Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 1 of 12
`
`FOR PUBLICATION
`
`UNITED STATES COURT OF APPEALS
`
`FOR THE NINTH CIRCUIT
`
`
`FILED
`
`
`JUL 17 2023
`
`MOLLY C. DWYER, CLERK
`U.S. COURT OF APPEALS
`
`
`
`
`
`
`
`No. 21-16506
`
`
`D.C. No. 4:20-cv-05640-YGR
`Northern District of California,
`Oakland
`
`
`ORDER
`
`No. 21-16695
`
`
`D.C. No. 4:20-cv-05640-YGR
`
`
`
`
` Plaintiff-counter-
`
`defendant-Appellant,
`
`EPIC GAMES, INC.,
`
`
`
`
` v.
`
`
`APPLE, INC.,
`
`
`
`
` Defendant-counter-claimant-
` Appellee.
`
`
`
` Plaintiff-counter-
`
`defendant-Appellee,
`
`EPIC GAMES, INC.,
`
`
`
`
` v.
`
`
`APPLE, INC.,
`
`
`
`
` Defendant-counter-claimant-
` Appellant.
`
`
`Before: S.R. THOMAS and M. SMITH, Circuit Judges, and McSHANE,* District
`Judge.
`Concurrence by Judge M. SMITH.
`
`
`*
` The Honorable Michael J. McShane, United States District Judge for
`
`
`the District of Oregon, sitting by designation.
`
`
`
`
`
`
`
`
`
`FOR PUBLICATION
`
`UNITED STATES COURT OF APPEALS
`
`FOR THE NINTH CIRCUIT
`
`
`FILED
`
`
`JUL 17 2023
`
`MOLLY C. DWYER, CLERK
`U.S. COURT OF APPEALS
`
`
`
`
`
`
`
`No. 21-16506
`
`
`D.C. No. 4:20-cv-05640-YGR
`Northern District of California,
`Oakland
`
`
`ORDER
`
`No. 21-16695
`
`
`D.C. No. 4:20-cv-05640-YGR
`
`
`
`
` Plaintiff-counter-
`
`defendant-Appellant,
`
`EPIC GAMES, INC.,
`
`
`
`
` v.
`
`
`APPLE, INC.,
`
`
`
`
` Defendant-counter-claimant-
` Appellee.
`
`
`
` Plaintiff-counter-
`
`defendant-Appellee,
`
`EPIC GAMES, INC.,
`
`
`
`
` v.
`
`
`APPLE, INC.,
`
`
`
`
` Defendant-counter-claimant-
` Appellant.
`
`
`Before: S.R. THOMAS and M. SMITH, Circuit Judges, and McSHANE,* District
`Judge.
`Concurrence by Judge M. SMITH.
`
`
`*
` The Honorable Michael J. McShane, United States District Judge for
`
`
`the District of Oregon, sitting by designation.
`
`
`
`
`
`
`
`
`
`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 2 of 12
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`
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`Apple’s Motion to Stay the Mandate (Dkt No. 247) is GRANTED. Pursuant
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`to Rule 41(d) of the Federal Rules of Appellate Procedure, the mandate is stayed for
`
`90 days to permit the filing of a petition for writ of certiorari in the Supreme Court.
`
`Apple must notify the Court in writing that the petition has been filed, in which case
`
`the stay will continue until the Supreme Court resolves the petition. See Fed. R.
`
`App. P. 41(d)(2)(B)(ii). Should the Supreme Court grant certiorari, the mandate will
`
`be stayed pending disposition of the case. Should the Supreme Court deny certiorari,
`
`the mandate will issue immediately. The parties shall advise this Court immediately
`
`upon the Supreme Court’s decision.
