[00:00:00] Speaker 00:
Case number 21, that's 1778.

[00:00:03] Speaker 00:
State of New York et al, at balance, versus Medipat, Torrance, Inc.

[00:00:07] Speaker 00:
Ms.

[00:00:08] Speaker 00:
Underwood for the at balance.

[00:00:09] Speaker 00:
Mr. Farr, amicus curiae for the United States.

[00:00:13] Speaker 00:
Mr. Banner for the empathy.

[00:00:17] Speaker 04:
Ms.

[00:00:17] Speaker 04:
Underwood, good morning.

[00:00:24] Speaker 03:
May I please record Barbara Underwood for the state.

[00:00:29] Speaker 03:
46 states,

[00:00:31] Speaker 03:
And DC and Guam have alleged that Facebook, now Metta, has used its monopoly power to buy or bury potential competitors.

[00:00:41] Speaker 03:
And in CEO Mark Zuckerberg's words, to build a competitive moat around itself in violation of the antitrust laws.

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It did this through a course of conduct that involved acquiring some potential competitors and also requiring any app that wanted to use the Facebook platform

[00:01:00] Speaker 03:
to avoid conduct Facebook deemed potentially competitive.

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As a result, it has stifled competition and denied consumers the improvements in service and other benefits that competition provides.

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The states bring this action to protect the public from the continuing harm caused by this conduct.

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In dismissing the complaint without discovery, the court below made three basic errors.

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It applied latches to bar the acquisition-based claims of the sovereign states, despite the longstanding principle of equity that a sovereign suing to protect public rights is not subject to latches.

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It wrongly concluded that many of the restrictions Facebook placed on apps were lawful and that any unlawful acts were somehow beyond the scope of injunctive relief.

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And it ignored the fact that the states allege a course of conduct.

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in which each act reinforces the competitive effects of the others.

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I'd like to start by explaining why LATCHES doesn't bar the state's acquisition-based challenges, and then explain why the other exclusionary conduct states an antitrust claim that warrants injunctive relief, whether considered alone or as part of a course of conduct.

[00:02:17] Speaker 03:
So the doctrine of LATCHES does not apply to this action brought by the sovereign states.

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And even if it did, it wouldn't justify this dismissal.

[00:02:27] Speaker 02:
Do you agree that the states are proceeding as what the Supreme Court has described as quasi sovereign capacity, not a fully sovereign capacity?

[00:02:38] Speaker 03:
No, what I would say is that the harm is a quasi that they're seeking to redress is a quasi sovereign harm.

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The state in a parent's action doesn't sue solely for the injuries to individuals, but rather for harm to individuals when that harm also harms the state.

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But the lawsuit is a fully sovereign act.

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Only the sovereign can do it.

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And so the equitable doctrine of latches shouldn't cut off the ability of the sovereign states to perform their fundamental duty to protect their residents.

[00:03:15] Speaker 02:
But the Supreme Court described

[00:03:18] Speaker 02:
this parent's patriotic posture as quasi sovereign, even though it acknowledged that there were sovereign interests involved.

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And then the Supreme Court has further distinguished that from state acting as a sovereign enforcing its own law.

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Well, it's different from a state enforcing its own laws.

[00:03:42] Speaker 03:
Yes, but the state

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has to act as a sovereign to bring this action.

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It is redressing a quasi-sovereign injury.

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It does not stand exactly and identically in the same position as the United States, but it is performing a crucial sovereign law enforcement function that is different from a private action, complementing the federal government's role.

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And like the US, when performing that function, it should not be

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subject to latches.

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If we were to agree with you that the district court misapplied latches at the motion to dismiss stage, we wouldn't have to reach the first issue.

[00:04:26] Speaker 02:
I'm trying to do the end of that.

[00:04:27] Speaker 02:
If we agreed with you that the district court misapplied latches at the motion to dismiss stage, then we wouldn't have to resolve that first question as to whether or not latches applies

[00:04:40] Speaker 03:
to states, because even if it did, um, the district court here, if we were to follow that, if I understand your question, it's even if latches could in principle apply to the state, it provides no basis to dismiss this complaint as a matter of law on this motion to dismiss.

[00:05:03] Speaker 03:
And therefore you don't have to reach the more general question.

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to do that.

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And I could talk about that if that would be helpful.

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Latches requires, assuming latches is capable of being applied to the states here, it would require both unreasonable delay by the plaintiffs and prejudice or harm to the defendants from the delay.

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And neither one is present here.

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I'd like to start with prejudice because I think it's the easiest.

[00:05:36] Speaker 03:
There was no harm

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to Facebook from the states filing their complaint in 2020 instead of a few years earlier.

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And that's what's at issue here.

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Prejudice not from the fact of the complaint, but from its timing.

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And that ruling is wrong.

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for at least three reasons.

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One, the trial court invoked a presumption of prejudice from the simple lapse of time.

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But this court requires evidence, not presumptions.

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So as Your Honor said, it's not really appropriate to resolve that at the motion to dismiss stage.

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Also, the court relied on allegations in the complaint that Facebook stated an intent to integrate these acquired companies

[00:06:22] Speaker 03:
relied on that as a basis for finding prejudice, but the court ignored the contrary allegations that Facebook terminated or never started implementing that plan.

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These are questions of fact.

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The complaint doesn't on its face support the finding of prejudice.

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Again, we take evidence beyond the complaint to determine the fact.

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And finally, Facebook is facing a parallel suit brought by the Federal Trade Commission and not barred by latches.

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challenging the same acquisitions and seeking effectively the same relief.

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That complaint was filed at the same time in 2020 as the state's complaint.

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As a result of the FTC suit, the acquisitions here are not in repose, the same remedies are available, and Facebook can point to no incremental harm from the timing

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of the state's filing in 2020.

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Well, the district court always has discretion whether to issue a permanent injunction or not.

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And many of the factors that go into the exercise of that discretion overlap with the question of latches.

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You would agree that simply because there's been a violation doesn't automatically lead to the propriety of issuing a permanent injunction.

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You would agree with that, would you not?

[00:07:42] Speaker 03:
I would agree with that, but we're at the motion to dismiss stage where we where the facts that would be needed either.

[00:07:49] Speaker 05:
Well, even at the motion to dismiss stage, the district court could evaluate the situation and say, for example, as Judge Boasberg did with respect to platform claims, there's nothing I can do at this stage to undo the harm by issuing an injunction.

[00:08:06] Speaker 05:
And therefore I dismissed those claims.

[00:08:08] Speaker 05:
Well, that was his reasoning, was it not?

[00:08:13] Speaker 03:
That was his reasoning as not as the latches as to the platform.

[00:08:17] Speaker 05:
Exactly.

[00:08:18] Speaker 05:
Well, that's my point.

[00:08:19] Speaker 05:
My point is that, uh, that simply because the FTC has brought an action doesn't mean that the FTC, even if it prevailed on the merits would be entitled to injunctive relief.

[00:08:30] Speaker 03:
No, and it doesn't mean we would either.

[00:08:32] Speaker 03:
But what I'm saying is there is no incremental prejudice.

[00:08:35] Speaker 03:
This is on the latches question from our bringing our claim at the same time.

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which Latches would say is too late.

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There's no prejudice from that.

[00:08:45] Speaker 03:
The same, the issues you've described would be in the case, and I'd like to address them.

