Apple Wins Temporary Delay on U.S. E-Books Monitor

Apple Inc. (AAPL) won a temporary reprieve from having a court-ordered monitor oversee its compliance with an antitrust ruling on electronic book prices until a federal appeals court holds a hearing on its bid for a longer stay.

U.S. Circuit Judge Raymond Lohier Jr. of the U.S. Court of Appeals in New York today granted Apple’s request for the temporary delay, saying the case would be referred to a three-judge appeals panel “as soon as possible” for a hearing on the company’s bid for a longer freeze pending an appeal of the case.

Lohier also granted Apple’s request for a temporary halt of proceedings before the federal judge in Manhattan who’s overseeing the antitrust case.

Apple Inc., the world’s biggest technology company, was found to have orchestrated a scheme with publishers to fix the prices of electronic books, U.S. District Court Judge Denise Cote ruled in July, after presiding over a non-jury trial in a suit brought by the U.S. and state attorneys general.

She appointed Michael Bromwich, a former U.S. Justice Department inspector general, as the monitor in October, a measure the Cupertino, California-based company has challenged.

U.S. Objection

The appeals court said that if the government opposes the delay, it must file an objection by Jan. 24. Cote had agreed that her Jan. 13 order denying Apple’s request to delay the external monitor wouldn’t go into effect until today to allow Apple time to appeal.

Photographer: Craig Warga/Bloomberg

U.S. District Judge Denise Cote concluded in July after a nonjury trial that Apple Inc. orchestrated a scheme with publishers to fix the prices of e-books. Close

U.S. District Judge Denise Cote concluded in July after a nonjury trial that Apple Inc.... Read More

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Photographer: Craig Warga/Bloomberg

U.S. District Judge Denise Cote concluded in July after a nonjury trial that Apple Inc. orchestrated a scheme with publishers to fix the prices of e-books.

Kristin Huguet, a spokeswoman for Apple, didn’t immediately respond to a voice-mail message seeking comment on the appeals court ruling. Gina Talamona, a spokeswoman for the Justice Department, declined to comment.

The U.S. sued Apple and five publishers in April 2012, claiming the maker of the iPad pushed publishers to sign agreements letting it sell digital copies of their books under what’s known as the agency model. Under that model, publishers, and not retailers, set prices for each book, with Apple getting 30 percent.

Apple was the last defendant left in the case after the publishers avoided trial by settling.

Theodore Boutrous and Cynthia Richman, lawyers for Apple, argued in court papers that the company would suffer “irreparable harm” unless Cote’s order was blocked.

‘Extrajudicial Powers’

Cote vested Bromwich with “extremely broad and extrajudicial powers” and objectives to “crawl into the company” and explore both Apple’s “tone” and “culture” the lawyers wrote.

While Apple says it’s committed to complying with antitrust laws, it said a monitor shouldn’t have been imposed in the first place.

“The district court’s refusal to disqualify the monitor was an abuse of discretion,” according to papers filed with the federal appeals court, “because although he is supposed to be objective (as an officer and agent of the court itself), he filed a declaration opposing Apple’s stay request on behalf of the plaintiffs, which the district court credited and relied upon in denying Apple’s motion.”

The court monitor was tasked only with doing an assessment during the three-month period after his appointment, Apple said.

‘Open Opposition’

Instead, Bromwich has shown “open opposition” to the technology company and pressed for interviews with its top executives, such as Chief Executive Officer Tim Cook and others “who have no involvement whatsoever in the day-to-day operation of the business unit at issue,” including board member Al Gore, the former U.S. vice-president, according to Apple’s court papers.

At a Jan. 13 hearing, Cote denied a bid by Apple to stop Bromwich from interviewing company officials. She later agreed to put her ruling on hold while the company took its challenge to the circuit court. Justice Department officials told Cote they didn’t object to her decision granting Apple a temporary stay.

The appeals court case is U.S. v. Apple Inc. 14-60, U.S. Court of Appeals for the Second Circuit (Manhattan). The district court case is U.S. v. Apple Inc., 12-cv-02826, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in Federal Court in Manhattan at

pathurtado@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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