Hagens Berman Reaches Settlements in Apple E-Book Antitrust Case, Awarding Millions for 23 States and Territories Represented by Firm
Honestly. When was the last time you actually read the Terms of Service page that Apple made you agree to before you are allowed to update the OS for your iPhone? Do you routinely hit “pause” on your DVR to read the small print that appears on ads that promise to make your debt smaller or your muscles bigger? Of course you don’t – and I think it is safe to say that virtually no one does, except perhaps those writing what is essentially a contract. And that is what they are counting on – if they make the experience so stupefying, boring, tedious or simply impossible to accomplish, they’ve done their job.
It seems like some companies will go to extreme lengths to hide these schemes in the fine print – schemes that often leave consumers with the short end of the stick without even knowing it. Sometimes these plots end quickly, leaving a trail of news stories and a firestorm of outraged customers who pull their support.
Take General Mills, a company that’s filled our cereal bowls with Cheerios and our freezers with Häagen-Dazs ice cream since its founding in 1866. In April of this year, the grocery giant revealed a dubious idea that had the potential to outright strip many consumers of their legal rights to form a class action against the company.
While we were all distracted by the other big “GM” automobile debacle, this GM – General Mills – quietly changed its online legal policy to include terms under which any dispute with the company would have to be decided through arbitration if consumers engage with the company’s social media profiles and online communities – a change first reported by The New York Times.
When consumers are forced to face a large and powerful corporation in a legal dispute, it’s never going to end pretty. This proposed “clickwrap” agreement momentarily put in motion by General Mills stipulated that when consumers visit the General Mills website to download coupons, discounts or other offerings, they would give up this right.
Outcry from the controversial change made headlines and reverberated in online comment boards until General Mills reversed the agreement shortly after it surfaced.
While this transient scheme turned into a noteworthy and largely discussed issue, other schemes are not so notorious and bring with them consequences to consumers that are broad reaching, damaging and unforeseen – that’s when things really get ugly.
In the price-fixing antitrust case against Apple and the Big Five Publishers – Penguin Group (USA) Inc.; Hachette Book Group Inc.; HarperCollins Publishers LLC; Simon & Schuster Inc.; and Holtzbrinck Publishers, LLC, d/b/a Macmillan – consumers weren’t just up against one entity but six altogether, conspiring against the betterment of the economy and the purses of the purchaser.
This story is really about two sets of business interests coming together at the expense of consumers – publishers, who are scrambling to save their business model in the face of innovation, and a media giant – Apple – trying to crush its competition.
The Big Five publishers joined with Apple in a marriage of financial convenience – the publishers found a way to roll back pricing to the pre-e-book days, and Apple found a way to crush a competitor, all in one fell swoop.
Some argued that it could have all been a wild coincidence. Five publishers all somehow agreed to raise prices at the same time and agreed to grant Apple a guarantee that it will always get the lowest price, while at the same time Apple announced the iPad as a competitor to the Kindle? I don’t think so.
The results were abundantly obvious – during litigation it was cheaper in some instances to buy a hardcover book that an e-book. The greed and market manipulation behind this scheme forced consumers to pay tens of millions of dollars more for their favorite titles.
Luckily for e-book purchasers in 23 states and territories, this particular instance of plotting against consumers and price-fixing did not involve a stipulation in the fine print to stop a class action, but did come with its share of rebuttal and dispute from Apple and the publishers.
Apple was the last entity to resolve in the settlement, first attempting to have the case dismissed in August of 2011.
Following this motion, it took an unusually short period of time before the $166 million dollar settlement was announced – $66 million of which was awarded from litigation through Hagens Berman. A second trial to determine the amount of damages Apple must pay will be scheduled to occur this summer. The settlement amount also returned a high percentage of losses to consumers.
Given the price fluctuations, it’s clear that these companies colluded and were involved in an incredibly complex agreement to manipulate the price of e-books, fix prices and push Amazon out of the e-book market.
Whether it’s an edit to a long-standing food giant’s fine print, as was the case with General Mills – or a drawn-out and multifaceted involvement between six entities across industries, companies will always be seeking ways in which they can skim a little off the top, without the consumer noticing.
We can only hope that successful and timely litigation such as this will hold companies to a higher standard and make them think twice whenever they decide to quietly edit their consumer agreements.