Courthouse Steps: What Does the Supreme Court’s Decision in Apple v. Pepper Mean for Antitrust Law and the U.S. Economy?

Corporations, Antitrust, and Securities Practice Group Teleforum

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On May 13, 2019, the U.S. Supreme Court ruled 5-4 that Apple may face antitrust liability in a consumer suit over purchases made from the Apple App Store.  That may sound like an unremarkable proposition (and Apple in fact may still prevail).  But the basis for the decision in Apple v. Pepper is one that will reverberate for years in the courts and the U.S. economy – that consumers who buy products from a platform like the App Store may be considered a direct purchaser and thus allowed to bring lawsuits against the platform concerning alleged anticompetitive conduct.  Other technology companies may face antitrust liability they did not expect, companies may seek to restructure their business dealings to avoid liability, and there may be continued challenges to the viability of the federal (but not state) antitrust doctrine that limits liability only to direct (not indirect) purchasers.  And – in an interesting fact not unnoticed by Supreme Court observers – the majority opinion written by newly-seated Justice Kavanaugh drew a dissenting opinion by his fellow Trump appointee Justice Gorsuch and joined by all of the other Republican-appointed justices.

Come hear immediate reactions to the Apple v. Pepper decision from two experienced antitrust practitioners who participated in the case – Andrew Finch, Principal Deputy Assistant Attorney General in the U.S. Department of Justice Antitrust Division, and Lauren Weinstein of MoloLamken’s Washington, DC, office, who represented a group of 18 antitrust professors that filed an amicus brief in the case.  Adam Biegel of Alston & Bird’s Washington, DC, office and a member of the Executive Board of the Federalist Society’s Corporations, Securities, and Antitrust Practice Group, will moderate the teleconference.


Andrew Finch, Principal Deputy Attorney General, Antitrust Division, Department of Justice 

Lauren M. Weinstein, Attorney, MoloLamken LLP 

Moderator: Adam Biegel, Partner, Alston & Bird

Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Corporations, Securities & Antitrust Practice Group, was recorded on Wednesday, May 15, 2019, during a live teleforum conference call held exclusively for Federalist Society members.     


Micah Wallen:  Welcome to The Federalist Society's teleforum conference call. This afternoon's topic: the recent Supreme Court decision in Apple v. Pepper and what it could mean for antitrust law. My name is Micah Wallen, and I am the Assistant Director of Practice Groups at The Federalist Society.


      As always, please note that all expressions of opinion are those of the experts on today's call.


      Today we are fortunate to have with us Adam Biegel, who is a Partner at Alston & Bird. Adam is our moderator for today, and he will be introducing the rest of our speakers. After our speakers give their remarks, we will then go to audience Q&A. Thank you all for sharing with us today. Adam, the floor is yours.


Adam Biegel:  Great. Thank you and good afternoon, everyone. This is Adam Biegel in Alston & Bird's Washington office, and I'm pleased to moderate today's panel, "Courthouse Steps: What Does the Supreme Court's Decision in Apple v. Pepper Mean for Antitrust Law and the U.S. Economy?" And as advertised, we have two distinguished speakers, as well as a special guest I'm going to introduce in just a moment.


      But first, let me introduce these two scheduled speakers. First is Andrew Finch, who is Principal Deputy Assistant Attorney General in the United States Department of Justice Antitrust Division. He previously served as a Partner at the law firm of Paul Weiss, and as counsel to the Assistant Attorney General in the Antitrust Division, and is a graduate of the University Berkeley and my alma mater, the University of Chicago Law School, and is a former law clerk for Judge Jacobs on the Second Circuit.


      We also have as one of our speakers as well here in Washington, Lauren Weinstein, who is an attorney with MoloLamken's Washington D.C. office. She focuses her practice on trial and appellate litigation, including representation of clients before the United States Supreme Court and practices in a variety of subject matters, including antitrust, class actions, and constitutional law. She is a graduate of Northwestern and Harvard Law School and also is a former law clerk to Judge McKeown on the Ninth Circuit and Judge Koeltl for the Southern District of New York.


      Andrew was on brief in the Apple v. Pepper case that we're going to talk about today for the United States, and Lauren was also counsel of record for 18 distinguished antitrust law professors, including luminaries such as Herbert Hovenkamp and Andy Gavel. But we will get more into that in a moment.


      And also, last but not least, our special guest, thanks to an invitation from Andrew, is another member of the front office of the Antitrust Division, Mike Murray, who currently serves as the Deputy Assistant Attorney General in the Antitrust Division, whose portfolio includes appellate matters. He previously served as an Associate Deputy Attorney General, and also in private practice with Jones Day, and is a graduate of Yale Law School and Princeton,  and a former clerk for Judge O'Scannlain on the Ninth Circuit as well as Justice Kennedy.


      Now that I've gotten some basic introductions out of the way, I want to jump right into our program today. And the first thing I wanted to do, because not all of our listeners may be that familiar with the Apple v. Pepper case that we're going to be discussing today, is to give just a brief overview with the caveat that we are only about 50 or so hours from the decision being handed down on Monday morning by the United States Supreme Court. So many people are commenting in the popular press, and legal scholars are commenting as well. And we're going to do our best to talk a little bit about its implications and meaning of this fresh decision.


