9th Circuit's Decision in Apple's Favor Modifies Meaning of Overt Act: Amicus Brief

A 9th U.S. Circuit Court of Appeals panel 2-1 decision in Apple's favor in SaurikIT’s antitrust case against the tech giant “modifies what constitutes an overt act,” said the Committee to Support the Antitrust Laws (COSAL) in an amicus brief Monday (docket 22-16527) in support of SaurikIT's petition for rehearing and rehearing en banc (see 2401190065).

SaurikIT, owner of the Cydia app store, a rival to Apple’s App Store, alleged in a 2020 complaint that the iPhone maker was violating antitrust law in the app distribution and payment processing markets. U.S. District Judge Yvonne Gonzalez Rogers rejected most of Cydia’s claims as time-barred, based on conduct that occurred in 2008.

The district court ruled all of SaurikIT’s claims except for technical changes Apple made in 2018 and 2019 were barred by the statute of limitations, but SaurikIT argues Apple’s entering into agreements, and enforcement of agreements, during the limitation period are “overt acts in support of a continuing violation of antitrust laws.” The district court “erred” in refusing to accept “the well-established principle that new agreements and enforcement are overt acts that restart the statute of limitations,” SaurikIT said in the opening brief of its appeal (see 2301130035).

In its amicus brief Monday, COSAL asserted that the panel’s order that exclusionary conduct is immune from a lawsuit if it’s not prosecuted in the first four years of its first occurrence -- “no matter how long it continues or how many market participants it harms, so long as the continuing conduct is sufficiently similar to the original conduct” -- does “serious violence to the enforcement of the antitrust laws against cartelists and monopolists.”

The logical implications of the panel’s order “lead to incorrect results under Ninth Circuit law regarding what constitutes an overt act sufficient to restart the statute of limitations for antitrust claims,” said the brief. By requiring SaurikIT to “go above and beyond Rule 8 pleading requirements and resolve in its pleadings a highly factual dispute that ought to be reserved for summary judgment, the Panel increased pleading requirements, in contradiction of the law of this Court,” it said.

An exception to the general rule requiring suits to be brought within four years of accrual is that a plaintiff “may bring suit for a ‘continuing violation’ that extends beyond those four years if the defendant completed an 'overt act’ during the four-year limitations period, and ‘restart[ed]’ the clock,” said the brief, citing Samsung Electronics v. Panasonic. The "continuing violation standard" is meant ‘to differentiate those cases where a continuing violation is ongoing from those where all the harm occurred at the time of the initial violation, it said.

The district court and the panel imposed a “novel requirement” that SaurikIT had to demonstrate “Apple’s use of consumer warranty agreements and iOS developer agreements were overt acts: that Apple’s conduct had evolved or changed over time,” the brief said. In dismissing SaurikIT’s antitrust claims, the district court concluded that to qualify as an overt act, Apple’s alleged misconduct within the limitations period had to “differ from what Apple [wa]s alleged to have done starting in 2008 and 2009,” it said.

The panel also reasoned that “anticompetitive contractual agreements must change during the limitations period to establish continuing violations,” said the brief. In affirming the district court’s decision, the panel “upturned established Ninth Circuit precedent to hold that new conduct does not amount to an overt act if it relates back to an agreement outside of the limitations period,” the brief said. “The Panel supplanted the continuing violation doctrine with its novel evolving violation doctrine,” it said.

That ruling alters the established 9th Circuit law “that imposing contracts on new products or enforcing agreements entered into prior to the limitations period constitutes new overt acts that cause new injuries,” the brief said. It creates an “unworkable standard that will preclude valid antitrust claims that would otherwise be permitted in this Circuit,” it said. If left “uncorrected,” the panel’s decision “will impede victims’ ability to enforce the antitrust laws against ongoing, longstanding instances of anticompetitive conduct,” it said.