Apple and its court-appointed monitor—attorney Michael Bromwich—appear to be headed towards a throwdown over his mandate. Details over friction between the two began emerging over the thanksgiving weekend, but an in-depth piece from Fortune shows that tensions and stakes are running even higher.
Fortune's piece was penned by Roger Parloff, the magazine's veteran senior editor for legal affairs, and it's epically long in the age of flash Internet reporting–some 3,357 words. If you are interested in this case, however, it is well worth the read, as it contains all manner of information and astute analysis I haven't seen offered elsewhere.
A Tale of Two Perspectives
My biggest takeaway is that Apple appears concerned that Mr. Bromwich is greatly expanding what it thought the court's mandate was. Mr. Bromwich has "hit the ground running," as he put it, and has demanded interviews with all of Apple's board members and most of its top executives, almost none of whom have anything to do with antitrust compliance or Apple's book selling operations.
Mr. Bromwich and his representatives have defended his actions as being in line with what Judge Denise Cote wants, and they have characterized Apple's actions as indicators that the company doesn't take the court ordered remedy "very seriously."
Apple has additionally argued that Mr. Bromwich's main job is monitoring Apple's compliance, and that he therefore doesn't even have anything to do until January 14th, when the company is scheduled to have new antitrust training policies in place. After all, if what he is monitoring isn't even due until mid-January, who does he need to speak with before then?
To demand meetings before then—let alone with executives and board members who aren't involved in antitrust compliance or Apple's book retailing business—is intrusive, disruptive, and an inappropriate expansion of his responsibilities, according to Apple.
"The unilateral investigation the Court has empowered Mr. Bromwich to undertake," Apple told the court, "is not a judicial function, and therefore cannot be delegated by the Court. The injunction, particularly as the Court proposes to amend it and in light of how Mr. Bromwich interprets his authority ... vests the monitor with wide-ranging, intrusive, and excessive inquisitorial powers of a sort reserved to prosecutors."
Those types of allegations put quibbling over how much Mr. Bromwich gets to charge in perspective. Fortune's Roger Parloff argues that Apple is structuring its complaints about Mr. Bromwich into an attack on Judge Cote herself, and may try to have the judge recuse herself from any further oversight of this trial.
There has been some Internet chat about Mr. Bromwich's lack of antitrust experience, with many questioning why he would be made Apple's monitor. Roger Parloff explained that Mr. Bromwich was chosen for his experience as a court monitor in other cases as a prime reason for him being chosen, and that's why he has hired antitrust experts to assist him with his duties.
With court monitors being rare, his experience in this area was judged to be more important than his lack of antitrust experience.
When Apple protested the fees Mr. Bromwich is charging—the court ordered Apple to pay his expenses—Mr. Bromwich reacted rather negatively. This is, in part, because he believes Apple is trying to treat him like an outside consultant rather than a court-appointed monitor.
That puts his seemingly haughty reaction in perspective, but it remains for the court to decide if the $1,100 per hour, plus a 15 percent "administrative fee," are appropriate. It's certainly not unheard of for attorneys to charge that much (the administrative fee still smells fishy to me), and Mr. Bromwich pointed out in a filing that one of Apple's own outside attorneys charged some $1,800 per hour in an unrelated case.
As with most things, the truth lies somewhere in the middle. Apple appears to have good reason to bristle at Mr. Bromwich's aggressive approach to his duties. At the same time, Mr. Bromwich appears to have good reason to think that an aggressive approach is precisely what the court wanted.
In the end, I still don't understand this case. I disagree with Judge Cote's verdict, and I can't imagine why a court-ordered monitor was necessary, or even appropriate. Roger Parloff does a great job of explaining just how rare outside monitors are, and the whole thing feels completely out of whack with reality.
Read the full piece for more.