United States of America v. Apple, Inc.

Filing 45

OPPOSITION TO MOTION to dismiss [34], on behalf of Appellant Bob Kohn, FILED. Service date 11/26/2012 by CM/ECF. [777714][45] [12-4017]

12-4017
BOB KOHN,
Appellant
v.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
(caption continued on next page)
KOHN’S RESPONSE REQUESTING DENIAL
OF UNITED STATES’S MOTION TO DISMISS KOHN’S APPEAL
OF THE ORDER DENYING HIS MOTION TO INTERVENE
STEVEN BROWER
BUCHALTER NEMER
18400 VON KARMAN AVE., SUITE 800
IRVINE, CALIFORNIA 92612-0514
[phone]
[e-mail]
PRO BONO ATTORNEYS FOR APPELLANT

BOB KOHN
140 E. 28TH ST.
NEW YORK, NY 10016
[phone]
[e-mail]

v.
VERLAGSGRUPPE GEORG VON HOLTZBRINK GMBH, HOLTZBRINK
PUBLISHERS, LLC, DBA MACMILLAN, THE PENGUIN GROUP, A DIVISION OF
PEARSON PLC, PENGUIN GROUP (USA), INC. HACHETTE BOOK GROUP, INC.,
HARPERCOLLINS PUBLISHERS, L.L.C., SIMON & SCHUSTER, INC.,
Defendants-Appellees,
APPLE, INC.,
Defendant.

ii

TABLE OF CONTENTS
INTRODUCTION .....................................................................................................1
ARGUMENT .............................................................................................................3
I.

THE GOVERNMENT’S MOTION SHOULD BE DENIED BECAUSE
THIS COURT HAS JURISDICTION TO REVIEW THE DISTRICT
COURT’S ORDER DENYING KOHN’S MOTION TO INTERVENE .......3
A. This Court has Jurisdiction of an Appeal of an Order Which Denies
Intervention .................................................................................................3
B. The Court Must Examine the Merits of the Motion for Intervention
Before Considering Whether It Has Jurisdiction to Review the Entry of
the Final Judgment .....................................................................................4

II. IF THIS COURT HOLDS THAT THE DISTRICT COURT SHOULD
HAVE GRANTED KOHN’S MOTION TO INTERVENE, IT WILL THEN
HAVE JURISDICTION TO REVIEW THE DISTRICT COURT’S ENTRY
OF FINAL JUDGMENT .................................................................................5
A. This Court May Review all Materials in the Record to Assess Standing ..5
B. This Court May Review Supplemental Materials Filed During the
Pendency of Appeal to Determine the Court’s Jurisdiction under Article
III ................................................................................................................7
C. Allegations to Support Standing Are to Be Liberally Construed.............10
D. Kohn Has Standing to Appeal Entry of the Final Judgment ....................11
CONCLUSION ........................................................................................................15
FINAL NOTE ..........................................................................................................16
CERTIFICATE OF SERVICE ................................................................................21

