DOJ Filing in Opposition to Apple Appeal to Remove ECM

8/13/2019 DOJ Filing in Opposition to Apple Appeal to Remove ECM

1/129

Nos. 13-3741 (L), 13-3857 (CON)

No. 14-60

No.14-61IN THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

____________________

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

and

STATE OF TEXAS, et. al,

Plaintiffs-Appellees,

v.

APPLE, INC.,

Defendant-Appellant.

____________________

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORK

(JUDGE DENISE COTE)

____________________

OPPOSITION OF PLAINTIFFS-APPELLEES TO APPLES

EMERGENCY MOTION FOR A STAY PENDING APPEAL____________________

WILLIAM J. BAERAssistant Attorney General

MARK W. RYAN

LAWRENCE E. BUTERMAN

DANIEL MCCUAIGAttorneys

U.S. Department of JusticeAntitrust Division

(Additional counsel on inside cover)

KRISTEN C. LIMARZI

ROBERT B. NICHOLSON

DAVID SEIDMANFINNUALA K. TESSIER

Attorneys

U.S. Department of Justice

Antitrust Division

950 Pennsylvania Ave., NWRoom 3224

Washington, DC 20530-0001

202-305-7420

Case: 13-3741 Document: 100 Page: 1 01/24/2014 1141349 129


2/129

GREG ABBOTTAttorney General of Texas

DANIEL T. HODGEFirst Assistant Attorney General

JOHN SCOTTDeputy Attorney General for

Civil Litigation

JONATHAN F. MITCHELLSolicitor General

ANDREW OLDHAMDeputy Solicitor General

ERIC LIPMANAssistant Attorney General

Office of the Attorney General

of TexasP.O. Box 12548

Austin, TX 78711-2548

512-463-1579

GEORGE JEPSENAttorney General of Connecticut

W. JOSEPH NIELSENAssistant Attorney General

Office of the Attorney General of Connecticut

55 Elm StreetHartford, CT 06106

860-808-5040

ERIC T. SCHNEIDERMANAttorney General of the State of New York

WON S. SHINAssistant Solicitor General

Office of the Attorney General of theState of New York

120 Broadway, 25th Floor

New York, NY 10271

212-416-8808



3/129

TABLE OF CONTENTS

TABLE OF AUTHORITIES .................................................................................... ii

INTRODUCTION ..................................................................................................... 1

BACKGROUND .......................................................................................................3

ARGUMENT ............................................................................................................. 7

I. The District Court Did Not Exceed Its Authority Or Abuse Its DiscretionBy Imposing A Monitor ................................................................................8

A. The Court Properly Exercised Its Inherent Power To Appoint A

Monitor ....................................................................................................9

B. Apples Rule 53 Arguments Are Both Waived And Meritless .............10

C. The Monitorship Does Not Violate Separation Of Powers ...................13

II. The District Court Did Not Abuse Its Discretion In Declining ToDisqualify Mr. Bromwich ........................................................................... 14

III. Apple Has Not Shown Irreparable Harm Absent Relief ............................17

IV. Further Delay Of The Monitors Work Is Not In The Public Interest .......19

CONCLUSION ........................................................................................................19

CERTIFICATE OF SERVICE ................................................................................21



4/129

ii

TABLE OF AUTHORITIES

FEDERAL CASES

Allianz Insurance Co. v. Lerner, 416 F.3d 109 (2d Cir. 2005) ................................11

Cobell v. Norton, 334 F.3d 1128 (D.C. Cir. 2003) ................................. 9, 12, 13, 16

E.E.O.C. v. Local 638, Local 28 of Sheet Metal Workers' International

Association, 532 F.2d 821 (2d Cir. 1976) ............................................................14

Ford Motor Co. v. United States, 405 U.S. 562 (1972) .............................................9

Freedom Holdings, Inc. v. Spitzer, 408 F.3d 112 (2d Cir. 2005) ............................18

Greene v. United States, 13 F.3d 577 (2d Cir. 1994) ..............................................10

Griggs v. Provident Consumer Discount Co., 459 U.S. 56 (1982) .........................10

Hilton v. Braunskill, 481 U.S. 770 (1987) .............................................................7, 8

In re Drexel Burnham Lambert Inc., 861 F.2d 1307 (2d Cir. 1988) .......................14

In re Peterson, 253 U.S. 300 (1920) ..........................................................................9

Liteky v. United States, 510 U.S. 540 (1994) ...........................................................15

Local 28 of Sheet Metal Workers' International Association v. E.E.O.C.,

478 U.S. 421 (1986) ........................................................................................ 9, 14

Mick Haig Productions E.K. v. Does 1-670, 687 F.3d 649 (5th Cir. 2012) ............10

Morrison v. Olson, 487 U.S. 654 (1988) .................................................................13

National Society of Professional Engineers v. United States,

435 U.S. 679 (1978) ............................................................................................... 9



5/129

iii

Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004) ...............................18

Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. 1 (1974) ................... 18

Ruiz v. Estelle, 679 F.2d 1115, amended in part, vacated in part on other grounds,

688 F.2d 266 (5th Cir. 1982) ........................................................................ 12, 13

SEC v. Razmilovic, 738 F.3d 14 (2d Cir. 2013) ....................................................... 15

United States v. Philip Morris USA Inc., 566 F.3d 1095 (D.C. Cir. 2009) .............13

Young v. United States ex rel. Vuitton et Fils, 481 U.S. 787 (1987) .......................13

FEDERAL STATUTES AND RULES

28 U.S.C. 455 ........................................................................................................ 15

Federal Rule of Civil Procedure 53 .................................................................... 6, 12

MISCELLANEOUS

Thomas E. Willging et al., Special Masters Incidence and Activity, Federal

Judicial Center (2000) ......................................................................................... 17



6/129

INTRODUCTION

Apple, led by high-level executives and in-house lawyers, orchestrated a

conspiracy among publishers to fix e-book prices. The district court found that

Apple acted with a blatant and aggressive disregard for the law, Ex. 2 at 17:1-2,

and that, at trial, its executives were not candid about Apples conduct, Ex. B at

143 n.66 (160-page liability opinion).1 Unconvinced that Apple would by itself

develop a commitment to understand and abide by the requirements of the law,

Ex. 2. at 19:16-20:4, the court ordered an external monitor to evaluate whether

Apples compliance and training programs are designed to detect and prevent

future violations of the antitrust laws.

The courts concerns were well founded. Almost immediately, Apple began to

slow down . . . if not stonewall the monitors work. Ex. 3 at 41:20. Apple

resisted and delayed the monitors interview and document requests and

complained about the monitors fees. Although the Injunction set forth a

procedure for resolving disputes between Apple and the monitor, Apple did not use

it. Instead, months after the Injunction was entered, Apple belatedly asked the

district court to stay the monitorship and to disqualify the monitor. In a 64-page

opinion, with detailed fact findings that Apple now ignores, the court made clear

1Exhibits A-AAA are attached to the Declaration of Theodore J. Boutrous, Jr.,

filed with Apples Emergency Motion to Stay Injunction Pending Appeal (Mot.).Exhibits 1-3 are attached to the Declaration of Mark W. Ryan, filed with thisOpposition.



7/129

2

that Apple had waived its meritless objections to the monitor provision and that the

monitor had acted appropriately in the face of continual Apple opposition. See

Ex. UU.

Apple should fare no better in this Court, where to secure a stay of the

monitorship it must make a strong showing that the district court abused its

discretion in requiring a monitor. Contrary to Apples claims, the district court has

authority to appoint a monitor to aid it enforcing compliance with its orders and

properly exercised that authority here to ensure that Apple develops effective

antitrust compliance and training programs. Apple also complains about the

monitors conduct, but Apples complaints that the monitor has provided a

recitation of relevant facts to the court, has communicated with the parties, and is

being paid for his work demonstrate only that the monitor is trying to do his job.

And even if Apple could establish that the monitor had exceeded his authority, the

proper relief at most would be disqualification of this particular monitor not

invalidation of the monitor provision itself. Apples true complaint is that it does

not control the monitorship. Mot. at 11. Of course not a monitor controlled

by the party to be monitored is no monitor at all.

Apple also fails to establish irreparable harm from the monitor provision.

Apple executives may view the monitors interviews as inconvenient, but they do



8/129

3

not threaten Apples ability to manage its business. Nor do the monitors fees

cause Apple irreparable harm warranting a stay.

As the district court observed, although Apple would prefer to have no

monitor . . .[a] monitorship which succeeds in confirming the existence of a

genuine and effective antitrust compliance program within Apple[] is in the interest

of not only the American public, but also Apple. Ex. UU at 63. The monitors

work should not be delayed further.

BACKGROUND

Through powerful and compelling evidence, Ex. B at 130, Plaintiffs (the

United States and thirty-three States) established at trial that Apple played a

central role in facilitating and executing a conspiracy among e-book publishers

to eliminate retail price competition in order to raise e-book prices, id.at 9. The

conspiracy did not promote competition, as Apple claimed, but destroyed it.

Id. at 121. Thisper se unlawful conspiracy was orchestrated by Apples in-house

lawyers and its highest-level executives. Two of those executives, Senior Vice

President Eddy Cue and iTunes Director Keith Moerer, and in-house lawyer Kevin

Saul testified at trial and were noteworthy for their lack of credibility. Id.at

143 n.66; see also 43-44 n.19, 71 n.38, 84 n.47, 90 n.52, 93 n.53.

In light of the district courts findings, Plaintiffs proposed an injunction calling

for, among other things, the appointment of an external monitor to ensure Apples



9/129

4

compliance with all terms of the Injunction and the antitrust laws. Apple objected

to any monitor as punitive, unnecessary, and burdensome, but it did not claim that

the court lacked authority to impose a monitor or that a monitor would be

unconstitutional. Ex. C at 9-13. At an initial remedies hearing, the district court,

hoping that Apple would adopt a vigorous in-house antitrust enforcement

program and eliminate the need for a monitor, Ex. 1 at 66:12-15, directed the

parties to meet and confer. They reached no agreement. Plaintiffs filed a revised

proposal, which Apple opposed on the same grounds.

