Case: 21-16506, 01/27/2022, ID: 12353463, DktEntry: 50, Page 1 of 37
`
`
`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, Counterclaimant –
`Appellee, Cross-Appellant.
`
`
`
`
`
`
`
`
`
`
`On Appeal from the United States District Court for the Northern
`District of California
`No. 4:20-cv-05640-YGR-TSH
`The Honorable Yvonne Gonzalez Rogers
`
`
`
`
`
`
`BRIEF OF AMICUS CURIAE PUBLIC CITIZEN
`IN SUPPORT OF APPELLANT, CROSS-APPELLEE
`
`
`
`
`
`
`Wendy Liu
`Scott Nelson
`Allison M. Zieve
`Public Citizen Litigation Group
`1600 20th Street NW
`Washington, DC 20009
`(202) 588-1000
`
`
`
`
`January 27, 2022
`
`Attorneys for Amicus Curiae
`
`
`
`
`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, Counterclaimant –
`Appellee, Cross-Appellant.
`
`
`
`
`
`
`
`
`
`
`On Appeal from the United States District Court for the Northern
`District of California
`No. 4:20-cv-05640-YGR-TSH
`The Honorable Yvonne Gonzalez Rogers
`
`
`
`
`
`
`BRIEF OF AMICUS CURIAE PUBLIC CITIZEN
`IN SUPPORT OF APPELLANT, CROSS-APPELLEE
`
`
`
`
`
`
`Wendy Liu
`Scott Nelson
`Allison M. Zieve
`Public Citizen Litigation Group
`1600 20th Street NW
`Washington, DC 20009
`(202) 588-1000
`
`
`
`
`January 27, 2022
`
`Attorneys for Amicus Curiae
`
`
`
`Case: 21-16506, 01/27/2022, ID: 12353463, DktEntry: 50, Page 2 of 37
`
`CORPORATE DISCLOSURE STATEMENT
`
`Amicus curiae Public Citizen is a nonprofit, non-stock corporation.
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`It has no parent corporation, and no publicly traded corporation has an
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`ownership interest in it.
`
`
`
`
`
`
`
`i
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`
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`Case: 21-16506, 01/27/2022, ID: 12353463, DktEntry: 50, Page 3 of 37
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`TABLE OF CONTENTS
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`Page
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`CORPORATE DISCLOSURE STATEMENT ............................................ i
`
`TABLE OF AUTHORITIES ..................................................................... iv
`
`INTEREST OF AMICUS CURIAE ........................................................... 1
`
`INTRODUCTION ...................................................................................... 2
`
`FACTUAL BACKGROUND ...................................................................... 3
`
`ARGUMENT ............................................................................................. 4
`
`THE DISTRICT COURT ERRED IN HOLDING THAT THE
`DPLA FAILS TO SATISFY THE CONCERTED-ACTION
`REQUIREMENT OF SECTION 1. .................................................. 4
`
`A. The DPLA satisfies the concerted-action requirement
`because it is a contract between separate decisionmakers. ..... 5
`
`1. All contracts between independent economic actors,
`including contracts of adhesion, come within the scope
`of section 1. .......................................................................... 5
`
`2. The DPLA satisfies the American Needle test for
`concerted action. .................................................................. 9
`
`B. The DPLA is direct evidence of concerted action because the
`contract itself operates to achieve anti-competitive
`results. ..................................................................................... 12
`
`C. The district court erred in ruling that the DPLA was
`“unilateral” activity outside the scope of section 1. ................ 17
`
`1. The plaintiff’s agreement to an anti-competitive contract
`is not independent action resulting from a company’s
`refusal to deal. ................................................................... 18
`
`
`
`ii
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`2. The cases cited by the district court do not support its
`view that a contract with anti-competitive provisions
`fails to satisfy the concerted-action requirement of
`section 1. ............................................................................ 22
`
`CONCLUSION ........................................................................................ 27
`
`CERTIFICATE OF COMPLIANCE ........................................................ 29
`
`CERTIFICATE OF SERVICE ................................................................. 30
`
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`
`iii
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`TABLE OF AUTHORITIES
