updated 02:14 am EST, Wed January 8, 2014
Controversial 'monitor' shows himself to be biased, Apple argues
Apple has filed a formal request with the same judge that appointed the antitrust compliance monitor to have him removed, citing a wide range of complaints and accusations of overreach -- including the monitor's own recent declarations, which the company says prove a pre-existing bias. Former DOJ Inspector General Michael Bromwich was a controversial choice for the post due to his lack of antitrust experience and personal relationship with the judge, among other problems and conflicts of interest.
The Department of Justice successfully sued Apple earlier this year, alleging that the company managed to "vertically" join an existing "horizontal" price-fixing conspiracy among publishers against Amazon's abusive-monopoly behavior and price model. Apple argued (and will argue in its appeal) that it did not participate in any conspiracy, and that its proposed "agency" model for e-book pricing in fact levelled the playing field, allowing more publishers and more e-book sellers to enter the market.
The appointment of a court-ordered monitor was itself unusual and controversial. It is rarely done in cases where the guilty party has no history of similar behavior, and when combined with Bromwich's background working for the prosecution was seen by many as a vindictive move by a biased judge, who had pre-announced her likely findings before the trial even began.
The missteps in both the trial and the aftermath have attracted the scorn of many observers. The Wall Street Journal published a lengthy editorial excoriating both Judge Cote and Bromwich over what it said were numerous judicial overreaches, improper procedures and conflicts of interest, and a portion of Cote's original order (later reversed) that allowed Bromwich to hold secret, off-the-record ex-parte meetings with the judge with no knowledge or representation from Apple, despite the fact that the judge is still deciding parts of the case.
The Journal article's issues with Bromwich and Cote didn't even take into account Apple's numerous complaints about the monitor. The iPhone maker has previously filed complaints ranging from his lack of qualifications for the job (requiring the hiring of a second "assistant" lawyer with an antitrust background) to prima donna demands for interviews with executives and board members who had no connection to the case or the iBookstore business.
Apple has previously complained to the court that Bromwich has "expanded his mandate" beyond the boundaries of the case, that he has made disruptive and inappropriate demands, that many aspects of his "investigation" are extra-legal and ignoring both discovery rules as well as the judge's own guidelines, and that according to the order he has no formal role until Apple has completed its revisions to its antitrust policy (expected sometime this month) and yet has charged excessive fees for "work" already performed, to the tune of nearly $70,000 per week (not including a 15 percent "administrative fee" payable to his law firm, and the $1,025-per-hour antitrust assistant).
The new letter specifically cites Bromwich's unnecessary rebuttal to Apple's complaints (in which he denied the Apple claims while accusing the company of being "uncooperative") as evidence that Bromwich is not impartial and may have a personal bias against the company. "His wholly inappropriate declaration in an adversarial proceeding is compounded by his conduct and the circumstances surrounding his appointment and activities," Apple's lawyers wrote, "including his reliance on preappointment conversations with the Court and plaintiffs as grounds for expanding his mandate beyond the terms of the Final Judgment, his active collaboration with plaintiffs to broaden the scope of his mandate in this manner and oppose Apple's motion for stay, his financial demands, and his adversarial, inquisitorial, and prosecutorial communications and activities toward Apple since his appointment."
The letter continues to enumerate various examples of Bromwich's inappropriate behavior, including multiple interview requests with employees and board members who have no direct connection to Apple's e-book business, and that Bromwich has illegally attempted to interview company employees without legal counsel present, a direct violation of Judge Cote's order. If the judge stays true to her trial behavior, her ruling will ignore or refuse to address direct evidence such as this in favour of a summary judgement one way or the other.
Apple, for its part, says Bromwich is "acting like an independent prosecutor" rather than a consultant designated to assist Apple in complying with antitrust rulings handed down in the original case (the whole of which Apple is contesting, and has asked thus far unsuccessfully that enforcement of which be suspended until the appeal is heard). The company also reiterated its argument that Bromwich's fees and costs are excessive for the actual listed duties he would normally perform, to say nothing of the extra costs of accommodating his extra-legal requests, "administrative fee" and assistant.
While Apple believes strongly that Judge Cote ignored exculpatory evidence and erred in her judgement in the original trial (stopping just short of accusing her or bias), it originally complained to the judge only after Bromwich starting billing the company months ahead of his official duties beginning, expanded his "investigation" of the company and demanded access on his own timetable to Apple executives unrelated to the case. While it was successful in getting Judge Cote to drop the secret meetings, she ignored the numerous charges and referred Apple to take up its complaints with the Department of Justice first before petitioning the court, despite the fact that Bromwich is a former DOJ employee and that the court, not the DOJ nominated and appointed him.
For his part, Bromwich has a long relationship with the judge -- she wrote letters to the Congress helping him get his previous job at the Department of Justice, despite Congressional concerns about his numerous conflicts of interest. Bromwich was an Inspector General for the DOJ during the Clinton administration, and has ties to the BP oil scandal of 2010 as well as the Iran-Contra affair in the Reagan administration.
Judge Cote will likely address the matter during the next official court hearing, scheduled for January 13. Apple will be arguing that Bromwich should at the very least be replaced with someone competent and understanding of the actual job, and preferably that any antitrust enforcement monitor be suspected pending its appeal -- arguing that it has a strong likelihood, in part based on Cote's judical errors, of succeeding in overturning at least some aspects of her ruling. The DOJ will argue that the court should protect the public from having Apple enter into any deals with publishers until the case is resolved, and requires external monitoring to ensure it doesn't engage in any further antitrust behavior.