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Chrissy Brashears Files Suit Against Ellora’s Cave

Hat tip to SB Sarah who has the scoop. According to the petition, Christina Brashears is a 5% shareholder of Ellora’s Cave beginning in July of 2003. September In 2005, Brashears was terminated from her position as Director, Chief Operating Office and Publisher. Her main claims are as follows:

  • She is entitled to a buyout of the 5% of shares.
  • She is entitled to distribution of the profits according to the 5% for 2005, 2006, and 2007.
  • She has been defamed both in writing and verbally.

1. Buy/Sell Agreement

The Buy/Sell Agreement provides that at the Shareholder’s election (Brashears) upon termination, she can choose to tender (offer) her shares in the following order:

  • first to Tina Engler. If Engler refuses, then to
  • Engler’s issue (daughter or perhaps husband). If those heirs refuse, then to
  • Other shareholders (in this case Patty Marks). If those other shareholders refuse, then to
  • The corporation (EC). If the corporation does not choose to purchase them during a certain time, then . . .
  • Shareholder (Brashears) can offer them to the free market.

The purchase price for those shares is defined in Paragraph 1.04(a) of the Contract and is either by unanimous agreement or the fair market value of the Company as of August 2005 (last day of the month preceding the instigating event) divided by the number of outstanding shares.

2. Distribution of Profits.

The only contract attached to the Complaint was the Buy/Sell Agreement. There may be another agreement which forms to the terms of dividends shareholders are entitled to. According to the Complaint, however, it is alleged that EC has not paid Brashears “the sums to which Brashears is entitled as a shareholder” despite Brashears paying income tax on sums to which she believes she would be entitled.

3. Defamation

Engler, without privilege to do so, has willfully defamed Brashear by libel and slander, including, without limitation, by wrongly accusing her widely and publicly of illegal acts of discrimination, of other improper actions as an officer of EC and of lacking a suitable temperament to conduct business appropriately, thereby injuring Brashear in her trade and occupation, all to Brashear’s damage.

Brashears has asked for the following relief:

  • Inspection of the books
  • Valuation of her shares and
  • Compensatory and Punitive Damages

I’m still digesting this and will be updating this post as the night goes on. Non-legalese summary:

Brashears is saying that she owns 5% shares of EC and hasn’t seen a dime since she was terminated even though she paid taxes on what she believed to be her rightful share. EC is allegedly undervaluing the company by shifting away profits to other corporations and generally not acting with the best interests of the corporation in mind. She doesn’t want to own 5% anymore but wants to be justly paid for her shares. She also wants money damages for the libel and slander of EC employees.

Is it wrong for me to hope that there is a summary judgment in this case filed by someone? I’ll give you the odds of EC filing some type of counter claim at 10 to 1.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

37 Comments

  1. coginwheel
    Apr 08, 2008 @ 08:31:14

    As soon as I saw this post, I thought, Whoops, won’t get any replies unless they’re from more multiple Anon’s. There’s just too much swingable weight involved here that could crush too many authors (already evidence of that justifiable paranoia over at the SB’s).

    Anybody care to start tallying the “good guys” — meaning stable, approachable, trustworthy, and generally author-fair and -friendly — in epublishing? Loose Id, Changeling, Liquid Silver? Are they good guys? Are there others? And why can’t the good guys, whoever they are, bring in as much coin as EC?

    So many questions; so few people willing to answer them!

  2. Ann Jacobs
    Apr 08, 2008 @ 09:43:08

    In my humble opinion, EC brings in more coin than any other publishers of erotic romance because it has developed a successful marketing plan that keeps EC books in the minds of a lot of readers and keeps on enticing more to try EC books. The fact that it has spun off subsidiaries seems to me to be one good way to keep track of the various entities and easily analyze their profitability.

    I am very glad that I managed to mend the wounds opened back in 2004, when then-publisher Cris Brashear managed contract negotiations with authors poorly. Since Patty Marks became CEO and Raelene Gorlinsky took over duties as Publisher, there have been no actions I’m aware of that would justify anyone’s categorizing Ellora’s Cave as anything other than a “good guy”.

    Frankly,I believe making private lawsuits public fodder is bad business. Just because one former employee of Ellora’s Cave has a beef with the company is no reason to slam mud at either Brashear or the principals at Ellora’s Cave.

