Summary
The Ninth Circuit affirmed the district court’s findings that Apple Inc. violated an injunction governing App Store anti-steering practices and was in civil contempt. It reversed and remanded in part the sanctions and remedial restrictions, concluding that some were overbroad or improperly structured, while otherwise affirming the contempt order. The court declined to vacate the injunction, rejected Apple’s arguments concerning nationwide injunctions, the Takings Clause, the First Amendment, due process, privilege, and judicial reassignment, and affirmed jurisdiction over the appeal.
Topics
Practice areas
Questions Presented
- Whether the district court abused its discretion by finding Apple in civil contempt for violating the injunction.
- Whether the district court properly considered the spirit and purpose of the injunction, evidence of Apple's bad faith, and materials challenged as attorney-client privileged.
- Whether Apple's 27% commission and link-design restrictions violated the injunction.
- Whether the district court's six prospective restrictions were permissible civil-contempt sanctions or an improper expansion of the injunction.
- Whether the commission prohibition violated equitable-abstention principles under California's Unfair Competition Law, the Takings Clause, the First Amendment, or due process.
- Whether subsequent authority required vacatur of the injunction under Rule 60(b)(5), including whether the injunction was an impermissible nationwide injunction under Trump v. CASA, Inc.
- Whether the case should be reassigned to a different district judge on remand.
Holdings
- A party may be held in civil contempt for violating the spirit of an injunction when it adopts a dubiously literal interpretation designed to evade the injunction's goals, even if the strict letter is not violated in every respect.
- Evidence of a contemnor's bad faith may be considered in evaluating civil contempt, particularly where the contemnor relies on a good-faith defense; bad faith may negate that defense.
- The Ninth Circuit declined to adopt the D.C. Circuit's alternative primary-purpose formulation for dual-purpose communications and applied the existing Ninth Circuit approach requiring legal advice to be the primary purpose.
- A commission that effectively prevents developers from using linked-out purchasing mechanisms is a prohibited restriction under the injunction, even though the injunction does not expressly mention commissions.
- Apple violated the injunction by requiring invisible 'plain buttons,' limiting developers to five templates, excluding external links from purchase flows, using a deterrent 'scare screen,' and requiring static rather than dynamic links.
- A district court may impose prospective restrictions that coerce compliance with an existing injunction or clarify its operation, but a permanent prohibition on all commissions was not a proper civil-contempt sanction because it was neither compensatory nor purgeable.
- The April 30 Order did not constitute impermissible judicial ratemaking under California's UCL, a regulatory taking, a violation of Apple's First Amendment rights, or a denial of due process.
- Neither Beverage v. Apple, Inc. nor Trump v. CASA, Inc. required vacatur of the injunction; the injunction remained tied to Epic's injuries and was not an impermissible nationwide injunction.
- Reassignment was unwarranted because disagreement with the district court's contempt findings, privilege rulings, and remedial decisions did not constitute rare and extraordinary circumstances.
Key quotations
“We affirm the district court’s contempt findings. We reverse and remand in part the district court’s imposition of civil contempt sanctions, but we otherwise affirm that order.” (18)
“In short, Sea Shepherd means what it says: parties may be held in contempt for violating the spirit of an injunction.” (20)
“However, Apple did not charge any commission; it charged a prohibitive commission.” (29)
“Where a fine is not compensatory, it is civil only if the contemnor is afforded an opportunity to purge.” (38)
“AFFIRMED in part, REVERSED in part, and REMANDED.” (54)
Factual background
Epic operates a video-game business and an app store, while Apple operates iOS and the App Store and historically required developers to use Apple's In-App Purchase system for digital transactions. The district court's original injunction prohibited Apple from preventing developers from including buttons, external links, or other calls to action directing customers to purchasing mechanisms outside Apple's App Store. In response, Apple adopted a 27% commission on linked-out purchases and multiple restrictions on link placement, design, warnings, templates, and dynamic functionality. The district court found that these measures made external purchases economically nonviable or practically difficult, held Apple in contempt, and imposed six prospective restrictions.
Procedural history
Epic sued Apple over App Store practices. After a bench trial, the district court found Apple's anti-steering provisions violated California's Unfair Competition Law and entered an injunction; the Ninth Circuit affirmed the injunction in part, and the Supreme Court denied certiorari. After Apple implemented a 27% commission and restrictions on external links, Epic moved to enforce the injunction. Following evidentiary hearings, the district court found Apple in civil contempt and entered the April 30 Order. The Ninth Circuit affirmed the contempt findings, modified and reversed portions of the sanctions, rejected Apple's constitutional and equitable-abstention challenges, declined to vacate the injunction, and remanded for further modification.
Remand instructions
The district court must consider whether Apple's exclusion of Video Partner Program and News Partner Program developers violated the injunction or was necessary to protect or give life to it. The district court must also amend the commission prohibition as either a purgeable civil-contempt sanction or a properly tailored clarification or modification of the injunction. The court otherwise left the injunction and April 30 Order in effect, as modified, and declined to reassign the district judge.