A Market Undrawn, an Owner Uninjured

The setup

PhantomALERT built a crowdsourced traffic app, the kind that warns drivers about speed traps and road hazards.[1] In early 2020 it repurposed the app to let users spot, report, and steer around COVID-19 outbreaks.[1] Apple rejected the update, citing new guidelines that limited pandemic-related apps to recognized health institutions and required apps in tightly regulated fields to come from established legal entities rather than individual developers.[1] Google’s store turned it away on similar grounds, and although Apple later loosened the rule to admit government-endorsed COVID apps, PhantomALERT says it was never told.[1]

The developer sued in federal court, alleging Apple had illegally monopolized its store and tied its products together under the Sherman Act, the country’s core antitrust statute.[1] It stumbled procedurally, missing the deadline to oppose Apple’s motion to dismiss and filing an amended complaint instead; the district court dismissed the case and refused to accept the late amended complaint as futile, because it failed to define any relevant market and lacked the elements for the injunction it sought under California law.[1] On appeal the D.C. Circuit reviewed those rulings de novo, meaning it looked at the legal questions fresh, with no deference to the judge below.[1]

The question

A monopolization claim needs a relevant market, the set of products that genuinely compete for the same customers, because a firm can only be a monopolist of something.[1] As a rule a single brand is not a market; a carmaker does not monopolize “Fords” while other cars are for sale.[1] The Supreme Court’s Kodak decision cut a narrow exception, holding that sometimes a single brand’s aftermarket, the parts and service for a durable good customers have already bought and cannot easily abandon, can be its own market.[1] PhantomALERT reached for that exception, describing iPhone owners as locked into Apple’s App Store.[1]

So the question was whether the complaint plausibly alleged such a single-brand market, and a narrower one for COVID apps besides.[1] The answer was not obvious, because Apple plainly does control the iPhone, and the developer assumed that pointing at that power would carry the day.[1]

The reasoning, walked

Start with the burden the complaint had to meet. To survive dismissal it needed facts, not labels, making a relevant market plausible, the standard the Supreme Court set in Twombly.[1] Market power can be shown two ways, by rare direct evidence or, more often, by the structural route: a dominant share of a properly defined market, walled off by barriers to entry.[1]

The court then assumed, without deciding, the test the Ninth Circuit used in the Epic Games litigation against Apple, under which even a single-brand aftermarket must take in all reasonable substitutes, and the plaintiff must actually do the work of market definition.[1] That work has recognized tools, among them the hypothetical monopolist test, which asks whether one seller controlling the whole proposed market could profitably raise prices, and the practical factors courts have weighed since Brown Shoe, such as whether buyers treat other products as interchangeable.[1] The amended complaint supplied none of it.[1]

For the claimed market in “access to apps on the iPhone,” the complaint offered no substitute analysis and skipped the obvious alternative, reaching apps through a mobile web browser instead of the App Store.[1] Without ruling that path out, the court held, the proposed market was not plausible.[1] PhantomALERT had a stronger theory available, that when a defendant already dominates the foremarket, here the phone itself, a plaintiff need not plead classic lock-in because the aftermarket power flows straight from the foremarket.[3] But it had not pressed that theory in the district court, and the panel refused to let it switch arguments on appeal.[1]

The narrower market fared no better. The complaint blurred a market for “access to” COVID apps with a market for the apps themselves, and propped up the category with a single assertion that such apps are not interchangeable with others because they serve a specific purpose.[1] That is a label where the law demands an analysis of how buyers substitute among products, so it too failed Twombly.[1] The California claims followed the federal ones down, since the state antitrust count rose or fell with the Sherman Act theory and the unfair-competition count was abandoned on appeal.[1] The court affirmed the dismissal, but without prejudice, leaving PhantomALERT free to try again if it can define a market properly.[1]

What turns on it

For developers who feel squeezed by an app store, the decision raises the price of admission. A platform plaintiff cannot get past a motion to dismiss by gesturing at Apple’s evident control of the iPhone; it has to define a market and rule out substitutes, the mobile web foremost among them.[1] That unaddressed browser is a recurring soft spot in platform antitrust, because web apps are a real, if imperfect, alternative to the native kind, and ignoring them tends to sink a market definition before it starts.[1]

The opinion is also notable for what it withholds. By assuming the Epic Games framework rather than adopting it, and by treating the foremarket-power theory as given up, the court decided the case without resolving the deeper question of when a single brand can be its own market at all.[1][3] A future plaintiff who pleads that theory squarely could still test it, and because this dismissal was without prejudice, the door here is closed only until someone draws the market with more care.[1]

A superyacht longer than a football field sat seized in a Fijian harbor while lawyers in New York argued a narrower question than who really owned it: whether the man whose name was on the title was even allowed into the courtroom.[1]