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But for now, the point is that there is no additional harm from the bringing of this case, the states case, at the same time that the FTC case was brought.

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I'd like to point out on these claims of prejudice that they're based entirely to the prospect

[00:09:09] Speaker 03:
on the prospect of divestiture as a remedy or unscrambling the egg.

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And that is not the only possible remedy.

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There are other remedies that could address the harm inflicted on consumers by the anti-competitive acquisitions here.

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For example, they would be prospective remedies.

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They would be, for instance, requiring Facebook to segregate the data from the acquired companies going forward without unscrambling any already scrambled egg.

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It could be, as we requested in our complaint, there could be a guard against future large anti-competitive acquisitions by requiring notice to the states.

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before such acquisitions can proceed.

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And Facebook could be required to take actions to promote user choice in the future, promoting competition in place of the competition that was wrongly suppressed by these acquisitions, such as requiring Facebook to allow data portability or interoperability, techniques that enable consumers

[00:10:15] Speaker 03:
to switch to rivals if they should choose.

[00:10:18] Speaker 03:
So it's simply not the case that the only available remedy is divestiture and that it's not the case that prejudice should be analyzed entirely with reference to that.

[00:10:32] Speaker 03:
So there is no prejudice to Facebook.

[00:10:37] Speaker 03:
There would be no prejudice to Facebook from applying these remedies now rather than a few years ago, or at least they haven't alleged

[00:10:45] Speaker 03:
any at all.

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It's also the case that the delay was not unreasonable.

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The complete lack of prejudice would be enough to defeat the latches defense, but it also fails because the timing of the complaint was reasonable.

[00:11:05] Speaker 03:
The district court said that considering whether latches bars a claim for injunctive relief, the starting presumption is the same four year limitations period

[00:11:14] Speaker 03:
that applies to a suit for damages.

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But that is inconsistent with this court's precedence.

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This court has repeatedly said that the equitable defense of latches depends on the equity, the reasons for delay, and the resulting prejudice, not the limitations period for damage suits.

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Here again, then, whether the timing was reasonable, like prejudice, is a factual question.

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The complaint doesn't provide any basis finding

[00:11:43] Speaker 03:
unreasonable delay, and the district court therefore should be dismissed on that ground.

[00:11:49] Speaker 03:
An inquiry into the relevant facts would show that the states acted reasonably and responsibly in investigating Facebook's conduct and evaluating its significance before filing this complaint.

[00:12:02] Speaker 03:
When Facebook first acquired Instagram and WhatsApp,

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What we now call the market for personal social network services was still developing and not well understood.

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The anti-competitive character of these acquisitions was not immediately apparent.

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Smartphones were just beginning to be widely adopted.

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The importance of phone camera photos wasn't immediately cleared, nor the relationship of phone messaging and social networks.

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FTC apparently did not perceive the anti-competitive character in its pre-acquisition review.

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It's also the case that Facebook made misrepresentations at the time of the acquisitions which tended to conceal the anti-competitive nature of these acquisitions.

[00:12:49] Speaker 03:
Facebook disavowed any plan to use WhatsApp user data to promote Facebook, but later they did just that.

[00:12:59] Speaker 03:
And finally, it's a matter of public record that in December 2018, strong evidence of the buy or bury strategy emerged.

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When a British Parliament committee leaked sealed documents, it got from a California lawsuit.

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These documents did not emerge from an antitrust investigation.

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The California suit was a contract suit, and the British investigation was about privacy.

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But they provided a basis for the state's investigation, which ultimately resulted in strong evidence of a scheme.

[00:13:36] Speaker 03:
It looks like I'm running out of time here.

[00:13:38] Speaker 03:
I think what I'd like to do since the DOJ Council is going to be arguing the merits of the analytical approach to this material, I think maybe I will skip that for a moment because I want to say,

[00:13:55] Speaker 03:
Also, to address Judge Randolph's point that there is no basis for the district court's ruling that there can be no injunctive relief, even if there was a violation of law here.

[00:14:05] Speaker 03:
That is with the judgment on the ground that the conduct happened too long ago and that there is no longer anything to prevent or repair.

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There's no basis to find on the pleadings that Facebook's anti-competitive conduct will not recur.

[00:14:21] Speaker 03:
In fact, there are plenty of reasons to think it will with a number of incidents.

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and recent press coverage of similar condo.

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The allegations here can be rejected on the pleadings and also the complaint alleges that Facebook has disciplined the marketplace not to take actions threatening its monopoly.

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that led to the bearing responses in the complaint.

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The app developers now know that competing with Facebook will incur the wrath of Mark and so they don't do it.

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Injunctive relief is needed to assure that they will not be destroyed by the wrath of Mark.

[00:14:58] Speaker 03:
If I understand correctly, I only have a few little bit of time left for rebuttal and I'd like to thank you.

[00:15:06] Speaker 04:
Mr. Hart.

[00:15:22] Speaker 08:
Morning.

[00:15:22] Speaker 08:
Good morning.

[00:15:24] Speaker 01:
May it please the court, Daniel Hart for the United States.

[00:15:28] Speaker 01:
This is a vitally important antitrust.

[00:15:31] Speaker 01:
In recent decades, handful of digital platforms have become increasingly dominant.

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Section two of the Sherman Act was designed to be flexible and vigorous enough to confront evolving threats to a competitive economy.

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The relevant inquiry must be fact-specific, as this supports Microsoft's decision to recognize

[00:15:52] Speaker 01:
Here, however, the district court departed unjustifiably from the flexible approach of Microsoft.

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Permitting that error could hobble Section 2's ability to protect competition, especially in the digital economy.

[00:16:07] Speaker 01:
The states made two related sets of allegations about Facebook's platform conduct, one regarding anti-competitive conditions that Facebook imposed on apps operating on its platform, and a second regarding apps

[00:16:21] Speaker 01:
that were denied access.

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The district court committed legal error with respect to both.

[00:16:28] Speaker 01:
First, it failed to apply Microsoft to the anti-competitive conditions, treating them as refusals to deal.

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And second, when it analyzed refusals, it announced an erroneous standard.

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As to the first error,

[00:16:43] Speaker 01:
The district court wrongly concluded the anti-competitive conditions Facebook imposed on app developers were no more than unilateral refusals to deal.

[00:16:53] Speaker 01:
Microsoft sets forth the default standard for finding conduct as anti-competitive under Section 2.

[00:17:00] Speaker 01:
It applies a fact-specific analysis to determine whether conduct harmed the competitive process and to discuss later in the opinion whether it is reasonably capable

[00:17:12] Speaker 01:
contributing significantly to the defendant's continued monopoly.

[00:17:16] Speaker 05:
There's no allegation, is there, that Facebook, as a condition of allowing an app access to its platform, required that the app not do business with a competitor?

[00:17:36] Speaker 01:
It did impose conditions that required the app to stand down from certain competitive acts.

[00:17:41] Speaker 01:
Is there a legend?

[00:17:43] Speaker 05:
I just want an answer to that question.

[00:17:47] Speaker 05:
The question I asked is whether any condition that Facebook imposed required an app in order to get access to the Facebook's platform, not to, you know, put the same app on a competitor's platform.

[00:18:04] Speaker 05:
There's nothing I see.

[00:18:06] Speaker 05:
If you can point to an allegation to that effect, I'd like to see it.

[00:18:10] Speaker 01:
It didn't require that, but it did require that.

