Apple calls shenanigans on anti-trust monitor; Bob Kohn gets his day in court

The Apple trial over the last few days has taken an interesting turn. Essentially, Apple complained to the court that the special anti-trust monitor Judge Cote assigned, Michael Bromwich, has been getting too big for his britches, seeing to investigate all sorts of things outside of his usual purview, and charging Apple a whopping $1,100 an hour for it. (Bear in mind, Apple’s own lawyers get as much as $1,800 an hour.) Apple was also upset that the judge recently amended Bromwich’s brief to include making reports to her without any Apple representatives present.

(The Wall Street Journal, owned by Rupert Murdoch’s News Corp the same as settling publisher Harper Collins, has gotten rather vociferous about Bromwich in an editorial, raising the specter of nepotism and claiming that he and Judge Cote are old friends. But then, considering the paper’s ownership, that’s probably to be expected.)

In her response, filed only a day or so later, Judge Cote reminded Apple that there was an established procedure for filing protests about the anti-trust monitor, and complaining to her wasn’t it. They were supposed to complain to the DoJ first, then only bother her if they couldn’t hash it out among themselves. She did backtrack as far as canceling the private reports, however.

But perhaps the more interesting news emerged from Judge Cote’s hearing on Friday approving the final e-book price-fixing settlements, for late-settlers Macmillan and Penguin. As expected, she approved their terms, a bit more punitive than the other publishers’ because they were the last to settle. And as part of this hearing, pro-agency-pricing gadfly Bob Kohn finally got his day in court.

Kohn, you will recall, is the persistent publishing industry exec who has constantly complained about the terms of the settlement—because the publishers, in settling, were not about to do it themselves. His argument, which he has previously filed in several briefs (including a comic book), is that price fixing that would otherwise be illegal is permitted in situations where it creates more competition. He cited the decline in Amazon’s market share from 90% to 60% as evidence competition had been increased.

Unfortunately, while Judge Cote noted that the arguments Kohn made were impressive, she doubted that he would have the standing to appeal since he is not a direct party to the case. This doesn’t mean he can’t try, but it probably will make his job of convincing appeals courts harder.

Regardless, the last of the settlements have been approved, and the funds will begin being disbursed to consumers soon. It won’t amount to much—about $3 for a bestseller, down to about 75 cents for non-bestsellers. Nonetheless, at least it will be something.

18 Comments on Apple calls shenanigans on anti-trust monitor; Bob Kohn gets his day in court

  1. What a garbage article. Take it down ASAP!
    None of anyone’s business what Apple pays its lawyer and it was damn stupid to bring it up.
    Focus on the issue at hand instead of trying to draw faux bs moral equivalence.

  2. Is it just me or are the comments on TeleRead getting just a bit more shrill and envenomed? Whatever the arguments about Chris’s tone, he seems to have at least done his homework and referenced his sources. And other publications besides TeleRead have seen fit to write about just this topic at length, for or against. Including taking a stand on Apple’s behavior through the whole price-fixing case.

  3. LOL, he obfuscated the issues.
    He also neglected the timeline, which shows the judge as a chump right from the beginning.
    It’s not Apple or News Corp jobs to be impartial or even separate the common interests, but it’s the judge’s job to determine if the law has been broken and define the remedies, not to give a cushy payday to a personal friend.

  4. @Mike, it was entirely appropriate for Chris to point out what Apple pays its lawyers. That’s valid context for the rest of the article. And Chris did a nice roundup of recent news on the case. Please moderate your tone in further comments.

  5. I don’t agree. This post is pernicious, missing important information and deserves to be criticised. Creating imaginary moral equivalence is a tactic that should be actively discouraged. If Chris had at least given a full explanation of Apple’s complaint about the Judge’s connection with Bromwich that would have been a different kettle of fish!

  6. @Mike, feel free to disagree. I don’t object to disagreement. I do object to the tone used when disagreeing.

  7. I apologize for my tone, but it did convey my shock at the article, having just read about the judge elsewhere. IMHO too many ebook related sites are shills for Amazon. And you do have two advertisements for Amazon on the page I am viewing right now.

  8. @Mike, yes we do run ads by Amazon and others. The same ads run across the entire Tell Network, of which we are a part, however, there is no editorial policy to shill for any particular company, and we praise and criticize as the various writers of the site see fit.

  9. There is plenty of information presented in other articles not included here and I wouldn’t characterise them as pro-Apple, but they weren’t anti-Apple as this article obviously is.
    So the bottom-line is a distorted article along with Amazon ads next to it.
    Criticising News Corp for a conflict of interest when there appears to be one here is hypocritical. And if you think I am being unreasonable than congrats – you are starting to a least empathise with my motivations for criticising this.