`
`
`
`2
`
`
`
`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 3 of 12
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`
`JUL 17 2023
`
`Epic Games v. Apple, Nos. 21-16506 & 16695
`MOLLY C. DWYER, CLERK
`U.S. COURT OF APPEALS
`M. SMITH, Circuit Judge, concurring in the granting of the motion for a stay of the
`mandate pending the filing of a petition for certiorari:
`
`Given our general practice of granting a motion for a stay if the arguments
`
`FILED
`
`presented therein are not frivolous, I have voted to grant Apple’s motion. See United
`
`States v. Pete, 525 F.3d 844, 850 (9th Cir. 2008) (it is “often the case” that our court
`
`stays the mandate while a party seeks certiorari). I write separately to express my
`
`view that, while the arguments in Apple’s motion may not be technically frivolous,
`
`they ignore key aspects of the panel’s reasoning and key factual findings by the
`
`district court. When our reasoning and the district court’s findings are considered,
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`Apple’s arguments cannot withstand even the slightest scrutiny. Apple’s standing
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`and scope-of-the-injunction arguments simply masquerade its disagreement with the
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`district court’s findings and objection to state-law liability as contentions of legal
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`error.
`
`I. STANDING
`
`
`
`Because Apple’s anti-steering provision negatively affects the revenue Epic
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`earns through the Epic Games Store, Epic had standing to seek injunctive relief
`
`against that provision pursuant to California’s Unfair Competition Law (UCL), Cal.
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`Bus. & Prof. Code § 17200 et seq.
`
`
`
`To establish standing, a plaintiff must have “suffered an injury in fact that is
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`concrete, particularized, and actual or imminent.” TransUnion LLC v. Ramirez, 141
`
`
`
`1
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`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 4 of 12
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`S. Ct. 2190, 2203 (2021). “[M]onetary harms” are one of the “[m]ost obvious” types
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`of harm that satisfy the injury-in-fact requirement. Id. at 2204.
`
`
`
`Epic has “three primary lines of business, each of which figures into various
`
`aspects of [this case].” Epic Games, Inc. v. Apple, Inc. (Epic II), 67 F.4th 946, 967
`
`(9th Cir. 2023). First, Epic is a “video game developer—best known for the
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`immensely popular Fortnite.” Id. Second, Epic is the “the parent company of a
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`gaming-software developer” (Epic International), which still has several apps on
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`Apple’s App Store. Id. Third, Epic is “a video game publisher and distributor,”
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`offering “the Epic Games Store as a game-transaction platform” on multiple devices.
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`Id. at 968. In this last role, Epic is “a direct competitor” of Apple’s App Store “when
`
`it comes to games that feature cross-platform functionality like Fortnite.” Id.
`
`
`
`As the panel opinion explained, the second and third lines of business—not
`
`the first—give rise to an injury in fact. See id. at 1000. As the parent company of
`
`Epic International, Epic is harmed because its subsidiary still has apps on the App
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`Store that are subject to the anti-steering provision. As a games distributor, Epic is
`
`harmed because app developers cannot direct, with the promise of lower prices, their
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`users to the Epic Games Store, which takes a significantly lower commission on app
`
`purchases than the App Store. As we explained: “[Epic] offers a 12% commission
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`compared to Apple’s 30% commission. If consumers can learn about lower app
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`prices, which are made possible by developers’ lower costs, and have the ability to
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`
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`2
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`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 5 of 12
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`substitute to the platform with those lower prices, they will [almost always] do so—
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`increasing the revenue that the Epic Games Store generates.” Id.
`
`
`
`Such monetary loss is hornbook injury-in-fact, and Apple’s arguments to the
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`contrary misconstrue both our decision and the record. Apple asserts that Epic lacks
`
`standing because “Epic’s developer program account has been terminated,” meaning
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`Epic “has no apps on the App Store.” But we did not conclude, as Apple’s argument
`
`suggests, that Epic was injured in its role as a video game developer (i.e., as the
`
`creator of the since-removed Fortnite). We recognized at the very start of our
`
`standing analysis that Apple had “terminated Epic’s iOS developer account,” and
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`instead determined that Epic suffered an injury-in-fact in its role as a parent company
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`and competing games distributor. Id. at 1000.
