we'll hear argument first this morning in case seventeen two zero four apple versus pepper mr wall please the court the only damages theory in this monopolization action is rooted in a thirty percent commission that apple charges app developers and which allegedly causes those developers to increase app prices to consumers the case is barred by the courts of illinois brick doctrine because the developers pricing decisions are necessarily in the causal chain that links the commission to any consumer damages if the commission increases beyond th competitive level but apps developers do not change their apps prices consumers suffer no damages and app developers do change their prices to pass on some or all of the overcharge well that is precisely the are the app developers who by contract with apple are buying a package of services which include distribution and software intellectual property and testing and and so forth and then the plaintiffs in this case are the buyer the developers yes without a doubt the developers are the ones who in the first instance pay the thirty percent commission i think it's it is it is important to route the analysis in the common ground which has been conceded that the only damages theory is based upon that thirty percent commission that is charged by contract between apple and the developers and it is deducted from whatever price that the developer chooses to to set subject to only the minimum or sorry the first sand is from apple to the customer it's the customer who pays the thirty percent but there has always  been a transaction between apple and the developer before that which has the pricing decision of what the developer is going to do want to count of the thirty percent commission there is another rescue something more general lee about illinois brick that was a case of a vertical monopoly concrete block person to manufacture monopolizes the next into media market who then sells to a customer yes all right this is not quite like that this is dramatically different this is a closed loop it is a closed loop but in terms of the injury theory which is what is it if you're not claiming that thirty percent is their injury no they're they're claiming their injury is the suppression of a cheaper price those that have to be thirty percent they're not seeking thirty five percent of their sales they have to go out and prove it the next step how without this monopoly they would have paid less it could be as little as a penny or nothing or it could be something more but the point is that this close loop with apple as it spoke they are the first purchaser of that thirty percent market no they are not that if the first purchaser is clearly the app developer who by i would have thought it would have been man to trust for at least one hundred years what you do is you look to see who you claim is the monopolist to do the claims of the novelist up and if you pay more if that's true they can raise prices to some people lower them to others or suppliers and if you are injured because you paid them or the monopolist you can collect them just and if you're injured because they force your price down you're a supplier you can collect damages and oh deary i don't see anything in illinois brick that conflicts with everything in illinois brick what is a place with that the emphasis in all three of this court's decision on both pass on defenses and damages theories that's what the doctrine disallows it says that it says that if i don't mean to interrupt you but i don't want to miss the point i'm making if joe smith is from bill who bought from the monopolist then we have something indirect but if joe smith bought from the monopolist it is to write it that's a simple theory now i can't find in reason or in case law or in anything i've ever learned any trust anything that would conflict without and i want you used to tell me what what conflicts with that in this case is that the alleged monopolization which is over the distribution function allegedly first manifests in a thirty percent commission consumers do not pay the thirty percent commission there was an effort in that in the district court to try to argue that apple added that but that was abandoned so what we have here instead is a damage theory that runs through the independent pricing decisions of the app developers is your answer to justice brier depend on what you said that the alleged monopolization in the distribution function because i understood that the respondents now to be saying no that's wrong the alleged monopolization is in the apps themselves in other words the consumer says you have a monopoly on apps you might also have a monopoly on the distribution function which the app developers have to live with but you have a monopoly on apps which the consumers have to live with you know in responding to justice briar you said well it's because the alleged monopoly is the distribution function but i don't think that that's correct well two points just as kagan first of all it is correct the complaint repeatedly alleges that paragraph three eight and fifty three that that this is a case about about a distribution market it has always been a case about a distant you should market it necessarily is because there is no good faith allegation that apple actually monopolizes the apps software it is it is simply the pipeline the sale of the apps which is which is alternatively describing this case as either distribution or as the so called after market which is simply limiting that to s apps instead of the engineers their awful lot of words in this case that i tend to have trouble understanding one is two sided market and though there is a lot that you use so i go by simple analogy bill buys from the monopolist he is a direct purchaser if bill buys from sam who buys from of an op list is an indirect purchaser anyone can understand that and when i get into what i think of his jorgen i begin to think suppose i were you advising the united fruit company i have a