In Re Amazon.com, Inc. eBook Antitrust Litigation

Background

Plaintiffs alleged that Amazon and certain publishers engaged in conduct violating Sections 1 and 2 of the Sherman Act. The case followed earlier amendments to the complaint and an earlier order granting defendants’ dismissal motions while allowing plaintiffs to amend. Plaintiffs then filed a new amended complaint, and Amazon and the Publishers again moved to dismiss.

Magistrate Judge Valerie Figueredo recommended granting in part and denying in part the motions. Among other recommendations, she recommended dismissing 13 of the 15 plaintiffs who bought their eBooks from retailers other than Amazon for lack of antitrust standing. Antitrust standing is the requirement that a plaintiff be sufficiently directly injured by the alleged antitrust violation to bring the claim. She recommended allowing the claims of the two plaintiffs who bought eBooks from Amazon to proceed. She also recommended dismissing the Sherman Act Section 2 conspiracy-to-monopolize claim and the Sherman Act Section 1 restraint-of-trade claim.

Court’s Analysis

The court treated the parties’ objections as sufficiently specific for a fresh review of the challenged recommendations. It rejected the objections and adopted the recommendation in full, while also addressing certain issues independently.

The court held that the 13 plaintiffs who purchased from non-Amazon retailers were indirect purchasers because a retailer stood between them and the publishers. The court concluded that they had not adequately pleaded antitrust standing. By contrast, the two direct-purchaser plaintiffs bought eBooks from Amazon and adequately alleged that Amazon’s conduct caused them to pay higher-than-competitive prices. The court also found that these plaintiffs were appropriate plaintiffs to enforce the antitrust laws.

As to Amazon’s Section 2 claims for monopolization and attempted monopolization, the court denied Amazon’s motion to dismiss as to the direct-purchaser plaintiffs. At the pleading stage, the court accepted as true the nonconclusory allegations that Amazon’s contractual provisions restricted publishers’ dealings with other retailers and that Amazon’s fees were unreasonably high and above competitive levels.

The court granted defendants’ motions to dismiss the Section 1 restraint-of-trade claim. It concluded that the complaint did not adequately plead a horizontal conspiracy among the publishers. Because the alleged hub-and-spoke theory also required a horizontal agreement among the publishers, that theory failed as well. The court declined to treat the publishers’ separate vertical agreements with Amazon collectively under a rule-of-reason theory without a properly pleaded coordinated horizontal effort.

The opinion’s discussion refers to the Section 1 claim as Count IV, while the conclusion identifies the dismissed Section 1 claim as Count VI. The court’s conclusion also identifies Count III as the dismissed Section 2 conspiracy-to-monopolize claim.

Disposition

The court granted in part and denied in part defendants’ motions to dismiss. It dismissed the 13 indirect-purchaser plaintiffs for lack of standing. It dismissed the Sherman Act Section 2 conspiracy-to-monopolize claim and the Sherman Act Section 1 restraint-of-trade claim. It denied Amazon’s motion to dismiss the direct-purchaser plaintiffs’ Section 2 monopolization and attempted-monopolization claims.

The court denied plaintiffs leave to amend, reasoning that the deficiencies were substantive, plaintiffs had already amended the complaint multiple times, and plaintiffs had not explained how another amendment would cure the problems. Because the two dismissed claims were the only claims asserted against the Publishers, the Publishers were terminated from the case. The case remained referred to Judge Figueredo for general pretrial matters.