`
`Cases
`
`Pages
`
`Aerotec International, Inc. v. Honeywell International, Inc.,
` 836 F.3d 1171 (9th Cir. 2016) ............................................................... 4
`
`American Needle, Inc. v. National Football League,
` 560 U.S. 183 (2010). .................................................................... passim
`
`Barry v. Blue Cross of California,
` 805 F.2d 866 (9th Cir. 1986) ..................................................... 8, 25, 26
`
`Black Gold, Ltd. v. Rockwool Industrial, Inc.,
` 729 F.2d 676 (10th Cir. 1984) ............................................................. 20
`
`Copperweld Corp. v. Independent Tube Corp.,
` 467 U.S. 752 (1984). .................................................................... 6, 7, 10
`
`Datagate, Inc. v. Hewlett-Packard Co.,
` 60 F.3d 1421 (9th Cir. 1995) ............................................. 13, 16, 17, 20
`
`Eastman Kodak Co. v. Image Technical Services, Inc.,
` 504 U.S. 451 (1992) ....................................................................... 13, 16
`
`Eskofot A/S v. E.I. Du Pont De Nemours & Co.,
` 872 F. Supp. 81 (S.D.N.Y. 1995) ................................................... 15, 25
`
`Matsushita Electric Industrial Co. v. Zenith Radio Corp.,
` 475 U.S. 574 (1986) ................................................................. 23, 24, 25
`
`Monsanto Co. v. Spray-Rite Service Corp.,
` 465 U.S. 752 (1984) ..................................................................... passim
`
`Paladin Associates, Inc. v. Montana Power Co.,
` 328 F.3d 1145 (9th Cir. 2003) ..................................................... passim
`
`
`
`
`iv
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`Perma Life Mufflers, Inc. v. International Parts Corp.,
` 392 U.S. 134 (1968) ............................................................................. 20
`
`Procaps S.A. v. Patheon Inc.,
` 36 F. Supp. 3d 1306 (S.D. Fla. 2014) .................................................. 15
`
`Sateriale v. R.J. Reynolds Tobacco Co.,
` 697 F.3d 777 (9th Cir. 2012) ................................................................. 7
`
`Spex Techs., Inc. v. Kingston Tech. Corp.,
` 2019 WL 8198300 (C.D. Cal. Sept. 24, 2019) ..................................... 14
`
`Summit Health, Ltd. v. Pinhas,
` 500 U.S. 322 (1991) ............................................................................... 6
`
`Systemcare, Inc. v. Wang Laboratory Corp.,
` 117 F.3d 1137 (10th Cir. 1997) ................................................... passim
`
`The Jeanery, Inc. v. James Jeans, Inc.,
` 849 F.2d 1148 (9th Cir. 1988) ..................................... 18, 22, 23, 24, 26
`
`Toscano v. PGA Tour, Inc.,
` 70 F. Supp. 2d 1109 (E.D. Cal. 1999), aff’d,
` 258 F.3d 978 (9th Cir. 2001) ............................................................... 24
`
`Toscano v. Professional Golfers Ass’n,
` 258 F.3d 978 (9th Cir. 2001) ....................................................... passim
`
`United States v. American Express Co.,
` 88 F. Supp. 3d 143 (E.D.N.Y. 2015), rev’d and remanded on
`other grounds, 838 F.3d 179 (2d Cir. 2016) ........................................ 15
`
`
`United States v. Apple Inc.,
` 952 F. Supp. 2d 638 (S.D.N.Y. 2013) .................................................... 8
`
`United States v. Colgate & Co.,
` 250 U.S. 300 (1984) ........................................................... 17, 18, 25, 26
`
`
`
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`v
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`United States v. Delta Dental of Rhode Island,
` 943 F. Supp. 172 (D.R.I. 1996) ........................................................... 15
`
`United States v. Parke, Davis & Co.,
` 362 U.S. 29 (1960) ................................................................... 19, 21, 22
`
`Wheel Center Co. v. W. Die Casting Co.,
` 1974 WL 868 (N.D. Cal. Jan. 31, 1974) ................................................ 8
`
`William O. Gilley Enterprises, Inc. v. Atlantic Richfield Co.,
` 588 F.3d 659 (9th Cir. 2009). ........................................................ 12, 14
`
`Statutes
`
`15 U.S.C. § 1 .................................................................................... passim
`
`Miscellaneous
`
`Steven J. Burton, The New Judicial Hostility to Arbitration: Federal
`Preemption, Contract Unconscionability, and Agreements to
`Arbitrate, 2006 J. Disp. Resol. 469 (2006) ........................................... 9
`
`
