disclosure of Confidential Materials or information that discloses the substance of a. b. c. d. e. The Court presiding over this proceeding and related officials involved in this proceeding or any other related proceeding (such as appellate review of this proceeding) in which the Confidential Materials are used, including judges, magistrates, commissioners, referees, jurors, court reporters and Persons preparing transcripts of testimony, and other personnel of the Court. The FTC, including its Commissioners, counsel, staff, employees, and agents (including consultants not covered under Subparagraph 10(e) below), as well as contractors assisting the FTC in the preparation or hearing of this proceeding under the direction and control of the FTC, its Commissioners, counsel, staff, employees, or agents. Defendants’ outside counsel of record in this proceeding, as well as their associated attorneys and other employees or contractors assisting such counsel in the preparation or hearing of this proceeding under the direction and control of such counsel; provided, however, that no such Person shall be an officer, director, or employee of any Defendant. The following three individuals, who are in-house legal counsel at DIRECTV: Robin Rogers, Christopher Murphy, and Ted Suzuki. Any independent experts or consultants retained or consulted by the parties in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 6 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page7 of 12 this proceeding, including the employees of such experts or consultants who are assigned to assist such experts or consultants, in connection with services in the preparation or hearing of this proceeding. Any Person who, based on a good faith and objectively reasonable belief or understanding of counsel of record for the disclosing party, created, sent, received or reviewed the Confidential Materials, or who has had access to the Confidential Materials independent of this proceeding. Any trial or deposition witness and the witness’s counsel, if the Confidential Materials are, based on a good faith and objectively reasonable belief or understanding of counsel of record for the disclosing party, reasonably related to the witness’s testimony. Any Person designated by the Court in the interest of justice, upon such terms as the Court deems proper. f. g. h. 11. Prior to disclosing Confidential Materials to any Person on the basis of subparagraph 10(d), 10(e), 10(f), or 10(g), the disclosing Party shall provide to such Person a copy of this Order and obtain from such Person a signed statement in the form attached hereto as Exhibit A. Such signed statement shall be retained by counsel for the disclosing Party and need not be filed with the Court or served upon opposing counsel, unless requested for good cause or ordered by the Court. A Person’s refusal or practical inability to sign this statement, after the disclosing Party’s good faith effort to secure signature, shall not restrict the disclosing Party (or its counsel) from disclosing the materials to the Person during trial, deposition, or other discovery or pretrial proceeding; provided, however, that the disclosing Party (or its counsel) shall serve on or provide to the Person a copy of this Order before the disclosure, and, in the case of the Person’s refusal, makes a record of the Person’s refusal to sign, or, in the case of impracticability, makes a good faith attempt to obtain the Person’s signature after the disclosure. 12. Disclosure of Confidential Materials, or information that discloses the substance of the contents of Confidential Materials, to any Person described in Paragraph 10 of this Order shall [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 7 of 12 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page8 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 be only for the purposes of the preparation and hearing of this proceeding, or any appeal therefrom, and for no other purpose whatsoever. Any such receiving Person to whom Confidential Materials are disclosed in this proceeding shall: (a) read this Order; (b) use such Confidential Materials, or information that discloses the substance of the contents of Confidential Materials, only for purposes permitted by this Order; and (c) not disclose or divulge the content of Confidential Materials, or information that discloses the substance of the contents of Confidential Materials, other than as permitted by this Order. However, nothing contained in this Order shall be construed as imposing these or any other obligations on the Court or court personnel. 13. Nothing in this Order shall restrict the use of Confidential Materials outside of this litigation by any Person, or the disclosure of Confidential Materials to any Person (or that Person’s counsel), who: (a) originally disclosed, provided, or produced such Materials in this proceeding; (b) has had such Materials in its possession, custody, or control independent of this proceeding or Federal Trade Commission Matter Number 1023141; or (c) has discovered such materials independent of this proceeding or Federal Trade Commission Matter Number 1023141. 14. Confidential Materials by the FTC, subject to taking appropriate steps to preserve the confidentiality of such Materials: (1) as provided by the FTC’s Rules of Practice, 16 C.F.R. §0.1, et seq., and any cases construing them, or Sections 6(f) and 21 of the Federal Trade Commission Act and any cases construing them; or (2) pursuant to any other legal obligation imposed upon the FTC. To the extent required by applicable laws or regulations, the FTC shall provide prior notice of such use or disclosure to the designating Person. 15. Without written permission from the Party or Non-Party who designated the Materials Confidential or an order of the Court, a Party may not file in the public record in this action any Confidential Materials. Instead, a Party that seeks to file Confidential Material must comply with Civil Local Rule 79-5, including its provisions for filing Materials under seal. For Materials designated Confidential by a Non-Party, the Party seeking their filing shall provide to In addition to paragraph 13, nothing in this Order shall restrict the use or disclosure of [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 8 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page9 of 12 Nothing in this Order shall be construed to affect in any way the admissibility of any that designating Non-Party advance notice of at least three days (excluding Saturdays, Sundays, and legal holidays defined under Fed. R. Civ. P. 6) before filing an Administrative Motion to File Under Seal under Rule 79-5(d). If the designating Non-Party agrees in writing to withdraw its Confidential designation from the Materials at issue or to otherwise permit their filing in the public records, such Materials may be filed in the public record and shall no longer be treated as Confidential in this proceeding. 16. Materials, testimony, or any other evidence in this proceeding. This Order shall have no effect upon, and its scope shall not extend to, any Party’s use of its own discovery Materials in this proceeding. 17. Any Party or Non-Party who designates any Materials as Confidential pursuant to this Order may consent to the removal of such designation by so notifying counsel of record for the other Parties in writing, after which time such Materials shall no longer be treated as Confidential in this proceeding. Any Party or Non-Party that, acting in good faith, inadvertently or mistakenly designates Materials as Confidential may withdraw that designation so notifying counsel of record for the other parties in writing immediately after discovering the erroneous designation, after which time such Materials shall no longer be treated as Confidential in this proceeding. 18. removal of the designation as follows: Any Party may challenge a designation of any Materials as Confidential and request a. b. c. The Party seeking such removal shall give the Party or Non-Party who designated the Materials as Confidential written notice thereof specifying the Materials as to which such removal is sought and the reason for the request. If the Parties and/or Non-Party cannot reach agreement concerning the matter within fifteen days after such notice, then the Party requesting the removal of the designation as Confidential may file and serve a motion for an order of the Court directing that the designation be removed. For Confidential Materials other than Sensitive Personal Information, the Party [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 9 of 12 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page10 of 12 or Non-Party desiring to maintain their designation as Confidential shall have the burden of establishing grounds for such treatment. The burden of establishing that any Sensitive Personal Information should not be designated Confidential shall be upon the party seeking to remove the designation. If a Party or Non-Party through inadvertence discloses, produces, or provides any Neither the taking of any action in accordance with the provisions of this Order, nor the 19. failure to object thereto, shall be construed as a waiver of any claim or defense in this proceeding. Moreover, the failure to designate Materials as Confidential in accordance with this Order and the failure to object to such designation at a given time shall not preclude the filing of a motion at a later date seeking to impose such designation or challenging the propriety thereof. The entry of this Order shall neither be construed as a waiver of any Person’s right to object to the furnishing of Materials in response to discovery in this proceeding, nor relieve any Person of the obligation to produce Materials in the course of discovery in this proceeding. 20. Confidential Materials without designating them as Confidential as provided in this Order, that Party or Non-Party shall promptly give written notice to the receiving Person that the Materials are Confidential and should be treated as such in accordance with this Order. The receiving Person shall treat such Materials as Confidential from the date it receives such notice. Disclosure of such Materials prior to receipt of such notice to a Person not authorized to receive Confidential Materials shall not be deemed a violation of this Order; however, each Person to whom disclosure has been made is to be advised that the Materials disclosed are Confidential and must be treated in accordance with this Order. 21. In the case of any accidental or inadvertent disclosure of Confidential Materials or any other disclosure not in accordance with this Order, the Person responsible for the disclosure (or the Person’s counsel) shall promptly notify counsel for the Party or Non-Party who designated the Materials as Confidential, or any such Person who is not represented by counsel, of the disclosure, and shall make every effort to prevent further disclosure, including attempting to retrieve all copies of the Confidential Materials from the recipients thereof, and attempting to secure the agreement of the recipients not to further disseminate the Confidential Materials in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 10 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page11 of 12 At the time that any consultant, expert, or other Person retained to assist a Party’s any form. 22. counsel in this proceeding concludes his or her participation in this proceeding, such Person shall return to counsel of record for the retaining Party all copies of Confidential Materials, together with all notes, memoranda, or other papers reproducing, paraphrasing, or otherwise disclosing Confidential Materials, or certify as to their destruction. Furthermore, within thirty days after the completion of this proceeding, all Confidential Materials, including any writing or communication reproducing, paraphrasing, or otherwise disclosing such Confidential Materials, shall be collected by counsel for the receiving Party and either destroyed or returned to the Party or Non-Party who disclosed, produced, or provided the Materials; provided, however, that attorney work product, expert reports, deposition transcripts and other sworn statements, or pleadings reproducing, paraphrasing, or otherwise disclosing Confidential Materials may be retained in counsel’s files subject to this Order and providing that such Confidential Materials shall not be used for any purpose outside of those permitted by this Order. For purposes of this Order, this proceeding shall be considered completed when the entire proceeding has been resolved and any related orders have become final and non-appealable. 23. to disclose such Materials, except as permitted in this Order. This duty shall continue in full force and effect after the completion of this proceeding. However, nothing contained in this Order is intended to be construed as authorizing a Person to disobey a lawful court order or subpoena issued in another proceeding. 24. shall provide to each such Non-Party a copy of this Order so as to inform the Non-Party of the Non-Party’s rights and obligations under this Order. 25. additional protections for the use of Confidential Materials at trial. 26. In the event that any additional Person becomes a Party to this proceeding, that Person, upon proper notice, shall be bound by this Order unless and until a different Protective Order is All Persons who receive Confidential Materials shall remain under a continuing duty not The Parties, in conducting discovery from any Non-Party as part of this proceeding, The Parties reserve their rights to seek, through stipulated agreement or otherwise, [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 11 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case3:15-cv-01129-HSG Document39 Filed06/23/15 Page12 of 12 entered with respect to that Person. SO STIPULATED Dated: June 23, 2015 Dated: June 23, 2015 IT IS SO ORDERED /s/ Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission Pursuant to Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtain from the other signatory. /s/ Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC _________________________________________ Haywood S. Gilliam, Jr. United States District Judge Northern District of California [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 12 of 12
2015-07-01	40	SCHEDULING ORDER. Signed by Judge Haywood S. Gilliam, Jr. on 7/1/2015. (ndrS, COURT STAFF) (Filed on 7/1/2015) (Entered: 07/01/2015)	Case3:15-cv-01129-HSG Document40 Filed07/01/15 Page1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG SCHEDULING ORDER A Case Management Conference in this action was held on June 16, 2015 before the undersigned. The following deadlines are set: Event Amend Complaint Fact Discovery Close Opening Expert Reports Rebuttal Expert Reports Experts Reply Date Expert Discovery Close Settlement Conference MSJ Filing Deadline MSJ Hearing Date Pretrial Conference Bench Trial Date Deadline Aug. 1, 2015 Apr. 22, 2016 Apr. 25, 2016 Jun. 10, 2016 July 1, 2016 Jul. 26, 2016 Aug. 4, 2016 Aug. 25, 2016 Sep. 29, 2016 Nov. 22, 2016 Dec. 5, 2016 These dates may only be altered by order of the Court and only upon a showing of good cause. IT IS SO ORDERED. Dated: ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N 7/1/2015
2015-08-07	41	NOTICE of Change In Counsel by Chad Samuel Hummel and Clayton Friedman; NOTICE OF CHANGE OF FIRM AND REMOVAL OF COUNSEL (Hummel, Chad) (Filed on 8/7/2015) (Entered: 08/07/2015)	Case3:15-cv-01129-HSG Document41 Filed08/07/15 Page1 of 2 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Attorneys for Defendants UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation and DIRECTV, LLC a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG NOTICE OF CHANGE OF FIRM AND REMOVAL OF COUNSEL ) ) ) ) ) ) ) ) ) ) ) ) ) ) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF CHANGE OF COUNSEL- CASE NO. 3:15-CV-01129 HSG Case3:15-cv-01129-HSG Document41 Filed08/07/15 Page2 of 2 PLEASE TAKE NOTICE that Defendants hereby remove Christian Baker and the firm Manatt Phelps & Phillips, as counsel in this case. Chad Hummel and Clayton Friedman, now of Sidley Austin LLP, remain as counsel for Defendants for all purposes. Individual notices of appearance will be filed forthwith. Dated: August 6, 2015 Respectfully Submitted, SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ACTIVE 209565171v.1 NOTICE OF CHANGE OF COUNSEL- CASE NO. 3:15-CV-01129 HSG 2
2015-08-10	42	NOTICE of Appearance by Ryan M. Sandrock (Sandrock, Ryan) (Filed on 8/10/2015) (Entered: 08/10/2015)	Case3:15-cv-01129-HSG Document42 Filed08/10/15 Page1 of 1 AO 458 (Rev. 01/09) Appearance of Counsel UNITED STATES DISTRICT COURT for the Northern District of California FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation and DIRECTV, LLC a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG ) ) ) ) ) ) ) ) ) ) ) ) ) APPEARANCE OF COUNSEL To: The clerk of court and all parties of record I am authorized to practice in this court, and I appear in this case as counsel for: DIRECTV, a corporation and DIRECTV, LLC a limited liability company. Date: August 10, 2015 /s/ Ryan M. Sandrock Attorney's signature Ryan M. Sandrock 251781 Printed name and bar number Sidley Austin, LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Address [email protected] E-mail address 415-772-1200 415-772-7400 Telephone number FAX number American LegalNet, Inc. www.FormsWorkflow.com
2015-08-10	43	NOTICE of Appearance by Michael Yaghi (Yaghi, Michael) (Filed on 8/10/2015) (Entered: 08/10/2015)	Case3:15-cv-01129-HSG Document43 Filed08/10/15 Page1 of 1 AO 458 (Rev. 01/09) Appearance of Counsel UNITED STATES DISTRICT COURT for the Northern District of California FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation and DIRECTV, LLC a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG ) ) ) ) ) ) ) ) ) ) ) ) ) APPEARANCE OF COUNSEL To: The clerk of court and all parties of record I am authorized to practice in this court, and I appear in this case as counsel for: DIRECTV, a corporation and DIRECTV, LLC a limited liability company. Date: August 10, 2015 /s/ Michael Yaghi Attorney's signature Michael Yaghi 202720 Printed name and bar number Sidley Austin LLP 695 Town Center Drive, Suite 530 Costa Mesa, CA 92626 Address [email protected] E-mail address (213) 896-6000 (213) 896-6600 Telephone number FAX number American LegalNet, Inc. www.FormsWorkflow.com
2015-08-11	44	NOTICE of Appearance by Mark Douglas Campbell (Campbell, Mark) (Filed on 8/11/2015) (Entered: 08/11/2015)	Case3:15-cv-01129-HSG Document44 Filed08/11/15 Page1 of 1 AO 458 (Rev. 01/09) Appearance of Counsel UNITED STATES DISTRICT COURT for the Northern District of California FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation and DIRECTV, LLC a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG ) ) ) ) ) ) ) ) ) ) ) ) ) APPEARANCE OF COUNSEL To: The clerk of court and all parties of record I am authorized to practice in this court, and I appear in this case as counsel for: DIRECTV, a corporation and DIRECTV, LLC a limited liability company. Date: August 11, 2015 /s/ Mark D. Campbell Attorney's signature Mark D. Campbell 180528 Printed name and bar number Sidley Austin LLP 555 W 5th St Ste 4000 Los Angeles, CA 90013 Address [email protected] E-mail address (213) 896-6143 (213) 896-6600 Telephone number FAX number American LegalNet, Inc. www.FormsWorkflow.com
2015-08-13	45	CLERK'S NOTICE. Notice is hereby given that the 32 motion to strike hearing scheduled today before Judge Haywood S. Gilliam, Jr., will be held at 1:00 p.m., in Courtroom 15, 18th Floor, 450 Golden Gate Avenue, San Francisco, CA. (This is a text-only entry generated by the court. There is no document associated with this entry.) (ndrS, COURT STAFF) (Filed on 8/13/2015) (Entered: 08/13/2015)
2015-08-13	46	Minute Entry for proceedings held before Hon. Haywood S. Gilliam, Jr.: Motion Hearing held on 8/13/2015. Court Reporter Name JoAnn Bryce. Plaintiff Attorney Jacob Snow. Defendant Attorney Chad Hummel; Ryan Sandrock; Clay Friedman. Plaintiff's motion to strike (docket no. 32 ) is argued and submitted by the parties, and taken under submission by the Court. (This is a text minute entry, there is no document associated with this entry.) (ndrS, COURT STAFF) (Date Filed: 8/13/2015) (Entered: 08/14/2015)
2015-08-14	47	TRANSCRIPT ORDER by DIRECTV LLC, DIRECTV, Inc. for Court Reporter Jo Ann Bryce. (Sandrock, Ryan) (Filed on 8/14/2015) (Entered: 08/14/2015)	UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CAND 435 (CAND Rev. 02/2015) Case3:15-cv-01129-HSG Document47 Filed08/14/15 Page1 of 1 TRANSCRIPT ORDER Please use one form per court reporter. CJA counsel please use Form CJA24 Please read instructions on next page. C O U R T U S E O N L Y DUE DATE: 1a. CONTACT PERSON FOR THIS ORDER 2a. CONTACT PHONE NUMBER 3. CONTACT EMAIL ADDRESS 1b. ATTORNEY NAME (if different) 2b. ATTORNEY PHONE NUMBER 3. ATTORNEY EMAIL ADDRESS 4. MAILING ADDRESS (INCLUDE LAW FIRM NAME, IF APPLICABLE) 5. CASE NAME 6. CASE NUMBER 7. COURT REPORTER NAME ( FOR FTR, LEAVE BLANK AND CHECK BOX)→ ❐ FTR 8. THIS TRANSCRIPT ORDER IS FOR: ❐ APPEAL ❐ NON-APPEAL ❐ CRIMINAL ❐ CIVIL ❐ In forma pauperis (NOTE: Court order for transcripts must be attached) CJA: Do not use this form; use Form CJA24. 9. TRANSCRIPT(S) REQUESTED (Specify portion(s) and date(s) of proceeding(s) for which transcript is requested), format(s) & quantity and delivery type: a. HEARING(S) (OR PORTIONS OF HEARINGS) b. SELECT FORMAT(S) (NOTE: ECF access is included with purchase of PDF, text, paper or condensed.) c . DELIVERY TYPE ( Choose one per line) DATE JUDGE (initials) TYPE (e.g. CMC) PORTION If requesting less than full hearing, specify portion (e.g. witness or time) PDF (email) TEXT/ASCII (email) PAPER CONDENSED (email) ECF ACCESS (web) ORDINARY (30-day) 14-Day EXPEDITED (7-day) DAILY (Next day) HOURLY (2 hrs) REALTIME 10. ADDITIONAL COMMENTS, INSTRUCTIONS, QUESTIONS, ETC: F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F ORDER & CERTIFICATION (11. & 12.) By signing below, I certify that I will pay all charges (deposit plus additional). 12. DATE 11. SIGNATURE DISTRIBUTION: ❐ COURT COPY ❐ TRANSCRIPTION COPY ❐ ORDER RECEIPT ❐ ORDER COPY
2015-08-14	48	Transcript of Proceedings held on 8/13/15, before Judge Haywood S. Gilliam, Jr.. Court Reporter Jo Ann Bryce, Telephone number 510-910-5888, [email protected]. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerk's Office public terminal or may be purchased through the Court Reporter until the deadline for the Release of Transcript Restriction after 90 days. After that date, it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. (Re 47 Transcript Order ) Release of Transcript Restriction set for 11/12/2015. (Related documents(s) 47 ) (Bryce, Joann) (Filed on 8/14/2015) (Entered: 08/14/2015)
2015-08-19	49	CORRECTION: This is a transcript order for two hearings - the 8/13/15 hearing reported by official court reporter Jo Ann Bryce, and the FTR recorded hearing on 6/16/15. TRANSCRIPT ORDER by Federal Trade Commission for Court Reporter Jo Ann Bryce. (Edmondson, Eric) (Filed on 8/19/2015) Modified on 8/19/2015 (djc, COURT STAFF). (Entered: 08/19/2015)	UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CAND 435 (CAND Rev. 02/2015) Case3:15-cv-01129-HSG Document49 Filed08/19/15 Page1 of 1 TRANSCRIPT ORDER Please use one form per court reporter. CJA counsel please use Form CJA24 Please read instructions on next page. C O U R T U S E O N L Y DUE DATE: 1a. CONTACT PERSON FOR THIS ORDER 2a. CONTACT PHONE NUMBER 3. CONTACT EMAIL ADDRESS 1b. ATTORNEY NAME (if different) 2b. ATTORNEY PHONE NUMBER 3. ATTORNEY EMAIL ADDRESS 4. MAILING ADDRESS (INCLUDE LAW FIRM NAME, IF APPLICABLE) 5. CASE NAME 6. CASE NUMBER 7. COURT REPORTER NAME ( FOR FTR, LEAVE BLANK AND CHECK BOX)→ ❐ FTR 8. THIS TRANSCRIPT ORDER IS FOR: ❐ APPEAL ❐ NON-APPEAL ❐ CRIMINAL ❐ CIVIL ❐ In forma pauperis (NOTE: Court order for transcripts must be attached) CJA: Do not use this form; use Form CJA24. 9. TRANSCRIPT(S) REQUESTED (Specify portion(s) and date(s) of proceeding(s) for which transcript is requested), format(s) & quantity and delivery type: a. HEARING(S) (OR PORTIONS OF HEARINGS) b. SELECT FORMAT(S) (NOTE: ECF access is included with purchase of PDF, text, paper or condensed.) c . DELIVERY TYPE ( Choose one per line) DATE JUDGE (initials) TYPE (e.g. CMC) PORTION If requesting less than full hearing, specify portion (e.g. witness or time) PDF (email) TEXT/ASCII (email) PAPER CONDENSED (email) ECF ACCESS (web) ORDINARY (30-day) 14-Day EXPEDITED (7-day) DAILY (Next day) HOURLY (2 hrs) REALTIME 10. ADDITIONAL COMMENTS, INSTRUCTIONS, QUESTIONS, ETC: F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F ORDER & CERTIFICATION (11. & 12.) By signing below, I certify that I will pay all charges (deposit plus additional). 12. DATE 11. SIGNATURE DISTRIBUTION: ❐ COURT COPY ❐ TRANSCRIPTION COPY ❐ ORDER RECEIPT ❐ ORDER COPY
2015-08-20	50	Transcript of Proceedings of the official sound recording held on 06/16/15, before Judge Haywood S. Gilliam, Jr.. FTR/Transcriber Echo Reporting, Inc., telephone number (858) 453-7590.;[email protected]. Tape Number: FTR 2:18 - 2:29. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerk's Office public terminal or may be purchased through the Court Reporter/Transcriber until the deadline for the Release of Transcript Restriction. After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. (Re 49 Transcript Order, ) Redaction Request due 9/10/2015. Redacted Transcript Deadline set for 9/21/2015. Release of Transcript Restriction set for 11/18/2015. (Related documents(s) 49 ) (tgb, COURT STAFF) (Filed on 8/20/2015) (Entered: 08/20/2015)
2015-10-07	51	NOTICE of Appearance by Kenneth Hatheway Abbe (Abbe, Kenneth) (Filed on 10/7/2015) (Entered: 10/07/2015)	Case 3:15-cv-01129-HSG Document 51 Filed 10/07/15 Page 1 of 2 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth Abe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, v. Case No. 15-cv-1129 NOTICE OF APPEARANCE OF KENNETH ABBE AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION a corporation, and DIRECTV, LLC, a limited liability company, Defendants. NOTICE OF APPEARANCE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 51 Filed 10/07/15 Page 2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, KENNETH ABBE, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the Bar of California and am employed by the United States government. My address, telephone number, and email address are as follows: Federal Trade Commission 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 Phone: (310) 824-4343 Fax: (310) 824-4380 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: October 6, 2015 /s/ Kenneth Abbe Kenneth Abbe Attorney Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE PAGE 2
2015-10-07	52	STIPULATION WITH PROPOSED ORDER Re: Discovery of Electronically Stored Information filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 10/7/2015) (Entered: 10/07/2015)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 52 Filed 10/07/15 Page 1 of 7 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected];[email protected];[email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel (Bar No. CA 139055) Clayton S. Friedman (Bar No. CA 245513) Mark D. Campbell (Bar No. CA 180528) Michael Yaghi (Bar No. CA 202720) [email protected], [email protected]; [email protected]; [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock (Bar No. CA 251781) SIDLEY AUSTIN LLP 555 California Street San Francisco, CA 94104 Telephone: (415) 772-1200 Facsimile: (415) 772-7400 [email protected] Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ELECTRONICALLY STORED INFORMATION v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 1 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 52 Filed 10/07/15 Page 2 of 7 COOPERATION The parties are aware of the importance the Court places on cooperation, and commit to PURPOSE This Order will govern discovery of electronically stored information (“ESI”) in this case 1. as a supplement to the Federal Rules of Civil Procedure, this Court’s Guidelines for the Discovery of Electronically Stored Information, and any other applicable orders and rules. 2. cooperate in good faith throughout the matter consistent with this Court’s Guidelines for the Discovery of ESI. 3. LIAISON The parties have identified liaisons to each other who are and will be knowledgeable about and responsible for discussing their respective ESI. Each e-discovery liaison will be, or have access to those who are, knowledgeable about the technical aspects of e-discovery, including the location, nature, accessibility, format, collection, search methodologies, and production of ESI in this matter. The parties will rely on the liaisons, as needed, to confer about ESI and to help resolve disputes without court intervention. 4. preservation of potentially relevant ESI will be reasonable and proportionate. To reduce the costs and burdens of preservation and to ensure that proper ESI is preserved, the parties agree that: PRESERVATION The parties have discussed their preservation obligations and needs, and agree that a. Only ESI created or received after January 1, 2007 will be preserved. b. The parties have committed to exchanging a list of the types of ESI they believe should be preserved and the criteria for organizational departments, custodians or descriptions of custodians, or general job titles, for which they believe ESI should be preserved. In the context of responding to the Federal Trade Commission’s (“FTC”) Civil Investigative Demands (“CIDs”) in connection with the FTC’s investigation leading to this action, Defendants (collectively, “DIRECTV”) have already preserved and produced to the FTC certain ESI that was in their [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 2 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 52 Filed 10/07/15 Page 3 of 7 possession, custody, or control. c. In addition to the agreements referenced in Paragraph 6 of the Initial Joint Case Management Statement (Dkt. 33), the parties agree generally not to require the preservation or production of the following categories of materials, absent a showing of good cause by the requesting party: i. Random access memory (RAM), temporary files, or other ephemeral data that are difficult to preserve without disabling the operating system; and ii. Back-up data that are duplicative of data that are more accessible elsewhere. The parties agree that they may subsequently identify additional types of ESI that need not be preserved, logged, or produced. d. Recognizing that the obligation to preserve materials is not necessarily identical to and coextensive with the obligation to produce materials in discovery, the parties agree that any agreement or commitment to preserve materials by any party does not constitute that party’s admission that such materials are properly discoverable or will be produced in discovery. 5. SEARCH The parties agree that after responding in writing to requests to produce pursuant to Fed. R. Civ. P. 34, they will meet and confer about methods to search ESI in order to identify ESI that is subject to production in discovery and filter out ESI that is not subject to discovery. The parties may agree to use search terms where appropriate. 6. possible, in near-native format when native is not possible, and, if neither format is technologically feasible, TIFF files with metadata and extracted text. these formats is technologically feasible, as TIFF files with metadata and extracted text. For webpage ESI, the parties agree to produce in existing native format, or that is not technologically PRODUCTION FORMATS Except as noted below, the parties agree to produce documents in native format whenever For email ESI, the parties agree to produce in MSG, EML, or PST formats, or if none of [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 3 of 7 Case 3:15-cv-01129-HSG Document 52 Filed 10/07/15 Page 4 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 If particular documents warrant a different format, the parties will cooperate to arrange feasible, in a near-native format that would sufficiently permit a full and fair examination of ESI. For multimedia ESI, the parties agree to produce in .mp3 or .mp4 formats, or not technologically feasible, in existing native format. For materials available only in “hard” format—e.g., on paper—the parties agree to produce in a PDF format, with searchable text embedded in the PDF, or if not technologically feasible, as singe-page TIFF files with metadata and extracted, searchable text. For ESI available only in a format accessible through proprietary software not available to the general public, the parties agree to confer about production. for the mutually acceptable production of such documents. The parties agree to permit de-duplication of identical files only in accordance with the FTC’s Production Guide (exchanged between the parties). Specifically, the parties agree to de- duplicate only if within a unique custodian search, and only by using hash value (MD5 or SHA- 1). possible. If not possible, the producing party shall provide a reference sheet with clearly identified passwords for password-protected materials. production process. Commission, Bureau of Consumer Protection Production Requirements, attached hereto as Exhibit A, including, but not limited to, for the procedures governing the production of Metadata in ESI. DIRECTV need not re-produce to the FTC in discovery documents that DIRECTV has already produced to the FTC as part of its responses to the FTC’s CIDs. However, to the extent that any such previously produced documents are responsive to the FTC’s requests in discovery, in lieu of re-production DIRECTV shall specify which of its previously produced documents are responsive. The parties agree not to use email threading software as part of production. The parties agree to strip password protection from ESI materials produced whenever The parties agree not to degrade the searchability of documents as part of the document Subject to and consistent with this Order, the parties agree to adhere to the Federal Trade [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 4 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 52 Filed 10/07/15 Page 5 of 7 7. PHASING When a party propounds discovery requests pursuant to Fed. R. Civ. P. 34, the parties agree, if appropriate, to discuss phasing the production of ESI (e.g., phasing by ESI source or type). 8. DOCUMENTS PROTECTED FROM DISCOVERY a. Pursuant to Fed. R. Evid. 502(d), the production of a privileged or work-product- protected document, whether inadvertent or otherwise, is not a waiver of privilege or protection from discovery in this case or in any other federal or state proceeding. For example, the mere production of privileged or work-product- protected documents in this case is not itself a waiver in this case or in any other federal or state proceeding. Nothing in this Order shall be interpreted to limit the applicability of Fed. R. Evid. 502(d). b. The parties shall take reasonable steps to prevent the disclosure of privileged or work product material (together, “protected” material). In the event of such disclosure, the parties shall follow the procedures set forth in Fed. R. Civ. P. 26(b)(5)(B) and herein for materials produced in discovery in this action by both parties and nonparties. c. If a receiving party discovers material produced to it by a party or nonparty in this action that the receiving party reasonably believes to be protected material, the receiving party shall promptly notify the producing party in writing and segregate that material (or the protected portion) until it receives a response from the producing party or the passage of seven days, whichever is earlier. If, after such notice, the party that produced the material fails within seven days to state its position about the privileged or protected status of the material, the receiving party may deem all claims of privilege of protection for that material waived. d. If a producing party discovers that it has disclosed protected material to another party, it shall (1) notify the receiving party in writing within seven days after such discovery, and (2) take prompt reasonable steps to identify any other protected [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 5 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 52 Filed 10/07/15 Page 6 of 7 material that it also may have disclosed. If the producing party fails to notify the receiving party within seven days of its disclosure of the protected material and state its position about the privileged or protected status of the material, the receiving party may deem all claims of privilege of protection for that material waived. e. If the parties disagree about the applicability of any asserted privilege or other protection for material that the producing party contends is protected material and should not have been disclosed, the parties shall promptly meet and confer to resolve the issue. If the parties cannot resolve the issue, the party that produced the material shall have the obligation to raise that dispute to the Court and shall exercise reasonable diligence in doing so. f. Any party’s return, sequester, or destruction of any material pursuant to this Order or the procedures set forth in Fed. R. Civ. P. 26(b)(5)(B) does not waive any right to challenge the assertion of privilege or other protection for that material in any litigation. MODIFICATION This Stipulated Order may be modified by a Stipulated Order of the parties or by the 9. Court for good cause shown. IT IS SO STIPULATED, through Counsel of Record. Dated: October 7, 2015 /s/ Eric D. Edmondson _ Eric D. Edmondson Counsel for Plaintiff FEDERAL TRADE COMMISSION Pursuant to Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtained from the other signatory. Dated: October 7, 2015 [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 6 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 52 Filed 10/07/15 Page 7 of 7 /s/ Chad S. Hummel _ Chad S. Hummel Counsel for Defendants IT IS ORDERED that the forgoing Agreement is approved. Dated: _________________________________________ Haywood S. Gilliam, Jr. United States District Judge Northern District of California [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 7 of 7
2015-10-13	53	MOTION for Partial Summary Judgment Notice of Motion and Motion for Partial Summary Judgment; Memorandum of Points and Authorities in Support Thereof filed by DIRECTV LLC, DIRECTV, Inc.. Motion Hearing set for 11/19/2015 02:00 PM in Courtroom 15, 18th Floor, San Francisco before Hon. Haywood S Gilliam Jr.. Responses due by 10/27/2015. Replies due by 11/3/2015. (Attachments: # 1 Declaration of Chad Hummel, # 2 Exhibit A-G Hummel Declaration, # 3 Declaration of Karen Leever, # 4 Exhibit A Part 1-Leever Declaration, # 5 Exhibit A Part 2-Leever Declaration, # 6 Exhibit B-Leever Declaration, # 7 Declaration of Clay Friedman, # 8 Exhibit 1-3 of Friedman Declaration, # 9 Proposed Order)(Hummel, Chad) (Filed on 10/13/2015) (Entered: 10/13/2015)	Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 1 of 30 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: November 19, 2015 Time: 2:00 p.m. Courtroom: 15 – 18th Floor Defendants. Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 2 of 30 TABLE OF CONTENTS Page INTRODUCTION AND SUMMARY OF ARGUMENT ................................................. 1 UNDISPUTED MATERIAL FACTS ................................................................................ 4 A. B. C. D. E. The Allegations in the Complaint ........................................................................... 4 The FTC Has Produced No Evidence to Support Its ROSCA Contentions ........... 5 DIRECTV’s 2013 Web Flow Makes Clear and Conspicuous Disclosures Related to the Premium Channel Packages Prior to Obtaining Consumers’ Financial Information.............................................................................................. 6 DIRECTV’s Current Webflow Makes Clear and Conspicuous Disclosures Related to the Premium Channel Packages Prior to Obtaining Consumers’ Financial Information............................................................................................ 10 DIRECTV Requires Consumers to Give Their Express Consent to The Premium Package Prior to Charging the Consumers ............................................ 14 LEGAL STANDARD ....................................................................................................... 15 ARGUMENT .................................................................................................................... 16 A. B. ROSCA’s Requirements ....................................................................................... 17 The Undisputed Evidence Conclusively Establishes that DIRECTV Complies with the Requirements of ROSCA ........................................................................ 18 1. 2. Under the FTC’s .com Guidelines, DIRECTV’s Disclosures Comply with ROSCA ............................................................................................. 18 A Transactional Webpage Is Not Deceptive If It Discloses All of the Material Terms and Requires the Consumer to Take Affirmative Steps to Accept the Offer .................................................................................... 21 CONCLUSION ................................................................................................................. 25 i TABLE OF CONTENTS 3:15-CV-01129 I. II. III. IV. V. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 3 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Cases Anderson v. Liberty Lobby, 477 U.S. 242 (1986) ..................................................................................................................... 16 Baxter v. Intelius, Inc., 2010 WL 3791487 (C.D. Cal. Sept. 16, 2010) ...................................................................... 22, 23 Berry v. Webloyalty.com, Inc., 2011 WL 1375665 (S.D. Cal. 2011), vacated on other grounds, 517 Fed. Appx. 581 (9th Cir. 2013) ................................................................................................................. 23, 24 Bott v. Vistaprint USA Inc., 392 F. App’x 327 (5th Cir. 2010) .......................................................................................... 21, 22 Burcham v. Expedia, Inc., 2009 WL 586513 (E.D. Mo. Mar. 6, 2009) ................................................................................. 24 Celotex Corp. v. Catrett, 477 U.S. 317 (1987) ............................................................................................................... 15, 16 Fairbank v. Wunderman Cato Johnson, 212 F.3d 528 (9th Cir. 2000) ....................................................................................................... 16 Freeman v. Time, Inc., 68 F.3d 285 (9th Cir. 1995) ......................................................................................................... 23 FTC v. Health Formulas, LLC, et al., 2015 WL 2130504 (D. Nev. 2015) .............................................................................................. 17 Hager v. Vertrue, 2011 WL 4501046 (D. Mass. 2011) ...................................................................................... 23, 25 Hook v. Intelius, Inc., 2011 WL 1196305 (M.D. Ga. Mar. 28, 2011) ............................................................................. 23 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) ............................................................................................................... 15, 16 Riensche v. Cingular Wireless, LLC, 2006 WL 3827477 (W.D. Wash. Dec. 27, 2006) ........................................................................ 23 T.W. Elec. Service, Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626 (9th Cir. 1987) ....................................................................................................... 15 i TABLE OF AUTHORITIES 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 4 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 U.S. v. Helms, 2010 WL 3384997 ....................................................................................................................... 16 In re Vistaprint Corp. Mktg. & Sales Practices Litig., 2009 WL 2884727 (S.D. Tex. Aug. 31, 2009) (Atlas, J.) .................................... 21, 22, 23, 24, 25 Wang Laboratories, Inc. v. Mitsubishi Electronics America, Inc., 860 F.Supp. 1448 (C.D. Cal. 1993) ............................................................................................. 16 Statutes 15 U.S.C. § 8403 ...................................................................................................................... 1, 17, 18 15 U.S.C. § 8403 (1) .................................................................................................................... 18, 19 15 U.S.C. §8403 (2) ........................................................................................................................... 24 Other Authorities .Com Disclosures: How to Make Effective Disclosures in Digital Advertising, available at https://www.ftc.gov/tips-advice/business-center/guidance/com- disclosures-how-make-effective-disclosures-digital (last accessed October 1, 2015) .......................................................................................................................... 17, 18, 19, 20 At FTC’s Request, Court Stops Supplement Marketers From Deceptive Advertising and Illegally Debiting Consumers’ Accounts, available at https://www.ftc.gov/news-events/press-releases/2014/10/ftcs-request-court-stops- supplement-marketers-deceptive (last accessed October 1, 2015) .............................................. 17 Dot Com Disclosures: Information About Online Advertising, available at https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-staff-issues- guidelines-internet-advertising/0005dotcomstaffreport.pdf (last accessed October 1, 2015) ........................................................................................................................................ 17 16 C.F.R. § 310.2(u) ............................................................................................................................ 1 Fed. R. Civ. P. 56(a) .......................................................................................................................... 16 Fed. R. Civ. P. 56(c) .......................................................................................................................... 15 Fed. R. Civ. P. 56(e) .................................................................................................................... 15, 16 Rule 26 ................................................................................................................................................. 3 Rule 26(a)........................................................................................................................................... 16 Rule 30(b)(6) ................................................................................................................................ 3, 5, 9 Rule 34 ................................................................................................................................................. 5 ii TABLE OF AUTHORITIES 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 5 of 30 Rule 37(c)(1) ...................................................................................................................................... 16 Rule 56 ........................................................................................................................................... 1, 16 iii TABLE OF AUTHORITIES 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 6 of 30 NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE THAT on November 19, 2015, at 2:00 p.m. or as soon thereafter as this matter may be heard before the above-entitled Court, located at 450 Golden Gate Ave., San Francisco, California 94102, defendants, DirecTV and DirecTV, LLC (collectively, “DIRECTV”) will, and hereby do, move this Court for an order granting partial summary judgment, pursuant to Federal Rule of Civil Procedure 56, on counts three and four asserted in the Complaint of plaintiff, the Federal Trade Commission (“FTC”), for purported violations of the Restore Online Shoppers’ Confidence Act (“ROSCA”), 15 U.S.C. §8403. MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION AND SUMMARY OF ARGUMENT DIRECTV is entitled to partial summary judgment on the FTC’s Third and Fourth causes of action for alleged violations of ROSCA. ROSCA requires that an online seller using a so-called negative option feature1 (a) clearly and conspicuously disclose all material terms of the transaction before obtaining the consumer’s billing information, (b) obtain the consumer’s express informed consent to the feature before charging the consumer’s financial account, and (c) provide a simple mechanism for a consumer to stop recurring charges. 15 U.S.C. § 8403. In this case, the FTC challenges the adequacy of DIRECTV’s disclosures regarding its premium channel negative option program and asserts that DIRECTV does not obtain consumers’ express informed consent to the terms of its free premium channel offer in its online subscription process.2 These claims are refuted by the undisputed evidence submitted with this Motion. During the relevant time period, DIRECTV has offered new subscribers to its satellite television services free premium movie channels (e.g., HBO, Showtime, and Cinemax) generally for a period of three months. At the end of the free trial period, consumers have to call DIRECTV either to cancel or to 1 provision under which the consumer’s silence or failure to take affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(u). 2 charges. The FTC does not allege that DIRECTV failed to provide a simple mechanism for consumers to stop recurring A “negative option feature” is defined as “an offer or agreement to sell or provide any goods or services, a MOTION FOR PARTIAL SUMMARY JUDGMENT 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 7 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 change the premium channels they receive, or they are charged going forward. These terms are disclosed in several ways on multiple occasions on DIRECTV’s website when a consumer subscribes online and are done in a clear and conspicuous manner. Those disclosures comply with both the requirements of the 2010 multi-State settlement agreement with DIRECTV3 and the FTC’s own “dot-com” disclosure guidelines. As set forth herein and as is clear from the evidence submitted with this Motion, DIRECTV’s detailed disclosures are contained in website info-hovers and hyperlinks that are invariably positioned in close proximity to the locations in the web flow promoting the free premium channel feature of a new programming subscription. The hyperlinks consistently are in the same font color and use the same icon to signal to the consumer that additional information is available. When the hyperlinks are clicked, clear and conspicuous disclosures appear in the subscription web flow which plainly disclose the length of the free promotional pricing for the premium channels and the price that the consumer will pay for these channels after the expiration of the trial period. The disclosures are easily understandable to the consumer. DIRECTV also complies with ROSCA’s requirement that it obtain the consumer’s express informed consent to the premium channel negative option feature prior to charging the consumer for the premium channels. In its current online subscription web flow, for example, DIRECTV makes disclosures about the negative option feature on every single page of the signup process, including in its Terms and Conditions to which a consumer must consent prior to placing an order. Only after a consumer provides consent to the Terms and Conditions (which is one of but many instances where the negative option feature is disclosed) can that consumer take affirmative steps to complete the order. Only then does DIRECTV receive the consumer’s financial information. Since DIRECTV does not receive a consumer’s financial information until after the consumer consents to the negative option feature, there is no ROSCA violation. There is no contrary evidence. In fact, the FTC’s allegations in the Complaint are premised on screen shots from a single version of DIRECTV’s website from 2013 (Complaint, Ex. 4) which is 3 See Declaration of Clayton Friedman, submitted concurrently herewith. MOTION FOR PARTIAL SUMMARY JUDGMENT 2 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 8 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 materially incomplete. The FTC-concocted exhibit omits entirely the website’s info-hovers and hyperlinked text that contain the very disclosures the FTC claims were not adequately made to consumers. What’s worse, nowhere in the Complaint does the FTC even mention the multi-state settlement agreement which covers the manner in which DIRECTV was required to disclose the terms of negative option features or explain why 50 States and the District of Columbia got it wrong in settling their investigation in the way they did. There is no dispute that DIRECTV has never been the subject of any subsequent state enforcement action on this issue. Finally, as the last straw, when DIRECTV sought through discovery in this case to elicit any facts the FTC relied upon in alleging that the terms of DIRECTV’s premium channel offer are not clear and conspicuous or that consumers do not give express informed consent to the deal, the FTC completely refused to produce any consumer surveys, research, studies, or tests supporting its ROSCA claims -- or even disclose whether any such evidence exists.4 Nor did the FTC disclose any such information in its Rule 26 Initial Disclosures. Most recently, during the duly noticed Rule 30(b)(6) deposition on this subject, the FTC’s witness refused to answer all questions regarding whether the FTC has any consumer surveys, research, studies, or tests which support its ROSCA allegations. Instead, the FTC’s witness merely parroted allegations in the Complaint as its sole evidence purportedly supporting its ROSCA claims. Of course, as noted above and described below, the Complaint’s allegations in this regard are premised on website screen captures that omit all of the relevant web pages and disclosures.5 Regardless of the FTC’s conduct here, the facts prove that DIRECTV has made the required disclosures for all relevant times in a manner that satisfies both the multi-state agreement and FTC guidelines. Moreover, to the extent any such consumer surveys, research, studies, or tests exist, the FTC should be barred from relying upon such evidence in opposing this Motion. Therefore, as more fully set forth below, DIRECTV is entitled to an order granting this Motion for Partial Summary Judgment as to the Third and Fourth Counts in the Complaint. 4 See Declaration of Chad S. Hummel, filed concurrently herewith. 5 Tellingly, when asked in the Rule 30(b)(6) deposition if the omissions were deliberate or whether they were intended to deceive the Court, the FTC’s witness refused to answer. MOTION FOR PARTIAL SUMMARY JUDGMENT 3 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 9 of 30 II. UNDISPUTED MATERIAL FACTS A. The barebones allegations in the FTC’s Complaint highlight the deficiencies of the Third and The Allegations in the Complaint Fourth Counts for violations of ROSCA. The FTC selectively cites to a single excerpt from an exhibit in its Complaint, which is a copy of portions of DIRECTV’s web flow from August 2013, and makes the allegation that “Defendants’ webpages typically contain statements concerning an offer of free premium channels that are identical or similar to the following: “Free for 3 months. HBO + Starz + Showtime + Cinemax.” (Compl., ¶ 23) (citing to Ex. 4, p. 1). The Complaint never again references any statement from DIRECTV’s website. Rather than addressing the multiple disclosures that DIRECTV makes in its web flows about its offer of three free months of premium channels (see Section II (C) & (D) below), the FTC makes the unsupportable conclusion that, “[t]o the extent that Defendants’ webpages contain any qualifying disclosures concerning the offer of free premium channels, any such disclosures are inadequate in terms of their content, presentation, proximity, prominence, or placement such that consumers are unlikely to see or understand such disclosures.” (Compl., ¶ 24). Noticeably absent from the Complaint are any allegations about the specific disclosures that DIRECTV makes to its consumers during the signup process or images of those disclosures that appear in DIRECTV’s web flow, much less any explanation of why such disclosures are “inadequate.” The Complaint then alleges that DIRECTV’s web flow “do[es] not convey to consumers: A. That Defendants automatically enroll consumers in a negative option continuity plan under which Defendants charge consumers for access to premium channels after an initial free period, typically three months, unless consumers contact Defendants and cancel their access to the premium channels; That consumers must affirmatively cancel the negative option continuity plan before the end of the initial free period to avoid charges; That Defendants use consumers’ credit or debit card information to charge consumers for the negative option continuity plan; and The costs associated with the negative option continuity plan.” B. C. D. (Compl., ¶24 (A) – (D)). Based upon these allegations, the FTC alleges in support of its third purported cause of action that “Defendants have charged or attempted to charge consumers for access to premium channels . . . MOTION FOR PARTIAL SUMMARY JUDGMENT 4 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 10 of 30 through a negative option feature while failing to clearly and conspicuously disclose all material terms of the transaction before obtaining consumers’ billing information.” (Compl., ¶39). The FTC also alleges in support of its fourth purported cause of action that “Defendants have charged or attempted to charge consumers for access to premium channels . . . through a negative option feature while failing to obtain consumers’ express informed consent before charging their credit card, debit card, bank account, or other financial account for those premium channels.” (Comp., ¶ 41). As explained below, each of the FTC’s claims is refuted by the undisputed evidence which demonstrates that (1) DIRECTV provides clear and conspicuous disclosures that the negative option feature is free for the first three months and that the consumer will then be charged regular prices when the promotional period ends (unless cancelled) and (2) DIRECTV obtains the consumer’s express informed consent to the premium channel offer prior to charging a consumer’s account. The FTC Has Produced No Evidence to Support Its ROSCA Contentions B. The FTC designated Kerry O’Brien, its Assistant Regional Director in San Francisco, as its Rule 30(b)(6) deponent on topics related to, among others “[t]he results of any and all research, surveys, or tests conducted by the FTC concerning DIRECTV’s advertising that the FTC contends has been or is deceptive.” (Hummel Decl., ¶ 8; Ex. F). During her August 28, 2015, deposition, Ms. O’Brien was instructed not to answer whether the FTC conducted any research, surveys, or tests: 1. to ascertain whether consumers who subscribed online viewed or were likely to see or view, understand, or appreciate the disclosures related to the premium channel package on the website (Id. Ex. G, 84:14-25; 87:14-88:13; 190:12-23); 2. that support the FTC’s contention that the disclosures for the three free months of premium channels were inadequate (Id., Ex. G, 131:5-17); and 3. to ascertain whether consumers give express informed consent to the premium channel offer. (Id., Ex. G, 149:23-150:8). Moreover, the FTC has failed to produce and identify any such information in its Initial Disclosures and in response to DIRECTV’s Rule 34 document requests. The FTC served its Initial Disclosures on June 9, 2015. (Hummel Decl., ¶ 2; Ex. A). Nowhere does the FTC identify any consumer research, surveys, or tests. (Id.). Moreover, Request Numbers 8, 15, 17 & 18 of MOTION FOR PARTIAL SUMMARY JUDGMENT 5 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 11 of 30 DIRECTV’s First Set of Requests for Production of Documents to Plaintiff Federal Trade Commission seek documents related to the ROSCA allegations. (Hummel Decl., Ex. B, 4:7 – 6:13). To date, the FTC has produced no consumer surveys, studies, research, or tests responsive to these requests (id., ¶ 10), therefore confirming that it has no evidence to support its ROSCA claims. Finally, Ms. O’Brien was asked during her deposition to explain the factual basis for the FTC’s contentions in its Complaint, including those allegations supporting its ROSCA allegations. Instead of providing any detailed information, she merely referred back to the Complaint. For example, when asked the basic question “[w]hat factual basis did the FTC have when it filed its lawsuit contending that . . . DIRECTV’s advertising has been deceptive,” she merely responded “[t]he factual basis is laid out in the complaint.” (Id., Ex. G, 24:4-9). She further stated “the complaint explains why consumers are unlikely to understand the terms of the offer that DIRECTV is making. And it explains that in pretty good detail in the complaint.” (Id., Ex. G, 66:9-12). When asked if the FTC had any facts to support its contention in the Complaint that consumers do not see or understand the disclosures for the premium channel offers on DIRECTV’s online web flow, Ms. O’Brien merely referred back to the allegations in the Complaint and its attachments. (Id., Ex. G, 131:18 – 133:4). Thus, not only has the FTC failed to produce any consumer surveys, research, or tests in support of its claims, it likewise has failed to cite any facts to support those claims either. C. DIRECTV’s 2013 Web Flow Makes Clear and Conspicuous Disclosures Related to the Premium Channel Packages Prior to Obtaining Consumers’ Financial Information Exhibit 4 to the Complaint is a misleadingly selective print out of DIRECTV’s subscription web flow from August 2013, and is the only “evidence” the FTC cites in its Complaint to support its ROSCA claims. (Compl., ¶ 21). During the discovery process, the FTC has only produced innocuous print advertisements, newspaper ads, video clips, and webpage photos in support of its ROSCA claims. (Hummel Decl., ¶ 7). None of these documents explains how the subscription webflow violates ROSCA. Moreover, during her deposition, when Ms. O’Brien was asked about the disclosures on the webflow, she merely stated that “the complaint explains why consumers are unlikely to understand the term of the offer that DIRECTV is making. And it explains that in pretty MOTION FOR PARTIAL SUMMARY JUDGMENT 6 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 12 of 30 good detail in the complaint.” (Id., Ex. G, 66:9-12). Therefore, this Motion, by necessity, focuses on DIRECTV’s entire subscription web flow from 2013 to demonstrate why the allegations about DIRECTV’s alleged violation of ROSCA fail as a matter of law. DIRECTV’s 2013 web flow includes on multiple pages during the signup process clear and conspicuous disclosures of material terms related to premium packages. (Leever Decl., ¶4). Tellingly, Ms. O’Brien refused to answer during her deposition why the FTC did not include any of DIRECTV’s online disclosures as exhibits to its Complaint. (Hummel Decl., Ex. G, 69:21 – 70:5; 133:5-17). Starting with the “Package Selection” page, DIRECTV advises consumers as to which packages (e.g., Entertainment, Choice and Ultimate) include three free months of the premium movie channels HBO, STARZ, SHOWTIME and Cinemax: (Leever Decl., ¶5; Ex. A, p. 4) At the bottom of the Package Selection page, the words “Additional Offer Details” appear in blue lettering against a white background, clearly signaling a hyperlink to more information: (Id., ¶ 6; Ex. A, p. 7). MOTION FOR PARTIAL SUMMARY JUDGMENT 7 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 13 of 30 This hyperlink to “Additional Offer Details” appears on page 4 of Exhibit 4 to the Complaint. However, the FTC misleadingly failed to include the text of the “Additional Offer Details” as an exhibit. (See Compl., Ex. 4, p. 4). During the FTC’s deposition, Ms. O’Brien refused to answer why the FTC did not include this disclosure in Exhibit 4. (Hummel Decl., Ex. G, 72:16 – 73:3). When that clear and conspicuous hyperlink is clicked, a white box labeled “Additional Information” appears against a dark background and includes the following disclosure for the premium packages: (Leever Decl., ¶6; Ex. A, p. 23). Additional disclosures about the negative option feature appear in the “Cart” page after the consumer selects his or her package, as depicted below. (Id., ¶ 7). There is a prominent blue banner which spans across the entire page and states in black letters the words “Package and Programming.” (Id.). Under that heading is a light grey box which has a prominent orange check-mark next to the wording “Premium Channels.” (Id.). The premium channel selections and their prices are all in black font. (Id.). In contrast and for prominence, green font is used to highlight the three free months of premium channels and the three month total discount (id., ¶7; Ex. A, p. 46): : As can also be seen above, there is another blue hyperlink with a “[?]” icon immediately next MOTION FOR PARTIAL SUMMARY JUDGMENT 8 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 14 of 30 to the “FREE for 3 months” language. (Id., ¶8). Hovering on that [?] brings up a prominent light blue box with a darker blue border, with the following additional disclosure about the negative option feature in prominent black lettering: (Id., ¶8; Ex. A, p. 58). Notably, the FTC included a printout of the Cart page in Exhibit 4 of its Complaint, but again misleadingly failed to include the necessary disclosure as an exhibit or explain its terms in the allegations. (Compl., Ex. 4, p. 5). And during its 30(b)(6) deposition, the FTC refused to answer whether or not the FTC has any tests or surveys which would demonstrate that a consumer is unlikely to see or understand the disclosures listed on the Package & Programming page of the webflow. (Hummel Decl., Ex. G, 135:12-20). DIRECTV also discloses in an easy-to-follow chart the prices a consumer will pay throughout the term of the agreement. (Leever Decl., ¶9). More specifically, as can be seen on P. 5 of Exhibit 4 to the Complaint, DIRECTV includes a hyperlink that states “View Monthly Cost” in its Cart page. While Ms. O’Brien refused to answer whether the FTC performed any analysis as to whether consumers see or understand this page of the web flow, (Hummel Decl., Ex. G, 146:9-17), it is undisputed that clicking this link allows the consumer to view precisely how much will be billed for each individual month of service for the premium channels: (Leever Decl., Ex. A, p. 77): MOTION FOR PARTIAL SUMMARY JUDGMENT 9 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 15 of 30 The above image depicts pricing for the first six months of service. (Id., ¶ 9). DIRECTV continues to use black font for the cost for each premium channel, continues to use green font for the discount applied to that channel during the three month promotional period, and continues to use the same “[?]” icon with blue font to signal an additional disclosure. (Id., ¶10). Notably, for months four through six of a subscription, the “View monthly cost” page clearly discloses that the promotional discount for the premium channels no longer applies. (Id.). This is consistent with the disclosures listed above, which state the promotional period lasts only three months and that normal prices will be charged for these channels unless the consumer contacts DIRECTV. Only after disclosing all material terms and conditions related to the premium channel offer is the consumer then asked to enter his or her contact and payment information and affirmatively consent to the purchase and conversion of the premium channels after three months. (Id., ¶11). D. DIRECTV’s Current Webflow Makes Clear and Conspicuous Disclosures Related to the Premium Channel Packages Prior to Obtaining Consumers’ Financial Information To the extent the FTC’s Complaint includes allegations relating to DIRECTV’s current practices, the undisputed evidence establishes compliance with ROSCA. Since about early 2014 and continuing to the present, DIRECTV, in its ongoing commitment to improve consumers’ experience on the company subscription website, has included even more robust disclosures about the free premium channel offer to additional locations throughout the web flow. (Id., ¶13). For instance, the above-referenced disclosure contained within the hyperlink labeled “Additional Offer Details” can now be accessed on every page of the current web flow. (Id., ¶14). The disclosures that appeared on the consumer’s Cart page were added to the Package Selection pages as well. (Id., ¶15). In the Package Selection pages, each package description has a box indicating that the premium channels are “FREE for 3 months,” and includes a blue hyperlinked icon of an “i” enclosed in a circle immediately next to that language: MOTION FOR PARTIAL SUMMARY JUDGMENT 10 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 16 of 30 (Id., ¶16; Ex. B, p. 4). Clicking the hyperlinked icon displays another white box with a prominent black border containing a disclosure about the negative option feature: (Id., ¶16; Ex. B, p. 6). This disclosure can be accessed on every page as the consumer progresses through the web flow. (Id., ¶17). Moreover, as seen below on the “Add more great programming” page, DIRECTV indicates that premium packages are “optional.” (Id., ¶17). Consistent with prior disclosures, DIRECTV continues to use blue hyperlinks with the same “i” icon placed near the relevant information about the negative option feature. (Id.). When clicked, this hyperlinked icon displays another box containing a disclosure about the terms of the negative option feature, which has a black border and black font. (Id.). To the right of the page, there is also a blue hyperlink with the words “Remove” which gives the consumer the option of removing the premium package: MOTION FOR PARTIAL SUMMARY JUDGMENT 11 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 17 of 30 (Id., ¶¶18-19; Ex. B, p. 18). Moreover, as seen on the Cart page below, DIRECTV continues to use green font to show the discounts on the premium channels, in contrast to the black font which has the regular monthly cost. (Id., ¶20). DIRECTV again uses the same hyperlinked “i” icon with blue font which is placed immediately next to the relevant statement “FREE for 3 months: HBO, SHOWTIME, STARZ and Cinemax,” signaling to the consumer that there is an additional disclosure for the premium package. (Id.). Clicking on the blue hyperlink brings up another white box with a prominent black border containing that disclosure. (Id.). Notably, there is even an additional blue hyperlink with the word “Remove” where the consumer again has the option of removing the premium package: (Id., ¶¶ 20-21, Ex. B, p. 31). As seen above, the current webflow also allows a consumer to view the monthly costs of the selected packages by clicking on the blue hyperlink in the Cart that states “View Monthly Cost.” (Id., ¶22). The below image depicts the new page the consumer is taken to when that hyperlink is clicked. (Id.). As seen in that image, DIRECTV continues to use green font to signal discounts and black font to signal normal prices. (Id.). DIRECTV also continues to use the same blue hyperlinked “i” icon placed next to the premium package to signal that additional information is available to the consumer about the terms of the premium package. (Id.). When the icon is clicked, as depicted below, there is yet another disclosure that repeats the terms of the negative option feature. (Id.). MOTION FOR PARTIAL SUMMARY JUDGMENT 12 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 18 of 30 And the chart again shows that for months four through six, the promotional discount is no longer applicable to the premium channel (id., ¶¶ 22-23): (Id., Ex. B, p. 38). The “Terms and Conditions” hyperlink, also in blue font, can now also be accessed on every page of the web flow, including the Check Out page (as seen below). (Id., ¶24). Clicking it causes additional disclosures about the premium channel offer to appear in a large white box with black font that takes up nearly the entire web page and blacks out the rest of the page (id., Ex. B, p. 57): MOTION FOR PARTIAL SUMMARY JUDGMENT 13 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 19 of 30 Only after disclosing all material terms and conditions related to the premium channel offer is the consumer then asked to enter his or her contact and payment information and affirmatively consent to the purchase and conversion of the premium channels after three months. (Id., ¶25). E. DIRECTV Requires Consumers to Give Their Express Consent to The Premium Package Prior to Charging the Consumers Express informed consent to the negative option feature has always been obtained before the consumer’s financial information is provided to DIRECTV. (Id., ¶26). As seen in the image below for the 2013 version of the website, at the bottom of the Checkout page where the consumer enters his or her financial information, there is a prominent hyperlink in blue lettering labeled “By clicking ‘Submit Order’ I agree to these Terms and Conditions.” (Id.). Immediately adjacent to that hyperlink is a prominent orange box containing contrasting white lettering “I Accept. Submit My Order” (id., Ex. A; p. 118): During Ms. O’Brien’s deposition, she was asked whether it is the FTC’s contention that a consumer clicking on the above orange box constitutes express informed consent to the premium package offer. (Hummel Decl., Ex. G, 148:25 – 149:6). Highlighting the FTC’s lack of evidence, the entirety of Ms. O’Brien’s answer was “I think given the whole purchase flow the Commission is alleging in its complaint that consumers didn’t have informed consent.” (Id., Ex. G, 149:20-22) Ms. O’Brien also refused to answer whether the FTC performed any studies or analyses as to whether or not clicking on the above button constitutes express informed consent. (Id., Ex. G, 149:23 – 150:8). In the current version of the web flow, at the bottom of the Checkout page after the consumer enters his or her financial information and views all the above referenced disclosures, there is a radio button which requires the consumer to give his or her express consent to the Terms and Conditions: (Id., ¶27; Ex. B, pp. 52-53). MOTION FOR PARTIAL SUMMARY JUDGMENT 14 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 20 of 30 As can also be seen in the image above for the current web flow, there is again a prominent blue hyperlink which sends the consumer to the same Terms & Conditions referenced above and found on every other page in the web flow. (Id., ¶ 28). The Terms and Conditions include, among other disclosures, the disclosure about the premium channels: (Id., ¶29; Ex. B, p. 57). A consumer must take the affirmative step of acknowledging that he or she consents to the Terms and Conditions before he or she can press the “Place My Order” button, which then transmits the consumer’s financial information to DIRECTV. (Id., ¶ 29). In other words, it is only after DIRECTV discloses all material terms and conditions about the negative option feature, and the consumer affirmatively consents to the negative option feature, that it receives financial information. (Id.). DIRECTV therefore does not have access to nor does it receive the consumer’s payment information until after the consumer affirmatively consents to all the Terms and Conditions, including those required by ROSCA, by actively pressing the appropriate button to purchase his or her order. (Id., ¶30). After placing the order, the consumer also receives an email confirming the details of the offer, which again discloses the terms of the premium movie channels offer, including the need to call to cancel. (Id., ¶31). III. LEGAL STANDARD Summary judgment is appropriate when there exists “no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). The party moving for summary judgment bears the burden of identifying those portions of the pleadings, discovery and affidavits that establish the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1987). If the moving party meets its burden, the burden then shifts to the opposing party to “set forth specific facts showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); T.W. Elec. Service, Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987). MOTION FOR PARTIAL SUMMARY JUDGMENT 15 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 21 of 30 To establish the existence of a genuine issue of material fact, the non-moving party may not rely upon mere allegations in its pleadings, but rather is required to tender evidence of specific facts in the form of affidavits and/or discovery. Celotex Corp., 477 U.S. at 324; Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 531 (9th Cir. 2000). Moreover, a party cannot defeat summary judgment merely be showing “that there is some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 587; see also Anderson v. Liberty Lobby, 477 U.S. 242, 252 (1986) (“mere existence of a scintilla of evidence in support of the non-moving party’s position is not sufficient.”). Nor can a party opposing summary judgment rely upon evidence not produced during the discovery process or in the initial disclosures. Rule 37(c)(1) provides, in pertinent part, “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at trial, unless the failure was substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1). The Advisory Committee Notes expressly state that this is applicable to Rule 56 motions for summary judgment. See Advisory Committee Notes to 1993 Amendments to subdivision (c)(1) (“This automatic sanction provides a strong inducement for disclosure of material that the disclosing party would expect to use as evidence . . . on a motion, such as one under Rule 56.”); see also U.S. v. Helms, 2010 WL 3384997 at 2-3 (S.D. Cal. Aug. 26, 2010 (striking evidence submitted by defendant in opposition to motion for summary judgment because it was not disclosed during discovery). Upon a showing that there is no genuine dispute of material fact as to particular claims or defenses, the court may grant summary judgment in the party’s favor on “each claim or defense—or the part of each claim or defenses—on which summary judgment is sought.” Fed. R. Civ. P. 56(a); see Wang Laboratories, Inc. v. Mitsubishi Electronics America, Inc., 860 F.Supp. 1448, 1450 (C.D. Cal. 1993). IV. ARGUMENT As set forth above, the undisputed evidence conclusively demonstrates that there are no material factual disputes as to Counts III and IV. Moreover, as discussed below, this undisputed evidence establishes that DIRECTV meets the requirements of ROSCA as well as guidelines provided by the FTC to assist businesses in meeting those requirements. MOTION FOR PARTIAL SUMMARY JUDGMENT 16 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 22 of 30 ROSCA’s Requirements A. Section 8403 of ROSCA, which took effect on December 29, 2010, provides that it is “unlawful for any person to charge or attempt to charge any consumer for any goods or services sold in a transaction effected on the Internet through a negative option feature. . . unless the person-- (1) provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information; (2) obtains a consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account, or other financial account for products or services through such transaction; and (3) provides simple mechanisms for a consumer to stop recurring charges from being placed on the consumer’s credit card, debit card, bank account, or other financial account.” FTC staff—the same government entity bringing this enforcement action—issued a document in March 2013 entitled “.com Disclosures: How to Make Effective Disclosures in Digital Advertising,” (the “.com Guidelines”) which “provides FTC staff guidance concerning the making of clear and conspicuous online disclosures that are necessary pursuant to the laws the FTC enforces.” See “.com Disclosures, How to Make Effective Disclosures in Digital Advertising”, available at https://www.ftc.gov/tips-advice/business-center/guidance/com-disclosures-how-make-effective- disclosures-digital (last accessed October 1, 2015).6 The first time the FTC brought a ROSCA enforcement action was nearly four years after ROSCA was enacted, on October 7, 2014. See FTC v. Health Formulas, LLC, et al., 2015 WL 2130504 (D. Nev. 2015) (granting FTC’s request for preliminary injunction against defendants who upsold products through negative option features without complying with ROSCA requirements).7 Notwithstanding the lack of applicable legal precedent as to ROSCA’s precise requirements, 6 https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-staff-issues-guidelines-internet- advertising/0005dotcomstaffreport.pdf (last accessed October 1, 2015). 7 marketers-deceptive (FTC press release describing case as first FTC action alleging violations of ROSCA) (last accessed October 1, 2015). See also https://www.ftc.gov/news-events/press-releases/2014/10/ftcs-request-court-stops-supplement- The Commission’s first guidance, released in May 2000, is available at MOTION FOR PARTIAL SUMMARY JUDGMENT 17 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 23 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV has carefully tailored its online advertising to satisfy the statutory language of Section 8403 and to adhere to the FTC’s pronouncements regarding effective online disclosures. B. The Undisputed Evidence Conclusively Establishes that DIRECTV Complies with the Requirements of ROSCA As set forth in the concurrently filed Friedman Declaration, DIRECTV’s disclosures are made pursuant to a multi-state settlement agreement. Tellingly, there has never been any enforcement action against DIRECTV related to the multi-state settlement agreement. This is not surprising because, as explained below, DIRECTV is in full compliance with that agreement and ROSCA because it (1) clearly and conspicuously discloses all material terms of the negative option feature prior to obtaining consumers’ financial information and (2) obtains consumers’ express informed consent before charging consumers’ financial accounts for the negative option feature. 1. Under the FTC’s .com Guidelines, DIRECTV’s Disclosures Comply with ROSCA The first prong of ROSCA requires that a seller, prior to charging or attempting to charge a consumer for goods or services sold online through a negative option feature, clearly and conspicuously disclose all material terms of the transaction before obtaining the consumer’s billing information. 15 U.S.C. § 8403 (1). In the overview to the .com Guidelines, the FTC staff advises: …In evaluating whether a disclosure is likely to be clear and conspicuous, advertisers should consider its placement in the ad and its proximity to the relevant claim. The closer the disclosure to the claim to which it relates, the better. Additional considerations include: the prominence of the disclosure; whether it is unavoidable, whether other parts of the ad distract attention from the disclosure, [and] whether the disclosure needs to be repeated at different places on the website… (See .com Guidelines at pp. 1-2). With regard to proximity, the FTC recommends placing the disclosure as close as possible to the triggering claim. “A disclosure is more effective if it is placed near the claim it qualifies or other relevant information. Proximity increases the likelihood that consumers will see the disclosure and relate it to the relevant claim or product.” Id. at 8. Recognizing that the details of some disclosures may be too complex to describe adjacent to the claim, the Commission expressly endorses the use of hyperlinks. See id. at 10. “The key MOTION FOR PARTIAL SUMMARY JUDGMENT 18 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 24 of 30 considerations for evaluating the effectiveness of all hyperlinks” include “the labeling or description of the hyperlink;” “consistency in the use of hyperlink styles;” “the placement and prominence of the hyperlink on the webpage or screen;” and “the handling of the disclosure on the click-through page or screen.” Id. at 11. It is important to reiterate that the FTC approves and favors the use of hyperlinks when the overall terms and transaction are complicated. The FTC’s .com Guidelines recommends that a hyperlink’s label, whether text or graphic, should be obvious. “Consumers should be able to tell that they can click on a link to get more information.” Id. Similarly, “[u]sing hyperlink styles consistently increases the likelihood that consumers will know when a link is available.” Id. at 12. In addition, the “hyperlink should be proximate to the claim that triggers the disclosure so consumers can notice it easily and relate it to the claim,” which, typically, “means that the hyperlink is adjacent to the triggering claim.” Id. at 13. “Format, color, or other graphics treatment also can help to ensure that consumers notice the link.” Id. And, once the hyperlink is accessed, “[g]etting to the disclosure on the click-through should be easy” and “take consumers directly to the disclosure,” which “should be easy to understand.” Id. The .com Guidelines further advises that “disclosures are more likely to be effective if they are provided in the context of the ad, when the consumer is considering the purchase.” Id. at 14. It further advises “[w]here advertising and selling are combined on a website or mobile application…disclosures should be provided before the consumer makes the decision to buy, e.g., before clicking an ‘order now’ button or a link that says ‘add to shopping cart.’” Id. Finally, the .com Guidelines notes that “[i]t may be necessary to disclose information more than once” since “[r]epeating a disclosure makes it more likely that a consumer will notice and understand it, and will also increase the likelihood that it will be seen by consumers who may be entering the website at different points.” Id. at 19. While the .com Guidelines may not constitute a rule or regulation, DIRECTV’s on-line presentation of these disclosures is consistent with FTC staff guidance set forth in the .com Guidelines. DIRECTV’s hyperlinked disclosures are positioned strategically for maximum impact. In the 2013 web flow, disclosures were made (1) in the Additional Offer Details hyperlink in the Package Selection Page, (2) in the Cart page immediately adjacent and tied directly to the premium MOTION FOR PARTIAL SUMMARY JUDGMENT 19 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 25 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 movie channel offer, where the consumer is most focused on the details of his or her selection before completing the purchase, and (3) in the View Monthly Cost hyperlink in the Cart page. (Leever Decl., ¶¶6-10). More recently, disclosures are immediately adjacent and tied directly to the premium movie channel offers in (1) the Package Selection page, (2) the Add more great programming page, (3) the Cart page, and (4) the View Monthly Cost page. (Id., ¶¶15-16, 18, 20, 22). In addition, in the 2013 web flow, the contrasting green and blue lettering and the blue “[?]” icon highlighted for the consumer that additional important information was to be found by accessing those tactically placed hyperlinks. (Id., ¶¶ 7-10; Ex. A, pp. 4, , 46, 58, 77). The current web flow also use similar graphics that prompt the consumer to click a hyperlinked icon of an “i” encircled in blue. (Id., ¶¶ 16, 18, 20-24; Ex. B, pp. 4, 6, 18, 30-31, 37). Moreover, regardless which particular graphic DIRECTV historically has used to signal a hyperlink, the hyperlink icon remains consistent throughout each web flow, indicating to the consumer that additional information is to be found by accessing the hyperlinks. Once the consumer clicks the icon, he or she is taken directly to the disclosure, which appears inside a prominent box with a white background and black lettering. (See e.g. id., Ex. B, p. 57). Further, the information contained on the webpage, combined with the click-through disclosures, details for the consumer in readily understandable language what the free premium movie channel offer entails, including the current cost of the premium channels, the savings, the limited time of the promotional period, and that the consumer must call to cancel to avoid additional charges. Finally, DIRECTV ensures that disclosures are repeated on every page of the web flow by including them in the Additional Details and Terms and Conditions hyperlinks, thus making it more likely the consumer will notice and understand the disclosure. (Id., ¶¶ 14, 24). These facts are indisputable and the FTC has no produced no facts to the contrary. The FTC refused to answer during its deposition whether DIRECTV’s online disclosures complied with the.Com Guidelines. (Hummel Decl., Ex. G, 137:3 – 138:9). The FTC also refused to answer whether it had performed any studies, analyses, or surveys that would demonstrate if a different presentation of DIRECTV’s disclosures would render it more likely that a consumer would see or MOTION FOR PARTIAL SUMMARY JUDGMENT 20 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 26 of 30 view the disclosure of material terms, thus confirming the FTC’s lack of evidentiary support for its allegations. (Id., Ex. G, 154:21 – 156:4; 161:18 – 163:22). It is not until all these disclosures are made that the consumer then is asked to submit his or her financial information to DIRECTV (and as described below, affirmatively consent to the negative option feature prior to DIRECTV charging the consumer). (Leever Decl., ¶¶11, 25, 26-30). Therefore, not only does DIRECTV comply with the FTC’s .com Guidelines by providing clear and conspicuous disclosures in accordance with those guidelines, but it also discloses all material terms of the negative option feature in compliance with ROSCA. 2. A Transactional Webpage Is Not Deceptive If It Discloses All of the Material Terms and Requires the Consumer to Take Affirmative Steps to Accept the Offer As noted above, case law on the application of ROSCA is scant. However, a number of district courts have looked at the question of consumer deception as it relates to online disclosures and have held that when the material terms of an online sales transaction are disclosed on the webpage where consumers are required to take affirmative steps to accept an offer, a plaintiff cannot state a claim based on deception. The seminal case on this issue is In re Vistaprint Corp. Mktg. & Sales Practices Litig., 2009 WL 2884727 (S.D. Tex. Aug. 31, 2009) (Atlas, J.), aff’d Bott v. Vistaprint USA Inc., 392 F. App’x 327 (5th Cir. 2010) (“Vistaprint”). In Vistaprint, the plaintiffs claimed they were “tricked into enrolling in membership programs” that resulted in “unauthorized charges to their debit or credit cards for monthly fees.” 2009 WL 2884727, at 1. Specifically, after completing an online purchase of business cards, consumers were directed to a webpage that offered a $10 rebate on the purchase. Id. at 4-5. A boxed area on that webpage provided space for consumers to enter their email address, to answer three “survey” questions (in some versions of the webpage), and to click on a “Yes” button. Id. at 5-6. “Offer Details” located next to the boxed area disclosed that clicking “Yes” would enroll consumers in the “VistaPrint Rewards” program, which, after a 30-day free trial membership, would cost $14.95 per month and would be charged to the credit or debit card they had used for their original purchase. Id. The Offer Details stated in relevant part: MOTION FOR PARTIAL SUMMARY JUDGMENT 21 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 27 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Simply click “Yes” to activate your trial membership and take advantage of the great savings that VistaPrint Rewards has to offer plus claim your $10.00 Cash Back. The membership fee of $14.95 per month will be charged by VistaPrint Rewards to the credit card you used today with VistaPrint after the 30-day FREE trial and then automatically charged/debited each month at the then-current monthly membership fee so long as you remain a member. Of course, you can call toll-free at 1-888-243-6158 and speak to a VistaPrint Rewards member representative within the first 30 days to cancel – you will have paid nothing and owe nothing. Id. at 6. Consumers enrolled in the program and incurred monthly charges simply by entering their email address and clicking the “Yes” button. The district court dismissed the complaint, holding that “Plaintiffs’ allegation regarding the deceptive nature of the webpages at issue is clearly and unequivocally refuted by the website pages themselves,” whose language is “clear and easily understandable by anyone capable of making an online purchase of business cards.” Id. at 4-6; see also id. at 8 (“review of the webpages on which Plaintiffs base their claims convinces the Court without reservation that, as a matter of law, the webpages are not deceptive”) (emphasis added). Given the plain language of the disclosures and their proximity to the “Yes” button, the court held that a “consumer cannot decline to read clear and easily understandable terms that are provided on the same webpage in close proximity to the location where the consumer indicates his agreement to those terms and then claim that the webpage, which the consumer has failed to read, is deceptive.” Id. at 6; see also id. at 7 (claim of deception refuted because consumers had to take affirmative steps to accept offer).8 Similarly, in Baxter v. Intelius, Inc., 2010 WL 3791487 (C.D. Cal. Sept. 16, 2010), the plaintiffs alleged that they had been “enrolled…in a negative option monthly membership program without their knowledge or permission.” Id. at 1. The enrollment process in Baxter was similar to that at issue in Vistaprint: (i) consumers were given the option to enroll in a membership program after completing the purchase of a product; (ii) the enrollment page required consumers to enter their email address twice and click a button in order to enroll; (iii) offer details were disclosed adjacent to the email entry box; and (iv) the offer details explained that the cost of the membership would be 8 district court.” Bott, 392 F. App’x at 328. The Fifth Circuit affirmed the “well-reasoned, detailed” decision “essentially for the reasons stated by the MOTION FOR PARTIAL SUMMARY JUDGMENT 22 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 28 of 30 automatically charged to the consumer’s credit card. Id. at 4. In dismissing the complaint with prejudice, Judge Guilford, citing Vistaprint, reasoned that the “website was not deceptive as a matter of law” (id. at 4) because it required consumers “to take affirmative steps to accept and provide[d] complete information about the results of those steps.” Id. at 5. The court also noted that because “the full disclosure and ‘true facts’ were located right next to the button” the plaintiff clicked to enroll (id. at 6), her “failure to read the information provided does not constitute a fraudulent business practice.” Id. at 1. Other courts have adopted the reasoning in Vistaprint to reject similar claims. In Berry v. Webloyalty.com, Inc., 2011 WL 1375665 (S.D. Cal. 2011), vacated on other grounds, 517 Fed. Appx. 581 (9th Cir. 2013), for example, the court dismissed misrepresentation claims regarding an online membership program because the defendant’s disclosures about the program were located next to where consumers indicated their acceptance of the offer by entering their email address and clicking on a “YES” button. 2011 WL 1375665 at 4; id. at 5 (plaintiff “took three affirmative steps to accept the terms of the club membership—he entered his email twice and clicked the ‘YES’ button”). The court also found the plaintiff’s unfair competition and false advertising claims to be baseless in light of the multiple times the disclosures were made on the website. Id. at 6; see also Hager v. Vertrue, 2011 WL 4501046, 6 (D. Mass. 2011) (granting summary judgment because the “clear language on each landing page advising consumers before they enter their email addresses [twice] and click ‘Yes’” was “sufficient to place reasonable consumers on notice…they were entering into new membership programs”) (emphasis in original). This self-evident proposition—that clearly displayed disclosures preclude a claim based on deception—has been upheld in a variety of contexts. See, e.g., Freeman v. Time, Inc., 68 F.3d 285, 289-90 (9th Cir. 1995) (upholding dismissal of UCL and CLRA claims challenging mailer that suggested plaintiff had won sweepstakes, where no reasonable consumer could be deceived by the advertisement); Hook v. Intelius, Inc., 2011 WL 1196305, at 8 (M.D. Ga. Mar. 28, 2011) (no EFTA claim where plaintiff was informed before entering payment information and clicking on button that he was signing up for service); Riensche v. Cingular Wireless, LLC, 2006 WL 3827477, at 2 (W.D. Wash. Dec. 27, 2006) (“Mr. Riensche is incorrect that his decision not to read the Terms absolves MOTION FOR PARTIAL SUMMARY JUDGMENT 23 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 29 of 30 him from any obligation to be bound by those Terms.”); Burcham v. Expedia, Inc., 2009 WL 586513, at 2, 4 (E.D. Mo. Mar. 6, 2009) (“A customer on notice of contract terms available on the internet is bound by those terms… That [plaintiff] either didn’t read the agreement or didn’t see it may be unfortunate for him, but it does not change the outcome.”). As a matter of law, DIRECTV’s premium channel package is not deceptive and fully complies with ROSCA’s requirement that DIRECTV obtain a consumer’s direct informed consent prior to charging the consumer for products or services. 15 U.S.C. §8403 (2). As described above, DIRECTV abundantly discloses the material terms of the premium movie channel offered— including the current cost of the premium channels, the savings, the limited time of the promotional period, and that the consumer must call to avoid additional charges—all before the consumer enters his or her personal contact and billing information. (Leever Decl., ¶¶ 4-11, 14-25). Only after all these disclosures are made is the consumer able to take the affirmative step of consenting to the Terms and Conditions (including the negative option feature). (Id., ¶¶25-30). It is not until after the consumer consents to the Terms and Conditions and then clicks the “Place My Order” button that DIRECTV then receives the customer’s financial information for the services selected. (Id., ¶¶ 28- 30). Thus, contrary to Ms. O’Brien’s testimony that “I think given the whole purchase flow, the Commission is alleging in its complaint that consumers didn’t have informed consent,” (Hummel Decl., Ex. G, 149:20-22), the undisputed facts establish that consumers provide their express informed consent. This case is thus substantially similar to Vistaprint and the other cases cited above. Here, DIRECTV discloses all material terms of the premium movie channels offer in language “clear and easily understandable by anyone capable of making an online purchase” of satellite subscription services. Vistaprint, supra, 2009 WL 288427 at 6. These disclosures, repeated at several locations throughout the web flow, are “sufficient to place the consumer on notice of the conditions and details” of the offer. Berry, supra, 2011 WL 1375665 at 6. Moreover, in the current version of the website, the disclosures are again repeated in the interstitial “Terms and Conditions” pages which are available on each page of the web flow, including the Checkout page right next to where the consumer must take the affirmative step of clicking the “Place My Order” button to accept the offer. MOTION FOR PARTIAL SUMMARY JUDGMENT 24 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 53 Filed 10/13/15 Page 30 of 30 (Leever Decl., ¶24). “Given the plain language of the disclosures and their proximity to the [acceptance] button,” (Vistaprint, supra, 2009 WL 288427 at 6), consumers’ express informed consent is unmistakable and cannot be disputed. Finally, the confirmation email consumers receive prior to being charged—which again discloses the terms of the premium movie channels offer, including the need to call to cancel (Leever Decl., ¶ 31)—provides yet additional assurance that the online subscription “experience as [a]whole [is] adequate to put a reasonable consumer on notice” of the material terms. Hager, supra, 2011 WL 4501046 at 7. In sum, it is undisputed that DIRECTV is in full compliance with ROSCA as it (1) discloses all material terms of the negative option feature prior to obtaining consumers’ financial information and (2) obtains consumers’ express informed consent before charging consumers’ financial accounts for the negative option feature. V. CONCLUSION For the foregoing reasons, DIRECTV respectfully requests that the Court grant this Motion for Partial Summary Judgment on the Third and Fourth counts in the Complaint. Dated: October 13, 2015 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC MOTION FOR PARTIAL SUMMARY JUDGMENT 25 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-10-15	54	ORDER by Judge Haywood S. Gilliam, Jr. Granting 39 Proposed Stipulated Protective Order Regarding Confidential Materials. (ndrS, COURT STAFF) (Filed on 10/15/2015) (Entered: 10/15/2015)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 1 of 14 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS, LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG [PROPOSED] STIPULATED PROTECTIVE ORDER REGARDING CONFIDENTIAL MATERIALS Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. v. Having (i) met and conferred regarding the appropriate level of protection for confidential materials elicited or produced during the proceeding of this action, (ii) reviewed the [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 1 of 12 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 2 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PURPOSE AND LIMITATIONS: Disclosure and discovery activity in this action will Northern District of California’s Model Protective Order for Standard Litigation, adopting the Model Order’s provisions where appropriate and modifying them where necessary to accommodate the unique circumstances of this action, (iii) and worked diligently and cooperatively to resolve any differences between the parties and to arrive at a jointly-stipulated proposal, the parties hereby submit the following Proposed Stipulated Protective Order Regarding Confidential Materials. 1. involve the production of confidential, proprietary, or private information for which special protection from public disclosure and from use for any purpose other than prosecuting this litigation is warranted. Accordingly, Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (“Defendants”) hereby stipulate to and petition the Court to enter this Stipulated Protective Order Regarding “Confidential” Materials (the “Order”), as defined herein. The Parties acknowledge that this Order does not confer blanket protections on all disclosures or responses to discovery and that the protection it affords from public disclosure and use extends only to the information or items that are entitled to confidential treatment under applicable legal principles. The Parties further acknowledge that this Order does not automatically entitle them to file confidential information under seal; Civil Local Rule 79-5 sets forth the procedures that must be followed and the standards that will be applied when a Party seeks permission from the Court to file under seal. 2. DEFINITIONS: As used in this Order: a. “Materials” shall refer to any document, writing, recording, transcript of oral testimony, recorded or graphic matter, tangible object, and electronically stored information, or to any portion of the foregoing. Any Materials disclosed, provided, produced, or filed in this proceeding by any Person, whether a Party or Non-Party, that contain (1) Sensitive Personal Information as defined in paragraph 3, or (2) trade secrets or other competitively sensitive information (such as confidential research, development, technical, commercial, or financial information) not otherwise publicly accessible or available, as well as any [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 2 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 3 of 14 b. c. d. e. information that discloses the substance of the contents of such Materials, may be designated as Confidential by any Party or by the Non-Party that discloses, produces, provides, or files the Materials. “Non-Party” shall refer to any Person who is not a Party. “Party” shall refer to any party to this action, including all of its officers, directors, employees, and contractors. “Person” shall refer to any natural person, partnership, corporation, association, or governmental or other legal entity, including, but not limited to, each Party and any Non-Party. “Sensitive Personal Information” shall include a Person’s Social Security number, taxpayer identification number, date of birth (other than year), home address, driver’s license number or other state identification number (or a foreign country equivalent), passport number, personal financial information, such as bank account, credit card, or debit card number(s), and medical records or other information relating to the Person’s treatment of physical or mental health or condition or to the provision of or payment for health care to the Person. CONFIDENTIAL MATERIALS: Consistent with Fed. R. Civ. P. 26(c), any Materials 3. disclosed, provided, produced, or filed in this proceeding by any Party or Non-Party that contain (1) Sensitive Personal Information, or (2) trade secrets or other competitively sensitive information (such as confidential research, development, technical, commercial, or financial information) not otherwise publicly accessible or available, as well as any information that discloses the substance of the contents of such Materials, may be designated as Confidential by any Party or by the Non-Party that discloses, produces, provides, or files the Materials. The designating Party or Non-Party may designate as Confidential only those portions of Materials that qualify for Confidential treatment under this Order. A designation that Materials are Confidential shall constitute a representation by the designating Party or Non-Party, in good faith and after careful determination, that the designated Materials, or portion thereof, are eligible for such designation pursuant this Order. Such designated Materials, as well as any [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 3 of 12 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 4 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Sensitive Personal Information shall be afforded all the protections of this Order information that discloses the substance or contents of such Materials, shall be treated as Confidential pursuant to and to the extent permitted by this Order. 4. afforded to other Confidential Materials, and also shall be secured by any receiving Party or Non-Party in such a manner as to minimize the possibility of disclosure, intentional or unintentional, to unauthorized Persons, including the physical storage thereof in a secure area or law office, the electronic storage thereof on a password-protected computer or system which may be accessed only by Persons authorized to have access to the Sensitive Personal Information pursuant to the terms of this Order, and the transmission thereof only to other authorized Persons by a trackable method with restricted delivery to such Persons. 5. Any Party or Non-Party who, as part of this proceeding, discloses, provides, or produces to any other Party, or files with the Court, materials that are Confidential under this Order shall designate such Materials as Confidential at the time of the disclosure, provision, production, or filing. Materials shall be designated as Confidential by placing on or affixing to the document or other medium containing Confidential Material (in such manner as will not interfere with the legibility thereof), or, if an entire folder or box of documents is confidential, by placing or affixing to that folder or box, the designation “CONFIDENTIAL – FTC v. DIRECTV., Case No. 15-cv-01129-HSG,” or any other appropriate notice that identifies this proceeding, together with an indication of the portion or portions of the document considered to be Confidential Material. Confidential Materials contained in electronic documents may also be designated as confidential by placing the designation “CONFIDENTIAL – FTC v. DIRECTV, Case No. 15- cv-01129-HSG,” or any other appropriate notice that identifies this proceeding, on the face of the CD or DVD or other medium on which the document is produced. Masked or otherwise redacted copies of Materials may be produced where the portions masked or redacted contain privileged matter, provided that the copy produced shall indicate at the appropriate point that portions have been masked or redacted and the reasons therefor. 6. the deponent’s counsel) fails to designate as Confidential appropriate portions of the deponent’s Notwithstanding paragraph 5, if during a deposition in this proceeding, a deponent (or [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 4 of 12 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 5 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Notwithstanding paragraph 5, any Party, within thirty days of receiving Confidential With respect to all Materials provided for inspection by a Party or its counsel, all deposition testimony on the record during the course of or at the close of the deposition, the deponent (or the deponent’s counsel) may, no later than ten days after the deposition transcript becomes available to the deponent, designate as Confidential those portions of the transcript that contain Confidential Materials. The Confidential designation may be accomplished by marking “CONFIDENTIAL” every page of the transcript that contains Confidential Materials, notifying all Parties of the transcript page and line numbers of the pages deemed to be Confidential, and marking the first and last such pages of such ranges as “CONFIDENTIAL – START” and “CONFIDENTIAL – END,” respectively. Until the earlier of the expiration of this ten-day period or the Confidential designation, the entire deposition transcript shall be treated as Confidential. 7. Materials from a Non-Party as part of this proceeding, may designate such Materials as Confidential. Until the earlier of the expiration of this thirty-day period or the Confidential designation, such Materials shall be treated as Confidential. 8. Confidential Materials shall be stamped “CONFIDENTIAL – FTC v. DIRECTV., Case No. 15- cv-01129-HSG” by the Party or Non-Party desiring such designation, or otherwise designated by such Party or Non-Party in writing, within thirty days of production. Until the end of such thirty-day period, the document production will be deemed to be designated Confidential in its entirety under the terms of this Order. A designation of Confidential by stamping or labeling need not be made until after counsel for the inspecting party has inspected the Materials and selected Materials to be copied. Making Materials available for inspection shall not constitute a waiver of any claim to designate such Materials as Confidential, and all Materials provided for inspection by a Party’s or Non-Party’s counsel shall be treated as though designated Confidential at the time of inspection. 9. the FTC, as part of Federal Trade Commission Matter Number 1023141, Materials entitled to confidentiality under the Federal Trade Commission Act, or any other federal statute or Any Party or Non-Party who previously disclosed, provided, or produced to or filed with [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 5 of 12 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 6 of 14 regulation, or under any federal court or FTC precedent interpreting such statute or regulation, may, within ninety days of entry of this Order, designate any such Materials as Confidential to the extent permitted by this Order. This designation may be accomplished by notifying all Parties of the Bates ranges (or other identifying information) of such Materials that are to be designated Confidential. Until the earlier of the expiration of this ninety-day period or the Confidential designation, such Materials shall be treated as Confidential. 10. the contents of Confidential Material (including through any writing or communication reproducing, paraphrasing, or otherwise disclosing the content of Confidential Materials) shall be limited to the following Persons: The disclosure of Confidential Materials or information that discloses the substance of a. b. c. d. e. The Court presiding over this proceeding and related officials involved in this proceeding or any other related proceeding (such as appellate review of this proceeding) in which the Confidential Materials are used, including judges, magistrates, commissioners, referees, jurors, court reporters and Persons preparing transcripts of testimony, and other personnel of the Court. The FTC, including its Commissioners, counsel, staff, employees, and agents (including consultants not covered under Subparagraph 10(e) below), as well as contractors assisting the FTC in the preparation or hearing of this proceeding under the direction and control of the FTC, its Commissioners, counsel, staff, employees, or agents. Defendants’ outside counsel of record in this proceeding, as well as their associated attorneys and other employees or contractors assisting such counsel in the preparation or hearing of this proceeding under the direction and control of such counsel; provided, however, that no such Person shall be an officer, director, or employee of any Defendant. The following three individuals, who are in-house legal counsel at DIRECTV: Robin Rogers, Christopher Murphy, and Ted Suzuki. Any independent experts or consultants retained or consulted by the parties in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 6 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 7 of 14 this proceeding, including the employees of such experts or consultants who are assigned to assist such experts or consultants, in connection with services in the preparation or hearing of this proceeding. Any Person who, based on a good faith and objectively reasonable belief or understanding of counsel of record for the disclosing party, created, sent, received or reviewed the Confidential Materials, or who has had access to the Confidential Materials independent of this proceeding. Any trial or deposition witness and the witness’s counsel, if the Confidential Materials are, based on a good faith and objectively reasonable belief or understanding of counsel of record for the disclosing party, reasonably related to the witness’s testimony. Any Person designated by the Court in the interest of justice, upon such terms as the Court deems proper. f. g. h. 11. Prior to disclosing Confidential Materials to any Person on the basis of subparagraph 10(d), 10(e), 10(f), or 10(g), the disclosing Party shall provide to such Person a copy of this Order and obtain from such Person a signed statement in the form attached hereto as Exhibit A. Such signed statement shall be retained by counsel for the disclosing Party and need not be filed with the Court or served upon opposing counsel, unless requested for good cause or ordered by the Court. A Person’s refusal or practical inability to sign this statement, after the disclosing Party’s good faith effort to secure signature, shall not restrict the disclosing Party (or its counsel) from disclosing the materials to the Person during trial, deposition, or other discovery or pretrial proceeding; provided, however, that the disclosing Party (or its counsel) shall serve on or provide to the Person a copy of this Order before the disclosure, and, in the case of the Person’s refusal, makes a record of the Person’s refusal to sign, or, in the case of impracticability, makes a good faith attempt to obtain the Person’s signature after the disclosure. 12. Disclosure of Confidential Materials, or information that discloses the substance of the contents of Confidential Materials, to any Person described in Paragraph 10 of this Order shall [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 7 of 12 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 8 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 be only for the purposes of the preparation and hearing of this proceeding, or any appeal therefrom, and for no other purpose whatsoever. Any such receiving Person to whom Confidential Materials are disclosed in this proceeding shall: (a) read this Order; (b) use such Confidential Materials, or information that discloses the substance of the contents of Confidential Materials, only for purposes permitted by this Order; and (c) not disclose or divulge the content of Confidential Materials, or information that discloses the substance of the contents of Confidential Materials, other than as permitted by this Order. However, nothing contained in this Order shall be construed as imposing these or any other obligations on the Court or court personnel. 13. Nothing in this Order shall restrict the use of Confidential Materials outside of this litigation by any Person, or the disclosure of Confidential Materials to any Person (or that Person’s counsel), who: (a) originally disclosed, provided, or produced such Materials in this proceeding; (b) has had such Materials in its possession, custody, or control independent of this proceeding or Federal Trade Commission Matter Number 1023141; or (c) has discovered such materials independent of this proceeding or Federal Trade Commission Matter Number 1023141. 14. Confidential Materials by the FTC, subject to taking appropriate steps to preserve the confidentiality of such Materials: (1) as provided by the FTC’s Rules of Practice, 16 C.F.R. §0.1, et seq., and any cases construing them, or Sections 6(f) and 21 of the Federal Trade Commission Act and any cases construing them; or (2) pursuant to any other legal obligation imposed upon the FTC. To the extent required by applicable laws or regulations, the FTC shall provide prior notice of such use or disclosure to the designating Person. 15. Without written permission from the Party or Non-Party who designated the Materials Confidential or an order of the Court, a Party may not file in the public record in this action any Confidential Materials. Instead, a Party that seeks to file Confidential Material must comply with Civil Local Rule 79-5, including its provisions for filing Materials under seal. For Materials designated Confidential by a Non-Party, the Party seeking their filing shall provide to In addition to paragraph 13, nothing in this Order shall restrict the use or disclosure of [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 8 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 9 of 14 Nothing in this Order shall be construed to affect in any way the admissibility of any that designating Non-Party advance notice of at least three days (excluding Saturdays, Sundays, and legal holidays defined under Fed. R. Civ. P. 6) before filing an Administrative Motion to File Under Seal under Rule 79-5(d). If the designating Non-Party agrees in writing to withdraw its Confidential designation from the Materials at issue or to otherwise permit their filing in the public records, such Materials may be filed in the public record and shall no longer be treated as Confidential in this proceeding. 16. Materials, testimony, or any other evidence in this proceeding. This Order shall have no effect upon, and its scope shall not extend to, any Party’s use of its own discovery Materials in this proceeding. 17. Any Party or Non-Party who designates any Materials as Confidential pursuant to this Order may consent to the removal of such designation by so notifying counsel of record for the other Parties in writing, after which time such Materials shall no longer be treated as Confidential in this proceeding. Any Party or Non-Party that, acting in good faith, inadvertently or mistakenly designates Materials as Confidential may withdraw that designation so notifying counsel of record for the other parties in writing immediately after discovering the erroneous designation, after which time such Materials shall no longer be treated as Confidential in this proceeding. 18. removal of the designation as follows: Any Party may challenge a designation of any Materials as Confidential and request a. b. c. The Party seeking such removal shall give the Party or Non-Party who designated the Materials as Confidential written notice thereof specifying the Materials as to which such removal is sought and the reason for the request. If the Parties and/or Non-Party cannot reach agreement concerning the matter within fifteen days after such notice, then the Party requesting the removal of the designation as Confidential may file and serve a motion for an order of the Court directing that the designation be removed. For Confidential Materials other than Sensitive Personal Information, the Party [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 9 of 12 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 10 of 14 or Non-Party desiring to maintain their designation as Confidential shall have the burden of establishing grounds for such treatment. The burden of establishing that any Sensitive Personal Information should not be designated Confidential shall be upon the party seeking to remove the designation. If a Party or Non-Party through inadvertence discloses, produces, or provides any Neither the taking of any action in accordance with the provisions of this Order, nor the 19. failure to object thereto, shall be construed as a waiver of any claim or defense in this proceeding. Moreover, the failure to designate Materials as Confidential in accordance with this Order and the failure to object to such designation at a given time shall not preclude the filing of a motion at a later date seeking to impose such designation or challenging the propriety thereof. The entry of this Order shall neither be construed as a waiver of any Person’s right to object to the furnishing of Materials in response to discovery in this proceeding, nor relieve any Person of the obligation to produce Materials in the course of discovery in this proceeding. 20. Confidential Materials without designating them as Confidential as provided in this Order, that Party or Non-Party shall promptly give written notice to the receiving Person that the Materials are Confidential and should be treated as such in accordance with this Order. The receiving Person shall treat such Materials as Confidential from the date it receives such notice. Disclosure of such Materials prior to receipt of such notice to a Person not authorized to receive Confidential Materials shall not be deemed a violation of this Order; however, each Person to whom disclosure has been made is to be advised that the Materials disclosed are Confidential and must be treated in accordance with this Order. 21. In the case of any accidental or inadvertent disclosure of Confidential Materials or any other disclosure not in accordance with this Order, the Person responsible for the disclosure (or the Person’s counsel) shall promptly notify counsel for the Party or Non-Party who designated the Materials as Confidential, or any such Person who is not represented by counsel, of the disclosure, and shall make every effort to prevent further disclosure, including attempting to retrieve all copies of the Confidential Materials from the recipients thereof, and attempting to secure the agreement of the recipients not to further disseminate the Confidential Materials in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 10 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 11 of 14 At the time that any consultant, expert, or other Person retained to assist a Party’s any form. 22. counsel in this proceeding concludes his or her participation in this proceeding, such Person shall return to counsel of record for the retaining Party all copies of Confidential Materials, together with all notes, memoranda, or other papers reproducing, paraphrasing, or otherwise disclosing Confidential Materials, or certify as to their destruction. Furthermore, within thirty days after the completion of this proceeding, all Confidential Materials, including any writing or communication reproducing, paraphrasing, or otherwise disclosing such Confidential Materials, shall be collected by counsel for the receiving Party and either destroyed or returned to the Party or Non-Party who disclosed, produced, or provided the Materials; provided, however, that attorney work product, expert reports, deposition transcripts and other sworn statements, or pleadings reproducing, paraphrasing, or otherwise disclosing Confidential Materials may be retained in counsel’s files subject to this Order and providing that such Confidential Materials shall not be used for any purpose outside of those permitted by this Order. For purposes of this Order, this proceeding shall be considered completed when the entire proceeding has been resolved and any related orders have become final and non-appealable. 23. to disclose such Materials, except as permitted in this Order. This duty shall continue in full force and effect after the completion of this proceeding. However, nothing contained in this Order is intended to be construed as authorizing a Person to disobey a lawful court order or subpoena issued in another proceeding. 24. shall provide to each such Non-Party a copy of this Order so as to inform the Non-Party of the Non-Party’s rights and obligations under this Order. 25. additional protections for the use of Confidential Materials at trial. 26. In the event that any additional Person becomes a Party to this proceeding, that Person, upon proper notice, shall be bound by this Order unless and until a different Protective Order is All Persons who receive Confidential Materials shall remain under a continuing duty not The Parties, in conducting discovery from any Non-Party as part of this proceeding, The Parties reserve their rights to seek, through stipulated agreement or otherwise, [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 11 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 12 of 14 entered with respect to that Person. SO STIPULATED Dated: June 23, 2015 Dated: June 23, 2015 IT IS SO ORDERED /s/ Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission Pursuant to Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtain from the other signatory. /s/ Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC _________________________________________ Haywood S. Gilliam, Jr. United States District Judge Northern District of California [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG Page 12 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 13 of 14 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission CHAD S. HUMMEL (Bar No. CA 139055) E-mail: [email protected] CLAYTON S. FRIEDMAN (Bar No. CA 245513) E-mail: [email protected] MICHAEL YAGHI (Bar No. CA 202720) E-mail: [email protected] MANATT PHELPS & PHILLIPS, LLP 11355 West Olympic Boulevard Los Angeles, CA 90064-1614 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 CHRISTIAN E. BAKER (Bar No. CA 247006) E-mail: [email protected] MANATT, PHELPS & PHILLIPS, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION By undersigning, I acknowledge that have received and read the Protective Order entered by the Court in the above-captioned case on _________________ [date] and I agree to be bound ACKNOWLEDGMENT OF [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG 1 Case No. 15-cv-01129-HSG ACKNOWLEDGMENT OF [PROPOSED] STIPULATED PROTECTIVE ORDER REGARDING CONFIDENTIAL MATERIALS v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Case 3:15-cv-01129-HSG Document 54 Filed 10/15/15 Page 14 of 14 by the terms of that Protective Order. As a condition to my receipt or review of any Materials designated Confidential pursuant to that Protective Order, I hereby agree that the Protective Order shall be deemed to be directed to and shall include me, and that I shall observe and comply with all of its provisions. I further understand and agree that I am not permitted to use, and I shall not use, Confidential Materials for any purpose other than those permitted under the Protective Order. Date: _________________ Signature: _______________________ Printed Name: ____________________ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ACKNOWLEDGMENT OF [PROPOSED] STIPULATED PROTECTIVE ORDER - 15-CV-01129-HSG 2
2015-10-15	55	ORDER by Judge Haywood S. Gilliam, Jr. Granting 52 Stipulation Re: Discovery of Electronically Stored Information. (ndrS, COURT STAFF) (Filed on 10/15/2015) (Entered: 10/15/2015)	Case 3:15-cv-01129-HSG Document 55 Filed 10/15/15 Page 1 of 7 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel (Bar No. CA 139055) Clayton S. Friedman (Bar No. CA 245513) Mark D. Campbell (Bar No. CA 180528) Michael Yaghi (Bar No. CA 202720) [email protected], [email protected]; [email protected]; [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock (Bar No. CA 251781) SIDLEY AUSTIN LLP 555 California Street San Francisco, CA 94104 Telephone: (415) 772-1200 Facsimile: (415) 772-7400 [email protected] Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG STIPULATED ORDER RE: DISCOVERY OF ELECTRONICALLY STORED INFORMATION Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. v. 1. PURPOSE [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 1 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 55 Filed 10/15/15 Page 2 of 7 This Order will govern discovery of electronically stored information (“ESI”) in this case COOPERATION The parties are aware of the importance the Court places on cooperation, and commit to as a supplement to the Federal Rules of Civil Procedure, this Court’s Guidelines for the Discovery of Electronically Stored Information, and any other applicable orders and rules. 2. cooperate in good faith throughout the matter consistent with this Court’s Guidelines for the Discovery of ESI. LIAISON 3. The parties have identified liaisons to each other who are and will be knowledgeable about and responsible for discussing their respective ESI. Each e-discovery liaison will be, or have access to those who are, knowledgeable about the technical aspects of e-discovery, including the location, nature, accessibility, format, collection, search methodologies, and production of ESI in this matter. The parties will rely on the liaisons, as needed, to confer about ESI and to help resolve disputes without court intervention. 4. preservation of potentially relevant ESI will be reasonable and proportionate. To reduce the costs and burdens of preservation and to ensure that proper ESI is preserved, the parties agree that: PRESERVATION The parties have discussed their preservation obligations and needs, and agree that a. Only ESI created or received after January 1, 2007 will be preserved. b. The parties have committed to exchanging a list of the types of ESI they believe should be preserved and the criteria for organizational departments, custodians or descriptions of custodians, or general job titles, for which they believe ESI should be preserved. In the context of responding to the Federal Trade Commission’s (“FTC”) Civil Investigative Demands (“CIDs”) in connection with the FTC’s investigation leading to this action, Defendants (collectively, “DIRECTV”) have already preserved and produced to the FTC certain ESI that was in their possession, custody, or control. c. In addition to the agreements referenced in Paragraph 6 of the Initial Joint Case [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 2 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 55 Filed 10/15/15 Page 3 of 7 Management Statement (Dkt. 33), the parties agree generally not to require the preservation or production of the following categories of materials, absent a showing of good cause by the requesting party: i. Random access memory (RAM), temporary files, or other ephemeral data that are difficult to preserve without disabling the operating system; and ii. Back-up data that are duplicative of data that are more accessible elsewhere. The parties agree that they may subsequently identify additional types of ESI that need not be preserved, logged, or produced. d. Recognizing that the obligation to preserve materials is not necessarily identical to and coextensive with the obligation to produce materials in discovery, the parties agree that any agreement or commitment to preserve materials by any party does not constitute that party’s admission that such materials are properly discoverable or will be produced in discovery. PRODUCTION FORMATS Except as noted below, the parties agree to produce documents in native format whenever SEARCH 5. The parties agree that after responding in writing to requests to produce pursuant to Fed. R. Civ. P. 34, they will meet and confer about methods to search ESI in order to identify ESI that is subject to production in discovery and filter out ESI that is not subject to discovery. The parties may agree to use search terms where appropriate. 6. possible, in near-native format when native is not possible, and, if neither format is technologically feasible, TIFF files with metadata and extracted text. these formats is technologically feasible, as TIFF files with metadata and extracted text. For webpage ESI, the parties agree to produce in existing native format, or that is not technologically feasible, in a near-native format that would sufficiently permit a full and fair examination of ESI. For multimedia ESI, the parties agree to produce in .mp3 or .mp4 formats, or not technologically For email ESI, the parties agree to produce in MSG, EML, or PST formats, or if none of [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 3 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 55 Filed 10/15/15 Page 4 of 7 If particular documents warrant a different format, the parties will cooperate to arrange The parties agree not to use email threading software as part of production. The parties agree to strip password protection from ESI materials produced whenever feasible, in existing native format. For materials available only in “hard” format—e.g., on paper—the parties agree to produce in a PDF format, with searchable text embedded in the PDF, or if not technologically feasible, as singe-page TIFF files with metadata and extracted, searchable text. For ESI available only in a format accessible through proprietary software not available to the general public, the parties agree to confer about production. for the mutually acceptable production of such documents. The parties agree to permit de-duplication of identical files only in accordance with the FTC’s Production Guide (exchanged between the parties). Specifically, the parties agree to de- duplicate only if within a unique custodian search, and only by using hash value (MD5 or SHA- 1). possible. If not possible, the producing party shall provide a reference sheet with clearly identified passwords for password-protected materials. production process. Commission, Bureau of Consumer Protection Production Requirements, attached hereto as Exhibit A, including, but not limited to, for the procedures governing the production of Metadata in ESI. DIRECTV need not re-produce to the FTC in discovery documents that DIRECTV has already produced to the FTC as part of its responses to the FTC’s CIDs. However, to the extent that any such previously produced documents are responsive to the FTC’s requests in discovery, in lieu of re-production DIRECTV shall specify which of its previously produced documents are responsive. 7. PHASING When a party propounds discovery requests pursuant to Fed. R. Civ. P. 34, the parties The parties agree not to degrade the searchability of documents as part of the document Subject to and consistent with this Order, the parties agree to adhere to the Federal Trade [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 4 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 55 Filed 10/15/15 Page 5 of 7 agree, if appropriate, to discuss phasing the production of ESI (e.g., phasing by ESI source or type). 8. DOCUMENTS PROTECTED FROM DISCOVERY a. Pursuant to Fed. R. Evid. 502(d), the production of a privileged or work-product- protected document, whether inadvertent or otherwise, is not a waiver of privilege or protection from discovery in this case or in any other federal or state proceeding. For example, the mere production of privileged or work-product- protected documents in this case is not itself a waiver in this case or in any other federal or state proceeding. Nothing in this Order shall be interpreted to limit the applicability of Fed. R. Evid. 502(d). b. The parties shall take reasonable steps to prevent the disclosure of privileged or work product material (together, “protected” material). In the event of such disclosure, the parties shall follow the procedures set forth in Fed. R. Civ. P. 26(b)(5)(B) and herein for materials produced in discovery in this action by both parties and nonparties. c. If a receiving party discovers material produced to it by a party or nonparty in this action that the receiving party reasonably believes to be protected material, the receiving party shall promptly notify the producing party in writing and segregate that material (or the protected portion) until it receives a response from the producing party or the passage of seven days, whichever is earlier. If, after such notice, the party that produced the material fails within seven days to state its position about the privileged or protected status of the material, the receiving party may deem all claims of privilege of protection for that material waived. d. If a producing party discovers that it has disclosed protected material to another party, it shall (1) notify the receiving party in writing within seven days after such discovery, and (2) take prompt reasonable steps to identify any other protected material that it also may have disclosed. If the producing party fails to notify the receiving party within seven days of its disclosure of the protected material and [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 5 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 55 Filed 10/15/15 Page 6 of 7 state its position about the privileged or protected status of the material, the receiving party may deem all claims of privilege of protection for that material waived. e. If the parties disagree about the applicability of any asserted privilege or other protection for material that the producing party contends is protected material and should not have been disclosed, the parties shall promptly meet and confer to resolve the issue. If the parties cannot resolve the issue, the party that produced the material shall have the obligation to raise that dispute to the Court and shall exercise reasonable diligence in doing so. f. Any party’s return, sequester, or destruction of any material pursuant to this Order or the procedures set forth in Fed. R. Civ. P. 26(b)(5)(B) does not waive any right to challenge the assertion of privilege or other protection for that material in any litigation. MODIFICATION This Stipulated Order may be modified by a Stipulated Order of the parties or by the 9. Court for good cause shown. IT IS SO STIPULATED, through Counsel of Record. Dated: October 7, 2015 /s/ Eric D. Edmondson _ Eric D. Edmondson Counsel for Plaintiff FEDERAL TRADE COMMISSION Pursuant to Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtained from the other signatory. Dated: October 7, 2015 /s/ Chad S. Hummel _ Chad S. Hummel Counsel for Defendants [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 6 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 55 Filed 10/15/15 Page 7 of 7 IT IS ORDERED that the forgoing Agreement is approved. Dated: October 15, 2015 _________________________________________ Haywood S. Gilliam, Jr. United States District Judge Northern District of California [PROPOSED] STIPULATED ORDER RE: DISCOVERY OF ESI - 15-CV-01129-HSG Page 7 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-10-19	56	Joint Discovery Letter Brief filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Proposed Order FTC's Proposed Order, # 4 Proposed Order DIRECTV's Proposed Order)(Hummel, Chad) (Filed on 10/19/2015) (Entered: 10/19/2015)	Case 3:15-cv-01129-HSG Document 56 Filed 10/19/15 Page 1 of 5 The Honorable Judge Haywood S. Gilliam United States District Court for the Northern District of California 450 Golden Gate Avenue San Francisco, CA 94102 Re: FTC v. DIRECTV (Case No. 15-cv-01129-HSG): DIRECTV Motion to Compel Dear Judge Gilliam: The parties have met and conferred regarding the following discovery dispute raised by DIRECTV.1 DIRECTV’s Position Even though the FTC has been fully aware of DIRECTV’s advertising since the company resolved virtually identical issues through a multi-state agreement in 2010, and waited nearly 5 years to institute this action which challenges a disclosure regime dictated by that agreement with which DIRECTV has complied, DIRECTV does not believe that the FTC did a reasonable investigation (if any) to support its allegations. The Complaint alleges generally that some of DIRECTV’s advertising disclosures relating to its introductory price and premium channel offers for new subscribers were inadequate and thus violate Section 5 of the FTC Act, but there is no evidence of any studies, consumer surveys, or other research that support that conclusion. DIRECTV contends that, absent such evidence, the FTC cannot meet it burden in this case for many reasons. The FTC claims, without support, that even the existence of such evidence is privileged and completely refuses to state whether it does exist. At a duly noticed Rule 30(b)(6) deposition on August 28, 2015, the FTC took the untenable position, repeated in its argument below, that the factual support for its allegations is contained entirely in the Complaint, and need not be supported by anything other than “its own independent judgment.”2 The FTC instructed its designee not to answer over 100 questions designed to elicit clearly discoverable information, including questions relating to which of tens of thousands of ads were allegedly deceptive, how they were deceptive, whether the FTC has any factual support (other than its own conclusions) for its contention that consumers have been deceived (for example, the existence of consumer research), its investigation of alleged consumer complaints, and the scope of alleged consumer harm or putative bases for monetary relief. Absent discovery of this basic information, DIRECTV cannot meet the allegations in the case, and the parties cannot determine the appropriate scope of discovery. Most importantly, if the FTC has any evidentiary consumer studies, surveys, or research regarding DIRECTV’s advertising, it must identify them and then justify any assertion of privilege. If no such evidence exists, it must so state under oath. Background On June 9, 2015, the FTC served initial disclosures that did not provide meaningful information about the FTC’s case, including any computation or method for determining the monetary relief it seeks as required by Rule 26(a)(1)(A)(iii). On August 28, 2015, DIRECTV deposed the FTC regarding Topics 3-5 1 The parties attach the subjects of the letter brief as Ex. A (30(b)(6) notice) and Ex. B (deposition transcript). DIRECTV agreed to defer topics 1 and 2. The FTC is now refusing to produce witnesses on those topics. 2 The FTC’s reliance below on Kraft, Inc. v. FTC, 970 F.2d 311, 319 (7th Cir. 1992) is entirely misplaced. That case involved a deferential review of FTC administrative findings, not the FTC’s burden in a civil proceeding in a federal district court. See, e.g., U.S. v. Bayer, No. 07-01, 2015 WL 5822595 (D.N.J. Sept. 24, 2015) (not for publication) (finding that government presented no evidence that Bayer made implied claims because it “offered no consumer survey data, no consumer testimony, no expert opinion on consumer understanding of the [] ads, no marketing data, and no copy tests of any [] advertisement.”) More to the point, regardless of whether the FTC needs survey evidence to support its claims, the existence of such evidence is certainly discoverable. 1 Case 3:15-cv-01129-HSG Document 56 Filed 10/19/15 Page 2 of 5 of DIRECTV’s Rule 30(b)(6) notice – including the factual support for its claims of consumer deception, consumer complaints, and relief sought. At the deposition, FTC counsel directed the witness to not answer questions about the following: • the FTC’s factual bases for asserting that DIRECTV’s ads have been deceptive, including the existence of any surveys or studies of these ads. The FTC took the insupportable position that “[t]he mere existence of the studies, or – or work done by or for the Commission, is privileged.” Ex. B at 56:18-22. If the FTC does not have such evidence, it must say so. • steps taken by the designee witness to educate herself regarding the noticed topics • the FTC’s investigation, if any, of alleged consumer complaints referenced in the Complaint, even though the witness said that she reviewed a summary of such complaints as part of her preparation. The FTC has refused to even identify the summary’s author. the monetary relief the FTC seeks. This objection covered basic questions about whether the witness even looked at any calculations of alleged consumer injury. • Argument I. DIRECTV is Entitled to the Facts Allegedly Supporting the FTC’s Allegations. DIRECTV is entitled to discover the facts surrounding the FTC’s investigation, including the existence of any surveys, studies or research. 2-15 Moore’s Fed. Prac. & Proc. § 15.03 (“a party may discover whether certain documents exist that were prepared in anticipation of litigation”). DIRECTV is entitled to know now whether the FTC possesses or has conducted any studies, surveys, or research regarding DIRECTV’s advertisements. The government’s privileges “do[] not preclude inquiry into the mere fact of an investigation” or its “scope.” RTC v. Dabney, 73 F.3d 262, 266 (10th Cir. 1995); see also Ressler v. United States, No. 11-03050, 2012 WL 3231002, at 3 (D. Colo. Aug. 6, 2012) (federal agency’s “fact gathering” activities proper subject of a 30(b)(6) deposition). None of the authority the FTC cites undermines this authority or supports the FTC’s position that it does not have to disclose whether any studies or surveys exist. If the evidence exists, and the FTC maintains that it is privileged, it must log the evidence so that the privilege, if any, can be evaluated. The blanket instructions not to answer were improper. II. DIRECTV is Entitled to Testimony Regarding the Designee’s Preparation. It was also improper for the FTC to block DIRECTV’s inquiries into steps the 30(b)(6) designee took to educate herself prior to the deposition. The deposing party has the right to interrogate a government designee witness regarding preparations. See EEOC v. Sterling Jewelers, Inc., No. 08-00706, 2010 WL 2803017, at 2 (W.D.N.Y. July 15, 2010) (disclosure of who was interviewed, what the deponent did to refresh recollection, and what facts agency considered did not reveal agency’s strategy.). III. DIRECTV Is Entitled to Testimony Regarding Consumer Complaints. The FTC’s Complaint references “tens of thousands” of purported consumer complaints about the relevant issues. (Compl. ¶ 15.)3 The witness acknowledged that she reviewed a summary of complaints to prepare for her deposition on that topic. Ex. B at 94:12-21; 99:19-25. The FTC has asserted that the summary is protected by the deliberative process privilege and the work product doctrine and that even “the name of [the staff member] who prepared the study” is protected. The FTC’s position is insupportable. The name of the summary’s author is not protected, given that such information would 3 The FTC has produced only a handful of complaints, and not advanced any legitimate reason for not producing all of the complaints immediately. 2 Case 3:15-cv-01129-HSG Document 56 Filed 10/19/15 Page 3 of 5 have to be included in any log. Viteri-Butler v. Univ. of Cal. Hastings, No. 12-2651, 2013 U.S. Dist. LEXIS 142430, at 20 (N.D. Cal. Sept. 30, 2013). Work product must be prepared in “anticipation of litigation or trial,” Fed. R. Civ. P. 26(b)(3)(A), and the FTC conceded that the summary “was not prepared in connection with [this litigation].” Ex. B at 95:7-8. The qualified deliberative process does not apply to “factual information, such as summaries of interviews and records.” Martins v. INS, 962 F. Supp. 2d 1106, 1124 (N.D. Cal. 2013). Finally, any work product or deliberative process protection was waived once the summary was reviewed by the witness to support her testimony. See Ex. B at 99:19-25 (witness stated that she reviewed the summary in order to provide testimony about it—“So that I was aware—so I could describe it to you today, in case you [] asked about it”); Fed. R. Evid. 612; Mattel, Inc. v. MGA Entm’t, No. 04-9049, 2012 WL 3705782, at 5 (C.D. Cal. Aug. 3, 2010). IV. DIRECTV Is Entitled to Information Regarding the Monetary Relief Sought. To date, the FTC has not complied with its obligations to disclose how it will ascertain or calculate any purported consumer injury flowing from the advertising at issue and has done nothing more than recite legal authority. DIRECTV is entitled, at the outset of the case, to disclosures describing the claims for monetary relief “in sufficient detail so as to enable … [DIRECTV] to understand the contours of its potential exposure and make informed decisions as to settlement and discovery.” City and County of San Francisco v. Tutor-Saliba Corp., 218 F.R.D. 219, 221 (N.D. Cal. 2003). The FTC’s disclosures merely identify categories of potential liability that might support monetary relief and broadly state that “[c]onsumer loss is calculated by ‘the amount of money paid by consumers, less any refunds made.’” That is not a sufficient disclosure, nor is it the law that should apply in this case. For example, the FTC’s disclosure fails to divulge how the FTC will account for any uninjured subscribers or calculate consumer injury. DIRECTV therefore has no practicable means to understand the contours of its potential exposure in this matter. THE FEDERAL TRADE COMMISSION’S POSITION On June 22, 2015, DIRECTV noticed the FTC’s deposition under Fed. R. Civ. P. 30(b)(6).4 Before the deposition, FTC counsel repeatedly informed DIRECTV, including in a detailed letter on July 7, that the testimony sought was largely privileged, and encouraged DIRECTV to take written discovery on the topics first. DIRECTV refused and insisted on proceeding with the deposition. The FTC complied, producing as the agency’s designated witness Kerry O’Brien, the Assistant Director for the FTC’s Western Region. Ms. O’Brien testified for four and a half hours. As expected, many of DIRECTV’s deposition questions sought privileged information that Ms. O’Brien could not reveal. Nonetheless, she answered the majority of DIRECTV’s questions responsively. 5 Unsatisfied, DIRECTV demands more testimony from the FTC on the same topics, and without objection based on privilege. DIRECTV has no valid basis for challenging the FTC’s privilege assertions. Its request should be denied. A. The FTC’s investigative techniques are protected from discovery. DIRECTV claims it seeks the facts supporting the FTC’s allegations. Those facts, however, are plainly set forth in the FTC’s Complaint, which details DIRECTV’s dissemination of advertisements that have failed to disclose adequately the material terms of DIRECTV’s service and how DIRECTV’s hidden disclosures failed to meet ROSCA’s stringent requirements. The Complaint also provides examples of such advertising as exhibits. Ms. O’Brien’s deposition testimony reaffirmed that “the [FTC’s] complaint lays out the factual basis for the complaint.”6 Thus, DIRECTV’s assertion above that “the parties cannot 4 See Exhibit A (deposition notice). DIRECTV expressly agreed to limit the deposition to three topics: 3, 4, and 5. 5 DIRECTV has extensively cited Ms. O’Brien’s deposition testimony in its recent summary judgment motion (Dkt. 53). 6 Exhibit B (deposition transcript) at 25:4-5. 3 Case 3:15-cv-01129-HSG Document 56 Filed 10/19/15 Page 4 of 5 determine the appropriate scope of discovery” absent a deep dive into the FTC’s investigative files is baseless. Indeed, DIRECTV has thus far had no difficulty in propounding ample discovery on the FTC. What DIRECTV actually seeks to compel here are not the facts underlying the FTC’s allegations, but information about the FTC’s pre-complaint investigation: whether and how the FTC analyzed consumer perception and consumer complaints as part of its investigation. DIRECTV’s acknowledges as much above, demanding that it “is entitled to discover the facts surrounding the FTC’s investigation” in order to sustain its belief that the FTC did not conduct a “reasonable investigation.” To that end, DIRECTV’s counsel repeatedly questioned Ms. O’Brien about the FTC’s investigative techniques.7 It is to this line of questioning that FTC counsel objected, and on which DIRECTV seeks further testimony now. This information, however, is privileged as attorney work product and deliberative process, and numerous courts have denied similar requests from civil defendants seeking to unveil federal law enforcement agencies’ investigative techniques, theories, and impressions under the guise of deposition queries into “facts.” See, e.g., SEC v. Jasper, 07-cv-06122, 2009 WL 1457755, at 3 (N.D. Cal. May 25, 2009); SEC v. Buntrock, 217 F.R.D. 441, 445-46 (N.D. Ill. 2003); FTC v. US Grant Resources LLC, 04-cv-596, 2004 WL 1444951, at 9-11 (E.D. La. June 25, 2004); SEC v. Rosenfeld, 97-cv-1467, 1997 WL 576021, at 3-4 (S.D.N.Y. Sept. 16, 1997). DIRECTV’s demand is all the more inappropriate because the FTC already produced a senior agency official for deposition to confirm the privileges under oath, after first warning DIRECTV upfront about the likely invocations of privilege. See FTC v. CyberSpy Software LLC, 08-cv-1872, 2009 WL 2386137, at 1, 3-4 (M.D. Fla. July 31, 2009) (refusing to sanction the FTC after its designee appropriately asserted similar privileges to similar queries by defense counsel). DIRECTV’s argument that the FTC must still “identify” its investigative techniques and learnings notwithstanding the applicable protections shielding them from discovery would effectively eviscerate those protections. See Wolfe v. Department of Health and Human Services, 839 F.2d 768, 771 n.3 (D.C. Cir. 1988) (rejecting a request to force an agency to index protected materials, as “the index itself would reveal significant aspects of deliberative process”); cf. Nat’l Ass’n of Chain Drug Stores v. U.S. Dep’t of Health & Human Servs., 631 F. Supp. 2d 23, 27 (D.D.C. 2009) (denying request for a privilege log describing agency’s deliberative documents not part of the official administrative record); Great Am. Ins. Co. v. United States, 12-C-9718, 2013 WL 4506929, at 9 (N.D. Ill. Aug. 23, 2013) (same). Finally, DIRECTV has no conceivable, let alone compelling, need to pierce these protections and rummage through the FTC’s investigative files purportedly in order to determine whether its own advertising is deceptive. DIRECTV’s advertising is deceptive on its face. The Commission, which voted unanimously to issue the Complaint, was empowered to make that determination based solely on its own independent judgment. See Kraft, Inc. v. FTC, 970 F.2d 311, 319 (7th Cir. 1992).8 Indeed, DIRECTV has consumer studies of its own, developed in the ordinary course of business, showing that its advertising was misleading to consumers. DIRECTV’s purported need for testimony about the privileged “summary of complaints” is similarly unjustified. DIRECTV has its own vast databases of customer complaints, and it has analyzed its complaints in the ordinary course of business. Finally, the FTC has already offered to produce all DIRECTV-related consumer complaints in its possession, even though DIRECTV still refuses 7 See, e.g., Ex. B at 33:22-25; 32:3-4; 102:14-19. 8 In Kraft, the Seventh Circuit explained that “[c]ourts, including the Supreme Court, have uniformly rejected imposing . . . a requirement” that the Commission rely on extrinsic evidence, such as consumer surveys, to determine whether claims were conveyed in challenged advertising, if those claims are “reasonably clear” from the face of the advertising. 970 F.2d at 319. Contrary to DIRECTV’s contention in footnote 2, supra, this precept extends to federal district courts deciding deception cases under the FTC Act. See FTC v. Nat’l Urological Group, Inc., 645 F. Supp. 2d 1167, 1189 (N.D. Ga. 2008). Thus, federal judges may rely “on a facial examination” of a website’s sign-up process as “sufficiently demonstrate[ing] that the website marketing . . . was misleading to a reasonable consumer.” FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1068 (C.D. Cal. 2012). 4 Case 3:15-cv-01129-HSG Document 56 Filed 10/19/15 Page 5 of 5 to produce a single consumer complaint in response to the FTC’s discovery (FTC’s RFP No. 12). In short, maintaining proper protections for the FTC’s investigative techniques will not prejudice DIRECTV’s defense of this action. Should the FTC decide to rely on any expert analysis of consumer perception or consumer complaints, DIRECTV will have ample and fair opportunity to examine that evidence at the appropriate time—during the expert discovery period ordered by the Court. B. DIRECTV is not entitled to discover privileged information under the guise of inquiring into the FTC designee’s preparation. DIRECTV’s demand to compel further testimony about Ms. O’Brien’s preparation is baseless. Contrary to DIRECTV’s assertion, Ms. O’Brien testified at length about what she did to prepare for the deposition, specifying the steps she took, identifying the FTC personnel with whom she spoke, and describing the materials she reviewed.9 The only thing Ms. O’Brien did not reveal about her preparation is privileged information. And that is precisely what DIRECTV seeks to compel now. Specifically, DIRECTV demands to further depose the FTC about its investigational analysis of consumer complaints—the so-called “summary of complaints”—which Ms. O’Brien reviewed in preparing for her deposition. FTC counsel, however, has explained to DIRECTV that this “summary” is a “confidential agency analysis . . . prepared by a staff economist in the FTC’s Bureau of Economics at the direction of FTC counsel.” It is pre-decisional work product, created for a law enforcement purpose, containing facts interwoven with FTC staff analysis and conclusions about investigational objectives. Therefore, attorney work product and deliberative process protections shield it from discovery. See FTC v. Warner Communications, Inc., 742 F.2d 1156, 1161 (9th Cir. 1984) (applying the deliberative process privilege to FTC Bureau of Economics investigational memoranda). DIRECTV’s contention that these protections covering the “summary of complaints” are stripped under Federal Rule of Evidence 612 because Ms. O’Brien—an FTC attorney who supervised the agency’s investigation of DIRECTV—reviewed the document in preparation for her deposition is wrong. See In re Kellogg Brown & Root, Inc., 796 F.3d 137, 144 (D.C. Cir. 2015) (rejecting precisely the type of privilege-stripping DIRECTV advocates here).10 C. DIRECTV’s demand for detailed testimony about monetary relief is disingenuous. The Court should not grant DIRECTV’s demand for additional testimony about how specifically the FTC plans to calculate monetary relief on behalf of consumers. With expert discovery still months away, this inquiry is premature. The FTC’s initial disclosures explain that the Commission plans to seek for consumer redress the amount of money paid by the consumers to DIRECTV stemming from its alleged misconduct, less refunds made. That is the governing standard under the FTC Act. See FTC v. Figgie Int’l, Inc., 994 F.2d 595, 606 (9th Cir. 1993); FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1088 (C.D. Cal. 2012). Ms. O’Brien’s testimony reaffirmed this position.11 Yet DIRECTV remains unsatisfied; it demands calculation methodologies. Information about the precise measure of monetary harm to DIRECTV customers is, however, in DIRECTV’s own hands. To make matters worse, DIRECTV refuses to provide this data to the FTC in response to discovery (FTC’s Interrogatory No. 8), complaining that the request “seeks detailed information regarding tens of millions of customers.” In other words, DIRECTV is now demanding from the FTC testimony about detailed information that only DIRECTV has and refuses to reveal. The Court should not permit this. /s/ Chad S. Hummel (Counsel for Defendants) /s/ Eric D. Edmondson (Counsel for Plaintiff) 9 See Ex. B at 12:8 – 21:10; 104:6 – 105:23; 110:24 – 111:11; 175:21 – 176:13. 10 DIRECTV’s reliance on Mattel is misplaced, since the witness there, unlike Ms. O’Brien here, reviewed attorney-client communications specifically “to refresh her recollection,” 2010 WL 3705782 at *5, which is necessary to trigger Rule 612. 11 See Ex. B at 179:12 – 186:13. 5
2015-10-20	57	ORDER REFERRING CASE to Magistrate Judge for Discovery purposes Re 56 . Signed by Judge Haywood S. Gilliam, Jr. on 10/20/2015. (ndrS, COURT STAFF) (Filed on 10/20/2015) (Entered: 10/20/2015)	Case 3:15-cv-01129-HSG Document 57 Filed 10/20/15 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Case No. 15-cv-01129-HSG ORDER OF REFERENCE TO MAGISTRATE JUDGE Defendants. Re: Dkt. No. 56 Pursuant to Local Rule 72-1, IT IS HEREBY ORDERED that the joint discovery letter brief and all further discovery motions filed in the above-captioned case are referred to a Magistrate Judge. Counsel will be advised of the date, time and place of any appearance by notice from the assigned Magistrate Judge. IT IS SO ORDERED. Dated: 10/20/2015 ______________________________________ Haywood S. Gilliam, Jr. United States District Judge 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2015-10-20		CASE REFERRED to Magistrate Judge Kandis A. Westmore for Discovery (ahm, COURT STAFF) (Filed on 10/20/2015) (Entered: 10/20/2015)
2015-10-20	58	First MOTION for Extension of Time to File Response/Reply as to 53 MOTION for Partial Summary Judgment Notice of Motion and Motion for Partial Summary Judgment; Memorandum of Points and Authorities in Support Thereof filed by Federal Trade Commission. (Attachments: # 1 Declaration DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF MOTION FOR AN EXTENSION OF TIME TO RESPOND TO DIRECTVS MOTION FOR SUMMARY JUDGMENT, # 2 Exhibit Exhibit 1, # 3 Exhibit Exhibit 2, # 4 Exhibit Exhibit 3, # 5 Exhibit Exhibit 4, # 6 Exhibit Exhibit 5, # 7 Exhibit Exhibit 6, # 8 Exhibit Exhibit 7, # 9 Exhibit Exhibit 8, # 10 Exhibit Exhibit 9, # 11 Exhibit Exhibit 10, # 12 Exhibit Exhibit 11, # 13 Exhibit Exhibit 12, # 14 Exhibit Exhibit 13, # 15 Exhibit Exhibit 14)(Edmondson, Eric) (Filed on 10/20/2015) (Entered: 10/20/2015)	Case 3:15-cv-01129-HSG Document 58 Filed 10/20/15 Page 1 of 7 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S MOTION FOR AN EXTENSION OF TIME TO RESPOND TO DIRECTV’S MOTION FOR SUMMARY JUDGMENT Hon. Haywood S. Gilliam, Jr. FTC’s Mot. for an Extension of Time to Respond to DIRECTV’s MSJ Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 58 Filed 10/20/15 Page 2 of 7 NOTICE OF MOTION AND MOTION Pursuant to Civil Local Rule 6-3, the Federal Trade Commission (the “FTC”) hereby moves for an extension of time for the FTC to respond to DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) motion for partial summary judgment, filed on October 13, 2015. For the reasons set forth below, the Court should grant the FTC’s motion for an extension and set the FTC’s deadline to respond to DIRECTV’s motion for summary judgment for November 24, 2015 and DIRECTV’s deadline to file its reply for December 22, 2015. I. INTRODUCTION In this motion, the FTC seeks an extension of time to respond to DIRECTV’s motion for partial summary judgment. The extension sought—four weeks to respond to a dispositive motion filed in the middle of fact discovery—is entirely reasonable. The FTC has agreed to similar extensions for DIRECTV as a matter of professional courtesy. This motion is necessary because DIRECTV refuses to extend the FTC the same courtesy. Instead of stipulating to a reasonable extension request, DIRECTV has conditioned its agreement to an extension on the FTC disclosing the discovery it deems necessary to oppose DIRECTV’s motion for summary judgment. DIRECTV appears (justifiably) concerned that the Court will deny or defer its motion for summary judgment under Federal Rule of Civil Procedure 56(d), which allows the Court to deny prematurely filed summary judgment motions when additional discovery is necessary. If the FTC’s opposition to DIRECTV’s summary judgment motion relies on Rule 56(d), the Court can assess whether that rule applies in ruling on the motion. DIRECTV must bear the consequences of filing a summary judgment motion six months before the close of fact discovery. There is no justification for DIRECTV’s insistence that the FTC disclose the basis for a hypothetical opposition in exchange for a reasonable extension. The FTC’s motion for additional time should be granted without conditions. II. PROCEDURAL BACKGROUND On October 13, 2015, DIRECTV filed its motion for summary judgment, arguing that its advertisements complied—beyond any dispute of fact—with the Restore Online Shopper’s Confidence Act (“ROSCA”), 15 U.S.C. § 8400, et seq. DIRECTV set October 27, 2015 as the FTC’s Mot. for an Extension of Time to Respond to DIRECTV’s MSJ Case No. 15-cv-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 58 Filed 10/20/15 Page 3 of 7 FTC’s date to respond. Dkt. No. 53. DIRECTV also set a hearing for November 19, 2015 (the same day Nicole Davis, an FTC witness, is sitting for a deposition). Id. DIRECTV did not meet and confer with the FTC regarding the briefing schedule or hearing date before filing its motion.1 Declaration of Eric Edmondson In Support of Motion for an Extension of Time (“Edmondson Decl.”) ¶ 2. On October 15, 2015—two days after DIRECTV filed its motion—the FTC requested a 28-day extension from DIRECTV. Edmondson Decl. ¶ 3. DIRECTV responded the following day, refusing to agree to any extension unless the FTC agreed not to argue in its response that DIRECTV’s motion should be denied under Federal Rule of Civil Procedure 56(d). Id. The FTC refused to foreclose opposing DIRECTV’s motion under Rule 56(d). Id. The parties met and conferred by telephone on October 19, 2015, but DIRECTV refused to agree to the extension without conditions. Edmondson Decl. ¶ 4. Because DIRECTV would not agree to the extension without conditions, the FTC filed the present motion. In the course of discovery, the FTC has granted DIRECTV, and third parties represented by DIRECTV’s counsel, multiple extensions of time to respond to discovery. For example, the FTC gave DIRECTV two extensions of time—for a total of 44 days—to respond to eleven interrogatories. Edmondson Decl. ¶¶ 5–7. Similarly, the FTC agreed that DIRECTV could serve supplemental responses to the FTC’s requests for production 31 days after the parties met and conferred regarding DIRECTV’s responses. Edmondson Decl. ¶ 10. III. ARGUMENT DIRECTV has elected to file its summary judgment motion well in advance of the summary-judgment filing deadline. That is DIRECTV’s right, but the fact that dispositive briefing is taking place simultaneously with significant ongoing fact discovery justifies the FTC's 1 In violation of the Civil Local Rules, DIRECTV did not seek leave of Court order before setting November 19, 2015 as the hearing date for its motion for summary judgment. Local Rule 6-1(b) states that "[a] Court order is required for any enlargement or shortening of time that alters an event or deadline already fixed by Court order or that involves papers required to be filed or lodged with the Court (other than an initial response to the complaint).” The summary- judgment hearing date, according to the Court’s scheduling order, is September 29, 2016. (Dkt. No. 40) FTC’s Mot. for an Extension of Time to Respond to DIRECTV’s MSJ Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 58 Filed 10/20/15 Page 4 of 7 requested extension. A four-week extension of time for the FTC to respond to DIRECTV’s motion for partial summary judgment will allow the FTC to prepare its opposition while continuing to build its affirmative case. Accommodating obligations of FTC team members to other professional responsibilities, including non-public investigations, also supports the FTC’s extension request. Finally, a 28-day extension will not prejudice DIRECTV. Even taking the extra time into account, DIRECTV’s summary judgment motion will be fully briefed approximately nine months before the summary judgment hearing date originally set by the Court. A. Significant Ongoing Discovery Justifies The FTC’s Requested Extension. DIRECTV filed its summary-judgment motion without conferring with the FTC regarding the briefing or hearing schedule. Edmondson Decl. ¶ 2. And DIRECTV set the FTC’s deadline to file its opposition for the earliest date permitted by the Civil Local Rules, providing only two weeks for the FTC to respond to a dispositive motion. Given the active discovery, set forth in more detail below, taking place in October, November, and December of 2015, a four- week extension is reasonable. Both parties are actively pursuing discovery in the next few months. DIRECTV is taking depositions of FTC witnesses Nicole Davis and David Gonzales on November 19 and December 9, respectively. Edmondson Decl. ¶ 11. And the FTC is taking the deposition of Aaron Nather and Jennifer Bullen on November 5, 2015. Edmondson Decl. ¶ 12. DIRECTV has committed to scheduling the deposition of Karen Leever, who the FTC noticed on September 25, 2015. Edmondson Decl. ¶ 16. The FTC has also served two deposition notices on DIRECTV under Federal Rule of Civil Procedure 30(b)(6). Edmondson Decl. ¶ 17. One of those two 30(b)(6) depositions will likely take place in early November. Edmondson Decl. ¶ 14. It is also likely (though not certain) that the FTC will need to seek relief from the Court relating to DIRECTV’s refusal to provide adequate discovery in this case. Edmondson Decl. ¶ 18. The FTC is also pursuing significant third-party discovery. The FTC has served the following third parties with subpoenas for documents: BrainJuicer, Inc., Media & Entertainment Strategies, LLC, Millward Brown, LLC, Odyssey Ventures, Inc. Penn, Schoen & Berland FTC’s Mot. for an Extension of Time to Respond to DIRECTV’s MSJ Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 58 Filed 10/20/15 Page 5 of 7 Assoc., LLC, Taylor Research & Consulting Group, Grey Group, The Kern Organization Inc., Realeyes North America, Costco Warehouse Corporation, Converge Direct, LLC, Deutsch LA, Deutsch New York, Alorica, Inc., Empereon Marketing, LLC, Voicecast Systems, Inc., and Career Horizons, Inc. Edmondson Decl. ¶ 8. The FTC is working closely with these third parties (several of whom are represented by counsel for DIRECTV) to collect and produce relevant material. Edmondson Decl. ¶ 9. Finally, the FTC also seeks the extension to accommodate other professional responsibilities of FTC team members, including to matters that are not yet public. Edmondson Decl. ¶ 15. In sum, the FTC is engaged in significant efforts pursuing affirmative discovery from DIRECTV, as well as responding to DIRECTV’s discovery. A four-week extension will allow these discovery efforts to continue while the FTC prepares its response to DIRECTV’s dispositive motion. The FTC therefore proposes that its response to DIRECTV’s motion for summary judgment be due on November 24, 2015. Under the FTC’s proposed schedule, DIRECTV’s reply—adding three additional weeks—would be due on December 22, 2015. Any hearing on DIRECTV’s motion can be held at the Court’s convenience once the papers are submitted. It appears that the parties are both available for a hearing on January 14, 2016. Edmondson Decl. ¶ 4. B. The Requested Extension Will Not Prejudice DIRECTV. DIRECTV will suffer no prejudice from the FTC’s requested extension. The FTC’s proposal, which adds approximately seven weeks to the briefing schedule, still allows DIRECTV to have its early summary judgment motion resolved well before the end of fact discovery (currently set for April 22, 2016). The FTC will oppose DIRECTV’s motion on its merits. But even if the Court grants DIRECTV summary judgment on the ROSCA claims, the FTC’s claims under Section 5 of the FTC Act—which also challenge DIRECTV’s premium channel negative option disclosures—will still go forward. Limiting the case to Section-5 claims therefore will have no effect on the scope of discovery. Consistent with this, DIRECTV has never asserted that FTC’s Mot. for an Extension of Time to Respond to DIRECTV’s MSJ Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 58 Filed 10/20/15 Page 6 of 7 the FTC’s proposed extension would result in any prejudice to DIRECTV. The FTC’s motion for an extension should be granted. IV. CONCLUSION For the reasons stated above, the Court should grant the FTC’s motion for additional time to respond to DIRECTV’s motion for partial summary judgment. Dated: October 20, 2015 Respectfully Submitted, _/s/ Eric Edmondson________ Eric D. Edmondson Erika Wodinsky Jacob A. Snow Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’s Mot. for an Extension of Time to Respond to DIRECTV’s MSJ Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 58 Filed 10/20/15 Page 7 of 7
2015-10-20	59	Proposed Order re 58 First MOTION for Extension of Time to File Response/Reply as to 53 MOTION for Partial Summary Judgment Notice of Motion and Motion for Partial Summary Judgment; Memorandum of Points and Authorities in Support Thereof Proposed Order Granting Motion for Extension of Time by Federal Trade Commission. (Edmondson, Eric) (Filed on 10/20/2015) (Entered: 10/20/2015)	Case 3:15-cv-01129-HSG Document 59 Filed 10/20/15 Page 1 of 2 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION CASE NO. 15-cv-01129-HSG [PROPOSED] ORDER GRANTING FEDERAL TRADE COMMISSION’S MOTION TO SHORTEN TIME ON MOTION FOR AN EXTENSION Hon. Haywood S. Gilliam, Jr. FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. // /// /// // // // // // 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 59 Filed 10/20/15 Page 2 of 2 The Court has considered the Federal Trade Commission’s Motion for an Extension of Time to Respond to Defendant’s Partial Motion for Summary Judgment as well as Defendants’ opposition to that motion. The Court concludes that the motion should be granted. Therefore, IT IS HEREBY ORDERED that the Federal Trade Commission’s response to DIRECTV’s motion for partial summary judgment shall be due November 24, 2015. DIRECTV’s reply in support of its motion for partial summary judgment shall be due on December 22, 2015. DATED: ______________________ ___________________________________ HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-10-20	60	First MOTION to Shorten Time MOTION TO SHORTEN TIME ON MOTION FOR AN EXTENSION OF TIME TO RESPOND TO DIRECTV'S MOTION FOR SUMMARY JUDGMENT filed by Federal Trade Commission. (Attachments: # 1 Declaration DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF FEDERAL TRADE COMMISSIONS MOTION TO SHORTEN TIME ON MOTION FOR AN EXTENSION, # 2 Exhibit Exhibit 1, # 3 Exhibit Exhibit 2)(Edmondson, Eric) (Filed on 10/20/2015) (Entered: 10/20/2015)	Case 3:15-cv-01129-HSG Document 60 Filed 10/20/15 Page 1 of 3 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S MOTION TO SHORTEN TIME ON MOTION FOR AN EXTENSION Hon. Haywood S. Gilliam, Jr. FTC’s Motion to Shorten Time on Motion for an Extension Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 60 Filed 10/20/15 Page 2 of 3 NOTICE OF MOTION AND MOTION Pursuant to Civil Local Rule 6-3, the Federal Trade Commission (the “FTC”) hereby moves to shorten time on the FTC’s motion for extension of time for the FTC to response to DIRECTV and DIRECTV, LLC’s (collectively, “DIRECTV”) motion for partial summary judgment, filed on October 13, 2015. For the reasons set forth below, the Court should grant the FTC’s motion to shorten time and set DIRECTV’s response deadline to the FTC’s motion for an extension for October 22, 2015. I. ARGUMENT This motion seeks to shorten time for DIRECTV to respond to, and for the Court to hear, the FTC’s motion for an extension of time to respond to DIRECTV’s motion for partial summary judgment. Shortening time on the extension motion is necessary for two reasons. First, it will give the Court adequate time to consider and rule on the motion for an extension. And second, it will give the FTC additional notice if the motion for an extension is denied. Granting this motion to shorten time will not prejudice DIRECTV, and it will not change the case schedule in any way. DIRECTV filed its motion for summary judgment on October 13, 2015 and, without first conferring with the FTC regarding the briefing schedule or hearing date, set the date for the FTC’s response on October 27, 2015. Dkt. No. 53 The FTC requested an extension of 28 days for its deadline to respond from DIRECTV. Edmondson Decl. ¶¶ 2-3. Because DIRECTV refused to stipulate to the extension, the FTC has filed a motion with the Court (concurrently with the present motion) requesting an extension of time to respond to DIRECTV’s motion for summary judgment. Under Civil Local Rule 6-3(b), DIRECTV’s opposition to the FTC’s extension motion would not be due until Monday, October 26, 2015, just one day before the FTC’s response to DIRECTV’s motion for summary judgment would be due. The FTC therefore proposes a compressed briefing schedule, moving DIRECTV’s response date two days earlier, to October 22, 2015. FTC’s Motion to Shorten Time on Motion for an Extension Case No. 15-cv-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 60 Filed 10/20/15 Page 3 of 3 The FTC made substantial efforts to obtain a stipulation to this proposed this schedule on October 16, 2015. Edmondson Decl. ¶ 3. DIRECTV refused to agree. Edmondson Decl. ¶ 3. The parties met and conferred a final time on October 19, 2015, but were unable to agree on a schedule for briefing summary judgment. Edmondson Decl. ¶ 3. The Court should set DIRECTV’s date to respond to the FTC’s motion for an extension to October 22, 2015. II. CONCLUSION For the reasons stated above, the Court should grant the FTC’s motion to shorten time and set DIRECTV’s response deadline to the FTC’s motion for an extension for October 22, 2015. Dated: October 20, 2015 Respectfully Submitted, _/s/ Eric D. Edmondson________ Jacob A. Snow Eric D. Edmondson Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’s Motion to Shorten Time on Motion for an Extension Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-10-20	61	Proposed Order re 60 First MOTION to Shorten Time MOTION TO SHORTEN TIME ON MOTION FOR AN EXTENSION OF TIME TO RESPOND TO DIRECTV'S MOTION FOR SUMMARY JUDGMENT by Federal Trade Commission. (Edmondson, Eric) (Filed on 10/20/2015) (Entered: 10/20/2015)	Case 3:15-cv-01129-HSG Document 61 Filed 10/20/15 Page 1 of 2 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG [PROPOSED] ORDER GRANTING FEDERAL TRADE COMMISSION’S MOTION TO SHORTEN TIME ON MOTION FOR AN EXTENSION Hon. Haywood S. Gilliam, Jr. /// /// /// // // // // /// 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 Case 3:15-cv-01129-HSG Document 61 Filed 10/20/15 Page 2 of 2 The Court has considered the Federal Trade Commission’s Motion to Shorten Time on Motion for an Extension. The Court concludes that the motion should be granted. Therefore, IT IS HEREBY ORDERED that DIRECTV’s opposition to the FTC’s Motion for an Extension of Time To Respond to DIRECTV’s Motion for Summary Judgment shall be due on October 22, 2015. DATED: ______________________ ___________________________________ HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-10-21	62	ERRATA re 58 First MOTION for Extension of Time to File Response/Reply by Federal Trade Commission. (Edmondson, Eric) (Filed on 10/21/2015) Modified on 10/21/2015 (dtmS, COURT STAFF). (Entered: 10/21/2015)	Case 3:15-cv-01129-HSG Document 62 Filed 10/21/15 Page 1 of 2 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. // // // // // CASE NO. 15-cv-01129-HSG NOTICE OF ERRATA TO: (1) FEDERAL TRADE COMMISSION’S MOTION FOR AN EXTENSION OF TIME TO RESPOND TO DIRECTV’S MOTION FOR SUMMARY JUDGMENT (DKT. NO. 58) AND (2) DECLARATION OF ERIC D. EDMONDSON (DKT. NO. 58-1) Hon. Haywood S. Gilliam, Jr. 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 62 Filed 10/21/15 Page 2 of 2 PLEASE TAKE NOTICE of the following corrections to (1) the Federal Trade Commission’s Motion for an Extension of Time to Respond to DIRECTV’s Motion for Summary Judgment (“Motion for an Extension”) (Dkt. No. 58); and (2) the Declaration of Eric D. Edmondson in Support of Motion for an Extension of Time to Respond to DIRECTV’s Motion for Summary Judgment (“Edmondson Declaration”) (Dkt. 58-1): Declaration, I stated that the Federal Trade Commission (“FTC”) has served subpoenas on “Deutsch LA” and “Deutsch New York.” The FTC has not served subpoenas on these entities. I also misstated the corporate names of several entities on whom subpoenas were served. The last sentence on page 3 of the Motion for an Extension and the first sentence of paragraph 8 of the Edmondson Declaration should therefore be corrected as follows: On pages 3 and 4 of the Motion for an Extension and in paragraph 8 of the Edmondson The FTC has served the following third parties with subpoenas for documents: Brainjuicer, Inc., Media & Entertainment Strategies, Inc., Millward Brown, LLC, Odyssey Ventures, Inc., Penn, Schoen & Berland Associates, LLC, The Taylor Research & Consulting Group, Inc., Grey Global Group, Inc., The Kern Organization, Inc., Realeyes North America, LLC, Costco Wholesale Corporation, Coverge Direct, LLC, Alorica, Inc., Empereon Marketing, LLC, Voicecast Systems, Inc., and Career Horizons, Inc. Dated: October 21, 2015 Respectfully submitted, /s/ Eric Edmondson________ Eric D. Edmondson Erika Wodinsky Jacob A. Snow Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-10-21	63	RESPONSE ( 58 MOTION for Extension of Time to File Response/Reply ) filed byDIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Chad S. Hummel in Support of DIRECTV'S Response to the FTC's Extension Motion, # 2 Exhibit A to Chad S. Hummel Decl., # 3 Exhibit B to Chad S. Hummel Decl., # 4 Proposed Order)(Hummel, Chad) (Filed on 10/21/2015) Modified on 10/21/2015 (dtmS, COURT STAFF). (Entered: 10/21/2015)	Case 3:15-cv-01129-HSG Document 63 Filed 10/21/15 Page 1 of 4 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. DIRECTV’S RESPONSE TO THE FTC’S MOTION FOR EXTENSION OF TIME TO FILE OPPOSITION TO MOTION FOR PARTIAL SUMMARY JUDGMENT [Civil Local Rule 6-3(b)] RESPONSE TO FTC’S EXTENSION MOTION 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 63 Filed 10/21/15 Page 2 of 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV does not oppose the FTC’s request for an extension of time to file an Opposition to DIRECTV’s pending Motion for Partial Summary Judgment on the two causes of action in this case alleging that DIRECTV violated ROSCA in its website subscription process (the “ROSCA Motion”). Dkt. 53.1 In fact, during the meet and confer communications regarding the FTC’s request, DIRECTV proposed in writing that the FTC’s opposition could be due November 24, 2015 (the date requested by the FTC); DIRECTV’s reply would be due on December 22, 2015; and the hearing would be set for January 14, 2016, or whatever date and time is convenient for the Court.2 DIRECTV respectfully requests that this proposed schedule be ordered by the Court, but with two reasonable and appropriate caveats with which the FTC would not agree but which will, DIRECTV respectfully submits, promote the fair and efficient disposition of the pending ROSCA Motion. First, in light of the discovery schedule already in place for October and November, as detailed in the FTC’s Local Rule 6-3 motion, DIRECTV requests that the FTC be ordered to inform DIRECTV by this coming Monday, October 26, 2015, without prejudice, of the party and third-party discovery that the FTC now believes it needs to oppose the ROSCA Motion. The FTC has refused to do this. This is not at all an unreasonable request in light of the schedule modification for the ROSCA Motion requested by the FTC. After having four weeks of additional time to respond to the ROSCA Motion, the FTC, instead of filing a substantive opposition, should not then simply file a Rule 56(d) request invoking the need for additional delay based on some as yet unspecified discovery when it has the time now to pursue it. If the FTC’s position will be that it needs additional discovery to oppose the ROSCA Motion, there is no need for it to wait more than a month to say so. The FTC’s present motion is deliberately noncommittal on this issue, suggesting, on the one hand, that the FTC might file a 56(d) opposition (“If the FTC’s opposition to DIRECTV’s summary judgment motion relies on Rule 56(d) . . .”), 1 DIRECTV also does not oppose the FTC’s request for expedited briefing. (Dkt. 60). This response will be filed before the date the FTC asked for in its request (Oct. 22), so the FTC’s request is moot. 2 DIRECTV informed the FTC on multiple occasions that it did not object to an extension. DIRECTV in fact believed that the parties were close to agreeing on the terms set forth in this response. See Declaration of Chad S. Hummel (“Hummel Decl.”), ¶¶ 3-6. 1 RESPONSE TO FTC’S EXTENSION MOTION 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 63 Filed 10/21/15 Page 3 of 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 while, on the other, suggesting the FTC will not (“The FTC will oppose DIRECTV’s motion on its merits.”). The FTC also avoids saying that it needs time to decide whether to file a 56(d) response or that any of the discovery listed in the motion is relevant to the ROSCA Motion. The FTC’s lack of clarity is unproductive—certainly the FTC must know now (or can decide in a few days) whether it will file a 56(d) response and how it might meet its burden under that rule.3 Indeed, the requested caveat to the extension only seeks the very same information that the FTC will have to disclose if it files a Rule 56(d) response. Tatum v. San Francisco, 441 F.3d 1090, 1100 (9th Cir. 2006) (Rule 56(d) request requires the moving party to “identify by affidavit the specific facts that further discovery would reveal, and explain why those facts would preclude summary judgment.”); Perkins v. National Express Corp., No. 14-cv-02347, 2015 WL 2437872 at *3 (N.D. Cal. May 15, 2015) (“The burden is on the party seeking additional discovery to proffer sufficient facts to show that the evidence exists and that it would prevent summary judgment.”) (internal quotations omitted). To be clear, DIRECTV does not ask the FTC to waive any substantive rights. If, after October 26, the FTC in good faith needs to modify the list of discovery it claims to need, DIRECTV will attempt timely to comply. DIRECTV simply wants to move this process forward in an efficient manner, which accommodates both the FTC’s requested professional courtesy in light of the FTC’s litigation team’s schedule and the scheduling needs of witnesses who may have information relevant to DIRECTV’s website disclosures. Requiring the FTC now to identify the information it needs will allow the parties to identify and resolve disputes about the scope of additional discovery and schedule what the FTC believes is necessary. There is no reason to wait an additional four weeks to begin these steps. Second, as a part of the briefing and scheduling Order on the ROSCA Motion, DIRECTV respectfully requests that the Court order that the FTC make any declarant it may use in opposing the 3As set forth in the letter brief now before Magistrate Judge Westmore (Dkt. 56), the FTC is also delaying this case by refusing to say whether or not it has any evidence supporting its claims of consumer deception and its ROSCA-based claims, including any consumer survey or other research regarding DIRECTV’s website disclosures. More significantly, in its document production that was to be completed by September 30, 2015, it did not produce a single document which supports its ROSCA claims. See Hummel Decl., ¶ 11. 2 RESPONSE TO FTC’S EXTENSION MOTION 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 63 Filed 10/21/15 Page 4 of 4 ROSCA Motion available for deposition prior to the date by which DIRECTV’s reply papers would be due (December 22, 2015) under a modified schedule. DIRECTV disagrees with the remainder of the FTC’s arguments. The ROSCA Motion is not premature—DIRECTV’s compliance with ROSCA is clear from the undisputed facts set forth in DIRECTV’s papers, and the FTC has yet to produce a single document or piece of information demonstrating a genuine dispute as to any material fact on the issues presented despite having been required to do so in the Rule 30(b)(6) deposition and Rule 34 document production contexts. Hummel Decl., ¶¶ 7-11. Setting a hearing date of November 19, 2015 did not violate the Court’s scheduling order (Dkt. 40)—that order did not require any particular timing on a partial summary judgment motion. Moreover, the ROSCA Motion did not come as any surprise to the FTC— DIRECTV made clear to the FTC at the early meeting of counsel and in the initial case management conference statement that it intended to file the ROSCA Motion. Hummel Decl., ¶ 2. Finally, DIRECTV absolutely does not seek to prejudice the FTC on any deadline or hearing date or to refuse reasonable requests for professional courtesies. DIRECTV merely asks, as a condition of giving the FTC four additional weeks to respond, that the parties be ordered to work together to schedule discovery that the FTC believes is necessary. CONCLUSION For the foregoing reasons, DIRECTV respectfully requests that the Court enter the schedule requested by the FTC on the ROSCA Motion but also require the FTC to provide the information set forth above, as described in the alternative proposed Order submitted herewith by DIRECTV. Dated: October 21, 2015 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 3 RESPONSE TO FTC’S EXTENSION MOTION 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-10-21	64	ORDER by Judge Haywood S. Gilliam, Jr. GRANTING FEDERAL TRADE COMMISSION'S 58 MOTION FOR AN EXTENSION OF TIME TO RESPOND TO DIRECTV'S 53 MOTION FOR SUMMARY JUDGMENT AND DENYING FEDERAL TRADE COMMISSION'S 60 MOTION TO SHORTEN TIME FOR EXTENSION. Responses due by 11/24/2015; Replies due by 12/22/2015. (ndrS, COURT STAFF) (Filed on 10/21/2015) (Entered: 10/21/2015)	Case 3:15-cv-01129-HSG Document 64 Filed 10/21/15 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG ORDER GRANTING FEDERAL TRADE COMMISSION'S MOTION FOR AN EXTENSION OF TIME TO RESPOND TO DIRECTV'S MOTION FOR SUMMARY JUDGMENT AND DENYING FEDERAL TRADE COMMISSION'S MOTION TO SHORTEN TIME FOR EXTENSION Re: Dkt. Nos. 58, 60 The Court has considered the Federal Trade Commission’s (“FTC’s”) Motion for an 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Extension of Time to Respond to Defendant’s Partial Motion for Summary Judgment. The Court 16 GRANTS the motion. The FTC’s Motion to Shorten Time on Motion for an Extension is 17 DENIED AS MOOT. 18 The FTC’s response to DIRECTV’s motion for partial summary judgment shall be due 19 November 24, 2015. DIRECTV’s reply in support of its motion for partial summary judgment 20 shall be due on December 22, 2015. 21 IT IS SO ORDERED. 22 Dated: t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N 23 24 25 26 27 28 ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge
2015-10-21	65	CLERK'S NOTICE. Notice is hereby given that the hearing on defendants' 53 motion for partial summary judgment, previously set for November 19, 2015, is continued to January 14, 2016, before Judge Haywood S. Gilliam, Jr., at 2:00 p.m., in Courtroom 15, 18th Floor, 450 Golden Gate Avenue, San Francisco, CA. (This is a text only docket entry, there is no document associated with this notice.) (ndrS, COURT STAFF) (Filed on 10/21/2015) (Entered: 10/21/2015)
2015-10-30	66	Joint Discovery Letter Brief filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Exhibit A, # 2 Proposed Order Granting DIRECTV'S Motion to Compel, # 3 Proposed Order Denying Defendants' Request to Compel the FTC to Provide Deposition Testimony on DIRECTV'S Topics 1 and 2)(Hummel, Chad) (Filed on 10/30/2015) (Entered: 10/30/2015)	Case 3:15-cv-01129-HSG Document 66 Filed 10/30/15 Page 1 of 9 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Kandis A. Westmore, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge Westmore: The parties met and conferred telephonically prior to filing this letter, and have complied with Section 9 of the Northern District’s Guidelines for Professional Conduct regarding discovery. The parties could not comply with the exact letter of Your Honor’s Standing Order (rev. Sept. 9, 2014) for this dispute because the parties initiated the dispute before Your Honor was assigned to this matter. Under a pre-existing agreed-upon protocol between the parties, the parties met and conferred telephonically about this dispute more than five business days prior to filing this letter. The parties will fully comply with Your Honor’s Standing Order going forward, and respectfully request that the Court rule on this Motion as presented below. /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 66 Filed 10/30/15 Page 2 of 9 The FTC should be required to produce designees on Topics 1 and 2 of DIRECTV’s June DIRECTV’s Position 22, 2015, FRCP Rule 30(b)(6) deposition notice, attached hereto as Exhibit A, relating to DIRECTV’s settlement of a Multi-State investigation of its advertising.1 The FTC has taken the position in this case that the “facts” on which its allegations of deceptive advertising against DIRECTV are based are contained entirely in the Complaint and that the FTC appropriately exercised its “agency” expertise in determining – without consumer research or survey evidence – that DIRECTV’s conduct violated Section 5 and ROSCA. (Kerry O’Brien Dep. 24:4-9; Dkt. 56 at 4.) One “evidentiary” fact that the FTC listed in the Complaint is that DIRECTV’s “marketing practices have been the focus […] of actions by the attorneys general of all 50 states and the District of Columbia.” (Dkt. 1, ¶15.) The Complaint fails, however, even to mention: (1) that these state “actions” were resolved by a Multi-State Settlement Agreement (the “MSA”) effective 2011 that covers the advertising disclosures at issue in this case and mandated extensive injunctive and monetary relief, (2) that the FTC was fully aware of the terms of the settlement, (3) that the FTC was invited to join in the settlement, declined, but thereafter allowed DIRECTV to implement a new advertising regime consistent with the MSA, and (4) that DIRECTV has not thereafter been the subject of a state enforcement action. 1 Topic 1 is “communications, negotiations, and discussions between or involving the FTC, on the one hand, and DIRECTV (including its attorneys) and/or any or all of the attorneys general of all 50 states and the District of Columbia, on the other, both before and after the effective date of the multi-state, concerning the multi-state settlement agreement and any of its terms.” Topic No. 2 is “[t]he decision by the FTC, including the reasons for the decision, not to object to, to intervene in, or to seek to modify or augment the terms of the multi-state settlement agreement.” 1 Case 3:15-cv-01129-HSG Document 66 Filed 10/30/15 Page 3 of 9 Based on these omitted facts, DIRECTV asserted equitable defenses – laches, estoppel, waiver, and preclusion – which are the subject of a pending FTC Motion to Strike which was argued on August 13, 2015. The FTC did not move to strike other affirmative defenses to which the requested discovery is relevant (including “compliance with applicable laws”) and has never challenged a basic defense premise: that, if 50 states and the District of Columbia imposed advertising disclosure requirements on DIRECTV, and the FTC did not intervene or object, and then let DIRECTV comply for 5 years prior to this lawsuit, DIRECTV’s compliant conduct could not violate Section 5 or ROSCA – absent other evidence of consumer deception which the FTC either does not have or has utterly refused to produce. That is the core of what this discovery seeks; the information is not privileged, and it should be ordered regardless of how Judge Gilliam rules on the pending motion to strike and notwithstanding a prior understanding between the parties reached in June temporarily to defer Topics 1 and 2. ARGUMENT On June 22, 2015, DIRECTV served the Rule 30(b)(6) notice at issue here. DIRECTV agreed to defer testimony on Topics 1 and 2 at that time and to proceed with Topics 3-5.2 Topics 1 and 2 relate specifically to the facts referenced above. They seek testimony, among other things, relevant to whether requested injunctive relief may be inconsistent with the terms of the 2 The FTC devotes much of its argument to the claim that DIRECTV is forever bound by its deferral agreement reached in June. This does not make sense. Developments since that time— including the continued pendency of the Motion to Strike, the FTC’s stonewalling discovery tactics, and the FTC’s issuance of a deposition notice for DIRECTV’s counsel, Clayton Friedman—have made it necessary and fully appropriate to move forward with a deposition on these topics. DIRECTV’s preliminary agreement to defer discovery pending a ruling on a motion to strike bears no resemblance whatsoever to the “universal discovery agreement” at issue in Genzyme. Genzyme Corp. v. Lupin Ltd., No. 09-1258, 2011 WL 2490603, at 3 (D. Md. June 21, 2011). In this case, the agreement was temporary and entirely designed to pierce the FTC’s expressed desire to block any and all discovery from it. 2 Case 3:15-cv-01129-HSG Document 66 Filed 10/30/15 Page 4 of 9 MSA (the FTC refuses to say), whether the claims are at odds with what its lawyers discussed with DIRECTV during the negotiations (the FTC refuses to say), and whether the FTC is seeking monetary redress that may include double recoveries in light of the restitution program of the MSA (the FTC refuses to say). The FTC has now refused to tender any witness on either topic on the grounds that those topics “relate solely to the affirmative defenses which are the subject of the FTC’s Motion to Strike.” Not true, for the reasons discussed above. What is worse is that, while on the one hand blocking discovery that DIRECTV needs on these subjects to defend itself, the FTC is seeking to depose DIRECTV’s outside advertising counsel and trial team member, Sidley’s Clayton Friedman, on the same issues. The FTC cannot have it both ways.3 Originally, the FTC had refused to produce a witness on Topics 1 and 2 on the grounds that DIRECTV’s equitable defenses are legally unavailing. At the time, because the Motion to Strike was set for imminent hearing on August 13, DIRECTV agreed to proceed with the other noticed topics and to temporarily defer Topics 1 and 2. This agreement, DIRECTV thought, would allow meaningful discovery of the facts relevant to the claims to proceed. Regardless, even if the FTC’s Motion to Strike were to be granted without leave, the FTC’s argument on this score fails. The noticed topics have independent relevance. The FTC’s views regarding DIRECTV’s disclosures and the sufficiency of the MSA are significant issues to be litigated in this case. The deposition could reveal that the FTC approved of critical aspects of the settlement which implicate the disclosure issues in this lawsuit, as Clayton Friedman will 3 Despite arguing that discovery on Topics 1 and 2 is improper because it relates to DIRECTV’s affirmative defenses, the FTC has itself sought discovery on these topics. Specifically, in an email dated October 2, 2015, the FTC acknowledged that DIRECTV’s compliance with the MSA is a “core defense” and argues that it should be permitted to depose DIRECTV’s attorney and trial counsel because “[w]e believe Mr. Friedman has personal knowledge of facts relevant to this defense.” DIRECTV has no issue with the FTC deposing Mr. Friedman for this purpose, but it is not tenable for the FTC to simultaneously seek this information while stonewalling DIRECTV’s discovery of this information from the FTC. 3 Case 3:15-cv-01129-HSG Document 66 Filed 10/30/15 Page 5 of 9 testify. If so, that could significantly undermine the FTC’s claims in this case (which are to date based on nothing more than its own subjective opinion). A deposition could also reveal that the FTC pushed for particular revisions to DIRECTV’s disclosures, facts that would be relevant to the appropriate relief, if any, in this case. Notably, the FTC has agreed to produce non- privileged communications from the states to the FTC concerning DIRECTV’s ads. The FTC has also not objected on relevance to a request to produce communications concerning why the FTC did not object to the MSA and has agreed to log such communications.4 Second, the equitable defenses may be legally viable, even if some amended pleading is required. The facts sought by this discovery could support the defenses even if the Court were to adopt a more stringent view of the factual predicate necessary for the defenses to apply – i.e., “affirmative misconduct” by the government – as discussed at the hearing on the Motion. Finally, the FTC’s expressed concern below about privilege is unavailing. Topic 1 obviously does not encroach on any privilege as it seeks information regarding—inherently non- privileged—communications between DIRECTV and the FTC. Similarly, there appears to be no dispute that Topic 2—to the extent that it covers any communications between the FTC and the states regarding the FTC’s decision-making—is not privileged. Most importantly, it is improper for the FTC to point to the Multi-State investigation (Dkt. 1, ¶ 15) and the FTC’s decision- making as support for its claims but bar discovery into these topics. At a minimum, the FTC must provide detail to allow evaluation of its privilege claims. See, e.g., Standing Order, par. 20 (privilege log requirements); In re Sealed Case, 856 F.2d 268, 271 (D.C. Cir. 1988) (requirements for establishing law enforcement privilege). 4 See FTC Supplemental Responses to DIRECTV’s First RFPs, Responses to Nos. 5 (will produce communications from the states regarding DIRECTV’s ads), 6 (will produce communications from the states regarding DIRECTV’s ads), 19 (will log communications concerning why the FTC did not object to the Multi-State). 4 Case 3:15-cv-01129-HSG Document 66 Filed 10/30/15 Page 6 of 9 THE FEDERAL TRADE COMMISSION’S POSITION Having already deposed the FTC on three Rule 30(b)(6) topics, DIRECTV now seeks to compel additional testimony about (i) the FTC’s communications with other law enforcement agencies and with DIRECTV itself (Topic 1) and (ii) the Commission’s “decision . . . including the reasons for the decision, not to object to, to intervene in, or to seek to modify or augment the terms of” the settlement agreements reached between the states and DIRECTV in 2011(Topic 2). These topics intrude into privileged communications and agency deliberations. Moreover, DIRECTV demands this testimony now, despite having previously agreed to defer it until after the Court resolves the FTC’s pending motion to strike six affirmative defenses. On June 22, 2015, DIRECTV noticed the FTC’s deposition under Fed. R. Civ. P. 30(b)(6), listing five deposition topics.5 The FTC agreed to produce a witness on Topics 3, 4, and 5,6 but proposed deferring the scheduling of testimony on Topics 1 and 2 pending the Court’s resolution of the FTC’s motion to strike six of DIRECTV’s affirmative defenses. 7 These six defenses generally contend that the FTC’s action is barred by the agency’s failure to participate in DIRECTV’s settlements with states’ attorneys general in 2011. If the Court strikes these defenses, DIRECTV’s Topics 1 and 2 will become moot. DIRECTV agreed to defer.8 I. Topics 1 and 2 seek exclusively work product and privileged information. Topics 1 and 2 constitute an improper inquiry into the FTC’s decision-making processes and law enforcement techniques. Topic 2 inquires exclusively into the Commission’s—and its 5 See Exhibit A (DIRECTV’s Rule 30(b)(6) deposition notice). 6 DIRECTV proceeded to depose the FTC’s designee’s on Topics 3, 4, and 5 on August 28. It has since filed a separate motion to compel additional testimony on those topics. (Dkt. 56.) 7 June 29, 2015 email from FTC counsel to DIRECTV counsel, not included herewith. The FTC moved to strike these defenses three weeks before DIRECTV’s deposition notice. (Dkt. 32.) 8 June 30, 2015 email from DIRECTV counsel to FTC counsel, not included herewith (“we are prepared to defer testimony on those topics until after a ruling on the Motion to Strike”). The Court heard argument on the motion on August 13, 2015 (Dkt. 46), but has not yet ruled. 5 Case 3:15-cv-01129-HSG Document 66 Filed 10/30/15 Page 7 of 9 counsel’s—strategic decision-making. DIRECTV acknowledges as much above, admitting that it intends to use the deposition to reveal “the FTC’s views” about the sufficiency of DIRECTV’s disclosures under DIRECTV’s settlement agreements with the states, and whether the FTC “approved of” aspects of those settlements. That information is protected from discovery under the attorney work product doctrine, the attorney-client privilege, and as deliberative process.9 Topic 1, which seeks testimony about communications between the FTC and state law enforcement agencies relating to their parallel, but independent, investigations of DIRECTV, is further covered by the law enforcement privilege.10 DIRECTV’s intended lines of questioning— what, if anything, the “FTC pushed for” in its discussions with states’ attorneys general, and “why the FTC did not object” to DIRECTV’s settlements with the states—seek protected agency opinions, deliberations, techniques, and procedures. Moreover, neither the FTC’s viewpoints about DIRECTV’s settlements with the states nor its staff attorneys’ discussions with state law enforcement relates to whether DIRECTV violated federal laws as alleged in the Complaint.11 The other part of Topic 1, in which DIRECTV seeks testimony about communications between itself and the FTC, is also improper. What DIRECTV really seeks is not testimony 9 See SEC v. Buntrock, 217 F.R.D. 441, 445-46 (N.D. Ill. 2003) (protecting as work product “the SEC’s position in this case, and how it arrived at that position”); FTC v. U.S. Grant Res., LLC, No. 04-596, 2004 WL 1444951, at 9 (E.D. La. June 25, 2004) (quashing a Rule 30(b)(6) deposition notice where defendant sought to “discern the deliberations, mental impressions and/or thought processes upon which this action was predicated”); see also Sedlacek v. Morgan Whitney Trading Grp., Inc., 795 F. Supp. 329, 332 (C.D. Cal. 1992) (work product that “contains the mental impressions and legal opinions of counsel” is “never discoverable”). 10 See In re Sealed Case, 856 F.2d 268, 271 (D.C. Cir. 1988) (“The privilege may be asserted to protect testimony about or other disclosure of the contents of law enforcement investigatory files.”); In re City of New York, 607 F.3d 923, 944 (2d Cir. 2010) (applying the law enforcement privilege to protect information revealing “‘law enforcement techniques and procedures’”). 11 As explained in the FTC’s motion to strike briefing, the states sued DIRECTV under various state laws, whereas the FTC is suing DIRECTV under two federal laws—the FTC Act and ROSCA—which were neither alleged nor settled by the states. (Dkt. 32; Dkt. 38.) The FTC did not participate in these state settlements, and is not bound by their terms. 6 Case 3:15-cv-01129-HSG Document 66 Filed 10/30/15 Page 8 of 9 about the factual contents of communications between its own lawyers and FTC lawyers—which DIRECTV necessarily has—but rather the FTC’s lawyers’ mental impressions and opinions regarding those communications. That information is privileged.12 Moreover, by planning to use this deposition to reveal whether the FTC’s claims “are at odds with what its lawyers discussed with DIRECTV during negotiations,”13 DIRECTV acknowledges its intent to elicit testimony about inadmissible settlement discussions.14 Finally, because the FTC’s designee on this topic will be one of the FTC’s attorneys,15 DIRECTV must show that “(1) no other means exist to obtain the information, (2) the information sought is relevant and nonprivileged, and (3) the information is crucial to the preparation of the case.”16 Apart from this information being privileged, irrelevant, and far from crucial to DIRECTV’s defense, DIRECTV has a readily available means to obtain it: its own lawyers—the other party to the communications. II. The parties have agreed to defer scheduling testimony on Topics 1 and 2. The Court should not permit DIRECTV to depose the FTC on Topics 1 and 2 because these topics are calculated to elicit only privileged and irrelevant information. Alternatively, the Court may defer that decision because, as DIRECTV acknowledges, the parties have agreed to defer scheduling testimony on Topics 1 and 2 until after the Court rules on the FTC’s motion to strike. Thus, this entire dispute may become moot, or at least substantially altered. 12 See SEC v. Rosenfeld, No. 97-1467, 1997 WL 576021, at 3 (S.D.N.Y. Sept. 16, 1997). 13 Page 3, supra. 14 Fed. R. Evid. 408 15 The FTC is a law enforcement agency staffed predominantly by attorneys. Its staff members who worked on the investigation of DIRECTV—and who are now part of the trial team—are attorneys or others (e.g., investigators) working at the direction of attorneys. Thus, this is a deposition for attorney testimony. See Rosenfeld, 1997 WL 576021, at 2 (explaining that “a Rule 30(b)(6) deposition of an SEC official with knowledge of the extent of that investigative effort, amounts to the equivalent of an attempt to depose the attorney for the other side”). 16 Chao v. Aurora Loan Servs., LLC, No. 10-3118, 2012 WL 5988617, at 3 (N.D. Cal. Nov. 26, 2012) (citing Shelton v. Am. Motors Corp., 805 F.2d 1323, 1327 (8th Cir. 1986)) (explaining that “attorney depositions even for fact discovery generally are allowed only when the discovery cannot be obtained from another place”). 7 Case 3:15-cv-01129-HSG Document 66 Filed 10/30/15 Page 9 of 9 The parties should respect their discovery agreement and the Court should treat it as binding,17 especially because the point of deferring contested discovery by agreement is to avoid unnecessary disputes. DIRECTV presents no compelling reason to the contrary. DIRECTV’s speculation about what the elicited testimony on Topics 1 and 2 could reveal is irrelevant to its conscious decision to agree to defer it.18 Furthermore, contrary to DIRECTV’s contention, there has been no material change of circumstances that warrants voiding the agreement. The FTC’s subpoena to depose DIRECTV’s outside advertising counsel, Mr. Friedman, has no connection to DIRECTV’s Topics 1 and 2. As the author of DIRECTV’s advertising compliance manual and training materials, Mr. Friedman is in a unique position to testify about DIRECTV’s implementation of its “new advertising regime” after it settled with the states.19 Because DIRECTV has alleged reliance on its compliance efforts with this “new advertising regime” as a defense in this action,20 the FTC is entitled to that discovery. DIRECTV’s Topics 1 and 2 seek entirely different discovery. Instead of going to DIRECTV’s compliance efforts, they inquire into the FTC’s internal deliberations and law enforcement communications about the settlements between DIRECTV and the states. These have no bearing on whether DIRECTV’s purported compliance with its “new advertising regime” can negate DIRECTV’s violations of the federal laws alleged by the FTC in this action. 17 See Genzyme Corp. v. Lupin Ltd., No. 09-1258, 2011 WL 2490603, at 3 (D. Md. June 21, 2011) (refusing motion to compel made in contravention of “the plain language of the parties’ negotiated discovery agreement”); Viacom Int’l, Inc. v. YouTube, Inc., No. 08-80129, 2008 WL 3876142, at *5 (N.D. Cal. Aug. 18, 2008) (admonishing the parties to abide by their previously reached agreements on specific discovery issues). 18 DIRECTV argues that it cannot be “forever bound by its deferral agreement.” Footnote 2, supra. That is true, but misplaced. It is bound only until the agreed-upon time: the Court’s ruling. 19 Page 1, supra. 20 See Amended Answer (Dkt. 27) Second Affirmative Defense (“Compliance with Applicable Law”) and Tenth Affirmative Defense (“Good Faith Belief and Conduct”). The FTC has not moved to strike these affirmative defenses. DIRECTV has not identified the “applicable statutes and regulations” constituting this affirmative defense. That is one matter ripe for discovery. 8
2015-11-12	67	ORDER OF RECUSAL. Signed by Judge Kandis A. Westmore on 11/12/2015. (kawlc1, COURT STAFF) (Filed on 11/12/2015) (Entered: 11/12/2015)	Case 3:15-cv-01129-HSG Document 67 Filed 11/12/15 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (KAW) ORDER OF RECUSAL TO ALL PARTIES AND COUNSEL OF RECORD: The undersigned was referred all discovery in this matter from the district court on October 20, 2015. The court, on its own motion, recuses itself from any and all further proceedings in this matter. IT IS SO ORDERED. Dated: November 12, 2015 ______________________________________ KANDIS A. WESTMORE United States Magistrate Judge 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2015-11-13		CASE REFERRED to Magistrate Judge Maria-Elena James for Discovery (ahm, COURT STAFF) (Filed on 11/13/2015) (Entered: 11/13/2015)
2015-11-13	68	ORDER re Case Referred to Magistrate Judge for Discovery. Signed by Magistrate Judge Maria-Elena James on 11/13/2015. (Attachments: # 1 STANDING ORDER - DISCOVERY)(rmm2S, COURT STAFF) (Filed on 11/13/2015) (Entered: 11/13/2015)	Case 3:15-cv-01129-HSG Document 68 Filed 11/13/15 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) NOTICE OF REFERRAL FOR DISCOVERY This case has been referred to the undersigned magistrate judge for all discovery-related matters. The parties must comply with the undersigned’s Discovery Standing Order, which is available on the Court’s website at http://www.cand.uscourts.gov/mej. A copy is enclosed herewith for any pro se party. The parties are advised they must meet and confer in person before any dispute is considered. Thus, any pending discovery motions are hereby DENIED WITHOUT PREJUDICE to the filing of a joint letter. If the parties submitted a letter to the presiding judge instead of a motion, the letter shall not be considered unless the parties attest they met and conferred in person prior to filing the letter. Accordingly, if there is a pending letter, the parties shall file a joint statement within three days of this notice verifying that they met in person prior to filing the letter. Please contact the Courtroom Deputy Clerk, Rose Maher, at (415) 522-4708 with any questions. IT IS SO ORDERED. Dated: November 13, 2015 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a i n r o f i l a C t r u o C t c i r t s i D s e t a t S d e t i n U f o t c i r t s i D n r e h t r o N
2015-11-16	69	JOINT STATEMENT by DIRECTV LLC, DIRECTV, Inc. re 56 Joint Discovery Letter Brief, 66 Joint Discovery Letter Brief Meet and Confer Verification (Sandrock, Ryan) (Filed on 11/16/2015) Modified on 11/17/2015 (ysS, COURT STAFF). (Entered: 11/16/2015)	Case 3:15-cv-01129-HSG Document 69 Filed 11/16/15 Page 1 of 2 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 [email protected] Erika Wodinsky, Cal. Bar No. 091700 [email protected] Jacob A. Snow, Cal. Bar No. 270988 [email protected] Boris Yankilovich, Cal. Bar No. 257887 [email protected] 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) Raymond E. McKown, Cal. Bar No. 150975 [email protected] Stacy Procter, Cal. Bar No. 221078 [email protected] 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) Attorneys for Plaintiff The Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to the Hon. Maria-Elena James JOINT STATEMENT RE: PENDING LETTER BRIEFS (DKT. NOS. 56 AND 66) FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. JOINT STATEMENT RE: PENDING LETTER BRIEFS 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 69 Filed 11/16/15 Page 2 of 2 Pursuant to Your Honor’s Notice of Referral for Discovery, the parties hereby verify that they have met in person regarding the pending letter briefs (Dkt. Nos. 56 and 66). Dated: November 16, 2015 SIDLEY AUSTIN LLP Dated: November 16, 2015 SIDLEY AUSTIN LLP Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), I hereby attest that concurrence in the filing of this document has been obtained from the signatories. By: /s/ Ryan M. Sandrock 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC By: /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff The Federal Trade Commission JOINT STATEMENT RE: PENDING LETTER BRIEFS 1 3:15-CV-01129
2015-11-18	70	Letter from Counsel for the Federal Trade Commission and Counsel for DIRECTV and DIRECTV, LLC Regarding FTC's Discovery Document Request #4. (Attachments: # 1 Proposed Order COMPELLING DEFENDANTS TO PRODUCE DOCUMENTS RESPONSIVE TO PLAINTIFF FTCS DOCUMENT REQUEST #4, # 2 Proposed Order DENYING THE FTCS MOTION TO COMPEL)(Edmondson, Eric) (Filed on 11/18/2015) (Entered: 11/18/2015)	Case 3:15-cv-01129-HSG Document 70 Filed 11/18/15 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person prior to filing this letter, on November 10, 2015. In addition, the parties met and conferred on this issue several other times in an attempt to resolve this dispute informally, including August 12, 2015 (by email), August 18, 2015 (telephonically), October 6, 2015 (by email), October 16, 2015 (by email), October 29, 2015 (telephonically), and November 16, 2015 (telephonically). /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 70 Filed 11/18/15 Page 2 of 6 NATURE OF DISPUTE This dispute concerns Request #4 of Plaintiff FTC’s June 26, 2015 Request for Production of Documents, seeking the production of “[a]ll advertisements created, drafted, or prepared, but not disseminated to consumers, relating to the Service” (DIRECTV’s “draft ads”). The FTC’s June 26, 2015 First Set of Requests for Production is attached hereto as Exhibit A. DIRECTV’s Supplemental Responses and Objections to the FTC’s First Set of Requests for Production are attached hereto as Exhibit B. Through this Joint Discovery Letter, the FTC seeks an Order compelling Defendants to produce their draft ads. DIRECTV opposes this request. THE FEDERAL TRADE COMMISSION’S POSITION This case concerns ads offering teaser rates for subscriptions to Defendant DIRECTV’s satellite television service. The FTC is seeking DIRECTV’s draft ads because they will show whether DIRECTV considered and rejected ads that more fully disclosed the price and terms of its service. The FTC’s complaint alleges that DIRECTV’s ads violate the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA) by failing to adequately disclose: 1) the full price of its satellite-television subscription service; 2) the full length of its required contract; and 3) that DIRECTV uses negative-option marketing to sell premium channels on its website without first obtaining consumers’ express informed consent.1 Drafts of DIRECTV’s ads are relevant to two issues: 1) the FTC’s allegations that consumers were likely to be deceived by DIRECTV’s ads; and 2) DIRECTV’s affirmative defense of good faith. DIRECTV has offered no evidence that the burden of complying with the FTC’s request is sufficient to render draft ads non-discoverable. In short, DIRECTV’s objections have no merit. The FTC’s motion to compel should be granted. I. Draft Ads Are Relevant to the FTC’s Deceptive Advertising Claims. The FTC’s request for DIRECTV’s draft ads is reasonably calculated to lead to the discovery of admissible evidence for two reasons. First, draft ads (and related communications) may reveal DIRECTV’s reasons for delivering the ads in their final form, which the FTC alleges are misleading. A draft ad with better disclosures that is rejected out of concern that such an ad would attract fewer customers would tend to show that DIRECTV acted consistently with an incentive to mislead the public. See, e.g., F.T.C. v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1082 (discussing as relevant the fact that the defendant had considered and “rejected the company's experiments in placing clearer disclosures and sending post-transaction emails because they hurt conversion rates”). Second, evidence showing that DIRECTV intended to make the misleading misrepresentations is relevant to establish that its misrepresentations were material. While the FTC need not prove that DIRECTV intended to mislead consumers—F.T.C. v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1083 (“[P]roof that the defendant intended to deceive 1 The Court should ignore as irrelevant DIRECTV’s references to the 2011 Multi-state Settlement Agreement (MSA) as a defense and its claim that the MSA “governs how DIRECTV must disclose the very subscription terms at issue” in this litigation. As detailed in the FTC’s Motion to Strike DIRECTV’s Affirmative Defenses (Dkt. No. 32) and Reply (Dkt. No. 38), the MSA is irrelevant to the questions of whether DIRECTV’s ads and marketing materials violate the FTC Act or ROSCA. Case 3:15-cv-01129-HSG Document 70 Filed 11/18/15 Page 3 of 6 consumers or acted in bad faith is unnecessary to establish a section 5(a) violation.”)—evidence that DIRECTV disseminated ads that it knew where likely to mislead consumers supports a presumption of materiality. See Kraft, Inc. v. F.T.C., 970 F.2d 311, 323 (7th Cir. 1992). Moreover, evidence that DIRECTV considered and rejected ads with more prominent disclosures out of concern they the improved disclosures would “deter” consumers from purchasing its service would be strong evidence that the ads actually delivered to consumers were designed to be misleading. In other words, evidence of intent to mislead consumers is strong evidence that the ads are in fact misleading to consumers. The clear relevance and probity of the FTC’s document request is evidenced by draft DIRECTV ads that the FTC has obtained from a major retailer that has allowed DIRECTV to market its service in the retailers’ stores. These draft ads show that the retailer put DIRECTV on notice that disclosures in DIRECTV ads were insufficient to give clear notice of material terms of DIRECTV’s offer to the retailers’ customers. The draft ads also reveal that the retailer required DIRECTV to improve the disclosures in ads directed at the retailer’s customers. Draft Ads Are Relevant to DIRECTV’s affirmative defense of “good faith.” DIRECTV has itself made its intent relevant in this case by including their broadly- worded affirmative defense of “good faith.” Answer (Dkt. No. 27) at 11 (“Defendants acted with a good faith belief that they had good cause and/or legitimate business reasons to act as they did and did not directly or indirectly perform any acts that would constitute a violation of consumers’ rights.”). Specifically, the Court may consider the defendant’s good faith in determining the appropriate final relief for the defendant’s violations of the FTC Act. See F.T.C. v. Bronson Partners, LLC, 2006 U.S. Dist. LEXIS 3315 at 3 (D. Conn. 2006) (“defendants’ good faith is relevant to the court’s determination of appropriate relief”), citing F.T.C. v. Medicor LLC, 2001 WL 765628, 2 (C.D. Cal. 2001). As discussed above, the draft ads are reasonably calculated to lead to evidence relevant to DIRECTV’s decision-making in choosing the final versions of its advertising. DIRECTV cannot simultaneously claim that its actions were undertaken in good faith while refusing to produce documents relevant to establishing whether that good faith exists. The ads at issue are relevant even though they were never distributed to consumers. II. III. DIRECTV’s Privilege and Burden Objections Have No Merit The Court should also reject DIRECTV’s second argument, that reviewing its draft ads for potential privilege protection would be unduly burdensome. As an initial matter, DIRECTV has waived any privilege relating to reliance on advice of counsel in creating DIRECTV’s ads. For one thing, DIRECTV has already produced and relied on multiple documents providing directions and information about DIRECTV’s legal obligations relating to advertising, including a presentation titled “DIRECTV Multistate Settlement: An Overview” and a document titled “DIRECTV Multistate Settlement: Advertising and Marketing Disclosures Compliance Manual.” Further, DIRECTV’s affirmative defenses—that it acted in good faith (Answer at 11) and complied with applicable law (Answer at 8)—place legal advice from DIRECTV’s attorneys at the center of DIRECTV’s defense. Fairness dictates that a party may not use the attorney-client privilege as both a sword and a shield. Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1162 (9th Cir.1992) (finding implicit waiver of privilege where defendant claimed to have relied on advice of counsel). Thus, deliberate “injection of the advice of counsel … waive[s] ‘the attorney-client privilege as to communications and documents Case 3:15-cv-01129-HSG Document 70 Filed 11/18/15 Page 4 of 6 relating to the advice.’” SNK Corp. of Am. v. Atlus Dream Entm't Co., 188 F.R.D. 566, 571 (N.D. Cal. 1999) (quoting Handgards, Inc. v. Johnson & Johnson, 413 F.Supp. 926, 929 (N.D.Cal.1976)). Any claim to work product or attorney-client privilege protection for that advice is therefore waived. U.S. v. Amlani, 169 F.3d 1189 (9th Cir. 1999). Additionally, even if some privilege attaches to that material, DIRECTV has not explained why a privilege review and log would be unduly burdensome. DIRECTV has represented that hundreds of thousands of draft ads exist, and that identifying privileged material in these drafts will impose a “substantial and unjustified burden on DIRECTV.” October 16, 2015 Hummel letter at p.2. However, numerous tools exist for counsel to reduce the burden of reviewing large volumes of potentially privileged documents, including word searches (e.g., for “attorney-client privilege”) and sender/recipient filters (e.g., for communications to/from counsel). DIRECTV has not explained why use of these tools would not substantially lessen the burden of production.2 DIRECTV’S POSITION The FTC’s motion to compel a massive production of all of DIRECTV’s draft TV, print, and Internet advertisements spanning over 7 years should be denied for a host of reasons, including: (1) consumers never saw draft ads and thus could not have been deceived by them; (2) DIRECTV’s intent or “incentive” to deceive consumers is not relevant to prove liability—the question in the case is whether actual advertising was deceptive; (3) the purported probative value of the drafts is based on pure speculation by the FTC that draft ads contained objectively “better” disclosures and that the drafts were not used by DIRECTV as a result of a belief that such “better” disclosures would harm sales – thereby somehow demonstrating illicit but irrelevant intent – as opposed to a myriad of other more probable reasons; (4) the burden of searching for, culling for privilege, and producing draft ads far outweighs any extremely limited probative value of this material; and (5) a high percentage of the drafts at issue are privileged. Furthermore, DIRECTV has already produced many draft advertisements and non- privileged research regarding the disclosures at issue to the FTC. This dispute therefore is about whether DIRECTV must also search for and review hundreds of thousands of additional ads to attempt to find and produce or log all draft ads as relevant to the FTC’s utterly unsupported and false supposition that DIRECTV opted for disclosures of subscription terms in the actual ads in a manner that deceived its customers.3 Background The FTC has alleged in this case that DIRECTV’s advertising for its satellite television subscription service on TV, in print, on the Internet, and in phone sales which describe its 2 Defendants claim they have produced hundreds of thousands of documents pursuant to the FTC’s CIDs. The Court should note, however, that DIRECTV’s productions have been duplicative and, at the same time, grossly incomplete, in part because DIRECTV withheld portions or all of over 25,000 documents as privileged without providing a log or any other support for their privilege claims. Moreover, DIRECTV has identified fewer than 50 of these documents as draft ads, while admitting that “hundreds of thousands” of draft ads exist. 3 The 24,000 figure cited in the FTC’s section refers only to print advertisements. It does not include TV, web, or other advertising and therefore dramatically understates the potential burden. Case 3:15-cv-01129-HSG Document 70 Filed 11/18/15 Page 5 of 6 introductory program package pricing and premium channel offers from 2007 to the present has been deceptive. As pleaded and as presently being pursued by the FTC, the case is hopelessly unmanageable. Literally thousands (if not tens of thousands) of ads that were actually disseminated are potentially at issue.4 The FTC does not claim that DIRECTV made any false statements in its advertising about its offers or that any material terms of the offers were omitted. Rather, the FTC’s case is based solely on the adequacy of disclosures that were unquestionably made relating to its introductory package pricing and premium movie channel offers. Since the lawsuit was filed, the FTC has refused to state which of DIRECTV’s disseminated ads are deceptive, how the ads are deceptive (except to say that disclosures are somehow “inadequate”), how any relevant disclosures could have been improved, and what evidence exists (if any) that relevant consumers do not see or understand the material terms of subscription offers (see Letter Briefs at Dkt. 56 and 66). Now, to make matters worse, the FTC insists that DIRECTV produce its “draft” ads – certainly hundreds of thousands of mostly privileged iterations of TV, print, and web advertising that never saw the light of day. This request in substantial part seeks documents that were reviewed as part of DIRECTV’s “RAP” process—a thorough, privileged legal department “review and approval process” through which disclosures were vetted to assure compliance with applicable laws and regulations. This review includes consideration of compliance with the 2011 Multi-State Settlement Agreement (“MSA”), which governs how DIRECTV must disclose the very subscription terms at issue here. The FTC has never stated why the MSA is inadequate, and no State has brought any action since that disclosure regime was implemented.5 Argument Arguing with pure speculation that drafts might reveal some (irrelevant) intent not to make disclosures more prominent, the FTC seeks to impose the immense burden on DIRECTV of reviewing and logging all draft advertisements. This burden is not remotely justified: Draft advertisements are not relevant. The FTC’s case will turn on the content of the advertisements that consumers actually saw. The FTC cannot and does not dispute this point and further concedes that intent is not an element of its claims. F.T.C. v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1083.6 DIRECTV has produced or agreed to produce the advertisements that it did disseminate. See Ex. B at 3-5. DIRECTV is producing a massive amount of material regarding its draft and final advertisements. DIRECTV produced over 444,000 pages of documents to the FTC prior to the 4 The FTC attached a single sample print ad, a sample TV ad, and a materially incomplete subscription webflow from directv.com as exhibits 1-4 to its Complaint. 5 While DIRECTV is not asserting an advice of counsel defense in this case, it is asserting that its good faith compliance with the terms of the 2011 MSA (which contained a disclosure regime covering the very same allegedly material terms and that was blessed by 50 states’ attorneys general and the District of Columbia, and which was not challenged by the FTC at the time despite multiple opportunities to do so) is highly probative evidence that DIRECTV’s advertising has not been deceptive and that relief should be tailored to reflect those facts. 6 The FTC contends that DIRECTV has put its intent at issue by asserting the affirmative defense of good faith. This argument is without merit. DIRECTV’s good faith defense is based primarily on its compliance with the MSA. (Dkt. Nos. 32, 36, 38). Case 3:15-cv-01129-HSG Document 70 Filed 11/18/15 Page 6 of 6 filing of the complaint. These productions included many draft advertisements. See, e.g. DTVFTCII-0080995-0081014; 0328961-70; 0394739-41. DIRECTV has also produced or promised to produce: dissemination schedules, brand books, offer guides, sales guides (in response to RFP 3), and consumer research regarding the material terms at issue (in response to RFPs 5, 6 and 7). See Ex. B at 4-11 (listing documents already produced and promising to produce additional documents). If the subscription terms in particular advertisements were discussed internally by the marketing or web teams those written communications have been or will be produced.7 These productions more than satisfy the FTC’s purported need. The burden of reviewing and logging these documents would be immense. Locating and then reviewing all draft TV, print, and Internet advertisements to determine if they are responsive and non-privileged will be substantial. See ESI Guideline 2.02 (encouraging agreement on truncated privilege logs). Privilege review would be particularly burdensome here because it would require examining whether particular notations on draft advertisements reflect review in the RAP process or by other counsel. The FTC has not proposed any way to minimize this burden or agreed to limit the scope of the review in any way. But the mere possibility of relevance does not justify imposing substantial burdens. See ESI Guideline 1.3. Imposing this burden now would be particularly inappropriate given that there is a tremendous amount of open party and non-discovery on both sides. The parties should not be sidetracked by the speculation that some draft advertisement could be marginally relevant. The FTC’s privilege waiver argument has no merit. The FTC claims that DIRECTV has waived any claim of privilege over draft advertisements because it produced documents regarding the MSA to State Attorneys General. This is wrong. First, DIRECTV produced these documents to the states as part of compliance with Paragraph 12.1 of the MSA. Second, it is not clear how the FTC takes the leap from the specific subject matter of these documents— compliance with the MSA—to the much broader topic of any discussion of any draft advertisement. The FTC has not, and could not, provide any justification for its extraordinary position that DIRECTV cannot claim privilege over any document or information regarding its disclosures. Finally, DIRECTV is not asserting an advice of counsel defense. *** The FTC refuses to provide any information about the scope of its case—it will not identify the final advertisements at issue; disclose whether or not it has any studies, surveys, or research regarding DIRECTV’s advertisements (See Letter Brief at Dkt. 56); or produce a 30(b)(6) witness regarding the FTC’s involvement in the MSA (See Letter Brief at Dkt. 66). At the same time, the FTC demands that DIRECTV bear the burden of reviewing and then producing or logging all draft advertisements based on pure speculation that some unproduced draft advertisement might be somehow relevant to whatever the FTC’s case turns out to be. This is unwarranted. The motion should be denied. 7 The FTC cites Commerce Planet for the proposition that a company’s consideration of other types of disclosures can be relevant. That case is completely inapposite. The decision discussed only three website versions – not thousands of iterations of ads and draft ads in play here. 878 F. Supp. 2d at 1058. Moreover, Commerce Planet did not discuss draft ads at all and never addressed, much less ratified, the FTC’s theory here – the rejected ads might show intent to deceive. Rather, the case revolved around different websites actually disseminated and noted that fact that sales of the sham offering in that case plummeted once disclosures were made. Id.
