Apple tells appeals court it wants ebooks monitor out

31 January 2017 9:56am

10 March 2015. By Richard Vanderford.

Apple on Tuesday asked a federal appeals court to remove a monitor tasked with overseeing its antitrust compliance in the wake of its loss in a case alleging a conspiracy to fix e-book prices, calling him “extraordinarily intrusive.”

Monitor Michael Bromwich has acted like a “roving commission,” conducting interviews with high-level executives that have nothing to do with antitrust and then reporting back to the US Department of Justice, Theodore J. Boutrous Jr., a lawyer for Apple, said at oral arguments in New York before the US Court of Appeals for the Second Circuit. The three-judge panel did not clearly indicate its
thinking on whether the monitorship should be ended.

“This is extraordinarily intrusive,” Boutrous said. “There was no reason to turn someone loose on the Apple campus.” Bromwich’s position should be terminated, or he should at least be replaced,
Boutrous argued.

Apple has repeatedly denounced Bromwich and the decision that led to his installation, a landmark 2013 ruling that the company conspired with major publishers to raise e-book prices as it entered the books business market and challenged then-dominant player — and aggressive price competitor — Amazon.

US District Judge Jesse Furman questioned whether this appeal, brought from a relatively limited order, could be used as grounds to terminate the monitorship entirely. US Circuit Judge Raymond Lohier noted that Bromwich’s dismissal could lead to the installation of Justice Department oversight in its place, adding
an “800-pound gorilla” to the mix.

Another judge questioned Bromwich’s potentially outsized fees. In his early pay application, Bromwich requested about $1,250 an hour.

“That would make him one of the best paid lawyers in the realm,” Dennis Jacobs said.

Jacobs ordered the Justice Department, whose lawyer declined to reveal Bromwich’s pay on the record, to provide the court an updated figure on what he makes.

Bromwich has demanded that senior company executives and board members submit to interviews, even when they have no conceivable tie to the company’s antitrust policy, Boutros said.

Bromwich, for example, demanded to interview Jonathan Ive, the famed English designer behind the iPhone and Apple Watch, he said.

“What does he have to do with antitrust compliance?” Boutrous said. Bromwich has also reported directly to the Justice Department and apparently billed Apple for work he did with it on briefs, Boutrous said.

Bromwich, as an ostensibly neutral party reporting to the trial court, should not be colluding with Apple’s adversary, he argued.

A lawyer for the Justice Department said that the appeals court at most could replace Bromwich based on Tuesday’s appeal.

Because Apple’s appeal was brought from a relatively narrow order from the lower court judge, the appeals court cannot simply remove him, Finnuala Tessier argued.

Tessier also said Bromwich, though he reports to the trial judge, does not have a judge’s “adjudical” role, arguing that his behavior as monitor should not be analyzed as though he were a judge taking the same steps.

The panel said it will rule later. Bromwich’s job is scheduled to terminate automatically in October, though his tenure could be extended.

Apple has visited the appeals court several times in connection with the e-books case, but has so far met with little success. A Second Circuit panel in February 2014 denied the company’s request that Bromwich’s work be halted while the company
appeals, and in May denied a motion to stay a related damages trial.

Judges are still weighing a broader, separate appeal from Apple asking that the court overturn its 2013 loss. If the court grants that appeal, concerns about Bromwich’s job performance would be moot, though the court has not given an indication of when it intends to rule.

US District Judge Denise Cote in 2013 appointed Bromwich to look into Apple’s antitrust compliance after finding that the company had showed a “blatant and aggressive” disregard for antitrust law.

Before working as Apple’s monitor, Bromwich served as a monitor for Washington DC’s police department, investigated Houston’s police crime lab, served as inspector general for the Justice Department, and was involved in the prosecution of Oliver L. North in connection with Iran-Contra affair.

Cote in July 2013 found that Apple had conspired with publishers Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster to switch the prevailing e-book pricing model from one in which retailers set prices to one in which publishers set prices and pay a commission.

The change drove up prices, the Justice Department said.
Publishers settled with the government ahead of trial. Apple has settled a separate money damages suit brought by state governments and consumers, but how much, if anything, it will pay hinges on the outcome of its appeal against Cote’s
July 2013 ruling.

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