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Friday, April 20, 2012

Judge sets DOJ hearing

From Publishers Lunch

At a status conference Wednesday afternoon in New York District Court, Judge Denise Cote heard from lawyers representing Apple, contesting publishers Penguin and Macmillan, and the three publishers - Hachette, Simon & Schuster, and HarperCollins -- that settled with the Department of Justice and are working towards a similar outcome with as many as all 50 states. Hachette and Harper confirmed they signed a memorandum of understanding with 16 states and Puerto Rico, Bloomberg reported, and "they hope to have a settlement with all 50 states completed by June 11," exactly 60 days from when both the DOJ and state ebook price fixing lawsuits were filed. A lawyer for S&S indicated the publisher also hopes to settle with all states soon, too.

Under such a settlement, paidContent said, the states would use the money collected from the settling publishers for "consumer restitution" as part of a large pool which would be paid out to customers. Answering one of the big open questions since the settlements were first announced, Harper lawyer Shepard Goldfein indicated their position that the state settlements remedy and effectively take the place of the class-action suit, which is also under Judge Cote's jurisdiction (channeling the funds to actual consumers rather than the class action attorneys, we would add). "There could be something left of the class, or nothing left of the class," Goldfein asserted.

Lead class action lawyer Steve Berman at Hagens Berman tried to counter this by arguing that state settlement "only applies to natural persons, not to businesses or libraries," but Goldfein countered that "few businesses and libraries bought ebooks." Regardless, Macmillan, Penguin and Apple will still be subject to the possibility of defending themselves against the class action suit as well as the suits brought by the Department of Justice and the coalition of state attorneys general, unless Judge Cote rules otherwise.

Cote said she would hold a hearing on July 27 to determine whether the federal settlements "are in the public interest," taking into account any public comments that emerge in the meantime. Readers are reminded that anyone who wishes to express themselves about the settlement is welcome to write to DOJ and "all comments received...will be considered" by DOJ and the judge. You should write to:

John Read
Chief Litigation III Section
Antitrust Division
U.S. Department of Justice
450 5th Street, NW, Suite 4000
Washington, DC 20530

That means it will be at over 100 days at a minimum before the settling publishers will need to have new contracts in place for ebook sales.

As for Apple, Reuters said the company wants a trial and explained their rationale in court: "Our basic view is that we would like the case to be decided on the merits. We believe that this is not an appropriate case against us and we would like to validate that." The next status conference is scheduled for June 22.

Meanwhile, ebook price fixing lawsuits have crossed the border, as the Toronto Star reports that two law firms in Ontario and one in B.C. have named Apple and the Agency Five (and their Canadian subsidiaries) in class-action claims. (The Globe and Mail adds there are additional suits pending in Quebec as well.)

"I would expect that if there's a change in business practices Canadians would benefit, but the case filed in the U.S. is on behalf of U.S. residents and seeks refunds to U.S. residents and so that would not do anything for Canadian consumers who have already made their purchases," explained Charles Wright of Siskinds LLP, which launched a suit on behalf of several Ontario residents. "A Canadian action is necessary and desirable to get compensation for Canadian consumers." All three complaints use similar language and request $110 million (CDN) in damages, which makes it likely the suits will merge into one.

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