Judge Certifies Apple E-Book Price Fixing Class Action Lawsuits

U.S. District Court Judge Denise Cote has certified a class of buyers who purchased e-books through iBookstore or iTunes during a period when Apple reportedly colluded with five of the six largest publishing companies, allowing a group of e-book price-fixing class action lawsuits to proceed.

Judge Cote’s order specifically mentioned the trial that Apple fought against the Department of Justice and several states’ attorneys general that deemed the company had created a per se anticompetitive environment by using an agency model in which publishers that worked with Apple could set their own prices that would be passed along to customers.

Judge Cote’s order acknowledged that Apple implemented this anticompetitive model over fears that Amazon.com efforts to cap its e-book pricing at $9.99 would substantially reduce their profit margin. However, one important element of the order focused on the expert witness used by the plaintiffs class action lawsuit lawyers to estimate a damages model.

Dr. Roger G. Noll’s analysis “explains 90 percent of the variance in prices among e-book titles” and estimated the total damages for the class action lawsuit plaintiffs to be roughly $280 billion. Judge Cote decided that the economic experts that Apple used failed to properly assess the model, asserted irrelevant opinions and tossed the majority of their claims made in opposition to his model.

“Apple has not identified any variable that Noll should have but did not include in his model,” the judge noted, going on to write that because the expert witness had identified more than 700 factors and tossing 200 of them in creating the regression model there would be specific damages for each customer who could be deemed a part of the class action lawsuit.

Several statements in the order imply some consternation with Apple’s opposition. Judge Cote repeatedly wrote that the benefits that might accrue from Apple’s moves were unfounded and pursuant to relevant case law, did not matter. U.S. courts have consistently found that an overcharge due to supracompetitive practices can be assessed. Further, “it is unsurprising that Noll did not develop an opinion about many of the issues that Apple contends are important[,] after all, the but-for world does not exist.”

As a result, she tossed all of the opinions of Apple’s expert witness Dr. Joseph P. Kalt, deciding that his analysis was improper or missed salient points. Jonathan Orsag will only be allowed to testify regarding Noll’s analysis and whether or not the inclusion of smaller publisher’s sales as data points strengthened or weakened his model for the class action lawsuit plaintiffs.

The 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 1: Apple Inc. announced June 16, 2014, that it had reached an undisclosed class action lawsuit settlement in the e-book antitrust litigation.

UPDATE 2: A federal judge preliminarily approved a $450 million Apple e-book class action settlement on Aug. 1, 2014. A Final Fairness Hearing is scheduled for Nov. 21, 2014. 

UPDATE 3: A settlement website has been established for the Apple e-books class action settlement. Click here or visit www.EbookLawsuits.com for more information.

UPDATE 4: On Nov. 21, 2014, U.S. District Judge Denise Cote granted final approval to the Apple e-book class action settlement.