Qualcomm won a legal battle on Wednesday in a massive class-action antitrust lawsuit involving as many as 250 million cellphone buyers.
A three-judge panel of the U.S. 9th Circuit Court of Appeals threw out the class certification in the lawsuit, returning the case to a lower court.
The judges found that U.S. District Judge Lucy Koh in San Jose was wrong to certify such a large, nationwide class under the umbrella of California's Cartwright Act — the state's primary antitrust law — when other states have very different anti-monopoly and consumer protection statutes.
The 9th Circuit's decision was based on a narrow interpretation of the standards required to broadly apply the Cartwright Act. But it could set the stage for dismissal of the entire case.
That's because Qualcomm has already been cleared of antitrust violations. In August 2020, a separate 9th Circuit panel found that the company's business practices are lawful and do not hinder competition in a case brought by the U.S. Federal Trade Commission.
Since the monopoly arguments against Qualcomm in the class-action lawsuit largely overlap with those made by FTC, the case may fail as a matter of law on remand given the 9th Circuit's precedent in favor of Qualcomm.
The company declined to comment.
The class action is seeking at least $5 billion in damages for Americans who bought cellphones as far back as 2001. It alleges Qualcomm leveraged its monopoly power in top-tier 3G and 4G modem chips to overcharge cellphone makers for patent royalties in a scheme dubbed "no license, no chips" by the FTC.
The alleged patent overcharge was passed on to consumers through higher smartphone prices, according to the class action complaint.
Qualcomm argued, among other things, that such a huge and diverse class of cellphone buyers was unmanageable and hamstrung its ability to mount a defense, which violated the company's due process rights.
