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Last to Settle Pays the Most: Penguin Agrees to Pay Over $90 Million to Settle eBook Pricing Suits

May 22, 2013
By Michael Cader

Penguin’s hard-to-fathom delay in settling the state and class-action lawsuits over ebook pricing (after settling with the Department of Justice in December 2012) was down to the wire, with the company forced to join in the trial starting June 3. But on Wednesday, it was announced that the publisher has agreed to settle those remaining suits — paying a whopping $75 million in restitution to affected consumers. They are paying another $7 million to the states themselves in litigation and investigation costs, and the class action attorneys are finally getting paid as well, collecting $8 million from Penguin, plus additional administration costs.

As part of the settlement, Penguin agrees to immediately withdrew its motions appealing their demands for a jury trial in the states’ suit, and arbitration in the class action suit. As with all of the settlements, the agreement still requires the court’s approval.

As the last to settle, Penguin is paying the most by far of any of the settling publisher. In fact, their total cost of over $90 million is more than the $78.9 million paid by the first three Settlers combined. (Hachette had incurred the largest penalty, paying $31.7 million in compensation, plus costs.) When Macmillan settled earlier this year, they agreed to pay $20 million in consumer restitution and roughly $6 million more in costs and fees. Total consumer payments secured now add up to $164 million, with another $31 million or so in costs and fees.

It’s clear that Penguin ultimately paid for more than the company had anticipated as well. When parent company Pearson reported 2012 results in February, they took a £32 million charge, “a fairly substantial amount” of which was “a provision for the settlement of litigation.” In a trading statement issued today, Pearson now admits that $40 million of that earlier charge was related to the lawsuits. The additional $50 million or more in additional liability “will be expensed in Pearson’s 2013 statutory accounts as part of the accounting for the Penguin Random House joint-venture.

Filed Under: DOJ, Free, Legal

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