USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 1 of 52
`NOT YET SCHEDULED FOR ORAL ARGUMENT
`PUBLIC COPY—SEALED MATERIAL DELETED
`21-7078
`
`United States Court of Appeals
`for the District of Columbia Circuit
`STATE OF NEW YORK; DISTRICT OF COLUMBIA; STATE OF CALIFORNIA; STATE OF
`COLORADO; STATE OF FLORIDA; STATE OF IOWA; STATE OF NEBRASKA; STATE OF
`NORTH CAROLINA; STATE OF OHIO; STATE OF TENNESSEE; STATE OF ALASKA;
`STATE OF ARIZONA; STATE OF ARKANSAS; STATE OF CONNECTICUT; STATE OF
`DELAWARE; TERRITORY OF GUAM; STATE OF HAWAII; STATE OF IDAHO; STATE OF
`ILLINOIS; STATE OF INDIANA; STATE OF KANSAS; COMMONWEALTH OF KENTUCKY;
`STATE OF LOUISIANA; STATE OF MAINE; STATE OF MARYLAND; COMMONWEALTH OF
`MASSACHUSETTS; STATE OF MICHIGAN; STATE OF MINNESOTA; STATE OF
`MISSISSIPPI; STATE OF MISSOURI; STATE OF MONTANA; STATE OF NEVADA; STATE
`OF NEW HAMPSHIRE; STATE OF NEW JERSEY; STATE OF NEW MEXICO; STATE OF
`NORTH DAKOTA; STATE OF OKLAHOMA; STATE OF OREGON; COMMONWEALTH OF
`PENNSYLVANIA; STATE OF RHODE ISLAND; STATE OF TEXAS; STATE OF UTAH; STATE
`OF VERMONT; COMMONWEALTH OF VIRGINIA; STATE OF WASHINGTON; STATE OF
`WEST VIRGINIA; STATE OF WISCONSIN; AND STATE OF WYOMING,
`
`
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`
`
`
`Plaintiffs-Appellants,
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`
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`
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`
`
`v.
`META PLATFORMS, INC.,
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`
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`Defendant-Appellee.
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`
`
`On Appeal from the United States District Court
`for the District of Columbia
`
`REPLY BRIEF FOR APPELLANTS
`
`
`
`
`BARBARA D. UNDERWOOD
` Solicitor General
`ANISHA S. DASGUPTA
` Deputy Solicitor General
`PHILIP J. LEVITZ
` Assistant Solicitor General
`
`of Counsel
`(Complete counsel listing appears on signature pages.)
`
`LETITIA JAMES
` Attorney General
` State of New York
`28 Liberty Street
`New York, NY 10005
`philip.levitz@ag.ny.gov
`(212) 416-6325
`
`
`Dated: April 14, 2022
`
`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 2 of 52
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`TABLE OF CONTENTS
`
`Page
`TABLE OF AUTHORITIES .................................................................... iii
`GLOSSARY .............................................................................................vii
`PRELIMINARY STATEMENT ................................................................. 1
`ARGUMENT ............................................................................................. 3
`POINT I
`LACHES DOES NOT BAR THE STATES’ ACQUISITION-BASED CLAIMS ........ 3
`A. Laches Does Not Apply to States Suing to Protect Public
`Rights. ....................................................................................... 3
`B. Even If Laches Could Apply Against the States, the
`District Court Erred in Applying Laches Here. ..................... 10
`1. The district court improperly presumed prejudice. ........ 12
`2. The district court improperly assumed
`unreasonable delay. ......................................................... 15
`
`POINT II
`THE STATES’ COMPLAINT SUFFICIENTLY ALLEGED THEIR
`PLATFORM-BASED CLAIM ..................................................................... 17
`A.
