Antitrust Victory for Comag Marketing Group, LLC
NEW YORK (September 26, 2005) — On September 22, 2005, the U.S. District Court for the Southern District of New York granted summary judgment in favor of McDermott Will & Emery client Comag Marketing Group, LLC (CMG) in an antitrust action brought in May 2000 by six former wholesalers of magazines. The action against CMG and five other leading national distributors of magazines, alleged, inter alia, violations of the Robinson Patman Act, predatory pricing, full-line forcing, breach of contract, promissory estoppel, breach of the New York state franchise statute and breach of fiduciary duty. The plaintiffs were seeking $750 million in damages.
In 2001, CMG, a joint venture of Advance Magazine Publishers, Inc. and The Hearst Corporation, moved to dismiss all of these causes of action, and was successful in obtaining a dismissal of all claims with the exception of the Robinson Patman Act price discrimination claim. This remaining claim alleged that CMG discriminated against them, in favor of their competitor, by offering their competitor better prices on magazines. As a result, the plaintiffs alleged that they were forced out of business.
In 2004, McDermott moved for summary judgment on the ground that CMG and its predecessor, Hearst Distribution Group, Inc. (HDG) were not the "sellers" of magazines under the Act's definition, and therefore could not be liable for any alleged violations of the Robinson Patman Act. The court agreed, leaving only the issue of whether CMG and HDG violated the Robinson Patman Act by allotting more copies of magazines to the plaintiffs than to their competitor, increasing plaintiffs’ costs by requiring them to return more copies of unsold magazines.
In March 2005, McDermott moved for summary judgment, and the court granted summary judgment and dismissed the action against all defendants, including CMG and HDG. The court found that discriminatory allotment policies are not cognizable under the Robinson Patman Act, and there was no evidence in the record to support such a claim.
The McDermott team representing CMG, one of the leading national distributors of magazines in the United States, and HDG, was led by antitrust partner Lawrence Fox.
