22-01-27 Utah Et Al. Acb Iso Epic Games Against Apple

Case: 21-16506, 01/27/2022, ID: 12353946, DktEntry: 55, Page 1 of 35
No. 21-16506
IN THE
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
EPIC GAMES, INC.,

Plaintiff-counter-defendant-Appellant,
v.
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 SEAN D. REYES

350 N. State Street, Ste. 230 Attorney General of Utah
P.O. Box 142320 MELISSA A. HOLYOAK*
Salt Lake City, UT 84114 Solicitor General
(801) 538-9600 STANFORD E. PURSER
[email protected] Deputy Solicitor General
*Counsel of Record
Counsel for Amici States

Additional counsel listed with signature block
TABLE OF CONTENTS
TABLE OF AUTHORITIES ......................................................................ii
INTRODUCTION AND INTEREST OF AMICI STATES ....................... 1
SUMMARY OF THE ARGUMENT .......................................................... 2
ARGUMENT ............................................................................................. 5
I. The district court erred in holding that Section 1 of the

Sherman Act does not apply to “unilateral contracts.” ............... 5
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
II. The district court’s rule-of-reason analysis failed to balance

the overall competitive effects of Apple’s restraints. ................ 18
CONCLUSION ........................................................................................ 25
ADDITIONAL COUNSEL ...................................................................... 27
CERTIFICATE OF COMPLIANCE ........................................................ 29
CERTIFICATE OF SERVICE................................................................. 30
i
TABLE OF AUTHORITIES
Federal Cases
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
Copperweld Corp. v. Independence Tube Corp.,

467 U.S. 752 (1984)..................................................................... 3, 13, 14
ii
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
Morissette v. United States,

342 U.S. 246 (1952)................................................................................. 8
Nat’l Soc’y of Pro. Eng’rs v. United States,

435 U.S. 679 (1978)......................................................................... 12, 18
NCAA v. Alston,
141 S. Ct. 2141 (2021) ........................................................ 18, 19, 20, 21
NCAA v. Bd. of Regents,

468 U.S. 85 (1984) ................................................................................ 19
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
iii
15 U.S.C. § 15c........................................................................................... 1
Other Authorities
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
Maurice Wormser, The True Conception of Unilateral Contracts,

26 Yale L.J. 136 (1916) ........................................................................... 9
Restatement (First) of Contracts § 1 .................................................. 9, 10
Restatement (Second) of Contracts § 1 ........................................... passim
Samuel J. Stoljar, The False Distinction Between Bilateral and

