updated 08:09 pm EST, Fri December 6, 2013
Call appointment of personal friend as antitrust monitor 'flatly unconstitutional'
In a new editorial that could have been written by Apple's legal team in a candid moment, the Wall Street Journal rakes Apple e-book trial judge over the coals for both recent and previous missteps, from "essentially [ruling] before hearing the evidence" to appointing a personal friend with no experience in antitrust issues (and requiring an $1,000-per-hour assistant) as an inquisitor who believes his job is to "investigate Apple all over again" in an unconstitutional manner.
The unusually scathing editorial comes, it should be noted, from a company that is owned by News Corporation, which also owns HarperCollins -- one of the original defendants in the price-fixing case brought by the US Department of Justice earlier this year. HarperCollins settled its charges with the DOJ, but was the most resistant of the publishers to sign an agreement with Apple originally, making any charge of WSJ bias towards Apple seem improbable.
The editorial, which comes from the paper's board, accuses Cote of being "abusive" towards Apple, and "shredding the separation of constitutional powers" in her appointment of an antitrust monitor at all (an action normally reserved only for those with repeat offenses or a long history of monopoly abuse), as well as for granting the monitor, which the paper describes as a "friend" of the judge, "carte blanche to act as the inquisitor of all things Cupertino." Until earlier this week, the appointed monitor -- Michael Bromwich, about whom the WSJ has further issues -- was also allowed to hold secret, off-the-record (ex parte) meetings with the judge, who is still hearing related matters in suits tied to the original e-book trial. The action, since rescinded after public criticism, appeared to be an obvious conflict of interest that would prejudice Cote in future matters involving Apple.
The editorial also took issue with the fees Bromwich was charging Apple. While an $1125-per-hour salary is not unusual among the nation's top legal minds, Bromwich has no experience in antitrust compliance or monitoring -- and he is billing Apple for full-time work (billing over $138,000 in the first two weeks), even though Apple pointed out to the judge (which she again ignored in her latest order) that his work cannot begin (according to her original ruling) until Apple revises its antitrust guidelines and policies and submits them for review, which is scheduled to take place in mid-January.
These fees are on top of a "15 percent administrative fee" Bromwich demanded, plus the $1,025-per-hour fee required by the assistant antitrust attorney. Apple also complained about Bromwich's demands to interview personnel unconnected to the e-book case, such as product designer Sir Jonathan Ive -- demands made to conform to Bromwich's own schedule, which the company calls both "outside his duties" and "incredibly disruptive." The judge again ignored these aspects of the complaint in her latest order, referring Apple to take up the matter first with the Department of Justice and states Attorneys General before taking the matter to the court.
The editorial makes the point that few outside the Department of Justice believe that Apple's entry into the e-book market -- regardless of what it may or may not have arranged with publishers -- did any harm to the industry, and in fact helped tame an Amazon monopoly that had become abusive to publishers, as well as allowing other competitors (beyond just Apple) to effectively enter the playing field through the "agency" pricing model -- increasing choice, diversity of publishing sources and yes, competition. While best-selling e-book titles did increase in price following the adoption of "agency" pricing, overall e-book prices actually went down and the number of publishers able to bring works to market flourished.
Judge Cote, according to the editorial, "pre-declared her 'tentative view' that Apple was an antitrust violator and indulged Justice Department arguments that have no precedent in antitrust jurisprudence." Bromwich, meanwhile, began "an open-ended, roving investigation of Apple" with the editorial suggesting he would "disinter Steve Jobs" if he had the ability to do so.
The paper referred to Bromwich's "tantrum" when Apple limited his interviewing to employees connected to actual antitrust matters, such as its general counsel and lead compliance officer, and his demands for "proprietary documents well beyond his mandate" and direct letters to Apple board members with further demands. The WSJ calls the arrangement with Bromwich, in particular the former ex parte reports, "flatly unconstitutional."
Bromwich himself is also excoriated in the editorial as a "political fixer" with ties to the BP oil scandal as well as the Iran-Contra investigation during the Reagan administration. He was Inspector General for the Justice Department during the Clinton administration -- a tie to the prosecution in the case that should disqualify him outright. In fact, Bromich was confirmed for the DOJ job in part (despite numerous concerns over his conflicts of interest) thanks to a letter of recommendation written by Judge Cote.
The editorial berates Judge Cote for using Bromwich to overstep her boundaries as a judge and the traditional role of an antitrust monitor, accusing her of "appointing [her] own agent to annex such [prosecutorial] activities reserved for the executive branch." The article concludes that Judge Cote's arrangement with Bromwich is "offensive to the rule of law and a disgrace to the judiciary" and calls for the Second Circuit (where her rulings are on appeal) to "remove her from the case."
Reviews of Judge Cote from judicial rating site The Robing Room -- mostly posted by attorneys, but which were written years before the Apple-DOJ case was tried -- referred to her as a judge who "pre-determines which parties should win at the outset, and is blatantly enamored of big-name firms and government entities" while another said that (in an unrelated case) "it seemed clear that she had pre-judged the case and the parties before hearing the merits, and proceeded to rule accordingly without regard for the facts and law." Her overall rating at the site was 4.5 out of a possible 10.0.
While many commenters (in statements mostly from 2011 and earlier) noted her tendency to pre-judge and forcibly exclude evidence that might exonerate the pre-designated loser, even the negative commenters noted that she is meticulous about reading the relevant filings by both parties ahead of a trial, and was described as "hard-working" and "no-nonsense" with a tendency towards speedy decisions. The reviews, however, are nearly unanimous that Cote tends to pre-determine cases, and that she has a nearly-unblemished record of siding with major-firm or government lawyers -- a fact that Apple may be able to leverage to gain appeals of her decisions.