Apple Response to Class Action

7/31/2019 Apple Response to Class Action

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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IN RE ELECTRONIC BOOKS ANTITRUSTLITIGATION

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This Document Relates to :

ALL ACTIONS

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No. 11-md-02293 (DLC)

APPLE INC.’S ANSWER TO CONSOLIDATED

AMENDED CLASS ACTION COMPLAINT

For its Answer to Plaintiffs’ Consolidated Amended Class Action Complaint (“Com-

plaint”), Defendant Apple Inc. (“Apple”) states as follows. Except as specifically admitted,

Apple denies the allegations in the Complaint.

I. RESPONSE TO INDIVIDUAL PARAGRAPHS

1. Apple admits that eBook sales have increased rapidly since November 2007,

when Amazon released the Kindle, but denies that the Kindle “revolutionized the book publish-

ing industry.” Apple lacks sufficient information and belief to admit or deny whether there are

“major” economic advantages to eBook technology or whether eBook distribution costs are

“massively” lower than those associated with “brick-and-mortar publishing.” Apple admits that

there are costs associated with print books that are not present with eBooks. Apple specifically

denies that it “decided free market competition should not be allowed to work.” Except as

otherwise admitted, Apple denies the allegations in paragraph 1.

Case 1:11-md-02293-DLC Document 165 Filed 05/29/12 of 39



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8. Apple admits that it announced the launch of the iPad in January 2010. Apple

further admits that its iPhone, iPad, and iPod touch devices offer functions which include the

ability to distribute, store, and access digital media through the App Store and the iTunes Store.

Apple denies the remaining allegations in paragraph 8, and specifically denies the allegation that

Apple had “strong incentives to help the Publisher Defendants restrain trade and increase the

price of eBooks.”

9. Apple admits that, prior to finalizing its eBook distribution agreements with pub-

lishers, news articles reported that the agreements would adopt an agency pricing model. Apple

denies that the adoption of an agency model worked a “radical” or “fundamental” change in

pricing “that had existed for more than a hundred years.” Apple also denies that its distribution

agreements with publishers prevented other retailers from setting consumer prices for eBooks.

Apple denies the remaining allegations in paragraph 9.

10. Apple lacks sufficient information and belief to respond to the allegations in par-

agraph 10, and on that basis denies them, except that Apple admits that it entered into an indi-

vidual bilateral distribution agreement with each of the Publisher Defendants.

11. Apple admits that it conducted bilateral negotiations with each Publisher Defend-

ant prior to announcing the launch of the iPad. Apple denies the remaining allegations in para-

graph 11.

12. Apple admits that the allegations in paragraph 12 purport to recite excerpts from

alleged news articles and avers that, if and to the extent the alleged documents are ever held to be

admissible, they will speak for themselves. Apple further admits that it engaged in individual

bilateral contract negotiations with the Publisher Defendants during January 2010. Apple denies

the remaining allegations in paragraph 12.




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13. Apple lacks sufficient information and belief as to the state of mind of the Pub-

lisher Defendants to respond to the allegations in paragraph 13, and on that basis denies them.

Apple specifically denies that the $9.99 price point was the “industry standard.” Apple denies

the remaining allegations in paragraph 13.


agraph 14, and on that basis denies them, except that Apple admits, on belief, that Amazon

possessed a very high share (possibly approaching 90%) of the eBook sales volume when Apple

entered the eBook retail business in 2010.

15.

Apple admits that the allegations in paragraph 15 purport to recite excerpts from

alleged news articles and avers that, if and to the extent the alleged documents are ever held to be

admissible, they will speak for themselves. Apple denies the remaining allegations in paragraph

15.

16. Apple admits that it announced the launch of the iPad on January 27, 2010, and

that the iPad includes an e-reader app called iBooks. Apple further admits that around the same

time, Apple announced that it had entered into individual bilateral eBook distribution agreements

that would allow Apple to offer eBooks through its iBookstore and that these agreements adopt-

ed an agency model. Apple denies that the agency model was “newly minted.” Apple lacks

sufficient information and belief to respond to the remaining allegations in paragraph 16, and on

that basis denies them.

17. Apple admits that the allegations in paragraph 17 purport to recite from excerpts

of a news article and avers that, if and to the extent the alleged news article is ever held to be

admissible, it will speak for itself. Apple denies the remaining allegations in paragraph 17.




