| NEW YORK, July 24
NEW YORK, July 24 A U.S. judge on Thursday
expressed concern over a proposed $450 million settlement of
claims Apple Inc conspired with five publishers to fix
e-book prices, saying its provisions could drastically reduce
money paid to consumers depending on appeals.
U.S. District Judge Denise Cote in Manhattan said she found
"most troubling" a clause requiring Apple to pay only $70
million if an appeals court reversed her finding that the
company is liable for antitrust violations and sent it back to
her for further proceedings.
Speaking on a teleconference, Cote questioned if that would
be fair and what might happen if the appeals court reversed her
ruling on a minor issue. She also took issue with the lack of
any requirement for Apple to pay interest while the appeals go
"I'm concerned about the terms of the settlement," she said.
The comments came a week after 33 U.S. states and
territories and lawyers for a class of consumers submitted the
settlement for Cote's preliminary approval, and to avoid a
scheduled Aug. 25 damages trial.
Cote scheduled the trial after ruling last July that Apple
was liable for colluding with publishers to impede e-book
competitors such as Amazon.com Inc.
The publishers include Lagardere SCA's Hachette
Book Group Inc, News Corp's HarperCollins Publishers
LLC, Penguin Group (USA) Inc, CBS Corp's Simon &
Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH's
Cote's ruling came in an April 2012 lawsuit by the U.S.
Department of Justice and the state attorneys general.
These plaintiffs were expected to seek up to $840 million in
damages but reached settlements in which the publishers would
provide $166 million to e-book purchasers, reducing Apple's
exposure to $674 million.
The size of the Apple settlement depends on the outcome of
the company's appeal of Cote's liability finding to the 2nd U.S.
Circuit Court of Appeals.
If Apple loses its appeal, it would pay $400 million to
consumers and $50 million to the states and plaintiffs' lawyers.
In contrast, if Apple's appeal is successful but the 2nd
Circuit returns the case to Cote for further proceedings or a
new trial, the company would pay just $70 million, with $50
million for consumers. If the 2nd Circuit reversed Cote outright
and ended the case, Apple would pay nothing.
On Thursday's call, Cote expressed concern that the middle
scenario might be unfair to consumers by undervaluing their
Steve Berman, a lawyer for the consumers, told her that such
an outcome would result in a "much bleaker universe" for his
"We thought given that unlikely scenario and the legal risk
we would face it would be a good outcome for consumers," he
After the call ended, Berman said the parties would consider
Cote's concerns. Apple did not respond to a request for comment.
The case is In Re: Electronic Books Antitrust Litigation,
U.S. District Court for the Southern District of New York, No.
(Reporting by Nate Raymond in New York; Editing by Cynthia