At a second hearing, the court stated that the record showed a blatant and

aggressive disregard at Apple for the requirements of the law and that, despite

several opportunities, Apple had not shown that a monitor was unnecessary. Ex. 2

at 17:1-16. But the court designed the Injunction to rest as lightly as possible on

the way Apple runs its business, id. at 8:25-9:1, and so it gave the monitor only

limited powers. The monitor may not assess compliance with the Injunction or

antitrust laws generally, as Plaintiffs proposed. His sole task is to aid the court in

evaluating Apples antitrust compliance and training programs to ensure they are

reasonably designed to detect and prevent violations of antitrust laws. Ex. E

VI.B-D.

To that end, the monitor may inspect documents and request reports on

reasonable notice, id. VI.G.2-3, and interview Apple personnel at their



10/129

5

reasonable convenience and with counsel present, id. VI.G.1. He may not

investigate or seek out evidence of violations of the Injunction or the antitrust laws,

though he is required to provide Plaintiffs with any such evidence he finds. Id.

VI.F. And while he may recommend changes to Apples compliance and

training programs that he deems necessary, id. VI.B, he may not direct Apple to

adopt them, id. VI.D-E. Apple may object to his recommendations, propose

alternatives, and obtain a ruling from the court. Id. VI.E. The Injunction also

provides a way for Apple to object to the monitors actions first with Plaintiffs

and then with the district court. Id. VI.H.

The court entered its Injunction on September 5, 2013. On October 3, 2013,

Apple noticed appeals from the Final Judgment in the United States case (No.

13-3741) and the non-final Order entering the Injunction in the States case (No.

13-3857), which have been consolidated (the Injunction Appeals), but it sought

no stay. On October 16, 2013, the court appointed Michael Bromwich, formerly

Inspector General of the Justice Department, as monitor and Bernard Nigro,

chairman of the Fried, Frank, Harris, Shriver, & Jacobson antitrust practice, to

assist him. Ex. G.

Almost immediately following the monitors appointment, Apple began

resisting his efforts to do his job. SeeEx. UU at 15-29. Apple asserted, based on

a strained and unreasonable reading of the Injunction, id.at 45, that the monitor



11/129

6

essentially could not work during the Injunctions first 90 days. To date, Apple

has allowed the monitor to conduct only thirteen hours of interviews with eleven

people, seven of whom are lawyers, and has provided the monitor with only 303

pages of documents. Id.at 29.

Apple skipped the district courts procedures for raising with it concerns

regarding the monitors attempts to carry out his duties. Instead, Apple asked the

district court to stay the monitorship, arguing that it was unconstitutional and

violated Rule 53, Fed. R. Civ. P., and that the monitors fees were excessive and

irreparably harmed Apple. Ex. H. In support of its motion, Apple filed

declarations by its counsel making numerous allegations about the monitors

conduct and character. Mr. Bromwich responded with a declaration detailing for

the court his dealings with Apple. In reply, Apple explained that its objections

turn primarily on the way in which the injunction is being implemented, not the

terms of the injunction as it was ordered, Ex. GG at 14, and sought to disqualify

Mr. Bromwich, arguing that his responsive declaration revealed his bias.

The district court denied Apples request, expressing disappoint[ment] that

Apple was doing its best to slow down . . . if not stonewall the process. Ex. 3 at

41:13-20. Apple had not raised the Rule 53 and constitutional arguments during

the lengthy remedy proceedings, but the court nonetheless addressed them in turn,

ruling that the monitorship was well within both its inherent authority and its



12/129

7

supplemental Rule 53 authority. Ex. UU at 35-44. And although Apple failed to

object properly to the Injunctions fee-setting provisions, the court referred Apples

complaints about the monitors fees to a magistrate judge for resolution. Id. at

49-52. Finally, the court did not disqualify Mr. Bromwich; his declaration was

proper and necessary for the court to assess Apples serious attacks on his

conduct and character, which were in fact meritless. Id.at 53-54.

Apple appealed the order denying its disqualification request in the United

States case (No. 14-60) and the States case (No. 14-61), Exs. ZZ, AAA, (the

Disqualification Appeals). It has now filed identical motions seeking to stay the

Injunction in its various appeals.

ARGUMENT

Apples identical stay motions in separate appeals from entirely separate orders

conflate both the questions presented by these appeals and the remedies available

in them. Apples arguments in support of the monitors disqualification have

nothing to do with the propriety of the Injunction and provide no basis to stay it.

Nor can Apple use its appeal of the disqualification order to obtain a stay of the

Injunction.

To stay the Injunction, Apple must make a strong showing that it is likely to

succeed in its appeal of the Injunctionby demonstrating that the district court

abused its discretion in requiring a monitor. Hilton v. Braunskill, 481 U.S. 770,



13/129

8

776 (1987). It must also show that it will suffer irreparable harm if the

monitorship is not stayed and that a stay is in the public interest. Id.

The monitors actions (but not the Injunction itself) are at issue in the

Disqualification Appeals. But even if Apple could establish in those appeals that

the monitor behaved improperly, and it cannot, the appropriate remedy would be to

disqualify the monitor, not to vacate the Injunction. Thus, a stay of the Injunction

is not appropriate.

In any event, the district court did not exceed its authority in ordering an

external monitor for Apple or abuse its discretion in declining to disqualify the

selected monitor. Nor can Apple establish that it will be irreparably harmed by the

monitorship. Finally, the public interest weighs firmly against any delay in the

monitors work.

I. The District Court Did Not Exceed Its Authority Or Abuse Its Discretion

By Imposing A Monitor

The Court will not stay the monitorship unless Apple makes a strong showing

that the monitor provision of the Injunction will be modified or vacated on appeal.

Hilton, 481 U.S. at 776. For purposes of this motion, Apple does not contest the

district courts determination that it orchestrated a price-fixing conspiracy that

destroyed e-book retail price competition. Mot. at 4([T]hat question is for

another day.). Nor does Apple dispute here the district courts determinations that

Apples founder and CEO, its executives, and its in-house lawyers were involved



14/129

9

and that some of those individuals gave non-credible testimony in Apples defense.

Apple also does not challenge here the requirement that it develop new antitrust

training programs. Instead, four months after the Injunction was entered, Apple

claims that the court exceeded its authority by appointing a monitor to evaluate

whether Apples antitrust compliance and training programs are reasonably

designed to detect and prevent violations of the antitrust laws. Ex. E VI.C. It

did not.

Courts have inherent power to appoint persons unconnected with the court

to aid judges in the performance of specific judicial duties,In re Peterson, 253

U.S. 300, 312-13 (1920), including special masters or monitors to investigate and

enforce compliance with court orders, seeLocal 28 of Sheet Metal Workers Intl

Assn v. E.E.O.C., 478 U.S. 421, 481-82 (1986); Cobell v. Norton, 334 F.3d 1128,

1140 (D.C. Cir. 2003). Nothing suggests, nor does Apple assert, that this power is

uniquely limited in civil antitrust cases.

Remedies in Sherman Act cases should end the unlawful conduct, prevent its

recurrence, and undo its anticompetitive consequences. SeeNatl Soc. of Profl

Engineers v. United States, 435 U.S. 679, 697 (1978). District courts are clothed

with large discretion to fit the decree to the special needs of the individual case.

Ford Motor Co. v. United States, 405 U.S. 562, 573 (1972) (internal quotations

A. The Court Properly Exercised Its Inherent Power To Appoint AMonitor



15/129

10

omitted). Here the court determined that preventing a recurrence of Apples

anticompetitive conduct required both that Apple develop new antitrust training

programs and that a monitor be appointed to ensure its compliance and training

programs are designed to detect and prevent antitrust violations. That

determination was within the district courts authority and a proper exercise of

discretion.

Ignoring the district courts inherent equitable authority to appoint a

compliance monitor, Apple claims that the court gave the monitor extrajudicial

powers in violation of Rule 53. But not once during the remedy proceedings did

Apple contest the monitorship on this ground. Ex. UU at 41. It first raised Rule 53

arguments two months after its appeal divested the district court of jurisdiction to

amend the Injunction substantively. See Griggs v. Provident Consumer Disc. Co.,

459 U.S. 56, 58 (1982) (effect of notice of appeal).

Just as an appellate court will not consider an issue raised for the first time on

appeal, Greene v. United States, 13 F.3d 577, 586 (2d Cir. 1994), it will not

consider an issue first raised after the district court no longer has authority to act on

it, see, e.g.,Mick Haig Productions E.K. v. Does 1-670, 687 F.3d 649, 652 (5th

Cir. 2012) (appellant waived arguments raised for the first time on appeal . . . [or]

in his untimely motion in the district court to stay sanctions pending appeal, which

B. Apples Rule 53 Arguments Are Both Waived And Meritless



16/129

11

was filed after this appeal was initiated). There is no reason for this Court to

exercise its discretion to consider these waived arguments; Apple could have

timely raised them and it proffer[s] no reason for [its] failure to raise [them]

below. Allianz Insurance Co. v. Lerner, 416 F.3d 109, 114 (2d Cir. 2005).

It would not matter if Apple had timely raised its Rule 53 concerns and if Rule

53 were the sole source of the courts authority, because the Injunction does not

violate the Rule. The monitors authority is narrowly tailored to a limited purpose:

evaluating Apples antitrust compliance and training programs. Although Apple

complains that the district court refus[ed] to limit the [monitors] inquiry to his

circumscribed role, Mot. at 11, the court repeatedly stated that the monitor may

only evaluate Apples antitrust compliance and training programs, Ex. UU at

10-11, Ex. 3 at 44:22-45:6. The monitor has no roving commission to seek out or

investigate antitrust or Injunction violations. Ex. E VI.F. Even if he does happen

to uncover evidence of an antitrust violation, he must turn over that evidence to the

government as any agent of the court should. Moreover, the monitor neither

adjudicates disputes nor commands Apple to act. Apple may object to

recommended changes to its programs, and the court determines what changes, if

any, are required. Ex. E VI.D-E.

