Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple podcast, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcast. It was a
Speaker 1: huge win for consumers at the Supreme Court today, huge
Speaker 1: loss for Apple. The Court ruled the consumers can go
Speaker 1: ahead with an antitrust lawsuit that accuses Apple of using
Speaker 1: its market dominance to artificially inflate prices at its app store.
Speaker 1: Joining me is the attorney who represents the consumers and
Speaker 1: the class action. The winning attorney, as you mentioned, Mark Riskin,
Speaker 1: managing partner at Wolf Haldenstein. Mark. At the end of
Speaker 1: last month, we were here talking about a Supreme Court
Speaker 1: decision against class arbitration. This was a huge win for consumers.
Speaker 1: What made the difference, Well, June, first, it's a pleasure
Speaker 1: to be here. Thank you for having me. I think
Speaker 1: the difference here is the way to court views the
Speaker 1: importance of enforcing the ant us laws. Justice Kavanaugh made
Speaker 1: it very clear that the Court will vindicate consumer rights
Speaker 1: when they're affected by any trust violations and I think
Speaker 1: that's an important principle. This was a five to four ruling,
Speaker 1: and the swing vote was the newest justice, as you mentioned,
Speaker 1: Brett Kavanaugh, who joined with the Court's liberal wing, which
Speaker 1: is an unusual alignment so far, and he's sort of
Speaker 1: signaled that in the oral arguments. We were very gratified
Speaker 1: with the kinds of questions that Justice Kavanaugh was asking
Speaker 1: because it made us think that he was going to
Speaker 1: apply Illinois Brick the way the Court has always applied it,
Speaker 1: which is in a very straightforward, very formalistic way, without
Speaker 1: looking behind the transaction to the economics that Apple wanted
Speaker 1: the Court to consider. Let's go back for just a
Speaker 1: moment and tell us the issue in the case. So,
Speaker 1: under the Supreme Court's Decision seven decision in Illinois Brick,
Speaker 1: the only plaintiffs who have standing to sue a monopolist
Speaker 1: are those who directly deal with a monopolist. And even
Speaker 1: if they may pass on some portion of their injury
Speaker 1: to downstream users, those downstream users don't have standing. The
Speaker 1: first person to deal with a monopolist is the one
Speaker 1: who has standing and can recover all the antitrust damages.
Speaker 1: And here, as Justice Kavanaugh says in the very first
Speaker 1: part of his decision, it's undisputed that iPhone owners bought
Speaker 1: apps directly from Apple, who is the alleged monopolist. So
Speaker 1: the way the Supreme Court has been deciding this issue
Speaker 1: for more than forty years, it's the consumers who have
Speaker 1: the standing to bring this claim. The other Trump appointee,
Speaker 1: Justice Neil Gores, which wrote the descent, saying the ruling
Speaker 1: exalts form over substance and to some degree justice course,
Speaker 1: which is correct. The Supreme Court has consistently said that
Speaker 1: the standing requirement under Illinois Brick is a formalistic rule.
Speaker 1: In fact, a few years after Illinois Brick was decided,
Speaker 1: in a case called Utiliccorp. The Supreme Court said, We're
Speaker 1: going to apply this rule formalistically. We're not going to
Speaker 1: be persuaded by any economic arguments. Even when the parties
Speaker 1: agree that the first party purchaser suffered no damage passed
Speaker 1: on all the injury to a downstream purchaser, we don't care.
Speaker 1: It's the first person who deals with a monopolist who
Speaker 1: we are going to recognize as the party withstanding. And
Speaker 1: that's the way the Court has interpreted this rule all along.
Speaker 1: Mark an organization that represented Facebook, Google and other tech
Speaker 1: giants told the Supreme Court that allowing this lawsuit to
Speaker 1: proceed would put quote these platforms services under threat. So
Speaker 1: how important is this case to other platforms? I think
Speaker 1: that Apple is unique in the way it runs the
Speaker 1: App Store. It's the only online platform I know of
Speaker 1: that has a perfect monopoly. I think what puts Apple
Speaker 1: and its platform at risk is its monopolistic practices. It's
Speaker 1: alleged monopolistic practices, not the way the Court has interpreted
Speaker 1: Illinois Brick. It's been interpreting Illinois Brick that way since
Speaker 1: it decided Illinois Brick in seven. It's the monopoly that
Speaker 1: causes the problem for Apple. Now, you file this suit
Speaker 1: first in two thousand seven, shows you how slowly the
Speaker 1: reels of justice turn any other obstacles in your way
Speaker 1: before you get to an actual trial. Well, sure, I'm
Speaker 1: convinced that Apple is going to defend this case vigorously.
Speaker 1: They have been for the last twelve years. We still
Speaker 1: have to go through class certification on this case. We
Speaker 1: have to do discovery. There's going to be expert battles
Speaker 1: over damages. But the fundamental fact remains that we have
Speaker 1: standing to bring the claim, and as Justice course, that's
Speaker 1: made very clear in his opinion, we will be entitled
Speaker 1: to recover all of the economic injury caused by the
Speaker 1: overcharges for the iPhone Apple. What's the estimate of those damages? Well,
Speaker 1: the size of the market is enormous. Is as you know,
Speaker 1: Apple's revenue from from the app store is in the
Speaker 1: billions of dollars a year. We have a class period
Speaker 1: that begins in two thousand seven, so current it's twelve
Speaker 1: years of over charges for iPhone apps, and I'm quite
Speaker 1: sure that the damages in this case will be measured
Speaker 1: in the billions of dollars as well. Any feeling as
Speaker 1: to whether there might be a settlement as this goes on.
Speaker 1: Apple's reputation is litigate, litigate, litigate. We'll see whether that
Speaker 1: changes in this case because of the size of the
Speaker 1: case and also the threat that an injunction has to
Speaker 1: its business model, But for the time being, we intend
Speaker 1: to litigate vigorously and all the way up to the jury.
Speaker 1: Looking at this case in light of the line of
Speaker 1: cases of the Supreme Court dealing with class arbitration class action,
Speaker 1: does this stand for any broader principle or is it
Speaker 1: just on its facts. No, I think it's actually a
Speaker 1: pretty broad opinion, and I think the Court made clear
Speaker 1: that they will protect consumers from monopolists. And what's unusual
Speaker 1: about this case is the way Apple insinuated itself in
Speaker 1: the middle of the transaction. You have app developers at
Speaker 1: the beginning end, you have Apple in middle, and then
Speaker 1: you have consumers at the far end of the transaction.
Speaker 1: And the Court says, when a consumer deals with a monopolist,
Speaker 1: we're going to protect the consumers if they're injured by
Speaker 1: monopolistic practices. And I think that's a pretty broad principle.
Speaker 1: You only have Justice Kavanaughs the swing vote here. It
Speaker 1: seems like the other four justices, the conservative or the
Speaker 1: business minded justices, were pretty firm in their camp. Well,
Speaker 1: if if this one the other way, I'm sure Apple
Speaker 1: would be calling it a victory. To five four affirmed
Speaker 1: is five four firmed. I'll take the win when I
Speaker 1: can get it, all right, We hear that, Thanks so much.
Speaker 1: That's Mark Rifkin. He is the managing partner at Wolf
Speaker 1: Hauldenstein and I represented the consumers in this class action.
Speaker 1: Thanks for listening to the Bloomberg Law Podcast. You can
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Speaker 1: and on bloomberg dot com slash podcast. I'm June Brasso.
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