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Case: 21-16506, 01/27/2022, ID: 12353946, DktEntry: 55, Page 1 of 35
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`No. 21-16506
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`
`IN THE
`UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
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`EPIC GAMES, INC.,
`Plaintiff-counter-defendant-Appellant,
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`v.
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`APPLE, INC.,
`Defendant-counter-claimant-Appellee.
`
`On Appeal from the United States District Court for the
`Northern District of California
`No. 4:20-cv-05640-YGR
`Hon. Yvonne Gonzalez Rogers
`
`BRIEF OF UTAH AND 34 OTHER STATES AS
`AMICI CURIAE IN SUPPORT OF PLAINTIFF-
`COUNTER-DEFENDANT-APPELLANT
`AND REVERSAL
`
`Office of the Attorney General
`350 N. State Street, Ste. 230
`P.O. Box 142320
`Salt Lake City, UT 84114
`(801) 538-9600
`melissaholyoak@agutah.gov
`
`SEAN D. REYES
`Attorney General of Utah
`MELISSA A. HOLYOAK*
`Solicitor General
`STANFORD E. PURSER
`Deputy Solicitor General
`*Counsel of Record
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`Counsel for Amici States
`Additional counsel listed with signature block
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`TABLE OF CONTENTS
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`TABLE OF AUTHORITIES ...................................................................... ii
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`INTRODUCTION AND INTEREST OF AMICI STATES ....................... 1
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`SUMMARY OF THE ARGUMENT .......................................................... 2
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`ARGUMENT ............................................................................................. 5
`
`I.
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`The district court erred in holding that Section 1 of the
`Sherman Act does not apply to “unilateral contracts.” ............... 5
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`A. Under rules of statutory interpretation, a Section 1
`“contract” includes unilateral contracts. ..................................... 6
`
`B. Excluding unilateral contracts from Section 1 “contract” is
`inconsistent with Supreme Court precedent. ........................... 12
`
`C. Excluding unilateral contracts or contracts of adhesion from
`Section 1 is bad public policy because it would impede
`antitrust enforcement. ............................................................... 14
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`II. The district court’s rule-of-reason analysis failed to balance
`the overall competitive effects of Apple’s restraints. ................ 18
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`CONCLUSION ........................................................................................ 25
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`ADDITIONAL COUNSEL ...................................................................... 27
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`CERTIFICATE OF COMPLIANCE ........................................................ 29
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`CERTIFICATE OF SERVICE ................................................................. 30
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`Federal Cases
`
`TABLE OF AUTHORITIES
`
`Abramski v. United States,
`573 U.S. 169 (2014)............................................................................... 11
`
`Aerotec Int’l, Inc. v. Honeywell Int’l, Inc.,
`836 F.3d 1171 (9th Cir. 2016) ................................................................. 5
`
`Albrecht v. Herald Co.,
`390 U.S. 145 (1968)............................................................................... 14
`
`Arizona v. Maricopa Cnty. Med. Soc’y,
`457 U.S. 332 (1982)............................................................................... 20
`
`Bd. of Trade of Chicago v. United States,
`246 U.S. 231 (1918)............................................................................... 18
`
`Bhan v. NME Hosps., Inc.,
`929 F.2d 1404 (9th Cir. 1991) ............................................................... 24
`
`Bostock v. Clayton Cnty., Georgia,
`140 S. Ct. 1731 (2020) ............................................................................ 7
`
`Business Elecs. Corp. v. Sharp Elecs. Corp.,
`485 U.S. 717 (1988)............................................................................... 12
`
`Cal. Dental Ass’n v. F.T.C.,
`526 U.S. 756 (1999)............................................................................... 21
`
`Cleveland v. United States,
`531 U.S. 12 (2000) ................................................................................ 11
`
`Cnty. of Tuolumne v. Sonora Cmty. Hosp.,
`236 F.3d 1148 (9th Cir. 2001) ............................................................... 24
`
`Continental T.V., Inc. v. GTE Sylvania Inc.,
`433 U.S. 36 (1977) ................................................................................ 20
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`Copperweld Corp. v. Independence Tube Corp.,
`467 U.S. 752 (1984)..................................................................... 3, 13, 14
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`ii
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`Davis v. Michigan Dep’t of Treasury,
`489 U.S. 803 (1989)............................................................................... 10
`
`In re NCAA Athletic Grant-in-Aid Cap Antitrust Litig.,
`375 F. Supp. 3d 1058 (N.D. Cal. 2019) ................................................. 23
`
`L.A. Mem’l Coliseum Comm’n v. NFL,
`726 F.2d 1381 (9th Cir. 1984) ............................................................... 24
`
`Leegin Creative Leather Prods., Inc. v. PSKS, Inc.,
`551 U.S. 877 (2007)................................................................... 19, 20, 22
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`Morissette v. United States,
