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Apple Loses Bid to Block Antitrust Monitor in E-Book Case

A digital book is displayed on an Apple Inc. iPad for a photograph in New York. Photographer: Scott Eells/Bloomberg
A digital book is displayed on an Apple Inc. iPad for a photograph in New York. Photographer: Scott Eells/Bloomberg

Jan. 14 (Bloomberg) -- Apple Inc. antitrust monitor Michael Bromwich may continue his court-ordered duties after a judge rejected a bid by the computer maker to stop him from seeking out interviews with top company officials.

Bromwich, a former U.S. Justice Department inspector general, was appointed in October to oversee the company’s compliance with terms of an electronic books price-fixing ruling. U.S. District Judge Denise Cote ruled Apple “played a central role” in the scheme and that it broke antitrust laws in its contracts with five of the six biggest book publishers.

Apple asked that Bromwich be replaced while it appeals the antitrust judgment, saying he inappropriately sought to interview Chief Executive Officer Tim Cook and board member Al Gore, the former U.S. vice president. The company also claimed that his hourly rate of $1,100, paid by Apple, is too much.

“Apple is not in a position to define for the monitor the scope of the monitor’s duties or how the monitor carries out those duties,” Cote said yesterday at a hearing in Manhattan federal court, rejecting the company’s bid to block Bromwich from talking with Apple’s management.

Cote didn’t formally rule on the company’s motion to disqualify Bromwich. She said she would file a more detailed opinion on that issue and would grant Apple 48 hours from that filing to seek an emergency appeal. Lawyers for the company said they would probably appeal her final ruling.

Fee Issue

Addressing the fee issue, Cote referenced a report in the National Law Journal, a legal newspaper, citing survey data that showed hourly rates of $1,000 or more at top law firms aren’t unusual. Gibson Dunn & Crutcher LLP, a firm representing Apple in the case, topped the list of highest hourly billing rates at $1,800, Cote said, referencing the article.

“There is nothing in the injunction that gives Apple a voice in the rate of payment,” the judge said.

In his own filing to the court in December, Bromwich said Apple, the world’s largest technology company, provided him with only limited access to personnel and documents during his investigation.

When he made initial inquiries about interviewing senior leaders, Bromwich said in his filing, one board member told him that the executives and directors were “very busy, and that we would see a ‘lot of anger’ about the case still existed within the company.”

Roving Investigation

In court yesterday, a lawyer for Apple, Theodore J. Boutrous Jr., argued that Bromwich was engaging in a “non-judicial” and “roving” investigation.

Under the injunction, which bars Apple from entering into anticompetitive contracts with e-book publishers, the monitor may interview any of the company’s personnel and may request any documents, Cote said.

She urged Apple to cooperate with the monitor and to try to address issues quickly with him, or with the government, if future problems arise.

Tom Neumayr, a spokesman for Apple, declined to comment on the judge’s order.

“I want this process to work,” she said. “I don’t want things to fester.”

The 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: Christie Smythe in Brooklyn at csmythe1@bloomberg.net

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

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