Ellora’s Cave author Ann Jacobs has filed an Intervening Counterclaim in the Ellora’s Cave v. Dear Author case. (Here, as with other similar situations, I’ll refer to her by her pseudonym.) From page 1 of the counterclaim:
The future value of the specific performance and declaratory judgment is unknown, but the damages incurred from Ellora’s Cave’s breaches are at least $193,000.
For. One. Author. (Ellora’s Cave had, last I checked, over 900.)
From pp. 4-5:
By way of example, §10 of the Mutual Favor Publishing Agreement provides that “In regard to all of Publisher’s royalty provisions as specified below, Publisher shall pay royalties based on cover price.”
Under § 10.1 of the Mutual Favor Publishing Agreement, the applicable royalty rate for digital formats of A Mutual Favor is 37.5% of cover price.
Under § 10.2 of the Mutual Favor Publishing Agreement, the royalty rate for print books of A Mutual Favor is 7.5% of cover price.
Notwithstanding the language in the contracts, Ellora’s Cave has stated that it believes it is entitled to calculate and pay (and has in fact calculated and paid) royalties to Jacobs—and, upon information and belief, other similarly situated authors—based not on cover price, but on the actual sales price of the works. […]
Ellora’s Cave has made similar underpayments for most or all of Jacobs’s works, and upon information and belief has made similar underpayments for many other authors.
After complaints about the improper royalty payments, Ellora’s Cave attempted to modify its publishing contracts with its authors, including Jacobs, by unilaterally informing the authors that Ellora’s Cave would begin paying an increased royalty rate (45% or 40%) but pay the royalty rate based on the sales price, which was often substantially lower than the cover price. The net result was that even with a supposedly higher royalty rate, the royalty payments were below those provided for in the contracts.
Ellora’s Cave’s attempts to change the royalty payment structure by unilateral notice is not permitted under any of the Publishing Agreements, all of which contain provisions requiring any modifications to be made in a writing signed by both Jacobs and Ellora’s Cave. The attempts at modification are, however, indicative of Ellora’s Cave’s knowledge that its prior royalty payments were not consistent with the Publishing Agreements.
Taking the claims as true, I think essentially this would prove the Dear Author claims about authors owed “several thousands, perhaps approaching six figures”. As I joked once, some people could say Dear Author’s statements were untrue with a straight face if seven figures were owed.
There’s also a Motion to Intervene as Counterclaim Defendant filed by Ms. Jacobs.
In the main action the plaintiffs, including Ellora’s Cave, have alleged that the defendants defamed the plaintiffs by stating that the plaintiffs have failed to timely pay royalties to Ellora’s Cave authors. See Complaint at ¶ 12, dkt. 1-1, PAGEID # 8. The intervenor’s claims therefore have not only common questions of fact and law with the main action, but actually substantially identical questions of fact and law with the main action. To put it more simply, if the intervenor prevails on her intervening counterclaims, the claims in the complaint (or at least a portion of them) fail as a matter of law, because the allegedly defamatory statements will have been shown to be true.
So, there you go.
Updated to Add: Link to Courtney Milan’s Piece
Courtney Milan’s blog post is here. She’s actually been to law school and been a clerk for some Very Important Judges and was a law professor. So.
Filing this claim as a motion to intervene was probably not the way to maximize the chances of success. If I had to guess, and this is purely a guess, I would say that this is an exercise in saber rattling. This is the saber I hear being rattled: Revert my titles, now, or you’ll spend well into the six figure mark defending your existence.
My commentary: I didn’t want to say this until I saw Courtney’s take on it, but I agree with her that this is some badass sabre rattling. I also find it really interesting that nothing was filed far earlier, say in December or January at the very latest.
Why? I think she’s seeing the writing on the wall, and she believes this is the best strategy to get paid, in full or in part, and get her rights reverted. Because if they pay her and revert her work, she doesn’t have a cause of action any more.
It’s a way of jumping the queue in front of other authors, and I think we may see more queue jumping coming up.