`342 U.S. 246 (1952)................................................................................. 8
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`Nat’l Soc’y of Pro. Eng’rs v. United States,
`435 U.S. 679 (1978)......................................................................... 12, 18
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`NCAA v. Alston,
`141 S. Ct. 2141 (2021) ........................................................ 18, 19, 20, 21
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`NCAA v. Bd. of Regents,
`468 U.S. 85 (1984) ................................................................................ 19
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`Richardson v. Hardwick,
`106 U.S. 252 (1882)........................................................................... 9, 10
`
`Standard Oil Co. v. United States,
`221 U.S. 1 (1911) .................................................................................. 12
`
`State Oil Co. v. Khan,
`522 U.S. 3 (1997) ............................................................................ 19, 20
`
`United States v. Rodgers,
`466 U.S. 475 (1984)............................................................................... 11
`
`Yates v. United States,
`574 U.S. 528 (2015)............................................................................... 10
`
`Federal Statutes
`
`15 U.S.C. § 1 .................................................................................... passim
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`15 U.S.C. § 15c ........................................................................................... 1
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`Other Authorities
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`73 Am. Jur. 2d Statutes § 150 (2021) ...................................................... 11
`
`Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of
`Legal Texts (2012) ................................................................................... 8
`
`Bilateral and unilateral contracts,
`1 Williston on Contracts § 1:17 (4th ed.) .................................... 9, 15, 16
`
`Daniel A. Farber & Brett H. McDonnell, “Is There a Text in this Class?”
`The Conflict Between Textualism and Antitrust,
`14 J. Contemp. Legal Issues 619 (2005) ................................................ 7
`
`Felix Frankfurter, Some Reflections on the Reading of Statutes,
`47 Colum. L. Rev. 527 (1947) ................................................................. 8
`
`Gabe Feldman, The Demise of the Rule of Reason,
`24 Lewis & Clark L. Rev. 951 (2020) ............................................. 23, 25
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`Maurice Wormser, The True Conception of Unilateral Contracts,
`26 Yale L.J. 136 (1916) ........................................................................... 9
`
`Restatement (First) of Contracts § 1 .................................................. 9, 10
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`Restatement (Second) of Contracts § 1 ........................................... passim
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`Samuel J. Stoljar, The False Distinction Between Bilateral and
`Unilateral Contracts,
`64 Yale L.J. 515 (1955) ......................................................................... 15
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`INTRODUCTION AND INTEREST OF AMICI STATES
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`Amici curiae, the State of Utah and 34 other states, respectfully
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`submit this brief in support of plaintiff-counter-defendant-appellant Epic
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`Games, Inc.
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`
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`Epic sued defendant-counter-claimant-appellee Apple, Inc. over Ap-
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`ple’s practices relating to its iOS App Store. Following a sixteen-day
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`bench trial, the district court ruled in favor of Apple on the nine counts
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`alleging violations of state and federal antitrust laws and in favor of Epic
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`on the remaining California unfair competition count. Epic’s flagship
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`video game Fortnite had more than 115 million registered players access-
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`ing Fortnite on an iOS device before Apple removed Fortnite from the App
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`Store. Each of the Amici States has consumers that use the iOS platform
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`and has an interest in ensuring a competitive marketplace for its con-
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`sumers.
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`Further, the attorneys general of the Amici States are authorized
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`by Congress to bring federal antitrust actions to protect their citizens
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`from the harmful effects of anticompetitive conduct. 15 U.S.C. § 15c.
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`Amici States thus have a strong interest in ensuring that federal courts
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`apply clear and effective standards for liability under the Sherman Act,
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`1
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`15 U.S.C. §§ 1 et seq., so that they may effectively enforce antitrust laws
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`in all aspects of the economy, including the smartphone industry which,
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`with hardware, products, and services, is approaching a trillion dollars
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`annually.
