E-Book Purchasers to Receive an Additional $400 Million in Credits for Unlawful Overcharges
Today, the U.S. Supreme Court denied Apple’s petition for certiorari in United States v. Apple Inc., making final lower court decisions that Apple orchestrated a price-fixing conspiracy with five major e-book publishers and substantially raised e-book prices.
The Supreme Court’s action triggers Apple’s obligation to pay $400 million to e-book purchasers under Apple’s July 2014 agreement to settle damages actions brought by the attorneys general of 33 states and territories, including Nebraska, and a private class of e-book purchasers. Most e-book purchasers will receive reimbursement for the higher prices Apple’s conduct caused them to pay through automatic credits at their e-book retailers. They will be able to apply these credits to future purchases. The specific amount Nebraska consumers will receive is to be determined. With the $166 million previously paid by the conspiring publishers to settle claims against them, Apple’s payment will bring the total to $566 million for the amount repaid to e-book purchasers overcharged as a result of Apple’s and the publishers’ illegal conspiracy.
The case was tried jointly, between the 33-state coalition and the U.S. Department of Justice. In this litigation, both the U.S. Department of Justice and the Plaintiff States filed their complaints against Apple in 2012 alleging an unlawful agreement to fix, maintain or stabilize prices of e-books in violation of federal and state antitrust laws. The trial against Apple, which was overseen by U.S. District Judge Denise L. Cote of the Southern District of New York, began on June 3, 2013. The trial lasted for three weeks, with closing arguments taking place on June 20, 2013. Judge Cote issued her opinion and order on July 10, 2013, finding Apple liable for knowingly participating in and facilitating a conspiracy with the publishers.
On June 30, 2015, the Second Circuit upheld the District Court’s decision on Apple’s liability in the price-fixing conspiracy. U.S. Circuit Judge Debra Ann Livingston wrote for the majority in a split three-judge panel: “We conclude that the district court’s decision that Apple orchestrated a horizontal conspiracy among the Publisher Defendants to raise e-book prices is amply supported and well-reasoned, and that the agreement unreasonably restrained trade in violation of § 1 of the Sherman Act.”
With the Supreme Court declining to review the district court’s ruling that was affirmed by the Second Circuit, Apple has no further opportunity to contest its liability. In addition to the $400 million to be distributed to consumers – including those represented by private counsel in a related class action – Apple will pay $20 million to the states in reimbursement for fees and costs and to resolve claims for civil penalties.