Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 1 of 36
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`UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`NO.
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`CLASS ACTION COMPLAINT
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`JURY TRIAL DEMANDED
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`CWA LOCAL 1180 MEMBERS’ ANNUITY
`FUND AND CWA LOCAL 1180
`ADMINISTRATIVE BENEFITS FUND,
`INDIVIDUALLY AND ON BEHALF OF ALL
`OTHERS SIMILARLY SITUATED,
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`Plaintiffs,
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`
`
`v.
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`AMAZON.COM, INC., ANDREW R. JASSY,
`JEFFREY P. BEZOS, BRIAN T. OLSAVSKY,
`DAVID A. ZAPOLSKY, and NATE SUTTON,
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`Defendants.
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`
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`Plaintiffs CWA Local 1180 Members’ Annuity Fund and CWA Local 1180
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`Administrative Benefits Fund (collectively “CWA 1180 Funds” or “Plaintiffs”), individually and
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`on behalf of all others similarly situated, allege the following upon information and belief except
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`as to allegations specific to Plaintiffs, which are alleged upon personal knowledge. Allegations
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`based on information and belief are based on, inter alia, the investigation of counsel which, in
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`turn, is based on the analysis and review of, among other things, public statements and filings
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`with the United States Securities Exchange Commission (“SEC”) made by Amazon.com, Inc.
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`CLASS ACTION COMPLAINT - 1
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 2 of 36
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`(“Amazon”), news releases issued by Amazon, news articles and analyst reports regarding
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`Amazon, and other publicly available information.
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`I.
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`NATURE AND SUMMARY OF THE ACTION
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`1.
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`This is a class action on behalf of persons and entities that acquired Amazon
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`common stock between February 1, 2019 and April 28, 2022, inclusive (the “Class Period”),
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`against the Defendants Amazon; Founder, Current Executive Chair, and Former Chief Executive
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`Officer Jeffrey P. Bezos (“Bezos”); Current Chief Executive Officer Andrew R. Jassy (“Jassy”);
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`Chief Financial Officer Brian T. Olsavsky (“Olsavsky”); General Counsel David A. Zapolsky
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`(“Zapolsky”); and Associate General Counsel Nate Sutton (“Sutton”) (collectively,
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`“Defendants”), for Defendants’ violations of sections 10(b) and 20(a) of the Securities Exchange
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`Act of 1934, (the “Exchange Act”), 15 U.S.C. §§ 78j(b) and 78t(a), and Rule 10b-5 promulgated
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`by the SEC, 17 C.F.R. § 240.10b-5.
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`2.
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`Amazon, headquartered in Seattle, Washington and incorporated in Delaware, is
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`one of the largest technology companies, and is involved in online retail, cloud computing, data,
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`and streaming, among other services.
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`3.
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`While Amazon is most known for being an online retailer, Amazon actually is a
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`“big data” company. On Amazon.com, Amazon acts as a merchant and retailer for third-party
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`merchandise and its own line of Amazon-branded products, while collecting data the entire time.
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`4.
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`As the owner and operator of Amazon.com, Amazon collects and analyzes the
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`data of its sales, customers, spending habits, and seller information.
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`5.
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`As Amazon collects data, it learns which items are best sellers, and how to
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`outcompete its own third-party sellers.
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`CLASS ACTION COMPLAINT - 2
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 3 of 36
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`6.
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`Once Amazon has collected the data of the best-selling third-party merchandise,
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`it replicates the merchandise, brands it as its own private-label “Amazon Basic”, and advertises
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`it at the top of its customer’s searches.
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`7.
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`In June 2019, the U.S. House Committee on the Judiciary (the “House Judiciary
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`Committee”) initiated a bipartisan investigation into the state of the competition online,
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`investigating Amazon, Apple, Facebook, and Google.1
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`8.
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`The House Judiciary Committee held eight hearings, and received testimony from
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`Amazon’s employees and counsel, including Amazon’s then-Chief Executive Officer, Jeff
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`Bezos.
