Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 1 of 39
`
`Nos. 21-16506 & 21-16695
`_______________________
`
`IN THE UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`_______________________
`
`EPIC GAMES, INC.,
`
`Plaintiff/counter-defendant,
`Appellant/cross-appellee;
`
`v.
`
`APPLE INC.,
`
`Defendant/counter-claimant,
`Appellee/cross-appellant.
`_______________________
`
`On Appeal from the United States District Court
`for the Northern District of California (Hon. Yvonne Gonzalez Rogers)
`No. 4:20-cv-05640-YGR
`_______________________
`
`REPLY BRIEF FOR
`APPELLEE/CROSS-APPELLANT APPLE INC.
`_______________________
`
`Theodore J. Boutrous, Jr.
`Daniel G. Swanson
`GIBSON, DUNN & CRUTCHER LLP
`333 S. Grand Avenue
`Los Angeles, CA 90071
`
`Rachel S. Brass
`Julian W. Kleinbrodt
`GIBSON, DUNN & CRUTCHER LLP
`555 Mission Street, Suite 3000
`San Francisco, CA 94105
`
`Mark A. Perry
`WEIL, GOTSHAL & MANGES LLP
`2001 M Street, NW, Suite 600
`Washington, DC 20036
`(202) 682-7511
`Mark.Perry@weil.com
`
`Cynthia Richman
`Joshua M. Wesneski
`Anna Casey
`Zachary B. Copeland
`GIBSON, DUNN & CRUTCHER LLP
`1050 Connecticut Avenue, NW
`Washington, DC 20036
`Attorneys for Apple Inc.
`
`
`
`
`
`
`
`
`
`

`

`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 2 of 39
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`
`
`TABLE OF CONTENTS
`
`
`
`ARGUMENT ............................................................................................................. 1
`
`Page
`
`I.
`
`The UCL Judgment Cannot Stand ........................................................ 1
`
`A.
`
`There Is No Case Or Controversy ............................................... 1
`
`1.
`
`2.
`
`Epic Failed To Prove Direct Or Indirect Harm ................ 1
`
`Apple Disproved Redressability ....................................... 6
`
`B.
`
`Epic’s UCL Claim Fails As A Matter Of Law ........................... 8
`
`1.
`
`2.
`
`3.
`
`The Chavez Doctrine Precludes UCL Liability ................ 9
`
`Epic Failed To Prove Significant Harm To
`Competition In Any Relevant Market ............................13
`
`The Anti-Steering Provisions Are Procompetitive
`Under Amex ....................................................................21
`
`C.
`
`The Injunction Exceeded The Court’s Authority .....................24
`
`1.
`
`2.
`
`The Injunction Is Overbroad ...........................................24
`
`Epic Failed To Prove Irreparable Harm .........................26
`
`II.
`
`Epic Must Pay Apple’s Attorneys’ Fees .............................................28
`
`CONCLUSION ........................................................................................................30
`
`
`
`i
`
`

`

`
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`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 3 of 39
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`CASES
`
`Aguilar v. Atl. Richfield Co.,
`25 Cal. 4th 826 (2001) ........................................................................................ 12
`
`Am. Ad Mgmt., Inc. v. GTE Corp.,
`92 F.3d 781 (9th Cir. 1996) ................................................................................ 15
`
`Arizonans for Official English v. Arizona,
`520 U.S. 43 (1997) ................................................................................................ 2
`
`Aya Healthcare Servs., Inc. v. AMN Healthcare, Inc.,
`9 F.4th 1102 (9th Cir. 2021) ............................................................................... 20
`
`BladeRoom Grp. Ltd. v. Facebook, Inc.,
`219 F. Supp. 3d 984 (N.D. Cal. 2017) ................................................................ 16
`
`Brandwein v. Butler,
`218 Cal. App. 4th 1485 (2013) ........................................................................... 28
`
`Brantley v. NBC Universal, Inc.,
`675 F.3d 1192 (9th Cir. 2012) ............................................................................ 19
`
`Bresgal v. Brock,
`843 F.2d 1163 (9th Cir. 1987) ............................................................................ 25
`
`Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp.,
`509 U.S. 209 (1993) ............................................................................................ 18
`
`Cal. Dental Ass’n v. FTC,
`224 F.3d 942 (9th Cir. 2000) ........................................................................ 18, 28
`
`Cal. Dental Ass’n v. FTC,
`526 U.S. 756 (1999) ............................................................................................ 18
`
`California v. Texas,
`141 S. Ct. 2104 (2021) .......................................................................................... 5
`
`Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.,
`20 Cal. 4th 163 (1999) ..................................................... 8, 10, 13, 14, 22, 23, 24
`
`
`
`ii
`
`

