The Ninth Circuit recently issued a decision that increases the level of antitrust risk exposure faced by companies.
In Pepper v. Apple, Inc. (In re Apple iPhone Antitrust Litig.), plaintiffs filed a putative class action against Apple alleging antitrust violations relating to the monopolization of iPhone applications (“Apps”). No. 14-15000, 2017 U.S. App. LEXIS 577, at *3-7 (9th Cir. Jan. 12, 2017). In particular, plaintiffs challenged the legality of Apple receiving a 30% commission for each third-party App sold in the App store – arguing that Apple’s policy of prohibiting developers from selling their Apps through other channels was anti-competitive and in violation of antitrust laws. Id. at *3-4. The district court dismissed the case for lack of statutory standing, holding that plaintiffs were indirect purchasers from Apple. I d. at *8; see Illinois Brick Co v. Illinois, 431 U.S. 720 (1977).
Applying the standard set forth in Illinois Brick, the Ninth Circuit reversed the district court’s decision – holding that plaintiffs were, in fact, direct purchasers from Apple and therefore have standing to bring the antitrust suit. Id. at *27. The court rejected Apple’s argument that it is not a distributor of Apps, but merely a seller of “software distribution services to developers,” akin to that of a shopping mall owner leasing out space to different stores. Id. at *24. The court also emphasized that its analysis is not determined by logistical details such as payment arrangements, form of payment, or which entity sets the price. Id. at *25-26 Instead, the court conducted a straightforward analysis focusing on the “fundamental distinction between a manufacturer or producer, on the one hand, and a distributor, on the other.” Id. at *27. Here, because Apple distributes iPhone Apps directly to purchasers via its App Store, plaintiffs satisfied the ‘direct purchaser’ standing requirement under Illinois Brick. Id.
Most interestingly, the Ninth Circuit expressly rejected the Eighth Circuit’s analysis in Campos v. Ticketmaster Corp., 140 F.3d 1166 (8th Cir. 1998), creating a split between the two circuit courts. Id. at *23. In Ticketmaster, plaintiffs alleged antitrust violations against Ticketmaster for monopolistic practices relating to its ticket distribution services and fees. 140 F.3d at 1168-69. The Eighth Circuit held that that the plaintiffs lacked standing under Illinois Brick to sue Ticketmaster for damages. Id. at 1174. The court reasoned that “[a]n indirect purchaser is one who bears some portion of a monopoly overcharge only by virtue of an antecedent transaction between the monopolist and another, independent purchaser.” Id. at 1169. Therefore, because plaintiffs only purchased Ticketmaster’s services because of the ‘antecedent transaction’ between the concert venue and Ticketmaster, the plaintiffs were not direct purchasers. Id. at 1171.
The Pepper decision increases antitrust risk exposure by setting forth a less-rigorous and less-scrutinized standard for establishing standing under the Clayton Act. Indeed, classes of consumers previously believed to lack standing may now have a stronger foothold in asserting antitrust claims against companies. In light of the Ninth Circuit’s decision, companies are well-advised to both reevaluate and reassess their business operations and antitrust risk.
KMK Law articles and blog posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. The laws/regulations and interpretations thereof are evolving and subject to change. Although we will attempt to update articles/blog posts for material changes, the article/post may not reflect changes in laws/regulations or guidance issued after the date the article/post was published. Please consult with counsel of your choice regarding any specific questions you may have.
ADVERTISING MATERIAL.
© 2021 Keating Muething & Klekamp PLL. All Rights Reserved
- Associate
Collin Ryan advises and represents clients in all aspects of litigation, with a focus on complex commercial and general corporate litigation. He helps public/private companies and individuals prosecute, defend against, and ...
Blog Contact: Joseph Callow, Litigation Partner
jcallow@kmklaw.com or 513.579.6419
Topics/Tags
Select- Class Action Litigation
- Coronavirus
- Litigation
- Cybersecurity and Privacy Law
- Data Breach
- Securities Law
- Supreme Court
- E-Discovery
- Intellectual Property
- Social Media
- Trademark
- Trademark Litigation
- Sixth Circuit
- Initial Coin Offering
- Antitrust
- Federal Rules of Civil Procedure
- Bet-the-Company Litigation
- E-Discovery Case Law
- Electronic Data Discovery
- Employment Law
- Workplace Accommodations
- ESI
- GDPR
- General Data Protection Regulation
- Employer Policies
- Labor & Employment Law
- Labor Law
- Cryptocurrency
- SEC
- Securities Litigation
- Technology
- ERISA
- Stock Drop
- Ascertainability
- Drug Enforcement Agency
- Medical Marijuana
- Ohio Foreclosure Reform
- Craft Brewing
- Cybersecurity Regulation
- Copyright Law
- Environmental Law
- Fair Housing Act
- Health Care Act
- Healthcare Reform
- Pregnancy Discrimination
- Religion Discrimination
- Seventh Circuit
- Electronically Stored Information
- Proportionality
- Accommodation
- Americans with Disabilities Act
- Cyber Insurance
- EEOC
- FLSA
- Telecommuting
- Lenders
- Receivership Statute
- Business Process Improvement
- Employment Litigation
- Employer Handbook
- Employer Rules
- National Labor Relations Act
- National Labor Relations Board
- NLRB
- Unions
- E-Discovery Project Plan
- Predictive Coding
- TAR ( Technology Assisted Review)
- Evidence
- Quality Representation
- Subpoena
- Arbitration
- CAFA
- Land Use & Zoning
- Construction Litigation
- Privacy
- Statute of Limitations
- Taxation
- Federal Rule
Recent Posts
- Questioning the Questionnaires: New PPP-Related Litigation Raises Issues for Borrowers
- "You Don't Have to Go Home But You Can't Stay Here": Updates to Ohio and Kentucky’s COVID-19 Orders Impacting Bars & Restaurants
- Kentucky Restaurants Begin Opening with Limited Capacity Amid COVID-19 Epidemic
- Ohio Restaurants and Bars Begin Soft Openings for Diners Amid COVID-19 Epidemic
- Supreme Court Sidesteps “Cy Pres” Challenge
- Golfers, New and Old - Be Careful!
- "Aloha Poke": Social Media and Consumer Perception are Part of the Trademark Enforcement Equation
- GDPR: Less Than 100 Day and Counting to "G-Day" - Here's What You Need to Know
- Rapid SEC Action Against AriseBank Reveals New Playbook For Allegedly Fraudulent ICOs
- Giga Watt ICO Faces Tezos-like Securities Litigation Challenge