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`9.
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`The House Judiciary Committee concluded that Amazon, as well as the other
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`investigated companies, “run the marketplace while also competing in it – a position that enables
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`them to write one set of rules for others, while they play by another, or to engage in a form of
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`their own private quasi regulation that is unaccountable to anyone but themselves.”
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`10.
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`The House Judiciary Committee concluded that Amazon made false and
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`misleading statements to the Committee, then refused to turn over evidence that would either
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`“corroborate its claims or correct the record.”
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`11.
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`On March 9, 2022, the House Judiciary Committee requested that the U.S.
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`Department of Justice (“DOJ”) open a criminal investigation into Amazon and its executives for
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`criminal obstruction of Congress in violation of applicable federal law.
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`12.
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`In response, Amazon asserted that there was “no factual basis” for the House
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`Judiciary Committee’s allegations.
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`1 https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf?utm_campaign=4493-
`519, last visited, June 26, 2022.
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`CLASS ACTION COMPLAINT - 3
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 4 of 36
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`13.
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`On April 6, 2022, news outlets reported that Amazon was under investigation by
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`the Securities and Exchange Commission (“SEC”) regarding its use of third-party seller data for
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`its own private-label business.
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`14.
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`On this news, Amazon’s stock fell 2% from $161.65 at open to $158.76 on close
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`on April 6, 2022.2
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`15.
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`Beyond Amazon’s anticompetitive misuse of third-party seller data, throughout
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`much of 2020 and the remainder of the Class Period, Amazon was engaged in a spending spree
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`on warehouse and fulfillment space. At the end of 2019, Amazon’s distribution, warehouse and
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`data center space covered approximately 192 million square feet. Beginning in 2020, the
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`Company engaged in a massive expansion spree, expanding its data and fulfillment centers until
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`they covered approximately 387.1 million square feet by the end of 2021, doubling its size in two
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`years and resulting in an excess of space and employees that forced the Company to pivot into
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`“cost efficiency”” mode.
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`16.
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`On April 28, 2022, Amazon posted its first quarterly loss in seven years. The loss
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`reflected, in part, $2 billion in “incremental costs” arising from the Company’s doubling of its
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`warehouse, fulfillment, and data center space, from 192 million square feet in December 2019 to
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`approximately 387.1 million square feet at the end of 2021. This over-expansion forced the
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`Company to pivot into “cost efficiency” mode, halting further expansion and even cancelling
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`some planned expansion projects.
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`2 On June 3, 2022, Amazon completed a 20 for 1 Stock Split. Accordingly, all numbers reflect
`valuations and stock prices based on that 20 for 1 split.
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`CLASS ACTION COMPLAINT - 4
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 5 of 36
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`17.
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`On this news, Amazon’s stock fell 14.05% from $144.59 per share, to $124.28
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`per share on close on April 29, 2022.
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`18.
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`Throughout the Class Period, Defendants made materially false and misleading
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`statements regarding Amazon’s business, operations, and policies. Specifically, Defendants
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`made false and/or misleading statements and/or failed to disclose that: (i) Amazon engaged in
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`anticompetitive conduct; (ii) Amazon’s anticompetitive behavior exposes it to a heightened risk
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`of regulatory scrutiny; (iii) Amazon’s revenues derived from its Amazon Basics business were a
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`result of its anticompetitive conduct; and (iv) Amazon was engaged in an overly aggressive
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`expansion of its warehouse and fulfillment network that would expose it to billions in
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`unnecessary “incremental costs.”
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`19.
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`Defendants’ wrongful acts and omissions, and the substantial decline in the
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`trading price of Amazon securities when those wrongful acts and omissions became known to
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`investors, caused significant losses and damages to Plaintiffs and the members of the Class.
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`II.
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`JURISDICTION AND VENUE
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`20.
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`The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange
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`Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17
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`C.F.R. § 240.10b-5).
