Apple Can’t Shake Monitor in E-Book Antitrust Case

NEW YORK (CN) - Despite behavior that gave the court "pause," a court-appointed monitor watching Apple will keep his job observing for potential antitrust violations in e-book sales, the 2nd Circuit ruled Thursday.

Apple has tried to chip away at a scathing ruling two years ago that found it played a "central role in facilitating and executing" a conspiracy "to eliminate retail price competition in order to raise e-book prices."

One of U.S. District Judge Denise Cote's remedies called for tapping attorney Michael Bromwich to keep a close eye on the company, and it did not take long for Apple to accuse its watchman of bias.

A New York appeals court noted that Apple and Bromwich got off to a "contentious start."

Apple accused the monitor of jumping the gun by making inquiries four days into his appointment, instead of honoring a 90-day window that the company interpreted from Cote's ruling.

Bromwich, in turn, alleged that Apple had been dragging its feet to comply.

Both parties knew going in that Apple would have to pay Bromwich's attorney fees, but each side had a different idea about what this arrangement entailed. Apple blanched at Bromwich's proposal for $1,265 per hour, plus slightly lesser fees for other members of his antitrust team.

Bromwich stacked up $138,432 in fees within the first two weeks of his appointment.

Circuit Judge Dennis Jacobs, the 2nd Circuit panel opinion's lead author, wrote that "some of Apple's allegations against the monitor give pause."

While Bromwich's court submission suggests "the opposite of best practice for a court-appointed monitor," Jacobs said that the "deferential standard" and "limited record" called for maintaining the status quo.

Enough safety valves currently exist within Apple's relationship with the monitor to obviate the need for appellate court action, he added.

As an arm of the district court, Bromwich must comply with the Code of Conduct of United States Judges barring "improper ex parte communications as well as 'other communications concerning a pending or impending matter that are made outside the presence of the parties or their lawyers,'" the opinion noted.

Jacobs appeared to be concerned with Apple's claims that the monitor engaged in ex parte communications with the plaintiffs in the case - the U.S. government, 30 states, Puerto Rico and the District of Columbia.

"It is certainly remarkable that an arm of the court would litigate on the side of a party in connection with an application to the court he serves," he wrote.

But Bromwich's "professional responsibilities" should prevent such complaints from recurring.

"As a lawyer, he is bound to respect the role of counsel and the adversarial system; as an impartial arm of the court, his responsibility to those institutions is a public trust," the opinion stated. "These manifold checks reassure us that, notwithstanding any supposed acquiescence by the district court, the monitor is prohibited from trampling rights of counsel and adversarial principles."

Circuit Judge Raymond Lohier joined Jacobs' opinion.

Concurring with his colleagues, Circuit Judge Jesse Furman wrote separately to opine that Apple let its relationship with the monitor spiral out of control by failing to engage in dispute resolution in the district court.

"Instead, the company largely sat on its hands, allowing issues with the monitor to fester and the relationship to deteriorate, mostly without the district court's knowledge," he wrote. "But it is hard not to believe that, had Apple timely raised its objections in the proper fashion instead of silently accumulating grievances and springing them on the district court en masse, matters might not have gotten to that point."

Apple did not release a statement on the ruling.

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