Court Denies Apple's Request to Remove Compliance Monitor in E-Book Antitrust Case

MacRumors · Jan 13, 2014

U.S. District Judge Denise Cote today denied Apple's attempts to thwart its antitrust monitorship, reports Reuters. Apple had asked the court for both a stay on the original order requiring an external compliance monitor (due to a pending appeal) and the removal of Michael Bromwich, the attorney appointed to serve as the company's monitor. Both requests were denied.

Apple Inc lost a bid on Monday to block an antitrust monitor appointed after a judge's finding that the company conspired to fix e-book prices. At a hearing, U.S. District Judge Denise Cote in Manhattan denied Apple's request to stay an order requiring an external compliance monitor pending the company's appeal.

Apple also sought to have the judge disqualify the lawyer chosen to serve as monitor, Michael Bromwich.

Apple and appointed antitrust compliance monitor Bromwich have ongoing disagreements since November, when Apple filed a formal complaint over Bromwich's fees in the case, which amounted to $138,432 over a two week period. The company also complained that Bromwich was overstepping his bounds by demanding lawyer-less meetings with key Apple executives and board members.

Bromwich, for his part, claimed that he experienced "a surprising and disappointing lack of cooperation from Apple and its executives", filing a complaint against the company in late December. Apple responded by requesting his removal last week, stating that Bromwich had a personal bias against the company.

Earlier today, the Department of Justice condemned Apple's actions, stating Apple had "chosen a campaign of character assassination over a culture of compliance" and suggested that Bromwich was open to negotiating with Apple on the original fee dispute.

Judge Cote plans to issue a decision explaining her reasoning on the denial in the near future, at which point Apple will have 48 hours to request an emergency stay from the federal appeals court in New York.

Apple was originally found guilty of conspiring with publishers to raise the retail price of e-books in July. As part of its punishment, the company was forced to hire an external compliance monitor to ensure that it complies with antitrust requirements in the future.

Article Link: Court Denies Apple's Request to Remove Compliance Monitor in E-Book Antitrust Case

AdonisSMU · Jan 13, 2014

The judge shouldn't be allowed to pick her friends. It should be a reputable party who has no relation to the judge at all.

Makosuke · Jan 13, 2014

I can understand denying the request to get rid of the monitor entirely, given that they were found guilty, but the simple fact that this monitor had to bring in an outside expert who gets paid as much as he does to do the job he was expressly hired to do should have disqualified him from being appointed in the first place, and I can't honestly see how it's anything but a favor by the judge.

I mean, really, if you were sent to a repair guy to get your car fixed, and the repair guy handed it off to an "expert in repairing cars" because he was actually an appliance repairman, then billed for both his and the expert's time, you'd say that the repair guy was incompetent and should never have been given the work in the first place.

How is this any different? Because lawyers are special flowers who get to take work they don't know how to do and bill fabulous amounts of money for hiring outside help to do the work?

2457282 · Jan 13, 2014

Lets see what she writes in her explanation. And then lets see how long it takes for Apple to file for an emergency stay. My guess is that it is all ready to go and just waiting for her to file her explanation. Apple will fight hard to keep anyone who doesn't belong out of their secrets.

parkds · Jan 13, 2014

I don't even begin to understand why the court would be unwilling to assign a new monitor. Why does it matter who the monitor is, if there isn't something shady going on.

It is very apparent that there most likely is a conflict of personality between the current monitor and Apple and that both parties feel like it is impeding their ability to get work accomplished. Seems simple, change out the monitor. If the monitor is doing what they are assigned to do why does it matter who the monitor is.

This seems to be a very odd response especially in light of the fact that the monitor (Bromwich) is an old friend of the judge on the case (Cote).

AnalyzeThis · Jan 13, 2014

Wow, a convicted felon shown his place, yet again. Really hard to imagine, very unpredictable. LOL

BTW, all these regurgitation of old friend of judge is just "Apple" propaganda. If you smart you would see this lie through...

thaifood · Jan 13, 2014

AnalyzeThis said:
Wow, a convicted felon shown his place, yet again. Really hard to imagine, very unpredictable. LOL

BTW, all these regurgitation of old friend of judge is just "Apple" propaganda. If you smart you would see this lie through...

You are pretty naive to think a lot of government assigned contracts aren't awarded as favours or to help out colleagues.

