WSJ wants antitrust judge taken off e-book case over conflict of interest

Michael Bromwich (headshot 001)

After the July trial found Apple guilty of ebook price-fixing, the iPhone maker last week filed a complaint over exorbitant lawyer fees. Specifically, court-appointed Michael Bromwich billed the company an unbelievable $138,432 (or the equivalent of 75 percent of a federal judge’s annual salary, as Apple wrote in the complaint), plus a fifteen percent “administrative fee” on top, for a fortnight’s worth of work on overseeing the electronic books price-fixing antitrust case.

It has now come to light that Bromwich and Denise Cote, the very same federal judge who found Apple guilty of price fixing, are in fact old friends. The finding prompted The Wall Street Journal to issue a scathing editorial lambasting Cote over conflict of interest and demanding that the antitrust judge be taken off the case…

The financial newspaper noted that Cote basically handed the lucrative task of monitoring Apple’s compliance to her old friend, Bromwich. The rather strongly-worded commentary called condominium with Bromwich “offensive” to the rule of law and “a disgrace to the judiciary”.

“The Second Circuit where her ruling is on appeal should remove her from the case,” the editorial reads. “Her condominium with Mr. Bromwich is offensive to the rule of law and a disgrace to the judiciary”.

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.

The piece is also a critique of Judge Cote, who was portrayed as being “abusive” and “shredding the separation of constitutional powers” based on hers granting broad antitrust authority to Michael Bromwich.

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.

Speaking of political connections, Bromwich has been profiled as “the political fixer” President Obama brought in after the British Petroleum 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,” the editorial notes.

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.

You should keep in mind that The Wall Street Journal’s parent, News Corp, also owns HarperCollins, which is one of the publishers involved in the antitrust case.

As Fortune’s Philip Elmer-Dewitt points out, HarperCollins was originally reluctant to join with Apple and wouldn’t change its stance until Apple’s then-CEO Steve Jobs wrote a personal appeal to News Corp. founder Rupert Murdoch.

A more dispassionate read on Apple’s mutiny against its court-ordered e-books monitor can be found in last week’s article by CNN Money.

A separate trial will reportedly happen in 2014 to assess damages Apple must pay.