`

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`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`
`Chavez v. Whirlpool Corp.,
`93 Cal. App. 4th 363 (2001) ..................................................................... 9, 10, 12
`
`Chi. Bd. of Trade v. United States,
`246 U.S. 231 (1918) ............................................................................................ 13
`
`City of San Jose v. Off. of the Comm’r of Baseball,
`776 F.3d 686 (9th Cir. 2015) .......................................................................... 9, 10
`
`Clapper v. Amnesty Int’l USA,
`568 U.S. 398 (2013) .............................................................................................. 5
`
`Coto Settlement v. Eisenberg,
`593 F.3d 1031 (9th Cir. 2012) .............................................................................. 5
`
`Diva Limousine, Ltd. v. Uber Techs., Inc.,
`329 F. Supp. 3d 1074 (N.D. Cal. 2017) .............................................................. 16
`
`Dixon Gas Club, LLC v. Safeway Inc.,
`No. A139910, 2015 WL 4557388 (Cal. Ct. App. July 29, 2015)....................... 16
`
`Dream Theater, Inc. v. Dream Theater,
`124 Cal. App. 4th 547 (2004) ............................................................................. 29
`
`Drum v. San Fernando Valley Bar Ass’n,
`182 Cal. App. 4th 247 (2010) ....................................................................... 11, 16
`
`Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc.,
`55 Cal. App. 5th 381 (2020) ......................................................................... 15, 23
`
`Franchise Tax Bd. v. Alcan Aluminum Ltd.,
`493 U.S. 331 (1990) .............................................................................................. 5
`
`Freitag v. Ayers,
`468 F.3d 528 (9th Cir. 2006) ................................................................................ 7
`
`FTC v. Motion Picture Adv. Co.,
`344 U.S. 392 (1953) ............................................................................................ 13
`
`FTC v. Qualcomm,
`969 F.3d 974 (9th Cir. 2020) .................................................................. 19, 20, 21
`
`
`
`iii
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`

`

`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 5 of 39
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`
`Gerawan Farming, Inc. v. Rehrig Pac. Co.,
`No. 11-CV-1273, 2013 WL 1934173 (E.D. Cal. May 9, 2013) ......................... 17
`
`Gregory v. Albertson’s, Inc.,
`104 Cal. App. 4th 845 (2002) ....................................................................... 14, 19
`
`Hahn v. Or. Physicians’ Serv.,
`868 F.2d 1022 (9th Cir. 1988) ............................................................................ 20
`
`Hangarter v. Provident Life & Accident Ins. Co.,
`373 F.3d 998 (9th Cir. 2004) .............................................................................. 26
`
`hiQ Labs, Inc. v. LinkedIn Corp.,
`273 F. Supp. 3d 1099 (N.D. Cal. 2017) .............................................................. 16
`
`Hodges v. Comcast Cable Commc’ns, LLC,
`21 F.4th 535 (9th Cir. 2021) ............................................................................... 25
`
`Hollingsworth v. Perry,
`570 U.S. 693 (2013) .............................................................................................. 3
`
`L.A. Haven Hospice, Inc. v. Sebelius,
`638 F.3d 644 (9th Cir. 2011) .............................................................................. 25
`
`Levitt v. Yelp! Inc.,
`765 F.3d 1123 (9th Cir. 2014) ............................................................................ 16
`
`LiveUniverse, Inc. v. MySpace, Inc.,
`304 F. App’x 554 (9th Cir. 2008) ....................................................................... 12
`
`Lozano v. AT&T Wireless Servs., Inc.,
`504 F.3d 718 (9th Cir. 2007) .............................................................................. 16
`
`Lujan v. Defs. of Wildlife,
`504 U.S. 555 (1992) .......................................................................................... 1, 6
`
`Marsh v. Anesthesia Servs. Med. Grp., Inc.,
`200 Cal. App. 4th 480 (2011) ....................................................................... 15, 16
`
`Meland v. WEBER,
`2 F.4th 838 (9th Cir. 2021) ................................................................................... 1
`
`
`
`iv
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`