      But before we get into that, for people who may not have read the entire decision and its dissent, I wanted to provide just a little bit of background knowledge about why many of the issues that are raised in the case are interesting and important to not only antitrust law but the United States economy. The simple place to begin is in 2011, a purported class action of consumers sued Apple under Section 2 of the federal Sherman Act, alleging that in the market for the sale of iPhone apps that Apple had acted anticompetitively as a monopolist in a way that was harmful to competition. The 30 percent commission that was being charged by Apple for apps sold in the App Store was more than it would have been in a competitive market, so this antitrust lawsuit was filed in federal court in the Northern District of California.


      You might say, "That makes perfect sense. Someone has a beef under the antitrust laws. They file a lawsuit in federal court. What is really remarkable about that?" But what is interesting is the structure of the sale of iPhones that most of us purchase in the App Store as well as in 1977, the United States Supreme Court decision in Illinois Brick because on the structure of the sale, as many of us know, the App Store is where you have to buy applications for your iPhone. Developers create them, and the developers set the price for those apps, but the consumer actually buys the app directly from Apple. Apple keeps a 30 percent commission and remits the other 70 percent back to the developer.


      And when you wed that with the Supreme Court's decision in an antitrust case in the late 70s, Illinois Brick, that says under federal antitrust law, monetary relief in antitrust claims can only be made by a direct purchaser against the person they purchased the entity from, that really became the rub of this procedural issue in this case because Apple moved to dismiss the case, saying these people were not direct purchasers and were barred from bringing the case under Illinois Brick. And the federal district court in the Northern District of California said Apple was right, and the case was dismissed. The people who were actually the direct purchasers were really the developers because they were the ones setting the purchase price. In 2017, the Ninth Circuit Court of Appeals reversed that decision and said the plaintiffs in this case actually should have standing under the antitrust laws under Illinois Brick to bring this case because, after all, they purchased the applications, the apps, directly from Apple.


      Now, bear in mind, none of this gets to the actual merits of the case, was Apple acting anticompetitively or other substantive issues, it was just about getting in the courthouse door and whether you could bring an antitrust action. And this case was appealed to the United States Supreme Court and cert was granted from that Ninth Circuit ruling. And it attracted a lot of attention from a lot of interested parties, including the people sitting on my left and right today, as well as 30 state attorneys general and the District of Colombia who said this case should be the vehicle to overturn Illinois Brick and allow direct purchasers to sue for monetary relief under the antitrust laws.


      So with that teeing up of the case, we had oral argument in November of 2018, and a decision was rendered on Monday morning by the Supreme Court in a 5-4 decision written by Justice Kavanaugh. And in that decision, Justice Kavanaugh affirmed the Ninth Circuit and said these plaintiffs were direct purchasers from Apple, said it is fairly straightforward, and that Illinois Brick does not bar them from, under its bright lines, from bringing this suit. And in the case, it was a rather, I'd say, strident explanation of saying Apple's arguments do not make a lot of sense, quote, "other than as a way to gerrymander Apple out of this and similar antitrust lawsuits."


      Justice Kavanaugh also said that if Apple's theories were given credence, it would provide, quote, "a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement." And he concluded toward the end by saying, "In sum, Apple's theory would disregard statutory text and precedent, create an unprincipled and economically senseless distinction among monopolistic retailers, and furnish monopolistic retailers with a how-to guide for the evasion of the antitrust laws."


      It did not, notably, touch on the issue of whether, directly, of whether Illinois Brick should be overturned. In Footnote 2, it said the Court had no occasion to consider it because, after all, none of the parties actually asked for Illinois Brick to be overturned, but rather tried to stay within its boundaries.


      And last but not least, I will note that one of the Justices in the minority, and the one who wrote the dissenting opinion, was the other Trump administration appointee to the Supreme Court, Justice Gorsuch, who joined the other Republican appointees to the Court that said Justice Kavanaugh's majority opinion exalted form over substance. And he said, "Maybe the Court proceeds as it does today because it just disagrees with Illinois Brick. After all, the Court not only displaces a sensible rule in favor of a senseless one, it also proceeds to question each of Illinois Brick's rationales." But he defended Illinois Brick and tried to say that the Court was misapplying it, and said in his last line of the dissent, said, "I would have thought the proper course today would have been to afford Illinois Brick full effect, not to begin whittling it away to a bare formalism."


      So with that setup of the debate that we've had and will continue to have about the impact of this decision, I want to ask our panelists today to explain a little bit about your involvement in the case as amici in the case and how you feel the Court resolved the matter; fairly, unfairly, completely, incompletely.


Lauren Weinstein:  Sure. So this is Lauren Weinstein of MoloLamken. I was counsel of record for a group of antitrust scholars who submitted an amicus brief in support of respondents. The main thrust is just to provide the Court with the kind of scholarly background that it needed to decide this case and highlighting the importance of private antitrust enforcement, which I think really came across in the majority opinion ultimately. Our brief made three major points. The first was that healthy market competition depends on private antitrust enforcement. The second was that extending Illinois Brick debars suits by certain direct purchasers would cripple private antitrust enforcement. And the third is the rationales that supported Illinois Brick in 1977 now have been eroded over time. 


