U.S. Court of Appeals for the Second Circuit.
U.S. Court of Appeals for the Second Circuit (Credit: ALM)

Major book publishers defeated parallel antitrust appeals Monday, after the U.S. Court of Appeals for the Second Circuit upheld summary judgments in favor of the defendants.

Publishers Simon & Schuster, Penguin Group, HarperCollins Publishers, Apple, DBA Macmillan, Hatchette Book Group, and Holtzbrinck Publishers and its parent company were found to have caused no injury to either Diesel eBooks or BooksOnBoard.

In both suits, Abbey House Media v. Simon & Schuster, 16-305-cv, and Diesel eBooks v. Simon & Schuster, the independent book publishers claimed injury from the antitrust violations.

The suits were filed in response to the circuit’s earlier ruling in United States v. Apple, which found that Apple and five publishing companies—all of whom were party to the current suit—had conspired when they simultaneously switched from a wholesale business model to an agency pricing model (NYLJ, March 8, 2016).

Under agency pricing, pricing was fixed by the publishers, who would pay a commission on each sale to the retailer. Previously, publishers sold to e-books to retailers, who had the discretion to sell at whatever price the chose.

The defendants alleged that the change in pricing ultimately shuttered their businesses (Diesel eBooks eventually reopened under a different name.)

Southern District Judge Denise Cote, ruling in both cases, found both retailers had, at the time, seen the agency pricing as a good thing, while Diesel’s business wasn’t grounded in price competition and BooksOnBoard faced competition from large retailers.

Ultimately, neither company could attribute its demise to the unlawful conspiracy, Cote found, granting the defendants’ motions for summary judgment.

Circuit Judges Amalya Kearse, Peter Hall and Denny Chin, in both suits, agreed with Cote’s findings that “the record permits no genuine dispute as to any material fact” that the antitrust conspiracy resulted in harm to the appellants.

New York University School of Law professor Scott Hemphill, who was not involved in the litigation, said the original antitrust ruling found the publishers’ and Apple’s shift to the agency system made it hard to be a discounter. Part of the problem with the current plaintiffs’ claims, he said, was that they themselves weren’t discounters.

“In fact, the court concluded, these particular plaintiffs apparently benefited from the reduction in price competition,” Hemphill said. “So the plaintiffs weren’t able to show harm from the publishers’ conduct, much less the kind of harm that antitrust protects.”

Weil, Gotshal & Manges partner Gregory Silbert handled oral arguments before the panel for the publisher appellees. He could not be reached for comment Monday.

Los Angeles-based Blecher Collins & Pepperman name partner Maxwell Blecher declined to comment on behalf of his clients, Abbey House Media, who did business as BooksOnBoard.

Washington, D.C.-based Kellogg, Hansen, Todd, Figel & Frederick partner Derek Ho, who represented Diesel eBooks successor Lavoho also could not be reached for comment.