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Harlequin Lawsuit’s Happy Ending

16 September 2016

From author Patricia McLinn:

Sitting in front of me is the settlement check I received from a class action lawsuit against Harlequin. Because this Harlequin lawsuit was settled out of court, there was no winner legally. That’s not how it feels. Not at all. Let me tell you, the authors won.

. . . .

In the spring of 2011 a group of authors, shepherded by Ginger Chambers and Barbara McMahon and with me part of the flock, hired Elaine English for a legal assessment of clauses governing ebook rights in various Harlequin contracts. Under contracts that spanned several years, ebook rights were lumped under “All Other Rights.” These contracts were written and signed before ebooks became truly commercially viable, but because of the length of Harlequin contracts they were still in force. The “All Other Rights” clause said Harlequin and the author split whatever monies came in from the exercise of these rights 50-50.

However, when books under those contracts eventually were digitized, it became quite clear the authors were getting way, way, way less than 50%.

What Harlequin did was say that our contracts were signed with Harlequin Switzerland, but the ebooks were published by Harlequin Toronto, and golly, gee, Harlequin Switzerland sold the rights to Harlequin Toronto for 6% of cover price. So Harlequin Toronto sent Switzerland 6%, Switzerland kept 3%, the author received 3% … and Harlequin Toronto kept all the rest. (BTW, this agreement between these Harlequins was created well after the contracts were signed. Authors were never informed about it.)

. . . .

A word about Harlequin contracts – they are essentially not negotiable, with extremely limited exceptions. You might be stunned at the major authors Harlequin could have kept if it had been willing to negotiate a bit. It chose instead to let those authors walk. You either accept the contract as Harlequin writes it or you don’t publish with Harlequin. (The latter became my choice around 2008.) They could do this because of the structure and business climate of publishing at that time.

I had a few excellent individual editors among the 34 I had for 25 books (yes, you read that right … editor turnover might lead some to suspect Harlequin didn’t treat many of its editors well, either), but my overall experience with Harlequin was … let’s say “not good.” By the end of 19 years with them I was disheartened, depressed, and done. I didn’t think I would write for publication ever again. I didn’t even want to try.

By 2011, however, I was back on track. I was publishing backlist books as an indie, I was writing again and publishing those originals as an indie. And, thanks to Harlequin’s machinations, I got a good jolt of indignation to return me to my feisty self. My reaction to what Harlequin was doing was summed up after reading one of their missives to authors that summer when I said aloud, “How stupid do you think I am?”

. . . .

David Wolf, bless his heart, took the case on as a potential class action lawsuit, which he and Michael Boni and John Sindoni of Boni & Zack, LLC, filed in July 2012. The lawsuit is Keiler v. Harlequin. The three named plaintiffs on whose behalf the suit was filed are authors Barbara Keiler (who writes asJudith Arnold), Linda Barrett, and Gay Wilson (who publishes as Gayle Wilson.)

Harlequin’s reaction? “This is the first we’ve heard of it.” That is what’s known in writing as A Big Fat Lie.

Remember, David Wolf had been talking to them for the better part of a year at that point.

The Harlequin lawsuit had plenty of twists and turns. It was completely dismissed at one point in 2013. The lawyers decided to appeal.  Mind you, they were Not Paid a Cent all this time. Once they started down the class action road it was all on contingency. (Yes, they’ve been paid out of the settlement now – getting nowhere near what they could have earned through ordinary billable hours for the years of work they put in on this.)

The appeals court upheld the most important element of the case in spring 2014 … and the next day, the sale of Harlequin to Harper Collins was announced. How would that affect things? We had no idea.

On top of that, the appeals court sent the case back to the same judge. Who hadn’t, to my unlegal eye, seemed to grasp much of anything about the issues. So how could we hope to fare better than the first time round with him?

Then that judge died unexpectedly as the result of a fall. I am not kidding you.

. . . .

The new judge took a different approach. In October 2014, the 1,200 authors affected by the contract clause were certified as a class. We were, truly, a class action lawsuit. There was champagne that day.