2015-11-24	71	RESPONSE (re 53 MOTION for Partial Summary Judgment ) filed byFederal Trade Commission. (Edmondson, Eric) (Filed on 11/24/2015) Modified on 11/25/2015 (dtmS, COURT STAFF). (Entered: 11/24/2015)	Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 1 of 29 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S OPPOSITION TO DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT Date: January 14, 2016 Time: 2:00 p.m. Judge: Hon. Haywood S. Gilliam, Jr. Location: San Francisco Courthouse Courtroom 15—18th Floor FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. II. III. IV. Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 2 of 29 TABLE OF CONTENTS INTRODUCTION............................................................................................................. 1 STATEMENT OF ISSUES TO BE DECIDED.............................................................. 2 PROCEDURAL HISTORY ............................................................................................. 2 FACTUAL BACKGROUND ........................................................................................... 3 A. B. C. Overview of DIRECTV’s negative-option offer .................................................... 3 DIRECTV’s description of the August 2013 version of its website is not accurate ................................................................................................................... 3 DIRECTV mischaracterizes the disclosures in its August 2015 website ............... 7 V. ARGUMENT ................................................................................................................... 10 A. B. C. D. E. F. Legal Standard ...................................................................................................... 10 ROSCA’s Requirements ....................................................................................... 10 A reasonable finder of fact could conclude that DIRECTV has not clearly and conspicuously disclosed material terms of its premium-channel offer ................. 11 1. FTC Act cases define when disclosures are not clear and conspicuous ....... 11 2. DIRECTV’s websites do not clearly and conspicuously disclose the premium-channel terms ................................................................................ 13 3. The Dot Com Disclosures unambiguously condemn DIRECTV’s website practices ........................................................................................................ 15 4. Documents from DIRECTV show that the disclosures are not clear and conspicuous .................................................................................................. 17 A reasonable finder of fact could conclude that DIRECTV failed to obtain consumers’ express informed consent prior to charging them for access to the premium channels ................................................................................................. 17 DIRECTV’s reliance on Vistaprint is misplaced .................................................. 19 The purpose of ROSCA is to forbid negative option disclosures made solely through info-hovers and hyperlinks ...................................................................... 20 G. The multistate settlement is not relevant to DIRECTV’s liability under ROSCA 21 VI. THE COURT SHOULD DENY DIRECTV’s MOTION UNDER RULE 56(d) ....... 22 A. B. The FTC has been diligent in pursuing discovery ................................................ 22 Discovery from DIRECTV will provide additional bases to deny DIRECTV’s motion for summary judgment.............................................................................. 23 VII. CONCLUSION ............................................................................................................... 25 FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 3 of 29 CASES TABLE OF AUTHORITIES Allied–Bruce Terminix Companies, Inc. v. Dobson 513 U.S. 265 (1995) .................................................................................................................. 19 Anderson v. Liberty Lobby, Inc. 477 U.S. 242 (1986) .................................................................................................................. 10 Baxter v. Intelius, Inc 2010 WL 3791487 (C.D. Cal. Sept. 16, 2010) ......................................................................... 19 Berry v. Webloyalty.com, Inc. 2011 WL 1375665 (S.D. Cal. Apr. 11, 2011) ........................................................................... 19 Bott v. Vistaprint USA Inc. 392 F. App’x 327 (5th Cir. 2010) ............................................................................................. 19 Bravo v. City of Santa Maria 665 F.3d 1076, 1083 (9th Cir. 2011) ........................................................................................ 10 Burlington N. Santa Fe R. Co. v. Assiniboine & Sioux Tribes of Fort Peck Reservation 323 F.3d 767, 773–74 (9th Cir.2003) ....................................................................................... 22 Doe v. Successfulmatch.com 70 F. Supp. 3d 1066, 1078–79 (N.D. Cal. 2014) ...................................................................... 20 Ferrington v. McAfee, Inc. 2010 U.S. Dist. LEXIS 106600 (N.D. Cal. Oct. 5, 2010) ......................................................... 20 Fresno Motors, LLC v. Mercedes Benz USA, LLC 771 F.3d 1119, 1125 (9th Cir. 2014) ........................................................................................ 10 FTC v. AMG Servs. 29 F. Supp. 3d 1338 (D. Nev. 2014) ......................................................................................... 12 FTC v. Commerce Planet, Inc. 878 F. Supp. 2d 1048 (C.D. Cal. 2012) ........................................................................ 12, 13, 19 FTC v. Cyberspace.com 453 F.3d 1196 (9th Cir. 2006) .................................................................................................. 11 FTC v. EDebitPay, LLC 695 F.3d 938 (9th Cir. 2012) .................................................................................................... 12 FTC v. Health Formulas, LLC 2015 U.S. Dist. LEXIS 59387 (D. Nev. May 6, 2015) ............................................................. 12 FTC v. Johnson 96 F. Supp. 3d 1110 (D. Nev. 2015) ............................................................................. 11, 12, 20 FTC v. Medlab, Inc. 615 F. Supp. 2d 1068 (N.D. Cal. 2009) .................................................................................... 11 FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 4 of 29 Garret v. City & Cnty. of S.F. 818 F.2d 1515 (9th Cir. 1987) .................................................................................................. 22 In re Easysaver Rewards Litig. 737 F. Supp. 2d 1159 (S.D. Cal. 2010) ..................................................................................... 20 In re Vistaprint Corp. Mktg. & Sales Practices Litig. 2009 WL 2884727 (S.D. Tex. Aug. 31, 2009) ................................................................... 19, 20 JJCO, Inc. v. Isuzu Motors Am., Inc. 2009 WL 1444103 (D. Haw. May 22, 2009) ............................................................................ 10 Keithly v. Intelius Inc. 764 F. Supp. 2d 1257 (W.D. Wash. 2011) ................................................................................ 20 Kremen v. Cohen 2012 WL 2919332 (N.D. Cal. July 17, 2012) ........................................................................... 22 Music Group Macao Commercial Offshore Ltd v. Foote 2015 WL 3882448 (N.D. Cal. June 23, 2015) .......................................................................... 22 Netbula, LLC v. BindView Dev. Corp. 516 F. Supp. 2d 1137 (N.D. Cal. 2007) .................................................................................... 19 STATUTES 15 U.S.C. § 57a ............................................................................................................................. 11 15 U.S.C. § 8403. .......................................................................................................................... 10 15 U.S.C. § 8404 ........................................................................................................................... 11 REGULATIONS 16 C.F.R. § 310.2(u) ..................................................................................................................... 10 21 C.F.R. § 50.27 .......................................................................................................................... 18 38 C.F.R. § 17.32(c)...................................................................................................................... 18 FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 5 of 29 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Defendants DirecTV and DirecTV, LLC’s (collectively, “DIRECTV”) Motion for Partial Summary Judgment (Dkt. No. 53) (“MSJ”) is based on misleading factual assertions and inapposite legal authority. It should be denied. The Restore Online Shoppers’ Confidence Act (“ROSCA”) requires DIRECTV to clearly and conspicuously disclose all material terms of its “free” premium-channel negative option and to obtain the consumer’s express informed consent to those terms. 1 DIRECTV’s own evidence shows that its online purchase process meets neither of these requirements. The material terms of the negative option, including its very existence, are buried behind inconspicuous and nondescript hyperlinks or info-hovers on DIRECTV’s website. A consumer can proceed through the entire online purchase process without ever seeing that they must cancel the “free” premium channels before the end of the trial period to avoid a substantial charge. A rational trier of fact could, and almost certainly would, resolve this dispute in the FTC’s favor. DIRECTV’s reliance on inapposite legal authority further undercuts its request for summary judgment. The cases that DIRECTV invokes do not address ROSCA or the FTC Act, and assess disclosures that are more conspicuous than DIRECTV’s. Moreover, DIRECTV ignores a long line of FTC Act cases holding that advertisements including hard-to-read disclosures—such as those placed at the bottom of a webpage or behind hyperlinks—did not comply with the FTC Act. Finally, although the Court can determine that DIRECTV violated ROSCA solely upon a facial review of DIRECTV’s website, because the Court may benefit from a more fully developed record, it may also deny DIRECTV’s motion under Fed. R. Civ. P. 56(d) to permit the FTC to complete its discovery of materials that DIRECTV has not yet produced. 1 The FTC alleged in its complaint that DIRECTV violated Section 5 of the FTC Act as well as ROSCA in its failure to disclose clearly and conspicuously the material terms of the premium- channel negative option offer. DIRECTV does not seek summary judgment on the Section 5 aspect of the negative option offer, and thus, regardless of the Court’s decision here, the issue of whether the premium-channel offer was clearly and conspicuously disclosed to purchasers will remain in this case. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 6 of 29 II. STATEMENT OF ISSUES TO BE DECIDED Issue No. 1: Could a reasonable finder of fact conclude that DIRECTV failed to clearly and conspicuously disclose all material terms of the premium-channel negative-option offer, as required by ROSCA? Issue No. 2: Could a reasonable finder of fact conclude that DIRECTV failed to obtain consumers’ express informed consent via those websites before charging their credit card, debit card, bank account, or other financial account for those premium channels, as required by ROSCA? III. PROCEDURAL HISTORY The FTC filed this suit on March 11, 2015, alleging that DIRECTV has violated Section 5 of the FTC Act and Section 4 of ROSCA by failing to adequately disclose: 1) the pricing and mandatory contract length of its satellite television subscription service; and 2) material terms of its negative option premium-channel offer. (See Counts I to III.) (Dkt. No. 1.) The complaint further alleges that DIRECTV failed to obtain consumers’ express informed consent before charging them for premium-channel subscriptions. (See Count IV.) (Dkt. No. 1.) The FTC attached screen shots of a DIRECTV website taken in August 2013 to the complaint. (Complaint Ex. 4.) (Dkt. No. 1-4.) In support of this opposition, the FTC has filed a declaration that authenticates that exhibit. (Declaration of Ann Stahl (“Stahl Dec.”) ¶ 7 & Exs. E, F.) The FTC has also submitted an interactive version of DIRECTV’s website intended to simulate a user’s experience visiting the site. (Declaration of Nicole Davis (“Davis Dec.”) ¶¶ 6–13.) On July 1, 2015, the Court issued a scheduling order directing that fact discovery ends on April 22, 2016, expert discovery closes on July 26, 2016, and dispositive motions are due no later than August 25, 2016. (Dkt. No. 40.) On October 13, 2015, DIRECTV filed the current MSJ seeking summary judgment as to Counts III and IV of the complaint, which relate to DIRECTV’s violations of ROSCA. (Dkt. No. 53.) FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 7 of 29 IV. FACTUAL BACKGROUND A. At all times since ROSCA became effective, DIRECTV has offered direct-to-home Overview of DIRECTV’s negative-option offer digital television service to consumers by subscription through its website. (Dkt. No. 2 ¶¶ 11, 20.) DIRECTV’s subscription service consists of programming, hardware, and installation and support services. (Id ¶ 11.) As an inducement to subscribe, DIRECTV offers new subscribers time-limited “free” access to premium channels, such as HBO, Cinemax, and Showtime, typically for three months. (MSJ at 1.) However, unless a consumer affirmatively cancels this premium-channel package before the end of the “free” period, the consumer will incur a substantial monthly charge. (Id. at 1–2; Declaration of Karen Leever (“Leever Dec.”) Ex. A (Dkt. No.53-4) at 46 ($47 in August 2013); Leever Dec. Ex. B (Dkt. No.53-6) at 37 ($59.96 in August 2015).) Until recently, consumers who signed up online for DIRECTV’s television subscription service were automatically enrolled in the “free” premium-channel subscription and not allowed to opt out of the free trial. (Compare Leever Dec. ¶¶ 5-11 with ¶¶ 12, 19, 21.) While the appearance of DIRECTV’s website has varied over time, DIRECTV has chosen to focus its MSJ on how the website appears at two points in time: August 2013 and August 2015. DIRECTV therefore presumably concedes that the website’s presentation of material terms has not diverged in relevant ways for the entire time period covered by the FTC’s ROSCA claims.2 B. DIRECTV’s description of the August 2013 version of its website is not accurate DIRECTV’s submission of its website purchase flow as of August 2013 in a series of enlarged, static screenshots is not an accurate simulation of what a consumer sees when 2 Despite being on notice of the FTC’s investigation of its marketing practices since at least 2010, DIRECTV has not modified its data retention practices in any way as a result of the FTC’s investigation. (Poling-Hiraldo Tr. 144:10–146:11)(Edmondson Decl. Ex E.) As a result of a purported software defect that DIRECTV has long been aware of, it is possible that assets associated with past versions of the website have been deleted. (Id. at 93:3–94:25 (“The problem is that if you try to revert [an asset] back [to a previous version], it doesn’t always work . . . And this is a historical issue . . . We’ve just always known.”).) FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 8 of 29 navigating the website. (See Exhibit A to Leever Declaration (Dkt. No. 53-4 & 53-5).) By presenting screenshots of its website taken with all material behind hyperlinks and info-hovers visible, DIRECTV’s presentation suggests that all consumers were likely to see all material disclosures as they navigated through the subscription process. In fact, unless consumers clicked on certain hyperlinks or activated info-hovers, the critical premium-channel terms would never be displayed to the user. (See Stahl Dec. Exs. A, C; Davis Dec. Ex. A.) DIRECTV also claims that “detailed disclosures are contained in website info-hovers that are invariably positioned in close proximity to the locations in the web flow promoting the free premium channel of a new programming subscription.” (MSJ at 2 (emphasis added).) This claim—and specifically the emphasized language—is flatly inaccurate. Info-hovers do not accompany every mention of the premium-channel promotion. For example, the Home page (the website’s first, or opening, page) of the August 2013 version of www.directv.com prominently features the “free” premium-channel package offer. (See Complaint Ex. 4 at 1; Davis Dec. Ex. A; Stahl Dec. Ex. C at 0:01–0:05; Leever Dec. Ex. A at 1.) But the Home page does not disclose—anywhere—that the consumer will be charged if she fails to affirmatively cancel the package before the end of the “free” period. (Id.) Nor does the page disclose the amount of this charge, when it will be imposed, or that it will continue for the duration of the subscription. (Id.) Next, on the Package Selection page, DIRECTV reiterates the “free” premium-channel offer beneath most of its programming packages. (See Complaint Ex. 4 at 2–3 ; MSJ at 7; Stahl Dec. Ex. C at 0:12–0:20; Davis Dec. Ex. A (navigate to “View All Packages” from the Home page); Leever Dec. Ex. A at 4–5.) As with the Home page, the Package Selection page does not include any conspicuous notice in close proximity to the premium-channel promotion. (Id.) Instead, DIRECTV placed a minuscule, light-colored hyperlink, non-descriptively labeled “Additional Offer Details,” well below the web fold and far from the premium-channel promotion—at the very bottom of the page, following a paragraph of fine-print disclosures. (MSJ at 7; Leever Dec. Ex. A at 7; see also Complaint Ex. 4 at 3; Stahl Dec. Ex. D at 0:17-057; Davis Dec. Ex. A.) Although DIRECTV’s motion highlights this “Additional Offer Details” link FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 9 of 29 (MSJ at 7), it never explains why a reasonable consumer would click on and read such a generically labeled hyperlink, or how a hyperlink that sends the consumer to another webpage constitutes a clear and conspicuous disclosure. Clicking on that hyperlink opens a separate page containing densely packed legal disclosures, all in small print. That popup page is reproduced below. (See Stahl Dec. Ex. D at 0:58-1:50) On this separate page of detailed legal disclosures, buried in the above paragraph, DIRECTV discloses for the first time—with confusing language—that consumers must cancel the premium-channel plan to avoid being charged. But even here, there is no mention of the monthly fee for the premium channels, other than an oblique reference to the free trial having a value of $141. Moving forward through the online purchase flow to the Cart page, on the right side of that page is a box, like that depicted on the right, which contains the cost for the first month of the DIRECTV subscription chosen by the consumer, and the amount due at “checkout.” (See MSJ at 8; Complaint Ex. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 10 of 29 4 at 5; Leever Ex. A at 46–48; Stahl Dec. Ex. C at 0:33–0:44; Davis Dec. Ex. A.) This “checkout box” contains an orange call-to-action button labeled “Check Out,” which, incidentally, DIRECTV has omitted from the partial screen shot appearing on page 8 of its Motion. There is no disclosure of the negative option terms in close proximity to this checkout box. (Id.) In its MSJ, DIRECTV includes an enlarged picture of an info-hover that can be activated by hovering over the “[?]” adjacent to the offer “FREE for 3 months: HBO, SHOWTIME, STARZ and Cinemax,” which appears in small, green font not anywhere near this checkout box, but instead below the heading “Premium Channels” partway down the Cart page. (See MSJ at 8–9; Leever Dec. Ex. A at 58; Stahl Dec. Ex. C. at 0:33–0:44; Davis Dec. Ex. A.) The “[?]” next to the free premium-channel offer is one of approximately 30 light-colored hovers and hyperlinks on the Cart page, each containing distinct messages. (See Leever Dec. Ex. A at 49– 76; see also Complaint Ex. 4 at 5; Stahl Dec. Ex. C at 0:33-0:44, Ex. D. at 2:12-3:06; Davis Dec. Ex. A) Although DIRECTV claims that its “[?]” hovers are designed to impart material information, many of them provide promotional messages completely unrelated to the material terms of the negative option. (See, e.g., Leever Dec. Ex. A at 54 (“See blockbuster movies, bold original series and exclusive sports on 11 channels, 9 in HD.”); id. at 57 (“Enjoy a massive movie lineup and hits you can’t find anywhere else on 8 channels—all in HD.”); see also Stahl Dec. Ex. D at 2:12–3:06) Consumers are neither required nor actively prompted to view material behind this panoply of info-hovers as part of the purchase process. And DIRECTV does not explain why a reasonable consumer would expect to find important service terms behind any particular question mark. DIRECTV does not provide click-through data to support its conclusory contention that consumers are likely to see the disclosures behind the info-hovers. DIRECTV’s assertion that it “discloses in an easy-to-follow chart the prices a consumer will pay throughout the term of the agreement” (MSJ at 9) is misleading. In order to access that chart, a consumer would have to locate and click on the tab located inconspicuously—with small gray font on a gray background—above the “Packaging and Programming” section of the Cart page. (See MSJ at 9; Complaint Ex. 4 at 5; Stahl Dec. Ex. C at FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 11 of 29 0:32-0:42, Ex. D. at 3:52; Davis Dec. Ex. A.) The purchase process does not require or actively prompt consumers to click on this “View Monthly Cost” hyperlink before proceeding to check out. DIRECTV presents no evidence supporting the conclusion that a reasonable consumer would notice—much less click on—this hyperlink. The remainder of the sign-up process provides no additional information about the premium-channel negative option’s material terms. After clicking the “Check Out” button on the Cart page, the website takes consumers to a series of Payment pages, which direct consumers to provide their installation address, social security number, account information, and payment and billing information. (See Complaint Ex. 4 at 7–9; Leever Dec. Ex. A at 106–119; Stahl Dec. Ex. C at 0:43-2:42; .) These pages do not contain any information about the premium-channel negative option offer. (Id.) Even when the Payment page directs consumers to submit their order by clicking an orange button (depicted below), it does not disclose the cancellation requirement or the monthly cost of the negative option offer. Nor does any Payment page require the consumer to affirmatively accept the negative option terms: (See Complaint Ex. 4 at 9; Leever Dec. Ex. A at 51; Stahl Dec. Ex. C at 2:41; Davis Dec. Ex. A.) The blue text is a hyperlink to a separate Terms & Conditions webpage. DIRECTV asserts that clicking this orange “I Accept” button next to the Terms & Conditions link constitutes consumers’ “affirmative[] consent to the purchase and conversion of the premium channels after three months.” (MSJ at 10.) In fact, DIRECTV’s own evidence establishes the exact opposite: this Terms & Conditions page contains no information about the premium-channel negative option offer. (Id.)3 DIRECTV mischaracterizes the disclosures in its August 2015 website C. A facial analysis of the August 2015 website submitted by DIRECTV in support of its MSJ reveals that the August 2015 version of the company’s online purchase flow has the same 3 Neither DIRECTV’s motion nor the Leever Declaration includes a screen shot of this Terms & Conditions page from the August 2013 website. The Court can find that page by going to Exhibit A of the Davis Declaration and following the process described in paragraph 15 until sub-paragraph 15.i, and by reviewing Exhibits C and D to the Stahl Declaration. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 12 of 29 inadequate disclosures as the 2013 version. Both the 2013 and the 2015 versions prominently advertise the “free” premium-channel offer, while burying the offer’s material terms behind inconspicuous info-hovers and hyperlinks. Moreover, the 2015 website’s disclosures still do not disclose all the material terms of the offer, such as the actual price consumers must pay after the “free” period. The Home pages in both versions are remarkably similar. As in August 2013, the Home page of the August 2015 website continues to highlight the premium-channel offer in bold, red letters directly above the orange button prompt. (Leever Dec. Ex. B (Dkt. 53-6) at 1; Stahl Dec. Ex. A at 0:01–0:05.) However, no other information about the premium-channel offer appears on the Home page or in the “Offer Details” info-hover at the bottom of the page. (Leever Dec. Ex. B at 1–2; Stahl Dec. Ex. A at 0:01–0:05, Ex. B at 0:01–0:21.) Continuing through the purchase flow, DIRECTV’s 2015 website continues to use the same inconspicuous hyperlinks and info-hovers as the August 2013 version, but those links are sprinkled in more locations on the site and use the generic symbol “[i]” instead of the “[?]”. (See Stahl Dec. Ex. A at 0:22–1:01.) Although DIRECTV argues that the 2015 version now places the “Additional Offer Details” hyperlink on each page of the web flow (MSJ at 10), DIRECTV has still done nothing to alert consumers that this hyperlink has anything to do with the premium- channel offer, its price, or other material offer terms.4 DIRECTV also points out that the info-hovers that did not appear until getting to the Cart page in the 2013 version now begin to appear a step earlier, on the Package Selection page. (MSJ at 10–11; Leever Dec. ¶ 15, Ex. B at 4–16; Stahl Dec. Ex. A at 0:22–0:30.) That, however, does not make these disclosures any less inconspicuous. DIRECTV continues to rely on a small, generic icon—now “[i]” instead of the “[?]” in the 2013 version—as cover for stating material 4 Exhibit B to the Leever Declaration shows this hyperlink only on the Cart page, not on any of the other pages. (Leever Dec. Ex. B at 36.) Notably, Exhibit B does not show what consumers would see behind this hyperlink. Exhibit B to the Stahl Declaration, however, does show that hidden text between the 2:02 and 3:08 marks. As with the Terms & Conditions page, the material price term is omitted from this disclosure. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 13 of 29 terms, mixed in with immaterial minutiae. (Compare Leever Dec. Ex. B at 5, with id. at 6 and id. at 15.)5 Although DIRECTV asserts that it has added a “Terms and Conditions” hyperlink to each page of the website, its evidence shows this hyperlink only on the Payment page, as it appears in the August 2013 site. (Leever Dec. ¶ 24, Ex. B at 52–53.)6 As with the 2013 version, in 2015, this generically labeled hyperlink provides no indication that consumers need to go behind it to discover the material terms of the premium-channel negative option. (See Stahl Dec. Ex. B. at 2:02–4:14.) Unlike the August 2013 website, the August 2015 version contains an “Add more great programming (optional)” page. (Leever Ex. B at 17; Stahl Dec. Ex. A at 0:33–0:42 (now titled “Choose add-on packages (optional)”).) After consumers select their programming package, which includes the “free” premium channels, consumers have the option on this page of customizing their package “with premium channels, sports, and more.” (Id.) The 2015 website also allows consumers to remove the premium-channels “free” trial from their shopping cart. (Id.) The page, however, does not explain to consumers that they will be enrolled in a negative option plan, and does not provide its material terms. (Id.) Regarding the content of the disclosures, DIRECTV states in its MSJ that the disclosures beneath the “Additional Offer Details” hyperlink are the same in 2015 as they were in the 2013 version. (MSJ at 10.) Unlike the August 2013 version, however, in 2015, the information on the “Terms & Conditions” page now contains information about the premium-channel offer. Specifically, a lengthy series of legal disclosures is visible if the consumer scrolls to the top of that “Terms & Conditions” page. (See Leever Dec. Ex. B at 57; Stahl Dec. Ex. B at 4:14–5:14) In 2015, DIRECTV has included a mention of the negative option aspect of its “free” premium-channel offer in a long “Terms and Conditions” document, hidden behind an inconspicuous “Terms & Conditions” hyperlink that appears in the bottom footer of its website. 5 The “i” icon appears more than 60 times throughout the site. (See Stahl Dec. Ex. B.) 6 Exhibit B to the Leever Declaration does not show a “Terms and Conditions” hyperlink on every page of the site. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 14 of 29 (Id.) But even this disclosure fails to inform consumers of the actual price DIRECTV will charge them after three months; instead, DIRECTV states only that consumers will be charged the “full, in-effect price per network,” and stops short of disclosing what that “price” is. (Id.) V. ARGUMENT Legal Standard A. Summary judgment is proper where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A factual issue is “material” when its resolution might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material factual issue is “genuine” when there is sufficient evidence that a reasonable trier of fact could resolve the issue in the non-movant’s favor. Id. Summary judgment for the movant is improper “if a rational trier of fact could resolve a genuine issue of material fact in the nonmoving party’s favor.” Bravo v. City of Santa Maria, 665 F.3d 1076, 1083 (9th Cir. 2011) (emphasis added). This dictate applies even where the facts at issue are undisputed; after all, a moving party cannot win summary judgment by drawing improper inferences from undisputed facts. Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014); see also JJCO, Inc. v. Isuzu Motors Am., Inc., No. 08- 00419, 2009 WL 1444103, at 8 (D. Haw. May 22, 2009) (denying summary judgment where the undisputed facts could draw multiple inferences). ROSCA’s Requirements B. Section 4(1) of ROSCA prohibits charging consumers for goods or services in Internet transactions through a negative option feature, unless the seller “provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information.” 15 U.S.C. § 8403(1). Section 4(2) requires sellers to obtain a “consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account, or other financial account.” 15 U.S.C. § 8403(2). A “negative option feature” is defined as “an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 15 of 29 the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(u). DIRECTV does not dispute that ROSCA applies to the negative option offer associated with its sale of the premium-channel package over the Internet.7 C. A reasonable finder of fact could conclude that DIRECTV has not clearly and conspicuously disclosed material terms of its premium-channel offer DIRECTV claims that its 2013 and 2015 web flows make “clear and conspicuous disclosures related to the premium channel packages prior to obtaining consumers’ financial information.” (MSJ at 6, 10.) This assertion is contradicted by (1) a facial review of DIRECTV’s purchase process; and (2) reliable evidence showing that consumers are unlikely to see the disclosures as they appear on DIRECTV’s website. This evidence includes guidance in the FTC’s .com Disclosures (the “Dot Com Disclosures”) to prominently display material conditions close the triggering claim, e.g., “FREE for three months.” Dot Com Disclosures (Attached to the Stahl Dec. as Exhibit G) at 8. 1. FTC Act cases define when disclosures are not clear and conspicuous When evaluating whether a disclosure is clear and conspicuous, courts have considered several factors, such as (1) its proximity to the claim it is qualifying, (2) its placement in the ad, (3) its prominence in the ad, (4) whether other items in the website distract attention from the disclosure, and (5) whether the language of the disclosure is understandable. In considering their placement and proximity, courts find disclosures inadequate when advertisers place them in locations where consumers are unlikely to see them (such as the bottom of the webpage) or in a context that is different than the claims they qualify (such as on a separate “Terms and Conditions” webpage). See FTC v. Cyberspace.com, 453 F.3d 1196, 1200–01 (9th Cir. 2006) (disclosures found inadequate when placed in small-print on the back of a check); FTC v. Johnson, 96 F. Supp. 3d 1110, 1121 (D. Nev. 2015) (disclosures found inadequate when placed at the very top of the page or under the submit button); FTC v. Medlab, Inc., 615 F. Supp. 2d 1068, 1077 (N.D. Cal. 2009) (disclosures found inadequate when placed at the bottom of a page). 7 Pursuant to Section 5 of ROSCA, 15 U.S.C. § 8404, a violation of ROSCA is a violation of a rule promulgated under Section 18 of the FTC Act, 15 U.S.C. § 57a. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 16 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 When considering the prominence of a disclosure, courts look to the font size, color, and style of the disclosure, as well as its prominence in comparison to other text or graphics in the advertisement. See, e.g., FTC v. EDebitPay, LLC, 695 F.3d 938, 944 (9th Cir. 2012) (disclosure found inadequate when “consumers would have had to look at a small footnote buried in the middle of other dense footnotes”); Johnson, 96 F. Supp. 3d at 1140 n.19 (disclosure found inadequate when size of font was smaller when compared to rest of webpage). Moreover, courts have found that consumers are unlikely to see a disclosure if other elements of the advertisement may cause them to overlook the disclosure. See, e.g., Johnson, 96 F. Supp. 3d at 1140) (disclosures found inadequate where statements about the “free” and “risk free” nature of the program were more eye-catching); FTC v. AMG Servs., 29 F. Supp. 3d 1338, 1353 (D. Nev. 2014) (hyperlink was inconspicuous where mandatory check boxes would “naturally draw a borrower’s attention” and where hyperlink was “buried in the fourth paragraph and overshadowed by two all caps hyperlinks”). Finally, when considering whether a disclosure is understandable, courts look to whether the disclosure is unambiguous. AMG Servs., 29 F. Supp. 3d at 1372–73. More recently, in FTC v. Health Formulas, LLC, 2015 U.S. Dist. LEXIS 59387, at 48 (D. Nev. May 6, 2015), the court granted the FTC’s motion for a preliminary injunction, finding that the FTC was likely to succeed on the merits of its ROSCA claims because the defendant’s disclosures were not clear and conspicuous. The disclosures at issue were “either buried in fine print on the payment page of Defendants’ websites or stated in separate Terms and Conditions documents that consumers are not required to read.” Id. at 48. DIRECTV’s disclosures are similarly inconspicuous. Even before the enactment of ROSCA, courts used these factors to evaluate whether disclosures of negative options were clear and conspicuous. For example, in FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048 (C.D. Cal. 2012), the court held that, based solely on a facial analysis, several purported website disclosures about a negative option plan were inadequate because the disclosures were ambiguous or consumers were unlikely to see them. The court identified characteristics that rendered the “disclosures” in a hyperlinked “Terms of FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 12 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 17 of 29 Membership” page insufficient. First, the hyperlink was “buried at the bottom” of the page, not “in close proximity” to the claim, and it was therefore “unlikely that consumers would notice or click on the link.” Id. at 1065–1067. Second, the label “Terms of Membership” did not indicate that it had anything to do with a negative option plan. Id. Moreover, the hyperlink sent consumers to a separate pop-up page and, thus, appeared in a “different context” than the claims they were qualifying. Id. Finally, the disclosures on the separate “Terms of Membership” page in one version of the website were buried on that page “with other densely packed information and legalese, which makes it unlikely that the average consumer will wade through the material and understand that she is signing up for a negative option plan.” Id. at 1065. The Commerce Planet court also found the other fine-print disclosures on the payment page to be inadequate on their face, given their size, color, and placement at the bottom of the page. Id. at 1065–67. In sum, the court held that the disclosures by their “placement, wording, colorization, spacing, and size of the text” were “designed not be clear and conspicuous, but rather to mask information about [the defendants’] continuity program without entirely omitting the information. Such a method of disclosure is inadequate because it simultaneously conceals, obscures, and suppresses the very information it purports to convey.” Id. at 1068. 2. DIRECTV’s websites do not clearly and conspicuously disclose the premium-channel terms Both the August 2013 and August 2015 websites prominently tout DIRECTV’s “free” offer for its premium-channel package. But the websites’ disclosures are not clear and conspicuous for three primary reasons. First, the relevant material terms are invisible by default, and only appear when the user clicks or hovers on particular links. Second, those links and info- hovers have inconspicuous, non-descriptive names such as “[?]” or “Additional Offer Terms.” Third, the disclosures behind those hyperlinks and info-hovers, even if discovered, do not disclose the material terms in plain, concise language, instead burying terms in paragraphs of legal text and using unclear descriptions. Using these techniques, DIRECTV has designed a purchase process that makes it unlikely that a reasonable consumer will see the material terms of the offer. Indeed, DIRECTV’s efforts urging consumers to move directly to the next stage of the FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 18 of 29 purchase process serve only to decrease the possibility that consumers will obtain additional information by hovering over ambiguous symbols or clicking on “Additional Offer Terms” hyperlinks. (See Leever Dec. Ex. A, at 42–45 (prominent orange “Proceed to Cart” button), 47– 60 (including prominent orange “Check Out” button); Ex. B at 17–21 (prominent orange “Continue to Next Step” button); 32–48 (prominent orange “Check Out” button).) First, not a single page in the purchase process discloses the negative option term in a way that is visible without additional interaction by the user. That is, if an extraordinarily diligent consumer were to painstakingly read every line of text on every page (but not click any hyperlink or display any info-hover), that consumer would never read that they would be automatically enrolled for a premium-channel subscription. See supra, Section IV.B, IV.C. And critically, the purchase process does not require consumers to display that information in order to complete their order. See supra, Section IV.B, IV.C. Thus, a consumer who completes every mandatory step of the purchase process is unlikely to see or be aware of the negative option term. Second, the links and info-hovers that contain the negative option term are often inconspicuous and have non-descriptive names (e.g., “[?]”, “[i]”, or “Additional Offer Details”) that tell the user nothing about what information they contain. Further, these hyperlinks and info-hovers are easily overlooked, as they were small, lightly colored, and generically labeled. In fact, as described above, the “[?]” and “[i]” hovers appeared many times on the websites and, if seen by consumers, often contain information of marginal relevance, such as generally describing a product or service or advertising some other aspect of DIRECTV’s business.8 (See Leever Dec. Ex. B at 15 (“Get every out-of-market game every Sunday on your TV, computer, tablet, and phone.”).) The inconspicuous “View Monthly Cost” hyperlink on the Cart page (approximately six pages into the signup process) is no better. Similar to the other hyperlinks, the size, color, and placement of the “View Monthly Cost” hyperlink made it unlikely that consumers would see it. 8 Given that the “?” hover disclosure in the August 2013 website contained a spelling error, one might wonder how many people actually clicked on this hover. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 19 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Third, even if a consumer discovered DIRECTV’s inconspicuous disclosures, they fail to disclose all the material terms of the offer or were ambiguous. The “Additional Offer Details” hyperlinks sent consumers to a separate page where the negative option disclosures were buried in other densely packed information and legal disclosures. See supra, Section IV.B, IV.C. And even the legal language behind the “Additional Offers Details” is not entirely clear. In particular, the words “BILL CREDIT/PROGRAMMING OFFER” are ambiguous as to whether it relates to the premium-channel offer. While the paragraph stated that the “BILL CREDIT/PROGRAMMING OFFER”—presumably referring to the premium-channel subscription—was “valued” at $141 in August 2013 and $152.97 in August 2015, that disclosure hardly informs consumers what the actual charges will be if they do not cancel the premium channels. In addition, both the August 2013 and 2015 info-hovers (labeled with “[?]” and “[i]” respectively) and the August 2015 Terms and Conditions state that the “price in effect” will be charged. That is, even the info-hovers do not state, in simple plain language, what the consumer will be charged. Again, a reasonable finder of fact could conclude that DIRECTV did not adequately disclose the amount it would charge consumers at the end of the promotional period. 3. The Dot Com Disclosures unambiguously condemn DIRECTV’s website practices DIRECTV asserts that its purchase process complies with the guidance in the FTC’s Dot Com Disclosures. Quite the contrary. In fact, DIRECTV’s purchase process ignores crucial guidance from the Dot Com Disclosures on how to make disclosures clear and conspicuous. According to the Dot Com Disclosures, web disclosures are “more likely to be effective if consumers view the disclosure and the claim that raises the need for disclosure (often referred to as a “triggering claim”) together on the same screen.” (Dot Com Disclosures at 8.) DIRECTV has often decided, contrary to this guidance, to place material disclosures behind hyperlinks and info-hovers, moving the information off the screen where the promotional language appears. (See, e.g., Leever Dec. Ex. B, at 31.) Next, the Dot Com Disclosures direct that “[d]isclosures that are an integral part of a claim or inseparable from it should not be communicated through a hyperlink. Instead, they FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 15 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 20 of 29 should be placed on the same page and immediately next to the claim . . . .” (Dot Com Disclosures at 10.) The negative option feature of the premium-channel offer is integral to its claim that the channels are “FREE for 3 months.” Nevertheless, DIRECTV hides the negative option disclosure behind hyperlinks and info-hovers. The ultimate test of whether a disclosure is clear and conspicuous, according to the Dot Com Disclosures is “whether the information intended to be disclosed is actually conveyed to consumers.” (Id. at 1.) In fact, it recommends that advertisers monitor whether consumers are actually seeing disclosures and hyperlinks that contain disclosures by obtaining relevant empirical evidence such as (1) “click-through rates, i.e., how often consumers click on a hyperlink and view the click-through information” and (2) evaluating “the amount of time visitors spend on a certain page, which may indicate whether consumers are reading the disclosure.” (Id. at 13.) It also recommends that advertisers consider “empirical research about where consumers do and do not look on a screen.” (Id. at 8.) Despite this clear guidance, DIRECTV has not offered any evidence that it monitored click-through rates or used web analytics data to show that consumers saw its disclosures. Finally, the Dot Com Disclosures advise that “[e]lements like graphics, sound, text, links that lead to other screens or sites, or “add to cart” buttons may result in consumers not noticing, reading, or listening to the disclosure.” (Dot Com Disclosures at 19.) Moreover, the Dot Com Disclosures advised that, when, as on DIRECTV’s websites, consumers are “trying to complete a task and obtain a specific product or service,” consumers “may not pay adequate attention to a disclosure that does not relate to the task at hand.” (Id. at 18.) The document even highlights the fact that “[t]his can be problematic if, for example, an advertiser is selling a product or service together with a negative option trial for a different product or service.” (Id.) Despite this guidance governing the same product type and purchase process used by DIRECTV, the negative option disclosure is buried behind “Additional Offer Details” and “Terms and Conditions” links. And the text behind that link is a long paragraph of legal disclosures, which Dot Com Disclosures advise against, stating that a “disclosure that is buried in a long paragraph of unrelated text will not be effective.” (Id. at 18.) FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 21 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4. Documents from DIRECTV show that the disclosures are not clear and conspicuous In addition to the Dot Com Disclosures, evidence from DIRECTV contradict DIRECTV’s assertions that its free premium-channel disclosures are clear and conspicuous. This evidence includes:  DIRECTV’s own website usability consultant advised the company not to bury important information at the bottom of webpages, in small fonts, or behind hyperlinks. (Declaration of Eric Edmondson In Support Of FTC’s Opp. to DIRECTV’s MSJ, (“Edmondson Dec.”), Ex. K (FTCDTVII-0227792 at 4, 7, 16, 20, 28))  DIRECTV receives 50 million calls a year, partially because of “surprises;” 9 million of these calls relate to “[w]hy am I being charged [for] premium channels?” (Edmondson Dec. Ex I, DTVFTCII-0114578 at p. 4)  DIRECTV is aware that consumers are pained by “no proactive notification of roll to pay offers,” the inability to cancel free premiums online, and the inability to future date and refuse premiums at the point of sale. (Edmondson Dec. Ex. J, DTVFTCII-0047444 at pp. 4–5.)  DIRECTV executives were concerned about the “negative impact . . . on revenue and churn” that providing advance notice to consumers that they would have to affirmatively cancel the premium-channel negative-option—suggesting that DIRECTV executives knew that this requirement was not sufficiently disclosed to consumers when they subscribed.” (Edmondson Dec. Ex H, DTVFTCII-0081362-63) D. A reasonable finder of fact could conclude that DIRECTV failed to obtain consumers’ express informed consent prior to charging them for access to the premium channels ROSCA requires that DIRECTV obtain consumers’ “express informed consent” to the terms of the premium-channel negative option offer before charging them. DIRECTV argues that by including text containing the negative option’s material terms interspersed throughout various places on its website in hover-overs and pop-ups, it put consumers on constructive notice that they were agreeing to those terms when they ultimately FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 17 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 22 of 29 clicked the purchase (“Submit My Order”) button at the end of the purchase process. DIRECTV then argues that its addition of the generic statement “I agree to the Terms and Conditions” next to the purchase button secured consumers’ consent to the negative option’s material terms. (MSJ at 14–15, 24.) These arguments fail. A reasonable fact finder could conclude that consumers did not provide their express informed consent before DIRECTV charged them for the premium- channel subscription.9 As explained above, DIRECTV’s info-hovers and pop-ups, placed in inconspicuous locations and displayed in tiny font, do not constitute clear and conspicuous disclosures of the material terms. As such, a reasonable fact finder could conclude—and would likely conclude— that DIRECTV failed to secure consumers’ express informed consent. See FTC v. Health Formulas, 2015 WL 2130504, at 16 (under ROSCA, “inadequate disclosures constitute evidence that Defendants often do not obtain consumers’ express informed consent before charging their cards or accounts.”) DIRECTV cannot rely on the generic “I agree to the Terms and Conditions” link near the purchase button. First, for the majority of the time since ROSCA’s enactment, the pop-up page behind that “Terms and Conditions” link did not even disclose the material terms of the premium-channel negative option. (See Stahl Dec. Ex. D at 5:22–6:06 and 7:37–8:22; Davis Dec. Ex. A.) Thus, even those consumers who visited the “Terms and Conditions” page to investigate those material terms would not have found them.10 9 The statutory language—“express informed consent”—requires evidence that the offeror clearly and conspicuously disclosed all the material terms of the negative option offer and that the consumer affirmatively consented to those terms. The word “express” means “made known distinctly and explicitly.” BLACK’S LAW DICTIONARY (10th ed. 2014). Informed consent” is a legal term that requires more than merely providing an opportunity to review the terms to which consent is sought. Black’s Law Dictionary defines “informed consent” as “[a] person’s agreement to allow something to happen, made with full knowledge of the risks involved and the alternatives.” (Id.)(emphasis added). Federal regulations that employ and define “informed consent” comport with the dictionary definitions by mandating a “careful explanation” and “the opportunity to . . . indicate comprehension,” 38 C.F.R. § 17.32(c), as well as robust documentation that demonstrates beyond doubt that the person understands the substance of that to which he or she is consenting, see 21 C.F.R. § 50.27. 10 While DIRECTV highlights that its current Terms and Conditions include a disclosure about the negative option (MSJ at 15), it omits the fact that there was no such disclosure as late as August 2013, two and a half years after ROSCA’s enactment. DIRECTV does not reveal when it added the disclosure that currently appears. Nor does DIRECTV disclose when it added a FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 23 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Second, even after DIRECTV began including a disclosure about the negative option in the “Terms and Conditions” page, that disclosure remains inconspicuous and confusing. Because it is displayed on an entirely different webpage from the offer purchase flow, it fails to meet the clear and conspicuous prerequisite to obtaining express informed consent. Commerce Planet, 878 F. Supp. 2d at 1058, 1065, 1067. Moreover, this newly added disclosure omits perhaps the most important material term of the negative option: the price that DIRECTV will charge consumers for the premium channels after the “free” trial. Instead of specifying the price, the disclosure states that “you will begin being charged the full, in effect price per network after the promotional period ends.” (MSJ at 15.) Testimony from DIRECTV’s own employees confirms that DIRECTV omits the price term from the disclosure. (Leever Dec. ¶ 28; Ex. B at 54.) If DIRECTV does not tell consumers what the price term is, consumers are incapable of giving informed consent to it and, consequently, to the negative option agreement. See Netbula, LLC v. BindView Dev. Corp., 516 F. Supp. 2d 1137, 1155 (N.D. Cal. 2007) (“Contract formation . . . requires that the parties[] reach mutual assent or consent on definite or complete terms.”); Allied–Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 281 (1995) (listing “price” among the few inherently “basic” terms in consumer contracts). Consequently, for all these reasons, a reasonable finder of fact could conclude that DIRECTV has not met ROSCA’s express informed consent requirement. DIRECTV’s reliance on Vistaprint is misplaced E. To justify its inadequate disclosures, DIRECTV relies primarily on Vistaprint.11 DIRECTV also relies upon two other cases that cite Vistaprint: Baxter v. Intelius, Inc., 2010 WL 3791487 (C.D. Cal. Sept. 16, 2010), and Berry v. Webloyalty.com, Inc., 2011 WL 1375665 (S.D. Cal. Apr. 11, 2011), vacated on other grounds, 517 Fed. App’x 581 (9th Cir. 2013). DIRECTV argues that these cases hold that so long as a consumer has to take some affirmative step to accept the seller’s offer, a web-based offer is—as a matter of law—not deceptive, even if the check box next to the “I agree to the Terms and Conditions” language, although that too was necessarily after August 2013. 11 In re Vistaprint Corp. Mktg. & Sales Practices Litig., 2009 WL 2884727 (S.D. Tex. Aug. 31, 2009), aff’d Bott v. Vistaprint USA Inc., 392 F. App’x 327 (5th Cir. 2010). FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 19 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 24 of 29 material terms are so buried that they are unlikely to be seen by a reasonable consumer. (MSJ at 21.) DIRECTV’s reliance on these cases is flawed. First, district courts in this circuit have repeatedly rejected this argument. See, e.g., FTC v. Johnson, 96 F. Supp. 3d 1110, 1114 (D. Nev. 2015) (finding Visaprint unpersuasive); Keithly v. Intelius Inc., 764 F. Supp. 2d 1257, 1270 n.12 (W.D. Wash. 2011) (rejecting Vistaprint and Intelius analyses and conclusions); Ferrington v. McAfee, Inc., 2010 U.S. Dist. LEXIS 106600, at 30 (N.D. Cal. Oct. 5, 2010) (“[T]he Court is not persuaded that [Vistaprint’s] determination of factually distinct claims under different laws should determine the outcome of this case.”); In re Easysaver Rewards Litig., 737 F. Supp. 2d 1159, 1172 (S.D. Cal. 2010) (rejecting motion to dismiss complaint based on Vistaprint); see also Doe v. Successfulmatch.com, 70 F. Supp. 3d 1066, 1078–79 (N.D. Cal. 2014) (distinguishing Vistaprint, Webloyalty, and Intelius). It is also notable that the disclosures in Vistaprint appeared on the same web page adjacent to the button consumers clicked to accept the offer at issue. Vistaprint, 2009 U.S. Dist. LEXIS 77509, at 14–23. DIRECTV has consistently failed to place on the material disclosures for the premium-channel offer on pages in a manner that makes the disclosures unavoidable to consumers. F. The purpose of ROSCA is to forbid negative option disclosures made solely through info-hovers and hyperlinks Congress enacted ROSCA in direct response to conduct of companies like Vistaprint and the corresponding harm to consumers from deceptive online negative option marketing. The legislative history of ROSCA is replete with critical assessments of Vistaprint’s failure to adequately disclose its negative option contracts. See, e.g., Sen. Comm. on Commerce, Science and Technology, Aggressive Sales Tactics on the Internet and Their Impact on American Consumers, S. Hrg. 11-513 14–23 (Statement of Prof. Robert G. Meyer, Wharton School, Univ. of Pennsylvania) (Vistaprint as example of deceptive Web sales “architecture”) (hereafter “Senate Hearing”) (Stahl. Dec. Ex. J, pp. 14–23). Indeed, Vistaprint’s “tiny fine print” disclosures demonstrated the need for legislative reform. Id. at 59 (colloquy between Prof. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 25 of 29 Meyer and Sen. LeMieux). A Senate Commerce Committee investigative report described how Vistaprint lured consumers into continuity programs cancellable only through a consumer’s affirmative action, resulting in thousands of consumers getting enrolled in continuity programs without their knowledge. See Office of Oversight and Investigations, Supplemental Report on Aggressive Sales Tactics on the Internet (May 19, 2010), Sen. Comm. on Commerce, Science and Technology, Restore Online Shoppers’ Confidence Act, S. Rep. No. 111-240, 61–62 (hereafter “Senate Report”) (Over 20,000 Vistaprint consumers unwittingly enrolled in at least two negative option programs) (Stahl Dec. Ex. I at 13–14). Prior to ROSCA, consumers who were sold negative option contracts by Vistaprint and other companies repeatedly complained that they felt “tricked into buying and or signing up for something” and the nature of the negative option feature (including its real cost) were “hidden at the bottom of the page, or not very clear.” Senate Report at 41 (Stahl Dec. Ex. H, at 28). In sum, the plain language of this statute and the legislative history surrounding the enactment of ROSCA make abundantly clear that Congress passed ROSCA in order to require clear and conspicuous disclosure of all material terms for a sale involving a negative option. DIRECTV’s efforts to mischaracterize the Act’s reach should be rejected. G. The multistate settlement is not relevant to DIRECTV’s liability under ROSCA DIRECTV argues that the putative failure of state attorneys general to take further enforcement action under their 2010 settlement with the States is dispositive evidence that the company is complying with ROSCA. (MSJ at 18.) This is a curious argument when addressing whether DIRECTV has violated (and continues to violate) a federal statute that had not even been signed into law at the time the State settlements were entered. Moreover, the State settlements for violations of state law have no preclusive effect on enforcement of federal law by the FTC. See FTC’s Motion to Strike Defendants’ Affirmative Defenses (Dkt. No. 32). And decisions by the state attorneys general not to enforce their own orders is irrelevant to the question of whether DIRECTV has complied with the FTC Act, ROSCA, or even its obligations under the settlements. Declaration of Paula Selis, Assistant FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 26 of 29 Attorney General for the State of Washington, ¶ 8 (“Although Washington has not thus far brought a formal enforcement action against DIRECTV for violating the State Settlement Agreement, that fact should not be interpreted as establishing DIRECTV’s compliance with Washington’ Consent Decree, let alone with federal law.”). VI. THE COURT SHOULD DENY DIRECTV’S MOTION UNDER RULE 56(d) DIRECTV’s motion for partial summary judgment should be denied for the reasons set forth above. Alternatively, the Court may deny DIRECTV’s motion under Rule 56(d). Rule 56(d) states that if “for specified reasons” a party cannot present sufficient facts to support its opposition to the motion for summary judgment, “the court may (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any other appropriate order.” Fed. R. Civ. P. 56(d). Generally, the party seeking a continuance or denial must show that “(1) they have set forth in affidavit form the specific facts that they hope to elicit from further discovery; (2) the facts sought exist, and (3) these sought after facts are essential to resist the summary judgment motion.” Kremen v. Cohen, No. 5:11- 05411-LHK, 2012 WL 2919332 at 5 (N.D. Cal. July 17, 2012) (citing Garret v. City & Cnty. of S.F., 818 F.2d 1515, 15181 (9th Cir. 1987)). However, “[w]hen a party moves for summary judgment before a meaningful opportunity for discovery, district courts may ‘fairly freely’ grant a Rule 56(d) motion.” Id. Courts generously grant Rule 56(d) motions “unless the non-moving party has not diligently pursued discovery of the evidence.” Music Group Macao Commercial Offshore Ltd v. Foote, 2015 WL 3882448, 6 (N.D. Cal. June 23, 2015) (citing Burlington N. Santa Fe R. Co. v. Assiniboine & Sioux Tribes of Fort Peck Reservation, 323 F.3d 767, 773–74 (9th Cir.2003)). “Summary denial [of a Rule 56(d) motion] is especially inappropriate where . . . the material sought is also the subject of outstanding discovery requests.” Id. The FTC has been diligent in pursuing discovery A. There can be no dispute that the FTC has diligently pursued discovery. Since fact discovery opened, FTC has served DIRECTV with 13 requests for production, 11 interrogatories, and 20 requests for admission. (Edmondson Dec. ¶¶ 2–4.) The FTC has taken FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 27 of 29 four depositions in this case, including a deposition of DIRECTV pursuant to Federal Rule of Civil Procedure 30(b)(6). (Id. ¶ 9.) DIRECTV has yet to comply with the FTC’s discovery, and the FTC has filed one letter brief seeking an order compelling production of draft advertisements. (Dkt. No. 70.) It appears likely that the FTC will need to file additional motions to compel, but the FTC will continue to work with DIRECTV to resolve any discovery disputes without seeking the Court’s intervention. (Edmondson Dec. ¶¶ 11–13.) B. Discovery from DIRECTV will provide additional bases to deny DIRECTV’s motion for summary judgment At least three categories of discovery from DIRECTV will provide additional bases to deny DIRECTV’s summary-judgment motion: material from DIRECTV’s customer-service database, DIRECTV’s website-related material, and DIRECTV’s analytics data. DIRECTV’s Customer-Service Database. DIRECTV’s customer-support system records system is known within DIRECTV as “RIO.” (Edmondson Dec. ¶ 10.) According to DIRECTV counsel, the RIO database includes many millions of records associated with customer-service calls DIRECTV receives. (Id.) The FTC has requested that DIRECTV produce relevant consumer complaints from the RIO system. (Edmondson Dec. ¶ 2 (attaching the FTC’s first set of Requests for Production as Exhibit A).) On November 16, 2015, the FTC and DIRECTV met and conferred regarding DIRECTV’s production of RIO-system records, and DIRECTV agreed to answer a set of outstanding questions regarding how the RIO material is stored. (Edmondson Dec. ¶ 10.) The FTC is also slated to take the deposition of a witness, who has knowledge of DIRECTV’s RIO system, on December 16. (Id.) The material in DIRECTV’s RIO system is relevant and will likely contain information relevant to DIRECTV’s motion for partial summary judgment. Customer-service calls inquiring about unexpected charges on a bill shortly after the expiration of the three-month “free” period would show that the disclosures were not clear and conspicuous. Such calls would also show that any consent was neither express nor informed. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 28 of 29 DIRECTV Website-Related Material. The exhibits to DIRECTV’s motion for partial summary judgment represent two versions of the website purchase flow, captured in August 2013 and August 2015, respectively. Those exhibits however, do not accurately replicate the experience of a customer browsing DIRECTV’s website for two primary reasons. First, the exhibits are static images, not an interactive website. And second, the images in the exhibits are configured such that many disclosures are visible by default (instead of requiring user interaction to appear as they would on an interactive website). An interactive, web-based version of the site will allow the Court to see—and expert witnesses to test—whether consumers would have understood the disclosures in the form DIRECTV offered them. There is no reason to rule on DIRECTV’s motion without the benefit of a website purchase flow that more accurately imitates a consumer’s experience. The FTC has sought the materials necessary to reconstruct an operable website since the outset of this case. The FTC took a 30(b)(6) deposition of two DIRECTV witnesses relating to the website on November 10, 2015, and an on-premises source-code inspection is scheduled for December 16, 2015. (Edmondson Dec. ¶ 8.) The Court should deny DIRECTV’s motion for partial summary judgment to let that discovery go forward. DIRECTV’s Analytics Data. Since 2010, DIRECTV has used a tool called SiteCatalyst—later known as Adobe Omniture—to track user behavior on its website. (Id. ¶ 13.) The FTC has requested that DIRECTV produce analytics data as well as relevant DIRECTV studies, surveys, or tests relating to how users navigate its website. (Id. ¶ 2; Ex. A) The FTC has also noticed the deposition of DIRECTV under Federal Rule of Civil Procedure 30(b)(6) for a topic relating to those studies, surveys, or tests. (Id. ¶ 5.) The parties are continuing to negotiate the scope of that production. (Id. ¶ 6.) The FTC expects that the analytics data will show that when disclosures were more prominent, consumers were less likely to purchase DIRECTV services because they understood the relevant disclosures. Discovery on website analytics information held by DIRECTV—but not yet disclosed—should be allowed to go forward before ruling on DIRECTV’s motion for summary judgment. FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 71 Filed 11/24/15 Page 29 of 29 VII. CONCLUSION For the foregoing reasons, the Commission requests that the Court deny DIRECTV’s motion for partial summary judgment. Dated: November 24, 2015 Respectfully Submitted, _ _/s/ Eric D. Edmondson _ Eric D. Edmondson Jacob A. Snow Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’S OPP. TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case No. 15-cv-01129-HSG 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-11-24	72	DECLARATION of Eric D. Edmondson in Support of 71 Opposition/Response to Motion, filed byFederal Trade Commission. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K)(Related document(s) 71 ) (Edmondson, Eric) (Filed on 11/24/2015) Modified on 11/25/2015 (dtmS, COURT STAFF). (Entered: 11/24/2015)	Case 3:15-cv-01129-HSG Document 72 Filed 11/24/15 Page 1 of 5 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF FEDERAL TRADE COMMISSION’S OPPPOSITION TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Decl. of Eric D. Edmondson ISO Opp. to MSJ 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 72 Filed 11/24/15 Page 2 of 5 I, Eric D. Edmondson, declare as follows: 1. I am an attorney for plaintiff Federal Trade Commission (“FTC”) in the above-captioned matter. Pursuant to Federal Rule of Civil Procedure 56(d), I submit this declaration in support of Plaintiff FTC’s Opposition to DIRECTV’s Motion for Partial Summary Judgment. Unless stated on information and belief, I make this declaration based on my own personal knowledge, and if called to testify to the truth of the matters herein, I could and would do so competently. 2. On June 26, 2015, the FTC served DIRECTV with a set of 13 requests for production of documents. A true and correct copy of those requests is attached hereto as Exhibit A. 3. On July 10, 2015, the FTC served DIRECTV with a set of 11 interrogatories A true and correct copy of those requests is attached hereto as Exhibit B. 4. On November 18, 2015, the FTC served DIRECTV with a set of 20 requests for admission. A true and correct copy of those requests is attached hereto as Exhibit C. 5. On July 9, 2015, the FTC served DIRECTV with a 30(b)(6) notice seeking testimony from the company on “the results of any and all research, surveys or tests, performed by or for DIRECTV, concerning the design, location or wording of disclosures in DIRECTV advertisements, websites or other marketing materials of material terms, including price, required subscriber agreement, early cancellation fee, or the existence of a negative option.” A true and correct copy of that 30(b)(6) notice is attached hereto as Exhibit D. 6. DIRECTV has repeatedly objected to the FTC’s noticed topic as “overbroad.” After meeting and conferring with DIRECTV, the FTC offered on September 15 to narrow the scope of the noticed topic to : “The results of any and all research, surveys or tests, performed by or for DIRECTV, which concern consumers’ perception, comprehension, or understanding of disclosures in DIRECTV advertisements, websites or other marketing materials—based on design, location, or wording, or other perception factors—relating to material terms, including price, required subscriber agreement, early- cancellation fee, or the existence of a negative option.” DIRECTV objected to the Decl. of Eric D. Edmondson ISO Opp. to MSJ 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 72 Filed 11/24/15 Page 3 of 5 revised topic. The FTC has continued to meet and confer with DIRECTV in hopes of resolving the issue. If no resolution to the parties’ disagreement is reached, the FTC will seek an order compelling DIRECTV to produce a witness to testify on the noticed topic. 7. On October 14, 2015, I commenced the deposition of Suzanne Ford Stinson, principal at Media and Entertainment Strategies, Inc. (“MES”). After deposing Ms. Stinson on several topics, I continued the deposition until a later date due to MES’s failure to adequately comply with the document subpoena served on MES by the FTC on June 29, 2015, over three months in advance of the deposition. 8. On September 16, 2015, the FTC noticed a deposition of DIRECTV under Federal Rule of Civil Procedure 30(b)(6), seeking testimony relating to DIRECTV’s website. After agreeing to proceed on a narrower deposition topic, the FTC took a 30(b)(6) deposition of two DIRECTV witnesses relating to the website on November 10, 2015. An on-premises source-code inspection is scheduled for December 16, 2015. A true and correct copy of a portion of the transcript of the 30(b)(6) testimony of DIRECTV employee Elizabeth Poling-Hiraldo is attached hereto as Exhibit E. 9. In total, the FTC has taken four depositions in this matter, including one 30(b)(6) deposition of DIRECTV for which DIRECTV designated two witnesses to testify. 10. Counsel for DIRECTV has informed us that their customer-service records are stored in a system known internally as “RIO.” On November 16, 2015, the FTC met and conferred with DIRECTV regarding DIRECTV’s production of material stored in the RIO system. During that call on November 16, 2015, counsel for DIRECTV informed us that the RIO system includes many millions of records associated with customer-service calls DIRECTV receives. DIRECTV also agreed on November 16, 2015 to provide additional information about the nature of the records stored in DIRECTV’s RIO system. 11. On November 16, 2015, the FTC sent an email to DIRECTV confirming the agreement reached by the parties for DIRECTV to provide more information about the RIO system. A true and correct copy of the November 16, 2015 email is attached to this declaration as Decl. of Eric D. Edmondson ISO Opp. to MSJ 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 72 Filed 11/24/15 Page 4 of 5 Exhibit F. DIRECTV responded on November 20, 2015, and a true and correct copy of DIRECTV’s letter is attached to this declaration as Exhibit G. The FTC will continue to work with DIRECTV to come to an agreement with respect to the production that DIRECTV will make to satisfy its discovery obligations. 12. The FTC is scheduled to take the deposition of Ellen Filipiak on December 16, 2015. It is our understanding that Ms. Filipiak has knowledge of DIRECTV’s RIO system. 13. Counsel for DIRECTV has informed the FTC that DIRECTV uses a tool called SiteCatalyst, which was later renamed Adobe Omniture, to track user behavior on its website. The FTC’s Request for Production No. 10 seeks information and documents relating to DIRECTV’s use of this web analytics tool. The FTC is continuing to negotiate with DIRECTV regarding the scope of DIRECTV’s production of documents relating to web analytics. 14. Attached as Exhibit H is a true and correct copy of an email dated August 24, 2012 from Paul J. Guyardo to Michael D. White numbered DTVFTCII-0081362 produced by DIRECTV to the Federal Trade Commission. 15. Attached as Exhibit I is a true and correct copy of a PowerPoint presentation dated August 20, 2012 numbered DTVFTCII-0114578 produced by DIRECTV to the Federal Trade Commission. 16. Attached as Exhibit J is a true and correct copy of a PowerPoint presentation dated May 7, 2013 numbered DTVFTCII-0047444 produced by DIRECTV to the Federal Trade Commission. 17. Attached as Exhibit K is a true and correct copy of a PowerPoint presentation dated June 2013 numbered DTVFTCII-0227792 produced by DIRECTV to the Federal Trade Commission. Decl. of Eric D. Edmondson ISO Opp. to MSJ 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 72 Filed 11/24/15 Page 5 of 5 I declare under penalty of perjury that the foregoing statements are true and correct. Executed in San Francisco, California on November 24, 2015. DATED: November 24, 2015 /s/ Eric D. Edmondson Eric D. Edmondson Decl. of Eric D. Edmondson ISO Opp. to MSJ 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-11-24	73	DECLARATION of Nicole Davis in Support of 71 Opposition/Response to Motion, filed byFederal Trade Commission. (Attachments: # 1 Exhibit A)(Related document(s) 71 ) (Edmondson, Eric) (Filed on 11/24/2015) Modified on 11/25/2015 (dtmS, COURT STAFF). (Entered: 11/24/2015)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 73 Filed 11/24/15 Page 1 of 9 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected]; Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Case No. 15-cv-01129-HSG DECLARATION OF NICOLE DAVIS Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, Defendants. Case 3:15-cv-01129-HSG Document 73 Filed 11/24/15 Page 2 of 9 1 2 3 4 DECLARATION OF NICOLE DA VIS PURSUANT TO 28 U.S.C. § 1746 1. My name is Nicole Davis. I am a United States citizen over the age 5 of 18. I make this declaration based on my personal knowledge. 6 7 8 2. I am employed by the Federal Trade Commission ("FTC") as an Information Technology Specialist for the Division of Litigation Technology & 9 Analysis in the Bureau of Consumer Protection. I am based in the FTC's 10 11 12 13 14 Washington D.C. office. I have worked for the FTC for more than twenty years, and have served as an Information Technology Specialist since 2001. 3. I have more than 15 years of working experience in the computer and information technology field. I hold a Masters Degree in Management 15 16 Information Systems from Bowie State University, and a B.S. in Business 17 Administration from the University of Maryland Eastern Shore. 18 4. As part of my role as Information Technology Specialist for the FTC, 19 20 I am member of the team that manages the FTC's Tech Lab (formerly known as 21 the Internet Lab). The Tech Lab houses and deploys physical and digital 22 resources that FTC staff use to conduct investigations on Internet, mobile, and 23 24 computer-related matters. As part of my duties, I support the Tech Lab's mission 25 and provide technical resources and support to FTC attorneys, investigators, and 26 paralegals on Internet, mobile, and computer-related matters. I assist and train 27 28 Case 3:15-cv-01129-HSG Document 73 Filed 11/24/15 Page 3 of 9 1 2 FTC staff on a variety of Internet-related investigative techniques and evidence- 3 capturing tools, which are commonly used in FTC investigations. 4 5 6 5. In the course of my duties, in July of2013, I was assigned to assist the FTC' s investigation of DIRECTV. I worked directly with and at the direction 7 of FTC staff counsel who investigated DIRECTV. 8 9 10 6. As part of my work on the DIRECTV investigation, I was asked in July of 2013 by those FTC staff counsel to attempt to capture and recreate the 11 www.directv.com website, including the site's home page and the package 12 13 14 selection page, and the online process for signing up for those packages, including the sequential webpages and forms involved in completing that process (the 15 "purchase flow"). 16 7. I began the process of accomplishing this task by reviewing the 17 18 www.directv.com website. I then used a program called WinHttrack to download 19 the website, including its underlying code. WinHttrack is a publicly available, 20 open-source software that allows users to capture an exact duplicate of a website 21 22 to view offline by downloading the website from the Internet to a local directory 23 while retaining the file structures and capture directories, HTML images, and 24 other files from the server to the user's computer. WinHttrack preserves the 25 26 captured website's relative link-structure. It allows a user to open any webpage of 27 the mirrored website in the user's web browser and to browse the site from link to 28 2 Case 3:15-cv-01129-HSG Document 73 Filed 11/24/15 Page 4 of 9 1 2 link, as if the user was viewing the website online. I have used WinHttrack to 3 capture websites, and I train FTC attorneys and investigators on using the 4 5 6 software as part of my duties. 8. Using WinHttrack, I downloaded the www.directv.com website, 7 including its underlying code, between July 15 and August 22, 2013. Because 8 WinHttrack was not able to download the www.directv.com website in its 9 entirety, and because for some of the downloaded webpages the formatting did 10 11 not match precisely the formatting as it appeared live on www.directv.com at that 12 13 14 time (the "Live Site"), I took and saved screen captures of those webpages that the FTC attorneys supervising my work instructed me to recreate which could not be 15 automatically downloaded by WinHttrack. 16 9. The combination of the WinHttrack download and my screen 17 18 captures of specific webpages provided me with sufficient code and other 19 information to recreate those portions of the Live Site that FTC counsel asked me 20 to recreate. Those of the Live Site's webpages that the WinHttrack program was 21 22 able to download completely and with accurate formatting were automatically 23 ready for web viewing as duplicates of the corresponding Live Site pages. 24 WinHttrack could not download some of the Live Site's webpages as exact 25 26 duplicates. For those webpages, to ensure their complete and accurate 27 duplication, I had to take and save screen captures, and then I proceeded to 28 3 Case 3:15-cv-01129-HSG Document 73 Filed 11/24/15 Page 5 of 9 1 2 recreate their appearance and functionality using Adobe Dreamweaver, a publicly 3 available web design and development application that lets users design, code and 4 manage websites and that enables visualization of web content while coding. The 5 entire recreation, to which I will refer as the Simulated Site, is included with this 6 7 declaration on the DVD marked Exhibit A. 8 9 10 10. Recreating the Live Site's purchase flows in a way that depicts each webpage and form that was displayed throughout the purchase flow process 11 required completing an online purchase of actual DIRECTV service packages. I 12 13 14 did so on August 15 and 19, 2013, completing the purchase flows for the DIRECTV "CHOICE" and "XTRA" packages using customer input information 15 provided to me by FTC counsel who supervised the process. I used the Mozilla 16 Firefox browser to make these purchases, and manually saved each webpage and 17 18 form that the Live Site displayed during the purchase flow process, including the 19 underlying code. 20 11. It is important to note that while the Simulated Site does recreate 21 22 many of the webpages and other content that were displayed on the Live Site, it 23 does not display all of the Live Site's individual hyperlinks and webpages. As 24 explained above, some of the Live Site's webpages could not be downloaded 25 26 properly using WinHttrack. In those cases, I would have to manually recreate 27 those pages, including their appearance and functionality, using Adobe 28 4 Case 3:15-cv-01129-HSG Document 73 Filed 11/24/15 Page 6 of 9 1 2 Dreamweaver. The FTC counsel supervising my work instructed me which 3 webpages needed such manual recreation- for example, the home page- in 4 5 6 which case I engaged in the manual recreation, and which pages did not need it, in which case I did not engage in the manual recreation. Additionally, the FTC 7 counsel supervising my work asked me to remove the functionality of some of the 8 9 1 0 hyperlinks, including those that linked to external websites. For example, I was asked by FTC counsel to remove the functionality of the "Social Media" 11 hyperlink that appears at very bottom footer on the website. 12 13 14 12. After I created and deployed the Simulated Site, I reviewed those of its webpages, pop-ups, and hover-overs that FTC counsel asked me to review- 15 including the home page and the purchase flow processes- to ensure that they 16 matched the appearance and functionality of the corresponding webpages, pop- 17 18 ups, and hover-overs displayed on the Live Site. I reviewed and compared the 19 Simulated Site and the Live Site side-by-side at the same time, using the same 20 web browser and screen size and resolution. Where necessary, I used Adobe 21 22 Dreamweaver to modify the appearance or functionality of the Simulated Site to 23 make it as identical as possible in appearance and functionality to the Live Site. 24 As explained above in paragraphs 8 and 9, I also made numerous screen captures 25 26 of Live Site webpages. I did so using a program called Snagit, a publicly 27 available screen capture program that allows users to capture any part of the 28 5 Case 3:15-cv-01129-HSG Document 73 Filed 11/24/15 Page 7 of 9 1 2 user's computer screen, including entire webpages, partial images, and video- 3 audio. In creating and deploying the Simulated Site, I used these Live Site screen 4 5 6 captures to run side-by-side comparisons to ensure the accuracy of the appearance and functionality of the corresponding content on the Simulated Site. Thus, these 7 screen captures can confirm that the appearance and the functionality of the 8 9 1 0 11 12 corresponding content on the Simulated Site matches what was displayed on the Live Site at the time that I took the screen captures. 13. Based on my thorough review and the side-by-side comparisons of the Live Site and the Simulated Site performed by me and other members of the 13 14 FTC's investigative team working with me, the Simulated Site-including the 15 home page and the two recreated purchase flows-fairly and accurately represents 16 the appearance and functionality of the corresponding webpages on the Live Site, 17 18 with the exceptions described in paragraph 11 . 14. To run the Simulated Site contained in Exhibit A on a web browser, one should follow these steps: a. Ensure that you are connected to the Internet. b. This Simulated Site is best viewed through the Mozilla Firefox browser, with pop-up blocked disabled. Open the Mozilla Firefox browser. c. Choose "File" from the control menu and select "Open File." d. Locate your media drive choose the DVD that is Exhibit A; then double-click the "Directv Capture" folder. e. Double click the "Directv" folder. 19 20 21 22 23 24 25 26 27 28 6 Case 3:15-cv-01129-HSG Document 73 Filed 11/24/15 Page 8 of 9 f. Double click the "index.html" file . The browser should take you to the Simulated Site's home page. 15. In order to proceed through and complete the two recreated purchase 1 2 3 4 5 flows on the Simulated Site: 6 7 8 9 10 1 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a. Starting at the home page, click the "View All Packages" orange button. b. When prompted to enter a zip code on the next page, click the "Submit" button, with or without actually entering a zip code. c. On the next page, click the "Select" orange button under the CHOICE or XTRA packages. Each of these selections will take you through a separate purchase flow. The "Select" buttons under the other displayed packages are not active. d. On the next page, click the first "Select" gray button next to the Genie HD DVR. The other "Select" gray buttons are not active. e. Once that selection is made, click the "Proceed to Cart" orange button, which should appear to the right. f. On the next page, click the "Check Out" orange button on the right side of the screen. g. A Checkout form will pop up. You can click the "Continue" orange button, without necessarily filling in any information. h. When the second Checkout form pops up, click the "Continue" orange button once again, without necessarily filling in any information. 1. When the third Checkout form pops up, click the "I Accept. Submit My Order." orange button, without necessarily filling in any information. J. The next page should be an order confirmation page, with the text "Congratulations! Your order is complete" displayed near the top. I declare under penalty of perjury that the statements made in this declaration are true and correct. Executed in Washington, D.C. on November 7 Case 3:15-cv-01129-HSG Document 73 Filed 11/24/15 Page 9 of 9 l 9 ) 2015. Nicole Davis 1 2 3 4 5 6 7 8 9 10 1 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8
2015-11-24	74	DECLARATION of Ann M. Stahl in Support of 71 Opposition/Response to Motion, filed byFederal Trade Commission. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J)(Related document(s) 71 ) (Edmondson, Eric) (Filed on 11/24/2015) Modified on 11/25/2015 (dtmS, COURT STAFF). (Entered: 11/24/2015)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 74 Filed 11/24/15 Page 1 of 8 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected]; Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Case No. 15-cv-01129-HSG DECLARATION OF ANN M. STAHL Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, Defendants. Case 3:15-cv-01129-HSG Document 74 Filed 11/24/15 Page 2 of 8 DECLARATION OF ANN M. STAHL PURSUANT TO 28 U.S.C. § 1746 1. I, Ann M. Stahl, hereby state that I have personal knowledge of the facts set forth below. If called as a witness, I could and would testify competently as follows: 2. I am a citizen of the United States and am over the age of eighteen (18). I am employed as an investigator with the Federal Trade Commission (“FTC”) in the Western Region Office, Los Angeles. I have worked as an investigator for the FTC for more than 40 years. 3. On October 26, 2015, I used an FTC computer to visit the website www.directv.com using the Mozilla Firefox browser. I viewed the website on a 22-inch monitor, with a screen resolution of 1680 x 1050. I used a publicly available screen capture computer program, Snagit, to record and save a video of all of the actions I took as I proceeded through the purchase process. The Snagit program captured the website in a screen resolution of 1680 x 1026. While recording my actions, I visited the website’s Home page (the first webpage that is displayed when visiting www.directv.com), then clicked on the button labeled “View All Packages,” and then proceeded through the step-by-step process needed to make an online purchase of DIRECTV satellite television service, including the selection of a programming package. The personal identification 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 74 Filed 11/24/15 Page 3 of 8 used to make the purchase is redacted from the Snagit video. After completing this process, I viewed the Snagit video recording and confirmed that it was a true and correct representation of each screen I had viewed and each action I had taken as I proceeded through the website. Attached hereto as Exhibit A is a disk that contains a true and correct copy of this video recording from October 26, 2015. 4. On November 24, 2015, I once again used an FTC computer to visit the website www.directv.com using the Mozilla Firefox browser. I viewed the website on a 22-inch monitor, with a screen resolution of 1680 x 1050. I again used the Snagit program to record and save a video of all of the content that was displayed and all of the actions I took as I proceeded through the website. The Snagit program captured the website in a screen resolution of 1680 x 1026. Unlike my process described in Paragraph 3 above, as I moved through the purchase flow this time, I made it an affirmative point to find and open and activate the hyperlinks, hover-overs, and statements that Defendants argue in their motion for summary judgment provide consumers with adequate notice of the material terms of DIRECTV’s premium channel negative option. I did so solely for the purpose of presenting this declaration and materials to the Court, not to replicate the experience of a typical user. Additionally, this time, I did not complete the purchase, although I did proceed through the purchase flow, using a fictitious investigational identity, up to the “Place My Order” prompt. After 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 74 Filed 11/24/15 Page 4 of 8 completing this process, I viewed the Snagit video recording and confirmed that it was a true and correct representation of each screen I had viewed and each action I had taken as I proceeded through the website. Attached hereto as Exhibit B is a disk that contains a true and correct copy of this video recording from November 24, 2015. 5. On November 24, 2015, I used an FTC computer with a 22-inch monitor and 1680 x 1050 screen resolution to visit the Simulated Site, which is described in and a copy of which is included with the concurrently-filed declaration of Nicole Davis. Based on Ms. Davis’s declaration, I understand that the Simulated Site fairly and accurately represents the appearance and functionality of corresponding pages displayed live on www.directv.com when they were captured in July and August of 2013. I visited an operational copy of the Simulated Site hosted on the FTC’s internal web server using the Mozilla Firefox browser. I used the Snagit program to record and save a video of all of the content that was displayed and all the actions that I took as I proceeded through the purchase flow. The Snagit program captured the website in a screen resolution of 1680 x 1026. After first going to the Simulated Site’s Home page, I clicked on the button labeled “View All Packages,” and then proceeded through the step-by-step process needed to make an online purchase of DIRECTV’s satellite television service. I used a fictitious investigational identity to complete 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 74 Filed 11/24/15 Page 5 of 8 the simulated purchase. After completing this process, I viewed the Snagit video recording and confirmed that it was a true and correct representation of each screen I had viewed and each action I had taken as I proceeded through the Simulated Site. Attached hereto as Exhibit C is a disk that contains a true and correct copy of this video recording from November 24, 2015. 6. On November 24, 2015, I once again used an FTC computer with a 22-inch monitor and 1680 x 1050 screen resolution to visit the Simulated Site using Mozilla Firefox. I again used the Snagit program to capture my movements as I moved through the website. The Snagit program captured the website in a screen resolution of 1680 x 1026. Unlike my process described in Paragraph 5 above, as I moved through the Simulated Site purchase flow, I made it an affirmative point to find and open and activate the hyperlinks, hover-overs, and statements that Defendants argue in their motion for summary judgment provide consumers with adequate notice of the material terms of DIRECTV’s premium channel negative option. I did so solely for the purpose of presenting this declaration and material to the Court, not to replicate the experience of a typical user. I used a fictitious investigational identity to complete the simulated purchase. After completing this process, I viewed the Snagit video recording and confirmed that it was a true and correct representation of each screen I had viewed and each action I had taken as I proceeded through the Simulated Site. Attached 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 74 Filed 11/24/15 Page 6 of 8 hereto as Exhibit D is a disk that contains a true and correct copy of this video recording from November 24, 2015. 7. On November 24, 2015, I used Snagit to take several screen shots of the Simulated Site. Attached to my declaration as Exhibit E are true and correct copies of those Simulated Site screen shots of the Account Info Page, and the content of the “Terms & Conditions” page that appears after the “Terms & Conditions” hyperlink is clicked from the Account Info Page. The Account Info Page displayed on the first page of Exhibit E corresponds to Exhibit 4 page 8 of the FTC’s Complaint. Attached to my declaration as Exhibit F are true and correct copies of those Simulated Site screen shots of the Payment Page, and the content of the “Terms & Conditions” page that appears after the “Terms & Conditions” hyperlink is clicked from the Payment Page. The Payment Page displayed on the first page of Exhibit F corresponds to Exhibit 4 page 9 of the FTC’s Complaint. 8. On November 18, 2015, I downloaded from the FTC’s website (www.ftc.gov) a publication entitled “.Com Disclosures: How to Make Effective Disclosures in Digital Advertising.” Attached to my declaration as Exhibit G is a true and correct copy of this document, which I downloaded from https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-staff-revises- online-advertising-disclosure-guidelines/130312dotcomdisclosures.pdf. 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 74 Filed 11/24/15 Page 7 of 8 9. On November 19, 2015, I downloaded a report by the Office of Oversight and Investigations Majority Staff of the Senate Committee on Commerce, Science, and Transportation entitled “Aggressive Sales Tactics on the Internet and Their Impact on American Consumers” from http://www.commerce.senate.gov/public/_cache/files/cf4a2051-9650-4c5a-bf51- 8e325fe6112d/ECE47201046B10273BBA8086DA12549F.e-commerce-staff- report.pdf. A true and correct copy of this document is attached hereto as Exhibit H. 10. On November 19, 2015, I downloaded a report by the Office of Oversight and Investigations Majority Staff of the Senate Committee on Commerce, Science, and Transportation entitled “Supplemental Report on Aggressive Sales Tactics on the Internet” from http://www.commerce.senate.gov/public/_cache/files/439184c5-0965-4bb9-aa98- 4a114b00a42e/809CAFA18A7A13D75486175719ACE1F3.5.19.10- supplemental-staff-report-on-aggressive-online-sales-tactics.pdf. A true and correct copy of this document is attached hereto as Exhibit I. 11. On November 19, 2015, I downloaded a transcript of a Senate Committee on Commerce, Science, and Transportation hearing held on November 17, 2009 from http://www.gpo.gov/fdsys/pkg/CHRG-111shrg54917/pdf/CHRG- 111shrg54917.pdf. A true and correct copy of this document is attached hereto as 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 74 Filed 11/24/15 Page 8 of 8
2015-11-24	75	DECLARATION of Paula Selis in Support of 71 Opposition/Response to Motion, filed byFederal Trade Commission. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Related document(s) 71 ) (Edmondson, Eric) (Filed on 11/24/2015) Modified on 11/25/2015 (dtmS, COURT STAFF). (Entered: 11/24/2015)	Case 3:15-cv-01129-HSG Document 75 Filed 11/24/15 Page 1 of 3 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected]; Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; sprocter tc.gov Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Case No. 15-cv-01129-HSG DECLARATION OF PAULA SELIS Plaintiff, V. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. DECLARATION OF PAULA SELIS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 75 Filed 11/24/15 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. I am an attorney licensed to practice in the State of Washington. I work as an Assistant Attorney General for the State of Washington. I make this declaration based on my personal knowledge. 2. I have reviewed the FTC's Complaint and DIRECTV's Motion for Partial Summary Judgment in this action. 3. In 2009 and 2010, the 50 states and the District of Columbia (collectively, the "States") filed individual Complaints against DIRECTV under their respective state laws. In December 2010, all the States entered into separate, substantially similar settlement agreements with DIRECTV (the "State Settlement Agreements"). Copies of Washington's Complaint and Consent Decree, filed with the Superior Court of King County on December 14, 2009 and December 16, 2010 respectively, are attached as Exhibits A and B to this Declaration. The State Settlement Agreements of the other States were likewise filed with their respective state courts as consent orders or consent decrees. 4. I was the lead attorney for the State of Washington in connection with the filing the Complaint and negotiation and entry of the settlement agreement between Washington and DIRECTV. Additionally, I have served and continue to serve, on behalf of the State of Washington, as a member of the States' coordinating committee for the investigation of DIRECT, the negotiation of the State Settlement Agreements, and the monitoring of DIRECTV's compliance with the State Settlement Agreements. Although I was aware that the FTC had also begun investigating DIRECTV by the time the State Settlement Agreements were entered, the FTC was not a party to the State Settlement Agreements and did not participate in negotiating them with DIRECTV. 5. In bringing the Complaints and entering into the State Settlement Agreements, the States acted as independent sovereigns. Like the States' Complaints, the State Settlement Agreements addressed claims based on state law, so the State Settlement Agreements released only state law claims. This was effectuated by tying the scope of releases in Section 14.1 to the definition of "Consumer Act" or "Consumer Protection Act" in Section 3.4, which, in turn, referenced state law, and only state law. DECLARATION OF PAULA SELIS 2 Case 3:15-cv-01129-HSG Document 75 Filed 11/24/15 Page 3 of 3 6. Section 10.1 of the settlement, captioned "Compliance With All Laws, states categorically that: "Nothing in this Judgment shall be construed as relieving DIRECTV of the obligation to comply with all State and Federal laws, regulations or rules, nor shall any of the provisions of this judgment be deemed to be permission to engage in any acts or practices prohibited by such law, regulation or rule." (Emphasis added.) See page 34, Exhibit B, State of Washington Consent Decree. 7. Neither the States' Complaints nor the State Settlement Agreements are based upon federal law, including, for example, the Federal Trade Commission Act (FTC Act) and the Restore Online Shoppers Confidence Act (ROSCA). In fact, the States' investigations and the parties' entry into the State Settlement Agreements pre-dated the enactment of ROSCA on December 29, 2010. In addition, the State Settlement Agreements do not purport to monitor or regulate DIRECTV' s compliance with federal law. 8. In asserting, on page 18 of its Motion for Partial Summary Judgment, that DIRECTV is in "full compliance" with the State Settlement Agreements, DIRECTV does not speak for the State of Washington. Although Washington has not thus far brought a formal enforcement action against DIRECTV for violating the State Settlement Agreement, that fact alone should not be interpreted as establishing DIRECTV's compliance with Washington's Consent Decree, let alone with federal law. Because prosecutors typically face a multiplicity of demands on their time and resources, it is inappropriate to infer an absence of a violation of law from an absence of a law enforcement action. Moreover, as noted above, Section 10.1 of the Consent Decree specifically disclaims any suggestion that its terms grant "permission" to DIRECTV to engage in otherwise unlawful behavior. I declare under the penalty of perjury that the foregoing is true and correct. Executed on a2,(/' rai Seattle, Washington. ct Paula Selis Assistant Attorney General State of Washington DECLARATION OF PAULA SELIS 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2015-11-24	76	Error, to be Re-filed Administrative Motion to File Under Seal EXHIBITS H, I, J, AND K TO DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF OPPOSITION TO DEFENDANTS MOTION FOR PARTIAL SUMMARY JUDGMENT filed by Federal Trade Commission. (Attachments: # 1 Declaration DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF PLAINTIFF FEDERAL TRADE COMMISSIONS ADMINISTRATIVE MOTION TO FILE UNDER SEAL, # 2 Proposed Order PROPOSED ORDER GRANTING PLAINTIFF FEDERAL TRADE COMMISSIONS ADMINISTRATIVE MOTION TO FILE UNDER SEAL)(Edmondson, Eric) (Filed on 11/24/2015) Modified on 11/25/2015 (dtmS, COURT STAFF). Modified on 11/25/2015 (dtmS, COURT STAFF). (Entered: 11/24/2015)	Case 3:15-cv-01129-HSG Document 76 Filed 11/24/15 Page 1 of 3 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL EXHIBITS H, I, J, AND K TO DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF OPPOSITION TO DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 76 Filed 11/24/15 Page 2 of 3 Pursuant to N.D. Cal. L. R. 79-5(d), Plaintiff Federal Trade Commission (“FTC” or “Commission”) hereby moves the Court to issue an administrative order that authorizes the sealing of Exhibits H, I, J, and K to the Declaration of Eric D. Edmondson in Support of the FTC’s Opposition to DIRECTV’s Motion for Partial Summary Judgment. These documents were designated as “confidential” when they were submitted to the Commission in response to a civil investigative demand issued to DIRECTV, LLC, a party to this action, in connection with an FTC’s law-enforcement investigation. Although the identified documents have not been re- designated as “confidential” for purposes of the instant action, the Protective Order issued by this Court on October 15, 2015, provides that documents previously submitted as confidential will continued to be treated as such for 90 days from the issuance of the Protective Order to allow re- designation of confidential status. (Dkt. 54, ¶9) Because Exhibits H, I, J, and K are currently subject to confidentiality under the Protective Order, the FTC seeks to have them filed under seal to comply with the terms of that Order. Edmondson Declaration in Support of FTC’s Administrative Motion to File Under Seal ¶3. Moreover, no redacted, public versions of the documents have been submitted, as it is our understanding that the entire documents are subject to confidential designation. Id. ¶2. A proposed order granting the FTC’s Administrative Motion to File Under Seal Exhibits H, I, J, and K to the Edmondson Declaration in Support of the FTC’s Opposition to DIRECTV’s Motion for Partial Summary Judgment is submitted herewith. Dated: November 24, 2015 Respectfully Submitted, _/s/ Eric D. Edmondson__ Eric D. Edmondson Jacob A. Snow Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 76 Filed 11/24/15 Page 3 of 3
2015-11-25	77	CERTIFICATE OF SERVICE by Federal Trade Commission re 73 Declaration in Opposition, 74 Declaration in Opposition, for Manually Filed Exhibits (Edmondson, Eric) (Filed on 11/25/2015) (Entered: 11/25/2015)	Case 3:15-cv-01129-HSG Document 77 Filed 11/25/15 Page 1 of 3 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, /// /// /// /// a limited liability company, Defendants. CERTIFICATE OF SERVICE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Case No. 15-cv-01129-HSG CERTIFICATE OF SERVICE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 77 Filed 11/25/15 Page 2 of 3 CERTIFICATE OF SERVICE I Kelly C. Ortiz, declare as follows: I am employed in San Francisco County, San Francisco, California. I am over the age of eighteen years and not a party to this action. My business address is Federal Trade Commission 901 Market St., Ste. 570, San Francisco, California 94103. On November 25, 2015, I served a true and correct copy of the following DVDs associated with the Manual Filing Notifications efiled with the court on November 24, 2015: • One DVD containing Exhibit A to the Declaration of Nicole Davis (Dkt# 73-1); • One DVD containing Exhibit A to the Declaration of Ann M. Stahl (Dkt# 74-1); • One DVD containing Exhibit B to the Declaration of Ann M. Stahl (Dkt# 74-2); • One DVD containing Exhibit C to the Declaration of Ann M. Stahl (Dkt# 74-3); • One DVD containing Exhibit D to the Declaration of Ann M. Stahl (Dkt# 74-4); on the interested parties in this action addressed as follows: Counsel for Defendants Chad Hummel, Esq. Sidley Austin LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Phone: (310) 595-2600 Fax: (310) 595-2601 Email: [email protected]; Ryan M. Sanrock, Esq. Sidley Austin LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Phone: (415) 772-1200 Fax: (415) 772-7400 Email: [email protected] X Clayton Friedman, Esq. Michael Yaghi, Esq. Sidley Austin LLP 695 Town Center Drive, Suite 530 Costa Mesa, CA 92626 Phone: (213) 896-6000 Fax: (213) 896-6600 Email: [email protected]; [email protected] Mark D. Campbell, Esq. Sidley Austin LLP 555 W. 5th Street, Suite 4000 Los Angeles, CA 90013 Phone: (213) 896-6143 Fax: (213) 896-6600 Email: [email protected] (BY ELECTRONIC MAIL) By transmitting the foregoing document(s) electronically from the e-mail address, [email protected], to the person(s) at the e-mail addresses listed 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 77 Filed 11/25/15 Page 3 of 3 above. The transmission was reported as complete and without error. This method of service was made pursuant to the agreement of counsel. I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made. Executed on November 25, 2015, at San Francisco, California 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3
2015-11-25		Electronic filing error. Exhibits to be Sealed Not Included with Filing. This filing will not be processed. Please re-file in its entirety. Re: 76 Administrative Motion to File Under Seal filed by Federal Trade Commission (dtmS, COURT STAFF) (Filed on 11/25/2015) (Entered: 11/25/2015)
2015-11-25	78	Administrative Motion to File Under Seal Exhibits H, I, J, and K to the Edmondson Declaration ISO Opposition 72 filed by Federal Trade Commission. (Attachments: # 1 Declaration ISO Administrative Motion to File Under Seal, # 2 Proposed Order Granting Administrative Motion to File Under Seal, # 3 Exhibit Unredacted Exhibit H to Edmondson Declaration ISO Opposition 72 , # 4 Exhibit Unredacted Exhibit I to Edmondson Declaration ISO Opposition 72 , # 5 Exhibit Unredacted Exhibit J to Edmondson Declaration ISO Opposition 72 , # 6 Exhibit Unredacted Exhibit K to Edmondson Declaration ISO Opposition 72 )(Edmondson, Eric) (Filed on 11/25/2015) (Entered: 11/25/2015)	Case 3:15-cv-01129-HSG Document 78 Filed 11/25/15 Page 1 of 3 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL EXHIBITS H, I, J, AND K TO DECLARATION OF ERIC D. EDMONDSON IN SUPPORT OF OPPOSITION TO DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 78 Filed 11/25/15 Page 2 of 3 Pursuant to N.D. Cal. L. R. 79-5(d), Plaintiff Federal Trade Commission (“FTC” or “Commission”) hereby moves the Court to issue an administrative order that authorizes the sealing of Exhibits H, I, J, and K to the Declaration of Eric D. Edmondson in Support of the FTC’s Opposition to DIRECTV’s Motion for Partial Summary Judgment. These documents were designated as “confidential” when they were submitted to the Commission in response to a civil investigative demand issued to DIRECTV, LLC, a party to this action, in connection with an FTC’s law-enforcement investigation. Although the identified documents have not been re- designated as “confidential” for purposes of the instant action, the Protective Order issued by this Court on October 15, 2015, provides that documents previously submitted as confidential will continued to be treated as such for 90 days from the issuance of the Protective Order to allow re- designation of confidential status. (Dkt. 54, ¶9) Because Exhibits H, I, J, and K are currently subject to confidentiality under the Protective Order, the FTC seeks to have them filed under seal to comply with the terms of that Order. Edmondson Declaration in Support of FTC’s Administrative Motion to File Under Seal ¶3. Moreover, no redacted, public versions of the documents have been submitted, as it is our understanding that the entire documents are subject to confidential designation. Id. ¶2. A proposed order granting the FTC’s Administrative Motion to File Under Seal Exhibits H, I, J, and K to the Edmondson Declaration in Support of the FTC’s Opposition to DIRECTV’s Motion for Partial Summary Judgment is submitted herewith. Dated: November 24, 2015 Respectfully Submitted, _/s/ Eric D. Edmondson__ Eric D. Edmondson Jacob A. Snow Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 78 Filed 11/25/15 Page 3 of 3
2015-11-30	79	Declaration of Christopher Murphy in Support of 78 Administrative Motion to File Under Seal Exhibits H, I, J, and K to the Edmondson Declaration ISO Opposition 72 filed byDIRECTV LLC. (Related document(s) 78 ) (Sandrock, Ryan) (Filed on 11/30/2015) (Entered: 11/30/2015)	Case 3:15-cv-01129-HSG Document 79 Filed 11/30/15 Page 1 of 3 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to Hon. Maria-Elena James DECLARATION OF CHRISTOPHER MURPHY IN SUPPORT OF FILING DIRECTV MATERIALS UNDER SEAL DECLARATION OF CHRISTOPHER MURPHY 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 79 Filed 11/30/15 Page 2 of 3 I, Christopher Murphy, declare and state as follows: 1. I am the Vice President & Deputy General Counsel at DIRECTV. Pursuant to Local Rules 79-5(d)(1)(A) and 79-5(e)(1), I submit this Declaration in support of the FTC’s Motion to File Under Seal (Dkt. 72). 2. The FTC filed four DIRECTV documents provisionally under seal: (a) DTVFTCII- 0047444; (b) DTVFTCII-0081362; (c) DTVFTCII-0114578; and (d) DTVFTCII-0227792. DIRECTV designated each of these document as Confidential, pursuant to the Protective Order in this case (Dkt. 54). 3. These documents, as described in greater detail below, contain DIRECTV’s proprietary or otherwise highly confidential and commercially sensitive information, including information about DIRECTV’s customer research, analysis of customer concerns, and consideration of changes to its services. The satellite television industry is highly competitive. The public disclosure of this information would put DIRECTV at a competitive disadvantage, as it would expose such highly confidential information to competitors, who could use this information to counter DIRECTV’s strategies and/or attempt to discredit DIRECTV’s products and services. a. DTVFTCII-0047444 is a May 2013 PowerPoint titled “Customer Pain Points—Review and Prioritization.” It contains an internal discussion by and for specific employees of customer concerns and proposals for addressing these concerns. b. DTVFTCII-0081362 is an August 2012 e-mail between Michael White, then DIRECTV’s CEO, and Paul Guyardo, then DIRECTV’s Executive Vice President and Chief Revenue and Marketing Officer. It discusses a proposal to modify DIRECTV’s notifications to consumers. c. DTVFTCII-0114578 is an August 2012 PowerPoint titled “Digital Customer Experience: Steering Committee.” It contains an internal discussion by and for specific employees of customer concerns and proposals for addressing these concerns. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF CHRISTOPHER MURPHY 1 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 79 Filed 11/30/15 Page 3 of 3 d. DTVFTCII-0227792 is a June 2013 PowerPoint titled “Digital Acquisition Flow, Qualitative Usability Testing.” It contains a discussion by and for specific employees of a customer survey and proposals for addressing the results of this survey. 4. These materials are protected within DIRECTV and only available to specific employees for purposes of setting corporate policy, strategic planning, and the direction of the company. It is the practice of employees who receive these confidential reports or communications to maintain their confidentiality. It is also their practice not to share them with any other employees of DIRECTV. These materials are therefore not available to all employees or the public, and it would be very damaging to DIRECTV if competitors were to have access to these materials. DIRECTV would be at a competitive disadvantage if its competitors had access to these strategic materials, especially since DIRECTV would not have access to similar confidential materials of its competitors. 5. For all of these reasons, I respectfully request that the Court grant the FTC’s motion to file these documents under seal and protect them from public disclosure or access. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on November 30, 2015, at Los Angeles, California The filer hereby attests that the holographic signature corresponding to the above conformed signature is on file. /s/ Christopher Murphy Christopher Murphy 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF CHRISTOPHER MURPHY 2 3:15-CV-01129
2015-11-30	80	ERRATA re 71 Opposition/Response to Motion for Partial Summary Judgment by Federal Trade Commission. (Edmondson, Eric) (Filed on 11/30/2015) (Entered: 11/30/2015)	Case 3:15-cv-01129-HSG Document 80 Filed 11/30/15 Page 1 of 3 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION CASE NO. 15-cv-01129-HSG NOTICE OF ERRATA TO THE FEDERAL TRADE COMMISSION’S OPPOSITION TO DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT Hon. Haywood S. Gilliam, Jr. FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 80 Filed 11/30/15 Page 2 of 3 PLEASE TAKE NOTICE of the following corrections to the Federal Trade Commission’s Opposition to DIRECTV’s Motion for Partial Summary Judgment (“Opposition”) (Dkt. No. 71). In the “Corrected Language” column below, added language is underlined and removed language is stricken through. Page and Line No. Page 3, Lines 4–5 Page 17, Lines 14–15 Corrected Language (Dkt No. 25 ¶¶ 11, 20.) “the inability to set a future cancellation date and refuse premiums at the point of sale.” “conditions close to the triggering claim” Office of Oversight and Investigations, Aggressive Sales Tactics on the Internet and their Impact on American Consumers (Nov. 16, 2009), Sen. Comm. on Commerce, Science and Technology, Restore Online Shoppers’ Confidence Act, S. Rep. No. 111-240, Senate Report at 41 (Stahl Dec. Ex. H, at 28). Original Language (Dkt No. 2 ¶¶ 11, 20.) “the inability to future date and refuse premiums at the point of sale.” “conditions close the triggering claim” Senate Report at 41 (Stahl Dec. Ex. H, at 28). Page 11, Line 12 Page 21, Line 12 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 80 Filed 11/30/15 Page 3 of 3 Dated: November 30, 2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Respectfully submitted, /s/ Eric Edmondson________ Eric D. Edmondson Erika Wodinsky Jacob A. Snow Boris Yankilovich 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) Raymond E. McKown Kenneth H. Abbe Stacy Procter 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 (phone) (310) 824-4380 (facsimile) Attorneys for Plaintiff Federal Trade Commission 3
2015-12-03	81	Discovery Order re: 56 Joint Discovery Letter Brief, 66 Joint Discovery Letter Brief, 70 Joint Discovery Letter. Signed by Judge Maria-Elena James on 12/3/2015. (cdnS, COURT STAFF) (Filed on 12/3/2015) (Entered: 12/03/2015)	Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 1 of 14 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. Nos. 56, 66, 70 INTRODUCTION Pending before the Court are the parties’ three discovery dispute letters regarding Defendants DIRECTV and DIRECTV, LLC’s (collectively, “Defendants”) Federal Rule of Civil Procedure 30(b)(6) deposition notice (Dkt. Nos. 56 and 66) and Plaintiff Federal Trade Commission’s (the “FTC”) Request for Production of Documents No. 4 (Dkt. No. 70, “RFP Ltr.”). Having considered the parties’ positions, relevant legal authority, and the record in this case, the Court issues the following order. BACKGROUND 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N 21 A. Factual Background 22 23 24 25 26 27 28 Defendants provide direct-to-home digital television service and multi-channel video programming distribution throughout the United States. Compl. ¶ 10, Dkt. No. 1. They offer this service to consumers by subscription, which consists of a programming package, a satellite dish and other necessary equipment, and installation and support services. Id. ¶ 11. Defendants typically require consumers to agree to a mandatory 24-month contract to receive programming and assess an “early cancellation fee” against customers who cancel their subscription before the end of 24 months. Id. ¶ 12. Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 2 of 14 Since 2007, Defendants have disseminated advertisements for their subscription service that contain the following statements regarding pricing for their subscription service: A. “All New! Limited Time Offer! . . . Now only $19.99/mo.” B. “Package offers starting at $24.99/mo. Limited Time.” C. “Limited Time! $24.99/mo for 12 months.” Id. ¶ 16 & Exs. 1-3. To the extent these advertisements contain any qualifying disclosures concerning the mandatory two-year contract length and the price consumers will pay after the initial period, the FTC alleges any such disclosures are inadequate. Id. ¶ 17. Some of Defendants’ advertisements also contain statements that subscribers will receive premium channels free of charge for three months. Id. ¶ 18. For example, Exhibit 1 to the Complaint states “over 30 premium channels free for 3 months.” The FTC alleges these advertisements do not convey that (1) Defendants automatically enroll consumers in a negative option continuity plan with additional charges; (2) consumers must affirmatively cancel the negative option continuity plan before the end of a trial period to avoid additional charges; (3) Defendants use consumers’ credit or debit card information to charge consumers monthly for the negative option continuity plan; and (4) the costs associated with the negative option continuity plan. Id. ¶ 19. The FTC further alleges Defendants engage in deceptive internet sales on their website, www.directv.com. Since 2007, Defendants have disseminated webpages that contain statements that are identical or similar to the following: A. “Limited Time. 140+ channels. $24.99 month for 12 months”; and B. “CHOICE: 150+ channels. Only $29.99 month for 12 months” Id. ¶ 21 & Ex. 4 at 1-2. The FTC alleges these webpages do not convey that Defendants require consumers to remain a subscriber for two years, a mandatory term which carries an early cancellation fee for the failure to do so; and that Defendants charge significantly higher monthly prices for their programming packages during the second year of service. Id. ¶ 22. Defendants’ webpages typically contain statements concerning an offer of free premium channels that are identical or similar to the following: “Free for 3 months. HBO + Starz + Showtime + Cinemax.” 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 3 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Id. ¶ 23 & Ex. 4 at 1. The FTC maintains these webpages do not convey to consumers that Defendants automatically enroll consumers in a negative option continuity plan and related costs described above. Id. ¶ 24. Consumers who call the telephone number listed in Defendants’ advertisements speak with a telemarketer. Id. ¶ 25. Defendants’ telephonic sales presentations typically include statements concerning the initial monthly prices that consumers will pay for programming packages, but the FTC alleges the presentations do not adequately disclose the monthly cost to consumers of the programming packages during in the second year of their subscription agreements. Id. B. Complaint The FTC filed this case on March 11, 2015, bringing claims under Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, and Section 5 of the Restore Online Shoppers’ Confidence Act (“ROSCA”), 15 U.S.C. § 8404, in connection with the advertising, marketing, and sale of Defendants’ multi-channel video programming subscription service. In Count I, the FTC alleges Defendants’ fail to disclose or disclose adequately: (1) the mandatory two-year agreement period for the subscription service, which carries an early cancellation fee; and (2) the significantly higher price for programming packages, typically $25 to $45 per month higher, during the mandatory second year of the consumer’s agreement, and this failure constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). Compl. ¶¶ 28-30. In Count II, the FTC alleges Defendants’ fail to disclose or disclose adequately: (1) that they automatically enroll consumers in a negative option continuity plan with significant charges; (2) consumers must affirmatively cancel the negative option continuity plan before the end of the trial period to avoid charges; (3) Defendants use consumers’ credit or debit card information to charge consumers for the negative option continuity plan; and (4) the costs associated with the negative option continuity plan, and this failure also constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). Id. ¶¶ 31-33. In Count III, the FTC alleges Defendants have charged or attempted to charge consumers for access to premium channels, as part of its subscription service, through a negative option 3 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 4 of 14 feature while failing to clearly and conspicuously disclose all material terms of the transaction before obtaining consumers’ billing information, and that this practice constitutes a violation of Section 4(1) of ROSCA, 15 U.S.C. § 8403(1). Id. ¶¶ 39-40. In Count IV, the FTC alleges Defendants have charged or attempted to charge consumers for access to premium channels, as part of their subscription service, through a negative option feature while failing to obtain consumers’ express informed consent before charging their credit card, debit card, bank account, or other financial account for those premium channels, and that this practice constitutes a violation of Section 4(2) of ROSCA, 15 U.S.C. § 8403(2). Id. ¶¶ 41-42. LEGAL STANDARD Federal Rule of Civil Procedure 26 provides that a party may obtain discovery “regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case[.]” Fed. R. Civ. P. 26(b)(1). A court “must limit the frequency or extent of discovery otherwise allowed by [the Federal] rules” if “(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).” Fed. R. Civ. P. 26(b)(2)(C). “The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense,” including by (1) prohibiting disclosure or discovery; (2) conditioning disclosure or discovery on specified terms; (3) preventing inquiry into certain matters; or (4) limiting the scope of disclosure or discovery to certain matters. Fed. R. Civ. P. 26(c)(1). “Rule 26(c) confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required.” Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). DISCUSSION A. Rule 30(b)(6) Letters The parties’ first two letters concern Defendants’ Rule 30(b)(6) Notice of Deposition served on the FTC on June 22, 2015, which contains five topics: 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 5 of 14 TOPIC NO. 1. All communications, negotiations, and discussions between or involving the FTC, on the one hand, and DIRECTV (including its attorneys) and/or any or all of the “attorneys general of all 50 states and the District of Columbia,” on the other, both before and after the effective date of the multi-state settlement agreement, concerning the multi-state settlement agreement and any of its terms. TOPIC NO. 2. The decision by the FTC, including the reasons for the decision, not to object to, to intervene in, or to seek to modify or augment the terms of the multi-state settlement agreement. TOPIC NO. 3. The results of any and all research, surveys, or tests conducted by the FTC concerning DIRECTV’S advertising that the FTC contends has been or is deceptive. TOPIC NO. 4. The FTC’s claim for restitution, refund of monies paid, or disgorgement of ill-gotten gains, as set forth in the “prayer for relief (Paragraph B of the COMPLAINT), including, but not limited to, any computation of monetary relief sought by the FTC and any conclusions regarding the nature and extent of any alleged injury to consumers that the FTC contends was caused by DIRECTV’S advertising. TOPIC NO. 5. The methods used and results of any and all investigations by the FTC into the reasons for or validity of alleged consumer complaints about DIRECTV’S advertising practices. Dkt. No. 66, Ex. A. 1. Topics 1 and 2 As to Topics 1 and 2, Defendants explain the attorney generals of all 50 states previously brought claims about the advertising disclosures, but those claims were resolved by a Multi-State Settlement Agreement (the “MSA”), effective 2011, that covers the advertising disclosures at issue in this case. Dkt. No. 66 at 2. Defendants argue the FTC is fully aware of the terms of the settlement; was invited to join in the settlement, declined, but thereafter allowed Defendants to implement a new advertising regime consistent with the MSA; and Defendants have not thereafter been the subject of an enforcement action by any state. Id. Defendants maintain Topics 1 and 2 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 6 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 are relevant to whether the FTC’s requested injunctive relief may be inconsistent with the terms of the MSA, whether the claims are at odds with what its lawyers discussed with Defendants during the negotiations, and whether the FTC is seeking monetary redress that may include double recoveries in light of the restitution program of the MSA. Id. at 3. In response, the FTC argues that if the presiding judge in this matter, the Honorable Haywood Gilliam, grants its pending Motion to Strike six of Defendants’ affirmative defenses, Topics 1 and 2 will become moot. Id. at 5; see also Dkt. No. 32 (Motion to Strike). After Defendants served the Rule 30(b)(6) notice, the FTC agreed to produce a witness on Topics 3, 4, and 5, but proposed deferring the scheduling of testimony on Topics 1 and 2 pending the Court’s resolution of its Motion to Strike. Dkt. No. 66 at 5. Defendants’ six affirmative defenses generally contend the FTC’s action is barred by the agency’s failure to participate in Defendants’ settlements with states’ attorneys general in 2011. Id.; see also Dkt. No. 27 (Amended Answer). Defendants maintain that, even if the FTC’s Motion to Strike were to be granted, the noticed topics have independent relevance. Dkt. No. 66 at 3. They argue the FTC’s views regarding Defendants’ disclosures and the sufficiency of the MSA “are significant issues to be litigated in this case,” and the deposition could reveal the FTC approved of critical aspects of the settlement that implicate the disclosure issues in this lawsuit. Id. Defendants further argue a deposition on these topics could reveal the FTC pushed for particular revisions to Defendants’ disclosures, which would be relevant to the appropriate relief, if any, in this case. Id. at 4. Defendants note the FTC has agreed to produce nonprivileged communications from the states to the FTC concerning Defendants’ ads, and the FTC has not objected on relevance to a request to produce communications concerning why the FTC did not object to the MSA. Id. Having reviewed the parties’ positions, the Court finds any decision regarding Topics 1 and 2 is best deferred until after resolution of the FTC’s Motion to Strike. Although Defendants speculate the discovery is relevant regardless of the FTC’s Motion, the Court finds it prudent to make this determination after the pleadings are settled so that the parties may avoid unnecessary disputes. Further, Defendants admit they initially agreed to defer Topics 1 and 2 pending resolution of the Motion to Strike, and they have not shown a compelling need to obtain the 6 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 7 of 14 discovery now, prior to resolution of the Motion. Id. at 3. Accordingly, Defendants’ motion to compel a Rule 30(b)(6) deposition on Topics 1 and 2 is DENIED WITHOUT PREJUDICE. 2. Topics 3-5 On August 28, 2015, Defendants deposed the FTC regarding Topics 3 through 5. The FTC produced Kerry O’Brien, the Assistant Director for the FTC’s Western Region, as its designated witness. Dkt. No. 56 at 3. At the deposition, FTC counsel directed Ms. O’Brien not to answer questions about the following: • the FTC’s factual bases for asserting that DIRECTV’s ads have been deceptive, including the existence of any surveys or studies of these ads. • steps taken by the designee witness to educate herself regarding the noticed topics. • the FTC’s investigation, if any, of alleged consumer complaints referenced in the Complaint, even though the witness said that she reviewed a summary of such complaints as part of her preparation. • the monetary relief the FTC seeks, including basic questions about whether the witness looked at any calculations of alleged consumer injury. Dkt. No. 56 at 1-2. Defendants argue they are entitled to discovery regarding these topics, including the facts surrounding the FTC’s investigation, including the existence of any surveys, studies or research, as well as whether the FTC possesses or has conducted any studies, surveys, or research regarding Defendants’ advertisements. Id. at 2. According to the FTC, no discovery on these matters is required as the Complaint sets forth all facts supporting its allegations. Id. at 3. It argues what Defendants actually seek to compel are not the facts underlying the FTC’s allegations, but information about its investigative techniques. Id. at 4. The FTC maintains this information is privileged as attorney work product and deliberative process. Id. The FTC further argues Defendants are not entitled to further testimony about Ms. O’Brien’s preparation, including disclosure of a summary of complaints she reviewed prior to the deposition, because such information is also privileged. Id. In response, Defendants argue any claim of privilege does not preclude inquiry into the investigation or its scope because the FTC’s “fact gathering” activities are the proper scope of a 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 8 of 14 Rule 30(b)(6) deposition. Id. at 2. A party may instruct a deposition witness not to answer when necessary to preserve a privilege. Fed. R. Civ. P. 30(c)(2). The work product privilege protects against disclosure of the “mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.” Fed. R. Civ. P. 26(b)(3)(B). However, a mere allegation that the work product doctrine applies is insufficient. See Peat, Marwick, Mitchell & Co. v. West, 748 F.2d 540, 542 (10th Cir. 1984), cert. dismissed, 469 U.S. 1199 (1985). “Because the work product doctrine is intended only to guard against divulging the attorney’s strategies and legal impressions, it does not protect facts concerning the creation of work product or facts contained within work product.” Resolution Tr. Corp. v. Dabney, 73 F.3d 262, 266 (10th Cir. 1995) (citation omitted). “Thus, work product does not preclude inquiry into the mere fact of an investigation.” Id.; see also Ressler v. United States, 2012 WL 3231002, at 3 (D. Colo. Aug. 6, 2012) (federal agency’s “fact gathering” activities proper subject of a 30(b)(6) deposition). Having reviewed the parties’ positions, the Court finds Defendants have shown Topics 3 through 5 are designed to elicit discoverable information, including questions relating to which ads were allegedly deceptive, how they were deceptive, whether the FTC has any factual support for its contention that consumers have been deceived, its investigation of alleged consumer complaints, and the scope of alleged consumer harm or putative bases for monetary relief. Dkt. No. 56 at 1. The factual information gathered by the FTC may be relevant, and inquiry about the fact gathering process utilized by the FTC may lead to the discovery of admissible evidence. Consequently, the Rule 30(b)(6) topics concern discoverable information. See Ressler, 2012 WL 3231002, at 3. Defendants also have the right to interrogate a government designee witness regarding preparations. See EEOC v. Sterling Jewelers, Inc., 2010 WL 2803017, at 2 (W.D.N.Y. July 15, 2010) (disclosure of who was interviewed, what the deponent did to refresh recollection, and what facts agency considered does not reveal agency’s trial strategy or its analysis of the case). However, the mere fact that Ms. O’Brien acknowledged she prepared for her deposition in part by reviewing a summary of consumer complaints regarding Defendants’ ads does not entitle 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 9 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants to testimony regarding the summary. The FTC maintains this “summary” is a “confidential agency analysis . . . prepared by a staff economist in the FTC’s Bureau of Economics at the direction of FTC counsel,” and “is pre-decisional work product, created for a law enforcement purpose, containing facts interwoven with FTC staff analysis and conclusions about investigational objectives.” Dkt. No. 56 at 5. Defendants do not deny the summary is privileged but argue “any work product or deliberative process protection was waived once the summary was reviewed by the witness to support her testimony.” Id. at 3 (citing Mattel, Inc. v. MGA Entm’t, Inc., 2010 WL 3705782, at *5 (C.D. Cal. Aug. 3, 2010) (“Federal Rule of Evidence 612 renders discoverable ‘written materials reviewed prior to a deposition . . . to permit discovery of writings [ ] that a witness reviewed before a deposition for the purpose of refreshing his or her recollection.’” (quoting United States v. 22.80 Acres of Land, 107 F.R.D. 20, 25 (N.D. Cal. 1985) (omissions in original))). However, unlike the witness in Mattel, there is no indication Ms. O’Brien used the summary “to refresh her recollection,” and Rule 612 applies only where a witness “uses a writing to refresh memory.” Fed. R. Evid. 612(a). “Thus, even if the witness consults a writing while testifying, the adverse party is not entitled to see it unless the writing influenced the witness’s testimony.” In re Kellogg Brown & Root, Inc., 796 F.3d 137, 144 (D.C. Cir. 2015) (citation and internal quotation omitted). Accordingly, Defendants have not shown they are entitled to question Ms. O’Brien on the contents of the summary. Finally, Defendants are entitled to information regarding the monetary relief sought. See City and Cty. of S.F. v. Tutor-Saliba Corp., 218 F.R.D. 219, 221 (N.D. Cal. 2003) (“Plaintiff should provide its assessment of damages . . . in sufficient detail so as to enable each of the multiple Defendants in this case to understand the contours of its potential exposure and make informed decisions as to settlement and discovery.”). However, the FTC has already disclosed that it plans to seek for consumer redress “the amount of money paid by the consumers to DIRECTV stemming from its alleged misconduct, less refunds made.” Dkt. No. 56 at 5. This is the appropriate standard under the FTC Act. See FTC v. Figgie Int’l, Inc., 994 F.2d 595, 606 (9th Cir. 1993); FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1088 (C.D. Cal. 2012). While Defendants seek more detailed calculation methodologies, they do not deny the FTC’s argument 9 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 10 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 that information about the precise measure of monetary harm to their customers is in their own hands. Dkt. No. 56 at 5. They also do not deny they refused to provide this data to the FTC in response to the FTC’s interrogatory request, objecting that the request “seeks detailed information regarding tens of millions of customers.” Id. At this point in the litigation, it is not clear how Defendants expect the FTC to provide testimony about detailed information that they themselves maintain. Based on this analysis, the Court GRANTS Defendants’ motion to compel further responses to Topics 3 through 5, except as to (1) Defendants’ request for further testimony regarding the contents of the summary Ms. O’Brien reviewed, (2) calculation methodologies for the monetary relief sought, and (3) any testimony that is properly deemed privileged. B. RFP Letter On June 26, 2015, the FTC served their First Set of Requests for Production. RFP Ltr. at 2. Request No. 4 seeks the production of “[a]ll advertisements created, drafted, or prepared, but not disseminated to consumers, relating to the Service.” Id. The FTC maintains these draft ads are relevant because they may reveal Defendants’ reasons for delivering the ads in their final form. Id. The FTC speculates “[a] draft ad with better disclosures that is rejected out of concern that such an ad would attract fewer customers would tend to show that DIRECTV acted consistently with an incentive to mislead the public.” Id. The FTC also argues evidence showing Defendants intended to make the misleading misrepresentations is relevant to establish that its misrepresentations were material. Id. The FTC contends “evidence of intent to mislead consumers is strong evidence that the ads are in fact misleading to consumers.” Id. at 3. The FTC further argues the draft ads are relevant to Defendants’ “good faith” affirmative defense. Id.; Am. Answer at 11 (“Defendants acted with a good faith belief that they had good cause and/or legitimate business reasons to act as they did and did not directly or indirectly perform any acts that would constitute a violation of consumers’ rights.”). Specifically, the FTC argues Defendants cannot simultaneously claim their actions were undertaken in good faith while refusing to produce documents relevant to establishing whether that good faith exists. RFP Ltr. at 3. 10 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 11 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants object to Request No. 4, arguing: (1) consumers never saw draft ads and thus could not have been deceived by them; (2) any intent or incentive to deceive consumers is not relevant to prove liability; (3) the probative value of the drafts is based on pure speculation by the FTC; (4) the burden of searching for and producing draft ads far outweighs any extremely limited probative value of this material; and (5) a high percentage of the drafts at issue are privileged. Id. at 4. Section 5(a) of the FTC Act prohibits “unfair or deceptive acts or practices in or affecting commerce” and empowers the FTC to prevent such acts or practices. 15 U.S.C. § 45(a)(1), (2). An act or practice is deceptive if (1) there is a representation, omission, or practice, (2) that is likely to mislead consumers acting reasonably under the circumstances, and (3) the representation, omission, or practice is material. FTC v. Pantron I Corp., 33 F.3d 1088, 1095 (9th Cir. 1994), cert. denied, 514 U.S. 1083 (1995). “[P]roof that the defendant intended to deceive consumers or acted in bad faith is unnecessary to establish a section 5(a) violation.” Commerce Planet, 878 F. Supp. 2d at 1083 (citing FTC v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1029 (7th Cir. 1988)). However, evidence which creates an inference that a defendant had the requisite knowledge that advertisements were misleading can be used to establish liability. Id. at 1082 (discussing as relevant the fact that the defendant had considered and “rejected the company’s experiments in placing clearer disclosures and sending post-transaction emails because they hurt conversion rates”). While the FTC need not prove Defendants intended to mislead consumers, the Court finds that if Defendants rejected draft ads with clearer disclosures out of concern that such ads would attract fewer customers, this would tend to show they acted consistently with an incentive to mislead the public. See id. (evidence that defendant rejected experiments placing clearer disclosures and sending post-transaction emails creates an inference that the defendant had the requisite knowledge to be held liable for deceptive website marketing). Thus, as draft ads may reveal Defendants’ reasons for delivering the ads in their final form, the Court finds they are relevant. See World Travel Vacation Brokers, 861 F.2d at 1029 (“the omission of material information, even if an advertisement does not contain falsehoods, may cause the advertisement to 11 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 12 of 14 violate section 5.”). Further, the FTC Act requires proof that the representation is material, and evidence that Defendants disseminated ads they knew where likely to mislead consumers can support a presumption of materiality. See Kraft, Inc. v. FTC, 970 F.2d 311, 323 (7th Cir. 1992) (evidence, including that defendant continued to run deceptive ads and even rejected proposed alternatives that would have allayed concerns over their deceptive nature, established the claim was material to consumers). In this case, the price and terms of Defendants’ service, including the mandatory two-year term with an early cancellation fee, significantly higher monthly prices for programming packages during the second year of service, and the negative option continuity plan, could all be considered material terms of Defendants’ service. As such, evidence showing Defendants considered and rejected ads with more prominent disclosures out of concern such disclosures would deter consumers from purchasing their service would be strong evidence that the ads actually delivered to consumers were designed to be misleading. FTC v. Cyberspace.com, LLC, 453 F.3d 1196, 1201 (9th Cir. 2006) (a representation “is material if it ‘involves information that is important to consumers and, hence, likely to affect their choice of, or conduct regarding, a product.’” (quoting Matter of Cliffdale Assocs., Inc., 103 F.T.C. 110, 165 (1984))). Defendants argue that production of all draft advertisements spanning over seven years would be unduly burdensome. RFP Ltr. at 5. Defendants note they already produced over 444,000 pages of documents to the FTC prior to the filing of this Complaint, and those productions included many draft advertisements. Id. at 5-6. Defendants further argue privilege review would be particularly burdensome “because it would require examining whether particular notations on draft advertisements reflect review in the RAP process or by other counsel.” Id. at 6.1 The FTC argues that, even if some privilege attaches to the requested material, the request is not unduly burdensome because “numerous tools exist for counsel to reduce the burden of reviewing large volumes of potentially privileged documents, including word searches (e.g., for ‘attorney- client privilege’) and sender/recipient filters (e.g., for communications to/from counsel).” Id. at 4. 1 Although the FTC argues otherwise, the Court finds Defendants have not waived any privilege relating to production of the draft ads. 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 13 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Having reviewed the parties’ positions, the Court finds good cause to limit the FTC’s request. On one hand, as discussed above, the FTC has established the relevancy of its request. On the other hand, the FTC’s position—that Defendants rejected draft ads with clearer disclosures out of concern that such ads would attract fewer customers—is merely speculative at this point, and the FTC has not shown why it needs all draft ads and related documents from the past seven years to establish this claim when a representative sample could be just as probative. Defendants maintain they would need to search for and review “hundreds of thousands of additional ads” to find and produce all draft ads relevant to the FTC’s request. Id. Considering the importance of the requested discovery to the FTC’s case, the Court finds the burden of producing all draft ads and related documents outweighs its likely benefit. See Fed. R. Civ. P. 26(b)(1) (In determining the scope of discovery, court must consider “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”). Accordingly, the Court ORDERS the parties to meet and confer in person to determine whether they can agree to a more limited production. If unable to reach an agreement, the parties shall file an updated joint letter in compliance with the undersigned’s Discovery Standing Order, and each party shall attach their proposal. Based on the analysis above, the Court ORDERS as follows: CONCLUSION 1) Defendants’ motion to compel a Rule 30(b)(6) deposition on Topics 1 and 2 is DENIED WITHOUT PREJUDICE, pending resolution of the FTC’s pending Motion to Strike; 2) Defendants’ motion to compel further responses to Topics 3 through 5 is GRANTED, except as to (1) Defendants’ request for further testimony regarding the contents of the summary Ms. O’Brien reviewed; (2) calculation methodologies for the monetary relief sought; and (3) any testimony that is properly deemed privileged; and 3) The FTC’s motion to compel Defendants response to Request No. 4 is GRANTED. However, the parties shall meet and confer to determine whether they can agree to a more limited production. If unable to reach an agreement, the parties shall file an updated joint 13 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 81 Filed 12/03/15 Page 14 of 14 letter in compliance with the undersigned’s Discovery Standing Order, and each party shall attach their proposal. IT IS SO ORDERED. Dated: December 3, 2015 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2015-12-07	82	Discovery Letter Brief filed by Federal Trade Commission. (Attachments: # 1 Exhibit Exhibit A, # 2 Exhibit Exhibit B, # 3 Exhibit Exhibit C, # 4 Exhibit Exhibit D, # 5 Exhibit Exhibit E, # 6 Exhibit Exhibit F, # 7 Exhibit Exhibit G, # 8 Proposed Order FTC's Proposed Protective Order Forbidding Consumer Declarant Depositions and Document Production Requests, # 9 Proposed Order DIRECTV's Proposed Order Denying the FTC's Motion for Protective Order)(Abbe, Kenneth) (Filed on 12/7/2015) (Entered: 12/07/2015)	Case 3:15-cv-01129-HSG Document 82 Filed 12/07/15 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on Tuesday, November 24, 2015, prior to filing this letter. In addition, the parties met and conferred on this issue several other times in an attempt to resolve this dispute informally, including November 6 (by email), November 10 (by telephone), November 12 (by email), November 16 (by email), November 17 (by email), November 18 (by email), and November 19 (by email). /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. Case 3:15-cv-01129-HSG Document 82 Filed 12/07/15 Page 2 of 6 NATURE OF DISPUTE This dispute concerns DIRECTV’s November 6, 2015 subpoenas to seven consumers for deposition testimony and the production of documents (collectively, the “consumer declarant subpoenas”) attached in redacted form as Exhibits A through G. Through this Joint Discovery Letter, the Federal Trade Commission (“FTC”) seeks a protective order forbidding the depositions and document productions requested. DIRECTV opposes this request. THE FEDERAL TRADE COMMISSION’S POSITION The FTC brings this motion for a protective order under Rule 26(c) to protect the agency’s interests and to relieve seven private citizens from the burdens of DIRECTV’s efforts to seek discovery of marginal relevance. These seven consumers provided the FTC with sworn declarations in 2013 and 2014 as part of the agency’s investigation of DIRECTV. The FTC produced these declarations to DIRECTV, but they represent just seven complaining consumers among the millions of complaints received by the FTC, the Better Business Bureau, and, we understand, by DIRECTV itself. DIRECTV continues to resist producing that last category— complaints that consumers submitted to DIRECTV—despite the FTC’s multiple requests, and pursues the depositions of these seven consumers in an effort to distract the FTC from this far more probative source of consumer complaints. DIRECTV cannot avoid the fact that the testimony and documents of the seven declarants is of extremely limited value when compared to these other sources of consumer complaints available from the parties themselves. Indeed, the FTC has not offered any of the consumer declarations in support of its Complaint, nor does it intend to call any of the consumer declarants as witnesses at trial.1 DIRECTV’s consumer declarant subpoenas therefore waste agency resources and inflict collateral damage on seven private citizens. The FTC therefore brings this motion for a protective order to forbid these depositions and document requests. Rule 26(b)(1) limits civil discovery, including third-party discovery, to requests that are “proportional to the needs of the case.” Rule 26(c) also provides that a court may issue a protective order forbidding certain discovery “for good cause.” The Supreme Court has held that trial courts have “broad discretion” in issuing protective orders.2 Discovery restrictions “may be broader when a nonparty is the target of discovery” and may be used to protect third parties “from harassment, inconvenience, or disclosure of confidential documents.”3 Either “[a] party” or “any person from whom discovery is sought” may move for a protective order “in the court where the action is pending” or “in the court for the district where the deposition will be taken.”4 Accordingly, the FTC, a federal government agency whose law-enforcement mission is undermined by abusive and wasteful discovery demands, has grounds to move for a protective order in this Court forbidding the discovery sought by DIRECTV of the consumer declarants.5 1 See, e.g., F.T.C. v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1073 (C.D. Cal. 2012) (internal quotation omitted) (“To establish a section 5 violation, proof of actual deception is unnecessary; it only requires a showing that misrepresentations possess a tendency to deceive.”). 2 Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). 3 Dart Indus. Co. v. Westwood Chem. Co., 649 F.2d 646, 649 (9th Cir. 1980) (internal quotations omitted). 4 Fed. R. Civ. P. 26(c)(1). 5 See FTC v. AMG Servs., Inc., 291 F.R.D. 544, 552-53 (D. Nev. 2013) (“FTC, as a party to this action, may bring this motion for protective order . . . regarding the subpoenas issued to the nonparty consumers.”); see also In re REMEC, Inc. Sec. Litig., 2008 WL 2282647, at 1 (S.D. Cal. May 30, 2008) (“A party can move for a protective order in regard to a subpoena issued to a non-party if it believes its own interests are jeopardized by discovery sought from a third party and has standing under Rule 26(c) to seek a protective order regarding subpoenas issued to non-parties which seek irrelevant information. Several Courts within the Ninth Circuit . . . have recognized this sound principle of law.”); Moon v. SCP Pool Corp., 232 F.R.D. 633, 636 (C.D. Cal. 2005) (“A party cannot object Case 3:15-cv-01129-HSG Document 82 Filed 12/07/15 Page 3 of 6 The Consumer Declarants’ Experiences With DIRECTV Are Irrelevant To The FTC’s ROSCA Claims. Counts Three and Four of the FTC’s Complaint against DIRECTV allege violations of Section 4 of the Restore Online Shoppers’ Confidence Act (“ROSCA”)6 in the negative option sale of premium channels. ROSCA took effect in December 2010. Six of the seven consumer declarations concern contacts with DIRECTV that occurred before ROSCA’s effective date, and the seventh declaration does not concern premium channels at all. Therefore, the seven declarations have no relevance to Counts Three and Four of the Complaint. The Consumer Declarants’ Experiences Have Limited Probative Value To The FTC’s Section 5 Claims. Counts One and Two of the FTC’s Complaint allege violations of Section 5(a) of the FTC Act7 in the deceptive sale of programming packages and premium channels by DIRECTV. While the FTC has tried to focus its discovery efforts on the most probative evidence—the millions of complaints recorded in DIRECTV’s own databases and reports—DIRECTV seeks to use seven consumers to draw generalizations about how millions of consumers behave when they complain about DIRECTV. In so doing, DIRECTV aims to show that the millions of consumers who complained about DIRECTV’s deceptive practices had no legitimate basis for doing so. But depositions of these seven consumers cannot change the fact that DIRECTV had knowledge of many consumer complaints about its deceptive practices. DIRECTV has yet to provide the FTC access to its database of consumer complaints, the best evidence of DIRECTV’s knowledge, despite repeated requests in discovery.8 Deposing these seven consumers would produce evidence of only marginal relevance compared with DIRECTV’s production of the complaint database. DIRECTV’s Document Requests Seek Irrelevant Information. The document requests propounded by DIRECTV on the consumer declarants seek information that is not relevant to this matter.9 Document Request No. 1, “All COMMUNICATIONS and DOCUMENTS with [sic] any state AG, BBB or other regulatory agency,” is not limited to communications related to this action, or even communications regarding DIRECTV. This means DIRECTV is seeking all complaints the declarants have made to any consumer protection agency. Whether or not the declarants have complained in other instances about other companies has no relevance to the counts alleged in the FTC’s Complaint against DIRECTV. This request is simply harassing.10 Document Request No. 5, “All records of any subscriptions to competitive TV services,” is also flawed. Whether or not the declarants have subscribed to other satellite TV providers has no relevance to DIRECTV’s violations of ROSCA or Section 5 of the FTC Act. to a subpoena duces tecum served on a nonparty, but rather, must seek a protective order or make a motion to quash.”); c.f. E.E.O.C. v. Lexus Serramonte, 237 F.R.D. 220, 223 (N.D. Cal. 2006) (holding that plaintiff government agency had standing to file a motion to quash defendants’ subpoenas to third parties even as the “the non-recipient of the subpoenas”). 6 15 U.S.C. § 8403. 7 15 U.S.C. § 45(a). 8 See Decl. of Eric D. Edmondson ISO FTC’s Opp. to DIRECTV’s Mot. for Partial Summ. J., Exs. F-G (Dkt. Nos. 72-06 and 72-07). 9 Each of the document requests is identical. 10 See REMEC, Inc., 2008 WL 2282647, at 3 (subpoena to nonparty for information regarding all asset valuations was overbroad because dispute involved valuation of only particular assets); Lexus Serramonte, 237 F.R.D. at 223 (information related to complainant’s employment with other employers, before and after employment dispute at issue, was not discoverable in connection with harassment claim against defendant employer); Moon, 232 F.R.D. at 638 (subpoena to nonparty for information regarding all of nonparty’s products was overbroad because dispute involved only products for a particular geographic region). Case 3:15-cv-01129-HSG Document 82 Filed 12/07/15 Page 4 of 6 This request is also harassing and invades the declarants’ privacy. The remainder of DIRECTV’s Document Requests are similarly overbroad because they are not limited to this action.11 The Consumer Declarant Subpoenas Impose Substantial Burdens On Private Citizens And Waste Agency Resources. DIRECTV’s deposition and document requests impose substantial burdens and costs on these private citizens, including the time and expense of collecting responsive documents and preparing and testifying at the depositions, not to mention the cost of retaining legal counsel to assist with this response. Separate and apart from the burden on these consumer declarants, the FTC will be forced to spend scarce agency resources flying its attorneys around the country to attend the depositions The consumer declarant subpoenas seek testimony and documents that are of limited probative value to the issues in this action, burden the consumers they target, and waste scarce agency resources. As such, the subpoenas are not proportional to the needs of this case, which define the scope of discovery. See Fed. R. Civ. P. 26(b)(1) (the importance of discovery in resolving case issues and the relationship of the burden to the benefit of discovery are two factors that define proportionality); see also Fed. R. Civ. P. 26(c) (oppression and undue burden and expense are express grounds for a protective order). For the foregoing reasons, the FTC respectfully asks the Court for a protective order forbidding the depositions and document production requests that are the subject of the consumer declarant subpoenas. DIRECTV’S POSITION The FTC has made clear that it will rely on consumer complaints against DIRECTV to support its case. In its Complaint, the FTC asserts that DIRECTV’s advertising has been the focus of “tens of thousands of consumer complaints.” In discovery, the FTC produced the seven declarations at issue, declarations obtained by the FTC from consumers complaining about DIRECTV’s pricing, terms of service, and early cancellation fees (the issues in this lawsuit). In this brief, the FTC again confirms its intention to rely on consumer complaints, asserting — incorrectly—that there are “millions” of complaints about DIRECTV’s “deceptive practices.” DIRECTV intends to show that consumer complaints in general—and these seven in particular—are unreliable. It therefore has subpoenaed the consumers that the FTC placed at issue by convincing them to sign declarations attacking DIRECTV. The FTC objects. The FTC’s motion should be denied. First, the FTC is the wrong party to bring this motion. If the consumers object, they must say so. Second, the discovery sought is relevant and likely to yield important evidence that supports DIRECTV’s defense that consumers have not been deceived, but rather have selective memories and make untruthful claims to avoid contractual fees. Such testimony will undermine the reliability of any statistical analyses of “complaints.” This is no doubt why the FTC disclaims any intended use of these declarations.12 The FTC has no right to dictate what depositions are relevant to DIRECTV’s defenses. I. The FTC Has No Standing to Complain of Claimed Burdens on Third Parties The seven consumers are the appropriate movants. Chevron Corp. v. Donziger, No. 12- 80237, 2013 WL 4536808, at 4-5 (N.D. Cal. Aug. 22, 2013); 9A Charles Alan Wright And Arthur R. Miller, Fed. Prac. & Proc. § 2459 (3d ed. 2008). Furthermore, if these consumers 11 See Auto–Owners Ins. Co. v. S.E. Floating Docks, Inc., 231 F.R.D. 426, 430 (M.D. Fla. 2005) (granting party’s motion for protective order where discovery regarding nonparty’s finances was overbroad); EEOC v. Renaissance III Org., 2006 WL 832504, at 1 (N.D. Tex. 2006) (granting plaintiff EEOC’s motion to quash to protect complainants’ privacy interests). 12The FTC has not agreed to forego introducing other records of these particular consumers’ complaints, statistical analyses of complaints, or other purported evidence regarding consumer complaints. Case 3:15-cv-01129-HSG Document 82 Filed 12/07/15 Page 5 of 6 object to their depositions—and there is no indication they do—Rule 45(d)(3)(B) requires the motion be brought in the district where compliance is required. Agincourt Gaming, LLC v. Zynga, Inc., No. 14-0708, 2014 WL 4079555, at 3-4 (D. Nev. Aug. 15, 2014). The FTC’s attempt to evade Rule 45 by moving under Rule 26 fails. The FTC may not seek a protective order on behalf of individuals that it does not represent and who themselves have not objected, unless its own interest is jeopardized. Koh v. S.C. Johnson & Son, Inc., No. 09-00927, 2011 WL 940227, at 2 (N.D. Cal. Feb. 18, 2011). A party only has standing to seek a protective order on behalf of a third party when the third-party discovery interferes with the party’s personal right (such as privacy or finances) or where it impinges upon a privilege. Id.; In re MGM Mirage Sec. Litig., No. 9-1558, 2014 WL 6675732 at 9 (D. Nev. Nov. 25, 2014).13 Here, the FTC’s motion should be denied because the FTC does not seek to protect any personal right or privilege that belongs to the FTC. The FTC does not proffer any facts of how it will be aggrieved if the depositions go forward, except to make the remarkable claim that FTC attorneys should not be required to travel to attend depositions. Rather, the FTC’s core argument is that depositions will burden the consumers. Of course, the FTC has no foundation to say what these individuals do or do not want to do. II. The Subpoenas Seek Relevant Information The depositions are relevant first and foremost because the FTC intends to present evidence in this case regarding purported consumer complaints. The FTC’s meet and confer statements confirm that it intends to cite to and rely upon statistics and expert analyses of complaints. In order to resolve this dispute, DIRECTV agreed to forego these consumer depositions for now so long as the FTC agreed that, if it relies upon statistical analysis of consumer complaints, then DIRECTV would get a chance to depose consumers. The FTC rejected this proposal. The only reason for this position is that the FTC wants to provide analysis of consumer complaints but does not want DIRECTV to be able to challenge it. Whether or not the FTC intends to use these consumer declarations or call consumers to testify at trial, however, DIRECTV has a right to conduct discovery of consumers who have claimed to have been deceived.14 Relevance is not limited to what the FTC intends to do— 13 The cases the FTC cites in footnotes 5 and 10 are generally consistent with this principle They recognize that a party does not have standing to challenge a third-party subpoena unless the party alleges a personal right or privilege with respect to the subpoena. See, e.g., In re REMEC, supra, 2008 WL 2282647, at 1. However, some of these cases also suggest—in tension with DIRECTV’s cited authority—that a party has a personal interest in preventing a third-party from being burdened with irrelevant requests. Id.; see also AMG Servs., supra., 291 F.R.D. at 552-53 (stating that FTC may bring motion because it is a party). DIRECTV submits that its authorities are more persuasive—adopting the FTC’s rule would eliminate any standing inquiry. That said, the AMG case cited by the FTC on the procedural point provides support for DIRECTV’s substantive point here. In that case, the Court found, without much discussion, that the FTC could bring a motion for protective order on behalf of subpoenaed consumers, but rejected many of the FTC’s argument in favor of barring the discovery. The FTC argued, as it does here, that the subpoenaed consumers were a small number of the thousands of consumers who had complained and that many of the requests to the consumers were irrelevant. Id. at 550-51. The Court nevertheless allowed much of the discovery to the consumers to proceed over the FTC’s objections. Id. at 552-55. This case confirms that, even if the FTC has standing to move for a protective order, its motion must have merit. 14 The FTC’s tactic is clear: anytime DIRECTV seeks a consumer deposition, the FTC will say that it will not present the testimony of that particular consumer, thereby ensuring that the FTC can present information regarding the number of consumer complaints without actually subjecting any consumers to deposition. Case 3:15-cv-01129-HSG Document 82 Filed 12/07/15 Page 6 of 6 DIRECTV is entitled to present its case as well. Here, DIRECTV will show that consumers who claimed not to have seen or understood certain disclosures, in fact often fully knew all the material terms at the time they subscribed. Thus, depositions like these are important for DIRECTV’s defenses and may strike at the heart of one pillar of the FTC’s case. The FTC does not have the right to dictate which consumer depositions DIRECTV can take. The FTC’s remaining relevance arguments fail: • The FTC argues that because there are (allegedly) so many complaints, the depositions of only seven consumers will be of limited importance. This makes no sense. The FTC’s argument weighs in favor of more consumer depositions, not less. • The FTC complains that DIRECTV has not produced relevant consumer complaint information (again confirming that the FTC believes consumer complaints are relevant). Raising this entirely separate issue is simply an attempt to distract the Court. The parties are working cooperatively regarding the scope of DIRECTV’s consumer complaint production. There is no issue to bring to the Court now. • The FTC claims that the depositions are not relevant because the conduct the consumers complain about occurred prior to the enactment of ROSCA. But the FTC asserts claims under Section 5 of the FTC Act, not just ROSCA. The FTC itself has issued over 15 subpoenas seeking information going back to 2007. • The FTC claims that the document requests seek irrelevant information. Not so. Request No. 1 (other consumer complaints) and Request No. 5 (subscriptions to other TV services) are relevant because they can show whether the consumers understood similar contracts, or whether the consumers had motives for complaining.15 III. Any Burden Is Minimal And of the FTC’s Own Creation The party seeking a protective order has the “burden of showing good cause” and “cannot meet its burden by relying on conclusory statements.” Koh, supra, 2011 WL 940227, at *2. Here, the FTC’s motion has nothing but conclusory language about purported burdens, expenses, and costs. The most the FTC says is that it would be burdensome for FTC attorneys to have to travel to attend these depositions. This not an “undue” burden. FTC attorneys have already flown to Seattle and Los Angeles to take depositions they noticed and will fly many more times in this case. Notably, there are no declarations from any of these consumers about burden. Moreover, any burden was created by the FTC. It was the FTC who sought out these consumers and obtained the declarations. The FTC’s position is that it can burden these consumers but any attempt to respond to the FTC’s work would impose an undue burden. The Depositions Do Not Threaten to Harm the FTC’s Law-Enforcement Mission IV. The FTC believes it should be allowed to sue companies based on consumer complaints and companies should not be allowed to challenge these consumers. This is obviously wrong. Preventing these critical depositions would unfairly prejudice DIRECTV. The FTC has cited to no authority that it can so broadly prevent DIRECTV from exercising its right to third party discovery under Rule 45, and there will be no harm to the FTC or any consumers if the depositions go forward. 15Moreover, even if the document requests were overbroad, the proper procedure would not be to strike the requests in their entirety, but rather, to modify or limit the requests.
2015-12-08	83	MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 305, receipt number 0971-10049462.) filed by DIRECTV LLC, DIRECTV, Inc.. (Griffin, Sean) (Filed on 12/8/2015) (Entered: 12/08/2015)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 83 Filed 12/08/15 Page 1 of 2 Reset Form UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA Federal Trade Commission v. DIRECTV, et al. Plaintiff(s), Defendant(s). 3:15-cv-01129 Case No: _______________ APPLICATION FOR ADMISSION OF ATTORNEY PRO HAC VICE (CIVIL LOCAL RULE 11-3) ) ) ) ) ) ) ) ) ) ) Sean C. Griffin I, DIRECTV and DIRECTV, LLC , hereby respectfully apply for admission to practice pro hac vice in the , an active member in good standing of the bar of Ryan M. Sandrock the District of Columbia Northern District of California representing: above-entitled action. My local co-counsel in this case is __________________________________, an attorney who is a member of the bar of this Court in good standing and who maintains an office within the State of California. MY ADDRESS OF RECORD: Sidley Austin LLP 1501 K St. NW, Washington, DC 20001 MY TELEPHONE # OF RECORD: (202) 736-8107 MY EMAIL ADDRESS OF RECORD: [email protected] LOCAL CO-COUNSEL’S ADDRESS OF RECORD: Sidley Austin LLP 555 California St. San Franciso, CA 94104 LOCAL CO-COUNSEL’S TELEPHONE # OF RECORD: (415) 772-1219 LOCAL CO-COUNSEL’S EMAIL ADDRESS OF RECORD: [email protected] in the I am an active member in good standing of a United States Court or of the highest court of another State or the District of Columbia, as indicated above; my bar number is: 499537 . A true and correct copy of a certificate of good standing or equivalent official document from said bar is attached to this application. I agree to familiarize myself with, and abide by, the Local Rules of this Court, especially the Standards of Professional Conduct for attorneys and the Alternative Dispute Resolution Local Rules. Dated: I declare under penalty of perjury that the foregoing is true and correct. Sean C. Griffin 12/08/15 APPLICANT ORDER GRANTING APPLICATION FOR ADMISSION OF ATTORNEY PRO HAC VICE IT IS HEREBY ORDERED THAT the application of is granted, subject to the terms and conditions of Civil L.R. 11-3. All papers filed by the attorney must indicate appearance pro hac vice. Service of papers upon, and communication with, local co-counsel designated in the application will constitute notice to the party. Sean C. Griffin Dated: UNITED STATES DISTRICT/MAGISTRATE JUDGE PRO HAC VICE APPLICATION & ORDER October 2012 Case 3:15-cv-01129-HSG Document 83 Filed 12/08/15 Page 2 of 2
2015-12-08	84	STIPULATION WITH PROPOSED ORDER Continuing the Deadline for DIRECTV to File its Reply Brief in Support of its Motion for Partial Summary Judgment and Continuing Hearing on Motion for Partial Summary Jugdment filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Chad S. Hummel in Support of Joint Stipulation and [Proposed] Order)(Hummel, Chad) (Filed on 12/8/2015) (Entered: 12/08/2015)	Case 3:15-cv-01129-HSG Document 84 Filed 12/08/15 Page 1 of 3 Counsel Listed on Signature Page UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT STIPULATION AND [PROPOSED] ORDER CONTINUING THE DEADLINE FOR DIRECTV TO FILE ITS REPLY BRIEF IN SUPPORT OF ITS MOTION FOR PARTIAL SUMMARY JUDGMENT AND CONTINUING HEARING ON MOTION FOR PARTIAL SUMMARY JUDGMENT Defendants. Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 84 Filed 12/08/15 Page 2 of 3 Pursuant to Local Rule 6-2 and 7-12, Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (collectively “DIRECTV”), hereby stipulate and agree as follows: 1. DIRECTV filed its Motion for Partial Summary Judgment on October 13, 2015 [Dkt. No. 53]. 2. On October 20, 2015, the FTC filed a Motion for Extension of Time to File Response/Reply to the Motion for Partial Summary Judgment [Dkt. No. 58]. 3. On October 21, 2015, the Court granted the FTC’s motion and continued (i) the FTC’s opposition due date to November 24, 2015, (ii) DIRECTV’s reply due date to December 22, 2015, and (iii) the hearing date on the Motion for Partial Summary Judgment to January 14, 2016 [Dkt. No. 64]. 4. The FTC filed its opposition brief to the Motion for Partial Summary Judgment on November 24, 2015 [Dkt. No. 72]. 5. DIRECTV’s reply brief in support of its Motion for Partial Summary Judgment is currently scheduled to be filed on or before December 22, 2015, and the hearing is scheduled for January 14, 2016, at 2:00 p.m. 6. The parties have met and conferred about additional discovery to take place prior to DIRECTV filing its reply brief. See Concurrently-Filed Declaration of Chad S. Hummel. 7. In order to allow time for this discovery, the parties hereby stipulate to and respectfully request that the Court enter the following schedule: a. b. DIRECTV shall file its reply brief by January 25, 2016. The hearing on the Motion for Partial Summary Judgment should be continued to February 25, 2016, at 2:00 p.m., or as soon thereafter as the matter may be heard before the Court. Dated: December 8, 2015 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel STIPULATION AND [PROPOSED] ORDER 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 84 Filed 12/08/15 Page 3 of 3 Dated: December 8, 2015 Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, Chad S. Hummel hereby attests that concurrence in the filing of this document has been obtained from Eric D. Edmondson. ____________________________________________________________________________ PURSUANT TO STIPULATION, IT IS ORDERED THAT: [PROPOSED] ORDER DIRECTV shall file its reply brief by January 25, 2016. The hearing on the Motion for Partial Summary Judgment should be continued to February 25, 2016, at 2:00 p.m. a. b. Dated: December __, 2015 Honorable Haywood S. Gilliam, Jr. ___________________________________ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STIPULATION AND [PROPOSED] ORDER 2 3:15-CV-01129
2015-12-09	85	ORDER by Judge Haywood S. Gilliam, Jr. granting 83 Motion for Pro Hac Vice (ndrS, COURT STAFF) (Filed on 12/9/2015) (Entered: 12/09/2015)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 85 Filed 12/09/15 Page 1 of 2 Reset Form UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA Federal Trade Commission v. DIRECTV, et al. Plaintiff(s), Defendant(s). 3:15-cv-01129 Case No: _______________ APPLICATION FOR ADMISSION OF ATTORNEY PRO HAC VICE (CIVIL LOCAL RULE 11-3) ) ) ) ) ) ) ) ) ) ) Sean C. Griffin I, DIRECTV and DIRECTV, LLC , hereby respectfully apply for admission to practice pro hac vice in the , an active member in good standing of the bar of Ryan M. Sandrock the District of Columbia Northern District of California representing: above-entitled action. My local co-counsel in this case is __________________________________, an attorney who is a member of the bar of this Court in good standing and who maintains an office within the State of California. MY ADDRESS OF RECORD: Sidley Austin LLP 1501 K St. NW, Washington, DC 20001 MY TELEPHONE # OF RECORD: (202) 736-8107 MY EMAIL ADDRESS OF RECORD: [email protected] LOCAL CO-COUNSEL’S ADDRESS OF RECORD: Sidley Austin LLP 555 California St. San Franciso, CA 94104 LOCAL CO-COUNSEL’S TELEPHONE # OF RECORD: (415) 772-1219 LOCAL CO-COUNSEL’S EMAIL ADDRESS OF RECORD: [email protected] in the I am an active member in good standing of a United States Court or of the highest court of another State or the District of Columbia, as indicated above; my bar number is: 499537 . A true and correct copy of a certificate of good standing or equivalent official document from said bar is attached to this application. I agree to familiarize myself with, and abide by, the Local Rules of this Court, especially the Standards of Professional Conduct for attorneys and the Alternative Dispute Resolution Local Rules. Dated: I declare under penalty of perjury that the foregoing is true and correct. Sean C. Griffin 12/08/15 APPLICANT ORDER GRANTING APPLICATION FOR ADMISSION OF ATTORNEY PRO HAC VICE IT IS HEREBY ORDERED THAT the application of is granted, subject to the terms and conditions of Civil L.R. 11-3. All papers filed by the attorney must indicate appearance pro hac vice. Service of papers upon, and communication with, local co-counsel designated in the application will constitute notice to the party. Sean C. Griffin Dated: UNITED STATES DISTRICT/MAGISTRATE JUDGE PRO HAC VICE APPLICATION & ORDER October 2012 12/9/2015Case 3:15-cv-01129-HSG Document 85 Filed 12/09/15 Page 2 of 2
2015-12-09	86	Discovery Order re: 82 Discovery Letter Brief filed by Federal Trade Commission. Signed by Judge Maria-Elena James on 12/9/2015. (cdnS, COURT STAFF) (Filed on 12/9/2015) (Entered: 12/09/2015)	Case 3:15-cv-01129-HSG Document 86 Filed 12/09/15 Page 1 of 8 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 82 INTRODUCTION Pending before the Court is the parties’ discovery dispute letter concerning Defendants DIRECTV and DIRECTV, LLC’s (collectively, “Defendants”) subpoenas to seven non-party consumers (collectively, the “consumer declarant subpoenas”). Dkt. No. 82. Through the joint letter, Plaintiff Federal Trade Commission (the “FTC”) seeks a protective order forbidding the depositions and document productions requested. Having considered the parties’ positions, relevant legal authority, and the record in this case, the Court issues the following order. BACKGROUND 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N 21 A. Factual Background 22 23 24 25 26 27 28 Defendants provide direct-to-home digital television service and multi-channel video programming distribution throughout the United States. Compl. ¶ 10, Dkt. No. 1. They offer this service to consumers by subscription, which consists of a programming package, a satellite dish and other necessary equipment, and installation and support services. Id. ¶ 11. Defendants typically require consumers to agree to a mandatory 24-month contract to receive programming and assess an “early cancellation fee” against customers who cancel their subscription before the end of 24 months. Id. ¶ 12. Case 3:15-cv-01129-HSG Document 86 Filed 12/09/15 Page 2 of 8 Since 2007, Defendants have disseminated advertisements for their subscription service that contain the following statements regarding pricing for their subscription service: A. “All New! Limited Time Offer! . . . Now only $19.99/mo.” B. “Package offers starting at $24.99/mo. Limited Time.” C. “Limited Time! $24.99/mo for 12 months.” Id. ¶ 16 & Exs. 1-3. To the extent these advertisements contain any qualifying disclosures concerning the mandatory two-year contract length and the price consumers will pay after the initial period, the FTC alleges any such disclosures are inadequate. Id. ¶ 17. Some of Defendants’ advertisements also contain statements that subscribers will receive premium channels free of charge for three months. Id. ¶ 18. For example, Exhibit 1 to the Complaint states “over 30 premium channels free for 3 months.” The FTC alleges these advertisements do not convey that (1) Defendants automatically enroll consumers in a negative option continuity plan with additional charges; (2) consumers must affirmatively cancel the negative option continuity plan before the end of a trial period to avoid additional charges; (3) Defendants use consumers’ credit or debit card information to charge consumers monthly for the negative option continuity plan; and (4) the costs associated with the negative option continuity plan. Id. ¶ 19. The FTC further alleges Defendants engage in deceptive internet sales on their website, www.directv.com. Since 2007, Defendants have disseminated webpages that contain statements that are identical or similar to the following: A. “Limited Time. 140+ channels. $24.99 month for 12 months”; and B. “CHOICE: 150+ channels. Only $29.99 month for 12 months” Id. ¶ 21 & Ex. 4 at 1-2. The FTC alleges these webpages do not convey that Defendants require consumers to remain a subscriber for two years, a mandatory term which carries an early cancellation fee for the failure to do so; and that Defendants charge significantly higher monthly prices for their programming packages during the second year of service. Id. ¶ 22. Defendants’ webpages typically contain statements concerning an offer of free premium channels that are identical or similar to the following: “Free for 3 months. HBO + Starz + Showtime + Cinemax.” 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 86 Filed 12/09/15 Page 3 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Id. ¶ 23 & Ex. 4 at 1. The FTC maintains these webpages do not convey to consumers that Defendants automatically enroll consumers in a negative option continuity plan and related costs described above. Id. ¶ 24. Consumers who call the telephone number listed in Defendants’ advertisements speak with a telemarketer. Id. ¶ 25. Defendants’ telephonic sales presentations typically include statements concerning the initial monthly prices that consumers will pay for programming packages, but the FTC alleges the presentations do not adequately disclose the monthly cost to consumers of the programming packages during in the second year of their subscription agreements. Id. B. Complaint The FTC filed this case on March 11, 2015, bringing claims under Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, and Section 5 of the Restore Online Shoppers’ Confidence Act (“ROSCA”), 15 U.S.C. § 8404, in connection with the advertising, marketing, and sale of Defendants’ multi-channel video programming subscription service. In Count I, the FTC alleges Defendants’ fail to disclose or disclose adequately: (1) the mandatory two-year agreement period for the subscription service, which carries an early cancellation fee; and (2) the significantly higher price for programming packages, typically $25 to $45 per month higher, during the mandatory second year of the consumer’s agreement, and this failure constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). Compl. ¶¶ 28-30. In Count II, the FTC alleges Defendants fail to disclose or disclose adequately: (1) that they automatically enroll consumers in a negative option continuity plan with significant charges; (2) consumers must affirmatively cancel the negative option continuity plan before the end of the trial period to avoid charges; (3) Defendants use consumers’ credit or debit card information to charge consumers for the negative option continuity plan; and (4) the costs associated with the negative option continuity plan, and this failure also constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). Id. ¶¶ 31-33. In Count III, the FTC alleges Defendants have charged or attempted to charge consumers for access to premium channels, as part of its subscription service, through a negative option 3 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 86 Filed 12/09/15 Page 4 of 8 feature while failing to clearly and conspicuously disclose all material terms of the transaction before obtaining consumers’ billing information, and that this practice constitutes a violation of Section 4(1) of ROSCA, 15 U.S.C. § 8403(1). Id. ¶¶ 39-40. In Count IV, the FTC alleges Defendants have charged or attempted to charge consumers for access to premium channels, as part of their subscription service, through a negative option feature while failing to obtain consumers’ express informed consent before charging their credit card, debit card, bank account, or other financial account for those premium channels, and that this practice constitutes a violation of Section 4(2) of ROSCA, 15 U.S.C. § 8403(2). Id. ¶¶ 41-42. C. Consumer Declarant Subpoenas On November 6, 2015, Defendants served the seven consumer declarant subpoenas. Jt. Ltr., Exs. A-G. The subpoenas seek information regarding communications with the FTC, including draft declarations, communications with DIRECTV about their accounts, communications with state attorneys general and regulatory agencies, and records of subscriptions to competitive TV services. Id.1 These seven consumers provided the FTC with sworn declarations in 2013 and 2014 as part of the agency’s investigation of Defendants. Jt. Ltr. at 2. LEGAL STANDARD Federal Rule of Civil Procedure 26 provides that a party may obtain discovery “regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case[.]” Fed. R. Civ. P. 26(b)(1). Relevance within the meaning of Rule 26(b)(1) is considerably broader than relevance for trial purposes. See Oppenheimer Fund v. Sanders, 437 U.S. 340, 351 (1978) (citation omitted). However, a court “must limit the frequency or extent of discovery otherwise allowed by [the Federal] rules” if “(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).” Fed. R. Civ. P. 26(b)(2)(C). 1 Each of the document requests is identical. 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 86 Filed 12/09/15 Page 5 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense,” including by (1) prohibiting disclosure or discovery; (2) conditioning disclosure or discovery on specified terms; (3) preventing inquiry into certain matters; or (4) limiting the scope of disclosure or discovery to certain matters. Fed. R. Civ. P. 26(c)(1). “Rule 26(c) confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required.” Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). DISCUSSION The FTC brings this request for a protective order under Rule 26(c) “to protect the agency’s interests and to relieve seven private citizens from the burdens of DIRECTV’s efforts to seek discovery of marginal relevance.” Jt. Ltr. at 2. Although the FTC produced these declarations to Defendants, it argues “they represent just seven complaining consumers among the millions of complaints received by the FTC, the Better Business Bureau, and, we understand, by DIRECTV itself.” Id. (emphasis in original). The FTC maintains Defendants “cannot avoid the fact that the testimony and documents of the seven declarants is of extremely limited value when compared to these other sources of consumer complaints available from the parties themselves.” Id. The FTC notes it has not offered any of the consumer declarations in support of its Complaint, nor does it intend to call any of the consumer declarants as witnesses at trial. Id. As such, Defendants’ consumer declarant subpoenas “waste agency resources and inflict collateral damage on seven private citizens.” Id. In response, Defendants argue the FTC “has made clear that it will rely on consumer complaints against DIRECTV to support its case,” noting that in its Complaint, the FTC asserts Defendants’ “advertising has been the focus of ‘tens of thousands of consumer complaints.’” Id. at 4; Compl. ¶ 15. As Defendants intend to show “consumer complaints in general—and these seven in particular—are unreliable,” they subpoenaed the consumers “the FTC placed at issue by convincing them to sign declarations attacking DIRECTV.” Jt. Ltr. at 4. Defendants contend the discovery is relevant and likely to yield evidence that supports their defense “that consumers have not been deceived, but rather have selective memories and make untruthful claims to avoid 5 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 86 Filed 12/09/15 Page 6 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 contractual fees.” Id. Defendants further argue the FTC’s motion should be denied because the FTC is the wrong party to bring this motion: “If the consumers object, they must say so.” Id. As an initial matter, the Court finds the FTC, as a party to this consumer protection action, may request a protective order regarding the consumers it seeks to protect. See FTC v. AMG Servs., Inc., 291 F.R.D. 544, 552 (D. Nev. 2013) (“FTC, as a party to this action, may bring this motion for protective order . . . regarding the subpoenas issued to the nonparty consumers.”); In re REMEC, Inc. Secs. Litig., 2008 WL 2282647, at 1 (S.D. Cal. May 30, 2008) (party may move for a protective order regarding subpoena issued to a non-party); see also Moon v. SCP Pool Corp., 232 F.R.D. 633, 636 (C.D. Cal. 2005) (“A party cannot object to a subpoena duces tecum served on a nonparty, but rather, must seek a protective order or make a motion to quash.”); EEOC v. Serramonte, 237 F.R.D. 220, 223 (N.D. Cal. 2006) (pursuant to Rule 26(c), plaintiff federal agency may move to quash nonparty subpoenas). Having reviewed the parties’ positions, the Court finds it unnecessary to burden the consumer declarants with Defendants’ requests. First, the consumer declarant subpoenas impose potentially substantial burdens on private citizens, including the time and expense of collecting responsive documents and preparing and testifying at the depositions, as well as the cost of retaining legal counsel to assist with this response. Second, it is not clear that the subpoenas are proportional to the needs of this case. While the scope of relevancy is broad for discovery purposes, permissible discovery from nonparties is narrower than that permitted from parties to the action. Dart Indus. Co. v. Westwood Chemical Co., 649 F.2d 646, 649-50 (9th Cir. 1980) (“[T]he word ‘non-party’ serves as a constant reminder of the reasons for the limitations that characterize ‘third-party’ discovery.” (citations omitted)). The Ninth Circuit “does not favor unnecessarily burdening nonparties with discovery requests, and, as a result, [n]on-parties deserve extra protection from the courts.” Robert Half Int’l Inc. v. Ainsworth, 2015 WL 4662429, at *4 (S.D. Cal. Aug. 6, 2015) (citations and quotations omitted). Defendants argue they have a right to conduct discovery of consumers who have claimed to have been deceived. Jt. Ltr. at 5. They argue they will show “that consumers who claimed not to have seen or understood certain disclosures, in fact often fully knew all the material terms at the 6 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 86 Filed 12/09/15 Page 7 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 time they subscribed. Thus, depositions like these are important for DIRECTV’s defenses and may strike at the heart of one pillar of the FTC’s case.” Id. at 6. However, these seven consumers provided the FTC with sworn declarations in 2013 and 2014 as part of the agency’s investigation of Defendants, before the FTC filed its current case. The FTC has already produced these declarations to Defendants, and there is no indication it intends to offer them in support of its Complaint or to call any of the consumer declarants as witnesses at trial. Id. at 2. Moreover, Defendants do not deny that, despite the FTC’s requests, they have not yet produced complaints that consumers submitted directly to DIRECTV. Id. at 2, 6. As the FTC’s case focuses on potentially millions of consumer complaints, many of which are in Defendants’ possession, the Court finds Defendants have failed to show that information obtained from these seven declarants, especially when compared to these other sources of consumer complaints available from the parties themselves, outweighs the potential burden to the declarants as nonparties. Third, in looking at the document requests propounded by Defendants, the requested information appears to be, at least in part, already in Defendants’ possession. Document Request No. 2 seeks “All COMMUNICATIONS and DOCUMENTS with DIRECTV about your account(s).” Id., Exs. A-G. Document Request No. 4 seeks “All records of billings by and payments to DIRECTV.” Id. Defendants fail to show why they cannot obtain this information from their own records rather than imposing the burden of production on nonparties. Document Request No. 5 is of marginal relevance at best; it seeks “All records of any subscriptions to competitive TV services.” Id. Defendants argue this request “can show whether the consumers understood similar contracts, or whether the consumers had motives for complaining.” Jt. Ltr. at 6. However, the FTC does not need to establish that consumers were actually deceived. See FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1073 (C.D. Cal. 2012) (“To establish a section 5 violation, proof of actual deception is unnecessary; it only requires a showing that misrepresentations possess a tendency to deceive.”). The two remaining requests could be relevant. Document Request No. 1 seeks “All COMMUNICATIONS and DOCUMENTS with the FTC including, but not limited to, draft declarations.” Jt. Ltr., Exs. A-G. Document Request No. 3 seeks “All COMMUNICATIONS and 7 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 86 Filed 12/09/15 Page 8 of 8 DOCUMENTS with any state AG, BBB or other regulatory agency.” Id. But at this stage in the litigation, where Defendants have not yet produced complaints that consumers submitted directly to them, the Court finds Defendants have failed to show it is necessary to burden nonparties with such requests. See Fed. R. Civ. P. 26(b)(1) (the importance of discovery in resolving case issues and the relationship of the burden to the benefit of discovery are two factors that define proportionality). CONCLUSION For the foregoing reasons, the Court GRANTS the FTC’s request for a protective order. The consumer declarants do not need to respond to Defendants’ November 6, 2015 subpoenas. If, after the pleadings are settled and the parties have had the opportunity to engage in further discovery, Defendants maintain discovery from nonparties is still necessary, the parties shall meet and confer in compliance with the undersigned’s Discovery Standing Order. IT IS SO ORDERED. Dated: December 9, 2015 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2015-12-09	87	ORDER by Judge Haywood S. Gilliam, Jr. Granting 84 Stipulation ontinuing the Deadline for DIRECTV to File its Reply Brief in Support of its 53 Motion for Partial Summary Judgment and Continuing Hearing on 53 Motion for Partial Summary Jugdment (ndrS, COURT STAFF) (Filed on 12/9/2015) (Entered: 12/09/2015)	Case 3:15-cv-01129-HSG Document 87 Filed 12/09/15 Page 1 of 3 Counsel Listed on Signature Page UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT STIPULATION AND ORDER CONTINUING THE DEADLINE FOR DIRECTV TO FILE ITS REPLY BRIEF IN SUPPORT OF ITS MOTION FOR PARTIAL SUMMARY JUDGMENT AND CONTINUING HEARING ON MOTION FOR PARTIAL SUMMARY JUDGMENT Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 87 Filed 12/09/15 Page 2 of 3 Pursuant to Local Rule 6-2 and 7-12, Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (collectively “DIRECTV”), hereby stipulate and agree as follows: 1. DIRECTV filed its Motion for Partial Summary Judgment on October 13, 2015 [Dkt. No. 53]. 2. On October 20, 2015, the FTC filed a Motion for Extension of Time to File Response/Reply to the Motion for Partial Summary Judgment [Dkt. No. 58]. 3. On October 21, 2015, the Court granted the FTC’s motion and continued (i) the FTC’s opposition due date to November 24, 2015, (ii) DIRECTV’s reply due date to December 22, 2015, and (iii) the hearing date on the Motion for Partial Summary Judgment to January 14, 2016 [Dkt. No. 64]. 4. The FTC filed its opposition brief to the Motion for Partial Summary Judgment on November 24, 2015 [Dkt. No. 72]. 5. DIRECTV’s reply brief in support of its Motion for Partial Summary Judgment is currently scheduled to be filed on or before December 22, 2015, and the hearing is scheduled for January 14, 2016, at 2:00 p.m. 6. The parties have met and conferred about additional discovery to take place prior to DIRECTV filing its reply brief. See Concurrently-Filed Declaration of Chad S. Hummel. 7. In order to allow time for this discovery, the parties hereby stipulate to and respectfully request that the Court enter the following schedule: a. b. DIRECTV shall file its reply brief by January 25, 2016. The hearing on the Motion for Partial Summary Judgment should be continued to February 25, 2016, at 2:00 p.m., or as soon thereafter as the matter may be heard before the Court. Dated: December 8, 2015 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel STIPULATION AND [PROPOSED] ORDER 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 87 Filed 12/09/15 Page 3 of 3 Dated: December 8, 2015 Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, Chad S. Hummel hereby attests that concurrence in the filing of this document has been obtained from Eric D. Edmondson. ____________________________________________________________________________ PURSUANT TO STIPULATION, IT IS ORDERED THAT: ORDER DIRECTV shall file its reply brief by January 25, 2016. The hearing on the Motion for Partial Summary Judgment should be continued to February 25, 2016, at 2:00 p.m. a. b. Dated: December 9, 2015 Honorable Haywood S. Gilliam, Jr. ___________________________________ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STIPULATION AND [PROPOSED] ORDER 2 3:15-CV-01129
2015-12-09		Reset Deadline/Hearing Pursuant to Docket No. 87 as to 53 MOTION for Partial Summary Judgment : Replies due by 1/25/2016; Motion Hearing set for 2/25/2016 02:00 PM before Hon. Haywood S. Gilliam Jr.. (ndrS, COURT STAFF) (Filed on 12/9/2015) (Entered: 12/09/2015)
2015-12-21	88	ORDER by Judge Haywood S. Gilliam, Jr. GRANTING IN PART AND DENYING IN PART PLAINTIFFS 32 MOTION TO STRIKE DEFENDANTS AFFIRMATIVE DEFENSES. (ndrS, COURT STAFF) (Filed on 12/21/2015) (Entered: 12/21/2015)	Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 1 of 10 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Case No. 15-cv-01129-HSG ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION TO STRIKE DEFENDANT’S AFFIRMATIVE DEFENSES Defendants. Re: Dkt. No. 32 Pending before the Court is the Federal Trade Commission’s (“FTC”) motion to strike DirecTV, Inc.’s affirmative defenses. For the following reasons, the FTC’s motion is GRANTED IN PART AND DENIED IN PART. I. BACKGROUND On March 11, 2015, the FTC filed this lawsuit against DirecTV, alleging four causes of action: (1) failure to disclose or disclose adequately pricing of DirecTV’s satellite television subscription service, in violation of 15 U.S.C. § 45(a); (2) failure to disclose adequately premium channel offer terms, in violation of 15 U.S.C. § 45(a); (3) failure to disclose all material terms, in violation of 15 U.S.C. § 57(a); and (4) failure to obtain consumers’ express informed consent, in violation of 15 U.S.C. § 57(a). Dkt. No. 1. DirecTV filed an amended answer on May 18, 2015, and the FTC moved to strike six of DirecTV’s affirmative defenses on June 1, 2015. Dkt. Nos. 27, 32. II. LEGAL STANDARD Federal Rule of Civil Procedure 12(f) authorizes courts to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” The purpose of a Rule 12(f) motion is to avoid spending time and money litigating spurious issues. See Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other grounds, 510 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 2 of 10 U.S. 517 (1994). “Because motions to strike a defense as insufficient are disfavored, they will not be granted if the insufficiency of the defense is not clearly apparent.” G & G Closed Circuit Events, LLC v. Nguyen, No. 10-cv-00168-LHK, 2010 WL 3749284, at 1 (N.D. Cal. Sept. 23, 2010) (internal quotation marks omitted). In ruling on a motion to strike, a “court[ ] may not resolve disputed and substantial factual or legal issues . . . .” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (internal quotation marks omitted); cf. Colaprico v. Sun Microsystems, Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 1991) (“[M]otions to strike should not be granted unless it is clear that the matter to be stricken could have no possible bearing on the subject matter of the litigation.”). Most courts have held that the standards articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), with respect to complaints also apply to affirmative defenses, such that they must state a plausible claim for relief to survive a motion to strike. See Otey v. Crowdflower, Inc., No. 12-cv-05524-JST, 2013 WL 5734146, 4 (N.D. Cal. Oct. 22, 2013) (“This Court agrees with the many judges in this district, however, who routinely apply Iqbal’s heightened pleading standard to affirmative defenses.”); Prime Media Group LLC v. Acer Am. Corp., No. 12-cv-05020-EJD, 2013 WL 621529, 2, n.2 (N.D. Cal. Feb. 19, 2013) (“Although the Ninth Circuit has not yet settled this issue once and for all, it seems a foregone conclusion at this point that the Rule 8 pleading standard . . . should also apply to affirmative defenses.”); Barnes & Noble, Inc. v. LSI Corp., 849 F. Supp. 2d 925, 928 (N. D. Cal. 2012) (“Most courts have held that the Ashcroft/Twombly pleading standards apply to affirmative defenses, such that they must state a plausible claim for relief.”); Barnes v. AT & T Pension Ben. Plan–Nonbargained Program, 718 F. Supp. 2d 1167, 1171-72 (N.D. Cal. 2010) (“While neither the Ninth Circuit nor any other Circuit Courts of Appeals has ruled on this issue, the vast majority of courts presented with the issue have extended Twombly’s heightened pleading standard to affirmative defenses.”). Although the Ninth Circuit has not yet addressed this question, the Court finds the reasoning of these decisions persuasive and will apply the Twombly/Iqbal standard when resolving the FTC’s motion. 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 3 of 10 III. ANALYSIS The FTC moves to strike six affirmative defenses asserted in the Amended Answer: laches, estoppel, waiver, claim preclusion, issue preclusion, and previous nationwide settlement. In support of each of these affirmative defenses, DirecTV’s Amended Answer recites the same paragraph of factual allegations: [I]n December 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other equitable relief extending back for almost a decade based on at least the foregoing. Dkt. No. 27 at 8-13. The FTC argues that these facts, even if true, do not plausibly support any of the six affirmative defenses challenged by its motion. See Dkt. No. 32 at 4. The Court will address each in turn. A. Laches “Laches is an equitable defense that prevents a plaintiff, who ‘with full knowledge of the facts, acquiesces in a transaction and sleeps upon his rights.’” Evergreen Safety Council v. RSA Network Inc., 697 F.3d 1221, 1226 (9th Cir. 2012) (citation omitted). “To prove laches, the ‘defendant must prove both an unreasonable delay by the plaintiff and prejudice to itself.’” Id. (citation omitted). As an initial matter, the FTC does not seriously dispute that the factual allegations pled in the Amended Answer at least facially support a finding of laches under this standard. DirecTV 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 4 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 asserts that (1) the FTC delayed its suit for four years after it was invited to participate in a resolution of the very same practices challenged in this case, which (2) prejudiced DirecTV because it designed its subsequent advertising disclosures in reliance on the settlement agreements reached with the attorneys general of all fifty states and the District of Columbia. Dkt. No. 36 at 9. Whether the FTC’s conduct was sufficiently dilatory and DirecTV’s prejudice sufficiently severe to warrant laches are factual questions inappropriate for determination on a motion to strike. Instead, the FTC argues that DirecTV’s laches defense must be stricken because “[l]aches is not available as an affirmative defense against the government in a suit by its agency to ‘enforce a public right or protect a public interest.’” Dkt. No. 32 at 4 (citing United States v. Ruby Co., 588 F.2d 697, 705 n.10 (9th Cir. 1978)). Ruby is not so clear. As DirecTV correctly notes, the sentence following the passage in Ruby cited by the FTC observes that “[i]t may be that this rule is subject to evolution as was the traditional rule that equitable estoppel would not lie against the government.” Ruby, 588 F.2d at 705 n.10. However, that same footnote also states that were laches to apply to the government in enforcing a public right, a showing of affirmative misconduct also would likely be required. Id. While neither party cites authority interpreting the Ruby footnote, at least one district court has rejected the FTC’s argument that Ruby forecloses a laches defense against the FTC. See FTC v. Hang-Ups Art Enterprises, Inc., No. CV 95-cv-0027-RMT-JGX, 1995 WL 914179, at 4 (C.D. Cal. Sept. 27, 1995) (rejecting the argument that Ruby precludes a laches defense against the FTC and denying motion to strike that affirmative defense). In denying the FTC’s motion to strike defendant’s laches defense, Hang-Ups cited Ruby for the principle that “laches may be a defense against the government if ‘affirmative misconduct’ by the government is shown,” and found that “[t]he facts of the case should decide whether there has been affirmative misconduct by the government such that laches might apply.” Id. The Court agrees with the reasoning of Hang-Ups. While, under Ruby, DirecTV very likely will have to prove affirmative misconduct to prevail on its laches defense, the defense as pled provides the FTC sufficient notice of DirecTV’s theory, and alleges specific facts that 4 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 5 of 10 plausibly could support such a finding. See Simmons v. Navajo Cty., Ariz., 609 F.3d 1011, 1023 (9th Cir. 2010) (“The key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense.”); Sec. People, Inc. v. Classic Woodworking, LLC, No. C-04-3133 MMC, 2005 WL 645592, at 2 (N.D. Cal. Mar. 4, 2005). At the pleading stage, no more is required, and the Court accordingly denies the FTC’s motion to strike DirecTV’s laches affirmative defense.1 B. Estoppel The Ninth Circuit has “outlined the ordinary elements of estoppel as: (1) The party to be estopped must know the facts; (2) He must intend that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to believe it is so intended; (3) The latter must be ignorant of the true facts; and (4) He must rely on the former’s conduct to his injury.” Ruby, 588 F.2d at 703 (citing United States v. Wharton, 514 F.2d 406, 412 (9th Cir. 1975)). The FTC concedes that estoppel is available against the government, Dkt. No. 32 at 5, with the caveat that additional requirements apply: (1) affirmative misconduct going beyond mere negligence; and (2) the wrongful conduct threatened to work a serious injustice and that the public’s interest will not suffer undue damage. See Watkins v. U.S. Army, 875 F.2d 699, 706-07 (9th Cir. 1989). For the same reasons discussed with regard to the laches defense, the Court finds that DirecTV has sufficiently pled its estoppel defense. The ultimate question of whether DirecTV can prove the elements of estoppel is not the issue at this stage. The FTC has notice of DirecTV’s legal theory, and the answer adequately pleads facts which plausibly could support a finding in DirecTV’s favor. The FTC’s motion to strike the estoppel affirmative defense is denied. 1 The FTC also cites FTC v. Bronson Partners LLC, No. 3:04CV1866 (SRU), 2006 WL 197357, at 1 (D. Conn. Jan. 25, 2006), in support of its position. The Court agrees with the FTC that the Ninth Circuit’s rules do not bar a party from citing an unpublished district court order. But the Court finds that the rule cited approvingly by Bronson Partners -- namely, that “[t]he settled precedent in [the Second C]ircuit holds that laches is not an available defense in an SEC enforcement action seeking injunctive relief” (citation omitted) -- is meaningfully different than the controlling Ninth Circuit rule discussed in Ruby. 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 6 of 10 C. Waiver Waiver is the intentional relinquishment of a known right. Alocozy v. U.S. Citizenship & Immigration Servs., 704 F.3d 795, 797 (9th Cir. 2012). The FTC moves to strike DirecTV’s waiver defense on two grounds: (1) that it cannot waive an act of Congress; and (2) that the facts alleged in the Amended Answer do not plausibly support that defense. Dkt. No. 32 at 6. The Court disagrees with the FTC that this case involves the waiver of an act of Congress. Even assuming that DirecTV could prevail on its waiver defense, the success of that affirmative defense would not undermine any statutory obligation placed on the FTC. The FTC was not statutorily required to bring this lawsuit against DirecTV—it, like virtually all federal agencies, is vested with discretion to bring suit to enforce its statutory mandate. Whether DirecTV has alleged sufficient facts to plausibly assert waiver, however, is a different question. DirecTV concedes that in order to prevail on its waiver defense, it must show that any waiver was “unmistakable.” Dkt. No. 36 at 12 (citing United States v. Philip Morris, Inc., 300 F. Supp. 2d 61, 66 (D.C. Cir. 2004)); see also Dkt. 48 (transcript of August 14, 2015 motions hearing) at 14:21-23. In line with the foregoing analysis of the other affirmative defenses, and given the parties’ agreement that a waiver defense can lie against the government under certain circumstances, the Court finds this affirmative defense adequately pled. DirecTV may or may not be able to meet the high burden for this defense at trial (or on summary judgment), but that is not the inquiry before the Court at the pleading stage. The FTC’s motion to strike this defense is denied. D. Claim Preclusion “Claim preclusion, or res judicata, bars ‘successive litigation of the very same claim’ following a final adjudication on the merits involving the same parties or their privies.” Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1159 (9th Cir. 2002) (quoting New Hampshire v. Maine, 532 U.S. 742, 748 (2001)). In general, “state and federal governments are separate parties for res judicata purposes, so that litigation by one does not bind another.” 18A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4458 (2d ed.). However, “[p]reclusion may flow from a state party to the United States . . . if the relationships 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 7 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 established by a special statutory scheme warrant the conclusion—likely to be expressed in terms of ‘privity’—that preclusion is appropriate.” Id. (citing United States v. ITT Rayonier, Inc., 627 F.2d 996, 1002 (9th Cir. 1980)). DirecTV argues that it may assert claim preclusion in this case because all 50 state attorneys general (and the District of Columbia) have already sued and obtained relief under the state analogues of the federal statute on which the FTC bases its causes of action. See Dkt. No. 36 at 14-15. According to DirecTV, the FTC was “adequately represented” by those state governments when they litigated and ultimately settled their virtually identical state-law claims arising from the same alleged misconduct at issue in this case. Id. (citing Taylor v. Sturgell, 553 U.S. 880, 881 (2008) (“‘[I]n certain limited circumstances,’ a nonparty may be bound by a judgment because she was ‘adequately represented by someone with the same interests who [wa]s a party’ to the suit.”) (citation omitted)). DirecTV fundamentally misconstrues the “adequately represented” exception articulated by the Supreme Court in Taylor. In Taylor, the Supreme Court expressly cabined that exception to a particular kind of representative suits: “[r]epresentative suits with preclusive effect on nonparties include properly conducted class actions and suits brought by trustees, guardians, and other fiduciaries.” Taylor, 553 U.S. at 894 (citations omitted). Accordingly, “[a] party’s representation of a nonparty is ‘adequate’ for preclusion purposes only if, at a minimum: (1) The interests of the nonparty and her representative are aligned; and (2) either the party understood herself to be acting in a representative capacity or the original court took care to protect the interests of the nonparty.” Id. at 900 (citation omitted). While DirecTV appears to argue that the interests of the state and District of Columbia attorneys general were aligned, the facts alleged in the affirmative defense give no indication that those attorneys general understood themselves to be acting in a representative capacity for the federal government or that the original court took care to protect the interests of the federal government. Put another way, DirecTV does not allege facts sufficient to plausibly state an affirmative defense of claim preclusion under Twombly, given the legal standards discussed above. For these reasons, the FTC’s motion to strike the claim preclusion affirmative defense is 7 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 8 of 10 granted, with DirecTV granted leave to amend if it can do so consistent with the requirements of Rule 11. E. Issue Preclusion Issue preclusion, also known as collateral estoppel, “attaches only ‘[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment.’” Amadeo, 290 F.3d at 1159 (alterations in original) (quoting Arizona v. California, 530 U.S. 392, 414 (2000)). “A voluntary dismissal of a claim prior to any adjudication and without any stipulated findings of fact does not actually litigate any issue.” Id.; see also Arizona, 530 U.S. at 414 (consent judgments “ordinarily occasion no issue preclusion . . . unless it is clear . . . that the parties intend their agreement to have such an effect”). The FTC moves to strike DirecTV’s issue preclusion defense on the ground that the consented-to multistate judgments did not contemplate such preclusive effect. Dkt. No. 32 at 9 (citing multistate judgment, which states that it was entered “without trial or adjudication of any issue of law or fact.”). DirecTV responds that whether the multistate judgments were intended to have a preclusive effect depends on the intent of the parties and is thus necessarily a question of fact that cannot be resolved on a motion to strike. Dkt. No. 36 at 15-16. The Court agrees with the FTC. In general, consent agreements like the multistate judgments entered into by DirecTV do not occasion issue preclusion unless it is clear that the parties intended their agreement to have that effect. See Arizona, 530 U.S. at 414. Here, DirecTV has asserted that judgments exist, but has pled no facts to suggest that the parties intended the agreements to be preclusive. At base, DirecTV appears to misconstrue the relevant burden. Contrary to DirecTV’s argument, the Court need not “find that the multistate judgments were entered before any of the issues were ‘actually litigated’” in order to strike its issue preclusion defense. Dkt. No. 36 at 16. To withstand a motion to strike an affirmative defense, DirecTV, not the FTC, must plead facts sufficient “to raise a right to relief above the speculative level” such that the claim “is plausible on its face.” Twombly, 550 U.S. at 556-57. Accordingly, that the “record presented here” does not permit the Court to determine whether a plausible defense of issue preclusion exists inures to FTC’s benefit, not DirecTV’s. 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 9 of 10 Accordingly, FTC’s motion to strike the issue preclusion affirmative defense is also granted, with DirecTV granted leave to amend if it can do so consistent with the requirements of Rule 11. F. Previous Nationwide Settlement DirecTV’s ninth affirmative defense is titled “Previous Nationwide Settlement Agreement.” Dkt. No. 27 at 12. The affirmative defense does not reference a legal theory under which a “previous nationwide settlement agreement” would serve as a defense to liability in this action. Id. at 12-13. DirecTV attempts to remedy this deficiency in its opposition by clarifying that the defense is based on at least Section 706(1) of the Administrative Procedures Act (although DirecTV’s opposition leaves open the possibility that other bases could exist). Dkt. No. 36 at 17. But DirecTV may not supplement its Amended Answer through its opposition. Cf. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1989) (a court deciding a motion to dismiss “may not consider any material beyond the pleadings”). To the extent that DirecTV’s ninth affirmative defense is based on the Administrative Procedures Act, DirecTV was obligated to identify the applicable statutory provision and plead sufficient facts—such as the agency decision to be reviewed and why that decision may be challenged in district court—to demonstrate that such a defense is plausible. The ninth affirmative defense falls well short of that standard, and is stricken with leave to amend to the extent DirecTV can do so consistent with its Rule 11 obligations. // // // // // // // // 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 88 Filed 12/21/15 Page 10 of 10 IV. CONCLUSION The FTC’s motion to strike DirecTV’s affirmative defenses is GRANTED IN PART AND DENIED IN PART. DirecTV must file its amended answer on or before January 18, 2016. If DirecTV cannot now, consistent with its Rule 11 obligations, amend the stricken affirmative defenses to remedy the defects identified by the Court, it may seek leave to amend later if it subsequently discovers a sufficient factual basis. IT IS SO ORDERED. Dated: ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N 12/21/2015
2016-01-05	89	DISCOVERY LETTER BRIEF from DIRECTV and Washington AG Office(Sandrock, Ryan) (Filed on 1/5/2016) Modified on 1/6/2016 (dtmS, COURT STAFF). (Entered: 01/05/2016)
2016-01-05	90	Discovery Order re 89 Letter filed by DIRECTV LLC. Signed by Judge Maria-Elena James on 1/5/2016. (cdnS, COURT STAFF) (Filed on 1/5/2016) (Entered: 01/05/2016)	Case 3:15-cv-01129-HSG Document 90 Filed 01/05/16 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 89 The Court is in receipt of the request from Defendant DIRECTV, Inc. and non-party witness Paula Selis, filed January 5, 2016, a dispute about whether DIRECTV may take Ms. Selis’s deposition pursuant to a Rule 45 subpoena. Dkt. No. 89. The parties request: (1) they be relieved of the obligation to meet and confer in person, given that Ms. Selis is in Seattle; (2) permission to file a joint letter brief (not to exceed 5 pages) on this issue by 1 PM PT on Friday, January 8; and (3) expedited consideration and resolution of the issue so that DIRECTV can file its Reply briefing in support of its Motion for Partial Summary Judgment by the January 25 deadline. Good cause appearing, the Court hereby GRANTS the request, provided the parties meet and confer by video conference or, if such technology is not available, by telephone. In order to ensure compliance with the purpose of the meet and confer requirement, the parties shall (1) make a contemporaneous record of their meeting using a court reporter or electronic recording device, and (2) create a log showing the beginning and ending time of discussions of particular topics. The parties shall prepare the recording and log in a format the Court can easily use if it needs to review them. The joint letter shall include as part of the cover page a statement as to how the parties met and conferred in compliance with this Order and the Discovery Standing Order. The parties need not submit the recording unless requested by the Court. IT IS SO ORDERED. Dated: January 5, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-01-06		Electronic filing error. Incorrect event used. Correct event is DISCOVERY LETTER BRIEF. Corrected by Clerk's Office. No further action is necessary. Re: 89 Letter filed by DIRECTV LLC (dtmS, COURT STAFF) (Filed on 1/6/2016) (Entered: 01/06/2016)
2016-01-08	91	Discovery Letter Brief filed by DIRECTV, Inc.. (Attachments: # 1 Exhibit A)(Sandrock, Ryan) (Filed on 1/8/2016) (Entered: 01/08/2016)	Case 3:15-cv-01129-HSG Document 91 Filed 01/08/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Pursuant to Your Honor’s Order of January 5, 2016, the parties met and conferred Dear Magistrate Judge James, telephonically (the attempted video conference failed for technical reasons) regarding the Paula Selis deposition dispute. The parties were not able to reach agreement. The transcript of the meet and confer is attached as Exhibit A. Ms. Selis has advised DIRECTV that she can be available for deposition in Seattle on January 13, 2016, should Your Honor order that her deposition proceed. /s/ Chad S. Hummel Counsel for DIRECTV /s/ Amy Teng Washington AG /s/ Todd Bowers (Pro Hac to be Submitted) Washington AG cc: Eric Edmondson, Counsel for Federal Trade Commission Case 3:15-cv-01129-HSG Document 91 Filed 01/08/16 Page 2 of 6 Ms. Selis’s Position This dispute concerns DIRECTV’s (DTV) subpoena to Paula Selis, a former Washington State Assistant Attorney General and a non-party in this matter, for her deposition (hereafter, the Selis Deposition). A copy of the subpoena is attached as Exhibit A. Through this Joint Discovery Letter, Ms. Selis seeks a protective order forbidding the January 13, 2016 deposition and document production requested. POSITION OF NON-PARTY WITNESS MS. SELIS A protective order is appropriate if the discovery sought imposes an undue burden or The FTC has sued DTV over DTV’s marketing practices. DTV claims the multistate settlements it signed in 2010 (MSAs) should have a preclusive effect and equitably bar the FTC’s suit. To demonstrate the irrelevance of the MSAs, the FTC submitted the short, factual declaration of Ms. Selis, a non-party who represented Washington in the MSAs. Dkt. No. 75. Ms. Selis’ declaration authenticates Washington’s consent decree with DTV, the plain language of which demonstrates the MSAs are irrelevant because they address only state law claims. Judge Gilliam, after the submission of Ms. Selis’ declaration, struck DTV’s preclusion defenses that were based on the MSAs. Dkt. 88 at 6-9. expense. Fed.R.Civ.P. 26(c)(1). Seeking irrelevant discovery not calculated to lead to the discovery of admissible evidence “by definition” imposes an undue burden. Robert Half Int’l Inc. v. Ainsworth, 2015 WL 46624629, at 4 (S.D.Cal. Aug. 6, 2015). In addition, Ninth Circuit courts hold that the scope of discovery from non-parties is narrower than that permitted to be taken from parties and that non-parties “deserve extra protection from the courts.” Id.; see also United States v. C.B.S., Inc., 666 F.2d 364, 371–72 (9th Cir. 1982). This Court should grant Ms. Selis’ protective order for four reasons. First, DTV seeks to question Ms. Selis, a non-party, about the MSAs. However, DTV’s compliance with the MSAs are irrelevant because the MSAs expressly settled only state law claims.1 Indeed, Judge Gilliam struck the preclusion defenses that are predicated on the MSAs after Ms. Selis’ declaration was submitted.2 Dkt. No. 88 at 6-9. Because the MSA defenses upon which Ms. Selis’ declaration was submitted have been stricken, the MSAs – and Ms. Selis’ testimony regarding them – are irrelevant. Nor can DTV use Ms. Selis’ deposition to resurrect the stricken defenses, as DTV’s indicates it wants to do. Oppenheimer Funds, Inc. v. Sanders, 437 U.S. 340, 352 (1978) (holding it is “proper to deny discovery of matter that is relevant only to claims or defenses that have been stricken.”).3 legality of its marketing practices by deposing Ms. Selis, either by asking Ms. Selis, a former state assistant attorney general, to apply federal law to various facts or regarding DTV’s Second, DTV should not be able to attempt to establish the non-deceptiveness and 1 Indeed, at the time the MSAs were entered, ROSCA did not even exist. 2 Despite acknowledging that Judge Gilliam struck the preclusion defenses, DTV continues to pursue its preclusion argument – including in this letter motion. 3 To the extent DTV argues that Judge Gilliam’s order permits discovery on their stricken defenses, DTV is wrong. Judge Gilliam commented that DTV may replead its stricken defenses “if it subsequently discovers a sufficient factual basis” and “consistent with its Rule 11 obligations.” Dkt. No. 88 at 10. The court’s order does not give DTV permission to engage in otherwise improper discovery to salvage their stricken defenses. See, Oppenheimer Fund, supra, 437 U.S. at 352; Micro Motion, Inc. v. Kane Steel Co., Inc., 894 F.2d 1318, 1327 (Fed. Cir. 1990) (“The discovery rules are designed to assist a party to prove a claim it reasonably believes to be viable without discovery, not to find out if it has any basis for a claim.”) (citations omitted). Case 3:15-cv-01129-HSG Document 91 Filed 01/08/16 Page 3 of 6 compliance with the MSA and Washington’s ongoing monitoring of its consent decree with DTV. In addition to raising concerns that it is speculative, such testimony would require Ms. Selis, an attorney, to divulge her mental impressions and thought processes. DTV cannot obtain Ms. Selis’ work product. Fed. R. Civ. P. 26(b)(3)(B). See e.g., Holmgren v. State Farm Mut. Auto. Ins. Co., 976 F.2d 573, 577 (9th. Cir. 1992). Third, although DTV’s equitable defenses of laches, estoppel and waiver remain, none of these are raised in the pending summary judgment motion. Thus, there is no need to depose Ms. Selis before DTV’s summary judgment reply is due. More importantly, Ms. Selis should not be deposed at all regarding these defenses because they center on what the FTC did and did not do and on the FTC’s intentions and motivations. For example, DTV’s estoppel defense involves a determination of whether the FTC intended to induce DTV to act on the agency not bringing suit until March 2015. Dkt. No. 88 at 5. Waiver is dependent on whether the FTC intentionally and unmistakably relinquished its right to sue DTV. Id. at 6. Ms. Selis is not and has never been an employee of the FTC and cannot speak for the agency. Fourth, to the extent Ms. Selis communicated with the FTC during her state law investigation and the FTC’s simultaneous federal law investigation, those communications are protected under the common interest doctrine and the deliberative process and law enforcement privileges. The common interest doctrine serves to protect communications from disclosure if: (1) the disclosure is made due to actual or anticipated litigation; (2) for the purpose of furthering a common interest; and (3) the disclosure is made in a manner not inconsistent with maintaining confidentiality against adverse parties. Holland v. Island Creek Corp., 885 F.Supp. 4, 6 (D.D.C. 1995). It is well-established that no written agreement is required, and that a common interest agreement may be implied from conduct and situation. United States v. Gonzalez, 669 F.3d 974, 979 (9th Cir. 2012).4 Even where “various agencies may not have always agreed on the policy outcome. . . . [t]he agencies were engaged in common effort.” Modesto Irrigation District v. Gutierrez, 2007 WL 763370, 16 (E.D. Cal. Mar. 9, 2007). These requirements are met here. Both Ms. Selis and the FTC independently investigated and ultimately sued DTV for violating respective state and federal consumer protection laws. Any communications naturally furthered each investigation.5 In addition, any communications between Ms. Selis, on behalf of the Washington Attorney General, and the FTC are further protected by the deliberative process and law enforcement privileges. The former protects “deliberations comprising part of a process by which government decisions and policies are formulated.” North Pacifica, LLC v. City of Pacifica, 274 F. Supp. 2d 1118, 1120-21 N.D.Cal. 2003). The latter is designed “to prevent disclosure of law enforcement techniques and procedures, to preserve the confidentiality of sources, . . . and otherwise to prevent interference with an investigation.” In re Dep’t of Investigation of City of N.Y., 856 F.2d 481, 484 (2d Cir. 1998), as cited in S.E.C. v. Gowrish, 2010 WL 1929498, 1 (N.D.Cal. May 12, 2010). 4 See also United States v. Town of Colorado City, 2014 WL 5431218, at 3 (D. Ariz. Oct. 27, 2014) (“Here, there is clearly a common interest between the Arizona Attorney General and the United States Department of Justice. They are both pursuing possible civil rights violations by the Colorado City defendants in this case.”). 5 Any communications after Washington settled with DTV in 2010 would remain protected because DTV remains subject to Washington’s oversight to ensure compliance with its consent decree with DTV. Finally, DTV argues it should be permitted to question Ms. Selis simply because she about Washington communications and deliberations with the FTC. Indeed, DTV’s counsel stated during the meet-and-confer that DTV intends to subpoena Ms. Selis’ counterparts in other states that participated in the MSAs to discover similar information it is now seeking from Ms. Selis. Permitting DTV to question Ms. Selis about her communications with her federal counterparts when both were pursuing the same target – DTV – for violations of state and federal consumer protection laws flies in the face of the common interest doctrine and deliberative and law enforcement privileges. In addition, it would seriously chill future cooperation between state attorneys general and the FTC and impair their ability to protect the public.6 submitted a short, factual declaration. However, as noted, Ms. Selis’ declaration was limited to the MSAs and DTV’s preclusion defenses. The former are irrelevant and the latter have been stricken, making Ms. Selis’ declaration moot and making any deposition of her an undue burden on her, especially in light of her status as a non-party.7 DIRECTV’s Position be denied for multiple reasons. First, Ms. Selis (a former Assistant Attorney General of the State of Washington and, in her own words, the “lead attorney” in connection with that State’s litigation that resulted in Washington joining the multi-state settlement agreement (“MSA”)) has first-hand, percipient knowledge of facts probative of (a) DIRECTV’s defense contention that its marketing practices have not been deceptive and (b) its affirmative defenses of laches, waiver and estoppel. In its December 21, 2015 order (Dkt 88) denying the FTC’s motion to strike those defenses, the Court implicitly held that discovery on the elements of those defenses is permissible. Second, the FTC’s Opposition to DIRECTV’s pending summary judgment motion (Dkt. 71) relies in part on Ms. Selis’s declaration (Dkt. 75), and the parties stipulated to extend schedule on the Motion to allow for her deposition in advance of DIRECTV’s reply (Dkt. 84). Third, neither the FTC nor Ms. Selis has offered support for any privilege to block inquiry into communications between the FTC and state AGs, communications which could show that the FTC and the states agreed that the MSA cured problems with the very practices at issue here. I. Ms. Selis Has Knowledge Regarding Core Issues In The Case. A. Ms. Selis Has Knowledge Regarding Lack of Deception. Ms. Selis has extensive knowledge regarding the fundamental defense premise that Ms. Selis’s application to this Court for a protective order barring her deposition should Case 3:15-cv-01129-HSG Document 91 Filed 01/08/16 Page 4 of 6 DTV argues that no privilege or common interest should apply in Ms. Selis’ testimony DIRECTV’s advertising has not been deceptive. The MSA covered the same conduct at issue here, the FTC failed to object to the MSA, no state including Washington ever brought any action to enforce or alter the terms of the MSA, and the FTC allowed DIRECTV to comply with the MSA for five years before filing this case. (See Dkt. 27, 33, 53, 66). Ms. Selis cannot dispute that she has information regarding the terms and effect of the MSA. She states that she 6 The State of Washington can promptly supply a declaration providing the bases for the invocation of Washington’s governmental privileges and the application of the common interest doctrine. 7 DTV’s argument that it should be able to depose Ms. Selis simply because it agreed with the FTC to extend the briefing schedule on its summary judgment reply to accommodate DTV’s request to seek to take additional discovery. The issue is whether Ms. Selis has discoverable information to provide – and she does not – not whether the parties agreed to extend the briefing schedule (which occurred prior to Judge Gilliam’s order striking the preclusion defenses on which Ms. Selis’ declaration was submitted). Case 3:15-cv-01129-HSG Document 91 Filed 01/08/16 Page 5 of 6 “was the lead attorney for the State of Washington” regarding the MSA and “a member of the States’ coordinating committee for the investigation of DIRECT[V], the negotiation of the [MSA], and the monitoring of DIRECTV’s compliance with the [MSA].” (Dkt. 75, ¶ 4). The FTC relies on Ms. Selis’s knowledge to support its summary judgment opposition. Her declaration states that, although she was aware of the FTC’s investigation, the state proceedings were separate. (Dkt. 75, ¶ 4). The FTC uses this statement to contend that DIRECTV’s affirmative defenses lack merit. (Dkt. 71 at 21). The declaration also states that the fact that Washington has not brought an enforcement action against DIRECTV “should not be interpreted as establishing DIRECTV’s compliance with Washington’s Consent Decree, let alone with federal law.” (Dkt. 75, ¶ 8). The FTC uses this statement to imply that DIRECTV somehow violated the MSA and thus can be subjected to this further action. (Dkt. 71 at 21-22). Given Ms. Selis’s direct knowledge regarding core issues in the case, DIRECTV is entitled to take her deposition. This relevance is independent of DIRECTV’s affirmative defenses. Even if DIRECTV had not asserted MSA-related defenses, Ms. Selis’s testimony would be proper because it could lead to admissible evidence regarding whether DIRECTV’s disclosures have been deceptive. Fed.R.Civ. P. 26(b)(1); Fratus v. Cty. of Contra Costa, No. 14- cv-05533-MEJ, 2015 WL 4538076, at 2 (N.D. Cal. July 27, 2015); U.S. v. Real Property, No. 13-cv-02027-JST (MEJ), 2014 WL 2126912, at 2 (May 22, 2014). Judge Gilliam’s Order Confirms the MSA’s Relevance. B. On December 21, 2015, Judge Gilliam rejected the FTC’s motion designed to eliminate the MSA from the case, ruling that DIRECTV had sufficiently pleaded the defenses of laches, estoppel, and waiver based on the MSA. (Dkt. 88). Furthermore, although Judge Gilliam struck the defenses of issue preclusion, claim preclusion, and previous nationwide settlement, he did so without prejudice, stating that DIRECTV “may seek leave to amend later if it subsequently discovers a sufficient factual basis.” (Dkt. 88 at 10) (emphasis added). This ruling allows, and seems to envision, further discovery on all the MSA-related defenses, including those stricken.8 Ms. Selis argues incorrectly exactly the opposite—that Judge Gilliam’s ruling means that the MSA is no longer relevant. She is plainly wrong. The order makes clear that all six of the defenses—the three that remain in the case without amendment and the three stricken—are based on the same factual allegations involving the MSA. (Dkt. 88 at 3) (Stating that “In support of each of these affirmative defenses, [DIRECTV]’s Amended Answer recites the same paragraph of factual allegations” and then citing the paragraph, the very first sentence of which describes the MSA). There is no question that Judge Gilliam’s order makes the MSA relevant. Your Honor previously denied without prejudice DIRECTV’s motion to compel a 30(b)(6) deposition on Topics 1-2 of DIRECTV’s 30(b)(6) notice, both of which related to the MSA. Your Honor found that a ruling should be deferred until after resolution of the Motion to 8 Ms. Selis cites Oppenheimer Funds, Inc. v. Sanders, 437 U.S. 340, 352 (1978) for the proposition that discovery regarding stricken defenses is improper. This argument ignores the language of Judge Gilliam’s order, which allows DIRECTV to re-assert the stricken defenses if it subsequently obtains information to support those defenses. Again, this language strongly suggests that Judge Gilliam believes that DIRECTV is authorized to obtain discovery on the stricken defenses. Furthermore, as set forth above, Ms. Selis’s deposition is relevant to far more than the defenses that have been stricken. Her testimony may be relevant of the fundamental issue of whether DIRECTV’s disclosures were deceptive. Case 3:15-cv-01129-HSG Document 91 Filed 01/08/16 Page 6 of 6 Strike. (Dkt. 81 at 6). Now that Judge Gilliam has allowed three of DIRECTV’s MSA-defenses to remain in the case, DIRECTV respectfully asserts that Your Honor should allow Ms. Selis’s deposition to go forward (and also order that the FTC produce a witness on Topics 1-2). II. Ms. Selis Subjected Herself to Deposition By Filing a Declaration. All this said, the most obvious reason why Ms. Selis’s arguments regarding lack of relevance should fail is that Ms. Selis herself elected to sign a declaration that the FTC filed in support of its summary judgment opposition. Ms. Selis has not cited any case in which a court granted a protective order preventing the deposition of a witness who submitted a declaration in support or opposition to a dispositive motion. The FTC clearly believes that her declaration is relevant to the pending motion.9 In fact, Ms. Selis’s argument that potential privilege issues justify barring the deposition is the FTC previously recognized that DIRECTV was entitled to Ms. Selis’s deposition when it filed a stipulation with the Court, agreeing to an extension of DIRECTV’s time to file its rely in light of the fact that “the parties have met and conferred about additional depositions that DIRECTV wishes to take in response to the FTC’s factual contentions in its opposition brief.” (Dkt. 84). This statement covered Ms. Selis’s deposition. III. Ms. Selis’s Privilege Claims Are Insufficient. meritless for at least two reasons. First, there is no dispute that the communications between the Washington Attorney General’s office and DIRECTV relating to the MSA are not privileged. There is no possible basis for preventing inquiry into those communications. Second, DIRECTV may also inquire into whether Ms. Selis and the FTC have any basis for their privilege claims as to communications between the states and the FTC. For example, Ms. Selis invokes the “common interest” privilege. However, in order to establish a common legal interest, Ms. Selis and the FTC must show that there was some agreement to pursue a joint strategy. In re Pacific Pictures Corp., 679 F.3d 1121, 1129 (9th Cir. 2012) (rejecting common interest claim over party’s communications with U.S. Attorney where no evidence that party and government had agreed to a joint strategy). Here, there is reason to doubt that there was any such agreement because, in arguing that the MSA is not relevant, the FTC has taken the position that it acted separately and independently from the state attorneys’ general. Given that position, the FTC may not legitimately invoke the common interest doctrine. The FTC cannot have it both ways by simultaneously claiming that it was not aligned with the states but also claiming that it followed a joint legal strategy with the states. Certainly DIRECTV is entitled to discovery on this issue.10 9Your Honor previously denied DIRECTV’s motion to compel the depositions of consumers who signed declarations regarding DIRECTV in part because the FTC stated that it would not rely on those declarations. (Dkt. 86). Here, however, it is clear that the FTC does intend to rely on Ms. Selis. 10There is also no basis for the claimed “law enforcement privilege.” This privilege allows a court to bar disclosure that would: (1) reveal confidential investigative methods or techniques; (2) jeopardize an ongoing investigation; or (3) harm non-parties. U.S. ex rel. Lee v. Horizon West, Inc., No. 00-2921 SBA, 2006 WL 305966, at 6-8 (N.D. Cal. Feb. 8, 2006). Documents describing routine or general investigative procedures do not meet this standard. Id. The government’s invocation of a generalized government interest is also not enough. U.S. v. McGraw-Hill Cos., No. 13-779, 2014 WL 1647385, at 7 (C.D. Cal. April 15, 2014). Finally, the privilege is inapplicable where the government fails to formally assert it. Id.
2016-01-08	92	Minute Entry for proceedings held before Magistrate Judge Maria-Elena James: Discovery Hearing held on 1/8/2016.FTR Time 4:10-4:34. Plaintiff Attorney: Erik Edmundson; Jacob Snow. Defendant Attorney: Chad S. Hummel; Clayton S. Friedman; Maichael Yaghi; Ryan M. Sandrock; Non-Party Paula Selis Counsel:Todd Bowurs; Amy Teng. Attachment: Minutes of Telephonic Discovery Hearing; See Minutes for Court Ruling.(rmm2S, COURT STAFF) (Date Filed: 1/8/2016) (Entered: 01/08/2016)	Case 3:15-cv-01129-HSG Document 92 Filed 01/08/16 Page 1 of 2 OFFICE OF THE CLERK UNITED STATES DISTRICT COURT Northern District of California Date: January 8, 2016 CIVIL MINUTES Time: 4:10 pm - 4:34 pm Judge: Maria Elena James Case No.: 15-cv-01129-HSG Case Name: Federal Trade Commission v. DIRECTV, Inc. Attorney for Plaintiff: Erik Edmondson, Esq. JJaaccoobb SSnnooww,, EEssqq.. Attorney for Defendant: Chad S. Hummel, Esq. CCllaayyttoonn SS.. FFrriieeddmmaann,, EEssqq.. MMiicchhaaeell YYaagghhii,, EEssqq.. RRyyaann MM.. SSaannddrroocckk,, EEssqq.. TToodddd BBoowweerrss,, AAsssstt.. AAttttoorrnneeyy GGeenneerraall ffoorr nnoonn--ppaarrttyy PPaauullaa SSeelliiss AAmmyy TTeenngg,, AAsssstt.. AAttttoorrnneeyy GGeenneerraall ffoorr nnoonn--ppaarrttyy PPaauullaa SSeelliiss Deputy Clerk: Rose Maher FTR Time: 4:10-4:34 PROCEEDINGS Telephonic Discovery Conference held. Argument heard. Court ruled as follows: DIRECTV shall be allowed to depose Ms. Selis in writing, no more than 30 questions to be submitted. DIRECTV shall submit to Counsels, Todd Bowers and Erik Edmundson the questions for Ms. Selis by Monday, 1/11/2016 by 5 p.m., Close of Business. Ms. Selis shall respond to those questions no later than Friday, 1/15/2016 by 5 p.m., Close of Business. Case 3:15-cv-01129-HSG Document 92 Filed 01/08/16 Page 2 of 2
2016-01-15	93	SECOND AMENDED ANSWER to Complaint byDIRECTV LLC, DIRECTV, Inc.. (Sandrock, Ryan) (Filed on 1/15/2016) (Entered: 01/15/2016)	Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 1 of 12 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation and DIRECTV, LLC a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG DEFENDANTS DIRECTV AND DIRECTV, LLC’S SECOND AMENDED ANSWER ) ) ) ) ) ) ) ) ) ) ) ) Defendants DIRECTV and DIRECTV, LLC, by and through their undersigned counsel, hereby answer the Complaint (“complaint”) filed by Plaintiff FEDERAL TRADE COMMISSION (hereinafter “Plaintiff” or “FTC”), as follows: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 2 of 12 SECOND AMENDED ANSWER TO THE COMPLAINT1 1. Paragraph 1 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. More specifically, Defendants generally and specifically deny that they have engaged in conduct that violates Section 5 of the FTC Act or Section 4 of ROSCA. Defendants have fully and adequately disclosed to potential and actual subscribers, at all times relevant to this action, all the material terms of their subscription satellite television services and offers, including, but not limited to, the pricing of television programming packages, the existence and length of consumer contract terms, the existence of early cancellation fees and the circumstances under which those may be imposed, and the terms relating to promotional offers for premium channels such as HBO, Showtime, and Cinemax. Defendants further deny that any equitable or statutory remedy as alleged is warranted. JURISDICTION, VENUE AND INTRADISTRICT ASSIGNMENT 2. Defendants admit the allegations of Paragraph 2, except to the extent that this Court may determine that the FTC lacks standing to assert any claims over which the Federal Communications Commission (“FCC”) has exclusive enforcement authority. 3. Defendants admit that venue is proper in this judicial district, but reserve their right to seek a transfer to a more convenient venue should circumstances arise justifying a motion under, for example, 28 U.S.C. Section 1404(a). 4. Defendants admit that DIRECTV, LLC advertised and has sold satellite television subscription services in San Francisco County and deny the remaining allegations contained in Paragraph 4. 5. Defendants admit the allegations of Paragraph 5. PLAINTIFF 6. Defendants admit the allegations of Paragraph 6, except to the extent that the 1 This Second Amended Answer is identical to the Amended Answer (Dkt. 27) except that it does not contain the three affirmative defenses stricken by the Court’s December 21, 2015 Order on the Motion to Strike (Dkt. 88). Pursuant to that Order, DIRECTV reserves the right to seek leave to amend at a later date to add the stricken affirmative defenses or otherwise amend. 1 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 3 of 12 Court may determine that the FTC is not authorized or lacks standing to enjoin, or seek equitable relief relating to, conduct at issue in this case due to the FCC’s exclusive enforcement authority. DEFENDANTS 7. Defendants admit the allegations of Paragraph 7, except that DIRECTV, LLC is the entity that has engaged in the advertising, marketing, distribution, and selling activities of direct-to-home digital television services to consumers throughout the United States that are the subject of the complaint. 8. Defendants admit the allegations of Paragraph 8, except that they deny that defendant DIRECTV (the “named defendant DIRECTV”) has directly engaged in the activities listed in this Paragraph. Hereinafter, any admissions by “Defendants” to allegations of the complaint are made solely with respect to and by DIRECTV, LLC (hereinafter “DIRECTV”), as the named defendant DIRECTV operates other business units which are not the subject of the complaint. All of the material allegations, if directed at the named defendant DIRECTV, are generally and specifically denied. COMMERCE 9. Defendants admit the allegations of Paragraph 9. DEFENDANTS’ BUSINESS ACTIVITIES 10. Defendants admit the allegations of Paragraph 10, except that DIRECTV is the entity that, as of December 31, 2013, had 20.3 million subscribers in the United States. 11. Defendants admit that DIRECTV offers direct-to-home satellite television service to consumers by subscription, and that consumers who subscribe receive programming, necessary equipment, installation, and support services. Defendants deny any remaining allegations contained in Paragraph 11. 12. Defendants deny the allegations contained in Paragraph 12 except as follows: DIRECTV admits that it has made offers to consumers that provide introductory pricing discounts, no upfront or reduced costs for installation and equipment, and other benefits, in exchange for the consumer’s agreement to purchase a minimum level of service for a period, typically, of 24 months. DIRECTV admits that, under the terms of such offers, which have been 2 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 4 of 12 clearly and conspicuously disclosed to consumers, and in appropriate circumstances, it has the contractual right to assess and collect early cancellation fees, which have sometimes been $20 per month for each month remaining on a subscriber’s agreement, should the subscriber breach their contractual obligation to maintain a required minimum level of service for the entire commitment period. Defendants further admit that DIRECTV’s customers may become month-to-month subscribers after 24 months. Defendants deny the remaining allegations of Paragraph 12. 13. Defendants admit that DIRECTV advertises for its products and services, including that it offers introductory promotional pricing for some of its programming packages, the terms of which vary by offer and have been and are clearly and conspicuously disclosed to consumers. Defendants further admit that DIRECTV advertises for its satellite television subscription services, including, in certain instances, promotional pricing offers, in a variety of media, including television, print, and the Internet. Defendants admit that the regular prices for satellite television subscription programming packages are periodically adjusted to reflect inflationary price increases and that the fact that its program pricing is subject to change has been and is clearly and conspicuously disclosed to consumers. Defendants admit that consumers who obtain the benefit of substantially discounted introductory first year pricing are typically charged the then-existing regular price of whatever programming package they choose during the second year of their subscription. Defendants deny the remaining allegations contained in Paragraph 13. 14. Defendants admit that DIRECTV’s programming subscriptions may include, at the election of consumers, certain premium channels such as HBO, Cinemax, and Showtime free of charge for a limited period of time, that consumers are thereafter charged the regular price for subscriptions to such premium channels at the end of the promotional period unless the consumer contacts DIRECTV to cancel one or more of the premium services, and that the material terms and conditions of these premium channel offers are clearly and conspicuously disclosed to consumers. Defendants deny the remaining allegations contained in Paragraph 14. 15. Defendants admit that DIRECTV, Inc. entered into a Multistate Settlement Agreement with 50 states and the District of Columbia and that the terms of that Agreement bound and continue to bind certain activities of DIRECTV relating to some of the identical issues 3 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 5 of 12 addressed in this complaint. DIRECTV further admits that not a single state has brought an enforcement action for any alleged violation of the letter or spirit of that Agreement since it was effective (January 2011). Defendants lack knowledge sufficient to admit or deny the remaining allegations contained in Paragraph 15. 16. Defendants admit that DIRECTV has disseminated advertisements for its subscription services since 2007, and that Plaintiff attaches what it claims to be examples of portions of such advertisements as Exhibits 1 through 3, the contents of which speak for themselves. Defendants admit that the quoted sections in this Paragraph appear in the advertisements, and state that the material terms of the programming package offers are clearly, conspicuously, and prominently disclosed to consumers at multiple times and in multiple ways prior to the time that any consumer is financially committed to subscribe to DIRECTV service and a programming package. Defendants deny the remaining allegations contained in Paragraph 16. 17. 18. Defendants deny the allegations contained in Paragraph 17. Defendants admit that certain DIRECTV advertisements have described an offer for free premium channels for three months. Defendants further admit that Plaintiff attaches an example of a DIRECTV advertisement as Exhibit 1, the content of which speaks for itself. Defendants further admit that, in language not quoted in full in the complaint, the advertisement states, with respect to the offer: “Over 30 premium channels FREE for 3 months including HBO, SHOWTIME and Cinemax with SELECT or ULTIMATE Packages. All Packages require 24 mo agreement [...] IF BY THE END OF PROMOTIONAL PRICE PERIOD(S) CUSTOMER DOES NOT CONTACT DIRECTV TO CHANGE SERVICE, THEN ALL SERVICES WILL AUTOMATICALLY CONTINUE AT THE THEN-PREVAILING RATES.” Defendants deny the remaining allegations contained in Paragraph 18. 19. 20. Defendants deny the allegations contained in Paragraph 19. Defendants admit that DIRECTV maintains the website, www.directv.com, on which consumers receive information about DIRECTV products and services and through which they may subscribe to its satellite television services. Defendants further admit that the website 4 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 6 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 contains a landing page, programming package selection page, receiver selection page, a shopping cart page, and an order confirmation page, among other pages. Defendants deny the remaining allegations contained in Paragraph 20. 21. Defendants admit that Plaintiff attaches as Exhibit 4 printed copies of some selected web pages that appeared on one version of a subscription web flow on www.directv.com, the content of which speaks for itself. Defendants state that Exhibit 4 does not contain many relevant web pages or the text contained in or accessed through hyperlinks, roll-overs, mouse- overs, light boxes, infohovers, pop-ups, and similar means of conveying information to consumers that are readily available to consumers who navigate DIRECTV’s website. In short, Defendants deny that Exhibit 4 depicts all relevant portions of a DIRECTV web flow, or even an example thereof. Defendants deny the remaining allegations contained in Paragraph 21. 22. 23. Defendants deny the allegations contained in Paragraph 22. Defendants admit that certain of DIRECTV web pages on www.directv.com contain text advertising its offers for free premium channels, and that Plaintiff attaches as Exhibit 4 what it contends are copies of selected web pages that appeared on one version of a subscription flow from www.directv.com, the content of which speaks for itself. Defendants deny that Exhibit 4 depicts all relevant portions of a DIRECTV web flow, or even an example thereof. Defendants deny the remaining allegations contained in Paragraph 23. 24. 25. Defendants deny the allegations contained in Paragraph 24. Defendants admit that consumers who call a telephone number listed in DIRECTV’s advertisements can speak with a telephone customer service representative. If the consumer wished to subscribe during such a call, the terms and conditions of subscriptions to DIRECTV’s satellite television services are fully and clearly disclosed. Defendants deny the remaining allegations contained in Paragraph 25. ALLEGATIONS RELATED TO THE FTC ACT 26. Paragraph 26 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 5 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 7 of 12 27. Paragraph 27 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. COUNT I 28. 29. 30. 31. 32. Defendants deny the allegations contained in Paragraph 28. Defendants deny the allegations contained in Paragraph 29. Defendants deny the allegations contained in Paragraph 30. COUNT II Defendants deny the allegations contained in Paragraph 31. Defendants deny the allegations contained in Paragraph 32. Defendants deny the allegations contained in Paragraph 33. 33. ALLEGATIONS RELATED TO ROSCA 34. Paragraph 34 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 35. Paragraph 35 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 36. Paragraph 36 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 37. Paragraph 37 contains legal conclusions to which no response is required. To the extent any statements in this Paragraph are considered factual allegations, Defendants deny any such allegations. 38. Defendants deny the allegations contained in Paragraph 38. 39. 40. COUNT III Defendants deny the allegations contained in Paragraph 39. Defendants deny the allegations contained in Paragraph 40. 6 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 8 of 12 COUNT IV 41. 42. Defendants deny the allegations contained in Paragraph 41. Defendants deny the allegations contained in Paragraph 42. AFFIRMATIVE DEFENSES By setting forth these affirmative defenses, Defendants do not assume the burden of proving any fact, issue, or element of a claim for relief where such burden properly belongs to Plaintiff. Moreover, nothing stated herein is intended to be construed as an acknowledgement that any particular issue or subject matter is relevant to Plaintiff’s allegations. Nor shall anything stated or unstated constitute an admission of any kind. FIRST AFFIRMATIVE DEFENSE (Failure To State A Claim) The complaint fails to state sufficient facts to constitute a cause of action against Defendants. SECOND AFFIRMATIVE DEFENSE (Compliance With Applicable Law) Plaintiff’s claims are barred because Defendants’ conduct is not unlawful in that Defendants complied with applicable statutes and regulations. THIRD AFFIRMATIVE DEFENSE (Statute Of Limitations) Counts III and IV of the Complaint are barred in part or in whole by the 3-year statute of limitations under 15 U.S.C. § 57b(d), or alternatively by the 4-year statute of limitations under 28 U.S.C. § 1658. FOURTH AFFIRMATIVE DEFENSE (Laches) Plaintiff’s claims are barred in part or in whole by the doctrine of laches on grounds that include, but are not limited to, the following facts and circumstances: in December 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District 7 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 9 of 12 of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other equitable relief extending back for almost a decade based on at least the foregoing. FIFTH AFFIRMATIVE DEFENSE (Estoppel) Plaintiff’s claims are barred in part or in whole by the doctrine of estoppel on grounds that include, but are not limited to, the following facts and circumstances: in December 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been 8 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 10 of 12 an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other equitable relief extending back for almost a decade based on at least the foregoing. SIXTH AFFIRMATIVE DEFENSE (Waiver) Plaintiff’s claims are barred in part or in whole by the doctrine of waiver on grounds that include, but are not limited to, the following facts and circumstances: in December 2010 and effective January 2011, after a lengthy investigation and negotiation with a multi-state group of attorneys general, DIRECTV entered into a nationwide agreement with 50 states (and the District of Columbia), resulting in 51 substantially similar judgments and consent orders. The issues addressed by the investigation and in the orders cover the same conduct at issue in this lawsuit: introductory discount price offers for satellite TV program packages, the requirement of a two year commitment to obtain the introductory pricing, how long the promotional price remains in effect, the disclosure of the regular price, the possible imposition of early cancellation fees, and roll to pay premium channel offers. The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined. There has never been an enforcement proceeding brought against DIRECTV by any state or the District of Columbia based on the multi-state agreement, and DIRECTV has relied, in part, on the requirements of that agreement in designing its advertising disclosures. The FTC has been aware of the multi-state agreement and DIRECTV’s advertising since late 2010 and did not take any formal action against the company on the issues implicated by the multi-state agreement until 2015. Regardless of the nationwide settlement agreement, it would be inequitable for Plaintiff to seek injunctive, monetary, or other equitable relief extending back for almost a decade based on at least the 9 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 11 of 12 foregoing. SEVENTH AFFIRMATIVE DEFENSE (Good Faith Belief And Conduct) The acts and statements of Defendants were fair and reasonable and were performed in good faith based on all the relevant facts known to Defendants. Defendants acted with a good faith belief that they had good cause and/or legitimate business reasons to act as they did and did not directly or indirectly perform any acts that would constitute a violation of consumers’ rights. As a consequence, Plaintiff is not entitled to any damages whatsoever. EIGHTH AFFIRMATIVE DEFENSE (Reservation Of Other Affirmative Defenses) Defendants lack sufficient information of all the facts and evidence surrounding the subject incident and are therefore unable to ascertain at this time any additional affirmative defenses which Defendants may have. Therefore, Defendants expressly reserve the right to amend this Answer to assert such other affirmative defenses as may become apparent subsequent to the filing of this Answer, whether in discovery, at trial, or otherwise. // // // // // // // // // // // // // 10 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 93 Filed 01/15/16 Page 12 of 12 DEFENDANTS’ PRAYER FOR RELIEF WHEREFORE, DIRECTV and DIRECTV, LLC respectfully request that this Court: 1. Dismiss Plaintiff’s complaint with prejudice as to DIRECTV and DIRECTV, LLC; 2. Order that Plaintiff take nothing by reason of the complaint, that Plaintiff is entitled to no relief, and that judgment be rendered in favor of DIRECTV and DIRECTV, LLC; 3. Award DIRECTV and DIRECTV, LLC its costs and expenses incurred in connection with this action; and Grant DIRECTV and DIRECTV, LLC such other relief as the Court deems proper. 4. Dated: January 18, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, Ryan M. Sandrock hereby attests that concurrence in the filing of this document has been obtained from Chad Hummel. Dated: January 18, 2016 By: /s/ Ryan M. Sandrock Ryan M. Sandrock Attorneys for Defendants DIRECTV and DIRECTV, LLC 11 SECOND AMENDED ANSWER CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-01-25	94	REPLY (re 53 MOTION for Partial Summary Judgment Notice of Motion and Motion for Partial Summary Judgment; Memorandum of Points and Authorities in Support Thereof ) filed byDIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Ryan M. Sandrock in Support of Reply Memorandum in Support of Motion for Partial Summary Judgment)(Sandrock, Ryan) (Filed on 1/25/2016) (Entered: 01/25/2016)	Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 1 of 18 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to the Hon. Maria-Elena James DIRECTV’S REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT Date: February 25, 2016 Time: 2:00 p.m. Courtroom: 15-18th Floor Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 2 of 18 TABLE OF CONTENTS Page I. II. The FTC Misstates the Summary Judgment Standard. ....................................................... 3 There Is No Dispute that DIRECTV Disclosed the Premium Channel Terms. .................. 4 III. There is No Authority Discounting Disclosures in Hyperlinks or Info-Hovers. ................ 6 A. B. The FTC Attempts to Add Additional Conditions to ROSCA. ...............................6 The FTC Distorts Its .com Disclosures. ...................................................................9 IV. The FTC Has No Evidence That The Disclosures Were Not Clear and Conspicuous. ..................................................................................................................... 10 A. B. C. No Document, Testimony, Survey, or Other Evidence Supports the FTC. ...........10 The FTC’s Response Regarding the MSA Fails. ...................................................11 The FTC’s Argument That It Does Not Need Evidence In This Case is Wrong. ...................................................................................................................12 The FTC Has Not Met Its Rule 56(d) Burden. ................................................................. 13 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG i V. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 3 of 18 TABLE OF AUTHORITIES Page(s) Cases Bd. of Tr. v. Piedmont Lumber & Mill Co., No. 13-03898-HSG, 2015 WL 5461561 (N.D. Cal. Sept. 16, 2015) (Gilliam, J.) ...................3, 4 Family Home & Fin. Ctr., Inc. v. Fed. Home Loan Mortg. Corp., 525 F.3d 822 (9th Cir. 2008) ......................................................................................................13 FTC v. AMG Servs., 29 F. Supp. 3d 1338, 1353 (D. Nev. 2014) (Resp. ) .....................................................................8 FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048 (C.D. Cal. 2012) ............................................................................4, 11, 13 FTC v. Cyberspace.com, 453 F.3d 1196 (9th Cir. 2006) (Resp. ) .........................................................................................7 FTC v. EDebit Pay, LLC, 695 F.3d 938 (9th Cir. 2012) .......................................................................................................8 FTC v. Health Formulas, LLC, No. 14-01649, 2015 WL 2130504 (D. Nev. May 6, 2015).....................................................7, 13 FTC v. Johnson, 96 F.Supp.3d 1110 (D. Nev. 2015) (Resp. ) .................................................................................8 Gaddy v. Adam, No. 14-01642-HSG, 2015 WL 1967292 (N.D. Cal. May 1, 2015) (Gilliam, J.) ............................................................4 Margolis v. Ryan, 140 F.3d 850 (9th Cir. 1998) ......................................................................................................13 Quintal Research Group, Inc. v. Nintendo of Am., Inc., No. 13-00888, 2015 WL 4396464 (N.D. Cal. July 17, 2015) ....................................................13 In re Vistaprint Corp. Mktg. & Sales Practices Litig., No. 08-1994, 2009 WL 2884727 (S.D. Tex. Aug. 31, 2009) .......................................................8 Statutes 15 U.S.C. § 8403 .................................................................................................................................7 15 U.S.C. § 8403(1) ........................................................................................................................1, 2 15 U.S.C. § 8403(2) ............................................................................................................................1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG ii Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 4 of 18 15 U.S.C. § 8403(3) ............................................................................................................................1 Other Authorities Fed.R.Civ.P. 56 .........................................................................................................................3, 4, 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG iii Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 5 of 18 In its Opposition, the FTC submits no evidence whatsoever that consumers do not see and understand the repeated recitations of the material terms of DIRECTV’s premium channel offer in its website subscription flows—the standard for whether disclosures regarding on-line negative option sales programs are “clear and conspicuous.” No actual consumer testimony of confusion or deception; no survey evidence; no studies or research of consumer behavior; nothing. Absent such evidence, the FTC has completely failed to meet its burden in opposing summary judgment. Rather than attempting to make the requisite showing, the FTC merely argues, with its own opinions based on the agency’s review of DIRECTV’s website, that DIRECTV’s extensive disclosures are inadequate. There is no dispute that DIRECTV repeatedly disclosed the material terms—just the FTC’s argument that disclosures made in hyperlinks or info-hovers do not pass ROSCA muster. That new position finds no support anywhere in ROSCA or the .com Disclosures. Contrary to what the FTC may urge now, there is no rule that advertising disclosures cannot be made by info-hovers or hyperlinks, so long as consumers see and understand those disclosures. The FTC offers zero evidence here that consumers do not—and it was the FTC’s burden to do so. DIRECTV’s motion established that it complies with ROSCA: it clearly and conspicuously discloses the material terms of the premium channel transaction before obtaining a consumer’s financial information (15 U.S.C. § 8403(1)) and obtains informed consent to the offer before charging the consumer (15 U.S.C. § 8403(2)).1 (Mot. at 6-15; Leever Decl. ¶¶ 3-30). DIRECTV’s motion included the disclosures at issue, unlike the FTC’s Exhibit 4 to the Complaint which omitted many of the disclosures at issue. (Mot. at 3). DIRECTV further showed that these disclosures complied with the multi-state settlement (“MSA”) and that no state had taken any enforcement action regarding these disclosures. In response, the FTC concedes that DIRECTV disclosed the premium channel terms repeatedly in 2013 web flow. For example, the FTC does not dispute that the web flow contains a hyper-linked disclosure that states in all capitals “IF BY THE END OF PROMOTIONAL PRICE PERIOD(S) CUSTOMER DOES NOT CONTACT DIRECTV TO CHANGE SERVICE THEN 1 The FTC does not allege that DIRECTV failed to provide a simple mechanism for consumers to stop recurring charges (15 U.S.C. § 8403(3)). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 1 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 6 of 18 ALL SERVICES WILL AUTOMATICALLY CONTINUE AT THE THEN PREVAILING RATES” (Mot. at 8:5-10; Leever Decl. ¶ 6; Leever Ex. A at 23) and info-hover2 disclosures describing the premium channels then stating “After promotional period ends, you will be charged at the price in effect unless you call to cancel.” (Mot. at 9:3-6; Leever Decl. ¶ 8; Leever Ex. A at 58). The info-hover disclosure is immediately adjacent to the description of the premium channels and the disclosure appears on the same screen as that description. Nor does the FTC dispute that the 2015 web flow contains these disclosures in numerous places. (Mot. at 10-13; Leever Decl. ¶¶ 14, 16, 18, 20, 22; Leever Ex. B at 6, 18, 31, 38, 54). The FTC’s central opposition thesis is that these disclosures are irrelevant because some of them are in hyperlinks or info-hovers. This sweeping claim ignores that DIRECTV makes disclosures outside of hyperlinks and info-hovers such as on the View Monthly Cost Page. The FTC has little to say about this page because it clearly shows the monthly charges and discounts for the premium channels, making it clear that the consumer will be charged after three months. (Mot. at 9; Leever Decl. ¶¶ 9-10, 22-23; Leever Ex. A at 77; Leever Ex. B at 37 ). But the bigger problem is that the FTC distorts the requirements of ROSCA and its own .com Disclosures, which do not prohibit info-hovers or hyperlinks. ROSCA requires “clear[] and conspicuous[]” disclosures (15 U.S.C. § 8403(1)) but does not specify what types of disclosures are clear and conspicuous. As the .com Disclosures state— “the ultimate test is whether the information intended to be disclosed is actually conveyed to consumers.” (.com Disclosures at 1). The FTC submits no evidence that this test is not satisfied here. In short, rather than present evidence that consumers did not see and understand DIRECTV’s repeated disclosures, the FTC simply asserts its own view that the disclosures were not clear and conspicuous. The FTC proceeds as some sort of “expert” prosecutor that can declare certain disclosures to be inadequate without having to present evidence to support its conclusions. In this regard, the FTC seems to think that a summary judgment opposition need not contain any more facts 2 DIRECTV uses the term “info-hover” to refer to both “mouse-overs” and “pop-ups.” A mouse- over refers to text that, when a user hovers over it (without clicking), shows additional text (without going to another page). A “pop-up” (also called a “light box” or “shadow box”) refers to text that, when a user clicks on it, shows additional text (without going to another page). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 2 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 7 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 than a complaint. This is not the case. The FTC’s position is remarkable given that this case bears no resemblance to the cases it cites. Those cases discussed companies with business models based on pure deception, where few consumers would have bought the product if the company had made truthful disclosures. In contrast to those scams, DIRECTV indisputably provides highly valued television services to millions of consumers nationwide as an alternative to cable television and other satellite television providers and discloses the negative option features of those subscriptions. DIRECTV even does so to the satisfaction of 50 state attorneys general and the District of Columbia. Moreover, none of the FTC’s cases discuss hyperlinks in detail except one, which considered a “convoluted email-and-hyperlink process” that is nothing like DIRECTV’s use of info-hovers and hyperlinks. See infra at 8. No doubt aware that its response is deficient, the FTC pleads for more time to develop its case, asking that the Court deny the motion under Rule 56(d). The Court should not do so. The FTC has not met its burden to show what specific evidence exists and how it could prevent the entry of summary judgment in DIRECTV’s favor. Nor does the FTC make any attempt to focus on the particular discovery relevant to the ROSCA claim or propose a schedule in which it could obtain this information. Instead, the FTC wants the Court to deny the motion without condition. The Court should decline this request to postpone issuing a ruling that could streamline this case and, at a minimum, provide guidance to the parties going forward. I. The FTC Misstates the Summary Judgment Standard. The FTC misstates its burden in opposing summary judgment on an issue as to which it bears the ultimate burden. The FTC says that the motion must be denied if “a rational trier of fact could resolve a genuine issue of material fact” in the FTC’s favor. (Resp. at 1). The FTC ignores that it must present sufficient evidence to raise a genuine issue of material fact. DIRECTV met its burden by informing the Court of the basis for its motion and identifying the materials demonstrating the absence of a genuine issue of material fact. Bd. of Tr. v. Piedmont Lumber & Mill Co., No. 13- 03898-HSG, 2015 WL 5461561, at 2 (N.D. Cal. Sept. 16, 2015) (Gilliam, J.). The FTC then had to come forward with “specific facts showing there is a genuine issue for trial.” Id. (citations and quotations omitted). The Court “shall grant summary judgment against a party who fails to make a REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 3 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 8 of 18 showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial, since a complete failure of proof concerning an essential element of the nonmoving party’s case necessarily renders all other facts immaterial.” Gaddy v. Adam, No. 14-01642-HSG, 2015 WL 1967292, at 3 (N.D. Cal. May 1, 2015) (Gilliam, J.) (citations and quotations omitted). II. There Is No Dispute that DIRECTV Disclosed the Premium Channel Terms. There is no dispute about what disclosures DIRECTV made in its 2013 web flow before obtaining the customer’s billing information and how it obtained consent: • Disclosure 1: The Package Selection Page describes the premium channels as free “for three months.” (Leever Ex. A at 4). There is no unqualified representation (as there was in FTC v. Commerce Planet, Inc. 878 F. Supp. 2d 1048 (C.D. Cal. 2012)) that the channels are “free.” The page also contains an “Additional Offer Details” link that when clicked clearly discloses the negative option feature immediately: “IF BY THE END OF PROMOTIONAL PRICE PERIOD(S) CUSTOMER DOES NOT CONTACT DIRECTV TO CHANGE SERVICE THEN ALL SERVICES WILL AUTOMATICALLY CONTINUE AT THE THEN PREVAILING RATES” (emphasis original). (Mot. at 7-8; Leever Decl. ¶¶ 5-6, Leever Ex. A at 23). (Leever Ex. A at 48, 71-76). • Disclosure 2: After the consumer selects a package, the consumer goes to the Cart page, where DIRECTV lists the monthly rates for the premium channels, the discount to be applied for the first three months, and provides a blue “[?]” info-hover that discloses that: “For a limited time, you get every premium mov[i]e channel FREE for 3 months as part of our new customer offer. After promotional period ends, you will be charged at the price in effect unless you call to cancel.” (Mot. at 8-9; Leever Decl. ¶¶ 7-8, Leever Ex. A at 58). • Disclosure 3: The Cart page also includes a hyperlink to the “View Monthly Cost”3 page. Clicking this link leads to information showing that the premium channel charges will continue after three months. For months four through six, the chart shows that the premium channel discount no longer applies. The page also contains an info-hover containing the disclosure listed above. (Mot. at 9; Leever Decl. ¶¶ 9- 10, Leever Ex. A at 77). • Consent: At the bottom of the Checkout page where the consumer enters his or her financial information, there is a prominent hyperlink in blue lettering labeled “By clicking ‘Submit Order’ I agree to these Terms and Conditions.” Immediately adjacent to that hyperlink is a prominent orange box containing contrasting white lettering “I Accept. Submit My Order.” The consumer must affirmatively click this 3 The FTC claims that the use of grey for the “View Monthly Cost” box renders it inconspicuous. (Resp. at 8). But the grey box is surrounded by green and blue boxes. (Mot. at 8). No doubt if DIRECTV had used green or blue, the FTC would have said the box was inconspicuous because it blended in (or said that color was not prominent because it was used too much). And if DIRECTV used another color, the FTC would have complained that there were too many colors. REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 9 of 18 box to provide consent. (Mot. at 14; Leever Decl. ¶ 26, Leever Ex. A at 118).4 There is also no dispute about what disclosures DIRECTV makes in its 2015 web flow before obtaining the customer’s billing information and how it obtains consent: • Disclosure 1: The “Additional Offer Details” discloses the negative option feature: “IF BY THE END OF PROMOTIONAL PRICE PERIOD(S) CUSTOMER DOES NOT CONTACT DIRECTV TO CHANGE SERVICE THEN ALL SERVICES WILL AUTOMATICALLY CONTINUE AT THE THEN PREVAILING RATES.” This disclosure is accessible on every page in the 2015 web flow. (Mot. at 10; Leever Decl. ¶ 14; Leever Ex. B at 54).5 • Disclosure 2: The Package Selection Pages also contains an additional disclosure of the negative option. Each package description has a box indicating that the premium channels are “FREE for 3 months,” and includes a blue “i” info-hover regarding the negative option feature. The info-hover states that “After promotional period ends, you will be charged the price in effect unless you call to cancel.” (Mot. at 10-11; Leever Decl. ¶¶ 16-17, Leever Ex. B at 6).6 • Disclosure 3: The “Ad More Great Programming” page contains the info-hover disclosure (Mot. at 11; Leever Decl. ¶¶ 16-17; Leever Ex. B at 18). • Disclosure 4: The Cart page lists the monthly rates for the premium channels, the discount to be applied for the first three months, and provides the info-hover disclosure. (Mot. at 12; Leever Decl. ¶¶ 20-21, Leever Ex. B at 31). • Disclosure 5: The Cart page also contains a blue hyperlink in the Cart that when clicked takes the consumer to the “View Monthly Cost” page, showing that the premium channel charges will continue after three months, and containing the info- hover disclosure. (Mot. at 12-13; Leever Decl. ¶¶ 22-23, Leever Ex. B at 38). • Disclosure 6: The “Terms and Conditions” hyperlink can now be accessed on every page of the web flow. Clicking on that link leads to additional disclosures regarding the negative option. The 2015 Terms and Conditions contain detail regarding the premium channel offer: “If you agree to the free premium networks for three months, you will begin being charged the full, in-effect price per network after the promotional period ends unless you cancel them by calling Customer Service.” (Mot. at 13; Leever Decl. ¶ 24, Leever Ex. B at 57). • Consent: At the bottom of the Checkout page after the consumer enters his or her financial information and views all the above referenced disclosures, there is a radio 4 The Terms and Conditions in the 2013 web flow do not describe the premium channel terms. 5 The FTC claims that this disclosure does not include the “material price term.” (Resp. at 8). It does state that the these channels are a $152.97 value. (Leever Ex. B at 54). Furthermore the FTC cannot dispute that the full cost of the premium channels is set forth on the Cart Page (Leever Ex. B at 31) and View Monthly Cost page (Leever Ex. B at 38). 6 The FTC complains that the [i] info-hover appears more than 60 times throughout the site. (Resp. at 9). This argument cuts against the FTC—given the multiple choices a consumer makes in the transaction, DIRECTV had to make numerous disclosures, it therefore would have been impossible to provide all disclosures in detail without using info-hovers or hyperlinks. If DIRECTV had included all disclosures on the same page, the FTC could claim that the disclosures were buried. REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 10 of 18 button which requires the consumer to give his or her express consent to the Terms and Conditions. The consumer must affirmatively click this button to provide consent. (Mot. at 14; Leever Decl. ¶ 25, Leever Ex. B at 57). The FTC’s papers or declarations do not dispute that these disclosures are made. The Davis and Stahl declarations and the videos they attach do not do not challenge DIRECTV’s descriptions of its disclosures or claim that DIRECTV did not make the relevant disclosures.7 The FTC does argue that DIRECTV’s exhibits are misleading because they show many disclosures as visible by default “instead of requiring user interaction to appear as they would on an interactive website.” (Resp. at 24). But there is no confusion or disagreement about how the website works and the nature of info-hovers and hyperlinks. If a consumer hovers over the [?] or clicks on the [i], the disclosure appears immediately adjacent to the triggering term. (See, e.g., Deposition of Nicole Davis (“Davis Dep.”) 100:8-23 (not disputing that the [?] is “immediately adjacent” to the phrase “free for three months.”) If a consumer clicks on a hyperlink, the consumer goes to the linked disclosure. The FTC’s real argument is not that it is hard to understand how the website works—it is not—but that ROSCA and the .com Disclosures say that info-hovers and hyperlinks are irrelevant. This is wrong. III. There is No Authority Discounting Disclosures in Hyperlinks or Info-Hovers. A. The FTC argues in a heading that that “The purpose of ROSCA is to forbid negative option The FTC Attempts to Add Additional Conditions to ROSCA. disclosures made solely through info-hovers and hyperlinks.” (Resp. at 20). This is made up and 7 DIRECTV objects to the Davis and Stahl evidence. Ms. Davis created a “Simulated Site,” which attempts to capture the 2013 web flow. (Davis Decl., ¶ 8). Ms. Stahl submitted a declaration that contains two videos of her going through the purchase flow process on DIRECTV’s actual website (Exs. A & B) and two videos of her going through the purchase flow process of the Simulated Site (Exs. C & D). In the first video of each set (Ex. A and C), she purposefully did not click on all the disclosures. In the second video in each set (Ex. B and D), she did. (Stahl Decl. ¶¶ 3-6). The problem with the Simulated Site is that Ms. Davis admitted that it does not include all the content from the DIRECTV website and that not all hyperlinks in the Simulated Site are active and functional. (Davis Dep. 51:21 – 53:5; 65:13 – 67:2). The problem with the Stahl videos is that none of them recreate the experience of a reasonable consumer. Ms. Stahl admitted that (i) the videos were not intended to capture a reasonable consumer’s visit, (ii) she had “no basis” to say anything about what a reasonable consumer would expect or perceive from the website, and (iii) she was not making any representation about the experience of a typical user of DIRECTV. See Deposition of Anne Stahl (“Stahl Dep.”) 36:16-24; 41:19-25; 42:2-10; 66:7-19; 88:18-22; 95:12-20, 98:18-99:21; 100:10-18; 123:9-14; 189:20-190:9). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 6 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 11 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 simply wrong. ROSCA says nothing about info-hovers or hyperlinks. ROSCA sets forth very straightforward elements for compliance: (1) clearly and conspicuously disclosing all material terms of the transaction before obtaining the consumer’s billing information; (2) obtaining the consumer’s express informed consent before charging the consumer’s financial account; and (3) providing a simple mechanism for a consumer to stop recurring charges. 15 U.S.C. § 8403. The statute does not prohibit hyperlinks or info-hovers. If that had been the intent, Congress would have clearly said so in the law itself. Nor do any ROSCA cases support such a conclusion. The FTC only cites a single ROSCA case in its response. FTC v. Health Formulas, LLC, No. 14-01649, 2015 WL 2130504 (D. Nev. May 6, 2015) (Resp. at 12). The defendants in that case advertised “free trials” of dietary supplements but in fact enrolled consumers in “continuity programs” in which they were sent and billed for monthly shipments of vitamins. Id. at 2-3. The entire product was a scam in which the defendants made consumers believe they would pay nothing if they were not satisfied after a month of use but then imposed various conditions making it nearly impossible for the consumer to get a refund: including ins some cases that the trial period was only 14 days (despite the fact that the trial shipment was a one-month supply), that the trial period started from the date of the order not the date of the receipt (making it possible that the trial period was over before the consumer ever even received the vitamins), and that the company refused to provide refunds if the customer opened the bottle of vitamins. Id. at 3-4, 12. There is not one word in the case about info-hovers or hyperlinks. And the FTC cannot with a straight face compare DIRECTV’s products, practices, and disclosures to those in that case. The non-ROSCA cases the FTC cites do not support its position either. Those cases also involved advertising schemes obviously intended to trick customers. For example, FTC v. Cyberspace.com, 453 F.3d 1196 (9th Cir. 2006) (Resp. at 11), concerned a scheme in which a company sent out checks to customers but once the check was deposited the customer was charged a monthly recurring fee. Id. at 1200-1201. The Court estimated that 99% of customers were deceived by this scheme. Id. at 1201. The problem in that case was not that the disclosures were too small but that the entire transaction was intended to deceive customers into thinking that they were just REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 7 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 12 of 18 depositing a check. Similarly, FTC v. Johnson, 96 F.Supp.3d 1110 (D. Nev. 2015) (Resp. at 11) involved the same basic scheme as in Commerce Planet: customers were promised “free or risk- free” information about government grants and other programs, customers provided credit card information under the impression that they were just paying for shipping and handling, but the company actually enrolled them in a largely worthless monthly membership program. Id. at 1116- 1117. Again, the problem was not with the size of the disclosures, it was with the deceptive nature of the entire transaction. In fact, only one of the FTC’s non-ROSCA cases even discusses info-hovers or hyperlinks. FTC v. AMG Servs., 29 F. Supp. 3d 1338, 1353 (D. Nev. 2014) (Resp. at 12).8 That case is also inapposite. It involved a payday loan transaction that required consumers to use a “convoluted email-and-hyperlink process.” Id. at 1345-46. The payday lender broke the terms and conditions into nine separate hyperlinks. Id. at 1343. The relevant terms were in “densely packed, fined print” in one of the links. Id. The Court did not find that hyperlinks were improper but that the payday lender’s particular disclosure scheme was deceptive. Again, the FTC cannot claim that DIRECTV’s extensive disclosures are comparable to those at issue in AMG. The FTC’s response also does not overcome Vistaprint. In re Vistaprint Corp. Mktg. & Sales Practices Litig., No. 08-1994, 2009 WL 2884727 (S.D. Tex. Aug. 31, 2009). There, the court held that “Plaintiffs’ allegation regarding the deceptive nature of the webpages at issue is clearly and unequivocally refuted by the website pages themselves,” whose language is “clear and easily understandable by anyone capable of making an online purchase of business cards.” Id. at 4-6; see also id. at 8 (“review of the webpages on which Plaintiffs base their claims convinces the Court without reservation that, as a matter of law, the webpages are not deceptive.”) (emphasis added). The FTC responds to Vistaprint by saying that “district courts in this circuit have repeatedly 8 FTC v. EDebitPay, LLC, 695 F.3d 938, 942 (9th Cir. 2012) (Resp. at 12), references a hyperlink disclosure but the case does not turn on whether the disclosure was in a hyperlink or not. The case involved advertisements for what appeared to be a credit card with a general credit line but really only was a card providing for a credit line that could only be used at a third-party’s online shop. Commerce Planet also mentions hyperlinks without much discussion. 878 F. Supp. 2d at 1058. Again, the facts of these cases bear no resemblance to this one and these cases certainly do not stand for any general proposition that hyperlinks are improper. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 8 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 13 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 rejected this argument.” (Resp. at 20). This is misleading. The FTC cites decisions in which the court distinguished Vistaprint on the facts or noted the possibility that a consumer might not see otherwise clear disclosures. However, none of these cases undermine the point that when a seller clearly and conspicuously discloses the material terms of an online sales transaction, this refutes any claim of deception. The FTC Distorts Its .com Disclosures. B. The FTC’s response includes a section heading stating that “The Dot Com Disclosures unambiguously condemn DIRECTV’s website practices.” This is wrong. Just like it did with ROSCA, the FTC flatly misstates what the .com Disclosures say. The .com Disclosures describe how hyperlinks and info-hovers can in some cases be effective forms of disclosure. They state that: Hyperlinks allow additional information to be placed on a webpage entirely separate from the relevant claim. Hyperlinks can provide a useful means to access disclosures that are not integral to the triggering claim, provided certain conditions (discussed below) are met. Hyperlinked disclosures may be particularly useful if the disclosure is lengthy or if it needs to be repeated (because of multiple triggering claims, for example). (.com Disclosures at 10). The .com Disclosures also recognize the use of info-hovers, which allow for disclosure adjacent to the claim without having to take the user to a separate page. (Id. at 12). Whether a particular ad is deceptive, unfair, or otherwise violative of a Commission rule will depend on the specific facts at hand. The ultimate test is not the size of the font or the location of the disclosure, although they are important considerations; the ultimate test is whether the information intended to be disclosed is actually conveyed to consumers. Id. at 1. This statement makes clear that the .com Disclosures cannot “unambiguously” condemn DIRECTV’s practices because they do not set forth bright-line rules against any particular form of disclosures. Rather, the .com Disclosures emphasize that what matters is the ultimate question of whether consumers received the disclosures and the FTC here has no evidence at all that consumers did not receive the disclosures that were indisputably made. The FTC’s own 30(b)(6) witness on the .com Disclosures, Frank Gorman, testified that the Guidelines do not proscribe any particular practice of form of disclosure. (Deposition of Frank Gorman (“Gorman Dep.”) 38:17 – 40:5). He explained that “The guidance specifically states that REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 9 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 14 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the ultimate question . . . in determining whether or not the net impression of an advertisement is deceptive online is the totality of the circumstances and . . . whether or not consumers are actually misled.” (Gorman Dep. 41:17-25). He went so far as to say that it is not even possible to comply with or violate the .com Disclosures because the issue of deception is context-specific. (Gorman Dep. 48:16 – 49:6). The FTC ignores the centerpiece of its own .com Disclosures. Instead, it misleadingly suggests that they condemn info-hovers and hyperlinks. This is wrong. The FTC largely relies on a portion of the .com Disclosures stating that disclosures are “more likely to be effective if consumers view the disclosure and the claim that raises the need for disclosure (often referred to as a ‘triggering claim’) together on the same screen” and that “disclosures that are an integral part of a claim or inseparable from it should not be communicated through a hyperlink.” (Resp. at 15). The FTC does not recognize that info-hover disclosures are communicated on the same screen as the disclosure. Info-hover disclosures are a way to include multiple disclosures on the same page as the triggering claim without cluttering the page. Furthermore, as set forth above, these principles do not bar hyperlinks, as evidenced by the fact that the section on hyperlinks follows this statement and confirmed by the FTC’s clear statement that the “specific facts” regarding consumer understanding of each disclosure trump bright-line rules. The need to look at the facts of each disclosure makes sense given that it is easy to imagine hyperlinked disclosures that are clear and conspicuous and non-hyperlinked disclosures that are not. The FTC concludes by arguing that DIRECTV has not provided evidence showing that consumers in fact see disclosures in info-hovers and hyperlinks. This argument ignores that, when the FTC brings a case, it is the FTC’s burden to prove that consumers are deceived. IV. The FTC Has No Evidence That The Disclosures Were Not Clear and Conspicuous. A. The FTC’s 30(b)(6) representative stated at her deposition that the entire factual basis for the No Document, Testimony, Survey, or Other Evidence Supports the FTC. FTC’s claims is “laid out in the complaint.” (Mot. at 6). She did not identify any evidence supporting these claims. Another FTC witness was prohibited by her counsel from answering the question of whether she was aware of whether the FTC had any factual basis for its claims. (Stahl REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 10 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 15 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dep. 225:9-16). And in written discovery, the FTC has failed to identify any consumer research, surveys, or tests supporting its allegations. The FTC apparently never tested whether consumers receive the information in DIRECTV’s disclosures. In addition, Ms. Stahl made clear that her videos of the DIRECTV website were not intended to replicate the average consumer’s experience or test what a reasonable consumer would perceive. (Stahl Dep. 36:16-24; 41:19-25; 42:2-10; 66:7- 19; 88:18-22; 95:12-20, 98:18-99:21; 100:10-18; 123:9-14; 189:20-190:9). The FTC’s citations to four documents produced by DIRECTV in discovery (Resp. at 17) do not create a triable issue of fact: • Exhibit K is a PowerPoint containing a discussion of a customer survey and proposals for addressing the results of this survey. The FTC says that this document warns against “bury[ing] information.” (Resp. at 17). The document shows that DIRECTV tries to make its disclosures clear. Furthermore, the FTC ignores that Slide 3 of this document states that “It is important to note that this was a qualitative research project, and as such, the findings are not necessarily projectable to the entire universe of prospective DIRECTV customers.” Suzanne Stinson of Media Entertainment Strategies—the agency that created this document—testified that studies of the type referred to in the document do not reflect the reasonable consumer standard. (Deposition of Suzanne Stinson (“Stinson Dep.”) 21:13 – 22:10; 167:6 – 169:11; 199:23 – 201:1; 201:8-25; 202:1 – 203:19; 206:24 – 207:10; 209:8- 14; 212:6-15). • Exhibits J, H, and I discuss DIRECTV’s consideration of providing proactive notification of roll to pay offers shortly before the roll to pay. The FTC does not, and could not, claim that ROSCA requires any such notification. In fact, ROSCA only concerns notifications provided prior to “obtaining the customer’s billing information” and “charging the customer’s account.” It does not require notice after the customer has already signed up for the product. Furthermore, Exhibit K does not show that there were 9 million calls about premium channel pricing (Resp. at 17) but 9 million calls about downgrades. (Ex I, DTVFTCII-0114578 at p. 4). The FTC’s lack of evidence is fatal to its claims. In order to show that a particular premium channel disclosure was deceptive in this case, the FTC had to present consumer survey evidence showing that typical buyers did not understand the terms of the premium channel offer and that this misunderstanding induced them to purchase DIRECTV’s services and fail to cancel the premium channels after three months. Here, the FTC could have attempted to present such evidence through an expert report or a consumer survey. It chose not to do so. The FTC’s Response Regarding the MSA Fails. B. As set forth in the Motion, DIRECTV’s disclosures are made pursuant to the MSA and there has never been a MSA enforcement action. (Mot. at 18). Given these facts regarding DIRECTV’s REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 11 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 16 of 18 diligent compliance with a regulatory regime, it is truly bewildering that the FTC would try to analogize this case to Commerce Planet and other cases in which the defendant’s entire business was based on deception. Certainly DIRECTV’s compliance with the MSA—which imposes guidelines on DIRECTV’s disclosure of “a 3-month trial of premium channels” (Dkt. 36-2 at 12)—is relevant to whether these disclosures are deceptive and whether the FTC must provide evidence of deception. The FTC response that the MSA does not have preclusive effect misses the point. The point here is that DIRECTV’s compliance with the MSA confirms that this case is nothing like any of the cases the FTC cites and the importance of holding the FTC to its burden of producing evidence showing some sort of deceptive conduct. The FTC’s only response to this issue is to point to the declaration of Paula Selis, Assistant Attorney General for the State of Washington, which suggests that DIRECTV might be in violation of the MSA. (Resp. at 22). However, Ms. Selis refused to provide any facts to support this suggestion, whether in her declaration or in the discovery ordered by Judge James regarding her declaration.9 C. The FTC’s Argument That It Does Not Need Evidence In This Case is Wrong. The FTC says that the Court “can determine that DIRECTV violated ROSCA solely upon facial review of DIRECTV’s website.” (Resp. at 1). While there may be some cases in which a company’s deception is so obvious that a facial review is sufficient, this is not one of those cases. (Of course, if the FTC intends to rely on a facial review of DIRECTV’s website without presenting 9 DIRECTV objects to the Selis evidence. Her declaration suggests that the declaration of Clay Friedman (Dkt 57-3) is somehow incorrect and also that DIRECTV might have violated the MSA. Magistrate Judge James ordered Ms. Selis to sit for a deposition by written questions. (Dkt. 92). DIRECTV asked: (1) “Is there anything in Clayton Friedman’s declaration filed in support of DIRECTV’s motion for partial summary judgment (Dkt. 53-7) that is untrue, and, if so, what and in what way is it untrue?” and (2) “In what ways, if any, has DIRECTV’s advertising or marketing since the entry of the settlements violated the terms of the settlements?” Ms. Selis evaded the first question by: (1) first claiming that her declaration does not address Mr. Friedman’s declaration (Deposition of Paula Selis (“Selis Dep.”) 54:6-10) and (2) then invoking the work product doctrine. (Selis Dep. 54:11-18). Ms. Selis evaded the second question by: (1) claiming—incorrectly—that Your Honor’s ruling on the FTC’s Motion to Strike (Dkt. 88) somehow makes the MSA irrelevant; (2) stating that she no longer works at the Washington Attorney General’s office, is not a representative of the State of Washington, and is not authorized to provide the State’s positions; and then (3) invoking the work product doctrine. (Selis Dep. 55:6-19; 56:21-57:9). Ms. Selis’s deposition added limitations to her declaration—namely that she does not speak for Washington and is unwilling to say anything to challenge Mr. Friedman’s declaration—that strips her declaration of any relevant content. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 12 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 17 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 any other evidence, it should say so now.) The FTC does not cite a single case in which a court found disclosures comparable to those at issue here to be deceptive at all and certainly no case in which a court did so based simply on a facial review. The cases cited in fact show, not surprisingly, that the FTC does present evidence of deception in the form of consumer declarations, surveys, and other evidence. For example, in the Health Formulas case, the FTC presented consumer declarations attesting to deception. 2015 WL 2130504 at 18. Similarly, in the Commerce Planet case, the FTC presented expert testimony. 878 F. Supp. 2d at 1068. V. The FTC Has Not Met Its Rule 56(d) Burden. In an effort to save its claims, the FTC asks that the Court deny the motion under Rule 56(d) and give the FTC more time to develop support for its case. This request should be denied. To obtain relief under Rule 56(d), “[t]he requesting party must show that: (1) it has set forth in affidavit form the specific facts it hopes to elicit from further discovery; (2) the facts sought exist; and (3) the sought-after facts are essential to oppose summary judgment.” Family Home & Fin. Ctr., Inc. v. Fed. Home Loan Mortg. Corp., 525 F.3d 822, 827 (9th Cir. 2008); Quintal Research Group, Inc. v. Nintendo of Am., Inc., No. 13-00888, 2015 WL 4396464, at *13 (N.D. Cal. July 17, 2015). Here, the FTC simply says that discovery remains open, lists pending discovery, and speculates that additional information could support its defenses. The FTC does not set forth in an affidavit what facts it hopes to elicit from discovery. The Edmondson affidavit simply sets forth the procedural history of some discovery requests. The FTC’s brief then offers a few sentences of speculation as to how additional information could support the FTC’s case. This speculation is not enough. Margolis v. Ryan, 140 F.3d 850, 854 (9th Cir. 1998). What the FTC does not do is provide any clarity regarding what specific evidence it needs to present in opposition to this motion. For example, it could have said that it intends to present expert evidence showing that surveys demonstrate that consumers did not read the particular info-hovers and hyperlinks in question. Such detail would at least allow the Court, if it found the Rule 56(d) argument to have merit, to impose conditions on its ruling and provide structure for the ROSCA case going forward. But the FTC remains unwilling to provide the Court or DIRECTV any detail about its case. (Dkt. 81 (Compelling the FTC to produce a 30(b)(6) witness regarding the factual bases for REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 13 Case 3:15-cv-01129-HSG Document 94 Filed 01/25/16 Page 18 of 18 asserting that DIRECTV’s claims are deceptive); Mot. at 5-6.) It wants the Court to deny the motion on Rule 56(d) grounds without condition, so that the FTC can hide its cards until trial begins. Furthermore, the FTC also says that “there can be no dispute that the FTC has diligently pursued discovery.” (Resp. at 22). DIRECTV does dispute the FTC’s diligence in this case. The FTC filed this case in March 2015. Since that time, the FTC has steadfastly refused to provide any information regarding how it will attempt to prove that DIRECTV’s disclosures were not clear and conspicuous. For example, as set forth in DIRECTV’s motion, the FTC’s 30(b)(6) witness refused to identify what evidence the FTC has to support its case. DIRECTV therefore had to file a motion to compel. Judge James granted that motion in large part, finding that the FTC must provide additional testimony regarding, among other topics, “whether the FTC has any factual support for its contention that consumers have been deceived.” (Dkt. 81 at 8). Finally, the FTC says that it needs to set up “an interactive website.” However, as set forth above, there is no dispute between the parties as to what DIRECTV disclosed to consumers and how it did so. If the FTC’s argument is that it needs to present survey evidence showing whether consumers understood DIRECTV’s website disclosures, it should have done so prior to this motion and could have done so based on the information it already has. Dated: January 25, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, Ryan M. Sandrock hereby attests that concurrence in the filing of this document has been obtained from Chad Hummel. Dated: January 25, 2016 By: /s/ Ryan M. Sandrock Ryan M. Sandrock Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY IN SUPPORT OF DIRECTV’S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 3:15-CV-01129-HSG 14 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 1 of 61 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to the Hon. Maria-Elena James DECLARATION OF RYAN M. SANDROCK IN SUPPORT OF REPLY MEMORANDUM IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT Date: February 25, 2016 Time: 2:00 p.m. Department: 15 – 18th Floor Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 DECLARATION OF RYAN M. SANDROCK CASE NO. 3:15-CV-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 2 of 61 I, Ryan M. Sandrock, declare and state as follows: 1. I am an attorney duly licensed to practice law before all of the courts of the State of California and the United States District Court for the Northern District of California. I am a partner of Sidley Austin LLP, counsel of record in this matter for defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”). I submit this Declaration in support of DIRECTV’s Reply Memorandum in Support of Motion for Partial Summary Judgment. I have personal, first-hand knowledge of the facts set forth herein, and, if called upon to do so, I could and would competently testify thereto. 2. On October 14, 2015, the FTC took the deposition of Suzanne Stinson of Media & Entertainment Strategies. Attached hereto as Exhibit A are relevant and true and correct portions of Ms. Stinson’s deposition transcript. 3. On December 10, 2015, DIRECTV took the deposition of Nicole Davis, an information technology specialist at the Federal Trade Commission (“FTC”). Attached hereto as Exhibit B are relevant and true and correct portions of Ms. Davis’s deposition transcript. 4. On December 15, 2015, DIRECTV took the deposition of Anne Stahl, an investigator at the FTC. Attached hereto as Exhibit C are relevant and true and correct portions of Ms. Stahl’s deposition transcript. 5. On January 15, 2016, Paula Selis, a former Assistant Attorney General for the State of Washington, sat for a deposition by written questions by DIRECTV. Attached hereto as Exhibit D are relevant and true and correct portions of Ms. Selis’s deposition transcript. 6. On January 15, 2016, DIRECTV took the deposition of Frank Gorman, whom the FTC designated as its Rule 30(b)(6) designee for DIRECTV’s topic of “[t]he FTC’s .com Disclosure guidelines.” Attached hereto as Exhibit E are relevant and true and correct portions of Mr. Gorman’s deposition transcript. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on January 25, 2016, at San Francisco, California. /s/ Ryan M. Sandrock Ryan M. Sandrock 1 DECLARATION OF RYAN M. SANDROCK CASE NO. 3:15-CV-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 3 of 61 EXHIBIT A Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 4 of 61 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION ) ) Plaintiff ) ) v. ) ) No. 15-cv-01129-HSG DIRECTV ) a corporation, ) ) and ) ) DIRECTV, LLC, ) ) a limited liability ) company, ) ) Wednesday, October 14, 2015 555 West 5th Street Suite 4000 Los Angeles, California CONFIDENTIAL PURSUANT TO STIPULATED PROTECTIVE ORDER The above-entitled matter came on for investigational hearing, pursuant to Notice, at 9:20 a.m. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 5 of 61 FTC v. DirecTV, et al. Stinson 21 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 all documentation that is required. And really, our conversations were about documentation, what kind of documentation, what kinds of studies. We didn't get into the substantive descriptions of studies, but we talked in general terms about the types of research 09:35:34 projects that our company has conducted for DirecTV since 2007 -- Q. Okay. A. -- and the kind of documentation, obviously, that -- that the FTC requires. 09:35:45 Q. How long has MES done work for DirecTV? A. Since 2001. Q. Okay. And what sort of studies has MES done for DirecTV since 2001? A. Sure. The types of studies, in -- in large 09:36:03 part, that we've engaged in are studies that look at usability of set top boxes for users of their system, remote controls, usability for DIRECTV.com, as well as usability for DirecTV apps. That's the largest share of the type of work that we've done 09:36:38 for them. All qualitative research. Q. When you say "qualitative research," what does that mean? A. Yeah. Qualitative research, as opposed to quantitative research. Quantitative research is 09:36:51 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 6 of 61 FTC v. DirecTV, et al. Stinson 22 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 projectable to a particular audience. The most common form of quantitative research that most Americans are used to looking at the findings of are political polls -- we're in that season at this point. 09:37:12 Qualitative research is not projectable in any way, and it gives you kind of the range of opinions that exist or that can exist about a particular topic, but once again, is not projectable. 09:37:26 Q. And I understood you to say that all of your work for DirecTV has been in the area of usability studies. A. No, not entirely, but most of it has. So we have conducted -- in fact, one of the decks that we 09:37:42 will look at today was based on focus groups, which is not usability. And I'm trying to think if they're -- so groups, focus groups, and ethnographies. So -- and ethnography is a research methodology that is very much based on observation 09:38:07 of individuals in their natural habitat. And we have conducted some ethnographies and question and answer after those ethnographies with DirecTV customers as well as competitors. Q. Since 2001, roughly, how many companies has 09:38:41 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 7 of 61 FTC v. DirecTV, et al. Stinson 167 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Okay. Q. The top bullet point you wrote "Users seek and" embarrass -- "and embrace transparency." Do you see that? A. Yes. 15:02:19 Q. What were you -- what point were you trying to make to DirecTV when you wrote that, "Users seek and embrace transparency"? A. It would have been -- let me just take a look at the entire page. Hold on just a minute. 15:02:33 So we've already talked about the first bullet point in terms of users being interested in -- in understanding of what pricing will be after the introductory period, keeping in mind, of course, that this is all qualitative research and not 15:03:23 projectable in any way. And also, transparency relative to -- it actually -- this is -- this entire page deals with issues of transparency, so it's transparency of information. The cart options, which I don't think that we've looked at in detail, 15:03:46 there were a couple of different options, couple of different options for the cart that they were testing, which was single column and double column, and as you see here, both of which were rejected. DirecTV was trying to find a user friendly way of 15:04:06 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 8 of 61 FTC v. DirecTV, et al. Stinson 168 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 presenting all of this extremely complex information in the cart, and so, you know, we tested a variety of different ways of -- of taking a look at it. So knowing -- kind of having a detailed list of the -- you know, specifically what you're purchasing, and 15:04:30 have that laid out in such a way that is easy to comprehend and understand was a goal of theirs, and so that's what that bullet point refers to, the transparency of the single and double column. So at that point, that was not resolved. 15:04:50 When a dollar sign is presented, users are interested in having the price presented then and there, if possible. That would have been a dollar sign that was associated as an icon with regard to movie posters in the entertainment portion of the 15:05:10 sign. So, you know, it's kind of like they were indicating that, you know, the movie actually costs something, and, you know, the -- the user said, well, in addition to having a dollar sign, let's just go ahead and put the price there instead of, 15:05:25 you know, hovering or clicking on it to find out what the specific price was. References to a hundred dollars in bundling savings has no meaning to respondents if it does not have a time period associated with it. And, you 15:05:42 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 9 of 61 FTC v. DirecTV, et al. Stinson 169 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 know, this reference to bundling savings was a promotion that was just kind of part of the bundling flow, and because it didn't have a time period, it just didn't make sense to some respondents. And then the final one, let's see what this 15:06:06 is. Additional transparency of interest would be informing users -- okay. So at the time that this particular study was done, downloading something to the DVR playlist might have not been instantaneous, and as a result, this would just be transparency of 15:06:36 information -- Q. Okay. A. -- which is, you know, this may take a bit of time. Q. So does it go back to your usability 15:06:43 studies -- A. Yes. Q. -- the DVR that we discussed earlier? A. Let's see what that -- probably. Yeah, probably. 15:06:57 MR. EDMONDSON: Okay. This is Exhibit 31. (Plaintiff's Exhibit 31 was marked for identification by the court reporter and is attached hereto.) /// For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 10 of 61 FTC v. DirecTV, et al. Stinson 199 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they're signing up for? MR. EDMONDSON: Objection; leading. THE WITNESS: No, they -- they did not. BY MR. HUMMEL: Q. In that regard, what did they ever tell you? 16:23:12 What was their -- A. Yeah. Q. When they said, "We want to hire you to look and conduct a usability study of our website," what did they say? 16:23:20 A. "We want to improve an enhanced purchase flow, so it's easier for those folks to be able to get through the process." Q. And what's purchase flow? A. The purchase flow is the process of going to 16:23:29 the homepage as a nonsubscriber to DirecTV and going through the process of getting DirecTV service and becoming a subscriber. Q. Mr. Edmondson asked you a number of questions today about a phrase, "bait and switch." 16:23:51 Do you recall that? A. Yes. Q. Did you ever see any practice in all the work that you ever did for DirecTV that you would characterize as a bait and switch? 16:23:55 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 11 of 61 FTC v. DirecTV, et al. Stinson 200 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I did not. I -- what the references are in the reports, too, are the notion that there may be a perception for some of these respondents, always keeping in mind that this is quality -- MR. EDMONDSON: Objection; nonresponsive. 16:24:15 MR. HUMMEL: You can move to strike it if you want, but you need to let the witness finish her answer, please. THE WITNESS: Can you read back what I was saying. (The previous partial answer was read back by the court reporter as follows: "ANSWER: I did not. I -- what the references are in the reports, 16:24:02 too, are the notion that there may be a perception for some of these respondents, always keeping in mind that this is quality" --) THE WITNESS: This is qualitative research; 16:24:37 it's not quantitative research. It's not projectable to, you know, the prospect audience that's out there. And if there is a perception even among one respondent in a study, that something feels off to them, it's going to be something that 16:24:57 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 12 of 61 FTC v. DirecTV, et al. Stinson 201 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I'm going to report back to the client. BY MR. HUMMEL: Q. This is -- MR. EDMONDSON: Objection; move to strike, unresponsive. 16:25:05 BY MR. HUMMEL: Q. Denied. This is a word you've used a word a lot today, "qualitative research." A. Yes. 16:25:15 Q. Can you, for the record, describe the type of usability qualitative research that you've done for DirecTV? A. Sure. The user studies that we've typically done for DirecTV have involved 12 respondents. 16:25:25 There are some studies that have been as many as 24 respondents, but once again, keeping in mind that those are -- you know, it's -- it is -- it's research that is designed to give you kind of a understanding of all of the different types of 16:25:53 responses that you can get, but in no way is it projectable. So these are 12 person usability studies that look at, for the most part, prototypes and demos of different user experiences that DirecTV is testing. 16:26:14 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 13 of 61 FTC v. DirecTV, et al. Stinson 202 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. You've used that word a lot today, not -- not projectable. A. Right. Q. And, in fact, it appears in virtually every one of your decks. 16:26:24 A. Yeah. Q. So, for example, I'm looking at Exhibit 16. It says, "It is important to note that this was a qualitative research project, and as such, the findings are not necessarily projectable to the 16:26:33 entire universe of prospective DirecTV customers." A. Yeah. Q. In that context, what does "projectable" mean? A. "Projectable" would mean that you would be 16:26:41 able to go to the -- the -- the vast number of prospects that exist in the marketplace and to be able to say that 10 percent of them believe this, 20 percent believe this, 65 percent are satisfied, that type of thing. 16:27:01 And I also should make a note about that statement. Can I just take a look at that? Q. You're looking at Exhibit 16, page 3. A. It says, "The findings are not necessarily projectable." 16:27:13 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 14 of 61 FTC v. DirecTV, et al. Stinson 203 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 That is a very fine point, and I just want to make sure that everyone understands what that means. Q. Okay. A. In the vast, vast majority of cases, the 16:27:21 findings would not be projectable. There may be a very odd circumstance on which a study could be projectable, but it would -- the odds of that are absolutely astronomical. And so that's why we have that very specific phrase in there, not necessarily 16:27:39 projectable. Qualitative studies are not projectable. Q. In your view have you ever done a usability study for DirecTV that is projectable, as you just defined it? 16:27:50 A. No. Q. Have you ever done any quantitative research for DirecTV? A. I have not. Q. Okay. And what's your understanding as a 16:27:55 psychology major from Princeton University, of what quantitative research is? A. I have done quantitative research in my career. I have not done it in recent years. And so this is research where you have percentages, numbers 16:28:10 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 15 of 61 FTC v. DirecTV, et al. Stinson 206 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to make an improvement, particularly with regard to usability. BY MR. HUMMEL: Q. Has your company ever performed surveys on existing DirecTV subscribers, where you ask them 16:30:23 about their experience on the website? MR. EDMONDSON: Objection; vague. THE WITNESS: Are you referring to quantitative research? BY MR. HUMMEL: 16:30:39 Q. Yes. A. No. Q. Okay. Have you ever done any research that would suggest to you that consumers, generally, after they subscribe to DirecTV do not understand 16:30:53 the terms and conditions of the subscription which they entered into? A. I have not done -- MR. EDMONDSON: Objection; vague, compound. THE WITNESS: I -- I have not done research 16:31:06 about the post-subscription or subscribing experience. BY MR. HUMMEL: Q. Have you ever done any projectable research for DirecTV which would demonstrate one way or the 16:31:20 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 16 of 61 FTC v. DirecTV, et al. Stinson 207 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 other about whether consumers understand the terms pursuant to which they get a trial subscription to premium channels? A. No, I have not. Q. Have you ever made any determination that 16:31:32 would be projectable onto a broader population of consumers, that DirecTV's disclosures of the terms of the free trial period for premium channels are not clear and conspicuous to consumers? A. I have not. 16:31:50 MR. EDMONDSON: Objection. BY MR. HUMMEL: Q. Let's look, if you wouldn't mind, at Exhibits 18 and 19 -- A. Okay. The -- 16:32:02 Q. -- and 25 and 26. Do you have them? A. I do. Q. Okay. Let's look first at Exhibit 18. I think you testified that these are notes -- 16:32:55 A. They are. Q. -- made by your colleague, of interviews? A. Yes. Q. But you couldn't testify if you made the transcription or not? 16:33:02 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 17 of 61 FTC v. DirecTV, et al. Stinson 209 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 able to state that. Q. So if the FTC, in this case, were to quote from this document, say look what a respondent said, you, as the -- as a witness for this company, would have no way of saying that that's, in fact, what the 16:34:12 respondent said; correct? A. Because it's not a transcription. Yes. Q. Okay. Nor would any of these individual anecdotal comments be projectable to a more general population of DirecTV potential subscribers; 16:34:26 correct? A. They would not be projectable. Q. Okay. A. It's qualitative research. Q. And when we talked about respondents, you 16:34:34 said your typical pool is 12 people? A. Yes. Q. All right. Sometimes you've done 24? A. Yes. Q. Were there 24 in any of the studies you 16:34:40 looked at today? A. I think one of them -- Q. One of them? A. -- was 24. Q. So 24 people performed a test, and you asked 16:34:45 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 18 of 61 FTC v. DirecTV, et al. Stinson 212 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and that would come up, and some -- one person said, "I think it looks like an Excel spreadsheet." A. Yes. Q. Do you recall that? A. Yes. 16:37:41 Q. Did you ever do any quantitative research that would be projectable, that would show how many consumers typically looked at that monthly price? A. No, I -- I have not. We have not. Q. Did you do any research that would be 16:37:50 projectable, that consumers who did view that monthly price didn't understand it? MR. EDMONDSON: Objection; vague, lacks foundation. THE WITNESS: We -- we have not. 16:37:59 BY MR. HUMMEL: Q. Okay. There were a lot of questions today, or some questions today, and each one of these exhibits typically had a cover page that had metadata on it? 16:38:16 A. Yes. Q. That metadata is nothing you prepared; correct? A. It is not. Q. So it's something that just comes with the 16:38:22 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 19 of 61 FTC v. DirecTV, et al. Stinson 249 10/14/2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 REPORTER'S CERTIFICATE I, the undersigned, a Certified Shorthand Reporter of the State of California, do hereby certify; That the foregoing proceedings were taken before me at the time and place herein set forth; that any witnesses in the foregoing proceedings, prior to testifying, were placed under oath; that a verbatim record of the proceedings was made by me using machine shorthand, which was thereafter transcribed under my direction; further, that the foregoing is an accurate transcription thereof. I further certify that I am neither financially interested in the action, nor a relative or employee of any attorney of any of the parties. IN WITNESS WHEREOF, I have this date subscribed my name. Dated: CHRISTINA KIM-CAMPOS CERTIFICATE NO. 12598 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 20 of 61 EXHIBIT B Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 21 of 61 Page 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION ------------------------------x FEDERAL TRADE COMMISSION, : : Plaintiff, : Case No. : 3:15-cv-01129 HSG vs. : : DIRECTV, a corporation, : Judge Haywood and DIRECTV, LLC, a limited : S. Gilliam, Jr. liability company, : : Defendants. : ------------------------------x Washington, D.C. Thursday, December 10, 2015 VIDEOTAPED deposition of NICOLE DAVIS, the witness, was called for examination by counsel for the Defendants, pursuant to notice, commencing at 9:00 a.m., at the offices of the Federal Trade Commission, 400 7th Street, S.W., Constitution Center, Washington, D.C. 20024, before Dawn A. Jaques, CSR, CLR, and Notary Public in and for the District of Columbia. Job No. WDC-066726 Pages: 1 - 150 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 22 of 61 Page 51 00:49:46 00:49:47 00:49:50 00:49:52 00:49:55 00:50:01 00:50:04 00:50:06 00:50:06 00:50:08 00:50:08 00:50:12 00:50:13 00:50:15 00:50:20 00:50:24 00:50:26 00:50:27 00:50:30 00:50:33 00:50:36 00:50:39 00:50:42 00:50:44 00:50:46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 "WinHttrack could not download some of the Live Site's webpages as exact duplicates"? A Yes. Q All right. So, in fact, you supplemented WinHttrack by taking screenshots of the Live website, correct? A I took screen captures. Q Screen captures. A Uh-huh. Q Is there a difference between a screenshot and a screen capture? A Terminology. Q Okay. Well, I'll try to say screen capture. Did you decide which screen captures to take? A No, I did not. Q Who did? A FTC counsel. At the direction of the FTC counsel. Q Okay. Not every page that you looked at on the Live Site was captured in a screen capture, correct? A I'm sorry, restate the question. Q Did you capture every screen that you Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 23 of 61 Page 52 00:50:49 00:50:50 00:50:53 00:50:54 00:50:56 00:50:59 00:51:01 00:51:06 00:51:12 00:51:13 00:51:18 00:51:19 00:51:19 00:51:23 00:51:31 00:51:34 00:51:35 00:51:38 00:51:38 00:51:39 00:51:41 00:51:41 00:51:44 00:51:46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 looked at on directv.com? A And what do you mean by cap- -- how do you mean by "capture"? Q Did you take a screen capture of every web page that you looked at on directv.com? A No. Q Okay. So you'd agree that some of the web pages were excluded from the Simulated Site? MR. EDMONDSON: Objection, mis- -- mischaracterizes testimony. THE WITNESS: Rephrase your question, please. BY MR. GRIFFIN: Q Okay. If you look at paragraph 11 -- A Uh-huh. Q Sorry. It's on page 5. A Uh-huh. Q It says you were asked by FTC counsel to remove -- A What line are you on? Q I'm at lines 8 to 11. A Uh-huh. Q The last sentence of the paragraph. It says, For example, I was asked by FTC counsel to remove the functionality of the "Social Media" Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 24 of 61 Page 53 00:51:50 00:51:51 00:51:53 00:51:58 00:52:02 00:52:03 00:52:05 00:52:07 00:52:12 00:52:15 00:52:19 00:52:21 00:52:23 00:52:24 00:52:25 00:52:29 00:52:30 00:52:31 00:52:32 00:52:34 00:52:35 00:52:36 00:52:40 00:52:43 00:52:43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 hyperlink that appears at the very bottom footer of the website. So the Social Media hyperlinks were intentionally not included in the Simulated Site? A Some were not. Q Okay. Do you have a list of everything that was intentionally not included in the Simulated Site? A What do you mean by "not included"? Q Do you have -- you testified both in the declaration and just now that you removed the functionality of the Social Media hyperlink. A That's correct. Q Right. Do you have a list of every time you removed something from the Simulated Site? A No, I do not. Q Do you have a list of every way in which the Simulated Site differs from the Live website? A Do I have a list? No, I do not. Q Okay. Can you tell me -- or, sorry, can you guaran- -- well, I won't say it that way either. Is it possible that there are Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 25 of 61 Page 65 01:06:03 01:06:05 01:06:06 01:06:07 01:06:10 01:06:12 01:06:12 01:06:14 01:06:17 01:06:19 01:06:21 01:06:23 01:06:25 01:06:29 01:06:31 01:06:35 01:06:36 01:06:39 01:06:43 01:06:43 01:06:46 01:06:48 01:06:51 01:06:51 01:06:53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q You know, when you say "fairly and accurately" -- A Uh-huh. Q -- are you applying a standard that's written down anywhere? A No. Q No? And that -- so it's just your opinion that this fairly and accurately represents the Live Site? A My opinion, along with the FTC attorney who was assisting with this investigation. Q Okay. Do you agree with me that there are some differences between the Simulated Site and the Live Site? A Yes. Q Okay. For one thing, a consumer using the Simulated Site can only choose Choice and XTRA packages? A That's correct. Q And on the Live Site, there are more packages than that? A That's correct. Q And there's a similar restriction on the receiver that the consumer could choose on the Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 26 of 61 Page 66 01:06:56 01:06:58 01:06:59 01:07:03 01:07:06 01:07:10 01:07:14 01:07:15 01:07:18 01:07:19 01:07:22 01:07:26 01:07:31 01:07:32 01:07:35 01:07:37 01:07:38 01:07:40 01:07:42 01:07:46 01:07:49 01:07:54 01:07:57 01:07:58 01:07:58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Simulated Site? A That's correct. Q And in general, there are fewer web pages to explore for information about DirecTV services on the Simulated Site? A Services meaning? Q You understand that the DirecTV website includes more than just the purchase flow? A Yes. Q Right. And is it your opinion that the Simulated Site contains all of the non-purchase flow web pages on www.directv.com? A It does not contain all. Q Okay. So there are fewer web pages in the Simulated Site for the consumer to explore for information? A Yes. Q Okay. And the Simulated Site does not produce a confirmation email when you go through to the end of the purchase flow? A The Simulated Site -- say that again. Q Does the Simulated Site, when you go through to the end of the purchase flow -- A Uh-huh. Q -- send the person looking at the Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 27 of 61 Page 67 01:08:00 01:08:02 01:08:03 01:08:09 01:08:09 01:08:31 01:08:32 01:09:08 01:09:11 01:09:17 01:09:20 01:09:22 01:09:24 01:09:27 01:09:29 01:09:31 01:09:34 01:09:35 01:09:37 01:09:40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Simulated Site a confirmation email? A Oh, no. Q No. All right. Let's start looking through -- (A discussion was held off the record.) MR. GRIFFIN: We'll mark this as the next exhibit. (Deposition Exhibit 151 was marked for identification.) BY MR. GRIFFIN: Q All right. So at the risk of making a speech, my law firm does not allow me to have Firefox, and I had a very, very difficult time getting the DVD to run in Internet Explorer or Chrome, which I -- are the two browsers I'm allowed to have. So what I've done is if you will see at the bottom of the first page of this exhibit, at the bottom left, there's a footer, and this is a printout of the file as it's found on the DVD. A Uh-huh. Q Okay. So that's what we're going to be looking at to the extent possible. All right. Do you recognize this as Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 28 of 61 Page 100 01:43:58 01:43:59 01:44:02 01:44:06 01:44:06 01:44:12 01:44:15 01:44:34 01:44:37 01:44:40 01:44:42 01:44:43 01:44:46 01:44:50 01:44:53 01:44:55 01:44:57 01:44:58 01:45:04 01:45:06 01:45:08 01:45:11 01:45:12 01:45:13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 six- -- Choice is $64.99. Q Okay. And it also states that there is a $30 bill credit for months 1 to 12; is that correct? MR. EDMONDSON: Objection, foundation. THE WITNESS: That's what it reads. BY MR. GRIFFIN: Q Okay. So when you -- with the premium channels, we've -- it shows prices for each of the premium channel, and then underneath that it says, Free for 3 months, HBO, Showtime, Starz and Cinemax. Do you see that? A Yes, I do. Q Okay. And then it has an offset of $47 -- strike that. It then just says negative $47; is that correct? A That's what it displays. Q Right. And next to -- next to the -- immediately adjacent to the phrase "Free for 3 months, HBO, Showtime, Starz and Cinemax," there's a blue question mark, correct? A Yes, it is. Q And that's -- that's a mouseover? A Yes, it is. Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 29 of 61 CERTIFICATE OF NOTARY PUBLIC Page 150 I, DAWN A. JAQUES, a Notary Public in and for the District of Columbia, before whom the foregoing deposition was taken, do hereby certify that witness whose testimony appears in the foregoing pages was duly sworn by me; that the testimony of said witness was taken by me in shorthand at the time and place mentioned in the caption hereof and thereafter reduced to typewriting under my supervision; that said deposition is a true record of the testimony given by said witness; that I am neither counsel for, related to, nor employed by any of the parties to the action in which this deposition is taken; and, further, that I am not a relative or employee of any attorney or counsel employed by the parties thereto, nor financially or otherwise interested in the outcome of the actions. __________________________ Dawn A. Jaques, CSR, CLR Notary Public in and for District of Columbia My commission expires: January 14, 2020 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 30 of 61 EXHIBIT C Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 31 of 61 ·1· · · · · · · · UNITED STATES DISTRICT COURT ·2· · · · · · · NORTHERN DISTRICT OF CALIFORNIA ·3· · · · · · · · · ·SAN FRANCISCO DIVISION ·4 ·5· ·FEDERAL TRADE COMMISSION,· · · · ·) · · · · · · · · · · · · · · · · · · · ·) ·6· · · · · · · · ·Plaintiff,· · · · · ) · · · · · · · · · · · · · · · · · · · ·) ·7· · · · · · vs.· · · · · · · · · · · ) No. · · · · · · · · · · · · · · · · · · · ·) 15-CV-01129-HSG ·8· ·DIRECTV, a corporation,· · · · · ·) · · ·and DIRECTV, LLC, a limited· · · ·) ·9· ·liability company,· · · · · · · · ) · · · · · · · · · · · · · · · · · · · ·) 10· · · · · · · · ·Defendants.· · · · ·) · · ·__________________________________) 11 12 13· · · · CONFIDENTIAL - PURSUANT TO PROTECTIVE ORDER 14 15· ·DEPOSITION OF:· · ·ANN MARIE STAHL 16· · · · · · · · · · · LOS ANGELES, CALIFORNIA 17· · · · · · · · · · · TUESDAY, DECEMBER 15, 2015 18· · · · · · · · · · · 9:06 A.M. 19 20· ·REPORTED BY:· · · ·ANNA M. HORTON 21· · · · · · · · · · · CSR No. 6950, RPR 22 23 24 25 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 32 of 61 ·1· ·that? ·2· · · ·A· · Yes. ·3· · · ·Q· · Okay.· What process did you utilize ·4· ·generally to create the video recording of your trip ·5· ·to the website? ·6· · · ·A· · Okay.· I used a -- some software called ·7· ·Snagit that allows one to record each step as I went ·8· ·through the website, the purchase flow process we ·9· ·refer to it as, where I went to the home page, then 10· ·followed, you know, where it directs you to click to 11· ·choose a package and then to choose a box of, you 12· ·know, whatever satellite box you need and then to go 13· ·to the check-out page and go through the 14· ·step-by-step process to -- actually as a consumer 15· ·who wanted to sign up for the DirecTV service. 16· · · ·Q· · And your journey through the DirecTV website 17· ·on October 26, 2015, was not intended to represent a 18· ·reasonable consumer's visit to the website; correct? 19· · · · · · MR. YANKILOVICH:· Objection.· Argumentative. 20· · · · · · THE WITNESS:· My assignment was simply to go 21· ·through and to make -- go through the entire 22· ·purchase process and actually make a purchase. 23· ·That's what I was asked to do. 24· ·BY MR. HUMMEL: 25· · · ·Q· · Right. Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 33 of 61 ·1· ·making a purchase on the DirecTV.com website? ·2· · · · · · MR. YANKILOVICH:· Objection.· Several ·3· ·objections.· First of all, vague as to video.· Are ·4· ·we talking about Exhibit A? ·5· · · · · · MR. HUMMEL:· Yes, sir. ·6· · · · · · MR. YANKILOVICH:· Second of all, privileged. ·7· ·Improper lay opinion testimony.· And to the extent ·8· ·that the witness's understanding of consumer ·9· ·perception is intertwined with her knowledge, use, 10· ·and understanding based on her working on the case, 11· ·I'm going to instruct the witness not to answer such 12· ·intertwined questions, to segregate the testimony. 13· · · · · · THE WITNESS:· Could you repeat the question 14· ·again, please? 15· · · · · · MR. HUMMEL:· Would you mind reading it back? 16· · · · · · And this question applies to the video 17· ·capture of Exhibit A. 18· · · · · · (The record was read as follows: 19· · · · · · · · ·"Q· ·Okay.· And does the video reflect 20· · · · · · in your view the experience of a reasonable 21· · · · · · consumer in making a purchase on the 22· · · · · · DirecTV.com website?") 23· · · · · · THE WITNESS:· I don't think I have any basis 24· ·on which to say what a reasonable consumer would 25· ·expect. Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 34 of 61 ·1· ·BY MR. HUMMEL: ·2· · · ·Q· · So based on that answer, is it correct that ·3· ·you can't say one way or the other whether or not ·4· ·the video reflected in Exhibit A represents the ·5· ·journey through the DirecTV website that would ·6· ·replicate the experience of a reasonable consumer ·7· ·making a purchase or subscription to DirecTV? ·8· · · · · · MR. YANKILOVICH:· Same objections. ·9· · · · · · But you can answer. 10· · · · · · THE WITNESS:· Yes. 11· ·BY MR. HUMMEL: 12· · · ·Q· · Okay.· Now let me talk about when you were 13· ·making this video.· Where were you? 14· · · ·A· · I was here in the FTC offices. 15· · · ·Q· · Okay.· And prior to the time that you made 16· ·the video, had you visited the DirecTV.com website? 17· · · ·A· · Yes. 18· · · ·Q· · Are you a subscriber to DirecTV? 19· · · ·A· · No. 20· · · ·Q· · Who do you subscribe to for television 21· ·services? 22· · · ·A· · Time Warner Cable. 23· · · ·Q· · Only cable? 24· · · ·A· · Cable and we have our Internet as well and 25· ·phone. Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 35 of 61 ·1· · · ·A· · I believe I do. ·2· · · ·Q· · One aspect of the allegations involves the ·3· ·website that you videoed; correct? ·4· · · · · · MR. YANKILOVICH:· Objection.· Argumentative. ·5· · · · · · THE WITNESS:· I believe, yes. ·6· ·BY MR. HUMMEL: ·7· · · ·Q· · And have you formed any opinion given your ·8· ·journeys through the website about whether ·9· ·reasonable consumers are deceived as they go through 10· ·and make the purchase on the website? 11· · · · · · MR. YANKILOVICH:· Objection.· Privilege. 12· ·Work product, law enforcement privilege, 13· ·deliberative process. 14· · · · · · The witness may answer keeping in mind my 15· ·privilege objection. 16· · · · · · MR. HUMMEL:· I don't accept them. 17· · · ·Q· · But you can answer the question. 18· · · ·A· · I don't have any basis on which to form an 19· ·opinion on about what consumers would perceive. 20· · · ·Q· · Do you know what percentage of consumers 21· ·start their journey to purchase on the website and 22· ·then pick up the phone and call 1(800)DirecTV to 23· ·subscribe? 24· · · ·A· · No. 25· · · ·Q· · Have you done any research in this case Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 36 of 61 ·1· · · ·A· · Yes. ·2· · · ·Q· · Another thing was note the screen ·3· ·resolution.· Correct? ·4· · · · · · MR. YANKILOVICH:· Objection.· Misstates ·5· ·prior testimony. ·6· ·BY MR. HUMMEL: ·7· · · ·Q· · Were you instructed to note the screen ·8· ·resolution? ·9· · · ·A· · For this particular assignment, I was. 10· · · ·Q· · All right.· What was your understanding as 11· ·to why you were instructed to note the screen 12· ·resolution? 13· · · · · · MR. YANKILOVICH:· Objection.· Privilege. 14· · · · · · Instructing the witness not to answer. 15· · · · · · THE WITNESS:· I was -- oh, not to answer. 16· ·I'm sorry. 17· ·BY MR. HUMMEL: 18· · · ·Q· · Okay.· Was one of your goals in capturing 19· ·the -- your visit to DirecTV.com on November 24 to 20· ·replicate the experience of a typical user of 21· ·DirecTV.com? 22· · · ·A· · That was not my instruction. 23· · · ·Q· · Did anyone ever tell you, please, when 24· ·you're recording the website, try to replicate to 25· ·the best of your ability the experience of a typical Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 37 of 61 ·1· · · · · · MR. YANKILOVICH:· She doesn't have to answer ·2· ·in a form that you like. ·3· · · · · · MR. HUMMEL:· She has to answer it yes or no, ·4· ·and I'll get a court order. ·5· · · ·Q· · Do you understand I'm asking for a yes or ·6· ·no. ·7· · · ·A· · Yes, I understand that. ·8· · · ·Q· · All right.· Are you able to answer my ·9· ·question yes or no? 10· · · ·A· · Could you repeat the question? 11· · · · · · (The record was read as follows: 12· · · · · · · · ·"Q· ·Correct.· So the answer is I'm not 13· · · · · · doing that.· Yes or no?· Are you making a 14· · · · · · representation to the court that any video 15· · · · · · that you've attached to your declaration 16· · · · · · replicates the experience of a typical 17· · · · · · user?") 18· · · · · · THE WITNESS:· In my declaration I'm not 19· ·making that -- I'm not using those words.· I'm not 20· ·making that representation. 21· ·BY MR. HUMMEL: 22· · · ·Q· · Okay.· In any other context are you making 23· ·that representation, that your recordings replicate 24· ·the experience of a typical user of DirecTV TV.com? 25· · · · · · MR. YANKILOVICH:· Objection.· Vague. Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 38 of 61 ·1· ·Counsel, when she submits a declaration? ·2· · · · · · MR. YANKILOVICH:· Her mental processes?· No, ·3· ·they're not waived.· The contents and the facts of ·4· ·the declaration are up for subject of testimony, not ·5· ·her mental impressions and the processes. ·6· · · · · · MR. HUMMEL:· You guys can't really stand any ·7· ·cross-examination of your theories. ·8· · · ·Q· · So just so we're clear, I want an answer to ·9· ·my question.· If he instructs you, he instructs you. 10· · · · · · Why didn't you include the phrase that, with 11· ·respect to Exhibit A, "I did so solely for the 12· ·purpose of presenting this declaration and materials 13· ·to the court, not to replicate the experience of the 14· ·typical user"?· Why didn't you use that instead 15· ·of -- 16· · · · · · MR. YANKILOVICH:· Same privilege objection. 17· · · · · · Instructed not to answer. 18· ·BY MR. HUMMEL: 19· · · ·Q· · Is it correct that the Exhibit A does not 20· ·replicate the experience of a typical user? 21· · · · · · MR. YANKILOVICH:· Objection.· Asked and 22· ·answered numerous times. 23· · · · · · THE WITNESS:· I don't know. 24· ·BY MR. HUMMEL: 25· · · ·Q· · Is it correct that Exhibit C does not Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 39 of 61 ·1· ·replicate the experience of a typical user of ·2· ·DirecTV.com as of July or August 2013? ·3· · · ·A· · I don't have any basis on which to answer ·4· ·that question about a typical consumer. ·5· · · ·Q· · Okay.· Is it true that Exhibit D does not ·6· ·replicate the experience of a typical user as of ·7· ·2013 of DirecTV.com? ·8· · · ·A· · I don't have a basis on which to comment on ·9· ·the typical experience of a user. 10· · · ·Q· · Yeah. 11· · · · · · And is it true, Ms. Stahl, that you can't 12· ·even verify, as you sit here today, that the website 13· ·that you recorded, the simulated website that you 14· ·recorded on Exhibits C and D, accurately represents 15· ·the website that a consumer saw if they went to 16· ·DirecTV.com in July or August of 2013? 17· · · · · · MR. YANKILOVICH:· Objection.· Argumentative. 18· · · · · · THE WITNESS:· I don't know what a consumer 19· ·saw on those dates.· I simply know what was 20· ·represented to me as in terms of the process by 21· ·which it was captured. 22· ·BY MR. HUMMEL: 23· · · ·Q· · Right. 24· · · · · · And that's what Ms. Davis declared.· So 25· ·you're relying on Ms. Davis's work to say anything Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 40 of 61 ·1· ·about the websites that are captured on Exhibit C ·2· ·and D; correct? ·3· · · · · · MR. YANKILOVICH:· Objection.· Misstates the ·4· ·document.· Misstates testimony. ·5· · · · · · THE WITNESS:· Well, I'm relying on ·6· ·Ms. Davis's declaration to describe how it was ·7· ·captured.· I had my own independent experience of ·8· ·using that which I describe in my declaration. ·9· ·BY MR. HUMMEL: 10· · · ·Q· · When you went through on November 24, 2015, 11· ·and made a video of your journey through the actual 12· ·website where you made an affirmative point to find 13· ·and open and activate the hyperlinks, hover-overs, 14· ·and statements that defendants make on the website, 15· ·do you have any basis one way or the other to offer 16· ·an opinion about whether consumers actually do what 17· ·you did or not? 18· · · ·A· · No. 19· · · ·Q· · And as you were going through and creating 20· ·the video that's attached as Exhibit B, which is the 21· ·one where you made an affirmative point to find, and 22· ·open, and activate hyperlinks and hover-overs, was 23· ·there somebody else in the room instructing you on 24· ·which hyperlinks or hover-overs to click on or to 25· ·hover over? Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 41 of 61 ·1· · · ·A· · I believe it was in a Word.· I believe it ·2· ·was in a Word document. ·3· · · ·Q· · A Word document created by counsel for the ·4· ·FTC? ·5· · · ·A· · Yes. ·6· · · ·Q· · And then given to you to follow in creating ·7· ·the exhibit; correct? ·8· · · ·A· · Yes. ·9· · · ·Q· · All right.· To the best of your 10· ·recollection, did the document say to attempt to 11· ·replicate the experience of a typical user? 12· · · ·A· · I'm not sure I can recall everything that 13· ·was in the document in terms of wording, but I don't 14· ·recall ever those particular words, no. 15· · · ·Q· · Are you aware of the existence of any other 16· ·simulated websites other than those that you've 17· ·captured on Exhibits C and D that were created by 18· ·the FTC? 19· · · · · · MR. YANKILOVICH:· Objection.· Calls for 20· ·privileged information.· Attorney work product. 21· ·Deliberative process. 22· · · · · · Instruct the witness not to answer. 23· ·BY MR. HUMMEL: 24· · · ·Q· · Has the FTC to your knowledge created any 25· ·websites that modify the exhibits, what you've Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 42 of 61 ·1· ·BY MR. HUMMEL: ·2· · · ·Q· · Okay.· Were you asked to? ·3· · · ·A· · No. ·4· · · ·Q· · When Mr. McKown instructed you to roll over ·5· ·those little "i's" next to all of the premium ·6· ·channels that we talked about before, did you know ·7· ·why he was asking you to do that? ·8· · · · · · MR. YANKILOVICH:· Objection.· Calls for ·9· ·privileged information. 10· · · · · · Instruct the witness not to answer. 11· ·BY MR. HUMMEL: 12· · · ·Q· · Did you know that what he was doing was 13· ·showing you the places on the website where DirecTV, 14· ·in fact, discloses clearly and conspicuously all of 15· ·the terms of the free premium channel offer? 16· · · · · · MR. YANKILOVICH:· Same privilege objection. 17· ·Work product. 18· · · · · · Instruct the witness not to answer. 19· ·BY MR. HUMMEL: 20· · · ·Q· · Did you do any research to ascertain whether 21· ·a reasonable consumer accesses all of the terms and 22· ·conditions of the free premium channel offer before 23· ·they click the yellow button that you're looking at 24· ·on Exhibit D? 25· · · · · · MR. YANKILOVICH:· Objection.· Calls for lay Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 43 of 61 ·1· ·opinion testimony. ·2· · · · · · You can answer. ·3· · · · · · THE WITNESS:· No, I did not. ·4· ·BY MR. HUMMEL: ·5· · · ·Q· · You didn't form that opinion? ·6· · · ·A· · No.· You asked me whether -- I believe you ·7· ·asked whether I did any research. ·8· · · ·Q· · Yes. ·9· · · ·A· · And I did not do such research. 10· · · ·Q· · Okay.· Do you know if the FTC has done such 11· ·research? 12· · · · · · MR. YANKILOVICH:· Objection.· That's 13· ·privileged work product, deliberative process, law 14· ·enforcement privilege. 15· ·BY MR. HUMMEL: 16· · · ·Q· · In your work for the FTC in connection with 17· ·analyzing the DirecTV website purchase flow, did you 18· ·compare it with any other television service 19· ·providers' purchase flows? 20· · · · · · MR. YANKILOVICH:· Objection. 21· ·Mischaracterizes prior testimony.· Lacks foundation. 22· · · · · · THE WITNESS:· I don't believe that I ever 23· ·testified that I did any analysis of the website, 24· ·but that I captured it. 25· ·/// Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 44 of 61 ·1· · · · · · MR. YANKILOVICH:· Same objections.· Work ·2· ·product, deliberative process, law enforcement ·3· ·privilege. ·4· · · · · · Instruct the witness not to answer. ·5· ·BY MR. HUMMEL: ·6· · · ·Q· · You've been investigating the case for two ·7· ·and a half years; correct? ·8· · · ·A· · Yes. ·9· · · ·Q· · And based on instruction from counsel today, 10· ·you're not going to tell me whether there's a single 11· ·shred of evidence that a consumer who looks at a 12· ·DirecTV website is deceived in any way; correct? 13· · · · · · MR. YANKILOVICH:· Counsel, I've given 14· ·instructions not to answer. 15· · · · · · Are you going to follow my instructions? 16· · · · · · THE WITNESS:· Yeah. 17· ·BY MR. HUMMEL: 18· · · ·Q· · Now, I just want to clear one other thing. 19· ·You said that after you -- before you signed your 20· ·declaration, you reviewed it, according to 21· ·Mr. Yankilovich -- "Yankilovich."· I got it right 22· ·this time.· You reviewed your declaration closely; 23· ·correct?· That's your words or his words, I think. 24· · · ·A· · Yes. 25· · · ·Q· · You reviewed it extensively; correct? Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 45 of 61 ·1· · · · · · · · · ·REPORTER'S CERTIFICATE ·2· ·STATE OF CALIFORNIA· · ·) · · · · · · · · · · · · · · ·)· ·ss. ·3· ·COUNTY of LOS ANGELES· ·) ·4· · · · · · ·I, Anna M. Horton, RPR, CSR No. 6950 for ·5· ·the State of California, hereby certify: ·6· · · · · · ·THAT the witness named in the foregoing ·7· ·deposition was duly sworn by me to testify the ·8· ·truth, the whole truth and nothing but the truth; ·9· · · · · · THAT said deposition was written by me in 10· ·stenotype and was thereafter reduced to printed 11· ·matter under my direction and supervision, and I 12· ·hereby declare that said deposition is a full, true 13· ·and correct transcript of my shorthand notes so 14· ·taken. 15· · · · · · Before completion of the deposition, review 16· ·of the transcript [XX] was [· ] was not requested. 17· ·If requested, any changes made by the deponent (and 18· ·provided to the reporter) during the period allowed 19· ·are appended hereto; 20· · · · · · ·I FURTHER CERTIFY that I am in no way 21· ·interested in the outcome of said action. 22· · · · · · IN WITNESS WHEREOF, I have hereunto 23· ·subscribed my name this 28th day of December, 2015. 24 · · · · · · · · · ·_________________________________ 25· · · · · · · · · · ·ANNA M. HORTON, RPR, CSR 6950 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 46 of 61 EXHIBIT D Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 47 of 61 Byers & Anderson Court Reporters/Video/Videoconferencing Seattle/Tacoma, Washington UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, ) ) Plaintiff, ) ) vs. ) Case No. 15-cv-01129-HSG ) DIRECTV, ) ) a corporation, ) ) and ) ) DIRECTV, LLC, ) ) a limited liability company, ) ) Defendants. DEPOSITION OF PAULA SELIS January 15, 2016 Seattle, Washington Byers & Anderson, Inc. Court Reporters/Video/Videoconferencing One Union Square 2208 North 30th Street, Suite 202 600 University St. Tacoma, WA 98403 Suite 2300 (253) 627-6401 Seattle, WA 98101 (253) 383-4884 Fax (206) 340-1316 [email protected] (800) 649-2034 www.byersanderson.com Serving Washington's Legal Community since 1980 Paula Selis January 15, 2016 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 48 of 61 Byers & Anderson Court Reporters/Video/Videoconferencing Seattle/Tacoma, Washington Page 54 1 I also object to the extent the question calls for 2 privileged information, including information covered by 3 the attorney work product doctrine. 4 Without waiving these privileges and subject to 5 these objections, Ms. Selis may answer. 6 THE WITNESS: My declaration doesn't 7 address Clay Friedman's declaration at all. I'm not a 8 fact-finder in this case, and I'm not in a position to 9 test the veracity of every factual proposition that 10 Mr. Friedman puts forward in his declaration. 11 To the extent I have doubts or concerns as to some 12 of Mr. Friedman's statements, those views are 13 inextricably tied to my work as an assistant attorney 14 general investigating DIRECTV's conduct. 15 I can't dissect my opinion from the work product 16 related to the State's investigation into DIRECTV. 17 Therefore, such information is protected as my opinion 18 work product. 19 Q (By Mr. Bowers) Question 23: In what ways, if any, has 20 DIRECTV's advertising or marketing since the entry of the 21 settlements violated the terms of the settlements? 22 MR. BOWERS: I have several 23 objections. First, I object as to form. The question's 24 vague and ambiguous regarding which settlements DIRECTV 25 is inquiring about. Paula Selis January 15, 2016 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 49 of 61 Byers & Anderson Court Reporters/Video/Videoconferencing Seattle/Tacoma, Washington Page 55 1 I also object as to foundation. Ms. Selis isn't 2 testifying as a designated representative of the 3 Washington Attorney General's Office, nor is she a 4 current employee of the Washington Attorney General's 5 Office. 6 I also object as to relevance. This is beyond the 7 scope of discovery. As I've stated before, Washington's 8 investigation of and litigation against DIRECTV in State 9 Court isn't relevant in this federal case. It's improper 10 for DIRECTV to attempt to relitigate the State case or 11 take discovery of Washington after the Washington 12 action's been resolved. 13 In light of Judge Gilliam's December 21, 2015, order 14 in the federal action that struck DIRECTV's affirmative 15 defenses predicated on the states' actions against 16 DIRECTV, and the resulting settlements, and because 17 DIRECTV hasn't re-pleaded those defenses consistent with 18 its Rule 11 obligations as ordered by Judge Gilliam, this 19 topic is beyond the scope of permissible discovery. 20 To the extent this question seeks Ms. Selis's 21 personal opinion, it's irrelevant to the litigation. I 22 object on that basis as well. 23 Finally, I object to the extent the question calls 24 for privileged information -- I'm sorry -- calls for the 25 disclosure of privileged information, including Paula Selis January 15, 2016 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 50 of 61 Byers & Anderson Court Reporters/Video/Videoconferencing Seattle/Tacoma, Washington Page 56 1 information protected under the law enforcement 2 privilege, the deliberative process privilege, the 3 attorney-client privilege, and attorney work product 4 doctrine. 5 DIRECTV is subject to compliance monitoring under 6 the terms of its consent decree with the Washington 7 Attorney General's Office; therefore, the State's 8 investigation is ongoing. 9 The Washington Attorney General's Office and its 10 sister state attorneys general have invoked the common 11 interest doctrine to protect their sharing of privileged 12 information in the scope of their parallel independent 13 investigations. 14 The law enforcement privilege shields the disclosure 15 of the Washington Attorney General's Office's 16 investigatory communications with other law enforcement 17 agencies during the scope of the law enforcement 18 privilege. 19 Without waiving these privileges and subject to 20 these objections, Ms. Selis may answer. 21 THE WITNESS: As I stated before, I'm 22 not a representative of the State of Washington, and I'm 23 not authorized to provide the State's positions regarding 24 whether DIRECTV is in violation of the consent decree. 25 From my experience, the AG's Office does not allege a Paula Selis January 15, 2016 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 51 of 61 Byers & Anderson Court Reporters/Video/Videoconferencing Seattle/Tacoma, Washington Page 57 1 violation of a consent decree until it concludes a formal 2 investigation and/or files a formal action. 3 To the extent DIRECTV is asking for my opinion 4 regarding the legality of its advertising, as I stated 5 before, I'm not familiar with what DIRECTV's advertising 6 looks like today. My personal opinions are inextricably 7 intertwined with my work in -- work while I investigated 8 and litigated against DIRECTV and would be my work 9 product. 10 Q (By Mr. Bowers) Question 24: How did the settlement 11 with the State of Washington specifically require DIRECTV 12 to disclose the terms of its premium channel negative 13 option offers? 14 MR. BOWERS: I object as to 15 foundation. Ms. Selis is not testifying as a designated 16 representative of the Washington Attorney General's 17 Office, nor is she a current employee of the Washington 18 Attorney General's Office. 19 I also object as to relevance. This is beyond the 20 scope of discovery. As I've stated, Washington's consent 21 decree with DIRECTV isn't relevant in this federal case. 22 In light of Judge Gilliam's December 21, 2015, order in 23 the federal case that struck DIRECTV 's affirmative 24 defenses predicated on states' actions against DIRECTV 25 and the resulting state settlements, and because DIRECTV Paula Selis January 15, 2016 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 52 of 61 Byers & Anderson Court Reporters/Video/Videoconferencing Seattle/Tacoma, Washington duly sworn to testify the truth, the whole truth, and right of signature; That I am not a relative, employee, attorney or of any such attorney or counsel and that I am not thereof; That I am herewith securely sealing the said Attorney Todd R. Bowers. IN WITNESS WHEREOF, I have hereunto set my 1 STATE OF WASHINGTON ) I, Cindy M. Koch, CCR, RPR, CRR, ) ss CLR, a certified court reporter 2 County of Pierce ) in the State of Washington, do hereby certify: 3 4 That the foregoing deposition of PAULA SELIS was 5 taken before me and completed on January 15, 2016, and thereafter was transcribed under my direction; that the 6 deposition is a full, true and complete transcript of the testimony of said witness, including all questions, answers, 7 objections, motions and exceptions; 8 That the witness, before examination, was by me 9 nothing but the truth, and that the witness reserved the 10 11 counsel of any party to this action or relative or employee 12 financially interested in the said action or the outcome 13 14 deposition and promptly delivering the same to 15 16 signature on the 15th day of January, 2016. 17 18 19 20 21 22 23 ________________________________ Cindy M. Koch, CCR, RPR, CRR, CLR 24 Certified Court Reporter No. 2357 (Certification expires 06/09/16.) 25 Paula Selis January 15, 2016 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 53 of 61 EXHIBIT E Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 54 of 61 ·1· · · · · · · UNITED STATES DISTRICT COURT ·2· · · · · · ·NORTHERN DISTRICT OF CALIFORNIA ·3· · · · · · · · · SAN FRANCISCO DIVISION ·4 ·5 ·6· ·FEDERAL TRADE COMMISSION, ·7· · · · · · ·Plaintiff, · · ·v.· · · · · · · · · · · · · · No. 3:15-cv-01129 HSG ·8 · · ·DIRECTV, a corporation, ·9 · · ·and 10 · · ·DIRECTV, LLC, a limited 11· ·liability company; 12· · · · · · ·Defendants. · · ·________________________________/ 13 14 15 16· · ·FEDERAL TRADE COMMISSION PERSON MOST KNOWLEDGEABLE 17· · · · · · · · VIDEOTAPED DEPOSITION OF 18· · · · · · · · · · · FRANK GORMAN 19· · · · · · · · _________________________ 20· · · · · · · · ·Friday, January 15, 2016 21 22 23 24· · · ·REPORTED BY:· DONIELLE DEL CARLO, CSR 10476 25 Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 55 of 61 ·1· ·notice for comment, having the workshop, that sort ·2· ·of thing. ·3· · · · · · ·And then also probably I would say in ·4· ·these conversations we spent time trying to figure ·5· ·out why DirecTV would take a deposition about a ·6· ·document that speaks for itself, so. ·7· · · · Q· · Is that your view, that the .com ·8· ·Disclosure Guidelines speak for themselves? ·9· · · · A· · Yes. 10· · · · Q· · They don't require any interpretation? 11· · · · A· · They say that they are required to be -- 12· ·that they -- they specifically say that they are not 13· ·a safe harbor, that they are guidance of things to 14· ·take into consideration, and that ultimately the 15· ·test is whether or not consumers actually understand 16· ·the message.· I think that they're very clear. 17· · · · Q· · And so because they're only a guidance, 18· ·they don't prescribe any particular type of 19· ·advertising practice, do they? 20· · · · · · ·MR. EDMONDSON:· Objection. 21· ·Mischaracterizes his testimony, lacks foundation. 22· · · · · · ·MR. CAMPBELL:· You can answer. 23· · · · · · ·THE WITNESS:· If that's a separate 24· ·question my answer would be that the Guidance, as 25· ·they state, are not -- it's not a statute, it's not Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 56 of 61 ·1· ·a regulation.· They don't -- you cannot be sued for ·2· ·not following the Guidelines.· Or Guidance.· Sorry. ·3· ·The Guidance. ·4· · · · · · ·They are -- if you could put the document ·5· ·in front of me, I could read you a couple of ·6· ·paragraphs that very clearly state exactly what ·7· ·their purpose is and what their limitations are, but ·8· ·they are meant to be a way for businesses, things ·9· ·that businesses should think about so that they can 10· ·actually provide a nondeceptive message in the 11· ·online environment. 12· · · · Q· · And based on everything you just said, for 13· ·those reasons and maybe others, the FTC .com 14· ·Guidance doesn't proscribe particular types of 15· ·advertisement? 16· · · · · · ·MR. EDMONDSON:· Is that prescribe -- 17· · · · · · ·MR. CAMPBELL:· Pro. 18· · · · · · ·MR. EDMONDSON:· -- or proscribe? 19· · · · · · ·MR. CAMPBELL:· Pro.· Prevent, preclude. 20· · · · · · ·THE WITNESS:· Thank you. 21· · · · · · ·The Guidelines have no legal effect.· The 22· ·Guidance, I'm sorry.· The Guidance has no legal 23· ·effect themselves.· They are staff's guidance on 24· ·things that online -- businesses can do online to 25· ·comply with Section 5 of the FTC Act, which prevents Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 57 of 61 ·1· ·unfair and deceptive practices, and various ·2· ·regulations that the FTC enforces, and laws that the ·3· ·FTC enforces similar to a, you know, threading your ·4· ·way, which is a business guidance on complying with ·5· ·a textile act. ·6· · · · · · ·MR. CAMPBELL:· Q.· If an advertiser were ·7· ·to follow an approved example from the Guidance word ·8· ·for word, would that mean that -- that there would ·9· ·be no technical violation of ROSCA or Title V? 10· · · · · · ·MR. EDMONDSON:· Objection.· Calls for 11· ·speculation, I will direct the witness not to answer 12· ·if he cannot do so without revealing his opinion or 13· ·a -- or applying law to facts. 14· · · · · · ·MR. CAMPBELL:· And we may want the last 15· ·answer read back because I think what you said was 16· ·provides a guidance to -- well, go ahead and answer 17· ·the question.· We'll read it back if we need to. 18· · · · · · ·THE WITNESS:· So, as a matter of law, 19· ·first of all, if you followed one of the examples 20· ·word for word, and these are all the Guidance makes 21· ·clear throughout, that it's context specific, that 22· ·it's fact specific, that they're not set in stone. 23· ·So, you know, it's an interactive environment. 24· · · · · · ·I don't think that a static example is 25· ·necessarily that you can't.· But let's say you Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 58 of 61 ·1· ·could.· As a matter of law, that does not preclude ·2· ·law enforcement action under Section 5. ·3· · · · Q· · Okay.· Let me ask you the flip side of ·4· ·that question.· Since they're only guides, if one -- ·5· · · · A· · Guideline.· Guidance.· Guidance.· Sorry. ·6· · · · Q· · Guidance.· Thank you. ·7· · · · A· · Guides are very a specific thing.· It's ·8· ·confusing.· I'm sorry. ·9· · · · Q· · I appreciate it.· No, it's okay. 10· · · · · · ·Since they are only guidance, if an 11· ·advertiser fails to adhere to the guidance, that 12· ·doesn't necessarily mean there's a legal violation. 13· · · · · · ·MR. EDMONDSON:· Objection.· Calls for 14· ·speculation, calls for a legal conclusion.· I'll let 15· ·the witness answer if he can do so without revealing 16· ·work product. 17· · · · · · ·THE WITNESS:· The Guidance specifically 18· ·states that the ultimate question for providing 19· ·ultimate issue in determining whether or not the net 20· ·impression of an advertisement is deceptive online, 21· ·is the totality of the circumstances and whether or 22· ·not -- and I'm paraphrasing, I could read this to 23· ·you from the Guides -- that whether or not consumers 24· ·are actually misled.· So if consumers are not 25· ·misled, if there's not deception under Section 5 of Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 59 of 61 ·1· · · · · · ·MR. CAMPBELL:· That's all I ask for. ·2· · · · · · ·MR. EDMONDSON:· Okay. ·3· · · · · · ·THE WITNESS:· Can you repeat the question? ·4· · · · · · ·MR. CAMPBELL:· Q.· Have you ever seen a ·5· ·situation where an advertiser followed the ·6· ·Guidance -- we're talking about the .com ·7· ·Disclosures -- in good faith, and yet, nevertheless ·8· ·was subject to an enforcement action by the Federal ·9· ·Trade Commission? 10· · · · A· · Just give me one moment, please. 11· · · · · · ·MR. EDMONDSON:· Well, this is -- the 12· ·question's vague as to the term "followed" the .com 13· ·Disclosures because there's no way to comply.· As 14· ·counsel's -- as Mr. Gorman's testified there's no 15· ·way to comply with the .com Disclosure. 16· · · · · · ·MR. CAMPBELL:· Q.· Is that your testimony, 17· ·there's no way to comply with the .com Disclosure 18· ·Guidance? 19· · · · A· · My testimony is that whether a particular 20· ·ad is deceptive, unfair, or otherwise violative of 21· ·the commissioned rule will depend on the specific 22· ·facts at hand.· The ultimate test is not the size of 23· ·the font or the location of the disclosure. 24· ·Although, they are important considerations.· The 25· ·ultimate test is whether the information intended to Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 60 of 61 ·1· ·be disclosed is actually conveyed to consumers. ·2· · · · · · ·Given that, my answer to your previous ·3· ·question is no, I am not aware of any law ·4· ·enforcement action where the Commission has brought ·5· ·a case against somebody who has followed -- met that ·6· ·directive. ·7· · · · Q· · How does one know if the information ·8· ·intended to be disclosed is actually conveyed to the ·9· ·consumer? 10· · · · · · ·MR. EDMONDSON:· Objection.· Calls for -- 11· ·the document speaks for itself. 12· · · · · · ·MR. CAMPBELL:· I'm asking a specific 13· ·question, a specific question about the language in 14· ·the document.· I'm trying to understand better what 15· ·he literally just read from page 1 of the 16· ·introduction. 17· · · · · · ·MR. EDMONDSON:· You're asking for a 18· ·question then that's beyond the scope of the .com 19· ·Disclosures. 20· · · · · · ·MR. CAMPBELL:· In terms of how you 21· ·understand them is beyond the scope of them? 22· · · · · · ·MR. EDMONDSON:· Well, I mean, are 23· ·you asking -- if you're asking the witness to 24· ·testify about something that is beyond what is 25· ·written in the .com Disclosures, then you're asking Case 3:15-cv-01129-HSG Document 94-1 Filed 01/25/16 Page 61 of 61 ·1· · · · · · · ·CERTIFICATE OF REPORTER ·2· · · · · · ·I, DONIELLE DEL CARLO, a Certified ·3· ·Shorthand Reporter, hereby certify that the witness ·4· ·in the foregoing deposition was by me duly sworn to ·5· ·tell the truth, the whole truth, and nothing but the ·6· ·truth in the within-entitled cause; ·7· · · · · · ·That said deposition was taken down in ·8· ·shorthand by me, a disinterested person at the time ·9· ·and place therein stated, and that the testimony of 10· ·the said witness was thereafter reduced to 11· ·typewriting, by computer, under my direction and 12· ·supervision; 13· · · · · · ·That before completion of the deposition, 14· ·review of the transcript [x] was [ ] was not 15· ·requested.· If requested, any changes made by the 16· ·deponent (and provided to the reporter) during the 17· ·period allowed are appended hereto. 18· · · · · · ·I further certify that I am not of counsel 19· ·or attorney for either or any of the parties to the 20· ·said deposition, nor in any way interested in the 21· ·event of this cause, and that I am not related to 22· ·any of the parties thereto. 23· · · · · · ·DATED:· January 20, 2016 24· · · · · · ·______________________________________ 25· · · · · · · ·DONIELLE DEL CARLO, CSR No. 10476
2016-02-02	95	TRANSCRIPT ORDER by Federal Trade Commission for Court Reporter FTR - San Francisco. (Edmondson, Eric) (Filed on 2/2/2016) (Entered: 02/02/2016)	UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CAND 435 (CAND Rev. 02/2015) Case 3:15-cv-01129-HSG Document 95 Filed 02/02/16 Page 1 of 1 TRANSCRIPT ORDER Please use one form per court reporter. CJA counsel please use Form CJA24 Please read instructions on next page. C O U R T U S E O N L Y DUE DATE: 1a. CONTACT PERSON FOR THIS ORDER 2a. CONTACT PHONE NUMBER 3. CONTACT EMAIL ADDRESS 1b. ATTORNEY NAME (if different) 2b. ATTORNEY PHONE NUMBER 3. ATTORNEY EMAIL ADDRESS 4. MAILING ADDRESS (INCLUDE LAW FIRM NAME, IF APPLICABLE) 5. CASE NAME 6. CASE NUMBER 7. COURT REPORTER NAME ( FOR FTR, LEAVE BLANK AND CHECK BOX)→ ❐ FTR 8. THIS TRANSCRIPT ORDER IS FOR: ❐ APPEAL ❐ NON-APPEAL ❐ CRIMINAL ❐ CIVIL ❐ In forma pauperis (NOTE: Court order for transcripts must be attached) CJA: Do not use this form; use Form CJA24. 9. TRANSCRIPT(S) REQUESTED (Specify portion(s) and date(s) of proceeding(s) for which transcript is requested), format(s) & quantity and delivery type: a. HEARING(S) (OR PORTIONS OF HEARINGS) b. SELECT FORMAT(S) (NOTE: ECF access is included with purchase of PDF, text, paper or condensed.) c . DELIVERY TYPE ( Choose one per line) DATE JUDGE (initials) TYPE (e.g. CMC) PORTION If requesting less than full hearing, specify portion (e.g. witness or time) PDF (email) TEXT/ASCII (email) PAPER CONDENSED (email) ECF ACCESS (web) ORDINARY (30-day) 14-Day EXPEDITED (7-day) DAILY (Next day) HOURLY (2 hrs) REALTIME 10. ADDITIONAL COMMENTS, INSTRUCTIONS, QUESTIONS, ETC: F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F ORDER & CERTIFICATION (11. & 12.) By signing below, I certify that I will pay all charges (deposit plus additional). 12. DATE 11. SIGNATURE DISTRIBUTION: ❐ COURT COPY ❐ TRANSCRIPTION COPY ❐ ORDER RECEIPT ❐ ORDER COPY
2016-02-02	96	TRANSCRIPT ORDER by DIRECTV LLC, DIRECTV, Inc. for Court Reporter FTR - San Francisco. (Sandrock, Ryan) (Filed on 2/2/2016) (Entered: 02/02/2016)	UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CAND 435 (CAND Rev. 02/2015) Case 3:15-cv-01129-HSG Document 96 Filed 02/02/16 Page 1 of 1 TRANSCRIPT ORDER Please use one form per court reporter. CJA counsel please use Form CJA24 Please read instructions on next page. C O U R T U S E O N L Y DUE DATE: 1a. CONTACT PERSON FOR THIS ORDER 2a. CONTACT PHONE NUMBER 3. CONTACT EMAIL ADDRESS 1b. ATTORNEY NAME (if different) 2b. ATTORNEY PHONE NUMBER 3. ATTORNEY EMAIL ADDRESS 4. MAILING ADDRESS (INCLUDE LAW FIRM NAME, IF APPLICABLE) 5. CASE NAME 6. CASE NUMBER 7. COURT REPORTER NAME ( FOR FTR, LEAVE BLANK AND CHECK BOX)→ ❐ FTR 8. THIS TRANSCRIPT ORDER IS FOR: ❐ APPEAL ❐ NON-APPEAL ❐ CRIMINAL ❐ CIVIL ❐ In forma pauperis (NOTE: Court order for transcripts must be attached) CJA: Do not use this form; use Form CJA24. 9. TRANSCRIPT(S) REQUESTED (Specify portion(s) and date(s) of proceeding(s) for which transcript is requested), format(s) & quantity and delivery type: a. HEARING(S) (OR PORTIONS OF HEARINGS) b. SELECT FORMAT(S) (NOTE: ECF access is included with purchase of PDF, text, paper or condensed.) c . DELIVERY TYPE ( Choose one per line) DATE JUDGE (initials) TYPE (e.g. CMC) PORTION If requesting less than full hearing, specify portion (e.g. witness or time) PDF (email) TEXT/ASCII (email) PAPER CONDENSED (email) ECF ACCESS (web) ORDINARY (30-day) 14-Day EXPEDITED (7-day) DAILY (Next day) HOURLY (2 hrs) REALTIME 10. ADDITIONAL COMMENTS, INSTRUCTIONS, QUESTIONS, ETC: F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F ORDER & CERTIFICATION (11. & 12.) By signing below, I certify that I will pay all charges (deposit plus additional). 12. DATE 11. SIGNATURE DISTRIBUTION: ❐ COURT COPY ❐ TRANSCRIPTION COPY ❐ ORDER RECEIPT ❐ ORDER COPY
2016-02-03	97	STIPULATION WITH PROPOSED ORDER Re: Summary Judgment Hearing Date filed by DIRECTV, Inc.. (Attachments: # 1 Declaration of Chad S. Hummel)(Sandrock, Ryan) (Filed on 2/3/2016) (Entered: 02/03/2016)	Case 3:15-cv-01129-HSG Document 97 Filed 02/03/16 Page 1 of 3 Counsel Listed on Signature Page UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to the Hon. Maria-Elena James JOINT STIPULATION AND [PROPOSED] ORDER CONTINUING HEARING DATE ON MOTION FOR PARTIAL SUMMARY JUDGMENT Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 97 Filed 02/03/16 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to Local Rule 6-2 and 7-12, Defendants DIRECTV and DIRECTV, LLC (collectively “DIRECTV”) and Plaintiff Federal Trade Commission (“FTC”), hereby stipulate and agree as follows: 1. DIRECTV’s Motion for Partial Summary Judgment (Dkt. 53, the “Motion”) is fully briefed and scheduled for hearing on February 25, 2016. 2. Due to DIRECTV’s lead trial counsel’s unavailability on February 25, 2016, and with agreement from the FTC, the parties respectfully request that the hearing be continued until March 4, 2016. 3. Chad Hummel, lead trial counsel for DIRECTV, will be in trial on February 25, 2016, in the matter captioned as Mount Olympus Mortgage Co. v. Benjamin Anderson, et al., Case No. 30- 2014-00729438-CU-BT-CJC in the Superior Court of the State of California, for the County of Orange (Hon. Craig Griffin presiding). 4. At the time the hearing on the Motion was set, Judge Griffin had a different trial schedule that would have allowed Mr. Hummel to argue the motion on February 25, 2015. 5. DIRECTV has asked the FTC if it is available for a hearing on March 4, 2016 and whether it would agree to request a continuance to that date. Eric Edmondson, lead trial counsel for the FTC, stated that he is available on March 4, 2016 and that the FTC agrees to make the request. 6. Accordingly, the parties hereby agree and stipulate and respectfully request that this Court continue the hearing date on the Motion for Partial Summary Judgment to Friday, March 4, 2016, at 2:00 p.m., or as soon thereafter as the matter may be heard before the Court. 7. The parties recognize that Your Honor does not normally conduct hearings on Fridays and that they are requesting an exception to Your Honor’s normal procedures. 8. This will be the third time the hearing on the Motion for Partial Summary Judgment has been continued. The Court previously continued the hearing on October 21, 2015, when it granted the FTC’s Motion for Extension of Time to File Response/Reply to the Motion for Partial Summary Judgment. [Dkt. No. 64]. The hearing was continued again on December 9, 2015, after the Court granted the parties’ stipulation to continue the hearing to allow time for additional discovery. [Dkt. No. 87]. 1 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 97 Filed 02/03/16 Page 3 of 3 Dated: February 3, 2016 Dated: February 3, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, the filer hereby attests that concurrence in the filing of this document has been obtained from all signatories. ____________________________________________________________________________ PURSUANT TO STIPULATION, IT IS ORDERED THAT: [PROPOSED] ORDER a. The hearing on the Motion for Partial Summary Judgment is continued to March 4, 2016, at 2:00 p.m. Dated: February __, 2016 Honorable Haywood S. Gilliam, Jr. ___________________________________ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 97-1 Filed 02/03/16 Page 1 of 3 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 772-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to the Hon. Maria-Elena James DECLARATION OF CHAD S. HUMMEL IN SUPPORT OF JOINT STIPULATION AND [PROPOSED] ORDER Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 DECLARATION OF CHAD S. HUMMEL 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 97-1 Filed 02/03/16 Page 2 of 3 I, Chad S. Hummel, declare and state as follows: 1. I am an attorney duly licensed to practice law before all of the courts of the State of California and the United States District Court for the Northern District of California. I am a partner of Sidley Austin LLP, counsel of record in this matter for defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) and am lead trial counsel in this action. I submit this Declaration in support of the concurrently-filed Joint Stipulation and [Proposed] Order Continuing Hearing Date on Motion For Partial Summary Judgment (the “Stipulation”). I have personal, first-hand knowledge of the facts set forth herein, and, if called upon to do so, I could and would competently testify thereto. 2. DIRECTV filed its Motion for Partial Summary Judgment (Dkt. 53, the “Motion”) on October 13, 2015. The Motion is fully briefed and scheduled for hearing on February 25, 2016. 3. I will be in trial on February 25, 2016, in the matter captioned as Mount Olympus Mortgage Co. v. Benjamin Anderson, et al, Case No. 30-2014-00729438-CU-BT-CJC in the Superior Court of the State of California, for the County of Orange (Hon. Craig Griffin presiding). I am lead trial for Mount Olympus in that case. 4. At the time that the hearing date on the Motion was set, Judge Griffin had a different trial schedule that would have allowed me to argue the motion on February 25, 2015. Presently, that jury trial is in session three days per week from Tuesday to Thursday and will run to March 17, 2016. 5. We have asked FTC counsel if they can be available for hearing on March 4, 2016, and whether the FTC would agree to request a continuance to that date. Eric Edmondson, lead trial counsel for the FTC, stated that he is available on March 4, 2016 and that the FTC agrees to make the request. 6. The hearing on the Motion has already been continued twice. The first time was by Court Order on October 21, 2015, when the Court granted the FTC’s Motion for Extension of Time to File Response/Reply to the Motion for Partial Summary Judgment. [Dkt. No. 64]. The second time was on December 9, 2015, when the Court granted the parties’ stipulation to continue the hearing on the Motion for Partial Summary Judgment to allow time for discovery. [Dkt. No. 87]. DECLARATION OF CHAD S. HUMMEL 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 97-1 Filed 02/03/16 Page 3 of 3 I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on February 3, 2016, at Los Angeles California /s/ Chad S. Hummel Chad Hummel Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, the filer hereby attests that concurrence in the filing of this document has been obtained from the signatory. DECLARATION OF CHAD S. HUMMEL 2 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-02-03	98	TRANSCRIPT OF PROCEEDINGS OF THE OFFICIAL ELECTRONIC SOUND RECORDING - FTR 4:10-4:34 held on 01/08/2016, before Judge Maria-Elena James, Magistrate. Court Reporter/Transcriber Kelly Polvi, telephone number 503.779.7406; [email protected]. Tape Number: FTR 4:10-4:34. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerk's Office public terminal or may be purchased through the Court Reporter/Transcriber until the deadline for the Release of Transcript Restriction. After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. (Re 95 Transcript Order, 96 Transcript Order ) Release of Transcript Restriction set for 5/3/2016. (Related documents(s) 95 , 96 ) (Polvi, Kelly) (Filed on 2/3/2016) (Entered: 02/03/2016)
2016-02-04	99	ORDER by Judge Haywood S. Gilliam, Jr. Granting 97 Stipulation Re: Summary Judgment Hearing Date. (ndrS, COURT STAFF) (Filed on 2/4/2016) (Entered: 02/04/2016)	Case 3:15-cv-01129-HSG Document 99 Filed 02/04/16 Page 1 of 3 Counsel Listed on Signature Page UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to the Hon. Maria-Elena James JOINT STIPULATION AND [PROPOSED] ORDER CONTINUING HEARING DATE ON MOTION FOR PARTIAL SUMMARY JUDGMENT Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 99 Filed 02/04/16 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to Local Rule 6-2 and 7-12, Defendants DIRECTV and DIRECTV, LLC (collectively “DIRECTV”) and Plaintiff Federal Trade Commission (“FTC”), hereby stipulate and agree as follows: 1. DIRECTV’s Motion for Partial Summary Judgment (Dkt. 53, the “Motion”) is fully briefed and scheduled for hearing on February 25, 2016. 2. Due to DIRECTV’s lead trial counsel’s unavailability on February 25, 2016, and with agreement from the FTC, the parties respectfully request that the hearing be continued until March 4, 2016. 3. Chad Hummel, lead trial counsel for DIRECTV, will be in trial on February 25, 2016, in the matter captioned as Mount Olympus Mortgage Co. v. Benjamin Anderson, et al., Case No. 30- 2014-00729438-CU-BT-CJC in the Superior Court of the State of California, for the County of Orange (Hon. Craig Griffin presiding). 4. At the time the hearing on the Motion was set, Judge Griffin had a different trial schedule that would have allowed Mr. Hummel to argue the motion on February 25, 2015. 5. DIRECTV has asked the FTC if it is available for a hearing on March 4, 2016 and whether it would agree to request a continuance to that date. Eric Edmondson, lead trial counsel for the FTC, stated that he is available on March 4, 2016 and that the FTC agrees to make the request. 6. Accordingly, the parties hereby agree and stipulate and respectfully request that this Court continue the hearing date on the Motion for Partial Summary Judgment to Friday, March 4, 2016, at 2:00 p.m., or as soon thereafter as the matter may be heard before the Court. 7. The parties recognize that Your Honor does not normally conduct hearings on Fridays and that they are requesting an exception to Your Honor’s normal procedures. 8. This will be the third time the hearing on the Motion for Partial Summary Judgment has been continued. The Court previously continued the hearing on October 21, 2015, when it granted the FTC’s Motion for Extension of Time to File Response/Reply to the Motion for Partial Summary Judgment. [Dkt. No. 64]. The hearing was continued again on December 9, 2015, after the Court granted the parties’ stipulation to continue the hearing to allow time for additional discovery. [Dkt. No. 87]. 1 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 99 Filed 02/04/16 Page 3 of 3 Dated: February 3, 2016 Dated: February 3, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, the filer hereby attests that concurrence in the filing of this document has been obtained from all signatories. ____________________________________________________________________________ PURSUANT TO STIPULATION, IT IS ORDERED THAT: [PROPOSED] ORDER a. The hearing on the Motion for Partial Summary Judgment is continued to March 4, 2016, at 2:00 p.m. Dated: February __, 2016 Honorable Haywood S. Gilliam, Jr. ___________________________________ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 4 10:00 a.m.
