Borders Moves to Dismiss Lawsuit by Ellora’s Cave; Alleges Short Shipments by EC
Borders has filed a motion to dismiss in the lawsuit filed by Ellora’s Cave. The motion to dismiss mentions, among other things, that the number of returns EC incurred was due to EC’s own failure to provide full shipments. Instead, EC engaged in a practice of short shipments. From the Motion to Dismiss:
It is also Borders’ policy (specifically for Waldenbooks) to hold any “short-shipped orders”-i.e., those in which the quantity shipped by the publisher is less than the amount ordered by Borders’ invoice-in its warehouses. If the seller does not supplement the order to satisfy the quantity requested by the Borders/Waldenbooks invoice, the entire order is shipped back to the seller. Throughout its commercial dealings with Borders, Plaintiff short-shipped orders. As a result, Borders was forced to warehouse the short-shipped product and, if not supplemented, to return it to Plaintiff. Plaintiff’s practice of short-shipping its orders therefore resulted in a number of returns from Borders.
In 2007, Plaintiff began to complain about the volume of returns it was receiving from Borders. As a result, a conference call was held on April 18, 2007, in which Borders and Plaintiff agreed that, to simplify the order and return process, Borders would begin to place orders with Plaintiff through Baker & Taylor, Inc., a North Carolina-based and nationally recognized wholesaler, rather than directly. Plaintiff supported this development fully.
Accordingly, on May 25,2007, Borders sent Plaintiff an e-mail confirming that it was updating its information for Plaintiff to note that Baker & Taylor was now the vendor of record and that future returns would not be made by Borders directly to Plaintiff but through Baker & Taylor, with whom Borders had a separate contract that allowed for full return rights. The parties’ commercial relationship continued with Baker & Taylor acting as wholesaler. Pursuant to its contractual rights, Borders later returned certain seller titles located at the store level to Baker & Taylor, which then returned those titles to Plaintiff.
Plaintiff soon began to complain again about returns made by Baker & Taylor. In March 2008, in another effort to accommodate Plaintiffs concerns and to continue the parties’ working relationship, Borders arranged a conference call with Plaintiff to discuss its concerns. The conference call included representatives from Borders and Patty Marks, Plaintiffs CEO. At that time, Borders made an offer pursuant to which Borders would take back returned titles that were
being held at that time by Baker & Taylor. Borders subsequently placed that proposal in writing and, in a show of good faith, took back approximately 22,000 books from Baker &Taylor. Baker & Taylor (and, thus, Plaintiff) was credited for these returns.
Borders has not placed any additional orders with Plaintiff since it reclaimed the returns from Baker & Taylor because Plaintiff never responded to Borders’ written settlement offer, despite Borders’ show of good faith in reclaiming returned titles held by Baker & Taylor.
Instead, Plaintiff filed its complaint in this lawsuit on January 6, 2009 in the Court of Common Pleas for Summit County, Ohio (Case No. 2009-01-0070).