`Injunctive Relief Is Available to Remedy Facebook’s
`Platform-Related Misconduct and That Misconduct’s
`Ongoing Effects. ...................................................................... 17
`B. The District Court Disregarded Properly Pleaded
`Allegations Regarding Facebook’s Platform Policy and
`Governing Law. ....................................................................... 21
`
`i
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`

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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 3 of 52
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`Page
`
`
`C. The States Plausibly Alleged That Facebook’s Platform-
`Related Misconduct Violates Sherman Act § 2. ..................... 23
`1. The components of Facebook’s unified course of
`conduct cannot be evaluated in isolation. ....................... 23
`2. Facebook engaged in misconduct that cannot be
`characterized as a lawful refusal to deal. ....................... 25
`CONCLUSION ........................................................................................ 34
`
`
`
`ii
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`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 4 of 52
`
`TABLE OF AUTHORITIES1
`
`Page(s)
`
`
`Cases
`Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez,
`458 U.S. 592 (1982) ............................................................................... 5
`Antoine L. Garabet, M.D., Inc. v. Autonomous Techs. Corp.,
`116 F. Supp. 2d 1159 (C.D. Cal. 2000) ............................................... 14
`*Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,
`472 U.S. 585 (1985) ....................................................................... 27, 30
`Banneker Ventures, LLC v. Graham,
`798 F.3d 1119 (D.C. Cir. 2015) ........................................................... 19
`Bridgestone/Firestone Rsch., Inc. v. Automobile Club
`de l’Ouest de la France,
`245 F.3d 1359 (Fed. Cir. 2001) ........................................................... 13
`California v. American Stores Co.,
`495 U.S. 271 (1990) ........................................................................... 8, 9
`Clearfield Tr. Co. v. United States,
`318 U.S. 363 (1943) ............................................................................... 5
`*Continental Ore Co. v. Union Carbide & Carbon Corp.,
`370 U.S. 690 (1962) ............................................................................. 24
`Covad Commc’ns Co. v. Bell Atl. Corp.,
`398 F.3d 666 (D.C. Cir. 2005) ............................................................. 33
`*Daingerfield Island Protective Soc’y v. Lujan,
`920 F.2d 32 (D.C. Cir. 1990) ......................................................... 10, 15
`*Eastman Kodak Co. v. Image Tech. Servs., Inc.,
`504 U.S. 451 (1992) ............................................................................. 29
`
`
`1 Authorities upon which we chiefly rely are marked with asterisks.
`
`iii
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`

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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 5 of 52
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`Page(s)
`
`Cases
`Evergreen Safety Council v. RSA Network Inc.,
`697 F.3d 1221 (9th Cir. 2012) ............................................................. 16
`*Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc.,
`528 U.S. 167 (2000) ............................................................................. 18
`Ginsburg v. InBev NV/SA,
`623 F.3d 1229 (8th Cir. 2010) ............................................................. 14
`*Guaranty Tr. Co. of N.Y. v. United States,
`304 U.S. 126 (1938) ....................................................................... 4, 5, 6
`Hanover Shoe, Inc. v. United Shoe Mach. Corp.,
`392 U.S. 481 (1968) ............................................................................. 16
`International Tel. & Tel. Corp. v. General Tel. & Elecs. Corp.,
`518 F.2d 913 (9th Cir. 1975) ............................................................ 9-10
`Kansas v. Nebraska,
`574 U.S. 445 (2015) ....................................................................... 11, 20
`Kickflip, Inc. v. Facebook, Inc.,
`999 F. Supp. 2d 677 (D. Del. 2013) ..................................................... 24
`Koch v. Cox,
`489 F.3d 384 (D.C. Cir. 2007) ............................................................. 17
`*Lorain Journal Co. v. United States,
`342 U.S. 143 (1951) ............................................................................. 26
`Love v. Stevens,
`207 F.2d 32 (D.C. Cir. 1953) ............................................................... 10
`Maryland-Nat’l Cap. Park & Plan. Comm’n v. U.S. Postal Serv.,
`487 F.2d 1029 (D.C. Cir. 1973) ........................................................... 11