Apple characterizes the monitors document requests and ex parteinterviews

as impermissible wide-ranging extrajudicial duties. Mot. at 10-11. But a



17/129

12

monitor cannot evaluate compliance with a decree without conducting interviews

and reviewing documents. See, e.g., Fed. R. Civ. P. 53 notes (2003 amendment)

(The masters role in enforcement may extend to investigation in ways that are

quite unlike the traditional role of judicial officers in an adversary system.); see

alsoRuiz v. Estelle, 679 F.2d 1115, 1162 (monitor allowed unlimited access to

records, confidential interviews, and written reports), amended in part, vacated in

part on other grounds, 688 F.2d 266 (5th Cir. 1982).

Here, the monitors tools, like his mandate, are limited. He must provide

reasonable notice before requesting reports and inspecting documents, Ex. E

VI.G.2-3, and he may interview Apple personnel only at their reasonable

convenience and with counsel present, id. VI.G.1; see Ruiz, 679 F.2d at 1162.

The monitor did not stray[] far from his mandate by asking a member of Apples

audit committee about compliance issues previously addressed by that committee.

Mot. at 11. Such queries are necessary for evaluating whether Apples compliance

and training programs will workfor Apple. SeeEx. UU at 46, 55 n.16.

Apple relies on Cobell,Mot. at 10-11, but that decisionrecognized the

authority of monitors to superintend[] compliance with [a] district courts decree,

334 F.3d at 1142-43 (internal citations omitted). Such authority was not



18/129

13

implicated in Cobell, where there was no decree to enforce.2Id. The government

objected in Cobellbecause the district court gave the monitor a license to intrude

into the internal affairs of an executive branch agency. Id. No such concerns are

implicated by this monitors limited authority to evaluate Apples antitrust

compliance and training programs.

Seeking to avoid its waiver, Apple argues that the monitor violates the

separation of powers by exercising duties of a nonjudicial nature. Mot. at 12-13

(citingMorrison v. Olson, 487 U.S. 654 (1988)). Recasting its Rule 53 argument

does not help. While judicial power is certainly limited, it is not so constrained as

Apple suggests. Rather, the Supreme Court has explained, it includes powers that

would not be considered typically judicial. Morrison, 487 at 682.

Specifically, the power of a federal court to appoint an agent to supervise the

implementation of its decrees has long been established. Ruiz, 679 F.2d at 1161.

The ability to punish disobedience to judicial orders is regarded as essential to

ensuring that the Judiciary has a means to vindicate its own authority without

complete dependence on other Branches. Young v. United States ex rel. Vuitton et

Fils, 481 U.S. 787, 796 (1987). Thus, the Supreme Court has affirmed the

appointment of an administrator to supervise [] compliance with the courts

2United States v. Philip Morris USA Inc., Mot. at 10, simply quoted Cobellindescribing the lower court decision. 566 F.3d 1095, 1149-50 (D.C. Cir. 2009).

C. The Monitorship Does Not Violate Separation Of Powers



19/129

14

orders with far greater administrative powers than those granted here. Sheet

Metal Workers, 478 U.S. at 481-82 (affirming administrator with broad powers to

oversee [unions] membership practices even though it may substantially

interfere with . . . membership operations); see alsoE.E.O.C. v. Local 638, Local

28 of Sheet Metal Workers Intl Assn, 532 F.2d 821, 829-30 (2d Cir. 1976) ([I]t

is necessary for a court-appointed administrator to exercise day-to-day oversight of

the unions affairs.).

II. The District Court Did Not Abuse Its Discretion In Declining ToDisqualify Mr. Bromwich

Apple has not sought an order directing the district court to disqualify

Mr. Bromwich, nor could it establish clearly and indisputably its right to such

relief. In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1312-13 (2d Cir.

1988). Apple does not challenge the district courts detailed factual findings

regarding Mr. Bromwichs actions as clearly erroneous. SeeEx. UU at 15-29.

And the court did not abuse its discretion in holding that Apples complaints that

Mr. Bromwich provided a recitation of relevant facts to the court, has

communicated with the parties, and is being paid for his work do not require his

disqualification.

Apples disqualification arguments were premised on a misleading account of

its interactions with Mr. Bromwich, detailed in multiple declarations from its

counsel. SeeExs. I, J, HH-JJ. Apple objects to Mr. Bromwichs reporting of those



20/129

15

same events to the court, but as the district court observed, the monitors job is just

that: to report to the court. Ex. 3 at 50:9-21. It would be surprising if a party

subject to a monitor could escape the monitorship by launching a cascade of

attacks on the monitor and then disqualify the monitor for responding. Ex. UU

at 54.

Nor can Apple escape Mr. Bromwichs monitorship by claiming he has

personal knowledge. Mot. at 15. To be sure, personal knowledge can require

disqualification under 28 U.S.C. 455, but only when it is extrajudicial

knowledge, not knowledge acquired as was Mr. Bromwichs by attending to

the task at hand. SEC v. Razmilovic, 738 F.3d 14, 29-30 (2d Cir. 2013). Likewise,

a bias or prejudice concerning a party does not require disqualification unless it

derives from an extrajudicial source or is so extreme as to display clear inability

to render fair judgment. Liteky v. United States, 510 U.S. 540, 547, 551 (1994).

Neither situation exists here.

Apple also claims that Mr. Bromwich had improper ex parte conversations

with the parties and that his declaration was based on extrajudicial information

gleaned from Plaintiffs, Apple, and the court. Mot. at 16. As the Injunction

contemplates, Plaintiffs have had conversations with Mr. Bromwich, including a

pre-appointment interview and fee discussions. Ex. E VI.A, I. Apple did not

object to those Injunction provisions. Ex. UU at 12, Ex. 3 at 33:10-15. The only



21/129

16

ex partecommunication Mr. Bromwich has had with the Court was his pre-

appointment interview, also provided for in the Injunction and to which Apple did

not object. Ex. UU at 15, 55-56. Moreover, Apple cannot identify any

extrajudicial information the monitor obtained during these discussions or

explain how they have biased the monitor against it. Mot. at 16.

There is also no merit to Apples recycled Cobell argument. Cobell involves

improper conduct by a monitor/master, but it is not like this case. The Cobell

monitor was not helping a court supervise implementation of a court order; it was

interfering with a government agency without benefit of an injunction. 334 F.3d at

1143-44. After obtaining access to the agencys internal deliberations regarding

the lawsuit, the monitor was designated a Special Master and charged with

adjudicating discovery disputes. Id. at 1136-1137. The monitor here, by contrast,

only helps ensure compliance with certain provisions of the Injunction. He has no

adjudicatory function, no access to Apples internal case deliberations, and no

responsibility in the ongoing damages case. He cannot command Apple even

regarding its compliance and training programs; only the court can.

Finally, Apple argues that Mr. Bromwich must be disqualified because of his

fees, although it did not object to the Injunctions fee-setting provisions. Ex. UU at

58. Court-appointed monitors and special masters, however, generally bill for their



22/129

17

time.3 Any complaint over the specific hourly rate is premature, as that dispute has

been referred to a magistrate.4 Moreover, Mr. Bromwich cannot, as Apple

speculates, prolong the term of the monitorship as long as possible. Mot at 17.

The Injunction sets the monitors term and includes a remedy if he fails to act

diligently or in a cost-effective manner. Ex. E VI.A, J.

III. Apple Has Not Shown Irreparable Harm Absent Relief

Four months after the Injunction was entered, Apple claims it will be

irreparably harmed by that Injunction because: (1) the monitors interviews are

interfering with Apples ability to manage its business, Mot. at 18; and (2) Apple

must pay the monitor. As the court explained, these claimed injuries are at least

somewhat of Apples own making as it has refused to use the Injunctions

procedures for resolving conflicts with the monitor. Ex. UU at 58 (internal

quotation marks omitted). Moreover, Apples claims of irreparable harm do not

justify immediate relief.

First, Apple has not identified any harm from the monitors past interviews.

The monitor has deferred to Apples scheduling requests, Exs. S at 4, EE 16,

conducting only thirteen hours of interviews, of which only two were with a senior

3Special masters compensation is typically their standard hourly rate in

addition to costs and expenses. Thomas E. Willging et al., Special MastersIncidence and Activity, Federal Judicial Center, 42 (2000) (available atwww.fjc.gov/public/pdf.nsf/lookup/SpecMast.pdf/$file/SpecMast.pdf).

4Apple offered to pay the monitor $800 an hour, Ex. MM at 1, but ignoredPlaintiffs invitation to discuss the fees further, Ex. 3 at 31-36.



23/129

18

executive (Apples general counsel) or a board member. Exs. EE 54, UU at 60-

61. Apple cannot credibly claim that these interviews caused Apple los[t]

business opportunities, loss of goodwill, or harm to [its] reputation. Mot. at

20 (quotingRegister.com, Inc. v. Verio, Inc., 356 F.3d 393, 404 (2d Cir. 2004)).

Nor does Apple identify any specific harm that will result from future

interview requests. If Apple believes a particular interview or series of interviews

will cause harm, it may seek relief through the procedures in the Injunction. Ex.

UU at 61-62, Ex. E at VI.H. Apple has not shown that these procedures are

insufficient to prevent harm during the appeal. The district court, after all, is

sensitive to the need not to interfere unnecessarily with Apples business, Ex. UU

at 61, making Apples prediction that the monitor will no doubt push for an even

broader investigation, Mot. at 19, particularly improbable. Apples speculations

are no grounds for a stay. See, e.g, Freedom Holdings, Inc. v. Spitzer, 408 F.3d

112, 114 (2d Cir. 2005).

Apple also claims that it will be irreparably harmed by the payment of any

monitor fees no matter how reasonable because they are unrecoverable upon

appellate victory. But payment of a monitors fees is not the kind of harm a stay is

supposed to prevent. See, e.g., Freedom Holdings, 408 F.3d at 114-15 (declining

to enjoin state law because ordinary compliance costs are typically insufficient to

constitute irreparable harm); see alsoRenegotiation Board v. Bannercraft



24/129

19

Clothing Co., 415 U.S. 1, 24 (1974) (Mere litigation expense, even substantial

and unrecoupable cost, does not constitute irreparable injury.). Of course, fees so

large that they threaten Apples solvency might warrant relief, but Apple makes no

such claim.

