Eric M. Merrill

Apple asked the Ninth Circuit to reconsider part of a panel decision that largely affirmed an injunction in the case being brought by Epic Games Inc. that blocked the tech giant from charging developers "prohibitive" commissions on iPhone app purchases made outside its payment systems. Apple filed a petition Monday seeking a rehearing from the panel, or the full Ninth Circuit, for a December ruling that largely affirmed an injunction mandating changes to its App Store policies, issued after the lower court found that Apple violated a previous order. The petition said that although the panel held that the injunction can only bar "prohibitive" commissions, or fees so high they prevent developers from linking to cheaper payment options, it also suggested in its ruling that Apple can only recover the direct costs of implementing linked-out purchases. "Apple respectfully seeks rehearing and, if need be, rehearing en banc on a narrow but extraordinarily important question: whether this court has imposed, and, if so, can impose, a direct-cost-only rate on linked-out purchases on the Apple App Store," Monday's petition said. "That critical question affects not just the judiciary's authority to regulate economic rates, but also an innovator's ability to earn a return on the enormous investment necessary to create and grow a novel marketplace with global reach." U.S. District Judge Yvonne Gonzalez Rogers issued the original injunction after finding that Apple violated California's unfair competition law by blocking developers from steering app users to outside payment methods. The judge later found that Apple willfully violated her order barring the antisteering rules by imposing new fees and restrictions, including a 27% commission on purchases made through a link, rather than the 30% it charges for most in-app purchases. She then issued a new injunction that sought to bar Apple from collecting any commissions on the linked purchases. The Ninth Circuit largely affirmed the new injunction but found it went too far and could only block "prohibitive" commissions that prevent developers from using the links. Apple's petition Monday said the appeals court also offered some possible courses of action for the lower court on remand, including suggesting that Apple only be able to recover the direct costs of implementing the linked-out purchases, even if a higher commission would not be prohibitive. The petition said Epic's CEO has even said the ruling only allows for a "de minims commission," which Apple said would resurrect "the zero-commission rule this court reversed." "To eliminate any doubt on this critical question, Apple asks the panel to clarify that Apple may charge a nonprohibitive commission on linked-out purchases as long as it is not prohibitive, even if such a commission exceeds the amount necessary to recover Apple's 'direct costs' for coordinating such purchases," the petition said. Apple said California law bars rate-setting to remedy unfair competition violations and said a ruling mandating a direct cost only rate would be rate-setting, "pure and simple." The petition also said limiting Apple's commissions to its cost of implementing the linked-out purchases would "grossly" undercompensate it for investments made in developing the App Store and other services it provides to developers. "It would wrongly deprive Apple of the basic economic right to recover a portion of its enormous investment in creating — and sustaining — one of the best, and most important, marketplaces ever created," the petition said. "And it would amount to a judicial takeover of the app economy — a matter far afield from the judiciary's expertise." Apple said the appeals court should also reconsider applying the injunction to all developers, citing the U.S. Supreme Court's recent ruling in litigation challenging President Donald Trump's birthright citizenship executive order that dealt with nationwide injunctions and their impact on nonparties. "Epic is the only plaintiff in this case," the petition said. "Yet the panel held that injunctive relief must apply with respect to all developers — even developers that do not wish to link out to the Epic Games store." Epic launched the high-stakes battle with Apple in 2020, along with a similar case targeting Google LLC over restrictions on apps for Android devices, after getting its popular Fortnite video game intentionally booted from the platforms for violating policies against using outside payments systems. The original order from Judge Yvonne Gonzalez Rogers followed a bench trial and the rejection of Epic's federal antitrust claims targeting Apple's broader policies that block rival stores and require use of its payment system for in-app purchases. The Supreme Court declined petitions from both Apple and Epic contesting aspects of the ruling after the Ninth Circuit largely affirmed the decision. Judge Gonzalez Rodgher later found that Apple violated her order barring the antisteering rules by imposing new fees and restrictions she said were intended to preserve the company's "anticompetitive revenue stream." Apple sought to impose a 27% commission on purchases made through a link, rather than the 30% it charges for most in-app purchases. The appeals panel found that the trial judge didn't clearly err in finding that Apple's antitrust compliance efforts had been in bad faith and didn't abuse her discretion in holding Apple in contempt for willfully violating her earlier 2023 injunction. The panel agreed with Apple, however, that a "zero-commissions rule" went too far by barring Apple from collecting a "nonprohibitive, reasonable commission or fee to ensure security and privacy for users." Epic reached a settlement in its case against Google last year, after the Ninth Circuit affirmed a California jury's 2023 finding that Google monopolized the Android app distribution market and the market for in-app billing services on Android devices. U.S. District Judge James Donato issued a three-year injunction requiring Google to open the Android operating system to Play Store rivals. The judge is now expressing serious doubts about the settlement and proposed changes to the court's order. A representative for Epic declined to comment Tuesday. Representatives for Apple did not immediately respond to a request for comment. U.S. Circuit Judges Sidney R. Thomas and Milan D. Smith Jr. and U.S. District Judge Michael J. McShane sat on the panel for the Ninth Circuit. Epic Games is represented by Gary A. Bornstein, Yonatan Even, Lauren A. Moskowitz, Michael J. Zaken and M. Brent Byars of Cravath Swaine & Moore LLP and Paul J. Riehle of Faegre Drinker Biddle & Reath LLP. Apple is represented by Gregory G. Garre, Roman Martinez, Soren J. Schmidt, Ben Harris and Kristin C. Holladay, Sarah M. Ray and Nicholas Rosellini of Latham & Watkins LLP and Mark A. Perry, Zachary D. Tripp, Joshua M. Wesneski, Cynthia E. Richman, Theodore J. Boutrous Jr. and Daniel G. Swanson of Gibson Dunn & Crutcher LLP. The case is Epic Games Inc. v. Apple Inc., case number 25-2935, in the U.S. Court of Appeals for the Ninth Circuit.