The work wasn’t over. There was discovery. There were depositions. Harlequin subpoenaed at least two authors groups, demanding from one all communication among its members. So much for privacy. It was an onerous effort for a volunteer-run organization to gather all the information and, as expected, it got Harlequin nowhere.

If I were writing this in a novel, I’d let the reader know that the big corporation had done it just because it could – to punish those upstart authors any way possible.

Finally, in June 2016, a settlement of the Harlequin lawsuit was announced.  While maintaining it never did anything wrong, Harlequin agreed to pay $4.1 million.

The settlement checks from the Harlequin lawsuit began arriving in authors’ mailboxes Monday, Sept. 12.

The checks are nice. Very nice.

. . . .

Most vividly, I remember tears from some of the communications from these authors. They were risking their livelihoods, but had to join the group because what Harlequin was doing was simply wrong. They had written for Harlequin for 30 years and felt betrayed and would never write for them again. They had just achieved their dream of selling their first book to Harlequin and they were scared, but this was too important to ignore. They were from all over the United States and Canada, from the U.K., Australia, and New Zealand. They couldn’t afford the $35 each of us put in to start, but would send me $5 a month until they had paid their share. They wrote a check for well over their share to help cover those who struggled to pay.

And the subgroup that first hired David Wolf became warriors. They collected, organized, and dug through contracts and correspondence. They taught themselves legal concepts. They searched corporate reports. They asked brilliant questions. They did what needed to be done.

Link to the rest at Patricia McLinn

Here’s a link to Patricia McLinn’s books. If you like an author’s post, you can show your appreciation by checking out their books.

PG can’t go into detail, but he will say that HQ is not the only publisher that is not living up to its contracts.

Big Publishing, Contracts, Legal Stuff

10 Comments to “Harlequin Lawsuit’s Happy Ending”

  1. I’m happy for the authors! Even if they ended up with a small share of money, it was worth it to show that these contracts are bad for us. Hopefully, more people will learn and refuse to sign such egregious deals. Only when these publishers can’t get willing serfs will they begin to change their practices.

  2. This is great for them, but–correct me if I’m wrong–since they settled instead of letting it go to trial, the next time this happens the next group will have to go through the whole lengthy process again from scratch and maybe lose because there was no case law established.

    • Yes and no.

      Case law and precedent against self-dealing exists a-plenty.

      That is why the whole case hinged on class-certification. One author alone arguing Harlequin had undervalued digital rights would have had a hard time proving it wasn’t just a value judgment (“we thought the book had a limited market”) but 1200 authors meant it was Harlequin policy to undervalue digital.

      Once class certification came through all they had was harrasment moves to try to outspend them or settle before the judge ruled.

      So, yes, technically they admitted no wrong-doing but no admission is needed: they ended up paying to avoid a ruling. That spells guilty pretty clearly.

      The big hit for Harlequin is the bad press and communal memory of the romance writers market. Nobody reading the reports of the suit had any doubt they were guilty. It was simply too blatant. And, moving forward, even the dreamiest of dreamers knows digital rights are worth no less than 17% of cover and in practical terms, 60-70%

      That ploy is done.

  3. About publishers not honoring even their own predatory terms: at this point, given the reporting clause exposed in their contracts it is pretty clear Hachette isn’t and never intended to.

  4. So glad for these authors and impressed with their courage and persistence.

  5. I had hoped they would win the case, but getting some money is nice, indeed.

    I hope more eager, young authors refuse to sign those contracts. Just say no to bad contracts.

  6. Yes, they’ve been paid out of the settlement now – getting nowhere near what they could have earned through ordinary billable hours for the years of work they put in on this.

    How much did they get?

    • $4.1m between 1200 authors. And the lawyers.

      • Assuming the plaintiffs lawyers worked on contingency at 40%, the lawyers got $1,640,000.00. Not a bad payday.

        That leaves $2,460,000.00 for the plaintiffs. Assuming there were exactly 1,200 authors and assuming each author got an equal vice equitable share, each author got (or will get) $2,050.00.

        Some justice is better than no justice.

  7. The lawyers only took 1/4th.

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