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`21.
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`This Court has jurisdiction over the subject matter of this action pursuant to 28
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`U.S.C. § 1331 and Section 27 of the Exchange Act (15 U.S.C. § 78aa).
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`22.
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`Venue is proper in this Judicial District pursuant to 28 U.S.C. § 1391(b) and
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`Section 27 of the Exchange Act (15 U.S.C. § 78aa(c)). Substantial acts in furtherance of the
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`alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts
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`charged herein, including the dissemination of materially false and/or misleading information,
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`CLASS ACTION COMPLAINT - 5
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 6 of 36
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`occurred in substantial part in this Judicial District. In addition, the Company’s principal
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`executive offices are in the Judicial District.
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`23.
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`In connection with the acts, transactions, and conduct alleged herein, Defendants
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`directly and indirectly used the means and instrumentalities of interstate commerce, including
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`the United States mail, interstate telephone communications, and the facilities of a national
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`securities exchange.
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`III.
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`PARTIES
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`24.
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`CWA 1180 Funds, as set forth in the accompanying certification, incorporated by
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`reference herein, purchased Amazon securities during the Class Period, and suffered damages as
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`a result of the federal securities law violations and false and/or misleading statements and/or
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`material omissions alleged herein.
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`25.
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`Defendant Amazon is incorporated under the laws of Delaware and maintains its
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`headquarters in Seattle, Washington. Amazon’s common stock trades on the NASDAQ under
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`the “AMZN” ticker symbol.
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`26.
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`Defendant, Jeffrey P. Bezos (“Bezos”), is the Founder and Executive Chair, was
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`Chief Executive Officer until July 2021, and has been a director of the Company at all relevant
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`times.
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`27.
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`Defendant Andrew R. Jassy (“Jassy”), has been the Chief Executive Officer since
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`July 2021 of the Company.
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`28.
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`Defendant Brian T. Olsavsky (“Olsavsky”), was the Company’s Chief Financial
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`Officer (“CFO”) at all relevant times.
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`29.
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`Defendant David A. Zapolsky (“Zapolsky”), was the Companies’ General
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`Counsel at all relevant times.
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`CLASS ACTION COMPLAINT - 6
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 7 of 36
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`30.
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`Defendant Nate Sutton (“Sutton”), was the Companies’ Associate General
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`Counsel at all relevant times.
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`31.
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`Defendants Bezos, Jassy, Olsavsky, Zapolsky, and Sutton (collectively the
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`“Individual Defendants”), because of their positions with the Company, possessed the power and
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`authority to control the contents of Amazon’s reports filed with the SEC, testimony before
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`Congress, press releases, and presentations to securities analysts, money and portfolio managers,
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`and institutional investors, i.e., the market. The Individual Defendants were provided with copies
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`of the Company’s reports and press releases alleged herein to be misleading prior to, or shortly
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`after, their issuance and had the ability and opportunity to prevent their issuance or cause them
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`to be corrected. Because of their positions and access to material non-public information, the
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`Individual Defendants knew that the adverse facts specified herein had not been disclosed to, and
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`were being concealed from, the public, and that the positive representations which were being
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`made were then materially false and/or misleading. The Individual Defendants are liable for the
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`false statements pled herein.
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`IV.
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`FACTUAL ALLEGATIONS
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`32.
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`Amazon, headquartered in Seattle, Washington and incorporated in Delaware, is
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`one of the largest technology companies, and is involved in online retail, cloud computing, data,
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`and streaming, among other services.
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`33. While Amazon is most known for being an online retailer, Amazon actually is a
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`“big data” company. On Amazon.com, Amazon acts as a merchant and retailer for third-party
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`merchandise and its own line of Amazon-branded products, while collecting data the entire time.
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`34.
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`As the owner and operator of Amazon.com, Amazon collects and analyzes the
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`data of its sales, customers, spending habits, and seller information.
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`CLASS ACTION COMPLAINT - 7
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 8 of 36
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`35.
