`
`D.C. No.
`5:17-md-02773-
`LHK
`
`
`OPINION
`
`FOR PUBLICATION
`
`UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`
`
`KAREN STROMBERG; SAMUEL
`ROECKER; THOMAS LAMMEL; MARY
`GALLOWAY; DANIELLE LAGRAVE;
`THOMAS MCMAHON; BOARDSPORTS
`SCHOOL LLC; PATRICK BENAD;
`LINDSEY CARR; RENEE ACOSTA;
`PATRICIA BURNESS; CAROL HARRIS;
`ROBERT LINKS; NICHELLE LYONS;
`NUALA VIGNOLES; RACHEL L.
`MILLER; JOHN WILLIAM KIEFER III;
`MATTHEW MITCHELL; SUSAN
`GONZALEZ-PENDER; TERESE
`RUSSELL; SARAH KEY; DALIA
`ZATLIN; BETH CRANDALL; CLARISSA
`SIMON; KENDALL MARTIN; RODRIGO
`SAPLA; REBECCA DAVIS; THOMAS
`MCMANUS; KIMBERLY SCAVONE;
`MELISSA JU; CHRIS THOMPSON;
`MARTHA COUNTESS; KAREN HOOD;
`JAIME MARTIN; ADRIAN ESTEBAN;
`JEFFREY DAVIS; ERICSSON
`BROADBENT; PAUL SCOTT ERVIN;
`CARALYN TADA; NAGORE MILES;
`BETHANY RISING; JIYING SPENCER;
`DAYAN CRUTCHER; CATHERINE
`SCHMIDLIN; ALLISON TRIPP;
`LINDSAY SMITH; KATIE SMITH;
`KIRSTEN LUENZ; LAUREL VENER;
`STEPHEN JUDGE; SETH SALENGER;
`
`
`
`2
`
`
`STROMBERG V. QUALCOMM
`
`SCOTT HANSEN; JOSEPH
`KOVACEVICH; MICHELLE REYNOLDS;
`GEORGE MARUT; JANET ACKERMAN;
`ALAN SCHLAIKJER; LORI LANDES;
`JOYCE GRANTZ; GABRIELLE KURDT;
`JOHN SOLAK; TODD ESPINOSA;
`ANDREW WESTLEY; LAURA
`HALLAHAN; MARY C. MCDEVITT;
`PADRAIC J. BRENNAN; JASON
`SCHWARTZ; SUZANNE BLOCK; KEVIN
`CALERO; CARLO ENDOZO CARINGAL;
`IAN CARSON; ANDRE CRUZ; LUCAS
`RANGEL FERREIRA; MASOOD
`JAVAHERIAN; DAVID KOPLOVITZ;
`BRIAN LETULLE; DEIRDRE
`MCELHANEY; CARMEN MINON;
`ERICA MINON; GABRIEL MINON;
`BETSY SANTIAGO; JAVIER SANTIAGO;
`PETER YEE; ALICIA HADNETT;
`DANIEL CARROLL; DEBRA GRASL;
`AMANDA NEWSOME; DAVID
`KREUZER; ARMANDO HERRERA;
`EDEN WAGNER; NEIL WAGNER;
`ALLAN ROTMAN; SHARI COLE;
`PHILLIP JAMES ZACHARIAS; MARY
`BETH CUMMINS; GUY SNOWDY;
`CYNTHIA BAMBINI; GRANT
`HAUSCHILD; DAVID FLOYD; KIM
`COUGHLIN; BRANDON FULLER; LISA
`PATNODE; NINA BARTOSHEVICH;
`LEONIDAS MIRAS; JAMES CLARK,
`Plaintiffs-Appellees,
`
`
`
`and
`
`
`
`
`
`
`STROMBERG V. QUALCOMM
`
`3
`
`JORDIE BORNSTEIN; CORDT BYRNE;
`ELLIOT CARTER; JEFF CIOTTI;
`DWIGHT DICKERSON; MATTHEW
`CHRISTIANSON; LOGAN GRIESEMER;
`RYAN HART; WILLIAM HORTON;
`STEVE KRUG; GAIL MARGOLIS; KATE
`MORTENSEN; ALYSSA NEE;
`CHRISTOPHER WHALEN; STEPHAN
`FARID WOZNIAK; CHRISTOPHER
`ZAYAS-BAZAN; DAVID CARNEY;
`JULIE EWALD; TOM PARKIN; BRIAN
`DEPPERSCHMIDT; BRANDON STEELE;
`KYLE WEBER; CRAIG HOUSENICK;
`RYAN MARGULIS; RICHARD RIZZO;
`GUY DIETRICH; JEFFREY M. KURZON;
`SUSAN NAGY; NICOLAS YOUSIF;
`SCOTT FREDERICK; CHARLES POON;
`ANDREA HOGAN; TINA HEIM;
`MONICA MORROW; MARK
`CARDILLO; ALLISON SHIPP;
`MICHELLE MACKAY; COLLEEN
`SPARKE; JANET SILVERNESS;
`MELANIE BARCLAY; TIFFANY RINGO;
`HALLIE LINGO; CRYSTAL
`HOHENTHANER; DANIEL K.
