Apple Looks Beyond Big Law to Fight Mounting Tech Court Battles

Nelita Collins

Apple Inc. tapped outside law firms more than three times as often as large tech rivals last year, leaning on Big Law but also regional specialists to fend off claims ranging from patent infringement to charges its App Store is an illegal monopoly, a Bloomberg Law analysis shows.

Apple accounted for 221 federal court appearances by outside firms last year, almost a third of the 732 appearances made on behalf of all 53 tech companies listed in the S&P 500, according to the analysis.

Apple, the largest company in the S&P 500, was followed by International Business Machines Corp., which had 67 cases using outside counsel, many of them defending IBM against allegations of age discrimination by former workers. Microsoft (57), Intel (54), and Broadcom (31) followed, the analysis showed.

The top firms representing big tech companies were Jones Day (46 cases), DLA Piper LLP (39), Wilmer Cutler Pickering Hale & Dorr LLP (39), and Gibson Dunn & Crutcher LLP (31).

But two of the next three biggest players were regional firms—Kelly Hart & Hallman LLP out of Fort Worth, Texas (27 cases); and Lightfoot Franklin & White LLC from Birmingham, Ala. (24 cases)—both of which worked extensively for Apple.

That highlights the importance of on-the-ground courtroom expertise, even for tech giants with high-powered in-house legal teams, said Jonathan Stroud, chief intellectual property counsel at Unified Patents.

“If you know you’re going to the West District of Texas, you want someone with boots-on-the-ground experience there,” said Stroud.

Kelly Hart specialized in patent infringement cases, often filed in federal court in the West District of Texas, a current hot spot for the litigation.

Related story: Apple Turns to Texas Firm for Legal Work in Patent Cases Hotbed

Emory University School of Law professor Timothy Holbrook agreed that even corporate giants like Apple are “going to want to have an attorney who knows the judge and has already gained their respect.”

Kelly Hart & Hallman, and Lightfoot Franklin & White handled more Apple cases than any Big Law firms except DLA Piper, the analysis shows.

Jones Day had more appearances for S&P 500 tech companies than any other law firm, mostly for IBM.

Lightfoot, a boutique firm that has represented Apple for more than a decade, took on what effectively were small-class cases involving allegedly faulty iPhone mobile operating system upgrades that slowed down plaintiffs’ phones. The firm took on more than a dozen new matters on behalf of Apple in 2021, and about half were filed in federal court in Alabama.

Related story: Apple Taps Alabama’s Lightfoot Franklin & White for Major Cases

To study outside law firms’ work for big tech, Bloomberg Law examined federal court filings using its Litigation Analyzer, which tracks company cases by law firms involved and the types of cases worked on. To account for a small variation in S&P 500 members, it counted only corporations that were listed in both 2020 and 2021 for this analysis.

Sixty-seven law firms represented multiple big tech companies in 2021, according to the Bloomberg Law data.

PODCAST:Listen to Bloomberg Law reporters talk about Apple’s legal spend.

Outside appearances overall fell by 25% in 2021 as court activity slowed in the first full calendar year of the Covid-19 pandemic. Appearances for the 53 tech companies fell to 732 last year from 981 in 2020, the analysis shows.

Apple’s Battles

DLA Piper defended Apple against a class action suit alleging that it “permits and facilitates illegal gambling” by selling free-to-play, casino-style games. Eighty percent of the games’ revenue was from players “specifically targeted” because they spent large amounts, the suit, McDonald et al v. Apple Inc., claims.

Apple turned to Gibson Dunn & Crutcher to fight an antitrust class action, Lepesant et al v. Apple Inc., alleging that it used the App Store to force customers to pay hundreds of millions of dollars more for iPhone operating system apps than those consumers would have spent in a competitive market.

Apple spokesman Josh Rosenstock declined to comment.

The company’s attorneys in the gambling case agreed to transfer it to be part of multidistrict litigation in the Northern District of California. Apple hasn’t yet responded in the App Store case, though in similar matters the company has argued that it isn’t a monopoly because it faces competition from Alphabet Inc.’s Google and others.

