The U.S. District Court in the Southern District of New York might have saved thousands of jobs when it granted embattled magazine publisher and wholesaler Source Interlink a temporary restraining order in its anti-trust lawsuit against several major magazine publishers and rival wholesalers—at least for now.
“If things continue the way they are going, Source will not be able to make its payroll this Friday,” Source attorney Marc E. Kaskowitz argued during the company’s February 13 court appearance seeking the order. “The result of that, your Honor, will be that the company will have no choice but to lay off thousands of employees.”
The order, which was granted by the court, prohibits publishers and national distributors from denying shipments to Source’s magazine distribution business. Source alleges that the defendants —including publishers Time Inc. and Hachette—“conspired” to force the company to sell its distribution business at a steep discount to rivals Hudson News and News Group.
The suit follows Source’s and fellow wholesaler Anderson News’ separate 7-cents-per-copy price hikes—which publishers largely balked at and refused to pay.
In what he described as a “gesture of goodwill,” Kaskowitz said Source on February 2 made several “advance payments” (totaling about $85 million) to national distributors after the defendants—except Time Warner—indicated they would continue to supply magazines to Source and would work toward an agreement.
“Literally within minutes of the payments that Source made, these good faith advance payments, the publishers and the national distributors sent letters to Source reneging on the assurances that they had given to Source during the previous two to three days and informing Source that they would no longer supply Source with magazines,” Kaskowitz said.
The temporary restraining order is valid until at least the preliminary injunction hearing, which is scheduled for February 23.
Did Source deserve the order? Click here to read the full transcript, via Incisive Media’s AM Law Daily.