`BRENDTRO; DANIEL DELIER; PAUL
`NELSON; CATHERINE KADERAVEK;
`KAREN CARLET; DAVID WARING;
`LEON THEODORE LIPKA III,
`Plaintiffs,
`
`
`
`
`
`v.
`
`
`
`4
`
`
`STROMBERG V. QUALCOMM
`
`QUALCOMM INCORPORATED,
`Defendant-Appellant.
`
`Appeal from the United States District Court
`for the Northern District of California
`Lucy H. Koh, District Judge, Presiding
`
`Argued and Submitted December 2, 2019
`Submission Withdrawn March 3, 2020
`Resubmitted September 21, 2021
`San Francisco, California
`
`Filed September 29, 2021
`
`Before: Eugene E. Siler*, Jay S. Bybee, and
`Ryan D. Nelson, Circuit Judges.
`
`Opinion by Judge R. Nelson
`
`
`
`
`
`* The Honorable Eugene E. Siler Jr., Senior United States Circuit
`Judge of the United States Court of Appeals for the Sixth Circuit, sitting
`by designation.
`
`
`
`STROMBERG V. QUALCOMM
`
`5
`
`SUMMARY**
`
`
`
`
`
`
`
`Antitrust / Class Certification
`
`
`The panel vacated the district court’s order certifying a
`
`nationwide indirect purchaser class in an antitrust multi-
`district litigation seeking injunctive and monetary relief
`under §§ 1 and 2 of the Sherman Act and California law
`against Qualcomm
`Incorporated, and
`remanded
`for
`reconsideration of the plaintiffs’ claims given FTC v.
`Qualcomm Inc., 969 F.3d 974 (9th Cir. 2020) (holding that
`Qualcomm’s modem chip licensing practices did not violate
`the Sherman Act, and there was nothing to be enjoined
`because its exclusive dealing agreements with Apple did not
`substantially foreclose competition and were terminated
`years ago).
`
`The plaintiffs, consumers who bought cellphones,
`
`alleged that Qualcomm maintained a monopoly in modem
`chips, harming consumers because the amount attributable
`to an allegedly excessive royalty was passed through the
`distribution chain to consumers in the form of higher prices
`or reduced quality in cellphones. The district court certified
`a damages class under Fed. R. Civ. P. 23(b)(3) and an
`injunctive relief class under Rule 23(b)(2).
`
` Vacating the Rule 23(b)(3) class certification order, the
`panel held that the class was erroneously certified under a
`faulty choice of law analysis because differences in relevant
`state laws swamped predominance. The panel held that
`
`
`** This summary constitutes no part of the opinion of the court. It
`has been prepared by court staff for the convenience of the reader.
`
`
`
`STROMBERG V. QUALCOMM
`
`6
`
`California’s choice of law rules precluded the district court’s
`certification of the nationwide Rule 23(b)(3) class because
`other states’ laws, beyond California’s Cartwright Act,
`should apply. As a result, common issues of law did not
`predominate in the class as certified.
`
`The panel vacated the Rule 23(b)(2) class certification
`
`order in light of FTC v. Qualcomm.
`
`The panel instructed that on remand, the district court
`
`should address in the first instance the effect of FTC v.
`Qualcomm on class certification, particularly on the classes’
`ability to meet the threshold requirements of Rule 23(a) as
`well as the viability of plaintiffs’ claims to move forward.
`
`
`
`COUNSEL
`
`
`Robert A. Van Nest (argued), Eugene M. Paige, Steven A.
`Hirsch, Cody S. Harris, and Justina Sessions, Keker Van
`Nest & Peters LLP, San Francisco, California; Gary A.
`Bornstein and Yonatan Even, Cravath Swaine & Moore
`LLP, New York, New York; Richard S. Taffet, Morgan
`Lewis & Bockius LLP, New York, New York; Willard K.
`Tom, Morgan Lewis & Bockius LLP, Washington, D.C.;
`Geoffrey T. Holtz, Morgan Lewis & Bockius LLP, San
`Francisco, California; for Defendant-Appellant.
