By Ankur Kapoor
In the latest skirmish in the e-books case of United States v. Apple, Inc., Apple has accused the external compliance monitor appointed by the court of conducting a “roving” and “unfettered” investigation into Apple’s business practices, including seeking to interview lead designer Jony Ive and board member and former Vice President Al Gore.
Apple is now moving the U.S. District Court for the Southern District of New York to suspend the court’s appointment of the external compliance monitor pending Apple’s appeal of that appointment. According to Apple, the monitor is not only interfering with Apple’s business by exercising wide-ranging investigative powers, but is also charging excessive fees. In a December 13, 2013, letter to the court responding to Apple’s court filings, the U.S. Department of Justice disputed Apple’s accusations and stated that, based on the DOJ’s review, the monitor’s “actions to date have been wholly within the scope of his authority under the Final Judgment.” Judge Denise Cote will hear oral arguments on Apple’s motion on January 13, 2014.
In its filings with the court, Apple portrays an aggressive monitor seeking to examine Apple’s internal antitrust compliance program well before the court ordered Apple to have that program in place. While the monitor certainly needs to understand Apple’s business before he can begin to evaluate Apple’s internal compliance program, it is questionable that needing to understand Apple’s business would justify seeking interviews with individuals who have little, if anything, to do with Apple’s day-to-day business operations and antitrust compliance program.
Apple has raised many jurisdictional and constitutional arguments against both the court’s imposition of the external compliance monitor and the monitor’s practices. The imposition of an external compliance monitor in non-merger antitrust cases is rare, if not unprecedented, in civil cases. Even in merger cases, the merging parties typically agree to a monitor as part of a negotiated resolution and the monitor’s duties do not include monitoring the parties’ antitrust compliance programs at large, rather only the parties’ commitments to the negotiated consent decree. The jurisdictional and constitutional arguments against the external compliance monitor are novel questions of law that are not likely to be answered definitively until the Court of Appeals, and possibly the Supreme Court, address these issues.
One thing, however, is clear. Under the terms of the external compliance monitor’s appointment in the court’s Final Judgment, the monitor has no authority to investigate any of Apple’s business practices—not even in e-books—beyond Apple’s antitrust compliance program. The court’s Final Judgment gives the monitor “the power and authority to review and evaluate Apple’s existing internal antitrust compliance policies and procedures and the training program required by [the] Final Judgment, and to recommend to Apple changes to address any perceived deficiencies in those policies, procedures, and training.” Final Judgment ¶ VI.B, at 11. The Final Judgment also authorizes the monitor to “conduct a review to assess whether Apple’s internal compliance policies and procedures, as they exist 90 days after his or her appointment, are reasonably designed to detect and prevent violations of law.” Final Judgment ¶ VI.C.
Thus, under the court’s own order, the external compliance monitor’s mandate extends only to reviewing and assessing Apple’s internal compliance policies, procedures, and practices, and specifically whether Apple’s internal antitrust compliance program is “reasonably designed” to uncover antitrust violations. The mandate does not extend to the external compliance monitor’s himself seeking-out and uncovering possible antitrust violations. Quite to the contrary, paragraph VI.H of the Final Judgment orders that if the External Compliance Monitor “discovers or receives evidence” suggesting a violation of the antitrust laws, then the monitor must provide that information to the DOJ and the Plaintiff States and “take no further action, including seeking information from Apple” via interviews of Apple personnel or reviews of Apple documents or data.
If Apple is right that the monitor is roving beyond an assessment of Apple’s internal antitrust compliance practices, then the monitor is acting beyond the authority the court gave him. Given the significance of this major antitrust litigation, it would not be surprising if the monitor’s zeal to perform his circumscribed duties caused him to overstep his bounds.
– Edited by Gary J. Malone