`

`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 6 of 39
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`
`Metricolor LLC v. L’Oreal S.A.,
`No. 18-CV-364, 2020 WL 3802942 (C.D. Cal. July 7, 2020) ........................... 16
`
`Nationwide Biweekly Admin., Inc. v. Super. Ct.,
`9 Cal. 5th 279 (2020) .......................................................................................... 17
`
`Ohio v. Am. Express Co.,
`138 S. Ct. 2274 (2018) ............................................................................ 10, 21, 23
`
`Pac. Bell Tel. Co. v. linkLine Commc’ns, Inc.,
`555 U.S. 438 (2009) ............................................................................................ 11
`
`People’s Choice Wireless, Inc. v. Verizon Wireless,
`131 Cal. App. 4th 656 (2005) ....................................................................... 15, 16
`
`Procaps S.A. v. Patheon, Inc.,
`845 F.3d 1072 (11th Cir. 2016) ............................................................................ 5
`
`Racek v. Rady Children’s Hosp. of San Diego,
`No. D058173, 2012 WL 2947881 (Cal. Ct. App. July 20, 2012)................. 13, 16
`
`S. Or. Barter Fair v. Jackson County,
`372 F.3d 1128 (9th Cir. 2004) .............................................................................. 7
`
`Spokeo, Inc. v. Robins,
`578 U.S. 330 (2016) .............................................................................................. 2
`
`Sun Microsys., Inc. v. Microsoft Corp.,
`87 F. Supp. 2d 992 (N.D. Cal. 2000) .................................................................. 12
`
`TransUnion LLC v. Ramirez,
`141 S. Ct. 2190 (2021) .......................................................................................... 5
`
`UFCW & Employers Ben. Trust v. Sutter Health,
`No. CGC-14-538451, 2019 WL 3856011 (Cal. Super. June 13,
`2019) ................................................................................................................... 23
`
`United States v. Colgate & Co.,
`250 U.S. 300 (1919) ............................................................................................ 10
`
`Verizon Commc’ns Inc. v. Law Offs. of Curtis V. Trinko, LLP,
`540 U.S. 398 (2004) ............................................................................................ 11
`
`
`
`v
`
`

`

`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 7 of 39
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`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`
`Viazis v. Am. Assoc. of Orthodontists,
`314 F.3d 758 (5th Cir. 2002) .............................................................................. 20
`
`W. Virginia v. EPA,
`— S. Ct. —, 2022 WL 2347278 (U.S. June 30, 2022) ......................................... 2
`
`Walker Process Equip., Inc. v. Food Mach. Corp.,
`382 U.S. 172 (1965) ............................................................................................ 15
`
`Watson Labs., Inc. v. Rhone-Poulenc Rorer, Inc.,
`178 F. Supp. 2d 1099 (C.D. Cal. 2001) .............................................................. 12
`
`Worldwide Travel, Inc. v. Travelmate US, Inc.,
`No. 14-CV-155, 2015 WL 1013704 (S.D. Cal. Mar. 9, 2015) ........................... 17
`
`
`
`
`
`
`vi
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`

