UNITED STATES DISTRICT COURT SOUTHERN DISTRICT of NEW YORK in Re: SONY BMG CD TECHNOLOGIES LITIGATION Case No. 1:05-Cv-09575-NR
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK In re: SONY BMG CD Case No. 1:05-cv-09575-NRB TECHNOLOGIES LITIGATION MOTION AND MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’ APPLICATION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT GIRARD GIBBS KAMBER & ASSOCIATES LLC & De BARTOLOMEO LLP Scott A. Kamber (SK-5794) Daniel C. Girard (Pro Hac Vice) 19 Fulton Street, Suite 400 Jonathan K. Levine (JL-8390) New York, NY 10038 Elizabeth C. Pritzker (Pro Hac Vice) Telephone: (212) 571-2000 Aaron M. Sheanin (Pro Hac Vice) 601 California Street, Suite 1400 San Francisco, California 94108 Telephone: (415) 981-4800 Plaintiffs’ Co-Lead Counsel www.girardgibbs.com TABLE OF CONTENTS I. INTRODUCTION ............................................................................................................. 1 II. BACKGROUND OF THE LITIGATION.......................................................................... 3 A. The Nature Of SONY BMG’s Content Protection Software.............................................. 3 B. XCP CDs And Software Expose Computers To Security Vulnerabilities ......................... 4 C. MediaMax CD Software Installs Without Consent And Exposes Computers To Security Vulnerabilities .............................................................................. 6 D. The Class Action Litigation................................................................................................ 6 III. THE PROPOSED SETTLEMENT..................................................................................... 8 A. The Settlement Class........................................................................................................... 8 B. The Settlement Consideration............................................................................................. 9 1. XCP CD Exchange Program......................................................................................... 10 2. MediaMax Compensation............................................................................................. 11 3. XCP And MediaMax Software Updates And Uninstallers........................................... 11 4. SONY BMG Will Not Collect Personal Data............................................................... 13 5. Defendants Will Waive Rights Under XCP And MediaMax EULAs.......................... 13 6. The Settlement Contains “Most Favored Nations” Protection ..................................... 14 7. Injunctive Relief Required By The Settlement Will Effectuate Changes In Defendants’ Use Of Content Protection Software................................................... 14 C. Release Of Claims............................................................................................................. 15 D. Defendants’ Limited Right To Withdraw From Settlement ............................................. 17 IV. PRELIMINARY SETTLEMENT APPROVAL .............................................................. 18 A. The Role Of The Court ..................................................................................................... 18 B. The Proposed Settlement Class May Be Certified Under Amchem.................................. 19 www.girardgibbs.com i 1. Plaintiffs Have Met All Of The Prerequisites Under Rule 23(a).................................. 20 2. The Court Should Certify The Settlement Class Under Rule 23(b)(3)......................... 21 3. The Court Should Appoint Plaintiffs’ Co-Lead Counsel As Class Counsel ................ 22 C. Criteria To Be Considered In Deciding Preliminary Approval ........................................ 23 1. There Are No Grounds To Doubt The Fairness Of The Settlement, Which Is The Product Of Extensive, Arm’s-Length Negotiations............................... 26 2. The Settlement Contains No Obvious Deficiencies...................................................... 27 3. The Settlement Falls Within The Range Of Possible Approval ................................... 29 V. THE PROPOSED PLAN OF CLASS NOTICE............................................................... 31 VII. CONCLUSION................................................................................................................. 35 www.girardgibbs.com ii TABLE OF AUTHORITIES CASES Page(s) Amchem Prods. Inc. v. Windsor 521 U.S. 591 (1997)...................................................................................................................... 19 Armstrong v. Board of School Directors of the City of Milwaukee 616 F.2d 305 (7th Cir. 1980) ......................................................................................................... 23 Blackie v. Barrack 524 F.2d 891 (9th Cir. 1975) ......................................................................................................... 