Mar 3

5 min

An insurer said an auto parts manufacturer can't get $50 million in coverage for COVID-19 losses, telling a North Carolina federal court the company concealed that an employee's positive test result was false since it was the only evidence that the virus was present at one of the manufacturer's facilities. In a motion for summary judgment filed Monday, Sompo America Insurance Co. contended that Teijin Automotive Technologies NA Holding Corp. cannot satisfy the requirements to trigger coverage under a communicable disease endorsement. The endorsement requires the "actual, not suspected," presence of a communicable disease at an insured location, and also requires that access to such a location was limited, restricted or prohibited by either an order of a governmental agency or an officer of Teijin. "Teijin has not satisfied either trigger," the insurer said. "In fact, in the absence of proof to substantiate its claim, Teijin resorted to outright deception, concealing that a COVID-19 positive test for an employee at the Huntington plant — the sole basis for more than half of the $50 million of its alleged damages — was actually a 'false positive.'" The insurer further argued that Teijin is not entitled to coverage because it willfully concealed or misrepresented facts about its claim. Teijin asserted in a competing motion, also filed Monday, that Sompo's position conflicts with the science that false negatives are more likely than false positives. The auto parts manufacturer said it has easily satisfied the endorsement's first requirement of the "actual, not suspected," presence of a communicable disease because it is a "low hurdle" requiring "something more than little to no evidence," not a lab-confirmed test. The presence of COVID-19 at its facilities is established by evidence of biostatistics and employee data of COVID-19 infections, which "confirms what everyone during the pandemic knew: COVID-19 was everywhere, including at Teijin's facilities," the manufacturer said. The endorsement's second requirement of restricted access has also been met, given that government orders regulated businesses like Teijin's by limiting access to essential workers and restricting access for symptomatic or COVID-19 positive individuals, Teijin said. The manufacturer added that its officers also made decisions to restrict access to Teijin's plants as a result of the virus. Teijin filed the suit in February 2024, seeking to recoup coverage for losses at its Indiana, Ohio, Michigan and North Carolina locations. The manufacturer asserted claims for breach of contract, bad faith and violations of North Carolina's Unfair and Deceptive Trade Practices Act. Last March, U.S. District Judge Thomas D. Schroeder rejected Sompo's request to toss the suit, finding that Teijin sufficiently alleged that its losses were covered under the communicable disease endorsement. The judge also held that Teijin's allegations were sufficient to support its UDTPA claim. Teijin also argued Monday that the undisputed facts show that Sompo violated the UDTPA by misrepresenting policy requirements and unreasonably denying coverage. Sompo, however, said that the court may determine that it erred in its policy interpretation, but that does not mean it violated the UDTPA. "Sompo's initial denial of the claim based on the lack of actual presence of COVID-19 was reasonable, and including a second basis for denial — even if ultimately incorrect — 'does not make the explanation unreasonable' as a matter of law," the insurer said. Representatives of the parties did not immediately respond to requests for comment Tuesday. Teijin is represented by Darren S. Teshima, Sabrina T. McGraw, Bruno Campos and Matthew Schlesinger of Covington & Burling LLP and Richard C. Worf Jr. of Robinson Bradshaw & Hinson PA. Sompo is represented by Gary Svirsky, Richard B. Goetz, Zoheb Noorani, Kellie A. Swannie, Matthew M. Higgins and Kristin Cope of O'Melveny & Myers LLP and Jennifer K. Van Zant of Brooks Pierce McLendon Humphrey & Leonard LLP. The case is Teijin Automotive Technologies NA Holding Corp. v. Sompo America Insurance Co., case number 1:24-cv-00159, in the U.S. District Court for the Middle District of North Carolina.