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`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 8 of 39
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`
`
`ARGUMENT
`
`I.
`
`The UCL Judgment Cannot Stand
`
`The decision below marks the first time any court has enjoined as “unfair”
`
`under the UCL conduct found reasonable under the antitrust laws. The district court
`
`reached that unprecedented result despite Epic’s failure to prove harm from the
`
`anti-steering provisions three times over. First, Epic did not prove harm to itself,
`
`rendering the UCL claim nonjusticiable. Second, Epic did not prove significant
`
`harm to competition, precluding liability under the UCL. Third, Epic did not prove
`
`irreparable harm, ruling out injunctive relief. Apple challenged the district court’s
`
`“findings” on these issues as unsupported by legally sufficient evidence. Apple Br.
`
`102. Remarkably, Epic cites no evidence in response.
`
`A. There Is No Case Or Controversy
`
`Epic did not prove that it will suffer injury-in-fact from the anti-steering
`
`provisions, while Apple proved that Epic cannot receive redress from the injunction.
`
`Accordingly, there is no Article III “case or controversy.”
`
`1.
`
`Epic Failed To Prove Direct Or Indirect Harm
`
`It was Epic’s burden to prove the irreducible minimum requirements of
`
`Article III. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992); Meland v.
`
`WEBER, 2 F.4th 838, 843 (9th Cir. 2021). In the district court, Epic introduced no
`
`evidence of injury-in-fact at any point in time. Apple Br. 102–04. The UCL
`
`judgment should be reversed for that reason alone.
`
`
`
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`
`
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`

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`
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`a. Epic quibbles with whether its failure to prove injury-in-fact is properly
`
`analyzed under the rubric of “standing” or, rather, “mootness at the appellate stage.”
`
`Epic Resp. Br. 88. But the standing defect did not arise only on appeal: Epic
`
`introduced no evidence below that it ever suffered injury-in-fact from the
`
`anti-steering provisions, and it cites none on appeal. Having failed to prove such
`
`harm—before, during, or after litigation—Epic never had standing to sue under the
`
`UCL. See Arizonans for Official English v. Arizona, 520 U.S. 43, 67–69 (1997)
`
`(courts must ensure a justiciable controversy exists at every stage in the litigation).
`
`Epic’s contention that “Apple never asserted Epic lacked standing at the outset
`
`of the case” (Epic Resp. Br. 87) is false: Apple asserted both lack of standing and
`
`nonjusticiability in its answer. 4-SER-867; 4-SER-869. And whatever bare
`
`allegations of harm the complaint contained, Epic did not prove any injury from the
`
`anti-steering provisions before judgment was entered. See Spokeo, Inc. v. Robins,
`
`578 U.S. 330, 339 (2016) (injury must be “concrete and particularized” and “actual
`
`or imminent” (quotation marks omitted)). Moreover, Epic’s assertion that
`
`“[s]tanding is determined as of the date of the filing of the complaint” (Epic Resp.
`
`Br. 87 (citation omitted)) is wrong: “Although most disputes over standing concern
`
`whether a plaintiff has satisfied the requirement when filing suit, ‘Article III
`
`demands that an actual controversy persist throughout all stages of litigation.’” W.
`
`Virginia v. EPA, — S. Ct. —, 2022 WL 2347278, at *10 (U.S. June 30, 2022)
`
`
`
`2
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`
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`(quoting Hollingsworth v. Perry, 570 U.S. 693, 705 (2013)). In the extensive record,
`
`there is not one speck of evidence that Epic will be harmed by the anti-steering
`
`provisions—and Epic cites none in its appellate brief.
`
`According to Epic, “the district court found that Apple’s anti-steering
`
`restraints lead to higher prices for consumers and developers, including Epic.” Epic
`
`Resp. Br. 91 (emphasis added) (citing 1-ER-166–67). That is false: The court did
`
`not find (on the cited pages or elsewhere) that these provisions will lead to any harm
`
`to Epic in the future, and there is no evidence on which such a finding could be made.
`
`Epic’s speculation that it might suffer injury as “a potential competing provider of
`
`in-app payment solutions” (id.) likewise has no evidentiary support; indeed, Apple’s
`
`Guideline concerning out-of-app purchase options does not address the provision of
`
`in-app payment solutions. See Part I.C.1.b, infra. Moreover, this argument assumes
`
`that Epic will succeed in its Sherman Act appeal—an assumption already refuted by
`
`Apple and its supporting amici.
`
`b. The district court’s post-judgment finding of injury-in-fact was based
`
`entirely on a misrepresentation by Epic regarding the operation of the Unreal Engine
`
`license agreement. 2-ER-192 (citing 4-SER-1073). The court found that the
`
`anti-steering provisions could help Apple maintain its commission rate, resulting in
`
`reduced licensing royalties to Epic because (according to Epic’s representation) such
`
`royalties were paid on sales net of commissions. Id.; see also D.C. Dkt. 835 at 7:2–
`
`
`
`3
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`