`
`Kalpana Srinivasan (argued), Susman Godfrey LLP, Los
`Angeles, California; Joseph W. Cotchett (argued), Michael
`A. Montaño (argued), Adam Zapala, and Tamarah Prevost,
`Cotchett Pitre & McCarthy LLP, Burlingame, California;
`Marc M. Seltzer (argued), Steven G. Sklaver, Amanda Bonn,
`Oleg Elkhunovich, Krysta Kauble Pachman, and Lora
`Krsulich, Susman Godfrey LLP, Los Angeles, California;
`
`
`
`7
`
`STROMBERG V. QUALCOMM
`
`
`
`Joseph Grinstein, Susman Godfrey LLP, Houston, Texas;
`Katherine M. Peaslee, Susman Godfrey LLP, Seattle,
`Washington; Steve W. Berman, Hagens Berman Sobol
`Shapiro LLP, Seattle, Washington; Jeffrey D. Friedman and
`Rio S. Pierce, Hagens Berman Sobol Shapiro LLP, Oakland,
`California; for Plaintiffs-Appellees.
`
`Mary Helen Wimberly (argued) and Kristen C. Limarzi,
`Attorneys; William J. Rinner, Chief of Staff and Senior
`Counsel; Michael F. Murray, Deputy Assistant Attorney
`General; Andrew C. Finch, Principal Deputy Assistant
`Attorney General; Makan Delrahim, Assistant Attorney
`General; Antitrust Division, United States Department of
`Justice, Washington, D.C.; Jeff Landry, Attorney General;
`Elizabeth Baker Murrill, Solicitor General; Louisiana
`Department of Justice, Baton Rouge, Louisiana; Dave Yost,
`Attorney General; Benjamin M. Flowers, State Solicitor;
`Office of the Attorney General, Columbus, Ohio; Ken
`Paxton, Attorney General; Kyle Hawkins, Solicitor General;
`Office of the Attorney General, Austin, Texas; for Amici
`Curiae United States of America and States of Louisiana,
`Ohio, and Texas.
`
`Kevin G. Clarkson, Attorney General, Office of the Attorney
`General, Anchorage, Alaska; Eric Schmitt, Attorney
`General, Office of the Attorney General, Jefferson City,
`Missouri; for Amici Curiae States of Alaska and Missouri.
`
`Ashley C. Parrish and Joshua N. Mitchell, King & Spalding
`LLP, Washington, D.C.; Steven P. Lehotsky and Jonathan
`D. Urick, U.S. Chamber Litigation Center, Washington,
`D.C.; for Amicus Curiae Chamber of Commerce of the
`United States of America.
`
`
`
`
`STROMBERG V. QUALCOMM
`
`8
`
`Richard A. Samp and Cory L. Andrews, Washington Legal
`Foundation, Washington, D.C.,
`for Amicus Curiae
`Washington Legal Foundation.
`
`Randy M. Stutz, American Antitrust Institute, Washington,
`D.C., for Amicus Curiae American Antitrust Institute.
`
`Steven N. Williams, Joseph Saveri Law Firm Inc., San
`Francisco, California, for Amici Curiae Choice of Law
`Professors.
`
`Scott Martin, Hausfeld LLP, New York, New York, for
`Amici Curiae Economists and Professors.
`
`Leslie A. Brueckner and Stephanie K. Glaberson, Public
`Justice P.C., Oakland, California; Jefffrey R. White and
`Amy L. Brogioli, American Association for Justice,
`Washington, D.C.; Richard A. Koffman, Emmy L. Levens,
`and Bo Uuganbayar, Cohen Milstein Sellers & Toll PLLC,
`Washington, D.C.; Sandeep Vaheesan, Open Markets
`Institute, Oakland Park, Florida; for Amici Curiae Public
`Justice P.C., American Association for Justice, and Open
`Markets Institute.
`
`
`
`
`
`
`
`
`
`
`STROMBERG V. QUALCOMM
`
`9
`
`OPINION
`
`R. NELSON, Circuit Judge:
`
`Qualcomm Incorporated seeks interlocutory review of
`the district court’s order certifying a nationwide class of up
`to 250 million class members in an antitrust multi-district
`litigation raising claims under the Sherman Act and
`California state law. Because the district court erred in its
`choice of law analysis and in light of FTC v. Qualcomm Inc.,
`969 F.3d 974 (9th Cir. 2020), we vacate the class
`certification order. On remand, the district court should
`reconsider the viability of Plaintiffs’ claims given FTC v.