`Anjanette H. Raymond, It Is Time the Law Begins to Protect
`Consumers from Significantly One-Sided Arbitration Clauses
`Within Contracts of Adhesion, 91 Neb. L. Rev. 666 (2013) ................. 9
`
`
`
`
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`vi
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`INTEREST OF AMICUS CURIAE1
`
`Public Citizen is a nonprofit consumer advocacy organization with
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`members and supporters nationwide. Public Citizen advocates before
`
`Congress, administrative agencies, and courts on a wide range of issues,
`
`and works for enactment and enforcement of laws protecting consumers,
`
`workers, and the public. Public Citizen often represents its members’
`
`interests in litigation and as amicus curiae.
`
`Public Citizen believes that vigorous enforcement of antitrust laws
`
`is critical to protecting consumers against corporate practices that
`
`diminish consumer choice and increase prices. Public Citizen has often
`
`submitted or joined in amicus curiae briefs in cases involving antitrust
`
`claims. See, e.g., Ohio v. Am. Express, 138 S. Ct. 2274 (2018); N.C. Bd. of
`
`Dental Examiners v. FTC, 574 U.S. 494 (2015).
`
`
`1 Counsel for both parties have consented to the filing of this brief
`through blanket consents filed with this Court. No party’s counsel
`authored this brief in whole or in part, and no party or party’s counsel
`made a monetary contribution to fund preparation or submission of this
`brief. No person or entity other than amicus made a monetary
`contribution to preparation or submission of this brief.
`
`1
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`
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`INTRODUCTION
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`Section 1 of the Sherman Act provides that “[e]very contract,
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`combination in the form of trust or otherwise, or conspiracy, in restraint
`
`of trade or commerce among the several States, or with foreign nations,
`
`is declared to be illegal.” 15 U.S.C. § 1. “The question whether an
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`arrangement is a contract, combination, or conspiracy is different from
`
`and antecedent to the question whether it unreasonably restrains trade.”
`
`Am. Needle, Inc. v. Nat’l Football League, 560 U.S. 183, 186 (2010). The
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`requirement of a “contract, combination …, or conspiracy” for a section 1
`
`claim requires proof of concerted action. See id. at 189–190.
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`Here, the district court erred in holding that the contract between
`
`the parties failed to satisfy the concerted-action requirement of section 1.
`
`Under the plain language of section 1, “[e]very contract” between
`
`separate decisionmakers satisfies the concerted-action requirement.
`
`Section 1 makes no exception for contracts of adhesion. Moreover, as this
`
`Court has recognized, a contract itself is direct evidence of concerted
`
`action where the contract operates to restrain trade. The district court’s
`
`reliance on Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752
`
`(1984), and cases citing Monsanto was wrong.
`
`2
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`FACTUAL BACKGROUND
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`To distribute an app to iOS users, Apple requires an app developer
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`to enter into a non-negotiable, standardized contract—that is, a contract
`
`of adhesion. See 1ER29, 93.2 Specifically, Apple requires developers to
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`sign the Developer Product Licensing Agreement (DPLA), which requires
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`developers, among other things, to distribute iOS apps exclusively
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`through Apple’s App Store. 1ER96. The DPLA further requires
`
`developers to use Apple’s in-app payment system for all in-app purchases
`
`of digital content, and Apple charges a thirty percent commission for
`
`every digital purchase. 1ER34–36. The DPLA also requires developers to
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`agree to comply with the App Store Review Guidelines, which include an
`
`anti-steering provision that prohibits “direct[ing] customers to
`
`purchasing mechanisms other than in-app purchase.” 1ER34.
