25 F. Supp. 3d 422
S.D.N.Y.2014Background
- DNAML Pty Ltd., an Australian software developer and e-book retailer, sold discounted e-books via its websites and planned an iOS reader app to sell/read e-books on iPad/iPhone.
- Five major trade publishers (Hachette, HarperCollins, Macmillan, Penguin, Simon & Schuster) and Apple allegedly conspired in 2010 to adopt an agency model and MFN/pricing tiers that removed retailers’ price-setting ability and raised retail e-book prices.
- DNAML claims the conspiracy forced publishers to require agency agreements, ending DNAML’s discounting and promotional business model and driving DNAML from the e-book retail market.
- DNAML also alleged Apple’s 2011 App Store policy change (30% fee for in-app e-book sales) harmed its app plans; DNAML later abandoned the App Store policy claim as an antitrust violation.
- DNAML sued under Section 1 of the Sherman Act (Clayton Act §4 damages) on Sept. 16, 2013, relying on the DOJ’s prior complaint and this Court’s findings that Apple violated antitrust law; defendants moved to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DNAML alleges antitrust injury from the price‑fixing conspiracy | DNAML: Lost profits and inability to compete after publishers adopted agency model and pricing tiers; exit from market is classic retailer injury | Defendants: Injury is indirect or speculative; only consumers were directly harmed; distributors can’t claim lost profits here | Held: DNAML sufficiently alleged antitrust injury — lost profits from being unable to price‑compete are the type of harm the antitrust laws protect |
| Whether DNAML is an efficient enforcer of antitrust laws | DNAML: As a harmed retailer/new entrant with pleaded investments and sales, it will vindicate the public interest and seek damages distinct from consumer claims | Defendants: Injury speculative, causation attenuated (App Store policy change a nearer cause), damages hard to apportion, risk of duplicative recovery | Held: DNAML plausibly alleged efficient‑enforcer factors; standing survives pleading stage though proving damages/causation may be difficult |
| Recoverability for foreign sales | DNAML: (no opposition) | Defendants: Claims based on foreign sales barred | Held: Claims arising from foreign sales dismissed (DNAML concedes) |
| Antitrust liability for Apple’s 2011 App Store policy change | DNAML: App Store policy harmed its app plans and entry | Defendants: Apple’s unilateral policy change doesn’t allege concerted antitrust wrongdoing | Held: Claim based on App Store policies dismissed; DNAML abandoned that theory |
Key Cases Cited
- Associated Gen. Contractors of Cal., Inc. v. California State Council of Carpenters, 459 U.S. 519 (1983) (purpose of antitrust private suits and limits on damages actions)
- Gatt Commc’ns, Inc. v. PMC Assoc., LLC, 711 F.3d 68 (2d Cir. 2013) (two‑part antitrust standing test: antitrust injury and efficient enforcer)
- Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (1990) (standing required even for per se price‑fixing claims)
- Monsanto Co. v. Spray‑Rite Serv. Corp., 465 U.S. 752 (1984) (distributor may recover lost profits from manufacturer price‑setting conspiracy)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377 (2014) (proximate‑cause/standing considerations and limitation on denying relief solely for damages‑apportionment concerns)
- In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677 (2d Cir. 2009) (lost profits and overcharge damages are distinct theories; retailer losses can be cognizable)
- Brunswick Corp. v. Pueblo Bowl‑O‑Mat, Inc., 429 U.S. 477 (1977) (plaintiff must show injury that flows from anticompetitive aspect of defendant’s conduct)