Independent Booksellers and Book Chains Settle Legal Dispute

Posted on April 20, 2001

A federal antitrust lawsuit filed against Barnes and Noble, Inc. and Border Group, Inc. by the American Booksellers Assocation (ABA) has been settled. The ABA accused the leading booksellers of using their size to bring about large discounts that the smaller booksellers could not compete with. However, the ABA has dropped the suit in exchange for the two retailers paying a portion of ABA's legal fees. As part of the settlement both parties agreed that neither party may suit or fund a suit of a similar nature during the next 3 years.

On February 27, Judge William Orrick heard arguments for the summary judgement phase of the case and took the case under advisement before dismissing damage claims on March 21. At that time, Judge Orrick ruled that the ABA and the bookseller plaintiffs could seek injunctive relief and legal fee costs. Under the settlement Borders and Barnes and Noble, Inc. will each pay $2.35 million to the ABA, about 1/4 of ABA's legal fees.

Leonard Riggio, Chairman and CEO, Barnes & Noble, Inc. said, ``This settlement is nothing short of a total vindication for Barnes & Noble. From a legal perspective, based on a March 19, 2001, opinion and ruling by U.S. District Judge William H. Orrick, Jr. in favor of Barnes & Noble, we now have a published legal opinion which validates the fundamental legal principle under which important discounts and terms provided to Barnes & Noble, as well as other booksellers, including many members of the ABA, are permissible."

Borders Group President and Chief Executive Officer Greg Josefowicz said, ``The Company has been completely vindicated in this case. Two very important points to note are that the settlement does not require any change in our business practices, and that the payment to the plaintiffs amounts to a fraction of their legal costs. We have defended our position vigorously from the beginning and are extremely pleased with the outcome of the case.''

Commenting on the settlement, ABA President Neal Coonerty said: "I am pleased to announce the settlement of the litigation by 26 bookstore plaintiffs and ABA against Barnes & Noble and Border�s. From the beginning we have sought to bring to light the system of secret illegal deals that operated to the competitive disadvantage of independent booksellers nationwide. Through the legal process those arrangements have been brought out and many have changed. Those that remain -- and, make no mistake, some do remain -- are better handled through negotiation rather than the unbelievably expensive trial process. The $4.7 million paid to ABA by the defendants together with our existing endowment insures that ability to move ahead with vigor to address the remaining issues as well as any new situations that may arise. I do not to forget to pay tribute to the 26 courageous booksellers who stood firm in the face of tremendous pressure for the common cause of equity in our industry. They are to be commended and thanked."