Unilateral Contracts,
64 Yale L.J. 515 (1955) ......................................................................... 15
iv
INTRODUCTION AND INTEREST OF AMICI STATES
Amici curiae, the State of Utah and 34 other states, respectfully
submit this brief in support of plaintiff-counter-defendant-appellant Epic
Games, Inc.
Epic sued defendant-counter-claimant-appellee Apple, Inc. over Ap-
ple’s practices relating to its iOS App Store. Following a sixteen-day
bench trial, the district court ruled in favor of Apple on the nine counts
alleging violations of state and federal antitrust laws and in favor of Epic
on the remaining California unfair competition count. Epic’s flagship
video game Fortnite had more than 115 million registered players access-
ing Fortnite on an iOS device before Apple removed Fortnite from the App
Store. Each of the Amici States has consumers that use the iOS platform
and has an interest in ensuring a competitive marketplace for its con-
sumers.
Further, the attorneys general of the Amici States are authorized
by Congress to bring federal antitrust actions to protect their citizens
from the harmful effects of anticompetitive conduct. 15 U.S.C. § 15c.
Amici States thus have a strong interest in ensuring that federal courts
apply clear and effective standards for liability under the Sherman Act,
1
15 U.S.C. §§ 1 et seq., so that they may effectively enforce antitrust laws
in all aspects of the economy, including the smartphone industry which,
with hardware, products, and services, is approaching a trillion dollars
annually.
Accordingly, Amici States file this brief to explain why this Court
should reverse the district court’s order.
SUMMARY OF THE ARGUMENT
While the Amici States generally support Epic’s arguments to re-
verse the district court’s decision, the States’ brief focuses on just two of
those reasons.
First, the district court erred in deciding that Section 1 of the Sher-
man Act does not apply to a “unilateral contract.” That’s wrong under
settled canons of statutory interpretation. In relevant part, Section 1
prohibits “[e]very contract, combination, . . . conspiracy, in restraint of
trade.” The Act does not define “contract,” but the term had a broad, ac-
cepted common law meaning when the Act became law in 1890. Then, as
now, a unilateral contract was simply one of various types of contracts—
bilateral, implied, express, formal, informal—that were legally enforce-
able. Per rules of statutory construction, Congress adopted this common
2
law understanding when using the term “contract” in Section 1. Like-
wise, the interpretive canon requiring statutory terms be read in context
shows that Section 1’s broad terms—“[e]very contract” and “combina-
tion” or “conspiracy”— meant to capture a wide range of agreements that
could harm competition.
The district court’s interpretation also runs counter to Supreme
Court Section 1 jurisprudence. More than 100 years ago, the Supreme
Court emphasized that Section 1 embraced “every conceivable contract.”
The district court’s error, however, seems to stem from the Court’s later
discussion of wholly unilateral conduct—coordinated conduct among a
single company’s officers. A single firm cannot conspire for purposes of a
Section 1 violation because such coordinated conduct does not merge eco-
nomic powers of separate economic actors. Copperweld Corp. v. Inde-
pendence Tube Corp., 467 U.S. 752, 768 (1984). But unilateral conduct
of a single economic actor is different than unilateral contract between
separate economic actors.
Further, excluding contracts like Apple’s simply because Apple
“unilaterally imposed” the terms makes bad antitrust public policy. Not
only does it needlessly complicate the Section 1 analysis, it also creates
3
an antitrust paradox. Firms with sufficient market power can unilater-
ally dictate the terms of a contract. The district court’s holding blows a
hole through Section 1; paradoxically, firms with enough market power
to unilaterally impose contracts would be protected from antitrust scru-
tiny—precisely the firms whose activities give the most cause for anti-
trust concern.
Second, the district court also misapplied the rule of reason test by
never weighing the anticompetitive and purported procompetitive ef-
fects of Apple’s conduct. The whole point of rule of reason analysis has
always been to assess the challenged restraint’s effects on competition.
The Supreme Court has frequently reiterated that the rule of reason in-
volves weighing all the circumstances of the case to properly determine
the restraint’s net impact.
To be sure, the Supreme Court has sometimes described the rule
of reason analysis as a three-part burden shifting test. But those three
steps, the Court has emphasized, are not inflexible and do not substitute
for careful analysis based on the circumstances of each case. That kind
of careful balancing is crucial here because the district court found both
anticompetitive and procompetitive effects. Weighing the relevant facts
4
is therefore the only way to determine whether the challenged conduct
overall poses an undue restraint on trade in violation of Section 1.
As Epic points out, Apple amassed billions in supracompetitive
profits from one billion iPhone users. Without balancing, this type of im-
mense harm to consumers can go unanswered with just the slightest
showing of procompetitive benefit. The Court should require Apple to
account for its conduct under a complete rule of reason analysis.
ARGUMENT
I. The district court erred in holding that Section 1 of the