`Massachusetts ex rel. Bellotti v. Russell Stover Candies, Inc.,
`541 F. Supp. 143 (D. Mass. 1982) ..................................................... 4, 9
`
`
`
`iv
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`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 6 of 52
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`Page(s)
`
`Cases
`McKinney v. Waterman Steamship Corp.,
`925 F.2d 1 (1st Cir. 1991) ................................................................... 11
`*Menominee Indian Tribe of Wisconsin v. United States,
`614 F.3d 519 (D.C. Cir. 2010) ....................................................... 10, 15
`National Soc’y of Pro. Eng’rs v. United States,
`435 U.S. 679 (1978) ............................................................................. 19
`Nebraska ex rel. Nelson v. Central Interstate Low-Level
`Radioactive Waste Comm’n,
`26 F.3d 77 (8th Cir. 1994) ..................................................................... 6
`Nebraska ex rel. Nelson v. Central Interstate Low-Level
`Radioactive Waste Comm’n,
`834 F. Supp. 1205 (D. Neb. 1993) ......................................................... 6
`Pacific Bell Telephone Co. v. linkLine Commc’ns, Inc.,
`555 U.S. 438 (2009) ............................................................................. 30
`Pro-Football, Inc. v. Harjo,
`567 F. Supp. 2d 46 (D.D.C. 2008) ....................................................... 13
`Puerto Rico v. Carpenter Co.,
`442 F. Supp. 3d 464 (D.P.R. 2020)........................................................ 6
`*Ralls Corp. v. Committee on Foreign Inv. in the U.S.,
`758 F.3d 296 (D.C. Cir. 2014) ................................................. 12, 23, 32
`Reveal Chat Holdco LLC v. Facebook, Inc.,
`2021 WL 1615349 (N.D. Cal. Apr. 26, 2021) ...................................... 11
`Reveal Chat Holdco LLC v. Meta Platforms, Inc.,
`2022 WL 595696 (9th Cir. Feb. 28, 2022) .......................................... 11
`Taleff v. Southwest Airlines Co.,
`828 F. Supp. 2d 1118 (N.D. Cal. 2011) ............................................... 14
`United States Forest Serv. v. Cowpasture River Pres. Ass’n,
`140 S. Ct. 1837 (2020) ........................................................................... 7
`
`v
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`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 7 of 52
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`Page(s)
`
`Cases
`United States v. Dentsply Int’l, Inc.,
`399 F.3d 181 (3d Cir. 2005) .......................................................... 22, 32
`United States v. Microsoft Corp.,
`231 F. Supp. 2d 144 (D.D.C. 2002) ..................................................... 20
`*United States v. Microsoft Corp.,
`253 F.3d 34 (D.C. Cir. 2001) ............................................. 20, 21, 25, 26
`United States v. Mottolo,
`605 F. Supp. 898 (D.N.H. 1985) ............................................................ 4
`Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP,
`540 U.S. 398 (2004) ....................................................................... 30, 31
`Viamedia, Inc. v. Comcast Corp.,
`951 F.3d 429 (7th Cir. 2020) ............................................................... 20
`Will v. Michigan Dep’t of State Police,
`491 U.S. 58 (1989) ................................................................................. 7
`Zenith Radio Corp. v. Hazeltine Rsch., Inc.,
`395 U.S. 100 (1969) ............................................................................. 20
`Zuckerman v. Metropolitan Museum of Art,
`928 F.3d 186 (2d Cir. 2019) ................................................................ 10
`Laws
`15 U.S.C.
`§ 15b .................................................................................................. 7, 8
`§ 15c ....................................................................................................... 7
`§ 15f ....................................................................................................... 8
`§ 26 ........................................................................................................ 6
`42 U.S.C.
`§ 9601 .................................................................................................... 5
`§ 9607 ................................................................................................. 4-5
`§ 9659 ................................................................................................. 4-5
`
`vi
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`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 8 of 52
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`API
`
`CERCLA
`
`
`Dkt.
`
`FTC
`
`FTC Dkt.
`
`NEPA
`
`
`
`GLOSSARY
`application programming interface
`
`Comprehensive Environmental Response,
`Compensation, and Liability Act of 1980,
`42 U.S.C. § 9601 et seq.
