GBS: A Small Point About Class Actions

After William Morris’s first letter to its members recommending opting out, the Authors Guild came back with a strong reply. That led William Morris to issue a second letter. This time, the Authors Guild didn’t issue an official statement or hold a conference call; it just did some interviews with the press disputing William Morris’s version.

I would like to dwell only on one specific point made by the Guild’s executive director, Paul Aiken. In an interview with Publishers Weekly, he said, “authors who don’t want to sue Google should stay in the settlement.” He’s right in the sense that the biggest benefit of opting out of the settlement (as opposed to opting in and Removing ones book) is the chance to win a lawsuit against Google. That’s the center of what you give up by settling. If you can’t actually pull off the lawsuit, then you have little to gain by retaining the right to sue. For most authors, that lawsuit would be impossibly expensive.

So Aiken is right in that sense, but keep in mind that this is one reason why we have class actions. There are many lawsuits that would be infeasible on an individual basis but become feasible with ten, a thousand, or a million plaintiffs who can share the costs (often shared on a contingency basis, to be paid out of the expected winnings). Just because an author wouldn’t, couldn’t, or shouldn’t sue Google doesn’t mean that authors, plural, wouldn’t, couldn’t, or shouldn’t. The Authors Guild chose to make this a class action, in part, so that authors could speak with one voice.

That kind of rolling-up of many lawsuits into one has obvious risks. Not all authors might want to speak with that voice. The lawsuit might be conducted (or settled) incompetently, or in a way that favors some authors over others. When you pile together in one boat for the lawsuit, you all become dependent on the skipper. And that’s why there are rules about class actions to protect class members. Those rules include things like fairness hearings, notice, and … opt-out rights.

And thus, that’s where the focus of the action will be in the next few months: the rules and implications of class actions. It’s the class action that elevates this settlement from being merely big to being remarkable. It’s the class action that magnifies the antitrust and privacy risks. It’s the class action settlement that invites close scrutiny by the court. And it’s the class action’s implications that are at the heart of the back-and-forth between William Morris and the Authors Guild. Keep your eye on the class-action ball.

I think you are mistaken to assume that “the biggest benefit of opting out of the settlement (as opposed to opting in and Removing ones book) is the chance to win a lawsuit against Google”.

For authors, the biggest benefit of opting out may be reserving one’s claims against print publishers, at least as much (and possibly more) than reserving one’s claims against Google. I don’t know enough law to know how the purported release of claims by authors against print publishers (which claims were never made in the complaints, never litigated, never saw any discovery, etc.) would stand up (especially if publishers failed to follow the terms of their preexisting contracts with authors regarding procedures and revenue and cost sharing for infringement claims and settlements with third parties). But if valid, they amount to a massive “claw-back” by print publishers of e-rights they never owned or had previously reverted — on the assumption that they were worthless — and that they now have realized might have value and want to get back, in whole or in part, from authors. There’s been far too little attention paid to the purported release of author-publisher claims, and the submission of author-publisher disputes to the “Publisher-Author Procedures” (in which capture of the registry board by publishers, even temporarily, could lead to publishers defining the defaults and the burden and standards of proof so as to ensure such disputes are resolved in publishers’ favor).

There’s also the release of cliams against class counsel, significant where class counsel have a clear track record of grave misconduct in similar cases with some of the same clients, lying about their author clients to the court to obtain approval of the settlement in Reed Elseveier v. Muchnick. Only theose who opt out can bring challenges if the same class counsel are found to have engaged in similar or other objectionable conduct in this case.

I think Edward’s points are extremely important.

Further: I believe that authors should ignore the ‘nothing to be gained by opting out’ slogan, and scrutinize the settlement agreement at least as closely and critically as (I hope) they would examine a contract from a publisher.

Ed, can you say more about how you see the release of claims against publishers? Are you talking about the loss of value of books whose electronic rights the settlement will treat as being publisher-controlled, even where the contracts provide otherwise? Or are you more concerned about giving up other, unrelated claims authors have against publishers?

Not everyone agrees with the Authors Guild “settlement” “agreement”. See I’m an Authors Guild member who — like many others, I’m sure — finds himself in a “David vs. Googleiath” situation.