iii

TABLE OF AUTHORITIES
CASES
Ass’n of Banks in Insurance, Inc. v. Duryee, 270 F.3d 397 (6th Cir. 2001) .......... 11
Ass’n of Data Processing Service Org’s v. Camp, 397 U.S. 150 (1970)............... 12
Brennan v. NYC Board of Edu., 260 F.3d 123 (2d Cir. 2001)................................. 3
Bridgeport Guardians, Inc. v. Delmonte, 602 F.3d 469 (2d Cir. 2010)................... 3
Build’g & Construct’n Trades Council of Buffalo v. Downtown Dev., Inc., 448
F.3d 138 (2d Cir. 2006)..................................................................................... 10
Cabalceta v. Standard Fruit Co., 883 F.2d 1553 (11th Cir. 1989).......................... 8
CSX Transportation, Inc. v. Garden City, 235 F.3d 1325 (11th Cir. 2000)............. 9
Dow Jones & Co. v. United States Depart. of Justice, 161 F.R.D. 247; 1995 U.S.
Dist. LEXIS 2262 (1995) .................................................................................. 16
Hormel v Helvering, 313 U.S. 552 (1941).............................................................. 9
In re Holocaust Victim Assets Litigation, 225 F.3d 191 (2d Cir. 2000) .................. 4
In re Lehman Brothers Holdings, Inc., 697 F.3d 74 (2d Cir. 2012) ........................ 3
Ionia Shipping Co. v. British Law Ins. Co., 426 F.2d 186 (2d Cir. 1970) ............3, 4
Jenkens v. McKeithen, 395 U.S. 411 (1969) ......................................................... 10
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ......................................... 6, 10
Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871 (1990) ............................................. 10
MasterCard Int’l Corp. v Visa Int’l Service Ass’n, Inc., 471 F.3d 377 (2d Cir.
2006) ............................................................................................................... 1, 3
Ouachita Watch League v. Jacobs, 463 F.3d 1163 (11th Cir. 2006)....................... 8
Red River Holdings, LLC v. United States, No. 09-185 C (Fed. Cl. 2009)............ 16
Schulz v. Williams, 44 F.3d 48 (2d Cir. 1994) ....................................... 6, 10, 11, 12
Tachiona v. United States, 386 F.3d 205 (2d Cir. 2004).................................... 4, 11
Thomas More Law Center v. Obama, 651 F.3d 529 (6th Cir. 2011) ....................... 7
United States v. American Cyanimid Co., 556 F.Supp. 357 (S.D.N.Y. 1982) ....... 12
United States v. American Cyanimid Co., 719 F.2d 558 (2d Cir. 1984)........... 12, 15
United States v. Aulet, 618 F.2d 182 (2d Cir. 1980) ............................................ 7, 9
United States v. Hooker Chemicals & Plastics Corp., 749 F.2d 968 (2d Cir. 1984) 3
United States v. Microsoft, 56 F.3d 1448 (D.C. Cir.1995) .................................... 19
Warth v. Selden, 422 U.S. 490 (1975) ............................................................... 6, 10
iv

STATUTES
15 U.S.C. §16 (the “Tunney Act”) ....................................................................... 11
15 U.S.C. §16(b) .................................................................................................. 13
15 U.S.C. §16(b)-(f)............................................................................................. 16
28 U.S.C. §1291 .................................................................................................... 3
RULES
Fed. R. App. P. 27(a)(3)(A) ................................................................................... 7
Fed. R. Civ. Proc. 24 .............................................................................................. 6
ARTICLES & TREATISES
16A Wright & Miller, et. al., Federal Practice and Procedure § 3956.4 (Sept.,
2012) ........................................................................................................... 6, 7, 8
1973 Senate Hearings, reprinted in 9 Federal Antitrust History 6592 .................. 17
Note, “The ITT Dividend: Reform of Justice Consent Decree Procedures,” 73
Colum.L..Rev. 594 (1973) ................................................................................ 17
CONSTITUTIONAL PROVISIONS
U.S. Const. art. I, sec. 8 ....................................................................................... 18
U.S. Const. art. III .................................................................................................. 5
PUBLIC COMMENTS
Comments of Bob Kohn, 5/30/12, ATC-0143 ...................................................... 13
COURT DOCUMENTS
Complaint, 4/11/12, 12-02826 (S.D.N.Y.), ECF No. 1 ......................................... 17
Final Judgment, 9/6/12, 12-02826, ECF No. 119 .......................................... passim
Kohn’s Motion for Leave to Participate as Amicus Curiae, Aug. 13, 2012, 1202826, ECF No. 97 ........................................................................................... 18
Order Denying Intervention, 10/2/12, 12-02826, ECF No. 136 ................. 1, 3, 6, 14
Order for Entry of Final Judgment, 9/5/12, 12-02826, ECF No. 113 ............. passim
Response to Public Comments, 7/23/12, 12-02826, ECF No. 81.......................... 14

v

INTRODUCTION
Appellant Bob Kohn (“Kohn”) is seeking to intervene in what the District
Court conceded is “no ordinary Tunney Act proceeding.” This appeal involves two
separate final orders: first, the District Court’s order denying Kohn’s motion for
leave to intervene for the purpose of appeal (Order, 10/2/12, No. 12-02826, ECF
No. 136) and, only by virtue of a reversal thereof, second, the District Court’s
entry of Final Judgment in the Tunney Act proceeding below (Order, 9/5/12, ECF
No. 113). Thus, Kohn immediately seeks review of the District Court’s order
denying Kohn’s motion for leave to intervene. If this Court reverses that order,
Kohn will have standing to challenge the District Court’s earlier order for entry of
the Final Judgment in the Tunney Act proceeding below. No one other than Kohn
has sought to intervene and there has been no other appeal of the Final Judgment.
By its Motion the Government seeks to put the cart before the horse.
Although it predicates its motion to dismiss on the fact that Kohn, as a nonintervenor, lacks appellate standing to challenge the Final Judgment, it ultimately
concedes, on page 5 of its Motion, that Kohn timely noticed “an appeal from the
denial of his motion to intervene.” In the Second Circuit, it is “settled law that this
Court has jurisdiction over an order denying intervention.” MasterCard Int’l Corp.
v Visa Int’l Service Ass’n, Inc., 471 F.3d 377, 384 (2d Cir. 2006).