`
`Docket in case number 20-cv-3589 (D.D.C.)
`
`Federal Trade Commission
`
`Docket in case number 20-cv-3590 (D.D.C.)
`
`National Environmental Policy Act of 1969,
`42 U.S.C. § 4321 et seq.
`
`vii
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`
`
`

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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 9 of 52
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`PRELIMINARY STATEMENT
`
`Facebook has engaged in an unlawful course of conduct to, in CEO
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`Mark Zuckerberg’s words, “build a competitive moat” around its monopoly.
`
`(JA46.) Facebook’s efforts to buy or bury nascent competitors continue to
`
`harm consumers, and the district court erred in dismissing the complaint
`
`of the forty-eight plaintiff States without discovery.
`
`First, as Facebook acknowledges, laches does not apply against
`
`sovereigns suing to protect public rights. Facebook is wrong to contend
`
`that the States are not acting as sovereigns merely because they are
`
`enforcing federal law. It is not the statutory source of the States’ claims,
`
`but their having sued to protect public rights, that makes laches inappli-
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`cable. And even if a laches defense were in theory available when the
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`States sue under federal antitrust law to protect public rights, that defense
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`would not apply here. The facts alleged do not prove unreasonable delay
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`by the States or undue prejudice to Facebook, particularly when giving
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`due weight in the equitable analysis to the States’ vital role protecting
`
`the public interest.
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`Second, Facebook fails to rebut the States’ showing that the district
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`court made multiple independent errors in dismissing the portion of the
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`
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`

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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 10 of 52
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`States’ Sherman Act § 2 claim based on Facebook’s exploitation of its
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`platform to bury potential competitors. For one thing, Facebook has not
`
`shown that injunctive relief is unavailable, as the district court mistakenly
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`assumed. The States alleged that Facebook’s anticompetitive course of
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`conduct is ongoing. And in any event, their allegations show that injunc-
`
`tive relief would meaningfully address Facebook’s past anticompetitive
`
`conduct and its ongoing effects.
`
`The district court erred in accepting Facebook’s assertion that its
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`conduct was exclusively a lawful refusal to deal. Facebook does not dispute
`
`that the States alleged a wide-ranging anticompetitive buy-or-bury course
`
`of conduct. Yet the district court did not address, as a whole, that miscon-
`
`duct and its reinforcing effects. The district court also failed to address
`
`substantial platform-related misconduct that cannot be construed as a
`
`refusal to deal, such as covertly degrading the functionality and distribu-
`
`tion of rivals’ content, and imposing conditions to induce third parties not
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`to compete with Facebook or transact with Facebook’s rivals. And because
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`Facebook’s attempts to justify its conduct as a mere refusal to deal depend
`
`on factual disputes that cannot be resolved against the plaintiffs at this
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`stage, the district court erred in cutting off necessary fact development.
`
`2
`
`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 11 of 52
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`That fact development is particularly appropriate here, given the novelty
`
`of the digital ecosystem in which Facebook operates.
`
`ARGUMENT
`
`POINT I
`
`LACHES DOES NOT BAR THE STATES’ ACQUISITION-BASED CLAIMS
`
`A. Laches Does Not Apply to States Suing to
`Protect Public Rights.
`As the States explained in their opening brief (at 22-28), laches does
`
`not apply against States suing to protect the public rights advanced by
`
`government enforcement actions like this one. Facebook does not dispute
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`this long-settled rule. Rather, it contends (Br. 13-20) that an exception
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`permits the application of laches here because the States are suing under
`
`Section 16 of the Clayton Act and the States are supposedly equivalent
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`to private parties when suing under that federal statute. That contention
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`is meritless for two reasons.
`
`First, it is not the statutory source of the States’ claims, but the
`
`capacity in which they sue—to protect public rights—that makes laches
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`inapplicable. The rule that laches does not apply against States is rooted
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`in “the great public policy” that States, like the federal government,
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`3
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`

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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 12 of 52
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`should be allowed broad latitude when protecting public rights. Guaranty
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`Tr. Co. of N.Y. v. United States, 304 U.S. 126, 132 (1938). Facebook does
`
`not contest that the States brought this suit to protect public rights.
