WEBVTT - Consumers Win Over Apple at Supreme Court

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple podcast, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash podcast. It was a

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<v Speaker 1>huge win for consumers at the Supreme Court today, huge

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<v Speaker 1>loss for Apple. The Court ruled the consumers can go

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<v Speaker 1>ahead with an antitrust lawsuit that accuses Apple of using

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<v Speaker 1>its market dominance to artificially inflate prices at its app store.

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<v Speaker 1>Joining me is the attorney who represents the consumers and

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<v Speaker 1>the class action. The winning attorney, as you mentioned, Mark Riskin,

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<v Speaker 1>managing partner at Wolf Haldenstein. Mark. At the end of

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<v Speaker 1>last month, we were here talking about a Supreme Court

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<v Speaker 1>decision against class arbitration. This was a huge win for consumers.

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<v Speaker 1>What made the difference, Well, June, first, it's a pleasure

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<v Speaker 1>to be here. Thank you for having me. I think

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<v Speaker 1>the difference here is the way to court views the

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<v Speaker 1>importance of enforcing the ant us laws. Justice Kavanaugh made

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<v Speaker 1>it very clear that the Court will vindicate consumer rights

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<v Speaker 1>when they're affected by any trust violations and I think

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<v Speaker 1>that's an important principle. This was a five to four ruling,

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<v Speaker 1>and the swing vote was the newest justice, as you mentioned,

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<v Speaker 1>Brett Kavanaugh, who joined with the Court's liberal wing, which

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<v Speaker 1>is an unusual alignment so far, and he's sort of

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<v Speaker 1>signaled that in the oral arguments. We were very gratified

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<v Speaker 1>with the kinds of questions that Justice Kavanaugh was asking

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<v Speaker 1>because it made us think that he was going to

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<v Speaker 1>apply Illinois Brick the way the Court has always applied it,

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<v Speaker 1>which is in a very straightforward, very formalistic way, without

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<v Speaker 1>looking behind the transaction to the economics that Apple wanted

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<v Speaker 1>the Court to consider. Let's go back for just a

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<v Speaker 1>moment and tell us the issue in the case. So,

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<v Speaker 1>under the Supreme Court's Decision seven decision in Illinois Brick,

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<v Speaker 1>the only plaintiffs who have standing to sue a monopolist

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<v Speaker 1>are those who directly deal with a monopolist. And even

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<v Speaker 1>if they may pass on some portion of their injury

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<v Speaker 1>to downstream users, those downstream users don't have standing. The

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<v Speaker 1>first person to deal with a monopolist is the one

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<v Speaker 1>who has standing and can recover all the antitrust damages.

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<v Speaker 1>And here, as Justice Kavanaugh says in the very first

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<v Speaker 1>part of his decision, it's undisputed that iPhone owners bought

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<v Speaker 1>apps directly from Apple, who is the alleged monopolist. So

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<v Speaker 1>the way the Supreme Court has been deciding this issue

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<v Speaker 1>for more than forty years, it's the consumers who have

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<v Speaker 1>the standing to bring this claim. The other Trump appointee,

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<v Speaker 1>Justice Neil Gores, which wrote the descent, saying the ruling

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<v Speaker 1>exalts form over substance and to some degree justice course,

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<v Speaker 1>which is correct. The Supreme Court has consistently said that

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<v Speaker 1>the standing requirement under Illinois Brick is a formalistic rule.

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<v Speaker 1>In fact, a few years after Illinois Brick was decided,

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<v Speaker 1>in a case called Utiliccorp. The Supreme Court said, We're

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<v Speaker 1>going to apply this rule formalistically. We're not going to

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<v Speaker 1>be persuaded by any economic arguments. Even when the parties

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<v Speaker 1>agree that the first party purchaser suffered no damage passed

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<v Speaker 1>on all the injury to a downstream purchaser, we don't care.

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<v Speaker 1>It's the first person who deals with a monopolist who

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<v Speaker 1>we are going to recognize as the party withstanding. And

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<v Speaker 1>that's the way the Court has interpreted this rule all along.

