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Warner Suit Alleges Massive DVD Destruction Fraud

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Old 07-30-2009, 02:27 PM   #1  
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Arrow Warner Suit Alleges Massive DVD Destruction Fraud

Warner Suit Alleges Massive DVD Destruction Fraud

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By : Chris Tribbey | Posted: 30 Jul 2009
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More than 2 million Warner Home Video DVDs and Blu-ray Discs slated for destruction were instead kept by the company charged with destroying them, and then sold at retail for bargain prices, according to a suit filed by the studio.

Warner alleges in the suit, filed July 28 in Los Angeles Superior Court, that Agoura Hills, Calif.-based IWMB, Inc. was contracted to destroy excess inventory, however IWMB allegedly sold the product “to one or more third parties, with the knowledge that those third parties would subsequently resell the product at a price lower than prevailing wholesale and retail prices,” undercutting sales by distributors and retailers.

The complaint alleges fraud, breach of contract, and violation of California’s Unfair Competition Law, and seeks an immediate injunction and damages in excess of $10 million.

IWMB president Cal Jones is named in the suit as well. A message left for Jones seeking comment was not immediately returned.

Warner says the alleged scheme cost it more than $10 million, when DVDs and Blu-rays returned by retailers and distributors were sold instead of destroyed, and is seeking compensatory and punitive damages, “in an amount sufficient to punish and make an example of them.”

The suit claims that replicator Cinram subcontracted IWMB to destroy the excess Warner product, and IWMB in turn issued certificates of destruction to Cinram. But Warner found the product that was supposed to be destroyed was “advertised and sold … nationally in large quantities.”

“These illegal sales were the fruits of defendants’ theft of the Warner product, and thus were wholly unauthorized and unlawful,” the suit reads. Warner believes at least 750,000 of the units have been sold so far, and another 250,000 are still being held by one or more third-party sellers. The suit does not name any of the alleged third-party sellers. The Santa Monica lawyer representing Warner was not immediately available for comment.

“[Warner] has already suffered irreparable damage including, without limitation, damage to the value of its home entertainment properties, its relationships with its business partners and to its reputation as a provider of valuable home entertainment,” the suit reads.

IWMB and Jones have 30 days from the filing to respond in writing.
http://www.homemediamagazine.com/war...on-fraud-16593
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Old 07-30-2009, 04:00 PM   #2  
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Originally Posted by Lee Stewart View Post
Warner Suit Alleges Massive DVD Destruction Fraud



http://www.homemediamagazine.com/war...on-fraud-16593
All right. What do you suppose is going on here? Why would Warner Bros destroy inventory? Is that like dairy farmers dumping milk? Anyone know?
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Old 07-30-2009, 04:33 PM   #3  
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I have seen some crazy prices on Warner DVD's and DVD-A's but not Blu-ray. I wonder if the HD DVD's being sold for such low prices by Traderbora, iNetVideo and other online retailers were part of the inventory fraudulently sold to retailers. Warner has clearly had some issues with excess inventory of CD's as well because I have seen many of the Rhino Definitive Collection 2-disc compilation CD's being liquidated at absurd prices.

In general a company will destroy excess inventory rather than sell it at firesale prices to avoid driving the price down for all similar products. It seems to happen to Warner more often than the others but I have a lot of Warner DVD's, DVD-A's, Blu-ray discs and HD DVD's because the company does a very good job overall with the software they sell.

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Old 07-30-2009, 05:21 PM   #4  
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Originally Posted by Chris Gerhard View Post
I have seen some crazy prices on Warner DVD's and DVD-A's but not Blu-ray. I wonder if the HD DVD's being sold for such low prices by Traderbora, iNetVideo and other online retailers were part of the inventory fraudulently sold to retailers. Warner has clearly had some issues with excess inventory of CD's as well because I have seen many of the Rhino Definitive Collection 2-disc compilation CD's being liquidated at absurd prices.

In general a company will destroy excess inventory rather than sell it at firesale prices to avoid driving the price down for all similar products. It seems to happen to Warner more often than the others but I have a lot of Warner DVD's, DVD-A's, Blu-ray discs and HD DVD's because the company does a very good job overall with the software they sell.

Chris
It specifically said . . .