`
`It is immaterial that the States are suing under a federal law rather
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`than their own state laws. The public policy that the States should be
`
`permitted to protect public rights applies regardless of the law the States
`
`seek to enforce. As one court explained in rejecting the same argument
`
`Facebook makes here, where a State suing as parens patriae is “protect-
`
`ing its citizens and economy from violations of the [federal] antitrust
`
`laws,” it is “acting in its sovereign capacity . . . to vindicate the public
`
`interest” and thus is not subject to laches. Massachusetts ex rel. Bellotti
`
`v. Russell Stover Candies, Inc., 541 F. Supp. 143, 144-45 (D. Mass. 1982).
`
`Similarly, a State sues “in its sovereign capacity,” and therefore is not
`
`subject to laches, when the State enforces federal environmental law
`
`under CERCLA. See, e.g., United States v. Mottolo, 605 F. Supp. 898, 909
`
`(D.N.H. 1985). See also Opening Br. 23-24.2
`
`
`2 Facebook is incorrect to suggest (at 19) that CERCLA is inapposite
`because CERCLA provides that a State can seek recovery. Like Clayton
`Act § 16, CERCLA permits any “person” to seek recovery, see 42 U.S.C.
`
`
`4
`
`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 13 of 52
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`Contrary to Facebook’s contention, when the States sue as parens
`
`patriae, they are not simply “standing in for private citizens” (Br. 15).
`
`Instead, they sue to protect a public interest “apart from the interests of
`
`particular private parties.” Alfred L. Snapp & Son, Inc. v. Puerto Rico ex
`
`rel. Barez, 458 U.S. 592, 605, 607 (1982). Here, that public interest is the
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`economic well-being of the community. See id. at 607. (JA49 (¶¶ 17-20).)
`
`The fact that such an interest has been labeled “quasi-sovereign” rather
`
`than simply “sovereign” in the standing context has no relevance to the
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`laches analysis, which rests on the separate question of whether the
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`States are protecting public rights—as they undisputedly are here. See
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`Guaranty Tr., 304 U.S. at 132.
`
`Neither Facebook nor any of its amici identifies a single authority
`
`to the contrary. Facebook references cases (at 16) applying laches to sover-
`
`eigns suing in a private or proprietary capacity, rather than to vindicate
`
`a public right. See Clearfield Tr. Co. v. United States, 318 U.S. 363, 369
`
`(1943) (recovery of amount owed); Guaranty Tr., 304 U.S. at 129 (similar).
`
`
`§§ 9607(a)(4)(A)-(B), 9659(a), and “person” is defined to include States,
`id. § 9601(21). CERCLA does not create an exclusive cause of action for
`States.
`
`5
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`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 14 of 52
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`Moreover, in Guaranty Trust, the sovereign was a foreign entity: the
`
`Soviet Union. Because no public rights—much less those of Americans—
`
`were at issue in these cases, the public-policy considerations against apply-
`
`ing laches were not present. See 304 U.S. at 135-36.
`
`Facebook also relies (at 19) on Puerto Rico v. Carpenter Co., 442 F.
`
`Supp. 3d 464 (D.P.R. 2020), and Nebraska ex rel. Nelson v. Central
`
`Interstate Low-Level Radioactive Waste Commission, 834 F. Supp. 1205
`
`(D. Neb. 1993). But in those cases the sovereign plaintiffs did not dispute
`
`the threshold applicability of laches. Thus, the district courts applied
`
`laches without considering whether the doctrine applied in the first
`
`instance. And in the one appeal that ensued, the Eighth Circuit declined
`
`to address laches and affirmed only the district court’s holding that
`
`Nebraska was subject to a statute of limitation that explicitly applied to
`
`States. See 26 F.3d 77, 81 (8th Cir. 1994).