[00:18:14] Speaker 05:
It didn't require that.

[00:18:15] Speaker 05:
So that takes it out of the realm of Lorraine Journal, right?

[00:18:21] Speaker 05:
Because Lorraine Journal, that's what Lorraine Journal required.

[00:18:24] Speaker 05:
You want to advertise with us, you can't advertise with a radio station.

[00:18:29] Speaker 01:
So that's how the District Court distinguished Lorraine Journal, but it fails to distinguish Microsoft.

[00:18:34] Speaker 01:
The conditions that the Microsoft work analyzed under its default framework operated just the same way as the conditions challenged here.

[00:18:42] Speaker 01:
These are the conditions in the first wave agreements that Microsoft had with app developers, software developers.

[00:18:49] Speaker 01:
We discussed it pages 71 through 72 and 75 through 76.

[00:18:54] Speaker 01:
That's at 253 at third in Microsoft decision.

[00:18:59] Speaker 01:
Those conditions hold software developers for software sold to run

[00:19:04] Speaker 01:
to Windows users, that is, sold to run on the Windows environment, but they had to use certain features, Microsoft's Internet Explorer and Microsoft's version of Java.

[00:19:17] Speaker 01:
And the court, applying this default framework, found those conditions anti-competitive because they disabled cross-platform functionality.

[00:19:26] Speaker 01:
The conditions didn't speak at all to the types of apps those software developers could develop

[00:19:32] Speaker 01:
to run on non-Windows platforms.

[00:19:35] Speaker 01:
This is at page 75 of that decision.

[00:19:38] Speaker 01:
These conditions were limited to apps sold to Windows users.

[00:19:43] Speaker 01:
And the threat that Facebook targeted here was the same as the threat that the court analyzed in Microsoft.

[00:19:52] Speaker 01:
It was the cross-platform functionality

[00:19:55] Speaker 01:
These were anti-competitive in Microsoft because the specific conditions disabled cross-platform functionality.

[00:20:03] Speaker 01:
And that's exactly what the state's complaint say was targeted by Facebook's conditions.

[00:20:09] Speaker 01:
At the bottom of paragraph 199 of the complaint, that they were aimed at preventing apps developer from bridging the gap with their apps to rival networks.

[00:20:21] Speaker 01:
These aren't refusals to deal.

[00:20:22] Speaker 01:
Facebook is dealing

[00:20:25] Speaker 01:
And this is alleged paragraph 194 with 10 million apps and websites.

[00:20:33] Speaker 01:
It's the anti-competitive effect of these restrictions on parties and ongoing deals with Facebook that gives rise to the anti-competitive harm.

[00:20:43] Speaker 01:
Not from a refusal to deal.

[00:20:45] Speaker 01:
There are refusals to deal alleged in the complaint, but that's not what I'm talking about when I'm referring to the conditions and to the harm they cause.

[00:20:55] Speaker 01:
These were not refusals to deal.

[00:20:56] Speaker 01:
And the Supreme Court's decision in Eastman Kodak confirms that.

[00:21:02] Speaker 01:
In footnote eight of that decision, Eastman Kodak be image technical services, the Supreme Court rejected the contention of Kodak that its parts policy where it sold to customers on condition that they do not deal with Kodak's rivals was a refusal to deal, a unilateral refusal to deal, the Supreme Court

[00:21:24] Speaker 01:
squarely rejected that proposition.

[00:21:27] Speaker 01:
So these aren't refusals to deal.

[00:21:30] Speaker 01:
And the policy discussions with Trinko confirmed that we're dealing with a vastly different scenario here.

[00:21:39] Speaker 01:
Trinko talked about a concern where courts are forcing sharing.

[00:21:43] Speaker 01:
Here, there are ongoing deals already.

[00:21:45] Speaker 01:
There's no occasion to force sharing.

[00:21:47] Speaker 01:
because the deals are happening already.

[00:21:50] Speaker 01:
It deals with conditions that are preventing those parties in deals from engaging in certain forms of rivalry.

[00:21:57] Speaker 01:
Again, I point to 199 and 201 of the complaint.

[00:22:00] Speaker 01:
The rivalry that's prevented is the prevention of linking to or integrating with rivals or replicating Facebook's core functionality.

[00:22:08] Speaker 01:
They're in deals, but they're prevented from that rivalry because they're in deals and there's no occasion for forced sharing.

[00:22:15] Speaker 01:
Courts aren't put in the role of acting as central planners.

[00:22:19] Speaker 01:
And their remedies don't risk facilitating collusion.

[00:22:22] Speaker 01:
Again, those parties are already together in deals.

[00:22:24] Speaker 01:
It's restrictive conditions in deals that anti-access law needs to scrutinize exactly to prevent the sorts of collusive firms that can happen in deals.

[00:22:36] Speaker 01:
A contrary view would mean that any terms and conditions in deals are treated as refusals to deal.

[00:22:42] Speaker 01:
But it can't be true.

[00:22:44] Speaker 01:
that price fixing terms, market allocation terms, exclusive dealing terms, buying terms, are just swallowed up by refusal to deal case law merely because there's a general right out there for businesses to deal with whom they wish.

[00:23:00] Speaker 01:
And I trust law has never treated restricted conditions that way.

[00:23:05] Speaker 01:
And Microsoft didn't with the materially similar conditions that issued here.

[00:23:11] Speaker 02:
One argument made by your friends on the other side

[00:23:14] Speaker 02:
is that

[00:23:17] Speaker 02:
we can't and should not look at conditions which by themselves are lawful and say, you know, combine three or four of them and through what they would call alchemy and claim that combining all of these lawful conditions together converts it into unlawful restraint of trade.

[00:23:46] Speaker 02:
and that that's what you are attempting to do here.

[00:23:51] Speaker 02:
What's your response to that?

[00:23:54] Speaker 01:
It's not alchemy.

[00:23:55] Speaker 01:
Many courts recognize that the competitive effects of conduct might come into true light by considering it together in its context.

[00:24:03] Speaker 01:
Even this court did it when analyzing some of the conditions.

[00:24:06] Speaker 01:
When I analyzed the first wave agreement, it said, oh, the foreclosure in this particular channel might not be great, but it takes on greater significance

[00:24:16] Speaker 01:
with the background that we already found foreclosure in the two primary channels.

[00:24:21] Speaker 01:
That's the OEM and the Internet access provider channels.

[00:24:25] Speaker 01:
So Microsoft, even though it didn't ultimately reach the total course of conduct, putting everything together, analyzed a number of the different types of anti-competitive conduct in the context of several other apps.

[00:24:36] Speaker 01:
And that's, in effect, what course of conduct does.

[00:24:39] Speaker 01:
It's not alchemy.

[00:24:41] Speaker 01:
It's normal.

[00:24:41] Speaker 01:
When you look at the sum total of the acts alleged, you ask the question whether it's anti-competitive on Microsoft.

[00:24:48] Speaker 01:
If I have time, I would like to address why the court was wrong in the refusal to deal analysis stated to apply.

[00:24:56] Speaker 01:
All right.

[00:24:57] Speaker 01:
Thank you.

[00:24:59] Speaker 01:
The district court stated that there were three necessary conditions for any refusal to deal.

[00:25:05] Speaker 01:
That's wrong.

[00:25:06] Speaker 01:
In particular, fire force appealing cannot be required as a necessary element in all cases.

