Class Action Lawsuit Against PublishAmerica Dismissed

Posted by Victoria Strauss for Writer Beware

On June 11 of this year, a class action lawsuit was filed against PublishAmerica by a Baltimore, MD law firm, in association with high-profile litigators Hagens Berman Sobol Shapiro.

Among other things, the complaint alleged that PA makes money off its authors while billing itself as a traditional publisher, requires authors to pay for “usual and customary marketing that any reputable publisher would do as a matter of course,” offers “services that are not reasonably designed to promote book sales,” and “duped” the three plaintiffs in the lawsuit with, among other things, “bogus services” and books “riddled with errors.” The complaint sought “a declarative judgment that defendant’s publishing contracts violate the Maryland Consumer Protection Act,” including the MCPA’s prohibition against deceptive trade practices.

PA, not surprisingly, filed a motion to dismiss for “failure to state a claim,” arguing that the author-PA relationship is not protected under the MCPA:

The Court should dismiss the claims brought by Plaintiffs under the Maryland Consumer Protection Act (“CPA”) because Plaintiffs are not consumers; they have entered into a commercial enterprise with PA pursuant to which they split the proceeds from sales of their literary work made by PA. This profit sharing relationship is not a relationship that is protected by the (“CPA”). Plaintiffs’ declaratory judgment count should also be dismissed since the underlying CPA claim is defective.

Responses and counter-responses ensued. A hearing was held in August with arguments by counsel. On September 4, PA’s motion to dismiss was granted by Judge Marvin J. Garbis–without prejudice, with the plaintiffs given the option of filing an amended complaint by the end of the month.

This past Wednesday, however, PA authors who’d sought to join the suit received a letter from Hagens Berman indicating that they did not intend to re-file.

In speaking and e-mailing with many of you what you wanted was out of your contract. That is also what we had hoped for when we filed this class action. We thought we had a good shot at this when we filed our first complaint. We claimed that Publish America’s representations about itself as a traditional publisher misled authors and led them to give away the publication rights to their books and that this violated the Maryland Consumer Protection Act. But the court concluded that the statute has a narrower scope and that the complaints we asserted against Publish America are not really consumer complaints, but more like business complaints.

For long-time watchers of the PA saga, the “it’s not a consumer matter, but a business matter” response may seem familiar. It’s the reason cited by the Maryland Attorney General’s Office for not taking action on authors’ complaints (of which, we’ve been told by various sources, the AG’s office has received a goodly number). For the Maryland AG, it’s straightforward: the author-PA relationship isn’t between a consumer and a business (the area the AG handles) but between a business and a business.

That’s not Judge Garbis’s position, however. The problem, in his opinion, is that the original complaint simply doesn’t provide enough facts to determine whether it’s a consumer matter or not.

For present purposes, it suffices to state that the Maryland Consumer Protection Act, Md. Code Ann., Com. Law § 13-101 et seq. (“MCPA”) provides relief with regard to deceptive trade practices relating to consumer goods and service….

The MCPA defines the term “consumer” to include “an actual or prospective purchaser . . . or recipient of . . . consumer services.” Id. § 13-101(c)(1). The term “consumer services” is defined as “services which are primarily for personal, household, family, or agricultural purposes.” Id. § 13-101(d). The Complaint does not clearly, if at all, enable the Court to determine the particular factual allegations upon which Plaintiffs base the contention that the claims in Count Two would be covered by the MCPA. Indeed, Plaintiffs do not specify which of the alleged deceptive trade practices are the subjects of the MCPA claims….

Each Plaintiff simply alleges his/her name, place of residence and that he/she contracted with PA to publish a book. Plaintiffs do not allege facts relating to their pertinent background and cannot – on the face of the pleading – be assumed to be seeking publication “primarily for personal,” as distinct from commercial, purposes.

Moreover, a particular good or service cannot be said, in the absence of a particular context, to be a consumer good or service. For example, a can of beans bought for home consumption would be a consumer good. However, the same can of beans bought by the owner of a restaurant for sale to customers may not be. Similarly, a house cleaning service for a resident homeowner would be a consumer service but the same service for the landlord owner of a rented house may not be.

Also, PA contends that at least some of the alleged “consumer services” are services that cannot plausibly be considered primarily for personal purposes, e.g., services relating to the sales, rather than literary aspects, of a book. The Court is not now addressing the question of whether any such services necessarily are non-consumer services. However, in an Amended Complaint, Plaintiffs should allege facts sufficient to present a plausible claim that the services in issue are consumer services.

In sum, Count Two must be redrafted to clearly and unambiguously indicate the factual allegations on which Plaintiffs contend they have made a plausible claim for
treatment of themselves as consumers and treatment of the services at issue as consumer services.

Judge Garbis, in other words, isn’t confirming PA’s argument that the author-PA relationship is not a consumer matter–rather, he’s saying that the plaintiffs haven’t sufficiently demonstrated that it is. He makes a similar determination with regard to the plaintiffs’ claim of unjust enrichment, breach of contract, and fraud.

Though PA will likely dispute this, the dismissal doesn’t vindicate their business practices or endorse their counter-claims. Rather, it leaves the door open for the plaintiffs to return with stronger arguments to bolster their case. Obviously I can’t reach into the minds of the lawyers to see why they decided not to do so. But I have to be honest–it seems shoddy to me. If they felt they had sufficient grounds to base the original complaint on the MCPA, and to make claims of fraud, why would they not re-file? (Or, perhaps, more adequately state their argument in the first place?) It makes the lawsuit seem like some sort of blue-sky effort, launched without adequate commitment and folding at the first roadblock.

At any rate, I think this illustrates yet again the extremely ambiguous position a writer occupies vis-a-vis a vanity publisher, whether or not the vanity publisher actively misrepresents itself. In every meaningful way, vanity publishing is analogous (to use Judge Garvis’s example) to the can of beans bought for home consumptio. But because it masquerades as “real” publishing–in part by adopting a few of real publishing’s components, such as offering the book for sale–this is very hard to demonstrate.

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