      As to the first point, the Sherman Act was enacted as a consumer protection statute. You can see echoes of the importance of consumer protection in the majority opinion, particularly the coda at the end of the opinion where Justice Kavanaugh points out the consumer protection rationale behind the Sherman Act. And our brief also highlighted that now, private antitrust enforcement is important, not only to consumer protection generally, but now, more specifically in light of the concentration that we're seeing across markets and specifically in tech; for example, Amazon, Google, Facebook. These are just giant, can't live without them, tech behemoths that the antitrust laws are kind of struggling with what to do about them.


      The second point was about extending Illinois Brick and the impact that that would have on private antitrust enforcement. The point of that argument is really just that this is, like Justice Kavanaugh ultimately wrote, a straight application of Illinois Brick. If you purchase directly from an entity like Apple, you are a direct purchaser of that entity. And what Apple is asking for in this case was an expansion to say, "Well, no. If somebody else sets the price, even if you purchase directly from that entity, then you're not a direct purchaser." Our brief explained why that was arbitrary and could cause gamesmanship in structuring transactions to create an Illinois Brick defense where one really shouldn't exist.


      And finally, our brief explored how advances in the last 42 years since Illinois Brick was decided have eroded its rationales, one being state repealer statutes which are under state law, you can bring indirect purchaser suits. Those are very common. Now, I think the majority of states have them, and as a result of the Class Action fairness Act, those cases can be removed from state court to federal court. So federal courts do hear indirect purchaser claims currently. And secondly, the advances in econometrics have made the complications of calculating pass-through damages which really worried the Court in 1977, not so much of a concern now. And as I've said, I think that the Court picked up on those points in ways that we'll continue to explore in this hour.


Adam Biegel:  Andrew or Mike, do you want to explain the DOJ's position and what you make of the case, at least at the highest level?


Andrew Finch:  Sure, sure. This is Andrew. Thanks, first of all, to The Federalist Society for inviting us to talk on this subject today, and Adam for putting this together, and Lauren for joining us. I guess I would start by saying our brief was filed in support of Apple, who is the petitioner. And we would have supported reversing the decision of the Ninth Circuit. That's not where the Supreme Court ended up, but there's a lot that's in the opinion that's very interesting to us, both in the dissent and the majority opinion.


      The dissent does, in many ways, describe the key element of the brief that the United States filed in support of the petitioners. And that really reflects the idea that Illinois Brick and other cases in this area embody a concept of proximate causation. And when you are trying to apply the concept of proximate causation no only in Illinois Brick but more broadly a case called Associated General Contractors.


      When you try to apply those concepts to the transaction at issue here, when somebody is buying an app from the Apple store, you really need to think about where the price is being set and whether or not the right place for liability should be on the -- whether the liability that Apple might have would really be owed to the app developer who's paying the overcharge, and whether or not there's actually passing on that's occurring here. What we looked at it through the lens of proximate causation and passing on and said that if those principles are applied, then what's really happening is that the app developers are passing on an overcharge that they incur when Apple tells them they have to pay 30 percent. They effectively have to include a 30 percent markup in the charge that consumers pay for apps.


      Look, one thing that has to be acknowledged and that we acknowledged is that the concept of directness or indirectness isn't really at home in this conversation because, as Justice Kavanaugh pointed out, it's easy to say, and I think everybody feels that you buy apps from the App Store. You don't buy apps from app developers. And that clearly is something that resonated with the Court at oral argument and resonated with Justice Kavanaugh and the majority.


      And it reveals -- and I think this is one of the interesting things about the difference between the majority opinion and the dissent, is that there're really two different lenses for looking at these Illinois Brick issues. There is the approach that looks at directness and indirectness as a sort of question that can be answered by hanging a certain label and saying who's direct and who's indirect, and it's a labeling exercise that sort of you're either direct or you're not. There's not a lot of nuance to it. And in fact, Justice Kavanaugh in his opinion acknowledged this. He talks a lot, I think he says four or five times, it's a bright line rule. And he says from the outset that consumers are direct purchasers from Apple.


      Justice Gorsuch in the dissent takes this other view, and that lens is really one that tries to look more at the economic nuance of the relationship and tries to figure out who's actually deciding what the prices that will be charges. And that was the approach that we took. Again, not the one that the majority ended up adopting, but that is another way of looking at it. And it is consistent with the broader concepts of proximate causation in antitrust law.


Adam Biegel:  Thank you both for that. That's a very helpful introduction, hopefully, for our audience as well. In terms of the immediate impact of the decision, a number of commentators have said companies that operate not exactly like Apple, but in Apple's likeness, people who operate platforms, whether it's Facebook, or Amazon, or Google, may have really thought they were insulated from some forms of antitrust allegations, like Apple might have hoped and thought because of some of the existing doctrines, and that this may be sending shivers through the tech sector wondering whether similar allegations about monopolistic conduct may be tossed their way. And case number one to say they shouldn't be barred at the courthouse door by Illinois Brick is this decision. What do you both make of whether that's just immediate reaction, or do we think really tech companies should -- that operate platforms have woken up in a different world this week?