Mar 3

3 min

A cross-office team has advised Microsoft’s Climate Innovation Fund on the US$50 million investment with LanzaJet, a sustainable fuels technology company and renewable fuels producer. The investment will support the construction of LanzaJet's (and the world's) first alcohol-to-jet sustainable aviation fuel (SAF) production plant, Freedom Pines Fuels in Soperton, Georgia. The innovative structure of Microsoft's financing will enable LanzaJet to bring lower-cost sustainable aviation fuel and renewable diesel to the global market. The investment was made as part of Microsoft's efforts to achieve its 2030 goal of becoming carbon negative and advancing a net-zero economy. It also allows Microsoft to access sustainable, renewable diesel for its data centers to enable Microsoft further to achieve its net-zero goals. The Latham team was led by Washington, D.C. partner Paul Hunt and counsel Eric Merrill and includes Washington, D.C. partner James Barrett, San Diego partner Robert Frances and counsel Aaron Friberg, New York partner J.P. Brisson, Orange County counsel Josh Bledsoe, Washington, D.C. associate James Lim and New York associate Qingyi Pan.~~

Jan 13

1 min

Global Infrastructure Partners (GIP) and AES Andes have agreed to expand its renewable energy partnership through their joint investment in a new portfolio of renewable projects. With this transaction, valued at US$441 million, the partnership between AES Andes and GIP will increase by 693 MW, including investments in Bolero Solar, Andes Solar IV, the San Matías Wind Farm and an additional battery system for Andes Solar IIa. Under the new agreement, AES Andes received US$333 million in December 2023. GIP will contribute the balance of its investment as the agreed conditions are met and the projects under construction reach commercial operation. As with the original partnership between the parties in 2021, on which Latham also advised, GIP will have a 49% stake and AES Andes will have a 51% stake in the companies developing new projects. The two companies’ partnership will now comprise a portfolio of more than 1,400MW in wind, solar and battery capacity in Chile. Latham & Watkins LLP represented GIP in the transaction with a team led by partners Tony Del Pino and Carlos Ardila, counsel Eric Merrill, and associates Costanza Garcia and Javier Arreola.* *Only Admitted to practice in Mexico.~~