Same thing happens in Australia. New construction contracts, or planning and architecture etc from government is usually assigned to people with no more than 1 or 2 degrees of separation from the person signing off on the deal.

macsimcon · Jan 13, 2014

Did anyone here actually read Bromwich's declaration?

He gave Apple many, many chances to do the right thing, and his qualifications are substantial:

http://www.justice.gov/atr/cases/f302600/302674.pdf

If even half of his statements are true, Apple is acting like a bunch of spoiled brats who got caught and are mad that they are being punished.

It's business! Do what the monitor asks and move on! You've got awesome products to build, don't waste your angst on one loss, especially when most of the time you win. Most companies don't get to win that often, mainly because they suck.

springsup · Jan 13, 2014

Apple suggested that he speak with its employees who actually have something to do with antitrust, such as its general counsel or chief compliance officer, whereupon Mr. Bromwich had a tantrum. He made blanket requests for proprietary documents well beyond his mandate and bypassed Apple's in-house counsel by sending letters directly to board members and executives ordering them to meet with him without their lawyers present, accusing the company of "a surprising and disappointing lack of cooperation."

Then, shortly before Thanksgiving and out of the blue, Judge Cote proposed to amend her injunction to grant Mr. Bromwich even greater powers than he already claimed and also to make monthly briefings to her on what he finds—without Apple present. She denied any previous ex parte contact, but Apple's lawyers say Mr. Bromwich told them that he doesn't need to wait for the January deadline because Judge Cote privately instructed him during the interview process for the position to get off to a "fast start."

He worked for Iran-Contra independent counsel Lawrence Walsh in the Reagan era and as inspector general for the Justice Department in the Clinton years.

He was confirmed for the latter job despite conflicts of interest; his mentor Philip Heymann was Deputy Attorney General and inspectors general are supposed to be impartial watchdogs. In 1994, Judge Cote wrote Mr. Bromwich an effusive endorsement letter to help push him over the Senate hump.

While he has great political connections, Mr. Bromwich has no experience in antitrust law. The greenhorn is billing Apple at an $1,100 hourly rate and he was forced to hire the law firm Fried Frank to make up for his lack of expertise, at $1,025 a hour. He racked up $138,432.40 in charges for his first two weeks. A spokesman for Mr. Bromwich's firm, the Bromwich Group, declined to comment on matters currently before the court.

From the WSJ.

Must have been a different Judge Denise Cote

mejsric · Jan 13, 2014

Makosuke said:
I can understand denying the request to get rid of the monitor entirely, given that they were found guilty, but the simple fact that this monitor had to bring in an outside expert who gets paid as much as he does to do the job he was expressly hired to do should have disqualified him from being appointed in the first place, and I can't honestly see how it's anything but a favor by the judge.

I mean, really, if you were sent to a repair guy to get your car fixed, and the repair guy handed it off to an "expert in repairing cars" because he was actually an appliance repairman, then billed for both his and the expert's time, you'd say that the repair guy was incompetent and should never have been given the work in the first place.

How is this any different? Because lawyers are special flowers who get to take work they don't know how to do and bill fabulous amounts of money for hiring outside help to do the work?

Im the repair guy. Im handed you to an expert of repairing which is my best friend. He will be charge you $1000/hr and you cant change that. You cant hire anybody. Only my friend.

Mak47 · Jan 13, 2014

I laughed very hard at the whole line about "fostering a culture of compliance".

Let's face it, that's what this is all about. Apple has never played by the same 'rules' that other big business play by. Minimal lobbying, no massive corporate PAC money, not rolling over and playing dead about the whole tax scheme thing a few months back, etc.

This is about forcing Apple to conform and demonstrating the government's ability to force it's will on anyone--even the most successful company in the US.

If I were in Tim Cook's shoes, I would kick the guy out of the building and dare the court to take further action. They've done nothing wrong. Their actions were not criminal, and even if they were (by some imaginative stretch) the 'ebooks market' is not large or vital enough for antitrust law to really even be a consideration.

I'm proud of them for standing up to this and I hope they continue.

HiRez · Jan 13, 2014

mejsric said:
Im the repair guy. Im handed you to an expert of repairing which is my best friend. He will be charge you $1000/hr and you cant change that. You cant hire anybody. Only my friend.

Right, except don't forget that you are also going to charge for your own time in addition to your friend's time, so it's doubly insulting.

