In mid-April, Judge Denise Cote dismissed Penguin as a named defendant in a proposed class action suit against its subsidiary, self-publishing service provider Author Solutions. But the case against Author Solutions goes on, and late last week the parties submitted a pretrial schedule that, if adopted, would likely not have the case ready for trial until after 2015.
Under the proposed schedule, “fact discovery” and initial “expert reports” in the case would be due October 22, 2014; Rebuttal expert reports would follow by November 12, with expert discovery to close by November 24. The class certification process is due to begin by December 12, with opposition to follow January 23, 2015, and replies to the opposition due by February 13, 2015.
The case, filed in spring of 2013, alleges that Author Solutions misrepresents itself as an independent publisher, luring authors in with claims of “greater speed, higher royalties, and more control for its authors,” and then profits from “fraudulent” practices, including “delaying publication, publishing manuscripts with errors to generate correction fees, and selling worthless services, or services that fail to accomplish what they promise.”
In the initial complaint, three named plaintiffs (Kelvin James, Jodi Foster, and Terry Hardy) detail their experiences of paying thousands of dollars, and being upsold into “developmental” packages for editing and marketing services which either “did not materialize, or provided subpar service, while generating fees for Author Solutions.”
On April 11, Judge Denise Cote granted Penguin’s motion to be severed from the case, holding that Penguin cannot be held liable for any alleged misconduct because Penguin did not acquire Author Solutions until “after virtually all of the conduct alleged with any specificity" took place. Penguin purchased Author Solutions in July, 2012, for $116 million.
Cote also dismissed one count of the complaint against Author Solutions, finding that the plaintiffs could not claim “unjust enrichment” for Authors Solutions’ alleged failure to pay proper royalties. Cote held that since the Author Solutions contracts specifically spell out the rates and terms under which royalties are to be paid, disputes over royalties are contract issues, and cannot be aired under an unjust enrichment claim. But the judge refused to dismiss the most serious claims against Author Solutions, paving the way for the case to proceed.
The original suit seeks damages in excess of $5 million. The authors (and any potential class, should the case advance to class action status), are represented by Oren Giskan of the New York-based firm Giskan Solataroff, Anderson and Stewart.
Authors Solutions vigorously denies the charges, calling them “false and misleading.” The defense has branded the suits "a misguided attempt to make a federal class action out of a series of gripes.”
The case comes at a boom time for self-publishing, and the complaint recalls self-publishing's dark past: the days of the Vanity Press, when authors were wooed in by various companies only to be saddled with expensive fees and garage-loads of sub-par print books.
Meanwhile, despite being severed from the suit, Penguin is not entirely out of the picture, as it still owns Author Solutions. Of course, the future of Author Solutions within the publisher has been a topic of intense speculation since Penguin’s blockbuster merger with Random House.
