Apple’s Appellate Challenge Of E-Books Monitor Moves To Procedural Battlefield
Apple’s battle in the U.S. Court of Appeals for the Second Circuit against a court-appointed external antitrust compliance monitor is winding its way through a procedural thicket as the Second Circuit prepares to consider the merits of Apple’s appeal.
Apple is appealing an order by Judge Denise Cote of the U.S. District Court for the Southern District of New York refusing to disqualify the monitor the court appointed to oversee Apple’s antitrust compliance policies, after finding in a bench trial that U.S. Department of Justice and Attorneys General of various 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.
Apple’s disputes with the monitor, Michael Bromwich, began almost as soon as he was appointed by the Judge Cote last fall. Apple complained from the start that he overstepped his mandated responsibilities, and charged exorbitant fees, with no oversight, which Apple is solely responsible for paying. Apple also argued that Bromwich lacked impartiality because of ex parte communications he engaged in with both Judge Cote and the government plaintiffs.
On January 16, 2014, Judge Cote denied Apple’s request to disqualify Mr. Bromwich, affirmed that his duties as monitor included a vast array of tasks within Mr. Bromwich’s sole discretion not spelled out in the initial injunction, and permitted the ex parte communications as part of his responsibilities.
Apple appealed this decision to the Second Circuit, and requested a stay of Mr. Bromwich’s monitorship pending appeal. In an arguably ambivalent per curiam decision, the Second Circuit denied Apple’s request for a stay, but concluded that Judge Cote’s original order “should be interpreted narrowly” to allow the monitor only “to assess the appropriateness of the compliance programs adopted by Apple and the means used to communicated those programs to its personnel.” The decision essentially split the baby and gave each side something.
Now that Apple’s appeal has been fully briefed, the government plaintiffs have filed a motion to strike Apple’s reply, arguing that its attempts to appeal the order under 28 U.S.C. § 1292(a)(1) were not properly preserved, and were therefore waived. Section 1292(a)(1) permits interlocutory appeals of district court orders “granting, continuing, modifying, refusing or dissolving injunctions” or “refusing to dissolve or modify injunctions.” The government plaintiffs claim that Apple raised this basis of appeal in its reply brief, but never previously asserted that Judge Cote’s January 16 order somehow “modified” her previous injunction.
The argument that Apple waived any argument is somewhat surprising, given that Apple has been fighting the monitor’s actions and Judge Cote’s authorization of his conduct in a tooth and nail battle since last fall. However, the government plaintiffs’ procedural argument may buttress their position that the only issue up on appeal is whether Judge Cote abused her discretion in refusing to disqualify Bromwich. Apple, on the other hand, has argued that the Second Circuit should examine whether the monitorship itself exceeds the authority of the District Court.
The Second Circuit’s decision will be cabined by the questions that have been properly presented. However, even if the Second Circuit accepts the government plaintiffs’ framing of the issue, Apple may still have a shot at convincing the appellate court that Judge Cote’s refusal to disqualify Bromwich was an abuse of discretion. Regardless of the standard, Apple will undoubtedly argue the district court erred in signing off on Mr. Bromwich’s allegedly aggressive approach, including his proffered aim to “crawl into [the] company.”
– Edited by Gary J. Malone
Categories: Antitrust Litigation