great idea you won't have to torpedo the boat of your competitors anymore here's what you do what you do is you buy from the farmers and you tell the farmers what you will pay the banana farmers is a very low price plus thirty percent commission and then what you do is when you sell to banana consumers throughout the world you charge them that thirty percent commission which they say is a higher price and if you united fruit did not become a monopolist now i think i'm advising jay rockefeller john rockefeller and i give him the same advice and i give the same advice  which happened to be a distribution company and we have been well you see the point but the difference here is is that there is there is no third party intermediary that is setting the price and exercising its independent determination as to whether any or all of the initial overcharge which is some part or all of the commission is going to manifest itself in the abstract and that's why i started with the with with that the simple i would woods would say  you know the hypothetical of imagine the price today is the competitive price the thirty percent is the competitive price and it goes up by ten points tomorrow no consumer is injured unless the prices change the abstractions have to change and if they don't and the only change by virtue of a decision which implicates everything this court talked about in hanover hsu in illinois brick wall i think  question a bit because i mean the questions that have been put to you by my colleagues are really what was illinois brick about was it about a vertical supply chain or instead was it about a pass through theory now in the fact of illinois breckon indeed in the facts of all the illinois brick cases that we've discussed you had both so you didn't have to separate the two and now here you don't have both because this is not a vertical supply chain but there still is a pass through mechanism and so then the question is does illinois brick applied to that or not and i think what does to spierer was suggesting to you that as long as it's not that vertical supply chain and where the person is not buying from the monopolist itself here the person is transacting with the monopolist itself that that's what separates this case from illinois brick and makes it entirely different not withstanding that there's some kind of pass through mechanism involved i completely agree with you that that the key to this is deciding what illinois brick was about was it simply a formalistic case about vertical chains or was it about pass through and in answering that question i would begin with first of all with hand overshoot which is about a pass on defense and about the that the difficulty is in the the the potential  complication of any trust litigation to pass on defense and then the framing of the question in illinois brick by this court which said having already found that we will not allow it pass on defense we are now confronted with the question to whether allow pass on to be used often civilly it was one hundred percent about pass on the vertical chain was the factual setting of the case and indeed respondents argument would would have this court believe that the factual setting is the sum and substance of the court's reason that mr walker i ask you about what troubles me about your position and it is this illinois breck was not about the economic theory it was about the courts or the courts the basis for the decision was not economic theory as i read the cases the courts calculation of what makes for an effective and efficient way to ation scheme and maybe your answer to this question is that the  before us but i really wonder whether in light of what has happened since then the court's evaluation stands up and take the third point that it makes about that the direct the so called direct purchasers are the most efficient and most in the best position to sue if you look at this case how many app developers are there whose whose apps are sold at the apple center were tens of take that we do not take the absence of litigation as evidence of an oppressed developer community that cannot speak for itself these you know the fact of the matter is that nowadays major companies suing their suppliers those lines i take your point that illinois brick and overshoot might be read about the economic realities of the past through mechanisms being important rather than the contract formalities whether it's a sales agent or a or formal purchase between the manufacturer and the distributor and any trust normally accounts for economics rather than forms of contract i take your point but building on what justice alito had in mind illinois for purposes of this question but why should we build on illinois brick should we question illinois break perhaps given the fact that so many states have done so they've repealed it there haven't been a huge number of reported problems with indirect purchasers and direct purchasers receiving double recovery one of the problems illinois brick built on the other one which justice alito alluded to is direct purchasers don't always sue because there's a threat that monopolists will share the rents it is an enormously complicated and controversial issue what to do with with the illinois doctor and you can see this in the briefing in this case where yes you did have states saying repeal it you also had the plaintiff's bar through through the american anti trust institute say don't  repeal it there have been i think on the order of seventeen efforts in congress to to have have it changed not once has it ever gotten to the floor it is a quintessentially controversial political issue which belongs across the all section for jurisprudence which is the proximate cause principle of damages not going past the first step and then it dealt with that in the context of the potential for duplicative passthrough overcharge claims which are a unique problem in antitrust it's not a general problem of all damage theories but when you have