Firm Secures Dismissal of Multi-District Antitrust Litigation

On June 14, 2021, Patterson Belknap secured a significant victory for our client, McGraw Hill LLC (“McGraw Hill”), with the full dismissal of a multi-district litigation in the Southern District of New York. The multi-district litigation consolidated a number of putative class action lawsuits alleging that McGraw Hill, along with other textbook publishers and retailers, violated various federal and state antitrust laws through its implementation of Inclusive Access, a program authorized by federal regulation whereby students may be automatically billed for and automatically receive digital course materials selected by their professor.

In her decision, Judge Cote of the Southern District of New York dismissed all of the plaintiffs’ claims. Specifically, the Court concluded that the plaintiffs did not have the required antitrust standing to sue McGraw Hill. The Court further held, among other things, that the plaintiffs had not adequately alleged the existence of a conspiracy between McGraw Hill and any of the other defendants and that the plaintiffs had not plausibly alleged that McGraw Hill attempted to, conspired to, or did monopolize any of the potentially relevant product markets.

The Court found that the defendant publishers had implemented Inclusive Access as a reasonable response to the changing market conditions of a digital world. As she explained:

“The [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 [Complaint], 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 rules 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 [Complaint] 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.’ Apple, 791 F.3d at 315. They do not support an inference that Inclusive Access was adopted and promoted because there was a conspiracy among the Publisher Defendants.”

To read the decision, click here.

To read press on the case in Bloomberg Law, please click here.