Apple, Inc. v. Pepper

Whether consumers may sue for antitrust damages anyone who delivers goods to them, even where they seek damages based on prices set by third parties who would be the immediate victims of the alleged offense.

In 1977, the Supreme Court held that damages in antitrust disputes were, not available to indirect consumers claiming “pass-through” damages. Illinois Brick Co. v. Illinois, 431 U.S 720 (1977). However, the rise of electronic marketplaces has muddled this concept. Apple sponsors the App Store and charges developers a 30% commission on all apps sold through the store. A class of consumers alleged monopolization of app distribution by Apple and inflated consumer prices caused by Apple’s commission charge. The district court, adhering to Illinois Brick, dismissed the action holding that Plaintiffs impermissibly sought pass-through damages. The Ninth Circuit reversed, holding that consumers may sue whoever delivers goods to them, regardless of whether they seek pass-through damages or not. The Supreme Court granted certiorari to determine whether consumers may sue for antitrust damages anyone who delivers goods to them, even where they seek damages based on prices set by third parties who would be the immediate victims of the alleged offense. Petitioner argues that the circuit split caused by the distributor function rule of the Ninth Circuit must be resolved because of its broad implications for the ever-growing electronic marketplace. Additionally, Petitioner asserts that the decision of the Ninth Circuit would allow for duplicative recoveries by both direct consumers claiming immediate harm and indirect consumers claiming pass-through damages in direct conflict with the Supreme Court’s decision in Illinois Brick.