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Argument Analysis: Justices Ready to Allow Antitrust Disputes Against Apple Over Apps to Go Forward



The Supreme Court heard the word this morning in a dispute between Apple's technology giant and a group of iPhone users over the sale of apps from Apple's App Store. IPhone users seek massive damage from Apple, complaining that the company violates federal antitrust laws by requiring users to purchase apps solely from the App Store. But when it comes to justices, it's about whether iPhone users can bring their lawsuit at all: Apple claims they can not, because it only sells the apps at the prices set by app developers. After 60 minutes of debate, there seemed to be at least five voices to make the case go on with only Chief Justice John Roberts who seems to be a clear voice for Apple.

Daniel M. Wall for the Plaintiff (Art Lien)

Arguing for Apple, Attorney Daniel Wall told the righteousness that the iPhone user's claim is exactly the kind of requirement prohibited under the 1977 Supreme Court Decision in Illinois Illinois Brick Co. against Illinois claiming that only consumers who are direct purchasers of a product may have lawsuit seeking the triple damages available for violation of federal antitrust laws: Here, Wall said that the only theory of compensation in the case is that Apple pays app developers a 30 percent commission, which in turn causes developers to increase the prices that consumers pay for apps. Therefore, Wall claims that there are app developers, not iPhone users, who are direct buyers under Illinois Brick .

But more justice was skeptical that the question was as simple as Wall portrayed it, especially because iPhone users buy apps directly from Apple. Justis Sonia Sotomayor suggested that this case was "dramatically different" from Illinois Brick where a manufacturer sold concrete blocks to contractors who used them in buildings that the plaintiffs then bought. IPhone users are, Sotomayor posited, "first buyers."

Justis Stephen Breyer echo Sotomayor's concerns. In his view, there would be no conflict between Illinois Brick and the basic principle of the antitrust law that anyone who pays a higher price to a monopolist can collect harm. If "Joe Smith" buys something from a monopolist, Breyer continues, he is a direct buyer.

The court's newest justice, Brett Kavanaugh, also appeared to be with the iPhone users. If it is not clear or how Illinois Brick applies to this case, Kavanaugh asked US lawyer-general secretary Noel Francisco, who claimed on behalf of the United States as a "friend of the court" who supported Apple, why should not The court resolve the dispute by looking at the text of the articles of association, which states that "any person injured" in violation of federal antitrust laws can bring an action? "It's wide," said Kavanaugh to Francisco.

Lawyer General Noel J. Francisco (Art Lien)

Judge Elena Kagan also chimated and formulated the question for the court as if Illinois Brick was at the core of a vertical supply chain or the idea that the plaintiffs can not recover damage to costs transferred to them. Other matters, Kagan mentioned, both had these elements, but should Illinois Brick apply to this case at all if there is no vertical supply chain?

Wall insisted in response to the Kagan question that Illinois Brick was "100 percent if" the antitrust plaintiffs do not want to recover claims sent to them. But he was quickly interrupted by Justis Samuel Alito, who suggested that the court ruling in Illinois Illinois Brick rested less on economic theory than on seeking to achieve an "efficient and effective trial", for example, by limiting litigation to lead buyers because the court believed that they would be in the best position to sue to enforce the antitrust Act. Alito asked if it was true in this case and pointed out what Wall admitted was "tens of thousands" of app developers – the direct buyers, under Walls theory – who had never brought an action against Apple.

Follow-up of Alito's proposal, Justice Neil Gorsuch suggested that the Supreme Court should completely surprise Illinois Brick . He noted that many states have allowed indirect buyers to file lawsuit similar to that in this case without experiencing the issues that Illinois Brick attempted to protect against, such as duplicative recovery.

Wall, contrary to any suggestion that Illinois Brick should be waved, Gorsuch told 17 attempts at the Congress to amend the Illinois Brick rule had failed. This is a "quintessential controversial political problem" that should be left to Congress, not the Supreme Court, argued Wall.

Appealed to iPhone users, David Frederick also opposed the idea that Illinois Brick ] should be overstyred, stressing that the case establishes a lightning rule that allows direct buyers to bring legal proceedings. The iPhone users pay Apple, he argued to make them direct buyers, and Apple never shared that money with anyone. " Illinois Brick is a case of an intermediary," explained Frederick. "There is no intermediary here."

David C. Frederick for respondents (Art Lien)

Roberts was perhaps Frederick's hardest sister. He expressed concern that the iPhone user's theory, both iPhone users and app developers, could suck Apple to recover damage due to the company's 30 percent markup of the apps.

Frederick insisted that iPhone users and App developers would have different claims against Apple: iPhone users would be suing to regain the difference between the price they paid and the price they would have paid in a competitive market for apps while developers would seek lost profits.

Towards the end of the oral argument, Alito Frederick asked for all iPhone users who bought an app to apply for compensation that is three times 30 percent of the commission, or if damage would instead vary from app to app. [19659004] Frederick acknowledged that he was not sure, but he used his answer to make two points that could help seal a victory in his favor. First, Congress created a preventive measure to deter antitrust fractures "just like this one." Second, he added that Apple can not point to another e-commerce distributor operating in this way, which can give fairness some comfort that their management will

A decision is expected sometime next year.

This post was originally published in Howe at Court.

Posted in Apple Inc. v. Pepper Featured, Meritter Cases

Recommended Quote:
Amy Howe,
Argument Analysis: Justices Ready to Allow Apple Antitrust Disputes Over Apps to Proceed ,
SCOTUSblog (November 26, 2018, 15:51),
http://www.scotusblog.com/2018/11/argument-analysis-justices-poised-to-allow-antitrust-dispute-against-apple-over-apps-to-go-forward/


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