Objections Could Derail Apple, Publisher E-Book Class Action Settlements

A federal court will decide next week whether to approve two class action settlements involving claims that Apple Inc. and book publishers Penguin and Macmillan conspired to fix and raise retail prices of e-books.

If approved, the settlements will resolve a consumer class action lawsuit and a separate class action lawsuit filed by the Attorneys General of 33 states. The state AGs and Class plaintiffs filed a motion for final approval of the e-book settlements on Nov. 21, but objections from the computing giant and a Class Member could torpedo both.

During the Final Fairness Hearing on Dec. 6, the judge will review Apple’s motion to dismiss the e-book class action lawsuit brought by the various states, alleging that they lack standing to do so because they cannot benefit residents beyond what the consumers’ class action case could provide.

The other issue to resolve is a question by one prospective member of the Class of consumers regarding the settlement notice and the amount of attorney’s fees. Class Member Christopher Batman alleges that there is no justification in the notice for the nearly $10.5 million in attorneys’ fees being requested based on various standard methodologies, and thus could not be assessed by a reasonable member of the public to be fair or not.

At the Final Fairness Hearing, the judge will also address Apple’s motion to dismiss both cases, in which the company alleged that a number of states lack the standing to properly pursue a remedy under the parens patriae theory and that consumers in the separate class action lawsuit cannot allege similarities in damages.

In the former case, Apple’s lawyers argue that the several states are basically pursuing an action on behalf of their residents that is already covered by the state AG action filed directly on behalf of consumers. The states can only seek damages via parens patriae if residents could not otherwise do so themselves, Apple argued in its Nov. 15 motion to dismiss the class action lawsuits and deny certification.

Apple claims that as a result, and since the states can’t cite any damages that they themselves experienced due to the price-fixing, the judge should either dismiss the case or force the states to meet the Rule 23 standards for class certification that it thinks the government entities won’t be able to accomplish. Those standards should also torpedo the claims of consumers in their class action lawsuit.

Apple cites the recent Supreme Court decision regarding Wal-Mart Stores v. Dukes in alleging that the consumers cannot satisfy the requirements that there are common damages and questions of fact. Specifically, the company attacks the expert used by the plaintiffs’ counsel. As a result of the Wal-Mart decision, consumers must provide a model of damages that equates to their theory of economic losses, according to the motion to dismiss.

Apple argues that is impossible because the experiences of the various consumers differ based on what e-books they bought, whether or not there were any sales and a number of other factors that lead to concerns over the likelihood of common questions of fact.

Any other Class Member wishing to make an objection to the e-book class action settlements has until Nov. 27 to submit their concerns to the address listed at the settlement website: www.ebooksagsettlements.com. The deadline to file a claim for the e-book class action settlements has passed.

Both cases are centralized in MDL No. 2293, In Re: Electronic Books Antitrust Litigation, U.S. District Court, Southern District of New York. The states’ e-book price fixing class action lawsuit is The State of Texas et al. v. Penguin Group (USA) Inc., et al., Case No. 12-cv-03394.

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.