Aaarrgh, zombie! Dead Apple iOS monopoly lawsuit is reanimated

Appeals court breathes life into App Store legal challenge


A US Court of Appeals has resurrected a class-action lawsuit accusing Apple of monopoly behavior with its iOS App Store.

The case, Pepper et al v Apple, was sparked by Cupertino customers Robert Pepper, Stephen Schwartz, Edward Hayter and Eric Terrell, who were upset at Apple's stranglehold on software for their iThings. However, their lawsuit was thrown out by the California Northern District Court in December 2013 after a judge refused to allow the plaintiffs to challenge Apple's price structure and lock-in of devices to its App Store service.

More than three years after that verdict, an appeals court panel has reversed the decision [PDF] and ordered Apple to face the anti-trust allegations. The three-judge appeals court panel found the district court had erred in its decision that the plaintiff class – customers of Apple who used the App Store – would not have standing to sue for breach of antitrust laws.

The customers have alleged that Apple's handling of the App Store violated a pair of US antitrust laws with the decision to lock out unauthorized applications. They also alleged the pricing policy of taking 30 per cent of revenues discourages developers from writing software that competes with Apple's own, effectively fixing higher prices for customers on the software that does make it into the App Store.

Apple had countered that the plaintiffs had no standing to sue for antitrust violation because they were not direct customers, reasoning that they had bought the developers' apps, not an Apple product, when they made their App Store purchases. That argument had been upheld in 2013, triggering the appeal that brought Thursday's ruling to reverse the dismissal and revive the suit.

"We conclude that any error, if indeed there was error, in the district court's consideration of the merits of Apple's Rule motion to dismiss for lack of statutory standing was harmless," the panel wrote.

"We conclude further that Plaintiffs are direct purchasers of iPhone apps from Apple ... and that they therefore have standing to sue."

With the appeal upheld, the case will now be remanded back to the District Court and will proceed later this year. ®


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