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Apple Granted Temporary Reprieve in eBook Antitrust Lawsuit

Apple applelogo_oldhas been fighting a rearguard action in the antitrust lawsuit they lost in July 2013, and today they finally won a round. A three-judge panel has granted Apple a hearing on whether to stop the court-appointed monitor, Michael Bromwich, from fulfilling his duties while the company pursues a formal appeal (which might not be filed until much later in 2014).

Apple’s appeal will be heard by the 2nd U.S. Circuit Court of Appeals in New York. They are expected to argue that the presence of the court appointed monitor will unnecessarily impede Apple’s ongoing business efforts. They have argued in the past that the monitor’s mandate is too broadly written, and that by seeking to interview top executives and board members he is also being too intrusive.

Apple has an administrative stay until the hearing, which means that Bromwich won’t be monitoring the company for the next while. The stay probably won’t last long, because the appeals court has indicated that they will hold the hearing as soon as possible. If Apple is successful at that hearing, they will get an injunction that will delay enforcement of the antitrust ruling until after Apple files their appeal later this year.

At this point it’s difficult to predict whether the appeals court will side with Apple, but I would bet that Apple is going to lose again. Court appointed monitors are not uncommon in antitrust cases, and there is not much for Apple to complain about that isn’t included in the final judgement.

And as Chris Meadows pointed out over at Teleread, Apple had several chances before the ruling was handed down to make the arguments they are putting forward now, but they did not. I should think that will make it difficult for Apple to plead their case before the appeals court, but of course we will have to wait and see what the judges think.




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Mackay Bell January 22, 2014 um 2:07 am

Well, it’s not the first time Apple has won a round. Judge Cote quickly backed off her own plan to have private communications with the monitor, which was clearly illegal. And don’t think Apple won’t bring that up again with the court of Appeals.

This is the first time Apple had a chance to present the issues to a ruling body outside of Cote’s court room, and they won. So far, they are 1 for 1 where it counts.

The weird thing about the anti-Apple spin by Chris Meadows (and others), is the refusal to acknowledge that this was a controversial decision from day one (and not just on the Wall Street Journal editorial page). There were charges of Cote being biased from day one. Now, fine if you want to disagree, but to pretend that this decision was business as usual is absurd. Many people have pointed out persuasively that it is a very, very unusual anti-trust action. You might not agree, but to pretend Apple has no legitimate arguments for appeal is kind of dishonest.

Also, in this post Snowden world, how can one pretend that this entire strange anti-trust case and insertion of a "monitor" into Apple can’t possibly be connected to the US Government trying to get it’s hooks into Apple. Either for NSA spying purposes or just plan old corrupt political machinations. (See New Jersey bridge scandal). Arguments have been made previously that Apple pissed off a lot of politicians because it doesn’t pay enough grease through Washington lobbyists. Maybe this is unrelated, but if you’re going to cover the story, why pretend this is not big deal and Apple is just being silly by arguing?

Moreover, even if you start with a blank slate, and erase all the controversy that has taken place so far, it seems odd that a judge has to write a long winded 64 page decision to justify something that is supposedly obvious.

I’m not a lawyer, but it sounds like a Judge who doesn’t have a strong case, and is desperate to explain her side.

Chris Meadows January 22, 2014 um 3:17 am

What makes Cote "biased"? That she mentioned ahead of time she was leaning toward finding against Apple? It’s not as if she lacked any basis for making that statement. As the judge who was also overseeing the publishers’ settlement, she had already seen a preponderance of evidence that tended to incriminate the company, because it was relevant to (and provided as part of) the settlement of the publishers Apple worked with. As Cote herself stated in response to Apple’s accusation of bias against Bromwich, it’s legally only considered bias when the information on which you make your decision comes from outside the judicial proceedings. She made her statement based on the information she had already gotten from within the proceedings.

And it’s part of a judge’s job to try to nudge the parties toward settlement if possible, to save time and expense all around. I gather that it’s not at all uncommon for judges in cases like this to warn the defendant (or the plaintiff!) ahead of time that, based on the evidence they’ve already seen, the case is going to go against them unless they pull something awesome out of their pocket in the courtroom, so they might better settle while they can. Then it’s up to the party in question to decide if it wants to settle, or if it thinks it does have something awesome in its pocket. Apple apparently didn’t have something as awesome as it thought it did, nor was it just glad to see her.