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`
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`Accordingly, Amici States file this brief to explain why this Court
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`should reverse the district court’s order.
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`
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`SUMMARY OF THE ARGUMENT
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`While the Amici States generally support Epic’s arguments to re-
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`verse the district court’s decision, the States’ brief focuses on just two of
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`those reasons.
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`First, the district court erred in deciding that Section 1 of the Sher-
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`man Act does not apply to a “unilateral contract.” That’s wrong under
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`settled canons of statutory interpretation. In relevant part, Section 1
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`prohibits “[e]very contract, combination, . . . conspiracy, in restraint of
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`trade.” The Act does not define “contract,” but the term had a broad, ac-
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`cepted common law meaning when the Act became law in 1890. Then, as
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`now, a unilateral contract was simply one of various types of contracts—
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`bilateral, implied, express, formal, informal—that were legally enforce-
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`able. Per rules of statutory construction, Congress adopted this common
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`2
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`law understanding when using the term “contract” in Section 1. Like-
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`wise, the interpretive canon requiring statutory terms be read in context
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`shows that Section 1’s broad terms—“[e]very contract” and “combina-
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`tion” or “conspiracy”— meant to capture a wide range of agreements that
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`could harm competition.
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`The district court’s interpretation also runs counter to Supreme
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`Court Section 1 jurisprudence. More than 100 years ago, the Supreme
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`Court emphasized that Section 1 embraced “every conceivable contract.”
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`The district court’s error, however, seems to stem from the Court’s later
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`discussion of wholly unilateral conduct—coordinated conduct among a
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`single company’s officers. A single firm cannot conspire for purposes of a
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`Section 1 violation because such coordinated conduct does not merge eco-
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`nomic powers of separate economic actors. Copperweld Corp. v. Inde-
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`pendence Tube Corp., 467 U.S. 752, 768 (1984). But unilateral conduct
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`of a single economic actor is different than unilateral contract between
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`separate economic actors.
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`Further, excluding contracts like Apple’s simply because Apple
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`“unilaterally imposed” the terms makes bad antitrust public policy. Not
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`only does it needlessly complicate the Section 1 analysis, it also creates
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`an antitrust paradox. Firms with sufficient market power can unilater-
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`ally dictate the terms of a contract. The district court’s holding blows a
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`hole through Section 1; paradoxically, firms with enough market power
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`to unilaterally impose contracts would be protected from antitrust scru-
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`tiny—precisely the firms whose activities give the most cause for anti-
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`trust concern.
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`Second, the district court also misapplied the rule of reason test by
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`never weighing the anticompetitive and purported procompetitive ef-
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`fects of Apple’s conduct. The whole point of rule of reason analysis has
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`always been to assess the challenged restraint’s effects on competition.
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`The Supreme Court has frequently reiterated that the rule of reason in-
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`volves weighing all the circumstances of the case to properly determine
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`the restraint’s net impact.
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`To be sure, the Supreme Court has sometimes described the rule
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`of reason analysis as a three-part burden shifting test. But those three
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`steps, the Court has emphasized, are not inflexible and do not substitute
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`for careful analysis based on the circumstances of each case. That kind
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`of careful balancing is crucial here because the district court found both
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`anticompetitive and procompetitive effects. Weighing the relevant facts
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`is therefore the only way to determine whether the challenged conduct
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`overall poses an undue restraint on trade in violation of Section 1.
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`As Epic points out, Apple amassed billions in supracompetitive
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`profits from one billion iPhone users. Without balancing, this type of im-
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`mense harm to consumers can go unanswered with just the slightest
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`showing of procompetitive benefit. The Court should require Apple to
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`account for its conduct under a complete rule of reason analysis.
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`
`
`ARGUMENT
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`I. The district court erred in holding that Section 1 of the
`Sherman Act does not apply to “unilateral contracts.”
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`
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` To establish liability under Section 1 of the Sherman Act, “a plain-
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`tiff must prove (1) the existence of an agreement, and (2) that the agree-
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`ment was an unreasonable restraint of trade.” Aerotec Int’l, Inc. v. Hon-
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`eywell Int’l, Inc., 836 F.3d 1171, 1178 (9th Cir. 2016). The district court
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`held that Epic could not satisfy element one (existence of an agreement)
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`because the Developer Product Licensing Agreement (DPLA) between
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`Epic and Apple was a “unilateral contract.” Order 142. Because Apple
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`had dictated the terms to developers—take it or leave it if Epic wanted
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`to distribute games on the iOS platform—the court held that it was not
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`a Section 1 contract under “antitrust jurisprudence.” Id.