1

Only after this Court resolves the merits of Kohn’s challenge to the denial of
his intervention—which Kohn unquestionably has standing to appeal and this
Court, as shown, has jurisdiction to consider—would the Court then consider
whether Kohn has standing to appeal the Final Judgment (and, if so, whether the
judgment should be reversed). Thus, the Government’s motion to dismiss is
premature; indeed, the Government does not cite a single case in which this Court
has dismissed an appeal for lack of appellate standing prior to full merits briefing
and disposition by a merits panel. The Court therefore should deny the
Government’s motion to dismiss, which improperly seeks to make Kohn litigate
these issues on an expedited basis before considering the merits of the District
Court’s intervention ruling—the very decision from which Kohn noticed an appeal.
Although, it is not proper to address Kohn’s appellate standing to appeal the
Final Judgment until this Court has resolved the predicate issue of whether the
District Court erred in denying the intervention, because the Government has
focused its motion on this unripe standing issue, Kohn nonetheless herein
demonstrates that, if he is held to be an intervenor, he will also have standing to
appeal the order entering the Final Judgment.
In sum, the Government’s motion should be denied. If this Court holds that
the District Court should have granted Kohn’s motion to intervene, it will then
have jurisdiction to review the District Court’s entry of Final Judgment. Kohn is
2

prepared to file his Opening Brief, on the merits, on or before the due date of
December 14, 2012.
ARGUMENT
I.

THE GOVERNMENT’S MOTION SHOULD BE DENIED BECAUSE
THIS COURT HAS JURISDICTION TO REVIEW THE DISTRICT
COURT’S ORDER DENYING KOHN’S MOTION TO INTERVENE
This Court has jurisdiction under 28 U.S.C. §1291. The District Court issued

a final order denying Kohn’s motion for leave to intervene on October 2, 2012, and
Kohn filed a Notice of Appeal that same day.
A.

This Court has Jurisdiction of an Appeal of an Order Which
Denies Intervention

It is settled law that this Court has jurisdiction of an appeal of an order
which denies intervention. Bridgeport Guardians, Inc. v. Delmonte, 602 F.3d 469,
473 (2d Cir. 2010); MasterCard Int’l Inc. v. Visa Int’l Serv. Ass’n, 471 F.3d 377,
384 (2d Cir. 2006); Brennan v. NYC Board of Edu., 260 F.3d 123, 128 (2d Cir.
2001); United States v. Hooker Chemicals & Plastics Corp., 749 F.2d 968, 993
n19 (2d Cir. 1984) (Friendly, J.); Ionia Shipping Co. v. British Law Ins. Co., 426
F.2d 186, 189 (2d Cir. 1970) (Kaufman, J.). 1

1

These decisions are “based on the reasoning that the denial of an opportunity to be heard
concludes the matter for all practical purposes for the would-be intervenor.” In re Lehman
Brothers Holdings, Inc., 697 F.3d 74 (2d Cir. 2012).
3

B.

The Court Must Examine the Merits of the Motion for
Intervention Before Considering Whether It Has Jurisdiction to
Review the Entry of the Final Judgment

This Court has recognized “to follow this approach in each instance, will
require the court to examine the merits of the motion for intervention before it can
consider whether it has jurisdiction.” Ionia Shipping Co. v. British Law Ins. Co.,
426 F.2d 186, 189 (2d Cir. 1970) (opinion by Kaufman, J.).
The Government fails to cite a single Second Circuit case where a denial of
a motion to intervene was dismissed upon a motion thereby “short circuiting” a
pending appeal, effectively depriving the appellant of the right to file a considered
Opening Brief and forcing decision based upon a 10-day opposition. Even in
Tachiona v. United States, 386 F.3d 205 (2d Cir. 2004), cited by the Government
on pages of 6 and 8 of its motion, the Court’s consideration of standing was after
full briefing and argument. The same is true of In re Holocaust Victim Assets
Litigation, 225 F.3d 191 (2d Cir. 2000), which the Government cites on pages 7
and 9 of its motion. In that case, the Court ultimately dismissed the appeal for lack
of standing, but again only after briefing and oral argument.
Accordingly, the Government’s motion should be denied.

