Record Shops Win a Round in Court

Best Buy Co., Wal-Mart Stores Inc. and other retailers lost a bid to dismiss a suit brought by independent record stores that claim their larger rivals receive incentives from music companies to sell albums at unfairly low prices.

U.S. District Judge Florence-Marie Cooper in Los Angeles ruled that the independent retailers’ claims would not be dismissed in the early stages of litigation. The major music labels, including Vivendi Universal’s Universal Music and Bertelsmann’s BMG, also are named as defendants.

Best Buy and other big retailers receive discounts and advertising allowances not offered to independents for new releases by major artists, according to the suit, filed last year. The independent retailers, which seek a court order banning the practice, say the promotional campaigns are harmful because the bulk of an album’s sales occur immediately after its release.

“This case is at the pleading stage, and plaintiffs’ burden is merely to provide a short and plain statement of the case and provide notice to the defendants of the claims and grounds upon which they rest,” Cooper wrote in her order.

Richfield, Minn.-based Best Buy and Bentonville, Ark.-based Wal-Mart could not be reached for comment.

The suit was brought by Boo Boo Records Inc., a record store in San Luis Obispo, and four other stores, which are seeking class-action status on behalf of small retailers in the state and nationwide.