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`As Amazon collects data, it learns which items are best sellers, and how to
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`outcompete its own third-party sellers.
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`36.
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`In the Amazon 2018 Annual Report to its employees, Amazon “put it bluntly:
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`Third-party sellers are kicking our first party butt. Badly.”
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`37.
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`Once Amazon has collected the data of the best-selling third-party merchandise,
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`it replicates the merchandise, brands it as its own private-label “Amazon Basic,” and advertises
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`it at the top of its customer’s searches.
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`38.
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`The Class Period begins on February 1, 2019, when Amazon filed an Annual
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`Report on Form 10-K with the SEC, reporting its financial and operating results for the year
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`ending on December 31, 2018.3
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`39.
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`In the 2018 10-K, Amazon failed to disclose that it had begun engaging in illegal
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`anticompetitive conduct in an effort to capture profit that was being realized by its third-party
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`sellers. Instead, the report contained a generic boilerplate disclaimer advising investors that
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`Amazon was “subject to general business regulations and laws, as well as regulations and laws
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`specifically governing the Internet [and] e-commerce” and that these laws covered competition
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`among other things. Amazon failed to disclose the specific and known risks arising from its
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`illegal business practices.
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`40.
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`In the 2018 10-K, Amazon reported net sales of $232.89 billion for the year.
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`Amazon failed to disclose that these sales figures were unsustainable as they were derived from
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`impermissible anticompetitive conduct.
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`3 https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/bed19367-fa6b-41ff-a973-
`df19510b0bba.pdf, last visited, June 26, 2022.
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`CLASS ACTION COMPLAINT - 8
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 9 of 36
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`41.
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`Appended to the 2018 10-K as Exhibits were signed Certifications pursuant to the
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`Sarbanes-Oxley Act (“SOX”) by Defendants Bezos and Olsavsky, attesting that the documents
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`fully complied with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
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`1934, and that the information contained fairly presents, in all material respects, the financial
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`condition and results of operations of the Company.
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`42.
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`On April 11, 2019, Defendant Bezos penned a letter to Amazon’s shareholders,
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`where he wrote “To put it bluntly: Third-party sellers are kicking our first party butt. Badly” . . .
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`“The compound annual growth rate for our first-party business in that time period is 25%. But in
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`that same time, third-party sales have grown from $0.1 billion to $160 billion – a compound
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`annual growth rate of 52%.”4
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`43.
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`On April 25, 2019, Amazon hosted an earnings call with investors and analysts to
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`discuss its Q1 2019 Results and its financial outlook. During that conference call, Defendant
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`Olsavsky asserted that Amazon’s goal was to:
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` . . . allow customers to have the broadest selection, the best available price and also
`the most convenient options on how they receive the item. If we’re delivering on those
`three elements, we’re indifferent as to whether its sold by us or a third party. We
`actively recruit sellers to sell on our platform [ ] because it adds selection . . . we have
`a vested interest in the success of our sellers.
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`44.
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`On June 3, 2019, the U.S. House Committee on the Judiciary (the “House
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`Judiciary Committee”) initiated a bipartisan investigation into the state of the competition online,
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`investigating Amazon, Apple, Facebook, and Google.
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`4 https://www.aboutamazon.com/news/company-news/2018-letter-to-shareholders, last visited, June 26,
`2022.
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`CLASS ACTION COMPLAINT - 9
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 10 of 36
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`45.
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`The House Judiciary Committee held eight hearings, and received testimony from
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`Amazon’s employees and counsel, including Amazon’s then-Chief Executive Officer, Jeff
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`Bezos.
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`46.
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`On July 16, 2019, Defendant Sutton testified before the House Judiciary
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`committee, and stated that “data on popularity of products like much retail data is actually public
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`data,” but “[Amazon] does not use any of that specific seller data in creating our own private
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`brand products.”
