U.S. v. Apple
In an opinion issued July 9, less than a month after trial, a U.S. district court judge in Manhattan found "overwhelming" and "compelling" evidence that Apple Inc. and five book publishers violated civil antitrust laws when they wrested control of the e-book market from Amazon Inc.
Gibson, Dunn & Crutcher's Orin Snyder, who represented Apple, had faced a daunting task during June's bench trial over government claims that Apple conspired with book publishers to fix e-book prices. U.S. District Judge Denise Cote had already concluded tentatively that prosecutors would meet their burden of proof. The five publisher defendants had all settled before trial. And yet many observers speculated that Snyder and Apple could still pull off a win in the civil case brought by the U.S. Department of Justice.
But Apple and its lawyers didn't even come close. The opinion, loaded with damaging quotes from internal company emails, describes how Apple jumped into the e-book market in 2009, how it joined forces with book publishers sick of Amazon's $9.99 price guarantee, and how these new bedfellows replaced Amazon's wholesale pricing model with a so-called agency model that raised e-book prices.
The ruling should reverberate in a parallel consumer class action. Hagens Berman Sobol & Shapiro's Steve Berman and Cohen Milstein Sellers & Toll's Kit Pierson are leading that litigation; at press time Berman said that plaintiffs would argue that Cote's ruling has collateral estoppel effect on the class claims, which would move the case directly to a hearing on damages.
Apple, via a spokesperson, vowed to appeal Cote's ruling. At press time Cote hadn't ruled on damages.
For Plaintiff the United States of America
In-House: At the U.S. Department of Justice, antitrust division: director of litigation Mark Ryan and trial attorney Lawrence Buterman.
For Defendant Apple Inc. (Cupertino, California)
Gibson, Dunn & Crutcher: Daniel Floyd, Cynthia Richman, Orin Snyder, Daniel Swanson, and counsel Lisa Rubin. (Rubin and Snyder are in New York, Richman is in Washington, D.C., and the others are in Los Angeles.)
O'Melveny & Myers: Howard Heiss and counsel Edward Moss. (They are in New York.)
—Jan Wolfe, with Rebekah Mintzer
Alexsam v. Gap
It took a federal district court jury in Marshall, Texas, just 75 minutes to return a verdict on June 28 that the Gap Inc. doesn't infringe on patents owned by Alexsam Inc.
Alexsam, a business that generates revenues from its patents, sued Gap and several other big retailers in 2010, alleging infringement of patents on a process of activating and recharging gift cards. Gap relied on "rocket docket" court veteran Alan Fisch of Fisch Hoffman Sigler for the defense win; Fisch represents most of the retailers. Alexsam tapped Timothy Maloney at Chicago's Fitch, Even, Tabin & Flannery.
In the first phase, seven cases were consolidated for an April jury trial on the validity of Alexsam's patents. Alexsam prevailed against Fisch and his clients, setting the stage for separate trials on whether individual retailers infringe the patents. The first of those trials, against Barnes & Noble Inc., kicked off in May, with Alexsam seeking $72 million. Fisch won a complete defense verdict on June 7.
The second trial against Gap seeking $34.5 million went to trial June 21. According to a juror, Fisch and a colleague R. William Sigler pulled off the win by undermining the testimony of two of Alexsam's expert witnesses, and by clearly explaining how the Gap obtains and processes its gift cards.
Maloney and Fisch will face off again on October 15 in the next trial against J.C. Penney Company Inc.; trials against McDonald's Corporation and The Home Depot Inc. are not yet scheduled.
For Plaintiff Alexsam Inc. (Kerrville, Texas)
Fitch, Even, Tabin & Flannery: Timothy Maloney, Alison Richards, Steven Schroer, and asso­ciates David Gosse, Nicole Little, and Joseph Marinelli. (Schroer is in Boulder; the rest are in Chicago.) The firm was lead counsel.
Gillam & Smith: Harry "Gil" Gillam and Melissa Smith. (They are in Marshall, Texas.) The firm was local counsel.
For Defendent The Gap Inc. (San Francisco)
In-House: Assistant general counsel Jennifer Sim.
Fisch Hoffman Sigler: Alan Fisch, Jason Hoffman, R. William Sig­ler, and associates Silvia Jordan, Patrick Lee, Jeffrey Saltman, David Saunders, and Peter Scoolidge. (Jordan and Scoolidge are in New York; the rest are in Washington, D.C.) The firm was lead counsel; Fisch took the cases with him when he left Kaye Scholer last year to start his own boutique.
—Jan Wolfe, with Rebekah Mintzer
Leveski v. ITT Educational Services
On July 8 a federal appeals court resuscitated a whistle-blower's False Claims Act lawsuit against for-profit higher education company ITT Educational Services Inc., throwing out an Indianapolis judge's August 2011 decision dismissing the case. ITT is facing long-running claims that it submitted false claims to the U.S. Department of Education in order to receive student financial aid money.
A plaintiffs-side expert's report had estimated damages in the case as ranging from hundreds of millions to as much as $1 billion; damages may be trebled under the False Claims Act.
The appellate court also vacated a scathing $400,000 sanctions order against the whistleblower's lawyers at Motley Rice and two other plaintiffs firms. And finally, in what could be interpreted as a rebuke to U.S. District Judge Tanya Walton Pratt, who wrote the 2011 decision, the U.S. Court of Appeals for the Seventh Circuit ordered the case assigned to a new judge to oversee summary judgment briefing and a potential trial.
The reversal is a blow to ITT, which remains squarely in the sights of lawmakers and plaintiffs lawyers targeting for-profit education companies, and to ITT's counsel, Gibson, Dunn & Crutcher's Wayne Smith and Timothy Hatch.
For Motley Rice, it's the first bit of good news since the firm took on the case in May 2011, less than a year after it was reassigned to Judge Pratt from another federal judge who had twice refused to dismiss it. Pratt tossed the case less than three months later, agreeing with ITT that Leveski and her lawyers based their allegations on already-public information, instead of on nonpublic information, as required by the False Claims Act. Later, in March 2012, Pratt sanctioned the firm along with cocounsel Plews Shadley Racher & Braun and a Mississippi plaintiffs lawyer for pursuing "frivolous" claims.
Siding with Motley Rice's Mark Labaton, who argued the whistle-blower's appeal, the Seventh Circuit panel unanimously reversed all penalties, sending the case back to the lower court. The whistle-blower's claims, the panel found, were distinct enough from previous public disclosures to allow the case to proceed.
ITT's summary judgment motion was pending at press time.
For Qui Tam Plaintiff Debra Leveski
Motley Rice: Mark Labaton. (He is in Los Angeles.) The firm was tapped in 2011 and led the appeal.
Plews Shadley Racher & Braun: Frederick Emhardt and John Ketcham. (They are in IndianapolisThe firm was cocounsel.
For Defendant ITT Educational Services Inc. (Carmel, Indiana)
Gibson, Dunn & Crutcher: Timothy Hatch, Wayne Smith, and associates Kristopher Diulio, Courtney Dreibelbis, Brad Hamburger, Jeremy Ochsenbein, and James Zelenay Jr. (Hatch is in Los Angeles; the rest are in Irvine, California.) The firm has been representing ITT for more than a decade. Smith argued the appeal.
—David Bario, with Rebekah Mintzer