IBM

Outside firms made 67 appearances on IBM’s behalf last year, second only to Apple.

Jones Day made more than three dozen appearances for IBM last year, up from only two in 2020, the analysis shows.

The increase in IBM’s need for outside help comes from a wave of discrimination lawsuits by former employees who say they were targeted for layoffs because of their age. The company has fired thousands of employees over the last decade, an effort to slash costs and overhaul its workforce for new tech opportunities.

The company increased its use of outside lawyers more than any other large tech rival from 2020 to 2021 based on appearances, in particular for arbitration, the analysis shows.

One of the suits alleges that executives discussed how to force out older workers, calling them “Dinobabies,” according to a court filing that cited company emails. The executives also discussed who should be made an “extinct species,” the suit claims.

That case, Lohnn v. International Business Machines Corp., was filed in July by Denise Lohnn, the spouse of former IBM executive Jorgen Lohnn, who committed suicide at the age of 57 after being laid off in 2016. He fell victim to a “years-long companywide discriminatory scheme,” the suit alleges.

The defense for IBM, which generally denies the allegations, is often led by Matt Lampe, a New York litigator who co-heads Jones Day’s labor and employment practice and has been with the firm since joining as an associate in 1989.

IBM’s lawyers argue that the employees signed agreements requiring them to arbitrate any claims individually rather than filing a class action in court. That’s a playbook used by a wide range of companies that look to dodge class actions, which are a valuable tool for groups of plaintiffs that allows them to leverage their claims, pool expenses, and hire lawyers on a contingency fee basis.

IBM declined to comment.

Small Firms Rate

Kelly Hart and Lightfoot Franklin had 23 appearances each for Apple, only behind DLA Piper’s 25.

Gibson Dunn & Crutcher followed the two regional firms with 19 appearances on behalf of Apple last year, the analysis shows. Morrison & Foerster, and Goldman Ismail Tomaselli Brennan & Baum, were next with 11 each.

Apple’s biggest need for outside help was for patent cases, the analysis shows, and that is no surprise, given the ubiquitious iPhone, said Stroud.

“When you become a platform, you attract a lot of attention,” said Stroud, whose group aims to improve patents.

Apple also uses outside legal help with cases backed by investment firms, Stroud said. Litigation finance companies such as Fortress Investment Fund and Burford Capital have targeted patent cases that involve wealthy corporate defendants to improve their chances of recouping investments, he said.

Another reason for Apple’s high number of court cases likely has been the company’s push to develop new services like Apple Pay, Apple Music, and a redesigned App Store, said Paul Allen, a San Francisco and Palo Alto, Calif.-based partner for the legal recruiter Major, Lindsey & Africa.

Collaboration

Law firms can grow the types of cases they handle for tech companies by adapting to their culture, said Josh Rosenkranz, head of the Supreme Court and appellate litigation practice at Orrick, Herrington & Sutcliffe.

Orrick, along with DLA Piper, worked for 11 different tech companies in the S&P 500 last year, the most of any firms, the Bloomberg Law analysis shows. Jackson Lewis was third with eight.

Of those Orrick appearances, the firm made most of them for Apple, Micron Technology Inc., Microsoft, Oracle Corp., and Synopsys Inc., the analysis shows. The firm declined to discuss any specific clients.

Tech companies often differ from other clients with their focus on innovation, collaboration, and sensitivity to service and value they receive, said Clem Roberts, an Orrick intellectual property and patents partner.

“Collaboration is one of the ways tech companies work internally,” said Roberts. “They expect you to do the same.”

Activision Blizzard Inc., which Microsoft in January said it would buy for $68.7 billion, had a sharp increase in its use of outside lawyers in 2021, the analysis shows. The company used the outside help for 12 appearances, up from two in 2020.

— With assistance from Mark Gurman

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https://news.bloomberglaw.com/business-and-practice/apple-looks-beyond-big-law-to-fight-mounting-tech-court-battles

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