UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK THE BOOK HOUSE OF STUYVESANT - 5- -43 I '2 JURY TRIAL DEMANDED PLAZA, INC., a New York corporation; 7m FICTION ADDICTION LLC, a South 5 0' I Carolina limited liability company; and 3 . ago cm': I POSMAN BOOKS AT GRAND CENTRAL '1'Nt5Eic NO. 1'lI ?337? a} (3 Q) INC., a New York corporation, on behalf of themselves and all others similarly situated, COMPLAINT FOR Plaintiffs, DECLARATORY AND INJUNCTIVE RELIEF v. . (15 U.S.C. 1 and 2) AMAZON.COM, INC., a Delaware Class Action Complaint corporation; RANDOM HOUSE, INC., a New York corporation; PENGUIN GROUP (USA) INC., a Delaware corporation; HACHETTE BOOK GROUP USA, INC., a Delaware corporation; SIMON SCHUSTER, INC., a New York corporation; HARP-ERCOLLINS PUBLISHERS LLC, a Delaware limited liability company; and MACMILLAN PUBLISHERS INC., a Delaware corporation, Defendants. Plaintiffs THE BOOK HOUSE OF STUYVESANT PLAZA, INC., FICTION ADDICTION LLC, and POSMAN BOOKS AT GRAND CENTRAL INC., filing this Complaint on behalf of themselves and all other similarly situated independent brick-and-mortar bookstores against Defendants AMAZONCOM, INC., RANDOM HOUSE, GROUP (USA) INC., HACHETTE BOOK GROUP USA, INC., SIMON SCI-IUSTER, INC., HARPERCOLLIN PUBLISHERS LLC, and MACMILLAN PUBLISHERS INC., for their complaint, allege as follows: I. VENUE AND JURISDICTION 1. Each of the named Defendants transacts business within the Southern District of New York. Defendant AMAZONCOM, INC. also maintains an office for one of its subsidiaries in the Southern District of New York. Defendants RANDOM HOUSE, INC., PENGUIN GROUP (USA) INC., I-IACHETTE BOOK GROUP USA, INC., SIMON SCHUSTER, INC., HARPERCOLLINS PUBLISHERS LLC, and MACMILLAN PUBLISHERS INC. maintain their business headquarters in the Southern District of New York. 2. Plaintiff POSMAN BOOKS AT GRAND CENTRAL INC. is also located in the Southem District of New York. -3. The Court has jurisdiction as each named Plaintiff is seeking declaratory and injunctive relief, on behalf of themselves and others similarly situated, based solely on violations of Sections 1 and 2 of the Sherman Act (15 U.S.C. 1 and 2). II. THE PARTIES 4; Plaintiff THE BOOK HOUSE OF STUYVESANT PLAZA, INC. is a corporation organized and existing under the laws of the Stateof New York with its principal place of business located in Albany, New York. BOOK HOUSE is an independent brick-and-mortar bookstore that sells both traditional, (hardcover and paperback) books as well as electronicibooks I 5. Plaintiff FICTION ADDICTION LLC is a limited liability company organized and existing under the laws of the State of South Carolina with its 2 principal place of business located in Greenville, South Carolina. FICTION ADDICTION is an independent brick-and-mortar bookstore that sells both traditional books as well as e-books. 6. Plaintiff POSMAN BOOKS GRAND CENTRAL INC. is a corporation organized and existing under. the laws of the State of New York with its principal place of business located in New York, New York. POSMAN BOOKS is an independent brick--and~--rnortar bookstore that sells both traditional books as well as e-books. 7. Defendant AMAZONCOM, INC. is a corporation organized and existing under the laws of the state of Delaware with its principal place of business in Seattle, Washington. AMAZON is the largest online retailer of both traditional books and e-books in the United' States. 8. Defendant RANDOM HOUSE, INC. is a corporation organized and existing under the laws of the state of New York with its principal place of business . in New York, New York. RANDOM HOUSE is one of the largest publishers of both traditional books and e-books in the United States. 9. Defendant PENGUIN GROUP (USA) INC. is a corporation organized and existing under the laws of the state of Delaware with its principal place of business in New York, New York. PENGUIN is one of the largest publishers of both traditional books and ebooks in the United States. 10. Defendant HACHETTE BOOK GROUP USA, INC. is a corporation organized and existing under the laws of thestate of Delaware with its principal place of business in New York, New York. I-IACHETTE is one of the largest publishers of both traditional books and e-books in the United States. 3 11. Defendant SIMON SCI-IUSTER, INC. is a corporation organized and existing under the laws of the state of New York with its principal place of business in New York, New York. is one of the largest publishers of both traditional books and ebooks in the United States. 12. Defendant HARPERCOLLINS PUBLISHERS LLC is a limited liability company organized and existing under the laws of the state of Delaware with its principal place of business in New York, New York. - HARPERCOLLINS is one of the largest publishers of both traditional books and e-books in the United States. 13. Defendant MACMILLAN PUBLISHERS INC. is a corporation organized and existing under the laws of the state of Delaware with its principal place of business in New York, New York. MACMILLAN is one of the largest publishers of both traditional books and e-books in the United States. STATEMENT OF FACTS 14. Defendants RANDOM HOUSE, PENGUIN, S, I-IARPERCOLLINS, and MACMILLAN, are commonly referred to, and also herein, as the because of their domination of the United States book publishing industry. Collectively, the BIG SIX are responsible for approximately 60% of all revenue generated from print books sold in the United States. Moreover the BIG SIX dominate the publishing of nationally ranked bestseller books. For example, 85% of all revenue generated from the sale of New York Times Bestsellers is from books published by the BIG SIX. In addition, the BIG SIX are the publishers for many well-known established authors including, but not limited to, Barbara Kingsolver (HARPERCOLLINS), Philippa Gregory (s Ken Follett (PENGUIN), Stephenie Meyer -- 4 (HACHETTE), Lee Child (RANDOM HOUSE), and Hilary Mantel (MACMILLAN). l5. on November 19, 2007, AMAZON released the first edition of the Kindle, a dedicated electronic reading device ("e-reader") that utilized electrophoretic ink and enabled e-books to be read on a portable device. The Kindle was so popular that it sold out in just a few hours and remained out of stock until the spring of 2008. Although Kindle has experienced some competition from other dedicated e-readers, such as Barnes Noble's Nook, which was initially released on November 30, 2009, Plaintiffs are informed and believe that the Kindle has consistently maintained and now has a dominant position of well over 60% in the dedicated e-reader market.' 16. Plaintiffs are infonned and believe that around the time of the initial release of the Kindle, AMAZON entered into various contracts with each of the BIG SIX publishers. These contracts, which have not been made public, established that AMAZON would use digital rights management access control technology specifically designed to limit the use of digital content after sale for all of the e>>-books published by the BIG SIX. As such, this DRM would prevent the unauthorized use, sharing, or copying of the content of these e-books. 17. DRMS were first popularly used in the electronic music industry by Apple's iTunes store. After numerous law suits challenging how iTunes music could only be played on Apple devices, Apple moved away from using DRMS and as of April 2009, all of the music available on iTunes is DRM free. Along with device or platform specific DRMS, DRMs can also be open-source, meaning that open-source DRM protected e--bool