IV. Further Delay Of The Monitors Work Is Not In The Public Interest

The district court found that Apple was engaged in a serious price-fixing

conspiracy. The highest levels of the company, its founder, its CEO, its lawyers

were involved. Ex. 3 at 43:18-20. While the Injunctions remaining provisions

aim to restore lost competition, the district court found that Apple cannot be

trusted, on its own, to develop antitrust compliance and training programs that will

effectively prevent and detect future violations of the law. Thus, a monitor is

needed to achieve the district courts laudable goal: that the American taxpayer

will never again have to pay for the [government] to investigate Apple for antitrust

violations, and that the American consumer will never again be victimized by

Apples antitrust violations. Ex. 3 at 45:8-12.

CONCLUSION

The Court should deny Apples motions.

Respectfully submitted.



25/129

20

January 24, 2014 /s/ Finnuala K. Tessier

MARK W. RYANLAWRENCE E. BUTERMANDANIEL MCCUAIG

Attorneys

U.S. Department of JusticeAntitrust Division

WILLIAM J. BAERAssistant Attorney General

KRISTEN C. LIMARZIROBERT B. NICHOLSONDAVID SEIDMANFINNUALA K. TESSIER

Attorneys

U.S. Department of JusticeAntitrust Division950 Pennsylvania Ave., NWRoom 3224Washington, DC 20530-0001202-305-7420

For Plaintiff United States

/s/ Eric Lipman

GREG ABBOTTAttorney General of Texas

DANIEL T. HODGEFirst Assistant Attorney General

JOHN SCOTT

Deputy Attorney General forCivil Litigation

JONATHAN F. MITCHELLSolicitor General

ANDREW OLDHAMDeputy Solicitor General

ERIC LIPMANAssistant Attorney General

Office of the Attorney General of Texas

P.O. Box 12548Austin, TX 78711-2548512-463-1579

For Plaintiff States

/s/ W. Joseph Nielsen

GEORGE JEPSENAttorney General of Connecticut

W. JOSEPH NIELSENAssistant Attorney General

Office of the Attorney Generalof Connecticut

55 Elm StreetHartford, CT 06106860-808-5040

For Plaintiff States

/s/ Won S. Shin

ERIC T. SCHNEIDERMANAttorney General of the State of New York

WON S. SHIN

Assistant Solicitor GeneralOffice of the Attorney General of the

State of New York120 Broadway, 25th FloorNew York, NY 10271212-416-8808

For Plaintiff State of New York



26/129

21

CERTIFICATE OF SERVICE

I, Finnuala K. Tessier, hereby certify that on January 24, 2014, I electronically

filed the foregoing Opposition of Plaintiffs-Appellees to Apples Emergency

Motion for a Stay Pending Appeal with the Clerk of the Court of the United States

Court of Appeals for the Second Circuit by using the CM/ECF System. I also sent

three copies to the Clerk of the Court by Federal Express.

I certify that all participants in the case are registered CM/ECF users and that

service will be accomplished by the CM/ECF system.

January 24, 2014 /s/ Finnuala K. Tessier

Attorney



27/129

UNITED STATES COURT OF APPEALSFOR THE SECOND CIRCUIT

-------------------------------------------------------

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

and

STATE OF TEXAS, et al.

Plaintiffs-Appellees,

- v. -

APPLE, INC.,

Defendant-Appellant.

X

:

:

:

:

:

:

:

:

:

:

:

::

:

:

:

DECLARATION IN

SUPPORT OFOPPOSITION OFPLAINTIFFS-APPELLEESTO APPLESEMERGENCY MOTIONFOR A STAY PENDINGAPPEAL

Nos. 13-3741 (L),13-3857 (CON)

No. 14-60

No. 14-61

-------------------------------------------------------X

I, MARK W. RYAN, pursuant to 28 U.S.C. 1746 declare:

1.

I am an Attorney in the Antitrust Division of the U.S. Department of

Justice. I respectfully submit this declaration in support of the Opposition of the

Plaintiffs-Appellees to Apples Emergency Motion to Stay the Injunction Pending

Appeal filed on January 24, 2014. I have personal knowledge of the matters stated

herein and, if called upon to do so, could and would competently testify thereto.2. Attached hereto as Exhibit 1 is a true and correct copy of relevant

portions of the transcript from the hearing on equitable relief held before the

Honorable Denise Cote on August 9, 2013.



28/129



29/129

EXHIBIT 1



30/129

11 d890eboa Argument2 UNI TED STATES DI STRI CT COURT2 SOUTHERN DI STRI CT OF NEW YORK3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x3 STATE OF TEXAS, et al . ,4 Pl ai nt i f f ,45 v. 12 CV 339456 PENGUI N ( USA) I NC. , et al ,6 Def endant .7 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x8 UNI TED STATES OF AMERI CA9 v. 12 CV 2826

10 APPLE, I NC. , et al . ,10 Def endant11 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x1213 New Yor k, N. Y.

13 August 9, 201314 3: 00 p. m.1415 Bef ore:1516 HON. DENI SE COTE,1617 Di st r i ct J udge1718 APPEARANCES1819 For Pl ai nt i f f :1920 Mar k Ryan20 Eri c Li pman21 J ef f D. Fr i edman2223 For Def endant :24 Or i n Snyder24 Dani el Fl oyd25

SOUTHERN DI STRI CT REPORTERS, P. C.( 212) 805- 0300



31/129

491 t hat t hat wi l l be t ee' d up af t er a meet - and- conf er pr ocess i n2 l at e August or ear l y September f or me t o gi ve ever ybody an3 opport uni t y t o be hear d agai n i f that ' s necessary. So t hen4 we' l l have any summary j udgment mot i ons due J anuar y 24t h,5 opposi t i on Febr uar y 14t h, repl i es on Febr uar y 28t h.6 And we' l l wai t . I ' l l r ef l ect on a schedul e wi t h7 r espect t o submi ssi on of a pr et r i al order . Whatever I choose8 as t he pr et r i al or der dat e, t hat ' s t he dat e on whi ch mot i ons i n9 l i mi ne wi l l be due, as wel l .

10 I t hi nk t hat we shoul d f ol d i n t he i ssue of col l at er al11 est oppel wi t h our summary j udgment pract i ce. And I assume12 t hat ' s t he r i ght ti me t o do i t . So, I ' m not goi ng t o set a13 separ at e schedul e f or col l at er al est oppel . I ' m goi ng t o assume14 t hat i s done at the t i me of summary j udgment pract i ce.15 Good. And t hank you. And t hose are t he onl y dat es16 t hat I ' m goi ng t o set r i ght now.17 Let ' s t ur n t o t he ver y i mport ant i ssue about t he18 i nj unct i ve rel i ef .19 Let me st art wi t h a st atement of t he st andar d,

20 obvi ousl y Rul e 65( d) sets out t he st andar d. And as a r esul t ,21 an i nj unct i on must be both speci f i c and def i ni t e enough t o22 appr i se t hose who wi l l be subj ect t o i t s t er ms of i t s scope and23 of t he scope of t he conduct that i s bei ng pr oscr i bed. Ci t y of24 New York, 645 F. 3d at 143.25 I have wi de di scret i on i n f r ami ng an i nj unct i on i n




32/129

501 t er ms t hat I deem r easonabl e t o pr event wr ongf ul conduct , i bi d.2 at 144, and t he For d Mot or Company, 405 US at 573.3 Nonethel ess, t he r el i ef a Cour t i mposes must be no4 br oader t han necessary t o cur e t he ef f ect s of t he har m of t he5 vi ol at i on. The Ci t y of New Yor k 645 F. 3d at 144.6 I nj unct i ve r el i ef shoul d, t her ef or e, be nar r owl y7 t ai l or ed t o f i t speci f i c l egal vi ol at i ons and mol ded t o t he8 necessi t i es of t he par t i cul ar case. I t may not enj oi n al l9 possi bl e br eaches of t he l aw, i bi d.

10 The pur pose of r el i ef i n an ant i t r ust case i s t o cur e11 t he i l l ef f ect s of t he i l l egal conduct , and t o assur e t he12 publ i c f r eedom f r om i t s cont i nuance. Uni t ed St at es agai nst13 Gl axo 410 US at 64.14 Thus, t he r emedy must i ncl ude appropri ate r est r ai nt s15 on a par t y' s f ut ur e act i vi t i es, bot h t o avoi d a r ecur r ence of16 t he vi ol at i on and t o el i mi nat e i t s consequences. Nat i onal17 Soci ety 435 US at 697.18 I t must al so be ef f ect i ve t o r est or e compet i t i on.19 Ford, 405 US at 573.

20 To pr event a r ecur r ence of a vi ol at i on, a Cour t i s not21 l i mi t ed t o i mposi ng a si mpl e pr oscr i pt i on agai nst t he pr eci se22 conduct pr evi ousl y pur sued. Nat i onal Soci ety 435 US at 698.23 I ndeed, i t may i mpose r el i ef t hat r epr esent s a24 r easonabl e method of el i mi nat i ng t he consequences of i l l egal25 conduct , I bi d.