Orlandoech · Jan 13, 2014

macsimcon said:
He gave Apple many, many chances to do the right thing, and his qualifications are substantial:

http://www.justice.gov/atr/cases/f302600/302674.pdf

If even half of his statements are true, Apple is acting like a bunch of spoiled brats who got caught and are mad that they are being punished.

It's business! Do what the monitor asks and move on! You've got awesome products to build, don't waste your angst on one loss, especially when most of the time you win. Most companies don't get to win that often, mainly because they suck.

Exactly. As much as Iove Apple products, their acts of entitlement and invincibility is disgusting.

Makosuke · Jan 13, 2014

AnalyzeThis said:
Wow, a convicted felon shown his place, yet again. Really hard to imagine, very unpredictable. LOL

BTW, all these regurgitation of old friend of judge is just "Apple" propaganda. If you smart you would see this lie through...

First, I don't think the antitrust violation Apple was convicted of wasn't a felony offense, so that's a bit overboard.

Regardless, it's the Wall Street Journal making the claims about Cote being friendly with the monitor, not Apple. I don't actually put much stock in what the WSJ says, personally, but they're not exactly a mudslinging tabloid. And regardless, the point remains that Bromwich had to hire an expert in antitrust monitoring to do exactly what he had been appointed to do--monitor a company for antitrust violation. If he knew what he was doing, why did he have to hire an outside expert? Why not just appoint that outside expert in the first place and bypass the middle man? After all, apparently Bromwich had to rely on the expert to figure out what to do anyway.

I'm not even saying Apple should be let off the hook for monitoring, even though I think going after Apple when Amazon is clearly the company pursuing a monopoly in ebooks is a little off-base. Of course companies don't like being monitored for violating antitrust laws. If they liked it, it would be beside the point.

But if you aren't appointing a competent monitor, something is wrong.

Glideslope · Jan 13, 2014

springsup said:
From the WSJ.

Must have been a different Judge Denise Cote

Cote should be removed from the bench. Some day, for some reason she will be. Just not here. :apple:

lesferdinand · Jan 13, 2014

The ridiculousness of this whole suit is that the Department of Justice is effectively helping Amazon to destroy competition through predatory pricing.

Last time I checked, the goal of antitrust regulations was to promote competition and support consumers' long term interests. I guess Amazon spends a whole lot more lobbying money in Washington.

itr81 · Jan 13, 2014

The judge could have just put another monitor in place. Just seems odd if both the client and monitor are at arms with each other.
I have feeling apple will fight them until the end.

zelman · Jan 13, 2014

What if apple just pays him minimum wage? It's not like he has their checkbook.

Leddy · Jan 13, 2014

This Salon article sums it up nicely:

http://www.salon.com/2014/01/12/amazons_bogus_anti_apple_crusade/

If Apple conspired to raise prices, why did they actually fall?

MacGuffin · Jan 13, 2014

macsimcon said:
He gave Apple many, many chances to do the right thing, and his qualifications are substantial:

http://www.justice.gov/atr/cases/f302600/302674.pdf

If even half of his statements are true, Apple is acting like a bunch of spoiled brats who got caught and are mad that they are being punished.

It's business! Do what the monitor asks and move on! You've got awesome products to build, don't waste your angst on one loss, especially when most of the time you win. Most companies don't get to win that often, mainly because they suck.

This is far, far too reasonable a post for this clubhouse of fetishists. No wonder you're a lone voice on this one.

It isn't hard at all to imagine the spoiled brat scenario. Only look at past and present history. Here sits Apple: convicted, yes, but also notoriously avoiding US taxes, hoarding shareholder wealth and exploiting slave labor rather than employing its own nationals at living wages.

Does this sound like a company that would accept its punishment or one that thinks legality and ethics are trifles it can buy and/or bully its way past? And lo, it learns, to its fury, that the court is no half-witted fanboy...

Swift · Jan 13, 2014

WSJ, meet Salon

http://www.salon.com/2014/01/12/amazons_bogus_anti_apple_crusade/

The thing is, this has improved Amazon's monopoly position, and it's been bad for publishers, because Amazon doesn't really care about anything but getting 90% or more of the market in e-books.

And the left and the right agree on that.

patent10021 · Jan 13, 2014

what's wrong with the Apple thunderbolt monitor?

viktormadarasz · Jan 14, 2014

MacGuffin said:
This is far, far too reasonable a post for this clubhouse of fetishists. No wonder you're a lone voice on this one.

