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Ellora’s Cave Settles with Chris Brashear

As of April 8, 2011, the three year lawsuit between 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 defendants bought out her 5% shares.   EC’s response to the litigation was to not participate, which you simply cannot do in a litigation.

EC refused to give up documents such as tax returns and ledgers.   The failure to respond the request for documents impaired Brashear’s ability to proceed with her claim.   EC blamed it on their first lawyer who they fired.   EC retained new counsel but the pattern of delay and duck continued.   Brashear filed a motion for sanctions (a request asking the court to punish EC for its delinquent behavior).   The court granted the motion after EC and its counsel failed to show up for a hearing.   EC asked the court to set aside the sanction and promised it would deliver the documents requested by Brashear.   EC never did.

Ellora’s Cave was given one last chance to respond to the discovery but instead of responding, they filed for a protective order asking the court to limit what documents EC had to produce to Brashear.   The Court granted the motion in part and denied the motion in part.   A pretrial hearing was scheduled.

No attorney showed up for the pretrial nor did any of the representatives for EC.   As the court order noted, the court placed phone calls, waited sixty-five minutes, and still there was no response.   The court then ordered a judgment against EC in favor of Brashear.   (PDF order here).

Fed up with Ellora’s Cave, the court set out the behavior by EC that it characterized as contumacious.  (twenty seven page ruling (PDF)).

A trial would proceed but only on the damages that Brashears was claiming.  Those damages were set out in a trial brief filed by Brashears. (PDF)  The trial brief laid out the calculation of damages alleged by Brashear.  First, it alleged Brashear was entitled to over $140,000 in unpaid distribution.  The follow table represents the distributions made to Engler and Marks from 2006 to May 17, 2010.

[table id=59 /]

The distributions in 2010 only include data up to May 17, 2010, as Ellora’s Cave has not divulged any post May 17, 2010 data.  Interesting that in this period of great digital growth, EC’s profits (as seen through it’s distribution) is declining.  In valuing Brashears’ 5% ownership in EC, EC’s expert is alleged to opine that Brashear’s interest in EC amounts to approximately $51,700 whereas Brashear’s expert values her 5% shares at $121,500.

The trial brief also asserts that Ellora’s Cave is diverting assets away from the company.  First, by borrowing money through commercial lines of credit and loans in EC’s name and then transferring those loan funds to Engler, Marks, and others at substantially lower interest rates.  Second, EC is paying above market rate rent to its landlord (who happens to be Tina Engler).  For example, in 2009, the market rent is around $40,131, and EC was paying to Engler $97,200 in rent.

All told, Brashears claimed about $350,000 in actual economic damages as well as damages for defamation and punitive damages (designed to “punish” the wrongdoer as opposed to “compensatory” damages that are designed to make the plaintiff “whole”) and attorneys’ fees.

The settlement is confidential (PDF) and thus we won’t know what has been paid although if Ellora’s Cave did pay in authors (as I suspect that they may have given their cash flow problems), we may see some authors’ backlists appearing on the Samhain site in the future.

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

21 Comments

  1. chanceofbooks
    Apr 24, 2011 @ 10:45:31

    Seriously? They can pay in authors? Shouldn’t they get a say in getting a new publisher or do their EC contracts read more like mortgages–Hi, we’re so grateful to have you, but we may sell you to another service provider or 10 just as soon as the ink dries. I like Samhain and have nothing against them, but if I were one of the authors being traded to settle the suit I would be beyond pissed and be contemplating action of my own against EC.

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  2. Cindy
    Apr 24, 2011 @ 10:57:24

    If their profits are down, which I doubt unless something shaky is going on, it’s because their quality of books have gone down. Poorly edited and most barely disguised porn. Oh there a few good ones, but if they’re not paying ALL authors, the better ones are probably submitting to Samhain instead. I’ve noticed the coming soon page is down to 2 or less pages, it used to be 5 or more.

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  3. Cindy
    Apr 24, 2011 @ 10:59:19

    @chanceofbooks Dorchester did it last year (or the year before?) with their bigger name authors, sold them to Avon without telling them. So yeah, I suppose Ellora’s Cave can do that.

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  4. Jane
    Apr 24, 2011 @ 11:03:02

    @chanceofbooks: An author’s contract is an asset for a publisher and I’m sure that it is one of the items that banks looks at in order to extend loans and lines of credit. In the case of Ellora’s Cave, I would guess that it’s deep backlist of titles is what makes up the majority of its worth.

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  5. Maddie
    Apr 24, 2011 @ 12:04:37

    This may sound mean and some what harsh, but maybe if she paid more attention on her business and getting that back on track then trying to get her husband out of jail, she would not be in this position.

    She is no different from those clueless women on Judge Judy who bail their mates out of jail only to sue those same mates for the money.

    Didn’t she pull Ellora Caves books out of Borders? And try to sue them?

    P.S.

    Karen Knows Best posted that Tina Engler called the daughter of the woman her husband murdered trying to get her help to have her husband released from jail.

    He was sentenced to life in prison.

    Tina Englers action her in the above case and marrying a man who committed murder is maybe why her business is losing sales, I for one will not give her my hard earn money so she can spend it on her husband get out of jail fund.

    Sorry if that hurts some of the older authors that signed with her but her site was already on the downswing and heading into the straight porn drivel anyway.