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`47. When asked whether Amazon collected data to push its own private label products
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`over third-party seller products, Defendant Sutton responded:
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`[o]ur algorithims, such as the buy box, is aimed to predict what customers
`want to buy . . . and we apply the same criteria whether you’re a third party
`seller or Amazon to that because we want customers to make the right
`purchase regardless of whether it’s a seller or Amazon.
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`48.
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`Two days after Defendant Sutton’s sworn testimony before the House Committee,
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`on July 18, 2019, The Capital Forum quoted a former Amazon employee who contradicted
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`aspects of Defendant Sutton’s testimony:
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`Contrary to Mr. Sutton’s representation that Amazon did not use “any” third-
`party seller data to compete with those sellers, the former employee said that
`Amazon “routinely tracked the popularity of independent sellers’ products
`sold through its website.” “I used to pull sellers’ data to look at what the best
`products were when I was there,” said the former employee, who worked in
`product management. “That was my job.”
`
`49.
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`Amazon did not volunteer any clarifying explanation to the Committee. Instead,
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`five days after the Capitol Forum article, on July 23, 2019, Subcommittee Chairman Cicilline
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`sent a letter to Defendant Zapolsky, citing the article and noting that Defendant Sutton’s
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`testimony “ha[d] been contested by a former Amazon employee, raising questions about the
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`veracity of his responses under oath.”
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`CLASS ACTION COMPLAINT - 10
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`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 11 of 36
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`50.
`
`The same letter also noted that Defendant Sutton had been evasive when
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`responding to the Committee’s questions.
`
`51.
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`On July 25, 2019, Amazon hosted an earnings call with investors and analysts to
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`discuss its Q2 2019 Results and financial outlook. On that call, Defendant Olsavsky stated,
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`we’re indifferent on whether we’re focused on price convenience and
`selection for our customers. And whether product is a retail offering or third-
`party offering is not that important to us. As long as it’s in stock, as long as
`it’s priced competitively. We continue very heavily in our systems both for
`retail vendors and also for third-party merchants invest[ing] billions of dollars
`a year on behalf of them making Amazon a better place for customers to buy
`and increasingly not only vendor sales, but also third-party merchant sales.
`
`52.
`
`On July 26, 2019, Defendant Zapolsky responded in a letter on behalf of Amazon,
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`
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`and conceded that contrary to Defendant Sutton’s testimony, Amazon did in fact use aggregated
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`store data and customer shopping behavior as inputs to Amazon’s private label strategy.5
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`Defendant Zapolsky also alleged that per Amazon’s private label strategy, Amazon prohibited
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`the use of data related to individual sellers. Defendant Zapolsky provided no further explanation
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`of the substance of Amazon’s policy on third-party seller data.
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`53.
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`On October 24, 2019, Amazon hosted an earnings call with investors and analysts
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`to discuss its Q3 2019 Results and financial outlook. On that call, Defendant Olsavsky reiterated
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`his response from the Q2 2019 Earnings Call, stating that:
`
`. . . we only succeed if the third party sellers succeeds [sic]. So we’re heavily
`invested in them as they are in us. So we are constantly investing on their
`behalf, adding new products and features and you know we are cognizant of
`their economics as well and we want a business that works for both of us and
`we set our fees accordingly.
`
`
`
`5 https://judiciary.house.gov/sites/democrats.judiciary.house.gov/files/documents/07.26.19%20-
`%20amazon%20response.pdf, last visited on June 26, 2022.
`
`CLASS ACTION COMPLAINT - 11
`
`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 12 of 36
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`
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`54.
`
`On January 31, 2020, Amazon filed its Annual Report on Form 10-K with the
`
`SEC, reporting the Company’s financial and operating results for the year ending December 31,
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`2019. Similar to its 2018 10-K, Amazon included boilerplate language that it was subject to
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`general business regulations and laws, and failed to disclose the specific and known risks arising
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`from its anticompetitive business practices.6
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`55.
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`In the 2019 10-K, Amazon reported net sales of $280.52 billion for the year.
