Booklocker.Com, Inc. v. Amazon.Com, Inc.
| Citation | 650 F.Supp.2d 89 |
| Decision Date | 26 August 2009 |
| Docket Number | No. CV-08-160-B-W.,CV-08-160-B-W. |
| Parties | BOOKLOCKER.COM, INC., Plaintiff, v. AMAZON.COM, INC., Defendant. |
| Court | U.S. District Court — District of Maine |
Anthony D. Pellegrini, Rudman & Winchell, Bangor, ME, Robert A. Izard, Seth Klein, Izard Nobel LLP, West Hartford, CT, for Plaintiff.
Joel S. Sanders, Gibson Dunn & Crutcher LLP, San Francisco, CA, Joshua Lipton, Gibson, Dunn & Crutcher LLP, Washington, DC, William J. Kayatta, Jr., Jeffrey M. White, Pierce Atwood LLP, Portland, ME, for Defendant.
ORDER ON MOTION TO DISMISS
An independent print on demand publishing company, BookLocker.com (BookLocker), brought this class action claiming a violation of federal antitrust law against a leading online retailer, Amazon.com (Amazon), for allegedly tying its online bookstore services with the printing services provided by its wholly owned subsidiary. Before the Court is Amazon's Motion to Dismiss (Docket # 38) pursuant to Rule 12(b)(6). Aside from one issue, Plaintiff raises a right to relief above the speculative level. Accordingly, the motion is primarily denied.
BookLocker filed its Complaint against Amazon on May 19, 2008, asserting one count of unlawful tying in violation of the Sherman Act, 15 U.S.C. § 1. Compl. (Docket # 1). On June 30, 2008, Amazon filed a motion to dismiss. Def.'s Mot. to Dismiss (Docket # 13). Oral argument on the motion was held on February 9, 2009. Minute Entry (Docket # 26). The next day, and prior to a decision on the pending motion, BookLocker moved to amend the Complaint. Pl. BookLocker.com's Notice of Amendment of Compl. or, in the alternative, Mot. for Leave to Amend the Compl. (Docket # 27). On February 17, 2009, a conference of counsel was held during which the motion to amend was granted, and Amazon withdrew its motion. Minute Entry (Docket # 29); Oral Order Granting Mot. to Amend (Docket # 30); Oral Withdrawal of Mot. to Dismiss (Docket # 31). The same day BookLocker filed its Amended Complaint. Am. Compl. (Docket # 33). Amazon filed the pending motion to dismiss on March 20, 2009. Def.'s Mot. to Dismiss Am. Compl. (Docket # 38) (Def.'s Mot.). BookLocker responded on April 23, 2009, Pl. BookLocker.com's Mem. in Opp'n to Def. Amazon.com's Mot. to Dismiss Am. Compl. (Docket # 43) (Pl.'s Opp'n), and Amazon replied on May 20, 2009. Reply in Support of Def.'s Mot. to Dismiss Am. Compl. (Docket # 46) (Def.'s Reply).
"Federal Rule of Civil Procedure 8(a)(2) requires only a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotation omitted). Rule 12(b)(6), however, provides that a court may dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). The Supreme Court recently addressed the standard to be applied to a Rule 12(b)(6) motion:
To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.' [Twombly, 550 U.S. at 570] 127 S.Ct. 1955. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556, 127 S.Ct. 1955. The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. Where a complaint pleads facts that are `merely consistent with' a defendant's liability, it `stops short of the line between possibility and plausibility of entitlement to relief.' Id. at 557, 127 S.Ct. 1955 (brackets omitted).
Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 1950.
Faithful application of this standard is particularly important in the context of a potentially expensive antitrust suit. "[W]hen the allegations in a complaint, however true, could not raise a claim of entitlement to relief, `this basic deficiency should ... be exposed at the point of minimum expenditure of time and money by the parties and the court.'" Twombly, 550 U.S. at 558, 127 S.Ct. 1955 (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216, at 233-34 (3d ed.2004)). "Thus, it is one thing to be cautious before dismissing an antitrust complaint in advance of discovery, but quite another to forget that proceeding to antitrust discovery can be expensive." Id. (internal citation omitted); see also Euromodas, Inc. v. Zanella, Ltd., 368 F.3d 11, 17 (1st Cir.2004) ().
