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Challenge to $30M Fee Award in Apple E-Book Price Fixing Settlement

January 12, 2015 | Posted in : Contingency Fees / POF, Fee Award, Fee Dispute

A recent Law 360 story, “E-Books Buyer Appeals $30M Attys’ Fee Award in Apple Deal” reports that an e-book buyer lodged an appeal challenging the $30 million in attorneys’ fee granted to the plaintiffs’ class counsel in the contingent $450 million price fixing settlement with Apple Inc.  Class member Dianne Young Erwin lodged a notice of appeal that she plans to fight the fee award to class counsel Hagens Berman Sobol Shaprio LLP and Cohen Milstein Sellers & Toll PLLC, who will together receive $30 million from the deal.

The unusual contingent settlement will see consumers get $400 million if the trial court’s finding that Apple conspired with five major publishers to fix e-book prices is upheld on appeal, with $20 million going to the states and $30 million going to attorneys’ fees for the two firms.  If the liability finding is vacated and remanded on appeal or reversed and remanded with instructions for reconsideration or a new trial, consumers will get $50 million and the states and class counsel will get $10 million each.  If the decision is simply reversed, Apple will pay nothing.

Erwin is challenging the fee award, as well as incentive awards to the named plaintiffs.  The filing did not provide the reasoning for Erwin’s appeal.  Erwin objected to the settlement in October before U.S. District Judge Denise Cote signed off on it.  At the time, she complained that class counsel were benefiting mainly from the hard work done by the U.S. Department of Justice and the dozens of states suing Apple during the liability phase of the case.

“Notwithstanding the work performed by class counsel, it is fair to say that this is primarily government-driven litigation where the government succeeded in winning a substantial trial victory against Apple that paved the way for a likely $674 million recovery should this case be allowed to proceed to a damages trial,” Erwin said in her objection.  The objection also worried about the structure of the deal, complaining that it put a ceiling on the amount of damages the plaintiffs could get without offering a corresponding floor because of the contingency provisions.

The suit, pursued by the DOJ and 33 states, alleged Apple’s distribution deals in 2010 with five top publishers raised the prices for digital books from $9.99 to as much as $14.99, costing consumers hundreds of millions of dollars.  Only Apple went to trial after the publishers settled their claims.  The cases are In re Electronic Books Antitrust Litigation and State of Texas v. Penguin Group both in the U.S. District Court for the Southern District of New York.