Supreme Court hears Apple Lawsuit
The Supreme Court heard arguments of Apple versus Pepper which is a lawsuit seeking an antitrust case against Apple. Robert Pepper and 3 others have been a part of a class action lawsuit against Apple since 2011. Claiming that because Apple users must use the AppStore and Apple takes a 30% commission on Apple Store sales, that this has caused developers to increase prices and therefore passing the commission cost to the customer without an alternative option.
The plaintiff’s lawyer, David Frederick, says, “Apple directed anti-competitive restraints at the iPhone owners to prevent them from buying apps anywhere other than Apple’s monopoly App Store. As a result, iPhone owners paid Apple more for apps than they would have paid in a competitive retail market.” And later saying, “Our assertion is that, with multiple sellers, multiple suppliers of the apps, we would be able to buy them [the apps] at a lower price.” And they are seeking damages for those who have purchased apps from the App Store.
Now the reason why we are seeing the Supreme Court step in is lower courts have actually disagreed over whether Pepper and others have the right to sue Apple. That right is what the Supreme Court will be deciding on, not the antitrust case itself. Specifically, they seek to answer, quote, “Whether consumers may sue anyone who delivers goods to them for antitrust damages, even when they seek damages based on prices set by third parties who would be the immediate victims of the alleged offense.”
So what is Apple’s defense? Well, Apple’s argument is centered around the 1977 Illinois, Brick Co. v. Illinois, where if found the customers could not sue the Brick monopoly, because they were purchasing from middlemen; meaning that only the direct purchaser, the middlemen who are mostly masons, are the only ones that can pursue an antitrust lawsuit. Apple’s argument is that in this case, they act as middlemen for the developers, the ones that set the prices. Meaning the app developers are the only ones that could bring an antitrust lawsuit against Apple and if customers did have issues with app costs they would need to take it up with the developers themselves.
So what does the Supreme Court think? Four liberal justices were skeptical of Apple’s argument along with at times 3 of the conservative justices. Justice Sotomayor disagreed with the characterization of Apple as the middleman. We also saw justices Samuel Alito and Neil Gorsuch suggesting that the Illinois brick doctrine should be revisited. Gorsuch specifically said, “Shouldn’t we question Illinois Brick, perhaps given the fact that so many states have done so?”
What he is referring to is a coalition of 31 states that have filed an amicus briefing on October with the court asking for that decision to be overturned. There was actually a Chief Justice, John Roberts, who seemed the most sympathetic to Apple’s argument saying, quote, “To the extent it might be said that Apple is a two-sided market, [they’re] subject to suit on both sides of the market for a single antitrust price increase that they’re alleged to have imposed.”
And while that may sound like a green light to sue the hell out of Apple it’s actually a reference to the Brick Doctrine. One of the things the Brick Doctrine was meant to prevent was double lawsuits over the same issue, one from the middlemen and one from the consumers. If the Supreme Court signs with Pepper, Apple would be open to lawsuits from developers as well as consumers over the same price increase.
However, you also have Justice Elana Kagan that does see it as a green light, agreeing that the argument is flawed because both of the parties would have separate damages that they are seeking. Saying on one side you have consumers who are paying too much, and on the other side you have developers who have lost profit, but with that said there has been no definite conclusion as of right now. It is unclear when there will come a decision. Reportedly the actual decision from the Supreme Court isn’t expected until late June of 2019.