It isn't hard at all to imagine the spoiled brat scenario. Only look at past and present history. Here sits Apple: convicted, yes, but also notoriously avoiding US taxes, hoarding shareholder wealth and exploiting slave labor rather than employing its own nationals at living wages.

Does this sound like a company that would accept its punishment or one that thinks legality and ethics are trifles it can buy and/or bully its way past? And lo, it learns, to its fury, that the court is no half-witted fanboy...

Just one remark. People always seem to forgot that Apple is not the only one whose products are coming out from Foxconn (Dell, Cisco, HP just to mention a few) They neither employ workers back in their country, But take just my example even where I work I am in an outsourced department within the company ( company is british and We work for them from Spain) Is it the company´s fault, is it my fault, is it anyones fault at all?

Company´s exist to make profit before product and none of them is an exception..its not a samaritan case they do this for money which I understand

What I dont get why we see all the mistakes in Apple and not in the rest of the tech giants? they are just as ,,greeedy¨

Whatever I like my greedy apple still

Regards,

Viktor

albusseverus · Jan 14, 2014

Mak47 said:
I laughed very hard at the whole line about "fostering a culture of compliance".

Let's face it, that's what this is all about. Apple has never played by the same 'rules' that other big business play by. Minimal lobbying, no massive corporate PAC money, not rolling over and playing dead about the whole tax scheme thing a few months back, etc.

This is about forcing Apple to conform and demonstrating the government's ability to force it's will on anyone--even the most successful company in the US.

If I were in Tim Cook's shoes, I would kick the guy out of the building and dare the court to take further action. They've done nothing wrong. Their actions were not criminal, and even if they were (by some imaginative stretch) the 'ebooks market' is not large or vital enough for antitrust law to really even be a consideration.

I'm proud of them for standing up to this and I hope they continue.

Some sense at last.

This is all politics. Amazon gets the the only seat at the table, for playing the game - taking control of the Washington Post, massive and growing CIA data contracts, not to mention lobbying like there's no tomorrow.

Apple does not play this game, and the powers that be, see a Jobs-less Apple as ripe for the pickings:

Wall St, Ican etc - siphoning cash out of the company
NSA only got Apple to sign up for Prism after Steve passed away
with the departure of Bob Mansfield, deep control over Apple Technologies is now in the hands of former Adobe CTO and Flash evangelist, Kevin Lynch who brought you, Adobe Insight intelligence monitoring using Omniture "Ad Tracking" from their data centre, right next to the NSA data centre in Utah and Flash, the most 'accidentally' insecure software on the planet

and clearly the White House is looking for more "lobbying" from Apple, as confirmed by The Justice Department's conduct of this "legal action":

not replacing a Judge who declared Apple guilty before the case commenced
not replacing a compliance monitor with insufficient qualifications for the job
not replacing the compliance monitor when he commenced his action prior to commencement of the monitoring
not replacing the compliance monitor when he stepped outside the declared role, on the basis of (illegal) private discussions with the judge, no less

What this under qualified compliance monitor is known for is:

issuing permits to drill, despite in his own words, the disturbing attitude of some oil companies, after a bad oil spill (which occurred less than a month after the president expanded off-shore drilling) and
making a Lieutenant Colonel take the fall for a President's and the security services' drug running operations

The whole thing stinks.

gnasher729 · Jan 14, 2014

macsimcon said:
He gave Apple many, many chances to do the right thing, and his qualifications are substantial:

http://www.justice.gov/atr/cases/f302600/302674.pdf

If even half of his statements are true, Apple is acting like a bunch of spoiled brats who got caught and are mad that they are being punished.

It's business! Do what the monitor asks and move on! You've got awesome products to build, don't waste your angst on one loss, especially when most of the time you win. Most companies don't get to win that often, mainly because they suck.

If even half of what Apple is saying is true, his only goal is to make as much money as possible from this by overreaching into things that are none of his business and trying to create as many billable hours as possible.

----------

MacGuffin said:
Here sits Apple:... exploiting slave labor rather...

Does this sound like a company that would accept its punishment or one that thinks legality and ethics are trifles it can buy and/or bully its way past? And lo, it learns, to its fury, that the court is no half-witted fanboy...

Pretty insulting, your post. Please explain to us in detail where Apple is "exploiting slave labor". Easy to make claims, hard to support them.

Court Denies Apple's Request to Remove Compliance Monitor in E-Book Antitrust Case

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