Apple fails to disqualify antitrust monitor in e-books case

By Jonathan Stempel and Nate Raymond

NEW YORK (Reuters) - A federal appeals court on Thursday rejected Apple Inc's bid to disqualify an antitrust compliance monitor appointed after the technology company was found liable for conspiring with five publishers to raise e-book prices.

While saying some allegations against the monitor Michael Bromwich "give pause," the 2nd U.S. Circuit Court of Appeals in New York said a lower court judge did not abuse her discretion in rejecting Apple's bid to end his two-year appointment early.

U.S. District Judge Denise Cote installed Bromwich through a permanent injunction in October 2013, three months after she ruled in favor of the U.S. Department of Justice by finding that Apple had played a "central role" in conspiring to raise e-book prices and impede rivals such as Amazon.com Inc.

The Cupertino, California-based company is appealing that decision. Apple separately entered a $450 million settlement of related claims by 31 states, Washington, D.C., Puerto Rico and consumers, contingent on the decision being upheld.

Apple had claimed that Bromwich collaborated improperly with the Justice Department and the states, was too aggressive in demanding interviews with executives, and charged hourly fees that began at $1,100 before being cut to $1,000, an amount revealed on Thursday.

For his part, Bromwich, a lawyer, has faulted Apple for refusing to provide access and adopting an "adversarial tone" toward him.

Writing for the appeals court, Circuit Judge Dennis Jacobs criticized Bromwich for submitting an affidavit supporting the plaintiffs when they opposed Apple's request to halt his work.

"Bromwich's submission in conjunction with a litigant's brief was the opposite of best practice for a court-appointed monitor," and may raise "an appearance of impropriety," Jacobs wrote.

But Jacobs said Cote's injunction "contemplates at least some interaction" between Bromwich and the plaintiffs, and that Cote need not disqualify him for that or for his billing rate, "rich as it may be."

Apple spokesman Josh Rosenstock, Apple's lawyer Theodore Boutrous, and Bromwich's spokeswoman declined to comment.

In a concurring opinion, U.S. District Judge Jesse Furman faulted Apple for being slow to object to Bromwich's actions.

"The company largely sat on its hands, allowing issues with the monitor to fester and the relationship to deteriorate," he wrote.

A Justice Department spokesman welcomed Thursday's decision, and said Apple "could have obviated this entire appeal" by raising concerns about Bromwich faster.

The publishers are Lagardere SCA's Hachette, News Corp's HarperCollins, Penguin Group, CBS Corp's Simon & Schuster and Verlagsgruppe Georg von Holtzbrinck GmbH's Macmillan.

The case is U.S. v. Apple Inc, 2nd U.S. Circuit Court of Appeals, No. 14-60.

(Reporting by Jonathan Stempel and Nate Raymond in New York; Editing by Frances Kerry, Jonathan Oatis and Richard Chang)