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`
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`13. These supposedly reduced royalties constituted the sole harm identified by the
`
`district court. As Apple has explained, however, the license agreement makes clear
`
`that Epic’s royalties are calculated based on gross (pre-commission) sales, and thus
`
`are entirely unaffected by the amount of the commission or, under the district court’s
`
`reasoning, the anti-steering provisions. Apple Br. 103–04. Tellingly, Epic does not
`
`deny that it misrepresented the agreement’s operation to the district court, or that the
`
`assumption on which the court below found standing is false. The Article III ruling
`
`constitutes invited error and cannot stand.
`
`Epic now changes tack, arguing that “marketplace dynamics” and “basic
`
`economics” are sufficient for this Court to find injury-in-fact in the first instance.
`
`Epic Resp. Br. 90. That new argument turns not on any economic principle, but on
`
`a series of unproven factual assumptions, including that (1) enjoining the
`
`anti-steering provisions would lead Epic’s independent licensees to steer consumers
`
`to alternative purchase options; (2) those developers would lower prices on other
`
`platforms rather than pocket the difference from (supposedly) lower commissions;
`
`and (3) users would (notwithstanding the added transaction friction caused by
`
`steering) increase their total number of purchases to offset the lower per-transaction
`
`royalty Epic would receive. None of these cascading conjectures has any evidentiary
`
`support—because this theory appeared for the first time in Epic’s appellate brief.
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`4
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`

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`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 12 of 39
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`Courts have made clear that “theoretical effects stated only at the highest level
`
`of abstraction” without “specific examples of such effects” do not suffice to establish
`
`justiciability. Procaps S.A. v. Patheon, Inc., 845 F.3d 1072, 1085 (11th Cir. 2016);
`
`see also California v. Texas, 141 S. Ct. 2104, 2117 (2021) (where injury is
`
`contingent on actions of third parties, a plaintiff must prove that they would “react
`
`in predictable ways”). A “speculative” risk of harm cannot sustain Article III
`
`justiciability (TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2212 (2021)), and courts
`
`are rightly “reluctan[t] to endorse standing theories that rest on speculation about the
`
`decisions of independent actors” (Clapper v. Amnesty Int’l USA, 568 U.S. 398, 414
`
`(2013)). Yet Epic’s submission to this Court is based on nothing but speculation.
`
`c. Epic also invokes purported harm to its subsidiaries. Epic Resp. Br. 89–
`
`90 (citing Franchise Tax Bd. v. Alcan Aluminum Ltd., 493 U.S. 331, 336 (1990)).
`
`Even if harm to such non-parties could suffice (but see Coto Settlement v. Eisenberg,
`
`593 F.3d 1031, 1037 (9th Cir. 2010)), Epic presented no evidence of harm to any of
`
`its subsidiaries. The screenshot cited by Epic (Epic Resp. Br. 89 (citing FER-10–
`
`11)) shows only that some Epic subsidiaries have developed iOS apps, not that any
`
`of them will ever be harmed by the anti-steering provisions. Epic failed to carry its
`
`burden of proving injury-in-fact.
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`
`
`5
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`

