In a letter to the court yesterday, lawyers for defendants Amazon and the Big Five publishers told magistrate judge Debra Freeman that they will soon file a motion seeking to stay all discovery in a lawsuit charging them with conspiring to fix e-book prices until the court rules on their motion to dismiss the case.
In their letter, lawyers for the defendants argue that discovery in the case would be a substantial burden on them, while the facts suggest the case against them is without merit and will be dismissed.
But in a Rule 26(f) filing this week, lawyers for a potential class of consumers, led by Seattle-based firm Hagens Berman, rejected the defendants’ request for a stay, and instead proposed a “deferred” discovery plan that would see a “discrete set of critical discovery” begin soon, including production of contracts, documents produced to governmental agencies that investigated the e-books industry, and e-book sales data.
In their 8-page filing, attorneys for Amazon and the publishers claim they have “substantial grounds for dismissal” of the case.
“Critically, the [complaint] fails to allege plausibly that Defendants engaged in a horizontal conspiracy under Section 1 of the Sherman Act, a conspiracy to monopolize under Section 2 of the Sherman Act, or that Amazon unilaterally violated Section 2 of the Sherman Act,” the defendants argue, adding that the complaint does not allege “a single communication between the Publishers,” or how “an alleged agreement was entered into," or facts to support “any claim that Amazon organized or otherwise participated in an overarching conspiracy” involving the publishers.
Further, the defendants say the alleged conspiracy is "implausible,” pointing out that the contract provisions at issue in the case were reviewed by the DOJ as well as State Attorneys General under an order in the Apple price-fixing case.
“It is implausible that the Publishers would conspire to enter into anticompetitive agreements with Amazon while under the supervision of antitrust authorities and would use the same contracts that were subject to review by antitrust authorities to implement those agreements,” the letter states, and “implausible that the Publishers would conspire with Amazon to help it become a monopolist when just years before they were alleged to have conspired against Amazon to reduce its market share.”
Attorneys for the plaintiffs, meanwhile, counter that it is the history of price-fixing among the major publishers that augurs for discovery to begin.
“In Apple, the Big Five were motivated by their desire to control e-book prices while Apple was motivated by its desire to avoid directly competing with other retailers on price. The same motivations apply here,” lawyers for the plaintiffs argue, “where the Big Five likewise publicly expressed their desire to control prices when they entered into agreements with Amazon, and they used this agreement as an opportunity to substantially raise their price of their e-books.”
The defendants have asked the court for a pre-motion conference on a potential stay of discovery, although at press time the court has not set a date.
Hagens Berman first filed suit against Amazon and the publishers (Hachette, HarperCollins, Macmillan, Simon & Schuster, and Penguin Random House) in January 2021, alleging a conspiracy to fix e-book prices. Specifically, the suit alleges that the publishers' use of various Most Favored Nations clauses in their contracts is evidence of an agreement "to prevent competitive pricing," causing consumers "to overpay when they purchase e-books from the Big Five through an eBook retailer that competes with Amazon."
In 2011, Hagens Berman was the first to file a price fixing case against Apple and a group of five major publishers, which led to a group of 33 states and the Department of Justice also filing suit, and eventually to settlements with the publishers in 2012 and a verdict against Apple in 2013.
