Apple does not disqualify antitrust inspector in e-book case

Authors: Jonathan Stempel and Nate Raymond

NEW YORK (Reuters) – A federal appeals court on Thursday rejected Apple Inc’s request to disqualify an antitrust monitor appointed after the technology company was found responsible for conspiring with five publishers to raise e-book prices.

While some of the allegations against monitor Michael Bromwich “give pause,” the 2nd U.S. Circuit Court of Appeals in New York found that a lower court judge did not abuse her discretion by rejecting Apple’s offer to end his two-year term early.

U.S. District Judge Denise Cote installed Bromwich on a permanent injunction in October 2013, three months after ruling in favor of the U.S. Department of Justice, finding that Apple played a “central role” in a conspiracy to raise e-book prices and obstruct rivals such as Amazon.com Inc.

The Cupertino, California-based company is appealing the decision. Apple separately settled for $450 million in claims from 31 states, Washington, D.C., Puerto Rico and consumers, conditional on the decision being upheld.

Apple alleged that Bromwich improperly cooperated with the Justice Department and states, was overly aggressive in requesting interviews with executives and charged hourly wages that started at $1,100 and were later reduced to $1,000, it was disclosed on Thursday.

For his part, Bromwich’s lawyer accuses Apple of refusing to provide access and adopting an “adversarial tone” towards him.

Writing for the appeals court, U.S. District Judge Dennis Jacobs criticized Bromwich for filing an affidavit in support of plaintiffs who opposed Apple’s request to halt its work.

“Bromwich’s statements, combined with the litigant’s letter, were antithetical to best practices for a court-appointed monitor” and could create “an appearance of impropriety,” Jacobs wrote.

Jacobs, however, said Cote’s order “recognizes at least some interaction” between Bromwich and the plaintiffs and that Cote does not have to disqualify him for that reason or because of his “however rich billing.”

Apple spokesman Josh Rosenstock, Apple lawyer Theodore Boutrous and a spokeswoman for Bromwich declined to comment.

In a concurring opinion, U.S. District Judge Jesse Furman accused Apple of being slow to oppose Bromwich’s actions.

“The company largely sat on its hands, causing monitor problems to escalate and relationships to deteriorate,” he wrote.

A Justice Department spokesman welcomed Thursday’s decision and said Apple “could have avoided the entire appeal” by raising concerns about Bromwich more quickly.

The publishers are: Hachette from Lagardere SCA, HarperCollins from News Corp, Penguin Group, Simon & Schuster from CBS Corp and Macmillan from Verlagsgruppe Georg von Holtzbrinck GmbH.

The case is United States v. Apple Inc, 2nd U.S. Circuit Court of Appeals, No. 14-60.

(Reporting by Jonathan Stempel and Nate Raymond in New York; Editing by Frances Kerry, Jonathan Oatis and Richard Chang)