`
`In this challenge by app developer Epic Games, the district court
`
`found that Apple’s app-distribution restrictions have anti-competitive
`
`effects. 1ER147–48. It stated that Apple’s “restrictions harm competition
`
`by precluding developers, especially larger ones, from opening competing
`
`
`2 “1ER” refers to Volume 1 of the Appellant, Cross-Appellee Epic Games,
`Inc.’s Excerpts of Record, filed at Docket Entry No. 42-2.
`3
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`game stores on iOS and compet[ing] for other developers and users on
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`price.” 1ER147. Nonetheless, the district court ruled against Epic on its
`
`claim under Sherman Act § 1. As to the first element of the § 1 claim, the
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`court held that the concerted-action requirement was not satisfied
`
`because “the DPLA is a unilateral contract” and “the parties agree that a
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`developer must accept
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`its provisions
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`(including the challenged
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`restrictions) to distribute games on iOS.” 1ER145.
`
`ARGUMENT
`
`THE DISTRICT COURT ERRED IN HOLDING THAT THE DPLA
`FAILS TO SATISFY THE CONCERTED-ACTION REQUIREMENT
`OF SECTION 1.
`
`Under Sherman Act § 1, “[e]very contract, combination in the form
`
`of trust or otherwise, or conspiracy, in restraint of trade or commerce … is
`
`declared to be illegal.” 15 U.S.C. § 1. In explaining the elements of a
`
`section 1 claim, this Court has stated that “a plaintiff must prove (1) the
`
`existence of an agreement, and (2) that the agreement was in
`
`unreasonable restraint of trade.” Aerotec Int’l, Inc. v. Honeywell Int’l, Inc.,
`
`836 F.3d 1171, 1178 (9th Cir. 2016).
`
`The first element of section 1 requires proof of concerted action. As
`
`the Supreme Court has explained, “an arrangement must embody
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`4
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`concerted action in order to be a ‘contract, combination ..., or conspiracy’
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`under § 1.” Am. Needle, 560 U.S. at 191. “The meaning of the term
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`‘contract, combination ..., or conspiracy’ is informed by the basic
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`distinction in the Sherman Act between concerted and independent
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`action that distinguishes § 1 of the Sherman Act from § 2.” Id. at 190
`
`(internal quotation marks omitted). “Section 1 applies only to concerted
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`action that restrains trade,” whereas “[s]ection 2 … covers both concerted
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`and independent action” that monopolizes or threatens monopolization.
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`Id. “Any concerted action in restraint of trade or commerce” is prohibited
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`by section 1. Id. at 191.
`
`A. The DPLA satisfies the concerted-action requirement
`because it is a contract between separate decision-
`makers.
`
`1. All contracts between independent economic actors,
`including contracts of adhesion, come within the
`scope of section 1.
`
`Section 1 of the Sherman Act provides that “[e]very contract … in
`
`restraint of trade or commerce” is unlawful. 15 U.S.C. § 1 (emphasis
`
`added). Thus, the plain meaning of section 1 encompasses all contracts,
`
`regardless of the type or form of the contract. See Paladin Assocs., Inc. v.
`
`Montana Power Co., 328 F.3d 1145, 1153 (9th Cir. 2003) (holding that
`
`5
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`signed contracts between two entities “are direct evidence of ‘concerted
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`activity’” under section 1); id. at 1154 n.7 (stating that “every commercial
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`agreement” between separate entities satisfies the first element of a
`
`section 1 claim).