overcharged cases and this gets to justice of course it does point about the potential for duplicate duplicative recovery it's not hypothetical it's automatic it's mathematical if the first purchaser gets one hundred percent of the overcharge because of hanover shoe anything else that is recovered that gets added on that is necessarily duplicative in vats what happens in the district courts you get the direct purchasers and the direct purchasers suing on whatever theory optimizes that there are levels of recovery i'd like to reserve the rest of my time and turn it over to the solicitor general of this point thank you counsel well general francisco mr chief justice and may it please the court i'd like to begin where mr wall left out and i think it addresses many of the questions that have been asked here at bottom illinois brick in hanover shoe properly understood prohibit passthrough theories and they reflect a basic application of the background principles of proximate cause that this court generally reads into statutes of this sort and in particular the rule that damages stop at the first step here the first step is the maker's pricing decision because the respondents the consumers are injured if and only if the yet makers decide to increase their prices in order to recoup gen and i have to say i find that a not intuitive argument because it's just seems to me that when you're looking at the relationship between the consumer and apple that there is only one step i mean i pick up my i phone i go to apple's app store i pay apple directly with the credit card information that i've supplied to apple from from my perspective i've just engaged in a one step transaction with apple and when i come in and say apple is a monopolist and apple is charging the super competitive price by by extracting a commission that it can only extract because of its market power i mean there's my one step right i understand that your honor but in proximate cause the issue is not transactional proximity the issue is proximity between the illegal conduct on the one hand here apple's monopolistic overcharge and the injury to consumers on the other hand here the higher prices and apple's monopolistic overcharge is not the direct cause of higher prices the direct cause of the higher prices is the app makers decision to increase their prices in order to recoup the oh how do i know that how do we know that given that apple really operates as a retail or in many respects here as just as right and points out and how do we know that thirty percent charge is not affecting the price well you don't the same way that any retailer that adds thirty percent would affect the ultimate price paid by the consume you don't know for sure but that's the whole point here because at makers set the final price they have a choice to make they either absorb the overcharge and keep prices the same in which case the consumers aren't harmed at all or they increased their prices to recoup the overcharge in which case the makers are also harmed because they face a drop in sales as a result of increased by consumers are harmed then too yes your honor and that's the whole point of illinois brick and hand over shoot when you've got part of the harm going to that initial party that's bearing the full brunt of the overcharge in the first instance because of its pricing decision that's the party that gets the whole queen but we have ambiguity about what an illinois brick means here and should not  ambiguity if there is such ambiguity be resolved by looking at the text of the statute for any person injured yes your honor and what i think that illinois brick reflects is the type of statutory interpretation this court is engaged in in a variety of cases including the rico cases including the lexmark cases where you interpret background principles of proximate cause to be built into the statute including the rule that damages stop at the first step does it make a difference general that that apple is influencing the prices here in other words this is you're suggesting that the app developers are just sort of setting these prices independently but i'll give you sort of two ways in which that's not true the first way is this ninety nine cent charge in which you might say well that doesn't matter because you know it's could be ninety nine cents or it could be a hundred dollars and ninety nine cents but in fact these are all the cost products for the most part so saying a price has to end with you the number ninety nine is saying a lot about the fact that you can't charge seventy seven cents or fifty five cents or thirty two cents so that's one and the other is the entire allegation here is that apple is truly a monopolist on both sides of the market it's able to dictate to developers whatever price structure it once and it's also able to dictate to consumers what the nature of the sale is going to be and in that event it  sure seems as though you know apple you know happened to set up this commission that puts it in the ambit of illinois brick but it could have done a thousand other things that are essentially the same that would have taken it out of the illinois brick rule sure and let me take those points in turn first the ninety nine cent pricing policy first thing i'll point out is it's not in the complaint but we'll put that to the side and assume that it's part of this case here i don't think it changes the fact that the that makers still control the overall price and to the extent that to the extent that respondents are harmed by that it's based on a past look if i go to an auction house and i have to bid in ten dollar increments nobody thinks the auction house is setting the price the bidders are still setting a price and here the respondent if you have to bid in ten dollar increment and in the true alternative places are three dollars five dollars and seven dollars right and indeed you are setting the price well that's my second point your honor here any injury is based on a pass through