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`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 13 of 39
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`2.
`
`Apple Disproved Redressability
`
`Even if Epic at some point had standing to sue to enjoin the anti-steering
`
`provisions, events that transpired at the very outset of this litigation rendered that
`
`claim moot. As relevant to this appeal, the UCL injunction precludes Apple from
`
`enforcing its Guideline prohibiting “developers” from using in-app “buttons,
`
`external links, or other calls to action” to steer consumers to out-of-app purchase
`
`options. 1-ER-171; 2-ER-195. Epic, however, is no longer an iOS developer and
`
`has no apps on the App Store because Apple terminated its developer account.
`
`1-ER-29. The district court refused to preliminarily enjoin the termination (D.C.
`
`Dkt. 118 at 38) and subsequently confirmed that Apple was entitled to terminate
`
`Epic for breach of contract (1-ER-176). Accordingly, Apple proved at trial that
`
`neither the district court’s sua sponte injunction nor any other prospective judicial
`
`action could provide any redress to Epic. See CJAC Br. 10–11. Redressability is an
`
`independent requirement of Article III (Lujan, 504 U.S. at 568), yet Epic fails to
`
`demonstrate how it could benefit from the UCL injunction.
`
`Epic argues that “Apple’s own conduct cannot moot Epic’s claim.” Epic
`
`Resp. Br. 88. But Epic expected that the misconduct comprising “Project Liberty”
`
`would result in the removal of Fortnite from the App Store (1-ER-26) and invite
`
`termination of its developer account (3-ER-635; 3-ER-683). Indeed, Epic stipulated
`
`that, antitrust allegations aside, termination was a permissible exercise of Apple’s
`
`
`
`6
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`

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`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 14 of 39
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`
`
`authority to enforce the DPLA. 3-SER-631. To be sure, Apple offered before
`
`judgment was entered to reinstate Epic’s account on the condition that Epic adhere
`
`to the Guidelines (1-ER-29; FER-19), but Epic repeatedly refused Apple’s offer
`
`(1-ER-29). It was thus the foreseeable consequences of Epic’s own actions,
`
`including Epic’s refusal to cure its breach, that mooted the UCL claim.1
`
`Epic remonstrates that “Apple changed course after judgment and refused to
`
`reinstate Epic’s developer account.” Epic Resp. Br. 88. But it is hardly
`
`“manipulat[ive]” (id. at 89) for Apple to rely on a hard-won judgment that expressly
`
`confirmed Apple’s right to terminate Epic’s developer account for breaching the
`
`DPLA and Guidelines. 1-ER-2; 1-ER-182. In any event, the UCL claim had already
`
`been mooted at the time judgment was entered; Apple’s post-judgment refusal to
`
`reinstate Epic’s account does not give rise to a justiciable controversy.
`
`Epic complains that finding mootness here would allow Apple to avoid
`
`developer claims by “simply terminat[ing] that developer’s account.” Epic Resp.
`
`Br. 89. But there will be vanishingly few cases in which the developer waives all
`
`monetary relief, commits an intentional breach of contract for which its account is
`
`terminated, refuses to cure the breach, and then receives an unasked-for injunction
`
`
`1 Epic’s cases are inapposite. Epic Resp. Br. 88–89 (citing S. Or. Barter Fair v.
`Jackson County, 372 F.3d 1128, 1133–34 (9th Cir. 2004) (failure to continue
`applying for a permit did not moot applicant’s request for prospective injunctive
`relief); Freitag v. Ayers, 468 F.3d 528, 548 (9th Cir. 2006) (finding standing
`based on state employees’ unique “property interest . . . guaranteed by statute”)).
`
`
`
`7
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`

