Amazon is opting to fight a lawsuit filed earlier this year that alleges some prices on Amazon Prime-eligible products are inflated to help cover the cost of shipping, even when delivery is supposed to be free.
One motion filed by Amazon asks the judge to throw out the lawsuit, and another asks the judge to force the plaintiffs into arbitration.
U.S. District Judge John Coughenour in Seattle could decide as soon as Friday to proceed with oral arguments, if necessary.
The suit focuses on the Amazon Prime subscription program, which offers free two-day shipping on Prime-eligible products on Amazon.com. Amazon is accused of encouraging vendors who use Amazon to ship items (referred to as Fulfillment by Amazon or FBA) to mark up their prices to essentially cover shipping charges.
In their latest filing, lawyers for the plaintiffs allege that Amazon “had a wink-and-a-nod understanding with its FBA vendors to increase Prime-eligible product prices by including shipping charges.”
The lawsuit also alleges that Amazon gives these vendors priority by showing their items first in product search results for Amazon Prime members. (The case does not apply to products Amazon sells direct to the consumer.)
New filings from the plaintiffs cite examples including a 12-pack of Callaway Hex Chrome Golf Balls that were available from a third-party vendor for $29.99 with free shipping for Prime customers, while non-Prime members paid $24.99 plus $5 shipping, effectively the same total price.
The complaint, which is seeking class action on behalf of Prime members between 2007 and 2011, was originally filed in February in U.S. District Court in Seattle.
At the time, Amazon was in the midst of raising the price of Amazon Prime to $99 from $79, citing increased transportation costs. Although Amazon maintains that the program continues to see healthy growth, the price bump has led some customers to wonder if the program is still worth it.
At the end of July, Amazon filed back-to-back motions seeking to dismiss the case and force arbitration. Amazon is being represented by the law firm of Davis Wright Tremaine.
In the first motion, seeking dismissal, Amazon is arguing that the plaintiffs cannot prove any injury (financial damages), so therefore, they don’t have a case.
Amazon says the first plaintiff, Dr. A Cemal Ekin, never purchased any items from third-party sellers using Prime (he only bought items directly from Amazon), so he was never a victim of the above allegations, Amazon argues. The second plaintiff, Marcia Burke, made three third-party purchases, “but in each instance, if she had not purchased through Prime, the charge for expedited shipping alone would have exceeded the product price,” Amazon claims.
In the second motion, Amazon is calling for arbitration based on the reasoning that every Prime user agrees to Amazon’s Conditions of Use, which includes settling disputes through arbitration.
Last week, the plaintiffs’ law firm, Sirianni Youtz Spoonemore Hamburger, filed responses to both motions. Their argument reads, in part …
“Both Dr. Ekin and Ms. Burke paid $79 annually in order to have access to products on Amazon.com at prices that did not contain shipping charges. Instead, the prices of Prime-eligible products offered were routinely inflated with hidden shipping charges, rendering them less appealing to prospective prime member buyers. Plaintiffs did not have to buy an overpriced product in order to have an injury — their injury was that they paid $79 and failed to receive this promised core benefit of shipping-free product offerings. Under well-established contract principles, they are entitled to their money back.”
When reached for comment, an Amazon spokesman said the company has a longstanding practice of not commenting on active litigation.
Here’s a copy of the original complaint: