Antitrust Defendants Seek to Turn Tables on Anderson News

, The Litigation Daily

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A quintet of major magazine publishers and distributors has spent years unsuccessfully trying to dodge claims that they conspired to drive the magazine wholesaler Anderson News out of business. Now they're attempting to take the offensive against Anderson with antitrust counterclaims of their own.

In a motion filed on Thursday, lawyers for Time Inc., American Media Inc., Hearst Communications Inc., Kable Distribution Services Inc. and Rodale Inc. asked the Delaware bankruptcy judge overseeing the wholesaler's Chapter 11 proceedings to lift a litigation stay in the case. In the filing, the publishers and distributors wrote that they plan to file counterclaims against Anderson before U.S. District Judge Paul Crotty in Manhattan, who is hearing Anderson's antitrust case against them.

Anderson News, which filed for bankruptcy in 2009 and sued the defendants the same year, lists its antitrust lawsuit as its biggest asset. The company's lawyers at Kasowitz, Benson, Torres & Friedman allege that publishers and distributors conspired to destroy Anderson after it tried to impose a seven-cent surcharge per magazine.

Judge Crotty initially dismissed Anderson's complaint with prejudice in August 2010, finding that the antitrust claims couldn't survive pleading standards set by the U.S. Supreme Court in Twombly and Iqbal. But the U.S. Court of Appeals for the Second Circuit reversed that ruling in April 2012, concluding that Crotty had taken an overly restrictive view of Twombly's "plausibility" standard. The U.S. Supreme Court denied the publishers' cert petition in January.

Details of the publishers' antitrust counterclaims are a bit sketchy, since the proposed motion that lays them out was was filed under seal. But they wrote in Thursday's bankruptcy court filing that newly discovered evidence shows that it was actually Anderson News that secretly conspired with other wholesalers, in violation of antitrust laws, to impose the surcharge at the heart of the case.

"The debtor's conspiracy caused millions of dollars of damages to the antitrust defendants, as is detailed in the proposed counterclaim," lawyers for the publishers and distributors wrote.

Marc Kasowitz, who represents Anderson News in the antitrust case, told us the defendants' latest move amounts to "a meritless and last-ditch attempt to divert attention from the overwhelming evidence that the defendant magazine publishers, national distributors and wholesalers illegally conspired to destroy Anderson News, an 80-year-old family business with thousands of employees."

"Anderson is confident that defendants' absurd effort to blame the victim of their own unlawful conduct will not succeed," Kasowitz added. The defendants are relying on counsel from Cravath, Swaine & Moore (for Time); Pillsbury Winthrop Shaw Pittman (for American Media); Bryan Cave (for Kable Distribution); and Rosenberg & Estis (for Rodale). A team of in-house lawyers represents Hearst. Rowan Wilson and Richard Levin of Cravath declined to comment.

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