Campus Book Company, Inc. v. McGraw-Hill Global Education Holdings, LLC

Background

The plaintiffs were independent off-campus bookstores and online sellers of college textbooks. They sought to represent a class of businesses selling course materials through off-campus outlets or online. The defendants included three major textbook publishers, Barnes & Noble entities, Follett Higher Education Group, Inc., and the Electronic Publishers Enforcement Group (EPEG), a trade association formed by the publisher defendants and two other publishing companies.

The plaintiffs challenged “Inclusive Access,” a digital textbook program under which students at participating institutions are automatically subscribed to digital textbooks selected for their courses and charged through their tuition bills. Students may opt out and may sometimes buy print upgrades, although the complaint alleged that students were discouraged from opting out. The plaintiffs alleged that agreements between colleges and on-campus bookstore operators made those operators the exclusive or nearly exclusive sellers of digital course materials, excluding off-campus and online sellers.

The complaint asserted claims under Sections 1 and 2 of the Sherman Act, the Robinson-Patman Act, and several state laws. The plaintiffs sought damages and an injunction under the Clayton Act. The defendants moved to dismiss the entire complaint under Rule 12(b)(6), which tests whether a complaint adequately states a legally plausible claim.

Sherman Act claims

The court first held that the plaintiffs lacked antitrust standing. Antitrust standing requires a plaintiff to allege an injury of the type the antitrust laws are intended to prevent and to be an appropriate party to enforce those laws. The plaintiffs identified their injury as declining textbook sales caused by exclusion from the Inclusive Access market. The court held that this injury resulted from institutions’ decisions to adopt digital textbooks, use on-campus bookstores, and select other retailers—not from the competition-reducing aspects of the conduct challenged in the lawsuit.

The court also held that the Sherman Act claims would fail on the merits even if the plaintiffs had standing. For the Section 1 claims, the complaint alleged three types of conspiracy: a horizontal conspiracy among the publishers, a horizontal conspiracy among the retailer defendants, and hub-and-spoke conspiracies involving publishers and retailers. The court found that the complaint did not plausibly allege an agreement for any of them. Parallel conduct, common economic incentives, communications, financial incentives offered to institutions, and the defendants’ participation in EPEG did not sufficiently support an inference of an unlawful agreement. Counts 1, 2, and 3 were dismissed.

For the Section 2 claims, the court held that the complaint did not plausibly allege that any publisher defendant possessed monopoly power in a relevant market or acquired or maintained such power through anticompetitive conduct. The allegation that the publishers collectively controlled a large market share did not establish that any single publisher had monopoly power. The complaint also did not adequately allege that the publishers’ refusal to distribute Inclusive Access through the plaintiffs was an unlawful refusal to deal, because the publishers continued to distribute other textbooks through the plaintiffs and had declined to extend that relationship to a new product. The monopolization claim in count 4 was dismissed.

The attempted-monopolization claim was dismissed because the complaint did not plausibly allege anticompetitive conduct, specific intent to monopolize, or a dangerous probability of achieving monopoly power. The conspiracy-to-monopolize claim was dismissed because the complaint did not adequately allege an agreement. These were counts 6 and 5, respectively.

Robinson-Patman Act claims

The plaintiffs alleged that publishers sold Inclusive Access materials to the retailer defendants at lower prices than those offered to the plaintiffs, and that the retailer defendants knowingly induced or received discriminatory prices. The court dismissed both claims, counts 7 and 8. The complaint gave only two examples involving Pearson and did not allege discriminatory pricing by McGraw Hill or Cengage. The court held that the two isolated examples did not plausibly show the substantial effect on competition required for a secondary-line price-discrimination claim.

State-law claims

The court dismissed counts 10 through 14. The claims under the Arkansas and Kentucky statutes failed because those laws addressed price discrimination among localities within the state, a circumstance the complaint did not allege. The New Mexico Price Discrimination Act claim failed because it closely parallels the federal Robinson-Patman Act and the federal claim was inadequately pleaded. The unjust-enrichment claims failed because the complaint did not adequately allege unlawful conduct. The New Mexico unfair-practices claim failed because that statute does not provide a claim for competitive injury, and the Texas antitrust claim was derivative of the federal antitrust claims.

Claims against EPEG and other rulings

The court held that the complaint plausibly alleged that EPEG was an unincorporated association capable of being sued. The claims against EPEG were nevertheless dismissed because the complaint did not adequately allege an agreement involving any defendant. The court denied the defendants’ motion under Rule 12(b)(2) challenging personal jurisdiction over EPEG, finding that the complaint made a sufficient preliminary showing of jurisdiction.

Disposition

The court granted the defendants’ January 22, 2021 motions to dismiss. It dismissed the claims, directed the Clerk of Court to close the case, and ordered entry of judgment for the defendants. Because the case was resolved through Rule 12 dismissal, this summary classifies the opinion as a procedural order, even though the court also discussed why several claims would fail on their merits.