Opinion ID: 2812632
Heading Depth: 4
Heading Rank: 3

Heading: Contract Interests

Text: Apple also asserts that ATTM’s contract rights give it a legally protected interest in this action. For the reasons that follow, we find that Apple has not demonstrated that ATTM currently has any substantial contract rights that may be impaired by resolution of this action. Under some circumstances, an absent party’s contract rights may give it a legally protected interest in an action. 26 WARD V. APPLE, INC. See, e.g., Wilbur, 423 F.3d 1101; Am. Greyhound Racing, Inc. v. Hull, 305 F.3d 1015, 1022–24 (9th Cir. 2002); Manybeads v. United States, 209 F.3d 1164, 1166 (9th Cir. 2000). For instance, it is well established that all parties to a contract are necessary in an action to set aside the contract. See Wilbur, 423 F.3d at 1113 (citing cases). Our cases also establish that an absent party may be required in an action seeking equitable relief that would prevent a defendant from fulfilling “substantial” contractual obligations to the absent party. See Am. Greyhound Racing, 305 F.3d at 1023 (holding that absent Indian tribes were necessary parties where “the interest of the tribes arises from terms in bargained contracts, and the interest is substantial”); Cachil Dehe Band, 547 F.3d at 970 (interpreting American Greyhound Racing, Inc. v. Hull to “require[]” that the interest arising from terms in bargained contracts be “substantial” to be legally protected). Cf. Wilbur, 423 F.3d at 1113 (“[I]t is a fundamental principle that a party to a contract is necessary, and if not susceptible to joinder, indispensable to litigation seeking to decimate that contract.” (internal quotation marks omitted)). We have not, however, held that an absent party is always required when the relief sought in an action merely implicates an absent party’s contract rights. See Cachil Dehe Band, 547 F.3d at 970 (“[A]n interest that ‘arises from terms in bargained contracts’ may be protected . . . .” (emphasis added)). Apple cites three contract interests of ATTM it contends may be impaired if the action is resolved in ATTM’s absence: (1) ATTM’s right to control unlock codes; (2) rights arising from ATTM’s Wireless Service Agreement (WSA) with customers; and (3) ATTM’s arbitration provisions in the WSA. WARD V. APPLE, INC. 27
The Plaintiffs seek a judgment “[o]rdering Apple to provide the unlock code upon request to all members of the Class . . . .” Apple contends that this injunctive relief would conflict with ATTM’s purported contractual right to prevent Apple from unlocking ATTM customers’ iPhones. As a threshold matter, we must determine whether the record supports a finding that ATTM currently has such a right. The only possible sources of this right in the record are brief excerpts of agreements between Apple and ATTM from 2006 and 2011, and the right is not embodied therein. We begin with the excerpt from the 2006 agreement. The limited excerpt in the record clearly states that any right of ATTM to control unlock codes was only to last during the “Term and the Wind-Down Period.” As Apple’s counsel conceded at oral argument, there is nothing in the record defining the term or wind-down period. Without a definition of the term or wind-down period, we cannot determine whether ATTM still has the right Apple claims it has. We therefore find that the excerpt of the 2006 agreement does not demonstrate that ATTM has any existing right to control unlock codes. We next turn to the excerpt of the 2011 agreement. The first clause of this excerpt appears to condition Apple’s obligation not to unlock iPhones on its use of a SIM solution not offered by AT&T’s SIM suppliers. There is no evidence in the record that Apple ever employed such a solution. In the absence of such evidence, we cannot determine whether ATTM currently has a right to control unlock codes, and cannot find that injunctive relief ordering Apple to disclose 28 WARD V. APPLE, INC. unlock codes would impair ATTM’s rights under its contracts with Apple.3
Agreements with Customers Apple next contends that “the District Court will . . . inevitably have to interpret the terms of ATTM’s WSA with consumers, in ways that could affect and impair ATTM’s rights under that contract.” We reject this argument. The district court’s decision in Apple II undercuts Apple’s contention that interpretation of ATTM’s WSA is “inevitable.” The district court explicitly noted that “[the] Plaintiffs have not contended that any of their claims arise from ATTM service contracts,” 874 F. Supp. 2d at 899, and declined to “reach the question of whether [the] Plaintiffs must rely upon the WSA to advance any or all of their claims,” id. at n.21. Moreover, even if the district court ultimately interprets these WSAs, ATTM, as a non-party, will not be bound by the district court’s interpretation in subsequent proceedings. See Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 329 (1971) (“Some litigants—those who never appeared in a prior action—may not be collaterally estopped without litigating the issue. They have never had a chance to present their evidence and arguments on the claim. Due process 3 Even if ATTM has some lingering contract interests, it may be appropriate for the district court to exercise its discretion to fashion the equitable relief in a way that avoids interfering with those interests, instead of dismissing the entire action. See Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F. Supp. 92, 105–06 (C.D. Cal. 1971). WARD V. APPLE, INC. 29 prohibits estopping them despite one or more existing adjudications of the identical issue which stand squarely against their position.”). Lastly, we note that there is no copy of ATTM’s WSA in the record. It is therefore unclear what rights ATTM had under the WSA that might be affected by this action. Nor is there any evidence in the record suggesting that class members are still bound by the WSAs they signed during the class period. The complaint seeks certification of a class of consumers who “purchased wireless voice and data services for the iPhone from October 19, 2008, through February 3, 2011.” It is plausible that, more than four years after the last WSA in the class period was signed, many class members have entered into new WSAs with ATTM or other carriers. In sum, the record does not disclose whether ATTM’s WSAs with customers give it a legally protected interest in this action.
Apple also contends that ATTM has an interest in this action because the district court will have to construe the arbitration provisions in the WSA. This argument is likewise without merit. As long as ATTM is not a party, any construction of the arbitration clause will likely focus on whether Apple may use ATTM’s arbitration clause for Apple’s benefit. See 874 F. Supp. 2d at 898–99 (holding that Apple, as a non-signatory to the arbitration agreement, did not satisfy the requirements to invoke the doctrine of equitable estoppel, and declining to compel the plaintiffs to arbitrate their claims against Apple). 30 WARD V. APPLE, INC. ATTM does not have a legally protected interest in whether Apple may compel arbitration. Nor will the district court’s construction of the arbitration clause bind ATTM, a nonparty, in future actions. See Blonder-Tongue, 402 U.S. at 329. For the above reasons, we hold that Apple has not demonstrated that ATTM has a legally protected interest in this action.