Judge takes issue with Apple's $450M e-books settlement offer

After the tech giant agrees to pay millions in the e-book price-fixing lawsuit, the presiding judge says, "I'm concerned about the terms of the settlement."

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
2 min read


Skirting an upcoming trial, Apple agreed to pay $450 million last week to settle an antitrust lawsuit that alleged the company conspired with five book publishers to fix e-book prices. However, the judge ruling over the case is having concerns with the settlement proposal, according to Reuters.

US District Judge Denise Cote in New York said during a teleconference on Thursday that some of the terms within the settlement offer could end up meaning far less money being paid to consumers if the case is appealed, according to Reuters.

"I'm concerned about the terms of the settlement," she said.

Cote specifically pointed to what she called the "most troubling" clause, which allows Apple to pay only $70 million if an appeals court decides to reverse her earlier decision that found the tech giant liable for violating antitrust laws. She also questioned a clause that said Apple didn't have to pay interest during an appeals process.

This lawsuit for damages is connected to a lawsuit filed by the Justice Department in April 2012 that accused Apple and five of the largest US book publishers of colluding to set e-book prices and working together to break Amazon's hold on the market with its Kindle e-book reader. After a non-jury trial in 2013, Cote concluded that Apple orchestrated a scheme with publishers to fix the prices of e-books. Apple is appealing that ruling.

Initially, the attorneys general in 33 states that filed the lawsuit sought $280 million in damages but asked in January that the amount be tripled to $840 million, because the US had already "conclusively proven" that Apple orchestrated the conspiracy. As the case proceeded into the damages phase, Apple sought dismissal of the attorneys general case, contending that the states lacked standing to seek damages against Apple. Cote denied that motion in April.

The attorneys general agreed to Apple's $450 million settlement proposal last week, which meant avoiding a damages trial that was scheduled for August 25. In the teleconference on Thursday, Steve Berman, an attorney for the consumers, alluded to agreeing to the settlement because he didn't think Cote's decision would be reversed in an appeal, according to Reuters.

"We thought given that unlikely scenario and the legal risk we would face it would be a good outcome for consumers," he said.

CNET contacted Apple for comment. We will update this story when we have more information.