`
`
`
`Regarding these two bases on which we actually determined standing, Apple
`
`offers only the conclusory statement that “no trial evidence or findings by the district
`
`court” support them. However, that assertion is simply false. Regarding Epic’s role
`
`as the parent of Epic International, the record contains screenshots showing that Epic
`
`International still has six apps on the App Store, even though the parent company’s
`
`developer account has been terminated.
`
`
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`The record is also filled with support for the common-sense proposition that
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`Epic is harmed as a competing games distributor because consumers would shift
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`some of their spending from the App Store to the Epic Games Store if developers
`
`
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`3
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`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 6 of 12
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`could communicate the availability of lower prices on the latter. To begin, Apple’s
`
`own internal documents conclude that two of the “most effective marketing
`
`activities” are “push notifications” and “email outreach,” which are the two practices
`
`prohibited by Apple’s anti-steering provision. Epic Games, Inc. v. Apple Inc. (Epic
`
`I), 559 F. Supp. 3d 898, 1054 (N.D. Cal. 2021); see also Epic II, 67 F.4th at 1001.
`
`Moreover, before the district court, Apple defeated Epic’s proposed market
`
`definition for its Sherman Act claims based on the very kind of factual findings that
`
`it now claims are non-existent. The district court found that video games
`
`increasingly can be “ported across multiple devices” because of the growing
`
`prevalence of cross-platform functionality. Epic I, 559 F. Supp. 3d at 985; see also
`
`Epic II, 67 F.4th at 967 (describing “cross-play,” “cross-progression,” and “cross-
`
`wallet”). “[N]ot all games” feature cross-platform functionality, and some platforms
`
`have taken steps to limit it. Epic I, 559 F. Supp. 3d. at 985. But when it comes to
`
`the games that do offer such cross-platform functionality, app-transaction platforms
`
`(like the App Store and Epic Games Store) “are truly competing against one
`
`another.” Id. The district court, therefore, rejected the contention that the App Store
`
`is a market unto itself and summarized its analysis as follows: “[N]either consumers
`
`nor developers are ‘locked-in’ to the App Store for digital mobile game
`
`transactions—they can and do pursue game transactions on a variety of other mobile
`
`platforms and increasingly other game platforms.” Id. at 1026. Indeed, the district
`
`
`
`4
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`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 7 of 12
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`court found that Fortnite data provided a particularly vivid illustration: Between 32
`
`and 52% of Fortnite users play the game on multiple devices, and, after Fortnite was
`
`removed from the App Store, 87% of Fortnite spending that had occurred on iOS
`
`devices was shifted to other platforms. Id. at 961 & n.277.1
`
`
`
`Apple wants to have it both ways: On the merits, it argued that there was
`
`sufficient evidence to support a finding that consumers can, and do, substitute across
`
`various app-transaction platforms. But on standing, it now argues that there would
`
`be absolutely no substitution if app developers could inform users of lower prices
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`available on the Epic Games Store.
`
`II. SCOPE OF THE INJUNCTION
`
`
`
`The district court did not abuse its discretion in enjoining Apple’s anti-
`
`steering provision as to all iOS developers because doing so was necessary to fully
`
`remedy the harm that Epic suffers in its role as a competing games distributor.2
`
`
`1 On appeal, the panel majority did not address the district court’s substitution factual
`finding, as we determined that Epic failed to make a required threshold showing for
`its proposed single-brand market: that the restrictions it alleged to cause consumer
`lock-in were “not generally known” to consumers when they purchased iOS devices
`in the foremarket. Epic II, 67 F.4th at 976–77, 980–81.
`2 Apple argues in its motion for a stay that the injunction will subject iOS users to
`“scams, fraud, and objectionable content.” But the district court expressly found
`that the anti-steering provision could be enjoined “without any impact on the
`integrity of the [iOS] ecosystem.” Epic I, 559 F. Supp. 3d at 1055. Both the district
`court and our court upheld Apple’s ability to control what content can be
`downloaded on iOS devices. The injunction against the anti-steering provision
`5
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`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 8 of 12
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`
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`“[I]njunctive relief should be no more burdensome to the defendant than
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`necessary to provide complete relief to the plaintiff[].” Califano v. Yamasaki, 442
`
`U.S. 682, 702 (1979); see also Epic, 67 F.4th at 1002 (setting forth the same rule).