33/129

511 I n t hi s way a Cour t has br oad power t o r est r ai n act s2 whi ch are t he same t ype or cl ass as unl awf ul acts whi ch t he3 Court has f ound t o have been commi t t ed, or whose commi ss i on i n4 t he f ut ur e, unl ess enj oi ned, may f ai r l y be ant i ci pat ed f r om t he5 def endant ' s past conduct . Zeni t h Radi o, 395 US at 132.6 As t he Supreme Cour t has i nst r uct ed, wher e t he pur pose7 t o r est r ai n t r ade appear s f r om a cl ear vi ol at i on of l aw, i t i s8 not necessar y t hat al l of t he unt r avel ed r oads, t o t hat end, be9 l ef t open, and t hat onl y t he worn one be cl osed. Nat i onal

10 soci ety 435 US at 698.11 I n ai mi ng t o r est ore compet i t i on, a Cour t al so i s not12 l i mi t ed t o t he r est or at i on of t he st at us quo ant i 405 US at13 573.14 I nst ead, t he key i s t hat r el i ef be di r ect ed t o t hat15 whi ch i s necessar y t o pr ot ect t he publ i c f r om f ur t her and16 compet i t i ve conduct , and t o addr ess any compet i t i ve harm.17 F. Hof f man LaRoche 542 US at 170.18 I n addi t i on, i t i s wel l set t l ed t hat once t he19 government has successf ul l y bour ne t he consi derabl e bur den of

20 est abl i shi ng a vi ol at i on of l aw, al l doubt as t o t he r emedy ar e21 t o be r esol ved i n i t s f avor . Uni t ed St at es agai nst Dupont , 36622 US, at 334, Hof f man LaRoche 542 US at 170.23 I t per haps i s al so i mport ant t o add t he f ol l owi ng24 observat i on f r omUni t ed St ates agai nst Or egon, 343 US, at 333.25 When def endant s are shown t o have ent ered i nto a conspi r acy




34/129

521 vi ol at i ve of ant i t r ust l aws, Cour t s wi l l not assume t hat i t has2 been abandoned wi t hout cl ear pr oof . I t i s t he dut y of t he3 Cour t s t o bewar e of ef f or t s t o def eat i nj unct i ve r el i ef by4 pr ot est at i ons of r epent ance or r ef or m - -5 Whi ch I don' t have bef ore me.6 - - especi al l y when abandonment seems t i me t o7 ant i ci pat e sui t or t her e i s a pr obabi l i t y of resumpt i on.8 Now, I t hank you al l f or your submi ssi ons about t he9 scope of i nj uncti ve rel i ef . I don' t t hi nk I ' m i n a posi t i on t o

10 deci de on t he f i nal scope of t he i nj unct i on t hi s af t er noon.11 I want t o share some t hought s wi t h you, and some12 i deas, and some r eact i ons t o what I have r ead. And t hen I13 woul d l i ke you t o meet and conf er next week. And f or us t o14 meet t he f ol l owi ng week.15 I ' m hopi ng t hat t he i ssues of di sput e wi l l be16 nar r owed. I ' m hopi ng I wi l l have a more f ul some r esponse f r om

17 Appl e on some i ssues I ' m goi ng t o descr i be her e.18 Among t he t hi ngs t hat I l ear ned at t he t r i al were t hat19 t he bi g si x publ i sher s, now f i ve, do not compet e wi t h each

20 ot her on pr i ce.21 I al so l ear ned t hat Amazon st r ongl y pr ef er s t o cont r ol22 ret ai l pr i ci ng.23 I al so l ear ned t hat t o be successf ul as an eBooks24 st or e i t i s i mpor t ant t o have al l of t he bi g si x, now f i ve,25 par t i ci pat i ng. Appl e, i n par t i cul ar , bel i eves t hi s t o be




35/129

531 essent i al .2 I l ear ned t hat t he publ i sher def endant s want t o r ai se3 eBook pr i ces si gni f i cant l y f r om t hei r 2009 pr i ce poi nt t o4 pr otect a busi ness model t hat was devel oped bef ore t he di gi t al5 age.6 I l ear ned, as wel l , t hat t he publ i shi ng busi ness i s7 changi ng r api dl y and si gni f i cant l y, i n l ar ge par t because of8 t he di gi t al age and t he cr eat i on of eBooks. There was some9 evi dence at t r i al t hat cer t ai n publ i sher s have come t o

10 under st and t hat t hey shoul d embr ace t hi s change and be f l exi bl e11 and cr eat i ve.12 I al so l ear ned, and bel i eve st r ongl y, t hat none of us13 can f or esee t he f ut ur e, and t hat change i n t he di gi t al wor l d i s14 happeni ng f ast , and t hat thi s i s t r ue i n t he eBook busi ness as15 wel l .16 A second seri es of observat i ons.17 The t r i al demonst r ated t hat Appl e and t he publ i sher18 def endant s col l uded wi t h each ot her to vi ol at e t he ant i t r ust19 l aws. I have wr i t t en ext ensi vel y on t hat i n my opi ni on. But

20 i t ' s i mport ant t o under score some of t hese i ssues i n connect i on21 wi t h t he i nj unct i on. They col l uded t o st r i p Amazon of cont r ol22 over r et ai l pr i ces. They col l uded t o el i mi nat e r et ai l pr i ce23 compet i t i on. They col l uded t o r ai se eBook pr i ces.24 They used several di f f erent means. These i ncl uded,25 agency agr eement s wi t h an MFM. Appl e used i t s app st ore t o




36/129

541 pressure RandomHouse t o adopt an agency agr eement . And t he2 publ i sher def endants made essent i al l y si mul t aneousl y demands on3 Amazon. And because t hey were si mul t aneous, t hose demands wer e4 ef f ect i ve i n coer ci ng Amazon' s capi t ul at i on t o t hei r demands5 t hat i t execut e agency agr eement s.6 A t hi r d set of obser vat i ons.7 The publ i sher def endant s' and Appl e' s j oi nt opposi t i on8 t o t he i nj unct i ve r el i ef request ed here by t he government9 r ef l ect s, I bel i eve, a cont i nui ng, and a ser i ousl y cont i nui ng

10 danger of col l usi on.11 As t he gover nment has expr essed, and t hi s Cour t has12 wr i t t en, t her e i s not hi ng i nher ent l y i l l egal or wr ong wi t h an13 agency agreement . The proper use and t he mi suse of an agency14 agr eement i s, I bel i eve, a ver y cont ext - ; speci f i c i nqui r y.15 Appl e obj ect s t o t he bar on an agency agr eement r unni ng beyond16 t wo year s, or even as a t er m of an i nj unct i on i n l i ght of t he17 consent decrees. The publ i sher def endant s submi t t ed a j oi nt18 opposi t i on t o t he bar on t he agency agr eement i n t he i nj unct i on19 as an i mproper amendment of t hei r consent decr ees.

20 I t ' s a quest i on i n my mi nd whet her t he agency model ,21 wi t h a r et ur n of pr i ce cont r ol t o t he publ i sher def endant s,22 woul d happen i n a t r ul y compet i t i ve worl d. But i f i t does23 happen, i t shoul d happen as a r esul t of negot i at i ons between a24 publ i sher and a r et ai l er , f r ee of bot h i l l egal col l usi on and25 government i nterf erence. I t hi nk my goal i n shapi ng an




37/129

551 i nj unct i on i s t o get us t o a worl d wher e t her e can be such2 i ndependent negot i at i ons.3 The onl y concl usi on I can dr aw f r omt he r ecord cr eat ed4 at tr i al , and t he par t i es' posi t i ons bef or e me, i s t hat they5 st i l l want t o col l ect i vel y f orce an agency model on Amazon and6 t o r ai se eBook pr i ces. At the ver y l east , an i nj unct i on has t o7 guar d agai nst thi s ver y r eal r i sk of col l usi on t o el i mi nat e8 pr i ce compet i t i on.9 Agai n, we are addr essi ng an i ndust r y i n whi ch t he

10 l ar gest book publ i sher s do not engage i n pr i ce compet i t i on wi t h11 each ot her . And i f t her e i s no r et ai l pr i ce compet i t i on, t her e12 wi l l be no pr i ce compet i t i on among t hei r books.13 Ther e was a r ef er ence i n Appl e' s submi ssi on t o i t14 consi der i ng movi ng an eBook apps t o t he i Bookst ore. I have15 some quest i ons about what t hat mi ght ent ai l . And t hi s l eads me16 t o my f our t h ser i es of obser vat i ons.17 Appl e asser t ed t hat t her e was no evi dence admi t t ed at18 t r i al t hat showed t hat the conspi r acy i nvol ved t he app st ore.19 That i s not pr eci sel y t r ue. I ndeed, Mr . Cue' s own di r ect

20 t est i mony at t r i al addr essed t hat i ssue, as do PX518 and 519.21 And t hi s i s t he ef f ort s t hat Appl e made t o coer ce Random House22 t o adopt i t s agency agr eement and ent er t he i Bookst ore, t hr ough23 deni al of access t o t he app st or e, i n t he cer t ai n i nst ance24 r ef err ed t o by Mr . Cue and i n t hose document s.25 Now, Appl e st r ongl y obj ects t o any aspect of t he




38/129

561 i nj unct i on t ouchi ng upon i t s app st or e. But t her e ar e cer t ai n2 pr i nci pl es wi t h whi ch i t does not seem t o t ake i ssue. They ar e3 t hat al l eBook r et ai l er apps t hat ar e compl i ant wi t h i t s4 pol i ci es may be of f er ed i n t he app st ore.5 I ' m t aki ng t hi s f romyour br i ef .6 And t hat consumers can downl oad eBooks pur chased7 t hr ough another websi t e ont o Appl e devi ces wi t hout charge.8 So, I woul d l i ke t o ask Appl e' s counsel t o t ur n t o9 Sect i on 4 of t he proposed amendment t hat i s ent i t l ed Requi r ed

10 Conduct . I know t hat i t obj ect s t o a passage i n subsect i on C11 t hat begi ns wi t h t he phr ase "except t hat " I n t he t hi r d l i ne.12 Do you see where I ' m poi nt i ng, Mr . Snyder?13 MR. SNYDER: I ' m l ooki ng now, your Honor . Yes, your14 Honor .15 THE COURT: So my quest i on i s, put t i ng asi de f or t he16 moment t he materi al i n subsect i on C t hat f ol l ows t he phr ase17 "except t hat , " does Appl e have any ot her obj ect i on t o any other18 component of Roman Numer al I V?19 MR. SNYDER: Meani ng t he f i r st t he ver bi age st art i ng

20 f r om, "appl e shal l " up unt i l t he wor d "st ore, " your Honor? I n21 ot her words t he f i r st t hr ee l i nes up t o words "except " i n22 subsect i on ( c) .23 THE COURT: Let ' s go t o page 6. Do you see where24 Roman Numeral I V st ar t s?25 MR. SNYDER: Yes, your Honor .




