State AGs’ Apple E-Book Price Fixing Cases Head to Damages Trial

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A judge has ruled that 31 states have both Article III and prudential standing, allowing their attorneys general to continue a case against a tech giant with a damages trial for both their claims and those of consumer plaintiffs in Apple e-book price fixing class action lawsuits.

Apple alleged that the states did not suffer an actual economic injury. However, U.S. District Court Judge Denise Cote did not find that argument compelling. For one, she noted that while the principle of standing was significant that the company could raise the issue even after the first trial and subsequent liability opinion, the attorneys general have statutory rights guaranteed by Congress.

Just like the class action lawsuit attorneys acting on behalf of citizens, the Sherman Antitrust Act and the later Hart-Scott-Rodino Antitrust Improvements act permit the states to bring parens patriae actions that will benefit their citizens. As the former provides for treble damages as a result of anti-competitive practices, there is an injury in fact.

Judge Cote also applied a standard that requires that injury in fact, a “causal connection between the injury and the conduct complained of … and that it is likely that the injury will be redressed by a favorable decision.” The causal connection, she wrote, was easily found by citing the liability opinion she herself wrote on behalf of states and the consumers’ class action lawsuit attorneys, indicating that Apple “forcefully facilitated” the “price fixing conspiracy” and the treble damages would be meet the redressability standard.

Apple’s defense team, in seeking to dismiss the states’ claims, had also argued that the judicially-defined prudential doctrine would keep the states from retaining standing. The judge noted that the states have a “concrete interest” and that the actions fell under the statutory protections of the Sherman Antitrust Act.

The states, finally, will not have to seek class certification as the tech giant had requested in the ebook price fixing case. While the consumer plaintiffs were able to meet Rule 23 standards in their class action lawsuit, Judge Cote cited a Second Circuit Court of Appeals decision noting that Hart-Scott-Rodino expressly allowed states to avoid this. Just because Rule 23 is required for class standing does not mean that it must be compelled in parens patriae actions taken by states on behalf of residents.

The states are represented by officials from the Offices of the Attorney General of Texas and Connecticut.

The State Attorneys General E-Book Price Fixing Lawsuit is The State of Texas, The State of Connecticut, et al. v. Penguin Group (USA) Inc., Case No. 12-cv-03394 in the U.S. District Court for the Southern District of New York.

The consumers’ Apple E-book Price Fixing Class Action Lawsuits and the states’ case are consolidated as In re: Electronic Books Antitrust Litigation, MDL No. 2293, in the U.S. District Court for the Southern District of New York.

UPDATE 1: Apple Inc. announced June 16, 2014, that it had reached an undisclosed class action lawsuit settlement in the e-book antitrust litigation.

UPDATE 2: A federal judge preliminarily approved a $450 million Apple e-book class action settlement on Aug. 1, 2014. A Final Fairness Hearing is scheduled for Nov. 21, 2014.