In the last post, I went over the basics of the Second Circuit’s 2-1 antitrust ruling against Apple in United States v. Apple, Inc., No. 13-3741-cv (2d Cir. June 30, 2015).

Apple, you will recall, served as the hub of a hub-and-spoke conspiracy that had five spokes — each of them a book publisher — to raise prices on e-books in late 2009 and early 2010.

To review:

  • The spokes settled before the trial, but the hub — Apple — insisted that it had done nothing wrong and that it had instead done competition a service by breaking the e-book monopoly of
  • Despite urging that no wrong did it do, Apple agreed to pay state and private plaintiffs $450 million if it lost its appeal and $70 million if it won.
  • All three of the court of appeals panel members accepted that Apple “orchestrated” the conspiracy (majority) or “enable[d]” it (dissent).

Which brings us to the topic we promised to discuss this time.

The per se melee

That far more consequential part of the majority opinion — and the focus of the dissent — dealt with whether the per se rule of Sherman Act liability for price-fixers extends to entities that orchestrate (or enable) the price-fixing conspiracy but do not occupy the same level of distribution as the other participants in the conspiracy do. As we will see at the bottom of this post, the per se rule simplifies antitrust claims, makes them less costly to prosecute, and renders them more suitable for class treatment.


Circuit Judges Debra Ann Livingston and Raymond Lohier opined that Apple’s “vertical” relationship with the publishers did not absolve it of per se liability. As Judge Livingston wrote:

“The true test of legality” under § 1 of the Sherman Act “is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.”   Bd. of Trade of City of Chi. v. United States, 246 U.S. 231, 238 (1918) (emphasis 5 added).   By agreeing to orchestrate a horizontal price‐fixing conspiracy, Apple committed itself to “achiev[ing] [that] unlawful objective,” Monsanto [Co. v. Spray‐Rite Serv. Corp., 465 U.S. [752,] 764 [(1984)] (internal quotation marks omitted): namely, collusion with and among the Publisher Defendants to set ebook prices.  This type of agreement, moreover, is a restraint “that would always or almost always tend to restrict competition and 10 decrease output.”  Leegin [Creative Leather Prods., 15 Inc. v. PSKS, Inc.], 551 U.S. [877,] 886 [(2007)] (internal quotation marks omitted).

The response, raised by Apple and our dissenting colleague, that Apple engaged in “vertical conduct” that is unfit for per se condemnation therefore misconstrues the Sherman Act analysis.  It is the type of restraint Apple agreed to impose that determines whether the per se rule or the rule of reason is appropriate. These rules are means of evaluating “whether [a] restraint is unreasonable,” not the reasonableness of a particular defendant’s role in the scheme.  Atl. Richfield [Co. v. USA Petroleum Co.], 495 U.S. [328,] 342 [(1990)] (emphasis added) (internal quotation marks 18 omitted); see also Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of the Univ. of Okla., 468 U.S. 85, 103 (1984) (“Both per se rules and the Rule of Reason are employed to form a judgment about the competitive significance of the restraint.” (internal quotation marks omitted)).

Id. at 72-73.


The dissenter, Circuit Judge Dennis Jacobs, wrote that “[t]his appeal turns on whether purely vertical participation in and facilitation of a horizontal price-fixing conspiracy gives rise to per se liability.” United States v. Apple, Inc., No. 13-3741-cv, slip op. at 14 (2d Cir. June 30, 2015) (Jacobs, J., dissenting). Judge Jacobs regarded the majority’s view of the question old-timey and maybe quaint:

A vertical relationship that facilitates a horizontal price conspiracy does not amount to a per se violation. In another age, the Supreme Court treated such a hub-and-spokes conspiracy as a per se violation. See Interstate Circuit, Inc. v. Paramount Pictures Distrib. Co., 306 U.S. 208, 226-27 (1939). But the per se rule has been in steady retreat.

Id. at 16.

The Supreme Court’s decision in Leegin Creative Leather, Judge Jacobs felt, signaled the doom of hub-and-spoke conspiracies as foundations for per se liability of the hub. He wrote:

The most recent and explicit signal is given in Leegin, which explains that “the Sherman Act’s prohibition on ‘restraints of trade’ evolves to meet the dynamics of present economic conditions,” such that “the boundaries of the doctrine of per se illegality should not be immovable.” 551 U.S. at 899-900 (alterations omitted). Leegin held that a manufacturer did not commit a per se violation of § 1 when it agreed with several retailers on a minimum price that the retailers could charge–a holding that overruled a century-old principle articulated in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911). See Leegin, 551 U.S. at 881. Leegin reasoned that Dr. Miles had “treated vertical agreements a manufacturer makes with its distributors as analogous to a horizontal combination among competing distributors,” but that, “[i]n later cases, . . . the Court rejected the approach of reliance on rules governing horizontal restraints when defining rules applicable to vertical ones.” Leegin, 551 U.S. at 888. Dr. Miles was held to be inconsistent with “[o]ur recent cases[,] [which] formulate antitrust principles in accordance with the appreciated differences in economic effect between vertical and horizontal agreements, differences the Dr. Miles Court failed to consider.” Id.

