The US Court of Appeals for the Second Circuit [official website] on Monday upheld the dismissal [opinion, PDF] of a lawsuit brought by Anderson News LLC [company profile], a magazine wholesaler that was once the largest in the country, against six major publishing companies including Hearst and Time Inc. [official websites]
The Knoxville, Tennessee company, which began operations in 1917, operated as a wholesaler [AP report] by collecting magazines from publishers, delivering them to retailers, and recycling unsold copies. Anderson shut down in 2009 when 90 percent of all magazine publishers nationwide rejected a seven cent surcharge Anderson attempted to impose in order to shift costs further up the supply chain. The lawsuit alleges that publishers illegally colluded to drive Anderson out of business by refusing to pay the surcharge.
Judge Susan Carney stated in the Second Circuit’s unanimous opinion that while the evidence presented by Anderson is “perhaps consistent with an unlawful conspiracy among defendants”, it does not exclude other explanations for the rejection of the surcharge such as Anderson’s immediate deadline to accept the “take or leave it” offer.
Defendants Hearts, Time and AMI filed counterclaims against Anderson, alleging that the wholesaler engaged in “an illegal price-fixing conspiracy” that costs them “tens of millions of dollars” in damages when Anderson “went dark” after failing to secure the surcharge from publishers. The Second Circuit affirmed the district courts summary judgement in Anderson’s favor, stating that because the “injuries resulted from an action related to, but not ‘inextricably intertwined with,” Anderson’s alleged conspiracies, they have not suffered an antitrust injury.”
Attorneys for Anderson say they are studying the opinion and deciding on their next move.