Class action suit filed against Apple over ebook price fixing

by Public Libraries on April 4, 2014

Gavel Books

Apple, the world tech super-company, is facing a whirlwind of backlash and bad news. On Friday, March 28, a group of New York consumers sued the tech giant for violating antitrust laws by fixing ebook prices. Five major book publishers are accused of being in cahoots with Apple’s price fixing conspiracy. A U.S. district judge noted that the plaintiffs had met the standards to file the lawsuit.

The explosive lawsuit could result in Apple having to pay hundreds of millions of dollars to ebook customers, potentially having a major domino effect on the company’s stock. The company has declined to speak about the allegations.

This isn’t the first time that bad news has plagued the tech company. The DOJ filed an antitrust lawsuit two years ago against Apple and five book publishers. Just last year, the same district judge found Apple guilty of participating in an ebook price fixing scheme with publishers to compete with Amazon.com Inc’s dominant position in the marketplace. Apple is in the appeals process over that decision.

33 states have sued Apple on behalf of their consumer residents, while other individuals have filed the class-action suit addressed on Friday. The plaintiffs are seeking over $800 million in reparations. Last year, publishers agreed to settle antitrust damages for $166 million, which the judge said would be deducted from the overall damages once (and if) reparations are paid to the plaintiffs.

In an 86-page opinion granting the lawsuit, Judge Denise Cote said that nearly all of the members of the class-action suit had paid inflated prices for ebooks because of the price fixing scheme. To further the woes of the company, Cote denied the attempts of Apple’s chief experts to discredit the plaintiff’s expert witness. Two of Apple’s chief economists were rejected, all but eradicating any chance they had of killing the suit.

Cote found gaping flaws in Apple’s two chief-witness analyses. In a 59-page opinion, she wrote that their findings would only confuse, and possibly mislead, the jury. The plaintiff’s expert found that the ebook charges were inflated by 18.1%, whereas Apple’s experts found the inflation rate to be about 14.9%. Apple’s experts might still be able to present their data to the jury as a model, and their estimation may become the jumping-off point for the damages.

The case could begin as quickly as May, but though neither team feels that it will be ready that soon. The plaintiffs would like the trial scheduled for July, and Apple has asked to extend the consumer lawsuits by 90 days, which means that the case would not begin until September. Either way, Apple’s critics feel that the tech company is prolonging the inevitable: a huge chunk of change owed to its customers, a drop in consumer trust, and a monumental headache that could hurt the company’s business endeavors with other publishers in the future.

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