21 Denney v. Jenkens & Gilchrist 230 F.R.D. 317 (S.D.N.Y. 2005) .................................................................................................. 19 Detroit v. Grinnell Corp. 495 F.2d 448 (2d Cir. 1974).......................................................................................................... 24 Eisen v. Carlisle & Jacquelin 417 U.S. 156 (1974)...................................................................................................................... 31 In re Airline Ticket Comm’n Antitrust Litig. 953 F. Supp. 280 (D. Minn. 1997)................................................................................................ 33 In re Automotive Refinishing Paint Antitrust Litig. 2003 U.S. Dist. LEXIS 4681 (E.D. Pa. Mar. 17, 2003)................................................................ 26 In re Compact Disc Minimum Advertised Price Antitrust Litig. 216 F.R.D. 197 (D. Me. 2003)...................................................................................................... 32 In re Initial Pub. Offering Sec. Litig. 226 F.R.D. 186 (S.D.N.Y. 2005) ...................................................................................... 18, 23, 24 In re Inter-Op Hip Prosthesis Liab. Litig. 204 F.R.D. 359 (N.D. Ohio 2001) ................................................................................................ 27 In re Medical X-Ray Film Antitrust Litig. 1997 U.S. Dist. LEXIS 21936 (E.D.N.Y. Dec. 10, 1997) ............................................................ 26 In re Michael Milken & Assoc. Sec. Litig. 150 F.R.D. 46 (S.D.N.Y. 1993) ................................................................................................... 18 www.girardgibbs.com iii In re NASDAQ Market-Makers Antitrust Litig. 176 F.R.D. 99 (S.D.N.Y. 1997) .............................................................................................. 18, 23 In re Prudential Sec. Inc. Ltd. P’ships Litig. 163 F.R.D. 200 (S.D.N.Y. 1995) ...................................................................................... 23, 24, 26 In re Serzone Prods. Liab. Litig. 2005 U.S. Dist. LEXIS 30468 (S.D.W.Va. Sep. 2, 2005) ............................................................ 33 In re Shell Oil Refinery 155 F.R.D. 552 (E.D. La. 1993).................................................................................................... 27 In re Visa Check/Mastermoney Antitrust Litig. 280 F.3d 124 (2d Cir. 2001).................................................................................................... 19, 21 In re Warner Comms. Sec. Litig. 798 F.2d 35 (2d Cir. 1986)............................................................................................................ 18 Lyons v. Marrud, Inc. [1972-1973 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 93 (S.D.N.Y. 1972) ............................ 25 Maywalt v. Parker & Parsley Petroleum Co. 67 F.3d 1072 (2d Cir. 1995).......................................................................................................... 25 McNamara v. Bre-X Minerals Ltd. 214 F.R.D. 424 (E.D. Tex. 2002).................................................................................................. 26 Philadelphia Housing Auth. v. American Radiator & Standard Sanitary Corp. 323 F. Supp. 364 (E.D. Pa. 1970) ................................................................................................. 24 Reed v. General Motors Corp. 703 F.2d 170 (5th Cir. 1983) ................................................................................................... 25, 26 Saylor v. Lindsley 456 F.2d 896 (2d Cir. 1972).......................................................................................................... 24 Soberal-Perez v. Heckler 717 F.2d 36 (2d Cir. 1983)............................................................................................................ 31 Spann v. AOL Time Warner, Inc. 2005 U.S. Dist. LEXIS 10848 (S.D.N.Y. June 7, 2005) .............................................................. 28 Wal-Mart Stores, Inc. v. Visa U.S.A. Inc. 396 F.3d 96 (2d Cir. 2005)................................................................................................ 24, 31, 33 Weinberger v. Kendrick 698 F.2d 61 (2d Cir. 1982)............................................................................................................ 31 www.girardgibbs.com iv STATUTES 18 U.S.C. § 1030, et seq.................................................................................................................. 8 Fed. R. Civ. P. 23(a) ............................................................................................................... 19, 20 Fed. R. Civ. P. 23(a)(1)................................................................................................................