`Qualcomm.
`
`I
`
`A
`
`With its principal place of business in California,
`Qualcomm is a global leader in cellular technology. Over
`the years, Qualcomm has contributed notable technological
`innovations to modern cellular communication standards
`and holds thousands of cellular patents.
`
`Some of Qualcomm’s patents are standard essential
`patents (“SEPs”) covering technology that international
`standard-setting organizations (“SSOs”) incorporated into
`cellular communication standards, such as 3G CDMA or 4G
`LTE.
` SSOs “are global collaborations of
`industry
`participants that establish technical specifications to ensure
`that products from different manufacturers are compatible
`with each other.” FTC v. Qualcomm, 969 F.3d at 982–83
`(internal quotation marks
`and
`citations omitted).
`Manufacturers and suppliers must use technology covered in
`Qualcomm’s SEPs if they want to practice 3G CDMA or 4G
`
`
`
`STROMBERG V. QUALCOMM
`
`10
`
`LTE standards. Thus, a manufacturer or supplier wanting to
`comply with 3G CDMA or 4G LTE standards will infringe
`on Qualcomm’s SEPs unless they license those SEPs.
`
`into a
`technology
`incorporating patented
`Before
`standard, SSOs require that patent holders commit to license
`their SEPs on fair, reasonable, and non-discriminatory
`(“FRAND”) terms.
` FRAND commitments safeguard
`against abuses like “patent holdup,” through which a SEP
`holder demands excessive royalties from suppliers and
`manufacturers of standard-compliant products and services.
`See Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 876
`(9th Cir. 2012) (citation omitted).
`
`its cellular patent portfolio,
`licenses
`Qualcomm
`including its SEPs, to original equipment manufacturers
`(“OEMs”) with products, like cellphones, that incorporate
`Qualcomm’s patented technologies. Though Qualcomm
`licenses its patents at the level of completed cellphone
`devices, it does not license its patents at the level of any
`given cellphone component. When Qualcomm licenses its
`patents, it receives a royalty that is typically 5% of the
`device’s wholesale net selling price.
`
`Besides licensing technology, Qualcomm also designs
`and sells semiconductor devices known as modem chips
`(“chips”) to OEMs. Chips enable cellphones to connect with
`cellular networks as well as provide other functions.
`Qualcomm is the leading supplier of CDMA and premium
`LTE chips worldwide.
`
`B
`
`In a separate action brought in January 2017, the Federal
`Trade Commission (“FTC”) sued Qualcomm, alleging that
`Qualcomm engaged in unfair methods of competition in
`
`
`
`11
`
`STROMBERG V. QUALCOMM
`
`
`
`violation of the Federal Trade Commission Act (“FTCA”)
`and the Sherman Act. Afterward, many follow-on consumer
`antitrust class actions were filed against Qualcomm,
`generally alleging that Qualcomm’s conduct violated federal
`and state antitrust and consumer protection laws based on
`similar claims of anti-competitive conduct. The Judicial
`Panel on Multidistrict Litigation centralized these consumer
`class actions as a consolidated class action in the United
`States District Court for the Northern District of California
`before the same judge presiding over the separate FTC
`action.
`
`Plaintiffs in this multidistrict litigation are consumers
`who bought cellphones and allege
`that Qualcomm
`maintained a monopoly in chips by: (1) engaging in a “no-
`license-no-chips” policy by which Qualcomm sold chips
`only to OEMs that paid above-FRAND royalty rates to
`license Qualcomm’s SEPs; (2) refusing to license its SEPs
`to rival chip suppliers; and (3) entering into exclusive
`dealing arrangements with Apple that prevented rival chip
`suppliers from competing with Qualcomm to supply Apple’s
`chip demand. Plaintiffs contend these practices harmed
`consumers because the amount attributable to the allegedly
`excessive royalty—the amount above the FRAND royalty—
`was passed through the distribution chain to consumers in
`the form of higher prices or reduced quality in cellphones.
`
`Plaintiffs seek injunctive and monetary relief against
`Qualcomm, asserting violations of Sections 1 and 2 of the
`Sherman Act as well as California’s Cartwright Act and
`Unfair Competition Law (“UCL”).
