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Case 1:21-cv-02584-GHW-VF Document 146 Filed 08/24/22 Page 1 of 59
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`-------------------------------------------------------X
`BOOKENDS & BEGINNINGS LLC, on behalf
`of itself and all others similarly situated,
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`Plaintiff,
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`AMAZON.COM, INC.; HACHETTE BOOK
`GROUP, INC., HARPERCOLLINS
`PUBLISHERS L.L.C.; MACMILLAN
`PUBLISHING GROUP, LLC; PENGUIN
`RANDOM HOUSE LLC; SIMON &
`SCHUSTER, INC.,
`
`
`Defendants.
`-------------------------------------------------------X
`
`REPORT AND
`RECOMMENDATION
`
`21-cv-02584 (GHW) (VF)
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`VALERIE FIGUEREDO, United States Magistrate Judge
`TO THE HONORABLE GREGORY H. WOODS, United States District Judge
`Plaintiff Bookends & Beginnings LLC (“Bookends”) brings this putative antitrust class-
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`action lawsuit against Defendants Amazon.com, Inc. (“Amazon”), and the five largest book
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`publishers in the United States—Hachette Book Group, Inc. (“Hachette”), HarperCollins
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`Publishers LLC (“HarperCollins”), Macmillan Publishing Group, LLC (“Macmillan”), Penguin
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`Random House LLC (“Penguin”), and Simon & Schuster, Inc. (“Simon & Schuster,” and
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`collectively with the other publisher-defendants, the “Publishers”). Plaintiff asserts claims, on
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`behalf of itself and all other similarly situated retail and online booksellers (the putative class),
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`for (1) discriminatory pricing in violation of the Robinson-Patman Act, 15 U.S.C. § 13; (2)
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`unlawful restraint of trade under Section 1 of the Sherman Act, 15 U.S.C. § 1; (3)
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`monopolization under Section 2 of the Sherman Act, 15 U.S.C. § 2, against only Amazon; and
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`(4) conspiracy to monopolize under Section 2 of the Sherman Act. Amazon and the Publishers
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`separately moved to dismiss the Amended Class Action Complaint (“CAC”).1 See ECF Nos. 75,
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`77. For the reasons that follow, I respectfully recommend that Defendants’ motions to dismiss be
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`GRANTED.
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`A. Factual Background2
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`BACKGROUND
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`Amazon is the largest retail bookseller in the sale of “print trade books,” accounting for
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`“over half of all books purchased at retail in the United States, including about 90% of all print
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`books sold online.”3 See ECF No. 65 (“CAC”) ¶¶ 2, 18, 31, 48, 80, 118, 134. Bookends is a
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`bookseller that sells print trade books online and at its brick-and-mortar store in Evanston,
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`Illinois. CAC ¶¶ 1, 30. The Publishers are the five largest publishers in the United States and
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`together account for about “80% of the trade books sold in the United States.” Id. ¶¶ 1, 77.
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`Collectively, the Publishers are responsible for many of the biggest titles in fiction and non-
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`fiction, including the vast majority of New York Times Bestsellers. Id. ¶ 77.
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`1 Amazon separately moved to strike the class allegations in the CAC. See ECF No. 79.
`The Publishers include an argument to strike the class allegations in their brief in support of their
`motion to dismiss. See ECF No. 76 (Publisher’s Br.) at 23-25. Plaintiff filed a separate
`opposition to Amazon’s motion to strike. See ECF No. 98. I will issue a separate report and
`recommendation addressing Defendants’ motions to strike the class allegations.
`2 The factual allegations recounted herein are taken from the Amended Class Action
`Complaint and documents integral to it. Because the case is before the Court on Defendants’
`motion to dismiss, I accept the well-pled factual allegations of the complaint as true and draw all
`reasonable inferences in Plaintiff’s favor. ATSI Communications, Inc. v. Shaar Fund, Ltd., 493
`F.3d 87, 98 (2d Cir. 2007).
`3 “Trade books” is a term of art referring to “general interest fiction and non-fiction
`books,” distinguished from “non-trade books” like academic textbooks or reference materials.
