Judge Expresses Concern over Apple E-Book Class Action Settlement

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Just when it seemed like the massive litigation regarding allegations of collusion between Apple Inc. and five major book publishers over e-book prices could be resolved, a number of issues have arisen over the proposed $450 million class action settlement reached in June.

The Apple e-book price-fixing litigation revolves around consumers’ arguments that five publishing firms had agreed to contracts with Apple when it launched the iPad that would set artificially high prices in violation of the Sherman Antitrust Act. U.S. District Judge Denise Cote had already ruled against the electronics manufacturer in a bench trial, prompting Apple to offer a $450 million class action settlement prior to a second trial to assess damages.

It was the terms of that agreement that gave the judge pause, however. During a telephone conference last week, Judge Cote told both sides she was concerned about approving a deal that could get Apple off the hook easy.

Unlike other class action settlement conditions, there are three separate outcomes in the jointly proposed document. Since the bench trial is on appeal with the Second Circuit Court of Appeals, that court’s decision would determine the amount of the award. If the panel agrees with Judge Cote, Apple will pay $400 million to consumers and $20 million to states attorneys generals.

However, if the decision is vacated or remanded, e-book buyers would only get $50 million and the states $10 million. A ruling in favor of Apple would absolve it from liability. Cote and the state attorneys general both have issues with the agreement as a whole, which was originally proposed by the class action lawyers for the consumer class.

Cote noted that most settlements are designed to provide a measure of finality without the need for more time in court. The Apple e-book settlement award may vary depending on the relative probability of success but should in general provide a sense of closure. That alone would send the parties back to the drawing board, but there are still minor issues as well.

Plaintiffs still seem to be hashing out the details of what Apple should pay the state attorneys general for the amount of time they have worked on the case as well as certain other issues like interest in attempting to finally resolve the Sherman Antitrust Act claims over the alleged e-book price fixing

The consumer plaintiffs are represented by class action lawsuit lawyers from Hagens Berman Sobol Shapiro LLP and Cohen Milstein Sellers & Toll PLLC.

The Apple E-Book Price Fixing Class Action Lawsuits 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: 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. 

UPDATE 2: A settlement website has been established for the Apple e-books class action settlement. Click here for more information.

UPDATE 3: On Nov. 21, 2014, U.S. District Judge Denise Cote granted final approval to the Apple e-book class action settlement.