2016-02-04		Reset Hearing as to 53 MOTION for Partial Summary Judgment : Motion Hearing set for 3/4/2016 10:00 AM before Hon. Haywood S Gilliam Jr.. (ndrS, COURT STAFF) (Filed on 2/4/2016) (Entered: 02/04/2016)
2016-02-08	100	STIPULATION WITH PROPOSED ORDER re 40 Order, Set Deadlines/Hearings, Set Motion and Deadlines/Hearings filed by Federal Trade Commission. (Attachments: # 1 Declaration in support of Proposed Stipulation Re Case Schedule)(Edmondson, Eric) (Filed on 2/8/2016) (Entered: 02/08/2016)	Case 3:15-cv-01129-HSG Document 100 Filed 02/08/16 Page 1 of 4 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected]; Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, /// a limited liability company, a corporation, Defendants. Case No. 15-cv-01129-HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to the Hon. Maria-Elena James JOINT STIPULATION AND [PROPOSED] ORDER EXTENDING CASE DEADLINES /// /// /// /// JOINT STIPULATION AND [PROPOSED] ORDER EXTENDING CASE DEADLINES 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 100 Filed 02/08/16 Page 2 of 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff Federal Trade Commission (“FTC”) and defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”), hereby stipulate and respectfully request that the Court continue all deadlines in this matter for a period of approximately three months in order to allow the parties sufficient time to conclude fact discovery. The parties are diligently working on discovery. However, despite best efforts, the parties do not believe that they will be able to complete fact discovery by the current deadline of April 22, 2016. Some examples of outstanding discovery include: • • • • Two letter briefs to be submitted to Judge James within the next two weeks; Multiple open discovery disputes regarding consumer complaints, subscription sales and cancellation data, DIRECTV website source code, advertisement dissemination data, draft advertisements, privilege logs, the deliberative process privilege, the common interest doctrine, 30(b)(6) depositions of FTC personnel, and other issues that could result in additional letter briefs; Depositions of several current and former DIRECTV employees scheduled for April; and Written discovery served in late January. The parties believe that the requested extension is in the interests of justice and could minimize the burden on Judge James as some of the discovery disputes may be resolved informally if the parties are given more time. Additional time would also take into account the possibility that future rulings by Your Honor or Judge James could impact the scope or focus of discovery. The Court has previously extended 1) the deadline for the FTC to move to strike DIRECTV’s affirmative defenses [Dkt. No. 23]; 2) the hearing date on DIRECTV’s Motion for Partial Summary Judgment [see Dkt. Nos. 64, 87, 99]. The Court has not previously extended any other deadlines. For these reasons, the parties respectfully request that the pre-trial deadlines be continued as set forth below. IT IS HEREBY STIPULATED AND AGREED BY AND BETWEEN THE PARTIES through their respective attorneys of record as follows: JOINT STIPULATION AND [PROPOSED] ORDER EXTENDING CASE DEADLINES 2 Case 3:15-cv-01129-HSG Document 100 Filed 02/08/16 Page 3 of 4 WHEREAS, the parties require additional time to resolve discovery disputes and conduct discovery, THEREFORE, the parties have stipulated and agreed, and do hereby respectfully request that the Court extend all deadlines in this matter as follows: Event: Fact Discovery Close Opening Expert Reports Rebuttal Expert Reports Reply Expert Reports Expert Discovery Close Settlement Conference MSJ Filing Deadline MSJ Oppositions Due MSJ Replies Due MSJ Hearing Date Pretrial Conference Bench Trial Date Existing date: Apr. 22, 2016 Apr. 25, 2016 Jun. 10, 2016 Jul. 1, 2016 Jul. 26, 2016 Aug. 4, 2016 Aug. 25, 2016 N/A N/A Sept. 29, 2016 Nov. 22, 2016 Dec. 5, 2016 Proposed new date: Aug. 5, 2016 Sept. 9, 2016 Oct. 21, 2016 Nov. 4, 2016 Nov. 23, 2016 Dec. 2, 2016 Dec. 23, 2016 Jan. 20, 2017 Feb. 3, 2017 To be determined March 2017 April 2017 SO STIPULATED: Dated: February 8, 2016 /s/ Eric D. Edmondson Eric D. Edmondson Raymond E. McKown Erika Wodinsky Kenneth H. Abbe Stacy Procter Boris Yankilovich Jacob A. Snow Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JOINT STIPULATION AND [PROPOSED] ORDER EXTENDING CASE DEADLINES 3 Case 3:15-cv-01129-HSG Document 100 Filed 02/08/16 Page 4 of 4 Pursuant to Civil Local Rule 5-1(i), I hereby attest that I have obtained concurrence in the filing of this document from all other signatories represented by a “conformed” signature. Dated: February 8, 2016 Sidley Austin LLP /s/ Chad S. Hummel Chad S. Hummel Attorney for Defendants DIRECTV and DIRECTV, LLC ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. HAYWOOD S. GILLIAM, JR. United States District Judge 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JOINT STIPULATION AND [PROPOSED] ORDER EXTENDING CASE DEADLINES 4
2016-02-09	101	CLERK'S NOTICE SETTING CASE MANAGEMENT CONFERENCE. Notice is hereby given that a Case Management Conference has been set for February 16, 2016, before Judge Haywood S. Gilliam, Jr., at 2:00 p.m., in Courtroom 15, 18th Floor, 450 Golden Gate Avenue, San Francisco, CA. (This is a text only docket entry, there is no document associated with this notice.) (ndrS, COURT STAFF) (Filed on 2/9/2016) (Entered: 02/09/2016)
2016-02-10	102	Discovery Letter Brief filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 2/10/2016) (Entered: 02/10/2016)	Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 1 of 41 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on November 24, 2015, prior to filing this letter. In addition, the parties met and conferred on this issue several other times in an attempt to resolve this dispute informally, including by letter on October 26 and November 2. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 2 of 41 NATURE OF THE DISPUTE This dispute concerns the FTC’s July 10, 2015 Interrogatories on Defendants (collectively, “DIRECTV”) issued under Fed. R. Civ. P. 33 (Exhibit A) and DIRECTV’s September 23, 2015 responses and objections to those Interrogatories (Exhibit B). Through this Joint Discovery Letter, the Federal Trade Commission (“FTC”) seeks an order compelling DIRECTV to respond to Interrogatory 10: “Identify each Person for whom or on whose behalf DIRECTV has paid any fees or costs for legal representation in connection with this action.” DIRECTV has only lodged objections to this Interrogatory and has not responded. THE FEDERAL TRADE COMMISSION’S POSITION Interrogatory 10 seeks discoverable information that is relevant in this case. DIRECTV’s counsel of record at Sidley Austin LLP have taken over representation of numerous nonparty witnesses from whom the FTC seeks relevant evidence. The question of whether DIRECTV is paying for these nonparties’ legal costs is relevant because DIRECTV itself has failed to produce numerous categories of requested materials in discovery. Therefore, the FTC has had seek those materials from nonparties, many of which DIRECTV’s own lawyers now represent as well. Most of the co-represented corporate nonparties have been slow to provide subpoenaed documents, some have failed to provide categories of documents altogether, and several now demand that the FTC pay for their costs. Determining whether DIRECTV is paying for these nonparties’ legal fees and costs will help the FTC, and ultimately the Court, assess the extent of DIRECTV’s influence over these witnesses, weigh bias, and ensure orderly and transparent discovery. Interrogatory 10 seeks relevant information. I. DIRECTV has to date produced only 38 documents in response to the FTC’s requests for production (“RFPs”)—lodged more than half a year ago. Therefore, the FTC has resorted to subpoenaing that evidence from nonparties that do business with DIRECTV. In many cases, shortly after the FTC has subpoenaed nonparties, DIRECTV’s counsel of record stepped in to represent them. For example, DIRECTV has not produced in discovery any of its own dissemination schedules for relevant advertising in response to the FTC’s RFPs. The FTC has had to seek those materials from nonparty Converge Direct, an advertising distribution vendor. After the FTC subpoenaed Converge Direct, DIRECTV’s counsel immediately stepped in to represent the company. Similarly, DIRECTV’s lawyers have taken over representation of at least ten other nonparty companies, whose work for DIRECTV covers key subject matter areas, including consumer research, advertisements, advertising distribution, telemarketing, and dealer networks.1 These co-represented nonparties raise near uniform objections to the FTC’s subpoenas. Several demand costs from the FTC before they will agree to produce certain categories of documents. At the same time, many of these co-represented nonparties refuse to engage in negotiations about ways to reduce their asserted burdens or costs. Nearly all of the nonparties represented by DIRECTV’s counsel have taken months to make even limited document productions, and several have produced nothing at all. In fact, the vast majority of the documents they have produced to date arrived only after the FTC initiated this dispute.2 1 As far as the FTC knows, DIRECTV’s counsel of record represent nonparty consumer research vendors (Brainjuicer, MES, Odyssey, Taylor Group), advertising distributors (Converge Direct, Kern), telemarketing vendors (Alorica, Empereon, RDI, S&P Data), and a sales dealer (DirectStar TV). 2 These co-represented nonparties produced 3,182 documents before January 27, 2016, and 16,477 documents since then. The vast majority of the production is various iterations of DIRECTV’s ads. 1 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 3 of 41 Having explained the background, it is important to note that this motion is not to compel nonparty production. It is a request for information—and for transparency—from DIRECTV, a party to this action. The breadth of nonparty representation coverage by DIRECTV’s counsel raises concerns about DIRECTV’s influence over the co-represented nonparties and the FTC’s ability to discover key evidence from them unimpeded by its party opponent. Determining who is paying for the nonparties’ legal fees and costs is relevant to establishing that influence. This Court and others in this circuit have recognized the disclosure of sources of legal fee payments as relevant to credibility or bias. See United States v. Cathcart, No. 07-4762, 2009 WL 1764642, at 2 (N.D. Cal. June 18, 2009) (permitting discovery into the source of payment of defendant’s legal fees as relevant to credibility and bias); Berger v. Seyfarth Shaw, LLP, No. 07-05279 JSW, 2008 WL 4570687, at 1 (N.D. Cal. Oct. 14, 2008) (“Consistent with federal privilege law, fee- payment arrangements are relevant to credibility and bias, and discoverable.”); Bryant v. Mattel, Inc., No.04-09049, 2007 WL 5416681, at 7 (C.D. Cal. Jan. 26, 2007) (“[D]ocuments relating to fee or indemnity agreements between MGA and Bryant are relevant to demonstrate bias and lack of credibility.”). The Ninth Circuit itself has affirmed this principle in permitting the admissibility of indemnity agreements as relevant to witness credibility. See Brocklesby v. United States, 767 F.2d 1288, 1292-93, n.3 (9th Cir. 1985). Here, the credibility and bias concerns are magnified by the blatant co-mingling of representation. Despite working at a global law firm with nearly 2,000 lawyers, DIRECTV’s outside counsel did not designate separate attorneys to represent the nonparties. Instead, the very same lawyers who represent DIRECTV in this case also represent the nonparties. Those same lawyers review the nonparty documents the FTC has subpoenaed to decide which will be produced and which will be withheld. In other words, DIRECTV’s lawyers have first-review rights to nonparty materials that the FTC has subpoenaed. Moreover, these lawyers have not even bothered to present a façade of independence. They have signed off on several nonparties’ subpoena objections as “Attorneys for Defendants DIRECTV and DIRECTV, LLC.”3 Additionally, during nonparty depositions, they assume dual roles, lodging objections as counsel for the nonparty witnesses, and then examining those witnesses as counsel for DIRECTV.4 Determining the full extent of DIRECTV’s influence over co-represented nonparties is important not only to test their credibility and bias, but also to ensure fair and orderly discovery. Most of the materials the FTC seeks from these nonparties are materials that DIRECTV itself should have—and had an obligation to preserve—but has so far not produced to the FTC in response to longstanding RFPs. Now, acting through DIRECTV’s counsel, the co-represented nonparties refuse to produce categories of materials too, and also demand that the FTC pay for their costs as a prerequisite to any discussion about production. Determining whether DIRECTV is subsidizing these nonparties will help shed light on whether their burden objections and cost shifting demands raise legitimate concerns about nonparty burden or impermissible barriers calculated to obstruct or delay discovery for DIRECTV’s benefit. DIRECTV’s burden objection and arguments are misplaced. II. What is at issue in this dispute is DIRECTV’s refusal to answer a valid interrogatory, not nonparties’ purported difficulties in complying with the FTC’s subpoenas. The relevant burden is 3 E.g., BrainJuicer’s Objections to FTC Subpoena (July 10, 2015); MES’s Objections to FTC’s Subpoena (July 14, 2015); Odyssey’s Objections to FTC Subpoena (July 29, 2015). 4 See, e.g., Nather Dep. Tr. at 6:21-22 (“Ryan Sandrock, Sidley Austin, for DIRECTV and the witness.”), and Stinson Dep. Tr. at 7:22-23 (“Chad Hummel. I’m counsel for the witness and the defendants in this case.”). 2 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 4 of 41 the one on DIRECTV to identify the nonparties, if any, for whose legal fees and costs it is paying in this litigation. Misdirecting focus from this actual dispute to hypothetical disputes raised on behalf of nonparties is disingenuous. Indeed, DIRECTV’s reliance on nonparty burdens as the excuse for refusing to respond to a party interrogatory only emphasizes the conflation of interests between DIRECTV and the co-represented nonparties and reinforces the need to determine the full extent of DIRECTV’s influence over them. III. DIRECTV’s other objections are meritless. DIRECTV’s three other specified objections to Interrogatory 10—privilege, privacy rights of nonparties, and harassment—are meritless. “As a general rule, client identity and the nature of the fee arrangement between attorney and client are not protected from disclosure by the attorney-client privilege.” United States v. Blackman, 72 F.3d 1418, 1424 (9th Cir. 1995); see also In re Osterhoudt, 722 F.2d 591, 592-93 (9th Cir. 1983) (“Fee arrangements usually fall outside the scope of the privilege . . . .”). DIRECTV’s objection that Interrogatory 10 violates “the right of privacy of third parties” is similarly meritless. Basic information about a fee arrangement is “so distinct from any confidential communication between [a party] and his counsel and so clearly unprotected by the attorney-client privilege that no reasonably informed client could have supposed that it would be protected from disclosure.” Osterhoudt, 722 F.2d at 595. That DIRECTV may not want to reveal its financial arrangements with witnesses whom it is sponsoring in this case does not erect some unspecified privacy bar to legitimate discovery. See United States v. Ellis, No. 93-52-CR-J-10, 1994 WL 90324, at 1 (M.D. Fla. Jan. 18, 1994), aff’d, 90 F.3d 447 (11th Cir. 1996) (fee arrangements are “not an overbroad disclosure of [defendant’s] normally private financial matters”). Finally, “the mere request for the information does not amount to harassment.” Cathcart, 2009 WL 1764642 at 3. DIRECTV’S POSITION The FTC’s claims that Sidley-represented third-parties have been slow to produce documents or have refused to negotiate with the FTC are wrong. The FTC issued sweeping and overbroad requests, requiring the responding parties and the FTC to engage in weekly meet and confer sessions to discuss how these requests could be narrowed and what documents will be produced. To date, Sidley-represented third-parties have produced 18,000 separate records and anticipate producing more. This production is in addition to the over 450,000 documents produced by DIRECTV to the FTC.5 The FTC does not, and cannot, claim that the third-parties not represented by Sidley have moved more quickly or produced more documents than the Sidley-represented third-parties. In short, the FTC has no support for its accusations and insinuations of non-compliance.6 Furthermore, the FTC’s accusations of some sort of misconduct—arising from Sidley’s representation of DIRECTV and some third-parties—are completely inappropriate and without merit. The FTC has no authority to support its claim that the same attorneys cannot represent a party and non-adverse third-parties. And the FTC’s suggestion that, if a third-party is not paying 5 The FTC’s claim that DIRECTV has only produced 38 documents is misleading. DIRECTV produced the over 450,000 documents to the FTC as part of its CID response. Since the filing of the litigation, DIRECTV has produced additional documents. Furthermore, as the FTC is well aware from numerous meet and confer sessions, DIRECTV will be producing a substantial number of additional documents in multiple categories. 6 If requested, DIRECTV can provide additional information regarding the negotiations with the FTC regarding third-party discovery that will show misstatements in the FTC’s brief. 3 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 5 of 41 Sidley’s fees, it cannot make a burden argument, is wrong. The fact that Sidley represents some third-parties as well as DIRECTV does not mean that these third-parties should not be protected from the FTC’s burdensome discovery requests. Finally, the FTC’s motion is premature. The FTC wants to get information about Background: The FTC Has Issued Overbroad Third-Party Discovery. The FTC has bombarded third-parties—most of whom are DIRECTV business whether DIRECTV is paying any third-party’s fees in anticipation of possible future motion practice regarding third-party discovery. However, there are no such motions pending. There is nothing for the Court to decide regarding the status of third-party productions. I. partners—with subpoenas containing extremely broad document requests. In all, the FTC has issued 13 subpoenas, requesting 99 categories of documents to just the third parties who are represented by Sidley. To date, the nonparties represented by Sidley have produced nearly 18,000 records to the FTC—at a very conservative average of three pages per record this production totals over 54,000 pages of materials. The FTC also has issued seven subpoenas to seven different third parties Sidley does not represent. In contrast to the over 18,000 (and counting) records produced by the 13 Sidley-represented parties, these seven have only produced 1,634 records. Sidley’s third party clients have not been slow or stingy in producing documents. The FTC’s subpoenas have included unfocused, overbroad requests such as: (1) “Every advertisement that the [nonparty] developed, in whole or in part, for DIRECTV, regardless of the state of development or whether it was disseminated, including, but not limited to, any preliminary sketches, drafts or proposals”; and (2) “All communications between the [nonparty] and DIRECTV.” The first category is so overbroad because it burdens nonparties to have to gather, review, and produce draft advertisements and all documents relating to them. This request is particularly inappropriate because Your Honor has already denied the FTC’s request that DIRECTV (a party) be compelled to produce all draft advertisements as overly burdensome. (Dkt. 81). The second category is also overbroad because it seeks “all communications” regardless of relevance. Responding would require time-consuming and costly ESI review. II. might use in a future motion. It is also not clear why the FTC has brought its complaints about third-party discovery to this court. All but one of the third-parties that Sidley represents reside outside the Northern District of California. Any motion practice regarding subpoenas to those parties will be heard in the district where compliance is required. Agincourt Gaming, LLC v. Zynga, Inc., No. 14-0708, 2014 WL 4079555, at 3-4 (D. Nev. Aug. 15, 2014). Argument A. It is not clear why the FTC has brought this motion now—it is seeking information that it The Motion is Not Relevant to Any Issue Before This Court. The Information Sought Is of Minimal Relevance to Burden.7 B. The FTC’s argument is that information regarding whether DIRECTV is paying third- party legal expenses is relevant to the issue of whether the FTC’s requests are unduly burdensome. There are at least three problems with this argument. 7 The FTC also argues that fee arrangements are relevant to a potential showing of bias but do not explain how any “bias” of non-parties could be relevant to this case. None of the cases the FTC cites on this point resemble this one. 4 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 6 of 41 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 7 of 41 EXHIBIT A Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 8 of 41 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal. Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Case No. 15-cv-01129-HSG PLAINTIFF FEDERAL TRADE COMMISSION’S FIRST SET OF INTERROGATORIES TO DEFENDANTS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 1 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 9 of 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff Federal Trade Commission (“FTC”), by counsel and pursuant to Fed. R. Civ. P. 33, hereby requests that Defendants provide to the undersigned counsel for the FTC sworn answers to the following interrogatories within the time required by the Federal Rules of Civil Procedure. DEFINITIONS 1. 2. 3. “Advertisement,” “Advertise,” “Advertising,” or “ad” means any statement, illustration, or depiction, that is designed to effect a sale or create interest in the purchasing of goods or services, whether disseminated to consumers or not, whether appearing on or in a label, package, package insert, radio, television, cable or satellite television, brochure, newspaper, magazine, pamphlet, leaflet, circular, mailer, book insert, free standing insert, letter, catalogue, poster, chart, billboard, public transit card, point of purchase display, film, slide, audio program transmitted over a telephone system, telemarketing script, on hold script, upsell script, program-length commercial (i.e., infomercial), the Internet, or any other medium. Internet advertising includes, but is not limited to, advertisements and marketing information appearing on any third-party websites, Internet search engine results pages (e.g., sponsored links), video-sharing websites (e.g., YouTube), social networking websites (e.g., Facebook, Google+, Twitter), blogs or online journals, and pages and information on the DIRECTV Website(s). “Communication” means any transmission or receipt of facts, information, opinions, or thoughts, whether conveyed in writing, orally, electronically, or by any other means, including written memorializations of oral communications. “Consumer Research” means all surveys, tests, analyses, measurements, or assessments of consumers’ or individuals’ perceptions, interpretations, understandings, behaviors, reactions, attitudes, or beliefs regarding any subject, including, but not limited to, any product, company, Advertisement, FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 2 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 10 of 41 draft ad, proposed ad, proposed ad text, copy, creative strategy or platform, marketing, offering, price, or any other Advertising material. Such research includes, but is not limited to, copy testing, split testing, A/B testing, focus groups, surveys, usability studies, questionnaires, underlying data, findings, analyses of results, and any evaluations of any data or results that refer or relate to such testing, surveys, or studies. “DIRECTV,” “Defendants,” “the Company,” “You” or “Your” means DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, their wholly or partially owned subsidiaries, parent companies, unincorporated divisions, joint ventures, partnerships, operations under assumed names, predecessors, affiliates, and all directors, officers, partners, employees, agents, attorneys, consultants, and any other person or entity, working for or on behalf of any of the foregoing at any time during the period covered by this subpoena. “DIRECTV Website” means each website—i.e., a location or set of locations on the Internet, including all component web pages, identified by a uniform resource locator (URL) or otherwise, or any other material displayed or accessible (in whole or in part) over the Internet via the Hypertext Transfer Protocol, including all source code, templates, database records, content-management systems, and any other materials used in or incorporated into the material displayed or accessed over the Internet— hosted, managed, maintained, or displayed by, for, or on behalf or at the direction of DIRECTV. “Document” means the complete original and any non-identical copy (whether different from the original because of notations on the copy or otherwise), regardless of origin or location, of any written, typed, printed, transcribed, taped, recorded, filmed, punched, computer-stored, or graphic matter of every type and description, however and by whomever prepared, 4. 5. 6. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 3 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 11 of 41 produced, disseminated or made, including, but not limited to, any Advertisement, book, pamphlet, periodical, contract, correspondence, file, invoice, memorandum, note, telegram, report, record, handwritten note, working paper, routing slip, graph, paper, index, map, tabulation, manual, draft, guide, policy, procedure, report, script, directive, chart, outline, abstract, history, calendar, diary, agenda, minute, code book, or label. “Document” shall include “Communication” and “Electronically Stored Information.” “Identify” or “identity” or “identification” a. b. when used with respect to a Person means to state (1) the full name of a natural Person, and his or her present or last known business and residential addresses, and telephone number(s); and (2) the businesses or other organizations by name, address, identities of natural persons who are officers, directors or managers of the business or organization, and contact persons, where applicable. Once a Person has been identified in accordance with this subparagraph, only the name of that person need be listed in response to subsequent discovery requesting the identification of that person; when used with respect to Documents means to state (1) the type of Document (e.g., “letter to John Doe, cc: Richard Roe”); (2) the date or approximate date of the Document; (3) its author or authors; (4) all recipients of the Document; (5) the subject matter of the Document; and (6) the present location or custodian of the Document. If any such Document was, but is no longer, in Your possession or subject to Your control, or is no longer in existence, state whether it (1) is missing or lost; (2) has been destroyed; (3) has been transferred, voluntarily or involuntarily, to others; or (4) 7. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 4 8. 9. 10. 11. Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 12 of 41 c. has been otherwise disposed of; and in each instance, explain the circumstances surrounding the authorization for such disposition and state the date or approximate date thereof; when used with respect to all other information, facts, or tangible or intangible things means to state and describe all information required to fully and accurately answer the interrogatory. For example, with respect to identification of a product or service, such information would include the product’s or service’s title or name, characteristics, components, price, the time period offered (term), cancellation or termination cost, the placement and locations of dissemination. “FTC” or “Commission” means the Federal Trade Commission. “Material Terms of the Service” means (i) the term of the Service, including the duration of any agreement or commitment by the consumer to maintain or pay for the Service; (ii) the price or cost of the Service, in total and in monthly installments, for both the first year and beyond the first year; (iii) the cost or penalty of cancelling or terminating the Service at any time, including before the conclusion of the term of the Service; and (iv) the terms of any “free” or introductory offer for premium channels, including when the offer terminates and how, and whether consumers bear any additional cost for the premium channels beyond the termination date. “Person” or “Persons” means any natural person, corporation, partnership, or other business association and any other legal entity. “Service” means any direct-to-home digital television service that You have Advertised, marketed, promoted, sold, or otherwise offered to consumers in the United States. 12. The words “refer,” “relate,” or “regard” (as well as various forms of these verbs, such as “referring to,” “relating to,” or “regarding”) shall mean to FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 13 of 41 discuss, describe, reflect, contain, analyze, study, report, comment, evidence, constitute, set forth, consider, recommend, concern, or pertain to, in whole or in part. 13. Each of the functional words “each,” “every,” “any,” and “all” shall be deemed to include each of the other functional words; and “between” and “among” shall be deemed to include each other. 14. The word “any” shall be construed to include the word “all,” and the word “all” shall be construed to include the word “any.” 15. The word “and,” as well as “or,” shall be construed both conjunctively and disjunctively, as necessary, in order to bring within the scope of any specification all information and materials that otherwise might be construed to be outside its scope. Wherever used herein, the singular shall be deemed to include the plural, and the plural shall be deemed to include the singular. INSTRUCTIONS A. Unless otherwise specified, the time period covered by each request shall be B. C. D. January 1, 2007 through the present. If You cannot answer all or part of any interrogatory in full after exercising due diligence to secure the full information to do so, so state and answer to the full extent possible, specifying Your inability to answer the remainder, stating whatever information or knowledge You have concerning the unanswered portion, and detailing what You did in attempting to secure the unknown information. If You object to any part of an interrogatory, answer all parts of such interrogatory to which You do not object. If you cannot understand or discern the meaning of an interrogatory, You shall timely contact undersigned counsel for the FTC and state the basis for Your confusion or lack of understanding. You may not refuse to provide 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 6 E. F. Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 14 of 41 information based on impermissible grounds, including an implausible or overly narrow interpretation of the request by You. If the answer to all or part of any interrogatory can be found in materials previously produced to the FTC by You, please indicate, by reference to particular Bates number(s) or other means sufficient to quickly and easily locate the materials, where in those materials the responsive information can be located. If You withhold any requested information based on the claim that the information is privileged or subject to protection as trial preparation material, You must (1) state the objection and reason(s) therefor; (2) describe the nature of the information not disclosed in a manner that will allow the FTC to assess the applicability of the privilege or protection; and (3) identify the Person(s) with sufficient knowledge to testify about the information and the underlying bases for the claimed privilege or protection. G. When responding, You shall comply with the Stipulated [Draft] Protective Order submitted to the Court by the parties on June 23, 2015 until the Court enters a protective order governing confidential materials, at which time You shall comply with that order entered by the Court. H. Consistent with the applicable prohibitions of the Cable Act, 47 U.S.C. § 551, and the Satellite Television Extension and Location Act, 47 U.S.C. § 338, You shall not construe any request as requiring Your disclosure of “personally identifiable information” concerning any subscriber who has not provided prior written or electronic consent to such disclosure. See 47 U.S.C. §§ 551(a)(2) and (c), and 47 U.S.C. §§ 338(i)(2)(A) and (i)(4). Accordingly, You should redact, edit, cut, expunge, or otherwise exclude from produced Documents any “personally identifiable information” prohibited from disclosure pursuant to the Cable Act or the Satellite Television Extension and Location Act. Please contact undersigned counsel 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 7 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 15 of 41 I. if You believe any material called for by these requests contains such information. Each of the interrogatories is continuing in nature. Therefore, You must promptly supplement Your responses as You obtain additional information or materials affecting any of Your responses. INTERROGATORIES 1. Provide answers to all interrogatories propounded in the Civil Investigative Demands (dated April 23, 2010 and December 13, 2013) issued to You by the FTC that You have not to date answered in full. Identify all types, versions, and offerings of the Service (e.g., programming packages, add-ons, other promotions, etc.), and the time period during which each was offered or sold to consumers. 2. 3. For each Service responsive to Interrogatory 2, supra, identify each of the Material Terms of the Service. 4. For each Advertisement that has referred to any of the Material Terms of the Service, identify: a. the title, name, or other identifier for the Advertisement; b. how the Advertisement has been disseminated to consumers (e.g., the general medium—print, radio, television, Internet, etc.—as well as the specific medium—publication, station, network, website, or ad distribution network); c. where the Advertisement has been disseminated to consumers (e.g., markets, geographic locations, consumer targets); d. when the Advertisement has been disseminated to consumers (e.g., the dates or date ranges of dissemination, duration); e. how often or frequently the Advertisement has been disseminated to consumers (e.g., circulation, run rates, the number and frequency of exposures); 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 8 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 16 of 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 f. the exposure or reach of the Advertisement (e.g., an actual number or best estimate for how many consumers viewed or were exposed to the Advertisement, or were calculated or projected to view or be exposed to the Advertisement); and g. each Person other than DIRECTV, such as an advertising agency or Internet publisher, involved in the creation, development, placement or other dissemination, and tracking (including online tracking) of the Advertisement. 5. Identify all Consumer Research relating to each Advertisement that has referred to any of the Material Terms of the Service, listing separately each instance or occurrence of such Consumer Research. 6. For each instance or occurrence of Consumer Research responsive to 7. Interrogatory 5, supra, identify all Persons who have participated or were otherwise involved in the development, procurement, implementation, review, interpretation, analysis, or presentation of the Consumer Research. Identify all information and materials that would permit, using reasonable and available tools and methods available to You, the accurate and complete reconstruction of past versions of all DIRECTV Website(s), including, but not limited to, www.directv.com (and its component web pages), used for displaying, conveying, or otherwise disseminating Advertising relating to the Service or any of the Material Terms of the Service. 8. For each consumer who purchased, paid for, or was enrolled in any Service that has included or entailed any of the Material Terms of the Service, identify: a. the term of the consumer’s Service, including the duration of any agreement or commitment by the consumer to maintain or pay for the Service; b. the dates on which the consumer’s enrollment in the Service started FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 9 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 17 of 41 and ended; c. the dollar amount the consumer paid for the Service for each month; d. whether the consumer cancelled or otherwise terminated the Service before the end of the Service’s term or commitment period, and, if so, the number of months between the start of the consumer’s enrollment in the Service and the termination; e. whether the consumer incurred any charge(s) relating to the consumer’s cancellation or termination of the Service (e.g., early cancellation fee), and, if so, the reason for and the dollar amount of each such charge; f. whether the consumer received any “free” or introductory offer for access to premium channels in connection with the Service, and, if so: i. the period during which the consumer received access to the premium channel(s); ii. the period during which the consumer incurred any charge(s) relating to access to the premium channel(s), and the dollar amount of each such charge; and iii. when, if ever, the consumer cancelled or otherwise terminated access to the premium channel(s). 9. Identify each Person to whom, in connection with this action, DIRECTV has offered or advised the retention of legal representation by DIRECTV’s counsel in this action. 10. Identify each Person for whom or on whose behalf DIRECTV has paid any fees or costs for legal representation in connection with this action. 11. Identify each Person with whom DIRECTV, in connection with this action, has entered into a joint defense or common interest agreement, or any other arrangement on the basis of which You anticipate the withholding of any information or materials from discovery in this action. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 10 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 18 of 41 /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission Dated: July 10, 2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 11 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 19 of 41 CERTIFICATE OF SERVICE I Kelly C. Ortiz, declare as follows: I am employed in San Francisco County, San Francisco, California. I am over the age of eighteen years and not a party to this action. My business address is Federal Trade Commission 901 Market St., Ste. 570, San Francisco, California 94103. On July 10, 2015, I served a true and correct copy of PLAINTIFF FEDERAL TRADE COMMISSION’S FIRST SET OF INTERROGATORIES TO DEFENDANTS on the interested parties in this action addressed as follows: Counsel for Defendants Chad Hummel, Esq. Clayton Friedman, Esq. Manatt, Phelps & Phillips LLP 11355 W. Olympic Blvd. Los Angeles, CA 90064 Phone: (310) 312-4000 Fax: (310) 312-4224 Email: [email protected]; [email protected] Christian E. Baker Manatt, Phelps & Phillips LLP One Embarcadero Center 30th Floor San Francisco, CA 94111 Phone: (415) 291-7400 Fax: (415) 291-7474 Email: [email protected] 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 X X (BY ELECTRONIC MAIL) By transmitting the foregoing document(s) electronically from the e-mail address, [email protected], to the person(s) at the e-mail addresses listed above. The transmission was reported as complete and without error. This method of service was made pursuant to the agreement of counsel. (BY MAIL) By placing the foregoing document(s) in a sealed envelope, with fully prepaid postage for first class mail for collection and mailing at Federal Trade Commission, San Francisco California following ordinary business practice. I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made. Executed on July 10, 2015, at San Francisco, California FTC’S FIRST SET OF INTERROGATORIES – 15-CV-01129-HSG 12 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 20 of 41 EXHIBIT B Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 21 of 41 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, corporation, and DIRECTV, LLC a limited liability company, ) ) ) ) ) ) ) ) ) ) ) ) ) ______________________________________ ) PROPOUNDING PARTY: Defendants. Case No. 3:15-cv-01129 HSG DEFENDANTS DIRECTV AND DIRECTV, LLC’S RESPONSES AND OBJECTIONS TO PLAINTIFF FEDERAL TRADE COMMISSION’S FIRST SET OF INTERROGATORIES Plaintiff FEDERAL TRADE COMMISSION RESPONDING PARTY: Defendant DIRECTV AND DIRECTV, LLC SET NO.: ONE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ACTIVE 210177296v.1 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 22 of 41 GENERAL OBJECTIONS The Objections and Responses herein are provided solely for the purpose of this action. The Objections and Responses herein are made on the basis of the information and writings presently available to, identified, and/or located by DIRECTV upon reasonable investigation. DIRECTV has not yet completed its investigation of the facts relating to this action; has not yet interviewed all witnesses in this action; has not yet completed its discovery in this action (including because of the FTC’s delays in responding to and fully complying with DIRECTV’s requests for discovery); and has not yet completed its preparation for trial or any other proceedings. DIRECTV therefore reserves its right to amend, revise, or supplement these Objections and Responses at a later date. However, DIRECTV assumes no obligation to voluntarily supplement or amend these Objections and Responses to reflect evidence, documents, or things discovered following service of these Objections and Responses, except to the extent DIRECTV is expressly obligated to do so under applicable laws or rules. DIRECTV also reserves the right to rely on any documents or information previously produced in response to the CIDs, continue its investigation and discovery of facts and evidence regarding this action and to produce, refer to, and/or offer into evidence at trial or other proceedings any additional facts or evidence that DIRECTV may discover from any source through that continuing investigation and discovery or any information omitted from these responses as a result of good faith oversight, error, or mistake. DIRECTV does not admit or concede that any statement contained in these Objections and Responses is relevant or admissible, and no such admission or concession shall be implied or inferred. In addition, these Objections and Responses are subject to all applicable evidentiary objections that would require the exclusion of any statement contained herein if the statement were made by a witness present and testifying in court. All such objections are reserved and may be interposed at the time of trial or in any other proceedings. GENERAL OBJECTIONS 1. DIRECTV objects to these Interrogatories to the extent that they call for information that is protected by the attorney-client privilege, the attorney work-product doctrine, or any other 1 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 23 of 41 constitutional, statutory or common-law privilege and/or doctrine. Disclosure of such information shall not constitute a waiver of any privilege or ground for objecting to the disclosure of such information and shall not waive DIRECTV’s right to object to the use of such information. 2. DIRECTV objects to these Interrogatories to the extent that they, in whole or in part, seek information that is neither relevant to the subject matter of this proceeding nor reasonably calculated to lead to the discovery of admissible evidence. 3. DIRECTV objects to these Interrogatories to the extent that they, in whole or in part, are unduly burdensome, oppressive, or harassing. 4. DIRECTV objects to these Interrogatories to the extent that they, in whole or in part, seek information not in the possession, custody, or control of DIRECTV. 5. DIRECTV objects to these Interrogatories to the extent that they, in whole or in part, seek information which is publicly or equally available to the FTC. 6. DIRECTV objects to these Interrogatories to the extent that they are, in whole or in part, duplicative. 7. DIRECTV objects to these Interrogatories to the extent that they, in whole or in part, call for information that is unlimited in time. 8. DIRECTV objects to these Interrogatories to the extent that they call for legal analysis or a legal conclusion. 9. DIRECTV further objects to the Interrogatories to the extent that any interrogatory is in multiple sub-parts and therefore counts as more than one interrogatory. 10. DIRECTV objects to these Interrogatories to the extent that they seek information reflected only in electronic documents and/or electronically stored information that are not reasonably accessible because of undue burden or cost, including but not limited to information in computer archives, and/or on backup tapes or disks. 11. DIRECTV objects to the definition of “Material Terms of the Service” and any other definition in or part of the Interrogatories to the extent it purports to relate to terms other than the pricing and premium channel terms identified in the Complaint. DIRECTV further objects to the definition to the extent it purports to assert a legal conclusion regarding what terms are “material.” 2 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 24 of 41 12. DIRECTV objects to the definitions of “Service,” “DIRECTV Website,” and any other definition in or part of the Interrogatories to the extent they relate to services not subject to the allegations of the Complaint. Each of the foregoing General Objections is a continuing objection, which DIRECTV incorporates into each and every one of its responses. To the extent that a specific objection is restated in any response below, it is for emphasis only. RESPONSES AND OBJECTIONS TO INTERROGATORIES, SET ONE INTERROGATORY NO. 1: Provide answers to all interrogatories propounded in the Civil Investigative Demands (dated April 23, 2010 and December 13, 2013) issued to You by the FTC that You have not to date answered in full. RESPONSE TO INTERROGATORY NO. 1: In addition to its General Objections, DIRECTV specifically objects to this interrogatory on grounds that it is impermissibly compound, burdensome, overbroad, and violates the limits on discovery allowed in this case. DIRECTV also objects to the phrase “in full” as impermissibly vague. The CIDs previously served on DIRECTV by the FTC together contained no less than 108 separate questions and sub-questions. Moreover, the scope of many of the original interrogatories in the CIDs was informally negotiated with the FTC to limit or expand the nature of the information provided. Being asked now, again, by the same government agency, to re- answer or more fully respond to the CIDs, in light of the parties’ prior agreements on the scope of DIRECTV’s responses is inappropriate and would create an undue burden on DIRECTV. Further, DIRECTV has no idea what interrogatories the FTC considers incomplete. Indeed, DIRECTV presently believes that it did fully respond to the CIDs as negotiated. DIRECTV further objects to this interrogatory to the extent that it purports to require further responses or the production of information, documents, and/or objects that are protected by the attorney client privilege or the work-product doctrine, or are confidential, proprietary and/or protectable trade secrets. DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 25 of 41 INTERROGATORY NO. 2: Identify all types, versions, and offerings of the Service (e.g., programming packages, add-ons, other promotions, etc.), and the time period during which each was offered or sold to consumers. RESPONSE TO INTERROGATORY NO. 2: In addition to its General Objections, DIRECTV specifically objects to this interrogatory on the grounds that it is compound, burdensome, overbroad and seeks information about the Service, which is neither relevant nor reasonably calculated to lead to the discovery of admissible evidence in this case. DIRECTV further objects to this interrogatory on the grounds and to the extent that it purports to require further responses or the production of information or documents in response to the prior CIDs. Subject to and without waiving any of the foregoing objections, DIRECTV responds as follows: DIRECTV provides satellite television services to customers in their homes and businesses. DIRECTV offers a wide array of programming packages. Descriptions of the programming packages and a channel guide can be viewed at www.directv.com. Also, DIRECTV will be shortly producing sales guides in response to the FTC’s document demands as part of its rolling production of relevant, non-privileged materials. The sales guides provide information about the material terms and conditions of offers and promotions. Pursuant to FRCP Rule 33(d), DIRECTV has produced or will produce documents and other materials that contain information responsive to this interrogatory, including: • Sales guides. • Programming price increase bill insert and messaging notices for the years 2010 to 2015. • Offer guides and brand books. • Exhibit 20 to DIRECTV’s responses to the FTC’s CID is a list of all channels added and dropped from programming packages from 2007 to 2010. • Exhibit 3 (2008 DIRECTV Programming Packages Overview). • Exhibit 14 (Programming package channel changes from 2007 to 2008). • Exhibit 15 (Online 2008 programming packages web flow with disclosures and 4 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 26 of 41 checkout). • Advertisements disseminated by DIRECTV. Discovery and investigation remain ongoing. INTERROGATORY NO. 3: For each Service responsive to Interrogatory 2, supra, identify each of the Material Terms of the Service. RESPONSE TO INTERROGATORY NO. 3: In addition to its General Objections, DIRECTV specifically objects to this interrogatory on grounds that it is compound, burdensome, overbroad, and seeks information which depends, in part, on a legal conclusion, which is in dispute in this case – the definition of “material terms”. Without waiving the foregoing objections, DIRECTV states that the DIRECTV Residential Customer Agreement states, “This describes the terms and conditions of your receipt of and payment for DIRECT Service.” Section 10(d) of the DIRECTV Residential Customer Agreement states, “This Agreement and any lease, activation, programming, or other service commitment agreement that you entered into in connection with obtaining Service or Receiving equipment constitute our entire agreement.” Throughout the relevant time period, DIRECTV has clearly and conspicuously disclosed the terms of its offers: (1) in advertisements, (2) at multiple times throughout the telephone and web sales processes, (3) in a sales confirmation email or letter sent immediately after a sale is completed, (4) in the DIRECTV Residential Customer Agreement, which is sent with the sales confirmation email or letter, (5) in the Equipment Lease Agreement that the customer signs when equipment is installed in the customer’s residence, and (6) in the first bill received by the customer. Those terms include, but are not limited to: (1) the 12-month discounted programming package price, (2) an agreement to maintain a minimum level of programming for 2 years or pay an early-cancellation fee, (3) the then-existing regular prices of the programming packages, (4) that programming and pricing is subject to change, and (4) that premium channels can be included for free for three months and will roll to pay unless canceled by the consumer. Further, pursuant to FRCP Rule 33(d), DIRECTV has produced or will produce documents 5 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 27 of 41 and other materials that contain information responsive to this interrogatory, including: • Exhibits 4-10 that DIRECTV produced in response to the FTC’s CID, which include samples of the foregoing documents. • Copies of its Customer Agreements from 2007 through 2013, which are Bates-labeled DTVFTCII-0089381 - DTVFTCII-0089409. • Copies of Lease Agreements, which are Bates-labeled DTVFTCII-0089410 - DTVFTCII-0089502. • Sample confirmation letters and emails from 2009 through 2014 Bates-labeled DTVFTC-0089311 - DTVFTCII-0089380. • Online web flows and web pages. • Documents from DIRECTV’s Agent Answer Center, which describe terms and conditions of its service, Bates-labeled DTVFTCII-0315174 - DTVFTCII-0315765. Discovery and investigation remain ongoing. INTERROGATORY NO. 4: For each Advertisement that has referred to any of the Material Terms of the Service, identify: a. b. how the Advertisement has been disseminated to consumers (e.g., the general the title, name, or other identifier for the Advertisement; medium—print, radio, television, Internet, etc.—as well as the specific medium—publication, station, network, website, or ad distribution network); c. where the Advertisement has been disseminated to consumers (e.g., markets, geographic locations, consumer targets); d. when the Advertisement has been disseminated to consumers (e.g., the dates or date ranges of dissemination, duration); e. f. how often or frequently the Advertisement has been disseminated to consumers (e.g., circulation, run rates, the number and frequency of exposures); the exposure or reach of the Advertisement (e.g., an actual number or best estimate for how many consumers viewed or were exposed to the Advertisement, or were calculated or projected to view or be exposed to the Advertisement); and 6 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 9 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 28 of 41 g. each Person other than DIRECTV, such as an advertising agency or Internet publisher, involved in the creation, development, placement or other dissemination, and tracking (including online tracking) of the Advertisement. RESPONSE TO INTERROGATORY NO. 4: In addition to its General Objections, DIRECTV specifically objects to this interrogatory on the grounds that it is compound, burdensome, and overbroad. DIRECTV further objects to this interrogatory on the grounds and to the extent that it purports to require further responses or the production of documents in response to the prior CIDs. DIRECTV further objects on the grounds that this interrogatory is overbroad, burdensome, and oppressive because the FTC has not identified in its Complaint the advertisements it claims are deceptive and only now seeks, through the interrogatories, to go on a fishing expedition for every single advertisement as well as all information and materials relating to those advertisements. DIRECTV further objects on the grounds that this interrogatory is overbroad, burdensome, and oppressive to the extent that it seeks detailed information regarding the exposure and reach of each advertisement and where, when, and how each advertisement was disseminated. DIRECTV further objects to this interrogatory to the extent that it calls for information protected by the attorney-client privilege or the work-product doctrine. DIRECTV further objects to this interrogatory on the grounds that it calls for information which is protected from disclosure as it is confidential, proprietary and/or a protectable trade secret(s). Moreover, DIRECTV cannot respond to this interrogatory as drafted. Unless the FTC agrees to meet and confer to limit the scope of this interrogatory, it is virtually impossible to respond as this interrogatory literally covers tens of thousands of advertisements during the relevant time period. Subject to and without waiving the foregoing objections, DIRECTV responds as follows: Pursuant to FRCP Rule 33(d), DIRECTV has produced or will produce documents and other materials that contain information responsive to this interrogatory, including: • Advertisements. 7 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 29 of 41 • Sales guides relating to DIRECTV’s various advertising campaigns. • Web pages and copies of online web flows. Discovery and investigation remain ongoing. INTERROGATORY NO. 5: Identify all Consumer Research relating to each Advertisement that has referred to any of the Material Terms of the Service, listing separately each instance or occurrence of such Consumer Research. RESPONSE TO INTERROGATORY NO. 5: In addition to its General Objections, DIRECTV specifically objects to this interrogatory on grounds that it is compound, burdensome, and overbroad. DIRECTV further objects to this interrogatory on the grounds and to the extent that it purports to require further responses or the production of documents in response to the prior CIDs. DIRECTV further objects on the grounds that this interrogatory is overbroad, burdensome, and oppressive because the FTC has not identified in its complaint any advertisements it claims are deceptive and only now seeks, through the interrogatories, to go on a fishing expedition for every single advertisement as well as all information and materials relating to those advertisements. DIRECTV further objects to this interrogatory to the extent that it calls for information protected by the attorney-client privilege or the work-product doctrine. DIRECTV further objects to this interrogatory on the grounds that it calls for information which is protected from disclosure as it is confidential, proprietary and/or a protectable trade secret(s). Moreover, DIRECTV cannot respond to this interrogatory as drafted. Unless the FTC agrees to meet and confer to limit the scope of this interrogatory, DIRECTV cannot respond because it covers tens of thousands of advertisements during the relevant time period and the FTC has not identified the advertisements at issue in this lawsuit. Subject to and without waiving the foregoing objections, DIRECTV responds as follows: Pursuant to FRCP Rule 33(d), DIRECTV has produced or will produce documents and other materials that contain information responsive to this interrogatory, including: • February 2014 PowerPoint about improving the customer experience, marked 8 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 30 of 41 confidential and Bates-labeled DTVFTCII-0078694- DTVFTCII-0078704. • Consumer Research previously produced in response to the FTC’s CIDs, which is marked confidential and Bates-labeled DTVFTCII-0089503 through DTVFTCII- 0090051 and DTVFTCII-0091765 through DTVFTCII-0091838. • Survey questionnaires marked confidential and Bates-labeled DTVFTCII-0071845 - DTVFTCII-0072186, • Churn Reports, marked confidential and Bates-labeled DTVFTCII-0090052 - 0091764, and DTVFTCII-0072187 - 0072190. As the FTC is aware, the consumer research previously produced includes Ad Tracking Reports, Offer Testing Reports, and NPS Reports. Ad Tracking Reports analyze data compiled through surveys that measure the impact of DIRECTV television advertisements on DIRECTV brand positioning in relation to that of its cable and satellite competitors. The reports used several metrics such as whether the advertisement conveyed messaging about excellence in customer service, value, picture quality, exclusive programming, and the latest technology, just to name a few. It also includes Offer Testing reports, which study consumer response to various offers, and illustrate DIRECTV’s commitment to provide a value to consumers based on what consumers indicate that they want. For example, the 2010 Offer Debrief evaluates seven potential new customer offers and provides DIRECTV with a recommendation based on what consumers perceived to be the best value. By utilizing studies like this, DIRECTV is able to create offers that deliver a real value to consumers so that they are satisfied with their programming selection. Finally, this range of documents also includes NPS Reports from 2011, Q4 through 2014, Q1, which are utilized to track customer satisfaction among subscribers. DIRECTV further responds that it previously produced Churn Reports, noted above, which track and analyze voluntary customer disconnects, from the fourth quarter of 2007 through the fourth quarter of 2014. DIRECTV further responds, as noted above, that it previously produced survey questionnaires, which relate to Offer Test Questionnaires for (1) May 2008 Offer Test; (2) September 2008 Offer Development Focus Groups; (3) NASCAR Hot Pass Prospect Offer Test; 9 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 31 of 41 (4) October 2008 Offer Development Study; (5) December 2008 Offer Development Study; (6) March 2009 Upgrade Offer Test; (7) Q4 2009 Offer Test; and (8) November 2010 Offer Test. The Ad Test Questionnaires relate to (1) January 2009 Ad Tracking Questionnaire; (2) Q3 2009 Ad Tracking Questionnaire Level Playing Field; (3) July 2009 Ad Tracking Questionnaire with Dislikes; (4) Q4 2009 Ad Tracking - Anti Dish Retention; (5) January 2010 Ad Tracking Questionnaire; and (6) January 2012 Ad Test. DIRECTV further responds that at times it will test advertisements and web pages. When doing so, DIRECTV tests for a customer’s overall response to the advertisement or web page. DIRECTV does not test at a granular level by focusing on specific issues, such as the 11 specific topics identified by the FTC in its CIDs. For example, DIRECTV does not test on the 24-month commitment or discount pricing. DIRECTV’s testing typically entails a customer survey about the advertisement or web page. These surveys may ask the customer what he or she liked about the advertisement / web page. Customers respond based on their perception of the overall offer (e.g., that they liked the term, channel line-up, or discount pricing). To the extent that this interrogatory seeks information related to DIRECTV’s tracking of website analytics, DIRECTV further responds as follows: DIRECTV has already provided the FTC staff with extensive and detailed information about web analytics. This includes a detailed PowerPoint presentation, numerous meetings and conference calls answering the FTC’s questions about web analytics, and DIRECTV’s prior submissions and correspondence to the FTC dated May 6, 2014; May 16, 2014; May 19, 2014; June 13, 2014; and June 20, 2014. DIRECTV will agree to produce additional relevant, non-privileged documents, if any, based on the FTC’s specific requests for documents based on its review of these prior submissions. Discovery and investigation remain ongoing. INTERROGATORY NO. 6: For each instance or occurrence of Consumer Research responsive to Interrogatory 5, supra, identify all Persons who have participated or were otherwise involved in the development, procurement, implementation, review, interpretation, analysis, or presentation of the Consumer Research. DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 32 of 41 RESPONSE TO INTERROGATORY NO. 6: In addition to its General Objections, DIRECTV specifically objects to this interrogatory on grounds that it is compound, burdensome, and overbroad. DIRECTV further objects to this interrogatory on the grounds and to the extent that it purports to require further responses or the production of documents in response to the prior CIDs. DIRECTV further objects on the grounds that this interrogatory is overbroad, burdensome, and oppressive because the FTC has not identified in its complaint any advertisements it claims are deceptive and only now seeks, through the interrogatories, to go on a fishing expedition for every single advertisement as well as all information and materials relating to those advertisements. DIRECTV further objects to this interrogatory to the extent that it calls for information protected by the attorney-client privilege or the work-product doctrine. DIRECTV further objects to this interrogatory on the grounds that it calls for information which is protected from disclosure as it is confidential, proprietary and/or a protectable trade secret(s). Moreover, DIRECTV cannot respond to this interrogatory as drafted. Unless the FTC agrees to meet and confer to limit the scope of this interrogatory, DIRECTV cannot respond because it covers tens of thousands of advertisements and consumer research during the relevant time period and the FTC has not identified the advertisements at issue in this lawsuit. Subject to and without waiving the foregoing objections, DIRECTV responds as follows: DIRECTV further responds that the following individuals may have been involved in consumer research: Shannon Campain, Senior Vice President, Sales and Marketing Operations; Jon Gieselman, Senior Vice President, Marketing, Advertising and Public Relations; Karen Leever, Senior Vice President, Digital Marketing, Media and Customer Communication; Rasesh Patel, Senior Vice President, Strategy and Innovation; and Liz Poling-Hirlado, Director, Content Strategy. In addition, DIRECTV further responds that it utilizes third-party vendors to understand the consumer marketplace. These entities may possess material that refers or relates to research regarding a DIRECTV website or webpage. In response to this interrogatory, DIRECTV provides the following list of third-party vendors: ADDTOLT.COM Inc. 11 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 33 of 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Added Value American Consumer Satisfaction Inc. Alliance Consulting Group Accenture, LLP Affinnova, Inc. Alliance Consulting Group AltThink, LLC AUS Marketing Research Systems, Inc. BrainJuicer Inc. Bovitz, Inc. CFI Group USA, LLC Convergys CMG Comscore, Inc. Competitrack, Inc. Convergys Corporation Corporate Executive Board Data Development Worldwide Decision Analyst, Inc. Deltek, Inc. Diffusion Group Econonet Ventures LLC EGG Strategy, Inc. Exact Staff, Inc. Forrester Research Inc. Factiva, Inc. Firm Search LLC Giga Omni Media, Inc. Gartner, Inc. 12 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 34 of 41 Gaddis Partners LTD GFK Mediamark Research & Intelligen Hanover Research Council, LLC HUB Hypothesis, Inc. ICODIA Inc. International Communications Research iSuppli Corporation Ideas and Solutions Inc. Integreon Managed Solutions, Inc. (d/b/a Grail Research) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Interpret, LLC JD Power & Associates, Inc. Latitude Research Lieberman Research Worldwide Inc. Lieberman Software Corporation Media & Entertainment Strategies Marketsight, LLC Maritz Research, Inc. Modis, Inc. NPD Group Odyssey, LP Parks Residential Systems Research Peerless Insights Inc. Penn, Schoen & Berland Assoc., LLC PereaSearch Qualtrics Labs, Inc. Radius GMR, LLC Rubin Postaer & Associates DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 13 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 35 of 41 Rentrak Corporation Resolve Market Research Raise line Ventures LLC Socratic Technologies, Inc. SNL Financial, LLC Shopper's View Smarty Pants, LLC Taylor Research & Consulting Group The Diffusion Group TBG Telogical Systems LLC UGAM Solutions SEZ Private Limited Upper Strata UEGroup Incorporated United Sample, Inc. Vital Findings LLC Wonderland Rentals, Inc. Discovery and investigation remain ongoing. INTERROGATORY NO. 7: Identify all information and materials that would permit, using reasonable and available tools and methods available to You, the accurate and complete reconstruction of past versions of all DIRECTV Website(s), including, but not limited to, www.directv.com (and its component web pages), used for displaying, conveying, or otherwise disseminating Advertising relating to the Service or any of the Material Terms of the Service. RESPONSE TO INTERROGATORY NO. 7: In addition to its General Objections, DIRECTV specifically objects to this interrogatory on grounds that it is compound, burdensome, and overbroad. DIRECTV further objects to this interrogatory on the grounds and to the extent that it purports to require further responses or the 14 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 36 of 41 production of documents in response to the prior CIDs. DIRECTV further objects on the grounds that this interrogatory is overbroad, burdensome, and oppressive because the FTC has not identified in its complaint any advertisements it claims are deceptive and only now seeks, through the interrogatories, to go on a fishing expedition for every single advertisement as well as all information and materials relating to those advertisements. DIRECTV further objects to this interrogatory to the extent that it calls for information protected by the attorney-client privilege or the work-product doctrine. DIRECTV further objects to this interrogatory on the grounds that it calls for information which is protected from disclosure as it is confidential, proprietary and/or a protectable trade secret(s). Subject to and without waiving the foregoing objections, DIRECTV responds as follows: DIRECTV is not aware of any tools or methods that could now be used or which could in the past have been used to create or recreate an accurate and complete reconstruction of any of its websites. However, as the FTC is aware, DIRECTV has previously produced historical web pages from its website and intends to produce more web pages. Pursuant to FRCP Rule 33(d), DIRECTV has produced or will produce documents and other materials that contain information responsive to this interrogatory, including: • Website pages and online web flow. For example, Exhibit 15, a copy of the then- existing online ordering process; Exhibit 33 (online screen shots); web flows marked confidential and Bates-labeled DTVFTCII-0078705 - DTVFTCII-0078816. • Website launch notices, marked confidential and Bates-labeled DTVFTCII-0069778 - DTVFTCII-0070272. DIRECTV does not maintain historic copies of its website. The DIRECTV website is dynamic, and DIRECTV has not retained screen shots or “code” that would reflect how the website appeared on any given day during the relevant time period. DIRECTV’s website does not consist of static pages that are saved in some central location. Rather, the website runs from a dynamic database that consists of core code. Java server pages (or JSPs) do not exist in a vacuum, but rather are presented to a consumer pursuant to a determined set of rules. In other words, the pages with which a consumer is presented when visiting www.directv.com are determined by (1) the coded 15 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 37 of 41 presentment rules; and (2) the information provided by the consumer (e.g., zip code, login credentials if account holder, etc.). The pages are modular, and parts of each page will or will not be displayed depending upon the presentment rules and the information provided by the consumer. Once the “code” or rules are modified, the historic code or rules are overwritten and essentially lost due to the dynamic nature of the web site. DIRECTV did, however, retain launch notice emails, many of which include screen shots that depict various changes to the website over time. These were previously produced in response to the CIDs. Importantly, these launch notices may not contain all of the associated legal copy that would have been presented to consumers on the website, so many may not contain all disclosures that were, in fact, made to consumers in the legal copy. DIRECTV further responds that, at the request of the FTC, in August 2013 DIRECTV started the process of completing monthly screen shot captures of the entire purchase sales flow on the website. This has been the most practical way to capture the content of the sales web flow. Discovery and investigation remain ongoing. INTERROGATORY NO. 8: For each consumer who purchased, paid for, or was enrolled in any Service that has included or entailed any of the Material Terms of the Service, identify: a. b. c. d. the term of the consumer’s Service, including the duration of any agreement or commitment by the consumer to maintain or pay for the Service; the dates on which the consumer’s enrollment in the Service started and ended; the dollar amount the consumer paid for the Service for each month; whether the consumer cancelled or otherwise terminated the Service before the end of the Service’s term or commitment period, and, if so, the number of months between the start of the consumer’s enrollment in the Service and the termination; e. whether the consumer incurred any charge(s) relating to the consumer’s cancellation or termination of the Service (e.g., early cancellation fee), and, if so, the reason for and the dollar amount of each such charge; f. whether the consumer received any “free” or introductory offer for access to premium channels in connection with the Service, and, if so: 16 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 10 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 38 of 41 i. ii. the period during which the consumer received access to the premium channel(s); the period during which the consumer incurred any charge(s) relating to access to the premium channel(s), and the dollar amount of each such charge; and iii. when, if ever, the consumer cancelled or otherwise terminated access to the premium channel(s). RESPONSE TO INTERROGATORY NO. 8: In addition to its General Objections, DIRECTV specifically objects to this interrogatory on grounds that it is compound, burdensome, oppressive, and overbroad. In particular, this request seeks detailed information regarding tens of millions of customers. DIRECTV further objects to this interrogatory on the grounds and to the extent that it purports to require further responses or the production of documents in response to the prior CIDs. DIRECTV further objects to this interrogatory to the extent that it calls for information protected by the attorney- client privilege or the work-product doctrine. DIRECTV further objects to this interrogatory on the grounds that it calls for information which is protected from disclosure as it is confidential, proprietary and/or a protectable trade secret(s). DIRECTV stands by its objections since this interrogatory seeks data for tens of millions of subscribers during the relevant time period without any limitation whatsoever. DIRECTV agrees to meet and confer with the FTC if it wishes to narrow the scope of this interrogatory. INTERROGATORY NO. 9: Identify each Person to whom, in connection with this action, DIRECTV has offered or advised the retention of legal representation by DIRECTV’s counsel in this action. RESPONSE TO INTERROGATORY NO. 9: DIRECTV objects on the grounds that the interrogatory is not relevant nor is it reasonably calculated to lead to the discovery of admissible evidence. DIRECTV further objects on the grounds that the interrogatory calls for information that is protected by the attorney-client privilege, the attorney work-product doctrine, or any other constitutional, statutory or common- law privilege and/or doctrine. DIRECTV further objects on the grounds that the interrogatory 17 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 39 of 41 violates the right of privacy of third parties who are not parties to this lawsuit. DIRECTV further objects on the grounds that the interrogatory is harassing. Subject to and without waiving the foregoing objections, DIRECTV responds as follows: • The Kern Organization. • Taylor Research & Consulting Group, Inc. • Media & Entertainment Strategies, Inc. • BrainJuicer. • Odyssey Ventures, Inc. • Realeyes North America LLC. • Deutsch LA, Inc. INTERROGATORY NO. 10: Identify each Person for whom or on whose behalf DIRECTV has paid any fees or costs for legal representation in connection with this action. RESPONSE TO INTERROGATORY NO. 10: DIRECTV objects on the grounds that this interrogatory is not relevant nor is it reasonably calculated to lead to the discovery of admissible evidence. DIRECTV further objects on the grounds that this interrogatory calls for information that is protected by the attorney-client privilege, the attorney work-product doctrine, or any other constitutional, statutory or common- law privilege and/or doctrine. DIRECTV further objects on the grounds that this interrogatory violates the right of privacy of third parties who are not parties to this lawsuit. DIRECTV further objects on the grounds that this interrogatory is harassing. INTERROGATORY NO. 11: Identify each Person with whom DIRECTV, in connection with this action, has entered into a joint defense or common interest agreement, or any other arrangement on the basis of which You anticipate the withholding of any information or materials from discovery in this action. RESPONSE TO INTERROGATORY NO. 11: DIRECTV objects on the grounds that this interrogatory is not relevant nor is it reasonably calculated to lead to the discovery of admissible evidence. DIRECTV further objects 18 DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 40 of 41 on the grounds that this interrogatory calls for information that is protected by the attorney-client privilege, the attorney work-product doctrine, or any other constitutional, statutory or common- law privilege and/or doctrine. DIRECTV further objects on the grounds that this interrogatory violates the right of privacy of third parties who are not parties to this lawsuit. DIRECTV further objects on the grounds that this interrogatory is harassing. Dated: September 23, 2015 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC DEFENDANTS’ RESPONSES AND OBJECTIONS TO PLAINTIFF’S FIRST SET OF INTERROGATORIES CASE NO. 3:15-CV-01129 HSG 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 102 Filed 02/10/16 Page 41 of 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO PROOF OF SERVICE ) ) ) ss I am employed in the County of San Francisco, State of California. I am over the age of 18 years and not a party to the within action. My business address is 555 California Street, Suite 2000, San Francisco, California 94104. On September 23, 2015, I served the foregoing document(s) described as: DEFENDANTS DIRECTV AND DIRECTV, LLC’S RESPONSES AND OBJECTIONS TO PLAINTIFF FEDERAL TRADE COMMISSION’S FIRST SET OF INTERROGATORIES on all interested parties in this action as follows: Eric David Edmondson Boris Yankilovich Erika Ruth Wodinsky Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: 415-848-5179 Fax: 415-848-5184 [email protected] Raymond Edward McKown Stacy Rene Procter Federal Trade Commission 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 Phone: 310-824-4343 Fax: 310-824-4380 [email protected] (VIA FEDERAL EXPRESS ) I caused each such document(s) to be sent by FEDERAL  EXPRESS for overnight delivery. I placed true copies of the document(s) in a sealed envelope addressed to each interested party as shown above. I placed each such envelope, with fees thereon fully prepaid, for collection and delivery at Sidley Austin LLP, Los Angeles, California. I am readily familiar with Sidley Austin LLP’s practice for collection and delivery of express carrier package for delivery with FEDERAL EXPRESS. Under that practice, the package(s) would be delivered to an authorized courier or dealer authorized by FEDERAL EXPRESS to receive document(s) on that same day in the ordinary course of business.  shown above. (E-MAIL) I caused the document(s) to be delivered by e-mail to each interested party as I declare under penalty of perjury that the foregoing is true and correct. Executed on September 23, 2015 at San Francisco, California. /s/ Hazel Ebalo-Gillespie Hazel Ebalo-Gillespie PROOF OF SERVICE
2016-02-11	103	Discovery Order re: 102 Discovery Letter Brief filed by Federal Trade Commission. Signed by Judge Maria-Elena James on 2/11/2016. (cdnS, COURT STAFF) (Filed on 2/11/2016) (Entered: 02/11/2016)	Case 3:15-cv-01129-HSG Document 103 Filed 02/11/16 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 102 Pending before the Court is the parties’ discovery letter concerning Plaintiff Federal Trade Commission’s (the “FTC”) request to compel Defendants DIRECTV and DIRECTV, LLC (“Defendants”) to respond to its Interrogatory Request 10, which seeks the following: “Identify each Person for whom or on whose behalf DIRECTV has paid any fees or costs for legal representation in connection with this action.” Jt. Ltr. at 1, Dkt. No. 102. The FTC explains that Defendants have produced only 38 documents in response to its requests for production, and the FTC has therefore subpoenaed that evidence from nonparties that do business with Defendants. Id. However, after the FTC issued the subpoenas, Defendants’ counsel, Sidley Austin LLP, took over representation of the nonparties. Id. The FTC argues information regarding the breadth of nonparty representation coverage by Sidley is relevant because it raises concerns about Defendants’ influence over the nonparties. Id. at 2. However, as the FTC admits, it does not seek to compel any nonparty’s production through this request. Id. If the FTC claims nonparties are improperly withholding documents, it should first seek to compel disclosure from those nonparties, as any influence Defendants have over the nonparties is not at issue if the FTC is able to obtain the discovery to which it is entitled. Accordingly, the Court DENIES the FTC’s request without prejudice. IT IS SO ORDERED. Dated: February 11, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-02-11	104	STIPULATION WITH PROPOSED ORDER re 101 Clerk's Notice, Joint Stipulation and [Proposed] Order Continuing Case Management Conference filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Chad S. Hummel in Support of Joint Stipulation and [Proposed] Order)(Hummel, Chad) (Filed on 2/11/2016) (Entered: 02/11/2016)	Case 3:15-cv-01129-HSG Document 104-1 Filed 02/11/16 Page 1 of 2 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to the Hon. Maria-Elena James DECLARATION OF CHAD S. HUMMEL IN SUPPORT OF JOINT STIPULATION AND [PROPOSED] ORDER Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 DECLARATION OF CHAD S. HUMMEL 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 104-1 Filed 02/11/16 Page 2 of 2 I, Chad S. Hummel, declare and state as follows: 1. I am an attorney duly licensed to practice law before all of the courts of the State of California and the United States District Court for the Northern District of California. I am a partner of Sidley Austin LLP, counsel of record in this matter for defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) and am lead trial counsel in this action. I submit this Declaration in support of the concurrently-filed Joint Stipulation and [Proposed] Order Continuing Case Management Conference (the “Stipulation”). I have personal, first-hand knowledge of the facts set forth herein, and, if called upon to do so, I could and would competently testify thereto. 2. The parties filed a Joint Stipulation and [Proposed] Order Extending Case Deadlines on February 8, 2016. 3. After the parties filed their Joint Stipulation and [Proposed] Order Extending Case Deadlines, the Clerk gave notice on February 9, 2016, that a Case Management Conference is scheduled for February 16, 2016, at 2:00 p.m. 4. I will be in trial on February 16, 2016, in the matter captioned as Mount Olympus Mortgage Co. v. Benjamin Anderson, et al, Case No. 30-2014-00729438-CU-BT-CJC in the Superior Court of the State of California, for the County of Orange (Hon. Craig Griffin presiding). I am lead trial for Mount Olympus in that case. The trial days in that matter are Tuesday through Thursday. 5. We have asked the FTC if it can be available for the Case Management Conference on February 22, 2016. Eric Edmondson, lead trial counsel for the FTC, stated that he is available on February 22, 2016. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on February 11, 2016, at Costa Mesa, California /s/ Chad S. Hummel Chad Hummel DECLARATION OF CHAD S. HUMMEL 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-02-11	105	ORDER by Judge Haywood S. Gilliam, Jr. Granting 104 Stipulation Re 101 Clerk's Notice, Joint Stipulation and [Proposed] Order Continuing Case Management Conference. (ndrS, COURT STAFF) (Filed on 2/11/2016) (Entered: 02/11/2016)	Case 3:15-cv-01129-HSG Document 105 Filed 02/11/16 Page 1 of 3 Counsel Listed on Signature Page UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to the Hon. Maria-Elena James JOINT STIPULATION AND ORDER CONTINUING CASE MANAGEMENT CONFERENCE DIRECTV, LLC, a limited liability company, Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 Defendants. STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 105 Filed 02/11/16 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to Local Rule 6-2 and 7-12, Defendants DIRECTV and DIRECTV, LLC (collectively “DIRECTV”) and Plaintiff Federal Trade Commission (“FTC”), hereby stipulate and respectfully request as follows: 1. On February 8, 2016, the parties filed their Joint Stipulation and [Proposed] Order Extending Case Deadlines. [Dkt. No. 100]. 2. On February 9, 2016, the Clerk gave notice that a Case Management Conference has been set for February 16, 2016, at 2:00 p.m. [Dkt. No. 101]. 3. Chad Hummel, lead trial counsel for DIRECTV, will be in trial on February 16, 2016, in the matter captioned as Mount Olympus Mortgage Co. v. Benjamin Anderson, et al., Case No. 30- 2014-00729438-CU-BT-CJC in the Superior Court of the State of California, for the County of Orange (Hon. Craig Griffin presiding). The trial days in that matter are Tuesday through Thursday. In addition, lead trial counsel for the FTC will be out-of-town during the week of February 15, 2016, although he could return for a hearing if necessary. 4. DIRECTV has asked the FTC if it is available for the Case Management Conference on Monday, February 22, 2016 and whether it would agree to continue the Case Management Conference to that date. Eric Edmondson, lead trial counsel for the FTC, stated that he is available on February 22, 2016. 5. Accordingly, in order to allow lead trial counsel to appear for the Case Management Conference, the parties hereby agree and respectfully request that this Court continue the Case Management Conference to Monday, February 22, 2016, at 2:00 p.m., or as soon thereafter as the matter may be heard before the Court. 6. This is the first time the parties have requested that the Case Management Conference be continued. The Court has previously continued (a) the deadline for the FTC to move to strike DIRECTV’s affirmative defenses [Dkt. No. 23]; (b) the deadline for the FTC to file a response to DIRECTV’s Motion for Partial Summary Judgment [Dkt. No. 64]; (c) the deadline for DIRECTV to file a reply in support of its Motion for Partial Summary Judgment [Dkt. Nos. 64, 87]; and (d) the hearing date on DIRECTV’s Motion for Partial Summary Judgment [see Dkt. Nos. 64, 87, 99]. // 1 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 105 Filed 02/11/16 Page 3 of 3 Dated: February 11, 2016 SIDLEY AUSTIN LLP Dated: February 11, 2016 By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Filer’s Attestation: Pursuant to Local Rule 5-1(i)(3), regarding signatures, Chad S. Hummel hereby attests that concurrence in the filing of this document has been obtained from Eric D. Edmondson. ____________________________________________________________________________ PURSUANT TO STIPULATION, IT IS ORDERED EXCEPT THAT: ORDER The Case Management Conference is continued to March 4, 2016 at 10:00 a.m. a. Dated: February 11, 2016 Honorable Haywood S. Gilliam, Jr. ___________________________________ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 STIPULATION AND [PROPOSED] ORDER 3:15-CV-01129
2016-02-11		Reset Hearing Pursuant to Docket No. 105 : Case Management Conference set for 3/4/2016 10:00 AM. (ndrS, COURT STAFF) (Filed on 2/11/2016) (Entered: 02/11/2016)
2016-02-12	106	Discovery Letter Brief filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 2/12/2016) (Entered: 02/12/2016)	Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 1 of 94 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person prior to filing this letter on January 20, 2016. In addition, the parties met and conferred on this issue several other times in an attempt to resolve this dispute informally, including by email. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 2 of 94 NATURE OF THE DISPUTE This dispute concerns DIRECTV’s June 22, 2015 Fed. R. Civ. P. 30(b)(6) deposition notice Topic 3: “The results of any and all research, surveys, or tests conducted by the FTC concerning DIRECTV’s advertising that the FTC contends has been or is deceptive.” (Ex. A.) THE FEDERAL TRADE COMMISSION’S POSITION The Federal Trade Commission (“FTC”) seeks a protective order disallowing further depositions of the agency on Topic 3 until the close of expert discovery. This request is consistent with the Court’s December 3, 2015 Discovery Order (Dkt. 81) (hereinafter “Discovery Order”). On August 28, 2015, DIRECTV deposed FTC representative Kerry O’Brien on Topic 3. DIRECTV’s deposition questions on that topic sought to elicit privileged information about confidential research, surveys, and tests on DIRECTV’s advertising conducted by FTC staff and consulting experts for the Commission during the agency’s pre-complaint investigation of DIRECTV. FTC counsel raised appropriate work product and privilege objections to these questions, and Ms. O’Brien could not answer them without revealing work product or violating privilege. Ms. O’Brien fully answered all of DIRECTV’s deposition questions on Topic 3 that sought non-privileged information. On December 3, 2015, this Court granted DIRECTV’s motion to seek further responses to its questions on Topic 3, excluding “any testimony that is properly deemed privileged.” (Discovery Order at p. 10.) DIRECTV insists that it must immediately get a new deposition on Topic 3, in which the FTC must answer all the questions for which the agency has lodged a privilege objection. That distorts the Court’s Discovery Order. The FTC’s privilege objections to unanswered questions on Topic 3 were proper. Therefore, under the Discovery Order, DIRECTV is not entitled further responses to those questions. Moreover, DIRECTV’s demand to inquire into the FTC’s preparative expert work product well before expert discovery violates Rule 26(b)(4). Indeed, both the FTC and DIRECTV apparently agree that inquiry into consumer perception testing performed for litigation preparation is the domain of expert discovery. A. The FTC lodged proper privilege objections to DIRECTV’s questions seeking the disclosure of confidential evaluations the agency conducted to prepare for litigation. The only deposition questions on Topic 3 that Ms. O’Brien could not answer sought to elicit privileged information. For example, DIRECTV’s counsel repeatedly asked Ms. O’Brien to identify any testing performed by the FTC during its pre-complaint investigation. (See Ex. B (O’Brien deposition transcript) at pp. 20-24, 31-33, 36-37, 47-50.) DIRECTV’s counsel also asked Ms. O’Brien to identify the surveys and other expert work product materials she reviewed while working on the agency’s investigation of DIRECTV. (Id. at pp. 22-23, 40.) Counsel even inquired into the work product that may support Ms. O’Brien’s “personal opinion” about DIRECTV’s advertising. (Id. at p. 35-36.) The FTC’s objections to these questions—based on attorney work product, deliberative process privilege, and law enforcement privilege—were proper. First, because the sought-after information would necessarily reveal FTC attorneys’ mental processes—e.g., how legal staff evaluated consumer perception of DIRECTV’s advertising—that information is attorney work product. See FTC v. CyberSpy Software LLC, 2009 WL 2386137, at 4 (M.D. Fla. July 31, 2009) (denying defendants’ attempt to explore opposing counsel’s views on what inferences can be drawn from underlying evidence). Second, information disclosing the FTC’s confidential techniques and processes—e.g., what the FTC did to investigate consumer perception—is shielded under the law enforcement privilege. See SEC v. Rosenfeld, 1997 WL 576021, at 3-4 1 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 3 of 94 (S.D.N.Y. Sept. 16, 1997) (shielding the agency’s “techniques and procedures”). Third, deliberative information that FTC staff developed as part of the process to help guide the agency’s decision on this matter—e.g., why and how FTC staff analyzed and summarized consumer perception evidence—is shielded under the deliberative process privilege. FTC v. AMG Servs., 291 F.R.D. 544, 561 (D. Nev. 2013) (protecting against disclosure of internal agency analyses). Indeed, this Court has already recognized that the FTC’s pre-decisional work product, created for a law enforcement purpose and containing facts interwoven with FTC staff analysis and conclusions about investigational objectives, is shielded from discovery. (Dkt. 81 at 9 (affirming the privileged nature of the agency’s internal summary of consumer complaints)). This conclusion applies to the agency’s internal evaluation of consumer perception, which is the only line of inquiry to which Ms. O’Brien could not provide responsive testimony on Topic 3. B. DIRECTV’s inquiry into consulting expert information violates Rule 26(b)(4)(D). In addition to seeking properly privileged information, DIRECTV’s unanswered questions on Topic 3 also seek information protected by Fed. R. Civ. P 26(b)(4)(D). That subsection shields the disclosure of specified information about non-witness experts retained or employed in anticipation of litigation or preparation for trial. It “precludes discovery against experts who (are) informally consulted in preparation for trial, but not retained or specially employed.” Todd v. Tempur-Sealy Int’l, Inc., 2015 WL 1022886, at 2 (N.D. Cal. Mar. 6, 2015) (James, Mag. J.) (internal quotation marks and citations omitted). “[T]his preclusion not only encompasses information and opinions developed in anticipation of litigation, but also insulates discovery of the identity and other collateral information concerning experts consulted informally.” Id. (internal quotation marks and citations omitted) (denying defendants’ request to compel plaintiffs to identify with whom they consulted as a possible expert). In short, as this Court has recognized, the identity of hired or potential consulting experts, as well as other collateral information, is ordinarily beyond the scope of permissible discovery. Yet the FTC’s answers to DIRECTV’s unanswered questions on Topic 3—e.g., what type of consumer perception tests were performed, by whom, when, where, how many times, etc.— would necessarily reveal this protected information, in violation of Rule 26(b)(4)(D). Fortunately, a violation can be avoided with no harm to the parties’ legitimate discovery needs. Consumer perception testing done at the direction of counsel in preparation for trial is paradigmatic expert work properly examined during expert discovery. DIRECTV itself recognizes this. It refuses to produce any documents responsive to the FTC’s request for production of the company’s own “consumer survey evidence” by objecting that the request “is premature at this stage of discovery, as the request seeks expert discovery prior to the expert disclosure deadline.”1 Moreover, DIRECTV has invited the FTC to present the agency’s “consumer survey evidence . . . through an expert report.” (Dkt. 94 at p. 11 (emphasis added).) In sum, the parties appear to agree that consumer perception testing developed for litigation— precisely the subject of Topic 3—is properly reserved for expert discovery. The Court’s Scheduling Order (Dkt. 40) has set the opening of expert discovery for April 25, 2016. C. The protection the FTC seeks is consistent with the Court’s Discovery Order. This request for a protective order comports with the Court’s Discovery Order because the FTC seeks protection for the release of only evaluative information, which is properly privileged, not underlying “factual information.” Consistent with the Court’s command, the FTC has already produced to DIRECTV thousands of DIRECTV’s advertisements gathered by the FTC during its 1 DIRECTV’s Response and Objections to the FTC’s Request for Production No. 18 (Feb. 8, 2016). 2 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 4 of 94 investigation, including several static and dynamic captures of DIRECTV’s website, as well as tens of thousands consumer complaints about DIRECTV. In other words, DIRECTV now has all the underlying factual information as the FTC upon which it can test consumer perception.2 DIRECTV’s position makes it clear that what it seeks is not pure facts (i.e., consumers’ actual perception of DIRECTV’s advertising), but rather the FTC’s evaluation of those facts (i.e., the agency’s testing of consumers’ perception). FTC v. AMG Servs. is particularly instructive in addressing this dichotomy. There, the court rejected a challenge to the FTC’s invocation of privilege for protecting the agency’s evaluative analyses of the underlying facts. The court protected “compilations and the factual analyses conducted by FTC staff when the FTC was deciding whether to bring an action” as deliberative process, because these would “reveal to the defendants what facts the FTC relied on during its deliberation regarding bringing claims.” 291 F.R.D. at 561. Similarly, the court found the privilege to shield FTC’s internal discussions about evidence, which reflected not the raw evidence in isolation, but “FTC staff’s deliberations over and analysis of the significance of the evidence.” Id. (noting that the underlying evidence itself had already been produced). Here, DIRECTV’s deposition questions seeking information about the FTC’s evaluation (testing) of underlying facts (consumers’ perception of DIRECTV’s own ads) invade privilege. Unless DIRECTV is prepared to concede that the FTC is the sole determinative authority on testing consumers’ perception of DIRECTV’s advertising, it cannot overcome the proper privilege objections for the agency’s internal evaluative information.3 The FTC should comply with the Court’s December 3, 2015 order granting DIRECTV’s motion to compel further responses to Topic 3: DIRECTV’S Position Defendants’ motion to compel further responses to Topics 3 through 5 is GRANTED, except as to (1) Defendants’ request for further testimony regarding the contents of the summary Ms. O’Brien reviewed; (2) calculation methodologies for the monetary relief sought; and (3) any testimony that is properly deemed privileged. Dkt. 81 at 13. Nothing has changed since that ruling and the FTC now makes the same arguments that the Court previously considered. The Court should reject the FTC’s attempt to re-open this already decided issue.4 The deposition on Topic 3—which seeks testimony regarding “the results of any and all research, surveys, or tests conducted by the FTC concerning DIRECTV’s advertising that the FTC contends has been or is deceptive”—should go forward as the Court ordered. 2 Indeed, DIRECTV likely has much more of that information and evidence. Yet DIRECTV has produced fewer than 40 documents in response to discovery requests for its own disseminated advertising. 3 Should the Court decide that the FTC must provide further answers to unanswered questions on Topic 3, given the high risk of inadvertent disclosure of privileged information, DIRECTV should seek those answers through written discovery or through a deposition by written questions. See N.F.A. Corp. v. Riverview Narrow Fabrics, Inc., 117 F.R.D. 83, 86 (M.D.N.C. 1987) (“Because deposition of a party’s attorney is usually both burdensome and disruptive . . . other methods, such as written interrogatories which do not involve the same dangers as an oral deposition, should be employed.”). 4 The FTC could have appealed Your Honor’s ruling pursuant to FRCP 72. It did not do so. 3 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 5 of 94 Argument The Court’s order is clear: DIRECTV is entitled to 30(b)(6) testimony on Topic 3. The FTC nevertheless refuses to comply with the Court’s order. It seeks to add two exceptions to this ruling—exceptions that would render the Court’s actual ruling null and void. First, the FTC contends that DIRECTV is not entitled to answers regarding the questions as to which the FTC lodged privilege objections at the Kerry O’Brien deposition (prior to the Court’s order). This argument is difficult to understand. DIRECTV moved to compel because the FTC lodged privilege objections (Dkt. 56 at 2); in opposition, the FTC stood on its objections (Dkt. 56 at 4); the Court granted the motion to compel (Dkt. 81 at 8); but now the FTC says that ruling does not apply to the questions as to which the FTC objected. This simply does not make sense. The Court did say that DIRECTV’s motion to compel was granted except as to “any testimony that is properly deemed privileged.” Dkt. 81 at 13. However, the Court did not rule that the testimony sought was privileged. The FTC made the same arguments in the original letter brief about how its investigative techniques are protected from discovery that it makes now, arguing that information about the “FTC’s investigative techniques” is “privileged as attorney work product and deliberative process.” Dkt. 56 at 4 (“This information, however, is privileged as attorney work product and deliberative process, and numerous courts have denied similar requests from civil defendants seeking to unveil federal law enforcement agencies’ investigative techniques, theories, and impressions under the guise of deposition queries into ‘facts.’”) The Court did not agree with the FTC that this argument prevented further questioning on Topic 3. In fact, after setting forth the FTC’s work product objections (Dkt. 81, p. 7:20-26) and the relevant law regarding the same (Dkt. 81, p. 8:2-13), the Court ruled that DIRECTV is entitled to testimony regarding, “which ads were allegedly deceptive, how they were deceptive, whether the FTC has any factual support for its contention that consumers have been deceived, its investigation of alleged consumer complaints,” “the factual information gathered by the FTC,” and “the fact gathering process utilized by the FTC.” Dkt. 81, p. 8:14-22. In support of this ruling, the Court cited Ressler v. United States, 2012 WL 3231002, at 3 (D. Colo. Aug. 6, 2012), for the proposition that a federal agency’s “fact gathering” activities are the proper subject of a 30(b)(6) deposition. Dkt. 81, p. 8:11-13.5 Your Honor’s ruling clearly rejects the FTC’s argument—made then and now—that a deposition cannot go forward based on the argument that all information about the FTC’s investigation is protected from discovery. 5 The Ressler court gave examples of areas of inquiry that did not touch on the deliberative process privilege—all of which would be relevant here—“whether there has been any fact gathering; who did it; when it was done; where it is reported, if at all; how it was conducted; what inquiry was made and of whom; why the inquiry has taken so long; and the like.” 2012 WL 3231002, at 3. The FTC nevertheless has objected to questions on these subjects, and others, in this case. 4 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 6 of 94 The FTC nevertheless twists the Court’s words, arguing that what the Court really meant was that: DIRECTV is entitled to testimony on all these subjects, except as to testimony that is properly deemed privileged, and testimony regarding all these subjects is deemed privileged. The Court did not make such a convoluted ruling. Second, the FTC contends that DIRECTV is not entitled to a deposition now and must wait until expert discovery to get information regarding whether the FTC has factual support for its claims. Again, the FTC ignores that it already made this argument. Dkt. 56 at 5 (“Should the FTC decide to rely on any expert analysis of consumer perception or consumer complaints, DIRECTV will have ample and fair opportunity to examine that evidence at the appropriate time—during the expert discovery period ordered by the Court.”). The Court heard this argument but did not rule that DIRECTV had to wait until expert discovery in order to take a renewed deposition on Topic 3. The FTC is correct that DIRECTV will have to take the deposition of any experts who submit reports on behalf of the FTC, including any experts who present testimony regarding DIRECTV’s advertising. However, DIRECTV’s right to depose the FTC’s hired experts later does not mean that it cannot depose a FTC 30(b)(6) witness now regarding the FTC’s investigation or lack thereof. Again, the Court did not accept the FTC’s argument that any deposition must be delayed and did not include any limitation on DIRECTV’s ability to take a deposition on Topic 3 now. Finally, the FTC’s contention that DIRECTV has somehow taken a contrary position is incorrect. DIRECTV has consistently contended that the facts regarding the FTC’s investigation are subject to discovery now, including whether or not any consumer surveys exist. The FTC nevertheless has refused to even say whether it has any surveys or factual support for its contentions. DIRECTV has not taken such a position. For example, DIRECTV allowed Karen Leever to testify as to the existence and timing of, and her involvement with, litigation related consumer testing on website disclosures. In sum, the FTC’s motion should be denied. The FTC should be required to comply with this Court’s December 3, 2015 order and provide an oral6 deposition on Topic 3. ** 6 The FTC ends its section by asking that, if the Court re-orders the deposition to go forward, it should allow a deposition by written questions. The FTC did not make this request the last time the Court heard this issue. The reason it does so now is transparent: Ms. Selis responded to her deposition by written questions by asserting objection after objection and refusing to provide any substantive answers; the FTC apparently sees a deposition by written questions as a way to lose this motion but still manage to avoid providing any information to DIRECTV. If the Court finds it helpful, DIRECTV can provide the transcript of Ms. Selis’s deposition. That transcript consists almost entirely of objections and, on its face, shows Ms. Selis’s tactics to be improper. Those tactics will be the subject of a forthcoming letter brief (the meet and confer on that issue has already been completed and the parties have agreed a letter brief is necessary). 5 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 7 of 94 EXHIBIT A Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 8 of 94 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 9 of 94 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 10 of 94 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 11 of 94 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 12 of 94 EXHIBIT B Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 13 of 94 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, ) Plaintiff, ) vs. ) No. 3:15-cv-01129 DIRECTV, a corporation, ) HSG and ) DIRECTV, LLC, a limited ) liability company, ) Defendants. ) ____________________________) VIDEOTAPED DEPOSITION OF FEDERAL TRADE COMMISSION'S 30(b)(6) CORPORATE REPRESENTATIVE - KERRY O'BRIEN San Francisco, California Friday, August 28, 2015 Volume I REPORTED BY: REBECCA L. ROMANO, RPR, CSR No. 12546 JOB NO. 2128502 PAGES 1-194 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions 866 299-5127 Page 1 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 14 of 94 1 UNITED STATES DISTRICT COURT 2 NORTHERN DISTRICT OF CALIFORNIA 3 SAN FRANCISCO DIVISION 4 5 FEDERAL TRADE COMMISSION, ) 6 Plaintiff, ) 7 vs. ) No. 3:15-cv-01129 8 DIRECTV, a corporation, ) HSG 9 and ) 10 DIRECTV, LLC, a limited ) 11 liability company, ) 12 Defendants. ) 13 ____________________________) 14 15 16 17 VIDEOTAPED DEPOSITION OF KERRY O'BRIEN, taken 18 on behalf of the Defendants at 901 Market Street, 19 Suite 570, San Francisco, California, commencing at 20 9:15 a.m., Friday, August 28, 2015, before 21 Rebecca L. Romano, Certified Shorthand Reporter 22 No. 12546 23 24 25 Page 2 1 APPEARANCES OF COUNSEL 2 3 For the Plaintiff: 4 U.S. FEDERAL TRADE COMMISSION 5 WESTERN REGION - SAN FRANCISCO 6 BY: ERIC D. EDMONDSON 7 Attorney at Law 8 901 Market Street 9 Suite 570 10 San Francisco, California 94103 11 (415) 848-5175 12 [email protected] 13 and 14 BY: JACOB A. SNOW 15 Attorney at Law 16 901 Market Street 17 Suite 570 18 San Francisco, California 94103 19 (415) 848-5175 20 [email protected] 21 22 23 24 25 Page 3 1 APPEARANCES OF COUNSEL (CONTINUED) 2 3 For the Defendants: 4 SIDLEY AUSTIN LLP 5 BY: CHAD S. HUMMEL 6 Attorney at Law 7 1999 Avenue of the Stars 8 Los Angeles, California 90067 9 (310) 595-9505 10 [email protected] 11 and 12 BY: RYAN M. SANDROCK 13 Attorney at Law 14 555 California Street 15 San Francisco, California 94104 16 (415) 772-1219 17 [email protected] 18 19 20 21 22 23 24 25 Page 4 1 INDEX 2 3 DEPONENT EXAMINATION 4 KERRY O'BRIEN PAGE 5 VOLUME I 6 BY MR. HUMMEL 9 7 8 9 10 EXHIBITS 11 NUMBER DESCRIPTION PAGE 12 13 Exhibit 1 Notice of Deposition of 14 Plaintiff Federal Trade 15 Commission, 4 Pages; 10 16 17 Exhibit 2 Complaint for Permanent 24 18 Injunctive and Other 19 Equitable Relief, 38 Pages; 20 21 Exhibit 3 DIRECTV Website Screenshots, 69 22 123 Pages; 23 24 Exhibit 4 Plaintiff's Initial 91 25 Disclosures, 6 Pages; Page 5 2 (Pages 2 - 5) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 15 of 94 1 EXHIBITS (CONTINUED) 2 NUMBER DESCRIPTION PAGE 3 4 Exhibit 5 Color Photocopy of 156 5 Act Now Printouts, 6 2 Pages; 7 8 Exhibit 6 DIRECTV Important 158 9 Contract Terms, 3 Pages. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 6 1 San Francisco, California, Friday, August 28, 2015 09:11:58 2 9:15 a.m. 3 ---o0o--- 4 5 (Exhibit 1 was marked for identification 09:11:58 6 by the court reporter and is attached hereto.) 7 8 THE VIDEOGRAPHER: Good morning. We are 9 on the record at 9:15 a.m. on August 28th, 2015. 10 This is the video-recorded deposition of 09:17:59 11 Kerry O'Brien. My name is Cassia Leet, here with 12 our court reporter Rebecca Romano. We are here 13 from Veritext Legal Solutions at the request of 14 counsel for defendant. 15 This deposition is being held at 09:18:15 16 901 Market Street, Suite 570, San Francisco, 17 California 94103. The caption of this case is 18 Federal Trade Commission versus DIRECTV, et al., in 19 the United States District Court, Northern District 20 of California, San Francisco Division. Case 09:18:34 21 No. 3:15-cv-01129HSG. 22 Please note that the audio and video 23 recording will take place unless all parties agree 24 to go off the record. Microphones are sensitive 25 and may pick up whispers and private conversations. 09:18:51 Page 7 1 I am not related to any party in this 09:18:56 2 action nor am I financially interested in the 3 outcome in any way. If there are any objections to 4 the proceeding, please state them at the time of 5 your appearance, beginning with the noticing 09:19:07 6 attorney. If you could just introduce yourselves. 7 MR. HUMMEL: I'm Chad Hummel. I 8 represent DIRECTV. 9 MR. SANDROCK: Ryan Sandrock on behalf of 10 DIRECTV. 09:19:18 11 MR. EDMONDSON: Eric Edmondson on behalf 12 of the Federal Trade Commission. 13 MR. SNOW: Jake Snow on behalf of the 14 Federal Trade Commission. 15 THE VIDEOGRAPHER: Thank you. The 09:19:25 16 witness will be sworn in and counsel may begin the 17 examination. 18 THE REPORTER: If you could raise your 19 right hand for me, please. 20 THE DEPONENT: (Complies.) 09:19:39 21 THE REPORTER: You do solemnly state, 22 under penalty of perjury, that the testimony you 23 are about to give in this deposition, shall be the 24 truth, the whole truth and nothing but the truth. 25 THE DEPONENT: I do. 09:19:39 Page 8 1 KERRY O'BRIEN, 09:19:39 2 having been administered an oath, was examined and 3 testified as follows: 4 EXAMINATION 5 BY MR. HUMMEL: 09:19:39 6 Q. Good morning. 7 A. Good morning. 8 Q. Please state your full name for the 9 record. 10 A. Kerry O'Brien. 09:19:45 11 Q. Ms. O'Brien, what is your business 12 address? 13 A. 901 Market Street, Suite 570, in 14 San Francisco, California. 15 Q. How are you presently employed? 09:19:56 16 A. I'm employed as the assistant regional 17 director here in the Federal Trade Commission's 18 western region, San Francisco. 19 Q. Generally, what are your duties and 20 responsibilities in that role? 09:20:11 21 A. Well, generally, I'm primarily 22 responsible for assisting Tom Dahdouh, who's the 23 regional director, in the general running and 24 managing of the office. 25 Q. Are you an attorney? 09:20:23 Page 9 3 (Pages 6 - 9) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 16 of 94 1 A. I am. 09:20:24 2 Q. Where are you licensed? 3 A. In California. 4 Q. Any other jurisdictions? 5 A. No. 09:20:36 6 Q. Have you ever been a deponent before? 7 A. I have. 8 Q. In your individual capacity or as a 9 representative of any entity or both? 10 A. Well, I was a fact witness in a case 09:20:51 11 involving the Federal Trade Commission. So I 12 wasn't a 30(b)(6) witness. 13 Q. And you just used the phrase 30(b)(6) 14 witness. 15 You understand that as a 30(b)(6) 09:21:01 16 designee, you're testifying on behalf of the 17 Federal Trade Commission. And so long as questions 18 are within the scope of a notice, which I've marked 19 as Exhibit 1 and which is in front of you, your 20 answer will be binding on the agency. 09:21:13 21 Do you understand that? 22 A. I do. 23 Q. Okay. Any other instances of your being 24 a deponent, other than the time you were a fact 25 witness in a matter involving the FTC? 09:21:23 Page 10 1 A. No. 09:21:25 2 Q. Have you ever been a 30(b)(6) designee 3 before? 4 A. No. 5 Q. Have you ever conducted a Rule 30(b)(6) 09:21:31 6 deposition? 7 A. I think I have. 8 Q. You're generally familiar with the rules 9 regarding depositions? 10 A. Yes. 09:21:44 11 Q. You understand, for example, that the 12 court reporter, seated to my left, administered an 13 oath at the start of this deposition which carries 14 with it the same force and effect as if you were 15 testifying in a court of law? 09:21:50 16 A. I do. 17 Q. If I ask a question today that, for 18 whatever reason, you don't understand -- and I 19 promise you I will ask some inartful questions 20 today -- please ask me to clarify or indicate on 09:22:02 21 the record that you don't understand the question. 22 I'll try to clarify it. 23 If you don't ask me that and you do go 24 ahead and answer the question, I will assume, trier 25 of fact will assume, that -- at least we'll urge 09:22:12 Page 11 1 that the trier fact assumes -- that you understood 09:22:15 2 the question and answered it to the best of your 3 ability. 4 A. I understand. 5 Q. Any reason you can't give your best 09:22:21 6 testimony here today? 7 A. No. 8 Q. The topics on which you've been 9 designated are listed in the notice of deposition, 10 which I've marked as Exhibit 1. It's dated 09:22:32 11 June 22. 12 And as I understand it, today you're 13 being designated to testify on topics 3, 4, and 5; 14 is that correct? 15 A. That's correct. 09:22:43 16 Q. And topic 3 -- I hope I'm reading this 17 correctly from my notes -- is the results of any 18 and all research, surveys or tests conducted by the 19 FTC concerning DIRECTV's advertising that the FTC 20 contends has been or is deceptive. 09:22:59 21 And you are, you believe, the 22 person most qualified at the Federal -- 23 Federal Trade Commission to testify on that topic? 24 A. If I was designated to -- to -- to talk 25 about that topic, yes. 09:23:08 Page 12 1 Q. And do you believe that you're the person 09:23:09 2 most qualified at the Federal Trade Commission to 3 testify as to that topic? 4 MR. EDMONDSON: Asked -- objection. 5 Asked and answered. 09:23:18 6 THE DEPONENT: I'm not sure what you mean 7 by "qualified." 8 Q. (By Mr. Hummel) So there's some case law 9 in the Ninth Circuit that suggests that the duty of 10 the entity that's noticed for a deposition is to 09:23:24 11 designate the person most qualified. 12 And if you believe you're not the person 13 most qualified, there's a whole line of questions 14 I'm going to ask about what you did to prepare 15 yourself to testify on that topic. 09:23:35 16 So do you believe that you're the most -- 17 most qualified person in the agency to testify on 18 topic 3? 19 A. I prepared to -- I -- I -- I -- I -- I 20 took steps to -- to prepare myself to be able to 09:23:47 21 talk about that topic. 22 Q. Okay. But there may be other people 23 within the agency who are more qualified to testify 24 about research, surveys or tests conducted by the 25 FTC concerning the advertising of DIRECTV that's at 09:24:00 Page 13 4 (Pages 10 - 13) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 17 of 94 1 issue in this case? 09:24:03 2 A. That's correct. 3 Q. Okay. And I take it, in the context of 4 your preparing to testify on that topic, you 5 discussed that topic with those people, correct? 09:24:11 6 A. That is correct. 7 Q. Okay. Who were those individuals on 8 topic 3? 9 A. It would be the litigation team that was 10 involved -- and the investigative team that was 09:24:21 11 involved in investigating DIRECTV. They'd be the 12 people, the most -- have the personal knowledge, if 13 there are any research or surveys or tests con- -- 14 that were conducted. 15 Q. Okay. Who specifically, other than the 09:24:34 16 members of the litigation team, did you discuss 17 this issue with? 18 MR. EDMONDSON: Objection. Calls for 19 work product privileged information. To the extent 20 that this question calls for work product 09:24:51 21 privileged information, instruct the witness not to 22 reveal the identity of any confidential 23 consultants, if -- if any exist. 24 Q. (By Mr. Hummel) Can you answer the 25 question? 09:25:04 Page 14 1 A. No, not -- I -- I don't think I can 09:25:04 2 answer it without divulging attorney work product. 3 Q. In your capacity as a lawyer -- do you 4 work as a lawyer for the FTC? 5 A. Yes, I do. 09:25:15 6 Q. Are you testifying today as a lawyer or 7 are you testifying today as a designee of the FTC? 8 A. Testifying today as a designee of the 9 FTC. 10 Q. Okay. And as the designee of the FTC on 09:25:25 11 these topics, did you -- I take it you were not 12 acting as a lawyer when you were having discussions 13 about research, surveys or tests conducted by the 14 FTC concerning DIRECTV's advertising which the FTC 15 contends has been deceptive. 09:25:41 16 Those conversations, I take it, were not 17 in your capacity as a lawyer but, rather, in your 18 capacity as a potential designee witness for the 19 FTC on that topic, correct? 20 A. That's correct. 09:25:51 21 Q. All right. So with whom did you have 22 discussions, other than members of the trial 23 team -- and I'll ask you to identify the members of 24 the trial team -- in readying yourself to prepare 25 for this deposition? 09:26:02 Page 15 1 A. I don't -- 09:26:06 2 MR. EDMONDSON: I'll -- 3 THE DEPONENT: I don't feel comfortable 4 answering that question. 5 MR. EDMONDSON: I'll -- I'm going to 09:26:09 6 object to the question as calling for work product 7 privileged information. 8 MR. HUMMEL: And you're instructing her 9 not to answer on that basis? 10 MR. EDMONDSON: Instructing her not to -- 09:26:17 11 not to reveal -- if -- not to reveal any privileged 12 information in her answer, to the extent that any 13 exists. 14 MR. HUMMEL: I need to know the basis of 15 the privilege and the assertion. 09:26:28 16 Q. (By Mr. Hummel) So for ex- -- you're 17 getting ready to testify as a designee witness on 18 this topic. You readying yourself to testify. 19 And you talked to people to ascertain 20 facts, correct? 09:26:38 21 A. That's correct. 22 Q. All right. And you're refusing to 23 identify today on the grounds of some privilege, 24 which I'm going to ask about, who those individuals 25 were. And I -- I understand that you're going to 09:26:46 Page 16 1 get ready for your deposition by talking to members 09:26:49 2 of the trial team. That I get. And I'm not going 3 to ask about your conversations with Mr. Edmondson 4 or Mr. Snow or any of the other litigator -- 5 litigation members of the team, in the context of 09:26:57 6 your preparing for the deposition. 7 However, I am entitled, I believe, to 8 know the identify of the people who provided you 9 with facts, and that's what I'm asking you. 10 And if you're going to instruct, then I 09:27:11 11 need to know the basis. 12 MR. EDMONDSON: I'm going to instruct the 13 witness not to reveal any information, if any 14 exists, that is confidential expert-related 15 attorney work product, and that would be 09:27:30 16 information protected from disclosure under 17 Federal Rule of Civil Procedure 26(b)(4). 18 Q. (By Mr. Hummel) Are the only people who 19 you talked to in preparing yourself for this 20 deposition, other than members of the litigation or 09:27:45 21 trial team, consultants retained by the FTC or 22 working for the FTC who performed work that would 23 fall within the subject of topic 3? 24 A. Could you repeat the question. 25 MR. HUMMEL: Could I ask the court 09:28:06 Page 17 5 (Pages 14 - 17) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 18 of 94 1 reporter, please, to read it back. 09:28:06 2 (Record read as follows: 3 "QUESTION: Are the only people who 4 you talked to in preparing yourself 5 for this deposition, other than 09:28:30 6 members of the litigation or trial 7 team, consultants retained by the FTC 8 or working for the FTC who performed 9 work that would fall within the 10 subject of topic 3?") 09:28:30 11 THE DEPONENT: The only people that I 12 spoke to preparing for today's deposition are 13 employees of the FTC. 14 Q. (By Mr. Hummel) Okay. I understand 15 that. 09:28:37 16 Are -- and are those individuals -- did 17 you speak with individuals other than members of 18 the trial team? 19 A. In preparing for today's deposition? 20 Q. Yes. 09:28:49 21 A. No. 22 Q. Okay. So in preparing for the deposition 23 and readying yourself to testify on topic 3, the 24 only people you talked to are members of the trial 25 team, correct? 09:28:58 Page 18 1 A. Yes. 09:28:59 2 Q. Okay. And to be clear, does the trial 3 team include members of the regional staff located 4 in Los Angeles? 5 A. Yes. 09:29:11 6 Q. Okay. And who are the lawyers that you 7 would consider members of the trial team who are on 8 the regional staff in Los Angeles? 9 A. Stacy Procter. 10 Q. Uh-huh. 09:29:21 11 A. Ray McKown. 12 Am I missing anyone? 13 Q. And in the San Francisco office, the 14 members of the trial team are Eric Edmondson, 15 Jake Snow, Erika Wodinsky. 09:29:40 16 Anybody else? 17 A. Boris Yankilovich. 18 Q. Anybody else? 19 A. I don't think so. 20 Q. All right. So am I correct that your 09:29:58 21 conversations with lawyers employed by the FTC, in 22 preparation for your testimony here today on 23 topic 3, were limited to those individuals? 24 A. Yes. 25 Q. Okay. So you spoke with no consultants 09:30:18 Page 19 1 who had performed, or not performed, or been 09:30:22 2 retained as consultants to perform any research, 3 surveys or tests on DIRECTV ads; is that correct? 4 A. That's correct. 5 Q. Okay. And in preparation for your 09:30:33 6 deposition here today on topic 3, did you review 7 any documents? 8 A. I reviewed -- well, I can tell you 9 generally what I reviewed in order to prepare for 10 today's deposition. 09:30:46 11 Q. Please do. 12 A. I reviewed the -- obviously, the 30(b)(6) 13 notice that was sent, which is Exhibit 1. I 14 reviewed the Commission's complaint and the 15 attached ads, as well as more than 100 DIRECTV ads 09:30:59 16 that we have. 17 I reviewed the initial disclosures the 18 FTC sent. I also reviewed some correspondence 19 between Ray McKown and Craig Freedman. 20 I think that's all. If I remember 09:31:27 21 something else, I'll let you know. 22 Q. Okay. Is it correct, then, that in 23 preparation for your testimony here today, as a 24 designee witness of the FTC on topic 3, you 25 reviewed no research relating to DIRECTV ads? 09:31:36 Page 20 1 A. I don't feel comfortable -- well, I 09:31:44 2 should say the other thing I -- I reviewed was the 3 complaint recommendation the Commission sent -- 4 that the -- this office sent to the Commission. 5 Q. Is that in the form of a memorandum? 09:31:57 6 A. It's a memorandum as well as proposed 7 pleadings. 8 Q. Any other attachments? 9 A. I -- I think that's all I really can tell 10 you. 09:32:17 11 Q. Why? 12 MR. EDMONDSON: I'm going -- I'm going 13 to -- I'm going to object to the question to the 14 extent that it calls for information that's 15 protected by the attorney-client privilege or as 09:32:24 16 attorney work product and/or deliberative process 17 privileged information. 18 MR. HUMMEL: I'm not asking for the 19 content of any of the memorandum, nor am I asking 20 for the content of any attachments. I'm just 09:32:37 21 asking for the fact of attachments, which I need to 22 know the existence of or not in order -- so that we 23 can frame the issue of whether we're going to 24 litigate for the production of them. 25 So I don't want to litigate in a vacuum. 09:32:48 Page 21 6 (Pages 18 - 21) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 19 of 94 1 I don't want to waste anybody's time; everybody has 09:32:50 2 enough to do. So if there were attachments, other 3 than -- to this recommendation, other than proposed 4 pleadings, I'm entitled to know the existence of 5 those facts. 09:33:00 6 MR. EDMONDSON: I'm going to object to 7 the question to the extent that it may call for 8 information that's protected -- rephrase the 9 objection. 10 The -- the -- the objection is to 09:33:12 11 information that is expert-related work product 12 protected by Federal Rule of Civil Procedure 13 26(b)(4). 14 Q. (By Mr. Hummel) Did you review 15 expert-related work product in connection with your 09:33:30 16 preparation for testimony on topic 3? 17 MR. EDMONDSON: Same objection. 18 Q. (By Mr. Hummel) I don't think I got an 19 answer to my first question. 20 Other than the documents that you listed, 09:33:45 21 did you review -- and it calls for a yes or no -- 22 any results of research performed by or for the FTC 23 on DIRECTV's ads? 24 MR. EDMONDSON: Objection. Calls for 25 expert-related work product. I mean, the -- the 09:34:00 Page 22 1 mere existence of expert of -- of -- of research or 09:34:03 2 studies done at the direction of counsel is 3 protected by Federal Rule of Civil Procedure 4 26(b)(4). 5 MR. HUMMEL: And you're instructing her 09:34:21 6 not to answer? 7 MR. EDMONDSON: I am. 8 Q. (By Mr. Hummel) Same question with 9 respect to any surveys or consumer surveys, did you 10 review any such surveys in connection with your 09:34:28 11 preparation for topic 3? 12 MR. EDMONDSON: Same objection. I'm 13 instructing the witness not to answer. 14 Q. (By Mr. Hummel) Do any such surveys 15 exist? 09:34:34 16 MR. EDMONDSON: Same objection. 17 Instructing the witness not to answer. 18 Q. (By Mr. Hummel) Same question with 19 respect to tests on -- on topic 3. 20 Do any such tests on DIRECTV's 09:34:43 21 advertising exist? 22 MR. EDMONDSON: Same objection. And I'm 23 instructing the witness not to answer. 24 Q. (By Mr. Hummel) Did you review any such 25 tests in connection with your preparation for your 09:34:50 Page 23 1 testimony on topic 3? 09:34:53 2 MR. EDMONDSON: Same objection. And I'm 3 instructing the witness not to answer. 4 Q. (By Mr. Hummel) What factual basis did 5 the FTC have when it filed its lawsuit contending 09:35:00 6 that F -- that DIRECTV's advertising has been 7 deceptive? 8 A. The factual basis is laid out in the 9 complaint. 10 MR. HUMMEL: Good. Let's mark it. 09:35:13 11 (Exhibit 2 was marked for identification 12 by the court reporter and is attached hereto.) 13 Q. (By Mr. Hummel) Exhibit 2 is a true and 14 correct copy of the complaint, even down to my 15 giving you another copy of the television ad that 09:35:36 16 was attached to the complaint by reference, so 17 you'll get yet another disc of -- 18 A. Okay. 19 Q. -- of a guy shaving his eyebrows. 20 A. Uh-huh. 09:35:48 21 Q. I take it you've reviewed the TV ad? 22 A. Uh-huh. 23 Q. "Yes"? You have to answer audibly yes or 24 no. 25 A. Yes. 09:35:52 Page 24 1 Q. Okay. Okay. And is it correct that the 09:35:53 2 sole factual basis for filing the complaint is 3 contained within the complaint? 4 A. Well, the -- the complaint lays out the 5 factual basis for the complaint. I wouldn't 09:36:05 6 necessarily say it's the sole basis. 7 Q. Okay. What are the other factual bases 8 not set forth in the complaint for filing the 9 complaint? 10 MR. EDMONDSON: I'm going to object to 09:36:19 11 that question to the extent that it calls for 12 the -- the thoughts were mental impressions of 13 Commission attorneys. The -- the basis for the 14 objection would be attorney-client and attorney 15 work product. 09:36:33 16 Q. (By Mr. Hummel) I'm asking for the 17 factual basis not the legal conclusions. I'm not 18 asking for attorney opinion regarding whether an ad 19 was deceptive or not. 20 I'm not asking for attorney opinion about 09:36:43 21 whether a particular print advertisement contains 22 adequate disclosures or not. But I am asking for 23 what facts the FTC had separate and apart from the 24 statements made in the complaint that supported the 25 filing of the complaint. 09:37:05 Page 25 7 (Pages 22 - 25) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 20 of 94 1 MR. EDMONDSON: I'm going to object to 09:37:06 2 that question. It calls for attorney-client 3 privileged information and attorney work product. 4 MR. HUMMEL: And you're instructing not 5 to answer? 09:37:19 6 MR. EDMONDSON: I am. 7 MR. HUMMEL: Okay. On that basis? 8 MR. EDMONDSON: Uh-huh. 9 Q. (By Mr. Hummel) In the context of your 10 preparing for your deposition on topic 3, did you 09:37:30 11 talk to Nicole Davis? 12 A. I don't -- 13 MR. EDMONDSON: I'm going to -- could we 14 go off the record for a moment? 15 MR. HUMMEL: Not during a pending 09:37:51 16 question, I'd prefer not to. But certainly right 17 after I get the answer. 18 Q. (By Mr. Hummel) The question is, in 19 preparing for topic 3, did you talk to 20 Nicole Davis, yes or no? 09:37:57 21 A. No. 22 Q. Okay. What about David Gonzalez? 23 And I'm sorry, those are the two people 24 that I wanted to ask about. 25 A. No. 09:38:03 Page 26 1 MR. HUMMEL: Okay. You want to still 09:38:05 2 take a break? 3 MR. EDMONDSON: Let's take a break. 4 MR. HUMMEL: Okay. Off the record. 5 THE VIDEOGRAPHER: Going off the record. 09:38:09 6 The time is 9:38 a.m. 7 (Recess taken.) 8 THE VIDEOGRAPHER: Back on the record. 9 The time is 9:42. 10 Please continue. 09:42:07 11 Q. (By Mr. Hummel) Ms. O'Brien, before the 12 break, I asked you about Nicole Davis and 13 David Gonzalez. 14 You testified that you had reviewed the 15 FTC's initial disclosures in preparation for your 09:42:18 16 deposition here today? 17 A. That's correct. 18 Q. And the FTC, in its initial disclosures, 19 named Nicole Davis, FTC litigation technology and 20 analysis, and David Gonzalez as employees of the 09:42:28 21 FTC who are likely to have discoverable information 22 that the FTC may use to support its claims. 23 Do you recall that? 24 A. Yes. 25 Q. All right. And you testified that in 09:42:43 Page 27 1 preparation for your deposition here today, you did 09:42:45 2 not discuss with Nicole Davis or David Gonzalez any 3 of the topics listed in the 30(b)(6) notice; is 4 that correct? 5 A. That's correct. 09:42:55 6 Q. Was there a reason for that? 7 A. I didn't think they'd have any 8 information that was relevant to those three 9 topics. 10 Q. Okay. Do you know what information they 09:42:59 11 have that maybe -- that the FTC may use to support 12 its claims? 13 A. Well, so since I feel it's -- I -- I can 14 answer to what I -- what I -- what I personally 15 know. I think it's -- given it's sort of beyond 09:43:15 16 the scope of what I thought was in the -- the 17 notice, so I can give you some idea. 18 For example, I know that they -- 19 you know, downloaded Websites, for example, 20 you know, captured that evidence for us. 09:43:32 21 Q. When you say "Websites," you mean? 22 A. DIRECTV's Websites. 23 Q. DIRECTV Web flow? 24 A. Right. 25 Q. Did they do it for competitors, do you 09:43:42 Page 28 1 know, of DIRECTV? 09:43:42 2 MR. EDMONDSON: Objection. Calls for 3 attorney-client privileged information. Attorney 4 work product. 5 Q. (By Mr. Hummel) Okay. So one of the 09:43:48 6 issues, as you know -- 7 MR. EDMONDSON: And it's beyond the 8 scope. 9 MR. HUMMEL: That's fine. 10 Q. (By Mr. Hummel) You're familiar with the 09:43:52 11 deception policy statement by the FTC? 12 A. Yes. 13 Q. And you're familiar, too, are you not, 14 with the dot com compliance guidelines? 15 A. I am. 09:43:59 16 Q. And one of the questions I would have -- 17 and I'll ask it later -- is, in ascertaining the 18 adequacy of disclosures, you're aware that the FTC 19 considers whether enhanced disclosures might have 20 an adverse impact on competition or an adverse 09:44:15 21 effect on a target of an FTC investigation in the 22 context of the competitive landscape? 23 So the question I have is, in the course 24 of your work in preparing for topic 3, did you look 25 at any testing, research or surveys, or discuss 09:44:31 Page 29 8 (Pages 26 - 29) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 21 of 94 1 with Ms. Davis or Mr. Gonzalez, whether they did 09:44:35 2 any work in that regard; that is, assessing the 3 competitive landscape? 4 MR. EDMONDSON: Objection. Compound and 5 is beyond the scope of the -- the notice. 09:44:46 6 Q. (By Mr. Hummel) You can answer. 7 A. I -- it was such a long question. I'm 8 sorry. You'll have to -- you'll have to repeat it 9 for me. 10 Q. (By Mr. Hummel) I'll just ask you this, 09:44:59 11 did you discuss issues relating to competitive ads, 12 or work that Ms. Davis or Mr. Gonzalez had done on 13 competitive ads, for the reasons I previously 14 listed, in connection with your preparation to 15 testify on topic 3? 09:45:13 16 MR. EDMONDSON: Objection. Beyond the 17 scope. 18 THE DEPONENT: As I said, I didn't speak 19 to either one of them in preparation for today's 20 deposition. 09:45:19 21 Q. (By Mr. Hummel) Okay. Do you know 22 whether they did any work in connection with the 23 competitive landscape, on behalf of the FTC, prior 24 to the time that the complaint was filed? 25 MR. EDMONDSON: Objection. Beyond the 09:45:28 Page 30 1 MR. HUMMEL: I understand that, and I 09:46:29 2 don't want to get into a colloquy. I'm asking 3 about the existence of surveys, and I'm entitled to 4 know whether such surveys exist or not. 5 MR. EDMONDSON: I'm going to object. It 09:46:40 6 calls for privileged information. Instructing the 7 witness not to answer. 8 Q. (By Mr. Hummel) Is it true that the FTC 9 had done no testing whatsoever on DIRECTV's ads, 10 print, TV, Website, Web banner ads, space 09:46:52 11 contra- -- constrained ads, to ascertain whether 12 consumers were, in fact, deceived by the ads, 13 according to the FTC's own standards, prior to the 14 time that the complaint was filed? 15 MR. EDMONDSON: Objection. Compound. 09:47:09 16 Calls for privileged information. 17 I'm instructing the witness not to 18 answer. 19 Q. (By Mr. Hummel) Is it true that the FTC 20 had done no research with consumers to ascertain 09:47:17 21 whether or not DIRECTV's advertising was deceptive, 22 prior to the time that the complaint was filed? 23 MR. EDMONDSON: Objection. Calls for 24 privileged information, work product -- both 25 attorney work product and attorney-client. 09:47:30 Page 32 1 scope 09:45:29 2 THE DEPONENT: I -- I don't know the 3 answer to that question 4 Q (By Mr Hummel) Okay Is it true that 5 the FTC performed no consumer surveys on DIRECTV's 09:45:37 6 ads to ascertain whether or not they were 7 deceptive, prior to the time that the complaint was 8 filed? 9 MR EDMONDSON: Objection Privileged 10 Calls for -- delivery -- I'm sorry 09:45:51 11 Calls for -- for attorney work product 12 information protected by FRCP 26(b)(4) 13 MR HUMMEL: And I assume that -- 14 MR EDMONDSON: I'm -- I'm instructing 15 her not to answer to the extent that -- that any 09:46:04 16 such privileged information exists 17 MR HUMMEL: And I'm assuming, 18 Mr Edmondson, that if such surveys do exist, 19 you'll log them 20 MR EDMONDSON: We can discuss that 09:46:18 21 off -- off the record, but we -- we are complying 22 with the federal rules 23 MR HUMMEL: That's a different -- 24 MR EDMONDSON: And we will be producing 25 our expert report at the appropriate time 09:46:25 Page 31 1 And I'm instructing the witness not to 09:47:32 2 answer. 3 Q. (By Mr. Hummel) So I've marked the 4 complaint as Exhibit 2. I would ask you to look, 5 please, at page 4. 09:47:53 6 Page 4, paragraph 16, starts to describe 7 what the FTC calls in this complaint defendant's 8 deceptive advertising campaigns. 9 Do you see that? 10 A. Yes. 09:48:10 11 Q. All right. And paragraph 16 identifies 12 three types of ads which are attached to the 13 complaint. 14 Exhibit 1 is an October 2014 print 15 advertisement disseminated by DIRECTV, correct? 09:48:27 16 It has Claire Danes on the cover. 17 A. That's correct. 18 Q. All right. And I take it in preparation 19 for your deposition here today, you looked at 20 Exhibit 1? 09:48:39 21 A. I did. 22 Q. Okay. Are you aware of whether or not, 23 prior to the time this complaint was filed, the FTC 24 performed any research, consumer surveys or tests 25 on Exhibit 1? 09:48:50 Page 33 9 (Pages 30 - 33) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 22 of 94 1 MR. EDMONDSON: Objection. Instructing 09:48:51 2 the witness not to answer because the question 3 calls for attorney work product and attorney-client 4 information. 5 Q. (By Mr. Hummel) Okay. One of the things 09:48:59 6 that the complaint alleges, if you look at 7 paragraph 16A -- can you read 16A into the record? 8 And, again, I'm going to reference your 9 comment that the facts supporting the complaint are 10 listed in the complaint. So I just want to ask you 09:49:11 11 something about 16A, just by way of example. 12 A. 16A says, "All New! Limited Time 13 Offer!...Now only $19.99/mo." 14 Q. With an asterisk? 15 A. With asterisk. 09:49:27 16 Q. Okay. Now, that "All New! Limited Time 17 Offer!...," that's what I'm going to ask you about 18 is the ellipses. 19 You understand an ellipses is a dot, dot, 20 dot, correct? 09:49:33 21 A. That's true. 22 Q. All right. So now go to page 1 of the 23 ad. 24 Does the "All New! Limited Time Offer!" 25 apply to the free Genie HD DVR upgrade, or does it 09:49:47 Page 34 1 noticed topic. 09:51:27 2 But second, I object to the question to 3 the extent that it calls for the -- the defendant 4 to -- or the witness to -- to reveal any 5 attorney-client privileged or attorney work product 09:51:36 6 information. 7 Q. (By Mr. Hummel) Does any research, 8 consumer survey or test support the contention in 9 paragraph 16A, which by implication, links the "All 10 New! Limited Time Offer!" to the "Now only 09:51:48 11 $19.99/mo" price offer? 12 MR. EDMONDSON: I'm going to repeat that 13 objection. 14 MR. HUMMEL: And instruction? 15 MR. EDMONDSON: The instruction is not 09:52:01 16 to -- not to answer if the answer necessarily would 17 have you reveal any attorney work product or 18 attorney-client information, or any mental 19 impressions of any -- any members of the -- of 20 the -- the -- of the -- the trial team or 09:52:16 21 frankly -- I'll leave it at that. 22 Q. (By Mr. Hummel) Can you answer? 23 A. Sorry. I can't answer. 24 Q. All right. Prior to the time that the 25 FTC filed a complaint, are you aware of, as the 09:52:30 Page 36 1 apply to the monthly price? 09:49:52 2 THE DEPONENT: Could you read -- 3 MR. EDMONDSON: I'm going -- I'm going 4 to -- I'm going to object to this question as being 5 beyond the scope of any of the topics. The witness 09:50:17 6 may answer if -- if she can. 7 THE DEPONENT: Could you please repeat 8 the question. 9 (Record read as follows: 10 "QUESTION: Does the "All New! 09:50:31 11 Limited Time Offer!" apply to the 12 free Genie HD DVR upgrade, or does it 13 apply to the monthly price?") 14 THE DEPONENT: Well, I think, you know, 15 my own personal opinion about this ad or the -- 09:50:51 16 what you're asking is that I would say a 17 significant number of consumers would view that 18 offer as applying to the monthly price. 19 Q. (By Mr. Hummel) Does any research, 20 consumer survey or test support that personal 09:51:10 21 opinion? 22 MR. EDMONDSON: Objection. I'll -- I'll 23 say, first, that I think it's beyond the scope of 24 the -- the noticed topic because it's predicated on 25 the question that was beyond the scope of the 09:51:25 Page 35 1 designee of the FTC on this topic, any research, 09:52:35 2 consumer surveys or tests which demonstrate that 3 consumers perceived the "All New! Limited Time 4 Offer!" to apply to the now only 19.99 per month 5 price, or whether they perceived that it applied to 09:52:47 6 the free Genie HD DVR upgrade offer? 7 MR. EDMONDSON: Objection. Calls for 8 work product and attorney-client privileged 9 communications. 10 And I'm directing the witness not to 09:53:03 11 answer. 12 Q. (By Mr. Hummel) In preparation for your 13 deposition here today, did you interview any 14 consumers? 15 A. No. 09:53:14 16 Q. In preparation for your deposition here 17 today, did you discuss the case with anyone other 18 than FTC counsel? 19 A. No. 20 Q. In preparation for your deposition here 09:53:22 21 today, did you discuss any consumer complaints with 22 any consumers? 23 A. Could you repeat that, please. 24 Q. Could I have that one read back, please. 25 (Record read as follows: 09:53:36 Page 37 10 (Pages 34 - 37) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 23 of 94 1 "QUESTION: In preparation for your 09:53:36 2 deposition here today, did you 3 discuss any consumer complaints with 4 any consumers?") 5 THE DEPONENT: So you're asking if I 09:53:45 6 talked to consumers? 7 Q. (By Mr. Hummel) Yes. 8 A. No. 9 Q. Was any information relating to consumer 10 complaints -- yes or no -- relayed to you in 09:53:53 11 connection with preparation for your deposition 12 here today? 13 A. I talked generally with the trial team 14 about consumer complaints. 15 Q. Okay. Do you personally have any role in 09:54:08 16 this case, other than a designee witness? 17 A. No. 18 Q. Did you have any role personally in 19 preparing the complaint? 20 A. Prior to filing the complaint, I acted as 09:54:19 21 a supervisor of this matter, which was in this 22 office. 23 Q. And what does that mean, "acted as a 24 supervisor"? 25 A. Well, it's -- I was involved -- I had 09:54:29 Page 38 1 some involvement in -- in supervising the -- the 09:54:34 2 complaint recommendation that went up to the 3 Commission. I would have participated in team 4 meetings that we had about the investigation. 5 I communicated with the Bureau of 09:54:50 6 Consumer Protection about the matter, as well as 7 had communications with staff in the 8 Bureau of Economics. 9 I also was involved after DIRECTV had the 10 opportunity to meet with Jessica Rich, who was the 09:55:14 11 Bureau director, Bureau of Consumer Protection. 12 I was involved in the settlement talks 13 that took place after that, before the complaint 14 recommendation was forwarded up to the Commission. 15 I also -- DIRECTV met with the five 09:55:29 16 commissioners in advance of the complaint being 17 voted out, so I listened in on all those phone 18 calls. 19 I'm sure there's other things I did, but 20 that's kind of what I can remember. 09:55:45 21 Q. So you were at a supervisor level 22 extensively involved in the investigation, 23 supervision of the investigation, the discussions 24 with the Commission and discussions with staff 25 about the case. 09:55:56 Page 39 1 Fair? 09:55:57 2 MR. EDMONDSON: Objection. 3 Argumentative. 4 THE DEPONENT: I -- I think overall 5 that's true. I wasn't an active as a -- a staff 09:56:05 6 attorney investigating the case. 7 Q. (By Mr. Hummel) I understand. 8 A. I was more of a supervisory role. 9 Q. And in connection with that supervisory 10 role, did you ever become aware of any 09:56:15 11 FTC-sponsored research, consumer surveys or tests 12 that supported the allegations of deception that 13 are contained in the complaint? 14 MR. EDMONDSON: Objection. Beyond the 15 scope of the -- the topics and calls for attorney 09:56:28 16 work product and attorney-client privileged 17 information. 18 I'm instructing the witness not to 19 answer. 20 Q. (By Mr. Hummel) Okay. I'd like you to 09:57:10 21 focus, please, on paragraph 19 of the complaint. 22 Paragraph 19 reads, initially, "To the 23 extent that" the "Defendants' advertisements 24 described in Paragraph 16, above, contain any 25 qualifying disclosures concerning the offer of 09:57:32 Page 40 1 premium channels, any such disclosure are 09:57:36 2 inadequate in terms of their content, presentation, 3 proximity, prominence or placement such that 4 consumers are unlikely to see or understand such 5 disclosures." 09:57:50 6 Do you see that? 7 A. Yes. 8 Q. All right. There is a similar allegation 9 with respect to the TV ad, the print ad and the Web 10 banner ad in paragraph 17. 09:57:58 11 Do you see that? 12 MR. EDMONDSON: I'm going to object to 13 Counsel's characterization of paragraph 19. You 14 skipped the word "free" and -- on line 16, 15 paragraph 19 in reading into the record. 09:58:11 16 MR. HUMMEL: I didn't mean to. 17 MR. EDMONDSON: Okay. 18 MR. HUMMEL: It was inadvertent. 19 THE DEPONENT: Yeah. I see -- I see 20 paragraph 17 also talks about the inadequacies 09:58:22 21 of -- if any qualifying disclosures were present. 22 Q. (By Mr. Hummel) Okay. So as I 23 understand, generally, the allegations, they fall 24 into two categories. And I'm just asking you this 25 as a -- to lay a foundation for my next series of 09:58:35 Page 41 11 (Pages 38 - 41) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 24 of 94 1 questions. 09:58:38 2 Paragraph 17 relates to what I'll call 3 the introductory price disclosures. And 4 paragraph 19 relates to what I'll call the free 5 premium channel offers, right. And those are two 09:58:47 6 broad categories of disclosures that are at the 7 heart of this case, correct? 8 A. Yes. 9 Q. And, generally, it's my understanding -- 10 and correct me if I'm wrong -- that the FTC is not 09:58:55 11 contending that DIRECTV made any false statements 12 in connection with either the introductory price 13 offers in their advertising or the free premium -- 14 premium channel offers; is that -- is that 15 accurate? 09:59:12 16 MR. EDMONDSON: Objec- -- 17 Q. (By Mr. Hummel) Let me -- let me ask -- 18 I don't see any allegation in the complaint that 19 says this is a lie, this is false, this is untrue. 20 This is an inadequacy of disclosure case, 09:59:23 21 correct? 22 A. Well, I mean, I -- there's no allegation 23 that -- that DIRECTV, for example, that -- say they 24 had a 24.99 a month price that -- that that was the 25 price consumers got for the first 12 months. And 09:59:43 Page 42 1 we're not saying that that -- that the complaint 09:59:46 2 doesn't say that that was false. 3 Q. Okay. And there's no other allegation 4 that you can point to in the complaint that a 5 specific statement in an ad is false, correct? 09:59:54 6 MR. EDMONDSON: You know, I'll object 7 that the complaint speaks for itself, but I'll -- 8 I'll -- and it's beyond the scope of the -- the 9 noticed topics, but I'll let the witness answer to 10 the extent that she feels she can on her individual 10:00:07 11 capacity. 12 THE DEPONENT: Well, I -- I -- I don't 13 know if I feel comfortable saying it wasn't -- that 14 the -- there's no allegation or -- of -- of falsity 15 in the sense that there is a claim of a monthly 10:00:21 16 price for the first year, and consumers are going 17 to be misled by that price because they don't know 18 certain information. 19 Q. (By Mr. Hummel) Okay. 20 A. And so in a sense, it could take a 10:00:33 21 false -- in a sense it is -- so you could 22 characterize it as a false claim in a very sort 23 of -- you know, kind of, just -- you know, 24 non-lawyerly approach to it, but... 25 Q. Well, we're lawyers -- 10:00:51 Page 43 1 A. Right. 10:00:52 2 Q. -- so I want to be precise. In other 3 words, I want to be very clear here and I want to 4 get the best testimony you can offer on this topic 5 because I'm going to ask you what testing supports 10:00:59 6 this. 7 If we were in a case where you were 8 saying that 29.99 doesn't exist for the first 9 12 months, and if you look at Exhibit 1 to the 10 complaint, you'll see immediately next to the 19.99 10:01:09 11 price point, it says for 12 months with 24-month 12 agreement. 13 No dispute about that, right? 14 A. Right. 15 Q. Okay. And that's -- the FTC isn't 10:01:16 16 contending that's false. It's contending that 17 the -- the -- what the FTC contends are material 18 terms are not adequately disclosed in connection 19 with that price offer, correct? 20 A. Well, the way I -- I view it is what 10:01:31 21 consumers thought they were getting, because they 22 weren't disclosed this information, in a sense was 23 false. 24 Q. Okay. 25 A. Yeah. 10:01:39 Page 44 1 Q. What evidence did you have, prior to 10:01:39 2 filing the complaint, as to what consumers thought 3 they were getting based on that ad? 4 MR. EDMONDSON: Okay. Objection. Beyond 5 the scope of the noticed topics. Calls for 10:01:51 6 attorney-client privileged communications and 7 attorney work product information; specifically, 8 work product that is covered by FRCP 26(b)(4). 9 And I'll instruct the witness not to 10 answer that -- that question. 10:02:09 11 MR. HUMMEL: I'll -- I'll disagree, Eric, 12 on that -- on that particular objection only 13 because I think it's squarely within the scope. 14 But I -- I understand you're instructing her not to 15 answer. 10:02:23 16 Q. (By Mr. Hummel) And you're going to 17 follow that instruction? 18 A. Yes. 19 Q. Okay. Now, would you agree with me that 20 with respect to the print ad, it directs potential 10:02:31 21 customers to call DIRECTV's toll-free number or to 22 visit DIRECTV's Internet Website? 23 A. The -- the first exhibit? 24 Q. Yeah. 25 A. That's -- that's correct. 10:02:52 Page 45 12 (Pages 42 - 45) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 25 of 94 1 Q. Okay. 10:02:53 2 A. That's what the ad says. 3 Q. Okay. And that's what -- a consumer 4 cannot buy DIRECTV simply by looking at the ad. A 5 consumer must either go to an 800 number or log on 10:03:00 6 to the Website and subscribe on the Web, correct? 7 MR. EDMONDSON: Objection. Lacks 8 foundation. 9 Q. (By Mr. Hummel) That's what it says in 10 the complaint, paragraph 12. I'm just asking to 10:03:10 11 confirm what it says in the complaint. 12 A. Right. That's what the complaint says. 13 Q. All right. Thanks. 14 So -- so in connection with the -- what 15 I'll call the Claire Danes ad, Exhibit 1, which is 10:03:22 16 a print advertisement. 17 You understand that that reg- -- ads of 18 that type regularly appeared in, for example, 19 Sunday papers as a circular, correct? 20 A. That's my understanding, yes. 10:03:32 21 Q. Okay. And the allegation in the 22 complaint is that those print ads contained 23 inadequate disclosures regarding a mandatory 24 two-year contract length, and the existence of an 25 early cancelation fee, if a consumer were to cancel 10:03:49 Page 46 1 content, presentation, proximity, promise or 10:04:57 2 placement. 3 Q. (By Mr. Hummel) Uh-huh. Such that? 4 A. Such that consumers were unlikely to see 5 and understand the disclosure. 10:05:08 6 Q. Okay. In that context, that's what the 7 FTC is alleging in terms of inadequacy, correct? 8 A. That's what the com- -- the complaint is 9 alleging is -- yes, exactly. 10 Q. Okay. What testing or consumer surveys 10:05:18 11 were done to ascertain whether or not those terms 12 were disclosed in a way such that consumers were 13 unlikely to see or understand them? 14 MR. EDMONDSON: Objection. Calls for 15 attorney work product and expert-related work 10:05:37 16 product that's protected by FRCP 26(b)(4). 17 Q. (By Mr. Hummel) What facts does the FTC 18 have to support an allegation that the disclosure 19 of those terms were inadequate, such that consumers 20 were unlikely to see or understand them? 10:05:54 21 MR. EDMONDSON: Objection. Beyond the 22 scope. Calls for attorney-client communications 23 and attorney work product, but I'll let the witness 24 answer to the extent that she can without revealing 25 privileged information. 10:06:09 Page 48 1 before that 24-month period, correct? 10:03:53 2 MR. EDMONDSON: Objection. Beyond the 3 scope of the noticed topics. She can answer it in 4 her individual capacity. 5 Q. (By Mr. Hummel) Well, I -- again, it's 10:04:04 6 foundational to ask the next question, which is: 7 Did you do any testing to ascertain whether the ad 8 was inadequate in that regard, so it's 9 foundation -- 10 A. So the disclosure I -- I -- the 10:04:12 11 disclosure you're asking about is the -- could you 12 repeat that, please. 13 Q. Sure. 14 The mandatory two-year contract length 15 and the early cancelation fee. 10:04:28 16 A. That the complaint is alleging that those 17 terms were not adequately disclosed. 18 Q. Okay. What does "adequately" mean? 19 MR. EDMONDSON: Objec- -- objection. 20 Beyond the scope. I'll let the witness answer 10:04:41 21 in -- provide her own opinion if she's -- to the 22 extent it does not reveal any attorney work 23 product, meaning mental impressions or... 24 THE DEPONENT: The -- the complaint 25 describes why it was inadequate, in terms of its 10:04:56 Page 47 1 THE DEPONENT: Well, the complaint 10:06:10 2 describes the advertisement and it attaches the 3 advertisements. So that's the facts that are cited 4 in the complaint for the reason that those 5 disclosures are not inadequate. 10:06:23 6 Q. (By Mr. Hummel) Right. So is it fair to 7 say that it's just the opinion of the FTC's 8 lawyers, the economists and market research folks, 9 not based on any consumer testing or research, that 10 the disclosures in the ads were inadequate? 10:06:34 11 MR. EDMONDSON: Objection. Beyond the 12 scope. Lacks foundation. Calls for attorney work 13 product, attorney-client communications. And the 14 witness is not the Commission, but I'll -- I'll let 15 her answer if -- if she wants to -- can make a 10:06:55 16 statement without revealing any privileged 17 information. 18 THE DEPONENT: I -- I only feel 19 comfortable describing what's in the complaint. 20 And in the complaint the only facts that are 10:07:07 21 attached are the -- are description of the ad and 22 the ad itself. 23 Q. (By Mr. Hummel) Okay. Are there any -- 24 A. And the ad itself. 25 Q. I'm sorry to interrupt you. 10:07:15 Page 49 13 (Pages 46 - 49) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 26 of 94 1 Are there any facts, research, studies 10:07:16 2 or -- or surveys, beyond the -- the allegations in 3 the complaint and the ads which support the FTC's 4 contention in this case that consumers are unlikely 5 to see or understand the disclosures made in the 10:07:38 6 ads? 7 MR. EDMONDSON: Okay. The question is 8 beyond the scope, but also calls for privileged 9 information; specifically, attorney work product 10 and expert-related work product protected by 10:07:48 11 FRCP 26(b)(4). 12 Q. (By Mr. Hummel) Do any such studies, 13 research or surveys, in fact, exist that predate 14 the filing of this complaint on the topic that I 15 just listed? 10:08:01 16 MR. EDMONDSON: Objection. Calls for 17 expert-related work product protected by 18 FRCP 26(b)(4), and I'm instructing the witness not 19 to answer. 20 Q. (By Mr. Hummel) Let me ask you a 10:08:10 21 question about paragraph 17. It says the 22 disclosures are inadequate, again such that 23 consumers are unlikely to see or understand such 24 disclosures. 25 What does the word "unlikely" mean? 10:08:21 Page 50 1 That's not one that appears in the dot com 10:08:23 2 guidelines or the disclosure guidelines, and so I'm 3 just -- or the deception policy statement which is 4 the Cliffdale attachment, so what does it mean? 5 MR. EDMONDSON: Objection. Beyond the 10:08:36 6 scope. Calls for attorney-client communications. 7 And -- and attorney work product; specifically, 8 attorneys' mental impressions. 9 I'll let the -- the witness answer, to 10 the extent that she can, without revealing any 10:08:48 11 privileged information. 12 THE DEPONENT: I can give you my legal 13 opinion. The -- the FTC -- you know, deception, 14 under the FTC Act, is standard where, you know, our 15 consumer is likely to be misled. That's what the 10:09:05 16 Commission has to establish. 17 And there's case law that, you know, when 18 looking at a particular ad, the -- the question 19 really is -- you know, is a significant minority of 20 consumers going to be misled. 10:09:22 21 So I think that is where, you know, 22 the -- the -- the term "unlikely" -- we are -- 23 we're not -- it's not saying that 100 percent of 24 consumers wouldn't have seen or understood the 25 disclosure, but the -- the burden that we have is 10:09:36 Page 51 1 to show the significant minority wouldn't. 10:09:38 2 Q. (By Mr. Hummel) And you're testifying as 3 a lawyer here, right? 4 A. That's true. 5 Q. So that's not quite right. It's targeted 10:09:42 6 to the reasonable consumer, who is in the relevant 7 audience for the ad, correct? 8 MR. EDMONDSON: Objection. 9 Argumentative. Beyond the scope. 10 Q. (By Mr. Hummel) We're talking as lawyers 10:09:52 11 here now apparently. 12 So isn't that -- isn't that actually the 13 statement from the deception policy attached to 14 Cliffdale? 15 THE DEPONENT: The standard for deception 10:10:02 16 is that a -- that consumers are likely to be 17 misled. 18 Q. (By Mr. Hummel) Which consumers? It's 19 the reasonable consumer, right? 20 MR. EDMONDSON: I'm going to object. 10:10:11 21 Beyond the scope. 22 MR. HUMMEL: I'm just trying to figure 23 out what "unlikely" means so that we can defend the 24 case fairly. 25 THE DEPONENT: Well, it depends on the 10:10:21 Page 52 1 ad. But, yeah, usually it's a reasonable consumer 10:10:22 2 standard. 3 Q. (By Mr. Hummel) Who is in the relevant 4 target audience for the product seller, correct? 5 MR. EDMONDSON: Objection. Beyond the 10:10:31 6 scope. 7 THE DEPONENT: That's correct. 8 Q. (By Mr. Hummel) All right. Now, so 9 "unlikely" you say means that a significant -- 10 A. Minority. 10:10:40 11 Q. -- a significant minority don't perceive 12 the -- or see or understand the material terms of 13 the offer; is that right? 14 MR. EDMONDSON: Objection. Beyond the 15 scope. 10:10:54 16 THE DEPONENT: Yes, that's my -- that's 17 my opinion as a lawyer. 18 Q. (By Mr. Hummel) Okay. And did the FTC, 19 prior to filing this complaint, conduct any 20 studies, surveys or research on the ads to 10:11:02 21 ascertain whether or not a significant minority of 22 consumers are unlikely to see or understand the 23 relevant disclosures? 24 MR. EDMONDSON: Objection. Calls for 25 attorney-client communications, attorney work 10:11:17 Page 53 14 (Pages 50 - 53) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 27 of 94 1 product and expert-related work product protected 10:11:19 2 from disclosure by FRCP 26(b)(4). 3 And I'm instructing the witness not to 4 answer that question. 5 Q. (By Mr. Hummel) Did the FTC, prior to 10:11:28 6 filing the complaint, or up to date, do any testing 7 or research to determine what is the relevant 8 audience for DIRECTV's subscription services? 9 MR. EDMONDSON: I repeat my previous 10 objection. And I'm instructing the witness not to 10:11:42 11 answer. 12 MR. HUMMEL: Same basis for the 13 objection? 14 MR. EDMONDSON: Same -- same basis. 15 Q. (By Mr. Hummel) Did the FTC do any 10:11:48 16 testing or research to determine what effect, if 17 any, the advertisements had on a reasonable 18 consumer in the target audience for DIRECTV's ads, 19 prior to the time that it filed the complaint? 20 MR. EDMONDSON: Objection. Same basis 10:12:01 21 for the objection as the two previous questions. 22 I'm instructing the witness not to 23 answer. 24 And -- and just for the record, to the 25 extent that you're asking for the witness to -- to 10:12:11 Page 54 1 reveal even the existence of any studies or 10:12:15 2 surveys, or other expert-related work, done by or 3 on behalf of the -- the Commission, related to this 4 complaint, that information is privileged and it's 5 protected from disclosure by FRCP 26(b)(4). And so 10:12:38 6 I'm going to have to object to all those -- that 7 entire line of questioning. 8 MR. HUMMEL: I understand. It's only 9 privileged if it exists. If it doesn't exist, we 10 have a real issue in the case. If it exists and 10:12:50 11 you're seeking to protect it, that's one thing. 12 But if it doesn't exist, I'm entitled to that fact. 13 And you may disagree, but we're going to have the 14 court decide that issue. 15 So what I really need to tee up is, are 10:13:03 16 you going to answer these -- this entire line of 17 questions about whether it exists or not. 18 MR. EDMONDSON: Well, what -- what's your 19 Rule 11 basis for suggesting that the Commission 20 has to do any -- any studies at all in support of 10:13:13 21 this complaint? 22 MR. HUMMEL: Because you have to have a 23 Rule 11 basis to file a complaint. You have to 24 prove -- you have to have some reasonable good 25 faith belief and facts to support the notion that a 10:13:21 Page 55 1 significant minority are unlikely to see or 10:13:25 2 understand the disclosures. That's my basis. And 3 if it exists, I'm entitled to know it exists. And 4 then I get to defend the case based on probing 5 whether it's valid or not. That's my basis for 10:13:35 6 asking the question. 7 So I'm entitled to know if it exists. If 8 the Commission doesn't have it, we'll argue about 9 that fact. But you're not even telling me whether 10 it exists or not. And I think we're going to have 10:13:45 11 a real problem with the judge. 12 Q. (By Mr. Hummel) So are you refusing to 13 answer, I guess, the question of whether any of 14 this stuff that I've been asking about, research, 15 surveys, tests, prior to the time that the 10:14:00 16 complaint was filed, or even through today, to 17 support those allegations exist? 18 MR. EDMONDSON: I'm going to repeat my 19 objection. The mere existence of the studies, 20 or -- or work done by or for the Commission, is 10:14:10 21 privileged and is protected from disclosure by 22 FRCP 26(b)(4). 23 MR. HUMMEL: Let's take a break. 24 THE VIDEOGRAPHER: Going off the record. 25 The time is 10:14. 10:14:29 Page 56 1 (Recess taken.) 10:14:35 2 THE VIDEOGRAPHER: Back on the record. 3 The time is 10:23. 4 Please continue. 5 Q. (By Mr. Hummel) Ms. O'Brien, you 10:23:27 6 understand you're still under oath? 7 A. I do. 8 Q. Okay. Assuming that the types of 9 studies, surveys, research, did, in fact, exist, 10 prior to the time that the complaint was filed, or 10:23:40 11 even through today, were any of them shared outside 12 the FTC? 13 MR. EDMONDSON: Objection. Calls for -- 14 calls for privileged information or information 15 protected by FRCP 26(b)(4), attorney-client 10:23:59 16 information and -- actually -- but I'll let the -- 17 I'll let you restate the question. Let me hear 18 that again. 19 Would you be kind enough to restate the 20 question or -- or just read it back. 10:24:21 21 MR. HUMMEL: That would be great. Thank 22 you. 23 (Record read as follows: 24 "QUESTION: Okay. Assuming that the 25 types of studies, surveys, research, 10:24:25 Page 57 15 (Pages 54 - 57) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 28 of 94 1 did, in fact, exist, prior to the 10:24:25 2 time that the complaint was filed, or 3 even through today, were any of them 4 shared outside the FTC?") 5 MR. EDMONDSON: I'm going to object as -- 10:24:52 6 as -- I'm -- I'm going to object as -- as calling 7 for attorney-client information and information 8 protected by FRCP 26(b)(4). 9 And instruct the witness not to answer. 10 Q. (By Mr. Hummel) Assuming that the types 10:25:07 11 of research, surveys or tests within the ambit of 12 the topic 3 of the deposition notice exist and 13 existed prior to the filing of -- filing of the 14 complaint or through today, were any of those 15 shared with any non-lawyers? 10:25:21 16 MR. EDMONDSON: I'm going to object as to 17 the question calls for -- assumes facts that are -- 18 are not established and also instruct the witness 19 not to answer because answering it in yes or no 20 would require the -- would require divulging work 10:25:42 21 product information protected by FRCP 26(b)(4) and 22 also attorney-client information. 23 Q. (By Mr. Hummel) Is it correct that the 24 only people who have knowledge responsive to 25 topic 3 in the deposition notice are FTC lawyers? 10:26:04 Page 58 1 the -- the litigation team and the investigative 10:27:33 2 team at the FTC, in preparation for your deposition 3 here today, did you learn -- yes or no -- of the 4 existence of facts responsive to topic 3? 5 MR. EDMONDSON: I'm going to -- I'm going 10:27:51 6 to object to the question to the extent that it 7 would require the witness to reveal information 8 that is protected from disclosure by FRCP 26(b)(4) 9 and that is expert-related material -- 10 expert-related documents and conversations with -- 10:28:12 11 with experts. 12 And I think I'll instruct the witness not 13 to answer that. 14 Q. (By Mr. Hummel) In connection with your 15 preparation for topic 3 today, is it correct that 10:28:22 16 you did not speak with any marketing experts? 17 MR. EDMONDSON: I -- you know, I'm -- I'm 18 going to object to that -- that question as asked 19 and answered. And also object to the -- the 20 question as calling for information that is 10:28:40 21 protected by FRCP 26(b)(4). 22 And I'll instruct the witness not to 23 answer. 24 Q. (By Mr. Hummel) In connection with your 25 preparation for your deposition here today, did you 10:28:55 Page 60 1 MR. EDMONDSON: Again, I'm going to 10:26:16 2 object to question 3 as calling for information 3 protected -- that's calling for attorney-client 4 communications and calling for information that's 5 protected from disclosure by FRCP 26(b)(4). 10:26:31 6 Instruct the witness not to answer. 7 Q. (By Mr. Hummel) In connection with your 8 preparation for testimony on topic 3, did you 9 discuss that topic with any economist? 10 A. I only spoke to -- as I said -- as I 10:26:49 11 testified earlier, I only spoke to the FTC trial 12 team or -- investigation team that worked on the 13 DIRECTV case. 14 Q. And when you say "investigation team," 15 you mean lawyers who were part of the investigative 10:27:03 16 team? 17 A. Yes. 18 Q. So Ray McKown and Stacy Procter. 19 A. Right. And also I -- I guess Barbara -- 20 Q. Chun? 10:27:15 21 A. -- Chun also worked on the case, but I 22 didn't speak to her in preparation for today's 23 deposition. 24 Q. Understood. 25 In -- in -- in your discussions with 10:27:21 Page 59 1 speak with any consumer survey experts? 10:28:57 2 MR. EDMONDSON: I'm going to -- asked and 3 answered. I'm going to instruct the witness not to 4 answer the question because it calls for 5 information protected by FRCP 26(b)(4). 10:29:07 6 Q. (By Mr. Hummel) In connection with your 7 preparation for your deposition here today, you did 8 say you reviewed DIRECTV ads, both ads that were 9 attached to the complaint and additional ads, 10 correct? 10:29:20 11 A. That's correct. 12 Q. And about 100 additional ads, I think you 13 said? 14 A. Yeah, 100 or more. Uh-huh. 15 Q. Okay. And what type of ads were they? 10:29:26 16 A. They were ads that were very similar to 17 the ads that are attached to the complaint, I 18 guess, paragraph 16. And these were ads that FTC 19 staff had obtained independently. 20 Q. Print ads? 10:29:52 21 A. Yes, print ads. 22 Q. Did you look at Web flows or screenshots 23 of Web flows? 24 A. I just looked at the attachment that was 25 attached to the exhibit -- to the complaint. 10:30:06 Page 61 16 (Pages 58 - 61) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 29 of 94 1 Q. Okay. And you know that that exhibit 10:30:06 2 attached to the complaint does not contain all the 3 screenshots of a consumer subscription Web flow 4 experience, correct? 5 MR. EDMONDSON: Objection. Beyond the 10:30:19 6 scope of the noticed topics. Lacks foundation. 7 Argumentative. 8 MR. HUMMEL: Well -- 9 MR. EDMONDSON: I'll -- I'll -- I'll let 10 the witness answer in her own capacity of her own 10:30:34 11 knowledge, but it's definitely beyond the scope of 12 the -- the noticed topic. 13 Q. (By Mr. Hummel) So Exhibit 4 is what you 14 reviewed, Exhibit 4 to the complaint? 15 A. Yes, I -- I looked at Exhibit 4. 10:31:16 16 Q. Okay. And Exhibit 4 has 11 pages, right? 17 A. I believe so. 18 Q. And it doesn't contain any of the text 19 associated with info hovers or hyperlinks or 20 pop-ups, correct? 10:31:39 21 A. Could you repeat the question, please. 22 MR. HUMMEL: Could I have that read back, 23 please. 24 (Record read as follows: 25 "QUESTION: And it doesn't contain 10:32:10 Page 62 1 THE DEPONENT: It could. I mean, 10:33:06 2 obviously, if you were looking at it via a tablet, 3 it may be actually pretty representative. But, 4 yeah, normal like a computer screen, I would 5 imagine it would be bigger. 10:33:15 6 Q. (By Mr. Hummel) But you don't have 7 any -- 8 MR. EDMONDSON: Objection. Beyond the 9 scope. Lacks foundation. 10 Q. (By Mr. Hummel) You don't have any -- 10:33:20 11 MR. EDMONDSON: Argumentative. 12 Q. (By Mr. Hummel) Sorry. You don't have 13 any facts that would support the notion that this 14 Web page could appear on a tablet, correct? 15 MR. EDMONDSON: Objection. Assumes facts 10:33:29 16 not in evidence. Lacks foundation. Argumentative. 17 Beyond the scope. 18 THE DEPONENT: I'm not an expert on 19 screen resolution. 20 Q. (By Mr. Hummel) Okay. And so in 10:33:40 21 preparation for your deposition here today on 22 topic 3, when you said you looked at the ad, you 23 didn't talk to anybody about studies or research 24 that related to screen resolution for how consumers 25 perceive this ad, correct? 10:33:51 Page 64 1 any of the text associated with info 10:32:10 2 hovers or hyperlinks or pop-ups, 3 correct?") 4 THE DEPONENT: It doesn't appear. 5 Q. (By Mr. Hummel) So, for example, if you 10:32:12 6 look at the first page of Exhibit 4, which is a 7 screenshot of a Web page that's -- you can't tell 8 what size a consumer would -- would look at that 9 on. It would depend on the resolution of the 10 consumer's monitor, right? 10:32:32 11 MR. EDMONDSON: That -- you know, I'm 12 going to object. Lacks foundation. Is beyond the 13 scope of the -- the noticed topics. 14 And, you know, I -- I don't even know how 15 you answer a question -- the question, but give it 10:32:46 16 your best shot, if you want to, Kerry. 17 THE DEPONENT: Well, based on my 18 experience, the -- a consumer wouldn't see this 19 whole screen on their computer. It would be some 20 subset of this screen. 10:32:54 21 Q. (By Mr. Hummel) It would be -- and could 22 be much larger than what it appears in this paper 23 printout of a screen, right? 24 MR. EDMONDSON: Objection. Lacks 25 foundation. 10:33:03 Page 63 1 MR. EDMONDSON: Objection. Be -- really 10:33:55 2 be -- you're -- you're asking her whether she -- 3 she -- she -- I'll say that this whole line of 4 questioning is beyond the scope and let the witness 5 answer it if she can. 10:34:10 6 THE DEPONENT: I guess, could -- could 7 you repeat the question. 8 MR. HUMMEL: Could you read it back, 9 please. 10 (Record read as follows: 10:34:21 11 "QUESTION: Okay. And so in 12 preparation for your deposition here 13 today on topic 3, when you said you 14 looked at the ad, you didn't talk to 15 anybody about studies or research 10:34:21 16 that related to screen resolution for 17 how consumers perceive this ad, 18 correct?") 19 MR. EDMONDSON: I'll also object as 20 calling for information protected by FRCP 26(b)(4). 10:34:50 21 Instruct the witness not to answer. 22 Q. (By Mr. Hummel) Okay. 23 A. I guess I'm not answering. 24 Q. All right. So would you agree that the 25 issue in this case, with respect to the Web flows 10:35:06 Page 65 17 (Pages 62 - 65) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 30 of 94 1 that DIRECTV sponsored and through which consumers 10:35:09 2 could subscribe to the service, the issue is 3 whether consumers see and understand the terms that 4 are disclosed on the Web page, correct? 5 MR EDMONDSON: Objection Beyond the 10:35:20 6 scope Lacks foundation Argumentative 7 THE DEPONENT: Well, again -- I mean, I 8 can -- I can -- I can answer it in my personal 9 capacity, and that is the complaint explains why 10 consumers are unlikely to understand the terms of 10:35:40 11 the offer that DIRECTV is making And it explains 12 that in pretty good detail in the complaint 13 Q (By Mr Hummel) Can you show me where in 14 the complaint it does that and with reference to 15 Exhibit 2 that's been marked? 10:35:51 16 MR EDMONDSON: Objection Beyond the 17 scope 18 THE DEPONENT: Well, paragraphs 11 and 19 12, describe what DIRECTV is offering, you know, if 20 consumers actually sign up for the service what -- 10:36:13 21 what happens to them 22 13, 14, 15 describe defendant's marketing 23 practices that they do just sort of generally 24 The -- paragraph 16, 17, 18, 19 describe 25 the -- the Web -- the ads that as you've said 10:36:48 Page 66 1 earlier, you know, sent consumers either to the 10:36:54 2 phone or they send them to the Website and what 3 claims are made there to consumers, and what 4 information the Commission is alleging isn't 5 adequately disclosed. And, of course, that's tied 10:37:09 6 back to what actually -- DIRECTV is actually 7 providing to consumers, which is described in 8 11 and 12. 9 Paragraphs 20 through 24 describe the 10 Internet sales process and give -- talk about 10:37:26 11 Exhibit 4, which we were just talking about. 12 Q. (By Mr. Hummel) All right. So that was 13 my question, actually, was, where does it describe 14 how Exhibit 4 is deceptive? 15 A. All right. So that's paragraph 20 10:37:40 16 through paragraph 24 of the complaint. 17 Q. Okay. And it references Exhibit 4? 18 A. Yes -- 19 Q. Okay. 20 A. -- as an example of the Web flow. 10:37:47 21 Q. Okay. And it's an example of the Web 22 flow that you would have to concede is materially 23 incomplete, correct? 24 MR. EDMONDSON: Objection. Lacks 25 foundation. Beyond the scope. Argumentative. 10:37:57 Page 67 1 You -- you can answer it, if you want. 10:38:03 2 THE DEPONENT: Well, I think the -- the 3 exhibit -- and, again, in my -- my own opinion is 4 Exhibit 4 -- our allegation is this is the 5 information that consumers, when they're going 10:38:15 6 through the Web flow, are likely to see. 7 Q. (By Mr. Hummel) Do you have any studies, 8 research or surveys that support that contention? 9 MR. EDMONDSON: Objection. Calls for 10 expert-related material and information protected 10:38:31 11 from disclosure by FRCP 26(b)(4). 12 And I'm instructing the witness not to 13 answer. 14 MR. HUMMEL: All right. Let me mark as 15 next in order a color -- it's Exhibit 3 -- a color 10:38:44 16 printout of the complete Web flow that is exactly, 17 as of the time that Exhibit 4 was in circulation on 18 the Web, sponsored by DIRECTV. 19 MR. EDMONDSON: I'm going to object. 20 This witness -- this exhibit lacks foundation. 10:39:01 21 According to the information that's been provided 22 us by DIRECTV counsel, DIRECTV has no copies of 23 its -- of its operating Website. These are -- this 24 is a printout. We don't know where it came from. 25 We don't know who created it. And since DIRECTV 10:39:19 Page 68 1 apparently has been systematically destroying its 10:39:24 2 Website during the time -- since the time that the 3 FTC issued the CID, we -- we -- I don't -- I don't 4 know -- I don't really know what I'm looking at. 5 MR. HUMMEL: Okay. Good objection. 10:39:39 6 (Exhibit 3 was marked for identification 7 by the court reporter and is attached hereto.) 8 MR. HUMMEL: Certainly not meritorious. 9 And you should check on the production of dozens 10 and dozens and dozens of Web flows to -- 10:39:45 11 MR. EDMONDSON: A printout of a 12 screenshot is not the operating -- not the 13 operating -- 14 MR. HUMMEL: Correct. Neither is 15 Exhibit 4 of the complaint, but you're representing 10:39:55 16 that it is -- representative, so I'm going to prove 17 that it's not. And I want to know whether studies 18 have been done as to why. 19 Q. (By Mr. Hummel) So, for example, look at 20 page 2 of Exhibit 3. 10:40:03 21 Why didn't the FTC, in its complaint, 22 attach the offer details info hover that appears 23 prominently, clearly and conspicuously on page 2 of 24 this exhibit? 25 MR. EDMONDSON: Objection. Beyond the 10:40:19 Page 69 18 (Pages 66 - 69) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 31 of 94 1 scope. Calls for attorney-client privileged 10:40:19 2 information, attorney work product. Facts not in 3 evidence. Argumentative. 4 And I'm instructing the witness not to 5 answer. 10:40:25 6 Q. (By Mr. Hummel) Did the FTC conduct any 7 surveys, studies or research to ascertain whether 8 consumers are unlikely to see or understand the 9 clear and conspicuous disclosures on page 2, offer 10 details of the landing page of the Website? 10:40:39 11 MR. EDMONDSON: Objection. Calls for 12 attorney-client privileged information and 13 information protected from disclosure by 14 FRCP 26(b)(4). 15 I'm instructing the witness not to 10:40:49 16 answer. 17 Q. (By Mr. Hummel) If you could look, 18 please, at page 7 of the complaint. 19 MR. SNOW: I'm sorry, of the complaint or 20 of Exhibit 3? 10:41:07 21 MR. HUMMEL: I'm sorry. Of Exhibit 3. 22 Q. (By Mr. Hummel) If you look at the 23 bottom of the page, there is a non-linked or info 24 hover disclosure regarding, quote, "All Offers 25 Require 24-Month Agreement." It's bold and in 10:41:24 Page 70 1 MR. HUMMEL: I'd like to finish the 10:42:49 2 questions. 3 Q. (By Mr. Hummel) Has the FTC performed 4 any research, studies or surveys indicating whether 5 or not consumers saw or understood the disclosures 10:42:57 6 contained on page 23 of Exhibit 3, which was 7 conspicuously absent from being attached to the 8 complaint? 9 MR. EDMONDSON: Objection. Lacks 10 foundation. Calls for information protected from 10:43:12 11 disclosure by FRCP 26(b)(4). 12 MR. HUMMEL: You're instructing her not 13 to answer? 14 MR. EDMONDSON: I am instructing her not 15 to answer. 10:43:22 16 Q. (By Mr. Hummel) Why did the FTC elect, 17 in filing the complaint, not to put forward this 18 box of detailed disclosure information in 19 Exhibit 4 -- 20 MR. EDMONDSON: Objection. Argu- -- 10:43:32 21 MR. HUMMEL: -- to the complaint? 22 MR. EDMONDSON: Objection. 23 Argumentative. Beyond the scope. It calls for 24 information. It calls for attorney-client 25 communications, deliberative process, protected 10:43:43 Page 72 1 caps. 10:41:29 2 MR. EDMONDSON: Objection. 3 MR. HUMMEL: I haven't asked a question 4 yet. 5 MR. EDMONDSON: Go ahead. 10:41:32 6 MR. HUMMEL: Thank you. 7 Q. (By Mr. Hummel) Has the FTC conducted 8 any research, studies or analysis, prior to the 9 time that it filed the complaint or up till today, 10 that consumers are unlikely to see or understand 10:41:41 11 that disclosure? 12 MR. EDMONDSON: Objection. Calls for 13 information protected from disclosure by 14 FRCP 26(b)(4). 15 I'm instructing the witness not to 10:41:54 16 answer. 17 Q. (By Mr. Hummel) If you could look at 18 page 23 of Exhibit 3. 19 Exhibit 23 contains the Web box text as 20 of this time that a consumer would see if that 10:42:39 21 consumer clicked on additional offer details. 22 MR. EDMONDSON: Objection. 23 MR. HUMMEL: Wait. I haven't asked -- 24 MR. EDMONDSON: Lacks foundation. 25 That's okay. Go ahead. 10:42:49 Page 71 1 information and attorney work product, as well 10:43:45 2 as -- and I'll leave it at that. 3 Instruct the witness not to answer. 4 Q. (By Mr. Hummel) You said, as part of 5 your answer, Ms. O'Brien, in connection with the 10:43:57 6 description of the practices that Direc- -- DIRECTV 7 engages in or the terms of the deal, you listed 8 paragraph 13 of the complaint. 9 Do you recall that? 10 A. Yeah, 13 seems to describe -- the purpose 10:44:44 11 of 13 is to describe the deal that consumers would 12 get if they actually subscribed to the DIRECTV 13 service. 14 Q. Uh-huh. Could you look at Exhibit 1, 15 please, of the -- to the complaint. Page 2 of 10:45:01 16 Exhibit 1 to the complaint which is the print ad. 17 Do you see the legal box at the bottom? 18 A. Yes. 19 Q. Okay. And you can't testify whether or 20 not this attachment to the complaint, which I've 10:45:27 21 reproduced as it was filed with the court, is the 22 actual size of the Sunday paper insert, correct? 23 Just whether or not it is. 24 MR. EDMONDSON: It -- objection. It's -- 25 it's beyond the scope and -- 10:45:38 Page 73 19 (Pages 70 - 73) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 32 of 94 1 MR. HUMMEL: It's foundational, Counsel. 10:45:42 2 MR. EDMONDSON: It's -- it's -- it's 3 argumentative. It lacks foundation. I'll let 4 her -- but it's beyond the scope. I'll let -- I'll 5 let Ms. O'Brien respond, if she can. 10:45:54 6 THE DEPONENT: I -- I don't know. 7 Q. (By Mr. Hummel) Right. Okay. I don't 8 either, actually. I'm just showing you what's been 9 filed with the court in the size it was filed with 10 the court. That's all I'm representing. And I'm 10:46:04 11 certainly not representing that the type or font 12 size is larger in the print ad or smaller. I'm 13 just saying neither of us today can know. All we 14 have is what's in front of us. 15 But I'm asking to look at the legal box. 10:46:15 16 And in the second paragraph of the legal box, can 17 you read where it has a double asterisk, 24-month 18 agreement, early cancelation will result in a fee 19 of $20 per month for each remaining month. 20 Do you see that? 10:46:27 21 MR. EDMONDSON: Objection. Beyond the 22 scope. 23 THE DEPONENT: So the -- the second 24 paragraph? 25 Q. (By Mr. Hummel) Of the legal box on page 10:46:34 Page 74 1 2 of Exhibit 1. 10:46:35 2 MR. EDMONDSON: Sorry. I just can't -- 3 it's so small, I can't see it. 4 MR. HUMMEL: Counsel, that's 5 inappropriate and you know it. 10:46:41 6 THE DEPONENT: So it's 24-month 7 agreement. It's dot -- it's like asterisk -- 8 24-month agreement, early cancelation will result 9 in a fee of $20 per month for each remaining month. 10 Q. (By Mr. Hummel) Right. 10:46:52 11 A. That's what you read to me. 12 Q. Correct. 13 A. Okay. 14 Q. And you see that that's in the ad, right? 15 A. At the bottom of the page, yes. 10:46:57 16 Q. Right. 17 Did the FTC perform any survey, studies 18 or analyses to ascertain whether consumers see or 19 understand that disclosure? 20 MR. EDMONDSON: Objection. Objection. 10:47:11 21 It calls for information protected from disclosure 22 by FRCP 26(b)(4). That would be expert-related 23 communications and materials. 24 MR. HUMMEL: Okay. 25 MR. EDMONDSON: And I'm instructing the 10:47:27 Page 75 1 witness not to answer 10:47:28 2 MR HUMMEL: I understand 3 Q (By Mr Hummel) So the next sentence -- 4 I'll read it to you and I'll represent that this is 5 actually what it says And I recognize that this 10:47:34 6 font type is such that I require my reading glasses 7 to read it 8 But it says, must maintain 24 months of 9 any DIRECTV base programming package, 29 99 per 10 month or above, or any qualifying international 10:47:47 11 service bundle 12 Do you see that? 13 A I think you missed a word 14 Must maintain 24 consecutive months of 15 any DIRECTV base programming package (29 99 per 10:48:00 16 month or above), or any qualifying information 17 service bundle 18 Q International service bundle 19 A Oh, international Okay 20 Q Okay Do you see that it says that in 10:48:10 21 the box? 22 A Yes 23 Q All right Now, contrast that sentence, 24 must maintain 24 consecutive months of a DIRECTV 25 base programming package of 29 99 per month, with 10:48:21 Page 76 1 the allegation contained in paragraph 13, lines 5 10:48:24 2 through 7, which is, "In the second year of the 3 agreement, Defendants substantially increase the 4 monthly charges of their programming packages." 5 Do you see that? 10:48:37 6 MR. EDMONDSON: Objection. Beyond the 7 scope. 8 Q. (By Mr. Hummel) Do you see the 9 allegation in paragraph 13? 10 A. Could you repeat which one in 13 you're 10:48:44 11 looking at. 12 Q. Lines 5 through 7, page 4 of the 13 complaint. 14 A. I see them both. 15 Q. Okay. Is it correct that the allegation 10:49:11 16 in the complaint is that consumers sign on to an 17 initial discounted subscription price and then, 18 quote, "In the second year of the agreement, 19 Defendants substantially increase the monthly 20 charges of their programming packages"? 10:49:26 21 MR. EDMONDSON: Objection. Beyond the 22 scope. 23 THE DEPONENT: That's what the complaint 24 seems to say. Uh-huh. 25 Q. (By Mr. Hummel) Right. 10:49:32 Page 77 20 (Pages 74 - 77) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 33 of 94 1 But that's not true, based on the terms 10:49:33 2 of the offer set forth in Exhibit 1, which the FTC 3 also attached to the complaint, correct? 4 MR. EDMONDSON: Objection. 5 Argumentative. Lacks foundation. Beyond the 10:49:40 6 scope. Assumes facts not in evidence. 7 THE DEPONENT: Well, I mean, we can -- 8 MR. EDMONDSON: And -- and 9 mischaracterizes the complaint. 10 Q. (By Mr. Hummel) Well, it's okay to just 10:50:02 11 admit that the FTC has it wrong and you can amend 12 the complaint. But it's not the terms of the deal. 13 Correct? 14 MR. EDMONDSON: Objection. Assumes facts 15 not in evidence. Lacks foundation. 10:50:11 16 MR. HUMMEL: I just read the fact that's 17 in evidence. There's nothing else other than the 18 fact that's attached to the FTC's complaint, 19 Counsel. That's it. 20 THE DEPONENT: I -- I -- I've said I 10:50:24 21 don't understand the question. 22 Q. (By Mr. Hummel) Okay. So the FTC 23 alleges, basically, that there's an introductory 24 price that's advertised, right? And that on the 25 Claire Danes ad you're focusing on the 19.99, or 10:50:33 Page 78 1 perhaps the prices that are listed on page 4 of the 10:50:39 2 ad which are the introductory prices in the red 3 bubbles -- 4 A. Right. 5 Q. -- correct? 10:50:49 6 And that the terms of the deal are not 7 adequately disclosed, right? 8 A. That's right. 9 Q. All right. And one of the terms of the 10 deal that you said is in paragraph 13, that "In the 10:50:56 11 second year . . . Defendants substantially increase 12 the monthly charges of their programming packages," 13 right? 14 A. Right. 15 Q. Right. But that's not true. 10:51:06 16 So if a consumer selected the 39.99 a 17 month package that's offered on page 4, their 18 package -- their price could actually go down in 19 Year 2 under the contract. 20 I don't know why it's funny. 10:51:18 21 MR. EDMONDSON: Objection. Beyond the 22 scope. Lacks foundation. Assumes facts not in 23 evidence. Argumentative. 24 THE DEPONENT: I mean, all I can say is 25 that this disclosure you're referring to on page 2 10:51:29 Page 79 1 doesn't make any reference to what price consumers 10:51:32 2 will pay in the second year. 3 Q. (By Mr. Hummel) Well, actually, it does. 4 You need to just read it before you testify maybe. 5 Where it says in the first paragraph -- 10:51:42 6 A. That's maybe why I'm confused. 7 Q. It says the current price of the packages 8 is -- it's in the second line of the first 9 paragraph -- featured package service names and 10 current prices. Select 49.99, Choice 69.99 and 10:51:52 11 Ultimate 81.99. 12 Do you see that? 13 A. No. And this is different than what you 14 were reading to me before. 15 Q. Correct. It's in the same legal box. 10:52:02 16 You said the second -- the -- 17 A. Oh, you're looking at the top? 18 Q. Right. Second line of the first 19 paragraph talks about the current prices for the 20 advertised packages. 10:52:09 21 A. I mean, what -- the question you had 22 asked me before was -- you had read this one line 23 and you asked me to compare it to 13. 24 Q. Correct. 25 A. That's why I was confused, because -- 10:52:21 Page 80 1 Q. There's -- there's no confusion. So 10:52:22 2 here's the deal. 3 A. I'm confused. 4 Q. I'll try -- I'll try to clarify. That's 5 fine. I'll try to clarify -- clarify it for you. 10:52:27 6 You may be confused, but consumers 7 aren't. And -- 8 MR. EDMONDSON: Objection. 9 Argumentative. 10 Q. (By Mr. Hummel) So here's -- here's the 10:52:33 11 question. Do consumers -- 12 MR. EDMONDSON: What's the question? 13 Q. (By Mr. Hummel) Here's the -- here's the 14 question. 15 Have you done any studies, surveys or 10:52:38 16 tests to show that consumers do not understand that 17 what they have to do in the second year of their 18 agreement is, as referenced in your attachment to 19 your complaint, maintain a base programming package 20 of 29.99 per month? 10:52:57 21 MR. EDMONDSON: Objection. Calls for 22 attorney-client privileged information, attorney 23 work product, and information protected from 24 disclosure by FRCP 26(b)(4), and that is 25 expert-related communications and work product. 10:53:14 Page 81 21 (Pages 78 - 81) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 34 of 94 1 And I'm instructing the witness not to 10:53:17 2 answer. 3 Q. (By Mr. Hummel) Have you done any 4 research, study or survey to determine whether 5 consumers see and understand that the current 10:53:26 6 prices of the packages that are advertised, for 7 example, on page 4 of the print ad, Exhibit 1 of 8 the complaint, are as stated? 9 MR. EDMONDSON: Objection. Calls for 10 information protected by FRCP 26(b)(4), 10:53:39 11 expert-related work product and communications. 12 I'm instructing the witness not to 13 answer. 14 Q. (By Mr. Hummel) In preparation for your 15 deposition here today or at any time, have you read 10:53:52 16 the case management conference statement in the 17 case? 18 A. I didn't in preparation for today. I 19 can't remember if I read it before then. 20 Q. Have you read the statement by DIRECTV 10:54:04 21 relating to the allegation in paragraph 13 of the 22 complaint, that the term of the 24-month agreement, 23 the second year, does not require a consumer to 24 keep the same package and thus be subjected to a 25 price increase, but rather allows them simply to 10:54:21 Page 82 1 maintain a service of 29.99 or more? 10:54:23 2 MR. EDMONDSON: Ob- -- objection. Beyond 3 the scope. And, Counsel, I can get a copy of the 4 case management statement, if you want to question 5 her on it. Can we do that? 10:54:32 6 Q. (By Mr. Hummel) I just want to know if 7 you've read it. 8 MR. EDMONDSON: Objection. Beyond the 9 scope. 10 THE DEPONENT: Read the answer to the 10:54:39 11 complaint. Is what you're referring to? 12 Q. (By Mr. Hummel) I actually said the case 13 management conference statement, but I think it's 14 in the answer, too. 15 A. I didn't read either one before coming 10:54:47 16 today. 17 Q. Okay. Have -- ever have you read it? 18 A. I guess I can't remember if I've ever 19 read the case management statement. I might have 20 at one time. 10:54:58 21 Q. You reference that you were involved in 22 the -- discussions with the Commission prior to 23 filing and in staff recommendation. I'm just -- I 24 haven't asked a question -- that you had 25 involvement there. 10:55:11 Page 83 1 A. Yes. 10:55:12 2 Q. Did -- did you read DIRECTV's white 3 papers? 4 MR. EDMONDSON: Objection. Beyond the 5 scope. 10:55:17 6 THE DEPONENT: I can't remember. 7 Q. (By Mr. Hummel) Okay. All right. So -- 8 MR. EDMONDSON: Would those be the white 9 papers that failed to cite commerce planet? 10 Q. (By Mr. Hummel) So question for you is 10:55:43 11 with respect to Exhibit 3 to the case -- 12 A. Oh, to this deposition. 13 Q. To this deposition, yeah, Exhibit 3. 14 Has the FTC done any surveys, tests or 15 research to date relating to whether or not 10:56:01 16 consumers see and understand the disclosures that 17 are contained in this document that are the -- the 18 full -- the full disclosures relating to the 19 introductory price offer and the premium channel 20 offer? 10:56:20 21 MR. EDMONDSON: Objection. Calls for 22 information protected from disclosure by 23 FRCP 26(b)(4). 24 I'm instructing the witness not to 25 answer. 10:56:28 Page 84 1 Q. (By Mr. Hummel) Would you agree with the 10:56:41 2 FTC's dot com compliance disclosure guidelines that 3 empirical research about whether consumers see and 4 understand disclosures relating to triggering terms 5 is necessary to determine whether disclosures are 10:56:54 6 clear and conspicuous? 7 MR. EDMONDSON: Objection. Beyond the 8 scope. 9 THE DEPONENT: I'd have to see the dot 10 com disclosure to see that sentence in context. 10:57:06 11 Do you have a copy? 12 MR. HUMMEL: Yeah, I do. But it's got my 13 markup on it. It's too ridden with my work product 14 I'm afraid. 15 MR. EDMONDSON: Sure. Counsel, if you'd 10:57:28 16 like, I can go off the record and get a copy -- a 17 clean copy of -- 18 MR. HUMMEL: Let me just see if you 19 can -- 20 MR. EDMONDSON: -- dot com -- 10:57:32 21 MR. HUMMEL: -- if you can answer this 22 question without reference to the dot com 23 disclosure -- 24 MR. EDMONDSON: No, I -- Counsel, I 25 really insist on Ms. O'Brien having access to a 10:57:36 Page 85 22 (Pages 82 - 85) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 35 of 94 1 full copy of the dot com disclosure before you 10:57:39 2 question her on it. 3 MR. HUMMEL: I'll withdraw the question. 4 Q. (By Mr. Hummel) Do you generally agree 5 that empirical research about whether consumers see 10:57:48 6 and understand the qualifications to a triggering 7 term is necessary to ascertain whether or not 8 disclosures are clear and conspicuous? 9 MR. EDMONDSON: Objection. Beyond the 10 scope. 10:58:14 11 THE DEPONENT: I can give you my personal 12 opinion. I mean, I think the -- the Commission, 13 you know, views consumer research, you know, as 14 useful and valuable information in determining what 15 representations are made to consumers. 10:58:31 16 And as a result, you know, you -- you see 17 the -- the Commission has -- in the past has 18 commissioned consumer research, whether it's, you 19 know, generic research, where we're -- the 20 Commission is looking at a particular practice. 10:58:49 21 Such as, you know, how consumers interpret 22 endorsements or -- up to claims where there's a 23 whole host of -- of these type of consumer research 24 that the Commission has done. 25 But then also in litigation, the 10:59:04 Page 86 1 "QUESTION: Does the Commission have 11:00:09 2 empirical research about whether 3 consumers who have subscribed to 4 DIRECTV through the Website access or 5 otherwise view disclosures that are 11:00:09 6 displayed through hyperlinks, info 7 hovers or click-throughs?") 8 MR. EDMONDSON: Ob- -- objection. Calls 9 for information protected by the attorney-client 10 privilege, attorney work product, and 11:00:35 11 FRCP 26(b)(4). 12 And I'm going to instruct the witness not 13 to answer that. 14 Q. (By Mr. Hummel) Did you review any 15 perception studies, in preparation for your 11:00:44 16 deposition here today, that were not conducted by 17 or for the FTC? 18 MR. EDMONDSON: Objection. Beyond the 19 scope. 20 THE DEPONENT: I guess I need that 11:01:01 21 question read back to me again. 22 Thank you. 23 (Record read as follows: 24 "QUESTION: Did you review any 25 perception studies, in preparation 11:01:05 Page 88 1 Commission has commissioned consumer research to 10:59:07 2 support the allegations in a complaint that a claim 3 was made to consumers. 4 Q. (By Mr. Hummel) And has such research 5 been commissioned in this case? 10:59:18 6 MR. EDMONDSON: Objection. Calls for 7 information protected from disclosure by 8 FRCP 26(b)(4). 9 Q. (By Mr. Hummel) Has such research been 10 completed in this case? 10:59:27 11 MR. EDMONDSON: Objection. Calls for 12 information protected from disclosure by 13 FRCP 26(b)(4). 14 Q. (By Mr. Hummel) Does the Commission have 15 empirical research about whether consumers who have 10:59:39 16 subscribed to DIRECTV through the Website access or 17 otherwise view disclosures that are displayed 18 through hyperlinks, info hovers or click-throughs? 19 MR. EDMONDSON: Objection. Beyond the 20 scope. 11:00:03 21 THE DEPONENT: Could you repeat the 22 question again. 23 MR. HUMMEL: Could I have that one read 24 back, please. 25 (Record read as follows: 11:00:09 Page 87 1 for your deposition here today, that 11:01:05 2 were not conducted by or for the 3 FTC?") 4 MR. EDMONDSON: And I -- I will reiterate 5 the objection, as to the -- this -- this question 11:01:23 6 being beyond the scope. 7 THE DEPONENT: I didn't review any -- I 8 think any nonprivileged studies in preparation for 9 today. 10 Q. (By Mr. Hummel) Did you review 11:01:39 11 privileged studies? 12 MR. EDMONDSON: Objection. Calls for -- 13 for information protected from disclosure by 14 FRCP 26(b)(4). 15 And I'm instructing the witness not to 11:01:50 16 answer. 17 Q. (By Mr. Hummel) Are you aware of the 18 existence of any studies, research or tests 19 relating to the allegations of the complaint on 20 DIRECTV's -- on DIRECTV's advertising, whether or 11:01:58 21 not they were conducted by the FTC? 22 MR. EDMONDSON: Objection. Calls for 23 information protected from disclosure by 24 FRCP 26(b)(4). 25 Q. (By Mr. Hummel) Are you aware of the 11:02:22 Page 89 23 (Pages 86 - 89) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 36 of 94 1 existence of any research, surveys or tests, 11:02:22 2 conducted on consumers who completed their DIRECTV 3 subscription through a Web flow process, such as 4 Exhibit 3 to this deposition? 5 MR. EDMONDSON: Could -- could you read 11:02:42 6 that question back, please. 7 (Record read as follows: 8 "QUESTION: Are you aware of the 9 existence of any research, surveys or 10 tests, conducted on consumers who 11:02:43 11 completed their DIRECTV subscription 12 through a Web flow process, such as 13 Exhibit 3 to this deposition?") 14 MR. EDMONDSON: I'm going to object to 15 that question to the extent it calls for 11:03:04 16 information protected from disclosure by 17 FRCP 26(b)(4), and direct the witness not to 18 answer. 19 And -- and -- and beyond -- and to the 20 extent that the -- the question calls for 11:03:22 21 information that is unrelated to studies conducted 22 by or for or on behalf of the FTC, in relation to 23 this case, it's beyond the scope. 24 THE DEPONENT: I -- I -- I don't -- I 25 can't -- I can't -- I have nothing to provide. I 11:03:41 Page 90 1 likely to have discoverable information that the 11:16:04 2 FTC may use to support its claims. 3 And the FTC lists categories of 4 individuals, which is fine, but only two 5 FTC-related witnesses, David Gonzalez and 11:16:26 6 Nicole Davis. 7 Can you testify as to whether or not that 8 was a good faith effort at giving a complete list 9 of those FTC-affiliated witnesses with discoverable 10 information? 11:16:40 11 MR. EDMONDSON: Objection. Beyond the 12 scope. Argumentative. And -- and calls for 13 attorney-client privileged communications and 14 attorney work product. I -- 15 MR. HUMMEL: So -- 11:16:57 16 MR. EDMONDSON: I'll -- I'll let you 17 answer to the extent that you can without revealing 18 any conversations that you've had with the trial 19 team or any other counsel at the Commission. 20 THE DEPONENT: I wasn't involved in -- in 11:17:09 21 drafting this document because I wasn't -- after 22 the -- after the complaint was issued, I really 23 have not been supervising the matter. So I can't 24 really say one way or the other. 25 I would assume based -- because these are 11:17:24 Page 92 1 have no -- I can't say one way or the other. 11:03:43 2 MR. HUMMEL: Let's take like five 3 minutes. 4 THE VIDEOGRAPHER: This marks the end of 5 Volume I, Media No. 1 of the deposition of 11:03:59 6 Kerry O'Brien. The time is 11:04 a.m. We're off 7 the record. 8 (Recess taken.) 9 THE VIDEOGRAPHER: Back on the record. 10 The time is 11:15. 11:15:31 11 Please continue. 12 Q. (By Mr. Hummel) Ms. O'Brien, you 13 remember you're still under oath? 14 A. I do. 15 MR. HUMMEL: Okay. I asked the court 11:15:38 16 reporter to pre-mark Exhibit 4, which are -- and, 17 Counsel, I gave you one. It should be in front of 18 you. 19 (Exhibit 4 was marked for identification 20 by the court reporter and is attached hereto.) 