Amazon pays $51m to settle Toys R Us divorce

Lawyers in toyland

By Austin Modine • Get more from this author

Posted in Music and Media, 13th June 2009 00:26 GMT

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Amazon.com must pay Toys R Us $51 million to settle a 2004 lawsuit seeking to scrap an exclusive distribution deal with the toy retailer.

The web retailer said in a filing with the US Securities and Exchange Commission its an "unanticipated" sum that will be payed in full during its third quarter. In return, Toys R Us is dropping its charges.

Five years ago, Toys R Us sued Amazon for allegedly seeing other toymakers when it had a pact making it the sole supplier of toys, games and babystuff sold on Amazon.com.

Amazon answered with a counter-suit, seeking to nix the deal based on claims Toysrus.com "failed to effectively choose the top toys and baby products and to keep products in stock," particularly during the holiday season. The online storefront demanded $750m in damages as well as the contractual divorce. The partnership was supposed to last through 2010.

Things obviously didn't go as planned for Amazon. According to a separate SEC filing from Amazon, in March 2006, the court entered a judgment in favor of Toys R Us, although it declined to award damages to either party.

Later in March 2009, an appellate court affirmed the previous ruling but reversed the ruling on damages. According to Amazon, Toys R Us was asking for about $93m including pre- and post-judgment interest. Amazon called the claim "grossly overstated" in it's SEC filing.

In a filing of its own, Toys R Us said the $51m settlement must be paid within 45 days of the agreement. ®

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