lazarus wrote an internal e mail that called diesel ebooks one of the forward looking indies that has a viable e book business that's may of two thousand and ten just one month after the agency pricing conspiracy was implemented now the defendants can say all they want and make lots of arguments about why there might have been other problems but if the argument is that there was no but for causation because the conspiracy here was the equivalent of shooting a corpse that was already dead there is a silver bullet piece of evidence in our case that i think again creates a jury issue at the very very least let me also address the  financial situation of diesel e books which also was was different from books on board to judge here's this question do you believe books had been profitable prior to april of two thousand and ten now the profitability went up and down and i agree wholeheartedly with mr bleachers comment that the measure of success in a nascent business like ebooks is not necessarily profit but revenue lots of companies when they're starting up are trying to generate more revenue even if they're not making a profit on a month over month basis but the books was profitable in two thousand and eight and two thousand and nine unlike books on board and of the declaration of mr bradford who was diesel c e o who explained in great detail that diesel e books in fact did price backlist titles lower than amazon this is  technology which means you can use software to go out and actually figure out on a nightly basis what amazon's prices are and he used that technology to make sure that they were pricing below amazon's prices and although we did not put this in the record because we did not feel the need to we put in pages from diesel's website at the time before agency that we found on what's an  the world wide web called the way back machine and if you look at that archive it demonstrates that there are many bundles of e books that are being sold at less than ninety nine per book some as low as five dollars imus's you the district  the reason for that judge chen is that what she is ignoring and is title mix front list titles like new york times best sellers are priced at a very low price you always see them on sale thirty percent forty percent off backlist titles are not so heavily discounted because they're not the rage of the moment and so publishers price them at a higher price the reason that diesels average prices were higher was that diesel was focused on selling backlist titles not front list titles so yes it's true that the average price was higher but again judge coach mis understood the significance of that fact it does not at all undermine argument and that sworn testimony of mr redford that diesel was trying to undercut amazon's prices as to the books that it actually sold the focus on backless titles was as the bread and butter of diesels business was strategy it was precisely because all the publishers were so heavily discounting the front list titles that diesel said look we're going to focus on the backlist titles we can be your argument is the judge codes observation  i don't like use the word finding when we're talking about summary judgment but her conclusion based on the facts is immaterial that she drew the wrong inferences from the observation about the average price the question i think about she focused on the of objects that were being sold because she was focused on average without looking at whether you were really comparing apples and oranges because and here you are it's just it's like saying that lexus has higher average prices than you know toyota yet yes they do but it's what they're selling different things and here we were selling different things than amazon is a much narrower set of higher priced books and really this is part and parcel of the problem on a summary and why it was erroneous for a judge coat tried to weigh all of this evidence and try to assess for herself its significance these are issues that have been addressed by all of the experts there was a quintessential classic battle of the experts about whether or not books was injured by the antitrust conspiracy here our expert said that it was their expert so that it wasn't there are these facts out there about finances and alternative causes but the significance of those facts is not undisputed and she drew all of the inferences from those facts in the defendant's favor rather than the pla to what i imagine mr silver is going to get up here and say about the about contemporaneous comments i would implore the court to look at the comments that mr silbert eludes to in his brief we're talking about blog posts musings online these are not the kinds of things that conclusively refute sworn testimony in scott against harris which is the supreme court's more recent summary judgment ruling the kind of thing that you can use to overcome sworn testimony is a videotape something that is really truly irrefutable but prior comments on a website to the extent that they even do contradict what mr redford sweate said in his sw declaration that's not the kind of stuff that allows you to ignore sworn testimony on the summary judgment i see that my red light isn't so with the court's permission i'll reserve the remainder of my time you may have the three minutes you asked silver thank you that's all so so diesel's position on these issues now is the exact opposite of diesel's position before it brought this lawsuit before bring this lawsuit diesel said over and over again that when agency pricing was introduced it helped diesel to compete and it it articulated the benefit of agency pricing specifically in terms of competition so i went agency was first introduced diesel said now we can compete against stores with a lot more resources and then six months later diesels c e o scott redford took it upon himself to write about what he had he had experienced as the benefits of agency and he and the word he used for the benefit to diesel was competition he said we don't have to lose our shirts to price cutting anymore so here today you have diesel saying you know our whole business model was based on competing price competition on these these backless titles and the agency model came along and prevented us from competing and then four years later our business failed and that was because of agency that's their position now their position before bringing this lawsuit was the agency system is allowing them to compete because their prices were significantly higher than amazon's and barnes and noble's and when i say significantly higher as judge cote said let me put that into perspective for you ok so as as mr redford confirmed in his deposition diesel wholesale price that its price of acquiring an e book from a wholesaler was sixty percent of the list price now in comparison amazon's price of acquiring the e book was fifty percent of the list price so even  the starting gate diesel is paying twenty percent more per e book then amazon is and then amazon is selling those ebooks at or around its cost or sometimes below so if you look in the carlton report you can see the average prices that amazon charged for e books in the period preceding agency those prices hover right around fifty percent of list price right around amazon's cost sometimes a little lower diesel on the other hand is buying the e book at sixty percent so so amazon is selling the e books to consumers to you and me for less money than diesel can buy the e book itself to put it on  shelves and then deal as mark up during that period is over twenty seven percent twenty seven percent over its cost its average markup and that includes any bundle any reward any discount that diesel says it offered it all averages out to a twenty seven percent gross profit margin over diesels already very high cost of southie apples and oranges are you ma'am that we're talking a great great question so  we