`CAC ¶ 1.
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`2
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`This lawsuit concerns the sale of print trade books (hardbacks, paperbacks, and mass-
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`produced). Id. ¶¶ 1 n.3, 60. The Publishers are “horizontal competitors” in the publication of
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`print trade books and in the sale, at the wholesale level, of print trade books. Id. ¶ 7. The
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`Publishers sell print books to retailers, like Plaintiff and Amazon, under a wholesale model—
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`which is defined as a discount from the list price of a book. Id. ¶ 3. A publisher’s “list price” is
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`the suggested retail price for a book; it is the price at which “a substantial number of sellers sell
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`trade books” to consumers. Id. ¶¶ 11, 54-55. The list price is also used to determine the
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`wholesale price for a book. Id. ¶ 3. Higher list prices generally mean that booksellers, like
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`Plaintiff, pay a higher wholesale price and consumers pay a higher “retail price[ ].” Id. ¶¶ 3, 53.
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`Higher wholesale prices also lead to “lower total market output of books.” Id. ¶ 53; see also id. ¶
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`56. Plaintiff purchases books from the Publishers at Plaintiff’s “standard discount price of up to
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`46%” off of the list price. Id. ¶ 94.
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`The CAC alleges that Defendants acted collectively to “control wholesale prices of print
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`trade books” by “knowingly” entering into “the same price discrimination agreements with
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`Amazon,” the “dominant retailer” through which the Publishers “sell their trade books.” Id. ¶¶ 7-
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`8, 40. In 2014 and 2015, the Publishers executed “book distribution agreements” with Amazon,
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`wherein the Publishers collectively agreed to sell their books to Amazon at prices that were
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`“steep[ly]” discounted and below the standard discounts available to other booksellers, like
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`Plaintiff. Id. ¶¶ 4, 40-41, 112. The “significant difference” between the discounts offered to
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`Amazon and Plaintiff exceeded any cost savings achieved by the Publishers from selling to
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`Amazon. Id. ¶ 101.
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`The agreement for
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` Publisher,
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`, expressly stated that
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`publisher would “
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`The Publishers recognize that Amazon’s “outsized position of power” in the book
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`industry “endangers the distribution of their books and the long-term health of the publishing
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`industry.” Id. ¶ 15. Publicly, the Publishers are “diametrically opposed to Amazon’s
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`consolidation of market power and their dependence on Amazon as their principle distributor of
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`their books.” Id. ¶ 111. Acting individually, none of the Publishers would have had an incentive
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`to enter into “restrictive agreements” with Amazon that consolidated power in Amazon and
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`ceded substantial control over the distribution of their books. Id. ¶¶ 15-16, 39, 111. By
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`knowingly entering into “uniform agreements” with Amazon, the Publishers “created an
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`economic incentive to raise list prices, which was only attractive to the [Publishers] to the extent
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`they acted collectively.” Id. ¶¶ 10-12, 17, 38, 40-41, 53, 110.
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`For its part, Amazon participated and facilitated the “horizontal agreement” among the
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`Publishers by “coordinating a series of substantially identical agreements with the same
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`anticompetitive terms” and making clear to each Publisher that it was offering each of them the
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`same terms. Id. ¶¶ 8, 115. Amazon “engineered and knowingly received the benefit” of the
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`Publishers’ “price discrimination,” thereby willfully acquiring its monopoly power in the online,
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`retail trade-book market. Id. ¶¶ 6, 18, 48-50, 80. By securing a “substantially lower wholesale
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`price and more favorable contractual terms” than its rivals, Amazon “dominate[s] over its retail
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`competitors” and “gain[s] market share,” because regardless of the list price set by the
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`Publishers, Amazon “faces no meaningful competition from any rival bookseller.” Id. ¶¶ 4, 17,
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`38, 110.
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`The Publishers also pay Amazon
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`Id. ¶¶ 5, 102. These additional discounts and charges “increase the cost of selling to Amazon as
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`compared to other Booksellers.” Id. ¶ 101.