[00:25:13] Speaker 05:
Central question under asking.

[00:25:16] Speaker 05:
The law of our circuit is that it is required.

[00:25:18] Speaker 05:
The COVID case, so help.

[00:25:20] Speaker 05:
We can't, as an individual panel, disregard that.

[00:25:27] Speaker 01:
He repeated a statement from Trinco.

[00:25:30] Speaker 01:
And applied it.

[00:25:31] Speaker 05:
Repeated it and applied it and said,

[00:25:34] Speaker 05:
that a prior course of dealing is a necessary element for establishing liability for refusal to deal.

[00:25:41] Speaker 05:
That was clear as a bell.

[00:25:43] Speaker 01:
That was the exact same regulatory context in Trinko.

[00:25:46] Speaker 01:
Trinko said in that context, it was necessary to have one or two things, either a prior voluntary course of dealing or that dealing would have happened absent regulatory compulsion.

[00:25:58] Speaker 01:
Trinko, however, left open the possibility that in a very different context, a different analysis would apply.

[00:26:05] Speaker 01:
Trinko discussed Otter Tail favorably.

[00:26:08] Speaker 01:
It distinguished its fact as involving a situation where a product was provided to some customers voluntarily, commercially.

[00:26:17] Speaker 01:
But Otter Tail did not require, did not involve the cessation of prior course of healing.

[00:26:24] Speaker 01:
the Supreme Court imposed liability on Otter Tail for refusing to deal with newly formed municipal power.

[00:26:34] Speaker 01:
Liability was premised and anti-competitive motivation necessary to find predatory conduct was premised on a discriminatory pattern of

[00:26:46] Speaker 01:
Otter Tail refused to deal with new companies with whom it never had a deal because they posed a competitive threat at retail, while it provided the same product that is wholesale power for transmission services in areas where it didn't have a retail presence.

[00:27:04] Speaker 01:
So in a different actual scenario, in a different regulatory setting, PRINCO

[00:27:11] Speaker 01:
clearly left open the possibility that a different pattern where no prior course of dealing was involved could give rise to liability.

[00:27:19] Speaker 01:
COVID, because it involved that same industry, same regulatory setting at Trinco, also couldn't present the situation that arose in Otter Tail.

[00:27:29] Speaker 01:
And I will note, finally, that it's the Otter Tail precedent, not the Trinco precedent, that's the analogous one here.

[00:27:38] Speaker 01:
Facebook, as I said before,

[00:27:40] Speaker 01:
is dealing with 10 million apps and websites, it's opened up its platform broadly as a complaint alleges at 79 through 82 and 189 through 195.

[00:27:51] Speaker 01:
Much of the value of Facebook's network was built based on investments from third parties.

[00:27:58] Speaker 01:
Facebook opened it up to them, but in case in the type of discriminatory dealing that was present in Otterdale and gave rise to liability, dealt broadly but cut them off

[00:28:09] Speaker 01:
when a competitive threat arose.

[00:28:15] Speaker 01:
I'd ask, we would ask that this board reverse the errors.

[00:28:20] Speaker 04:
All right.

[00:28:20] Speaker 04:
We'll give you a couple of minutes and reply.

[00:28:23] Speaker 04:
Mr. Panner.

[00:29:14] Speaker 08:
Thank you, Judge Henderson.

[00:29:16] Speaker 06:
Please support.

[00:29:18] Speaker 06:
I'd like to begin by emphasizing that all of the conduct that's been discussed this morning took place many, many years ago.

[00:29:27] Speaker 06:
with regard, for example, to the policy to which DOJ's counsel referred.

[00:29:35] Speaker 06:
Those policies were put into place in 2011, and some of the policies were put in place in 2013.

[00:29:41] Speaker 06:
Of course, the transactions took place in 2012 and 2014, and all of this conduct was, of course, quite open and publicized at the time.

[00:29:52] Speaker 06:
For example, that's obviously true with regard to the transactions.

[00:29:56] Speaker 06:
It's also true with regards to platform policies which were published.

[00:29:59] Speaker 06:
Developers had them available so they knew about it.

[00:30:02] Speaker 06:
And yet we see a suit that's filed at the end of 2020.

[00:30:09] Speaker 06:
The doctrine of latches exists to prevent that kind of unfair delay.

[00:30:16] Speaker 06:
And the district court was correct to sign the state suit challenging the acquisitions was barred by that doctrine.

[00:30:25] Speaker 06:
Now, the district court, I think, was correct in observing that it is impossible to read the court's analysis in California, the American stores, the Supreme Court's analysis in that case, without concluding that the Supreme Court understood that states would be subject to the same sorts of limitations on equitable remedies as other persons suing under section 16.

[00:30:50] Speaker 06:
The states sue as private parties.

[00:30:53] Speaker 06:
That's what they're referred to as in that decision.

[00:30:56] Speaker 06:
And of course, Justice Kennedy expressly said that it was his understanding that the state would be subject to latches on remand.

[00:31:06] Speaker 06:
And no justice expressed any disagreement with that observation.

[00:31:12] Speaker 06:
And it makes perfect sense that the states would be subject to latches.

[00:31:17] Speaker 06:
Because in a parent's patriotic suit, the state is not pursuing a sovereign interest in law enforcement.

[00:31:25] Speaker 06:
It sues on behalf of its citizens to vindicate those private injuries.

[00:31:30] Speaker 06:
And it's more akin to a class action than it is to an enforcement suit by a sovereign.

[00:31:35] Speaker 06:
And there's no reason that the state should be immune from the equitable limits that would apply to the suits by those citizens.

[00:31:44] Speaker 06:
when it's those interests of the state seeking to vindicate.

[00:31:48] Speaker 06:
And I think the court was also correct in finding that if there was ever a case that was barred by the Doctrine of Latches, it is the challenge to the acquisitions that are at issue here.

[00:32:05] Speaker 06:
With regard to the Council for the States correctly says that there are two elements to a latches

[00:32:12] Speaker 05:
showing one is, you know, the section four C of the Clayton act allows a state attorney general to sue for trouble damages.

[00:32:21] Speaker 05:
But, uh, and it explicitly recognizes that when the state does that, it's suing as horrendous, Patrick.

[00:32:30] Speaker 05:
Correct.

[00:32:30] Speaker 05:
It was that an original part of the Clayton act or was that an amendment?

[00:32:35] Speaker 06:
It was an amendment.

[00:32:36] Speaker 06:
What happened was in Hawaii case that is cited in the brief.

[00:32:40] Speaker 06:
Um, the Supreme Court held that the state attorneys general could not sue parents, Patriot for damages.

[00:32:46] Speaker 06:
And there was an amendment.

[00:32:47] Speaker 06:
I believe it was part of the same amendments that, um, adopted the hard Scott Rodino, um, amendments, but I'm not, not certain, but it was in the same era added that cause of action.

[00:32:57] Speaker 05:
And under the Sherman at section seven of the Sherman act, the Supreme Court held in the case that was a Georgia versus Evans that the state is a person.

[00:33:07] Speaker 05:
Correct.

[00:33:08] Speaker 06:
That's exactly right.

[00:33:10] Speaker 06:
In George versus Evans, the holding was that the states could sue for injunctive relief as a person.

[00:33:17] Speaker 06:
And then that's elaborated on in the Pennsylvania Railroad case where the nature of the parents' patriotic standing is further explained.

