At an afternoon conference yesterday, Judge Denise Cote denied Apple’s request for a stay of the external monitor she appointed last fall following her ruling in Apple’s e-book price-fixing case, and has ordered the company to cooperate fully with the monitor going forward.
The judge also declined Apple’s request to disqualify the current monitor, Michael Bromwich, holding that Bromwich had not overstepped his bounds or abused his authority. In addition to seeking a stay of the monitorship, Apple attorneys had accused Bromwich of conducting a “roving investigation,” questioned his partiality, and claimed that his conduct—including direct requests for interviews with Apple board members and executives—was prosecutorial, and overly burdensome.
Calling the circumstances leading up to the conference “extraordinarily sad,” the judge upbraided Apple attorneys for obstructing Bromwich’s work, and for ignoring the process for objections set forth in her final order.
Saying she was borrowing a phrase from “Secretary Clinton’s playbook,” Cote said she was seeking “a reset” going forward, and ordered Apple attorneys to follow the process for resolving disputes laid out in her final order—Apple is to raise any objections with the monitor to the DoJ within 10 days of the action; meet and confer with the DoJ on resolving the matter; and, if no resolution comes, to write the judge a letter two pages or less, so the matter can be mediated.
She said a written legal opinion denying Apple’s request for a stay of its monitor provision would be issued “promptly.”
After a roughly hour-long hearing, during which Apple reiterated its complaints over Bromwich, and DoJ attorneys rebutted, Cote held that Bromwich’s actions were in fact within the bounds of his narrow mandate to help Apple craft a suitable antitrust training program.
At times, the judge appeared annoyed, and cautioned Apple attorney Theodore Boutrous twice for his characterizations of Bromwich’s conduct. She suggested that interviewing Apple executives was essential to Bromwich's task, to help him understand Apple's business and and its corporate culture. While Boutrous sought to portray Bromwich as a meddling, partisan prosecutor, Cote told Boutrous that “the record is what it is,” and that “just because you say it does not make it so.”
At one point, Cote noted that Bromwich had conducted just 11 interviews for a total of 13 hours so far, which the DoJ argued was hardly evidence of any "roving" investigation.
In delivering her ruling from the bench, Cote reminded Apple attorneys that she ordered the monitor reluctantly, and had greatly reduced the monitor's scope from the DoJ's initial proposal. But Apple’s price-fixing conspiracy reached to the highest levels of the company, she stressed, and was assisted by Apple's in-house counsel.
She also specifically reminded Apple that under the terms of the final order—the language of which Apple attorneys helped to draft, and approved—the monitor has the explicit power to interview any Apple personnel, and to access records, and that Apple attorneys have "no say" in how the monitor carries out his duties. Apple officials are also to “assist” the monitor, she noted, and not to interfere in any way with his work, citing the language of the final order.
The judge also brushed aside what can be seen as a bit of legal gamesmanship on Apple’s part: Apple attorneys had submitted declarations objecting to and detailing Bromwich’s alleged misconduct. When Bromwich submitted a declaration of his own to counter Apple’s submission to the court, Apple attorneys argued that Bromwich’s declaration compromised his impartiality, and called for his disqualification. In her decision, however, Cote held that Bromwich’s declaration was not only proper, but was important.
Cote also moved to resolve Apple’s concerns over Bromwich’s fees, noting that Bromwich and the DoJ have offered to negotiate those fees in order to put the issue behind them. But again, the judge noted that Apple attorneys had worked on and approved the language of the final order, which requires Apple to pay the monitor, but gave Apple no input into the fee structure. The monitor's fees are only required to be "reasonable and customary" and commensurate with experience.
Bromwich was said to be charging over $1200 an hour, including fees. Apple, the judge noted, had proposed $800 an hour. Cote ordered the parties to hammer out the fee dispute with the help of a magistrate, but not before she handed out copies of a recent billing survey from the National Law Journal, which showed Apple's firm, Gibson, Dunn & Crutcher, to be the highest billing firm in the country, with top partner billing rates at $1800 an hour. "It will surprise no one in this courtroom," she said, "that lawyers get paid a lot of money."
Apple is appealing Judge Cote's July 10 verdict in the price-fixing case and the final injunction. It also now has 48 hours from the filing of the judge's written opinion to appeal her decision not to stay the monitorship, which Apple has vowed it will do.
The hearing capped a fraught 90-day period in which Apple attorneys have strongly resisted the monitorship, lodging numerous complaints and objections over Bromwich's actions. DoJ attorneys, meanwhile, cast Apple's complaints as a "baseless" and "manufactured" effort to overturn the monitor provision. At the hearing, DoJ attorneys said the record showed Apple was not interested in "resolving any issues" with Bromwich but only in "having the issues available to them" as they seek to expunge the monitorship, and press their appeal.
