Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-00786/USCOURTS-casd-3_08-cv-00786-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MERDAD VALIKHANI, an individual, on

behalf of himself, the general public and all

others similarly situated,

Plaintiffs,

CASE NO. 08CV786 WQH (JMA)

ORDER

vs.

QUALCOMM INCORPORATED, a

Delaware corporation, and DOES 1-100,

Defendants.

HAYES, Judge:

The matter before the Court is Plaintiff’s motion to remand this case back to the

California State Superior Court in San Diego, California. (Doc. # 20). The Court finds this

matter suitable for submission on the papers and without oral argument.

PROCEDURAL HISTORY

On April 18, 2008, Plaintiff Merdad Valikhani filed the pending class action lawsuit

against Defendant Qualcomm Incorporated (Qualcomm) in the California State Superior Court

in San Diego, California. (Doc. # 1 at Ex. A). On April 30, 2008, Defendant Qualcomm

removed the case to this Court pursuant to 28 U.S.C. §§ 1332(d) & 1441. (Doc. # 1). On May

16, 2008, Plaintiff filed the pending motion to remand this case back to the California State

Superior Court. (Doc. # 20). On June 9, 2008, Defendant filed an opposition to the motion.

(Doc. # 25). On June 16, 2008, Plaintiff filed a reply to support the motion. (Doc. # 28).

Case 3:08-cv-00786-WQH-LSP Document 36 Filed 08/21/08 Page 1 of 7
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ALLEGATIONS OF THE COMPLAINT AND FACTUAL BACKGROUND

Plaintiff Merdad Valikhani resides in Los Angeles, California. Complaint (Doc. # 1 at

Ex. A), ¶ 8. Plaintiff purchased a subsidized LF-CU500 cell phone from AT&T and receives

cellular phone service from AT&T. Compl., ¶ 8. 

Defendant Qualcomm is a Delaware corporation which is headquartered in San Diego,

California. Compl., ¶ 9. “Qualcomm commercializes technology involved in cellular

communications and applications,” and owns patents which are significant in the wireless

communications industry. Compl., ¶ 9. Qualcomm generates billions in revenues by licensing

its patents. Compl., ¶ 9.

The wireless communications industry consists of many components, including wireless

carriers who provide cell phone service to consumers, cell phone manufacturers who

manufacture cell phones, and cell phone component manufactures who manufacture parts of

cell phones. Compl., ¶¶ 16-17. In order “[f]or a carrier’s wireless system to function properly,

all of the system’s components (e.g. base stations in various geographic locations and

consumers’ cell phones) must seamlessly interface with each other.” Compl., ¶ 19. This

requires that “each cell phone,” no matter who manufactures it, “must be capable of interfacing

with all of the other components in a carrier’s wireless system.” Compl., ¶ 19. 

Because of the “demand for interoperability,” telecommunication standards determining

organizations (SDOs) have created industry and global-wide standards for wireless carriers,

cell phone manufacturers, and component makers. Compl., ¶¶ 20-22. When

telecommunication SDOs consider implementing new standards, “[t]he ownership of relevant

intellectual property (IP) and related IP licensing practices are critical issues . . . .” Compl.,

¶ 24. “If the implementation of a standard requires the use of particular [intellectual property],

such as a patent, the [intellectual property] owner may have the ability to prevent, delay or

distort the development of technology implementing that standard (sometimes referred to as

‘patent hold-up’) and thereby undermine the purpose of the SDO.” Compl., ¶ 24.

“Accordingly, SDOs typically require that their members declare whether they believe they

hold patents necessary for compliance with a particular standard, and if so whether they are

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willing to license such patents on fair, reasonable, and non-discriminatory (FRAND) terms.”

Compl., ¶ 24.

“Patents necessary to implement a particular standard are known as ‘essential patents’

for the standard to which they relate,” and “[e]ach SDO relevant to this action requires that

owners of essential patents agree to FRAND licensing before the SDO will agree to include

the technology that depends upon those patents in any industry standard.” Compl., ¶¶ 24, 43.

Once adopted, “[a]n industry-wide standard necessarily eliminates previously available

alternative technologies, which can no longer be used and are no longer competitive.” Compl.,

¶ 34. “The adoption of an industry-wide standard, therefore, confers monopoly power on the

holders of patents essential to implementing that standard.” Compl., ¶ 34.

