Apple Inc. is hedging its bets in the sprawling e-books antitrust litigation, agreeing to a settlement on damages that allows the company to continue fighting a year-old decision that it’s liable for fixing e-book prices. The move allows Apple’s lawyers at Gibson, Dunn & Crutcher to avoid an August jury trial on damages conducted by U.S. District Judge Denise Cote in Manhattan, who’s ruled against Apple at nearly every turn.
Steven Berman of Hagens Berman Sobol Shapiro, one of the plaintiffs lawyers representing a class of e-book customers, disclosed the settlement, but not its terms, in a letter to the court on Monday. The deal, which is tentative and must be approved by Cote, would also resolve private lawsuits brought by attorneys general in 33 U.S. states and territories.
Berman’s letter says that “any payment” by Apple is contingent on the outcome of the company’s ongoing appellate battle with the U.S. Department of Justice, which is pressing the price-fixing claims alongside the class action lawyers and the state attorneys general. The DOJ wants the U.S. Court of Appeals for the Second Circuit to affirm Cote’s July 2013 ruling that Apple fixed e-book prices. Apple has long telegraphed that it thinks its only hope of beating the case is getting Cote’s bench verdict flipped on appeal.
Hagens Berman first accused Apple and the world’s biggest book publishers of manipulating e-book prices in an August 2011 class action. The firm’s complaint alleged that Apple inked anticompetitive agreements with the publishers when it entered the e-books market, causing a spike in prices. The Justice Department and the attorneys general soon brought cases of their own, and the litigation was consolidated before Cote. The publishers settled before trial for a combined $166 million.
The judge held a bench trial to determine Apple’s liability in June 2013. Only the Justice Department and the attorneys general participated in that trial, but Cote’s findings also applied to the class action. Soon after trial, she ruled that there is “compelling evidence” that Apple fixed e-book prices. Orin Snyder of Gibson Dunn was Apple’s lead trial lawyer.
The verdict set the stage for a jury trial on damages, originally scheduled for July but later pushed to August. Berman and his cocounsel had planned to seek $840 million in damages.
In an order issued on Monday, Cote instructed the plaintiffs to submit a brief outlining the specifics of their settlement with Apple by July 16. (Reuters columnist Alison Frankel speculated on Tuesday that the deal may include some payment to the class action plaintiffs even if Apple wins its appeal.)
In addition to appealing Cote’s verdict on liability, Apple is fighting to undo a series of rulings in which the judge empowered an external monitor to oversee Apple’s antitrust compliance programs. Apple’s lead appellate lawyers at Gibson Dunn, Theodore Boutrous Jr. and Daniel Swanson, have failed to persuade the Second Circuit to expedite its rulings.