11:15:44 21 Q. (By Mr. Hummel) It's just the FTC's 22 initial disclosures in the case. And I apologize, 23 Jake. I only have one copy -- extra copy. 24 So Rule 26(a)(1)(A)(i) requires the 25 parties to identify names, if known, of individuals 11:16:01 Page 91 1 FTC attorneys that they gave a good faith effort to 11:17:25 2 divulge all fact witnesses that have relevant 3 information. Obviously, they would be just -- 4 need -- there's no need for them to disclose expert 5 witness information at this point. 11:17:36 6 Q. (By Mr. Hummel) The FTC disclosed in its 7 initial disclosures (I)(A) "Current and former 8 customers of Defendants' direct-to-home digital 9 television service." 10 And you did not, I take it, speak 11:18:04 11 directly with any consumers, either past or current 12 customers of DIRECTV, in connection with -- with 13 your preparation for this deposition, but were you 14 made aware of -- of consumers who did, in fact, 15 submit complaints regarding the service? 11:18:27 16 A. Having -- you know, talking to the -- the 17 litigation team in preparing for topic No. 5 on 18 your notice, we did talk about consumer complaints 19 that had been -- that we have in our possession 20 relating to DIRECTV. 11:18:47 21 Q. And with respect -- with respect to topic 22 5, did you look at any consumer complaints? 23 A. No. 24 Q. Did you look at any summary of consumer 25 complaints? 11:19:09 Page 93 24 (Pages 90 - 93) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 37 of 94 1 MR. EDMONDSON: Objection. I'm going to 11:19:09 2 direct the witness not to answer, if answering 3 would tend to reveal any attorney-client 4 communications, attorney work product or work 5 product protected from disclosure by FRCP 26(b)(4). 11:19:26 6 So you can answer only if your answer 7 doesn't involve privileged information in any of 8 those three categories. 9 THE DEPONENT: Could you read -- please 10 repeat the question. 11:19:47 11 (Record read as follows: 12 "QUESTION: Did you look at any 13 summary of consumer complaints?") 14 THE DEPONENT: And when you say a 15 "summary," you're -- are you talking about summary 11:20:06 16 of complaints about DIRECTV? 17 Q. (By Mr. Hummel) Yes. For now. 18 A. I am aware of a -- an analysis done by an 19 FTC staff person of complaints relating to cable 20 and satellite television industry, and DIRECTV was 11:20:23 21 mentioned in that -- in that analysis. 22 Q. Who performed that study? 23 MR. EDMONDSON: I'm going to -- Counsel, 24 at this point in time, based on information 25 available to us, we believe that the -- the study 11:20:43 Page 94 1 and it is beyond the scope of this -- the -- the -- 11:22:17 2 the questioning here. 3 Q. (By Mr. Hummel) Well, topic 5 is -- it's 4 expressly within topic 5. So what privilege are 5 you asserting? 11:22:34 6 MR. EDMONDSON: Well, we're going to 7 assert attorney-client, attorney work product 8 privilege and I'll -- I'm going to assert 9 FRCP 26(b)(4) for the time being. 10 Q. (By Mr. Hummel) What litigation was the 11:22:48 11 study prepared in anticipation of, do you know? 12 A. I don't know. 13 Q. Was it prepared in anticipation of this 14 litigation? 15 MR. EDMONDSON: The question is beyond 11:23:05 16 the scope. And I'm going to direct Ms. O'Brien not 17 to answer because that -- that information is 18 privileged. 19 Q. (By Mr. Hummel) Was the study a 20 communication to counsel for the purpose of 11:23:23 21 obtaining legal advice? 22 MR. EDMONDSON: It's -- I'm going to 23 object to that question as calling for deliberative 24 process privileged information. 25 Q. (By Mr. Hummel) So you're refusing to 11:23:41 Page 96 1 itself is privileged. And that privilege would 11:20:49 2 extend to the name of the staff -- FTC staff member 3 who prepared the study. 4 And we can -- we can discuss that -- 5 that -- the privilege claim in more detail at -- at 11:21:08 6 a later date, but it's really -- because -- because 7 the study was -- was not prepared in connection 8 with this -- with this litigation, or in 9 anticipation of this litigation and prepared 10 earlier in time than -- than -- than this 11:21:29 11 litigation and, frankly, earlier in time than the 12 investigation into DIRECTV's advertising, we -- we 13 think it's beyond the scope -- or hold as beyond 14 the scope of your questioning here. 15 Q. (By Mr. Hummel) Did the study reference 11:21:45 16 complaints about DIRECTV's advertising practices? 17 MR. EDMONDSON: Again, that -- the study 18 is beyond the scope. I will let Ms. O'Brien answer 19 that question. 20 No, hold up. I'm -- I'm going -- I'm 11:22:04 21 going to have to take that back. 22 I'm going to direct Ms. O'Brien not to -- 23 not to answer that question at this time. 24 MR. HUMMEL: Basis? 25 MR. EDMONDSON: The content is privileged 11:22:15 Page 95 1 answer a question about whether the foundation -- 11:23:42 2 MR. EDMONDSON: It's beyond -- 3 MR. HUMMEL: -- for a -- can I finish? 4 MR. EDMONDSON: It's beyond the skill -- 5 MR. HUMMEL: I need to -- I get to make a 11:23:46 6 record, too. 7 Q. (By Mr. Hummel) So just to be clear, 8 you're refusing to answer a question about the 9 foundation for an assertion of the attorney-client 10 privilege based on the deliberative process 11:23:53 11 privilege? 12 MR. EDMONDSON: No, that's not -- 13 MR. HUMMEL: Okay. 14 MR. EDMONDSON: -- not accurate. The -- 15 your -- your follow-on question -- and would you -- 11:23:59 16 could you read back the -- the question that -- the 17 last question that was posed. 18 MR. HUMMEL: I'll rephrase it. I'll say 19 it again. 20 Q. (By Mr. Hummel) Was the study that was 11:24:07 21 prepared a communication to counsel for the purpose 22 of obtaining legal advice? 23 MR. EDMONDSON: I'm going to object to 24 the question as being beyond the scope. And, 25 frankly, beyond the scope of anything that Ms. -- 11:24:32 Page 97 25 (Pages 94 - 97) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 38 of 94 1 Ms. O'Brien was prepared to -- to answer today. 11:24:36 2 Q. (By Mr. Hummel) And just to be clear, 3 this was a study, an analysis by staff of cable 4 versus satellite consumer complaints, including 5 DIRECTV customer complaints relating to its 11:24:46 6 advertising practices? 7 MR. EDMONDSON: No, I'm -- I'm -- I'm 8 going to object to that question as -- as 9 mischaracterizing Ms. O'Brien's prior testimony. 10 Lacking foundation. Assuming facts not in 11:24:57 11 evidence. And calling for privileged -- 12 attorney-client privileged information and 13 deliberative process by protected information. 14 Q. (By Mr. Hummel) What's -- what's your 15 best testimony about what this study that you 11:25:11 16 looked at was? What is it? 17 MR. EDMONDSON: I'm going -- 18 THE DEPONENT: I can repeat -- 19 MR. EDMONDSON: I'm going to caution -- 20 THE DEPONENT: I can repeat what I said 11:25:18 21 before. 22 I mean, it's -- it was an analysis by FTC 23 staff -- staffer, looking at complaints in the 24 cable and satellite television industry. 25 Q. (By Mr. Hummel) Consumer complaints? 11:25:32 Page 98 1 Q. Understood. 11:27:07 2 Were there any other studies than the one 3 you just referenced, or was that it, on consumer 4 complaints? 5 MR. EDMONDSON: I -- I'm going -- going 11:27:16 6 to object to that question to the extent that it 7 calls for information protected by FRCP 26(b)(4). 8 So you're not to answer that question, 9 unless you can answer it without revealing studies 10 that -- the -- the existence of -- of your 11:27:42 11 knowledge about the existence of any studies 12 conducted by or for the FTC, in connection with 13 this litigation. 14 THE DEPONENT: I'm not aware of any 15 studies that wouldn't fall within the 11:27:54 16 attorney-client privilege or attorney work product. 17 I mean, any kind of studies that were -- were done 18 would have been in anticipation of the litigation 19 here today. 20 Q. (By Mr. Hummel) Are there any? 11:28:06 21 A. But any sort of outside -- I'm aware of 22 like a third party that has analyzed consumer 23 complaints for DIRECTV, I'm not aware of any third 24 party, you know, that's not connected with us. 25 Q. Understood. 11:28:17 Page 100 1 A. Consumer complaints. 11:25:33 2 Q. Did they relate to advertising? 3 MR. EDMONDSON: I'm going to object as 4 calling for -- it's beyond the scope. And calling 5 for deliberative process privileged information and 11:25:44 6 information protected by the attorney-client 7 privilege, attorney work product. And also 8 attorney protected by FRCP 26(b)(4). 9 And direct the witness not to answer that 10 question. 11:26:04 11 Let me just note for the record that we 12 are doing further inves- -- factual investigation 13 of this study to determine whether the study -- 14 whether to maintain our -- our -- our privileged 15 claims. But for the -- for the time being, we're 11:26:32 16 asserting privilege for the study. If we 17 ultimately conclude that we can't sustain those 18 claims, we will produce the study. 19 Q. (By Mr. Hummel) Did you review the study 20 in preparation for your testimony on topic 5 today? 11:26:50 21 A. I -- I -- other than really just looking 22 at the first paragraph of the study, that's all I 23 did. So that I was aware -- so I could describe it 24 to you today, in case you answered -- asked about 25 it. 11:27:07 Page 99 1 And is there a study performed by the FTC 11:28:17 2 that you're asserting work product protection over 3 relating to consumer complaints? 4 MR. EDMONDSON: Asked and answered. I'm 5 going to object to that question as calling for 11:28:29 6 information protected by FRCP 26(b)(4), and direct 7 the witness not to answer. 8 MR. HUMMEL: Okay. So just for the 9 record, as you know, an opposing party is entitled 10 to probe for the existence of alleged privileged 11:28:41 11 documents without getting into privileged content 12 and is allowed to ask questions relating to the 13 foundation of the assertion of the privilege. 14 And, you know, it's obvious we're going 15 to be in front of the court litigating this. So 11:28:53 16 I'm going to ask the questions. I appreciate your 17 being patient. We're going to be in front of the 18 court very quickly on this, and we'll see what the 19 court has to say. 20 But I don't want to -- I don't want to 11:29:04 21 litigate about a vacuum, and I -- you understand 22 that that's a complete waste of time. So if there 23 are other studies, I'm just asking for whether they 24 exist or not, that you're aware of in connection 25 with topic 5. 11:29:15 Page 101 26 (Pages 98 - 101) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 39 of 94 1 And I take it you're instructing her not 11:29:16 2 to answer. 3 MR. EDMONDSON: I'm instructing her not 4 to answer -- 5 MR. HUMMEL: Okay. 11:29:23 6 MR. EDMONDSON: -- unless she's aware -- 7 not to answer it with respect to any studies 8 prepared by or for the Commission in preparation -- 9 preparation for this litigation. Any other studies 10 would be beyond the scope of the topic. 11:29:37 11 MR. HUMMEL: Well -- 12 MR. EDMONDSON: And she can answer if -- 13 if she has any knowledge of those. 14 MR. HUMMEL: So topic 5, which is what I 15 thought we were talking about, is the methods used 11:29:47 16 and results of any and all investigations by the 17 FTC into the reasons for or validity of alleged 18 consumer complaints about DIRECTV's advertising 19 practices. 20 So I'm asking, are there any results of 11:29:58 21 any investigations that you looked at in 22 preparation for topic -- for your testimony on 23 topic 5. 24 MR. EDMONDSON: All right. Object to 25 that question as -- as vague and calling for -- for 11:30:11 Page 102 1 THE DEPONENT: I -- I believe it's a true 11:31:27 2 allegation. 3 Q. (By Mr. Hummel) Okay. So tens of 4 thousands of consumer complaints? 5 A. That's what it says. 11:31:34 6 Q. All right. Now, you were designated to 7 testify on topic 5, which I think you have in front 8 of you, which is methods used and results of any 9 and all investigations by the FTC into the reasons 10 for or validity of alleged consumer complaints 11:31:46 11 about DIRECTV's advertising practices. 12 So what did you do to prepare for your 13 deposition here today relating to the allegation 14 that defendants' marketing practices have been the 15 focus of tens of thousands of consumer complaints? 11:32:06 16 A. I spoke -- as I -- as I testified to 17 earlier, I spoke to the -- the team of attorneys 18 that have been working on DIRECTV about consumer 19 complaints that the Commission has received. 20 Q. Anything else, other than speaking to the 11:32:22 21 trial team? 22 A. No. 23 Q. Did you review the complaints? 24 A. No. 25 Q. Did you review a summary of the 11:32:27 Page 104 1 privileged -- attorney-client privileged 11:30:15 2 information and attorney work product. 3 MR. HUMMEL: And you're instructing her 4 not to answer? 5 MR. EDMONDSON: Well, I'm going to 11:30:23 6 instruct her not to answer to the extent that -- 7 that she cannot answer without revealing privileged 8 information. 9 THE DEPONENT: I really -- I can't -- I 10 can't answer. I'm sorry. 11:30:34 11 Q. (By Mr. Hummel) All right. So let's 12 look at paragraph 15 of the complaint, which I 13 think I marked as Exhibit 2 in the case. 14 Could you read paragraph 15 into the 15 record, Ms. O'Brien. 11:30:54 16 A. "Defendants' marketing practices have 17 been the focus of tens of thousands of consumer 18 complaints and of actions by the attorneys general 19 of all 50 states and the District of Columbia." 20 Q. Okay. And the FTC believes that to be a 11:31:06 21 true allegation, correct? 22 MR. EDMONDSON: Objection. Beyond the 23 scope. The -- the witness is not the FTC. She -- 24 she -- she can -- she can try to answer that 25 question in her own individual capacity. 11:31:23 Page 103 1 complaints? 11:32:29 2 MR. EDMONDSON: Objection. Objection. 3 Calls for information protected from disclosure by 4 FRCP 26(b)(4) and attorney-client privilege. 5 And -- 11:32:41 6 Q. (By Mr. Hummel) Did you do any -- 7 MR. EDMONDSON: -- I'm going to instruct 8 her not to answer that. 9 MR. HUMMEL: I'm sorry, Eric. 10 Q. (By Mr. Hummel) Did you do anything to 11:32:45 11 ascertain whether it is true that the focus of the 12 complaints was on the marketing practices 13 challenged in the complaint? 14 MR. EDMONDSON: I'm going to object to 15 that question as being beyond the scope. 11:32:56 16 The witness may answer, if she can answer 17 it without revealing any -- any privileged 18 communications. 19 THE DEPONENT: Well, when -- when the -- 20 just given my experience when the Commission 11:33:15 21 receives or is aware of consumer complaints, the 22 consumers are complaining about a particular 23 target, and it's their dealings with that target. 24 Q. (By Mr. Hummel) Have you seen any 25 studies or analysis to ascertain whether the number 11:33:28 Page 105 27 (Pages 102 - 105) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 40 of 94 1 of complaints about DIRECTV's marketing practices, 11:33:31 2 what percentage of that -- of the total DIRECTV 3 subscriber base do those complaints represent? 4 MR. EDMONDSON: Well, objection to that 5 question. It calls for information protected from 11:33:43 6 disclosure by FRCP 26(b)(4). Also calls for 7 attorney-client privileged communication and 8 attorney work product. 9 And I'm going to instruct the witness not 10 to answer. 11:33:58 11 Q. (By Mr. Hummel) Did you do anything to 12 prepare for your deposition to testify today about 13 the type of complaint; for example, X number of 14 these alleged tens of thousands related to the free 15 premium channels? 11:34:10 16 MR. EDMONDSON: I'm going to object to 17 that question as calling for information protected 18 by FRCP 26(b)(4). 19 Q. (By Mr. Hummel) What about -- 20 MR. EDMONDSON: And attorney work 11:34:19 21 product. 22 MR. HUMMEL: And instructing her? 23 MR. EDMONDSON: Instructing her not to 24 answer. 25 Q. (By Mr. Hummel) What percentage of 11:34:23 Page 106 1 that question as being beyond the scope here and 11:35:28 2 calling for attorney work product. I'll -- you -- 3 if -- if there's any way to answer that question 4 without revealing privileged information of your 5 own, and you would be testifying in your individual 11:35:48 6 capacity, not -- not as -- as a designated witness, 7 you can try to answer that question. 8 THE DEPONENT: I don't know the answer to 9 that question. 10 Q. (By Mr. Hummel) Now, the FTC has spoken 11:36:00 11 with representatives of Costco. 12 You're aware of that, right? 13 A. Yes. 14 Q. Okay. And the representatives of Costco 15 have talked to the FTC about complaints that 11:36:09 16 they've received, correct? 17 MR. EDMONDSON: Objection. Lacks 18 foundation. Beyond the scope of -- 19 MR. HUMMEL: You were on the calls, so 20 let's talk about them. And it's not privileged 11:36:17 21 because we know from Costco what you asked them 22 about. So let's not pretend that it didn't happen 23 or -- and Stacy was on the calls and I know when 24 they happened. So let's not pretend that I don't 25 have information or that it doesn't exist on this 11:36:30 Page 108 1 complaints related to the imposition of an early 11:34:24 2 cancelation fee? 3 MR. EDMONDSON: I'm going to instruct the 4 witness not to answer that question in that it 5 calls for information protected by FRCP 26(b)(4) 11:34:34 6 and attorney work product. 7 Q. (By Mr. Hummel) What work did the FTC 8 do, prior to filing the complaint, to ascertain 9 whether any complaints about the imposition of an 10 early cancelation fee were, in fact, merely 11:34:47 11 consumers trying to get out of a contractual 12 obligation that they full well knew about? 13 MR. EDMONDSON: I'm going to instruct the 14 witness not to answer that question. It calls for 15 information protected from disclosure by 11:35:00 16 FRCP 26(b)(4), attorney work product, 17 attorney-client communication and potentially 18 probably deliberative process. 19 Q. (By Mr. Hummel) What work did -- 20 MR. EDMONDSON: I'm instructing her not 11:35:16 21 to answer. 22 Q. (By Mr. Hummel) What investigation did 23 the FTC do, if any, into the consumer testimony in 24 prior matters relating to that issue? 25 MR. EDMONDSON: I'm going to object to 11:35:27 Page 107 1 one. 11:36:33 2 MR. EDMONDSON: I -- I -- Coun- -- 3 Counsel -- 4 MR. HUMMEL: And there's no privilege in 5 your communications with Costco, Counsel. 11:36:38 6 MR. EDMONDSON: I'm not -- I'm not 7 disputing that. 8 MR. HUMMEL: Okay. 9 MR. EDMONDSON: Ms. O'Brien was not on 10 the calls. And at no time during the -- the calls 11:36:45 11 with Costco were there -- were there questions 12 about -- 13 MR. HUMMEL: I'm asking the witness, not 14 you. You're not testifying. Let's not coach. 15 THE DEPONENT: I mean, I was aware of the 11:36:55 16 call -- that the calls took place. I'm not -- I'm 17 not aware of what was said during those calls. 18 MR. EDMONDSON: This -- this is beyond 19 the scope of -- of -- of your -- your -- 20 MR. HUMMEL: It rates -- relates to the 11:37:03 21 investigation of consumer complaints. 22 Q. (By Mr. Hummel) Are you aware of whether 23 or not Costco told counsel for the FTC that there 24 had been no complaints about the adequacy of the 25 disclosures by consumers who purchased DIRECTV 11:37:14 Page 109 28 (Pages 106 - 109) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 41 of 94 1 through Costco? 11:37:17 2 A. As I testified earlier, I -- I'm aware 3 that the call took place -- or calls. I'm not even 4 sure how many calls took place. But I don't know 5 what happened during those calls. 11:37:24 6 Q. Okay. What about other third parties and 7 the question of consumer complaints? 8 MR. EDMONDSON: I'm going to object to 9 the question, to the extent that it calls for 10 attorney work product. 11:37:38 11 THE DEPONENT: As I said earlier, I -- I 12 haven't been involved in the super- -- you know, I 13 haven't been supervising this matter after it 14 was -- the -- the complaint was filed. So I don't 15 really -- I -- I don't know what -- who the team 11:37:51 16 has been calling relating to the case. 17 MR. HUMMEL: We have a pretty good idea. 18 Q. (By Mr. Hummel) In terms of topic 5, 19 though, what did you do to prepare yourself to 20 testify about investigations conducted by the FTC 11:38:05 21 into consumer complaints made or not made about 22 DIRECTV's advertising practices to third parties 23 who -- who sell the DIRECTV service? 24 A. What I did to prepare for topic 5 is, 25 again, I spoke to the -- the litigation team and 11:38:21 Page 110 1 investigative team about the consumer complaints 11:38:25 2 that the Direc- -- that the FTC had obtained. 3 In particular, I was focusing on the tens 4 of thousands of consumer complaints. My 5 understanding is the basis for that -- that number 11:38:38 6 comes from the Federal Trade Commission's 7 Consumer Sentinel, which is a consumer -- is a 8 consumer database of consumer complaints. 9 I have been told that the number of 10 complaints is around 75,000 consumer complaints 11:38:53 11 relating to DIRECTV. 12 Q. Over what time period? 13 A. Well, during the relevant time period for 14 the complaints. 15 Q. 2007 back -- 2007 forward, I mean? 11:39:07 16 A. Yes. 17 Q. Okay. Do you know how many on any given 18 year on average? 19 A. I don't. 20 Q. Okay. So assuming that were in one year, 11:39:18 21 that would be less than 1 percent of the total 22 consumer customer base of DIRECTV is complaining? 23 Less than 1 percent? 24 A. I'll take your word for it. 25 Q. Okay. And you consider that material? 11:39:46 Page 111 1 MR. EDMONDSON: Objection. Beyond the 11:39:49 2 scope. Argumentative. 3 THE DEPONENT: Well, consumer -- you want 4 to finish? 5 MR. EDMONDSON: Answer it, if you can. 11:39:57 6 THE DEPONENT: I mean, consumer 7 complaints in FTC cases has -- are sometimes 8 useful. I mean, they're useful to -- or even just 9 consumer testimony -- in showing actual deception, 10 which the Commission doesn't have to show, but it 11:40:13 11 can be used as extrinsic evidence to help establish 12 that a violation has occurred. 13 Also, consumer complaints are useful 14 to -- in terms of what -- what the -- the target of 15 the case knew. And that's relevant to things like 11:40:27 16 the scope of the order relief. 17 Q. (By Mr. Hummel) Sure. 18 So let's talk about actual deception for 19 a second. Even though it's not necessary, you say 20 it's sometimes helpful. It's helpful to the FTC 11:40:39 21 when they want to prove their case. But let's talk 22 about that. 23 So of the 75,000 or so complaints 24 maintained in Consumer Sentinel, has the FTC done 25 any analysis to ascertain how many relate to the 11:40:51 Page 112 1 ECF issue, or how many relate to the -- the free 11:40:53 2 premium channel issue, et cetera. That's my 3 question. 4 MR. EDMONDSON: Objection. Calls for 5 information protected from disclosure by 11:41:04 6 FRCP 26(b)(4). It calls for attorney work product. 7 Instruct the witness not to answer. 8 Q. (By Mr. Hummel) Has the FTC done any 9 investigation as to whether or not the complaints 10 are valid or not? 11:41:17 11 MR. EDMONDSON: Objection. Vague. Calls 12 for attorney work product. 13 I'm instructing the witness not to 14 answer. 15 Q. (By Mr. Hummel) What third-party sellers 11:41:29 16 of DIRECTV services are you aware that FTC staff 17 has contacted, other than Costco, and inquired 18 about whether those third parties have received 19 consumer complaints? 20 MR. EDMONDSON: Objection. It calls for 11:41:43 21 attorney work product and attorney-client 22 communications. 23 The witness may answer if she can with -- 24 you can answer the question without revealing any 25 privileged information. 11:42:00 Page 113 29 (Pages 110 - 113) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 42 of 94 1 THE DEPONENT: As I -- as I testified 11:42:03 2 earlier, I don't know. 3 Q. (By Mr. Hummel) Okay. What 4 investigation, if any, has the FTC performed in 5 connection with whether or not DIRECTV has 11:42:13 6 remediated consumer complaints on the marketing 7 practices described in the complaint? 8 MR. EDMONDSON: Could you repeat that -- 9 or read that question back, please. 10 (Record read as follows: 11:42:29 11 "QUESTION: Okay. What 12 investigation, if any, has the FTC 13 performed in connection with whether 14 or not DIRECTV has remediated 15 consumer complaints on the marketing 11:42:29 16 practices described in the 17 complaint?") 18 MR. EDMONDSON: Okay. I'm going to 19 object to that as being beyond the scope and 20 calling for attorney work product. 11:42:51 21 The witness may answer, if she can answer 22 without revealing any privileged information. 23 THE DEPONENT: When you say 24 "investigation," are you talking about some -- like 25 looking at all tens of thousands of consumer 11:43:11 Page 114 1 restitution program that addressed consumers who 11:44:10 2 were complaining about payment of ECF? 3 MR. EDMONDSON: Objection. 4 Q. (By Mr. Hummel) Are you aware of that? 5 MR. EDMONDSON: Objection. Calls for 11:44:21 6 facts not in evidence. Beyond the scope. 7 MR. HUMMEL: If I have to put it into 8 evidence, I will. But it's a deposition, it's 9 discovery. So I'm asking if you're aware. 10 MR. EDMONDSON: This is -- this is beyond 11:44:29 11 the scope. 12 MR. HUMMEL: No, it's not. 13 MR. EDMONDSON: If you -- 14 MR. HUMMEL: It's foundational to what 15 I'm doing on topic 5. 11:44:34 16 MR. EDMONDSON: Okay. 17 Q. (By Mr. Hummel) Are you aware that there 18 was a restitution program of that type? 19 A. I was aware there was a restitution 20 program. I'm not -- I'm not aware of what exact -- 11:44:41 21 I'm not an expert on the -- the details of that 22 program. 23 Q. Fair enough. 24 In connection with your preparation on 25 topic 5, you didn't do anything to prepare yourself 11:44:47 Page 116 1 complaints and evaluating whether DIRECTV gave any 11:43:15 2 sort of refund to those consumers? 3 Q (By Mr Hummel) Yes 4 A Is that what you're asking? 5 Q Or was -- or agreed to do so as part of a 11:43:24 6 restitution program under the multistate or -- in 7 other words, whether the consumer was satisfied in 8 some way, monetarily or otherwise, after they 9 submitted the complaint 10 A Yeah I don't -- I don't feel 11:43:39 11 comfortable answering that question Again, I 12 think to the extent any such investigation 13 occurred, it would have been in context of bringing 14 this lawsuit 15 Q Okay So let me give you a concrete 11:43:50 16 example, and I don't mean to be exclusive Counsel 17 may insist that it be exclusive, in which case I'll 18 do a whole bunch of questions 19 But you're aware that there was a 20 multistate settlement It's not referenced in 11:43:58 21 paragraph 15, but there was a settlement of the 22 actions by the attorney generals of 50 states and 23 the District of Columbia, correct? 24 A Right I'm aware of that 25 Q Okay And the settlement had a 11:44:09 Page 115 1 to testify about investigations conducted into 11:44:51 2 whether there had been a remediation under the 3 multistate program of consumer complaints relating 4 to the marketing practices at issue, correct? 5 MR. EDMONDSON: Objection. Beyond the 11:45:05 6 scope. The -- the multistate remediation program, 7 or whatever it is here, is -- is not within 8 topic 5. 9 I'm going to let the witness answer, if 10 she can. 11:45:18 11 THE DEPONENT: Do you mind, please, 12 repeating the question. 13 (Record read as follows: 14 "QUESTION: In connection with your 15 preparation on topic 5, you didn't do 11:45:46 16 anything to prepare yourself to 17 testify about investigations 18 conducted into whether there had been 19 a remediation under the multistate 20 program of consumer complaints 11:45:46 21 relating to the marketing practices 22 at issue, correct?") 23 THE DEPONENT: I don't -- I -- yeah, I -- 24 I have said I find that question confusing. 25 Q. (By Mr. Hummel) Okay. That's fair. 11:46:08 Page 117 30 (Pages 114 - 117) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 43 of 94 1 I'll represent to you for purposes of 11:46:09 2 this question -- Counsel can disprove it, if he 3 wants, down the road. 4 There was a restitution program under the 5 multistate. Consumers were refunded, if they could 11:46:17 6 prove the claim relating to the ECF, certain 7 amounts of money. There was an adjudicative 8 process. 9 Has the FTC, in connection with assessing 10 the validity of the complaint or, by the way, in 11:46:27 11 connection with topic 4, on which you're designated 12 today, which is a claim for restitution or of -- of 13 monies paid, have you done anything to prepare 14 yourself to testify on the extent of that program? 15 MR. EDMONDSON: Objection. Compound. 11:46:44 16 Beyond the scope. And calls for -- for attorney 17 work product and potentially even possibly for 18 information protected by FRCP 26(b)(4). 19 The witness can try to answer that 20 question if -- if she can. I -- 11:47:07 21 THE DEPONENT: I mean, the only thing I 22 can -- I think I can say that -- in terms of 23 preparing for today's deposition that -- without 24 divulging any, you know, attorney work product is 25 that I -- I read Clay Friedman's declaration that 11:47:20 Page 118 1 item was called like teaser ads. 11:48:42 2 Q. Okay. So there were -- there were print 3 ads that were -- would be Sunday flyers, correct? 4 A. Those. And also I think there was 5 some -- some Web ads. It wasn't the Website. 11:48:53 6 Q. Banner ads? 7 A. That sort of thing, yes. 8 Q. Okay. And, again, on the banner ads, a 9 consumer couldn't purchase the -- or subscribe to 10 the DIRECTV service simply by clicking on the 11:49:07 11 banner ad. They had to either call a number or go 12 to the Web flow, correct? 13 MR. EDMONDSON: Objection. Assumes facts 14 not in evidence. 15 THE DEPONENT: The ads I looked at, 11:49:20 16 that -- that would be true. 17 Q. (By Mr. Hummel) Okay. And did you look 18 at any other TV ads? 19 A. Not -- nothing other than what's attached 20 to the complaint. 11:49:27 21 Q. You watched that ad? 22 A. Well, yeah. And I -- 23 Q. (By Mr. Hummel) In preparation for 24 your -- 25 MR. EDMONDSON: I'm -- I'm -- I'm going 11:49:36 Page 120 1 was attached to the motion to -- the -- the 11:47:28 2 opposition to the motion to strike which discussed 3 the multistate. 4 Q. (By Mr. Hummel) So the answer to my 5 question is, other than reading the dep- -- the 11:47:40 6 Clay Friedman declaration, did you do anything to 7 prepare yourself to testify on topic 4 or 5, with 8 respect to the restitution program that was 9 implemented under the multistate? 10 MR. EDMONDSON: Objection. Beyond the 11:47:56 11 scope. Allow the witness to answer to the extent 12 she can without revealing any privileged 13 conversations or -- or attorney work product. 14 THE DEPONENT: I guess the answer is no. 15 Q. (By Mr. Hummel) Okay. Going back to 11:48:12 16 the -- this might be back to topic 3. I'll jump 17 around a little bit. 18 On topic 3, you said you reviewed DIRECTV 19 ads, right? 20 A. That is correct. 11:48:30 21 Q. Okay. Were they print ads, TV ads and 22 Websites, or just print ads? 23 A. Well, as I testified earlier, the -- 24 the -- the ads were very similar to the ads 25 attached to paragraph 16. So they were what -- 11:48:39 Page 119 1 to -- I'm going to object -- I -- could you -- 11:49:36 2 could you read that last question back. 3 (Record read as follows: 4 "QUESTION: And did you look at any 5 other TV ads?") 11:49:44 6 MR. EDMONDSON: Okay. Are you asking the 7 witness whether she looked at TV ads since -- 8 specifically in preparation for this -- this 9 deposition, or whether she looked at -- at TV ads 10 or other ads for DIRECTV over the last two years, 11:50:05 11 as this case was being developed and -- and the 12 recommendations sent up to -- to -- to the 13 Commission, because I -- I -- I'm not -- I'm not 14 clear on what -- what the -- what -- what time 15 frame you're -- you're asking the -- the witness 11:50:18 16 about. 17 MR. HUMMEL: I'm not sure it matters 18 because it's prefatory to whether there was any 19 research, surveys or tests done on TV ads. 20 Q. (By Mr. Hummel) But you said that in 11:50:33 21 preparation for your deposition on topic 3, you 22 looked at TV ads. 23 I guess my question is, in preparation 24 for your deposition here today, did you look at any 25 TV ads other than the one attached to the 11:50:42 Page 121 31 (Pages 118 - 121) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 44 of 94 1 complaint? 11:50:49 2 A. Well, just in preparation for today's 3 deposition, I looked at -- as I said, several 4 hundred ads. But they really were more like what 5 the ads -- they're similar to the ones on 11:50:57 6 paragraph 16, like teaser ads. Other than that, 7 the TV ad and the Website ad, I just -- in 8 preparation for today, I looked at the complaint 9 exhibits. 10 Q. Okay. So just what's -- the only TV ad 11:51:09 11 for preparation for today was Exhibit 2 -- 12 A. I believe so, yes. 13 Q. -- to the complaint? 14 A. Uh-huh. 15 Q. Okay. Which is the fake your own death 11:51:22 16 ad, right? 17 A. Uh-huh. 18 Q. Is that "yes"? 19 A. Yes. 20 Q. All right. And what studies, surveys or 11:51:30 21 tests have been conducted by the FTC that would in 22 any way demonstrate that a consumer is deceived or 23 consumers are deceived, or a significant minority 24 of consumers are deceived by that TV ad? 25 MR. EDMONDSON: I'm going to object to 11:51:53 Page 122 1 that question. It calls for information protected 11:51:55 2 from disclosure by FRCP 26(b)(4). 3 Instruct the witness not to answer. 4 Q. (By Mr. Hummel) Are there any such 5 tests, surveys or studies? 11:52:02 6 MR. EDMONDSON: Calls for information 7 protected by FRCP 26(b)(4). 8 I'm going to instruct the witness -- 9 witness not to answer. 10 Q. (By Mr. Hummel) What about the TV ad 11:52:13 11 does the FTC contend is in any way deceptive? 12 MR. EDMONDSON: I'm going to object to 13 that as being beyond the scope. Calling for 14 attorney work product. Attorneys' mental 15 impressions and their analyses, their legal 11:52:29 16 analysis, attorney-client communications and 17 deliberative process privilege in there, too. 18 The witness may answer in her individual 19 capacity, if she can, and is willing to. 20 MR. HUMMEL: I don't agree to that 11:52:50 21 limitation. 22 MR. EDMONDSON: Okay. Okay. Then 23 I'll -- I'll -- I'll let her answer, if she can, 24 without revealing any privileged -- privileged 25 information. 11:52:58 Page 123 1 MR. HUMMEL: I don't think it's 11:52:58 2 privileged. I don't agree to the objection. That 3 goes for all of them, obviously. But on this one, 4 I think it's squarely within the scope. It's 5 foundational. I -- we're entitled to know what 11:53:05 6 about an ad that's attached to the complaint is 7 allegedly deceptive. 8 Q. (By Mr. Hummel) What is it? 9 A. Well, it -- as described in the 10 complaint, the -- the ad -- it makes a 11:53:17 11 representation about the price -- the monthly price 12 of a satellite service package that you could buy 13 from DIRECTV or subscribe to DIRECTV. 14 And paragraph 17 describes what -- 15 that the -- the -- if -- to the extent there are 11:53:39 16 qualifying disclosures there, what -- what 17 information is not provided or communicated to 18 consumers. 19 Q. What evidence does -- right. 20 And then attached to the complaint and 11:53:50 21 incorporated therein is a transcript of the TV ad 22 which indicates that the price card, which could be 23 the only thing allegedly deceptive in the -- in the 24 ad, according to the complaint, is flashed for one 25 second. 11:54:03 Page 124 1 So what evidence or facts does the FTC 11:54:04 2 have that consumers were in any way deceived by a 3 one-second flash of an introductory price? 4 MR. EDMONDSON: Objection. Beyond the 5 scope. Calls for attorney work product and 11:54:14 6 deliberative process, privileged information and 7 information protected from disclosure by 8 FRCP 26(b)(4). 9 The witness may answer if she can do so 10 without revealing any privileged information. And 11:54:29 11 I -- I want to reiterate that it's beyond the 12 scope. 13 THE DEPONENT: Well, by looking at the -- 14 the complaint, the -- the evidence that's attached 15 is -- is the transcript and the video. 11:54:42 16 Q. (By Mr. Hummel) Right. 17 And what evidence does the FTC have that 18 consumers are unlikely to see or understand 19 material terms of an offer based on the TV ad? 20 MR. EDMONDSON: I'm going to have to 11:55:00 21 reiterate those objections. Beyond the scope. 22 Calls for a deliberative process infor- -- 23 information communi- -- subject to the -- the 24 deliberative process privilege. Information 25 subject to the attorney-client privilege. Attorney 11:55:12 Page 125 32 (Pages 122 - 125) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 45 of 94 1 work product and infor- -- information that is 11:55:14 2 protected by the -- protected from disclosure by 3 FRCP 26(b)(4). 4 Q. (By Mr. Hummel) Does the FTC have any 5 studies, surveys or analysis showing that consumers 11:55:25 6 perceive this ad as a price ad? 7 MR. EDMONDSON: I'm objecting to that 8 question as calling for information protected by 9 FRCP 26(b)(4). 10 And directing the witness not to answer. 11:55:37 11 Q. (By Mr. Hummel) Does the FTC have any 12 analysis or investigation of consumer complaints -- 13 strike that. 14 Is the FTC aware of any consumer 15 complaints about TV ads -- consumers being misled 11:55:49 16 by TV ads? 17 MR. EDMONDSON: Could -- could you read 18 that back. 19 (Record read as follows: 20 "QUESTION: Is the FTC aware of any 11:55:58 21 consumer complaints about TV ads -- 22 consumers being misled by TV ads?") 23 MR. EDMONDSON: Okay. I'm going to -- 24 I'm going to first object to that as being beyond 25 the scope and then calling for information 11:56:15 Page 126 1 think it's a waste of time. 11:57:17 2 Q. (By Mr. Hummel) But on this one is -- is 3 the FTC aware of any consumer complaints the reason 4 for which had to do with TV ads? 5 A. My understanding that -- that there are a 11:57:28 6 number of complaints that relate to the advertising 7 and that the -- that the FTC staff, during the 8 investigation, talked to some consumers that had 9 complained about DIRECTV. And that some of those 10 conversations resulted in the consumer signing a 11:57:47 11 declaration, relating to their experiences with 12 DIRECTV. 13 And my understanding is that all the 14 consumer complaints that we have -- that the 15 Commission received, that I've talked about 11:57:58 16 earlier, as well as those communications with 17 consumers and the consumer declarations will be 18 provided to DIRECTV during the discovery process. 19 Q. Okay. I appreciate the answer because it 20 gave me a lot of additional information I didn't 11:58:13 21 have, but it didn't answer my question. 22 Is the FTC aware of any complaints about 23 their TV ads, specifically? 24 A. My understanding that -- 25 MR. EDMONDSON: I'm going to -- I'm going 11:58:24 Page 128 1 protected by FRCP 26(b)(4) and attorney work 11:56:20 2 product. 3 And we'll allow the witness to answer it, 4 if she can answer without revealing privileged 5 information. 11:56:36 6 MR. HUMMEL: So let me just say for the 7 record that it's squarely within the scope of 8 topic 5, which is the reasons for consumer 9 complaints. And I'm asking, is one of the reasons 10 for consumer complaints a consumer being misled by 11:56:45 11 a TV ad. 12 Putting that aside, I don't agree that I 13 have an obligation in the deposition context to 14 meet and confer about the legitimacy of every 15 objection that's been asserted. 11:56:56 16 Suffice it to say that on almost every 17 single occasion where an objection and an 18 instruction has been asserted, I think it's 19 improper. I think it's obstructionist and I think 20 we'll seek a remedy from the court. But I'm not 11:57:04 21 going to take up your time or Mr. Edmondson's time 22 or anybody else debating the validity objection. 23 On that one, though, and on other ones 24 where he's made a scope objection, I'm not 25 necessarily agreeing by not arguing at the time. I 11:57:15 Page 127 1 to object to that -- that question as calling for 11:58:24 2 information protected from discovery by 3 FRCP 26(b)(4). 4 And instruct the witness not to answer. 5 Q. (By Mr. Hummel) How many declarations 11:58:38 6 did the FTC obtain? 7 A. You know, I can't -- I remember I was 8 told, but I can't remember the number. I can find 9 out that for you, though. 10 Q. Is it tens of thousands? 11:58:49 11 A. No. 12 Q. Is it more than a dozen? 13 A. I don't know. 14 Q. Okay. And it was FTC staff that talked 15 to consumers and obtained their declarations? 11:59:02 16 A. Yes. 17 Q. All right. But you don't know the 18 number? 19 A. I think I was told the number and I 20 forget -- 11:59:08 21 Q. Okay. 22 A. -- so I'll have to -- we'll have to get 23 back to you on that. 24 Q. Who obtained the declarations? 25 A. FTC staff that were working on the case. 11:59:15 Page 129 33 (Pages 126 - 129) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 46 of 94 1 Q. Lawyers or investigators? 11:59:17 2 A. I would imagine both, but I don't know 3 for sure. 4 MR. HUMMEL: All right. Let's take a 5 lunch break. Going about 3 hours. 11:59:24 6 THE VIDEOGRAPHER: Going off the record. 7 The time is 11:59 a.m. 8 (Recess taken.) 9 THE VIDEOGRAPHER: Back on the record. 10 The time is 1:08. 01:08:06 11 Please continue. 12 Q. (By Mr. Hummel) Afternoon, Ms. O'Brien. 13 A. Hello. 14 Q. You understand you're still under oath? 15 A. I do. 01:08:15 16 Q. Any reason you can't continue to give 17 your best testimony here today? 18 A. There's no reason. 19 Q. Any reason you can't continue to follow 20 your counsel's instructions? 01:08:19 21 A. No. 22 Q. Okay. I'd like you to look at 23 paragraph 24 of the complaint, which we've marked 24 as Exhibit 2. And paragraph 24 deals with Web page 25 disclosures which according to the FTC are 01:08:36 Page 130 1 inadequate. And in particular this paragraph 01:08:39 2 relates to the premium channel offers, which the 3 FTC characterizes in this complaint as a negative 4 option. 5 And my question is this, and it's 01:08:51 6 responsive to topic 3. Has the FTC performed any 7 studies, surveys or tests which demonstrate or 8 support the contention that DIRECTV's disclosures 9 on its Web page relating to the fact that consumers 10 will be charged the regular price for the premium 01:09:11 11 channels, if they do not call to cancel, has been 12 inadequate? 13 MR. EDMONDSON: Objection. Compound. 14 Calls for information protected from disclosure by 15 FRCP 26(b)(4). 01:09:27 16 Instruct the wit- -- witness not to 17 answer. 18 Q. (By Mr. Hummel) Does the FTC have any 19 facts that support the contention that consumers do 20 not see or understand the disclosures in the Web 01:09:42 21 page relating to the fact that for the premium 22 channel offer, which are free for the first three 23 months, that consumers will be charged if they 24 don't call to cancel? 25 MR. EDMONDSON: Okay. Objection. It's 01:09:56 Page 131 1 beyond the scope, to the extent that this question 01:09:58 2 calls for data or information developed by experts 3 retained by the Commission or employed by the 4 Commission to do work on this -- this matter, 5 meaning the -- the -- in preparation for the 01:10:16 6 litigation against DIRECTV, the question calls for 7 information protected from disclosure by 8 FRCP 26(b)(4). 9 So I would instruct the witness not to 10 answer if she -- to answer only if she can do so 01:10:31 11 without disclosing privileged information. 12 THE DEPONENT: Would you mind repeating 13 the question again. 14 (Record read as follows: 15 "QUESTION: Does the FTC have any 01:10:45 16 facts that support the contention 17 that consumers do not see or 18 understand the disclosures in the Web 19 page relating to the fact that for 20 the premium channel offer, which are 01:10:45 21 free for the first three months, that 22 consumers will be charged if they 23 don't call to cancel?") 24 THE DEPONENT: Well, the -- the complaint 25 alleges -- cites the -- the advertisements that 01:11:14 Page 132 1 DIRECTV disseminated that advertised or, you know, 01:11:18 2 had the offer for free premium channels, and I know 3 there's some examples that are attached -- attached 4 to the complaint. 5 Q. (By Mr. Hummel) Well, this relates to 01:11:32 6 the Web page. And my question is, if you know, why 7 the FTC didn't attach the Web pages, as Exhibit 4 8 to the complaint, that have the disclosure relating 9 to the negative option offers? 10 MR. EDMONDSON: Objection. Beyond the 01:11:54 11 scope. Mischaracterizes the complaint exhibits. 12 And calls for attorney-client privileged 13 information and attorney work product. 14 You may answer, if you can answer without 15 divulging any privileged information. 01:12:12 16 THE DEPONENT: I don't believe I can 17 answer. 18 Q. (By Mr. Hummel) All right. So look at 19 Exhibit 3, for example, on page 58. I'm just 20 giving you one example, but there are many. 01:12:21 21 And do you have that page? 22 A. Page 58 of Exhibit 3 -- 23 Q. Yes. 24 A. -- yes. 25 Q. And you'll see there's the text of an 01:12:39 Page 133 34 (Pages 130 - 133) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 47 of 94 1 info hover there that arises when a consumer 01:12:39 2 scrolls his or her mouse over a question mark next 3 to the "Free for 3 months HBO, Showtime, Starz," 4 that appears on the Website. 5 And the disclosure there reads, "For a 01:12:50 6 limited time you get every premium movie channel 7 free for 3 months as part of our new customer 8 offer. After promotional period ends you will be 9 charged the price in effect unless you call to 10 cancel." 01:13:03 11 Do you see that? 12 A. Yes. 13 Q. Has the FTC done any test surveys or -- 14 or conducted any research that would demonstrate 15 that a consumer is unlikely to see or understand 01:13:12 16 that disclosure that appears on page 58? 17 MR. EDMONDSON: Okay. I'm going to 18 object to that question on multiple grounds. 19 First, it mis- -- mischaracterizes the evidence or 20 this -- this exhibit, to the extent that the 01:13:30 21 question implies that the info hover is visible to 22 consumers who scroll through the Website without 23 specifically stopping and hovering over the -- the 24 space -- 25 MR. HUMMEL: This is a speaking 01:13:49 Page 134 1 objection, Counsel. I'm going to object and have 01:13:50 2 you not -- I'm just asking you a question, if 3 there's a study. 4 MR. EDMONDSON: The -- the -- the -- but 5 I'm also objecting to the -- the -- the question 01:13:56 6 based on -- on the fact that it calls for 7 information protected from disclosure by 8 FRCP 26(b)(4). 9 MR. HUMMEL: That I understand. 10 MR. EDMONDSON: And I'm instructing the 01:14:06 11 witness not to answer. 12 Q. (By Mr. Hummel) All right. So the FTC 13 has done no studies, correct, to ascertain whether 14 consumers see or understand that disclosure that 15 exists on, for example, page 58? 01:14:15 16 MR. EDMONDSON: Objection. Calls for 17 information that is protected from disclosure by 18 FRCP 26(b)(4). 19 And I'm instructing the witness not to 20 answer. 01:14:26 21 Q. (By Mr. Hummel) You're aware that the 22 FTC's disclosure guidelines for dot com disclosures 23 permit consumer disclosures of certain terms by 24 info hover or hyperlink, correct? 25 MR. EDMONDSON: Okay. First of all, that 01:14:42 Page 135 1 question's beyond the scope. Second, I request 01:14:42 2 that we put a copy of the dot com disclosures in 3 front of Ms. O'Brien if you want to ask her 4 questions about the dot com disclosures. And I 5 could -- can get a copy for you, Counsel, if you -- 01:14:52 6 if you wish. 7 MR. HUMMEL: You were free to do it at 8 lunch. You were free to do it anytime. I'm going 9 to continue to ask you -- ask questions. I think 10 I'm entitled to cross-examine a witness about any 01:14:59 11 topic that's fair game. But this is a designee of 12 the FTC, so... 13 MR. EDMONDSON: Well, this -- this 14 question is beyond the scope. 15 MR. HUMMEL: Okay. 01:15:09 16 MR. EDMONDSON: So Ms. O'Brien, you -- 17 you may answer the question, if you wish. The 18 question is beyond the scope. So your answer would 19 be in your individual capacity. 20 THE DEPONENT: I can't answer. I mean, 01:15:16 21 in preparing for today's deposition, I didn't 22 reread dot com disclosures. 23 Q. (By Mr. Hummel) Okay. So has the -- 24 MR. EDMONDSON: Would you like to take a 25 break so I can get the dot com disclosures? 01:15:25 Page 136 1 MR. HUMMEL: I don't want to take a 01:15:27 2 break. We had an hour; you could have done that. 3 Q. (By Mr. Hummel) I'd like to ask you, did 4 the FTC, in connection with this case, perform any 5 research or analysis to ascertain whether the 01:15:34 6 disclosures made by DIRECTV regarding the premium 7 channel offers on its Web page comply with the dot 8 com guidelines? 9 MR. EDMONDSON: Would you read the 10 question back, please. 01:15:48 11 (Record read as follows: 12 "QUESTION: I'd like to ask you, did 13 the FTC, in connection with this 14 case, perform any research or 15 analysis to ascertain whether the 01:15:49 16 disclosures made by DIRECTV regarding 17 the premium channel offers on its Web 18 page comply with the dot com 19 guidelines?") 20 MR. EDMONDSON: Okay. I'm going to 01:16:13 21 object to that question. It calls for 22 attorney-client privileged information, attorney 23 work product protected information. And 24 information protected from disclosure by 25 FRCP 26(b)(4). 01:16:29 Page 137 35 (Pages 134 - 137) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 48 of 94 1 And I'm going to instruct the witness not 01:16:29 2 to answer. 3 Q. (By Mr. Hummel) Do any such studies 4 exist? 5 MR. EDMONDSON: I'm going to object to 01:16:38 6 the question insofar it -- in that it -- it calls 7 for information that's protected from disclosure by 8 FRCP 26(b)(4). 9 And instruct the witness not to answer. 10 Q. (By Mr. Hummel) One of the allegations 01:16:49 11 relating to the alleged deceptive nature of the Web 12 page is that the second year price charged to 13 consumers for particular packages is not adequately 14 disclosed, correct? 15 A. That's true. 01:17:04 16 Q. All right. So if you could look at 17 page 87 of the Exhibit 3 that I've marked, which is 18 the complete unedited Web flow. 19 You see a tab there on what's called the 20 cart page called "View Monthly Cost." 01:17:18 21 Do you see that? 22 A. Yes. 23 Q. All right. It's right next to the 24 programming and packaging -- I don't know what you 25 call that line -- blue line in that page? 01:17:30 Page 138 1 A. It's -- yes, slightly above in smaller 01:17:33 2 type. 3 Q. Right. All caps, right? 4 A. Yes. 5 Q. Okay. Smaller type than "Package & 01:17:38 6 Programming" -- 7 A. "Package & Programming." 8 Q. -- but certainly larger type than other 9 type on the page, right? 10 A. It doesn't appear to be. 01:17:52 11 Q. Oh, okay. You don't think -- 12 A. It seems to be the smallest type on the 13 page to me, but I'm not -- I don't have a ruler 14 here to measure it. 15 Q. Right. 01:17:57 16 And -- and you haven't performed any 17 studies or -- or analysis regarding the relative 18 size of fonts that are available on user interfaces 19 on individuals' computers, right? 20 MR. EDMONDSON: Objection. Calls for 01:18:11 21 information that is -- that we don't have to 22 disclose pursuant to FRCP 26(b)(4). 23 Instruct the witness not to answer. 24 Q. (By Mr. Hummel) In satisfying 25 yourself -- that is, the FTC, the agency -- the 01:18:22 Page 139 1 royal agency's attempt to satisfy itself that there 01:18:30 2 was a factual basis for the complaint that 3 consumers do not see or understand or are unlikely 4 to see or understand what the FTC contends are 5 material terms, did the FTC conduct any studies or 01:18:43 6 research by a Web usability expert? 7 MR. EDMONDSON: Objection. Calls for 8 information protected from disclosure by 9 FRCP 26(b)(4). 10 Instruct the witness not to answer. 01:18:57 11 Q. (By Mr. Hummel) In preparation for your 12 deposition here today, did you consult with any 13 reports or analyses conducted by a Web usability 14 expert? 15 MR. EDMONDSON: Again, I'll -- I'll 01:19:07 16 object based on the -- on the fact that it -- it 17 calls for information that is protected from 18 disclosure by FRCP 26(b)(4). 19 And I instruct Ms. O'Brien not to answer. 20 Q. (By Mr. Hummel) Uh-huh. Did you -- and 01:19:20 21 by "you," I mean the FTC -- conduct any studies, 22 research or consumer surveys relating to consumers' 23 usage of the view monthly cost tab on the cart 24 page, page 87, of the Exhibit 3? 25 MR. EDMONDSON: It calls for -- 01:19:38 Page 140 1 objection. It calls for information protected from 01:19:39 2 disclosure by FRCP 26(b)(4). 3 And I instruct the witness not to answer. 4 Q. (By Mr. Hummel) Does the FTC have 5 information as to what data or pricing information 01:19:46 6 is displayed if a consumer taps the view monthly 7 price tab on the cart page before they check out? 8 MR. EDMONDSON: I'm going to object to 9 that question as beyond the scope and as calling 10 for information that is -- that may be protected by 01:20:03 11 FRCP 26(b)(4) and may be subject to attorney work 12 product. 13 I'm going to allow Ms. O'Brien to answer 14 the question if she can answer the question without 15 revealing any privileged information. 01:20:21 16 THE DEPONENT: Could you please repeat 17 the question. 18 (Record read as follows: 19 "QUESTION: Does the FTC have 20 information as to what data or 01:20:26 21 pricing information is displayed if a 22 consumer taps the view monthly price 23 tab on the cart page before they 24 check out?") 25 THE DEPONENT: My understanding that the 01:20:50 Page 141 36 (Pages 138 - 141) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 49 of 94 1 Commission, during the investigation, did go on the 01:20:51 2 DIRECTV Website and actually captured -- it's 3 really pretty much every page they could capture in 4 terms of -- of the -- you know, the -- what was on 5 the page. And I -- and I know that at some point 01:21:06 6 at least some of those captures clicked on that 7 view monthly cost page to -- to see what it showed. 8 Q. (By Mr. Hummel) And what did it show? 9 A. I can't remember off the top of my head. 10 Q. Why didn't you attach the view monthly 01:21:19 11 cost pages to the complaint? 12 MR. EDMONDSON: Objection. Calls for 13 attorney-client privileged information, attorney 14 work product, in that it calls for attorneys' 15 mental impressions, thought processes. It also 01:21:33 16 calls for information that's protected by the 17 deliberative process privilege. 18 And I'm going to instruct Ms. O'Brien -- 19 it's also beyond the scope. So I will allow Ms. -- 20 since it's beyond the scope, I'll allow Ms. O'Brien 01:21:47 21 to answer the question, if she can answer it 22 without revealing any privileged information. 23 THE DEPONENT: I'm sorry. I can't answer 24 the question. 25 Q. (By Mr. Hummel) Was the FTC trying to 01:21:59 Page 142 1 mislead the court or the public in connection with 01:22:00 2 its allegations in the complaint by attaching a 3 materially incomplete Web flow which didn't contain 4 disclosures admittedly like the view monthly cost 5 pages in Exhibit 3 and alleging that the 01:22:13 6 disclosures weren't made? 7 MR. EDMONDSON: Okay. Let me -- let me 8 start that that question is beyond the scope. It's 9 compound. It's argumentative. And it calls for 10 the thought processes of -- and mental impressions 01:22:36 11 of Commission attorneys and attorney-client 12 privileged communications, and communications that 13 are protected by the deliberative process 14 privilege. 15 And I'm going to instruct Ms. O'Brien not 01:22:55 16 to respond to that question. 17 Q. (By Mr. Hummel) As a supervisor in -- in 18 the regional office of the FTC, you're not going to 19 answer a question about whether it was the FTC's 20 intent to mislead the court of the public in a 01:23:05 21 public filing? 22 MR. EDMONDSON: The -- the -- first of 23 all, the -- the question -- 24 Q. (By Mr. Hummel) Do you want to answer 25 the question? 01:23:13 Page 143 1 MR. EDMONDSON: The -- first of all, the 01:23:13 2 question is beyond the scope. So if Ms. O'Brien 3 were to choose to try to respond to that question, 4 she would be doing so as an individual employee of 5 the Commission. 01:23:28 6 And she -- it's not speaking for the 7 Commission or doesn't bind them -- 8 MR. HUMMEL: I -- 9 MR. EDMONDSON: -- in the response. But 10 I'm going to allow her to try to answer the 01:23:34 11 question, if she can, without revealing any 12 privileged information. 13 THE DEPONENT: Well, I mean, my 14 experience is when the Commission files a complaint 15 and they attach exhibits, they are trying to 01:23:46 16 describe -- or especially a Website flow, a -- 17 an -- an example of how consumers could have gone 18 through the Web -- Website flow -- you know, 19 purchase flow and bought the product. 20 They don't attach every potential way 01:24:03 21 they could have done it, but they -- they -- they 22 attach kind of a rep- -- obviously, you know, I 23 should say also -- I mean, the exhibit, as you said 24 earlier, is paper. I mean, you can't -- you're not 25 attaching what is on the -- you know, on the screen 01:24:19 Page 144 1 for a consumer, but to give an example of why the 01:24:21 2 Commission used the ad as being deceptive. 3 And in this case, the -- you know, 4 obviously, it's described in the paragraphs in 5 terms of what disclosures were not or -- you know, 01:24:33 6 were made and were not made. 7 Q. (By Mr. Hummel) But you would concede 8 that if a consumer clicked on the view monthly cost 9 tab before they checked out, a consumer would see 10 by month every price they pay through the full 01:24:48 11 24-month commitment, would you not? 12 MR. EDMONDSON: Objection. Beyond the 13 scope. Argumentative. Lacks foundation. 14 You may answer if -- if you can. 15 THE DEPONENT: I can't remember what that 01:25:05 16 page says. 17 Q. (By Mr. Hummel) It's in front of you, 18 page 89, 90. And it also contains a hyperlink to 19 the "What is my agreement," which has all the terms 20 of the agreement. I mean -- I guess let me 01:25:21 21 rephrase. 22 Did you perform any analysis, prior to 23 filing the complaint, which attached a Web flow, 24 which you would concede doesn't contain these 25 pages? The record speaks for itself. 01:25:33 Page 145 37 (Pages 142 - 145) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 50 of 94 1 Did you perform any analysis that 01:25:35 2 consumers don't see or understand these pages that 3 weren't attached? 4 MR. EDMONDSON: Okay. I'm going to 5 object to that question as calling for information 01:25:44 6 protected from disclosure by FRCP 26(b)(4). 7 I'm going to direct the witness not to 8 answer. 9 Q. (By Mr. Hummel) Did the FTC, prior to 10 filing the complaint, do any study, research or 01:26:15 11 survey which demonstrated that consumers do not 12 routinely click on the monthly -- view monthly cost 13 tab? 14 MR. EDMONDSON: I'm going to object to 15 that question as calling for information protected 01:26:27 16 by FRCP 26(b)(4). 17 Instruct the witness not to answer. 18 Q. (By Mr. Hummel) So page 111 of 19 Exhibit 3, again, another page in the Web flow. 20 This is actually one that -- that you did attach as 01:27:08 21 page 9 to Exhibit 4 of the complaint, which has a 22 button that says "I accept. Submit my order." 23 And I take it the FTC's contention, which 24 is that a consumer, by clicking that button which 25 is immediately adjacent to a hyperlink that says 01:27:35 Page 146 1 "By clicking submit order I agree to these terms 01:27:37 2 and conditions, including the free premium 3 channel" -- I assume the FTC's position is that 4 that is not express informed consent to the terms 5 of the negative option offer; is that accurate? 01:27:50 6 MR. EDMONDSON: Okay. First of all, give 7 us a moment to compare -- did you say page 8 -- 8 page 9 of Exhibit 4 is the same as page 111? I'm 9 going to -- Exhibit 4 is the FTC's complaint, which 10 is Exhibit 2 of this deposition. 01:28:06 11 MR. HUMMEL: It's not identical, but it 12 has the same accept button. It's basically the 13 offer acceptance page. 14 MR. EDMONDSON: Let me -- I'm going to 15 let -- first of all, let Ms. O'Brien have a minute 01:28:22 16 to compare the two pages. 17 Q. (By Mr. Hummel) It's -- it's not 18 relevant to the question. Just look at page 9, 19 Exhibit 4 of the complaint and answer my question 20 about the allegation, if you can, ma'am. 01:28:30 21 MR. EDMONDSON: And would you read the 22 question back, please. 23 (Record read as follows: 24 "QUESTION: And I take it the FTC's 25 contention, which is that a consumer, 01:28:39 Page 147 1 by clicking that button which is 01:28:39 2 immediately adjacent to a hyperlink 3 that says "By clicking submit order I 4 agree to these terms and conditions, 5 including the free premium 01:28:39 6 channel" -- I assume the FTC's 7 position is that that is not express 8 informed consent to the terms of the 9 negative option offer; is that 10 accurate?") 01:28:39 11 MR. EDMONDSON: Okay. I'm going to start 12 by objecting to that question as compound. And 13 outside the scope. And assuming facts not in 14 evidence. 15 I'll let Ms. O'Brien answer the question 01:29:35 16 to the extent she can do so without revealing any 17 privileged communications or attorney work product. 18 THE DEPONENT: Well, count 4 of the 19 complaint, you know, the Commission has alleged 20 that the -- the company has failed to obtain 01:29:49 21 consumer's express informed consent. 22 Q. (By Mr. Hummel) I understand that. 23 My question is, so I take it -- let me 24 rephrase. 25 My question is, is it the FTC's position 01:29:59 Page 148 1 that a consumer clicking "I accept, submit my 01:30:03 2 order," that button, next to language that says, 3 quote, "By clicking submit order, I agree to these 4 terms and conditions," close quote -- is it the 5 FTC's position that that is not express informed 01:30:15 6 consent? 7 MR. EDMONDSON: Objection. Beyond the 8 scope. And I'll let Ms. O'Brien answer the 9 question if she can do so without revealing any 10 privileged information, including attorney work 01:30:30 11 product. 12 THE DEPONENT: Well, I mean, it's my 13 opinion that -- I mean, when the -- when the 14 Commission looks at -- at advertisements, they're 15 looking at -- and the courts as well -- when courts 01:30:44 16 are looking at an advertisement, they look at the 17 complaint -- the -- the ad as a whole. 18 Q. (By Mr. Hummel) Uh-huh. 19 A. So I don't feel comfortable -- you know, 20 I -- I think given the whole purchase flow, the 01:30:54 21 Commission is alleging in its complaint that 22 consumers didn't have informed consent. 23 Q. Okay. And what studies, surveys or 24 analyses did the FTC perform, looking at the 25 Website as a whole, the entire subscription 01:31:15 Page 149 38 (Pages 146 - 149) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 51 of 94 1 process, that clicking "I accept, submit my order," 01:31:19 2 was not express informed consent? 3 MR. EDMONDSON: Okay. I'm going to 4 object to that question as calling for information 5 protected from disclosure by F -- FRCP 26(b)(4) and 01:31:29 6 calling for attorney work product. 7 And direct Ms. O'Brien not to answer that 8 question. 9 Q. (By Mr. Hummel) If you could look, 10 please, at paragraph 17 again of the complaint, 01:32:04 11 page 5. 12 These are all going to be foundational 13 questions for whether there were any tests, studies 14 or surveys performed in connection with these 15 allegations, but I just want to understand what the 01:32:25 16 FTC is saying here. 17 In paragraph 17 it says that the 18 disclosures were not [sic] inadequate generally "in 19 terms of their content, presentation, proximity, 20 prominence or placement." 01:32:40 21 Do you see that? 22 A. Yes. Uh-huh. 23 Q. All right. What is content? 24 MR. EDMONDSON: Okay. Could -- could I 25 stop right there and have you read the entire 01:32:48 Page 150 1 question back including the -- his -- his prepa- -- 01:32:50 2 preparatory statement that -- what's being alleged 3 here. 4 (Record read as follows: 5 "QUESTION: If you could look, 01:32:04 6 please, at paragraph 17 again of the 7 complaint, page 5. 8 "These are all going to be 9 foundational questions for whether 10 there were any tests, studies or 01:32:19 11 surveys performed in connection with 12 these allegations, but I just want to 13 understand what the FTC is saying 14 here. 15 "In paragraph 17 it says that the 01:32:29 16 disclosures were not [sic] inadequate 17 generally "in terms of their content, 18 presentation, proximity, prominence 19 or placement. 20 "ANSWER: Yes. Uh-huh. 01:32:42 21 "QUESTION: All right. What is 22 content?") 23 MR. EDMONDSON: Okay. The -- the -- the 24 question is beyond the scope. And I'll let 25 Ms. O'Brien answer the question to the extent she 01:34:08 Page 151 1 can answer it without revealing privileged 01:34:10 2 information. 3 I also -- I also want to make sure that I 4 understand that that was trans- -- make sure it was 5 transcribed properly because I think there was a 01:34:22 6 statement that the disclosures were adequate in 7 there. 8 MR. HUMMEL: I -- I said it's inadequate. 9 I mean, the FTC's allegation is that the 10 disclosures are inadequate. 01:34:31 11 MR. EDMONDSON: Okay. 12 Q. (By Mr. Hummel) And the allegation 13 further says that it's inadequate in terms of 14 content, presentation, proximity, prominence and 15 placement -- or placement. So it's in the 01:34:41 16 disjunctive. 17 My first question is first, what does 18 content mean? 19 MR. EDMONDSON: Okay. That's beyond the 20 scope, but you may answer. 01:34:53 21 THE DEPONENT: And, unfortunately, I -- 22 I -- you know, the -- the 30(b)(6) notice didn't 23 ask for us to prepare for -- for me to analyze 24 the -- the ads, especially the disclosures. So, 25 I'm -- unfortunately, I'm not prepared today to go 01:35:06 Page 152 1 into a detailed analysis of each element. 01:35:09 2 I mean, I can tell you these are common 3 terms in the context of FTC law. I mean, if you're 4 familiar with the dot com disclosures it talks 5 about what content means, what presentation means, 01:35:20 6 what proximity means, prominence and placement. 7 So I mean, I -- I direct you to -- to 8 those -- to that document and -- other case law 9 that talks about disclosures because these terms 10 are common terms in FTC law. I'm just not prepared 01:35:34 11 today to talk about it in the context of DIRECTV's 12 advertisements. 13 Q. (By Mr. Hummel) Totally agree. And if 14 we were in an administrative proceeding and not in 15 federal court, the FTC's word on what these things 01:35:46 16 mean might be given greater weight than it will be 17 in -- under -- you know, under the rules that apply 18 to section 5 in a federal court proceeding. 19 Having said that, I think I'm entitled to 20 understand, does content mean what something 01:35:57 21 actually says? 22 MR. EDMONDSON: Objection. Beyond the 23 scope. Calls for a legal conclusion. 24 THE DEPONENT: As I said, I'm not 25 prepared today to talk about -- 01:36:10 Page 153 39 (Pages 150 - 153) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 52 of 94 1 Q. (By Mr. Hummel) Okay. 01:36:12 2 A. -- disclosures. 3 Q. All right. So taking those -- that 4 phrase together, content, presentation, proximity, 5 prominence or placement, I understand that there's 01:36:17 6 a gloss been given by the FTC in their own 7 guidelines about what those things mean. 8 My question is, prior to filing the 9 complaint, had the FTC done any analysis regarding 10 the content, proximity, presentation, prominence or 01:36:33 11 placement of the disclosures that the FTC contends 12 are material? 13 MR. EDMONDSON: Okay. I'm going to 14 object to that question on the basis of it calling 15 for attorney work product, attorney-client 01:36:48 16 communications and information that's protected 17 from disclosure by FRCP 26(b)(4). 18 And instruct the witness not to answer. 19 Q. (By Mr. Hummel) In the context of -- 20 strike that. 01:37:18 21 Prior to filing the complaint, or even to 22 today, has the FTC done any studies, analyses or 23 surveys regarding disclosures that would have 24 different content, presentation, proximity, 25 prominence or placement that would be adequate? 01:37:41 Page 154 1 any privileged information, I'll -- I'll let her do 01:39:10 2 that. 3 THE DEPONENT: I'm sorry. I can't answer 4 the question. 5 MR. HUMMEL: Okay. Let me mark this next 01:39:15 6 as Exhibit No. 5. 7 (Exhibit 5 was marked for identification 8 by the court reporter and is attached hereto.) 9 Q. (By Mr. Hummel) Exhibit 5 is a two-page 10 document provided by DIRECT- -- by the FTC to 01:39:32 11 DIRECTV, on or about 9/24/2014, which contains an 12 FTC mockup of -- of a disclosure where the content, 13 presentation, proximity, prominence or placement 14 would have been deemed adequate by the FTC 15 according to it at the time. 01:39:52 16 My question is, did the FTC perform any 17 studies, surveys, or analyses to ascertain that the 18 two different mockups prepared by the FTC and 19 provided to DIRECTV would have been adequate 20 disclosures? 01:40:09 21 MR. EDMONDSON: Okay. I'm going to 22 object to this exhibit as being provided in the 23 context of settlement discussions and protected by 24 Rule -- from disclosure by Rule 408 of our rules of 25 evidence. 01:40:21 Page 156 1 MR. EDMONDSON: Okay. Could you please 01:37:50 2 read that question back. 3 (Record read as follows: 4 "QUESTION: Prior to filing the 5 complaint, or even to today, has the 01:37:53 6 FTC done any studies, analyses or 7 surveys regarding disclosures that 8 would have different content, 9 presentation, proximity, prominence 10 or placement that would be 01:37:53 11 adequate?") 12 MR. EDMONDSON: Okay. I'm going to 13 object to that question as beyond the scope and 14 calling for information that is protected from 15 disclosure by FRCP 26(b)(4). 01:38:25 16 And instruct the witness not to answer 17 the question to the extent that her -- her answer 18 would -- would require disclosing any information 19 related to tests or studies, or any expert work 20 conducted in connection with the FTC's action 01:38:47 21 against DIRECTV. 22 If she can answer -- if there's an answer 23 she can give about studies generally or more 24 broadly, if she -- she may be able to answer that. 25 If she can answer that question without revealing 01:39:07 Page 155 1 MR. HUMMEL: Rule 408 is not a disclosure 01:40:24 2 protection, Counsel, as you know. It's an 3 admissibility rule. 4 MR. EDMONDSON: Okay. 5 MR. HUMMEL: And in this particular 01:40:27 6 context, it may well be relevant to the issue of 7 designing appropriate surveys and controls for such 8 surveys to show what the FTC would have admitted 9 would have been an adequate disclosure. 10 Q. (By Mr. Hummel) So the question is, were 01:40:36 11 there any studies or surveys by the FTC -- 12 MR. EDMONDSON: Okay -- 13 MR. HUMMEL: Let me finish my question. 14 Q. (By Mr. Hummel) -- that show that these 15 disclosures would have been adequate? 01:40:43 16 MR. EDMONDSON: Okay. First of all, 17 again, I'm going to reiterate my -- my objection to 18 introducing this exhibit, based on -- on it being 19 provided to DIRECTV in the context of settlement 20 negotiations. 01:40:57 21 Second, I'm going to object to the 22 question as lacking foundation. 23 And third, object to the question as 24 being beyond the scope. 25 And four, object to the question as 01:41:07 Page 157 40 (Pages 154 - 157) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 53 of 94 1 calling for information that's protected from 01:41:09 2 disclosure by FRCP 26(b)(4). 3 And instruct the witness not to answer. 4 MR. HUMMEL: Mark this as next in order, 5 No. 6. 01:41:36 6 (Exhibit 6 was marked for identification 7 by the court reporter and is attached hereto.) 8 Q. (By Mr. Hummel) Exhibit 6 is another set 9 of disclosures that the FTC suggested would be 10 adequate in terms of content, presentation, 01:41:52 11 proximity, prominence or placement, with respect to 12 the disclosure of terms. 13 My question is, did the FTC perform any 14 studies or analyses or conduct any consumer surveys 15 that would indicate that consumers were more likely 01:42:06 16 to see or understand the terms as presented in the 17 format conveyed in Exhibit 6? 18 MR. EDMONDSON: Okay. Several objections 19 here. First, I'm going to object to this exhibit 20 as -- as being introduced without foundation. 01:42:21 21 MR. HUMMEL: I can call it into account, 22 if you want. 23 MR. EDMONDSON: Okay. 24 MR. HUMMEL: I mean, I'll -- I'll lay the 25 foundation on that sucker. 01:42:29 Page 158 1 MR. EDMONDSON: Okay. I'm sure you 01:42:31 2 would. 3 MR. HUMMEL: I will. 4 MR. EDMONDSON: Second objection is that 5 it is -- was provided to DIRECTV in the context of 01:42:37 6 settlement negotiations. 7 And third is our objection that the 8 question calls for information that's protected 9 from disclosure by FRCP 26(b)(4). 10 And instruct the witness not to answer. 01:43:00 11 Q. (By Mr. Hummel) So if you look at the 12 first page of Exhibit 6, Ms. O'Brien, there is a 13 disclosure that, again, the FTC would have claimed, 14 in our view, was adequate. Although the problem 15 was, to us, it was false. 01:43:14 16 And that is, for the first year, I will 17 pay 24.99 per month for the Choice package. For 18 the second year, I will pay 49.99 per month, unless 19 the package price goes up. 20 And as I demonstrated to you, I think, by 01:43:26 21 looking at the prior -- actually, Exhibit 1 to the 22 complaint -- that's not true. The consumer would 23 have to maintain a minimum level of service for 24 24 months. The package price would not necessarily 25 go up for that particular consumer. 01:43:42 Page 159 1 So the question is, did you perform any 01:43:43 2 studies, analyses or surveys that this disclosure 3 would have better informed consumers about the 4 terms of the deal? 5 MR. EDMONDSON: Object to the question. 01:43:53 6 Lack of foundation. Argumentative. And calls for 7 information protected from disclosure by F -- 8 FRCP 26(b). 9 And I will instruct the witness not to 10 answer. 01:44:06 11 Q. (By Mr. Hummel) Look, if you would, 12 please, at the second page of Exhibit No. 6, which 13 is another method of putting information in what we 14 call the red bubble, as opposed to having 15 information outside the red bubble, which is on 01:44:20 16 Exhibit 1 of the complaint, the Claire Danes ad. 17 My question is, are you aware of any 18 studies, surveys or analyses performed by the FTC 19 that show the consumers better perceive 20 introductory price terms of the offer if they're in 01:44:31 21 the bubble versus outside the bubble? 22 MR. EDMONDSON: Okay. I'm -- I'm going 23 to object to that question as lacking foundation, 24 mischaracterizes the exhibit, and as calling for 25 evidence that's protected from disclosure by 01:44:50 Page 160 1 FRCP 26(b), and I'll direct Ms. O'Brien not to 01:44:55 2 respond to the question. 3 Q. (By Mr. Hummel) What was the basis, if 4 any, of the FTC's contention that disclosures 5 inside a red bubble are more likely to be seen and 01:45:10 6 understood by consumers than disclosures outside 7 the red bubble but immediately adjacent to the red 8 bubble? 9 MR. EDMONDSON: I'm going to object to 10 that question as lacking in foundation. Also, 01:45:25 11 object to it as calling for information protected 12 from disclosure by FRCP 26(b). 13 And I'll direct Ms. O'Brien not to 14 answer. 15 It's also beyond the scope of the topic. 01:45:36 16 MR. HUMMEL: I think I was asking about 17 surveys, but that's okay. 18 Q. (By Mr. Hummel) Is it correct to say 19 that your answer would be the same for the meaning 20 of presentation, proximity, prominence, placement 01:46:15 21 and context as it was for your answer about the 22 meaning of content, when I asked that question? 23 MR. EDMONDSON: Would you read that back, 24 please. 25 (Record read as follows: 01:46:29 Page 161 41 (Pages 158 - 161) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 54 of 94 1 "QUESTION: Is it correct to say that 01:46:29 2 your answer would be the same for the 3 meaning of presentation, proximity, 4 prominence, placement and context as 5 it was for your answer about the 01:46:29 6 meaning of content, when I asked that 7 question?") 8 Q. (By Mr. Hummel) Do you understand what 9 I'm asking you? 10 MR. EDMONDSON: I -- I -- before you 01:46:47 11 answer that, I want to object to that as -- 12 question as being outside the scope. Ms. O'Brien 13 may respond to the question if she can do so 14 without revealing any privileged information, 15 including -- including attorney work product or 01:46:59 16 attorney-client communications. 17 THE DEPONENT: Your question before was 18 asking for my interpretation of those terms, and my 19 answer would be the same. I have not prepared to 20 answer those questions today. 01:47:16 21 Q. (By Mr. Hummel) Understood. 22 And in connection with your preparation 23 for your deposition here today, you did not look at 24 or examine any studies relating to the content, 25 presentation, proximity, prominence or placement of 01:47:27 Page 162 1 more probable than not that a consumer would not 01:48:44 2 see and understand the disclosures that the FTC 3 contends are material? 4 MR. EDMONDSON: Okay. That question is 5 beyond the scope. It also calls for information 01:48:54 6 protected by the attorney work product and 7 attorney-client privileges. 8 And I'll allow Ms. O'Brien to respond to 9 the question, if she can do so without revealing 10 privileged information. 01:49:09 11 THE DEPONENT: Can you please repeat the 12 question. 13 (Record read as follows: 14 "QUESTION: In connection with the 15 FTC's allegations in paragraph 17 and 01:49:14 16 22 of the complaint, does the word 17 "unlikely" mean that it is more 18 probable than not that a consumer 19 would not see and understand the 20 disclosures that the FTC contends are 01:49:14 21 material?") 22 THE DEPONENT: Well, like I said earlier, 23 when I was telling my legal opinion about this, is 24 that -- I mean, the standard is whether 25 consumers -- like a significant minority of 01:49:53 Page 164 1 what the FTC contends are material terms relating 01:47:31 2 to the introductory price or the premium channel 3 offer, correct? 4 MR. EDMONDSON: Okay. I'm going to 5 object to that question as mischaracterizes prior 01:47:41 6 testimony, and I also object to it to the -- in 7 that it calls for information that's protected from 8 disclosure by FRCP 26(b). 9 I'm going to direct Ms. O'Brien not to 10 answer. 01:47:58 11 Q. (By Mr. Hummel) Has the FTC performed 12 any studies or analyses or surveys that would 13 demonstrate the different content, presentation, 14 proximity, prominence or placement of terms 15 relating to the introductory price offer or the 01:48:09 16 premium channel offer, would render it more likely 17 that consumers would see and understand what the 18 FTC contends are material terms? 19 MR. EDMONDSON: Okay. I'm going to 20 object to that question as calling for information 01:48:21 21 protected from disclosure by FRCP 26(b)(4). 22 And direct Ms. O'Brien not to answer. 23 Q. (By Mr. Hummel) In connection with the 24 FTC's allegations in paragraph 17 and 22 of the 25 complaint, does the word "unlikely" mean that it is 01:48:40 Page 163 1 consumers may not have seen the disclosure and 01:49:55 2 understood it. 3 Q. (By Mr. Hummel) What does "significant 4 minority" mean? 5 MR. EDMONDSON: Okay. That question is 01:50:02 6 beyond the scope. It calls for a -- an attorney's 7 mental impressions. It calls for a legal 8 conclusion. 9 I'll allow Ms. O'Brien to respond to the 10 question, if she -- if she can. 01:50:17 11 THE DEPONENT: Well, I mean, court -- 12 courts have -- I mean, this is something that 13 courts have ruled on, and I think some cases have 14 been as low as 20 percent. Maybe even lower. 15 Q. (By Mr. Hummel) In terms of the 01:50:34 16 20 percent, you mean that if 20 percent of 17 consumers do not see and understand the 18 disclosures, then you would consider that 19 potentially actual deception? 20 MR. EDMONDSON: Objection. Misstates 01:50:46 21 prior testimony. Beyond the scope. Calls for a 22 legal conclusion. 23 You may answer -- respond if you can. 24 THE DEPONENT: I think, in my legal 25 opinion, it -- it would -- it would indicate that 01:50:59 Page 165 42 (Pages 162 - 165) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 55 of 94 1 consumers are -- are likely to be misled. So 01:51:00 2 that was the -- that would establish that stan- -- 3 that element of the deception case. And I'm basing 4 that on case law that I've read. 5 Q. (By Mr. Hummel) If you could look at 01:51:46 6 page 1 -- excuse me -- yeah, the first page of 7 Exhibit 1, which is the cover page of the 8 Claire Danes ad. 9 A. This is Exhibit 1 to the complaint? 10 Q. Yeah. Exhibit 1 to the complaint which 01:52:09 11 is the first page of the print advertisement from 12 October 2014. 13 The -- the document speaks for itself, 14 but I'll tell you that the requirement of a 15 24-month commitment or agreement is twice stated on 01:52:18 16 the first page of the -- of the ad. 17 What surveys or studies has the FTC 18 performed, if any, that would indicate that a 19 consumer is likely to be misled, in light of the 20 content, presentation, proximity, prominence or 01:52:43 21 placement of that disclaimer? 22 MR. EDMONDSON: Objection. Calls for 23 information protected from disclosure by 24 FRCP 26(b). 25 Direct Ms. O'Brien not to respond. 01:52:55 Page 166 1 Q. (By Mr. Hummel) And in connection with 01:52:58 2 topic 4 of the complaint, assuming that a consumer 3 did not read those two disclaimers on the very 4 first page of Exhibit 1 that talk about the 5 24-month agreement, but nevertheless went to the 01:53:07 6 800 number -- or the toll-free number because it 7 might have been 888 -- or directv.com and 8 subscribed, and after subscribing, absolutely knew, 9 100 percent, about the 24-month commitment and the 10 existence of a second year price change, what 01:53:25 11 injury would there be, if any, to a consumer, based 12 on the print ad? 13 MR. EDMONDSON: Okay. Would you read 14 that question back, please. 15 (Discussion off the stenographic record.) 01:53:35 16 (Record read as follows: 17 "QUESTION: And in connection with 18 topic 4 of the complaint, assuming 19 that a consumer did not read those 20 two disclaimers on the very first 01:53:35 21 page of Exhibit 1 that talk about the 22 24-month agreement, but nevertheless 23 went to the 800 number -- or the 24 toll-free number because it might 25 have been 888 -- or directv.com and 01:53:35 Page 167 1 subscribed, and after subscribing, 01:53:35 2 absolutely knew, 100 percent, about 3 the 24-month commitment and the 4 existence of a second year price 5 change, what injury would there be, 01:53:35 6 if any, to a consumer, based on the 7 print ad?") 8 MR. EDMONDSON: Okay. I'm going to 9 object as that question is being compound and also 10 being -- being beyond the scope of the noticed 01:54:37 11 topics. 12 I will allow Ms. O'Brien to respond to 13 the question, if she can without revealing any 14 privileged information, including any attorney work 15 product or attorney-client privileged 01:54:52 16 communications or other attorney-client 17 information. 18 THE DEPONENT: So this is relating to 19 topic 4 of -- you said of the complaint. I think 20 you meant the notice. 01:55:05 21 Q. (By Mr. Hummel) I did. 22 A. So in your hypothetical, the consumer has 23 been asked -- has -- has seen the -- the -- the 24 Claire Danes ad and then signed up for the -- 25 signed up for the service. And at the time they 01:55:19 Page 168 1 were signing up -- before they signed up for the 01:55:21 2 service, they were informed that it was 24 months, 3 and they were informed what their second year price 4 was going to be. 5 Q. Right. 01:55:29 6 A. Then I would agree that there wouldn't be 7 any injury. 8 Q. Okay. And that would be true if a 9 consumer viewed a TV ad and then went to the Web or 10 the phone, and during the subscription process 01:55:39 11 learned about the 24-month agreement, learned about 12 the -- the existence of a second year price change, 13 learned about the -- the existence of a possible 14 imposition of an early cancelation fee if they 15 canceled within 24 months. 01:56:03 16 But before they subscribed, if they knew 17 those terms, no injury flowing from the TV ad 18 either, correct? 19 MR. EDMONDSON: Okay. Compound. 20 Misstates her -- her -- her prior testimony. 01:56:17 21 Beyond the scope. So any answer she -- she gives 22 is -- is not binding on the Commission. 23 Calls for attorney -- attorney -- 24 attorney's mental impressions. Really calls for a 25 legal conclusion. 01:56:31 Page 169 43 (Pages 166 - 169) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 56 of 94 1 I'll allow Ms. O'Brien to respond to it 01:56:32 2 if she can do so without revealing any privileged 3 information. 4 MR. HUMMEL: And, again, we disagree 5 about the scope objection. 01:56:42 6 THE DEPONENT: Well, the -- you know, 7 again, in your hypothetical, if the consumer had 8 seen the TV ad and then had -- and during the -- 9 before they subscribed all the information that the 10 complaint alleges isn't normally disclosed to 01:56:55 11 consumers was disclosed, there wouldn't be any 12 consumer injury. 13 But there would be a violation of the 14 FTC Act because they -- the company has 15 disseminated deceptive ad. There may not be a 01:57:09 16 ground for monetary relief, but there certainly 17 would be grounds for injunctive relief, in my legal 18 opinion. 19 Q. (By Mr. Hummel) Right. And that's a 20 legal opinion. We may differ about that. 01:57:18 21 A. Yeah, I hope -- all I answered here was a 22 legal opinion. 23 Q. I understand. It -- all right. But -- 24 but it's fair enough and -- and we would certainly 25 agree that -- or state that that's within the 01:57:26 Page 170 1 scope. 01:57:28 2 But the question is -- really does go to 3 topic 4 of the notice, which is the FTC's claim for 4 restitution, refund of monies paid or disgorgement 5 ill-gotten gains and injunctive relief. But I'm 01:57:42 6 putting aside injunctive relief for a minute. 7 Okay. 8 You're aware that the FTC's initial 9 disclosures identified four categories of alleged 10 consumer injury that could lead to some sort of 01:57:58 11 monetary component of relief? 12 MR. EDMONDSON: Is there a question 13 there? 14 THE DEPONENT: Am I aware of the -- yes, 15 I am aware of the initial disclosures listing four 01:58:11 16 categories. 17 Q. (By Mr. Hummel) Right. That was my only 18 question. 19 MR. EDMONDSON: Okay. Good. Counsel, 20 before we go any farther, we've been going for an 01:58:18 21 hour. Do you think -- I think Ms. O'Brien has been 22 worked pretty hard -- 23 THE DEPONENT: We could take a quick 24 five-minute break. 25 MR. HUMMEL: Absolutely. 01:58:26 Page 171 1 MR. EDMONDSON: I think it would be -- 01:58:27 2 can we do that? 3 MR. HUMMEL: 100 percent. 4 MR. EDMONDSON: Thanks. 5 THE VIDEOGRAPHER: This marks the end of 01:58:28 6 Volume I, Media No. 2 of the deposition of Kerry 7 O'Brien. The time is 1:58 p.m. We're off the 8 record. 9 (Recess taken.) 10 THE VIDEOGRAPHER: We are back on the 02:10:50 11 record at 2:11 p.m. This marks the beginning of 12 Volume I, Media No. 3 of the deposition of 13 Kerry O'Brien. 14 Please continue. 15 Q. (By Mr. Hummel) In connection with your 02:11:01 16 designation on topic No. 4 of the notice, which 17 relates to the FTC's claim for restitution, refund 18 of monies paid or disgorgement, and with reference 19 to the initial disclosures for categories, I'm 20 going to focus you first on category 1. 02:11:15 21 And my question is this, how would the 22 FTC measure the injury flowing from DIRECTV's 23 failure to adequately disclose, or alleged 24 failure to adequately disclose, the mandatory 25 two-year agreement period for subscription service? 02:11:29 Page 172 1 MR. EDMONDSON: I'm going to object to 02:11:35 2 that question to the extent it calls for -- it is 3 calling for attorney -- to the extent that it calls 4 attorney -- for attorney-client privileged 5 communications, attorney work product. 02:11:50 6 I would say it's beyond the -- object to 7 it as being beyond the scope. And let Ms. O'Brien 8 answer the question if she can answer it without 9 revealing any privileged information. 10 MR. HUMMEL: How is it beyond the scope, 02:12:05 11 honestly? That one I don't understand at all. 12 No response. Okay. 13 Q. (By Mr. Hummel) You can answer. 14 A. So are you asking how -- ultimately, at 15 the end of this case the Commission -- the 02:12:14 16 Commission litigation team will -- what evidence 17 they'll present that's relevant to one? 18 Q. Nope. That's not what I'm asking. Let 19 me be really clear on what -- 20 A. Then I'm confused. 02:12:24 21 Q. Okay. I don't want there to be any 22 confusion. 23 So injury flowing from DIRECTV's failure 24 to adequately disclose -- I'll call it the material 25 terms of the introductory price offer. Okay? 02:12:34 Page 173 44 (Pages 170 - 173) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 57 of 94 1 Question is, how are you going to go 02:12:37 2 about measuring that injury? One way might be to 3 say consumers weren't aware that there was an 4 increase or potential increase in price in the 5 second year. When they found out in month 14, they 02:12:49 6 canceled and they had to pay an ECF. And one 7 measure might be the ECF, because you could say 8 they were locked into the two-year contract, duped 9 into believing that there was a -- not a two-year 10 price increase and they had to pay a penalty. And 02:13:04 11 the penalty -- the total sum of that penalty may 12 well be one measure. 13 Is that a way that the FTC is going to 14 measure? So I'm asking -- you know, the federal 15 rules require that the -- the plaintiff in a case, 02:13:14 16 in which case it's the FTC -- if they're not going 17 to tell us the amount, they have to tell us the 18 method of calculating. And so that's what I'm 19 after. It's not sufficient for you to say, injury 20 flowing from. It's how do you calculate it and 02:13:26 21 that's what I'm after. 22 MR. EDMONDSON: Okay. I'm going to 23 object to that question as calling for attorney 24 work product, calling for information that is 25 protected from disclosure by F -- FRCP 26(b)(4). 02:13:37 Page 174 1 And direct the witness not to answer. 02:13:42 2 Q. (By Mr. Hummel) So my question is, what 3 methodology will the FTC employ to measure the 4 injury flowing from the alleged failure to disclose 5 the mandatory two-year agreement for subscription 02:14:05 6 service? 7 MR. EDMONDSON: Okay. Again -- would you 8 restate the -- read that question back. 9 (Record read as follows: 10 "QUESTION: So my question is, what 02:14:49 11 methodology will the FTC employ to 12 measure the injury flowing from the 13 alleged failure to disclose the 14 mandatory two-year agreement for 15 subscription service?") 02:14:49 16 MR. EDMONDSON: I'm going to object to 17 that question as calling for information protected 18 from disclosure by the attorney work product 19 doctrine and FRCP 26(b)(4). 20 And direct the witness not to answer. 02:15:08 21 Q. (By Mr. Hummel) What did you do to 22 prepare for your testimony on topic 4 of the depo 23 notice? 24 MR. EDMONDSON: I'm going to caution the 25 witness that in responding to this question she 02:15:22 Page 175 1 should not reveal any attorney work product, or any 02:15:26 2 information related to any calculations or -- or 3 the existence of any calculations done by experts 4 employed by or retained by the FTC. 5 THE DEPONENT: By -- I feel like I've 02:15:49 6 already answered this question. I told you 7 everything that I did to prepare for today, and I 8 didn't do anything extra to prepare for item No. 4. 9 Q. (By Mr. Hummel) I could have asked that 10 question. 02:15:58 11 Did you do anything in addition to what 12 you've already testified to to prepare for topic 4? 13 A. No. 14 Q. Did you look at, for example, any 15 calculations of alleged consumer injury? 02:16:06 16 MR. EDMONDSON: Okay. I'm going to 17 object to that question as calling for information 18 protected from disclosure by FRCP 26(b)(4), and by 19 the attorney-client privilege and the attorney -- 20 and the attorney work product doctrine. 02:16:22 21 And direct the witness not to answer. 22 Q. (By Mr. Hummel) What methodology would 23 the FTC use to measure the consumer injury flowing 24 from DIRECTV's alleged failure adequately to 25 disclose the second year price of the service 02:16:34 Page 176 1 subscription? 02:16:36 2 MR. EDMONDSON: Okay. I'm going to 3 direct the witness not to answer that question 4 because it calls for information protected from 5 disclosure by FRCP 26(b)(4), and by the attorney 02:16:41 6 work product doctrine. 7 Q. (By Mr. Hummel) If it were true that 8 DIRECTV could not, under any circumstance, 9 accurately disclose the second year price of the 10 subscription service, would it be true that there's 02:16:57 11 no consumer injury flowing from the failure to 12 disclose that? 13 MR. EDMONDSON: Okay. That question is 14 beyond the scope. It's compound. It calls for a 15 legal conclusion. It calls for attorney work 02:17:11 16 product. 17 I'll let Ms. O'Brien answer it if she -- 18 if she can without revealing any privileged 19 information. 20 THE DEPONENT: I'm sorry. I -- I can't 02:17:25 21 answer that hypothetical. I don't have an opinion. 22 Q. (By Mr. Hummel) Okay. Category No. 3, 23 in the initial disclosures, is alleged consumer 24 injury flowing from DIRECTV's alleged failure to 25 adequately disclose the need for subscribers of the 02:17:50 Page 177 45 (Pages 174 - 177) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 58 of 94 1 service to affirmatively cancel their introductory 02:17:53 2 premium channel offering prior to the end of the 3 free trial period in order to avoid DIRECTV's 4 additional charges. 5 Do you see that? 02:18:04 6 A. I see item No. 3. 7 Q. First of all, the additional charges are 8 the charges for the premium channels, once the free 9 promotional offer ends, right? It's like the 10 regular price? 02:18:18 11 MR. EDMONDSON: Could you read that back, 12 please. 13 (Record read as follows: 14 "QUESTION: First of all, the 15 additional charges are the charges 02:18:21 16 for the premium channels, once the 17 free promotional offer ends, right? 18 It's like the regular price?") 19 MR. EDMONDSON: Yeah, I realize that's a 20 foundational question, but I'm going to object to 02:18:36 21 it as being beyond the scope. 22 But Ms. O'Brien may answer. 23 THE DEPONENT: That's my understanding, 24 based -- having read the complaint. 25 Q. (By Mr. Hummel) Yeah. So what 02:18:46 Page 178 1 methodology would the FTC utilize to measure 02:18:48 2 consumer injury flowing from DIRECTV's alleged 3 failure adequately to -- to disclose the need for 4 subscribers to call to cancel the premium channel 5 service? 02:19:01 6 MR. EDMONDSON: That question calls for 7 information protected by the attorney work product 8 doctrine, attorney-client privilege and 9 FRCP 26(b)(4). 10 And I'll instruct the witness not to 02:19:10 11 answer. 12 Q. (By Mr. Hummel) So let's assume, in a 13 hypothetical -- and I just want to understand the 14 methodology that the FTC might use -- that a 15 consumer doesn't understand at the time they 02:19:23 16 subscribe that they're getting free HBO, Showtime 17 and Cinemax, but they get it and they -- they 18 really like it. They watch all kinds of Showtime 19 and HOB programming and they want to keep it. 20 And come the fourth month, they get 02:19:38 21 charged for it and they see it on their bill, and 22 they continue to subscribe to those premium 23 channels at the regular price for the next two 24 years and then they go to cable. 25 Is there any consumer injury flowing from 02:19:52 Page 179 1 their failure to understand or DIRECTV's failure to 02:19:54 2 adequately disclose the role to pay? 3 MR. EDMONDSON: Okay. That question is 4 beyond the scope. It calls for a legal conclusion. 5 Potentially -- may call for -- for information 02:20:08 6 protected by FRCP 26(b)(4). 7 I'll let Ms. O'Brien respond to the 8 question to the extent she can respond without 9 revealing any attorney-client or attorney -- 10 attorney work product protected information. 02:20:25 11 THE DEPONENT: I mean, I can explain my 12 understanding of the case law, which is that, 13 you know, when the Commission has established that 14 there is a violation -- and that seems to be where 15 your hypothetical that we -- that there is a 02:20:36 16 violation of -- of the law. That in order to 17 obtain monetary relief, the Commission has to show 18 consumer reliance and -- and -- and consumers were 19 injured. 20 Those two facts, or factors, are presumed 02:20:53 21 if the Commission can establish only that the ads 22 were widely disseminated and -- as -- and 23 the consumers -- and the consumers actually 24 purchased the product, or in this case subscribed 25 to the service. Then the burden is then shifted to 02:21:08 Page 180 1 the defendants or defendant to come back and show 02:21:10 2 the consumers, you know, weren't injured, and which 3 is sort of your hypothetical or they didn't rely on 4 those ads. 5 So, you know, that's how I would analyze 02:21:20 6 your hypo. 7 Q. (By Mr. Hummel) That's a perfect 8 question and that's exactly within the scope of the 9 testimony. It's -- I want to understand the 10 methodology the FTC's going to use to try to 02:21:30 11 measure injury flowing from these -- 12 A. And that would be -- 13 Q. -- alleged failures to disclose. 14 A. And that's -- that's the case law for an 15 FTC violation. 02:21:39 16 Q. I'm not sure I would agree with you on 17 the case law in terms of shifting burden, but I 18 understand the point. 19 And my question did not presume 20 inadequate disclosure, it presumed -- and you could 02:21:46 21 imagine a hypothetical where a consumer doesn't 22 care about any of the terms of the offer. They 23 don't pay any attention to it, even though they're 24 prominently displayed, because they want 25 Ray Donovan or they want the NFL Sunday ticket, and 02:21:59 Page 181 46 (Pages 178 - 181) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 59 of 94 1 they sign up and they're not harmed at all. 02:21:59 2 But you -- your view is, we're going to 3 show the total amount charged as a result of this 4 alleged violation and it's the defendant's burden 5 to come back and demonstrate no consumer injury, 02:22:12 6 for any number of factors, generally speaking. 7 Fair? 8 A. Well, the consumers didn't rely on those 9 ads -- 10 Q. Right. 02:22:24 11 A. -- is the standard. 12 Q. Right. Okay. Understood. 13 And in terms of liability, if -- if it 14 were demonstrated that a consumer, in fact, 15 notwithstanding seeing a -- a print ad, for 02:22:40 16 example, like Exhibit 1 to the complaint, which 17 unquestionably contains the disclosures. You're 18 going to argue that they may not have been 19 prominent enough or appropriate placement -- but 20 then goes through the subscription flow. 02:22:58 21 Is it your view that there's presumptive 22 injury even though they know the terms of the deal 23 by the time they subscribe? 24 MR. EDMONDSON: Okay. Would you read 25 that question back, please. 02:23:10 Page 182 1 (Record read as follows: 02:24:00 2 "QUESTION: And in terms of 3 liability, if -- if it were 4 demonstrated that a consumer, in 5 fact, notwithstanding seeing a -- a 02:22:40 6 print ad, for example, like 7 Exhibit 1 to the complaint, which 8 unquestionably contains the 9 disclosures. You're going to argue 10 that they may not have been prominent 02:22:56 11 enough or appropriate placement -- 12 but then goes through the 13 subscription flow. 14 "Is it your view that there's 15 presumptive injury even though they 02:23:03 16 know the terms of the deal by the 17 time they subscribe?") 18 MR. HUMMEL: Let me -- let me rephrase. 19 MR. EDMONDSON: I -- I'm -- okay. 20 MR. HUMMEL: Let me withdraw the question 02:24:02 21 and rephrase. 22 MR. EDMONDSON: Okay. 23 Q. (By Mr. Hummel) So if you look at the 24 initial disclosures of the FTC, you cite a case, 25 which is Stefanchik, which is a Ninth Circuit case 02:24:11 Page 183 1 from 2009, that says because the FTC Act is 02:24:17 2 designed to protect consumers from economic 3 injuries, courts have often awarded the full amount 4 lost by consumers. Okay. 5 My question is this, if the FTC were to 02:24:31 6 prove that a -- a significant minority of consumers 7 did not see or understand material disclosures on 8 the ads, in the print ad, but nevertheless then 9 knew all of the terms of the offer by the time they 10 either completed the phone or Web subscription 02:24:58 11 process, is it the FTC's view that in that instance 12 there has been loss to consumers? 13 MR. EDMONDSON: Okay. The question is 14 beyond the scope. The question calls for a legal 15 conclusion. 02:25:14 16 I'll let Ms. O'Brien answer the question 17 if she can do so without revealing any privileged 18 information concerning this case, including 19 information protected by the attorney-client 20 privilege, attorney work product doctrine or 02:25:29 21 expert-related information protected by 22 FRCP 26(b)(4). Okay. 23 THE DEPONENT: I have to say, I really 24 can't get my head around your hypothetical. 25 Q. (By Mr. Hummel) Okay. I'm just trying 02:25:45 Page 184 1 to understand your -- the "your" meaning the FTC's 02:25:47 2 view of loss in this case. And it says citing 3 Stefanchik the full amount lost by consumers. 4 My question is, does the loss to 5 consumers include those consumers who sign up 02:26:02 6 through the telephone or the Web process, and who, 7 by the end of that process, fully understand the 8 material terms of the deal, including the premium 9 channel offer and the introductory price offer, but 10 who didn't appreciate those terms based on the 02:26:18 11 print ad or a TV ad? 12 MR. EDMONDSON: Okay. Again, that 13 question is beyond the scope of the noticed topics. 14 It calls for a legal conclusion. 15 And Ms. O'Brien may answer it if she can 02:26:29 16 do so without revealing any privileged information, 17 including information protected by the 18 attorney-client, attorney work product or 19 FRCP 26(b)(4) privileges. 20 THE DEPONENT: Well, my -- my experience, 02:26:49 21 you know, as the courts -- once we've established 22 liability, the FTC has established that there's 23 been a law violation, that the court has a 24 discretion to award monetary relief in the form of 25 consumer restitution. 02:27:07 Page 185 47 (Pages 182 - 185) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 60 of 94 1 The standard that the FTC has to meet in 02:27:08 2 order to establish a monetary relief is appropriate 3 is, again, that the odds were widely disseminated 4 and the consumers actually subscribed or purchased 5 the product. 02:27:20 6 The courts, including the Ninth Circuit, 7 has said that the -- at that point the -- the 8 appropriate measure of equitable relief is the full 9 amount of money that -- usually it's gross revenue 10 minus refunds, chargebacks, that sort of thing. So 02:27:32 11 sort of net injury. Again, the defendant can come 12 in and rebut that -- those -- that presumption. 13 That's my personal view of the law. 14 Q. (By Mr. Hummel) So is the FTC's view -- 15 strike that. 02:27:53 16 In connection with topic 4 of the notice, 17 is it the FTC's claim that monetary relief should 18 be measured for all of these alleged failure 19 disclosures by taking total revenues for the entire 20 product and deducting certain costs? 02:28:08 21 MR. EDMONDSON: Okay. I'm going to 22 object to that question as calling for information 23 protected by FRCP 26(b)(4), and I'm going to direct 24 the answer -- the witness not to answer. And it's 25 also attorney-client privilege and attorney work 02:28:35 Page 186 1 product that applies here. 02:28:37 2 Q. (By Mr. Hummel) Looking at topics -- or 3 excuse me -- paragraph numbers 3 and 4 of the 4 initial disclosures. 5 One is injury flowing from the failure 02:28:45 6 allegedly to disclose the fact that consumers have 7 to call to cancel the premium service or be 8 charged. And the second one is the alleged failure 9 to obtain express informed content. 10 How do those two measures differ, if at 02:28:59 11 all? 12 In both cases the consumers are getting 13 free premium channels for three months and then 14 they're charged. So how is the measure different? 15 MR. EDMONDSON: I'm going to object to 02:29:11 16 that question as calling for information protected 17 from disclosure by FRCP 26(b)(4), and the 18 attorney-client privilege and attorney work product 19 doctrine. 20 Direct the witness not to answer. 02:29:23 21 Q. (By Mr. Hummel) The last part of the 22 disclosure on page 6 says, quote, "The number of 23 injured consumers and the total monetary injury 24 will be ascertained through discovery and trial." 25 Do you see that? 02:29:40 Page 187 1 A. Yes. 02:29:41 2 Q. How are you going to count the number of 3 injured consumers? 4 MR. EDMONDSON: I'm going to object to 5 that question as being -- calling for information 02:29:46 6 protected from disclosure by FRCP 26(b)(4) and the 7 attorney-client privilege. 8 And direct the witness not to answer. 9 Q. (By Mr. Hummel) Does injured consumers 10 include those consumers who, by the time they 02:30:01 11 subscribe, understand the material -- what the FTC 12 contends are the material terms of the deal? 13 MR. EDMONDSON: Okay. I'm going to 14 object to that question as being an incomplete 15 hypothetical. Calling for a legal conclusion and 02:30:17 16 calling for information protected from disclosure 17 by FRCP 26(b)(4) and the attorney work product 18 doctrine. 19 And direct the witness not to answer. 20 Q. (By Mr. Hummel) In connection with the 02:30:35 21 declarations that you obtained from complaining 22 consumers, during the break did you ask Jake how 23 many declarations you have, by the way? 24 A. No. 25 Q. Is there anything, in your view, that 02:30:44 Page 188 1 prevents the immediate disclosure by PDF tonight of 02:30:44 2 those declarations? 3 MR. EDMONDSON: Coun- -- Counsel, we 4 can -- that's beyond the scope of her -- of her 5 testimony here. And you and I can take that up 02:30:56 6 after the deposition. 7 Q. (By Mr. Hummel) Just wanting to know if 8 there's somehow some protection over those 9 declarations that we can't have them. We should 10 have had them months ago and we don't have them. 02:31:07 11 MR. EDMONDSON: Well, the -- the -- the 12 issue is that the -- is that -- to be honest, that 13 the -- the declarations of consent contain PII, 14 personal identifiable information, and until we 15 have an order in place or an agreement in place 02:31:21 16 between the parties that satisfactorily protects 17 the PII, we -- we can't produce those to DIRECTV. 18 MR. HUMMEL: Actually, it goes the other 19 way, in terms of the law. And we agreed to the 20 terms of the protective order, so -- 02:31:34 21 MR. EDMONDSON: We -- we can -- 22 MR. HUMMEL: -- nothing prevents that 23 production. 24 MR. EDMONDSON: We can take that up after 25 the deposition. 02:31:37 Page 189 48 (Pages 186 - 189) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 61 of 94 1 Q. (By Mr. Hummel) All right. Does the -- 02:31:39 2 do the declarations -- have you read the 3 declarations? 4 A. No. 5 MR. HUMMEL: Let's go off the record. 02:31:48 6 THE VIDEOGRAPHER: Going off the record. 7 The time is 2:32 p.m. 8 (Recess taken.) 9 THE VIDEOGRAPHER: Back on the record. 10 The time is 2:40. 02:39:56 11 Please continue. 12 Q. (By Mr. Hummel) Has the FTC conducted 13 any surveys of consumers who have completed the 14 subscription process, either on the phone or on the 15 Web, to ascertain whether, in fact, they understand 02:40:08 16 and appreciate all the material terms of the 17 introductory price offer and the premium channel 18 offer? 19 MR. EDMONDSON: Objection. Calls for 20 information protected from disclosure by 02:40:20 21 FRCP 26(b)(4). Also calls for attorney-client and 22 attorney work product protected information. 23 And direct the witness not to answer. 24 Q. (By Mr. Hummel) Has the FTC conducted 25 any studies or surveys or performed any analyses to 02:40:32 Page 190 1 determine when, in the subscription process, 02:40:35 2 consumers reasonably make the buying decision 3 regarding the DIRECTV satellite television 4 subscription service? 5 MR. EDMONDSON: Objection. Calls for 02:40:47 6 information protected from disclosure by 7 FRCP 26(b)(4), and for information protected by the 8 attorney-client and attorney work product 9 privileges. 10 And Ms. O'Brien, please don't answer that 02:40:58 11 question. 12 Q. (By Mr. Hummel) Has the FTC conducted 13 any studies of other television subscription 14 services providers, like cable companies or DISH 15 Network, to ascertain whether there is any material 02:41:11 16 difference between Website disclosures for 17 subscribing to those competitors as compared to 18 DIRECTV's disclosures? 19 MR. EDMONDSON: Okay. That question is 20 beyond the scope of the noticed topics. It also 02:41:25 21 calls for information protected from disclosure by 22 FRCP 26(b)(4). 23 Q. (By Mr. Hummel) Has the FTC performed 24 any testing, surveys or analysis to ascertain what 25 is the relevant audience for DIRECTV's ads? 02:41:40 Page 191 1 MR. EDMONDSON: That calls for 02:41:46 2 information protected by FRCP 26(b)(4). It's also 3 beyond the scope. 4 Direct the witness not to answer. 5 MR. HUMMEL: At this time, Counsel, I 02:41:55 6 have no further questions of this witness, except 7 to say that we obviously do not believe this 8 deposition is concluded. We have issues with the 9 objections and instructions. We would assert that 10 this witness was not an adequate Rule 30(b)(6) 02:42:11 11 designee for several reasons in terms of the 12 preparation and the ability to testify. 13 We'll reserve those topics. Subject to 14 that statement on the record, which I'm sure you 15 don't agree with, because we're going to meet and 02:42:24 16 confer about it, I'm done with the questioning for 17 today. 18 MR. EDMONDSON: Okay. Thank you. 19 MR. HUMMEL: Okay. 20 THE DEPONENT: Okay. 02:42:31 21 //// 22 23 24 25 Page 192 1 THE VIDEOGRAPHER: This concludes today's 2 deposition of Kerry O'Brien. The number of media 3 was three and will be retained by Veritext Legal 4 Solutions. The time is 2:42 p m. We're off the 5 record. 02:42:41 6 (Time noted: 2:42 p m.) 02:42:41 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 193 49 (Pages 190 - 193) Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 62 of 94 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 63 of 94 [& - 4] & & 139:5,7 0 01129 1:7 2:7 01129hsg 7:21 1 1 5:13 7:5 10:19 12:10 20:13 33:14 33:20,25 34:22 44:9 46:15 73:14,16 75:1 78:2 82:7 91:5,24 111:21,23 159:21 160:16 166:6,7,9,10 167:4,21 172:20 182:16 183:7 1-194 1:25 10 5:15 100 20:15 51:23 61:12,14 167:9 168:2 172:3 10:14 56:25 10:23 57:3 11 55:19,23 62:16 66:18 67:8 111 146:18 147:8 11:04 91:6 11:15 91:10 11:59 130:7 12 42:25 44:9,11 46:10 66:19 67:8 123 5:22 12546 1:22 2:22 194:25 13 66:22 73:8,10,11 77:1,9,10 79:10 80:23 82:21 14 66:22 174:5 15 66:22 103:12,14 115:21 156 6:4 158 6:8 16 33:6,11 40:24 41:14 61:18 66:24 119:25 122:6 16a 34:7,7,11,12 36:9 17 41:10,20 42:2 50:21 66:24 124:14 150:10,17 151:6,15 163:24 164:15 18 66:24 19 40:21,22 41:13 41:15 42:4 66:24 19.99 34:13 36:11 37:4 44:10 78:25 1999 4:7 1:08 130:10 1:58 172:7 2 2 5:17 6:6 24:11,13 33:4 66:15 69:20,23 70:9 73:15 75:1 79:19,25 103:13 122:11 130:24 147:10 172:6 20 67:9,15 74:19 75:9 165:14,16,16 2007 111:15,15 2009 184:1 2014 33:14 166:12 2015 1:18 2:20 7:1,9 2128502 1:23 22 12:11 163:24 164:16 23 71:18,19 72:6 24 5:17 44:11 47:1 67:9,16 70:25 74:17 75:6,8 76:8,14,24 82:22 130:23,24 145:11 159:24 166:15 167:5,9,22 168:3 169:2,11,15 24.99 42:24 159:17 26 17:17 22:13 23:4 31:12 45:8 48:16 50:11,18 54:2 55:5 56:22 57:15 58:8,21 59:5 60:8,21 61:5 65:20 68:11 70:14 71:14 72:11 75:22 81:24 82:10 84:23 87:8,13 88:11 89:14 89:24 90:17 91:24 94:5 96:9 99:8 100:7 101:6 105:4 106:6,18 107:5,16 113:6 118:18 123:2 123:7 125:8 126:3,9 127:1 129:3 131:15 132:8 135:8,18 137:25 138:8 139:22 140:9,18 141:2,11 146:6,16 150:5 154:17 155:15 158:2 159:9 160:8 161:1,12 163:8,21 166:24 174:25 175:19 176:18 177:5 179:9 180:6 184:22 185:19 186:23 187:17 188:6,17 190:21 191:7,22 192:2 28 1:18 2:20 7:1 28th 7:9 29.99 44:8 76:9,15 76:25 81:20 83:1 2:11 172:11 2:32 190:7 2:40 190:10 2:42 193:4,6 3 3 5:21 6:9 12:13,16 13:18 14:8 17:23 18:10,23 19:23 20:6 20:24 22:16 23:11 23:19 24:1 26:10,19 29:24 30:15 58:12 58:25 59:2,8 60:4 60:15 64:22 65:13 Veritext Legal Solutions 866 299-5127 68:15 69:6,20 70:20 70:21 71:18 72:6 84:11,13 90:4,13 119:16,18 121:21 130:5 131:6 133:19 133:22 134:3,7 138:17 140:24 143:5 146:19 172:12 177:22 178:6 187:3 30 1:16 10:12,13,15 11:2,5 20:12 28:3 152:22 192:10 310 4:9 38 5:19 39.99 79:16 3:15 1:7 2:7 7:21 4 4 5:15,24 12:13 17:17 22:13 23:4 31:12 33:5,6 45:8 48:16 50:11,18 54:2 55:5 56:22 57:15 58:8,21 59:5 60:8 60:21 61:5 62:13,14 62:15,16 63:6 65:20 67:11,14,17 68:4,11 68:17 69:15 70:14 71:14 72:11,19 75:22 77:12 79:1,17 81:24 82:7,10 84:23 87:8,13 88:11 89:14 89:24 90:17 91:16 91:19 94:5 96:9 99:8 100:7 101:6 105:4 106:6,18 107:5,16 113:6 118:11,18 119:7 123:2,7 125:8 126:3 126:9 127:1 129:3 131:15 132:8 133:7 135:8,18 137:25 138:8 139:22 140:9 140:18 141:2,11 Page 1 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 64 of 94 [4 - advertisements] 146:6,16,21 147:8,9 147:19 148:18 150:5 154:17 155:15 158:2 159:9 163:21 167:2,18 168:19 171:3 172:16 174:25 175:19,22 176:8,12 176:18 177:5 179:9 180:6 184:22 185:19 186:16,23 187:3,17 188:6,17 190:21 191:7,22 192:2 408 156:24 157:1 415 3:11,19 4:16 49.99 80:10 159:18 5 5 6:4 12:13 77:1,12 93:17,22 96:3,4 99:20 101:25 102:14,23 104:7 110:18,24 116:15 116:25 117:8,15 119:7 127:8 150:11 151:7 153:18 156:6 156:7,9 50 103:19 115:22 555 4:14 570 2:19 3:9,17 7:16 9:13 58 133:19,22 134:16 135:15 595-9505 4:9 6 6 1:16 5:25 6:8 10:12,13,15 11:2,5 20:12 28:3 152:22 158:5,6,8,17 159:12 160:12 187:22 192:10 69 5:21 69.99 80:10 7 7 70:18 77:2,12 75,000 111:10 112:23 772-1219 4:16 8 8 147:7 800 46:5 167:6,23 81.99. 80:11 848-5175 3:11,19 87 138:17 140:24 888 167:7,25 89 145:18 9 9 5:6 146:21 147:8 147:18 9/24/2014 156:11 9/3/2015 194:22 90 145:18 90067 4:8 901 2:18 3:8,16 7:16 9:13 91 5:24 94103 3:10,18 7:17 94104 4:15 9:15 2:20 7:2,9 9:38 27:6 9:42 27:9 a a.m. 2:20 7:2,9 27:6 91:6 130:7 ability 12:3 192:12 able 13:20 155:24 absent 72:7 absolutely 167:8 168:2 171:25 accept 146:22 147:12 149:1 150:1 acceptance 147:13 access 85:25 87:16 88:4 account 158:21 accurate 42:15 97:14 147:5 148:10 accurately 177:9 act 6:5 51:14 170:14 184:1 acted 38:20,23 acting 15:12 action 8:2 155:20 194:17,18 actions 103:18 115:22 active 40:5 actual 73:22 112:9 112:18 165:19 ad 24:15,21 25:18 34:23 35:15 41:9,9 41:10 43:5 45:3,20 46:2,4,15 47:7 49:21,22,24 51:18 52:7 53:1 64:22,25 65:14,17 73:16 74:12 75:14 78:25 79:2 82:7 120:11,21 122:7,7,10,16,24 123:10 124:6,10,21 124:24 125:19 126:6,6 127:11 145:2 149:17 160:16 166:8,16 167:12 168:7,24 169:9,17 170:8,15 182:15 183:6 184:8 185:11,11 addition 176:11 additional 61:9,12 71:21 128:20 178:4 178:7,15 address 9:12 addressed 116:1 adequacy 29:18 109:24 adequate 25:22 152:6 154:25 155:11 156:14,19 157:9,15 158:10 159:14 192:10 adequately 44:18 47:17,18 67:5 79:7 138:13 172:23,24 173:24 176:24 177:25 179:3 180:2 adjacent 146:25 148:2 161:7 adjudicative 118:7 administered 9:2 11:12 194:7 administrative 153:14 admissibility 157:3 admit 78:11 admitted 157:8 admittedly 143:4 ads 20:3,15,15,25 22:23 30:11,13 31:6 32:9,10,11,12 33:12 46:17,22 49:10 50:3 50:6 53:20 54:18 61:8,8,9,12,15,16,17 61:18,20,21 66:25 119:19,21,21,22,24 119:24 120:1,3,5,6 120:8,15,18 121:5,7 121:9,10,19,22,25 122:4,5,6 126:15,16 126:21,22 128:4,23 152:24 180:21 181:4 182:9 184:8 191:25 advance 39:16 adverse 29:20,20 advertised 78:24 80:20 82:6 133:1 advertisement 25:21 33:15 46:16 49:2 149:16 166:11 advertisements 40:23 49:3 54:17 132:25 149:14 153:12 Veritext Legal Solutions 866 299-5127 Page 2 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 65 of 94 [advertising - apply] 147:19 148:15 149:8 150:7 151:20 151:25 152:1,20 154:18 155:16,17 155:22,22,24,25 156:3 158:3 159:10 160:10 161:14,19 161:21 162:2,5,11 162:19,20 163:10 163:22 165:23 169:21 173:8,8,13 175:1,20 176:21 177:3,17,21 178:22 179:11 184:16 185:15 186:24,24 187:20 188:8,19 190:23 191:10 192:4 answered 12:2 13:5 60:19 61:3 99:24 101:4 170:21 176:6 answering 16:4 58:19 65:23 94:2 115:11 anticipation 95:9 96:11,13 100:18 anybody 19:16,18 64:23 65:15 127:22 anybody's 22:1 anytime 136:8 apart 25:23 apologize 91:22 apparently 52:11 appear 63:4 64:14 69:1 139:10 advertising 12:19 13:25 15:14 23:21 24:6 32:21 33:8 42:13 89:20 95:12 95:16 98:6 99:2 102:18 104:11 110:22 128:6 advice 96:21 97:22 affiliated 92:9 affirmatively 178:1 afraid 85:14 afternoon 130:12 agency 10:20 13:17 13:23 139:25 agency's 140:1 ago 189:10 agree 7:23 45:19 65:24 85:1 86:4 123:20 124:2 127:12 147:1 148:4 149:3 153:13 169:6 170:25 181:16 192:15 agreed 115:5 189:19 agreeing 127:25 agreement 44:12 70:25 74:18 75:7,8 77:3,18 81:18 82:22 145:19,20 166:15 167:5,22 169:11 172:25 175:5,14 189:15 ahead 11:24 71:5,25 al 7:18 allegation 41:8 42:18,22 43:3,14 46:21 48:18 68:4 77:1,9,15 82:21 103:21 104:2,13 147:20 152:9,12 allegations 40:12 41:23 50:2 56:17 87:2 89:19 138:10 143:2 150:15 151:12 163:24 164:15 alleged 101:10 102:17 104:10 106:14 138:11 148:19 151:2 171:9 172:23 175:4,13 176:15,24 177:23 177:24 179:2 181:13 182:4 186:18 187:8 allegedly 124:7,23 187:6 alleges 34:6 78:23 132:25 170:10 alleging 47:16 48:7 48:9 67:4 143:5 149:21 allow 119:11 127:3 141:13 142:19,20 144:10 164:8 165:9 168:12 170:1 allowed 101:12 allows 82:25 ambit 58:11 amend 78:11 amount 174:17 182:3 184:3 185:3 186:9 amounts 118:7 analyses 75:18 123:15 140:13 149:24 154:22 155:6 156:17 158:14 160:2,18 163:12 190:25 analysis 27:20 71:8 94:18,21 98:3,22 105:25 112:25 123:16 126:5,12 137:5,15 139:17 145:22 146:1 153:1 154:9 191:24 analyze 152:23 181:5 analyzed 100:22 angeles 4:8 19:4,8 answer 10:20 11:24 14:24 15:2 16:9,12 22:19 23:6,13,17,23 24:3,23 26:5,17 28:14 30:6 31:3,15 32:7,18 33:2 34:2 35:6 36:16,16,22,23 37:11 40:19 43:9 45:10,15 47:3,20 48:24 49:15 50:19 51:9 54:4,11,23 55:16 56:13 58:9,19 59:6 60:13,23 61:4 62:10 63:15 65:5,21 66:8 68:1,13 70:5 70:16 71:16 72:13 72:15 73:3,5 76:1 82:2,13 83:10,14 84:25 85:21 88:13 89:16 90:18 92:17 94:2,6,6 95:18,23 96:17 97:1,8 98:1 99:9 100:8,9 101:7 102:2,4,7,12 103:4 103:6,7,10,24 105:8 105:16,16 106:10 106:24 107:4,14,21 108:3,7,8 112:5 113:7,14,23,24 114:21,21 117:9 118:19 119:4,11,14 123:3,9,18,23 125:9 126:10 127:3,4 128:19,21 129:4 131:17 132:10,10 133:14,14,17 135:11,20 136:17 136:18,20 138:2,9 139:23 140:10,19 141:3,13,14 142:21 142:21,23 143:19 143:24 144:10 145:14 146:8,17 appearance 8:5 appearances 3:1 4:1 appeared 46:18 appears 51:1 63:22 69:22 134:4,16 applied 37:5 applies 187:1 apply 34:25 35:1,11 35:13 37:4 153:17 Veritext Legal Solutions 866 299-5127 Page 3 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 66 of 94 [applying - b] attachments 21:8,20 194:18 applying 35:18 appreciate 101:16 128:19 185:10 190:16 approach 43:24 appropriate 31:25 157:7 182:19 183:11 186:2,8 argu 72:20 argue 56:8 182:18 183:9 arguing 127:25 argumentative 40:3 52:9 62:7 64:11,16 66:6 67:25 70:3 72:23 74:3 78:5 79:23 81:9 92:12 112:2 143:9 145:13 160:6 arises 134:1 ascertain 16:19 31:6 32:11,20 47:7 48:11 53:21 70:7 75:18 86:7 105:11,25 107:8 112:25 135:13 137:5,15 156:17 190:15 191:15,24 ascertained 187:24 ascertaining 29:17 aside 127:12 171:6 asked 13:4,5 27:12 60:18 61:2 71:3,23 80:22,23 83:24 91:15 99:24 101:4 108:21 161:22 162:6 168:23 176:9 asking 17:9 21:18 21:19,21 25:16,18 25:20,22 32:2 35:16 38:5 41:24 46:10 47:11 54:25 56:6,14 65:2 74:15 101:23 102:20 109:13 115:4 116:9 121:6 121:15 127:9 135:2 161:16 162:9,18 173:14,18 174:14 assert 96:7,8 192:9 asserted 127:15,18 asserting 96:5 99:16 assertion 16:15 97:9 101:2 101:13 assessing 30:2 118:9 assistant 9:16 assisting 9:22 associated 62:19 63:1 assume 11:24,25 31:13 92:25 147:3 148:6 179:12 assumes 12:1 58:17 64:15 78:6,14 79:22 120:13 assuming 31:17 57:8,24 58:10 98:10 111:20 148:13 167:2,18 asterisk 34:14,15 74:17 75:7 attach 69:22 133:7 142:10 144:15,20 144:22 146:20 attached 7:6 20:15 24:12,16 33:12 49:21 52:13 61:9,17 61:25 62:2 69:7 72:7 78:3,18 91:20 119:1,25 120:19 121:25 124:6,20 125:14 133:3,3 145:23 146:3 156:8 158:7 attaches 49:2 attaching 143:2 144:25 attachment 51:4 61:24 73:20 81:18 21:21 22:2 attempt 140:1 attention 181:23 attorney 3:7,15 4:6 4:13 8:6 9:25 15:2 17:15 21:15,16 25:14,14,18,20 26:2 26:3 29:3,3 31:11 32:25,25 34:3,3 36:5,5,17,18 37:8 40:6,15,16 45:6,7 47:22 48:15,22,23 49:12,13 50:9 51:6 51:7 53:25,25 57:15 58:7,22 59:3 70:1,2 70:12 72:24 73:1 81:22,22 88:9,10 92:13,14 94:3,4 96:7,7 97:9 98:12 99:6,7,8 100:16,16 103:1,2 105:4 106:7 106:8,20 107:6,16 107:17 108:2 110:10 113:6,12,21 113:21 114:20 115:22 118:16,24 119:13 123:14,16 125:5,25,25 127:1 133:12,13 137:22 137:22 141:11 142:13,13 143:11 148:17 149:10 150:6 154:15,15 162:15,16 164:6,7 168:14,15,16 169:23,23 173:3,4,4 173:5 174:23 175:18 176:1,19,19 176:20 177:5,15 179:7,8 180:9,9,10 184:19,20 185:18 185:18 186:25,25 187:18,18 188:7,17 190:21,22 191:8,8 attorney's 165:6 169:24 attorneys 25:13 51:8 93:1 103:18 104:17 123:14 142:14 143:11 audibly 24:23 audience 52:7 53:4 54:8,18 191:25 audio 7:22 august 1:18 2:20 7:1 7:9 austin 4:4 available 94:25 139:18 avenue 4:7 average 111:18 avoid 178:3 award 185:24 awarded 184:3 aware 29:18 33:22 36:25 40:10 89:17 89:25 90:8 93:14 94:18 99:23 100:14 100:21,23 101:24 102:6 105:21 108:12 109:15,17 109:22 110:2 113:16 115:19,24 116:4,9,17,19,20 126:14,20 128:3,22 135:21 160:17 171:8,14,15 174:3 b b 1:16 10:12,13,15 11:2,5 17:17 20:12 22:13 23:4 28:3 31:12 45:8 48:16 50:11,18 54:2 55:5 56:22 57:15 58:8,21 59:5 60:8,21 61:5 65:20 68:11 70:14 71:14 72:11 75:22 Page 4 Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 67 of 94 [b - calling] 81:24 82:10 84:23 87:8,13 88:11 89:14 89:24 90:17 94:5 96:9 99:8 100:7 101:6 105:4 106:6 106:18 107:5,16 113:6 118:18 123:2 123:7 125:8 126:3,9 127:1 129:3 131:15 132:8 135:8,18 137:25 138:8 139:22 140:9,18 141:2,11 146:6,16 150:5 152:22 154:17 155:15 158:2 159:9 160:8 161:1,12 163:8,21 166:24 174:25 175:19 176:18 177:5 179:9 180:6 184:22 185:19 186:23 187:17 188:6,17 190:21 191:7,22 192:2,10 37:24 57:2,20 62:22 65:8 67:6 87:24 88:21 90:6 91:9 95:21 97:16 111:15 114:9 119:15,16 121:2 126:18 129:23 130:9 137:10 147:22 151:1 155:2 161:23 167:14 172:10 175:8 178:11 181:1 182:5,25 190:9 back 18:1 27:8 banner 32:10 41:10 120:6,8,11 barbara 59:19 base 76:9,15,25 81:19 106:3 111:22 based 45:3 49:9 56:4 63:17 78:1 92:25 94:24 97:10 125:19 135:6 140:16 157:18 167:11 168:6 178:24 185:10 bases 25:7 basically 78:23 147:12 basing 166:3 basis 16:9,14 17:11 24:4,8 25:2,5,6,13 25:17 26:7 54:12,14 54:20 55:19,23 56:2 56:5 95:24 111:5 140:2 154:14 161:3 beginning 8:5 172:11 behalf 2:18 8:9,11 8:13 10:16 30:23 55:3 90:22 belief 55:25 believe 12:21 13:1 13:12,16 17:7 62:17 94:25 104:1 122:12 133:16 192:7 believes 103:20 believing 174:9 best 12:2,5 44:4 63:16 98:15 130:17 better 160:3,19 beyond 28:15 29:7 30:5,16,25 35:5,23 35:25 40:14 43:8 45:4 47:2,20 48:21 49:11 50:2,8 51:5 52:9,21 53:5,14 62:5,11 63:12 64:8 64:17 65:4 66:5,16 67:25 69:25 72:23 73:25 74:4,21 77:6 77:21 78:5 79:21 83:2,8 84:4 85:7 86:9 87:19 88:18 89:6 90:19,23 92:11 95:13,13,18 96:1,15 97:2,4,24,25 99:4 102:10 103:22 105:15 108:1,18 109:18 112:1 114:19 116:6,10 117:5 118:16 119:10 123:13 125:4,11,21 126:24 132:1 133:10 136:1 136:14,18 141:9 142:19,20 143:8 144:2 145:12 149:7 151:24 152:19 153:22 155:13 157:24 161:15 164:5 165:6,21 168:10 169:21 173:6,7,10 177:14 178:21 180:4 184:14 185:13 189:4 191:20 192:3 bigger 64:5 bill 179:21 bind 144:7 binding 10:20 169:22 bit 119:17 blue 138:25 bold 70:25 boris 19:17 bottom 70:23 73:17 75:15 bought 144:19 box 71:19 72:18 73:17 74:15,16,25 76:21 80:15 break 27:2,3,12 56:23 130:5 136:25 137:2 171:24 188:22 bringing 115:13 broad 42:6 broadly 155:24 bubble 160:14,15,21 160:21 161:5,7,8 bubbles 79:3 bunch 115:18 bundle 76:11,17,18 burden 51:25 180:25 181:17 182:4 bureau 39:5,8,11,11 business 9:11 button 146:22,24 147:12 148:1 149:2 buy 46:4 124:12 buying 191:2 c cable 94:19 98:3,24 179:24 191:14 calculate 174:20 calculating 174:18 calculations 176:2,3 176:15 california 1:2,17 2:2 2:19 3:10,18 4:8,14 4:15 7:1,17,20 9:14 10:3 194:2 call 22:7 42:2,4 45:21 46:15 109:16 110:3 120:11 131:11,24 132:23 134:9 138:25 158:21 160:14 173:24 179:4 180:5 187:7 called 120:1 138:19 138:20 calling 16:6 58:6 59:2,3,4 60:20 65:20 96:23 98:11 99:4,4 101:5 102:25 106:17 108:2 110:16 114:20 123:13 126:8,25 129:1 141:9 146:5 146:15 150:4,6 154:14 155:14 158:1 160:24 Veritext Legal Solutions 866 299-5127 Page 5 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 68 of 94 [calling - client] 161:11 163:20 173:3 174:23,24 175:17 176:17 186:22 187:16 188:5,15,16 calls 14:18,20 21:14 22:21,24 25:11 26:2 29:2 31:10,11 32:6 32:16,23 33:7 34:3 36:3 37:7 39:18 40:15 45:5 48:14,22 49:12 50:8,16 51:6 53:24 57:13,14 58:17 61:4 68:9 70:1,11 71:12 72:10 72:23,24 75:21 81:21 82:9 84:21 87:6,11 88:8 89:12 89:22 90:15,20 92:12 100:7 105:3 106:5,6 107:5,14 108:19,23 109:10 109:10,16,17 110:3 110:4,5,9 113:4,6 113:11,20 116:5 118:16 123:1,6 125:5,22 131:14 132:2,6 133:12 135:6,16 137:21 138:6 139:20 140:7 140:17,25 141:1 142:12,14,16 143:9 153:23 159:8 160:6 163:7 164:5 165:6,7 165:21 166:22 169:23,24 173:2,3 177:4,14,15 179:6 180:4 184:14 185:14 190:19,21 191:5,21 192:1 campaigns 33:8 cancel 46:25 131:11 131:24 132:23 134:10 178:1 179:4 187:7 cancelation 46:25 47:15 74:18 75:8 107:2,10 169:14 canceled 169:15 174:6 capacity 10:8 15:3 15:17,18 43:11 47:4 62:10 66:9 103:25 108:6 123:19 136:19 caps 71:1 139:3 caption 7:17 capture 142:3 captured 28:20 142:2 captures 142:6 card 124:22 care 181:22 carries 11:13 cart 138:20 140:23 141:7,23 case 7:17,20 10:10 13:8 14:1 37:17 38:16 39:25 40:6 42:7,20 44:7 50:4 51:17 52:24 55:10 56:4 59:13,21 65:25 82:16,17 83:4,12,19 84:11 87:5,10 90:23 91:22 99:24 103:13 110:16 112:15,21 115:17 121:11 129:25 137:4,14 145:3 153:8 166:3,4 173:15 174:15,16 180:12,24 181:14 181:17 183:24,25 184:18 185:2 194:14 cases 112:7 165:13 187:12 cassia 7:11 categories 41:24 42:6 92:3 94:8 171:9,16 172:19 category 172:20 caution 98:19 177:22 175:24 certain 43:18 118:6 135:23 186:20 certainly 26:16 69:8 74:11 139:8 170:16 170:24 certified 2:21 194:1 certify 194:3,16 cetera 113:2 chad 4:5 8:7 challenged 105:13 change 167:10 168:5 169:12 channel 42:5,14 84:19 113:2 131:2 131:22 132:20 134:6 137:7,17 147:3 148:6 163:2 163:16 178:2 179:4 185:9 190:17 channels 41:1 106:15 131:11 133:2 178:8,16 179:23 187:13 characterization 41:13 characterize 43:22 characterizes 131:3 chargebacks 186:10 charged 131:10,23 132:22 134:9 138:12 179:21 182:3 187:8,14 charges 77:4,20 79:12 178:4,7,8,15 178:15 check 69:9 141:7,24 checked 145:9 choice 80:10 159:17 choose 144:3 chummel 4:10 chun 59:20,21 cid 69:3 cinemax 179:17 circuit 13:9 183:25 186:6 circular 46:19 circulation 68:17 circumstance 177:8 cite 84:9 183:24 cited 49:3 cites 132:25 citing 185:2 civil 17:17 22:12 23:3 claim 43:15,22 87:2 95:5 118:6,12 171:3 172:17 186:17 claimed 159:13 claims 27:22 28:12 67:3 86:22 92:2 99:15,18 claire 33:16 46:15 78:25 160:16 166:8 168:24 clarify 11:20,22 81:4,5,5 clay 118:25 119:6 clean 85:17 clear 19:2 44:3 70:9 85:6 86:8 97:7 98:2 121:14 173:19 clearly 69:23 click 87:18 88:7 146:12 145:8 clicked 71:21 142:6 clicking 120:10 146:24 147:1 148:1 148:3 149:1,3 150:1 client 21:15 25:14 26:2 29:3 32:25 34:3 36:5,18 37:8 40:16 45:6 48:22 49:13 51:6 53:25 57:15 58:7,22 59:3 Veritext Legal Solutions 866 299-5127 Page 6 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 69 of 94 [client - con] 70:1,12 72:24 81:22 88:9 92:13 94:3 96:7 97:9 98:12 99:6 100:16 103:1 105:4 106:7 107:17 113:21 123:16 125:25 133:12 137:22 142:13 143:11 154:15 162:16 164:7 168:15,16 173:4 176:19 179:8 180:9 184:19 185:18 186:25 187:18 188:7 190:21 191:8 cliffdale 51:4 52:14 close 149:4 coach 109:14 colloquy 32:2 color 6:4 68:15,15 columbia 103:19 115:23 com 29:14 48:8 51:1 85:2,10,20,22 86:1 135:22 136:2,4,22 136:25 137:8,18 153:4 come 179:20 181:1 182:5 186:11 comes 111:6 comfortable 16:3 21:1 43:13 49:19 115:11 149:19 coming 83:15 commencing 2:19 comment 34:9 commerce 84:9 commission 1:5 2:5 3:4 5:15 7:18 8:12 8:14 10:11,17 12:23 13:2 21:3,4 25:13 39:3,14,24 49:14 51:16 55:3,19 56:8 56:20 67:4 83:22 86:12,17,20,24 87:1 87:14 88:1 92:19 102:8 104:19 105:20 112:10 121:13 128:15 132:3,4 142:1 143:11 144:5,7,14 145:2 148:19 149:14,21 169:22 173:15,16 180:13 180:17,21 commission's 1:15 9:17 20:14 111:6 commissioned 86:18 commissioners 87:1,5 39:16 commitment 145:11 166:15 167:9 168:3 common 153:2,10 communi 125:23 communicated 39:5 124:17 communication 96:20 97:21 106:7 107:17 communications 37:9 39:7 45:6 48:22 49:13 51:6 53:25 59:4 72:25 75:23 81:25 82:11 92:13 94:4 105:18 109:5 113:22 123:16 128:16 143:12,12 148:17 154:16 162:16 168:16 173:5 companies 191:14 company 1:11 2:11 148:20 170:14 compare 80:23 147:7,16 compared 191:17 competition 29:20 competitive 29:22 30:3,11,13,23 competitors 28:25 191:17 complained 128:9 complaining 105:22 111:22 116:2 188:21 complaint 5:17 20:14 21:3 24:9,14 24:16 25:2,3,4,5,8,9 25:24,25 30:24 31:7 32:14,22 33:4,7,13 33:23 34:6,9,10 36:25 38:19,20 39:2 39:13,16 40:13,21 42:18 43:1,4,7 44:10 45:2 46:10,11 46:12,22 47:16,24 48:8 49:1,4,19,20 50:3,14 53:19 54:6 54:19 55:4,21,23 56:16 57:10 58:2,14 61:9,17,25 62:2,14 66:9,12,14 67:16 69:15,21 70:18,19 71:9 72:8,17,21 73:8,15,16,20 77:13 77:16,23 78:3,9,12 78:18 81:19 82:8,22 83:11 87:2 89:19 92:22 103:12 105:13 106:13 107:8 110:14 114:7 114:17 115:9 118:10 120:20 122:1,8,13 124:6,10 124:20,24 125:14 130:23 131:3 132:24 133:4,8,11 140:2 142:11 143:2 144:14 145:23 146:10,21 147:9,19 148:19 149:17,21 150:10 151:7 154:9 154:21 155:5 159:22 160:16 163:25 164:16 166:9,10 167:2,18 168:19 170:10 178:24 182:16 183:7 complaints 37:21 38:3,10,14 93:15,18 93:22,25 94:13,16 94:19 95:16 98:4,5 98:23,25 99:1 100:4 100:23 101:3 102:18 103:18 104:4,10,15,19,23 105:1,12,21 106:1,3 107:1,9 108:15 109:21,24 110:7,21 111:1,4,8,10,10,14 112:7,13,23 113:9 113:19 114:6,15 115:1 117:3,20 126:12,15,21 127:9 127:10 128:3,6,14 128:22 complete 68:16 92:8 101:22 138:18 completed 87:10 90:2,11 184:10 190:13 completion 194:14 compliance 29:14 85:2 complies 8:20 comply 137:7,18 complying 31:21 component 171:11 compound 30:4 32:15 118:15 131:13 143:9 148:12 168:9 169:19 177:14 computer 63:19 64:4 computers 139:19 con 14:13 Veritext Legal Solutions 866 299-5127 Page 7 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 70 of 94 [concede - contention] concede 67:22 145:7 145:24 concerning 12:19 13:25 15:14 40:25 184:18 conclude 99:17 concluded 192:8 concludes 193:1 conclusion 153:23 165:8,22 169:25 177:15 180:4 184:15 185:14 188:15 conclusions 25:17 concrete 115:15 conditions 147:2 148:4 149:4 conduct 53:19 70:6 140:5,21 158:14 conducted 11:5 12:18 13:24 14:14 15:13 71:7 88:16 89:2,21 90:2,10,21 100:12 110:20 117:1,18 122:21 134:14 140:13 155:20 190:12,24 191:12 confer 127:14 192:16 conference 82:16 83:13 17:14 confidential 14:22 confirm 46:11 confused 80:6,25 81:3,6 173:20 confusing 117:24 confusion 81:1 173:22 connected 100:24 connection 22:15 23:10,25 30:14,22 38:11 40:9 42:12 44:18 46:14 59:7 60:14,24 61:6 73:5 93:12 95:7 100:12 101:24 114:5,13 116:24 117:14 118:9,11 137:4,13 143:1 150:14 151:11 155:20 162:22 163:23 164:14 167:1,17 172:15 186:16 188:20 consecutive 76:14 76:24 consent 147:4 148:8 148:21 149:6,22 150:2 189:13 consider 19:7 111:25 165:18 considers 29:19 conspicuous 70:9 85:6 86:8 72:7 constrained 32:11 consult 140:12 consultants 14:23 17:21 18:7 19:25 20:2 consumer 23:9 31:5 33:24 35:20 36:8 37:2,21 38:3,9,14 39:6,11 40:11 46:3 46:5,25 48:10 49:9 51:15 52:6,19 53:1 54:18 61:1 62:3 63:8,18 71:20,21 79:16 82:23 86:13 86:18,23 87:1 93:18 93:22,24 94:13 98:4 98:25 99:1 100:3,22 101:3 102:18 103:17 104:4,10,15 104:18 105:21 107:23 109:21 110:7,21 111:1,4,7 conspicuously 69:23 consumer's 63:10 148:21 consumers 32:12,20 111:7,8,8,10,22 112:3,6,9,13,24 113:19 114:6,15,25 115:7 117:3,20 120:9 122:22 126:12,14,21 127:8 127:10,10 128:3,10 128:14,17 134:1,15 135:23 140:22 141:6,22 145:1,8,9 146:24 147:25 149:1 158:14 159:22,25 164:1,18 166:19 167:2,11,19 168:6,22 169:9 170:7,12 171:10 176:15,23 177:11 177:23 179:2,15,25 180:18 181:21 182:5,14 183:4 185:25 35:17 37:3,14,22 38:4,6 41:4 42:25 43:16 44:21 45:2 48:4,12,19 50:4,23 51:20,24 52:16,18 53:22 64:24 65:17 66:1,3,10,20 67:1,3 67:7 68:5 70:8 71:10 72:5 73:11 75:18 77:16 80:1 81:6,11,16 82:5 84:16 85:3 86:5,15 86:21 87:3,15 88:3 90:2,10 93:11,14 105:22 107:11 109:25 115:2 116:1 118:5 122:23,24 124:18 125:2,18 126:5,15,22 128:8 128:17 129:15 131:9,19,23 132:17 132:22 134:22 135:14 138:13 140:3,22 144:17 146:2,11 149:22 158:15 160:3,19 161:6 163:17 164:25 165:1,17 166:1 170:11 174:3 180:18,23,23 181:2 182:8 184:2,4,6,12 185:3,5,5 186:4 187:6,12,23 188:3,9 188:10,22 190:13 191:2 contacted 113:17 contain 40:24 62:2 62:18,25 143:3 145:24 189:13 contained 25:3 40:13 46:22 72:6 77:1 84:17 contains 25:21 71:19 145:18 156:11 182:17 183:8 contend 123:11 contending 24:5 42:11 44:16,16 contends 12:20 15:15 44:17 140:4 154:11 163:1,18 164:3,20 188:12 content 21:19,20 41:2 48:1 95:25 101:11 150:19,23 151:17,22 152:14 152:18 153:5,20 154:4,10,24 155:8 156:12 158:10 161:22 162:6,24 163:13 166:20 187:9 contention 36:8 50:4 68:8 131:8,19 132:16 146:23 Veritext Legal Solutions 866 299-5127 Page 8 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 71 of 94 [contention - deponent] cost 138:20 140:23 customers 45:21 147:25 161:4 context 14:3 17:5 26:9 29:22 48:6 85:10 115:13 127:13 153:3,11 154:19 156:23 157:6,19 159:5 161:21 162:4 continue 27:10 57:4 91:11 130:11,16,19 136:9 172:14 179:22 190:11 continued 4:1 6:1 contra 32:11 contract 6:9 46:24 47:14 79:19 174:8 contractual 107:11 contrast 76:23 controls 157:7 conversations 7:25 15:16 17:3 19:21 60:10 92:18 119:13 128:10 conveyed 158:17 copies 68:22 copy 24:14,15 83:3 85:11,16,17 86:1 91:23,23 136:2,5 corporate 1:16 corporation 1:8 2:8 correct 12:14,15 14:2,5,6 15:19,20 16:20,21 18:25 19:20 20:3,4,22 24:14 25:1 27:17 28:4,5 33:15,17 34:20 42:7,10,21 43:5 44:19 45:25 46:6,19 47:1 48:7 52:7 53:4,7 58:23 60:15 61:10,11 62:4 62:20 63:3 64:14,25 65:18 66:4 67:23 69:14 73:22 75:12 77:15 78:3,13 79:5 80:15,24 103:21 108:16 115:23 117:4,22 119:20 120:3,12 135:13,24 138:14 161:18 162:1 163:3 169:18 correctly 12:17 correspondence 20:18 142:7,11 143:4 145:8 146:12 costco 108:11,14,21 109:5,11,23 110:1 113:17 costs 186:20 coun 109:2 189:3 counsel 3:1 4:1 7:14 8:16 23:2 37:18 68:22 74:1 75:4 78:19 83:3 85:15,24 91:17 92:19 94:23 96:20 97:21 109:3,5 109:23 115:16 118:2 135:1 136:5 157:2 171:19 189:3 192:5 counsel's 41:13 130:20 count 148:18 188:2 course 29:23 67:5 court 1:1 2:1 7:6,12 7:19 11:12,15 17:25 24:12 55:14 69:7 73:21 74:9,10 91:15 91:20 101:15,18,19 127:20 143:1,20 153:15,18 156:8 158:7 165:11 185:23 courts 149:15,15 165:12,13 184:3 185:21 186:6 cover 33:16 166:7 covered 45:8 craig 20:19 created 68:25 cross 136:10 csr 1:22 194:25 current 80:7,10,19 82:5 93:7,11 customer 98:5 111:22 134:7 93:8,12 cv 1:7 2:7 7:21 d d 3:6 dahdouh 9:22 danes 33:16 46:15 78:25 160:16 166:8 168:24 data 132:2 141:5,20 database 111:8 date 54:6 84:15 95:6 194:19 dated 12:10 194:22 david 26:22 27:13 27:20 28:2 92:5 davis 26:11,20 27:12,19 28:2 30:1 30:12 92:6 deal 73:7,11 78:12 79:6,10 81:2 160:4 182:22 183:16 185:8 188:12 dealings 105:23 deals 130:24 death 122:15 debating 127:22 deceived 32:12 122:22,23,24 125:2 deception 29:11 40:12 51:3,13 52:13 52:15 112:9,18 165:19 166:3 deceptive 12:20 15:15 24:7 25:19 31:7 32:21 33:8 67:14 123:11 124:7 124:23 138:11 145:2 170:15 decide 55:14 decision 191:2 declaration 118:25 119:6 128:11 declarations 128:17 129:5,15,24 188:21 188:23 189:2,9,13 190:2,3 deducting 186:20 deemed 156:14 defend 52:23 56:4 defendant 7:14 36:3 181:1 186:11 defendant's 33:7 66:22 182:4 defendants 1:12 2:12,18 4:3 40:23 77:3,19 79:11 93:8 103:16 104:14 181:1 definitely 62:11 deliberative 21:16 72:25 96:23 97:10 98:13 99:5 107:18 123:17 125:6,22,24 142:17 143:13 delivery 31:10 demonstrate 37:2 122:22 131:7 134:14 163:13 182:5 demonstrated 146:11 159:20 182:14 183:4 dep 119:5 depend 63:9 depends 52:25 depo 175:22 deponent 5:3 8:20 8:25 10:6,24 13:6 16:3 18:11 30:18 Veritext Legal Solutions 866 299-5127 Page 9 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 72 of 94 [deponent - disclosure] 31:2 35:2,7,14 38:5 40:4 41:19 43:12 47:24 49:1,18 51:12 52:15,25 53:7,16 63:4,17 64:1,18 65:6 66:7,18 68:2 74:6,23 75:6 77:23 78:7,20 79:24 83:10 84:6 85:9 86:11 87:21 88:20 89:7 90:24 92:20 94:9,14 98:18,20 100:14 103:9 104:1 105:19 108:8 109:15 110:11 112:3,6 114:1,23 117:11,23 118:21 119:14 120:15 125:13 132:12,24 133:16 136:20 141:16,25 142:23 144:13 145:15 148:18 149:12 152:21 153:24 156:3 162:17 164:11,22 165:11,24 168:18 170:6 171:14,23 176:5 177:20 178:23 180:11 184:23 185:20 192:20 5:13 7:10,15 8:23 11:6,13 12:9 13:10 15:25 17:1,6,20 18:5,12,19,22 20:6 20:10 26:10 27:16 28:1 30:20 33:19 37:13,16,20 38:2,11 58:12,25 59:23 60:2 60:25 61:7 64:21 65:12 82:15 84:12 84:13 88:16 89:1 90:4,13 91:5 93:13 104:13 106:12 deposition 1:15 2:17 116:8 118:23 121:9 121:21,24 122:3 127:13 136:21 140:12 147:10 162:23 172:6,12 189:6,25 192:8 193:2 194:13 depositions 11:9 describe 33:6 66:19 66:22,24 67:9,13 73:10,11 99:23 144:16 described 40:24 67:7 114:7,16 124:9 145:4 describes 47:25 49:2 124:14 describing 49:19 description 5:11 6:2 49:21 73:6 designate 13:11 designated 12:9,13 12:24 104:6 108:6 118:11 designation 172:16 designed 184:2 designee 10:16 11:2 15:7,8,10,18 16:17 20:24 37:1 38:16 136:11 192:11 designing 157:7 destroying 69:1 detail 66:12 95:5 detailed 72:18 153:1 details 69:22 70:10 71:21 116:21 determine 54:7,16 82:4 85:5 99:13 191:1 determining 86:14 developed 121:11 132:2 differ 170:20 187:10 difference 191:16 different 31:23 80:13 154:24 155:8 156:18 163:13 187:14 digital 93:8 direc 73:6 111:2 direct 90:17 93:8 94:2 95:22 96:16 99:9 101:6 146:7 150:7 153:7 156:10 161:1,13 163:9,22 166:25 175:1,20 176:21 177:3 186:23 187:20 188:8,19 190:23 192:4 directing 37:10 direction 23:2 126:10 194:10 directly 93:11 director 9:17,23 39:11 directs 45:20 directv 1:8,10 2:8 2:10 5:21 6:8 7:18 8:8,10 13:25 14:11 20:3,15,25 28:23 29:1 33:15 39:9,15 42:11,23 46:4 59:13 61:8 66:1,11,19 67:6 68:18,22,22,25 73:6,12 76:9,15,24 82:20 87:16 88:4 90:2,11 93:12,20 94:16,20 98:5 100:23 104:18 106:2 109:25 110:23 111:11,22 113:16 114:5,14 115:1 119:18 120:10 121:10 124:13,13 128:9,12 128:18 132:6 133:1 137:6,16 142:2 155:21 156:11,19 157:19 159:5 177:8 189:17 191:3 directv's 12:19 15:14 22:23 23:20 24:6 28:22 31:5 32:9,21 45:21,22 54:8,18 84:2 89:20 89:20 95:12,16 102:18 104:11 106:1 110:22 131:8 153:11 172:22 173:23 176:24 177:24 178:3 179:2 180:1 191:18,25 directv.com 167:7 167:25 disagree 45:11 55:13 170:4 disc 24:17 disclaimer 166:21 disclaimers 167:3 167:20 disclose 93:4 139:22 172:23,24 173:24 175:4,13 176:25 177:9,12,25 179:3 180:2 181:13 187:6 disclosed 44:18,22 47:17 48:12 66:4 67:5 79:7 93:6 138:14 170:10,11 disclosing 132:11 155:18 disclosure 17:16 41:1 42:20 47:10,11 48:5,18 51:2,25 54:2 55:5 56:21 59:5 60:8 68:11 70:13,24 71:11,13 72:11,18 75:19,21 79:25 81:24 84:22 85:2,10,23 86:1 87:7,12 89:13,23 90:16 94:5 105:3 Veritext Legal Solutions 866 299-5127 Page 10 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 73 of 94 [disclosure - edmondson] disclosures 5:25 172:18 106:6 107:15 113:5 123:2 125:7 126:2 131:14 132:7 133:8 134:5,16 135:7,14 135:17,22 137:24 138:7 140:8,18 141:2 146:6 150:5 154:17 155:15 156:12,24 157:1,9 158:2,12 159:9,13 160:2,7,25 161:12 163:8,21 165:1 166:23 174:25 175:18 176:18 177:5 181:20 187:17,22 188:6,16 189:1 190:20 191:6 191:21 20:17 25:22 27:15 27:18 29:18,19 40:25 41:5,21 42:3 42:6 46:23 49:5,10 50:5,22,24 53:23 56:2 70:9 72:5 84:16,18 85:4,5 86:8 87:17 88:5 91:22 93:7 109:25 124:16 130:25 131:8,20 132:18 135:22,23 136:2,4 136:22,25 137:6,16 143:4,6 145:5 150:18 151:16 152:6,10,24 153:4,9 154:2,11,23 155:7 156:20 157:15 158:9 161:4,6 164:2 164:20 165:18 171:9,15 172:19 177:23 182:17 183:9,24 184:7 186:19 187:4 191:16,18 discounted 77:17 discoverable 27:21 92:1,9 discovery 116:9 128:18 129:2 187:24 discretion 185:24 discuss 14:16 28:2 29:25 30:11 31:20 37:17,21 38:3 59:9 95:4 discussed 14:5 119:2 discussion 167:15 discussions 15:12,22 39:23,24 59:25 83:22 156:23 disgorgement 171:4 dish 191:14 disjunctive 152:16 displayed 87:17 88:6 141:6,21 181:24 disprove 118:2 dispute 44:13 disputing 109:7 disseminated 33:15 133:1 170:15 180:22 186:3 district 1:1,2 2:1,2 7:19,19 103:19 115:23 division 1:3 2:3 7:20 divulge 93:2 divulging 15:2 58:20 118:24 133:15 doctrine 175:19 176:20 177:6 179:8 184:20 187:19 188:18 document 84:17 92:21 153:8 156:10 166:13 documents 20:7 22:20 60:10 101:11 doing 99:12 116:15 144:4 donovan 181:25 dot 29:14 34:19,19 34:20 51:1 75:7 85:2,9,20,22 86:1 135:22 136:2,4,22 136:25 137:7,18 153:4 double 74:17 downloaded 28:19 dozen 129:12 dozens 69:9,10,10 drafting 92:21 duped 174:8 duties 9:19 duty 13:9 dvr 34:25 35:12 37:6 e earlier 59:11 67:1 95:10,11 104:17 110:2,11 114:2 119:23 128:16 144:24 164:22 early 46:25 47:15 74:18 75:8 107:1,10 169:14 ecf 113:1 116:2 118:6 174:6,7 economic 184:2 economics 39:8 economist 59:9 economists 49:8 edmondson 3:6 8:11 8:11 13:4 14:18 16:2,5,10 17:3,12 19:14 21:12 22:6,17 22:24 23:7,12,16,22 24:2 25:10 26:1,6,8 26:13 27:3 29:2,7 30:4,16,25 31:9,14 31:18,20,24 32:5,15 32:23 34:1 35:3,22 36:12,15 37:7 40:2 40:14 41:12,17 42:16 43:6 45:4 46:7 47:2,19 48:14 48:21 49:11 50:7,16 51:5 52:8,20 53:5 53:14,24 54:9,14,20 55:18 56:18 57:13 58:5,16 59:1 60:5 60:17 61:2 62:5,9 63:11,24 64:8,11,15 65:1,19 66:5,16 67:24 68:9,19 69:11 69:25 70:11 71:2,5 71:12,22,24 72:9,14 72:20,22 73:24 74:2 74:21 75:2,20,25 77:6,21 78:4,8,14 79:21 81:8,12,21 82:9 83:2,8 84:4,8 84:21 85:7,15,20,24 86:9 87:6,11,19 88:8,18 89:4,12,22 90:5,14 92:11,16 94:1,23 95:17,25 96:6,15,22 97:2,4 97:12,14,23 98:7,17 98:19 99:3 100:5 101:4 102:3,6,12,24 103:5,22 105:2,7,14 106:4,16,20,23 107:3,13,20,25 108:17 109:2,6,9,18 110:8 112:1,5 113:4 113:11,20 114:8,18 116:3,5,10,13,16 117:5 118:15 119:10 120:13,25 121:6 122:25 123:6 123:12,22 125:4,20 126:7,17,23 128:25 131:13,25 133:10 134:17 135:4,10,16 Page 11 Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 74 of 94 [edmondson - extent] 135:25 136:13,16 136:24 137:9,20 138:5 139:20 140:7 140:15,25 141:8 142:12 143:7,22 144:1,9 145:12 146:4,14 147:6,14 147:21 148:11 149:7 150:3,24 151:23 152:11,19 153:22 154:13 155:1,12 156:21 157:4,12,16 158:18 158:23 159:1,4 160:5,22 161:9,23 162:10 163:4,19 164:4 165:5,20 166:22 167:13 168:8 169:19 171:12,19 172:1,4 173:1 174:22 175:7 175:16,24 176:16 177:2,13 178:11,19 179:6 180:3 182:24 183:19,22 184:13 185:12 186:21 187:15 188:4,13 189:3,11,21,24 190:19 191:5,19 192:1,18 edmondson's 127:21 eedmondson 3:12 effect 11:14 29:21 54:16 134:9 effort 92:8 93:1 either 30:19 42:12 46:5 67:1 74:8 83:15 93:11 120:11 169:18 184:10 190:14 elect 72:16 element 153:1 166:3 ellipses 34:18,19 empirical 85:3 86:5 87:15 88:2 employ 175:3,11 employed 9:15,16 19:21 132:3 176:4 employee 144:4 employees 18:13 194:17 27:20 endorsements 86:22 ends 134:8 178:9,17 engages 73:7 enhanced 29:19 entire 55:7,16 149:25 150:25 186:19 entitled 17:7 22:4 32:3 55:12 56:3,7 101:9 124:5 136:10 153:19 entity 10:9 13:10 equitable 5:19 186:8 eric 3:6 8:11 19:14 45:11 105:9 erika 19:15 especially 144:16 152:24 establish 51:16 112:11 166:2 180:21 186:2 established 58:18 180:13 185:21,22 et 7:18 113:2 evaluating 115:1 everybody 22:1 evidence 28:20 45:1 64:16 70:3 78:6,15 78:17 79:23 98:11 112:11 116:6,8 120:14 124:19 125:1,14,17 134:19 148:14 156:25 160:25 173:16 ex 16:16 exact 116:20 exactly 48:9 68:16 181:8 examination 5:3 8:17 9:4 examine 136:10 162:24 examined 9:2 example 11:11 28:18,19 34:11 42:23 46:18 63:5 67:20,21 69:19 82:7 106:13 115:16 133:19,20 135:15 144:17 145:1 176:14 182:16 183:6 examples 133:3 exclusive 115:16,17 excuse 166:6 187:3 exhibit 5:13,17,21 5:24 6:4,8 7:5 10:19 12:10 20:13 24:11 24:13 33:4,14,20,25 44:9 45:23 46:15 61:25 62:1,13,14,15 62:16 63:6 66:15 67:11,14,17 68:3,4 68:15,17,20 69:6,15 69:20,24 70:20,21 71:18,19 72:6,19 73:14,16 75:1 78:2 82:7 84:11,13 90:4 90:13 91:16,19 103:13 122:11 130:24 133:7,19,22 134:20 138:17 140:24 143:5 144:23 146:19,21 147:8,9,10,19 156:6 156:7,9,22 157:18 158:6,8,17,19 159:12,21 160:12 160:16,24 166:7,9 166:10 167:4,21 182:16 183:7 exhibits 5:10 6:1 122:9 133:11 144:15 exist 14:23 23:15,21 31:18 32:4 44:8 50:13 55:9,12 56:17 57:9 58:1,12 101:24 108:25 138:4 existed 58:13 existence 21:22 22:4 23:1 32:3 46:24 55:1 56:19 60:4 89:18 90:1,9 100:10 100:11 101:10 167:10 168:4 169:12,13 176:3 exists 16:13 17:14 31:16 55:9,10,17 56:3,3,7,10 135:15 experience 62:4 63:18 105:20 144:14 185:20 experiences 128:11 expert 17:14 22:11 22:15,25 23:1 31:25 48:15 50:10,17 54:1 55:2 60:9,10 64:18 68:10 75:22 81:25 82:11 93:4 116:21 140:6,14 155:19 184:21 experts 60:11,16 61:1 132:2 176:3 explain 180:11 explains 66:9,11 express 147:4 148:7 148:21 149:5 150:2 187:9 expressly 96:4 extend 95:2 extensively 39:22 extent 14:19 16:12 21:14 22:7 25:11 31:15 36:3 40:23 Veritext Legal Solutions 866 299-5127 Page 12 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 75 of 94 [extent - foundational] 43:10 47:22 48:24 51:10 54:25 60:6 90:15,20 92:17 100:6 103:6 110:9 115:12 118:14 119:11 124:15 132:1 134:20 148:16 151:25 155:17 173:2,3 180:8 extra 91:23 176:8 extrinsic 112:11 eyebrows 24:19 f f 24:6 150:5 160:7 174:25 fact 10:10,24 11:25 12:1 21:21 32:12 50:13 55:12 56:9 57:9 58:1 78:16,18 93:2,14 107:10 131:9,21 132:19 135:6 140:16 182:14 183:5 187:6 190:15 factors 180:20 182:6 facts 16:20 17:9 22:5 25:23 34:9 48:17 49:3,20 50:1 55:25 58:17 60:4 64:13,15 70:2 78:6 78:14 79:22 98:10 116:6 120:13 125:1 131:19 132:16 148:13 180:20 factual 24:4,8 25:2,5 25:7,17 99:12 140:2 failed 84:9 148:20 failure 172:23,24 173:23 175:4,13 176:24 177:11,24 179:3 180:1,1 186:18 187:5,8 failures 181:13 fair 40:1 49:6 116:23 117:25 136:11 170:24 182:7 fairly 52:24 faith 55:25 92:8 93:1 fake 122:15 fall 17:23 18:9 41:23 100:15 false 42:11,19 43:2,5 43:21,22 44:16,23 159:15 falsity 43:14 familiar 11:8 29:10 29:13 153:4 farther 171:20 featured 80:9 federal 1:5,15 2:5 3:4 5:14 7:18 8:12 8:14 9:17 10:11,17 12:22,23 13:2 17:17 22:12 23:3 31:22 111:6 153:15,18 174:14 194:13 fee 46:25 47:15 74:18 75:9 107:2,10 169:14 feel 16:3 21:1 28:13 43:13 49:18 115:10 149:19 176:5 feels 43:10 figure 52:22 file 55:23 filed 24:5 30:24 31:8 32:14,22 33:23 36:25 54:19 56:16 57:10 58:2 71:9 73:21 74:9,9 110:14 files 144:14 filing 25:2,8,25 38:20 45:2 50:14 53:19 54:6 58:13,13 72:17 83:23 107:8 143:21 145:23 146:10 154:8,21 155:4 financially 8:2 194:16 find 117:24 129:8 fine 29:9 81:5 92:4 finish 72:1 97:3 112:4 157:13 first 22:19 35:23 42:25 43:16 44:8 45:23 63:6 80:5,8 80:18 99:22 126:24 131:22 132:21 134:19 135:25 143:22 144:1 147:6 147:15 152:17,17 157:16 158:19 159:12,16 166:6,11 166:16 167:4,20 172:20 178:7,14 five 39:15 91:2 171:24 flash 125:3 flashed 124:24 flow 28:23 62:3 67:20,22 68:6,16 90:3,12 120:12 138:18 143:3 144:16,18,19 145:23 146:19 149:20 182:20 183:13 flowing 169:17 172:22 173:23 174:20 175:4,12 176:23 177:11,24 179:2,25 181:11 187:5 flows 61:22,23 65:25 69:10 flyers 120:3 focus 40:21 103:17 104:15 105:11 172:20 focusing 78:25 111:3 folks 49:8 follow 45:17 97:15 130:19 follows 9:3 18:2 35:9 37:25 57:23 62:24 65:10 87:25 88:23 90:7 94:11 114:10 117:13 121:3 126:19 132:14 137:11 141:18 147:23 151:4 155:3 161:25 164:13 167:16 175:9 178:13 183:1 font 74:11 76:6 fonts 139:18 force 11:14 foregoing 194:4,6 194:10,12 forget 129:20 form 21:5 185:24 format 158:17 former 93:7 forth 25:8 78:2 forward 72:17 194:5 111:15 forwarded 39:14 found 174:5 foundation 41:25 46:8 47:9 49:12 62:6 63:12,25 64:9 64:16 66:6 67:25 68:20 71:24 72:10 74:3 78:5,15 79:22 97:1,9 98:10 101:13 108:18 145:13 157:22 158:20,25 160:6,23 161:10 foundational 47:6 74:1 116:14 124:5 150:12 151:9 178:20 Veritext Legal Solutions 866 299-5127 Page 13 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 76 of 94 [four - going] four 157:25 171:9 171:15 fourth 179:20 frame 21:23 121:15 francisco 1:3,17 2:3 2:19 3:5,10,18 4:15 7:1,16,20 9:14,18 19:13 frankly 36:21 95:11 97:25 frcp 31:12 45:8 48:16 50:11,18 54:2 55:5 56:22 57:15 58:8,21 59:5 60:8 60:21 61:5 65:20 68:11 70:14 71:14 72:11 75:22 81:24 82:10 84:23 87:8,13 88:11 89:14,24 90:17 94:5 96:9 99:8 100:7 101:6 105:4 106:6,18 107:5,16 113:6 118:18 123:2,7 125:8 126:3,9 127:1 129:3 131:15 132:8 135:8,18 137:25 138:8 139:22 140:9 140:18 141:2,11 146:6,16 150:5 154:17 155:15 158:2 159:9 160:8 161:1,12 163:8,21 166:24 174:25 175:19 176:18 177:5 179:9 180:6 184:22 185:19 186:23 187:17 188:6,17 190:21 191:7,22 192:2 free 34:25 35:12 37:6 41:14 42:4,13 45:21 106:14 113:1 131:22 132:21 133:2 134:3,7 136:7 136:8 147:2 148:5 167:6,24 178:3,8,17 179:16 187:13 freedman 20:19 friday 1:18 2:20 7:1 friedman 119:6 friedman's 118:25 front 10:19 74:14 91:17 101:15,17 104:7 136:3 145:17 ftc 10:25 12:19,19 13:25 15:4,7,9,10 15:14,14,19 17:21 17:22 18:7,8,13 19:21 20:18,24 22:22 24:5 25:23 27:18,19,21,22 28:11 29:11,18,21 30:23 31:5 32:8,19 33:7,23 36:25 37:1 37:18 40:11 42:10 44:15,17 48:7,17 51:13,14 53:18 54:5 54:15 57:12 58:4,25 59:11 60:2 61:18 69:3,21 70:6 71:7 72:3,16 75:17 78:2 78:11,22 84:14 88:17 89:3,21 90:22 92:2,3,5,9 93:1,6 94:19 95:2 98:22 100:12 101:1 102:17 103:20,23 104:9 107:7,23 108:10,15 109:23 110:20 111:2 112:7 112:20,24 113:8,16 114:4,12 118:9 122:21 123:11 125:1,17 126:4,11 126:14,20 128:3,7 128:22 129:6,14,25 130:25 131:3,6,18 132:15 133:7 134:13 135:12 136:12 137:4,13 139:25 140:4,5,21 141:4,19 142:25 143:18 146:9 149:24 150:16 151:13 153:3,10 154:6,9,11,22 155:6 156:10,12,14,16,18 157:8,11 158:9,13 159:13 160:18 163:1,11,18 164:2 164:20 166:17 170:14 172:22 174:13,16 175:3,11 176:4,23 179:1,14 181:15 183:24 184:1,5 185:22 186:1 188:11 190:12,24 191:12 191:23 ftc's 27:15 32:13 49:7 50:3 78:18 85:2 91:21 135:22 143:19 146:23 147:3,9,24 148:6,25 149:5 152:9 153:15 155:20 161:4 163:24 164:15 171:3,8 172:17 181:10 184:11 185:1 186:14,17 ftc.gov 3:12,20 full 9:8 84:18,18 86:1 107:12 145:10 184:3 185:3 186:8 fully 185:7 funny 79:20 further 99:12 152:13 192:6 194:12,16 g gains 171:5 game 136:11 general 9:23 103:18 generally 9:19,21 11:8 20:9 38:13 41:23 42:9 66:23 86:4 150:18 151:17 155:23 182:6 generals 115:22 generic 86:19 genie 34:25 35:12 37:6 getting 16:17 44:21 45:3 101:11 179:16 187:12 give 8:23 12:5 28:17 51:12 63:15 67:10 86:11 115:15 130:16 145:1 147:6 155:23 given 28:15 105:20 111:17 149:20 153:16 154:6 194:11 gives 169:21 giving 24:15 92:8 133:20 glasses 76:6 gloss 154:6 go 7:24 11:23 26:14 34:22 46:5 71:5,25 79:18 85:16 120:11 142:1 152:25 159:25 171:2,20 174:1 179:24 190:5 goes 124:3 159:19 182:20 183:12 189:18 going 13:14 16:5,24 16:25 17:2,10,12 21:12,12,13,23 22:6 25:10 26:1,13 27:5 32:5 34:8,17 35:3,3 35:4 36:12 41:12 43:16 44:5 45:16 51:20 52:20 55:6,13 55:16 56:10,18,24 Veritext Legal Solutions 866 299-5127 Page 14 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 77 of 94 [going - hummel] 58:5,6,16 59:1 60:5 60:5,18 61:2,3 63:12 68:5,19 69:16 88:12 90:14 94:1,23 95:20,21,22 96:6,8 96:16,22 97:23 98:8 98:17,19 99:3 100:5 100:5 101:5,14,16 101:17 103:5 105:7 105:14 106:9,16 107:3,13,25 110:8 114:18 117:9 119:15 120:25 121:1 122:25 123:8 123:12 125:20 126:23,24 127:21 128:25,25 130:5,6 134:17 135:1 136:8 137:20 138:1,5 141:8,13 142:18 143:15,18 144:10 146:4,7,14 147:9,14 148:11 150:3,12 151:8 154:13 155:12 156:21 157:17,21 158:19 160:22 161:9 163:4 163:9,19 168:8 169:4 171:20 172:20 173:1 174:1 174:13,16,22 175:16,24 176:16 177:2 178:20 181:10 182:2,18 183:9 186:21,23 187:15 188:2,4,13 190:6 192:15 gonzalez 26:22 27:13,20 28:2 30:1 30:12 92:5 good 7:8 9:6,7 24:10 55:24 66:12 69:5 92:8 93:1 110:17 171:19 gotten 171:5 great 57:21 greater 153:16 gross 186:9 ground 170:16 grounds 16:23 134:18 170:17 guess 56:13 59:19 61:18 65:6,23 83:18 88:20 119:14 121:23 145:20 guidelines 29:14 51:2,2 85:2 135:22 137:8,19 154:7 guy 24:19 h hand 8:19 happen 108:22 happened 108:24 110:5 happens 66:21 hard 171:22 harmed 182:1 hbo 134:3 179:16 hd 34:25 35:12 37:6 head 142:9 184:24 hear 57:17 heart 42:7 held 7:15 hello 130:13 help 112:11 helpful 112:20,20 hereto 7:6 24:12 69:7 91:20 156:8 158:7 hob 179:19 hold 95:13,20 home 93:8 honest 189:12 honestly 173:11 hope 12:16 170:21 host 86:23 hour 137:2 171:21 hours 130:5 hover 69:22 70:24 134:1,21 135:24 hovering 134:23 hovers 62:19 63:2 87:18 88:7 hsg 1:8 2:8 huh 19:10 24:20,22 26:8 48:3 61:14 73:14 77:24 122:14 122:17 140:20 149:18 150:22 151:20 hummel 4:5 5:6 8:7 8:7 9:5 13:8 14:24 16:8,14,16 17:18,25 18:14 21:18 22:14 22:18 23:5,8,14,18 23:24 24:4,10,13 25:16 26:4,7,9,15 26:18 27:1,4,11 29:5,9,10 30:6,10 30:21 31:4,13,17,23 32:1,8,19 33:3 34:5 35:19 36:7,14,22 37:12 38:7 40:7,20 41:16,18,22 42:17 43:19 45:11,16 46:9 47:5 48:3,17 49:6 49:23 50:12,20 52:2 52:10,18,22 53:3,8 53:18 54:5,12,15 55:8,22 56:12,23 57:5,21 58:10,23 59:7 60:14,24 61:6 62:8,13,22 63:5,21 64:6,10,12,20 65:8 65:22 66:13 67:12 68:7,14 69:5,8,14 69:19 70:6,17,21,22 71:3,6,7,17,23 72:1 72:3,12,16,21 73:4 74:1,7,25 75:4,10 75:24 76:2,3 77:8 77:25 78:10,16,22 80:3 81:10,13 82:3 82:14 83:6,12 84:7 84:10 85:1,12,18,21 86:3,4 87:4,9,14,23 88:14 89:10,17,25 91:2,12,15,21 92:15 93:6 94:17 95:15,24 96:3,10,19,25 97:3 97:5,7,13,18,20 98:2,14,25 99:19 100:20 101:8 102:5 102:11,14 103:3,11 104:3 105:6,9,10,24 106:11,19,22,25 107:7,19,22 108:10 108:19 109:4,8,13 109:20,22 110:17 110:18 112:17 113:8,15 114:3 115:3 116:4,7,12,14 116:17 117:25 119:4,15 120:17,23 121:17,20 123:4,10 123:20 124:1,8 125:16 126:4,11 127:6 128:2 129:5 130:4,12 131:18 133:5,18 134:25 135:9,12,21 136:7 136:15,23 137:1,3 138:3,10 139:24 140:11,20 141:4 142:8,25 143:17,24 144:8 145:7,17 146:9,18 147:11,17 148:22 149:18 150:9 152:8,12 153:13 154:1,19 156:5,9 157:1,5,10 157:13,14 158:4,8 158:21,24 159:3,11 160:11 161:3,16,18 162:8,21 163:11,23 165:3,15 166:5 167:1 168:21 170:4 Page 15 Veritext Legal Solutions 866 299-5127 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 78 of 94 [hummel - injury] 170:19 171:17,25 172:3,15 173:10,13 175:2,21 176:9,22 177:7,22 178:25 179:12 181:7 183:18,20,23 184:25 186:14 187:2,21 188:9,20 189:7,18,22 190:1,5 190:12,24 191:12 191:23 192:5,19 hundred 122:4 hyperlink 135:24 145:18 146:25 148:2 hyperlinks 62:19 63:2 87:18 88:6 hypo 181:6 hypothetical 168:22 170:7 177:21 179:13 180:15 181:3,21 184:24 188:15 i idea 28:17 110:17 identical 147:11 identifiable 189:14 identification 7:5 24:11 69:6 91:19 156:7 158:6 identified 171:9 identifies 33:11 identify 15:23 16:23 17:8 91:25 identity 14:22 imagine 64:5 130:2 181:21 immediate 189:1 immediately 44:10 146:25 148:2 161:7 impact 29:20 implemented 119:9 implication 36:9 implies 134:21 important 6:8 imposition 107:1,9 169:14 impressions 25:12 36:19 47:23 51:8 123:15 142:15 143:10 165:7 169:24 improper 127:19 inadequacies 41:20 inadequacy 42:20 48:7 inadequate 41:2 46:23 47:8,25 48:19 49:5,10 50:22 131:1 131:12 150:18 151:16 152:8,10,13 181:20 inadvertent 41:18 inappropriate 75:5 inartful 11:19 include 19:3 185:5 188:10 including 98:4 147:2 148:5 149:10 151:1 162:15,15 168:14 184:18 185:8,17 186:6 incomplete 67:23 143:3 188:14 incorporated 124:21 increase 77:3,19 79:11 82:25 174:4,4 174:10 independently 61:19 index 5:1 indicate 11:20 158:15 165:25 166:18 indicates 124:22 indicating 72:4 individual 10:8 43:10 47:4 103:25 108:5 123:18 136:19 144:4 individuals 14:7 16:24 18:16,17 19:23 91:25 92:4 139:19 industry 94:20 98:24 info 62:19 63:1 69:22 70:23 87:18 88:6 134:1,21 135:24 infor 125:22 126:1 information 14:19 14:21 16:7,12 17:13 17:16 21:14,17 22:8 22:11 26:3 27:21 28:8,10 29:3 31:12 31:16 32:6,16,24 34:4 36:6,18 38:9 40:17 43:18 44:22 45:7 48:25 49:17 50:9 51:11 55:4 57:14,14,16 58:7,7 58:21,22 59:2,4 60:7,20 61:5 65:20 67:4 68:5,10,21 70:2,12,13 71:13 72:10,18,24 73:1 75:21 76:16 81:22 81:23 82:10 84:22 86:14 87:7,12 88:9 89:13,23 90:16,21 92:1,10 93:3,5 94:7 94:24 96:17,24 98:12,13 99:5,6 100:7 101:6 103:2,8 105:3 106:5,17 107:5,15 108:4,25 113:5,25 114:22 118:18 123:1,6,25 124:17 125:6,7,10 125:23,24 126:1,8 126:25 127:5 128:20 129:2 131:14 132:2,7,11 133:13,15 135:7,17 137:22,23,24 138:7 139:21 140:8,17 141:1,5,5,10,15,20 141:21 142:13,16 142:22 144:12 146:5,15 149:10 150:4 152:2 154:16 155:14,18 156:1 158:1 159:8 160:7 160:13,15 161:11 162:14 163:7,20 164:5,10 166:23 168:14,17 170:3,9 173:9 174:24 175:17 176:2,17 177:4,19 179:7 180:5,10 184:18,19 184:21 185:16,17 186:22 187:16 188:5,16 189:14 190:20,22 191:6,7 191:21 192:2 informed 147:4 148:8,21 149:5,22 150:2 160:3 169:2,3 187:9 initial 5:24 20:17 27:15,18 77:17 91:22 93:7 171:8,15 172:19 177:23 183:24 187:4 initially 40:22 injunctive 5:18 170:17 171:5,6 injured 180:19 181:2 187:23 188:3 188:9 injuries 184:3 injury 167:11 168:5 169:7,17 170:12 171:10 172:22 Veritext Legal Solutions 866 299-5127 Page 16 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 79 of 94 [injury - lawsuit] 173:23 174:2,19 175:4,12 176:15,23 177:11,24 179:2,25 181:11 182:5,22 183:15 186:11 187:5,23 inquired 113:17 insert 73:22 inside 161:5 insist 85:25 115:17 insofar 138:6 instance 184:11 instances 10:23 instruct 14:21 17:10 17:12 45:9 58:9,18 59:6 60:12,22 61:3 65:21 73:3 88:12 103:6 105:7 106:9 107:3,13 113:7 123:3,8 129:4 131:16 132:9 138:1 138:9 139:23 140:10,19 141:3 142:18 143:15 146:17 154:18 155:16 158:3 159:10 160:9 179:10 instructing 16:8,10 23:5,13,17,23 24:3 26:4 31:14 32:6,17 33:1 34:1 40:18 45:14 50:18 54:3,10 54:22 68:12 70:4,15 71:15 72:12,14 75:25 82:1,12 84:24 89:15 102:1,3 103:3 106:22,23 107:20 113:13 135:10,19 instruction 36:14,15 45:17 127:18 instructions 130:20 192:9 intent 143:20 interested 8:2 194:17 interfaces 139:18 international 76:10 76:18,19 internet 45:22 67:10 interpret 86:21 interpretation 162:18 interrupt 49:25 interview 37:13 introduce 8:6 introduced 158:20 introducing 157:18 introductory 42:3 42:12 78:23 79:2 84:19 125:3 160:20 163:2,15 173:25 178:1 185:9 190:17 inves 99:12 investigating 14:11 40:6 investigation 29:21 39:4,22,23 59:12,14 95:12 99:12 107:22 109:21 113:9 114:4 114:12,24 115:12 126:12 128:8 142:1 investigations 102:16,21 104:9 110:20 117:1,17 investigative 14:10 59:15 60:1 111:1 investigators 130:1 involve 94:7 involved 14:10,11 38:25 39:9,12,22 83:21 92:20 110:12 involvement 39:1 83:25 involving 10:11,25 issue 14:1,17 21:23 55:10,14 65:25 66:2 107:24 113:1,2 117:4,22 157:6 189:12 issued 69:3 92:22 issues 29:6 30:11 item 120:1 176:8 192:8 178:6 j jacob 3:14 jake 8:13 19:15 91:23 188:22 jessica 39:10 job 1:23 jsnow 3:20 judge 56:11 jump 119:16 june 12:11 jurisdictions 10:4 k keep 82:24 179:19 kerry 1:16 2:17 5:4 7:11 9:1,10 63:16 91:6 172:6,13 193:2 kind 39:20 43:23 57:19 100:17 144:22 kinds 179:18 knew 107:12 112:15 167:8 168:2 169:16 184:9 know 16:14 17:8,11 20:21 21:22 22:4 28:10,15,18,19,20 29:1,6 30:21 31:2 32:4 35:14 43:6,13 43:17,23,23 51:13 51:14,17,19,21 56:3 56:7 60:17 62:1 63:11,14,14 66:19 67:1 68:24,25 69:4 69:4,17 74:6,13 75:5 79:20 83:6 86:13,13,16,19,21 93:16 96:11,12 100:24 101:9,14 108:8,21,23 110:4 110:12,15 111:17 114:2 118:24 124:5 129:7,13,17 130:2 133:1,2,6 138:24 142:4,5 144:18,22 144:25 145:3,5 148:19 149:19 152:22 153:17 157:2 170:6 174:14 180:13 181:2,5 182:22 183:16 185:21 189:7 knowledge 14:12 58:24 62:11 100:11 102:13 known 91:25 l l 1:22 2:21 194:1,24 lack 160:6 lacking 98:10 157:22 160:23 161:10 lacks 46:7 49:12 62:6 63:12,24 64:9 64:16 66:6 67:24 68:20 71:24 72:9 74:3 78:5,15 79:22 108:17 145:13 laid 24:8 landing 70:10 landscape 29:22 30:3,23 language 149:2 larger 63:22 74:12 139:8 law 3:7,15 4:6,13 11:15 13:8 51:17 153:3,8,10 166:4 180:12,16 181:14 181:17 185:23 186:13 189:19 lawsuit 24:5 115:14 Veritext Legal Solutions 866 299-5127 Page 17 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 80 of 94 [lawyer - meant] looking 46:4 51:18 117:4,21 lawyer 15:3,4,6,12 15:17 52:3 53:17 lawyerly 43:24 lawyers 19:6,21 43:25 49:8 52:10 58:15,25 59:15 130:1 lay 41:25 158:24 lays 25:4 lead 171:10 learn 60:3 learned 169:11,11 169:13 leave 36:21 73:2 leet 7:11 left 11:12 legal 7:13 25:17 51:12 73:17 74:15 74:16,25 80:15 96:21 97:22 123:15 153:23 164:23 165:7,22,24 169:25 170:17,20,22 177:15 180:4 184:14 185:14 188:15 193:3 legitimacy 127:14 length 46:24 47:14 level 39:21 159:23 liability 1:11 2:11 182:13 183:3 185:22 licensed 10:2 lie 42:19 light 166:19 limitation 123:21 limited 1:10 2:10 19:23 34:12,16,24 35:11 36:10 37:3 134:6 line 13:13 41:14 55:7,16 65:3 80:8 80:18,22 138:25,25 lines 77:1,12 linked 70:23 links 36:9 list 92:8 listed 12:9 22:20 28:3 30:14 34:10 50:15 73:7 79:1 listened 39:17 listing 171:15 lists 92:3 litigate 21:24,25 101:21 litigating 101:15 litigation 14:9,16 17:5,20 18:6 27:19 60:1 86:25 93:17 95:8,9,11 96:10,14 100:13,18 102:9 110:25 132:6 173:16 litigator 17:4 little 119:17 llc 1:10 2:10 llp 4:4 located 19:3 locked 174:8 log 31:19 46:5 long 10:17 30:7 look 29:24 33:4 34:6 44:9 61:22 63:6,8 69:19 70:17,22 71:17 73:14 74:15 93:22,24 94:12 103:12 120:17 121:4,24 130:22 133:18 138:16 147:18 149:16 150:9 151:5 159:11 160:11 162:23 166:5 176:14 183:23 looked 33:19 61:24 62:15 64:22 65:14 98:16 102:21 120:15 121:7,9,22 122:3,8 64:2 69:4 77:11 80:17 86:20 98:23 99:21 114:25 125:13 149:15,16 149:24 159:21 187:2 looks 149:14 los 4:8 19:4,8 loss 184:12 185:2,4 lost 184:4 185:3 lot 128:20 low 165:14 lower 165:14 lunch 130:5 136:8 m m 4:12 ma'am 147:20 machine 194:9 maintain 76:8,14,24 81:19 83:1 99:14 159:23 maintained 112:24 making 66:11 management 82:16 83:4,13,19 managing 9:24 mandatory 46:23 47:14 172:24 175:5 175:14 mark 24:10 68:14 91:16 134:2 156:5 158:4 marked 7:5 10:18 12:10 24:11 33:3 66:15 69:6 91:19 103:13 130:23 138:17 156:7 158:6 market 2:18 3:8,16 7:16 9:13 49:8 marketing 60:16 66:22 103:16 104:14 105:12 106:1 114:6,15 marks 91:4 172:5,11 markup 85:13 material 44:17 53:12 60:9 68:10 111:25 125:19 140:5 154:12 163:1 163:18 164:3,21 173:24 184:7 185:8 188:11,12 190:16 191:15 materially 67:22 143:3 materials 75:23 matter 10:25 38:21 39:6 92:23 110:13 132:4 matters 107:24 121:17 mckown 19:11 20:19 59:18 mean 13:6 22:25 28:21 38:23 41:16 42:22 47:18 50:25 51:4 59:15 64:1 66:7 78:7 79:24 80:21 86:12 98:22 100:17 109:15 111:15 112:6,8 115:16 118:21 136:20 140:21 144:13,23,24 145:20 149:12,13 152:9,18 153:2,3,7 153:16,20 154:7 158:24 163:25 164:17,24 165:4,11 165:12,16 180:11 meaning 47:23 132:5 161:19,22 162:3,6 185:1 means 52:23 53:9 153:5,5,6 meant 168:20 Veritext Legal Solutions 866 299-5127 Page 18 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 81 of 94 [measure - o'brien] measure 139:14 172:22 174:7,12,14 175:3,12 176:23 179:1 181:11 186:8 187:14 measured 186:18 measures 187:10 measuring 174:2 media 91:5 172:6,12 193:2 meet 39:10 127:14 186:1 192:15 meetings 39:4 member 95:2 members 14:16 15:22,23 17:1,5,20 18:6,17,24 19:3,7 19:14 36:19 memorandum 21:5 21:6,19 mental 25:12 36:18 47:23 51:8 123:14 142:15 143:10 165:7 169:24 mentioned 94:21 mere 23:1 56:19 merely 107:10 meritorious 69:8 met 39:15 method 160:13 174:18 methodology 175:3 175:11 176:22 179:1,14 181:10 methods 102:15 104:8 microphones 7:24 mind 117:11 132:12 minimum 159:23 minority 51:19 52:1 53:10,11,21 56:1 122:23 164:25 165:4 184:6 minus 186:10 minute 147:15 171:6,24 minutes 91:3 mis 134:19 mischaracterizes 78:9 133:11 134:19 160:24 163:5 mischaracterizing 98:9 mislead 143:1,20 misled 43:17 51:15 51:20 52:17 126:15 126:22 127:10 166:1,19 missed 76:13 missing 19:12 misstates 165:20 169:20 mo 34:13 36:11 mockup 156:12 mockups 156:18 moment 26:14 147:7 monetarily 115:8 monetary 170:16 171:11 180:17 185:24 186:2,17 187:23 money 118:7 186:9 monies 118:13 171:4 172:18 monitor 63:10 month 37:4 42:24 44:11 47:1 70:25 74:17,19,19 75:6,8 75:9,9 76:10,16,25 79:17 81:20 82:22 145:10,11 159:17 159:18 166:15 167:5,9,22 168:3 169:11 174:5 179:20 monthly 35:1,13,18 43:15 77:4,19 79:12 124:11 138:20 140:23 141:6,22 142:7,10 143:4 145:8 146:12,12 months 42:25 44:9 44:11 76:8,14,24 131:23 132:21 134:3,7 159:24 169:2,15 187:13 189:10 morning 7:8 9:6,7 motion 119:1,2 mouse 134:2 movie 134:6 multiple 134:18 multistate 115:6,20 117:3,6,19 118:5 119:3,9 n name 7:11 9:8 95:2 194:20 named 27:19 names 80:9 91:25 nature 138:11 necessarily 25:6 36:16 127:25 159:24 necessary 85:5 86:7 112:19 need 16:14 17:11 21:21 55:15 80:4 88:20 93:4,4 97:5 177:25 179:3 negative 131:3 133:9 147:5 148:9 negotiations 157:20 neither 69:14 74:13 159:6 194:16 net 186:11 network 191:15 nevertheless 167:5 167:22 184:8 new 34:12,16,24 35:10 36:10 37:3 134:7 Veritext Legal Solutions 866 299-5127 nfl 181:25 nicole 26:11,20 27:12,19 28:2 92:6 ninth 13:9 183:25 non 43:24 58:15 186:6 70:23 nonprivileged 89:8 nope 173:18 normal 64:4 normally 170:10 northern 1:2 2:2 7:19 note 7:22 99:11 noted 193:6 notes 12:17 notice 5:13 10:18 12:9 20:13 28:3,17 30:5 58:12,25 93:18 152:22 168:20 171:3 172:16 175:23 186:16 noticed 13:10 35:24 36:1 43:9 45:5 47:3 62:6,12 63:13 168:10 185:13 191:20 noticing 8:5 notion 55:25 64:13 notwithstanding 182:15 183:5 number 5:11 6:2 35:17 45:21 46:5 105:25 106:13 111:5,9 120:11 128:6 129:8,18,19 167:6,6,23,24 182:6 187:22 188:2 193:2 numbers 187:3 o o'brien 1:16 2:17 5:4 7:11 9:1,10,11 27:11 57:5 73:5 74:5 85:25 91:6,12 Page 19 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 82 of 94 [o'brien - okay] 95:18,22 96:16 98:1 103:15 109:9 130:12 136:3,16 140:19 141:13 142:18,20 143:15 144:2 147:15 148:15 149:8 150:7 151:25 159:12 161:1,13 162:12 163:9,22 164:8 165:9 166:25 168:12 170:1 171:21 172:7,13 173:7 177:17 178:22 180:7 184:16 185:15 191:10 193:2 o'brien's 98:9 o0o 7:3 oath 9:2 11:13 57:6 91:13 130:14 194:7 ob 83:2 88:8 objec 42:16 47:19 object 16:6 21:13 22:6 25:10 26:1 32:5 35:4 36:2 41:12 43:6 52:20 55:6 58:5,6,16 59:2 60:6,18,19 63:12 65:19 68:19 90:14 96:23 97:23 98:8 99:3 100:6 101:5 102:24 105:14 106:16 107:25 110:8 114:19 121:1 122:25 123:12 126:24 129:1 134:18 135:1 137:21 138:5 140:16 141:8 146:5 146:14 150:4 154:14 155:13 156:22 157:21,23 157:25 158:19 160:5,23 161:9,11 162:11 163:5,6,20 168:9 173:1,6 174:23 175:16 176:17 178:20 186:22 187:15 188:4,14 objecting 126:7 135:5 148:12 objection 13:4 14:18 22:9,10,17,24 23:12 23:16,22 24:2 25:14 29:2 30:4,16,25 31:9 32:15,23 34:1 35:22 36:13 37:7 40:2,14 45:4,12 46:7 47:2,19 48:14 48:21 49:11 50:16 51:5 52:8 53:5,14 53:24 54:10,13,20 54:21 56:19 57:13 62:5 63:24 64:8,15 65:1 66:5,16 67:24 68:9 69:5,25 70:11 71:2,12,22 72:9,20 72:22 73:24 74:21 75:20,20 77:6,21 78:4,14 79:21 81:8 81:21 82:9 83:2,8 84:4,21 85:7 86:9 87:6,11,19 88:8,18 89:5,12,22 92:11 94:1 103:22 105:2,2 106:4 108:17 112:1 113:4,11,20 116:3,5 117:5 118:15 119:10 120:13 124:2 125:4 127:15 127:17,22,24 131:13,25 133:10 135:1,16 139:20 140:7 141:1 142:12 145:12 149:7 153:22 157:17 159:4,7 165:20 166:22 170:5 190:19 191:5 objections 8:3 125:21 158:18 192:9 obligation 107:12 obstructionist 127:13 127:19 obtain 129:6 148:20 180:17 187:9 obtained 61:19 111:2 129:15,24 188:21 obtaining 96:21 97:22 obvious 101:14 obviously 20:12 64:2 93:3 124:3 144:22 145:4 192:7 occasion 127:17 occurred 112:12 october 33:14 115:13 166:12 odds 186:3 offer 34:13,17,24 35:11,18 36:10,11 37:4,6 40:25 44:4 44:19 53:13 66:11 69:22 70:9 71:21 78:2 84:19,20 125:19 131:22 132:20 133:2 134:8 147:5,13 148:9 160:20 163:3,15,16 173:25 178:9,17 181:22 184:9 185:9 185:9 190:17,18 offered 79:17 offering 66:19 178:2 offers 42:5,13,14 70:24 131:2 133:9 137:7,17 office 9:24 19:13 21:4 38:22 143:18 Veritext Legal Solutions 866 299-5127 oh 76:19 80:17 84:12 139:11 okay 10:23 13:22 14:3,7,15 15:10 18:14,22 19:2,6,25 20:5,22 24:18 25:1 25:1,7 26:7,22 27:1 27:4 28:10 29:5 30:21 31:4 33:22 34:5,16 38:15 40:20 41:17,22 43:3,19 44:15,24 45:4,19 46:1,3,21 47:18 48:6,10 49:23 50:7 53:18 57:8,24 61:15 62:1,16 64:20 65:11 65:22 67:17,19,21 69:5 71:25 73:19 74:7 75:13,24 76:19 76:20 77:15 78:10 78:22 83:17 84:7 91:15 97:13 101:8 102:5 103:20 104:3 108:14 109:8 110:6 111:17,20,25 114:3 114:11,18 115:15 115:25 116:16 117:25 119:15,21 120:2,8,17 121:6 122:10,15 123:22 123:22 126:23 128:19 129:14,21 130:22 131:25 134:17 135:25 136:15,23 137:20 139:5,11 143:7 146:4 147:6 148:11 149:23 150:3,24 151:23 152:11,19 154:1,13 155:1,12 156:5,21 157:4,12 157:16 158:18,23 159:1 160:22 161:17 163:4,19 164:4 165:5 167:13 Page 20 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 83 of 94 [okay - place] 168:8 169:8,19 171:7,19 173:12,21 173:25 174:22 175:7 176:16 177:2 177:13,22 180:3 182:12,24 183:19 183:22 184:4,13,22 184:25 185:12 186:21 188:13 191:19 192:18,19 192:20 once 178:8,16 185:21 ones 122:5 127:23 operating 68:23 69:12,13 opinion 25:18,20 35:15,21 47:21 49:7 51:13 53:17 68:3 86:12 149:13 164:23 165:25 170:18,20,22 177:21 opportunity 39:10 opposed 160:14 opposing 101:9 opposition 119:2 option 131:4 133:9 147:5 148:9 order 20:9 21:22 68:15 112:16 146:22 147:1 148:3 149:2,3 150:1 158:4 178:3 180:16 186:2 189:15,20 original 194:13 outcome 8:3 outside 57:11 58:4 100:21 148:13 160:15,21 161:6 162:12 overall 40:4 p p.m. 172:7,11 190:7 193:4,6 package 76:9,15,25 79:17,18 80:9 81:19 82:24 124:12 139:5 139:7 159:17,19,24 packages 77:4,20 79:12 80:7,20 82:6 138:13 packaging 138:24 page 5:4,11 6:2 33:5 33:6 34:22 63:6,7 64:14 66:4 69:20,23 70:9,10,18,23 71:18 72:6 73:15 74:25 75:15 77:12 79:1,17 79:25 82:7 130:24 131:9,21 132:19 133:6,19,21,22 134:16 135:15 137:7,18 138:12,17 138:20,25 139:9,13 140:24,24 141:7,23 142:3,5,7 145:16,18 146:18,19,21 147:7 147:8,8,13,18 150:11 151:7 156:9 159:12 160:12 166:6,6,7,11,16 167:4,21 187:22 pages 1:25 5:15,19 5:22,25 6:6,9 62:16 133:7 142:11 143:5 145:25 146:2 147:16 paid 118:13 171:4 paper 63:22 73:22 172:18 144:24 papers 46:19 84:3,9 paragraph 33:6,11 34:7 36:9 40:21,22 40:24 41:10,13,15 41:20 42:2,4 46:10 50:21 61:18 66:24 67:15,16 73:8 74:16 74:24 77:1,9 79:10 80:5,9,19 82:21 99:22 103:12,14 115:21 119:25 122:6 124:14 130:23,24 131:1 150:10,17 151:6,15 163:24 164:15 187:3 paragraphs 66:18 67:9 145:4 part 59:15 73:4 115:5 134:7 187:21 participated 39:3 particular 25:21 45:12 51:18 86:20 105:22 111:3 131:1 138:13 157:5 159:25 parties 7:23 91:25 110:6,22 113:18 189:16 party 8:1 100:22,24 101:9 113:15 194:18 patient 101:17 pay 80:2 145:10 159:17,18 174:6,10 180:2 181:23 payment 116:2 pdf 189:1 penalty 8:22 174:10 174:11,11 pending 26:15 people 13:22 14:5 14:12 16:19 17:8,18 18:3,11,24 26:23 58:24 perceive 53:11 64:25 65:17 126:6 160:19 perceived 37:3,5 percent 51:23 111:21,23 165:14 165:16,16 167:9 168:2 172:3 percentage 106:2,25 perception 88:15,25 perfect 181:7 perform 20:2 75:17 137:4,14 145:22 146:1 149:24 156:16 158:13 160:1 performed 17:22 18:8 20:1,1 22:22 31:5 33:24 72:3 94:22 101:1 114:4 114:13 131:6 139:16 150:14 151:11 160:18 163:11 166:18 190:25 191:23 period 47:1 111:12 111:13 134:8 172:25 178:3 perjury 8:22 permanent 5:17 permit 135:23 person 12:22 13:1 13:11,12,17 94:19 personal 14:12 35:15,20 66:8 86:11 186:13 189:14 personally 28:14 38:15,18 pertains 194:12 phone 39:17 67:2 169:10 184:10 190:14 photocopy 6:4 phrase 10:13 154:4 pick 7:25 pii 189:13,17 place 7:23 39:13 109:16 110:3,4 Veritext Legal Solutions 866 299-5127 Page 21 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 84 of 94 [place - privilege] 189:15,15 194:5 placement 41:3 48:2 150:20 151:19 152:15,15 153:6 154:5,11,25 155:10 156:13 158:11 161:20 162:4,25 163:14 166:21 182:19 183:11 plaintiff 1:6 2:6 3:3 5:14 174:15 plaintiff's 5:24 planet 84:9 pleadings 21:7 22:4 please 7:22 8:4,19 9:8 11:20 18:1 20:11 27:10 33:5 35:7 37:23,24 40:21 47:12 57:4 62:21,23 65:9 70:18 73:15 87:24 90:6 91:11 94:9 114:9 117:11 130:11 137:10 141:16 147:22 150:10 151:6 155:1 160:12 161:24 164:11 167:14 172:14 178:12 182:25 190:11 191:10 point 43:4 44:11 93:5 94:24 142:5 181:18 186:7 policy 29:11 51:3 52:13 pop 62:20 63:2 posed 97:17 position 147:3 148:7 148:25 149:5 possession 93:19 possible 169:13 possibly 118:17 potential 15:18 45:20 144:20 174:4 potentially 107:17 118:17 165:19 180:5 practice 86:20 practices 66:23 73:6 95:16 98:6 102:19 103:16 104:11,14 105:12 106:1 110:22 114:7,16 117:4,21 pre 91:16 precise 44:2 predate 50:13 predicated 35:24 prefatory 121:18 prefer 26:16 premium 41:1 42:5 42:13,14 84:19 106:15 113:2 131:2 131:10,21 132:20 133:2 134:6 137:6 137:17 147:2 148:5 163:2,16 178:2,8,16 179:4,22 185:8 187:7,13 190:17 prepa 151:1 preparation 19:22 20:5,23 22:16 23:11 23:25 27:15 28:1 30:14,19 33:18 37:12,16,20 38:1,11 59:8,22 60:2,15,25 61:7 64:21 65:12 82:14,18 88:15,25 89:8 93:13 99:20 102:8,9,22 116:24 117:15 120:23 121:8,21,23 122:2,8 122:11 132:5 140:11 162:22 192:12 preparatory 151:2 prepare 13:14,20 15:24 20:9 104:12 106:12 110:19,24 116:25 117:16 118:13 119:7 152:23 175:22 176:7,8,12 prepared 13:19 95:3 95:7,9 96:11,13 97:21 98:1 102:8 152:25 153:10,25 156:18 162:19 preparing 14:4 17:6 17:19 18:4,12,19,22 26:10,19 29:24 38:19 93:17 118:23 136:21 present 41:21 173:17 presentation 41:2 48:1 150:19 151:18 152:14 153:5 154:4 154:10,24 155:9 156:13 158:10 161:20 162:3,25 163:13 166:20 presented 158:16 presently 9:15 presume 181:19 presumed 180:20 181:20 presumption 186:12 presumptive 182:21 183:15 pretend 108:22,24 pretty 64:3 66:12 110:17 142:3 171:22 prevents 189:1,22 previous 54:9,21 previously 30:13 price 35:1,13,18 36:11 37:5 42:3,12 42:24,25 43:16,17 44:11,19 77:17 78:24 79:18 80:1,7 82:25 84:19 124:11 124:11,22 125:3 126:6 131:10 134:9 138:12 141:7,22 145:10 159:19,24 160:20 163:2,15 167:10 168:4 169:3 169:12 173:25 174:4,10 176:25 177:9 178:10,18 179:23 185:9 190:17 prices 79:1,2 80:10 80:19 82:6 pricing 141:5,21 primarily 9:21 print 25:21 32:10 33:14 41:9 45:20 46:16,22 61:20,21 73:16 74:12 82:7 119:21,22 120:2 166:11 167:12 168:7 182:15 183:6 184:8 185:11 printout 63:23 68:16,24 69:11 printouts 6:5 prior 30:23 31:7 32:13,22 33:23 36:24 38:20 45:1 53:19 54:5,19 56:15 57:10 58:1,13 71:8 83:22 98:9 107:8,24 145:22 146:9 154:8 154:21 155:4 159:21 163:5 165:21 169:20 178:2 194:7 private 7:25 privilege 16:15,23 21:15 88:10 95:1,5 96:4,8 97:10,11 99:7,16 100:16 101:13 105:4 109:4 123:17 125:24,25 142:17 143:14 176:19 179:8 Veritext Legal Solutions 866 299-5127 Page 22 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 85 of 94 [privilege - purpose] 184:20 186:25 187:18 188:7 privileged 14:19,21 16:7,11 21:17 26:3 29:3 31:9,16 32:6 32:16,24 36:5 37:8 40:16 45:6 48:25 49:16 50:8 51:11 55:4,9 56:21 57:14 70:1,12 81:22 89:11 92:13 94:7 95:1,25 96:18,24 98:11,12 99:5,14 101:10,11 103:1,1,7 105:17 106:7 108:4,20 113:25 114:22 119:12 123:24,24 124:2 125:6,10 127:4 132:11 133:12,15 137:22 141:15 142:13,22 143:12 144:12 148:17 149:10 152:1 156:1 162:14 164:10 168:14,15 170:2 173:4,9 177:18 184:17 185:16 privileges 164:7 185:19 191:9 probable 164:1,18 probably 107:18 probe 101:10 probing 56:4 problem 56:11 159:14 procedure 17:17 22:12 23:3 proceeding 8:4 153:14,18 proceedings 194:4,6 194:8,14 process 21:16 67:10 72:25 90:3,12 96:24 97:10 98:13 99:5 107:18 118:8 123:17 125:6,22,24 128:18 142:17 143:13 150:1 169:10 184:11 185:6,7 190:14 191:1 processes 142:15 143:10 procter 19:9 59:18 produce 99:18 189:17 producing 31:24 product 14:19,20 15:2 16:6 17:15 21:16 22:11,15,25 25:15 26:3 29:4 31:11 32:24,25 34:3 36:5,17 37:8 40:16 45:7,8 47:23 48:15 48:16,23 49:13 50:9 50:10,17 51:7 53:4 54:1,1 58:21 70:2 73:1 81:23,25 82:11 85:13 88:10 92:14 94:4,5 96:7 99:7 100:16 101:2 103:2 106:8,21 107:6,16 108:2 110:10 113:6 113:12,21 114:20 118:17,24 119:13 123:14 125:5 126:1 127:2 133:13 137:23 141:12 142:14 144:19 148:17 149:11 150:6 154:15 162:15 164:6 168:15 173:5 174:24 175:18 176:1,20 177:6,16 179:7 180:10,24 184:20 185:18 186:5,20 187:1,18 188:17 190:22 191:8 production 21:24 69:9 189:23 program 115:6 116:1,18,20,22 117:3,6,20 118:4,14 119:8 programming 76:9 76:15,25 77:4,20 79:12 81:19 138:24 139:6,7 179:19 prominence 41:3 150:20 151:18 152:14 153:6 154:5 154:10,25 155:9 156:13 158:11 161:20 162:4,25 163:14 166:20 prominent 182:19 prominently 69:23 183:10 181:24 promise 11:19 48:1 promotional 134:8 178:9,17 properly 152:5 proposed 21:6 22:3 protect 55:11 184:2 protected 17:16 21:15 22:8,12 23:3 31:12 48:16 50:10 50:17 54:1 55:5 56:21 57:15 58:8,21 59:3,5 60:8,21 61:5 65:20 68:10 70:13 71:13 72:10,25 75:21 81:23 82:10 84:22 87:7,12 88:9 89:13,23 90:16 94:5 98:13 99:6,8 100:7 101:6 105:3 106:5 106:17 107:5,15 113:5 118:18 123:1 123:7 125:7 126:2,2 126:8 127:1 129:2 131:14 132:7 135:7 135:17 137:23,24 138:7 140:8,17 141:1,10 142:16 143:13 146:6,15 150:5 154:16 155:14 156:23 158:1 159:8 160:7 160:25 161:11 163:7,21 164:6 166:23 174:25 175:17 176:18 177:4 179:7 180:6 180:10 184:19,21 185:17 186:23 187:16 188:6,16 190:20,22 191:6,7 191:21 192:2 protection 39:6,11 101:2 157:2 189:8 protective 189:20 protects 189:16 prove 55:24 69:16 112:21 118:6 184:6 provide 47:21 90:25 provided 17:8 68:21 124:17 128:18 156:10,19,22 157:19 159:5 providers 191:14 providing 67:7 proximity 41:3 48:1 150:19 151:18 152:14 153:6 154:4 154:10,24 155:9 156:13 158:11 161:20 162:3,25 163:14 166:20 public 143:1,20,21 purchase 120:9 144:19 149:20 purchased 109:25 180:24 186:4 purpose 73:10 96:20 97:21 Veritext Legal Solutions 866 299-5127 Page 23 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 86 of 94 [purposes - record] purposes 118:1 pursuant 139:22 put 72:17 116:7 136:2 putting 127:12 160:13 171:6 q qualifications 86:6 qualified 12:22 13:2 13:7,11,13,17,23 qualifying 40:25 41:21 76:10,16 124:16 question 11:17,21 11:24 12:2 14:20,25 16:4,6 17:24 18:3 21:13 22:7,19 23:8 23:18 25:11 26:2,16 26:18 29:23 30:7 31:3 34:2 35:4,8,10 35:25 36:2 38:1 45:10 47:6 50:7,21 51:18 54:4 56:6,13 57:17,20,24 58:17 59:2 60:6,18,20 61:4 62:21,25 63:15 63:15 65:7,11 67:13 71:3 78:21 80:21 81:11,12,14 83:4,24 84:10 85:22 86:2,3 87:22 88:1,21,24 89:5 90:6,8,15,20 94:10,12 95:19,23 96:15,23 97:1,8,15 97:16,17,24 98:8 99:10 100:6,8 101:5 102:25 103:25 105:15 106:5,17 107:4,14 108:1,3,7 108:9 110:7,9 113:3 113:24 114:9,11 115:11 117:12,14 117:24 118:2,20 119:5 121:2,4,23 123:1 126:8,20 128:21 129:1 131:5 132:1,6,13,15 133:6 134:2,18,21 135:2,5 136:14,17,18 137:10,12,21 138:6 141:9,14,14,17,19 142:21,24 143:8,16 143:19,23,25 144:2 144:3,11 146:5,15 147:18,19,22,24 148:12,15,23,25 149:9 150:4,8 151:1 151:5,21,24,25 152:17 154:8,14 155:2,4,13,17,25 156:4,16 157:10,13 157:22,23,25 158:13 159:8 160:1 160:5,17,23 161:2 161:10,22 162:1,7 162:12,13,17 163:5 163:20 164:4,9,12 164:14 165:5,10 167:14,17 168:9,13 171:2,12,18 172:21 173:2,8 174:1,23 175:2,8,10,10,17,25 176:6,10,17 177:3 177:13 178:14,20 179:6 180:3,8 181:8 181:19 182:25 183:2,20 184:5,13 184:14,16 185:4,13 186:22 187:16 188:5,14 191:11,19 question's 136:1 questioning 55:7 65:4 95:14 96:2 192:16 questions 10:17 11:19 13:13 29:16 42:1 54:21 55:17 72:2 101:12,16 109:11 115:18 136:4,9 150:13 151:9 162:20 192:6 quick 171:23 quickly 101:18 quite 52:5 quote 70:24 77:18 149:3,4 187:22 r raise 8:18 rates 109:20 ray 19:11 20:19 59:18 181:25 read 18:1,2 34:7 35:2,9 37:24,25 57:20,23 62:22,24 65:8,10 74:17 75:11 76:4,7 78:16 80:4 80:22 82:15,19,20 83:7,10,15,17,19 84:2 87:23,25 88:21 88:23 90:5,7 94:9 94:11 97:16 103:14 114:9,10 117:13 118:25 121:2,3 126:17,19 132:14 137:9,11 141:18 147:21,23 150:25 151:4 155:2,3 161:23,25 164:13 166:4 167:3,13,16 167:19 175:8,9 178:11,13,24 182:24 183:1 190:2 reading 12:16 41:15 76:6 80:14 119:5 reads 40:22 134:5 ready 16:17 17:1 readying 15:24 16:18 18:23 real 55:10 56:11 realize 178:19 really 21:9 51:19 55:15 65:1 69:4 85:25 92:22,24 95:6 99:21 103:9 110:15 122:4 142:3 169:24 171:2 173:19 179:18 184:23 reason 11:18 12:5 28:6 49:4 128:3 130:16,18,19 reasonable 52:6,19 53:1 54:17 55:24 reasonably 191:2 reasons 30:13 102:17 104:9 127:8 127:9 192:11 rebecca 1:22 2:21 7:12 194:1,24 rebut 186:12 recall 27:23 73:9 received 104:19 108:16 113:18 128:15 receives 105:21 recess 27:7 57:1 91:8 130:8 172:9 190:8 recognize 76:5 recommendation 21:3 22:3 39:2,14 83:23 recommendations 121:12 record 7:9,24 9:9 11:21 18:2 26:14 27:4,5,8 31:21 34:7 35:9 37:25 41:15 54:24 56:24 57:2,23 62:24 65:10 85:16 87:25 88:23 90:7 91:7,9 94:11 97:6 99:11 101:9 103:15 114:10 117:13 121:3 126:19 127:7 130:6,9 132:14 137:11 141:18 145:25 147:23 151:4 155:3 161:25 Veritext Legal Solutions 866 299-5127 Page 24 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 87 of 94 [record - resulted] 164:13 167:15,16 172:8,11 175:9 178:13 183:1 190:5 190:6,9 192:14 193:5 194:8,11 recorded 7:10 recording 7:23 red 79:2 160:14,15 161:5,7,7 reference 24:16 34:8 66:14 80:1 83:21 85:22 95:15 172:18 referenced 81:18 100:3 115:20 references 67:17 referring 79:25 refund 115:2 171:4 83:11 172:17 refunded 118:5 refunds 186:10 refusing 16:22 56:12 96:25 97:8 reg 46:17 regard 30:2 47:8 regarding 11:9 25:18 46:23 70:24 93:15 137:6,16 139:17 154:9,23 155:7 191:3 region 3:5 9:18 regional 9:16,23 19:3,8 143:18 regular 131:10 178:10,18 179:23 regularly 46:18 reiterate 89:4 125:11,21 157:17 relate 99:2 112:25 113:1 128:6 related 8:1 17:14 22:11,15,25 48:15 50:10,17 54:1 55:2 55:3 60:9,10 64:24 65:16 68:10 75:22 81:25 82:11 92:5 106:14 107:1 155:19 176:2 184:21 relates 42:2,4 109:20 131:2 133:5 172:17 relating 20:25 30:11 38:9 82:21 84:15,18 85:4 89:19 93:20 94:19 98:5 101:3,12 104:13 107:24 110:16 111:11 117:3,21 118:6 128:11 131:9,21 132:19 133:8 138:11 140:22 162:24 163:1,15 168:18 relation 90:22 relative 139:17 194:17 relayed 38:10 relevant 28:8 52:6 53:3,23 54:7 93:2 111:13 112:15 147:18 157:6 173:17 191:25 reliance 180:18 relief 5:19 112:16 170:16,17 171:5,6 171:11 180:17 185:24 186:2,8,17 rely 181:3 182:8 remaining 74:19 remediated 114:6 75:9 114:14 117:19 remedy 127:20 remember 20:20 39:20 82:19 83:18 84:6 91:13 129:7,8 remediation 117:2,6 142:9 145:15 render 163:16 rep 144:22 repeat 17:24 30:8 35:7 36:12 37:23 47:12 54:9 56:18 62:21 65:7 77:10 87:21 94:10 98:18 98:20 114:8 141:16 164:11 repeating 117:12 132:12 rephrase 22:8 97:18 145:21 148:24 183:18,21 report 31:25 reported 1:21 reporter 2:21 7:6,12 8:18,21 11:12 18:1 24:12 69:7 91:16,20 156:8 158:7 194:2 reports 140:13 represent 8:8 76:4 106:3 118:1 representation representations 124:11 86:15 representative 1:16 10:9 64:3 69:16 representatives 108:11,14 representing 69:15 74:10,11 reproduced 73:21 request 7:13 136:1 requested 194:15 require 58:20,20 60:7 70:25 76:6 82:23 155:18 174:15 requirement 166:14 requires 91:24 reread 136:22 research 12:18 13:24 14:13 15:13 20:2,25 22:22 23:1 29:25 32:20 33:24 35:19 36:7 37:1 40:11 49:8,9 50:1 50:13 53:20 54:7,16 56:14 57:9,25 58:11 64:23 65:15 68:8 70:7 71:8 72:4 82:4 84:15 85:3 86:5,13 86:18,19,23 87:1,4 87:9,15 88:2 89:18 90:1,9 121:19 134:14 137:5,14 140:6,22 146:10 reserve 192:13 resolution 63:9 64:19,24 65:16 respect 23:9,19 41:9 45:20 65:25 84:11 93:21,21 102:7 119:8 158:11 respond 74:5 143:16 144:3 161:2 162:13 164:8 165:9,23 166:25 168:12 170:1 180:7,8 responding 175:25 response 144:9 173:12 responsibilities 9:20 responsible 9:22 responsive 58:24 60:4 131:6 restate 57:17,19 175:8 restitution 115:6 116:1,18,19 118:4 118:12 119:8 171:4 172:17 185:25 result 74:18 75:8 86:16 182:3 resulted 128:10 Veritext Legal Solutions 866 299-5127 Page 25 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 88 of 94 [results - see] results 12:17 22:22 102:16,20 104:8 retained 17:21 18:7 20:2 132:3 176:4 193:3 reveal 14:22 16:11 16:11 17:13 36:4,17 47:22 55:1 60:7 94:3 176:1 revealing 48:24 49:16 51:10 92:17 100:9 103:7 105:17 108:4 113:24 114:22 119:12 123:24 125:10 127:4 141:15 142:22 144:11 148:16 149:9 152:1 155:25 162:14 164:9 168:13 170:2 173:9 177:18 180:9 184:17 185:16 revenue 186:9 revenues 186:19 review 20:6 22:14 22:21 23:10,24 88:14,24 89:7,10 99:19 104:23,25 194:14 reviewed 20:8,9,12 20:14,17,18,25 21:2 24:21 27:14 61:8 62:14 119:18 rich 39:10 ridden 85:13 right 8:19 15:21 16:22 19:20 26:16 27:25 28:24 33:11 33:18 34:22 36:24 41:8 42:5 44:1,13 44:14 46:12,13 49:6 52:3,5,19 53:8,13 59:19 62:16 63:10 63:23 65:24 67:12 67:15 68:14 74:7 75:10,14,16 76:23 77:25 78:24 79:4,7 79:8,9,13,14,15 80:18 84:7 102:24 103:11 104:6 108:12 115:24 119:19 122:16,20 124:19 125:16 129:17 130:4 133:18 135:12 138:16,23,23 139:3 139:3,9,15,19 150:23,25 151:21 154:3 169:5 170:19 170:23 171:17 178:9,17 182:10,12 190:1 road 118:3 role 9:20 38:15,18 40:8,10 180:2 romano 1:22 2:21 7:12 194:1,24 routinely 146:12 royal 140:1 rpr 1:22 194:24 rsandrock 4:17 rule 11:5 17:17 22:12 23:3 55:19,23 91:24 156:24,24 157:1,3 192:10 ruled 165:13 ruler 139:13 rules 11:8 31:22 153:17 156:24 174:15 running 9:23 ryan 4:12 8:9 s s 4:5 sales 67:10 san 1:3,17 2:3,19 3:5,10,18 4:15 7:1 7:16,20 9:14,18 19:13 sandrock 4:12 8:9,9 satellite 94:20 98:4 98:24 124:12 191:3 satisfactorily 189:16 satisfied 115:7 satisfy 140:1 satisfying 139:24 saw 72:5 saying 43:1,13 44:8 51:23 74:13 150:16 151:13 says 34:12 42:19 44:11 46:2,9,11,12 50:21 76:5,8,20 80:5,7 104:5 145:16 146:22,25 148:3 149:2 150:17 151:15 152:13 153:21 184:1 185:2 187:22 scope 10:18 28:16 29:8 30:5,17 31:1 35:5,23,25 40:15 43:8 45:5,13 47:3 47:20 48:22 49:12 50:8 51:6 52:9,21 53:6,15 62:6,11 63:13 64:9,17 65:4 66:6,17 67:25 70:1 72:23 73:25 74:4,22 77:7,22 78:6 79:22 83:3,9 84:5 85:8 86:10 87:20 88:19 89:6 90:23 92:12 95:13,14,18 96:1,16 97:24,25 99:4 102:10 103:23 105:15 108:1,18 109:19 112:2,16 114:19 116:6,11 117:6 118:16 119:11 123:13 124:4 125:5,12,21 126:25 127:7,24 132:1 133:11 136:1 136:14,18 141:9 142:19,20 143:8 144:2 145:13 148:13 149:8 151:24 152:20 153:23 155:13 157:24 161:15 162:12 164:5 165:6 165:21 168:10 169:21 170:5 171:1 173:7,10 177:14 178:21 180:4 181:8 184:14 185:13 189:4 191:20 192:3 screen 63:19,20,23 64:4,19,24 65:16 144:25 screenshot 63:7 69:12 screenshots 5:21 61:22 62:3 scroll 134:22 scrolls 134:2 seated 11:12 second 36:2 74:16 74:23 77:2,18 79:11 80:2,8,16,18 81:17 82:23 112:19 124:25 125:3 136:1 138:12 157:21 159:4,18 160:12 167:10 168:4 169:3 169:12 174:5 176:25 177:9 187:8 section 153:18 see 33:9 41:4,6,11 41:19,19 42:18 44:10 48:4,13,20 50:5,23 53:12,22 56:1 63:18 66:3 68:6 70:8 71:10,20 73:17 74:20 75:3,14 75:18 76:12,20 77:5 77:8,14 80:12 82:5 84:16 85:3,9,10,18 Veritext Legal Solutions 866 299-5127 Page 26 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 89 of 94 [see - studies] services 54:8 113:16 size 63:8 73:22 74:9 stacy 19:9 59:18 86:5,16 101:18 125:18 131:20 132:17 133:25 134:11,15 135:14 138:19,21 140:3,4 142:7 145:9 146:2 150:21 158:16 163:17 164:2,19 165:17 178:5,6 179:21 184:7 187:25 seeing 182:15 183:5 seek 127:20 seeking 55:11 seen 51:24 105:24 161:5 165:1 168:23 170:8 select 80:10 selected 79:16 sell 110:23 seller 53:4 sellers 113:15 send 67:2 sense 43:15,20,21 44:22 sensitive 7:24 sent 20:13,18 21:3,4 67:1 121:12 sentence 76:3,23 sentinel 111:7 85:10 112:24 separate 25:23 series 41:25 service 66:2,20 73:13 76:11,17,18 80:9 83:1 93:9,15 110:23 120:10 124:12 159:23 168:25 169:2 172:25 175:6,15 176:25 177:10 178:1 179:5 180:25 187:7 191:4 set 25:8 78:2 158:8 191:14 194:5 settlement 39:12 115:20,21,25 156:23 157:19 159:6 shared 57:11 58:4 58:15 shaving 24:19 shifted 180:25 shifting 181:17 shorthand 2:21 194:1,9 shot 63:16 show 52:1 66:13 81:16 112:10 142:8 157:8,14 160:19 180:17 181:1 182:3 showed 142:7 showing 74:8 112:9 126:5 showtime 134:3 179:16,18 sic 150:18 151:16 sidley 4:4 sidley.com 4:10,17 sign 66:20 77:16 182:1 185:5 signature 194:23 signed 168:24,25 169:1 significant 35:17 51:19 52:1 53:9,11 53:21 56:1 122:23 164:25 165:3 184:6 signing 128:10 169:1 similar 41:8 61:16 119:24 122:5 simply 46:4 82:25 120:10 single 127:17 74:12 139:18 skill 97:4 skipped 41:14 slightly 139:1 small 75:3 smaller 74:12 139:1 139:5 smallest 139:12 snow 3:14 8:13,13 17:4 19:15 70:19 sole 25:2,6 solemnly 8:21 solutions 7:13 193:4 sorry 26:23 30:8 31:10 36:23 49:25 64:12 70:19,21 75:2 103:10 105:9 142:23 156:3 177:20 sort 28:15 43:22 66:23 100:21 115:2 120:7 171:10 181:3 186:10,11 space 32:10 134:24 speak 18:17 30:18 59:22 60:16 61:1 93:10 speaking 104:20 134:25 144:6 182:6 speaks 43:7 145:25 166:13 specific 43:5 specifically 14:15 45:7 50:9 51:7 121:8 128:23 134:23 spoke 18:12 19:25 59:10,11 104:16,17 110:25 spoken 108:10 sponsored 40:11 66:1 68:18 squarely 45:13 124:4 127:7 108:23 staff 19:3,8 39:7,24 40:5 61:19 83:23 94:19 95:2,2 98:3 98:23 113:16 128:7 129:14,25 staffer 98:23 stan 166:2 standard 51:14 52:15 53:2 164:24 182:11 186:1 standards 32:13 stars 4:7 start 11:13 143:8 148:11 starts 33:6 starz 134:3 state 8:4,21 9:8 170:25 194:2 stated 82:8 166:15 statement 29:11 43:5 49:16 51:3 52:13 82:16,20 83:4 83:13,19 151:2 152:6 192:14 statements 25:24 42:11 states 1:1 2:1 7:19 103:19 115:22 stefanchik 183:25 185:3 stenographic 167:15 steps 13:20 stop 150:25 stopping 134:23 street 2:18 3:8,16 4:14 7:16 9:13 strike 119:2 126:13 154:20 186:15 studies 23:2 50:1,12 53:20 55:1,20 56:19 57:9,25 64:23 65:15 68:7 69:17 70:7 71:8 72:4 75:17 Veritext Legal Solutions 866 299-5127 Page 27 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 90 of 94 [studies - term] 81:15 88:15,25 89:8 89:11,18 90:21 100:2,9,11,15,17 101:23 102:7,9 105:25 122:20 123:5 126:5 131:7 135:13 138:3 139:17 140:5,21 149:23 150:13 151:10 154:22 155:6,19,23 156:17 157:11 158:14 160:2,18 162:24 163:12 166:17 190:25 191:13 study 82:4 94:22,25 95:3,7,15,17 96:11 96:19 97:20 98:3,15 99:13,13,16,18,19 99:22 101:1 135:3 146:10 stuff 56:14 subject 17:23 18:10 125:23,25 141:11 192:13 subjected 82:24 submit 93:15 146:22 147:1 148:3 149:1,3 150:1 submitted 115:9 subscribe 46:6 66:2 120:9 124:13 179:16,22 182:23 183:17 188:11 subscribed 73:12 87:16 88:3 167:8 168:1 169:16 170:9 180:24 186:4 194:20 subscriber 106:3 subscribers 177:25 179:4 subscribing 167:8 168:1 191:17 subscription 54:8 62:3 77:17 90:3,11 149:25 169:10 172:25 175:5,15 177:1,10 182:20 183:13 184:10 190:14 191:1,4,13 subset 63:20 substantially 77:3 77:19 79:11 sucker 158:25 suffice 127:16 sufficient 174:19 suggested 158:9 suggesting 55:19 suggests 13:9 suite 2:19 3:9,17 7:16 9:13 sum 174:11 summary 93:24 94:13,15,15 104:25 sunday 46:19 73:22 120:3 181:25 super 110:12 supervising 39:1 92:23 110:13 supervision 39:23 supervisor 38:21,24 39:21 143:17 supervisory 40:8,9 support 27:22 28:11 35:20 36:8 48:18 50:3 55:20,25 56:17 64:13 68:8 87:2 92:2 131:8,19 132:16 supported 25:24 40:12 supporting 34:9 supports 44:5 sure 13:6 39:19 47:13 85:15 110:4 112:17 121:17 130:3 152:3,4 159:1 181:16 192:14 survey 35:20 36:8 61:1 75:17 82:4 146:11 surveys 12:18 13:24 14:13 15:13 20:3 23:9,9,10,14 29:25 31:5,18 32:3,4 33:24 37:2 40:11 48:10 50:2,13 53:20 55:2 56:15 57:9,25 58:11 68:8 70:7 72:4 81:15 84:14 90:1,9 121:19 122:20 123:5 126:5 131:7 134:13 140:22 149:23 150:14 151:11 154:23 155:7 156:17 157:7,8,11 158:14 160:2,18 161:17 163:12 166:17 190:13,25 191:24 sustain 99:17 sworn 8:16 systematically 69:1 t tab 138:19 140:23 141:7,23 145:9 146:13 tablet 64:2,14 take 7:23 14:3 15:11 15:16 24:21 27:2,3 33:18 43:20 56:23 91:2 93:10 95:21 102:1 111:24 127:21 130:4 136:24 137:1 146:23 147:24 148:23 171:23 189:5,24 taken 2:17 27:7 57:1 91:8 130:8 172:9 190:8 194:4 talk 12:24 13:21 26:11,19 64:23 65:14 67:10 93:18 108:20 112:18,21 153:11,25 167:4,21 talked 16:19 17:19 18:4,24 38:6,13 108:15 128:8,15 129:14 talking 17:1 52:10 67:11 93:16 94:15 102:15 114:24 talks 39:12 41:20 80:19 153:4,9 taps 141:6,22 target 29:21 53:4 54:18 105:23,23 112:14 targeted 52:5 team 14:9,10,16 15:23,24 17:2,5,21 18:7,18,25 19:3,7 19:14 36:20 38:13 39:3 59:12,12,14,16 60:1,2 92:19 93:17 104:17,21 110:15 110:25 111:1 173:16 teaser 120:1 122:6 technology 27:19 tee 55:15 telephone 185:6 television 24:15 93:9 94:20 98:24 191:3,13 tell 20:8 21:9 63:7 153:2 166:14 174:17,17 telling 56:9 164:23 tend 94:3 tens 103:17 104:3,15 106:14 111:3 114:25 129:10 term 51:22 82:22 86:7 Veritext Legal Solutions 866 299-5127 Page 28 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 91 of 94 [terms - topics] terms 6:9 41:2 44:18 47:17,25 48:7,11,19 53:12 66:3,10 73:7 78:1,12 79:6,9 85:4 110:18 112:14 118:22 125:19 135:23 140:5 142:4 145:5,19 147:1,4 148:4,8 149:4 150:19 151:17 152:13 153:3,9,10 158:10,12,16 160:4 160:20 162:18 163:1,14,18 165:15 169:17 173:25 181:17,22 182:13 182:22 183:2,16 184:9 185:8,10 188:12 189:19,20 190:16 192:11 test 35:20 36:8 134:13 testified 9:3 27:14 27:25 59:11 104:16 110:2 114:1 119:23 176:12 testify 12:13,23 13:3 13:15,17,23 14:4 16:17,18 18:23 30:15 73:19 80:4 92:7 104:7 106:12 110:20 117:1,17 118:14 119:7 192:12 testifying 10:16 11:15 15:6,7,8 52:2 108:5 109:14 194:7 testimony 8:22 12:6 19:22 20:23 22:16 24:1 44:4 59:8 98:9 98:15 99:20 102:22 107:23 112:9 130:17 163:6 165:21 169:20 175:22 181:9 189:5 194:11 testing 29:25 32:9 44:5 47:7 48:10 49:9 54:6,16 191:24 tests 12:18 13:24 14:13 15:13 20:3 23:19,20,25 33:24 37:2 40:11 56:15 58:11 81:16 84:14 89:18 90:1,10 121:19 122:21 123:5 131:7 150:13 151:10 155:19 text 62:18 63:1 71:19 133:25 thank 8:15 57:21 71:6 88:22 192:18 thanks 46:13 172:4 thing 21:2 55:11 118:21 120:7 124:23 186:10 things 34:5 39:19 112:15 153:15 154:7 think 11:7 15:1 19:19 20:20 21:9 22:18 28:7,15 35:14 35:23 40:4 45:13 51:21 56:10 60:12 61:12 68:2 76:13 83:13 86:12 89:8 95:13 103:13 104:7 115:12 118:22 120:4 124:1,4 127:18,19,19 128:1 129:19 136:9 139:11 149:20 152:5 153:19 159:20 161:16 165:13,24 168:19 171:21,21 172:1 third 100:22,23 110:6,22 113:15,18 157:23 159:7 thought 28:16 44:21 45:2 102:15 142:15 143:10 thoughts 25:12 thousands 103:17 104:4,15 106:14 111:4 114:25 129:10 three 28:8 33:12 94:8 131:22 132:21 187:13 193:3 throughs 87:18 88:7 ticket 181:25 tied 67:5 till 71:9 time 8:4 10:24 22:1 27:6,9 30:24 31:7 31:25 32:14,22 33:23 34:12,16,24 35:11 36:10,24 37:3 54:19 56:15,25 57:3 57:10 58:2 68:17 69:2,2 71:9,20 82:15 83:20 91:6,10 94:24 95:10,11,23 96:9 99:15 101:22 109:10 111:12,13 121:14 127:21,21 127:25 128:1 130:7 130:10 134:6 156:15 168:25 172:7 179:15 182:23 183:17 184:9 188:10 190:7 190:10 192:5 193:4 193:6 194:5 today 11:17,20 12:6 12:12 15:6,7,8 16:23 19:22 20:6,23 27:16 28:1 33:19 37:13,17,21 38:2,12 56:16 57:11 58:3,14 60:3,15,25 61:7 64:21 65:13 71:9 74:13 82:15,18 83:16 88:16 89:1,9 98:1 99:20,24 100:19 104:13 106:12 118:12 121:24 122:8,11 130:17 140:12 152:25 153:11,25 154:22 155:5 162:20,23 176:7 192:17 today's 18:12,19 20:10 30:19 59:22 118:23 122:2 136:21 193:1 told 109:23 111:9 129:8,19 176:6 toll 45:21 167:6,24 tom 9:22 tonight 189:1 top 80:17 142:9 topic 12:16,23,25 13:3,15,18,21 14:4 14:5,8 15:19 16:18 17:23 18:10,23 19:23 20:6,24 22:16 23:11,19 24:1 26:10 26:19 29:24 30:15 35:24 36:1 37:1 44:4 50:14 58:12,25 59:8,9 60:4,15 62:12 64:22 65:13 93:17,21 96:3,4 99:20 101:25 102:10,14,22,23 104:7 110:18,24 116:15,25 117:8,15 118:11 119:7,16,18 121:21 127:8 131:6 136:11 161:15 167:2,18 168:19 171:3 172:16 175:22 176:12 186:16 topics 12:8,13 15:11 28:3,9 35:5 40:15 Veritext Legal Solutions 866 299-5127 Page 29 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 92 of 94 [topics - vs] 43:9 45:5 47:3 62:6 63:13 168:11 185:13 187:2 191:20 192:13 total 106:2 111:21 174:11 182:3 186:19 187:23 totally 153:13 trade 1:5,15 2:5 3:4 5:14 7:18 8:12,14 9:17 10:11,17 12:23 13:2 111:6 trans 152:4 transcribed 152:5 194:10 transcript 124:21 125:15 194:11,13 194:15 trial 15:22,24 17:2 17:21 18:6,18,24 19:2,7,14 36:20 38:13 59:11 92:18 104:21 178:3 187:24 trier 11:24 12:1 triggering 85:4 86:6 true 24:13 31:4 32:8 32:19 34:21 40:5 52:4 78:1 79:15 103:21 104:1 105:11 120:16 138:15 159:22 169:8 177:7,10 194:11 truth 8:24,24,24 try 11:22 81:4,4,5 103:24 108:7 118:19 144:3,10 181:10 trying 52:22 107:11 142:25 144:15 184:25 tv 24:21 32:10 41:9 119:21 120:18 121:5,7,9,19,22,25 122:7,10,24 123:10 124:21 125:19 126:15,16,21,22 127:11 128:4,23 169:9,17 170:8 185:11 twice 166:15 two 26:23 41:24 42:5 46:24 47:14 54:21 92:4 121:10 147:16 156:9,18 167:3,20 172:25 174:8,9 175:5,14 179:23 180:20 187:10 type 46:18 61:15 74:11 76:6 86:23 106:13 116:18 139:2,5,8,9,12 types 33:12 57:8,25 58:10 u u.s. 3:4 uh 19:10 24:20,22 26:8 48:3 61:14 73:14 77:24 122:14 122:17 140:20 149:18 150:22 151:20 ultimate 80:11 ultimately 99:17 173:14 understand 10:15 10:21 11:11,18,21 12:4,12 16:25 18:14 32:1 34:19 40:7 41:4,23 45:14 46:17 48:5,13,20 50:5,23 53:12,22 55:8 56:2 57:6 66:3,10 70:8 71:10 75:19 76:2 78:21 81:16 82:5 84:16 85:4 86:6 101:21 125:18 130:14 131:20 132:18 134:15 135:9,14 140:3,4 146:2 148:22 150:15 151:13 152:4 153:20 154:5 158:16 162:8 163:17 164:2,19 165:17 170:23 173:11 179:13,15 180:1 181:9,18 184:7 185:1,7 188:11 190:15 understanding 42:9 46:20 111:5 128:5 128:13,24 141:25 178:23 180:12 understood 12:1 51:24 59:24 72:5 100:1,25 161:6 162:21 165:2 182:12 unedited 138:18 unfortunately 152:21,25 united 1:1 2:1 7:19 unquestionably 182:17 183:8 unrelated 90:21 untrue 42:19 upgrade 34:25 35:12 37:6 ups 62:20 63:2 urge 11:25 usability 140:6,13 usage 140:23 use 27:22 28:11 92:2 176:23 179:14 181:10 useful 86:14 112:8,8 112:13 user 139:18 usually 53:1 186:9 utilize 179:1 v vacuum 21:25 vague 102:25 101:21 113:11 valid 56:5 113:10 validity 102:17 104:10 118:10 127:22 valuable 86:14 veritext 7:13 193:3 versus 7:18 98:4 video 7:10,22 160:21 125:15 videographer 7:8 8:15 27:5,8 56:24 57:2 91:4,9 130:6,9 172:5,10 190:6,9 193:1 videotaped 1:15 2:17 view 35:17 44:20 87:17 88:5 138:20 140:23 141:6,22 142:7,10 143:4 145:8 146:12 159:14 182:2,21 183:14 184:11 185:2 186:13,14 188:25 viewed 169:9 views 86:13 violation 112:12 170:13 180:14,16 181:15 182:4 185:23 visible 134:21 visit 45:22 volume 1:19 5:5 91:5 172:6,12 voted 39:17 vs 1:7 2:7 Veritext Legal Solutions 866 299-5127 Page 30 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 93 of 94 [wait - years] w wait 71:23 want 21:25 22:1 27:1 32:2 34:10 44:2,3,3 63:16 68:1 69:17 83:4,6 101:20 101:20 112:3,21 125:11 136:3 137:1 143:24 150:15 151:12 152:3 158:22 162:11 173:21 179:13,19 181:9,24,25 wanted 26:24 wanting 189:7 wants 49:15 118:3 waste 22:1 101:22 128:1 watch 179:18 watched 120:21 way 8:3 34:11 44:20 48:12 91:1 92:24 108:3 115:8 118:10 122:22 123:11 125:2 144:20 174:2 174:13 188:23 189:19 we've 130:23 171:20 185:21 web 28:23 32:10 41:9 46:6 61:22,23 62:3 63:7 64:14 65:25 66:4,25 67:20 67:21 68:6,16,18 69:10 71:19 90:3,12 120:5,12 130:24 131:9,20 132:18 133:6,7 137:7,17 138:11,18 140:6,13 143:3 144:18 145:23 146:19 169:9 184:10 185:6 190:15 website 5:21 32:10 45:22 46:6 67:2 68:23 69:2 70:10 87:16 88:4 120:5 122:7 134:4,22 142:2 144:16,18 149:25 191:16 websites 28:19,21 28:22 119:22 weight 153:16 went 39:2 167:5,23 169:9 western 3:5 9:18 whatsoever 32:9 whereof 194:19 whispers 7:25 white 84:2,8 widely 180:22 186:3 willing 123:19 wish 136:6,17 wit 131:16 withdraw 86:3 183:20 witness 8:16 10:10 10:12,14,25 14:21 15:18 16:17 17:13 20:24 23:13,17,23 24:3 32:7,17 33:1 34:2 35:5 36:4 37:10 38:16 40:18 43:9 45:9 47:20 48:23 49:14 50:18 51:9 54:3,10,22,25 58:9,18 59:6 60:7 60:12,22 61:3 62:10 65:4,21 68:12,20 70:4,15 71:15 73:3 76:1 82:1,12 84:24 88:12 89:15 90:17 93:5 94:2 99:9 101:7 103:23 105:16 106:9 107:4 107:14 108:6 109:13 113:7,13,23 114:21 117:9 125:5 126:1 127:1 132:4 133:13 137:23 141:11 142:14 148:17 149:10 150:6 154:15 155:19 162:15 164:6 168:14 173:5 174:24 175:18 176:1,20 177:6,15 179:7 180:10 184:20 185:18 186:25 187:18 188:17 190:22 191:8 worked 59:12,21 171:22 working 17:22 18:8 104:18 129:25 wrong 42:10 78:11 x x 106:13 194:15 y yankilovich 19:17 yeah 41:19 44:25 45:24 53:1 61:14 64:4 73:10 84:13 85:12 115:10 117:23 120:22 166:6,10 170:21 178:19,25 year 43:16 46:24 47:14 77:2,18 79:11 79:19 80:2 81:17 82:23 111:18,20 138:12 159:16,18 167:10 168:4 169:3 169:12 172:25 174:5,8,9 175:5,14 176:25 177:9 years 121:10 179:24 118:19 119:11 121:7,15 123:3,8,9 123:18 125:9 126:10 127:3 129:4 131:16 132:9 135:11,19 136:10 138:1,9 139:23 140:10 141:3 146:7 146:17 154:18 155:16 158:3 159:10 160:9 175:1 175:20,25 176:21 177:3 179:10 186:24 187:20 188:8,19 190:23 192:4,6,10 194:19 witnesses 92:5,9 93:2 194:6 wodinsky 19:15 word 41:14 50:25 76:13 111:24 153:15 163:25 164:16 words 44:3 115:7 work 14:19,20 15:2 15:4 16:6 17:15,22 18:9 21:16 22:11,15 22:25 25:15 26:3 29:4,24 30:2,12,22 31:11 32:24,25 34:3 36:5,17 37:8 40:16 45:7,8 47:22 48:15 48:15,23 49:12 50:9 50:10,17 51:7 53:25 54:1 55:2 56:20 58:20 70:2 73:1 81:23,25 82:11 85:13 88:10 92:14 94:4,4 96:7 99:7 100:16 101:2 103:2 106:8,20 107:6,7,16 107:19 108:2 110:10 113:6,12,21 114:20 118:17,24 119:13 123:14 Veritext Legal Solutions 866 299-5127 Page 31 Case 3:15-cv-01129-HSG Document 106 Filed 02/12/16 Page 94 of 94 Federal Rules of Civil Procedure Rule 30 (e) Review By the Witness; Changes. (1) Review; Statement of Changes. On request by the deponent or a party before the deposition is completed, the deponent must be allowed 30 days after being notified by the officer that the transcript or recording is available in which: (A) to review the transcript or recording; and (B) if there are changes in form or substance, to sign a statement listing the changes and the reasons for making them. (2) Changes Indicated in the Officer's Certificate. The officer must note in the certificate prescribed by Rule 30(f)(1) whether a review was requested and, if so, must attach any changes the deponent makes during the 30-day period. DISCLAIMER: THE FOREGOING FEDERAL PROCEDURE RULES ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY. THE ABOVE RULES ARE CURRENT AS OF SEPTEMBER 1, 2014. PLEASE REFER TO THE APPLICABLE FEDERAL RULES OF CIVIL PROCEDURE FOR UP-TO-DATE INFORMATION.