`
`Sections 1 and 2 of the Sherman Act are “particularly
`‘important to the preservation of economic freedom and our
`free-enterprise system.’” FTC v. Qualcomm, 969 F.3d
`at 988 (quoting United States v. Topco Assocs., Inc.,
`
`
`
`STROMBERG V. QUALCOMM
`
`12
`
`405 U.S. 596, 610 (1972)). Section 1 prohibits “[e]very
`contract, combination in the form of trust or otherwise, or
`conspiracy, in restraint of trade or commerce among the
`several States.” 15 U.S.C. § 1. Section 2 also makes it
`illegal to “monopolize any part of the trade or commerce
`among the several States.” Id. § 2. Direct purchasers—
`meaning those who buy the relevant product directly from
`the alleged antitrust violator—can bring antitrust suits for
`treble damages under the Sherman Act. See id. § 15. But
`the Supreme Court has long held that indirect purchasers—
`meaning those who purchase the relevant product through
`middlemen—are barred from seeking damages for alleged
`Sherman Act violations. See Ill. Brick Co. v. Illinois,
`431 U.S. 720 (1977).
` Here, Plaintiffs are “indirect
`purchasers who are two or more steps removed from
`[Qualcomm] in a distribution chain” and thus cannot seek
`damages for the alleged Sherman Act violations. See Apple
`Inc. v. Pepper, 139 S. Ct. 1514, 1520 (2019) (emphasis
`omitted).
`
`After the Supreme Court’s Illinois Brick decision, many
`states enacted Illinois Brick repealer laws, authorizing
`indirect purchasers to bring antitrust damages suits under
`state laws. For instance, California’s Cartwright Act, though
`modeled after the Sherman Act, permits indirect purchasers
`to bring antitrust claims and recover treble damages. Cal.
`Bus. & Prof. Code § 16700 et seq. Currently, thirty-five
`states and the District of Columbia effectively repealed
`Illinois Brick (known as “repealer states”) in one form or
`another, but fifteen states have not (known as “non-repealer
`states”). See Practical Law Antitrust, State Illinois Brick
`Repealer Laws Chart, Westlaw, https://bit.ly/3foROqr.
`
`In addition to the Sherman Act and California’s
`Cartwright Act, Plaintiffs brought a claim under California’s
`
`
`
`13
`
`STROMBERG V. QUALCOMM
`
`
`
`UCL, Cal. Bus. & Prof. Code § 17200 et seq., which
`generally prohibits any “unlawful, unfair or fraudulent”
`conduct. Id. § 17200. Plaintiffs’ UCL claim is based on the
`Sherman and Cartwright Act violations. See Cel-Tech
`Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 539–
`40 (Cal. 1999) (explaining that the UCL “borrows violations
`of other laws and treats them as unlawful practices that the
`unfair competition law makes independently actionable”
`(internal quotation marks and citation omitted)). Because
`neither party identified any material difference between the
`federal and state claims beyond the availability of damages,
`the district court generally treated Plaintiffs’ state law claims
`together with the federal claims.
`
`C
`
`Plaintiffs sought certification under Federal Rule of Civil
`Procedure 23 (“Rule 23”) for an indirect purchaser class
`comprising “[a]ll natural persons and entities in the United
`States who purchased, paid
`for, and/or provided
`reimbursement for some or all of the purchase price for all
`UMTS, CDMA (including CDMAone and cdma2000)
`and/or LTE cellular phones . . . for their own use and not for
`resale from February 11, 2001 . . . .” This class would
`number between 232.8 and 250 million people, and the
`lower bound on damages to the consumer class was
`estimated as $4.84 billion. Opposing class certification,
`Qualcomm argued that (1) Plaintiffs provided no model that
`could prove antitrust impact using common evidence on a
`class-wide basis;
`(2) the proposed class’s size and
`heterogeneity violated due process, was unmanageable, and
`therefore not superior; and (3) indirect purchasers in non-
`repealer states lack standing to seek antitrust damages.
`
`The district court certified Plaintiffs’ class under Rule
`23(b)(2) and (b)(3). Because the Cartwright Act mirrors
`
`
`
`STROMBERG V. QUALCOMM
`
`14
`
`federal antitrust law, Plaintiffs’ UCL claim is premised at
`least in part upon the Sherman and Cartwright Act
`violations, and the parties did not identify any material
`differences between the federal and state claims, the district
`court treated Plaintiffs’ federal and state law claims together
`when certifying the class. After concluding that the
`proposed class satisfied the requirements of Rule 23(a), the
`district court held that the proposed class satisfied Rule
`23(b)(3)’s predominance and superiority requirements. As
`to predominance, the district court concluded that common
`questions predominate overall and as to the elements of the
`federal antitrust claim—particularly, as to antitrust violation,
`antitrust impact, and damages.
