Thomson Reuters sued over Casetext acquisition, integration
Thomson Reuters is facing a purported antitrust class action lawsuit over its massive $650 million acquisition and integration of Casetext into its Westlaw system.
In an Oct. 1 complaint filed with the U.S. District Court for the Northern District of California, the Rubin Law Office alleged that Thomson Reuters violated state and federal antitrust law by purchasing a lower priced competitor and then folding it into its more expensive ecosystem, forcing Casetext users to pay more per month. Calling Casetext a “nimble, budget-conscious horizontal challenger” to Westlaw, the Rubin Law Office accused Reuters of executing a “killer acquisition” that was designed to get rid of a competitor.
Casetext famously launched its generative artificial intelligence-powered legal research tool CoCounsel on MSNBC’s Morning Joe in March 2023, setting off an AI arms race in the legal industry.
“Faced with immediate technological obsolescence and a profound threat to its structural market moat, [Thomson Reuters] did not compete on the merits,” the Rubin Law Office, based in Carlsbad, California, said in its complaint, adding that Thomson Reuters’ technological capabilities before buying Casetext were “lagging,” and that Westlaw “lacked any standalone or integrated generative AI capabilities.”
“They did not spend the years or capital required to organically build a comparable large language model application layer. Instead, Defendants used their massive capital reserves to short-circuit the competitive process,” according to the complaint.
According to the complaint, after the Casetext acquisition and integration into Westlaw, the Rubin Law Office went from paying $32.50 per month for Casetext to $111.48 monthly for Westlaw Classic, complete with a three-year mandatory subscription with annual 4% increases built in.
“By permanently removing the independent Casetext alternative from the legal ecosystem, Westlaw eliminated the downstream contract-negotiation leverage and pricing discipline that historically suppressed Westlaw’s standard contract rates. Free from the threat of user defection to Casetext, Westlaw has been empowered to maintain and escalate its standard baseline subscription fees at artificial, supra-competitive levels across its entire domestic customer base,” the law firm stated in its complaint.
The antitrust complaint is requesting that the court certify a class action on behalf of users throughout the country, as well as a subclass of California-based users. It is also requesting treble damages under the Clayton Antitrust Act and the California Business and Professions Code, as well as an order for Thomson Reuters to divest, spin off or reestablish Casetext as an independent company.
Thomson Reuters did not respond to a request for comment from the ABA Journal. A spokesperson told Bloomberg Law that “Thomson Reuters has not been served with any complaint related to this matter.”
“Until we have received and reviewed any such filing, we are not in a position to comment,” the spokesperson said to Bloomberg Law.
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