B & C in the news

Retail Track: Suit Against Big Boxes, Majors Moves Ahead

Billboard May 22, 2004

BYLINE: ED CHRISTMAN

Things are getting interesting in that Los Angeles courtroom where David is taking on Goliath.

A federal district court judge has denied the motion by several big boxes and the five majors to dismiss a lawsuit them. The amended class-action suit alleges that they engage in unfair business practices.

"The next step will be to move to certify the class," says attorney Max Blecher of L.A.-based Blecher & Collins.

Blecher’s firm filed the lawsuit Aug. 6, 2003, in the U.S. District Court for the Central District of California, Western Division, on behalf of California retailers Mad Rhino, Boo Boo Records, and Rand Foster of Fingerprints.

The suit initially alleged that Best Buy’s business practices violate federal and California state law. It was amended Jan. 26 to include Target, Wal-Mart, Circuit City and the five majors.

Blecher says the suit also broadened into a class action to include independent retailers from other parts of the country. Among these are Twist & Shout in Denver, Ear X-tacy in Louisville, Ky., and Music Millennium in Portland, Ore.

The suit alleges that the majors give big boxes preferential pricing through promotional allowances, kickbacks and/or rebates that are not provided to independent merchants.

According to the plaintiffs, these "secret payments" allow the big boxes to sell superstar product at a significantly reduced price, if not below cost, thereby diverting business from competitors.

The complaint charges that these practices violate the Robinson-Patman Act and Section 17043-17045 of the California Business and Professions Code.

The amended suit seeks only injunctive relief, not damages, Blecher says. Such an injunction wold prohibits the defendants from engaging in the aforementioned conduct.