Judge Denise Cote on Thursday ordered three defunct e-book retailers, Apple and the five major publishers, to enter into mediation in an attempt to resolve claims that a 2010 conspiracy to fix e-book prices forced the retailers out of business.
In a conference in her Manhattan courtroom, Judge Cote conferred with the parties on discovery issues, and outlined a schedule that could have the case ready for trial by late 2015. Although a final schedule was not set, the judge said she would order the parties to enter mediation in December.
The suit was first filed by Australian upstart DNAML in September of 2013, and later joined by Lavoho, LLC, a "successor" to the Diesel eBook Store and Abbey House Media, formerly BooksOnBoard, and could yet be joined by more plaintiffs. It alleges that the fledgling e-book businesses were harmed "directly and as a proximate result" of the 2010 price-fixing scheme executed by Apple and the five agency publishers (Hachette, HarperCollins, Simon & Schuster, Macmillan and Penguin).
Apple and the publishers had sought to have the case tossed, but in a 22-page opinion handed down in June, Cote ruled that the retailers could pursue the case. It is “more than plausible that a discount retailer was harmed by a conspiracy to remove retailers’ ability to discount e-books,” Cote held, adding that the retailers were "indisputably competitors in a market in which trade was restrained.” She also acknowledged, however, that proving damages would be “difficult in the extreme" for the plaintiffs.
In pre-conference filings, attorneys for Apple and the publishers had asked the judge to “bifurcate” the case—in essence, to “litigate whether the conspiracy alleged…actually caused the damage claimed, before addressing the underlying merits of Plaintiffs’ antitrust claims.” Cote, however, citing more expeditious discovery, declined to break the case into stages.
The litigation represents yet another legal front for Apple and the publishers, with the plaintiffs arguing that the agency switch “devastated” their nascent business models, which were based on bundling and other discount-driven promotions.
The publishers and Apple counter that the businesses were hardly players in the business, and could have folded for many reasons. In their joint brief to dismiss, the publishers questioned DNAML's legitimacy, describing the operation as a “small, one person, Australian software company” with “no e-reader, no App, and nothing else to distinguish it from the already established competitors in the space, including Amazon and Barnes & Noble.”
