High Court’s Certiorari Denial Allows Digital Music Antitrust Class To Proceed

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on Jan. 10 declined to grant a petition for certiorari filed by the nation's four top record labels, which sought review of a ruling by the Second Circuit U.S. Court of Appeals that allowed a group of consumers to pursue antitrust class claims against the labels for allegedly conspiring to fix the prices for music sold on the Internet (Sony Music Entertainment, et al. v. Kevin Starr, et al., 10-263, U.S. Sup.; See January 2010, Page 7).

The 15 plaintiffs comprise digital music purchasers that sued Sony Music Entertainment, EMI, Universal Music Group Recordings Inc. and Warner Music Group Corp. in nine separate cases.  The actions were consolidated in the U.S. District Court for the Southern District of New York in August 2006.  The purchasers allege that the defendants engaged in a continuing conspiracy to "restrain the availability and distribution of Internet Music, fix and maintain at artificially high and non-competitive levels the prices at which they sold Internet Music and impose unreasonably restrictive terms in the purchase and use of Internet Music" for the purpose of making the format less attractive to consumers and inflating the prices of compact discs. 

The District Court dismissed the class claims in October 2008, finding that there were not sufficient facts to establish anticompetitive and collusive behavior by the labels per the standards of Bell Atlantic v. Twombly (127 S.Ct. 1955 [2007]). 

On appeal, the Second Circuit reversed the lower court's dismissal in January 2010, finding that the plaintiffs had sufficiently alleged violation of Section 1 of the Sherman Act under Twombly.  Contrary to the District Court's findings, the Second Circuit held that the "complaint alleges specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among the defendants." 

The labels filed their petition for a writ of certiorari in August.  The high court denied the petition without comment, merely stating that Chief Justice John G. Roberts Jr. and Justice Sonia Sotomayor took no part in the consideration or decision.

[Editor's Note:  Full coverage will be in the January issue.  In the meantime, the Supreme Court's orders list is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #24-110120-016R.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

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For more information, call editor Mark Rogers at 215-988-7745, or e-mail him at mark.rogers@lexisnexis.com