4

II.

IF THIS COURT HOLDS THAT THE DISTRICT COURT SHOULD
HAVE GRANTED KOHN’S MOTION TO INTERVENE, IT WILL
THEN HAVE JURISDICTION TO REVIEW THE DISTRICT
COURT’S ENTRY OF FINAL JUDGMENT
Given that this Court has jurisdiction over the Kohn’s appeal of the order

denying his intervention, Kohn should have the right to file a considered Opening
Brief (just as the parties in all the cases relied on by the Government have done) to
challenge the District Court’s order denying his motion to intervene and its order
entering the Final Judgment (addressing any issue of Kohn’s standing to appeal
such order). This Court will thereupon have an opportunity in reviewing Kohn’s
appeal to consider the record and Kohn’s standing to appeal the Final Judgment,
rather than having to address these issues in the expedited posture of a motion.
Nonetheless, because the Government’s motion (improperly) focuses on the
merits of Kohn’s standing to appeal the Final Judgment, Kohn shows below that as
an intervenor, he will have standing because Kohn has met every requirement to
support such standing. Thus, after reversing the denial of Kohn’s motion to
intervene, this Court will have jurisdiction to hear Kohn’s appeal of the Final
Judgment under Article III. U.S. Const. art. III.
A.

This Court May Review all Materials in the Record to Assess
Standing

The Court may review all materials in the record to assess standing,
including affidavits in support of standing. Schulz v. Williams, 44 F.3d 48, 61 n4
5

(2d Cir. 1994) (citing Warth v. Selden, 422 U.S. 490, 501-02 (1975). It was within
the District Court’s power to allow or require Kohn to supply by affidavit or
otherwise, further particularized allegations of fact deemed supportive of his
standing. Warth at 501-02. But, neither the Government nor the District Court
raised the issue of standing below. 2 Had the parties or the District Court raised the
issue, then Kohn would have submitted affidavits specifically to meet his burden of
establishing the elements of standing. See, Schulz at 61 n4. (citing Lujan v.
Defenders of Wildlife, 504 U.S. 555 (1992).
This Court may “at this stage” consider the record, together with the
attached affidavit which particularizes the allegations of fact in the record
supporting Kohn’s standing to appeal the Final Judgment (“Kohn Affidavit”).
Schulz at n4 (“In the absence of such documents [i.e., ‘affidavits specifically to
meet their burden of establishing the elements of standing’] at this stage, we look
first at the evidence presented at trial”). See also, Warth, 422 U.S. 490, 501-2. A
court of appeals has the power to “supplement the record to add material not
presented to the district court.” 16A Wright & Miller, et. al., Federal Practice and
Procedure § 3956.4 (Sept., 2012) (compiling a list of reasons for granting

2

The District Court never questioned Kohn’s standing to appeal, only his qualifications for
intervention under Rule 24. 10/2/12 Order (ECF No. 136). When the District Court questioned a
party’s standing to appeal the Final Judgment, it was quite explicit, as when it reserved judgment
on whether defendant Apple had such standing. 9/5/12 Order at 44 (ECF No. 113) (“Even if
Apple has standing to pursue an appeal, an issue which this Opinion does not decide…”).
6

permission to supplement the record on appeal, including the filing of affidavits
with the Court of Appeals for the purpose of determining appellate jurisdiction).
B.

This Court May Review Supplemental Materials Filed During the
Pendency of Appeal to Determine the Court’s Jurisdiction under
Article III

The Second Circuit has specifically permitted the United States to
supplement the record with documents not in the record after the opposing party
raised an issue for the first time on appeal. United States v. Aulet, 618 F.2d 182,
186-87 (2d Cir. 1980) (allowing supplementation of record on appeal even with
material that was not presented to the district court). Some courts state that
supplementing the record on appeal constitutes an exercise of the “inherent
equitable power” of the Court of Appeals. See, 16A Wright & Miller, et.
al., Federal Practice and Procedure § 3956.4 (Sept., 2012).
At least two Circuit Courts of Appeal, in three decisions, have specifically
permitted a party to supplement the record on appeal with affidavits to support
their Article III standing. 3 In Thomas More Law Center v. Obama, 651 F.3d 529,
536 (6th Cir. 2011), on appeal from a district court decision upholding a provision
in the Patient Protection and Affordable Care Act, the government moved to
dismiss the appeal after learning that a plaintiff had obtained medical insurance.

