Penguin to Pay $90m to Settle Ebook Lawsuit with States, Consumers

In Tech Digest by Edward Nawotka

Penguin LogoUpdated: The total Penguin has agreed to pay the ongoing class action lawsuit with the states and consumers is totally $90 million, with $75 million going to the consumers and another $7 million to the states and $8 million to the, ahem, attorneys.

The press release from lead law firm for the class action, Hagens Berman, follows:

SEATTLE – Hagens Berman Sobol Shapiro, a consumer-rights law firm, today announced that the firm, working alongside 33 state attorneys general, has reached a proposed $75 million settlement with global book publisher Penguin (NYSE: PSO) over allegations that it participated in an illegal scheme to fix the price of e-books in the United States.

The lawsuit asserts that Penguin actively participated in a price-fixing scheme orchestrated by Apple (NASDAQ: AAPL) that artificially raised e-book prices and created a virtual cartel, eliminating any retailer competition on price.

The $75 million settlement, if approved by the court, would resolve claims filed by 33 states against Penguin as well as class-action lawsuits filed by consumers alleging that the company’s behavior violated unfair competition laws, causing consumers to overpay for e-books.

“This proposed settlement is a powerful demonstration of what is possible when federal, state and private class antitrust enforcement lawyers work together,” said Steve W. Berman, managing partner of Hagens Berman. “In this case, the level of cooperation was unprecedented, and the results that we were able to deliver to the states and consumers demonstrate that.”

Late last year, Penguin settled similar claims with the Department of Justice. Under that settlement, Penguin agreed to end its allegedly anticompetitive agreements with Apple and other retailers for a period of two years.

In December, Berman was appointed lead counsel to represent the rights of consumers in the consolidated class-action lawsuit first filed on Aug. 9, 2011. It alleges that the defendants coordinated a switch to an agency model, where publishers would set the price, rather than retailers. The result, the lawsuit claims, was a dramatic increase in the price of many e-books as retailers were contractually forbidden from competing on price. The suit sought to compensate consumers for overpayment as a result of the pricing agreement.

“Penguin’s senior management deserves credit for working with us and the attorneys general to reach a comprehensive agreement in such a hotly contested case,” said Jeff D. Friedman, Hagens Berman partner. “They’ve agreed to a settlement that will go a long way toward making e-book consumers whole and restoring a thriving, again-competitive e-book marketplace.”

The states and the Department of Justice are scheduled to face Apple in a civil trial regarding these claims beginning on June 3, 2013.

About the Author

Edward Nawotka

A widely published critic and essayist, Edward Nawotka serves as a speaker, educator and consultant for institutions and businesses involved in the global publishing and content industries. He was also editor-in-chief of Publishing Perspectives since the launch of the publication in 2009 until January 2016.