April 16, 2014

Penguin Blinks on Agency Model Civil Suit

After coming down to the wire, with a trial scheduled to start June 3, Penguin announced May 22 that it will settle the remaining ebook price fixing class action suits, as well as claims filed by 33 states. The publisher had already settled similar Federal claims with the Department of Justice in December 2012. Under that settlement, Penguin agreed to end its allegedly anticompetitive agreements with Apple and other retailers for a period of two years.

If the U.S. District Court for the Southern District of New York approves the settlement, Penguin will pay $75 million in restitution to affected consumers, plus $7 million to the states in litigation and investigation costs, and $8 million plus administration costs to the class action attorneys Hagens Berman Sobol Shapiro LLP.

Penguin also agreed to withdraw its motions appealing their demands for a jury trial in the states’ suit, and arbitration in the class action suit.

According to Publishers Lunch, “As the last to settle, Penguin is paying the most by far of any of the settling publishers. In fact, their total cost of over $90 million is more than the $78.9 million paid by the first three settlers combined.”

Perhaps in order to spread this hefty tariff over two years, Penguin allocated $40 million in 2012 towards such a settlement. The remainder “will be expensed in Pearson’s 2013 statutory accounts as part of the accounting for the Penguin Random House joint-venture,” the company said in a statement.

Meredith Schwartz About Meredith Schwartz

Meredith Schwartz (mschwartz@mediasourceinc.com) is Senior Editor, News and Features of Library Journal.

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