Andrew Finch:  This is Andrew. I think the answer is sort of yes, no, and maybe. What is interesting about this case and the Supreme Court dealing with it, this is really a case about platforms, and how do you take the older concepts in Illinois Brick, again, 1976, direct and indirect, or passing on, how do you apply them to a platform? That's really what Apple was doing here, marrying up app developers with customers. It's not really necessarily viewed by many people as a vertical distribution chain but more of a platform. And so this case, and also the American Express case that was decided, tells us something interesting which is that the Supreme Court is not going to be reluctant to wade into the very thorny issues that come up  when we apply or try to apply existing antitrust doctrine to platforms.


      So yes, there is some reason for platforms to think that the Supreme Court is going to take these cases and figure out how antitrust law applies to them. But it bears emphasis that this is not a marriage determination in this case, and so I don't think that that's -- and the majority is very clear to point that out early on in the opinion. So it's not obvious that the result is that Apple is going to have to incur liability. There's a much longer road to go here. But look, I mean, the idea that the Court is going to think about how these issues apply to platforms and may entertain the idea of liability owing to both sides of the platform is something that might -- clearly will get the focus of the platform companies.


Lauren Weinstein:  I think that you raised the AmEx decision from last term, and that's an important point to pick up on. And it's one that Apple put in its briefing was that is was a two-sided platform where Apple offers distribution services on one side of the platform to app creators and then sales those apps to the consumers at the other end of the platform, cited the AmEx decision. And ultimately, neither the majority nor the dissent really went anywhere with that, and it could have been interesting if the Court had, but I think the Court and certainly lower courts are still trying to figure out what to make of the AmEx decision itself and how important those kind of two-sided markets are ultimately going to be in antitrust cases.


      I think there's an interesting piece in Law360 today that kind of collects reactions from tech and firms that represent tech companies on whether the sky is falling. Some say it is. Some say it isn't. I personally -- and I should say that my views are for myself, not for any of the clients I represented in the Supreme Court. I don't really see this as a tech case so much as a case that arose in the tech context. In our brief, we pointed out that the App Store is really like any other store. You walk in, you buy something, you leave with your good, and you can sue the entity that sold it to you. So I don't really think that this is going to create that much of a shift in the tech space, at least as far as antitrust is concerned.


      But for some companies -- and really, this is only a concern for retailers that have monopolistic shares that are engaged in exclusionary practices, not every tech company, and certainly not small startups. But the larger companies like Amazon might be really considering their litigation strategies. Amazon, like Apple, claims to be a distributor of retail goods, and had the Court come out differently in Apple v. Pepper, Amazon might have a really good defense in antitrust cases that it's facing based on that decision. And now, I don't know if Amazon's facing any of that liability. I don't know what their pricing structure is like, but the defense seems to think it would be unavailable.


Michael Murray:  The one thing that I would add—and this is Mike—is I think in some respects, the fact that it's a 5-4 decision, the fact that it's been litigated in the courts for so long indicates that this is an issue that many companies were already thinking about, hopefully. And it's also -- I think The Wall Street Journal had an op-ed or an editorial this morning talking about the consequences of the decision, talking about the sort of contracting implications, how you might change contracts in light of the decision, and maybe they're right, maybe they're wrong. It's only 50 hours after the decision, so we're still evaluating it. But I think what that indicates is that we're not talking about a revolution here. This is one Supreme Court decision, a 5-4 decision in a case that's been litigated for quite some time. And so it requires us and folks like those on this call to sort of analyze and think about before jumping to any conclusions.


      The last thing that I wanted to mention about that is that one of the things that's interesting about this case is the juxtaposition between the digital platforms, the new economy, and the modes of analysis that Justice Kavanaugh goes through. So what he starts with in his analysis is the text of the statute, and then from there, he goes to precedent. And those are very sort of backward-looking ways of thinking about it, but they're also very traditional for the Supreme Court to start with those modes of analysis. And so in some ways, that might be surprising for those who are seeing this case as a case about technology companies, many of which were formed in the last 10 years to see recourse to canons of interpretation that have been in the courts for centuries. And so there's an interesting juxtaposition there about how those types of methods will be used and applied in cases involving these new and evolving technologies.


Adam Biegel:  One thing I definitely wanted to bring up with all of you was what do we make of Footnote 2 where they say -- where Justice Kavanaugh says, "We don't have occasion to touch Illinois Brick." Was this something that simply everyone, the parties, the Court, said was unnecessary, not ripe, because it had not been fully litigated about the need to overturn Illinois Brick, or was this a missed opportunity to bring even more clarity than Justice Kavanaugh says he brought to the antitrust landscape and this divide of that direct or indirect? Any thoughts on -- or whether -- or is there anything in here you see that tees up a better case where it might be fully litigated?


