Antitrust Law Daily Wrap Up, ANTITRUST—S.D.N.Y.: Apple’s request for stay of antitrust compliance monitoring requirements pending appeal denied, (Jan 16, 2014)

By Jeffrey May, J.D.

Apple Inc. is not entitled to a stay of a provision in a final judgment issued in the federal/state e-books price fixing case that appointed an External Compliance Monitor to review and evaluate the company’s antitrust compliance policies and procedures, the federal district court in New York City has ruled. The court denied Apple’s application to disqualify the Monitor on January 13. In its opinion issued today, the court explained its reasons for denying the application for disqualification and for denying the stay of the final judgment provision (U.S. v. Apple, Inc., January 16, 2014, Cote, D.).

The final judgment was issued last September after Apple was found to have orchestrated a conspiracy among the publishers to fix retail prices for e-books. In addition to providing injunctive relief sought by the U.S. Department of Justice and a number of state attorney generals, the final judgment created the disputed Monitor position. Apple sought a stay of this provision of the final judgment pending appeal in the price fixing case.

Although Apple had waived or was no longer pursuing some of its arguments for the stay, it continued to seek temporary relief based on its objections to the conduct of Monitor Michael Bromwich. Apple has asserted that the stay was appropriate because Bromwich should be disqualified.

Among other things, Apple questioned the Monitor’s impartiality. The company suggested that the Monitor had acted beyond his authority under the Final Judgment. The company also took issue with the Monitor’s efforts to make direct contact with company personnel outside the presence of counsel. In addition, Apple argued that the Monitor’s fee structure was impermissible.

Apple made no showing that the Monitor should be disqualified or that Apple would suffer irreparable harm if the Monitor were not disqualified or if the stay were not granted pending appeal, the court ruled.

“The core of Apple’s argument for a stay is its contention that Bromwich must be disqualified as a Monitor,” the court explained. Apple failed to support its argument that it was unconstitutional to pay a court-appointed monitor at an hourly rate because that created an incentive for the Monitor to conduct as lengthy of an investigation as possible. Although Apple had objected to the fee structure, it had offered to pay $800 per hour instead of the $1,100 approved by the Department of Justice. A dispute resolution process was available to Apple, and a stay motion was not a proper vehicle for the complaint, in the court’s view.

Apple’s principal focus of the stay application was its argument that the Monitor had a personal bias or prejudice against the company. However, Apple failed to show that it was likely to succeed in obtaining a stay of the monitorship by disqualifying the Monitor on this ground.

Apple also failed to show that it would be irreparably harmed if the stay were not granted. The court was not convinced that irreparable harm was caused by Apple’s payment of the Monitor’s fees or the Monitor’s interference with Apple’s ability to manage its business by requesting interviews with company executives. Lastly, Apple failed to show that it was in the public interest to stop the Monitor’s work.

In closing, the court urged a “reset” of the relationship between Apple and the Monitor. “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,” the court said.

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