conference this case i would urge you to open the joint appendix to page three hundred sixteen at three hundred nineteen ok and what you will find there is the deposition testimony of dr ratliff which is the sold a different mix of e books that it had that it discounted any particular mix of e books that it discounted backlist versus front list any evidentiary or quantitative basis for a claim that would support the idea that diesel was discounting those particular books and his answer is no no no so so what you have is now the player is saying gee our whole business was it was premised on discounting you know these particular books and we were a discounter that that  our secret that was the special sauce but at the time what they were saying was the exact opposite they were saying we can't compete because amazon's prices are so low but finally when when the agency system comes into place now diesel can compete because pricing is uniform and they specifically again put that benefit in terms of competition and again never once before bringing this lawsuit do they ever say that agency pricing has harmed them now let me touch upon the outage we heard a little bit about that it's the same analysis here as it is in books on board let me just make sure that you understand what the outage is and then i will explain why judge koch correctly held that the outage is not yet i trust injury ok the outage happened during the transition to agency it affected some retailers but not others it was a temporary  elay or interruption in the wholesale supply chain as wholesalers signed on to new agency contracts with each publisher individual and then also signed on with the retailers who the wholesalers worked with like diesel was a reasonably forseeable result of the n t competitive behavior it was not receival and even if it was it would not be antitrust injury ok it is not receive it because it depended on the not of the injury  wholesaler has to make changes within its systems to do you know task collecting and tax reporting and with the publishers do not have visibility necessarily into that so it just it depends factors that are outside of conscious control but for see ability is not the test anyway ok if you want to see the test for an antitrust injury i think the best case to look is the arco case the electric richfield case which in fact mr beecher argued and what that what the supreme court says there is that even even if an injury is is the direct and intended result of a price fixing conspiracy so obviously foreseeable it was intended in that case it's still not antitrust injury unless the  losses correspond to the reason for finding an antitrust violation in the first place that the losses have to result directly from or be inextricably intertwined with the anti competitive aspect of the violation not just the violation itself ok so so why did judge coat find an antitrust violation in the apple case and remember because this is important judge cote is is the judge who presided over the apple case she found the price fixing conspiracy and she held in this case that the conspiracy that she found has nothing to do with the outage so so she knows that the circumstances of the conspiracy that she found that the reason that she found in antitrust violation in the apple case was price fixing ok she said it was a it was a conspiracy to raise ebooks prices and eliminate competition in the retail market so in order for the plaintiffs to demonstrate and i trust in what they have to do is show that their loss was caused by price fixing that that was the anti competitive aspect of the conduct that was the reason for finding an antitrust violation and if you look through if you read the briefs carefully i don't think you'll find anywhere where they even attempt to say that the that whatever losses they experience from the outage somehow result from prices nor could they because that the outage was just a sort of a logistical delay in getting products online that affected some retailers prices were fixed uniformly for every retailer most retailers did not many retailers did not experience any outage even some independent retailers do not experience any outage and in to the extent there was an outage it just involved the timing and which the wholesalers could could get the agency titles back on the shelves did not have anything to do with the uniform pricing of e books and it was the it was the alleged price fixing that that was the basis of the violation so the outage does not  and cannot satisfy the antitrust injury requirement and this is important for causation as well where we've got to to hurdles they've got to jump over right antitrust injury and causation but when you get to causation the but for and the material cause that they have to show it is the antitrust injury it has to be the same harm that satisfies the antitrust injury requirement has to then be a but for and material cause of their losses and again their losses according to the deal here are that four years after the agency system was introduced their business failed they say well that's all because of of agency pricing even though we like agency pricing at the time but they can't say because they cannot show causation even based on an outage because the outage does not meet the antitrust injury requirement and so they can't make that link  point which is on a motion for summary judgment that raises antitrust issues injury and causation it is not necessary for us to show that the entire company went out of business because of the defendant conspiracy what's at issue here is whether the plaintiff suffered some economic harm from the entity the entry trust violation and the question of how much harm is a matter for damages on which the defendants did not move that i think is a full response to many of the alternative cause arguments that the defendants have raised because again we don't have to disprove every single one of those price fixing that thank you direction for asking that because i was going to correct that mischaracterization as my second point judge cote said specifically that there were two aspects to and i competitive aspects to the conspiracy one was to try to raise prices for sure but the other was to eliminate retail price competition remember that the whole reason that the publishers and apple got together was to that apple wanted to get rid of retail price competition by other retailers so it is well within the ambit of that anti competitive effect in the antitrust injury to allow a plan recover for harms that are caused when the agency conspiracy then shuts off the supply of ebooks and prohibits clients like mine and mr bleachers from engaging in retail competition in the e book market and as your honor suggested it doesn't have to be directly linked to the antitrust violation the standard standard that i think is most apt here is the brunswick case which said that the injury has to be caused by the violation itself or by and i competitive acts made possible by the violation and i think our case falls squarely within that the violation was the agreement but then what flowed from that was the immediate cutoff of all the e book retailers without warning except to apple which got a head start because it was of course you know on the conspiracy finally mr silver again paints a picture of comments that mr redford and others made and makes it sound as if they were unqualifiedly support of the agency and i  just ask the court to look at the actual documents in the record they talk about the pros and the cons of agency talking about price changes quote for better and for worse if they're what they are are blog posts that constitute they're partly designed to be informative they're partly designed to be entertaining they're partly designed to be kind of looking at the industry and trying to figure out where base surprisingly we will take this under adviseme