How to Read a Book Contract – Where Are We Gonna Fight?

Somewhere toward the back of most publishing contracts you will find a clause that sounds something like this:

This agreement shall be deemed to have been entered into in the State of New York and shall be interpreted and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed therein by each party. Each party hereby agrees to submit to the sole and exclusive jurisdiction of the state or federal courts of New York, in New York County and/or the Southern District of New York.

This clause is often referred to as a “Choice of Law” provision. The purpose of a clause like this is to designate the place where litigation between an author and a publisher will take place and to specify the laws that will apply.

Most of these clauses, including the example clause above, relate to two specific legal concepts:

1. Choice of Venue – where litigation will take place.

2. Choice of Law – what law will be applied to any litigation.

In the example above, the choice of venue is either the state or federal courts located in New York City. The choice of law is New York law.

Why do you care?

If you live in Arizona and decide to sue your publisher or your publisher sues you, you will be making a number of trips to New York City in order to fight your battle. You will be taking airplanes to court. Your publisher will be taking cabs to court.

While you may have a very good attorney in Tucson, a legal fight in New York City will require that you locate and hire a competent attorney who practices there. Your New York publisher already has established relationships with one or more law firms and may give them enough business to bargain for lower fees than someone walking in the door would pay.

Competent New York City attorneys charge among the highest fees you will find anywhere in the United States. To be fair, attorneys in other large cities also charge high fees. Fighting your case in New York City will cost you more in attorneys fees than fighting your case in a city the size of Tucson. Again, to be fair, New York City attorneys pay more money for office rents and higher salaries for office staff than attorneys in Tucson do, but fairness will not make your attorneys fees smaller.

Passive Guy is not an expert on the laws of New York. Neither is your Tucson attorney, so you be dealing with a new attorney you do not know and relying upon his or her judgment and advice.

Your litigation will take a long time. While this is a statement that can be made about litigation in many different courts, typical big-city court dockets are very backed up and it may take several years to go to trial.

It is not in the nature of most attorneys to sit around doing nothing while waiting for a trial date.

One of the most time-consuming aspect of many civil cases is pretrial discovery, including depositions, production of documents and interrogatories (written questions requiring written answers). Pretrial discovery often involves lots of fights which result in trips to court for resolution.

During the time before a trial, attorneys will also file a variety of pretrial motions. Some of these may be completely legitimate and necessary, while others may simply be dilatory. Each pretrial motion is likely to require another trip to court.

Attorneys never go to court without charging fees to do so.

When PG was a young whippersnapper attorney in Los Angeles, he had a conversation with another attorney in the office who had been a litigation specialist for 10 years. PG was very surprised to learn the litigation attorney had never actually gone to trial. His entire practice over 10 years consisted of pretrial trial discovery and pretrial motions.

Most lawsuits are settled before they go to trial. Sometimes this is because the pretrial process discloses facts that make it clear to one or both parties that either the plaintiff or defendant has a weak case. Sometimes settlements happen because one side becomes tired of paying attorneys fees and a trial date is a long way in the future.

What is an author to do?

Arbitration is a form of alternative dispute resolution providing a way to have a fight without going through the legal system. Typically, arbitration is much faster and much less expensive than a trial. Start to finish for many commercial disputes is less than 120 days. Unlike most civil litigation, arbitration can also be private.

In order to require that both parties waive their rights to litigate disputes in court and submit to arbitration, you will need an Arbitration Clause in your publishing contract. Arbitration clauses are not exotic or strange and are a common feature of many business contracts.

A potential downside of arbitration is that it may be difficult to appeal a bad decision by an arbitrator.

PG has seen arbitration clauses in agency contracts, but, so far, has not seen them in publishing contracts from large publishers. The simple fact is that a publisher’s financial resources give it a significant advantage over most authors in litigation that does not exist in arbitration.

Another approach is to simply ignore the choice of venue provision and sue your publisher in the state where you live. You will want to have an extensive discussion with your local attorney before doing so. As a general proposition, most state courts will enforce choice of venue provisions. You would probably prefer not to pay for litigation in Tucson before you pay for litigation in New York.

Despite the general rule that choice of law and choice of venue contract provisions will be enforced, under some circumstances, a state may not honor them if some aspect of that contract is contrary to an important state law.

One example of such a law would be California’s law that covenants not to compete are void as applied to employees and others under California Business and Professions Code section 16600.

While non-compete agreements are enforceable in many other states, other than under specific, limited circumstances, they are invalid in California.

In some cases, even an employee agreement that include a choice of law provision designating the law of a state other than California will not prevent a California court from applying California law to a California resident.

In the case PG is thinking of, an employee non-compete agreement was signed by a Maryland employer and an employee who was living in Maryland at the time. The agreement specified Maryland laws would govern enforcement and disputes arising under the agreement.

The employee quit and moved to California where he started work for a competitor of his former employer. When the Maryland employer sued its former employee in California, the California court would not enforce the covenant not to compete because it violated California law.

PG will not speculate about the potential applicability of California Business and Professions Code 16600 for California authors in the face of the non-compete provisions included in many Big Publishing agreements.

While other exceptions to choice of law and choice of venue provisions in publishing contracts undoubtedly exist in various states, an author should not assume that he or she will be able to avoid having a fight with a New York publisher in New York City if a clause similar to the one shown earlier in this post is included in their publishing contract. The very best time to think about this is before you sign the contract.

If any readers of The Passive Voice have experience with either persuading publishers to drop the New York provisions or avoid their applicability, PG would love to hear about it.

Obligatory Disclaimer: Although PG is an attorney, this blog post is not legal advice. What he says may not apply to you or your publishing contract. If you need legal advice, you will need to contact your own attorney.

All of PG’s discussions are based upon US law. While choice of law and choice of venue provisions are often included in international contracts, enforceability of those provisions is one of the many things PG knows next to nothing about.

Contracts