Shutterstock_122546788Apple settles

Apple has settled up to $841 million of antitrust claims by state attorneys-general and a nationwide class of consumers who bought e-books from Apple and its publisher co-conspirators.

The pact comes almost a year after U.S. District Judge Denise Cote in New York held Apple civilly liable for conspiracy to fix prices, a violation of section 1 of the Sherman Act. The United States brought the case, primarily for injunctive relief. Judge Cote entered a final judgment on September 5, 2013.

Before the trial, Apple had rejected a settlement offer by the Deparment of Justice before trial because, according to Apple's CEO Tim Cook, "we're not going to sign something that says we did something that we didn't do".

Amount unclear

We don't know how much Apple will pay. Its maximum exposure to the class and the states totaled $840,763,122, three times the plaintiffs' estimate of actual overcharges for e-books ($280,254,374 — a number that reflects a 17 percent inflation of e-book prices as a result of the conspiracy).

The Wall Street Journal weighs in

Should we feel sorry for Apple? The Wall Street Journal thinks so. It absolves Apple and the publishers for engaging in what criminal law would deem a felony. It points its finger of blame instead at the Department of Justice and Judge Cote.

What did they do, you ask? Instead of "letting the market decide whether the wholesale model [which Amazon preferred] or agency model [which the conspirators agreed to adopt] should prevail", Judge Cote "dictated the outcome by ruling against Apple."

Issing-may the oint-pay

But the "market" never had a chance to decide which model to use precisely because Apple and the publishers perverted the market through collusion.  They did so to drive up the prices they could charge. Worse, in the absence of the Apple-publisher cartel, the market plainly would have chosen the wholesale model that Amazon preferred. The squelching of competition by means of an illegal agreement — not the actions of the court or the DOJ — dictated the outcome.

Astonishingly, the WSJ purports to regard Apple and the publishers as innocent of wrongdoing. It asserts that Apple simply "offered e-book publishers the same [agency model] deal" and that they all coincidentally accepted the offer. But the evidence showed hard-core collusion — the kind involving secret CEO-only luncheons in private rooms of fancy restaurants and ensuing lock-step increases in prices — not indepedent action. As Judge Cote noted in her post-trial opinion on liability:

The question in this case has always been a narrow one: whether Apple participated in a price-fixing scheme in violation of this country's antitrust laws. Apple is liable here for facilitating and encouraging the Publisher Defendants' collective, illegal restraint of trade. Through their conspiracy they forced Amazon (and other resellers) to relinquish retail pricing authority and then they raised retail e-book prices. Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant.

United States v. Apple Inc., No. 12 Civ. 2826 (DLC), slip op. at 158 (S.D.N.Y. July 10, 2013).


The WSJ's claim that Amazon's share of e-book sales "has soared" as a result of the DOJ's win is a combination of argle-bargle and mumbo-jumbo. The reasons that the paper cites for the supposed wind beneath Amazon's wings have nothing to do with breaking up the Apple-publisher cartel.

On the contrary. There is no discernible connection between the facts that Barnes & Noble "pulled back on its Nook", that "Sony and Samsung exited the e-reader market", and that Apple "seems focused elsewhere" and the breakup of the cartel. And Amazon's market share didn't "soar". It simply went back to where it was before the unlawful conspiracy. See id. at 14 ("Through 2009, Amazon dominated the e-book retail market, selling nearly 90% of all e-books.").

Prices should have risen

The WSJ ends by urging that antitrust enforcers should "stand aside and let the market determine winners and losers." That's all well and good, but if the WSJ is right that the DOJ has quashed competition, ebook prices would have soared in the last couple of years, right?

Just the opposite has happened As the leading authority on e-book prices said this on April 30, 2014:

In the nearly two years Digital Book World has been measuring the average price of a best-selling ebook, the tend has been unmistakable: down.

Best-selling ebooks cost more two years ago than they do now. Two years ago, many of the best-selling ebooks were agency priced, meaning that publishers determined the price of the books and the price was usually $10 and up.

Today, no publishers price their own books and retailers have generally lowered prices to compete with each other and sell more units.

Despite all that, L. Gordon Crovitz, who wrote the WSJ piece, preaches "humility" to Judge Cote and the DOJ. He might want to look in the mirror.

A challenge

The Second Circuit has Apple's appeal before it now. Argument will likely take place by year-end, and a decision will follow in due course.

In the meantime, Blawgletter issues this challenge to Mr. Crovitz: When the Second Circuit rules, we'll each write about it and explain how we either got it right or got it wrong.

Blawgletter can hardly wait.

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Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

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Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

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Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.