Relevant wireless communication SDOs adopted the Universal Mobile

Telecommunications System (UMTS) standard for the wireless communication industry, and

Defendant Qualcomm holds “essential” patents with respect to the UMTS standard. Compl.,

¶¶ 1-4, 33-38. Specifically, “Qualcomm’s WCDMA patents are essential to the manufacture

of UMTS-compliant cell phones and other UMTS-compliant devices, and are also essential

for the implementation of the UMTS standard.” Compl., ¶ 38. Before the relevant SDOs

included Qualcomm’s technology and intellectual property in the UMTS standard, “Qualcomm

made repeated and express written representations to SDOs . . . that Qualcomm would license

any of its essential WCDMA patents on FRAND terms prior to the adoption of the UMTS

standard.” Compl., ¶¶ 44-45.

After the relevant SDOs adopted the UMTS standard, Defendant Qualcomm did not

license its UMTS-related patents in a fair, reasonable, and non-discriminatory manner.

Compl., ¶ 48. Rather, Qualcomm has charged “supracompetitive” prices for goods and

licenses which do not bear a relationship to its patents. Compl., ¶¶ 47-88. Qualcomm never

intended to offer its patent portfolio on FRAND terms, and only represented that it would

license on FRAND terms to induce the relevant SDOs to include Qualcomm’s technology in

the UMTS standard. Compl., ¶¶ 44-48. On behalf of himself and others similarly situated,

Plaintiff Valikhani alleges that “Qualcomm acquired monopoly power by intentionally

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misrepresenting to the relevant SDOs and their members that Qualcomm would license its

WCDMA patents on fair, reasonable, and non-discriminatory terms.” Compl., ¶ 101. Plaintiff

Valikhani alleges that he and others similarly situated were forced to pay “supracompetitive”

prices for goods in the wireless communications marketplace as a result of Defendants’

improper actions. Compl., ¶ 109. 

Plaintiff seeks certification of, and purports to represent, two different classes of

persons in this lawsuit. Compl., ¶ 1. First, Plaintiff alleges and represents a “Device Class,”

defined as all persons who purchased a UMTS-capable cellular device. Compl., ¶¶ 1, 89. Over

14 million UMTS devices, each requiring a patent license from Defendant, have been sold in

the United States from 2005 through 2007. Declaration of Andres Leyva (Doc. # 25-1), ¶ 3.

Qualcomm estimates that “326 million UMTS devices were sold globally in the last three

years.” Compl., ¶ 90. According to the Complaint, “[t]he Device Class seeks injunctive relief

under state anti-trust laws, and money damages (including treble damages under the Cartwright

Act) . . . for persons who purchased a UMTS-capable cellular device.” Compl., ¶ 7. Second,

Plaintiff alleges and represents a “Service Class,” defined as all persons who purchased

cellular service from any carrier in the United States which bundles its cellular service with

subsidized UMTS-compliant devices.” Compl., ¶ 93. The Service Class seeks “injunctive

relief under state antitrust laws, and money damages (including treble damages under the

Cartwright Act) for persons who purchased cellular service from a carrier that bundled its

cellular services with subsidized UMTS-capable devices.” Compl., ¶ 87. The Complaint seeks

reasonable attorneys’ fees and restitution, among other relief. Compl., ¶ 115.

Plaintiff alleges that “Defendant’s actions have injured Plaintiff and the Device and

Service Class members and threaten them with additional antitrust injury in the form of more

expensive UMTS cellular devices, reduced selection, and lessened non-price competition.”

Compl., ¶ 105. Plaintiff and the Class Members allege that they have sustained antitrust

injuries from the Defendant’s actions including artificially and unreasonably increased costs

for UMTS cellular devices. Compl., ¶ 105.

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1

 28 U.S.C. § 1332(d) is part of the Class Action Fairness Act of 2005 (CAFA).

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STANDARD OF REVIEW

28 U.S.C. § 1332(d)1

 “vests the district court with ‘original jurisdiction of any civil

action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive

of interest and costs, and is a class action in which’ the parties satisfy, among other

requirements, minimal diversity.” Abrego v. The Dow Chemical Co., 443 F.3d 676, 680 (9th

Cir. 2006). The burden of establishing removal jurisdiction under 28 U.S.C. § 1332(d) is on

“the proponent of federal jurisdiction.” Id. at 685. 

DISCUSSION

Defendant removed this case under 28 U.S.C. § 1332(d) of the Class Action Fairness

Act. The only issue before the Court is whether Defendant has established that more than

$5,000,000 is in controversy in this case, as is required under 28 U.S.C. § 1332(d)(2).

