Judge Sides With DOJ, Monitor in Apple E-Books Hearing

Judge Sides With DOJ, Monitor in Apple E-Books Hearing

Apple Inc. has lost a skirmish in its battle to rein in the company’s court-appointed antitrust monitor, Michael Bromwich, failing to persuade a judge to slash one of Bromwich’s recent bills or to limit his access to Apple top brass.

At a hearing on Friday, U.S. Magistrate Judge Michael Dolinger in Manhattan heard Apple’s arguments that it shouldn’t have to shoulder the full cost of an April 14 status report, which Apple says was unnecessary and duplicative of one of Bromwich’s earlier filings. Apple lawyer Matthew Reilly of Simpson Thacher & Bartlett also asked Dolinger to discourage Bromwich from conducting further interviews with Apple personnel, pointing out that the company recently made 10 individuals available to meet with him, including CEO Tim Cook.

Neither of Reilly’s arguments got anywhere with the judge. Dolinger called Apple’s complaints about the bill for the report “utterly and completely groundless.” As for the company’s claim that Bromwich is being too demanding, Dolinger concluded that Bromwich’s numerous interviews haven’t undermined Apple’s ability to do business.

“Inherent in a monitorship of this sort is some fairly broad discretion on the part of the monitor,” Dolinger said, according to a transcript of the hearing. “Apple does not have to continually run to the court” with objections, he added.

Following a bench trial that pitted Apple against the U.S. Department of Justice, U.S. District Judge Denise Cote ruled in July 2013 that Apple fixed prices for e-books. As part of the the injunctive relief she granted in the case, Cote instructed Apple to beef up its compliance programs and tasked Bromwich with monitoring Apple’s progress. Apple has appealed both Cote’s finding of liability and her decision to instate Bromwich.

Apple asserts that the separation of powers doctrine puts strict limits on Bromwich’s role, yet he’s conducting a “roving” investigation into Apple’s general obedience with antitrust laws. Apple has also objected to the monitor’s fees, which Apple is obliged to pay. Bromwich is a partner at Goodwin Procter but he’s billing Apple through his consulting firm, the Bromwich Group.

Gibson, Dunn & Crutcher represented Apple at trial and is leading the company’s appeal to the U.S. Court of Appeals for the Second Circuit. But Apple also retained Simpson Thacher to communicate with Bromwich and sit in on his interviews. DOJ attorney Lawrence Buterman complained at Friday’s hearing that Apple was “playing one side against the other” and that the two law firms sometimes engaged in a “good cop-bad cop” routine. Apple’s lawyers have contradicted each other in the case, he said, claiming that Gibson Dunn aired objections to Bromwich’s tactics that were never raised by Simpson Thacher.

In the first half of Bromwich’s April status report, he described how Apple dragged its feet when he first asked for document productions. Bromwich did report, however, that his relationship with Apple has become more cooperative since February, thanks in part to Apple designating Simpson Thacher as his contact.

The “good cop” label notwithstanding, Simpson Thacher’s Reilly picked a fight with Bromwich on May 5 over his consulting firm’s $271,000 bill for March, which is when Bromwich wrote most of the report. In a letter to the court (which isn’t publicly available but was referenced in court), Reilly argued that Apple shouldn’t have to pick up the tab for part of the report in which Bromwich summarized Apple’s supposedly obstreperous antics, because that information was unnecessary and redundant. Reilly also used the oral argument to push back against Bromwich’s requests for access. “We are cooperating,” Reilly said at the hearing, but “we need some guidance about what is appropriate.”

Bromwich defended his actions at the hearing and accused Apple of obstructing his work. “There can be nothing more chilling to someone in my position than having the contents of a report challenged and for payments to be declined because the monitored entity isn’t happy with what’s in the report,” he said.

Apple is also represented by Gibson Dunn’s Theodore Boutrous Jr., Lawrence Zweifach and Daniel Swanson. Zweifach argued alongside Reilly at Friday’s hearing.

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