Apple E-Book Class Action Settlement Preliminarily Approved

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After some initial reticence, a federal judge has preliminarily approved a $450 million class action settlement with Apple Inc. over allegations it colluded with book publishers to inflate the price of e-books, saying she agrees with plaintiffs’ lawyers that the likelihood of an award for consumers outweighed the possibility of an appeals court vacating her previous decision that found Apple liable for the allegations.

On June 3, Apple appealed a July 2013 ruling by U.S. District Judge Denise Cote that found the company guilty of the violations and ordered Apple to renegotiate all of its e-book distribution deals. The impending threat of a follow-up trial to determine damages for the liability verdict helped to push Apple to offer a $450 million class action settlement to back out of the litigation.

Part of Judge Cote’s concern in approving the Apple e-book class action settlement revolves around the fact that the class action settlement actually provides for three different outcomes. If the 2nd Circuit Court of Appeals rules against the plaintiffs, Apple would only have to pay them $50 million and the state attorneys general, who also filed cases, would receive $10 million as opposed to $400 million and $50 million if the court upholds the settlement. During recent conversations, Judge Cote thought that was a variable situation that goes against the goals of most agreements to settle class action lawsuits.

More clarification from the consumer plaintiffs’ lawyers helped to sway her, evidently. They reiterated that the drop to $50 million would only occur if the appeals court found Apple not liable. Further, “the agreement provides that the … scenario will not apply in the ‘event of a remand to the District Court on administrative or non-substantive grounds that do not, or could not, affect the liability finding.’ These provisions further reduce the likelihood of the remand scenario, as well as the likelihood of confusion (and further litigation)[,]” the judge wrote in her Aug. 1 decision.

The Apple e-book class action lawsuit centered around the agreements that Apple allegedly made with five of the biggest publishing houses in the country prior to the launch of its iPad tablet. According to the Apple e-book class action lawsuit, the tech giant reportedly required publishers to carry artificially high prices for their e-books in an alleged attempt to help Apple compete with Amazon’s Kindle e-reader, a violation of the Sherman Antitrust Act.

All of the publishers had previously reached class action settlements to resolve the individual claims against them. Apple was the only remaining defendant that had not settled.

In all, Apple and the five publishers could pay more than $600 million in order to resolve claims regarding the alleged violations of the Sherman Antitrust Act.

The 2nd Circuit Court has not published information on when it will hear Apple’s appeal of the alleged priced-fixing.

Judge Cote will hold a Final Fairness Hearing for the Apple e-book class action settlement on Nov. 21, 2014.

An amended notice will be mailed to Class Members on or before Sept. 15, 2014. Class Members will have until Oct. 31 to opt out of the Apple e-book settlement or object to it.
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The consumer plaintiffs are represented by class action lawsuit lawyers from Hagens Berman Sobol Shapiro LLP and Cohen Milstein Sellers & Toll PLLC.

The Apple E-Book Price Fixing Class Action Lawsuits are consolidated as In re: Electronic Books Antitrust Litigation, MDL No. 2293, in the U.S. District Court for the Southern District of New York.

UPDATE: A settlement website has been established for the Apple e-books class action settlement. Click here for more information.

UPDATE 2: On Nov. 21, 2014, U.S. District Judge Denise Cote granted final approval to the Apple e-book class action settlement.