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`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 15 of 39
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`
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`against a Guideline applicable only to active developers. While any such claim
`
`would also be moot, that does not mean that Apple’s Guidelines are insulated from
`
`review. See Cameron v. Apple Inc., No. 19-CV-3074 (N.D. Cal. June 10, 2022),
`
`Dkt. 491 (approving settlement with class of developers under which Apple
`
`amended a second anti-steering Guideline that addressed targeted out-of-app
`
`communications and is no longer at issue).
`
`In sum, whether analyzed as standing or mootness, there is no justiciable claim
`
`with respect to the anti-steering provisions.
`
`B.
`
`Epic’s UCL Claim Fails As A Matter Of Law
`
`Purportedly anticompetitive conduct can be enjoined as “unfair” under the
`
`UCL only if it “threatens an incipient violation of an antitrust law, or violates the
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`policy or spirit of one of those laws because its effects are comparable to or the same
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`as a violation of the law, or otherwise significantly threatens or harms competition.”
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`Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 187 (1999).
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`“Courts may not simply impose their own notions of the day as to what is fair or
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`unfair.” Id. at 182.2
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`2 Because the Cel-Tech standard controls, Apple agrees with Epic that certification
`to the California Supreme Court is unnecessary. Epic Resp. Br. 91 n.28.
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`1.
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`The Chavez Doctrine Precludes UCL Liability
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`California law is pellucid: “If the same conduct is alleged to be both an
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`antitrust violation and an ‘unfair’ business act or practice for the same reason—
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`because
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`it unreasonably restrains competition and harms consumers—the
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`determination that the conduct is not an unreasonable restraint of trade necessarily
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`implies that the conduct is not ‘unfair’ toward consumers.” Chavez v. Whirlpool
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`Corp., 93 Cal. App. 4th 363, 375 (2001). This Court has recognized and applied the
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`Chavez rule (see City of San Jose v. Off. of the Comm’r of Baseball, 776 F.3d 686,
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`691–92 (9th Cir. 2015)), and the motions panel cited it in an order that Epic
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`studiously ignores (2-ER-189–90).
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`a. The district court recognized that Epic “seeks relief [under the UCL] for
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`the same conduct that it challenged”—unsuccessfully—“under the Sherman and
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`Cartwright Acts.” 1-ER-165. A straightforward application of the Chavez doctrine
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`thus precludes a finding that the same conduct is “unfair” under the UCL. Epic does
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`not really dispute this point; instead, it contends that the Chavez rule should be
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`limited to cases involving a “safe-harbor provision.” Epic Resp. Br. 94; see also
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`Cal. Br. 17–18 (same). This argument reflects a misunderstanding of UCL
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`precedent.
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`Cel-Tech established two separate principles regarding the UCL’s application
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`to competition cases. First, “[w]hen specific legislation provides a ‘safe harbor’ [for
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`specific conduct], plaintiffs may not use the [UCL] to assault that harbor.” Cel-Tech,
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`20 Cal. 4th at 182 (emphasis added). This applies only when the “other provision”
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`actually bars the claim, “not merely fail[s] to allow it.” Id. at 184. Second, “any
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`finding of unfairness to competitors under section 17200 [must] be tethered to some
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`legislatively declared policy or proof of some actual or threatened impact on
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`competition.” Id. at 186–87.
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`Chavez and City of San Jose involved the second of these principles, not the
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`first. Neither case found that “specific legislation” provided a statutory “safe
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`harbor” for the challenged conduct. Rather, in each case the conduct was found
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`reasonable based on existing judicial precedent. Specifically, the conduct
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`challenged in Chavez was reasonable under United States v. Colgate & Co., 250 U.S.
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`300, 307 (1919), which held that the antitrust laws do “not restrict the long
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`recognized right of [a] trader . . . [to] announce in advance the circumstances under
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`which he will refuse to sell.” 93 Cal. App. 4th at 375. Similarly, the antitrust
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`analysis in City of San Jose was “governed by three Supreme Court cases.” 776 F.3d