People who are legal experts don’t think Apple has a terribly strong chance of winning the case on appeal overall. All this temporary injunction means is that the judge thinks it would be better to give them one undeservedly for a while than not to give them one if it turns out they do deserve it. This round ain’t over ’til the fat appeals court panel sings.

(Even if the panel does grant a longer injunction, it doesn’t necessarily bode ill for the case as a whole, but we’ll see.)

Mackay Bell January 22, 2014 um 10:46 pm

Again with the "all legal experts agree Apple is wrong" fantasy. Simply not true. Here’s a lawyer who makes a very good argument Apple knows exactly what it is doing and planning it out like a chess game:

It’s aways a sign someone has a weak argument when they have to keep saying every expert agrees with them.

Chris Meadows January 23, 2014 um 2:20 am

Summary of article: Apple thinks it can prevail on appeal by making a lot of noise. Yeah, sure, okay Apple, try that. See how well that works for you.

New Name Same Guy January 23, 2014 um 2:27 am

Apple recently agreed to up its fine for child in-app purchases.
Did you know? No! Puff goes your argument (like all of your others).

Sorry it was the judge and her sidekick who have been eager for the publicity in order to capitalise on their moments in the spotlight.
Please send them to a leper colony to repent from their sins.

New Name Same Guy January 22, 2014 um 6:24 am

Like Mr Bell said, "1 for 1 where it counts"!

I don’t think Apple loses on this round. Even if the court decides to let Bromwich turn his perpetual till back on, I bet it will be with a few restrictions.

One wonders if Cote and Bromwich hadn’t behaved like morons and instead focused on the core compliance issues whether this would have happened or even Apple may not have appealed this issue. Cote could have always allowed Bromwich to poke around in more diversified places had Apple lost the big appeal.

Instead these power hungry low-lifes tried to exploit their temporary powerful position to the max. Let’s hope Bromwich’s reputation will be tarred forever.

William Ockham January 22, 2014 um 10:30 am

"Judge Cote quickly backed off her own plan to have private communications with the monitor, which was clearly illegal."

Nope, that’s wrong and not even Apple is arguing that. There was nothing illegal about that plan. Apple’s complaint was based on the notion that "ex parte" meant without lawyers present (which is bizarre to say the least).

The granting of this stay is not a "win" for Apple in any way whatsoever. It is pretty much routine.

Have any of you Apple supporters read any of the documents in this case? Because they have a lot more relevance that your conspiracy theories of the NSA, Chris Christie, and lobbyists. Seriously, you’re starting to sound like lunatics.

The only people who are desperate are the people who can’t accept the fact that Apple lost because they were guilty.

Mackay Bell January 22, 2014 um 11:06 pm

Let me give you a little tip about Apple supporters. We’ve spent twenty years listening to people say the company was doomed. That the Mac wouldn’t sell, then the iPhone wouldn’t sell, then the iPad wouldn’t sell. That it would never be able to compete with Microsoft, that Mac’s can’t be used for business, etc. And we’ve sat back an waited until the "experts" proven wrong again and again.

We’re a skeptical bunch when it comes to people spinning stuff that sounds like bunk. We kinda have a little faith the company knows what it’s doing most of the time.

Apple wouldn’t be fighting this unless they thought it was important for the company.

And they wouldn’t fight it if they thought they would lose.

Yes, I’m a fan, and I’m not a lawyer, but I’ve read plenty enough to understand the important issues involved, and I can see how and why they might win.

Christie also said people were lunatics for believing there was a bridge conspiracy, until he had to eat crow. And if you don’t think the NSA thing has possible relevance, then you live in a fantasy world where the government is always right and questioning authority is always wrong.

William Ockham January 23, 2014 um 9:37 am

Let’s take this stuff in reverse order. I am pretty confident I know more than you about the NSA stuff. Check out my twitter timeline (@WilliamOckhamTx). I have never been accused of believing the government is always right. The government has lied and continues to lie about the NSA.