3

The Federal Rules of Appellate Procedure permit the filing of affidavits on appeal, particularly
in response to a motion filed by an opposing party. Fed. R. App. P. 27(a)(3)(A).
7

The Sixth Circuit permitted two other plaintiffs to file, on appeal, affidavits
showing that they had standing to challenge the provision. See, 16A Wright &
Miller, et. al., Federal Practice and Procedure § 3956.4, at n29.
In Ouachita Watch League v. Jacobs, 463 F.3d 1163, 1170 (11th Cir. 2006),
after the U.S. Forest Service challenged appellant’s standing for the first time on
appeal, the Court considered affidavits filed by appellant with its reply brief,
together with its motion for leave to file such affidavits. The Court held that it had
the power to do so, because the additional material would be dispositive of pending
issues and doing so was in the interests of justice and judicial economy. Id. at
1170-71.
In Cabalceta v. Standard Fruit Co., 883 F.2d 1553, 1555 (11th Cir. 1989),
the Eleventh Circuit held that supplementation was appropriate in considering the
court’s jurisdiction. The court specifically considered (1) whether acceptance of
the proffered material into the record would establish beyond any doubt the proper
resolution of the pending issue and (2) whether remand of the case to the district
court for consideration of the additional material would be contrary to both the
interests of justice and the efficient use of judicial resources. The court concluded
that, in determining the existence of jurisdiction, “a consideration of all relevant
information is necessary to make an informed and final decision. In the interests of
judicial economy, supplementation is necessary for a final disposition of this issue
8

and to avoid remand on all issues.” Id. See also, CSX Transportation, Inc. v.
Garden City, 235 F.3d 1325, 1331 (11th Cir. 2000) (exercising its inherent
inequitable power to allow supplementation of the appellate record with documents
not reviewed by the district court. “While we rarely exercise our authority to
enlarge the appellate record, the Supreme Court has reminded the appellate courts
that:
‘[T]he rules of practice and procedure are devised to promote the ends of
justice, not to defeat them. A rigid and undeviating judicially declared
practice under which courts of review would invariably and under all
circumstances decline to consider all questions which had not previously
been specifically urged would be out of harmony with this policy. Orderly
rules of procedure do not require sacrifice of the rules of fundamental
justice.’”
quoting Hormel v Helvering, 313 U.S. 552, 721 (1941)).
Should this Court reverse the District Court’s denial of Kohn’s motion to
intervene, Kohn will contend that, to the extent the record below is deemed
insufficient, the further particulars alleged in the attached Kohn Affidavit would
establish beyond any doubt the resolution of his standing to challenge the decree.
Kohn will file a motion to supplement the record with the Kohn Affidavit at the
time he files his Opening Brief, if necessary. 4

4

That is, unless the Government withdraws its challenge to Court’s jurisdiction or, in the
interests of judicial economy, this Court otherwise exercises its own authority to supplement the
record with the Kohn Affidavit. See, Aulet, 618 F.2d 182, 186-87. To that latter end, if necessary,
9

C.

Allegations to Support Standing Are to Be Liberally Construed

In its review of standing, both the trial and reviewing courts must accept as
true all material allegations in favor of the complaining party. See, Warth at 501
(citing Jenkens v. McKeithen, 395 U.S. 411, 421-22 (1969) (allegations made to
support standing should be “liberally construed” in favor of the complaining
party). 5
Facts supporting Kohn’s standing are not limited by those mentioned by the
Government in its Motion, which overlooks facts in the record below supporting
Kohn’s personal and financial stake in the outcome of this appeal, which are
further particularized by the Kohn Affidavit. That Kohn repeatedly described
himself in the proceeding below as a “consumer” or “author,” vigorously
contending that the Final Judgment is not in the public interest—which is the only
basis for challenging the Final Judgment—does not “contradict or undermine”
other facts supporting his personal and financial stake in the outcome of this
appeal. See, Schulz at 61 n4.

this Court may consider this Response as including and constituting a motion by Kohn to
supplement the record with the Kohn Affidavit.
5
“At the pleading stage, general factual allegations of injury resulting from the defendants
conduct may suffice, for on a motion to dismiss we ‘presum[e] that general allegations embrace
those specific facts that are necessary to support the claim.” Build’g & Construct’n Trades
Council of Buffalo v. Downtown Dev., Inc., 448 F.3d 138, 145 (2d Cir. 2006) (citing, Defenders
of Wildlife, 504 U.S. at 561 (quoting Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 889 (1990)).
10

D.

