After failing to remove its court-appointed antitrust monitor, Apple urged the U.S. Court of Appeals for the Second Circuit this week to reverse the e-books price-fixing judgment that led to the monitorship in the first place. Meanwhile, things are heating up in parallel suits brought on behalf of consumers, with Apple trying to move the cases out New York federal court.
In an opening appellate brief filed Tuesday at the Second Circuit, Apple urged the court to reverse U.S. District Judge Denise Cote’s July 2013 ruling that the company fixed e-book prices. Apple argues that Cote based her ruling on a flawed theory of antitrust liability—namely, that Apple joined a preexisting price-fixing conspiracy among book publishers in 2009 and furthered it by orchestrating an industry-wide shift to a retail model that raised prices.
Apple had perfectly legitimate economic reasons for trying out the new pricing model, the company’s lawyers at Gibson, Dunn & Crutcher argue in Tuesday’s brief, and it was largely ignorant of any anticompetitive discussions between book publishers. Gibson Dunn also maintains that Apple promoted competition by ending Amazon Inc.’s monopoly on e-book sales.
“Apple had no knowledge that the publishers were engaged in a conspiracy,” the brief asserts. “The district court’s own findings show that Apple offered a retail business model to the publishers that was in Apple’s independent business interest and was attractive to the publishers, who were frustrated with Amazon.”
Plaintiffs lawyers at Hagens Berman Sobol Shapiro first accused Apple of e-books pricing fixing in 2011. The U.S. Department of Justice and state attorneys general followed suit in 2012. The Judicial Panel on Multidistrict Litigation consolidated the cases before Judge Cote, who held a three-week bench trial on the issue of liability in June 2013. The Department of Justice took the lead in that trial, but the finding of liability also applies to the attorney general cases and Hagens Berman’s consumer class action.
Cote has scheduled a damages trial for May 2014 that will pit Apple against not just the Department of Justice, but also the plaintiffs lawyers and the AGs. Earlier this month, Hagens Berman and cocounsel at Cohen Milstein Sellers & Toll said they would seek up to $840 million in damages in their part of the case.
Apple’s lawyers are trying to make the best of the cards they’ve been dealt. In a Feb. 21 motion, they sought to change the format of the damages trial, arguing that Cote should remand the consumer class action to U.S. district court in San Francisco, where Hagens Berman originally filed it. That happens to be Apple’s home turf, where it might draw a more sympathetic judge than Cote. Apple also wants to transfer the attorney general cases to Texas, where the first of them was filed. The JPML “never entered an order consolidating the class actions and states’ action (except insofar as it overlapped with the DOJ’s liability case) for any purpose other than pretrial proceeding,” Apple argued.
Plaintiffs counsel in the case include Steve Berman of Hagens Berman and Kit Pierson of Cohen Milstein. Apple’s legal team at Gibson Dunn includes Theodore Boutrous Jr., Daniel Swanson and Cynthia Richman.