Diesel eBooks, LLC v. Simon & Schuster, Inc., No. 16-726 (2d Cir. 2017)

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Justia Opinion Summary

The Second Circuit affirmed the district court's grant of summary judgment in favor of Simon & Schuster on the issues of antitrust injury and causation. Lavoho, successor in interest to Diesel, filed this antitrust action for business injuries it alleges arose from an unlawful conspiracy in restraint of trade between Apple, Inc. and five major publishing companies. The district court determined that Diesel's business was not grounded in price competition, that it contemporaneously viewed the adoption of agency pricing as a boon, and that its decline was not a legally cognizable antitrust injury flowing from the unlawful nature of the conspiracy. The court agreed and held that there was no genuine dispute as to any material fact underlying the conclusion that, as a matter of law, Diesel suffered no antitrust injury caused by the unlawful antitrust conspiracy.

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16-726-cv Diesel eBooks, LLC v. Simon & Schuster, Inc. et al. In the United States Court of Appeals for the Second Circuit August Term, 2016 Argued: February 23, 2017 Decided: July 17, 2017 Docket No. 16-726-cv DIESEL EBOOKS, LLC, Plaintiff-CounterDefendant-Appellant, LAVOHO, L.L.C., successor in interest Diesel Ebooks, L.L.C.,* Plaintiff-CounterDefendant, v. SIMON & SCHUSTER, INC., HOLTZBRINCK PUBLISHERS, LLC, DBA Macmillan, HACHETTE BOOK GROUP, INC., HARPERCOLLINS PUBLISHERS L.L.C., THE PENGUIN GROUP (USA) LLC, the successor to the named defendant The Penguin Group, Defendants-CounterClaimants-Appellees, The inconsistent styling of “Diesel eBooks, LLC” and “Diesel Ebooks, L.L.C.” in the caption appears throughout the parties’ filings in this matter. * 1 16-726-cv Diesel eBooks, LLC v. Simon & Schuster, Inc. et al. VERLAGSGRUPPE GEORG VON HOLTZBRINCK GMBH, THE PENGUIN GROUP, a division of Pearson Plc,† Defendants-Appellees, APPLE INC., Defendant. Before: KEARSE, HALL, CHIN, Circuit Judges. Appeal from a judgment of the United States District Court for the Southern District of New York (Cote, J.) granting summary judgment in favor of the Appellees on the issues of antitrust injury and causation. There is no material fact in dispute underlying the conclusion that, as a matter of law, the Appellant suffered no antitrust injury caused by the unlawful antitrust conspiracy. Based on the wellreasoned decision of the district court, see Lavoho, LLC v. Apple, Inc., et al., ___ F.Supp.3d ___, 2016 WL 556636 (S.D.N.Y. Feb. 10, 2016), which we hereby adopt, the judgment of the district court is AFFIRMED. DEREK T. HO (Collin R. White, on the brief), Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., Washington, D.C., for PlaintiffCounter-Defendant-Appellant. GREGORY SILBERT (James W. Quinn and Yehudah L. Buchweitz, on the brief), Weil, Gotshal & Manges LLP, New York, New York, for Defendant-Counter-ClaimantAppellee Simon & Schuster, Inc. Joel M. Mitnick, John J. Lavelle, and Bianca Cadena, Sidley Austin LLP, New York, New York, for Defendant-Counter-ClaimantAppellee Holtzbrinck Publishers, LLC, DBA † The styling “Pearson Plc” also appears throughout the parties’ filings. 2 16-726-cv Diesel eBooks, LLC v. Simon & Schuster, Inc. et al. Macmillan and Defendant-Appellee Verlagsgruppe Georg Von Holtzbrinck GMBH. Linda H. Martin, Freshfields Bruckhaus Deringer US LLP, New York, New York, and Samuel J. Rubin, Goodwin Procter LLP, New York, New York, for Defendant-CounterClaimant-Appellee Hachette Book Group, Inc. Charles Scott Lent, Arnold & Porter Kaye Scholer LLP, New York, New York, for Defendant-Counter-Claimant-Appellee HarperCollins Publishers L.L.C. Saul P. Morgenstern, Margaret A. Rogers, and Alice C.C. Huling, Arnold & Porter Kaye Scholer LLP, New York, New York, for Defendant-Counter-Claimant-Appellee Penguin Group (USA) LLC. PER CURIAM: Lavoho, LLC, successor in interest to Diesel eBooks LLC, brought this civil antitrust action for business injuries it alleges arose from an unlawful conspiracy in restraint of trade between Apple, Inc. and five major publishing companies, who are the Defendants. We have ruled that the publisher Defendants and Apple did indeed conspire unlawfully to restrain trade in violation of the Sherman Act. See United States et al. v. Apple, Inc. et al., 791 F.3d 290 (2d Cir. 2015). The unlawful conspiracy was effected by the publishers simultaneously changing their business practices to abandon the wholesale business model in favor of the agency pricing model. Under the former wholesale business model, the publishers would sell ebooks to retailers and suggest a retail price, but retailers retained discretion to sell at prices higher or lower than the publisher’s suggested price. Under the new agency pricing model the publisher required the retailer to sell the ebook at a retail price of the publisher’s choosing, and the publisher paid the retailer a commission for each sale. 3 16-726-cv Diesel eBooks, LLC v. Simon & Schuster, Inc. et al. Diesel eBooks was an independent ebook retailer whose revenues dropped precipitously in the wake of the switch to agency pricing, and it claimed that the switch to agency pricing was the cause of its decline. The district court (Cote, J.) granted summary judgment in favor of the publisher Defendants, determining that the record left no genuine issue of material fact as to antitrust injury or causation. See Lavoho, LLC v. Apple, Inc., et al., ___ F.Supp.3d ___, 2016 WL 556636 (S.D.N.Y. Feb. 10, 2016). Based on the undisputed facts in the record, the district court determined that Diesel’s business was not grounded in price competition, that it contemporaneously viewed the adoption of agency pricing as a boon, and that its decline was not a legally cognizable antitrust injury flowing from the unlawful nature of the conspiracy. See id. at ___, 2016 WL 556636 at *14. This timely appeal followed. “We review de novo the district court’s grant of summary judgment, construing the evidence in the light most favorable to the non-moving party and drawing all reasonable inferences in her favor.” Mihalik v. Credit Agricole Cheuvreux N. Am., Inc., 715 F.3d 102, 108 (2d Cir. 2013). Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). We have carefully reviewed the summary judgment record, and we agree with the district court’s determination that the record permits no genuine dispute as to any material fact underlying the conclusion that, as a matter of law, the Appellant suffered no antitrust injury caused by the unlawful antitrust conspiracy. We affirm for the reasons set forth in the district court’s thorough and well-reasoned written decision, which we hereby adopt. See ___ F.Supp.3d ___, 2016 WL 556636. 4