Sherman Act does not apply to “unilateral contracts.”
To establish liability under Section 1 of the Sherman Act, “a plain-
tiff must prove (1) the existence of an agreement, and (2) that the agree-
ment was an unreasonable restraint of trade.” Aerotec Int’l, Inc. v. Hon-
eywell Int’l, Inc., 836 F.3d 1171, 1178 (9th Cir. 2016). The district court
held that Epic could not satisfy element one (existence of an agreement)
because the Developer Product Licensing Agreement (DPLA) between
Epic and Apple was a “unilateral contract.” Order 142. Because Apple
had dictated the terms to developers—take it or leave it if Epic wanted
to distribute games on the iOS platform—the court held that it was not
a Section 1 contract under “antitrust jurisprudence.” Id.
5
A unilateral contract is one in which a promise is made in exchange
for an act. The district court wrongly found that the DPLA (which was
actually a bilateral contract of adhesion with exchange of promises by
both Apple and developers) was a “unilateral contract.” See infra Section
I.C. But regardless of this finding, the district court’s legal holding—that
“unilateral contracts” are exempt from Section 1—is wrong as a matter
of law: (1) Section 1 “contracts” include unilateral contracts under canons
of statutory interpretation; (2) excluding unilateral contracts from Sec-
tion 1 is inconsistent with Supreme Court precedent; and (3) an exception
for unilateral contracts or contracts of adhesion is bad public policy as it
needlessly complicates and impedes Section 1 enforcement of antitrust
violations.
A. Under rules of statutory interpretation, a Section 1

