American Booksellers Association Action in against Barnes & Noble and Borders for Alleged Price Discrimination Commenced in the United States District Court, San Francisco, Judge William H. Orrick

Initial Publication: 02/26/02; Last Update: 02/27/02 09:01

Wallace Kuralt, owner of The Intimate Bookshop, Inc., a regional chain of 9 bookstores located in and around North Carolina ("Intimate") and the American Booksellers Association ("ABA") of which Intimate was a member decided at about the same time to commence a lawsuit against the two main superstore competitors, Barnes & Noble and Borders, instead of bringing another lawsuit against the major book publishers. There was an arrangement by which Intimate permitted the ABA to file its action first, as the more important of the two lawsuits. The ABA action was brought by the various independent bookstores represented by the ABA's 26-person board of governors, and was brought in California to try to obtain in federal court a class action on behalf of all California bookseller members of the ABA, under a California state statute permitting such class actions.

Meanwhile, Intimate commenced is action in the United States District Court for the Southern District of New York, with only its owner, Wallace Kuralt, and Intimate, as the plaintiffs. Later, Kuralt was dropped as a plaintiff. Kuralt's brother was Charles Kuralt, famous television newscaster who died several years ago.

After some preliminary skirmishing in San Francisco, the federal court denied class action status in the ABA action, citing federal court decisions prohibiting class actions for RPA cases.

After a lengthy discovery process for both the Intimate and ABA action, conducted independently by Intimate and the ABA, but conducted by essentially the same law firms and law firms representing the defendants, B&N and Borders, the defendants moved for a summary judgment in the ABA action to try to have the entire case thrown out. Judge William H. Orrick held that the ABA had failed to establish that any of the named plaintiffs therein was entitled to any damages, but allowed the case to go to trial on the issue of whether the ABA plaintiffs were entitled to injunctive relief.

Most of the evidence filed by the ABA in opposition to the summary judgment motion was filed under seal and not available for the public, Intimate or Intimate's attorney to see, even though the cases were related to each other. Borders and B&N produced about 35 CD-Roms of document images (perhaps 1,000,000 images) to the ABA plaintiffs in such case, together with various other documents, all pursuant to various agreements requiring that the information be held confidential and not be disclosed to anyone except specified persons. These same CD-Roms were provided to Intimate's attorney.

Accordingly, the papers filed by the ABA in opposing the summary judgment motion were filed under seal, and Intimate and its attorney were not able to obtain copies of such papers, even though Intimate's attorney went to the Clerk's Office in the District Court in San Francisco to see what information was available for review and copying.

After returning from the trip empty-handed, Intimate's attorney (Carl E. Person) made a request to the Judge (William H. Pauley, III) in Intimate's New York action for permission to seek the information filed under seal in the ABA Action, and was granted permission, with a very short deadline to make the motion.

During this time frame, in early April, 2001, the ABA trial commenced in San Francisco, and just at the point when Intimate was making its motion to obtain the discovery filed under seal in San Francisco, B&N and Borders entered into a settlement agreement with the ABA (during the 6th day of what otherwise would have been a 1- or 2-month trial), and as part of the settlement agreement the ABA was to be paid $4,700,000 and the ABA was required under the agreement immediately to destroy all of the confidential documents.

Leonard Riggio, C.E.O. of B&N, issued a press release on that date, which informed the world about such settlement, and its terms, and this press release was forwarded to Wallace Kuralt, who sent it to his attorney, Carl Person, who sent it to Judge Pauley in the New York Action, and after a telephone conference, it was agreed that the destruction would not take place, and that Intimate would have so many days to complete its efforts to intervene in the ABA Action (just settled) to try to obtain a court order from Judge Orrick to obtain copies of the documents filed under seal.

The documents sought were the expert reports and the documents on which they were based.

The motion was made, and Judge Orrick decided that Intimate was to receive the expert reports filed by B&N and Borders, but with information redacted which related to the ABA's filings (or something like that).

B&N and Borders then produced whatever they were ordered by Judge Orrick to produce, and the ABA case was finally over, during the middle of 2001, approximately.

The ABA Action was prosecuted by the ABA at an admitted cost to the ABA of $18,000,000, a figure set forth in the ABA's own website.

Intimate's attorney estimated that B&N and Borders combined spent about $75,000,000 in defending the ABA lawsuit (probably including some costs relating to Intimate's lawsuit). This estimate was based on a guesstimate. Borders stated in a public document that during the first quarter of 2001 it spent about $6,000,000 in defending itself in the ABA Action. The ABA Action was brought in 1998, and Borders is smaller than B&N. With these factors in mind, Intimate's attorney estimated that B&N and Borders combined spent about $75,000,000 in defending themselves in the ABA Action, and reported this estimate to Judge Pauley in the New York Action.

A copy of the ABA trial transcripts are available (as HTML files (the first set of 6 links) or as PDF files, without any HTML markup, readable using Adobe Acrobat Reader or similar program), as follows:

[Note: Some of the 6 PDF files - for Days 1, 2 and 5 - may not be readable at this time, a problem which we are trying to correct; all of the files are long, about 200,000 bytes, and take some length of time to come up, depending on the modem and speed being used; when having trouble with a PDF file, try the HTML file for that day, and then hit the VIEW button and the SOURCE option which will enable you to put the court reporter's line numbers into a position along the left margin. We'll continue working on these problems, possibly by using an RTF format.]

    the HTML Files

  1. Day 1 of ABA Trial, April 4, 2001, 65 pages
  2. Day 2 of ABA Trial, April 10, 2001
  3. Day 3 of ABA Trial, April 11, 2001
  4. Day 4 of ABA Trial, April 12, 2001
  5. Day 5 of ABA Trial, April 16, 2001
  6. Day 6 of ABA Trial, April 17, 2001

    The PDF Files

  7. Day 1 of ABA Trial, April 4, 2001, 65 pages
  8. Day 2 of ABA Trial, April 10, 2001
  9. Day 3 of ABA Trial, April 11, 2001
  10. Day 4 of ABA Trial, April 12, 2001
  11. Day 5 of ABA Trial, April 16, 2001
  12. Day 6 of ABA Trial, April 17, 2001

  13. Note: If anyone wants to suggest what additional information could be useful in this website, please contact us at E-Mail Contact Form

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Copyright 2002 by Carl E. Person - not including ABA transcripts