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`The Publishers sell their books to Amazon at “higher discounts and other favorable price
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`terms that are not available to Amazon’s retail competitors in the sale of print trade books, like
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`Plaintiff.” Id. ¶¶ 3-5, 9. The “huge price concessions
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`ensure that Amazon has a significant competitive advantage” over other booksellers, like
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`Plaintiff, by guaranteeing that another bookseller cannot “underprice” Amazon. Id. ¶¶ 4, 10, 110.
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`Amazon knows that the discounts it receives are higher than the Publishers’ “published standard
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`discounts,” and that the Publishers “do not
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` to other customers as they do to
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`Amazon.” Id. ¶¶ 6, 99.
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`The Publishers had “opportunities to collude,” and have colluded in the past. Id. ¶ 112.
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`From 2010 to 2012, the Publishers conspired with Apple to raise the prices of trade eBooks. Id.
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`¶¶ 40, 43, 112. That conduct led to an investigation by the European Commission’s Directorate
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`General for Competition, as well as to substantial sums of money paid in settlement fees by the
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`Publishers as a result of consumer class actions and an action commenced by the United States
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`against the Publishers and Apple. Id. ¶¶ 40, 43-45, 113.
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`Amazon has a “history” of using “anticompetitive agreements,” and its “market
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`dominance” gives it the “ability to promote or destroy a book in the national marketplace for any
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`reason it chooses.” Id. ¶¶ 46, 51. For example, “to extract more fees” from Hachette, during its
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`negotiations of a distribution agreement, Amazon “suspended pre-orders and delayed the
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`shipping times of thousands of Hachette books by weeks, and modified its search and
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`recommendation algorithms to direct shoppers to other books.” Id. ¶ 52.
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`Defendants’ price discrimination has caused Plaintiff to “overpay for books,” requiring it
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`to pay “higher wholesale prices for print trade books” without any offsetting competitive benefit,
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`such as exclusive sales. Id. ¶¶ 20, 42, 91. It has also resulted in higher retail prices paid by
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`consumers and depressed book sales. Id. ¶¶ 12-14, 53, 56, 91, 119. The discriminatory pricing
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`also lessens competition in the retail market for print trade books by allowing Amazon to draw
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`significant sales or profits away from rival booksellers. Id. ¶¶ 17, 37. Moreover, “by minimizing
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`competition from Amazon’s rivals,” the discriminatory pricing agreements also tend to create or
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`maintain Amazon’s monopoly share of the market for print trade books and the submarket for
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`online sales of print trade books. Id. ¶ 17, 111.
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`B. Procedural Background
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`Plaintiff commenced this action on March 25, 2021. See ECF No. 1. (“Compl.”). The
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`initial complaint alleged that the wholesale prices for print trade books were artificially inflated
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`by Most Favored Nation (“MFN”) clauses in the agreements between the Publishers and
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`Amazon, which prevented other booksellers, like Plaintiff, from negotiating for better wholesale
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`prices and competing to gain market share. Compl. ¶¶ 2-4, 22-23, 26. The print distribution
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`agreements between the Publishers and Amazon, however, did not contain an MFN clause; a fact
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`Plaintiff discovered when Defendants made the agreements available to Plaintiff’s counsel for
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`review. See ECF No. 43 at 1; ECF No. 44 at 1-2 n.2.
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`On July 13, 2021, Plaintiff filed an amended class action complaint. See ECF No. 65
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`(CAC). The CAC asserts four causes of action: (1) a claim under the Robinson-Patman Act, 15
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`U.S.C. § 13, alleging that Defendants entered into discriminatory pricing agreements (CAC ¶¶
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`92-104); (2) a claim under Section 1 of the Sherman Act, 15 U.S.C. § 1, alleging that Defendants
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`conspired to raise the wholesale price of print trade books (CAC ¶¶ 105-23); (3) a claim against
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`only Amazon under Section 2 of the Sherman Act, 15 U.S.C. § 2, alleging that, through its
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`discriminatory pricing agreements with the Publishers, Amazon willfully acquired and
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`maintained its monopoly power in the U.S. retail market for print trade books (CAC ¶¶ 124-30);
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`and (4) a claim for conspiracy to monopolize, 15 U.S.C. § 2, alleging that Defendants conspired
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`to confer a monopoly on Amazon (CAC ¶¶ 131-38).