Plaintiff contends that this case should be remanded because Defendant has not satisfied

its burden to establish that more than $5,000,000 is at issue in this case. See 28 U.S.C. §

1332(d)(2). Plaintiff notes that there is a presumption against removal jurisdiction, and

contends that Defendant has not submitted sufficient evidence to establish the requisite amount

in controversy.

Defendant contends that Plaintiff’s Complaint satisfies the amount in controversy

without reference to any evidence submitted by Defendant. Specifically, Defendant contends

that the allegations of the Complaint make it facially apparent that more than $5,000,000 is in

controversy here, particularly considering the size of the alleged Service and Device classes

and the fact that Plaintiffs seek treble damages, injunctive relief, and attorney fees. Defendant

further contends that it has submitted evidence which adequately establishes that more than

$5,000,000 is at issue in this case.

In order to establish jurisdiction under 28 U.S.C. § 1332(d), a party must establish by

a preponderance of the evidence that plaintiff class members seek, in aggregate, more than

$5,000,000. Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007). In other

words, if the proponent of jurisdiction establishes that it is “more likely than not” that plaintiff

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2

 In determining the amount in controversy, a court can consider requests for treble damages,

attorneys fees, and injunctions. Kroske v. U.S. Bank Corp., 432 F.3d 976, 980 (9th Cir. 2005)

(attorneys fees); In re Ford Motor Co., 264 F.3d 952, 958 (9th Cir. 2001) (injunctive relief); Chabner

v. United of Omaha Life Ins., 225 F.3d 1042, 1046 fn. 3 (9th Cir. 2000) (treble damages). 

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class members seek more than $5,000,000, then the proponent has satisfied its burden with

respect to the amount in controversy. Abrego, 443 F.3d at 689. In determining “the amount

in controversy on removal, . . . [t]he district may consider whether it is ‘facially apparent’ from

the complaint that the jurisdictional amount is in controversy.” Singer v. State Farm Mutual

Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). If the jurisdictional amount is not “facially

apparent, . . . the court may consider facts in the removal petition, and may ‘require parties to

submit summary-judgment-type evidence relevant to the amount in controversy at the time of

removal.” Id. (citing Allen v. R&H Oil & Gas Co., 63 F.3d 1326, 1335-36 (5th Cir. 1995).

The Complaint alleges that the Service Class consists of at least 76 million persons.

Compl., ¶ 94. Defendant has submitted evidence that the over 14 million UMTS devices have

been sold in the United States from 2005 to 2007. Leyva Decl., ¶ 3. Plaintiff seeks

compensatory damages, treble damages2

 and an injunction enjoining Defendant from

continuing to license its patents unfairly. Defendant has submitted evidence that its UMTS

licensees earned over $2.5 billion on the sale of UMTS-licensed devices in the United States,

Leyva Decl., ¶ 4; and that Defendant’s “Technology Licensing Segment” had total revenues

of $2.77 billion, at least $1 billion of which is derived from UMTS sales worldwide. Karl

Huth Declaration, Ex. D at 4. The allegations of the Complaint and Defendant’s evidence

establish that more likely than not Defendant’s patent licensing division has earned billions of

dollars over the last three years, a large part of which is attributable to Defendant’s essential

UMTS patents. Huth Decl., Ex. D.

After considering the allegations of the Complaint and the evidence submitted by

Defendant, the Court concludes that Defendant has established that it is more likely than not

that Plaintiff class members seek greater than $5,000,000 in this case. The Court concludes

the allegations of the size of both the Service and the Device Classes; Plaintiff’s request for

not only compensatory damages, but treble damages, injunctive relief, and attorney fees; and

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and Defendant’s evidence related to the size of the Service and Device Classes and

Defendant’s revenues establishes by a preponderance of the evidence that the amount in

controversy is satisfied. Plaintiff seeks damages for a class of approximately 76 million

members and injunctive relief related to Defendant’s multibillion dollar patent licensing

business. Defendant has submitted evidence to show that Plaintiff’s requested injunction to

enjoin all “further anticompetitive acts” by Defendant would more likely than not be valued

in excess of $5,000,000. Finally, and in addition to the costs of the injunction, the Court

concludes that Plaintiff’s claims for restitution, treble damages, and attorney fees make it more

likely than not that more than $5,000,000 is in controversy in this case.

IT IS HEREBY ORDERED that Plaintiff’s motion to remand (Doc. # 20) is DENIED.

DATED: August 21, 2008

WILLIAM Q. HAYES

United States District Judge

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