The setup

The Amadea is a 348-foot vessel worth something near three hundred million dollars, taken by the Justice Department’s kleptocracy task force in 2022.[1][2] The government did not sue a person. It sued the boat, in a civil forfeiture action, an old procedure in which the case is brought against the property itself on the theory that the thing was used in or bought with the proceeds of a crime.[1] Its allegation was that the true, beneficial owner is Suleiman Kerimov, a sanctioned Russian oligarch, and that money moved through American banks to keep the vessel running in violation of sanctions.[1][2]

Two claimants stepped forward: Eduard Khudainatov and his company, which held legal title, insisting Khudainatov was the real owner.[1] The government moved to strike their claim for lack of standing, the requirement that a litigant have a real stake in the dispute before a court will hear him.[1] Rather than decide it on paper, the district court held a four-day evidentiary hearing and found, by a preponderance of the evidence (more likely than not), that the claimants held nothing but bare title and were straw owners, names on a document standing in for someone else.[1] It struck their claim and ordered the yacht forfeited, and they appealed.[1]

The question

To fight a forfeiture a claimant needs two kinds of standing. Statutory standing means meeting the filing rules Congress laid down; constitutional standing, the harder one here, means showing a concrete injury of one’s own from the seizure.[1] An owner normally has that injury as a matter of course. The puzzle is what happens when ownership itself is contested, and whether a person who holds legal title but no beneficial stake has been injured at all when the property is taken.[1] Folded inside it is a procedural question with real bite: at what point, and by what standard, a judge may resolve those disputed ownership facts before any trial on the merits.[1]

The reasoning, walked

The court’s starting point was a rule almost no one contests. Standing looks to the injury of the party asking for it, and someone who holds title for another’s benefit is not the one who loses when the property is seized.[1]

Bare legal title, standing alone, is therefore not enough; a claimant must show at least a facially colorable interest, some genuine stake beyond the paper.[1] The harder step was procedural. When the facts behind standing are genuinely disputed, the court held, a judge may hold an evidentiary hearing and require the claimant to prove his stake by a preponderance, a heavier demand than merely raising a factual dispute that would send the issue to trial.[1] That is the load-bearing move, because it lets a judge decide contested ownership before the merits are ever reached.[1]

The claimants saw the trap and argued it. Proving beneficial ownership by a preponderance, they said, collapses the standing question into the merits, since who truly owns the yacht is the whole case.[1] The court answered that overlap is permitted, and that deciding whether they had a facially colorable interest is not the same as deciding ultimate ownership.[1] The tension in that answer is real, and it matters below.

Applied to the facts, the result came quickly. A 2021 memorandum of agreement had sold the yacht for two hundred twenty-five million euros to a Cayman company formed days earlier, with the buyer taking use and operating costs after the first installment and paying in full within months.[1] After that sale Khudainatov stopped using the vessel, left no belongings aboard, and paid none of its insurance; by the 2022 seizure the indicia of ownership, possession, control, financial stake, had all passed on.[1] A sworn declaration from Khudainatov was excluded as hearsay, because forfeiture hearings of this kind apply the ordinary rules of evidence.[1] What remained in his hands was title with nothing behind it, so the panel affirmed: no injury, and therefore no standing to contest the forfeiture.[1]

The reasoning, weighed

Both decisions are gatekeeping opinions, each turning a plaintiff away at a threshold, market definition in the one, standing in the other, before any court weighs the merits. The antitrust panel reasons cleanly within a narrow lane. Its point is modest and hard to fault: a complaint cannot conjure a market by pointing at Apple’s grip on the iPhone while ignoring that people also reach apps through a browser.[3] The weakness is what the panel steps around. It assumes the single-brand-market test rather than adopting it, and it sets aside the stronger foremarket-power theory as forfeited, so it disposes of the case without settling the doctrine it leans on, tidy in result and unfinished in law.[3]

The forfeiture opinion rests on a sturdier principle, that a person who suffers no loss has nothing for a court to redress, and it applies that principle to facts that point almost entirely one way.[1] Its soft joint is procedural. A standard the court calls a merely facially colorable interest becomes, in practice, a demand that the claimant win a preponderance contest over ownership at a pretrial hearing, and the overlap between that inquiry and the merits is larger than the opinion admits.[1] On this record the gap does no harm, because the claimants had shed every mark of ownership; on a closer record it could turn a judge’s pretrial finding into the whole ballgame.[1] Neither case drew a dissent, so in both the strain sits inside the reasoning rather than in a rival opinion, and on balance the forfeiture court offers the more complete argument while the antitrust court is the more candid about how little it decides.[3]

This is an analysis of how the two courts reasoned, not legal advice.