IN RE APPLE INC. SECURITIES LITIGATION

Background

The underlying lawsuit asserts securities-related claims against Apple Inc., Tim Cook, and Luca Maestri based on allegedly misleading statements about iPhone sales in Greater China. The discovery dispute concerned a subpoena seeking documents from non-party Pegatron Corporation, which the opinion describes as a technology manufacturer headquartered in Taiwan. The requests covered iPhone production plans, sales and order information, economic conditions in Greater China, production agreements, and communications with analysts and journalists during the period from February 1, 2018, through January 31, 2019.

The plaintiff served the subpoena at a Pegatron facility in Elk Grove, California, by leaving it with Sabrina Guinn, and later served it at a Fremont address associated with Pegatron USA, Inc. Pegatron refused to produce documents. It argued that Pegatron Corporation was not subject to the court’s jurisdiction, that service was improper, that the requests were overbroad and unduly burdensome, and that the plaintiff should bear the costs of responding. Pegatron estimated the search and production costs at $300,000 to $400,000.

Ruling on Service

Judge Spero held that the subpoena was properly served. The court concluded that the plaintiff presented sufficient evidence that Pegatron Corporation conducted business in the district, including evidence concerning the Elk Grove facility, a contract involving Apple, Pegatron Corporation, and Pegatron’s subsidiary PTSI, insurance coverage, and large-scale iPhone repair services. The court also relied on Pegatron Corporation’s prior representations that it operated technical-support and service facilities in the Northern District of California.

The court further held that Guinn qualified as a “general manager” under California law because her stated responsibilities were sufficiently substantial and made it reasonably certain that Pegatron Corporation would learn of the subpoena. The court rejected Pegatron’s suggestion that Guinn’s professional profile might have been automatically generated because Pegatron offered no evidence that the description was inaccurate.

The court also held that service through Pegatron USA was adequate. It rejected Pegatron’s argument that the use of “d/b/a Pegatron USA, Inc.” meant that the subpoena targeted only Pegatron USA. The subpoena’s attachment identified Pegatron Corporation as the recipient. The court found that Pegatron USA’s technical-support and business-coordination activities for Pegatron Corporation’s customers made it a “general manager” under California law.

The court declined to decide the plaintiff’s separate theory that service through PTSI was proper because it found service valid on other grounds.

Scope and Costs

The court did not resolve Pegatron’s objections that the document requests were overbroad, unduly burdensome, or sought documents available from Apple. It also did not decide whether the plaintiff should pay the costs of compliance. The court found those issues premature because the parties had not meaningfully met and conferred about the scope of the requests, and because Pegatron’s cost arguments were conclusory and speculative.

Disposition

The court granted the motion to compel in part. It ordered lead counsel for the plaintiff and Pegatron to meet by video during the week of April 5, 2021, to discuss the requests. Five days after that meeting, the parties were required to file a joint letter of no more than five pages stating their positions and proposed compromises. The court stated that, subject to changes resulting from that process or further court action, Pegatron Corporation would be required to comply with the subpoena.