Knowledge Library $450M Apple e-books price fixing settlement gets preliminary nod
Monday, August 4, 2014

$450M Apple e-books price fixing settlement gets preliminary nod

By Jeffrey May, J.D.

The federal district court in New York City has granted preliminary approval to a settlement resolving price fixing claims against Apple Inc., raised in a certified class action and a parens patriae action. The court concluded that there is probable cause to find that the proposed Settlement Agreement is within the range of those that may be approved as fair and reasonable, such that notice to the class is appropriate (In re Electronic Books Antitrust Litigation, August 1, 2014, Cote, D.).

Preliminary approval comes less than three weeks after the parties filed the proposal with the court. Apparently, the parties have been able to satisfy some of the court’s initial concerns raised in a July 24 conference.

The settlement agreement between Apple and the 33 plaintiff states/territories and class plaintiffs is valued at up to $450 million. However, the amount provided to eligible consumers under the settlement agreement is contingent upon whether the court’s July 2013 liability finding against Apple is upheld on appeal.

Under the terms of the settlement, Apple would pay a total of $400 million in compensation for consumers who purchased e-books between roughly April 2010 and May 2012; a total of $20 million to the plaintiff states to cover their fees and costs; and a total of $30 million to cover the fees and costs of settlement class counsel. But these payments only would be made if the liability finding against Apple was affirmed by the appellate court.

If the liability finding is reversed and that decision is final, Apple would make no payments for consumer compensation or to the state attorneys general or class counsel, under the settlement’s terms. If the appellate court vacates and remands, or reverses and remands, with instructions for reconsideration or for retrial of the liability finding, then Apple would still pay, but the compensation would be more limited. Under this scenario, Apple would pay eligible consumers a total sum of $50 million; and $10 million to both the plaintiff states and to settlement class counsel for their fees and expenses.

According to the court, the plaintiffs’ counsel justified the potential reduction from $400 million to $50 million in the event of a remand on the ground that such a result was unlikely to occur. The plaintiffs also explained why Apple was not required to pay interest under the settlement's terms. The plaintiffs' counsel presented a calculation showing that an interest award per consumer would be de minimis.

The proposed settlement class is the same class already certified by the court earlier this year. It includes all natural persons who purchased e-books published by Hachette, HarperCollins, MacMillan, Penguin, or Simon & Schuster, from April 1, 2010, through May 21, 2012.

There were concerns about delivering payments to consumers who changed or will change e-mail addresses. The court noted that the plaintiffs had developed procedures for distributing compensation to these consumers and have drafted notices to consumers regarding steps they may take to ensure payment reaches them.

Lead plaintiffs, class counsel. In its order, the court also confirmed the choice of lead plaintiffs Anthony Petru, Thomas Friedman, and Shane S. Davis, and class counsel Hagens Berman Sobol Shapiro LLP and Cohen Milstein Sellers & Toll PPLC.

The case is No. 11md2293 (DLC), 12cv3394 (DLC).

Attorneys: David M. Ashton, Texas Attorney General’s Office, for the State of Texas. Gary M. Becker, Connecticut Office of the Attorney General, for the State of Connecticut. Nancy M. Bonnell, Attorney General of Arizona, for the State of Arizona. Devin M. Laiho, Assistant Attorney General, for the State of Colorado. James A. Donahue, Chief Deputy Attorney General, for the State of Pennsylvania. Steve W. Berman (Hagens Berman Sobol Shapiro LLP) and Douglas Richards, Kit A. Pierson, and Jeffrey B. Dubner (Cohen Milstein Sellers & Toll PLLC) for class plaintiffs. Daniel S. Floyd (Gibson, Dunn & Crutcher LLP) for Apple Inc.

Companies: Apple Inc.

MainStory: TopStory Antitrust NewYorkNews

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