When the justices return to the bench next fall after their summer recess, a case involving computer giant Apple may very well be on their merits docket. Last week the U.S. government recommended that the Supreme Court grant review in a case arising from allegations that the company has monopolized the market to distribute apps for its iPhones. Although such a recommendation is not dispositive, the justices pay close attention to the government’s views, especially when the government urges the justices to weigh in on a case.
The case arose when iPhone users who have purchased apps from Apple’s App Store filed a would-be class action, alleging that Apple had monopolized the distribution of apps by requiring app developers to sell their apps only to the App Store, and charging those developers a 30% commission on each sale. The iPhone users argue that, because they could only buy apps through the App Store, they paid more for the apps than they would have if they could have purchased their apps elsewhere. Federal antitrust laws allow courts to award triple damages for violations, so the users asked a federal trial court in California to require Apple to pay them three times the amount that the company allegedly overcharged them.
The district court dismissed the users’ complaint. It relied on a 1977 Supreme Court case called Illinois Brick Co. v. Illinois, in which the justices ruled that courts cannot award triple damages to plaintiffs who are alleging that the defendant overcharged someone else, who then passed that charge on to them. Here, the district court reasoned, the app developers were paying Apple the 30% commission and then passing the costs on to the users, so the users could not try to recover the mark-up from Apple.
The U.S. Court of Appeals for the 9th Circuit reversed. It ruled that the users’ lawsuit could go forward because Apple sells the apps to users directly through its App Store. In August 2017, Apple asked the Supreme Court to review that decision, and the justices asked the federal government for its views in October.
In a brief filed last week, U.S. solicitor general Noel Francisco told the justices that they should grant review. The government complained that the users’ case “is premised on the same sort of pass-on allegations that this Court found insufficient in Illinois Brick” because “the prices in the App Store are set by third-party app developers, not by Apple.” The choice of whether to pass some or all of the 30% commission on to users is made, the government stressed, by the developers rather than Apple.
The government conceded that, although the courts of appeals are divided on the legal question in Apple’s case, only two different courts of appeals have addressed this question so far, and they have done so relatively recently. But the Supreme Court should still step in now, the government argued, “because other existing and emerging e-commerce platforms use similar models,” and the “importance of the question presented will only grow as commerce continues to move online.”
The iPhone users will be able to respond to the government’s brief. If they opt to do so, their brief will likely be filed soon, and the justices will almost certainly announce whether they will grant review before their summer recess at the end of June.