    And BTW before Chris can start cashing his checks from Apple he is going to have to wait out the appeal process. If anything, he should be angry at the judge for possibly compromising the outcome of the case.

  10. I said that the WSJ said they were old friends, which is enough for a summary, and gave a link to the editorial where they discussed that in detail. This is a blog. We summarize the stories, and offer links to where people can go to read the whole thing. We don’t completely rereport the stories.

    I’m not sure what’s “imaginary” about the equivalence between what one legal professional gets paid and what another legal professional gets paid. Without the context of what Apple pays its own lawyers, the average uninformed person might think that $1,100 an hour seems like an awful lot. But put into context, it’s not even as much as Apple pays its own legal staff.

    Other news articles have been happy to report that in great detail (such as unapologetic Apple partisan Philip Elmer-DeWitt, who included Bromwich’s response to Apple that he’d be happy to abide by the fee limitations Apple wanted to impose if they could assure him their own lawyers worked under those same limitations).

  11. @Chris- Thanks for the update and links, including the info on the Penguin and Macmillan settlements. I missed seeing that particular bit in all the kerfuffle about the fees Bromwich is charging.

    @Mike- Thank you for the links you provided but I disagree that they are not pro-Apple. May I suggest you consider reading anything written about this case by Andrew Albanese of Publishers Weekly? In particular, I recommend his ebook “The Battle of $9.99”. I thought it an excellent overview of the case without all the editorializing I found elsewhere. Of course, YMMV.

  12. The first Fortune link wasn’t pro-Apple and there are many others, but yes the other two I included supported the Apple position.

    Regardless of the merits of the case, the actions of the judge are going to put the ruling at risk. One never knows what the true motivations are for this.

    I am reminded of the Trayvon Martin case. The prosecutors went for murder(2?) but it was obvious to me that manslaughter would have been more appropriate and perhaps yielded a conviction. Perhaps the prosecutors were secretly hoping for an acquittal.

  13. The WSJ Opinion piece was unsigned so I discounted it more than I usually discount opinion pieces. As for what the lawyers get per “billable hour” it’s all pretty obscene sounding to me. Nonetheless, the complaint that Apple raised in this regard cites both the fees charged by Bromwich plus the fees charged by another firm engaged because Bromwich did not have sufficient ant-trust law experience. If combined, the fees amount to c. $2500 per billable hour. This, of course, raises the question as to why Bromwich was appointed instead of an attorney with adequate anti-trust experience and training. I have no special insight into the judge’s thinking of course but it is an interesting question.
    Apple continues to assert its innocence (too bad there’s not a DNA test for this) and, so, will pursue exoneration by any and all necessary legal means.

  14. @frank

    Bromwich doesn’t need anti-trust experience. What he needs is compliance and monitoring experience, and according to the press release he has it:

    Bromwich, a litigation partner in Goodwin Procter’s Washington, D.C. and New York offices, is a member of the firm’s Securities Litigation & White Collar Defense Group. He specializes in internal investigations, compliance and monitoring, and has led major internal investigations for companies, audit committees, special committees and special litigation committees.

    It looks to me like he has a fair amount of experience related to the job he’s going to do. And just to be clear, this isn’t anti-trust. He’s an external monitor, which makes more of an investigator/auditor. The anti-trust part is over; it’s time for the monitoring to begin.

  15. And, yet, the Bromwich hired another firm because (he said) it had superior ant-trust law experience. So has he incurred an unnecessary expense that Apple must pay? It would seem that the sub rosa agenda that Apple is trying to suggest Bromwich is pursuing is a punitive one. That would be well beyond what the judge engaged him to do.

  16. Apple is going to find ample reasons to be unhappy with whatever the judge and Bromwich do, no matter how benign. They lost their case, and they are being punished—having an external compliance officer at all is a punishment, because they certainly would not have gone out and got one on their own.

    We can’t really judge how well Bromwich is doing his job from what Apple—or for that matter, the Wall Street Journal editorial—says, because they’re both biased sources we have to take with a grain of salt.

  17. Don’t forget the appeals process, Chris!
    If the the verdict is thrown out, don’t blame Apple either.
    Blame the beloved judge and her sidekick…

    Still a long way to go unless Apple decides to throw in the towel.

  18. Chris says “But put into context, it’s not even as much as Apple pays its own legal staff.”

    That is (again) a half-truth at best, bad faith on your part at worst. Apple has paid one lawyer on one case more money. That lawyer didn’t get to stay at the 4 Seasons, call Steve Jobs with one day notice and demand his time, or charge a 15% FU fee on top of the hourly fee. apple’s in house counsel makes far less than the $1250 that Bromwich is billing Apple

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