Judge explains denial of request to remove e-book antitrust monitor in lengthy court filing

Posted:
in General Discussion edited March 2014
District Court Judge Denise Cote on Thursday filed an opinion and order detailing the reasoning behind her denial of Apple's request to remove an external antitrust compliance monitor, saying many of the arguments the company made are now moot.

Summation
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court


In the 64-page document, Judge Cote offers an exhaustive opinion on her order to deny Apple's motion to remove court-appointed antitrust compliance monitor Michael Bromwich. With the filing, the jurist fulfills a promise made on Monday to explain the reasoning behind her decision.

From Judge Cote's opinion and order:
In brief, many of the arguments which Apple once made (and is no longer pursuing) have been waived or are moot. In addition, Apple has access to a dispute resolution mechanism which has and will be in place to ensure that the Monitor does not exceed the bounds of the Injunction. Finally, there has been no showing that the Monitor should be disqualified or that Apple will suffer irreparable harm. For these and all of the other reasons stated herein, Apple's request for a stay is denied.
The lengthy filing begins with an in-depth background of the situation, which describes a continual locking of horns between Apple and Bromwich. Troubles began almost immediately after the ECM -- tasked with ensuring Apple does not engage in further illegal price fixing activities -- was appointed to the monitorship in October.

Bromwich's assigned task is a direct result of Judge Cote's ruling that found Apple culpable in an e-book price fixing scheme played out through the iBookstore.

Thursday's filing gives a run down of Apple's main complaints. The company takes issue with Bromwich's fee structure, which will cost millions of dollars over the ECM's tenure; his allegedly "unconstitutional" wide-roving inspection of current operations; and an overstepping of bounds in demanding interviews with top Apple executives and board members who play no role in day-to-day operations, especially those dealing with the iBookstore.

Apple formally aired its grievances to the court in a number of filings, to which Bromwich filed his own declaration rebutting the claims. Further, the monitor noted a distinct lack of willingness to participate on the part of Apple. This, Apple claimed, was grounds for dismissal as it brought Bromwich's impartiality into question.

Judge Cote's take on the situation:
The deterioration of the relationship between Apple and the Monitor is unfortunate and disappointing. Hopefully, that relationship can be "reset" and placed on a productive course. But it is strongly in the public's interest for the Monitor to remain in place. A monitorship which succeeds in confirming the existence of a genuine and effective antitrust compliance program within Apple, is in the interest of not only the American public, but also Apple.
Judge Cote thus denies Apple's request to remove Bromwich and, subsequently, the company's motion to suspend her initial injunction ruling.

To appeal today's order, Apple must file a motion to stay with the Second Circuit by Saturday.

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Comments

  • Reply 1 of 40
    philboogiephilboogie Posts: 7,438member
    Brilliant slide!
  • Reply 2 of 40
    gtrgtr Posts: 3,231member
    She forgot to mention that 'the monitor' is also a personal friend of hers that she has a history of looking after.

    [IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/37371/width/500/height/1000[/IMG]
  • Reply 3 of 40
    Quote:


    "A monitorship ... is in the interest of not only the American public, but also Apple."


    Um, I am a member of the "American public" and I don't find this to be in my interest in any way whatsoever.

  • Reply 4 of 40
    Quote:
    "A monitorship which succeeds in confirming the existence of a genuine and effective antitrust compliance program within Apple, is in the interest of not only the American public, but also Apple."

    Meaning:
    "A monitorship which succeeds in confirming the existence of a genuine and effective antitrust compliance program within Apple, is in the interest of not only my good friend Mr. Bromwich, but also Amazon."
  • Reply 5 of 40
    "That's just...like...your opinion, man."

    Cote needs to go. Time to start a letter-writing campaign against this abuse of power.
  • Reply 6 of 40
    rob53rob53 Posts: 2,011member
    Quote:

    Originally Posted by bloggerblog View Post

     

    Um, I am a member of the "American public" and I don't find this to be in my interest in any way whatsoever.


    Makes two of us (and probably a whole lot more!).