Lauren Weinstein:  Adam, as you point out, neither side raised overruling Illinois Brick or urged the Court or any of the lower courts to go there, so I think there would have been a vehicle issue. And I think that obviously the Supreme Court's preference is to have lower courts address issues like this in the first instance. I don't think that either opinion suggests any sort of appetite for overruling Illinois Brick. The dissent acknowledges that it might be a flawed doctrine, but they certainly don't signal that they would want it to be overruled; if anything, expanded. And Justice Kavanaugh and the majority, I think, went out of their way to kind of preserve the doctrine while balancing the need for private antitrust enforcement. So I don't think there was any sort of missed opportunity here. Andrew, Mike, what do you think?


Andrew Finch:  The government's brief in support of Apple noted that various commentators have observed that the Illinois Brick rule may be complex and inefficient, and also noted that none of the parties, as Lauren mentioned today, asked for it to be revisited. But there were some citations there, including to the report of the Antitrust Modernization Commission, that discussed extensively Illinois Brick and whether there might be a time to overrule it. So I don't think an opportunity was missed because the opportunity wasn't present.


      I do think that both opinions acknowledge that and suggest, perhaps, reading between the lines, that there may be some time when it might be appropriate. It's true, I think, that the majority opinion does sort of, to some extent in the discussion of the rationales of Illinois Brick, maybe weaken the foundations of the opinion a little bit. So I think it remains to be seen. But, yes, this was not the case to overrule Illinois Brick.


Adam Biegel:  If we're going to dig just a minute into Justice Gorsuch's dissent, I think you summarized some additional provisions of it where he was talking about looking at the economic substance of the transaction in order to maybe find that Illinois Brick would have barred the plaintiff here. I guess, Lauren, that stands counter to what your brief was arguing that you have to have these lines, and enforcement is important. What do you make of the dissent saying, "This is not really applying Illinois Brick, and we're elevating form over substance with bright lines like this."?


Lauren Weinstein:  Sure. So two thoughts on that. The first is that there is, I think, kind of a "What are courts best suited to do?" kind of theme that runs through both of these opinions. And whether courts can engage in this sort of complex economic analysis that the dissent would have them do is a tricky question. And judges necessarily aren't trained economists, and it might not be the best way to instruct lower courts to decide these cases. Justice Kavanaugh instead adopts -- he doesn't adopt, he just explains that there is a bright line rule and instructs lower courts to follow it, which is more what we think, traditionally, courts are suited to do.


      The second point in what I think is really interesting about the dissent is that while the dissent appears to privilege what it thinks is the economic reality of these transactions, it privileges that over the express purpose of the antitrust laws which are to protect consumers against anticompetitive conduct. So if you take the broad view of Illinois Brick that Apple had urged the Court to adopt, then the parties that would have been able to sue Apple are the app creators. And those app creators lacked an economic incentive to sue Apple. They depend on Apple for their livelihood, so the reality is they probably wouldn't be turning around to file lawsuits if this case had come out differently.


      People that are engaged in the market, as our brief points out, and plaintiff's lawyers who can rally consumers do have economic incentives under the treble damages that they're entitled to if they win, and they have the -- they lack economic disincentive to the alleged monopolists. And I don't think it's so really formalistic to say that the judge-made doctrine of Illinois Brick shouldn't be expanded to as to insulate an alleged monopolist from suit.


Adam Biegel:  Any reaction, inasmuch as that differs from the government's position in its brief?


Michael Murray:  Sure. I think one of the most interesting things to me about Justice Gorsuch's dissent, and I think, Adam, you hit on that in your question, that is the sort of dueling hypotheticals opposed by both the majority and the dissent. And it's interesting for two reasons. One is interesting from a perspective of the merits. It seems to me, at least, that sort of both of those hypotheticals are in some sense question begging. They sort of assume a conclusion, and so that's interesting in terms of how the framing of the case matters.


      There's also an interesting advocacy point there for future folks who are thinking about advocating a particular position for the Supreme Court and sort of court watcher in whatever free time they actually have, I can notice that this is not a normal thing. You usually don't have in the Supreme Court opinion both the majority and the dissent saying that the other side is formalistic, and both of them throwing dueling hypotheticals back and forth. And so that's a change.


      It's possible that I'm forgetting some example, but it's very interesting that you have Kavanaugh and Gorsuch, both of whom have been appellate judges for quite a while, who are experienced appellate practitioners thinking in terms of hypotheticals, thinking in terms of whether their rule is formalistic, whether the other side's rule is formalistic. And I think that is something that is an advocacy point that you can take away from this decision in terms of framing arguments to courts, including the Supreme Court.


Adam Biegel:  Moving to some sort of other implications of the decision, does this decision mean anything for antitrust enforcement, public or private? Lauren, you mentioned some of the echoes in the -- or the conscious statements in the majority opinion of the Court about the purposes of the antitrust laws and the need for vigorous enforcement as Congress intended. Any predictions to make about other people seizing on that in other doctrinal areas? And we talked a little bit about, obviously, whether other people are looking at bringing other litigation. And is that a good thing for things like innovation in the tech sector, having more antitrust enforcement?