“contract” includes unilateral contracts.
Section 1 of the Sherman Act prohibits “[e]very contract, combina-
tion in the form of trust or otherwise, or conspiracy, in restraint of trade
or commerce among the several States, or with foreign nations.” 15
U.S.C. § 1. There is no question that Epic and Apple had a contract. The
79-page written and executed DPLA contained “complex and comprehen-
sive provisions addressing not only intellectual property rights, but those
6
relating to marketing, agency, indemnity, and myriad other considera-
tions.” Order 29. But because Epic or any other developer must accept
the DPLA’s “provisions (including the challenged restrictions) to distrib-
ute games on iOS,” the district court found that the DPLA is a “unilateral
contract” and not subject to Section 1. Id. at 142.
Even if Epic’s contract were correctly categorized as “unilateral,”
excising unilateral contracts from Section 1 offends the plain text of the
statute. Although scholars note that antitrust cases focus on economic
policy with sometimes little more “than a passing citation to the statutory
text,” 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, 620 (2005), that does not excuse courts from interpret-
ing the Sherman Act in accord with the actual terms of its text. Justice
Gorsuch expounded the sober duty of statutory interpretation: “If judges
could add to, remodel, update, or detract from old statutory terms in-
spired only by extratextual sources and our own imaginations, we would
risk amending statutes outside the legislative process reserved for the
people’s representatives.” Bostock v. Clayton Cnty., Georgia, 140 S. Ct.
1731, 1738 (2020).
7
Here, rules of statutory interpretation direct that Section 1 includes
unilateral contracts for two reasons. First, the term “contract” encom-
passed unilateral contracts at common law in 1890 when the Sherman
Act was adopted. The Sherman Act does not define the term “contract.”
Thus the “age-old principle” applies “that words undefined in a statute
are to be interpreted and applied according to their common-law mean-
ings.” Antonin Scalia & Bryan A. Garner, Reading Law: The Interpreta-
tion of Legal Texts 320 (2012). As Justice Jackson explained:
[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.
Morissette v. United States, 342 U.S. 246, 263 (1952). The term “contract,”
heavy laden with centuries of legal tradition, is a transplant of the com-
mon law that “brings the old soil with it.” Felix Frankfurter, Some Re-
flections on the Reading of Statutes, 47 Colum. L. Rev. 527, 537 (1947).
The common law recognized that legally enforceable contracts in-
cluded both bilateral and unilateral contracts. The most famous unilat-
eral contract hypothetical–enjoyed by law students everywhere—is
Wormser’s Brooklyn Bridge: “Suppose A says to B, ‘I will give you $100 if
8
you walk across the Brooklyn Bridge,’ and B walks—is there a contract?”
Maurice Wormser, The True Conception of Unilateral Contracts, 26 Yale
L.J. 136, 136 (1916). Professor Wormser noted that “unilateral contracts
are not infrequently met with in the practice of law,” id. at 142—they
were alive and well in the 19th century. Id. at 137-42 nn.2-7 (citing
cases); Bilateral and unilateral contracts, 1 Williston on Contracts § 1:17
(4th ed.) (distinction between bilateral and unilateral contracts fully rec-
ognized by 17th century).
More important, a unilateral contract at common law was simply
viewed as one of various kinds of contract. See Restatement (First) of
Contracts § 1 cmt. e (1932) (“The term contract is generic. As commonly
used, and as here defined, it includes varieties described as voidable, un-
enforceable, formal, informal, express, implied (see Comment a to 5) uni-
lateral, bilateral.”). For example, in Richardson v. Hardwick, the Su-
preme Court affirmed dismissal of a bill of complaint involving a unilat-
eral contract relating to the purchase of land. 106 U.S. 252, 255 (1882).
The appellant had failed to pay within the time limit: “In suits upon uni-
lateral contracts, it is only where the defendant has had the benefit of the
9
consideration for which he bargained that he can be held bound.” Id. (cit-
ing Jones v. Robertson, 17 L. J. Exch. 36; Mills v. Blackhall, 11 Q. B. 358;
Morton v. Burr, 7 Adol. & E. 23; Kennaway v. Treleavan, 5 Mees. & W.
501). Although the Court recognized the application of unilateral contract
principles, it still repeatedly referred to the written agreement as “a con-
tract” or “the contract” without distinction. Richardson, 106 U.S. at 252-
54. Accordingly, Section 1’s “contract” is best understood in 1890 to in-
clude unilateral contracts.
Second, context supports a broad definition of “contract” that in-
cludes a “unilateral contract.” “It is a fundamental canon of statutory
construction that the words of a statute must be read in their context and
with a view to their place in the overall statutory scheme.” Davis v. Mich-
igan Dep’t of Treasury, 489 U.S. 803, 809 (1989). The words surrounding
the term “contract” support Section 1’s application to the entire universe
of contracts. To begin, Section 1 expressly extends to “[e]very contract.”
15 U.S.C. § 1. The preceding word “every” is comparable to “any,” which
indicates “‘an expansive meaning,’ bringing within a statute’s reach all
types of the item (here, [contract]) to which the law refers.” Yates v.
10
United States, 574 U.S. 528, 555 (2015) (Kagan, J., dissenting); see 73
Am. Jur. 2d Statutes § 150 (2021) (“every” is a term of inclusion).
Next, in addition to “contract[s],” the statute applies to every “com-
bination in the form of trust or otherwise, or conspiracy.” 15 U.S.C. § 1.
By following “contract” with the words “combination” and “conspiracy,”
Congress sought to capture a wide range of potential agreements that
could restrain trade. Applying a “narrow” definition to contract “clashes
strongly” with the “sweeping” language on either side of the term. See
United States v. Rodgers, 466 U.S. 475, 480 (1984). Thus, context shows
that Congress wrote the Sherman Act with the broadest of brushes.1
In short, all roads of statutory interpretation lead to the most ex-
pansive meaning of “contract” possible that includes unilateral contracts.
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.
11
B. Excluding unilateral contracts from Section 1 “con-