[00:33:26] Speaker 05:
So you move from, I mean, that's the premise of your entire latches argument, isn't it?

[00:33:32] Speaker 05:
That they're suing in the shoes of the citizens of the United States.

[00:33:38] Speaker 05:
are the citizens of their state, and the citizens of the state would be subject to latches.

[00:33:43] Speaker 05:
So therefore, the state itself is.

[00:33:46] Speaker 06:
That's right, Your Honor.

[00:33:47] Speaker 06:
And I think it's also critical to recognize, as Your Honor has pointed out, that the state simply sue under that Section 16, which is the general cause of action available to any private party.

[00:34:00] Speaker 06:
And it's been referred to repeatedly

[00:34:03] Speaker 06:
Again, the language in California v. American stores refers to private party suing under section 16.

[00:34:11] Speaker 06:
And of course, in that case, the party suing was the state.

[00:34:14] Speaker 06:
And I think it's notable that the United States has repeatedly advised the courts that when states sue under section 16 of the Clayton Act, they sue as private parties.

[00:34:28] Speaker 06:
And they're subject to limitations that would apply to private parties.

[00:34:31] Speaker 06:
And of course, the United States did not support the states with regard to their challenge to the district court's holding.

[00:34:37] Speaker 05:
Did you cite instances where the United States took that position in briefs?

[00:34:45] Speaker 06:
We do in our brief, Your Honor.

[00:34:49] Speaker 06:
We refer to the Microsoft case.

[00:34:52] Speaker 06:
This was briefed by the United States's amicus curiae

[00:34:56] Speaker 06:
It was also briefed by the United States' amicus curiae in the Deutsche Telekom case that was much more recent.

[00:35:04] Speaker 05:
Was that a position of the Antitrust Division or the Solicitor General?

[00:35:09] Speaker 06:
I don't recall who signed those briefs, Your Honor, but I assume, well, I shouldn't speculate, Your Honor.

[00:35:16] Speaker 06:
I mean, my understanding would be, obviously, in this case, any appellate position would have had to be cleared by the Proposition.

[00:35:26] Speaker 06:
But getting to the application of latches, I think the court was quite right to say that if there was ever a case in which latches needs to apply even against the states with recognition of the importance of recognizing the interest that the states carry with them, it is this one.

[00:35:47] Speaker 06:
Remember, we're talking about mergers.

[00:35:50] Speaker 06:
And not only is a merger highly publicized

[00:35:56] Speaker 06:
available for enforcers to scrutinize before it's cleared in this case.

[00:36:03] Speaker 06:
But the process, it's inevitable that after a company acquires another and begins to run it as part of a unified business, that investment and business decisions will depend on that unified character.

[00:36:23] Speaker 06:
And that's why courts

[00:36:25] Speaker 06:
have rejected, as barred by latches, challenges to mergers that were filed far more promptly than the six and eight year delay that's here.

[00:36:34] Speaker 06:
I think that the presumption that the court recognized from other circuits is a sound one, certainly in the case of a merger.

[00:36:43] Speaker 06:
And were any of those cases resolved on a motion to dismiss?

[00:36:48] Speaker 06:
Yes, Your Honor.

[00:36:49] Speaker 06:
The Ginsburg case was resolved on a motion to dismiss.

[00:36:52] Speaker 06:
And some of the cases involved.

[00:36:55] Speaker 06:
That was a district court opinion?

[00:36:57] Speaker 06:
No, that's the Ninth Circuit, Your Honor.

[00:37:00] Speaker 06:
The case was affirmed on the basis that there was no remedy available because of the delay.

[00:37:06] Speaker 02:
What do we do with our case law discouraging making a finding of latches based on a complaint?

[00:37:17] Speaker 02:
And I know you cite the Lyons case, but the Lyons case I don't think is very strong precedent, one page per curiam.

[00:37:26] Speaker 02:
And you look at the district court opinions in that case.

[00:37:33] Speaker 02:
there are lots of extenuating circumstances from the face of the complaint, not the least of which is that the plaintiff in that case had filed a prior lawsuit and didn't raise something that they then raised in the second lawsuit that was brought after the statutory statute limitations.

[00:37:54] Speaker 06:
Your honor, I think the way that you distinguish those is exactly the way the district court did.

[00:37:58] Speaker 06:
The district court was quite, um, uh, um,

[00:38:01] Speaker 06:
He acknowledged this court's statements regarding the rare circumstances in which it would be appropriate to dispose of a latched defense on a motion to dismiss.

[00:38:13] Speaker 06:
And as he said, seldom does not mean never.

[00:38:15] Speaker 06:
And the circumstances here, with regard to, again, two factors, with regard to unreasonable delay, the states did not contest below that they had unreasonably delayed.

[00:38:26] Speaker 06:
And the district court relied on them

[00:38:29] Speaker 06:
If you look at the appendix at 282, he actually has a rather elaborate discussion at that point.

[00:38:35] Speaker 06:
And he says, had the states responded to the substantial timeliness arguments that Facebook put forward in its motion to dismiss, which rests entirely and properly on facts that are either pleaded or properly just traditionally noticed by raising or even hinting at,

[00:38:51] Speaker 06:
factual dispute as to when their claims first accrued were a reasonable justification for their long delays in filing, the outcome here might well be different.

[00:39:00] Speaker 06:
They did not do so.

[00:39:01] Speaker 06:
So the district court, that goes to unreasonable delay.

[00:39:04] Speaker 06:
They waived, they forfeited any argument that they did not unreasonably delay.

[00:39:09] Speaker 06:
And then with regards to prejudice, again, the circumstance, the context is important.

[00:39:13] Speaker 06:
We're talking about a merger on unreasonable delay.

[00:39:16] Speaker 02:
I mean, isn't it in the complaint that one reason for the delay was that the public was misled about Facebook's intentions with respect to, I guess, especially WhatsApp.

[00:39:35] Speaker 06:
Your honor, with respect

[00:39:38] Speaker 06:
That argument has no substance whatsoever.

[00:39:41] Speaker 06:
There is no argument at all with regard to any misleading statement with regard to Instagram of any kind.

[00:39:50] Speaker 06:
And the supposedly misleading statement with regard to WhatsApp has nothing to do with the nature or anti-competitive nature, allegedly anti-competitive nature of that acquisition.

[00:40:02] Speaker 06:
And again,

[00:40:07] Speaker 06:
This is not a situation where there is any argument that a matter of Facebook somehow concealed facts that were then later discovered.

[00:40:20] Speaker 06:
Because remember, the action that they rely on, the enforcement action that was taken in Europe regarding this data sharing took place, I believe, in 2015.

[00:40:30] Speaker 06:
It was quite soon after the transaction.

[00:40:33] Speaker 06:
So there's simply no excuse.

[00:40:36] Speaker 06:
or there's no fact that they claim was concealed for that period of time.

[00:40:42] Speaker 06:
And again, the prejudice point, there are allegations in the complaint.

[00:40:46] Speaker 06:
Paragraph 125 of the complaint, I believe most of the relevant factual allegations are in the sealed version, but that make very clear the nature of the investment.

[00:40:58] Speaker 06:
But also, if you just think about the logic of the claim, it is that Facebook, after acquiring Instagram and WhatsApp,

[00:41:06] Speaker 06:
continue to run them and have them provide these functionalities to consumers so that other companies would not necessarily be able to as easily to take that, provide those functions.