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`On September 7, 2021, the Publishers and Amazon separately moved to dismiss the
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`amended complaint. See ECF Nos. 75, 77. Plaintiff opposed the motions (see ECF Nos. 94, 95),
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`and the motions were fully submitted on November 22, 2021 (see ECF Nos. 112, 114). The
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`Court held oral argument on the motions on July 27, 2022. See ECF No. 136.
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`A. Motion to Dismiss
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`DISCUSSION
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`Rule 8 of the Federal Rules of Civil Procedure provides that a complaint seeking relief
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`“must contain . . . a short and plain statement of the claim showing that the pleader is entitled to
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`relief.” Fed. R. Civ. P. 8(a)(2). “This Rule does not countenance pleadings that are conclusory; it
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`requires factual allegations that are sufficient to ‘give the defendant fair notice of what the . . .
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`claim is and the grounds upon which it rests.’” Anderson News, LLC v. Am. Media, Inc., 680
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`F.3d 162, 182 (2d Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
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`Where the well-pleaded facts in a complaint “do not permit the court to infer more than the mere
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`possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—that ‘the pleader
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`is entitled to relief.’” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (quoting Fed. R. Civ. P. 8(a)(2)
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`(alteration in original)).
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`To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a
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`complaint must plead “enough facts to state a claim to relief that is plausible on its face.”
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`Twombly, 550 U.S. at 570. A claim has “facial plausibility when the plaintiff pleads factual
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`content that allows the court to draw the reasonable inference that the defendant is liable for the
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`misconduct alleged.” Iqbal, 556 U.S. at 678. “Asking for plausible grounds to infer an agreement
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`does not impose a probability requirement at the pleading stage; it simply calls for enough fact to
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`raise a reasonable expectation that discovery will reveal evidence of illegal agreement.”
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`Twombly, 550 U.S. at 556.
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`In considering a motion to dismiss, a district court must “accept[ ] all factual claims in
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`the complaint as true, and draw[ ] all reasonable inferences in the plaintiff’s favor.” Lotes Co. v.
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`Hon Hai Precision Indus. Co., 753 F.3d 395, 403 (2d Cir. 2014) (quoting Famous Horse Inc. v.
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`5th Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir. 2010)) (internal quotation marks omitted).
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`However, “the tenet that a court must accept as true all of the allegations contained in a
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`complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. “Threadbare recitals of
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`the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.
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`“[R]ather, the complaint’s factual allegations must be enough to raise a right to relief above the
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`speculative level, i.e., enough to make the claim plausible.” Arista Records, LLC v. Doe 3, 604
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`F.3d 110, 120 (2d Cir. 2010) (quoting Twombly, 550 U.S. at 555, 570) (internal quotation marks,
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`alteration, and citation omitted).
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`B. Sherman Act Section 1 Claim
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`In Count II of the CAC, Plaintiff alleges that Defendants conspired to raise the wholesale
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`prices of print trade books in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. CAC ¶¶
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`105-123. The Publishers and Amazon contend that the Section 1 claim should be dismissed
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`because Plaintiff has failed to allege direct or circumstantial evidence of the existence of a
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`conspiracy among the Publishers and Amazon to raise wholesale prices. Publisher’s Br. at 4-8;
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`Amazon’s Br. at 25. For the reasons discussed below, I agree that Plaintiff has not plausibly
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`alleged the existence of a conspiracy either among the Publishers or between the Publishers and
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`Amazon.
