Judge Denise Cote, the Federal Judge who ruled Apple orchestrated a conspiracy with publishers to drive up the price of books, is concerned that the settlement the iPhone and iPad maker agreed to in a related class action lawsuit will be unfair to consumers. Apple agreed to pay US$400 million in the settlement, but that number drops to $50 million plus attorney fees if the Appeals Court sends the case back for further proceedings.
Judge Cote says Apple's Ebook price fixing settlement isn't fair to consumers
Apple and the top book publishers were all accused of conspiring to artificially raise book prices by the Department of Justice, leading to a Federal trial before Judge Cote. The publishers all settled out of court to avoid potentially crippling fines, although Apple stayed the course and went to trial. Judge Cote sided with the DOJ and ruled Apple was the ring leader in the conspiracy.
Apple denied any wrong doing and has since filed an to appeal Judge Cote's ruling.
The DOJ case was followed by a class action lawsuit from 33 states. Apple agreed to a settlement earlier this month, but the payout is contingent on the outcome of the appeals process in the DOJ case.
"I'm concerned about the terms of the settlement," Judge Cote said, according to Reuters. Her concerns are focused on the possibility that Apple's payout would drop to $50 million for consumers plus $20 million for attorneys should the Appeals Court send the DOJ case back to her for further proceedings. She also took issue with the fact that Apple won't have to pay interest on the settlement amount during the appeals process.
Judge Cote is calling the huge gap between $400 million and $70 million "most troubling," and fears the end result could undercut consumers and the claims in the class action lawsuit.
On first glance, Judge Cote's comments could seem like more anti-Apple sentiment, although in this case her concerns may be at least partially justified. The huge difference between dollar amounts in the various settlement tiers leave consumers will little -- or nothing at all -- is reasonable because both sides agreed to the terms, but the idea that Apple won't have to pay interest while the appeals process plays out isn't typical.
For Apple, it's a gamble that the Appeals Court will rule in its favor, which means no pay out, or partially in its favor which drops its payout by more than 75 percent. Either way, Apple minimizes its expenses in the law suit.
For the states, the deal minimizes costs, too, while assuring they'll get at least $50 million without having to dig even deeper into tax payer funds. The states are also gambling that the Appeals Court wont completely overturn Judge Cote's ruling.
Apple hasn't commented on Judge Cote's statements, and attorneys representing the states said they would take what she said under advisement.