`
`Second, Section 16 of the Clayton Act underscores the inapplica-
`
`bility of laches against States suing under that statute. Section 16 entitles
`
`plaintiffs to injunctive relief “ against threatened loss or damage by a
`
`violation of the antitrust laws . . . when and under the same conditions
`
`and principles as injunctive relief . . . is granted by courts of equity.”
`
`6
`
`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 15 of 52
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`15 U.S.C. § 26. It is undisputedly a settled rule of equity that laches does
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`not apply against sovereign States enforcing public rights.
`
`If Congress wanted to override States’ longstanding sovereign
`
`protection from laches, it would have needed to use “exceedingly clear
`
`language.” United States Forest Serv. v. Cowpasture River Pres. Ass’n,
`
`140 S. Ct. 1837, 1849-50 (2020). Congress did not do so in Section 16.
`
`There is no merit to Facebook’s attempt (at 20) to distinguish on their
`
`facts the cases applying this canon that were referenced in the States’
`
`opening brief. Countless cases in many contexts apply the canon to ensure
`
`that federal statutes are not read to impliedly “pre-empt the historic
`
`powers of the States”—like their protection from laches when suing to
`
`protect public rights. See, e.g., Will v. Michigan Dep’t of State Police, 491
`
`U.S. 58, 65 (1989) (quotation marks omitted).
`
`Facebook misplaces its reliance (at 17-18) on laws not at issue in
`
`this case. Facebook notes that a provision permitting States to sue for
`
`damages for antitrust violations, 15 U.S.C. § 15c(a)(1), is subject to a
`
`statute of limitations, id. § 15b. But that is precisely the type of clear
`
`language that is needed to subject States to a time bar, and which Section
`
`16 lacks. Moreover, the time bar in § 15b applies equally to the federal
`
`7
`
`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 16 of 52
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`government, which undisputedly is not subject to laches. See id. (apply-
`
`ing limitations period to § 15a, which governs damage suits by the United
`
`States). Facebook also notes (at 14) that Congress declined to include in
`
`the Clayton Act a provision that would have allowed States to enforce
`
`any criminal or civil provision of the federal antitrust laws. But that is
`
`irrelevant when Congress did enact Section 16, which permits the civil
`
`enforcement by States here.3
`
`Facebook also is wrong to assert (at 14-15) that California v. Ameri-
`
`can Stores Co., 495 U.S. 271 (1990), indicates that the States should be
`
`subject to laches when suing under Section 16. There, the Court merely
`
`observed in dicta that equitable defenses such as laches could apply in
`
`Section 16 challenges “by private parties.” Id. at 296. No other Justice
`
`joined Justice Kennedy’s concurrence suggesting that the state plaintiff
`
`
`3 Other statutory provisions underscore that Congress intended
`States to have a central role in enforcement of federal antitrust laws. For
`instance, whenever the U.S. Attorney General sues under the antitrust
`laws and has reason to believe any State would be entitled to sue based
`on substantially the same alleged violation, the State must be notified.
`15 U.S.C. § 15f.
`
`8
`
`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 17 of 52
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`might be subject to laches. See id. at 298.4 Facebook likewise is wrong to
`
`maintain (at 14-15) that the federal government has suggested States
`
`should be subject to laches when suing under Section 16. The amicus brief
`
`Facebook cites did not address laches.5
`
`Finally, Facebook’s amici ignore current realities when they specu-
`
`late that recognizing the inapplicability of laches to States would harm
`
`businesses by enabling “eternal liability.” Chamber Br. 3-4, 9-18. It is
`
`undisputed that States and the federal government have never been
`
`subject to laches when pursuing public rights under their own laws, and
`
`amici offer no evidence that abuses have occurred. That is because the
`
`States and the federal government are subject to the “safeguards of the
`
`public-interest standards” that consistently “guide the government when
`
`it is a plaintiff.” International Tel. & Tel. Corp. v. General Tel. & Elecs.
`
`
`4 Because American Stores made no laches holding, it could not have
`undermined Russell Stover’s holding that States are not subject to laches
`when protecting public rights under federal antitrust law, see 541 F.
