Judge Nixes Apple Bid to Block E-Books Monitor

, The Litigation Daily

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Michael Bromwich
Michael Bromwich

Apple Inc.'s court-appointed antitrust monitor, Goodwin Procter's Michael Bromwich, has defeated the company's disqualification bid—at least for now.

At a hearing on Monday, U.S. District Judge Denise Cote in Manhattan denied Apple's requests that she disqualify Bromwich or suspend his duties pending Apple's appeal of her final judgment that the company fixed prices for e-books. According to Reuters and Bloomberg News, which had reporters in the courtroom, Cote rejected Apple's argument that Bromwich revealed bias against Apple by filing an adversarial declaration in court. Siding with the U.S. Department of Justice, Cote also brushed aside concerns that Bromwich is overcharging Apple, noting that a newly released study shows that Apple's lawyers at Gibson, Dunn & Crutcher sometimes demand similar hourly rates.

Apple's appellate lawyer, Theodore Boutrous Jr. of Gibson Dunn, said the company will appeal Monday's ruling to the U.S. Court of Appeals for the Second Circuit. The appeals court is also reviewing Cote's July 2013 determination that Apple violated civil antitrust laws by conspiring with book publishers to set e-book prices. That ruling was a high-profile win for the DOJ, which sued Apple and five major e-book publishers in April 2012. (The publisher defendants have since settled.)

While Cote hasn't yet ruled on the damages Apple must pay, she entered an injunction and other nonmonetary relief, including the appointment of an external monitor to oversee Apple's implementation of a beefed-up compliance program.

Cote selected Bromwich, the DOJ's former inspector general and a litigation partner at Goodwin Procter, for the role in October. According to Apple, which is picking up the tab for Bromwich's services, he's billing $1,100 an hour through his consultancy firm, The Bromwich Group, plus a 15 percent administrative fee.

In December, Gibson Dunn asked Cote to stay the portion of her final judgment that set up the monitorship. Apple argued that Bromwich overstepped his limited authority, subjecting Apple executives like CEO Tim Cook and board members like Al Gore to "indiscriminate demands for interviews and information." Apple also raised a separation of powers argument, writing that "the unilateral investigation the court has empowered Mr. Bromwich to undertake is not a judicial function, and therefore cannot be delegated by the court."

Apple upped the ante in a Jan. 7 letter, urging Cote to disqualify Bromwich entirely. In its brief, Gibson Dunn argued that Bromwich became an "advocate for the plaintiff" by filing a Dec. 30 declaration that explained and defended his work so far. Apple also objected to Bromwich's fees, arguing that "serving as a court-appointed monitor is a form of public service and should not be treated as a profit-making enterprise."

The DOJ has come to Bromwich's defense, stating publicly that Apple's tactics "only highlight the critical need for his monitorship to continue uninterrupted."

According to Reuters, Cote ruled at Monday's hearing that Bromwich did "nothing improper" by filing the declaration. Addressing the fee issue, Cote noted that our affiliate The National Law Journal had just released its annual survey of hourly rates, which showed that Gibson Dunn partner Theodore Olson bills up to $1,800 an hour. "There is nothing in the injunction that gives Apple a voice in the rate of payment," Cote said, according to Bloomberg.

While Apple failed to persuade Cote, the company is not without its sympathizers.

"What we have here is the appointment of a monitor not as a result of a consent decree, but rather following a vigorously contested ruling that's under appeal," said Snell & Wilmer partner Greg Brower, who is not involved in the case. "Appointing a monitor in such a situation is unusual if not unprecedented."

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