39/129

571 THE COURT: Do you obj ect t o par agr aph A. I t ake i t2 you do.3 MR. SNYDER: Yes, your Honor .4 THE COURT: That ' s not r eal l y an app st ore i ssue.5 Do you obj ect t o par agr aph B?6 MR. SNYDER: Yes, your Honor , we do. That f or 107 years we can' t change t he t erms or condi t i ons wi t h r espect8 t o - -9 THE COURT: Okay page 6, t he bot t om, Roman Numer al I V,

10 B.11 MR. SNYDER: We obj ect t o I V B, your Honor .12 THE COURT: For any eBook apps t hat any per son of f ered13 t o consumers thr ough Appl e' s eBooks st ore as of J ul y 10, 2013,14 Appl e shal l cont i nue t o per mi t such per son t o of f er t hat eBook15 apps, or updat es t o t hat eBook apps on t he same t erms and16 condi t i ons bet ween Appl e and such per son or on t erms and17 condi t i ons t hat ar e more f avorabl e t o such per son.18 You obj ect t o t hat ?19 MR. SNYDER: Yes your Honor . I t precl udes us f r om

20 maki ng gener al changes i n t he pol i ci es wi t h r espect t o al l of21 t he other 850, 000 apps devel oper s. So, i t si mpl y - -22 THE COURT: Thank you. I have your st at ement .23 MR. SNYDER: Yes.24 THE COURT: Turni ng t o C.25 I am j ust t r yi ng t o f i gur e out what i s i n di sput e




40/129

581 her e.2 MR. SNYDER: Yes, your Honor .3 THE COURT: Do you obj ect t o t he begi nni ng of4 paragr aph C, Appl e shal l appl y t he same t erms and condi t i ons t o5 t he sal e or di st r i but i on of an eBook apps t hr ough Appl e' s app6 st or e, as Appl e appl i es t o al l ot her apps sol d or di st r i but ed7 t hr ough Appl e' s app st ore?8 MR. SNYDER: No, your Honor , t hat i s Appl e' s general9 apps pol i cy f or al l apps devel oper s.

10 THE COURT: Okay. Thank you, t hat ' s hel pf ul .11 MR. SNYDER: May I gi ve t he Cour t i nf ormat i on t hat12 mi ght be hel pf ul on C t o f r ame i t t hat was not i n our br i ef ?13 Or I can submi t somet hi ng i n wr i t i ng i n more detai l about t hi s.14 THE COURT: I t hi nk I woul d l i ke t o cont i nue wi t h - -15 MR. SNYDER: Sure.16 THE COURT: - - my quest i ons t o you - -17 MR. SNYDER: Yes, your Honor .18 THE COURT: - - i n a moment , Mr . Snyder .19 I t hi nk t he debate around 4C, whi ch i s al l owi ng eBook

20 r et ai l er s t o pr ovi de a hyper l i nk t o t hei r websi t es or eBook21 st ore t hrough an eBook apps, wi t hout f ur t her compensat i ng22 Appl e, i s a debat e about whet her t hat i s necessary - -23 You can be seated, Mr . Snyder .24 MR. SNYDER: I ' m sor r y, your Honor .25 THE COURT: - - t o pr otect t he exi st ence of r et ai l




41/129

591 pr i ce compet i t i on.2 As of now, as I unders t and i t , a r eader can use an3 i Pad, hol d an i Pad i n hi s hand, use t he i Pad t o go t o t he4 i nternet , go - - l et me use Amazon as an exampl e. Go t o t he5 Amazon si t e. Pur chase an eBook at Ki ndl e eBookst ore, wi t h no6 payment goi ng t o Appl e, and have t hat eBook wi r el essl y sent t o7 t he i Pad, and opened on t he i Pad, i n t he i Pad' s Ki ndl e apps,8 al l at no - - wi t hout Appl e r ecei vi ng a penny.9 On t he other hand, as I underst and i t - - and Kobos'

10 submi ssi on t oday was ver y hel pf ul and i nf ormat i ve - - Appl e11 does not al l ow a r eader to pur chase an eBook - - and, agai n,12 I ' l l use Amazon as an exampl e - - t hr ough a Ki ndl e app di r ect l y.13 Or at l east does not al l ow i t t o do so wi t hout t he payment of14 t he 30 per cent commi ssi on f or such sal es t hat Appl e bel i eves i s15 cust omar y i n i t s app st ore. Kobo' s submi ssi on i ndi cat es t hat16 Appl e adopt ed t hi s pol i cy i n 2011. I f I under st and i t ' s17 submi ssi on cor r ect l y.18 MR. SNYDER: I t ' s hi ghl y mi sl eadi ng, t he submi ssi on,19 your Honor. Appl e adopt ed - - i f I can be hear d, your Honor,

20 because t he submi ssi on f r oma compet i t or basi cal l y want i ng t o21 not pay a commi ssi on, we t hi nk, you know, was hi ghl y mi sl eadi ng22 t o t hi s Cour t . I f I can be hear d on t hi s, I t hi nk I can be23 ver y hel pf ul t o t he Cour t on t hi s.24 Whi ch i s t hat t he basi c ar gument i s t hat t o r est ore25 compet i t i on t hat Appl e has t o be pr event ed f r om, t hey say,




42/129

601 di scr i mi nat i ng agai nst ri val eBook apps l i ke Kobo' s and,2 t heref ore, t hey want an except i on t o havi ng t o pay a commi ssi on3 on any hyper l i nk f r om t hei r si ght , f r om t he Appl e apps t o t hei r4 si t e. And t her e are a coupl e of argument s, your Honor .5 THE COURT: Wel l , why don' t you st art wi t h t he f acts.6 MR. SNYDER: I ' m goi ng t o gi ve your Honor t he f act s.7 THE COURT: Okay. I n t erms of , f actual l y, have I8 descr i bed i t cor r ect l y how i t works?9 MR. SNYDER: Yes. Except t he suggest i on t hat we

10 somehow changed our apps pol i cy t o di scr i mi nat e agai nst11 eRet ai l ers, i s absur d. What happened was, and t he evi dence12 showed, t hat Appl e' s pol i ci es - - t her e was no evi dence, because13 t he f i r st poi nt i s, and t hi s i s why we t hi nk t hi s i s actual l y14 egr egi ous f or them have t o i ncl uded t hi s i n t hei r pr oposal ,15 t hey had, your Honor, a pr oposed f i ndi ng of f act on t hi s ver y16 i ssue r el at i ng t o t he app st or e' s supposed di scr i mi nat or y17 t r eat ment of eBook r etai l er apps. They di d not admi t any18 evi dence t hat t hey ci t e i n support of t hei r pr oposed f i ndi ngs19 because we obj ect ed t o i t , and t hey wi t hdr ew t he evi dence, was

20 never submi t t ed t o t hi s Cour t . So now t hey want a r emedy f or21 asser t i ons made, proposed f i ndi ngs of f act , t hat t hey di d not22 deem suf f i ci ent t o t r y t o pr of f er evi dence i n suppor t of .23 And so, A, t here i s no evi dence i n t hi s r ecord of24 t hat . And, B, t her e i s no f i ndi ng, obvi ousl y. But mor e25 i mpor t ant l y, your Honor , Appl e' s pol i ci es t hat regul at e t he app




43/129

611 st ore, uni f orml y, appl i cabl e t o each and ever y one of the2 850, 000 apps i n i t s st ore, f r omAmazon' s apps, t o Zappos. com' s3 apps, to Kobo' s apps. And t hi s i ncl udes a pol i cy, uni ver sal ,4 al l the 850, 000 app devel oper s.5 I t hi nk i t i s i mport ant t o know t hat t he app st or e i s6 a cr i t i cal engi ne of t hi s Amer i can economy i n t erms of how many7 bi l l i ons of dol l ar s i t pays out t o app devel oper s and t he r ol e8 i t pl ays i n empl oyment , and i n our economy. And what t hey want9 t o do i s r egul at e our app pol i cy t o make a speci al except i on

10 f or eRet ai l er s. And, t he i n app pur chase r ul e, whi ch uni f or ml y11 appl i es across the boar d, Appl e gets a 30 percent commi ssi on12 f or pur chaser s of al l el ect r oni c goods acr oss t he boar d. Ther e13 was no speci al di scr i mi natory change made t o puni sh eRetai l ers14 whi ch make up an i nf i ni t esi mal amount of Appl e' s app r evenue,15 much l ess t otal revenue, so - -16 THE COURT: Mr . Snyder , I have no desi r e t o r egul ate17 t he app st or e. What I ' m t r yi ng t o do her e i s t o f ashi on as18 nar r ow a r emedy as possi bl e t o cr eat e, r est ore, promote, pr i ce19 compet i t i on i n eBooks.

20 MR. SNYDER: And - -21 THE COURT: So, I need t o under st and, f act ual l y, how22 t hese t hi ngs work.23 MR. SNYDER: So t he consumer can go t o t he Saf ar i24 br owser , as your Honor sai d - -25 THE COURT: So i f I got i t r i ght , I got i t r i ght .




44/129

621 So I amconcerned about your st at ement i n page 17 of2 your br i ef t hat you may move t he publ i sher def endant s' apps t o3 t he i Bookst or e. I ' m concer ned as t o whet her or not t hat i s4 goi ng t o be an end r un around any i nj unct i on, and cr eat e t he5 opport uni t y f or t he r ei nt r oduct i on of an agency agr eement t o6 maki ng i t possi bl e f or a consumer, seaml essl y, t o pur chase an7 eBook f r omone of t he publ i sher def endant s payi ng Appl e a8 30 per cent commi ss i on.9 MR. SNYDER: Oh, I under st and, your Honor .

