Frankel: The weird proviso in Apple’s e-books settlement

“There’s a very unusual sentence near the beginning of the letter that class action lawyer Steve Berman of Hagens Berman Sobol Shapiro sent Monday to U.S. District Judge Denise Cote of Manhattan,” Alison Frankel writes in a column for Reuters. “Berman’s letter on Monday informed the judge that Apple has agreed to a binding settlement with the consumer class and the states. But there’s a catch, he wrote: ‘Any payment to be made by Apple under the settlement agreement will be contingent on the outcome of that appeal.'”

“What? The whole point of settlements is to eliminate uncertainty for both sides. Yet according to Berman’s letter, this deal hinges on the uncertain outcome of Apple’s appeal to the 2nd Circuit. That didn’t make any sense to me. Almost all of the leverage in this case right now belongs to the class and the state AGs,” Frankel writes. “Apple’s only bargaining chip was the possibility that its lawyers at Gibson, Dunn & Crutcher would win the company’s appeal of Cote’s liability decision from the Justice case. So why, I wondered, would the state AGs and Berman — one of the most experienced antitrust class action lawyers in the country — agree to a deal that appears to undercut their bargaining power and inflate Apple’s leverage?”

“I don’t think they did,” Frankel writes. “I have a feeling that when the states and Hagens Berman file their memo of understanding with Apple, sometime in the next 30 days, we’re going to see a new kind of settlement structure — one that’s tailored to the peculiar circumstances of this case, in which money damages claims by the states and class action plaintiffs live or die with Apple’s appeal in the separate, but intertwined, Justice proceeding… With a settlement that anticipates different outcomes at the 2nd Circuit, both sides would mitigate the risk of Apple’s all-or-nothing appeal, effectively buying a degree of certainty. Neither has to bear the additional cost of trying the case, and Apple can continue to litigate against the Justice Department without worrying about the collateral consequences.”

Read more in the full article here.

MacDailyNews Take: Settle Different™.

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