  • Reply 7 of 40
    What i wonder is how is this:
    So many people hate Apple. These people typically love Google. Google has tonnes of money and their hands in many pies. How are they not continually in trouble with the u.s. government?
  • Reply 8 of 40
    cpsrocpsro Posts: 2,453member

    What is a monitor supposed to accomplish other than slow down innovation and snoop?

     

    The iBooks store thing was a one-time affair that was agreed to separately, with little negotiation or communication involved, between Apple and several desperate, ravaged publishers in less than a month's time over the biggest holiday period of the year (Xmas and New Year's).

     

    So much for freedom.

  • Reply 9 of 40
    cpsrocpsro Posts: 2,453member
    Quote:

    Originally Posted by revenant View Post



    What i wonder is how is this:

    So many people hate Apple. These people typically love Google. Google has tonnes of money and their hands in many pies. How are they not continually in trouble with the u.s. government?

    Government lobbying

  • Reply 10 of 40
    gtrgtr Posts: 3,231member
    Quote:
    Originally Posted by revenant View Post



    What i wonder is how is this:

    So many people hate Apple. These people typically love Google. Google has tonnes of money and their hands in many pies. How are they not continually in trouble with the u.s. government?

     

    I don't know if you've noticed it, but it isn't just the U. S. government.

     

    Apple cops it from EVERYBODY.

     

    Disrupt a lot of industries with your regularly successful, well-thought out, easy-to-use, consumer-orientated technology, which also takes the money away from multiple industries, and you make a LOT of enemies. Enemies who will not hesitate to smear you as much as possible in order to return the status quo of looking after profits instead of customers.

     

    It also never helps to have the world know that your success has generated billions of dollars which are sitting in banks somewhere. That one really tends to bring out the parasites.

  • Reply 11 of 40
    Her opinion! What kind of judgement is that!
  • Reply 12 of 40
    jungmarkjungmark Posts: 6,684member
    Cote to Apple: it's my opinion my personal friend...errr...my choice of monitor should continue to operate freely at Apple for the benefit of Amazon...um...the American people. The fees he is charging Apple is just as I get a cut...uh....as it is consistent to the amount Amazon pays me...I mean...the amount other violators have paid us...um...him.
  • Reply 13 of 40
    solipsismxsolipsismx Posts: 19,566member
    gtr wrote: »
    I don't know if you've noticed it, but it isn't just the U. S. government.

    <span style="line-height:1.4em;">Apple cops it from EVERYBODY</span>
    <span style="line-height:1.4em;">.</span>


    Disrupt a lot of industries with your regularly successful well-thought, easy to use, consumer-orientated technology, which also takes the money away from multiple industries, and you make a LOT of enemies. Enemies who will not hesitates to smear you as much as possible in order to return the status quo of looking after profits instead of customers.

    It also never helps to have the world know how your success has generated billions of dollars which are sitting in banks somewhere.

    That one really tends to bring out the parasites.

    Considering how slow certain groups of people are to change they were probably betting against Apple at every turn and have lost huge amounts by 1) investing in their dying or now dead rivals, and 2) directly betting against Apple to succeed.
  • Reply 14 of 40
    inklinginkling Posts: 731member
    Those who'd like to see how lawyers regard Judge Denise Cole should turn to a rating site:

    http://www.therobingroom.com/RatingListing.aspx?ID=1403

    Her ratings from 2008 and earlier seem fairly good on a 10-point scale where 1 is "awful." There there's a spat of back scores in 2009, followed by a return to normal in 2010.

    Now pay particularly attention to her ratings from 2011 to the present. Discarding a bizarre 10 outlier (perhaps by friend Bromwich), her scores are terrible.

    Thirty 1s (remember 1 means "awful")
    Five 2s
    One 3
    One 5
    Nothing higher except for that bizarre, almost all 10 rating.

    And her bad ratings over the entire time are in areas that are obvious in this dispute with Apple. They are in:

    Temperament
    Evenhandedness in civil litigation
    Flexibility
    Involvement in discussions

    Read the comments from lawyers and you'll see she regarded as a judge who makes up her mind before trials, typically favors the plaintiff (here the DOJ) and refuses to listen to contrary evidence during the trial.