[00:41:20] Speaker 06:
That can only be true if Facebook continues to invest in and run these companies and provide services to consumers that continue to attract those consumers.

[00:41:29] Speaker 06:
I find it extraordinary that the state would suggest that there's a lack of investment

[00:41:35] Speaker 06:
in two apps that now serve, in the case of Instagram, something like a billion users worldwide, in the case of WhatsApp, 2.5 billion users worldwide.

[00:41:44] Speaker 06:
And again, the allegation is that Instagram was a tiny company when acquired, and WhatsApp had 400 million users.

[00:41:50] Speaker 06:
It does not make any sense for the states to suggest that there's been a lack of investment in these companies.

[00:41:58] Speaker 06:
I would like to speak about the platform-related

[00:42:04] Speaker 06:
And with regards to that, the district court quite rightly held that under settled Section 2 law, Facebook violated no duty by placing restrictions on developers' use of the platform to take users and engagement away from Facebook.

[00:42:23] Speaker 06:
Trinko's basic no duty to deal rule covers all of the state's allegations, including each of the seven instances that are described in the state's complaint.

[00:42:33] Speaker 06:
the court likewise properly held that no injunctive relief was available to address those discrete instances, both because no preventative or reparative injunctive relief was available and because, as we've argued in our appeal brief, those claims were barred by latches, which the district court also noted was lightly applicable.

[00:42:57] Speaker 06:
That's in the appendix at 251.

[00:43:02] Speaker 06:
With regard to the government, the Department of Justice has largely relied on the suggestion that the district court improperly analyze the state's claim of conditional dealing.

[00:43:21] Speaker 06:
But I think Judge Randolph, your question got right at the problem with the state's theory

[00:43:30] Speaker 06:
which is there is simply no allegation of interference with the third party apps dealing with other apps, any effort to interfere with that independent conduct by those competitors.

[00:43:48] Speaker 05:
Is there anything, you know, I think of Lorraine and I wondered to myself, if the case had been one in which the journal

[00:44:00] Speaker 05:
said to advertisers, listen, if you advertise with us, you can't run the same ad with the radio station.

[00:44:09] Speaker 05:
It has to be a different ad.

[00:44:12] Speaker 05:
And I wonder if the case would have come out the same in that situation, and whether that is the type of situation that we have here, to draw the analogy.

[00:44:22] Speaker 05:
And I'd just like your comment on that.

[00:44:25] Speaker 06:
Sure.

[00:44:27] Speaker 06:
I think that the case very well

[00:44:29] Speaker 06:
could have come out the other way.

[00:44:33] Speaker 06:
But I think the best way to draw the analogy, Your Honor, would be to say, suppose the journal had said, we have a service, and we will design an ad for you.

[00:44:46] Speaker 06:
And that will provide that service for free if you buy ad space.

[00:44:50] Speaker 06:
That's something that we will provide for free.

[00:44:52] Speaker 06:
But we don't want you to use the ad that we designed in some other publication.

[00:44:56] Speaker 06:
I see your point.

[00:44:58] Speaker 06:
That would be analogous to what's going on here.

[00:45:00] Speaker 06:
And that would be completely fine.

[00:45:02] Speaker 06:
And again, I think that the distinction with this court's Microsoft case is that this court was very clear in analyzing the restrictions to which Mr. Haar referred regarding OEMs and independent software developers that they were talking about exclusive dealing, both with regard

[00:45:23] Speaker 06:
to the manner in which the OEMs had to install Internet Explorer and the refusal to allow them to alter the boot sequence, et cetera.

[00:45:34] Speaker 06:
And with regard to the independent software vendors, the district court held and this court affirmed the fact that those restrictions on those independent software developers functioned as exclusive dealing.

[00:45:49] Speaker 06:
They prevented the independent software developers

[00:45:52] Speaker 06:
from featuring other forms of the Java virtual machine.

[00:45:56] Speaker 06:
And through that conduct, they were able to block Sun and other competitors from distributing their competing product, their competing middleware product.

[00:46:09] Speaker 06:
So those cases are quite different from the circumstance that was alleged in this case.

[00:46:21] Speaker 06:
And I think if you simply look at Trinko and the way that case has been understood and interpreted both by the Supreme Court itself in Linkline and by the 10th Circuit in an opinion by then Judge Gorsuch in Novell, the background rule is quite clear that a defendant generally has no obligation to deal with his rival.

[00:46:50] Speaker 06:
And the reasons for that go to the importance of encouraging investment in facilities that will benefit consumers.

[00:47:02] Speaker 06:
Justice Breyer, I think, in his concurrence in the Verizon case, talks about the fact that you don't get competition from people sharing the same thing.

[00:47:12] Speaker 06:
You get competition from people building rival facilities and competing independently.

[00:47:21] Speaker 05:
Facebook's competition now?

[00:47:25] Speaker 06:
Right now Facebook has tremendous competition.

[00:47:27] Speaker 06:
It's in the papers all the time.

[00:47:29] Speaker 06:
TikTok is obviously all over the papers because it's grown tremendously.

[00:47:34] Speaker 06:
Facebook has for many years competed with YouTube for users, compete with Twitter, compete with Snap, compete with

[00:47:43] Speaker 06:
Pinterest, I could name many more.

[00:47:46] Speaker 06:
But the fact is that one sees a dynamic market in which there's been substantial entry, both recently and over time.

[00:47:55] Speaker 06:
And, you know, one, you know, again, as a matter of just reading the newspapers, it's clear that both other newspapers are reporting and this is not in the record and I don't

[00:48:07] Speaker 05:
I want you to affirm or deny that Facebook is losing millions of individuals who are under the age of 30.

[00:48:18] Speaker 05:
That there's a mass exodus from Facebook these days.

[00:48:24] Speaker 06:
Your Honor, I would only comment that sometimes facts that are good for an antitrust offense are bad for the business.

[00:48:31] Speaker 06:
And obviously, the reporting is what it is.

[00:48:36] Speaker 06:
And MEDA addresses those issues through its public statements and securities filings, et cetera.

[00:48:44] Speaker 06:
So I'm not going to say anything about that.

[00:48:46] Speaker 06:
But it is plainly right.

[00:48:50] Speaker 06:
And again, this was not the basis for the district court's opinion.

[00:48:55] Speaker 06:
So I don't want to spend too much time on it.

[00:48:58] Speaker 06:
But it is plainly right.

[00:49:00] Speaker 06:
Facebook operates an extremely competitive environment in which the ability to switch from one app to another is simply a matter of pressing an icon on the phone interface.

[00:49:18] Speaker 06:
And again, we're talking about conduct that occurred years ago.

[00:49:29] Speaker 06:
It was never something that any enforcer challenged at the time, despite the affirmative allegation by the states that Facebook had a monopoly as early as 2011.

[00:49:42] Speaker 06:
The district court quite rightly recognized that the state's claims were stale and failed to implicate any duty under the antitrust law.

[00:49:56] Speaker 02:
The district court acknowledged, though, that the complaint alleged unlawful conduct from 2013 to 2015 did not.

[00:50:04] Speaker 06:
No, it didn't, Your Honor.

[00:50:05] Speaker 06:
What it said was it didn't need to reach the question.

[00:50:09] Speaker 06:
And that reminds me.