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of the biography of Steve Jobs and avers that, if and to the extent the alleged book excerpts are

ever held to be admissible, they will speak for themselves. Apple denies the remaining allega-

tions in paragraph 18.

19. Apple admits that the iPad went on sale the first week of April 2010. Apple lacks

sufficient information or belief to respond to the remaining allegations in paragraph 19, and on


20. Apple lacks sufficient information or belief to respond to the allegations in para-

graph 20 regarding the pricing of eBooks, and on that basis denies them. Apple denies that

eBooks sold through the iBookstore face “no pricing competition from Amazon or other e-

distributors” or “remain” at supra-competitive levels. Apple denies the remaining allegations in

paragraph 20.

21. Apple admits that Plaintiffs’ claims arise under federal and state law and that

Plaintiffs seek damages and injunctive relief, but denies that it has engaged in illegal conduct and

denies that any relief is appropriate.

22. Apple admits that one of the named plaintiffs purports to identify himself in para-

graph 22. To the extent that any response to the allegations in paragraph 22 is required, Apple

denies that the named plaintiff was injured as a result of its conduct. Apple lacks information

and belief sufficient to respond to the remaining allegations in paragraph 22, and on that basis

denies them.







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denies them.





denies them.

25. Apple admits that one of the named plaintiffs purports to identify herself in para-




denies them.





denies them.





denies them.




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denies them.





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denies them.





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denies them.

47. Apple denies the allegations in paragraph 47.

48. Apple admits the allegations in paragraph 48.


50.

Apple admits the allegations in paragraph 50.





55. Apple admits that venue is proper in this district.

56. Apple lacks sufficient information and belief to respond to the allegations in para-

graph 56, and on that basis denies them.

57. Apple lacks information and belief sufficient to respond to the allegations con-

cerning the Publisher Defendants, and on that basis denies those allegations.

58. Apple has never participated in the print book business, and therefore lacks suffi-

cient information and belief to respond to the allegations in paragraph 58, and on that basis

denies them.




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59. Apple responds that paragraph 59 generally appears to provide an accurate high-

level description of a portion of the print book business. Apple has never participated in the print

book business, and therefore lacks sufficient information and belief to respond beyond that.

60. Apple lacks information and belief sufficient to respond to the allegations in par-

agraph 60, except that Apple denies that all eBook retailers used the wholesale model.

61. Apple admits the allegations in paragraph 61, except that Apple denies that Ama-

zon’s Kindle “revolutionized the book publishing industry.” Apple denies the remaining allega-

tions in paragraph 61.

62.

Apple lacks sufficient information and belief to respond to the allegations in par-

agraph 62, and on that basis denies them.

63. Apple denies that $9.99 was a “standard pro-consumer” price for new eBook ti-

tles. Apple lacks sufficient information and belief to respond to the remaining allegations in

paragraph 63, and on that basis denies them.

64. Apple lacks sufficient information and belief as to the allegations in paragraph 64,

and on that basis denies them, except Apple admits that Amazon has at times set a $9.99 price

level for certain newly released eBook titles and New York Times bestsellers.

65. Apple is informed and believes that wholesale prices for newly released and best-

selling eBooks were often above the $9.99 price reference in paragraph 65, although Apple lacks



66. Apple lacks sufficient information and belief to admit or deny whether there are

“major” economic advantages to eBook technology or whether eBook distribution costs are

“massively” lower than those associated with “brick-and-mortar publishing.” Apple admits that




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there are costs associated with print books that are not present with eBooks and vice versa.

Apple lacks sufficient information and belief to respond to the remaining allegations in para-



agraph 67, and on that basis denies them, except that Apple admits that Barnes & Noble released

the Nook in 2009 and that eBook retailers Barnes & Noble and Sony have at times set a $9.99

price level for certain newly released eBook titles and New York Times bestsellers.

68. Apple is informed and believes that wholesale prices paid by Amazon to book

publishers for newly released and best-selling eBooks were often below the price Amazon paid

to book publishers. Apple admits that Amazon possessed a very high share (possibly approach-

ing 90%) of the eBook sales volume when Apple entered the eBook retail business in 2010.

Apple lacks sufficient information and belief to respond to the remaining allegations in para-


69. Apple admits that eBooks are a fast-growing segment of the book industry, and

growth accelerated when Apple began offering eBooks through its iBookstore. Apple lacks


that basis denies them, except that Apple denies that Amazon’s eBooks business strategy is “pro-

consumer.”



denies them.




