A month of legal skirmishing between the law firm heading up the class action lawsuit against five publishers and Apple alleging a conspiracy to raise e-book prices culminated March 30 with Hagens Berman filing responses to motions to dismiss the case and to a motion by Penguin to stay the proceedings and move to arbitration.
In motions made earlier in March by the publishers, publishers contended the decision to move to the agency model was made by individual companies and linked to a variety of changes in the industry. In its motion to dismiss, Apple argued that the company shouldn't be lumped in with the publishers since its business needs were (and are) far different than the publishers.
"Plaintiffs' ‘hub' theory implausibly suggests Apple conspired with the Publishers to address economic issues it was not facing, and coordinated actions it did not participate in. Apple had no market power, was not a horizontal competitor of the Publishers, was never a physical book seller, had no motive to protect such a market, and had no incentive to ‘slow eBook growth,'" Apple said in its motion.
Apple was reacting to Hagens' assertion that Apple was the hub in a system in which publishers all struck deals to fix e-book prices. The motion also refers to arguments made by the publishers that stressed that it was the market conditions that existed and the time that led them to make separate decisions to moved e-book pricing from the wholesale model to the agency model. Among the reasons cited in the publishers' motion for dismissal were: "resisting Amazon's creation/maintenance of monopsony in the purchase of eBooks ; reducing reliance on a single retailer; expanding and diversifying eBook distribution, and providing readers broad access to new titles in Ebook form; increasing or preserving wholesale prices for physical books; support for "brick-and-mortar" retailers that were (and are) central players in the development of consumer interest in new books and were subject to Amazon's below-cost pricing and destructive free-riding; valuable partnerships with Apple, a ‘powerful content distribution company' (‘the most powerful . . . other than Amazon'), an iconic brand, and a recognized leader in the manufacture of mobile devices, with a proven track record in the e-retail space; gaining access to Apple's ‘huge installed base' of millions of customers who were already buying other forms of digital media through Apple; increasing overall book sales (Apple's launch of the iPad ‘was expected to prompt a surge in eBook purchasing')'; improvement of the eReading experience and market-wide innovation, including enhanced eBooks and greater selection of eReaders offering more features."
In opposing the motion to dismiss, Hagens stressed that the raising of e-book prices was done "in three coordinated steps." Hagens also noted that at this stage of the case, the plaintiffs "are not required to defeat Defandants' proferred competing inferences."
Separately from the motion to dismiss, Penguin had filed a motion asking the court to make members of the class action lawsuit who bought e-books from Amazon and BN.com move directly to arbitration to resolve that matter and stay the court proceedings. In opposing the motion, Hagens Berman argued that such a move would be too costly for individuals to pursue on their own thereby "prevent[ing] plaintiffs from effectively vindicating their rights under the antitrust law." Penguin has until April 13 to file its response.