Kohn Has Standing to Appeal Entry of the Final Judgment

Kohn has suffered (1) an injury in fact, (2) that is fairly traceable to the
challenged action and (3) that is likely to be redressed by the relief requested.
Schultz, 44 F.3d 48, 52. To suffer a judicially cognizable “injury in fact” an
intervenor must have a “direct stake in the outcome” of the challenged action.
Schultz, 44 F.3d 48, 52 (citing Diamond v. Charles, 476 U.S. 54, 66-67 (1986)).
Here, the challenged action is the District Court’s entry of the Final Judgment
under 15 U.S.C. §16 (the “Tunney Act”). 6 See, Tachiona, 386 F.3d 205, 211
(standing at the appellate stage concerns injury caused by the judgment, not injury
caused by the underlying facts).
“Although the determination of an injury may not always be simple,
standing to appeal is recognized if the appellant can show an adverse effect of the
judgment, and denied if no adverse effect can be shown." Ass’n of Banks in
Insurance, Inc. v. Duryee, 270 F.3d 397, 403 (6th Cir. 2001) (quoting 15A Charles
A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure:
§ 3902 (2d ed.1992)). Threatened injury is sufficient to confer standing. Duryee at

6

Arguably, since the Tunney Act specifically requires the Court to make a determination that the
proposed decree is in the public interest, virtually any member of the public, such as a consumer
who buys e-books or an author who creates them, who sufficiently alleges an injury in fact that is
fairly traceable to the challenged action and this is likely to be redressed by the relief
requested—all of which Kohn alleged in the record in addition to his direct financial stake in
reversing the anticompetitive and other harmful effects of the Final Judgment—would have
standing to challenge the District Court’s public interest determination under Article III.
11

403. See, Schulz, 44 F.3d 48, 52 (“actual or imminent, not conjectural or
hypothetical”).
Thus, in United States v. American Cyanimid Co., 719 F.2d 558, 563 (2d
Cir. 1984), the Court permitted intervention to appeal termination of an antitrust
consent decree where the intervenor claimed such termination would have an
“anticompetitive effect” upon the relevant market. As the District Court in that
case found, intervenor did not have “any vested rights” in the subject consent
decree (United States v. American Cyanimid Co., 556 F.Supp. 357, 361 (S.D.N.Y.
1982)), yet the Second Circuit had jurisdiction because intervenor’s claims were
“directly related to the ultimate questions” in the case—i.e., the anticompetitive
effect of terminating the decree. American Cyanimid, 719 F.2d 558, 563. In other
words, while the intervenor did not have any direct personal or pecuniary interest
in the decree, it did have a stake in the alleged anticompetitive effect of the District
Court’s termination of the decree.
Certainly, he who is “likely to be financially” injured “may be a reliable
private attorney general to litigate the issues of the public interest.” Ass’n of Data
Processing Service Org’s v. Camp, 397 U.S. 150 (1970). This should be especially
true in Tunney Act cases when the real, public Attorney General has contractually
agreed not to appeal—one which involves the review of the District Court’s
determination of whether such contract is in public interest.
12

The record reflects that Kohn has alleged a direct, personal financial interest
in the outcome of this appeal, not just “a mere interest in the problem.” It reflects
that Kohn is Chairman & CEO of RoyaltyShare, Inc., and that RoyaltyShare
“provides technology solutions and enterprise services” to book publishers,
“including one of the Settling Defendants.” Comments of Kohn, 5/30/12, ATC0143 at 14 [emphasis added]. Such comments were filed with the District Court
and are part of the record. 15 U.S.C. §16(b). Now, two of RoyaltyShare’s largest
customers are defendants in this case—Hachette Book Group, Inc., a settling
defendant, and

Holtzbrink Publishers, LLC, DBA Macmillan, a non-settling

defendant. Kohn Aff. at 3-5. “RoyaltyShare also provides services to the New
York Times under which the Times accesses data that RoyaltyShare compiles,
which the Times uses to verify the accuracy of data used to compile the New York
Times Best Seller List for e-books.” Comments of Kohn at 14. The services it
provides to the Times involves RoyaltyShare’s access to e-book revenue data of
three of the defendants in this action (Hachette, Macmillan, and Penguin), as well
as other prominent publishers, data which RoyaltyShare receives directly from
each of the top e-book retailers. Kohn Aff. at 4-5.
The District Court specifically noted that Kohn described himself as
“founder and CEO of technology companies directly involved in the digital

13

distribution of music and e-books.” 10/2/12 Order at 3 [emphasis added]. 7 As
particularized in the Kohn Affidavit, because RoyaltyShare receives e-book
transaction data directly from the E-book Retailers—such as Amazon, Apple and
Barnes & Noble—on behalf of its book publisher clients, including defendants
Hachette and Macmillan, RoyaltyShare is directly integrated into the e-book chain
of revenue transactions upon which these publishers rely to operate their
businesses. Kohn Aff. at 6-8. This information was publicly available to
Government throughout this proceeding. Id.