Have you read enough about this case? Did you read the government’s submissions in the original case? Did you read Apple’s submissions? Did you read all the exhibits before the trial? Have you read all the submissions in Apple’s appeal of the main case? Have you read Judge Cote’s decisions? Have read any background material on price-fixing in U.S. antitrust law? Because if you haven’t, you really don’t know much about this case. I have read all of this stuff. I am not a lawyer, but I did do graduate work in public policy. I have worked in software development for decades. I did follow the Microsoft antitrust case very closely. I even remember the AT&T antitrust case. I believe I have a pretty firm grip on the issues in this case. All I see from you is a repetition of Apple’s talking points, not even the arguments they have made in court.

I think there are any number of reasons Apple might fight this case even though they know they will lose. It would be logical to fight the case if they believe that their punishment won’t get worse and by fighting the case they keep their customers faith in Apple’s goodness.

If you had read the court documents you would know that a big reason that Apple lost is that their executives (and their publisher allies' execs) lied to the court about crucial facts in the case. They submitted written testimony that made specific factual claims and then when they testified in court, the DoJ confronted them with documentary evidence to the contrary. In each instance, the Apple witnesses had to backtrack and admit the truth of the DoJ’s evidence. You can call that bunk and spin if you want, but that is documented in the court records. It happened and it isn’t appealable in court. Explain to me exactly how Apple’s aura is going to overcome that.

I don’t have to depend on experts or press accounts. I have followed this case closely and I can spot it when the press accounts are deliberately misleading or "experts" are just throwing out FUD. With the current pro-business slant of the Supreme Court, nothing is impossible, but they would have to throw out a hundred years of precedents for Apple to win. I just don’t see that happening on this case.

Q January 23, 2014 um 11:02 am

I’m sorry, but this is a ridiculous statement:

"Apple wouldn’t be fighting this unless they thought it was important for the company.

And they wouldn’t fight it if they thought they would lose."

If you think that Apple is fighting this case because their some innocent do-gooder company that has never done anything wrong, you’re just living in a fantasy world.

Look, Apple’s primary concern is making money, just like every other company on the planet. They can make more of it if allowed to run their ecosystem the way they want, without interference.

They can keep good faith with their users if some government mandated monitor doesn’t find more dirty laundry hiding behind closed doors (I’m not saying it’s there, just giving you a reason they would fight to get rid of him).

In fact, I think that Apple’s defiance in the face of all of the evidence, and the court’s findings proves that they might have more to hide, but that’s just speculation on my part.

My point is this: Apple isn’t perfect. Even if you like their tech, and you like how they work, they’re out to get your money–as much of it as they possibly can. That’s the reason their profit margins remain extremely high, that’s the reason they were supportive of an agency pricing model, and that’s the reason you can’t put 100% of your faith in them as some sort of angelic entity that is, no matter what, somehow innocent.

New Name Same Guy January 23, 2014 um 1:39 pm

The idea that a violation in the ebook sector would give someone an excuse to go on a fishing expedition inside a company when no evidence exists otherwise is unconstitutional.

P.Seingalt January 22, 2014 um 11:44 am

The Second Circuit’s order is not about the appeal but to exercise its supervisory authority over an appointed special master (Bromwich) who is charging sums way above what federal contractors and federal employees earn. The Court is also probably concerned about Bromwich’s interference in Apple’s business. It is hard to see why it is necessary to have lengthy interviews with Apple Board members–who are at best time part-time overseers of the company themselves–concerning the mechanics of implementing a court order. If Bromwich charged the same rate as federal public defenders there would probably be no supervisory order. The Court is outraged by $1000/hr fees and rightly so.

Nate Hoffelder January 22, 2014 um 11:55 am

"charging sums way above what federal contractors and federal employees earn."

The payscale of fed’l contractors and employees is not relevant here; what matters is the amount charged by lawyers operating on the same level as Bromwich. The senior lawyers from Apple’s law firm charge about as much as bromwich, which kinda undercuts their complaint:

"If Bromwich charged the same rate as federal public defenders there would probably be no supervisory order. "


Chris Meadows January 22, 2014 um 12:19 pm

In fact, I saw in some of the courtroom coverage that Judge Cote suggested to Apple’s lawyer that he should provide his own hourly rate as a benchmark for the magistrate judge to use in helping determine what Bromwich should be paid.