    In short Apple's lawyers don't like her for the same reason most of the lawyers who appear before her don't like her. (Even the winning side may fear being on the losing side in a different case.) It's just that this case, being Apple v. DOJ, gets more press than the host of smaller cases she's decided badly.

    She is in her late, sixties, so the good news is that she'll probably be off the bench soon, perhaps eased into retirement. You can almost pity her. Her last big case, her swan song, isn't going well. On the other hand, if you want to be well-regarded, don't create a conflict of interest by appointing a friend who is billing huge fees but has no expertise in this area of law.
  • Reply 15 of 40
    This is all needed at this point, right? This is the final step needed so that Apple can appeal, right? So a higher court can then (hopefully) say Cote overstepped and either correct that or throw it out, right?
  • Reply 16 of 40
    She's on the take period. What do you all think 60/40.
  • Reply 17 of 40
    jonljonl Posts: 210member
    Quote:

    Originally Posted by bloggerblog View Post

     
    Quote:

    "A monitorship ... is in the interest of not only the American public, but also Apple."


    Um, I am a member of the "American public" and I don't find this to be in my interest in any way whatsoever.




    Yeah, but Bromwich is, and what's good for Bromwich is good for America.

  • Reply 18 of 40
    The lady doth protest too much, methinks.
  • Reply 19 of 40
    Dennis Cote, the DoJ and others who believe Apple is guilty are just plain wrong. It is simply a case of two separate business models, which aren't compatible.

    In Amazon's case, Amazon has a model where they buy books at a wholesale rate and then run a risk with how much money they make from selling the book. So authors typically make a lot upfront, and very little to nothing on incremental sales of each additional copy. This is a model that works for Amazon, because Amazon is even ready to print books on demand, they can do this for physical as well as eBooks.

    Apple however has a much cleaner much fairer structure, where Apple pays 70% of all proceeds to author/rights holder, and keeps 30% for itself. They do not buy books on wholesale basis, they do not engage in printing books on demand etc.

    The issue here is that Apple told publishers that Apple could not sell their books on iTunes Bookstore, unless Apple is in a position to offer the same prices as Amazon. If there are two stores, and one store had prices much higher than others, it makes no sense, because no consumers would buy from higher priced store!

    At that point, publishers had a choice - they either stuck with Amazon's model, and stay out of Apple totally. Or give Apple same price as Amazon, despite not getting the upfront payment from Apple, hoping that the 70% of proceeds makes up for difference. The risk was that the 70% would easily cover the difference for successful books, but might not even come close for lemons.

    The problem was that giving Apple the low price as Amazon, without getting the upfront payment that Amazon was making was not making any sense whatsoever for dud books.

    Amazon was ok with this approach because Amazon was making up for losses in one book by gains on another. In effect it was almost a socialist leveling of the field.

    This is a genuine clash of two separate business models, one of which was not compatible with the other. And the publishers clearly liked the Apple model, because it restored the balance in their favor. They now got a lot more of the price per copy, but no upfront payment.

    This is what DoJ and Dennis Cote failed to understand. This clash of business models obviously could not be managed. One business model had to go. Apple was a digital only player, and would never agree to pay upfront for books, irrespective of whether they sold or not.

    The publishers any way were looking for ways to reduce Amazon's clout, so they picked Apple. But when DoJ came knocking, they realized the risk and capitulated instantly. Apple had not done anything wrong, so it didn't capitulate.

    If there was collusion, it was between publishers - not between them and Apple.

    It is not like as if Apple's lawyers did not try to explain this - but the judge was largely unmoved because she probably had made up her mind on Apple's guilt. She probably wanted to appoint her friend as monitor.
  • Reply 20 of 40
    malaxmalax Posts: 1,598member
    This is the interesting/relevant part of the opinion: "In addition, Apple has access to a dispute resolution mechanism which has and will be in place to ensure that the Monitor does not exceed the bounds of the Injunction."

    I wonder what that mechanism is and why Apple hasn't used it.
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