Second Circuit Affirms Apple E-Book Settlement

On February 17, 2016, the U.S. Court of Appeals for the Second Circuit affirmed a class action settlement of two antitrust lawsuits involving claims that Apple Inc. fixed the prices of electronic books. Specifically, in the lawsuits, the State Attorneys General in 33 jurisdictions and individual consumers in 23 other jurisdictions alleged, among other things, that Apple and five book publishing companies conspired to “raise, fix and stabilize the retail price for newly released and bestselling trade e-books” in violation of Section 1 of the Sherman Antitrust Act and various state laws. 

In 2013, following a bench trial in one of the cases, U.S. District Judge Denise Cote ruled in favor of the plaintiffs—holding that Apple violated state and federal antirust laws—and set a date for a second trial to determine the amount of damages; Apple appealed.

Prior to the damages trial and while Apple’s appeal of the liability determination was pending, the company entered into a class action settlement. Under the e-books settlement, the size of Apple’s payments to consumers was dependent upon the outcome of the company’s liability appeal. If the appeal was affirmed, Apple agreed to pay $400 million in damages to consumers, plus $50 million in attorneys’ fees and costs. However, if the appellate court reversed the District Court’s holding on liability, then Apple would be required to pay, at maximum, $50 million to consumers and $20 million in attorneys’ fees in costs.

Objector John Bradley challenged the “fairness, reasonableness and adequacy” of the settlement. In his appeal to the Second Circuit, Bradley argued that the District Court’s approval of the agreement was “premature” because the payments were contingent on future legal proceedings. The Second Circuit disagreed and stated, “Bradley’s appeal, in which he asserts arguments either not presented to the District Court or devoid of merit, has done nothing to cast any doubt on the District Court’s characterization.”

The case is: In Re: Electronic Books Antitrust Litigation, Nos. 14-4649 and 14-4710 (2d. Cir.)

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