Will states and consumers sue Apple over e-book prices?

This summer a judge ruled that Apple arranged a conspiracy with major publishers to raise e-book prices. Now Apple faces a class action lawsuit from plaintiff states and a consumer class.

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    Apple headquarters is located in Cupertino, Calif.
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Nearly four months after a federal judge ruled that Apple broke anti-trust laws by conspiring with publishers to increase e-book retail prices, Apple is seeking to stop a pending class action lawsuit that could result in the company's having to pay millions in damages.

According to Publishers Weekly, Apple filed a motion last week arguing that a class action lawsuit pressed by plaintiff states and a consumer class was invalid. As it stands, Apple may have to pay up to $307 million in damages, based on a Stanford economist’s estimates.

In a July 10 decision, US District Judge Denise Cote ruled that Apple orchestrated a conspiracy with five major publishers to raise e-book prices in competition with Amazon. Apple had led an agreement with major publishers to set e-book pricing via the agency model, whereby publishers set the price on e-books (as opposed to the traditional wholesale model, where the distributor or retailer sets prices). Under its plan, Apple raised e-book prices, Cote said.

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Now, a class-action lawsuit is being brought against Apple that could result in the company's having to pay more than $300 million in damages to consumers.

Apple is trying to quash the class action suit. Here’s how:

For starters, Apple says its entry into the e-books market was beneficial to consumers.

“Each of the millions of e-books has its own unique history,” Apple’s brief states. “Indeed, many e-book purchasers affirmatively benefitted from the Publisher Defendants’ shift to the agency model because, for example, they paid less than they otherwise would have if the retailer had set the price or they had access to e-books that otherwise would have been unavailable.”

Apple is also targeting the very class action certification itself, asserting that class action status should not be bestowed on the plaintiffs in this case.

Citing a landmark Supreme Court ruling in Wal-Mart Stores Inc. v Dukes et al., Apple is alleging that plaintiffs need to prove injury to each individual plaintiff, not to competition in the market as a whole.

“...[C]lass certification in this case turn on, among other things, whether Plaintiffs can establish through common proof, not only injury to competition in the market generally, but also injury to each individual plaintiff and his or her damages,” Apple wrote in its filing last week.

It also said that a class of 24 million consumer accounts that registered e-book purchases between April 2010 and May 2012 was too broad a group to be certified as a class.

If it is successful in arguing against class action certification, Apple may be off the hook for hundreds of millions in damages – and consumers out of compensation.

Briefings on Apple’s motions have been scheduled.

But according to reports, it is unlikely Cote will accept Apple’s arguments and kill the class action suit. As Publishers Weekly noted, “In her July 10 ruling and in approving the publishers’ settlements, she decisively found that consumers were harmed.”

As it currently stands, a damages trial to discuss how much Apple must pay in compensation is currently set for May 2014.

Husna Haq is a Monitor correspondent.

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