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Weil Defeats Two Additional E-Books Antitrust Actions for Simon & Schuster

On January 22, 2016 and February 5, 2016, Weil obtained major victories for Simon & Schuster (S&S) in New York federal court when, on each date, Judge Denise Cote issued an order granting summary judgment in two coordinated antitrust cases brought by former e-book retailers regarding the market for e-books.  Weil prepared the winning summary judgment papers in both cases.  In the span of two months, Weil has now secured favorable summary judgment decisions dismissing all claims in coordinated cases brought by independent e-book retailers against S&S before Judge Cote.

Plaintiffs in these two actions were BooksOnBoard (BOB) and Diesel eBooks, now defunct retailers of e-books.  BOB and Diesel asserted that S&S and four other leading publishing companies violated Section 1 of the Sherman Act and New York’s Donnelly Act by allegedly conspiring to fix prices and reduce competition in the market for e-books. This purported conduct was also the subject of an industry-wide investigation commenced in 2010 by the U.S. Department of Justice, and subsequent litigation involving the DOJ, numerous state Attorneys General, and private class plaintiffs. While S&S and the four other publishing companies settled these cases, another party proceeded to trial and was found liable for the conduct in 2013.  Nearly one year later, BOB, Diesel, and one other private e-book retailer filed suits against the publishers, claiming that the alleged price fixing conspiracy led to their respective demises.

In the actions brought by BOB and Diesel, the publishers moved for summary judgment following the close of discovery, arguing that BOB and Diesel failed to demonstrate that the alleged conspiracy caused the demise of both e-book businesses, or that they had suffered an antitrust injury.

On January 22 the court granted defendants’ motion in its entirety, with prejudice, in BOB’s case, finding that “[t]he Publisher Defendants have provided an extensive record demonstrating that BOB was failing as a business before the Publisher Defendants implemented the agency model for distributing their e-books in 2010, and that BOB could not effectively compete through discounting or otherwise. Rather than identifying agency pricing as the cause of its demise, BOB instead touted agency pricing’s benefits to both investors and creditors. BOB fails to rebut this evidence and thus has not raised a disputed issue of material fact that would entitle it to a trial.”

Subsequently, on February 5, the court granted defendants’ motion for summary judgment in the action brought by Diesel, holding that plaintiff had not offered sufficient evidence to show that it suffered an antitrust injury as a result of the alleged conspiracy to eliminate retail price competition, while the publishers “offered overwhelming evidence that Diesel’s business was not predicated on price competition.”

The Weil team representing S&S in each case included partners James Quinn, Yehudah Buchweitz, and Jeff White and associates Robert Levine, Joseph Adamson, and William Brewer.

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