Court Opinion

ID: 4186665
Source: CourtListenerOpinion
Date Created: 2017-07-17 15:00:45.371035+00
Date Added: 2024-06-11T14:39:56.125585
License: Public Domain

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-Counter-
                                                      Defendant-Appellant,

      LAVOHO, L.L.C., successor in interest Diesel Ebooks, L.L.C.,*

                                                      Plaintiff-Counter-
                                                      Defendant,

                                         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-Counter-
                                                      Claimants-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.

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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 well-
reasoned 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 Plaintiff-
                                  Counter-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-Claimant-
                                  Appellee Simon & Schuster, Inc.

                                  Joel M. Mitnick, John J. Lavelle, and Bianca
                                  Cadena, Sidley Austin LLP, New York, New
                                  York, for Defendant-Counter-Claimant-
                                  Appellee Holtzbrinck Publishers, LLC, DBA

†   The styling “Pearson Plc” also appears throughout the parties’ filings.

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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-Counter-
                              Claimant-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.

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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.

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