petitive 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.
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.
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