Among the deluge of pre-trial documents released this week in preparation for the June 3 e-book price-fixing trial, one document filed by Penguin evoked a particular sense of déjà vu. The motion, filed April 26, asked the court to compel the parties in the consumer class and state claims to federal arbitration—virtually the same motion Penguin attorneys filed a year ago—and which Judge Denise Cote rejected last July.
In Penguin’s recent filing, the bedrock argument is nearly identical to its 2012 bid—that those who purchased e-books from Amazon and Barnes & Noble, via their “Terms of Use” have already agreed to arbitrate “all disputes arising out of the purchases.” Even though Penguin is not a signatory to those agreements, the publisher argues that they can compel enforcement of those terms.
In her 2012 ruling declining to compel arbitration, however, Cote forcefully shot down Penguin’s arguments, citing a plainly applicable precedent via a Second Circuit case, In re Am. Express Merchants' Litigation, and noting that arbitration was economically unfeasible for individual e-book consumers. “Given the complexities of proving this particular antitrust violation, plaintiffs can expect at most a median recovery of $540 in treble damages, and face several hundred thousand dollars to millions of dollars in expert expenses alone.”
So, why re-file the failed motion to compel arbitration? For one, in her 2012 ruling, Cote reserved ruling on the state claims. But in a footnote at the end of the filing, Penguin attorneys acknowledge that Cote has already rejected “similar” arguments made by Penguin seeking to compel arbitration, and expressly notes it is filing the motion to “preserve the issues for appeal.” And in the filing, Penguin articulates its belief that the Second Circuit case cited by Cote was “wrongly decided,” and could be reversed by the Supreme Court. More last-minute maneuvering (including Penguin’s failed bid in March to win a separate jury trial for the state and consumer claims) to preserve potential grounds for appeal, and perhaps another tantalizing hint that Penguin is indeed heading to trial on June 3.