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`Section 1 of the Sherman Act outlaws “[e]very contract, combination . . ., or conspiracy,
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`in restraint of trade or commerce among the several States.” 15 U.S.C. § 1. To state a claim
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`under Section 1, a plaintiff must allege (1) “a combination or some form of concerted action
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`between at least two legally distinct economic entities,” and (2) “that the agreement constituted
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`an unreasonable restraint of trade either per se or under the rule of reason.” Meyer v. Kalanick,
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`174 F. Supp. 3d 817, 822 (S.D.N.Y. 2016) (quoting Cap. Imaging Assocs., P.C. v. Mohawk
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`Valley Med. Assocs., Inc., 996 F.2d 537, 542 (2d Cir. 1993)). An antitrust conspiracy in
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`violation of Section 1 of the Sherman Act requires proof of joint or concerted action as opposed
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`to unilateral action. Anderson News, 680 F.3d at 183.
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`When a Section 1 claim is made, the “crucial question” is “whether the challenged
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`conduct ‘stem[s] from independent decision or from an agreement, tacit or express.’” Starr v.
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`Sony BMG Music Entm’t, 592 F.3d 314, 321 (2d Cir. 2010) (quoting Theatre Enters., Inc. v.
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`Paramount Film Distrib. Corp., 346 U.S. 537, 540 (1954)) (alteration in original); see also
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`Capital Imaging Assocs., 996 F.2d at 542 (“Unilateral conduct on the part of a single . . .
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`enterprise falls outside the purview” of Section 1 of the Sherman Act.). To establish a conspiracy
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`in violation of Section 1, the circumstances of the alleged conspiracy “must reveal a unity of
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`purpose or a common design and understanding, or a meeting of minds in an unlawful
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`arrangement.” Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764 (1984) (internal
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`citation and quotation marks omitted). “No formal agreement is required to constitute an antitrust
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`conspiracy.” Ross v. Am. Express Co., 35 F. Supp. 3d 407, 437 (S.D.N.Y. 2014), aff’d sub nom.
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`Ross v. Citigroup, Inc., 630 F. App’x 79 (2d Cir. 2015), as corrected (Nov. 24, 2015). Rather, the
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`“essential combination or conspiracy in violation of the Sherman Act may be found in a course
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`of dealings or other circumstances as well as in any exchange of words.” Am. Tobacco Co. v.
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`United States, 328 U.S. 781, 809-10 (1946). Courts examine the existence of a conspiracy “as a
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`whole,” taking into consideration the totality of the evidence, as opposed to “dismembering it
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`and viewing its separate parts.” Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690,
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`699 (1962); see also In re Publ’n Paper Antitrust Litig., 690 F.3d 51, 65 (2d Cir. 2012).
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`In order to prove the existence of a conspiracy, a plaintiff must come forth with “direct or
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`circumstantial evidence that reasonably tends to prove that the [defendant] and others had a
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`conscious commitment to a common scheme designed to achieve an unlawful objective.”
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`Anderson News, 680 F.3d at 184 (quoting Monsanto Co., 465 U.S. at 764) (emphasis and
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`alteration in original). Because conspiracies, by their nature, tend to form in secret, such
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`unlawful agreements “nearly always must be proven through inferences that may fairly be drawn
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`from the behavior of the alleged conspirators.” Anderson News, 680 F.3d at 183 (citation
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`omitted).
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`“Under Twombly, parallel conduct, such as competitors adopting similar policies around
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`the same time in response to similar market conditions, may constitute circumstantial evidence of
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`anticompetitive behavior.” In re Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186,
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`1193 (9th Cir. 2015) (citing Twombly, 550 U.S. at 553-54). But a complaint that merely alleges
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`parallel conduct among defendants—even consciously parallel conduct—does not state a claim
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`under Section 1. See Twombly, 550 U.S. at 553-54. That is because “parallel conduct or
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`interdependence, without more,” is behavior that is “consistent with conspiracy, but just as much
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`in line with a wide swath of rational and competitive business strategy unilaterally prompted by
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`common perceptions of the market.” Id. at 554; Mayor & City Council of Baltimore, Md. v.
