WASHINGTON (Legal Newsline) – To file an antitrust lawsuit against Amazon, District of Columbia Attorney General Karl Racine has chosen Hausfeld LLP – a firm that features a former employee at the D.C. AG’s Office and whose founder once employed a now-deputy AG who signed the complaint.
The contingency fee contract scored by Hausfeld LLP is so potentially lucrative that it includes a stipulation that the firm can’t take more than $55 million in fees. Helping lead the litigation will be antitrust veteran Paul Gallagher, who previously worked at the Department of Justice and the D.C. Attorney General’s Office.
Racine picked the firm for an antitrust lawsuit his office filed May 25 in D.C. Superior Court against the online retailer. Their agreement stipulates Hausfeld will get up to 15% of the total recovery, up to the $55 million cap.
Signing the complaint as Racine’s Deputy AG of his Public Advocacy Division was Kathleen Konopka, who worked at the firm Cohen Milstein when Hausfeld founder Michael Hausfeld was a name partner there.
Hausfeld and his fellow partners at Cohen Milstein split more than 10 years ago. They left a note on his chair after voting him out of the firm.
Now, Racine has hired Hausfeld’s firm to allege Amazon kept third-party sellers on the site from offering their products elsewhere for lower prices, ensuring that they’d be sold on Amazon and the company could keep a percentage.
Lawyers at the firm have been tracking the issue for years and will now get to use the investigative power of government.
“The anticompetitive impact of Amazon’s conduct is compounded by a complex scheme of fees and extra charges—sometimes equaling up to 40% of the total product price—that Amazon imposes on TPSs to sell their products on Amazon’s platform,” the lawsuit says.
“These unreasonably-high charges—which Amazon can charge TPSs because of its market power—are then passed on to customers not only on Amazon’s platform, but also on all other online retail platforms by virtue of Amazon’s (platform most-favored nation policies).”
It’s not Hausfeld’s first time suing Amazon (the firm has other unrelated claims against the company in a few federal courts). And It remains to be seen if the info it collects using Racine’s investigative powers will have an effect on a pending class action lawsuit filed by Hagens Berman that makes similar claims.
The firm Hagens Berman was the first to claim Amazon’s marketplace violates antitrust laws and filed suit in 2020 in Seattle federal court. It could benefit from Racine’s and Hausfeld’s involvement.
“The gravamen of plaintiff’s amended complaint is that Amazon’s policies encouraging low prices in its stores somehow constitute an antitrust violation,” lawyers for Amazon wrote in a pending motion to dismiss that case last year.
“This proposition – that Amazon should not be allowed to encourage low prices from the third-party sellers in its store by featuring only competitively priced products – defies common sense and the fundamental dynamic of retail competition.
“Unsurprisingly, in light of that common-sense conclusion, it also contradicts the letter and purpose of the antitrust laws, which protect the very type of competition in which plaintiffs allege Amazon is engaging.”
This litigation injects court oversight into routine business decisions made by thousands of retailers every day, the motion says.
“Amazon’s approach is not unique; it is a reasonable one that allows it to compete effectively,” it adds.
Briefing in the Seattle case was completed in November on the motion to dismiss but Judge Richard Jones has yet to issue a decision.
Amazon is not the first corporate giant AG Racine has decided to use private lawyers to sue. Last year, his office filed a climate change suit against Exxon, BP, Chevron and Shell Oil.
The merits of that case, like several others filed around the country, are on hold while courts decide whether they should be heard in federal or state courts. The U.S. Supreme Court recently gave a boost to defendants when it told the Fourth Circuit to consider more of the energy industry’s arguments for federal jurisdiction.
Racine hired the law firm Sher Edling on a contingency fee for his climate case.