Dec. 5, 2013 7:09 p.m. ET
Impossible as it sounds, Judge Denise Cote has found a way to make the Justice Department's antitrust assault on Apple AAPL +0.51% Apple Inc. U.S.: Nasdaq $567.90 +2.90 +0.51% Dec. 5, 2013 4:00 pm Volume (Delayed 15m) : 15.70M AFTER HOURS $566.80 -1.10 -0.19% Dec. 5, 2013 7:59 pm Volume (Delayed 15m): 288,649 P/E Ratio 14.23 Market Cap $508.35 Billion Dividend Yield 2.15% Rev. per Employee $2,127,850 12/05/13 Review & Outlook: Apple's Star... 12/05/13 Apple, Google's Android Gain M... 12/05/13 HEARD ON THE STREET: Apple: Th... More quote details and news » even more abusive. Because it presumed to enter the e-books market, the court is forcing the company to pay for a special prosecutor to investigate itself—and shredding the separation of constitutional powers too.
In July, Judge Cote of the New York federal district court convicted the iPad of being a conspiracy to increase digital book prices, though the tablet's 2010 introduction increased competition and consumer choice and, er, lowered digital book prices. She then appointed her friend Michael Bromwich as an external monitor to review antitrust at Apple, which he has interpreted as carte blanche to act as the inquisitor of all things Cupertino.
That may be what Judge Cote wants. Before her bench trial began she pre-declared her "tentative view" that Apple was an antitrust violator and indulged Justice Department arguments that have no precedent in antitrust jurisprudence. She essentially ruled before hearing the evidence.
Judge Cote's injunction gave Apple until January 14, 2014 to overhaul its antitrust compliance and training procedures, a process that is underway. But in late October Mr. Bromwich began an open-ended, roving investigation of Apple. He demanded immediate interviews starting in November with every top Apple executive and board member, including CEO Tim Cook, lead designer Jony Ive and Al Gore. Does he want to disinter Steve Jobs too?
Apple suggested that he speak with its employees who actually have something to do with antitrust, such as its general counsel or chief compliance officer, whereupon Mr. Bromwich had a tantrum. He made blanket requests for proprietary documents well beyond his mandate and bypassed Apple's in-house counsel by sending letters directly to board members and executives ordering them to meet with him without their lawyers present, accusing the company of "a surprising and disappointing lack of cooperation."
Then, shortly before Thanksgiving and out of the blue, Judge Cote proposed to amend her injunction to grant Mr. Bromwich even greater powers than he already claimed and also to make monthly briefings to her on what he finds—without Apple present. She denied any previous ex parte contact, but Apple's lawyers say Mr. Bromwich told them that he doesn't need to wait for the January deadline because Judge Cote privately instructed him during the interview process for the position to get off to a "fast start."
The arrangement is flatly unconstitutional. 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. Judge Cote foisted Mr. Bromwich on Apple over its objections, to punish the company for what she ruled was price-fixing when the late Jobs tried to alter the payment structure of e-books in December 2009 and January 2010. His alleged publishing co-conspirators include HarperCollins, which like the Journal is owned by News Corp. NWSA -0.68% News Corp Cl A U.S.: Nasdaq $17.46 -0.12 -0.68% Dec. 5, 2013 4:00 pm Volume (Delayed 15m) : 2.55M AFTER HOURS $17.46 0.00 0.00% Dec. 5, 2013 7:03 pm Volume (Delayed 15m): 17,185 P/E Ratio N/A Market Cap $10.16 Billion Dividend Yield N/A Rev. per Employee $367,917 11/26/13 Rebekah Brooks Described How t... 11/21/13 NBCUniversal Close to Minority... 11/21/13 The Celtic Tiger Purrs: Irelan... More quote details and news »
The "judicial duty" under the Constitution's Article III vests judges with the power to resolve "cases and controversies." 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.
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 greenhorn is billing Apple at an $1,100 hourly rate and he was forced to hire the law firm Fried Frank to make up for his lack of expertise, at $1,025 a hour. He racked up $138,432.40 in charges for his first two weeks. A spokesman for Mr. Bromwich's firm, the Bromwich Group, declined to comment on matters currently before the court.
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.
via apple - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNHnhmAgnIitKGZzuYBuXDL63r_6eA&url=http://online.wsj.com/article/SB10001424052702304355104579236261045331876.html
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