Lauren Weinstein:  I think that this decision does alter the scope of antitrust enforcement. As you pointed out, it is a very pro-enforcement decision. Not only does it preserve the ability of parties with incentives to sue alleged monopolists, it preserves their ability to sue, it also emphasizes that an alleged monopolist can be exposed to liability from multiple parties. And that, I think, is a really, really important point that shouldn't go unnoted. Commonly, a defense, even aside from Illinois Brick, is lack of antitrust standing because you're not the most efficient enforcer. The plaintiff is not the most efficient enforcer of the antitrust laws.


      And in this case, Justice Kavanaugh makes a point in the majority opinion that Apple could face liability from app distributors, and it could face liability from consumers, and that there's nothing wrong with that dual liability. They're not just coming after the same pot, and they're pursuing different theories of liability. So now, plaintiffs can say, "Look, even if there's another party that's well situated to sue, we are the most efficient enforcer for this theory that we have." And I think that that will incentivize some parties to move forward. And I mean, the plaintiff's bar is always creative and innovative, so I think that to the extent that there's anything to seize on in this opinion, it will be seized on.


      To your question about innovation, I think this decision and the emphasis on private antitrust enforcement ultimately is a good thing for innovation if you believe in markets. Anticompetitive activity is, by definition, harmful to the creation and maintenance of efficient markets, and if you believe in the power of functioning markets, then you would want a robust private antitrust enforcement regime. Meritless claims will get ferreted out at some point, and meritorious claims will result in the eradication, and hopefully, the deterrents of anticompetitive conduct that deters entrants into the market and, ultimately, innovation.


Adam Biegel:  Andrew, Mike, any comments on the impact from your perspective?


Andrew Finch:  Sure. The most visible impact, probably, will be the amicus program because filing the brief we filed in the Supreme Court and we have a very active program now to file amicus briefs with our cases, even if they're private cases that raise interesting, important questions about antitrust enforcement. So we'll probably continue to do that in this area. And that's because the DOJ does have an interest in the rational and predictable system of both public and private enforcement. So we do have an interest in that.


      We are interested in a system that respects the language of the statutes and, in particular, Section 4 of the Clayton Act. And so it was interesting, as Mike pointed out, to see that Justice Kavanaugh did focus on that. And we're interested in a system respecting the treble damages for private litigants is something that Congress is provided for. We also have an interest in a system that is an efficient enforcement system that doesn't provide for more than treble damages because of duplicative injury and duplicative recovery, and one were litigation costs are not excessive.


      So I think that the decision sort of, to the extent that it may lead to continued litigation about who's direct and who's indirect may continue to perpetuate the system that we described -- that someone described as complex and inefficient. But again, it may lead ultimately towards an improvement in that system.


Adam Biegel:  Let's come back to the voting blocks in this case. I think a lot of legal observers have also noted some interesting things here, putting aside the fact that this was the United States Supreme Court affirming a Ninth Circuit decision, which is a relatively rare thing unto itself, statistically. But the voting coalitions, when you look at Justice Kavanaugh joining the four democratic appointees, and you have the four other Republican appointees in the minority, as we all know as practicing lawyers, just because you were appointed by a certain President doesn't mean you vote a certain way.


      But I think all the voting coalition observers have said that's an interesting lineup, seeing Gorsuch and Kavanaugh on both sides of a case that involved a major American business in an area that is often, at least in the Roberts Court era, come out for the antitrust defendant. This is an interesting alignment of voting blocks. Is there anything as Court observers or in students of this opinion we can take from that, what might motivate some of the Justices, or the Justices that wrote those particular two opinions in this case?


Michael Murray:  It's always hard to read the tea leaves of one decision, but I think what you can take away is that antitrust law in Supreme Court is complicated, and the Justices approach it with an open mind. So in some of these antitrust cases, you don't have traditional coalitions that you might see in other types of cases. And I think this is a good example of that. There are obviously things in this opinion that you would expect from a Justice Kavanaugh opinion based on what we heard from him in the confirmation hearing, mainly the focus on the text of a particular statute. Although, then again, as Justice Kagan recently proclaimed, "We're all textualists now." And so that's not entirely surprising that a textualist opinion would be joined by Justice Kagan.


      So it's just not so simple, and I don't think antitrust law in particular, and even really a lot of the other areas of law, are places where these Justices are coming to the case with a preconceived notion. It looks like this case, based on the opinions and also based on the oral argument and the questions that the Justices were asking was one where they came in with an open mind. They tried to apply the law to the facts as they understood it. To borrow the Chief Justice's metaphor from over a decade ago now, they we're trying to call the balls and strikes.


      And the fact that Justice Kavanaugh and Justice Gorsuch came out on different sides, I think, indicates that it was a 5-4 case. It was a hard case, and sometimes it's hard to call the balls and the strikes. But I think it also indicates that they have an open mind, and they're approaching these cases to really see where the law should go, what the law is without the sort of preconceived notions that you often read about in, say, the popular press which only thinks in terms of who appointed this Justice, is this a big business case or an anti-business case? Those things are often really hard to assess, and the scholarly literature on that area is -- it actually sort of admits that.


