The newly-filed Justice Department complaint against Apple and five major publishers is an
incalculable boon to Hagens Berman Sobol Shapiro and Cohen
Milstein Sellers & Toll, the firms that won the intense competition to lead the multidistrict e-books antitrust class
action. There hasn't yet been discovery in the class action,
which the defendants have moved to dismiss or send to
arbitration, so the specific details in the Antitrust Division's
complaint, including emails and meetings between Apple and
publishing executives, are powerful evidence of the conspiracy
the class action alleges. The Justice Deparment's same-day settlement with Hachette Books, Simon & Shuster, and Harper
Collins also increases the likelihood that those publishers will
also move to resolve the class action and improves the class's
case against Apple and the remaining publishers, Macmillan and
Penguin.
There's another gift to the private lawyers in the DOJ case
as well: The Justice Department is not asking for any money
damages of its own. Its complaint seeks only a decree that the
defendants engaged in an unlawful price-fixing conspiracy, an
injunction against such collusive conduct, and costs. The
Antitrust Division -- which filed its case in Manhattan federal
court as a related proceeding to the multidistrict litigation --
seems to be leaving money damages entirely in the hands of
Hagens Berman and Cohen Milstein.
Steve Berman of Hagens Berman told me in an email that it's
not unusual for the Justice Department "to leave damages to
private lawyers." He also said there had been no discussions
between class counsel and the DOJ on what sort of damages the
Justice Department would seek. But his firm's official statement
makes clear that the private lawyers also noticed the
distinction between what they want and what the Antitrust
Division is after: "While Attorney General Holder's actions, if
successful, will put an end to the anticompetitive actions, our
class action is designed to pry the ill-gotten profits from
Apple and the publishers and return them to consumers," it
said(in part).
Big money is at stake in the e-books litigation, which
contends that Apple and the publishers used Apple's entrance
into the e-reader market to fix the prices of books at $12.99 or
$14.99, rather than the $9.99 Amazon charged. The Consumer
Federation of America said Tuesday in a letter to the chairman of a Senate Judiciary subcommittee that the difference will
likely cost consumers more than $200 million in 2012. Sixteen
state Attorneys General who announced suits paralleling the DOJ case reportedly reached a $52 million settlement with Hachette
and Harper Collins on Wednesday.
So how often does the Antitrust Division leave money damages
out of its cases? Obviously, when the Antitrust Division files a
complaint to block a proposed merger, it seeks an injunction,
not money damages. In criminal price-fixing cases, it demands
big-money pleas (as in the largest-ever criminal antitrust fine,
$548 million, that auto parts manufacturers agreed to pay in
January). But Justice asks for money damages even in civil
cases. The proposed antitrust settlement with Morgan Stanley
that DOJ announced in March, for instance, includes $4.8 million
in damages.
I've previously noted that the e-books class action is a
rare instance of the private antitrust bar bringing claims in advance of regulators, rather than filing follow-on private
claims. I've been told that the Justice Department was very
interested in the allegations in the private litigation. Maybe
the feds' decision not to seek money damages was a bit of
gratitude for the pioneering work of plaintiffs lawyers.
I emailed the Antitrust Division to ask, but didn't get a
response.
(Reporting by Alison Frankel)
Follow us on Twitter: @AlisonFrankel, @ReutersLegal