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`Citigroup, Inc., 709 F.3d 129, 136 (2d Cir. 2013) (explaining that “alleging parallel conduct
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`alone is insufficient, even at the pleading stage” to state a Section 1 claim); In re Musical
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`Instruments, 798 F.3d at 1193-94 (“Allegations of facts that could just as easily suggest rational,
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`legal business behavior by the defendants as they could suggest an illegal conspiracy are
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`insufficient to plead a § 1 violation.”) (internal quotation marks and citations omitted);
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`Bookhouse of Stuyvesant Plaza, Inc. v. Amazon.com, 985 F. Supp. 2d 612, 619 (S.D.N.Y.
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`2013). Instead, allegations of parallel conduct “gets the complaint close to stating a claim, but
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`without some further factual enhancement it stops short of the line between possibility and
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`plausibility of entitlement to relief.” Twombly, 550 U.S. at 557 (internal quotation marks,
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`alteration, and citation omitted); see also Iqbal, 556 U.S. at 678.
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`At the pleading stage, “when allegations of parallel conduct are set out in order to make a
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`§ 1 claim, they must be placed in a context that raises a suggestion of a preceding agreement.”
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`Twombly, 550 U.S. at 557; Starr, 592 F.3d at 323; In re Elevator Antitrust Litig., 502 F.3d 47, 50
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`(2d Cir. 2007). This standard does not require a plaintiff to show that the allegations suggesting
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`agreement “are more likely than not true or that they rule out the possibility of independent
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`action.” Anderson News, 680 F.3d at 184. A court ruling on a motion to dismiss need not choose
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`among plausible interpretations of the evidence. Id. at 189-90. But a statement of facts that is
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`“merely consistent” with an agreement will not suffice. Twombly, 550 U.S. at 557; Anderson
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`News, 680 F.3d at 184. A complaint must contain “enough fact to raise a reasonable expectation
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`that discovery will reveal evidence of illegal agreement.” Twombly, 550 U.S. at 556.
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`1. Concerted Action
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`a. Direct Evidence of a Conspiracy
`As direct evidence of a conspiracy, Plaintiff points to the existence of the vertical
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`distribution agreements between each Publisher and Amazon. ECF No. 94 (Pl.’s Br.) at 5. Those
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`contracts, Plaintiff argues, demonstrate that the Publishers agreed to sell their print trade books to
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`Amazon at “highly discounted prices not available to other booksellers, and only on the
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`condition that the other Publisher Defendants also participated in the pricing scheme.” Id.
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`The CAC alleges that the Publishers, all of whom are “horizontal competitors in the
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`publication and sale (at wholesale) of print trade books,” knowingly entered into the “same price
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`discrimination agreements with Amazon” in 2014 and 2015. CAC ¶¶ 7-8, 40. Each publisher
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`“understood” that “the specific monetary and performance terms of its contract reflect[ed] its
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`competitors’ terms and in fact were conditioned on their agreement to the same terms.” Id. ¶ 8.
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` of the agreements
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` contained a meeting-
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`competition clause, where the Publisher agreed that it would
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` Id.
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` the CAC alleges that “Amazon
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`publicly confirmed at the time of negotiations that the contract presented to HarperCollins was
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`the same contract recently signed by Simon & Schuster, Hachette, and Macmillan.” Id. ¶ 8
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`(internal quotation marks omitted).
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`An agreement that contains lawful contractual terms, standing alone, is not direct
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`evidence of a conspiracy. See PharmacyChecker.com, LLC v. Nat’l Ass’n of Bds. of Pharmacy,
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`530 F. Supp. 3d 301, 333 (S.D.N.Y. 2021) (“Direct evidence of a conspiracy is explicit and
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`requires no inferences to establish the proposition or conclusion being asserted.”) (internal
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`quotation marks and citation omitted); see also Relevant Sports, LLC v. Federation
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`Internationale de Football Ass’n, 551 F. Supp. 3d 120, 131-32 (S.D.N.Y. 2021) (reasoning that
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`FIFA policy itself was not direct evidence of a conspiracy and explaining that direct evidence of
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`concerted activity by the members of the FIFA Council required plausible allegations concerning
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`“an antecedent agreement” among those members “to vote a particular way to adopt such a
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`policy”) (citation and internal quotation marks omitted). Instead, direct evidence of a conspiracy
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`“would consist, for example, of a recorded phone call in which two competitors agreed to fix
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`prices at a certain level.” Mayor & City Council, 709 F.3d at 136; see also In re Tether &
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`Bitfinex Crypto Asset Litig., 576 F. Supp. 3d 55, 101-02 (S.D.N.Y. 2021) (noting that direct
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`evidence of a conspiracy includes such evidence as “recorded phone call or email in which
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`competitors agreed to fix prices”) (citation and internal quotation marks omitted).