`
`An injunction remedying a plaintiff’s harm may “affect[] nonparties[] [if] it does so
`
`only incidentally.” United States v. Texas, 2023 WL 4139000, at *12 (U.S. June 23,
`
`2023) (Gorsuch, J., concurring); see also Bresgal v. Brock, 843 F.2d 1163, 1170–71
`
`(9th Cir. 1988) (“[A]n injunction is not necessarily made overbroad by extending
`
`benefit or protection to persons other than the prevailing parties in the lawsuit—even
`
`if it is not a class action—if such breadth is necessary to give prevailing parties the
`
`relief to which they are entitled.”).
`
`
`
`Apple contends that the district court’s injunction impermissibly allowed
`
`Epic’s suit to proceed as a “de facto” class action in which Epic obtained nationwide
`
`injunctive “relief on behalf of others.” To paint this picture, it argues that “the panel
`
`never explained” how harm to Epic’s “subsidiaries justified an injunction applicable
`
`not only to . . . its subsidiaries, but also to all other U.S. developers.” Like its
`
`standing argument, this argument overlooks aspects of the panel opinion’s analysis
`
`that are inconvenient to its position and is incorrect. As the opinion explained, it
`
`was Epic’s role as a competing games distributor—not its role as a parent
`
`
`simply allows developers to let users know that certain content (which Apple has
`itself chosen to allow access to) can be purchased at a lower price elsewhere.
`6
`
`
`
`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 9 of 12
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`company—that justified application of the injunction beyond just Epic’s
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`subsidiaries. As a games distributor, Epic is harmed by Apple’s anti-steering
`
`provision’s prevention of “other apps’ users from becoming would-be Epic Games
`
`Store consumers.” Epic II, 67 F.4th at 1003. Had the district court limited the
`
`injunction only to Epic’s subsidiaries’ apps on the App Store, the injunction would
`
`have “fail[ed] to address the full harm caused by the anti-steering provision.” Id.
`
`The injunction is thus consistent with the minimally-burdensome principle because
`
`the injunction’s “scope is tied to Epic’s injuries.” Id.
`
`
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`Apple’s argument also overlooks that, in an antitrust suit brought by a
`
`competitor, injunctive relief will almost by definition have incidental benefits to
`
`non-parties—since antitrust law protects competition, not individual market
`
`participants. To be sure, it is the “the exception,” not the rule, for injunctive relief
`
`to incidentally affect non-parties—and such cases will likely be few and far between
`
`in most areas of law. Cachil Dehe Band of Wintun Indians of Colusa Indian Cmty.
`
`v. California, 618 F.3d 1066, 1084 (9th Cir. 2010). But injunctions with incidental
`
`benefits for non-parties are the inevitable result when a competitor-plaintiff makes
`
`the difficult showing that it is entitled to injunctive relief pursuant to state or federal
`
`competition law. As a threshold matter, a competitor-plaintiff must prove that the
`
`defendant’s conduct caused it a tangible injury as a competitor. But to ultimately
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`prevail and obtain relief, it must prove that the defendant’s conduct harmed
`
`
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`7
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`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 10 of 12
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`competition (i.e., consumers). This two-types-of-harm requirement necessarily
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`means that relief will have two types of benefits—remedying the competitor’s harm
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`in the main, while benefitting consumers incidentally.
`
`
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`Begin with the statute at issue here: California’s UCL. To establish statutory
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`standing, a competitor-plaintiff must have “suffered injury in fact and . . . lost money
`
`or property,” such that its bottom line as a competitor was negatively affected. Cal.
