Remainders War in Publishing Business

MANHATTAN (CN) - Strictly By-The-Book, a remainders company, claims the Hachette Book Group defamed and defrauded it by stealing proprietary information to learn the remainders business, then refusing to deliver remaindered books to the plaintiff or its customers, and defaming it to others in the publishing industry.

Strictly By-The-Book says it paid Hachette $54.9 million for remainders from 2004 through the end off 2008. It claims Hachette then "lured" it to enter "a symbiotic business relationship" in warehousing and distributing. Strictly By-The-Book claims that once Hachette learned the business, it set out to destroy its putative partner.

Among the tactics it used was to sue Strictly By-The-Book in this Federal Court, accusing it of actions that Hachette knew were false, according to this complaint.

"Because statements set forth in a complaint are privileged and not in and of themselves actionable, the HBG defendants were free to include false allegations of fact regarding SBTB's payments to HBG. Free to ignore facts with impunity, the complaint is a concrete manifestation of HBG's scheme. For example, at paragraph 25 of the complaint, HBG avers that 'since July 2008, Strictly had failed to pay HBG for overstock remainder titles ordered and received from HBG.' That statement is knowingly false. To the contrary, SBTB had paid HBG $7,289,826.46 from July 2008 through January 31, 2009; moreover, $2,691,361.66 of that sum was paid by SBTB to HBG for overstock/remainder titles. ...

"Moreover, HBG's complaint claims the SBTB has failed and refused to make payments due and owing to HBG are belied by defendant Dennis Balog, HBG's vice president for credit services, who wrote to SBTB on July 9, 2008 'I am well aware that you have never missed a payment with us' and wrote on October 31, 2008 'We have an exclusive arrangement with SBTB and they have never paid us late.'

"The fact of these payments is indisputable. They were known to the HBG defendants on the filing of the complaint.

"yet, in the small, interconnected world of book publishers such as HBG and remainder companies such as SBTB, the HBG defendants' knowing mistruths were intentionally designed to present in the august confines of a court document the same untruths the HBG defendants had been spreading that SBTB was on financial life support with the intention that SBTB's suppliers and customers believe they must be true, so that SBTB's suppliers should demand payment and SBTB's customers look elsewhere for sources of product.

"The HBG defendants' unlawful fraudulent scheme is succeeding. By unlawfully refusing to ship product to SBTB and its customers and in violation of its contract with SBTB the HBG defendants are causing SBTB's customers to cancel orders and look elsewhere for remainders and causing SBTB's suppliers to reduce or withhold credit."

Strictly By-The-Book demands damages for breach of contract, defamation, tortious interference, fraud and RICO conspiracy, including "acts of extortion." It seeks $5 million I damages on each claim. It is represented by Robert Brown of Manhattan and Bruce Thail of Philadelphia.

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