IN RE APPLE INC. SECURITIES LITIGATION

Background

The parties filed competing motions to exclude expert opinions under Federal Rule of Evidence 702. That rule permits testimony from a qualified expert when the opinion is relevant and reliable. The court also applied its standing order limiting each side to three Daubert motions unless the court grants permission and requiring the parties to identify clearly the specific opinions they challenge. The court had allowed omnibus motions challenging more than three experts but did not waive the requirement that challenged opinions be clearly identified.

Defendants’ motion

Defendants sought to exclude opinions from Frank Partnoy and Dr. Oded Shenkar, two of plaintiff’s experts.

The court denied the motion as to Partnoy. It held that his criticisms of other experts’ methods were substantive methodological critiques appropriate for a rebuttal expert, rather than improper legal opinions. The court also held that Partnoy could refer to media articles and reports about the November 1, 2018 call because he used those sources to respond to limitations in defendants’ experts’ analyses.

The court also denied the motion as to Shenkar. It found that the challenged opinions about what Apple must have known at particular times were not opinions about intent or motive requiring exclusion at that stage. It further found Shenkar qualified to offer opinions about studies and sources concerning China’s general economic climate because of his expertise in Chinese sociology, business, and related experience. The court concluded that defendants’ motion to exclude was denied in its entirety.

Plaintiff’s motion

The court first rejected several general arguments. It held that opinions about the accuracy of the November 1, 2018 guidance, later events affecting Apple’s securities, and interpretations of the challenged statement could be relevant to issues such as defendants’ defenses and loss causation. Experts could address whether an interpretation was factually supported, but could not opine on Cook’s intent or what he thought the statement meant. The court also limited review to opinions that plaintiff clearly identified.

Dennis Yang

The court granted plaintiff’s motion as to specified portions of Yang’s report. It excluded the identified sentence in paragraph 7 because it misleadingly described plaintiff’s theory, and excluded paragraph 99 because it improperly addressed whether the challenged statement was accurate, an issue for the jury. The court denied plaintiff’s other challenges to Yang’s opinions, including opinions about the effect of the Huawei chief financial officer’s arrest, unexpected changes in China’s economy, and Chinese currency stability. The court treated disagreements about Yang’s evidence and methods as matters for cross-examination or the weight of his testimony.

Alex Gauna

The court denied plaintiff’s request to exclude Gauna’s entire report but granted the motion as to specified portions. It excluded parts of paragraphs 32, 35, 39, and 41 that opined on what companies were legally required to do, finding those statements outside Gauna’s expertise and likely to confuse or mislead the jury. It denied the motion as to remaining opinions about industry practices and disclosure-related topics.

The court also denied exclusion of Gauna’s opinions describing the challenged statement as an “intra-quarter update.” However, it granted the motion as to paragraphs 12(g) and 59 through 66 because Gauna did not explain how he selected the analyst reports and prior calls he discussed, and the opinions appeared to substitute his judgment for the jury’s without a reliable methodology. The court stated that the jury could read the underlying public materials itself.

Brett Trueman

The court denied plaintiff’s motion as to Trueman. It found his method—reviewing analyst statements and other public sources and applying his academic research and expertise—sufficiently clear in this context. Criticisms that he failed to review every report or use more exact methods went to the weight of his opinions, not admissibility.

The court also rejected challenges to Trueman’s interpretations of analyst reports, descriptions of plaintiff’s claims, opinions about gaming applications and currency issues, and rebuttal opinions responding to sources relied on by Shenkar. The court distinguished Trueman’s opinions from Gauna’s because Trueman interpreted the reports rather than merely repeating their contents.

Carlyn Taylor

The court denied plaintiff’s motion to exclude Taylor’s entire rebuttal report as cumulative or outside the scope of Shenkar’s report. The court found the cumulative-evidence objection premature because trial strategy could determine which expert would testify about particular issues. It also found that much of Taylor’s report directly responded to Shenkar’s report.

Eric Poer

The court denied plaintiff’s motion as to Poer. Plaintiff had not clearly identified the opinions or topics it challenged and had not shown that his opinions about accounting, finance, guidance, currency fluctuations, iPhone activations, growth trends, or store traffic were irrelevant. The court also rejected plaintiff’s arguments concerning summary testimony and the combination of summary and expert opinions. The underlying facts and data would need to be introduced separately, after which Poer could offer opinions based on them.

Steven Grenadier

The court granted in part and denied in part plaintiff’s motion as to Grenadier. It excluded the phrase “If the Court determines” from paragraphs 13 and 14 because it incorrectly suggested that the court, rather than the jury, would decide what Cook’s statement meant and whether it was misleading.

The court granted the motion as to Grenadier’s Opinion 3, reflected in paragraphs 15, 43 through 47, 132, and 133, because it inaccurately described plaintiff’s theory of harm and could confuse the jury. The court denied challenges to other damages and loss-causation opinions, including opinions responding to a “but-for” analysis in another expert’s report. But it excluded the first sentence of paragraph 51 because it misleadingly implied that but-for causation was the legal standard. The court also denied plaintiff’s other methodology and loss-causation challenges, treating them as disputes about the weight of the opinions.

Disposition

The court denied defendants’ motion to exclude the opinions of Frank Partnoy and Dr. Oded Shenkar in its entirety. It granted in part and denied in part plaintiff’s motion to exclude. The court granted the motion as to specified portions of the reports of Dennis Yang, Alex Gauna, and Steven Grenadier, and otherwise denied the motion. The order terminated docket numbers 292 and 301.

The opinion’s body says that the court granted the motion as to the second sentence of Yang’s paragraph 7, while the conclusion lists the first sentence. The order therefore contains an internal inconsistency about which sentence of paragraph 7 was excluded.