At Stake in “Apple v. Pepper”: Why the Supreme Court’s Direct-Purchaser Rule is a “Super-Precedent”

app storeOne of the more interesting cases the Supreme Court will hear in the new term is Apple, Inc. v. Pepper. We’ve blogged previously about the case here. Superficially, the Court will decide whether iPhone users who buy apps from Apple’s App Store may sue Apple for alleged antitrust violations, or whether only app developers may bring such claims. But more fundamentally, resolution of the case hinges on the continued viability of Illinois Brick Co. v. Illinois, which holds that only the direct purchaser of a good or service may sue an allegedly abusive monopolist for damages.

In February, two high-level officials in the Department of Justice’s Antitrust Division floated the possibility of asking the Supreme Court to abandon Illinois Brick’s direct-purchaser rule. But the Solicitor General, in the United States’ amicus brief, insists that the question is not properly joined in the case. If either the Respondents or their amici urge the Court to overturn Illinois Brick, they will face a high hurdle.

That’s because the pull of stare decisis is especially strong here. As the Illinois Brick Court emphasized, Congress is always free to legislate away the Court’s interpretation of the Clayton Act if it disagrees with it. Yet Congress has never done so.  While legislative inaction by Congress doesn’t always equal acquiescence, Congress’s long history of inaction here, combined with its deliberate amendments to § 4 of the Clayton Act, show decisively that Congress has ratified the direct-purchaser rule.

As WLF detailed in its amicus brief, Congress has long been well aware of Illinois Brick’s direct-purchaser rule. In the four decades since the Court decided Illinois Brick, no fewer than 17 bills have sought to repeal the direct-purchaser rule. But none of those bills has garnered so much as a floor vote in either chamber of Congress. Such “congressional silence, after years of judicial interpretation, supports adherence to the traditional view.” Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581, 594 (2004).

But that’s not all. Congress has not been shy about amending the Clayton Act; it has done so more than two dozen times over the past four decades. Yet it has never altered or repealed the statutory language in § 4 that was the basis for the Court’s direct-purchaser rule. In fact, Congress has twice amended § 4 itself, in 1980 and 1982, at the height of a “repeal-Illinois-Brick” frenzy. And the last of those amendments—the Foreign Sovereign Antitrust Recoveries Act of 1982—expressly overturned another of this Court’s decisions construing the very statutory language at issue in Illinois Brick. But in both amendments, Congress fully retained the statutory basis for the direct-purchaser rule.

Under the Supreme Court’s case law, those amendments give Illinois Brick special precedential force. Because Congress is presumed to know of the Supreme Court’s construction of statutory language, it “adopt[s] that interpretation when it re-enacts a statute without chang[ing it].” Lorillard v. Pons, 434 U.S. 575, 580 (1978).

So the record is clear. Congress has essentially ratified Illinois Brick. While it is true that any departure from stare decisis demands special justification, stare decisis has special force here. After 40 years of legislative acquiescence and deliberative amendments, the direct-purchaser rule is a “super-precedent.”

Also published by Forbes.com on WLF’s contributor page.

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