Nov 23 2010

Tuesday Midday Links: Ellora’s Cave Gets the Smackdown from Judge

Yesterday, I received an email from HarperCollins that it was shuttering its ebookstore (used to be called PerfectBound) as of November 19 and that customers would only have until December 19, 2010 to redownload their purchases. After the December 19, 2010, date, titles purchased through the HC eBook Store would not be accessible. (I thought it odd that the email was sent 3 days after the shuttering of the eBook Store but I haven’t bought anything there for a long time).

Storming the CastleOn the same day, I received a newsletter update that AvonRomance.com will be offering special digital exclusives such as original shorts and digital bundles of their most popular authors.

These digital books will be available at your favorite retailer or for purchase directly from Avonromance.com beginning December 21, 2010, in epub format. The bundles are available only for a short time although the digital exclusives will be available forever. The first digital exclusive will be penned by Eloisa James. Storming the Castle takes up where A Kiss at Midnight left off and features Wick as the hero. Wick is the brother of the her in A Kiss at Midnight. AvonRomance.com will also have a brand new design come December 1, 2010.

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Digital Book World has a really interesting article on agency pricing and how publishers aren’t seeing any depreciation in sales because the ebook market is growing at such a rapid pace.   I think this is what Nate at the digital reader tries to point out in noting that ebook sales aren’t growing at the rate that they had in the past even if they are growing.   In essence, ebook sales are flat, argues Nate.     Further, agency pricing was supposedly designed to help new retailers enter the market and take away the dominance of a retailer like Amazon but in the short term, it has cost retailers millions of dollars.   In the long term, independents like Diesel and BooksonBoard believe it will help them combat Amazon and Barnes and Noble.

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Ellora’s Cave has been in a contentious legal battle with Christina Brashear, owner of Samhain Publishing, since 2008.   Brashear brought suit against EC alleging EC owed her 5% of EC’s profit in 2005, 2006, 2007 and 5% of the overall value of the company in a shareholder buyout in addition to damages arising out of Tina Engler, and others, defaming Brashear.

EC refused to give up documents such as tax returns and ledgers during the litigation.   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.

In a twenty seven page ruling (PDF), the court sets out the behavior by EC that it characterizes as contumacious.

Defendants willfully evaded the production of discovery, resulting in unnecessary delays of this case and increased legal fees.   Defendants’ actions in this case have crossed the line from a zealous defense to malingering, malfeasance, sabotage and delay.

As for the missed hearing (which I think played a huge partin this ruling), the court noted that the Defendants Marks and Engler are “savvy and sophisticated litigants”, that they knew how to contact the Court and monitor the docket based on previous behavior, and that the two of them discussed the case and the hearing with each other in person and in email. Their attorney said that his absence was a calendaring error.

It is suspect that all three of them failed to appear for the final pretrial.   The Court could understand if one of them had neglected to put it on their calendar or “forgot” to come.   But the absence of all three, who concede to receiving notice of the hearing, is questionable.

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Such continuous, systematic delays and flagrant disrespect for court orders resemble an unwillingness to defend and bad faith attempts to derail the case from moving to a resolution.

In the end, summary judgment was granted to Brashear and now all that is left will be a trial on damages and a hearing on attorneys fees.

In 2006, Forbes noted EC had pulled in $6.7 million in revenue in 2006 and another source pinned EC’s revenue in 2009 at $5 million.   The ultimate bill for EC as a result of not participating in litigation is likely to exceed seven figures if you include attorneys’ fees and interest.   Does EC have this amount of cash on hand to pay this judgment?   EC can appeal and would have to post a bond for the judgment (usually 10%).   The appeal standard for a decision like this is usually “abuse of discretion” and given the detailed account of EC’s misbehavior, it’s not likely (in my judgment) this decision would be overturned.

EC had filed suit against its first attorney but has recently dismissed the case (PDF).   The dismissal is without prejudice and can be refiled.

Related posts:

  1. Ellora’s Cave Fails to Show Up, Respond to Discovery in Lawsuit
  2. Tuesday Midday Links: PW Gets a Romance Section
  3. Tuesday Midday Links: Harlequin Horizon’s, A self publishing venture
  4. Tuesday Midday Review Links: Kindle is everywhere but Canada (WTF?)
  5. Tuesday Midday Links: New Readers, New Prices

By Jane • Publishing News • 19 • Tags: , , ,