  3. Shiloh Walker
    Apr 08, 2008 @ 09:52:11

    Just because one former employee of Ellora's Cave has a beef with the company is no reason to slam mud at either Brashear or the principals at Ellora's Cave.

    I’ll second that, Ann. Well said.

    I really don’t have anything TO offer to the discussion. I’m not privy to the books, to conversation between the parties involved. I write for them, but that doesn’t make me much of an authority to comment one way or the other on this particular issue.

  4. LostSoul
    Apr 08, 2008 @ 09:56:19

    let’s just hope it settles quickly and doesn’t affect the authors… right now the last thing the e-publishing industry needs is another crisis!

  5. Heather Holland
    Apr 08, 2008 @ 09:57:59

    I agree with what Shiloh said. I have no idea how they operate the business and it probably wouldn’t make sense to me anyhow. This is between EC and Brashear. I’m just a writer, and that’s all I care to be.

  6. Ann Bruce
    Apr 08, 2008 @ 10:48:24

    Saw this at the SB’s site, read the comments, raised a brow, and decided not to contribute to the discussion there. Like the other ladies here, I’m of the opinion this matter is between EC and CB.

    And let me add spinning off subsidiaries is a common practice. For instance, I work for a corporation that created two more separate companies to, essentially, delay income tax payments. (Yes, it’s legal.)

  7. December Quinn
    Apr 08, 2008 @ 10:58:38

    Triple ditto. While I don’t see this as private–a lawsuit is public, after all, and this one is definitely news–I do think it’s clearly a matter in which all of the facts have not been made public, and really doesn’t effect authors for either company.

  8. Jane
    Apr 08, 2008 @ 11:12:36

    I posted about the Judith Regan lawsuit with HarperCollins. I posted about some other author’s lawsuit with Regenery. It’s completely newsworthy when a well known publishing company is accused of improperly diverting assets. The fact is that EC’s books are no longer easily available in print for a variety of reasons, the least of which is that because it prints its own books it has a hard time meeting the demand.

    Further, the diversion of funds from EC to other enterprises instead of reinvestment in marketing, distribution and so forth would probably be the downfall of EC far before this lawsuit over 5% of the value of the company. If EC can’t afford to buy 5% of its shares, its economic status seems pretty precarious.

    Given the unstable nature of epublishing, I think this is completely newsworthy. YMMV.

  9. katiebabs
    Apr 08, 2008 @ 11:15:46

    I also love EC. It is such a shame with all the drama going on with ebook publishers in general. This really saddens me because ebooks are the wave of the future.

  10. Teddypig
    Apr 08, 2008 @ 11:18:02

    Jane, you are right it is newsworthy and of public record.
    Nothing “private” or “gossip related” about this.

  11. K. Z. Snow
    Apr 08, 2008 @ 11:31:15

    A matter of public record? Yes. A newsworthy matter of public record? Yes. Fully comprehensible to any but the parties involved? I doubt it.

    Legal issues give me a headache. That’s why I like spinning tales. So back to it!

  12. Charlotte Boyett-Compo
    Apr 08, 2008 @ 11:40:33

    I write for Ellora’s Cave and have one book at Samhain. EC has treated me with nothing but respect and I earn a damned fine living with them. They pay on time and promote their authors very strenuously. I was able to quit my 40 hour a week job to write full-time because of EC. They have my undying gratitude for taking a chance on my writing and for making my dream come true. With over twenty books with EC, seven with Cerridwen Press, and three submissions pending, I am firmly convinced they ARE the good guys. I trust them completely.

    But you always find those who are more than willing to find fault and point fingers and take sides, who chortle with glee when trouble is blared to the masses. That’s just the way this business is.

    —Frankly,I believe making private lawsuits public fodder is bad business.—

    I agree.

  13. Jane
    Apr 08, 2008 @ 11:43:14

    There is no such thing as a private lawsuit. Lawsuits are a matter of public record. All of them.

  14. Bernita
    Apr 08, 2008 @ 11:47:34

    when trouble is blared to the masses.

    The masses.
    Hmmm.
    I detect a superior “bread and circuses” attitude in the use of that term.

  15. Ann Bruce
    Apr 08, 2008 @ 11:50:03

    I didn’t say it’s not newsworthy. It’s legal action against the biggest electronic publisher in the business. Definitely newsworhty, but a lot of EC’s writers don’t know what happens behind the scenes because we’re not employees; we’re just contractors. Moreover, their conduct with me has been nothing but professional so, personally speaking, I’m taking a wait-and-see approach.

