The U.S. Court of Appeals for the Second Circuit and the U.S. District Court for the Southern District of New York. (Photo: Ken Lund) The Second Circuit sided with a group of magazine publishers on Tuesday over claims that they collaborated to put a wholesaler out of business. Second Circuit Judge Susan Carney wrote in the court's opinion that the wholesaler, Anderson News, failed to provide sufficient evidence that the publishers had collectively decided to boycott the company over a 7-cent surcharge. The opinion affirmed a decision in the U.S. District Court for the Southern District of New York. The decision is the latest in a nearly decade-old conflict between Anderson News and several companies, including Time Inc., Hearst Communications Inc., Curtis Circulation Co., and others. Michael Kellogg, name partner in Kellogg, Hansen, Todd, Figel & Frederick, represented Anderson News. He said the firm is studying Carney's opinion and considering options. Anderson News was also represented by attorneys from Kasowitz Benson Torres in Manhattan, including partner Marc Kasowitz. Briefs were submitted by several attorneys for different magazine publishing companies, including George Gordon, a partner at Dechert in Manhattan who represented Curtis Circulation. The dispute started in 2009 when Anderson News told magazine publishers it planned to impose a 7-cent surcharge on each magazine shipped through them. Anderson News was responsible for collecting magazines from publishers and delivering them to retailers. They tracked how many magazines were sold and recycled unsold magazines. Anderson News announced the new charge on a conference call hosted by a magazine-industry publication, according to the decision. Charles Anderson Jr., the owner of Anderson News, said during the conference call that the company was imposing the charge because “profits have eroded to nothing and into significant losses” over the last decade, the decision said. When asked if he could predict the financial stability of his company, Anderson declined, saying, “I can't tell you what the future holds.” He was also pushed on the timing of the decision because magazines had recently announced a decline in advertising revenue, according to the decision. “I am fully cognizant of what is going on in the industry,” Anderson said. “Is the time good? Of course not. But now is the time that we have to do this.” Anderson News gave magazine companies about two weeks to agree to the surcharge “to ensure future distribution” for the month of February, according to the decision. Those two weeks were filled with phone calls, emails and other communications between Anderson News, the magazine companies and other wholesalers. None of the magazine companies agreed to pay the surcharge on a long-term basis. Some paid the surcharge only for February before deciding what to do next. Others, including Time, Hachette and Bauer, rejected the surcharge and chose another wholesaler. After litigation involving that other wholesaler, Anderson News ceased doing business and began bankruptcy proceedings in March, only two months after the surcharge was implemented. Attorneys for Anderson News argued in court that the magazine companies had collaborated to reject the surcharge and drive Anderson News out of business, which violated federal antitrust laws, according to the decision. The court said in its decision that that plan would make no economic sense. “Reducing competition in the wholesaler market appears to increase the market power of the remaining wholesalers, and therefore seems likely to embolden those remaining to charge higher prices to all their commercial partners—publishers included—and not just to retailers,” Carney wrote in the court's opinion. Carney also wrote that the decision by publishers to reject the proposed surcharge did not come as a surprise since Anderson News was seeking to adjust its anticipated costs on very short notice. “When it introduced the [surcharge], Anderson sought to significantly change the state of the market by suddenly seeking to impose a surcharge and setting an immediate deadline for publishers to take it or leave it,” she wrote. “It is not surprising that defendants quickly rejected the proposal in favor of switching to existing wholesalers without surcharges, refusing to accept the terms of Anderson's new business model.”