because that makers are either going to round up we're going to round down if the round down to the lower ninety nine cent price point the consumers aren't injured at all if the round up to the next ninety nine cent price point that consumers are injured as a result of a pass through theory and it's that intermediating pricing decision that we think that under the principles approximation was that the problem is that they're not measuring damages by that and i understand they're saying it's not the thirty percent it is why the price would be if we could buy apps outside of this closed loop and it could be theoretically a lot higher that they're saying the developers may have their own claim their damages likely have to stay within the thirty percent but we don't measure our damages by that so respectfully disagree with that and explaining kagan i think i can also answer the second part of your question the harm to the consumers here is that they have to pay higher prices for apps and the reason they have to pay higher prices for apps and justice kagan this goes to your question is because apple controls the pipeline that connects at makers on the one hand and i phone users on the other and the way they exploited that pipeline through their alleged monopoly is by charging that thirty percent commission so the only reason consumers are harmed here in the form of paying higher prices is because the app makers decide to increase their prices in order to recoup that commission and justice prior to your question the reason why this makes it different than your hypothetical of bill buys from sam and you have transactional proximity is because the question isn't proximity between the parties who are transacting with one another but proximity between the antitrust violation the thirty percent commission rather competitive or more restrictive than necessary practices alcoa for sure alcoa did not charge higher than competitive prices and that's why i learned hand said the easy life not necessarily higher prices is the reward often of monopoly now for force i would thought it's a matter for proof at the damages stage whether in fact apple assuming they prove it is a monopoly has extracted higher than competitive prices from those particular people the plaintiffs or whether they've just had the easy life no i don't think that's a stage route in this case so if you say right right right well i must win no so what i wanted to say is that for sure the illinois brick theory doesn't apply across the board but it does apply when somebody is bringing an overcharge theory as an illinois brick as in hanover shoe and has here the don't have we had trial on that your honor where you have that kind of overcharge theory what illinois brick says asks is under basic principles of proximate cause is there some party other than the monopolist that standing in between the plaintiff's injury in the form of higher prices and the monopolist violation in the form of the commission and whenever the price set or the ultimate price setter is somebody other than the monopol it's never the monopolists overcharge that is the direct cause of the injury but if the app developer if apple bought the apps from the app developer and then added thirty percent to it and sold it to the consumer you would agree that a claim could lie there correct your i want to make sure i understand the hypothetical if apple's flying the app from the app developer for a price right apple's then adding thirty percent to that price and selling it to the consumer the consumer alleges that apple's doing that as a result of monopolistic behavior claim why yes you can sue apple directly but you can't sue apple if  apple isn't the price setting party but the app maker is the price setting party and that's why it might finish the answer and that's why the key is who sets the price and it's very hard to manipulate our rule because under our rule you actually have to change the party that has the authority to set the final price and that's a fundamental change in the nature of the transaction itself thank you coun store as a result i phone owners paid apple more for apps than they would have paid in a competitive retail market or this court's precedents i phone owners have a cause of action under section four the apple for those overcharges the court of appeal should be affirmed for three reasons first illinois brick is a bright line rule that respondents easily satisfied second apple directed monopoly abuses at respondents so it's appropriate that respondents can sue apple for their damages as a result of those violations and third apple seeks to expand and modify priceline rule of illinois brick to die indisputable direct purchasers an antitrust remedy and to change the rule into a standard lists inquiry that will be hard to apply at the pleading stage now if i could return to the first point the direct purchaser rule is a bright line rule this court said so in illinois break and importantly a case that has not yet been discussed that today  in which the court said illinois brick is a bright line rule for direct purchasers not withstanding the economics that go into that utility corp was a case that protected the defendants who asserting that the who were asserting that the it was a break in the link at the chain this is case is really the flip side of that to protect plaintiffs who directly purchase from the alleged antitrust violator and are claiming damages as a result of that antitrust violation that there's there's one antitrust violation under your theory which is the increase of the thirty percent increase that apple imposes when it when it's when as you put it it sells the aft wrong and this is very important for the court to understand the antitrust violation here is the monopoly app store consumers cannot buy an apple anywhere other than apple's one hundred percent own happens when it comes to the product the thirty percent increase you're obviously saying the purchasers again under your