10 No, your Honor . Your Honor , what we di d i s, i n11 argui ng why a 10 year , what we sai d r egul at i on of our app12 pol i ci es, gi vi ng an except i on t o eRet ai l er s, woul d be i mpr oper ,13 were among ot her r easons t hat we mi ght seek, over t i me, t o14 change our pol i ci es. And t hi s was a what i f , a possi bi l i t y.15 Ther e i s no, as I under st and i t , pl an or desi gn t o do t hat .16 We' r e j ust sayi ng t hat t here are a myr i ad of out comes, because17 no one knows the f uture, of what mi ght happen i n 2020, or 2018,18 or 2021 i n t he eBook ecosyst em. But we' r e not suggest i ng her e19 t hat t here i s a pl an t o end r un ar ound anyt hi ng. And i f t hat

20 was t he i mpr essi on gi ven t o t he Cour t , t hen i t was whol l y21 i nadver t ent and uni nt ended. Our vi ew i s t hat i f t her e i s a22 hyper l i nk i n Amazon. com, t o a part i cul ar book, we get f r oma23 def endant publ i sher, we get 30 per cent . The same way i f t her e24 i s a hyperl i nk t o buy shoes, we get 30 percent across t he25 board.




45/129

631 THE COURT: Wel l , l et me say t hat any i nj unct i on I2 t hi nk has t o make sure t hat t he app st ore i s not used as an3 engi ne of r et al i at i on.4 MR. SNYDER: We agree, your Honor .5 THE COURT: And i t i s not used t o do an end r un around6 an i nj unct i on. I t ' s not used as a back door way f or7 i nt r oduct i on of an agency agr eement , de f act o agency agr eement ,8 as i magi ned by t he di scussi on on page 17.9 I f we can adequat el y pr otect pr i ce compet i t i on wi t hout

10 t ouchi ng, i n any way, Appl e' s f l exi bi l i t y i n i t s management of11 t he app st ore, t hat woul d be my pr ef erence. I do not assume - -12 I know I don' t know how Appl e wi l l i nnovat e t hrough t he app13 st ore i n t he f ut ur e. I know I don' t know t hat . I coul d14 i magi ne t hat even Appl e doesn' t f ul l y appr eci ate how t he app15 st ore mi ght evol ve i n t he comi ng years. My pref erence woul d be16 t hat no i nj unct i on woul d l i mi t i nnovat i on i n t he app st ore.17 But , at t he same t i me, t hat t her e be f ul l pr i ce compet i t i on i n18 t he eBook market . And so i f counsel can f ormul ate an19 i nj unct i on t hat per mi t s t hat , I expect that t hat woul d be

20 sat i sf act or y t o me.21 Let me get t o anot her i ssue. We do need an i nj unct i on22 her e. Ther e was bl at ant pr i ce f i xi ng. Ther e was st r uct ur al23 col l usi on by t he publ i sher def endant s. Al l of t he def endant s,24 and ot her pl ayer s, wer e absol ut el y wi l l i ng t o pl ay har d bal l25 wi t h each ot her . Thi s was a r ough and t umbl e game pl ayed f or




46/129

641 hi gh st akes by one and al l . And t he consumer suf f ered2 si gni f i cant l y f r om t he pr i ce i ncreases and t he l ack of3 compet i t i on at any l evel .4 None of t he publ i sher def endant s - - and t hi s i s t r ue5 f or Appl e, as wel l - - have expr essed any r emorse over t hei r6 act i ons, made any publ i c st atement s admi t t i ng wr ongdoi ng,7 under t aken any vol unt ary pr ogr amt o prevent a r ecur r ence. They8 ar e, i n a word, unr epent ant .9 Mr . Ser geant , i n t wo st atement s i n December and

10 Febr uar y t o cer t ai n const i t uenci es of i mport ance t o hi m 11 aut hors, i l l ust r at ors, and agent s, made st at ement s t hat12 under score t hi s poi nt . He dr ew a di st i nct i on bet ween r eal13 books and eBooks. He asser t ed t hat MacMi l l an di d no wr ong. He14 expl ai ns t hat t he set t l ement s of the publ i sher def endant s means15 t hat ret ai l er s wi l l be abl e, quot e, " To di scount MacMi l l an16 eBooks f or a l i mi t ed t i me. "17 He conveys hi s di sappoi nt ment i n t he di scount i ng but18 comf ort s hi s audi ence wi t h a message t hat , quot e, "Thi s r ound19 wi l l shor t l y be over . "

20 Now, t hi s i nj unct i on i s a r emedy i mposed upon Appl e21 and not t he publ i sher def endant s. But i t woul d be r eckl ess f or22 me t o i gnore t he i ndust r y i n whi ch Appl e i s operat i ng, and t he23 ease wi t h whi ch i t wi l l be abl e t o f i nd par t ner s wi l l i ng t o24 el i mi nat e pr i ce compet i t i on and t o r ai se eBook pr i ces.25 To t he ext ent possi bl e, any i nj unct i on agai nst Appl e




47/129

651 shoul d be t ai l or ed t o pr event the r epet i t i on of pr i ce f i xi ng2 and t o encour age pr i ce compet i t i on. But i t shoul d not be3 br oader or i n pl ace l onger than necessary si nce t hi s i s a4 swi f t l y- changi ng wor l d and I want t o make sure nothi ng I do5 di scourages i nnovat i on and dynami c change.6 So I have a pr oposal I want t he par t i es t o consi der .7 I ' m t hi nki ng i n t er ms of an i nj unct i on t hat woul d8 pl ace no r est r i ct i ons on - - usi ng t he l anguage t hat DOJ has9 pr oposed - - t hat Appl e woul dn' t ent er i nt o any agr eement s t hat

10 restr i ct ed i t s abi l i t y t o set ret ai l pr i ces f or f i ve - - terms,11 wi t h si x t o ei ght mont h i nt er val s, t he f i r st t er m endi ng i n t wo12 years, and assi gn each of t he publ i sher def endant s t o one of13 t hose t erms, so t her e woul d be separ ate i nt er val s f or cont r act14 r enegot i at i on between Appl e and each of the publ i sher15 def endant s.16 The f i r st woul d be up f or r enegot i at i on r oughl y t wo17 years f r omnow; t he second t wo years ; and si x or ei ght mont hs18 t her eaf t er ; t he t hi r d anot her si x or ei ght mont hs t her eaf t er ,19 t he f our t h another si x or ei ght mont hs t hereaf t er , and t hen t he

20 l ast, af t er anot her si mi l ar i nt erval .21 Thi s means t hat t her e woul d be no one poi nt i n t i me22 when Appl e woul d be r enegot i at i ng wi t h al l of t he publ i sher23 def endants at once. And no one poi nt i n t i me when t he24 publ i sher def endant s coul d be assured t hat i t was t aki ng t he25 same bar gai ni ng posi t i on as i t s peer s vi s- a- vi s Appl e.




48/129

661 Let ' s t al k about t he exter nal compl i ance moni t or.2 Appl e vehement l y obj ects t o t hi s. I woul d have appreci ated a3 pr esent at i on by Appl e t hat a moni t or i s unnecessary. At t hi s4 poi nt , i t has made no such showi ng. There i s no admi ssi on of5 wr ongdoi ng. Ther e i s no cont r i t i on. Ther e i s no showi ng of6 any awar eness of i l l egal i t y or the danger of col l usi on by7 publ i sher def endant s t o r ai se eBook pr i ces. Ther e i s no8 showi ng of i nst i t ut i onal r ef or ms t o ensur e t hat i t s execut i ves9 wi l l never engage agai n i n such wi l l f ul and bl at ant vi ol at i ons

10 of t he l aw.11 My pref erence woul d be t o appoi nt no external12 compl i ance moni t or . I woul d pr ef er t hat Appl e adopt a vi gorous13 i n- house ant i t r ust enf orcement pr ogr amand convi nce t he14 pl ai nt i f f s, and t hi s Cour t , t hat t her e i s no need f or a15 moni t or. Al l I have on page 10 of Appl e' s submi ssi on i s a ver y16 cr ypt i c r ef erence t o t he f act t hat i t enhanced some compl i ance17 pr ogr am, i t adopt ed at some poi nt dur i ng t hi s l i t i gat i on.18 I don' t want t o do more t han necessar y here. I want19 t o pr otect t he market , prot ect t he consumer, encour age pri ce

20 compet i t i on and, i f possi bl e, at t he same t i me, al l ow t hi s21 market t o devel op and change and prosper i n ways we al l can' t22 i magi ne t oday. And t hat goes f or Appl e as wel l .23 So t hat ' s my goal . And I want t o t hank you al l f or24 your f i r st r ound of ef f or t s at t hi nki ng about an i nj uncti on. I25 may be wr ong, maybe t her e i s not hi ng t o be accompl i shed by a




49/129

671 f urt her meet and conf er , and per haps maybe I shoul d ask you,2 bot h, i s t her e anythi ng t o be accompl i shed f r om f ur t her3 r ef l ect i on on my comment s, and a f ur t her opport uni t y t o t al k4 wi t h each other , or not?5 THE COURT: Mr . Ryan.6 MR. RYAN: Mark Ryan, your Honor . Yes, your Honor ,7 bot h, i n bot h r espect s.8 We, and ot hers at t he J ust i ce Depart ment , woul d l i ke9 t o r ef l ect on your Honor ' s comment s, and t hen we woul d l i ke t o

10 si t down wi t h Appl e on t he schedul e t hat your Honor suggest ed,11 meet i ng next week, and we' l l be back her e i n t wo weeks.12 THE COURT: Mr . Snyder - - I ' m sor r y someone el se has13 st ood up.14 MR. GOLDFEI N: Shep Gol df ei n, f or Harper Col l i ns.15 Can I have t wo mi nutes?16 THE COURT: Can I have Mr . Snyder ' s r eact i on t o my17 comment s f i r st ?18 MR. SNYDER: Yes, your Honor . We woul d be pl eased t o19 par t i ci pat e i n t hat pr ocess.

