May 22, 2013

(WASHINGTON, D.C.) Plaintiffs alleging that five of the country’s biggest publishing houses conspired with each other and Apple Inc. to raise the prices of ebooks have agreed to a settlement with Penguin Group (USA) Inc., according to Co-Lead Class Counsel Kit A. Pierson of Cohen Milstein Sellers & Toll PLLC. Penguin has agreed to pay $75 million directly to consumers, along with more than $15 million in administrative costs and attorneys’ fees and expenses. It is the largest settlement to date in the ongoing suit.

Cohen Milstein represents a class of consumers who purchased ebooks from the defendant publishers. The class action, along with complaints subsequently filed by the Department of Justice and several state attorneys general, alleges that Apple coordinated a conspiracy among Penguin and four of its top competitors to raise the prices of ebooks when the iPad was launched in 2009. As Penguin CEO David Shanks admitted in an email sent in 2011, Apple acted as a “facilitator and go-between” for the publishers, allowing them to abolish consumer-friendly discounts provided by Amazon and other major ebook retailers and raise the prices of their ebooks significantly.

Penguin is the last publisher defendant to settle claims brought on behalf of consumers. Penguin’s settlement nearly doubles the total relief provided to consumers to date. Previously, HarperCollins Publishers, LLC, Simon & Schuster, Inc., and Hachette Book Group, Inc. had settled with state attorneys general for a combined $69 million in relief to consumers plus fees and administrative costs, and the class plaintiffs and state attorneys general settled with Holtzbrinck Publishers, LLC, D/B/A/ Macmillan for $20 million plus fees and administrative costs. Apple, the sole remaining defendant, is expected to proceed to trial on liability and equitable relief issues with the Department of Justice and the state attorneys general in June, which will be followed by class proceedings and a subsequent damages trial.

“We are pleased that Penguin has agreed to provide significant relief to the avid readers who Penguin and its competitors overcharged for ebooks,” said Pierson, whose firm was named Co-Lead Counsel with the law firm of Hagens Berman Sobol Shapiro LLP in the consolidated class action in December 2011 by presiding U.S. District Court Judge Denise Cote. “This settlement will help restore competition and fair, market-based pricing in an important emerging industry.”

In addition to Steve W. Berman and Jeff D. Friedman of Hagens Berman Sobol Shapiro, Jeffrey Dubner at Cohen Milstein has also played a substantial role in the successful prosecution of the class litigation. The case is In re Electronic Books Antitrust Litigation, No. 11-md-2293.

The settlement with Penguin must be approved by Judge Cote. A hearing is expected later this summer. For more information or to track the progress of the settlement, visit /case-study/electronic-books-antitrust-litigation.