Unites States of America v. Apple, Inc. et al

Filing 185

Letter addressed to Judge Cote from Apple, Inc. (Richard Parker) dated 2/14/2013 re: Apple/Amazon Discovery Dispute. Document filed by Apple, Inc. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(cr)

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Exhibit B 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------x UNITED STATES OF AMERICA, Plaintiff, vs. CASE NO. 12-CV-2826(DLC) APPLE INC., et. al, Defendants. --------------------------------x HIGHLY CONFIDENTIAL VIDEOTAPED DEPOSITION DAVID NAGGAR JANUARY 30, 2013 1918 Eighth Avenue Seattle, Washington REPORTED BY: PAUL J. FREDERICKSON, CCR, CSR JOB NO. 28641 DAVID NAGGAR - HIGHLY CONFIDENTIAL 110 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 more information about the date of this meeting. 3 A. 4 5 Yeah, the meeting that I was referring to in previous testimony was a meeting that we called 11:01:48 immediately after John Sargent had left us in Seattle, 6 when he came to Seattle to announce that Macmillan was 7 giving us a choice between two terms options. 8 BY MR. PARKER: 9 10 Q. 11:02:04 Okay. Okay. Can you tell me approximately what the date on 11 that was? 12 A. It was 28th of January. 13 Q. All right. 14 A. So it was that afternoon. 15 Q. All right. 16 MR. PARKER: 17 mark? 18 All right. 19 20 So which one are we going to So I'm going to mark a new document here, email from Mr. Murray to you and Mr. Grandinetti. 11:02:44 [Deposition Exhibit 6 marked.] 21 MR. FRIEDMAN: 22 THE WITNESS: 23 THE COURT REPORTER: 24 MR. FRIEDMAN: 25 11:04:21 This is Naggar 6? Yes. 6. Thank you. [Pause.] DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 122 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 So she has now left the company, Ms. Wilson? 3 A. 4 5 I don't know her status with the company. She is snow longer general counsel. 11:13:47 Q. All right. 6 Mr. Bezos was there? 7 A. Yes. 8 Q. Mr. Kessel was there? 9 A. Yes. Q. Laura Porco was there? 11 A. Yes. 12 Q. And you were there? 13 A. Yes. 14 Q. And Mr. Grandinetti was there? 15 A. Yes. 16 Q. All right. 17 So at that meeting did anybody outline the pros 10 11:13:54 18 and cons to Amazon of going to the agency model? 19 20 MR. KIPLING: 11:14:12 21 I'm going to object and instruct the witness not to answer about what was discussed in the meeting. 22 I've conferred with him and it was in his view and 23 in my view a meeting at which legal advice was being 24 sought and delivered by the lawyers for the company. 25 11:14:25 THE WITNESS: That's correct. DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 123 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 BY MR. PARKER: 3 Q. 4 5 Were you personally seeking legal advice? MR. KIPLING: 11:14:31 He -- I'm not suggesting that he was. I'm suggesting that Amazon was seeking legal 6 advice. That's my client. 7 instructing this employee of Amazon not to answer the 8 question. 9 BY MR. PARKER: 10 11:14:42 Q. 11 And on that basis I'm Was there any -MR. PARKER: I mean, Mike are you going to 12 block me on any question here? 13 question whatsoever? 14 15 MR. KIPLING: 11:14:53 16 there, when it happened. MR. PARKER: 18 MR. KIPLING: 19 Right. How long it was, whether documents were prepared, which I believe pretty much 11:15:02 21 exhausts what you're permitted to inquire about in a meeting that's privileged. 22 MR. PARKER: 23 All right. Well, I'm -- 24 25 You've spent 20 minutes asking him questions about this meeting which has probed who was 17 20 I mean, I can't ask any MR. KIPLING: 11:15:10 yeah, I am. So beyond that I guess I -- Beyond what you've done, unless you come up DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 124 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 with something else that's permitted that doesn't invade 3 the privilege. 4 BY MR. PARKER: 5 11:15:17 6 Q. What -- were there business decisions that came out of this meeting? 7 A. 8 Not as distinct from asking for lawyers' counsel as to what we could do. 9 10 All right. Q. 11:15:32 Did you come up with a business strategy for dealing with proposals by Mr. -- such as that 11 presented by Mr. Murray and others? 12 MR. KIPLING: 13 this. 14 15 You can answer yes or no to A. 11:15:46 16 No. MR. SUTTON: Objection. BY MR. PARKER: 17 Q. So what did you come up with? 18 MR. FRIEDMAN: 19 MR. KIPLING: 20 11:15:51 21 That -- instruct him not to answer. You can ask him about what he did after the 22 meeting and what Amazon did after the meeting. 23 MR. PARKER: 24 MR. KIPLING: 25 Objection. 11:15:56 MR. PARKER: Oh, I'm about to. Okay. But I'm just asking. DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 137 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 A. The next day. 3 Q. And you were personally involved in 4 executing that strategy? 5 A. Yes. 6 Q. What did Mr. Grandinetti tell you about why 7 you were doing that? 8 MR. SUTTON: 9 10 A. 11:32:10 Objection, form. We were taking them down because they had presented us with an ultimatum and terms we couldn't 11 live with and told us we had no option but to go with 12 those terms. 