theory of the apps are harmed by that and recover can recover damages for that and also that the developers are harmed by that and they can recover damages for it as well in other words to the extent is might be said that apple is a two sided market there so they're subject to suit on both sides of the market for a single antitrust  price increase that they are alleged to have imposed so mr chief justice i think that your question kind of gets to the core of a lot of the confusion here because by having a wholly owned monopoly appstore apple  able to distort the market at the supply chain and at the retail chain for consumers we representing consumer i phone owners are suing only for the damages that we incur that is the higher than what a competitive market price would be for apps a measure of damages is not necessarily the thirty percent the thirty percent is simply proof that apple is acting as a monopolist because it expired i understand i understand your claim on your side of the market but you do think that the developers have a claim as well don't you well i have no saying if i have it's not the same it is a different point for the same price increase those same i disagree with that mr chief justice food apples supplier of the apps if they have a claim it is that happened has distorted the market for the supply of apps in a way that hurts  developers profits their argument would be if we were suffering under the one monopoly store constraint we might be able to charge a different price lower than ninety nine cents and able to get a direct purchase from and i from i think you're just saying that the measure of damages would be different between the two sides of the market and but they would be different damages another word you're saying the consumer says i'm paying a higher price for the product it might be the entire thirty percent commission that might be some portion of the thirty percent commission that super competitive but paying a higher price for the product in the app developer says well i don't know that's irrelevant to me i don't have to buy the product what's relevant to me is fewer people are buying my apps and that represents some amount of lost profits but those two things are not i mean it is true that two people are being able to sue because apple is is a transaction with each of these people and each of them has a gripe against what the way apple has structured the market but the damages are entirely different one is a measure of lost profits which may or may not exist the other is i'm paying too much that's correct and that's some of the mr perry but is that the theory is that your climb yeah i thought this case was all about the thirty percent well that the other side has been trying justice alito to make the case all about the thirty percent but if you read the thirty percent has nothing to do with this the what the three percent is is an allegation that apple is monopolizing the sale of apps and we know that because they can extract thirty percent on every single sale which only a monopolist could do if thirty percent is not a measure of damages i'm not aware of any case from this court that says you have to plead antitrust damages with particularity but the because of the ability to extract a monopoly rent we can say in good faith that they we are paying more than we would pay then if a competitive market existed i think you'd agree that there can only be one monopoly rent and then the question becomes who is paying it and it might be spread partially but between direct purchasers and direct purchasers might be partially spread between the app makers and the purchasers of apps and desegregating that is the question that we've been wrestling with here i guess euro you say that illinois bridge has a bright line premised on the existence of a contractual relationship between the buyer the ultimate purchaser and the intermediate seller and that there has to be that relationship rather than a sales agency relationship like we have here but any trust doesn't usually depend upon such contractual formalities usually depends upon the underlying economics and i have a hard time distinguishing this case from illinois brick in the sense of the in the question of economic passthrough and the problems that it presents the possibility that the intermediate purchaser may absorb the monopoly read and not pass it a law that raises for me the question for the question why did up quickly a promise whether illinois brooke is correct right and you have an amicus that says it's not but you don't make that argument i'm really curious why you claim as far as not making that argument before this court so there's a whole formalistic actually it's seems to me that argument in the law of contracts rather than the law of any trust so help me out with economics economics we paid money apple never shared that money with any middleman illinois brick is a case about a middleman there's no middleman here problem that i'm stuck with ok if i could try to answer your question with a hypothetical and if the court would indulge me suppose at a competitive market the price for an app was ninety cents not ninety nine cents as apple charging it's ninety cents we would all agree i think that the consumer can sue for the nine cent differential between the monopoly i understand the ninety nine cent target let's put that aside all right now that we've got that aside look let's look at it from the developer's perspective if they had a claim if they had a claim and i'm not saying that they do but if they had a claim they would need to show the difference between the profits that they would have achieved in the monopoly appstore versus the profits they would have achieved at a competitive market price if that depends on three factors one is the difference in sales that they would achieve between ninety nine cents and ninety nine ninety cents the second is how their sales differences would affect their revenue and the third is whether the