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Apple Seeks to Halt E-Books Monitor Before Appeals Panel

Feb. 4 (Bloomberg) -- Apple Inc., facing as much as $840 million in state and consumer antitrust claims tied to price-fixing in the electronic-book market, asked an appeals court to halt oversight by a court-appointed compliance monitor.

Apple made an emergency request today before a three-judge panel in New York, seeking a longer delay in the supervision by the monitor, Michael Bromwich. Apple, the world’s most valuable technology company, accuses Bromwich of taking inappropriate actions beyond the scope of his authority and interfering with the way it does business.

The Cupertino, California-based company is challenging the monitor, imposed by U.S. District Judge Denise Cote in Manhattan, who concluded in July after a nonjury trial that Apple, maker of the iPad tablet computer, orchestrated a scheme with publishers to limit retail price competition and raise e-book prices.

Cote also found Apple liable to 33 states that joined the U.S. Justice Department in its suit. The Justice Department didn’t ask for money damages in its case.

Valuable Time

While the panel didn’t immediately rule, it questioned Theodore Boutrous, Apple’s lawyer, who said the monitor had misspent the valuable time of executives and board members with his inquiries.

“How much time are we talking about in your estimate?” U.S. Circuit Judge Gerard Lynch asked. “Maybe if they’d spent some of their ‘very valuable time’ not keeping the company from violating antitrust laws they wouldn’t be in this position in the first place.”

Boutrous said Bromwich was “conducting truly roaming interviews.”

“This case is a classic case of irreparable harm,” Boutrous told the panel, adding that Cote gave Bromwich “extremely broad and extrajudicial powers.”

Lynch suggested that the panel could craft an order clearly defining Bromwich’s role and duties while the appeal is pending.

“What if we sculpt the order to incorporate those accomodations?” Lynch asked.

Finnuala Tessier, a lawyer for the Justice Department’s antitrust division, said it wasn’t necessary, citing Cote’s directive on the monitor.

“The language on the injunction makes clear his tasks,” Tessier said.

Temporary Reprieve

Even with the adjustments suggested by Lynch, Boutrous told the panel that Apple still opposes the monitoring and believes it will win a challenge to Cote’s rulings.

Cote last month denied Apple’s bid to delay the monitoring and compliance. A federal appeals court judge on Jan. 21 granted Apple a temporary reprieve from the monitoring until the full appeals panel could hear its bid.

Cote denied Apple’s request to replace Bromwich while it appeals the judgment and argued that he inappropriately sought interviews with Chief Executive Officer Tim Cook and board member Al Gore, the former U.S. vice president.

Apple also objected to Bromwich’s proposed hourly fee of $1,100 an hour. Lynch said he took note of Apple’s complaint on legal fees, telling Boutrous that the court had spent more time hearing the case than was allotted.

“I think we’ve gotten your argument,” Lynch said. “We’re very sensitive to the cost to your client.”

Sales of e-books, music, movies and software and services were $12.9 billion in 2012, 8.2 percent of Apple’s total revenue. Apple introduced e-books in 2010 to boost the appeal of the newly unveiled iPad tablet as a reading device.

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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