2016-02-12	107	Discovery Letter BriefRegarding DIRECTV 30(b)(6) Topic 1 filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 2/12/2016) (Entered: 02/12/2016)	Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 1 of 11 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on January 20, 2016, prior to filing this letter. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission 1 Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 2 of 11 NATURE OF DISPUTE This dispute concerns Topic 1 of DIRECTV’s June 22, 2015, Fed. R. Civ. P. 30(b)(6) Notice of Deposition to Plaintiff Federal Trade Commission (“FTC”), attached as Exhibit A. Through this Joint Discovery Letter, the FTC seeks a protective order preventing the deposition from going forward on this topic. DIRECTV opposes this request. THE FEDERAL TRADE COMMISSION’S POSITION The FTC brings this motion for a protective order under Rule 26(c) to prevent DIRECTV from seeking materials protected by the common interest doctrine, attorney work product, and, in effect, the testimony of counsel. In its June 22, 2015, Fed. R. Civ. P. 30(b)(6) deposition notice, DIRECTV propounded five topics of examination, including the following: • Topic No. 1: “All communications, negotiations, and discussions between or involving the FTC, on the one hand, and DIRECTV (including its attorneys) and/or any or all of the ‘attorneys general of all 50 states and the District of Columbia,’ on the other, both before and after the effective date of the multi-state settlement agreement concerning the multi- state settlement agreement and any of its terms.”1 Exhibit A, p. 2. On December 3, 2015, this Court denied without prejudice DIRECTV’s request to compel a deposition on, inter alia, Topic 1, pending a decision on the FTC’s Motion to Strike Affirmative Defenses. DIRECTV’s defenses of Claim Preclusion, Issue Preclusion, and Previous Nationwide Settlement were stricken with leave to amend (Dkt. 88), and were not pled again. (Dkt. 93.) The communications between the FTC and state attorneys general (“AGs”) at issue in Topic 1 are privileged attorney work product protected under the common interest doctrine. The FTC’s communications with the AGs were in anticipation of litigation and reveal the mental impressions of the AGs and the FTC, the most protected type of attorney work product. Fed. R. Civ. P. 26(b)(3). Under the common interest doctrine, attorney work product remains privileged when that work product is shared between two parties if: “(1) the disclosure is made due to actual or anticipated litigation; (2) for the purpose of furthering a common interest; and (3) the disclosure is made in a manner not inconsistent with maintaining confidentiality against adverse parties.” Holland v. Island Creek Corp., 885 F. Supp. 4, 6 (D.D.C. 1995). “Whether the jointly interested persons are defendants or plaintiffs, and whether the litigation or potential litigation is civil or criminal, the rationale for the joint defense rule remains unchanged: persons who share a common interest in litigation should be able to communicate with their respective attorneys and with each other to more effectively prosecute or defend their claims.” United States v. Gonzalez, 669 F.3d 974, 978 (9th Cir. 2012), quoting In re Grand Jury Subpoenas, 902 F.2d 244, 249 (4th Cir. 1990). Moreover, no written agreement is required; a common interest “may be implied from conduct and situation, such as attorneys exchanging confidential communications from clients who . . . have common interests in litigation.” Gonzalez, 669 F.3d at 979. Furthermore, “the application of the common interest does not require complete unity of interests.” Modesto Irrigation Dist. v. Gutierrez, 2007 U.S. Dist. LEXIS 21949, 46-47 (E.D. Cal. 2007). Here, all the requirements are met. First, there is sufficient evidence that the FTC and the AGs had a common interest. Communications between FTC and the AGs were made in anticipation of litigation with DIRECTV over its advertising practices. Second, the 1 The multi-state settlement agreement (“MSA”) is comprised of 51 separate consent orders signed in December 2010 and entered in January 2011 that relate to DIRECTV’s advertising. See Discovery Order, Dkt. No. 81, pp. 5-6. 2 Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 3 of 11 communications were made for the purpose of furthering a common interest: Ensuring DIRECTV’s advertising complied with the law. That the MSA was entered into by the AGs while the FTC chose to sue DIRECTV does not change the fact that the communications were in furtherance of litigation.2 Third, the FTC and the AGs have maintained the confidentiality of their communications regarding law enforcement regarding DIRECTV’s actions, including the MSA. The FTC has withheld such communications with the AGs from production in discovery on this basis. For these reasons, the communications sought in Topic 1 are protected by the common interest doctrine. Furthermore, all of these communications are protected, as the communications “concerning the multi-state settlement” sought by Topic 1 fall squarely into the category of the common interest of ensuring DIRECTV’s advertising compliance. Topic 1 seeks discovery of privileged attorney work product. Topic 1 seeks access to FTC work product. The FTC attorneys who were contact with the AGs are counsel of record in this matter. Communications between the FTC attorneys and the AGs may reveal their thoughts, mental impressions, opinions or conclusions about actions to stop DIRECTV’s law violations. Topic 1 thus seeks the work product of the FTC and the AGs prepared in anticipation of litigation. Fed. R. Civ. P. 26(b)(3). SEC v. Buntrock, 217 F.R.D. 441, 444 (N.D. Ill. 2003), is instructive. In Buntrock, the defendant sought a 30(b)(6) deposition of the SEC on topics that related to the results of the SEC’s investigation of the defendant. The SEC moved for a protective order, which the Court granted, holding that “[t]he investigation in this matter was conducted by SEC attorneys and by SEC employees working under the direction of attorneys. Thus, the 30(b)(6) notice would necessarily involve the testimony of attorneys assigned to this case, or require those attorneys to prepare other witnesses to testify.” As in Buntrock, the communications the FTC had with the AGs concern the results of the FTC’s investigation of DIRECTV. DIRECTV does not meet the standard for deposing opposing counsel. Topic 1, in effect, seeks the testimony of counsel. In Shelton v. American Motors Corporation, 805 F.2d 1323, 1327 (8th Cir. 1986), the leading case on this issue, the court held that depositions of opposing counsel are generally disfavored. In order to depose an opposing attorney, a party must show that (1) no other means exist to obtain the information, (2) the information sought is relevant and nonprivileged, and (3) the information is crucial to the preparation of the case. Id. communications with the FTC from its own attorneys. Second, the information sought – communications among the FTC and the AGs regarding DIRECTV – is privileged under the common interest doctrine. Finally, the information sought is also not crucial to the preparation of DIRECTV’s remaining defenses. Indeed, it is not even relevant to these defenses. As for the first requirement, DIRECTV clearly can obtain information about its own DIRECTV’s remaining affirmative defenses, laches, estoppel, and waiver, relate to the conduct of the FTC, not to its privileged communications with other law enforcement agencies in anticipation of litigation. To show laches, DIRECTV must show affirmative misconduct by the government. United States v. Ruby Co., 588 F.2d 697, 705 n.10 (9th Cir. 1978). To show estoppel, DIRECTV must likewise show affirmative misconduct, going beyond mere negligence, which threatened a serious injustice and that the estoppel will not cause undue harm to the public interest. Watkins v. U.S. Army, 875 F.2d 699, 706-07 (9th Cir. 1989). For waiver, DIRECTV must show the unmistakable relinquishment of a known right. United States v. Philip Morris, 2 The FTC’s prior argument that it has authority independent of the AGs to sue DIRECTV (Dkt. 38, pp. 8-10) in no way implies that the FTC and the AGs lacked a common interest in pursuing litigation against DIRECTV. 3 Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 4 of 11 Inc., 300 F. Supp. 2d 61, 68-69 (D.C. Cir. 2004). DIRECTV’s Second Amended Answer does not allege that the supposed affirmative misconduct by the FTC occurred in communications with the AGs. Similarly, there is no way that the FTC’s confidential communications with the AGs could constitute an unmistakable waiver of the FTC’s ability to sue DIRECTV. DIRECTV should not be allowed to engage in a fishing expedition at the expense of an FTC 30(b)(6) witness. Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318, 1327 (Fed. Cir. 1990). A protective order preventing DIRECTV from examining an FTC 30(b)(6) witness on Topic 1 is appropriate. For all the foregoing reasons, the FTC respectfully requests that the Court enter a protective order under Rule 26(c) barring DIRECTV from asking questions based on Topic 1 of any FTC 30(b)(6) witness.3 In the alternative, should the Court determine that the FTC must answer questions that arise from the Topic 1, the FTC respectfully requests that they be posed in the form of deposition by written questions pursuant to Fed. R. Civ. P. 31. DIRECTV’S POSITION This motion is another attempt by the FTC to bar any deposition that could elicit facts Judge Gilliam’s Order on the Motion to Strike Confirms That Topic 1 is Relevant. The result of Judge Gilliam’s order on the Motion to Strike is that DIRECTV is supporting DIRECTV’s MSA-based defenses. The Court should deny the FTC’s request. Judge Gilliam’s ruling on the motion to strike—which kept three of DIRECTV’s MSA-based defenses in the case and allowed discovery on three other MSA-based defenses—makes clear that the communications between the FTC and the states about the MSA are subject to discovery. I. authorized to take discovery regarding the relationship and communications between state attorneys general and the FTC. The parties originally briefed this issue last Fall. Dkt. 66. DIRECTV argued that Topic 1 was relevant to the basic defense premise that: if 50 states and the District of Columbia imposed advertising disclosure requirements on DIRECTV, and the FTC did not intervene or object, and then let DIRECTV comply for five years prior to this lawsuit, DIRECTV’s compliant conduct could not violate Section 5 or ROSCA – absent other evidence of consumer deception which the FTC either does not have or has utterly refused to produce. Id. at 2. The FTC opposed producing a witness on several grounds, including that DIRECTV had agreed to defer a deposition until after Judge Gilliam ruled on the motion to strike DIRECTV’s affirmative defenses. Id. at 7. One of the FTC’s core arguments was that Judge Gilliam might issue a ruling dictating that the MSA was not relevant to the case, and therefore that Your Honor should hold off on resolving this dispute. On December 3, 2015, Your Honor deferred a substantive ruling on this dispute until after the resolution of the Motion to Strike. Dkt. 81 at 6-7. the MSA from the case, ruling that DIRECTV had sufficiently pleaded the defenses of laches, estoppel, and waiver based on the MSA. Dkt. 88. Furthermore, although Judge Gilliam struck On December 21, 2015, Judge Gilliam rejected the FTC’s attempt to eliminate 3 This request is not inconsistent with this Court’s prior ruling regarding the deposition by written questions of Paula Selis, formerly of the Washington State AG’s office (Dkt. 92). Here, DIRECTV is expressly seeking discovery on communications protected by the common interest privilege, while DIRECTV’s deposition notice to Ms. Selis was not so limited. 4 Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 5 of 11 the defenses of issue preclusion, claim preclusion, and previous nationwide settlement, he did so without prejudice, stating that DIRECTV “may seek leave to amend later if it subsequently discovers a sufficient factual basis.” Dkt. 88 at 10 (emphasis added). This ruling allows, and seems to envision, further discovery on all the MSA-related defenses, including those stricken. In fact, the FTC itself at oral argument had raised the possibility that the Court could Your Honor’s ruling ordering the deposition of Paula Selis of the Washington Attorney dismiss with leave to amend, while allowing discovery to go forward. FTC counsel stated: “And so I think Your Honor could dismiss at least these defenses with prejudice with the understanding that if discovery proceeds and affirmative misconduct is discovered, then at that point the affirmative defenses could be added in an amendment to the pleadings, and it wouldn’t require an extended series of motions to strike insufficient affirmative defenses at this stage of the case. So that’s one other option.” Dkt. 48: 16-17. This is exactly what Judge Gilliam did with regard to the three stricken defenses. And, of course, Judge Gilliam denied the motion to strike as to the three other MSA defenses. There can be no reasonable debate, therefore, that the MSA is relevant, and that discovery regarding the MSA is proper. General’s office also confirms the relevance of the MSA and Topic 1. The FTC argued that Judge Gilliam’s ruling meant that the MSA is no longer relevant. Dkt. 91 at 3-4. DIRECTV countered that the order made clear that all six of the defenses—the three that remain in the case without amendment and the three stricken—are based on the same factual allegations involving the MSA. Dkt. 91 at 5. Your Honor denied the motion for a protective order and ordered Ms. Selis to sit for a deposition by written questions. Dkt. 92. communications between the states and the FTC about the MSA might not be relevant. The FTC parses DIRECTV’s defenses, claiming that DIRECTV “does not allege that the supposed affirmative misconduct by the FTC occurred in communications with the AGs.” This does not make sense. The affirmative misconduct could have taken place in such communications and, for that reason, DIRECTV has sought these communications. Furthermore, the standard is not whether those communications would in themselves be sufficient to establish one of DIRECTV’s defenses, but whether those communications are relevant to those defenses. FRCP 26(b)(1). II. any deposition. There are at least four problems with this position. The FTC’s Privilege Claims Are Insufficient. Tacitly conceding relevance, the FTC invokes the common interest doctrine as a shield to The FTC makes a half-hearted attempt to argue that, even if the MSA is relevant, First, the FTC has not established a common interest. In order to do so, the FTC must show that there was an agreement to pursue a joint strategy. See In re Pacific Pictures Corp., 679 F.3d 1121, 1129-30 (9th Cir. 2012) (as amended May 12, 2012) (rejecting common interest claim over party’s communications with U.S. Attorney where there was no evidence that party and government had agreed to a joint strategy); see also Lennar Mare Island LLC v. Steadfast Insurance Co., 2014 WL 1366252 at 7 (E.D. Cal. April 7, 2014) (rejecting common interest privilege where party had not presented evidence of (1) an agreement; and (2) whether communications were made in pursuit of a joint strategy in accordance with such an agreement) . Here, the FTC has not answered the basic who, what, when, and why questions about its alleged common interest: Was the agreement in writing or oral? Who were the parties to the agreement? When did the parties enter into the agreement? What was the nature of the common interest? Were the interests the same? Instead, the FTC blithely asserts that “there is sufficient evidence that the FTC and the AGs had a common interest” without citing to any evidence at all. 5 Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 6 of 11 Second, the FTC at times has taken the position that it did not have a common interest with the states. In this motion, in order to fit under the common interest doctrine, the FTC suggests that it was coordinating with the states. However, in arguing that the MSA is not relevant, the FTC previously took the position that it acted separately and independently from the state attorneys general. See Dkt. 38 at 8-10. The FTC is trying to have it both ways by simultaneously claiming that it was not aligned with the states, but also claiming that it followed a joint strategy with the states. It is therefore fundamental that DIRECTV be allowed to question an FTC witness on the precise nature of any alleged common interest—not only to see whether the common interest doctrine applies, but also to understand the facts regarding the interactions between the FTC and the state attorneys general. None of the cases cited by the FTC involve an analogous situation in which the party seeking discovery asserted defenses based on the alleged common interest.4 Third, the FTC requests a ruling that is inconsistent with Your Honor’s ruling on the Selis deposition. In that motion, the FTC made the same arguments it makes now about the common interest privilege. Your Honor after careful consideration ultimately ruled that Ms. Selis should be deposed by written questions. Your Honor did not bar discovery regarding communications between the FTC and the Washington State Attorney General. Fourth, the FTC cannot shut down any questioning by invoking the common interest The FTC ends its section by asking that, if the Court re-orders the deposition to go doctrine. The possibility that some questions could call for information protected by some privilege does not mean that there should not be any questions at all. It is difficult to rule on privilege questions in the abstract without the context of actual questions. Allowing a deposition to proceed will, at a minimum, develop the record regarding the claimed privilege. III. A Deposition by Written Questions Would Be Insufficient. forward, it should allow a deposition by written questions. The FTC did not make this request the last time the Court heard this issue. The reason it does so now is transparent: Ms. Selis responded to her deposition by written questions by asserting objection after objection and refusing to provide any substantive answers; the FTC apparently sees a deposition by written questions as a way to lose this motion but still manage to avoid providing any information to DIRECTV. If the Court finds it helpful, DIRECTV can provide the transcript of Ms. Selis’s deposition. That transcript consists almost entirely of objections, and on its face, shows Ms. Selis’s tactics to be improper. Those tactics will be the subject of a forthcoming letter brief. (The meet and confer on that issue has already been completed and the parties have agreed a letter brief is necessary). 4 The cases cited by the FTC are inapposite. SEC v. Buntrock, 217 F.R.D. 441, 444 (N.D. Ill. 2003), involved an attempt to depose SEC attorneys regarding the results of the SEC’s investigation. Here, DIRECTV seeks a deposition regarding communications between the FTC and state attorneys general, not the results of their investigation. Notably, the FTC cited Buntrock in its attempt to prevent a deposition on Topics 3-5 of DIRECTV’s 30(b)(6) notice. Dkt. 56. Your Honor nevertheless ordered a deposition on those topics to go forward. Dkt. 81 at 13-14. Shelton v. American Motors Corp., 805 F.2d 1323, 1327 (8th Cir. 1986), does set forth a test for when deposing counsel is appropriate. That test is met here: there is no way to obtain the information regarding communications between the FTC and the states other than through a deposition, the FTC has not established any basis for the common interest privilege, and those communications are central to DIRECTV’s defenses. Courts in the Ninth Circuit applying the Shelton test have allowed counsel to be deposed. See e.g., American Casualty Co. v. Krieger, 160 F.R.D. 582, 590-91 (S.D. Cal. 1995). 6 Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 7 of 11 Exhibit A Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 8 of 11 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation, and DIRECTV, LLC a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Judge: Haywood S. Gilliam, Jr. RENEWED NOTICE OF TAKING DEPOSITION OF PLAINTIFF FEDERAL TRADE COMMISSION ON TOPICS 1 - 5 [FRCP RULE 30(B)(6)] Date: January 28, 2016 Time: 9:00 a.m. Place: 901 Market Street Suite 570 San Francisco, CA 94103 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) RENEWED NOTICE OF TAKING DEPOSITION OF PLAINTIFF FEDERAL TRADE COMMISSION ON TOPICS 1 - 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 9 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure and the Court’s December 3, 2015, Discovery Order, defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”), will take the deposition upon oral examination of the person(s) designated by Plaintiff Federal Trade Commission (“FTC”), who consents to be designated to testify on its behalf, concerning the subjects and matters identified below, beginning at 9:00 a.m. on January 28, 2016 and continuing from day to day thereafter (excluding Saturdays, Sundays, and holidays) until completed as permitted by rule. The Deposition shall take place at the FTC’s offices located at 901 Market Street, Suite 570, San Francisco, CA 94103. PLEASE TAKE FURTHER NOTICE THAT the FTC’s deposition will be taken before a certified shorthand reporter or any other such person authorized to administer oaths who is present at such date and time. Pursuant to Rule 30(b)(3) of the Federal Rules of Civil Procedure, the deposition testimony will be recorded by video, audio, audiovisual, and stenographic means, and may be recorded also by the instant visual display of testimony. MATTERS ON WHICH EXAMINATION IS REQUESTED Pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure and the Court’s December 3, 2015, Discovery Order, FTC shall designate a person or persons to testify on the following topics: TOPIC NO. 1: All communications, negotiations, and discussions between or involving the FTC, on the one hand, and DIRECTV (including its attorneys) and/or any or all of the "attorneys general of all 50 states and the District of Columbia," on the other, both before and after the effective date of the multi-state settlement agreement, concerning the multi-state settlement agreement and any of its terms. TOPIC NO. 2: The decision by the FTC, including the reasons for the decision, not to object to, to intervene in, or to seek to modify or augment the terms of the multi-state settlement agreement. TOPIC NO. 3: The results of any and all research, surveys, or tests conducted by the FTC concerning RENEWED NOTICE OF TAKING DEPOSITION OF PLAINTIFF FEDERAL TRADE COMMISSION 2 ON TOPICS 1 - 5 Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 10 of 11 DIRECTV'S advertising that the FTC contends has been or is deceptive. TOPIC NO. 4: The FTC's claim for restitution, refund of monies paid, or disgorgement of ill-gotten gains, as set forth in the "prayer for relief (Paragraph B of the COMPLAINT), including, but not limited to, any computation of monetary relief sought by the FTC and any conclusions regarding the nature and extent of any alleged injury to consumers that the FTC contends was caused by DIRECTV'S advertising. TOPIC NO. 5: The methods used and results of any and all investigations by the FTC into the reasons for or validity of alleged consumer complaints about DIRECTV'S advertising practices. Dated: January 6, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC RENEWED NOTICE OF TAKING DEPOSITION OF PLAINTIFF FEDERAL TRADE COMMISSION 3 ON TOPICS 1 - 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 107 Filed 02/12/16 Page 11 of 11 CERTIFICATE OF SERVICE I am employed in the County of Los Angeles, State of California. I am over the age of 18 years and not a party to the within action. My business address is 555 West Fifth Street, Suite 4000, Los Angeles, California 90013. On January 6, 2016, I served the foregoing document(s) described as RENEWED NOTICE OF TAKING DEPOSITION OF PLAINTIFF FEDERAL TRADE COMMISSION ON TOPICS 1 – 5 on all interested parties in this action as follows (or as on the attached service list): Eric David Edmondson Boris Yankilovich Erika Ruth Wodinsky Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: 415-848-5179 Fax: 415-848-5184 [email protected]  shown above. Raymond Edward McKown Stacy Rene Procter Federal Trade Commission 10877 Wilshire Blvd. Suite 700 Los Angeles, CA 90024 Phone 310-824-4343 Fax: 310-824-4380 [email protected] (E-MAIL) I caused the document(s) to be delivered by e-mail to each interested party as I declare under penalty of perjury that the foregoing is true and correct. Executed on January 6, 2016, at Los Angeles, California. /s/ Denise Brown Denise Brown 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 CERTIFICATE OF SERVICE
2016-02-18	108	Discovery Order re: 107 Discovery Letter Brief Regarding DIRECTV 30(b)(6) Topic 1. Signed by Judge Maria-Elena James on 2/18/2016. (cdnS, COURT STAFF) (Filed on 2/18/2016) (Entered: 02/18/2016)	Case 3:15-cv-01129-HSG Document 108 Filed 02/18/16 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 107 On February 12, 2016, the parties filed a discovery dispute letter concerning Topic 11 of Defendant DIRECTV’s June 22, 2015, Rule 30(b)(6) Notice of Deposition to Plaintiff Federal Trade Commission (“FTC”). Dkt. No. 107. FTC seeks a protective order preventing the deposition from going forward on this topic, arguing it seeks materials protected by the common interest doctrine and attorney work product. However, while it is possible that some information related in Topic 1 may be privileged, it is not clear that all such communications are. Accordingly, FTC’s request is DENIED without prejudice to raising proper objections to individual questions at the time of the deposition. IT IS SO ORDERED. Dated: February 18, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 1 Topic No. 1: “All communications, negotiations, and discussions between or involving the FTC, on the one hand, and DIRECTV (including its attorneys) and/or any or all of the ‘attorneys general of all 50 states and the District of Columbia,’ on the other, both before and after the effective date of the multi-state settlement agreement concerning the multistate settlement agreement and any of its terms.” Jt. Ltr., Ex. A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-02-24	109	Discovery Order re: 106 Discovery Letter Brief. Signed by Judge Maria-Elena James on 2/24/2016. (cdnS, COURT STAFF) (Filed on 2/24/2016) (Entered: 02/24/2016)	Case 3:15-cv-01129-HSG Document 109 Filed 02/24/16 Page 1 of 3 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 106 The Court is in receipt of the discovery dispute letter filed by Defendants DIRECTV and DIRECTV, LLC’s (collectively, “DIRECTV”) and Plaintiff Federal Trade Commission (“FTC”) regarding DIRECTV’s Rule 30(b)(6) deposition notice Topic 3, which seeks information regarding “[t]he results of any and all research, surveys, or tests conducted by the FTC concerning DIRECTV’s advertising that the FTC contends has been or is deceptive.” Dkt. No. 106. The Court previously considered this issue and, on December 3, 2015, granted DIRECTV’s motion to seek further responses to its questions on Topic 3, finding the topic was “designed to elicit discoverable information, including questions relating to which ads were allegedly deceptive, how they were deceptive, whether the FTC has any factual support for its contention that consumers have been deceived, its investigation of alleged consumer complaints, and the scope of alleged consumer harm or putative bases for monetary relief.” Order at 8, Dkt. No. 81. However, in doing so, the Court also excluded “any testimony that is properly deemed privileged.” Id. at 10. The FTC now seeks to prevent a further deposition based on attorney work product, deliberative process privilege, and law enforcement privilege. Jt. Ltr. at 1. Having reviewed the parties’ positions, the Court finds DIRECTV is entitled to a further deposition on Topic 3. The FTC maintains it “has already produced to DIRECTV thousands of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 109 Filed 02/24/16 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’s advertisements gathered by the FTC during its investigation,” and “DIRECTV now has all the underlying factual information as the FTC upon which it can test consumer perception,” Jt. Ltr. at 1-2. But the proper inquiry is not so limited. DIRECTV may seek relevant information surrounding the FTC’s investigation, such as “whether there has been any fact gathering; who did it; when it was done; where it is reported, if at all; how it was conducted; what inquiry was made and of whom; why the inquiry has taken so long; and the like.” Ressler v. United States, 2012 WL 3231002, at 3 (D. Colo. Aug. 6, 2012). Thus, DIRECTV is free to inquire into information such as the FTC’s fact gathering techniques and how it conducted the investigation. Ressler, 2012 WL 3231002, at 3 (federal agency’s “fact gathering” activities proper subject of a 30(b)(6) deposition). At the same time, while DIRECTV is entitled to discover facts, it is “not entitled to explore opposing counsel’s thought processes as to which facts support these contentions (and which do not), or what inferences can be drawn from the evidence that has been assembled so far.” FTC v. CyberSpy Software, LLC, 2009 WL 2386137, at 4 (M.D. Fla. July 31, 2009). Accordingly, while the Court shall permit a further deposition on Topic 3, DIRECTV should be mindful to direct its questioning to the facts surrounding the investigation and not the FTC’s evaluation of those facts. The FTC also argues DIRECTV’s inquiry violates Federal Rule of Civil Procedure 26(b)(4)(D) as it seeks consulting expert information. Jt. Ltr. at 2. Rule 26(b)(4)(D) shields the disclosure of specified information about non-witness experts retained or employed in anticipation of litigation or preparation for trial. It “precludes discovery against experts who (are) informally consulted in preparation for trial, but not retained or specially employed.” Todd v. Tempur-Sealy Int’l, Inc., 2015 WL 1022886, at 2 (N.D. Cal. Mar. 6, 2015) (internal quotation marks and citations omitted). “[T]his preclusion not only encompasses information and opinions developed in anticipation of litigation, but also insulates discovery of the identity and other collateral information concerning experts consulted informally.” Id. (internal quotation marks and citations omitted) (denying defendants’ request to compel plaintiffs to identify with whom they consulted as a possible expert). While the FTC is correct that DIRECTV may not obtain information regarding non-witness experts, it is not clear why this does not entitle DIRECTV to depose the 2 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 109 Filed 02/24/16 Page 3 of 3 witness designated by the FTC for a 30(b)(6) deposition now. The Court finds no merit to the FTC’s argument that such a deposition must be delayed. Finally, the FTC requests that, should the Court decide the FTC must provide further responses on Topic 3, DIRECTV should seek those answers through written discovery or through a deposition by written questions, “given the high risk of inadvertent disclosure of privileged information.” Jt. Ltr. at 3 n.3. As the FTC has not shown a written deposition is necessary, the Court DENIES its request. IT IS SO ORDERED. Dated: February 24, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-02-26	110	MOTION Request to use the EEPS and bring electronic equipment into the courthouse filed by Federal Trade Commission. (Attachments: # 1 Proposed Order)(Edmondson, Eric) (Filed on 2/26/2016) Modified on 2/29/2016 (dtmS, COURT STAFF). Modified on 2/29/2016 (dtmS, COURT STAFF). (Entered: 02/26/2016)	Case 3:15-cv-01129-HSG Document 110 Filed 02/26/16 Page 1 of 2 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S ADMINISTRATIVE MOTION FOR AN ORDER PERMITTING THE USE OF THE COURT’S ELECTRONIC EVIDENCE PRESENTATION SYSTEMS AND SPECIFIED AUDIO AND VISUAL TECHNICAL EQUIPMENT AT THE HEARING ON DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT Hearing Date: Time: Place: March 4, 2016 10:00 a.m. Courtroom 15, 18th Floor Hon. Haywood S. Gilliam Jr. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 110 Filed 02/26/16 Page 2 of 2 Pursuant to Civil Local Rule 7-11 and the Court’s Civil Pretrial and Trial Standing Order for Cases Before District Judge Haywood S. Gilliam, Jr., ¶ 27, the Federal Trade Commission (“FTC”) hereby moves the Court for an Order permitting the FTC to access and use the Court’s Electronic Evidence Presentation System during the Court’s March 4, 2016 hearing on Defendants’ Motion for Partial Summary Judgment, and to bring into the Courthouse for use at that hearing the following audio visual technical equipment: 1. 2 Laptops with power cords 2. 2 VGA cords 3. 1 projector 4. 1 Samsung T-Mobile HotSpot 5. 1 Whitescreen The FTC understands that use of audio-visual technology is traditionally reserved for trial. However, use of this technology would be helpful during the March 4 summary judgment hearing because a central dispute between the parties on the pending summary judgment motion concerns the display of DIRECTV’s website. The ability to display DIRECTV’s website in a dynamic and interactive manner—from exhibits already submitted to the Court—may be helpful to oral arguments on this issue. Accordingly, the FTC respectfully requests that the Court enter the accompanying Proposed Order permitting the use in court of specified technical equipment. Pursuant to Civil Local Rule 7-11(a), Defendants stipulate to this motion, except they reserve the right to object to the FTC’s display of particular materials.. Dated: February 26, 2016 Respectfully submitted, /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission FTC’S ADMIN MOTION TO PERMIT USE OF EEPS AND TECHNICAL EQUIPMENT 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-03-03	111	ORDER by Judge Haywood S. Gilliam, Jr. Granting 110 Ex Parte Request to use the EEPS and bring electronic equipment into the courthouse.(ndrS, COURT STAFF) (Filed on 3/3/2016) (Entered: 03/03/2016)	Case 3:15-cv-01129-HSG Document 111 Filed 03/03/16 Page 1 of 2 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 15-cv-01129-HSG STIPULATION AND ORDER PERMITTING THE USE OF THE COURT’S ELECTRONIC EVIDENCE PRESENTATION SYSTEMS AND SPECIFIED AUDIO AND VISUAL TECHNICAL EQUIPMENT AT THE HEARING ON DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT Hearing Date: Time: Place: March 4, 2016 10:00 a.m. Courtroom 15, 18th Floor Hon. Haywood S. Gilliam Jr. STIPULATION AND PROPOSED ORDER RE FTC’S ADMIN MOTION TO PERMIT USE OF EEPS AND TECHNICAL EQUIPMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 111 Filed 03/03/16 Page 2 of 2 Pursuant to Civil Local Rules 7-11(a) and 7-12, the parties hereby stipulate to the concurrently filed Federal Trade Commission’s Administrative Motion for an Order permitting the use of the Court’s Electronic Evidence Presentation System and specified audio and visual technical equipment at the March 4, 2016 hearing on Defendants’ Motion for Partial Summary Judgement (the “Motion”). Dated: February 26, 2016 /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission /s/ Ryan M. Sandrock Ryan M. Sandrock Attorney for Defendants DIRECTV and DIRECTV, LLC The Court, having considered the Motion and the parties’ stipulation above, hereby ORDERS that use of the Court’s Electronic Evidence Presentation System during the March 4, 2016 hearing, if necessary, is permitted, and that the following items may be brought into the Courthouse (Courtroom 10, 19th Floor) on March 4, 2016 for the hearing: 1. 2 Laptops with power cords 2. 2 VGA cords PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: March 3, 2016 Haywood S. Gilliam Jr. United States District Court Judge STIPULATION AND PROPOSED ORDER RE FTC’S ADMIN MOTION TO PERMIT USE OF EEPS AND TECHNICAL EQUIPMENT 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-03-03	112	STATEMENT OF RECENT DECISION re 71 Opposition/Response to Motion, by Federal Trade Commission. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Edmondson, Eric) (Filed on 3/3/2016) Modified on 3/3/2016 (dtmS, COURT STAFF). (Entered: 03/03/2016)	Case 3:15-cv-01129-HSG Document 112 Filed 03/03/16 Page 1 of 2 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected]; Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG STATEMENT OF RECENT DECISION PURSUANT TO L.R. 7-3(d)(2) Date: Time: Judge: Location: March 4, 2016 10:00 a.m. Hon. Haywood S. Gilliam, Jr. San Francisco Courthouse Courtroom 15 – 18th Floor v. Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, Defendants. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 112 Filed 03/03/16 Page 2 of 2 Pursuant to Local Rule 7-3(d)(2), Plaintiff Federal Trade Commission (“FTC”), respectfully submits this Statement of Recent Decision in support of its Opposition to Defendants’ Motion For Partial Summary Judgment. On March 3, 2016, the 9th Circuit Court of Appeals issued an opinion and memorandum in FTC v. Commerce Planet, No. 12-57064, which are directly relevant to this matter. A copy of the opinion is attached hereto Exhibit A. A copy of the memorandum is attached hereto as Exhibit B. Dated: March 3, 2016 Respectfully submitted, /s/ Eric D. Edmondson Eric D. Edmondson Raymond E. McKown Erika Wodinsky Kenneth H. Abbe Stacy Procter Boris Yankilovich Jacob A. Snow Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATEMENT OF RECENT DECISION PURSUANT TO L.R. 7-3(d)(2) 2
2016-03-03		Electronic filing error. Incorrect event used. Correct event is STATEMENT OF RECENT DECISION. Corrected by Clerk. Re: 112 Statement, filed by Federal Trade Commission (dtmS, COURT STAFF) (Filed on 3/3/2016) (Entered: 03/03/2016)
2016-03-03	113	DISCOVERY LETTER BRIEF Re. FTC RFPs 12 and 13 filed byFederal Trade Commission. (Attachments: # 1 Exhibit Exhibit A to Letter Brief Re. FTC RFPs 12 and 13)(Edmondson, Eric) (Filed on 3/3/2016) Modified on 3/4/2016 (dtmS, COURT STAFF). (Entered: 03/03/2016)	Case 3:15-cv-01129-HSG Document 113 Filed 03/03/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on January 27, 2016, prior to filing this letter. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 113 Filed 03/03/16 Page 2 of 6 NATURE OF THE DISPUTE This dispute concerns the Federal Trade Commission’s (“FTC”) Requests for Production (“RFPs”) No. 12 (“All consumer complaints regarding any of the Material Terms of the Service.”) and No. 13 (“All Documents relating to consumer complaints regarding any of the Material Terms of the Service.”).1 The FTC seeks a motion to compel the production of documents in response to these RFPs. THE FEDERAL TRADE COMMISSION’S POSITION Last June, the FTC propounded requests for production of DIRECTV customers’ complaints about the conduct at issue in this case (RFP No. 12) and the company’s internal documents relating to those complaints, such as reports, analyses, and memorialized discussions (RFP No. 13). To date, DIRECTV has produced no documents in response to these RFPs. Over the past eight months, the FTC has sought to make progress on these requests, initiating numerous meetings to work through DIRECTV’s objections. Over just the past three months, the parties have conferred in person, by phone, and via written correspondence nearly twenty times. The FTC has repeatedly offered to limit DIRECTV’s purported burden. Shortly before initiating this letter brief, the FTC sent DIRECTV a detailed proposal to limit, including an option to sample DIRECTV’s main consumer records database, called RIO, and to employ narrowly targeted search terms for DIRECTV’s ESI query. DIRECTV has refused to accept. After more than eight months of trying to work in good faith with DIRECTV on these RFPs, but making no progress, the FTC now respectfully asks the Court to order DIRECTV to produce responsive materials. A. The consumer complaint evidence the FTC requests is relevant and important to resolving material issues in this case. The FTC has alleged that DIRECTV marketed its subscription service to consumers without adequately disclosing all material terms of its offer. Evidence that DIRECTV’s own customers have complained about this conduct is probative of, inter alia, whether consumers were deceived by DIRECTV’s advertising and whether DIRECTV knew of this deception while continuing to disseminate deceptive advertisements, websites, and other marketing materials. See FTC v. Cyberspace.com, LLC, No. C00-1806L, 2002 WL 32060289, at 3 n.5 (W.D. Wash. July 10, 2002), aff’d, 453 F.3d 1196 (9th Cir. 2006) (explaining the evidentiary relevance of consumer complaints in FTC Act deception cases). Indeed, DIRECTV has acknowledged the relevance of consumer complaints in this litigation by requesting in discovery the FTC’s records of consumer complaints about DIRECTV. In response, the FTC has produced all relevant, non-privileged consumer complaint materials, including more than 100,000 individual complaints. B. The consumer complaint evidence requested is proportional to the needs of the case. 1. The rule 26(b) proportionality factors countervailing burden are strong. As explained above, consumer complaint evidence has direct bearing on DIRECTV’s misconduct, which has affected tens of millions of DIRECTV’s customers. (See Dkt. 56 at 5; Dkt. 81 at 10.) The amount in controversy potentially reaches into the billions.2 As a multi- billion dollar company, DIRECTV’s resources are enormous. They have grown even larger since this case began. Last July, DIRECTV was acquired by AT&T, forming “the largest pay TV 1 See Ex. A (FTC’s RFPs). “Material Terms of the Service” is a defined term in the FTC’s RFPs. 2 As the Court has recognized, the appropriate standard for calculating consumer redress is up to all of DIRECTV’s revenues stemming from the misconduct, less refunds. (Dkt. 81 at 9.) DIRECTV’s revenues in 2014 alone exceeded $33 billion. DIRECTV, Annual Report (Form 10-K), at 41 (Feb. 25, 2015). 1 Case 3:15-cv-01129-HSG Document 113 Filed 03/03/16 Page 3 of 6 provider in the United States and the world.”3 Finally, the parties’ relative access to the relevant information is entirely one-sided. DIRECTV is the sole source of its own repository of customer complaints, as well as the company’s internal analyses and discussions about complaints. 2. DIRECTV’s burden objections do not outweigh the benefits of this evidence. DIRECTV does not specify any compelling burdens to counter the scale of proportionality. Its burden arguments are even less persuasive in light of DIRECTV’s refusal to accept numerous FTC proposals to reasonably limit the company’s burden in responding to these RFPs. With respect to RFP No. 12—the consumer complaints themselves—DIRECTV has acknowledged that its electronic RIO system is the main repository of customer complaints.4 DIRECTV has advanced two burden arguments against producing any RIO materials. First, DIRECTV argues that it would be burdensome to segregate non-responsive from responsive RIO materials—e.g., those files that include complaints from those that do not. The reason for that burden is DIRECTV’s own failure to properly categorize its customer records. In any event, this burden is no greater than the ordinary burden of reviewing documents for relevance before production—a standard part of any litigation. Moreover, to reduce this relevance review burden, the FTC has offered to shift that burden to itself, by either receiving the entire universe of RIO files or taking a representative random sample from that universe.5 DIRECTV has not accepted. DIRECTV’s second objection to producing RIO files is that production would contravene the Satellite Home Viewer Extension and Reauthorization Act of 2004, as amended and extended by the Satellite Television Extension and Localism Act of 2010, 47 U.S.C. § 338. DIRECTV argues that this law precludes it from producing customers’ personally identifiable information (“PII”) to the FTC. This argument is a red herring. The FTC does not seek PII and will accept masked fields in lieu of it.6 DIRECTV itself has acknowledged the ease of redacting text from designated PII fields (such as the “Name”) in RIO. Its sole burden argument rests on the speculative possibility that some PII may appear not only in those designated PII fields, but also in the notes narratives, and therefore lawyers must manually read each note. This begs too much. These satellite statutes are intended to protect consumers, not to shield satellite companies from their discovery obligations. Neither the FTC nor any other party litigating against DIRECTV should bear the cost of DIRECTV’s decision to store its records in a way that (purportedly) renders 3 Press Release, AT&T, “AT&T Completes Acquisition of DIRECTV” (July 24, 2015), available at http://about.att.com/story/att_completes_acquisition_of_directv.html. 4 DIRECTV contends that RIO contains more information than just consumer complaints. That contention does not refute the fact that RIO is by far the company’s largest repository of consumer complaints. In contrast, the company’s Office of the President (“OOP”) database contains only a sliver of select complaints from select sources (e.g., government officials). Unless DIRECTV can assure the Court that those OOP complaints are fully representative of complaints from the company’s customers in general, DIRECTV’s offer to use OOP complaints as a substitute for RIO complaints is unacceptable. 5 It is for these reasons—to limit unnecessary review burdens and to ensure prompt production—that the FTC produced to DIRECTV all DIRECTV-related consumer complaints in the FTC’s Consumer Sentinel database three months ago, under the understanding that the production may be broader than DIRECTV’s requests. With the FTC’s production, both the FTC and DIRECTV now have access to the entire universe of complaints from the FTC’s side. DIRECTV did not object to that voluminous production being overbroad or otherwise unreasonable. Yet now, DIRECTV refuses to reciprocate. 6 Because the question of whether or not the production of customer PII to the FTC in this action would violate these statutes is hypothetical and entirely avoidable, the Court need not reach it. 2 Case 3:15-cv-01129-HSG Document 113 Filed 03/03/16 Page 4 of 6 them undiscoverable in litigation without DIRECTV undergoing a burden in redacting PII.7 With respect to RFP No. 13, which seeks DIRECTV’s internal reports, summaries, analyses, and discussions about consumer complaints, DIRECTV failed to offer any burden justification. Unlike the consumer complaints themselves, these internal review and analysis materials do not trigger any special PII concerns. DIRECTV’s sole burden argument amounts to a complaint about the unspecified cost of having to conduct an ESI search for responsive emails, slide presentations, and word processing documents. This cost is part of any modern litigation, and not a legitimate basis to avoid discovery responsibilities. See Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 317 (S.D.N.Y. 2003) (“‘[e]lectronic documents are no less subject to disclosure than paper records’”). Moreover, the FTC has proposed a significant limitation to this request—using a set of narrowly tailored search terms to query DIRECTV’s ESI and limiting the search to only relevant company departments.8 DIRECTV has not accepted this proposal either. There is no valid reason for DIRECTV to continue withholding these materials from production. C. DIRECTV’s proposal for further negotiations at this late stage is unacceptable. Over the past eight months, the parties have met and conferred again and again about these RFPs. DIRECTV has consistently asked for the FTC to be patient, and the FTC has obliged. The FTC has now waited for the majority of fact discovery, without receiving a single document to date. The FTC must decline DIRECTV’s present offer to continue negotiating indefinitely. See Salazar v. McDonald’s Corp., No. 14-CV-02096-RS (MEJ), 2016 WL 736213, at 4 (N.D. Cal. Feb. 25, 2016) (refusing to permit further delay where “the benefit of delaying is unclear”). DIRECTV’S POSITION By its motion, the FTC seeks every communication between DIRECTV and its customers, based on its speculation that these communications might contain relevant consumer complaints (that DIRECTV did not track as complaints). This request involves billions of records. The task of gathering, reviewing, and redacting these communications (which is required under a federal law that regulates DIRECTV) would be oppressive. DIRECTV therefore offers a compromise to produce a reasonable number of relevant complaints.9 How DIRECTV Tracks Consumer Communications and Complaints. A. There are two categories of records at issue: (1) DIRECTV’s Office of the President complaint files (“OOP”) and (2) RIO Main Bank Files. The OOP complaint files include actual customer complaints on various topics, including, in some instances, those relating to the issues in this case. The RIO Main Bank is DIRECTV’s customer service notes system. Customer service notes in the RIO Main Bank are not consumer complaints, but rather notes of all customer inquiries to DIRECTV, including such matters as channel availability, how to use the remote control or set-top box, making programming package changes, etc. Dating back to 2007 7 According to the FTC’s outside consultant, developing and deploying a computer program to locate and redact PII terms such as names and addresses from narrative fields in an electronic database platform is readily achievable within reasonable cost and time parameters, and is a technique frequently employed in modern litigation. Thus, DIRECTV’s insistence on manual redaction is a burden of its own choosing. 8 The Feb. 18. 2016 email from FTC counsel to DIRECTV counsel specifies the FTC’s proposals. The FTC can provide this document to the Court with the Court’s permission. 9 The FTC erroneously argues access to consumer complaints is entirely one–sided; it is not. While DIRECTV may be the “sole source” of its own consumer complaints, DIRECTV is not the sole source of consumer complaints. As the FTC acknowledges, it collected and produced more than 100,000 consumer complaints from its own files. The FTC does not explain why it cannot, from its own consumer complaint files, establish whether consumers were deceived by DIRECTV’s advertising. 3 Case 3:15-cv-01129-HSG Document 113 Filed 03/03/16 Page 5 of 6 (the time period requested by the FTC), there are approximately 2.8 billion note entries in this system.10 From time to time, a customer inquiry may trigger an “escalation” which is noted in the RIO Main Bank, but an “escalation” can be triggered for any number of reasons wholly unrelated to whether or not it is a consumer complaint. To avoid the tremendous burden of gathering, reviewing, and redacting these voluminous records, DIRECTV has offered, and continues to offer to produce a relevant set of OOP consumer complaints along with all notes from the RIO Main Bank relating to these complaints. These complaints are representative of the type of complaints all consumers raise with the company. In addition, DIRECTV has already agreed to produce its non-privileged and relevant consumer complaint reports, summaries and analyses tracking complaint data. This is the best source of information for the complaint data the FTC seeks—reports generated in the ordinary course of business about complaints. This production takes time because DIRECTV is still in the process of redacting all consumers’ Personally Identifiable Information (“PII”) from these reports, which is required under federal law.11 Federal Law Requires Redaction of Personal Consumer Information. B. If the FTC had its way, DIRECTV would be ordered to produce 2.8 billion RIO Main Bank notes in violation of federal law. DIRECTV is strictly prohibited from disclosing any PII to the FTC under the Satellite Home Viewer Extension and Reauthorization Act of 2004 (“SHVERA”) as amended and extended by the Satellite Television Extension and Localism Act of 2010 (“STELA”). STELA includes a provision protecting the privacy rights of DIRECTV’s satellite television subscribers and DIRECTV is strictly prohibited from producing any PII without their prior express written consent. See, 47 U.S.C. § 338(i). There is no exception made for governmental demands, and the FTC offers no viable proposal around this requirement. STELA states in relevant part, subject to certain exceptions not applicable here, “a satellite carrier shall not disclose personally identifiable information concerning any subscriber without the prior written or electronic consent of the subscriber concerned ....” See, 47 U.S.C. § 338(i)(emphasis added). It is not possible to produce any customer-service notes or consumer complaint files without going through a record-by-record review to make sure that no PII is produced. While it may be possible to redact or omit from production specific fields containing obvious PII (such as name and address columns in a spreadsheet), there is no fully automated method for removing or redacting PII in the customer service notes. For example, a typical customer note contains PII, such as “Mr. Johnson at 555 California called from his cell phone (415-100-1000)—DIRECTV to update billing address. Future bills should be sent to him at 444 New York Dr.” This note entry requires individual review and redaction under STELA. This is not speculation but a real concern the FTC summarily dismisses. Therefore, DIRECTV cannot rely entirely on automation or masked fields but must manually review and redact all PII. DIRECTV is strictly prohibited from mass production of data before it reviews and redacts all PII. The FTC offers no viable way around this requirement. DIRECTV cannot be exposed to liability to its subscribers by mass producing data that contains subscriber PII to the 10 Approximately 26 million note entries per month = 312 million entries annually, times nine years = 2.808 billion. 11 The FTC claims these reports do not contain PII. They do and DIRECTV has explained this to the FTC in writing many times. In fact, approximately 233 of these reports are Excel spreadsheets totaling 287,000 pages that contain customer service notes with PII in them. Redacting this PII is required and very time consuming. 4 Case 3:15-cv-01129-HSG Document 113 Filed 03/03/16 Page 6 of 6 government. DIRECTV must take STELA compliance seriously. Any resolution of this dispute therefore must consider the unavoidable and substantial redaction burden on DIRECTV, which is unique to this case. This redaction requirement is not a burden of DIRECTV’s own choosing but a specific requirement under an Act of Congress—STELA. For all of these reasons customer service notes are irrelevant—only consumer complaints are relevant.12 DIRECTV’s Attempts to Narrow The Universe of Complaints. C. The OOP consumer complaint files are stored electronically but are not keyword searchable. These complaints are housed in DIRECTV’s Fastrieve database and the only way to obtain a record in the database is to manually query it with the account number, complaint number, customer name, or DCN number (unique number Fastrieve assigns to each scanned item). However, DIRECTV does categorize these complaints. DIRECTV, therefore, sought agreement with the FTC on the relevant categories and provided the FTC with a spreadsheet that lists the various complaint categories. In response, the FTC unreasonably identified 98 categories, which totaled approximately 123,253 OOP complaint files and 1,272,842 RIO customer-service notes. Pulling and reviewing the 123,253 files and 1,272,842 notes13 would take months, if not years, to review and redact under STELA. Rather than attempt to narrow its request, the FTC filed its motion, seeking every record (in the billions) DIRECTV has about any customer interaction, regardless of relevance and ignoring the redaction requirement. Customer Service Notes are Not Complaints and are Irrelevant. D. The FTC asks the Court to order DIRECTV to produce everything in the RIO Main Bank. This would include every time a customer called to complain about a fuzzy picture, an installer with dirty shoes, or asked how to work the remote. The true complaint data can be found in the files of the Office of the President, which is where DIRECTV maintains its consumer complaints. It is possible that files outside the Office of the President might contain additional consumer concerns (not necessarily “complaints”) but this possibility is not enough to justify imposing a massive burden on DIRECTV. See Gilead v. Merck., No. 13-04057, 2016 WL 146574, *1 (N.D. Cal. Jan. 13, 2016) (holding that the revisions to the federal rules confirm the importance of proportionality in discovery; denying motion to compel information that was likely not relevant). Any resolution of this dispute must focus on OOP. DIRECTV therefore proposes to produce complaint information in the Office of the President for ten complaint categories selected by the FTC (and the total number of complaints in these categories shall not exceed 20,000). DIRECTV will produce this information on a rolling basis after the material is reviewed and redacted. DIRECTV will also produce the corresponding RIO Main Bank and/or escalation notes for all complaint files produced in accordance with the terms above to ensure that the FTC receives the actual complaints as well as all of their customer service notes. DIRECTV will also produce all of its responsive and non- privileged complaint reports, which is the best evidence of the company’s complaints. DIRECTV shall have no obligation to mass produce any other customer-service notes in RIO. For all of these reasons, the FTC’s motion should be denied. 12 The FTC repeatedly states that RIO is DIRECTV’s complaint repository. Not true. As DIRECTV has repeatedly explained to the FTC, customer service notes are not complaints. 13 These are the escalated notes and do not include general note history, so the volume is much higher. Assuming at an average of ten additional notes over the history of an account this figure would be over 12.7 million note entries that must be reviewed and redacted. There is no way to separate escalated notes. 5
2016-03-04		Electronic filing error. Incorrect event used. Correct event is DISCOVERY LETTER BRIEF. Corrected by Clerk's Office. No further action is necessary. Re: 113 Letter Brief filed by Federal Trade Commission (dtmS, COURT STAFF) (Filed on 3/4/2016) (Entered: 03/04/2016)
2016-03-04	114	Minute Entry for proceedings held before Hon. Haywood S. Gilliam, Jr.: Motion Hearing and Further Case Management Conference held on 3/4/2016 (Time in Court: 43 minutes). FTR Time 10:02-10:45. Plaintiff Attorney Eric Edmondson; Jacob Snow. Defendant Attorney Clayton Friedman; Ryan Sandrock; Chad Hummel. Defendants' motion for partial summary judgment (docket no. 53 ) is argued and submitted by the parties, and taken under submission by the Court. Parties are directed to meet and confer regarding a proposed revised schedule consistent with the discussion at the hearing. (This is a text minute entry, there is no document associated with this entry.) (ndrS, COURT STAFF) (Date Filed: 3/4/2016) (Entered: 03/04/2016)
2016-03-07	115	TRANSCRIPT ORDER by Federal Trade Commission for Court Reporter FTR - San Francisco. (Edmondson, Eric) (Filed on 3/7/2016) (Entered: 03/07/2016)	UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CAND 435 (CAND Rev. 02/2015) Case 3:15-cv-01129-HSG Document 115 Filed 03/07/16 Page 1 of 1 TRANSCRIPT ORDER Please use one form per court reporter. CJA counsel please use Form CJA24 Please read instructions on next page. C O U R T U S E O N L Y DUE DATE: 1a. CONTACT PERSON FOR THIS ORDER 2a. CONTACT PHONE NUMBER 3. CONTACT EMAIL ADDRESS 1b. ATTORNEY NAME (if different) 2b. ATTORNEY PHONE NUMBER 3. ATTORNEY EMAIL ADDRESS 4. MAILING ADDRESS (INCLUDE LAW FIRM NAME, IF APPLICABLE) 5. CASE NAME 6. CASE NUMBER 7. COURT REPORTER NAME ( FOR FTR, LEAVE BLANK AND CHECK BOX)→ ❐ FTR 8. THIS TRANSCRIPT ORDER IS FOR: ❐ APPEAL ❐ NON-APPEAL ❐ CRIMINAL ❐ CIVIL ❐ In forma pauperis (NOTE: Court order for transcripts must be attached) CJA: Do not use this form; use Form CJA24. 9. TRANSCRIPT(S) REQUESTED (Specify portion(s) and date(s) of proceeding(s) for which transcript is requested), format(s) & quantity and delivery type: a. HEARING(S) (OR PORTIONS OF HEARINGS) b. SELECT FORMAT(S) (NOTE: ECF access is included with purchase of PDF, text, paper or condensed.) c . DELIVERY TYPE ( Choose one per line) DATE JUDGE (initials) TYPE (e.g. CMC) PORTION If requesting less than full hearing, specify portion (e.g. witness or time) PDF (email) TEXT/ASCII (email) PAPER CONDENSED (email) ECF ACCESS (web) ORDINARY (30-day) 14-Day EXPEDITED (7-day) DAILY (Next day) HOURLY (2 hrs) REALTIME 10. ADDITIONAL COMMENTS, INSTRUCTIONS, QUESTIONS, ETC: F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F ORDER & CERTIFICATION (11. & 12.) By signing below, I certify that I will pay all charges (deposit plus additional). 12. DATE 11. SIGNATURE DISTRIBUTION: ❐ COURT COPY ❐ TRANSCRIPTION COPY ❐ ORDER RECEIPT ❐ ORDER COPY
2016-03-07	116	TRANSCRIPT ORDER by DIRECTV LLC, DIRECTV, Inc. for Court Reporter FTR - San Francisco. (Sandrock, Ryan) (Filed on 3/7/2016) (Entered: 03/07/2016)	UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CAND 435 (CAND Rev. 02/2015) Case 3:15-cv-01129-HSG Document 116 Filed 03/07/16 Page 1 of 1 TRANSCRIPT ORDER Please use one form per court reporter. CJA counsel please use Form CJA24 Please read instructions on next page. C O U R T U S E O N L Y DUE DATE: 1a. CONTACT PERSON FOR THIS ORDER 2a. CONTACT PHONE NUMBER 3. CONTACT EMAIL ADDRESS 1b. ATTORNEY NAME (if different) 2b. ATTORNEY PHONE NUMBER 3. ATTORNEY EMAIL ADDRESS 4. MAILING ADDRESS (INCLUDE LAW FIRM NAME, IF APPLICABLE) 5. CASE NAME 6. CASE NUMBER 7. COURT REPORTER NAME ( FOR FTR, LEAVE BLANK AND CHECK BOX)→ ❐ FTR 8. THIS TRANSCRIPT ORDER IS FOR: ❐ APPEAL ❐ NON-APPEAL ❐ CRIMINAL ❐ CIVIL ❐ In forma pauperis (NOTE: Court order for transcripts must be attached) CJA: Do not use this form; use Form CJA24. 9. TRANSCRIPT(S) REQUESTED (Specify portion(s) and date(s) of proceeding(s) for which transcript is requested), format(s) & quantity and delivery type: a. HEARING(S) (OR PORTIONS OF HEARINGS) b. SELECT FORMAT(S) (NOTE: ECF access is included with purchase of PDF, text, paper or condensed.) c . DELIVERY TYPE ( Choose one per line) DATE JUDGE (initials) TYPE (e.g. CMC) PORTION If requesting less than full hearing, specify portion (e.g. witness or time) PDF (email) TEXT/ASCII (email) PAPER CONDENSED (email) ECF ACCESS (web) ORDINARY (30-day) 14-Day EXPEDITED (7-day) DAILY (Next day) HOURLY (2 hrs) REALTIME 10. ADDITIONAL COMMENTS, INSTRUCTIONS, QUESTIONS, ETC: F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F ORDER & CERTIFICATION (11. & 12.) By signing below, I certify that I will pay all charges (deposit plus additional). 12. DATE 11. SIGNATURE DISTRIBUTION: ❐ COURT COPY ❐ TRANSCRIPTION COPY ❐ ORDER RECEIPT ❐ ORDER COPY
2016-03-08	117	Discovery Order re: 113 Discovery Letter Brief filed by Federal Trade Commission. Signed by Judge Maria-Elena James on 3/8/2016. (cdnS, COURT STAFF) (Filed on 3/8/2016) (Entered: 03/08/2016)	Case 3:15-cv-01129-HSG Document 117 Filed 03/08/16 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 113 The Court is in receipt of the parties’ discovery dispute letter regarding the FTC’s Requests for Production No. 12 (“All consumer complaints regarding any of the Material Terms of the Service.”) and No. 13 (“All Documents relating to consumer complaints regarding any of the Material Terms of the Service.”). Dkt. No. 113. Having reviewed the parties’ positions, the Court finds the FTC’s requests relevant but overbroad. Accordingly, the Court ORDERS the parties to further meet and confer in an effort to narrow the scope of the requests. If unable to reach a resolution, the parties shall file an updated letter in compliance with the Discovery Standing Order, setting forth a summary of each party’s final substantive position and their final proposed compromise on each issue, including relevant legal authority. With regard to DIRECTV’s argument regarding redaction of personal consumer information, the parties are directed to meet and confer regarding redaction of any such information, unless the FTC can make a compelling showing as to its relevancy. If any personal information is necessary, it can be sufficiently safeguarded under the parties’ Protective Order. IT IS SO ORDERED. Dated: March 8, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-03-09	118	Transcript of Proceedings of the official sound recording held on 03/04/16, before Judge Haywood S. Gilliam, Jr.. FTR/Transcriber Echo Reporting, Inc., telephone number (858) 453-7590.;[email protected]. Tape Number: FTR 10:02 - 10:45. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerk's Office public terminal or may be purchased through the Court Reporter/Transcriber until the deadline for the Release of Transcript Restriction. After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. (Re 115 Transcript Order ) Redaction Request due 3/30/2016. Redacted Transcript Deadline set for 4/11/2016. Release of Transcript Restriction set for 6/7/2016. (Related documents(s) 115 ) (tgb, COURT STAFF) (Filed on 3/9/2016) (Entered: 03/09/2016)
2016-03-15	119	MOTION for Leave to File Supplementary Material filed by Federal Trade Commission. (Attachments: # 1 Exhibit A)(Edmondson, Eric) (Filed on 3/15/2016) (Entered: 03/15/2016)	Case 3:15-cv-01129-HSG Document 119 Filed 03/15/16 Page 1 of 2 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S MOTION FOR LEAVE TO FILE SUPPLEMENTARY MATERIAL Date: March 4, 2016 Time: 10:00 a.m. Judge: Hon. Haywood S. Gilliam, Jr. Location: San Francisco Courthouse Courtroom 10—19th Floor Pursuant to Civil Local Rule 7-3(d), the Federal Trade Commission (“FTC”) respectfully seeks approval to file the following supplementary material relating to Defendants’ pending motion for summary judgment (Dkt. 53): a four-page brief addressing the FTC’s position on the evidentiary burden legal standard applicable to the pending summary judgment motion. The proposed brief is attached hereto as Exhibit A. The FTC seeks to make this supplemental filing solely to address the Court’s concern, expressed during the March 4, 2016 hearing on the pending summary judgment motion, that the FTC’S MTN. FOR LEAVE TO FILE SUPPLEMENTARY MATERIAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 119 Filed 03/15/16 Page 2 of 2 parties have not given the Court clear guidance on the appropriate evidentiary burden standard under which the motion is to be resolved. The FTC sincerely regrets that it did not articulate its position on this question with sufficient clarity before or during the hearing. The Court has in the past permitted supplemental briefs filed after oral arguments on dispositive motions. See, e.g., Lockwood v. Conagra Foods, Inc., 597 F. Supp. 2d 1028, 1030 (N.D. Cal. 2009); Ramos v. United States, No. C 01-21148, 2002 WL 31466751, at 1 (N.D. Cal. Nov. 1, 2002). The FTC asks the Court to do so here because the proposed brief may assist the Court in applying the correct legal standard to the pending motion. The FTC invited Defendants to join in this supplemental filing, so that both sides could present their respective positions on this discrete issue in one short join brief. The FTC sent its proposed brief to Defendants on March 14, and proposed a joint filing on March 18. Defendants declined the FTC’s invitation to make a joint supplemental filing. Dated: March 15, 2016 Respectfully Submitted, /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission FTC’S MTN. FOR LEAVE TO FILE SUPPLEMENTARY MATERIAL Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 119-1 Filed 03/15/16 Page 1 of 4 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected]; Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Case No. 15-cv-01129-HSG [PROPOSED] FEDERAL TRADE COMMISSION’S SUPPLEMENTAL BRIEF RE THE APPROPRIATE STANDARD FOR RESOLVING DEFENDANTS’ PENDING MOTION FOR PARTIAL SUMMARY JUDGMENT Date: March 4, 2016 Time: 10:00 a.m. Judge: Hon. Haywood S. Gilliam, Jr. Location: San Francisco Courthouse Courtroom 10—19th Floor This summary judgment dispute is somewhat unusual because the parties do not disagree about the sole material fact upon which DIRECTV has predicated its pending motion—its www.directv.com website. In the absence of such a factual dispute, the Court may decide summary judgment based solely on its own facial review of the DIRECTV website. [PROPOSED] SUPP. BR. RE. SUMMARY JUDGMENT STANDARD ON PENDING MSJ Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 119-1 Filed 03/15/16 Page 2 of 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The parties have no genuine dispute about the fact that DIRECTV’s website was disseminated to consumers and gives rise to the FTC’s ROSCA claims. DIRECTV acknowledges that. (See Transcript of Mar. 4, 2016 Hearing at 23:14-16.) DIRECTV, however, argues that since it has presented screenshots of its website—including disclosures hidden behind hyperlinks, icons and tabs—as evidence, the burden shifted to the FTC to present additional, different evidence—beyond the website itself—that demonstrates that consumers did not in fact see or understand these disclosures. (Id. at 5:11–6:1, 7:8-20.) DIRECTV states that this burden emanates from the summary judgment standard—Rule 56. (Id. at 8:2-6.) That is not correct. Rule 56 permits summary judgment if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). When the movant presents evidentiary facts that support summary judgment in its favor, the burden shifts to the non-movant to “designate ‘specific facts showing that there is a genuine issue for trial.’” FTC v. Medlab, Inc., 615 F. Supp. 2d 1068, 1075 (N.D. Cal. 2009) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986)). Nothing in this burden-shifting requires the non-movant to present new evidence different from what the movant presented in support of summary judgment. Indeed, Rule 56(c)(1)(B) permits the defeat of summary judgment by a showing that the materials cited by the movant “do not establish the absence . . . of a genuine dispute.” That means that “[o]ne party, without citing any other materials, may respond or reply that materials cited to dispute or support a fact do not establish the absence or presence of a genuine dispute.” Fed. R. Civ. P. 56(c) advisory committee’s note to 2010 amendment (emphasis added). Thus, the type of “genuine dispute” that can defeat summary judgment is not limited to a presentation of differing facts or competing evidence. One type of genuine dispute by which the non-movant can defeat summary judgment is a showing that “divergent ultimate inferences may reasonably be drawn from the undisputed facts.” Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014) (internal citations and quotation marks omitted). The court must draw “all justifiable inferences in favor of the non-moving party.” Id. Thus, where a court considers the same undisputed [PROPOSED] SUPP. BR. RE. SUMMARY JUDGMENT STANDARD ON PENDING MSJ Case No. 15-cv-01129-HSG 2 Case 3:15-cv-01129-HSG Document 119-1 Filed 03/15/16 Page 3 of 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 evidence, but determines that a reasonable factfinder could arrive at a different conclusion from it than the one propounded by the movant, summary judgment is inappropriate. See Payne v. Salazar, 899 F. Supp. 2d 42, 54 (D.D.C. 2012). Where the parties disagree about the “legal effect” of the undisputed facts, that too is a dispute that “can quite properly be decided on summary judgment”—“effectively being a question of law.” Fonda v. Gray, 707 F.2d 435, 438 (9th Cir. 1983). Indeed, where the legal effect favors the non-movant, a court may grant summary in its favor, even if it has not asked for it. See Fed. R. Civ. P. 56(f); see also Erler v. Erler, No. 12-cv-2793, 2013 WL 6139721, at 8 (N.D. Cal. Nov. 21, 2013) (expressing intent to grant summary judgment for the non-movant where the court disagreed with the movant’s underlying legal inference from undisputed facts). Here, both parties agree that the dispositive material fact at issue on the pending motion is DIRECTV’s website. But the parties disagree about the legal inferences to be drawn from the website. DIRECTV argues that since the text containing material terms of the premium channel negative option exists in the website, those terms are available for consumers to find and read, and therefore, they are clearly and conspicuously disclosed under ROSCA. The FTC argues that because the material terms are disclosed only behind inconspicuously placed and generically labeled hyperlinks, icons, and tabs, they are not conspicuously made under ROSCA, and that the disclosures’ failure to expressly state all material terms—most notably, price—renders them not clear as well. In other words, the parties’ dispute boils down to an application of law to undisputed facts: Does an online seller comply with ROSCA by technically making disclosures about (some) material terms while displaying them in the manner DIRECTV has done here? If the Court concludes that ROSCA does not permit that, DIRECTV cannot win summary judgment; indeed, it should lose. Nor can DIRECTV win summary judgment if the Court concludes that the inferences from the website could be drawn either way. Just as Rule 56 does not mandate the infusion of additional evidence to defeat summary judgment, neither ROSCA nor the FTC Act—the substantive statutes that govern this case— [PROPOSED] SUPP. BR. RE. SUMMARY JUDGMENT STANDARD ON PENDING MSJ Case No. 15-cv-01129-HSG 3 Case 3:15-cv-01129-HSG Document 119-1 Filed 03/15/16 Page 4 of 4 requires the Court to consider additional evidence beyond DIRECTV’s website in order to decide whether the material disclosures at issue are provided clearly and conspicuously and whether they are sufficient to secure express informed consent. Facial review by the factfinder—the Commission and federal courts—is a well-accepted and longstanding practice in resolving deception cases under the FTC Act. Numerous federal courts, including this Court, have sanctioned the resolution of the elements of deception under the FTC Act based on the court’s facial review alone. See Medlab, 615 F. Supp. 2d at 1077-78 (collecting and discussing cases). For example, in Medlab, the court, ruling on summary judgment, relied exclusively on its own facial analysis to determine that the deceptive representations alleged were in fact conveyed in defendants’ advertising, and that defendants’ disclaimers—presented in “minuscule type at the bottom of the advertisements”—were insufficient to cure the deception. Id. at 1077-78. The court expressly rejected the argument that, in order to win, the FTC must present precisely the type of “extrinsic evidence” DIRECTV demands here. Id. at 1078 (“The FTC does not need to present consumer survey data in order to prove what is obvious to any rational reader.”). The strict liability nature of ROSCA renders reliance on facial review even more appropriate. Unlike deception under FTC Act, which requires proof that the representation or omission alleged is “likely to mislead consumers acting reasonably under the circumstances,” id. at 1079 (internal citation and quotation marks omitted), an online seller violates ROSCA by failing to disclose material terms clearly and conspicuously, irrespective of whether consumers are likely to be misled. 15 U.S.C. § 8403; see also FTC v. Health Formulas, LLC, No. 14-cv- 01649, 2015 WL 2130504, at *16 (D. Nev. May 6, 2015). Therefore, evidence that consumers likely did not see or understand the disclosures is not necessary to find a ROSCA violation. Respectfully Submitted, Dated: March 15, 2016 /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission [PROPOSED] SUPP. BR. RE. SUMMARY JUDGMENT STANDARD ON PENDING MSJ Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-03-15	120	Proposed Order re 119 MOTION for Leave to File Supplementary Material by Federal Trade Commission. (Edmondson, Eric) (Filed on 3/15/2016) (Entered: 03/15/2016)	Case 3:15-cv-01129-HSG Document 120 Filed 03/15/16 Page 1 of 1 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG [PROPOSED] ORDER GRANTING FEDERAL TRADE COMMISSION’S MOTION FOR LEAVE TO FILE SUPPLEMENTARY MATERIAL In accordance with Civil Local Rule 7-3(d), the Court, having considered the Federal Trade Commission’s Motion for Leave to File Supplementary Material, hereby GRANTS the Motion and APPROVES the filing of the supplementary material attached to the Motion as Exhibit A. Dated: HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE [PROPOSED] ORDER GRANTING FTC’S MTN. FOR LEAVE TO FILE SUPPLEMENTARY MATERIAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-03-16	121	Discovery Letter Brief filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Exhibit A to Discovery Letter Brief, # 2 Exhibit B to Discovery Letter Brief, # 3 Exhibit C to Discovery Letter Brief)(Sandrock, Ryan) (Filed on 3/16/2016) (Entered: 03/16/2016)	Case 3:15-cv-01129-HSG Document 121 Filed 03/16/16 Page 1 of 8 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: DIRECTV seeks to compel an oral deposition of Paula Selis. Ms. Selis and the FTC oppose. Counsel for the parties met and conferred by phone on February 3, prior to filing this letter. Ms. Selis’s counsel is not located in the same city as other counsel, so an in-person meeting was not possible. If the Court requires, the parties can arrange for a videoconference, as the Court previously ordered as to the earlier dispute on the same issue. (Dkt. 90). /s/ Chad Hummel Counsel for DIRECTV /s/ Amy Teng Counsel for Ms. Selis /s/ Eric Edmondson Counsel for the FTC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. Ryan Sandrock Case 3:15-cv-01129-HSG Document 121 Filed 03/16/16 Page 2 of 8 DIRECTV’S POSITION This motion can be resolved by a review of the transcript of the deposition by written questions (Ex. A), which shows that Ms. Selis refused to provide substantive answers to almost every question. Instead, she repeated objections that this Court already rejected (or at least found insufficient to justify barring all questioning). The Court should order that Ms. Selis sit for a three-hour oral deposition so that DIRECTV can get the discovery it needs. I. Background Ms. Selis, a former Assistant Attorney General of Washington and the state’s “lead attorney” in connection with the Multi-State Settlement (“MSA”), filed a declaration challenging DIRECTV’s MSA-based defenses. DIRECTV sought to take her deposition. Ms. Selis moved for a protective order. She argued that the MSA was not relevant and that various privileges shielded all her communications with the FTC from discovery. (Dkt. 91). DIRECTV argued in response that: (a) Ms. Selis has extensive knowledge regarding DIRECTV’s compliance with the MSA; (b) Judge Gilliam rejected the FTC’s motion designed to eliminate the MSA from the case; (c) Ms. Selis subjected herself to deposition by filing a declaration; and (d) Ms. Selis had not provided support for her privilege claims. (Dkt. 91). Your Honor heard argument and ruled: I’m going to indicate that DIRECTV be allowed to depose Ms. Selis in writing. Because I know they’re treading on attorney-client privileges, information, and back and forth. So I’m going to allow them to do a written deposition of her. And this is without prejudice to DIRECTV’s returning back to this Court indicating why it has to be done in person. But under the circumstances, and given the position of her declaration and the way this case is unfolding, I’m going to allow her to be deposed, but in writing. (Ex. B, 15:10-16 (emphasis added); Dkt. 92). Ms. Selis gave her deposition on January 18, 2016. She largely avoided providing any answers. Instead, she made the same objections she did in the brief, claiming that the MSA is irrelevant and multiple privileges applied. Ms. Selis appears to have read many of her responses into the record, as evidenced by multiple near word-for-word identical answers. (Compare Ex. A, 28:22-29:4 to 32:4-33:11 to 42:12-43:19 to 45:7-46:14 to 48:5-49:12). Subsequent to the deposition, Your Honor ruled that DIRECTV may take the FTC’s deposition regarding communications between the FTC and the states regarding the MSA, notwithstanding the FTC’s claim that all such communications are privileged (the same claim Ms. Selis and the FTC make here). (Dkt. 108). The FTC also served a 30(b)(6) notice seeking the factual bases for DIRECTV’s MSA-based defenses—the same defenses at issue here. II. Argument A. Ms. Selis Evaded DIRECTV’s Questions. Because opposing counsel was not present, Ms. Selis was able to avoid providing any substantive answers. Each question was followed by a lengthy speaking objection which, in many instances, was longer than the answer itself. These objections violated FRCP 30(c) which requires that objections be made in a “non-argumentative and non-suggestive manner.” When the objections finally concluded, Ms. Selis responded with canned answers that resembled counsel-authored interrogatory responses. 1 Case 3:15-cv-01129-HSG Document 121 Filed 03/16/16 Page 3 of 8 For example, in response to Question 5 (“At the time that you entered into the settlement with DIRECTV, did you believe that the settlement adequately cured the DIRECTV conduct that you alleged violated Washington consumer protection laws?”), counsel objected for over a page (Ex. A, 12:25-14:3) and then Ms. Selis gave a short non-response: I have no idea what my personal opinions have to do with the State of Washington’s decision-making, let alone how it relates to the FTC action. Given the privilege assertions made by Mr. Bowers, it would be improper for me to give my personal beliefs, considering the office’s ongoing monitoring of DIRECTV’s compliance with the consent decree. My opinions on this issue are inextricably tied to my work as an assistant attorney general and my investigation and litigation into DIRECTV’s practices. I can’t dissect my opinion from the work product related to the State’s investigation and litigation into DIRECTV. Therefore, such information’s protected as my opinion work product. (Ex. A, 14:4-14:18). In an oral deposition, follow-up questions would have sought the basis for the privilege assertions and also dissected Ms. Selis’s knowledge from any claimed work product. that the document speaks for itself. (Ex. A, 8:14-18; 12:15-19; 61:23-62:5). In an oral deposition, DIRECTV would have been able to ask follow-up questions about those documents. Ms. Selis also answered three questions by simply referring to a document and saying B. Ms. Selis Has Not Established That Any Privilege Applies. The privilege objection cannot stand given Your Honor’s ruling allowing DIRECTV to take a deposition on communications between the FTC and the states regarding the MSA. (Dkt. 108). The FTC sought to prevent this deposition from proceeding, invoking the same privilege arguments it does now. Your Honor allowed the deposition to go forward, ruling “while it is possible that some information related in Topic 1 may be privileged, it is not clear that all such communications are.” (Dkt. 108). The same approach makes sense here. Topic 1—“All communications, negotiations, and discussions between or involving the FTC, on the one hand, and DIRECTV . . . and/or any or all of the ‘attorneys general of all 50 states and the District of Columbia,’ on the other, both before and after the effective date of the multi-state settlement agreement concerning the multistate settlement agreement and any of its terms”—covers the same subjects as many of DIRECTV’s questions, including Questions 6, 13, and 17. Your Honor ordered a deposition to go forward on Topic 1 but Ms. Selis refused to answer those questions, claiming privilege. (Ex. A, 14:19- 17:12; 30:15-33:17; 41:2-42:19). Ms. Selis has not established the basis for any privilege but simply has asserted legal conclusions. For example, her written responses repeatedly claim that the state and federal investigations were “parallel and independent.” (See, e.g., Ex. A, 42:17-18). A fundamental question in this case is whether that is actually true. DIRECTV therefore needs to be able to question Ms. Selis regarding her basis for making this claim. Similarly, Ms. Selis refers to a “shared understanding” between the states and the FTC about the nature of their investigation. (See, e.g., Ex. A, 42:24-25). DIRECTV needs to be able to get information regarding the nature for that claimed understanding. In particular, DIRECTV must get an explanation as to how the FTC and Ms. Selis can simultaneously claim that they 2 Case 3:15-cv-01129-HSG Document 121 Filed 03/16/16 Page 4 of 8 were not aligned but also that they agreed to pursue a joint strategy. (For more detail on this argument, see Dkt. 91 at 6, Dkt. 107 at 6, and Ex. B at 13). In short, Ms. Selis cannot invoke the privilege but at the same refuse to provide sufficient answers regarding the basis for the privilege. Significantly, Ms. Selis’s answers do make it clear that there was no written agreement establishing a common interest between the FTC and the states. When asked whether there was such an agreement, Ms. Selis could only refer to an “administrative form” regarding confidentiality. (Ex. A, 30:5-10). DIRECTV also needs to be able to ask questions about this form and, most importantly, where and how any common interest was memorialized, given that it was not done so in writing. C. Ms. Selis’s Other Objections Fail Ms. Selis clearly has relevant information: the FTC submitted Ms. Selis’s declaration in order to show the views of the Washington Attorney General’s office and to suggest that DIRECTV’s disclosures are deceptive. Furthermore, as set forth in the prior briefing, the FTC’s claim that the MSA is not relevant is wrong. The FTC in fact has sought discovery since Ms. Selis’s deposition regarding DIRECTV’s MSA-based defenses. As to foundation, the arguments that Ms. Selis does not speak for the State or know its current views fail: she was the “lead attorney” and all of the deposition questions seek information regarding the time when Ms. Selis was employed. Ms. Selis cannot use her retirement as a shield to prevent questions about the declaration she filed. *** The most efficient way for DIRECTV to get the answers to which it is entitled is through a short oral deposition at a time and place convenient to Ms. Selis. PAULA SELIS’ POSITION This Court should deny DIRECTV’s (“DTV”) request for yet another deposition of Ms. Selis for two reasons. First, Ms. Selis, a non-party, has submitted to one deposition already and, contrary to DTV’s allegations and as demonstrated in the transcript, substantively answered all of DTV’s questions except those that called for privileged and protected information. Second, most if not all of the information DTV seeks from Ms. Selis—privileged and protected communications between state law enforcement agencies and the FTC—can and will soon be sought by DTV during its 30(b)(6) deposition of the FTC. Unlike Ms. Selis, the FTC is a party to this action. The case law is clear that where possible, DTV should seek information from a party witness before burdening a non-party witness. Not once in its briefing did DTV mention Ms. Selis’ non-party status or explain why it needs to further burden Ms. Selis when much of what it seeks can be discovered through the 30(b)(6) deposition of the FTC. As a result, the Court should deny DTV’s request to re-depose Ms. Selis. A. Ms. Selis Provided Substantive Testimony In Her Written Deposition. DTV’s assertion that Ms. Selis was evasive in her deposition is simply false. To the contrary, Ms. Selis provided substantive responses to 26 of the 30 questions asked by DTV, which, incidentally, made no effort to appear at her written deposition. Of the four remaining questions, the information sought was privileged or protected by the common interest doctrine and objections were properly made on the record to those questions.1 See FRCP 30(c) (deposition 1 DTV’s Jan. 11, 2016 Deposition Notice by Written Questions (Ex. C), Question Nos. 5, 6, 8 and 27. 3 Case 3:15-cv-01129-HSG Document 121 Filed 03/16/16 Page 5 of 8 objections “must be noted on the record” and the witness may be instructed not to answer “when necessary to preserve a privilege”). Without waiving privileged or protected communications, and without limitation to any relevance objections, Ms. Selis: • Testified regarding the AGO’s investigation and litigation against DTV and about the MSA (Ex. A, 7:3-10, 8:14-18, 10:16-11:9, 12:15-19, 58:15-19, 61:23-62:5) and identified officials of other states with whom she communicated (id. at 19:3-6); Identified the non-privileged and unprotected communications she had with the FTC (id. at 32:4-33:17, 42:15-43:19, 50:21-52:3, 67:4-69:2), including those regarding DTV’s conduct (id. at 16:6-17:12); • Did not recall any communications with the FTC regarding why it chose not to join the • MSA (id. at 46:15-16) or waited to bring an action (id. at 49:13-15); • Explained the basis for the privileged and protected nature of the AGO-FTC communications relating to the DTV investigation (id. at 27:1-29:7), identified the writings supporting this (id. at 30:5-14), and described the circumstances surrounding her short declaration filed in this matter (id. at 53:3-16); • • Testified regarding DTV’s advertising since the entry of the MSA (id. at 37:3-6, 60:14-17, 64:3-6, 65:22-24); and Identified communications between the AGO and DTV (id. at 25:13-24, 35:2-8)2 and the reasons why the AGO may not have notified DTV of possible violations of the MSA (id. at 39:24-41:1). As evidenced by DTV’s written deposition questions and briefing, if given the opportunity to conduct further discovery of Ms. Selis, DTV intends to expand discovery to include information regarding Washington’s prosecution of DTV and subsequent monitoring of compliance under the MSA. Yet DTV has not explained to this Court how the relevance of this information outweighs the burden and expense on a third party, let alone the burden on the state charged with monitoring DTV’s compliance. Nalco Co. v. Turner Designs, Inc., 2014 WL 1311571, 2 (N.D. Cal. Mar. 31, 2014). B. DTV Seeks the Same Discovery From Ms. Selis That It Will Seek From the FTC. Despite Ms. Selis’ substantive responses, DTV seeks yet another deposition of her ostensibly to follow up on her written deposition testimony. However, as DTV itself admits in its portion of this letter brief, DTV will soon be seeking the same information during its 30(b)(6) deposition of the FTC: “Topic 1 [of the 30(b)(6) deposition of FTC] covers the same subjects as many of DIRECTV’s questions [to Ms. Selis].” (emphasis added). Such a tactic runs directly contrary to case law. Courts have long recognized that non-parties, such as Ms. Selis, “deserve extra protection from the courts.” Robert Half Int’l v. Ainsworth, 2015 WL 4662429, at 4 (S.D. Cal. Aug. 6, 2015) (citations omitted). This is particularly true where, as here, the discovery sought can be had from a party to the case. See Nidec Corp. v. Victor Co. of Japan, 249 F.R.D. 575, 577 (N.D. Cal. 2007) (“There is simply no reason to burden nonparties when the documents sought are in the possession of the party defendant”); Nalco, supra, at *2 (“Nalco has not explained why it 2 DTV has even asked Ms. Selis to testify about its own communications with her. (See Ex. C, Question Nos. 10 & 14). As a party to such communications, DTV possesses the information already and should not seek discovery from Ms. Selis on these topics. See FRCP 26(b)(2)(C) (court should limit discovery if it “can be obtained from some other source that is more convenient, less burdensome, or less expensive”). 4 Case 3:15-cv-01129-HSG Document 121 Filed 03/16/16 Page 6 of 8 cannot get these documents from Turner, who is a party to this litigation. This alone is sufficient to warrant denying Nalco’s request to compel this category of documents.”). Nor does DTV’s claim that it needs to depose Ms. Selis in order to probe the “shared understanding” between the states and the FTC have merit. Ms. Selis adequately laid out the basis for the common interest agreement by testifying how she believed a common interest agreement applied between the Washington Attorney General’s Office (“AGO”) and the FTC. (Ex. A at 27:1-29:7).3 Although a written agreement is not required to prove the existence of a common interest agreement,4 Ms. Selis identified writings to show a common interest between the agencies. (Ex. A at 30:5-14). Moreover, the common interest protection does not require there to be actual litigation or for the entities sharing the information to be part of the same action. Gonzalez, supra, at 980 (“[A]s parties in separate actions might nonetheless have reasons to work together toward a common objective, and there is no requirement that actual litigation even be in progress.”); see also United States v. Town of Colorado City, 2014 WL 5431218 (D. Ariz. Oct. 27, 2014) (finding communications between federal and state agencies are protected under the common interest privilege where each agency pursued a separate action). In addition, as previously discussed, DTV can ask any follow up questions it has on this topic of FTC’s witness during the 30(b)(6) deposition. The FTC would have the same information regarding the common interest agreements between itself and the states that Ms. Selis could provide, and unlike Ms. Selis, the FTC is a party in this case. The only other example DTV provides regarding its challenges to the privilege objections relates to the opinion work product objection. Ms. Selis is a retired assistant attorney general, and in that former capacity, she investigated and litigated against DTV.5 DTV now intends to ask Ms. Selis follow-up questions in an oral deposition to “dissect [her] knowledge from any claimed work product.” This is an impossible task and an unfair burden to Ms. Selis, as she would risk divulging privileged information held by her former employer in an oral deposition. Indeed, it was for that reason this Court only allowed her to be deposed on written questions. DTV is simply unhappy with Ms. Selis’ substantive deposition responses and her necessary and proper invocation of privilege. It now wants another bite at the apple. By DTV’s own admission, however, the information it seeks from non-party Ms. Selis will be sought during DTV’s 30(b)(6) deposition of the party plaintiff FTC. Consistent with Robert Half, Nidec, Nalco, and other case law, DTV’s request for yet another deposition of Ms. Selis should be denied. 3 To the extent DTV is rehashing privilege and related issues that were the subject of a prior letter brief— issues of such significance that this Court ordered the deposition to be done by written questions—Ms. Selis directs the Court to the privilege arguments made in the prior briefing. (Dkt. 91 at pgs. 3-4). Although Ms. Selis does not believe any additional information is needed to show the existence of the privilege, AGO can provide such information if the Court wishes. 4 United States v. Gonzalez, 669 F.3d 974, 979 (9th Cir. 2012), as cited by Ellis v. J.P. Morgan Chase & Co., 2014 WL 1510884 (N.D. Cal. Apr. 1, 2014); see also In re Pacific Pictures Corp., 679 F.3d 1121, 1129 (9th Cir. 2012) (for the common interest, “the parties must make the communications in pursuit of a joint strategy in accordance with some form of agreement – whether written or unwritten”). 5 Ms. Selis’ former employee status is a proper basis for a foundation objection to questions regarding decisions made and actions taken by AGO. Ms. Selis provided responses to the extent she could, but she cannot testify as an AAG. DTV cites no case law in support of its argument that a non-party former employee (much less a former prosecutor) can be compelled to provide testimony to bind a former employer or to waive privileges held by that former employer. No such case law exists. 5 Case 3:15-cv-01129-HSG Document 121 Filed 03/16/16 Page 7 of 8 THE FEDERAL TRADE COMMISSION’S POSITION A. DIRECTV’s written deposition questions demonstrate that the testimony it seeks from Ms. Selis is irrelevant to this action. The Court permitted Ms. Selis to be deposed because the FTC submitted her declaration in support of its opposition to DIRECTV’s summary judgment motion.6 The FTC filed Ms. Selis’s declaration to make one discrete point: the 2010 settlements between the 50 states and the District of Columbia (collectively, the “states”) and DIRECTV are irrelevant to this federal action because those settlements addressed only state law claims and this Court cannot be bound by either those settlements or the absence of subsequent actions to enforce them.7 Judge Gilliam’s order striking three of DIRECTV’s affirmative defenses—those predicated on the state settlements having a preclusive effect—confirmed this point.8 Notwithstanding the narrow predicate for the relevance of Ms. Selis’s testimony to this case, DIRECTV did not use its deposition questions to examine or challenge her declaration. On the contrary, only one of DIRECTV’s 30 deposition questions even mentioned her declaration.9 The remaining 29 questions went far beyond the declaration into topics ranging from Ms. Selis’s personal views of DIRECTV’s advertising practices over the years to Ms. Selis’s subjective beliefs about whether Washington consumers continue to be deceived by DIRECTV’s conduct.10 This overbroad inquiry is emblematic of DIRECTV’s continued insistence—even after Judge Gilliam’s order—that discovery from the states has bearing on this case. Specifically, DIRECTV views the subjective beliefs of the states’ law enforcement officials involved in settling state claims with DIRECTV in 2010 to be “probative and substantive evidence that these law enforcement officials did not believe DIRECTV was engaging in deceptive conduct on the very issues that the FTC is now pursuing” in 2015.11 In other words, DIRECTV wants to drag into this case law enforcement officials of 51 state sovereigns in order to elicit their opinions about the merits of this federal action. This inquiry is irrelevant, unduly burdensome, and a waste of resources. Just recently, Judge Gilliam expressed further skepticism about the relevance of the state settlements to any issue in this case.12 Whether or not state law enforcement agencies view DIRECTV to be in compliance with state laws—or, in this case, state settlement agreements—cannot preclude the federal claims pending in this action. The Court made that clear by striking DIRECTV’s affirmative defenses predicated on that preclusive effect.13 Likewise, the state settlements have no bearing on the three surviving affirmative defenses that DIRECTV has invoked for its need to depose Ms. Selis: laches, estoppel, and waiver.14 Whether or not the FTC engaged in the type of “affirmative misconduct” necessary to establish 6 Ex. B at 9:10-13, 15:14-16. 7 See Declaration of Paula Selis (Dkt. 75); see also FTC Opp’n to Defendants’ MSJ (Dkt. 71) at 21-22. 8 Court Order of Dec. 21, 2015 (Dkt. 88) (“Court Order on Affirmative Defenses”), at 6-9. 9 Ex. C question no. 21. 10 See, e.g., id. question nos. 15, 16, 23. 11 Ex. B at 12:15-18. 12 Transcript of the March 4, 2016 Court Hearing on DIRECTV’s Motion for Partial Summary Judgment at 21:10-13 (“But how – how is that probative of anything? In other words, the fact that in a negotiated resolution they said whatever they said, that’s not evidence of any issue before me, is it?”)). 13 Court Order on Affirmative Defenses at 6-9. 14 Ex. B at 8:23–9:8, 13:15-17 6 Case 3:15-cv-01129-HSG Document 121 Filed 03/16/16 Page 8 of 8 laches or estoppel, or demonstrated “unmistakable” waiver,15 does not hinge on the views or recollections of the law enforcement officials of 51 sovereigns who are not party to this action. In fact, DIRECTV’s basis for its laches, estoppel, and waiver defenses is that the FTC “declined” to participate alongside the states in settling with DIRECTV in 2010.16 DIRECTV cannot plausibly argue that deposing the states’ attorneys general will provide insight into the FTC’s internal decision-making when, according to DIRECTV’s own pleadings, the FTC did not join the states’ settlement negotiations and instead proceeded independently. In any event, DIRECTV has already noticed the FTC’s deposition on the topic of the FTC’s decision to not settle alongside the states in 2010,17 and the FTC will produce a witness. DIRECTV has not pled that the FTC and the states conspired to trick DIRECTV, or that the Commission waived its right to bring this action in a way that was “unmistakable” to the states, but not to DIRECTV or anyone else.18 Absent such pleadings, made consistent with Rule 11,19 there is no reason to burden third parties with further depositions to indulge a fishing expedition. Finally, even if the Court were inclined to allow an expansion of discovery to the attorneys general of the 51 states, DIRECTV has not actually sought that. Instead, DIRECTV seeks to re-depose a former assistant attorney general in her personal capacity, even though her testimony cannot bind the State of Washington or any other sovereign. If DIRECTV desires evidence from the states, it should subpoena them directly and permit them to respond and object. B. Follow-up oral deposition questioning of Ms. Selis further risks the unintentional release of privileged information. The Court was right to recognize the heightened privilege concerns with deposing a lawyer who litigated against DIRECTV on behalf of the State of Washington,20 especially since Washington and the FTC have asserted common interest protections for their confidential communications.21 Six of DIRECTV’s 30 deposition questions to Ms. Selis asked directly about those confidential communications, and 25 questions elicited privilege objections.22 DIRECTV’s intent—evident from its deposition questions and expressed in this brief—to use Ms. Selis as a vehicle to challenge the common interest between the FTC and Washington makes it clear that a follow-up oral deposition would amount to a grueling exercise in avoiding unintentional divulgence of privileged information—by a person who does not hold the privilege and is not in a position to waive it. That risk outweighs DIRECTV’s marginal need for further testimony. 15 See Court Order on Affirmative Defenses at 4-6. 16 Defendants’ Second Amended Answer (Dkt. 93) (“The FTC was invited to participate in the negotiation and resolution of those issues before the settlement was finalized but declined.”). 17 DIRECTV’s Rule 30(b)(6) Topic 2: “The decision by the FTC, including the reasons for the decision, not to object to, to intervene in, or to seek to modify or augment the terms of the multi-state settlement agreement.” 18 See Court Order on Affirmative Defenses at 6; see also United States v. Philip Morris Inc., 300 F. Supp. 2d 61, 69 (D.D.C. 2004) (unmistakable waiver cannot be inferred from the government’s silence). 19 Cf. Court Order on Affirmative Defenses at 10 (requiring re-pleading to comply with Rule 11). 20 Ex. B at 15:6-11. 21 The FTC’s witness on DIRECTV’s Rule 30(b)(6) Topic 1 will be prepared answer questions about the FTC’s invocation of the common interest doctrine. Contrary to DIRECTV suggestion (at p. 3 supra), the Court previously ordered the FTC to produce a representative to be deposed on that topic (Dkt. 108), not to force a third party to answer questions relating to it despite counsel’s privilege objections. 22 See Ex. A. 7
2016-03-16	122	Discovery Order re: 121 Discovery Letter Brief re: Solis Deposition. Signed by Judge Maria-Elena James on 3/16/2016. (cdnS, COURT STAFF) (Filed on 3/16/2016) (Entered: 03/16/2016)	Case 3:15-cv-01129-HSG Document 122 Filed 03/16/16 Page 1 of 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 121 The Court is in receipt of the parties’ discovery dispute letter concerning Defendants DIRECTV and DIRECTV, LLC’s (collectively, “DIRECTV”) request to compel an oral deposition of Paula Selis, a former Assistant Attorney General for the State of Washington who represented Washington in the litigation that resulted in multistate settlement agreements regarding DIRECTV’s advertising. Dkt. No. 121. Although she is not a party in this case, Plaintiff Federal Trade Commission (“FTC”) submitted Ms. Selis’s declaration in support of its Opposition to DIRECTV’s pending Motion for Partial Summary Judgment. Dkt. No. 75. In her Declaration, Ms. Selis states that she was Washington’s lead attorney in connection with its complaint against DIRECTV, as well as negotiation and entry of the settlement agreement between Washington and DIRECTV. Selis Decl. ¶ 4. The parties previously brought this dispute to the Court’s attention (see Dkt. Nos. 89, 91) and, after a hearing on the matter, the Court allowed DIRECTV to depose Ms. Selis, but by written deposition questions. Dkt. No. 92 (Minute Order). Ms. Selis gave her deposition on January 18, 2016. Jt. Ltr., Ex. A (Dep. Tr.), Dkt. No. 121-1. DIRECTV now renews its request for an oral deposition, arguing that Ms. Selis refused to provide substantive answers to almost every question. Jt. Ltr. at 2. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 122 Filed 03/16/16 Page 2 of 2 Having reviewed the parties’ arguments and the deposition transcript, the Court finds Ms. Selis’s written deposition responses insufficient, and that the most efficient way for DIRECTV to obtain proper responses at this point is by oral deposition. Accordingly, the Court ORDERS Ms. Selis to sit for a three-hour oral deposition at a time and place convenient to her. IT IS SO ORDERED. Dated: March 16, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-03-16	123	NOTICE of Appearance by Whitney B Merrill for Federal Trade Commission (Merrill, Whitney) (Filed on 3/16/2016) (Entered: 03/16/2016)	Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 Whitney B. Merrill, IL Bar No. 6317981 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION /// /// /// 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, v. a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG NOTICE OF APPEARANCE OF WHITNEY B. MERRILL AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION NOTICE OF APPEARANCE TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, WHITNEY B. MERRILL, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of Illinois and employed by the United States government. My address, telephone number, and email address are as follows: Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: March 16, 2016 /s/ Whitney B. Merrill Whitney B. Merrill Attorney Federal Trade Commission NOTICE OF APPEARANCE PAGE 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-03-21	124	RESPONSE (re 119 MOTION for Leave to File Supplementary Material ) DIRECTV'S RESPONSE TO THE FTC'S SUPPLEMENTAL SUMMARY JUDGMENT BRIEF filed byDIRECTV LLC, DIRECTV, Inc.. (Sandrock, Ryan) (Filed on 3/21/2016) (Entered: 03/21/2016)	Case 3:15-cv-01129-HSG Document 124 Filed 03/21/16 Page 1 of 3 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 772-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA Case No. 3:15-cv-01129 HSG DIRECTV’S RESPONSE TO THE FTC’S SUPPLEMENTAL SUMMARY JUDGMENT BRIEF FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation and DIRECTV, LLC a limited liability company, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) DIRECTV’S RESPONSE TO THE FTC’S SUPPLEMENTAL SUMMARY JUDGMENT BRIEFING CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 124 Filed 03/21/16 Page 2 of 3 DIRECTV opposes the FTC’s motion for leave. Dkt. 119. Further briefing is not permitted by the local rules or necessary. The Court therefore should strike and not consider the supplemental brief the FTC attached to the motion. (Dkt. 119-1). However, should the Court consider the FTC’s brief, DIRECTV requests that the Court consider the below response. There is no dispute about the summary judgment standard: the FTC does not challenge that DIRECTV shifted the burden to the FTC by presenting evidence that DIRECTV disclosed the premium channel negative option. Dkt. 119-1 at 2. The FTC then had to come forward with admissible evidence showing that there is a genuine issue of material fact as to whether the disclosures are clear and conspicuous. The FTC contends that it can meet this burden without presenting any evidence but merely by asking the Court to conduct a facial review of the evidence DIRECTV presented—the disclosures themselves. Id. The dispute then is about whether this is the type of case in which the disclosures are so obviously deceptive that a facial review is sufficient to meet the FTC’s burden. It is not.1 The FTC’s citation to FTC v. Medlab, Inc., 615 F. Supp. 2d 1068 (N.D. Cal. 2009) (Dkt. 119-1 at 2, 4), shows the problem with the FTC’s attempt to get by on mere facial review. In that case, the advertisements at issue included claims such as “As much as 4 inches and 50% of all excess fat gone in just 14 days!,” “Lose up to 15 pounds a week with the amazing formula that forces your body to release fat,” and “Amazing New Skinny Pill prescription forces your body to release fat, flab and fluid!” Id. at 1076-77. The Court rejected the defendants’ contention that extrinsic evidence was necessary to show how consumers understood these advertisements. The Court concluded that the “FTC does not need to present consumer survey data in order to prove what is obvious to any rational reader: these advertisements represent that defendants’ product achieves dramatic weight loss for anyone without the discomfort of diet and exercise.” Id. at 1078. 1 The FTC still has not cited a single case in which a court found disclosures comparable to those at issue here to be deceptive at all and certainly no case in which a court did so based simply on a facial review. DIRECTV SJ Reply, Dkt. 94 at 13. And the FTC cannot dispute that clear disclosures preclude a claim based on deception. DIRECTV SJ Motion, Dkt. 53 at 22-23. DIRECTV’S RESPONSE TO THE FTC’S SUPPLEMENTAL SUMMARY JUDGMENT BRIEFING CASE NO. 3:15-CV-01129 HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 124 Filed 03/21/16 Page 3 of 3 Here, unlike Medlab, the Court cannot look at DIRECTV’s webflow and conclude, as the FTC suggests, that consumers are deceived by the premium channel offer. Nor can the Court look at the disclosures in this case and make a “justifiable inference” (Dkt. 119-1 at 2) that the disclosures were not clear and conspicuous. Given the undisputed fact that DIRECTV made the required disclosures, and that they are not obviously deceptive (unlike the claims in Medlab, Health Formulas, and in the other cases cited by the FTC2), the FTC could only meet its burden by coming forward with some evidence showing that the disclosures were not clear and conspicuous—such as evidence that consumers did not understand DIRECTV’s disclosures. The fact that there are some cases of obvious deception in which the FTC might meet its burden without presenting additional evidence beyond the disclosures at issue does not mean that it can do so in this case. Dated: March 21, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 2 See DIRECTV SJ Reply, Dkt. 94 at 3, 7-8 (distinguishing the FTC’s cited cases—all of which involved obvious scams). DIRECTV’S RESPONSE TO THE FTC’S SUPPLEMENTAL SUMMARY JUDGMENT BRIEFING CASE NO. 3:15-CV-01129 HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-03-30	125	NOTICE of Appearance by Amy Teng (Teng, Amy) (Filed on 3/30/2016) (Entered: 03/30/2016)	Case 3:15-cv-01129-HSG Document 125 Filed 03/30/16 Page 1 of 2 Amy Teng, WSBA #50003, SBN 228133 [email protected] WASHINGTON ATTORNEY GENERAL’S OFFICE 800 5th Avenue, Suite 2000 Seattle, WA 98104-3188 Telephone: (206) 464-7745 Facsimile: (206) 587-5636 Attorney for Non-Party Paula Selis UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG NOTICE OF APPEARANCE OF AMY TENG AS COUNSEL FOR NON-PARTY PAULA SELIS FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE -1- 1 Case 3:15-cv-01129-HSG Document 125 Filed 03/30/16 Page 2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, AMY TENG, Assistant Attorney General for the State of Washington, hereby enter my appearance as counsel for non-party Paula Selis in this matter. I am a member of the State Bar of California and admitted to practice in the United States District Court for the Northern District of California. I am employed by the State of Washington. My address, telephone number, and e- mail address are as follows: Consumer Protection Division Washington State Office of the Attorney General 800 Fifth Avenue, Suite 2000 Seattle, WA 08104-3188 Phone: (206) 254-0571 Email: [email protected] Dated: March 30, 2016 State of Washington By: s/Amy Teng___________________ Amy Teng (CA Bar No. 228133) Assistant Attorney General Washington State Office of the Attorney General Attorney for Non-Party Paula Selis 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE -2- 2
2016-03-30	126	MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE filed by Paula Selis. (Attachments: # 1 Declaration of Amy Teng, # 2 Exhibit 1-9 to Teng Decl., # 3 Proposed Order)(Teng, Amy) (Filed on 3/30/2016) Modified on 4/13/2016, incorrect deadline removed from the docket text. (ndrS, COURT STAFF). (Entered: 03/30/2016)	Case 3:15-cv-01129-HSG Document 126 Filed 03/30/16 Page 1 of 7 Amy Teng, WSBA #50003, SBN 228133 [email protected] WASHINGTON ATTORNEY GENERAL’S OFFICE 800 5th Avenue, Suite 2000 Seattle, WA 98104-3188 Telephone: (206) 464-7745 Facsimile: (206) 587-5636 Attorney for Non-Party Paula Selis UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Case No. 3:15-cv-01129 HSG Plaintiff, Assigned to the Hon. Haywood S. Gilliam, Jr. v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Referral to the Hon. Maria-Elena James NON-PARTY PAULA SELIS’ MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE [Civ. L.R.-72-2] No Hearing Date and Time Complaint Filed: March 11, 2015 Trial Date: December 5, 2016 SELIS MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER -1- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 126 Filed 03/30/16 Page 2 of 7 NOTICE OF MOTION AND MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE THAT as soon as this matter may be heard before the above-entitled Court, located at 450 Golden Gate Avenue, San Francisco, CA 94102, non-party Paula Selis through this motion and declaration of Amy Teng (“Teng Decl.”) will, and hereby does, move this Court for relief from Magistrate Judge Maria-Elena James’ discovery order dated March 16, 2016. No hearing date and time has been set. Ms. Selis respectfully requests that the order compelling her testimony be set aside. INTRODUCTION Pursuant to Federal Rules of Civil Procedure Rule 72(a),1 28 U.S.C. § 636(b)(1)(A), and Civil Local Rule 72-2, the Washington State Attorney General’s Office (“WAGO”), on behalf of non-party Paula Selis, files this motion for relief from Judge James’ March 16, 2016 discovery order to sit for an oral deposition. Ms. Selis objects to the order because it is contrary to law and clearly erroneous in the face of this Court’s December 21, 2015 order striking those of DIRECTV’s (“DTV’s”) affirmative defenses predicated on the settlement agreements entered in December 2010 between DTV and each of the 50 states and the District of Columbia (“State Settlement Agreements”). This Court has effectively shut the door on DTV’s affirmative defenses predicated on the State Settlement Agreements unless and until DTV can plead facts to support the defenses consistent with its Rule 11 obligations. Based on the Court’s ruling, the topics on which DTV seeks to re-depose non-party Paula Selis are no longer relevant to this litigation. It would be contrary to law for DTV to take discovery relevant only to stricken defenses, and it would be an undue burden to compel a non-party witness to testify on topics to which she has only limited access to relevant information relative to the parties themselves. At bottom, Ms. Selis’ testimony is not relevant to any active defenses in this litigation, and the burden of this discovery on a non- party witness does not outweigh its likely minimal benefit. 1 Hereinafter all references to Rules are to the Federal Rules of Civil Procedure. 1 SELIS MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 126 Filed 03/30/16 Page 3 of 7 DTV has twisted this Court’s order striking three of its affirmative defenses into an open invitation to expand discovery in this litigation between the Federal Trade Commission (“FTC”) and DTV into discovery of all the state attorneys general involved in the State Settlement Agreements. Indeed, DTV is attempting to litigate the issue of compliance with Washington’s consent decree in this federal action. But this Court has already considered the limited probative value and non-binding nature of the State Settlement Agreements to the underlying litigation, and the message was as clear then as it is now: the State Settlement Agreements are not to remain a focal point of discovery. For these reasons, the Court should set aside the magistrate judge’s order compelling Ms. Selis to sit for an oral deposition. FACTUAL BACKGROUND Paula Selis is a former assistant attorney general (“AAG”) with WAGO. On November 24, 2015, prior to her retirement, Ms. Selis filed a declaration in support of the FTC’s opposition to DTV’s partial summary judgment motion. Dkt. No. 75; Teng. Decl., ¶ 2, Ex. 1. In her declaration, Ms. Selis authenticated the complaint WAGO filed against DTV in 2009 and the subsequent consent decree WAGO entered into with DTV in December 2010. Id. Her declaration cited portions of the complaint and consent decree, which the FTC then referenced in its opposition to show that the FTC was not party to the consent decree, the states acted as independent sovereigns in negotiating with DTV, and the State Settlement Agreements released only state law claims—in short, to show that the State Settlement Agreements were not relevant to the underlying action. Id. at ¶ 2, Ex. 1 at ¶¶ 3-5, 7. On December 21, 2015, before ruling on the partial summary judgment motion, this Court partially granted the FTC’s motion to strike DTV’s affirmative defenses. Dkt. No. 88; Teng Decl., ¶ 3, Ex. 2. The Court struck DTV’s claim preclusion defense because DTV failed to allege facts to show that the interests of the state attorneys general were aligned or “understood themselves to be acting in a representative capacity for the federal government.” Id. at ¶ 3, Ex. 2 at 7:21-25. The Court also struck DTV’s issue preclusion defense because DTV “pled no facts to suggest the parties [to the State Settlement Agreements] intended their agreement[s] to have 2 SELIS MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 126 Filed 03/30/16 Page 4 of 7 [issue preclusive] effect.” Id. at 8:20-21. Finally, the Court struck DTV’s affirmative defense of “previous nationwide settlement” for failure to plead facts to allege a defense based on the Administrative Procedures Act. Id. at 9:13-19. The Court stated: “If [DTV] cannot now, consistent with its Rule 11 obligations, amend the stricken affirmative defenses to remedy the defects identified by the Court, it may seek leave to amend later if it subsequently discovers a sufficient factual basis.” Id. at 10:4-6. DTV has not re-pled the stricken defenses in its last amended answer. See Dkt. No. 93. On December 31, 2015, DTV served a non-party subpoena on Ms. Selis to testify at a deposition regarding, among other things, all communications Ms. Selis had with DTV and with the FTC regarding DTV. Teng Decl., ¶ 4, Ex. 3, Attachment A. On January 8, 2016, WAGO, on behalf of Ms. Selis, and DTV filed a joint letter brief to Judge James, in which WAGO sought a protective order to prevent Ms. Selis’ deposition from taking place. Dkt. No. 92; Teng Decl., ¶ 5, Ex. 4. In the letter brief, WAGO objected based on irrelevance of the information sought, particularly given this Court’s December 21, 2015 order; the extent of the privileged and protected communication sought; and the undue burden placed on non-party Ms. Selis. Id. During the January 8, 2016 hearing on the matter, Judge James ordered Ms. Selis to be deposed on thirty written questions “[b]ecause I know they’re treading on attorney-client privileges, information, and back and forth.” Dkt. No. 92; Teng Decl., ¶ 6, Ex. 5 at 15:7-9. DTV served Ms. Selis with written deposition questions seeking broad categories of information, including WAGO’s evidence of DTV’s deceptive marketing and advertising, prior to and following the State Settlement Agreements; every communication between WAGO and FTC concerning the State Settlement Agreements and DTV; communications between WAGO and DTV; and information to explain why the FTC elected not to join the State Settlement Agreements or waited to file its action against DTV. Teng Decl., ¶ 7, Ex. 6. Only one question directly mentioned Ms. Selis’ declaration. Id. at ¶ 7, Ex. 6, no. 21. Notably, the information sought – if relevant at all – could have been obtained from the FTC or from DTV itself. Despite the burden, overbreadth, and irrelevance objections raised, Ms. Selis provided 3 SELIS MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 126 Filed 03/30/16 Page 5 of 7 written deposition testimony on January 15, 2016, having retired from WAGO by then. Teng Decl. at ¶ 8, Ex. 7. DTV now presses Ms. Selis for even more testimony, this time in an oral deposition. On March 16, 2016, Ms. Selis, DTV, and the FTC filed a joint letter brief to Judge James in response to DTV’s request that Ms. Selis appear for another deposition. Dkt. No. 121; Teng Decl. at ¶ 9, Ex. 8. Ms. Selis and the FTC objected, based on – again – irrelevance of the information requested, the duplicative and burdensome nature of the information sought, particularly in light of Ms. Selis’ non-party status,2 and the privilege concerns raised by the topics. Teng Decl. at ¶ 9, Ex. 8 at pp. 3-7. Without addressing relevance, Ms. Selis’ non-party status, the overbreadth of information sought or the privilege concerns of Ms. Selis and the FTC, Judge James simply noted that Ms. Selis’ written deposition questions were insufficient and that an oral deposition of Ms. Selis would be the most efficient way for DTV to obtain proper responses. Dkt. No. 122; Teng Decl. at ¶ 10, Ex. 9 at 2:3-4. WAGO now files this motion. ARGUMENT A district court may modify or set aside a magistrate judge’s nondispositive order “where it has been shown that the magistrate judge’s order is clearly erroneous or contrary to law.” 28 U.S.C. 636(b)(1)(A). “A decision is ‘contrary to law’ if it applies an incorrect legal standard or fails to consider an element of the applicable standard.” Conant v. McCoffey, 1998 WL 164946, *2 (N.D. Cal. Mar. 16, 1988). Judge James’ order to depose Ms. Selis is in clear error of this Court’s December 21, 2015 order and contrary to the laws governing discovery as set forth in the federal rules and relevant case law. Pursuant to This Court’s Order, Ms. Selis’ Testimony is Not Relevant to This Litigation. Based on DTV’s deposition topics directed as Ms. Selis and the Court’s December 21, 2015 ruling, Ms. Selis’ testimony concerning the State Settlement Agreements would have only been relevant to DTV’s preclusion defenses and its national settlement defense, but this Court has already struck those three affirmative defenses. DTV never re-pled these defenses and 2 DTV acknowledges that “Topic 1 [of the 30(b)(6) deposition of FTC] covers the same subjects as many of DIRECTV’s questions [to Ms. Selis].” Teng Decl. at ¶ 9, Ex 8, p.2. 4 SELIS MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 126 Filed 03/30/16 Page 6 of 7 cannot now take discovery to revive the stricken affirmative defenses.3 See Oppenheimer Funds, Inc. v. Sanders, 437 U.S. 340, 352 (1978) (noting it is “proper to deny discovery of matter that is relevant only to claims or defenses that have been stricken”). The Order Compelling Ms. Selis’ Testimony is Contrary to Law Because the Deposition Topics Set Out in DTV’s Discovery Of Ms. Selis Exceed the Scope of Discovery Pursuant to Rule 26(b)(1), “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering . . . the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Even assuming DTV could make a colorable claim that Ms. Selis had information related to its affirmative defenses of waiver, laches, and estoppel, those defenses relate to whether the FTC engaged in “affirmative misconduct” or “unmistakable” waiver. See Dkt. No. 88; Teng Decl., ¶ 3, Ex. 2. DTV is already seeking discovery of the FTC on those issues, including through deposition testimony. Ms. Selis does not have better access to information than the FTC regarding whether the FTC engaged in “affirmative misconduct” or unmistakably waived its rights. Moreover, the burden and expense of deposing a non-party, out-of-state, retired AAG significantly outweighs any likely benefit. It is contrary to law for DTV to seek testimony from Ms. Selis, a non-party, when the information sought can be had from a party to the case. See Nidec Corp. v. Victor Co. of Japan, 249 F.R.D. 575, 577 (N.D. Cal. 2007) (“There is simply no reason to burden nonparties when the documents sought are in the possession of the party defendant.”). DTV’s discovery of Ms. Selis exceeds the bounds of Rule 26 discovery. There are no valid defenses to which Ms. Selis’ proposed testimony is relevant. The WAGO and Ms. Selis respectfully request that Judge James’ order be set aside. 3 Despite the Court’s ruling, DTV continued to represent to Judge James that it needed Ms. Selis’s testimony to revive stricken defenses, to show “in settling the case, that the states believe that our disclosures were clear and conspicuous. . . . [H]er testimony and the fact of the settlement is probative that all the attorney generals . . . believe that our conduct, as a result of the [State Settlement Agreements], complied with a standard that’s identical to what the FTC is now contending has been violated.” Dkt. No. 92; Teng Decl., ¶ 6, Ex. 5 at 11:13-24. 5 SELIS MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 126 Filed 03/30/16 Page 7 of 7 Dated: March 30, 2016 STATE OF WASHINGTON ROBERT W. FERGUSON Attorney General By: s/Amy Teng___________________ Amy Teng (WSBA# 50003, SBN 228133) Assistant Attorney General Washington State Office of the Attorney General Attorneys for Non-Party Paula Selis 6 SELIS MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-03-31	127	Discovery Letter Brief regarding FTC RFP 12 and 13 filed by Federal Trade Commission. (Attachments: # 1 Exhibit A)(Edmondson, Eric) (Filed on 3/31/2016) (Entered: 03/31/2016)	Case 3:15-cv-01129-HSG Document 127 Filed 03/31/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: On March 8, 2016, the Court ruled on the Federal Trade Commission’s request to compel production of material in response to the FTC’s Requests for Production (“RFP”) No. 12 (“All consumer complaints regarding any of the Material Terms of the Service.”) and RFP No. 13 (“All Documents relating to consumer complaints regarding any of the Material Terms of the Service.”). The Court ordered the parties to further meet and confer on these RFPs in an effort to narrow the scope of the requests, and, if unable to resolve their dispute, to file an updated letter with a summary of each party’s final substantive position and the final proposed compromise on each issue, including relevant legal authority. The parties met and conferred in person, with some counsel participating by telephone, on March 18, 2016. The parties could not agree to their respective proposals to limit, or otherwise resolve their disputes on these RFPs. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. Case 3:15-cv-01129-HSG Document 127 Filed 03/31/16 Page 2 of 6 THE FEDERAL TRADE COMMISSION’S POSITION A. The FTC’s Proposal to Limit RFP No. 12. The FTC proposes the following two options for limiting the scope of this RFP: Option 1: DIRECTV permits the FTC to draw a statistical random sample of files from its RIO database. RIO is DIRECTV’s customer notes system. As DIRECTV acknowledges, RIO is “the primary system where customers communicate with DirecTV.” (Ex. A at 5:20-21.)1 RIO files necessarily contain entries that record or reflect consumers’ complaints as relevant to this case. For example, DIRECTV acknowledges that a record of a consumer calling DIRECTV to express concern and confusion about an unexpected price jump would be captured in RIO. (Id. at 13-14.) It would not, however, likely be captured in the company’s Office of the President (“OOP”) database, which DIRECTV suggests as a substitute for a production from RIO. (Id.)2 The sole discovery problem with RIO is its breadth. RIO contains millions of files, some of which may not be responsive to this RFP. DIRECTV, justifiably, does not want to spend the time and money to select responsive materials from this large database. Using a random sample would solve this problem while removing DIRECTV’s review burden. Using a random sample to reduce the burden of producing relevant materials from voluminous sources, such as a database, is a well-established approach in discovery. See Soto v. Castlerock Farming & Transp., Inc., 282 F.R.D. 492, 503-04 (E.D. Cal. 2012) (collecting and discussing cases, and ordering sampling of company timekeeping and payroll records). Under the FTC’s proposal, the FTC would ask the Court to order DIRECTV to produce a chronological list of RIO files since January 1, 2007 (the Complaint period) within three business days of the order.3 Then the FTC would select a random sample from that list, and DIRECTV would produce the files within ten days of the selection. The burden of reviewing that random sample for responsiveness would fall on the FTC. With regard to DIRECTV’s concern for protecting consumers’ personal information (“PII”), the FTC’s position is that individual consumers’ PII is not necessary to the FTC, and therefore DIRECTV need not produce PII to the FTC. If, however, DIRECTV deems it is necessary to produce PII in order to avoid the burden of redacting it, DIRECTV can do so under the safeguards of the governing Protective Order, as indicated in the Court’s March 8 Order. Option 2: If the Court does not sanction Option 1, the FTC proposes another alternative: In lieu of producing the materials requested in RFP No. 12, DIRECTV shall admit that the FTC’s repository of consumer complaints is accurately reflective and representative of DIRECTV’s repository of consumer complaints. Specifically, DIRECTV would admit that the numbers, proportions, and content of complaints the FTC has received pertaining to the issues relevant in this case completely reflect and are accurately projectable to the consumer complaints that DIRECTV has received, such that DIRECTV is deemed to have received those complaints. DIRECTV itself has argued to the Court: “As the FTC acknowledges, it collected and produced more than 100,000 consumer complaints from its own files. The FTC does not explain why it cannot, from its own consumer complaint files, establish whether consumers were deceived by DIRECTV’s advertising.” (Dkt. 113 at 3 n.9.) In other words, DIRECTV has invited 1 Exhibit A contains selected portions of a transcript of the parties’ March 18, 2016 meet and confer. 2 Contrary to DIRECTV’s suggestion, by insisting on a production from RIO, the FTC does not relinquish its demand for consumer complaints from other sources, such as OOP files or written complaint files in the Fastrieve system. DIRECTV has an obligation to produce all responsive materials. The FTC’s position is that none of these other, highly limited systems is a valid substitute for RIO files. 3 DIRECTV committed to providing this information to months ago, although it has not done so yet. 1 Case 3:15-cv-01129-HSG Document 127 Filed 03/31/16 Page 3 of 6 the use of the FTC’s repository of consumer complaints as a valid substitute for its own consumer complaint repository. If DIRECTV will make the requisite admission needed to authenticate that offer, as specified here, the FTC is prepared to accept it. B. The FTC’s Response to DIRECTV’s Proposal to Limit RFP No. 12. Instead of agreeing to produce any files from its RIO system, DIRECTV proposes sampling files from the separate OOP database. That is unacceptable. OOP includes only select categories complaints that DIRECTV receives from specific and insular sources, such as state attorneys general or Better Business Bureaus. OOP files are not representative of the types or the volume of complaints lodged by consumers at large, such as the customer who calls in to DIRECTV to express concern and confusion about monthly cost suddenly increasing from the advertised price. Indeed, “it is very rare that a ‘complaint’ makes its way from a customer service person to Office of the President.” (Ex. A at 30:5-7.) The FTC, and the Court, must get an accurate reflection of the entire volume and rate of relevant consumer complaints to DIRECTV. Only RIO—the company’s “primary system” for recording customer communications—can provide that. C. The FTC’s Proposal to Limit RFP No. 13. RFP No. 13 seeks DIRECTV’s internal materials that summarize, report, or discuss information gleaned from consumer complaints. DIRECTV admits that it has responsive materials, but refuses to produce any responsive electronically stored information (“ESI”), except for fewer than 700 formal, regularly generated company reports. DIRECTV’s proposal would exclude all emails, ad-hoc reports, slide presentations, etc. (See Ex. A at 62-64.) Such sweeping exclusion and such a narrow production is untenable. The FTC proposes to reasonably limit this request by asking that DIRECTV, in addition to producing those (fewer than 700) reports that it has already committed to providing, also perform the following targeted query of ESI among just the six of the most relevant internal company groups— (1) Customer Service department; (2) Customer Experience department; (3) Digital Marketing and Communications department; (4) Digital Care Email Team; (5) Office of the President; and (6) executive level management (e.g., DIRECTV’s C-suite and company presidents and vice presidents)—and based on the following search terms: (customer* or consumer) and (complain or concern* or upset or unclear or (not /3 clear) or (wasn’t /3 clear) or ((don’t or not) /3 understand) or ((not or don’t) /3 see) or misunderst* or pain* or risk) AND (pric* or cost* or charge* or rate* or fee* or bill* or statement* or invoice* or pay) /30 (raise or increase* or hike* or add* or differen* or change* or “up”) /30 (month* or year* or “yr” or “mo” or “mos” or contract* or agree* or term* or commit* or period* or package* or lease or subscribe* or subscription* or advertise* or communicat* or convey* or messag) OR (cancel or terminat* or deactivat) /30 (price or cost* or charge* or rate* or fee* or bill* or statement* or invoice or pay* or “ECF”) /30 (month* or year* or “yr” or “mo” or “mos” or contract* or agree* or term* or commit* or period* or package or lease or subscribe* or subscription* or advertis* or communicat* or convey* or messag) OR (premium or HBO or STARZ* or Showtime or Cinemax) /30 (free or offer or promot* or months or “mos” or advertis* or communicat* or convey* or messag* or sign* or subscribe) /30 (price or cost* or charge* or rate* or fee* or bill* or statement* or invoice* or pay* or roll) The FTC proposes limiting DIRECTV’s production burden DIRECTV’s objection that this ESI query is likely to yield a large number of documents is inapposite. First, the relevant question is burden, not volume. The very point of using tailored search terms is to eliminate the burden of a relevance review by distilling the likely responsive materials based on automated queries. Using search terms on ESI is a “well-recognized method 2 Case 3:15-cv-01129-HSG Document 127 Filed 03/31/16 Page 4 of 6 for finding facts.” In re Domestic Drywall Antitrust Litig., 300 F.R.D. 228, 233 (E.D. Pa. 2014); see also Salazar v. McDonald’s Corp., No. 14-CV-02096, 2016 WL 736213, at 4 (N.D. Cal. Feb. 25, 2016). Second, DIRECTV’s claim of burden is speculative, since DIRECTV’s lawyers took no steps to ascertain burden, even after the FTC proposed this query protocol on February 18, but instead deliberately chose not to assess cost. (Ex. A at 65-66.) Finally, DIRECTV’s contention that it is simply too late to engage in any meaningful document production is disingenuous. The FTC has consistently asked for these materials since last August. DIRECTV should not be permitted to delay for months, and then claim that there is not enough time left.4 D. The FTC’s Response to DIRECTV’s Proposal to Limit RFP No. 13. DIRECTV has no proposal to limit the scope of RFP No. 13 besides refusing to provide anything except a small set of regularly generated reports. DIRECTV concedes that these reports do not include emails, and recognizes that the company likely has emails responsive to RFP No. 13. (Ex. A at 62:11-13, 64:11-13.) Yet, it refuses to agree to any search for responsive emails or other ESI. (Id. at 64:24-25.) Such categorical refusal is unacceptable. The FTC has consistently requested informal materials (emails, presentations), in addition to formal reports, in response to RFP No. 13. (Id. at 56-57.) The informal materials demonstrate DIRECTV’s knowledge of consumer confusion caused by the company’s deceptive advertising.5 Given the high relevance of informal materials, DIRECTV presents no compelling reason to exclude them from discovery. DIRECTV’S POSITION The FTC’s Requests 12 and 13 seek customer complaints. DIRECTV’s customer complaints are maintained by its Office of the President (“OOP”). DIRECTV has offered to produce full complaint files for up to 30,000 customer complaints (10,000 more than DIRECTV previously offered to produce) randomly selected from categories the FTC believes are relevant. DIRECTV also agrees to produce roughly 600-700 non-privileged documents analyzing those complaints—documents obtained from the employees with responsibilities regarding complaints. The Court should deny the FTC’s request because the FTC has refused to compromise; what it seeks now is the same as what it sought before and which was rejected: an unspecified number of OOP complaints, an unspecified number of RIO customer service files, and a massive keyword search through the ESI of thousands of present and former employees. The Court found these requests overbroad and ordered both sides to compromise. The FTC’s compromise is not a compromise but an attempt to obtain the relief the Court previously would not grant. The Court should also reject the FTC’s proposal because the FTC seeks records of consumer inquiries stored in DIRECTV’s RIO database (which stores notes of consumer inquiries about a myriad of topics—picture quality, channel offerings, installation times, what channel sporting events are on, purchase pay-per-views, etc.—not complaints). DIRECTV has repeatedly told the FTC that the repository for customer “complaints” is OOP, not RIO, but the FTC refuses to believe DIRECTV. 4 DIRECTV’s argument that another ESI query conducted for scores of other custodians yielded a high number of documents is unavailing. That ESI query was based on different terms, different custodians, and performed years ago, before this litigation even began. Moreover, DIRECTV only states the number of documents that query yielded, but does not articulate the burden of performing it. If anything, that prior ESI query only proves that conducting a sophisticated ESI search is within DIRECTV’s powers. 5 See, e.g., FTC’s Opp’n to MSJ (Dkt. 71 at 17 (citing informal slide presentations demonstrating knowledge of consumers’ complaints about the deceptive practices at issue (Dkt. 72 Exs. I, J)). 3 Case 3:15-cv-01129-HSG Document 127 Filed 03/31/16 Page 5 of 6 Finally, the Court should also reject the FTC’s proposal because it is unworkable at this late date. The FTC’s proposal that DIRECTV not only produce records from its RIO consumer call database but also run a complicated string of keyword searches across all ESI of all employees in multiple departments ignores any consideration of proportionality. Gilead Scis., Inc. v. Merck & Co, Inc., 2016 WL 146574, at 1 (N.D. Cal. Jan. 13, 2016). The FTC is not entitled to virtually a company-wide search simply because there might be a marginally relevant needle in the haystack. The fact that the FTC does not believe that DIRECTV’s descriptions of its OOP and RIO systems are accurate does not entitle the FTC to discovery. Id. at *2. DIRECTV’s Final Proposed Compromise Regarding Requests 12 and 13. I. DIRECTV will produce approximately 30,000 customer complaint files from its OOP repository from the following categories (or from different/additional categories the FTC chooses): (1) billing disputes, which includes the subcategories, bill increase and dispute charges; (2) early cancellation, which includes the subcategories, bill increase, commitment dispute, commitment end date, contract dispute, dispute charges, dispute early cancellation fee, dispute fee, early cancellation fee, pay early cancellation fee, pay fee, payment, and price increase; (3) national offer; and (4) premium, which includes the subcategories, premium channels and price increase. The foregoing categories contain some 63,416 consumer complaint files. DIRECTV will pull random samples from these categories (and/or from additional categories identified by the FTC) so that the number does not exceed 30,000. DIRECTV will also produce all RIO database customer service notes for all 30,000 files to ensure that the FTC receives all relevant customer information relating to customer complaints responsive to Request 12. As described below, DIRECTV will also produce relevant complaint reports used by DIRECTV to track consumer complaints in response to Request 13. There is no time for DIRECTV to do anything more than this. DIRECTV will have to work extremely hard to complete even just its proposed production by the end of fact discovery. Even if the schedule were continued substantially, it is unlikely that DIRECTV would be able to complete the FTC’s proposed review and production. II. Why the FTC’s Proposals Are Unworkable A. RFP 12 1. Option 1 (Produce An Unspecified6 Number of Customer Call Notes) It is clear that the FTC does not have relevant customer complaints to support its claims against DIRECTV, despite alleging in its Complaint, “Defendants’ marketing practices have been the focus of tens of thousands of consumer complaints and of actions by the attorneys general of all 50 states and the District of Columbia.” (¶ 15) (emphasis added). Now the FTC does not even seek customer complaints but instead seeks notes of customer inquiries. The vast majority of the calls to DIRECTV have nothing to do with “complaining consumers.” This might not be the case if DIRECTV was a company selling a deceptive product—as the FTC alleged against Commerce Planet. In DIRECTV’s case, no one has questioned the validity of 6 The FTC does not say how many customer call notes it wants. It wants the Court to issue an open- ended order that would allow the FTC to get as many records as it deems necessary. Gathering RIO data (much of which is archived) would be extremely burdensome for DIRECTV and could causing processing delays on DIRECTV’s network. 4 Case 3:15-cv-01129-HSG Document 127 Filed 03/31/16 Page 6 of 6 DIRECTV’s product—thus calls to the company tend to deal with typical consumer inquiries. The FTC erroneously states that DIRECTV concedes the OOP customer complaint files are not representative of RIO customer service notes. DIRECTV has repeatedly explained to the FTC that customer service notes are not customer complaints.7 To the contrary, DIRECTV has stated just the opposite. The FTC just refuses to believe DIRECTV. The FTC also refuses to accept the fact that any production of customer call notes of OOP files would require redaction of personally identifiable information (“PII”). STELA requires DIRECTV to redact all PII prior to producing any documents. There are no exceptions to this redaction requirement for pending litigation, including those with a protective order. Congress drafted STELA with very narrow exceptions when sharing PII with the government, and none of these narrowly drafted exceptions apply here. See, 47 U.S.C. § 338(i)(4)(B). 2. Option 2 (Bar DIRECTV from Relying on Its Customer Complaints). Plaintiffs’ second option effectively asks the Court to punish DIRECTV for the FTC’s failure to narrow its request by deeming DIRECTV to have admitted that “the numbers, proportions, and content of complaints the FTC has received pertaining to the issues relevant in this case completely reflect and are accurately projectable to the consumer complaints that DIRECTV has received, such that DIRECTV is deemed to have received those complaints.” In other words, the FTC wants the court to order that the consumer complaints that DIRECTV receives are identical to the consumer complaints that consumers made to the FTC about DIRECTV. There is no reason to think this is true. And, more importantly, there is no basis to impose what amounts to a discovery sanction against DIRECTV. RFP 13 B. The FTC’s proposal to run a complicated keyword search on every employee from six departments shows a total disregard for how near this case is to the close of discovery and for any proportionality considerations. DIRECTV has run these search terms across certain emails loaded for approximately 78 custodians and the search has yielded 2,092,258 documents. The actual number of documents DIRECTV would have to review could be millions more, however, because the number of employees in the six departments is several thousand. The FTC’s response is that the 78 are a different set of custodians and, in theory, it is possible that running the terms across thousands more custodians could yield fewer documents. That is almost certainly not the case. The FTC should not be allowed to benefit from the fact that it proposed such a overbroad, uncertain search that DIRECTV has had to estimate the number of documents. The FTC’s keyword proposal is not only impossible, it is also unnecessary. As noted above, in response to Request 13 DIRECTV agrees to produce the 600-700 relevant consumer complaint reports prepared by DIRECTV in the ordinary course of business. Much of this data is contained within internally generated reports known as “Executive Escalations.” Furthermore, DIRECTV has already done an ESI search of the custodians with relevant responsibilities. Any ESI from these custodians regarding customer complaints have already been produced. In short, DIRECTV has produced the relevant documents from the relevant employees. There is no reason for the FTC to force DIRECTV to conduct another ESI review at this late date. 7 The FTC cites to portions of the meet and confer transcript to suggest incorrectly that RIO contains complaints. That is not what DIRECTV said at the meet and confer. See Ex. B at 9-15. 5
2016-03-31	128	EXHIBITS re 127 Discovery Letter Brief regarding FTC RFP 12 and 13 Exhibit B filed byFederal Trade Commission. (Related document(s) 127 ) (Edmondson, Eric) (Filed on 3/31/2016) (Entered: 03/31/2016)	Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 1 of 32 Exhibit B Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 2 of 32 In the Matter of: FTC v. DirecTV, et al. March 18, 2016 Meet and Confer Condensed Transcript with Word Index For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 3 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 P R O C E E D I N G S - - - - - MR. YANKILOVICH: Good afternoon, gentlemen, Boris Yankilovich speaking. For the record, we have from the Federal Trade Commission myself, Eric Edmondson in San Francisco, and Stacy Procter in Los Angeles. And we have from DirecTV Mark Campbell in Los Angeles, and Clay Friedman, Michael Yaghi, and Ryan Sandrock joining us from their respective offices telephonically. But we are -- we do have folks in-person in the Los Angeles office. So, what I want to do briefly, Clay, is I want to respond to your proposal on the Office of the President materials because I think we can cut through that pretty quickly, and then we can give you or we can talk about our proposals to limit that we've laid out so that we can have a full meet-and-confer in accordance with Judge James' order. Does that sound like a plan? MR. FRIEDMAN: That sounds perfect. MR. YANKILOVICH: Okay, great. So, Office of the President, as we said in our emails over the past week, week and a half, we understand that that's one location in DirecTV that contains a set of escalated complaints, but unless 4 DirecTV can, under oath, state that the consumer complaints, as represented in Office of the President, are completely representative in terms of, you know, proportion, percentages, content of the total number of -- or of the total customers' complaints and concerns that DirecTV receives, we cannot accept it as a valid substitute for, you know, the RIO notes, which we understand to be the broadest location where complaints are contained. So, we have posed this question I think a couple times over the past week. Based on our prior conversations over the past, you know, nine months, I don't think DirecTV can represent that, but maybe I'm wrong. So, you know, unless you can make that representation in an affidavit, in response to an RFA, then it -- talking about ways to limit it to Office of the President complaints becomes a moot point. MR. FRIEDMAN: I'll be honest with you, one, there's a complete disconnect with me, and I'm not sure if you're only talking about Office of the President complaints -- well, first of all, that is the only source of known complaints, is Office of the President. The other two sources are not complaints, and we'll get into that later. But if you're then saying our two choices are 1 (Pages 1 to 4) 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, ) Plaintiff, ) vs. ) Case No. 15-cv-01129-HSG DIRECTV, a corporation, ) and ) DIRECTV, LLC, a limited ) liability company, ) Defendants. ) ---------------------------------) Friday, March 18, 2016 2:30 p.m. (PST) Teleconference The above-entitled matter convened for a meet and confer, via teleconference, at 2:30 p.m. PST, 5:30 p.m. EST. 2 APPEARANCES: ON BEHALF OF THE FEDERAL TRADE COMMISSION: BORIS YANKILOVICH, ESQ. ERIC EDMONDSON, ESQ. STACY PROCTER, ESQ. Federal Trade Commission ON BEHALF OF DIRECTV: CLAYTON FRIEDMAN, ESQ. MARK CAMPBELL, EQ. MICHAEL YAGHI, ESQ. RYAN SANDROCK, ESQ. Sidley & Austin 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 4 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about millions or tens of millions of notes. Our understanding is, with certainty, some of those notes will be consumers expressing complaints. For example, consumers saying, "Boy, my price just shot up after 12 months. I don't understand why. I thought I had a guarantee." Okay? So, is that -- and based on the volume, based on the fact that RIO is the primary system of record for communications between the company and its customers, and based on the large volume of communications recorded, we have concluded that RIO will have more reflections or recordings of those types of notes than any other system, like Office of the President. Our understanding, based on prior conversations, is Office of the President includes a -- you know, a set of complaints from some other sources; for instance, when an Attorney General's Office forwards complaints to the company or someone calls the President's Office directly or maybe from the Better Business Bureaus. But our understanding is that the Office of the President materials that are reported do not reflect accurately everything that is going on in RIO. So, to give you a concrete example, let's say, for instance, that there are -- assuming that there are 10 million notes in the RIO system, and let's say -- and 8 obviously this will probably be the wrong number -- but let's say 1 million, i.e., 10 percent of those notes are customers calling in to complain or express concern or confusion about their price going up after 12 months. So, now, assuming, for example, that there are 100,000 files in the Office of the President, is it an accurate assumption that precisely 10 percent of those files will be exactly the same type of complaints? That's what I mean by accurately representative of complaints at large, right? So, our position is unless the Office of the President provides a completely accurate snapshot of communications between customers and DirecTV, which will include complaints, concerns, expressions of confusion, we can't use Office of the President as a substitute because it may well be completely unrepresentative of those communications at large. Mark, does that clarify the issue for you? MR. CAMPBELL: Yes, it does. MR. FRIEDMAN: Where you fall or err from the gitgo is what is a complaint versus what isn't a complaint and what's an inquiry. We're conceding, for purposes of this discussion and only this discussion right now, that Office of the President houses DirecTV's complaints. RIO houses communications with customers. 2 (Pages 5 to 8) 5 either, A, produce to you 240,000 complaints in the full files in Office of the President or sign some sort of affidavit that we're not going to do, that's the only two options you're willing to explore? MR. YANKILOVICH: No, I think you're misunderstanding my point. MR. FRIEDMAN: I think I am. MR. YANKILOVICH: Sure. My point is this: Based upon numerous prior discussions, based on information that, you know, you told us at the start of the litigation, based on information you've provided to us, you know, to the FTC before the litigation, during the FTC's investigation, we understood that the RIO Main Bank contains notes that, in all likelihood -- frankly, with certainty -- reflect customers calling in to complain about things or to express concerns, and the RIO Main Bank is the primary system that records communications between customers and DirecTV. Is that correct? MR. FRIEDMAN: It is, in fact, the primary system where customers communicate with DirecTV. It is not the primary system that notes concerns or complaints. In fact, to the extent it has complaints, they're de minimus in nature. The primary source for consumers complaining and where they are lodged is with 6 Office of the President. MR. CAMPBELL: Hey, Boris, I think you started off by confusing us all a little bit. You said you wanted to focus on Office of the President complaints, but I think you're actually blending it. I want to see if I can follow. MR. YANKILOVICH: Sure. MR. CAMPBELL: Your question was are we willing to represent that the Office of the President's complaints are completely representative of the overall content, and what you meant by that, I guess, is representative of every communication with a customer, including RIO. Is that what you were intending to say? MR. YANKILOVICH: Right. So, yes, let me clarify this. So, our understanding was that when customers call in, when DirecTV's customers call in to the company with questions, to articulate concerns, to lodge complaints, whatever they want to talk about, those communications -- the primary place where those communications are recorded are in note fields within the RIO system. Our understanding is that the RIO system contains millions of individual files that are categorized by account, and there could be multiple notes associated with each file. So, we're talking 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 5 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 formalistic distinction. We all understand that it's a review of what's relevant versus what's not relevant from a system like RIO, which doesn't have categories that directly map our litigation issues, will mean an actual review, which will get us to our next proposal, because we can shift that burden to us. Our problem with accepting Office of the President as a substitute or as an indication of complaints has to do -- we can't do that unless we know if it's truly representative. So, again, unless DirecTV can say, yes, Office of the President statistics -- for instance, if we need to extrapolate from Office of the President -- MR. FRIEDMAN: You understand that -- MR. YANKILOVICH: Hold on, Clay. Let me finish my point, please. If we need to extrapolate, as an evidentiary point, that X numbers of consumers contacted DirecTV complaining or expressing confusion about price increases at the second year or a wide percentage of the total contacts with DirecTV were about that issue, if you can accurately tell us, yes, Office of the President will provide that information because it's exactly reflective of all the contacts made through or recorded 12 in RIO, that's one thing. But I don't think you're telling us that, and that's why we cannot accept Office of the President as a substitute. It's just not representative of the contacts made between the company and its customers. MR. CAMPBELL: And, Boris, don't forget you will be getting the RIO notes that go along with all those complaints, please don't forget that. But the other thing I would say is I'm not sure even if we were to turn over the entire database to you today that you could draw any conclusion about whether it's representative because I don't think you have -- that there is a systematic way to review and analyze it the way you think you can. MR. FRIEDMAN: They are two different things, and, in fact, if I were to hypothesize, Boris, it's just the opposite, meaning that Office of the President is representative of the complaints DirecTV gets because it is the complaints they get. The customer service calls are not. And so it would make no sense for us to say, yeah, extrapolate out from Office of the President on top of the customer service calls and then you're at a point of getting an understanding of the statistics. You're trying to prove something in your complaint, that there are millions and millions of 3 (Pages 9 to 12) 9 The very fact that we have roughly a customer base of 20 million and we receive 20 million calls or more a month that are noted in RIO shows the fallacy of where you're trying to go. RIO notes is not a good indication or -- or -- an indication of DirecTV's complaints and DirecTV's complaint patterns. To try to find the complaints that could be in there -- because I am not going to be foolish enough to say that there are no calls where a consumer calls in to DirecTV and complains about something in RIO -- but they are de minimus in nature. So, there may be an occasion where there's that situation that you just described, a customer calls up and says, "Hey, my price went up, and I was told it was locked in for two years." I'm sure, if we were going through 2.4 billion notes, or whatever the exact number is, we could find one of those. We could also probably find some calls where a customer says, "Hey, my bill just went up. How come?" And then the customer service agent says to the consumer, "Well, your 12-month lock period is over." And the customer says, "Okay, fine. Thank you very much." Clearly not a complaint; just an inquiry. And then there's going to be the one about saying, "Hey, where can I find the Buffalo Bills 10 football game" or "My remote doesn't work" or "My signal has those spotted things on it." The vast majority of what happens through RIO is not complaint-related or even close. For you to say to DirecTV you need to go through that and either produce all 2.4 billion of those or do some sort of search that will take ten years, well, if you get the Court to agree to a continuance for ten years, we will consider looking at that, but for right now, the burdens that you are talking about putting on the company related to the minimal gains the FTC may get and what they think is relevant is something we will never agree to. MR. CAMPBELL: And that is especially true, Boris, in light of the fact that we're handing over a specific database or portion of that specific database that's representative of things that are actually consumer complaints. MR. YANKILOVICH: Right. But, Mark, see, again, here's -- this is -- you know, there's a logical fallacy here. I understand that RIO isn't limited to consumer complaints. I understand that RIO doesn't categorize its notes by complaints versus noncomplaints. But as we've talked about numerous times in our meet-and-confers on this, this is not, you know, a 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 6 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we will know what our random sample is. And then the burden is on us to determine what's in there and whether it's responsive or not responsive or relevant or not relevant. And, of course, you'll know what our materials are, and you can always challenge it if we make some factual assertions that you disagree with. But that's -- I mean, to the extent that your concern is the burden on DirecTV going through millions of notes to figure out what's relevant, we can take it on, and it may not be millions depending on the number of files -- and we want to make sure it's chronologically representative -- but that sample may well be under that 20,000-file figure that you proposed providing from RIO. But we just need -- we need -- we need a list of files. We'll give it to our consulting expert, we will get a random sample, and then the burden is completely on us to figure out what's in there. MR. CAMPBELL: But the burden isn't limited to just you because we can't simply randomly produce these without first reviewing them and redacting them and going through the same exercise that you're talking about doing. So, it doesn't decrease our burden whatsoever except -- well, I guess what you're saying is you're willing to reduce the sample size. MR. YANKILOVICH: No. I mean, so I -- well, I'm 16 willing to reduce the production probably very substantially by taking a statistical random sample. The point of a -- the very point of a random sample is that the parties agree that they -- that there's no need to review for relevance before producing the random sample. That's the entire point of it, so that it's -- instead of parties going -- you know, the producing party reviewing all the files and cherry-picking what's relevant, it -- they just hand over a random sample. The redaction burden -- look, we've talked about this. We briefed this. The Court issued an order. And under the Court's order, we have no -- we have no bones to pick about relevance of PII. We don't want PII. We don't think it's necessary. If DirecTV's position is that it would be necessary to produce that PII because not -- because redacting it presents a substantial burden, well, the Court has said that can be sufficiently safeguarded under the protective order. MR. FRIEDMAN: Actually, I think we read that order differently. She said that if the FTC says it's not relevant, then it should be redacted. If the FTC says it's relevant, that's where her protective order comes into play. Since you've already said it is not relevant, we have sought no need to appeal her order because she agrees then that it should be redacted. 4 (Pages 13 to 16) 13 complaints against DirecTV on marketing issues, and you're not going to get there because, quite frankly, they don't have millions and millions of complaints, and RIO is not going to supply that. That's not even what RIO is about. MR. YANKILOVICH: Well, Clay, let me ask you a question. If a Direct -- a hypothetical, a DirecTV customer calls into the company and says, "I'm really confused. My price for my television package in the first year was 39.99. All of a sudden I see that now it's shot up to 54.99. What's going on here?" If a customer -- if they just call in and pose that question to the customer service representative and the representative says, "Oh, well, you see, sir or ma'am, you were actually enrolled in a two-year plan, the price goes up during the second year." And the customer says, "I didn't realize that. How did that happen?" And the person says, "Well, it was in your contract." And the customer says, "Oh, okay. Well, you -- yep, I guess I've got to live with it." Will that type -- will that be reflected or should that be reflected, according to the company's policies and procedures, in the RIO notes system? MR. FRIEDMAN: The conversation would be captured in RIO notes. I don't know if it would be 14 captured exactly how you said it, but they would capture it in the shorthand that they use. MR. YANKILOVICH: Okay. Well, then, will that note or the shorthand or the -- hold on a second. So, will that conversation necessarily be forwarded to the Office of the President? MR. FRIEDMAN: Well, first of all, see, you're trying to say that that's a complaint, and you and I are not on the same page with that particular fact pattern. And it probably would not be forwarded to Office of the President, nor should it be. But let's just assume hypothetically right now, for discussion, that I concede that that's a complaint -- I don't, but I am going to go with it hypothetically -- so you're asking us to go through a database of 2.4 billion notes, to look through the -- to look for those little pins in a haystack, and the burden on the company is so tremendous -- MR. YANKILOVICH: Well, we're not -- that actually -- well, that brings us to our proposal to limit. We are not actually asking you to do that. What our proposal to limit is -- and, again, we made it I think in January, we put it in writing on February 18th -- is for us, the FTC, to take a random sample of the RIO files. You will know what our random sample is; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 7 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we would make this request to the Court under our option -- is we need in very short order to get a list of RIO files, which I think you were supposed to be working on for months on getting us now, then we would turn it over to our consulting expert who would choose a random sample. The size of that random sample will depend on the numbers of files as they are spread out per year because we want to pick a representative random sample from the start of 2007 to the present. So, I can't tell you the size because we don't know what the volume is and what it is spread out by year. I will also add that at different points in the past, over the past months, I think you have expressed a concern that, well, if we give you a random sample but it doesn't -- you don't like it, you know, we don't want to have you come back and ask for more and more random samples. And we appreciate that, and we can commit to that. So, if we're the ones -- if we're the ones selecting the random sample based on full knowledge of how many number of complaints there are over the years, we can commit to taking one random sample and not coming back and asking for more. Now, let me quickly lay out the second option -- 20 MR. YAGHI: Hold on, before you go on, so, Boris, we have told you it's 2.4 billion entries. How can you say you don't know the size? MR. YANKILOVICH: Well, we know it's the number of entries, but we're not -- each -- an entry is a note entry, not a file, as we understand it. What we would be selecting are files, and each file may have one entry or multiple entries, and we need to know what that -- how that volume of files breaks down by year because we can't -- we don't want to select a random sample but, as it turns out, we'll be heavily loaded -- you know, for instance, on 2014 and 2015 and ignoring, you know, 2008, 2009. MR. YAGHI: So, I have another -- again, just to reiterate, I mean, we have made it clear these are not consumer complaints. Your requests 12 and 13, which is the whole point of this discussion, asks for consumer complaints. So, this whole -- your whole proposal is a waste of time. MR. YANKILOVICH: Well, no, our proposal -- Mike, our proposal is a proposal to limit, to relieve DirecTV of the burden of weeding out consumer complaints from the RIO database. What we propose is a random sample. That way, we -- we, the FTC -- takes on the burden of weeding out consumer -- what we construe as 5 (Pages 17 to 20) 17 MR. YANKILOVICH: I don't think we have a disagreement. Look, we've said from the gitgo we don't need PII. It's not relevant. Whether you want to redact it or not is completely up to you. MR. CAMPBELL: It is not up to us. It's what the law tells us to do. MR. FRIEDMAN: Federal law dictates that we have to redact. MR. YANKILOVICH: And if you want to redact, by all means redact. If your position is it's overly burdensome to redact, I see no other way of reading the Court's order than saying that the protective order will protect -- will secure that. So, I don't know -- you know, I -- that's -- that's the only implication -- I mean, essentially it -- you are saying it would be necessary for us to produce PII because not producing PII is overly burdensome, essentially. In other words, it's not the FTC but DirecTV who's saying that the production of PII is necessary to avoid a burden. And the Court said, well, if that necessity is in play, then the protective order safeguards it. We are agnostic. Give us PII, don't give us PII, it's your decision. MR. FRIEDMAN: Let me tell you how we -- what our position is going to be across the board. We are going to redact PII because we think the law requires 18 that, and I think we probably are going to have a disagreement over what her two sentences of that order mean because she said the only time the protective order comes into play is if the FTC considers this stuff relevant. Since you've already said it is not relevant, then that second -- that last sentence doesn't come into play, and that's why we have not felt the need to appeal her order. But, yes, you can assume we are taking the position that we must redact the information. MR. YANKILOVICH: Okay. Well, Clay, I hear you. We've briefed the issue. We've briefed the need for a redaction. Judge James, you know, she wrote the order and she can always revisit her own position, and that's fine, but our proposed -- and we actually have a second option that we haven't laid out in writing yet, but our first option is a random sample of RIO. Here is our second option, which may well -- MR. CAMPBELL: Before you go to the second option, when you say a random sample, of what size? MR. YANKILOVICH: Well, that -- good question, Mark, and we've asked -- I think we started asking back in January and I think you guys committed numerous times to provide us with an Excel spreadsheet listing files. What we would need to do, the way this would work -- and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 8 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 see what sort of relevance there may or may not be. MR. YANKILOVICH: Well, yeah, but, Clay, you're just -- I mean, you're -- you're picking numbers out of a hat, so -- though you've described the process correctly, the numbers may be completely different. So -- MR. FRIEDMAN: You're right. I don't know what your starting point will be -- MR. YANKILOVICH: Right. MR. FRIEDMAN: -- but I do know that my multiplier of ten is probably very conservative. MR. YANKILOVICH: It may be, but it also may be, you know, 10,000 files and we -- 10,000 files, so we're looking at a set of 100,000 notes ourselves, and then we take it on on our end and we, you know, spend a lot of time and money figuring out what information we can glean from those notes, as opposed to DirecTV going through, you know, 2-plus billion notes. MR. FRIEDMAN: What's your other alternative, because this one has problems. MR. YANKILOVICH: Okay. Our other alternative may well be easy because it sounds like you -- i.e., DirecTV -- has already suggested this. So, I tried to come up with something that it sounds like you were arguing in your letter brief in footnote 9, which is, as 24 I understood your footnote 9 and the prior letter brief, look, DirecTV is not the only repository of consumer complaints. After all, the FTC has received consumer complaints about DirecTV. You know, we've -- it's tens of thousands, I think the total number may be over 100,000. Why should DirecTV undergo the burden of producing consumer complaints when the FTC has them? You know, there's some fairness to that point, so if DirecTV is willing to admit that the FTC's repository of consumer complaints is accurately reflective and representative of DirecTV's repository, specifically that the numbers, proportions, the contents of the complaints that the FTC has received pertaining to the issues relevant in this case are accurately projectable to the consumer complaints that DirecTV has received, such that DirecTV seems to have received the same complaints, then we can probably move forward. In other words, we -- MR. FRIEDMAN: What you're suggesting is you want to take your 70,000, have an expert or whomever review them, put them into your categories, and let's just say, hypothetically, that you have -- of the 70,000, 10,000 are relevant to your issues. And then say, "Okay, DirecTV, you've told us you have one -- 70 million files, and based on our analysis, that means one 6 (Pages 21 to 24) 21 consumer complaints as defined in our RFPs. So, I appreciate the point that RIO is not just, you know, a consumer complaint repository, that it's a customer relationship management system that reflects all sorts of interactions between the company and customers. But to the extent that it certainly subsumes what we've defined as consumer complaints, and which the Court deemed relevant in our RFPs, you know, we have got to get it. Your concern is this is huge, you know, and we don't want to go through the burden of figuring out what's responsive and what's not, and our proposal to limit it is, that's fair, let's take a random sample, and we take on the burden. So, can -- let me move on very quickly to our other option, and that is -- MR. YAGHI: Boris, can you hold on one second? MR. YANKILOVICH: Okay, Michael, sure. MR. YAGHI: Just one second. (Pause in the proceedings.) So, I just want to clarify that we understand. You're asking for the total number of files in the RIO database, and let's just assume, for example, there's 100 million files in the database and we gave you a breakdown of how many of the 100 million come from 2007 22 and for every year to the present. That's what you're asking for? MR. YANKILOVICH: Yes, that's correct, and that's -- go ahead. MR. YAGHI: Let me finish. So, then, you're asking for that, and then from that, you will come back and say, for example, 500,000 is a random sample. We want these 500,000 of these files you've identified in the 100 million range, correct? MR. YANKILOVICH: I mean, I doubt that the number is going to be as high as 500,000, but, yes, that's how the process would work. MR. FRIEDMAN: So, let me go forward with this. So, then, let's just assume your number's 100,000, and we all -- just by the way, so everyone understands, a file is the same thing as a customer account, and so you're saying tell us how many total customers you have had, by year, and then you would pick, let's just say, 100,000 of those, and then you would want us to no doubt pull all of the notes for the 100,000, correct? MR. YANKILOVICH: Yes. MR. FRIEDMAN: So, without knowing exactly what it is, but that's probably at least ten per file, so you want us to produce to you basically a million note files so you then can do an analysis of those million notes to 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 9 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 complaint tens of thousands of consumer complaints supporting its claims and that you are admitting you had tens of thousands of complaints that presumably prove your claims, so -- MR. YANKILOVICH: Well, that's not -- MR. YAGHI: -- any insinuation in the letter brief by the FTC that it somehow didn't have the necessary evidence or needed it from us was not accurate. So, that's the point. MR. CAMPBELL: Boris, we will consider your proposal if you will agree that paragraph 15 of the complaint, where the FTC says that you have tens of thousands of consumer complaints, that that was inaccurate because your own records don't support it, and that's why you think you need our records. MR. YANKILOVICH: So, Mark, yeah, we're kind of running it backwards. We are seeking consumer complaints not to prove up paragraph 15 of our pleaded complaint. We're seeking consumer complaints of the direct relevance that it has to deception, to knowledge of deception, to materiality. That's precisely what we argued in our letter brief to the Court, and that's precisely what you responded. Nowhere in our letter brief did we say that the relevance of the consumer complaints has to do with that 28 one factual allegation which, frankly, we don't need to prove to win the case. So, it's not like that's an indispensable part of an FTC Act cause of action or a Rosta (phonetic) cause of action, and that's not why we're seeking consumer complaints. But, look, we're now 15 minutes into this. It sounds like, based on Clay's response, that our second option is not workable for DirecTV, and that's fine. I understand the argument that you've presented against it, but I wanted to lay it out on the table. Let me ask you this: We've discussed Office of the President as a substitute, and we know our positions on each. We've discussed RIO sampling. We've discussed our option about using the DirecTV -- I'm sorry, the FTC's universe of DirecTV complaints as a projectable substitute. Do you have any other proposals to limit RFP 12 that we have not yet discussed? MR. CAMPBELL: Well, we certainly haven't discussed our proposal. I mean, our proposal, which you have never -- I mean, you haven't told us you reject it, but you also have said it's unacceptable I guess by itself, and that is to produce Office of the President complaints in a sampling that we think is sufficient to show you the level of consumer complaints to DirecTV. You'll get the notes, you'll get the complaints, 7 (Pages 25 to 28) 25 out of seven is relevant, so of the RIO calls and files, there must be 10 million complaints." Are you asking us to go there, to make that type of illogical leap with you? MR. YANKILOVICH: Well, I think -- I think you opened that logical leap in our view -- MR. FRIEDMAN: I said "illogical," just to be clear, but go ahead. MR. YANKILOVICH: Yeah, that's the proposal, because otherwise I'm not sure what -- what you -- what point you had in mind in footnote 9. MR. FRIEDMAN: First of all, I just -- I mean, I want it to be specifically clear, where that fails in my mind -- and I'll let Michael Yaghi talk about it in a second, footnote 9 -- but where that fails is that you assume that there must be some logical correlation between a consumer who takes the effort to lodge a complaint with the agency correlates one to one on relevancy to a consumer who calls DirecTV, and that's just absurd, and you should -- and that you would even postulate that is absurd, because we can tell you -- again, the simple fact that DirecTV gets 20 million calls a month out of a customer base of 20 million should tell you that the vast majority of those calls that come in relate absolutely nothing to whether or not 26 the consumer is complaining. What we're saying is if you want to get a feel and a sense for how -- where consumers are complaining, look to Office of the President. It will give you actual complaints. It will also give you millions -- you know, several million notes that you want to look at anyhow because a complaint will give you all their notes. But what you are saying is exactly what we argued and the Court agreed in her order. It's overbroad. We're not -- you know, any attempt to try to extrapolate from your complaints or Office of the President complaints to get to the 10 million number you used in your complaint, without justification, we're not going to go there with you. MR. YANKILOVICH: Well, look, Clay, I hear what you're saying. It's our proposal. It was based solely on what your arguments were in that footnote. I hear your reservations, but if your main concern is burden on the company, this is one way of essentially limiting or really eliminating the burden. But, look, I hear that you're rejecting it, and that's the point of this meet-and-confer process. MR. YAGHI: Let me address, the brief was to point out to the Court that the FTC has alleged in its 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 10 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Let's say a customer service -- a consumer calls up and said, "I lost programming for three days because of weather-related issues or whatnot and I want a refund for those three days," and the customer service agent says, "Okay." Then he writes it up, describes the situation, and then authorizes the refund or the credit. A month later the consumer calls back and says, "Hey, where's my refund?" Customer service says, "I can't see that. I don't have access to that information. I can escalate that to the group that can see that and they will get back to you." That is an escalation, and I think it would probably fall under the category of refund because customer service agents can't see that type of activity. On another type of situation, a new customer calls up and says, "I signed up for the Premier package, and I also was supposed to -- as part of that, I was supposed to get Channel 625. I don't have 625." The customer service agent would say, "That is something I can't fix. I have to escalate that up." So, most of the RIO escalations that exist are that type of situation where the customer service agent can't do it or can't see it. We know -- and we gave you a spreadsheet of both Office of the President numbers and RIO escalation 32 numbers that you guys went off of. We're happy to use a survey of sorts to convince you that the RIO escalation files are not relevant to your concern, and we can talk about that. That's a proposal from us. As it relates to -- MR. YANKILOVICH: Okay. MR. FRIEDMAN: -- Office of the President, we stick with our original proposal that we will work with you to identify a random sample, in the right categories, of 20,000 -- and we have some more ideas on that -- and we would agree as far as extrapolating what that means. If you look at 20,000 complaints, that you could extrapolate what those are against the Office of the President basis. We'll never agree that you can extrapolate that -- actually, we won't agree to that. Your statistician expert will simply testify to that, but it has no relationship at all to Main Bank inquiries. So, just to recap where we're at, quite frankly, we are not willing to do anything that involves surveying or sampling or anything related to RIO Main Bank database of customer service calls. We are willing to come up with a sampling with you that shows you that the RIO escalations aren't what you think they are, and we will work with you on the Office of the President 8 (Pages 29 to 32) 29 and although it will be burdensome for both of us to go through and review it, we think it's the most efficient way to get at the documents you're seeking, which are complaints. MR. YANKILOVICH: Is this Mark? MR. CAMPBELL: Yes. MR. YANKILOVICH: Mark, listen, we can go over it in circles and circles, like -- and I think we've talked about this, and thankfully, we have it on a transcript. Unless Office of the President complaints reflect the entire universe of consumer interactions with DirecTV, accurately and statistically reflect that entire universe, as is gathered by the RIO notes, we cannot accept that proposal because it's skewed. I understand that Office of the President is the one place in the company that aggregates complaints, but it doesn't aggregate complaints in a way that's wholly and completely representative. The way I -- and Clay and I went through this a few minutes ago where I raised that hypothetical about a customer calling in with an inquiry or a concern or however you want to call it about his bill going up after 12 months, and Clay acknowledged that that would, by policy, be recorded in RIO but it would likely not be teed up to Office of the President because it may not qualify as the type of 30 "complaint" -- MR. FRIEDMAN: And I have to clarify something so that you understand something. MR. YANKILOVICH: Go ahead, Clay. MR. FRIEDMAN: Just so you know, it is very rare that a "complaint" makes its way from a customer service person to Office of the President, as opposed to sometimes inquiries do, but that's not how the process works. You have a bunch of people who call customer service. The goal of customer service is to be able to resolve the inquiry, answer the question, or in the rare instance, if there's a complaint on the grand scheme of things, resolve a complaint. If they have a "complaint," they don't escalate that up to Office of the President. We've explained this before and over and over again, but I'll do it again. RIO customer service is just that. It is a customer service operation. Now, you've heard us make reference to RIO escalations. There are certain types of calls that are escalated to the back office or Office of the President. The vast majorities of those calls represent situations -- and we call those RIO escalations -- situations when the customer service agent can't see or can't fix what the consumer needs fixed, and let me give you a couple of examples. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 11 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is not so much of a burden, but it's also -- we would say it's not relevant to your request because you're asking for much more than just complaints. MR. YANKILOVICH: I understand that that's your position, so -- MR. FRIEDMAN: Well, I might be able to shorten this a little bit just as it relates to request number 13. I don't think we would say anything different than what we've just said about 13. MR. YANKILOVICH: I'm confused. What do you -- are you talking about our proposal to limit as we laid out on February 18th or something else? MR. FRIEDMAN: Well, you -- I guess -- look, go ahead. You know, you're right. I'm going too fast. Are we done with 12 before we get to 13? MR. YANKILOVICH: I am -- we can be done with 12, yes. MR. FRIEDMAN: I think Ryan may want to add something. Ryan, go ahead. MR. SANDROCK: No, I don't. MR. FRIEDMAN: Okay, fine. MR. YANKILOVICH: Thank you, Ryan. I appreciate that. Look, so, RFP number 13, we made the initial 36 proposal on February 18th. I reiterated it, I think it was in my email on March 14th as an attachment, and then again on March 16th. There are two components to this, as we've talked about all along. First -- and really, I don't actually think there's any disagreement on the first component. It's just a matter of timing. There are the "regularly generated reports" that DirecTV has pertaining to consumer complaints. We've talked about those ad nauseam on numerous meet-and-confers. You committed to at least making a substantial if not a complete production of those reports, and you've told us the volume's about 700, on February 5th. It's now March 16th. I don't believe we've gotten any of those to date. I mean, I really don't think it makes any sense for us to, you know, waste Judge James' time for her to order something that you've committed to, but where are these reports? MR. FRIEDMAN: So -- go ahead, or are you waiting for me? MR. YANKILOVICH: I'm done. That's my question. MR. FRIEDMAN: So, there are -- there is a large production. We are about to do the very large first wave of that. There is some of that that has to go through a redaction process because it contains PII, but 9 (Pages 33 to 36) 33 complaints, which typically don't come in from Main Bank customer service but from other sources, to give you the full file on those customers and come up with a randomized sample under the right categories of a lesser included array suggested so that you can get the data you need. MR. YANKILOVICH: Okay, Clay. I hear you loud and clear, and let me -- let me sum up our position so we can move on to RFP 13 briefly, and, you know, in our view, you just said it, which is that you won't agree and you cannot agree, in good faith, that Office of the President complaints are representative of the RIO Main Bank. So, to the extent that the RIO Main Bank is the primary source of records for communications between DirecTV and its customers by far, in terms of volume, you know, as we call it, that's the raw data, that's where the communications are reflected without filter, without company selection, and our position is that's what we need to look at to make the points that are relevant to our allegations, that a large number or a substantial percentage of customers had concerns or complaints about the issues, that DirecTV was on notice about those concerns or complaints, understood them to be material. That's -- MR. FRIEDMAN: Boris, I have to interrupt for a 34 second, and I apologize for that, but that's the disadvantage of having a court reporter on this call because we have got to make sure this record is accurate. MR. YANKILOVICH: Okay, go ahead. MR. FRIEDMAN: I just want to make it -- we see it as apples to oranges. Just trying to go from Office of the President to RIO Main Bank, you want to see a correlation there. To us, they are two completely different databases, and we just have to make that clear on the record. I apologize for interrupting, but -- MR. YANKILOVICH: That's fine. Clay, look, I think we understand our issues. I mean, we do have a fundamental disagreement, and unfortunately, it sounds like we don't have a consensus on a proposal to limit. So, per Judge James' order, on RFP 12, we have to put our proposals in writing and let her decide, and that's fine. I mean, I don't think that what you're -- that your proposal is in bad faith. I just don't think it's adequate for the relevancy points that we need to make. I think your position is our proposal creates too much of a burden, so we'll have to, again, re-argue those issues before Judge James. MR. FRIEDMAN: And, again, not to interrupt, it 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 12 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ways can you show on a graph the complaints that Office -- the documents of the complaints that Office of the President got in from different sources. So, there might be a tab for FTC complaints. There might be a tab for AG complaints. There might be a tab for BBB complaints. And then there might be a separate tab combining all three of those categories by state. And then there might be a tab that takes all those categories and breaks it down by key issues. So, there's, like, 19 different of those. The last tab is what slows us up, is that they will take the actual "complaint" or a summary of the complaint and include it in the report, and that requires the redaction. I think we offered once before -- Ray was not interested -- where we said we will even send you those without that last tab, but that didn't go over, and I don't think we ever agreed to that. But that -- MR. YANKILOVICH: Well, I -- go ahead, I'm sorry. MR. FRIEDMAN: -- that is the one thing that is taking up -- of this batch of 700 or so, that is taking up time. MR. YANKILOVICH: Okay. So, do you -- I mean, look, I appreciate the detail. I mean, it's -- it's -- 40 we -- I know that as of January 21st, essentially two months ago, you've had this -- you've had these 700 or so documents, and it's two months, and you've got ten lawyers working on reviewing and redacting those. We've gotten none to date. To me, that's shocking in efficiency, but I'll move past that and I'll say the following: Can you produce to us all of these reports, without that last tab, on Tuesday? And then give us one example -- MR. FRIEDMAN: Remember, I said Friday. I didn't say Tuesday. MR. YANKILOVICH: No, no, no, no, I understand that, but if the entire burden is a burden of redacting, and all of the redactions have to do with that last tab, would you be able to do the following: Take all of the reports, just redact that last tab in all of them in its entirety, and produce them to us as soon as possible next week? In addition -- MR. FRIEDMAN: You're talking about the specific reports I was just talking about? MR. YANKILOVICH: Okay. Just to step back, we have a universe of about 700 reports, right? MR. FRIEDMAN: Yes, sir. 10 (Pages 37 to 40) 37 those documents will be forthcoming on a fairly expedited pace, and to the extent that the ones that have PII take more time, we'll just -- those will take more time. MR. YANKILOVICH: Clay, I appreciate that, but what you have to recognize that that's exactly the same answer that you gave us back in January. I think we had a meet-and-confer on January 21st, another one on January 27th, which is there's review and redaction work to be done. We need a date. It's now -- I mean, we're coming up to the close of discovery. We can only hope that Judge Gilliam will grant an extension, but we both know that it will be modest. We need a date-certain, after nine months of these RFPs being out there, for these -- I mean, it's 700 documents, and you've had them in your possession, meaning counsel's possession, for, what, three months now? We need a date-certain by when we will get these documents. MR. FRIEDMAN: All right. So, by the end of next week, you will get all the documents except those that require additional redaction, and I can represent to you that the vast majority of the documents don't require redaction of that batch that you made reference to earlier in the call. 38 MR. YANKILOVICH: Okay. So, we're talking about 700 documents. Can you tell us how many we'll get on March 25th or by March 25th? MR. FRIEDMAN: I don't know, but I can represent to you that we will give you an approximation by close of business on -- hold on. Close of business Tuesday, we will get you that approximation of what percentage of the 700 we think will come by Friday. MR. YANKILOVICH: Okay. And for the numbers that won't come by Friday, what's your date of producing those? MR. FRIEDMAN: We'll give you that also on Tuesday. We have a team of ten people going through the redactions, and I've just got to -- I have to see where they are and extrapolate that all. What those are, just so that you know -- MR. YANKILOVICH: Yeah. MR. FRIEDMAN: -- is that for a two-year period of time, roughly -- it may not be a full two-year period, I know it took place over two years, so it could be a minimum of 13 months, but I think it's more than that -- Office of the President would produce a report to management. That report would have about 20 tabs on it. Nineteen of those tabs are how many different 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 13 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 door. MR. YANKILOVICH: Clay, I have got to tell you, I appreciate that. I don't think you're being -- you know, you guys are being intentionally slow or obstructionist, but to me -- and I'm looking at Eric -- it's just jarring. We're talking about 700 reports, and over a period of two months, you can't make conclusive responsiveness determinations? That -- I mean, that's just shocking. But let's -- so, that's fine, we'll -- we'll follow along with your path. We'll get your projection on Tuesday. What I will tell you right now is, to short-cut the redaction burden, we will propose as follows: You can produce all of the reports that require redaction, that tab you identified to us, and you can leave out or fully redact that entire tab, which will presumably substantially reduce your manual redaction of it. Then maybe you can give us one exemplar report with a selective redaction so we can better understand what's being redacted and what's not being redacted, but we just need to get our hands on these reports because you told us two months ago that these were very eye-opening, so we have been eagerly waiting for them -- MR. FRIEDMAN: I'm not sure if I said 44 "eye-opening," but -- MR. YANKILOVICH: Well, you've -- wait a minute, Clay. You've told us that before we go and seek more information in terms of the company's internal reports, summaries, analyses of consumer complaints, we really need to review these 700 because those will be very informative to us. And that's why we have patiently waited for these 700, but at this point, you know, obviously we can't wait any longer. So, let's commit to the following, which is what you proposed: We will kick off the letter brief process anyway because we have a dispute on number 12. We can hold off on including these in our dispute for now, but -- depending on what you tell us on Tuesday, but I've got to tell you, based on what we just said, which is just give us the redaction of the entire tab, I think that if that production will go beyond the end of next week or maybe the very start of the following week, we may need to include it to the Court, because this is -- I mean, it's -- the timing is just -- it's incredibly long. So, end of day -- by end of day Tuesday, you will tell us what the numbers are of reports, how many have to be redacted, how many won't have to be redacted at all, and when you expect to produce them, right? MR. FRIEDMAN: Well, what -- just to restate 11 (Pages 41 to 44) 41 MR. YANKILOVICH: You've all got them from your client, so they are, by definition, responsive, right? MR. YAGHI: No. MR. FRIEDMAN: No. That's part of what the delay has been. Some are and some aren't. MR. YAGHI: We've made that very clear to you numerous times, Boris. MR. YANKILOVICH: Okay. MR. YAGHI: You can read our original email, we made that very clear to you, but go ahead. MR. YANKILOVICH: Have you -- so, at this point, have you -- since our call on January 21st, have you been able to determine which of those 700 are responsive and which are not? MR. YAGHI: By Tuesday, we will be able to tell you. MR. YANKILOVICH: Wonderful. So, here's my question: Step one is responsiveness. Step -- which you will figure out by Tuesday. Step two is redacting PII, which is contained in a discrete tab in some of those 700 reports, correct? MR. FRIEDMAN: So, I want to just modify that. Step one is identifying responsiveness or not. Step two is getting the non-PII-based documents ready for production. Step three then is taking that that has 42 PII, redacting it, and producing it. You're making it a -- you're missing one little step, one that will only take a few days, but one that still has to happen. MR. YANKILOVICH: The getting ready for production step, is that what you're talking about? MR. FRIEDMAN: Yes, sir. MR. YANKILOVICH: So, like, calling your doc production management database company and saying, "Please put those on a disk and get them ready to produce"? MR. FRIEDMAN: No, once there's been a first-level review of relevancy or nonrelevancy, then there's the second-level review to make sure that what they say is relevant is, in fact, relevant and also making sure that what they said was not relevant was not miscoded or misdiagnosed. MR. YANKILOVICH: But that sounds not like a little step. That just sounds like an additional layer of a responsiveness review. MR. FRIEDMAN: I guess you're probably right. That's why we said by Tuesday, we thought we could project how many were responsive as an approximation. MR. YANKILOVICH: Okay. MR. FRIEDMAN: I mean, that's why we said we needed that three extra days then to get it out the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 14 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 yes, that's relevant and responsive. We will also include in that these monthly reports that I'm talking about that kind of exist between the two thousand -- late 2009 to early 2011 time frame, I think, and -- what's that? -- they're called actually AG/BBB/FTC reports. We will produce those. We will redact completely out the one pivot table that has all the PII on it, but you will still get all of those different types of spreadsheets that I talked about that gives you an analysis of those complaints kind of on a statistical basis. The one -- and then you said -- and we will get you a sample of what a redacted portion of one of these looks like. We will also get you that sample by Monday, that same time frame. I want to tell you, though, that the sample won't necessarily be complete because I don't think I will have a complete month done yet. The way the coders are doing this is they each have one of their own reports, but I will get you a pretty robust sample of -- it may not be a whole month -- yeah, it won't be a whole month, but you will be able to see exactly what these things look like. What I can't tell you just yet is when that redaction process will be done because I need to get a better handle on it myself. 48 MR. YANKILOVICH: Okay. Clay, just -- MR. YAGHI: Let me jump in here real quick, Boris? MR. YANKILOVICH: Go ahead, Michael. MR. YAGHI: To remind you guys, we put this in our letter brief, I believe in a footnote, these files we're talking about are approximately over 287,000 pages. MR. YANKILOVICH: Okay, got it. So, Clay, just to confirm, the regularly generated company reports, you are committing to producing them in full and with these blanket redactions that we talked about on or before Monday, March 28th, right? MR. FRIEDMAN: For the Office -- for these monthly reports, correct. MR. YANKILOVICH: Okay. So, and then you will -- if there's any additional regularly generated reports that you have not yet reviewed and will not be able to produce by March 28th, you will let us know what that universe is by Tuesday, March 22nd, and you will give us -- you know, you will tell us what they are, how many there are, and by when you will produce them. Is that right? MR. FRIEDMAN: Approximations of how many there 12 (Pages 45 to 48) 45 where I think we are, by Tuesday we will give you an approximation of those -- that batch of 700 or so how many we are guesstimating are going to be produced by the end of the week, at the latest Monday of the following week. We will also include in that production the Office of the President monthly reports, and we will pull from that and completely redact that one tab. We will -- pardon? Hold on. MR. YANKILOVICH: I didn't say anything. Go ahead. Oh. MR. CAMPBELL: I think he is conferring with Mike. MS. PROCTOR: And I need to step out for just one minute. MR. YANKILOVICH: Was that Stacy? MR. CAMPBELL: She just stepped out for a moment. MR. YANKILOVICH: Okay. MR. FRIEDMAN: Give us a minute. We'll be right back. MR. YANKILOVICH: Okay. (Pause in the proceedings.) MS. PROCTOR: I'm back. This is Stacy. MR. YANKILOVICH: So, Clay and Mike are 46 conferring, so we're waiting for them. (Pause in the proceedings.) MR. FRIEDMAN: Boris, I'm back. Did you have more questions? I'm sorry about that. MR. YANKILOVICH: Clay, while you were out, we just resolved everything. MR. FRIEDMAN: Oh, wonderful. MR. YANKILOVICH: Just joking. Just joking, of course. Go ahead. MR. FRIEDMAN: By Tuesday we will give you an approximation of what we think, out of the 700, is relevant or not relevant. The one other thing I want to clarify is we will also know by then if, besides this one document style that I've talked about, which are these monthly Office of the President reports, we'll also know of anything that is relevant that I may not know about that may need its own redaction, and that was just one of the things that we were clarifying here. I don't think it's going to be a lot, but I don't want to tell you it won't be any. So, by Tuesday, we will give you the breakdown of those 700 that we think will be coming. We will -- as well as whether or not something else needs to be redacted. We will produce -- we will endeavor to produce by Friday, but we may need the weekend, anything of that 700 that we say, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 15 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 search terms, possibly even fewer search terms, that yielded 1.25 million records that required 10 to 15 lawyers to review over more than a 1 1/2-year period to produce 450,000 pages to the FTC. So, your proposal, I don't see how that's even manageable to do even before the current trial date, let alone the fact discovery cutoff. MR. YANKILOVICH: Mike, I think -- I hear what you're saying, but I think we're -- much like the sampling of RIO, which I do not want to go back to since we have covered that point, I think we are kind of missing the point here. For ESI, the precise point of coming to an agreement and using search terms is that you then don't have to do a relevance review. In other words, the two parties come together and say, "We're going to agree that the following set of terms is reasonably calculated to yield relevant information," and then we'll take the risk of determining whether this is overbroad or not broad. And understand, please, that the risk is on us as well. We don't want to get -- MR. SANDROCK: I hate to interrupt, but that's just not true. MR. YANKILOVICH: Why is that not true? 52 MR. SANDROCK: That's sometimes done, but it's rarely done. MR. YANKILOVICH: What's usually done by a limitation to some keywords? MR. SANDROCK: But, Boris, that's a limitation on what you review. MR. YAGHI: Right. Ryan is right, and we could spend between now until fact discovery fighting over the appropriate terms, the different number of hit reports we get, after assuming we could even gather the vast majority of the data you're asking for. It's just -- and the bottom line is we already have the records that are responsive that you're asking for, and we just talked about them, the 700 records. We're going to give those to you. That's the best evidence of what you're looking for. What you're asking for has no relevance. It's minimal, at best, far outweighed by the burden on us to go through that exercise. MR. YANKILOVICH: I completely disagree. Just because you're giving us 700 documents that are the easiest for you to get and identify as responsive doesn't mean that the remaining documents, which are more difficult, you know, to sift through, are going to be unresponsive. 13 (Pages 49 to 52) 49 are and a pretty good approximation of when, yes. And I'm sure we won't necessarily wait to go through all the time to tell you exactly what they are, but we will give you general information on -- MR. YANKILOVICH: Sure. A general summary will suffice. We just need to know what we're dealing with, and particularly the timing is critical as we're coming up to what is currently the close of fact discovery on April 22nd. So, finally -- and I really do want to wrap this up -- so, with respect to RFP number 13, putting aside what I call this very limited universe of regularly generated reports, there is everything else; previously I referred to it as ad hoc material, but primarily we're talking about emails, we're talking about, you know, PowerPoint presentations, Word documents that summarize, analyze, or reflect customers' complaints on the, you know, relevant topics as listed in our RFPs. We have proposed doing an ESI query of -- we've given you a detailed proposal for key terms on February 18th. We have since limited that proposal to six groups within the company, and that's all laid out in my email on March 16th. We have -- you know, I know that at some point in time, I believe it was Mike who responded with a very large number of, you know, Outlook emails for the 50 company. I think Mike responded on February 17th that there were, you know, about 211 million Outlook messages and, therefore, the search -- if we were to do a query of key terms, that would -- you know, they would have to be loaded to your e-discovery vendor to run an advanced query. I understand all that. You know, from my perspective, that's normal, and moreover, I'm not looking at the whole company. To reduce that limit, we chose the departments that are most likely to have relevant information with respect to consumer complaints, and in addition to five departments, we added kind of the C-suite, the CEO, CFO, and then the presidents and vice presidents. So, we are proposing an ESI search for those materials with keyword terms. We have had this proposal on the table for a month now. At this point, I don't really think we need to debate the merits and demerits of doing an ESI search. I would like to get your reaction to our key terms, but if you think that our proposal is just overly burdensome and out of line, tell us, because I want to get to a resolution. MR. YAGHI: Yes, Boris. Yeah, I mean, looking back to your terms, even limiting it to those departments, if you think back to the CID productions, there were only 13 custodians with a similar set of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 16 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 been asking for this data for several months. We've given you numerous reasonable options and proposals. You chose not to accept any of them. You decided, in the eleventh hour, to file your letter brief and ask for everything under the sun, and the Court said that was overbroad, okay? So, this insinuation that we're obstructing anything is silly. We haven't obstructed anything. The FTC has sat on its hands and never accepted any of our very reasonable proposals under the discovery rules. So, here we are in the eleventh hour and you're asking us to do a huge ESI search of numerous departments that we would probably run into scores of custodians, and that's absurd. That's absurd, for you to try to search for something, a needle in a haystack, and discovery is not -- it doesn't -- discovery isn't proper for you to say that I want an affidavit that says nothing remotely responsive from numerous departments exists. That's silly. That's not how discovery works. You asked us for information in response to request 13. We're incurring a huge burden already to give you information and documents responsive to 13. That's not good enough for you, so now you're saying, "We want you to go through several departments, gather 56 every single custodian, and do a huge ESI search now just to make sure, you know, we don't find something that might still exist out there." That's not how discovery works. That's not how it works. MR. YANKILOVICH: Michael, I appreciate this, but I think you're conflating a number of issues, and let me try to clear them up. First of all, we propounded this RFP in June of 2015. In August, at a meet-and-confer, Chad Hummel, who's a partner of yours but not here on the phone, told us, "No way, no how will we be doing any type of ESI search, period." We have tried repeatedly to limit the scope. In November, you told us, "Look, we've got these regularly generated reports. Let's get them -- why don't you see if you can get them first." In January of 2016, you represented to us that you finally got them and would get them to us by February 5th, okay? And now we're in the middle of March and we still haven't gotten the things that you told us would be, you know, idle things. But that's not -- you know, we can debate the chronology all we want. The point is: Unless DirecTV can represent to us that nothing but these 700 or so regularly generated reports are responsive to RFP 13, 14 (Pages 53 to 56) 53 MR. YAGHI: No, that is the full universe. It wasn't easy to gather those. We have already told you, like, less than half of them are over 287,000 pages long. So, it's not that we're saying it's the easiest. It's the responsive data. You want to incur -- you want us to incur a huge burden to go find responsive -- go look for something you think exists. We're giving you what exists. MR. YANKILOVICH: Well, that's the point of discovery, after all, right, for us to go ask for things that we think exist. MR. YAGHI: And we are giving them to you, and we are giving them -- MR. YANKILOVICH: Okay, but -- MR. FRIEDMAN: Boris, this is Clay -- MR. YANKILOVICH: Hold on -- MR. FRIEDMAN: -- you have asked us to respond. You have asked us to respond to your request in 13. We've said we have 700 responsive documents that we've identified, and now you're saying, "That's not enough. We also want" -- MR. YANKILOVICH: I'm sorry, Clay, that's completely incorrect. We never -- we always had two types of documents that we discussed with respect to RFP 13, the very limited universe of regularly generated 54 reports that you have -- you are committed to produce, even though it's taking months, and the ad hoc materials, which includes emails, PowerPoint presentations, Word documents. This goes back to our discussions back in August and September. So, the notion that we accepted the regularly generated reports as a valid substitute for everything else is wrong. If you are -- if you can represent -- and, again, this would have to be through an affidavit or an RFA -- that there are no responsive emails or PowerPoint presentations, Word documents, or really ESI of any form that are responsive to RFP 13, besides the regularly generated reports, then we have another issue altogether. I sort of heard Mike allude to that, but I don't think you will be prepared to say that under oath. MR. YAGHI: You are putting words in my mouth. I did not -- MR. YANKILOVICH: Okay. So, sure, let me -- is DirecTV representing that besides these 700 or so regularly generated reports, there is no other material responsive to RFP 13? MR. YAGHI: First I want to deal with your delay issues. MR. YANKILOVICH: Okay. MR. YAGHI: You're wrong, Boris. You guys have 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 17 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 13, correct? MR. YANKILOVICH: What is your offer on 13? MR. YAGHI: What are you talking about? We put it in our email to you. We said we will produce the 700 reports. We agreed to do that. MR. YANKILOVICH: Yeah, but we both agreed -- there is no dispute about that. You agreed to produce those months ago. We're talking about the other stuff besides those 700 reports. MR. YAGHI: Okay. So, I'll clarify. You agree or the FTC, to crystallize it for the record, has rejected our offer on request 12, correct? MR. YANKILOVICH: The Office of the President? MR. YAGHI: Yes, our offer on request 12. MR. YANKILOVICH: Yes, because we -- because we put forward a condition, the only condition upon which we could accept it, and DirecTV said no to that condition, which was the Office of the President -- MR. YAGHI: That's certainly not what we talked about on the phone. MR. YANKILOVICH: Well, just to make it clear for the record, we can accept it only on one condition, but DirecTV cannot accept that condition, so yes, we reject it as stated. Go ahead. 60 MR. YAGHI: I was simply trying to crystallize for the Court our issue, just like you did. MR. YANKILOVICH: Sure. MR. YAGHI: We don't need to rehash the parties' positions on request 12. I'm simply saying the FTC's position is it's not accepting our proposal on request 12, correct? MR. YANKILOVICH: As proposed, that's correct. MR. YAGHI: Okay. And we know what our differences are on 13. We're offering you and will be giving you the reports that are relevant, and you're asking for an ESI search, which we have rejected, correct? MR. YANKILOVICH: Well, that is partly correct because you're now suggesting that at some prior point we agreed to accept the 700 regularly generated reports in lieu of the other materials responsive to RFP 13. We never accepted that. We've always insisted on getting the 700 regularly generated reports in addition to those other materials. So, I'm not quite sure what your proposal to limit RFP 13 is. MR. YAGHI: Sure you do. We said we will give you the reports, the relevant reports out of the 700. We've made that -- we -- MR. YANKILOVICH: Again, we have a -- but this 15 (Pages 57 to 60) 57 then we're talking about burden. We're not talking about responsiveness. We're talking about burden. I recognize that reviewing a large number of documents and reviewing ESI presents some burden, but this is 2016, this is modern litigation, and DirecTV is not an individual guy, you know, somewhere. It's a multibillion dollar corporation with sophisticated technologies represented by a very large and sophisticated law firm. Finding and reviewing ESI is part and parcel of that type of litigation. So, to get back to the point so we can crystallize the issue for the Court, we have proposed a specific proposal for keyword searches for reducing DirecTV's burden. It sounds to me like DirecTV is not going to accept that proposal and that DirecTV won't accept any proposal that would engage it in doing any type of ESI search or production. Is that right? MR. FRIEDMAN: That's a pretty good summary, and I think the one thing I want to clarify is we're not going to give you an affidavit, but we believe that the 700 documents we are speaking of are quite robust and that to go through the search that you want to see if there's, by chance, something else is such a significant burden on this company that we're not willing to partake in that effort. 58 MR. YAGHI: Yeah, your proposal isn't lessening the burden, that's our position, and for all the reasons we've already explained, for all of the reasons, and since -- when you propounded your discovery requests and we told you -- and you've admitted that -- we've consistently told you no ESI search, it's too burdensome and oppressive, and any minimal value to you is far outweighed by the burden on us. And to -- and your February 5th was a unilateral -- the deadline for February 5th for any kind of report production, we've told you all along that the requirements to redact under STELA were going to be time-consuming and burdensome and oppressive. We have made that very clear to you. We have not delayed, and we've -- I mean, we've been working with you to try to resolve these issues. MR. YANKILOVICH: Well, I hear you, but I do -- but, again, I think I heard -- I think it was Michael, and I think Michael said yes in terms of my characterization, that whatever -- both our specific proposal or any type of ESI query and search is not acceptable to DirecTV. Is that -- MR. YAGHI: Yes, that is correct. And just so we crystallize the FTC's position, you're rejecting our offer as well to resolve requests -- FTC requests 12 and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 18 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 63 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I already explained to you, we had 13 custodians with a smaller search term list during the CID production that yielded over 1.25 million records. There's scores of employees out of the six departments you've identified. Your search criteria is longer. You're talking about millions and millions and millions of hits and -- MR. YANKILOVICH: I hear you, but -- sorry, just -- MR. YAGHI: I'll crystallize 13 for you, okay, and tell me if this is wrong. We are going to produce the relevant reports we've been talking about out of the 700. The burden of an ESI search on DirecTV is far outweighed by any minimal benefit to the FTC. We have consistently told you no ESI search, we've even acknowledged that on this call, so we are not going to do an ESI search. MR. YANKILOVICH: Okay. Let me get back to the emails because I really want to hone this issue. You have just told me earlier that DirecTV cannot represent to the FTC that there aren't any emails that are responsive to RFP 13. So, here's my question: Do you have any proposal to limit the query of emails to find responsive emails or is your position that DirecTV will not query emails whatsoever? MR. YAGHI: Hold on one second, Boris. 64 MR. YANKILOVICH: Sure. (Pause in the proceedings.) MR. YANKILOVICH: I'm sorry, did you guys say something? MR. CAMPBELL: I think he accidentally took the phone off of mute. MR. YAGHI: Sorry, Boris. This is one of the problems to try to do something off the record to try to see if we could come up with a solution, so I appreciate everyone's patience. No, I mean, look, you're asking us to tell you that no possible email could exist, and I can't say that. MR. YANKILOVICH: Right. We have covered that, right. MR. YAGHI: Right. Wasn't that your question? MR. YANKILOVICH: No. My question is -- MR. YAGHI: Emails. MR. YANKILOVICH: -- emails, do you have a proposal for producing or limiting your burden to produce emails or is DirecTV's position that it refuses to do any querying and production of emails in response to this RFP? MR. YAGHI: Yes. We refuse to do any querying of emails in response to this RFP. 16 (Pages 61 to 64) 61 is not in dispute. You've agreed to do that many months ago. What we -- our problem with that is we just need to get them without many, many months of delay, but that's not a dispute for the Court. The dispute for the Court is, besides those 700 regularly generated reports, we are talking about emails, PowerPoint presentations, Word document presentations, we have proposed a way to limit that. Do you have a proposal on how to limit that? MR. YAGHI: No. We have responded to that already, Boris. We said the 700 -- the relevant portions of the 700 reports are responsive to 13, and your request for a further ESI to just be 100 percent sure nothing else might exist is extremely burdensome and oppressive on the company, and any minimal benefit to the FTC is far outweighed by that burden. We have made that clear since the beginning. MR. YANKILOVICH: But let me -- let me -- MR. YAGHI: And we have also made clear that your alleged narrowing of your ESI request somehow lessens the burden, we disagree with. MR. YANKILOVICH: Okay. So, we've -- again, just -- I hear what you're saying, Mike, but we have made a proposal to limit, and as we all recognize, our proposal to limit is to do -- to limit the scope of the 62 search not to the entire company but to six groups within the company and to do a keyword search. I understand that you don't view that as meaningfully limiting, and I hear your position. Here's my question: Do you have a counterproposal? Let's just look at emails, okay? Let me ask you this: The 700 reports that you will be producing, do those contain email communications within the company, internal email communications? MR. YAGHI: Internal -- say that again. MR. YANKILOVICH: Do the 700 regularly generated reports, will they contain internal email communications responsive to RFP 13? MR. YAGHI: No. MR. YANKILOVICH: Is it DirecTV's position that there are no email communications internal at the company that are responsive to RFP 13? MR. YAGHI: I don't know, but we're not going to take on the extreme burden to try to find something that you think might exist when the 700 reports, the relevant portions of those reports, are the best evidence responsive to request 13. We have made that very clear to you. Your request to minimize your ESI terms to six departments we've made very clear is not any limitation. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 19 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 But anyways, thank you again, folks. Have a good weekend, everyone. MR. SANDROCK: I want to add one note. MR. YANKILOVICH: Sure. MR. SANDROCK: There is certainly a massive number of letter briefs that are stacking up, and I know we have an agreement on how to do this, but they really are stacking up. So, I think on Tuesday we all just need to think about what the orderly process is for doing this, where we get issues before the Court in a timely fashion but also reasonable given the number of letter briefs that are piling up. MR. YANKILOVICH: Ryan, I hear you in general, and I think that we've -- you and I have, you know, definitely agreed to that process in person. We have a timing protocol on these letter briefs. On this discrete issue, as I -- this is precisely why I just said this a few seconds ago, on this discrete issue, we've got to get our letter brief out the door ASAP. In light of, you know, the burden issues that you've raised, in light of the timetable that you've raised, and most importantly, in light of the fact that we are under court order to either resolve it or get it up to Judge James, I -- you know, we can't -- I can't hold off until Tuesday to initiate the 68 letter brief process. MR. SANDROCK: I'm not telling you when -- I'm not telling you when you guys can do anything or not do anything. What I'm saying is -- and I think there can be no disagreement on this -- is we have to work together on this because we had a formal procedure for doing this, but now we just have a whole lot of briefs stacking up. It's not like in the past where we had one brief. So, there's nothing really -- I don't think there's anything really to discuss, but let's just make sure on Tuesday to talk about things going forward. MR. YANKILOVICH: We're always happy to do that, and in terms of -- you know, as we all know, we worked out a protocol that if we have more than one letter brief coming on one day, we extend our timetable. So, your point, Ryan, is well taken. We will -- you know, our position is always to distill the disputes so that we know what we're talking about and we know that we will crystallize the issues. We have done that here. It has taken us nearly two hours, but we have done it, and so we will definitely coordinate with you, Ryan, on timing. MR. FRIEDMAN: Before we completely end this, I wanted to see if -- this is a non-court reporter issue, doesn't relate to what we're talking about, but I was 17 (Pages 65 to 68) 65 MR. YANKILOVICH: Finally -- MR. YAGHI: Again, the burden far outweighs any minimal benefit to you and there is no time to do it. MR. YANKILOVICH: Do you have -- and finally, my last question, because, fellows, we have been on the phone for nearly two hours, and I want to make sure we bring it to brass tacks, but my last question: In terms of our proposal, which is an ESI search based on key terms of the six groups you've identified, have you -- and we gave this proposal to you on February 18th, a month ago -- do you have a dollar figure for the cost that DirecTV would incur to do that search and produce those hits to the FTC? MR. YAGHI: No. We were working on that, and if you recall, pretty quickly after your February 18th letter, before giving us a chance to respond, you filed your letter brief. So, you took it offline from trying to continue the meet-and-confer and decided to go to the Court. That was your choice, and that's what you chose to do. So, here we are. MR. YANKILOVICH: So, did you -- so, it's been -- but it's been a month -- MR. YAGHI: We started to work on that. Like I said, we started to work on that, and then you decided to file your brief pretty immediately after your 66 February 18 letter, I think within a week. MR. YANKILOVICH: Okay. Well, so, but do you -- is there -- did your work yield any fruit? Do you have a number? MR. YAGHI: No. I just answered that. We started to work on that, and then you filed your brief. So, no, I don't have a number. MR. YANKILOVICH: Okay. Okay, so I think we have crystallized our issues on 12 and 13, and it looks like we have a continuing dispute for the Court. I know that, you know, our disputes got a little heated over this time, but, you know, this is the way discovery goes. I really appreciate your time and the opportunity to meet in person in Los Angeles and by phone. Here's what we will do: We will try to get to you our portion of the letter brief, now that we know what our positions are, as soon as possible. It may not be by end of day today, even though we could try to get it out, because we know what these issues are. If not, it will probably be on Monday. But these two issues, because Judge James has already looked at them and has told us to meet and confer and has told us to give her an update, we want to get these issues resolved and to her as quickly as possible. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 20 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 69 wondering if we could put you guys on hold, and, Mark, if you could step out and call my office. MR. YANKILOVICH: So, this is -- I'm sorry, this is not responsive to RFP 12 and -- this is not RFP 12 and 13 related? MR. FRIEDMAN: Correct. MR. YANKILOVICH: So, should we -- well, okay, let's -- so, you want to go off the record? MR. FRIEDMAN: Yes, just go off the record, and then let Mark -- I'm not sure if you put him in shackles or not, but unshackle him so he can come out and make a brief phone call. MR. CAMPBELL: I will call you -- MR. YANKILOVICH: Susanne, just stand by, if you would, but let's take it off the record for now. THE REPORTER: Okay. MR. YANKILOVICH: Thank you. (A brief recess was taken.) MR. YANKILOVICH: Okay, Susanne, we are done. Thank you so much for your time. (Whereupon, at 7:21 p.m., the meet-and-confer was adjourned.) CERTIFICATE OF REPORTER 70 I, Susanne Bergling, do hereby certify that the foregoing proceedings were recorded by me via stenotype and reduced to typewriting under my supervision; that I am neither counsel for, related to, nor employed by any of the parties to the action in which these proceedings were transcribed; and further, that I am not a relative or employee of any attorney or counsel employed by the parties hereto, nor financially or otherwise interested in the outcome of the action. _________________________________ SUSANNE BERGLING, RMR-CRR-CLR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 18 (Pages 69 to 70) Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 21 of 32 Meet and Confer Meet and Confer FTC v. DirecTV, et al. FTC v. DirecTV, et al. A able 30:10 35:6 40:16 41:13,15 47:21 48:20 above-entitled 1:19 absolutely 25:25 absurd 25:20,21 55:14,15 accept 4:6 12:2 29:14 55:3 57:15 57:16 59:17,22,23 60:16 acceptable 58:22 accepted 54:6 55:9 60:18 accepting 11:8 60:6 access 31:9 accidentally 64:5 account 6:24 22:16 accurate 8:7,12 27:9 34:4 accurately 7:21 8:9 11:23 24:10,14 29:12 acknowledged 29:23 63:15 Act 28:3 action 28:3,4 70:8 70:12 activity 31:14 actual 11:5 26:5 39:12 ad 36:9 49:14 54:2 add 19:13 35:18 67:3 added 50:12 addition 40:20 50:11 60:19 additional 37:22 42:18 48:18 address 26:24 adequate 34:21 adjourned 69:22 admit 24:9 admitted 58:5 admitting 27:2 advanced 50:5 affidavit 4:15 5:3 54:9 55:18 57:20 afternoon 3:3 AG 39:5 AG/BBB/FTC 47:6 agency 25:18 agent 9:20 30:24 31:4,19,22 agents 31:13 aggregate 29:17 aggregates 29:16 agnostic 17:21 ago 29:19 40:2 43:23 59:8 61:2 65:11 67:18 agree 10:8,13 16:4 27:11 32:11,14,15 33:10,11 51:16 59:10 agreed 26:9 39:17 59:5,6,7 60:16 61:1 67:15 agreement 51:14 67:7 agrees 16:25 ahead 22:4 25:8 30:4 34:5 35:14,20 36:19 39:19 41:10 45:11 46:9 48:4 59:25 allegation 28:1 allegations 33:20 alleged 26:25 61:20 allude 54:14 alternative 23:19,21 altogether 54:14 analyses 44:5 analysis 22:25 24:25 47:10 analyze 12:13 49:17 Angeles 3:6,7,10 66:14 answer 30:11 37:7 answered 66:5 anyway 44:11 anyways 67:1 apologize 34:1,11 appeal 16:24 18:8 APPEARANCES 2:1 apples 34:7 appreciate 19:18 21:2 35:23 37:5 39:25 43:3 56:5 64:9 66:13 appropriate 52:9 approximately 48:7 approximation 38:5 38:7 42:22 45:2 46:11 49:1 Approximations 48:25 April 49:9 argued 26:9 27:22 arguing 23:25 argument 28:9 arguments 26:18 array 33:5 articulate 6:17 ASAP 67:20 aside 49:11 asked 18:22 53:17 53:18 55:21 asking 14:15,21 18:22 19:24 21:22 22:2,6 25:3 35:3 52:11,13,17 55:1 55:11 60:12 64:11 asks 20:17 assertions 15:6 associated 6:25 assume 14:12 18:9 21:23 22:14 25:16 assuming 7:24 8:5 52:10 assumption 8:7 attachment 36:2 attempt 26:11 attorney 7:17 70:10 August 54:5 56:9 Austin 2:15 authorizes 31:6 avoid 17:19 3/18/2016 3/18/2016 [71] 50:22 52:5 53:15 54:25 61:11 63:25 64:7 bottom 52:12 Boy 7:4 brass 65:7 breakdown 21:25 46:21 breaks 20:9 39:9 brief 23:25 24:1 26:24 27:7,22,24 44:11 48:6 55:4 65:17,25 66:6,16 67:19 68:1,9,15 69:12,18 briefed 16:11 18:12 18:12 briefly 3:12 33:9 briefs 67:6,12,16 68:7 bring 65:7 brings 14:20 broad 51:20 broadest 4:8 Buffalo 9:25 bunch 30:9 burden 11:7 14:17 15:2,8,16,18,22 16:10,17 17:19 20:22,25 21:11,14 24:6 26:19,21 34:23 35:1 40:14 40:14 43:13 52:18 53:6 55:22 57:1,2 57:4,14,24 58:2,8 61:16,21 62:19 63:12 64:20 65:2 67:20 burdens 10:10 burdensome 17:11 17:17 29:1 50:20 58:6,13 61:14 Bureaus 7:19 business 7:19 38:6,6 C C 3:1 B back 18:22 19:17,24 22:6 30:20 31:7,11 37:7 40:23 45:21 45:24 46:3 50:23 50:24 51:10 54:4,5 57:11 63:17 backwards 27:17 bad 34:20 Bank 5:14,17 32:17 32:22 33:1,13,13 34:8 base 9:1 25:23 based 4:11 5:9,9,11 7:7,7,10,14 19:21 24:25 26:17 28:7 44:15 65:8 basically 22:24 basis 32:14 47:11 batch 37:24 39:22 45:2 BBB 39:5 beginning 61:17 BEHALF 2:3,10 believe 36:14 48:6 49:24 57:20 benefit 61:15 63:13 65:3 Bergling 70:4,18 best 52:16,17 62:21 better 7:19 43:20 47:25 beyond 44:17 bill 9:19 29:22 billion 9:16 10:6 14:16 20:2 23:18 Bills 9:25 bit 6:3 35:7 blanket 48:12 blending 6:5 board 17:24 bones 16:12 Boris 2:4 3:4 6:2 10:15 12:6,16 20:2 21:17 27:10 33:25 41:7 46:3 48:3 For The Record, Inc. For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 22 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 [72] cherry-picking 16:8 choice 65:19 choices 4:25 choose 19:5 chose 50:9 55:3 chronologically 6:12 65:19 15:12 C-suite 50:12 calculated 51:17 CALIFORNIA 1:2 call 6:16,16 13:12 29:21 30:9,22 33:16 34:2 37:25 41:12 49:12 63:15 69:2,12,13 called 47:5 calling 5:15 8:3 29:20 42:7 calls 7:18 9:2,9,10 9:13,18 12:19,22 13:8 25:1,19,23,24 30:20,21 31:1,7,16 32:22 Campbell 2:12 3:7 6:2,8 8:19 10:14 12:6 15:18 17:5 18:19 27:10 28:18 29:6 45:12,17 64:5 69:13 capture 14:1 captured 13:25 14:1 case 1:7 24:14 28:2 categories 11:4 24:21 32:10 33:4 39:7,9 categorize 10:22 categorized 6:24 category 31:13 cause 28:3,4 CEO 50:12 certain 30:19 certainly 21:6 28:18 59:19 67:5 certainty 5:15 7:2 CERTIFICATE 70:1 certify 70:4 CFO 50:12 Chad 56:9 challenge 15:5 chance 57:23 65:16 Channel 31:18 characterization 58:20 chronology 56:23 CID 50:24 63:2 circles 29:8,8 claims 27:2,4 clarify 6:15 8:18 21:21 30:2 46:13 57:19 59:10 clarifying 46:18 Clay 3:8,12 11:16 13:6 18:11 23:2 26:16 29:18,22 30:4 33:7 34:12 37:5 43:2 44:3 45:25 46:5 48:1,10 53:15,22 Clay's 28:7 CLAYTON 2:11 clear 20:15 25:8,13 33:8 34:10 41:6,10 56:7 58:14 59:21 61:17,19 62:22,25 Clearly 9:23 client 41:2 close 10:4 37:12 38:5,6 49:8 coders 47:18 combining 39:7 come 9:19 18:7 19:17 21:25 22:6 23:24 25:25 32:23 33:1,3 38:8,10 51:16 64:9 69:11 comes 16:23 18:4 coming 19:23 37:12 46:22 49:7 51:13 68:15 Commission 1:5 2:3 2:7 3:5 commit 19:18,23 44:9 committed 18:23 36:10,18 54:1 committing 48:11 communicate 5:21 communication communications 5:18 6:19,20 7:9 7:10 8:13,17,25 33:14,17 62:8,9,12 62:16 company 1:11 6:17 7:9,18 10:11 12:4 13:8 14:18 21:5 26:20 29:16 33:18 42:8 48:11 49:22 50:1,8 57:24 61:15 62:1,2,9,17 company's 13:22 44:4 complain 5:16 8:3 complaining 5:25 11:20 26:1,3 complains 9:10 complaint 8:21,22 9:7,23 12:25 14:8 14:14 21:3 25:18 26:7,14 27:1,12,19 30:1,6,12,13,14 39:12,13 complaint-related 10:3 complaints 3:25 4:2 4:5,8,17,21,22,23 5:1,23,23 6:4,10 6:18 7:3,16,17 8:8 8:10,14,25 9:6,7 10:18,22,23 11:10 12:8,18,19 13:1,3 19:22 20:16,18,22 21:1,7 24:3,4,7,10 24:13,15,17 25:2 26:5,12,13 27:1,3 27:13,18,19,25 28:5,15,23,24,25 29:4,10,16,17 32:12 33:1,12,22 33:23 35:3 36:9 39:1,2,4,5,6 44:5 47:10 49:17 50:11 complete 4:19 36:11 47:16,17 completely 4:3 6:10 8:12,16 15:17 17:4 23:5 29:18 34:9 45:8 47:7 52:20 53:23 68:23 component 36:6 components 36:3 concede 14:13 conceding 8:22 concern 8:3 15:8 19:15 21:10 26:19 29:21 32:3 concerns 4:5 5:16 5:22 6:17 8:14 33:21,23 concluded 7:11 conclusion 12:11 conclusive 43:7 concrete 7:23 condition 59:16,16 59:18,22,23 confer 1:20 66:23 conferring 45:12 46:1 confirm 48:10 conflating 56:6 confused 13:9 35:10 confusing 6:3 confusion 8:4,14 11:20 consensus 34:15 conservative 23:11 consider 10:9 27:10 considers 18:4 consistently 58:6 63:14 construe 20:25 consulting 15:15 19:5 consumer 4:1 9:10 9:21 10:18,21 20:16,17,22,25 21:1,3,7 24:2,3,7 24:10,15 25:17,19 26:1 27:1,13,17,19 27:25 28:5,24 29:11 30:24 31:1,7 36:9 44:5 50:11 consumers 5:25 7:3 7:4 11:19 26:3 contacted 11:19 contacts 11:22,25 12:4 contain 62:8,12 contained 4:9 41:20 contains 3:25 5:14 6:23 36:25 content 4:4 6:11 contents 24:12 continuance 10:8 continue 65:18 continuing 66:10 contract 13:18 convened 1:19 conversation 13:24 14:5 7:14 conversations 4:12 convince 32:2 coordinate 68:22 corporation 1:8 57:7 correct 5:19 22:3,9 22:20 41:21 48:16 58:23 59:1,12 60:7 60:8,13,14 69:6 correctly 23:5 correlates 25:18 correlation 25:16 34:9 cost 65:11 counsel 70:7,10 counsel's 37:17 counterproposal 62:5 couple 4:10 30:25 course 15:4 46:9 court 1:1 10:8 16:11 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 23 of 32 Meet and Confer FTC v. DirecTV, et al. 16:17 17:20 19:1 21:8 26:9,25 27:22 34:2 44:19 55:5 57:12 60:2 61:4,5 65:19 66:10 67:10 67:23 Court's 16:12 17:12 covered 51:11 64:14 creates 34:22 credit 31:6 criteria 63:5 critical 49:7 crystallize 57:12 58:24 59:11 60:1 63:9 68:19 crystallized 66:9 current 51:6 currently 49:8 custodian 56:1 custodians 50:25 55:13 63:1 customer 6:12 9:1 9:13,19,20,22 12:19,22 13:8,12 13:13,16,19 21:4 22:16 25:23 29:20 30:6,9,10,17,18,23 31:1,4,8,13,15,19 31:22 32:22 33:2 customers 5:15,18 5:21 6:16,16 7:9 8:3,13,25 12:5 21:6 22:17 33:3,15 33:21 customers' 4:5 49:17 cut 3:14 cutoff 51:7 D D 3:1 data 33:5,16 52:11 53:5 55:1 database 10:16,16 12:10 14:16 20:23 21:23,24 32:22 42:8 databases 34:10 date 36:15 37:11 38:10 40:5 51:6 date-certain 37:14 37:18 68:15 day 44:21,21 66:18 days 31:2,4 42:3,25 de 5:24 9:11 deadline 58:10 deal 54:22 dealing 49:6 debate 50:17 56:22 deception 27:20,21 decide 34:17 decided 55:3 65:18 65:24 decision 17:22 decrease 15:22 deemed 21:8 Defendants 1:12 defined 21:1,7 definitely 67:15 68:22 definition 41:2 delay 41:5 54:22 61:3 delayed 58:14 demerits 50:17 departments 50:9 50:12,24 55:12,19 55:25 62:25 63:4 depend 19:7 depending 15:10 44:14 described 9:13 23:4 describes 31:5 detail 39:25 detailed 49:20 determinations 43:8 determine 15:2 41:13 determining 51:19 dictates 17:7 differences 60:10 different 12:15 19:13 23:5 34:10 35:8 38:25 39:3,10 47:9 52:9 differently 16:20 difficult 52:24 direct 13:7 27:20 directly 7:19 11:4 DirecTV 1:8,10 2:10 3:7,24 4:1,6,13 5:18,21 8:13 9:10 10:5 11:11,19,22 12:18 13:1,7 15:8 17:18 20:22 23:17 23:23 24:2,4,6,9 24:15,16,24 25:19 25:22 28:8,14,15 28:24 29:12 33:15 33:22 36:8 54:19 56:23 57:5,14,15 58:22 59:17,23 63:12,19,23 65:12 DirecTV's 6:16 8:24 9:6,6 16:14 24:11 57:14 62:15 64:21 disadvantage 34:2 disagree 15:6 52:20 61:21 disagreement 17:2 18:2 34:14 36:6 68:5 disconnect 4:19 discovery 37:12 49:8 51:6 52:8 53:10 55:10,16,17 55:20 56:4 58:4 66:12 discrete 41:20 67:17 67:19 discuss 68:10 discussed 28:11,13 28:13,17,19 53:24 discussion 8:23,23 14:13 20:17 discussions 5:9 54:5 disk 42:9 dispute 44:12,13 59:7 61:1,4,5 66:10 disputes 66:11 68:17 distill 68:17 distinction 11:1 DISTRICT 1:1,2 DIVISION 1:3 doc 42:7 document 46:14 61:7 documents 29:3 37:1,16,19,21,23 38:2 39:2 40:3 41:24 49:16 52:21 52:23 53:19,24 54:4,11 55:23 57:4 57:21 doing 15:22 47:18 49:19 50:18 56:11 57:16 67:10 68:7 dollar 57:7 65:11 door 43:1 67:20 doubt 22:10,19 draw 12:11 E E 3:1,1 e-discovery 50:5 eagerly 43:24 earlier 37:25 63:19 early 47:4 easiest 52:22 53:4 easy 23:22 53:2 Edmondson 2:5 3:5 efficiency 40:6 efficient 29:2 effort 25:17 57:25 either 5:1 10:6 67:23 eleventh 55:4,11 eliminating 26:21 email 36:2 41:9 49:22 59:4 62:8,9 62:12,16 64:12 emails 3:23 49:15,25 54:3,10 61:7 62:6 63:18,20,22,23,24 64:18,19,21,22,25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 3/18/2016 [73] employed 70:7,10 employee 70:10 employees 63:4 endeavor 46:24 engage 57:16 enrolled 13:15 entire 12:10 16:6 29:11,13 40:14 43:16 44:16 62:1 entirety 40:18 entries 20:2,5,8 entry 20:5,6,7 EQ 2:12 Eric 2:5 3:5 43:5 err 8:20 escalate 30:14 31:10 escalated 3:25 30:20 escalation 31:12,25 31:20 32:2 escalations 30:19,23 31:21 32:24 ESI 49:19 50:14,18 51:13 54:11 55:12 56:1,11 57:4,9,17 58:6,21 60:12 61:13,20 62:24 63:12,14,16 65:8 especially 10:14 ESQ 2:4,5,6,11,13 2:14 essentially 17:15,17 26:20 40:1 EST 1:21 everyone's 64:10 evidence 27:8 52:16 62:21 evidentiary 11:18 exact 9:16 exactly 8:8 11:24 14:1 22:22 26:8 37:6 47:21 49:3 example 7:3,23 8:5 21:23 22:7 40:10 examples 30:25 Excel 18:24 exemplar 43:19 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 24 of 32 Meet and Confer FTC v. DirecTV, et al. exercise 15:21 52:19 exist 31:21 47:3 53:11 56:3 61:14 62:20 64:12 exists 53:7,8 55:19 expect 44:24 expedited 37:2 expert 15:16 19:5 24:20 32:16 explained 30:15 58:3 63:1 explore 5:4 express 5:16 8:3 expressed 19:14 expressing 7:3 11:20 expressions 8:14 extend 68:15 extension 37:13 extent 5:23 15:7 21:6 33:13 37:2 extra 42:25 extrapolate 11:13 11:18 12:21 26:12 32:13,15 38:15 extrapolating 32:11 extreme 62:19 extremely 61:14 eye-opening 43:24 44:1 F fact 5:20,23 7:8 9:1 10:15 12:16 14:9 25:22 42:14 49:8 51:6 52:8 67:23 factual 15:6 28:1 fails 25:13,15 fair 21:13 fairly 37:1 fairness 24:8 faith 33:11 34:20 fall 8:20 31:12 fallacy 9:3 10:20 far 32:11 33:15 52:17 58:7 61:16 63:12 65:2 fashion 67:11 fast 35:14 February 14:23 35:12 36:1,13 49:20 50:1 56:18 58:9,10 65:10,15 66:1 Federal 1:5 2:3,7 3:5 17:7 feel 26:2 fellows 65:5 felt 18:8 fewer 51:1 fields 6:20 fighting 52:8 figure 15:9,13,17 41:19 65:11 figuring 21:11 23:16 file 6:25 20:6,7 22:16,23 33:3 55:4 65:25 filed 65:16 66:6 files 5:2 6:23 8:6,8 14:25 15:11,15 16:8 18:24 19:3,8 20:7,9 21:22,24 22:8,24 23:13,13 24:25 25:1 32:3 48:6 filter 33:17 finally 49:10 56:17 65:1,4 financially 70:11 find 9:7,17,18,25 53:6 56:2 62:19 63:22 Finding 57:9 fine 9:22 18:15 28:8 34:12,18 35:22 43:10 finish 11:16 22:5 firm 57:9 first 4:21 13:10 14:7 15:20 18:17 25:12 36:5,6,23 54:22 56:8,16 first-level 42:12 five 50:11 fix 30:24 31:20 fixed 30:25 focus 6:4 folks 3:10 67:1 follow 6:6 43:11 following 40:7,16 44:10,18 45:5 51:17 follows 43:14 foolish 9:9 football 10:1 footnote 23:25 24:1 25:11,15 26:18 48:6 foregoing 70:5 forget 12:6,8 form 54:11 formal 68:6 formalistic 11:1 forthcoming 37:1 forward 22:13 24:17 59:16 68:11 forwarded 14:5,10 forwards 7:17 frame 47:5,15 Francisco 1:3 3:6 frankly 5:14 13:2 28:1 32:19 Friday 1:15 38:8,10 40:11 46:24 Friedman 2:11 3:8 3:20 4:18 5:7,20 8:20 11:15 12:15 13:24 14:7 16:19 17:7,23 22:13,22 23:7,10,19 24:19 25:7,12 30:2,5 32:7 33:25 34:6,25 35:6,13,18,22 36:19,22 37:20 38:4,12,18 39:21 40:11,21,25 41:4 41:22 42:6,11,20 42:24 43:25 44:25 45:20 46:3,7,10 48:15,25 53:15,17 57:18 68:23 69:6,9 fruit 66:3 FTC 5:12 10:11 14:24 16:20,21 17:18 18:4 20:24 24:3,7,13 26:25 27:7,12 28:3 39:4 51:4 55:9 58:25 59:11 61:16 63:13 63:20 65:13 FTC's 5:13 24:9 28:15 58:24 60:5 full 3:17 5:1 19:21 33:3 38:19 48:12 53:1 fully 43:16 fundamental 34:14 further 61:13 70:9 G G 3:1 gains 10:11 game 10:1 gather 52:10 53:2 55:25 gathered 29:13 general 49:4,5 67:13 General's 7:17 generated 36:8 48:11,18 49:13 53:25 54:6,13,20 56:15,25 60:16,19 61:6 62:11 gentlemen 3:3 getting 12:7,23 19:4 41:24 42:4 60:18 Gilliam 37:13 gitgo 8:21 17:2 give 3:15 7:23 15:15 17:22,22 19:15 26:4,5,7 30:25 33:2 38:5,12 40:9 43:19 44:16 45:1 45:20 46:10,21 48:22 49:3 52:15 55:23 57:20 60:22 66:23 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 3/18/2016 [74] given 49:20 55:2 67:11 gives 47:10 giving 52:21 53:7,12 53:13 60:11 65:16 glean 23:17 go 9:4 10:5 12:7 14:14,15 18:19 20:1 21:11 22:4,13 25:3,8 26:15 29:1 29:7 30:4 34:5,7 35:13,20 36:19,24 39:17,19 41:10 44:3,17 45:10 46:9 48:4 49:2 51:10 52:18 53:6,6,10 55:25 57:22 59:25 65:18 69:8,9 goal 30:10 goes 13:16 54:4 66:13 going 5:3 7:22 8:4 9:8,15,24 13:2,4 13:11 14:14 15:8 15:21 16:7 17:24 17:25 18:1 22:11 23:17 26:15 29:22 35:14 38:13 45:3 46:19 51:16 52:15 52:24 57:15,20 58:12 62:18 63:10 63:15 68:11 good 3:3 9:5 18:21 33:11 49:1 55:24 57:18 67:2 gotten 36:15 40:5 56:19 grand 30:12 grant 37:13 graph 39:1 great 3:21 group 31:10 groups 49:21 62:1 65:9 guarantee 7:6 guess 6:11 13:19 15:23 28:21 35:13 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 25 of 32 Meet and Confer FTC v. DirecTV, et al. 42:20 guesstimating 45:3 guy 57:6 guys 18:23 32:1 43:4 48:5 54:25 64:3 68:3 69:1 H half 3:23 53:3 hand 16:9 handing 10:15 handle 47:25 hands 43:22 55:9 happen 13:17 42:3 happens 10:3 happy 32:1 68:12 hat 23:4 hate 51:23 haystack 14:17 55:16 hear 18:11 26:16,18 26:21 33:7 51:8 58:17 61:23 62:4 63:7 67:13 heard 30:18 54:14 58:18 heated 66:11 heavily 20:11 hereto 70:11 Hey 6:2 9:14,19,25 31:8 high 22:11 hit 52:9 hits 63:6 65:13 hoc 49:14 54:2 hold 11:16 14:4 20:1 21:17 38:6 44:12 45:9 53:16 63:25 67:25 69:1 hone 63:18 honest 4:18 hope 37:12 hour 55:4,11 hours 65:6 68:21 houses 8:24,25 huge 21:10 53:6 55:12,22 56:1 Hummel 56:9 hypothesize 12:16 hypothetical 13:7 29:20 hypothetically 14:12,15 24:22 I i.e 8:2 23:22 ideas 32:10 identified 22:8 43:15 53:20 63:4 65:9 identify 32:9 52:22 identifying 41:23 idle 56:20 ignoring 20:12 illogical 25:4,7 immediately 65:25 implication 17:14 importantly 67:22 in-person 3:10 inaccurate 27:14 include 8:14 39:13 44:19 45:6 47:2 included 33:5 includes 7:15 54:3 including 6:13 44:13 incorrect 53:23 increases 11:21 incredibly 44:20 incur 53:5,6 65:12 incurring 55:22 indication 9:5,6 11:9 indispensable 28:3 individual 6:23 57:6 information 5:10,11 11:24 18:10 23:16 31:10 44:4 49:4 50:10 51:18 55:21 55:23 informative 44:7 initial 35:25 initiate 67:25 inquiries 30:8 32:18 inquiry 8:22 9:23 29:21 30:11 insinuation 27:6 55:7 insisted 60:18 instance 7:16,24 11:13 20:12 30:12 intending 6:13 intentionally 43:4 interactions 21:5 interested 39:15 29:11 70:11 internal 44:4 62:9 62:10,12,16 interrupt 33:25 34:25 51:23 interrupting 34:11 investigation 5:13 involves 32:20 issue 8:18 11:22 18:12 54:13 57:12 60:2 63:18 67:17 67:19 68:24 issued 16:11 issues 11:5 13:1 24:14,23 31:3 33:22 34:13,24 39:9 54:23 56:6 58:16 66:9,19,21 66:24 67:10,21 68:19 J James 18:13 34:24 66:21 67:24 James' 3:18 34:16 36:17 January 14:23 18:23 37:7,8,9 40:1 41:12 56:16 jarring 43:6 joining 3:8 joking 46:8,8 Judge 3:18 18:13 34:16,24 36:17 37:13 66:21 67:24 jump 48:2 June 56:8 justification 26:14 K key 39:9 49:20 50:4 50:19 65:8 keyword 50:15 57:13 62:2 keywords 52:4 kick 44:11 kind 27:16 47:3,10 50:12 51:11 58:10 know 4:3,7,12,14 5:10,12 7:15 10:20 10:25 11:10 13:25 14:25 15:1,4 16:7 17:13,14 18:13 19:11,16 20:3,4,8 20:11,12 21:3,8,10 23:7,10,13,15,18 24:4,8 26:6,11 28:12 30:5 31:24 33:9,16 35:14 36:16 37:14 38:4 38:16,20 40:1 43:4 44:8 46:13,16,17 48:20,22 49:6,15 49:18,23,23,25 50:2,4,7 52:24 56:2,20,22 57:6 60:9 62:18 66:10 66:11,12,16,19 67:6,14,20,24 68:13,13,16,18,18 knowing 22:22 knowledge 19:21 27:20 known 4:22 L laid 3:16 18:16 35:11 49:22 large 7:10 8:10,17 33:20 36:22,23 49:25 57:3,8 late 47:4 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 3/18/2016 [75] latest 45:4 law 17:6,7,25 57:9 lawyers 40:4 51:3 lay 19:25 28:10 layer 42:18 leap 25:4,6 leave 43:16 lessening 58:1 lessens 61:21 lesser 33:4 let's 7:23,25 8:2 14:12 21:13,23 22:14,18 24:21 31:1 43:10 44:9 56:15 62:5 68:10 69:8,15 letter 23:25 24:1 27:6,22,24 44:11 48:6 55:4 65:16,17 66:1,16 67:6,12,16 67:19 68:1,14 level 28:24 liability 1:11 lieu 60:17 light 10:15 67:20,21 67:22 likelihood 5:14 limit 3:16 4:16 14:21,22 20:21 21:13 28:16 34:15 35:11 50:9 56:12 60:21 61:8,9,24,25 61:25 63:22 limitation 52:4,5 62:25 limited 1:10 10:21 15:18 49:12,21 53:25 limiting 26:20 50:23 62:4 64:20 line 50:20 52:12 list 15:15 19:2 63:2 listed 49:18 listen 29:7 listing 18:24 litigation 5:11,12 11:5 57:5,10 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 26 of 32 Meet and Confer FTC v. DirecTV, et al. little 6:3 14:17 35:7 42:2,18 66:11 live 13:20 LLC 1:10 loaded 20:11 50:5 location 3:24 4:8 lock 9:21 locked 9:15 lodge 6:18 25:17 lodged 5:25 logical 10:20 25:6 25:16 long 44:20 53:4 longer 44:9 63:5 look 14:16,17 16:10 17:2 24:2 26:4,6 26:16,21 28:6 32:12 33:19 34:12 35:13,25 39:25 47:22 53:7 56:14 62:6 64:11 looked 66:22 looking 10:9 23:14 43:5 50:8,22 52:16 looks 47:14 66:9 Los 3:6,7,10 66:14 lost 31:2 lot 23:15 46:19 68:7 loud 33:7 M ma'am 13:14 main 5:13,17 26:19 32:17,21 33:1,12 33:13 34:8 majorities 30:21 majority 10:2 25:24 37:23 52:11 making 36:11 42:1 42:15 manageable 51:5 management 21:4 38:23 42:8 manual 43:17 map 11:4 March 1:15 36:2,3 36:14 38:3,3 48:13 48:20,21 49:23 56:19 Mark 2:12 3:7 8:18 10:19 18:22 27:16 29:5,7 69:1,10 marketing 13:1 massive 67:5 material 33:24 49:14 54:20 materiality 27:21 materials 3:14 7:21 15:5 50:15 54:3 60:17,20 matter 1:19 36:7 mean 8:9 11:5 15:7 15:25 17:15 18:3 20:15 22:10 23:3 25:12 28:19,20 34:13,19 36:15 37:11,16 39:24,25 42:24 43:8 44:19 50:22 52:23 58:15 64:11 meaning 12:17 meaningfully 62:4 means 17:10 24:25 37:17 32:12 meant 6:11 meet 1:19 66:14,22 meet-and-confer 3:17 26:23 37:8 56:9 65:18 69:21 meet-and-confers 10:25 36:10 merits 50:17 messages 50:2 Michael 2:13 3:8 21:18 25:14 48:4 56:5 58:18,19 middle 56:19 Mike 20:21 45:13,25 49:24 50:1 51:8 54:14 61:23 million 7:25 8:2 9:2 9:2 21:24,25 22:9 22:24,25 24:25 For The Record, Inc. 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DirecTV, et al. offices 3:9 offline 65:17 Oh 13:14,19 45:11 46:7 okay 3:21 7:6 9:22 13:19 14:3 18:11 21:18 23:21 24:24 31:5 32:6 33:7 34:5 35:22 38:1,9 39:24 40:23 41:8 42:23 45:19,22 48:1,9,17 53:14 54:18,24 55:6 56:18 59:10 60:9 61:22 62:6 63:9,17 66:2,8,8 69:7,16 69:19 once 39:14 42:11 ones 19:20,20 37:2 opened 25:6 operation 30:18 opportunity 66:13 opposed 23:17 30:7 opposite 12:17 oppressive 58:7,13 61:15 option 18:16,17,18 18:20 19:1,25 21:16 28:8,14 options 5:4 55:2 oranges 34:7 order 3:18 16:11,12 16:18,20,22,24 17:12,12,21 18:2,3 18:9,13 19:2 26:9 34:16 36:17 67:23 orderly 67:9 original 32:8 41:9 outcome 70:12 Outlook 49:25 50:2 outweighed 52:18 58:8 61:16 63:13 outweighs 65:2 overall 6:10 overbroad 26:10 51:19 55:6 overly 17:10,17 50:20 P P 3:1 p.m 1:16,20,21 69:21 pace 37:2 package 13:9 31:16 page 14:9 pages 48:8 51:4 53:3 paragraph 27:11,18 parcel 57:10 pardon 45:9 part 28:3 31:17 41:4 57:10 partake 57:24 particular 14:9 particularly 49:7 parties 16:4,7 51:16 70:8,11 parties' 60:4 partly 60:14 partner 56:10 party 16:8 path 43:11 patience 64:10 patiently 44:7 pattern 14:9 patterns 9:7 Pause 21:20 45:23 46:2 64:2 people 30:9 38:13 percent 8:2,7 61:13 percentage 11:21 33:21 38:7 percentages 4:4 perfect 3:20 period 9:21 38:18 38:20 43:7 51:3 56:12 person 13:18 30:7 66:14 67:15 perspective 50:7 pertaining 24:13 36:8 phone 56:10 59:20 64:6 65:6 66:14 69:12 phonetic 28:4 pick 16:13 19:9 22:18 picking 23:3 PII 16:13,13,15 17:3 17:16,17,19,22,22 17:25 36:25 37:3 41:20 42:1 47:8 piling 67:12 pins 14:17 pivot 47:7 place 6:19 29:16 38:20 Plaintiff 1:6 plan 3:19 13:15 play 16:23 17:20 18:4,8 pleaded 27:18 please 11:17 12:8 42:9 51:21 point 4:17 5:6,8 11:17,19 12:23 16:3,3,6 20:17 21:2 23:8 24:8 25:11 26:22,25 27:9 41:11 44:8 49:24 50:16 51:11 51:12,13 53:9 56:23 57:11 60:15 68:16 points 19:13 33:19 34:21 policies 13:22 policy 29:23 portion 10:16 47:13 portions 61:12 66:16 62:21 pose 13:12 posed 4:10 position 8:11 16:14 17:10,24 18:10,14 33:8,18 34:22 35:5 58:2,24 60:6 62:4 62:15 63:23 64:21 68:17 3/18/2016 [77] 24:1 60:15 probably 8:1 9:18 14:10 16:1 18:1 22:23 23:11 24:17 31:12 42:20 55:13 66:20 problem 11:8 61:2 problems 23:20 64:8 procedure 68:6 procedures 13:22 proceedings 21:20 45:23 46:2 64:2 70:5,8 process 22:12 23:4 26:23 30:8 36:25 44:11 47:24 67:9 67:15 68:1 Procter 2:6 3:6 PROCTOR 45:14 45:24 produce 5:1 10:6 15:19 16:15 17:16 22:24 28:22 38:22 40:8,18 42:10 43:14 44:24 46:24 46:24 47:6 48:20 48:23 51:4 54:1 59:4,7 63:10 64:21 65:12 produced 45:3 producing 16:5,7 17:16 24:7 38:10 42:1 48:12 62:8 64:20 production 16:1 17:19 36:12,23 41:25 42:5,8 44:17 45:6 57:17 58:11 63:2 64:22 productions 50:24 programming 31:2 project 42:22 projectable 24:15 28:15 projection 43:11 proper 55:17 positions 28:12 60:5 66:17 possession 37:17,17 possible 40:18 64:12 66:17,25 possibly 51:1 postulate 25:21 PowerPoint 49:16 54:3,10 61:7 precise 51:13 precisely 8:7 27:21 27:23 67:18 Premier 31:16 prepared 54:15 present 19:10 22:1 presentations 49:16 54:4,11 61:7,8 presented 28:9 presents 16:16 57:4 President 3:14,22 4:2,17,20,22 5:2 6:1,4 7:13,15,20 8:6,12,15,24 11:9 11:12,14,23 12:3 12:17,21 14:6,11 26:4,13 28:12,22 29:10,15,25 30:7 30:15,21 31:25 32:7,14,25 33:12 34:8 38:22 39:3 45:7 46:15 59:13 59:18 President's 6:9 7:18 presidents 50:13,13 presumably 27:3 43:17 pretty 3:15 47:19 49:1 57:18 65:15 65:25 previously 49:13 price 7:4 8:4 9:14 11:20 13:9,15 primarily 49:14 primary 5:17,20,22 5:24 6:19 7:8 33:14 prior 4:11 5:9 7:14 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 28 of 32 Meet and Confer FTC v. DirecTV, et al. proportion 4:4 proportions 24:12 proposal 3:13 11:6 14:20,22 20:18,20 20:21,21 21:12 25:9 26:17 27:11 28:19,19 29:14 32:4,8 34:15,20,22 35:11 36:1 49:20 49:21 50:15,20 51:4 57:13,15,16 58:1,21 60:6,21 61:9,24,25 63:22 64:20 65:8,10 proposals 3:16 28:16 34:17 55:2 55:10 propose 20:23 43:13 proposed 15:13 18:15 44:10 49:19 57:12 60:8 61:8 proposing 50:14 propounded 56:8 58:4 protect 17:13 protective 16:18,22 17:12,21 18:3 protocol 67:16 68:14 28:2 prove 12:24 27:3,18 provide 11:24 18:24 provided 5:11 provides 8:12 providing 15:14 PST 1:16,20 pull 22:20 45:8 purposes 8:23 put 14:23 24:21 34:16 42:9 48:5 59:3,16 69:1,10 putting 10:10 49:11 54:16 Q qualify 29:25 query 49:19 50:3,6 58:21 63:22,24 querying 64:22,24 question 4:10 6:8 13:7,12 18:21 30:11 36:21 41:18 62:5 63:21 64:16 64:17 65:5,7 questions 6:17 46:4 quick 48:2 quickly 3:15 19:25 21:15 65:15 66:24 quite 13:2 32:19 57:21 60:20 R R 3:1 raised 29:19 67:21 67:22 random 14:24,25 15:1,16 16:2,3,5,9 18:17,20 19:5,7,9 19:15,17,21,23 20:10,23 21:13 22:7 32:9 randomized 33:4 randomly 15:19 range 22:9 rare 30:5,11 rarely 52:2 raw 33:16 Ray 39:15 re-argue 34:23 reaction 50:19 read 16:19 41:9 reading 17:11 ready 41:24 42:4,9 real 48:2 realize 13:17 really 13:8 26:21 36:5,15 44:5 49:10 50:17 54:11 63:18 66:13 67:7 68:9,10 reasonable 55:2,10 67:11 reasonably 51:17 reasons 58:2,3 recall 65:15 recap 32:19 receive 9:2 received 24:3,13,16 24:16 receives 4:6 recess 69:18 recognize 37:6 57:3 61:24 record 3:4 7:8 34:3 34:11 59:11,22 64:8 69:8,9,15 recorded 6:20 7:11 11:25 29:23 70:5 recordings 7:12 records 5:17 27:14 27:15 33:14 51:2 52:12,14 63:3 redact 17:4,8,9,10 17:11,25 18:10 40:17 43:16 45:8 47:7 58:12 redacted 16:21,25 43:21,21 44:23,23 46:23 47:13 redacting 15:20 16:16 40:4,14 41:19 42:1 redaction 16:10 18:13 36:25 37:9 37:22,24 39:14 43:13,15,18,20 44:16 46:17 47:24 redactions 38:14 40:15 48:12 reduce 15:24 16:1 43:17 50:9 reduced 70:6 reducing 57:13 reference 30:19 37:24 referred 49:14 reflect 5:15 7:21 29:11,12 49:17 reflected 13:21,21 33:17 reflections 7:12 reflective 11:25 24:11 reflects 21:4 refund 31:3,6,8,13 refuse 64:24 refuses 64:21 regularly 36:7 48:10 48:18 49:12 53:25 54:6,12,20 56:15 56:25 60:16,19 61:6 62:11 rehash 60:4 reiterate 20:15 reiterated 36:1 reject 28:20 59:24 rejected 59:12 60:12 rejecting 26:22 58:24 relate 25:25 68:25 related 10:11 32:21 69:5 70:7 relates 32:4 35:7 relationship 21:4 32:17 relative 70:9 relevance 16:5,13 23:1 27:20,25 51:15 52:17 relevancy 25:19 34:21 42:12 relevant 10:12 11:3 11:3 15:3,4,9 16:9 16:21,22,24 17:3 18:5,6 21:8 24:14 24:23 25:1 32:3 33:20 35:2 42:14 42:14,15 46:12,12 46:16 47:1 49:18 50:10 51:18 60:11 60:23 61:11 62:20 63:11 relieve 20:21 remaining 52:23 Remember 40:11 remind 48:5 remote 10:1 remotely 55:18 repeatedly 56:12 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 3/18/2016 [78] report 38:22,23 39:13 43:19 58:11 reported 7:21 reporter 34:2 68:24 69:16 70:1 reports 36:8,12,18 40:8,17,22,24 41:21 43:6,14,22 44:4,22 45:7 46:15 47:3,6,19 48:11,16 48:19 49:13 52:9 54:1,6,13,20 56:15 56:25 59:5,9 60:11 60:16,19,23,23 61:6,12 62:7,12,20 62:21 63:11 repository 21:3 24:2 24:10,11 represent 4:13 6:9 30:22 37:22 38:4 54:8 56:24 63:19 representation 4:15 representative 4:3 6:10,12 8:9 10:17 11:11 12:4,12,18 13:13,14 15:12 19:9 24:11 29:18 33:12 represented 4:2 56:17 57:8 representing 54:19 request 19:1 35:2,7 53:18 55:22 59:12 59:14 60:5,6 61:13 61:20 62:22,24 requests 20:16 58:4 58:25,25 require 37:22,24 43:15 required 51:2 requirements 58:12 requires 17:25 39:14 reservations 26:19 resolution 50:21 resolve 30:11,13 58:16,25 67:23 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 29 of 32 Meet and Confer FTC v. DirecTV, et al. resolved 46:6 66:24 respect 49:11 50:10 53:24 respective 3:9 respond 3:13 53:17 53:18 65:16 responded 27:23 49:24 50:1 61:10 response 4:15 28:7 55:21 64:22,25 responsive 15:3,3 21:12 41:2,13 42:22 47:1 52:13 52:22 53:5,6,19 54:10,12,21 55:19 55:23 56:25 60:17 61:12 62:13,17,22 63:21,23 69:4 responsiveness 41:18,23 42:19 43:8 57:2 restate 44:25 review 11:2,5 12:13 16:5 24:21 29:2 37:9 42:12,13,19 44:6 51:3,15 52:6 reviewed 48:19 reviewing 15:20 16:8 40:4 57:3,4,9 revisit 18:14 RFA 4:15 54:10 RFP 28:17 33:9 34:16 35:25 49:11 53:24 54:12,21 56:8,25 60:17,21 62:13,17 63:21 64:23,25 69:4,4 RFPs 21:1,8 37:15 49:18 right 6:14 8:10,24 10:9,19 14:12 23:7 23:9 32:9 33:4 35:14 37:20 40:24 41:2 42:20 43:12 44:24 45:20 48:14 48:24 52:7,7 53:10 57:17 64:14,15,16 RIO 4:7 5:13,17 6:13,21,22 7:8,11 7:22,25 8:25 9:3,5 9:11 10:3,21,22 11:4 12:1,7 13:4,5 13:22,25 14:25 15:14 18:17 19:2 20:23 21:2,22 25:1 28:13 29:13,24 30:17,19,22 31:21 31:25 32:2,21,24 33:12,13 34:8 51:10 risk 51:19,21 RMR-CRR-CLR 70:18 robust 47:19 57:21 Rosta 28:4 roughly 9:1 38:19 rules 55:10 run 50:5 55:13 running 27:17 Ryan 2:14 3:8 35:18 35:20,23 52:7 67:13 68:16,22 S S 3:1 safeguarded 16:18 safeguards 17:21 sample 14:24,25 15:1,12,16,24 16:2 16:3,6,9 18:17,20 19:6,7,9,15,21,23 20:10,24 21:13 22:7 32:9 33:4 47:13,14,16,19 samples 19:18 sampling 28:13,23 32:21,23 51:10 San 1:3 3:6 Sandrock 2:14 3:8 35:21 51:23 52:1,5 67:3,5 68:2 sat 55:9 saying 4:25 7:4 9:25 15:23 17:12,15,18 22:17 26:2,8,17 42:8 51:9 53:4,20 55:24 60:5 61:23 68:4 says 9:14,19,20,22 13:8,14,16,18,19 16:20,22 27:12 31:5,7,8,16 55:18 scheme 30:12 scope 56:13 61:25 scores 55:13 63:3 search 10:7 50:3,14 50:18 51:1,1,14 55:12,15 56:1,12 57:17,22 58:6,21 60:12 62:1,2 63:2 63:5,12,14,16 65:8 65:12 searches 57:13 second 11:21 13:16 14:4 18:7,15,18,19 19:25 21:17,19 25:15 28:7 34:1 63:25 second-level 42:13 seconds 67:18 secure 17:13 see 6:5 10:19 13:10 13:14 14:7 17:11 23:1 30:24 31:9,11 31:14,23 34:6,8 38:14 47:21 51:5 56:16 57:22 64:9 68:24 seek 44:3 seeking 27:17,19 28:5 29:3 select 20:10 selecting 19:21 20:7 selection 33:18 selective 43:20 send 39:16 sense 12:20 26:3 36:16 sentence 18:7 sentences 18:2 separate 39:6 September 54:5 service 9:20 12:19 12:22 13:13 30:6 30:10,10,17,18,23 31:1,4,8,13,19,22 32:22 33:2 set 3:25 7:15 23:14 50:25 51:17 seven 25:1 shackles 69:10 shift 11:6 shocking 40:5 43:9 short 19:2 short-cut 43:13 shorten 35:6 shorthand 14:2,4 shot 7:4 13:11 show 28:24 39:1 shows 9:3 32:23 Sidley 2:15 sift 52:24 sign 5:2 signal 10:1 signed 31:16 significant 57:23 silly 55:8,20 similar 50:25 simple 25:22 simply 15:19 32:16 60:1,5 single 56:1 sir 13:14 40:25 42:6 situation 9:13 31:6 31:15,22 situations 30:22,23 six 49:21 62:1,24 63:4 65:9 size 15:24 18:20 19:7,11 20:3 skewed 29:14 slow 43:4 slows 39:11 smaller 63:2 snapshot 8:12 solely 26:17 solution 64:9 soon 40:18 66:17 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 3/18/2016 [79] sophisticated 57:7,9 sorry 28:14 39:20 46:4 53:22 63:7 64:3,7 69:3 sort 5:2 10:7 23:1 54:14 sorts 21:5 32:2 sought 16:24 sound 3:19 sounds 3:20 23:22 23:24 28:7 34:14 42:17,18 57:14 source 4:22 5:24 33:14 sources 4:23 7:16 33:2 39:3 speaking 3:4 57:21 specific 10:16,16 40:21 57:13 58:20 specifically 24:12 25:13 spend 23:15 52:8 spotted 10:2 spread 19:8,12 spreadsheet 18:24 31:24 spreadsheets 47:9 stacking 67:6,8 68:8 Stacy 2:6 3:6 45:16 45:24 stand 69:14 start 5:10 19:10 44:18 started 6:2 18:22 65:23,24 66:6 starting 23:8 state 4:1 39:7 stated 59:24 STATES 1:1 statistical 16:2 47:11 statistically 29:12 statistician 32:16 statistics 11:12 12:23 STELA 58:12 stenotype 70:5 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 30 of 32 Meet and Confer FTC v. DirecTV, et al. 3/18/2016 [80] 46:20 48:21 67:8 67:25 68:11 turn 12:10 19:4 turns 20:11 two 4:23,25 5:4 9:15 12:15 18:2 34:9 36:3 38:20 40:1,3 41:19,23 43:7,23 47:4 51:15 53:23 65:6 66:21 68:21 two-year 13:15 38:18,19 type 8:8 13:20 25:3 29:25 31:14,15,21 56:11 57:10,17 58:21 types 7:12 30:19 47:9 53:24 typewriting 70:6 typically 33:1 U unacceptable 28:21 undergo 24:6 understand 3:24 4:8 7:5 10:21,22 11:2 11:15 20:6 21:21 28:9 29:15 30:3 34:13 35:4 40:13 43:20 50:6 51:21 62:3 understanding 6:15 6:22 7:2,14,20 12:23 understands 22:15 understood 5:13 24:1 33:23 unfortunately 34:14 unilateral 58:10 UNITED 1:1 universe 28:15 29:11,13 40:24 48:21 49:12 53:1 53:25 unrepresentative 8:16 unresponsive 52:25 suggesting 24:19 takes 20:24 25:17 step 40:23 41:18,18 41:19,23,23,25 42:2,5,18 45:14 69:2 stepped 45:17 stick 32:8 stuff 18:4 59:8 style 46:14 substantial 16:16 33:21 36:11 substantially 16:2 43:17 substitute 4:7 8:15 11:9 12:3 28:12,16 54:7 subsumes 21:6 sudden 13:10 suffice 49:6 sufficient 28:23 sufficiently 16:18 suggested 23:23 33:5 60:15 sum 33:8 summaries 44:5 summarize 49:16 summary 39:12 49:5 57:18 sun 55:5 supervision 70:6 supply 13:4 support 27:14 supporting 27:2 supposed 19:3 31:17 31:18 sure 4:19 5:8 6:7 9:15 12:9 15:11 21:18 25:10 34:3 42:13,15 43:25 49:2,5 54:18 56:2 60:3,20,22 61:14 64:1 65:6 67:4 68:11 69:10 survey 32:2 surveying 32:21 Susanne 69:14,19 70:4,18 system 5:17,21,22 6:21,22 7:8,13,25 11:3 13:23 21:4 systematic 12:13 T tab 39:4,4,5,6,8,11 39:16 40:9,15,17 41:20 43:15,16 44:16 45:8 table 28:10 47:7 50:16 tabs 38:23,25 tacks 65:7 take 10:7 14:24 15:9 21:13,14 23:15 24:20 37:3,3 39:12 40:16 42:3 51:18 62:19 69:15 taken 68:16,20 69:18 39:8 talk 3:16 6:18 25:14 32:3 68:11 talked 10:24 16:10 29:9 36:4,9 46:14 47:9 48:13 52:14 59:19 talking 4:16,20 6:25 10:10 15:21 35:11 38:1 40:21,22 42:5 43:6 47:3 48:7 49:15,15 57:1,1,2 59:3,8 61:6 63:5 63:11 68:18,25 team 38:13 technologies 57:8 teed 29:24 teleconference 1:17 1:20 telephonically 3:9 television 13:9 tell 11:23 17:23 19:10 22:17 25:21 25:24 38:2 41:15 43:2,12 44:14,15 44:22 46:20 47:15 47:23 48:22 49:3 50:20 63:10 64:11 telling 12:2 68:2,3 tells 17:6 ten 10:7,8 22:23 23:11 38:13 40:3 tens 7:1 24:4 27:1,3 27:12 term 63:2 terms 4:3 33:15 44:4 49:20 50:4,15,19 50:23 51:1,1,14,17 52:9 58:19 62:24 65:7,9 68:13 testify 32:16 thank 9:22 35:23 67:1 69:17,20 thankfully 29:9 thing 12:1,9 22:16 39:21 46:12 57:19 things 5:16 10:2,17 12:15 30:13 46:18 47:22 53:10 56:20 56:21 68:11 think 3:14 4:10,13 5:5,7 6:2,5 10:12 12:1,12,14 14:23 16:14,19 17:1,25 18:1,22,23 19:3,14 24:5 25:5,5 27:15 28:23 29:2,8 31:12 32:24 34:13,19,20 34:22 35:8,18 36:1 36:5,16 37:7 38:8 38:21 39:14,17 43:3 44:16 45:1,12 46:11,19,22 47:5 47:17 50:1,17,19 50:24 51:8,9,11 53:7,11 54:15 56:6 57:19 58:18,18,19 62:20 64:5 66:1,8 67:8,9,14 68:4,9 thought 7:5 42:21 thousand 47:4 thousands 24:5 27:1 27:3,13 three 31:2,4 37:18 39:7 41:25 42:25 time 18:3 20:19 23:16 36:17 37:3,4 38:19 39:23 47:4 47:15 49:3,24 65:3 66:12,13 69:20 time-consuming 58:13 timely 67:11 times 4:11 10:24 18:23 41:7 timetable 67:21 68:15 timing 36:7 44:20 49:7 67:16 68:22 today 12:10 66:18 told 5:10 9:14 20:2 24:24 28:20 36:12 43:23 44:3 53:2 56:10,14,20 58:5,6 58:11 63:14,19 66:22,23 top 12:22 topics 49:18 total 4:4,5 11:22 21:22 22:17 24:5 Trade 1:5 2:3,7 3:5 transcribed 70:9 transcript 29:10 tremendous 14:18 trial 51:6 tried 23:23 56:12 true 10:14 51:24,25 truly 11:11 try 9:7 26:11 55:15 56:7 58:15 62:19 64:8,8 66:15,18 trying 9:4 12:24 14:8 34:7 60:1 65:17 Tuesday 38:6,13 40:9,12 41:15,19 42:21 43:12 44:14 44:21 45:1 46:10 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 31 of 32 Meet and Confer FTC v. DirecTV, et al. unshackle 69:11 update 66:23 use 8:15 14:2 32:1 usually 52:3 V valid 4:6 54:7 value 58:7 vast 10:2 25:24 30:21 37:23 52:10 vendor 50:5 versus 8:21 10:23 11:3 vice 50:13 view 25:6 33:10 62:3 volume 7:7,10 19:11 20:9 33:15 volume's 36:13 vs 1:7 W wait 44:2,9 49:2 waited 44:8 waiting 36:20 43:24 46:1 want 3:12,12 6:5,18 15:11 16:13 17:3,9 19:9,16 20:10 21:11,21 22:8,19 22:24 24:20 25:13 26:2,6 29:21 31:3 34:6,8 35:18 41:22 46:12,20 47:15 49:10 50:21 51:10 51:22 53:5,5,21 54:22 55:18,25 56:23 57:19,22 63:18 65:6 66:23 67:3 69:8 wanted 6:4 28:10 68:24 wasn't 53:2 64:16 waste 20:19 36:16 wave 36:24 way 12:13,14 17:11 18:25 20:24 22:15 26:20 29:3,17,18 30:6 47:17 56:11 61:8 66:12 ways 4:16 39:1 we'll 4:23 15:15 20:11 32:14 34:23 37:3 38:2,12 43:10 43:10,11 45:20 46:15 51:18 we're 5:3 6:25 8:22 10:15 14:19 19:20 19:20 20:5 23:13 26:2,11,14 27:16 27:19 28:5,6 32:1 32:19 37:11 38:1 43:6 46:1 48:7 49:6,7,14,15 51:9 51:16 52:15 53:4,7 55:7,22 56:19 57:1 57:1,2,19,24 59:8 60:10 62:18 68:12 68:18,25 we've 3:16 10:24 16:10 17:2 18:12 18:12,22 21:7 24:4 28:11,13,13 29:8 30:15 35:9 36:4,9 36:14 40:4 41:6 49:19 53:19,19 55:1 56:14 58:3,5 58:11,15,15 60:18 60:24 61:22 62:25 63:11,14 67:14,19 weather-related 31:3 weeding 20:22,25 week 3:23,23 4:11 37:21 40:19 44:17 44:18 45:4,5 66:1 weekend 46:25 67:2 went 9:14,19 29:19 32:1 whatnot 31:3 whatsoever 15:23 63:24 wholly 29:17 wide 11:21 willing 5:4 6:8 15:24 3/18/2016 [81] 1/2-year 51:3 10 7:25 8:2,7 25:2 26:13 51:2 10,000 23:13,13 100 21:24,25 22:9 24:23 61:13 100,000 8:6 22:14 22:19,20 23:14 24:6 12 7:4 8:4 20:16 28:17 29:22 34:16 35:15,17 44:12 58:25 59:12,14 60:5,7 66:9 69:4,4 12-month 9:21 13 20:16 33:9 35:8,9 35:15,25 38:21 49:11 50:25 53:18 53:25 54:12,21 55:22,23 56:25 59:1,2 60:10,17,21 61:12 62:13,17,22 63:1,9,21 66:9 69:5 14th 36:2 15 27:11,18 28:6 51:2 1:7 15-cv-01129-HSG 16th 36:3,14 49:23 17th 50:1 18 1:15 66:1 18th 14:24 35:12 36:1 49:21 65:10 65:15 19 39:10 2 2-plus 23:18 2.4 9:16 10:6 14:16 20:2 2:30 1:16,20 20 9:1,2 25:22,23 38:23 20,000 32:10,12 20,000-file 15:13 10:19 11:16 13:6 14:3,19 15:25 17:1 17:9 18:11,21 20:4 20:20 21:18 22:3 22:10,21 23:2,9,12 23:21 25:5,9 26:16 27:5,16 29:5,7 30:4 32:6 33:7 34:5,12 35:4,10,16 35:23 36:21 37:5 38:1,9,17 39:19,24 40:13,23 41:1,8,11 41:17 42:4,7,17,23 43:2 44:2 45:10,16 45:19,22,25 46:5,8 48:1,4,9,17 49:5 51:8,25 52:3,20 53:9,14,16,22 54:18,24 56:5 58:17 59:2,6,13,15 59:21 60:3,8,14,25 61:18,22 62:11,15 63:7,17 64:1,3,14 64:17,19 65:1,4,21 66:2,8 67:4,13 68:12 69:3,7,14,17 69:19 yeah 12:21 23:2 25:9 27:16 38:17 47:20 50:22 58:1 59:6 year 11:21 13:10,16 19:8,12 20:9 22:1 22:18 years 9:15 10:7,9 19:22 38:20 yep 13:19 yield 51:18 66:3 yielded 51:2 63:3 Z 0 1 1 8:2 51:3 1.25 51:2 63:3 16:1 24:9 32:20,22 57:24 win 28:2 wonderful 41:17 46:7 61:7 wondering 69:1 Word 49:16 54:4,11 words 17:17 24:18 51:15 54:16 work 10:1 18:25 22:12 32:8,25 37:9 65:23,24 66:3,6 68:5 workable 28:8 worked 68:13 working 19:3 40:4 58:15 65:14 works 30:9 55:20 56:4,4 wrap 49:10 writes 31:5 writing 14:23 18:16 34:17 wrong 4:14 8:1 54:7 54:25 63:10 wrote 18:13 X X 11:19 Y Yaghi 2:13 3:8 20:1 20:14 21:17,19 22:5 25:14 26:24 27:6 41:3,6,9,15 48:2,5 50:22 52:7 53:1,12 54:16,22 54:25 58:1,23 59:3 59:10,14,19 60:1,4 60:9,22 61:10,19 62:10,14,18 63:9 63:25 64:7,16,18 64:24 65:2,14,23 66:5 Yankilovich 2:4 3:3 3:4,21 5:5,8 6:7,14 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 3/18/2016 [82] Case 3:15-cv-01129-HSG Document 128 Filed 03/31/16 Page 32 of 32 Meet and Confer FTC v. DirecTV, et al. 8 9 9 23:25 24:1 25:11 25:15 2007 19:10 21:25 2008 20:12 2009 20:13 47:4 2011 47:4 2014 20:12 2015 20:12 56:9 2016 1:15 56:17 57:5 211 50:2 21st 37:8 40:1 41:12 22nd 48:21 49:9 240,000 5:1 25th 38:3,3 27th 37:9 287,000 48:7 53:3 28th 48:13,20 3 39.99 13:10 4 450,000 51:4 5 5:30 1:20 500,000 22:7,8,11 54.99 13:11 5th 36:13 56:18 58:9 58:10 6 625 31:18,18 7 7:21 69:21 70 24:24 70,000 24:20,23 700 36:13 37:16 38:2,8 39:22 40:2 40:24 41:13,21 43:6 44:6,8 45:2 46:11,21,25 52:14 52:21 53:19 54:19 56:24 57:21 59:4,9 60:16,19,23 61:5 61:11,12 62:7,11 62:20 63:12 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555
2016-04-01	129	STIPULATION WITH PROPOSED ORDER to Extend Case Deadlines filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 4/1/2016) Modified on 4/1/2016 (dtmS, COURT STAFF). (Entered: 04/01/2016)	Case 3:15-cv-01129-HSG Document 129 Filed 04/01/16 Page 1 of 7 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC Case No. 15-cv-01129-HSG Hon. Haywood S. Gilliam, Jr. STIPULATED MOTION AND [PROPOSED] ORDER TO EXTEND CASE DEADLINES UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 129 Filed 04/01/16 Page 2 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”), jointly move the Court to extend the schedule and continue the trial date for the purpose of allowing the parties to complete discovery that both parties agree is necessary to a full and fair litigation of this matter. The parties recognize that the Court has expressed reluctance to alter the case schedule significantly and to move the trial date. However, after extensive consultation and good faith negotiations following the case management conference with this Court on March 4, 2016, the parties jointly and respectfully submit that the requested extension is necessary because, despite diligence by both sides, there is outstanding discovery that cannot be completed under the current schedule. I. The Parties’ Proposed Schedule. After meeting and conferring extensively, including a six-hour, in-person session on March 24, 2016, the parties jointly propose the following case schedule. This proposal shortens substantially the extensions sought by the parties in their prior joint request. (Dkt. 100). Under the new proposal, the trial date would be continued only eight weeks (compared with sixteen weeks in the parties’ last submission). Current Schedule (Dkt. 40) The Parties’ Proposal Fact Discovery Closes Opening Expert Reports Rebuttal Expert Reports Reply Expert Reports Expert Discovery Closes Settlement Conference MSJ Filing MSJ Opposition MSJ Reply MSJ Hearing Apr. 22, 2016 Apr. 25, 2016 Jun. 10, 2016 Jul. 1, 2016 Jul. 26, 2016 Aug. 4, 2016 Aug. 25, 2016 N/A N/A Sep. 29, 2016 July 22, 2016 Sept. 2, 2016 Sept. 30, 2016 Oct. 21, 2016 Nov. 10, 2016 Nov. 18, 2016 Nov. 23, 2016 Dec. 9, 2016 Dec. 16, 2016 TBD STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 2 Case 3:15-cv-01129-HSG Document 129 Filed 04/01/16 Page 3 of 7 Current Schedule (Dkt. 40) The Parties’ Proposal Pretrial Conference Bench Trial Starts Nov. 22, 2016 Dec. 5, 2016 Jan. 17, 2017 Jan. 30, 2017 II. Discovery Taken to Date. The parties have conducted considerable discovery to date: • DIRECTV has produced over 58,000 pages of documents and the FTC has produced over 133,000 pages of documents. • The FTC has sought documents from 20 third-parties, including DIRECTV’s telemarketers, dealers, advertising agencies, and market research vendors; those companies have made substantial productions, with some productions on-going; • The parties have taken 13 depositions, and have noticed and will notice an additional thirty depositions of individuals and corporate designees. • The parties have brought 10 letter briefs to Judge James (Dkt. Nos. 56, 66, 70, 82, 89, 106, 107, 113, 121, and 127). III. Reasons for the Proposed Extension. The parties are requesting this extension for three reasons. First, unanticipated discovery issues, including unresolved disagreements and technology problems involving attempts to recover historical versions of DIRECTV’s website, have made it difficult to complete fact discovery within the original schedule. Second, the requested extension will promote judicial economy by giving the parties additional time to resolve disputes without resorting to letter briefs filed before exhausting the meet-and-confer process. Third, both parties have experienced unexpected disruptions in their ability to complete discovery. DIRECTV’s July 2015 merger with AT&T caused disruptions within the company which have delayed discovery. And the FTC is currently facing unanticipated staffing issues, described below, which is hampering its ability to meet the current discovery schedule. A. Significant, Important Discovery Remains to be Completed. While the parties have each dutifully propounded discovery and noticed depositions early in the discovery period with the intention of completing discovery within the existing schedule, many noticed depositions and ongoing document and data productions cannot be completed STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 129 Filed 04/01/16 Page 4 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 within the time frame of the original fact discovery schedule. At present, the parties have scheduled nearly 20 depositions, which will require at least an additional two months beyond the current fact discovery cutoff to complete. DIRECTV anticipates noticing as many as 12 additional party and non-party depositions. In addition to outstanding depositions, there are several large document and data productions. These include: the production of DIRECTV’s sales and cancellation data, which the parties believe will take six to eight weeks to complete; production of advertising and dissemination information; and production of electronic data and documents relating to consumer inquiries and complaints made to DIRECTV. All of this discovery must be completed before expert disclosures and discovery can occur. B. Production, Recreation, and Testing of DIRECTV’s Website. Pursuant to an agreement between the parties, DIRECTV produced all website source code, ATG database and TeamSite database since 2007. DIRECTV completed the production recently, after the last conference before the Court. The FTC believes that it will require significant time to work with these assets to try and recreate and test DIRECTV’s website. C. The Proposed Schedule Will Promote Judicial Economy. Permitting the parties additional time for fact discovery will promote judicial economy in this action. Although the parties have not been able to resolve some disputes and therefore require judicial intervention, the meet-and-confer process has frequently been productive. The parties are working diligently to resolve outstanding disagreements. Despite these efforts, unless fact discovery is extended, the parties will likely seek judicial intervention for disputes that would otherwise be resolved informally. Without an extension, the parties may also need to compel post-cutoff production or further testimony. D. FTC Staffing. The FTC’s resources for this case will be reduced over the next several months because key members of this case team will be unable to work due to unforeseen, serious medical issues. /// STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 4 Case 3:15-cv-01129-HSG Document 129 Filed 04/01/16 Page 5 of 7 The FTC can provide more detail to the Court regarding those reasons but respectfully asks that it not be required to do so in a publicly-available filing. *** The parties can be available at any time for a conference with Your Honor to discuss this request. IT IS HEREBY STIPULATED AND AGREED BY AND BETWEEN THE PARTIES through their respective attorneys of record as follows: WHEREAS, the parties require additional time to resolve discovery disputes and conclude the necessary discovery, THEREFORE, the parties have stipulated and agreed, and do hereby respectfully request that the Court extend all deadlines in this matter as follows: Fact Discovery Closes July 22, 2016 Opening Expert Reports Sept. 2, 2016 Rebuttal Expert Reports Sept. 30, 2016 Reply Expert Reports Oct. 21, 2016 Expert Discovery Closes Nov. 10, 2016 Settlement Conference Nov. 18, 2016 MSJ Filing MSJ Opposition MSJ Reply MSJ Hearing Nov. 23, 2016 Dec. 9, 2016 Dec. 16, 2016 TBD Pretrial Conference Jan. 17, 2017 Bench Trial Starts Jan. 30, 2017 STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 129 Filed 04/01/16 Page 6 of 7 SO STIPULATED: Dated: April 1, 2016 Dated: April 1, 2016 Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC [PROPOSED] ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. HAYWOOD S. GILLIAM, JR. United States District Judge STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 129 Filed 04/01/16 Page 7 of 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-04-04	130	Discovery Letter Brief re FTC 30(b)(6) Topic 1 filed by Federal Trade Commission. (Attachments: # 1 Exhibit A)(Edmondson, Eric) (Filed on 4/4/2016) (Entered: 04/04/2016)	Case 3:15-cv-01129-HSG Document 130 Filed 04/04/16 Page 1 of 4 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person prior to filing this letter, on March 24, 2016. In addition, the parties met and conferred on this issue several other times in an attempt to resolve this dispute informally, including July 27, 2015 (telephonically), August 5, 2015 (by email), September 15, 2015 (by email), and September 18, 2015 (email). /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Case 3:15-cv-01129-HSG Document 130 Filed 04/04/16 Page 2 of 4 NATURE OF DISPUTE This dispute concerns Plaintiff Federal Trade Commission’s (“FTC”) Fed. R. Civ. P 30(b)(6) Topic 1, which is attached hereto as Exhibit A. THE FEDERAL TRADE COMMISSION’S POSITION The FTC’s complaint alleges that DIRECTV’s ads violate the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA) by failing to adequately disclose the actual price of its satellite-television subscription service, the full length of its required contract, and DIRECTV’s negative-option marketing to sell premium channels. Whether necessary disclosures are made in a manner that consumers can see and understand is the issue at the very center of this case. Documents produced by DIRECTV in response to an FTC pre-complaint Civil Investigative Demand indicate that DIRECTV regularly conducts surveys and tests about the effectiveness of its advertisements, websites and other marketing materials. Understanding those tests—including what DIRECTV learned from those tests about whether its ads were deceptive or misleading—is highly relevant to the FTC’s allegations that consumers were likely to be deceived by DIRECTV’s ads, and to DIRECTV’s affirmative defense of good faith. The FTC’s 30(b)(6) Notice was served over eight months ago. DIRECTV has offered no reason why it cannot designate a witness other than the inconvenience of providing more than one witness and its objection to answering questions that are central to this case. The FTC’s motion to compel should be granted. I. Surveys and tests performed by or for DIRECTV regarding price, 24- month subscriber commitment, and the premium channel negative option are clearly relevant. The FTC’s request for a deposition of a witness knowledgeable about research, surveys or tests on the very topics at issue in this case is clearly relevant, as this type of research may show that consumers were likely to be deceived—or were actually deceived—by DIRECTV’s advertising, website and marketing. It may also reveal DIRECTV’s reasons for placement of disclosures in mouseprint in dense type in print ads, or behind inconspicuous links or hover- overs on its website, which the FTC alleges are misleading. To the extent that the studies demonstrate that better disclosures should have been made to avoid deception, or that DIRECTV knew that clearer disclosures would have attracted fewer customers, these studies would tend to show that DIRECTV acted consistently with an incentive to mislead the public. See, e.g., F.T.C. v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1082 (discussing as relevant the fact that the defendant had considered and “rejected the company's experiments in placing clearer disclosures and sending post-transaction emails because they hurt conversion rates”). Second, evidence showing that DIRECTV intended to make the misleading misrepresentations is relevant to establish that its misrepresentations were material. While the FTC need not prove that DIRECTV intended to mislead consumers—F.T.C. v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1083 (“[P]roof that the defendant intended to deceive consumers or acted in bad faith is unnecessary to establish a section 5(a) violation.”)—evidence that DIRECTV disseminated ads that it knew where likely to mislead consumers supports a Case 3:15-cv-01129-HSG Document 130 Filed 04/04/16 Page 3 of 4 presumption of materiality. See Kraft, Inc. v. F.T.C., 970 F.2d 311, 323 (7th Cir. 1992). Moreover, evidence that DIRECTV was informed by marketing research that more prominent or improved disclosures would “deter” consumers from purchasing its service would be strong evidence that the ads were designed to be misleading. In other words, evidence of intent to mislead consumers is strong evidence that the ads are in fact misleading. The FTC is entitled to conduct discovery on this key issue. Evidence of DIRECTV’s knowledge about deception in its advertisements are relevant to DIRECTV’s affirmative defense of “good faith.” DIRECTV has itself made its intent relevant in this case by including a broadly-worded affirmative defense of “good faith.” Answer (Dkt. No. 27) at 11 (“Defendants acted with a good faith belief that they had good cause and/or legitimate business reasons to act as they did and did not directly or indirectly perform any acts that would constitute a violation of consumers’ rights. See F.T.C. v. Bronson Partners, LLC, 2006 U.S. Dist. LEXIS 3315 at 3 (D. Conn. 2006) (“defendants’ good faith is relevant to the court’s determination of appropriate relief”), citing F.T.C. v. Medicor LLC, 2001 WL 765628, 2 (C.D. Cal. 2001). As discussed above, marketing studies and surveys are reasonably calculated to lead to evidence relevant to DIRECTV’s decision-making in choosing how it marketed its services, how it chose to include (or not include) disclosures, and whether consumers saw and understood the purported disclosures. DIRECTV cannot simultaneously claim that its actions were undertaken in good faith while refusing to allow the FTC to probe what it knew about the effect of its ads and marketing. II. III. DIRECTV’s objections have no merit. DIRECTV has previously objected to naming a witness (or witnesses), asserting that the Topic is “too broad,” calls for testimony about “every single advertisement since 2007 without limitation,” (Sept. 18, 2015 email from Chad Hummel to Eric Edmondson) and would require more than one person to discuss the proposed Topic. These objections are without merit. First, Topic #1, as explained above, focuses on the very core of this case, and is described with great specificity. Second, DIRECTV objects to the Topic based on its own misstatement of the request. A plain reading of the request shows that it focuses on “research, surveys or tests, performed by or for DIRECTV”—not on each individual advertisement. Third, the fact that DIRECTV may have to designate more than one person to respond to this focused topic is not a basis for objection. Fed. R. Civ. P. 30(b)(6) expressly contemplates that the organization receiving a deposition notice pursuant to this section must “designate one or more officer, directors, or managing agents” to respond. The FTC is requesting only that the witness or witnesses be able to address the designated topic. DIRECTV can choose how many witnesses to prepare so that it can meet its obligations to respond to the topic. Finally, DIRECTV now objects to the modified noticed topic because the FTC refused to accept DIRECTV’s counterproposal, which is designed to prevent the FTC from discovering relevant information, including the objectives of its advertising research and the data DIRECTV obtained from its studies. DIRECTV seeks to limit the FTC’s discovery to a narrow topic—the Case 3:15-cv-01129-HSG Document 130 Filed 04/04/16 Page 4 of 4 conclusions of studies—because that is the topic that it wants to address, not because the FTC’s topic is unclear. Contrary to DIRECTV’s contention, the FTC’s noticed describes “with reasonable particularity the matters for examination,” as required by Fed. R. Civ. P. 30(b)(6). DIRECTV’S POSITION There should be no dispute. The FTC’s original notice was entirely overbroad and vague. For example, the FTC sought testimony on the “results” of research which could include a myriad of topics some relevant, many not. Similarly, the FTC sought testimony on consumer perception related to “material terms” of the subscriber agreement, requiring DIRECTV to speculate as to which terms the FTC believe are material. To address the deficiencies in the notice, over seven months ago, on August 5, 2015, DIRECTV agreed to produce a witness or witnesses on the following topic: Conclusions reached by DIRECTV, based on non-privileged research or studies it has conducted, legal requirements, and/or data available to it, regarding the adequacy of disclosures in its advertising of introductory program package subscription pricing, the subscriber agreement, early cancellation fees, and premium channel offers. This topic is only slightly different from the FTC’s proposed topic (the September 15, 2015 modification of the original July 9, 2015 topic) and seeks only to address DIRECTV’s concerns with the overbroad nature of the FTC’s proposed topic. In short, there is nothing for the Court to decide: DIRECTV will make a witness or witnesses available on DIRECTV’s proposed topic. The FTC has not shown any basis as to why it is necessary for it to take testimony on any subject that is covered by the FTC’s proposed formulation but not covered by DIRECTV’s proposed formulation. DIRECTV submits that any such topics that fall in the cracks between the two proposed formulations are not relevant. If there is some dispute about the scope of the deposition, the parties can resolve it at the deposition without having to file yet another letter brief. Case 3:15-cv-01129-HSG Document 130-1 Filed 04/04/16 Page 1 of 4 Exhibit A Case 3:15-cv-01129-HSG Document 130-1 Filed 04/04/16 Page 2 of 4 Jonathan E. Nuechterlein General Counsel Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal. Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG NOTICE OF DEPOSITION OF DEFENDANT DIRECTV, LLC (FRCP Rule 30(b)(6)) Date: August 10, 2015 Time: 9:00 a.m. Place: TBD v. Plaintiff, a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, Defendants. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PLAINTIFF’S NOTICE OF DEPOSITION PURSUANT TO FRCP 30(B)(6) – 15-CV-01129-HSG 1 Case 3:15-cv-01129-HSG Document 130-1 Filed 04/04/16 Page 3 of 4 PLEASE TAKE NOTICE that pursuant to Rule 30(b)(6) of the Federal Rules of Civil TO DEFENDANT AND ITS ATTORNEYS OF RECORD: Procedure, plaintiff Federal Trade Commission will take the deposition upon oral examination of the person(s) designated by DIRECTV, LLC, who consents to be designated to testify on its behalf, concerning the subjects and matters identified below, beginning at 9:00 a.m. on August 10, 2015 and continuing from day to day thereafter (excluding Saturdays, Sundays, and holidays) until completed as permitted by rule. The deposition shall take place at a location to be agreed upon by counsel for the parties. PLEASE TAKE FURTHER NOTICE that the deposition will be taken before a certified shorthand reporter or any other such person authorized to administer oaths that is present at such date and time. Pursuant to Rule 30(b)(3) of the Federal Rules of Civil Procedure, the deposition testimony will be recorded by video, audio, audiovisual, and stenographic means. MATTERS ON WHICH EXAMINATION IS REQUESTED Pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure, DIRECTV, LLC shall designate a person or persons to testify on the following topics: Topic Number 1 The results of any and all research, surveys or tests, performed by or for DIRECTV, concerning the design, location or wording of disclosures in DIRECTV advertisements, websites or other marketing materials of material terms, including price, required subscriber agreement, early cancellation fee, or the existence of a negative option. Dated: July 9, 2015 /s/ Eric D. Edmondson Eric D. Edmondson Erika Wodinsky Jacob A. Snow Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PLAINTIFF’S NOTICE OF DEPOSITION PURSUANT TO FRCP 30(B)(6) – 15-CV-01129-HSG 2 Case 3:15-cv-01129-HSG Document 130-1 Filed 04/04/16 Page 4 of 4 CERTIFICATE OF SERVICE I Kelly C. Ortiz, declare as follows: I am employed in San Francisco County, San Francisco, California. I am over the age of eighteen years and not a party to this action. My business address is Federal Trade Commission 901 Market St., Ste. 570, San Francisco, California 94103. On July 9, 2015, I served a true and correct copy of NOTICE OF DEPOSITION OF DEFENDANT DIRECTV, LLC on the interested parties in this action addressed as follows: Counsel for Defendants Chad Hummel, Esq. Clayton Friedman, Esq. Manatt, Phelps & Phillips LLP 11355 W. Olympic Blvd. Los Angeles, CA 90064 Phone: (310) 312-4000 Fax: (310) 312-4224 Email: [email protected]; [email protected] Christian E. Baker Manatt, Phelps & Phillips LLP One Embarcadero Center 30th Floor San Francisco, CA 94111 Phone: (415) 291-7400 Fax: (415) 291-7474 Email: [email protected] X X (BY ELECTRONIC MAIL) By transmitting the foregoing document(s) electronically from the e-mail address, [email protected], to the person(s) at the e-mail addresses listed above. The transmission was reported as complete and without error. This method of service was made pursuant to the agreement of counsel. (BY MAIL) By placing the foregoing document(s) in a sealed envelope, with fully prepaid postage for first class mail. For collection and mailing at Federal Trade Commission, San Francisco California following ordinary business practice. I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made. Executed on July 9, 2015, at San Francisco, California 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PLAINTIFF’S NOTICE OF DEPOSITION PURSUANT TO FRCP 30(B)(6) – 15-CV-01129-HSG 3
2016-04-04	131	Discovery Order re: 127 Discovery Letter Brief regarding FTC RFP 12 and 13. Signed by Judge Maria-Elena James on 4/4/2016. (cdnS, COURT STAFF) (Filed on 4/4/2016) (Entered: 04/04/2016)	Case 3:15-cv-01129-HSG Document 131 Filed 04/04/16 Page 1 of 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 127 On March 3, 2016, the parties filed a joint discovery dispute letter regarding the FTC’s Requests for Production No. 12 (“All consumer complaints regarding any of the Material Terms of the Service.”) and No. 13 (“All Documents relating to consumer complaints regarding any of the Material Terms of the Service.”). Dkt. No. 113. Having reviewed the parties’ positions, the Court found the FTC’s requests relevant but overbroad and ordered the parties to further meet and confer in an effort to narrow the scope of the requests. Dkt. No. 117. If unable to reach a resolution, the Court ordered the parties to file an updated letter setting forth a summary of each party’s final substantive position and their final proposed compromise on each issue. Unable to resolve these matters, the parties filed an updated letter on March 31, 2016. Dkt. No. 127. Having reviewed the updated letter, the Court ORDERS as follows: 1) RFP No. 12 Although DIRECTV maintains its RIO system does not contain consumer complaints, the FTC has shown that, at a minimum, it likely contains relevant information such as customers who call DIRECTV to express concern about monthly cost increases. Accordingly, the Court finds the FTC’s proposal an appropriate compromise and therefore ORDERS DIRECTV to produce a chronological list of RIO files since January 1, 2007 (the Complaint period) by April 11, 2016. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 131 Filed 04/04/16 Page 2 of 2 The FTC shall then select a random sample from that list, and DIRECTV shall produce the files within 14 days of the selection. With regard to DIRECTV’s concern for protecting consumers’ personal information, the FTC has stated it does not seek such information, and therefore DIRECTV need not produce it. If DIRECTV seeks to produce consumers’ personal information in order to avoid the burden of redacting it, DIRECTV can do so under the safeguards of the governing Protective Order, as indicated in the Court’s March 8 Order. 2) RFP No. 13 Given that the FTC’s search proposal could result in millions of documents, the Court finds it reasonable for DIRECTV to instead produce the consumer complaint reports it uses to track consumer complaints. DIRECTV shall produce these reports by April 11, 2016. If the FTC still contends further production is required after review of these reports, the parties shall again meet and confer in compliance with the undersigned’s Discovery Standing Order. IT IS SO ORDERED. Dated: April 4, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-04-05	132	CLERK'S NOTICE Re Docket No. 129 . Notice is hereby given that a Telephonic Case Management Conference has been set for April 7, 2016, before Judge Haywood S. Gilliam, Jr., at 1:00 p.m., in Courtroom 10, 19th Floor, 450 Golden Gate Avenue, San Francisco, CA. Counsel shall contact CourtCall at (866) 582-6878 to make arrangements for the telephonic appearance. (This is a text-only entry generated by the court. There is no document associated with this entry.) (ndrS, COURT STAFF) (Filed on 4/5/2016) (Entered: 04/05/2016)
2016-04-06	133	Discovery Order re: 130 Discovery Letter Brief re FTC 30(b)(6) Topic 1. Signed by Judge Maria-Elena James on 4/6/2016. (cdnS, COURT STAFF) (Filed on 4/6/2016) (Entered: 04/06/2016)	Case 3:15-cv-01129-HSG Document 133 Filed 04/06/16 Page 1 of 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 130 The Court is in receipt of the parties’ discovery dispute letter concerning Plaintiff Federal Trade Commission’s (“FTC”) Federal Rule of Civil Procedure 30(b)(6) Deposition Topic 1, which seeks the following testimony: “The results of any and all research, surveys or tests, performed by or for [Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”)] concerning the design, location or wording of disclosures in DIRECTV advertisements, websites or other marketing materials of material terms, including price, required subscriber agreement, early cancellation fee, or the existence of a negative option.” Jt. Ltr., Dkt. No. 130; id., Ex. A (Notice of Dep.), Dkt. No. 130-1. The FTC argues this information is relevant because, in its Complaint, the FTC alleges DIRECTV’s ads violate the FTC Act and the Restore Online Shoppers’ Confidence Act by failing to adequately disclose the actual price of its satellite-television subscription service, the full length of its required contract, and DIRECTV’s negative-option marketing to sell premium channels. Jt. Ltr. at 2. As the central issue in the case is whether necessary disclosures are made in a manner that consumers can see and understand, the FTC maintains that surveys and tests performed by or for DIRECTV regarding price, the required length of subscriber commitment, and the premium channel negative option are clearly relevant. Id. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 133 Filed 04/06/16 Page 2 of 2 In response, DIRECTV argues the FTC’s notice is overbroad and vague because it seeks testimony on the “results” of research, “which could include a myriad of topics some relevant, many not.” Id. at 4. DIRECTV further argues the topic requires it to speculate as to which terms the FTC believes are material because it seeks testimony on consumer perception related to “material terms” of the subscriber agreement. Id. DIRECTV requests the Court limit testimony to the following topic: “Conclusions reached by DIRECTV, based on non-privileged research or studies it has conducted, legal requirements, and/or data available to it, regarding the adequacy of disclosures in its advertising of introductory program package subscription pricing, the subscriber agreement, early cancellation fees, and premium channel offers.” Id. Having reviewed the parties’ positions, the Court finds the FTC’s Topic 1 both relevant and appropriately limited in scope. Topic 1 does not include a “myriad of topics,” but instead focuses on “research, surveys or tests, performed by or for DIRECTV,” and it limits material terms to “price, required subscriber agreement, early cancellation fee, or the existence of a negative option.” Further, although DIRECTV seeks to limit the request to the “conclusions” it reached, this would prevent the FTC from discovering relevant information, such as the objectives of DIRECTV’s advertising research and the data it obtained from its studies. Accordingly, the Court GRANTS the FTC’s motion to compel. IT IS SO ORDERED. Dated: April 6, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-04-07	134	Minute Entry for proceedings held before Hon. Haywood S. Gilliam, Jr.: Further Case Management Conference held on 4/7/2016 (Time:11 Minutes). FTR Time 1:02-1:13 Plaintiff Attorney Jacob Snow; Erika Wodinsk; Boris Yankilovich; and Eric Edmondson appearing via CourtCall. Defendant Attorney Chad Hummel appearing via CourtCall. The parties are directed to meet and confer regarding a revised proposed schedule that includes a motion for summary judgment hearing deadline of October 27, 2016, and then e-file it for Court approval. Once the revised proposed schedule is received, the Court will issue an order referring the case to a Magistrate Judge for settlement conference. (This is a text minute entry, there is no document associated with this entry.) (ndrS, COURT STAFF) (Date Filed: 4/7/2016) (Entered: 04/08/2016)
2016-04-11	135	STIPULATION WITH PROPOSED ORDER to Extend Case Deadlines filed by DIRECTV LLC, DIRECTV, Inc.. (Hummel, Chad) (Filed on 4/11/2016) Modified on 4/11/2016 (dtmS, COURT STAFF). (Entered: 04/11/2016)	Case 3:15-cv-01129-HSG Document 135 Filed 04/11/16 Page 1 of 4 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG Hon. Haywood S. Gilliam, Jr. STIPULATED MOTION AND [PROPOSED] ORDER TO EXTEND CASE DEADLINES v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 135 Filed 04/11/16 Page 2 of 4 Pursuant to the Court’s guidance during the April 7, 2016 case management conference, and for the reasons set out in the parties’ prior Stipulated Motion to Extend Case Deadlines (Dkt. 129), Plaintiff Federal Trade Commission and Defendants DIRECTV and DIRECTV, LLC jointly move the Court to extend the case schedule as follows: Fact Discovery Closes Opening Expert Reports MSJ Filing Rebuttal Expert Reports MSJ Opposition MSJ Reply Reply Expert Reports MSJ Hearing Expert Discovery Closes Settlement Conference Pretrial Conference Bench Trial Starts July 22, 2016 Sept. 2, 2016 Sept. 22, 2016 Sept. 30, 2016 Oct. 6, 2016 Oct. 13, 2016 Oct. 21, 2016 Oct. 27, 2016 Nov. 10, 2016 Nov. 18, 20161 Jan. 17, 2017 Jan. 30, 2017 SO STIPULATED: Dated: April 11, 2016 Dated: April 11, 2016 /s/ Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission /s/ Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC 1 The parties respectfully request that the Court appoint a sitting United States Magistrate Judge in the Northern District to conduct the mediation on that date. STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 135 Filed 04/11/16 Page 3 of 4 [PROPOSED] ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. HAYWOOD S. GILLIAM, JR. United States District Judge STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 135 Filed 04/11/16 Page 4 of 4 SIGNATURE ATTESTATION I am the ECF User whose identification and password are being used to file the foregoing STIPULATED MOTION AND [PROPOSED] ORDER TO EXTEND CASE DEADLINES in compliance with Civil Local Rule 5.1, I hereby attest that the signatory has concurred in this filing. Dated: April 11, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG
2016-04-12	136	Order by Hon. Haywood S. Gilliam, Jr. denying 100 as moot. (This is a text-only entry; there is no document associated with this entry.) (hsglc3S, COURT STAFF) (Filed on 4/12/2016) (Entered: 04/12/2016)
2016-04-12	137	Order by Hon. Haywood S. Gilliam, Jr. denying 129 as moot. (This is a text-only entry; there is no document associated with this entry.) (hsglc3S, COURT STAFF) (Filed on 4/12/2016) (Entered: 04/12/2016)
2016-04-12	138	ORDER by Judge Haywood S. Gilliam, Jr. Granting 135 Stipulation Extend Case Deadlines. (ndrS, COURT STAFF) (Filed on 4/12/2016) (Entered: 04/12/2016)	Case 3:15-cv-01129-HSG Document 138 Filed 04/12/16 Page 1 of 4 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Plaintiff, v. FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Case No. 15-cv-01129-HSG Hon. Haywood S. Gilliam, Jr. STIPULATED MOTION AND ORDER TO EXTEND CASE DEADLINES STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 138 Filed 04/12/16 Page 2 of 4 Pursuant to the Court’s guidance during the April 7, 2016 case management conference, and for the reasons set out in the parties’ prior Stipulated Motion to Extend Case Deadlines (Dkt. 129), Plaintiff Federal Trade Commission and Defendants DIRECTV and DIRECTV, LLC jointly move the Court to extend the case schedule as follows: Fact Discovery Closes July 22, 2016 Opening Expert Reports Sept. 2, 2016 MSJ Filing Sept. 22, 2016 Rebuttal Expert Reports Sept. 30, 2016 MSJ Opposition MSJ Reply Oct. 6, 2016 Oct. 13, 2016 Reply Expert Reports Oct. 21, 2016 MSJ Hearing Oct. 27, 2016 Expert Discovery Closes Nov. 10, 2016 Settlement Conference Nov. 18, 20161 Pretrial Conference Jan. 17, 2017 Bench Trial Starts Jan. 30, 2017 SO STIPULATED: Dated: April 11, 2016 /s/ Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission Dated: April 11, 2016 /s/ Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC 1 The parties respectfully request that the Court appoint a sitting United States Magistrate Judge in the Northern District to conduct the mediation on that date. STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 138 Filed 04/12/16 Page 3 of 4 ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: April 12, 2016 ___________________________________ HON. HAYWOOD S. GILLIAM, JR. United States District Judge STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 138 Filed 04/12/16 Page 4 of 4 SIGNATURE ATTESTATION I am the ECF User whose identification and password are being used to file the foregoing STIPULATED MOTION AND [PROPOSED] ORDER TO EXTEND CASE DEADLINES in compliance with Civil Local Rule 5.1, I hereby attest that the signatory has concurred in this filing. Dated: April 12, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC STIPULATED MOTION AND PROPOSED ORDER TO EXTEND CASE DEADLINES CASE NO. 15-CV-01129-HSG
2016-04-12		Reset Deadlines/Hearings Pursuant to Docket No. 138 : Discovery due by 7/22/2016; Motions due by 9/22/2016; Responses due by 10/6/2016; Replies due by 10/13/2016; Motion Hearing set for 10/27/2016 02:00 PM before Hon. Haywood S. Gilliam Jr.; Final Pretrial Conference set for 1/17/2017 03:00 PM; Bench Trial set for 1/30/2017 08:30 AM before Hon. Haywood S. Gilliam Jr. (ndrS, COURT STAFF) (Filed on 4/12/2016) (Entered: 04/12/2016)
2016-04-22	139	ORDER by Judge Haywood S. Gilliam, Jr. DENYING 126 MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER. (ndrS, COURT STAFF) (Filed on 4/22/2016) (Entered: 04/22/2016)	Case 3:15-cv-01129-HSG Document 139 Filed 04/22/16 Page 1 of 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG ORDER DENYING MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER Re: Dkt. No. 126 On March 30, 2016, non-party Paula Selis filed a motion for nondispositive relief from the Magistrate Judge’s order directing Ms. Selis to sit for a three-hour oral deposition. See Dkt. No. 122. Under Federal Rule of Civil Procedure 72, a district judge may set aside a magistrate judge’s non-dispositive pretrial order only if it is “clearly erroneous or contrary to law.” Fed. R. Civ. P. 72(a); see also 28 U.S.C. § 636(b)(1)(A). “The magistrate’s factual determinations are reviewed for clear error, and the magistrate’s legal conclusions are reviewed to determine whether they are contrary to law.” Perry v. Schwarzenegger, 268 F.R.D. 344, 348 (N.D. Cal. 2010). “When the court reviews the magistrate’s determination of relevance in a discovery order, the Court must review the magistrate’s order with an eye toward the broad standard of relevance in the discovery context. Thus, the standard of review in most instances is not the explicit statutory language, but the clearly implicit standard of abuse of discretion.” Id. at 348 (internal quotation marks omitted). The Court can overturn the “magistrate’s factual determinations only if the court reaches a definite and firm conviction that a mistake has been committed.” Id. (citations and internal quotation marks omitted). “This standard is extremely deferential and the [m]agistrate’s rulings should be considered the final decisions of the [d]istrict [c]ourt.” Otey v. CrowdFlower, Inc., No. 12-CV-05524-JST, 2013 WL 3456942, at *1 (N.D. Cal. July 8, 2013) (internal quotation 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 139 Filed 04/22/16 Page 2 of 2 marks omitted). The Court has reviewed the Magistrate Judge’s order and finds no clear error of fact or legal conclusions contrary to law. Accordingly, the motion to set aside the Magistrate Judge’s order is DENIED. IT IS SO ORDERED. Dated: HAYWOOD S. GILLIAM, JR. United States District Judge 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N 4/22/2016
2016-04-27	140	ORDER REFERRING CASE to Magistrate Judge Spero for Settlement. Signed by Judge Haywood S. Gilliam, Jr. on 4/27/2016. (ndrS, COURT STAFF) (Filed on 4/27/2016) (Entered: 04/27/2016)	Case 3:15-cv-01129-HSG Document 140 Filed 04/27/16 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG ORDER OF REFERENCE TO MAGISTRATE JUDGE FOR SETTLEMENT PROCEEDINGS Pursuant to Local Rule 72-1, this matter is referred to Chief Magistrate Judge Joseph Spero for settlement proceedings. The parties will be advised of the date, time and place of the next appearance by notice from Judge Spero. IT IS SO ORDERED. Dated: ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N 4/27/2016
2016-04-27		CASE REFERRED to Magistrate Judge Joseph C. Spero for Settlement (ahm, COURT STAFF) (Filed on 4/27/2016) (Entered: 04/27/2016)
2016-04-28	141	Notice of Settlement Conference Order Setting Settlement Conference before Chief Magistrate Judge Joseph C. Spero. Settlement Conference set for 11/28/2016 09:30 AM in Courtroom G, 15th Floor, San Francisco. Signed by Chief Magistrate Judge Joseph C. Spero on 4/28/16. (klhS, COURT STAFF) (Filed on 4/28/2016) (Entered: 04/28/2016)	Case 3:15-cv-01129-HSG Document 141 Filed 04/28/16 Page 1 of 3 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff. v. DIRECTV, INC., et al., Case No. 15-cv-01129-HSG (JCS) NOTICE OF SETTLEMENT CONFERENCE AND SETTLEMENT CONFERENCE ORDER Defendants. Re: Dkt. No. 140 TO ALL PARTIES AND COUNSEL OF RECORD: The above matter was referred to Magistrate Judge Joseph C. Spero for settlement purposes. You are hereby notified that a Settlement Conference is scheduled for November 28, 2016, at 9:30 a.m., in Courtroom G, 15th Floor, Federal Building, 450 Golden Gate Avenue, San Francisco, California 94102. It is the responsibility of counsel to ensure that whatever discovery is needed for all sides to evaluate the case for settlement purposes is completed by the date of the Settlement Conference. Counsel shall cooperate in providing discovery informally and expeditiously. Lead trial counsel shall appear at the Settlement Conference with the parties. Any party who is not a natural person shall be represented by the person(s) with unlimited authority to negotiate a settlement. A person who needs to call another person not present before agreeing to any settlement does not have full authority. If a party is a governmental entity, its governing body shall designate one of its members or a senior executive to appear at the Settlement Conference with authority to participate in the Settlement Conference and, if a tentative settlement agreement is reached, to recommend the agreement to the governmental entity for its approval. An insured 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 141 Filed 04/28/16 Page 2 of 3 party shall appear with a representative of the carrier with full authority to negotiate up to the limits of coverage. Personal attendance of a party representative will rarely be excused by the Court, and then only upon separate written application demonstrating substantial hardship served on opposing counsel and lodged as early as the basis for the hardship is known but no later than the Settlement Conference Statement. Each party shall prepare a Settlement Conference Statement, which must be LODGED with the undersigned's Chambers (NOT electronically filed) no later than fourteen (14) calendar days prior to the conference. Please 3-hole punch the document at the left side. Each party shall also submit their Settlement Conference Statement in .pdf format and email their statement to [email protected]. The Settlement Conference Statement need not be served on opposing counsel. The parties are encouraged, however, to exchange Settlement Conference Statements. If Settlement Conference Statements are exchanged, any party may submit an additional confidential settlement letter to the Court not to exceed three (3) pages. The contents of this confidential settlement letter will not be disclosed to the other parties. The Settlement Conference Statement shall not exceed ten (10) pages of text and twenty (20) pages of exhibits and shall include the following: 1. 2. A brief statement of the facts of the case. A brief statement of the claims and defenses including, but not limited to, statutory or other grounds upon which the claims are founded, and a candid evaluation of the parties' likelihood of prevailing on the claims and defenses. The more candid the parties are, the more productive the conference will be. 3. A list of the key facts in dispute and a brief statement of the specific evidence relevant to a determination of those facts. A summary of the proceedings to date and any pending motions. An estimate of the cost and time to be expended for further discovery, pretrial and 4. 5. trial. 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 141 Filed 04/28/16 Page 3 of 3 6. 7. The relief sought, including an itemization of damages. The party's position on settlement, including present demands and offers and a history of past settlement discussions. The Court's time can best be used to assist the parties in completing their negotiations, not in starting them. Accordingly, Plaintiff(s) must serve a demand in writing no later than fourteen (14) days before the conference and Defendant(s) must respond in writing no later than eight (8) days before the conference. The parties are urged to carefully evaluate their case before taking a settlement position since extreme positions hinder the settlement process. Settlement Conference Statements may be submitted on CD-ROM with hypertext links to exhibits. Otherwise, the portion of exhibits on which the party relies shall be highlighted. It is not unusual for the conference to last three (3) or more hours. Parties are encouraged to participate and frankly discuss their case. Statements they make during the conference will not be admissible at trial in the event the case does not settle. The parties should be prepared to discuss such issues as: 1. 2. 3. Their settlement objectives. Any impediments to settlement they perceive. Whether they have enough information to discuss settlement. If not, what additional information is needed? 4. The possibility of a creative resolution of the dispute. The parties shall notify Chambers immediately at (415) 522-3691 if this case settles prior to the date set for Settlement Conference. Counsel shall provide a copy of this order to each party who will participate in the conference. IT IS SO ORDERED. Dated: April 28, 2016 _________________________________ JOSEPH C. SPERO Chief Magistrate Judge 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-04-28		Set/Reset Hearing re 141 Order Setting Settlement Conference, Settlement Conference set for 11/28/2016 09:30 AM in Courtroom G, 15th Floor, San Francisco. (klhS, COURT STAFF) (Filed on 4/28/2016) (Entered: 04/28/2016)
2016-05-02	142	DISCOVERY LETER BRIEF re: Sentinel Dispute filed byDIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Sandrock, Ryan) (Filed on 5/2/2016) Modified on 5/2/2016 (dtmS, COURT STAFF). (Entered: 05/02/2016)	Case 3:15-cv-01129-HSG Document 142 Filed 05/02/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on April 12, 2016, prior to filing this Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Ryan M. Sandrock letter. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Case 3:15-cv-01129-HSG Document 142 Filed 05/02/16 Page 2 of 6 NATURE OF DISPUTE DIRECTV served Requests for Production on the Federal Trade Commission (“FTC”) seeking production of complaints from the FTC’s Consumer Sentinel system (“Sentinel) regarding DIRECTV competitors Dish Network, Comcast XFINITY, Cox Communications, Verizon FIOS, Time Warner Cable, Charter Communications, and other providers of cable or satellite television services. The FTC objected to producing any documents. DIRECTV’S POSITION Information At Issue. DIRECTV seeks consumer complaints regarding DIRECTV competitors maintained in Sentinel. DIRECTV has identified six specific competitors and also has requested Sentinel complaints for other cable providers.1 this case that it intends to rely on the purported volume of consumer complaints against DIRECTV as evidence that DIRECTV’s advertising violated ROSCA and the FTC Act. DIRECTV needs to be able to defend itself against this claim by showing that there is nothing exceptional about the volume or content of complaints against DIRECTV or that the raw volume (not measured against an industry control) is in any way probative of deceptive advertising. Relevance. These complaints are relevant because the FTC has made clear throughout The FTC’s Complaint alleges that “Defendants’ marketing practices have been the focus The FTC asserts there is something unusual about the raw number of complaints made of tens of thousands of consumer complaints and of actions by the attorneys general of all 50 states and the District of Columbia.” (Dkt. 1, ¶ 15). The FTC has also filed multiple letter briefs asking this Court to order DIRECTV to produce a massive amount of information regarding customer communications with DIRECTV, claiming that these complaints are of fundamental importance to this case. (Dkt. 113; 127). In fact, based on the recent summary judgment briefing, it appears that the FTC is resting its entire case against DIRECTV on facial review of DIRECTV’s advertisements and the number of consumer complaints. (See Dkt. 94 (arguing that FTC has not presented any evidence against DIRECTV)). against DIRECTV. DIRECTV believes that this is incorrect and that production of Sentinel complaints regarding DIRECTV’s competitors will show that the number of complaints against DIRECTV was not exceptional (and perhaps even atypically low). The FTC wants to bar DIRECTV from obtaining and analyzing this evidence that could undermine the FTC’s case. This is improper. companies are irrelevant. This is wrong. The FTC has argued throughout the case—including in the Complaint itself (Dkt. 1, ¶ 15)—that the number of complaints against DIRECTV suggests wrongdoing by DIRECTV. DIRECTV is entitled to defend itself against this claim by showing that the FTC’s own records show that there are comparable, or greater, numbers of complaints against other companies. The FTC argues, as it did in its objections, that complaints about the conduct of other 1 DIRECTV will work with the FTC to limit the number of additional competitors for whom the FTC must produce documents and will not seek complaints regarding more than four additional competitors. 1 Case 3:15-cv-01129-HSG Document 142 Filed 05/02/16 Page 3 of 6 Furthermore, the requested Consumer Sentinel production may show that consumers complained regarding competitor disclosures on the same issues presented here. If consumers complained more often regarding competitor disclosures that the FTC would deem acceptable, that may be probative of the fact that consumers are not in fact deceived or misled by the DIRECTV advertising but are really complaining about something else. If so, this would undermine any contention by the FTC that bolstered disclosures would have changed consumer understanding. Lack of Burden. The FTC has produced Sentinel complaints regarding DIRECTV in a single spreadsheet. DIRECTV believes that the FTC can produce the information requested in a single spreadsheet for each company. It is likely therefore that the FTC could produce all the information requested with ten pushes of a button. Moreover, the FTC regularly responds to requests for consumer complaints made pursuant to the public records provisions of the Freedom of Information Act (“FOIA”). 5 U.S.C. §552(a)-(l). In fact, according to the FTC’s Freedom of Information and Privacy Act Handbook,2 it regularly processes FOIA requests for consumer complaints on an efficient basis. The FTC would have to respond to DIRECTV’s requests for complaints in response to a FOIA request (but there is no reason for DIRECTV to have to jump through that hoop given that the FTC filed suit against DIRECTV). THE FEDERAL TRADE COMMISSION’S POSITION DIRECTV’s demand for the FTC’s records of an unspecified number of consumer complaints about other (specified and unspecified3) companies that are not involved in this action should be denied because these materials are completely irrelevant to this action. DIRECTV’s argument to the contrary suffers from a fatal logical flaw. DIRECTV argues that complaints about other companies are relevant because the FTC has purportedly “made clear throughout this case” its intent to rely on the numbers of complaints about DIRECTV. Putting aside the speculative nature of DIRECTV’s assumptions about what evidence the FTC’s intends to present at trial, the only complaints that would be plausibly relevant to that type of evidentiary presentation are complaints about DIRECTV itself. The FTC turned over all those complaints— more than a hundred thousand of them—to DIRECTV months ago. Thus, DIRECTV already has all the complaints the FTC has about DIRECTV. DIRECTV’s demand for complaints about other companies is so irrelevant and non-proportional to the needs of this case that it borders on the frivolous. DIRECTV is also flatly wrong in its conclusory contention that the burden for the agency to locate, review, and produce what will almost certainly amount to hundreds of thousands of additional complaint records will be minimal. A. DIRECTV’s argument about the relevance of the FTC’s records of consumer complaints about other companies is premised on a mischaracterization of the 2 The Handbook is available at: https://www.ftc.gov/sites/default/files/attachments/foia- request/foiahandbook.pdf. The second page of this document, titled “Consumer Complaints,” destroys any argument that it would be unusually burdensome for the FTC to comply with DIRECTV’s request. 3 In addition to seeking the FTC’s records of consumer complaints about six named companies, DIRECTV also seeks such records for “any other provider of cable or satellite television services.” See Ex. A (DIRECTV’s Second Set of Requests for Production). Ex. B is the FTC’s objections and responses. 2 Case 3:15-cv-01129-HSG Document 142 Filed 05/02/16 Page 4 of 6 FTC’s claims and a misapplication of the governing law. Rule 26 limits the scope of permissible discovery to matters that are “relevant to any party’s claim or defense.” Fed. R. Civ. P. 26(b)(1). DIRECTV’s argument for the relevance of the FTC’s records of consumer complaints about other companies rests on a distortion of the record and misapplications of the governing law. In fact, these records have no bearing on this case whatsoever. Contrary to DIRECTV’s suggestion, the FTC has never sought to inject its records of consumer complaints about other companies into this case, or suggested that it plans to rely on them as evidence at trial. On the contrary, the FTC has consistently focused this case on DIRECTV’s conduct. First, DIRECTV argues that it needs these complaint records because “[t]he FTC asserts there is something unusual about the raw number of complaints made against DIRECTV.” That is incorrect. DIRECTV presents no support for its baseless contention. Nothing in the FTC’s Complaint states or suggests that the FTC’s case is predicated on an “unusual” number of consumer complaints against DIRECTV as compared to other companies. Nor can DIRECTV point to anything in the case record or in the parties’ meet and confer discussions to substantiate its speculative hunch about the FTC’s intent to rely on complaints about other companies to prove its case against DIRECTV. On the contrary, the FTC does not need to prove that DIRECTV was an industry outlier in eliciting consumer complaints about its marketing practices in order to establish that DIRECTV violated the FTC Act and ROSCA.4 Second, DIRECTV argues that it needs the FTC’s records of complaints about other companies to put on the defense that its own conduct was not exceptionally unlawful when compared to that of its competitors. DIRECTV speculates that these complaint records may show that there are “comparable, or greater, numbers of complaints against other companies.” This speculative argument is premised on a fundamental misunderstanding of the governing law. As the Ninth Circuit recently confirmed, even “a practice that is standard to a particular industry can still violate the FTC Act.” FTC v. Commerce Planet, Inc., No. 12-57064, 2016 WL 828326, at *1 (9th Cir. Mar. 3, 2016) (citing FTC v. Cement Institute, 333 U.S. 683, 688, 720–21 (1948)) (rejecting defendants’ trial argument that their “use of negative options was consistent with ‘standard industry practices’”). Thus, DIRECTV cannot defend against its own culpability by trying to show that its competitors in the cable and satellite television industry also engaged in the same type of deceptive advertising as DIRECTV. Third, DIRECTV suggests that a comparison of complaints lodged with the FTC about different companies may suggest that the rates of consumer confusion, as could be gleaned from those complaints, may have been no higher for DIRECTV’s advertising than for the advertising by other cable and television companies that the FTC has not sued. This is the same but- everybody-was-doing-it argument, except even more attenuated. As explained, showing that consumers were just as likely to be deceived by other companies’ marketing practices is not a defense against one’s own deceptive conduct. Finally, DIRECTV’s appears to make a quid pro quo argument: because the FTC sought “a massive amount of information” from DIRECTV’s repository of customer complaints, DIRECTV should be entitled to seek a massive about of data from the FTC’s records of 4 If the FTC did intend to rely on these materials at trial, it would of course be obligated to give DIRECTV a full and fair opportunity to obtain them in discovery. But this basic principle is not at issue here, where DIRECTV seeks wholly irrelevant materials that the FTC does not intend to use at trial. 3 Case 3:15-cv-01129-HSG Document 142 Filed 05/02/16 Page 5 of 6 consumer complaints about other companies, irrespective of relevance. This argument makes no sense. For one thing, Rule 26 demands relevance, not tit-for-tat reciprocity. Moreover, if any quid pro quo should apply here, the FTC has already satisfied its quid by producing all of its complaints relating to DIRECTV—more than a hundred thousand in all. The only thing left is for DIRECTV to satisfy its quo by actually producing its records of consumer complaints.5 B. Producing the FTC’s records of complaints about numerous other companies is highly burdensome, and not proportional to the needs of this case. Given the complete irrelevance of complaints about other companies to the FTC’s claims and DIRECTV’s defenses in this action, the burden of complying with these RFPs transcends any possible benefit. In a conclusory fashion, DIRECTV contends that the FTC’s production burden likely amounts to just “ten pushes of a button.” That is false, and DIRECTV knows it.6 1. DIRECTV’s contentions about the FTC’s lack of burden are baseless and wrong. DIRECTV points out that the FTC previously produced in discovery complaints “regarding DIRECTV” from the Consumer Sentinel database “in a single spreadsheet.” First, that is factually false. The FTC produced two spreadsheets, which together contained more than ninety thousand complaints. These files were so massive that the FTC had to turn to an outside vendor to generate them. Second, DIRECTV omits to mention that the FTC also produced thousands of DIRECTV-related complaints from sources other than Sentinel, which were stored by the agency in a variety of formats, such as Adobe PDF. Compiling and presenting those records presented separate and unique challenges than those associated with generating the produced spreadsheets from the Sentinel database. Third, DIRECTV’s implication that the FTC’s compliance with discovery for DIRECTV-related consumer complaints proves that the agency can just as easily produce all complaints for an unspecified number (at least half a dozen) of other companies is wrongheaded. The FTC’s ready willingness to comply with reasonable discovery should not be mistaken for absence of burden, especially with substantially magnified requests. 2. In fact, the FTC faces significant burdens in complying with these requests. Contrary to DIRECTV’s conclusory assertion, the FTC’s burden of complying with these Requests would be high. To comply with RFPs 23, 25, 27, 29, 31, and 33, which seek materials from the Consumer Sentinel database, the FTC would have to query and produce files for six specified companies. Based on a similar query and production performed for the DIRECTV complaints in this case, the FTC conservatively estimates that this would take approximately 15- 25 hours of attorney and paralegal time for each of the six specified companies—for a total of 90 to 150 hours—to build the appropriate queries, review output files, and remove obvious false positives (without engaging in a far more labor-intensive file-by-file review). The FTC would also have to engage its outside vendor that maintains the Sentinel database to process the queries and generate the massive spreadsheets, as well as its internal Sentinel administration group to oversee that process, at an estimated five work hours per query, for a total of 30 additional hours. 5 Prior to the Court’s April 4, 2016 Discovery Order (Dkt. 127), DIRECTV refused to produce its consumer complaints about DIRECTV from its main system or record. Consistent with the Court’s Order, the parties are working toward a production of a sample from DIRECTV’s RIO database. To date, however, DIRECTV has not produced any RIO files. 6 The FTC circulated to DIRECTV a version of its portion of this letter brief containing the burden explanation provided here before DIRECTV made this “ten pushes” argument. 4 Case 3:15-cv-01129-HSG Document 142 Filed 05/02/16 Page 6 of 6 In total, compliance with these Sentinel-related RFPs is expected to require between 120 and 180 work hours, in addition to possible expenditures by the Commission for vendor services. Production in response to RFPs 24, 26, 28, 30, 32, and 34—which seek all other types of complaint materials outside of Sentinel—would be far more burdensome. FTC staff would have to implement an agency-wide call for all information and materials relating to six major corporations, sift through the potentially hundreds of responses and thousands (if not tens or hundreds of thousands) of potentially responsive documents, and engage in a painstaking privilege review process, as DIRECTV’s requests encompass internal agency investigations and deliberations, including those that may be nonpublic or ongoing. This exercise would embroil and disrupt the work of scores of agency attorneys, economists, and other staffers, and would likely result in countless lost work hours for the nation’s taxpayers. Complying with RFPs 35 and 36 would be exponentially more difficult, since these Requests broadly demand consumer complaint materials for all “other provider[s] of cable or satellite television services,” apart from those listed in RFPs 23 through 34, without specifying who qualifies as a “provider.” Thus, before even engaging in the highly burdensome review and production process described above, the FTC would have to query all agency files relating complaints for all companies and persons for all times to make determinations about which would qualify as relating to “a provider of cable or satellite television services.”7 This preliminary task alone could take agency staff months to complete. 3. DIRECTV’s threat to use the Freedom of Information Act (“FOIA”) as an end run is not a reason to permit otherwise improper discovery. As a last ditch effort, DIRECTV suggests that it should be able to get this otherwise improper and overly burdensome discovery from the FTC because DIRECTV could seek the same materials from the agency through a FOIA request. But “FOIA is not designed ‘as a substitute for civil discovery.’” Shannahan v. IRS, 672 F.3d 1142, 1151 (9th Cir. 2012) (citing Baldrige v. Shapiro, 455 U.S. 345, 360 n.14 (1982)); see also Clay v. U.S. Dep’t of Justice, 680 F. Supp. 2d 239, 248 (D.D.C. 2010) (“FOIA is not a substitute for discovery rules which govern civil and criminal litigation where ‘[d]ifferent considerations’ are at issue.”). Indeed, “the Supreme Court has generally looked with disfavor upon parties that have tried to use the FOIA to circumvent the discovery rules.” Am. Lumber Corp. v. Nat’l R.R. Passenger Corp., 886 F.2d 50, 55 (3d Cir. 1989) (citing United States v. Weber Aircraft Corp., 465 U.S. 792, 801 (1984)). misleading. The Handbook states only that “[r]equesters frequently ask for records of complaints about the business practices of a company,” not, as DIRECTV suggests, that the FTC regularly provides all materials in response to such requests without incurring a burden. On the contrary, the Handbook points out the agency’s needs to reduce “voluminous” requests, and explains that the requester will likely incur the fees associated with processing “consumer complaints about a company.”8 Therefore, DIRECTV’s reference to the FTC’s FOIA Handbook is misplaced. It is also 7 DIRECTV’s Requests do not define who qualifies as a “provider of cable or satellite television services.” Nor do the Requests place any limitations on temporal scope. See Ex. A. 8 See FTC FOIA & Privacy Act Handbook, fn. 2 supra, at pp. 6, 11. 5
2016-05-02	143	DISCOVERY LETTER BRIEF re: McKown Deposition filed byDIRECTV LLC, DIRECTV, Inc.. (Sandrock, Ryan) (Filed on 5/2/2016) Modified on 5/2/2016 (dtmS, COURT STAFF). (Entered: 05/02/2016)	Case 3:15-cv-01129-HSG Document 143 Filed 05/02/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on March 24, 2016, prior to filing this letter. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Ryan Sandrock Case 3:15-cv-01129-HSG Document 143 Filed 05/02/16 Page 2 of 6 DIRECTV seeks to depose the FTC’s Ray McKown regarding his communications with DIRECTV and the state attorneys general regarding the 2011 Multi-State Settlement (“MSA”). NATURE OF DISPUTE DIRECTV’S POSITION Mr. McKown is the sole FTC witness to key conversations he had with DIRECTV that will support the MSA-related affirmative defenses that Your Honor and Judge Gilliam have ruled are appropriate subjects for discovery. Mr. McKown was the FTC’s primary interface with DIRECTV regarding the issues raised by the states during settlement negotiations in 2010 – adequate disclosures in advertising of the contract term, introductory pricing, early cancellation fees, and negative option offers. Mr. McKown is the only FTC witness regarding many discussions he had with DIRECTV’s counsel. Specifically, between April 2010 (when the FTC began its investigation of DIRECTV) and December 2010 (when DIRECTV and the states reached agreement and publically announced the MSA), DIRECTV’s counsel, Clayton S. Friedman,1 had repeated conversations with Mr. McKown only (neither Tom Syta nor Barbara Chun were present or participated) about the MSA. The discussions with Mr. McKown involved the following: (1) (2) (3) (4) (5) DIRECTV explaining to Mr. McKown the existence of the multistate investigation; The terms being negotiated between DIRECTV and the states; Inviting the FTC to join the MSA; A detailed presentation to Mr. McKown in the Fall of 2010 about the terms and scope of the MSA; and Mr. McKown informing DIRECTV, through Mr. Friedman, that the FTC’s investigation was focused on other issues. As part of these discussions, Mr. McKown never expressed concern about the MSA settlement provisions – only that they did not resolve the FTC’s “other” issues. As a result, DIRECTV was led to believe that the disclosure regime imposed by the MSA was sufficient to address disclosure issues related to commitments, pricing, ECFs, and premium channels. In addition, it is DIRECTV’s understanding that Mr. McKown was the primary FTC lawyer communicating with the various states about DIRECTV and the MSA. Relevance of FTC/DIRECTV Communications Re: the MSA. There is no question that DIRECTV is entitled to discovery regarding its MSA-related affirmative defenses, specifically, discovery about its contention that the Mr. McKown led DIRECTV to believe that the FTC would not take any action regarding the specific issues set forth above because those issues were covered by the MSA. On a number of occasions, through only Mr. McKown, the FTC communicated that it would not formally join in the MSA and that it was focused on “other issues,” conveying to DIRECTV that the MSA’s disclosure regime, on which DIRECTV relied, complied with the law. Mr. McKown never expressed reservations about the advertising terms of the MSA. 1 DIRECTV’s counsel, Michael Yaghi, also participated in some of these conversations with only Mr. McKown present. 1 Case 3:15-cv-01129-HSG Document 143 Filed 05/02/16 Page 3 of 6 Judge Gilliam has ruled that DIRECTV is entitled to discovery on the MSA. On Your Honor has also ruled multiple times that discovery regarding the MSA is December 21, 2015, he largely rejected the FTC’s motion to strike, ruling that DIRECTV had sufficiently pled its MSA-based affirmative defenses of laches, estoppel, and waiver. (Dkt. 88). All of these defenses are predicated in part on the FTC’s communications with DIRECTV. Furthermore, although Judge Gilliam struck the defenses of issue preclusion, claim preclusion, and previous nationwide settlement (which are based on the same communications), he stated that DIRECTV “may seek leave to amend later if it subsequently discovers a sufficient factual basis.” (Dkt. 88 at 10). This ruling allows further discovery on all the MSA-related defenses. appropriate. On January 8, 2016, Your Honor ruled that DIRECTV was entitled to discovery regarding Washington’s involvement with the MSA. (Dkt. 92). Then, on February 18, 2016, Your Honor ruled that the FTC must produce a witness regarding: “All communications, negotiations, and discussions between or involving the FTC, on the one hand, and DIRECTV (including its attorneys) and/or any or all of the ‘attorneys general of all 50 states and the District of Columbia,’ on the other, both before and after the effective date of the multi-state settlement agreement concerning the multistate settlement agreement and any of its terms.” (Dkt. 108). The FTC has agreed to produce a witness, but not Mr. McKown. Then, on March 16, 2016, Your Honor ruled that Ms. Selis must sit for an oral deposition regarding the MSA. (Dkt. 122). interface with DIRECTV’s counsel relating to the terms of the MSA and the decision by the FTC not to join in the MSA. He made statements to DIRECTV’s counsel, Clay Friedman, on which DIRECTV justifiably relied in during the final negotiations of the MSA and in designing an advertising regime in a manner that complied with the MSA. Furthermore, he provided DIRECTV’s counsel with proposed advertising copy that the FTC said it considered not deceptive. Again, Mr. McKown participated in many conversations with DIRECTV in which he was the only participant on the FTC side—Ms. Chun and Mr. Syta were not present. that witness will be FTC attorney Tom Syta. This is gamesmanship intended to prevent DIRECTV from obtaining testimony from the horse’s mouth. This tactic fails because DIRECTV has noticed both a 30(b)(6) deposition and Mr. McKown’s individual deposition. The FTC is free to designate Mr. Syta and present Mr. McKown for his individual deposition. It is important to note that DIRECTV has virtually no recollection of Mr. Syta being involved in any discussions whatsoever. The FTC responds that it will produce a witness regarding the MSA communications but Need for Mr. McKown’s Testimony. Mr. McKown was the principal if not sole Alternatively, if Mr. McKown does not testify, the FTC should be precluded from contradicting DIRECTV’s testimony regarding communications with Mr. McKown. Shelton Factors. The FTC also responds that Mr. McKown should not be compelled to testify because he is a member of the FTC’s trial team. The FTC cites Shelton v. American Motors, 805 F2d 1323 (8th Cir 1986), for the proposition that in order to depose an opposing attorney, a party must show that (1) no other means exist to obtain the information, (2) the information sought is relevant and non-privileged, and (3) the information is crucial to the preparation of the case. That test is easily met here: there is no way to obtain the information regarding communications between Mr. McKown and DIRECTV as to which no other FTC lawyer was present, the FTC has not established any basis for the common interest privilege, and those communications are central to DIRECTV’s defenses. Courts applying the Shelton test 2 Case 3:15-cv-01129-HSG Document 143 Filed 05/02/16 Page 4 of 6 have allowed counsel to be deposed. See e.g., American Casualty Co. v. Krieger, 160 F.R.D. 582, 590-91 (S.D. Cal. 1995). Your Honor, in fact, has ordered that such a deposition to go forward in this case, despite the FTC’s invocation of the Shelton factors. (Dkt. 107 at 3; Dkt. 108). Furthermore, the FTC has not cited any case disallowing a deposition of an FTC attorney who has first-hand knowledge of conversations providing the factual bases for a defendant’s affirmative defenses, and testimony of such conversations through other FTC witnesses not present during those conversations is inadmissible hearsay. Under these circumstances, the Shelton factors are clearly met. THE FEDERAL TRADE COMMISSION’S POSITION Deposing opposing trial counsel during the pendency of active litigation is permitted only under extraordinarily narrow circumstances: when that opposing counsel holds specific discoverable and crucial information that his party opponent cannot obtain anywhere else. By DIRECTV’s own narrative, that is not the case here. DIRECTV seeks to depose Mr. McKown, the FTC’s trial counsel of record in this action, not to unlock some otherwise hidden information, but to elicit Mr. McKown’s testimony about whether his recollections of settlement discussions between him and DIRECTV’s lawyers match the recollections of DIRECTV’s lawyers. DIRECTV claims to seek this testimony to bolster its affirmative defenses of laches, waiver, and estoppel, which DIRECTV contends relate to the FTC’s decision not to join the settlement agreements with state government agencies in 2010. But DIRECTV itself knows what was said during conversations between its lawyers and FTC counsel. In fact, DIRECTV has already submitted its narratives of those conversations to the Court. If DIRECTV wants to obtain the FTC’s admissions about the agency’s purported commitments, it can seek that discovery from the FTC—the party against which DIRECTV invokes these defenses. Indeed, DIRECTV is already scheduled to depose the FTC on the very same topics on which it seeks Mr. McKown’s personal testimony. Its attempt to depose Mr. McKown on top of those Rule 30(b)(6) depositions is unnecessary and improper. A. This Court recognizes the strong presumption against deposing opposing counsel during active litigation, absent narrow exceptional circumstances. This Court recognizes the well-established “presumption against testimony by an opposing party’s attorney-witness.” Flotsam of Cal., Inc. v. Huntington Beach Conference & Visitors Bureau, No. C06-7028 MMC (MEJ), 2007 WL 4171136, at 1 (N.D. Cal. Nov. 26, 2007) (citing Hickman v. Taylor, 329 U.S. 495, 513 (1947)). Under the standard set out by the Eighth Circuit in Shelton v. American Motors Corp., and widely applied by this Court,2 to depose opposing trial counsel, DIRECTV must establish that “(1) no other means exist to obtain the information; (2) the information sought is relevant and nonprivileged; and (3) the information is crucial to the preparation of the case.” 805 F.2d 1323, 1327 (8th Cir.1986). DIRECTV bears the burden of making this showing. Flotsam of Cal., 2007 WL 4171136, at 1. It has not done so here. B. DIRECTV seeks to depose Mr. McKown to elicit favorable testimony, not to obtain otherwise unavailable information. DIRECTV claims that it needs to depose Mr. McKown about his communications with DIRECTV’s counsel during pre-complaint settlement discussions that occurred while the FTC 2 See, e.g., Flotsam of Cal., 2007 WL 4171136 at 1; Chao v. Aurora Loan Servs., LLC, No. C10-3118 SBA (LB), 2012 WL 5988617, at 4 (N.D. Cal. Nov. 26, 2012); Graff v. Hunt & Henriques, No. C08- 0908 JF (PVT), 2008 WL 2854517, at 2 (N.D. Cal. July 23, 2008). 3 Case 3:15-cv-01129-HSG Document 143 Filed 05/02/16 Page 5 of 6 was investigating DIRECTV. At the same time, DIRECTV acknowledges that its own counsel were party to all those communications with Mr. McKown. Therefore, it is impossible for Mr. McKown to possess any information about what was said that DIRECTV does not also have.3 In fact, DIRECTV has already submitted voluminous papers in this case presenting its recollection of those communications. For example, DIRECTV filed a declaration from its counsel Mr. Friedman, who devotes several paragraphs to describing his communications with Mr. McKown and other FTC counsel. (See Dkt. 36-1 at ¶¶ 11, 12, 15, 16.) DIRECTV also responded to the FTC’s interrogatories with a multi-page narrative about communications between its lawyers and FTC lawyers, including Mr. McKown.4 Instead of seeking any unique information from Mr. McKown, what DIRECTV seeks to elicit from him is testimony that corroborates its own lawyers’ recollections of pre-litigation settlement discussions between him and them. That is not a valid basis to depose opposing trial counsel. The Shelton rule’s narrow exceptions to the default prohibition against deposing opposing counsel are predicated on the need to obtain otherwise unavailable “information,” not the desire for hypothetically favorable testimony. See Shelton, 805 F.2d at 1324 (ruling on the plaintiffs’ purported need to obtain information about the existence of documents); cf. Alcon Labs., Inc. v. Pharmacia Corp., 225 F. Supp. 2d 340, 343 (S.D.N.Y. 2002) (permitting deposition where the company’s trial counsel, who also served as its patent prosecution attorney, was “likely the only source” for much of the information relating to patent inventorship). Because DIRECTV itself has all the information about these communications, deposing Mr. McKown just to test his recollection against those of DIRECTV’s lawyers is unwarranted. See Chao, 2012 WL 5988617, at 5 (rejecting defendant’s demand to depose plaintiffs’ trial counsel where defendant’s own records, combined with document productions, “provides a sufficient avenue for [defendant] to obtain the information it needs”). The very notion that opposing trial lawyers can freely depose each other to test their competing recollections of what one said to the other earlier in the case—or, worse yet, during settlement discussions—would eviscerate the Shelton test and grind orderly litigation to a halt. As one court aptly described it, seeking to compel such depositions “is ridiculous and a waste of the Court’s time.” Coleman v. District of Columbia, 284 F.R.D. 16, 19 (D.D.C. 2012) (barring the deposition of defendant’s attorney about communications between her and plaintiff’s counsel where “[p]laintiff’s counsel admits that it was present during these communications”).5 C. Any relevant “information” that DIRECTV seeks from Mr. McKown is available through other means of discovery, including from the FTC itself. DIRECTV also fails to satisfy the prongs of the Shelton test. Mr. McKown’s personal testimony is irrelevant to DIRECTV’s asserted need for it. What DIRECTV seeks is testimony 3 DIRECTV’s contention that “Mr. McKown is the sole FTC witness” (emphasis added) to several communications between himself and DIRECTV’s lawyers is misplaced, since DIRECTV’s lawyers were also witnesses to those communications. Unless those lawyers have failing memories, it is unclear why Mr. McKown’s testimony is indispensable for DIRECTV to discover what was discussed. 4 DIRECTV’s Responses and Objections to the FTC’s Second Set of Interrogatories, at pp. 10-19. 5 Even if parties could freely depose opposing counsel in order to secure favorable admissions based on counsel-to-counsel settlement communications, any such testimony would be inadmissible under Federal Rules of Evidence 408 (settlement negotiations) and 802 (hearsay). This undercuts the third Shelton factor—whether the information sought is crucial to DIRECTV’s preparation of the case. 4 Case 3:15-cv-01129-HSG Document 143 Filed 05/02/16 Page 6 of 6 about Mr. McKown’s communications made on behalf of the FTC. DIRECTV admits that the lawyer-to-lawyer communications on which it intends to examine Mr. McKown are actually “FTC communicat[ions]” made “through” Mr. McKown. (emphasis in original) Indeed, any of Mr. McKown’s communications made outside the scope of his duties for the FTC would be irrelevant to DIRECTV’s affirmative defenses—DIRECTV’s relevance predicate for seeking his deposition—since DIRECTV does not plead these defenses against Mr. McKown himself. DIRECTV does not, and cannot, contend that Mr. McKown could speak for the FTC when acting outside the scope of his duties for the agency. Mr. McKown’s communications with DIRECTV’s counsel matter only to the extent that they were made on behalf of the FTC. In that case, the appropriate course is for DIRECTV to seek discovery about these communications, including any admissions that DIRECTV hopes to secure, from the FTC itself. See Graff, 2008 WL 2854517, at *1-2 & n.2 (N.D. Cal. July 23, 2008) (noting defendant’s ability to determine the scope of plaintiff’s grant of authority to its counsel through interrogatories and party depositions, instead of deposing the lawyer himself). And, in fact, DIRECTV has already done precisely that. It has noticed, under Rule 30(b)(6), the FTC’s deposition on “[a]ll communications, negotiations, and discussions between or involving the FTC, on the one hand, and DIRECTV (including its attorneys) and/or any or all of the ‘attorneys general of all 50 states and the District of Columbia,’ on the other, both before and after the effective date of the multi-state settlement agreement, concerning the multi-state settlement agreement and any of its terms.” (Topic 1). This topic includes Mr. McKown’s communications made within the scope of his duties for the FTC. It also subsumes any and all of Mr. McKown’s communications on behalf of the FTC with the states and their attorneys general. DIRECTV has also noticed the FTC’s deposition on “[t]he decision by the FTC, including the reasons for the decision, not to object to, to intervene in, or to seek to modify or augment the terms of the multi-state settlement agreement.” (Topic 2). This topic encompasses Mr. McKown’s internal communications within the agency. Deposition on both these Rule 30(b)(6) topics is scheduled for May 27, and the Commission will provide designated witnesses to testify, subject to proper privilege and other objections. DIRECTV, however, cannot dictate whom the Commission designates to testify on its behalf. See Progress Bulk Carriers v. Am. S.S. Owners Mut. Prot. & Indem. Ass’n, Inc., 939 F. Supp. 2d 422, 430 (S.D.N.Y. 2013). The FTC bears the obligation to make sure that its designated witnesses are adequately prepared to testify on noticed deposition topics. See Sony Elecs., Inc. v. Soundview Techs., Inc., 217 F.R.D. 104, 112 (D. Conn. 2002) (the organization must “prepare [its designated witnesses] so that they may give complete, knowledgeable and binding answers”) (internal quotations omitted)). If, as DIRECTV suggests, inquiring into the content of Mr. McKown’s communications with DIRECTV’s lawyers is indispensable to that preparation, DIRECTV presents no compelling reason to conclude that the Commission’s designated representatives would be unable to do that.6 6 DIRECTV’s request to bar the FTC from challenging DIRECTV’s characterizations of the FTC’s communications unless the FTC puts up Mr. McKown for deposition is warrantless. It is solely DIRECTV, not the FTC, that has injected these characterizations into the case, including through a sworn declaration from its counsel of record, Mr. Friedman. The FTC is entitled to challenge those assertions, if necessary, and does not lose that right by shielding its trial counsel from improper deposition demands. 5
2016-05-02		Electronic filing error. Incorrect event used. Correct event is DISCOVERY LETTER BRIEF. Corrected by Clerk's Office. No further action is necessary. Re: 143 Letter Brief 142 Letter Brief filed by DIRECTV LLC(dtmS, COURT STAFF) (Filed on 5/2/2016) (Entered: 05/02/2016)
2016-05-03	144	Discovery Order re: 142 Discovery Letter Brief. Signed by Judge Maria-Elena James on 5/3/2016. (cdnS, COURT STAFF) (Filed on 5/3/2016) (Entered: 05/03/2016)	Case 3:15-cv-01129-HSG Document 144 Filed 05/03/16 Page 1 of 3 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 142 Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) and Plaintiff Federal Trade Commission’s (“FTC”) have filed a joint discovery letter regarding DIRECTV’s Requests for Production of complaints from the FTC’s Consumer Sentinel system (“Sentinel) regarding DIRECTV competitors Dish Network, Comcast XFINITY, Cox Communications, Verizon FIOS, Time Warner Cable, Charter Communications, and other providers of cable or satellite television services. Jt. Ltr., Dkt. No. 142. The FTC objected to producing any documents, and DIRECTV therefore seeks to compel production. Id. at 1. DIRECTV argues these complaints are relevant because the FTC intends to rely on the volume of consumer complaints against DIRECTV as evidence that DIRECTV’s advertising violated the Federal Trade Commission Act, 15 U.S.C. §§ 53(b) and 57b, and Section 5 of the Restore Online Shoppers’ Confidence Act, 15 U.S.C. § 8404. Jt. Ltr. at 1. DIRECTV maintains it needs to be able to defend itself against this claim by showing that there is nothing exceptional about the volume or content of complaints against DIRECTV or that the raw volume is in any way probative of deceptive advertising. Id. DIRECTV believes that production of Sentinel complaints regarding DIRECTV’s competitors will show that the number of complaints against it was not exceptional, and it argues the FTC wants to bar DIRECTV from obtaining and analyzing this evidence because it could undermine the FTC’s case. Id. DIRECTV further argues the requested 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 144 Filed 05/03/16 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 production of Sentinel complaints may show that consumers complained regarding competitor disclosures on the same issues presented in this case and that if consumers “complained more often regarding competitor disclosures that the FTC would deem acceptable, that may be probative of the fact that consumers are not in fact deceived or misled by the DIRECTV advertising but are really complaining about something else.” Id. at 2. Finally, DIRECTV contends that any burden on the FTC is minimal as it has already produced Sentinel complaints regarding DIRECTV in a single spreadsheet, and it can likely produce the information in a single spreadsheet for each company. Id. In response, the FTC argues that nothing in its Complaint suggests this case is predicated on an “unusual” number of consumer complaints against DIRECTV as compared to other companies, and DIRECTV cannot point to anything in the case record to substantiate its “speculative hunch” about the FTC’s intent to rely on complaints about other companies to prove its case against DIRECTV. Id. at 3. Even if the complaints were somehow relevant, the FTC argues DIRECTV “cannot defend against its own culpability by trying to show that its competitors in the cable and satellite television industry also engaged in the same type of deceptive advertising as DIRECTV.” Id. The FTC also argues that producing its records of complaints about numerous other companies is highly burdensome and not proportional to the needs of this case. Id. at 4. Although DIRECTV points out that the FTC previously produced complaints regarding DIRECTV in a single spreadsheet, the FTC notes it has actually produced two spreadsheets, which together contained more than ninety thousand complaints. Id. The FTC states these files “were so massive” that it had to turn to an outside vendor to generate them. Id. It maintains that to comply with DIRECTV’s request, the FTC would have to query and produce files for six specified companies and that, based on a similar query and production performed for the DIRECTV complaints in this case, “the FTC conservatively estimates that this would take approximately 15- 25 hours of attorney and paralegal time for each of the six specified companies—for a total of 90 to 150 hours—to build the appropriate queries, review output files, and remove obvious false positives (without engaging in a far more labor-intensive file-by-file review).” Id. Having reviewed the parties’ positions, the Court finds DIRECTV’s requests may be 2 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 144 Filed 05/03/16 Page 3 of 3 relevant, but they are not proportional to the needs of the case. Bearing in mind the proportionality requirements of Federal Rule of Civil Procedure 26, the parties have not shown any attempt to agree upon a more limited scope of production. Rule 26 provides that a party may obtain discovery “regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case[.]” Fed. R. Civ. P. 26(b)(1). Factors to consider include “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id. Under Rule 26, “[t]he parties and the court have a collective responsibility to consider the proportionality of all discovery and consider it in resolving discovery disputes.” Fed. R. Civ. P. 26 advisory committee notes (2015 amendments). Thus, there is “a shared responsibility on all the parties to consider the factors bearing on proportionality before propounding discovery requests, issuing responses and objections, or raising discovery disputes before the courts.” Salazar v. McDonald’s Corp., 2016 WL 736213, at 2 (N.D. Cal. Feb. 25, 2016); Goes Int’l, AB v. Dodur Ltd., 2016 WL 427369, at 4 (N.D. Cal. Feb. 4, 2016) (citing advisory committee notes for proposition that parties share a “collective responsibility” to consider proportionality and requiring that “[b]oth parties . . . tailor their efforts to the needs of th[e] case”). Further, the parties have not set forth their proposed compromise on the issues in dispute, as required under the undersigned’s Discovery Standing Order (revised March 14, 2016). With this in mind, the Court ORDERS the parties to meet and confer in person again on this issue to determine if they are able to agree on a more limited production. If unable to agree, the parties shall file an updated joint letter that includes each party’s proposed compromise on the issues in dispute. IT IS SO ORDERED. Dated: May 3, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-05-03	145	Discovery Order re: 143 Discovery Letter Brief. Signed by Judge Maria-Elena James on 5/3/2016. (cdnS, COURT STAFF) (Filed on 5/3/2016) (Entered: 05/03/2016)	Case 3:15-cv-01129-HSG Document 145 Filed 05/03/16 Page 1 of 4 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 143 BACKGROUND Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) and Plaintiff Federal Trade Commission’s (“FTC”) have filed a joint discovery letter in which DIRECTV seeks to depose Ray McKown, counsel for FTC in this case. Dkt. No. 143. DIRECTV seeks testimony regarding Mr. McKown’s communications with DIRECTV and the state attorneys general of all 50 states concerning the 2011 Multi-State Settlement (“MSA”), through which all 50 states settled claims covering DIRECTV’s advertising disclosures at issue in this case. Id. at 1. DIRECTV states Mr. McKown is the sole FTC witness to key conversations he had with DIRECTV that will support its MSA-related affirmative defenses. Id. at 1. It argues Mr. McKown led DIRECTV to believe the FTC would not take any action regarding certain issues in this lawsuit because those issues were covered by the MSA, and his testimony is necessary because Mr. McKown “was the principal if not sole interface with DIRECTV’s counsel relating to the terms of the MSA and the decision by the FTC not to join in the MSA.” Id. at 2. In response, the FTC argues that deposing opposing trial counsel during the pendency of active litigation should be permitted only under extraordinarily narrow circumstances, and such circumstances are not present here because DIRECTV itself has all the information about these communications. Id. at 3-4. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 145 Filed 05/03/16 Page 2 of 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LEGAL STANDARD Federal Rule of Civil Procedure (“Rule”) 26 provides that a party may obtain discovery “regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case[.]” Fed. R. Civ. P. 26(b)(1). Rule 26(c) “confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required.” Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). “The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense,” including by (1) prohibiting disclosure or discovery; (2) conditioning disclosure or discovery on specified terms; (3) preventing inquiry into certain matters; or (4) limiting the scope of disclosure or discovery to certain matters. Fed. R. Civ. P. 26(c)(1). “A party may depose ‘any person’ under Rule 30(a)(1), and there is no express prohibition against deposing an attorney of record in a case.” Chao v. Aurora Loan Servs., LLC, 2012 WL 5988617, at 3 (N.D. Cal. Nov. 26, 2012) (citing Graff v. Hunt & Henriques, 2008 WL 2854517, at 1 (N.D. Cal. July 23, 2008). Still, “[t]he Supreme Court . . . alluded to a presumption that trial counsel should not be forced to testify because doing so compromises the standards of the legal profession.” Nocal, Inc. v. Sabercat Ventures, Inc., 2004 WL 3174427, at 2 (N.D. Cal. Nov. 15, 2004) (citing Hickman v. Taylor, 329 U.S. 495, 513 (1947)); see also Chao, 2012 WL 5988617, at 3. “For this reason, attorney depositions even for fact discovery generally are allowed only when the discovery cannot be obtained from another place.” Chao, 2012 WL 5988617, at 3 (citing Graff, 2008 WL 2854517, at 1). In considering whether to permit testimony by an opposing party’s attorney-witness, courts in this District utilize the standard set out by the Eighth Circuit in Shelton v. American Motors Corporation, 805 F.2d 1323, 1327 (8th Cir. 1986). See, e.g., Chao, 2012 WL 5988617, at 4; S.E.C. v. Jasper, 2009 WL 1457755, at 3 (N.D. Cal. May 26, 2009); Graff, 2008 WL 2854517, at 2; Flotsam of Cal., Inc. v. Huntington Beach Conf. & Visitors Bureau, 2007 WL 4171136, at 1. The Shelton court explained that attorney depositions should be permitted only where the party seeking the deposition shows that (1) no other means exist to obtain the information, (2) the 2 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 145 Filed 05/03/16 Page 3 of 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 information sought is relevant and nonprivileged, and (3) the information is crucial to the preparation of the case. 805 F.2d at 1327. DISCUSSION Applying the Shelton factors, the Court finds DIRECTV has not met its burden to overcome the strong presumption against deposing counsel during active litigation. DIRECTV has not demonstrated that no other means exist to obtain the requested discovery. DIRECTV claims to seek this testimony to bolster its affirmative defenses of laches, waiver, and estoppel, and argues that Mr. McKown is the only FTC witness regarding the discussions he had with DIRECTV’s counsel. Jt. Ltr. at 1. However, given that DIRECTV’s own counsel were party to those communications, it is clear that DIRECTV knows what was said during conversations between its lawyers and FTC counsel. Indeed, as the FTC points out, DIRECTV has already submitted its narratives of those conversations to the Court. Id. at 3 (citing Dkt. No. 36-1 at ¶¶ 11, 12, 15, 16). Because DIRECTV itself has all the information about these communications, deposing Mr. McKown is unwarranted. See Chao, 2012 WL 5988617, at 5 (rejecting defendant’s demand to depose plaintiffs’ trial counsel where defendant’s own records, combined with document productions, “provides a sufficient avenue for [defendant] to obtain the information it needs”); Coleman v. Dist. of Columbia, 284 F.R.D. 16, 19 (D.D.C. 2012) (barring the deposition of defendant’s attorney about communications between her and plaintiff’s counsel where “[p]laintiff’s counsel admits that it was present during these communications”). Further, while information regarding the FTC’s commitments concerning the MSA may be relevant, DIRECTV has not shown why it cannot seek the same information directly from the FTC through a Rule 30(b)(6) deposition. As Mr. McKown’s communications with DIRECTV’s counsel are relevant to the extent they were made on behalf of the FTC, the appropriate course is for DIRECTV to seek discovery about these communications from the FTC itself. See Graff, 2008 WL 2854517, at 1-2 & n.2 (noting defendant’s ability to determine the scope of plaintiff’s grant of authority to its counsel through interrogatories and party depositions, instead of deposing the lawyer himself). In fact, it appears DIRECTV has already done precisely that, as it has noticed the FTC’s Rule 30(b)(6) deposition on “[a]ll communications, negotiations, and discussions 3 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 145 Filed 05/03/16 Page 4 of 4 between or involving the FTC, on the one hand, and DIRECTV (including its attorneys) and/or any or all of the ‘attorneys general of all 50 states and the District of Columbia,’ on the other, both before and after the effective date of the multi-state settlement agreement, concerning the multi- state settlement agreement and any of its terms.” Jt. Ltr. at 5 (quoting DIRECTV’s Rule 30(b)(6) Deposition Notice, Topic 1). This topic includes Mr. McKown’s communications made within the scope of his duties for the FTC, and it subsumes Mr. McKown’s communications on behalf of the FTC with the states and their attorneys general. DIRECTV has also noticed the FTC’s deposition on “[t]he decision by the FTC, including the reasons for the decision, not to object to, to intervene in, or to seek to modify or augment the terms of the multi-state settlement agreement.” Id. (quoting DIRECTV’s Topic 2). Thus, DIRECTV has failed to establish that its need to depose Mr. McKown is “crucial” to its preparation of its case. CONCLUSION Based on the analysis above, the Court DENIES DIRECTV’s request to compel Ray McKown’s deposition. IT IS SO ORDERED. Dated: May 3, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-06-08	146	Joint Discovery Letter Brief filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Exhibit A)(Sandrock, Ryan) (Filed on 6/8/2016) (Entered: 06/08/2016)	Case 3:15-cv-01129-HSG Document 146 Filed 06/08/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on May 4, 2016, prior to filing this letter. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Ryan M. Sandrock Counsel for DIRECTV and DIRECTV, LLC Case 3:15-cv-01129-HSG Document 146 Filed 06/08/16 Page 2 of 6 NATURE OF DISPUTE The parties have not been able to reach agreement on a more limited production of complaints from the FTC’s Consumer Sentinel system (“Sentinel”) regarding DIRECTV competitors. DIRECTV’S POSITION Original Request: DIRECTV sought all consumer complaints in Sentinel regarding ten DIRECTV competitors (DISH, Comcast XFINITY, Cox Communications, Verizon FIOS, Time Warner Cable, Charter Communications and no more than four additional competitors to be identified later). Dkt. 142. Order: The Court found that DIRECTV’s requests “may be relevant, but they are not proportional to the needs of the case.” The Court also found that the parties had not met their obligations to set forth their proposed compromises on the issue. Dkt. 144. DIRECTV’s Proposed Compromise: DIRECTV proposes that the FTC produce consumer complaints for three DIRECTV competitors (Comcast, DISH, and Charter). The FTC has already run a query to identify the number of complaints for these competitors. The total is 231,802 (100,988 Comcast+96,813 DISH +34,001 Charter). Argument: The Court has decided that complaints about competitors may be relevant. The issue is what scope of production is proportional. DIRECTV’s agreement to reduce its request from ten to three companies reduces the FTC’s burden by 70% (or 50% if you only consider the original request to be for six specified companies). The FTC cannot dispute that DIRECTV’s proposed compromise dramatically reduces the burden on the FTC. Yet, the FTC still refuses the compromise, claiming that any method other than sampling would be unduly burdensome.1 The FTC’s burden argument is questionable given that the FTC does not dispute that it can and does respond to FOIA requests for complaints from the Sentinel system. Dkt. 142. In addition, the FTC’s argument that it would be burdensome to “build the appropriate queries” is also weak, given that the FTC has already run queries for the seven identified companies and provided the number of hits to DIRECTV. Even if new or additional queries are somehow necessary, any burden would be slight. It is difficult to see how this basic work imposes an undue burden on the FTC.2 1 Notably, when the FTC seeks production of materials to support its claims, it invokes the potential magnitude of this case in order to overcome DIRECTV’s burden arguments. See, e.g., Dkt. 113 at 1. However, when DIRECTV seeks production of materials to support its defenses, the FTC takes the position that only a minimal burden is justified. 2 In an earlier brief regarding production of information from DIRECTV’s databases, the FTC said that the burden of separating relevant and non-relevant documents was the result of “DIRECTV’s own failure to properly categorize its customer records” and “in any event, this burden is no greater than the ordinary burden of reviewing documents for relevance before production—a standard part of any litigation.” Dkt. 113 at 3. The same could be said here of the FTC’s arguments. The FTC also has claimed that any burden here must be taken more seriously 1 Case 3:15-cv-01129-HSG Document 146 Filed 06/08/16 Page 3 of 6 The FTC did not attempt at any time in the meet and confer process to explain how the 15-25 hour per company figure could be reduced other than through sampling.3 DIRECTV submits that this number is only that high because the FTC asserts that it must “build the appropriate queries, review output files, and remove obvious false positives.” Dkt. 142. The FTC presumably could reduce this burden by simplifying any query (this assumes that additional querying is even necessary), conducting a more limited review of output files, or making more limited efforts to eliminate false positives. Again, however, the FTC has failed to offer any compromise on this point. It says that there is just one way to produce data for each company and that way requires 15-25 hours. This is unreasonable. The FTC also ignores that a random sample process will create new work for both sides—providing the list of potentially relevant complaints to DIRECTV, attempting to reach agreement on the number of complaints to be sampled, making sure that the number of complaints produced is in fact representative of the larger universe of complaints, and discussing whether additional sampling is needed. In short, the FTC’s proposed compromise may not finally resolve this issue. DIRECTV’s proposed compromise will. The FTC also contends that sampling should be ordered because the Court ordered sampling to resolve a separate dispute about DIRECTV’s RIO database. But the disputes are of a different scale. The total number of RIO files at issue was over 35 million. Sampling therefore was necessary. Here, the total number of files is over 150 times less—just 231,802. A complete production of these files is therefore possible and reasonable. *** DIRECTV agreed to a 50-70% reduction of its original request. The FTC failed to provide any detail in the meet and confer process that would have allowed for some other compromise. The FTC’s open-ended, iterative proposed compromise will be far more complex, and far more likely to lead to further motion practice, than DIRECTV’s simple proposal for a final resolution of this issue. There is no time for further wrangling over what should be a simple issue. The Court therefore should resolve this issue for good now by ordering the FTC to produce all consumer complaints for Comcast, DISH, and Charter. than a burden on a private party because it is the government. This is wrong. The FTC is not entitled to any special consideration in discovery in a civil matter simply because it is the FTC. 3DIRECTV further attempted to compromise by proposing structured sampling in which it would get at least 10% of the complaints for four companies. The FTC rejected that proposal, declaring it unreasonable and offering no further compromise, other than an unstructured sampling proposal in which the FTC would have final say as to the process. The FTC’s claim that the parties moved forward to implement a sampling proposal is wrong. The FTC proposed sampling, DIRECTV gave some structure to a sampling proposal, and the FTC rejected it. 2 Case 3:15-cv-01129-HSG Document 146 Filed 06/08/16 Page 4 of 6 THE FEDERAL TRADE COMMISSION’S POSITION A. The FTC’s Proposal. The FTC proposes to produce to DIRECTV random samples of consumer complaints from the FTC’s Consumer Sentinel database for three companies of DIRECTV’s choosing.4 DIRECTV can choose the sample from each population, or it can let the FTC choose the sample. This proposal mirrors the Court’s April 4, 2016 Order (Dkt. 131) mandating DIRECTV to produce a random sample of consumer files from the company’s RIO database. Moreover, unlike DIRECTV’s demand for a full-scale production of all Sentinel files for three large companies (totaling more than 200,000 files), the FTC’s sampling proposal comports with Rule 26’s demand for proportionality. B. Procedural History. DIRECTV propounded on the FTC thirteen Requests for Production (“RFPs”)—RFP Nos. 23-36—seeking all of the FTC’s records of consumer complaints about six specified and countless unspecified television service providers. The FTC objected to these RFPs, and DIRECTV moved to compel. (Dkt. 142.) The Court resolved that motion by concluding that while DIRECTV’s requests may be relevant, they are not proportional to the needs of the case, and by ordering the parties to meet and confer to determine if they are able to agree on a more limited production. (May 3, 2016 Discovery Order (Dkt. 144.)) The parties met and conferred in person on May 4, 2016, at which time the FTC made the sampling proposal it makes here: the FTC would produce a statistical random sample of consumer complaints from the Consumer Sentinel database—the FTC’s main repository of consumer complaints—for three companies of DIRECTV’s choosing. DIRECTV initially found this proposal “reasonable,” 5 and the parties proceeded to move forward. On May 6, apparently working to implement this proposal, DIRECTV asked the FTC to provide the numbers of Sentinel complaints for five companies. The FTC provided that information on May 12, going above and beyond the request by showing volume data for various name searches (e.g., “DISH” versus “DISH Network”) for all five companies. During these exchanges, the FTC consistently reiterated its proposal: random samples for three companies. Once DIRECTV obtained the complaint volume data from the FTC, however, it disregarded the FTC’s sampling proposal, and instead lodged a series of shifting, unreasonably broad counterproposals. For example, on May 20, DIRECTV demanded random samples for four companies, but insisted that the sample size be no less than 10% of the population.6 Now, in this motion, DIRECTV appears no longer willing to accept sampling at all; instead, DIRECTV demands all complaints for three companies. 4 The FTC can accommodate DIRECTV’s request for Sentinel complaints relating to Comcast, Dish Network, and Charter. 5 See Ex. A at p. 39:18. 6 That demanded 10% minimum struck FTC counsel as extraordinarily large, arbitrary, and not developed through random sampling methodology. For example and by way of contrast, the FTC’s requested sample of DIRECTV’s RIO database represented 0.05% of the underlying population—16,580 files out of 35,757,175. 3 Case 3:15-cv-01129-HSG Document 146 Filed 06/08/16 Page 5 of 6 C. The FTC’s proposal—producing random samples of Sentinel complaints for three companies—is consistent with the May 3, 2016 Discovery Order and Rule 26. The Court ordered the parties to come up with a solution consistent with Rule 26’s proportionality requirements. The FTC’s proposal for random sampling does that. In fact, it is identical to the resolution the Court ordered when the FTC sought consumer complaints from DIRECTV’s RIO database. (Apr. 4, 2016 Discovery Order (Dkt. 131).) In the context of that discovery dispute, DIRECTV was very much willing to “pull random samples,” albeit from sources other than RIO. (See Dkt. 127 at p. 4.) Yet now, when it comes to a reciprocal production from the FTC’s Sentinel database, DIRECTV rejects sampling outright. Here, sampling would achieve Rule 26’s and the Court’s demand for proportionality. Given the speculative relevance of consumer complaints about other companies to this case against DIRECTV, a random sample for three companies will give DIRECTV what it contends it seeks through these RFPs: a potential basis to argue that its conduct was no worse than that of its competitors, at least as judged by the comparative complaint rates. Additionally, the sampling approach, unlike a full-scale production, will render the FTC’s burden reasonably proportional to the materials’ purported evidentiary value. As explained in the FTC’s prior brief (Dkt. 142 at pp. 2-5), a comprehensive Sentinel production is likely to take up 15-25 hours of attorney and paralegal time per company, in addition to five hours of work for the internal FTC Sentinel team, plus outside vendor time and costs. Reducing the request to random samples would eliminate all or nearly all of the attorney and paralegal time, saving the FTC— and taxpayers— between 45 and 75 hours in production burden. DIRECTV suggests that the FTC’s burden estimates are unsubstantiated and unreliable. DIRECTV is mistaken. The FTC knows precisely the burden involved because the FTC undertook that burden when it produced to DIRECTV all the Sentinel consumer complaints relating to DIRECTV. Like DIRECTV, each of the three companies on DIRECTV’s current wish list is associated with tens of thousands of consumer complaints. Thus, there is no reason to believe that the associated burden with producing complaint files for those companies will be meaningfully lower than the burden of producing the DIRECTV-related complaints. Finally, and most notably, DIRECTV does not argue that samples of Sentinel files, as opposed to the production of entire populations, will create any prejudice for DIRECTV. DIRECTV’s argument for requesting complaint files for other companies is its speculation that complaint rates will show that DIRECTV’s misconduct was no worse than the misconduct of its competitors. DIRECTV has not contended, and cannot contend, that statistical samples—as opposed to full populations—will jeopardize that argument. D. DIRECTV’s attacks on the FTC’s sampling proposal are misleading and unavailing. Having no basis to challenge the FTC’s sampling proposal based on the merits, DIRECTV resorts to a number of collateral attacks predicated on distortions of the record and the truth. These attacks fail to undercut the reasonableness of the FTC’s proposal. First, DIRECTV contends that “the FTC did not attempt at any time in the meet and confer process to explain how the 15-25 hour per company figure could be reduced other than through sampling.” That is misleading. The FTC met and conferred with DIRECTV about this production in person the day after the Court’s May 3, 2016 Discovery Order. Contrary to DIRECTV’s contention, the FTC explained at that meeting why the burden of producing the 4 Case 3:15-cv-01129-HSG Document 146 Filed 06/08/16 Page 6 of 6 entire populations of Sentinel complaints for a large company is significantly more burdensome that producing random samples of those complaints.7 Because DIRECTV subsequently characterized the FTC’s sampling proposal as “sound[ing] reasonable,” the parties agreed to move forward consistent with it and did not address other alternatives .8 Similarly, DIRECTV’s contention that the FTC refuses to compromise is disingenuous. The FTC has never refused to compromise, but it cannot accept DIRECTV’s overly burdensome proposal as compromise just because it is slightly less unreasonable than DIRECTV’s initial demand. That type of negotiating tactic is tantamount to demanding a million dollar settlement for a $1,000 case, and then claiming that coming down to $500,000 is by definition a reasonable compromise. Here, although DIRECTV’s proposal for all Sentinel files for three companies, as opposed to six companies, will reduce the FTC’s burden, it will still result in a burden that is far disproportional to the evidentiary value of these materials. Rule 26 demands proportionality, not compromises that remain disproportional. Finally, DIRECTV’s suggestion that a sampling approach will likely result in further disputes and litigation is baseless speculation. There have been no additional disputes stemming from the Court’s prior order for DIRECTV to provide a random sample of RIO files to the FTC. And there is no reason to suspect that the parties will not fully and faithfully obey a Court order requiring the FTC to produce random samples of Sentinel files. E. Conclusion The FTC respectfully requests that the Court order a production of consumer complaints consistent with the FTC’s proposal: random statistically significant samples of Sentinel complaints for three companies. This proposal, unlike DIRECTV’s, strikes the proper balance between DIRECTV’s purported need for the complaints and the FTC’s burden in producing them. 5 7 See Ex. A at 36:21-39:21. 8 Id. at 39.