13 Q. 14 15 And if you didn't go with those terms, what did Mr. Sargent say would be the consequences? 11:32:31 A. Well, he said, "You have a choice. You 16 can either go to the agency model or you cannot see 17 new releases for seven months." 18 Q. It was, I'm sorry, seven months? 19 A. I believe it was seven months, yes. Q. So it was sign up with the agency model or 20 11:32:43 21 windowing; am I right? 22 A. Yes. 23 Q. All right. 24 How long were the buy buttons pulled on 25 11:32:54 Macmillan titles? DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 139 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 people, all our lawyers, and we discussed the 3 implications of -- 4 5 MR. KIPLING: 11:34:08 Don't talk about what you discussed in that meeting. 6 THE WITNESS: 7 MR. PARKER: 8 Okay. BY MR. PARKER: 9 10 Okay. Q. 11:34:14 What were the implications of pulling the -- from your perspective, what were the 11 implications of pulling the buy button on the Macmillan 12 product? 13 A. 14 15 It meant our customers were not going to have access to the books. 11:34:34 16 impact. Q. 17 That was the immediate What positive comes out of it? I mean, that's negative for the customer. 18 A. It's negative for the customer. 19 Q. All right. 20 11:34:42 21 So what's -- what's good about that strategy from Amazon's point of view? 22 A. We had -- as far as business strategy for 23 the agency, if we were going to be forced to agency, 24 we did not want to be in a position where there was 25 11:35:01 selection available at other retailers that was not DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 140 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 available to Amazon customers or where there was lower 3 prices on selection than was available to Amazon 4 customers. 5 11:35:16 6 That was as far as we went. And so we were going to make sure that we got those protections for our customers. 7 Q. Price and selection; correct? 8 A. Correct. 9 Q. Did anybody -- withdrawn. 10 11:35:32 11 Did -- I'm referring now to your conversation with Mr. Sargent, the one you just described. 12 A. Uh-huh. 13 Q. Did he suggest that there were any 14 15 retailers who would not be windowed on the Macmillan 11:35:47 product? 16 A. 17 on one model or the other. 18 Q. 19 20 No, he suggested that everybody would be So he suggested that Apple, Barnes & Noble and others would not be windowed if they signed onto 11:36:00 the agency proposal? 21 A. That was the assumption, yes. 22 Q. All right. 23 And so you were facing a situation in which 24 25 Amazon would be windowed but Apple and others might 11:36:11 not? DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 151 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 with one retailer but not with Amazon. 3 Q. MFN on price parity means what? 4 A. That the price is set for these books 5 11:48:02 since the publishers under an agency model would be 6 seller of record, would be the same at Amazon as 7 anywhere else. 8 Q. 9 10 And these are terms that Amazon proposed and negotiated for with all of the publishers; am I 11:48:15 11 right? A. I don't believe we proposed and I don't 12 believe it was with all the publishers. 13 only five publishers who were negotiating agency. 14 15 Q. 11:48:27 16 I'm very sorry. Amazon insisted on an MFN with the five publishers who were negotiating agency? 17 A. 18 It was -- yeah, these were some of the elements of a 32 page contract, yes. 19 20 There were Q. 11:48:42 And it was something that Amazon found to be in its interest; am I right? 21 A. In our customers' interest for sure. 22 Q. And in your interest as well as a 23 competitor? 24 25 A. 11:48:54 No, we were -- we were at that point trying very hard to protect the customer experience. DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 152 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 And so telling us there are books available elsewhere 3 but not on Amazon is bad for our customers. 4 5 Q. 11:49:04 6 I see. All right. And having books available elsewhere at a lower price than Amazon is bad for your customers too? 7 A. Yes. 8 Q. All right. 9 I take it that Amazon was able to achieve MFNs 10 11:49:38 11 in some or all of its contracts with the five publishers that went to agency? 12 MR. SUTTON: 13 A. 14 15 Okay. Objection, form. The -- yes, we got protections on most the issues. 11:49:52 BY MR. PARKER: 16 Q. 17 Did you -- do you recall taking steps to enforce 18 the MFN in any circumstance? 19 20 Okay. MR. KIPLING: 11:49:59 MR. SUTTON: Object. Object to form. 21 A. When? 22 Q. Following -- following at the time that you 23 entered into these agency agreements with these various 24 publishers. 25 11:50:08 A. Yes. DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099

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