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denies them.

72. Apple has never participated in the print book business, and lacks sufficient in-

formation and belief to respond to the allegations in paragraph 72, and on that basis denies them.

Apple admits that publicly and privately in their individual discussions with Apple, representa-

tives of each of the publishers separately expressed varying degrees of unhappiness with Ama-

zon’s tactics, including its prices.

73.

Apple lacks sufficient information and belief to respond to the allegations in para-



lisher Defendants to respond to those allegations, and on that basis denies the allegations in

paragraph 74.



paragraph 75. Apple admits that the allegations in paragraph 75 purport to recite excerpts from

alleged documents and avers that, if and to the extent the alleged documents are ever held to be

admissible, they will speak for themselves.

76. Apple admits that it entered the eBook retail business with “no market share” and

that part of its motivation to start an iBookstore was to generate revenue and profits for the

corporation and its shareholders and to avoid negative margins that it believed Amazon was

incurring as it sold certain bestselling eBooks below cost, but Apple denies that it sought to do so

by “driving prices” above $9.99. Apple lacks sufficient information and belief as to the state of




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mind of the Publisher Defendants to respond to those allegations, and on that basis denies the

allegations in paragraph 76.



paragraph 77. Apple denies the remaining allegations in paragraph 77.


agraph 78, and on that basis denies them, except Apple admits that publicly and privately in their

individual discussions with Apple, representatives of each of the publishers separately expressed

varying degrees of unhappiness with Amazon’s tactics, including its prices.


and on that basis denies them.


an alleged News Corp. earnings call and avers that, if and to the extent the alleged call transcript

is ever held to be admissible, it will speak for itself.

81. Apple admits that in its individual discussions, representatives of each of the Pub-

lisher Defendants separately expressed varying degrees of unhappiness with Amazon’s prices.

Apple lacks sufficient information and belief as to the remaining allegations in paragraph 81, and

on that basis denies them.


an alleged blog posting and avers that, if and to the extent the alleged blog post is ever held to be

admissible, it will speak for itself. Apple denies the remaining allegations in paragraph 82.





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88.

Apple lacks sufficient information and belief to respond to the allegations in para-







of a letter and avers that, if and to the extent the alleged letter is ever held to be admissible, it

will speak for itself.

92. On belief, Apple admits that publishers continue to sell print books to Amazon

under the wholesale model. Apple further admits that print book retailers compete with retailers

of eBooks. Apple admits that under an agency model, publishers retain the ability to set prices

for their eBooks. Apple denies the remaining allegations in paragraph 92.

93. Apple admits that under the agency model, the publishers retain the ability to set

the price of their eBooks. Apple denies that the agency model deprived consumers of “the




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benefit of competition” or “stabilized” the market. Apple denies the remaining allegations in

paragraph 93.


lisher Defendants to respond to those allegations in paragraph 94, and that basis denies the

allegations. Apple denies that it “coordinated” its activities with the Publisher Defendants to

restrain trade. Apple denies the remaining allegations in paragraph 94.



paragraph 95.

96. Apple denies that it entered into an agreement to force Amazon to “abandon its

pro-consumer pricing.” Apple lacks sufficient information and belief to respond to the remain-

ing allegations in paragraph 96, and on that basis denies them.


98. Apple denies the allegations in paragraph 98 as to itself. Apple lacks sufficient

information and belief to respond to the remaining allegations in paragraph 98, and on that basis

denies them.










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graph 118, and on that basis denies them, except Apple admits that Apple’s App store offers 70%

of royalties to software application publishers.




122. Apple denies the allegation in paragraph 122.

123. Apple admits the allegations in paragraph 123, except denies any implication that

its agreements with the Publisher Defendants were multi-lateral.

124. Apple admits that it entered into eBook distribution agreements with each of the

Publisher Defendants under which Apple agrees to serve as an agent of the publishers. Those

agreements are the best evidence of their contents. Apple lacks sufficient information and belief

to respond to the allegations in paragraph 124 regarding any other eBook retailer’s distribution

agreements with the Publisher Defendants, and on that basis denies them.