    Also, unless I get a look at EC’s financial statements, I don’t know if they can or cannot afford to buy back CB’s 5% or what they’re doing with their revenue. They’re meeting their end of their contract with me and that’s all I’m concerned about at this point.

  16. Robin
    Apr 08, 2008 @ 11:55:45

    I read this as essentially the equivalent of a derivative shareholder suit. But in a closely held corporation — where there are few shareholders who are also corporate officers and the stock isn’t publicly traded — an individual minority shareholder can sue the individual corporate officers as an individual. If EC were a larger corporation, I think this would look like a more traditional derivative shareholder suit, which is filed by a shareholder on behalf of the corporation, which I know sounds strange, but makes a bit more sense when you think about the fact that shareholders are corporate owners. So when shareholders allege wrongdoing, they are essentially suing the corporation AS the corporation in order to protect its shareholders. But because you’re dealing with such a small and closely held corporation here, it all looks much more personal.

  17. Karen Scott
    Apr 08, 2008 @ 11:59:21

    Am I the only one who thinks that some of the comments relating to this being merely gossipy is a tad hypocritical?

    So it’s ok to comment on any other publisher except EC because you guys happen to write for them?

  18. December Quinn
    Apr 08, 2008 @ 12:13:08

    I certainly hope my comments didn’t come across that way, Karen. It’s definitely news, it’s definitely newsworthy, and it’s definitely worth reporting. I just don’t think it really has a direct effect on authors for either company, both of which I think are fine companies (and that’s what I was agreeing to in my comment). I’ll be very interested in how it unfolds, and will be following it.

  19. Heather Holland
    Apr 08, 2008 @ 12:22:24

    Agreeing with December this time. Never said it wasn’t newsworthy. It certainly is news–news I got from here and SBs. I’m glad these blogs keep us informed. I just can’t really comment on it because it doesn’t really make much sense to me. Legal talk makes my eyes cross.

  20. Karen Scott
    Apr 08, 2008 @ 12:30:52

    December, there’s nothing in this post to suggest that EC are bastards to their authors (we’ll leave that to the authors themselves to suggest such a thing) or that they are a bad company to work with, which is why it puzzled me to see the cries of foul play coming from some of the EC authors.

    Nobody compared EC to the other e-book car crashes, so the paraonoia is a tad premature methinks, and only serves to bring out the people who aren’t so happy there.

  21. Teddypig
    Apr 08, 2008 @ 12:32:28

    Two things here being said in this filing by Christina Brashears that I think are of interest…

    *Request Inspection of the books.

    *She has been defamed both in writing and verbally.

  22. Shiloh Walker
    Apr 08, 2008 @ 12:36:49

    So it's ok to comment on any other publisher except EC because you guys happen to write for them?

    I generally think it’s a bad idea for an author to gossip about any publisher period. Offering opinions? That’s different and my opinion is that this is between EC’s owners and Samhain’s owners and until I know if it affects me, I’m better to just wait and see.

    I really don’t have anything to add to this since I don’t know all the issues at hand and I don’t want to waste my time speculating. If I had relevant info that I was free to discuss, it might be different. But I don’t.

    The best approach I can take as an author is just to sit back and wait, see what happens.

    Authors getting up in arms over this is the absolute WORST thing they could do, IMO. It won’t affect the situation any and it won’t help a career, either.

    Jane, yes, it’s newsworthy but just because something is newsworthy doesn’t mean that everybody who might have a distant connection is going to want to discuss or debate. Chances are this has a lot authors rather tense and until we know more, until we know if it’s going to affect us, what really can we do but wait?

  23. Shiloh Walker
    Apr 08, 2008 @ 12:38:28

    so the paraonoia is a tad premature methinks

    *G* Karen, I think paranoia goes with the business. I’m certainly paranoid.

  24. Robin
    Apr 08, 2008 @ 12:44:33

    Two things here being said in this filing by Christina Brashears that I think are of interest…

    *Request Inspection of the books.

    Here’s the Ohio statute on the rights of a shareholder to inspect corporate books and records.

  25. Ann Bruce
    Apr 08, 2008 @ 13:01:21

    Karen, if I sound hypocritical, I don’t mean to be. I’m not trying to deter people from commenting; I’m just stating my own.

