According to an amended complaint filed on Tuesday by Redbox, Disney has recently retained Anderson Merchandisers, an in-store merchandising company, in its effort to limit Redbox purchases of Disney DVDs. Redbox alleges that a major big-box retailer has been instructed not to allow Redbox employees to buy more than five Disney DVDs. The retailer is not identified in the complaint, but Anderson has a close relationship with Walmart.
Redbox alleges that Anderson employees have followed its own staffers around in stores and taken photographs of them, and in one case threatened a Redbox staffer with prison time.
“On February 27, 2018, a Redbox employee was threatened multiple times with imprisonment in a federal prison for purchasing combo packs of ‘Coco,'” the complaint alleges. “Upon information and belief, the threats were made by a representative of Anderson or Disney.”
The legal battle arises from Redbox’s practice of buying up DVD combo packs, which include codes for a digital download. Redbox then separates the codes and sells them separately through its kiosks, at a steeply discounted price compared to the cost of a download from iTunes or Amazon. Disney filed suit last fall accusing Redbox of copyright infringement, while Redbox contends that its practice is perfectly legal and that Disney is seeking to starve a low-cost competitor of content.
“Disney is seeking to expand its role in the distribution market itself as a competitor to retailers like Redbox and Netflix, and, on information and belief, to eventually remove third-party retailers from the distribution chain altogether,” Redbox alleges. “Disney wants consumers to be inured to higher prices so that they will not object to them once Disney expands into that market.”
In February, a federal judge denied Disney’s request for an injunction to block Redbox from selling download codes. On Monday, Disney renewed its bid for an injunction, saying it had updated its terms and conditions in response to the judge’s ruling.
Redbox argues that the issue is broader than the digital codes, saying that Disney is seeking to block it from obtaining physical discs, which it unquestionably has the right to re-sell. Redbox’s suit alleges that Disney is abusing its dominant position in the market, and will only have more power over retailers once the Fox merger is completed.
“Disney is unlawfully using its market power to reduce output and prevent Redbox from meeting consumer demand for Disney titles,” Redbox states. “Only a company with substantial market power could dictate terms to major national big-box retailers that ultimately lead those retailers to sell fewer units.”
In response to the updated complaint, a Disney spokesman said, “Redbox continues to infringe our copyrights, and we have filed a renewed motion to stop its sale of our digital codes. While Redbox has filed a counterclaim to distract attention from its infringing conduct, we remain confident in our position and look forward to pursuing our claims in court.”