[00:50:11] Speaker 06:
So let me answer that.

[00:50:12] Speaker 06:
And I also want to get back to a question that Your Honor asked of Mr. Haar.

[00:50:18] Speaker 06:
What the court said was, I don't need to reach the question of whether there's been enough alleged here.

[00:50:25] Speaker 06:
to satisfy the standards of TRINCO because there is no, the states don't identify any injunctive release that could be granted with regard to those seven individual instances.

[00:50:38] Speaker 06:
And so I'm not gonna parse through those allegations.

[00:50:41] Speaker 06:
But if you look at what's pled there, there's no question that TRINCO bars those claims because none of them involves an allegation

[00:50:51] Speaker 06:
of a profitable prior course of dealing that was terminated under circumstances that would suggest a sacrifice.

[00:50:59] Speaker 05:
He also said that some of the seven, that some of those companies are defunct.

[00:51:09] Speaker 05:
Several of them are, yes.

[00:51:10] Speaker 05:
Do you know how many and which ones?

[00:51:14] Speaker 06:
I don't have that information off the top of my head.

[00:51:16] Speaker 06:
I know that photo is defunct.

[00:51:21] Speaker 06:
I believe Circle is defunct.

[00:51:22] Speaker 06:
I believe Boxer is not defunct, I believe.

[00:51:29] Speaker 05:
But they were the only seven companies mentioned in the complaint where Facebook had prior dealings.

[00:51:36] Speaker 05:
Is that true?

[00:51:38] Speaker 05:
Sorry, Your Honor.

[00:51:39] Speaker 05:
Those seven companies were the only ones mentioned in the complaint in which Facebook had prior dealings with.

[00:51:48] Speaker 05:
Is that right?

[00:51:49] Speaker 06:
Actually, of the seven, Facebook had prior dealings with six.

[00:51:53] Speaker 06:
Mine, there was no court.

[00:51:55] Speaker 06:
There was never a course of dealing established.

[00:51:57] Speaker 06:
Mine was a video app that was owned by Twitter, and Facebook never dealt with them.

[00:52:02] Speaker 06:
They also defunct, Your Honor, as my understanding.

[00:52:06] Speaker 06:
But those are the only examples.

[00:52:08] Speaker 06:
It's not that counsel was correct.

[00:52:13] Speaker 06:
I think it's a fact that is strongly favorable to Facebook.

[00:52:19] Speaker 06:
that millions of apps have dealt with Facebook, have taken advantage of the APIs that Facebook offers and the pro-competitive platform.

[00:52:28] Speaker 05:
I understand that, but those seven were the only ones named.

[00:52:32] Speaker 05:
That's right.

[00:52:33] Speaker 05:
That's right, Your Honor.

[00:52:33] Speaker 06:
And as I say, six of them actually had a prior course of dealing.

[00:52:37] Speaker 06:
If I may, Judge Wilkins, just to get back to one point, you referred to the point about, referred to our argument

[00:52:47] Speaker 06:
referring to the Linkline case about the alchemy phrase.

[00:52:53] Speaker 06:
And a slightly different point about that, which I wanted to clarify.

[00:52:57] Speaker 06:
None of the point that Judge Boasberg was relying on there is there's been a reference to a course of conduct and a number of gametes restressed that somehow he failed to adequately consider the

[00:53:13] Speaker 06:
allegation that there was a course of conduct.

[00:53:15] Speaker 06:
If you read the opinion, I don't understand how people can make that argument, because he clearly addressed all of the arguments regarding this supposed course of conduct.

[00:53:25] Speaker 06:
But the point here was that there were allegations that there were the refusal to deal policy.

[00:53:36] Speaker 06:
Because none of the refusals to deal went into the limitations

[00:53:39] Speaker 06:
But the states argued, well, you had the policy in place at some later time.

[00:53:45] Speaker 06:
And so we can take the existence of the policy and use that to bring the allegations about acquisitions forward because it's part of a course of conduct.

[00:53:58] Speaker 06:
Now, I'm not sure we stressed enough in our briefing that the policies were held to be lawful, correctly so, and so that

[00:54:07] Speaker 06:
really doesn't get the states anywhere.

[00:54:10] Speaker 06:
But the additional point to make is that to the extent that there's a challenge to some individual application of a policy that's lawful, you can't use a lawful conduct later to... Let me back up a second.

[00:54:34] Speaker 06:
You can't use the existence of that lawful refusal to deal policy to bring that earlier conduct into the limitations period without creating the very problems that imposing the refusal to deal would create, because that would essentially render suspect and subject to challenge lawful conduct

[00:54:58] Speaker 06:
that is lawful because, or the very good antitrust policy reason, that we don't want to discourage investment in productive facilities by imposing inappropriate duties to assist competitors.

[00:55:13] Speaker 04:
All right.

[00:55:14] Speaker 04:
If there are no further questions, thank you.

[00:55:16] Speaker 04:
Thank you, Your Honor.

[00:55:17] Speaker 04:
Ms.

[00:55:18] Speaker 04:
Underwood, why don't you take two minutes?

[00:55:33] Speaker 03:
Just like to make a few points.

[00:55:35] Speaker 03:
First on the question, did Facebook require an act to stay away from other platforms?

[00:55:41] Speaker 03:
I would say this is another example of why the motion to dismiss isn't the right place to adjudicate any of this.

[00:55:48] Speaker 03:
There appears to be a factual dispute about what Facebook's

[00:55:51] Speaker 03:
written policy meant or what its practices were or how they were applied or how they were described to developers.

[00:55:59] Speaker 03:
The complaint plainly alleges that Facebook prohibited apps that merely access Facebook's APIs from also dealing with other social networking platforms.

[00:56:09] Speaker 03:
And it's undisputed that this was aimed at the emergence of Google Plus's new platform that ultimately failed.

[00:56:18] Speaker 03:
And the court acknowledged that such a condition could be unlawful.

[00:56:22] Speaker 03:
The district court did, but rejected the allegation as implausible.

[00:56:27] Speaker 03:
That dispute about what exactly was going on shouldn't be resolved on a motion to dismiss the complaint.

[00:56:34] Speaker 03:
And also the complaint alleges conduct outside the written policy, like degrading performance rather than cutting off access.

[00:56:42] Speaker 03:
as retaliation for engaging in potentially competitive conduct.

[00:56:46] Speaker 05:
Can you give me the paragraphs of the complaint where those allegations are contained?

[00:56:51] Speaker 03:
Paragraph 199, paragraph 203, paragraph 205, 223, 227,

[00:57:03] Speaker 03:
These are allegations about what Facebook was doing.

[00:57:06] Speaker 05:
These are the conditions that you're claiming.

[00:57:09] Speaker 03:
Yes, not written as policies.

[00:57:11] Speaker 03:
One of them is a policy and some of them are just behavior.

[00:57:15] Speaker 03:
I also want to say that on this question that it's all too old and can't be remedied anymore.

[00:57:24] Speaker 03:
This is both as to prejudice and as to the continuing, the possibility of remedying unlawful conduct.

[00:57:36] Speaker 03:
The allegation is, and the judge found that there was a substantial anti-competitive effect and forward-looking remedies could be part of an injunction that would restore competition.

[00:57:52] Speaker 03:
On latches and

[00:57:54] Speaker 03:
American stores, American stores did not resolve this.

