Judge Issues Preliminary Approval of States’ $69 Million E-Book Settlement

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This week, U.S. District Judge Denise Cote issued an order preliminarily approving the e-book pricing settlements between 49 states and Hachette, HarperCollins, and Simon & Schuster. The order covers all states but Minnesota.

The 49 states had sued the publishers claiming that there was a conspiracy involving three of the nation’s top publishers and others to fix and raise retail prices of e-books, the judge’s order states. Hachette, HarperCollins, and Simon & Schuster agreed to settle the lawsuit. A separate lawsuit with similar claims continues against Penguin Group (USA), Macmillan, and Apple.

While the settling publishers denied any wrongdoing, they agreed to settle to “avoid the cost and risk of a trial,” the opinion reported.

Under the agreement, the settling publishers have agreed to pay $69.04 million into a fund to pay customers who purchased e-books by any of the five publishers, according to the order. Hachette will pay $31.71 million, Harper will pay $19.6 million, and Simon & Schuster will pay $17.8 million. The settlement also stipulates that any consumer who bought one or more e-books that are included in the settlements are eligible for a credit or check representing part of their purchase price for each qualifying e-book.

Consumers who bought qualifying e-books at Amazon, Barnes & Noble, Kobo, or Apple from April 1, 2010 through May 21, 2012, will receive a credit to their account automatically if the settlement is approved. Those who bought qualifying e-books through Sony will receive a check automatically, and those who bought a qualifying e-book from any other retailer must file a claim form to receive benefits.

The judge also scheduled a “Fairness Hearing” for February 8, 2013, to consider the “fairness, reasonableness, and adequacy of the Settlements, the dismissal with prejudice of this action as to the Defendants, and the entry of final judgment in this action.”

Consumers who wish to speak at the Fairness Hearing must file a Notice of Appearance with the New York District Court and the E-Books AG Settlements administrator by December 12, 2012. Consumers may also send in objections to the court without appearing at the hearing.

In a parallel civil suit brought by the Department of Justice, on September 6, Judge Cote issued an order entering as a final judgment a settlement agreement that requires Hachette, HarperCollins and Simon & Schuster to terminate all of their agency agreements and any agreement that restricts an e-book retailer’s discretion over pricing as soon as allowed under contract, typically, on 30 days’ notice. The settling publishers are also prevented from adopting new agency-type agreements for two years.