Judge Cote Gives Preliminary Approval to Apple Ebook Settlement

Posted on August 2, 2014

Bloomberg reports that federal judge Denise Cote has given preliminary approval to the proposed settlement between Apple, the Department of Justice and numerous states' attorneys general in the ebook price fixing case.

Judge Cote expressed her reservations with terms of the proposed settlement and the parties said they would discuss her suggestions. The counsel for the plaintiffs sent a letter to the court saying that the parties could not agree on any proposed changes to the settlement and that this was the best deal they could cut. So the judge gave her preliminary approval and fast tracked the settlement dates.

The settlement terms have Apple paying out $400 million to consumers and $50 in attorneys' fees if the appellate court confirms Judge Cote's ruling that Apple violated U.S. antitrust laws. If Apple wins the appeal, it pays out nothing. If the appellate court remands the cast back to Judge Cote for a retrial on some technicality, then Apple must pay $50 million to consumers and $20 million in attorneys' fees. The judge doesn't like this part of the deal as she says it hurts consumers.

The settlement also provides that Apple does not have to pay interest on the settlement monies while the appellate process is going on. This is another one of the provisions that the judge didn't like, but she'll probably approve it anyway.

So, what's next? On November 21, 2014, the parties go back to court for a fairness hearing to determine whether the settlement should be approved. There has been some grumbling about harm to consumers if Apple gets the case sent back for a retrial for some technicality, but overall it's a good deal for consumers. Because the most likely outcome here is that the decision is affirmed on appeal. That will mean ebook purchasers during the relevant time period will be getting a nice refund.