Although the express holding of Leegin does not extend beyond the overruling of Dr. Miles, the Court’s analysis reinforces the doctrinal shift that subjects an ever-broader category of vertical agreements to review under the rule of reason. The Court first stated the subsisting scope of per se liability: A horizontal cartel among competing manufacturers or competing retailers that decreases output or reduces competition in order to increase price is, and ought to be, per se unlawful. Leegin, 551 U.S. at 893. The Court then rejected per se liability for hub-and-spokes agreements, in wording that prescribes rule-of-reason review of vertical dealings that facilitate per se unlawful horizontal agreements (the type of agreement that the district court found Apple had undertaken): To the extent a vertical agreement setting minimum resale prices is entered upon to facilitate either type of cartel [among 17 manufacturers or among retailers], it, too, would need to be held unlawful under the rule of reason. Id. (emphasis added). After Leegin, we cannot apply the per se rule to a vertical facilitator of a horizontal price-fixing conspiracy; such an actor must be held liable, if at all, “under the rule of reason.” Id.


The ultimate outcome of United States v. Apple on the per se v. rule of reason issue — whether in the Second Circuit or the Supreme Court — will affect antitrust law in three principal ways.

First, a per se case is simpler, costs millions of dollars less to try, and has greater odds of success with a judge or jury. Why? Because, unlike the rule of reason, per se:

  • does not require an economist to opine about the relevant product and geographic markets;
  • obviates the need to prove that the defendants had market (or monopoly) power or that their conduct was anticompetitive;
  • simplifies proof of damages; and
  • precludes defendants from claiming, and presenting evidence, that their agreement enhanced competition.

Second, a per se case stands a much better chance of meeting the requirements of Rule 23(b)(3), which allows certification of claims to recover damages on a class-wide basis. The irrebuttable presumption of unlawfulness prevents defendants from injecting “pro-competitive” justifications and other complicating issues that may affect different class members differently and may therefore lead to the conclusion that issues common to class members do not, as Rule 23(b)(3) requires, “predominate” over individual questions.

Finally, a win for Apple on the per se issue would lend credence to the dissenting judge’s claim that “the per se rule has been in steady retreat” since the 1970s, notably (according to the dissent) in Leegin. The idea of a trend against per se treatment might encourage courts to question all of the traditional per se categories (including price-fixing, customer and market allocation, and agreements to limit supply).

As we know from Chief Justice John Marshall, “the power to tax involves the power to destroy”, McCulloch v. Maryland, 17 U.S. (4 Wheat) 416, 431 (1819), and converting antitrust cases from per se to rule of reason would impose a tax that would make them much harder to afford, more difficult to win, less likely to qualify for class treatment, and generally scarcer.

What do you think about that possibility? Does the prospect of weakening enforcement of antitrust law sound like a good thing to you or a bad thing? Or do you believe that the dissent has the better argument about the proper scope of the per se shortcut?



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Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

A versatile trial lawyer, Barnett knows how to handle a case all the way from strategic pre-suit planning to affirmance on appeal. He’s tried cases to verdict and then briefed and argued them when they went before appellate courts, including the Second, Third, Fifth, and Tenth Circuits, the Supreme Court of Louisiana, and (in the case of Comcast Corp. v. Behrend) the Supreme Court of the United States.

Barnett is a sought-after public speaker, often serving on panels and talking about topics like the trials of antitrust class actions and techniques for streamlining complex litigation. He also comments on trends in commercial litigation and the implications of major rulings for outlets such as NPR, Reuters, Law360, Corporate Counsel, and The Dallas Morning News. He’s even appeared in a Frontline program about underfunding of state pensions, authored chapters on “Fee Arrangements” and “Techniques for Expediting and Streamlining Litigation” (the latter with Steve Susman) in the ABA’s definitive treatise on Business and Commercial Litigation in Federal Courts, 5th, and commented on How Antitrust Enforcers Might Think Like Plaintiffs’ Lawyers.

Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

A client in a $100 million oil and gas case, which Barnett’s team won at trial and held on appeal, said Barnett and his team “presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom.” David McCombs at Haynes and Boone said Barnett “has a natural presence that goes over well with juries and judges.”

Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.