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`Amazon failed to disclose that these sales figures were unsustainable as they were derived from
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`impermissible anticompetitive conduct.
`
`56.
`
`Appended to the 2019 10-K as Exhibits were signed Certifications pursuant to
`
`SOX by Defendants Bezos and Olsavsky, attesting that the documents fully complied with the
`
`requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the
`
`information contained fairly presents, in all material respects, the financial condition and results
`
`of operations of the Company.
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`57.
`
`On April 23, 2020, the Wall Street Journal, among other media outlets, reported
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`that Amazon employees were in the regular business of using sensitive business information from
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`third-party sellers to develop competing products.7
`
`
`6 https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/4d39f579-19d8-4119-b087-
`ee618abf82d6.pdf, last visited on June 26, 2022.
`7 https://www.wsj.com/articles/amazon-scooped-up-data-from-its-own-sellers-to-launch-competing-
`products-11587650015, last visited on June 26, 2022.
`
`
`CLASS ACTION COMPLAINT - 12
`
`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 13 of 36
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`58.
`
`On May 1, 2020, the House Judiciary Committee sent a letter to Defendant Bezos,
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`encouraging Defendant Bezos to testify before the Subcommittee whether Amazon was
`
`exploiting its role as the largest online marketplace in the United States.8
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`59.
`
`In response, on May 15, 2020, Amazon sent a letter on behalf of Defendant Bezos
`
`stating that it had an internal policy known as the “Seller Data Protection Policy” prohibiting the
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`use of nonpublic, seller-specific data to compete against Amazon’s selling partners. That letter
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`stated that Amazon trains extensively on that policy, that leadership reinforces said training, that
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`Amazon audits for compliance, and that Amazon examines allegations of breaches of said
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`policy.9
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`60.
`
`Additionally, in that letter, Amazon stated that Amazon prohibits the use of data
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`related to individual sellers in its private label strategy, that Amazon is prohibited from using
`
`individual sellers’ data to decide which products to launch, and that Amazon is prohibited from
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`using such data to make sourcing, pricing, or inventory decisions for its private brand products.
`
`61.
`
`On July 29, 2020, Defendant Bezos testified before the House Committee.
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`Defendant Bezos could not affirmatively answer or deny whether Amazon’s internal policy had
`
`never been violated.10
`
`62.
`
`On July 30, 2020, Amazon held a conference call discussing financial results for
`
`the second quarter of 2020. During the call, Amazon discussed an aggressive plan to expand
`
`
`8 https://judiciary.house.gov/uploadedfiles/2020-05-
`01_letter_to_amazon_ceo_bezos.pdf?utm_campaign=2719-519, last visited on June 26, 2022.
`9 https://judiciary.house.gov/uploadedfiles/letter_from_brian_huseman_to_committee__may_15_
`2020.pdf, last visited on June 26, 2022.
`10 https://www.govinfo.gov/content/pkg/CHRG-116hhrg41317/pdf/CHRG-116hhrg41317.pdf, last
`visited on June 26, 2022.
`
`CLASS ACTION COMPLAINT - 13
`
`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 14 of 36
`
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`warehouse and fulfillment space, reflecting an approximately 50% growth in space over the
`
`course of the year and, consequently, dramatically increasing headcount to support fulfillment.
`
`63.
`
`SEC Regulation S-K17 C.F.R. § 229.303 was adopted with the goal of
`
`“provid[ing] information relevant to an assessment of the financial condition and results of
`
`operations of the registrant including an evaluation of the amounts and certainties of cash flows
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`. . . . The discussion and analysis must focus specifically on material events and uncertainties
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`known to management that are reasonably likely to cause reported financial information not to
`
`be necessarily indicative of future operating results or of future financial condition. This includes
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`descriptions and amounts of matters that have had a material impact on reported operations, as
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`well as matters that are reasonably likely based on management's assessment to have a material
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`impact on future operations. Amazon failed to provide adequate information to investors
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`regarding its hyper- aggressive capacity expansion and the relative demand that the Company
`
`was seeing from consumers. As a result, investors suffered substantial losses when Amazon
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`belatedly acknowledged that it had overbuilt capacity to such an extent that it was incurring
`
`several billion dollars in costs associated with over-expansion and that it was pivoting to
`
`engaging in cost control measures.
