The fight goes on: in a filing last week, RoyaltyShare founder Bob Kohn appealed final approval of the Macmillan and Penguin e-book settlements to the Second Circuit Court of Appeals.
Kohn's appeal comes after a December 9 final approval hearing, at which Cote approved the settlements, and denied Kohn’s Motion to Intervene. In addition, the judge told Kohn, who has objected to the Macmillan and Penguin settlements, that his arguments were misplaced, and that she doubted very much that he would ultimately be found to have standing to appeal the settlements.
In approving the final two publisher settlements on December 9, Judge Cote cleared the way for more than $166 million in refunds to begin flowing to consumer accounts, which will likely start in early 2014. Kohn’s appeal is not expected to affect those payments, however, as Kohn stipulated at the hearing that he would not seek any delay in the distribution of funds, or a “claw back” of any fees. If that position changes, however, Kohn could be made to post a bond to cover additional expenses created by a delay of funds.
According to Rust Consultants, more than 23 million consumer accounts will see refunds of as much as $3.06 per e-book for New York Times bestsellers purchased during the settlement, and $.73 for non-bestsellers, although those amount could still be adjusted.
In his presentation to the court on December 9, Kohn pressed his argument that Cote had erred by not examining Amazon’s market power. He cited cases showing that price-fixing was not considered a per se violation of the Sherman Act if it was undertaken to address “inefficiencies” in the market, such as those caused by Amazon and its below-cost pricing.
Kohn did not dispute that the publishers engaged in a horizontal conspiracy, or that the result of the conspiracy was to raise e-book prices—unlike Apple, which in its defense has argued that e-book prices actually went down after the agency switch, an argument that Kohn colorfully labeled "crap."
Rather, Kohn argues that the publishers’ collusive actions were legally justified because they were pro-competitive in nature, serving to reduce Amazon’s 90% share of the e-book market to around 60%, and that consumers benefited from the agency switch because it made the e-book market more efficient.
Kohn also argued that, if he is not given standing to appeal, the settlements will not face any appeal scrutiny at all on behalf of consumers. After all, Apple, which is appealing its own case, is not involved in the publisher settlements. And while the publishers surely agree with Kohn's view that their actions were legal, they are not about to challenge their own settlement deals.