      Look, it's really hard to tell whether a particular case should be a Republican case, or a Democrat case, or something like that. It's actually a little bit more complicated. And I think this opinion, the oral argument questioning, the briefing indicates that the Supreme Court shouldn't really be viewed through the normal lens of sort of partisan politics.


Adam Biegel:  Some other court watcher tidbits -- and Lauren, if you have any thoughts, feel free to jump in as well. To me, it's interesting also for the little joke I made about the Ninth Circuit, they don't often take the cases to affirm them. They don't -- might there have been a robust discussion based on the oral argument, in conference? And personally, I thought it took a little bit, from November to May. That means there were maybe more issues that might be kicked back and forth. Do you see anything in the decision that might have shown compromise or nods to each other that would have sort of shown what was going on inside the Court, even though, of course, none of us have inside knowledge to that?


Michael Murray:  So it's really hard to do that based on an opinion or an oral argument. I can say from my experience, it's not that unusual for the Court to take a case to ultimately affirm. As the Stern and Gressman leading treatise on the Supreme Court sort of points out, there's multiple reasons you might take a case. You might take it because there's a circuit split. You  might take it because there's a -- the opinion's wrong. You might take it just because it's a really important, big case, and you think the area of law could benefit from the Supreme Court's involvement.


      And so it's hard to know without interviewing Justices, and they're never going to say what exactly was going on in the case or what wasn't. And I can say that the November to May timeline doesn't seem particularly surprising to me, given the importance of the case, and how the oral argument went, and the fact that it was a 5-4 decision. And I haven't looked at the statistics in terms of how long the average is, but it doesn't strike me as out of the ordinary that that was the approximate timeline.


Adam Biegel:  Any thoughts on this issue of the split between the two Trump appointed Justices?


Lauren Weinstein:  I wouldn't read too much into it. Like Mike said, it's a complicated case. And I mean, it's not exactly -- how to interpret a 42-year-old antitrust precedent, it's not exactly a culture wars issue that you would expect political divides over to the extent that you should ever expect political divides over any Supreme Court case.


      I will just say one thing in defense of the Ninth Circuit as a former Ninth Circuit clerk. The Ninth Circuit has an enormous docket. I think it's -- at least last I checked, it was almost twice the number of cases as the next closest circuit court of appeals, which is the Fifth Circuit. And when you have that many cases, you're going to get a lot of cert grants. And sometimes you're going to get affirmed, and sometimes you're not. So I wouldn't read too much into the fact that it was the Ninth Circuit, either.


Adam Biegel:  Fair enough, fair enough. Let me throw in -- and we're just going to have a couple more questions before we open up the floor for some audience questions. One thing that I think sometimes people at The Federalist Society also think about is the enforcement system that we have, as Andrew was referring to, wanting an efficient enforcement mechanism and where we've come since Illinois Brick with all the state Illinois Brick repealers that allow indirect purchasers to be suing does create, at least for the corporate defendants, an interesting landscape that might affect their behavior where you say, "I worry about how I treat my direct purchasers for federal antitrust law, but I also have a risk on another front with indirect purchasers under the two dozen or so plus indirect purchaser laws." And that has developed under bodies of state law as well as federal law that all exist in our federal system.


      Does this -- I think you made comments, Lauren, about this efficient or this very active antitrust enforcement remedies being available as Justice Kavanaugh talks about, even though he wasn't referring to state enforcement specifically. And you were talking about the importance of an efficient enforcement system yourself, Andrew. Do you think this case has an impact on the vibrancy and use of those indirect purchaser statutes? It sounded like no one was saying Illinois Brick is likely to be overturned in the near future, so do we just keep on having this complex system we live with, or do we think people might use them more, use them less? Does it have any impact? Or yes, no, or maybe might be your answer.


Andrew Finch:  Bearing in mind that, again, we're 50 hours out, what's interesting about this opinion is there -- at least in this type of fact pattern, there may be no need for an indirect purchaser statute. And the claims by the consumers who bought the apps and the app developers who may, under majority's reasoning, also have some kind of claim against Apple, should they choose to bring it, seem like they could both be resolved in federal court, which is interesting and contrary to the way Illinois Brick  has been interpreted in the past. So this might be a situation where Illinois Brick has been interpreted flexibly to try to get -- in a way that will get those claims adjudicated in one form in federal court. There might be actually several different claims. I mean, it might not be in front of the same judge, but at least they would be in federal court.


      But the folks who have said that the current system before Apple v. Pepper, who said that the current Illinois Brick and Hanover Shoe -- we haven't really talked about Hanover Shoe, but it's the other side of the coin of Illinois Brick. Those who have said that that system is complex and inefficient have actually suggested that the indirect purchaser repealer statutes that have been passed by a number of states that Lauren mentioned and the system whereby those claims nonetheless wind their way into federal court, that's in many ways inefficient and would, some have suggested, would weigh in favor of repealing Illinois Brick at some point so that federal courts could address those claims in one form.