2016-06-09	147	Discovery Order re: 146 Joint Discovery Letter Brief. Signed by Judge Maria-Elena James on 6/9/2016. (cdnS, COURT STAFF) (Filed on 6/9/2016) (Entered: 06/09/2016)	Case 3:15-cv-01129-HSG Document 147 Filed 06/09/16 Page 1 of 3 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 146 On May 2, 2016, Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) and Plaintiff Federal Trade Commission (“FTC”) filed a joint discovery letter regarding DIRECTV’s Requests for Production of complaints from the FTC’s Consumer Sentinel system (“Sentinel”) regarding DIRECTV competitors Dish Network, Comcast XFINITY, Cox Communications, Verizon FIOS, Time Warner Cable, Charter Communications, and other providers of cable or satellite television services (a total of ten companies). Dkt. No. 142. After reviewing the parties’ positions, the Court found DIRECTV’s requests may be relevant, but they were not proportional to the needs of the case. Dkt. No. 144. Bearing in mind the proportionality requirements of Federal Rule of Civil Procedure 26, the Court noted that the parties did not show any attempt to agree upon a more limited scope of production and they had not set forth their proposed compromise on the issues in dispute, as required under the undersigned’s Discovery Standing Order. Id. Thus, the Court ordered the parties to meet and confer to determine if they are able to agree on a more limited production. Id. On June 8, 2016, the parties filed an updated letter stating they have not been able to reach an agreement. Dkt. No. 146. DIRECTV now proposes the FTC produce all consumer complaints for three DIRECTV competitors (Comcast, DISH, and Charter)—as opposed to all ten companies—noting the FTC has already run a query to identify the number of complaints for these 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 147 Filed 06/09/16 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 competitors, and the total is 231,802 (100,988 Comcast + 96,813 DISH + 34,001 Charter). Id. at 1. The FTC proposes producing random samples of consumer complaints for three companies of DIRECTV’s choosing. Id. at 3. Under its proposal, DIRECTV can choose the sample from each population, or it can let the FTC choose the sample. Id. Having reviewed the parties’ positions, the Court finds the FTC’s sampling proposal more closely comports with Rule 26’s demand for proportionality. Rule 26 provides that a party may obtain discovery “regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case[.]” Fed. R. Civ. P. 26(b)(1). Factors to consider include “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id. Under Rule 26, “[t]he parties and the court have a collective responsibility to consider the proportionality of all discovery and consider it in resolving discovery disputes.” Fed. R. Civ. P. 26 advisory committee notes (2015 amendments). Thus, there is “a shared responsibility on all the parties to consider the factors bearing on proportionality before propounding discovery requests, issuing responses and objections, or raising discovery disputes before the courts.” Salazar v. McDonald’s Corp., 2016 WL 736213, at 2 (N.D. Cal. Feb. 25, 2016); Goes Int’l, AB v. Dodur Ltd., 2016 WL 427369, at 4 (N.D. Cal. Feb. 4, 2016) (citing advisory committee notes for proposition that parties share a “collective responsibility” to consider proportionality and requiring that “[b]oth parties . . . tailor their efforts to the needs of th[e] case”). Unlike DIRECTV’s proposal for a full-scale production of all Sentinel files for three companies (totaling more than 200,000 files), sampling would achieve Rule 26’s demand for proportionality. At this point, the relevance of these materials is largely speculative and a random sample therefore gives DIRECTV what it seeks through these Requests for Production while rendering the FTC’s burden reasonably proportional to the materials’ purported evidentiary value. At the same time, the FTC’s proposal mirrors the Court’s April 4, 2016 Order mandating DIRECTV to produce a random sample of consumer files from the company’s RIO database. See 2 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 147 Filed 06/09/16 Page 3 of 3 Dkt. No. 31. Reciprocal production on this basis is appropriate. However, DIRECTV agreed to reduce its request from ten to three companies if it obtained all complaints for the three companies. As a random sample of three companies drastically alters DIRECTV’s request and greatly reduces the FTC’s production burden, it may be appropriate for the FTC to produce a random sample from other companies as well. Accordingly, the parties shall further meet and confer in compliance with the undersigned’s Discovery Standing Order to determine which companies’ complaints the FTC shall produce as well as the appropriate sample size for each company. If unable to agree, the parties shall file an updated joint letter. IT IS SO ORDERED. Dated: June 9, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-06-09	148	Discovery Letter Brief Regarding FTC RFP No. 2 filed by Federal Trade Commission. (Attachments: # 1 Exhibit A)(Edmondson, Eric) (Filed on 6/9/2016) (Entered: 06/09/2016)	Case 3:15-cv-01129-HSG Document 148 Filed 06/09/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on March 24, 2016 and May 10, 2016, prior to filing this letter. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 148 Filed 06/09/16 Page 2 of 6 NATURE OF DISPUTE This dispute concerns Request for Production (“RFP”) No. 2 served on DIRECTV by Plaintiff Federal Trade Commission (“FTC”) on June 26, 2015 (attached as Exhibit A). Through this Joint Discovery Letter, the FTC seeks to compel DIRECTV to produce advertisements relevant to this litigation that have not been produced to the FTC.1 THE FEDERAL TRADE COMMISSION’S POSITION The FTC seeks to compel an adequate production from DIRECTV in response to the FTC’s RFP No. 2, which seeks “[a]ll Advertisements disseminated to consumers relating to the Service.” DIRECTV does not dispute the central relevance of its advertisements to this case. Previously, DIRECTV had argued that the FTC has received or will receive a production of DIRECTV’s ads from various nonparties. Having received the FTC’s draft of this letter brief, however, DIRECTV now changes its position to promise to provide responsive documents by July 8, 2016 – over a year after the RFP was propounded, and only two weeks before the close of fact discovery. In light of DIRECTV’s repeated – but unmet – commitments that the FTC would receive DIRECTV’s ads from nonparties also represented by its counsel, the FTC asks that the Court issue an enforceable order requiring DIRECTV to comply with this basic but important document request. The FTC respectfully requests that the Court order DIRECTV to produce, within 10 days of the Court’s order, complete copies of all responsive print, digital (Internet), and television advertisements that have not already been produced to the FTC. A. DIRECTV’s missing advertising materials are critical to this case. This case is, at its very core, about DIRECTV’s deceptive advertising and marketing practices. RFP No. 2, which seeks DIRECTV’s ads, is centrally relevant to this action. DIRECTV has disseminated tens of thousands of print ads, and hundreds of television and digital ads (e.g., banner ads) to consumers nationwide since 2007. DIRECTV does not, and cannot, seriously contest the central relevance of these materials to this case. Instead, the dispute has always been about the burdens and mechanics of production— specifically, who will produce DIRECTV’s ads to the FTC and when. Even before the opening of discovery, on May 6, 2015, and several times thereafter, the FTC proposed to DIRECTV that the parties reduce the scope of discovery by stipulating to use representative ads for each advertising campaign of the complaint period. DIRECTV rejected this proposal. The FTC served RFP No. 2 on DIRECTV on June 26, 2015. The FTC also subpoenaed DIRECTV’s ads from several nonparties, including Grey Global Group, Inc. (“Grey”), which created many of DIRECTV’s television ads and The Kern Organization Inc. (“Kern”), which created some of DIRECTV’s print and digital ads. The FTC has received some ads from nonparties Kern and Grey; DIRECTV itself has not produced a single ad in response to RFP No. 2. The ads produced by the nonparties, however, do not cover all of DIRECTV’s relevant advertising. Print & Digital Ads: After the FTC served its subpoena on Kern, DIRECTV’s outside counsel stepped in to represent Kern for purposes of this litigation. During meet and confers with Kern and DIRECTV, the FTC agreed that, to minimize burden, ads produced by DIRECTV or 1 RFP 2 also seeks other types of advertising (e.g., www.directv.com and scripts) that is not the subject of this letter brief. 2 Case 3:15-cv-01129-HSG Document 148 Filed 06/09/16 Page 3 of 6 Kern would not need to be produced again by the other entity. In December 2015, DIRECTV’s counsel informed the FTC that Kern (not DIRECTV) would produce all of DIRECTV’s final print and digital ads by January 15, 2016, or soon thereafter.2 Despite this promise, Kern did not complete the production of the ads in its possession until late April 2016. Since then, it has become apparent that Kern did not create or ever possess, and thus cannot produce, many of DIRECTV’s print and digital ads, including DIRECTV’s Sunday circulars, magazine ads, newspaper ads, and many of DIRECTV’s digital ads. In addition, Kern produced only a limited number of ads for 2009 and is unsure of the completeness of its submission for 2007 and 2008. TV Ads: DIRECTV has disseminated hundreds of television ads since 2007. DIRECTV produced only 46 TV ads in response to Civil Investigative Demands issued by the FTC prior to this lawsuit, but has not produced any other TV ads in response to RFP No. 2. While the FTC has obtained from the nonparty Grey ads that Grey developed for DIRECTV, Grey did not develop all of DIRECTV’s TV ads. Moreover, the FTC has only a handful of TV ads from before 2010. Missing Categories of Ads: At this point, the FTC is aware of the following categories of advertising materials that DIRECTV has not yet produced: (1) DIRECTV’s print advertising not created by Kern, including Sunday circulars; (2) digital ads not created by Kern, including flash banner ads; (3) print ads created by Kern, but not produced to the FTC, (e.g., ads from 2009); and (4) television ads not created by Grey. B. DIRECTV’s objections and requests for further delay should be rejected. DIRECTV’s burden argument cannot be taken seriously. DIRECTV’s claim that it has provided 800,000 documents is misleading; DIRECTV omits the fact that it has not produced a single ad in discovery. DIRECTV’s offer to make a “supplemental production” of ads is equally misleading, as it has not produced anything to supplement. In any event, any burden imposed by RFP No. 2 is proportional to the scope of this case, where the alleged deceptive advertising practices span over nine years, during which time DIRECTV, a multi-billion dollar company, blanketed the country with ads that attracted more than 10 million new subscribers. DIRECTV’s excuses for prolonged delay are similarly unavailing. DIRECTV suggests that it could not figure out how to comply with RFP No. 2 because the FTC did not identify specifically what documents were missing. First, that is factually false. The FTC identified the same categories of documents listed above at the March 24, 2016 meet and confer (TV ads, banner ads, and non-Kern print ads), and at the May 10, 2016 meet and confer (print, banner ads, and circulars). Additionally, DIRECTV’s position that the FTC should have had to identify what DIRECTV failed to produce in order to obtain materials in discovery would turn the discovery process into a game of “Go Fish.” FTC should not have to play a guessing game to learn what DIRECTV has chosen to withhold. DIRECTV’s present willingness to produce responsive materials does not render this dispute moot. RFP No. 2 has been pending for nearly a year. And DIRECTV has been on notice for months about specifically what categories of ads were missing. For example, DIRECTV was 2 In March 2016, DIRECTV again represented that Kern’s production, when complete, would cover all of DIRECTV’s print ads and anything DIRECTV could add would be duplicative. 3 Case 3:15-cv-01129-HSG Document 148 Filed 06/09/16 Page 4 of 6 aware at least by January 2016—when its own counsel reviewed the documents provided by co- represented nonparties—what categories of documents were missing. Moreover, as a Kern witness (co-represented by DIRECTV’s counsel) testified, most of the print ads not yet produced were created by DIRECTV itself, as opposed to Kern. (Deposition of Grozian-Lorentzen at 65:18-66:9.) In short, DIRECTV knows precisely what it still needs to produce, and has possession or control of those materials. Finally, any additional delay in DIRECTV’s production would significantly prejudice the FTC. DIRECTV’s proposal to produce its ads on July 8—just two weeks before the close of discovery—will not permit the FTC to complete a meaningful review to determine if any categories remain missing. Given the short time remaining to resolve discovery disputes, the FTC respectfully requests an enforceable order from the Court for the missing categories of advertising materials responsive to RFP No. 2, to be produced within 10 days of the order. DIRECTV’S POSITION DIRECTV and third-parties in this case have produced tens of thousands of pages of advertisements. The FTC has the relevant advertisements. All that is left is a small amount of clean-up, which DIRECTV has agreed to complete by July 8, 2016. Cutting through the FTC’s misleading characterization of the history of productions in this case, it is clear that there is no dispute that this is correct. The only issue is when the clean-up production will be made. Although the history of DIRECTV’s extensive efforts to produce a complete set of advertisements is not at issue (again, all that is left is clean-up and the only question is when that clean-up production will be made), DIRECTV must provide some detail on this history because the FTC has provided a one-sided and misleading account. DIRECTV has produced approximately 800,000 documents to the FTC (nearly 450,000 documents during the CID inquiry and over 363,000 in this litigation). These productions contained numerous advertisements. Nonparties have also produced approximately 95,706 more documents to the FTC. Of this amount, over 77,000 pages of DIRECTV’s print and online advertisements were produced to the FTC by The Kern Organization (“Kern”). The FTC agreed that it did not make sense for both DIRECTV and Kern to produce the same documents. It therefore agreed that a production by Kern would be sufficient (i.e. DIRECTV did not also have to produce the same ads). The FTC’s argument that DIRECTV did not itself produce those advertisements is contrary to that agreement and simply an attempt to provide misleading color to this dispute. As is typical near the close of fact discovery the parties may have to clean up their respective productions to include additional relevant and non-privileged documents. It is customary for opposing counsel to work together in this regard and extend each other the professional courtesy to do so. The FTC simply refuses to give DIRECTV sufficient time to update its already voluminous productions. The only current dispute is when these materials must be produced because DIRECTV has agreed to produce the additional materials, as explained below, by July 8, 2016. The FTC unreasonably refuses to extend DIRECTV the professional courtesy to gather these materials for production by this date and instead 4 Case 3:15-cv-01129-HSG Document 148 Filed 06/09/16 Page 5 of 6 (unreasonably) demands production in ten days. DIRECTV cannot meet this arbitrary deadline, and there is no prejudice to the FTC waiting a little longer.3 DIRECTV has repeatedly told the FTC that it will produce any missing materials from its productions or from the productions by nonparties and on a number of occasions has invited the FTC to identify with specificity which documents are missing. The FTC has never done so. Instead, the FTC first identified allegedly missing documents by sending of this letter brief to DIRECTV on May 25, 2016. The FTC’s requested relief is based in part on testimony provided by Kern three weeks earlier on May 3, 2016. The FTC provides no explanation why it never informally asked DIRECTV about these materials much sooner (right after the May 3 deposition) and instead opted to wait three more weeks to start the formal letter brief process. Regardless, DIRECTV agrees to supplement its productions to FTC by July 8, 2016, as follows: Sunday Circulars: DIRECTV agrees to conduct a diligent search and inquiry for any relevant and non-privileged Sunday circulars as well as other print advertising not created by Kern for production to the FTC. DIRECTV requests that the FTC meet and confer with DIRECTV to ensure DIRECTV understands the specificity of this request to ensure appropriate documents are gathered and reviewed for potential production. Digital Advertisements: DIRECTV also agrees to conduct a diligent search and inquiry for any digital advertisements not created by Kern, including flash banner ads. DIRECTV similarly requests that the FTC meet and confer with DIRECTV to ensure the parties understand what items the FTC is requesting, particularly with respect to “flash banner ads.” Additional Kern Print Ads: The FTC seeks print advertising created by Kern but not produced to the FTC, including those for 2009. Kern has produced 77,044 pages to the FTC, including all of its print and online banner ads. DIRECTV does not understand which print ads the FTC claims were not produced by Kern and asks that the FTC meet and confer to explain with more specificity which documents the FTC is referring to, including any missing for 2009. DIRECTV will agree to conduct a diligent search and inquiry for additional print ads based on its meet and confer with the FTC. Television Advertisements: DIRECTV also agrees to conduct a diligent search and inquiry for any remaining television advertisements not produced. The FTC seems to think television ads exist but are missing. The FTC should meet and confer with DIRECTV to identify the additional television advertisements it seeks if it is asking for ads other than those that may 3 FTC admits it served RFP No. 2 on May 6, 2015. FTC also admits it met and conferred with DIRECTV on March 24, 2016 and on May 10, 2016. DIRECTV has repeatedly agreed to clean up any missing items by gathering them and producing them to the FTC. Nearly over a month after the last meet and confer on May 10, the FTC blindsides DIRECTV with this letter brief unreasonably demanding all production materials in ten days. 5 Case 3:15-cv-01129-HSG Document 148 Filed 06/09/16 Page 6 of 6 exist from 2009. It is important to note that DIRECTV has produced TV ads from this time period.4 DIRECTV simply needs until July 8, 2016 to produce these additional materials to the FTC. The FTC unreasonably refuses to provide DIRECTV this requested time. DIRECTV has extended the FTC this courtesy on a number of occasions. For example, during the parties’ April 12, 2016 meet and confer to discuss various discovery items before a court reporter, DIRECTV requested that the FTC supplement its responses to certain interrogatories propounded by DIRECTV relating to the FTC’s allegations. The FTC agreed to supplement its responses but refused to provide a date certain on the record, preferring to provide a proposed date off the record. Over a week later, on April 20, 2016, the FTC sent an e-mail to DIRECTV stating it would supplement its responses by May 12, 2016.5 DIRECTV objected to this proposal but did not move to compel supplemental responses sooner. The FTC ultimately provided supplemental responses on May 18, 2016 (almost a week after the promised May 12 date). DIRECTV respectfully requests that the Court order the parties to meet and confer so that DIRECTV gathers the appropriate documents the FTC seeks and that the Court give DIRECTV until at least July 8, 2016 to provide its supplemental production to the FTC. Proposed Compromise (Pursuant to Standing Order): As set forth above, DIRECTV will agree to produce the requested materials by July 8, 2016. 4 If the Court is inclined, DIRECTV will submit samples of all of the voluminous advertisements it has already produced to demonstrate it has made a fulsome production. 5 DIRECTV will submit the parties’ transcript from the April 12, 2016 meet and confer and the relevant e-mail communications between the parties upon the Court’s request. 6
2016-06-10	149	Discovery Order re: 148 Discovery Letter Brief Regarding FTC RFP No. 2. Signed by Judge Maria-Elena James on 6/10/2016. (cdnS, COURT STAFF) (Filed on 6/10/2016) (Entered: 06/10/2016)	Case 3:15-cv-01129-HSG Document 149 Filed 06/10/16 Page 1 of 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 148 On June 9, 2016, Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) and Plaintiff Federal Trade Commission (“FTC”) filed a joint discovery letter regarding the FTC’s Request for Production (“RFP”) No. 2, which seeks “[a]ll Advertisements disseminated to consumers relating to the Service.” Dkt. No. 148 (Jt. Ltr.); Id., Ex. A (FTC’s RFPs)1, Dkt. No. 148-1. The FTC notes it served its RFPs on June 26, 2015, and DIRECTV does not dispute the central relevance of its advertisements to this case. Id. at 2. Instead, the FTC states that prior to this letter brief, DIRECTV maintained the FTC would receive a production of DIRECTV’s ads from various nonparties, but “now changes its position to promise to provide responsive documents by July 8, 2016 – over a year after the RFP was propounded, and only two weeks before the close of fact discovery.” Id. In response, DIRECTV maintains that it and third-parties in this case “have produced tens of thousands of pages of advertisements,” the FTC “has the relevant advertisements,” and “[a]ll that is left is a small amount of clean-up, which DIRECTV has agreed to complete by July 8, 2016.” Id. at 4. However, given the July 21, 2016 discovery cut-off (see Dkt. No. 32), the FTC argues that “any additional delay in DIRECTV’s production 1 “‘Service’ means any direct-to-home digital television service that [DIRECTV] have Advertised, marketed, promoted, sold, or otherwise offered to consumers in the United States.” Id., Ex. A ¶ 12. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 149 Filed 06/10/16 Page 2 of 2 would significantly prejudice the FTC. DIRECTV’s proposal to produce its ads on July 8—just two weeks before the close of discovery—will not permit the FTC to complete a meaningful review to determine if any categories remain missing.” Id. As DIRECTV does not appear to dispute the relevance of the FTC’s request, the Court ORDERS DIRECTV to produce to the FTC complete copies of all responsive print, digital (Internet), and television advertisements, as detailed in the FTC’s portion of the joint letter and that have not already been produced, by July 1, 2016. If the FTC contends more time is needed to complete a meaningful review of the production, it may seek an extension of the discovery deadline from the presiding judge, preferably in the form of a stipulation and proposed order from both parties. IT IS SO ORDERED. Dated: June 10, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-06-28	150	Certificate of Interested Entities by DIRECTV LLC, DIRECTV, Inc. identifying Corporate Parent AT&T Inc., Corporate Parent Directv Holdings LLC, Corporate Parent The Directv Group, Inc., Corporate Parent DTV Entertainment, Inc., Corporate Parent DIRECTV Group Holdings, LLC, Other Affiliate Greenlady Corp., Other Affiliate DIRECTV LLC for DIRECTV LLC. re 20 Certificate of Interested Entities (Hummel, Chad) (Filed on 6/28/2016) (Entered: 06/28/2016)	Case 3:15-cv-01129-HSG Document 150 Filed 06/28/16 Page 1 of 2 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 772-1200 Facsimile: (415) 772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. SUPPLEMENT TO CERTIFICATION OF INTERESTED ENTITIES OR PERSONS Complaint Filed: March 11, 2015 Trial Date: January 30, 2017 FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ACTIVE 215522979v.1 SUPPLEMENT TO CERTIFICATION OF INTERESTED ENTITIES OR PERSONS 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 150 Filed 06/28/16 Page 2 of 2 Pursuant to Civil L.R. 3-15, the undersigned certifies that the following listed persons, associations of persons, firms, partnerships, corporations (including parent corporations) or other entities (i) have a financial interest in the subject matter in controversy or in a party to the proceedings, or (ii) have a non-financial interest in that subject matter or in a party that could be substantially affected by the outcome of this proceeding: 1. 2. DIRECTV, LLC. DIRECTV Holdings LLC, which is the direct parent company and 100% owner of DIRECTV, LLC. 3. The DIRECTV Group, Inc., which is the direct parent company and 100% owner of DIRECTV Holdings LLC. 4. 5. Greenlady Corp., which controls a 57% interest in The DIRECTV Group, Inc. DTV Entertainment, Inc., which is the direct parent company and 100% owner of Greenlady Corp. 6. DIRECTV Group Holdings, LLC, which is the direct parent company and 100% owner of DTV Entertainment, Inc., and which controls a 43% interest in The DIRECTV Group, Inc. 7. AT&T Inc., which is publicly traded and is the ultimate parent company of DIRECTV Group Holdings, LLC. Dated: June 28, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ACTIVE 215522979v.1 SUPPLEMENT TO CERTIFICATION OF INTERESTED ENTITEIS OR PERSONS 1 3:15-CV-01129
2016-07-01	151	NOTICE of Appearance by Bridget Santorelli Johnsen (Johnsen, Bridget) (Filed on 7/1/2016) (Entered: 07/01/2016)	Case 3:15-cv-01129-HSG Document 151 Filed 07/01/16 Page 1 of 1 AO 458 (Rev. 01/09) Appearance of Counsel UNITED STATES DISTRICT COURT for the Northern District of California FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation and DIRECTV, LLC a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG ) ) ) ) ) ) ) ) ) ) ) ) ) APPEARANCE OF COUNSEL To: The clerk of court and all parties of record I am authorized to practice in this court, and I appear in this case as counsel for: Defendants DIRECTV and DIRECTV, LLC. Date: July 1, 2016 /s/ Bridget S. Johnsen Attorney's signature Printed name and bar number Bridget S. Johnsen 210778 Sidley Austin LLP 555 W 5th St., Suite 4000 Los Angeles, CA 90013 Address [email protected] E-mail address (213) 896-6678 (213) 896-6600 Telephone number FAX number American LegalNet, Inc. www.FormsWorkflow.com
2016-07-14	152	Discovery Letter BriefFTC Request For Production 4 filed by Federal Trade Commission. (Attachments: # 1 Exhibit A)(Edmondson, Eric) (Filed on 7/14/2016) (Entered: 07/14/2016)	Case 3:15-cv-01129-HSG Document 152 Filed 07/14/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on July 1, 2016, prior to filing this letter. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 152 Filed 07/14/16 Page 2 of 6 NATURE OF DISPUTE This dispute concerns Request for Production (“RFP”) No. 4 served on DIRECTV by Plaintiff Federal Trade Commission (“FTC”) on June 26, 2015 (attached as Exhibit A), and the subject of this Court’s December 3, 2015 Order (Dkt. No. 81). THE FEDERAL TRADE COMMISSION’S POSITION On December 3, 2015, the Court granted the FTC’s request for DIRECTV’s draft ads (in response to FTC Request For Production No. 4), but ordered the parties to meet and confer to determine if they could agree to a more limited production. (See Dkt. 81. at p. 13.) Through this updated Joint Discovery Letter, the FTC seeks to compel DIRECTV to produce a subset of its draft ads. In order to make a reasonable proposal for a limited production of draft ads, the FTC first needed to obtain a comprehensive set of DIRECTV’s final ads. That production has been substantially delayed. That delay, in turn, has stymied the FTC’s ability to propose a reduced production of draft ads. Throughout December 2015 and January 2016, the FTC negotiated with DIRECTV and a third party vendor, The Kern Organization, Inc. (“Kern”), to obtain final print and digital ads. DIRECTV ultimately offered that Kern, which is represented by DIRECTV’s counsel in this case, would produce all of DIRECTV’s print ads and digital ads no later than January 2016. Despite that promise, Kern did not complete its production to the FTC until April 2016. Making matters worse, in late April, while deposing Kern, the FTC learned that, contrary to DIRECTV counsel’s representations, Kern did not have and, thus, could not produce many of DIRECTV’s print and digital advertisements. Between late April and June, the FTC attempted to obtain the missing ads from DIRECTV, ultimately moving the Court for an order compelling their production,1 and worked with counsel for DIRECTV and Kern to obtain reproduced copies of over 7,900 ads erroneously redacted for privilege. Only on July 1, 2016, and pursuant to the Court’s Order, did DIRECTV purportedly complete its production of final advertisements. After the Court’s June 10, 2016 Discovery Order, on June 16, the FTC submitted to DIRECTV a carefully focused proposal, substantially limiting the production of DIRECTV’s draft ads to (1) approximately 300 draft ads, to be selected by the FTC from the ads produced to the FTC by Kern and (2) a similarly modest subset of draft ads from the digital and print ads that the Court ordered DIRECTV to produce to the FTC by July 1, 2016. In total, these requested draft ads amount to less than one percent of DIRECTV’s final print ads produced to the FTC. The FTC also requested that DIRECTV produce complete, legible copies of documents known as creative summaries (also known as “offer creatives”), which contain images of proposed ads in the context of advertising campaign overviews.2 DIRECTV had previously agreed to produce these summaries, including on March 24 and April 29, 2016. DIRECTV rejected this proposal, including the production of creative summaries to which DIRECTV had previously agreed. Instead, DIRECTV proposed to produce an unspecified number of draft ads sampled from an unspecified population of ads selected at DIRECTV’s complete discretion. DIRECTV also vaguely asserted that it will “explore” producing the 1 These ads were the subject of this Court’s June 10, 2106 order. (Dkt. No. 148.) 2 DIRECTV has already produced some of these summaries, but the production appears to be incomplete. Moreover, the production was made in a format that is significantly smaller than the original 11x17 size of the documents, rendering the documents illegible. 1 Case 3:15-cv-01129-HSG Document 152 Filed 07/14/16 Page 3 of 6 creative summaries, which it previously promised to produce. After months of delay and nonproduction of ads, DIRECTV’s proposal for unilateral determination of what draft ads it will and will not produce is unacceptable. Given this background, the contention that the FTC has been dilatory is also disingenuous. DIRECTV has delayed the production of advertisements for months, and now blames the FTC for proceeding along on DIRECTV’s timetable. Such a tactic should not be rewarded. A. The FTC’s proposal for draft ads is reasonable. As explained to the Court last November (Dkt. 70), the FTC seeks draft ads to show that DIRECT considered, but rejected, advertisements that would have disclosed material terms of DIRECTV’s offer more clearly and conspicuously. The Court agreed with this rationale, and with the FTC’s need to obtain draft advertisements. (See Dkt. 81 at 11 (“[I]f Defendants rejected draft ads with clearer disclosures out of concern that such ads would attract fewer customers, this would tend to show they acted consistently with an incentive to mislead the public.”) Consistent with the Court’s Order and Rule 26, the FTC’s proposal is limited. The FTC requests draft ads associated with less than one percent of DIRECTV’s total advertising produced to the FTC.3 The FTC’s request also focuses on ads since 2013, which should be more easily retrievable. Finally, the FTC’s proposal seeks the creative summaries—documents that DIRECTV previously agreed to produce. B. DIRECTV’s objections to the FTC’s proposed production are not persuasive. DIRECTV’s argument that all draft ads have gone through the company’s Review and Approval Process (“RAP”) and are thereby privileged is irrelevant and misleading. Even assuming, arguendo, that this advertising review process somehow creates an attorney-client privilege shield against discovery, not all of DIRECTV draft ads undergo the RAP process.4 It its proposal, the FTC does not seek documents located within the RAP system.5 3 Although DIRECTV represented to the Court that it had hundreds of thousands of ads, DIRECTV and third parties that have produced DIRECTV ads on the company’s behalf have only produced roughly 45,000 ads in discovery. If DIRECTV’s assertion is true, the FTC’s request represents far less than one percent of its ads. Additionally, if true, that assertion means that DIRECTV has been substantially deficient in producing to the FTC its final (i.e., disseminated) advertisements. 4 See Deposition of Kern at 103:7 – 106:15. Testimony from Kern revealed that DIRECTV reviewed drafts ads with its vendors as part of regular business creative review meetings prior to those draft ads being submitted into the RAP system for review. Id. at 238:16 – 240:9. DIRECTV has also acknowledged that draft ads exist outside of that RAP system, including in emails. (Dkt. 70 at pp. 5-6.) 5 The FTC does not concede that all materials in the RAP system are privileged. DIRECTV’s attempt to shield as privileged all draft advertisements by subsequently uploading them to a system that company employees purportedly use to review ads for compliance is dubious. That attempt is also contrary to DIRECTV’s representation to the Court that only legal notations on the draft ads, as opposed to the draft ads themselves, may constitute privileged information. (Dkt. 70 at p. 6.) Although the FTC is not currently seeking documents located within RAP (aka Fastreive), the FTC never agreed that the RAP process is privileged. DIRECTV’s RAP process, as explained by DIRECTV’s Ted Suzuki, is a perfunctory review by non-attorney employees in DIRECTV’s legal department to confirm that ads comply with previously agreed-upon formats. Comments on draft ads submitted to RAP are also made by non-attorneys, and have been transmitted to third-parties, including Kern and retailers. 2 Case 3:15-cv-01129-HSG Document 152 Filed 07/14/16 Page 4 of 6 DIRECTV’s burden argument is meritless. DIRECTV argues that it does not have the files of drafts associated with every ad. But that does not mean that DIRECTV has no draft ads at all. DIRECTV should not be excused from producing any draft ads simply because it may not be able to locate all of them. DIRECTV also never raised this argument to the Court when the parties briefed their discovery dispute on draft advertisements last November (Dkt. 70). C. DIRECTV’s proposal is nonspecific and noncommittal. DIRECTV proposes to select some sample of draft ads from some population that DIRECTV will unilaterally determine but will not define upfront. DIRECTV will also not commit to a sample size. In contrast, under the FTC’s proposal, the FTC will identify a discrete number (350) of draft ads from a discrete population known to both parties (final ads produced by DIRECTV). D. The FTC’s Proposal. The FTC proposes the following limitation to DIRECTV’s production of draft ads: (1) Draft ads for 300 DIRECTV ads disseminated in 2013 or later, to be selected by the FTC from the population of approximately 37,500 final ads produced prior to June 30, 2016. (2) Drat ads for 50 DIRECTV ads, to be selected by the FTC from the population of at least 6,500 final ads produced by DIRECTV since June 30, 2016. (3) All creative summaries (“offer creatives”) in their original, native format or, if unavailable in that format, in a manner that makes them legible when viewed and printed. The FTC’s request for all drafts of 350 specific ads should be rejected for many reasons: among them, privilege, impossibility, marginal relevance, and tardiness. DIRECTV’S POSITION First, the FTC’s motion is far too late. Fact discovery closes on July 22. In December 2015, Your Honor ordered the parties to meet and confer to discuss how to narrow the FTC’s overbroad request. The FTC thereafter sat on its hands for 6 months, despite repeated offers by DIRECTV to engage in a meaningful dialogue. The FTC’s excuse for its lack of diligence – that it was unable to make any narrowed proposal until after the production of all of DIRECTV’s ads – should be rejected. The FTC filed the Complaint based on DIRECTV’s ads in March 2015, was in possession of numerous DIRECTV ads then, and by December 2015 had enough ads and related information to file the original motion. The FTC’s contention that it could not meet and confer until now defies logic. Second, it is virtually impossible for DIRECTV to locate drafts associated with particular, final ads. DIRECTV simply does not file all drafts associated with final ads in this manner (which FTC would have known months ago had it not delayed). If the Court granted the FTC’s request, DIRECTV does not know of any way to comply, and any further exploration of other options would add time to the schedule (something Judge Gilliam does not want to do). Third, as the FTC knows, all final, disseminated ads were submitted through an in-house legal department review and approval process – called “RAP”. Drafts that reflect the review by RAP are privileged. The FTC has already agreed to not pursue the production or logging of such draft ads and cannot now renege on that agreement. Finally, because the documents requested are, at best, only potentially marginally relevant, any limited to non-existent probative value of their production is far outweighed by the burden and prejudice of having at the twelfth hour to search for and then log what are most likely 3 Case 3:15-cv-01129-HSG Document 152 Filed 07/14/16 Page 5 of 6 to be privileged material (that the FTC already agreed need not be logged). The Court should deny the FTC’s proposal The FTC’s Delay. The FTC moved to compel the production of draft ads in November 2015. In the December 3, 2015 Order, the Court found that there was “good cause to limit the FTC’s request” because (i) the FTC’s position on relevance was premised on a speculative theory that the draft ads would show that DIRECTV had rejected supposedly clearer disclosures in the drafts, and (ii) DIRECTV would have to search “hundreds of thousands of additional ads” to find and produce responsive ads. Id. at p. 13. The Court ordered “the parties to meet and confer in person to determine whether they can agree to a more limited production.” Id. On May 17, in a lengthy meet and confer, DIRECTV proffered a witness to the FTC to explain the RAP process, subject to the protections of FRE 408. In house counsel, Ted Suzuki, described generically for the FTC the manner in which draft ads are submitted to RAP, the review of the ads conducted by DIRECTV in house counsel and those working at their direction, and the provision of legal advice respecting the ads by DIRECTV’s counsel. Following this proffer, FTC agreed that RAP was a privileged process and any communications respecting the draft ads made in connection with that process were privileged. The FTC agreed to not pursue the production of drafts submitted to RAP or the logging of such documents on a privilege log Over six months after Your Honor’s Order, the FTC belatedly proposed in a June 16, 2016 email that DIRECTV produce drafts of over 300 undisclosed, specific ads. In response, DIRECTV stated numerous objections, including the delay, privilege, and burden. Without meeting and conferring in person, FTC served its portion of this letter brief on DIRECTV on June 28, 2016. After serving its letter brief, the FTC scheduled a meet and confer for July 1. At that meet and confer, DIRECTV explained that it could not locate the documents in the manner requested but said it would continue to explore different searches and other options based on a sampling of six final ads provided by the FTC. DIRECTV has been unable to find a way to search for drafts of a particular final, disseminated ad. FTC’s belated proposal contravenes Judge Gilliam’s admonition to the parties to be diligent in bringing disputes to Your Honor. With respect to any unresolved disputes, Judge Gilliam stated that, “[i]f intervention is needed, you need to build in enough time to do that in light of the discovery deadline that exists, and so . . . if there are issues that are still potentially pending before Judge James or will be things that you potentially need to bring to her attention, I think you need to very quickly decide whether they can be worked out informally or not and get those on her – on her docket.” Tr. pp. 24-26 (Mar. 4, 2016). There is no excuse for the delay. FTC claims that it could not earlier make its request because of Kern’s alleged delay in producing DIRECTV print ads, but Kern commenced producing such ads in December 2015 and produced over 36,000 ads between then and April 1, 2016. Indeed, it is this particular group of ads that FTC has had since April that it is most interested, indicated by its request for drafts of 300 of these ads.6 Moreover, the FTC itself has been in possession of DIRECTV ads since the filing of this case and admitted in its interrogatory responses that the ads attached to the Complaint are illustrative of the deception claims in this case. FTC could have made a request with respect to those ads or the numerous others it had immediately after the December order. The Practical Impossibility of Complying with the FTC’s Request. The production proposed by the FTC is burdensome and prejudicial for several reasons. First, DIRECTV does 6 FTC is only marginally interested in the ads produced recently, requesting drafts of only 50. 4 Case 3:15-cv-01129-HSG Document 152 Filed 07/14/16 Page 6 of 6 not have files of the drafts associated with each final disseminated ad, and it is difficult to frame new and different ESI searches for such documents. For example, with respect to the print ads produce by Kern, DIRECTV would have to search tens of thousands of documents, which are not organized in any meaningful way, to locate drafts of particular ads, and this assumes that there are common elements that could be searched and that the documents are electronically searchable.7 Even if DIRECTV was able to identify drafts, there is no way to confirm that DIRECTV has located every draft, and it also is time consuming to determine privilege. The burden and prejudice is compounded by the facts that the FTC is speculating that there may be some indication on a draft that a particular element was changed to prevent loss of potential customers – its only “hook” to this discovery – and, in any event, that would be privileged. Second, the FTC is well aware that, throughout the relevant time period, all draft ads requested by the FTC were submitted to RAP, and a legal review of the drafts was conducted by in-house legal counsel and others working with them. There is no question that this legal review is privileged.8 Indeed, after the meet and confer proffer on RAP, FTC agreed with DIRECTV that the RAP process is privileged and further agreed that it would not pursue the production of draft ads submitted to RAP nor require that such ads be logged on a privilege log. FTC’s proposal, however, violates that agreement. FTC tries to justify its bad faith by explaining that it is not seeking ads contained in RAP, but the privileged drafts are not solely housed in RAP and also are located elsewhere in DIRECTV’s electronic files and records. Moreover, it is time consuming and difficult to determine whether a draft ad, wherever found, is privileged. There is no justification for requiring DIRECTV to undertake this burdensome and prejudicial review given the marginal relevance. In fact, Your Honor previously concluded FTC’s relevance theory was speculative because it depended on mere possible content of the documents. Accordingly, the burden, prejudice, and risk of revealing privileged far outweigh the speculative and mere potential probative value of the drafts. DIRECTV’s Proposed Compromise. DIRECTV proposes to search for and produce a sampling of up to 300 drafts of ads that it determines are not privileged. This will take time since DIRECTV does not separately maintain non-privileged and privileged drafts. DIRECTV will produce less than 300 drafts only if it cannot locate 300 non-privileged drafts. DIRECTV will attempt to include in the sampling of 300 draft ads, drafts from each of the years in the relevant time period, to the extent the date for a draft can be determined and non-privileged drafts from each of the relevant years are located and available, as well as a sampling of drafts for each medium in which an ad was intended to run, to the extent available. With respect to creative summaries, all such documents have been produced. DIRECTV does not believe it has better copies of the creative summaries it has already produced. It has searched for better quality copies but cannot locate any. DIRECTV is willing to continue to search for better quality copies of the creative summaries and to promptly produce any it locates. 7 DIRECTV has spent substantial time exploring the options. To evaluate FTC’s proposal, DIRECTV conducted multiple searches using sample, final ads (including six provided by the FTC), and tried to locate drafts of a particular ad. DIRECTV’s searches were not successful. 8 Indeed, in connection with this discovery dispute, FTC has made clear that it is looking for notations on the ads that explain any changes being made to them and the reasoning for those changes. Those comments are the exact communications that are privileged. 5
2016-07-14	153	MOTION For Issuance of a Subpoena to Testify in a Civil Matter Pursuant to the Walsh Act filed by Federal Trade Commission. Responses due by 7/28/2016. Replies due by 8/4/2016. (Attachments: # 1 Proposed Order, # 2 Draft Subpoena, # 3 Declaration of Ann M. Stahl)(Edmondson, Eric) (Filed on 7/14/2016) (Entered: 07/14/2016)	Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 1 of 10 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Case No. 15-cv-01129-HSG PLAINTIFF FEDERAL TRADE COMMISSION’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783, AND FOR ALTERNATIVE SERVICE PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 4(f)(3) No hearing requested 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 2 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION Plaintiff, Federal Trade Commission (“FTC”), respectfully moves this Court for an order: (1) issuing a subpoena pursuant to the Walsh Act, 28 U.S.C. § 1783, to compel Giles Lundberg, a U.S. national or resident currently residing in Madrid, Spain, to appear for a deposition on July 21, 2016 at the FTC’s offices in New York City; and (2) authorizing service of the subpoena via FedEx or other private overnight courier pursuant to Fed. R. Civ. P. 4(f)(3). The FTC also requests that the Court authorize it to pay for Mr. Lundberg’s “estimated necessary travel and attendance expenses” under Section 1783 using official U.S. government travel procedures for witnesses. A proposed order and subpoena are attached. The FTC has met and conferred with counsel for defendants DIRECTV and DIRECTV, LLC (collectively “DIRECTV”) regarding Mr. Lundberg’s deposition. DIRECTV does not oppose this motion. BACKGROUND The FTC filed this suit on March 11, 2015, against DIRECTV and DIRECTV, LLC (collectively “DIRECTV”), alleging that DIRECTV violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and Section 5 of the Restore Online Shoppers’ Confidence Act (ROSCA), 15 U.S.C. § 8404. (Dkt. No. 1.) Fact discovery closes on July 22, 2016. (Dkt. No. 138.) The FTC has long planned to depose Giles Lundberg – a key witness who now appears to have left the United States – prior to the close of fact discovery. Mr. Lundberg is a former DIRECTV employee, who served as the Senior Vice President (SVP) of Research from approximately 2005 to 2015. Based on the information available to the FTC, Mr. Lundberg was involved in research related to the sales, marketing and advertising practices at issue in this case. DIRECTV’s counsel has asserted that they represent Mr. Lundberg for purposes of this action. Over the past several months, FTC counsel and DIRECTV’s counsel have engaged in numerous exchanges regarding an appropriate time and place for Mr. Lundberg’s deposition. On June 21, 2016, counsel for DIRECTV informed the FTC that they had been unable to contact Mr. Lundberg and believed he may be located outside the United States. Counsel for DIRECTV FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) 1 Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 3 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 confirmed this again on June 30, 2016. The FTC has since been able to determine that Mr. Lundberg is likely renting out the home he owns in Manhattan Beach, California,1 and that his mail is being forwarded to a residence in Madrid, Spain. (Declaration of Ann Stahl (“Stahl”) at ¶¶ 3, 6.) To the best of the FTC’s knowledge, Mr. Lundberg is a U.S. citizen or an authorized permanent resident of the U.S. (Stahl at ¶¶ 2, 9, 10.) ARGUMENT This Court should issue a subpoena directing Mr. Lundberg to appear at a deposition in New York City pursuant to the Walsh Act, 28 U.S.C. § 1783. The Walsh Act provides that, in civil matters, courts may order the issuance of a subpoena requiring a national or resident of the U.S. located in a foreign country to appear as a witness if the witness’s testimony is in the “interest of justice” and it is “not possible to obtain [the] testimony in admissible form without [the witness’s] personal appearance. See §1783(a). The FTC clearly meets this standard because: (1) Mr. Lundberg is a national or resident of the U.S. currently located in Madrid, Spain; (2) Mr. Lundberg has direct personal knowledge of relevant evidence critical to the FTC’s allegations, and his testimony is in the “interest of justice”; and (3) with fact discovery set to close on July 22, 2016, a Section 1783 subpoena requiring Mr. Lundberg’s appearance for a deposition is the only way the FTC can obtain his testimony in admissible form. The FTC requests that the deposition take place on July 21, 2016 in New York City, which is likely the most convenient U.S. location for Mr. Lundberg and all counsel, and that the Court authorize the FTC to pay for Mr. Lundberg’s necessary travel and attendance expenses using official government procedures for witness travel. Additionally, this Court should order that the subpoena may be served on Mr. Lundberg through overnight courier pursuant to Fed. R. Civ. P. 4(f)(3). As explained in detail in Section B below, such service complies with the Federal Rules and the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents (“Hague Service Convention”). 1 The FTC has attempted to serve Mr. Lundberg at his Manhattan Beach address. (Stahl at ¶¶ 7-8.) FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) 2 Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 4 of 10 A. This Court Should Issue a Section 1783 Subpoena Because the FTC’s Request Meets the Requirements of the Walsh Act. The decision to issue a subpoena under 28 U.S.C. § 1783 is within the sound discretion of the Court. MedImmune, LLC v. PDL Biopharma, Inc., No. 08-cv-5590, 2010 WL 2179154, at 1 (N.D. Cal. May 27, 2010). Under the Walsh Act, a court may issue a subpoena to a U.S. national or resident located abroad for a deposition in a civil proceeding if it finds that the testimony is (1) “necessary in the interest of justice,” and (2) it is “not possible to obtain his testimony in admissible form without his personal appearance. . . .” 18 U.S.C. § 1783.2 The Walsh Act applies to both deposition and trial testimony. CSI Inv. Partners II, L.P. v. Cendant Corp., 2006 U.S. Dist. LEXIS, at 11-12 (S.D.N.Y. Mar. 15, 2006). The FTC’s request meets these requirements. 1. Mr. Lundberg is Subject to the Walsh Act. The FTC’s request meets the Walsh Act’s threshold standard: Mr. Lundberg is a national or resident of the U.S. currently located in a foreign country – Madrid, Spain. (Stahl at ¶¶ 6, 9, 10.) Specifically, the Walsh Act provides that a court may direct a “national or resident of the United States who is in a foreign country” to appear as a witness.3 2. Mr. Lundberg’s Deposition is Necessary in the “Interest of Justice.” Mr. Lundberg, DIRECTV’s former research director, is a key witness whose testimony is necessary in the “interest of justice.” Courts interpreting this provision, including courts in this district, have consistently held that deposition or trial testimony meets this requirement if it is “relevant under the liberal standards set forth in Federal Rule of Civil Procedure 26(b).” SEC v. Sabhlok, No. 08-4238, 2009 WL 3561523, at 3 (N.D. Cal. Oct. 30, 2009), citing SEC v. In 1926, Congress enacted the Walsh Act, 28 U.S.C. § 1783, to provide U.S. courts with the authority 2 to compel U.S. citizens residing abroad to appear as witnesses in U.S. criminal proceedings. Estate of Ungar, 412 F.Supp.2d 328, 333 (S.D.N.Y. 2006), citing United States v. Thompson, 319 F.2d 665, 668-69 (2d Cir. 1963). Later, Congress amended the Act to extend to civil proceedings. See 28 U.S.C. § 1783(a). 3 States possess the power inherent in sovereignty to require the return to this country of a citizen, resident elsewhere, whenever the public interest requires it, and to penalize him in case of refusal. Blackmer v. U.S. , 284 U.S. 421, 437 (1932). In 1932, the Supreme Court upheld the Walsh Act, stating: “Nor can it be doubted that the United FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 5 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Sandifur, No. 05-cv-1631, 2006 WL 3692611, at 4 (W.D. Wash. Dec. 11, 2006)). See also MedImmune, 2010 WL 2179154, at 1. When determining if testimony meets the relevancy standard, a court should evaluate “the circumstances of the particular case,” and “the posture of the case when the issue arises.” Klesch & Co. Ltd. v. Liberty Media Corp., 217 F.R.D. 517, 523 (D. Colo. 2003). In addition, “the predicate theory of federal pre-trial discovery – the production of material essential for the full and fair litigation of a cause of action” should underpin this evaluation. Estate of Ungar, 412 F.Supp.2d at 333, citing Klesch, 217 F.R.D. at 524. In Sabhlok, the Northern District of California held that testimony that “bears directly on the key issues in [the] case” meets the “interest of justice” standard. Sabhlok, 2009 WL 3561523, at 3. Sabhlok involved an SEC civil action relating to a stock options backdating scheme. Accordingly, the court compelled the appearance and deposition testimony of Mr. Wong (a U.S. citizen residing in Hong Kong), who had authorized backdated stock option grants and participated in discussions with the defendant regarding the backdating scheme. Id. Based on this, the court found “[t]here can be no question that Mr. Wong’s testimony is highly relevant, and is in ‘the interest of justice’ under the first prong of the Walsh Act.” Id.4 Likewise, in this case, Mr. Lundberg’s testimony is highly relevant and directly related to the key issues in the case. In his capacity as a former DIRECTV employee, Mr. Lundberg was involved in research related to the sales, marketing and advertising practices at issue in this case. His expected testimony, thus, meets the “interest of justice” standard under the Walsh Act. 3. Mr. Lundberg’s Personal Appearance Is Necessary. The FTC’s request for a subpoena also meets the Walsh Act’s second prong. The FTC cannot practically obtain admissible testimony from Mr. Lundberg, who is currently in Spain, without his personal appearance. Courts in this district have consistently ruled that it is In Sabhlok, the court ordered the deposition to take place in Hong Kong upon the request of the 4 moving party. Here, we request that the deposition take place at the FTC’s regional office in New York City to ensure the Court retains jurisdiction over the deposition proceedings. See MedImmune, 2010 WL 2179154, at 2. FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) 4 Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 6 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 impracticality, rather than “sheer impossibility,” that satisfies the Walsh Act’s second prong. MedImmune, 2010 WL 2179154, at 1. Impracticality occurs when resorting to alternative methods is not likely to result in the production of evidence due to impending discovery deadlines, and/or when the witness is the only source for the evidence. Id.; Sabhlok, 2009 WL 3561523, at 3-4. For example, in MedImmune, the Northern District of California issued a subpoena pursuant to the Walsh Act, finding resort to other mechanisms to obtain the testimony (such as the lengthy process for letters rogatory) was impractical with less than two months until discovery closes. MedImmune, 2010 WL 2179154, at 1. Similarly, in Sabhlok, the Northern District of California issued a Walsh Act subpoena after finding that the witness was a “unique source of evidence” who had “not previously provided any substantive testimony regarding the allegations at issue in the case.” Sabhlok, 2009 WL 3561523, at 3-4. Here, the second prong of the Walsh Act is met due to the procedural posture of the case and the centrality of Mr. Lundberg’s testimony to this case. Given that discovery is scheduled to close on July 22, 2016, it is nearly impossible to resort to any other available methods for obtaining Mr. Lundberg’s testimony, since they are all cumbersome and time consuming. For example, although Spain is a signatory to the Hague Evidence Convention, Spain self-reports that it generally takes 12 months for its central authority to execute a request.5 Further, Mr. Lundberg has not been deposed before in this matter and he is the best source for the information the FTC will seek in the deposition. As already noted, Mr. Lundberg was DIRECTV’s head of research during the timeframe in which the charged law violations occurred and therefore has direct personal knowledge of relevant information. 4. The Deposition Should Take Place in New York. The Walsh Act states that the subpoena “shall designate the time and place for the 5 See Spain’s Response to Question 7 of the “Questionnaire of November 2013 relating to the Hague Convention on 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters,” available at https://assets.hcch.net/upload/wop/2014/2014sc_20es.pdf. FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) 5 Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 7 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 appearance” of the witness. 28 U.S.C. § 1783(b). Here, the FTC plans to designate that the deposition take place on July 21, 2016 in New York City, where both the FTC and DIRECTV’s counsel have offices. Holding the deposition in New York City will also ease the travel burden for Mr. Lundberg, who will have options for nonstop flights between Madrid and New York. 5. The FTC Will Pay Mr. Lundberg’s Necessary Travel and Attendance Expenses Using Official U.S. Government Travel Procedures for Witnesses. The Walsh Act provides that “[t]he person serving the subpoena shall tender to the person to whom the subpoena is addressed his estimated necessary travel and attendance expenses, the amount of which shall be determined by the court and stated in the order directing the issuance of the subpoena.” 28 U.S.C. § 1783(b). Scant case law exists addressing whether the “tendering” requirement mandates that the moving party include a check with service of the subpoena. Due to policy restrictions on spending public funds for paying invoices and reimbursing expenses, the FTC cannot tender a check to Mr. Lundberg at the time of service of the subpoena. The FTC, however, will cover all of Mr. Lundberg’s necessary travel and attendance expenses, as determined by this Court and stated in the order directing the issuance of the subpoena. We therefore request that the Court’s order require the FTC to pay such expenses in accordance with the federal government and FTC policies and procedures for witness travel and require Mr. Lundberg to provide the FTC with the information necessary to book his travel.6 The current government contract for a nonstop flight from Madrid to New York City (JFK) is on American Airlines (operated by Iberia) for an economy cost of $1052.06. The per 6 The FTC is governed by the Federal Travel Regulation. 41 C.F.R. Part 300. The agency must book and pay for official travel using contracts with airline carriers and per diem allotments as set by the GSA. For invitational and witness travelers, the FTC has policies and procedures for arranging travel, which require the agency to book and pay for hotels at a per diem rate and for airfare on government contract flights through a centrally billed account. Agency policies and procedures also require to the FTC to reimburse witnesses via direct deposit for meals and incidental expenses at the U.S. government’s per diem rate and for other reasonable travel expenses (like taxi cabs). To do so, the FTC requires witnesses to provide us with their legal names, contact information, dates of birth, social security numbers, and passport information and number (for international travel). For reimbursement of the meals and other reasonable travel expenses, the witness must provide his bank account information for direct deposit of the reimbursement, and receipts for non-meal expenses (like taxi cabs). FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) 6 Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 8 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 diem hotel rate in New York City for July and August is $242, as set by the GSA. Travel day meals and incidental expenses are set at $55.50, with non-travel days set at $74.7 The total estimated expense for Mr. Lundberg’s travel and attendance, including per diem meals and incidentals, is $1,921.06.8 B. The Court Should Authorize Service of the Subpoena via FedEx or Other Overnight Courier Pursuant Fed. R. Civ. P. 4(f)(3). The Walsh Act requires that service of a subpoena issued under it “be effected in accordance with the provisions of the Federal Rules of Civil Procedure relating to service of process on a person in a foreign country.” 28 U.S.C. § 1783. Fed. R. Civ. P. Rule 4(f) authorizes several methods of service. The FTC accordingly requests that the Court authorize service of process via FedEx or other private overnight courier pursuant to Fed. R. Civ. P. 4(f)(3) and in accordance with Article 10(a) of the Hague Service Convention. The decision to authorize alternative methods of service under Rule 4(f)(3)9 is within the discretion of the district court. Brockmeyer v. May, 383 F.3d 798, 805 (9th Cir. 2004), citing Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1016 (9th Cir. 2002). Service on individuals located in foreign countries involves a complicated interplay between Fed. R. Civ. P. 4(f), international agreements, and case law. First and foremost is Fed. R. Civ. P. 4(f)(1), which provides that “an individual . . . may be served at a place not within any judicial district of the United States . . . by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the [Hague Service 7 The per diem allotments for New York City as set by the GSA are available at: http://www.gsa.gov/portal/category/100120. 8 This is based on contract flights departing Madrid at either 10:55 a.m. or 12:05 p.m. (local time) and arriving at JFK at 13:20 EDT or 14:25 EDT, the deposition beginning the next day and lasting no longer than one day, and Mr. Lundberg departing the day after the deposition on a nonstop flight from JFK to Madrid at either 17:00 EDT, 19:00 EDT, or 20:55 EDT, and arriving in Madrid a 6:10 a.m., 8:30 a.m., or 10:10 a.m. (all local times to Madrid), respectively. The calculation also includes $200 for taxi fares. 9 Richmond Tech, Inc. v. Aumtech Bus. Solutions, Civ. No. 11-02460, 2011 U.S. Dist. LEXIS 71269, at 39 (N.D. Cal. July 1, 2011), citing Rio Props, 284 F.3d at 1014-15 (“Under the Ninth Circuit’s analysis, Rule 4(f)(3) is neither a ‘last resort’ nor ‘extraordinary relief.’ It is merely one means among several which enables service of process on an international defendant.’”) FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) 7 Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 9 of 10 Convention].” The Supreme Court has held that when the Hague Service Convention applies, “compliance with the Convention is mandatory.” Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 705 (1988). The Hague Service Convention applies “in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad” and “where the address of the person to be served with the document is . . . known.” Art. 1. The primary method of service under the Hague Service Convention is through a “central authority” that is designated by the signatory governments. The Convention also permits alternative service mechanisms, including service through postal channels and personal service through judicial officers or other competent persons. See Art. 10. The Ninth Circuit has held that service through postal channels under Art. 10(a) of the Convention comports with U.S. rules for service provided that the country in which service has to occur has not objected to those mechanisms. Brockmeyer, 383 F.3d at 805. Here, the Hague Service Convention applies because: (1) the United States and Spain are signatories to the Convention, (2) the court proceeding is a civil matter, and (3) an address for Mr. Lundberg in Spain is known. Moreover, Spain has not objected to the alternative service mechanisms authorized by Article 10, including service through postal channels as provided in Article 10(a). The options for service of process that comply with both Fed. R. Civ. P. 4(f) and the Hague Service Convention are: (1) service through the central authority in compliance with Rule 4(f)(1) and Article 5 of the Convention or (2) service through postal channels as authorized by a court order pursuant to Rule 4(f)(3) and as authorized by Article 10(a) of the Convention. The first option is time-consuming and will not meet the deadlines of this case.10 The second option – service via postal channels – complies with both the Convention and the U.S. rules on 10 See footnote 5 above. FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 153 Filed 07/14/16 Page 10 of 10 service,11 and will accomplish service both in a timely manner to minimize delays in this case and in a manner that provides the maximum notice to Mr. Lundberg.12 Accordingly, this court should authorize service of the subpoena via FedEx or other private overnight courier13 pursuant to Fed. R. Civ. P. 4(f)(3) and in compliance with Article 10(a) of the Hague Service Convention. CONCLUSION For the reasons stated above, the Court should order the issuance of a subpoena under the Walsh Act directing Mr. Lundberg to appear at a deposition in New York City, and should authorize service of the subpoena via FedEx or other private overnight courier. Dated: July 14, 2016 Respectfully submitted, /s/ Eric D. Edmondson Eric D. Edmondson Raymond E. McKown Erika Wodinsky Kenneth H. Abbe Stacy Procter Boris Yankilovich Jacob A. Snow Attorneys for Plaintiff Federal Trade Commission 11 Service pursuant to Rule 4(f)(3) is appropriate provided “(1) an international agreement does not prohibit the service; and (2) that the service is ‘reasonably calculated to provide actual notice’ to the defendant.” Carrico v. Samsung Elecs. Co., Ltd., 2016 U.S. Dist. LEXIS 62454, at * 7 (N.D. Cal. May 10, 2016), quoting Rio Props., 284 F.3d at 1014-16. As already shown, the Hague Convention does not prohibit service through postal channels in this case because Spain has not objected to Article 10(a). Brockmeyer, 383 F.3d at 808-09 (holding that the Hague Service Convention permits service of process by international mail, and therefore can be ordered by a court pursuant to Fed. R. Civ. P. 4(f)(3), provided that the country in which service is to take place did not object to Article 10(a)). Additionally, service via FedEx or other courier in this matter is “reasonably calculated to provide actual notice” to Mr. Lundberg because it will be sent to the address that appears to be his current residential address. 12 As noted in fn 10, service via FedEx or private courier is “reasonably calculated to provide actual notice” to Mr. Lundberg because it will be delivered to his current residence in Spain. 13 The Northern District of California recently held that the term “postal channels” in Article 10(a) of the Hague Service Convention encompasses FedEx and other private courtiers. Willamette Green Innovation Ctr., LLC v. Quartis Capital Partners, Civ. No. 13-cv-00848, at11-12 (N.D. Cal. Jan. 21, 2014). There, the court noted: “Treating private couriers as within the definition of ‘postal channels’ is in accord with the case law interpreting other rules regarding international service.” Id. at 12. FTC’S UNOPPOSED MOTION FOR ISSUANCE OF SUBPOENA PURSUANT TO 28 U.S.C. § 1783 AND FOR ALTERNATIVE SERVICE PURSUANT TO FED. R. CIV. P. 4(f)(3) 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-07-15	154	STIPULATION WITH PROPOSED ORDER re 138 Order on Stipulation to extend discovery deadlines filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 7/15/2016) (Entered: 07/15/2016)	Case 3:15-cv-01129-HSG Document 154 Filed 07/15/16 Page 1 of 5 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Case No. 15-cv-01129-HSG Hon. Haywood S. Gilliam, Jr. STIPULATED MOTION AND [PROPOSED] ORDER TO EXTEND DISCOVERY DEADLINES Case 3:15-cv-01129-HSG Document 154 Filed 07/15/16 Page 2 of 5 Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”), jointly move the Court to extend the discovery deadlines in this matter in order to allow the parties sufficient time to complete fact discovery. The parties’ proposed revised schedule would not alter the current dates for summary judgment or trial. The Parties’ Proposed Schedule I. The parties jointly propose the following revisions to the current case schedule (Dkt. No. 138) in order to allow sufficient time to complete a number of outstanding depositions and to review recently produced and soon-to-be produced materials. This proposal continues the deadline for fact discovery by three weeks, extends expert discovery by two weeks, and moves the settlement conference to December 5, 2016, or as soon thereafter as practicable for Judge Spero. (See Dkt. No. 140.) Fact Discovery Closes Opening Expert Reports MSJ Filing Rebuttal Expert Reports MSJ Opposition MSJ Reply Reply Expert Reports MSJ Hearing Date Expert Discovery Close Settlement Conference Pretrial Conference Bench Trial Date Current Schedule (Dkt. No. 138) July 22, 2016 Sept. 2, 2016 Sept. 22, 2016 Sept. 30, 2016 Oct. 6, 2016 Oct. 13, 2016 Oct. 21, 2016 Oct. 27, 2016 Nov. 10, 2016 Nov. 18, 2016 Jan. 17, 2017 Jan. 30, 2017 The Parties’ Proposal Aug. 12, 2016 Sept. 16, 2016 No Change Oct. 13, 2016 No Change No Change Nov. 4, 2016 No Change Nov. 23, 2016 Dec. 5, 2016 No Change No Change STIPULATED MOTION AND PROPOSED ORDER TO EXTEND DISCOVERY DEADLINES Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 154 Filed 07/15/16 Page 3 of 5 Discovery Taken to Date. II. The parties have conducted considerable discovery to date:  The FTC has produced over 133,000 pages of documents and DIRECTV has produced over 384,302 pages of documents, plus an additional 1,829 audio files.  The FTC has sought documents from 22 third parties, including DIRECTV’s telemarketers, dealers, advertising agencies, and market research vendors; those companies have made substantial productions, with some productions ongoing.  The parties have taken 29 depositions, and have noticed an additional nine depositions of individuals and corporate designees.  The parties have brought 16 letter briefs to Judge James (Dkt. Nos. 56, 66, 70, 82, 89, 106, 107, 113, 121, 127, 130, 142, 146, 148, 149 and 152.) III. Reasons for the Proposed Extension. The parties are requesting this extension of discovery deadlines for three principal reasons. First, due to the unavailability of some witnesses, several depositions cannot be completed by July 22. Second, DIRECTV has produced a large volume of material over the past three weeks, including 1,829 recordings of sales calls. Third, several third parties have expressed an intention to produce additional documents to the FTC. The FTC needs a modest amount of additional time to complete its review of these recent and expected productions prior to the commencement of expert discovery, and both parties need time to complete noticed depositions. *** IT IS HEREBY STIPULATED AND AGREED BY AND BETWEEN THE PARTIES through their respective attorneys of record as follows: WHEREAS, the parties require additional time to resolve discovery disputes and conclude the necessary discovery, STIPULATED MOTION AND PROPOSED ORDER TO EXTEND DISCOVERY DEADLINES Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 154 Filed 07/15/16 Page 4 of 5 THEREFORE, the parties have stipulated and agreed, and do hereby respectfully request that the Court extend discovery deadlines and set the following deadlines: Fact Discovery Closes Opening Expert Reports MSJ Filing MSJ Opposition Rebuttal Expert Reports MSJ Reply MSJ Hearing Date Reply Expert Reports Expert Discovery Close Settlement Conference Pretrial Conference Bench Trial Date SO STIPULATED: Dated: July 15, 2016 Aug. 12, 2016 Sept. 16, 2016 Sept. 22, 2016 Oct. 6, 2016 Oct. 13, 2016 Oct. 13, 2016 Oct. 27, 2016 Nov. 4, 2016 Nov. 23, 2016 Dec. 5, 2016 Jan. 17, 2017 Jan. 30, 2017 /s/ Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission Dated: July 15, 2016 /s/ Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC STIPULATED MOTION AND PROPOSED ORDER TO EXTEND DISCOVERY DEADLINES Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 154 Filed 07/15/16 Page 5 of 5 Attestation pursuant to Local Rule 5.1(i)(3) Pursuant to Local Rule 5.1(i)(3) , I attest that concurrence in the filing of this document has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission [PROPOSED] ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. HAYWOOD S. GILLIAM, JR. United States District Judge STIPULATED MOTION AND PROPOSED ORDER TO EXTEND DISCOVERY DEADLINES Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-07-15	155	Discovery Letter Brief regarding FTC Request For Production of Documents 6 & 7 filed by Federal Trade Commission. (Attachments: # 1 Exhibit A)(Edmondson, Eric) (Filed on 7/15/2016) (Entered: 07/15/2016)	Case 3:15-cv-01129-HSG Document 155 Filed 07/15/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on March 24, 2016 and June 14, 2016, prior to filing this letter. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission has been obtained from all Signatories to this document. /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 155 Filed 07/15/16 Page 2 of 6 NATURE OF THE DISPUTE This dispute concerns the Federal Trade Commission’s (“FTC”) Requests for Production (“RFPs”) No. 6 (“All Documents relating to Consumer Research regarding any of the Material Terms of the Service.”) and No. 7 (“All Documents relating to Consumer Research regarding the Advertising of the Service.”). (See Ex. A.) THE FEDERAL TRADE COMMISSION’S POSITION The FTC propounded RFP Nos. 6 and 7, relating to DIRECTV’s consumer research about the conduct at issue in this case, on June 25, 2015. Despite representing to the Court that it will produce materials in response to these RFPs (see Dkt. No. 70 at p.6), DIRECTV has not done so. Over the past year, the FTC has diligently sought to work through DIRECTV’s objections, initiating numerous meetings and proposing focused searches to limit the production. DIRECTV has rejected the FTC’s proposals. With the close of fact discovery fast approaching, the FTC seeks an order for a reasonable, limited production in response to these requests for highly important materials. A. The consumer research materials the FTC seeks are highly relevant. DIRECTV’s consumer research relating to the advertising at issue in this case is directly relevant to consumer deception, materiality, and the company’s knowledge of deception. See In Re Kraft, Inc., 114 F.T.C. 40, 61-67,129, 136, 141 n.14, 15 (1991), aff’d sub. nom. Kraft, Inc. v. FTC, 970 F.2d 311 (7th Cir. 1992) (relying on Kraft’s internal copy testing and other consumer research to demonstrate the likelihood of consumer deception, the claims’ materiality, and Kraft’s knowledge of that likelihood); see also Kraft, 970 F.2d at 323 (invoking Kraft’s internal consumer research to support the Commission’s findings of liability). B. The FTC proposes a limited, narrowly-focused production of materials responsive to RFP Nos. 6 and 7. The FTC proposes that DIRECTV produce two specific categories of materials that it First, the FTC seeks responsive research studies (e.g., A/B and usability studies) done by possesses or controls, but has thus far not produced, and comply with Fed. R. Civ. P. 34(b)(2)(E)(i). specific vendors that conducted consumer research and analysis for DIRECTV, as well as DIRECTV’s analyses of this research. Testimony and documents already provided confirm that DIRECTV commissioned regular consumer research through numerous vendors.1 Testimony and documents produced by nonparties also indicate that significant categories of research exist, but were not produced by DIRECTV. For example, it appears that DIRECTV did not produce all heat-mapping research in its files, including research by Valpak, Wishabi and Realeyes North America, LLC (Realeyes).2 Heat-mapping and eye-tracking studies are directly related to consumer perception of DIRECTV’s advertisements. Similarly, research done by comScore, 1 See Depositions of Suzanne Stinson, Karen Leever, Camilla Grozian-Lorentzen, Maarten Terry, and Nicholas Donatiello. See also DIRECTV’s response to FTC Interrogatory 6 (identifying over 70 vendors who participated or were involved in responsive research). 2 See, e.g., Deposition Exhibit 596, containing DIRECTV’s analysis of research done by Realeyes; see also depositions of Camilla Grozian-Lorentzen (identifying study by Valpak) and Converge Direct document production identifying research by Wishabi. DIRECTV’s response to FTC Interrogatory 6 failed to identify Valpak, Wishabi or Realeyes. 1 Case 3:15-cv-01129-HSG Document 155 Filed 07/15/16 Page 3 of 6 DIRECTV also asserts that the FTC agreed that it did not need to produce any documents which tracks consumers’ online behavior, and analysis of such research by DIRECTV, is relevant to consumers’ perception of DIRECTV’s website, but has not been produced by DIRECTV. DIRECTV has also failed to produce research documents on which it is likely to rely. For example, the FTC has subpoenaed, but not received, materials from two key vendors – CFI Group and McKinsey & Co, Inc. (McKinsey).3 Studies done by McKinsey are especially important because DIRECTV specifically identified McKinsey for the first time on June 28, 2016 as having discoverable information DIRECTV may use to support its defenses. While the FTC has subpoenaed and obtained relevant materials from some of these vendors, their records are not a perfect substitute for what DIRECTV has in its possession,4 including analyses done by DIRECTV and not transmitted to, or retained by, these vendors.5 Contrary to DIRECTV’s suggestion, the FTC should not be forced to go on a scavenger hunt and subpoena numerous nonparties to obtain materials that DIRECTV should possess or control. Even if these nonparty vendors have some responsive materials, DIRECTV has or controls research it purchased or directed6 and, as a party to this action, bears the burden of production. See Kaur v. Alameida, No. 05-276, 2007 WL 1449723, at 2 (E.D. Cal. May 15, 2007). produced by a third party. This is incorrect. While the FTC agreed that print ads and dissemination information could be provided by vendors who contracted with DIRECTV, and that two third parties who worked together on studies did not both need to submit the identical documents, DIRECTV’s contention that FTC counsel agreed to accept any and all responsive materials from nonparties in lieu of DIRECTV’s own production is false. Second, the FTC seeks a limited production of ESI, including emails, based on narrowly tailored search terms. After consistently refusing to produce any ESI in this case based on claims of overwhelming burden, on March 24, 2016, DIRECTV invited the FTC to propose ESI query search terms across a limited number of custodians. The FTC did precisely that, providing narrowly tailored search terms relating specifically to RFPs 6 and 7 for just eight custodians, including two witnesses listed on DIRECTV’s Rule 26 disclosures. DIRECTV identified the resulting volume at approximately 59,000 — far lower than its previous claim that an ESI search would yield more than two million documents (see Dkt. 127 at p. 5). But, apart from a limited review for only two of these eight custodians, DIRECTV refuses to produce this ESI. DIRECTV’s counterproposal to review no more than 3,000 electronic files is unreasonable considering the number of custodians connected to research at DIRECTV, two years of missing materials, and at least six vendors for which the FTC has not received all responsive information. Third, to the extent that DIRECTV asserts that it has already produced studies, the FTC 3 In addition to other vendors, counsel for DIRECTV represents CFI Group and McKinsey. Ironically, DIRECTV’s response to FTC interrogatory 6 also did not identify McKinsey. 4 For example, Suzanne Stinson testified that Media & Entertainment Strategies, Inc. (MES) provided DIRECTV with video recordings of usability studies that MES no longer possessed. 5 Indeed, several DIRECTV vendors testified that they did not learn about the FTC’s investigation until they received subpoenas in this litigation and, thus, did not preserve materials outside of their normal procedures. DIRECTV, on the other hand, has been under an obligation to preserve relevant materials for years. 6 See Deposition of Suzanne Stinson at 70:17–71:1 (explaining that the research recordings were DIRECTV’s property); 239:14-20 (vendor handed recordings to DIRECTV). 2 Case 3:15-cv-01129-HSG Document 155 Filed 07/15/16 Page 4 of 6 asks that it identify the studies it claims to have already produced. DIRECTV has tried to justify its refusal to produce responsive consumer research materials by arguing that the FTC sought consumer research as part of its pre-litigation Civil Investigative Demands (CIDs), and that DIRECTV provided some of those materials in response. Although DIRECTV produced a random spattering of research studies in connection with the CIDs, DIRECTV’s last response to that CID was over two years ago. Notably, DIRECTV’s CID production also excluded responsive research materials from vendors identified above. If DIRECTV seeks to rely on its investigative productions as satisfying, in part, its discovery obligations, it should, consistent with Rule 34, specify what provided documents are responsive to RFPs 6 and 7. Consistent with the foregoing, the FTC respectfully requests an order mandating the following limited production in response to RFP Nos. 6 and 7, plus related ancillary relief: 1. Responsive research materials performed by CFI Group, comScore, McKinsey, Valpak, Wishabi, and Realeyes, as well as DIRECTV’s analyses of these studies, within seven days of the Court’s order; 2. The ESI that DIRECTV has identified in response to the FTC’s keyword queries, including emails and attachments, within ten days of the Court’s order, subject to claw- back for any privileged information as agreed-upon between the parties; and 3. Consistent with Rule 34(b)(2)(E)(i), specific identification by labeling of materials provided by DIRECTV to the FTC during the pre-Complaint investigation that DIRECTV claims are responsive to RFPs 6 and 7, within seven days of the Court’s order. DIRECTV’S POSITION The FTC’s request is based on a mischaracterization of the record. DIRECTV has produced the relevant materials. The FTC’s unsubstantiated speculation that there may be additional documents is not sufficient to justify the FTC’s request for a massive, last-minute search for ESI. If the Court orders any relief, it should adopt DIRECTV’s proposed compromise to conduct a limited, additional ESI search. I. The Request for a Massive ESI Search Is Not Proportional to the Needs of the Case. A. The Requested Materials Are of Limited or No Relevance Because DIRECTV Has Produced Its Consumer Research. The relevance of the requested materials is essentially nothing because DIRECTV has already produced its relevant consumer research. The FTC’s claims that DIRECTV and third- parties have not produced materials in response to Requests 6 and 7 are false. The FTC ignores that DIRECTV long ago produced from identified custodians, as part of the CID process, “all tests, surveys, reports, studies, or models conducted by or for the company that refer or relate to any advertisement (including but not limited to any website), or component thereof, used, considered, or disseminated by the company during the applicable time period regarding any early cancellation fee, the length or term of any television subscription agreement (e.g., 24 months, 18 months), any discount price offer (e.g., any 12-month discount prices, premium channel offers, or receiver upgrades), any regular price offer (e.g., for contract months 13-24), channels offered in programming packages, the ability to change any contract term . . .” In other words, DIRECTV produced the same consumer research the FTC seeks now. The FTC also ignores that it has received thousands of pages of consumer research from 3 Case 3:15-cv-01129-HSG Document 155 Filed 07/15/16 Page 5 of 6 The FTC also ignores that McKinsey will be making a production of consumer research. the parties that conducted consumer research data for DIRECTV, including Media & Entertainment Strategies; Taylor Group; BrainJuicer; Odyssey; ConvergeDirect; and CFI Group. FTC lawyers, including Stacy Procter and Erika Wodinsky, agreed with DIRECTV’s counsel on many occasions that if documents are being produced by nonparties, then DIRECTV does not need to produce duplicate copies of the same records. The FTC again attempts to distract by claiming that it did not learn until June 28, 2016, that McKinsey may have discoverable information. The FTC is wrong. The FTC explicitly referred to McKinsey studies three months prior, during the parties’ March 24 meet and confer on these requests. Moreover, the FTC served McKinsey with a subpoena on June 6, 2016—three weeks prior to its alleged discovery on June 28. deposition testimony. However, the FTC does not identify where in those transcripts these individuals allegedly testified about research that is allegedly missing. Nor does the FTC make a specific request for specific documents from specific custodians. The speculation that there could be something more is not sufficient to justify a broad last-minute ESI search. B. The FTC speculates that not all consumer research has been produced based on The Burden of Reviewing Tens of Thousands of Documents in the Last Days Before the Close of Fact Discovery Would Be Substantial. The burden of the proposed search is substantial: the FTC wants DIRECTV to review roughly 59,000 documents before the close of fact discovery on July 22. Specifically, the FTC wants DIRECTV to apply search terms to documents from six custodians not previously subject to an ESI search. The search terms which yielded the 59,000 are overly-inclusive and unnecessarily complicated: QUERY 1: (disclaim OR disclos* OR language OR text* OR font OR statement* OR print OR terms OR conditions OR legal OR advertis* OR communicat* OR convey* OR messag* OR promo) (popup OR pop-up* OR (pop* /3 up) OR hover OR box OR graphic OR block* OR bubble* OR mouse* OR mice* OR visib* OR proxim* OR prominen* OR view* OR transparen* OR notice* OR understand* OR understood OR comprehen* OR appear* OR see OR saw) AND AND (research* OR survey* OR test* OR study OR studie* OR usability OR result* OR track OR (site /3 catalyst) OR (focus /3 group) OR (eye /3 (map OR track)) OR (heat /3 (map OR track)) heat-map OR heatmap OR “A/B” OR “A-B” OR qualitative OR quantitative) QUERY 2: (consumer* OR customer* OR user) AND (complain OR concern* OR confus* OR upset OR unclear OR aware* OR unaware* OR (not /3 clear) OR (wasn’t /3 clear) OR ((not OR don’t) /3 see) OR understand* OR understood* PR misunderst* OR pain* OR misled OR mislead) (research OR survey* OR test* OR study OR studie* OR usability OR result* OR track OR (site /3 catalyst) OR (focus /3 group) OR (eye /3 (map OR track)) OR (heat /3 (map OR track)) heat-map OR heatmap OR “A/B” OR “A-B” OR qualitative OR quantitative) AND AND (pric* OR cost* OR charge* OR rate* OR fee* OR bill* OR statement* OR invoice* OR pay) AND (raise OR increase* OR hike* OR add* OR differen* OR change* OR slashout OR roll* OR introduct) AND (month OR year* OR “yr” OR “mo” OR “mos” OR contract* OR agree* OR term* OR commit* OR period* OR package* OR lease OR subscri* OR advertise* OR communicat* OR convey* OR messag)) OR 4 Case 3:15-cv-01129-HSG Document 155 Filed 07/15/16 Page 6 of 6 (cancel OR terminat* OR deactivat) AND (price OR cost* OR charge* OR rate* OR fee* OR bill* OR statement* OR invoice OR pay* OR “ECF” OR “ETF”) AND (month* OR year* OR “yr” OR “mo” OR “mos” OR contract* OR agree* OR term* OR commit* OR introduct* OR period* OR package OR lease OR subscribe* OR subscription* OR advertis* OR communicat* OR convey* OR messag) OR (premium OR HBO OR STARZ* OR Showtime OR Cinemax) AND (free OR offer* OR promot* OR introduct* OR month* OR “mos” OR advertis* OR communicat* OR convey* OR messag* OR sign* OR subscribe) AND (price OR cost* OR charge* OR rate* OR fee* OR bill* OR statement* OR invoice* OR pay* OR roll) The FTC did not propose these terms until June 12, 2016 and since then has not offered any narrower set of terms. (The only movement since June 12, 2016 has been that DIRECTV as a compromise agreed to review all documents that hit on these terms for two custodians—the original request was for eight custodians but DIRECTV’s agreement means that only six custodians are now at issue. The FTC has not moved at all). There is no justification for the FTC to have waited this long, nor for the FTC to insist that this complicated query is necessary, especially when there are obviously simpler queries (see proposal below) and DIRECTV agreed to the complicated query for two custodians • DIRECTV will also review documents from the six other custodians that hit on the search The Court therefore should adopt DIRECTV’s compromise: terms “Valpak,” “Wishabi,” “.comScore,” or “Realeyes”7 up to a maximum of 3,000 documents (or the FTC can choose the terms, so long as the number of hits is below 3,000). • No additional deposition time will be allowed based on these productions. • No identification of materials responsive to RFPs 6 and 7 shall be required. DIRECTV has compromised already by agreeing to review additional documents for two custodians. It is willing to compromise further by reviewing up to 3,000 additional documents. This compromise should be more than sufficient given that there was good reason, given the FTC’s delay, to not allow the FTC any additional ESI. Furthermore, it is significant that the FTC has not compromised at all from its June 12, 2016 position. The FTC’s request is a “give us everything else too” document grab that disregards the prior productions, the FTC’s delay in raising this issue, the proportionality concerns in Rule 26, and the parties’ obligations to work cooperatively to minimize the burdens of electronic discovery.8 The Court should grant DIRECTV’s compromise. 7 CFI Group and McKinsey—the other two entities listed by the FTC—are making productions of research materials. 8 Rule 26 “places a shared responsibility on all the parties to consider the factors bearing on proportionality before propounding discovery requests, issuing responses and objections, or raising discovery disputes before the courts.” Salazar v. McDonald’s Corp., No. 14-cv-02096RS (MEJ), 2016 WL 736213, at 2 (N.D. Cal. Feb. 25, 2016); Gilead Scis., Inc. v. Merck & Co., Inc., No. 5:13-CV-04057-BLF, 2016 WL 146574, at *1 (N.D. Cal. Jan. 13, 2016) (rejecting requests based on speculation). DIRECTV has met its obligation by reviewing for two custodians and offering a further compromise. The FTC has not. 5
2016-07-15	156	Discovery Order re: Letter Brief 152 . Signed by Judge Maria-Elena James on 7/15/2016. (mejlc3, COURT STAFF) (Filed on 7/15/2016) (Entered: 07/15/2016)	Case 3:15-cv-01129-HSG Document 156 Filed 07/15/16 Page 1 of 4 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Re: Dkt. No. 152 The Court has received the parties’ discovery dispute letter regarding the Federal Trade Commission’s (“FTC”) Request for Production No. 4 (“RFP No. 4”) (requesting production of “[a]ll advertisements created, drafted, or prepared, but not disseminated to consumers, relating to service”). Jt. Ltr., Dkt. No. 152. RFP No. 4 was the subject of an earlier discovery dispute letter. Dkt. No. 70. On December 3, 2015, the Court ruled on the parties’ dispute regarding RFP No. 4: Having reviewed the parties’ positions, the Court finds good cause to limit the FTC’s request. On one hand, as discussed above, the FTC has established the relevancy of its request. On the other hand, the FTC’s position—that Defendants rejected draft ads with clearer disclosures out of concern that such ads would attract fewer customers—is merely speculative at this point, and the FTC has not shown why it needs all draft ads and related documents from the past seven years to establish this claim when a representative sample could be just as probative. Defendants maintain they would need to search for and review “hundreds of thousands of additional ads” to find and produce all draft ads relevant to the FTC’s request. Id. Considering the importance of the requested discovery to the FTC’s case, the Court finds the burden of producing all draft ads and related documents outweighs its likely benefit. See Fed. R. Civ. P. 26(b)(1) (In determining the scope of discovery, court must consider “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”). Accordingly, the Court ORDERS the parties to meet and confer in person to determine whether they can 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 156 Filed 07/15/16 Page 2 of 4 agree to a more limited production. If unable to reach an agreement, the parties shall file an updated joint letter in compliance with the undersigned’s Discovery Standing Order, and each party shall attach their proposal. Dkt. No. 81 at 13. Seven months have elapsed since the Court’s order granting the FTC’s motion to compel production in response to RFP No. 4. Counsel for defendants DIRECTV LLC and DIRECTV, Inc. (together “DIRECTV”) represents that it made “repeated offers . . . to engage in a meaningful dialogue” on the issue, but that FTC did not contact DIRECTV to discuss it until June 16, 2016. Jt. Ltr. at 4. The FTC explains it could not propose a more limited production earlier because the production of “a comprehensive set” of final ads by DIRECTV and a third party was “substantially delayed.” Jt. Ltr. at 1. Discovery closes on July 22, 2016. Dkt. No. 138 at 2. The FTC asks the Court to order DIRECTV to produce (1) draft ads for 350 specific ads, and (2) creative summaries in a more legible format. In Opposition, DIRECTV argues that (1) it cannot locate drafts associated with particular ads; (2) all drafts that reflect review by its in-house legal department are privileged1; and (3) the FTC’s proposal is unduly burdensome in light of the potential marginal relevance of the information. It further argues the FTC’s “twelfth hour request” is untimely. DIRECTV instead proposes to search for and produce a sampling of up to 300 ads that it determines are not privileged. DIRECTV also represents that it has produced the most legible copies of all the creative summaries available. When the Court ordered the parties to meet and confer to determine whether they could agree to a more limited production, it contemplated the parties would do so promptly after issuance of the order. Nevertheless, the Court’s order requiring DIRECTV to produce the drafts 1 DIRECTV argues that all final disseminated ads are submitted to its in-house counsel for review through the Review Approval Process (“RAP”) tool; all draft ads reflecting review by in-house counsel are privileged; and it does not separately maintain non-privileged and privileged drafts. The Court, however, does not know whether drafts sent to in-house counsel for review are preserved by DIRECTV outside RAP (e.g., by virtue of being sent to RAP via email or because they are uploaded to RAP from other locations such as department drives, shared folders, or individual computers) and can be produced directly from those sources. The Court also does not know whether drafts are more easily produced for certain time periods or for certain types of ads or whether the FTC wants to prioritize either of these categories of drafts. In light of the lateness of this request, the Court cannot investigate these issues further. 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 156 Filed 07/15/16 Page 3 of 4 stands, and DIRECTV has not produced them. In light of counsel’s representation that DIRECTV has investigated various options for producing draft ads associated with specific final disseminated ads but cannot practicably do so, the Court’s prior analysis of relevance and burden, and the FTC’s delay in meeting and conferring on the issue, the Court adopts DIRECTV’s proposed compromise (Jt. Ltr. at 5), with the following modifications: (1) As soon as practicable, DIRECTV shall produce a sampling of 350 draft ads. DIRECTV shall produce a random sampling that covers each of the relevant years. When producing the draft ads, DIRECTV shall describe in detail the methodology by which it located the available drafts and selected the sampling of ads produced; (2) If DIRECTV objects to producing 350 drafts on the ground that some of them are privileged, counsel for DIRECTV shall file a declaration describing the efforts they have made to locate draft ads outside RAP and confirming they cannot reasonably produce the requested information from a source outside RAP; (3) If the FTC challenges either the methodology DIRECTV utilized to select the sampling, the privilege issue, or the adequacy of DIRECTV’s search for draft ads outside RAP, it shall promptly meet and confer with DIRECTV to attempt to reach a compromise. If the parties cannot do so, they shall file an updated joint letter in compliance with the undersigned’s Discovery Standing Order. The Court strongly urges the parties to resolve this issue without further court intervention and to agree to a production schedule that will not require a further extension of court-ordered deadlines. // // // // // // // 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 156 Filed 07/15/16 Page 4 of 4 As to the creative summaries, DIRECTV represents it has produced them all and is willing to continue to search for better quality copies. The Court accepts DIRECTV’s representations and orders it to continue to search for better quality copies and to promptly produce any it finds. IT IS SO ORDERED. Dated: July 15, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-07-15	157	Order by Hon. Haywood S. Gilliam, Jr. granting 153 Motion. (This is a text-only entry; there is no document associated with this entry.) (hsglc3S, COURT STAFF) (Filed on 7/15/2016) (Entered: 07/15/2016)	From: Sent: To: Subject: [email protected] Friday, July 15, 2016 4:01 PM [email protected] Activity in Case 3:15-cv-01129-HSG Federal Trade Commission v. DIRECTV, Inc. et al Order on Motion for Miscellaneous Relief This is an automatic e-mail message generated by the CM/ECF system. Please DO NOT RESPOND to this e-mail because the mail box is unattended. *NOTE TO PUBLIC ACCESS USERS* Judicial Conference of the United States policy permits attorneys of record and parties in a case (including pro se litigants) to receive one free electronic copy of all documents filed electronically, if receipt is required by law or directed by the filer. PACER access fees apply to all other users. To avoid later charges, download a copy of each document during this first viewing. However, if the referenced document is a transcript, the free copy and 30 page limit do not apply. U.S. District Court California Northern District Notice of Electronic Filing The following transaction was entered on 7/15/2016 at 4:00 PM and filed on 7/15/2016 Case Name: Case Number: Filer: Document Number: 157(No document attached) Federal Trade Commission v. DIRECTV, Inc. et al 3:15-cv-01129-HSG Docket Text: Order by Hon. Haywood S. Gilliam, Jr. granting [153] Motion. (This is a text-only entry; there is no document associated with this entry.) (hsglc3S, COURT STAFF) (Filed on 7/15/2016) 3:15-cv-01129-HSG Notice has been electronically mailed to: Amy Teng [email protected], [email protected], [email protected] Boris Yankilovich [email protected] Bridget Santorelli Johnsen [email protected] Chad Samuel Hummel [email protected], [email protected], [email protected], [email protected], [email protected], [email protected] Clayton S Friedman [email protected] Eric David Edmondson [email protected], [email protected], [email protected] Erika Ruth Wodinsky [email protected] Jacob Adam Snow [email protected], [email protected] Kenneth Hatheway Abbe [email protected] Mark Douglas Campbell [email protected], [email protected], [email protected] Michael Yaghi [email protected], [email protected], [email protected], [email protected], [email protected] Raymond Edward McKown [email protected] Ryan M. Sandrock [email protected], [email protected], [email protected], ryan- [email protected], [email protected] Sean Christopher Griffin [email protected] Stacy Rene Procter [email protected] Whitney B Merrill [email protected] 3:15-cv-01129-HSG Please see Local Rule 5-5; Notice has NOT been electronically mailed to:
2016-07-15	158	Joint Discovery Letter Briefre: Ostheimer Depo. filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E)(Hummel, Chad) (Filed on 7/15/2016) (Entered: 07/15/2016)	Case 3:15-cv-01129-HSG Document 158 Filed 07/15/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on July 1, 2016, prior to filing this letter. /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Chad S. Hummel Counsel for Defendants DIRECTV & DIRECTV LLC Case 3:15-cv-01129-HSG Document 158 Filed 07/15/16 Page 2 of 6 This dispute concerns DIRECTV’s motion to compel further testimony from the FTC as a result of the June 9, 2016 deposition of FTC designee Michael Ostheimer. NATURE OF DISPUTE DIRECTV’S POSITION Despite two unambiguous court orders (Dkt. 81 and 109) directing the FTC to provide critical discovery by deposition of (a) the factual bases of the FTC’s allegations of deceptive advertising and (b) specific details of the FTC’s investigation (which are directly relevant to DIRECTV’s defenses), in a June 9 court-ordered Rule 30(b)(6) deposition, the FTC refused to answer or to provide meaningful testimony on topics expressly permitted by this Court.1 As a result of the FTC’s instructions not to answer, as well as its repeated references to “privileged facts” which the designee, Michael Ostheimer, would not reveal, the FTC has flatly refused to reveal many basic facts about its investigation and the factual support for its claims. In its response below to DIRECTV’s letter brief, the FTC claims that its case is based solely on a “facial review” of the ads in question, DIRECTV documents, DIRECTV witness testimony, customer complaints, and expert testimony. However, the FTC refuses to divulge: (a) whether the FTC has any studies, surveys, or research on DIRECTV’s ads that pre-date the filing of this lawsuit, (b) if the FTC filed this lawsuit based solely on its own “facial analyses” of the ads, which is likely the case, who at the FTC first performed those “analyses” of DIRECTV’s ads and when, (c) all factual bases for the allegation that DIRECTV’s ads were likely to deceive reasonable consumers, and (d) which DIRECTV documents (other than the ads themselves) support its claims. The FTC either refused or failed to answer these basic inquiries – all clearly permitted by law and court order. At this point, Rule 37 sanctions are fully warranted against the FTC, as its lawyers have flouted this Court’s prior orders and repeatedly blocked appropriate discovery. At a minimum this Court should order that the FTC immediately respond to deposition questions seeking the types of discoverable information outlined above and which this Court has twice ordered to be permissible – without meritless objections and instructions not to answer. Furthermore, the FTC designee witness should not be allowed to claim “privilege” over facts, which Mr. Ostheimer did repeatedly during the session at issue in this motion, citing the unheard-of and absurd proposition that, if one of its experts considers facts in formulating opinions, those facts are not discoverable until expert discovery. See, e.g., Ostheimer Tr. 151:15-153:11 (claiming that Your Honor’s prior order protects disclosure of facts).2 As evidenced by the FTC’s response below, it admits that it has not provided substantive answers to the key questions posed. A comprehensive listing of the questions not answered is attached hereto as Exhibit A. 1 DIRECTV respectfully submits that this Court can best comprehend the extent of the FTC’s improper obstruction in this deposition by reading it, and DIRECTV requests that the Court order that the parties submit the entirety of the Court-ordered June 9, 2016, Rule 30(b)(6) deposition on topics 3, 4, 7, 9, 11, and 15 for review. 2 The FTC claims that Your Honor’s opinion in Todd v. Tempur-Sealy Int’l, Inc., 2015 WL 1022886, at 2 (N.D. Cal. Mar. 6, 2015) supports its position. This is incorrect. The portion cited relies on Rule 26(b)(4)’s dictate that “Ordinarily, a party may not, by interrogatories or deposition, discover facts known or opinions held by an expert who has been retained or specially employed by another party in anticipation of litigation or to prepare for trial and who is not expected to be called as a witness at trial.” This rule does not bar DIRECTV from discovering facts from the party itself or allow the FTC to shield fact discovery by providing facts to an expert. 1 Case 3:15-cv-01129-HSG Document 158 Filed 07/15/16 Page 3 of 6 Despite the FTC’s protestations that it has produced several witnesses for deposition, the fact remains that the who, what, how, and when of the FTC’s investigation in this case remain unanswered. This information is key here, because DIRECTV’s defenses of laches and estoppel are in part premised on the FTC’s knowledge of facts (specifically, allegedly deceptive advertising after the 2010 multistate settlement) and its unreasonable delay in filing suit. Equally important, if there are other facts or documents that the FTC will use, those must be identified. Two Prior Court Orders Authorized the Discovery That the FTC has Blocked. On December 3, 2015, the Court ruled that DIRECTV was entitled to take discovery on Topic 3: “The results of any and all research, surveys, or tests conducted by the FTC concerning DIRECTV’S advertising that the FTC contends has been or is deceptive.” Dkt. 81. The FTC had claimed that questions regarding the topic were privileged as attorney work product and deliberative process. Dkt. 81 at 7. The Court rejected this position, ruling that DIRECTV could ask questions “relating to which ads were allegedly deceptive, how they were deceptive, whether the FTC has any factual support for its contention that consumers have been deceived, its investigation of alleged consumer complaints.” Dkt. 81 at 8 (emphasis added).3 The Court only barred questions seeking testimony “properly deemed privileged.” Id. at 13. Then, on February 24, 2016, in response to the FTC’s attempt to re-argue the issue (Dkt. 106), the Court again ruled that DIRECTV was entitled to testimony regarding the facts of the FTC’s investigation. Dkt. 109. The Court made clear that “DIRECTV may seek relevant information surrounding the FTC’s investigation, such as ‘whether there has been any fact gathering; who did it; when it was done; where it is reported, if at all; how it was conducted; what inquiry was made and of whom; why the inquiry has taken so long; and the like.’” Dkt. 109 at 2 (emphasis added), quoting Ressler, 2012 WL 3231002 at 3. The Court confirmed that “DIRECTV is free to inquire into information such as the FTC’s fact gathering techniques and how it conducted the investigation.” Id. Addressing the FTC’s privilege claims, the Court said that DIRECTV was not entitled to testimony regarding the FTC’s “evaluation” of facts but was entitled to discover the facts of the FTC’s investigation. Dkt. 109 at 2. The FTC Blocked All Testimony on These Topics. On June 9, DIRECTV attempted to take the deposition of the FTC’s designee Michael Ostheimer regarding Topic 3, as well as Topics 4, 7, 9, 11, and 15—all topics seeking facts supporting the FTC’s contentions.4 The relevant inquiries were largely blocked. See Exhibit A. The FTC’s claim below that its designee witness did answer some of these questions is highly misleading as a review of the transcript readily demonstrates. An answer that the witness does not know of any evidence or “facts” that are not privileged is not an answer. For example, in response to the question about whether the FTC had facts supporting its claims of deception with regard to the contractual two-year commitment, the FTC gave a partial instruction not to 3 The Court cited Ressler v. United States, 2012 WL 3231002, at 3 (D. Colo. Aug. 6, 2012), for the proposition that an agency’s “fact gathering” is the proper subject of a 30(b)(6) deposition. Dkt. 81 at 11. 4 No. 7: “For each TV ad that the FTC contends violated Section 5(a) of the FTC Act, ALL facts which support the FTC’s contention that the TV ad was deceptive.” No. 9: “For each print ad that the FTC contends violated Section 5(a) of the FTC Act, ALL facts which support the FTC’s contention that the TV ad was deceptive.” No. 11: “ALL facts that support YOUR contention that any DIRECTV INTERNET SALES WEBSITE has been deceptive or unfair as alleged in YOUR COMPLAINT.” No. 13: “ALL facts that support YOUR contention that any DIRECTV INTERNET SALES WEBSITE has violated ROSCA as alleged in the FTC’S COMPLAINT.” No. 15: “ALL facts which support any contention that the DIRECTV telephone sales subscription process has been in any way deceptive.” 2 Case 3:15-cv-01129-HSG Document 158 Filed 07/15/16 Page 4 of 6 answer, and the witness said: “I’m not personally aware of any facts that are not privileged. That doesn’t mean that there aren't such facts. It means that I’m unaware of any that are not privileged.” See, e.g., Ostheimer Tr. 137:5-8. There is no justification for this evasive answer. The FTC responds that these questions seek to discover the FTC’s “evaluation” of facts. This is clearly wrong. DIRECTV’s questions seek facts, not the mental processes of the FTC’s attorneys. The questions seek identification of facts or documents, yes and no answers, and the factual nuts and bolts of the FTC’s investigation. The FTC’s Failure to Identify the Documents Supporting Its Case. As part of the briefing process, FTC has argued that “DIRECTV’s own documents, including consumer perception research, demonstrate[e] that the company was well aware of consumer deception.” However, the FTC’s witness did not identify any such documents and the FTC’s counsel has refused to do so, claiming that the FTC has no obligation to do so. This too is wrong. The FTC should be ordered to do so or be precluded from presenting these documents at trial. Proposed Compromise/Relief. Pursuant to FRCP 37(b)(1), the FTC should be sanctioned for its conduct. In addition, a designee should be ordered to sit for an additional deposition during which he or she must provide full answers to the questions posed in Exhibit A and reasonable follow-up. Alternatively, the FTC can file a statement with the Court stating that, at the time it filed the Complaint, it had no evidence of deception other than the vote of the commissioners and a facial review of the ads, and that it currently does not have any evidence other than expert testimony. As for DIRECTV documents, the FTC should identify the documents by Bates Number or be precluded from using them at trial pursuant to FRCP 37(c)(1). THE FEDERAL TRADE COMMISSION’S POSITION To date, seven FTC witnesses, including four attorneys, have provided testimony on nine Rule 30(b)(6) deposition topics and in their personal capacities. Despite these depositions and the FTC’s prompt and comprehensive responses to written discovery, DIRECTV accuses the FTC of obstruction. Now, DIRECTV challenges the testimony of Michael Ostheimer, the FTC’s designee who testified on Rule 30(b)(6) deposition topics 3, 4, 7, 9, 11, and 15. DIRECTV contends that the FTC improperly blocked, through objections, Mr. Ostheimer from answering questions seeking (1) “the who, what, how, and when of the FTC’s investigation,” and (2) an identification of “facts or documents that the FTC will use” at trial. DIRECTV is wrong. As the deposition transcript shows, Mr. Ostheimer provided responsive testimony to these questions.5 The only testimony that he did not provide was subject to proper privilege objections, consistent with the Court’s Feb. 24, 2016 Discovery Order (Dkt. 109). A. The witness answered DIRECTV’s “who, what, how, and when” questions about the FTC’s investigation and the factual basis for the FTC’s allegations. “Who” and “When” questions. Contrary to DIRECTV’s contention, Mr. Ostheimer answered these questions. Specifically, he identified who made the determination that DIRECTV’s advertisements have been deceptive. (See Ex. B at 14:2-15; 19:17-24; 20:15 – 21:8.) The witness also answered who at the FTC was involved in making the recommendation to the Commission regarding the Complaint. (See id. at 30:9 – 32:3.) The only challenged question the witness was unable to answer was DIRECTV’s demand to identify “the first person 5 See Ex. B (full deposition transcript, with highlights of relevant portions of testimony). Additionally, for the Court’s convenience, Ex. C provides a table of the questions DIRECTV challenges, the FTC’s objections and limiting instructions, and the witness’s testimony in response. As Ex. C demonstrates, DIRECTV challenges four lines of inquiry here. 3 Case 3:15-cv-01129-HSG Document 158 Filed 07/15/16 Page 5 of 6 within the FTC organization” who looked at DIRECTV’s ads and determined that they were likely to deceive consumers, and when that first determination by that first person was made. (See Ex. C at Line of Inquiry No.1; Ex. B at 21:9 – 23:8; 286:14 – 288:2.) The burden of canvassing every FTC employee since 2007 in order to obtain an answer to this question—which is irrelevant to the FTC’s allegations—is not proportional to the needs of the case. “What” and “How” questions. Also contrary to DIRECTV’s contention, Mr. Ostheimer provided responsive testimony to DIRECTV’s questions about the factual bases for the FTC’s contentions—i.e., what the FTC views as deceptive about DIRECTV’s advertising and how the FTC arrived at those views. FTC’s cautioned Mr. Ostheimer not to divulge privileged information, but allowed him to answer these questions. (See Ex. C Line of Inquiry Nos. 2, 3.) Consistent with that instruction, Mr. Ostheimer did answer the questions to the best of his knowledge. He explained the factual basis for the FTC’s allegations of DIRECTV’s deceptive advertising, and the basis for the FTC’s allegation that the material terms are not adequately disclosed in the illustrative advertising included in the Complaint. (See Ex. B at 64:15-66:8; 115:7-12; 241:2 – 245:11.) He explained, with facts, precisely why and how the advertising is likely to deceive consumers. (See id. at 88:12 – 89:4; 107:16 – 113:25; 133:19 – 136:2; 155:4 – 157:2; 164:17 – 166:24; 190:15 – 191:17; 228:1 – 230:16.) He also described to the best of his knowledge, but without divulging privileged information, how the FTC staff gathered facts during the agency’s investigation of DIRECTV. (See id. at 61:15-21; 142:6 – 143:15.) The information that DIRECTV specifically demands now is the work, if any, performed by non-testifying consulting experts in preparation for the Commission’s determination to bring this action, which Mr. Ostheimer did not reveal. (See Ex. C Line of Inquiry No. 3.) His refusal to reveal that privileged information is consistent with the Feb. 24, 2016 Discovery Order, which confirmed that “Rule 26(b)(4)(D) shields the disclosure of specified information about non- witness experts retained or employed in anticipation of litigation or preparation for trial.” (Dkt. 109 at p. 2.) This shield against consulting expert discovery “‘also insulates discovery of the identity and other collateral information concerning experts consulted informally.’” (Id.) Moreover, contrary to DIRECTV’s blanket assertion that it is entitled to know “the facts,” Rule 26(b)(4)(D) expressly protects from discovery “facts known or opinions held” by a non- testifying expert. Finally, DIRECTV’s position (in footnote 2, supra) that otherwise privileged information developed by a non-testifying consulting expert becomes discoverable if sought “from the party itself,” as opposed to from the expert, is illogical and unsupported by law. Rule 26(b)(4)(D)’s protections do not hinge on who is being deposed. To be sure, the Rule does not permit a party to insulate discoverable information by handing it to a consulting expert, but the FTC has not done that here, and DIRECTV has no valid basis to suggest that it has. B. The FTC’s counsel properly instructed the witness not to divulge what the Commission “considered” in making its determination to bring this action. The only challenged line of questioning to which the FTC’s counsel gave a blanket instruction not to answer on the basis of privilege was inquiry into what the FTC Commissioners “considered” in deciding to bring this law enforcement action. (See Ex. C Line of Inquiry No. 4.) That instruction was consistent with the Court’s prior ruling that “DIRECTV should be mindful to direct its questioning to the facts surrounding the investigation and not the FTC’s evaluation of those facts.” (Dkt. No. 109 at p. 2.) DIRECTV’s demand that the FTC reveal what the agency heads “considered” (i.e., evaluated) in deciding to bring this action, and what staff attorneys selected to present to the Commission when providing legal advice is impermissible. (See id.) 4 Case 3:15-cv-01129-HSG Document 158 Filed 07/15/16 Page 6 of 6 C. DIRECTV is not entitled to preview the FTC’s trial exhibit list during discovery. DIRECTV contends that the FTC must identify —now (during discovery) and through deposition testimony—all of DIRECTV’s documents that the FTC plans to use at trial. DIRECTV provides no legal support for the unprecedented proposition that parties must reveal their trial exhibit lists before the close of discovery and well before the lists are actually due. Nor does it explain how the FTC could surprise DIRECTV with DIRECTV’s own documents at trial. Moreover, DIRECTV’s demand, even if valid, cannot be met since DIRECTV has to date not produced at least tens of thousands of documents in response to the FTC discovery requests.6 The FTC is not required to produce a witness to preview the agency’s trial exhibits and strategy. Accordingly, the FTC produced Mr. Ostheimer for testimony on topics 7, 9, 11, and 15 as limited to the facts supporting the FTC’s supplemental responses to substantially identical DIRECTV contention interrogatories: Nos. 2, 5, 7, 9, and 11. (See Ex. C at 16:1-10; Ex. D; Ex. E.) These contention interrogatories asked FTC to state “ALL facts” supporting the FTC’s contention of deception (see Ex. E)—the same questions DIRECTV demanded of Mr. Ostheimer and (erroneously) claims he did not answer. Although “Rule 33 expressly contemplates postponement of contention interrogatories,” Amgen Inc. v. Sandoz Inc., No. 14-CV-04741- RS(MEJ), 2016 WL 913105, at 2 (N.D. Cal. Mar. 10, 2016), the FTC answered these contention interrogatories comprehensively, identifying thousands of documents that support the FTC’s contentions, such as DIRECTV’s own ads and sales scripts, and explaining how and why DIRECTV’s advertising is deceptive. (See Ex. E at pp. 6-35.) The FTC served its supplemental responses to these interrogatories nearly two months ago, and before Mr. Ostheimer’s deposition. DIRECTV cannot plausibly insist that Mr. Ostheimer, live during his deposition, was obligated to further supplement the FTC’s responses to these contention interrogatories. If further supplementation will be necessary, the FTC will provide it at the proper time. D. DIRECTV’s demand for sanctions is unfounded. DIRECTV’s two grounds for demanding Rule 37 sanctions are misplaced. First, as explained above, the FTC complied with the Court’s Dec. 3, 2015 and Feb. 24, 2016 Discovery Orders. The FTC instructed the witness to not divulge only properly privileged information, and the witness answered questions accordingly. (See Dkt. 81 at p. 10 (exempting “any testimony that is properly deemed privileged); Dkt. 109 at 2 (“DIRECTV may not obtain information regarding non-witness experts . . . .”).) In any event, those Discovery Orders addressed deposition topic 3 (the results of the FTC’s research, surveys, or tests), whereas what DIRECTV challenges here is primarily the FTC’s testimony on deposition topics 7, 9, 11, and 15 (the facts supporting the FTC’s contention that DIRECTV’s advertising has been deceptive). Second, DIRECTV’s request for evidence preclusion under Rule 37(c)(1) is afield because the FTC does not intend to introduce at trial evidence it is withholding from discovery based on privilege. Thus, this is not a situation where a party withholds discoverable information or materials for the bulk of fact discovery just to spring it on its opponent at the last minute. Cf. Techsavies, LLC v. WDFA Mktg. Inc., No. C10-1213 BZ, 2011 WL 723983, at *3-4 (N.D. Cal. Feb. 23, 2011) (barring defendant from introducing materials it should have produced earlier). 6 As recent discovery letter briefs show, the FTC is moving for the Court’s intervention to obtain documents after months of obstructionist tactics by DIRECTV. (See, e.g., Dkt. 152, 155.) 5
2016-07-19	159	ORDER by Judge Haywood S. Gilliam, Jr. Granting 154 Stipulation to extend discovery deadlines. (ndrS, COURT STAFF) (Filed on 7/19/2016) (Entered: 07/19/2016)	Case 3:15-cv-01129-HSG Document 159 Filed 07/19/16 Page 1 of 5 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION v. Plaintiff, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, a limited liability company, a corporation, Defendants. Case No. 15-cv-01129-HSG Hon. Haywood S. Gilliam, Jr. STIPULATED MOTION AND [PROPOSED] ORDER TO EXTEND DISCOVERY DEADLINES Case 3:15-cv-01129-HSG Document 159 Filed 07/19/16 Page 2 of 5 Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”), jointly move the Court to extend the discovery deadlines in this matter in order to allow the parties sufficient time to complete fact discovery. The parties’ proposed revised schedule would not alter the current dates for summary judgment or trial. The Parties’ Proposed Schedule I. The parties jointly propose the following revisions to the current case schedule (Dkt. No. 138) in order to allow sufficient time to complete a number of outstanding depositions and to review recently produced and soon-to-be produced materials. This proposal continues the deadline for fact discovery by three weeks, extends expert discovery by two weeks, and moves the settlement conference to December 5, 2016, or as soon thereafter as practicable for Judge Spero. (See Dkt. No. 140.) Fact Discovery Closes Opening Expert Reports MSJ Filing Rebuttal Expert Reports MSJ Opposition MSJ Reply Reply Expert Reports MSJ Hearing Date Expert Discovery Close Settlement Conference Pretrial Conference Bench Trial Date Current Schedule (Dkt. No. 138) July 22, 2016 Sept. 2, 2016 Sept. 22, 2016 Sept. 30, 2016 Oct. 6, 2016 Oct. 13, 2016 Oct. 21, 2016 Oct. 27, 2016 Nov. 10, 2016 Nov. 18, 2016 Jan. 17, 2017 Jan. 30, 2017 The Parties’ Proposal Aug. 12, 2016 Sept. 16, 2016 No Change Oct. 13, 2016 No Change No Change Nov. 4, 2016 No Change Nov. 23, 2016 Dec. 5, 2016 No Change No Change STIPULATED MOTION AND PROPOSED ORDER TO EXTEND DISCOVERY DEADLINES Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 159 Filed 07/19/16 Page 3 of 5 Discovery Taken to Date. II. The parties have conducted considerable discovery to date:  The FTC has produced over 133,000 pages of documents and DIRECTV has produced over 384,302 pages of documents, plus an additional 1,829 audio files.  The FTC has sought documents from 22 third parties, including DIRECTV’s telemarketers, dealers, advertising agencies, and market research vendors; those companies have made substantial productions, with some productions ongoing.  The parties have taken 29 depositions, and have noticed an additional nine depositions of individuals and corporate designees.  The parties have brought 16 letter briefs to Judge James (Dkt. Nos. 56, 66, 70, 82, 89, 106, 107, 113, 121, 127, 130, 142, 146, 148, 149 and 152.) III. Reasons for the Proposed Extension. The parties are requesting this extension of discovery deadlines for three principal reasons. First, due to the unavailability of some witnesses, several depositions cannot be completed by July 22. Second, DIRECTV has produced a large volume of material over the past three weeks, including 1,829 recordings of sales calls. Third, several third parties have expressed an intention to produce additional documents to the FTC. The FTC needs a modest amount of additional time to complete its review of these recent and expected productions prior to the commencement of expert discovery, and both parties need time to complete noticed depositions. *** IT IS HEREBY STIPULATED AND AGREED BY AND BETWEEN THE PARTIES through their respective attorneys of record as follows: WHEREAS, the parties require additional time to resolve discovery disputes and conclude the necessary discovery, STIPULATED MOTION AND PROPOSED ORDER TO EXTEND DISCOVERY DEADLINES Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 159 Filed 07/19/16 Page 4 of 5 THEREFORE, the parties have stipulated and agreed, and do hereby respectfully request that the Court extend discovery deadlines and set the following deadlines: Fact Discovery Closes Opening Expert Reports MSJ Filing MSJ Opposition Rebuttal Expert Reports MSJ Reply MSJ Hearing Date Reply Expert Reports Expert Discovery Close Settlement Conference Pretrial Conference Bench Trial Date SO STIPULATED: Dated: July 15, 2016 Aug. 12, 2016 Sept. 16, 2016 Sept. 22, 2016 Oct. 6, 2016 Oct. 13, 2016 Oct. 13, 2016 Oct. 27, 2016 Nov. 4, 2016 Nov. 23, 2016 Dec. 5, 2016 Jan. 17, 2017 Jan. 30, 2017 /s/ Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission Dated: July 15, 2016 /s/ Chad S. Hummel Chad S. Hummel Counsel for Defendants DIRECTV and DIRECTV, LLC STIPULATED MOTION AND PROPOSED ORDER TO EXTEND DISCOVERY DEADLINES Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 159 Filed 07/19/16 Page 5 of 5 Attestation pursuant to Local Rule 5.1(i)(3) Pursuant to Local Rule 5.1(i)(3) , I attest that concurrence in the filing of this document has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Eric D. Edmondson Counsel for Plaintiff Federal Trade Commission [PROPOSED] ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. HAYWOOD S. GILLIAM, JR. United States District Judge STIPULATED MOTION AND PROPOSED ORDER TO EXTEND DISCOVERY DEADLINES Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7/19/2016
2016-07-19		Set Deadline Pursuant to Docket No. 159 : Discovery due by 8/12/2016. (ndrS, COURT STAFF) (Filed on 7/19/2016) (Entered: 07/19/2016)
2016-07-20	160	ORDER FOR PARTIES TO APPEAR FOR COURTROOM MEET AND CONFER SESSION. Signed by Magistrate Judge Maria-Elena James on 7/20/2016. (rmm2S, COURT STAFF) (Filed on 7/20/2016) (Entered: 07/20/2016)	Case 3:15-cv-01129-HSG Document 160 Filed 07/20/16 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) ORDER FOR PARTIES TO APPEAR FOR COURTROOM MEET AND CONFER SESSION The Court is in receipt of the parties’ three recently filed joint discovery letters. Dkt. Nos. 152, 155, 158. Having reviewed the letters and the parties’ disputes, the Court now ORDERS the parties to meet and confer in person on Monday, July 25, 2016 at 9:30 a.m. in Courtroom B, 15th Floor, 450 Golden Gate Avenue, San Francisco, California. The parties shall come prepared to meaningfully discuss and resolve their disputes. The Courtroom will be available to the parties for the entirety of the day. If unable to resolve their disputes at the meet and confer session, the parties shall prepare a joint letter(s) at the session in compliance with paragraph 2 of the undersigned’s Discovery Standing Order. Thus, the parties are ORDERED to bring any necessary equipment to draft the letter and present it to the Deputy Clerk for electronic filing. If the parties resolve their disputes prior to July 25, 2016, they shall jointly request that the Court vacate the meet and confer session. IT IS SO ORDERED. Dated: July 20, 2016 ______________________________________ ______________________________________ _______________________________________ MARIA-ELENA JAMES MARIA-ELENENNNNNNENNNNNNNNNNNENNNNNNNNNNNNENNNNNNA JAMES United States Magistrate Judge United States Magistrate Ju 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-07-20		Set/Reset Hearing re 160 Order Discovery Meet and Confer Meeting set for 7/25/2016 09:30 AM in Courtroom B, 15th Floor, San Francisco - Magistrate Judge Maria-Elena James' Courtroom. (rmm2S, COURT STAFF) (Filed on 7/20/2016) (Entered: 07/20/2016)
2016-07-22	161	Discovery Letter Brief regarding the noticed deposition of Takehiko (Ted) Suzuki filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 7/22/2016) (Entered: 07/22/2016)	Case 3:15-cv-01129-HSG Document 161 Filed 07/22/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on June 15, 2016, prior to filing this letter. Because we will be meeting again in person on July 25, 2016, pursuant to the Court’s order of July 20, 2016, we ask that the Court advise us whether this additional letter brief should be addressed by the parties at that time. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad S. Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 161 Filed 07/22/16 Page 2 of 6 NATURE OF DISPUTE The FTC seeks to depose DIRECTV Vice President and Deputy General Counsel Takehiko (Ted) Suzuki concerning DIRECTV’s advertising and marketing disclosures compliance program. THE FEDERAL TRADE COMMISSION’S POSITION DIRECTV has refused the FTC’s request to produce Mr. Suzuki for a deposition on facts relevant to DIRECTV’s affirmative defenses of laches, estoppel and waiver. DIRECTV has not provided a cognizable basis for refusing to produce Mr. Suzuki, nor can it. DIRECTV has alleged as the basis for its affirmative defenses that the FTC declined to join the negotiated resolution to DIRECTV’s violations of consumer protections laws of 49 states and the District of Columbia known as the Multistate Agreement (“MSA”). DIRECTV claims that it was prejudiced by the FTC not objecting to the adequacy of the MSA and allowing DIRECTV to “roll out a national compliance program”1 based on the MSA. These claims beg the question of whether DIRECTV actually has complied with the MSA, because failure to do so would moot DIRECTV’s affirmative defenses. Ted Suzuki developed and oversaw DIRECTV’s MSA compliance program. He co- authored recently-produced compliance documents, including DIRECTV’s “advertising and marketing disclosures compliance manual” and a presentation titled “DIRECTV Multistate Settlement: An Overview.” DIRECTV advertising executives have testified that they relied on Mr. Suzuki and his legal team to ensure that DIRECTV’s ads were compliant with the MSA. Accordingly, Mr. Suzuki’s testimony will be essential to determining what steps DIRECTV took to comply with the disclosure requirements of the MSA, the FTC Act and the Restore Online Shoppers Confidence Act (“ROSCA”). A. Mr. Suzuki’s testimony is highly relevant. DIRECTV has alleged in support of its affirmative defenses of laches, waiver and estoppel that “the FTC was invited to participate in the negotiation and resolution” of the advertising disclosure issues covered by the MSA but declined, and that, based on the FTC’s silence, DIRECTV “relied on the requirements of [MSA] in designing its advertising disclosures.”2 DIRECTV’s allegation suggests that compliance with the requirements of the MSA is somehow different from the requirements for complying with the Section 5 of the FTC Act and Sections 3 and 4 of ROSCA. Mr. Suzuki designed and oversaw DIRECTV’s advertising and marketing compliance program. He co-authored DIRECTV’s compliance manual as well as a presentation on the disclosure requirement of the MSA. His testimony is relevant to determining whether DIRECTV can substantiate its affirmative defenses, including whether DIRECTV’s compliance manual was designed to meet the requirements of the FTC Act and ROSCA. He will also be able to explain what steps DIRECTV took to ensure that its advertisements and marketing materials complied with the MSA. Finally, several DIRECTV executives – including Paul Guyardo, Jon Gieselman, Karen Leever, and Brad Bentley – testified that they relied on Mr. Suzuki or his legal team to ensure that DIRECTV’s advertising and marketing materials were legally compliant. B. The testimony the FTC’s seeks in not privileged. The information the FTC seeks from Mr. Suzuki is not per se privileged, and to the extent that particular inquiries infringe on genuinely privileged information, DIRECTV’s counsel may 1 Deposition Transcript of Clayton Friedman (“Friedman Dep. Tr.”) at 87:20. 2 See Affirmative defenses 4, 5 and 6 in Defendants’ DIRECTV and DIRECTV LLC’s Second Amended Answer (Dkt. 93). 1 Case 3:15-cv-01129-HSG Document 161 Filed 07/22/16 Page 3 of 6 instruct Mr. Suzuki not to answer those questions. What counsel may not do, however, is substitute a non-lawyer with no personal knowledge of DIRECTV’s MSA compliance efforts for Mr. Suzuki, the witness the FTC has chosen to depose. 3 It is clear from the record that many of the documents central to the proposed deposition are simply not privileged. The advertising and marketing compliance manual and related “compliance checklist” the FTC intends to question Mr. Suzuki about are widely disseminated documents clearly intended as statements of DIRECTV policy, not legal advice. The Multistate Agreement is a public document. Mr. Suzuki should be able to answer factual questions about that document, and explain DIRECTV’s efforts to comply with the MSA, without revealing privileged information. Any privilege that may have attached to the internal DIRECTV presentation summarizing the requirements of the MSA was waived when DIRECTV produced the document to the FTC. Moreover, DIRECTV has waived privilege with respect to MSA compliance by putting it at the center of its affirmative defenses. Courts have long recognized that a party cannot use legal advice as both a sword and a shield. See Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1162 (9th Cir. 1992) (citing United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir.1991). When parties attempt to use legal advice both offensively and defensively, courts may find that the privilege has been implicitly waived. Id. DIRECTV’s repeated claim that its compliance program ensured that its advertising was legally compliant (a defensive use) combined with its affirmative defenses related to the program (an offensive use), effectively waives any claim it may have had that its advertising review and approval process protects as privileged all communications between its marketing executives and in-house lawyers. C. The Shelton factors do not preclude the FTC from taking Mr. Suzuki’s deposition. DIRECTV incorrectly assumes that because Shelton involved in-house counsel, the additional protections described in that case would apply to Mr. Suzuki. It is well-established that the Shelton factors were intended to cover only to opposing litigation counsel in the matter at hand (whether in-house or outside counsel). See, e.g., Pamida, Inc. v. E.S. Originals, Inc., 281 F.3d 726, 730 (8th Cir. 2002) (holding that Shelton did not apply to attorney being deposed in one matter about representation in another matter); Luster v. Schafer, No. 08–cv–02399–PAB– KMT, 2009 WL 2219255, at 2 (D.Colo. July 23, 2009) (Shelton factors “only apply to depositions of trial counsel or counsel directly representing the party in the pending litigation.”). Mr. Suzuki is not acting as litigation counsel in this matter – he has not entered an appearance, taken a deposition, signed discovery responses or in any other way acted as such.4 The purpose of the Shelton factors was to protect litigation counsel from inadvertently revealing their litigation strategy or having to spend time preparing for a deposition instead of preparing their case. See Pamida, 281 F.3d at 730; Luster, 2009 WL 2219255 at 2. These concerns are absent here, as Mr. Suzuki is not litigation counsel. The Shelton factors do not apply and the FTC need only show that Mr. Suzuki has information relevant to its claims. (See Section A above.) 3 See, e.g., Armada (Singapore) Pte Ltd v. Amcol Int'l Corp., No. 13 C 3455, 2016 WL 612852, at *1 (N.D. Ill. Feb. 16, 2016) (“Questions of privilege must be assessed on a question by question basis and cannot be resolved fungibly even before the deposition begins. Nor ought it be a valid objection to an otherwise permissible notice of deposition to say that the party seeking the deposition has or can get the same information elsewhere. Witnesses are not fungible, and thus the quality of the evidence each may provide can only be determined in retrospect.”) 4 DIRECTV incorrectly equates Mr. Suzuki with Mr. McKown, who this Court agreed should not be deposed. In contrast to Mr. Suzuki, Mr. McKown is an attorney of record for the FTC and is actively serving as litigation counsel in this matter. 2 Case 3:15-cv-01129-HSG Document 161 Filed 07/22/16 Page 4 of 6 D. The FTC never agreed to waive its right to depose Mr. Suzuki. The FTC unequivocally rejects DIRECTV’s assertion that it agreed to allow DIRECTV substitute Brad Bentley for Mr. Suzuki.5 Mr. Bentley has no personal knowledge of DIRECTV’s MSA compliance efforts and, in fact, has already testified that he relied on the legal department for compliance information. Mr. Bentley, who is a marketing executive, is simply not qualified to testify about DIRECTV’s MSA compliance program. The Court should reject this bald attempt by DIRECTV to cherry pick fact witnesses for deposition. E. Conclusion to produce Mr. Suzuki for deposition. For the foregoing reasons, the FTC respectfully requests that the Court order DIRECTV DIRECTV’S POSITION The Court should deny the FTC’s motion to compel the deposition of DIRECTV’s in- house counsel in charge of advertising review and litigation: (1) the FTC is reneging on a clear discovery agreement reached at a voluntary, privileged proffer session involving Mr. Suzuki in which, after speaking with Mr. Suzuki for hours about DIRECTV’s privileged advertising review process, the FTC agreed to take a designee witness under Rule 30(b)(6) instead of Mr. Suzuki; (2) the Court’s prior decision regarding the Ray McKown deposition (Dkt. 143) controls here and dictates denial of the FTC’s motion; (3) the information the FTC claims to seek from Mr. Suzuki is almost all privileged or protected under the work product doctrine, and DIRECTV is not invoking an “advice of counsel” defense; (4) the FTC cannot meet its high burden under Shelton for overcoming the presumption against deposing opposing counsel; DIRECTV’s marketing executive and 30(b)(6) representative can provide the same non-privileged testimony without the risk of impinging on protected advice or attorney thought processes. Background In a good faith effort to resolve a discovery dispute with the FTC, DIRECTV proffered Mr. Suzuki to describe how all ads are reviewed and approved in the so-called RAP process. The parties agreed that the provision of information at the session on May 17 would not constitute a waiver of any privileges or be used in the case. Eric Edmondson, lead counsel for the FTC, and FTC attorney Sylvia Kundig interviewed Mr. Suzuki for several hours regarding DIRECTV’s RAP process, Mr. Suzuki and his team’s role in the process, and the maintenance of records of reviews or draft ads, among many other topics. After the proffer session, the FTC agreed that it would not require RAP materials to be produced or logged as they clearly are privileged and extremely voluminous. In addition, the FTC also agreed that it would forego the personal deposition of Mr. Suzuki if DIRECTV would produce a designee Rule 30(b)(6) witness on topics that the FTC would provide regarding DIRECTV’s advertising and marketing disclosure compliance program. DIRECTV confirmed this agreement with the FTC in an e-mail the next day.6 Pursuant to the agreement, the FTC proposed two topics.7 DIRECTV offered Brad Bentley, DIRECTV’s 5 Contrary to DIRECTV’s version of events, the proffer session concerned draft advertisements contained in the company’s “Fastrieve” document management system, not all draft advertisements. The FTC determined that the burden of producing potentially hundreds of thousands of draft advertisement contained in Fastrieve likely outweighed their probative value to this case and promised not to seek production of those documents. The FTC has honored this agreement. 6The relevant portions of the e-mail provided: “This email will confirm that, based on your informal interview of Ted Suzuki yesterday about DIRECTV’s RAP policies and procedures, which was conducted under the settlement privilege and the protections of FRE Rule 408, and pursuant to an agreement that nothing said in the meeting would 3 Case 3:15-cv-01129-HSG Document 161 Filed 07/22/16 Page 5 of 6 Executive Vice President and Chief Marketing Officer, as a 30(b)(6) designee witness on these topics, a witness fully knowledgeable about the proposed topics. The matter was resolved. Inexplicably, and without reference to the prior agreement (witnessed by three DIRECTV counsel and confirmed in writing), the FTC then demanded that Mr. Suzuki appear for a personal deposition. The FTC subsequently withdrew Topics 7 and 8—arguing that a 30(b)(6) witness no longer worked because the topics had been withdrawn. The FTC then brought this Motion. I. Argument The Discovery Agreement Should be Enforced. DIRECTV had Brad Bentley ready to testify regarding 30(b)(6) Topics 7 and 8 and had reserved a date for his deposition. His testimony would have covered the same ground as the proposed deposition of Mr. Suzuki—any non-privileged information regarding policies, procedures, and practices designed to ensure compliance with legal requirements. The FTC’s conduct in issuing the notices indicated that it believed 30(b)(6) testimony would be sufficient. This Court endorsed this approach in its ruling allowing for a FTC 30(b)(6) designee witness in lieu of the FTC’s Ray McKown. DIRECTV sought to compel the testimony of Mr. McKown regarding his communications on behalf of the FTC with DIRECTV’s counsel regarding the MSA. Dkt. 143. Mr. McKown was the only one at the FTC with first-hand knowledge of those communications. The FTC—taking the opposite position it takes now— argued that 30(b)(6) testimony instead of Mr. McKown would suffice. This Court agreed, finding that “As Mr. McKown’s communications with DIRECTV’s counsel are relevant to the extent they were made on behalf of the FTC, the appropriate course is for DIRECTV to seek discovery about these communications from the FTC itself.” Dkt. 145. That reasoning applies here: as Mr. Suzuki’s conduct regarding compliance is relevant to the extent it shows DIRECTV’s compliance, the appropriate course is for the FTC to seek discovery from DIRECTV itself. The fact that the FTC chose not to do so does not mean it gets Mr. Suzuki’s deposition. II. compliance with the MSA and other applicable law is privileged. There is no question that the attorney-client privilege bars testimony about Mr. Suzuki’s legal advice with respect to advertisements, and the work product doctrine protects Mr. Suzuki’s mental impressions. The FTC nevertheless makes two attempts to create exceptions to these protections. The Information Sought From Mr. Suzuki is Privileged. The FTC concedes that how DIRECTV’s attorneys advised business personnel regarding constitute a waiver of the attorney–client privilege or DIRECTV’s work product, the FTC will not require production of RAP materials and will not require that we log privileged communications within RAP. . . Finally, this will confirm that you will send us potential 30b6 topics, potentially in lieu of Mr. Suzuki’s personal deposition which you noticed. Until we reach agreement on the scope of designee testimony, we will hold the agreed date of June 28, and may use that for the 30b6 if necessary. . . . Let me know if this does not accurately reflect our understandings.” 7 Topic 7: “DIRECTV’s policies, procedures, and practices intended to ensure that the Company’s advertisements and other forms of marketing . . . for direct-to-home digital television service that DIRECTV has advertised, marketed, promoted, sold, or otherwise offered to consumers in the United States conveys clearly and conspicuously to consumers” various terms of DIRECTV’s offers.” Topic 8: “DIRECTV’s policies, procedures, and practices intended to ensure that the Company, in connection with transactions over the Internet for sale of the Service with a negative option feature.” 4 Case 3:15-cv-01129-HSG Document 161 Filed 07/22/16 Page 6 of 6 First, the FTC says that the MSA is a public document and Mr. Suzuki should be able to answer factual questions about it. This is true, but any witness could answer factual questions about the MSA and there is no basis for burdening Mr. Suzuki with a deposition simply so he can read the terms of the MSA into the record. Of course, his interpretations of the MSA and advice regarding it are protected from disclosure. Second, the FTC argues that DIRECTV is relying on an advice of counsel defense and thereby using the privilege as both “a sword and a shield.” This is factually wrong. DIRECTV is not asserting “advice of counsel” as a defense. As DIRECTV has made clear in repeated pleadings, its defenses of waiver, estoppel, and laches (defenses as to which Judge Gilliam denied a motion to strike (Dkt. 88)) are based on the FTC’s conduct. Specifically, the FTC unreasonably delayed for 5 years in initiating this action after it fully knew of the MSA and the manner of advertising disclosures dictated by it, engaged in affirmative misconduct in 2010 in misleading DIRECTV into believing that the FTC would not take action on issues resolved by the MSA (which are the very same disclosures at issue in this case), and failed to disclose its common interest prosecution of DIRECTV with the states. This FTC conduct, not the inner workings of DIRECTV’s legal department, is what is at issue in this case. And the FTC has already deposed a 30(b)(6) witness (DIRECTV’s outside counsel responsible for negotiating the MSA, Clayton Friedman) on the FTC’s conduct and how DIRECTV reasonably relied on it in the context of the MSA and DIRECTV’s subsequent compliance program. III. The FTC Has Not Met the Shelton Factors for Deposing Opposing Counsel. Finally, the FTC has never attempted to, and cannot, meet “its burden to overcome the strong presumption against deposing counsel during active litigation.” Dkt. 143 at 2. As this Court has explained, Shelton v. AMC, 805 F.2d 1323 (8th Cir. 1986), provides that attorney depositions should be permitted only where the party seeking the deposition shows that (1) no other means exist to obtain the information, (2) the information sought is relevant and non- privileged, and (3) the information is crucial to the preparation of the case. Dkt. 143 at 2. As to the first factor alone, multiple other means exist to elicit discoverable information in this area and the FTC has already conceded as much by issuing the proposed 30(b)(6) topics. Certainly, the FTC has not demonstrated that no other means exist to obtain the requested discovery or “why it cannot seek the same information from [DIRECTV] through a Rule 30(b)(6) deposition.” Dkt. 143 at 3. As to the second factor, the FTC’s argument for relevance relies on the incorrect premise that DIRECTV is relying on an “advice of counsel” defense. Even assuming some relevance, however, the FTC cannot show that Mr. Suzuki’s testimony is “crucial” to its preparation of the case because any non-privileged information is plainly obtainable from other sources. The FTC’s only argument in response is that Mr. Suzuki is not litigation counsel. This is wrong. He is, and his deposition could reveal litigation strategy in this case. The fact that he has not entered an appearance, taken a deposition, or signed discovery responses is not remarkable— most in-house counsel involved with litigation do not do these things. The FTC is therefore without a response to Shelton and its request should be denied. 5
2016-07-27	162	Minute Entry for proceedings held before Magistrate Judge Maria-Elena James: Discovery Hearing held on 7/25/2016.FTR Time: 3:38 - 4:36. Plaintiff Attorney(s): Eric D. Edmondson, Esq.; Jacob A. Snow, Esq.; Boris Yankilovich, Esq. Defendant Attorney: Chad Hummel, Esq. Attachment: Minutes of Meet and Confer Session.(rmm2S, COURT STAFF) (Date Filed: 7/27/2016) (Entered: 07/27/2016)	Case 3:15-cv-01129-HSG Document 162 Filed 07/27/16 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CIVIL MINUTES Time: 3:38 - 4:36 Date: 7/25/2016 Case No.: 15-cv-01129-HSG Case Name: Federal Trade Commission v. DIRECTV, Inc. Judge: MARIA-ELENA JAMES Attorney for Plaintiff: Eric D. Edmondson, Esq. JJaaccoobb SS.. SSnnooww,, EEssqq.. BBoorriiss YYaannkkiilloovviicchh,, EEssqq.. Attorney for Defendant: Chad Hummel, Esq. Deputy Clerk: Rose Maher FTR Time: 3:38 - 4:36 PROCEEDINGS Meet and confer session held. Counsel stated they shall submit a joint letter re matters discussed at the meet and confer session, both resolved and unresolved issues, for the Court's review. Counsel presented argument to the Court regarding unresolved issues re Docket Nos. 161 and 158. Argument heard. Matters submitted. Court shall issue an Order.
