Will the Supreme Court Take Apple’s E-Book Appeal?

As expected, Apple attorneys this week confirmed that they will be seeking a Supreme Court review of Judge Denise Cote’s 2013 verdict finding them liable for a conspiracy to fix e-books prices. The question now is: will the Supreme Court take the case?

“I think, and have always said, that the Supreme Court taking the case is very unlikely,” says Christopher Sagers, law professor at Cleveland State University, and a close follower of the case. Sagers reiterated what he told PW this summer after an appeals court affirmed Cote's ruling: “It’s a fact case, and I can’t imagine what the circuit split will be,” he said.

Apple is a high-profile plaintiff, and this is a high-profile case. But that is not enough, Sagers explained, to get a case heard before the high court in the absence of compelling legal issues. Sagers told PW that there are thousands of cases each year where "brilliant counsel try to explain to the Court at length why their fact case isn't really a fact case” without success. The Supreme Court receives some 10,000 petitions each year, he adds, and only takes about 75-80 cases.

"It's not impossible," he says of Apple's chances. “But will there be a clerk in the cert pool willing to say that [Apple’s] arguments make this case something other than a fact case?" Apple is betting $450 million there is. And perhaps upping the chances the Court will take the case, Apple has brought on some major firepower to help with its appeal, hiring Seth Waxman, the 41st Solicitor General of the United States, and a familiar figure before the Supreme Court.

In its unsuccessful Second Circuit appeal, Apple attorneys argued that Judge Cote did in fact make a legal error, by finding Apple liable for a "per se" case of price-fixing (a "per se" case is a case where the restraint imposed on competition is condemned without examination of other market factors). In June of this year, a three-judge panel of the U.S. Court of Appeals for the Second Circuit strongly affirmed Cote’s "per se" handling of the case, calling the decision “amply supported and well reasoned.” But, in a headline-grabbing dissent, one member of the appeals panel, Judge Dennis Jacobs, sided with Apple.

Notably, Jacobs did not contest Cote's findings of fact in the case. But he argued that case law dictates that Apple's "vertical" publisher agreements cannot be seen as part of a per se "horizontal" conspiracy, and must instead be considered under the more stringent “rule of reason” framework. Under a rule of reason analysis, Jacobs says Apple's actions were justified, and the net result "pro-competitive." But most importantly, Jacobs' dissent includes the magic words for any cert petition: Citing cases from other circuits, he suggested that Cote's application of the "per se" standard has created a “circuit split."

In her majority opinion, however, judge Debra Ann Livingston rebutted Jacobs' dissent and stressed there is no circuit split. The “per se” condemnation in Apple’s case is correct, she noted, because it does not apply to Apple's vertical contracts with the publishers, she explained, but to Apple’s “uncontested” role in organizing the publishers’ conspiracy to raise e-book prices. And the Supreme Court, she adds, “has explicitly distinguished situations in which a vertical player organizes a horizontal cartel."

Interestingly, while Sagers thinks it is unlikely the Supreme Court will take the case, if it does, he says Apple actually has a strong chance of prevailing. “I would say that if the Court does decide to take this case, a fact case that has been litigated to final judgment on the merits and affirmed, that probably means there are at least four Justices prepared to reverse and make some new law,” he observed.

That observation echoes RoyaltyShare founder Bob Kohn, an attorney and appellant in the case, who told PW in June that he too believed that if the Court takes the case, Apple would likely prevail. “The Supreme Court has already cut back on the per se doctrine and may well entertain another opportunity to clarify that it does not apply in cases like this, where evidence of pro-competitive effects has been shown,” he said.

As PW first reported last Friday, Apple’s Supreme Court petition was due by the end of September. But this week Apple attorneys filed a motion requesting a 30-day extension that would give it until October 28 to file. If the Supreme Court ultimately rejects Apple’s petition for cert, its liability finding would be considered final under a 2014 settlement with 33 states and a consumer class, triggering $400 million in consumer rebates.