A class action lawsuit over e-book pricing filed against five major publishers and Apple has begun to sprawl, with four new "copycat" lawsuits filed last week. Two suits, filed in Manhattan, add Random House as a defendant, while a third suit, also in Manhattan, adds Amazon and Barnes & Noble. Another suit was filed in Oakland, Calif. The claims and assertions of fact in each suit are nearly identical to the original suit, filed August 9 by the firm Hagens Berman: that the simultaneous introduction of the agency model by the major publishers reflects an illegal conspiracy to "artificially inflate" e-book prices.
The filing of copycat suits is very common in consumer class actions. "It is more the rule than the exception," one class action attorney told PW. If a case is perceived to be a good one, there will be multiple filings by different firms in different courts, and the firms will then compete to see who will become lead counsel. In the coming months, the cases—and there could be more coming—will be organized, and the defendants will seek to have them moved to one court.
According to the filings, the price fixing conspiracy occurred as Apple negotiated terms with publishers in anticipation of the 2010 iPad release. On January 27, 2010, when asked by reporters how Apple's e-bookstore would compete with Amazon's $9.99 price, Apple's Steve Jobs responded that the prices "would be the same." That public pronouncement, one suit alleges, "was a signal to Publisher Defendants that each of them had agreed to join the conspiracy." The following day, January 28, Macmillan CEO John Sargent told Amazon of its switch to the agency model. "This would have been irrational if Macmillan had not expected its primary competitors to follow suit," the lawsuit notes. "Acting alone, no individual publisher would be able to sustain the supra-competitive prices." The agency model, the suit notes, effectively ended "retailer discretion" for e-book pricing.
The question now is whether the allegations of conspiracy in the filings are sufficient to avoid dismissal. In the coming months, the defendants will most likely move to have the suits dismissed on as many grounds as possible, and will also seek to delay any discovery while the case is considered. But such motions to dismiss usually fail, lawyers say, although the case may be narrowed.
The filings so far include no proof of any collusion. But with investigations under way in some states and reported federal interest into Apple's practices, the questions raised in the suit appear strong enough to at least advance the case, and that could be damaging enough. Even if the case is defensible, the prospect of being deposed about pricing, the economics of digital publishing, and other core business operations looms. And there are the legal fees, which have already begun to toll, and come at a time when publishers appear poised to litigate with Google, following the failure of the Google settlement.