A panel of judges sided with Apple Inc. on Wednesday, finding that the company raised serious questions on the merits of the district court’s determination that Apple violated California’s Unfair Competition Law. The injunction requiring Apple to remove a contractual provision of its app developer agreement is now stayed until the Ninth Circuit renders a decision on the antitrust cross-appeals.
Previously, Judge Yvonne Gonzalez Rogers denied Apple’s request to stay the injunction, doubling down on the court’s earlier finding that Apple’s anti-steering restrictions, rules barring third-party developers from communicating with customers, were anticompetitive and illegally restricted consumer choice. Combined with Apple’s “incipient antitrust violations,” the court decided to enjoin their further use. In its order denying the stay, the court also found that Apple’s irreparable injury arguments were “exaggerated,” and without evidentiary support.
Apple took its grievance to the Ninth Circuit, where the parties are preparing to brief their cross-appeals. Epic Games argued against a stay, contending, among other things, that Apple gloated about its victory at the trial court level and waived off the injunction as relatively trivial.
This week’s two page order cited concerns that the landmark ruling was inherently contradictory. The court questioned how Epic Games could have shown that Apple’s conduct violated state law without violating federal antitrust law.
The court drew on a principle articulated in a 2015 appellate case explaining that, “under California law[,] if the same conduct is alleged to be both an antitrust violation and an unfair business act or practice for the same reason—because it unreasonably restrains competition and harms consumers—the determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not unfair toward consumers.”
The panel also determined that Apple made a showing of irreparable harm and that the remaining factors favored staying part of the injunction until the Ninth Circuit issues a mandate. Epic is set to file its first cross-appellate brief on December 21. Apple’s is due January 20.
Epic is represented by Faegre Drinker Biddle & Reath LLP and Cravath, Swaine & Moore, while Apple is represented by Gibson, Dunn & Crutcher LLP.