`
`The district court also concluded that Plaintiffs can seek
`damages on behalf of the entire nationwide class under the
`Cartwright Act. In so concluding, the district court applied
`California’s choice of law rules and determined that
`California has sufficient contacts with the claims of each
`class member. The district court then applied California’s
`three-step governmental interest test to determine whether
`other state law, besides California law, should apply.
`Applying that test, the district court first concluded that non-
`repealer states’ antitrust laws were materially different from
`California’s Cartwright Act on the issue of damages
`recovery. The district court then determined that California
`has an interest in applying its law to this case because
`Qualcomm is a California business and the Cartwright Act
`(by allowing damages recovery) benefits consumers. But,
`according to the district court, non-repealer states have no
`interest in applying their laws here because non-repealer
`laws disadvantage resident consumers and are not intended
`to protect out-of-state businesses. As a result, the district
`court held that California’s Cartwright Act applied to the
`
`
`
`STROMBERG V. QUALCOMM
`
`
`
`nationwide class, allowing the consumer class to sue for
`antitrust damages under Rule 23(b)(3).
`
`15
`
`Besides certifying the class under Rule 23(b)(3), the
`district court certified a Rule 23(b)(2) injunctive relief class.
`According to the district court, the class satisfied 23(b)(2)’s
`requirements
`because
`Qualcomm’s
`allegedly
`anticompetitive conduct—i.e., the practices to be enjoined—
`are generally applicable to the whole class.
`
`Qualcomm seeks interlocutory review under Rule 23(f)
`of the district court’s class certification order. On appeal,
`Qualcomm challenges the district court’s finding of Rule
`23(b)(3) predominance, arguing that antitrust impact cannot
`be shown by common evidence, the class improperly
`includes millions of iPhone purchasers suffering no antitrust
`impact, and California law cannot apply to the nationwide
`class. Qualcomm also argues that the class is unmanageable
`and not a superior method of adjudicating the claims as
`required by Rule 23(b)(3) and that the class failed to meet
`Rule 23(b)(2)’s requirements for injunctive relief.
`
`After this case was submitted, this court issued its
`opinion in FTC v. Qualcomm, 969 F.3d 974. We directed
`the parties to file supplemental briefs addressing the effect
`of that decision, if any, on this case. Qualcomm urges us to
`remand to the district court with instructions to dismiss
`because FTC v. Qualcomm means that Plaintiffs lack any
`viable foundation for their claims. Plaintiffs argue that FTC
`v. Qualcomm does not affect this Rule 23(f) interlocutory
`appeal and that the impact, if any, of FTC v. Qualcomm on
`Plaintiffs’ claims requires further development before this
`court can weigh in.
`
`
`
`16
`
`
`STROMBERG V. QUALCOMM
`
`II
`
`We review the district court’s class certification rulings
`for abuse of discretion and “review for clear error any
`findings of fact the district court relied upon in its
`certification order.” Senne v. Kan. City Royals Baseball
`Corp., 934 F.3d 918, 926 (9th Cir. 2019). “A district court
`abuses its discretion where it commits an error of law, relies
`on an improper factor, omits a substantial factor, or engages
`in a clear error of judgment in weighing the correct mix of
`factors.” Id. (citing Stockwell v. City & Cnty. of San
`Francisco, 749 F.3d 1107, 1113 (9th Cir. 2014)). A district
`court’s choice of law determination is reviewed de novo, but
`its underlying factual findings are reviewed for clear error.
`Zinser v. Accufix Rsch. Inst., Inc., 253 F.3d 1180, 1187 (9th
`Cir. 2001), amended 273 F.3d 1266 (9th Cir. 2001).
`
`III
`
`Rule 23 governs class certification. “The party seeking
`class certification has
`the burden of affirmatively
`demonstrating that the class meets the requirements of
`[Rule] 23.” Mazza v. Am. Honda Motor Co., 666 F.3d 581,
`588 (9th Cir. 2012) (citing Wal-Mart Stores, Inc. v. Dukes,
`564 U.S. 338, 350 (2011)). As a threshold matter, a class
`must first meet the four requirements of Rule 23(a):
`(1) numerosity,
`(2) commonality,
`(3) typicality,
`and
`(4) adequacy of representation. Senne, 934 F.3d at 927. In
`addition to Rule 23(a)’s requirements, the class must meet
`the requirements of at least one of the “three different types
`of classes” set forth in Rule 23(b). Id. (quoting Leyva v.
`Medline Indus., Inc., 716 F.3d 510, 512 (9th Cir. 2013)). On
`appeal, Qualcomm does not contest that Plaintiffs met Rule
`23(a)’s requirements; rather, it contests class certification
`under Rule 23(b)(3) and (b)(2).