7

The District Court had earlier referred to Kohn specifically as, “RoyaltyShare, Inc. Chairman &
CEO Bob Kohn.” 9/5/12 Order at 20. The Government had done the same. Response to Public
Comments, 7/23/12, 12-02826, ECF No. 81 at 44 (referring to Kohn as “Bob Kohn, CEO of
RoyaltyShare”).
14

RoyaltyShare’s revenues vary in direct proportion with the e-book revenue
of its clients or the number of e-books published by its clients, or both. For
example, for every dollar that settling defendant Hachette loses in e-book revenue
as a result of an alleged anti-competitive provision in the Final Judgment,
RoyaltyShare loses an easily quantifiable amount of money. As a result of its
integration within its clients’ e-book supply chain, the Final Judgment, and the
anticompetitive effects which it is alleged to have, directly and financially impacts
RoyaltyShare and Kohn. See, American Cyanimid, 719 F.2d 558, 563.
Kohn Affidavit further particularizes how Kohn and his business is directly
injured by the Final Judgment, not only by its anti-competitive effects, but even
including direct financial injury which has occurred since the Final Judgment took
effect.

CONCLUSION
It is settled law in this Circuit that this Court has jurisdiction to review an
order denying intervention. This Court has recognized that in each instance it must
review the merits of the motion for intervention before it can consider whether it
has jurisdiction to review the challenged action. It is respectfully submitted that,
because the Government has not, and cannot, challenge Kohn’s standing to appeal
the District Court’s final order denying his motion to intervene, the Government’s
motion to dismiss should be denied.
15

FINAL NOTE
“[A]ppellate review is central to our judicial system.”
--

District Judge Sotomayor, allowing intervention for appeal purposes
in Dow Jones & Co. v. United States Depart. of Justice, 161 F.R.D.
247, 253; 1995 U.S. Dist. LEXIS 2262 (1995) (quoted in Red River
Holdings, LLC v. United States, No. 09-185 C (Fed. Cl. 2009).

As the District Court acknowledged, this is “no ordinary Tunney Act
proceeding.” 9/5/12 Order at 21. The Tunney Act was enacted by Congress to
shine light on the antitrust decree process and increase the scrutiny applied by the
judiciary to consent decrees. To that end, Congress specifically encouraged public
participation, including by means of intervention. 15 U.S.C. §16(b)-(f). Because
the parties to a consent decree will rarely, if ever, appeal a district court decision
approving a proposed settlement, intervention is typically the only vehicle for
subjecting approved decrees to the kind of rigorous judicial review contemplated
by the Act.
Unfortunately, not only will the parties rarely appeal, these consent decrees
are rarely appealed even by direct competitors or other qualified intervenors who
have a substantial financial interest in the outcome of the appeal. This is because
the typical characteristic of Tunney Act cases—unlike suits by organizations to
challenge or defend controversial statutes or potential environmental hazards—is
that there is nearly always the presence of monopoly power that, in many cases,

16

has a palpable effect upon business decision-making, including the decision
whether to challenge a proposed consent decree.
A leading witness, testifying in support of Senator Tunney’s bill, was Circuit
Court Judge J. Skelly Wright who said, in approving a consent decree, “the Justice
Department attorneys may overlook certain issues, ignore certain concerns, or
misunderstand certain facts.”8 At the same time, he cautioned, companies involved
in antitrust matters often “wield great influence and economic power. They can
often bring significant pressure to bear on Government, and even on the courts, in
connection with the handling of decrees.” 9
In its order entering the Final Judgment, the District Court found as an
undisputed fact that Amazon had a “90 percent monopoly” in the trade e-book
market. 9/5/12 Order at 34-35.10 Paragraph 80 of the Government’s own Complaint
dramatically illustrates what can happen in a market beset with the presence of
90% monopoly power. When defendant Macmillan presented Amazon with a
proposal for an e-book distribution contract to replace its existing one, Amazon