tract” is inconsistent with Supreme Court precedent.
Interpreting Section 1 to exclude unilateral contracts is incon-
sistent with Supreme Court precedent. Adopted in 1890, the Act re-
sponded to the harmful effects of a wide variety of anticompetitive mech-
anisms used in the 19th Century. Standard Oil Co. v. United States, 221
U.S. 1, 50 (1911). The Court observed that Section 1’s language is “broad
enough to embrace every conceivable contract or combination which
could be made concerning trade or commerce or the subjects of such com-
merce.” Id. at 60 (emphasis added). It is because of this breadth that the
Supreme Court has long read Section 1 to prohibit only “undue” re-
straints of trade, applying a “rule of reason” analysis. Id. at 59-62; see
Nat’l Soc’y of Pro. Eng’rs v. United States, 435 U.S. 679, 688 (1978) (with-
out the rule of reason, Section 1 “would outlaw the entire body of private
contract law”).
As Justice Scalia explained, “[t]he term ‘restraint of trade’ in the
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
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
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
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
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
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
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 Apple gets to continue its substantial anticompetitive conduct based
on relatively feeble procompetitive justifications.
The whole purpose of rule of reason analysis is to assess the chal-
lenged restraint’s “actual effect on competition.” NCAA v. Alston, 141 S.
Ct. 2141, 2155 (2021) (internal quotation marks omitted). That goal has
remained preeminent since the rule’s inception more than a century ago.
See, e.g., Bd. of Trade of Chicago v. United States, 246 U.S. 231, 238
(1918) (stating the “[t]he true test of legality is whether the restraint
imposed is such as merely regulates and perhaps thereby promotes com-
petition or whether it is such as may suppress or even destroy competi-
tion”); Nat’l Soc’y of Pro. Eng’rs v. United States, 435 U.S. 679, 691 (1978)
(stating “the Court has adhered to the position that the inquiry man-
dated by the Rule of Reason is whether the challenged agreement is one
18
that promotes competition or one that suppresses competition”); NCAA
v. Bd. of Regents, 468 U.S. 85, 103-04 (1984) (explaining that the rule of
reason inquiry is “whether or not the challenged restraint enhances com-
petition”); State Oil Co. v. Khan, 522 U.S. 3, 10 (1997) (under rule of
reason the “finder of fact must decide whether the questioned practice
imposes an unreasonable restraint on competition”); Leegin Creative
Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 885 (2007) (rule of rea-
son analysis determines “whether a restrictive practice should be pro-
hibited as imposing an unreasonable restraint on competition” (internal
quotation marks omitted)).
Though the goal is “[a]lways” the same, Alston, 141 S. Ct. at 2151,
the scope of a rule of reason inquiry can vary depending on the nature of
the restraint. A quick look may suffice for conduct at the competitive
extremes—restraints either so obviously anticompetitive or harmless
that more detailed analysis is unnecessary. Id. at 2155-56. But for all
the other restraints “in the great in-between,” id. at 2155, rule of reason
analysis demands more. The test, the Supreme Court has repeatedly
stated, requires the fact finder to weigh “all of the circumstances of a
case” to assess the restraint’s competitive effects. Leegin, 551 U.S. at 885
19
(quoting Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 49
(1977)); see also Khan, 522 U.S. at 10 (rule of reason “take[s] into account
a variety of factors, including specific information about the relevant
business, its condition before and after the restraint was imposed, and
the restraint's history, nature, and effect”); Arizona v. Maricopa Cnty.
Med. Soc’y, 457 U.S. 332, 343 (1982) (stating “the rule of reason requires
the factfinder to [consider] all the circumstances of the case”). By “design
and function” the rule of reason’s balancing of all the circumstances “dis-
tinguishes between restraints with anticompetitive effect that are harm-
ful to the consumer and restraints stimulating competition that are in
the consumer’s best interest.” Leegin, 551 U.S. at 886.
To be sure, the Court has “sometimes” described the rule of reason
as a three-part burden-shifting test. Alston, 141 S. Ct. at 2160. Under
that framework, the plaintiff first proves the challenged restraint “has a
substantial anticompetitive effect”; the defendant must then show “a
procompetitive rationale for the restraint”; after which the plaintiff car-
ries the burden of proving there are “less anticompetitive” ways for de-
fendant to achieve the “procompetitive efficiencies.” Id. (internal quota-
tion marks omitted).
20
While acknowledging its occasional use of this test, the Supreme
Court emphasized that the three steps “do not represent a rote checklist,
nor may they be employed as an inflexible substitute for careful analy-
sis.” Id. The rule of reason should always fit the case, not the other way
around. Indeed, the “whole point of the rule of reason is to furnish ‘an
enquiry meet for the case, looking to the circumstances, details, and logic
