US judge says she’s concerned about Apple’s $450 million e-book deal

By Nate Raymond NEW YORK (Reuters) – A U.S. judge on Thursday expressed concern about a proposed $450 million (264.9 million pounds) settlement on claims Apple Inc. colluded with five publishers to fix e-book prices, saying its provisions could drastically reduce the money paid to consumers depending on the appeal. U.S. District Judge Denise Cote in Manhattan said she found “most troubling” a clause requiring Apple to pay only $70 million if an appeals court overturns her ruling that the company was liable for antitrust violations and sends them back to her for further proceedings. Speaking on a conference call, Cote asked whether that would be fair and what might happen if the appeals court overturned her ruling on the lesser issue. She also questioned the lack of any requirement for Apple to pay interest while the appeals continue. “I’m concerned about the terms of the settlement,” she said. The comments came a week after 33 U.S. states and territories and attorneys representing a group of consumers filed a settlement seeking preliminary approval from Cote and avoiding a scheduled Aug. 25 trial for damages. Cote scheduled the trial after a ruling last July that Apple was liable for colluding with publishers to stifle e-book competition from companies like Amazon.com Inc. The publishers include Lagardere SCA’s Hachette Book Group Inc, News Corp’s HarperCollins Publishers LLC, Penguin Group (USA) Inc, CBS Corp’s Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan. Cote’s ruling came in a lawsuit filed in April 2012 by the U.S. Department of Justice and state attorneys general. Those plaintiffs were expected to seek up to $840 million in damages, but they reached settlements in which the publishers would pay e-book buyers $166 million, reducing Apple’s exposure to $674 million. The size of Apple’s settlement depends on the outcome of the company’s appeal of Cote’s liability ruling to the 2nd U.S. Circuit Court of Appeals. If Apple loses the appeal, it will pay $400 million to consumers and $50 million to states and plaintiffs’ lawyers. By contrast, if Apple’s appeal is successful but the 2nd Circuit remands the case to Cote for further proceedings or a new trial, the company will pay only $70 million, with $50 million to consumers. If the 2nd Circuit were to overturn Cote’s ruling entirely and end the case, Apple would pay nothing. On Thursday’s call, Cote expressed concerns that the middle ground could be unfair to consumers because it understates their claims. Steve Berman, a consumer lawyer, told her that such an outcome would create a “significantly bleak universe” for his clients. “We felt that given the unlikely scenario and the legal risks that we face, that would be a good outcome for consumers,” he said. After the call, Berman said the parties would consider Cote’s concerns. Apple did not respond to a request for comment. The case is In Re: Electronic Books Antitrust Litigation, U.S. District Court for the Southern District of New York, No. 11-md-02293. (Reporting by Nate Raymond in New York; Editing by Cynthia Osterman)