NAMM Counters Misinformation Surrounding Class Action Lawsuits

On September 11, 2009, NAMM was named a defendant in a class action lawsuit filed by David Giambusso on behalf of himself and others similarly situated.  The complaint, which was filed in the Southern District of California, alleges that NAMM conspired with Guitar Center and Fender to raise the prices of various musical instruments and related products, including guitars, violins, and strings.  Since that time, numerous additional complaints have been filed in California, Tennessee, Illinois, Kentucky and the District of Columbia.  In class actions such as this, it has become the norm that many “copy cat” complaints are filed around the country. These complaints typically change a few words and are filed by a new plaintiff and new plaintiff’s counsel.  These cases will likely be consolidated or coordinated before one judge and the cases will then proceed.  This procedural process is now occurring.

NAMM believes that its actions were lawful and that these suits are without factual basis or legal merit.  NAMM intends to defend itself vigorously against these claims.

In connection with these lawsuits, significant misinformation has circulated regarding NAMM’s conduct and its April 2009 settlement with the Federal Trade Commission (“FTC”).  To counter this misinformation, NAMM offers the following facts relating to the FTC settlement and the pending cases.

• Allegations made by the class action plaintiffs are not facts.  Various plaintiffs and their attorneys make statements, in their complaints and elsewhere, that are untrue, misquote published sources, take information out of context, and lack any factual basis.  Just because something is alleged in a complaint does not make it true.  NAMM must wait until the appropriate stage of the proceedings to challenge these assertions, but in the meantime, they should be appropriately seen for what they are:  unproven allegations without evidentiary support.

• NAMM has maintained at all times that its conduct was lawful.  According to the FTC’s own papers, NAMM’s consent agreement with the FTC “is for settlement purposes only and does not constitute an admission [by NAMM] of a law violation.”  NAMM has not admitted to any wrongdoing.
   
• NAMM’s settlement with the FTC was voluntary.  Rather than pursuing costly and time-consuming litigation with the FTC, NAMM resolved the matter through a settlement agreement so that NAMM could continue to focus on its primary mission of strengthening music education in schools, funding new music-brain research, and helping people of all ages discovery the fun and proven benefits of music playing.
   
• The FTC did not allege that any conduct by NAMM harmed consumers.  The FTC’s complaint did not allege that NAMM’s conduct resulted in higher prices for musical products or that NAMM harmed consumers in any way.
   
• NAMM’s settlement does not provide proof of an illegal conspiracy.  In fact, nowhere does the FTC allege that NAMM or any of its members entered into an agreement of any kind.  While the FTC is charged with enforcing the antitrust laws, after issuing subpoenas to NAMM and several industry participants, the FTC elected not to bring charges that any conspiracy occurred.
   
• The FTC closed its investigation with respect to others, including the defendants in the private lawsuits.  Copies of the FTC closing letters are available at: http://www.ftc.gov/os/closings/staffclosing.shtm.  See the August 24, 2009 entries.
   

For additional commentary on the litigation, please see the attached articles at the bottom of this page.

As always, NAMM remains committed to its primary mission of strengthening music education in schools and helping people of all ages discover the fun and proven benefits of playing music.

NAMM thanks its members and the public for continued support as it works to vindicate itself against these claims.