Cell Phone Buyers Say Qualcomm Must Face Antitrust Class Action

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Class representatives say that Qualcomm Inc. needs to face antitrust allegations raised in litigation alleging the company orchestrated a price-fixing scheme that drove up the cost of chips for cell phones.

Several class actions lawsuits were consolidated into multidistrict litigation (MDL) in California earlier this year. Qualcomm argued that the cell phone buyers were not direct purchasers of the chips for the phones and therefore do not have standing in the antitrust case. They also argued that a nationwide Class could not be established in California.

The group of cell phone buyers pushed back against Qualcomm’s arguments. The buyers say that even though they did not purchase Qualcomm chips directly, the cost of their devices were still driven up by the price-fixing scheme.

“The exclusive dealing arrangement was part of a broader effort to foreclose competition by perpetuating Qualcomm’s monopoly in the modem chip market,” said the buyers in their motion. “Plaintiffs were injured because this exclusive dealing arrangement substantially foreclosed competition.”

A nationwide Class for the consolidated class action lawsuit and other antitrust litigation is appropriate, argued the buyers. Most of Qualcomm’s price-fixing and other antitrust actions occurred in California, say the buyers. Qualcomm is based in the southern district of California and, as the company noted during consolidation of the class action lawsuits, most witnesses and evidence is currently in California.

The Qualcomm antitrust MDL alleges that the chip maker abused its power by forcing cell phone makers into exclusive dealing contracts stymieing competition. Qualcomm also refused to license competitors and reneged on agreements to license.

The plaintiffs in the MDL also claim that Qualcomm owns 80 percent of the market for modern chips – essential for devices to comply with communication regulations and standards required by major cell phone providers. Qualcomm used its influence to force companies to pay huge royalties to have access to the chipsets, which resulted in correspondingly high prices for consumers wishing to purchase devices like cell phones and tablets.

Antitrust litigation, including class actions, were initiated against Qualcomm after the company was hit by $854 million in fines by Korean regulators for excessive patent royalty payments from cell phone makers and for unlawful licensing agreements.

Apple had originally entered into the litigation alleging that Qualcomm forced it to enter into an exclusive dealing contract, effectively killing any competition; however, Apple’s claims were not included in the MDL.

The Federal Trade Commission has also filed claims against Qualcomm alleging antitrust actions after beginning an investigation in January. The FTC action is currently pending in the Northern District of California.

The lead plaintiffs are represented by Kalpana Srinivasan, Marc M. Seltzer, Steven G. Sklaver, Amanda Bonn, Oleg Elkhunovich, Carel Alé and Joseph Grinstein of Susman Godfrey LLP, Steven N. Williams, Joseph W. Cotchett, Joyce M. Chang, Mark F. Ram and Toriana S. Holmes of Cotchett Pitre & McCarthy LLP and Steve W. Berman of Hagens Berman Sobol Shapiro LLP.

The Qualcomm Antitrust Class Action Lawsuit is In re: Qualcomm Patent Licensing Antitrust Litigation, Case No. 5:17­-md­-02773, in the U.S. District Court for the Northern District of California.

UPDATE: On July 19, 2018, plaintiffs in a Qualcomm antitrust class action lawsuit argued against the chipmaker’s push to require Apple to import iPhones under a proposed cease and desist order pending with the International Trade Commission.

UPDATE 2: On Aug. 9, 2018, Qualcomm fought a motion to certify a class action lawsuit initiated by consumers who say forced import behavior intentionally fixed the price of chipsets commonly used in cell phones. The chipmaker told the court that a Class of 250 million people is unprecedented and unfeasible.

UPDATE 3: On Aug. 29, 2018, a judge blocked a consumer antitrust class action lawsuit that attempted to stop Qualcomm from pursuing a patent infringement case against Apple which could force Apple to only import iPhones with Qualcomm’s chipsets.

UPDATE 4: On Oct. 12, 2018, Qualcomm says that they should be able to appeal a California court’s decision to certify a proposed Class of 250 million individuals in a lawsuit alleging the company gouged consumers by hiking the price of a chip used in most cell phones.

UPDATE 5: On Jan. 23, 2019, consumers who purchased a cell phone since Feb. 11, 2011, may be affected by a Qualcomm antitrust class action lawsuit pending in federal court. A settlement has not been reached and no money is available at this time. However, this litigation is being dubbed “quite likely the biggest class action in history,” and may affect the rights of more than 250 million cell phone owners. Learn more here.

UPDATE 6: On Jan. 23, 2019, Qualcomm was granted an immediate appeal of a massive certified Class of cellphone owners involved in a class action lawsuit alleging the company overpriced chips ubiquitous in mobile devices. Qualcomm contends that the newly certified Class of about 250 million consumers is “simply too large and unwieldy to manage” in a petition to appeal the decision brought to the Ninth Circuit two-judge panel.