125. Apple responds that paragraph 125 generally appears to provide an accurate high-

level description of the wholesale model that “traditionally” has been used to distribute print

books. Apple has never participated in the print book business, and therefore lacks sufficient

information and belief to respond beyond that. On belief, Apple admits that Amazon has, at

times, set a $9.99 price level for certain newly released titles, even though Amazon purchases the

content for “near or above $9.99.” Apple denies the remaining allegations in paragraph 125.

126. Apple admits that it entered into eBook distribution agreements with the Publisher

Defendants during the same time period and that each agreement adopted the agency model.

Apple denies the remaining allegations in paragraph 126, including the allegations that the




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agreements resulted in an “unprecedented industry shift in pricing and sales model” in the “book

industry.”

127. Apple denies the allegations in paragraph 127 and avers that the referenced

agreements are the best evidence of their contents.





132.

Apple denies the allegations in paragraph 132.

133. Apple admits that it engaged in individual, but simultaneous, negotiations with

each of the Publisher Defendants and further admits that it entered into agreements with each of

the Publisher Defendants “within days of each other.” Apple denies the remaining allegations in

paragraph 133, except that Apple admits that the final agreements provide that Apple’s commis-

sion is 30% of the eBook retail price and admits that the agreements include an MFN provision.

134. Apple denies the allegations in paragraph 134, and avers that the allegations in

paragraph 134 mischaracterize the alleged statement of Steve Jobs.


136. Apple lacks sufficient information and belief as to the allegations in paragraph

136, and on that basis denies them.


137 and on that basis denies them, except that Apple admits, on belief, that Amazon had a very

high share (possibly approaching 90%) of eBook sales volume when Apple entered the eBook

retail business in 2010.




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139, and on that basis denies them, except that Apple admits, on belief, that Amazon had a

substantial share of eBook sales at the time Apple entered into the business, and it continues to

be the dominant eBook distributor.

140. Apple admits eBooks sold through its iBookstore can only be read on Apple de-

vices. Apple specifically denies that the “iPad would not help a publisher tap into a new custom-

er market.” Apple lacks sufficient information and belief as to the remaining allegations in




lisher Defendants to respond to the allegations in paragraph 142, and on that basis denies them.



144. Apple lacks sufficient information and belief as to the state of mind of the pub-

lisher defendants to respond to the allegations in paragraph 144, and on that basis denies them.

145. Apple denies that the agency model of eBook distribution was a “radical switch”

and further denies that “Amazon was the true target of the negotiations between the Publisher

Defendants and Apple.” Apple lacks sufficient information and belief to respond to the remain-

ing allegations in paragraph 145, and on that basis denies them.






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149, and on that basis denies them, except that Apple specifically admits its distribution agree-

ment with Macmillan contained an MFN, and Apple specifically denies that Apple and Macmil-

lan “agreed to a pricing formulae and MFN Clauses, assuring themselves that Amazon would be

closed out of the market… unless Amazon agreed to allow the Publisher Defendants to raise

prices.”
















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160.

Apple lacks sufficient information and belief as to the allegations in paragraph



162. Apple lacks sufficient information and belief as to the state of mind of Amazon to

respond to those allegations in paragraph 162, and on that basis denies them. Apple denies the

remaining allegations in paragraph 162.

163. Apple lacks sufficient information and belief as to the allegations in Paragraph











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168. Apple denies that its conduct has had “real economic consequences to potential

class members” and further denies that it has “inflicted” harm on consumers. Apple lacks

sufficient information and belief as to the allegations in paragraph 168, and on that basis denies

them.



170.

Apple admits that it did not conspire with Random House. Apple lacks sufficient

information and belief as to the remaining allegations in paragraph 170, and on that basis denies

them.





174. Apple admits that it entered into agency agreements with the Publisher Defend-

ants during the same time period, but denies that the agency model represented a “radical,

structural change to a business model that has been in existence for decades.” Apple lacks

sufficient information and belief as to the remaining allegations in paragraph 174, and on that

basis denies them.






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180.

Apple lacks sufficient information and belief as to the allegations in paragraph






183. Apple admits that it sought to negotiate distribution agreements with the Publisher

Defendants that allowed it to require a publisher to offer a competitive price on a new release in

the iBookstore. Apple denies the remaining allegations in paragraph 183.


