In Apple Inc. v. Pepper, 139 S.Ct. 1514 (2019), attached, Justice Kavanaugh joined the liberal justices in a 5-4 decision holding that plaintiffs had standing to bring an enormous antitrust class-action lawsuit against Apple Inc., alleging Apple monopolized the market for iPhone applications through its App Store.    

Apple Inc. sells iPhone applications, or apps, directly to iPhone owners through its App Store–the only place where iPhone owners may lawfully buy apps. Most of those apps are created by independent developers under contracts with Apple. Apple charges the developers a $99 annual membership fee, allows them to set the retail price of the apps, and charges a 30% commission on every app sale. 

In Apple Inc., Respondents, four iPhone owners, sued Apple, alleging that the company has unlawfully monopolized the aftermarket for iPhone apps. Apple moved to dismiss, arguing that the iPhone owners could not sue because they were not direct purchasers from Apple under Illinois Brick Co. v. Illinois, 431 U. S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977). The District Court agreed, but the Ninth Circuit reversed, concluding that the iPhone owners were direct purchasers because they purchased apps directly from Apple.

The U.S. Supreme Court’s precedent in Illinois Brick established a bright-line rule where direct purchasers may sue antitrust violators from whom they purchased a good or service. Illinois Brick was not based on an economic theory about who set the price. Rather, Illinois Brick sought to ensure an effective and efficient litigation scheme in antitrust cases. To do so, the Court drew a bright line that allowed direct purchasers to sue but barred indirect purchasers from suing. When there is no intermediary between the purchaser and the antitrust violator, the purchaser may sue. The Illinois Brick bright-line rule is grounded on the belief that simplified administration improves antitrust enforcement. 

In Apple Inc., the U.S. Supreme Court held that, to the extent that Illinois Brick leaves any ambiguity about whether a direct purchaser may sue an antitrust violator, the court should resolve that ambiguity in the direction of the statutory text. And under the text set forth in Section 4 of the Clayton Act, 15 U.S.C.S. § 15, direct purchasers from monopolistic retailers are proper plaintiffs to sue those retailers.


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Sources: Apple Inc. v. Pepper, 139 S.Ct. 1514 (2019), S. Ct. 1514, 203 L. Ed. 2d 802, 2019 U.S. LEXIS 3397, 2019-1 Trade Cas. (CCH) P80,762, 27 Fla. L. Weekly Fed. S 796, 2019 WL 2078087; and https://www.americanbar.org/