At which point the lawyer honestly complained that Bromwich shouldn’t get paid as much as he did because Apple didn’t get to pick him out. Yeah, he really went there.

Chris Meadows January 22, 2014 um 12:24 pm

I went over every word in the stay order but didn’t find a single word about the stay being in regard to Bromwich’s salary there. It does mention "objections to the external compliance monitor’s conduct" but only in the context of Judge Cote’s denial of those objections being a thing Apple is appealing.

Where are you getting this information from?

William Ockham January 22, 2014 um 6:16 pm

I am afraid you are hopelessly confused. "The Court" is not Apple. And Apple’s outrage is totally faked to bamboozle people like you. You have absolutely no idea what’s in the injunction against Apple’s conduct, do you?

Let me ask you some questions. Are you aware of any companies who have had an external compliance monitor in a federal antitrust case who tried to prevent the monitor from meeting with their board? Are aware of any monitor that didn’t meet the company’s board?

New Name Same Guy January 22, 2014 um 2:52 pm

Because Cote and Bromwich overreached, Apple has a good case to get a stay on the remedy process until after the appeal . At a maximum – like I said – Mr Bromwich is going to have his wings clipped.

Meanwhile the Court of Appeals will use this nonsense as an excuse to take a long hard look at the whole case.

More bad news for amazon to come.

Chris Meadows January 22, 2014 um 3:16 pm

I still don’t see how Bromwich "overreached." By wanting to talk to the executives? The way that the settlement order that all the parties helped write and agreed upon specifically said he had the power to do? The way he had done at every single other company he had monitored without any complaints?

These are the people who, along with the late Jobs, were responsible for Apple’s egregious violations. They okayed everything Apple did. They’re the ones who set the tone for the entire company. Bromwich needs to get a feel for what their understanding of the affair is and how they are affecting the rest of the company in order to be able to tell whether the antitrust measures Apple is going to put in place can be effective. And for them not to be able to set aside one hour out of their day, with plenty of advance warning, to meet with the man is ridiculous. I’ll bet they spend longer than that eating lunch every day.

New Name Same Guy January 22, 2014 um 3:47 pm

The remedy is for the case, not for culture. Civil suits are not witch hunts.
Apple has a pattern of breaking civil laws to the extent that a company of its size operating on a global basis is going to screw up here and there. There is no pattern. This isn’t Wall Street 3.

There is no such thing as being "egregiously guilty". You are either guilty or not. Circumstances might mitigate guilt but not deepen it. It’s binary.

The case involves a very small part of Apple’s operations and there has been no allegation or evidence presented that Apple pursues monopolistic practices as a core business practice.

Frankly Bromwich doesn’t need shit except to figure out the bill, determine compensation and certify that the "violations" are no longer being committed. He should get his ass on with the job or get the hell out of dodge.

Chris Meadows January 22, 2014 um 4:21 pm

That’s not what pages 11-14 of the final order say. The monitor is charged with "conduct[ing] a review" to assess whether Apple’s anti-trust policies (not its "e-book anti-trust policies," its overall policies) are "reasonably designed to detect and prevent violations of the antitrust laws" and whether its antitrust training program is "sufficiently comprehensive and effective." To do that, he is specifically granted the authority to talk to "any Apple personnel […] without restraint or interference by Apple."

And the executives can have plenty of effect on how these things go. An anti-trust training program can’t really be "effective" if the execs make it known to their subordinates that this is just a rubber-stamp formality and otherwise it’s business as usual, for example. Bromwich needs to talk to them to figure out if this is going to be the case.

If Apple didn’t want him to be able to do this, it had every opportunity to object to the language in the document giving the monitor his authority that they helped to write and signed off on. I have a hard time seeing how the appeals court could find Bromwich "overstepped" anything.

But I expect we’ll just have to wait and see.

Apple Starts to Play Nice With the eBook Antitrust Monitor – The Digital Reader April 15, 2014 um 9:51 pm

[…] stalling tactics culminated in an appeal to delay the appointment of the monitor until after Apple filed their appeal to overturn the ruling which […]

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