Apple Doubles Down On Its Bet Against E-Books Judge

By Allison F. Sheedy

Apple has upped the ante in the e-books case with two court filings in recent weeks that seek to prevent Judge Denise Cote of the U.S. District Court for the Southern District of New York from presiding over the upcoming jury trial on damages.

While the two-pronged attack – which argues not only lack of jurisdiction but also bias by the judge – is fairly aggressive, it is hardly surprising.  Although motions for recusal based on a judge’s lack of impartiality are rarely made – and even more rarely granted – Apple’s litigation tactics over the past few months have telegraphed that it was likely to seek the removal of Judge Cote from the case.

The e-books case encompasses several actions brought by the U.S. Department of Justice (“DOJ”), Attorneys General of various states and class action plaintiffs, which alleged that Apple’s contractual agreements with book publishers violated state and federal antitrust laws.  After the publishers settled the case, Judge Cote found in a bench trial that the DOJ and the states had proved that Apple violated Section 1 of the Sherman Act and related state antitrust laws by conspiring with the publishers to raise e-book prices.  The trial focused solely on liability, and the only relief sought was an injunction.

While Judge Cote’s judgment ended the district court case against Apple by the DOJ, the undecided issues of damages in the state and private class actions must, by right, be determined by a jury.  As that piece of the case hurtles towards a second trial, Apple has been busy positioning itself to be in front of anyone other than Judge Cote for the damages determination.

As we have blogged about previously, Apple’s appellate challenge to the alleged overreach and partiality of the external antitrust compliance monitor appointed by Judge Cote seemed calculated to support an eventual challenge to the judge as biased against Apple. While the Second Circuit refused to reverse Judge Cote’s order imposing the external monitor on the company, it did severely cabin his responsibilities, sending a message on its views about the appropriate scope of  the monitor’s reach and the lower court’s role in that process.

Apple is attempting to cash in on that groundwork by seeking to have the damages trial remanded to the Judicial Panel on Multidistrict Litigation, or, alternatively, by requesting that Judge Cote recuse herself on the basis that she has prejudged the issue of damages in prior orders on the merits of the case.

In the first part of this two-step move, Apple filed a motion asking the court to remand the damage actions brought by several states and class action plaintiffs back to the jurisdictions in which the cases were originally filed under 28 U.S.C. § 1407(a) as coordinated proceedings have come to an end.  The situation here is fairly unique because of the split nature of the liability and damages portions, necessitating separate bench and jury trials.  Although the states and class actions plaintiffs argue that Apple waived any right to object to venue in the Southern District of New York, Apple’s legal argument may have teeth:  the Lexecon case cited in their papers does seem to support the proposition that it would be improper for the transferee court to retain jurisdiction at this stage in the game.

But if that doesn’t work, Apple has a second move in play.  After the class plaintiffs moved for summary judgment on the issues of damages based on the court’s “extensive” findings on the issue of the price of e-books and harm to consumers, Apple countered in its opposition by arguing that Judge Cote should recuse herself from presiding over the damages part of the case because she prematurely prejudged the issue of damages throughout the pretrial period and beyond, prior to the issue being before the court.

Even if neither move works, Apple has already filed its opening brief in support of its appeal of Judge Cote’s merits decision on liability to the Second Circuit.  In this high-profile case, it would not be surprising if the Court of Appeals is following Judge Cote’s rulings on whether she should hold onto the case with more than the usual interest.

— Edited by Gary J. Malone