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Monday, June 17, 2024 | Back issues
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Judge Certifies Apple|E-Book Class Action

(CN) - A federal judge on Friday certified a class action accusing Apple of conspiring with five major publishers to fix the prices of e-books sold between April 2010 and May 2012.

U.S. District Judge Denise Cote in Manhattan said the plaintiff e-book buyers "have more than met their burden to establish each of the requirements" of proceeding as a class action.

"This is a paradigmatic antitrust class action," she wrote. "Virtually all class members paid inflated prices for e-books as a result of a centralized price-fixing conspiracy, and they have proffered a sophisticated damages model to reliably determine damages. If certification were not appropriate here, no antitrust class action could be certified."

In August 2011, consumers filed the first of several antitrust class actions against Apple and publishers Simon & Schuster, Macmillan, Penguin, Hachette and HarperCollins. The lawsuits were consolidated in January 2012, and the plaintiffs sought class certification before upcoming trial for damages.

Meanwhile, the Department of Justice and a slew of states and U.S. territories filed separate antitrust lawsuits accusing Apple and the same five publishers of colluding to fix e-book prices.

The publishers settled those claims for a total of $166 million. E-book customers have begun to receive account credits from those settlements, Amazon says in an FAQ section on its website. (Amazon was not a party to the lawsuits.)

Amazon says customers will receive $3.17 for each New York Times bestseller bought between April 1, 2010 and May 21, 2012, and 73 cents for other e-books. Minnesota customers will receive slightly more per e-book, because their settlement was negotiated separately.

Apple, which decided not to settle, proceeded to a bench trial last June. Judge Cote found that Apple had played a central role in orchestrating the price-fixing conspiracy.

The tech giant wanted to avoid having to compete with Amazon's $9.99 price point for e-books, Cote said, so it struck distribution deals with each of the five publishers. The agreements allegedly allowed the publishers to raise the prices of new and bestselling e-books to $12.99 or $14.99, and gave Apple a 30 percent commission on each e-book sale.

In Friday's ruling on class certification, Judge Cote noted that the prices of all e-books sold by the defendant publishers went up by an average of 18.6 percent after the deals were made, while the prices of some bestsellers increased by more than 40 percent.

She rejected Apple's argument that the lawsuit should not proceed as a class action because the damages model used by the plaintiffs' expert, Dr. Roger Noll, is flawed.

After conducting a "rigorous analysis" of Noll's model, Cote said, she "finds it capable of reliably estimating class members' damages."

She granted class certification and refused to exclude Noll's opinions.

Cote also struck much of Apple's response to the motion for class certification, saying it went "well beyond the scope of Noll's addition of a finer-grained analysis."

The plaintiffs' trial for damages is scheduled for later this year.

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