Ed, can you say more about how you see the release of claims against publishers? Are you talking about the loss of value of books whose electronic rights the settlement will treat as being publisher-controlled, even where the contracts provide otherwise? Or are you more concerned about giving up other, unrelated claims authors have against publishers?


I first wrote about the undercutting of authors’ e-rights in 2003 when Google Book Search was first rumored. But decisions made under the Author-Publisher Procedures could also have impacts beyond Google, if they trigger other cascading consequences under pre-existing author-publisher contracts. The most obvious such case would be if the author doesn’t opt out and is determined not to be a Rightsholder (because their rights are slightly less than exclusive), the publisher (as sole “Rightsholder” for settlement purposes) authorizes Google uses, and those uses are held to mean that the book is “in print” and therefore that other rights (or all rights) don’t revert to the author, when they otherwise would have reverted in the absence of the “Google Edition” that the author didn’t authorize and couldn’t veto.

(Note that the settlement says decisions of whether a book is deemed “in pront” for settlement purposes don’t determine whether it is “in print” for author-publisher contract purposes, but that doesn’t rule out the existence of the “Google Edition” — not the settlement “in print” decision — being a fact that might detemine whether the book is considered “in print” under such contracts.)

There may be any number of other cases where settlement decisions will create trigger conditions (or the absence thereof) with consequences under author-publisher contracts.

But if the release of author-publisher claims stands up, authors (who don’t opt out of the settlement) won’t be able to challenge these decisions, even if they result from misrepresentations by publishers about their rights.

And if the Registry adopts procedures barring statutory or punitive damages, the risk to publishers in lying about their rights ownership will be dramatically lowered.

Similarly, if the release of claims against counsel stands up, those who opt out won’t be able to challenge class counsel, even if they are later found to have acted improperly in the settlement negotiations.

Fears of such misrepresentation of rights ownership by publishers, or misconduct by class counsel, are well founded and far from hypothetical. We know that publishers have consistently misrepresented their ownership of e-rights that were actually owned by authors: that’s the fact pattern that led authors to sue print publishers, successfully, in NYT v. Tasini, Ryan v. CARL, and Reed Elsevier v. Muchnick, and that’s happening now with Kindle. Why should we trust them not to lie about rights ownership now to Google and/or the Registry? And we know that class counsel Boni lied to the court about writers’ objections to get the court to approve the settlement in Muchnick, and signed off, on his clients’ behalf, on a settlement that purports to prohibit his clients from criticizing it — before they had a chance to debate or vote on whether to ratify the deal the way a union would ratify any other collective bargaining agreement. Why should we trust him not to have similarly sold out writers this time around?

For completeness I should also mention that the settlement would (purport to) release authors’ claims against print publishers releated to the litigation process itself.

Most author-publisher contracts require either party to notify the other as soon as they beocme aware of copyright infringement by a third party. Typical contracts specify a process for deciding whether to pursue the claim jointly or separately, impose a duty of cooperation even if one party chooses not to pursue the claim against the third party, and define how costs of litigation and any recovery through judgement or settlement will be divided.

I don’t know if the original publisher plaintiffs notified authors or complied with the other provisions of these clauses of their contracts before they sued Google, how these contract clauses apply to claims that were made only as members of a class in a class action, or whether a settlement agreement can, by its terms, legalize a division of settlement funds contrary to previous contractual obligations specifically describing the division of potential settlement funds. But I think it likely that many publishers haven’t complied with these terms of their pre-existing contracts with authors. And certianly the allocaiton would be contrary to specific infringement settlement allocation clauses in most contracts.

It’s also important to recognize that all of these these contractual terms were, ideally, negotiated. Authors who made concessions to publishers on other aspects of their contracts (e.g. royalty percentage) in exchange for e.g. more favorable terms on e-rights or reservation or reversion of rights would under the settlement see those e-rights clawed back by publishers, but wouldn’t see any reciprocal recovery by authors of the things they had conceded in exchange.

After writing the previous comments, I came across a set of articles by Lynn Chu (see the right sidebar of her home page for more), a lawyer and literary agent:

The Google Book Settlement’s accounting details are ugly, the default assumptions worse…

FAQ on the Google Book Settlement

She comes to almost the exact same conclusions I had reached independently about how the determinations of who owns which rights, the revenue split, and the conflict resolution process all would alter existing contracts against authors and in favor of print publishers (and Google).