Update May 2011: The court dismissed claims filed by Blockbuster customers, alleging that the Walmart/Netflix deal led directly to Blockbuster raising its prices. The court held that there was insufficient evidence of a direct link between
Update July 2010: The court has denied Walmart’s and Netflix’s motion to dismiss. Although retaining doubt about the plaintiffs’ ultimate ability to prove that their injuries were caused by any agreement between Walmart and Netflix, it felt compelled to allow discover to proceed given that no case law addressed the specific claim and that it was plausible that the plaintiffs could build an evidentiary record showing causation.
In Pierson v. Walmart.com USA et al.; and Levy et al. v. Walmart.com USA LLC et al., Northern District of California Judge Phyllis J. Hamilton has agreed to allow Blockbuster Inc. customers who accused Wal-Mart Stores Inc. and Netflix Inc. of colluding in the market for online DVD rentals to amend their complaint based on facts obtained through discovery after oral argument on the defendants’ motion to dismiss. The plaintiffs said that they could allege new facts that would provide the missing causal link between an alleged agreement between Wal-Mart and Netflix not to compete in the market for on-line DVD rentals and Blockbuster’s decision to raise its prices. Judge Hamilton said in her order that while she was not convinced the plaintiffs’ additional allegations would withstand scrutiny, there was “at minimum a possibility” that the plaintiffs could amend the complaint in a way that would overcome its previous deficiencies.