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Apple Antitrust Monitor Stays Put: 2nd Cir.

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By Mark Wilson, Esq. on May 28, 2015 3:55 PM

Apple -- you know, the company that makes your iPhone -- got into a bit of trouble a few years ago when the United States started investigating allegations of price fixing in the e-book market.

Eventually, Apple settled for $450 million, but did so in the most begrudging way possible. Ever since, it's done nothing but complain about the compliance monitor the court appointed to ensure Apple was abiding by the terms of the settlement. Today, the Second Circuit told Apple to suck it up: the monitor isn't going anywhere.

This Will Be an Awkward Thanksgiving

Apple has long been unhappy with Michael Bromwich, a lawyer and former DOJ inspector general, appointed by U.S. District Judge Denise Cote to oversee Apple's compliance with the settlement. First, Apple objected in November 2013 to Bromwich's fee, a staggering $1,100 an hour, plus a 15% administrative fee and the cost of retaining an outside antitrust firm at an additional $1,025 an hour.

Bromwich himself wrote a letter to Tim Cook and the Apple board of directors, claiming that his attempts to "meet with key Apple personnel have been largely ignored, and when not ignored the responses have been extremely slow in coming." Apple was being extremely uncooperative, Bromwich said, and "spent far more time challenging the terms of our compensation and raising other objections related to administrative matters" than it did actually complying with his requests.

Apple claimed that Bromwich's demands -- which included meeting with executives without company lawyers present -- were inappropriate. They also claimed he was inappropriately having ex parte communications with DOJ. The company wanted him gone.

The Parties Are Ordered to Deal With It

"Too bad" was the message the Second Circuit sent, concluding the district court didn't abuse its discretion in denying Apple's motion to replace Bromwich. While admonishing Bromwich for the single documented instance of ex parte communication with DOJ, the court said that, ultimately, it didn't really make a difference and didn't require his disqualification.

The court wasn't amenable to any of Apple's other contentions. For example, the panel found it very curious that Bromwich's hourly rate was kept under seal. "Bromwich is a court-appointed arm of the district court, paid at a rate ultimately approved by the court, and the parties have provided no reason for keeping this information from the public," the Second Circuit said. It didn't find that his fee was unreasonable.

As to Bromwich's "aggressive" questioning of Apple executives, Apple hasn't shown that to be a problem. The court noted that there are statutory and court-imposed limits on what a monitor can do, and Apple to date hasn't provided any evidence that Bromwich hit those limits.

Concurrence: Apple's Partly to Blame, Here

Judge Jesse Furman concurred in the opinion to point out that Apple was the one coming into this motion with unclean hands. The district court established a dispute resolution to deal with the very kinds of issues that Apple now raises -- but "Apple largely failed to avail itself this process," he said.

What Apple did was "silently accumulate[e] grievances and spring[] them on the district court en masse," according to Furman. He suggested that if Apple had used the dispute resolution mechanism correctly, things wouldn't have devolved to the point where the district court had to be involved. (Then again, maybe that was its intention all along, eh?)

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