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`There is nothing inherently unlawful about a distribution agreement between a publisher
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`and a retailer. And Plaintiff does not claim otherwise. Nor was it unlawful for each Publisher,
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`acting alone, to enter into the same distribution agreement with Amazon, even if it knew that its
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`competitors were also doing the same. Such behavior is simply parallel conduct which is not
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`itself unlawful absent some preceding agreement to act collectively. See Twombly, 550 U.S. at
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`553-54 (explaining that “parallel conduct or interdependence, without more,” is behavior that is
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`“consistent with conspiracy, but just as much in line with a wide swath of rational and
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`competitive business strategy unilaterally prompted by common perceptions of the market”).
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`b. Circumstantial Evidence of a Conspiracy
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`Where, as here, there is no direct evidence of an agreement to conspire, parallel conduct
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`can be probative evidence of unlawful collusion. Apex Oil Co. v. DiMauro, 822 F.2d 246, 253
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`(2d Cir. 1987). “The line separating conspiracy from parallelism is indistinct[.]” Gelboim v.
`
`Bank of Am. Corp., 823 F.3d 759, 781 (2d Cir. 2016). But a conspiracy “may be inferred on the
`
`basis of conscious parallelism, when such interdependent conduct is accompanied by
`
`circumstantial evidence and plus factors.” Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir.
`
`2001); see also Apex Oil, 822 F.2d at 253 (“[A] plaintiff must show the existence of additional
`
`circumstances, often referred to as ‘plus’ factors, which, when viewed in conjunction with the
`
`14
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`

`

`Case 1:21-cv-02584-GHW-VF Document 146 Filed 08/24/22 Page 15 of 59
`
`parallel acts, can serve to allow a fact-finder to infer a conspiracy.”). “These ‘plus factors’ may
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`include: a common motive to conspire, evidence that shows that the parallel acts were against the
`
`apparent individual economic self-interest of the alleged conspirators, and evidence of a high
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`level of interfirm communications.” Mayor & City Council, 709 F.3d at 136 (quoting Twombly
`
`v. Bell Atl. Corp., 425 F.3d 99, 114 (2d Cir. 2005), rev’d on other grounds, Twombly, 550 U.S.
`
`544). Such plus factors are “neither exhaustive nor exclusive, but rather illustrative of the type of
`
`circumstances which, when combined with parallel behavior, might [lead a court to] infer the
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`existence of an agreement.” Id. at 136, n. 6.
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`The CAC alleges that the Publishers knowingly entered into the same distribution
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`agreement with Amazon, which contained a meeting-competition clause, and whereby the
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`Publishers agreed to provide Amazon “huge price concessions” for the purchase of print trade
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`books. See CAC ¶¶ 4, 8-10. The CAC further alleges that following execution of those
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`agreements, the Publishers each raised the list price of their print trade books, causing a market-
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`wide increase in the list price of print books. See CAC ¶¶ 11-13.
