Federal Judge May Not Approve Apple's Ebook Settlement

Posted on July 25, 2014

Apple finally reached a settlement with the Department of Justice and the state attorneys general in the ebook price fixing case in which Apple and major book publishers conspired to raise the price of ebooks sold to consumers. But it may not pass muster with the court.

The proposed settlement was reached last week. Under at the terms of the deal, Apple will pay $450 million in damages if it loses the case on appeal with $400 million going to consumers. If the appellate court overrules Judge Cote's decision that Apple was liable for violating antitrust laws and remands the case back to the district court for another trial, Apple pays $70 million, $50 million of which would go to consumers. And if the appellate court overturns the entire decision (which is extremely unlikely), Apple pays nothing.

According to a Reuters report, Judge Coate said that the middle alternative -- where the court doesn't overturn the case, but sends it back to the district court -- is unfair to consumers and that she found that clause "most troubling." She also objected to the fact that Apple does not have to pay interest on the proposed damages while the case is running its course through the appeals courts.

Judge Cote's comments were made during a telephonic hearing to discuss the settlement with the parties. Apple would like to avoid the upcoming damages trial which is scheduled for August 25th. The parties said they would consider the judge's concerns. But the judge seems to be saying she may not approve the settlement unless those points are addressed.