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`5
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`A unilateral contract is one in which a promise is made in exchange
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`for an act. The district court wrongly found that the DPLA (which was
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`actually a bilateral contract of adhesion with exchange of promises by
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`both Apple and developers) was a “unilateral contract.” See infra Section
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`I.C. But regardless of this finding, the district court’s legal holding—that
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`“unilateral contracts” are exempt from Section 1—is wrong as a matter
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`of law: (1) Section 1 “contracts” include unilateral contracts under canons
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`of statutory interpretation; (2) excluding unilateral contracts from Sec-
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`tion 1 is inconsistent with Supreme Court precedent; and (3) an exception
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`for unilateral contracts or contracts of adhesion is bad public policy as it
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`needlessly complicates and impedes Section 1 enforcement of antitrust
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`violations.
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`A. Under rules of statutory interpretation, a Section 1
`“contract” includes unilateral contracts.
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`
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`Section 1 of the Sherman Act prohibits “[e]very contract, combina-
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`tion in the form of trust or otherwise, or conspiracy, in restraint of trade
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`or commerce among the several States, or with foreign nations.” 15
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`U.S.C. § 1. There is no question that Epic and Apple had a contract. The
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`79-page written and executed DPLA contained “complex and comprehen-
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`sive provisions addressing not only intellectual property rights, but those
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`relating to marketing, agency, indemnity, and myriad other considera-
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`tions.” Order 29. But because Epic or any other developer must accept
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`the DPLA’s “provisions (including the challenged restrictions) to distrib-
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`ute games on iOS,” the district court found that the DPLA is a “unilateral
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`contract” and not subject to Section 1. Id. at 142.
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`Even if Epic’s contract were correctly categorized as “unilateral,”
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`excising unilateral contracts from Section 1 offends the plain text of the
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`statute. Although scholars note that antitrust cases focus on economic
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`policy with sometimes little more “than a passing citation to the statutory
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`text,” Daniel A. Farber & Brett H. McDonnell, “Is There a Text in this
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`Class?” The Conflict Between Textualism and Antitrust, 14 J. Contemp.
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`Legal Issues 619, 620 (2005), that does not excuse courts from interpret-
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`ing the Sherman Act in accord with the actual terms of its text. Justice
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`Gorsuch expounded the sober duty of statutory interpretation: “If judges
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`could add to, remodel, update, or detract from old statutory terms in-
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`spired only by extratextual sources and our own imaginations, we would
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`risk amending statutes outside the legislative process reserved for the
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`people’s representatives.” Bostock v. Clayton Cnty., Georgia, 140 S. Ct.
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`1731, 1738 (2020).
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`Here, rules of statutory interpretation direct that Section 1 includes
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`unilateral contracts for two reasons. First, the term “contract” encom-
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`passed unilateral contracts at common law in 1890 when the Sherman
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`Act was adopted. The Sherman Act does not define the term “contract.”
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`Thus the “age-old principle” applies “that words undefined in a statute
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`are to be interpreted and applied according to their common-law mean-
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`ings.” Antonin Scalia & Bryan A. Garner, Reading Law: The Interpreta-
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`tion of Legal Texts 320 (2012). As Justice Jackson explained:
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`[W]here Congress borrows terms of art in which are accumu-
`lated the legal tradition and meaning of centuries of practice,
`it presumably knows and adopts the cluster of ideas that were
`attached to each borrowed word in the body of learning from
`which it was taken and the meaning its use will convey to the
`judicial mind unless otherwise instructed.
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`Morissette v. United States, 342 U.S. 246, 263 (1952). The term “contract,”
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`heavy laden with centuries of legal tradition, is a transplant of the com-
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`mon law that “brings the old soil with it.” Felix Frankfurter, Some Re-
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`flections on the Reading of Statutes, 47 Colum. L. Rev. 527, 537 (1947).
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`The common law recognized that legally enforceable contracts in-
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`cluded both bilateral and unilateral contracts. The most famous unilat-
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`eral contract hypothetical–enjoyed by law students everywhere—is
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`Wormser’s Brooklyn Bridge: “Suppose A says to B, ‘I will give you $100 if
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`you walk across the Brooklyn Bridge,’ and B walks—is there a contract?”
