Sunday, September 20, 2009

DOJ Weighs in on Proposed Google Books Settlement

The Department of Justice Antitrust Division filed a statement of interest Friday, available here, opposing the Google Books settlement. DOJ's filing addresses concerns that the settlement: (1) fails to satisfy Federal Rule of Civil Procedure 23 (which governs class action lawsuits); (2) violates copyright law; and (3) violates antitrust law. DOJ's statement is a bit unusual in that it raises both antitrust and non-antitrust concerns; typically the DOJ's Antitrust Division confines public stances to antitrust issues.

DOJ states that the proposed settlement "is one of the most far-reaching class action settlements of which the United States is aware." Under Rule 23, DOJ raises concerns that the interests of one set of class members -- orphan works holders – conflicts with another set of class members – rightsholders, that the settlement resolves amorphous future claims, and that the class was not provided adequate notice of the settlement. A class member (and former colleague), Scott Gant, previously filed a lengthy and well reasoned objection to the settlement raising more detailed class action procedural concerns.

DOJ raises two main antitrust concerns. First, the proposed settlement appears to give book publishers the power to restrict price competition. Second, the settlement may "effectively preclude[]" competing distributors of digital books. Kotchen & Low recently co-authored an op-ed, along with the American Antitrust Institute, addressing the antitrust implications of the Google Books settlement, available here, raising the same concerns. The settlement provides a fixed royalty rate and creates a joint pricing mechanism. It also provides a monopoly over orphan works, which may create a substantial disadvantage for any potential competitors.

Despite these objections, DOJ recognizes that the settlement has great potential benefits, such as to "breathe life into millions of works that are now effectively off limits to the public," and to "open the door to new research opportunities."

In light of these issues, DOJ concludes that the Court should reject the proposed settlement, but should encourage the parties to continue negotiations to modify the settlement consistent with Rule 23 and the copyright and antitrust laws. Consistent with Kotchen & Low and AAI's recent op-ed, I agree, and encourage the Court to give substantial weight to DOJ's concerns.

Friday, September 18, 2009

Consolidated Complaints Filed in Packaged Ice MDL

Plaintiffs in the In re Packaged Ice Antitrust Litigation, MDL 1952, filed consolidated amended class action complaints this week alleging a conspiracy by the three major packaged ice manufacturers to allocate territories.

More than 70 separate complaints were originally filed last year against packaged ice manufacturers Reddy Ice, Arctic Glacier, and Home City Ice. The cases were transferred and consolidated by the Judicial Panel on Multidistrict Litigation before Judge Borman in the Eastern District of Michigan. After Judge Borman appointed lead counsel, plaintiffs' counsel filed their consolidated amended complaints.

Plaintiffs allege, inter alia, that:

The existence of the unlawful agreements and conspiracy is evidenced, inter alia, by admissions made by Defendants' officers and employees who directly participated in or witnessed acts in furtherance of the conspiracy, by a United States Department of Justice Criminal Information and guilty plea, as well as by the structure of the market and supporting economic data.

Defendants have 60 days to respond to the complaints.

The amended complaints were discussed in an article in the Dallas Morning News.

Tuesday, September 8, 2009

Valassis’ Federal Trial Set for February 2, 2010

Valassis issued a press release today announcing that a trial date for its federal antitrust lawsuit against News America has been set for February 2, 2010:

Valassis (NYSE: VCI), one of the nation's leading media and marketing services companies, announced that, on Thursday, Sept. 3, 2009, United States District Court Judge Arthur J. Tarnow formally scheduled Valassis' federal trial against News America Incorporated ("News America") for Feb. 2, 2010. Valassis originally filed the action in the United States District Court, Eastern District of Michigan on Jan. 18, 2006 alleging violations of the Sherman Act. Generally, the complaint alleges that News America has improperly leveraged and tied the purchase of its in-store promotion and advertising services to the purchase of space in its free-standing insert (FSI) and that News America has attempted to monopolize the FSI market. Judge Tarnow denied all motions for summary judgment and established the trial schedule.

"With a court date set, we are eager to move forward with the second of our three cases against News America to restore lost value to our shareholders and return to a fair and even playing field in the FSI marketplace," said Alan F. Schultz, Valassis Chairman, President and Chief Executive Officer.

As announced on July 23, 2009, a Wayne County Circuit Court jury awarded Valassis $300 million for compensatory damages in its first of three lawsuits against News America. News America was found liable for unfair competition and tortious interference. This award accumulates interest on a compounding basis beginning from March 9, 2007, the date the complaint was filed. The award is subject to the risks of post-trial motions, appeal and collection.

In addition to the Federal antitrust law claims, Valassis has a lawsuit pending against News America in the Supreme Court of the State of California for the County of Los Angeles raising claims under California's Cartwright, Unfair Competition and Unfair Practices Acts. This case is not currently scheduled for trial. Under the relevant Federal and California laws, any compensatory damages awarded in either of the remaining cases will be automatically tripled by the respective court.

Related posts.

Friday, September 4, 2009

Summary Judgment Denied in Valassis’ Federal Case Against News America

A federal judge in Michigan denied Valassis' motion for partial summary judgment today. Although Valassis submitted a supplemental brief with some powerful evidence from the recent state court trial, the court found that the recent state court verdict did not have a preclusive effect. Similarly, the court denied News America's motion for summary judgment:


Before the court are defendants' motion for summary judgment and plaintiff's motion for partial summary judgment. The court received supplemental briefing. The motions came on for a hearing on September 3, 2009.

For the reasons stated on the record, the motions are DENIED. The state-court trial before Judge Sapala does not have issue-preclusive effect on the proceedings before this court. Accordingly, there are genuine issues of material fact for a jury to consider.
. . . .

With the denial of the summary judgment motions (neither of which is surprising), I would expect that trial will commence in the next few months. After News America lost the first trial on unfair competition, and given the evidence presented in that case, they have reason to be
concerned about the federal case, which involves antitrust claims that would lead to treble damages.

Related posts.


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