`
`64.
`
`On September 4, 2020, Amazon responded to the House Committee’s July 29,
`
`2020 hearing requests, and stated that Amazon first learned of alleged violations of Amazon’s
`
`Seller Data Protection Policy from the Wall Street Journal article. Amazon further said that the
`
`reporting conflated product-pricing and top-seller data, with individual seller data.11
`
`
`11 https://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG-116-JU05-20200729-
`QFR052.pdf, last visited on June 26, 2022.
`
`CLASS ACTION COMPLAINT - 14
`
`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
`
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 15 of 36
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`
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`65.
`
`On October 4, 2020, Amazon supplemented its previous responses and stated that
`
`it had completed its internal investigation regarding the Wall Street Journal allegations. Amazon
`
`further stated that it prohibits private brand employees to look at individual seller data, but does
`
`permit them to view aggregate sales data. Amazon clarified that individual seller data is
`
`information regarding sales made by a single seller, and that aggregate store data is data on the
`
`number of sales of a product where there is more than one seller of that product.12
`
`66.
`
`On February 2, 2021, after the close of the market, Amazon held a conference call
`
`to discuss fourth quarter financial results. During the call, the Company noted that “we have a
`
`lot of continued expansion . . . definitely through 2021,” even while noting that it “you may have
`
`to overbuild to protect the customer experience.”
`
`67.
`
`On February 3, 2021, Amazon filed an Annual Report on Form 10-K with the
`
`SEC, reporting its financial and operating results for the year ending December 31, 2020. Similar
`
`to its 2018 and 2019 10-K forms, Amazon included boilerplate language that it was subject to
`
`general business regulations and laws, and failed to disclose the specific and known risks arising
`
`from its anticompetitive business practices.13
`
`68.
`
`In the 2020 10-K, Amazon reported net sales of $386.06 billion for the year.
`
`Amazon failed to disclose that these sales figures were unsustainable as they were derived from
`
`impermissible anticompetitive conduct.
`
`69.
`
`Appended to the 2020 10-K as Exhibits were signed Certifications pursuant to
`
`SOX by Defendants Bezos and Olsavsky, attesting that the documents fully complied with the
`
`
`
`12
`https://judiciary.house.gov/uploadedfiles/letter_from_brian_huseman_to_committee__oct_04_2020.pdf,
`last visited on June 26, 2022.
`13 https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/336d8745-ea82-40a5-9acc-
`1a89df23d0f3.pdf, last visited on June 26, 2022.
`
`CLASS ACTION COMPLAINT - 15
`
`TOUSLEY BRAIN STEPHENS PLLC
`1200 Fifth Avenue, Suite 1700
`Seattle, Washington 98101
`TEL. 206.682.5600 • FAX 206.682.2992
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`Case 2:22-cv-00907 Document 1 Filed 06/28/22 Page 16 of 36
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`requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the
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`information contained fairly presents, in all material respects, the financial condition and results
`
`of operations of the Company.
`
`70.
`
`On April 29, 2021, during a conference call discussing first quarter 2021 financial
`
`results, Amazon CFO Olsavsky noted that Amazon’s increased spending on warehouse and
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`fulfillment resources would continue to be “a large investment” through 2021 and “may also spill
`
`into 2022. That should set us up in really good stead with our capacity.” The Company assured
`
`investors that “we measure that [costs] very closely.”
`
`71.
`
`During Amazon’s July 29, 2021 earnings conference call, the Company reasoned
`
`that prior “pull-forward in demand” was driving the continued need for “a significant amount of
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`investment in our fulfill