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`Maurice Wormser, The True Conception of Unilateral Contracts, 26 Yale
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`L.J. 136, 136 (1916). Professor Wormser noted that “unilateral contracts
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`are not infrequently met with in the practice of law,” id. at 142—they
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`were alive and well in the 19th century. Id. at 137-42 nn.2-7 (citing
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`cases); Bilateral and unilateral contracts, 1 Williston on Contracts § 1:17
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`(4th ed.) (distinction between bilateral and unilateral contracts fully rec-
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`ognized by 17th century).
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`More important, a unilateral contract at common law was simply
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`viewed as one of various kinds of contract. See Restatement (First) of
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`Contracts § 1 cmt. e (1932) (“The term contract is generic. As commonly
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`used, and as here defined, it includes varieties described as voidable, un-
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`enforceable, formal, informal, express, implied (see Comment a to 5) uni-
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`lateral, bilateral.”). For example, in Richardson v. Hardwick, the Su-
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`preme Court affirmed dismissal of a bill of complaint involving a unilat-
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`eral contract relating to the purchase of land. 106 U.S. 252, 255 (1882).
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`The appellant had failed to pay within the time limit: “In suits upon uni-
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`lateral contracts, it is only where the defendant has had the benefit of the
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`consideration for which he bargained that he can be held bound.” Id. (cit-
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`ing Jones v. Robertson, 17 L. J. Exch. 36; Mills v. Blackhall, 11 Q. B. 358;
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`Morton v. Burr, 7 Adol. & E. 23; Kennaway v. Treleavan, 5 Mees. & W.
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`501). Although the Court recognized the application of unilateral contract
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`principles, it still repeatedly referred to the written agreement as “a con-
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`tract” or “the contract” without distinction. Richardson, 106 U.S. at 252-
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`54. Accordingly, Section 1’s “contract” is best understood in 1890 to in-
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`clude unilateral contracts.
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`Second, context supports a broad definition of “contract” that in-
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`cludes a “unilateral contract.” “It is a fundamental canon of statutory
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`construction that the words of a statute must be read in their context and
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`with a view to their place in the overall statutory scheme.” Davis v. Mich-
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`igan Dep’t of Treasury, 489 U.S. 803, 809 (1989). The words surrounding
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`the term “contract” support Section 1’s application to the entire universe
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`of contracts. To begin, Section 1 expressly extends to “[e]very contract.”
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`15 U.S.C. § 1. The preceding word “every” is comparable to “any,” which
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`indicates “‘an expansive meaning,’ bringing within a statute’s reach all
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`types of the item (here, [contract]) to which the law refers.” Yates v.
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`United States, 574 U.S. 528, 555 (2015) (Kagan, J., dissenting); see 73
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`Am. Jur. 2d Statutes § 150 (2021) (“every” is a term of inclusion).
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`Next, in addition to “contract[s],” the statute applies to every “com-
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`bination in the form of trust or otherwise, or conspiracy.” 15 U.S.C. § 1.
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`By following “contract” with the words “combination” and “conspiracy,”
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`Congress sought to capture a wide range of potential agreements that
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`could restrain trade. Applying a “narrow” definition to contract “clashes
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`strongly” with the “sweeping” language on either side of the term. See
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`United States v. Rodgers, 466 U.S. 475, 480 (1984). Thus, context shows
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`that Congress wrote the Sherman Act with the broadest of brushes.1
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`In short, all roads of statutory interpretation lead to the most ex-
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`pansive meaning of “contract” possible that includes unilateral contracts.
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`
`1 Nor does the rule of lenity save the district court’s error. The rule
`of lenity instructs that “ambiguity concerning the ambit of criminal
`statutes should be resolved in favor of lenity.” Cleveland v. United
`States, 531 U.S. 12, 25 (2000). But that rule only applies when, “after
`all legitimate tools of interpretation have been exhausted, a reasonable
`doubt persists regarding whether Congress has made the defendant’s
`conduct a federal crime.” Abramski v. United States, 573 U.S. 169, 264
`(2014) (Scalia, J., dissenting) (cleaned up). Applying tools of interpreta-
`tion, there is no ambiguity—“contract” under Section 1 includes a uni-
`lateral contract.