185. Apple admits that its iPad and eReader applications compete with Amazon’s Kin-

dle and that Apple has been successful in selling eBooks and increased its market share from the

zero market share it had upon entry, but lacks information and belief sufficient to admit or deny

whether it has gained market share at the “expense” of Amazon and on that basis denies that




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allegation. Apple lacks sufficient information and belief as to the remaining allegations in






188. Apple denies that the “price of eBooks has soared.” Apple lacks sufficient infor-

mation and belief as to the allegations in paragraph 188, and on that basis denies them.

189.



191. Apple admits that certain state authorities and the Department of Justice have ini-

tiated litigation in this venue. Apple denies the remaining allegations in paragraph 191.

192. Apple admits that the Texas Attorney General “launched an inquiry.” Apple fur-

ther admits that the allegations in paragraph 192 purport to recite from excerpts of an industry

newsletter and avers that, if and to the extent the industry newsletter is ever held to be admissi-

ble, it will speak for itself.

193. Apple admits that the Connecticut Attorney General “launched an inquiry.” Ap-

ple further admits that the allegations in paragraph 193 purport to recite from excerpts of a press

release and avers that, if and to the extent the press release is ever held to be admissible, it will

speak for itself.


of a press release and avers that, if and to the extent the press release is ever held to be admissi-





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195. On information and belief, Apple admits that “European Union antitrust regula-

tors” made “unannounced raids” on eBook publishers. Apple admits that the remaining allega-

tions in paragraph 195 purport to recite from excerpts of a press release and avers that, if and to

the extent the press release is ever held to be admissible, it will speak for itself.


of a press release and avers that, if and to the extent the press release is ever held to be admissi-



198.

Apple admits the allegations in paragraph 198.

199. Apple admits the allegations in the first sentence in paragraph 199. Apple denies

that eBooks represent a distinct antitrust market and further denies that the geographic market is

the “entire United States.” On belief, Apple admits the remaining allegations in paragraph 199.

200. To the extent the allegations in paragraph 200 are legal conclusions, no respon-

sive pleading is required. To the extent any response is required, Apple denies the allegations in

paragraph 200.





denies them.

204. Apple denies that it participated in a conspiracy to “restrict and increase the price

range of eBooks,” and denies the remaining allegations in paragraph 204.





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206. Apple admits that it was an eBook retailer prior to entering into the agency

agreements with the Publisher Defendants but denies that it set the prices of eBooks. Apple has

always sold eBooks under the agency model. Apple lacks sufficient information and belief to

respond to the remaining allegations in paragraph 206, and on that basis denies them.

207. Apple admits that, under its bilateral contracts with book publishers, each Pub-

lisher Defendant decides the price of its product in the retail marketplace, and Apple’s commis-

sion is 30% of the retail price. Those contracts are the best evidence of their contents. Apple

lacks sufficient information and belief to respond to the remaining allegations in paragraph 207,


208. Apple admits that its bilateral contract with each Publisher Defendant was the re-

sult of individual negotiations during January 2010, and that the resulting agreements have some

similar terms, but they are not identical. Those contracts are the best evidence of their contents.

Apple denies the remaining allegations in paragraph 208.

209. Apple admits that its individual agreement with each Publisher Defendant identi-

fies Apple as an agent of the contracting Publisher Defendant and that each agreement provides

Apple will sell, market, and distribute eBooks on behalf of the publisher. Those contracts are the

best evidence of their contents. Apple lacks sufficient information and belief to respond to the

allegations in paragraph 209 regarding any other eBook retailer’s contractual agreements with

the Publisher Defendants, and on that basis denies them.

210. Apple admits that it does not have the authority to set eBook prices under its

agency agreements with each Publisher Defendant. Apple alleges that it separately negotiated

certain limitations on the prices charged by the Publisher Defendants. Those agreements are the

best evidence of their contents. Apple lacks sufficient information and belief to respond to the




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211. Apple admits that each of its agency agreements with the Publisher Defendants

provides that a 30% commission will be paid to Apple for the sale of a Publisher Defendant’s

eBook. Apple lacks sufficient information and belief to respond to the allegations in paragraph

211 regarding any other eBook retailer’s contractual agreements with the Publisher Defendants,


212. Apple admits that its agency agreements with each Publisher Defendant specify

Apple’s and the Publisher Defendants’ responsibilities under the individual agreements. Those

agreements are the best evidence of their contents. Apple lacks sufficient information and belief

to respond to the allegations in paragraph 212 regarding any other eBook retailer’s contractual

agreements with the Publisher Defendants, and on that basis denies them. Apple denies any


213. Apple responds that the allegations in paragraph 213 generally appear to provide

an accurate high-level description of Apple’s agency agreements with the Publisher Defendants.