The Court begins its analysis with a recitation of BookLocker's well-pleaded factual allegations entitled to the assumption of truth. See Iqbal, 129 S.Ct. at 1950; Fitzgerald v. Harris, 549 F.3d 46, 52 (1st Cir.2008) ().
BookLocker is an independent print on demand (POD) publishing company with approximately 1,200 books currently available. Am. Compl. ¶¶ 3, 11. "Print on demand" refers to "both a printing technology and business process in which copies of a book are only printed when an order has been received from a consumer or retail bookseller, and only the number of books that have been ordered are printed." Id. ¶ 3. The "print on demand" model allows "for very small print runs for lower-demand titles for which traditional printing technology, such as offset printing, is uneconomical." Id. According to BookLocker, there are "thousands of POD publishers" in the United States publishing "hundreds of thousands of titles." Id. ¶ 4. These publishers "use a variety of printing companies to print physical copies of the books in their catalogs as those books are ordered." Id. ¶ 5. Presently, Lightning Source, Inc. (Lightning Source) "is the leading printer of POD books." Id.
"[T]raditional brick-and-mortar bookstores (like Borders or Barnes & Nobles) generally do not stock books from POD publishers." Id. ¶ 23. Instead, POD books are predominantly sold in the "Online Book Market," which BookLocker defines as "the market for physical books ordered online by consumers and then delivered to consumers by means of a shipping service." Id. ¶¶ 6, 22-23.
Amazon, "widely recognized as being the largest Internet retailer in the world," "owns and operates the Amazon bookstore [ (the Bookstore) ], an Internet site that sells books to consumers." Id. ¶ 6. "Amazon's Bookstore is the dominant channel through which consumers purchase POD books in the Online Book Market." Id. ¶ 24. According to BookLocker, "Amazon has significant power in the Online Book Market, with a market share of up to 70%." Id.
Consumers generally purchase POD books from the Amazon Bookstore in one of two ways. Id. ¶ 25. First, "consumers may purchase POD books directly from Amazon" by clicking on "a prominent button labeled `Add to Shopping Cart'" (the Direct Amazon Sales Channel). Id. "The vast majority of POD books sold in the Bookstore" are sold in this manner because purchasing via the Direct Amazon Sales Channel offers consumers "the privacy and security of purchasing direct from Amazon and various free shipping deals that Amazon offers for products purchased directly from Amazon." Id. According to the website of Amazon's subsidiary, BookSurge, the availability of a POD book in the Direct Amazon Sales Channel is "`a distinction proven to lift sales.'" Id.
As an alternative to the Direct Amazon Sales Channel, "Amazon allows third-party vendors to sell books on Amazon through a program known as `Amazon Marketplace'" (the Marketplace). Id. ¶ 26. Consumers purchasing books in this manner "must provide shipping information to the third-party vendor and cannot take advantage of Amazon's free shipping programs." Id. "Only a small fraction of POD book Bookstore sales" are completed through the Marketplace. Id.
According to BookLocker, Amazon "acts as a direct-sales agent" or "sales broker" rather than as a traditional retailer with regard to its "sales" service for POD books sold via the Direct Amazon Sales Channel. See id. ¶¶ 7, 27, 29. After an Amazon customer orders a POD book over Amazon's website and simultaneously pays for the POD book with a credit card, Amazon transmits the order to the POD publisher's printer, which then prints a copy of the ordered book and "drop ships" it directly to the customer using an Amazon label. Id. ¶¶ 7, 28. Amazon "generally does not pay for POD books in advance or maintain inventory of POD books in its warehouses" or "take title or possession" of POD books. Id. ¶ 29. POD publishers "pay Amazon a percentage of the sales price [of the ordered book] for the service it provides." Id.
In April 2005, "Amazon acquired BookSurge, a company that, among other services, provides printing services to POD publishers." Id. ¶¶ 8, 30. Several companies compete in the POD printing market, however, "Lightning Source has been the dominant POD printing service," printing "over 1 million books every month on behalf of over 4,300 publishers." Id. ¶¶ 8, 31. BookLocker "presently prints its books through Lightning Source," id.; BookSurge "is a competitor of Lightning Source." Id. ¶¶ 8, 32. According to BookLocker, BookSurge...
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