commission was thirty percent in a competitive market ok so if you take my hypothetical the damages for the developer there are three possibilities one is that it's zero if the commission went to twenty two percent in a competitive market the developer takes home seventy cents just as it does with apples thirty percent and in ninety nine cent monopoly market at twenty two percent commission the developer has zero damages it to develop or would have positive damages if the commission were zero because then the sustains damages of twenty cents the developer would make the ninety cents in the competitive market instead of the seventy cents that apple is now passing along by virtue of the monopoly market the damages would be negative though if in a competitive market the commission stated thirty percent because the very the benefits that would achieve by the monopoly price of ninety nine cent give the developer an extra eight cents per transaction so in that way mr chief justice the developer has a different claim it's based on its lost profits and that would be irrespective of whether the buyer of the app the consumer sustains damage for the nine cents in my hypothetical you can run these out under different you get your law clerks to run all the different scenarios it always works the same way through unless you're prepared to overrule it wasn't our case alcoa i think all you'd have to show is one they have monopoly power and to the achieved it through less restrictive  restrictive than necessary practices and of your burden in your case and and just of course it is quite right there's only one monopoly profit to be your and so you'd have a different question when you get to the damages of the things that we want to use in order to prove that they do have monopoly power the power to raise price significantly above a competitive level this is a charge is so all bloody bloody much money that's just a piece of evidence here and we'll worry later agreeing that there is only one monopoly profit in there as to who got what now if i stated that correctly yes you have just this prior i mean the the basic problem in this case as it comes to this court is who gets to complain about the monopoly app store we say as the buyers of the apps from the monopoly app store there is no form or function there  contract issues just as corsets to create a different form versus function problem we're paying the money they're keeping it and we think we're paying more than where we would pass to if their market was competitive they say would be different if apple purchased the apps from the app developer and then added thirty percent on the sale and why is that not different because the it's irrelevant and here's where we part company from the solicitor general it's irrelevant who sets the price so long as what the violation is here the monopoly caps store leads to higher prices that the consumers have to pay that's what the violation is that's how we are approximately are and so in the very hypothetical just as cavanagh that you posed to the solicitor general the solicitor general concedes we are direct purchasers in a situation where the app developer sets the price and they simply tack on thirty percent by virtue of their monopoly power it's no different here you think about it in in terms of what is actually going on suppose apple dropped its commission from thirty percent to twenty percent but it maintained the price restriction of a ninety nine cent app from the consumer perspective we're still overpaying for the app under that hypothetical apple simply gives the app developer more money but that doesn't affect the consumer welfare at all we're going to i'm sorry go ahead  with the general said that if in fact apple bought these products from suppliers pay them and then added thirty percent to you that that would be a classic antitrust violation  you're saying that's basically what they're doing here anyway but let's take the reverse let's say they collect that money from you and paid all of it over to the developer and then sold the developer give us thirty percent of that back at what you bend still be a direct purchaser so we would still be direct purchasers if under your hypothetical we're buying it from apple and then apple is engaging in the it form over function situations in terms of how the money gets moved around i think that the in that situation we are still directly purchasing and we're still able to complain about apple's violation and i think under your hypothetical just a sort of moral war we have to keep the idea that apple is still operating in monopoly appstore it's no different than if there was a grocery store chain that monopolized the sale of all vegetables if they if that is the only place you could buy vegetables we would say that that monopoly store outlet was able to control prices and affect output that's the client basically what's happening what i think just a sort of last question is it requires further exploration i mean are we in danger of incentivizing the restructuring of contracts here so that all that apple does or people like it is make you purchased directly from the app provider and then it then returns the profit to apple later represent the plaintiff's bar i represent the consumers in this case and the consumers in this case have no grief and no beef with illinois brick we think we are direct purchasers we satisfy the rule we come with in the bright line that's ok a with us what the court decides not trying to lead to do with illinois brick is obviously something where i think you go to a different situation if the case arises but on your other point i think it's the other side that is actually asking for the opportunity to use contracts in order to distort or we characterize matters in a way that evades the only brick bright line what will assume for the moment that i believe that the economics underlying the tos arrangements are very similar hard to distinguish i haven't yet heard you give me a good argument