On August 6, 2018, the United States Court of Appeals for the Second Circuit ruled in favor of Cravath clients Time Inc. and Time Inc. Retail (formerly Time/Warner Retail Sales & Marketing, Inc.) (“TWR”), and several unaffiliated magazine publishers, national distributors and wholesalers, in affirming the summary judgment dismissal of antitrust litigation filed by Anderson News, LLC and Anderson Services, LLC (collectively, “Anderson”). Anderson, a defunct wholesaler of magazines, alleged that in January 2009 the defendants engaged in a group boycott to eliminate Anderson from the magazine industry, in violation of Section 1 of the Sherman Act, and destroyed its business. Anderson sought more than $1 billion in damages.
On August 2, 2010, the U.S. District Court for the Southern District of New York dismissed Anderson’s lawsuit with prejudice, holding that the allegations were insufficient to raise any inference of a conspiracy among the defendants. The Second Circuit reversed the dismissal on April 3, 2012, and held that Anderson’s allegations were plausible at the motion to dismiss stage.
On remand, the parties completed fact and expert discovery. The District Court heard oral argument on defendants’ summary judgment motions and Daubert motions on July 22, 2015, and granted defendants’ motions for summary judgment on August 20, 2015. Anderson appealed, and Time Inc. cross-appealed. The appeal was argued before the Second Circuit on December 2, 2016.
The Second Circuit affirmed Judge Paul A. Crotty’s August 2015 summary judgment grant, holding that “the District Court correctly ruled that Anderson has failed to offer sufficient evidence from which a reasonable jury could infer that defendants entered into such an unlawful agreement.” In an opinion by Judge Susan L. Carney, the Second Circuit held that the group boycott that Anderson alleged was implausible as an economic matter, as it would have been irrational for defendants to have wanted to reduce competition in the wholesale market. Against this backdrop, the Second Circuit held, in a lengthy, fact-intensive opinion, that defendants’ conduct was consistent with independent action (as opposed to Anderson’s theory of a conspiracy). Anderson had announced a distribution surcharge, which defendants refused to accept, and defendants had the right to act independently in refusing to deal with Anderson and dealing instead with alternative wholesalers who offered better terms. As to Time Inc. and TWR specifically, the Second Circuit found that they made a counterproposal to Anderson, and “it seems at least equally likely that Time/TWR was genuinely interested in continuing its relationship with Anderson when it made this final counterproposal.” The Second Circuit also affirmed the grant of summary judgment on defendants’ counterclaims on the ground that defendants did not suffer an antitrust injury.
The Cravath team included partner Antony L. Ryan (Picture) and associates M. Brent Byars, Daniel P. Margolskee and Lauren M. Rosenberg.
Law Firms: Cravath Swaine & Moore;
Clients: Time inc.;