Judge Denise Cote officially opened a new (although tenuous) legal front in the ongoing e-book price-fixing battle, refusing to dismiss an antitrust suit filed by a nascent e-book retailer against Apple and the five agency publishers.
The case, filed by Australian upstart DNAML in September of 2013 alleges that the company was 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, Cote ruled that the retailer was entitled to its day in court. In addition, the DNAML case will likely be joined by two related cases, one filed by Lavoho, LLC, a "successor" to the Diesel eBook Store; and another from Abbey House Media, formerly BooksOnBoard. In her order, Cote scheduled a pretrial conference for July 25, that is to include Lavoho and Abbey House, at which the parties are to discuss “a schedule for fact discovery, and settlement talks,” as well as confer on a proposed schedule. She also lifted a discovery stay.
The plaintiffs are represented (at least in part) by attorney Max Blecher, who in an earlier letter to the court indicated that he would seek to consolidate the three plaintiffs' cases.
Notably, this is not Blecher's first suit alleging a major publisher conspiracy. He also represented three independent booksellers in a recently dismissed suit that claimed the "big six" publishers were in a conspiracy with Amazon. Judge Jed Rakoff dismissed that case in December, 2013, citing a lack of evidence and "no plausible motive."
Although Cote in her opinion said proving damages was going to be difficult “in the extreme” for the DNAML, she held that the plaintiff’s case met the standard to proceed. But while Cote suggested that proving damages might be difficult, she added that DNAML’s “lost investment,” in its business “may be reasonably quantifiable.”
“It is more than plausible that a discount retailer was harmed by a conspiracy to remove retailers’ ability to discount e-books,” the judge wrote in her order, adding that the retailers were "indisputably competitors in a market in which trade was restrained."
Whatever DNAML’s chances of success with the suit, the decision is a blow for the publishers, who clearly want this entire legal saga behind them.
Meanwhile, in a minor ruling last week in Apple’s case, Cote held that the states are entitled to seek statutory penalties in addition to damages at Apple’s upcoming damages trial. The amount varies from state-to-state, but comes to around $9 million total—a drop in the bucket for Apple, which is facing hundreds of millions in damages.