`
`The Supreme Court “has long recognized that Congress intended
`
`th[e] language [of section 1] to have a broad sweep, reaching any form of
`
`combination.” Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 785
`
`(1984). Discussing Congress’s purpose, the Court stated:
`
`[I]n view of the many new forms of contracts and
`combinations which were being evolved from existing
`economic conditions, it was deemed essential by an all-
`embracing enumeration to make sure that no form of contract
`or combination by which an undue restraint of interstate or
`foreign commerce was brought about could save such
`restraint from condemnation.
`
`Id. Thus, “when Congress passed the Sherman Act, it left no area of its
`
`constitutional power [over commerce] unoccupied. Congress meant to
`
`deal comprehensively and effectively with the evils resulting from
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`contracts, combinations and conspiracies in restraint of trade, and to that
`
`end to exercise all the power it possessed.” Summit Health, Ltd. v.
`
`Pinhas, 500 U.S. 322, 329 n.10 (1991) (internal quotation marks and
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`citation omitted).
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`6
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`Contrary to the plain language and the Supreme Court’s
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`confirmation of its comprehensive sweep, the district court ruled that the
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`DPLA was outside the scope of section 1 because it was a contract of
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`adhesion—that is, a non-negotiable contract that the “developer must
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`accept.” 1ER145.3 Because section 1 encompasses “[e]very contract,” 15
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`U.S.C. § 1, contracts of adhesion (including the DPLA) are within its
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`scope. The district court’s ruling thus contravenes both the broad
`
`statutory text and Congress’s intent “to make sure that no form of
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`contract,” Copperweld, 467 U.S. at 785, would escape section 1 of the
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`Sherman Act.
`
`
`3 The district court characterized the DPLA as a “unilateral contract,”
`1ER145, but its use of that term was both inaccurate and irrelevant. A
`“unilateral contract” has a specific meaning under contract law: “In
`contrast to a bilateral contract, a unilateral contract involves the
`exchange of a promise for a performance. The offer is accepted by
`rendering a performance rather than providing a promise,” such as
`through “offers of rewards or prizes.” Sateriale v. R.J. Reynolds Tobacco
`Co., 697 F.3d 777, 785 (9th Cir. 2012) (internal citation omitted). Here,
`the DPLA is a bilateral contract between Apple and Epic (or other
`developers). In particular, it is a “contract of adhesion,” in which the
`“contractual terms are standardized and nonnegotiable.” 1ER96. In
`addition to being incorrect as a matter of contract law, the district court’s
`usage confused the distinct and unrelated questions of whether a
`contract is unilateral or bilateral for contract-law purposes, and whether
`conduct is unilateral or concerted for purposes of Sherman Act § 1.
`
`7
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`Further, this Circuit and other courts have found section 1
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`violations arising from standardized form contracts. See, e.g., Barry v.
`
`Blue Cross of Cal., 805 F.2d 866, 870 (9th Cir. 1986) (finding
`
`“overwhelming evidence of vertical agreement” where “Blue Cross signed
`
`several thousand express agreements with physicians”); see also Wheel
`
`Ctr. Co. v. W. Die Casting Co., 1974 WL 868, at *5 (N.D. Cal. Jan. 31,
`
`1974) (concluding that an anti-competitive provision in the defendant’s
`
`“standard form contracts” “amounted in substance and effect … to an
`
`unreasonable agreement in restraint of interstate commerce within the
`
`meaning of Sherman Act Section 1”); see also United States v. Apple Inc.,
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`952 F. Supp. 2d 638, 698 (S.D.N.Y. 2013) (stating that although “[i]t
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`is … not illegal for a company to adopt a form ‘click-through’ contract” or
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`other business practices, “[t]hat does not … make it lawful for a company
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`to use those business practices to effect an unreasonable restraint of
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`trade”), aff’d, 791 F.3d 290 (2d Cir. 2015). As these courts recognized, a
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`contract of adhesion—like any other contract—may form the basis for a
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`section 1 claim.