of a restraint’” to assess whether it unduly harms competition. Id. (quot-
ing Cal. Dental Ass’n v. F.T.C., 526 U.S. 756, 781 (1999)).
The district court acknowledged most of this. The court even re-
cited Alston’s warning not to rigidly apply the three-part burden-shifting
analysis. See, e.g., Order 140-41, 143. Yet that’s exactly what the court
ended up doing—analyzing only the three steps. Id. at 141-150. The
court never weighed all the relevant facts in this case to make the critical
determination—whether the challenged restraints overall help or harm
consumers.
Admittedly, rigidly applying the three-part test without any bal-
ancing may not matter much in most antitrust cases where the plaintiff
fails the first step and can’t show a substantial anticompetitive effect.
See Alston, 141 S. Ct. at 2161 (noting amicus brief asserting that courts
21
decided 90% of antitrust cases on this ground over the past 45 years). If
there are no anticompetitive effects, there’s nothing to balance against
the restraint’s purported benefits, and no possible Section 1 violation.
But that’s not the situation here. The district court concluded that
the challenged restraints had anticompetitive effects and some procom-
petitive justifications. Order 143-47, 149-50. The court then reached the
third step and determined that Epic had not shown adequate less re-
strictive alternatives Apple could use. Id. at 147-49, 150. So the court
stopped there and held that the challenged restraints did not violate Sec-
tion 1. Id. at 149, 150.
That truncated analysis, however, did not fully address the rule-
of-reason’s purpose—to “distinguish[] between restraints” that harm
consumers and those that help. Leegin, 551 U.S. at 886. That’s why
weighing all the circumstances remains critical, so the court can deter-
mine the restraint’s overall competitive effects. In a case like this—with
anticompetitive and purported procompetitive effects—the absence of an
adequate less restrictive means cannot logically be the deciding factor.
22
As one perceptive district court put it, “[i]f no balancing were re-
quired at any point in the [rule of reason] analysis, an egregious re-
straint with a minor procompetitive effect would have to be allowed to
continue, merely because a qualifying less restrictive alternative was not
shown.” In re NCAA Athletic Grant-in-Aid Cap Antitrust Litig., 375 F.
Supp. 3d 1058, 1109 (N.D. Cal. 2019), aff’d, 958 F.3d 1239 (9th Cir.
2020), aff’d sub nom. NCAA v. Alston, 141 S. Ct. 2141 (2021).
That is not and never has been the law. Nor should it be. It would
facilitate what Section 1 forbids—undue restraints of trade. Gabe Feld-
man, The Demise of the Rule of Reason, 24 Lewis & Clark L. Rev. 951,
954 (2020). (“By allowing restraints that are collateral to relatively small
procompetitive aims but are overwhelmingly net anticompetitive, the
[less restrictive alternatives] formulations create problems that may
neuter the competition-protecting function of antitrust law.”).
The Ninth Circuit, in line with the Supreme Court’s precedent, has
required balancing as part of the rule of reason analysis—where a plain-
tiff has not met its “burden of advancing viable less restrictive alterna-
tives,” the court “must balance the harms and benefits of the [challenged
23
restraints] to determine whether they are reasonable.” Cnty. of Tu-
olumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1160 (9th Cir. 2001); see
also Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1413 (9th Cir. 1991) (“Fi-
nally, the court must weigh the harms and benefits to determine if the
behavior is reasonable on balance.”); L.A. Mem’l Coliseum Comm’n v.
NFL, 726 F.2d 1381, 1391 (9th Cir. 1984) (stating rule of reason requires
“a balancing of the arrangement’s positive and negative effects on com-
petition” (internal quotation marks omitted)). The Court should reverse
and require the district court to follow suit.
Epic’s brief highlights what a proper balancing test would look like
in this case. And Amici States have a significant interest in seeing that
the test occurs. Apple’s conduct has harmed and is harming mobile app-
developers and millions of citizens within the Amici States’ boundaries.
Meanwhile Apple continues to monopolize app-distribution and in-app-
payment solutions for iPhones, stifle competition, and amass su-
pracompetitive profits within the almost trillion-dollar-a-year
smartphone industry. Apple must account for its conduct under a com-
plete rule of reason analysis.
24
Finally, endorsing the district court’s approach here could frus-
trate future enforcement actions in the Ninth Circuit. By stopping at the
less-restrictive means inquiry and failing to balance the overall compet-
itive effects, the district court’s analysis “morph[s] the role of antitrust
law from an ex ante deterrent of net anticompetitive behavior to an ex
post regulator of procompetitive business decisions.” Feldman, The De-
mise of the Rule of Reason, 24 Lewis & Clark L. Rev. at 954. Firms with
the most egregious anticompetitive behavior could escape liability by
showing only the slightest procompetitive benefit.
CONCLUSION
For the foregoing reasons, the district court’s order should be re-
versed.
25
DATED this 27th day of January, 2022.
Respectfully submitted,
/s/ Melissa A. Holyoak