8

1973 Senate Hearings at 145-6, reprinted in 9 Federal Antitrust History 6592 (“occasionally
[they] make mistakes”).
9
1973 Senate Hearings at 147, reprinted in 9 Federal Antitrust History 6593. See also, 119
Cong. Rec. 3449, 3451 (Feb. 6, 1973) (statement of Sen. Tunney) (“[p]ut simply, the bigger the
company, the greater the leverage it has in Washington”). Disclosures in the wake of the
Watergate scandal suggested that Nixon administration officials may have settled a merger case
against IT&T in exchange for funding the Republican National Convention. Note, “The ITT
Dividend: Reform of Justice Consent Decree Procedures,” 73 Colum.L. Rev. 594, 603-06
(1973).
10
Amazon also reportedly sells 25% of all printed trade books in the United States.
17

exercised what has been described as its “nuclear option”: the online retail giant
promptly deleted the “buy” buttons in the Amazon online store for all of
Macmillan’s books (e-books, as well as printed books). As a result, 90% of
Macmillan’s e-book revenues and 25% of its printed book revenues vanished in an
instant. The sixth largest book publisher in the United States was brought to its
knees.11
This kind of conduct affects everyone in the e-book supply chain. For
example, had Amazon continued its single-handed boycott of Macmillan’s books a
while longer Macmillan would have been unable to solicit new manuscripts from
authors and would have ceased publishing new books, effectively putting it out of
business. Driving Macmillan out of business would have meant one less publisher
to bid on the acquisition of authors’ manuscripts. Over time, authors would receive
less money for the licensing of their copyrighted works—the recognition of which
involves one of the Constitutionally-enumerated powers of Congress calculated to
promote the Writings of authors for the purpose of enhancing the public interest.
U.S. Const. art. I, sec. 8.

11

This was not the first time that Amazon exercised its 90% monopsony power in this specific
way to improve the commercial terms of its agreements with book publishers and authors.
Amazon also used this option on several separate occasions against independent book publishers
(including an incident earlier this year) and representatives of unpublished authors. See, Kohn’s
Motion for Leave to Participate as Amicus Curiae, Aug. 13, 2012, No. 12-02826 (S.D.N.Y.),
ECF No. 97 at 18-20; Kohn Affidavit at 9-11.
18

Fear of retaliation by large system providers with 90 percent market power
is not new. See, United States v. Microsoft, 56 F.3d 1448, 1463-64 (D.C. Cir.1995)
(criticizing a district court’s decision to grant competitors, fearing retaliation from
Microsoft, leave to participate as amicus curiae on an anonymous basis).12 More
than twenty-five years later, with Amazon threatening to monopolize the market
for e-books (e.g., Kindle), Apple the market for music (e.g. iTunes), and Google
the market for audiovisual works (e.g., YouTube), the economic consequence of
the resolution of an intervenor’s standing in Tunney Act cases challenges the
public interest in ways even more profound and far-reaching than that of the Final
Judgment underlying this appeal.
Kohn thus urges the utmost judicial consideration of the factual allegations
supporting his standing to appeal the Final Judgment. Certainly, this Court should
reject the Government’s attempt to resolve these important issues on an expedited
basis prior to a full merits briefing and disposition by a merits panel.

12

In 1995, Kohn was Sr. Vice President & General Counsel of Borland International, Inc., one of
the anonymous competitors on behalf of whom the amicus curiae brief was filed.
19

DATED: November 26, 2012

Respectfully submitted,

_______________________
BOB KOHN
140 E. 28th St.
New York, NY 10016
Tel. [phone]
Fax. [phone]
eMail: [e-mail]
/s/ Steven Brower
By: _______________________
STEVEN BROWER [PRO HAC]
California Bar No. 93568
BUCHALTER NEMER
18400 Von Karman Ave., Suite 800
Irvine, California 92612-0514
Tel: [phone]
Fax: [phone]
Email: [e-mail]
Pro Bono Counsel to Bob Kohn

20

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 26th day of November, 2012, a true and
correct copy of the foregoing Appellants Response Brief was served on all counsel
of record in this appeal via CM/ECF pursuant to Local Rule 25.1 (h)(1) & (2).
/s/ Steven Brower
STEVEN BROWER [PRO HAC]
California Bar No. 93568
BUCHALTER NEMER
18400 Von Karman Ave., Suite 800
Irvine, California 92612-0514
Tel: [phone]
Fax: [phone]
Email: [e-mail]
Pro Bono Counsel to Appellant Bob Kohn

21