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`Moreover, a contrary holding would significantly undermine
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`antitrust enforcement in light of how ubiquitous contracts of adhesion
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`8
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`are today. See Anjanette H. Raymond, It Is Time the Law Begins to
`
`Protect Consumers from Significantly One-Sided Arbitration Clauses
`
`Within Contracts of Adhesion, 91 Neb. L. Rev. 666, 695 (2013) (stating
`
`that “[c]ontracts of adhesion, especially those involving consumers and
`
`the purchase of basic goods, are ubiquitous in modern commercial life”);
`
`see also Steven J. Burton, The New Judicial Hostility to Arbitration:
`
`Federal Preemption, Contract Unconscionability, and Agreements to
`
`Arbitrate, 2006 J. Disp. Resol. 469, 479 (2006) (stating that “[a]dhesion
`
`contracts are ubiquitous in the American economy” and that “[o]ne
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`scholar suggests that ninety-nine percent of contracts entered into in the
`
`United States are adhesion contracts”).
`
`2. The DPLA satisfies the American Needle test for
`concerted action.
`
`In American Needle, the Supreme Court elaborated on the test for
`
`concerted action under Sherman Act § 1. 560 U.S. 183. The Court
`
`explained that in determining whether there is concerted action, it is not
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`“formalistic distinctions” that matter, but rather “a
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`functional
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`consideration of how the parties involved in the alleged anticompetitive
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`conduct actually operate.” Id. at 191.
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`9
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`The key is whether the alleged “contract, combination ..., or
`conspiracy” is concerted action—that is, whether it joins
`together separate decisionmakers. The relevant inquiry,
`therefore, is whether there is a “contract, combination ..., or
`conspiracy” amongst “separate economic actors pursuing
`separate economic interests,” such that the agreement
`“deprives the marketplace of independent centers of decision-
`making,” and therefore of “diversity of entrepreneurial
`interests,” and thus of actual or potential competition.
`
`Id. at 195 (internal citations omitted). If an “agreement joins together
`
`‘independent centers of decisionmaking,’” “the court must decide whether
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`the restraint of trade is an unreasonable and therefore illegal one.” Id. at
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`196.
`
`Applying this test, the Supreme Court concluded that the licensing
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`activities of National Football League Properties—a joint venture formed
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`by the thirty-two National Football League teams—constitute concerted
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`action because the “teams are acting as ‘separate economic actors
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`pursuing economic interests,’ and each team therefore is a potential
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`‘independent cente[r] of decisionmaking.’” Id. at 197
`
`(quoting
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`Copperweld, 467 U.S. at 769). “Although NFL teams have common
`
`interests such as promoting the NFL brand, they are still separate, profit-
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`maximizing entities, and their interests in licensing team trademarks
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`are not necessarily aligned,” the Court explained. Id. at 198. Their
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`10
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`actions are concerted because the teams “do not possess either the
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`unitary decisionmaking quality or the single aggregation of economic
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`power characteristic of independent action.” Id. at 196.
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`As American Needle recognizes, any arrangement—including any
`
`contractual arrangement—that “joins together separate decision-
`
`makers,” id. at 195, meets the concerted-action requirement of section 1.
`
`The DPLA satisfies that test. Apple and Epic’s interests are not aligned,
`
`and their agreement in the DPLA “deprive[d] the marketplace of
`
`independent centers of decisionmaking.” Id. Like the NFL teams in
`
`American Needle, Epic and Apple are “separate economic actors” because
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`each “is a potential ‘independent center[] of decisionmaking.’” Id. Indeed,
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`the record reflects that Epic requested exemption from certain provisions
`
`in the DPLA and that Apple denied that request, citing Epic and Apple’s
`
`different interests. See 1ER27 (quoting letter from Apple to Epic stating
`
`that Apple “understand[s] [Epic’s request] might be in Epic’s financial
`
`interests, but Apple strongly believes these rules are vital to the health
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`of the Apple platform and carry enormous benefits for both consumers
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`and developers”). Because the DPLA “joins together independent centers
`
`11
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`of decisionmaking,” Am. Needle, 560 U.S. at 195, it satisfies the
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`concerted-action requirement of section 1.
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`B. The DPLA is direct evidence of concerted action
`because the contract itself operates to achieve anti-
`competitive results.