`
`
`
`
`
`
`STROMBERG V. QUALCOMM
`
`17
`
`Under Rule 23(b)(3), a court must find that “the
`questions of law or fact common to class members
`predominate over any questions affecting only individual
`members, and that a class action is superior to other available
`methods
`for
`fairly and efficiently adjudicating
`the
`controversy.” This “inquiry focuses on ‘the relationship
`between the common and individual issues’ and ‘tests
`whether proposed classes are sufficiently cohesive to
`warrant adjudication by representation.’”
` Vinole v.
`Countrywide Home Loans, Inc., 571 F.3d 935, 944 (9th Cir.
`2009) (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011,
`1022 (9th Cir. 1998)).
`
`that “the party
`Rule 23(b)(2), however, requires
`opposing the class has acted or refused to act on grounds that
`apply generally to the class, so that final injunctive relief or
`corresponding declaratory relief is appropriate respecting
`the class as a whole.” Rule 23(b)(2) “requirements are
`unquestionably satisfied when members of a putative class
`seek uniform injunctive or declaratory relief from policies or
`practices that are generally applicable to the class as a
`whole.” Parsons v. Ryan, 754 F.3d 657, 688 (9th Cir. 2014)
`(citing Rodriguez v. Hayes, 591 F.3d 1105, 1125 (9th Cir.
`2010)).
`
`Qualcomm asserts that the class did not meet the
`requirements of Rule 23(b)(2) and (b)(3). Even though
`Qualcomm raises various 23(b)(3) predominance arguments
`on appeal, we hold that the 23(b)(3) class was erroneously
`certified under a faulty choice of law analysis because
`differences in relevant state laws swamp predominance.
`Therefore, we vacate the 23(b)(3) class certification order.
`We also vacate the 23(b)(2) class certification order in light
`of FTC v. Qualcomm. On remand, the district court should
`address in the first instance the effect of FTC v. Qualcomm
`
`
`
`STROMBERG V. QUALCOMM
`
`18
`
`on certification, particularly on the 23(b)(3) and (b)(2)
`classes’ ability to meet the threshold requirements of Rule
`23(a) as well as the viability of Plaintiffs’ claims to move
`forward.1
`
`A
`
`After considering Qualcomm’s various arguments, we
`hold that most fundamentally the district court failed to
`properly analyze California’s choice of law rules to
`determine the applicable state laws. When properly
`analyzed, California’s choice of law rules preclude the
`district court’s certification of the 23(b)(3) class because the
`laws of other states—beyond California’s Cartwright Act—
`should apply. As a result, common issues of law do not
`predominate in the class as currently certified.
`
`“Understanding which law will apply before making a
`predominance determination is important when there are
`variations in applicable state law.” Zinser, 253 F.3d at 1189.
`“[V]ariances in state law [can] overwhelm common issues
`and preclude predominance for a single nationwide class.”
`Mazza, 666 F.3d at 596. To determine which laws will apply
`and consequently whether 23(b)(3) predominance can be
`met, courts must conduct a choice of law analysis.
`
`When state claims are brought, federal courts apply the
`choice of law rules of the forum state—here, California. See
`Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496
`(1941). Under California’s choice of law rules, the class
`
`1 Because we vacate and remand the 23(b)(2) class so the district
`court can reconsider certification given FTC v. Qualcomm, we need not
`reach Qualcomm’s argument that the 23(b)(2) class failed to meet the
`Rule 23(b)(2) cohesiveness requirement, which—as Qualcomm later
`concedes in its reply brief—we rejected in Senne, 934 F.3d 918.
`
`
`
`19
`
`STROMBERG V. QUALCOMM
`
`
`
`action proponent bears the initial burden to show that
`application of California law is constitutional on the basis
`that California has “‘significant contact or significant
`aggregation of contacts’ to the claims of each class
`member.” Mazza, 666 F.3d at 589–90 (quoting Wash. Mut.
`Bank v. Superior Court, 15 P.3d 1071, 1081 (Cal. 2001)
`(citations omitted)). “Once the class action proponent makes
`this showing, the burden shifts to the other side to
`demonstrate ‘that foreign law, rather than California law,
`should apply to class claims.’” Mazza, 666 F.3d at 590
`(quoting Wash. Mut. Bank, 15 P.3d at 1081).
`
`California law cannot apply to the class claims if the
`interests of other states outweigh California’s interest.
`Mazza, 666 F.3d at 590. To make this determination, courts
`use California’s three-step governmental interest test. Id.
