December 10, 2013

The Wall Street Journal calls for Judge Cote’s removal from U.S. v. Apple; Rupert Murdoch is still super rich


A lawyer involved in the fallout from U.S. v. Apple. It doesn't matter which party he's representing. He's getting paid.

A lawyer involved in the fallout from U.S. v. Apple. It doesn’t matter which party he’s representing. He’s getting paid.

Just before Thanksgiving, Apple took aim at Michael Bromwich, whom Judge Denise Cote had recently appointed to oversee its compliance with antitrust law relating to its sale of ebooks. According to Fortune’s Roger Parloff:

Apple accused the monitor, Michael Bromwich, a partner at the law firm of Goodwin Procter, of charging excessive fees, behaving in an “unfettered and inappropriate manner,” relying on “secret communications with the court,” evincing “incredibly disruptive” mission creep, and acting in ways that threatened to turn him into an “quasi-inquisitional” offshoot of the federal judge who appointed him in violation of the constitutional principle of separation of powers.

Bromwich’s task is also a lucrative one; he charges high fees for his serves and Apple has repeatedly alleged that they’re exorbitant. According to Parloff, Bromwhich inisisted that “Apple pay a 15% “administrative fee” to his consulting firm on top of his $1,100 hourly rate and the $1,025 hourly fee of antitrust lawyer Bernard Nigro, who was appointed to assist him because of Bromwich’s lack of antitrust experience.”

Finally—and significantly—Apple took aim a recent court order issued by Cote, which permitted Bromwich to privately meet with the judge to discuss his findings without a record being taken. Bromwich could theoretically share confidential information he learned from his meetings with Apple with Cote.

Late last week, the relationship between Bromwich and Cote was the center of a scathing editorial from the Wall Street Jounal’s editorial board. According to the Wall Street Journal, Bromwich is an “old friend” of Cote’s—the editorial traces their relationship back to (at least) the early 1990s:

Readers may recall Mr. Bromwich as the political fixer President Obama brought in after the BP deepwater oil spill. He worked for Iran-Contra independent counsel Lawrence Walsh in the Reagan era and as inspector general for the Justice Department in the Clinton years.

He was confirmed for the latter job despite conflicts of interest; his mentor Philip Heymann was Deputy Attorney General and inspectors general are supposed to be impartial watchdogs. In 1994, Judge Cote wrote Mr. Bromwich an effusive endorsement letter to help push him over the Senate hump.

While he has great political connections, Mr. Bromwich has no experience in antitrust law.

The possibility that Bromwich and Cote are “old friends” is made all the more uncomfortable, as the Journal notes, when one takes the fact that Bromwich is making quite a bit of money from his new gig. But the relationship between Bromwich and Cote isn’t the only troubling aspect of the fallout from U.S. v. Apple.

Taking its cue from Apple’s recent griping (in fact, Apple’s recent public statements appear to be their primary source), the Wall Street Journal accuses Bromwich of acting like an “inquisitor” in his dealings with the tech giant and suggests that he and Cote have a vendetta against the company, noting the “tentative view” Cote expressed before the trial that Apple was guilty. Cote, moreover, has granted Bromwich unconstitutional powers, according to the Journal. “Special masters are typically imposed on a company to remedy a pattern of especially egregious conduct using a settlement consent decree in which litigants agree to the terms of the appointment,” the editorial argues, before suggesting that Cote is using Bromwich to investigate Apple all over again:

Prosecutors enforce laws, conduct investigations and uncover evidence. Judges aren’t supposed to appoint their own agents to annex such activities reserved for the executive branch. Mr. Bromwich has rewritten his job description to investigate Apple all over again, not simply monitor if Apple is abiding by the terms of the court judgment while it appeals the case

Then, finally, the kicker:

Judge Cote backed off her plan for secret communications with Mr. Bromwich when Apple objected, but otherwise she is giving her friend whatever he wants. The Second Circuit where her ruling is on appeal should remove her from the case. Her condominium with Mr. Bromwich is offensive to the rule of law and a disgrace to the judiciary.

The typically conservative Wall Street Journal goes even further than Apple in decrying what it sees as a cabal between Bromwich and Cote—its language is fiery, even a bit melodramatic, throughout and, well, it’s hard to make a bolder claim than Judge Cote should be removed for disgracing not just herself, but the judiciary as a whole. And yet, their stance isn’t particularly shocking. The Journal is, after all, owned by Rupert Murdoch who also just happens to own HarperCollins, one of the five publishers accused of colluding with Apple to fix ebook prices. As Philip Elmer-Dewitt notes, the Journal‘s stance is ironic, as “HarperCollins was the conspiracy’s most reluctant participant. It threw in with Apple only after Steve Jobs appealed to… Rupert Murdoch.”

In many ways, though, The Wall Street Journal isn’t wrong. Cote’s relationship with Bromwich is certainly troubling, and one hopes that it is investigated at greater length; questions about how a prosecutor with no antitrust experience got such a lucrative position abound. And Bromwich’s apparent abuse of powers, with Cote’s approval, also deserve to be investigated at greater length. Both Apple and the Wall Street Journal have a point about Cote and Bromwich being unfair and self-interested; but they’re self-interested, too.

This brings us to the neglected subtext of the U.S. v. Apple fiasco: sure, Apple and the publishers got screwed, but everyone involved is rich, horrible, and, above all, self-interested. (Related digression: Amazon set the whole thing up.) Murdoch, Jeff Bezos, and Tim Cook are going to be just fine. At least, as all this cash changes hands, some of the absolutely breathtaking amount of money involved in this trial is trickling down to those who desperately need it: lawyers.


Alex Shephard is the director of digital media for Melville House, and a former bookseller.