A NEW YORK STATE court has approved the settlement of a class action suit brought against HarperCollins by two authors, who charged the publisher with selling their work to its foreign affiliates at improperly high discounts. Authors in the class who accepted the settlement will receive an adjustment to their royalty accounts in October.
All authors who had a book in print with HarperCollins between November 1993 and June 1999 are included in thc class and entitled to an account adjustment if copies of their works were sold at particular discounts to certain HarperCollins affiliates in Canada, Australia and the UK. Authors published by Zondervan, a US HarperCollins affiliate, are not part of the settlement.
The named plaintiffs, Ken Englade and Patricia Simpson, accused HarperCollins of selling their works to these foreign affiliates at discounts of up to 75 percent, causing the authors' royalty payments to sink to egregiously low levels. The authors alleged that in so doing, HarperCollins breached its express royalty rates clauses and the implied contractual duty of fair dealing. The publisher argued that the discounts were justified because the books were sold on a non-returnable basis. In December 2001, a New York appellate court bolstered the plaintiffs' case by affirming that they could bring the action on behalf of all "similarly situated" HarperCollins authors, who total thousands.
Class members received notice in November 2002 that the parties had reached a tentative agreement. The notice gave each member the choice of: (1) "opting out" of the settlement agreement; (2) objecting to the fairness or adequacy of the settlement on behalf of the entire class; or (3) accepting the deal by doing nothing.
Fifteen authors opted out and will not receive the settlement's proposed compensation, but they did preserve their right to pursue a separate remedy. By accepting the settlement, the remaining authors waived their right to pursue separate actions. No claims against Zondervan for the actions alleged in this settlement have been waived or dismissed, because Zondervan authors will not receive any adjustments.
Authors Guild legal staff and principals of the Royalty Review Service studied the terms of the proposed settlement when it was announced. The Guild took no position on the settlement's fairness or adequacy, but concluded that separate legal actions against HarperCollins would prove too costly for all but bestselling authors. The Guild's key concerns, mostly involving whether the promised adjustments could be individually verified, were satisfied in consultation with HarperCollins staff and the plaintiffs' lawyers,
Authors who have their royalty statements from the period in question can calculate the approximate amount of their benefit under the settlement for Canadian export royalties (which, both sides confirm, constituted 80-90 percent of the sales at issue). For the period November 5, 1993 to June 30, 1999, HarperCollins sold authors' titles for export to Canada at a discount of 72.5 percent for hardcover and trade paperback editions, and 75 percent for mass-market editions. The adjustment will recalculate the discount to 65 percent for hard cover and trade paperback editions, and 67.5 percent for mass-market editions. The publishing contract sets forth the percentage of net proceeds to which the authors are entitled.
The Guild calculates that most authors will see their royalty earnings increase by 20 to 30 percent. However, this doesn't necessarily mean that HarperCollins will issue payment for the adjusted royalties. Titles that haven't earned out their advances will simply have their earnings credited.
Go also to Blood on the Sheets essay concerning the multinationals' similar 'sheet-dealing' swindle, and to Can they do that? article by literary lawyer Nicola Solomon.