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Solicitor General, States Weigh In On Apple Supreme Court Case

As the Supreme Court prepares to hear Apple Inc. v. Pepper, a major case involving antitrust standing, interested parties across the political spectrum are weighing in with their ideas of how the case should be resolved.  As we previously reported, the Supreme Court decided to review the Ninth Circuit’s decision that because Apple sold iPhone apps directly to consumers, consumers are direct purchasers that have standing to sue Apple for alleged monopolization of the market for iPhone apps.  Apple contends that the app developers – not Apple – are the sellers of apps to consumers because the app developers set prices; Apple contends that it sells only distribution services, and sells those services to the app developers, not to consumers.

The Supreme Court granted cert after the Solicitor General filed a brief encouraging the Court to take the case.  The SG agreed with Apple that the Ninth Circuit misapplied Illinois Brick and also argued that this issue will grow in importance as commerce continues to expand online.  The SG recently filed a brief on the merits reiterating that the Clayton Act “does not authorize damages claims that are premised on a theory of passed-on harm.”

Earlier this week, the Court granted the SG’s motion to participate in oral argument on the side of Apple.  The SG cited its history of participating in oral argument in antitrust cases, most recently last term in Ohio v. American Express Co., and highlighted its substantial interest in the correct application of federal antitrust laws.

The SG is not the only governmental entity to present its views on the merits.  31 states, led by Texas and Iowa, filed an amicus brief in support of the purchasers.  While the purchasers argue that they have standing under Illinois Brick, the states call on the Court to overrule Illinois Brick.  They assert that indirect purchasers have been allowed to sue under state antitrust law for decades without the feared consequences that underlay the Illinois Brick doctrine, such as the concern that defendants could be liable for duplicative recoveries for the same injury.  The states contend that Illinois Brick is a relic of a pre-modern era and is out-of-step with modern economic doctrine and the modern marketplace.

The states include what may seem like strange bedfellows:  Texas, Mississippi, and South Carolina have joined the brief, as have California, New York, and the District of Columbia.  But “red” and “blue” states often are aligned in seeking robust enforcement of antitrust laws.  Last year, in Ohio v. American Express Co., states as diverse as California, Massachusetts, New York, Alaska, South Carolina, and Kentucky filed an amicus brief in support of Texas, Ohio, Nebraska, and Tennessee, the petitioners in that case.

The Supreme Court has not yet scheduled argument in the case but we expect argument to take place as early as November, with a decision by next June.  We will continue to monitor the case and report on developments.