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<v Speaker 1>Mark an organization that represented Facebook, Google and other tech

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<v Speaker 1>giants told the Supreme Court that allowing this lawsuit to

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<v Speaker 1>proceed would put quote these platforms services under threat. So

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<v Speaker 1>how important is this case to other platforms? I think

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<v Speaker 1>that Apple is unique in the way it runs the

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<v Speaker 1>App Store. It's the only online platform I know of

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<v Speaker 1>that has a perfect monopoly. I think what puts Apple

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<v Speaker 1>and its platform at risk is its monopolistic practices. It's

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<v Speaker 1>alleged monopolistic practices, not the way the Court has interpreted

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<v Speaker 1>Illinois Brick. It's been interpreting Illinois Brick that way since

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<v Speaker 1>it decided Illinois Brick in seven. It's the monopoly that

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<v Speaker 1>causes the problem for Apple. Now, you file this suit

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<v Speaker 1>first in two thousand seven, shows you how slowly the

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<v Speaker 1>reels of justice turn any other obstacles in your way

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<v Speaker 1>before you get to an actual trial. Well, sure, I'm

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<v Speaker 1>convinced that Apple is going to defend this case vigorously.

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<v Speaker 1>They have been for the last twelve years. We still

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<v Speaker 1>have to go through class certification on this case. We

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<v Speaker 1>have to do discovery. There's going to be expert battles

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<v Speaker 1>over damages. But the fundamental fact remains that we have

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<v Speaker 1>standing to bring the claim, and as Justice course, that's

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<v Speaker 1>made very clear in his opinion, we will be entitled

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<v Speaker 1>to recover all of the economic injury caused by the

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<v Speaker 1>overcharges for the iPhone Apple. What's the estimate of those damages? Well,

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<v Speaker 1>the size of the market is enormous. Is as you know,

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<v Speaker 1>Apple's revenue from from the app store is in the

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<v Speaker 1>billions of dollars a year. We have a class period

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<v Speaker 1>that begins in two thousand seven, so current it's twelve

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<v Speaker 1>years of over charges for iPhone apps, and I'm quite

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<v Speaker 1>sure that the damages in this case will be measured

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<v Speaker 1>in the billions of dollars as well. Any feeling as

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<v Speaker 1>to whether there might be a settlement as this goes on.

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<v Speaker 1>Apple's reputation is litigate, litigate, litigate. We'll see whether that

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<v Speaker 1>changes in this case because of the size of the

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<v Speaker 1>case and also the threat that an injunction has to

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<v Speaker 1>its business model, But for the time being, we intend

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<v Speaker 1>to litigate vigorously and all the way up to the jury.

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<v Speaker 1>Looking at this case in light of the line of

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<v Speaker 1>cases of the Supreme Court dealing with class arbitration class action,

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<v Speaker 1>does this stand for any broader principle or is it

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<v Speaker 1>just on its facts. No, I think it's actually a

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<v Speaker 1>pretty broad opinion, and I think the Court made clear

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<v Speaker 1>that they will protect consumers from monopolists. And what's unusual

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<v Speaker 1>about this case is the way Apple insinuated itself in

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<v Speaker 1>the middle of the transaction. You have app developers at

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<v Speaker 1>the beginning end, you have Apple in middle, and then

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<v Speaker 1>you have consumers at the far end of the transaction.

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<v Speaker 1>And the Court says, when a consumer deals with a monopolist,

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<v Speaker 1>we're going to protect the consumers if they're injured by

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<v Speaker 1>monopolistic practices. And I think that's a pretty broad principle.

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<v Speaker 1>You only have Justice Kavanaughs the swing vote here. It

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<v Speaker 1>seems like the other four justices, the conservative or the

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<v Speaker 1>business minded justices, were pretty firm in their camp. Well,

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<v Speaker 1>if if this one the other way, I'm sure Apple

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<v Speaker 1>would be calling it a victory. To five four affirmed

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<v Speaker 1>is five four firmed. I'll take the win when I

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<v Speaker 1>can get it, all right, We hear that, Thanks so much.

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<v Speaker 1>That's Mark Rifkin. He is the managing partner at Wolf

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<v Speaker 1>Hauldenstein and I represented the consumers in this class action.

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<v Speaker 1>Thanks for listening to the Bloomberg Law Podcast. You can

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<v Speaker 1>subscribe and listen to the show on Apple Podcasts, SoundCloud,

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<v Speaker 1>and on bloomberg dot com slash podcast. I'm June Brasso.

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