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`Where a contract itself achieves anti-competitive results, this Court
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`has recognized that the contractual agreement satisfies section 1’s
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`requirement of concerted action. See William O. Gilley Enterprises, Inc.
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`v. Atl. Richfield Co., 588 F.3d 659, 665 (9th Cir. 2009) (stating that “[i]f
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`the bilateral agreements in themselves have an illegal effect on
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`competition …, then the bilateral agreements constitute the ‘contract,
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`combination or conspiracy’ required for a claim under § 1 of the Sherman
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`Act”).
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`For example, in Paladin Associates, this Court held that the
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`agreement to contract terms that were allegedly anti-competitive was
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`direct evidence of concerted action. 328 F.3d at 1154. There, a natural-
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`gas marketer sued a pipeline company, alleging that the company’s
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`contractual assignment of rights to a competitor marketer was an illegal
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`boycott of the plaintiff that violated section 1. Id. at 1153. This Court
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`concluded that “[t]he district court erred in concluding that the
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`assignments” in the written contracts were not direct evidence of
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`concerted action.” Id. at 1154. Rather, the assignment contracts were
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`“express ‘agreements,’” and those contracts, signed by representatives of
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`the defendant-company and the competitor, were “direct evidence of
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`‘concerted activity.’” Id. at 1153.
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`Likewise, in the context of a section 1 claim alleging illegal tying
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`arrangements, this Court held that “the ‘contract’ requirement [of section
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`1] is satisfied in tie-in cases by the coerced sales contract for the tied
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`item.” Datagate, Inc. v. Hewlett-Packard Co., 60 F.3d 1421, 1427 (9th Cir.
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`1995).4 As the Court explained, “[a] showing that the buyer of the tied
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`product was coerced by the tying arrangement into making the purchase
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`is sufficient to show that the buyer was not merely
`
`‘acting
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`independently.’” Id. (citation omitted). The contract was “evidence of a
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`coerced agreement to purchase the tied product” and thus satisfied the
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`requirement of concerted action. Id.5
`
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`4 “A tying arrangement is an agreement by a party to sell one product but
`only on the condition that the buyer also purchases a different (or tied)
`product, or at least agrees that he will not purchase that product from
`any other supplier.” Eastman Kodak Co. v. Image Technical Services,
`Inc., 504 U.S. 451, 461 (1992).
`
`5 Similarly, the Tenth Circuit held that “a contract between a buyer and
`seller satisfies the concerted action element of section 1 of the Sherman
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`In William O. Gilley, where a class of gasoline purchasers alleged
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`that a network of bilateral sales-or-exchange agreements among the oil
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`producers “facilitat[ed] coordinated action by the defendants that
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`unlawfully restrains trade,” the Court noted the “critical” “distinction”
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`between allegations that a network of contracts facilitated coordinated
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`action and allegations that the contracts themselves “violated the anti-
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`trust laws due to their anti-competitive effect.” 588 F.3d at 655. Although
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`the plaintiffs had failed to plead the latter claim, the Court recognized
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`that a claim alleging that the contracts “in themselves have an illegal
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`effect on competition” would satisfy the “contract, combination or
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`conspiracy” requirement of section 1. Id.
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`Other courts agree that a contract itself is proof of concerted activity
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`in restraint of trade where the contract includes anti-competitive
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`provisions. See, e.g., Spex Techs., Inc. v. Kingston Tech. Corp., 2019 WL
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`8198300, at *4 (C.D. Cal. Sept. 24, 2019) (finding that the counter-
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`claimant plausibly alleged concerted action based upon an allegedly anti-
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`competitive signed settlement agreement between the counter-defendant
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`Act where the seller coerces a buyer’s acquiescence in a tying
`arrangement imposed by the seller.” Systemcare, Inc. v. Wang Labs.
`Corp., 117 F.3d 1137, 1145 (10th Cir. 1997) (en banc).