`Supp. at 144-45. Facebook is incorrect in asserting otherwise (at 18).
`5 See Mem. Amicus Curiae of the United States, New York v.
`Microsoft Corp., No.
`98-cv-1233
`(D.D.C. Apr.
`15,
`2002),
`https://tinyurl.com /9rjxj8jh.
`
`9
`
`

`

`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 18 of 52
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`Corp., 518 F.2d 913, 926-27 (9th Cir. 1975), disapproved on other grounds
`
`by American Stores, 495 U.S. 271.
`
`B. Even If Laches Could Apply Against the States,
`the District Court Erred in Applying Laches Here.
`Even if laches were in theory available in this type of case, laches
`
`would provide no basis for dismissal here. Facebook does not dispute that
`
`a defendant asserting laches bears the burden of proving both undue
`
`prejudice from the timing of the complaint and inexcusable delay in
`
`bringing suit. Daingerfield Island Protective Soc’y v. Lujan, 920 F.2d 32,
`
`37 (D.C. Cir. 1990). Facebook also does not dispute that, because laches
`
`depends largely on factual questions, it generally provides no basis for
`
`dismissal on the complaint alone. See Menominee Indian Tribe of Wiscon-
`
`sin v. United States, 614 F.3d 519, 532 (D.C. Cir. 2010). In fact, the only
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`case Facebook cites (at 27) where this Court affirmed a dismissal on the
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`basis of laches is a seventy-year-old, one-paragraph decision with no
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`reasoning. See Love v. Stevens, 207 F.2d 32 (D.C. Cir. 1953).6
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`6 Facebook’s out-of-circuit cases are readily distinguishable. Zucker-
`man v. Metropolitan Museum of Art concerned a seventy-year delay and
`prejudice that was “evident on the face of [the] complaint.” 928 F.3d 186,
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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 19 of 52
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`Moreover, contrary to Facebook’s suggestion (at 28-29), ample auth-
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`ority demonstrates that the equitable laches analysis must give great
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`weight to the States’ role protecting the public interest. Indeed, the public
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`interest is the “most important” factor to be considered. Maryland-Nat’l
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`Cap. Park & Plan. Comm’n v. U.S. Postal Serv., 487 F.2d 1029, 1042 (D.C.
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`Cir. 1973). When “the public interest is involved, a federal court’s equit-
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`able powers assume an even broader and more flexible character than
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`when only a private controversy is at stake.” Kansas v. Nebraska, 574 U.S.
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`445, 456 (2015) (quotations marks omitted). And when the public interest
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`is appropriately weighed in the equitable analysis, the complaint’s allega-
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`tions reveal no undue prejudice or unreasonable delay.7
`
`
`
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`
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`190 (2d Cir. 2019), cert. denied, 140 S. Ct. 1269 (2020). And in McKinney
`v. Waterman Steamship Corp., an unrebutted and unobjected-to affidavit
`proved laches. 925 F.2d 1, 4-5 (1st Cir. 1991).
`7 Facebook misplaces its reliance on a trial-court laches finding in
`Reveal Chat Holdco LLC v. Facebook, Inc., 2021 WL 1615349, at *5 (N.D.
`Cal. Apr. 26, 2021), because private plaintiffs—not States—brought that
`case, and the Ninth Circuit in any event did not reach the laches issue on
`appeal, see 2022 WL 595696 (9th Cir. Feb. 28, 2022).
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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 20 of 52
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`1. The district court improperly presumed prejudice.
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`The States’ complaint demonstrates no undue prejudice. When
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`Facebook asserts (at 25-27) that a divestiture remedy would be prejudi-
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`cial because Facebook purportedly has invested in and integrated Insta-
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`gram and WhatsApp, Facebook erroneously disregards the complaint’s
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`allegations that Facebook acquired Instagram and WhatsApp to stifle
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`competition from them—and thus did not seriously invest in and inte-
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`grate them. See Opening Br. 33-35. In evaluating a motion to dismiss,
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`the Court must accept the complaint’s allegations as true and “grant[]
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`plaintiff[s] the benefit of all inferences that can be derived from the facts
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`alleged.” Ralls Corp. v. Committee on Foreign Inv. in the U.S., 758 F.3d
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`296, 314-15 (D.C. Cir. 2014) (quotation marks omitted).