Jan 11

1 min

Live Nation does not illegally pressure concert venues or artists to use Ticketmaster and other of its services, its counsel told a Manhattan federal jury Tuesday, calling the entertainment giant a "fierce, lawful, legitimate" competitor as a closely watched antitrust trial opened. Live Nation's counsel argued at the start of an antitrust trial that the company owns "very little" relative to the entire universe of over 20,000 venues in the United States. (Photo by Mario Tama/Getty Images) A civil jury of 12 New Yorkers heard morning-long opening statements at the outset of a Sherman Act trial before U.S. District Judge Arun Subramanian that could last five weeks. Live Nation is seeking to beat claims by the government that it engaged in monopolistic conduct to control the live entertainment supply chain after its 2010 purchase of ticketing giant Ticketmaster. "We do not have monopoly power, and we will show you that through the evidence," its counsel David Marriott told jurors. "This marketplace is more competitive than ever it has been before. Every customer we get is a hard-fought battle in a competitive market." Relative to the entire universe of over 20,000 venues in the United States — including big stadiums largely owned by sports teams — Live Nation owns "very little," he said, arguing to the jury that the government is cherry-picking data related to amphitheaters to try to prove antitrust injury. "There are more ticketing options today than ever there have been before," he said. Openings unfolded after a detailed decision by Judge Subramanian last month that narrowed the issues for the jury. The panel must weigh allegations that Live Nation pressures artists who use its large amphitheaters to also use its promotional services, and that the company unduly ties the use of its venues to the use of Ticketmaster. "The fans have a triable issue about antitrust injury," Judge Subramanian wrote in relation to the ticket-tying allegation, calling it the strongest part of the government's case. "Fans purchasing tickets from Ticketmaster may suffer the downstream consequences of any violation in the ticketing-services market, which could take the form of fewer shows, worse services, or higher fees." In allowing the promoter-related claims to proceed, the judge cited evidence including a "situation in which an artist wanted to play at a Live Nation amphitheater with a different promoter but was rebuffed because the amphitheater was 'off limits to' that promoter." Claims from 39 states and the District of Columbia — including from New York Attorney General Letitia James — also remain in play. The Empire State claims, among other things, that Live Nation's conduct saddles music fans with high prices and outrageous fees. After the decision putting the case on track for trial, Live Nation executive Dan Wall said any effort by the U.S. Department of Justice to force the company to divest Ticketmaster was off the table. He added that the pursuit of a "meaningful" settlement was the superior course of action. But with no settlement forthcoming amid comments from James' office that it would continue to pursue its case no matter what the feds do, Marriott told the jury that the live entertainment market is thriving. Despite allegations that Live Nation has done "horrible things," what the company has actually done is "bring joy to people's lives," he said. "They produce great concerts. They produce great live entertainment," Marriott said, adding that the jury will see evidence of "intense competition in the markets that are relevant" to the dispute. Marriott followed the DOJ's David Dahlquist, who said the government will prove that Live Nation and Ticketmaster acted illegally to maintain monopoly power. "Today the concert ticket industry is broken," Dahlquist said. "It is controlled by a monopolist." Since their 2010 tie-up, Live Nation and Ticketmaster "have continued to grow their power" and "misuse their power," Dahlquist said. They control an 86% share of ticketing for large concert venues, a figure he said is not healthy. Dahlquist said documentary evidence from the defendants' own workers will bear out the allegations. He said the jury will also hear from a competitor called AXS, which he said is stuck at a 9% market share because of barriers to competition that Live Nation has erected. Another competitor, SeatGeek, will also feature prominently as trial unfolds, Dahlquist said. SeatGeek CEO Jack Groetzinger is expected to tell the jury that Ticketmaster used threats as it sought to block his company from signing clients. "This is strong evidence of market power," Dahlquist said. He described a "flywheel" of control the company exercises via its venues, ticketing and promotions through which performers must pass. "Live Nation and Ticketmaster control the connection between artists and fans," he said. "Ticketing fees are the highest they have been in the United States." Amid billion-dollar profits, Dahlquist said, the jury will also see evidence that the company mocks concertgoers, including messages that Ticketmaster is "robbing them blind, baby." Amid the alleged market abuses, Ticketmaster has allegedly failed to develop technological improvements — a sign that the market is not benefiting from healthy competition, he said. Dahlquist cited ticketing snafus that exploded during Taylor Swift's wildly popular Eras Tour. He said the jury would see evidence related to "decreased innovation" as the government challenges Live Nation's contention that its position in the market is good for competition. During opening statements, the jury also heard from a representative for the state plaintiffs, Jonathan Hatch of the New York Attorney General's Office, who said empirical evidence will show what fees would look like absent an alleged monopoly. "Ticketmaster keeps $2.30 a ticket more" than competitors like AXS, Hatch said. "This is what Ticketmaster is taking just because it can." Among other high-profile witnesses, the trial is expected to feature testimony from Michael Rapino, Live Nation's CEO. Dahlquist said Rapino's own words will help the government prove its allegations. The government is represented by counsel including Bonny Sweeney, Lorraine Van Kirk and David Dahlquist of the U.S. Department of Justice's Antitrust Division. The states are represented by their respective attorneys general. Live Nation and Ticketmaster are represented by Al Pfeiffer, David Marriott, Tim O'Mara, Jennifer L. Giordano, Andrew Gass, Kelly Fayne, Lindsey S. Champlin and Robin L. Gushman of Latham & Watkins LLP and Lauren A. Moskowitz, Jesse M. Weiss and Nicole M. Peles of Cravath Swaine & Moore LLP. The case is U.S. v. Live Nation et al., case number 1:24-cv-03973, in the U.S. District Court for the Southern District of New York.

Mar 3

5 min