`“First, the court determines whether the relevant law of each
`of the potentially affected jurisdictions with regard to the
`particular issue in question is the same or different.” Chen
`v. Los Angeles Truck Ctrs., LLC, 444 P.3d 727, 730 (Cal.
`2019) (citations omitted). “Second, if there is a difference,
`the court examines each jurisdiction’s interest in the
`application of its own law under the circumstances of the
`particular case to determine whether a true conflict exists.”
`Id. at 730–31 (citations omitted). Finally, “if the court finds
`that there is a true conflict, it carefully evaluates and
`compares the nature and strength of the interest of each
`jurisdiction in the application of its own law to determine
`which state’s interest would be more impaired if its policy
`were subordinated to the policy of the other state, and then
`ultimately applies the law of the state whose interest would
`be the more impaired if its law were not applied.” Id. at 731
`(internal quotation marks and citations omitted).
`
`
`
`20
`
`
`STROMBERG V. QUALCOMM
`
`As an initial matter, the district court correctly concluded
`that California has a constitutionally sufficient aggregation
`of contacts to the claims of each class member. Qualcomm’s
`principal place of business is in California; the class includes
`residents of California as well as indirect purchasers who
`bought cellphones in California; and Qualcomm made
`business decisions and negotiated licenses related to its
`allegedly anticompetitive conduct in California. See Mazza,
`666 F.3d at 590 (citing Clothesrigger, Inc. v. GTE Corp.,
`236 Cal. Rptr. 605, 612–13 (Ct. App. 1987)). Qualcomm
`does not dispute there are sufficient contacts in California.
`Instead, it argues that the district court misapplied the three-
`step governmental interest test in making its predominance
`determination. We agree.
`
`1
`
`There is no dispute that material differences exist
`between California’s Cartwright Act and the antitrust laws
`of other states. Non-repealer states do not allow indirect
`purchasers to bring antitrust damages suits, while repealer
`states—like California—do. See supra Section I.B. This
`difference is material because it “will spell the difference
`between the success and failure of a claim.” Mazza,
`666 F.3d at 591. But the district court erred in its analysis at
`the first step because it overlooked variations in the antitrust
`laws of Illinois Brick-repealer states. Even among the
`repealer states, there are significant variations in the scope
`of repealer laws. For instance, state repealer laws vary as to
`the type of law the repeal applies to;2 who can sue for
`
`2 Florida, Massachusetts, Missouri, and New Hampshire limit the
`repeal to consumer protection statutes. See Mack v. Bristol-Myers
`Squibb Co., 673 So. 2d 100, 108 (Fla. Dist. Ct. App. 1996); Ciardi v. F.
`Hoffman-La Roche, Ltd., 762 N.E.2d 303, 312 (Mass. 2002); In re
`
`
`
`
`21
`
`STROMBERG V. QUALCOMM
`
`
`
`damages;3 and the amount or type of damages indirect
`purchasers can recover.4 Thus, the district court failed to
`“determine[] . . . the relevant law of each of the potentially
`affected jurisdictions,” as required under California’s
`governmental interest test. Mazza, 666 F.3d at 590 (citation
`omitted).
`
`2
`
`The district court also erroneously concluded that “while
`California has an interest in applying its law, other states
`have no interest in applying their laws to the current
`dispute.” In re Qualcomm Antitrust Litig., 328 F.R.D. 280,
`313 (N.D. Cal. 2018). True, as the district court noted,
`California has an interest in applying its law to regulate and
`deter Qualcomm (a resident California corporation) from
`allegedly unlawful business activities in California. But
`
`Lithium Ion Batteries Antitrust Litig., No. 13-MD-2420 YGR, 2014 WL
`4955377, at *19 (N.D. Cal. Oct. 2, 2014) (quoting Gibbons v. J.
`Nuckolls, Inc., 216 S.W.3d 667, 669 (Mo. 2007)); LaChance v. U.S.
`Smokeless Tobacco Co., 931 A.2d 571, 582 (N.H. 2007).
`
`3 Though Illinois allows indirect purchaser recovery, it precludes
`class actions brought by indirect purchasers. 740 Ill. Comp. Stat.
`Ann. 10/7. And, as another example, Alaska, Arkansas, Colorado, and
`Idaho limit indirect purchaser claims to suits brought by the state
`attorney general. See Alaska Stat. Ann. § 45.50.577(i); Ark. Code Ann.
`§ 4-75-315(b); Colo. Rev. Stat. Ann. § 6-4-111(2); Idaho Code Ann.
`§ 48-108(2).
`
`4 For instance, Hawaii only permits indirect purchaser suits for
`comp