U.S. District Court judge Marcia G. Cooke upheld all but two motions in a $1 billion lawsuit filed by Fred Rubin, formerly the owner of Ace Pro Sound & Recording in Miami, against Marty Albertson, CEO of Guitar Center; GC itself; and seven manufacturers. The ruling came on April 1, exactly one year after the lawsuit was filed.
The two counts dismissed alleged Albertson partook in a “pattern of extortion activity in violation of the Federal Racketeer Influenced and Corrupt Organizations Act of 1961, (known as RICO), and the Hobbs Act of 1951.”
However, the other charges will be allowed to proceed. These claims, made by Rubin and a class-action group of retailers, include allegations Albertson took part in “unconscionable acts and unfair trade practices—that defendant Albertson coerced and otherwise induced the supplier defendants to refrain from dealing with the plaintiff—in violation of the Florida Deceptive and Unfair Trade Practices Act;” that Albertson violated Florida law for “tortious interference with business relationships between Ace Pro and the supplier defendants;” that Guitar Center “coerced and otherwise induced the supplier defendants to refrain from dealing with the plaintiff;” that a manufacturer “breach[ed] a contract to supply the plaintiff with certain music-related products;” and that three manufacturers violated Florida law “based in the equitable principle of promissory estoppel for reneging on a promise to supply the plaintiff with certain music-related products.”
In all, 24 counts were allowed to proceed. It’s important to note, however, that Cooke’s ruling does not in any way mean the defendants are guilty of any wrongdoing. It simply means there is sufficient evidence to take the claims to the next step.
So what is the next step? “The next thing that’s looming is our motion for class certification,” said Michael L. Feinstein, Rubin’s attorney. Before such a motion can be filed, Feinstein said he is actively soliciting the largest class-action firms in the country, including Boies, Schiller & Flexner, and Milberg Weiss & Bershad, to serve as co-counsel, due to the large scope of the case. Feinstein defined the class-action group as “those people who have potentially been damaged as a result of Guitar Center and other suppliers price fixing, boycotting, attempted monopolies, Sherman Antitrust Act [of 1890] violations, etc.” Feinstein added that as for the two counts that were dismissed, since Cooke did not dismiss those claims “with prejudice,” he is allowed to amend those claims. Feinstein said he and Rubin have not decided if they will amend the two dismissed counts however.
Although Rubin is alleging price fixing as part of his lawsuit, Feinstein stressed this lawsuit is in no way was a predecessor to, or in any way related to alleged price fixing the U.S. Federal Trade Commission is investigating in MI. “It was a surprise to us [when we heard about that investigation],” he said.
Margaret (Peggy) M. Zwisler of Latham & Watkins, GC’s counsel, said GC had no comment about the ruling.
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