[00:57:58] Speaker 03:
Justice Kennedy had to write separately because the majority opinion didn't say what he wanted it to say.

[00:58:04] Speaker 03:
The majority opinion left it open.

[00:58:06] Speaker 03:
Said the states are persons.

[00:58:10] Speaker 05:
Excuse me.

[00:58:13] Speaker 05:
The majority opinion mentioned latches, didn't it?

[00:58:16] Speaker 03:
Yes, it said latches and other equitable remedies could be applied to persons that didn't engage with the question whether the states as parents were a special kind of person to whom this wouldn't apply, which is essentially our position that the states sue under the person's statute, but they are different in important ways from other persons.

[00:58:40] Speaker 03:
The US discussion of this question in the Microsoft brief was in a very different context.

[00:58:45] Speaker 03:
Wasn't even talking about latches at all.

[00:58:48] Speaker 03:
It's undisputed that the states, when they sue, are different and invoke governmental interests that are different from and in addition to private person's interests.

[00:58:59] Speaker 03:
My adversary says they're more like a class action, but they're not a class action.

[00:59:06] Speaker 03:
We say they're more like the United States.

[00:59:08] Speaker 03:
They're somewhere in between, but they're governmental.

[00:59:10] Speaker 03:
sovereign states enforcing the law for governmental interests and deserve the treatment of a government.

[00:59:17] Speaker 03:
What's the governmental interest?

[00:59:19] Speaker 03:
The governmental interest is the harm to the economy as a whole, a harm to the marketplace.

[00:59:24] Speaker 03:
You cannot bring a parent's action just by aggregating individual private actions.

[00:59:30] Speaker 03:
You have to show some harm to the community as a whole, to the government, to the state.

[00:59:36] Speaker 03:
And that's what

[00:59:38] Speaker 03:
That's what George, that's from the beginning from Georgia, from SNAP, any discussion of parents will say that, which is what makes it different from a class action or different from a group of individual actions.

[00:59:50] Speaker 05:
Except that from the point of view of the defendant, it's absolutely no different.

[00:59:57] Speaker 03:
The defendant doesn't, may not care who sues him, but the rule about latches is to protect

[01:00:07] Speaker 05:
from the lapse of time, the governmental interest, which is entitled to a different kind of consideration from... You see, with private parties, laches is a time-honored element of equity jurisprudence.

[01:00:24] Speaker 05:
And it protects defendants from stale claims, even if there's... But it used to be that statutes of limitation couldn't apply in equity.

[01:00:33] Speaker 05:
And that's why Latches grew up.

[01:00:35] Speaker 05:
But with respect to the sovereign interests, the United States, for example, there's hypotheticals that it could sue 20 years later.

[01:00:45] Speaker 05:
But the answer to that is another equitable doctrine, which says that the injunctive relief is discretionary.

[01:00:53] Speaker 05:
And if the United States brought an action like that, for sure that doctrine would kick in and prevent any recovery on behalf of the United States.

[01:01:03] Speaker 03:
It wouldn't necessarily prevent remedies here.

[01:01:07] Speaker 03:
We have the United States case, a parallel FTC case here, and there are questions about retrospective relief and future relief, and Latches undisputedly doesn't apply.

[01:01:18] Speaker 03:
That's why our argument is that there's no prejudice on the facts of this particular case.

[01:01:24] Speaker 05:
Am I correct that the only thing left in the FTC case is the acquisitions?

[01:01:34] Speaker 03:
And the opinion certainly suggests that he didn't dismiss the, I mean, he had the FTC lost on the platform claims.

[01:01:44] Speaker 03:
Well, he said, he said adverse things about the platform claims.

[01:01:48] Speaker 05:
He didn't, I don't believe he actually dismissed them because he said he, and I don't know whether that would be appealed or not, but certainly FTC did not appeal that adverse judgment.

[01:01:58] Speaker 05:
Correct.

[01:01:59] Speaker 05:
I don't want to speak to the FTC.

[01:02:01] Speaker 05:
They either appealed or they didn't.

[01:02:04] Speaker 05:
They didn't appeal, right?

[01:02:14] Speaker 03:
I want to talk about the history briefly because I have a different spin on the history.

[01:02:22] Speaker 03:
What we have is evidence from the history that parents' Patriot Actions were important to Congress

[01:02:28] Speaker 03:
And they thought about them as important separately from private actions so that they didn't need to legislate to authorize parents' patriotic actions for injunctive relief because the Supreme Court found parents' patriotic actions for injunctive relief to be implied from the person's authority.

[01:02:50] Speaker 03:
But as soon as courts doubted the existence of a parallel state action for damage actions,

[01:02:56] Speaker 03:
Congress acted to establish that authority.

[01:02:59] Speaker 03:
So Congress's view was that if private individual actions were not enough, that state parent's actions were something different and should be authorized.

[01:03:08] Speaker 03:
So I just think that history needs to be understood as Congress's recognition of the importance of state parent's actions and the difference between them.

[01:03:19] Speaker 03:
All right.

[01:03:20] Speaker 03:
Thank you.

[01:03:21] Speaker 04:
Mr. Hauer, do you want two minutes?

[01:03:28] Speaker 07:
Thank you.

[01:03:41] Speaker 01:
A quick point on latches.

[01:03:43] Speaker 01:
We didn't take a position here.

[01:03:45] Speaker 01:
No inference should be drawn from our not taking position here.

[01:03:55] Speaker 01:
Microsoft and the Deutsche Telekom were district court briefs.

[01:03:58] Speaker 01:
And as a general matter, briefs don't require.

[01:04:04] Speaker 01:
On the conditions.

[01:04:08] Speaker 01:
Council for Metta did not distinguish this court's treatment in Microsoft.

[01:04:14] Speaker 01:
Just as in Microsoft, the conditions here disable a certain form of working with, linking with and integrating them, clearly prohibited

[01:04:25] Speaker 01:
As Council for New York said, there's a factual dispute over on a motion to dismiss about how broad those policies have operation, but inferences must be given in favor of the non-movement.

[01:04:40] Speaker 01:
The conditions in both here and Microsoft do not necessarily, well, certainly in Microsoft, say anything about how the app developers could interoperate or could

[01:04:55] Speaker 01:
develop software for the rivals.

[01:04:58] Speaker 01:
Just as the district court here said in attempting to distinguish the facts of Lorraine Journal, the conditions in Microsoft subject to the traditional framework for section two analysis didn't prohibit the app developers from working with rival platforms or developing different software for those rival platforms.

[01:05:19] Speaker 01:
Those conditions in the first wave agreements simply didn't speak to it.

[01:05:22] Speaker 01:
They were targeted at the software running on Microsoft's operating system for a very specific reason.

[01:05:29] Speaker 01:
They wanted to disable cross-platform functionality.

[01:05:33] Speaker 01:
All you have to do to disable cross-platform functionality is to do what this report said at page 39 or JA249, regulate the quote unquote acceptable features operating on your own platform.

[01:05:47] Speaker 01:
If you make the features of the software operating on your own platform, not cross-platform,

[01:05:52] Speaker 01:
functional and you've disabled cross-platform functionality.

[01:05:56] Speaker 01:
That's what the conditions at 199 and 201 of the complaint do exactly, just as the conditions in Microsoft did.

[01:06:05] Speaker 01:
All right.

[01:06:05] Speaker 01:
Thank you.