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`at 688–89. In each instance, conduct found reasonable under judicially created
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`doctrines—not statutory safe harbors—could not be “unfair” under the UCL.
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`The same is true here: As discussed in Apple’s principal brief, multiple lines
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`of binding precedent confirm that Apple’s conduct is reasonable under the Sherman
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`Act. See, e.g., Ohio v. Am. Express Co., 138 S. Ct. 2274, 2289–90 (2018) (“Amex”)
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`(anti-steering provisions on two-sided transaction platforms cannot be condemned
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`without proof of net anticompetitive effects); Pac. Bell Tel. Co. v. linkLine
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`Commc’ns, Inc., 555 U.S. 438, 448 n.2, 457 (2009) (“[A]n antitrust duty to deal . . .
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`requires a showing of monopoly power,” and even a monopolist “has no duty to deal
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`under the terms and conditions preferred by [its] rivals”); Verizon Commc’ns Inc. v.
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`Law Offs. of Curtis V. Trinko, LLP, 540 U.S. 398, 415–16 (2004) (firm cannot be
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`ordered to “alter its way of doing business whenever some other approach might
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`yield greater competition”). Just as in City of San Jose and Chavez, the applicability
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`of these doctrines—not a statutory safe harbor—both precludes antitrust liability and
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`forecloses a parallel UCL claim. See Drum v. San Fernando Valley Bar Ass’n, 182
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`Cal. App. 4th 247, 254 (2010) (no UCL claim based on conduct reasonable under
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`antitrust precedent providing that “a private party generally may choose to do or not
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`to do business with whomever it pleases”).
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`b. Epic argues that an antitrust violation is not a prerequisite to a UCL
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`unfairness finding. Epic Resp. Br. 92–94; see also Cal. Br. 12–16.3 That is a straw
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`man: The court in Chavez carefully explained that it was not “hold[ing] that in all
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`circumstances an ‘unfair’ business act or practice must violate an antitrust law to be
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`3 Epic also suggests that the Cartwright Act “could support a UCL claim regardless
`of whether a Sherman Act claim succeeds.” Epic Resp. Br. 96. But Epic, which
`abandoned its Cartwright Act claims on appeal (Apple Br. 29), provides no
`substantiation for this contention. Its untimely amici cannot advance arguments
`not preserved by Epic. See UCL Practitioners’ Br. 5 n.3, 20–26.
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`actionable under the unfair competition law,” but rather only that once conduct
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`challenged as anticompetitive “is deemed reasonable and condoned under the
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`antitrust laws,” it cannot be condemned under the UCL. 93 Cal. App. 4th at 375.
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`Where, as here, a plaintiff’s UCL claim depends on the same theories of harm to
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`competition that give rise to a failed antitrust claim, the UCL claim must fall as well.
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`See Aguilar v. Atl. Richfield Co., 25 Cal. 4th 826, 866–67 (2001).
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`Epic does not dispute that “other than the decision below, no court—state or
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`federal—has imposed UCL liability for conduct found not to be anticompetitive
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`under the antitrust laws.” Apple Br. 105; see also CJAC Br. 11. California cites
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`two cases “in which a federal court within the Ninth Circuit allowed a UCL
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`unfairness claim alleging anticompetitive conduct to proceed without a concurrent
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`unlawful claim.” Cal. Br. 14–15 (citing Watson Labs., Inc. v. Rhone-Poulenc Rorer,
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`Inc., 178 F. Supp. 2d 1099 (C.D. Cal. 2001); Sun Microsys., Inc. v. Microsoft Corp.,
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`87 F. Supp. 2d 992 (N.D. Cal. 2000)). Those decisions are inapposite: The question
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`here is not whether a plaintiff may plead a UCL claim without a parallel antitrust
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`claim, but rather whether a plaintiff who loses its antitrust claim after a full trial on
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`the reasonableness of challenged conduct can enjoin the exact same conduct as
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`unfair under the UCL. See CJAC Br. 13. The answer is unequivocally “no.” See
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`LiveUniverse, Inc. v. MySpace, Inc., 304 F. App’x 554, 557–58 (9th Cir. 2008).
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`Case: 21-16506, 07/15/2022, ID: 12494512, DktEntry: 183, Page 20 of 39
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`The district court expressly found—after a full trial under the rule of reason—
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`that the design of the App Store offers legitimate procompetitive justifications not
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`reasonably achievable through other me