In a pair of opinions Monday, Judge Cote dismissed two putative class actions, one brought by college textbook retailers (opinion here) and another brought by students (opinion here), accusing textbook publishers and on-campus bookstore operators of violating the antitrust laws. The cases alleged an unlawful conspiracy involving a digital program called Inclusive Access that provides students automatic access to course materials when they register for class and bills their bursar account (unless they opt out).
In both cases, Judge Cote found that there were no plausible allegations of an anticompetitive agreement, or conspiracy, among the defendants, because there were ample independent reasons to pursue a digital strategy:
[T]he [Second Amended Complaint] describes market conditions that would have independently suggested to any publisher of textbooks that digital innovations such as Inclusive Access might help their bottom line. As detailed in the SAC, there was a flourishing secondary marketplace for textbooks and the sales of new textbooks had declined. These phenomena had a negative impact on publishers’ revenue and profits. Then, in 2016, the DOE adopted a rule that permitted Institutions to include the cost of books and supplies, including digital textbooks, in tuition bills.
Meanwhile, the digital revolution was well underway and both faculty and students were accustomed to using electronic devices to access information. These phenomena affected every textbook publisher and gave each of them an incentive to develop digital textbooks that could be charged on a tuition bill.
Underscoring this commonsense reaction to market phenomena, the SAC pleads that the adoption of the Inclusive Access program for courses was significantly more profitable for a publisher than the sale of hardcopy textbooks. Digital materials are less expensive to produce and reduce the opportunity for competition in the secondary market. Taken together, these allegations suggest that the Publisher Defendants’ decisions to implement Inclusive Access were likely the result of “independent responses to common stimuli.” They do not support an inference that Inclusive Access was adopted and promoted because there was a conspiracy among the Publisher Defendants.
Steptoe represented defendant Pearson Education, Inc. in both cases.