Let’s just say that resolution of this case has taken way longer than a Fortnite!  😉

In the case In re Apple iPhone Antitrust Litigation, No. 11-cv-06714-YGR (TSH) (N.D. Cal. Feb. 24, 2021), California Magistrate Judge Thomas S. Hixson ordered third party Valve to “produce the aggregated data sought by RFP 2 by March 8” to Apple, but narrowed the per app information for RFP 2 “and order[ed] Valve to produce the per-app information only for the 436 apps available on both Steam and the Epic Games store (as providing that information broken down for all 30,000+ apps is an unnecessary burden on Valve), and to produce that within 30 days.”  Judge Hixson also ordered Valve to “produce the requested information for the 436 apps within 30 days” in response to RFP 32, limiting the time frame to 2017 to the present and also ordered Valve to remove non-privileged redactions from its volume 5 document production, finding that the protection from the protective orders was “sufficient”.

Case Background

In this case related to the litigation between Epic Games (developers of the game Fortnite) and Apple over Apple’s removal of Fortnite from the Apple App Store after Epic implemented changes in Fortnite to bypass the App Store payment system, Apple served a document subpoena on third-party Valve (which is a privately held company that develops PC video games and operates Steam, an online platform that lets users purchase and play PC games on their laptops and desktops).  Apple moved to compel on three points of dispute:

• RFP 2, which requested documents sufficient to show since 2008 Valve’s (a) total yearly sales from apps and in-app purchases from Steam, (b) annual advertising revenue attributable to Steam, (c) annual sales of external products attributable to Steam, (d) annual revenues from Steam, and (e) annual earnings, income or profits from Steam;
• RFP 32, seeking information relevant to the effects of competition; and
• Redactions to volume 5 of Valve’s document production, where Apple contended that the redactions were “substantial” and that “most of the potentially responsive information was redacted out”.

Valve briefed all three issues together, arguing “that the requested information is irrelevant, that collecting it is burdensome, and that Apple has not shown a substantial need for this information”.

Judge’s Ruling

Judge Hixson stated that “Valve argues that RFPs 2 and 32 seek proprietary and highly confidential information, so Apple must establish a substantial need that cannot otherwise be met without undue hardship under Federal Rule of Civil Procedure 45(d)(3). The Court agrees that Apple must meet this standard and believes it has done so. Apple has shown that it has a substantial need for this information to obtain evidence in support of its arguments concerning market definition and the effects of competition, and it cannot obtain this information elsewhere without undue burden. Valve offers several reasons why Apple has not satisfied this standard, but none is persuasive.”

He also stated that “The information Apple seeks is relevant and proportional to these three related actions. First, the aggregate financial information sought by RFP 2 is relevant to market definition, which is a major issue in dispute in this litigation”, noting that “Apple is pushing for a broadly defined video game market that includes distribution on other platforms, including the Microsoft Xbox, Sony PlayStation 4, Nintendo Switch, computer platforms (Microsoft Windows PCs, macOS computers), and tablets. (Google Android and Microsoft Surface)…The proper definition of the relevant market requires discovery and factual development…Here, Steam is within Apple’s proposed relevant market, and RFP 2 seeks relevant information concerning this proposed relevant market.”

Judge Hixson also found that “RFP 32 as narrowed by Apple during meet and confer seeks information relevant to the effects of competition. Recall that in these related cases, Plaintiffs allege that Apple’s 30% commission on sales through its App Store is anti-competitive and that allowing iOS apps to be sold through other stores would force Apple to reduce its commission to a more competitive level. Well, Steam is one of the largest video game stores for PCs, and it too charges a 30% commission. Epic Games opened its video game store for PCs in December 2018, and Epic charges a commission that is lower than 30%. By focusing RFP 32 on 436 specific games that are sold in both Steam and Epic’s store, Apple seeks to take discovery into whether the availability of other stores does in fact affect commissions in the way Plaintiffs allege.”

Judge Hixson also disagreed with Valve’s decision to redact its own sales and revenue information from its volume 5 document production, stating that “Valve’s decision to stay private means that it avoids the public company disclosure and reporting requirements, but it does not immunize the company from discovery. The protective orders in these actions allow Valve to designate its documents confidential or highly confidential to address competitive concerns, and that protection is sufficient. The Court orders Valve to remove the redactions from volume 5 of its document production, except for any redactions of attorney-client privileged or attorney work product information, if there are any.”

So, what do you think?  Do you agree that Apple met its “substantial need” requirement to justify the discovery from third party Valve?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant, an Affinity partner of eDiscovery Today.  Check out Kelly Twigger’s ACEDS #caseoftheweek ACEDS event at 11:30am ET today here, where she discusses this case!

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