    Anybody care to start tallying the “good guys” -‘ meaning stable, approachable, trustworthy, and generally author-fair and -friendly -‘ in epublishing? Loose Id, Changeling, Liquid Silver?

    Automatically in some people’s minds, because of a lawsuit between EC and a former employee, both EC and Samhain are being labeled the “bad guys.” This lawsuit isn’t about unhappy authors who are not getting paid on time or at all or about working with a controlling narcissist (yes, I just finished reading Lisa Kleypas’s Blue-Eyed Devil) who makes threats of a personal nature, yet some people are interpreting the lawsuit to mean EC and Samhain are no longer reputable.

  26. Melissa Schroeder
    Apr 08, 2008 @ 14:20:28

    I don’t think the posts in themselves have been gossipy at all. While I do wonder who pointed SB to the filing (let’s be honest that unless the bitches have nothing better to do, they would not have known about it unless someone pointed to it-and this is my little gossipy bit, lol) but I find it newsworthy within the publishing world.
    What I do find gossipy are some of the author comments, not on this site. I publish with both companies, and have had decent experiences with both. That being said, it is always best to remember that epublishing, and really romance publishing, is a small world. Feelings are hurt, people think they have been screwed, and in this day and age, they use online resources to attack(again, not talking about the posts, talking about the comments). I know there are publishers I would never write for because of their practices, or my experience with them, but other authors LOVE them. I know there are people who will never write for companies I do because of some problem in the past.
    There is probably some right and wrong on both sides. Because it is so small, authors think publishers are their friends and feel the need to step in and stand up for them. They aren’t your friend and they have a team of lawyers to do the job. Publishers can be friendly with you and vice versa, nothing wrong with that. But this is business not a fricking sorority. I am a contract writer, and my allegiance is to myself. I know, bitchy, but that is my personality and it is the truth. I am not part of the company, but an independent contractor.
    My attitude is sit and wait. Hopefully, everything will be tidied up soon, any wrongs will be fixed, and we can move on to the next big publishing scandal.

  27. The overwhelming femaleness of e-publishing…good or bad? « The thing is…
    Apr 08, 2008 @ 16:49:35

    […] April 8, 2008 in blogs, epublishers Big news this morning about Christine Brashear, who is currently with Samhain Publishing and was previously a part of Ellora’s Cave.  Ms. Brashear is filing suit against EC and its shareholders.  Not being of a legal mindset, I don’t understand it enough to comment on it but you can read about the whole thing at Smart Bitches and Dear Author. […]

  28. Patricia Briggs
    Apr 08, 2008 @ 19:22:58

    The problem with being a business is that businesses are run by people. People get crabby/upset/whatever with each other. Very few people who are friends can go into business together and stay that way forever. Money/finances/business plans all raise conflicts.

    The problem with being an e-publishing business, is that people who read e-books hang out on the Internet and gossip about their favorite things: in this case e-publishers. Gossip on the Internet never goes away. Ten years from now people can search this blog out.

    And the biggest problem with being a publisher is that if you tick off your authors . . . you are ticking off WRITERS. Writers (or so I’ve heard on one of my favorite movies — Throw Mama From the Train) write. And writers who are e-published, write on the Internet.

    I don’t think bringing all this out into the open is necessarily an unhealthy thing. In the old days, the big NY houses tried all sorts of stuff they never would today. My own publisher, Ace (who has, for the last fifteen years been terrific to me — and I’ve not heard anything bad about them in that time) was responsible for publishing Tolkien’s Lord of the Rings without giving him any $ when TLOTR first was published in the US. Since they weren’t paying the author (due to some strange laws or lack thereof that have since changed) the Ace books were cheaper than the books brought out by the publisher who had contracts with Tolkien (DelRey, I think).

    Tolkien was blessed with rabid fans who forced their bookstores to send the Ace editions back to the publisher. Ace eventually contacted Tolkien, sent him royalties and begged him to talk to his fans so that they would quit boycotting Ace. Without the spread of information, Tolkien would have been without recourse.

    Certainly a lawsuit is news, especially one that might have an impact on EC or Samhain authors. It is probably not an excuse for jumping automatically on anyone’s side. There is not necessarily a “bad” guy involved in a lawsuit, just two parties who are unhappy with each other and need an outsider to arbitrate. This is to stop matters before people start a Hatfield/McCoy incident.

