The ABA has dropped its lawsuit against Barnes & Noble and Borders in exchange for a $4.7 million payment, ending a legal odyssey that lasted nearly three years and cost the ABA approximately $18 million in legal fees. Neither defendant will need to change its business practices as a result of the settlement.
As part of the agreement, the ABA will not be allowed to sue either company in connection with allegations raised in this suit for three years. Documents and depositions uncovered during the discovery phase will be destroyed. The documents, which the ABA said supported claims of preferential pricing, were referred to in witness testimonies but never officially entered into evidence.
Each side took something positive away from the settlement, although the two chains were clearly happier about the result. "The settlement is nothing short of a total vindication for Barnes & Noble," said Len Riggio, the company's CEO. "Barnes & Noble was being sued for being Barnes & Noble." B&N lead counsel Daniel Petrocelli said that the settlement "is a total validation of [my client's] right to do business and the way they do it." Borders president Greg Josefowicz said Borders "has been completely vindicated in this case." Chief Borders lawyer Reg Steer said he, too, felt satisfied with the result, though he added, "Going into Wednesday I didn't know if we were going to be able to settle."
The ABA's reaction was more muted, and the association limited its comments to a prepared statement that read in part: "The [pricing] issues are on the table. They can no longer be ignored or denied — the lawsuit has accomplished that end." Indeed, a common refrain from booksellers during the trial ran along the lines of "We just want to get this evidence out there." Still, the annual meeting in June is sure to bring questions from member booksellers as to whether the effort was worth it.
The ABA left the door open for further action, the three-year agreement notwithstanding. "As the settlement agreement makes clear, independent booksellers retain all their options to address grievances in the future — including legal ones," it said in the statement.
The agreement came about rather abruptly. After six days of testimony, the lawyers took a break Wednesday for settlement talks. On Thursday morning, they asked Judge William Orrick for another hour to hammer out final details. By 10 a.m., the mood in the courtroom was jovial, a departure from the tense atmosphere earlier.
The settlement followed an up-and-down week for each side. The plaintiff had pieced together a case based on internal documents which tried to show that the chains regularly received a discount above 42%, were given more time to pay their bills and had access to special programs that were not available to other stores. The defense sought to show that independents had a successful business despite their allegations and that independents were also privy to discounts and terms not found in the ABA Red Book.
As the trial wore on, some observers felt it was slipping out of the ABA's grasp. The plaintiff's own witness, bookseller and Cody's owner Andy Ross, admitted that he negotiated terms that were outside the Red Book. The ABA was also adversely affected by the judge's ruling three days into the trial that former ABA president Gail See could not testify as a so-called summary witness, meaning, essentially, that she couldn't interpret the difference between chain and independent terms. But the ABA received perhaps its biggest setback even before the trial began, when Orrick ruled that the case would not be subject to monetary damages and eliminated the possibility of a jury trial, which meant many of the videotaped depositions would likely be entered only in the form of written testimony.
"They were trying to tie a lot of little things into one big thing," said one insider. "It wasn't an easy case."