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`B. Excluding unilateral contracts from Section 1 “con-
`tract” is inconsistent with Supreme Court precedent.
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`Interpreting Section 1 to exclude unilateral contracts is incon-
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`sistent with Supreme Court precedent. Adopted in 1890, the Act re-
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`sponded to the harmful effects of a wide variety of anticompetitive mech-
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`anisms used in the 19th Century. Standard Oil Co. v. United States, 221
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`U.S. 1, 50 (1911). The Court observed that Section 1’s language is “broad
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`enough to embrace every conceivable contract or combination which
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`could be made concerning trade or commerce or the subjects of such com-
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`merce.” Id. at 60 (emphasis added). It is because of this breadth that the
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`Supreme Court has long read Section 1 to prohibit only “undue” re-
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`straints of trade, applying a “rule of reason” analysis. Id. at 59-62; see
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`Nat’l Soc’y of Pro. Eng’rs v. United States, 435 U.S. 679, 688 (1978) (with-
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`out the rule of reason, Section 1 “would outlaw the entire body of private
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`contract law”).
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`As Justice Scalia explained, “[t]he term ‘restraint of trade’ in the
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`statute, like the term at common law, refers not to a particular list of
`
`agreements, but to a particular economic consequence, which may be pro-
`
`duced by quite different sorts of agreements in varying times and cir-
`
`cumstances.” Business Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717,
`
`
`
`12
`
`

`

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`
`
`731 (1988) (emphasis added). Thus, while the Court has shaped the con-
`
`tours of “restraint of trade” as the limiting principle for Section 1, the
`
`Court has not restricted the sweep of Section 1’s “every contract.”
`
`And the Supreme Court’s discussion of unilateral and concerted
`
`conduct under Section 1 does not limit that sweep. The district court here
`
`relied on the Supreme Court’s explanation of unilateral activity:
`
`“Concerted activity subject to § 1 is judged more sternly than
`unilateral activity under § 2” because it “deprives the market-
`place of the independent centers of decisionmaking that com-
`petition assumes and demands.” . . . Thus, even unreasonable
`unilateral restraints are not subject to antitrust scrutiny un-
`less “they pose a danger of monopolization.”
`
`Order 141-42 (quoting Copperweld Corp. v. Indep. Tube Corp., 467 U.S.
`
`752, 768-69 (1984)). But in excluding unilateral contracts from Section
`
`1’s reach, the district court mistakes Copperweld’s discussion of unilat-
`
`eral conduct to mean unilateral contract.
`
`In Copperweld, the Supreme Court held that a parent company and
`
`its wholly owned subsidiary were incapable of conspiring for purposes of
`
`Section 1. 467 U.S. at 777. Section 1 does not proscribe coordinated con-
`
`duct among those of the same company: “The officers of a single firm are
`
`not separate economic actors pursuing separate economic interests, so
`
`agreements among them do not suddenly bring together economic power
`
`
`
`13
`
`

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`
`
`
`that was previously pursuing divergent goals.” Id. at 769. Thus, Section
`
`1 “does not reach conduct that is ‘wholly unilateral.’” Id. at 768 (quoting
`
`Albrecht v. Herald Co., 390 U.S. 145, 149 (1968)).
`
`Unilateral contracts, by contrast, involve different economic actors.
`
`A party choosing to accept a unilateral contract does so based on its own
`
`economic interests. Here, there is no question that Apple and developers
`
`are separate economic actors with separate economic interests. So how-
`
`ever Apple’s DPLA is viewed (as a unilateral contract or correctly cate-
`
`gorized as a bilateral contract of adhesion), it did not constitute wholly
`
`unilateral conduct that excused Apple from Section 1 scrutiny.
`
`Thus, excluding an entire body of contracts from Section 1 contra-
`
`dicts the statutory text and is inconsistent with Supreme Court prece-
`
`dent.
`
`C. Excluding unilateral contracts or contracts of adhe-
`sion from Section 1 is bad public policy because it
`would impede antitrust enforcement.
`
`
`
`It would be bad public policy to exclude unilateral contracts from
`
`Section 1 scrutiny because it would both complicate and impede effective
`
`antitrust enforcement. As an initial matter, it would add an unneces-
`
`sary—and sometimes complicated—element to the Section 1 analysis.