Quote:
DVDs and Blu-ray Discs
HD DVD's are liquidated because the format failed.
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Old 07-30-2009, 05:28 PM   #5  
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Quote:
Originally Posted by Chris Gerhard View Post
I have seen some crazy prices on Warner DVD's and DVD-A's but not Blu-ray. I wonder if the HD DVD's being sold for such low prices by Traderbora, iNetVideo and other online retailers were part of the inventory fraudulently sold to retailers. Warner has clearly had some issues with excess inventory of CD's as well because I have seen many of the Rhino Definitive Collection 2-disc compilation CD's being liquidated at absurd prices.

In general a company will destroy excess inventory rather than sell it at firesale prices to avoid driving the price down for all similar products. It seems to happen to Warner more often than the others but I have a lot of Warner DVD's, DVD-A's, Blu-ray discs and HD DVD's because the company does a very good job overall with the software they sell.

Chris
They didn't mention HD DVD discs as part of this. Just DVD video & BD discs, that they said were:

Quote:
when DVDs and Blu-rays returned by retailers and distributors were sold instead of destroyed
Not sure WHY they were returned from retailers & distributors, but some could have been customer returns, and I would guess some were overstock that if sold at a discount to get rid of them via sales, that it would drive the prices down overall at retail like you said.
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Old 07-30-2009, 05:33 PM   #6  
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Here is another article about this. Big Lots was one of the retailers selling the stolen DVD's:

http://budgetdvdhunter.wordpress.com...ofit%e2%80%a6/

Last edited by Lee Stewart; 07-30-2009 at 06:20 PM..
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Old 07-30-2009, 05:53 PM   #7  
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I picked up a few Warner TV box sets at Big Lots, now it all makes sense.

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Old 07-30-2009, 06:17 PM   #8  
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Just got back from my local Big Lots. There was a single BD there - Nip/Tuck. All the rest were movies for $3 and TV show box sets for $6 (DVD's)
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Old 07-30-2009, 08:36 PM   #9  
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Although it didn't mention HD DVDs, I suspect that Taking Lives HD DVD was probably slated for destruction because all of a sudden the 2000 copies show up right after the Blu-ray is released. I don't think WB wanted it that way.
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Old 07-31-2009, 01:34 AM   #10  
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Finally, something that actually qualifies as piracy.

They do this with books too. When bookstores return excess books to the publisher, they're supposed to tear the covers off and ship them back, then destroy the rest. That's why books always have warnings against buying the book if it doesn't have a cover, because that's an illegal sale.
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Old 07-31-2009, 01:55 AM   #11  
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Such a waste.

Bruce, can u still get hold of the Taking Lives HD DVD? Or have they all been bought up now?
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Old 07-31-2009, 04:11 AM   #12  
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Originally Posted by bruceames View Post
Although it didn't mention HD DVDs, I suspect that Taking Lives HD DVD was probably slated for destruction because all of a sudden the 2000 copies show up right after the Blu-ray is released. I don't think WB wanted it that way.
I don't know whether HD DVD's were included in the crime or not but because that article doesn't specifically mention HD DVD isn't reason to conclude they were excluded, that much I assumed when reading the article. As far as that writer or most any reporter is concerned, HD DVD is just another type of DVD. It also didn't mention DVD-A, but Warner DVD-A's have shown up at Dollar Tree and Wal-Mart clearance priced. I had never seen that before. There were also some suspect CD's at Dollar Tree. I asked the cashier when checking out and he said he didn't understand it either, when he saw the CD's he checked and many were still current titles, all Warner, at $14 or so at other retailers.

Chris

Last edited by Chris Gerhard; 07-31-2009 at 04:16 AM..
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Old 07-31-2009, 04:14 AM   #13  
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Originally Posted by MikeRox View Post
Such a waste.

Bruce, can u still get hold of the Taking Lives HD DVD? Or have they all been bought up now?
I wanted to save this post. Mike is trying to arrange purchasing stolen goods with Bruce's help.

Chris
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Old 07-31-2009, 04:44 AM   #14  
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No I'm trying to purchase a product to ensure it is finally correctly disposed of...
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Old 07-31-2009, 08:33 AM   #15  
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Quote:
Originally Posted by Dare View Post
Finally, something that actually qualifies as piracy.

They do this with books too. When bookstores return excess books to the publisher, they're supposed to tear the covers off and ship them back, then destroy the rest. That's why books always have warnings against buying the book if it doesn't have a cover, because that's an illegal sale.
Yeah, when I worked at a bookstore for a couple years we had to do that with older magazines as they were replaced by newer issues.
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