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.

click here for more »

By Allison F. Sheedy

Although the U.S. Court of Appeals for the Second Circuit has denied Apple’s motion to suspend a court-appointed antitrust compliance monitor, Apple actually achieved part of its goal of reining in the monitor.

Apple had asked the appellate court to stay the monitor, Michael R. Bromwich, from doing any more work pending Apple’s appeal of that appointment in United States v. Apple, Inc.  While the court denied Apple’s motion on Monday, it gave Apple some of what it asked for by writing a one-page order that should effectively put some limits on how far the monitor can reach in demanding documents and interviews with Apple employees.

Significantly, the appellate court premised its denial of the motion to stay the monitor on a narrow reading of Judge Denise Cote’s order appointing the monitor.

The Second Circuit’s order explained that the monitor’s job was to ensure that Apple is putting antitrust compliance policies in place.  The Second Circuit noted that the district court’s order of appointment “should be interpreted narrowly,” and highlighted that at oral argument the government “conceded” that the monitor was not allowed “to investigate whether [Apple’s] personnel were in fact complying with the antitrust or other laws.”

click here for more »

By Axel Bernabe

The FTC’s recent victory in unwinding the St. Luke’s Health System and Saltzer Medical Group merger in Idaho provides a cautionary note to hospitals and other health care providers contemplating mergers.

Mergers that threaten to give an entity market power to demand higher rates for health services to insurers are likely to be challenged.  In the St. Luke’s case, the FTC convinced the U.S. District Court for Idaho that St. Luke’s acquisition of Saltzer Medical Group violated Section 7 of the Clayton Act.  The court ordered “St. Luke’s to fully divest itself of Saltzer’s physicians and assets and take any further action needed to unwind the Acquisition.”

The FTC argued that St. Luke’s acquisition of Saltzer, the region’s largest independent, multi-specialty physician group, would have given the combined entity “far too great a market power when negotiating with insurance companies.”  There was little ambiguity in the FTC’s position, and the victory is a clear warning sign to competitors contemplating joint ventures.

click here for more »

A View from Constantine Cannon’s London Office

By Irene Fraile and Ankur Kapoor

The European Union may be on the verge of embracing “umbrella liability”—a theory of liability that would significantly increase the exposure of members of anticompetitive cartels.

The European Court of Justice is being urged by one of its advocates general to hold that, under EU law, victims of cartels can seek damages from cartel members for higher prices paid to non-cartel members that were able to raise their prices under the pricing “umbrella” created by the cartel. If the Court of Justice endorses such umbrella liability, antitrust liability in the EU could diverge from the approach evolving in U.S. courts which have been reluctant to embrace umbrella liability. click here for more »

By Allison F. Sheedy

Apple is finding this week that its appellate challenge to a court-appointed antitrust monitor is going to be a tough sell in the U.S. Court of Appeals for the Second Circuit.

Apple is asking the Second Circuit to stay the monitorship while it appeals both Judge Denise Cote’s decision in United States v. Apple, Inc. that Apple conspired to raise e-book prices and her subsequent decision to impose an external monitor on Apple to ensure its antitrust compliance.  The Court has already granted Apple a temporary administrative stay of the monitor until a three-judge panel can rule on Apple’s motion for a full stay pending appeal.

At oral argument yesterday, the three-judge panel—comprised of Judges Guido Calabresi, Gerard Lynch, and Pierre Leval—was noticeably skeptical of the thriving company’s claims of irreparable financial harm stemming from the conduct of the monitor.

In particular, Judge Lynch seemed to comment on Apple’s possible hubris, opining that the company would not be in its current predicament if management had “spent some of their valuable time keeping the company from violating the antitrust laws.”

Judging by the judges’ comment, the appellate panel also seemed to be unmoved by several of Apple’s other arguments, including Apple’s claims that the trial court’s order violates the separation of powers between the judiciary and the executive.  However, the panel appeared sympathetic to the argument that Judge Cote should have been more precise in setting limits on the powers of the external monitor, lawyer Michael Bromwich. click here for more »