`
`
`
`14
`
`

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`
`
`
`After determining whether there was an agreement, the court would
`
`then have to determine whether that agreement was a unilateral con-
`
`tract.
`
`“A unilateral contract results from an exchange of a promise for an
`
`act, while a bilateral contract results from an exchange of promises.” Bi-
`
`lateral and unilateral contracts, 1 Williston on Contracts § 1:17 (4th ed.).
`
`But scholars have called the distinction between bilateral and unilateral
`
`contracts artificial and false. See Samuel J. Stoljar, The False Distinction
`
`Between Bilateral and Unilateral Contracts, 64 Yale L.J. 515, 516 (1955)
`
`(“If ex hypothesi a contract does exist, what difference does it make, in
`
`terms of legal consequences, whether two promises were consideration
`
`for each other, or no promise was consideration for the promisor’s prom-
`
`ise?”).
`
`Indeed, modern contract law has moved away from distinguishing
`
`between bilateral and unilateral contract. Commentators have ques-
`
`tioned the distinction’s utility and noted the confusion it creates. See Re-
`
`statement (Second) of Contracts § 1, Reporter’s Note (1981). That is be-
`
`cause “in some cases a promise may not readily be characterized as
`
`
`
`15
`
`

`

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`
`
`
`clearly bilateral or clearly unilateral.” Bilateral and unilateral contracts,
`
`1 Williston on Contracts § 1:17 (4th ed.).
`
`Of course, in this case, the district court’s finding that the DPLA
`
`was a “unilateral contract” is wrong. Order 142. The fact that Apple had
`
`greater bargaining power in negotiating—“unilaterally” imposing the
`
`terms—does not make the contract unilateral. Id. at 141. The district
`
`court recognized that both parties made promises under the DPLA. The
`
`developers promised to comply with the terms of the agreement, use the
`
`software consistent with Apple’s rights, create apps that can only be dis-
`
`tributed through the App Store, submit apps for review, configure apps
`
`to use IAP, and not to hide or misrepresent features; Apple, in return,
`
`promised membership in its developer program to distribute apps with
`
`access to application programming interfaces. Order 28-30. The DPLA
`
`was a bilateral exchange of promises.
`
`But regardless of how a contract is categorized, it is bad public pol-
`
`icy to excise from Section 1 those contracts where one party unilaterally
`
`imposes the terms, i.e., contracts of adhesion. Such a limitation would
`
`complicate and impede enforcement of antitrust violations against firms
`
`
`
`16
`
`

`

`Case: 21-16506, 01/27/2022, ID: 12353946, DktEntry: 55, Page 22 of 35
`
`
`
`that exercise greater bargaining power in contract negotiations. Bar-
`
`gaining power is never fully equal in contractual negotiations. And the
`
`district court’s holding leaves many questions unanswered about the pa-
`
`rameters of “unilaterally imposed” terms: Must courts dissect the con-
`
`tract negotiations to see who proposed which terms? What if some of the
`
`terms were negotiated?
`
`Further, it creates an enforcement impossibility. Firms with suf-
`
`ficient market power can unilaterally impose contractual terms. The dis-
`
`trict court’s holding creates a paralyzing paradox: once a firm acquires
`
`market power and unilaterally imposes a contract, then it is no longer
`
`subject to Section 1. Affirming this paradox would gut the Sherman Act
`
`and prevent the Amici States from enforcing antitrust violations by large
`
`firms that harm their citizens.
`
`***
`
`This Court should reverse the district court’s holding that Section
`
`1 does not apply to unilateral contracts or unilaterally imposed contracts
`
`because it violates rules of statutory interpretation and conflicts with
`
`Supreme Court jurisprudence and sound public policy considerations.
`
`
`
`17
`
`

`

`Case: 21-16506, 01/27/2022, ID: 12353946, DktEntry: 55, Page 23 of 35
`
`
`
`II. The district court’s rule-of-reason analysis failed to bal-
`ance the overall competitive effects of Apple’s restraints.
`
`
`
`The Court should reverse and remand for another reason. The dis-
`
`trict court’s rule of reason analysis stopped short of the most important
`
`inquiry in a case like this: weighing all the relevant facts to determine
`
`whether the challenged restraints are unduly anticompetitive. Without
`
`that crucial step, the injuries of the Amici States’ citizens go unheard
`
`and

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