Opinion ID: 626562
Heading Depth: 2
Heading Rank: 5

Heading: Anderson's Motion for Reconsideration and for Permission To File Its Proposed Amended Complaint

Text: Anderson timely moved pursuant to Fed.R.Civ.P. 59(e) for reconsideration, arguing principally that, in dismissing the Complaint, the district court drew unjustified inferences and overlooked allegations of material facts. Anderson also sought reconsideration of the denial of its request for leave to file an amended complaint, and it attached the proposed amended complaint to its motion. The PAC reiterates certain allegations made in the Complaint and contains specific additional allegations as to meetings, conversations, and e-mails between or among various named individual coconspirators on or about specific dates. It includes the following allegations: [F]our days after Anderson's public announcement of the surcharge, the presidents of the two largest national distributors, Castardi, the president of Curtis, and Michael Duloc (Duloc), the president and CEO of Kable, attended a meeting on Sunday, January 18, 2009 to plan their collusive action. Those two competitors represent and act on behalf of all but one of the defendant publishers: Curtis represents and acts on behalf of AMI, Hachette and Rodale; and Kable represents and acts on behalf of Bauer. The only publisher not present or represented at the Sunday meetings was defendant Time and its national distributor, TWR. 57. On January 22, 2009, however, four days after the Sunday meeting, Kable, pursuant to the conspiracy, communicated with its competitor TWR, ostensibly to catch up on a few unspecified IPDA type items. The IPDAor International Periodical Distributors Associationis precisely the type of trade organization that has been used perennially by competitors to attempt to mask their illegal, anti-competitive communications. 58. In at least two instances during January 2009, after Source had also proposed a $.07 surcharge, certain defendants invited Anderson to join the conspiracy to eliminate Source as a wholesaler by pointing out that Anderson could profit by taking over Source's business and obtaining its profits through price increases imposed on the retailers. Thus, Castardi of Curtis told Mr. Anderson that you need to let Source go out first. In certain areas Arizona, for exampleAnderson and Source were the only wholesalers. Once Source was excluded from the market and its business destroyed, Castardi told Mr. Anderson, in words or substance, that Anderson could use its regional market power to get all your [Anderson's] profits from the retailers. And in a phone call with Frank Stockard, President of Anderson, Duloc of Kable discussed the idea of offering Anderson exclusivity in certain territories in exchange for Anderson retracting the proposed surcharge. According to Duloc, Anderson could obtain the profits it desired by using its exclusivity arrangement to increase the prices to retailers. Anderson refused to participate in this blatantly unlawful market allocation. Kable responded by reaffirming its participation in defendants' boycott of Anderson, thereby refusing to supply Anderson with the magazines it distributes, including those published by defendant Bauer. (PAC ¶¶ 56-58 (emphases added).) According to the Complaint, Duloc from Kable proceeded to solicit Sullivan, the president and CEO of ... Comag to join defendants' conspiracy to end shipments to Anderson and Source. (PAC ¶ 59.) Comag, however, refused ( see id. ), and subsequent [e]-mail exchanges and transmissions among defendants Rodale, DSI, AMI and Bauer, show that defendants perceived Comag's actions as a potential threat to the cohesion and unity of their conspiracy and to defendants' goal for 100% participation by the publishers and national distributors in the boycott of Anderson and Source. On January 29, 2009, Richard Alleger, a vice president at Rodale, sent an e-mail to Michael Porche (Porche), the president and CEO of DSI, stating that he had just read an e-mail from Comag to its clients: they have reached an understanding with BOTH Anco [ i.e., Anderson] and Source and will continue to SHIP! Sullivan [the CEO of Comag] is dangerous.  Porche forwarded the message to the president of AMI Rodale's competitorwho in turn forwarded it to Michael Roscoe, a consultant and former DSI employee, who was one of the conduits through which the conspiracy was effectuated. 61. Two days later, on Saturday, January 31, Rodale complained again, this time to Bauer, another of its co-conspirators and competitors, that Comag had agreed to continue to supply Source. Confirming the intent, and obviously anticipating the success, of the conspiracy, Bauer reassured Rodale, stating: Doesn't matter [S]ource won't be around much longer. (PAC ¶¶ 60-61 (emphases added).) In the meantime, according to the proposed amended complaint, [o]n or about January 25, 2009, the presidents of competitors TWR and Kable scheduled a breakfast meeting for Thursday, January 29, 2009 to discuss the conspiracy. 63. Hudson was at the heart of the conspiratorial meetings. After business hours on or about January 29, 2009, key employees of certain defendantsostensible competitorsincluding Dennis Porti of Curtis and Michael Cvrlje of TWR, met at Hudson's offices in North Bergen, New Jersey. David Parry of News Group a competitor of Hudson and John Rafferty of DSI, also were present at that January 29 meeting at Hudson's offices. At this and the other meetings among the defendants, they discussed and planned their collusive activity, including their market allocation agreement with respect to the Anderson and Source business and customers. (PAC ¶¶ 62-63 (as amended by letter from Anderson's counsel to the district court dated October 4, 2010 (Amending Letter), at 1 (emphases added)).) Thus, in late January, Curtis, on behalf of publishers Hachette, Rodale and AMI, and Kable, on behalf of publisher Bauer, acting in concert with the other defendants and pursuant to and in furtherance of defendants' conspiracy to eliminate Anderson as a wholesaler, ... cut Anderson off from its supply of their magazines.... [O]n the morning of January 29, 2009, Curtis sent an e-mail to its publisher clients, informing them that, effective immediately, Curtis is suspending all further shipments of magazines to all Anco [i.e., Anderson] wholesaler operations.  