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Apple loses court bid to block e-book antitrust monitor

The Apple logo is pictured on the front of the company's flagship retail store near signs for the central subway project in San Francisco, C
The Apple logo is pictured on the front of the company's flagship retail store near signs for the central subway project in San Francisco, C

By Nate Raymond

NEW YORK (Reuters) - Apple Inc lost a bid on Monday to block an antitrust monitor appointed after a judge found that the company had conspired to fix e-book prices.

At a hearing, U.S. District Judge Denise Cote in Manhattan denied Apple's request to stay an order requiring an external compliance monitor pending the company's appeal.

"I want the monitorship to succeed for Apple," she said.

The judge also said there was "nothing improper" about a declaration filed by a lawyer chosen to serve as monitor, Michael Bromwich, that became the basis of Apple seeking his disqualification.

Cote said she will promptly issue a decision explaining her reasoning. Apple will then have 48 hours to seek an emergency stay from the federal appeals court in New York, she said.

Theodore Boutrous, a lawyer for Apple, said Apple would appeal. A spokeswoman for the Justice Department declined immediate comment.

The hearing was the latest to spill out of a growing battle stemming from Apple's objections to the monitor. In October, Cote appointed Bromwich, a former Justice Department inspector general, three months after she found Apple liable for conspiring with five publishers to raise e-book prices.

In November, Apple complained he had been trying aggressively to interview top executives, even though his mandate called for him to review the company's antitrust policies 90 days after his appointment.

Apple also complained about his proposed hourly fee rate of $1,100, which Apple said gave him an incentive to run, "as broad and intrusive investigation as possible."

The Justice Department came to Bromwich's defense. He himself also filed a declaration disputing Apple's claims that he had engaged in a "roving" investigation and detailing a series of unsuccessful attempts to gain Apple's cooperation.

Apple subsequently moved for his disqualification, saying Bromwich had a personal bias against the company and had engaged in "grossly inappropriate behavior" through filing the declaration.

At the hearing on Monday, Cote said it had become clear, "that parts of Apple have been resistant to the monitor performing his duties."

She hoped Apple cooperates with the monitor going forward, and urged the parties to bring disputes to her attention sooner.

As for Bromwich's rates, the judge said it was not surprising that, "lawyers get paid a lot of money."

She cited a survey of 350 law firms that the National Law Journal published on Monday reporting that Gibson, Dunn & Crutcher, the law firm representing Apple, had a partner with the highest billing rate in the country, $1,800 an hour. The average rate for lawyers at the firm was $980 an hour, she added.

The Justice Department says Bromwich has indicated a willingness nonetheless to adjust his fee. Cote said she would refer the dispute to a magistrate, "so we can resolve this fee dispute and put it behind us."

The case is U.S. v Apple Inc et al, U.S. District Court, Southern District of New York, 12-2826.

(Reporting by Nate Raymond in New York; Editing by Leslie Adler, Bernard Orr and Andre Grenon)

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