  29. Melissa Schroeder
    Apr 08, 2008 @ 19:50:21

    Patricia,
    One thing I like about epublishing is a lot of the openess of it. I still have NY authors who don’t believe I make the percentage per digital copy I do because so many of them signed for much less. They were told that was the going rate.
    And you are right. There are two sides to every story and there doesn’t always have to be a BAD guy.

  30. Caitlin
    Apr 09, 2008 @ 01:33:13

    I really don’t understand much about lawsuits but this kind of thing is annoying…

    I generally think it's a bad idea for an author to gossip about any publisher period. Offering opinions? That's different and my opinion is that this is between EC's owners and Samhain's owners

    Why the heck does that matter? The suit is between Brashears and EC. I don’t see why Samhain’s name is being dragged into it because it has no relevance whatsoever. So the woman works for Samhain now. The whole issue is between Brashears and EC.

    The Smart Bitches website made a passing mention of Brashears now working with Samhain, but this isn’t even mentioned at all in Jane’s post because it’s irrelevant. Why bring up unnecessary parties? It over complicates things.

  31. Shiloh Walker
    Apr 09, 2008 @ 05:27:54

    I generally think it's a bad idea for an author to gossip about any publisher period. Offering opinions? That's different and my opinion is that this is between EC's owners and Samhain's owners

    Actually it’s not an unnecessary party~Crissy OWNS Samhain. She doesn’t work for them. She owns it. So in effect, it is between the two owners, although you’re right in the sense that Samhain, the business, isn’t involved. That was poor wording on my part and I apologize, but it doesn’t change the truth of the statement either.

  32. kirsten saell
    Apr 09, 2008 @ 21:02:53

    Because it is so small, authors think publishers are their friends and feel the need to step in and stand up for them. They aren't your friend and they have a team of lawyers to do the job. Publishers can be friendly with you and vice versa, nothing wrong with that. But this is business not a fricking sorority. I am a contract writer, and my allegiance is to myself. I know, bitchy, but that is my personality and it is the truth. I am not part of the company, but an independent contractor.

    In this instance, I think the compulsion to take sides has a lot to do with blatant self-interest on the part of authors. It isn’t that someone is dissing my girlfriend (be she Tina Engler or Crissy Brashear), it’s the fact that if my publisher is negatively affected, I could be negatively affected.

  33. emily
    Apr 10, 2008 @ 13:42:28

    Not commenting on this at all would be about as sensible as ignoring an elephant in the room. You don’t have to poke the elephant with a stick, just acknowledge it is there and take that into account.

  34. Ellora’s Cave Fails to Show Up, Respond to Discovery in Lawsuit | Dear Author: Romance Novel Reviews, Industry News, and Commentary
    Mar 05, 2010 @ 09:24:48

    […] brought suit against Ellora’s Cave on April 2008.  The details of the original suit I blogged about here.  Ellora’s Cave filed a countersuit, alleging Brashear engaged in misappropriation of trade […]

  35. Sue in OH
    Mar 12, 2010 @ 12:08:56

    Miss Briggs,
    How eloquently you write – and how right you are about business people, it certainly takes one to know one! I have been following this story for several months and I am not a writer, but I do own a business and reside in Summit County where this Legal Matter will ultimately be decided. It seems to me that this is a HUGE b*tch fight, but I’m just an amused bystander, and I wonder who will write THIS story when it comes out? I’m still amazed that the State hasn’t shut down EC yet for the Tax lien that they have against them – not to scare any of you, but I’m thinkin’ this will get good and UGLY before it gets better.

  36. scoopie
    Dec 28, 2010 @ 11:26:23

    ok, folks – here’s the update. I regret to inform you that Tina/Patty/EC have considerably p.o.’ed Her Honor, the Judge(27+ pages worth)and Crissy has won the Judgement on all counts and that the EC world is currently scrambling to liquidate assets. Yep, I live in the same County as Tina/Patty/EC and I’M WATCHING IT HAPPEN, so if you’d like to verify go to the Summit County Courts Website and find the latest – you can search on Crissy, Tina, Patty or EC and search dockets. Best wishes to all – and Happy New Year. Ciao!

  37. Ellora’s Cave Settles with Chris Brashear
    Apr 25, 2011 @ 08:35:38

    […] Ellora’s Cave and Chris Brashear has come to an end.  On April 7, 2008, Chrissy Brashear filed suit against Ellora’s Cave alleging that she was entitled to a distribution of profits from 2005 until the date at which […]

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