In a legal victory for self-publishing service provider Author Solutions, federal judge Denise Cote has denied class certification in a case that accused the company of fraudulent conduct. In a 30-page written opinion, Cote ruled that the plaintiff authors failed to produce evidence to back up their fraud claims.
Despite being denied class action status, the individual underlying suits continue. In a separate order, Judge Sarah Netburn scheduled a settlement conference for August 11 in New York, and “strongly encouraged” the parties to engage in “good faith settlement negotiations.”
The decision was not unexpected. Just months after the first filing, in April, 2013, two amended complaints were filed in response to motions to dismiss. Last year, parent company Penguin was severed from the case, and some of the initial claims were dropped. The roster of named plaintiffs also changed, creating jurisdictional issues that played into the court’s decision to deny class action status. In January, 2015, plaintiff Kelvin James withdrew, leaving no plaintiff in New York. The final two plaintiffs resided in Colorado and California, which required the establishment of subclasses. Despite the suit beginning with eight claims (including failure to pay royalties), Cote noted that the final class action analysis came down only to the allegations of fraud in the California subclass.
On that question, Attorneys for the authors had argued that a common question augured for class certification: "Did Author Solutions engage in a fraudulent scheme to sell worthless marketing services?"
In their filings, the plaintiffs described Author Solutions “consultants” with little or no publishing experience, upselling “worthless” services to unsuspecting authors. “[Author Solutions], as part of a company-wide policy, hides from consumers that it is a telemarketing operation,” the plaintiffs argued, “with no stake in the quality or retail success of its authors' books.”
In response, attorneys for the defendants branded the suit "a misguided attempt to make a federal class action out of a series of gripes.” In their most recent filings, Author Solutions attorneys claimed the plaintiffs lacked any evidence of a “deceptive” scheme. And because the argument for class certification was based entirely on "an alleged scheme," they argued, the court had to determine whether the evidence suggested such a scheme was even plausible before making a certification decision.
Cote agreed with Author Solutions attorneys, and her ruling cited a lack of “generalized" proof. “Some evidence of a centrally-orchestrated scheme,” was required, Cote held, and “despite the completion of discovery, no such evidence has been presented here.” Even where there “might be evidence of exposure,” she added, “the subject of that exposure is nebulous at best.” Claims on the Author Solutions’ web site “straddle the line between representation and puffery,” she noted, and “hardly drive the conclusion that a uniform scheme to defraud victimized the class.”
Cote also pointed out that the relationships in question were governed by contracts. “It would be easier to find predominance if, say, plaintiffs offered evidence that everyone with an iUniverse Bookstore Premier Pro publishing package was victim to misrepresentations in the contracts they all shared,” she wrote. “Tellingly, the relevant contracts are nearly silent on the issue of marketing services.” The contracts granted Author Solutions “the right” to market an author’s work, Cote explained, but “notably absent” was contractual language spelling out specific obligations for Author Solutions. And in terms of any contract disputes, iUniverse contracts called for those disputes to be governed by Indiana law.