2016-07-27	163	STIPULATION WITH PROPOSED ORDER Discovery Stipulation Arising From Court-Ordered Meet and Confer (DKT. 160) and Proposed Order filed by DIRECTV LLC, DIRECTV, Inc.. (Hummel, Chad) (Filed on 7/27/2016) (Entered: 07/27/2016)	Case 3:15-cv-01129-HSG Document 163 Filed 07/27/16 Page 1 of 5 Counsel Listed on Signature Page UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Judge: Haywood S. Gilliam, Jr. DISCOVERY STIPULATION ARISING FROM COURT-ORDERED MEET AND CONFER (DKT. 160) AND [PROPOSED] ORDER ) ) ) ) ) ) ) ) ) ) ) ) ) ) NO. 15-1129 DISCOVERY STIPULATION AND [PROPOSED] ORDER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation, and DIRECTV, LLP a limited company, Defendants. Case 3:15-cv-01129-HSG Document 163 Filed 07/27/16 Page 2 of 5 Pursuant to the Court’s order (Dkt. 160), the parties met and conferred in court on July 25, 2016. The parties reached agreement on the following: 1. Letter Brief re: RFP 4: The parties agree that the issue (Dkt. 152) has been resolved by the Court’s order (Dkt. 156). DIRECTV is preparing its production in accordance with the Court’s order. 2. Letter Brief re: RFPs 6 and 7: a. DIRECTV will search for and produce any relevant, responsive eye-mapping studies/reports from Valpak, Wishabi, and RealEyes. DIRECTV will also search for and produce any relevant, responsive additional research from Wishabi. DIRECTV will provide information on the results of these searches by July 29, 2016. b. DIRECTV will search for and produce any relevant, responsive .comScore data/studies/reports (in particular any data regarding click-throughs). DIRECTV will provide information on the results of this search by July 29, 2016. c. DIRECTV will search for and produce for relevant, responsive McKinsey surveys/studies/reports. DIRECTV will provide information on the results of this search by July 29, 2016. d. DIRECTV will run and review the FTC’s search terms (as set forth in Dkt. 155—both Query 1 and Query 2) on Giles Lundberg’s materials and produce responsive documents reasonably in advance of Mr. Lundberg’s deposition. e. The FTC will not seek any further ESI under RFPs 6 and 7. f. This resolves Dkt. 155. 3. DIRECTV Topic 17 to FTC: a. The FTC will identify in its opening expert report (or in another form no later than the day opening expert reports are exchanged) any DIRECTV-produced documents supporting any FTC claim that DIRECTV’s consumer perception research demonstrated that the company was aware of consumer deception. b. The deposition will be taken off calendar. 4. DIRECTV Topic 18 to FTC: DISCOVERY STIPULATION AND [PROPOSED] ORDER NO. 15-1129 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 163 Filed 07/27/16 Page 3 of 5 a. The FTC will produce declaration(s) by August 5, 2016 regarding how videos were captured and what DIRECTV website material was selected for capture. b. The deposition will be taken off calendar, with the understanding that DIRECTV can depose the witnesses if necessary after receiving the declaration(s). 5. 6. FTC 30(b)(6) Topic 4: The parties will continue to work cooperatively on the authentication and explanation of sales and cancellation data produced by DIRECTV. FTC 30(b)(6) Topic 14: a. DIRECTV will produce declaration(s) by August 5, 2016 regarding the universe from which the sample of recorded calls was drawn and how the recorded calls were selected. b. The deposition will be taken off calendar, with the understanding that the FTC can depose the witness(es) if necessary after receiving the declaration(s). 7. FTC 30(b)(6) Topics 9-11: DIRECTV will produce a witness after the ruling on the Ted Suzuki deposition. FTC 30(b)(6) Topics 12-13: Withdrawn. 8. 9. Website Analytics: DIRECTV will allow the FTC to meet with the appropriate DIRECTV employee to discuss analytics on either 8/2, 8/3, 8/4. DIRECTV will provide the FTC with the opportunity to review the analytics data in the possession of DIRECTV, and if additional relevant, responsive material exists, DIRECTV will produce that material to the FTC. 10. ROG 4: DIRECTV will agree that any dissemination schedules produced by third-party agents of DIRECTV are accurate. DIRECTV agrees that DIRECTV’s final television advertisements aired nationally. The parties are still discussing dissemination regarding digital ads and will continue to work cooperatively on this front. 11. ROG 26: a. DIRECTV will go back to see if there are any additional scripts that have not been produced and will produce any such scripts that are reasonably available. b. DIRECTV will also see if there are additional sample video recordings of the agent’s computer screen during sales calls. If additional such videos exist and are reasonably available, DIRECTV will produce them. 2 DISCOVERY STIPULATION AND [PROPOSED] ORDER NO. 15-1129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 163 Filed 07/27/16 Page 4 of 5 c. Required Call Components: DIRECTV will provide or identify reasonably available information specifying the time periods during which each Required Call Component was operative (i.e., the time period during which each Required Call Component directed sales agents to include the specified components). d. For the Required Call Components and the scripts DIRECTV has produced or will produce, DIRECTV will confirm that these are the final scripts actually used for customer calls. 12. Banner Ads: DIRECTV will produce in native format if reasonably available. 13. Production from Third Parties: The FTC will provide by July 29, 2016 a confirmation that it has produced all such documents or will identify by category documents that it has not. 14. No Further Issues. The parties will continue to resolve privilege log issues in good faith. There shall be no further discovery motion practice on any issue without good cause. Dated: July 27, 2016 Dated: July 27, 2016 /s/ Eric D. Edmondson Eric D. Edmondson Counsel for FTC Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; /s/ Chad S. Hummel Chad S. Hummel Counsel for DIRECTV Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP DISCOVERY STIPULATION AND [PROPOSED] ORDER NO. 15-1129 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 163 Filed 07/27/16 Page 5 of 5 [email protected] Attorneys for Plaintiff Federal Trade Commission 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document has Attestation pursuant to Local Rule 5.1(i)(3) been obtained from all Signatories to this document. /s/ Chad S. Hummel_______________ Counsel for Defendants DIRECTV & DIRECTV LLC [PROPOSED] ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. MARIA-ELENA JAMES DISCOVERY STIPULATION AND [PROPOSED] ORDER NO. 15-1129 4
2016-07-27	164	ORDER by Magistrate Judge Maria-Elena James granting 163 Stipulation. (rmm2S, COURT STAFF) (Filed on 7/27/2016) (Entered: 07/27/2016)	Case 3:15-cv-01129-HSG Document 164 Filed 07/27/16 Page 1 of 5 Counsel Listed on Signature Page UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Judge: Haywood S. Gilliam, Jr. DISCOVERY STIPULATION ARISING FROM COURT-ORDERED MEET AND CONFER (DKT. 160) AND [PROPOSED] ORDER ) ) ) ) ) ) ) ) ) ) ) ) ) ) NO. 15-1129 DISCOVERY STIPULATION AND [PROPOSED] ORDER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FEDERAL TRADE COMMISSION, Plaintiff, vs. DIRECTV, a corporation, and DIRECTV, LLP a limited company, Defendants. Case 3:15-cv-01129-HSG Document 164 Filed 07/27/16 Page 2 of 5 Pursuant to the Court’s order (Dkt. 160), the parties met and conferred in court on July 25, 2016. The parties reached agreement on the following: 1. Letter Brief re: RFP 4: The parties agree that the issue (Dkt. 152) has been resolved by the Court’s order (Dkt. 156). DIRECTV is preparing its production in accordance with the Court’s order. 2. Letter Brief re: RFPs 6 and 7: a. DIRECTV will search for and produce any relevant, responsive eye-mapping studies/reports from Valpak, Wishabi, and RealEyes. DIRECTV will also search for and produce any relevant, responsive additional research from Wishabi. DIRECTV will provide information on the results of these searches by July 29, 2016. b. DIRECTV will search for and produce any relevant, responsive .comScore data/studies/reports (in particular any data regarding click-throughs). DIRECTV will provide information on the results of this search by July 29, 2016. c. DIRECTV will search for and produce for relevant, responsive McKinsey surveys/studies/reports. DIRECTV will provide information on the results of this search by July 29, 2016. d. DIRECTV will run and review the FTC’s search terms (as set forth in Dkt. 155—both Query 1 and Query 2) on Giles Lundberg’s materials and produce responsive documents reasonably in advance of Mr. Lundberg’s deposition. e. The FTC will not seek any further ESI under RFPs 6 and 7. f. This resolves Dkt. 155. 3. DIRECTV Topic 17 to FTC: a. The FTC will identify in its opening expert report (or in another form no later than the day opening expert reports are exchanged) any DIRECTV-produced documents supporting any FTC claim that DIRECTV’s consumer perception research demonstrated that the company was aware of consumer deception. b. The deposition will be taken off calendar. 4. DIRECTV Topic 18 to FTC: DISCOVERY STIPULATION AND [PROPOSED] ORDER NO. 15-1129 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 164 Filed 07/27/16 Page 3 of 5 a. The FTC will produce declaration(s) by August 5, 2016 regarding how videos were captured and what DIRECTV website material was selected for capture. b. The deposition will be taken off calendar, with the understanding that DIRECTV can depose the witnesses if necessary after receiving the declaration(s). 5. 6. FTC 30(b)(6) Topic 4: The parties will continue to work cooperatively on the authentication and explanation of sales and cancellation data produced by DIRECTV. FTC 30(b)(6) Topic 14: a. DIRECTV will produce declaration(s) by August 5, 2016 regarding the universe from which the sample of recorded calls was drawn and how the recorded calls were selected. b. The deposition will be taken off calendar, with the understanding that the FTC can depose the witness(es) if necessary after receiving the declaration(s). 7. FTC 30(b)(6) Topics 9-11: DIRECTV will produce a witness after the ruling on the Ted Suzuki deposition. FTC 30(b)(6) Topics 12-13: Withdrawn. 8. 9. Website Analytics: DIRECTV will allow the FTC to meet with the appropriate DIRECTV employee to discuss analytics on either 8/2, 8/3, 8/4. DIRECTV will provide the FTC with the opportunity to review the analytics data in the possession of DIRECTV, and if additional relevant, responsive material exists, DIRECTV will produce that material to the FTC. 10. ROG 4: DIRECTV will agree that any dissemination schedules produced by third-party agents of DIRECTV are accurate. DIRECTV agrees that DIRECTV’s final television advertisements aired nationally. The parties are still discussing dissemination regarding digital ads and will continue to work cooperatively on this front. 11. ROG 26: a. DIRECTV will go back to see if there are any additional scripts that have not been produced and will produce any such scripts that are reasonably available. b. DIRECTV will also see if there are additional sample video recordings of the agent’s computer screen during sales calls. If additional such videos exist and are reasonably available, DIRECTV will produce them. 2 DISCOVERY STIPULATION AND [PROPOSED] ORDER NO. 15-1129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 164 Filed 07/27/16 Page 4 of 5 c. Required Call Components: DIRECTV will provide or identify reasonably available information specifying the time periods during which each Required Call Component was operative (i.e., the time period during which each Required Call Component directed sales agents to include the specified components). d. For the Required Call Components and the scripts DIRECTV has produced or will produce, DIRECTV will confirm that these are the final scripts actually used for customer calls. 12. Banner Ads: DIRECTV will produce in native format if reasonably available. 13. Production from Third Parties: The FTC will provide by July 29, 2016 a confirmation that it has produced all such documents or will identify by category documents that it has not. 14. No Further Issues. The parties will continue to resolve privilege log issues in good faith. There shall be no further discovery motion practice on any issue without good cause. Dated: July 27, 2016 Dated: July 27, 2016 /s/ Eric D. Edmondson Eric D. Edmondson Counsel for FTC Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; /s/ Chad S. Hummel Chad S. Hummel Counsel for DIRECTV Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP DISCOVERY STIPULATION AND [PROPOSED] ORDER NO. 15-1129 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 164 Filed 07/27/16 Page 5 of 5 [email protected] Attorneys for Plaintiff Federal Trade Commission 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document has Attestation pursuant to Local Rule 5.1(i)(3) been obtained from all Signatories to this document. /s/ Chad S. Hummel_______________ Counsel for Defendants DIRECTV & DIRECTV LLC [PROPOSED] ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. MARIA-ELENA JAMES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DISCOVERY STIPULATION AND [PROPOSED] ORDER NO. 15-1129 4 July 27, 2016
2016-07-27	165	Discovery Letter Brief regarding FTC's request related to DIRECTV's RIO system filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 7/27/2016) (Entered: 07/27/2016)
2016-08-05	166	Discovery Order re Dkt. Nos. 158 , 161 , 165 . Signed by Judge Maria-Elena James on 8/5/2016. (mejlc3, COURT STAFF) (Filed on 8/5/2016) (Entered: 08/05/2016)	Case 3:15-cv-01129-HSG Document 166 Filed 08/05/16 Page 1 of 9 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) DISCOVERY ORDER Dkt. Nos. 158, 161, 165 INTRODUCTION Over eight days, Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) filed four joint discovery dispute letters. See Dkt. Nos. 152, 155, 158, 161. Pursuant to the Court’s July 20, 2015 Order (Dkt. No. 160), the parties met and conferred on those disputes at the courthouse on July 25, 2016. The parties successfully resolved two of their disputes, see Dkt. No. 164, and the Court held a hearing on the other disputes. Two days later, the parties filed a fifth discovery dispute letter, the subject of which the parties raised at the July 25 hearing. RIO Ltr., Dkt. No. 165. This Order considers the parties’ three remaining discovery disputes regarding (1) the deposition of Michael Ostheimer (Ostheimer Ltr., Dkt. No. 158); (2) the deposition of Takehiko (“Ted”) Suzuki (Suzuki Ltr., Dkt. No. 161); and (3) the scope of DIRECTV’s RIO1 production (RIO Ltr., Dkt. No. 165). LEGAL STANDARD Federal Rule of Civil Procedure (“Rule”) 26 provides that a party may obtain discovery “regarding any nonprivileged matter that is relevant to any party’s claim or defense and 1 RIO is DIRECTV’s customer notes system which contains entries that record consumer complaints. Dkt. No. 127 at 1. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 166 Filed 08/05/16 Page 2 of 9 proportional to the needs of the case[.]” Fed. R. Civ. P. 26(b)(1). Factors to consider include “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id. Discovery need not be admissible in evidence to be discoverable. Id. However, “[t]he parties and the court have a collective responsibility to consider the proportionality of all discovery and consider it in resolving discovery disputes.” Fed. R. Civ. P. 26 advisory committee’s note to 2015 amendment. Thus, there is “a shared responsibility on all the parties to consider the factors bearing on proportionality before propounding discovery requests, issuing responses and objections, or raising discovery disputes before the courts.” Salazar v. McDonald’s Corp., 2016 WL 736213, at 2 (N.D. Cal. Feb. 25, 2016); Goes Int’l, AB v. Dodur Ltd., 2016 WL 427369, at 4 (N.D. Cal. Feb. 4, 2016) (citing advisory committee notes for proposition that parties share a “collective responsibility” to consider proportionality and requiring that “[b]oth parties . . . tailor their efforts to the needs of th[e] case”). Rule 26(c) “confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required.” Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). “The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense,” including by (1) prohibiting disclosure or discovery; (2) conditioning disclosure or discovery on specified terms; (3) preventing inquiry into certain matters; or (4) limiting the scope of disclosure or discovery to certain matters. Fed. R. Civ. P. 26(c)(1). DISCUSSION A. Ostheimer Deposition On June 22, 2015, DIRECTV served the FTC with a Rule 30(b)(6) Notice of Deposition, which included Topic No. 3: “The results of any and all research, surveys, or tests conducted by the FTC concerning DIRECTV’S advertising that the FTC contends has been or is deceptive.” Ostheimer Ltr. at 2. On December 3, 2015, the Court granted DIRECTV’s request to compel further responses to Topic No. 3, finding DIRECTV sought discoverable factual information (Dec. 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 166 Filed 08/05/16 Page 3 of 9 3 Order at 8, Dkt. No. 81), and on June 9, 2016, DIRECTV deposed Michael Ostheimer, a staff attorney at the FTC and the FTC’s 30(b)(6) designee. Ostheimer Ltr. at 1; see also id., Ex. B (“Ostheimer Tr.”) at 5:24-6:2. DIRECTV argues the FTC continues to withhold basic facts about its investigations and the factual support for its claims. Ostheimer Ltr. at 1. Specifically, DIRECTV asserts the FTC has refused to reveal (1) the existence of any studies, surveys, or research conducted by the FTC on DIRECTV’s ads that pre-date the filing of this lawsuit; (2) who at the FTC first performed “facial analyses” of DIRECTV’s ads and when those analyses occurred; (3) all factual bases for the FTC’s allegation that DIRECTV’s ads were likely to deceive reasonable consumers; and (4) other than the ads, what DIRECTV documents support the FTC’s claims. Id. In response, the FTC contends Mr. Ostheimer in fact provided responsive testimony to DIRECTV’s questions and did not do so only when such testimony was subject to “proper privilege objections.” Id. at 3. Factual questions as to “whether there has been any fact gathering; who did it; when it was done; where it is reported, if at all; how it was conducted; what inquiry was made and of whom; why the inquiry has taken so long; and the like,” Ressler v. United States, 2012 WL 3231002, at 3 (D. Colo. Aug. 6, 2012), do not reveal mental impressions or opinions that could be subject to privilege. DIRECTV is entitled to discover those facts. The FTC therefore shall respond to DIRECTV’s factual questions, including factual questions regarding the existence of any pre- lawsuit studies, surveys, or research, and whether the FTC conducted such analyses before filing this action. That the documents themselves may be protected as attorney work product does not preclude DIRECTV from discovering the fact of their existence.2 That said, DIRECTV cannot 2 Similarly, at the hearing, the FTC argued that because the parties previously agreed not to produce any “preliminary work,” it need not produce any studies, surveys, or research conducted prior to the filing of their Complaint. See Jt. Case Mgmt. Stmt., Dkt. No. 33. The Court is unpersuaded. The Joint Case Management Statement provides: [n]o party is required to preserve or produce in discovery . . . notes, drafts, written communications, data formulations or runs, or any database-related operations or other types of preliminary work created by, or for, expert witnesses or their staff; however, the protections against discovery contained in this paragraph shall not apply to any information or materials covered by Fed. R. Civ. P. 26(b)(4)(C)(i)-(iii). 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 166 Filed 08/05/16 Page 4 of 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 inquire as to what facts the FTC Commissioners or other individuals considered or evaluated when deciding to initiate this action, as this would impermissibly reveal their evaluations of those materials. See In re Gen. Motors LLC Ignition Switch Litig., 2015 WL 4750774, at 2 (S.D.N.Y. Aug. 11, 2015) (“[T]o the extent that Plaintiffs intend to ask whether [the investigator] considered certain documents or facts in preparing the Report, those questions would invariably reveal [the investigator’s] mental impressions and personal beliefs and therefore run afoul of the work product doctrine.” (internal quotations and citations omitted)). DIRECTV requests the Court order the FTC to fully answer the questions listed in Exhibit A, which includes excerpts of the Ostheimer Deposition transcript (see Ostheimer Ltr. at 3 and Ex. A), but the Court finds that not all of the sought-after information in those questions is discoverable. By way of example, questions in Exhibit A such as those appearing at page/line 18:19-23 (“what facts the commissioners considered in determining . . .”) and 28:18-29:22 (“what facts did the commissioners consider in voting . . .”) seek undiscoverable material, whereas questions such as those appearing at page/line 59:4-6 (“Did the Commission have any consumer surveys available to it when it made its decision . . .”), and 136:3-7 (“In support of its allegation of consumer deception, does the FTC have any facts which show the percentage of consumers who view the TV ad who actually don’t know that there’s a 2-year commitment?”) properly seek factual information about the existence of any pre-Complaint surveys, studies, or research and the factual support for the FTC’s claims. Accordingly, while the Court does not grant DIRECTV’s request to order the FTC to fully answer all the questions listed in Exhibit A, DIRECTV may, in accordance with this Order, conduct a further three-hour deposition of the FTC’s Rule 30(b)(6) witness regarding the factual information about the FTC’s investigations and the factual support for its claims. Finally, the Court is aware of the parties’ agreement limiting the need to provide a Id. at 16-17. This does not, however, preclude the FTC from disclosing the existence of any pre- Complaint surveys, studies, or research. DIRECTV is not asking the FTC to produce the documents themselves. As such, the parties’ prior discovery agreement does not preclude the FTC from responding to DIRECTV’s questions regarding the existence of any pre-Complaint surveys, studies, or research. 4 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 166 Filed 08/05/16 Page 5 of 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 privilege log. Should the FTC continue to withhold factual information on the basis that the information is privileged or protected as attorney work product, the Court nonetheless will order the FTC to provide a privilege log with respect to the withheld information and require the FTC to identify the basis for its claim(s) of privilege. B. Suzuki Deposition The FTC seeks to depose Mr. Suzuki relating to DIRECTV’s affirmative defenses of laches, estoppel, and waiver based on the FTC’s decision not to join a Multistate Agreement (“MSA”) between DIRECTV, all 50 states, and the District of Columbia. Suzuki Ltr. at 1. DIRECTV claims it was prejudiced by the FTC’s failure to object to the MSA and by the FTC allowing DIRECTV to enact an MSA-based national compliance program. Id. The FTC thus seeks to determine whether DIRECTV in fact complied with the MSA, as its “failure to do so would moot DIRECTV’s affirmative defenses.” Id. For that reason, the FTC requests to depose Mr. Suzuki, DIRECTV’s in-house counsel who developed and oversaw DIRECTV’s MSA compliance program. Id. DIRECTV contends the information sought from Mr. Suzuki is privileged, and the factors set forth in Shelton v. American Motor Corporation, 805 F.2d 1323 (8th Cir. 1986), preclude the FTC from deposing Mr. Suzuki. Suzuki Ltr. at 5. DIRECTV instead offers to substitute Brad Bentley, a marketing executive, for Mr. Suzuki—an offer the FTC rejects. Id. at 1. The Federal Rules of Civil Procedure do not expressly prohibit taking the deposition of opposing counsel. See Fed. R. Civ. P. 30(a)(1) (“A party may . . . depose any person[.]”). Nevertheless, “[t]he practice of forcing trial counsel to testify as a witness . . . has long been discouraged.” Shelton, 805 F.2d at 1327. The Eighth Circuit, “recogniz[ing] that circumstances may arise in which the court should order the taking of opposing counsel’s deposition[,]” limited those circumstances “to where the party seeking to take the deposition has shown that (1) no other means exist to obtain the information than to depose opposing counsel; (2) the information sought is relevant and nonprivileged; and (3) the information is crucial to the preparation of the case.” Id. While the Ninth Circuit has not published a decision addressing the circumstances when a party may depose opposing counsel, courts in this district have followed Shelton. See, e.g., ATS Prods., 5 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 166 Filed 08/05/16 Page 6 of 9 Inc. v. Champion Fiberglass, Inc., 2015 WL 3561611, at 3 n.5 (N.D. Cal. June 8, 2015) (citing cases). The parties dispute the applicability of Shelton to this case.3 Suzuki Ltr. at 2, 5. Arguing Shelton does not apply, the FTC notes Mr. Suzuki “has not entered an appearance, taken a deposition, signed discovery responses or in any other way acted as such.” Id. at 2. DIRECTV admits Mr. Suzuki has not done those things but argues he has still worked on this case and therefore Shelton applies. Id. at 5. Courts have held that Shelton does not apply to all circumstances where a party seeks to depose opposing counsel. See Pamida, Inc. v. E.S. Originals, Inc., 281 F.3d 726, 730 (8th Cir. 2002) (“Shelton was not intended to provide heightened protection to attorneys who represented a client in a completed case and then also happened to represent that same client in a pending case where the information known only by the attorneys regarding the prior concluded case was crucial.”). The problem is that the precise nature and extent of Mr. Suzuki’s involvement in this case is unclear; DIRECTV did not elaborate on what exactly Mr. Suzuki has done. As the FTC points out, some courts have declined to apply Shelton to situations where the attorney sought to be deposed is not trial counsel or does not directly represent the party in the pending litigation. See Suzuki Ltr. at 2 (citing Luster v. Schafer, 2009 WL 2219255, at 2-3 (D. Colo. July 23, 2009) (holding Shelton does not apply to proposed attorney-deponent who represented defendant during administrative proceeding but not during instant litigation)); ATS Prods., 2015 WL 3561611, at 3 (declining to apply Shelton where “the subject matter of the deposition of opposing counsel [was] not his conduct in the pending case but his percipient knowledge of the events surrounding a prior concluded litigation”); United States v. Philip Morris Inc., 209 F.R.D. 13, 18 (D.D.C. 2002) (holding Shelton factors did not apply where, “unlike Shelton, the proposed deponents . . . [were] not litigation or trial counsel”). 3 The parties also dispute whether there was an agreement regarding the FTC’s waiver of its right to depose Mr. Suzuki. The Court does not address the existence or enforceability of such an agreement. 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 166 Filed 08/05/16 Page 7 of 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 It is undisputed that Mr. Suzuki has not formally appeared in this matter. But because the Court cannot ascertain the extent of Mr. Suzuki’s involvement in this case, the Court does not resolve Shelton’s applicability. The Court is instead guided by Rule 26(b)(2)(C), which requires courts to “limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that . . . the discovery sought . . . can be obtained from some other source that is more convenient, less burdensome, or less expensive[.]” Fed. R. Civ. P. 26(b)(2)(C). The Court finds there are ways the FTC can obtain the information it seeks without deposing Mr. Suzuki, specifically, by deposing a Rule 30(b)(6) designee. Pursuant to Rule 30(a)(1), “[a] party may, by oral questions, depose any person, including a party without leave of court except as provided in Rule 30(a)(2).” Fed. R. Civ. P. 30(a)(1). “[A] party may name as the deponent a public or private corporation, a partnership, an association, a governmental agency, or other entity and must describe with reasonable particularity the matters for examination.” Fed. R. Civ. P. 30(b)(6). That “organization must then designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf; and it may set out the matters on which each person designated will testify.” Id. A Rule 30(b)(6) designee “must testify about information known or reasonably available to the organization.” Id. The organization “has an affirmative duty to educate and prepare the designated representative for the deposition.” S. Cal. Stroke Rehab. Assocs., Inc.v. Nautilus, 2010 WL 2998839, at 1 (S.D. Cal. July 29, 2010). While Mr. Suzuki likely possesses relevant knowledge as to DIRECTV’s MSA compliance program, so would a Rule 30(b)(6) designee. Indeed, a Rule 30(b)(6) witness is not required to possess personal knowledge of the facts. La. Pac. Corp. v. Money Mkt. 1 Institutional Inv. Dealer, 285 F.R.D. 481, 486 (N.D. Cal. 2012). Instead, “[t]he designee may become educated by reasonably obtaining information from documents, past employees, or other sources.” Id. The FTC seeks factual information about DIRECTV’s MSA compliance program. Suzuki Ltr. at 2. DIRECTV can ensure any Rule 30(b)(6) designee is sufficiently informed to answer the FTC’s questions on its behalf. See Century 21 Real Estate, LLC v. All Prof’l Realty, Inc., 2012 WL 2116409, at *2 (E.D. Cal. June 6, 2012) (“By commissioning the designee as the voice of 7 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 166 Filed 08/05/16 Page 8 of 9 the corporation, the Rule obligates a corporate party to prepare its designee to be able to give binding answers in its behalf.” (quotations omitted)). Accordingly, while the Court will not compel Mr. Suzuki’s deposition, it will allow the FTC to depose a Rule 30(b)(6) designee to testify as to DIRECTV’s MSA compliance program. No later than 4:00 p.m. on August 9, 2016, the FTC shall serve on DIRECTV a list of topics it intends to cover at the deposition regarding the MSA compliance program to enable DIRECTV to identify and prepare an appropriate Rule 30(b)(6) witness. The FTC also should highlight those questions it asked during the earlier Rule 30(b)(6) deposition that the FTC contends were not answered appropriately. No later than 4:00 p.m. on August 11, 2016, the parties shall meet and confer to schedule a date for the 30(b)(6) deposition. The 30(b)(6) deposition shall last no more than three hours. C. The RIO Algorithm The parties’ final dispute concerns DIRECTV’s text-mining algorithm. The Court previously ordered DIRECTV to produce a sample of RIO files. RIO Order at 1-2, Dkt. No. 131. During a post-production deposition of DIRECTV’s designated witness on RIO, the FTC learned there were significant “shortfalls” with the produced RIO files. RIO Ltr. at 1. In particular, DIRECTV did not produce the source code for an algorithm which shows how DIRECTV coded certain fields in the RIO files.4 Id. DIRECTV in fact has used two algorithms: it used one algorithm until 2014, and has used another since 2014. Id. At the hearing, the FTC stated it is more concerned with obtaining the more recent algorithm, the one used from 2014 to today. The FTC contends it needs the algorithm to “efficiently review and interpret the produced RIO sample files” and so it can determine whether its analysis of the RIO files differs from DIRECTV’s. Id. DIRECTV, however, argues (1) the FTC does not need the algorithm, as it has the algorithm’s results; (2) the FTC cannot use the algorithm to generate admissible analyses of the produced RIO notes; (3) DIRECTV will not use the algorithm in this case on account of high error rates associated with algorithms and its inapplicability to the issues; and (4) the FTC will use the source 4 During the July 25 meet-and-confer, DIRECTV agreed to produce the other missing parts of the produced RIO samples. RIO Ltr. at 1. 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 166 Filed 08/05/16 Page 9 of 9 code to obtain more discovery by making further requests as to its function. Id. at 1-2. The FTC’s possession of the algorithm’s results does not foreclose its ability to seek the algorithm itself, particularly given that the algorithm will aid it in reviewing the RIO files and DIRECTV has not otherwise shown its production to be unduly burdensome. See Campbell v. Facebook Inc., 310 F.R.D. 439, 444-46 (N.D. Cal. 2015) (ordering production of information to help plaintiff analyze already-produced source code where such production would be minimally burdensome to producing party). DIRECTV’s own planned use of the algorithm is irrelevant; moreover, DIRECTV can argue as to the algorithm’s accuracy and admissibility should the FTC attempt to introduce it at trial. The Court thus orders DIRECTV to produce the current algorithm, subject to the parties’ protective order (see Dkt. No. 54). In light of the foregoing, the Court ORDERS the following: CONCLUSION 1. DIRECTV’s request to compel further responses to Topic No. 3 is GRANTED IN PART. DIRECTV may conduct a three-hour deposition of the FTC’s Rule 30(b)(6) witness based on the parameters articulated in this Order. 2. The FTC’s request to specifically compel Takehiko Suzuki’s deposition is DENIED. Instead, the FTC may depose a Rule 30(b)(6) designee for DIRECTV for three hours to answer questions regarding DIRECTV’s MSA compliance program. 3. The FTC’s request to compel production of the algorithm is GRANTED subject to the parties’ protective order. IT IS SO ORDERED. Dated: August 5, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-09-15	167	Stipulated Motion for Administrative Relief Seeking Permission to File Summary Judgment Briefing of up to 30 Pages filed by Federal Trade Commission. Responses due by 9/19/2016. (Attachments: # 1 Proposed Order)(Edmondson, Eric) (Filed on 9/15/2016) Modified on 9/16/2016 (pdy, COURT STAFF). (Entered: 09/15/2016)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 167 Filed 09/15/16 Page 1 of 2 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG STIPULATED MOTION FOR ADMINISTRATIVE RELIEF SEEKING PERMISSION TO FILE SUMMARY JUDGMENT BRIEFING OF UP TO 30 PAGES Date: October 27, 2016 Time: 2:00 p.m. Judge: Hon. Haywood S. Gilliam, Jr. Location: San Francisco Courthouse Courtroom 10 – 19th Floor Pursuant to Local Civil Rule 7-11, the Federal Trade Commission (“FTC”) respectfully seeks the Court’s permission to file a brief of up to 30 pages in support of its forthcoming motion for summary judgment, and for Defendants (“DIRECTV”) to have a corresponding page limit of 30 pages for its opposition brief. The FTC plans for its summary judgment motion to address its claims under the Restore Online Shoppers’ Confidence Act, 15 U.S.C. § 8401 et seq. (Counts III and IV), as well as STIP. MTN. FOR ADMINISTRATIVE RELIEF RE. SUMMARY JUDGMENT BRIEF LENGTH Case No. 15-cv-01129-HSG Case 3:15-cv-01129-HSG Document 167 Filed 09/15/16 Page 2 of 2 DIRECTV’s Affirmative Defenses of laches, estoppel, and waiver. The FTC seeks five extra pages to adequately address these two sets of issues. DIRECTV stipulates to this motion. Dated: September 15, 2016 Respectfully Submitted, /s/ Eric D. Edmondson Eric D. Edmondson Attorney for Plaintiff Federal Trade Commission STIP. MTN. FOR ADMINISTRATIVE RELIEF RE. SUMMARY JUDGMENT BRIEF LENGTH Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-09-16	168	Order by Hon. Haywood S. Gilliam, Jr. denying 167 Administrative Motion.(This is a text-only entry; there is no document associated with this entry.) (hsglc3S, COURT STAFF) (Filed on 9/16/2016) (Entered: 09/16/2016)
2016-09-19	169	MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 305, receipt number 0971-10780828.) filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Appendix Certificate of Good Standing)(Mundel, Benjamin) (Filed on 9/19/2016) (Entered: 09/19/2016)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 169 Filed 09/19/16 Page 1 of 1 Reset Form UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA Federal Trade Comission v. DIRECTV, et al. Plaintiff(s), Defendant(s). 3:15-cv-01129 Case No: _______________ APPLICATION FOR ADMISSION OF ATTORNEY PRO HAC VICE (CIVIL LOCAL RULE 11-3) ) ) ) ) ) ) ) ) ) ) Benjamin M Mundel I, , hereby respectfully apply for admission to practice pro hac vice in the , an active member in good standing of the bar of DIRECTV and DIRECTV, LLC the District of Columbia Northern District of California representing: above-entitled action. My local co-counsel in this case is __________________________________, an attorney who is a member of the bar of this Court in good standing and who maintains an office within the State of California. MY ADDRESS OF RECORD: Sidley Austin LLP 1501 K ST NW, Washington DC 20001 MY TELEPHONE # OF RECORD: (202) 736-8157 MY EMAIL ADDRESS OF RECORD: [email protected] LOCAL CO-COUNSEL’S ADDRESS OF RECORD: Sidley Austin LLP 555 California St. San Franciso, CA 94104 LOCAL CO-COUNSEL’S TELEPHONE # OF RECORD: (415) 772-1219 LOCAL CO-COUNSEL’S EMAIL ADDRESS OF RECORD: [email protected] Ryan Sandrock in the I am an active member in good standing of a United States Court or of the highest court of another State or the District of Columbia, as indicated above; my bar number is: 1018144 . A true and correct copy of a certificate of good standing or equivalent official document from said bar is attached to this application. I agree to familiarize myself with, and abide by, the Local Rules of this Court, especially the Standards of Professional Conduct for attorneys and the Alternative Dispute Resolution Local Rules. I declare under penalty of perjury that the foregoing is true and correct. 09/19/16 Dated: Benjamin M Mundel APPLICANT ORDER GRANTING APPLICATION FOR ADMISSION OF ATTORNEY PRO HAC VICE Benjamin M Mundel IT IS HEREBY ORDERED THAT the application of is granted, subject to the terms and conditions of Civil L.R. 11-3. All papers filed by the attorney must indicate appearance pro hac vice. Service of papers upon, and communication with, local co-counsel designated in the application will constitute notice to the party. Dated: UNITED STATES DISTRICT/MAGISTRATE JUDGE PRO HAC VICE APPLICATION & ORDER October 2012
2016-09-20	170	NOTICE of Appearance by Emily Cope Burton (Burton, Emily) (Filed on 9/20/2016) (Entered: 09/20/2016)	Case 3:15-cv-01129-HSG Document 170 Filed 09/20/16 Page 1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. NOTICE OF APPEARANCE OF EMILY COPE BURTON AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. /// /// /// /// /// NOTICE OF APPEARANCE Case 3:15-cv-01129-HSG Document 170 Filed 09/20/16 Page 2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, EMILY COPE BURTON, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of California and am admitted to practice in the Northern District of California. My address, telephone number, and email address are as follows: Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: September 20, 2016 /s/ Emily Cope Burton Emily Cope Burton Attorney Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE PAGE 2
2016-09-21	171	NOTICE of Appearance by Evan Rose (Rose, Evan) (Filed on 9/21/2016) (Entered: 09/21/2016)	Case 3:15-cv-01129-HSG Document 171 Filed 09/21/16 Page 1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG NOTICE OF APPEARANCE OF EVAN ROSE AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. /// /// /// /// /// Notice of Appearance Case No. 15-cv-01129-HSG Case 3:15-cv-01129-HSG Document 171 Filed 09/21/16 Page 2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, EVAN ROSE, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of California and am admitted to practice in the Northern District of California. My address, telephone number, and email address are as follows: Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: September 21, 2016 /s/ Evan Rose Evan Rose Attorney Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Notice of Appearance Case No. 15-cv-01129-HSG Page 2
2016-09-21	172	NOTICE of Appearance by Lin Wang Kahn (Kahn, Lin) (Filed on 9/21/2016) (Entered: 09/21/2016)	Case 3:15-cv-01129-HSG Document 172 Filed 09/21/16 Page 1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Case No. 15-cv-01129-HSG NOTICE OF APPEARANCE OF LIN KAHN AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION Defendants. /// /// /// /// /// Notice of Appearance Case No. 15-cv-01129-HSG Case 3:15-cv-01129-HSG Document 172 Filed 09/21/16 Page 2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, LIN KAHN, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of California and am admitted to practice in the Northern District of California. My address, telephone number, and email address are as follows: Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: September 21, 2016 /s/ Lin Kahn Lin Kahn Attorney Federal Trade Commission Notice of Appearance Case No. 15-cv-01129-HSG Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-09-21	173	NOTICE of Appearance by Faye Chen Barnouw (Barnouw, Faye) (Filed on 9/21/2016) (Entered: 09/21/2016)	Case 3:15-cv-01129-HSG Document 173 Filed 09/21/16 Page 1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129-HSG NOTICE OF APPEARANCE OF FAYE CHEN BARNOUW AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. /// /// /// /// /// NOTICE OF APPEARANCE Case 3:15-cv-01129-HSG Document 173 Filed 09/21/16 Page 2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, Faye Chen Barnouw, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff Federal Trade Commission in this matter. I am a member of the State Bar of California and am employed by the United States government. My address, telephone number, fax number, and email address are as follows: Federal Trade Commission 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 Phone: (310) 824-4343 Fax: (310) 824-4380 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: September 21, 2016 /s/ Faye Chen Barnouw Faye Chen Barnouw Attorney Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF APPEARANCE PAGE 2
2016-09-21	174	NOTICE of Appearance by Matthew David Gold (Gold, Matthew) (Filed on 9/21/2016) (Entered: 09/21/2016)	Case 3:15-cv-01129-HSG Document 174 Filed 09/21/16 Page 1 of 2 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG NOTICE OF APPEARANCE OF MATTHEW D. GOLD AS COUNSEL FOR PLAINTIFF FEDERAL TRADE COMMISSION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. /// /// /// /// /// Notice of Appearance Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 174 Filed 09/21/16 Page 2 of 2 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: I, MATTHEW D. GOLD, of the Federal Trade Commission, hereby enter my appearance as counsel for Plaintiff FEDERAL TRADE COMMISSION in this matter. I am a member of the State Bar of New York and am employed by the United States government. My address, telephone number, and email address are as follows: Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: (415) 848-5100 Fax: (415) 848-5184 Email: [email protected] Please serve said counsel with all pleadings and notices in this action. DATED: September 21, 2016 /s/ Matthew D. Gold Matthew D. Gold Attorney Federal Trade Commission Notice of Appearance Case No. 15-cv-01129-HSG Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-09-22	175	ORDER by Judge Haywood S. Gilliam, Jr. Granting 169 Motion for Pro Hac Vice as to Benjamin M. Mundel. (ndr, COURT STAFF) (Filed on 9/22/2016) (Entered: 09/22/2016)	1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 175 Filed 09/22/16 Page 1 of 2 Reset Form UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA Federal Trade Comission v. DIRECTV, et al. Plaintiff(s), Defendant(s). 3:15-cv-01129 Case No: _______________ APPLICATION FOR ADMISSION OF ATTORNEY PRO HAC VICE (CIVIL LOCAL RULE 11-3) ) ) ) ) ) ) ) ) ) ) Benjamin M Mundel I, , hereby respectfully apply for admission to practice pro hac vice in the , an active member in good standing of the bar of DIRECTV and DIRECTV, LLC the District of Columbia Northern District of California representing: above-entitled action. My local co-counsel in this case is __________________________________, an attorney who is a member of the bar of this Court in good standing and who maintains an office within the State of California. MY ADDRESS OF RECORD: Sidley Austin LLP 1501 K ST NW, Washington DC 20001 MY TELEPHONE # OF RECORD: (202) 736-8157 MY EMAIL ADDRESS OF RECORD: [email protected] LOCAL CO-COUNSEL’S ADDRESS OF RECORD: Sidley Austin LLP 555 California St. San Franciso, CA 94104 LOCAL CO-COUNSEL’S TELEPHONE # OF RECORD: (415) 772-1219 LOCAL CO-COUNSEL’S EMAIL ADDRESS OF RECORD: [email protected] Ryan Sandrock in the I am an active member in good standing of a United States Court or of the highest court of another State or the District of Columbia, as indicated above; my bar number is: 1018144 . A true and correct copy of a certificate of good standing or equivalent official document from said bar is attached to this application. I agree to familiarize myself with, and abide by, the Local Rules of this Court, especially the Standards of Professional Conduct for attorneys and the Alternative Dispute Resolution Local Rules. I declare under penalty of perjury that the foregoing is true and correct. 09/19/16 Dated: Benjamin M Mundel APPLICANT ORDER GRANTING APPLICATION FOR ADMISSION OF ATTORNEY PRO HAC VICE Benjamin M Mundel IT IS HEREBY ORDERED THAT the application of is granted, subject to the terms and conditions of Civil L.R. 11-3. All papers filed by the attorney must indicate appearance pro hac vice. Service of papers upon, and communication with, local co-counsel designated in the application will constitute notice to the party. Dated: UNITED STATES DISTRICT/MAGISTRATE JUDGE PRO HAC VICE APPLICATION & ORDER October 2012 9/22/2016Case 3:14-cv-04601-WHO Document 100-1 Filed 02/25/16 Page 1 of 1 Case 3:15-cv-01129-HSG Document 175 Filed 09/22/16 Page 2 of 2
2016-09-22	176	MOTION for Partial Summary Judgment; Memorandum of Points and Authorities in Support Thereof filed by Federal Trade Commission. Motion Hearing set for 10/27/2016 02:00 PM in Courtroom 10, 19th Floor, San Francisco before Hon. Haywood S Gilliam Jr.. Responses due by 10/6/2016. Replies due by 10/13/2016. (Attachments: # 1 Proposed Order Granting FTC's Motion for Partial Summary Judgment, # 2 Declaration Declaration of Ann Stahl In Support Of FTC's Motion for Partial Summary Judgment, # 3 Exhibit Manual Filing Notification - Exhibits A-D Of Declaration Of Ann Stahl, # 4 Declaration Declaration Of David S. Gonzalez In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 5 Exhibit Manual Filing Notification - Exhibit A Of Declaration Of David Gonzales, # 6 Declaration Declaration Of Tom Syta In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 7 Exhibit Exhibit A To The Declaration Of Tom Syta In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 8 Exhibit Exhibit B Of Declaration Of Tom Syta In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 9 Declaration Declaration Of Kelly Ortiz In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 10 Exhibit Exhibits A-K Of Declaration Of Kelly Ortiz In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 11 Exhibit Exhibits L-AA Of Declaration Of Kelly Ortiz In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 12 Exhibit Exhibits BB-FF Of Declaration Of Kelly Ortiz In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 13 Exhibit Exhibits GG-II Of Declaration Of Kelly Ortiz In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 14 Declaration Declaration Of Dr. Nathaniel Good In Support Of Federal Trade Commissions Motion For Partial Summary Judgment, # 15 Exhibit Exhibit A Of Declaration Of Dr. Nathaniel Good In Support Of Federal Trade Commissions Motion For Partial Summary Judgment)(Snow, Jacob) (Filed on 9/22/2016) Modified on 9/23/2016 (ysS, COURT STAFF). (Entered: 09/22/2016)	Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 1 of 29 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, CASE NO. 15-cv-01129-HSG Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT BY THE FEDERAL TRADE COMMISSION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: October 27, 2016 Time: 2:00 p.m. Judge: Hon. Haywood S. Gilliam, Jr. Location: San Francisco Courthouse Courtroom 10, 19th Floor CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 2 of 29 TABLE OF CONTENTS NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT ................. 1 MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 1 I. II. III. INTRODUCTION .............................................................................................................. 1 Statement of issues to be decided ....................................................................................... 2 THE UNDISPUTED MATERIAL FACTs ........................................................................ 2 IV. ARGUMENT...................................................................................................................... 8 1. The Court can resolve the alleged violations of ROSCA’s clear and conspicuous and express informed consent provisions based on a facial assessment of DIRECTV’s website. ............................................................................................ 10 2. The undisputed material facts demonstrate that DIRECTV has not clearly and conspicuously disclosed the material terms of its premium channel negative option. ................................................................................................................... 11 3. The undisputed material facts demonstrate that DIRECTV has not obtained consumers’ express informed consent to the material terms of its “free” premium channel negative option. ....................................................................................... 16 The FTC conducted its own independent investigation of DIRECTV................. 17 The undisputed facts disprove DIRECTV’s theory underpinning its estoppel, laches, and waiver defenses. ................................................................................. 18 The undisputed material facts establish that DIRECTV cannot prevail on its estoppel defense.................................................................................................... 20 The undisputed material facts establish that DIRECTV cannot prevail on its laches defense. ...................................................................................................... 23 The undisputed material facts establish that DIRECTV cannot prevail on its waiver defense. ..................................................................................................... 24 1. 2. 3. 4. 5. V. CONCLUSION................................................................................................................. 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT i Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 3 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES CASES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)................................................................... 9 Alocozy v. U.S. Citizenship & Immigration Servs., 704 F.3d 795, 797 (9th Cir. 2012) ............... 24 Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337 (9th Cir. 1995) ................ 20 Arizona v. Tohono O'odham Nation, 818 F.3d 549 (9th Cir. 2016) ............................................. 25 Baccei v. United States, 632 F.3d 1140 (9th Cir. 2011) ............................................................... 21 Cadwalader v. United States, 45 F.3d 297 (9th Cir. 1995) .......................................................... 22 Chamlikyan v. Bardini, No. 10-cv-00268, 2010 WL 5141841 (N.D. Cal. Dec. 13, 2010) .......... 23 Evergreen Safety Council v. RSA Network Inc., 697 F.3d 1221, (9th Cir. 2012)......................... 23 FTC v. AMG Servs., 29 F. Supp. 3d 1338 (D. Nev. 2014) ........................................................... 12 FTC v. Cyberspace.com, 453 F.3d 1196 (9th Cir. 2006).............................................................. 11 FTC v. EDebitPay, LLC, 695 F.3d 938 (9th Cir. 2012)................................................................ 11 FTC v. Health Formulas, LLC, 2015 WL 2130504 (D. Nev. May 6, 2015) .......................... 15, 17 FTC v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012)................ 10, 17 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ............................................................................... 9 FTC v. Medlab, Inc., 615 F. Supp. 2d 1068 (N.D. Cal. 2009)...................................................... 10 Gonzales-Rios v. Holder, 361 F.Appx. 833 (9th Cir. 2010) ......................................................... 23 Hooks v. NLRB, 72 F. Supp. 3d 1168 (D. Or . 2014).................................................................... 24 Krouch v. Wal-Mart Stores, Inc., No. 12-cv-02217, 2014 WL 5463333 (N.D. Cal. Oct. 28, 2014) ................................................................................................................................................... 20 Nelson v. Pima Cmty. Coll., 83 F.3d 1075 (9th Cir. 1996)............................................................. 9 Soremekun v. Thrifty Payless, Inc., 509 F.3d 978 (9th Cir. 2007).................................................. 9 U.S. v. Ruby Company, 588 F.2d 697 (9th Cir. 1978) .................................................................. 23 United States v. Cherokee Nation of Oklahoma, 480 U.S. 700 (1987)......................................... 24 United States v. Kim, 806 F.3d 1161 (9th Cir. 2015).................................................................... 23 United States v. Philip Morris Inc., 300 F. Supp. 2d 61 (D.D.C. 2004)................................. 22, 25 United States v. Ruby Co., 588 F.2d 697 (9th Cir. 1978) ............................................................. 21 CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 4 of 29 Watkins v. U.S. Army, 875 F.2d 699 (9th Cir. 1989) .................................................................... 21 STATUTES 15 U.S.C. § 8401............................................................................................................................. 9 15 U.S.C. § 8403................................................................................................................... 1, 9, 10 15 U.S.C. § 8404............................................................................................................................. 9 REGULATIONS 16 C.F.R. § 310.2.......................................................................................................................... 10 RULES Fed. R. Civ. P. 56............................................................................................................................ 9 OTHER BLACK’S LAW DICTIONARY (10th ed. 2014)................................................................................. 17 CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT iii Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 5 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 6 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Friedman (who is also counsel of record in this case). His testimony undermines these defenses. Moreover, the objective, uncontroverted evidence shows that DIRECTV knew that the FTC was proceeding with its own investigation independent of DIRECTV’s prior settlements with 50 states and the District of Columbia (collectively, “the States”). DIRECTV remained well aware of the scope and active status of the FTC’s investigation. Finally, the undisputed evidence shows that it was DIRECTV’s own delays in complying with the Commission’s investigation discovery, and the extensive settlement negotiations between the parties, that were largely responsible for the duration of the FTC’s investigation. II. STATEMENT OF ISSUES TO BE DECIDED Issue 1: Do the uncontroverted material facts establish that DIRECTV’s website has not disclosed the material terms of its premium channel negative option clearly and conspicuously, and failed to obtain consumers’ express informed consent to those terms? Issue 2: Do the uncontroverted material facts establish that DIRECTV’s affirmative defenses of estoppel, laches, or waiver are without merit? III. THE UNDISPUTED MATERIAL FACTS DIRECTV is the largest provider of direct-to-home digital television service in the United States. (2nd Am. Answer (Dkt. 93) (“2nd Ans.”) ¶ 10.) DIRECTV offers its service to consumers by subscription, which consists of television programming, necessary equipment, installation, and support services. (Id. ¶ 11.) A. DIRECTV’s promotion and sales of the premium channel negative option. At all times since ROSCA became effective in 2011, DIRECTV has offered new subscribers “free” access to premium channels (e.g., Cinemax, HBO, Showtime, STARZ) for three months. (Id. ¶14; Declaration of Kelly Ortiz, filed herewith, (“Ortiz”) Ex. A at 116:6-11.) DIRECTV has advertised its “free” premium channel promotion on its website, which allows consumers to subscribe to DIRECTV’s services. (2nd Ans. ¶ 23.) This “free” offer comes with a catch: it is a negative option. Unless the consumer affirmatively cancels the premium-channel programming before the end of the three-month promotional period, DIRECTV automatically charges the consumer for the premium channels at CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 2 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 7 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 8 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 9 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 10 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (Id. at 23:56.) In the next step in the purchase process—the Package Selection page—DIRECTV promotes the “FREE” premium channel offer. (Stahl Ex. B at 0:58-1:05; Ex. D at 1:29-1:37.) The page does not disclose the negative option or its terms. Instead, in the prior version of the site, DIRECTV includes the “Additional Offer Details” hyperlink at the very bottom of the page, not near the promotion. (Stahl Ex. D at 4:50.) Clicking that link opens up a popup page that, among approximately 60 lines of text, contains “promotional price period(s)” language similar to that displayed above. (Id. at 4:55-6:18.) In the current version of the site, besides the “Additional Offer Details” link discussed above, any suggestion of a negative option is hidden behind hyperlinks embedded in a select few among the numerous identical symbols scattered throughout the page, many of which are themselves hidden behind embedded hyperlinks. (Gonzalez Ex. A. at 2:36-11:36.) Clicking on one of those select few symbols (located above a “STARZ” channel logo) opens a popup box containing the following text in tiny gray font: “Get the most premium move channels FREE for 3 months as part of our new customer offer. After promotional period ends, you will be charged the price in effect unless you call to cancel.” (Id. at 2:45.) During the next step in the process—the “Add more great programming” page, which exists only in the current version of the website—DIRECTV again promotes the premium channels. (Stahl Ex. B 1:24-1:34.) The page does not disclose the terms of the negative option. (Id.) To learn about the negative option, users would have to click on the nondescript symbol next to a block of dense gray-on-gray text. (Gonzalez Ex. A at 11:53-12:24.) During the next step in the process—the Receiver and Cart pages—DIRECTV similarly hides any suggestion of a negative option behind generically labeled hyperlinks and symbols. Both the old and the new website versions of these pages have the “Additional Offer Details” link buried at the bottom of the page. (Gonzalez Ex. A at 22:01; 22:44, 23:50; Stahl Ex. D at CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 11 of 29 7:38, 12:48.) On the Cart page, both versions use generically labeled symbols. The prior website version used symbols, which act as info-hovers: if a user’s mouse hovers over them on screen, a textbox appears. (Stahl Ex. D at 10:55-13:12.) Most of these symbols reveal simple promotional messaging, such as: “See blockbuster movies, bold original series and exclusive sports on 11 channels, 9 in HD.” (Id. at 11:23.) Only one of sixteen of these symbols on the Cart page uncovers the following textbox: “For a limited time, you get every premium move [sic] channel FREE for 3 months as part of our new customer offer. After promotional period ends, you will be charged the price in effect unless you call to cancel.” (Id. at 11:38.) The current version of the website hides similar text behind some of the numerous identical symbols scattered across the Cart page. (Gonzalez Ex. A at 22:51-23:50.) The prior version of the Cart page also contained a small, generically labeled, gray-font- on-gray-background tab, nowhere near the premium promotional messaging. (Stahl Ex. D at 10:47). The current version contains an analogous hyperlink located in the middle of the Cart page, also not proximate to the premium channel promotional message. (Gonzalez Ex. A at 23:30.) If a consumer would find and click on this tab or link, the website would unveil a complex, multiple-row table that lists various dollar figures in a six- month snapshot across seventeen rows and six columns—displaying nearly 100 cells at a glance. (Stahl Ex. D at 14:11-14:36; Gonzalez Ex. A at 24:29-24:55.) Throughout the last step in the purchase process—the Checkout pages—DIRECTV does not promote the “free” premium channel offer. There is no disclosure about the terms of this negative option promotion on the face of these Checkout pages. (Stahl Ex. B at 2:25-5:10; Ex. C at 0:50-2:10.) The prior version of the website did not even disclose the existence of the negative option or its material terms behind the generic “Terms and Conditions” hyperlinks found on the bottom of the Checkout pages, including the link near the large, orange “I Accept. Submit My Order” button” on the final Checkout page. (Stahl Ex. D at 16:12-16:54, 18:28-18:55.) The Terms and Conditions popup page behind that link did not contain any disclosure about the premium channels until September 2014. (See Ortiz Ex. JJ at 6 (RFA No. 1137).) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 7 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 12 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 13 of 29 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the initial burden of informing the court of the basis of its motion, and “identifying those portions of ‘pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets that initial burden, the burden shifts to the nonmoving party to present evidence showing that disputes about genuine issues of fact remain. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The nonmoving party must “designate ‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 U.S. 317 at 324. “Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). “Likewise, mere allegation and speculation do not create a factual dispute for purposes of summary judgment.” Nelson v. Pima Cmty. Coll., 83 F.3d 1075, 1081-82 (9th Cir. 1996). B. Summary judgment in the FTC’s favor is appropriate on the Complaint’s ROSCA claims (Counts III and IV). Congress enacted ROSCA to curb the pernicious practice of consumer entrapment in unwanted negative options through Internet transactions, and designated the FTC as the statute’s federal law enforcement authority. See 15 U.S.C. §§ 8401(8), 8404. Consequently, Congress mandated that Internet negative option sellers provide clear and conspicuous disclosure and obtain consumers’ express informed consent. 15 U.S.C. § 8403(1), (2); see also Dkt. 74-10 at 7 (Senate Committee on Commerce, Science, and Transportation Chairman concluding that such misconduct must “come[ ] to a complete halt”). Specifically, ROSCA prohibits sellers from charging consumers for goods or services in Internet transactions through a negative option feature, unless the seller “provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information.” 15 U.S.C. § 8403(1). ROSCA also requires sellers to obtain a “consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account, or other financial account . . . .” CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 14 of 29 15 U.S.C. § 8403(2).2 1. The Court can resolve the alleged violations of ROSCA’s clear and conspicuous and express informed consent provisions based on a facial assessment of DIRECTV’s website. Consistent with ROSCA’s mandate to display material terms clearly and conspicuously, it is proper for the Court to decide the clarity or conspicuousness of DIRECTV’s disclosures as a matter of law based on its facial review of the website. Federal courts can, and do, adjudicate FTC Act deception cases based on a facial assessment of disclosures. See FTC v. Medlab, Inc., 615 F. Supp. 2d 1068, 1077-78 (N.D. Cal. 2009) (granting FTC’s summary judgment after conducting a facial analysis to determine that defendants’ disclaimers—presented in “minuscule type at the bottom of the advertisements”—were insufficient to cure the deception). The Court in Medlab expressly rejected the argument that the FTC must present extrinsic evidence beyond what is plainly evident on a facial review. Id. at 1078 (rejecting the need for “consumer survey data in order to prove what is obvious to any rational reader . . . ”). Likewise, courts can and do adjudicate “clear and conspicuous” disclosure mandates similar to ROSCA’s upon a facial review of the underlying dissemination materials. See FTC v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012), aff’d, 644 Fed. Appx. 709 (9th Cir. 2016) (finding on summary judgment that defendants’ disclosures of negative option material terms were not clear and conspicuous, in violation of the Telemarketing Sales Rule (“TSR”), based on a facial review of sales call transcripts). The Court can also make a dispositive ruling on ROSCA’s express informed consent provision based on its facial review of DIRECTV’s website. See id. at 1078 (granting summary judgment on the TSR’s “express informed consent” requirement after determining, based on a facial review, that defendants’ disclosures were inadequate).3 2 A “negative option feature” is defined as “an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(u). DIRECTV does not dispute that ROSCA applies to the negative option offer associated with its sale of the premium channel package over the Internet. (2nd Ans. ¶ 1; see generally DIRECTV MSJ (Dkt. 53).) 3 Like ROSCA as applied to Internet sellers, the TSR prohibits telemarketers from failing to disclose “in a clear and conspicuous manner . . . the material terms and conditions of the negative option feature.” 16 C.F.R. § 310.3(a)(1)(vii). Also like ROSCA, the TSR requires telemarketers to obtain consumers’ “express informed consent” to transactions. 16 C.F.R. § 310.4(a)(7). CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 10 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 15 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 16 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the advertisement overshadow the disclosures. See Johnson, 96 F. Supp. 3d at 1140) (disclosures found inadequate where statements about the “free” and “risk free” nature of the program were more eye-catching); FTC v. AMG Servs., 29 F. Supp. 3d 1338, 1353 (D. Nev. 2014) (hyperlink was inconspicuous where mandatory check boxes would “naturally draw a borrower’s attention” and where hyperlink was “buried in the fourth paragraph and overshadowed by two all caps hyperlinks”). The district court in Commerce Planet, 878 F. Supp. 2d 1048, applied these principles to a website’s disclosures of the terms of a negative option. Conducting a facial review, the court found that making disclosures behind a “Terms of Membership” hyperlink “buried at the bottom” of the webpage, not “in close proximity” to the claim, failed to prompt consumers to notice or open the link. The generic label “Terms of Membership” did not indicate that it had anything to do with a negative option plan. Moreover, the hyperlink sent consumers to a separate popup page and, thus, appeared in a “different context” than the promotional claims the disclosures were supposed to qualify. Finally, the disclosures on this popup page in one version of the website were buried along “with other densely packed information and legalese,” which undercut both conspicuousness and clarity. The Commerce Planet court also found the other fine-print disclosures on the payment page to be inadequate on their face, given their size, color, and placement at the bottom of the page. In sum, the court held that these disclosures by their “placement, wording, colorization, spacing, and size of the text” were “designed not be clear and conspicuous, but rather to mask information about [the defendants’] continuity program without entirely omitting the information.” Id. at 1065-68. Application of these principles shows that DIRECTV has failed to disclose the material terms of its premium channel negative option clearly and conspicuously. DIRECTV’s website does not display the existence of a negative option or its material terms on the face of any webpage in the online purchase process in proximity to the prominent “free” premium channel promotion. Instead, DIRECTV has hidden material terms of the premium channel negative option in three inconspicuous places: (1) behind tiny “Terms & Conditions” and “Additional [Offer] Details” hyperlinks; (2) behind a handful of generically labeled symbols— (prior CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 12 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 17 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 18 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 19 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 20 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 21 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 22 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 23 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 24 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 25 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 26 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 27 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 28 of 29 Case 3:15-cv-01129-HSG Document 176 Filed 09/22/16 Page 29 of 29
2016-09-22	177	Administrative Motion to File Under Seal filed by Federal Trade Commission. (Attachments: # 1 Proposed Order, # 2 Declaration, # 3 Exhibit, # 4 Exhibit, # 5 Exhibit, # 6 Exhibit, # 7 Exhibit, # 8 Exhibit, # 9 Exhibit, # 10 Exhibit, # 11 Exhibit, # 12 Exhibit, # 13 Exhibit, # 14 Exhibit, # 15 Exhibit, # 16 Exhibit, # 17 Exhibit, # 18 Exhibit, # 19 Exhibit, # 20 Exhibit, # 21 Exhibit, # 22 Exhibit, # 23 Exhibit, # 24 Exhibit, # 25 Exhibit, # 26 Exhibit, # 27 Exhibit, # 28 Exhibit, # 29 Exhibit, # 30 Exhibit, # 31 Exhibit, # 32 Exhibit, # 33 Exhibit, # 34 Exhibit, # 35 Exhibit, # 36 Exhibit, # 37 Exhibit, # 38 Exhibit, # 39 Exhibit, # 40 Exhibit, # 41 Exhibit, # 42 Exhibit, # 43 Exhibit, # 44 Exhibit, # 45 Exhibit, # 46 Exhibit, # 47 Exhibit, # 48 Exhibit, # 49 Exhibit, # 50 Exhibit, # 51 Exhibit, # 52 Exhibit, # 53 Exhibit, # 54 Exhibit, # 55 Exhibit, # 56 Exhibit)(Edmondson, Eric) (Filed on 9/22/2016) (Entered: 09/22/2016)	Case 3:15-cv-01129-HSG Document 177 Filed 09/22/16 Page 1 of 5 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL: (1) UNREDACTED VERSION OF THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; AND (2) ORTIZ DECLARATION EXHIBITS DESIGNATED AS CONFIDENTIAL BY DEFENDANT DIRECTV AND NON- PARTY MEDIA & ENTERTAINMENT STRATEGIES, INC. [Local Rules 7-11 and 79-5(d), (e)] [Filed concurrently with the redacted version of the FTC’s Motion for Partial Summary Judgment] FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 177 Filed 09/22/16 Page 2 of 5 Plaintiff Federal Trade Commission (“FTC” or “Submitting Party”) hereby moves the Court to issue an administrative order that authorizes the filing under seal, pursuant to N.D. Cal. Local Rules 7-11 and 79-5(d) and (e), of: (1) the unredacted version of the “Notice of Motion and Motion for Partial Summary Judgment by the Federal Trade Commission; Memorandum of Points and Authorities filed in Support Thereof”; and (2) certain Exhibits attached to the Declaration of Kelly Ortiz in Support of the FTC’s Motion for Partial Summary Judgment. The Memorandum of Points and Authorities filed in Support of the FTC’s Motion for Partial Summary Judgments discusses deposition testimony, deposition exhibits, and other documents (listed below) that Sidley Austin, as counsel for Defendant DIRECTV and/or Non- Party Media & Entertainment Strategies, Inc., has designated as confidential and subject to the Court’s October 15, 2014 Protective Order (Dkt. 54). The materials marked as confidential, and that are at issue here, are:1  Deposition transcripts designated as confidential by Defendant DIRECTV: o Ortiz Exhibit A: Brad Bentley, April 29, 2016 o Ortiz Exhibit B: Audrey Chen, July 15, 2016 o Ortiz Exhibit C: Ellen Filipiak, June 23, 2016 o Ortiz Exhibit D: Clayton Friedman (DIRECTV’s FRCP 30(b)(6) designee), June 17, 2016 o Ortiz Exhibit E: Scott Hause (DIRECTV’s FRCP 30(b)(6) designee), July 15, 2016 o Ortiz Exhibit F: Karen Leever, February 3, 2016 o Ortiz Exhibit G: Rasesh Patel, July 22, 2016 o Ortiz Exhibit H: Liz Poling-Hiraldo, May 11, 2016 o Ortiz Exhibit K: Vince Torres (DIRECTV’s FRCP 30(b)(6) designee), July 7, 2016  Deposition exhibits designated as confidential by Defendant DIRECTV: 1 This motion does not seek to file under seal Ortiz Exhibits J, BB, CC, DD, EE, FF, GG, HH, and II. FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 177 Filed 09/22/16 Page 3 of 5 o Ortiz Exhibit N: Deposition Exhibit 178 o Ortiz Exhibit O: Deposition Exhibit 316 o Ortiz Exhibit P: Deposition Exhibit 319 o Ortiz Exhibit Q: Deposition Exhibit 407 o Ortiz Exhibit R: Deposition Exhibit 613 o Ortiz Exhibit S: Deposition Exhibit 704 o Ortiz Exhibit T: Deposition Exhibit 706 o Ortiz Exhibit U: Deposition Exhibit 720 o Ortiz Exhibit V: Deposition Exhibit 729 o Ortiz Exhibit W: Deposition Exhibit 731 o Ortiz Exhibit X: Deposition Exhibit 773 o Ortiz Exhibit Y: Deposition Exhibit 777  Deposition transcript designated as confidential by Defendant DIRECTV and/or Non- Party Media Entertainment Strategies, Inc. o Ortiz Exhibit I: Suzanne Stinson, October 14, 2015  Deposition exhibits designated as confidential by Defendant DIRECTV and/or Non-Party Media & Entertainment Strategies, Inc.: o Ortiz Exhibit L: Deposition Exhibit 16 o Ortiz Exhibit M: Deposition Exhibit 27  Other discovery designated as confidential by Defendant DIRECTV: o Ortiz Exhibit Z: Documents produced as Bates range DIRECTV-0000797 to DIRECTV-0000967 by DIRECTV to the FTC on or about September 25, 2015, in response to the FTC’s First Set of Requests for Production o Ortiz Exhibit AA: Documents produced as Bates range DIRECTV-0001436 to DIRECTV-0001614 by DIRECTV to the FTC on or about September 25, 2015, in response to the FTC’s First Set of Requests for Production. Each of these documents was designated in its entirety as confidential by Defendant DIRECTV and/or Non-Party Media & Entertainment Strategies, Inc. (the “Designating Parties”). FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 177 Filed 09/22/16 Page 4 of 5 Based on this confidential designation, these documents are subject to the Protective Order issued by the Court on October 15, 2015 (Dkt. 54). Local Rule 79-5 governs the filing of documents under seal in civil cases. Subsection (e) of Local Rule 79-5 sets forth additional procedures that apply when a party seeks to file “documents designated as confidential by the opposing party or a Non-Party pursuant to a protective order” and provides as follows: If the Submitting Party is seeking to file under seal a document designated as confidential by the opposing party or a non-party pursuant to a protective order, or a document containing information so designated by an opposing party or a non- party, the Submitting Party's declaration in support of the Administrative Motion to File Under Seal must identify the document or portions thereof which contain the designated confidential material and identify the party that has designated the material as confidential (“the Designating Party”). Pursuant to subsection (e)(1) of Local Rule 79-5, the Designating Party then has 4 days to file a declaration establishing that all of the designated material is “sealable” (as defined in Local Rule 79-5(b)). Designating Parties DIRECTV and Non-Party Media & Entertainment Strategies, Inc. bear the burden of establishing that the documents listed above, as well as the redacted portions of the FTC’s Memorandum of Points and Authorities, are “sealable.” The FTC takes no position as to whether these documents, or any portions thereof, should remain under seal. The declaration of undersigned FTC counsel and a proposed order granting the FTC’s Administrative Motion to File Under Seal is submitted herewith. FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 177 Filed 09/22/16 Page 5 of 5 Dated: September 22, 2016 Respectfully Submitted, _/s/ Eric D. Edmondson__ Eric D. Edmondson Jacob A. Snow Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-09-23	178	ORDER by Hon. Haywood S. Gilliam, Jr. denying 53 Motion for Partial Summary Judgment; granting 78 Administrative Motion to File Under Seal; denying 119 Motion for Leave to File Supplementary Material. (hsglc3S, COURT STAFF) (Filed on 9/23/2016) (Entered: 09/23/2016)	Case 3:15-cv-01129-HSG Document 178 Filed 09/23/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. Case No.15-cv-01129-HSG ORDER DENYING MOTION FOR PARTIAL SUMMARY JUDGMENT DIRECTV, INC., et al., Re: Dkt. Nos. 53, 78, 119 Defendants. Defendant DIRECTV, LLC offers direct-to-home satellite television service to consumers by subscription. The Federal Trade Commission (“FTC”) brought this action in March 2015 alleging violations of the FTC Act and the Restore Online Shoppers Confidence Act (“ROSCA”), 15 U.S.C. §§ 8401 et seq. Pending before the Court is Defendant’s motion for partial summary judgment as to the third and fourth causes of action. Count three alleges that Defendant charged or attempted to charge consumers for access to premium channels through a negative option feature while failing to clearly and conspicuously disclose all material terms of the transaction before obtaining consumers’ billing information, in violation of 15 U.S.C. § 8403(1). Count four alleges Defendant failed to obtain consumers’ express informed consent before charging their credit card, debit card, bank account, or other financial account for those premium channels, in violation of § 8403(2). Defendant contends that the FTC has produced no evidence to support these ROSCA contentions, and that as a matter of law, DIRECTV’s premium channel package clearly discloses the material terms and that consumers provide informed consent. For the reasons articulated below, the Court DENIES Defendant’s motion. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 178 Filed 09/23/16 Page 2 of 6 I. ADMINISTRATIVE MOTION TO FILE UNDER SEAL In conjunction with its opposition to Defendant’s summary judgment motion, the FTC has sought leave to file under seal Exhibits H, I, J, and K to the Declaration of Eric Edmondson. Dkt. No. 78. Courts apply a “compelling reasons” standard when considering motions to seal documents like the ones at issue here. Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010). “This standard derives from the common law right ‘to inspect and copy public records and documents, including judicial records and documents.’” Id. “[A] ‘strong presumption in favor of access’ is the starting point.” Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006). To overcome this strong presumption, the moving party must “articulate compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process.” Id. at 1178-79 (citations, internal quotation marks, and alterations omitted). The Court must “balance the competing interests of the public and the party who seeks to keep certain judicial records secret. After considering these interests, if the court decides to seal certain judicial records, it must base its decision on a compelling reason and articulate the factual basis for its ruling, without relying on hypothesis or conjecture.” Id. at 1179 (internal quotation marks omitted). Records attached to motions that are only “tangentially related to the merits of a case” are not subject to the strong presumption of access. Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1101 (9th Cir. 2016). Accordingly, parties moving to seal such records must meet the lower “good cause” standard of Rule 26(c) of the Federal Rules of Civil Procedure. Id. at 8-9. The “good cause” standard requires a “particularized showing” that “specific prejudice or harm will result” if the information is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210- 11 (9th Cir. 2002) (internal quotation marks omitted); see Fed. R. Civ. P. 26(c). “Broad allegations of harm, unsubstantiated by specific examples of articulated reasoning” will not suffice. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992). Because this is a summary judgment motion, the compelling reason standard applies. The 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 178 Filed 09/23/16 Page 3 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 documents sought to be sealed were submitted to the FTC by Defendant in response to a civil investigative demand the FTC issued on January 4, 2014, Dkt. No. 78-1. The exhibits contain sensitive business information regarding customer feedback and Defendant’s development strategy and operations. Having reviewed the contents of the exhibits, the Court finds that pursuant to the Court’s protective order and the “compelling reasons” standard, the request is appropriately tailored to sealable information. The motion to file under seal is GRANTED. Dkt. No. 78. II. SUMMARY JUDGMENT LEGAL STANDARD Summary judgment is proper when the moving party demonstrates that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56. The moving party bears the initial burden of informing the Court of the basis for its motion and of identifying the portions of the declarations, pleadings, and discovery that demonstrate an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Material facts are those that may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is “genuine” if the evidence is such that “a reasonable jury could return a verdict for the nonmoving party.” Id. “[A] moving party without the ultimate burden of persuasion at trial . . . may carry its initial burden of production by either of two methods.” Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1106 (9th Cir. 2000). “The moving party may produce evidence negating an essential element of the nonmoving party’s case, or, after suitable discovery, the moving party may show that the nonmoving party does not have enough evidence of an essential element of its claim or defense to carry its ultimate burden of persuasion at trial.” Id. “If a moving party fails to carry its initial burden of production, the nonmoving party has no obligation to produce anything.” Id. at 1102-03. In deciding a summary judgment motion, the evidence is viewed in the light most favorable to the opposing party and all justifiable inferences are to be drawn in its favor. Anderson, 477 U.S. at 255. “Credibility determinations, the weighing of the evidence, and the 3 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 178 Filed 09/23/16 Page 4 of 6 drawing of legitimate inferences from the facts are jury functions, not those of a judge [when he] is ruling on a motion for summary judgment.” Id. “Summary judgment is improper where divergent ultimate inferences may reasonably be drawn from the undisputed facts.” Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014) (internal quotation marks omitted). III. DISCUSSION ROSCA prohibits certain methods of negative option marketing on the Internet. A “negative option feature” is “an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(u). ROSCA prohibits charging consumers for goods or services in Internet transactions through a negative option feature, unless the seller “provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information.” 15 U.S.C. § 8403(1). Additionally, ROSCA requires sellers to obtain a “consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account, or other financial account for products or services through such transaction.” § 8403(2). The Court finds that Defendant’s evidence (consisting of screenshots of DIRECTV’s website) does not establish the absence of a genuine dispute. Contrary to Defendant’s argument, the party opposing summary judgment does not have a duty to present evidence in opposition to a motion under Rule 56 in all circumstances. 4 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure, § 2727.2 (2016). In particular, that obligation does not exist when the movant’s papers themselves demonstrate the existence of a genuine dispute of material fact. Sheet Metal Workers’ Int’l Ass'n, Local No. 355 v. N.L.R.B., 716 F.2d 1249, 1254 (9th Cir. 1983) (holding summary judgment should be denied “where the movant’s papers are insufficient on their face or themselves demonstrate the existence of a material issue of fact”). In other words, while the contents of the website do not appear to be disputed, the inferences to be drawn from those contents are vigorously disputed, and that dispute is the heart of this case. See Fresno Motors, 771 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 178 Filed 09/23/16 Page 5 of 6 F.3d at 1125; see also Int’l Union of Bricklayers & Allied Craftsman Local Union No. 20, AFL- CIO v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985) (“Even where the basic facts are stipulated, if the parties dispute what inferences should be drawn from them, summary judgment is improper.”). Drawing all reasonable inferences in the FTC’s favor, the Court cannot conclude that DIRECTV’s disclosures regarding the premium channel promotion are sufficiently clear and conspicuous as a matter of law. For example, although the screenshot on the Package Selection Page states that the channels are free for three months, it does not plainly disclose the cost of the service after the promotion or how to cancel the package. Dkt. No. 53-4 at 4. Defendant argues that the site highlights the premium channel promotion by consistently using green font and including a hyperlink “[?]” after the offer so that consumers can notice it easily and relate it to the promotion. See, e.g., Dkt. No. 53-4 at 58. But the FTC challenges the conspicuousness of these very disclosures, contending that because the links and info-hovers “have non-descriptive names (e.g., ‘[?,]’ ‘[i,]’ or ‘[Additional Offer Details,]’) that tell the user nothing about what information they contain,” it is unlikely that consumers saw the disclosures. Dkt. No. 71 at 14. Making all reasonable inferences in the Plaintiff’s favor, there is an issue of fact as to whether these non- descriptive names rendered the disclosures less than clear and conspicuous. Accordingly, summary judgment is improper. The Court finds for similar reasons that summary judgment is inappropriate on count four. Drawing all reasonable inferences in FTC’s favor, there is an issue of fact as to whether the disclosures were adequate. It follows that there is a reasonable inference, viewing all facts in the light most favorable to Plaintiff, that consumers did not have sufficient information and thus could not have given informed consent when they clicked “I Accept. Submit My Order.” See also F.T.C. v. Health Formulas, LLC, No. 2:14-CV-01649-RFB, 2015 WL 2130504, at *16 (D. Nev. May 6, 2015) (“[T]hese inadequate disclosures constitute evidence that Defendants often do not obtain consumers’ express informed consent before charging their cards or accounts.”). Accordingly, this claim also is not amenable to summary judgment. 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 178 Filed 09/23/16 Page 6 of 6 IV. CONCLUSION For the reasons above, the Court DENIES Defendant’s motion for summary judgment. The Court also DENIES Plaintiff’s motion for leave to file supplementary material, Dkt. No. 119. IT IS SO ORDERED. Dated: 9/23/2016 HAYWOOD S. GILLIAM, JR. United States District Judge 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-09-23	179	MOTION for Extension of Time to File Declaration in support of plaintiffs administrative motion to file under seal filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration, # 2 Proposed Order)(Sandrock, Ryan) (Filed on 9/23/2016) (Entered: 09/23/2016)	Case 3:15-cv-01129-HSG Document 179 Filed 09/23/16 Page 1 of 3 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. ADMINISTRATIVE MOTION FOR EXTENSION OF TIME TO FILE DECLARATION IN SUPPORT OF PLAINTIFF’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE 3:15-CV-01129 UNDER SEAL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 179 Filed 09/23/16 Page 2 of 3 Pursuant to Civil Local Rules 6-3 and 7-11, defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) respectfully request that their deadline to file their declaration in support of Plaintiff FTC’s Administrative Motion to File Under Seal be extended from Monday, September 26, 2016, to Monday, October 3, 2016. Plaintiff Federal Trade Commission (“FTC”) does not object to this motion. On September 22, 2016, FTC filed its Administrative Motion to File Under Seal, requesting portions of 10 deposition transcripts and 16 documents be filed under seal. [ECF No. 177]. The total number of pages at issue is over 1,000. These transcripts and exhibits have been designated as confidential subject to the Protective Order entered in this case. [See Dkt. 54.] Pursuant to Local Rule 79-5, DIRECTV currently has until Monday, September 26, 2016 to file a declaration establishing that all of the designated material is sealable. L.R. 79-5(e)(2). In light of the large number of documents as to which DIRECTV must file a declaration, and DIRECTV’s obligation to file a declaration establishing the bases for filing these materials under seal, DIRECTV requests a one week extension of the time in which to file its declaration. Good cause exists for this extension because the volume of the under seal filings will necessitate a substantial effort by DIRECTV to prepare a declaration. DIRECTV requests that this extension also apply to the deposition transcript of Suzanne Stinson, a representative of Media & Entertainment Strategies, who conducted consumer usability studies of, among other things, DIRECTV’s products and online web flow. This extension would not adversely affect the schedule or any other deadline in this case. DIRECTV’s response to the FTC’s motion for summary judgment will still be due on October 6, 2016, and the hearing on that motion will still be set for October 27, 2016. There have been the following prior extensions in this case: (a) Dkt. No. 64, October 21, 2015 (granting FTC’s motion for extension of time to respond to DIRECTV’s motion for partial summary judgment); (b) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE 1 UNDER SEAL 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 179 Filed 09/23/16 Page 3 of 3 judgment briefing deadlines and hearing date, and trial date). DIRECTV has conferred with FTC about this request for an extension of time, and FTC stated that it did not object to the extension. Dated: September 23, 2016 SIDLEY AUSTIN LLP By: /s/ Ryan M. Sandrock Ryan M. Sandrock Attorneys for Defendants DIRECTV and DIRECTV, LLC MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE 3:15-CV-01129 2 UNDER SEAL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-09-26	180	ERRATA re 179 MOTION for Extension of Time to File Declaration in support of plaintiffs administrative motion to file under seal by DIRECTV LLC, DIRECTV, Inc.. (Sandrock, Ryan) (Filed on 9/26/2016) (Entered: 09/26/2016)	Case 3:15-cv-01129-HSG Document 180 Filed 09/26/16 Page 1 of 2 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. ERRATA TO ADMINISTRATIVE MOTION FOR EXTENSION OF TIME TO FILE DECLARATION IN SUPPORT OF PLAINTIFF’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL ERRATA 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 180 Filed 09/26/16 Page 2 of 2 Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) file this errata to their Administrative Motion for Extension of Time to File Declaration in Support of Plaintiff’s Administrative Motion to File Under Seal. (Dkt. 179). DIRECTV’s motion listed prior time modifications pursuant to Local Rule 6-2 but inadvertently omitted several prior modifications. The complete list is set forth below (omitted modifications in italics): (a) Dkt. No. 23, April 17, 2015 (granting stipulated request for an extension of time for the FTC to file motion to strike Defendants’ affirmative defenses); (b) Dkt. No. 64, October 21, 2015 (granting motion for extension of time for the FTC to respond to DIRECTV’s motion for partial summary judgment); (c) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); (d) Dkt. No. 99, February 4, 2016 (granting stipulation continuing hearing date on motion for partial summary judgment); (e) Dkt. No. 105 (granting stipulation continuing Case Management Conference); (f) Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary judgment briefing deadlines and hearing date, and trial date); (g) Dkt. No. 159, July 19, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery). Dated: September 26, 2016 SIDLEY AUSTIN LLP By: /s/ Ryan M. Sandrock Ryan M. Sandrock Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 ERRATA 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-09-26	181	ORDER by Judge Haywood S. Gilliam, Jr. Granting 179 Motion for Extension of Time to File. (ndrS, COURT STAFF) (Filed on 9/26/2016) (Entered: 09/26/2016)	Case 3:15-cv-01129-HSG Document 181 Filed 09/26/16 Page 1 of 2 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION FOR EXTENSION OF TIME TO FILE DECLARATION IN SUPPORT OF PLAINTIFF’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE UNDER SEAL CASE NO. 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 181 Filed 09/26/16 Page 2 of 2 [PROPOSED] ORDER Having read and considered Defendant DIRECTV and DIRECTV, LLC’s (collectively, “DIRECTV”) Motion for Extension of Time to File Declaration in Support of Administrative Motion to File Under Seal, the Court rules as follows: 1. 2. DIRECTV’s Motion for Extension of time is granted; DIRECTV’s deadline to file a declaration on both its behalf and on behalf of Media & Entertainment Strategies in support of Plaintiff’s Administrative Motion to File under Seal is extended to October 3, 2016 IT IS SO ORDERED. Dated: ___________________, 2016 _____________________________________ HON. HAYWOOD S. GILLIAM, JR. United States District Judge [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE UNDER SEAL CASE NO. 3:15-CV-01129 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 September 26
2016-09-27	182	STIPULATION WITH PROPOSED ORDER To Extend Time for Rebuttal and Reply Expert Reports and Expert Discovery filed by DIRECTV LLC. (Hummel, Chad) (Filed on 9/27/2016) (Entered: 09/27/2016)	Case 3:15-cv-01129-HSG Document 182 Filed 09/27/16 Page 1 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL AND REPLY EXPERT REPORTS AND EXPERT DISCOVERY JOINT STIPULATION TO EXTEND TIME FOR EXPERT REPORTS AND DISCOVERY 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 182 Filed 09/27/16 Page 2 of 3 Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (DIRECTV) jointly stipulate, pursuant to Civil Local Rules 6-1(b), 6-2 and 7-12, to extend the time for expert rebuttal and reply reports and for the close of expert discovery. On September 16, 2016, both sides served their opening expert reports; the FTC served five expert reports and DIRECTV served three expert reports. As currently scheduled, the deadline for (i) expert rebuttal reports is October 13, 2016; (ii) expert reply reports is November 4, 2016; and (iii) the close of expert discovery is November 23, 2016 (Dkt. 159). There are a number of experts and the expert reports are voluminous, and, therefore, the number of depositions that need to be taken is high. Both sides therefore would benefit from more time to prepare rebuttal and reply reports and more flexibility in scheduling the depositions of these experts. In addition, experts and counsel are also confronting scheduling difficulties in the month of October due to the upcoming Jewish High Holidays of Rosh Hashanah, beginning on the evening of October 2 and continuing to the evening of October 4, and Yom Kippur, beginning on the evening of October 11 and continuing to the evening of October 12. The parties have conferred with each other and their experts about scheduling and have arrived at an agreement satisfactory to all. The proposed modification to the schedule would have no effect on any other deadlines in this case. There have been the following modifications to the schedule in this case: (a) Dkt. No. 23, April 17, 2015 (granting stipulated request for an extension of time for the FTC to file motion to strike Defendants’ affirmative defenses); (b) Dkt. No. 64, October 21, 2015 (granting motion for extension of time for the FTC to respond to DIRECTV’s motion for partial summary judgment); (c) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); (d) Dkt. No. 99, February 4, 2016 (granting stipulation continuing hearing date on motion for partial summary judgment); (e) Dkt. No. 105 (granting stipulation continuing Case Management Conference); (f) Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary judgment briefing deadlines and hearing date, and trial date); (g) Dkt. No. 159, July 19, 2016 (granting stipulation to extend case JOINT STIPULATION TO EXTEND TIME FOR EXPERT REPORTS AND DISCOVERY 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 182 Filed 09/27/16 Page 3 of 3 deadlines, including fact and expert discovery); and (h) Dkt. 181, September 26, 2016 (granting motion to extend time to file declaration in support of motion to file under seal). NOW THEREFORE, the parties, through the undersigned counsel, hereby stipulate to and respectfully request the court enter the following schedule: Current Date Event October 13, 2016 Rebuttal Reports Reply Reports November 4, 2016 November 14, 2016 Expert Discovery Close November 23, 2016 December 2, 2016 Proposed Date October 21, 2016 Dated: September 27, 2016 SIDLEY AUSTIN By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to Civil Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtained from the signatories above. By: /s/ Chad S. Hummel [PROPOSED] ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. HAYWOOD S. GILLIAM, JR. JOINT STIPULATION TO EXTEND TIME FOR EXPERT REPORTS AND DISCOVERY 2 3:15-CV-01129
2016-09-27	183	CORRECTION OF DOCKET re 176 MOTION for Partial Summary Judgment filed by Federal Trade Commission. (Related document(s) 176 ) (Edmondson, Eric) (Filed on 9/27/2016) Modified on 9/28/2016 (ecgS, COURT STAFF). (Entered: 09/27/2016)	Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 1 of 29 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT BY THE FEDERAL TRADE COMMISSION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: October 27, 2016 Time: 2:00 p.m. Judge: Hon. Haywood S. Gilliam, Jr. Location: San Francisco Courthouse Courtroom 10, 19th Floor CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 2 of 29 TABLE OF CONTENTS NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT ................. 1 MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 1 I. II. INTRODUCTION .............................................................................................................. 1 STATEMENT OF ISSUES TO BE DECIDED ................................................................. 2 III. THE UNDISPUTED MATERIAL FACTS........................................................................ 2 A. B. DIRECTV's promotion and sales of the premium channel negative option .......... 2 DIRECTV’s website and its disclosures of the material terms of the premium channel negative option. ........................................................................................ 4 IV. ARGUMENT ...................................................................................................................... 8 Legal Standard For Summary Judgment.. ............................................................... 8 A. B. Summary judgment in the FTC’s favor is appropriate on the Complaint’s ROSCA claims (Counts III and IV)... ................................................................................... 9 1. C. 3. 2. The Court can resolve the alleged violations of ROSCA’s clear and conspicuous and express informed consent provisions based on a facial assessment of DIRECTV’s website.. ........................................................ 11 The undisputed material facts demonstrate that DIRECTV has not clearly and conspicuously disclosed the material terms of its premium channel negative option. ......................................................................................... 11 The undisputed material facts demonstrate that DIRECTV has not obtained consumers’ express informed consent to the material terms of its “free” premium channel negative option. ................................................. 16 Summary judgment is appropriate on DIRECTV’s affirmative defenses of laches, waiver, and estoppel.............................................................................................. 17 1. The FTC conducted its own independent investigation of DIRECTV. .... 17 The undisputed facts disprove DIRECTV’s theory underpinning its 2. estoppel, laches, and waiver defenses. ...................................................... 18 The undisputed material facts establish that DIRECTV cannot prevail on its estoppel defense. .................................................................................. 20 The undisputed material facts establish that DIRECTV cannot prevail on its laches defense....................................................................................... 23 The undisputed material facts establish that DIRECTV cannot prevail on its waiver defense. ..................................................................................... 24 3. 4. 5. V. CONCLUSION ................................................................................................................. 25 CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 3 of 29 CASES TABLE OF AUTHORITIES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ................................................................... 9 Alocozy v. U.S. Citizenship & Immigration Servs., 704 F.3d 795 (9th Cir. 2012) ....................... 24 Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337 (9th Cir. 1995) ................ 20 Arizona v. Tohono O'odham Nation, 818 F.3d 549 (9th Cir. 2016) ............................................. 25 Baccei v. United States, 632 F.3d 1140 (9th Cir. 2011) ............................................................... 21 Cadwalader v. United States, 45 F.3d 297 (9th Cir. 1995) .......................................................... 22 Chamlikyan v. Bardini, No. 10-cv-00268, 2010 WL 5141841 (N.D. Cal. Dec. 13, 2010) .......... 23 Evergreen Safety Council v. RSA Network Inc., 697 F.3d 1221, (9th Cir. 2012) ......................... 23 FTC v. AMG Servs., 29 F. Supp. 3d 1338 (D. Nev. 2014) ........................................................... 12 FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048 (C.D. Cal. 2012) ............................... 12, 15 FTC v. Cyberspace.com, 453 F.3d 1196 (9th Cir. 2006) .............................................................. 11 FTC v. EDebitPay, LLC, 695 F.3d 938 (9th Cir. 2012) ................................................................ 11 FTC v. Health Formulas, LLC, 2015 WL 2130504 (D. Nev. May 6, 2015) .......................... 15, 17 FTC v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012) ................ 10, 17 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ............................................................................... 9 FTC v. Medlab, Inc., 615 F. Supp. 2d 1068 (N.D. Cal. 2009) ...................................................... 10 Gonzales-Rios v. Holder, 361 F.Appx. 833 (9th Cir. 2010) ......................................................... 23 Hooks v. NLRB, 72 F. Supp. 3d 1168 (D. Or . 2014).................................................................... 24 Krouch v. Wal-Mart Stores, Inc., No. 12-cv-02217, 2014 WL 5463333 (N.D. Cal. Oct. 28, 2014) ................................................................................................................................................... 20 Nelson v. Pima Cmty. Coll., 83 F.3d 1075 (9th Cir. 1996) ............................................................. 9 Soremekun v. Thrifty Payless, Inc., 509 F.3d 978 (9th Cir. 2007) .................................................. 9 U.S. v. Ruby Company, 588 F.2d 697 (9th Cir. 1978) .................................................................. 23 United States v. Cherokee Nation of Oklahoma, 480 U.S. 700 (1987) ......................................... 24 United States v. Kim, 806 F.3d 1161 (9th Cir. 2015).................................................................... 23 CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 4 of 29 United States v. Philip Morris Inc., 300 F. Supp. 2d 61 (D.D.C. 2004) ................................. 22, 25 United States v. Ruby Co., 588 F.2d 697 (9th Cir. 1978) ............................................................. 21 Watkins v. U.S. Army, 875 F.2d 699 (9th Cir. 1989) .................................................................... 21 STATUTES 15 U.S.C. § 8401 ............................................................................................................................. 9 15 U.S.C. § 8403 ................................................................................................................... 1, 9, 10 15 U.S.C. § 8404 ............................................................................................................................. 9 REGULATIONS 16 C.F.R. § 310.2 .......................................................................................................................... 10 RULES Fed. R. Civ. P. 56 ............................................................................................................................ 9 OTHER BLACK’S LAW DICTIONARY (10th ed. 2014) ................................................................................. 17 CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 5 of 29 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 6 of 29 Friedman (who is also counsel of record in this case). His testimony undermines these defenses. Moreover, the objective, uncontroverted evidence shows that DIRECTV knew that the FTC was proceeding with its own investigation independent of DIRECTV’s prior settlements with 50 states and the District of Columbia (collectively, “the States”). DIRECTV remained well aware of the scope and active status of the FTC’s investigation. Finally, the undisputed evidence shows that it was DIRECTV’s own delays in complying with the Commission’s investigation discovery, and the extensive settlement negotiations between the parties, that were largely responsible for the duration of the FTC’s investigation. II. STATEMENT OF ISSUES TO BE DECIDED Issue 1: Do the uncontroverted material facts establish that DIRECTV’s website has not disclosed the material terms of its premium channel negative option clearly and conspicuously, and failed to obtain consumers’ express informed consent to those terms? Issue 2: Do the uncontroverted material facts establish that DIRECTV’s affirmative defenses of estoppel, laches, or waiver are without merit? III. THE UNDISPUTED MATERIAL FACTS DIRECTV is the largest provider of direct-to-home digital television service in the United States. (2nd Am. Answer (Dkt. 93) (“2nd Ans.”) ¶ 10.) DIRECTV offers its service to consumers by subscription, which consists of television programming, necessary equipment, installation, and support services. (Id. ¶ 11.) A. DIRECTV’s promotion and sales of the premium channel negative option. At all times since ROSCA became effective in 2011, DIRECTV has offered new subscribers “free” access to premium channels (e.g., Cinemax, HBO, Showtime, STARZ) for three months. (Id. ¶14; Declaration of Kelly Ortiz, filed herewith, (“Ortiz”) Ex. A at 116:6-11.) DIRECTV has advertised its “free” premium channel promotion on its website, which allows consumers to subscribe to DIRECTV’s services. (2nd Ans. ¶ 23.) This “free” offer comes with a catch: it is a negative option. Unless the consumer affirmatively cancels the premium-channel programming before the end of the three-month promotional period, DIRECTV automatically charges the consumer for the premium channels at CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 7 of 29 whatever price prevails at that time. (Id. ¶¶ 14, 23; Ortiz Ex. A at 99:9-100:14; 119:5-18.) (See Ortiz Ex. Y at 22.) . (Ortiz Ex. X at 58; Ortiz Ex. F at 143:4-18; Ortiz ¶ 27 & Exs. Z, AA.) (Ortiz ¶ 27 & Exs. Z, AA.) (Id.) G at 189:23-190:7; Ex. A 136:20-137:7.) . (Ortiz Ex. X at 57; Ex. K at 103:4-107:15.) . (Id.) . (Id.) . (Ortiz Ex. Y at 22.) . (Ortiz Ex. U at 30.) (Ortiz Ex. C at 81:25-82:19.) DIRECTV identified . (Ortiz Ex. P at 6, 7; Ex. (Ortiz Ex. R at 39; Ex. W at 1-2; Ex. C at 237:22-238:13; 242:1-243:17.) The company also recognized that (Ortiz Ex. Y at 22; Ex. K at 143:9-145:12.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 8 of 29 (Id.) (Ortiz Ex. N at 3.) (Id. at 4.) (Ortiz Ex. O at 18; Ex. A at 118:19-119:4; see also Ortiz Ex. U at 30 ; Ex. C at 82:21-84:17.) (Ortiz Ex. R at 39; Ex. C at 242:1-243:13.). B. DIRECTV’s website and its disclosures of the material terms of the premium channel negative option. (See Ortiz Ex. H at 26:4-30:5, 35:15-36:5.) The FTC and DIRECTV do not dispute that the content of the website speaks for itself. (See 2nd Ans. ¶ 23.) In fact, both parties have submitted representative examples of each: an August 2013 website capture for the prior version, and an August 2015 website capture for the current version. (See Declaration of Ann Stahl, filed herewith (“Stahl”) ¶¶ 3-6 & Exs. A-D; Declaration of David Gonzales, filed herewith (“Gonzalez”), ¶¶ 4-5 & Ex. A.)1 1 DIRECTV itself presented to the Court versions of its website from August 2013 and August 2015, albeit through static screenshots, thereby conceding that these versions are representative for purposes of resolving the FTC’s ROSCA counts on summary judgment. (See Declaration of Karen Leever in support of DIRECTV’s Motion for Partial Summary Judgment & Exs. A, B (Dkt. 53-3, 53-4, 53-5.).) Similarly, the FTC presents versions of DIRECTV’s website from those points in time, but as video recordings and an interactive version of the 2013 site. Stahl Exhibit A is a version of DIRECTV’s website as it appeared in 2013, reconstructed by the FTC’s expert Nathan Good. (See Declaration of Dr. Nathaniel Good, filed herewith.) This version, called the “UX Site,” is an CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 9 of 29 36:5 (discussing consistency of the website design)). DIRECTV concedes that it has consistently disclosed terms of the premium channel offer behind hyperlinks and symbols. (See Dkt. 53-3 ¶¶ . (Ortiz Ex. H at 26:16-29:23; 35:15– 6, 8-9, 14-18, 20, 22-24.) The FTC’s Opposition to DIRECTV’s motion for partial summary judgment on the ROSCA counts describes the purchase process on both versions of DIRECTV’s website. (Dkt. 71 at pp. 3-10.) The FTC incorporates that factual description here. A review of this uncontroverted website evidence demonstrates that DIRECTV has not displayed the key material terms on the face of any of the webpages in the online purchase process, including: (1) the fact that consumers must call to cancel the negative option within the “free” promotional period or be automatically charged, and (2) the amount they will be charged if they do not cancel in time. DIRECTV does not display these terms on any of the webpages that comprise the website’s purchase process. (See Stahl Exs. B, C.) First, DIRECTV prominently advertises the “FREE” premium channel promotion on the website’s opening Home page (a/k/a Landing page). (Stahl Ex. B at 0:01-0:03, Ex. C at 0:01-0:03.) In the prior (2009-2014) version of the site, the terms of the premium channel negative option are not displayed anywhere. (Stahl Ex. D at 0:01- 1:18.) In the current version (2014-present) of the site, DIRECTV has an “Additional Details” hyperlink at the bottom of the Home page. (Gonzalez Ex. A at 0:01-1:22.) This link appears in tiny font at the bottom of the page, below an area of small-print legalese. (Id.) If a consumer should locate and click on this generically titled “Additional Details” link, the website would open a separate pop-up webpage that contains more than 50 lines of text displayed in densely packed, small gray font. (Id. at 23:55-24:20.) Among those lines is the following text: enhancement of the “Simulated Site” that the FTC filed along with its Opposition to DIRECTV’s Partial MSJ. (Dkt. 73-1.) Stahl Exhibits B-D, and Gonzales Exhibit A are video recordings taken by FTC investigators of DIRECTV’s live site in August of 2015 (Stahl Ex B, Gonzalez Ex. A) and of the UX Site (Stahl Exs. C, D). DIRECTV has not challenged the FTC’s presentation of substantially similar exhibits for purposes of summary judgment. (See generally DIRECTV Reply in Support of Partial Summary Judgment (Dkt. 94).) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 10 of 29 (Id. at 23:56.) In the next step in the purchase process—the Package Selection page—DIRECTV promotes the “FREE” premium channel offer. (Stahl Ex. B at 0:58-1:05; Ex. D at 1:29-1:37.) The page does not disclose the negative option or its terms. Instead, in the prior version of the site, DIRECTV includes the “Additional Offer Details” hyperlink at the very bottom of the page, not near the promotion. (Stahl Ex. D at 4:50.) Clicking that link opens up a popup page that, among approximately 60 lines of text, contains “promotional price period(s)” language similar to that displayed above. (Id. at 4:55-6:18.) In the current version of the site, besides the “Additional Offer Details” link discussed above, any suggestion of a negative option is hidden behind hyperlinks embedded in a select few among the numerous identical symbols scattered throughout the page, many of which are themselves hidden behind embedded hyperlinks. (Gonzalez Ex. A. at 2:36-11:36.) Clicking on one of those select few symbols (located above a “STARZ” channel logo) opens a popup box containing the following text in tiny gray font: “Get the most premium move channels FREE for 3 months as part of our new customer offer. After promotional period ends, you will be charged the price in effect unless you call to cancel.” (Id. at 2:45.) During the next step in the process—the “Add more great programming” page, which exists only in the current version of the website—DIRECTV again promotes the premium channels. (Stahl Ex. B 1:24-1:34.) The page does not disclose the terms of the negative option. (Id.) To learn about the negative option, users would have to click on the nondescript symbol next to a block of dense gray-on-gray text. (Gonzalez Ex. A at 11:53-12:24.) During the next step in the process—the Receiver and Cart pages—DIRECTV similarly hides any suggestion of a negative option behind generically labeled hyperlinks and symbols. Both the old and the new website versions of these pages have the “Additional Offer Details” link buried at the bottom of the page. (Gonzalez Ex. A at 22:01; 22:44, 23:50; Stahl Ex. D at CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 11 of 29 7:38, 12:48.) On the Cart page, both versions use generically labeled symbols. The prior website version used symbols, which act as info-hovers: if a user’s mouse hovers over them on screen, a textbox appears. (Stahl Ex. D at 10:55-13:12.) Most of these symbols reveal simple promotional messaging, such as: “See blockbuster movies, bold original series and exclusive sports on 11 channels, 9 in HD.” (Id. at 11:23.) Only one of sixteen of these symbols on the Cart page uncovers the following textbox: “For a limited time, you get every premium move [sic] channel FREE for 3 months as part of our new customer offer. After promotional period ends, you will be charged the price in effect unless you call to cancel.” (Id. at 11:38.) The current version of the website hides similar text behind some of the numerous identical symbols scattered across the Cart page. (Gonzalez Ex. A at 22:51-23:50.) The prior version of the Cart page also contained a small, generically labeled, gray-font- on-gray-background tab, nowhere near the premium promotional messaging. (Stahl Ex. D at 10:47). The current version contains an analogous hyperlink located in the middle of the Cart page, also not proximate to the premium channel promotional message. (Gonzalez Ex. A at 23:30.) If a consumer would find and click on this tab or link, the website would unveil a complex, multiple-row table that lists various dollar figures in a six- month snapshot across seventeen rows and six columns—displaying nearly 100 cells at a glance. (Stahl Ex. D at 14:11-14:36; Gonzalez Ex. A at 24:29-24:55.) Throughout the last step in the purchase process—the Checkout pages—DIRECTV does not promote the “free” premium channel offer. There is no disclosure about the terms of this negative option promotion on the face of these Checkout pages. (Stahl Ex. B at 2:25-5:10; Ex. C at 0:50-2:10.) The prior version of the website did not even disclose the existence of the negative option or its material terms behind the generic “Terms and Conditions” hyperlinks found on the bottom of the Checkout pages, including the link near the large, orange “I Accept. Submit My Order” button” on the final Checkout page. (Stahl Ex. D at 16:12-16:54, 18:28-18:55.) The Terms and Conditions popup page behind that link did not contain any disclosure about the premium channels until September 2014. (See Ortiz Ex. JJ at 6 (RFA No. 1137).) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 12 of 29 The current version of the website also makes no disclosures about the negative option on the face of the Checkout pages, but instead contains the standard “Additional Offer Details” and “Terms & conditions” hyperlinks next to each other at the bottom of the page. (Gonzalez Ex. A at 27:30, 28:26.) The final Checkout screen also contains generic “I agree to the Terms and Conditions” language next to a checkbox and a large, orange “Place My Order” button. (Id. at 29:05-29:08.) The words “Terms and Conditions” function as a hyperlink. (Id.) It is not necessary to click on that link in order to check the checkbox or to click “Place My Order,” which completes the transaction. (See Declaration of Ann Stahl in Support of FTC Opp’n to DIRECTV MSJ Ex. A (Dkt. 74-1) at 4:12-4:50; see also Stahl Ex. C 2:52-2:56 (completing transaction).) If a consumer were to click on that “Terms and Conditions” link, the website would open a Terms & Conditions popup page—containing 43 lines of small, densely packed gray text. (Gonzalez Ex. A at 29:05-29:34.) That popup page contains the following snippet: (Id. at 29:14.) As the website evidence shows, consumers can proceed through the entire purchase process without ever clicking or hovering over any of the hyperlinks or symbols described above. (See Stahl Ex. B at 0:01-5:18, Ex. C at 0:01-3:12; Ortiz Ex. F at 174:1-175:20.) DIRECTV has neither required nor actively prompted consumers to click on these links and symbols to learn about the premium channel negative option and its material terms. (See Stahl Ex. A; Ex. B at 0:01-5:18; Ex. C at 0:01-3:12.) ), 69:4-14 ( IV. ARGUMENT . (See Ortiz Ex. B at 62:4-6 ), 63:12-14 and 64:16-20 ( ).) A. Legal Standard For Summary Judgment. Summary judgment on any claim or defense is proper if “there is no genuine dispute as to CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 13 of 29 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the initial burden of informing the court of the basis of its motion, and “identifying those portions of ‘pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets that initial burden, the burden shifts to the nonmoving party to present evidence showing that disputes about genuine issues of fact remain. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The nonmoving party must “designate ‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 U.S. 317 at 324. “Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). “Likewise, mere allegation and speculation do not create a factual dispute for purposes of summary judgment.” Nelson v. Pima Cmty. Coll., 83 F.3d 1075, 1081-82 (9th Cir. 1996). B. Summary judgment in the FTC’s favor is appropriate on the Complaint’s ROSCA claims (Counts III and IV). Congress enacted ROSCA to curb the pernicious practice of consumer entrapment in unwanted negative options through Internet transactions, and designated the FTC as the statute’s federal law enforcement authority. See 15 U.S.C. §§ 8401(8), 8404. Consequently, Congress mandated that Internet negative option sellers provide clear and conspicuous disclosure and obtain consumers’ express informed consent. 15 U.S.C. § 8403(1), (2); see also Dkt. 74-10 at 7 (Senate Committee on Commerce, Science, and Transportation Chairman concluding that such misconduct must “come[ ] to a complete halt”). Specifically, ROSCA prohibits sellers from charging consumers for goods or services in Internet transactions through a negative option feature, unless the seller “provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information.” 15 U.S.C. § 8403(1). ROSCA also requires sellers to obtain a “consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account, or other financial account . . . .” CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 14 of 29 15 U.S.C. § 8403(2).2 1. The Court can resolve the alleged violations of ROSCA’s clear and conspicuous and express informed consent provisions based on a facial assessment of DIRECTV’s website. Consistent with ROSCA’s mandate to display material terms clearly and conspicuously, it is proper for the Court to decide the clarity or conspicuousness of DIRECTV’s disclosures as a matter of law based on its facial review of the website. Federal courts can, and do, adjudicate FTC Act deception cases based on a facial assessment of disclosures. See FTC v. Medlab, Inc., 615 F. Supp. 2d 1068, 1077-78 (N.D. Cal. 2009) (granting FTC’s summary judgment after conducting a facial analysis to determine that defendants’ disclaimers—presented in “minuscule type at the bottom of the advertisements”—were insufficient to cure the deception). The Court in Medlab expressly rejected the argument that the FTC must present extrinsic evidence beyond what is plainly evident on a facial review. Id. at 1078 (rejecting the need for “consumer survey data in order to prove what is obvious to any rational reader . . . ”). Likewise, courts can and do adjudicate “clear and conspicuous” disclosure mandates similar to ROSCA’s upon a facial review of the underlying dissemination materials. See FTC v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012), aff’d, 644 Fed. Appx. 709 (9th Cir. 2016) (finding on summary judgment that defendants’ disclosures of negative option material terms were not clear and conspicuous, in violation of the Telemarketing Sales Rule (“TSR”), based on a facial review of sales call transcripts). The Court can also make a dispositive ruling on ROSCA’s express informed consent provision based on its facial review of DIRECTV’s website. See id. at 1078 (granting summary judgment on the TSR’s “express informed consent” requirement after determining, based on a facial review, that defendants’ disclosures were inadequate).3 2 A “negative option feature” is defined as “an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(u). DIRECTV does not dispute that ROSCA applies to the negative option offer associated with its sale of the premium channel package over the Internet. (2nd Ans. ¶ 1; see generally DIRECTV MSJ (Dkt. 53).) 3 Like ROSCA as applied to Internet sellers, the TSR prohibits telemarketers from failing to disclose “in a clear and conspicuous manner . . . the material terms and conditions of the negative option feature.” 16 C.F.R. § 310.3(a)(1)(vii). Also like ROSCA, the TSR requires telemarketers to obtain consumers’ “express informed consent” to transactions. 16 C.F.R. § 310.4(a)(7). CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 15 of 29 The resolution of the ROSCA counts on summary judgment is particularly appropriate here, since both sides agree that there is no genuine dispute about the material facts bearing on the disposition of these claims. (See DIRECTV MSJ (Dkt. 53) at 21 (“the undisputed evidence conclusively demonstrates that there are no material factual disputes as to Counts III and IV.”). Most notably, the parties do not dispute the appearance and functionality of DIRECTV’s website—the factual foundation upon which the Court would conduct its facial analysis.4 2. The undisputed material facts demonstrate that DIRECTV has not clearly and conspicuously disclosed the material terms of its premium channel negative option. In evaluating the clarity and conspicuousness of disclosures, courts consider a number of factors. Courts look to placement—specifically, whether the disclosures are located where consumers are unlikely to see them (such as the bottom of the webpage), or in a context different from the claims the disclosures qualify (such as on a separate “Terms and Conditions” webpage). See FTC v. Cyberspace.com, 453 F.3d 1196, 1200-01 (9th Cir. 2006) (disclosures found inadequate when placed in small print on the back of a check); FTC v. Johnson, 96 F. Supp. 3d 1110, 1140 (D. Nev. 2015) (disclosures found inadequate when placed at the very top of the page or under the submit button); Medlab, 615 F. Supp. 2d at 1077 (disclosures found inadequate when placed at the bottom of a page). Courts also consider prominence: e.g., the font size, color, and style of the disclosure, as well as its prominence in comparison to other text or graphics in the advertisement. See FTC v. EDebitPay, LLC, 695 F.3d 938, 944 (9th Cir. 2012) (disclosure found inadequate when “consumers would have had to look at a small footnote buried in the middle of other dense footnotes”); Johnson, 96 F. Supp. 3d at 1140 (disclosure found inadequate when size of font was smaller when compared to rest of webpage). Similarly, courts look to whether other elements of 4 As explained in footnote 1, supra, DIRECTV has not challenged the FTC’s captures of the DIRECTV’s website, which form the factual basis of this motion. Moreover, fabricate a genuine dispute to defeat summary judgment based on speculative assertions that the FTC’s website captures may not be perfectly accurate. See Nelson v. Pima Cmty. Coll., 83 F.3d at 1081-82. (see Ortiz Ex. D at 152:3-6), DIRECTV cannot now CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 16 of 29 the advertisement overshadow the disclosures. See Johnson, 96 F. Supp. 3d at 1140) (disclosures found inadequate where statements about the “free” and “risk free” nature of the program were more eye-catching); FTC v. AMG Servs., 29 F. Supp. 3d 1338, 1353 (D. Nev. 2014) (hyperlink was inconspicuous where mandatory check boxes would “naturally draw a borrower’s attention” and where hyperlink was “buried in the fourth paragraph and overshadowed by two all caps hyperlinks”). The district court in Commerce Planet, 878 F. Supp. 2d 1048, applied these principles to a website’s disclosures of the terms of a negative option. Conducting a facial review, the court found that making disclosures behind a “Terms of Membership” hyperlink “buried at the bottom” of the webpage, not “in close proximity” to the claim, failed to prompt consumers to notice or open the link. The generic label “Terms of Membership” did not indicate that it had anything to do with a negative option plan. Moreover, the hyperlink sent consumers to a separate popup page and, thus, appeared in a “different context” than the promotional claims the disclosures were supposed to qualify. Finally, the disclosures on this popup page in one version of the website were buried along “with other densely packed information and legalese,” which undercut both conspicuousness and clarity. The Commerce Planet court also found the other fine-print disclosures on the payment page to be inadequate on their face, given their size, color, and placement at the bottom of the page. In sum, the court held that these disclosures by their “placement, wording, colorization, spacing, and size of the text” were “designed not be clear and conspicuous, but rather to mask information about [the defendants’] continuity program without entirely omitting the information.” Id. at 1065-68. Application of these principles shows that DIRECTV has failed to disclose the material terms of its premium channel negative option clearly and conspicuously. DIRECTV’s website does not display the existence of a negative option or its material terms on the face of any webpage in the online purchase process in proximity to the prominent “free” premium channel promotion. Instead, DIRECTV has hidden material terms of the premium channel negative option in three inconspicuous places: (1) behind tiny “Terms & Conditions” and “Additional [Offer] Details” hyperlinks; (2) behind a handful of generically labeled symbols— (prior CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 17 of 29 version) and (current version)—interspersed among scores of other such icons that have nothing to do with the premium channel negative option; and (3) behind a tiny, entirely avoidable tab on the Cart page: . Consequently, consumers can proceed through the entire purchase process and sign up for DIRECTV’s programming without once clicking on any of these generically labeled symbols, and without ever seeing any material terms. (See Stahl Ex. B at 0:01-5:18, Ex. C at 0:01-3:12; Ortiz Ex. F at 174:1-175:20.) Remarkably, DIRECTV has employed these disclosure practices even though 4, 32-35; see also Ortiz Ex. H at 10:22–11:06, 83:6–84:4 (DIRECTV’s former Director of Product Management and Strategy for its Digital Media Group acknowledging (Ortiz Ex. T at ).) Moreover, by 2013, DIRECTV knew that 19-20.) Nonetheless, DIRECTV continued to (Ortiz Ex. V at .5 As described below, DIRECTV’s use of these hyperlinks and similar symbols to disclose the material terms of its “free” premium channel negative option fails ROSCA’s clear and conspicuous mandate. (1) DIRECTV’s generically labeled hyperlinks: DIRECTV’s disclosure of material terms behind “Terms & Conditions,” “Additional Details,” and “Additional Offer Details” hyperlinks does not pass muster for conspicuousness. In all but at the last step in the purchase 5 (See Ortiz Ex. B at 69:4-14; see also id. at 62:4-6; 63:12-14; 64:16-65:6.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 18 of 29 process, DIRECTV displays these generically labeled links at the bottom of webpages, below the web fold, and in small font, surrounded by legalese fine print and other generic links, such as “Privacy policy.” (See, e.g., Stahl Ex. B at 1:06-1:07, Ex. D at 4:50.) In fact, (Ortiz Ex. Q at 23, 24.). Ex. M at 9; see also Ortiz Ex. L at 19 , and 29 .)6 (Ortiz Even on the last Checkout page in the purchase process, where DIRECTV displays its “Terms & Conditions” links near a large orange button to place the order, DIRECTV still fails the clear and conspicuous test. First, this Checkout page does not mention the premium channel offer at all. (Stahl Ex. B at 4:27-5:06; Ex. D at 17:26-18:27.) Instead, DIRECTV promotes this offer several steps earlier in the purchase process. Therefore, having already gone through multiple pages (which do specifically reference the “free” premium channel promotion) and upon arrival at the final Checkout page (which does not), consumers would have no reason to suspect that the generically labeled “Terms & Conditions” link would specifically disclose material terms of that promotion. Second, the Terms & Conditions popup page behind that link does not conspicuously disclose the material terms. In fact, in the prior version of the website, the Terms & Conditions popup page said nothing at all about the premium channel negative option. (Stahl Ex. D at 16:12- 6 Apart from these usability tests (Ortiz Ex. E at 41:11-42:11; 112:11-14) Additionally, DIRECTV admitted—or failed to properly deny—that it has not produced any such research to the FTC. (See Ortiz Ex. GG at 5-7 (RFA Nos. 5-10).) (id. at 68:19-69:18). CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 19 of 29 16:54, 18:28-18:55; see also Stahl Ex. A.) It was not until September 2014 that DIRECTV added the following statement to the Terms & Conditions popup page: (Gonzalez Ex. A at 29:14; Ortiz Ex. JJ at 6 (RFA No. 1137).) This statement appears in small gray font in middle of more than 40 lines of densely packed text. (Id.) This type of disclosure is not conspicuous. See Commerce Planet, Inc., 878 F.Supp.2d at 1065 (“the information about the continuity plan . . . is buried with other densely packed information and legalese, which makes it unlikely that the average consumer will wade through the material and understand that she is signing up for a negative option plan”); FTC v. Health Formulas, LLC, 2015 WL 2130504, at 16 (D. Nev. May 6, 2015) (in ruling that the FTC was likely to succeed on the merits of its ROSCA claims, finding inconspicuous disclosures “buried in fine print” or “stated in separate Terms and Conditions documents that consumers are not required to read”). (2) DIRECTV’s and symbols: These generic symbols also fail to clearly and conspicuously disclose the material terms of the premium channel negative option. Even those consumers who recognize these symbols as interactive—a dubious proposition7—would have no indication that the content hidden behind them provides information about the premium channel negative option. These symbols litter the webpages in DIRECTV’s online purchase flow process, appearing next to scores of displayed statements and icons. When hovered-over or clicked on, the majority of these symbols do not display text that relates to the “free” premium channel promotion. On the contrary, many display generic promotional language, such as website does not indicate that material terms of DIRECTV’s “free” premium channel promotion would be located behind a select few of a myriad, identical symbols that clutter the website. . (Stahl Ex. D at 11:23.) In short, the 7 (Ortiz Ex. Q at 23.) DIRECTV has not in the ordinary course of business (See Ortiz Ex. B at 64:16-65:6.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 20 of 29 (3) DIRECTV’s hidden table on the Cart page: DIRECTV’s hidden table in the Cart page also fails the clear and conspicuous test. The tab used to activate this hidden table in the prior version of the Cart page ( ), and the analogous link used in the current version ( ) are not conspicuous; they are entirely avoidable. These are not located proximately near the premium channels promotion, and they use a generic label that does not reference the premium channels. (Stahl Ex. D at 10:50; Gonzalez Ex. A at 23:30.) The text is tiny, and given the dull, gray background, it is overshadowed by other larger, brighter elements. (Id.) The gray-on-gray font used in the tab is barely legible. Curiously, DIRECTV chose and kept this tab even though it knew (Ortiz Ex. L at 7.) Additionally, this tab bears no indication of interactive functionality, (See Ortiz Ex. H at 57:18-59:08) (Ortiz Ex. Q at 33.) Finally, consumers who could find and activate the tab would unveil a complicated spreadsheet-style table that displayed a jarring array of information: nearly 100 cells of pricing information (credits and debits) in one glance. (Stahl Ex. D at 14:11-14:36; Gonzalez Ex. A at 24:29-24:45.) (Ortiz Ex. Q at 33.) DIRECTV’s own representative on disclosure research has confirmed what is plainly evident from the face of DIRECTV’s website: (Ortiz Ex. E at 70:2-7.) 3. The undisputed material facts demonstrate that DIRECTV has not obtained consumers’ express informed consent to the material terms of its “free” premium channel negative option. ROSCA’s section 8403(2) mandates that Internet sellers obtain consumers’ “express informed consent” before charging them under the negative option. The term “express” means CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 21 of 29 “made known distinctly and explicitly.” BLACK’S LAW DICTIONARY (10th ed. 2014). The term “informed consent” means “[a] person’s agreement to allow something to happen, made with full knowledge of the risks involved and the alternatives.” Id. DIRECTV has not complied with ROSCA’s express informed consent requirement. Because, as demonstrated above, DIRECTV has not presented the material terms of the premium channel negative option clearly and conspicuously, it could not have secured consumers’ express informed consent. See Health Formulas, 2015 WL 2130504, at 16 (under ROSCA, “inadequate disclosures constitute evidence that Defendants often do not obtain consumers’ express informed consent before charging their cards or accounts”); see also John Beck Amazing Profits, 865 F. Supp. 2d at 1077 (same with respect to analogous mandates under the TSR). C. Summary judgment is appropriate on DIRECTV’s affirmative defenses of laches, waiver, and estoppel. 1. The FTC conducted its own independent investigation of DIRECTV. The Commission granted FTC staff a broad mandate to investigate DIRECTV’s advertising practices. On April 23, 2010, the Commission issued the first of two Civil Investigative Demands (“CID”) to DIRECTV. (Declaration of Thomas Syta, filed herewith, (“Syta”) ¶¶ 6-7, 21.) These CIDs covered all of the deceptive conduct subsequently charged in the Complaint. (Id. ¶¶ 6-7, 21, Exs. A,B.) As the FTC was starting its investigation of DIRECTV in 2010, 22.) . (Ortiz Ex. D at 54:10-11; 55:12- (Id.) Although FTC staff attorneys communicated with staff of some of the States’ Attorneys General given their common interest, the FTC conducted its own investigation independently of the States. (Syta ¶ 11.) There is no documented evidence of an offer by DIRECTV to the FTC to have it resolve its investigation of DIRECTV by joining the multistate settlement negotiation. (Id. ¶ 12.) There is also no documented evidence of a commitment by the FTC to DIRECTV to stop investigating or prosecuting any DIRECTV practices that may have been addressed by the multistate settlements. (Id .¶13; see also Ortiz Ex. D at 87:10-14; 88:6-7 ( CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 22 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 commitment by the FTC that, as a result of the multistate settlements, the FTC would reorient its investigation to conduct that fell outside of whatever practices the multistate settlements covered. ).) Nor is there any documented evidence of a (Syta ¶ 16.) DIRECTV knew that the FTC’s ongoing investigation covered issues similar to those that it settled with the States. DIRECTV remained well informed about the proceeding of the FTC’s investigation and what conduct the FTC was investigating. Throughout the investigation, FTC staff exchanged thousands of emails with DIRECTV counsel. (Id. ¶ 9.) In August 2012, as part of settlement negotiations, the FTC sent DIRECTV a draft of a proposed settlement agreement (complaint and order). (Id. ¶ 19.) That draft complaint alleged misconduct similar to what the FTC ended up alleging in the Complaint. (Id.) The FTC’s investigation lasted until March of 2015. DIRECTV’s own conduct contributed to the length of the investigation. First, DIRECTV repeatedly asked for, and received, numerous extensions to respond to the Commission’s CIDs, and then dragged out its responses. (Id. ¶¶ 18, 21.) In fact, . (Ortiz Ex. D at 149:25-150:11.) Additionally, DIRECTV and the FTC engaged in protracted settlement discussions. DIRECTV concedes that . (Id. at 179:11-14.). 2. The undisputed facts disprove DIRECTV’s theory underpinning its estoppel, laches, and waiver defenses. The predicate theory behind DIRECTV’s affirmative defenses is that DIRECTV invited the FTC to participate in the multistate negotiations, disclosing to the FTC the negotiated settlement terms; the FTC declined; and then, years later, the FTC sprung to sue DIRECTV for that very same conduct covered in those multistate settlement terms. (DIRECTV’s Opp’n to Mtn. to Strike (Dkt. 36) at 8-9; 2nd Ans. at 8-10.) When the FTC moved to strike these defenses, the Court gave DIRECTV an opportunity to prove its theory with facts under the heightened standards applicable to federal law enforcement agencies. (Dec. 21, 2015 Court Order (Dkt. 88) at 3-10.) Now, after the close of fact discovery, it is clear that DIRECTV’s only basis for these allegations is the same as it was during the pleading stage: unsupported conjecture and CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 18 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 23 of 29 conclusory opinions by the company’s outside counsel, Mr. Friedman. Mr. Friedman is counsel of record in this case . (Ortiz Ex. D at 18:6-23.) DIRECTV designated him alone as the company’s witness under Federal Rule of Civil Procedure 30(b)(6) to testify about DIRECTV’s affirmative defenses. The objective, undisputed evidence developed through discovery, including Mr. Friedman’s own statements, demonstrates that DIRECTV’s theory, and these three affirmative defenses, have no factual merit. That evidence includes Mr. Friedman’s memorialized statements made at the time that he claims he was extending invitations to the FTC. On October 12, 2010, Mr. Friedman wrote to the FTC staff conducting the investigation: (Ortiz Ex. S at 36 (emphasis added).) Mr. Friedman testified that this email represents (Ortiz Ex D. at 81:10-14; 95:11–96:13.) It is clear from the face of his email .8 8 During the deposition, DIRECTV’s counsel acknowledged that (Ortiz Ex. D at 81:19-20.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 19 . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 24 of 29 (Ortiz Ex. S at 36.) FTC staff did not agree to these untenable propositions. (See Ortiz Ex. D at 180:17-20 ) To Mr. Friedman that meant that (Id. at 63:21). This email is uncontroverted evidence that DIRECTV never earnestly invited the FTC into the multistate settlement negotiations. First, according to Mr. Friedman’s own testimony, Thus, . Second, in this email, (Id. at 54:4-24.) That request makes no sense if Mr. Friedman had already shared those terms with those same FTC attorneys. In fact, Mr. Friedman did not send a copy of the multistate settlement to FTC staff until December 15, 2010, after it had been executed by the parties. (Ortiz Ex. S at 39 .) In sum, DIRECTV’s theory collapses when put to the test of discovery. DIRECTV’s only evidence is Mr. Friedman’s subjective belief that the FTC should have acted differently. (See Ortiz Ex. D at 176:15-177:17 ( .) DIRECTV should not escape summary judgment on such thin grounds. See Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337, 345 (9th Cir. 1995) (finding witness’s assumptions formed from conversations insufficient to defeat summary judgment); Krouch v. Wal-Mart Stores, Inc., No. 12-cv-02217, 2014 WL 5463333, at 8-9 (N.D. Cal. Oct. 28, 2014) (granting summary judgment where the “undisputed evidence contradict[ed] plaintiff’s testimony, which can only be reasonably viewed as a self-serving attempt to avoid summary judgment”). 3. The undisputed material facts establish that DIRECTV cannot prevail on its estoppel defense. To prevail on its estoppel defense, DIRECTV first would have to prove the traditional CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 25 of 29 elements of estoppel: (1) the FTC knew the facts; (2) the FTC intended that DIRECTV act on its conduct, or acted such that DIRECTV had a right to believe it was so intended; (3) DIRECTV was ignorant of the true facts; and (4) DIRECTV relied on the FTC’s conduct to its injury. United States v. Ruby Co., 588 F.2d 697, 703 (9th Cir. 1978). DIRECTV must also prove two additional requirements to assert estoppel against the government: (5) affirmative misconduct going beyond mere negligence; and (6) the wrongful conduct threatened to work a serious injustice and that the public’s interest will not suffer undue damage. Watkins v. U.S. Army, 875 F.2d 699, 706-07 (9th Cir. 1989). DIRECTV cannot establish affirmative misconduct by the FTC because there is no evidence of “an affirmative misrepresentation or affirmative concealment of a material fact . . . such as a deliberate lie or a pattern of false promises.” Baccei v. United States, 632 F.3d 1140, 1147 (9th Cir. 2011). Through discovery, DIRECTV has clarified that its factual basis for the estoppel defense is 171:23). (Ortiz Ex. D at 167:21- (Id. at 49:14-50:2; 96:10-13.) It has only Mr. Friedman’s subjective opinions. Specifically, Mr. Friedman testified that (Id. at 180:7-181:1.) (Id.) Even assuming Mr. Friedman’s recollections are true and accurate, they fall short of affirmative misconduct. First, the fact that the FTC did not object to the multistate settlements is not evidence of any misrepresentation, lie, or false promise. Mr. Friedman admits that On the contrary, according to Mr. Friedman, (Id. at 85:11-15; 87:3-8.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 26 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (Id. at 88:13-16.) Mr. Friedman (id. at 91:13-16), even though the FTC is not required to participate in, approve, or object to settlements entered into by other parties. Mr. Friedman’s subjective extrapolations from the fact that the FTC did not lodge a formal objection to DIRECTV’s settlement agreements with the States should not preclude the FTC from enforcing federal law. See Cadwalader v. United States, 45 F.3d 297, 299-300 (9th Cir. 1995) (government’s failure to inform parties of legal insufficiencies is “not affirmative misconduct”). Second, Mr. Friedman’s claim that is unavailing because, by Mr. Friedman’s own acknowledgment, . DIRECTV knew that the FTC’s investigation was broader than just focusing on the practices addressed by the multistate settlements. For example, FTC also investigated and ultimately alleged conduct that violated ROSCA, a law that was not even in effect when DIRECTV consummated the multistate settlements. Thus, there was no . (Ortiz Ex. D at 102:15-20.) Additionally, the untruth in (Id. at 91:19-20.) Such a truthful statement cannot give rise to estoppel. See United States v. Philip Morris Inc., 300 F. Supp. 2d 61, 71-72 (D.D.C. 2004) (rejecting estoppel where defendants “failed to present evidence that could constitute a misrepresentation by the Government”). Finally, the uncontroverted evidence shows that DIRECTV knew that the FTC was continuing to investigate many of the same practices addressed in the multistate settlements. In February of 2011, just two months after executing the multistate settlements—and then again in 2012, 2013, 2014, and 2015—DIRECTV described the FTC’s ongoing investigation in its public SEC filings as relating to “issues similar to those resolved with the multistate group of state attorneys” and DIRECTV’s ongoing negotiations with the FTC. (Ortiz Ex. BB at 35; see also id. Ex. CC at 38, 133; Ex. DD at 39, 132; Ex. EE at 34, 104; Ex. FF at 42, 129; Ex. HH at 4-6.) Additionally, in August 2012, as part of settlement negotiations the FTC sent DIRECTV a draft CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 22 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 27 of 29 complaint, which alleged many of the same practices the FTC prosecutes in this action. (Syta ¶ 19.) This uncontroverted evidence establishes that DIRECTV knew throughout the FTC’s investigation that the FTC was continuing to investigate conduct that overlapped with the multistate settlements. Therefore, DIRECTV cannot establish even the traditional elements of estoppel. See United States v. Kim, 806 F.3d 1161, 1169 (9th Cir. 2015) (defendants’ estoppel theory “simply does not add up” given evidence of their knowledge of the underlying facts). 4. The undisputed material facts establish that DIRECTV cannot prevail on its laches defense. Laches can apply against a plaintiff who, “with full knowledge of the facts, acquiesces in a transaction and sleeps upon his rights.” Evergreen Safety Council v. RSA Network Inc., 697 F.3d 1221, 1226 (9th Cir. 2012) (citation omitted). To prevail on its laches defense, DIRECTV must establish that the FTC engaged in both affirmative misconduct and unreasonable delay that prejudiced DIRECTV. (See Dkt. 88 at 3-4.) As explained above, none of the evidence shows affirmative misconduct by the FTC. There is also no evidence of an unreasonable delay by the FTC. The length of the FTC’s investigation of DIRECTV—almost five years—is not on its face unreasonable. See U.S. v. Ruby Company, 588 F.2d 697 n.10 (9th Cir. 1978) (rejecting laches despite decades of government delay in asserting rights to public lands). Nor does it rise to “affirmative misconduct.” Gonzales-Rios v. Holder, 361 F.Appx. 833, 834 (9th Cir. 2010) (“Delay alone” not sufficient to establish affirmative misconduct for estoppel). The FTC’s investigation took a long time in large part because DIRECTV asked for, and received, numerous extensions to respond to the Commission’s CIDs, and also engaged in protracted (but ultimately fruitless) settlement negotiations with the FTC. (Syta ¶¶ 18-23.) DIRECTV acknowledges that (Ortiz Ex. D at 179:11-14.) Moreover, DIRECTV acknowledges DIRECTV concedes that (Id. at 114:14-21.) Indeed, (Id. 31:23-32:4.) Thus, this is not a case where the FTC sat dormant for years before springing this action on DIRECTV. Cf. Chamlikyan v. Bardini, No. 10-cv-00268, 2010 WL 5141841, at 6 (N.D. Cal. Dec. 13, 2010) (characterizing as “troubling” the government’s unexplained eight-year delay in processing an CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 28 of 29 asylum application, yet still rejecting the laches defense). Finally, the undisputed facts show that DIRECTV suffered no prejudice. DIRECTV theory of prejudice is that, in reliance on the FTC not joining the multistate settlements and not objecting to them, DIRECTV implemented advertising disclosure practices allegedly consistent with the multistate settlements. (2nd Ans. at 8-9.) Yet DIRECTV concedes that the multistate settlements do not conflict with the FTC Act (Dkt. 36-1 at ¶¶ 18-29), and the settlement orders themselves do not release DIRECTV from compliance with federal laws (Dkt. No. 36-2 at 38 (¶ 10.1).) DIRECTV also concedes that (Ortiz Ex. D at 115:11-116:1.)9 Regardless of how DIRECTV has chosen to comply with its multistate settlement agreements, one thing remained clear: DIRECTV had to obey federal law. It did not, and that is why the FTC filed this action. Thus, there is no prejudice here. See Hooks v. NLRB, 72 F. Supp. 3d 1168, 1182 (D. Or . 2014) (no prejudice where “the consequences Respondents face are the same now as they would have if Petitioner had filed its petition earlier”). 5. The undisputed material facts establish that DIRECTV cannot prevail on its waiver defense. Waiver is the intentional relinquishment of a known right. Alocozy v. U.S. Citizenship & Immigration Servs., 704 F.3d 795, 797 (9th Cir. 2012). To prevail on this defense against the FTC, DIRECTV must present evidence that the FTC “unmistakabl[y]” relinquished its rights to prosecute DIRECTV. (Dkt. 88 at 6.) Unmistakable waiver cannot be implied. United States v. Cherokee Nation of Oklahoma, 480 U.S. 700, 707 (1987). Here, however, the undisputed facts show that DIRECTV’s waiver defense is predicated entirely on implied conduct. Mr. Friedman has conceded under oath that 9 These admissions by DIRECTV highlight the logical flaw in Mr. Friedman’s opinion that (Ortiz Ex. D at 113:2-4.) What reason would the FTC have to object to a settlement agreement the terms of which did not conflict with the federal laws enforced by the FTC? Even in there was such conflict, DIRECTV can point to no obligation by the FTC to intervene in (or approve) settlement agreements by third parties. CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 183 Filed 09/27/16 Page 29 of 29 (Ortiz Ex. D at 87:10-14, 88:6-7.) Instead, Mr. Friedman says (Id. 87:21-24; 88:6-7; 193:12-17.) Even if Mr. Friedman’s subjective impressions were accurate, they would still fail the unmistakability test. See Arizona v. Tohono O'odham Nation, 818 F.3d 549, 560 (9th Cir. 2016) (failure to object does not amount to “clear, decisive and unequivocal conduct”); see also United States v. Philip Morris Inc., 300 F. Supp. 2d 61, 69 (D.D.C. 2004) (rejecting waiver defense based on defendants’ subjective view that the government’s silence in the face of unlawful conduct amounted to acquiescence.) V. CONCLUSION For the foregoing reasons, the FTC requests that the Court grant summary judgment in the FTC’s favor on Counts III and IV. The FTC seeks only a finding of liability on these counts, with equitable relief to be determined at trial, along with liability on the remaining counts. Additionally, the FTC requests that the Court grant summary judgment in the FTC’s favor on DIRECTV’s estoppel, waiver, and laches affirmative defenses. Dated: September 22, 2016 Respectfully Submitted, /s/ Boris Yankilovich Boris Yankilovich Attorney for Plaintiff Federal Trade Commission CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-09-27	184	EXHIBITS re 177 Administrative Motion to File Under Seal CORRECTION OF DOCKET # [177-3] and [177-4] filed byFederal Trade Commission. (Attachments: # 1 Exhibit)(Related document(s) 177 ) (Edmondson, Eric) (Filed on 9/27/2016) (Entered: 09/27/2016)	Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 1 of 29 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT BY THE FEDERAL TRADE COMMISSION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: October 27, 2016 Time: 2:00 p.m. Judge: Hon. Haywood S. Gilliam, Jr. Location: San Francisco Courthouse Courtroom 10, 19th Floor CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 2 of 29 TABLE OF CONTENTS NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT ................. 1 MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 1 I. II. INTRODUCTION .............................................................................................................. 1 STATEMENT OF ISSUES TO BE DECIDED ................................................................. 2 III. THE UNDISPUTED MATERIAL FACTS........................................................................ 2 A. B. DIRECTV's promotion and sales of the premium channel negative option .......... 2 DIRECTV’s website and its disclosures of the material terms of the premium channel negative option. ........................................................................................ 4 IV. ARGUMENT ...................................................................................................................... 8 Legal Standard For Summary Judgment.. ............................................................... 8 A. B. Summary judgment in the FTC’s favor is appropriate on the Complaint’s ROSCA claims (Counts III and IV)... ................................................................................... 9 1. C. 2. 3. The Court can resolve the alleged violations of ROSCA’s clear and conspicuous and express informed consent provisions based on a facial assessment of DIRECTV’s website.. ........................................................ 11 The undisputed material facts demonstrate that DIRECTV has not clearly and conspicuously disclosed the material terms of its premium channel negative option. ......................................................................................... 11 The undisputed material facts demonstrate that DIRECTV has not obtained consumers’ express informed consent to the material terms of its “free” premium channel negative option. ................................................. 16 Summary judgment is appropriate on DIRECTV’s affirmative defenses of laches, waiver, and estoppel.............................................................................................. 17 1. The FTC conducted its own independent investigation of DIRECTV. .... 17 The undisputed facts disprove DIRECTV’s theory underpinning its 2. estoppel, laches, and waiver defenses. ...................................................... 18 The undisputed material facts establish that DIRECTV cannot prevail on its estoppel defense. .................................................................................. 20 The undisputed material facts establish that DIRECTV cannot prevail on its laches defense....................................................................................... 23 The undisputed material facts establish that DIRECTV cannot prevail on its waiver defense. ..................................................................................... 24 3. 4. 5. V. CONCLUSION ................................................................................................................. 25 CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 3 of 29 CASES TABLE OF AUTHORITIES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ................................................................... 9 Alocozy v. U.S. Citizenship & Immigration Servs., 704 F.3d 795 (9th Cir. 2012) ....................... 24 Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337 (9th Cir. 1995) ................ 20 Arizona v. Tohono O'odham Nation, 818 F.3d 549 (9th Cir. 2016) ............................................. 25 Baccei v. United States, 632 F.3d 1140 (9th Cir. 2011) ............................................................... 21 Cadwalader v. United States, 45 F.3d 297 (9th Cir. 1995) .......................................................... 22 Chamlikyan v. Bardini, No. 10-cv-00268, 2010 WL 5141841 (N.D. Cal. Dec. 13, 2010) .......... 23 Evergreen Safety Council v. RSA Network Inc., 697 F.3d 1221, (9th Cir. 2012) ......................... 23 FTC v. AMG Servs., 29 F. Supp. 3d 1338 (D. Nev. 2014) ........................................................... 12 FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048 (C.D. Cal. 2012) ............................... 12, 15 FTC v. Cyberspace.com, 453 F.3d 1196 (9th Cir. 2006) .............................................................. 11 FTC v. EDebitPay, LLC, 695 F.3d 938 (9th Cir. 2012) ................................................................ 11 FTC v. Health Formulas, LLC, 2015 WL 2130504 (D. Nev. May 6, 2015) .......................... 15, 17 FTC v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012) ................ 10, 17 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ............................................................................... 9 FTC v. Medlab, Inc., 615 F. Supp. 2d 1068 (N.D. Cal. 2009) ...................................................... 10 Gonzales-Rios v. Holder, 361 F.Appx. 833 (9th Cir. 2010) ......................................................... 23 Hooks v. NLRB, 72 F. Supp. 3d 1168 (D. Or . 2014).................................................................... 24 Krouch v. Wal-Mart Stores, Inc., No. 12-cv-02217, 2014 WL 5463333 (N.D. Cal. Oct. 28, 2014) ................................................................................................................................................... 20 Nelson v. Pima Cmty. Coll., 83 F.3d 1075 (9th Cir. 1996) ............................................................. 9 Soremekun v. Thrifty Payless, Inc., 509 F.3d 978 (9th Cir. 2007) .................................................. 9 U.S. v. Ruby Company, 588 F.2d 697 (9th Cir. 1978) .................................................................. 23 United States v. Cherokee Nation of Oklahoma, 480 U.S. 700 (1987) ......................................... 24 United States v. Kim, 806 F.3d 1161 (9th Cir. 2015).................................................................... 23 CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 4 of 29 United States v. Philip Morris Inc., 300 F. Supp. 2d 61 (D.D.C. 2004) ................................. 22, 25 United States v. Ruby Co., 588 F.2d 697 (9th Cir. 1978) ............................................................. 21 Watkins v. U.S. Army, 875 F.2d 699 (9th Cir. 1989) .................................................................... 21 STATUTES 15 U.S.C. § 8401 ............................................................................................................................. 9 15 U.S.C. § 8403 ................................................................................................................... 1, 9, 10 15 U.S.C. § 8404 ............................................................................................................................. 9 REGULATIONS 16 C.F.R. § 310.2 .......................................................................................................................... 10 RULES Fed. R. Civ. P. 56 ............................................................................................................................ 9 OTHER BLACK’S LAW DICTIONARY (10th ed. 2014) ................................................................................. 17 CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 5 of 29 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 6 of 29 Friedman (who is also counsel of record in this case). His testimony undermines these defenses. Moreover, the objective, uncontroverted evidence shows that DIRECTV knew that the FTC was proceeding with its own investigation independent of DIRECTV’s prior settlements with 50 states and the District of Columbia (collectively, “the States”). DIRECTV remained well aware of the scope and active status of the FTC’s investigation. Finally, the undisputed evidence shows that it was DIRECTV’s own delays in complying with the Commission’s investigation discovery, and the extensive settlement negotiations between the parties, that were largely responsible for the duration of the FTC’s investigation. II. STATEMENT OF ISSUES TO BE DECIDED Issue 1: Do the uncontroverted material facts establish that DIRECTV’s website has not disclosed the material terms of its premium channel negative option clearly and conspicuously, and failed to obtain consumers’ express informed consent to those terms? Issue 2: Do the uncontroverted material facts establish that DIRECTV’s affirmative defenses of estoppel, laches, or waiver are without merit? III. THE UNDISPUTED MATERIAL FACTS DIRECTV is the largest provider of direct-to-home digital television service in the United States. (2nd Am. Answer (Dkt. 93) (“2nd Ans.”) ¶ 10.) DIRECTV offers its service to consumers by subscription, which consists of television programming, necessary equipment, installation, and support services. (Id. ¶ 11.) A. DIRECTV’s promotion and sales of the premium channel negative option. At all times since ROSCA became effective in 2011, DIRECTV has offered new subscribers “free” access to premium channels (e.g., Cinemax, HBO, Showtime, STARZ) for three months. (Id. ¶14; Declaration of Kelly Ortiz, filed herewith, (“Ortiz”) Ex. A at 116:6-11.) DIRECTV has advertised its “free” premium channel promotion on its website, which allows consumers to subscribe to DIRECTV’s services. (2nd Ans. ¶ 23.) This “free” offer comes with a catch: it is a negative option. Unless the consumer affirmatively cancels the premium-channel programming before the end of the three-month promotional period, DIRECTV automatically charges the consumer for the premium channels at CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 7 of 29 whatever price prevails at that time. (Id. ¶¶ 14, 23; Ortiz Ex. A at 99:9-100:14; 119:5-18.) (See Ortiz Ex. Y at 22.) . (Ortiz Ex. X at 58; Ortiz Ex. F at 143:4-18; Ortiz ¶ 27 & Exs. Z, AA.) (Ortiz ¶ 27 & Exs. Z, AA.) (Id.) G at 189:23-190:7; Ex. A 136:20-137:7.) . (Ortiz Ex. X at 57; Ex. K at 103:4-107:15.) . (Id.) . (Id.) . (Ortiz Ex. Y at 22.) . (Ortiz Ex. U at 30.) (Ortiz Ex. C at 81:25-82:19.) DIRECTV identified . (Ortiz Ex. P at 6, 7; Ex. (Ortiz Ex. R at 39; Ex. W at 1-2; Ex. C at 237:22-238:13; 242:1-243:17.) The company also recognized that (Ortiz Ex. Y at 22; Ex. K at 143:9-145:12.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 8 of 29 (Id.) (Ortiz Ex. N at 3.) (Id. at 4.) (Ortiz Ex. O at 18; Ex. A at 118:19-119:4; see also Ortiz Ex. U at 30 ; Ex. C at 82:21-84:17.) (Ortiz Ex. R at 39; Ex. C at 242:1-243:13.). B. DIRECTV’s website and its disclosures of the material terms of the premium channel negative option. (See Ortiz Ex. H at 26:4-30:5, 35:15-36:5.) The FTC and DIRECTV do not dispute that the content of the website speaks for itself. (See 2nd Ans. ¶ 23.) In fact, both parties have submitted representative examples of each: an August 2013 website capture for the prior version, and an August 2015 website capture for the current version. (See Declaration of Ann Stahl, filed herewith (“Stahl”) ¶¶ 3-6 & Exs. A-D; Declaration of David Gonzales, filed herewith (“Gonzalez”), ¶¶ 4-5 & Ex. A.)1 1 DIRECTV itself presented to the Court versions of its website from August 2013 and August 2015, albeit through static screenshots, thereby conceding that these versions are representative for purposes of resolving the FTC’s ROSCA counts on summary judgment. (See Declaration of Karen Leever in support of DIRECTV’s Motion for Partial Summary Judgment & Exs. A, B (Dkt. 53-3, 53-4, 53-5.).) Similarly, the FTC presents versions of DIRECTV’s website from those points in time, but as video recordings and an interactive version of the 2013 site. Stahl Exhibit A is a version of DIRECTV’s website as it appeared in 2013, reconstructed by the FTC’s expert Nathan Good. (See Declaration of Dr. Nathaniel Good, filed herewith.) This version, called the “UX Site,” is an CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 9 of 29 36:5 (discussing consistency of the website design)). DIRECTV concedes that it has consistently disclosed terms of the premium channel offer behind hyperlinks and symbols. (See Dkt. 53-3 ¶¶ . (Ortiz Ex. H at 26:16-29:23; 35:15– 6, 8-9, 14-18, 20, 22-24.) The FTC’s Opposition to DIRECTV’s motion for partial summary judgment on the ROSCA counts describes the purchase process on both versions of DIRECTV’s website. (Dkt. 71 at pp. 3-10.) The FTC incorporates that factual description here. A review of this uncontroverted website evidence demonstrates that DIRECTV has not displayed the key material terms on the face of any of the webpages in the online purchase process, including: (1) the fact that consumers must call to cancel the negative option within the “free” promotional period or be automatically charged, and (2) the amount they will be charged if they do not cancel in time. DIRECTV does not display these terms on any of the webpages that comprise the website’s purchase process. (See Stahl Exs. B, C.) First, DIRECTV prominently advertises the “FREE” premium channel promotion on the website’s opening Home page (a/k/a Landing page). (Stahl Ex. B at 0:01-0:03, Ex. C at 0:01-0:03.) In the prior (2009-2014) version of the site, the terms of the premium channel negative option are not displayed anywhere. (Stahl Ex. D at 0:01- 1:18.) In the current version (2014-present) of the site, DIRECTV has an “Additional Details” hyperlink at the bottom of the Home page. (Gonzalez Ex. A at 0:01-1:22.) This link appears in tiny font at the bottom of the page, below an area of small-print legalese. (Id.) If a consumer should locate and click on this generically titled “Additional Details” link, the website would open a separate pop-up webpage that contains more than 50 lines of text displayed in densely packed, small gray font. (Id. at 23:55-24:20.) Among those lines is the following text: enhancement of the “Simulated Site” that the FTC filed along with its Opposition to DIRECTV’s Partial MSJ. (Dkt. 73-1.) Stahl Exhibits B-D, and Gonzales Exhibit A are video recordings taken by FTC investigators of DIRECTV’s live site in August of 2015 (Stahl Ex B, Gonzalez Ex. A) and of the UX Site (Stahl Exs. C, D). DIRECTV has not challenged the FTC’s presentation of substantially similar exhibits for purposes of summary judgment. (See generally DIRECTV Reply in Support of Partial Summary Judgment (Dkt. 94).) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 10 of 29 (Id. at 23:56.) In the next step in the purchase process—the Package Selection page—DIRECTV promotes the “FREE” premium channel offer. (Stahl Ex. B at 0:58-1:05; Ex. D at 1:29-1:37.) The page does not disclose the negative option or its terms. Instead, in the prior version of the site, DIRECTV includes the “Additional Offer Details” hyperlink at the very bottom of the page, not near the promotion. (Stahl Ex. D at 4:50.) Clicking that link opens up a popup page that, among approximately 60 lines of text, contains “promotional price period(s)” language similar to that displayed above. (Id. at 4:55-6:18.) In the current version of the site, besides the “Additional Offer Details” link discussed above, any suggestion of a negative option is hidden behind hyperlinks embedded in a select few among the numerous identical symbols scattered throughout the page, many of which are themselves hidden behind embedded hyperlinks. (Gonzalez Ex. A. at 2:36-11:36.) Clicking on one of those select few symbols (located above a “STARZ” channel logo) opens a popup box containing the following text in tiny gray font: “Get the most premium move channels FREE for 3 months as part of our new customer offer. After promotional period ends, you will be charged the price in effect unless you call to cancel.” (Id. at 2:45.) During the next step in the process—the “Add more great programming” page, which exists only in the current version of the website—DIRECTV again promotes the premium channels. (Stahl Ex. B 1:24-1:34.) The page does not disclose the terms of the negative option. (Id.) To learn about the negative option, users would have to click on the nondescript symbol next to a block of dense gray-on-gray text. (Gonzalez Ex. A at 11:53-12:24.) During the next step in the process—the Receiver and Cart pages—DIRECTV similarly hides any suggestion of a negative option behind generically labeled hyperlinks and symbols. Both the old and the new website versions of these pages have the “Additional Offer Details” link buried at the bottom of the page. (Gonzalez Ex. A at 22:01; 22:44, 23:50; Stahl Ex. D at CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 11 of 29 7:38, 12:48.) On the Cart page, both versions use generically labeled symbols. The prior website version used symbols, which act as info-hovers: if a user’s mouse hovers over them on screen, a textbox appears. (Stahl Ex. D at 10:55-13:12.) Most of these symbols reveal simple promotional messaging, such as: “See blockbuster movies, bold original series and exclusive sports on 11 channels, 9 in HD.” (Id. at 11:23.) Only one of sixteen of these symbols on the Cart page uncovers the following textbox: “For a limited time, you get every premium move [sic] channel FREE for 3 months as part of our new customer offer. After promotional period ends, you will be charged the price in effect unless you call to cancel.” (Id. at 11:38.) The current version of the website hides similar text behind some of the numerous identical symbols scattered across the Cart page. (Gonzalez Ex. A at 22:51-23:50.) The prior version of the Cart page also contained a small, generically labeled, gray-font- on-gray-background tab, nowhere near the premium promotional messaging. (Stahl Ex. D at 10:47). The current version contains an analogous hyperlink located in the middle of the Cart page, also not proximate to the premium channel promotional message. (Gonzalez Ex. A at 23:30.) If a consumer would find and click on this tab or link, the website would unveil a complex, multiple-row table that lists various dollar figures in a six- month snapshot across seventeen rows and six columns—displaying nearly 100 cells at a glance. (Stahl Ex. D at 14:11-14:36; Gonzalez Ex. A at 24:29-24:55.) Throughout the last step in the purchase process—the Checkout pages—DIRECTV does not promote the “free” premium channel offer. There is no disclosure about the terms of this negative option promotion on the face of these Checkout pages. (Stahl Ex. B at 2:25-5:10; Ex. C at 0:50-2:10.) The prior version of the website did not even disclose the existence of the negative option or its material terms behind the generic “Terms and Conditions” hyperlinks found on the bottom of the Checkout pages, including the link near the large, orange “I Accept. Submit My Order” button” on the final Checkout page. (Stahl Ex. D at 16:12-16:54, 18:28-18:55.) The Terms and Conditions popup page behind that link did not contain any disclosure about the premium channels until September 2014. (See Ortiz Ex. JJ at 6 (RFA No. 1137).) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 12 of 29 The current version of the website also makes no disclosures about the negative option on the face of the Checkout pages, but instead contains the standard “Additional Offer Details” and “Terms & conditions” hyperlinks next to each other at the bottom of the page. (Gonzalez Ex. A at 27:30, 28:26.) The final Checkout screen also contains generic “I agree to the Terms and Conditions” language next to a checkbox and a large, orange “Place My Order” button. (Id. at 29:05-29:08.) The words “Terms and Conditions” function as a hyperlink. (Id.) It is not necessary to click on that link in order to check the checkbox or to click “Place My Order,” which completes the transaction. (See Declaration of Ann Stahl in Support of FTC Opp’n to DIRECTV MSJ Ex. A (Dkt. 74-1) at 4:12-4:50; see also Stahl Ex. C 2:52-2:56 (completing transaction).) If a consumer were to click on that “Terms and Conditions” link, the website would open a Terms & Conditions popup page—containing 43 lines of small, densely packed gray text. (Gonzalez Ex. A at 29:05-29:34.) That popup page contains the following snippet: (Id. at 29:14.) As the website evidence shows, consumers can proceed through the entire purchase process without ever clicking or hovering over any of the hyperlinks or symbols described above. (See Stahl Ex. B at 0:01-5:18, Ex. C at 0:01-3:12; Ortiz Ex. F at 174:1-175:20.) DIRECTV has neither required nor actively prompted consumers to click on these links and symbols to learn about the premium channel negative option and its material terms. (See Stahl Ex. A; Ex. B at 0:01-5:18; Ex. C at 0:01-3:12.) ), 69:4-14 ( IV. ARGUMENT . (See Ortiz Ex. B at 62:4-6 ), 63:12-14 and 64:16-20 ( ).) A. Legal Standard For Summary Judgment. Summary judgment on any claim or defense is proper if “there is no genuine dispute as to CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 13 of 29 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the initial burden of informing the court of the basis of its motion, and “identifying those portions of ‘pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets that initial burden, the burden shifts to the nonmoving party to present evidence showing that disputes about genuine issues of fact remain. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The nonmoving party must “designate ‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 U.S. 317 at 324. “Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). “Likewise, mere allegation and speculation do not create a factual dispute for purposes of summary judgment.” Nelson v. Pima Cmty. Coll., 83 F.3d 1075, 1081-82 (9th Cir. 1996). B. Summary judgment in the FTC’s favor is appropriate on the Complaint’s ROSCA claims (Counts III and IV). Congress enacted ROSCA to curb the pernicious practice of consumer entrapment in unwanted negative options through Internet transactions, and designated the FTC as the statute’s federal law enforcement authority. See 15 U.S.C. §§ 8401(8), 8404. Consequently, Congress mandated that Internet negative option sellers provide clear and conspicuous disclosure and obtain consumers’ express informed consent. 15 U.S.C. § 8403(1), (2); see also Dkt. 74-10 at 7 (Senate Committee on Commerce, Science, and Transportation Chairman concluding that such misconduct must “come[ ] to a complete halt”). Specifically, ROSCA prohibits sellers from charging consumers for goods or services in Internet transactions through a negative option feature, unless the seller “provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information.” 15 U.S.C. § 8403(1). ROSCA also requires sellers to obtain a “consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account, or other financial account . . . .” CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 14 of 29 15 U.S.C. § 8403(2).2 1. The Court can resolve the alleged violations of ROSCA’s clear and conspicuous and express informed consent provisions based on a facial assessment of DIRECTV’s website. Consistent with ROSCA’s mandate to display material terms clearly and conspicuously, it is proper for the Court to decide the clarity or conspicuousness of DIRECTV’s disclosures as a matter of law based on its facial review of the website. Federal courts can, and do, adjudicate FTC Act deception cases based on a facial assessment of disclosures. See FTC v. Medlab, Inc., 615 F. Supp. 2d 1068, 1077-78 (N.D. Cal. 2009) (granting FTC’s summary judgment after conducting a facial analysis to determine that defendants’ disclaimers—presented in “minuscule type at the bottom of the advertisements”—were insufficient to cure the deception). The Court in Medlab expressly rejected the argument that the FTC must present extrinsic evidence beyond what is plainly evident on a facial review. Id. at 1078 (rejecting the need for “consumer survey data in order to prove what is obvious to any rational reader . . . ”). Likewise, courts can and do adjudicate “clear and conspicuous” disclosure mandates similar to ROSCA’s upon a facial review of the underlying dissemination materials. See FTC v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012), aff’d, 644 Fed. Appx. 709 (9th Cir. 2016) (finding on summary judgment that defendants’ disclosures of negative option material terms were not clear and conspicuous, in violation of the Telemarketing Sales Rule (“TSR”), based on a facial review of sales call transcripts). The Court can also make a dispositive ruling on ROSCA’s express informed consent provision based on its facial review of DIRECTV’s website. See id. at 1078 (granting summary judgment on the TSR’s “express informed consent” requirement after determining, based on a facial review, that defendants’ disclosures were inadequate).3 2 A “negative option feature” is defined as “an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(u). DIRECTV does not dispute that ROSCA applies to the negative option offer associated with its sale of the premium channel package over the Internet. (2nd Ans. ¶ 1; see generally DIRECTV MSJ (Dkt. 53).) 3 Like ROSCA as applied to Internet sellers, the TSR prohibits telemarketers from failing to disclose “in a clear and conspicuous manner . . . the material terms and conditions of the negative option feature.” 16 C.F.R. § 310.3(a)(1)(vii). Also like ROSCA, the TSR requires telemarketers to obtain consumers’ “express informed consent” to transactions. 16 C.F.R. § 310.4(a)(7). CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 15 of 29 The resolution of the ROSCA counts on summary judgment is particularly appropriate here, since both sides agree that there is no genuine dispute about the material facts bearing on the disposition of these claims. (See DIRECTV MSJ (Dkt. 53) at 21 (“the undisputed evidence conclusively demonstrates that there are no material factual disputes as to Counts III and IV.”). Most notably, the parties do not dispute the appearance and functionality of DIRECTV’s website—the factual foundation upon which the Court would conduct its facial analysis.4 2. The undisputed material facts demonstrate that DIRECTV has not clearly and conspicuously disclosed the material terms of its premium channel negative option. In evaluating the clarity and conspicuousness of disclosures, courts consider a number of factors. Courts look to placement—specifically, whether the disclosures are located where consumers are unlikely to see them (such as the bottom of the webpage), or in a context different from the claims the disclosures qualify (such as on a separate “Terms and Conditions” webpage). See FTC v. Cyberspace.com, 453 F.3d 1196, 1200-01 (9th Cir. 2006) (disclosures found inadequate when placed in small print on the back of a check); FTC v. Johnson, 96 F. Supp. 3d 1110, 1140 (D. Nev. 2015) (disclosures found inadequate when placed at the very top of the page or under the submit button); Medlab, 615 F. Supp. 2d at 1077 (disclosures found inadequate when placed at the bottom of a page). Courts also consider prominence: e.g., the font size, color, and style of the disclosure, as well as its prominence in comparison to other text or graphics in the advertisement. See FTC v. EDebitPay, LLC, 695 F.3d 938, 944 (9th Cir. 2012) (disclosure found inadequate when “consumers would have had to look at a small footnote buried in the middle of other dense footnotes”); Johnson, 96 F. Supp. 3d at 1140 (disclosure found inadequate when size of font was smaller when compared to rest of webpage). Similarly, courts look to whether other elements of 4 As explained in footnote 1, supra, DIRECTV has not challenged the FTC’s captures of the DIRECTV’s website, which form the factual basis of this motion. Moreover, fabricate a genuine dispute to defeat summary judgment based on speculative assertions that the FTC’s website captures may not be perfectly accurate. See Nelson v. Pima Cmty. Coll., 83 F.3d at 1081-82. (see Ortiz Ex. D at 152:3-6), DIRECTV cannot now CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 16 of 29 the advertisement overshadow the disclosures. See Johnson, 96 F. Supp. 3d at 1140) (disclosures found inadequate where statements about the “free” and “risk free” nature of the program were more eye-catching); FTC v. AMG Servs., 29 F. Supp. 3d 1338, 1353 (D. Nev. 2014) (hyperlink was inconspicuous where mandatory check boxes would “naturally draw a borrower’s attention” and where hyperlink was “buried in the fourth paragraph and overshadowed by two all caps hyperlinks”). The district court in Commerce Planet, 878 F. Supp. 2d 1048, applied these principles to a website’s disclosures of the terms of a negative option. Conducting a facial review, the court found that making disclosures behind a “Terms of Membership” hyperlink “buried at the bottom” of the webpage, not “in close proximity” to the claim, failed to prompt consumers to notice or open the link. The generic label “Terms of Membership” did not indicate that it had anything to do with a negative option plan. Moreover, the hyperlink sent consumers to a separate popup page and, thus, appeared in a “different context” than the promotional claims the disclosures were supposed to qualify. Finally, the disclosures on this popup page in one version of the website were buried along “with other densely packed information and legalese,” which undercut both conspicuousness and clarity. The Commerce Planet court also found the other fine-print disclosures on the payment page to be inadequate on their face, given their size, color, and placement at the bottom of the page. In sum, the court held that these disclosures by their “placement, wording, colorization, spacing, and size of the text” were “designed not be clear and conspicuous, but rather to mask information about [the defendants’] continuity program without entirely omitting the information.” Id. at 1065-68. Application of these principles shows that DIRECTV has failed to disclose the material terms of its premium channel negative option clearly and conspicuously. DIRECTV’s website does not display the existence of a negative option or its material terms on the face of any webpage in the online purchase process in proximity to the prominent “free” premium channel promotion. Instead, DIRECTV has hidden material terms of the premium channel negative option in three inconspicuous places: (1) behind tiny “Terms & Conditions” and “Additional [Offer] Details” hyperlinks; (2) behind a handful of generically labeled symbols— (prior CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 17 of 29 version) and (current version)—interspersed among scores of other such icons that have nothing to do with the premium channel negative option; and (3) behind a tiny, entirely avoidable tab on the Cart page: . Consequently, consumers can proceed through the entire purchase process and sign up for DIRECTV’s programming without once clicking on any of these generically labeled symbols, and without ever seeing any material terms. (See Stahl Ex. B at 0:01-5:18, Ex. C at 0:01-3:12; Ortiz Ex. F at 174:1-175:20.) Remarkably, DIRECTV has employed these disclosure practices even though 4, 32-35; see also Ortiz Ex. H at 10:22–11:06, 83:6–84:4 (DIRECTV’s former Director of Product Management and Strategy for its Digital Media Group acknowledging (Ortiz Ex. T at ).) Moreover, by 2013, DIRECTV knew that 19-20.) Nonetheless, DIRECTV continued to (Ortiz Ex. V at .5 As described below, DIRECTV’s use of these hyperlinks and similar symbols to disclose the material terms of its “free” premium channel negative option fails ROSCA’s clear and conspicuous mandate. (1) DIRECTV’s generically labeled hyperlinks: DIRECTV’s disclosure of material terms behind “Terms & Conditions,” “Additional Details,” and “Additional Offer Details” hyperlinks does not pass muster for conspicuousness. In all but at the last step in the purchase 5 (See Ortiz Ex. B at 69:4-14; see also id. at 62:4-6; 63:12-14; 64:16-65:6.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 18 of 29 process, DIRECTV displays these generically labeled links at the bottom of webpages, below the web fold, and in small font, surrounded by legalese fine print and other generic links, such as “Privacy policy.” (See, e.g., Stahl Ex. B at 1:06-1:07, Ex. D at 4:50.) In fact, (Ortiz Ex. Q at 23, 24.). Ex. M at 9; see also Ortiz Ex. L at 19 , and 29 .)6 (Ortiz Even on the last Checkout page in the purchase process, where DIRECTV displays its “Terms & Conditions” links near a large orange button to place the order, DIRECTV still fails the clear and conspicuous test. First, this Checkout page does not mention the premium channel offer at all. (Stahl Ex. B at 4:27-5:06; Ex. D at 17:26-18:27.) Instead, DIRECTV promotes this offer several steps earlier in the purchase process. Therefore, having already gone through multiple pages (which do specifically reference the “free” premium channel promotion) and upon arrival at the final Checkout page (which does not), consumers would have no reason to suspect that the generically labeled “Terms & Conditions” link would specifically disclose material terms of that promotion. Second, the Terms & Conditions popup page behind that link does not conspicuously disclose the material terms. In fact, in the prior version of the website, the Terms & Conditions popup page said nothing at all about the premium channel negative option. (Stahl Ex. D at 16:12- 6 Apart from these usability tests (Ortiz Ex. E at 41:11-42:11; 112:11-14) Additionally, DIRECTV admitted—or failed to properly deny—that it has not produced any such research to the FTC. (See Ortiz Ex. GG at 5-7 (RFA Nos. 5-10).) (id. at 68:19-69:18). CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 19 of 29 16:54, 18:28-18:55; see also Stahl Ex. A.) It was not until September 2014 that DIRECTV added the following statement to the Terms & Conditions popup page: (Gonzalez Ex. A at 29:14; Ortiz Ex. JJ at 6 (RFA No. 1137).) This statement appears in small gray font in middle of more than 40 lines of densely packed text. (Id.) This type of disclosure is not conspicuous. See Commerce Planet, Inc., 878 F.Supp.2d at 1065 (“the information about the continuity plan . . . is buried with other densely packed information and legalese, which makes it unlikely that the average consumer will wade through the material and understand that she is signing up for a negative option plan”); FTC v. Health Formulas, LLC, 2015 WL 2130504, at 16 (D. Nev. May 6, 2015) (in ruling that the FTC was likely to succeed on the merits of its ROSCA claims, finding inconspicuous disclosures “buried in fine print” or “stated in separate Terms and Conditions documents that consumers are not required to read”). (2) DIRECTV’s and symbols: These generic symbols also fail to clearly and conspicuously disclose the material terms of the premium channel negative option. Even those consumers who recognize these symbols as interactive—a dubious proposition7—would have no indication that the content hidden behind them provides information about the premium channel negative option. These symbols litter the webpages in DIRECTV’s online purchase flow process, appearing next to scores of displayed statements and icons. When hovered-over or clicked on, the majority of these symbols do not display text that relates to the “free” premium channel promotion. On the contrary, many display generic promotional language, such as website does not indicate that material terms of DIRECTV’s “free” premium channel promotion would be located behind a select few of a myriad, identical symbols that clutter the website. . (Stahl Ex. D at 11:23.) In short, the 7 (Ortiz Ex. Q at 23.) DIRECTV has not in the ordinary course of business (See Ortiz Ex. B at 64:16-65:6.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 20 of 29 (3) DIRECTV’s hidden table on the Cart page: DIRECTV’s hidden table in the Cart page also fails the clear and conspicuous test. The tab used to activate this hidden table in the prior version of the Cart page ( ), and the analogous link used in the current version ( ) are not conspicuous; they are entirely avoidable. These are not located proximately near the premium channels promotion, and they use a generic label that does not reference the premium channels. (Stahl Ex. D at 10:50; Gonzalez Ex. A at 23:30.) The text is tiny, and given the dull, gray background, it is overshadowed by other larger, brighter elements. (Id.) The gray-on-gray font used in the tab is barely legible. Curiously, DIRECTV chose and kept this tab even though it knew (Ortiz Ex. L at 7.) Additionally, this tab bears no indication of interactive functionality, (See Ortiz Ex. H at 57:18-59:08) (Ortiz Ex. Q at 33.) Finally, consumers who could find and activate the tab would unveil a complicated spreadsheet-style table that displayed a jarring array of information: nearly 100 cells of pricing information (credits and debits) in one glance. (Stahl Ex. D at 14:11-14:36; Gonzalez Ex. A at 24:29-24:45.) (Ortiz Ex. Q at 33.) DIRECTV’s own representative on disclosure research has confirmed what is plainly evident from the face of DIRECTV’s website: (Ortiz Ex. E at 70:2-7.) 3. The undisputed material facts demonstrate that DIRECTV has not obtained consumers’ express informed consent to the material terms of its “free” premium channel negative option. ROSCA’s section 8403(2) mandates that Internet sellers obtain consumers’ “express informed consent” before charging them under the negative option. The term “express” means CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 21 of 29 “made known distinctly and explicitly.” BLACK’S LAW DICTIONARY (10th ed. 2014). The term “informed consent” means “[a] person’s agreement to allow something to happen, made with full knowledge of the risks involved and the alternatives.” Id. DIRECTV has not complied with ROSCA’s express informed consent requirement. Because, as demonstrated above, DIRECTV has not presented the material terms of the premium channel negative option clearly and conspicuously, it could not have secured consumers’ express informed consent. See Health Formulas, 2015 WL 2130504, at 16 (under ROSCA, “inadequate disclosures constitute evidence that Defendants often do not obtain consumers’ express informed consent before charging their cards or accounts”); see also John Beck Amazing Profits, 865 F. Supp. 2d at 1077 (same with respect to analogous mandates under the TSR). C. Summary judgment is appropriate on DIRECTV’s affirmative defenses of laches, waiver, and estoppel. 1. The FTC conducted its own independent investigation of DIRECTV. The Commission granted FTC staff a broad mandate to investigate DIRECTV’s advertising practices. On April 23, 2010, the Commission issued the first of two Civil Investigative Demands (“CID”) to DIRECTV. (Declaration of Thomas Syta, filed herewith, (“Syta”) ¶¶ 6-7, 21.) These CIDs covered all of the deceptive conduct subsequently charged in the Complaint. (Id. ¶¶ 6-7, 21, Exs. A,B.) As the FTC was starting its investigation of DIRECTV in 2010, 22.) . (Ortiz Ex. D at 54:10-11; 55:12- (Id.) Although FTC staff attorneys communicated with staff of some of the States’ Attorneys General given their common interest, the FTC conducted its own investigation independently of the States. (Syta ¶ 11.) There is no documented evidence of an offer by DIRECTV to the FTC to have it resolve its investigation of DIRECTV by joining the multistate settlement negotiation. (Id. ¶ 12.) There is also no documented evidence of a commitment by the FTC to DIRECTV to stop investigating or prosecuting any DIRECTV practices that may have been addressed by the multistate settlements. (Id .¶13; see also Ortiz Ex. D at 87:10-14; 88:6-7 ( CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 22 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 commitment by the FTC that, as a result of the multistate settlements, the FTC would reorient its investigation to conduct that fell outside of whatever practices the multistate settlements covered. ).) Nor is there any documented evidence of a (Syta ¶ 16.) DIRECTV knew that the FTC’s ongoing investigation covered issues similar to those that it settled with the States. DIRECTV remained well informed about the proceeding of the FTC’s investigation and what conduct the FTC was investigating. Throughout the investigation, FTC staff exchanged thousands of emails with DIRECTV counsel. (Id. ¶ 9.) In August 2012, as part of settlement negotiations, the FTC sent DIRECTV a draft of a proposed settlement agreement (complaint and order). (Id. ¶ 19.) That draft complaint alleged misconduct similar to what the FTC ended up alleging in the Complaint. (Id.) The FTC’s investigation lasted until March of 2015. DIRECTV’s own conduct contributed to the length of the investigation. First, DIRECTV repeatedly asked for, and received, numerous extensions to respond to the Commission’s CIDs, and then dragged out its responses. (Id. ¶¶ 18, 21.) In fact, . (Ortiz Ex. D at 149:25-150:11.) Additionally, DIRECTV and the FTC engaged in protracted settlement discussions. DIRECTV concedes that . (Id. at 179:11-14.). 2. The undisputed facts disprove DIRECTV’s theory underpinning its estoppel, laches, and waiver defenses. The predicate theory behind DIRECTV’s affirmative defenses is that DIRECTV invited the FTC to participate in the multistate negotiations, disclosing to the FTC the negotiated settlement terms; the FTC declined; and then, years later, the FTC sprung to sue DIRECTV for that very same conduct covered in those multistate settlement terms. (DIRECTV’s Opp’n to Mtn. to Strike (Dkt. 36) at 8-9; 2nd Ans. at 8-10.) When the FTC moved to strike these defenses, the Court gave DIRECTV an opportunity to prove its theory with facts under the heightened standards applicable to federal law enforcement agencies. (Dec. 21, 2015 Court Order (Dkt. 88) at 3-10.) Now, after the close of fact discovery, it is clear that DIRECTV’s only basis for these allegations is the same as it was during the pleading stage: unsupported conjecture and CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 18 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 23 of 29 conclusory opinions by the company’s outside counsel, Mr. Friedman. Mr. Friedman is counsel of record in this case . (Ortiz Ex. D at 18:6-23.) DIRECTV designated him alone as the company’s witness under Federal Rule of Civil Procedure 30(b)(6) to testify about DIRECTV’s affirmative defenses. The objective, undisputed evidence developed through discovery, including Mr. Friedman’s own statements, demonstrates that DIRECTV’s theory, and these three affirmative defenses, have no factual merit. That evidence includes Mr. Friedman’s memorialized statements made at the time that he claims he was extending invitations to the FTC. On October 12, 2010, Mr. Friedman wrote to the FTC staff conducting the investigation: (Ortiz Ex. S at 36 (emphasis added).) Mr. Friedman testified that this email represents (Ortiz Ex D. at 81:10-14; 95:11–96:13.) It is clear from the face of his email .8 8 During the deposition, DIRECTV’s counsel acknowledged that (Ortiz Ex. D at 81:19-20.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 19 . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 24 of 29 (Ortiz Ex. S at 36.) FTC staff did not agree to these untenable propositions. (See Ortiz Ex. D at 180:17-20 ) To Mr. Friedman that meant that (Id. at 63:21). This email is uncontroverted evidence that DIRECTV never earnestly invited the FTC into the multistate settlement negotiations. First, according to Mr. Friedman’s own testimony, Thus, . Second, in this email, (Id. at 54:4-24.) That request makes no sense if Mr. Friedman had already shared those terms with those same FTC attorneys. In fact, Mr. Friedman did not send a copy of the multistate settlement to FTC staff until December 15, 2010, after it had been executed by the parties. (Ortiz Ex. S at 39 .) In sum, DIRECTV’s theory collapses when put to the test of discovery. DIRECTV’s only evidence is Mr. Friedman’s subjective belief that the FTC should have acted differently. (See Ortiz Ex. D at 176:15-177:17 ( .) DIRECTV should not escape summary judgment on such thin grounds. See Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337, 345 (9th Cir. 1995) (finding witness’s assumptions formed from conversations insufficient to defeat summary judgment); Krouch v. Wal-Mart Stores, Inc., No. 12-cv-02217, 2014 WL 5463333, at 8-9 (N.D. Cal. Oct. 28, 2014) (granting summary judgment where the “undisputed evidence contradict[ed] plaintiff’s testimony, which can only be reasonably viewed as a self-serving attempt to avoid summary judgment”). 3. The undisputed material facts establish that DIRECTV cannot prevail on its estoppel defense. To prevail on its estoppel defense, DIRECTV first would have to prove the traditional CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 25 of 29 elements of estoppel: (1) the FTC knew the facts; (2) the FTC intended that DIRECTV act on its conduct, or acted such that DIRECTV had a right to believe it was so intended; (3) DIRECTV was ignorant of the true facts; and (4) DIRECTV relied on the FTC’s conduct to its injury. United States v. Ruby Co., 588 F.2d 697, 703 (9th Cir. 1978). DIRECTV must also prove two additional requirements to assert estoppel against the government: (5) affirmative misconduct going beyond mere negligence; and (6) the wrongful conduct threatened to work a serious injustice and that the public’s interest will not suffer undue damage. Watkins v. U.S. Army, 875 F.2d 699, 706-07 (9th Cir. 1989). DIRECTV cannot establish affirmative misconduct by the FTC because there is no evidence of “an affirmative misrepresentation or affirmative concealment of a material fact . . . such as a deliberate lie or a pattern of false promises.” Baccei v. United States, 632 F.3d 1140, 1147 (9th Cir. 2011). Through discovery, DIRECTV has clarified that its factual basis for the estoppel defense is 171:23). (Ortiz Ex. D at 167:21- (Id. at 49:14-50:2; 96:10-13.) It has only Mr. Friedman’s subjective opinions. Specifically, Mr. Friedman testified that (Id. at 180:7-181:1.) (Id.) Even assuming Mr. Friedman’s recollections are true and accurate, they fall short of affirmative misconduct. First, the fact that the FTC did not object to the multistate settlements is not evidence of any misrepresentation, lie, or false promise. Mr. Friedman admits that On the contrary, according to Mr. Friedman, (Id. at 85:11-15; 87:3-8.) CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 26 of 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (Id. at 88:13-16.) Mr. Friedman (id. at 91:13-16), even though the FTC is not required to participate in, approve, or object to settlements entered into by other parties. Mr. Friedman’s subjective extrapolations from the fact that the FTC did not lodge a formal objection to DIRECTV’s settlement agreements with the States should not preclude the FTC from enforcing federal law. See Cadwalader v. United States, 45 F.3d 297, 299-300 (9th Cir. 1995) (government’s failure to inform parties of legal insufficiencies is “not affirmative misconduct”). Second, Mr. Friedman’s claim that is unavailing because, by Mr. Friedman’s own acknowledgment, . DIRECTV knew that the FTC’s investigation was broader than just focusing on the practices addressed by the multistate settlements. For example, FTC also investigated and ultimately alleged conduct that violated ROSCA, a law that was not even in effect when DIRECTV consummated the multistate settlements. Thus, there was no . (Ortiz Ex. D at 102:15-20.) Additionally, the untruth in (Id. at 91:19-20.) Such a truthful statement cannot give rise to estoppel. See United States v. Philip Morris Inc., 300 F. Supp. 2d 61, 71-72 (D.D.C. 2004) (rejecting estoppel where defendants “failed to present evidence that could constitute a misrepresentation by the Government”). Finally, the uncontroverted evidence shows that DIRECTV knew that the FTC was continuing to investigate many of the same practices addressed in the multistate settlements. In February of 2011, just two months after executing the multistate settlements—and then again in 2012, 2013, 2014, and 2015—DIRECTV described the FTC’s ongoing investigation in its public SEC filings as relating to “issues similar to those resolved with the multistate group of state attorneys” and DIRECTV’s ongoing negotiations with the FTC. (Ortiz Ex. BB at 35; see also id. Ex. CC at 38, 133; Ex. DD at 39, 132; Ex. EE at 34, 104; Ex. FF at 42, 129; Ex. HH at 4-6.) Additionally, in August 2012, as part of settlement negotiations the FTC sent DIRECTV a draft CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 22 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 27 of 29 complaint, which alleged many of the same practices the FTC prosecutes in this action. (Syta ¶ 19.) This uncontroverted evidence establishes that DIRECTV knew throughout the FTC’s investigation that the FTC was continuing to investigate conduct that overlapped with the multistate settlements. Therefore, DIRECTV cannot establish even the traditional elements of estoppel. See United States v. Kim, 806 F.3d 1161, 1169 (9th Cir. 2015) (defendants’ estoppel theory “simply does not add up” given evidence of their knowledge of the underlying facts). 4. The undisputed material facts establish that DIRECTV cannot prevail on its laches defense. Laches can apply against a plaintiff who, “with full knowledge of the facts, acquiesces in a transaction and sleeps upon his rights.” Evergreen Safety Council v. RSA Network Inc., 697 F.3d 1221, 1226 (9th Cir. 2012) (citation omitted). To prevail on its laches defense, DIRECTV must establish that the FTC engaged in both affirmative misconduct and unreasonable delay that prejudiced DIRECTV. (See Dkt. 88 at 3-4.) As explained above, none of the evidence shows affirmative misconduct by the FTC. There is also no evidence of an unreasonable delay by the FTC. The length of the FTC’s investigation of DIRECTV—almost five years—is not on its face unreasonable. See U.S. v. Ruby Company, 588 F.2d 697 n.10 (9th Cir. 1978) (rejecting laches despite decades of government delay in asserting rights to public lands). Nor does it rise to “affirmative misconduct.” Gonzales-Rios v. Holder, 361 F.Appx. 833, 834 (9th Cir. 2010) (“Delay alone” not sufficient to establish affirmative misconduct for estoppel). The FTC’s investigation took a long time in large part because DIRECTV asked for, and received, numerous extensions to respond to the Commission’s CIDs, and also engaged in protracted (but ultimately fruitless) settlement negotiations with the FTC. (Syta ¶¶ 18-23.) DIRECTV acknowledges that (Ortiz Ex. D at 179:11-14.) Moreover, DIRECTV acknowledges DIRECTV concedes that (Id. at 114:14-21.) Indeed, (Id. 31:23-32:4.) Thus, this is not a case where the FTC sat dormant for years before springing this action on DIRECTV. Cf. Chamlikyan v. Bardini, No. 10-cv-00268, 2010 WL 5141841, at 6 (N.D. Cal. Dec. 13, 2010) (characterizing as “troubling” the government’s unexplained eight-year delay in processing an CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 28 of 29 asylum application, yet still rejecting the laches defense). Finally, the undisputed facts show that DIRECTV suffered no prejudice. DIRECTV theory of prejudice is that, in reliance on the FTC not joining the multistate settlements and not objecting to them, DIRECTV implemented advertising disclosure practices allegedly consistent with the multistate settlements. (2nd Ans. at 8-9.) Yet DIRECTV concedes that the multistate settlements do not conflict with the FTC Act (Dkt. 36-1 at ¶¶ 18-29), and the settlement orders themselves do not release DIRECTV from compliance with federal laws (Dkt. No. 36-2 at 38 (¶ 10.1).) DIRECTV also concedes that (Ortiz Ex. D at 115:11-116:1.)9 Regardless of how DIRECTV has chosen to comply with its multistate settlement agreements, one thing remained clear: DIRECTV had to obey federal law. It did not, and that is why the FTC filed this action. Thus, there is no prejudice here. See Hooks v. NLRB, 72 F. Supp. 3d 1168, 1182 (D. Or . 2014) (no prejudice where “the consequences Respondents face are the same now as they would have if Petitioner had filed its petition earlier”). 5. The undisputed material facts establish that DIRECTV cannot prevail on its waiver defense. Waiver is the intentional relinquishment of a known right. Alocozy v. U.S. Citizenship & Immigration Servs., 704 F.3d 795, 797 (9th Cir. 2012). To prevail on this defense against the FTC, DIRECTV must present evidence that the FTC “unmistakabl[y]” relinquished its rights to prosecute DIRECTV. (Dkt. 88 at 6.) Unmistakable waiver cannot be implied. United States v. Cherokee Nation of Oklahoma, 480 U.S. 700, 707 (1987). Here, however, the undisputed facts show that DIRECTV’s waiver defense is predicated entirely on implied conduct. Mr. Friedman has conceded under oath that 9 These admissions by DIRECTV highlight the logical flaw in Mr. Friedman’s opinion that (Ortiz Ex. D at 113:2-4.) What reason would the FTC have to object to a settlement agreement the terms of which did not conflict with the federal laws enforced by the FTC? Even in there was such conflict, DIRECTV can point to no obligation by the FTC to intervene in (or approve) settlement agreements by third parties. CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 184 Filed 09/27/16 Page 29 of 29 (Ortiz Ex. D at 87:10-14, 88:6-7.) Instead, Mr. Friedman says (Id. 87:21-24; 88:6-7; 193:12-17.) Even if Mr. Friedman’s subjective impressions were accurate, they would still fail the unmistakability test. See Arizona v. Tohono O'odham Nation, 818 F.3d 549, 560 (9th Cir. 2016) (failure to object does not amount to “clear, decisive and unequivocal conduct”); see also United States v. Philip Morris Inc., 300 F. Supp. 2d 61, 69 (D.D.C. 2004) (rejecting waiver defense based on defendants’ subjective view that the government’s silence in the face of unlawful conduct amounted to acquiescence.) V. CONCLUSION For the foregoing reasons, the FTC requests that the Court grant summary judgment in the FTC’s favor on Counts III and IV. The FTC seeks only a finding of liability on these counts, with equitable relief to be determined at trial, along with liability on the remaining counts. Additionally, the FTC requests that the Court grant summary judgment in the FTC’s favor on DIRECTV’s estoppel, waiver, and laches affirmative defenses. Dated: September 22, 2016 Respectfully Submitted, /s/ Boris Yankilovich Boris Yankilovich Attorney for Plaintiff Federal Trade Commission CASE NO. 15-CV-01129-HSG – FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-09-28	185	ORDER by Judge Haywood S. Gilliam, Jr. Granting 182 Stipulation To Extend Time for Rebuttal and Reply Expert Reports and Expert Discovery. (ndrS, COURT STAFF) (Filed on 9/28/2016) (Entered: 09/28/2016)	Case 3:15-cv-01129-HSG Document 185 Filed 09/28/16 Page 1 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL AND REPLY EXPERT REPORTS AND EXPERT DISCOVERY JOINT STIPULATION TO EXTEND TIME FOR EXPERT REPORTS AND DISCOVERY 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 185 Filed 09/28/16 Page 2 of 3 Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (DIRECTV) jointly stipulate, pursuant to Civil Local Rules 6-1(b), 6-2 and 7-12, to extend the time for expert rebuttal and reply reports and for the close of expert discovery. On September 16, 2016, both sides served their opening expert reports; the FTC served five expert reports and DIRECTV served three expert reports. As currently scheduled, the deadline for (i) expert rebuttal reports is October 13, 2016; (ii) expert reply reports is November 4, 2016; and (iii) the close of expert discovery is November 23, 2016 (Dkt. 159). There are a number of experts and the expert reports are voluminous, and, therefore, the number of depositions that need to be taken is high. Both sides therefore would benefit from more time to prepare rebuttal and reply reports and more flexibility in scheduling the depositions of these experts. In addition, experts and counsel are also confronting scheduling difficulties in the month of October due to the upcoming Jewish High Holidays of Rosh Hashanah, beginning on the evening of October 2 and continuing to the evening of October 4, and Yom Kippur, beginning on the evening of October 11 and continuing to the evening of October 12. The parties have conferred with each other and their experts about scheduling and have arrived at an agreement satisfactory to all. The proposed modification to the schedule would have no effect on any other deadlines in this case. There have been the following modifications to the schedule in this case: (a) Dkt. No. 23, April 17, 2015 (granting stipulated request for an extension of time for the FTC to file motion to strike Defendants’ affirmative defenses); (b) Dkt. No. 64, October 21, 2015 (granting motion for extension of time for the FTC to respond to DIRECTV’s motion for partial summary judgment); (c) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); (d) Dkt. No. 99, February 4, 2016 (granting stipulation continuing hearing date on motion for partial summary judgment); (e) Dkt. No. 105 (granting stipulation continuing Case Management Conference); (f) Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary judgment briefing deadlines and hearing date, and trial date); (g) Dkt. No. 159, July 19, 2016 (granting stipulation to extend case JOINT STIPULATION TO EXTEND TIME FOR EXPERT REPORTS AND DISCOVERY 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 185 Filed 09/28/16 Page 3 of 3 deadlines, including fact and expert discovery); and (h) Dkt. 181, September 26, 2016 (granting motion to extend time to file declaration in support of motion to file under seal). NOW THEREFORE, the parties, through the undersigned counsel, hereby stipulate to and respectfully request the court enter the following schedule: Current Date Event October 13, 2016 Rebuttal Reports November 4, 2016 November 14, 2016 Reply Reports Expert Discovery Close November 23, 2016 December 2, 2016 Proposed Date October 21, 2016 Dated: September 27, 2016 FEDERAL TRADE COMMISSION SIDLEY AUSTIN By: By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to Civil Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtained from the signatories above. /s/ Chad S. Hummel By: ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: September 28, 2016 ___________________________________ HON. HAYWOOD S. GILLIAM, JR. JOINT STIPULATION TO EXTEND TIME FOR EXPERT REPORTS AND DISCOVERY 2 3:15-CV-01129
2016-10-03	186	NOTICE of Appearance by Jeffrey Mark Tillotson (Tillotson, Jeffrey) (Filed on 10/3/2016) (Entered: 10/03/2016)	Case 3:15-cv-01129-HSG Document 186 Filed 10/03/16 Page 1 of 2 Case 3:15-cv-01129-HSG Document 186 Filed 10/03/16 Page 2 of 2
2016-10-03	187	Administrative Motion to File Under Seal filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Christopher Murphy, # 2 Proposed Order, # 3 Redacted Version of FTC's Motion for Partial Summary Judgment, # 4 Redacted Version of Exhibit A, # 5 Redacted Version of Exhibit B, # 6 Redacted Version of Exhibit C, # 7 Redacted Version of Exhibit D, # 8 Redacted Version of Exhibit E, # 9 Redacted Version of Exhibit F, # 10 Redacted Version of Exhibit G, # 11 Redacted Version of Exhibit H, # 12 Redacted Version of Exhibit I, # 13 Redacted Version of Exhibit K, # 14 Unredacted FTC's Motion for Partial Summary Judgment, # 15 Unredacted Version of Exhibit A, # 16 Unredacted Version of Exhibit B, # 17 Unredacted Version of Exhibit C, # 18 Unredacted Version of Exhibit D, # 19 Unredacted Version of Exhibit E, # 20 Unredacted Version of Exhibit F, # 21 Unredacted Version of Exhibit G, # 22 Unredacted Version of Exhibit H, # 23 Unredacted Version of Exhibit I, # 24 Unredacted Version of Exhibit K, # 25 Certificate/Proof of Service)(Sandrock, Ryan) (Filed on 10/3/2016) (Entered: 10/03/2016)	Case 3:15-cv-01129-HSG Document 187 Filed 10/03/16 Page 1 of 6 Chad S. Hummel, SBN 139055 [email protected] Clayton S. Friedman, SBN 245513 [email protected] Mark D. Campbell, SBN 180528 [email protected] Michael Yaghi, SBN 202720 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to Hon. Maria-Elena James DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS ACCOMPANYING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT TO BE FILED UNDER SEAL [Declaration of Christopher Murphy and [Proposed] Order Filed Concurrently] DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 187 Filed 10/03/16 Page 2 of 6 Pursuant to Civil L.R. 79-5 and the Protective Order entered in this case on October 15, 2015 [Dkt. 54], Defendants DIRECTV and DIRECTV, LLC (together, “DIRECTV”) request that this Court enter an order allowing the filing of certain exhibits attached to Plaintiff’s motion for partial summary judgment, identified below, under seal. This motion is accompanied by the Declaration of Christopher Murphy and a Proposed Order. The legal standard for sealing documents accompanying a summary judgment motion is that the requesting party must show a “compelling reason” to submit the documents under seal. Costco Wholesale Corp. v. Johnson & Johnson Vision Care Inc., No. 15-cv-00941-HSG, 2015 WL 2405486, at 1 (N.D. Cal. May 18, 2015) (citing Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010)). Compelling reasons exist to protect DIRECTV’s confidential and sensitive information found within and attached to Plaintiff’s motion for partial summary judgment and the Declaration of Kelly Ortiz.1 DIRECTV seeks to keep under seal limited instances of confidential and sensitive information consisting of: (1) DIRECTV internal business structures and operations; (2) DIRECTV strategic planning information; (3) DIRECTV consumer and competitive research, and the results of that research; and (4) DIRECTV financial and sales data. DIRECTV in the normal course of business treats as confidential and takes reasonable steps to limit the disclosure of such information. See Declaration of Christopher Murphy (“Murphy Decl.”) ¶ 7. DIRECTV would be harmed if its competitors had access to these materials because DIRECTV does not have access to similar materials of its competitors. This Court and other courts in the Northern District have found the “compelling reason” standard satisfied where the release of the confidential business information at issue “might harm [a litigant’s] ability to conduct its business.” See, e.g., Delfino Green & Green v. Workers Compansation Solutions, LLC, No. 15-cv-02302-HSG, 2015 WL 4235356, at 2 (N.D. Cal. July 13, 2015) (granting motion to seal documents containing confidential financial information); Barnes v. Hershey Co., No. 3:12-cv-01334-CRB, 2015 WL 1814293, at 2 (N.D. Cal. Apr. 21, 2015) (finding 1 Moreover, these documents are substantially similar to other materials this Court has previously found appropriate for sealing in this litigation. See Dkt. 178. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 1 Case 3:15-cv-01129-HSG Document 187 Filed 10/03/16 Page 3 of 6 exhibits sealable “in their entirety because they contain confidential and private information about [the Defendant’s] business strategy and trade secrets, including internal operations information, account assignments and divisions, financial information regarding specific clients, and [Defendant’s] organization structure and sales strategies”); Costco, 2015 WL 2405486, at 2 (“The Court agrees that the redacted portions of the Exhibit contain sensitive pricing information, disclosure of which could cause Defendant competitive harm.”) (citing In re Elec. Arts, Inc., 298 Fed. Appx. 568, 569 (9th Cir. 2008)); Hunt v. Cont’l Cas. Co., No. 13-cv-05966-HSG, 2015 WL 5355398, at 2 (granting motion to seal confidential financial information) (citing Transperfect Global, Inc., v. MotionPoint Corp., No. 10-cv-02590-CW, 2014 WL 4950082, at 1 (N.D. Cal. Sept. 25, 2014)). Moreover, the court has broad discretion to seal company documents: Pursuant to Rule 26(c), a trial court has broad discretion to permit sealing of court documents for, inter alia, the protection of “a trade secret or other confidential research, development, or commercial information.” Fed. R. Civ. P. 26(c)(1)(G). The Ninth Circuit has adopted the definition of “trade secrets” set forth in the Restatement of Torts, holding that “[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” Clark v. Bunker, 453 F.2d 1006, 1009 (9th Cir. 1972) (quoting Restatement (First) of Torts § 757 cmt. b). “Generally [a trade secret] relates to the production of goods . . . . It may, however, relate to the sale of goods or to other operations in the business . . . .” Id. (ellipses in original). In addition, the Supreme Court has recognized that sealing may be justified to prevent judicial documents from being used “as sources of business information that might harm a litigant’s competitive standing.” Nixon, 435 U.S. at 598. Baker v. Yahoo! Inc., 2015 WL 3660769, No. 13-cv-04980-LHK, at *2 (N.D. Cal. May 27, 2015). The confidential and sensitive business information within and attached to Plaintiff’s summary judgment motion could cause DIRECTV competitive harm if such information were released. This provides a compelling reason for keeping this information under seal. Additionally, DIRECTV has narrowly tailored this request and is not seeking to keep under seal all documents identified by Plaintiff in its filing, nor is DIRECTV seeking to keep under seal entire deposition transcripts. Instead, DIRECTV consents to allowing the following documents and portions of deposition transcripts to be made public: (1) Ex. A to the Ortiz Declaration, except for DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 187 Filed 10/03/16 Page 4 of 6 the narrowly tailored portions identified in Table 1 below; (2) Ex. B to the Ortiz Declaration, except for the narrowly tailored portions identified in Table 1 below; (3) Ex. C to the Ortiz Declaration, except for the narrowly tailored portions identified in Table 1 below; (4) Ex. D to the Ortiz Declaration, except for the narrowly tailored portions identified in Table 1 below; (5) Ex. E to the Ortiz Declaration, except for the narrowly tailored portions identified in Table 1 below; (6) Ex. F to the Ortiz Declaration, except for the narrowly tailored portions identified in Table 1 below; (7) Ex. G to the Ortiz Declaration, except for the narrowly tailored portions identified in Table 1 below; (8) Ex. H to the Ortiz Declaration, except for the narrowly tailored portions identified in Table 1 below; (9) Ex. I to the Ortiz Declaration, except for the narrowly tailored portions identified in Table 1 below; (10) Ex. K to the Ortiz Declaration, except for the narrowly tailored portions identified in Table 1 below; (11) Ex. Z to the Ortiz Declaration (documents produced as Bates range DIRECTV- 0000797 to DIRECTV-0000967); and (12) Ex. AA to the Ortiz Declaration (documents produced as Bates range DIRECTV-0001436 to DIRECTV-0001614). DIRECTV thus respectfully requests that the materials set forth in Table 1 below be kept sealed, including because: (1) DIRECTV has a compelling interest in keeping such information confidential; (2) the redactions are narrowly tailored; (3) there is no less restrictive means available. Document Exhibit A to the Ortiz Declaration Exhibit B to the Ortiz Declaration Exhibit C to the Ortiz Declaration What Defendants Seek to Keep Under Seal (Page: Line, or paragraph) 97:19-98:14, 98:19-100:25, 138:17-139:25, 140:15-25, 146:19- 147:2, 147:11-21, 148:19-25, 149:6-150:22, 151:4-6, 151:17- 152:18, 153:4-154:7, 154:11-17, 155:16-156:1, 156:11-25, 157:3- 159:15, 160:4-7, 160:14-161:10, 161:19-162:7, 162:13-163:25, 164:5-25, 109:1-110:17, 111:3-120:24, 121:1-14, 121:22-123:2, 123:9-10, 123:14-17, 123:25-124:19, 125:7-126:13, 127:16-128:3, 128:12-129:1, 129:9-131:4, 131:12-13, 132:2, 132:22-25, 133:4- 134:25; 135:13-137:7, 201:8-203:6 61:2-63:5, 63:12-24, 64:13-66:20, 67:1-7, 67:13-68:2, 68:18-69:20, 69:25-70:8, 70:16-72:7 77:11-15, 78:4-6, 78:13-80:4, 81:6-7, 81:25-82:25, 83:4-85:4, 85:11-86:3, 86:13-86:25, 87:7-88:25, 149:2-22, 150:1-151:21, 152:9-155:8, 155:12-156:10, 156:16-160:23, 226:8-9, 226:21- 228:1, 228:9-229:5, 229:21-231:8, 232:25-236:24, 237:1-10, 237:18-20, 238:9-243:17, 244:6-247:15, 248:5-249:4, 250:3-11, 250:24-252:25, 8:18-19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 3 Case 3:15-cv-01129-HSG Document 187 Filed 10/03/16 Page 5 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Exhibit D to the Ortiz Declaration Exhibit E to the Ortiz Declaration Exhibit F to the Ortiz Declaration Exhibit G to the Ortiz Declaration Exhibit H to the Ortiz Declaration Exhibit I to the Ortiz Declaration Exhibit K to the Ortiz Declaration Exhibit L to the Ortiz Declaration Exhibit M to the Ortiz Declaration Exhibit N to the Ortiz Declaration Exhibit O to the Ortiz Declaration Exhibit P to the Ortiz Declaration Exhibit Q to the Ortiz Declaration Exhibit R to the Ortiz Declaration Exhibit S to the Ortiz Declaration Exhibit T to the Ortiz Declaration Exhibit U to the Ortiz Declaration 30:13-32:24, 49:1-51:2, 51:18-19, 52:20-22, 53:1-4, 53:21-56:9, 56:14-57:6, 57:18-60:25, 61:18-65:1, 65:8-68:24, 69:11-16, 70:20- 72:13, 73:8-78:2, 78:8-79:19, 80:4-81:20, 82:2-85:15, 86:2-24, 87:6-98:4, 98:14-15, 99:11-104:25, 109:1-6, 110:1-116:25, 121:3- 18, 122:1-132:25, 149:8-150:25, 151:9-19, 152:3-25, 165:1-171:25, 172:13-177:25, 178:10-184:25, 193:1-194:10, 194:15-195:24, 196:7-25, 269:1-9 41:2-9, 41:14-44:10, 44;15-25, 65:9-66:4, 66:8-10, 66:19-67:20, 68:8-69:22, 70:2-71:2, 105:10-106:18, 107:10-13, 107:20-108:18, 109:10-111:14, 111:23-112:14, 112:21-113:2, 113:8, 113:17-115:8, 115:13-17, 115:24-116:3, 116:6-116:22, 117:3, 117:8-21, 117:25- 118:1, 118:10-120:20, 121:6-17, 122:8-124:25, 6:17-18 37:4-38:1, 38:16-40:25, 85:4-13, 85:20-88:25, 141:5-142:20, 143:1-144:15, 205:16-207:15, 6:22-23 189:1-192:11, 192:17-25, 205:1-18, 206:6-14 9:17-10:21, 11:10-12:25, 25:7-30:24, 31:3-32:12, 32:25-33:2, 34:15-36:25, 57:1-60:11, 60:15-24, 81:5-82:6, 83:2-84:25, 181:1- 11, 182:8-185:6, 186:3-188:25, 201:1-202:6 57:22-58:22, 61:1-65:25, 66:23-68:25, 85:4-12, 85:18-88:25, 89:17-91:17, 91:22-92:17, 92:23-25, 137:11-18, 138:20-139:10, 139:15-140:3, 140:15-25, 141:6-143:24, 144:10-25, 149:2-8, 150:23-151:11, 151:21-152:14 49:3-18, 50:18-51:17, 101:7-10, 102:15-103:3, 103:12-13, 103:20- 105:24, 106:14-108:1, 108:12-25, 129:6-8, 129:13-131:21, 132:22- 135:10, 135:20-138:21, 138:25-146:9, 147:1-148:25, 217:3-218:20, 219:10-220:3, 7:19-8:2 Entire Document Entire Document Entire Document Entire Document Entire Document Entire Document Entire Document Entire Document Entire Document Entire Document DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 4 Case 3:15-cv-01129-HSG Document 187 Filed 10/03/16 Page 6 of 6 Exhibit V to the Ortiz Declaration Exhibit W to the Ortiz Declaration Exhibit X to the Ortiz Declaration Exhibit Y to the Ortiz Declaration FTC’s Motion for Partial Summary Judgment Entire Document Entire Document Entire Document Entire Document 1:23-25, 3:1-4:17, 4:22, 5:1, 8:21-25, 11:25-27, 13:7-18, 13:25-28, 14:4-14:10, 14:24-26, 15:26-28, 16:9-13, 16:17-19, 16:21-23, 17:18-22, 17:28-18:1, 18:15-18, 19:10-17, 19:18-26, 20:1-4, 20:7- 11, 20:14-15, 20:18-19, 21:13-21, 21:24-22:2, 22:8-10, 22:12-13, 22:16-17, 23:22-25, 24:22-26, 25:1-4 Dated: October 3, 2016 SIDLEY AUSTIN LLP By /s/ Ryan M. Sandrock Ryan M. Sandrock Attorney for Defendants DIRECTV and DIRECTV, LLC DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-10-03		Set Hearing as to [187-3] Redacted Version of FTC's Motion for Partial Summary Judgment: Motion Hearing set for 10/27/2016 02:00 PM before Hon. Haywood S. Gilliam Jr. (ndrS, COURT STAFF) (Filed on 10/3/2016) (Entered: 10/04/2016)
2016-10-06	188	Administrative Motion to File Under Seal filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Christopher Murphy, # 2 Proposed Order, # 3 Redacted Version of Opposition to Motion for Summary Judgment, # 4 UNREDACTED Version of Opposition to Motion for Summary Judgment, # 5 Exhibit Redacted Version of Sandrock Exhibit A, # 6 Exhibit UNREDACTED Version of Sandrock Exhibit A, # 7 Exhibit Redacted Version of Sandrock Exhibit B, # 8 Exhibit UNREDACTED Version of Sandrock Exhibit B, # 9 Exhibit Redacted Version of Sandrock Exhibit C, # 10 Exhibit UNREDACTED Version of Sandrock Exhibit C, # 11 Exhibit Redacted Version of Sandrock Exhibit D, # 12 Exhibit UNREDACTED Version of Sandrock Exhibit D, # 13 Exhibit Redacted Version of Sandrock Exhibit E, # 14 Exhibit UNREDACTED Version of Sandrock Exhibit E, # 15 Exhibit Redacted Version of Sandrock Exhibit F, # 16 Exhibit UNREDACTED Version of Sandrock Exhibit F, # 17 Exhibit Redacted Version of Sandrock Exhibit G, # 18 Exhibit UNREDACTED Version of Sandrock Exhibit G, # 19 Exhibit Redacted Version of Sandrock Exhibit H, # 20 Exhibit UNREDACTED Version of Sandrock Exhibit H, # 21 Exhibit UNREDACTED Version of Sandrock Exhibit I, # 22 Exhibit UNREDACTED Version of Wind Exhibit 1, # 23 Exhibit UNREDACTED Version of Wind Exhibit 2, # 24 Exhibit UNREDACTED Version of Wind Exhibit 3, # 25 Exhibit UNREDACTED Version of Wijntjes Exhibit 1, # 26 Declaration Redacted Version of Clayton Friedman Declaration, # 27 Declaration UNREDACTED Version of Clayton Friedman Declaration, # 28 Certificate/Proof of Service)(Sandrock, Ryan) (Filed on 10/6/2016) (Entered: 10/06/2016)	Case 3:15-cv-01129-HSG Document 188 Filed 10/06/16 Page 1 of 5 Jeffrey M. Tillotson, SBN 139372 [email protected] TILLOTSON LAW 750 N. St. Paul Street, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to Hon. Maria-Elena James DIRECTV AND DIRECTV, LLC’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 188 Filed 10/06/16 Page 2 of 5 Pursuant to Civil L.R. 79-5 and the Protective Order entered in this case on October 15, 2015 [Dkt. 54], Defendants DIRECTV and DIRECTV, LLC (together, “DIRECTV”) request that this Court enter an order allowing the filing of certain exhibits attached to DIRECTV’s Opposition to the Federal Trade Commission’s Motion for Summary Judgment, or, in the Alternative, Summary Adjudication, identified below, under seal. This motion is accompanied by the Declaration of Christopher Murphy and a Proposed Order. The legal standard for sealing documents accompanying a dispositive motion is that the requesting party must show a “compelling reason” to submit the documents under seal. Costco Wholesale Corp. v. Johnson & Johnson Vision Care Inc., No. 15-cv-00941-HSG, 2015 WL 2405486, at 1 (N.D. Cal. May 18, 2015) (citing Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010)). Compelling reasons exist to protect DIRECTV’s confidential and sensitive information found within and attached to DIRECTV’s Opposition to the Federal Trade Commission’s Motion for Summary Judgment, or, in the Alternative, Summary Adjudication.1 DIRECTV seeks to keep under seal limited instances of confidential and sensitive information consisting of: (1) DIRECTV internal business structures and operations; (2) DIRECTV strategic planning information; (3) DIRECTV consumer and competitive research, and the results of that research; and (4) DIRECTV sales data. DIRECTV in the normal course of business treats as confidential and takes reasonable steps to limit the disclosure of such information. See Declaration of Christopher Murphy (“Murphy Decl.”) ¶ 5. DIRECTV would be harmed if its competitors had access to these materials because DIRECTV does not have access to similar materials of its competitors. This Court and other courts in the Northern District have found the “compelling reason” standard satisfied where the release of the confidential business information at issue “might harm [a litigant’s] ability to conduct its business.” See, e.g., Delfino Green & Green v. Workers Compansation Solutions, LLC, No. 15-cv-02302-HSG, 2015 WL 4235356, at 2 (N.D. Cal. July 13, 2015) (granting motion to seal documents containing confidential financial information); Barnes v. 1 Moreover, these documents are substantially similar to other materials this Court has previously found appropriate for sealing in this litigation. See Dkt. 178. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 1 Case 3:15-cv-01129-HSG Document 188 Filed 10/06/16 Page 3 of 5 Hershey Co., No. 3:12-cv-01334-CRB, 2015 WL 1814293, at 2 (N.D. Cal. Apr. 21, 2015) (finding exhibits sealable “in their entirety because they contain confidential and private information about [the Defendant’s] business strategy and trade secrets, including internal operations information, account assignments and divisions, financial information regarding specific clients, and [Defendant’s] organization structure and sales strategies”); Costco, 2015 WL 2405486, at 2 (“The Court agrees that the redacted portions of the Exhibit contain sensitive pricing information, disclosure of which could cause Defendant competitive harm.”) (citing In re Elec. Arts, Inc., 298 Fed. Appx. 568, 569 (9th Cir. 2008)); Hunt v. Cont’l Cas. Co., No. 13-cv-05966-HSG, 2015 WL 5355398, at 2 (granting motion to seal confidential financial information) (citing Transperfect Global, Inc., v. MotionPoint Corp., No. 10-cv-02590-CW, 2014 WL 4950082, at 1 (N.D. Cal. Sept. 25, 2014)). Moreover, the court has broad discretion to seal company documents: Pursuant to Rule 26(c), a trial court has broad discretion to permit sealing of court documents for, inter alia, the protection of “a trade secret or other confidential research, development, or commercial information.” Fed. R. Civ. P. 26(c)(1)(G). The Ninth Circuit has adopted the definition of “trade secrets” set forth in the Restatement of Torts, holding that “[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” Clark v. Bunker, 453 F.2d 1006, 1009 (9th Cir. 1972) (quoting Restatement (First) of Torts § 757 cmt. b). “Generally [a trade secret] relates to the production of goods . . . . It may, however, relate to the sale of goods or to other operations in the business . . . .” Id. (ellipses in original). In addition, the Supreme Court has recognized that sealing may be justified to prevent judicial documents from being used “as sources of business information that might harm a litigant’s competitive standing.” Nixon, 435 U.S. at 598. Baker v. Yahoo! Inc., 2015 WL 3660769, No. 13-cv-04980-LHK, at *2 (N.D. Cal. May 27, 2015). The confidential and sensitive business information within and attached to DIRECTV’s Opposition to the Federal Trade Commission’s Motion for Summary Judgment, or, in the Alternative, Summary Adjudication could cause DIRECTV competitive harm if such information were released. This provides a compelling reason for keeping this information under seal. Additionally, DIRECTV has narrowly tailored this request and is not seeking to keep under seal entire deposition transcripts. Indeed, DIRECTV consents to allowing the following documents DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 188 Filed 10/06/16 Page 4 of 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and portions of deposition transcripts to be made public: (1) Ex. B to the Sandrock Declaration, except for the narrowly tailored portions identified in Table 1 below; (2) Ex. C to the Sandrock Declaration, except for the narrowly tailored portions identified in Table 1 below; (3) Ex. D to the Sandrock Declaration, except for the narrowly tailored portions identified in Table 1 below; (4) Ex. E to the Sandrock Declaration, except for the narrowly tailored portions identified in Table 1 below; (5) Ex. F to the Sandrock Declaration, except for the narrowly tailored portions identified in Table 1 below; (6) Ex. G to the Sandrock Declaration, except for the narrowly tailored portions identified in Table 1 below; (7) Ex. H to the Sandrock Declaration, except for the narrowly tailored portions identified in Table 1 below; (8) Ex. J to the Sandrock Declaration; (9) Ex. K to the Sandrock Declaration; (10) and the Friedman Declaration, except for the narrowly tailored portions identified in Table 1 below. DIRECTV thus respectfully requests that the materials set forth in Table 1 below be kept sealed, including because: (1) DIRECTV has a compelling interest in keeping such information confidential; (2) the redactions are narrowly tailored; (3) there is no less restrictive means available. Document Exhibit A to the Sandrock Declaration Exhibit B to the Sandrock Declaration Exhibit C to the Sandrock Declaration Exhibit D to the Sandrock Declaration Exhibit E to the Sandrock Declaration Exhibit F to the Sandrock Declaration Exhibit G to the Sandrock Declaration Exhibit H to the Sandrock Declaration Exhibit I to the Sandrock Declaration Exhibit 1 to the Wind Declaration What Defendants Seek to Keep Under Seal (Page: Line, or paragraph) 305:1-308:25 73:1-14, 75:4-21, 76:3-7, 76:17-25, 89:1-25, 90:6-92:6 197:1-198:6, 198:13-199:1, 199:10-200:25 89:1-92:25 253:9-254:15, 225:20-256:24 193:1-195:4, 195:13-198:2, 198:20-200:25, 205:1-206:5, 206:16- 209:18, 210:2-211:22, 212:8-9, 212:20-25 65:2-12; 66:5-68:12; 70:12-25; 72:3-21; 149:2-150:24; 151:7- 152:24 229:3-25; 230:3-232:25 Entire Document Entire Document DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 3 Case 3:15-cv-01129-HSG Document 188 Filed 10/06/16 Page 5 of 5 Entire Document Entire Document Entire Document 2:6-12; 2:25-3:1-13 2:3, 2:5, 6:20-24, 9:1-2, 15:2, 15:4, 15:6-9, 17:16-18, 21:3 Exhibit 2 to the Wind Declaration Exhibit 3 to the Wind Declaration Exhibit 1 to the Wijntjes Declaration Declaration of Clayton Friedman DirecTV’s Opposition to the FTC’s Partial Motion for Summary Judgment Dated: October 6, 2016 SIDLEY AUSTIN LLP By /s/ Ryan M. Sandrock Ryan M. Sandrock Attorney for Defendants DIRECTV and DIRECTV, LLC DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-10-06	189	RESPONSE (re 176 MOTION for Partial Summary Judgment , 188 Administrative Motion to File Under Seal ) filed byDIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Ryan Sandrock, # 2 Exhibit Redacted Version of Sandrock Exhibit A, # 3 Exhibit Redacted Version of Sandrock Exhibit B, # 4 Exhibit Redacted Version of Sandrock Exhibit C, # 5 Exhibit Redacted Version of Sandrock Exhibit D, # 6 Exhibit Redacted Version of Sandrock Exhibit E, # 7 Exhibit Redacted Version of Sandrock Exhibit F, # 8 Exhibit Redacted Version of Sandrock Exhibit G, # 9 Exhibit Redacted Version of Sandrock Exhibit H, # 10 Exhibit Redacted Version of Sandrock Exhibit I, # 11 Exhibit Sandrock Exhibit J, # 12 Exhibit Sandrock Exhibit K, # 13 Declaration of Jerry Wind, # 14 Exhibit Redacted Version of Wind Exhibits 1 to 3, # 15 Declaration of Lorie Wijntjes, # 16 Exhibit Redacted Version of Wijntjes Exhibit 1, # 17 Declaration of Clayton Friedman (redacted), # 18 Exhibit Friedman Exhibits A and B, # 19 Declaration of David Franklyn, # 20 Exhibit Franklyn Exhibits A to C, # 21 Proposed Order)(Sandrock, Ryan) (Filed on 10/6/2016) (Entered: 10/06/2016)	Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 1 of 30 Jeff Tillotson, SBN 139372 [email protected] Tillotson Law 750 North Saint Paul Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. DIRECTV AND DIRECTV, LLC’S OPPOSITION TO THE FEDERAL TRADE COMMISSION’S MOTION FOR PARTIAL SUMMARY JUDGMENT Date: October 27, 2016 Time: 2:00 p.m. Courtroom: 10 – 19th Floor Defendants. Complaint Filed: March 11, 2015 Trial Date: January 30, 2017 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 2 of 30 TABLE OF CONTENTS Page STATEMENT OF KEY FACTS .................................................................................................... 3 I. II. DIRECTV Background and Disclosures ................................................................ 3 The MSA and the FTC’s Involvement .................................................................... 7 LEGAL STANDARD ................................................................................................................... 10 ARGUMENT ................................................................................................................................ 11 I. The FTC Has Not Met Its Burden On Its ROSCA Claims. .................................. 11 A. B. C. The Inferences To Be Drawn From The Web Disclosures Are In Dispute11 DIRECTV Has Substantial Evidence Showing That Its Disclosures Are Clear and Conspicuous ............................................................................. 12 The FTC’s Purported Documentary Evidence Is Seriously Misused and Insufficient to Justify Summary Judgment ............................................... 14 1. 2. 3. McKinsey “Survey” ...................................................................... 14 Web Usability Documents ............................................................ 15 Miscellaneous Documents ............................................................ 16 D. None of the FTC's Cases Show That a Facial Analysis of the Website Is Sufficient in This Case .............................................................................. 18 II. The FTC Has Not Met its Burden to Defeat DIRECTV’s Affirmative Defenses. 19 A. B. C. DIRECTV Has Established Evidence of Affirmative Misconduct........... 20 Credibility Determinations Are Inappropriate At Summary Judgment .... 22 DIRECTV Has Met Its Burden On The Remaining Elements Of Its Affirmative Defenses ................................................................................ 23 1. 2. 3. Estoppel......................................................................................... 23 Laches ........................................................................................... 23 Waiver ........................................................................................... 24 i DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 3 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Cases Alpi Int’l, Ltd. v. Anga Supply, LLC, No. 13-CV-04888-HSG, 2015 WL 2170040 (N.D. Cal. May 8, 2015).........................................10 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) .................................................................................................................10, 11 Arizona v. Tohono O’odham Nation, 818 F.3d 549 (9th Cir. 2016) ...................................................................................................24, 25 Baccei v. United States, 632 F.3d 1140 (9th Cir. 2011) .......................................................................................................20 Bulthuis v. Rexall Corp., 789 F.2d 1315 (9th Cir. 1985) .......................................................................................................10 Cadwalder v. United States, 45 F.3d 297 (9th Cir. 1995) ...........................................................................................................21 Danjaq LLC v. Sony Corp., 263 F.3d 942 (9th Cir. 2001) .........................................................................................................24 Derek and Constance Lee Corp. v. Kim Seng Co., 467 Fed. Appx. 696 (9th Cir. 2012) ...............................................................................................24 Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135 (9th Cir. 2002) .......................................................................................................21 Evergreen Safety Council v. RSA Network Inc., 697 F.3d 1221 (9th Cir. 2012) .......................................................................................................23 Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119 (9th Cir. 2014) .......................................................................................................10 FTC v. AMG Servs., 29 F. Supp. 3d 1338 (D. Nev. 2014) .............................................................................................19 FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048 (C.D. Cal. 2012) .........................................................................................18 FTC v. Cyberspace.com LLC, 453 F.3d 1196 (9th Cir. 2006) .......................................................................................................18 FTC v. EDebitPay, LLC, 695 F.3d 938 (9th Cir. 2012) .........................................................................................................19 i DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 4 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC v. Hang-Ups Art Enterprises, Inc., No. CV 95-cv-0027-RMT-JGx, 1995 WL 914179 (C.D. Cal. Sept. 27, 1995) .............................23 FTC v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012) .........................................................................................19 FTC v. Johnson, 96 F. Supp. 3d 1110 (D. Nev. 2015) ..............................................................................................18 FTC v. Medlab, Inc., 615 F. Supp. 2d 1068 (N.D. Cal. 2009) .........................................................................................11 FTC v. Sterling Drug, Inc., 317 F.2d 669 (2d Cir. 1963)...........................................................................................................12 Grand Canyon Trust v. Tucson Elec. Power Co., 391 F.3d 979 (9th Cir. 2004) .........................................................................................................23 Hoover v. Switlik Parachute Co., 663 F.2d 964 (9th Cir. 1981) .....................................................................................................3, 22 McGinest v. GTE Service Corp., 360 F.3d 1103 (9th Cir. 2004) .......................................................................................................22 Reno Air Racing Ass’n Inc v. McCord, 452 F.3d 1126 (9th Cir. 2006) .......................................................................................................24 U.S. v. Philip Morris Inc., 300 F. Supp. 2d 61 (D.D.C. 2004) ...........................................................................................21, 24 United States v. Kim, 806 F.3d 1161 (9th Cir. 2015) .......................................................................................................22 Watkins v. U.S. Army, 875 F.2d 699 (9th Cir. 1989) ...................................................................................................20, 23 Statutes 15 U.S.C. § 8403(1) .............................................................................................................................11 15 U.S.C. § 8403(2) .............................................................................................................................11 15 U.S.C. § 8403(3) .............................................................................................................................11 Other Authorities Fed. R. Civ. P. 56(a) ............................................................................................................................10 Fed. R. Evid. 401 ................................................................................................................................10 ii DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 5 of 30 Fed. R. Evid. 402 ................................................................................................................................10 Fed. R. Evid. 403 .................................................................................................................................10 Fed. R. Evid. 602 ...................................................................................................................................9 Fed. R. Evid. 802 .................................................................................................................................10 iii DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 6 of 30 The FTC’s Motion for Partial Summary Judgment on its Restore Online Shopper’s Confidence Act (“ROSCA”) claims and on DIRECTV’s equitable defenses should be denied. There are numerous genuine issues of material fact requiring trial. Moreover, there are numerous divergent inferences that can be fairly drawn from the undisputed facts, including the fact that the negative option disclosures at issue have been and are repeatedly made on DIRECTV’s website. Central to this Opposition is that, in December 2010, DIRECTV entered into a multistate settlement agreement with the Attorneys General of all 50 States and the District of Columbia (the “MSA”). The MSA contained specific advertising disclosure obligations, requiring DIRECTV to “clearly and conspicuously” disclose all material terms (including the terms of its premium channel offer). This is the identical disclosure standard later codified in ROSCA. The FTC received multiple briefings on the settlement terms from DIRECTV’s counsel before the MSA was finalized. The FTC was also given the opportunity formally to join the MSA or to object to it. Instead of objecting, the FTC told DIRECTV that it was looking at “other issues.” Relying on this assurance, DIRECTV settled with all 50 States and then invested substantial financial and other resources to comply with the MSA, including redesigning its advertising disclosures in all media and its website. No State thereafter brought an enforcement action against DIRECTV for non-compliance with this comprehensive MSA. Notwithstanding DIRECTV’s compliance with the MSA endorsed and executed by every state Attorney General in the United States, and after five years of delay, the FTC reversed course and filed this lawsuit on precisely the same “issues” resolved by the MSA. With respect to the discrete ROSCA issues raised in this lawsuit, the FTC’s request for summary judgment should be denied for several reasons: First, the FTC’s motion is premised on a facial review of DIRECTV’s website, which this Court has already ruled is insufficient for summary judgment. (Dkt. 178 at 4:26-28). In denying DIRECTV’s motion for partial summary judgment on the ROSCA claims, this Court held that “while the contents of the website do not appear to be disputed, the inferences to be drawn from those contents are vigorously disputed, and that dispute is the heart of this case.” (Dkt. 178 at 4:26- 28). The FTC’s Motion can and should be denied on this same basis. Second, DIRECTV submits evidence with this Opposition demonstrating that its premium 1 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 217586665v.12 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 7 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 channel offer disclosures are clear and conspicuous. It is undisputed that DIRECTV’s website repeatedly discloses the terms of this offer. The undisputed evidence proves that consumers understand its terms, on average: DIRECTV’s survey evidence in this case confirms that of web subscribers understood at the time of subscription that they would need to call DIRECTV to avoid a charge for premium channels, and only gave the wrong answer of “Do nothing” when asked what actions they had to take if they wanted to avoid being charged. Finally, a leading web usability expert has declared that DIRECTV’s website uses common conventions for disclosures that are known to and used by Internet consumers and meets usability and clarity standards. Third, and finally, the only evidence cited in the FTC’s Motion are internal DIRECTV documents that do not support the FTC’s positions. Nearly all of the documents were created as part of DIRECTV’s Customer Experience Initiative, which was a multi-million dollar effort designed to improve issues of concern to its customers. None of these documents even tends to prove that DIRECTV’s premium channel disclosures were legally inadequate, or that DIRECTV ignored legal advice. This latter allegation is, indeed, a blatant misstatement of the record. Summary judgment is also inappropriate on DIRECTV’s affirmative defenses: First, admissible evidence demonstrates inexcusable and affirmative FTC misconduct justifying the defenses at issue. It is undisputed that the FTC was involved in the MSA. Clayton Friedman (DIRECTV’s outside counsel who negotiated the MSA on its behalf and who communicated with the FTC about it) repeatedly explained the terms of the MSA to the FTC and asked the FTC to join the MSA. The FTC was repeatedly briefed on the status of the negotiations and even asked for periodic updates. And the FTC was offered the opportunity to comment on the terms of the MSA before it was finalized. The FTC never objected to the terms of the MSA or advised DIRECTV that the agreement endorsed by all 50 states was insufficient under federal law. Repeatedly before the settlement was finalized, the FTC affirmatively represented to DIRECTV that it was concerned with “other issues,” not those resolved by the MSA. DIRECTV relied on the FTC’s representations when it entered into the MSA, redesigned its website and its advertisements, and made substantial investments to comply with the MSA’s terms. (Ortiz Decl., Ex. E at 127:1-20). After five years of allowing DIRECTV to advertise consistently with the terms of the MSA, the FTC 2 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 8 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 filed suit not on the “other issues” but on the very same issues that the MSA covered. Simply put, it was misconduct – and irresponsible and unfair behavior for a law enforcement agency – to mislead DIRECTV into believing that the FTC had no problem with the MSA, allow DIRECTV to settle under that belief and undertake substantial changes to its disclosures, then delay five years while monitoring DIRECTV’s advertising, only to seek further equitable and monetary relief for precisely the same issues the MSA addressed. Second, the FTC’s Motion inappropriately requires the Court to make a credibility determination. The basis for the FTC’s motion on these defenses is that Mr. Friedman’s testimony is not “objective” or “credible.” (Mot. at 1). But “[q]uestions of credibility, of course, are particularly appropriate for [fact finder] determination.” Hoover v. Switlik Parachute Co., 663 F.2d 964, 968 (9th Cir. 1981) (citing Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 628 (1944)). On summary judgment, the Court must draw all inferences from Mr. Friedman’s testimony in DIRECTV’s favor. This is particularly true here, where the FTC refused to make available the FTC witness with personal knowledge of these events, Ray McKown, and offered instead a Rule 30(b)(6) witness with no personal knowledge. I. DIRECTV Background and Disclosures STATEMENT OF KEY FACTS DIRECTV is an award-winning provider of satellite television service with over 20 million customers. DIRECTV leads the industry in consumer satisfaction. (Sandrock (“Sand.”) Decl., Ex. A at 307:4-12). Customers display their loyalty by staying with DIRECTV for an average of 5½ years, well after their two-year contract ends. (Ortiz Decl., Ex. X at 24; Sand. Decl., Ex. B at 74:25- 75:21). DIRECTV’s reputation and loyalty is well earned: DIRECTV offers unparalleled content and customer service. DIRECTV is the only provider of NFL Sunday Ticket which provides every out-of-market Sunday NFL football game to subscribers. DIRECTV also offers cutting edge digital recording, mobile device technology, hundreds of high-definition channels, and premiums like HBO, Starz, Cinemax, and Showtime. In addition, DIRECTV was responsible for bringing multichannel video programming distribution through the entire United States when cable was unable to do so. 3 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 9 of 30 In an effort to create best-in-class customer service and to differentiate itself from its competitors, DIRECTV’s Chief Executive Officer launched the Customer Experience Initiative. (Sand. Decl., Ex. C at 200:1-8). DIRECTV spent $193 million on this multi-year initiative that was designed to search out and discover all customer “pain points,” so that the company could continue to improve its practices to provide an unparalleled customer experience. (Sand. Decl., Ex. G at 68:20 – 70:11). Throughout this process, DIRECTV made substantial changes to many aspects of its business to improve customers’ experiences, including simplifying its bill to make it easier to understand, and simplifying its rebate process so that customers instantly and automatically received the advertised rebate. (Id. at 68:20 – 70:11; Ex. J). As part of its many service options, DIRECTV provides consumers an opportunity to sample premium channels (HBO, Starz, and Showtime) at no charge for three months. (Ortiz Decl., Ex. A at 119:5-18). The customer will be charged for the premium channels after the three month period unless the customer calls DIRECTV to cancel all or some channels. This feature is used because DIRECTV learned that, after sampling premium channel content for the trial period, many customers enjoyed it and continued to purchase some or all of the channels once the free trial ended. (Id. at 119:5-18). Customers were required to call to cancel so that DIRECTV could learn why the customer wanted to cancel and attempt to “right-size” the customer into the proper package—some customers wished to cancel the premium channels other than Showtime and others wished to keep only HBO. (Ortiz Decl., Ex. F at 206:25 – 207:15; Ex. G at 191:15 – 192:8). It is undisputed that DIRECTV repeatedly discloses the terms of this premium channel option in a variety of ways and at numerous points throughout the online sign-up process. The 2013 webflow made the following disclosures:1 Package Selection Page Describes the premium channels as free “for three months.” Includes an “Additional Offer Details” link that when clicked states: “IF BY THE END OF PROMOTIONAL PRICE PERIOD(S) CUSTOMER DOES NOT CONTACT DIRECTV TO CHANGE SERVICE THEN ALL 1 Leever Decl. (Dkt. 53-3), ¶¶ 5-9, 26; Leever Decl., Ex. A (Dkt. 53-4 & 53-5) at 23, 48, 61-66 (Package Selection Page), 58 (Cart Page), 77 (View Monthly Cart Page), 118 (Checkout Page); See also Dkt. 94 at 4-5. 4 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 10 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cart Page View Monthly Cost Page Checkout Page SERVICES WILL AUTOMATICALLY CONTINUE AT THE THEN PREVAILING RATES.” (Capitals and bold original). Lists the monthly rates for the premium channels and then, separately below that in a green contrasting font, the discount to be applied for the first three months. Immediately next to the text conveying the Premium Channel Offer, there is a blue [?] icon with the following text: “For a limited time, you get every premium mov[i]e channel FREE for 3 months as part of our new customer offer. After promotional period ends, you will be charged at the price in effect unless you call to cancel.” Includes a hyperlink titled View Monthly Cost that leads to the page described below. Contrary to the FTC’s barely noticeable snippet of this link and its statement that the link is “avoidable” (Mot. at 16:4), it is conspicuously placed next to the “1st Month Cost” that the consumer will pay, and it is placed on top of an all blue “Package & Programming” tab and against a white background for contrast. (Leever Decl., Ex. A at 46). Displays a chart showing that in months four through six, the premium channel discount no longer applies. Includes a hyperlink titled “By clicking ‘Submit Order’ I agree to these Terms and Conditions.” Immediately adjacent to that hyperlink is an orange box containing contrasting white lettering I Accept. Submit My Order. The consumer must affirmatively click this box to provide consent. (Leever Decl., Ex. A at 118). The new 2015 web flow makes even more substantial disclosures:2 Package Selection Pages Additional Offer Details Page This page is accessible from hyperlinks on each page in the 2015 web flow. States: “IF BY THE END OF PROMOTIONAL PRICE PERIOD(S) CUSTOMER DOES NOT CONTACT DIRECTV TO CHANGE SERVICE THEN ALL SERVICES WILL AUTOMATICALLY CONTINUE AT THE THEN PREVAILING RATES.” (Capitals and bold original). Each package description has a box indicating that the premium channels are “FREE for 3 months,” and includes an [i] icon immediately adjacent with the following text: “After promotional period ends, you will be charged the price in effect unless you call to cancel.” Includes a blue [i] icon immediately adjacent with the following text: “After Add More promotional period ends, you will be charged the price in effect unless you call Great Programming to cancel.” 2 Leever Decl. (Dkt. 53-3), ¶¶ 14, 16-17, 18, 20-21, 22-24, 29; Leever Decl., Ex. B (Dkt. 53-6), at 54 (Additional Offer Details), 6 (Package Selection Page), 18 (Add More Great Programming Page), 31 (Cart Page), 38 (View Monthly Cost Page), 57 (Terms and Conditions Hyperlinks and Consent Page). See also Dkt. 94 at 4-6. 5 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 11 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Page Cart Page View Monthly Cost Page Terms and Conditions Hyperlink Checkout Page Lists the monthly rates for the premium channels and the discount to be applied for the first three months. Also includes a blue [i] icon with the following text: “After promotional period ends, you will be charged the price in effect unless you call to cancel.” Also includes a blue hyperlink “View Monthly Cost” link that takes the consumer to a new page disclosing the price of service for each month. Contrary to the FTC’s barely-noticeable snippet of this link and its statement that link is “avoidable” (Mot. at 16:3-4), it is conspicuously placed next to the “1st Month Total” that the consumer will pay, and it is in blue font against a grey background. Displays a chart showing that in months four through six, the premium channel discount no longer applies. Terms and Conditions hyperlink is accessible on every page of the web flow. Clicking the link leads to terms and conditions that state: “If you agree to the free premium networks for three months, you will begin being charged the full, in-effect price per network after the promotional period ends unless you cancel them by calling Customer Service.” (emphasis in original). At the bottom of the Checkout page after the consumer enters his or her financial information and views all of the above referenced disclosures, there is a radio button which requires the consumer to give his or her express consent to the Terms and Conditions. The consumer must affirmatively click this button to provide consent. The consumer must affirmatively click a radio button giving consent to the Terms and Conditions. DIRECTV makes these repeated disclosures in compliance with the law. DIRECTV also makes these disclosures repeatedly because it has no financial incentive to deceive consumers. DIRECTV is a subscription business with a high subscriber acquisition cost. DIRECTV spends nearly to sign up each new customer—this cost includes equipment and installation. (Ortiz Decl., Ex. X at 26-29). at 89:24-91:14). (Id. at 45; Sand. Decl., Ex. B , it is incentivized to make clear and conspicuous disclosures so that customers know and understand the terms of their service and stick with the platform. (Sand. Decl., Ex. D at 91:11-22). Deceived customers would be more likely to change television service before DIRECTV begins to turn a profit on them. As confirmation of 6 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 12 of 30 this fact, DIRECTV frequently does not hold its customers to the negative option financial terms if they forget to call to cancel; it provides bill credits for many such customers that cancel in month four and even into month five. (Ortiz Decl., Ex. G at 191:15–192:8). II. The MSA and the FTC’s Involvement As described above, in December 2010, DIRECTV entered into the MSA. There is no dispute that the MSA resolved the identical conduct at issue in this case, including DIRECTV’s advertising disclosures of its two year contract, promotional pricing, early cancellation fee, and premium channel promotional offers. There is also no dispute that the MSA and ROSCA require that DIRECTV “Clearly and Conspicuously” disclose the premium channel negative option. MSA 5.14(i). The MSA3 requires DIRECTV to do the following: 5.6 5.8(c) Summary of Relevant Provision Par. 5.14(i) Prior to a sale DIRECTV must “disclose, Clearly and Conspicuously, any and all material terms or conditions of DIRECTV’s offer … [which] include, but are not limited to … if DIRECTV offers its services, or any part of its services (e.g., a 3- month trial of premium movie channels or a protection plan), at no cost to the consumer for a period of time (“Promotional Period”): (i) whether the consumer will be automatically billed for the service following the expiration of the Promotional Period, (ii) that the consumer must cancel the service within the Promotional Period to avoid being automatically billed for it, (iii) the cost of the service after the promotional period, (iv) the length of the promotional period, and (v) the means by which the consumer may cancel the service during the Promotional Period.” “DIRECTV shall Clearly and Conspicuously disclose any and all material terms or conditions of an offer….” In ads with pricing for any good or service, “DIRECTV shall Clearly and Conspicuously disclose, in Direct Proximity to the price, all material limitations on a consumer’s ability to obtain the advertised price, including … [i]f the price is promotional, the term of the promotional period.” If an offer ends at the end of a promotional period, DIRECTV must “Clearly and Conspicuously disclose in each bill during the Promotional Period the total number of months of the offer, or alternatively, the number of months remaining in the offer.” DIRECTV must “clearly and conspicuously disclose in a document, which shall be mailed or e-mailed to a new customer within seventy-two (72) hours of the consumer’s order … (“Confirmation Letter”), all material terms and conditions of the consumer’s purchase and activation….” 5.25(h) DIRECTV must “Clearly and Conspicuously disclose in the confirmation letter all 5.21 5.23 material terms of the consumer’s order … including … where applicable, a statement that specifies: (i) the fact that the promotional price is contingent upon the consumer’s request for a rebate(s), (ii) each component or requirement for claiming a rebate, if applicable, and (iii) the duration of the promotional price or period (e.g. 3 See Ex. 1 to the June 15, 2015 Declaration of Clayton F. Friedman in Opposition to FTC’s Motion to Strike (“June 2015 Friedman Decl.”), Dkt. 36-2. 7 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 13 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Par. 5.26 5.42 5.1 Summary of Relevant Provision ‘HBO for 3 Months’).” At or before installation, DIRECTV must give consumers “a written document which contains any other terms and conditions of the Agreement between the consumer and DIRECTV” that was not in the Confirmation Letter. 5.27(d) At or before installation, DIRECTV “shall obtain the consumer’s signature acknowledging the consumer is entering into a contract or commitment period for DIRECTV services. In addition, DIRECTV shall provide the consumer with a document that Clearly and Conspicuously discloses: the identity of other documents the consumer has received which include the full terms and conditions associated with their purchase or lease of DIRECTV Goods or Services.” If DIRECTV cannot prove a consumer’s express assent to any new or additional services, such as via recorded calls or signed documents, DIRECTV shall tell the consumer he/she may cancel without paying an ECF [early cancellation fee]. The settlement generally prohibits any unfair or deceptive trade practice under applicable state laws including any such laws relating to free offers. The MSA and DIRECTV’s implementation of the nationwide settlement provide significant context for this case, and evidence concerning it will be introduced at trial to explain the development of DIRECTV’s disclosures even apart from any affirmative defenses. In reliance on the MSA, DIRECTV revised its website to make its disclosures even more prominent. None of the Attorneys General who signed the MSA has taken any enforcement action. (Sand. Decl., Ex. E at 189:6-25). This is a critical point that the FTC simply ignores. It is well known that state attorneys general receive thousands of consumer complaints from residents of their states about virtually any consumer matter. The fact that DIRECTV entered into a settlement regarding the precise marketing conduct that the FTC challenges here, applying the identical or closely similar standards that are set forth in federal law, and the further fact that not a single one of these attorneys general throughout the United States ever advised DIRECTV that DIRECTV was not complying with the settlement, casts enormous doubt on the FTC’s assertion that DIRECTV’s conduct is deceptive. The MSA is also central to the affirmative defenses at issue in the FTC’s Motion. Between April 2010 and December 2010, while DIRECTV was negotiating with the States, Mr. Friedman had multiple conversations with FTC regional counsel, Ray McKown and Barbara Chun, about the terms of the MSA. (June 2015 Friedman Decl. (Dkt. 36-2) at ¶ 11-12). Mr. Friedman invited the FTC to join the States’ settlement but the FTC declined, indicating that the FTC was looking at different issues than the issues the States were investigating. (June 2015 Friedman Decl. at ¶ 12). The FTC 8 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 14 of 30 asserted that there were “other issues” it was investigating, . (Sand. Decl., Ex. E at 33:6-23; Ortiz Decl., Ex. D at 63:22-64:3, 66:23-67:6, 67:17-68:4, 71:14-21, 82:14-22; 83:4-6; 84:19-23; 86:10-23; 87:21-24; 89:2-96:9). As Mr. Friedman testified: “I have a specific recollection on several times of talking about it. It is etched in my brain like a broken record of the commission saying, ‘We have other issues.’” (Ortiz Decl., Ex. D at 95:20-23). In December 2010 and early 2011, the MSA was executed and entered by courts in all 50 states; the FTC did not object to its terms, which DIRECTV relied upon in designing and implementing its advertising in a way that complies with the terms of the MSA. (June 2015 Friedman Decl. at ¶¶ 16-17, 30). As required by the MSA, by May 16, 2011, DIRECTV had launched a new version of its website with revamped advertising and disclosures that fully complied with the MSA, including making disclosures more prominent. (October 2016 Friedman Decl.,¶ 10). DIRECTV has complied with the MSA ever since, including the requirements that DIRECTV “clearly and conspicuously” disclose certain terms and conditions. (June 2015 Friedman Decl. at ¶¶ 18-29). For the first three years after the MSA went into effect, DIRECTV did not face any regulatory action. Then in December 2013, the FTC issued a second civil investigative demand (CID). (Id. at ¶ 17). The FTC’s CIDs called for the production of roughly 53 categories of documents and written responses and 26 interrogatories. (Id.) In over 83 submissions, DIRECTV produced over 448,869 pages of responsive documents covering seven years. (Id.). In all the years between the MSA and the filing of this action, the FTC never advised DIRECTV that the terms of the MSA were insufficient or failed to comply with federal law. (June 2015 Friedman Decl. at ¶ 30). Nor did the FTC indicate that changes DIRECTV made following the MSA would be insufficient. (See id.) The FTC also never advised DIRECTV of any violation of the FTC Act or ROSCA, knowing that DIRECTV had been complying with the MSA. (See id.) Then, in March 2015, the FTC filed this lawsuit on precisely the “same” issues and asserted 9 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 15 of 30 for the first time that DIRECTV’s MSA-compliant disclosures were insufficient. 4 LEGAL STANDARD Summary judgment is only proper if the pleadings, discovery and affidavits show that there is “no genuine dispute as to any material fact and [that] the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Material facts are those which may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). At summary judgment, “[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255. “Summary judgment is improper where divergent ultimate inferences may reasonably be drawn from the undisputed facts.” Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014) (internal quotation marks omitted); (Dkt. 178 at 3:9-4:5). To defeat summary judgment, it is not necessary for the opposing party to show that any dispute will be resolved in its favor. Alpi Int’l, Ltd. v. Anga Supply, LLC, No. 13-CV-04888-HSG, 2015 WL 2170040 at 1 (N.D. Cal. May 8, 2015). The opposing party need only present “sufficient 4 DIRECTV objects to the following evidence submitted by the FTC: • Declaration of Thomas Syta, Material Objected To: Paragraph 12: “As part of extensive review in preparation for my deposition, I searched for any evidence of an offer made by DIRECTV to the FTC to have the FTC resolve its investigation of DIRECTV by joining the multistate settlement negotiations. I did not find any.” (Syta Decl., ¶ 12), Grounds for Objections: Lack of personal knowledge (Fed. R. Evid. 602); Not Relevant (Fed. R. Evid. 401, 402); Hearsay (Fed. R. Evid. 802). Mr. Syta admittedly has no personal knowledge of Mr. Friedman’s oral communications with FTC staff attorneys Raymond McKown and Barbara Chun wherein Mr. Friedman invited the FTC to join the MSA. (Ortiz Decl., Ex. J at 56:20-57:25; Syta Decl. ¶¶ 5, 9). He has no basis to offer his speculative opinions about what was said or not said in conversations between Mr. Friedman and other FTC lawyers whom the FTC refuses to produce to testify. • Declaration of Kelly Ortiz, Material Objected To: Exhibits L & M, Grounds for Objection: Not Relevant (Fed. R. Evid. 401, 402). Suzanne Stinson of Media & Entertainment Strategies, the agency that created these documents, testified that her usability studies were qualitative not quantitative, meaning that the findings cannot be projected to other consumers. (Sand. Decl., Ex. F at 194:24-195:4, 197:2-8). She further testified that any use of her studies by the FTC to prove that consumers do not understand DIRECTV’s terms and conditions would be improper because of the qualitative nature of the work. (Id. at 209:1- 210:18). Indeed, Ms. Stinson was never asked by DIRECTV to perform any quantitative, projectable research about whether users of DIRECTV’s website see and understand the terms of the subscription (Id. at 206:22-207:6) or whether consumers who receive the premium channels understand what the regular price of the programming will be after the three free months of programming expire (Id. at 208:10-15). • Stahl Exs. A-D, Gonzalez Ex. A, C, D, Grounds for Objection: Unfair Prejudice, Confusing the Issues, Misleading the Jury (Fed. R. Evid. 403). The FTC’s various simulated sites, including the UX Site, do not accurately reflect the appearance and functionality of DIRECTV’s website and/or how customers use the website. 10 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 16 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 evidence to create a material factual dispute, thereby requiring a jury or judge to resolve the parties’ differing versions at trial.” Id. Expert opinion “may defeat summary judgment if it appears the affiant is competent to give an expert opinion and the factual basis for the opinion is stated in the affidavit.” Bulthuis v. Rexall Corp., 789 F.2d 1315, 1318 (9th Cir. 1985); (Dkt. 178 at 3:9-17). ARGUMENT I. The FTC Has Not Met Its Burden On Its ROSCA Claims. ROSCA requires companies that offer negative option features to (1) clearly and conspicuously disclose all material terms of the transaction before receiving the consumer’s billing information (15 U.S.C. § 8403(1)) and (2) obtain the consumer’s express informed consent to the feature before charging the consumer’s financial account (15 U.S.C. § 8403(2)).5 Because there is a significant factual dispute about both prongs, the FTC’s motion should be denied. The Inferences To Be Drawn From The Web Disclosures Are In Dispute. A. It is undisputed that DIRECTV discloses the material terms of its premium channel offer multiple times and in multiple ways throughout its webflows. The FTC argues that this Court can determine from a “facial assessment” that these disclosures are insufficient. (Mot. at 11). This Court has already rejected this argument, holding that “while the contents of the website do not appear to be disputed, the inferences to be drawn from those contents are vigorously disputed, and that dispute is the heart of this case.” (Dkt. 178 at 4-5) (citing Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014) and Int’l Union of Bricklayers & Allied Craftsman Local Union No. 20, AFL-CIO v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985)); compare FTC v. Medlab, Inc., 615 F. Supp. 2d 1068 (N.D. Cal. 2009) (FTC could prevail on a facial review because there was no triable issue that the statements in the advertisement for a scam 5 The FTC’s Motion cites the same purported evidence as to the two other prongs (Mot. at 17); for the reasons explained in this Opposition, that evidence does not suffice and the FTC therefore fails to meet is burden as to both. And in any event, the inferences to be drawn from the evidence demonstrate that consumers give consent to the negative option feature. The Checkout pages of the 2013 and 2015 webflows required a consumer to affirmatively take action and click boxes or radio buttons, in which they must agree to the Terms and Conditions, to submit their orders. (Leever Decl. at ¶¶ 26-29; Ex. A at 118; Ex. B at 57). It is only after DIRECTV discloses all material terms and conditions about the negative option throughout its website, and the consumer affirmatively consents to the negative option, that DIRECTV receives financial information. 11 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 17 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 weight loss product were false and likely to mislead consumers). The inferences that this Court recognizes as “vigorously disputed” must now be drawn in DIRECTV’s favor. For that reason alone, the FTC’s motion should be denied. Liberty Lobby, Inc., 477 U.S. at 255.6 B. DIRECTV Has Substantial Evidence Showing That Its Disclosures Are Clear and Conspicuous. The FTC’s motion should be denied for the independent reason that DIRECTV has substantial evidence showing that the disclosures at issue are clear and conspicuous. The FTC’s own “.com Disclosures” guidelines explain that the ultimate test of whether a disclosure is clear and conspicuous is “whether the information intended to be disclosed is actually conveyed to consumers.” See FTC .com Disclosures, How to Make Effective Disclosures in Digital Advertising (March 2013) (“.com Guidelines”) at 1; see also FTC v. Sterling Drug, Inc., 317 F.2d 669, 674 (2d Cir. 1963). Because the inferences to be drawn from DIRECTV’s evidence is that the disclosures were “actually conveyed to consumers,” summary judgment must be denied. First, DIRECTV’s survey evidence demonstrates that 65% of customers who signed up on the web understood that they had to call to cancel to avoid being charged for the premium channels, and only 3% of web subscribers gave the wrong answer of “Do nothing” in response to a question about what they would have to do to not ever pay for the premium service channels. (Wind Decl., Ex. 2 at 112-13). This survey was conducted by DIRECTV’s marketing and advertising expert, Professor Jerry Wind of the Wharton School of the University of Pennsylvania, who surveyed 2,878 actual DIRECTV purchasers shortly after signup. (Id., Ex. 2 at 2, 7-8, & 112-113). The survey results would not show this level of consumer understanding if the terms of the premium channel promotion were not actually conveyed to consumers – that is, were not clear and conspicuous on DIRECTV’s website. Second, DIRECTV offers expert testimony from David Franklyn, a web usability expert and 6 The FTC does not and cannot argue that hyperlinks and icon disclosures are insufficient as a matter of law because no law or guidance has ever prohibited them. Nor does ROSCA or the FTC guidance require any particular method of disclosure for negative options. The only evidence before the Court supports the inference that consumers see and understand the disclosures. See infra 12-14. 12 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 18 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 professor at the University of San Francisco Law School. Professor Franklyn has declared that DIRECTV’s disclosures of the premium channel option in hyperlinks and icons are a common way to communicate disclosures, and consumers recognize the symbols associated with the hyperlinks and icons, know to look at them for important information about the offer, and therefore likely see the disclosures. (Franklyn Decl., ¶¶ 7-15). Moreover, Professor Franklyn also opines that the prevalence of the disclosures make it more likely that a consumer will view them. (Id. at ¶ 16). Third, the fact that there have been only a miniscule number of consumer complaints on this issue – contrary to the FTC’s erroneous assertion to the contrary – confirms that consumers see and understand the premium channel option disclosures. Lorie Wijntjes, an expert statistician from PricewaterhouseCoopers, conducted a thorough statistical analysis of customer complaints reported to regulatory agencies and to DIRECTV. (Wijntjes Decl. at ¶ 2, Ex. 1). From this sampling, coding, and analysis, Dr. Wijntjes concluded that 0.01% of customers complain to DIRECTV about the premium channel option and less than 0.01% of customers complain to the FTC in its Sentinel Database. (Id. at ¶ 2, Ex. 1 at 1). Professor Wind has opined that this extraordinarily small percentage of complainants demonstrates that DIRECTV’s disclosures are clear and conspicuous to a reasonable consumer. Fourth, Professor Wind commissioned a formal study of customer communications about DIRECTV on social media. Professor Wind explains that consumers who feel tricked or deceived take to social media to voice their complaints and frustration. (Wind Decl., Ex. 3 at 3-8). Professor Wind’s study used advanced data mining techniques to capture and categorize online social media commentary about DIRECTV. Over a four year period, Professor Wind showed that less than .02% of negative online comments about DIRECTV were about the premium channel option. (Id., Ex. 3 at 15). Professor Wind explained that if DIRECTV’s premium channel disclosures were not clear and conspicuous, a significantly higher percentage of consumers would voice concerns online. Fifth, the MSA itself is additional evidence that DIRECTV’s premium channel disclosures are clear and conspicuous. The MSA required DIRECTV to meet the same “clear and conspicuous” standard embodied in ROSCA. (See Dkt. 36-2 at ¶ 3.3) (defining “Clear and Conspicuous” as used in the MSA). All state Attorneys General—who represent all of the consumers represented by the 13 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 19 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FTC here—are authorized to bring actions against DIRECTV if it fails to maintain clear and conspicuous disclosures. (Dkt. 36-2 at p. 38, ¶ 11.1). In the six years since the MSA, not a single state has brought an enforcement action against DIRECTV. (Sand. Decl., Ex. E at 189:6-25).7 All of this evidence, according to the FTC’s own guidance, is highly probative that DIRECTV’s disclosures are clear and conspicuous and that consumers understand them. In contrast, the FTC’s Motion essentially relies on the FTC’s facial review, without any survey evidence, focus group evidence, or empirical evidence of any kind as support. The FTC did not even present one customer who misunderstood the terms of the premium channel option. DIRECTV’s extensive evidence creates a material factual dispute when compared to the FTC’s purely “facial assessment.” C. The FTC’s Purported Documentary Evidence Is Seriously Misused and Insufficient to Justify Summary Judgment. In addition to its facial review, the FTC’s motion is premised only on DIRECTV documents that the FTC misrepresents and misconstrues. Nearly all of these documents were created in the course of DIRECTV’s Customer Experience Initiative. DIRECTV invested tens of millions of dollars in this initiative to increase consumer satisfaction and retention. To do so, DIRECTV critically analyzed all aspects of its business and sought to identify customer “pain points” in order to address and improve customers’ experiences. Because the FTC grossly misrepresents the contents of the documents and the inferences it asks the Court to draw from them are hotly disputed, summary judgment is inappropriate. 1. McKinsey “Survey” Relying on bullet points from a consultant’s presentation, the FTC wrongly asserts that one third of customers who contacted DIRECTV in the first four months of service “felt mislead about terms of service” that are relevant in this case. (Mot. at 4, citing to Ortiz Decl., Ex. N at p. 3). This document is entirely irrelevant to ROSCA because it conveys results only of a survey of customers who signed up over the phone with a sales agent, not online. (See Sand. Decl., Ex. I at 9) (“1 in 3 say 7 In addition, DIRECTV disputes the FTC’s claim that the number of consumers who cancel or downgrade their premium channel offerings shows deception. Many consumers who understand the terms of the offer, and decide they do not want to pay for the premium channels, will call and cancel during the fourth month. 14 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 20 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 they felt misled by the sales agent”) . ROSCA, of course, only applies to online sales. The FTC also misrepresents the results of the survey. The survey does not show that of customers felt misled about the premium channel option or the terms of service. It says nothing of the kind. The figure relied on by the FTC included a much broader group of customer issues, most of which are irrelevant to this case and the FTC’s Motion, including matters involving “equipment” and “programming.” (Sand. Decl., Ex. H at 230:3-5) (emphasis added). Extrapolating the numbers from this survey, only of customers indicated that they felt misled by “the promotional price” and only felt misled about the “terms of the service contract.” (See Sand. Decl., Ex. I at 9). The FTC’s misrepresentation of this document highlights the fundamental problem with the FTC’s reliance on snippets of DIRECTV consultants’ slides to make its case on summary judgment. Because the FTC misrepresents those documents and presents them completely out of context, they necessarily raise factual disputes and permit divergent inferences that defeat the FTC’s Motion. 2. Web Usability Documents The FTC also relies heavily on purported web usability studies to argue that DIRECTV’s premium channel disclosures are not clear and conspicuous. These cited documents do not support the inferences the FTC claims. First, none of the cited documents contain any conclusions about the clarity of DIRECTV’s premium channel offers. They exclusively address other aspects of DIRECTV’s website. For example, the first usability test asks how DIRECTV can make the website easier for purposes of buying DIRECTV’s product and checking out. (Ortiz Decl., Ex. H at 186:18-21, 186:25-187:1; see also Ortiz Decl., Ex. Q at 19). The second usability test addressed bundling of services, (Ortiz Decl., Ex. M), and the third tested the intuitiveness of a new “prototype screen.” (Ortiz Decl., Ex. L at 5). These documents offered no conclusions about the premium channel disclosures. Second, the FTC incorrectly suggests that these documents are empirical surveys that can be evidence of how other DIRECTV customers perceive the website. This is incorrect. The web usability tests are qualitative opinions of only 4, 10, or 12 participants. (Ortiz Decl., Ex. M at 3, L at 15 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 21 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5, and Q at 18). The documents state on their face that because of the small sample size and qualitative nature of the analysis, the results are not projectable to the entire universe of customers. (See Ex. M at 3; Ex. L at 4; see also Sand. Decl., Ex. F at 194:24-195:4; 197:2-8). The FTC has no basis to extrapolate from these tests to the premium channel disclosures or to customers generally. Third, the FTC misrepresents the findings of the documents. For example, the FTC cites results showing that “most” of the four study participants in one study did not scroll down on the Home Page (Mot. at 14). This is irrelevant to premium channel disclosures, however, because these disclosures are made not at the bottom of the Home Page but immediately next to the Premium Channel Offer. The FTC also claims that “none of the test users notice the tab” for the “View Monthly Cost.” (Mot. at 16). But the documents show that customers did notice the first View Monthly Cost page which shows months 1-6. (Ortiz Decl., Ex. Q at 33). This page includes a specific disclosure that the customer will receive the premium channels free for 3 months and then will begin paying for them in months 4-6. (Id.). It was only the “next 6 months” tab that some of the tiny handful of participants tested did not notice, which is irrelevant to the premium channel disclosure at issue in this motion. (Id.) 3. Miscellaneous Documents The FTC cites an assortment of other documents and deposition excerpts, none of which bolsters the FTC’s case for summary judgment: • The FTC cites “declining net promoter scores.” (Mot. at 4:6-10). But the fact that customers react negatively to the end of a free promotional period does not show that any are deceived and the document itself make no such conclusion. It is not surprising that customers are less happy when free services end. • The FTC refers to customer “pain points” but does not explain that what customers wanted was “proactive notification when offers are about to roll to pay” (Ortiz Decl., Ex. P at 7). In other words, customers wanted to be reminded of something already disclosed. While customers may appreciate a reminder, it is not required by ROSCA. • The FTC cites a line from a 2010 PowerPoint that references 9 million calls about premium channels. (Mot. at 4:4-6). The FTC cited this document in the prior round of 16 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 22 of 30 briefing (Dkt. 71 at 17:10-12), and DIRECTV explained that the reference was not to 9 million calls about pricing but about downgrades to different combinations of services (Dkt. 94 at 11:18-19). Further discovery confirmed this to be true. DIRECTV’s Karen Leever testified that nine million calls “could be nine million calls about switching your premiums or changing your premiums . . . when I read this, it’s about making it easier on DIRECTV.com to downgrade your premiums, to change your premiums.” (Ortiz Decl., Ex. F at 206:2-24). • The FTC cites a statement from DIRECTV’s Scott Hause answering “no” to the question “Does DIRECTV have any reason to believe that consumers understood that they would continue to be enrolled in the premium channel promotion and be charged for the premium channels until they contacted the company to cancel.” (Mot. at 16:20-24). The FTC ignores that Mr. Hause was only designated to testify about the “results of any and all research, surveys or tests” (Sand. Decl., Ex. K at 3) concerning DIRECTV’s disclosures. • The FTC contends that a statement from Mr. Friedman’s PowerPoint presentation shows that DIRECTV ignored his advice to (Mot. at 13:7-10, citing Ortiz Decl., Ex. T at 4). The FTC takes the exhibit completely out of context to make it appear as if click- throughs or icons (also known as a “roll-over”) are an improper method for the ROSCA type of disclosures. This is not what the exhibit states. That presentation was tied to specific “Direct Proximity” disclosure requirements of the MSA, and it had nothing to do with the negative option disclosures required under ROSCA. (October 2016 Friedman Decl. at ¶¶ 11-12). • There is no factual support for the FTC’s statement that a former DIRECTV employee acknowledged “that for a disclosure to ‘be in close proximity’ means that items previously placed in footnotes or behind icons ‘needed to come out.’” (Mot. at 13:11- 14). Rather, the former DIRECTV employee merely testified about her recollection of 17 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 23 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 what the MSA generally required, not specifically about premium channel disclosures. (Ortiz Decl., H at 83:23-84:4). • The FTC cites a 2008 presentation characterizing premium roll-to-pay as “customer unfriendly.” (Mot. at 3:24-25). The cited slide says only that “some customers” took the premium channel offer thinking that “they [would] rolloff” without any further details. (Ortiz Decl., Ex. R at 39; Ortiz Decl., Ex. W at 2). D. None of the FTC’s Cases Show That a Facial Analysis of the Website Is Sufficient in This Case. As in the last round of briefing, the FTC continues to rely on cases that involve an underlying scam and do not turn on the formatting issues that this case presents. The case law makes clear that when a company advertises a scam or is a fraud, a facial review of the ad or website can show deception. But when the question instead is one of the clarity and conspicuousness of disclosures for a legitimate product, more than a facial review is required.8 For example, in FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048 (C.D. Cal. 2012) (Mot. at 12),9 the court considered offers of a “free kit” that was used as a “ruse” to enroll shoppers in a monthly subscription fee service. FTC v. Cyberspace.com LLC, 453 F.3d 1196 (9th Cir. 2006) (Mot. at 11), concerned a scheme in which a company sent out checks to customers but once the check was deposited the customer was charged a monthly recurring fee. Id. at 1200-01. The Court estimated that 99% of customers were deceived by this scheme. Id. at 1201. The problem in that case was not that the disclosures were too small or in hyperlinks, but that the entire transaction was intended to deceive customers into thinking that they were just depositing a check. That could be determined on a facial review. Similarly, the defendant in FTC v. Johnson, 96 F. Supp. 3d 1110, 1121 (D. Nev. 2015) (Mot. at 11),10 asked customers to provide credit card information to obtain “free or risk-free” information 8 DIRECTV moved for summary judgment because the FTC had not produced any evidence beyond a facial review. The FTC produced little evidence in opposition. In contrast, DIRECTV has produced considerable evidence in opposition to the FTC’s motion. 9 In addition, the FTC’s reliance on Commerce Planet is misplaced as the district court only found liability after a 16-day bench trial. Commerce Planet, 878 F. Supp. 2d at 1055. 10 In Johnson, the court denied summary judgment in part because there was a genuine issue of material fact as to whether the defendants’ representation would mislead a consumer acting reasonably. 96 F. Supp. 3d at 1136. 18 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 24 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 about government grants. But the company then instead enrolled them in a largely worthless monthly membership program. Id. at 1116-17. Again, the essential problem was not the formatting of the disclosures, but rather the deceptive nature of the entire transaction.11 Nor is there any case holding that hyperlinks or icon disclosures are not clear and conspicuous as a matter of law. The FTC cites FTC v. EDebitPay, LLC, 695 F.3d 938, 942 (9th Cir. 2012) (Mot. at 11),12 but that case only mentions hyperlinks in passing; the case involved advertisements for what appeared to be a credit card with a general credit line but in fact could be used only at a third-party’s online shop. FTC v. AMG Servs., 29 F. Supp. 3d 1338 (D. Nev. 2014) (Mot. at 12), involved a payday loan transaction that required consumers to use a “convoluted email- and-hyperlink process” to decline enrollment in the automatic repayment plan for a short-term loan. Id. at 1345-46. The terms and conditions were divided into nine separate hyperlinks designed to obfuscate the most important terms of the loan. Id. at 1343. The Court did not find that hyperlinks were improper; it held that the entire disclosure scheme was deceptive. Because consumers are getting a product they want, and with conditions that they understand, this case bears no resemblance to the cases the FTC cites in its motion. As this Court held in denying DIRECTV’s motion, a facial review of a website is insufficient at summary judgment where the inferences to be drawn from that website are “vigorously disputed.” II. The FTC Has Not Met Its Burden to Defeat DIRECTV’s Affirmative Defenses. The FTC’s Motion is based on the erroneous premise that “DIRECTV cannot establish affirmative misconduct by the FTC because there is no evidence of ‘an affirmative misrepresentation 11 Id. at 1144-46 (“Moving through the pages of the various sites, the Court is struck by the fact that it is never clear what precisely IWorks is providing. . . A consumer that did happen to review the disclosures would not necessarily understand what they are receiving for the monthly fees. . . The mere fact that the sites contained disclosures in smaller print . . . does not alter the deceptive net impression as to the cost and nature of the product.”); see also FTC v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012) (Mot. at 10, 17) (infomercials told consumers they could quickly make money off of certain real estate transactions; consumers were automatically enrolled in a “continuity plan” when they placed a call to order the product, and the continuity plan was not disclosed before payment information was received). 12 The FTC was enforcing the terms of a Final Order for Permanent Injunction, and as a result, the FTC was held to a lesser burden than if the FTC sought summary judgment on a deceptive advertisement claim. FTC v. EDebitPay, LLC, No. CV-07-4880 ODW(AJWx), 2011 WL 486260, 2 (C.D. Cal. Feb. 3, 2011) (requiring the FTC to “show by clear and convincing evidence that Defendants have violated a specific and definite order of the Court”). 19 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 25 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 or affirmative concealment of a material fact … such as a deliberate lie or a pattern of false promises.’” (Mot. at 21). Not so. DIRECTV has provided evidence of affirmative misconduct through the sworn declaration and testimony of its counsel at the relevant time, Mr. Friedman. Mr. Friedman’s testimony demonstrates that the FTC affirmatively misled DIRECTV into entering into the MSA and implementing the disclosures approved by that agreement, by telling DIRECTV that its investigation focused on “other issues.” (Ortiz Decl., Ex. D at 66:23 – 67:6). The FTC does not offer evidence to overcome Mr. Friedman’s testimony about this misconduct. Nevertheless, the FTC argues that the Court should grant summary judgment in its favor because “[t]he objective, undisputed evidence … demonstrates that DIRECTV’s theory, and [the] three affirmative defenses, have no factual merit.” (Mot. at 19). Because (1) DIRECTV has produced evidence of affirmative misconduct and (2) the FTC has offered nothing more than an attack on the credibility of this evidence, summary judgment is inappropriate. DIRECTV Has Established Evidence of Affirmative Misconduct. A. Affirmative misconduct requires an affirmative misrepresentation or an affirmative concealment of a material fact by the government, although it does not require that the government intend to mislead a party. Watkins v. U.S. Army, 875 F.2d 699, 707 (9th Cir. 1989). The FTC’s affirmative misconduct can be based on the FTC’s “affirmative concealment of a material fact.” Baccei v. United States, 632 F.3d 1140, 1147 (9th Cir. 2011). The FTC made both affirmative misstatements and affirmatively concealed a material fact in this case. The FTC affirmatively stated that it was focused on “other issues” rather than the conduct at issue in the MSA. (Sand. Decl., Ex. E at 33:11-34:3; Ortiz. Decl., Ex. D at 67:17-68:4; 71:14-24). There was no confusion about what this statement meant. The FTC was “well aware that the MSA dealt with the exact issues in this case” (Ortiz. Decl., Ex. D at 30:24-25); the FTC’s own lawyers acknowledged that DIRECTV kept it apprised of the status of the MSA and the terms of the settlement. (See October 2016 Friedman Decl., Ex. A). In fact, Mr. Friedman discussed in “great detail” with the FTC the marketing practices covered by the agreement (Ortiz. Decl., Ex. D at 72:1- 8), and recalled preparing talking points to discuss the terms of the MSA for the first meeting with the FTC. (Id. at 79:3-11). In total, DIRECTV communicated with the FTC regarding the terms of 20 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 26 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the MSA between 15 and 20 times between May and October 2010.13 (Id. at 96:6-9; October 2016 Friedman Decl. at ¶ 5). When the FTC stated it had “other issues,” this meant that the FTC was interested —not the issues that it ended up bringing in this lawsuit, which are precisely the same issues covered by the MSA. Furthermore, despite DIRECTV’s repeated invitations to the FTC to join the MSA (October 2016 Friedman Decl. ¶ 8) and DIRECTV’s briefings on the terms of the MSA, the FTC did not object to any of the terms of the settlement. (Id. at ¶ 8; Ortiz Decl., Ex. D at 83:25-84:10). Instead, it informed DIRECTV on multiple occasions between May and October 2010 that it had “other issues.” (Ortiz. Decl., Ex. D at 90:14-92:7, 101:5-20). As a result of these representations, DIRECTV reasonably believed that the FTC was satisfied with the terms of the MSA, which addressed DIRECTV’s practices, and that the FTC moved on to “other issues.” (Id. at 92:14-93:11). DIRECTV relied on that understanding in entering into the MSA and making substantial investments to comply with its terms. (Sand. Decl., Ex. E at 245:18-246:2; 249:14-24; 252:21- 253:19). The representations by the FTC that induced DIRECTV’s reliance constituted misconduct. The only contrary evidence that the FTC relies upon in its motion is a single email from Mr. Friedman to the FTC regarding the terms of the MSA. But, as Mr. Friedman explained, this email was merely an additional invitation for the FTC to join the MSA, while also expressing a “concern” that the FTC could introduce new issues that would “bog[] down” the settlement. (Ortiz Decl., Ex. D at 71:14-24). To the extent that the parties dispute the meaning of the email, that necessarily raises a factual dispute that defeats the FTC’s motion. See Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1149 (9th Cir. 2002) (correct interpretation of email was a question best left to the trier- of-fact). Finally, the FTC’s argument that DIRECTV’s defense is premised on the FTC’s failure to “raise a red flag” (Mot. at 22) ignores DIRECTV’s factual allegations. DIRECTV does not rest its defense on a claim that the FTC failed to act (although it did), but rather, that the FTC’s affirmative 13 Mr. Friedman testified that he did not have any email correspondence or notes in his possession to corroborate his testimony (Ortiz Decl., Ex. D at 96:10-13), but the absence of documents does not undermine Mr. Friedman’s testimony based on firsthand knowledge. 21 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 27 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 statement that there were “other issues” on which it was focused conveyed a clear message that the MSA was sufficient to resolve any concerns regarding DIRECTV’s advertising practice.14 Particularly because the MSA was resolving important regulatory issues for all 50 states and the District of Columbia, it was entirely appropriate for DIRECTV to conclude that the FTC’s statement, coupled with its failure to raise any other concerns, meant that the issues relating to DIRECTV’s advertising would be resolved by DIRECTV’s agreement to, and compliance with, the terms of the MSA. (Ortiz Decl., Ex. D at 94:7-20). B. Credibility Determinations Are Inappropriate At Summary Judgment. In order to strike the affirmative defenses, the FTC has asked this court to reject Mr. Friedman’s testimony because it is not “objective” or “credible.” But “[q]uestions of credibility, of course, are particularly appropriate for [fact finder] determination.” Hoover v. Switlik Parachute Co., 663 F.2d 964, 968 (9th Cir. 1981) (citing Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 628 (1944)); McGinest v. GTE Service Corp., 360 F.3d 1103, 1113 n.5 (9th Cir. 2004) (holding that “it is axiomatic that disputes about material facts and credibility determinations must be resolved at trial, not on summary judgment”). Any challenge to Mr. Friedman’s credibility or objectivity cannot be resolved on summary judgment. Moreover, and even more importantly, the FTC refused to allow the key FTC participant in the conversations with Mr. Friedman to testify. (Dkt. 143). If the FTC thought that Mr. Friedman’s testimony was inaccurate then Mr. McKown should have testified to that point. But the FTC took the opposite approach and fought DIRECTV’s efforts to depose Mr. McKown, presumably because 14 This is the distinguishing factor from all the estoppel cases on which the FTC relies. In Cadwalder v. United States, 45 F.3d 297, 299 (9th Cir. 1995), the only “misconduct” was the “passage of time” it took the government to deny a claim for an assignment under the Federal Tort Claims Act. In U.S. v. Philip Morris Inc., 300 F. Supp. 2d 61, 71 (D.D.C. 2004), the alleged misconduct—the government’s lawful regulation of the cigarette industry and encouragement that the defendants develop safer, reduced-tar cigarettes—had nothing to do with being estopped from or waiving a claim for RICO based on the defendants’ unlawful conspiracy to deceive the American public about whether smoking caused diseases, whether smoking was addictive, and whether defendants misled customers into believing certain cigarettes were less hazardous than they actually were. United States v. Kim, 806 F.3d 1161, 1169 (9th Cir. 2015), addressed whether the plaintiff relied on the government’s representations to satisfy an estoppel defense. Here, the undisputed evidence shows that DIRECTV spent millions of dollars launching its new advertising regime that it otherwise wouldn’t have implemented in that form had the FTC objected. 22 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 28 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 he would have confirmed the accuracy and credibility of the testimony by Mr. Friedman that the FTC’s now attacks. (Id.). Specifically, after the FTC objected to DIRECTV’s effort to take Mr. McKown’s testimony, Judge James permitted the FTC instead to designate a 30(b)(6) witness of its choice regarding the FTC’s communications regarding the multistate. (Dkt. 145). The FTC designated Tom Syta, who provided little information. The only material point that Mr. Syta disputed was whether Mr. Friedman invited the FTC to join the investigation. Mr. Friedman testified under oath that he did so. (Sand. Decl., Ex. E at 48:19-49:4; June 2015 Friedman Decl. ¶15; October 2016 Friedman Decl. ¶ 8). In contrast, Mr. Syta only offered the conclusion that Mr. Friedman was wrong. The FTC must live with the testimony of its 30(b)(6) witness and therefore has no credible basis to challenge Mr. Friedman’s testimony. C. DIRECTV Has Met Its Burden On The Remaining Elements Of Its Affirmative Defenses. 1. Estoppel Beyond affirmative misconduct, the second requirement of an estoppel claim against the government involves a balancing of interests in individual cases. Watkins, 875 F.2d at 708. The injustice to DIRECTV is clear here: as a result of DIRECTV’s reliance on the FTC’s representations, the company made substantial investments in re-designing its advertisements and websites in light of the MSA, proceeded in compliance with that agreement for five years, and now faces claims for massive penalties for that compliant conduct. (Sand. Decl., Ex. E at 245:18-246:2; 249:14-24; 252:21-253:19; see also id. at 187:13-188:1 (testifying that the FTC’s conduct was as “gross of an injustice … that I’ve run across in my 30 years in the business”)). The FTC allowed DIRECTV to advertise consistent with the terms of the MSA for five years, and then initiated suit on the exact conduct addressed by that settlement. (Id. at 33:1-34:3). That conduct was unjust and a fundamentally unfair exercise of authority. 2. Laches The equitable defense of laches bars the FTC from bringing a claim based on facts of which it had “full knowledge” after “sleep[ing] upon [its] rights.” Evergreen Safety Council v. RSA 23 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 29 of 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Network Inc., 697 F.3d 1221, 1226 (9th Cir. 2012). Unreasonable delay and prejudice are elements of this defense. Grand Canyon Trust v. Tucson Elec. Power Co., 391 F.3d 979, 987 (9th Cir. 2004). The FTC rests on the assertion that it has not engaged in affirmative misconduct and therefore, DIRECTV’s laches defense must fail. However, as DIRECTV has demonstrated, the FTC engaged in affirmative misconduct. FTC v. Hang-Ups Art Enterprises, Inc., No. CV 95-cv-0027- RMT-JGx, 1995 WL 914179, at 4 (C.D. Cal. Sept. 27, 1995). Furthermore, the FTC waited five years to initiate its claim. Particularly in light of the fact that DIRECTV’s conduct conformed to the terms of the MSA, which was approved by the 50 States and the District of Columbia, such delay was unreasonable. See Derek and Constance Lee Corp. v. Kim Seng Co., 467 Fed. Appx. 696, 698 (9th Cir. 2012) (unreasonable delay is satisfied by a delay of 15 months); Danjaq LLC v. Sony Corp., 263 F.3d 942, 955 (9th Cir. 2001) (unreasonable delay satisfied where plaintiff offers “no viable justification” for delay). The FTC attempts to excuse its delay by arguing that settlement negotiations and DIRECTV’s actions contributed to the delay. (Mot. at 22). But the negotiations comprised no more than 18 months of the FTC’s delay. (Ortiz Decl., Ex. D at 179:11-14). And, because “the limitations period runs from the time the plaintiff knew or should have known about his … cause of action,” Reno Air Racing Ass’n Inc v. McCord, 452 F.3d 1126, 1139 (9th Cir. 2006), and the FTC acknowledges that it was aware of DIRECTV’s advertising practices as early as 2010, the FTC’s delay cannot be excused by the parties’ negotiations, particularly in light of DIRECTV’s invitation to the FTC to join the MSA or state its objection to the 50-state settlement. Finally, DIRECTV has complied with the terms of the MSA for the past five years, which governs the same conduct that the FTC later alleged in this complaint is unlawful. Because DIRECTV would not have entered into the MSA had it known the FTC objected to the terms (Ortiz Decl., Ex. D at 99:14-23), DIRECTV “took actions or suffered consequences that it would not have, had the plaintiff brought suit promptly.” Danjaq LLC, 263 F.3d at 955. 3. Waiver The FTC also waived its right to initiate a claim when it unmistakably relinquished its right to join the MSA. United States v. Philip Morris, Inc., 300 F. Supp. 2d 61, 66 (D.C. Cir. 2004). 24 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 189 Filed 10/06/16 Page 30 of 30 Despite the FTC’s suggestion, DIRECTV’s waiver defense is not based on “implied conduct” (Mot. at 24-25), but rather the FTC’s affirmative “other issues” statement. The FTC engaged in affirmative misconduct when it informed DIRECTV that it was concerned with “other issues.” Contrary to the FTC’s assertion, DIRECTV did not rely on “implied conduct” and the FTC did not simply “fail[] to object.” (Mot. at 24-25) (relying on Arizona v. Tohono O’odham Nation, 818 F.3d 549, 560 (9th Cir. 2016)). Rather, the FTC engaged in specific actions that demonstrated it unmistakably approved of the terms of the MSA. As Mr. Friedman testified, when he explained the specific terms of the MSA, “at no point did … the FTC say that’s not consistent with Section 5, nor did they object. Instead, their response is, ‘We have other issues.’ His conduct basically said ‘We’re okay with that.’” (Ortiz Decl., Ex. D at 83:25-84:21). DIRECTV understood that the FTC was not joining the MSA because it “doesn’t do us any good because we have other issues.” (Id. at 91:19--93:11). This conduct, and not Mr. Friedman’s “subjective opinion” (Mot. at 20:16-26), establishes DIRECTV’s affirmative defense of waiver. ** The Court must consider the FTC’s inexcusable delay in informing the company that it objected to the multistate disclosures, and the FTC’s extraordinary delay in bringing this suit. It is fundamentally unfair to allow the FTC to seek a remedy based upon equity in light of the FTC’s inequitable conduct. Mr. Friedman’s largely undisputed testimony provides sufficient evidence of affirmative misconduct and the other elements of DIRECTV’s affirmative defenses. The FTC’s attempt to attack Mr. Friedman’s credibility is inappropriate at this stage and no basis for summary judgment. The Court should deny the Motion and let these issues be resolved by trial. Dated: October 6, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 25 DIRECTV’S OPPOSITION TO THE FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-10-07	190	OPPOSITION (re 187 Administrative Motion to File Under Seal ) filed byFederal Trade Commission. (Wodinsky, Erika) (Filed on 10/7/2016) Modified on 10/11/2016 (ecgS, COURT STAFF). (Entered: 10/07/2016)	Case 3:15-cv-01129-HSG Document 190 Filed 10/07/16 Page 1 of 6 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S OPPOSITION TO DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS ACCOMPANYING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT TO BE FILED UNDER SEAL [Local Rules 7-11 and 79-5(d), (e)] FTC’S OPP’N TO DIRECTV’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 190 Filed 10/07/16 Page 2 of 6 I. INTRODUCTION Plaintiff Federal Trade Commission (“FTC”) opposes the Administrative Motion to Allow Certain Documents Accompanying Plaintiff’s Motion for Partial Summary Judgment to Be Filed Under Seal (Dkt. 187) filed by Defendants DIRECTV, LLC and DIRECTV (collectively, “DIRECTV”) with respect to two categories of materials: A. Deposition testimony of Clayton Friedman (designated as Exhibit D to the Declaration of Kelly Ortiz (“Ortiz”) (Dkt. 187-18)), and related materials (Ortiz Exhibit S (Dkt. 177-40) and Ortiz Exhibit T (Dkt. 177-42)); and B. Deposition transcripts of eight current or former DIRECTV employees and nonparty Suzanne Stinson filed under seal (Ortiz Exhibits A, B, C, E, F, G, H, I and K), and related materials. None of the materials in category A (the Friedman materials) meet the requirements in the Ninth Circuit or the Local Rules of the Northern District to justify keeping documents that are part of a dispositive motion under seal. The materials in category B (employee deposition transcripts) may contain some testimony that warrants sealing, but DIRECTV has over- designated the transcripts to shield testimony that should not be sealed. II. PROCEDURAL HISTORY On September 22, 2016, concurrent with the filing of its Motion for Partial Summary Judgment (“MSJ”)(Dkt. 176 (public); Dkt. 177-04 (under seal))1, the FTC filed an administrative motion to file under seal specified documents that the FTC included as exhibits in its MSJ. (Dkt. 177) The FTC did so because DIRECTV or nonparties had previously designated the subject documents as “Confidential” under the Protective Order in this case (Dkt. 54). (See Ortiz Declaration (Dkt. 176-9) ¶¶ 2-25.) Consistent with Paragraph 15 of the Protective Order, the FTC timely notified nonparties (as well as DIRECTV) of its intent to file materials designated as Confidential and asked if they would withdraw the Confidential designations for all or part of the listed material. Because the FTC did not receive responses regarding the withdrawal of designations before the filing deadline, the FTC filed the subject materials under seal. Moreover, 1 Because this opposition is addressing issues of proper designation of documents under seal, references will be to the docket numbers for sealed versions of documents unless otherwise noted. FTC’S OPP’N TO DIRECTV’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 190 Filed 10/07/16 Page 3 of 6 because DIRECTV and the subject nonparties, as designating parties, bore the burden of presenting sufficiently compelling reasons to keep the materials under seal, the FTC took no position in filing its motion about whether or not the materials should remain sealed. (Dkt. 177 at 4.) Having now reviewed DIRECTV’s rationale for keeping materials sealed and its proposed redactions, the FTC hereby opposes maintaining the seal on the categories of documents described above. III. ARGUMENT In determining whether to seal certain judicial records, “a ‘strong presumption in favor of access’ is the starting point [citations omitted]. A party seeking to seal a judicial record then bears the burden of overcoming this strong presumption by meeting the ‘compelling reasons’ standard.” Kamakana v. City & Cnty of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citing Foltz, 331 F.3d 1122, 1135 (9th Cir. 2003). Moreover, “the party seeking a seal must “articulate[] compelling reasons supported by specific factual findings that outweigh the general history of access and public policies favoring disclosure . . . .” Kamakana, 447 F.3d at 1178 (internal citations omitted). Furthermore, in considering the public right of access, public interest in judicial records is even stronger when a case involves important public issues or where the public interest is being represented. See California ex rel. Lockyer v. Safeway, Inc., 355 F. Supp. 2d 1111, 1124 (C.D. Cal. Jan 28, 2005) (government representation of public interest weighed heavily toward access under “compelling reason” standard). Civil Local Rule 79-5 further “supplements the compelling reasons standard set forth in Kamakana.” Costco Wholesale Corp. v. Johnson & Johnson Vision Care Inc., No. 15-cv-00941- HSG, 2015 U.S. Dist. LEXIS 64796, at *4 (N.D. Cal. May 18, 2015). L.R 79-5(b) provides that “[a] sealing order may issue only upon a request that establishes that the document, or portions thereof, are privileged, protectable as a trade secret, or otherwise entitled to protection under the law. “Broad allegations of harm, unsubstantiated by specific examples of articulated reasoning” are not sufficient. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992). FTC’S OPP’N TO DIRECTV’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 190 Filed 10/07/16 Page 4 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV, in its Administrative Motion, claims that it is merely asking the court to keep under seal “(1) DIRECTV internal business structures and operations; (2) DIRECTV strategic planning information; (3) DIRECTV consumer and competitive research, and the results of that research; and (4) DIRECTV financial and sales data.” The actual documents or portions of documents that it has designated, however, go far beyond these limited categories. A. The Friedman materials do not meet the standard to warrant sealed status. As noted above, DIRECTV has proposed sealing significant portions of the testimony of Clay Friedman, its designated 30(b)(6) witness, regarding the basis for its affirmative defenses. See Dkt. 187-18. In justification of these redactions, DIRECTV states that Mr. Friedman’s testimony includes “analyses of issues both in the present case and in the prior multistate settlement, including discussion of settlement negotiations, strategy, events and internal processes related to Mr. Friedman’s representation of DIRECTV.” Murphy Declaration (Dkt. 187-1 at 2). None of the enumerated topics provides a reason – let alone a compelling reason – for concluding that Mr. Friedman’s testimony should be sealed. 2 Mr. Friedman’s testimony regarding the circumstances of a public settlement hardly constitutes a trade secret. Moreover, DIRECTV has already offered the unredacted and unsealed testimony of Mr. Friedman through his declarations in support of its Opposition to the FTC’s Motion to Strike Affirmative Defenses (Dkt. 36-1) and Motion for Partial Summary Judgment (Dkt. 53-7). In further contradiction of its claim that Mr. Friedman’s testimony is so highly confidential that it must be maintained under seal, DIRECTV has itself now used the same portions of testimony in its public, unredacted version of its Opposition to the FTC’s MSJ, publicly quoting language that it sought to seal. See, e.g., Defendants Opposition to the Federal Trade Commission’s Motion for Partial Summary Judgment (“DIRECTV Opp. to MSJ”) at 9, lines 4-6 and Dkt. 187-18 at 95:20-23. If nothing else, this attests to the lack of care DIRECTV has shown in designating testimony to be sealed. As courts have explained, “[t]he mere fact that the production of records may lead to the 2 DIRECTV has not asserted that Mr. Friedman’s testimony would reveal attorney-client privileged material. In any case, if his testimony contained privileged communications, providing that testimony in the course of a deposition would have waived any such privilege. FTC’S OPP’N TO DIRECTV’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 3 Case 3:15-cv-01129-HSG Document 190 Filed 10/07/16 Page 5 of 6 litigant’s embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court to seal its records.” Kamakana, 447 F.3d at 1179, citing Foltz, 331 F.3d at 1136. DIRECTV should not be permitted to make public the testimony it chooses in support of its own motions, designate the same person as its 30(b)(6) witness on that same issue, and then hide testimony behind a seal motion to prevent the facts from becoming public in connection with a dispositive motion. Similarly, DIRECTV has sought to seal two documents used in Mr. Friedman’s deposition without any showing that these documents fit into the recognized categories of financial or strategic documents, or any other category that would demonstrate a compelling need for a seal. It seeks to seal access to Ortiz Ex. S (Dkt. 177-40), a series of emails – mostly between the FTC and DIRECTV – asserting that the document includes “sensitive information about Mr. Friedman’s approach to representation of DIRECTV” in connection with the multistate settlement agreement and inquiries from the FTC. (Dkt. 187-1 at 6) DIRECTV, however, offers no explanation about why Mr. Friedman’s “approach,” which he shared with the FTC through these emails, should be treated as so confidential that disclosure would cause it competitive or other harm. DIRECTV also asserts that Ortiz Exhibit T (Dkt. 177-42), a Powerpoint entitled “DirecTV Multistate Settlement: an Overview,” contains highly sensitive business information regarding DIRECTV’s compliance strategies. Even a brief review of the document belies this assertion. The document on its face does not contain financial, corporate strategic or trade secret information. It also does not appear to contain anything that amounts to “compliance strategies.”3 If DIRECTV actually has a compelling interest in sealing an overview of highly public settlement agreements with 50 states, it must come forward with more than unsupported assertions to justify sealing. B. DIRECTV has failed to present compelling reasons to seal other testimony The FTC objects to DIRECTV’s broad assertion that much of the testimony of other witnesses should be redacted and filed under seal. A straight-forward reading of those 3 This document was provided to the FTC both during the course of the FTC’s investigation and in fact discovery. DIRECTV has not claimed that it contains attorney-client privileged material. FTC’S OPP’N TO DIRECTV’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 190 Filed 10/07/16 Page 6 of 6 transcripts demonstrates that much of the testimony does not implicate business strategies, financial information, trade secrets or constitute otherwise sealable material. For example, with respect to Ortiz Ex. G (Dkt. 187-21), DIRECTV seeks to seal a set of questions and answers about automatic enrollment in the premium channel offer and how consumers can cancel premium channels (Dkt. 187-21 at 189:1-11). Indeed, if DIRECTV views the facts about how consumers can cancel premium channels to be a trade secret, how can it argue that this information is easily known to its customers? Moreover, as with the Friedman materials, DIRECTV has now used materials publicly its Opposition to the MSJ that it has had previously claimed must be kept sealed. See Opp. to MSJ at 7 and Ortiz Ex. G (Dkt. 187-21), at 191:15- 192:8). See also Opp. to MSJ at 4 and Ortiz Ex. F (Dkt. 187-20) at 206:25-207:15). DIRECTV’s public use of testimony that only days before it claimed was highly confidential suggests that DIRECTV has made little effort to meet the requirements of L.R. 79-5(b) that “the request must be narrowly tailored to seek sealing of only sealable material.” For these reasons, the FTC opposes the sealing of deposition testimony unless and until DIRECTV redesignates those portions for which it has an actual compelling reason. CONCLUSION For the reasons presented above, the FTC opposes sealing the Friedman materials. It also opposes sealing the deposition transcripts of eight current or former DIRECTV employees and nonparty Suzanne Stinson and related materials unless DIRECTV can make a compelling showing that meets the standard of this Circuit and the Local Rules. Dated: October 7, 2016 _/s/ Erika Wodinsky __ Eric D. Edmondson Jacob A. Snow Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile FTC’S OPP’N TO DIRECTV’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-10-13	191	Supplemental Administrative Motion to File Under Seal (DKT. 187) filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Exhibit D - Redacted, # 2 Exhibit F - Redacted, # 3 Exhibit G - Redacted, # 4 Exhibit S, # 5 Exhibit D - UNREDACTED, # 6 Exhibit F - UNREDACTED, # 7 Exhibit G - UNREDACTED, # 8 Certificate/Proof of Service)(Sandrock, Ryan) (Filed on 10/13/2016) (Entered: 10/13/2016)	Case 3:15-cv-01129-HSG Document 191 Filed 10/13/16 Page 1 of 3 Jeff Tillotson, SBN 139372 [email protected] Tillotson Law 750 North Saint Paul, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. DIRECTV’S SUPPLEMENT TO ITS ADMINISTRATIVE MOTION TO FILE UNDER SEAL (DKT. 187) Date: Time: Courtroom: Complaint Filed: March 11, 2015 Trial Date: January 30, 2017 October 27, 2016 2:00 p.m. 15 – 18th Floor DIRECTV’S SUPPLEMENT TO ITS ADMINISTRATIVE MOTION TO FILE UNDER SEAL CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 191 Filed 10/13/16 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 On October 3, 2016, DIRECTV filed an administrative motion seeking to file materials under seal. (Dkt. 187). On October 6, 2016, DIRECTV filed a second administrative motion to file materials under seal. (Dkt. 188). This motion was more narrowly tailored than the prior motion. In particular, DIRECTV no longer sought to keep under seal certain materials that were addressed in its first motion. Those materials include nearly all of the materials in the Clay Friedman deposition. On October 7, 2016, the FTC filed an opposition to DIRECTV’s first administrative motion. (Dkt. 190). DIRECTV no longer seeks to keep under seal the following portions of the Friedman deposition: 30:13-32:24, 49:1-51:2, 51:18-19, 52:20-22, 53:1-4, 53:21-56:9, 56:14-57:6, 57:18- 60:25, 61:18-65:1, 65:8-67:10, 68:10-24, 70:20- 72:13, 73:8-78:2, 78:8-79:19, 80:4-81:20, 82:2- 85:15, 86:2-7, 87:6-98:4, 98:14-15, 99:11-100:16, 104:4-104:25, 109:1-6, 110:1-116:25, 121:3-18, 122:1-132:25, 149:8-150:25, 151:9-19, 152:3-25, 165:1-171:25, 172:13-177:25, 178:10-183:13, 184:7-25, 193:1-194:10, 194:15-195:24, 196:7-25, 269:1-9. DIRECTV hereby withdraws these portions of its first administrative motion. DIRECTV also withdraws its request to seal Ortiz Decl., Ex. S, Ortiz Decl., Ex. G at 191:15-192:8, and Ortiz Decl., Ex. F at 206:25-207:15. DIRECTV’s withdrawal of these portions of its request largely moots the FTC’s opposition, in particular their arguments at pages 3:6-23, 4:10-13, 5:9-10. The parties do disagree regarding the following portions of Clay Friedman’s deposition: 67:11-68:9, 69:11-16, 86:8-24, 100:17-104:3, 183:14-184:6. DIRECTV maintains its under seal claim for the reasons set forth in its October 3, 2016 Administrative Motion (Dkt. 187). The parties also disagree regarding DIRECTV’s request to file under seal the following: DIRECTV’s redactions of Ortiz Decl., Exhibits A, B, C, E, F, G, H, I and K and DIRECTV’s filing under seal of Ortiz Decl., Ex. T. (See Dkt. 188). As to these materials, the FTC has not stated any specific basis for challenging the under seal filing. As to Exhibit T (discussed by the FTC at Dkt. 190 at 4:16-23), DIRECTV notes that, contrary to the FTC’s claim that the document “does not appear to contain anything that amounts to ‘compliance strategies,’” Exhibit T directly addresses DirecTV’s internal compliance strategy. See Ortiz Decl., Ex. T at 56-60 (providing a summary of DIRECTV’S SUPPLEMENT TO ITS ADMINISTRATIVE MOTION TO FILE UNDER SEAL CASE NO. 3:15-CV-01129 HSG 1 Case 3:15-cv-01129-HSG Document 191 Filed 10/13/16 Page 3 of 3 the slide deck titled “compliance checklist”). DIRECTV maintains its under seal claim for the reasons set forth in its October 3, 2016 Administrative Motion (Dkt. 187). Dated: October 13, 2016 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC DIRECTV’S SUPPLEMENT TO ITS ADMINISTRATIVE MOTION TO FILE UNDER SEAL CASE NO. 3:15-CV-01129 HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-10-13	192	AMENDED CERTIFICATE OF SERVICE by DIRECTV LLC, DIRECTV, Inc. re 191 Supplemental Administrative Motion to File Under Seal (DKT. 187) (Sandrock, Ryan) (Filed on 10/13/2016) Modified on 10/13/2016 (ecgS, COURT STAFF). (Entered: 10/13/2016)	Case 3:15-cv-01129-HSG Document 192 Filed 10/13/16 Page 1 of 3 Jeff Tillotson, SBN 139372 [email protected] Tillotson Law 750 North Saint Paul, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. AMENDED CERTIFICATE OF SERVICE AMENDED CERTIFICATE OF SERVICE CASE NO. 3:15-CV-01129 HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 192 Filed 10/13/16 Page 2 of 3 AMENDED CERTIFICATE OF SERVICE I am employed in the County of San Francisco, State of California. I am over the age of 18 years and not a party to the within action. My business address is 555 California Street, Suite 2000, San Francisco, CA 94104. On, October 13, 2016 I served the foregoing document(s) described as: 1. [UNREDACTED] EXHIBIT D TO THE DECLARATION OF KELLY ORTIZ 2. [UNREDACTED] EXHIBIT F TO THE DECLARATION OF KELLY ORTIZ 3. [UNREDACTED] EXHIBIT G TO THE DECLARATION OF KELLY ORTIZ on all interested parties in this action as follows: (E-MAIL) I caused the document(s) to be delivered by e-mail to each interested party as 1 AMENDED CERTIFICATE OF SERVICE CASE NO. 3:15-CV-01129 HSG Raymond Edward McKown Kenneth H. Abbe Stacy Rene Procter Faye Chen Barnouw Federal Trade Commission 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 Phone: 310-824-4343 Fax: 310-824-4380 [email protected] Eric David Edmondson Boris Yankilovich Erika Ruth Wodinsky Jacob A. Snow Whitney B. Merrill Emily Cope Burton Evan Rose Kenneth Hatheway Abbe Lin Wang Kahn Matthew David Gold Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 Phone: 415-848-5179 Fax: 415-848-5184 [email protected] Jeffrey Mark Tillotson Tillotson Law 750 N. St. Paul Street, Suite 610 Dallas, TX 75201 Phone: 214-382-3041 Email: [email protected]  shown above. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 192 Filed 10/13/16 Page 3 of 3 I declare under penalty of perjury that the foregoing is true and correct. Executed on October 13, 2016 at San Francisco, California. /s/ Marvely Macdonald 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 AMENDED CERTIFICATE OF SERVICE CASE NO. 3:15-CV-01129 HSG