Curtis clients AMI and Hachette cut off Anderson soon afterward .... (PAC ¶ 66 as amended by Amending Letter at 2 (emphases added).) Anderson alleged that the only magazines it received from AMI and Hachette thereafter were a limited number of magazines ... that were already `in the pipeline' from the magazine printers and could not be diverted. Id. On Monday February 2, two business days later, TWR and Time cut off the supply of Time's magazines to Anderson. ( See PAC ¶ 67.) Although on January 31, TWR's CEO Jacobsen had led Anderson to believe that TWR agreed to a continuing relationship, with financial accommodations that obviated Anderson's proposed Surcharge, TWR and Time instead joined, or had joined, the agreement to boycott Anderson: [Anderson] was led by Jacobsen to believe that TWR and Anderson had an agreement that would obviate the need for a surcharge, an agreement for an increase of 2.00% in the discount to Anderson of the magazines' cover prices for all Time weeklies, and 2.75% for all People weeklies. Anderson also was led to believe by Jacobsen that TWR also agreed to discuss scan-based trading on Monday, February 2, 2009, in return for which, after the scan-based trading call, Anderson would make a $13 million payment to TWR for amounts supposedly due. Anderson rescinded its fee proposal as a result of this compromise settlement. .... 67. On February 2, Time and TWRacting in concert with the other defendants, and pursuant to and in furtherance of defendants' conspiracy to eliminate Anderson as a wholesaler reneged on its agreement to continue to supply Time's magazines to Anderson. Jacobsen informed Anderson that TWR and Time executives had decided to change the channel, that they were going to have to use two wholesalers, and that that was the way it was going to be. .... 70. Statements made by the defendants to Anderson also make clear that the defendants, as a result of their inter-competitor meetings and communications, had agreed to a coordinated boycott of Anderson and Source. On or about January 21, 2009, after talking with representatives of TWR and Kable, Mr. Anderson spoke with Castardi, the president and CEO of defendant Curtis. Castardi, acting on behalf of Curtis as well as all the publishers represented by Curtisincluding publisher defendants AMI, Hachette, and Rodaletold Mr. Anderson, in words or substance, that I [Castardi] don't want a problem. I would like to get this worked out. But I'm going to have to go with whatever Rich [Jacobsen, CEO of defendant TWR] does.  When Mr. Anderson later told Jacobsen on January 31, 2009 what Castardi had told himthat [Castardi's] going whatever way you [Jacobsen] goJacobsen did not deny it, but instead crossed his arms, nodded in agreement and smiled. 71. At the January 31 meeting with Jacobsen, Jacobsen told Mr. Anderson that he ha[d] Greg Mays [the CEO of Source] flying in at 1:00 pm to meet with me. And I'm going to deliver the message that, as long as I'm at TWR or Ann Moore is at Time, we will never, ever do business with Source again. Indeed, TWR's competitor, Curtis, was already aware of this informationthe same day, a Source executive was advised by Castardi, the president of Curtis that, on January 31, he (Castardi) knew, with 100% certainty, that TWR, Bauer and AMI would refuse to supply product to Sourceeven though, by this time, Source had publicly rescinded its surcharge proposal. (PAC ¶¶ 65, 67, 70-71 (emphases added).) In an order dated October 25, 2010, also reported at 732 F.Supp.2d 389, the district court denied Anderson's motions for reconsideration and for leave to file the proposed amended complaint, see id. at 406-07. In denying reconsideration, the court noted principally that Anderson did not point to anything the court had overlooked but merely reargued contentions already addressed by the court. In its Opinion, the Court found that the alleged antitrust conspiracy was not plausible because publishers and national distributors have an economic self-interest in more wholesalers, not fewer; more wholesalers yields greater competition, which is good for suppliers, (Op. [397].) Specifically, the Court held that it is implausible that magazine publishers would conspire to deny retailers access to their own products, ( Id. ), and noted that, in the Complaint, Anderson itself pointed out that its elimination as a wholesaler has substantially reduc[ed] the output of magazines ... and the ability of retailers to obtain those magazines.... Because determining whether a complaint states a plausible claim is context-specific, requiring the reviewing court to draw on its experience and common sense, Ashcroft v. Iqbal, 556 U.S. 662, 663-64, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009), the Court's conclusion was neither impermissible, nor clear error. Anderson also argues that the Court's determination that the 7-cent surcharge was a non-negotiable take-it-or-leave-it demand was mistaken and overlooks the fact, recognized in another part of the Court's Opinion, that neither Anderson nor Defendants treated it as such and that Anderson was entirely flexible and willing to compromise.... (Pl.Mem.4.) This argument is unavailing. Anderson impliedly admits that the Court did not overlook this information because, as Anderson points out, the Court recognized in another part of its Opinion that the Defendants had varied reactions to the surcharge. Additionally, the fact that the Defendants had several different reactions to the surchargewhether the surcharge was negotiable or notclearly suggests the absence of an antitrust conspiracy. Plaintiffs impliedly ask the Court to assume that either (1) the wholesalers first had several different reactions to the announced surcharge and then abruptly changed course, deciding to engage in unlawful collective action; or (2) the original non-parallel conduct was nothing more than a ruse. The most plausible scenario, however, is that the Defendants each separately came to a similar conclusionthat they did not want to pay a 7-cent surcharge. Thus, the Court permissibly determined that the Defendants' rejection of the surcharge was not plausibly the product of collective action and was simply a common response to a common stimulus.  732 F.Supp.2d at 406-07 (other internal quotation marks omitted) (emphases added). The district court denied Anderson's motion for permission to file its proposed amended complaint, attached to the motion for reconsideration, stating only as follows: As to Plaintiffs' request for leave to amend its Complaint, there is no basis for it. The addition of numerous conclusory allegations does not cure the deficiencies of the Complaint the Court dismissed on August 2, 2010[.] Id. at 407.