MELISSA A. HOLYOAK
Solicitor General
SEAN D. REYES
Attorney General of Utah
STANFORD E. PURSER
Deputy Solicitor General
Office of the Attorney General
160 E. 300 S., 5th Floor
Salt Lake City, UT 84114
(801) 366-0260
26
ADDITIONAL COUNSEL
TREG R. TAYLOR THEODORE E. ROKITA

Attorney General Attorney General
State of Alaska State of Indiana
LESLIE RUTLEDGE THOMAS J. MILLER

State of Arkansas State of Iowa
PHILIP J. WEISER DANIEL CAMERON

State of Colorado State of Kentucky
WILLIAM TONG JEFF LANDRY

State of Connecticut State of Louisiana
KATHY JENNINGS BRIAN E. FROSH

State of Delaware State of Maryland
KARL A. RACINE MAURA HEALEY

District of Columbia Commonwealth of Massachusetts
ASHLEY MOODY DANA NESSEL

State of Florida State of Michigan
LAWRENCE WASDEN KEITH ELLISON

State of Idaho State of Minnesota
KWAME RAOUL AUSTIN KNUDSEN

State of Illinois State of Montana
27
DOUG PETERSON ELLEN R. ROSENBLUM

State of Nebraska State of Oregon
AARON FORD JOSH SHAPIRO

State of Nevada Commonwealth of Pennsylvania
JOHN M. FORMELLA PETER F. NERONHA

State of New Hampshire State of Rhode Island
ANDREW J. BRUCK ALAN WILSON

State of New Jersey State of South Carolina
HECTOR BALDERAS JASON R. RAVNSBORG

State of New Mexico State of South Dakota
LETITIA JAMES KEN PAXTON

State of New York State of Texas
WAYNE STENEHJEM THOMAS J. DONOVAN, JR.

State of North Dakota State of Vermont
DAVE YOST BOB FERGUSON

State of Ohio State of Washington
28
CERTIFICATE OF COMPLIANCE
This document complies with the word limit of Fed. R. App. P.
29(a)(5) because, excluding the parts of the document exempted by Fed.
R. App. P. 32(f), this document contains 4,856 words.
Dated: January 27, 2022

Melissa A. Holyoak
Solicitor General
29
CERTIFICATE OF SERVICE
I certify that on January 27, 2022, I caused service of the forgoing
brief to be made by electronic filing with the Clerk of the Court using
the CM/ECF system, which will send a Notice of Electronic Filing to all
parties with an email address of record, who have appeared and con-
sent to electronic service in this action.
Dated: January 27, 2022

Melissa A. Holyoak
Solicitor General
30

22-01-27 Utah Et Al. Acb Iso Epic Games Against Apple

Uploaded by

Copyright:

Available Formats

22-01-27 Utah Et Al. Acb Iso Epic Games Against Apple

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

22-01-27 Utah Et Al. Acb Iso Epic Games Against Apple

Uploaded by

Copyright:

Available Formats

What is the main argument of the amici states?

