E-Books Appellate Decisions

In July 2017, an appellate panel in the Second Circuit upheld Judge Denise Cote’s decisions, dismissing the antitrust claims of two e-book retailers that had sued Apple Inc., and five e-book publishers, Hachette Book Group, HarperCollins Publishers, MacMillan, The Penguin Group and Simon & Schuster. The matters involved claims that the Plaintiffs were harmed as a result of the allegedly conspiratorial introduction of an “agency model” for e-book distribution in which publishers set the retail price of e-books. The Plaintiffs claimed that the agency model prevented each of them from offering discounts on their sales of e-books and thus limited their ability to sell e-books. Judge Cote’s decision relied heavily on the opinions and testimony of Compass Lexecon expert Dennis Carlton, who filed an expert report on behalf of the Defendants. Professor Carlton showed that there was no evidence to support any claims that the Plaintiffs’ business models relied significantly on the discounting of e-books prior to the introduction of the agency model and that therefore the retailers’ business difficulties were not significantly related to their inability to engage in retail price discounting after the agency model’s introduction.

Professor Carlton was supported by a Compass Lexecon team that included Guillermo Israilevich, Quinn Johnson, Joel Papke and Gustavo Bamberger. The team worked closely with counsel for the six defendants including, Daniel Swanson of Gibson, Dunn & Crutcher LLP, representing Apple; Michael Lacovara of Freshfields Bruckhaus Deringer US, representing Hachette; C. Scott Lent of Arnold & Porter LLP, representing HarperCollins; Joel Mitnick of Sidley Austin LLP, representing MacMillan; Saul Morgenstern of Kaye Scholer LLP, representing Penguin Group; and Yehudah Buchweitz of Weil, Gotshal & Manges LLP, representing Simon & Schuster.