`14
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`Case: 21-16506, 01/27/2022, ID: 12353463, DktEntry: 50, Page 22 of 37
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`and other parties); United States v. American Express Co., 88 F. Supp. 3d
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`143, 167 (E.D.N.Y. 2015) (stating that the alleged anti-competitive
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`provisions “are contained in American Express’s card acceptance
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`agreements with its merchants—satisfying the ‘concerted action’ element
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`of a Section 1 violation”), rev’d and remanded on other grounds, 838 F.3d
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`179 (2d Cir. 2016); Procaps S.A. v. Patheon Inc., 36 F. Supp. 3d 1306,
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`1321 (S.D. Fla. 2014) (concluding that “the Collaboration Agreement
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`itself can provide the basis for satisfying the contract type of concerted
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`action requirement” because “[b]y its express terms, section 1 is satisfied
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`when there is a ‘contract’ between the parties[] [a]nd there is one here”);
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`United States v. Delta Dental of Rhode Island, 943 F. Supp. 172, 175
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`(D.R.I. 1996) (concluding that “the requisite concerted action has been
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`alleged” because “every contract between Delta and a participating
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`dentist contains the [alleged anti-competitive] clause,” and “Delta
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`dentists expressly agree to comply” with that clause); Eskofot A/S v. E.I.
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`Du Pont De Nemours & Co., 872 F. Supp. 81, 91–93 (S.D.N.Y. 1995)
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`(concluding that allegations that the defendants entered into “various
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`contracts and merger arrangements” with other parties satisfied the
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`concerted-action element of section 1).
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`Accordingly, here, the district court erred in ruling that contracts
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`of adhesion like the DPLA fail to satisfy the concerted-action requirement
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`of section 1. The DPLA is an “express agreement[],” Paladin Assocs., 328
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`F.3d at 1153, between Apple and Epic (or other app developers). The
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`contract includes provisions that have anti-competitive effects, as the
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`district court found. See 1ER146–48. Thus, the DPLA itself is direct
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`evidence of concerted activity in restraint of trade.
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`Moreover, for an adhesive contract like the DPLA, the contract
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`itself is direct evidence of concerted action for the same reason that the
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`contract itself may be concerted action in the tying context. In Datagate,
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`this Court explained that, in the tying context, the “coerced sales contract
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`for the tied item” satisfies the concerted-action requirement because “[a]
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`showing that the buyer of the tied product was coerced by the tying
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`arrangement into making the purchase is sufficient to show that the
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`buyer was not merely ‘acting independently.’” 60 F.3d at 1427; cf.
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`Eastman Kodak, 504 U.S. at 464 n.9 (stating that “[t]he essential
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`characteristic of an invalid tying arrangement lies in the seller’s
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`exploitation of its control over the tying product to force the buyer into
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`the purchase of a tied product” and that “[w]hen such ‘forcing’ is present,
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`competition on the merits in the market for the tied item is restrained
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`and the Sherman Act is violated”). Similarly, in a contract of adhesion,
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`where a company, through its unequal bargaining power, coerces the
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`buyer’s agreement to terms that are not negotiable, the buyer is not
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`merely acting independently when it acts in accordance with the
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`agreement. Thus, just as the contract itself in a tying arrangement is
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`“evidence of a coerced agreement” that satisfies the concerted-action
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`requirement, Datagate, 60 F.3d at 1427, so too does the adhesion contract
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`itself provide evidence of concerted activity.
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`C. The district court erred in ruling that the DPLA was
`“unilateral” activity outside the scope of section 1.
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`Because section 1 prohibits only concerted activity, unilateral or
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`independent action does not violate section 1 of the Sherman Act. See Am.
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`Needle, 560 U.S. at 190–91 (distinguishing “concerted” activity under
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`section 1 from “unilateral” or “independent” activity under section 2).
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`Elaborating on independent action, the Supreme Court in Monsanto Co.
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`v. Spray-Rite Service Corp., stated that “[a] manufacturer of course
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`generally has a right to deal, or refuse to deal, with whomever it likes, as
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`long as it does so independently.” 465 U.S. at 761. In Monsanto, the Court
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