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)

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

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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

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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.

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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

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450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099

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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.

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450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099

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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?

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450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099

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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

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450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099

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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?

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450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099

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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

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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