2016-10-13	193	OPPOSITION (re 188 Administrative Motion to File Under Seal ) filed by Federal Trade Commission. (Wodinsky, Erika) (Filed on 10/13/2016) Modified on 10/14/2016 (ecgS, COURT STAFF). (Entered: 10/13/2016)	Case 3:15-cv-01129-HSG Document 193 Filed 10/13/16 Page 1 of 7 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S OPPOSITION TO DIRECT’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL (Dkt. 188) [Local Rules 7-11 and 79-5(d), (e)] FTC’S OPP’N TO DIRECTV’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 193 Filed 10/13/16 Page 2 of 7 I. INTRODUCTION Plaintiff Federal Trade Commission (“FTC”) opposes the Administrative Motion to Allow Certain Documents to Be Filed Under Seal (Dkt. 188) filed by Defendants DIRECTV, LLC and DIRECTV (collectively, “DIRECTV”) in connections with DIRECTV’s Opposition to Plaintiff’s Motion for Partial Summary Judgment. The FTC’s opposition to DIRECTV’s administrative motion addresses two categories of materials: A. The Declaration of Clayton S. Friedman In Support of DIRECTV’s Opposition to the FTC’s Motion for Partial Summary Judgment (Dkt. 188-26 and Dkt. 188-27 (under seal)), and the deposition testimony of Clayton Friedman (designated as Exhibit E to the Declaration of Ryan Sandrock (“Sandrock”) (Dkt. 189-1)) ; and B. Deposition transcripts of six current or former DIRECTV employees and one nonparty witness, Ewan Duncan, filed under seal (Sandrock Exhibits A, B, C, D, F, G, H, and I). The FTC opposes DIRECTV’s Administrative Motion for the same reasons set forth in detail in its Opposition to DIRECTV’s Administrative Motion to seal documents lodged by the FTC in support of its Motion for Partial Summary Judgment (Dkt. 190). As with the documents that DIRECTV sought to file under seal before, none of the materials in category A (the Friedman materials) meet the requirements in the Ninth Circuit or the Local Rules of the Northern District to justify maintaining under seal documents that are part of a dispositive motion. Although the materials in category B (employee and third party deposition transcripts) may contain some testimony that warrants sealing, DIRECTV has clearly over-designated the transcripts to shield testimony that should not be sealed. As in its previous motion, DIRECTV has claimed these materials are highly confidential at the same time that it has, in its public filing, quoted language (or cited to specific details) in the asserted “sealable” transcripts. This disregard of the requirements Local Rule 79-5(b) that requests must be narrowly tailored should not be countenanced. II. ARGUMENT In determining whether to seal certain judicial records, “a ‘strong presumption in favor of access’ is the starting point [citations omitted]. A party seeking to seal a judicial record then FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS UNDER SEAL Case No. 15-cv-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 193 Filed 10/13/16 Page 3 of 7 bears the burden of overcoming this strong presumption by meeting the ‘compelling reasons’ standard.” Kamakana v. City & Cnty of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003). Moreover, “the party seeking a seal must “articulate[] compelling reasons supported by specific factual findings that outweigh the general history of access and public policies favoring disclosure . . . .” Kamakana, 447 F.3d at 1178 (internal citations omitted). Civil Local Rule 79-5 further specifies that “[a] sealing order may issue only upon a request that establishes that the document, or portions thereof, are privileged, protectable as a trade secret, or otherwise entitled to protection under the law.” “Broad allegations of harm, unsubstantiated by specific examples of articulated reasoning” are not sufficient. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992). DIRECTV, in its Administrative Motion, claims that it is merely asking the court to keep under seal what it describes as “limited instances of confidential and sensitive information consisting of (1) DIRECTV internal business structures and operations; (2) DIRECTV strategic planning information; (3) DIRECTV consumer and competitive research, and the results of that research; and (4) DIRECTV financial and sales data.” The actual documents or portions of documents that DIRECTV has designated – as with its previous motion – go far beyond these categories. A. The Friedman materials do not meet the standard to warrant sealed status. DIRECTV has again proposed sealing significant portions of the testimony of Clay Friedman, its designated 30(b)(6) witness, regarding the basis for its affirmative defenses. It also proposes to seal several paragraphs of Mr. Friedman’s Declaration in Support of DIRECTV’s Opposition to the FTC Motion for Partial Summary Judgment. In justification of the transcript redactions, DIRECTV states that Mr. Friedman’s testimony includes “analyses of issues in the prior multistate settlement, including discussion of settlement negotiations, strategy, and internal processes related to Mr. Friedman’s representation of DIRECTV.” Murphy Declaration (Dkt. 188-1 ¶3(e)). None of the enumerated topics provides a reason – let alone a compelling reason – FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS UNDER SEAL Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 193 Filed 10/13/16 Page 4 of 7 for concluding that Mr. Friedman’s testimony should be sealed. 1 Mr. Friedman’s testimony regarding the circumstances of a public settlement hardly constitutes a trade secret. Moreover, DIRECTV has already offered the unredacted and unsealed testimony of Mr. Friedman through his declarations in support of its Opposition to the FTC’s Motion to Strike Affirmative Defenses (Dkt. 36-1) and Motion for Partial Summary Judgment (Dkt. 53-7). A cursory reading of the testimony that DIRECTV seeks to seal reveals that it does not fall into any of the categories of highly sensitive documents that DIRECTV has enumerated. See, e.g., Sandrock Ex. E, 255:20- 256:25. (Questions and answers about communications between Mr. Friedman and the FTC). It is well-established that “[t]he mere fact that the production of records may lead to the litigant’s embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court to seal its records.” Kamakana, 447 F.3d at 1179, citing Foltz v. State Farm Mut. Auto Ins. Co, 331 F.3d 1122, 1136 (9th Cir. 2003). Similarly, DIRECTV has failed to provide compelling reasons to support its proposed redactions to Mr. Friedman’s Declaration (Sandrock Ex. E). Again, a cursory reading of the text that it proposes to seal (Paragraphs 9, 11 and 12) demonstrate that these paragraphs do not involve any confidential material – let alone material of the sort that can be protected under Kamakana and Local Rule 79-5, such as confidential settlement agreements, confidenital financial information, or information that might harm the company’s ability to conduct business. See Delfino Green & Green v. Workers Comp Solutions, LLC, No. 15-cv-02302-HSG, 2015 U.S. Dist. LEXIS 90774, at *4-5 (N.D. Cal. July 13, 2015). For example, Paragraph 9 addresses Mr. Friedman’s recollections of conversations with FTC employees and Paragraph 12 is merely argument about how Mr. Friedman interprets certain facts.2 Another reason to deny DIRECTV’s administrative motion with respect to Mr. Friedman’s testimony is that his testimony is offered in support of DIRECTV’s affirmative 1 The declarations of Mr. Sandrock and Mr. Murphy appear to contain a typographical error, both indicating that the pages to be sealed include 225:20-256:24, although pages 225 through 244 were not included in the exhibits. It appears that the correct pages are 255:20-256:24. The FTC objections apply to the proposed redactions to pages 255 and 256. 2 This paragraph references Ortiz Declaration Ex. T, which was one of the documents addressed in our previous Opposition to Administrative Motion to Seal. FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS UNDER SEAL Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 193 Filed 10/13/16 Page 5 of 7 defenses, which require a showing that the FTC has engaged in affirmative misconduct. In a situation where a federal government agency is accused of misconduct, there is a particularly strong need for disclosure of underlying facts supporting (or contradicting) the accusation. In these circumstances, the need to demonstrate the required compelling reasons is strong. See California ex rel. Lockyer v. Safeway, Inc., 355 F. Supp. 2d 1111, 1124 (C.D. Cal. Jan 28, 2005) (government representation of public interest weighed heavily toward access under “compelling reason” standard). B. DIRECTV has failed to present compelling reasons to seal other testimony The FTC objects to DIRECTV’s broad assertion that much of the testimony of the witnesses in Category B should be redacted and filed under seal. A straight-forward reading of those transcripts demonstrates that much of the testimony does not implicate business strategies, financial information, trade secrets or constitute otherwise sealable material. Indeed, DIRECTV must agree with this (despite its request for a seal), because it includes some of the material that it seeks to seal in the text of its public version of its Opposition to Plaintiff’s Motion for Partial Summary Judgment. For example, in DIRECTV’s Opposition at 3:18-19, it cites to Sandrock Ex. A. Although specific, factual information from that deposition testimony is included almost verbatim in the public version of the Opposition, DIRECTV proposed to seal that same information in Exhibit A itself. Similarly, DIRECTV, in the public version of its Opposition, cites to specific business information from Sandrock Ex. B (customers remain with DIRECTV for an average of 5 ½ years), but then seeks to seal the underlying document that it cites for this point. If this financial or business information is so competitively sensitive, why does DIRECTV make it public? If it is not, what is its justification for sealing the transcript? DIRECTV’s public use of testimony that it has simultaneously asserted is highly confidential suggests that DIRECTV has made little effort to meet the requirements of L.R. 79-5(b) that “the request must be narrowly tailored to seek sealing of only sealable material.” The FTC has not, in this Opposition, identified each instance from each of the seven redacted transcripts where the assertion of the need to seal is overbroad. Given the widespread nature of DIRECTV’s overdesignations and failure to comply with the requirements of Local FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS UNDER SEAL Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 193 Filed 10/13/16 Page 6 of 7 Rule 79-5(b) that the request to seal “must be narrowly tailored to seek sealing of only sealable material,” the FTC submits that DIRECTV should be required to correct its designations before the court can consider its motion.3 CONCLUSION For the reasons presented above, the FTC opposes sealing the Friedman materials. It also opposes sealing the deposition transcripts of six current or former DIRECTV employees and nonparty Ewan Duncan unless DIRECTV can make a “compelling reason” showing that meets the standard of this Circuit and the Local Rules. Dated: October 13, 2016 _/s/ Erika Wodinsky __ Eric D. Edmondson Jacob A. Snow Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile 3 The FTC takes no position with respect to the expert declarations and the attached expert reports which DIRECTV has sought to maintain under seal in its Administrative Motion. Although its designations with respect to these documents may also be broader than allowed by Local Rule 79-5, the FTC is not at this time in a position to evaluate whether some of the cited material may to be competitively sensitive. FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS UNDER SEAL Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 193 Filed 10/13/16 Page 7 of 7
2016-10-13	194	Administrative Motion to File Under Seal filed by Federal Trade Commission. (Attachments: # 1 Proposed Order, # 2 Declaration, # 3 Exhibit, # 4 Exhibit, # 5 Exhibit, # 6 Exhibit, # 7 Exhibit, # 8 Exhibit, # 9 Exhibit, # 10 Exhibit, # 11 Exhibit, # 12 Exhibit)(Edmondson, Eric) (Filed on 10/13/2016) (Entered: 10/13/2016)	Case 3:15-cv-01129-HSG Document 194 Filed 10/13/16 Page 1 of 5 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL: (1) UNREDACTED VERSION OF FTC’S REPLY BRIEF IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT; (2) ORTIZ DECLARATION EXHIBITS DESIGNATED AS CONFIDENTIAL BY DEFENDANT DIRECTV; AND (3) SNOW DECLARATION EXHIBITS DESIGNATED AS CONFIDENTIAL BY DEFENDANT DIRECTV [Local Rules 7-11 and 79-5(d), (e)] [Filed concurrently with the redacted version of the FTC’s Reply Brief in support of its Motion for Partial Summary Judgment] FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 194 Filed 10/13/16 Page 2 of 5 Plaintiff Federal Trade Commission (“FTC” or “Submitting Party”) hereby moves the Court to issue an administrative order that authorizes the filing under seal, pursuant to N.D. Cal. Local Rules 7-11 and 79-5(d) and (e), of: (1) the unredacted version of the “Federal Trade Commission’s Reply in Support of Motion for Partial Summary Judgment” (“Reply Brief”); (2) certain Exhibits attached to the Declaration of Kelly Ortiz in Support of the FTC’s Reply Brief; and (3) certain Exhibits attached to the Declaration of Jacob Snow in Support of the FTC’s Reply Brief. The FTC’s Reply Brief discusses deposition testimony and other documents (listed below) that Defendant DIRECTV has designated as confidential and are thus subject to the Court’s October 15, 2015 Protective Order (Dkt. 54). The materials marked as confidential, and that are at issue here, are:  Excerpts from deposition transcripts designated as confidential by Defendant DIRECTV: o Ortiz Exhibit KK: Brad Bentley, April 29, 2016 o Ortiz Exhibit LL: Ellen Filipiak, June 23, 2016 o Ortiz Exhibit MM: Scott Hause (DIRECTV’s FRCP 30(b)(6) designee), July 15, 2016 o Ortiz Exhibit NN: Karen Leever, February 3, 2016 o Ortiz Exhibit OO: Liz Poling-Hiraldo, May 11, 2016  DIRECTV’s letters responding to the FTC’s Civil Investigative Demands (“CIDs”): o Ortiz Exhibit QQ: DIRECTV's CID response letter to the FTC dated May 13, 2010. o Ortiz Exhibit RR: DIRECTV's CID response letter to the FTC dated June 9, 2010. o Ortiz Exhibit SS: DIRECTV's CID response letter to the FTC dated July 2, 2010. o Ortiz Exhibit TT: DIRECTV's CID response letter to the FTC dated October 12, 2010. o Ortiz Exhibit UU: DIRECTV's CID response letter to the FTC dated April 6, 2011. FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 194 Filed 10/13/16 Page 3 of 5 o Ortiz Exhibit VV: DIRECTV's CID response letter to the FTC dated August 6, 2013.  DIRECTV Expert Report of Jerry Wind: o Snow Exhibit A: Jerry Wind’s Expert Report. o Snow Exhibit B: Exhibit 3 to Jerry Wind’s Expert Report. o Snow Exhibit C: Supporting document submitted with Jerry Wind’s Expert Report. o Snow Exhibit D: Email correspondence between FTC counsel and DIRECTV counsel. Each of these documents was designated in its entirety as confidential by Defendant DIRECTV (the “Designating Party”). Based on this confidential designation, these documents are subject to the Protective Order issued by the Court on October 15, 2015 (Dkt. 54). Local Rule 79-5 governs the filing of documents under seal in civil cases. Subsection (e) of Local Rule 79-5 sets forth additional procedures that apply when a party seeks to file “documents designated as confidential by the opposing party or a non-party pursuant to a protective order” and provides as follows: If the Submitting Party is seeking to file under seal a document designated as confidential by the opposing party or a non-party pursuant to a protective order, or a document containing information so designated by an opposing party or a non- party, the Submitting Party's declaration in support of the Administrative Motion to File Under Seal must identify the document or portions thereof which contain the designated confidential material and identify the party that has designated the material as confidential (“the Designating Party”). Pursuant to subsection (e)(1) of Local Rule 79-5, the Designating Party then has 4 days to file a declaration establishing that all of the designated material is “sealable” (as defined in Local Rule 79-5(b)). Designating Party DIRECTV bears the burden of establishing that the documents listed above, as well as the redacted portions of the FTC’s Reply Brief, are “sealable.” At this time, FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 194 Filed 10/13/16 Page 4 of 5 because the obligation to defend the sealed status of these materials falls on the Designating party, the FTC takes no position as to whether these documents, or any portions thereof, should remain under seal. The FTC reserves its right to oppose designations and redactions. The declaration of undersigned FTC counsel and a proposed order granting the FTC’s Administrative Motion to File Under Seal is submitted herewith. Dated: October 13, 2016 Respectfully Submitted, _/s/ Eric D. Edmondson__ Eric D. Edmondson Jacob A. Snow Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’S ADMINISTRATIVE MOTION TO FILE EXHIBITS UNDER SEAL Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 194 Filed 10/13/16 Page 5 of 5
2016-10-13	195	EXHIBITS re 194 Administrative Motion to File Under Seal filed byFederal Trade Commission. (Attachments: # 1 Exhibit, # 2 Exhibit, # 3 Exhibit, # 4 Exhibit, # 5 Exhibit, # 6 Exhibit, # 7 Exhibit, # 8 Exhibit, # 9 Exhibit, # 10 Exhibit, # 11 Exhibit, # 12 Exhibit, # 13 Exhibit, # 14 Exhibit, # 15 Exhibit, # 16 Exhibit, # 17 Exhibit, # 18 Exhibit, # 19 Exhibit, # 20 Exhibit, # 21 Exhibit)(Related document(s) 194 ) (Edmondson, Eric) (Filed on 10/13/2016) (Entered: 10/13/2016)	Case 3:15-cv-01129-HSG Document 195 Filed 10/13/16 Page 1 of 1 EXHIBIT KK to the declaration of Kelly Ortiz FILED UNDER SEAL
2016-10-13	196	REPLY (re 176 MOTION for Partial Summary Judgment ) Repy to Defendant's Opposition filed byFederal Trade Commission. (Attachments: # 1 Declaration, # 2 Exhibit Snow A through D, # 3 Declaration, # 4 Exhibit Ortiz JJ through WW)(Edmondson, Eric) (Filed on 10/13/2016) (Entered: 10/13/2016)	Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 1 of 19 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT Date: October 27, 2016 Time: 2:00 p.m. Judge: Hon. Haywood S. Gilliam, Jr. Location: San Francisco Courthouse Courtroom 10, 19th Floor FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 2 of 19 TABLE OF CONTENTS I. DIRECTV has not met its SUMMARY JUDGMENT burden on the ROSCA counts. ..... 1 A. DIRECTV’s contention that the Court cannot rely on a facial analysis is baseless. ................................................................................................................................. 1 The Court may grant the FTC’s MSJ based on facts DIRECTV does not dispute. 2 DIRECTV attempts to dispute the FTC’s remaining material facts based on B. C. conclusory claims and implausible characterizations. ............................................ 4 1. DIRECTV’s attack on the FTC’s website evidence (Stahl Ex. A-D and Gonzalez Ex. A) is conclusory and baseless. .......................................................... 4 2. 3. 4. 5. DIRECTV’s admission through its designated witness is binding. ............ 5 DIRECTV’s Web usability studies (Ortiz Exs. L, M and Q). .................... 5 DIRECTV’s legal guidance for direct proximity disclosures. .................... 7 Internal reports of consumers feeling misled about terms. ......................... 7 D. DIRECTV’s reliance on fundamentally flawed and irrelevant expert opinions is insufficient to defeat summary judgment on the ROSCA claims. .......................... 8 1. DIRECTV’s customer knowledge survey lacks the proper foundation for admissible expert evidence. .................................................................................... 9 2. 3. The customer knowledge survey also did not test the relevant proposition. 10 DIRECTV’s analysis of select customer complaints and aired grievances on social media is irrelevant to DIRECTV’s argument. ....................................... 11 4. 5. Franklyn’s declaration should be stricken. ............................................... 11 Franklyn’s opinions lack proper foundation and relevance. ..................... 12 II. DIRECTV has not met its SUMMARY JUDGMENT burden on ITS affirmative defenses. ............................................................................................................................ 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT i Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 3 of 19 Cases Acevedo v. City of Anaheim, 14-cv-01147, 2016 WL 79786 (C.D. Cal. Jan. 6, 2016) .................. 2 Aguilar v. Pac. Orthopedic Med. Grp.,12-cv-01869, 2013 WL 5424896 (E.D. Cal. Sept. 27, 2013) ........................................................................................................................................... 8 Banga v. First USA, NA, 29 F. Supp. 3d 1270 (N.D. Cal. 2014) .................................... 1, 4, 13, 14 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ............................................................................... 1 Daubert v. Merrell Dow Pharm., Inc., 43 F.3d 1311 (9th Cir. 1995)........................................... 12 Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579...................................................................... 9 Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119 (9th Cir. 2014) ....................... 1 FTC v. Amy Travel Serv., Inc., 875 F.2d 564 (7th Cir. 1989) ......................................................... 8 FTC v. Commerce Planet, Inc., 878 F. Supp. 2d. 1048 .................................................................. 2 FTC v. Cyberspace.com, LLC, No. C00-1806L, 2002 WL 32060289 (W.D. Wash. July 10, 2002) ................................................................................................................................................... 11 FTC v. E.M.A. Nationwide, Inc., 767 F.3d 611 (6th Cir. 2008) ..................................................... 10 FTC v. Figgie Int’l, Inc., 994 F.2d 595 (9th Cir. 1993) .................................................................. 2 FTC v. Wilcox, 926 F. Supp. 1091 ................................................................................................ 11 In re Sabine Oil & Gas Corp., 555 B.R. 180 (Bankr. S.D.N.Y. 2016) .......................................... 9 McEnroe v. Local 9400, Commc’n Workers of Am., AFL-CIO, No. 14-CV-03461-HSG, 2015 WL 9303985 (N.D. Cal. Dec. 22, 2015) ............................................................................... 4, 14 McGlinchy v. Shell Chem. Co., 845 F.2d 802 (9th Cir. 1988) ...................................................... 11 Nelson v. Pima Cmty. Coll., 83 F.3d 1075 (9th Cir. 1996) ............................................................. 4 Removatron Int'l Corp. v. FTC, 884 F.2d 1489 (1st Cir. 1989) .................................................... 10 Resort Car Rental Sys., Inc. v. FTC, 518 F.2d 962 (9th Cir. 1975) .............................................. 10 United States v. Johnson, 122 F. Supp. 3d 272 (M.D.N.C. 2015) .................................................. 9 United States v. Various Slot Machines on Guam, 658 F.2d 697 (9th Cir. 1981) .......................... 4 Wong v. Regents of Univ. of California, 410 F.3d 1052 (9th Cir. 2005) ...................................... 12 Statutes 15 U.S.C. § 8403 ........................................................................................................................... 10 CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 4 of 19 Rules Fed. R. Evid. 403 ............................................................................................................................ 4 Fed. R. Evid. 702 ............................................................................................................................ 9 Fed. R. Evid. 1004 .......................................................................................................................... 4 CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 5 of 19 I. DIRECTV HAS NOT MET ITS SUMMARY JUDGMENT BURDEN ON THE ROSCA COUNTS. The FTC’s Motion for Partial Summary Judgment (“MSJ”) presents material facts that demonstrate DIRECTV did not disclose the terms of its premium channel negative option clearly and conspicuously and did not obtain consumers’ express informed consent to it. (FTC MSJ (Dkt. 176) at 1-8.) Thus, the FTC has met its “initial responsibility of informing the district court of the basis for its motion.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden has shifted to DIRECTV “to designate specific facts showing a genuine issue for trial” by “com[ing] forward with affirmative evidence from which a jury could reasonably render a verdict in its favor.” Banga v. First USA, NA, 29 F. Supp. 3d 1270, 1275 (N.D. Cal. 2014). DIRECTV’s burden extends beyond offering “evidence that is merely colorable or that is not significantly probative.” Id. at 1275-76. DIRECTV has not met its burden. It presents no credible evidence to support its position. Instead, DIRECTV attempts to mischaracterize and discredit its own documents and testimony and invokes opinions of litigation “experts” which lack proper foundation and relevance in an attempt to create factual issues where none exist. A. DIRECTV’s contention that the Court cannot rely on a facial analysis is baseless. DIRECTV’s argument that the Court cannot rely on a facial assessment of DIRECTV’s website to decide the ROSCA claims is wrong. (DIRECTV Opposition (“Opp.”) (Dkt. 189) at 11-12.) It is proper for the Court to conduct its own facial review of DIRECTV’s website. Contrary to DIRECTV’s contention, the Court did not preclude itself from doing so when it denied DIRECTV’s MSJ on the ROSCA claims. Instead, the Court recognized that the parties did not dispute the underlying website. It then properly drew all “reasonable” and “justifiable” inferences arising from those undisputed facts in the FTC’s favor. (See Dkt. 178 at 4-5); Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014). This does not mean that drawing all reasonable inferences in DIRECTV’s favor precludes the Court from granting the FTC’s MSJ based on a facial review of DIRECTV’s website. Neither the Court’s Order, nor the cases cited in the Order, impose a new, higher burden on the FTC, as proposed in DIRECTV’s Opposition. What matters is the inferences that can be reasonably drawn in the non-moving party’s favor. By implication, if the non-moving party’s 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT 1 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 6 of 19 proposed inference is not reasonable or justifiable, the Court may not give it credit. The argument (Opp. at 18-19.) that a facial review is improper because DIRECTV purportedly offers a “legitimate product” and is not a “scam” or “fraud” is also unsupported by the law. Neither ROSCA nor the FTC Act make any such distinction. On the contrary, a violation of the FTC Act originates from the way the defendant sells the product, not the product itself. See FTC v. Figgie Int’l, Inc., 994 F.2d 595, 606 (9th Cir. 1993). Similarly, DIRECTV fails to support its contention that a facial review is appropriate only for expressly false statements, but not for deception by failure to disclose. The FTC’s cited case law contradicts that contention. (See FTC MSJ at 10.) DIRECTV’s overly narrow reading of those cases is unavailing; case law directly addresses the sufficiency of disclosures made through hyperlinks. See, e.g., FTC v. Commerce Planet, Inc., 878 F. Supp. 2d. 1048, 1065 (CD Cal. 2012), aff’d 815 F.3d 593 (9th Cir. 2016) (“while the terms of the continuity program are disclosed in a separate, hyperlinked ‘Terms of Membership’ page, this is an insufficient cue. Disclaimers do not automatically exonerate deceptive activity”) (internal citations omitted). B. The Court may grant the FTC’s MSJ based on facts DIRECTV does not dispute. DIRECTV’s failure to challenge the material facts below is tantamount to an admission. Acevedo v. City of Anaheim, No. 8:14-cv-01147, 2016 WL 79786, at 3 (C.D. Cal. Jan. 6, 2016). These undisputed facts are a sufficient basis for the Court to grant the FTC’s motion. • ROSCA applies to DIRECTV’s premium channel offer: (1) ROSCA has been in effect since 2011. (FTC MSJ at 2-3.) (2) DIRECTV has sold access to premium channels on its website (directv.com) through a negative option program, promoting the premium channel offer as “free” during the entire period ROSCA has been in effect. (Id. at 2-3.) • The material terms of DIRECTV’s premium channel negative option offer: (1) Customers must take affirmative steps to cancel the premium channel enrollment. They must call within the promotional period to avoid charges at the end of the free 3-months. (Id. at 5.) (2) Unless consumers affirmatively cancel the premium-channel programming before the end of the promotional period, DIRECTV automatically charges them for the premium channels at whatever price prevails at that time. (Id. at 2-3.) That cost is substantial – sometimes more than CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 7 of 19 the underlying programming package cost itself. (Id. at 2-3.) The August 2013 and August 2015 versions of DIRECTV’s website are representative • of DIRECTV’s website for the entire relevant period: (1) DIRECTV’s website as it relates to the premium channel offer has been relatively unchanged since at least 2011. The website has had two fundamental designs of the online purchase process since at least 2011: the first in effect from 2009 into 2014, and the second implemented in 2014. (Id. at 4-5.) (2) The August 2013 version of DIRECTV’s website is representative of the website as it existed during the period 2009-2014. (Id. at 4-5.) (3) The August 2015 version of DIRECTV’s website is representative of the website as it has existed since 2014. (Id. at 4-5.) (4) In 2010, the FTC, through its civil investigative demand process, instructed DIRECTV to preserve copies of each iteration of its website. DIRECTV has failed to preserve any historical version of its website despite this preservation clause. (Id. at 11 n.4.) • How DIRECTV presents its premium channel negative option offer: (1) DIRECTV does not dispute that DIRECTV’s August 2013 and August 2015 websites appeared as described in the FTC’s MSJ. (Id. at 4-8.) (2) DIRECTV’s website disclosed material terms relating to the premium channel offer only behind generically labeled hyperlinks and symbols. (Id. at 1, 5-6.) (3) DIRECTV has not tracked whether its website’s users find, hover over, or click on these hyperlinks or symbols when proceeding through the process. (Id. at 8.) (4) Consumers can proceed through the entire online purchase process without ever clicking or hovering over any of these hyperlinks or symbols, and therefore without once seeing any of the disclosures hidden behind them. (Id. at 1, 8.) (5) In the 2009-2014 version of DIRECTV’s website, the popup page behind the “Terms and Conditions” hyperlink on the Checkout pages did not disclose the existence of the negative option. (Id. at 7.)1 • Mandatory/default enrollment in DIRECTV’s premium channel offer: (1) Until at least 2014, consumers who signed up on the website could not decline enrollment in the premium 1 This omission means that, despite DIRECTV’s argument to the contrary (Opp. at 5, lns.13-15), customers who clicked the “I Accept. Submit My Order.” button on the “Checkout Page” of its 2013 web flow could not be deemed to have consented to the negative option. CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 8 of 19 channel negative option. By 2015, DIRECTV’s website permitted consumers to opt out of any or all “free” premium channels, but the box to enroll in the premium channel promotion was pre- checked by default. (Id. at 3.) C. DIRECTV attempts to dispute the FTC’s remaining material facts based on conclusory claims and implausible characterizations. DIRECTV’s challenge to the following remaining evidence does not create a genuine issues of material fact. 1. DIRECTV’s attack on the FTC’s website evidence (Stahl Ex. A-D and Gonzalez Ex. A) is conclusory and baseless. DIRECTV objects, pursuant to Fed. R. Evid. 403, that FTC evidence of DIRECTV’s website at two points in time is unfairly prejudicial, confusing, and misleading to the jury. (Opp. at n. 4.)2 With respect to Stahl Exs. A, C and D (the UX Site and the two video captures of the UX site), DIRECTV alleges that they do not accurately reflect the appearance and functionality of DIRECTV’s website.3 DIRECTV does not, however, state what it is that makes the UX Site purportedly inaccurate, let alone designate “specific facts.” Its “bald assertion” fails to generate a genuine dispute.4 Banga, 29 F. Supp. 3d at 1275; See also, United States v. Various Slot Machines on Guam, 658 F.2d 697, 699 (9th Cir. 1981) (describing as “pettifoggery” conclusory attacks on photographic evidence). DIRECTV cannot escape summary judgment through “allegation and speculation” alone. Nelson v. Pima Cmty. Coll., 83 F.3d 1075, 1081-82 (9th Cir. 1996). Nor can DIRECTV defeat summary judgment on the basis of its own, subjective characterizations of undisputed evidence. McEnroe v. Local 9400, Commc’n Workers of Am., AFL-CIO, No. 14-cv-03461-HSG, 2015 WL 9303985, at 4 (N.D. Cal. Dec. 22, 2015). The Court should thus reject this objection as to Stahl Ex. A, C, and D. 2 This lawsuit was brought in equity and will be tried before the Court. (Dkt. 159.) The Court should thus ignore DIRECTV’s objection that the website evidence will “[m]islead[] the Jury.” 3 The UX Site (Stahl Ex. A) is the FTC’s reconstruction of DIRECTV’s August 2013 website. 4 Notably, DIRECTV cannot point to a single material inaccuracy in the UX Site based on comparisons to screenshots submitted by DIRECTV’s Karen Leever (Dkt. 53-3, 53-4, 53-5.), which were also captured in 2013. (Dkt. ¶ 53-3 ¶ 3; Ortiz II Ex. NN at 135:12-136:25.) DIRECTV also does not explain how the versions of the August 2015 website the FTC submitted differ from the August 2015 screenshots DIRECTV submitted (Dkt. # 53-6). Having failed to preserve historical versions of its own website (see FTC MSJ at n.4), it is unsurprising that DIRECTV does not, and cannot, muster a genuine factual challenge the FTC’s evidence. See Fed. R. Evid. 1004. CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 9 of 19 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 10 of 19 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 11 of 19 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 12 of 19 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 13 of 19 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 14 of 19 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 15 of 19 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 16 of 19 improper and not harmless. See Wong v. Regents of Univ. of Cal., 410 F.3d 1052, 1058-62 (9th Cir. 2005) (affirming exclusion of expert opinions submitted after the expert identification cutoff for the sole purpose of opposing summary judgment). The same result should follow here. 5. Franklyn’s opinions lack proper foundation and relevance. Even if the Court were to consider Franklyn’s declaration, it is insufficient to defeat summary judgment. First, Franklyn has not established the requisite qualifications for the opinions DIRECTV ascribes to him. Although DIRECTV claims that he is a “web usability expert” (Opp. at 12.), he does not identify himself as such. He does not state his field of expertise, or that he is providing his opinions as an expert in any field. He does not reference any skill, training, or education in web usability. His listed publications include none on web usability. (See Franklyn ¶¶ 1-16; Ex. A (Dkt. 189-20) at 2-3.) Instead, Franklyn identifies himself as a lawyer and law professor on intellectual property. (Franklyn at ¶ 3.) He claims to have served as a consultant or expert witness “in cases that have examined consumer understanding of website features” (Id. at ¶ 4), but he does not attest that his testimony in those cases related to web usability. That he bases his opinions here not on his own independent research, but primarily on non-peer reviewed Internet blogs or magazine articles, further undercuts his qualification as an expert in the field. (Id. at n. 2-10, 12-15, 21.) See Daubert, 43 F.3d at 1318 (third-party research relied on by experts must be based on “scientifically valid principles,” as evidenced, for example, by peer review and publication). Second, Franklyn does not render the opinions DIRECTV ascribes to him. DIRECTV claims that he opines that “consumers . . . are likely to see the disclosures” relating to the premium channel negative option. (Opp. at 13.) His declaration contains no such opinion. Instead, he opines that hyperlinks, info-hovers, and designating icons are common conventions by which websites make disclosures, observes that DIRECTV’s website uses these conventions, and concludes that users of DIRECTV’s website are likely to be aware of these while navigating the website. (Franklyn ¶¶ 7, 9-13, 16.) This general conclusion is has no bearing on the ROSCA claims. The FTC does not claim that no consumers understand what hyperlinks and info-hovers are. Nor does the FTC claim that consumers lack the ability to interact with the hyperlinks or CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 17 of 19 info-hovers on DIRECTV’s website. ROSCA does not simply mandate giving consumers the ability to find disclosures; it requires making disclosures clearly and conspicuously. Thus, the relevant question is whether DIRECTV’s presentation of material terms of the offer behind a hodgepodge of generically-labeled hyperlinks and info-hovers meets that test. Franklyn provides no opinion on that question. II. DIRECTV HAS NOT MET ITS SUMMARY JUDGMENT BURDEN ON ITS AFFIRMATIVE DEFENSES. DIRECTV has no evidence beyond Mr. Friedman’s statements to support its estoppel, waiver, and laches affirmative defenses. (Opp. at 19-25.) At the same time, DIRECTV accuses the FTC of not offering “evidence to overcome Mr. Friedman’s testimony . . . .” (Opp. at 20.) But because DIRECTV bears the burden of proof at trial on its defenses, the FTC “need only point out through argument that the nonmoving party does not have enough evidence of an essential element of its claim to carry its ultimate burden of persuasion at trial.” Banga, 29 F. Supp. 3d at 1275. DIRECTV fails to rebut the facts and evidence presented by the FTC that undercut DIRECTV’s affirmative defenses. First, DIRECTV attempts to predicate its claim of affirmative misconduct12 entirely on what DIRECTV contends Mr. Friedman believed FTC staff to have meant when they said sometime in 2010—in numerous, yet still unspecified oral conversations—that the FTC had “other issues.” (Opp. at 20-22.) The uncontroverted evidence shows that the FTC’s investigation did include both those issues that DIRECTV settled with the states as well as other issues, and that DIRECTV knew this. (See FTC MSJ at 17-18, 22-23; Ortiz Exs. BB-FF, HH; Syta ¶¶ 6-7 & Exs. A, B.) DIRECTV does not challenge this evidence. Instead, it tries to fabricate a dispute by claiming that the “clear message” of the FTC staff’s “other issues” statement was that the FTC’s 12 While irrelevant to the question of whether the FTC has engaged in affirmative misconduct, the FTC disputes DIRECTV’s claim that it has “design[ed] and implementing its advertising in a way that complies with the terms of the MSA” (Opp. at 9). On February 25, 2014, Paul Singer, Assistant Attorney General for the State of Tennessee, notified Mr. Friedman of DIRECTV advertisements that “do[] not comply with item 6.8 of the [MSA] that requires a Clear and Conspicuous disclosure in Direct Proximity to an advertised price of all material limitations of the offer.” (Ortiz II Ex. PP.) Furthermore, DIRECTV’s use of the MSA as a defense to the FTC’s action is itself a violation of the MSA. (See Ortiz II, Ex. WW at 138:2—144:2.) CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 18 of 19 investigation “focused” on those other issues, and therefore, by implication did not “focus” on the issues that DIRECTV was contemporaneously trying to resolve with the states. (See Opp. at 22; see also id. at 21 (concluding that the FTC was not “interested” in “the issues” that were covered by the MSA).) DIRECTV provides no factual support for this conclusion. Even Mr. Friedman has not declared this. On the contrary, he has declared the exact opposite: “it was clear that the FTC was inquiring about the same issues that the states were focusing on” (Dkt. 36-1 at ¶15 (emphasis added).) Mr. Friedman has similarly testified that what he understood the FTC staff to suggest is that “[i]n addition to what the multistate is covering, we have other issues.” (Ortiz Ex. H at 63:21-24.)13 DIRECTV cannot defeat summary judgment by an unsupported, and directly controverted, conclusion. See Banga, 29 F. Supp. 3d at 1275 (“it is the opposing party’s obligation to produce a factual predicate from which the inference may be drawn”). Second, DIRECTV attempts to escape summary judgment by mischaracterizing the FTC’s motion as disputing Mr. Friedman’s objectivity and credibility. (Opp. at 22-23.) Although the FTC has correctly characterized Mr. Friedman as not objective—he is, after all, defense counsel—the FTC’s MSJ does not challenge his credibility. Email evidence that points out some inconsistencies in Mr. Friedman’s recalled sequence of events from six years ago is not an attack on his credibility. (FTC MSJ at 19-20.) On the contrary, those emails present Mr. Friedman’s own statements, which the FTC presumes to be credible. (See Ortiz Ex. S at 36, 39.) The question here is not Mr. Friedman’s credibility, but the reasonableness of DIRECTV’s characterizations of the impressions Mr. Friedman claims to have formed during conversations with FTC staff.14 The Court can resolve that now. See McEnroe 2015 WL 9303985, at *4 13 Mr. Friedman’s most recent declaration states that FTC staff attorney Ray McKown did not expressly state that “any of the FTC’s issues included the same issues the 50 States investigated and settled with DIRECTV.” (Dkt. 188-27 at ¶ 9.) The absence of such an express statement by one FTC staff member is irrelevant. Mr. Friedman does not declare that Mr. McKown told him that the FTC was not investigating these overlapping “issues.” Indeed, DIRECTV already knew from the FTC’s CIDs what conduct the FTC was investigating, and acknowledged that knowledge in written statements to securities regulators. (MSJ Opp. 17-18, 22-23.) Unprompted oral confirmation of what both sides already knew was unnecessary. Thus, Mr. Friedman’s newest declaration does not raise a new material fact. 14 Because these defenses rest on unsupported conclusions drawn from Mr. Friedman’s subjective beliefs, there is no merit to DIRECTV’s contention that Mr. McKown’s testimony is indispensable to resolving the dispute. Mr. McKown cannot read Mr. Friedman’s mind. Mr. CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 196 Filed 10/13/16 Page 19 of 19 (rejecting attempt to defeat summary judgment “on the basis of characterizations alone”). Third, DIRECTV still presents no evidence about how it was prejudiced besides claiming that it would not have entered into the multistate settlements had it realized that the FTC could subsequently prosecute the same misconduct. (Opp. at 23.) At the same time, DIRECTV contends that the multistate settlements imposed an “identical disclosure standard” to the one codified in ROSCA. (Id. at 1.) Thus, the only prejudice DIRECTV allegedly suffered is taking on the obligation of complying with ROSCA’s standards. That is not prejudice, since DIRECTV had to comply with ROSCA irrespective of the multistate settlements. Finally, DIRECTV does not genuinely dispute its role in delaying the FTC’s investigation through negotiation and its protracted delays in CID compliance. It does not address Mr. Friedman’s concession on deposition examination that he takes no issue with the length of the FTC’s investigation. (See FTC MSJ at 23.) Instead, it concludes that the length was too great, citing inapposite cases that did not involve government investigations. DIRECTV has not met its burden. Dated: October 13, 2016 Respectfully Submitted, /s/ Eric Edmondson Eric Edmondson Attorney for Plaintiff Federal Trade Commission McKown is trial counsel, and Magistrate Judge James properly precluded his deposition testimony. (Dkt. 145.) Instead, the FTC provided Mr. Syta, Mr. McKown’s supervisor, as a Rule 30(b)(6) witness. DIRECTV now criticizes his testimony, but it never sought further testimony on the grounds that Mr. Syta’s was insufficient. Moreover, contrary to DIRECTV’s assertion of a direct conflict in testimony, Mr. Syta testified only that, apart from Mr. Friedman’s declaration, he could find no evidence of an invitation by Mr. Friedman to the FTC. (Dkt. 176-6 at ¶ 12.) DIRECTV has no valid basis to dispute that testimony, having presented no such evidence either. DIRECTV’s attempt to strike that declaration testimony is baseless. (Opp. n.4.) Mr. Syta has personal knowledge about what evidence he searched for in preparation for his deposition, and what he did (and did not) find. Furthermore, separate from his declaration, Mr. Syta provided the same testimony during his deposition (Ortiz Ex. J at 180:6-184:5), which DIRECTV does not seek to strike. CASE NO. 15-CV-01129-HSG – FTC’S REPLY ISO PARTIAL SUMMARY JUDGMENT 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-10-17	197	Administrative Motion to File Under Seal filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Christopher Murphy in Support of Filing Certain DIRECTV Materials Under Seal, # 2 Proposed Order, # 3 Redacted Version of FTC's Reply in Support of Motion for Partial Summary Judgment, # 4 Exhibit KK to Ortiz Declaration, # 5 Exhibit LL to Ortiz Declaration, # 6 Exhibit MM to Ortiz Declaration, # 7 Exhibit NN to Ortiz Declaration, # 8 Exhibit OO to Ortiz Declaration, # 9 Exhibit A to Sandrock Declaration, # 10 Exhibit B to Sandrock Declaration, # 11 Exhibit E to Sandrock Declaration, # 12 UNREDACTED Version of FTC's Reply in Support of Motion for Partial Summary Judgment, # 13 Exhibit KK to Ortiz Declaration - UNREDACTED, # 14 Exhibit LL to Ortiz Declaration - UNREDACTED, # 15 Exhibit MM to Ortiz Declaration - UNREDACTED, # 16 Exhibit NN to Ortiz Declaration - UNREDACTED, # 17 Exhibit OO to Ortiz Declaration - UNREDACTED, # 18 Exhibit A to Sandrock Declaration - UNREDACTED, # 19 Exhibit B to Sandrock Declaration - UNREDACTED, # 20 Exhibit E to Sandrock Declaration - UNREDACTED, # 21 Certificate/Proof of Service)(Sandrock, Ryan) (Filed on 10/17/2016) (Entered: 10/17/2016)	Case 3:15-cv-01129-HSG Document 199 Filed 10/21/16 Page 1 of 4 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S OPPOSITION TO DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS ACCOMPANYING PLAINTIFF’S REPLY ISO MOTION FOR PARTIAL SUMMARY JUDGMENT TO BE FILED UNDER SEAL (DKT. 197) FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS RE REPLY UNDER SEAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 199 Filed 10/21/16 Page 2 of 4 I. INTRODUCTION Plaintiff Federal Trade Commission (“FTC”) opposes the Administrative Motion to Allow Certain Documents Accompanying Plaintiff’s Reply in Support of Plaintiff’s Motion For Partial Summary Judgment To Be Filed Under Seal (Dkt. 197) filed by Defendants DIRECTV, LLC and DIRECTV (collectively, “DIRECTV”) with respect to the following documents1: • Exhibit QQ to the Declaration of Kelly Ortiz filed in Support of Plaintiff’s Reply (“Ortiz II”) (Dkt. 195-10; Dkt. 195-11 (under seal)) • Exhibit RR to Ortiz II (Dkt. 195-12; Dkt. 195-13 (under seal)) • Exhibit SS to Ortiz II (Dkt. 195-14; Dkt. 195-15(under seal))) • Exhibit UU to Ortiz II (Dkt. 195-18; Dkt. 195-19 (under seal)) As explained below, DIRECTV has failed to meet the requirements of this Circuit and Civil Local Rule 79-5 to justify maintaining these documents under seal. Accordingly, DIRECTV’s Administrative Motion with respect to these documents should be denied. II. ARGUMENT In determining whether to seal certain judicial records, “a ‘strong presumption in favor of access’ is the starting point [citations omitted]. A party seeking to seal a judicial record then bears the burden of overcoming this strong presumption by meeting the ‘compelling reasons’ standard.” Kamakana v. City & Cnty of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006), quoting Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003). Moreover, “the party seeking a seal must “articulate[] compelling reasons supported by specific factual findings that outweigh the general history of access and public policies favoring disclosure . . . .” Kamakana, 447 F.3d at 1178 (internal citations omitted). Civil Local Rule 79-5(b) further specifies that “[a] sealing order may issue only upon a request that establishes that the document, or portions thereof, are privileged, protectable as a trade secret, or otherwise entitled to protection under the law.” “Broad allegations of harm, unsubstantiated by specific examples of 1 The FTC takes no position with regard to the other documents DIRECTV seeks to allow to be filed under seal through the referenced administrative motion (Ortiz Exhibits KK, LL, MM, NN, and OO, and Exhibits A and C to the Snow Declaration). FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS RE REPLY UNDER SEAL Case No. 15-cv-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 199 Filed 10/21/16 Page 3 of 4 articulated reasoning” are not sufficient. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992). In its Administrative Motion, DIRECTV is seeking to seal what it describes as “limited instances of confidential and sensitive information consisting of (1) DIRECTV internal business structures and operations; (2) DIRECTV strategic planning information; (3) DIRECTV consumer and competitive research, and the results of that research; and (4) DIRECTV financial and sales data.” (Dkt. 197 at 1) Ortiz Exhibits QQ, RR, SS and UU do not, however, satisfy these stated criteria. Instead, they are letters from DIRECTV’s counsel to the FTC responding to the FTC’s Civil Investigative Demands to DIRECTV during the course of the FTC’s investigation. Although certain pages of these documents contain limited amounts of financial data, much of the information in the letters is either public information or colloquy between the parties. For example, page 1 of Exhibit RR contains DIRECTV’s response to a request that DIRECTV provide the “Company’s legal name, current physical address, data and state of formation” -- presumably public information. Page 4 of the same document shows the prices that DIRECTV charged for its various programming packages in 2008, 2009 and 2010. If this information is of such a competitively sensitive nature that it must be maintained under seal, it is hard to understand how DIRECTV can also argue that its pricing information is readily apparent to consumers who read its ads or visit its public-facing website. The presumption in favor of public disclosure is particularly strong here, as these documents are relevant to DIRECTV’s affirmative defenses of estoppel, waiver and laches, which accuse the FTC of affirmative misconduct through its communications with DIRECTV about the Commission’s on-going investigation. The documents provide evidence of what DIRECTV knew about the FTC’s investigation in 2010 through 2013. Indeed, even the letters’ recitation of the FTC’s questions (which do not contain confidential information), demonstrate that DIRECTV knew that the FTC’s investigation covered conduct also addressed by the Multistate Settlement Agreement (MSA). Additionally, DIRECTV’s repeated statements in these letters that it would be providing the FTC the requested information at a future time are evidence that many delays during the investigation were caused at least in part by DIRECTV. FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS RE REPLY UNDER SEAL Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 199 Filed 10/21/16 Page 4 of 4 DIRECTV’s promises to provide answers and documents at a later time can hardly be viewed as trade secrets or strategic plans. Where a government agency has been accused of misconduct, the public interest is served by public disclosure of facts that may support (or refute) the accusation. Thus, there is a particularly strong need for the party seeking a seal to demonstrate that is has “compelling reasons” for its request. Merely wanting to hide the documents from public view is not sufficient. It is well-established that “[t]he mere fact that the production of records may lead to the litigant’s embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court to seal its records.” Kamakana, 447 F.3d at 1179, citing Foltz v. State Farm Mut. Auto Ins. Co, 331 F.3d 1122, 1136 (9th Cir. 2003). CONCLUSION For the reasons set forth above, the FTC urges that DIRECTV’s Administrative Motion be denied with respect to Ortiz Exhibits QQ, RR, SS, and UU. If DIRECTV has a valid concern that disclosure of specific information in these letters (such as 2007-2010 sales data in Ortiz Exhibit SS) “could cause DIRECTV competitive harm if such information was released,” (Dkt. 197 at 2), it can narrow its request to “seek sealing only of sealable material,” as required by Civil Local Rule 79-5(b).2 Dated: October 21, 2016 _/s/ Erika Wodinsky __ Eric D. Edmondson Jacob A. Snow Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) 2 Plaintiff FTC is also mystified by DIRECTV’s offer in note 2 of its Administrative Motion to modify its previous seal requests with respect to three short transcript passages “in the interest of compromise.” This is not a question of compromise between the parties. If there is no “compelling reason” for maintaining materials related to a dispositive motion under seal, the parties should not be reaching compromises about what should be in the public record. FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS RE REPLY UNDER SEAL Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-10-21	198	STIPULATION WITH PROPOSED ORDER to Extend Time for Rebuttal Report filed by DIRECTV LLC. (Hummel, Chad) (Filed on 10/21/2016) Modified on 10/24/2016 (ecgS, COURT STAFF). (Entered: 10/21/2016)	Case 3:15-cv-01129-HSG Document 198 Filed 10/21/16 Page 1 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 198 Filed 10/21/16 Page 2 of 3 Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (DIRECTV) jointly stipulate, pursuant to Civil Local Rules 6-1(b), 6-2 and 7-12, to extend the time for DIRECTV to serve its rebuttal report to the expert report of Tulin Erdem. Due to scheduling issues, DIRECTV is taking the deposition of Ms. Erdem on November 4, 2016, which is after the currently-scheduled October 21 deadline for DIRECTV to serve its rebuttal report. The parties have conferred with each other and Ms. Erdem about scheduling and have arrived at an agreement satisfactory to all, which includes extending DIRECTV’s time to serve a rebuttal report to November 7 and the FTC’s time to serve a reply report to November 28. The proposed modification to the schedule would have no effect on any other deadlines in this case (i.e., all other rebuttal report deadlines remain the same, all other reply report deadlines remain the same, and the expert discovery cut-off date remains the same). There have been the following modifications to the schedule in this case: (a) Dkt. No. 23, April 17, 2015 (granting stipulated request for an extension of time for the FTC to file motion to strike Defendants’ affirmative defenses); (b) Dkt. No. 64, October 21, 2015 (granting motion for extension of time for the FTC to respond to DIRECTV’s motion for partial summary judgment); (c) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); (d) Dkt. No. 99, February 4, 2016 (granting stipulation continuing hearing date on motion for partial summary judgment); (e) Dkt. No. 105 (granting stipulation continuing Case Management Conference); (f) Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary judgment briefing deadlines and hearing date, and trial date); (g) Dkt. No. 159, July 19, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery); (h) Dkt. 181, September 26, 2016 (granting motion to extend time to file declaration in support of motion to file under seal); and (i) September 28, 2016 (granting stipulation to extend time for rebuttal and reply expert reports and expert discovery). // // // JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 198 Filed 10/21/16 Page 3 of 3 NOW THEREFORE, the parties, through the undersigned counsel, hereby stipulate to and respectfully request the court enter the following schedule: Current Date October 21, 2016 Event Rebuttal Report to Erdem Report Reply Report November 14, 2016 November 28, 2016 Expert Discovery Close December 2, 2016 December 2, 2016 Proposed Date November 7 Dated: October 20, 2016 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SIDLEY AUSTIN LLP By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Federal Trade Commission Pursuant to Civil Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtained from the signatories above. By: /s/ Chad S. Hummel [PROPOSED] ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. HAYWOOD S. GILLIAM, JR. JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 2 3:15-CV-01129
2016-10-21	199	OPPOSITION (re 197 Administrative Motion to File Under Seal ) filed by Federal Trade Commission. (Wodinsky, Erika) (Filed on 10/21/2016) Modified on 10/24/2016 (ecgS, COURT STAFF). (Entered: 10/21/2016)	Case 3:15-cv-01129-HSG Document 199 Filed 10/21/16 Page 1 of 4 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S OPPOSITION TO DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS ACCOMPANYING PLAINTIFF’S REPLY ISO MOTION FOR PARTIAL SUMMARY JUDGMENT TO BE FILED UNDER SEAL (DKT. 197) FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS RE REPLY UNDER SEAL Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 199 Filed 10/21/16 Page 2 of 4 I. INTRODUCTION Plaintiff Federal Trade Commission (“FTC”) opposes the Administrative Motion to Allow Certain Documents Accompanying Plaintiff’s Reply in Support of Plaintiff’s Motion For Partial Summary Judgment To Be Filed Under Seal (Dkt. 197) filed by Defendants DIRECTV, LLC and DIRECTV (collectively, “DIRECTV”) with respect to the following documents1: • Exhibit QQ to the Declaration of Kelly Ortiz filed in Support of Plaintiff’s Reply (“Ortiz II”) (Dkt. 195-10; Dkt. 195-11 (under seal)) • Exhibit RR to Ortiz II (Dkt. 195-12; Dkt. 195-13 (under seal)) • Exhibit SS to Ortiz II (Dkt. 195-14; Dkt. 195-15(under seal))) • Exhibit UU to Ortiz II (Dkt. 195-18; Dkt. 195-19 (under seal)) As explained below, DIRECTV has failed to meet the requirements of this Circuit and Civil Local Rule 79-5 to justify maintaining these documents under seal. Accordingly, DIRECTV’s Administrative Motion with respect to these documents should be denied. II. ARGUMENT In determining whether to seal certain judicial records, “a ‘strong presumption in favor of access’ is the starting point [citations omitted]. A party seeking to seal a judicial record then bears the burden of overcoming this strong presumption by meeting the ‘compelling reasons’ standard.” Kamakana v. City & Cnty of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006), quoting Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003). Moreover, “the party seeking a seal must “articulate[] compelling reasons supported by specific factual findings that outweigh the general history of access and public policies favoring disclosure . . . .” Kamakana, 447 F.3d at 1178 (internal citations omitted). Civil Local Rule 79-5(b) further specifies that “[a] sealing order may issue only upon a request that establishes that the document, or portions thereof, are privileged, protectable as a trade secret, or otherwise entitled to protection under the law.” “Broad allegations of harm, unsubstantiated by specific examples of 1 The FTC takes no position with regard to the other documents DIRECTV seeks to allow to be filed under seal through the referenced administrative motion (Ortiz Exhibits KK, LL, MM, NN, and OO, and Exhibits A and C to the Snow Declaration). FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS RE REPLY UNDER SEAL Case No. 15-cv-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 199 Filed 10/21/16 Page 3 of 4 articulated reasoning” are not sufficient. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992). In its Administrative Motion, DIRECTV is seeking to seal what it describes as “limited instances of confidential and sensitive information consisting of (1) DIRECTV internal business structures and operations; (2) DIRECTV strategic planning information; (3) DIRECTV consumer and competitive research, and the results of that research; and (4) DIRECTV financial and sales data.” (Dkt. 197 at 1) Ortiz Exhibits QQ, RR, SS and UU do not, however, satisfy these stated criteria. Instead, they are letters from DIRECTV’s counsel to the FTC responding to the FTC’s Civil Investigative Demands to DIRECTV during the course of the FTC’s investigation. Although certain pages of these documents contain limited amounts of financial data, much of the information in the letters is either public information or colloquy between the parties. For example, page 1 of Exhibit RR contains DIRECTV’s response to a request that DIRECTV provide the “Company’s legal name, current physical address, data and state of formation” -- presumably public information. Page 4 of the same document shows the prices that DIRECTV charged for its various programming packages in 2008, 2009 and 2010. If this information is of such a competitively sensitive nature that it must be maintained under seal, it is hard to understand how DIRECTV can also argue that its pricing information is readily apparent to consumers who read its ads or visit its public-facing website. The presumption in favor of public disclosure is particularly strong here, as these documents are relevant to DIRECTV’s affirmative defenses of estoppel, waiver and laches, which accuse the FTC of affirmative misconduct through its communications with DIRECTV about the Commission’s on-going investigation. The documents provide evidence of what DIRECTV knew about the FTC’s investigation in 2010 through 2013. Indeed, even the letters’ recitation of the FTC’s questions (which do not contain confidential information), demonstrate that DIRECTV knew that the FTC’s investigation covered conduct also addressed by the Multistate Settlement Agreement (MSA). Additionally, DIRECTV’s repeated statements in these letters that it would be providing the FTC the requested information at a future time are evidence that many delays during the investigation were caused at least in part by DIRECTV. FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS RE REPLY UNDER SEAL Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 199 Filed 10/21/16 Page 4 of 4 DIRECTV’s promises to provide answers and documents at a later time can hardly be viewed as trade secrets or strategic plans. Where a government agency has been accused of misconduct, the public interest is served by public disclosure of facts that may support (or refute) the accusation. Thus, there is a particularly strong need for the party seeking a seal to demonstrate that is has “compelling reasons” for its request. Merely wanting to hide the documents from public view is not sufficient. It is well-established that “[t]he mere fact that the production of records may lead to the litigant’s embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court to seal its records.” Kamakana, 447 F.3d at 1179, citing Foltz v. State Farm Mut. Auto Ins. Co, 331 F.3d 1122, 1136 (9th Cir. 2003). CONCLUSION For the reasons set forth above, the FTC urges that DIRECTV’s Administrative Motion be denied with respect to Ortiz Exhibits QQ, RR, SS, and UU. If DIRECTV has a valid concern that disclosure of specific information in these letters (such as 2007-2010 sales data in Ortiz Exhibit SS) “could cause DIRECTV competitive harm if such information was released,” (Dkt. 197 at 2), it can narrow its request to “seek sealing only of sealable material,” as required by Civil Local Rule 79-5(b).2 Dated: October 21, 2016 _/s/ Erika Wodinsky __ Eric D. Edmondson Jacob A. Snow Erika Wodinsky Boris Yankilovich Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) 2 Plaintiff FTC is also mystified by DIRECTV’s offer in note 2 of its Administrative Motion to modify its previous seal requests with respect to three short transcript passages “in the interest of compromise.” This is not a question of compromise between the parties. If there is no “compelling reason” for maintaining materials related to a dispositive motion under seal, the parties should not be reaching compromises about what should be in the public record. FTC’S OPP’N TO DIRECTV’S ADMIN. MOTION TO FILE CERTAIN DOCS RE REPLY UNDER SEAL Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-10-24	200	ORDER by Judge Haywood S. Gilliam, Jr. Granting 198 Stipulation to Extend Time for Rebuttal Report. (ndrS, COURT STAFF) (Filed on 10/24/2016) (Entered: 10/24/2016)	Case 3:15-cv-01129-HSG Document 200 Filed 10/24/16 Page 1 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 200 Filed 10/24/16 Page 2 of 3 Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (DIRECTV) jointly stipulate, pursuant to Civil Local Rules 6-1(b), 6-2 and 7-12, to extend the time for DIRECTV to serve its rebuttal report to the expert report of Tulin Erdem. Due to scheduling issues, DIRECTV is taking the deposition of Ms. Erdem on November 4, 2016, which is after the currently-scheduled October 21 deadline for DIRECTV to serve its rebuttal report. The parties have conferred with each other and Ms. Erdem about scheduling and have arrived at an agreement satisfactory to all, which includes extending DIRECTV’s time to serve a rebuttal report to November 7 and the FTC’s time to serve a reply report to November 28. The proposed modification to the schedule would have no effect on any other deadlines in this case (i.e., all other rebuttal report deadlines remain the same, all other reply report deadlines remain the same, and the expert discovery cut-off date remains the same). There have been the following modifications to the schedule in this case: (a) Dkt. No. 23, April 17, 2015 (granting stipulated request for an extension of time for the FTC to file motion to strike Defendants’ affirmative defenses); (b) Dkt. No. 64, October 21, 2015 (granting motion for extension of time for the FTC to respond to DIRECTV’s motion for partial summary judgment); (c) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); (d) Dkt. No. 99, February 4, 2016 (granting stipulation continuing hearing date on motion for partial summary judgment); (e) Dkt. No. 105 (granting stipulation continuing Case Management Conference); (f) Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary judgment briefing deadlines and hearing date, and trial date); (g) Dkt. No. 159, July 19, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery); (h) Dkt. 181, September 26, 2016 (granting motion to extend time to file declaration in support of motion to file under seal); and (i) September 28, 2016 (granting stipulation to extend time for rebuttal and reply expert reports and expert discovery). // // // JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 200 Filed 10/24/16 Page 3 of 3 NOW TH HEREFORE, , the parties, through the e undersigned d counsel, h ereby stipula ate to and respe ectfully reque est the court t enter the fo ollowing sch edule: Event Rebuttal Re Erdem Rep Reply Repo Expert Disc eport to port ort covery Close Current October 2 Date 21, 2016 Proposed November Date r 7 Novembe e Decembe er 14, 2016 er 2, 2016 November December r 28, 2016 r 2, 2016 Dated d: October 2 20, 2016 SIDLEY Y AUSTIN L LLP By: / /s/ Chad S. H C Chad S. Hum A Attorneys fo D DIRECTV a Hummel mmel ts or Defendant and DIRECT TV, LLC FEDER RAL TRADE E COMMISS SION By: / /s/ Eric D. E E Eric D. Edm A Attorneys fo F Federal Trad Edmondson mondson or Plaintiff de Commiss ion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PURS Dated Pursuant t to Civil Loc al Rule 5-1( i), the filer a attests that co oncurrence i in the filing of this docum ment has bee en obtained from the sig gnatories abo ove. By: / /s/ Chad S. H Hummel ORDE ER SUANT TO O STIPULAT TION, IT IS SO ORDER RED. d: October 2 24, 2016 _ __________ H HON. HAY ___________ WOOD S. G __________ GILLIAM, J _______ JR. JOINT T STIPULATION TO EXTEND TI 3:15-CV-01 IME FOR REBUT 1129 TTAL REPORT 2
2016-10-26	201	CLERK'S NOTICE. Notice is hereby given that the Court takes FTC's pending 176 motion for partial summary judgment filings under submission. The hearing previously scheduled for October 27, 2016 at 2:00 p.m. is vacated. The Court will issue a written order. (This is a text-only entry generated by the court. There is no document associated with this entry.) (ndrS, COURT STAFF) (Filed on 10/26/2016) (Entered: 10/26/2016)
2016-10-27	202	*FILED IN ERROR. PLEASE SEE 203 * Discovery Letter Briefre: Rule 37(e) filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 10/27/2016) Modified on 10/28/2016 (ecgS, COURT STAFF). (Entered: 10/27/2016)	Case 3:15-cv-01129-HSG Document 202 Filed 10/27/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on September 20, 2016, prior to filing this letter brief. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission [need signature] Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. [need signature once consent is obtained] Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 202 Filed 10/27/16 Page 2 of 6 NATURE OF DISPUTE The FTC seeks sanctions pursuant to Rule 37(e) as a result of DIRECTV’s failure to preserve evidence. The FTC requests exclusion of certain evidence and expert analysis of that evidence, and in the alternative requests leave to file a fifteen-page motion, including submission of relevant documents and testimony (not included in compliance with the Court’s standing order). DIRECTV opposes this request. THE FEDERAL TRADE COMMISSION’S POSITION Federal Rule of Civil Procedure 37(e) provides that “[i]f electronically stored information [ESI] that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court . . . upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)–(e)(1). See also Matthew Enterprise, Inc. v. Chrysler Group, LLC, 2016 WL 2957133, 1 (N.D. Cal. May 23, 2016). A. DIRECTV Had an Obligation to Preserve Relevant Evidence Starting in 2010. In the investigation phase of this case, the FTC served DIRECTV with two Civil Investigative Demands, one dated April 23, 2010 and a second dated December 13, 2013. Both included an admonition that DIRECTV preserve relevant evidence. Even without those admonitions, however, the pending investigation triggered an ongoing duty to preserve evidence. Marten Transport, Ltd. v. Plattform Advertising, Inc., Case No. 14-cv-02464-JWL-TJJ, 2016 WL 492743 (D. Kan. Feb. 8, 2016) (A party is deemed to have notice of duty to preserve “if the party has received a discovery request, a complaint has been filed, ‘or any time a party receives notification that litigation is likely to be commenced.’”). Therefore, as of April 2010, DIRECTV had an obligation to “suspend any existing policies related to deleting or destroying files and to preserve all relevant documents related to the litigation.” In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1070 (N.D. Cal. 2006). B. DIRECTV Has Lost Relevant Website and Testing Evidence. Interactive website captures associated with Wind Report. DIRECTV’s expert report, authored by Professor Jerry Wind and served in this case on September 16, 2016 (“Wind Report”), relies primarily on a two-phase survey of consumers who had just completed the DIRECTV subscription process by web or by phone. Wind Report, p. 48, Ex. 2, p. 4. The consumers who subscribed over the web did so by navigating DIRECTV’s live, interactive website over the Internet. See id. p. 47. The surveys were conducted in January through July of 2015—long after DIRECTV’s obligation to preserve evidence arose Id. at Ex. 2, p.4. Further, the interactive website is plainly relevant to the litigation since it forms the basis for portions of Dr. Wind’s expert analysis. Nonetheless, DIRECTV did not preserve the interactive website used in the consumer surveys, and has stated that no such evidence can be recovered. DIRECTV’s loss of the interactive site plainly prejudices the FTC. First, neither the FTC nor the Court can view and interact with the website that consumers saw before they participated in DIRECTV’s survey. (The screenshots relied on by Dr. Wind are an inadequate substitute because they are static and from the wrong dates). Second, without the interactive site, the FTC’s survey expert cannot attempt to replicate Dr. Wind’s survey (e.g., in a manner that would cure the defects in his methodology). And third, the FTC’s usability expert cannot perform an 1 Case 3:15-cv-01129-HSG Document 202 Filed 10/27/16 Page 3 of 6 analysis of the website tested by Dr. Wind. Although DIRECTV bears the responsibility of preserving its own ESI, it is worth noting that DIRECTV did not disclose the dates of its surveys until September of 2016, which prevented the FTC from being able to preserve the appropriate interactive website material itself. DIRECTV’s failure to preserve the interactive website makes it impossible for the Court, the FTC, and the FTC’s expert witnesses to analyze and replicate DIRECTV’s survey evidence. For that reason, the Court should exclude the survey evidence and Dr. Wind’s analysis of that survey evidence. Website A/B testing evidence. “A/B testing” refers to the common practice of presenting different experiences to subsets of consumers and analyzing how consumers respond. DIRECTV has likely conducted thousands of A/B tests on its website. Transcript of Deposition of Audrey Chen (“Chen Tr.”) 160:4–18. Each A/B test has a “test” stimulus and a “control” stimulus that is seen by different sets of users. Because A/B testing can show how consumers respond to different advertising stimulus (under otherwise similar conditions), the FTC’s first set of Requests for Production, served on June 26, 2015, sought consumer research (including A/B tests) relating to the advertising and material terms of DIRECTV’s satellite television service. FTC’s First Set of Requests for Production, Dkt. No. 113-1 (“FTC RFPs”), p. 17. The FTC had previously requested this material through Civil Investigative Demands issued in 2010 and 2013. Dkt. No. 176-07 (“First CID”), p. 14; Dkt. No. 176-08 (“Second CID”), p. 13. DIRECTV has recently used two different software tools for performing A/B tests on its website: 1) Adobe Test & Target; and 2) Monetate. Chen Tr. 32:22–25. From 2011 through 2014, DIRECTV used Test & Target for A/B testing. Id. at 26:10–17. In 2014, DIRECTV switched from Adobe Test &Target to Monetate. Id. Since the Test & Target contract ended, DIRECTV has no way to access the Test & Target data; in the words of Audrey Chen, a Senior Manager for Web Analytics at DIRECTV, “basically it’s gone.” Chen Tr. 44:8–45:6. As for any data in Monetate, DIRECTV has confirmed that A/B testing information (specifically, an image of the two experiences being tested) has been lost. Email from C. Hummel to J. Snow dated August 22, 2016 (“9/22 Email”) (stating that “DIRECTV is unable to extract the test [Business As Usual] / control stimuli from Monetate.”). In sum, DIRECTV has lost essentially every ordinary-course-of-business document showing the A/B tests the company performed on its website. But DIRECTV has preserved data associated with one A/B test: the A/B test performed in connection with Dr. Wind’s report and relied on in his analysis. Wind Report, Ex. 2, p. 38 (showing the interface seen by users who experience a different checkout process as part of Dr. Wind’s survey); see also Chen Tr. 115:25–119:5 (describing the A/B test). DIRECTV has failed to preserve evidence showing what the test and control stimuli were for thousands of A/B tests conducted by the company. These A/B tests were unquestionably relevant to the FTC’s case. DIRECTV cannot now rely on the only preserved A/B test (prepared solely for litigation) after failing to preserve the rest. Excluding the A/B test data and Dr. Wind’s analysis of it is an appropriately targeted remedy under Rule 37(e). Website Analytics Evidence. DIRECTV has also produced material in this case relating to the behavior of users navigating the DIRECTV website. Audrey Chen Deposition Exhibits (“Chen Ex.”) 117-118, 120-121. That material purports to show, for example, the rates at which users purchased satellite-television service (i.e., the “conversion rate”) across different sales 2 Case 3:15-cv-01129-HSG Document 202 Filed 10/27/16 Page 4 of 6 channels (Chen Ex. 120). The material produced by DIRECTV goes back only to 2014. Chen Ex. 120. In late 2015, DIRECTV modified its contract with its analytics-platform supplier to automatically delete all analytics data older than three years. Chen Tr. 42:8–43:16 (testifying that “there is no way” to access deleted analytics data.”). That is, DIRECTV destroyed years of responsive data after the FTC served two CIDS and a set of litigation requests for production, all identifying analytics data as relevant and responsive information. First CID, p. 14; Second CID, p. 13; FTC RFPs, p. 17 (RFP 10 re “Website Analytics”). DIRECTV has confirmed Ms. Chen’s testimony that the data is lost and cannot be recovered. 9/22 Email (stating that DIRECTV “believe[s] that Ms. Chen’s deposition testimony was accurate”). The Court should enjoin DIRECTV from relying on any analytics data from the Site Catalyst platform and exclude any expert analysis of that data. C. The Court Should Exclude Spoliated Evidence and Expert Analysis Related to That Evidence. In light of the loss of ESI described above, the Court should exclude the evidence described above, as well as any expert analysis of the evidence. See Internmatch, Inc. v. Nxtbigthing, LLC, Case No. 14-cv-05438-JST, 2016 WL 491483, at 3 (N.D. Cal. Feb. 8, 2016) (appropriate sanctions include exclusion of testimony based on the despoiled evidence); Unigard Sec. Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363 (9th Cir. 1992) (expert testimony based on destroyed evidence was properly excluded due to prejudice). This remedy is appropriately tailored to cure the prejudice to the FTC. DIRECTV’S POSITION The FTC’s motion for Rule 37 sanctions should be summarily denied. Not only has DIRECTV produced or made available for inspection the materials at issue, but the FTC belatedly brings this motion after the discovery cut-off (and after this Court ordered the parties to resolve outstanding disputes in July 2016 (Dkt. No. 160). As detailed below: (i) DIRECTV took sufficiently reasonable steps to preserve and produce relevant website materials, A/B testing data, and web analytics materials; (ii) DIRECTV repeatedly offered, beginning at least as early as May 2014, to make all web analytics data available for inspection; (iii) the scope of what reasonably could be preserved was discussed repeatedly with the FTC over the last six years, including advising the FTC that DIRECTV could not technologically maintain or produce live versions of its dynamic website; (iv) the FTC did not object to the scope or manner of DIRECTV’s production, and in several instances, expressly endorsed DIRECTV’s actions; (v) the FTC did not request additional documents during discovery; and (vi) the FTC has not identified any prejudice because it has the information it requires. The only explanation for the motion, made in the middle of expert discovery, is that it is a strategic ploy to exclude expert work fundamental to the case rather than to seek redress for any real discovery wrong. DIRECTV’s Preservation and Production of the Relevant Materials All Relevant Website Materials Have Been Produced to the FTC. DIRECTV explained to the FTC years ago that it could not preserve versions of its website because it is dynamic and changes almost daily. The website is not a single file that simply could be provided to the FTC. Rather, it is comprised of complex code that instructs the website to draw from multiple assets housed in several content management and other systems, using multiple programs, systems, and other resources to function. Prior to the litigation, and given the 3 Case 3:15-cv-01129-HSG Document 202 Filed 10/27/16 Page 5 of 6 technological limitations, the FTC agreed to and did accept monthly screen captures of the website. DIRECTV produced the captures for the period August 2013 to June 2016. The FTC also demanded in its discovery requests all website source code, change logs, and website assets (claiming it was required to replicate DIRECTV’s website), which was produced in March 2016. After designating Dr. Wind as an expert, DIRECTV produced screen captures of the website survey stimuli (both the test and control used in Dr. Wind’s web survey), which clearly show the changes made in the control flow. Notably, Dr. Wind tested subscribers’ perception of the content of the website and did not test the functionality of the website. The FTC Has Been Aware Since 2010 of DIRECTV’s Website Preservation Efforts. DIRECTV repeatedly informed the FTC, beginning in 2010, that it was virtually impossible for DIRECTV to preserve all historic versions of its dynamic website. Until now, the FTC had not challenged DIRECTV’s position or preservation efforts. In fact, recognizing the impossibility of preserving and producing the dynamic website, the FTC took a number of actions to assure it memorialized the content of the website, including taking its own screen captures, taking videos of an FTC employee scrolling through the DIRECTV webflow, and using a program called WinHttrack to capture a duplicate of the website (later submitted to the Court), which capture the FTC used to make a simulated version of the website used by the FTC’s survey expert, Dr. Erdem. The parties in fact worked cooperatively over several years to assure that the FTC had sufficient information regarding the website (in addition to what already has been produced): • August 18, 2015 to November 10, 2015: In response to FTC questions, DIRECTV explained in detail how the website functioned. • November 10, 2015: FTC took the depositions of Doug Wells to discuss the website function and Liz Poling-Hiraldo to discuss website content updates and preservation. • December 16, 2015: DIRECTV allowed the FTC and its web expert to review at DIRECTV’s offices the website source code and related assets to evaluate and understand how the website functions. • March 24, 2016: DIRECTV produced all website source code and content assets (since 2007) from its ATG and TeamSite systems, which is all website content in its possession; FTC argued this information was required to replicate the website (and its production notably resolved issues in a letter brief pending at that time). For at least seven months, the FTC has had everything it needed to replicate the website, which it ultimately did using the WinHttrack capture, videos of the website, screen shots provided by DIRECTV, and publicly available internet resources. Notably, the FTC did not use the source code and related assets it previously insisted it needed. All Relevant Web Analytics Data and A/B Testing Data Have Been Produced. As with the website, DIRECTV preserved and produced relevant web analytics and A/B testing data. Between May 6, 2014 and June 20, 2014, DIRECTV sent numerous detailed letters to the FTC about web analytics data. DIRECTV repeatedly asked the FTC to identify what additional data it wanted or claimed to need since the volume of available data was extremely large. The parties engaged in additional discovery from September 2015 to September 2016. During this time, DIRECTV produced additional web analytics data; allowed the FTC to take a 30(b)(6) deposition of DIRECTV’s Audrey Chen; and allowed the FTC to subsequently interview Ms. Chen informally to ask additional questions about web analytics. Although the FTC voiced some concerns about DIRECTV’s productions, it never moved to compel. 4 Case 3:15-cv-01129-HSG Document 202 Filed 10/27/16 Page 6 of 6 The FTC ignores the fundamental question under Rule 37(e) regarding the scope of Application of Revised FRCP 37(e) DIRECTV’s preservation obligation—sanctions are only considered where (i) relevant ESI “that should have been preserved” is lost because a party failed to take “reasonable steps” and “it cannot be restored or replaced,” and (ii) there is prejudice to the requesting party. See Matthew Enterprise, Inc. v. Chrysler Group LLC, No. 13-CV-04236-BLG, 2016 WL 2957133, 1 (N.D. Cal. May 23, 2016) (noting that revised Rule 37(e) provides a safe harbor for parties that take reasonable preservation steps and provides a heightened standard for imposing sanctions). There is no dispute that there is a duty to preserve, and DIRECTV did just that. The question of whether DIRECTV was required to preserve more than it did turns on considerations of reasonableness and proportionality. In the Northern District, the presumption is that the parties will discuss and resolve these issues early in the case. See, e.g., Northern District Guidelines for the Discovery of Electronically Stored Information. The parties did so. The FTC never argued that more should have been preserved nor that DIRECTV violated the parties’ prior agreement to produce certain website assets. In any event, DIRECTV could not reasonably have preserved more given the technical limitations here, about which the FTC was well aware. But even if the FTC could establish a duty to preserve and a failure to take reasonable steps to do so, it has not established prejudice. See, e.g., Matthew Enterprise, 2016 WL 2957133, at 3. The FTC makes no argument on this point, which is not surprising given that the FTC was able to replicate the DIRECTV website and could further alter the simulation to reflect the content of Dr. Wind’s control using the screen captures provided if it chose to do so.1 Likewise, the FTC has not articulated why it needs to view or interact with the website to test or rebut Dr. Wind’s report. The content of, perception of, and impression from the website disclosures is what is at issue. The parties’ arguments on those issues readily can be presented to the Court using the screen captures and other data and information produced and available. As for the web analytics and A/B testing, the FTC completely misrepresents Audrey Chen’s testimony to suggest materials were lost, when in fact they were not.2 Notably, the FTC does not identify with particularity any actual data that no longer exists or what prejudice it suffered. In fact, the FTC’s lack of prejudice is evidenced by the FTC’s inability to narrowly tailor the sanctions. The FTC cannot do so because it has not been prejudiced at all. Nor does the FTC attempt to explain why it failed to inspect the web analytics data on any of the multiple occasions since 2014 when a full inspection was offered by DIRECTV. Even if the FTC suffered prejudice, the next step would be to identify the narrowest sanction to remedy the prejudice. FRCP 37(e)(1) (“upon finding prejudice to another party from the loss of the information,” the Court “may order measures no greater than necessary to cure the prejudice.”); Matthew Enterprise, 2016 WL 2957133, at 3. Given the lack of any prejudice, the FTC’s amorphous “exclude everything” request is without merit. 3 1 The FTC’s rebuttal report complains—in a footnote—“I was unable to independently verify that these changes were made to the ‘modified’ webpage, as I was not provided a copy of the website as the respondents experienced it.” This appears to be the only purported prejudice to FTC. Testimony (subject to cross) will address this concern. 2 Given the lengthy history, it is not possible to describe this issue in full in this motion. DIRECTV can provide more information should the Court allow further briefing. 3 Internmatch, Inc. v. Nxtbigthing, LLC, Case No. 14-cv-05438-JST, 2016 WL 491483, at 3 (N.D. Cal. Feb. 8, 2016), is inapposite. That case involved a finding that a party had lied to the court about the loss of relevant materials, saying a power surge (that never happened) destroyed hard drives. There is no such conduct here. 5
2016-10-27	203	Discovery Letter BriefCORRECTION OF DOCKET # 202 filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 10/27/2016) (Entered: 10/27/2016)	Case 3:15-cv-01129-HSG Document 203 Filed 10/27/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Hon. Haywood S. Gilliam, Jr., Presiding Hon. Maria-Elena James, Referral FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Dear Judge James: Counsel for the parties met and conferred in person on September 20, 2016, prior to filing this letter brief. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission /s/ Chad Hummel Counsel for DIRECTV and DIRECTV, LLC Pursuant to Local Rule 5.1(i)(3), I attest that concurrence in the filing of this document Attestation pursuant to Local Rule 5.1(i)(3) has been obtained from all Signatories to this document. /s/ Eric D. Edmondson Counsel for the Federal Trade Commission Case 3:15-cv-01129-HSG Document 203 Filed 10/27/16 Page 2 of 6 NATURE OF DISPUTE The FTC seeks sanctions pursuant to Rule 37(e) as a result of DIRECTV’s failure to preserve evidence. The FTC requests exclusion of certain evidence and expert analysis of that evidence, and in the alternative requests leave to file a fifteen-page motion, including submission of relevant documents and testimony (not included in compliance with the Court’s standing order). DIRECTV opposes this request. THE FEDERAL TRADE COMMISSION’S POSITION Federal Rule of Civil Procedure 37(e) provides that “[i]f electronically stored information [ESI] that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court . . . upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)–(e)(1). See also Matthew Enterprise, Inc. v. Chrysler Group, LLC, 2016 WL 2957133, 1 (N.D. Cal. May 23, 2016). A. DIRECTV Had an Obligation to Preserve Relevant Evidence Starting in 2010. In the investigation phase of this case, the FTC served DIRECTV with two Civil Investigative Demands, one dated April 23, 2010 and a second dated December 13, 2013. Both included an admonition that DIRECTV preserve relevant evidence. Even without those admonitions, however, the pending investigation triggered an ongoing duty to preserve evidence. Marten Transport, Ltd. v. Plattform Advertising, Inc., Case No. 14-cv-02464-JWL-TJJ, 2016 WL 492743 (D. Kan. Feb. 8, 2016) (A party is deemed to have notice of duty to preserve “if the party has received a discovery request, a complaint has been filed, ‘or any time a party receives notification that litigation is likely to be commenced.’”). Therefore, as of April 2010, DIRECTV had an obligation to “suspend any existing policies related to deleting or destroying files and to preserve all relevant documents related to the litigation.” In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1070 (N.D. Cal. 2006). B. DIRECTV Has Lost Relevant Website and Testing Evidence. Interactive website captures associated with Wind Report. DIRECTV’s expert report, authored by Professor Jerry Wind and served in this case on September 16, 2016 (“Wind Report”), relies primarily on a two-phase survey of consumers who had just completed the DIRECTV subscription process by web or by phone. Wind Report, p. 48, Ex. 2, p. 4. The consumers who subscribed over the web did so by navigating DIRECTV’s live, interactive website over the Internet. See id. p. 47. The surveys were conducted in January through July of 2015—long after DIRECTV’s obligation to preserve evidence arose Id. at Ex. 2, p.4. Further, the interactive website is plainly relevant to the litigation since it forms the basis for portions of Dr. Wind’s expert analysis. Nonetheless, DIRECTV did not preserve the interactive website used in the consumer surveys, and has stated that no such evidence can be recovered. DIRECTV’s loss of the interactive site plainly prejudices the FTC. First, neither the FTC nor the Court can view and interact with the website that consumers saw before they participated in DIRECTV’s survey. (The screenshots relied on by Dr. Wind are an inadequate substitute because they are static and from the wrong dates). Second, without the interactive site, the FTC’s survey expert cannot attempt to replicate Dr. Wind’s survey (e.g., in a manner that would cure the defects in his methodology). And third, the FTC’s usability expert cannot perform an 1 Case 3:15-cv-01129-HSG Document 203 Filed 10/27/16 Page 3 of 6 analysis of the website tested by Dr. Wind. Although DIRECTV bears the responsibility of preserving its own ESI, it is worth noting that DIRECTV did not disclose the dates of its surveys until September of 2016, which prevented the FTC from being able to preserve the appropriate interactive website material itself. DIRECTV’s failure to preserve the interactive website makes it impossible for the Court, the FTC, and the FTC’s expert witnesses to analyze and replicate DIRECTV’s survey evidence. For that reason, the Court should exclude the survey evidence and Dr. Wind’s analysis of that survey evidence. Website A/B testing evidence. “A/B testing” refers to the common practice of presenting different experiences to subsets of consumers and analyzing how consumers respond. DIRECTV has likely conducted thousands of A/B tests on its website. Transcript of Deposition of Audrey Chen (“Chen Tr.”) 160:4–18. Each A/B test has a “test” stimulus and a “control” stimulus that is seen by different sets of users. Because A/B testing can show how consumers respond to different advertising stimulus (under otherwise similar conditions), the FTC’s first set of Requests for Production, served on June 26, 2015, sought consumer research (including A/B tests) relating to the advertising and material terms of DIRECTV’s satellite television service. FTC’s First Set of Requests for Production, Dkt. No. 113-1 (“FTC RFPs”), p. 17. The FTC had previously requested this material through Civil Investigative Demands issued in 2010 and 2013. Dkt. No. 176-07 (“First CID”), p. 14; Dkt. No. 176-08 (“Second CID”), p. 13. DIRECTV has recently used two different software tools for performing A/B tests on its website: 1) Adobe Test & Target; and 2) Monetate. Chen Tr. 32:22–25. From 2011 through 2014, DIRECTV used Test & Target for A/B testing. Id. at 26:10–17. In 2014, DIRECTV switched from Adobe Test &Target to Monetate. Id. Since the Test & Target contract ended, DIRECTV has no way to access the Test & Target data; in the words of Audrey Chen, a Senior Manager for Web Analytics at DIRECTV, “basically it’s gone.” Chen Tr. 44:8–45:6. As for any data in Monetate, DIRECTV has confirmed that A/B testing information (specifically, an image of the two experiences being tested) has been lost. Email from C. Hummel to J. Snow dated August 22, 2016 (“9/22 Email”) (stating that “DIRECTV is unable to extract the test [Business As Usual] / control stimuli from Monetate.”). In sum, DIRECTV has lost essentially every ordinary-course-of-business document showing the A/B tests the company performed on its website. But DIRECTV has preserved data associated with one A/B test: the A/B test performed in connection with Dr. Wind’s report and relied on in his analysis. Wind Report, Ex. 2, p. 38 (showing the interface seen by users who experience a different checkout process as part of Dr. Wind’s survey); see also Chen Tr. 115:25–119:5 (describing the A/B test). DIRECTV has failed to preserve evidence showing what the test and control stimuli were for thousands of A/B tests conducted by the company. These A/B tests were unquestionably relevant to the FTC’s case. DIRECTV cannot now rely on the only preserved A/B test (prepared solely for litigation) after failing to preserve the rest. Excluding the A/B test data and Dr. Wind’s analysis of it is an appropriately targeted remedy under Rule 37(e). Website Analytics Evidence. DIRECTV has also produced material in this case relating to the behavior of users navigating the DIRECTV website. Audrey Chen Deposition Exhibits (“Chen Ex.”) 117-118, 120-121. That material purports to show, for example, the rates at which users purchased satellite-television service (i.e., the “conversion rate”) across different sales 2 Case 3:15-cv-01129-HSG Document 203 Filed 10/27/16 Page 4 of 6 channels (Chen Ex. 120). The material produced by DIRECTV goes back only to 2014. Chen Ex. 120. In late 2015, DIRECTV modified its contract with its analytics-platform supplier to automatically delete all analytics data older than three years. Chen Tr. 42:8–43:16 (testifying that “there is no way” to access deleted analytics data.”). That is, DIRECTV destroyed years of responsive data after the FTC served two CIDS and a set of litigation requests for production, all identifying analytics data as relevant and responsive information. First CID, p. 14; Second CID, p. 13; FTC RFPs, p. 17 (RFP 10 re “Website Analytics”). DIRECTV has confirmed Ms. Chen’s testimony that the data is lost and cannot be recovered. 9/22 Email (stating that DIRECTV “believe[s] that Ms. Chen’s deposition testimony was accurate”). The Court should enjoin DIRECTV from relying on any analytics data from the Site Catalyst platform and exclude any expert analysis of that data. C. The Court Should Exclude Spoliated Evidence and Expert Analysis Related to That Evidence. In light of the loss of ESI described above, the Court should exclude the evidence described above, as well as any expert analysis of the evidence. See Internmatch, Inc. v. Nxtbigthing, LLC, Case No. 14-cv-05438-JST, 2016 WL 491483, at 3 (N.D. Cal. Feb. 8, 2016) (appropriate sanctions include exclusion of testimony based on the despoiled evidence); Unigard Sec. Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363 (9th Cir. 1992) (expert testimony based on destroyed evidence was properly excluded due to prejudice). This remedy is appropriately tailored to cure the prejudice to the FTC. DIRECTV’S POSITION The FTC’s motion for Rule 37 sanctions should be summarily denied. Not only has DIRECTV produced or made available for inspection the materials at issue, but the FTC belatedly brings this motion after the discovery cut-off (and after this Court ordered the parties to resolve outstanding disputes in July 2016 (Dkt. No. 160). As detailed below: (i) DIRECTV took sufficiently reasonable steps to preserve and produce relevant website materials, A/B testing data, and web analytics materials; (ii) DIRECTV repeatedly offered, beginning at least as early as May 2014, to make all web analytics data available for inspection; (iii) the scope of what reasonably could be preserved was discussed repeatedly with the FTC over the last six years, including advising the FTC that DIRECTV could not technologically maintain or produce live versions of its dynamic website; (iv) the FTC did not object to the scope or manner of DIRECTV’s production, and in several instances, expressly endorsed DIRECTV’s actions; (v) the FTC did not request additional documents during discovery; and (vi) the FTC has not identified any prejudice because it has the information it requires. The only explanation for the motion, made in the middle of expert discovery, is that it is a strategic ploy to exclude expert work fundamental to the case rather than to seek redress for any real discovery wrong. DIRECTV’s Preservation and Production of the Relevant Materials All Relevant Website Materials Have Been Produced to the FTC. DIRECTV explained to the FTC years ago that it could not preserve versions of its website because it is dynamic and changes almost daily. The website is not a single file that simply could be provided to the FTC. Rather, it is comprised of complex code that instructs the website to draw from multiple assets housed in several content management and other systems, using multiple programs, systems, and other resources to function. Prior to the litigation, and given the 3 Case 3:15-cv-01129-HSG Document 203 Filed 10/27/16 Page 5 of 6 technological limitations, the FTC agreed to and did accept monthly screen captures of the website. DIRECTV produced the captures for the period August 2013 to June 2016. The FTC also demanded in its discovery requests all website source code, change logs, and website assets (claiming it was required to replicate DIRECTV’s website), which was produced in March 2016. After designating Dr. Wind as an expert, DIRECTV produced screen captures of the website survey stimuli (both the test and control used in Dr. Wind’s web survey), which clearly show the changes made in the control flow. Notably, Dr. Wind tested subscribers’ perception of the content of the website and did not test the functionality of the website. The FTC Has Been Aware Since 2010 of DIRECTV’s Website Preservation Efforts. DIRECTV repeatedly informed the FTC, beginning in 2010, that it was virtually impossible for DIRECTV to preserve all historic versions of its dynamic website. Until now, the FTC had not challenged DIRECTV’s position or preservation efforts. In fact, recognizing the impossibility of preserving and producing the dynamic website, the FTC took a number of actions to assure it memorialized the content of the website, including taking its own screen captures, taking videos of an FTC employee scrolling through the DIRECTV webflow, and using a program called WinHttrack to capture a duplicate of the website (later submitted to the Court), which capture the FTC used to make a simulated version of the website used by the FTC’s survey expert, Dr. Erdem. The parties in fact worked cooperatively over several years to assure that the FTC had sufficient information regarding the website (in addition to what already has been produced):  August 18, 2015 to November 10, 2015: In response to FTC questions, DIRECTV explained in detail how the website functioned.  November 10, 2015: FTC took the depositions of Doug Wells to discuss the website function and Liz Poling-Hiraldo to discuss website content updates and preservation.  December 16, 2015: DIRECTV allowed the FTC and its web expert to review at DIRECTV’s offices the website source code and related assets to evaluate and understand how the website functions.  March 24, 2016: DIRECTV produced all website source code and content assets (since 2007) from its ATG and TeamSite systems, which is all website content in its possession; FTC argued this information was required to replicate the website (and its production notably resolved issues in a letter brief pending at that time). For at least seven months, the FTC has had everything it needed to replicate the website, which it ultimately did using the WinHttrack capture, videos of the website, screen shots provided by DIRECTV, and publicly available internet resources. Notably, the FTC did not use the source code and related assets it previously insisted it needed. All Relevant Web Analytics Data and A/B Testing Data Have Been Produced. As with the website, DIRECTV preserved and produced relevant web analytics and A/B testing data. Between May 6, 2014 and June 20, 2014, DIRECTV sent numerous detailed letters to the FTC about web analytics data. DIRECTV repeatedly asked the FTC to identify what additional data it wanted or claimed to need since the volume of available data was extremely large. The parties engaged in additional discovery from September 2015 to September 2016. During this time, DIRECTV produced additional web analytics data; allowed the FTC to take a 30(b)(6) deposition of DIRECTV’s Audrey Chen; and allowed the FTC to subsequently interview Ms. Chen informally to ask additional questions about web analytics. Although the FTC voiced some concerns about DIRECTV’s productions, it never moved to compel. 4 Case 3:15-cv-01129-HSG Document 203 Filed 10/27/16 Page 6 of 6 The FTC ignores the fundamental question under Rule 37(e) regarding the scope of Application of Revised FRCP 37(e) DIRECTV’s preservation obligation—sanctions are only considered where (i) relevant ESI “that should have been preserved” is lost because a party failed to take “reasonable steps” and “it cannot be restored or replaced,” and (ii) there is prejudice to the requesting party. See Matthew Enterprise, Inc. v. Chrysler Group LLC, No. 13-CV-04236-BLG, 2016 WL 2957133, 1 (N.D. Cal. May 23, 2016) (noting that revised Rule 37(e) provides a safe harbor for parties that take reasonable preservation steps and provides a heightened standard for imposing sanctions). There is no dispute that there is a duty to preserve, and DIRECTV did just that. The question of whether DIRECTV was required to preserve more than it did turns on considerations of reasonableness and proportionality. In the Northern District, the presumption is that the parties will discuss and resolve these issues early in the case. See, e.g., Northern District Guidelines for the Discovery of Electronically Stored Information. The parties did so. The FTC never argued that more should have been preserved nor that DIRECTV violated the parties’ prior agreement to produce certain website assets. In any event, DIRECTV could not reasonably have preserved more given the technical limitations here, about which the FTC was well aware. But even if the FTC could establish a duty to preserve and a failure to take reasonable steps to do so, it has not established prejudice. See, e.g., Matthew Enterprise, 2016 WL 2957133, at 3. The FTC makes no argument on this point, which is not surprising given that the FTC was able to replicate the DIRECTV website and could further alter the simulation to reflect the content of Dr. Wind’s control using the screen captures provided if it chose to do so.1 Likewise, the FTC has not articulated why it needs to view or interact with the website to test or rebut Dr. Wind’s report. The content of, perception of, and impression from the website disclosures is what is at issue. The parties’ arguments on those issues readily can be presented to the Court using the screen captures and other data and information produced and available. As for the web analytics and A/B testing, the FTC completely misrepresents Audrey Chen’s testimony to suggest materials were lost, when in fact they were not.2 Notably, the FTC does not identify with particularity any actual data that no longer exists or what prejudice it suffered. In fact, the FTC’s lack of prejudice is evidenced by the FTC’s inability to narrowly tailor the sanctions. The FTC cannot do so because it has not been prejudiced at all. Nor does the FTC attempt to explain why it failed to inspect the web analytics data on any of the multiple occasions since 2014 when a full inspection was offered by DIRECTV. Even if the FTC suffered prejudice, the next step would be to identify the narrowest sanction to remedy the prejudice. FRCP 37(e)(1) (“upon finding prejudice to another party from the loss of the information,” the Court “may order measures no greater than necessary to cure the prejudice.”); Matthew Enterprise, 2016 WL 2957133, at 3. Given the lack of any prejudice, the FTC’s amorphous “exclude everything” request is without merit. 3 1 The FTC’s rebuttal report complains—in a footnote—“I was unable to independently verify that these changes were made to the ‘modified’ webpage, as I was not provided a copy of the website as the respondents experienced it.” This appears to be the only purported prejudice to FTC. Testimony (subject to cross) will address this concern. 2 Given the lengthy history, it is not possible to describe this issue in full in this motion. DIRECTV can provide more information should the Court allow further briefing. 3 Internmatch, Inc. v. Nxtbigthing, LLC, Case No. 14-cv-05438-JST, 2016 WL 491483, at 3 (N.D. Cal. Feb. 8, 2016), is inapposite. That case involved a finding that a party had lied to the court about the loss of relevant materials, saying a power surge (that never happened) destroyed hard drives. There is no such conduct here. 5
2016-10-28	204	CERTIFICATE OF SERVICE by Federal Trade Commission re 176 MOTION for Partial Summary Judgment , 184 Exhibits to an Administrative Motion to File Under Seal, 195 Exhibits to an Administrative Motion to File Under Seal,, 194 Administrative Motion to File Under Seal , 177 Administrative Motion to File Under Seal (Edmondson, Eric) (Filed on 10/28/2016) (Entered: 10/28/2016)	Case 3:15-cv-01129-HSG Document 204 Filed 10/28/16 Page 1 of 4 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Kenneth H. Abbe, Cal. Bar No. 172416 Stacy Procter, Cal. Bar No. 221078 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission NORTHERN DISTRICT OF CALIFORNIA UNITED STATES DISTRICT COURT SAN FRANCISCO DIVISION Case No. 15-cv-01129-HSG CERTIFICATE OF SERVICE Plaintiff, v. a corporation, FEDERAL TRADE COMMISSION, DIRECTV, and DIRECTV, LLC, /// /// /// /// /// /// a limited liability company, Defendants. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 204 Filed 10/28/16 Page 2 of 4 CERTIFICATE OF SERVICE I Kelly C. Ortiz, declare as follows: I am employed in San Francisco County, San Francisco, California. I am over the age of eighteen years and not a party to this action. My business address is Federal Trade Commission 901 Market St., Ste. 570, San Francisco, California 94103. On September 22, 2016, I served true and correct copies of the following lodged exhibits filed with the Federal Trade Commission’s (“FTC”) Motion for Partial Summary Judgment (Docket No. 176):  Gonzalez Exhibit A  Stahl Exhibit B  Stahl Exhibit C  Stahl Exhibit D On September 22, 2016, I served true and correct unredacted copies of the following exhibits filed under seal as Docket No. 177:  Ortiz Exhibit B  Ortiz Exhibit C  Ortiz Exhibit D  Ortiz Exhibit E  Ortiz Exhibit F  Ortiz Exhibit G  Ortiz Exhibit H  Ortiz Exhibit I  Ortiz Exhibit K  Ortiz Exhibit L  Ortiz Exhibit M  Ortiz Exhibit N  Ortiz Exhibit O  Ortiz Exhibit P  Ortiz Exhibit Q  Ortiz Exhibit R  Ortiz Exhibit S  Ortiz Exhibit T  Ortiz Exhibit U  Ortiz Exhibit V  Ortiz Exhibit W  Ortiz Exhibit X  Ortiz Exhibit Y  Ortiz Exhibit Z 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 204 Filed 10/28/16 Page 3 of 4  Ortiz Exhibit AA On September 23, 2016, I served true and correct unredacted copies of the following documents filed under seal as Docket No. 177:  FTC’s Motion for Partial Summary Judgment  Ortiz Exhibit A  Stahl Exhibit A On September 27, 2016, I served a true and correct unredacted copy of the following document filed under seal as Docket No. 184:  FTC’s Errata to the Motion for Partial Summary Judgment On October 13, 2016, I served true and correct unredacted copies of the following documents filed under seal as Docket Nos. 194 and 195:  FTC’s Reply in Support of Partial Summary Judgment  Snow Exhibit A  Snow Exhibit B  Snow Exhibit C  Ortiz Exhibit KK  Ortiz Exhibit LL  Ortiz Exhibit MM  Ortiz Exhibit NN  Ortiz Exhibit OO  Ortiz Exhibit QQ  Ortiz Exhibit RR  Ortiz Exhibit SS  Ortiz Exhibit TT  Ortiz Exhibit UU  Ortiz Exhibit VV On October 14, 2016, I served true and correct unredacted copy of the following exhibit filed under seal as Docket No. 194:  Snow Exhibit D I served the above materials on the interested parties in this action addressed as follows: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 204 Filed 10/28/16 Page 4 of 4 Chad Hummel, Esq. Sidley Austin LLP 1999 Avenue of the Stars, 17th Fl Los Angeles, CA 90067 Phone: (310) 595-2600 Fax: (310) 595-2601 Email:[email protected] Ryan M. Sandrock, Esq. Mark D. Campbell, Esq. Bridget S. Johnsen, Esq. Sidley Austin LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Phone: (415) 772-1200 Fax: (415) 772-7400 Email:[email protected]; [email protected]; [email protected] Jeffrey M. Tillotson 750 North Saint Paul Place Suite 610 Dallas, Texas 75201 Phone: (214) 382-3041 Email: [email protected] Clayton Friedman, Esq. Michael Yaghi, Esq. Sidley Austin LLP 695 Town Center Drive, Suite 530 Costa Mesa, CA 92626 Phone: (213) 896-6000 Fax: (213) 896-6600 Email:[email protected]; [email protected] Sean C. Griffin Benjamin M. Mundel Sidley Austin LLP 1501 K St. NW Washington, DC 20001 Phone: (202) 736-8100 Email: [email protected]; [email protected] Sidley Austin LLP litigation team email list serve: [email protected] (BY ELECTRONIC MAIL) By transmitting the foregoing document(s) electronically from the e-mail address, [email protected], to the person(s) at the e-mail addresses listed above. The transmission was reported as complete and without error. This method of service was made pursuant to the agreement of counsel. direction the service was made. Executed on October 28, 2016, at San Francisco, California I declare that I am employed in the office of a member of the bar of this court at whose 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-11-02	205	Discovery Order re Dkt. No. 203 . Signed by Judge Maria-Elena James on 11/2/2016. (mejlc3, COURT STAFF) (Filed on 11/2/2016) (Entered: 11/02/2016)	Case 3:15-cv-01129-HSG Document 205 Filed 11/02/16 Page 1 of 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG (MEJ) ORDER RE: DISCOVERY LETTER Re: Dkt. No. 203 Pending before the Court is a joint discovery letter in which the Federal Trade Commission (“FTC”) argues Defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) failed to preserve (1) an interactive website that one of DIRECTV’s experts, Jerry Wind, relied upon to create his expert report (the “Wind Report”), and (2) analytics data for DIRECTV’s website. See Jt. Ltr. at 1-3, Dkt. No. 203. Pursuant to Federal Rule of Civil Procedure 37(e)(1), the FTC seeks sanctions or alternatively an order excluding the Wind Report and the underlying survey analytics evidence on the ground that DIRECTV failed to preserve relevant evidence.1 Id. Federal Rule of Civil Procedure 37(e) addresses a party’s failure to preserve electronically stored information (“ESI”). It provides in relevant part: If [ESI] that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court: (1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice . . . . 1 The FTC does not appear to contend DIRECTV “acted with the intent to deprive” the FTC of the information’s use in litigation; consequently, the Court does not address it here. See Jt. Ltr. at 1 (referring only to Rule 37(e)(1)); see also Fed. R. Civ. P. 37(e)(2) (providing remedies upon a finding that the party that failed to preserve the ESI did so “with the intent to deprive another party of the information’s use in litigation”). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 205 Filed 11/02/16 Page 2 of 2 Fed. R. Civ. P. 37(e) (emphasis added). The joint discovery letter does not provide information sufficient to allow the undersigned to decide whether sanctions are appropriate at this point. The Court accordingly temporarily denies the FTC’s request for sanctions and grants its alternative request for leave to file a fifteen- page motion. Jt. Ltr. at 1. Any such motion must be filed by November 16, 2016 and must address: (1) DIRECTV’s disclosures to the FTC about what website data DIRECTV was or was not preserving, and the FTC’s responses thereto; (2) what “reasonable steps” the FTC contends DIRECTV should have taken to preserve the lost ESI; (3) why the FTC believes this ESI cannot be, or has not been, restored or replaced through additional discovery; (4) the prejudice caused by the loss of the ESI; and (5) why excluding the Wind Report is the most appropriate remedial measure under these circumstances. DIRECTV may file an Opposition by November 30, 2016, not to exceed 15 pages. The FTC’s Reply shall not exceed five pages and shall be due by December 7, 2016. The Court will schedule a hearing on the motion if it deems it necessary. In light of the Thanksgiving holiday, the Court will also consider a stipulation by the parties for a different, mutually-agreeable briefing schedule. Finally, the Court notes the parties’ tendency to provide extensive documentary evidence in connection with their filings and to request much of this evidence be sealed pursuant to Civil Local Rule 79-5. The Court accordingly encourages the parties to meet and confer in connection with any sealing requests and also to determine whether certain facts can be stipulated to or supported by declaration rather than through other documentary evidence. If disputes arise regarding evidentiary support for the declarations, the Court can order further production as necessary. IT IS SO ORDERED. Dated: November 2, 2016 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-11-16	206	Administrative Motion to File Under Seal filed by Federal Trade Commission. (Attachments: # 1 Declaration, # 2 Proposed Order, # 3 Exhibit E Redacted, # 4 Exhibit E Under Seal, # 5 Exhibit G Redacted, # 6 Exhibit G Under Seal, # 7 Certificate/Proof of Service)(Snow, Jacob) (Filed on 11/16/2016) (Entered: 11/16/2016)	Case 3:15-cv-01129-HSG Document 209 Filed 11/21/16 Page 1 of 3 Jeffrey M. Tillotson, SBN 139372 [email protected] TILLOTSON LAW 750 N. St. Paul Street, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. ADMINISTRATIVE MOTION FOR TWO- DAY EXTENSION OF TIME TO FILE DECLARATION IN SUPPORT OF PLAINTIFF’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE 3:15-CV-01129 UNDER SEAL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 209 Filed 11/21/16 Page 2 of 3 Pursuant to Civil Local Rules 6-3 and 7-11, defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) respectfully request that their deadline to file their declaration in support of Plaintiff FTC’s Administrative Motion to File Under Seal be extended from Monday, November 21, 2016, to Wednesday, November 23, 2016. Plaintiff Federal Trade Commission (“FTC”) does not object to this motion. On November 16, 2016, FTC filed its Administrative Motion to File Under Seal Snow Declaration Exhibits Designated as Confidential By Defendant DIRECTV, Filed in Support of the FTC’s Motion for Sanctions Under Rule 37(e)(1), requesting that portions of a deposition transcript and an exhibit be filed under seal. [Dkt No. 206]. This transcript and exhibit have been designated as confidential subject to the Protective Order entered in this case. [See Dkt. 54.] Pursuant to Local Rule 79-5, DIRECTV currently has until Monday, November 21, 2016 to file a declaration establishing that all of the designated material is sealable. L.R. 79-5(e)(2). Due to the schedule of DIRECTV’s counsel and in light of DIRECTV’s obligation to file a declaration establishing the bases for filing these materials under seal, DIRECTV requests a two day extension of time in which to file its declaration. This extension would not adversely affect the schedule or any other deadline in this case. If possible, DIRECTV intends to file this declaration on Tuesday, November 22, concurrently with an administrative motion to seal, and the jointly prepared chart summarizing the administrative motions to seal ordered by the Court in Dkt. 208. There have been the following prior extensions in this case: (a) Dkt. No. 64, October 21, 2015 (granting FTC’s motion for extension of time to respond to DIRECTV’s motion for partial summary judgment); (b) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); (c) Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary judgment briefing deadlines and hearing date, and trial date); (d) Dkt. No. 181, September 26, 2016 (granting DIRECTV’s motion for extension of time to file declaration in support of plaintiff’s administrative motion to seal); (e) Dkt. No. 185, September 28, 2016 (granting joint stipulation to MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE 3:15-CV-01129 1 UNDER SEAL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 209 Filed 11/21/16 Page 3 of 3 extend time for rebuttal and reply of expert reports and expert discovery; (f) Dkt. No. 200 (granting joint stipulation to extend time for rebuttal report). DIRECTV has conferred with FTC about this request for an extension of time, and FTC stated that it did not object to the extension. Dated: November 21, 2016 SIDLEY AUSTIN LLP By: /s/ Ryan M. Sandrock Ryan M. Sandrock Attorneys for Defendants DIRECTV and DIRECTV, LLC MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE 3:15-CV-01129 2 UNDER SEAL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-11-16	207	MOTION for Sanctions Under Rule 37(e)(1) filed by Federal Trade Commission. Responses due by 11/30/2016. Replies due by 12/7/2016. (Attachments: # 1 Declaration of Jacob A. Snow in Support of the FTC's Motion for Santions Under Rule 37(e)(1), # 2 Exhibit A - Email dated October 4, 2016, # 3 Exhibit B - Email dated October 19, 2015, # 4 Exhibit C - Email dated March 9, 2016, # 5 Exhibit D - Email dated October 23, 2016, # 6 Exhibit E - Excerpts from the Deposition of Audrey Chen (REDACTED), # 7 Exhibit F - Email dated August 22, 2016, # 8 Exhibit G - Exhibit 120 (Filed Under Seal), # 9 Proposed Order Granting the FTC's Motion for Sanctions Under Rule 37(e)(1))(Snow, Jacob) (Filed on 11/16/2016) Modified on 11/17/2016 (ecgS, COURT STAFF). (Entered: 11/16/2016)	Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 1 of 12 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. CASE NO. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 2 of 12 I. II. TABLE OF CONTENTS INTRODUCTION .............................................................................................................. 1 LEGAL STANDARD ......................................................................................................... 2 III. ARGUMENT ...................................................................................................................... 2 A. B. DIRECTV Had an Obligation to Preserve Relevant Evidence Starting in 2010 .... 2 DIRECTV’s Loss of Websites Associated with the Wind Report Justifies Exclusion of Dr. Wind’s Survey Evidence ............................................................. 3 1. 2. DIRECTV Has Lost Website Evidence ...................................................... 3 The FTC Has Been Prejudiced ................................................................... 5 C. DIRECTV’s Loss of A/B Testing Evidence Justifies Exclusion of the A/B Test Evidence On Which DIRECTV Now Relies .......................................................... 6 1. 2. DIRECTV Has Lost A/B Testing Evidence ............................................... 6 The FTC Has Been Prejudiced ................................................................... 7 D. DIRECTV’s Loss of Analytics Evidence Justifies Exclusion of that Evidence and Any Related Expert Analysis .................................................................................. 8 1. 2. DIRECTV Has Lost Analytics Evidence .................................................... 8 The FTC Has Been Prejudiced ................................................................... 8 E. Exclusion of Evidence and Expert Analysis Is an Appropriate Targeted Remedy 9 IV. CONCLUSION ................................................................................................................. 10 FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 3 of 12 I. INTRODUCTION Since 2010, DIRECTV has had an affirmative obligation to preserve evidence relevant to this litigation. For three categories of evidence—interactive website evidence, website A/B testing evidence, and website analytics evidence—DIRECTV has failed to comply with that obligation, and relevant evidence has been lost. This motion is necessary because DIRECTV now plans to rely on exactly the types of evidence it has failed to preserve. Exclusion of that evidence is the appropriate tailored remedy. Interactive Website Evidence. DIRECTV’s survey expert relied on the results of surveys performed on its live website in January and June–July 2015. When it conducted that survey, DIRECTV did not capture the interactive website purchase flow and produce that captured material to the FTC with its survey expert report by Professor Jerry Wind. In contract, the FTC produced the interactive website to DIRECTV that underlies the FTC’s web-based survey. The interactive site produced by the FTC allows anyone to experience the website just as participants in the survey did. A/B Test Evidence. In the ordinary course of its business, DIRECTV has conducted thousands of tests to assess how consumers respond to material on its website. Those tests— called “A/B tests”—provide different versions of the website to different groups of consumers and measure their response. Of the thousands of A/B tests, DIRECTV has preserved only one— the one prepared specifically for litigation and relied on by its expert witness. Nearly all of the remaining tests have been lost. Web-analytics Evidence. DIRECTV has also used a “web analytics” tool—called Adobe SiteCatalyst—to track consumer behavior on its website. In 2015, after the FTC filed this suit, DIRECTV modified the contract with SiteCatalyst to provide that data older than three years not be maintained. DIRECTV has had an obligation to preserve analytics data since 2010, but has not done so. DIRECTV has failed to comply with its evidence-preservation obligations. The appropriate remedy is to exclude evidence of the type that has been lost, along with any expert analysis of that evidence. FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 4 of 12 II. LEGAL STANDARD Federal Rule of Civil Procedure 37(e) provides that “[i]f electronically stored information [ESI] that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court . . . upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)–(e)(1). See also Matthew Enter., Inc. v. Chrysler Grp., LLC, 2016 WL 2957133, at 1 (N.D. Cal. May 23, 2016). In 2015, Rule 37(e) was amended to unify the standard for imposing sanctions on parties that fail to preserve electronically stored information (“ESI”). The amended rule eliminates the need for courts to rely on inherent authority in issuing preservation-related sanctions and “specifies measures a court may employ if information that should have been preserved is lost, and specifies the findings necessary to justify those measures.” Fed. R. Civ. P. 37, Advisory Committee Notes, 2015 Amendment. The new rule—based on the long-standing duty established in case law to preserve ESI once litigation is anticipated—“places no greater substantive obligation on the party preserving ESI.” CAT3, LLC v. Black Lineage, Inc., 164 F. Supp. 3d 488, 496 (S.D.N.Y. 2016). III. ARGUMENT A. DIRECTV Had an Obligation to Preserve Relevant Evidence Starting in 2010. In the investigation phase of this case, the FTC served DIRECTV with two Civil Investigative Demands, the first dated April 23, 2010 and the second dated December 13, 2013. Both included an admonition that DIRECTV preserve relevant evidence. Dkt. No. 176-07 (“First CID”), p. 3; Dkt. No. 176-08 (“Second CID”), p. 5. The First CID, for example, directed the company to “suspend any routine procedures for document destruction and take other measures to prevent the destruction of documents that are in any way relevant to [the FTC’s] investigation during its pendency, irrespective of whether [DIRECTV] believe[s] such documents are protected from discovery by privilege or otherwise.” First CID, p. 3. Even FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 5 of 12 without those admonitions, however, the pending investigation triggered an ongoing duty to preserve evidence. Marten Transport, Ltd. v. Plattform Advertising, Inc., Case No. 14-cv-02464- JWL-TJJ, 2016 WL 492743 (D. Kan. Feb. 8, 2016) (A party is deemed to have notice of duty to preserve “if the party has received a discovery request, a complaint has been filed, ‘or any time a party receives notification that litigation is likely to be commenced.’”). Therefore, as of April 2010, DIRECTV had an obligation to “suspend any existing policies related to deleting or destroying files and to preserve all relevant documents related to the litigation.” In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1070 (N.D. Cal. 2006). That obligation “is an affirmative one; it requires that the agency or corporate officers having notice of discovery obligations communicate those obligations to employees in possession of discoverable materials.” Id. (quoting Nat’l Ass’n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557–58 (N.D. Cal. 1987)). “Once the duty to preserve attaches, any destruction of documents is, at a minimum, negligent.” Id. (quoting Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 220 (S.D.N.Y.2003)). B. DIRECTV’s Loss of Websites Associated with the Wind Report Justifies Exclusion of Dr. Wind’s Survey Evidence. 1. DIRECTV Has Lost Website Evidence. DIRECTV’s expert report, authored by Professor Jerry Wind and served in this case on September 16, 2016 (“Wind Report”), relies primarily on a two-phase survey of consumers who had recently subscribed by web or by phone (the “Convergys Study”). Wind Report, p. 48, Ex. 2, p. 4.1 The surveyed consumers who subscribed over the web did so by navigating DIRECTV’s live, interactive website on the Internet. See Wind Report, p. 47. The surveys were conducted in January and June–July 2015—long after DIRECTV’s obligation to preserve evidence arose. See Id. at Ex. 2, p. 4. The interactive website used for the survey is plainly relevant to the litigation since it forms the basis for portions of Dr. Wind’s expert analysis. 1 The Wind Report was filed as Docket No. 189-14 by DIRECTV on October 6, 2016 in support of DIRECTV’s opposition to the FTC’s motion for partial summary judgment. See Declaration of Jerry Wind, ¶ 5, Dkt. No. 189-13. FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 6 of 12 Nonetheless, DIRECTV did not preserve the interactive website used in the consumer surveys, and has stated that no such evidence can be recovered. Declaration of Jacob A. Snow in Support of Motion for Sanctions (“Snow Decl.”), ¶ 2, Ex. A, October 4, 2016 Email (email chain including written confirmation from FTC counsel that DIRECTV no longer possesses the interactive websites used in the survey).2 In its section of the parties’ letter brief, DIRECTV argues the FTC understood that DIRECTV was not preserving every interactive version of its website. Dkt. No. 203 (“Letter Brief”), p. 4. DIRECTV misunderstands the FTC’s motion. The FTC is not suggesting that DIRECTV should have preserved all of its interactive websites; just those versions that DIRECTV plans to rely on in support of its case. That is, DIRECTV should have preserved the particular websites on which the Convergys Study was conducted, first in January 2015 and then in June–July 2015. Wind Report, Ex. 2, p. 4. DIRECTV failed to preserve the interactive website, despite that it was using the website to conduct surveys for use in litigation. The preservation and production of the particular versions of the site subject to the surveys is particularly important given that, between January and October 2015, there were “at least 65 releases of the site and over 2000 content changes.” Snow Decl. ¶ 5, Ex. D, October 23, 2015 Email. The fact that DIRECTV cannot preserve every version of its website is no excuse for its failure to preserve the specific versions of the interactive websites that form the core of its survey expert’s work. 2 In its portion of the letter brief on this issue, DIRECTV argued that the FTC can simply recreate DIRECTV’s site from the original source code. Letter Brief, p. 4. But DIRECTV has maintained since at least October 2015 that it is not practical to reliably recreate and produce to the FTC any version of the interactive website based on the source code. Snow Decl. ¶ 3, Ex. B, October 19, 2015 Email (Counsel for DIRECTV stated that “we cannot replicate historic operative versions of directv.com (or even just the purchase flow from that site) absent extraordinary burden (and have not done so). Even if such a reconstruction were technically possible, in light of the dynamic nature of the sites and connectivity to back end functionality which is also dynamic, we could not guarantee an accurate replica of the consumer experience.”). After the FTC prepared a letter brief on the subject, DIRECTV agreed to produce the underlying source code. Snow Decl. ¶ 4, Ex. C, March 9, 2016 Email. The FTC does not now dispute that reliably recreating a version of the 2015 website in time to be used in litigation would be impractical. FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 7 of 12 DIRECTV could have taken reasonable steps to preserve its interactive website evidence in the same manner as the FTC preserved the interactive website for its consumer-survey expert, Dr. Tülin Erdem. The interactive website evidence produced with Dr. Erdem’s report allowed DIRECTV, the Court, and DIRECTV’s experts to review and analyze the website as survey participants and consumers would have experienced it. The FTC preserved that website by capturing the DIRECTV website in August 2013 and modifying that capture to ensure that the site worked reliably and accurately. See Declaration of Nathan Good in Support of Partial Motion for Summary Judgment, ¶ 3, Dkt. No. 176-14. DIRECTV can decide for itself how to comply with its evidence-preservation obligations, but the steps taken by the FTC to preserve interactive website evidence are one reasonable option. DIRECTV did not take readily available steps to preserve the website on which its experts would rely. 2. The FTC Has Been Prejudiced. DIRECTV’s loss of the interactive website plainly prejudices the FTC. First, neither the FTC nor the Court can view or interact with the website that surveyed consumers saw. The screenshots relied on by Dr. Wind (in Exhibit 3 to the Wind Report) are an inadequate substitute because they are static, from the wrong dates, and misleadingly display disclosures typically hidden behind hyperlinks and info-hovers. Second, without the interactive site, the FTC’s survey expert cannot attempt to replicate Dr. Wind’s survey (for example, in a manner that would cure the defects in his methodology). And third, the FTC’s usability expert cannot perform an analysis of the website tested by Dr. Wind. DIRECTV’s disclosure of the surveys in September 2016—well over a year after they were conducted—prevented the FTC from capturing the interactive website material corresponding to the dates of the surveys. The Court should therefore exclude the survey evidence based on the website as well as expert analysis of that survey evidence. FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 8 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. DIRECTV’s Loss of A/B Testing Evidence Justifies Exclusion of the A/B Test Evidence On Which DIRECTV Now Relies. 1. DIRECTV Has Lost A/B Testing Evidence. “A/B testing” refers to the common practice of presenting different experiences to subsets of consumers and analyzing how consumers respond. DIRECTV has likely conducted thousands of A/B tests on its website. Snow Decl. ¶ 6, Ex. E, Transcript of Deposition of Audrey Chen (“Chen Tr.”) 160:4–18. Each A/B test has a “test” version and a “control” version that is seen by different groups of users. Each version is sometimes called a “stimulus” and the two versions are the “A” and “B” in the phrase “A/B test.” Because A/B testing can show how consumers respond to different advertising stimuli (under otherwise similar conditions), the FTC’s first set of Requests for Production, served on June 26, 2015, sought consumer research (including A/B tests) relating to the advertising and material terms of DIRECTV’s satellite television service. FTC’s First Set of Requests for Production, Dkt. No. 113-1 (“FTC RFPs”), p. 17. The FTC had previously requested this material through Civil Investigative Demands issued in 2010 and 2013. First CID, p. 14; Second CID, p. 13. DIRECTV has therefore had an obligation to preserve A/B test information for years before this case was filed. Despite its duty to preserve this information, DIRECTV has lost nearly every ordinary- course-of-business document showing what A/B tests the company performed on its website. DIRECTV has recently used two different software products to perform A/B tests on its website: 1) Adobe Test & Target; and 2) Monetate. Chen Tr. 32:22–25. From 2011 through 2014, DIRECTV used Adobe Test & Target for A/B testing. Id. at 26:10–17. In 2014, DIRECTV switched to Monetate. Id. Since the Adobe Test & Target contract ended, DIRECTV has no way to access the data in that product: in the words of Audrey Chen, a Senior Manager for Web Analytics at DIRECTV, “basically it’s gone.” Chen Tr. 44:8–45:6. As for the data in Monetate, DIRECTV has confirmed that images of the two experiences cannot be recovered. Snow Decl. ¶ 7, Ex. F, August 22, 2016 Email (“DIRECTV is unable to extract the test [Business As Usual] / control stimuli from Monetate.”). DIRECTV has lost nearly all evidence of the A/B test stimuli except one: the litigation-focused A/B test performed in connection with Dr. Wind’s report and FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 6 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 9 of 12 relied on in his analysis.3 Wind Report, Ex. 2, p. 38 (showing the interface seen by users who experience a different checkout process as part of Dr. Wind’s survey); see also Chen Tr. 115:25– 119:5 (describing the A/B test conducted for use in litigation). DIRECTV could have taken reasonable steps to preserve other A/B tests performed in the ordinary course of business. Appendix A of the Wind Report includes a set of screenshots that show the differences between the “test” and the “control” websites used in the survey. Wind Report, Ex. 2, p. 35–40. Screenshots like those in the Wind Report are a simple means of preserving the test and control stimulus of the A/B test, since that information was apparently not preserved inside the Monetate tool. For the A/B test information in the Adobe Test & Target tool, DIRECTV should have preserved that information instead of destroying it. In sum, DIRECTV has failed to preserve evidence showing what the test and control stimuli were for thousands of A/B tests conducted by the company. 2. The FTC Has Been Prejudiced. DIRECTV’s loss of A/B test stimuli prejudices the FTC. DIRECTV is asking the Court to let it rely on the only preserved A/B test (prepared solely for litigation) after failing to preserve nearly all other ordinary-course A/B test information. The FTC is entitled to compare the evidence that DIRECTV has prepared for litigation with similar evidence created in the ordinary course of business. Because DIRECTV has lost the information showing the test and control stimulus for essentially all of the A/B tests conducted in the ordinary course of business, the FTC has been deprived of that opportunity to test the results of the Convergys Study against ordinary- course A/B test documents, or to commission a counter-survey. See Pinterest v. Pintrips, Inc., 2015 WL 2268498, at 2 (N.D. Cal., May 14, 2015) (noting that a counter-survey can test flaws in a consumer survey). The Advisory Committee Notes for the 2015 Amendment to Rule 37(e)(1) contemplate exactly this remedy for exactly this prejudice, noting that “it may be appropriate to exclude a specific item of evidence to offset prejudice caused by failure to 3 DIRECTV eventually produced two images which may reflect the test and control stimulus for a second A/B test with Bates numbers DIRECTV-0568620–21. The stimuli for the remaining thousands of A/B tests have been lost. FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 10 of 12 preserve other evidence that might contradict the excluded item of evidence.” Excluding the Convergys website A/B test and Dr. Wind’s analysis of it is an appropriately targeted remedy under Rule 37(e). D. DIRECTV’s Loss of Analytics Evidence Justifies Exclusion of that Evidence and Any Related Expert Analysis. 1. DIRECTV Has Lost Analytics Evidence. DIRECTV has also produced “website analytics” evidence, which relates to the behavior of users navigating the DIRECTV website. See, e.g., Snow Decl. ¶ 8, Ex. G. That material purports to show, for example, the rates at which users purchased satellite-television service (i.e., the “conversion rate”) across different sales channels. Id. In late 2015, DIRECTV modified its contract with its analytics-platform supplier to automatically delete all analytics data older than three years. Chen Tr. 42:8–43:16 (testifying that “there is no way” to access deleted analytics data).4 That is, DIRECTV destroyed years of responsive data after the FTC served two CIDS and a set of litigation requests for production, all identifying analytics data as relevant and responsive information. First CID, p. 14; Second CID, p. 13; FTC RFPs, Dkt. No. 113-1, p. 17 (RFP 10). DIRECTV has confirmed Ms. Chen’s testimony that the data is lost and cannot be recovered. Snow Decl. ¶ 6, Ex. F, August 22, 2016 Email (stating, in revisions to an email from FTC counsel on August 10, 2016 that DIRECTV “believe[s] that Ms. Chen’s deposition testimony was accurate”). DIRECTV plainly failed to take reasonable steps to preserve the analytics evidence. Instead of modifying the contract to allow Adobe to destroy the analytics data older than three years, DIRECTV should have affirmatively preserved it as the law requires. 2. The FTC Has Been Prejudiced. DIRECTV apparently intends to use analytics evidence in support of its case, but because DIRECTV has not preserved any data from before 2014, the FTC has no opportunity to test 4 DIRECTV states in the letter brief that the analytics materials were not lost. Letter Brief, p. 5. This is contrary to Audrey Chen’s sworn testimony. Chen Tr. 42:8–43:16. It is also contrary to DIRECTV’s email confirming, in response to the FTC’s inquiry, that her testimony was accurate. Snow Decl. ¶ 6, Ex. F. FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 11 of 12 whether the recent data matches older, destroyed data. For example, the FTC has no way of knowing whether one of the previous versions of DIRECTV’s website caused users to interact with the site differently from the data DIRECTV has produced. In light of DIRECTV’s failure to maintain the analytics data, the Court should not presume that the lost data is the same as the data DIRECTV has produced. The Court should enjoin DIRECTV from relying on any analytics data from the SiteCatalyst platform and exclude any expert analysis of that data. E. Exclusion of Evidence and Expert Analysis Is an Appropriate Targeted Remedy. The Court should exclude the evidence in question—and any expert analysis of that evidence—as a remedy for DIRECTV’s spoliation of evidence. See Internmatch, Inc. v. Nxtbigthing, LLC, Case No. 14-cv-05438-JST, 2016 WL 491483, at *3 (N.D. Cal. Feb. 8, 2016) (appropriate sanctions include exclusion of testimony based on the despoiled evidence); Unigard Sec. Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363 (9th Cir. 1992) (expert testimony based on destroyed evidence was properly excluded due to prejudice). DIRECTV calls the FTC’s proposed remedy an “exclude everything” approach. Letter Brief, p. 5. In fact, the FTC’s proposed remedy is quite narrow. The FTC requests that the Court exclude the particular categories of evidence that DIRECTV has failed to adequately preserve: 1) interactive-website data; 2) website A/B test data; and 3) website analytics data. The first two of these categories—the interactive website and A/B test data—were introduced by DIRECTV through the Wind Report, and specifically through a web-based survey performed by Convergys. See Wind Report, Ex. 2. Only the portions of the Wind Report that rely on the Convergys web survey should be excluded. The third category—DIRECTV’s analytics data—was produced by DIRECTV independent of any expert report, and therefore can be separately excluded. The FTC is not seeking wholesale exclusion of expert testimony. Rather, the FTC seeks exclusion of the specific types of evidence subject to spoliation, and any expert analysis of that evidence. The FTC’s proposed remedy is the only reasonable cure for the prejudice to the FTC. Other more severe remedies are available under Rule 37(e)(2)—including dismissal of the action or adverse presumptions about the lost evidence—only when intent is found. Although FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 207 Filed 11/16/16 Page 12 of 12 DIRECTV has long known of its obligation to preserve relevant evidence, the FTC has not alleged in this motion that DIRECTV’s spoliation of evidence is intentional. Among those sanctions available under Rule 37(e)(1), only exclusion of the evidence will cure the prejudice. Monetary sanctions (e.g., attorneys’ fees associated with the present motion) against DIRECTV are unrelated to the prejudice suffered by the FTC. Additional discovery or a schedule modification, while they might be appropriate in some cases, would also fail to cure the prejudice here—neither more time nor more discovery can recover the lost evidence. As the 2015 Amendment Advisory Committee Notes to Rule 37(e) state, “it may be appropriate to exclude a specific item of evidence to offset prejudice caused by failure to preserve other evidence that might contradict the excluded item of evidence.” Exactly this limited remedy is appropriate here. IV. CONCLUSION For the reasons stated above, the Court should exclude: 1) the stimulus and results of any web-based survey conducted by DIRECTV (including the Convergys website survey that appears in the Wind Report) as well as any expert analysis of such surveys; 2) all A/B test information, including all data associated with any A/B test and any stimulus associated with any A/B test, as well as any expert analysis of that A/B test information; and 3) all electronically stored information from DIRECTV’s SiteCatalyst analytics platform. Dated: November 16, 2016 Respectfully Submitted, /s/ Jacob A. Snow Eric D. Edmondson Erika Wodinsky Boris Yankilovich Jacob A. Snow Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Case No. 15-cv-01129-HSG 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-11-18	208	ORDER to file chart. Signed by Judge Haywood S. Gilliam, Jr. (hsglc3S, COURT STAFF) (Filed on 11/18/2016) (Entered: 11/18/2016)
2016-11-21	209	ADMINISTRATIVE MOTION Two-Day Extension of Time re 206 Administrative Motion to File Under Seal filed by DIRECTV LLC, DIRECTV, Inc.. Responses due by 11/25/2016. (Attachments: # 1 Declaration of Ryan M. Sandrock, # 2 Proposed Order)(Sandrock, Ryan) (Filed on 11/21/2016) (Entered: 11/21/2016)	Case 3:15-cv-01129-HSG Document 209 Filed 11/21/16 Page 1 of 3 Jeffrey M. Tillotson, SBN 139372 [email protected] TILLOTSON LAW 750 N. St. Paul Street, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. ADMINISTRATIVE MOTION FOR TWO- DAY EXTENSION OF TIME TO FILE DECLARATION IN SUPPORT OF PLAINTIFF’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE 3:15-CV-01129 UNDER SEAL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 209 Filed 11/21/16 Page 2 of 3 Pursuant to Civil Local Rules 6-3 and 7-11, defendants DIRECTV and DIRECTV, LLC (collectively, “DIRECTV”) respectfully request that their deadline to file their declaration in support of Plaintiff FTC’s Administrative Motion to File Under Seal be extended from Monday, November 21, 2016, to Wednesday, November 23, 2016. Plaintiff Federal Trade Commission (“FTC”) does not object to this motion. On November 16, 2016, FTC filed its Administrative Motion to File Under Seal Snow Declaration Exhibits Designated as Confidential By Defendant DIRECTV, Filed in Support of the FTC’s Motion for Sanctions Under Rule 37(e)(1), requesting that portions of a deposition transcript and an exhibit be filed under seal. [Dkt No. 206]. This transcript and exhibit have been designated as confidential subject to the Protective Order entered in this case. [See Dkt. 54.] Pursuant to Local Rule 79-5, DIRECTV currently has until Monday, November 21, 2016 to file a declaration establishing that all of the designated material is sealable. L.R. 79-5(e)(2). Due to the schedule of DIRECTV’s counsel and in light of DIRECTV’s obligation to file a declaration establishing the bases for filing these materials under seal, DIRECTV requests a two day extension of time in which to file its declaration. This extension would not adversely affect the schedule or any other deadline in this case. If possible, DIRECTV intends to file this declaration on Tuesday, November 22, concurrently with an administrative motion to seal, and the jointly prepared chart summarizing the administrative motions to seal ordered by the Court in Dkt. 208. There have been the following prior extensions in this case: (a) Dkt. No. 64, October 21, 2015 (granting FTC’s motion for extension of time to respond to DIRECTV’s motion for partial summary judgment); (b) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); (c) Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary judgment briefing deadlines and hearing date, and trial date); (d) Dkt. No. 181, September 26, 2016 (granting DIRECTV’s motion for extension of time to file declaration in support of plaintiff’s administrative motion to seal); (e) Dkt. No. 185, September 28, 2016 (granting joint stipulation to MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE 3:15-CV-01129 1 UNDER SEAL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 209 Filed 11/21/16 Page 3 of 3 extend time for rebuttal and reply of expert reports and expert discovery; (f) Dkt. No. 200 (granting joint stipulation to extend time for rebuttal report). DIRECTV has conferred with FTC about this request for an extension of time, and FTC stated that it did not object to the extension. Dated: November 21, 2016 SIDLEY AUSTIN LLP By: /s/ Ryan M. Sandrock Ryan M. Sandrock Attorneys for Defendants DIRECTV and DIRECTV, LLC MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE 3:15-CV-01129 2 UNDER SEAL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-11-22	210	ORDER by Magistrate Judge Maria-Elena James granting 209 Administrative Motion For Extension of Time to File Declaration in Support of Plaintiff's Administrative Motion to file Under Seal. (rmm2S, COURT STAFF) (Filed on 11/22/2016) (Entered: 11/22/2016)	Case 3:15-cv-01129-HSG Document 210 Filed 11/22/16 Page 1 of 2 Jeffrey M. Tillotson, SBN 139372 [email protected] TILLOTSON LAW 750 N. St. Paul Street, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION FOR EXTENSION OF TIME TO FILE DECLARATION IN SUPPORT OF PLAINTIFF’S ADMINISTRATIVE MOTION TO FILE UNDER SEAL FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO ADMINISTRATIVE MOTION TO FILE UNDER SEAL CASE NO. 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 210 Filed 11/22/16 Page 2 of 2 [PROPOSED] ORDER Having read and considered Defendant DIRECTV and DIRECTV, LLC’s (collectively, “DIRECTV”) Motion for Extension of Time to File Declaration in Support of Administrative Motion to File Under Seal, the Court rules as follows: 1. 2. DIRECTV’s Motion for Extension of time is granted; DIRECTV’s deadline to file a declaration in support of Plaintiff’s Administrative Motion to File under Seal is extended to November 23, 2016 IT IS SO ORDERED. Dated: November 21, 2016 _____________________________________ HON. United States MARIA-ELENA JAMES Magistrate Judge [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION FOR EXTENSION OF TIME TO FILE DECLARATION ISO 1 ADMINISTRATIVE MOTION TO FILE UNDER SEAL CASE NO. 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-11-22	211	Administrative Motion to File Under Seal filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration of Christopher Murphy, # 2 Proposed Order, # 3 Exhibit E to Decl of Jacob Snow - Redacted, # 4 Exhibit E to Decl of Jacob Snow - UNREDACTED, # 5 Certificate/Proof of Service)(Sandrock, Ryan) (Filed on 11/22/2016) (Entered: 11/22/2016)	Case 3:15-cv-01129-HSG Document 211 Filed 11/22/16 Page 1 of 4 Jeffrey M. Tillotson, SBN 139372 [email protected] TILLOTSON LAW 750 N. St. Paul Street, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to Hon. Maria-Elena James DIRECTV AND DIRECTV, LLC’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS ACCOMPANYING PLAINTIFF’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) TO BE FILED UNDER SEAL [Declaration of Christopher Murphy and [Proposed] Order Filed Concurrently] DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 211 Filed 11/22/16 Page 2 of 4 Pursuant to Civil L.R. 79-5 and the Protective Order entered in this case on October 15, 2015 [Dkt. 54], Defendants DIRECTV and DIRECTV, LLC (together, “DIRECTV”) request that this Court enter an order allowing the filing of certain exhibits attached to Plaintiff’s Motion for Sanctions Under Rule 37(e)(1), identified below, under seal. This motion is accompanied by the Declaration of Christopher Murphy and a Proposed Order. The legal standard for sealing documents accompanying a non-dispositive motion is that the requesting party must show “good cause” to submit the documents under seal. Kamakana v. City and Cnty. of Honolulu, 447 F.3d 1172, 1180 (9th Cir. 2006). Discovery motions, such as a motion for sanctions under Rule 37, are considered a non-dispositive matter. Apple Inc. v. Samsung Elecs. Co., No 11-CV-01846 LHK PSG, 2012 WL 4120541, at 1-2 (N.D. Cal. Sept. 18, 2012); On Command Video Corp. v. LodgeNet Entm't Corp., 976 F. Supp. 917, 920 (N.D. Cal. 1997). Thus, a party moving to seal documents attached to a Rule 37 sanctions motion need only meet the lower “good cause” standard. Finjan, Inc. v. Proofpoint, Inc, No. 13-CV-05808-HSG, 2015 WL 9023164, at 1 (N.D. Cal. Dec. 16, 2015) (describing the higher “compelling reasons” standard for dispositive motions and lower “good cause” standard for non-dispositive motions). Good cause exists to protect DIRECTV’s confidential and sensitive information attached to Plaintiff’s Motion for Sanctions Under Rule 37(e)(1) and the Declaration of Jacob Snow.1 Defendants have narrowly tailored these requests. DIRECTV seeks to keep under seal limited instances of confidential and sensitive information consisting of: (1) DIRECTV internal business structures and operations; (2) DIRECTV strategic planning information; (3) DIRECTV consumer research and the results of that research; and (4) DIRECTV sales data. DIRECTV in the normal course of business treats as confidential and takes reasonable steps to limit the disclosure of such information. See Declaration of Christopher Murphy (“Murphy Decl.”) ¶ 6. DIRECTV would be harmed if its competitors had access to these materials because DIRECTV does not have access to similar materials of its competitors. 1 Moreover, these documents are substantially similar to other materials this Court has previously found appropriate for sealing in this litigation. See Dkt. 178. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 1 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 211 Filed 11/22/16 Page 3 of 4 This Court and other courts in the Northern District have recognized the importance of protecting a company’s sensitive information where the release of the confidential business information at issue “might harm [a litigant’s] ability to conduct its business.” See, e.g., Delfino Green & Green v. Workers Compansation Solutions, LLC, No. 15-cv-02302-HSG, 2015 WL 4235356, at 2 (N.D. Cal. July 13, 2015) (granting motion to seal documents containing confidential financial information); Bohannon v. Facebook, Inc., No. 12-CV-01894-BLF, 2014 WL 5598222, at 1 (N.D. Cal. Nov. 3, 2014) (granting sealing of company documents and stating that: “Good cause may exist to seal documents that are privileged, contain trade secrets, contain confidential research, development or commercial information, or if disclosure of the information might harm a litigant’s competitive standing.”); Costco Wholesale Corp. v. Johnson & Johnson Vision Care Inc., No. 15- CV-00941-HSG, 2015 WL 2405486, at 2 (“The Court agrees that the redacted portions of the Exhibit contain sensitive pricing information, disclosure of which could cause Defendant competitive harm.”) (citing In re Elec. Arts, Inc., 298 Fed. Appx. 568, 569 (9th Cir. 2008)); Hunt v. Cont’l Cas. Co., No. 13-cv-05966-HSG, 2015 WL 5355398, at 2 (granting motion to seal confidential financial information) (citing Transperfect Global, Inc., v. MotionPoint Corp., No. 10- cv-02590-CW, 2014 WL 4950082, at 1 (N.D. Cal. Sept. 25, 2014)). Moreover, the court has broad discretion to seal company documents: Pursuant to Rule 26(c), a trial court has broad discretion to permit sealing of court documents for, inter alia, the protection of “a trade secret or other confidential research, development, or commercial information.” Fed. R. Civ. P. 26(c)(1)(G). The Ninth Circuit has adopted the definition of “trade secrets” set forth in the Restatement of Torts, holding that “[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” Clark v. Bunker, 453 F.2d 1006, 1009 (9th Cir. 1972) (quoting Restatement (First) of Torts § 757 cmt. b). “Generally [a trade secret] relates to the production of goods . . . . It may, however, relate to the sale of goods or to other operations in the business . . . .” Id. (ellipses in original). In addition, the Supreme Court has recognized that sealing may be justified to prevent judicial documents from being used “as sources of business information that might harm a litigant’s competitive standing.” Nixon, 435 U.S. at 598. Baker v. Yahoo! Inc., 2015 WL 3660769, No. 13-cv-04980-LHK, at 2 (N.D. Cal. May 27, 2015). DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 2 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 211 Filed 11/22/16 Page 4 of 4 The confidential and sensitive business information attached to Plaintiff’s Motion for Sanctions Under Rule 37(e)(1) could cause DIRECTV competitive harm if such information were released. This provides good cause for keeping this information under seal. Additionally, DIRECTV has narrowly tailored this request and is not seeking to keep under seal entire deposition transcripts. Instead, DIRECTV consents to allowing portions of Exhibit E to the Snow Declaration to be made public, except for the narrowly tailored portions identified in Table 1 below. DIRECTV thus respectfully requests that the materials set forth in Table 1 below be kept sealed, including because: (1) DIRECTV has a compelling interest in keeping such information confidential; (2) the redactions are narrowly tailored; (3) there is no less restrictive means available. Table 1 What Defendants Seek to Keep Under Seal (Page: Line, or paragraph) 25:1-12, 26:18-27:23, 28:3-22, 29:1-2, 29:5-32:16, 41:1-12, 41:18- 42:7, 45:7-46:24, 47:2-48:23, 113:1-119:19, 120:4-14, 157:1- 158:11, 159:11-24 Entire Document Document Exhibit E to the Snow Declaration Exhibit G to the Snow Declaration Dated: November 22, 2016 SIDLEY AUSTIN LLP By /s/ Ryan M. Sandrock Ryan M. Sandrock Attorney for Defendants DIRECTV and DIRECTV, LLC DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN DOCUMENTS TO BE FILED UNDER SEAL 3 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-11-22	212	RESPONSE to re 208 Order Joint Response to Order to File Jointly Prepared Chart re Administrative Motions to File Under Seal by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Jointly Prepared Chart Per Order (Dkt. 208))(Sandrock, Ryan) (Filed on 11/22/2016) (Entered: 11/22/2016)	Case 3:15-cv-01129-HSG Document 212 Filed 11/22/16 Page 1 of 2 Jeffrey M. Tillotson, SBN 139372 [email protected] TILLOTSON LAW 750 N. St. Paul Street, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT RESPONSE TO ORDER TO FILE JOINTLY PREPARED CHART REGARDING ADMINISTRATIVE MOTIONS TO FILE UNDER SEAL (DKT. 208) JOINT RESPONSE TO ORDER TO FILE JOINTLY PREPARED CHART 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 212 Filed 11/22/16 Page 2 of 2 Pursuant to the Court’s order on November 18, 2016, attached is a jointly prepared chart regarding the administrative motions to file under seal. (Dkt. 208). This chart sets forth the current status of all the requested redactions, including DIRECTV’s withdrawal of certain requests made in Dkt. 187, 188, and 197.1 Dated: November 22, 2016 Pursuant to Civil Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtained from the signatories above. By: /s/ Ryan M. Sandrock 1 DIRECTV withdraws the following requests: FTC’s Motion for Partial Summary Judgment (Dkt. 187) at 3:6-9, 11:25-26, 17:18-22, 17:28-18:1, 18:15-18, 19:10-17, 19:18-26, 20:1-4, 20:7-11, 20:14-15, 20:18-19, 21:13-21, 21:24-22:2, 22:8-10, 22:16-17, 23:22-25, 24:8-9, 24:22-26, 25:1-4; Sandrock Ex. B (Deposition of Vincent Torres) (Dkt. 188, 197) at 76:3-7, 76:17-25. JOINT RESPONSE TO ORDER TO FILE JOINTLY PREPARED CHART 1 3:15-CV-01129 FEDERAL TRADE COMMISSION SIDLEY AUSTIN By: /s/ Ryan M. Sandrock Ryan M. Sandrock Attorney for Defendants DIRECTV and DIRECTV, LLC By: /s/ Erika Wodinsky Erika Wodinsky Attorney for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-11-23	213	ORDER by Judge Haywood S. Gilliam, Jr., GRANTING IN PART and DENYING IN PART 176 Motion for Partial Summary Judgment. The Court GRANTS summary judgment in the FTC's favor on DIRECTV's affirmative defense of waiver. The Court DENIES summary judgment on Counts III and IV of the complaint and on DIRECTV's affirmative defenses of estoppel and laches. The Court will issue a written order detailing its reasoning before Monday, November 28, 2016. (This is a text-only entry; there is no document associated with this entry.) (hsglc3S, COURT STAFF) (Filed on 11/23/2016) (Entered: 11/23/2016)
2016-11-26	214	* PLEASE DISREGARD. PLEASE SEE 216 FOR CORRECTED PDF * ORDER by Judge Haywood S. Gilliam, Jr., GRANTING IN PART and DENYING IN PART 177 184 187 188 191 194 195 197 Administrative Motions to File Under Seal. (hsglc3S, COURT STAFF) (Filed on 11/26/2016) Modified on 11/28/2016 (ecgS, COURT STAFF). (Entered: 11/26/2016)	Case 3:15-cv-01129-HSG Document 214 Filed 11/26/16 Page 1 of 4 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Case No. 15-cv-01129-HSG ORDER GRANTING IN PART AND DENYING IN PART ADMINISTRATIVE MOTIONS TO SEAL Defendants. Re: Dkt. Nos. 177, 184, 187-88, 191, 194-95, 197 The Federal Trade Commission (“FTC”) and DIRECTV, Inc. (“DIRECTV”) have both filed various administrative motions (including a supplemental administrative motion) seeking to seal portions of the briefs and exhibits relating to the FTC’s motion for partial summary judgment. See Dkt. Nos. 177, 184, 187-88, 191, 194-95, 197. The FTC has opposed several of these administrative motions. See Dkt. Nos. 190, 193, 199. Pursuant to the Court’s order, Dkt. No. 208, the parties filed a jointly prepared chart listing all portions of documents sought to be sealed, the asserted grounds for sealing, and if applicable, the asserted grounds for opposition, Dkt. No. 212- 1. The parties represented that the jointly prepared chart sets forth the current status of all requested redactions. Dkt. No. 212. Having carefully considered each of the requested redactions, the Court GRANTS IN PART and DENIES IN PART the administrative motions to seal. I. LEGAL STANDARD Courts generally apply a “compelling reasons” standard when considering motions to seal documents. Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 677-78 (9th Cir. 2010). “This standard derives from the common law right ‘to inspect and copy public records and documents, including judicial records and documents.’” Id. (quoting Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006)). “[A] strong presumption in favor of access is the starting point.” 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 214 Filed 11/26/16 Page 2 of 4 Kamakana, 447 F.3d at 1178 (citation and internal quotation marks omitted). To overcome this strong presumption, the moving party must “articulate compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process.” Id. at 1178-79 (citations, internal quotation marks, and alterations omitted). “In general, compelling reasons sufficient to outweigh the public’s interest in disclosure and justify sealing court records exist when such court files might have become a vehicle for improper purposes, such as the use of records to gratify private spite, promote public scandal, circulate libelous statements, or release trade secrets.” Id. at 1179 (citation and internal quotation marks omitted). The court must “balance the competing interests of the public and the party who seeks to keep certain judicial records secret. After considering these interests, if the court decides to seal certain judicial records, it must base its decision on a compelling reason and articulate the factual basis for its ruling, without relying on hypothesis or conjecture.” Id. (citations, brackets, and internal quotation marks omitted). Civil Local Rule 79-5 supplements the “compelling reasons” standard. The party seeking to file under seal must “establish[ ] that the document, or portions thereof, are privileged, protectable as a trade secret or otherwise entitled to protection under the law. . . . The request must be narrowly tailored to seek sealing only of sealable material . . . .” Civil L.R. 79-5(b). Finally, records attached to motions that are only “tangentially related to the merits of a case” are not subject to the strong presumption of access. Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1101 (9th Cir. 2016). Accordingly, parties moving to seal such records must meet the lower “good cause” standard of Rule 26(c) of the Federal Rules of Civil Procedure. Id. at 1097. The “good cause” standard requires a “particularized showing” that “specific prejudice or harm will result” if the information is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210-11 (9th Cir. 2002) (citation and internal quotation marks omitted); see also Fed. R. Civ. P. 26(c). II. DISCUSSION Here, the Court applies the “compelling reasons” standard because the documents at issue 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 214 Filed 11/26/16 Page 3 of 4 have more than a tangential relation to the merits of the case. See Ctr. for Auto Safety, 809 F.3d at 1101. The Court finds that the requested redactions in the jointly prepared chart at Dkt. No. 212-1 all satisfy the “compelling reasons” standard, on the grounds listed in column 6 (“Asserted Grounds for Sealing”)—except for those listed in the chart below. Document Ortiz Decl., Ex. A (Bentley Dep.) Ortiz Decl., Ex. B (Chen Dep.) Ortiz Decl., Ex. C (Filipiak Dep.) Ortiz Decl., Ex. D (Friedman Dep.) Ortiz Decl., Ex. E (Hause Dep.) Ortiz Decl., Ex. F (Leever Dep.) Ortiz Decl., Ex. G (Patel Dep.) Ortiz Decl., Ex. H (Poling-Hiraldo Dep.) Ortiz Decl., Ex. P (Dep. Ex. 319) Ortiz Decl., Ex. T (Dep. Ex. 706) Ortiz Decl., Ex. U (Dep. Ex. 720) FTC’s Motion for Partial Summary Judgment Sandrock Decl., Ex. E (Friedman Dep.) Sandrock Decl., Ex. F (Stinson Dep.) Friedman Decl. (Oct. 6, 2015) DIRECTV’s Opposition to FTC’s Motion for Partial Summary Judgment Ortiz II Decl., Ex. MM (Hause Dep.) Ortiz II Decl., Ex. QQ (May 13, 2010 CID Letter) Ortiz II Decl., Ex. RR (June 9, 2010 CID Letter) Ortiz II Decl., Ex. SS (July 2, 2010 CID Letter) Ortiz II Decl., Ex. UU (April 6, 2011 CID Letter) FTC’s Reply in Support of Motion for Partial Summary Judgment Dkt. No. (Unredacted Version) 187-15 187-16 187-17 187-18 Jt. Chart Pg. No. (Dkt. No. 212-1) 2 3 4 5 187-19 187-20 187-21 187-22 5 7 8 8 177-34 177-40 177-42 177-4, 187-14 188-14, 197- 20 188-16 11 11 11 11-12 13 13-14 188-27 188-4 197-15 195-11 195-13 195-15 195-19 197-12 15 15 17 18 18 18 18 19 Portions of Document for Which Sealing is DENIED 136:13-22 69:15-20 81:6-7 67:11-68:9, 69:11-16 86:8-24, 100:17-104:3, 183:14-184:6 41:2-9 143:1-144:15, 189:1-191:14 205:1-18, 206:6-14 57:1-60-11, 83:2-84:25 Entirety Entirety Entirety 1:23-25, 13:7-18 253:9-254:15 193:1-195:4, 198:20-200:25, 205:1- 206:5, 206:16-209:18, 210:2-211:22, 212:8-9, 212:20-25. 2:6-12, 2:25-3:13 17:16-18 117:3 Entirety Entirety 1, 4-8 (from subsection “8.” onward) 1 7:4-7 Sealing is inappropriate for the portions of the documents listed above, but is appropriate for all other portions of documents listed in the jointly prepared chart at Dkt. No. 212-1. III. CONCLUSION For the foregoing reasons, the Court DENIES the motions to seal with respect to the 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 214 Filed 11/26/16 Page 4 of 4 portions of documents listed in the chart above. The Court GRANTS the motions to seal with respect to all the other portions of documents listed in the jointly prepared chart at Dkt. No. 212-1. Pursuant to Civil Local Rule 79-5(f)(3), the parties must, within 7 days, file revised redacted versions of the documents listed in the chart above (except for the five documents for which the motions to seal were denied as to the entire document). IT IS SO ORDERED. Dated: ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-11-26	215	* PLEASE DISREGARD. PLEASE SEE 217 FOR CORRECTED PDF * ORDER by Judge Haywood S. Gilliam, Jr., GRANTING IN PART and DENYING IN PART 176 the Federal Trade Commission's Motion for Partial Summary Judgment. (hsglc3S, COURT STAFF) (Filed on 11/26/2016) Modified on 11/28/2016 (ecgS, COURT STAFF). (Entered: 11/26/2016)	Case 3:15-cv-01129-HSG Document 215 Filed 11/26/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG ORDER GRANTING IN PART AND DENYING IN PART THE FEDERAL TRADE COMMISSION’S MOTION FOR PARTIAL SUMMARY JUDGMENT Re: Dkt. No. 176 On September 22, 2016, the Federal Trade Commission (“FTC”) filed a motion for partial summary judgment. See Dkt. No. 176 (original motion); Dkt. No. 187-3 (redacted motion). Specifically, the FTC moved for an order granting summary judgment in its favor on Counts III and IV of the complaint and on DIRECTV’s affirmative defenses of estoppel, laches, and waiver. Dkt. No. 187-3 at 1. The Court finds that this matter is appropriate for disposition without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). After careful consideration of the arguments made by the parties, the Court GRANTS summary judgment in the FTC’s favor on DIRECTV’s affirmative defense of waiver, and DENIES summary judgment on Counts III and IV of the complaint and on DIRECTV’s affirmative defenses of estoppel and laches.1 I. LEGAL STANDARD Summary judgment is proper when a “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute is “genuine” if there is evidence in the record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Id. 1 On November 23, 2016, the Court issued an order ruling on the motion. This order briefly sets out the Court’s reasoning for that ruling. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 215 Filed 11/26/16 Page 2 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 But in deciding if a dispute is genuine, the court must view the inferences reasonably drawn from the materials in the record in the light most favorable to the nonmoving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986), and “may not weigh the evidence or make credibility determinations,” Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997), overruled on other grounds by Shakur v. Schriro, 514 F.3d 878, 884-85 (9th Cir. 2008). “Summary judgment is improper where divergent ultimate inferences may reasonably be drawn from the undisputed facts.” Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014) (internal quotation marks omitted); see also Int’l Union of Bricklayers & Allied Craftsman Local Union No. 20, AFL-CIO v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985) (“Even where the basic facts are stipulated, if the parties dispute what inferences should be drawn from them, summary judgment is improper.”). If a court finds that there is no genuine dispute of material fact as to only a single claim or defense or as to part of a claim or defense, it may enter partial summary judgment. See Fed. R. Civ. P. 56(a). With respect to summary judgment procedure, the moving party always bears both the ultimate burden of persuasion and the initial burden of producing those portions of the pleadings, discovery, and affidavits that show the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving party will not bear the burden of proof on an issue at trial, it “must either produce evidence negating an essential element of the nonmoving party’s claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). Where the moving party will bear the burden of proof on an issue at trial, it must also show that any reasonable trier of fact would have to find in its favor. See Celotex, 477 U.S. at 325. In either case, the movant “may not require the nonmoving party to produce evidence supporting its claim or defense simply by saying that the nonmoving party has no such evidence.” Nissan Fire, 210 F.3d at 1105. “If a moving party fails to carry its initial burden of production, the nonmoving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion at trial.” Id. at 1102-03. 2 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 215 Filed 11/26/16 Page 3 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “If, however, a moving party carries its burden of production, the nonmoving party must produce evidence to support its claim or defense.” Id. at 1103. In doing so, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec., 475 U.S. at 586. A nonmoving party must also “identify with reasonable particularity the evidence that precludes summary judgment,” because the duty of the courts is not to “scour the record in search of a genuine issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (quoting Richards v. Combined Ins. Co. of Am., 55 F.3d 247, 251 (7th Cir. 1995)). If a nonmoving party fails to produce evidence that supports its claim or defense, courts must enter summary judgment in favor of the moving party. Celotex, 477 U.S. at 323. II. COUNTS III-IV The FTC seeks summary judgment on two claims under provisions of the Restore Online Shoppers Confidence Act (“ROSCA”) that relate to the online marketing of negative option features.2 Dkt. No. 187-3 at 1; see also 15 U.S.C. § 8403(1) (2012) (requiring clear and conspicuous disclosure of transaction’s material terms); § 8403(2) (requiring customer’s express informed consent before billing). The Court recently denied DIRECTV’s motion for summary judgment on these same claims. See Dkt. No. 178 (FTC v. Directv, Inc., No. 15-cv-01229-HSG, 2016 WL 5339797 (N.D. Cal. Sept. 23, 2016)). In its prior order, the Court held that DIRECTV had not established the absence of a genuine dispute of material fact because the parties “vigorously disputed” what inferences should be drawn from DIRECTV’s website. Id. at 3 (citing Fresno Motors, 771 F.3d at 1125; Int’l Union of Bricklayers, 752 F.2d at 1405 (9th Cir. 1985)). The briefing and evidence submitted on the present motion have not changed the Court’s view that divergent inferences reasonably can be drawn from the website. 3 Therefore, summary 2 “Negative option feature means, in an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(w) (2016). 3 The FTC misses the point by arguing that the parties agree there is no genuine dispute of material fact. See Dkt. No. 187-3 at 11. As the Ninth Circuit has held, the litigants’ views cannot replace the Court’s judgment. See United States v. Fred A. Arnold, Inc., 573 F.2d 605, 606 (9th Cir. 1978) (“It is well-settled in this circuit and others that the filing of cross-motions for summary judgment, both parties asserting that there are no uncontested issues of material fact, does not vitiate the court’s responsibility to determine whether disputed issues of material fact are present. 3 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 215 Filed 11/26/16 Page 4 of 6 judgment is not warranted on the FTC’s ROSCA claims. See Fresno Motors, 771 F.3d at 1125; Int’l Union of Bricklayers, 752 F.2d at 1405. III. AFFIRMATIVE DEFENSES The FTC has also moved for summary judgment on DIRECTV’s affirmative defenses of estoppel, laches, and waiver. Dkt. No. 187-3 at 1. The Court finds that summary judgment is warranted as to waiver, but not estoppel or laches. A. Estoppel An essential element of estoppel, when pled against the government, is a showing that the government engaged in “affirmative misconduct going beyond mere negligence.” See Baccei v. United States, 632 F.3d 1140, 1147 (9th Cir. 2011). “Affirmative misconduct on the part of the government requires an affirmative misrepresentation or affirmative concealment of a material fact, such as a deliberate lie or a pattern of false promises.” Id. (citation omitted). Here, there is a genuine dispute between the parties regarding the inferences that should be drawn from the facts that are material to whether the FTC engaged in affirmative misconduct. For example, the parties make divergent arguments about what was reasonably meant by statements the FTC made to DIRECTV regarding its investigation. Compare Dkt. No. 188-3 at 21 (arguing that the FTC’s statement about “other issues” meant it was not investigating issues covered by the multistate settlements) with Dkt. No. 187-3 at 22 (arguing that DIRECTV understood that the FTC’s investigation included issues covered by the multistate settlements, as well as broader issues). Given that divergent reasonable inferences can be drawn regarding the facts that are material to an essential element of DIRECTV’s estoppel defense, summary judgment is not warranted. See Fresno Motors, 771 F.3d at 1125; Int’l Union of Bricklayers, 752 F.2d at 1405. B. Laches For the reasons set out in the Court’s order on the FTC’s motion to strike DIRECTV’s A summary judgment cannot be granted if a genuine issue as to any material fact exists.”) (citing authorities). Here, as explained in the Court’s prior order, the parties comprehensively dispute what inferences properly may be drawn regarding the website’s contents. Making all reasonable inferences in nonmovant DIRECTV’s favor, as it must at this stage, the Court finds that the FTC is not entitled to summary judgment. 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 215 Filed 11/26/16 Page 5 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 affirmative defenses, the Court holds that, for the defense of laches to apply to the government, the defendant must also show affirmative misconduct. See Dkt. No. 88 at 4-5 (FTC v. Directv, Inc., No. 15-CV-01129-HSG, 2015 WL 9268119, at 3 (N.D. Cal. Dec. 21, 2015)) (discussing United States v. Ruby Co. 588 F.2d 697, 705 n.10 (9th Cir. 1978); FTC v. Hang-Ups Art Enterprises, Inc., No. 95-cv-0027-RMT-JGX, 1995 WL 914179, at 4 (C.D. Cal. Sept. 27, 1995)); see also United States v. Becker, No. 86 CIV. 3946 (JFK), 1989 WL 34048, at 4 (S.D.N.Y. Apr. 4, 1989) (“It is well-established that the doctrines of estoppel or laches are not applicable to the United States Government absent a showing of ‘affirmative misconduct’ by the Government.”). Under the same reasoning the Court has applied in evaluating the estoppel defense, summary judgment is also unwarranted as to DIRECTV’s laches defense C. Waiver “Waiver is the intentional relinquishment of a known right.” Alocozy v. U.S. Citizenship & Immigration Servs., 704 F.3d 795, 797 (9th Cir. 2012) (internal quotation marks omitted). DIRECTV has conceded that this defense requires showing that waiver was “unmistakable.” See FTC v. Directv, 2015 WL 9268119, at 4. In opposition to the FTC’s motion, DIRECTV argues that the FTC “waived its right to initiate a claim when it unmistakably relinquished its right to join the MSA.” Dkt. No. 188-3 at 24. DIRECTV bases this defense on evidence that FTC informed DIRECTV that it had “other issues.” Dkt. No. 188-3 at 25 (citing record). The parties have no genuine dispute regarding the underlying facts relevant to assessing waiver. Compare Dkt. No. 187-3 at 24-25 with Dkt. No. 188-3 at 24-25. And viewing the evidence in the light most favorable to DIRECTV, and drawing all justifiable inferences in its favor, the Court finds that this defense fails as a matter of law. The FTC’s statement that it had “other issues,” and its decision not to join the MSA, are insufficient to show that the FTC both intentionally and unmistakably waived its right to bring this enforcement action. Accordingly, DIRECTV would not be able to carry its burden of persuasion regarding the waiver defense at trial, and summary judgment is properly granted in the FTC’s favor as to that defense. See Alocozy, 704 F.3d at 797 (“intentional” requirement); FTC v. Directv, 2015 WL 9268119, at 4 (“unmistakable” requirement); Nissan Fire, 210 F.3d at 1102 (burden of persuasion). 5 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 215 Filed 11/26/16 Page 6 of 6 IV. CONCLUSION For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART the FTC’s motion for partial summary judgment. IT IS SO ORDERED. Dated: ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-11-26	216	ORDER by Judge Haywood S. Gilliam, Jr., GRANTING IN PART and DENYING IN PART 177 184 187 188 191 194 197 Administrative Motions to File Under Seal. (hsglc3S, COURT STAFF) (Filed on 11/26/2016) (Entered: 11/28/2016)	Case 3:15-cv-01129-HSG Document 216 Filed 11/26/16 Page 1 of 4 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Case No. 15-cv-01129-HSG ORDER GRANTING IN PART AND DENYING IN PART ADMINISTRATIVE MOTIONS TO SEAL Defendants. Re: Dkt. Nos. 177, 184, 187-88, 191, 194-95, 197 The Federal Trade Commission (“FTC”) and DIRECTV, Inc. (“DIRECTV”) have both filed various administrative motions (including a supplemental administrative motion) seeking to seal portions of the briefs and exhibits relating to the FTC’s motion for partial summary judgment. See Dkt. Nos. 177, 184, 187-88, 191, 194-95, 197. The FTC has opposed several of these administrative motions. See Dkt. Nos. 190, 193, 199. Pursuant to the Court’s order, Dkt. No. 208, the parties filed a jointly prepared chart listing all portions of documents sought to be sealed, the asserted grounds for sealing, and if applicable, the asserted grounds for opposition, Dkt. No. 212- 1. The parties represented that the jointly prepared chart sets forth the current status of all requested redactions. Dkt. No. 212. Having carefully considered each of the requested redactions, the Court GRANTS IN PART and DENIES IN PART the administrative motions to seal. I. LEGAL STANDARD Courts generally apply a “compelling reasons” standard when considering motions to seal documents. Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 677-78 (9th Cir. 2010). “This standard derives from the common law right ‘to inspect and copy public records and documents, including judicial records and documents.’” Id. (quoting Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006)). “[A] strong presumption in favor of access is the starting point.” 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 216 Filed 11/26/16 Page 2 of 4 Kamakana, 447 F.3d at 1178 (citation and internal quotation marks omitted). To overcome this strong presumption, the moving party must “articulate compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process.” Id. at 1178-79 (citations, internal quotation marks, and alterations omitted). “In general, compelling reasons sufficient to outweigh the public’s interest in disclosure and justify sealing court records exist when such court files might have become a vehicle for improper purposes, such as the use of records to gratify private spite, promote public scandal, circulate libelous statements, or release trade secrets.” Id. at 1179 (citation and internal quotation marks omitted). The court must “balance the competing interests of the public and the party who seeks to keep certain judicial records secret. After considering these interests, if the court decides to seal certain judicial records, it must base its decision on a compelling reason and articulate the factual basis for its ruling, without relying on hypothesis or conjecture.” Id. (citations, brackets, and internal quotation marks omitted). Civil Local Rule 79-5 supplements the “compelling reasons” standard. The party seeking to file under seal must “establish[ ] that the document, or portions thereof, are privileged, protectable as a trade secret or otherwise entitled to protection under the law. . . . The request must be narrowly tailored to seek sealing only of sealable material . . . .” Civil L.R. 79-5(b). Finally, records attached to motions that are only “tangentially related to the merits of a case” are not subject to the strong presumption of access. Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1101 (9th Cir. 2016). Accordingly, parties moving to seal such records must meet the lower “good cause” standard of Rule 26(c) of the Federal Rules of Civil Procedure. Id. at 1097. The “good cause” standard requires a “particularized showing” that “specific prejudice or harm will result” if the information is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210-11 (9th Cir. 2002) (citation and internal quotation marks omitted); see also Fed. R. Civ. P. 26(c). II. DISCUSSION Here, the Court applies the “compelling reasons” standard because the documents at issue 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 216 Filed 11/26/16 Page 3 of 4 have more than a tangential relation to the merits of the case. See Ctr. for Auto Safety, 809 F.3d at 1101. The Court finds that the requested redactions in the jointly prepared chart at Dkt. No. 212-1 all satisfy the “compelling reasons” standard, on the grounds listed in column 6 (“Asserted Grounds for Sealing”)—except for those listed in the chart below. Document Ortiz Decl., Ex. A (Bentley Dep.) Ortiz Decl., Ex. B (Chen Dep.) Ortiz Decl., Ex. C (Filipiak Dep.) Ortiz Decl., Ex. D (Friedman Dep.) Ortiz Decl., Ex. E (Hause Dep.) Ortiz Decl., Ex. F (Leever Dep.) Ortiz Decl., Ex. G (Patel Dep.) Ortiz Decl., Ex. H (Poling-Hiraldo Dep.) Ortiz Decl., Ex. P (Dep. Ex. 319) Ortiz Decl., Ex. T (Dep. Ex. 706) Ortiz Decl., Ex. U (Dep. Ex. 720) FTC’s Motion for Partial Summary Judgment Sandrock Decl., Ex. E (Friedman Dep.) Sandrock Decl., Ex. F (Stinson Dep.) Dkt. No. (Unredacted Version) 187-15 187-16 187-17 187-18 Jt. Chart Pg. No. (Dkt. No. 212-1) 2 3 4 5 187-19 187-20 187-21 187-22 5 7 8 8 177-34 177-40 177-42 177-4, 187-14 188-14, 197- 20 188-16 11 11 11 11-12 13 13-14 Friedman Decl. (Oct. 6, 2015) DIRECTV’s Opposition to FTC’s Motion for Partial Summary Judgment Ortiz II Decl., Ex. MM (Hause Dep.) Ortiz II Decl., Ex. QQ (May 13, 2010 CID Letter) Ortiz II Decl., Ex. RR (June 9, 2010 CID Letter) Ortiz II Decl., Ex. SS (July 2, 2010 CID Letter) Ortiz II Decl., Ex. UU (April 6, 2011 CID Letter) FTC’s Reply in Support of Motion for Partial Summary Judgment 188-27 188-4 197-15 195-11 195-13 195-15 195-19 197-12 15 15 17 18 18 18 18 19 Portions of Document for Which Sealing is DENIED 136:13-22 69:15-20 81:6-7 67:11-68:9, 69:11-16 86:8-24, 100:17-104:3, 183:14-184:6 41:2-9 143:1-144:15, 189:1-191:14 205:1-18, 206:6-14 57:1-60-11, 83:2-84:25 Entirety Entirety Entirety 1:23-25, 13:7-18 253:9-254:15 193:1-195:4, 198:20-200:25, 205:1- 206:5, 206:16-209:18, 210:2-211:22, 212:8-9, 212:20-25. 2:6-12, 2:25-3:13 17:16-18 117:3 Entirety Entirety 1, 4-8 (from subsection “8.” onward) 1 7:4-7 Sealing is inappropriate for the portions of the documents listed above, but is appropriate for all other portions of documents listed in the jointly prepared chart at Dkt. No. 212-1. III. CONCLUSION For the foregoing reasons, the Court DENIES the motions to seal with respect to the 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 216 Filed 11/26/16 Page 4 of 4 portions of documents listed in the chart above. The Court GRANTS the motions to seal with respect to all the other portions of documents listed in the jointly prepared chart at Dkt. No. 212-1. Pursuant to Civil Local Rule 79-5(f)(3), the parties must, within 7 days, file revised redacted versions of the documents listed in the chart above (except for the five documents for which the motions to seal were denied as to the entire document). IT IS SO ORDERED. Dated: 11/26/2016 ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-11-26	217	ORDER by Judge Haywood S. Gilliam, Jr., GRANTING IN PART and DENYING IN PART 176 the Federal Trade Commission's Motion for Partial Summary Judgment. (hsglc3S, COURT STAFF) (Filed on 11/26/2016) (Entered: 11/28/2016)	Case 3:15-cv-01129-HSG Document 217 Filed 11/26/16 Page 1 of 6 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, INC., et al., Defendants. Case No. 15-cv-01129-HSG ORDER GRANTING IN PART AND DENYING IN PART THE FEDERAL TRADE COMMISSION’S MOTION FOR PARTIAL SUMMARY JUDGMENT Re: Dkt. No. 176 On September 22, 2016, the Federal Trade Commission (“FTC”) filed a motion for partial summary judgment. See Dkt. No. 176 (original motion); Dkt. No. 187-3 (redacted motion). Specifically, the FTC moved for an order granting summary judgment in its favor on Counts III and IV of the complaint and on DIRECTV’s affirmative defenses of estoppel, laches, and waiver. Dkt. No. 187-3 at 1. The Court finds that this matter is appropriate for disposition without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). After careful consideration of the arguments made by the parties, the Court GRANTS summary judgment in the FTC’s favor on DIRECTV’s affirmative defense of waiver, and DENIES summary judgment on Counts III and IV of the complaint and on DIRECTV’s affirmative defenses of estoppel and laches.1 I. LEGAL STANDARD Summary judgment is proper when a “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute is “genuine” if there is evidence in the record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Id. 1 On November 23, 2016, the Court issued an order ruling on the motion. This order briefly sets out the Court’s reasoning for that ruling. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 217 Filed 11/26/16 Page 2 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 But in deciding if a dispute is genuine, the court must view the inferences reasonably drawn from the materials in the record in the light most favorable to the nonmoving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986), and “may not weigh the evidence or make credibility determinations,” Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997), overruled on other grounds by Shakur v. Schriro, 514 F.3d 878, 884-85 (9th Cir. 2008). “Summary judgment is improper where divergent ultimate inferences may reasonably be drawn from the undisputed facts.” Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014) (internal quotation marks omitted); see also Int’l Union of Bricklayers & Allied Craftsman Local Union No. 20, AFL-CIO v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985) (“Even where the basic facts are stipulated, if the parties dispute what inferences should be drawn from them, summary judgment is improper.”). If a court finds that there is no genuine dispute of material fact as to only a single claim or defense or as to part of a claim or defense, it may enter partial summary judgment. See Fed. R. Civ. P. 56(a). With respect to summary judgment procedure, the moving party always bears both the ultimate burden of persuasion and the initial burden of producing those portions of the pleadings, discovery, and affidavits that show the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving party will not bear the burden of proof on an issue at trial, it “must either produce evidence negating an essential element of the nonmoving party’s claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). Where the moving party will bear the burden of proof on an issue at trial, it must also show that any reasonable trier of fact would have to find in its favor. See Celotex, 477 U.S. at 325. In either case, the movant “may not require the nonmoving party to produce evidence supporting its claim or defense simply by saying that the nonmoving party has no such evidence.” Nissan Fire, 210 F.3d at 1105. “If a moving party fails to carry its initial burden of production, the nonmoving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion at trial.” Id. at 1102-03. 2 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 217 Filed 11/26/16 Page 3 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “If, however, a moving party carries its burden of production, the nonmoving party must produce evidence to support its claim or defense.” Id. at 1103. In doing so, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec., 475 U.S. at 586. A nonmoving party must also “identify with reasonable particularity the evidence that precludes summary judgment,” because the duty of the courts is not to “scour the record in search of a genuine issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (quoting Richards v. Combined Ins. Co. of Am., 55 F.3d 247, 251 (7th Cir. 1995)). If a nonmoving party fails to produce evidence that supports its claim or defense, courts must enter summary judgment in favor of the moving party. Celotex, 477 U.S. at 323. II. COUNTS III-IV The FTC seeks summary judgment on two claims under provisions of the Restore Online Shoppers Confidence Act (“ROSCA”) that relate to the online marketing of negative option features.2 Dkt. No. 187-3 at 1; see also 15 U.S.C. § 8403(1) (2012) (requiring clear and conspicuous disclosure of transaction’s material terms); § 8403(2) (requiring customer’s express informed consent before billing). The Court recently denied DIRECTV’s motion for summary judgment on these same claims. See Dkt. No. 178 (FTC v. Directv, Inc., No. 15-cv-01229-HSG, 2016 WL 5339797 (N.D. Cal. Sept. 23, 2016)). In its prior order, the Court held that DIRECTV had not established the absence of a genuine dispute of material fact because the parties “vigorously disputed” what inferences should be drawn from DIRECTV’s website. Id. at 3 (citing Fresno Motors, 771 F.3d at 1125; Int’l Union of Bricklayers, 752 F.2d at 1405 (9th Cir. 1985)). The briefing and evidence submitted on the present motion have not changed the Court’s view that divergent inferences reasonably can be drawn from the website. 3 Therefore, summary 2 “Negative option feature means, in an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(w) (2016). 3 The FTC misses the point by arguing that the parties agree there is no genuine dispute of material fact. See Dkt. No. 187-3 at 11. As the Ninth Circuit has held, the litigants’ views cannot replace the Court’s judgment. See United States v. Fred A. Arnold, Inc., 573 F.2d 605, 606 (9th Cir. 1978) (“It is well-settled in this circuit and others that the filing of cross-motions for summary judgment, both parties asserting that there are no uncontested issues of material fact, does not vitiate the court’s responsibility to determine whether disputed issues of material fact are present. 3 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 217 Filed 11/26/16 Page 4 of 6 judgment is not warranted on the FTC’s ROSCA claims. See Fresno Motors, 771 F.3d at 1125; Int’l Union of Bricklayers, 752 F.2d at 1405. III. AFFIRMATIVE DEFENSES The FTC has also moved for summary judgment on DIRECTV’s affirmative defenses of estoppel, laches, and waiver. Dkt. No. 187-3 at 1. The Court finds that summary judgment is warranted as to waiver, but not estoppel or laches. A. Estoppel An essential element of estoppel, when pled against the government, is a showing that the government engaged in “affirmative misconduct going beyond mere negligence.” See Baccei v. United States, 632 F.3d 1140, 1147 (9th Cir. 2011). “Affirmative misconduct on the part of the government requires an affirmative misrepresentation or affirmative concealment of a material fact, such as a deliberate lie or a pattern of false promises.” Id. (citation omitted). Here, there is a genuine dispute between the parties regarding the inferences that should be drawn from the facts that are material to whether the FTC engaged in affirmative misconduct. For example, the parties make divergent arguments about what was reasonably meant by statements the FTC made to DIRECTV regarding its investigation. Compare Dkt. No. 188-3 at 21 (arguing that the FTC’s statement about “other issues” meant it was not investigating issues covered by the multistate settlements) with Dkt. No. 187-3 at 22 (arguing that DIRECTV understood that the FTC’s investigation included issues covered by the multistate settlements, as well as broader issues). Given that divergent reasonable inferences can be drawn regarding the facts that are material to an essential element of DIRECTV’s estoppel defense, summary judgment is not warranted. See Fresno Motors, 771 F.3d at 1125; Int’l Union of Bricklayers, 752 F.2d at 1405. B. Laches For the reasons set out in the Court’s order on the FTC’s motion to strike DIRECTV’s A summary judgment cannot be granted if a genuine issue as to any material fact exists.”) (citing authorities). Here, as explained in the Court’s prior order, the parties comprehensively dispute what inferences properly may be drawn regarding the website’s contents. Making all reasonable inferences in nonmovant DIRECTV’s favor, as it must at this stage, the Court finds that the FTC is not entitled to summary judgment. 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 217 Filed 11/26/16 Page 5 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 affirmative defenses, the Court holds that, for the defense of laches to apply to the government, the defendant must also show affirmative misconduct. See Dkt. No. 88 at 4-5 (FTC v. Directv, Inc., No. 15-CV-01129-HSG, 2015 WL 9268119, at 3 (N.D. Cal. Dec. 21, 2015)) (discussing United States v. Ruby Co. 588 F.2d 697, 705 n.10 (9th Cir. 1978); FTC v. Hang-Ups Art Enterprises, Inc., No. 95-cv-0027-RMT-JGX, 1995 WL 914179, at 4 (C.D. Cal. Sept. 27, 1995)); see also United States v. Becker, No. 86 CIV. 3946 (JFK), 1989 WL 34048, at 4 (S.D.N.Y. Apr. 4, 1989) (“It is well-established that the doctrines of estoppel or laches are not applicable to the United States Government absent a showing of ‘affirmative misconduct’ by the Government.”). Under the same reasoning the Court has applied in evaluating the estoppel defense, summary judgment is also unwarranted as to DIRECTV’s laches defense C. Waiver “Waiver is the intentional relinquishment of a known right.” Alocozy v. U.S. Citizenship & Immigration Servs., 704 F.3d 795, 797 (9th Cir. 2012) (internal quotation marks omitted). DIRECTV has conceded that this defense requires showing that waiver was “unmistakable.” See FTC v. Directv, 2015 WL 9268119, at 4. In opposition to the FTC’s motion, DIRECTV argues that the FTC “waived its right to initiate a claim when it unmistakably relinquished its right to join the MSA.” Dkt. No. 188-3 at 24. DIRECTV bases this defense on evidence that FTC informed DIRECTV that it had “other issues.” Dkt. No. 188-3 at 25 (citing record). The parties have no genuine dispute regarding the underlying facts relevant to assessing waiver. Compare Dkt. No. 187-3 at 24-25 with Dkt. No. 188-3 at 24-25. And viewing the evidence in the light most favorable to DIRECTV, and drawing all justifiable inferences in its favor, the Court finds that this defense fails as a matter of law. The FTC’s statement that it had “other issues,” and its decision not to join the MSA, are insufficient to show that the FTC both intentionally and unmistakably waived its right to bring this enforcement action. Accordingly, DIRECTV would not be able to carry its burden of persuasion regarding the waiver defense at trial, and summary judgment is properly granted in the FTC’s favor as to that defense. See Alocozy, 704 F.3d at 797 (“intentional” requirement); FTC v. Directv, 2015 WL 9268119, at 4 (“unmistakable” requirement); Nissan Fire, 210 F.3d at 1102 (burden of persuasion). 5 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N Case 3:15-cv-01129-HSG Document 217 Filed 11/26/16 Page 6 of 6 IV. CONCLUSION For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART the FTC’s motion for partial summary judgment. IT IS SO ORDERED. Dated: 11/26/2016. ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 t r u o C t c i r t s i D s e t a t S d e t i n U a i n r o f i l a C f o t c i r t s i D n r e h t r o N
2016-11-28	218	Minute Entry for proceedings held before Chief Magistrate Judge Joseph C. Spero: Settlement Conference held on 11/28/2016. Case did not settle.FTR Time Not Reported. (klhS, COURT STAFF) (Date Filed: 11/28/2016) (Entered: 11/29/2016)	Case 3:15-cv-01129-HSG Document 218 Filed 11/28/16 Page 1 of 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CHIEF MAGISTRATE JUDGE JOSEPH C. SPERO CIVIL MINUTES Case No.: 15-cv-01129-HSG (JCS) Case Name: Federal Trade Commission v. DIRECTV, Inc. Date: November 28, 2016 Time: 5 H Deputy Clerk: Karen Hom Court Reporter: Not Reported Attorney for Plaintiff: Eric Edmondson, Thomas Dahdouh, Kerry O'Brien, Mary Engle & Jacob Snow Attorney for Defendant: Linda Goldstein, Pete Marketos, Jeff Tillotson, Chad Hammel PROCEEDINGS Settlement Conference - Held ( ) Case Settled ( ) Case Settled ( ) Case Did Not Settle ( ) Partial Settlement Further Settlement Conference (X) Case Did Not Settle ( ) Partial Settlement Telephonic Scheduling/Settlement Conference Discovery Conference – Lead Trial Counsel Meet and Confer (X) ( ) ( ) ( ) ( ) ( ) Notes: Parties are invited to contact the Court if they would like to schedule a further settlement conference. cc: Status Conference Other
2016-11-30	219	Administrative Motion to File Under Seal Certain Exhibits in Support of Opposition to FTC's Motion Under Rule 37(e)(1) filed by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 8, # 3 Proposed Order)(Hummel, Chad) (Filed on 11/30/2016) (Entered: 11/30/2016)	Case 3:15-cv-01129-HSG Document 219 Filed 11/30/16 Page 1 of 3 Jeffrey M. Tillotson, SBN 139372 [email protected] TILLOTSON LAW 750 N. St. Paul Street, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. Referral to Hon. Maria-Elena James DIRECTV AND DIRECTV, LLC’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN EXHIBITS ACCOMPANYING DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) TO BE FILED UNDER SEAL [[Proposed] Order Filed Concurrently] DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN EXHIBITS TO BE FILED UNDER SEAL 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 219 Filed 11/30/16 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to Civil L.R. 79-5 and the Protective Order entered in this case on October 15, 2015 (Dkt. 54), Defendants DIRECTV and DIRECTV, LLC (together, “DIRECTV”) request that this Court enter an order allowing Exhibits 1 and 8 to the Declaration of Chad Hummel in Support of DIRECTV’s Opposition to the FTC’s Motion for Sanctions Under Rule 37(e)(1) to be filed under seal. These exhibits consist of excerpts of the Expert Report of Professor Jerry Wind (“Wind Report”) and a confidential consumer survey therein (“Convergys Survey”), both of which this Court has previously allowed DIRECTV to file under seal in their entirety, as Dkt. 189-14, in connection with DIRECTV’s Opposition to the FTC’s Motion for Partial Summary Judgment. This Administrative Motion is accompanied by a Proposed Order and incorporates by reference (i) the Declaration of Christopher Murphy in Support of DIRECTV’s prior administrative motion to seal the same material (Dkt 188-1); and (ii) this Court’s prior Order granting that motion as to the Wind Report and Convergys Survey (Dkt. 216). The legal standard for sealing documents accompanying a non-dispositive motion is that the requesting party must show “good cause” to submit the documents under seal. Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1180 (9th Cir. 2006). Discovery motions, such as a motion for sanctions under Rule 37, are considered a non-dispositive matter. Apple Inc. v. Samsung Elecs. Co., No 11-CV-01846 LHK PSG, 2012 WL 4120541, at 1-2 (N.D. Cal. Sept. 18, 2012); On Command Video Corp. v. LodgeNet Entm't Corp., 976 F. Supp. 917, 920 (N.D. Cal. 1997). Thus, a party moving to seal documents attached to a Rule 37 sanctions motion need only meet the lower “good cause” standard. Finjan, Inc. v. Proofpoint, Inc, No. 13-CV-05808-HSG, 2015 WL 9023164, at 1 (N.D. Cal. Dec. 16, 2015) (describing the higher “compelling reasons” standard for dispositive motions and the lower “good cause” standard for non-dispositive motions). Good cause exists to protect DIRECTV’s confidential and sensitive information in the excerpted portions of the Wind Report and Convergys Survey. Indeed, on November 26, 2016, this Court granted DIRECTV’s prior motion to seal the entire Wind Report and Convergys Survey (not just the excepted portions requested in this motion) under the higher “compelling reasons” standard. (See Dkt. 216 at 2-3 (granting request to seal Wind Report and Convergys Survey in their entirety, as summarized in Dkt. 212-1 at 15).) The FTC has never opposed DIRECTV’s request to seal these DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN EXHIBITS TO BE FILED UNDER SEAL 1 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 219 Filed 11/30/16 Page 3 of 3 documents. (Dkt. 212-1 at 15). As explained in the Declaration of Christopher Murphy in Support of DIRECTV’s prior administrative motion to seal the same material (Dkt 188-1), the excerpted portions of the Wind Report and Convergys Survey provide empirical evidence of actual DIRECTV customers demonstrating understanding of DIRECTV’s conditions of purchase and include sensitive information regarding customer feedback and DIRECTV’s business strategies and operations (Id. ¶ 3(j)). These materials are not available to all employees or the public, and DIRECTV would be at a competitive disadvantage if competitors were to have access to them because DIRECTV does not have access to similar materials of its competitors. (Id. ¶¶ 5-6.) DIRECTV therefore respectfully requests that the materials set forth in Table 1 below be kept sealed (in accordance with this Court’s prior Order). Table 1 What Defendants Seek to Keep Under Seal (Page: Line, or paragraph) Entire Document Entire Document Document Exhibit 1 to the Hummel Declaration Exhibit 8 to the Hummel Declaration Dated: November 30, 2016 SIDLEY AUSTIN LLP By /s/ Chad S. Hummel Chad S. Hummel Attorney for Defendants DIRECTV and DIRECTV, LLC DIRECTV’S ADMINISTRATIVE MOTION TO ALLOW CERTAIN EXHIBITS TO BE FILED UNDER SEAL 2 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
2016-11-30	220	OPPOSITION/RESPONSE (re 207 MOTION for Sanctions Under Rule 37(e)(1) ) filed byDIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Declaration, # 2 Exhibit 1, # 3 Exhibit 2, # 4 Exhibit 3, # 5 Exhibit 4, # 6 Exhibit 4, # 7 Exhibit 6, # 8 Exhibit 7, # 9 Exhibit 8, # 10 Exhibit 9, # 11 Exhibit 10, # 12 Exhibit 11, # 13 Exhibit 12, # 14 Exhibit 13, # 15 Exhibit 14, # 16 Declaration)(Hummel, Chad) (Filed on 11/30/2016) (Entered: 11/30/2016)	Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 1 of 19 Jeff Tillotson, SBN 139372 [email protected] Tillotson Law 750 North Saint Paul, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415) 772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. DIRECTV’S OPPOSITION TO FEDERAL TRADE COMMISSION’S MOTION FOR SANCTIONS UNDER RULE 37(e)(1) Hon. Maria-Elena James, Referral 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 2 of 19 TABLE OF CONTENTS Page I. FACTUAL BACKGROUND REGARDING THE DIRECTV WEBSITE ....................... 2 A. B. C. Beginning in 2010, DIRECTV Tells the FTC that It Cannot Preserve Interactive Iterations of the Website. ...................................................................... 2 After Substantial Additional Discovery and Negotiation, the FTC Instead Demands Source Code and Related Web Assets, and DIRECTV Complies. ................................................................................................................ 3 DIRECTV Produces All Information and Assets Relating to the Convergys Study That the FTC Says It Needs to Analyze and Recreate the Study. ...................................................................................................................... 5 II. III. LEGAL STANDARD ......................................................................................................... 7 ARGUMENT ...................................................................................................................... 7 A. Sanctions In Connection With The Website Are Unfounded. ................................ 7 1. 2. 3. The FTC Knew It Was Not Feasible to Preserve the Entire Website and Has Not Shown Additional Reasonable Steps DIRECTV Should Have Taken (Court-Ordered Factors 1 and 2). ............................... 7 The FTC Has Failed to Show That the Information It Has (Screenshots, Source Code, Web Assets) Is Not Sufficient Or That It Suffered Any Prejudice (Court-Ordered Factors 3 and 4)....................... 8 Even If the FTC Were To Prevail On Spoliation and Prejudice, Exclusion of the Convergys Study Is Not the Appropriate Remedial Measure (Court-Ordered Factor 5). .......................................... 10 B. DIRECTV Has Produced All Relevant A/B Testing ............................................ 11 1. 2. 3. The FTC Stipulated that All Disputes Concerning A/B Testing Were Resolved (Court-Ordered Factor 1). ................................................ 11 DIRECTV Produced All Relevant A/B Tests and Never Conducted the Type of A/B Tests Which the FTC Claims DIRECTV Did Not Produce (Court-Ordered Factors 2 and 3). ................................................ 12 There Is No Prejudice to The FTC (Court-Ordered Factors 4 and 5). .............................................................................................................. 12 C. The FTC’s Motion Should Also Be Denied With Respect To Website Analytics. .............................................................................................................. 13 1. 2. The FTC Stipulated that All Disputes Concerning Web Analytics Were Resolved (Court-Ordered Factor 1). ................................................ 13 The FTC Inexcusably Ignored DIRECTV’s Invitations to Inspect Web Analytics Starting in 2014 (Court-Ordered Factors 1-3).................. 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG i Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 3 of 19 3. There is No Prejudice (Court-Ordered Factors 4 and 5). .......................... 15 IV. CONCLUSION ................................................................................................................. 15 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 4 of 19 TABLE OF AUTHORITIES Page(s) Cases De Los Santos v. Kroger Texas, LP, No. 14-CV-3086, 2015 WL 3504878 (N.D. Tex. June 3, 2015) ................................................... 8 Internmatch, Inc. v. Nxtbigthing, LLC, Case No. 14-cv-05438-JST, 2016 WL 491483 (N.D. Cal. Feb. 8, 2016) .................................... 13 Matthew Enterprise, Inc. v. Chrysler Group LLC, No. 13-CV-04236-BLG, 2016 WL 2957133 (N.D. Cal. May 23, 2016)....................................... 7 Unigard Sec. Ins. Co. v. Lakewood Eng’g & Mfg. Corp., 982 F.2d 363 (9th Cir. 1992) ....................................................................................................... 13 Other Authorities Fed. R. Civ. Proc. 37(e)(2) ................................................................................................................... 7 N.D. Cal. Guidelines for the Disc. of Elec. Stored Info. § 2.01(a)-(b) and (d) .................................... 8 Rule 26 ................................................................................................................................................. 2 Rule 37 ............................................................................................................................ 1, 7, 10, 12-13 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 5 of 19 The FTC’s Motion for Sanctions under Rule 37(e)(1) is based on a blatant mischaracterization of the record and should be summarily denied. Not only has there been no spoliation of discoverable evidence or any misconduct by DIRECTV of any kind, but the remedy proposed in this Motion is transparently tactical – designed improperly to exclude critical proof in the case (the consumer survey conducted by Dr. Yoram Wind – the “Convergys Study”) and not to cure any alleged prejudice to the FTC. The FTC has known for years that DIRECTV cannot preserve any one iteration of its fully functional and dynamic website, much less all of the tens of thousands of different iterations over time. For that reason, the FTC long ago agreed and accepted that DIRECTV could comply with its discovery obligations by producing screenshots of its website and all the historical website source code and collateral advertising assets (demanded by the FTC so that it could generate historic iterations of the website). The FTC’s contention that DIRECTV failed to preserve and produce necessary website elements (including source code, advertising collateral, screen captures, and advertising disclosures) relating to Dr. Wind’s survey1 is false; these documents were produced months ago. Moreover, the FTC presents no justification for exclusion – it cannot explain why the website data it has is insufficient or why an appropriate path forward is to impose an overly-broad, case-altering sanction that throws out the entire Wind survey. The FTC’s true motivation is to exclude critical evidence. Dr. Wind’s survey of thousands of DIRECTV customers confirms that DIRECTV’s customers are not deceived by DIRECTV’s advertising, contrary to what the FTC alleges, but rather overwhelmingly know the conditions of purchase at the time they subscribe. This finding undermines the FTC’s entire case. However, the instant Motion (entirely lacking in factual support) is not an appropriate vehicle for challenging the reliability of the survey. With respect to data relating to consumer usage and behavior on directv.com (so-called “web analytics” data), starting in 2014 and repeatedly thereafter, DIRECTV offered to allow the FTC to inspect all web analytics data and to run any relevant web analytics reports. Despite DIRECTV’s repeated oral and written entreaties for the FTC to list the types of web analytics data it wanted, the 1 DIRECTV served the Wind Report on September 16, 2016, and filed it as Dkt. 189-14, on October 6, 2016, in support of its opposition to the FTC’s motion for partial summary judgment. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 1 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 6 of 19 FTC did not do anything in this regard until after the close of fact discovery and after it represented to this Court that all disputes relating to this issue were resolved. Without good cause, the FTC has now trumped up this disingenuous Motion by complaining that evidence no longer exists, when, in fact, DIRECTV has produced all relevant web analytics data and A/B testing to the FTC, consistent with its Rule 26 obligations. The FTC fails to identify any specific item or even category of website analytics data that it now claims to need that it does not have or could not have obtained during the fact discovery period. The Motion should be denied. To the extent the Court is inclined to grant any relief, DIRECTV respectfully requests a hearing respecting the appropriate scope of such relief. I. FACTUAL BACKGROUND REGARDING THE DIRECTV WEBSITE2 A. Beginning in 2010, DIRECTV Tells the FTC that It Cannot Preserve Interactive Iterations of the Website. Since the inception of the FTC’s investigation in 2010, DIRECTV repeatedly informed the FTC that it was technologically infeasible to maintain or “produce” historic, interactive iterations of its website. Contrary to the FTC’s misleading and overly simplistic argument, DIRECTV’s live, interactive website is not a single file capable of preservation and production. Rather, it is a dynamic, ever-changing end product of complex code that instructs the website to draw from multiple assets housed in several content management and other systems, using multiple programs, systems, and resources to function. It simply cannot be preserved. (Wells Decl. ¶¶ 4-6)(describing in detail the challenges of replicating the website.) Indeed, to replicate and separately maintain a historic iteration of the live website would have taken months and required DIRECTV to spend over $1 million dollars to build and maintain an entirely new system, including obtaining all the same hardware, software, applications, and licenses that DIRECTV uses for the live site to create, house, and maintain the replica site. (Wells Decl. ¶¶ 6-11.) Accordingly, when responding to the FTC’s Civil Investigatory Demands (“CIDs”) served prior to this litigation, beginning as early as June 2010, DIRECTV (1) advised the FTC that it had not maintained copies of the thousands of iterations of its website, and (2) explained that it was not technologically possible to do so. (Hummel Decl. ¶ 2.) Subsequently, there were numerous 2 The factual background regarding the A/B testing and Web Analytics is in the Argument section. DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 7 of 19 conversations between the FTC and DIRECTV’s counsel regarding these limitations, and, as a compromise, in August 2013, DIRECTV advised that it would produce monthly screenshots of the website. (Id., ¶ 3.) On February 14, 2014, DIRECTV described its then present understanding of the issues concerning preserving copies of the website: DIRECTV'S website does not consist of static pages that are saved in some central location. Rather, the website runs from a dynamic database that consists of core code. Java server pages (or JSPs) do not exist in a vacuum, but rather are presented to a consumer pursuant to a determined set of rules. In other words, the pages with which a consumer is presented when visiting www.directv.com are determined by (1) the coded presentment rules; and (2) the information provided by the consumer (e.g., zip code, login credentials if account holder, etc.). The pages are modular, and parts of each page will or will not be displayed depending upon the presentment rules and the information provided by the consumer. . . . Given this dynamic system, the only way to capture a web page that would have been presented to a particular consumer on a particular day would be to have captured and saved screenshots. (Id., Ex. 2 at 2.) DIRECTV nevertheless took reasonable steps to preserve changes to the website. From 2010 to the filing of this action in 2015, DIRECTV preserved and produced documents depicting the website purchase flow at issue (“webflow”), including emails and attachments and launch notices depicting changes to the website. (Id. ¶ 4.) Also, beginning in 2013, DIRECTV prepared, on a monthly basis, screenshots of the webflow and produced those to the FTC. (Id.) In the five-year CID period, the FTC never sought to enforce or seek any relief under the CID’s to address DIRECTV’s preservation and production efforts relating to the website.3 (Id. ¶ 5.) B. After Substantial Additional Discovery and Negotiation, the FTC Instead Demands Source Code and Related Web Assets, and DIRECTV Complies. In June 2015, despite knowing it was not possible, the FTC again requested historical copies of the website. Again, DIRECTV explained to the FTC, in an August 18, 2015, phone call, that it was technologically infeasible to preserve and produce every iteration of its live, interactive website, but that it would continue to preserve and produce monthly screenshots of the webflow (which it did through the close of discovery). (Id. ¶ 6.) DIRECTV confirmed this in an October 2, 2015 letter: “live or recreated versions of DIRECTV’s website do not exist” and DIRECTV has “made extensive 3 The FTC itself also made and maintained copies of the website, including screenshots, and videos of FTC staff proceeding through the webflow. (See, e.g., Dkt. 176 at 4 n.1 (discussing “video recordings taken by FTC investigators of DIRECTV’s live site in August 2015”).) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 3 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 8 of 19 productions to the FTC of the content of historic DIRECTV website flows … [that] have provided full and complete information concerning the content and manner of disclosures that are at issue in this case[.]” (Snow Decl., Ex. B. at 4.) Indeed, DIRECTV has produced tens of thousands of pages of screenshots and other documents depicting the content of the website and manner of the disclosures, historically. (Hummel Decl. ¶ 7.) Accordingly, the FTC abandoned its requests for interactive, historical iterations of the website, and, instead, in early October 2015, shifted to pursuing the website’s “source code and supporting material to provide the ability to reconstruct the directv.com website.” (Snow Decl., Ex. B at 5.) In an October 6, 2015 email, the FTC stated: “Our request remains straightforward: DIRECTV must provide either historical versions of its website or the materials and information necessary to reconstruct historical versions.” (Hummel Decl., Ex. 3 at 1) (emphasis added). That is, the FTC represented that production of source code would be a fully acceptable substitute for historical iterations of the website. In response, on October 12, 2015, DIRECTV wrote to the FTC: [W]e have confirmed (again) that DIRECTV does not possess historical operative / navigable websites, but does have some legacy source [code] and other web assets. We are in the process of determining what can be produced.… I want to reiterate that the FTC has been investigating this matter for years, has had access to operative web flows for years, has known the website content for years, and DIRECTV has produced reams of data and website captures from which the FTC can investigate (and presumably should have already thoroughly investigated) what it claims now to need. (Snow Decl., Ex. B at 2-3.) On October 23, 2015, DIRECTV updated the FTC that it had “devoted substantial resources to investigating” the issue; that “directv.com . . . has not been architected to support reconstruction of historic sites (or to maintain them)”; that it had “verified that all source code exists going back to 2007, along with the change notices and design documents”; and that DIRECTV was “still verifying how far historical collateral goes back….” (Id., Ex. D.) To provide the FTC with a complete understanding of what source code and other information were available, DIRECTV then provided two 30(b)(6) witnesses to testify regarding “whether the source code for the website exists, but also, whether other assets, including images, texts, or data exist that would have been delivered to the user as part of the website operating in the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 4 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 9 of 19 past.” (Hummel Decl. ¶ 9.) 4 Further accommodating the FTC, and making sure that the FTC had the information and data on the website it needed, on December 16, 2015, DIRECTV permitted the FTC and its expert, Dr. Nathaniel Good,5 to review and inspect DIRECTV’s source code and content management systems (ATG and TeamSite) in-person to evaluate and understand how the website functions and what data is capable of preservation. (Id. ¶ 11.) Using information from the depositions and on-site review, on January 8, 2016, the FTC served further document requests seeking production of all materials in and relating to DIRECTV’s source-code repository, DIRECTV’s content-management system (ATG), and DIRECTV’s asset storage system (TeamSite). (Id., Ex. 4.) After DIRECTV objected to the scope of these requests, the FTC served a letter brief on February 19, 2016, to move to compel the requested source code and related assets, stating that the “source code (in combination with related assets) is the most accurate evidence of the ‘operation of any aspects or elements’ of the advertising that the FTC claims violates Section 5 and ROSCA” and “will allow the FTC to recreate reasonably accurate, interactive versions of the pages that appeared live on DIRECTV’s website.” (Id., Ex. 5.) Thereafter, on March 7, 2016, DIRECTV agreed “to produce the website source code, TeamSite and ATG assets to the FTC.” (See Snow Decl. Ex. C at 2.) The FTC confirmed: “[w]e accept DIRECTV’s agreement to produce the source code.” (Id. at 1.) On March 24, 2016, DIRECTV produced all historic source code and related assets to the FTC. (Hummel Decl. ¶ 14.) Of significance, this production included the data reflecting the webpages used in the Convergys Study and the A/B testing the FTC claims DIRECTV did not retain. (Id.) C. DIRECTV Produces All Information and Assets Relating to the Convergys Study That the FTC Says It Needs to Analyze and Recreate the Study. The parties initially exchanged expert reports on September 16, 2016. Incorporated into Dr. Wind’s report were the results of a consumer survey, the Convergys Study. DIRECTV provided the 4 The deponents were Douglas Wells, DIRECTV’s Senior Director of Dotcom Product Development, to discuss the website function and reconstruction, and Liz Poling-Hiraldo, DIRECTV’s former Director of Product Management and Strategy, Digital Media Group, to discuss the website content updates and preservation. (Hummel Decl. ¶ 9.) 5 Dr. Good created a simulated version of a 2013 iteration of the DIRECTV website and has been disclosed by the FTC as an expert. (Hummel Decl. ¶ 11.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 5 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 10 of 19 FTC with all necessary information showing how the Study was conducted. The survey asked questions of thousands of DIRECTV’s actual subscribers, a few days after their phone and website purchase and prior to the activation of service, to determine if they were potentially deceived regarding DIRECTV’s conditions of purchase.6 The surveyed customers who signed up by web used either a “Business as Usual” (“BAU”) or a control webflow on which limited modifications were made to the disclosures at issue. DIRECTV provided the FTC with screenshots of the 2015 BAU webflow,7 as well as screenshots showing specifically the limited modifications made to the control webflow for the Convergys Study. (See Hummel Decl. Ex. 1 (Figure 21 of Wind Report) & Ex. 8 at 14-19). The modifications made to the webflow are shown in Figure 21 of the Wind Report, Ex. 1 to the Hummel Declaration. There is no dispute or confusion about these modifications. With this information, together with the source code the FTC said it could use to recreate the website, the FTC could have replicated the Convergys Study. The FTC’s expert, Dr. Good, in fact created a simulation of the 2013 website (thereby confirming the FTC had the ability to do so). Dr. Good had participated in the December 2015 on- site meeting to explore the available source code the FTC required to rebuild the website, but instead used documents and information produced in the action to create a simulation of the website, which the FTC’s expert, Dr. Tülin Erdem, used for her survey. There was nothing to prevent the FTC from doing the same with the 2015 website.8 Instead, the FTC waited over a month after DIRECTV served Dr. Wind’s expert report to concoct a spoliation argument on the eve of trial, some seven 6 The FTC seeks to exclude the entire Convergys Study, but fails to address the fact that the study also surveyed phone subscribers, which are approximately 70% of DIRECTV customers and did not sign up on the web. Thus, on its face, the proposed remedy is fatally overbroad. 7 DIRECTV produced monthly screenshots of its 2015 BAU webflow to the FTC. Indeed, the FTC has stated explicitly in its reply in support of its motion for partial summary judgment that “[t]he August 2015 version of DIRECTV’s website is representative of the website as it has existed since 2014.” (Dkt. 196 at 3:8-9; see also Dkt. 176 at 4:15-5:4 & n.1.) DIRECTV filed screenshots of the August 2015 BAU webflow as Exhibit B to the declaration of Karen Leever in support of its motion for partial summary judgment (Dkt. 53-6). These show the manner and content of each disclosure at issue, which are further discussed in Ms. Leever’s Declaration. (Dkt. 53-3.) 8 Indeed, during the testimony of Karen Leever and a subsequent meet and confer in March 2016, DIRECTV expressly disclosed to the FTC that it had tested a live version of its website in 2015 in connection with expert consultant work. The FTC still chose not to test the 2015 version. (Hummel Decl. Exs. 6 at 100:22-103:13, 111:9-114:12 and 7 at 86:12-88:8, 97:10-20, 100:20-101:6, 102:17- 103:9. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 6 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 11 of 19 months after the dispute regarding the production of interactive versions of DIRECTV’s historical websites had been fully resolved by the production of source code and related web assets. II. LEGAL STANDARD Sanctions under Rule 37(e) should be awarded only if: (1) the “electronically stored information” at issue “should have been preserved in the anticipation or conduct of litigation”; (2) that information “is lost because a party failed to take reasonable steps to preserve it”; and (3) “it cannot be restored or replaced through additional discovery.” Fed. R. Civ. Proc. 37(e). Spoliation does not mean there should be sanctions. Sanctions are only appropriate where there is prejudice. Fed. R. Civ. Proc. 37(e)(1). Even where there is prejudice, sanctions cannot be “greater than necessary” to cure the prejudice. Matthew Enterprise, Inc. v. Chrysler Group LLC, No. 13-CV- 04236-BLG, 2016 WL 2957133, 3-4 (N.D. Cal. May 23, 2016). The FTC does not move under Fed. R. Civ. Proc. 37(e)(2), III. ARGUMENT A. Sanctions In Connection With The Website Are Unfounded. 1. The FTC Knew It Was Not Feasible to Preserve the Entire Website and Has Not Shown Additional Reasonable Steps DIRECTV Should Have Taken (Court-Ordered Factors 1 and 2). First, the FTC does not discuss in any detail “DIRECTV’s disclosures to the FTC about what website data DIRECTV was or was not preserving, and the FTC’s responses thereto,” despite the Court’s direction to do so. (Dkt. 205). Its omission is telling, as DIRECTV made it clear from the start that it could not preserve live iterations of its website. DIRECTV conveyed this to the FTC in numerous meet and confers and informal communications among counsel, during depositions of two DIRECTV witnesses, and during an on-site investigation by the FTC’s website expert. Recognizing reality, the FTC did not claim spoliation but demanded that DIRECTV produce source code and related collateral (which the FTC said it could use to replicate the website). DIRECTV produced the requested information and the FTC later created its version of the 2013 website. Second, through its actions, the FTC expressly relinquished its demand for production of historical versions of the live website. The FTC never challenged DIRECTV’s statement that it cannot preserve the live website. Had the FTC thought DIRECTV’s representations were untrue or 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 7 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 12 of 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 incorrect, such preservation issues should have been raised promptly with the Court and long before now. N.D. Cal. Guidelines for the Disc. of Elec. Stored Info. § 2.01(a)-(b) and (d)). Third, the fact that DIRECTV conducted the Convergys (Wind) surveys on certain iterations of its 2015 website does not change the underlying reality, which the FTC has known for years, that DIRECTV cannot preserve any iteration of the live website. Fourth, despite this Court’s Order, the FTC does not identify any alternative “reasonable steps” DIRECTV could have taken to preserve the interactive website over and above preserving the historic source code, related web assets, and the screenshots of the webflow that DIRECTV produced to the FTC. The FTC does not attach a single declaration by its experts nor cite any evidence at all that the interactive website could practicably have been preserved. While the FTC vaguely suggests that DIRECTV could have “preserved” the interactive website used in the Convergys Study “in the same manner as the FTC preserved the interactive website for its consumer-survey expert, Dr. Tülin Erdem” (Mot. at 5), this is highly misleading. The FTC did not “preserve” the website for Dr. Erdem. Rather, the FTC “re-created it” by instructing its experts to use software to “download the website, including its underlying code,” to recreate and modify certain pages, using screen captures of the website and other publicly available materials as a reference, in order to create its simulated local version of the interactive website. See Dkt. 73 ¶¶ 6- 13; Dkt. 176-14 ¶ 2-3; Dkt. 73 ¶ 9 (“The combination of the WinHttrack download and my screen captures of specific webpages provided me with sufficient code and other information to recreate those portions of the Live Site[.]” (emphasis added)). DIRECTV’s duty to preserve evidence, however, does not include such a duty to create a new, simulated version of the interactive website used in the Convergys Study. See De Los Santos v. Kroger Texas, LP, No. 14-CV-3086, 2015 WL 3504878, at 6 n.4 (N.D. Tex. June 3, 2015) (“[T]he duty to preserve evidence does not include the duty to create evidence.”) (emphasis in original). Thus, the FTC has provided no basis for imposing sanctions and excluding the Wind Report. 2. The FTC Has Failed to Show That the Information It Has (Screenshots, Source Code, Web Assets) Is Not Sufficient Or That It Suffered Any Prejudice (Court-Ordered Factors 3 and 4). Independently, the FTC’s Motion should be denied because the FTC has failed to show that it DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 8 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 13 of 19 has suffered or will suffer any prejudice from DIRECTV’s supposed failure to preserve the interactive website used in the Convergys Study. Instead it repeats nearly verbatim its same three conclusory assertions of prejudice that this Court rejected as insufficiently detailed in its letter brief. Compare Mot. at 5, with Dkt. 203 at 1-2; Dkt. 205 at 2. There is no credible evidence of any prejudice. The FTC first asserts that “neither the FTC nor the Court can view or interact with the website that the survey consumers saw” because “screenshots relied on by Dr. Wind (in Exhibit 3 to the Wind Report) are an inadequate substitute because they are static, from the wrong dates,9 and misleadingly display disclosures typically hidden behind hyperlinks and infohovers.” Mot. at 5. Notably, this is the same prejudice the FTC cited in its February 2016 letter brief to compel DIRECTV to produce the source code and related assets (which was never filed) (see Hummel Decl. Ex. 5 at 3-4), which the FTC accepted as being resolved when DIRECTV agreed to produce the same. (See Snow Decl. Ex. C at 1-2.) Moreover, the FTC does not articulate why it or the Court needs to “interact” with the website to understand how the original and modified disclosures were provided in the Convergys Study and what the study tested (which was subscriber’s perception of the content, not the functionality, of the website). The screenshots produced with the Wind Report provide precisely this information. (See Hummel Decl. Ex. 1 & Ex. 8 at 14-19; see also footnote 7, supra). Tellingly, the FTC does not argue in its Motion that it is unable to understand how the disclosures were made or what the Convergys Study tested from the materials DIRECTV produced. Wind figure 21 (Hummel Decl. Ex. 1) makes this very clear. The FTC’s second and third purported prejudice arguments – that it cannot attempt to replicate Dr. Wind’s survey without the interactive website and that its website usability expert cannot test the interactive website used in the Convergys Study – are equally meritless because, as discussed above, DIRECTV produced nearly seven months ago all historic source code and related web assets (including from the Convergys Study), which the FTC repeatedly represented to DIRECTV it could use to recreate the interactive website (and which represent all the data 9 The FTC confuses which Exhibits to the Wind Report show screenshots of the webflow from the Convergys Study; Exhibits 2 and 6 are the correct exhibits. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 9 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 14 of 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV could technologically preserve relating to its live website). Indeed, the FTC does not dispute in its Motion that it could use these materials to recreate the interactive website. See Mot. at 4 n.2.10 Moreover, the FTC also has screenshots from 2015, as well as other documents depicting the website content, and could use those to recreate the content of a simulated website, which Dr. Good used, among other things, to create the website stimuli for Dr. Erdem’s studies. Likewise, the FTC’s website usability expert could use the screenshots to conduct further usability analyses.11 In response to the Court’s Order, the FTC should have detailed what information it has, what it can do with that information, and what it claims it cannot do with that information. The FTC skips the first two steps, acting as if what it has (the very information it had agreed was sufficient) is worthless. 3. Even If the FTC Were To Prevail On Spoliation and Prejudice, Exclusion of the Convergys Study Is Not the Appropriate Remedial Measure (Court-Ordered Factor 5). Even if the FTC were to prevail on establishing spoliation and prejudice, the next step would be to identify the narrowest sanction to remedy the prejudice. Fed. R. Civ. P. 37(e)(1) (“[U]pon finding prejudice to another party from the loss of the information,” the court “may order measures no greater than necessary to cure the prejudice.”). Here, the FTC’s only purported prejudice (raised in a footnote) is that it supposedly does not have time before trial to recreate the interactive website. See Mot. at 4 n.2. If true, this is not DIRECTV’s fault, as DIRECTV produced all historic source code and web assets in March 2016 and timely served the Wind Report on September 16, 2016. Moreover, the FTC knew in March 2016 that DIRECTV, in connection with expert work in this case, was testing 2015 versions of its website, but the FTC made its own decision to perform its testing on its recreated iteration of the 2013 website. (See footnote 8, supra.)12 Notably, the FTC 10 In footnote 2, the FTC argues that DIRECTV previously claimed that an exact recreation of the website likely cannot be made because of, among other things, the dynamic nature of the site and back end functionality. Notably, the challenges in creating a re-creation are the same as the challenges of preserving the website, including the versions used in Convergys – iterations of the websites are not simple files that can be saved and sent to the FTC. 11 The FTC’s usability expert, Dr. Theo Mandel, analyzed website components easily seen in screenshots – i.e., font size, legalese, too much information, too busy an appearance, etc. While David Franklyn, DIRECTV’s expert in rebuttal to Dr. Mandel, references the benefits of looking at a live site as compared to a simulated site, if available, he further opines that the proper methodology to apply depends on the circumstances. Here, a review of the screenshots is sufficient. 12 Although DIRECTV had no obligation to disclose what testing Dr. Wind was doing prior to expert disclosures, DIRECTV did so. On the other hand, the FTC did not disclose the existence of its DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 10 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 15 of 19 does not say what it could do before trial (or could have done if it started in March or September) to recreate the Convergys Study, and it does not include any declarations stating what its experts could or could not have done in the time they had. If the real issue is not having enough time based on the expert disclosure and trial dates, then the remedy is to extend deadlines, not to exclude a significant amount of DIRECTV’s evidence based on the actions (and inactions) of the FTC. Exclusion of even portions of the Wind Report is an unnecessarily harsh and disproportionate sanction which would unfairly and unjustifiably prevent DIRECTV from offering critical evidence in support of its central defense. See, e.g., Matthew Enter., supra, at 3-6 (declining to exclude evidence as sanction for spoliation because it was “too stringent” a remedy). The FTC’s demand for such an extreme and unjustified remedy strongly suggests the FTC’s Motion is about gamesmanship, not any true prejudice. The FTC’s proposed remedy should be rejected. B. DIRECTV Has Produced All Relevant A/B Testing 1. The FTC Stipulated that All Disputes Concerning A/B Testing Were Resolved (Court-Ordered Factor 1). The FTC’s claims regarding some alleged failure to produce relevant “A/B testing” are absolutely false and contrary to the parties’ stipulations. The FTC previously filed a letter brief regarding its document demands 6 and 7, which concerned documents related to consumer research. (Dkt. No. 155.) As part of that discovery letter brief, the FTC sought production from DIRECTV of A/B testing. (Id. at 1-2.) On July 27, 2016, after meeting and conferring in chambers with Your Honor over this and other discovery disputes, the parties agreed, and Your Honor ordered, that “[t]here shall be no further discovery motion practice on any issue without good cause.” (Dkt. 164 at ¶ 14.) On this same day, DIRECTV and the FTC stipulated that the discovery dispute concerning consumer research was resolved. (Dkt. 163 at ¶ 2(f).) Because the FTC sought production of A/B testing in that letter brief and then stipulated with DIRECTV that it resolved that dispute, it cannot now complain to the Court and reopen the issue under the guise of Rule 37. consumer survey to DIRECTV prior to expert disclosures (and blocked any attempt by DIRECTV to discover the existence of such testing until expert disclosures). Thus, the FTC had the same amount of time to respond to the Convergys Study as DIRECTV had with respect to the FTC’s survey. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 11 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 16 of 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. DIRECTV Produced All Relevant A/B Tests and Never Conducted the Type of A/B Tests Which the FTC Claims DIRECTV Did Not Produce (Court-Ordered Factors 2 and 3). The alleged misconduct on this issue is fabricated. DIRECTV has produced all relevant A/B tests. First, the FTC misleadingly suggests in its Motion that DIRECTV in the ordinary course of business conducted thousands of A/B tests relating to its terms and conditions of its service at issue in this case. (Mot. at 7:4-5.) This is untrue. Obviously, DIRECTV performs “A/B testing” in the course of its business. But there is no support for the contention that such testing was performed on the disclosures at issue in this case. The FTC’s sole support for its contention is the testimony of Ms. Chen. But when asked that exact question – whether there were “thousands” of A/B tests – she testified “I have no idea.” (Hummel Decl. Ex. 10 at 160:22-161:10.) In fact, she testified to being personally involved with approximately 10 A/B tests relating to the website. (Snow Decl. Ex. E, 160:19-21.) Importantly, she also testified that the only time DIRECTV conducted an A/B test of the terms and conditions was at the advice of counsel for this litigation (i.e., the Convergys Study). (Snow Decl. Ex. E, 120:6-14.) None of this is surprising to the FTC. More than five months ago, DIRECTV informed the FTC that DIRECTV never conducted any A/B testing of its disclosures in the ordinary course of business. (See Hummel Decl. Ex. 9 at 45:8-47:2.) This also was confirmed by DIRECTV’s former Senior VP of Consumer Research, who explained that DIRECTV’s A/B testing did not focus on testing of disclosures. (Id. Ex. 11at 43:24-44:23.) Thus, the notion that there are scores of A/B tests that relate to the issue of this case or the issues tested in the Convergys study is false. Second, the FTC’s claim that these purported thousands of A/B tests are “basically gone” is untrue. (Mot. at 6:4-5; 6:24.) The FTC ignores that relevant A/B testing conducted in the ordinary course of business was produced in numerous power points and in DIRECTV’s March 24, 2016, production of its historic source code and all related web assets. (Hummel Decl., ¶ 21.) DIRECTV further produced on September 8, 2016, A/B testing and web analytics data that the FTC specifically requested from DIRECTV. (Id.) All relevant A/B testing information has been produced. 3. There Is No Prejudice to The FTC (Court-Ordered Factors 4 and 5). The FTC has failed to show prejudice. The FTC alleges that it cannot compare the “evidence DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 12 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 17 of 19 that DIRECTV has prepared for litigation with similar evidence created in the ordinary course of business.” (Mot. at 7:16-18.) This argument assumes what the FTC failed to prove – that there was any similar evidence (i.e., A/B testing on DIRECTV’s disclosures). Thus the FTC’s citation to Pinterest v. Pintrips, Inc., which assumes that a counter-survey exists, is of little help. (Mot. at 7:21- 23.)13 While, “it may be appropriate to exclude a specific item of evidence to offset prejudice caused by failure to preserve other evidence that might contradict the excluded item of evidence,” Advisory Notes to Rule 37(e)(1) (emphasis added), here, there is no “other evidence.” Finally, nothing prevents the FTC from attacking any perceived flaws with the Convergys Study. Indeed, the FTC already served a lengthy rebuttal report (Dr. Erdem), which does not claim that missing but previously existing A/B testing precluded her from offering full opinions. C. The FTC’s Motion Should Also Be Denied With Respect To Website Analytics. 1. The FTC Stipulated that All Disputes Concerning Web Analytics Were Resolved (Court-Ordered Factor 1). The time to complain about alleged spoliation regarding web analytics has come and gone. The FTC deposed Ms. Chen about web analytics on July 15, 2016, more than two years after DIRECTV first made her available. (Hummel Decl., ¶¶ 24 & 28.) The parties then met and conferred with this Court about outstanding discovery issues, including web analytics, twelve days later on July 27, 2016. (Dkt. 163 at ¶ 9.) Nowhere in the parties’ stipulation to the Court did the FTC complain about the alleged “destruction” of web analytics data. (See id.) Instead, on August 10 (two days before the close of fact discovery), the FTC requested specific web analytics from DIRECTV, and DIRECTV produced it on September 8. (Hummel Decl., ¶ 29.) The FTC did not begin the letter briefing process for web analytics until more than a month later, on October 17, 2016, when it for the first time complained of spoliation. The FTC has not presented any good cause for why the Court should entertain this Motion nearly three months after the Court resolved all 13 Internmatch, Inc. v. Nxtbigthing, LLC, Case No. 14-cv-05438-JST, 2016 WL 491483, at 3 (N.D. Cal. Feb. 8, 2016), is inapposite. That case involved a finding that a party had lied to the court about the loss of relevant materials, saying a power surge (that never happened) destroyed hard drives. There is no such conduct here—the FTC does not even purport to move under 37(e)(2). Similarly, Unigard Sec. Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363 (9th Cir. 1992), is inapposite: it involved sanctions under a prior version of Rule 37(e) for the physical destruction of a heater that prevented any investigation regarding the heater. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 13 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 18 of 19 discovery issues. 2. The FTC Inexcusably Ignored DIRECTV’s Invitations to Inspect Web Analytics Starting in 2014 (Court-Ordered Factors 1-3). The FTC omits from its Motion any record of the parties’ extensive discussions about web analytics and DIRECTV’s offers, starting in April 2014, for the FTC to inspect such data. (Id., ¶ 22). As early as April 30, 2014, DIRECTV gave a detailed presentation to the FTC on its web analytics platform, in which it informed the FTC that numerous types of reports could be generated from its system and that DIRECTV could produce customized reports that the FTC might request. (Id., ¶ 23.) DIRECTV repeatedly explained to the FTC that there were literally thousands of iterations of reports that DIRECTV could run from the data, the overwhelming majority of which bore no relation to this case. (Id.) DIRECTV also answered the FTC’s questions it asked about web analytics in its CIDs and produced sample reports from Site Catalyst. (Id.) 14 During the litigation, the FTC broadly requested “all Documents relating to Website Analytics.” (See Dkt. No. 113-1, RFP No. 10.) Given the volume of data, that request was hopelessly overbroad, and the FTC clearly knew it. More than fourteen months ago, on September 19, 2015, DIRECTV responded that it would “agree to produce additional, relevant, non-privileged documents, if any, based on the FTC’s specific requests for documents.” (Hummel Decl. Ex. 12 at 16:18-20.) The FTC never followed up or made any specific requests that DIRECTV generate certain types of web analytics reports. Months later, in January 2016, DIRECTV agreed to make Ms. Chen available for a meeting so that the FTC could ask her questions about the available web analytics. (Id., ¶ 27.) To facilitate this meeting, DIRECTV requested that the FTC provide it with a list of topics so that Ms. Chen could be prepared. (Id.) The FTC failed to do so. Despite having three discovery meet and confers on March 24, May 10, and June 14, 2016 during which web analytics and DIRECTV’s offer to make Ms. Chen available were specifically discussed, the FTC never met with Ms. Chen nor provided DIRECTV with a list of topics. (Id., ¶ 27; Exs. 9, 13, & 14.) 14 The FTC has known since 2014 that Ms. Chen was responsible for compiling such reports from Site Catalyst but waited until July 15, 2016 to depose her. (Hummel Decl. ¶¶ 24 & 28.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 14 Case 3:15-cv-01129-HSG Document 220 Filed 11/30/16 Page 19 of 19 Instead, only one week before the close of discovery, the FTC noticed Ms. Chen’s deposition for July 15, 2016. (Id., ¶ 28.) Only after that deposition did the FTC finally meet with Ms. Chen on August 4, 2016, to discuss web analytics issues. (Id.) Then on August 10, 2016, more than 28 months after DIRECTV first offered web analytics data to the FTC, the FTC finally sent DIRECTV a summary of the categories of documents and information regarding web analytics that it wanted produced. (Id., ¶29.) The list was based on the FTC’s informal discussion with Ms. Chen— something it should have done years earlier. (Id.) On August 22, DIRECTV indicated to the FTC what could be produced from the FTC’s list and then produced the data on September 8, 2016. (Id.) 3. There is No Prejudice (Court-Ordered Factors 4 and 5). The Motion should also be denied because the FTC has not been prejudiced. Notably absent from the Motion is any discussion about any specific type of web analytics that previously existed that no longer exists which the FTC needs to prosecute its case, or any reason why the FTC did not previously ask for this information. Indeed, in response to the only time (on August 10) when the FTC requested specific web analytics information, DIRECTV promptly produced almost all of that information. (Hummel Decl., ¶ 29.) Tellingly, of all the web analytics that the FTC requested from DIRECTV on August 10 (which it could have requested years earlier), it only complains in its Motion that DIRECTV cannot extract the test and control images from an A/B test in the Monetate tool. (Mot. at 6:24-27.) Nowhere does it discuss how this prejudices it. The reason is clear – there has been no prejudice given that DIRECTV has produced all such web analytics it intends to rely upon, and the FTC cannot specifically point to anything it needs that was not provided. IV. CONCLUSION Based on the forgoing, the FTC’s Motion should be denied in its entirety. Dated: November 30, 2016 SIDLEY AUSTIN LLP By: /s/Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DIRECTV’S OPPOSITION TO FTC’S MOTION FOR SANCTIONS UNDER RULE 37(E)(1) CASE NO. 3:15-CV-01129 HSG 15
2016-11-30	221	CERTIFICATE OF SERVICE by DIRECTV LLC, DIRECTV, Inc. re 219 Administrative Motion to File Under Seal (Hummel, Chad) (Filed on 11/30/2016) Modified on 12/1/2016 (ecgS, COURT STAFF). (Entered: 11/30/2016)	Case 3:15-cv-01129-HSG Document 221 Filed 11/30/16 Page 1 of 2 Case 3:15-cv-01129-HSG Document 221 Filed 11/30/16 Page 2 of 2
2016-12-01	222	STIPULATION WITH PROPOSED ORDER to extend expert discovery re 200 Order on Stipulation, 159 Order on Stipulation, 185 Order on Stipulation, 138 Order on Stipulation, 40 Order filed by Federal Trade Commission. (Edmondson, Eric) (Filed on 12/1/2016) Modified on 12/1/2016 (ecgS, COURT STAFF). (Entered: 12/01/2016)	Case 3:15-cv-01129-HSG Document 222 Filed 12/01/16 Page 1 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT STIPULATION TO EXTEND TIME FOR EXPERT DISCOVERY JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 222 Filed 12/01/16 Page 2 of 3 Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (DIRECTV) jointly stipulate, pursuant to Civil Local Rules 6-1(b), 6-2 and 7-12, to extend the time for the parties to complete expert discovery. Due to scheduling issues, the parties are unable to complete all expert witness depositions by the December 2, 2016 deadline for expert discovery. The parties have conferred with each other about the scheduling of the remaining expert witness depositions and have arrived at an agreement satisfactory to all which includes extending the close of expert discovery to December 23, 2016. The proposed modification to the schedule would have no effect on any other deadlines in this case. There have been the following modifications to the schedule in this case: (a) Dkt. No. 23, April 17, 2015 (granting stipulated request for an extension of time for the FTC to file motion to strike Defendants’ affirmative defenses); (b) Dkt. No. 64, October 21, 2015 (granting motion for extension of time for the FTC to respond to DIRECTV’s motion for partial summary judgment); (c) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); (d) Dkt. No. 99, February 4, 2016 (granting stipulation continuing hearing date on motion for partial summary judgment); (e) Dkt. No. 105 (granting stipulation continuing Case Management Conference); (f) Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary judgment briefing deadlines and hearing date, and trial date); (g) Dkt. No. 159, July 19, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery); (h) Dkt. 181, September 26, 2016 (granting motion to extend time to file declaration in support of motion to file under seal); (i) Dkt. No. 185, September 28, 2016 (granting stipulation to extend time for rebuttal and reply expert reports and expert discovery); (j) Dkt. No. 200, October 24, 2016 (granting motion to extend time for DIRECTV to serve its rebuttal report to the expert report of Tulin Erdem); and (k) Dkt. No. 210, November 22, 2016 (granting motion to extend time to file declaration in support of motion to file under seal). // // // JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 222 Filed 12/01/16 Page 3 of 3 // // NOW THEREFORE, the parties, through the undersigned counsel, hereby stipulate to and respectfully request the court enter the following schedule: Event Expert Discovery Close December 2, 2016 December 23, 2016 Proposed Date Current Date Dated: November 30, 2016 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SIDLEY AUSTIN By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC FEDERAL TRADE COMMISSION By: /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Federal Trade Commission Pursuant to Civil Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtained from the signatories above. By: /s/ Chad S. Hummel [PROPOSED] ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: _______________________ ___________________________________ HON. HAYWOOD S. GILLIAM, JR. JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 2 3:15-CV-01129
2016-12-01	223	ORDER by Judge Haywood S. Gilliam, Jr. Granting 222 Stipulation to extend expert discovery: Close of Expert Discovery due by 12/23/2016. (ndrS, COURT STAFF) (Filed on 12/1/2016) (Entered: 12/01/2016)	Case 3:15-cv-01129-HSG Document 223 Filed 12/01/16 Page 1 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] SIDLEY AUSTIN LLP 1999 Avenue of the Stars, 17th Floor Los Angeles, CA 90067 Telephone: (310) 595-2600 Facsimile: (310) 595-2601 Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT STIPULATION TO EXTEND TIME FOR EXPERT DISCOVERY JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 223 Filed 12/01/16 Page 2 of 3 Plaintiff Federal Trade Commission (“FTC”) and Defendants DIRECTV and DIRECTV, LLC (DIRECTV) jointly stipulate, pursuant to Civil Local Rules 6-1(b), 6-2 and 7-12, to extend the time for the parties to complete expert discovery. Due to scheduling issues, the parties are unable to complete all expert witness depositions by the December 2, 2016 deadline for expert discovery. The parties have conferred with each other about the scheduling of the remaining expert witness depositions and have arrived at an agreement satisfactory to all which includes extending the close of expert discovery to December 23, 2016. The proposed modification to the schedule would have no effect on any other deadlines in this case. There have been the following modifications to the schedule in this case: (a) Dkt. No. 23, April 17, 2015 (granting stipulated request for an extension of time for the FTC to file motion to strike Defendants’ affirmative defenses); (b) Dkt. No. 64, October 21, 2015 (granting motion for extension of time for the FTC to respond to DIRECTV’s motion for partial summary judgment); (c) Dkt. No. 87, December 9, 2015 (granting joint stipulation to extend DIRECTV’s time to file its reply brief in support of its motion for partial summary judgment, and continuing hearing date on motion for partial summary judgment); (d) Dkt. No. 99, February 4, 2016 (granting stipulation continuing hearing date on motion for partial summary judgment); (e) Dkt. No. 105 (granting stipulation continuing Case Management Conference); (f) Dkt. No. 138, April 12, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery, summary judgment briefing deadlines and hearing date, and trial date); (g) Dkt. No. 159, July 19, 2016 (granting stipulation to extend case deadlines, including fact and expert discovery); (h) Dkt. 181, September 26, 2016 (granting motion to extend time to file declaration in support of motion to file under seal); (i) Dkt. No. 185, September 28, 2016 (granting stipulation to extend time for rebuttal and reply expert reports and expert discovery); (j) Dkt. No. 200, October 24, 2016 (granting motion to extend time for DIRECTV to serve its rebuttal report to the expert report of Tulin Erdem); and (k) Dkt. No. 210, November 22, 2016 (granting motion to extend time to file declaration in support of motion to file under seal). // // // JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 1 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 223 Filed 12/01/16 Page 3 of 3 // // NOW THEREFORE, the parties, through the undersigned counsel, hereby stipulate to and respectfully request the court enter the following schedule: Event Expert Discovery Close December 2, 2016 December 23, 2016 Proposed Date Current Date Dated: November 30, 2016 FEDERAL TRADE COMMISSION SIDLEY AUSTIN By: By: /s/ Chad S. Hummel Chad S. Hummel Attorneys for Defendants DIRECTV and DIRECTV, LLC /s/ Eric D. Edmondson Eric D. Edmondson Attorneys for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to Civil Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtained from the signatories above. /s/ Chad S. Hummel By: ORDER PURSUANT TO STIPULATION, IT IS SO ORDERED. Dated: December 1, 2016 ___________________________________ HON. HAYWOOD S. GILLIAM, JR. JOINT STIPULATION TO EXTEND TIME FOR REBUTTAL REPORT 2 3:15-CV-01129
2016-12-05	224	Joint Response to 216 Order Granting in Part and Denying in Part Administrative Motions to Seal by DIRECTV LLC, DIRECTV, Inc.. (Attachments: # 1 Redacted - ORTIZ EXHIBIT A, # 2 Redacted - ORTIZ EXHIBIT B, # 3 Redacted - ORTIZ EXHIBIT C, # 4 ORTIZ EXHIBIT D, # 5 Redacted - ORTIZ EXHIBIT E, # 6 Redacted - ORTIZ EXHIBIT F, # 7 Redacted - ORTIZ EXHIBIT G, # 8 Redacted - ORTIZ EXHIBIT H, # 9 ORTIZ EXHIBIT P, # 10 ORTIZ EXHIBIT T, # 11 ORTIZ EXHIBIT U, # 12 Redacted MSJ, # 13 Sandrock Decl. Exhibit E, # 14 Redacted - Sandrock Decl. Exhibit F, # 15 Friedman Decl. ISO Opposition to MSJ, # 16 Redacted - Opposition to MSJ, # 17 Redacted - ORTIZ EXHIBIT MM, # 18 ORTIZ EXHIBIT QQ, # 19 ORTIZ EXHIBIT RR, # 20 Redacted - ORTIZ EXHIBIT SS, # 21 Redacted - ORTIZ EXHIBIT UU, # 22 Redacted Reply to MSJ)(Sandrock, Ryan) (Filed on 12/5/2016) Modified on 12/6/2016 (ecgS, COURT STAFF). (Entered: 12/05/2016)	Case 3:15-cv-01129-HSG Document 224 Filed 12/05/16 Page 1 of 3 Jeffrey M. Tillotson, SBN 139372 [email protected] TILLOTSON LAW 750 N. St. Paul Street, Suite 610 Dallas, TX 75201 Telephone: (214) 382-3040 Chad S. Hummel, SBN 139055 [email protected] Mark D. Campbell, SBN 180528 [email protected] Bridget S. Johnsen, SBN 210778 [email protected] Ryan M. Sandrock, SBN 251781 [email protected] SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722-1200 Facsimile: (415)772-7400 Attorneys for Defendants DIRECTV and DIRECTV, LLC Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Jacob A. Snow, Cal. Bar No. 270988 Boris Yankilovich, Cal Bar No. 257887 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100 / (415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700 Los Angeles, CA 90024 (310) 824-4343 / (310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and Case No. 3:15-cv-01129 HSG Assigned to the Hon. Haywood S. Gilliam, Jr. JOINT RESPONSE TO ORDER GRANTING IN PART AND DENYING IN PART ADMINISTRATIVE MOTIONS TO SEAL (DKT. 216) DIRECTV, LLC, a limited liability company, Defendants. JOINT RESPONSE TO DKT. 216 ORDER RE: SEALING 3:15-CV-01129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 224 Filed 12/05/16 Page 2 of 3 Pursuant to the Court’s order on November 26, 2016, attached are (1) exhibits filed publically without redactions1 and (2) revised redacted exhibits. (Dkt. 216). DIRECTV and the FTC are filing the following documents publically without redactions: • Ortiz Decl., Ex. D, P, T, U • Sandrock Decl., Ex. E • Declaration of Clayton Friedman (October 6, 2016) • Ortiz II Decl., Ex. QQ and RR DIRECTV and the FTC are filing the following documents with revised redactions: • Ortiz Decl., Ex. A, B, C, E, F, G,2 H • FTC’s Motion for Partial Summary Judgment • Sandrock Decl., Ex. F • DIRECTV Opposition to FTC’s Motion for Partial Summary Judgment • Ortiz II Decl., Ex. MM, SS, UU • FTC’s Reply in Support of Motion for Partial Summary Judgment Dated: December 5, 2016 FEDERAL TRADE COMMISSION SIDLEY AUSTIN By: /s/ Ryan M. Sandrock Ryan M. Sandrock Attorney for Defendants DIRECTV and DIRECTV, LLC By: /s/ Erika Wodinsky Erika Wodinsky Attorney for Plaintiff Federal Trade Commission 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 Pursuant to the Court’s order, Ortiz Decl., Ex. D, Sandrock Decl., Ex. E, and the Declaration of Clayton Friedman no longer contain redactions. (Dkt. 216). 2 The Court denied sealing for Ortiz Decl., Ex. F at 189:1-191:14. As this redaction request was actually made for Ortiz Decl., Ex. G (See Dkt. 212-1 at 7) the redaction has been removed from that exhibit instead. JOINT RESPONSE TO SEALING ORDER 1 3:15-CV-01129 Case 3:15-cv-01129-HSG Document 224 Filed 12/05/16 Page 3 of 3 Pursuant to Civil Local Rule 5-1(i), the filer attests that concurrence in the filing of this document has been obtained from the signatories above. By: /s/ Ryan M. Sandrock 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JOINT RESPONSE TO SEALING ORDER 2 3:15-CV-01129
2016-12-07	225	REPLY (re 207 MOTION for Sanctions Under Rule 37(e)(1) ) filed byFederal Trade Commission. (Attachments: # 1 Declaration of Jacob Snow in Support of Federal Trade Commissions Reply in Support of Motion for Sanctions Under Rule 37(e)(1), # 2 Exhibit A, # 3 Exhibit B, # 4 Exhibit C, # 5 Exhibit D)(Snow, Jacob) (Filed on 12/7/2016) (Entered: 12/07/2016)	Case 3:15-cv-01129-HSG Document 225 Filed 12/07/16 Page 1 of 8 Eric D. Edmondson, D.C. Bar No. 450294 Erika Wodinsky, Cal. Bar No. 091700 Boris Yankilovich, Cal. Bar No. 257887 Jacob A. Snow, Cal. Bar No. 270988 901 Market Street, Suite 570, San Francisco, CA 94103 (415) 848-5100/(415) 848-5184 (fax) [email protected]; [email protected]; [email protected]; [email protected] Raymond E. McKown, Cal. Bar No. 150975 Stacy Procter, Cal. Bar No. 221078 Kenneth H. Abbe, Cal. Bar No. 172416 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024 (310) 824-4343/(310) 824-4380 (fax) [email protected]; [email protected]; [email protected] Attorneys for Plaintiff Federal Trade Commission UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. DIRECTV, a corporation, and DIRECTV, LLC, a limited liability company, Defendants. Case No. 15-cv-01129-HSG FEDERAL TRADE COMMISSION’S REPLY IN SUPPORT OF MOTION FOR SANCTIONS UNDER RULE 37(e)(1) FTC’S REPLY IN SUPPORT OF MOTION FOR SANCTIONS UNDER RULE 37(e)(1) CASE NO. 15-CV-01129-HSG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 225 Filed 12/07/16 Page 2 of 8 TABLE OF CONTENTS INTRODUCTION .............................................................................................................. 1 ARGUMENT ...................................................................................................................... 1 A. The Convergys Website Survey Should Be Excluded Because DIRECTV Failed to Preserve the Two Interactive Websites Used in 2015 ........................................ 1 B. A/B Testing Evidence Should Be Excluded Because No One—Not Even DIRECTV or Its Counsel—Knows What Was Lost............................................... 3 C. DIRECTV Should Not Be Permitted to Rely on Analytics Evidence of the Type It Destroyed After the Litigation Was Filed ............................................................... 5 D. Exclusion of Evidence Is the Appropriate Remedy ................................................ 5 CONCLUSION ................................................................................................................... 5 I. II. III. FTC’S REPLY IN SUPPORT OF MOTION FOR SANCTIONS UNDER RULE 37(e)(1) CASE NO. 15-CV-01129-HSG i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 225 Filed 12/07/16 Page 3 of 8 I. INTRODUCTION Sanctions are appropriate under Rule 37(e) if the FTC is prejudiced by DIRECTV’s loss of information that it should have (and reasonably could have) preserved. DIRECTV’s opposition tries to make this motion about the parties’ discovery negotiations. But DIRECTV’s lengthy account of the parties’ negotiations is both inaccurate and beside the point. Discovery negotiations that take place after evidence is lost cannot excuse DIRECTV’s basic failure to preserve evidence. The Court’s analysis should focus on the elements of Rule 37(e). Considered under those elements, the FTC’s motion should be granted. II. ARGUMENT A. The Convergys Website Survey Should Be Excluded Because DIRECTV Failed to Preserve the Two Interactive Websites Used in 2015. Preservation. DIRECTV contends in its opposition both that it is impossible to preserve the website in interactive form and that it would be straightforward for the FTC to have done it.1 Both statements cannot be true. In fact, DIRECTV and the FTC (as a technical matter) could have preserved the interactive website in January 2015 and June–July 2015. But only DIRECTV knew at the time that it was conducting surveys that would form the core of its expert’s analysis. DIRECTV would not inform the FTC of the dates of those surveys for over a year (in September 2016). If DIRECTV had disclosed the fact that it was conducting surveys on its live website, the FTC could have (and would have) preserved those websites as it preserved the 2013 site. The FTC is not claiming—as DIRECTV suggests—that DIRECTV must “maintain or provide[] to the FTC a live, interactive, fully functioning iteration of directv.com.” Declaration of Douglas Wells, Dkt. No. 220-16, ¶¶ 6–7. Rather, the FTC’s motion is based on DIRECTV’s obligation to preserve the core interactive website that consumers saw as they proceeded through the DIRECTV purchase flow. DIRECTV can comply with its evidence-preservation obligations however it chooses, but the FTC’s preservation and production of DIRECTV’s 2013 website is 1 Compare Opp. at 2 (“It simply cannot be preserved.”) with Opp. at 6 (“There was nothing to prevent the FTC from doing the same thing [i.e., capturing and producing] with the 2015 website.”). FTC’S REPLY IN SUPPORT OF MOTION FOR SANCTIONS UNDER RULE 37(e)(1) CASE NO. 15-CV-01129-HSG 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 225 Filed 12/07/16 Page 4 of 8 one reasonable means of preserving the interactive site.2 If DIRECTV planned to rely on the 2015 site as the basis for its survey, DIRECTV could have and should have preserved and produced evidence in a similar way.3 Prejudice. DIRECTV asserts that the screenshots are sufficient for the FTC and the Court to understand the 2015 site. Opp. at 9. DIRECTV is mistaken: without the interactive site, it is not apparent, for example, whether a user must click or hover to reveal information, or how users navigate from page to page.4 And DIRECTV’s screenshots are from the wrong dates, and given the frequent changes and updates to the site (Mot. at 4), there is no way to confirm that the screenshots correspond to the websites users saw. DIRECTV could (and did) ask the FTC’s experts questions in depositions using the actual interactive site used in the survey, but the FTC was given no such opportunity for Dr. Wind. Next, DIRECTV claims that the FTC could have reconstructed the 2015 website from the source code. Opp. at 9–10. DIRECTV has long maintained that such a reconstruction effort is not possible. Mot. at 4 n.2. The FTC agrees that reconstructing the interactive site from the source code is not practical (especially because there was insufficient time—the survey dates were first disclosed in September 2016). Id. The produced source code therefore does not excuse DIRECTV’s failure to preserve the interactive sites that surveyed consumers saw. 2 DIRECTV cites De Los Santos v. Kroger Texas, LP, No. 3:14-CV-3086-G, 2015 WL 3504878 (N.D. Tex. June 3, 2015), for the proposition that DIRECTV had no “duty to create a new, simulated version of the interactive website used in the Convergys Study.” Opp. at 8. In the De Los Santos case, however, the court noted in the context of a spoliation argument that Kroger had no duty to take pictures of the scene of a slip and fall, or to take witness statements after an accident (i.e., to create evidence)—it only had a duty to preserve such evidence if it had been created at the time. Id. at *6 n.4. Unlike the photos and statements in De Los Santos, the version of DIRECTV’s website that formed the basis for the Convergys study did in fact exist in 2015. It could have been preserved at the time (just as the FTC preserved the 2013 site). Such a recreation (or restoration) is specifically contemplated by Rule 37(e), which applies when evidence is lost “and cannot be restored.” 3 The FTC encourages the Court to review the site captured and produced by the FTC, Exhibit A to the Stahl Declaration filed in support of the FTC’s motion for partial summary judgment. Dkt. Nos. 176-02 (Stahl Declaration), 176-03 (Notice of Manual Filing for the captured website and other exhibits to the Stahl Declaration). 4 These defects in the evidence supporting the Wind Report are apparent from reviewing the Wind Report exhibits. A declaration filed with this motion includes an explanation of where the Wind Report and its various exhibits have been filed in this action. Declaration of Jacob Snow in Support of Reply (“Snow Reply Decl.”) ¶ 6. FTC’S REPLY IN SUPPORT OF MOTION FOR SANCTIONS UNDER RULE 37(e)(1) CASE NO. 15-CV-01129-HSG 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 225 Filed 12/07/16 Page 5 of 8 B. A/B Testing Evidence Should Be Excluded Because No One—Not Even DIRECTV or Its Counsel—Knows What Was Lost. Preservation. DIRECTV does not dispute that it has lost the test and control stimuli for web-based A/B tests performed in the Monetate and Adobe Test & Target tools.5 The loss of the Adobe Test & Target information is particularly egregious because it was destroyed when a vendor contract concluded in 2014, four years after DIRECTV’s obligation to preserve arose. Mot. at 2–3. DIRECTV also does not dispute that it could have preserved the test and control stimuli by (for example) taking screenshots. DIRECTV’s primary argument in opposition is that “DIRECTV has produced all relevant A/B tests.” Opp. at 12 (original emphasis removed).6 This argument has no merit for two reasons. First, the law does not permit DIRECTV to destroy documents that it unilaterally deems irrelevant. Rather, DIRECTV must preserve all material that is potentially relevant to litigation.7 Moreover, DIRECTV may not assume that the lost A/B tests are not relevant. “[B]ecause the relevance of destroyed documents cannot be clearly ascertained because the documents no longer exist, a party can hardly assert any presumption of irrelevance as to the destroyed documents.”8 5 DIRECTV does assert that the source-code production included the “data reflecting the web pages . . . and A/B testing that the FTC claims . . . DIRECTV did not retain in ‘interactive’ form.” Hummel Decl. ¶ 14. DIRECTV does not identify where in the source-code production the test and control stimuli reside, nor has it extracted the test and control stimuli from the source code and produced them. DIRECTV’s opposition is the first time it has made this claim, despite the parties having met and conferred numerous times about web A/B tests. DIRECTV’s disclosure, even if true, is too late and too incomplete to cure the prejudice. 6 The Court should reject DIRECTV’s argument that the parties’ stipulation to resolve discovery disputes bars the FTC’s motion. See Opp. at 11, 13. The stipulation provided that DIRECTV would search for and produce certain categories of documents relating to the FTC’s RFPs 6 and 7. Dkt. No. 164 ¶ 2. It also provided that the FTC would “meet with the appropriate DIRECTV employee to discuss analytics” and “review the analytics data in the possession of DIRECTV, and if additional relevant, responsive material exists, DIRECTV will produce that material to the FTC.” Id. ¶ 9. The stipulation resolved discovery disputes about production, not spoliation. Further, it was during the stipulated meeting on August 4, 2016 that DIRECTV’s failure to preserve the test and control stimuli for A/B tests first came to light. The parties’ stipulation does not foreclose a remedy for spoliation discovered while carrying out the parties’ agreement. 7 See Leon v. IDX Sys. Corp., 464 F.3d 951, 959 (9th Cir. 2006) (“A party’s destruction of evidence qualifies as willful spoliation if the party has ‘some notice that the documents were potentially relevant to the litigation before they were destroyed.’”) (emphasis original). 8 Id. (internal quotations and revisions omitted). FTC’S REPLY IN SUPPORT OF MOTION FOR SANCTIONS UNDER RULE 37(e)(1) CASE NO. 15-CV-01129-HSG 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 225 Filed 12/07/16 Page 6 of 8 Even if DIRECTV had preserved all relevant tests, the law requires that all potentially relevant material be preserved.9 Second, DIRECTV does not know whether relevant A/B test stimuli have been lost. It is not the case, as DIRECTV suggests, that the only relevant tests are those “relating to the terms and conditions of its service at issue in this case.” Opp. at 12. A/B testing information showing how consumers respond to different font sizes, or different disclosure placement, or different pricing structures, would be relevant to the FTC’s claims in this action. DIRECTV cannot say— because it does not know—that such web-based A/B tests never existed. DIRECTV’s identification by Bates number of “numerous Power Point [sic] presentations that were produced to the FTC [that] referred to A/B testing” is no substitute for the lost web-based A/B test information. Hummel Decl. ¶ 21, n.1, Dkt. No. 220-1. Critically, every document DIRECTV identifies refers to print A/B tests, not the lost web-based A/B tests at issue in this motion. See Snow Reply Decl. ¶ 5. That Converge Direct produced print-based A/B test information underscores that DIRECTV should have preserved web-based test information. Prejudice. DIRECTV claims that the FTC has “failed to prove” that similar A/B tests exist. Opp. at 13. The FTC has no obligation to “prove” any such thing. Parties to litigation must maintain information in their possession that is potentially relevant to litigation, whether that information is helpful to them or not. By failing to preserve the A/B tests in Adobe Test & Target (in use from 2011–2014) and Monetate (in use from 2015–2016), DIRECTV has lost nearly every ordinary-course document that reflects the stimuli for web-based tests that DIRECTV conducted over five years of operating its business, preserving only those A/B tests performed specifically for litigation. This loss of A/B test information deprives the FTC of the ability to compare evidence developed in litigation with ordinary-course evidence that might contradict it. That prejudice is explicitly the focus of Rule 37(e)(1). Mot. at 10. Requiring the FTC to prove the relevance of lost evidence would nullify the rule and frustrate its purpose. 9 DIRECTV states that Audrey Chen testified that she participated in approximately ten A/B tests relating to the website. Opp. at 12. Later in her deposition, Ms. Chen clarified that she was involved with approximately 10–15 A/B tests per year. Snow Reply Decl. ¶ 2, Ex. A, 170:13– 172:4. FTC’S REPLY IN SUPPORT OF MOTION FOR SANCTIONS UNDER RULE 37(e)(1) CASE NO. 15-CV-01129-HSG 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 225 Filed 12/07/16 Page 7 of 8 C. DIRECTV Should Not Be Permitted to Rely on Analytics Evidence of the Type It Destroyed After the Litigation Was Filed. Preservation. The loss of analytics data represents a basic failure by DIRECTV to preserve relevant information in this case. DIRECTV’s opposition does not explain how a DIRECTV vendor contract was modified in late 2015 to provide that analytics data older than three years be discarded. Mot. at 8. It is no excuse that the parties were negotiating the scope of DIRECTV’s web-analytics production in late 2015 and early 2016.10 If anything, those negotiations should have compelled DIRECTV to carefully preserve the analytics data at issue. Prejudice. Denying that any prejudice exists, DIRECTV claims that the FTC “cannot specifically point to anything it needs that was not provided.” Opp. at 15. DIRECTV is wrong: the FTC points specifically to analytics data older than three years (for the categories of analytics information DIRECTV has produced in discovery). Mot. at 8–9. The FTC is entitled to test the data DIRECTV relies on against older data. By the same token, DIRECTV cannot destroy older analytics data while simultaneously relying on new data to support its case. Exclusion of Evidence Is the Appropriate Remedy. D. DIRECTV’s opposition contends that exclusion of evidence is an inappropriate sanction, but offers no alternative remedy that would cure the prejudice, instead requesting “a hearing respecting the appropriate scope of such relief.” Opp. at 2. No such hearing is necessary. The FTC should be given the opportunity to consider and respond to any proposed alternative remedy in writing.11 The remedies available under Rule 37(e)(1) are well established. Only exclusion will cure the prejudice. See Mot. at 9–10. III. CONCLUSION For the reasons stated above, the FTC’s motion for sanctions should be granted. 10 DIRECTV’s account of the parties negotiations regarding web analytics is inaccurate and incomplete. Snow Decl. ¶¶ 7–9. 11 DIRECTV claims that the FTC’s proposed remedy is overbroad because “[t]he FTC seeks to exclude the entire Convergys study” including phone subscribers. Opp. at 6, n. 6. DIRECTV is incorrect, the FTC’s motion seeks only exclusion of any “web-based” survey conducted by DIRECTV. Mot. at 10. FTC’S REPLY IN SUPPORT OF MOTION FOR SANCTIONS UNDER RULE 37(e)(1) CASE NO. 15-CV-01129-HSG 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:15-cv-01129-HSG Document 225 Filed 12/07/16 Page 8 of 8 Dated: December 7, 2016 Respectfully Submitted, /s/ Jacob A. Snow Eric D. Edmondson Erika Wodinsky Boris Yankilovich Jacob A. Snow Attorneys for Plaintiff Federal Trade Commission 901 Market Street, Suite 570 San Francisco, CA 94103 (415) 848-5100 (phone) (415) 848-5184 (facsimile) FTC’S REPLY IN SUPPORT OF MOTION FOR SANCTIONS UNDER RULE 37(e)(1) CASE NO. 15-CV-01129-HSG 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28