U.S. appeals court upholds Apple e-book settlement

NEW YORK (Reuters) - A federal appeals court on Wednesday upheld Apple Inc’s $450 million settlement of claims that it harmed consumers by conspiring with five publishers to raise e-book prices.

An Apple logo is seen at the Apple store in Munich, Germany, January 27, 2016. REUTERS/Michaela Rehle

The 2nd U.S. Circuit Court of Appeals in Manhattan rejected a challenge by e-books purchaser John Bradley to the fairness, reasonableness and adequacy of Apple’s class-action antitrust settlement with consumers and 33 state attorneys general.

U.S. District Judge Denise Cote in Manhattan had approved the settlement in November 2014.

Apple agreed to the accord after Cote in July 2013 found it liable for having played a “central role” in a conspiracy with the publishers to eliminate retail price competition and undercut market leader Inc’s dominance.

The alleged conspiracy caused some e-book prices to rise to $12.99 or $14.99 from Amazon’s $9.99 price, according to the U.S. Department of Justice.

Cote ruled after a non-jury trial, and the 2nd Circuit later upheld her liability finding.

Apple has appealed that finding to the U.S. Supreme Court, saying it could harm competition and the economy.

The Supreme Court is expected to decide in its current term whether to hear the Cupertino, California-based company’s appeal.

Under the settlement, Apple would pay $400 million to compensate consumers plus $50 million for legal fees if the liability finding is upheld.

But if a retrial is ordered, Apple would pay just $50 million in compensation plus $20 million in legal fees. If the liability finding is overturned, Apple would pay nothing.

In Wednesday’s decision, the 2nd Circuit said Cote did not abuse her powers or act prematurely in approving the settlement.

It pointed to expert testimony that the accord, combined with $166 million of settlements with publishers, could actually award consumers more money than they claimed to have lost.

The 2nd Circuit also cited Cote’s observation that Bradley’s arguments were made by a “professional objector,” meaning a lawyer who hopes to win a fee for resolving “stock objections” to class-action settlements.

Bradley’s lawyer did not immediately respond to requests for comment. A spokeswoman for Apple declined to comment.

The five publishers are Lagardere SCA’s Hachette Book Group Inc, News Corp’s HarperCollins Publishers LLC, Penguin Group Inc, CBS Corp’s Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan.

The case is In re: Electronic Books Antitrust Litigation, 2nd U.S. Circuit Court of Appeals, No. 14-4649.

Reporting by Jonathan Stempel in New York; Additional reporting by Lawrence Hurley; Editing by Chizu Nomiyama, Will Dunham and Leslie Adler