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  6. Annabel
    Apr 24, 2011 @ 12:32:14

    I’m not surprised that “in this period of great digital growth, EC’s profits (as seen through it’s distribution) is declining.”

    They price their books way out of the market on third party sites, which is why I don’t sub to them anymore. My EC books way undersell my other titles.

    I’m not so sure I wouldn’t like to be traded to Samhain, LOL.

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  7. Angelia Sparrow
    Apr 24, 2011 @ 12:37:51

    Ellora’s Cave, or at least my titles there, experienced a STUNNING drop in sales around May 2009. My book that came out in Feb sold over 700 copies in the first month, which was an improvement over the previous two titles, but only about 20% better. The one that came out in July? 250 copies.

    All my book sales dropped around then, when the recession took its hardest hold. And they still aren’t back to pre 2009 levels.

    Also, during that period, EC dropped Ingrams as a distributor and decided that bookstores should purchase directly from them. In 2006, 2007, you could find a ton of EC books in bookstores. This year, you MIGHT find one, but it’ll be Lora Leigh.

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  8. Cindy
    Apr 24, 2011 @ 13:12:46

    I shop at an indie bookstore, selling both used and new. /They used to carry their books but once it was pulled from Ingrams, they couldn’t. Baker & Taylor has some but you can’t make any money from what I’m told.

    The owner tried to buy direct from them and was told he wasn’t considered a bookstore because he didn’t order some obscene amount (can’t remember if it was copies or dollars) at a time so he would have to pay retail. So they no longer get them.

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  9. Sascha Illyvich
    Apr 24, 2011 @ 17:58:25

    It’s an interesting topic to see in the industry when this company leads the way in ebook sales. I have my reservations about Ellora’s Cave and will reserve those to myself but I can promise you they’re interesting to watch. Look at the fact that the company that used to put out the hottest erotic romance now has a “sweet” line. Tell me things aren’t changing.

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  10. kate r
    Apr 24, 2011 @ 22:34:45

    Good thing the big trend these days are those Author Playing Cards. The lawyers can collect a bunch and throw them on a table and sort them out that way.

    What’s the evaluation process for that sort of thing? Do they call in some sort of literary expert to decide what the future profits will be based on rising trends (good luck on figuring out that one) or do they just go by numbers and assume particular authors stay steady?

    I’m sure it would be hard impossible to get the two parties to agree, so I wonder who gets to decide an author’s worth.

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  11. Interested Observer
    Apr 25, 2011 @ 00:24:42

    Much food for thought here.

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  12. jmc
    Apr 25, 2011 @ 08:26:46

    The link to the PDF about the settlement is getting a 404 error. Unless that’s the point? File not found because it’s confidential? (Sorry, I’m slow that way.)

    On the possibility of being paid via author contracts, I’m curious how they would be valued and used to pay down whatever the settlement amount was, especially in light of EC’s declining sales and (IMO) editorial standards. Backlist only, or contracted but unpubbed works, too? How much additional work would Samhain have to put into some of the works in order to republish?

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  13. Jane
    Apr 25, 2011 @ 08:35:53

    @jmc Sorry, the link must have been broken.

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  14. Jackie Barbosa
    Apr 25, 2011 @ 09:46:40

    I’m sorry, perhaps I’m slow this morning. What does “pay in authors” mean? Specifically the “in” part.

    Thanks!

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  15. SandyW
    Apr 25, 2011 @ 10:16:52

    I know that there are quite a few attorneys around DA, so let me ask this:
    How common is the whole ‘you can sue me but you can’t make me actually show up in court’ attitude? Is this behavior an EC thing? Or do people do this on a regular basis?
    Just curious.

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  16. Jane
    Apr 25, 2011 @ 10:18:16

    @SandyW No, I think that is pretty rare.

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  17. Nadia Lee
    Apr 25, 2011 @ 11:10:53

    @Jackie Barbosa: Unless I’m mistaken, it’s about transferring the contracts authors have with EC to Samhain, so that Samhain gets the $ from selling those books.

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  18. Jane
    Apr 25, 2011 @ 11:29:51

    @Nadia Lee Basically. Like the sale of Dorchester authors to Avon. The backlists of authors can be quite valuable, particularly as an author grows in audience.

    ReplyReply

  19. M
    Apr 25, 2011 @ 12:42:20

    @SandyW:

    People can go into a case with that attitude (I’ve seen it happen), but a chat with their attorney will quickly enlighten them as to how thoroughly pissed off the judge will be if they don’t show up. It’s never a good idea to piss off the judge.

    I will say I’d be surprised at any author objecting to the shift from EC to Samhain. You’d think they’d be happy to jump a sinking ship for one still sturdily afloat.

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  20. Jackie Barbosa
    Apr 25, 2011 @ 12:42:38

    Okay, now I get it! (Maybe the caffeine has finally kicked in.) The phrase “pay in authors” didn’t make sense to me because I wasn’t thinking we were discussing how Brashears was being paid her damages. I was thinking it had something to do with how EC was paying its own authors as evidence of its apparent cash flow problms.

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  21. Stumbling Over Chaos :: In which I can’t think of anything remotely clever for a linkity title and even begin to wonder if I’ve already used this title before
    Apr 29, 2011 @ 02:02:20

    [...] Interesting post at Dear Author on the lawsuit between Ellora’s Cave and Samhain’s Chris…. What I found most startling was the possibility that EC would pay part of the settlement in authors. Who knew authors could be used as a form of payment?! [...]

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