      It's interesting also, and I'll just mention this because Lauren mentioned it, that the complexity argument that used to be one of the underpinnings of Illinois Brick, that it's too complicated to sort out claims by indirect purchasers and direct purchasers, that argument took a bit of a hit in the majority opinion in an interesting way where Justice Kavanaugh says something like antitrust cases are complicated and experts sometimes have to do this work. And that's interesting. He says, "Expert testimony will often be necessary, but that's hardly unusual in antitrust cases." That suggests that there may be an openness someday to suggesting that federal courts, with the help of experts, would be in a good position to be able to sort out claims from direct purchasers in one form more efficiently and expeditiously.


Adam Biegel:  And not to put you on the spot, but I believe the Assistant Attorney General has said Illinois Brick is worthy of consideration as an ongoing doctrine, so there are people who have been paying attention to this even before this case was decided this week.


Andrew Finch:  Yes, our Assistant Attorney General, Makan Delrahim, was on the Antitrust Modernization Commission that focused at some length on these issues and there -- it's available, and it's referenced in the briefs, and it does discuss that exact issue.


Adam Biegel:  Any thoughts about vibrancy of indirect statutes?


Lauren Weinstein:  As I mentioned, I don't think this is really a watershed decision. I think that the Illinois Brick rule was clear, that Justice Kavanaugh emphasized that it was a clear rule. It remains a clear rule. I don't think that companies or litigants are really in too different a position than they were last week.


      That said—and my colleague Eric Beisner has an interesting article in on this—the pro-enforcement language of the decision and the reluctance to expand the Illinois Brick rule to bar private antitrust enforcement actions might suggest that the Supreme Court isn't going to stand in the way of what might be innovative theories of antitrust enforcement. So there might be some more litigation that this case spurs because of the importance of private enforcement in the opinion, not so much the actual ruling in the case, in my view.


Adam Biegel:  My final question to the panel is we all are also living in an age where antitrust has become part of the presidential campaign as well as just general political discourse, with the calls for breaking up of large companies or more active antitrust enforcement, down to stump speeches in Iowa, people talking about non-price competition, which I think at least antitrust lawyers enjoy hearing more discussion. But does this case add anything to that debate, momentum or greater attention for some of the people calling for more antitrust enforcement or more vigorous antitrust enforcement?


Lauren Weinstein:  If a candidate is looking for a segue or an entree to plug their antitrust platform, then yes, but I don't think that this will really change -- I mean, so the big hot button issue is what do we do about Amazon? What do we do about Google, Facebook, these big, big companies? And this decision, I don't think, offers us any sort of answer. If anything, the kind of consumer protection coda in the opinion might undercut efforts in the courts, at least, to address the antitrust issues raised by these big tech companies.


      One of the arguments against -- or one of the troubles, I think, that plaintiffs have had in using the antitrust laws to kind of reign in these big tech companies is that we do have this consumer welfare standards that underpin our antitrust laws and the policy of our antitrust laws. And Amazon is a great example. Amazon looks a lot like a monopolist, but it offers a product that consumers love at competitive prices. So there's really -- what's the antitrust problem there, other than they look like a monopolist?


      This case, I don't think, has much to say about that, but it might provide candidates an opportunity to talk about it. Then again, it's May. The election's in November. The attention span of the public is not all that long with the news cycle moving as quickly as it does. So who knows whether it'll really move the needle at all? We'll see where the candidates take it as we progress through the summer and fall.


Adam Biegel:  Andrew and Mike, without asking you to wade explicitly into politics, does this change enforcement, or do you think we've covered that?


Andrew Finch:  I don't think it changes enforcement at the Antitrust Division in a significant way. We're always looking for good cases and happy to bring cases where consumers are being harmed and we can prove those cases. I do think it's interesting, some of the rhetoric that Justice Kavanaugh used, and that may actually be picked up, some of the rhetoric that you mentioned at the outset, Adam, about the monopolists and so forth. I thought that was interesting. That may be picked up.


Adam Biegel:  So you're ready to announce a Section 2 case today?




Andrew Finch:  No, but it may someday be decided as an evidence of the views of the Court being actually consistent on both sides about the importance of antitrust enforcement in this area when firms are acting as monopolists and excluding competition or harming consumers through predatory or exclusionary conduct.


Adam Biegel:  Terrific. And with that, Micah, I'll ask you at The Federalist Society to see if we have any questions on the line. Our panelists welcome those questions, and if we have any, we'd be pleased to take them.


Micah Wallen:  Not seeing any question light up right off the bat. Adam, is there any other questions you had for our speakers?


Adam Biegel:  No. I think unless there are things other people wanted to add, we're happy, if there are no questions, to turn back the balance of the hour to our audience or any other closing thoughts from our panelists. I really, even if there is a question, I do want to thank in advance our panelists for the time they've taken to participate in this panel and to The Federalist Society for sponsoring it and doing it in such a timely -- all of us, doing it in such a timely manner so it can provide some useful content to Federalist Society members and other listeners.


Lauren Weinstein:  Nothing to add here other than to say thank you to The Federalist Society and to you, Adam, as well, and to Andrew and Mike for having this interesting discussion today.


Micah Wallen:  On behalf of The Federalist Society, I'd like to thank all of our experts for the benefit of their valuable time and expertise today. We welcome listener feedback by email at Thank you all for joining us. We are adjourned.


Operator:  Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at