What is the main argument of the amici states?

What precedent is cited regarding unilateral contracts and Section 1 of the Sherman Act?

What precedent is cited regarding unilateral contracts and Section 1 of the Sherman Act?

Case: 21-16506, 01/27/2022, ID: 12353946, DktEntry: 55, Page 1 of 35

EPIC GAMES, INC.,

On Appeal from the United States District Court for the

BRIEF OF UTAH AND 34 OTHER STATES AS

Office of the Attorney General SEAN D. REYES

Counsel for Amici States

TABLE OF AUTHORITIES ......................................................................ii

INTRODUCTION AND INTEREST OF AMICI STATES ....................... 1

SUMMARY OF THE ARGUMENT .......................................................... 2

I. The district court erred in holding that Section 1 of the

A. Under rules of statutory interpretation, a Section 1

B. Excluding unilateral contracts from Section 1 “contract” is

C. Excluding unilateral contracts or contracts of adhesion from

II. The district court’s rule-of-reason analysis failed to balance

ADDITIONAL COUNSEL ...................................................................... 27

CERTIFICATE OF COMPLIANCE ........................................................ 29

Abramski v. United States,

Aerotec Int’l, Inc. v. Honeywell Int’l, Inc.,

Albrecht v. Herald Co.,

Arizona v. Maricopa Cnty. Med. Soc’y,

Bd. of Trade of Chicago v. United States,

Bhan v. NME Hosps., Inc.,

Bostock v. Clayton Cnty., Georgia,

Business Elecs. Corp. v. Sharp Elecs. Corp.,

Cal. Dental Ass’n v. F.T.C.,

Cleveland v. United States,

Cnty. of Tuolumne v. Sonora Cmty. Hosp.,

Continental T.V., Inc. v. GTE Sylvania Inc.,

Copperweld Corp. v. Independence Tube Corp.,

Davis v. Michigan Dep’t of Treasury,

In re NCAA Athletic Grant-in-Aid Cap Antitrust Litig.,

L.A. Mem’l Coliseum Comm’n v. NFL,

Leegin Creative Leather Prods., Inc. v. PSKS, Inc.,

Morissette v. United States,

Nat’l Soc’y of Pro. Eng’rs v. United States,

NCAA v. Bd. of Regents,

Standard Oil Co. v. United States,

State Oil Co. v. Khan,

United States v. Rodgers,

Yates v. United States,

15 U.S.C. § 1 .................................................................................... passim

73 Am. Jur. 2d Statutes § 150 (2021) ...................................................... 11

Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of

Bilateral and unilateral contracts,

Felix Frankfurter, Some Reflections on the Reading of Statutes,

Gabe Feldman, The Demise of the Rule of Reason,

Maurice Wormser, The True Conception of Unilateral Contracts,

Restatement (First) of Contracts § 1 .................................................. 9, 10

Restatement (Second) of Contracts § 1 ........................................... passim

Samuel J. Stoljar, The False Distinction Between Bilateral and

INTRODUCTION AND INTEREST OF AMICI STATES

Amici curiae, the State of Utah and 34 other states, respectfully

submit this brief in support of plaintiff-counter-defendant-appellant Epic

Epic sued defendant-counter-claimant-appellee Apple, Inc. over Ap-

ple’s practices relating to its iOS App Store. Following a sixteen-day

on the remaining California unfair competition count. Epic’s flagship