Office of the Attorney General News Release Archive

August 2, 2000

CORNYN ANNOUNCES $1.7 MILLION SETTLEMENT WITH NATION'S LARGEST SCHOOL AND LIBRARY BOOK DISTRIBUTOR

AUSTIN - Texas Attorney General John Cornyn along with the U.S. Department of Justice and 17 other state Attorneys General today announced a settlement with Baker and Taylor, Inc., the nation's largest supplier of books to public schools and libraries, and its former owner, W.R. Grace & Co. The settlement resolves a lawsuit which alleged that the companies were involved in a massive scheme to overcharge schools and libraries for their book purchases beginning in 1980.

The companies have agreed to pay a total of $15.5 million to settle the case, and the State of Texas will receive $1.692 million of the settlement. The money obtained in the settlement will be used to reimburse schools and libraries that were defrauded.

"Funds that rightfully belonged to Texas libraries and schools ended up as profit on a company's balance sheet," said Attorney General Cornyn. "I am pleased to announce that the money my office has recovered will go back to the public schools and libraries in our communities. Companies that attempt to cheat public institutions will be held accountable."

In this lawsuit, filed under the Texas Deceptive Trade Practices Act, Attorney General Cornyn alleged that book publishers sold certain types of books, known as trade books, to Baker & Taylor at a large discount from list price. In its contracts with public school and library customers, Baker & Taylor promised to pass along most of that discount to them.

However, beginning in 1980, the company adopted a massive "Profit Enhancement" scheme to secretly remove thousands of books from the deep discount category. The Attorney General's lawsuit alleges that, continuing until late 1993, Baker & Taylor billed its public school and library customers for more than the agreed upon price. The lawsuit asked the court to award restitution to those entities that had been overcharged. The Attorney General's office will send a letter to all eligible schools and libraries stating how to participate in the restitution after the State of Texas receives the funds in September.

The other states involved in the settlement include Arkansas, California, Connecticut, Florida, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Missouri, Nevada, New Mexico, Oklahoma, Tennessee, Vermont and Wisconsin.

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