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May 28, 12:18 PM EDT

Appeals court: Apple must submit to imposition of monitor



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NEW YORK (AP) -- Apple must cooperate with a court-appointed monitor after a judge found the technology giant colluded with book publishers in 2010 to raise electronic book prices, a federal appeals court said Thursday.

The 2nd U.S. Circuit Court of Appeals in Manhattan rejected Apple Inc.'s request that it disqualify Washington lawyer Michael Bromwich from evaluating Apple's antitrust policies over a two-year period.

U.S. District Judge Denise Cote appointed Bromwich as monitor in October 2013 after a civil trial weeks earlier led her to conclude that Apple had violated antitrust laws when it entered the electronic book market.

Within weeks of his appointment, Bromwich complained that Apple failed to turn over documents, delayed interviews with officers and directors and used attorneys as shields to block access to its staff.

In court papers, Apple argued that Bromwich launched a "broad and amorphous inquisition" that was interfering with its business operations and imposing substantial and rapidly escalating costs on it.

In ruling Thursday, the appeals court revealed that Bromwich originally proposed to bill Apple $1,265 per hour for his own work, consisting of a $1,100 hourly fee plus a 15 percent "administrative fee," along with lower rates for the rest of his team. The fee was later reduced to $1,000 per hour.

It said Bromwich had billed Apple $138,432 within two weeks of his appointment, "fueling Apple's allegation that Bromwich had jumped the gun to maximize a commercial opportunity."

The 2nd Circuit criticized Bromwich for submitting an affidavit to support the government in its opposition to Apple's request that the judge halt Bromwich's work.

"It is certainly remarkable that an arm of the court would litigate on the side of a party in connection with an application to the court he serves," Circuit Judge Dennis Jacobs wrote on behalf of the three-judge panel that heard oral arguments earlier this year. He called it the "opposite of best practice for a court-appointed monitor" and said the fee arrangements never should have been sealed from the public.

In a separate concurring opinion, Judge Jesse M. Furman criticized Apple for failing to take advantage of a "sensible and effective process" the trial judge had set up to swiftly resolve any objections to the monitor's actions.

"The company largely sat on its hands, allowing issues with the monitor to fester and the relationship to deteriorate, mostly without the district court's knowledge," he wrote.

Lawyers for Apple did not immediately respond to requests for comment

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