A US appeals court on Wednesday upheld the $450 million settlement that Apple agreed to (PDF) in an antitrust lawsuit over e-book price-fixing. After a district court found Apple liable for antitrust violations, the company settled for $450 million, but one consumer challenged that settlement figure, saying it was decided prematurely and was too low to represent a fair deal for e-book buyers.
Back in 2012, the Department of Justice followed a class-action lawsuit accusing Apple and five publishers (Penguin, HarperCollins, Hachette, Simon & Schuster, and Macmillan) of conspiring to offer e-books at price points between $12.99 and $14.99—well above Amazon’s $9.99 e-books. The publishers settled but Apple held out, and in June 2014 a Manhattan district court judge ruled that Apple was indeed violating antitrust law. Apple appealed the ruling, but it worked out a settlement deal later that year—if the company went through the appeals process and lost, it would pay $400 million to consumers in cash and e-book credits and $50 million to the plaintiff’s lawyers. But if Apple won a retrial, it would only pay $50 million to consumers and $20 million to lawyers. And if the decision were overturned on appeal, Apple would pay nothing.Objector-Appellant John Bradley, a consumer who purchased e-books, appealed the District Court’s decision to approve the $450 million settlement that Apple agreed to. Bradley challenged "the fairness, reasonableness, and adequacy of the Settlement,” arguing that Apple should pay more for its alleged role in the scheme.
The Second Circuit Court of Appeals rejected that argument, however, saying that the District Court was right in deciding that $450 million was a reasonable amount. "An expert for the private plaintiffs estimated total consumer losses resulting from the conspiracy to be approximately $280 million. Taking into consideration the payments of approximately $166 million that these consumers had already secured from settlements with Apple’s co-conspirators, the Settlement would give consumers just over 200 percent of their estimated losses (if the Liability Finding is affirmed), and 77 percent of their estimated losses (if the Liability Finding is either reversed and remanded, or vacated and remanded),” the panel of three circuit judges wrote.
The Second Circuit Court of Appeals recently upheld the District Court’s decision that Apple was liable for price-fixing, and Apple is now seeking an audience with the Supreme Court, arguing that it could never have competed against Amazon by undercutting the online commerce giant’s price point for e-books.
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