20 THE COURT: Thank you.21 MR. GOLDFEI N: What I wanted t o say was I bel i eve we22 woul d l i ke t o be i ncl uded i n t hat pr ocess. Because wi t h al l23 due r espect , your Honor , our consent decr ees t hat have been24 pr evi ousl y ent er ed by t he Cour t , cont ai n ver y l engt hy ant i t r ust25 compl i ance progr ams, and compl i ance provi si ons. Your Honor




50/129

681 suggest ed t hat we had not undert aken anyt hi ng i n order t o2 pr otect t he mar ket f or t he r est orat i on of compet i t i on.3 THE COURT: I don' t bel i eve I sai d t hat , si r .4 MR. GOLDFEI N: Wel l , I apol ogi ze i f I mi shear d. But5 t he publ i sher s, we - - we f i l ed a j oi nt br i ef onl y f or the6 conveni ence of t he Cour t . We di dn' t f i l e a j oi nt br i ef because7 we were col l udi ng wi t h each other .8 The Noer r - Penni ngt on doctr i ne, i n f act , suggest ed we9 shoul d f i l e a j oi nt br i ef i f we have a common posi t i on wi t h t he

10 Cour t .11 So I don' t t hi nk t her e was anythi ng unusual i n t he12 f i l i ng of a j oi nt br i ef . And I don' t t hi nk, wi t h r espect, your13 Honor, t hat we, f r omday one, showed cont r i t i on i n t hi s case by14 comi ng i nt o t he Cour t f r omt he ver y f i r st conf erence, when we15 appeared and sai d we were i n t he set t l ement mode. That we16 were - - t hat we were prepared t o negot i ate set t l ement s. We17 negot i at ed cl ear l y f or near a year wi t h t he J ust i ce Depart ment18 f or t he r esol ut i on of t hi s mat t er . And ent er ed i nt o consent19 decr ees t hat cl ear l y cont empl at ed t he cool i ng of f per i od t hat

20 your Honor not ed i n t he opi ni on. And t hat contempl ated t hat we21 woul d be f r ee t o go t o a model , what ever we coul d negot i ate,22 uni l at er al l y, uni l at eral l y, not col l usi vel y, wi t h any eRet ai l er23 as t o t erms and condi t i ons of sal e of books. Whether i t be on24 agency model , or on a r esel l er model , or any ot her model .25 That ' s what we bar gai ned f or, speci f i cal l y, wi t h t he f i ve year




51/129

691 l i mi t wi t h t he government . And we negot i ated l ong and har d.2 We di dn' t want t wo year s, we want ed much shor t er . We set t l ed3 wi t h t he government on t wo years. And t he government came back4 and sai d t hey di dn' t want t o r egul at e, t here was i nnovat i on and5 t he market i s r api dl y changi ng. And t hat t he t wo years was6 j ust i f i ed as a cool i ng- of f per i od. We agr eed and your Honor7 agr eed when you approved and ent ered t he opi ni on approvi ng of8 our consent decr ees.9 I want t he r ecor d, your Honor, t o be cl ear t hat - -

10 t hat wi t h al l due r espect - - I know you have sat t hr ough a11 l engt hy t r i al and I appr eci at e t hat , but I don' t thi nk i t i s - -12 I don' t t hi nk i t i s cor r ect t o say t hat the - - t hat at l east13 f or Har per Col l i ns, I ' l l speak f or Har per Col l i ns. I can' t on14 t hi s i ssue addr ess somethi ng f r om MacMi l l an. We st epped up t o15 t he pl ate f r om day one i n t hi s case. And we st epped up t o16 pl ate and we set t l ed t hi s case. We set t l ed wi t h 49 st at es and17 si x at t orneys general . We spent a l ot of money. We al so18 set t l ed wi t h Mi nnesot a wi t h t he Mi nnesot a cl ass wi t h Mr .19 Berman. So we have acknowl edged our r esponsi bi l i t y. We have

20 st epped up i n t er ms of our cust omer s, ul t i mat el y, or i ndi r ect21 cust omer s. And we t r i ed t o do t he r i ght t hi ng, your Honor.22 And f r om day one, we di dn' t we di dn' t st and her e and say we23 wer e not pr epar ed t o r esol ve t he mat t er . I t ' s r out i ne, i n any24 set t l ement agr eement , f or a whol e host of r easons, i ncl udi ng25 some t ax l aw r easons t hat you don' t admi t l i abi l i t y. But I




52/129

701 t hi nk our act i ons speak l ouder t han words f or how we have2 perf ormed and st epped up t o t he pl ate here i n order to - - and3 bargai ned over what the r el at i onshi ps shoul d be movi ng f orward4 i n a f r ee market . I n a f r ee market where t he market pl ace wi l l5 determi ne. I mean t here i s an assumpt i on, wi t h r espect , your6 Honor , t hat you' r e assumi ng. You are assumi ng t hat we have t he7 bar gai ni ng power one on one wi t h Amazon or wi t h Appl e i n t erms8 of what t hose t er ms and condi t i ons of r esal e, or t he sal e of9 books are gonna be. I t hi nk t hat ' s a bi g assumpt i on. Because

10 t hose are huge r etai l ers wi t h t r emendous bar gai ni ng power.11 THE COURT: I ' m ver y aware of t hat . Counsel , t hank12 you.13 MR. GOLDFEI N: You' r e wel come.14 THE COURT: And, yes, I ' m aware t hat t wo, and one15 coul d say t hr ee of t he publ i sher def endant s ent er ed ear l y16 set t l ement s and, over the mont hs t hat f ol l owed, t he t wo17 addi t i onal ones di d. I ' m awar e of the f act t hat t he publ i sher18 def endant s' consent decrees i ncl uded a compl i ance program. I ' m

19 not aware of any st atement of cont r i t i on by any of t he

20 publ i sher s' st at ement s, or admi ssi on of wr ongdoi ng. I di dn' t21 f i nd t he submi ssi on of t he j oi nt br i ef a pr obl em. I ndeed, I22 appr eci at ed t he f act t hat i f t hey had a uni f i ed posi t i on t hat23 i t be submi t t ed t o me once, not f i ve t i mes, so I t hank you f or24 t hat .25 I t hi nk my st atement s about no descr i pt i on of any




53/129

711 compl i ance pr ogr am, i n- house ant i t r ust enf orcement pr ogr am, was2 a r ef er ence sol el y t o Appl e. And page 10 of thei r br i ef . I ' m

3 aware of t he consent pr ovi si on whi ch i mposes upon t he publ i sher4 def endant s on cer t ai n obl i gat i ons i n t hat r egar d.5 And I am ver y aware t hat a publ i sher def endant may6 not , dependi ng on t he ci r cumst ances, have bar gai ni ng power7 vi s- a- vi s some of t he si gni f i cant r et ai l er s. They ar e not8 al one i n t hat posi t i on. I expect l ot s of Amer i can busi ness9 woul d be abl e t he t est i f y t o t hat f act . Nonet hel ess, my f ocus

10 i s on maki ng sur e we don' t have col l usi ve i l l egal act i vi t y11 agai n i n t he mar ket pl ace wi t h r espect t o eBooks. I t ' s al l I ' m

12 f ocused on.13 Wel l , I don' t want t o si mpl i f y i t . I ' m t r yi ng t o be14 f ocused on ever ythi ng t hat I shoul d under t he st andar ds t hat I15 ar t i cul at ed bef or e, but t hat ' s my cor e f ocus, i s t o creat e a16 nar r owl y t ai l or ed i nj unct i on t hat wi l l pr omot e pr i ce17 compet i t i on and pr event col l usi ve behavi or i n eBook pr i ci ng.18 And negot i at i on of eBook agr eement s.19 Okay, I t hi nk what I woul d l i ke t o do t hen, si nce

20 both - - and I don' t want t he publ i sher def endant s t o be21 i nvol ved i n t hese negot i at i ons, cer t ai nl y not now. Thi s i s an22 i nj unct i on t hat i s goi ng t o be i mposed on Appl e, not on t he23 publ i sher def endant s. I ' m not bl i nd t o t he i mpact i t wi l l have24 on t he publ i sher def endant s. And t he publ i sher def endant s wi l l25 cer t ai nl y have an oppor t uni t y t o be heard on any proposed




54/129

721 i nj unct i on. But I t hi nk t he f i r st r ound of di scussi ons her e2 shoul d be j ust bet ween t he par t i es who went to t r i al . I ' m

3 consci ous of t he f act t hi s i s August . I woul d l ove i t i f we4 coul d r eschedul e a conf er ence on t he i nj unct i on f or the week of5 August 19t h, but why don' t you, Mr . Ryan and Mr . Snyder , and6 your t eams, consul t wi t h each other br i ef l y and t el l me what7 week I shoul d be l ooki ng at f or a conf er ence schedul e.8 We' l l go of f t he r ecor d her e j ust t o t al k wi t h each9 ot her br i ef l y.

10 ( Recess)11 MR. SNYDER: Woul d i t be al l r i ght i f we got back t o12 t he Cour t by noon t omor r ow. Because t her e has been a l ot of - -13 I need t o t al k t o my cl i ent and r evi ew schedul es.14 THE COURT: Why don' t I get a l et t er f r om counsel ,15 hopef ul l y, i t wi l l be a j oi nt appl i cat i on, by t he cl ose of16 busi ness on Monday wi t h r espect t o a proposed schedul e f or when17 we woul d r econvene on t he i nj unct i on, and when I get wr i t t en18 submi ssi ons f r omyou wi t h r espect t o t hat conf erence. And I19 woul d l i ke at l east t wo busi ness days between t he submi ssi ons

20 and t he conf erence, so I have a chance t o r ead and r ef l ect .21 I want t o t hank you al l f or your submi ssi ons. I know22 how i mpor t ant t hese i ssues are t o every part i ci pant here. And23 t hat there i s a l oss have l ot of passi on behi nd some24 pr esent at i ons. And t hat ' s appr opr i at e. And i t ' s hel pf ul f or25 me t o hear , even, t o know t hat t hese i ssues are i mpor t ant t o

SOUTHERN DI STRI

DOJ Filing in Opposition to Apple Appeal to Remove ECM

Documents