`
`Bus. & Prof. Code § 17204. But to win on the merits, a competitor-plaintiff must
`
`show that the defendant’s conduct “threatens an incipient violation of an antitrust
`
`law, . . . violates [antitrust law’s] policy or spirit . . . , or otherwise significantly
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`threatens or harms competition.” Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.,
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`20 Cal. 4th 163, 186–87 (1999). Because antitrust’s goal is the “the protection of
`
`competition, not competitors,” Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104,
`
`110 (1986), a competitor-plaintiff will win on the merits only if it proves that the
`
`defendant’s conduct harms consumers. Therefore, by the time a court is fashioning
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`injunctive relief in a UCL competitor suit, the court has already determined both that
`
`(1) the defendant’s conduct caused the plaintiff-competitor to lose “money or
`
`property,” and (2) that the same conduct harmed consumers. Relief remedying (1)
`
`will necessarily have incidental benefits for the consumers found to have been
`
`harmed at (2). If that were not the case, then the plaintiff-competitor would not have
`
`prevailed on the merits.
`
`
`
`8
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`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 11 of 12
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`
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`Federal law imposes a similar two-types-of-harm requirement. To establish
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`Article III standing, a plaintiff-competitor must have “suffered an injury in fact,”
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`such as “monetary harm[].” TransUnion, 141 S. Ct. at 2203. But the plaintiff-
`
`competitor must also establish antitrust injury—that their “injury [is] of the type the
`
`antitrust laws were designed to prevent.” Cargill, 479 U.S. at 111, 117 (lost profits
`
`caused by competitor’s lower prices after merger are not antitrust injury). Similarly,
`
`on the merits, the competitor-plaintiff must prove the defendant’s conduct harms
`
`consumers by, for example, decreasing output or raising prices. See Epic II, 67 F.4th
`
`at 983. If a competitor-plaintiff is able to serve two masters and establish Article III
`
`standing on the one hand and antitrust injury and liability on the other, then the
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`competitor-plaintiff would have necessarily shown that the defendant’s conduct
`
`harms both the plaintiff as a competitor and consumers. So again, it is hardly
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`surprising that the injunctive relief granted in such a case will carry incidental
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`benefits for consumers.
`
`
`
`Consider, as an example, the Kodak-parts litigation that was the subject of the
`
`Supreme Court’s decision in Eastman Kodak Co. v. Image Technical Services, Inc.,
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`504 U.S. 451 (1992). Independent service organizations (ISOs) alleged that Kodak
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`violated federal antitrust law by “adopt[ing] policies to limit the availability of parts
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`to [the] ISOs to make it more difficult for ISOs to compete with Kodak in servicing
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`Kodak equipment.” Id. at 455. The Supreme Court affirmed our court’s denial of
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`
`
`9
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`
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`Case: 21-16506, 07/17/2023, ID: 12756293, DktEntry: 250, Page 12 of 12
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`summary judgment, id. at 486; on remand, the ISOs prevailed in a jury trial and the
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`district court entered an injunction requiring Kodak to sell its parts to ISOs on
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`“reasonable and nondiscriminatory terms and prices.” Image Tech. Servs., Inc. v.
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`Eastman Kodak Co., 125 F.3d 1195, 1201 (9th Cir. 1997). The injunction remedied
`
`the ISOs’ harm: their inability to compete for “large contracts” because they lacked
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`“sufficient parts.” Id. at 1222. But the injunction also incidentally benefited
`
`consumers by breaking up what the jury had found to be an unlawfully maintained
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`monopoly. See id. at 1207–12. The injunction was challenged on several grounds,
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`see id. at 1224–25, but there was no hint of the radical argument that Apple now
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`advances: that a competition-law injunction is invalid if it benefits consumers.
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`CONCLUSION
`
`
`
`Apple’s standing and scope-of-the-injunction arguments challenge an
`
`imagined panel opinion on an imagined record. When the panel opinion’s reasoning
`
`and the district court’s factual findings are fully considered, the motion’s arguments
`
`fall far short of establishing legal error.
`
`
`
`10
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`
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