was i so let's just posit that that then it really is just about four isn't it no i think in that hypothetical i would be prepared to say if we were paying  the developer directly for the app and the app developer could set whatever price it wanted to set ok keep with me on that assumption the app developer operating in a free market can set whatever it wants to set and then an apple comes after the app to help and says hey you bought it that the consumer brought it to our store we want whatever we want that becomes not a problem with the consumer that becomes a problem between the developer a pricing control is really important to proximate cause that i beg your pardon so pricing control is really important approximate was pricing control is not porton a price to proximate cause in the sense that whether i think under direct proximate cause we're buying the app directly from the app developer remember a key part of my answer was the app developer can set that price competitively in a competitive market the arrangements happen between apple exercising its monopoly control through the app store and the supplier is not something we're approximately directed by europe at sort of your point was that the other side is putting form over the reality that's correct and they're doing it in a way that is particularly standard less because what the chording utility or upheld was that even when it is absolutely clear one hundred percent of the overcharge is going from the natural gas supplier through the utility directly to the consumer this court held no we're going to keep the bright line rule only the utility gets to complain about the natural gas over charge and it was that bright line rule that the court said is going to apply and the reason is exactly justice alito for the point that you made which is that it's about judicial administration at th pleading stage we're just trying to figure out who has the claim and who could complain about the antitrust violation here if asked really the consumers because we're the ones who are paying apple the money to receive the app and so to do justice kavanagh to finish off the point what the other side is essentially asking is that instead of having a bright line rule it's a very fuzzy rule because they don't have a test for what constitutes a passthrough they don't have a test that o plies when there is no middleman there is no middleman in this particular transaction it's directly between the i phone owner and apple and so you're going to have to figure out do they get a one ticket good for this case only they happen to be the largest company in the world or at least they were some weeks ago and they are able to extract monopoly pricing by virtue of a unique e commerce monopoly on their app store what concerns me about your argument is that it doesn't seem to be based on the way in which this claim was understood by the lower courts maybe they mis understood  it i mean the opening line of the order granting apple's motion to dismiss the second amended complaint by the district court the thrust of point of second and the complaint is that apple has engaged in the antitrust conduct by collecting thirty percent of the price i phone applications the district court dismissed it justice alito respectfully and went ok where can you point to me where in the ninth circuit's opinion they understood your claim in the way that you've characterized it this morning yeah they said on page twenty one a of the petition app i think that's the page that this is simply about a monopoly distribution and that it is a simple case as a result of fact if you look at the bottom distributor on the other apple is a distributor of the i phone apps selling them directly to purchasers through its app store and because of that we have standing to complain that they are the seller of the a that's it's a very simple case in that view through that lens now i accept justice alito that there have been a lot of arguments in this idea about the thirty percent has led to a certain lack of clarity but i think that the position we have written in our cent requirement in that theory is what in other words would your theory be the same if no such requirement existed or would it not it would be a still an overcharge case justice kagan because the theory economically is that if you are having to buy only from a monopoly you are paying more than you would if there was a discount apps warehouse or you could buy directly from the apps developer our assertion is that with multiple the price over charge and it also informs that contrary to apple's assertion they are not the agent of the apps developers i mean they put that in their contract that's that's where you get to just discourse which is form over substance problem because at ninety nine says they're telling the app developer we're foreclosing from you ninety nine percent of all pricing are well if it's not significant why didn't you included in the complaint because it's not significant from this perspective mr chief justice and that is that with and hot and a monopoly store the prices are overcharged her theory is relatively simple vapor out up the ninety nine cents in the blue  i think it's at page nine of their brief where they raised the ninety nine cent issue and as we were thinking about what the implications of that were became clear to us that that meant the app developer couldn't possibly be that's kind of another way to come up with a new theory litigation well  saying the broad of the mind not since it wasn't us were used to not order and review the first few well no our point was that when they raise the ninety nine cents is somehow proof that the developer actually gets to set the price we say no it's actually irrelevant for the reasons which i've already stated but secondly just wrong because if you're constraining what ninety nine percent of the pricing options are you know that that's what it is what it is but it also has economically of raising the price that's