Judge Denise Cote this week denied RoyaltyShare founder Bob Kohn’s application to conduct his own “discovery” into Amazon’s allegedly “predatory” e-book pricing. Cote's order denying Kohn’s latest application, without explanation, sets up a potentially charged final fairness hearing for the final two publisher settlements (Macmillan and Penguin) on December 6.
In a statement to PW, Kohn noted that the judge's "one word" order failed to address "the critical issues" he raised in his pleadings, "betraying a concern that perhaps I’ve raised issues she would rather not confront." He also suggested he would raise the issues in person. "I look forward to seeing Judge Cote in court on December 6, 2013," he said. "She has denied me a hearing in each of the previous settlements, but this time, under Rule 23 of the Federal Rules of Civil Procedure, which governs class action lawsuits, she is compelled to hold a hearing."
From the early days of the Apple e-book litigation, Kohn has unsuccessfully argued that the court must consider Amazon’s “below marginal-cost pricing practices” for e-books, a point Cote has specifically denied.
“This trial has not been the occasion to decide whether Amazon’s choice to sell NYT Bestsellers or other New Releases as loss leaders was an unfair trade practice or in any other way a violation of law,” Cote wrote in her July 10 ruling against Apple. “If it was, however, the remedy for illegal conduct is a complaint lodged with the proper law enforcement offices or a civil suit or both. Another company’s alleged violation of antitrust laws is not an excuse for engaging in your own violations of law.”
Kohn has been a persistent opponent of the e-book settlements, most famously submitting an amicus brief to the court in comic-book form. And that opposition has persisted despite the court’s rejection.
As a class member and an e-book consumer, Kohn wrote the court last week, arguing that the settlements pursued by the states and the DoJ are in fact “detrimental” to e-book consumers. What the court eventually found to be a price-fixing conspiracy, he argued, was in fact was a rational response to Amazon’s below-cost pricing, and a response that actually benefited consumers.
Kohn had asked the court to issue a subpoena to the DoJ and the states to turn over evidence to Kohn that would allow him to assess the truthfulness of the DoJ’s conclusion that Amazon’s e-book business was “consistently profitable,” as well as any other evidence that relates to “Amazon’s marginal cost for e-books.”
Kohn also asked the court to issue a subpoena to Amazon, compelling them to produce evidence pertaining to “Amazon’s marginal cost of e-books acquired, and the prices charged.” While Amazon executives did testify at trial on their pricing practices, stating under oath that their e-book business was profitable, much of the evidence gathered remains sealed.
Government attorneys brushed off Kohn’s request, calling his legal reasoning “flawed” and essentially pointing out that Amazon is not a litigant in this action. “If Mr. Kohn truly believes that Amazon is engaging in predatory pricing, then the antitrust laws offer him an opportunity to commence a private action against Amazon,” wrote Gary Becker, Connecticut Assistant Attorney General.