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`To place that parallel conduct in a context that raises a plausible inference that the
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`Publishers were not acting independently, Plaintiff relies on the following plus factors: (1)
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`without collective action, “none of the [Publishers] would have an incentive to enter into
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`restrictive agreements that consolidate power in Amazon” (CAC ¶¶ 10, 16, 39-41, 111); (2)
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`Defendants share a common motive to collude (CAC ¶ 110); (3) Defendants “had opportunities
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`to collude,” including, most recently, during the Publishers’ conspiracy with Apple to fix the
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`price of eBooks (CAC ¶¶ 40, 43, 112); and (4) Amazon has been the subject of prior government
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`investigations (CAC ¶¶ 43-47). For the reasons discussed below, these plus factors do not
`
`support a plausible inference that the Publishers were not acting independently. Plaintiff thus has
`
`15
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`

`

`Case 1:21-cv-02584-GHW-VF Document 146 Filed 08/24/22 Page 16 of 59
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`not plausibly alleged the existence of concerted action, either among the Publishers or between
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`the Publishers and Amazon.
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`Action against Self-Interest
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`The CAC alleges that the Publishers acted against their own self-interest in entering into
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`the distribution agreements with Amazon. As the CAC explains, it would have been in each
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`Publisher’s own self-interest “not to give Amazon disproportionate discounts or other advantages
`
`that allow it to destroy its competition,” because Amazon “acts anti-competitively in multiple
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`ways.” CAC ¶¶ 15-16; see also id. ¶ 111. The CAC further alleges that “[a]cting individually”
`
`none of the Publishers would have had an “incentive to enter into restrictive agreements that
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`consolidate power in Amazon and cede substantial control over the distribution of their books.”
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`CAC ¶ 39. Plaintiff thus claims that in the absence of concerted action, the Publishers “cannot
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`explain why” it would have been in their individual self-interest to contract with Amazon. ECF
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`No. 94 (Pl.’s Br.) at 8.
`
`“An action that is contrary to a firm’s apparent economic self-interest is one that is
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`implausible if undertaken alone, without the guarantee of cooperation by competitors.”
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`SourceOne Dental, Inc. v. Patterson Companies, Inc., 310 F. Supp. 3d 346, 360 (E.D.N.Y. 2018);
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`accord PharmacyChecker.com, 530 F. Supp. 3d at 335. Here, Plaintiff’s own allegations readily
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`explain why each Publisher would have independently decided to distribute print books through
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`Amazon, even without a guarantee that the other Publishers would follow. The CAC provides a
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`natural explanation for such unilateral action by a Publisher because Amazon’s market
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`dominance made it an indispensable bookselling partner for each Publisher.
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`According to the CAC, the Publishers “have an interest in generating sales in the print
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`trade book market.” CAC ¶ 111. Amazon, by itself, accounts for “50% or more of the US print
`
`16
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`

`

`Case 1:21-cv-02584-GHW-VF Document 146 Filed 08/24/22 Page 17 of 59
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`book market” and “90% of online print sales.” CAC ¶¶ 18, 48-49, 80, 118. As the CAC explains,
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`Amazon is a “dominant” online retailer in the U.S. market for print trade books, selling “more
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`books than any other single retail outlet in history.” CAC ¶¶ 7, 39, 48, 114, 134. Its “market
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`dominance” nationwide gives Amazon the ability to “promote or destroy a book in the national
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`marketplace.” CAC ¶ 51. For instance, if Amazon removes the “buy-button from a particular
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`title,” overall sales of that book can drop by “50% or more.” CAC ¶ 52.5 Collectively, these
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`allegations demonstrate that the Publishers were dealing with a retailer who had an “outsized
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`position of power” (CAC ¶ 15) and accounted for “over half of all books purchased at retail in
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`the United States” (CAC ¶ 2). Although the CAC also alleges that acting alone, none of the
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`Publishers would have had an incentive to “cede substantial control over the distribution of their
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`books” (CAC ¶ 39), the CAC itself explains why a Publisher, acting alone, would have sought to
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`distribute books through Amazon: it could not afford to lose a retailer that accounted for more
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`than 50% of the retail market and 90% of the online retail market for print books. CAC ¶ 118.
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`To bolster its argument that collective action was necessary for an agreement with
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`Amazon to be in each Publisher’s own self-interest, Plaintiff points to the conspiracy in Apple,
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`where the Publishers colluded with Apple to raise the price of eBooks. ECF No. 94 (Pl.’s Br.) at
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`8; see also United States

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