A Developing Circuit Split Over Vertical Restraints?

In Leegin Creative Leather Products Inc. v. PSKS Inc., 551 U.S. 877 (2007), the U.S. Supreme Court held that vertical resale price maintenance (RPM) agreements were not per se unlawful under the Sherman Act, but instead were to be evaluated under the rule of reason. Given the challenges of pleading and proving rule of reason cases, Leegin was heralded by some as the death knell for Sherman Act claims based on vertical restraints.

In United States of America v. Apple Inc., however, the Southern District of New York held, notwithstanding Leegin, that the per se rule applied to Apple’s vertical agreements with electronic book publishers. This decision seems contrary to Leegin’s holding and reasoning and could, if upheld by the Second Circuit, give rise to a circuit split.

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