Those agreements are the best evidence of their contents. Apple lacks sufficient information and

belief to respond to the allegations in paragraph 213 regarding any other eBook retailer’s con-

tractual agreements with the Publisher Defendants, and on that basis denies them.

214. Apple admits in general under its agency agreements that the Publisher Defend-

ants bear the credit risk from eBook sales to customers if the stated conditions are met, but the

specific terms relating to accounts receivable and credit risk are not uniform. Apple further

admits that there are return policies provided in each of its agency agreements, but alleges that

they are not uniform. Apple’s agency agreements themselves are the best evidence of their




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contents. Apple lacks sufficient information and belief to respond to the allegations in paragraph

215 regarding any other eBook retailer’s contractual agreements with the Publisher Defendants,


215. Apple admits that its agency agreements allow it to provide defined excerpts of

eBooks to customers at no charge, and that those excerpts need not be protected by Apple’s

security solution. Apple’s agency agreements themselves are the best evidence of their contents.

Apple lacks sufficient information and belief to respond to the allegations in paragraph 215

regarding any other eBook retailer’s contractual agreements with the Publisher Defendants, and

on that basis denies them.

216. Apple admits the allegations in paragraph 216, except that Apple has certain lim-

ited rights to modify a file. Apple lacks sufficient information and belief to respond to the









220. Apple admits that the allegations in paragraph 220 purport to recite excerpts of

the iBookstore Terms and Conditions and avers that, if and to the extent the Terms and Condi-

tions are ever held to be admissible, they will speak for themselves. Apple denies any remaining





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221. Apple admits that the allegations in paragraph 221 purport to recite excerpts of

the Amazon’s Kindle License Agreement and Terms of Use and avers that, if and to the extent

the Kindle License Agreement is ever held to be admissible, it will speak for itself. Apple lacks

sufficient information and belief to respond to the allegations in paragraph 221, and on that basis

denies them.

222. Apple admits that the Complaint purports to contain screen captures from Ama-

zon’s website that indicate that the eBook price was set by the publisher. Apple lacks sufficient

information and belief as to the allegations in paragraph 222, and on that basis denies them.

223.

Apple admits that the Complaint purports to contain a screen capture of a pur-

chase confirmation from Amazon that indicates the publisher is the entity selling the eBook to

the purchaser. Apple lacks sufficient information and belief as to the allegations in paragraph


224. To the extent the allegations in paragraph 224 are legal conclusions, no respon-

sive pleading is required. To the extent any response is required, Apple admits that under its

agency agreements with the Publisher Defendants, Apple acts as an agent of the Publisher

Defendants. Apple denies the remaining allegations in paragraph 224.

225. The allegations in paragraph 225 are legal conclusions, and therefore no respon-


paragraph 225.

226. The allegations in paragraph 226 are legal conclusions, and therefore no respon-


paragraph 226.




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234. Apple admits that its corporate headquarters are located in Cupertino, California,

but otherwise denies the allegations in paragraph 234. Apple specifically denies that it created,

adopted, ratified, and/or implemented any “unlawful” or anticompetitive conduct.

235. Apple admits that it is incorporated in California but denies that it served as an

“intermediary” for communications between publishers. Apple denies any remaining allegations

in paragraph 235.

236. Apple admits that Steve Jobs is the former CEO and Chairman of Apple but de-

nies the remaining allegations in paragraph 236.

237.

Apple admits that paragraph 237 purports to recite from excerpts of the terms and

conditions of purchase from the iBookstore and avers that, if and to the extent the terms and

conditions are ever held to be admissible, they will speak for themselves. Apple denies the


238. Apple admits that Plaintiffs purport to bring this case as a class action under Rule

23 of the Federal Rules of Civil Procedure, but denies that this case may be properly maintained

as a class action and denies the remaining allegations in paragraph 238.

239. Apple admits that Plaintiffs purport to bring this case as a class action by indirect

purchasers of eBooks “in the event Plaintiffs are not a direct purchaser and the Court determines

that California law does not apply.” Apple denies that this case may be properly maintained as a

class action and denies the remaining allegations in paragraph 239.

