Antitrust Law Daily Wrap Up, TOP STORY—Apple could pay $450M in e-books price fixing settlement or nothing at all, (Jul 16, 2014)

By Jeffrey May, J.D.

State attorneys general and counsel for class action plaintiffs, in an action against Apple Inc. for orchestrating a conspiracy among publishers to fix the price of e-books, have asked the federal district court in New York City for preliminary approval of a settlement agreement valued at up to $450 million. The proposed settlement was brought before the court, despite a pending appeal of the district court's July 2013 decision finding Apple liable for conspiring to fix e-book prices. The parties intend to pursue the liability appeal, and just yesterday the U.S. Department of Justice and states asked the U.S. Court of Appeals in New York City to uphold the district court’s judgment and injunctive relief against the firm (In re Electronic Books Antitrust Litigation, No. 11 MD 2293; No. 12-cv-03394).

A settlement in principle was announced last month. At that time, the terms of the settlement were not disclosed. The settlement agreement reached between Apple and the 33 plaintiff states/territories and class plaintiffs on July 10 details the possible compensation for the complaining states and consumers.

Under the terms of the settlement, Apple would pay a total of $400 million in compensation for consumers who purchased e-books between roughly April 2010 and May 2012; a total of $20 million to the plaintiff states to cover their fees and costs; and a total of $30 million to cover the fees and costs of settlement class counsel. But these payments only would be made if the liability finding against Apple was affirmed by the appellate court.

If the liability finding is reversed and that decision is final, Apple would make no payments for consumer compensation or to the state attorneys general or class counsel, under the settlement’s terms. If the appellate court vacates and remands, or reverses and remands, with instructions for reconsideration or for retrial of the liability finding, then Apple would still pay, but the compensation would be more limited. Under this scenario, Apple would pay eligible consumers a total sum of $50 million; and $10 million to both the plaintiff states and to settlement class counsel for their fees and expenses.

The settlement could potentially provide $566 million in compensation to e-book purchasers, when combined with the $166 million already recovered from settling publishers. The settlements with the publishers were approved in 2013.

According to the plaintiffs' memorandum in support of preliminary approval, this outcome would represent a consumer recovery of more than 200 percent of the maximum estimated consumer damages. If the liability finding was remanded for retrial or reconsideration, the $50 million payment to consumers would represent slightly more than 77 percent of the maximum estimated single damages, when combined with the money received under the publisher settlements.

The proposed settlement class is the same class already certified by the court earlier this year. It includes all natural persons who purchased e-books published by Hachette, HarperCollins, MacMillan, Penguin, or Simon & Schuster, from April 1, 2010, through May 21, 2012.

Notice to the class would not take place until the appellate court rules on the liability finding.

Attorneys: David M. Ashton, Texas Attorney General’s Office, for the State of Texas. Gary M. Becker, Connecticut Office of the Attorney General, for the State of Connecticut. Nancy M. Bonnell, Attorney General of Arizona, for the State of Arizona. Devin M. Laiho, Assistant Attorney General, for the State of Colorado. James A. Donahue, Chief Deputy Attorney General, for the State of Pennsylvania. Steve W. Berman (Hagens Berman Sobol Shapiro LLP) and Douglas Richards, Kit A. Pierson, and Jeffrey B. Dubner (Cohen Milstein Sellers & Toll PLLC) for class plaintiffs. Daniel S. Floyd (Gibson, Dunn & Crutcher LLP) for Apple Inc.

Companies: Apple Inc.

MainStory: TopStory Antitrust