It's deja vu all over again: in a brief order this week, Magistrate judge Valerie Figueredo has set oral arguments for June 22 to hear motions from Amazon and the Big Five publishers to dismiss an amended civil lawsuit accusing them of an illegal conspiracy to fix e-book prices. The hearing comes some 10 months after Figueredo found insufficient evidence for the initial case to proceed, prompting a do-over.
The case was first filed in the Southern District of New York on January 14, 2021, led by firm Hagens Berman, the first firm to sue Apple and five major publishers for colluding to fix e-book prices in 2011. It alleges that the Big Five publishers—Hachette, HarperCollins, Macmillan, Penguin Random House, and Simon & Schuster—are co-conspirators in a hub-and-spoke scheme, with Amazon to suppress retail price competition and keep e-book prices artificially high. In March 2021, a second, associated suit accusing Amazon and the Big Five publishers of a conspiracy to restrain price competition in the retail and online print trade book markets was also filed. That case was also dismissed, amended, and refiled last year, though it is not clear whether the June 22 hearing will include the motions to dismiss that case as well.
From the outset, Amazon and the publishers have insisted the conspiracy claims are "implausible" and unsupported by any evidence. And after a marathon July 27, 2022 hearing, Figueredo agreed, recommending that presiding judge Gregory Woods dismiss both cases. Woods accepted Figeuredo's "well-reasoned" and "thorough" reports, and dismissed both cases last September—but in a twist, the cases were dismissed without prejudice, giving the plaintiffs a chance to file amended complaints.
Amazon and the publishers insist there is still no case. “While the [second amended complaint] has swelled plaintiffs’ allegations by more than 30 pages and 100 paragraphs, those additions overwhelmingly consist of repetitions of the same alleged facts from the [complaint] that the court has already determined do not state a claim,” reads a December, 2022 letter from Amazon lawyers.
The plaintiffs argue that the case should be allowed to proceed. "The question at this stage is not whether Defendants have in fact violated the antitrust laws but, rather, whether Plaintiffs have met pleading requirements so that their claim—accepting all allegations as true and drawing all reasonable inferences in their favor—should get past a motion to dismiss," the plaintiffs argue, insisting they have cleared that bar.
While the revived complaint adds details about the "supracompetitive" profit margins on e-book sales Amazon is able to reap and invokes Judge Florence Pan’s October 31 decision to block Penguin Random House’s acquisition of Simon & Schuster on antitrust grounds, it appears to still suffer from the key deficiency of its predecessor: the lack of any direct evidence suggesting coordination among Amazon and the publishers.
“The mere fact that the publishers entered into those agreements with Amazon is not direct evidence of a conspiracy to fix e-book prices and eliminate retail competition,” Figueredo concluded in her report recommending the initial case be tossed last year. “Because the publishers compete in a concentrated market with a single dominant retailer, each publisher could have rationally expected that the other publishers would have reached the same conclusion about the need to secure an agreement with Amazon."