that the consumers hast have to pay it's going to add to your damages correct well it potentially it could potentially add to the damages or it could subtract from the damages were i don't know what we know is what the price is in a noncompetitive market and we will have to have experts that will assess what the damages would be in a competitive market or theory doesn't depend on the ninety nine cent or theory of damages or theory of the violation the theory of the violation is the wholly owned monopoly app store as the place to sell apps that is what the violation is here and how you calculate the damages is you look at what is the over charge based on what they've been are police is selling the app for versus what it would be sold for in a competitive market the antitrust scholars and i would direct you to page twenty three of their brief they go through a lot of the pricing scenarios that you have explored through hypotheticals here in a make very clear that is a matter of function what is happening here is that the monopoly seller of the apps here is extracting and overcharge from the purchasers who are direct purchasers of those apps if this case were to go to trial as of last action would every ap purchaser potentially be entitled to three times the thirty percent over charge or would it depend on the particular app your honor i i think that i don't know the answer to your question fully i'll be candid i have not thought about how the experts are actually going to try to prove it up what i would say though is that they're probably what will likely happen is that because there are apps that are sold at ninety nine cent a huge number of them are free but a huge number sold at ninety nine cents some other strata is sold for a dollar ninety nine some other strata is sold for two ninety nine or six ninety nine and i haven't put my head around to be perfectly honest exactly how you would carve up the damages on some sort of a pro rata basis but the idea of course of the clayton act is that trouble damages designed to deter antitrust violations and so this court has made very clear in its cases that the point of having that deterrence is to avoid having the monopolist in this case act in a way that it is not penalized for its monopoly behavior and if you were to suppose that it was just a single damages problem it would be easy for a monopolist to simply act and if they get caught they just simply pay over what they cost and damage but the idea behind the claim next trouble damages remedy is designed to deter actions just like this and that is why apple cannot point to another e commerce distributor that does what it does in every other instance as we point out in the red green there is an alternative to finding the product and in fact apple doesn't even do this with its own computer software and we have pleaded that in the complaint mr chief justice where we say that if you buy software you can buy it open source and you do not have to buy it through apple's monopoly chain so the i phone app monopoly app store is a unique feature of the e commerce setting apple has found ways using technology and contractual constraints to limit the opportunity of a competitive market to i think i need to begin with the experience i had in this case for its first nine years and that is it was about a thirty percent commission paragraph forty eight of the complaint is the key allegation which is the root of the damage theory which maintains that the thirty percent commission is a monopoly price it's called the monopolies price it's elsewhere call the super competitive price it is the root of the damages theory not just in part not just on the periphery but entirely  the brief in opposition at pages five and twelve make this unmistakably clear that at page five the brief in opposition states quote respondents seek damages based sole on the thirty percent markup so whatever other attributes of this case one may want to talk about that might contribute to the liability theory the injury theory of the damages theory is in their words soley about th the all of the relevant agreements with both developers and consumers state that there should be litigation in the northern district of galilee i know i know you don't but suppose he did if that were the case then this would be a matter for about that in this case the second point that i want to make is relates to this duplicative recovery possibility there is we never heard any suggestion prior to the respondents merits brief about potential los profits claims based upon monopsony answer to the contrary the theory throughout the life of this case is that developers if they sued would sue over the same thirty percent markup the brief in opposition twelve says any claim by the apps developers excuse me a claim by the absolute even if they had one would not overlap the thirty percent markup paid by ups purchasers rather it is a piece of the same thirty percent pie so going back to what is illinois brick about it is about not having that apportionment fight they admitted to that to the time that this case was on in this court's doorstep that this is all about and apportionment fight between the that asks is your damages theory a pass on theory focuses on what is of economic substance in here that's what the district court judge did in a patient but persistent manner she required them to say what is your theory and it in it j a one thirty seven a one forty three you see the transcript of the district court argument when when finally ajay one forty one they said or one forty three rather they said the theory is that because of the commission the developer would mark up the app that is a classic overcharge case now to be sure in a new setting it's a new world stage it's not the brick and mortar setting of the three cases that this case  that this court has decided before but it is the same economics that should have the same outcome prohibiting passthrough damages claims thank you counsel the case is submitted