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`In any event, none of the allegations that Facebook identifies (at
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`26) supports Facebook’s assertions of undue prejudice. For instance, the
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`complaint makes clear that a pre-acquisition suggestion to integrate
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`Instagram (JA72 (¶ 115))
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` (JA367-368 (¶¶ 125-126).) An allegation that Facebook
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`used WhatsApp data to promote Facebook’s core platform likewise does
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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 21 of 52
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`not demonstrate that undue prejudice would result from divestiture.
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`Instead, the allegation underscores why laches should not apply here, by
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`showing that Facebook’s anticompetitive data usage contradicted its
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`assurances at the time of the acquisition that it would not use WhatsApp
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`data this way. (JA87 (¶¶ 176-177).)
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`Facebook is not aided by its reliance (at 25, 27) on Pro-Football, Inc.
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`v. Harjo, 567 F. Supp. 2d 46, 60-61 (D.D.C. 2008), aff’d in part, 565 F.3d
`
`880 (D.C. Cir. 2009), and Bridgestone/Firestone Research, Inc. v. Auto-
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`mobile Club de l’Ouest de la France, 245 F.3d 1359, 1362-63 (Fed. Cir.
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`2001). In those cases, decided on full evidentiary records, the party assert-
`
`ing laches undisputedly made a substantial investment that would be
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`wholly wasted if the other party prevailed. Here, by contrast, the complaint
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`provides no such undisputed proof of prejudice.
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`More fundamentally, any concern about purported burdens of
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`divestiture should be addressed at the remedies stage, not at the motion-
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`to-dismiss stage. At this juncture, no court has yet found liability, let alone
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`begun to consider appropriate relief. Moreover, the States seek other,
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`purely prospective relief—such as limitations and preconditions on Face-
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`book’s future acquisitions. Facebook has not explained why its arguments
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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 22 of 52
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`about the costs of unwinding should matter to such forward-looking
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`remedies. That fact distinguishes the out-of-circuit cases Facebook cites
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`(e.g., at 25-26), in which the only equitable relief the plaintiffs sought was
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`divestiture. See Ginsburg v. InBev NV/SA, 623 F.3d 1229, 1233 (8th Cir.
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`2010); Taleff v. Southwest Airlines Co., 828 F. Supp. 2d 1118, 1125 (N.D.
`
`Cal. 2011), aff’d, 554 F. App’x 598 (9th Cir. 2014); Antoine L. Garabet,
`
`M.D., Inc. v. Autonomous Techs. Corp., 116 F. Supp. 2d 1159, 1160 (C.D.
`
`Cal. 2000). The district court thus erred in assuming prejudice based on
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`assumptions about divestiture alone.
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`The FTC’s pending, parallel claims for divestiture further under-
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`score the lack of prejudice to Facebook. There is no merit to Facebook’s
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`concern that accepting the States’ position would allow any private person
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`to seek equitable relief using a pending federal government lawsuit “as a
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`shield against untimeliness.” Br. 30. The States’ arguments here reflect
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`their special role protecting public rights in parallel with the federal
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`government.
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`Finally, Facebook has offered no authority from this circuit support-
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`ing the district court’s erroneous presumption of prejudice or undermin-
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`ing this Court’s repeated holding that “laches cannot rest simply on the
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`USCA Case #21-7078 Document #1943203 Filed: 04/14/2022 Page 23 of 52
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`length of delay.” Daingerfield Island, 920 F.2d at 37; see Menominee
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`Indian, 614 F.3d at 532. Although Daingerfield Island involved a NEPA
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`claim, as noted by Facebook (at 25), nothing in that case suggests that its
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`holding does not apply equally to other claims. See 920 F.