240. Apple admits that Plaintiffs purport to bring this case as a class action under vari-

ous state laws. Apple denies the remaining allegations in paragraph 240.

241. Apple incorporates its response to paragraphs 1 through 240 as if fully set forth

herein.




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242. Apple denies the allegations in paragraph 242. The alleged conduct is subject to

the rule of reason and, to the extent constituting an agreement within the meaning of Section 1 of

the Sherman Act, Plaintiffs must prove a relevant product market in order to establish a violation

of Section 1. Apple denies that “eBooks” defines a separate and distinct relevant product mar-

ket.




246.

Apple lacks sufficient information and belief as to whether Plaintiffs and the puta-

tive class members are direct purchasers of eBooks, and on that basis denies the allegations in

paragraph 246, except Apple admits that, in selling eBooks, it acts as an agent for the Publisher

Defendants.



herein. Apple admits that Plaintiffs purport to assert a claim on behalf of a putative class or

subclass under the Cartwright Act “if the Court rules the Sherman Act does not apply.” Apple

denies the remaining allegations in paragraph 248.




herein.




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252. Apple admits that its activities associated with its sale of eBooks took place in in-

trastate commerce in each of the states listed in paragraphs 253-280 but denies the remaining







258.



















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281.



herein.



285. Apple admits that Plaintiffs demand a trial by jury and hereby demands a trial by

jury as to all issues so triable.

ANSWER TO CLAIM FOR RELIEF

Apple denies that any of the requested relief is properly awarded.

III. SEPARATE AND ADDITIONAL DEFENSES

Without assuming any burden of proof that it would not otherwise bear, Apple also as-

serts the following separate and additional defenses:

FIRST SEPARATE AND ADDITIONAL DEFENSE

The relief sought in the Complaint is not in the public interest.




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SECOND SEPARATE AND ADDITIONAL DEFENSE

The Complaint fails to state a claim for relief.

THIRD SEPARATE AND ADDITIONAL DEFENS

Plaintiffs have failed to join all parties necessary for a just adjudication of its purported

claims.

FOURTH SEPARATE AND ADDITIONAL DEFENSE

Apple alleges that, without admitting any liability whatsoever, at all times its conduct

was reasonable and that its actions were undertaken in good faith to advance legitimate business

interests and had the effect of promoting, encouraging, and increasing competition.

FIFTH SEPARATE AND ADDITIONAL DEFENSE

The Complaint is barred, in whole or in part, insofar as it challenges or seeks to impair

the exercise of rights protected by the First Amendment of the United States Constitution and by

the Noerr - Pennington doctrine.

SIXTH SEPARATE AND ADDITIONAL DEFENSE

Plaintiffs’ claims, and the claims of a putative class, will be extinguished, in

whole or in part, by any judgment on or releases of the claims brought by certain states in

their parens patriae capacity in The State of Texas, et al. v. Penguin Group, et al., 1:12-

cv-03394-DLC and it is inequitable to allow both sets of overlapping claims to proceed

simultaneously.

SEVENTH SEPARATE AND ADDITIONAL DEFENSE

Apple has insufficient knowledge or information to determine whether it may have addi-

tional, as yet unstated, separate defenses available. Apple has not knowingly and intentionally

waived any applicable separate and additional defenses and reserves the right to raise additional

defenses as they become known to it through discovery in this matter. Apple further reserves the




right to amend this Answer to add, delete, or modify defenses based upon legal theories that may

or will be divulged through clarification of Plaintiff’s Complaint, through discovery, or through

further legal analysis of Plaintiff’s position in this litigation.

Dated: May 29, 2012 Respectfully submitted,

/s/ Daniel S. Floyd

Richard Parker (admitted pro hac vice) Daniel S. Floyd (admitted pro hac vice)O’MELVENY & MYERS LLP Daniel G. Swanson (admitted pro hac vice)1625 Eye Street, NW GIBSON, DUNN & CRUTCHER LLPWashington, DC 20006 333 South Grand AvenueT: 202.383.5380; F: 202.383.5414 Los Angeles, CA [email protected] T: 213.229.7000; F: 213.229.7520

[email protected]

[email protected]

Attorneys for Defendant Apple Inc.


Apple Response to Class Action

Documents

Transcript of Apple Response to Class Action