Post-Tasini Class Action Case Settling for Up to $18 Million
Posted On April 4, 2005
Four years after the 2001 ruling in their favor by the Supreme Court in the Tasini case (New York Times Co., Inc., et al. v. Tasini et al.), freelance writers finally have some cash in sight. The finding by the Supreme Court established that publishers and the information industry had to get approval from authors to electronically publish reports. (For coverage of the 2001 victory, read Carol Ebbinghouse's NewsBreak "Tasini Case Final Decision: Authors Win" at http://newsbreaks.infotoday.com/nbreader.asp?ArticleID=17563.) In August 2000, 21 authors and three author professional associations—the National Writers Union (http://www.nwu.org), American Society of Journalists and Authors (http://www.asja.org), and the Authors Guild (http://www.authorsguild.org)—filed a class action suit. On March 29, 2005, plaintiffs filed a final motion for court approval of a settlement in the suit against database services and publishers, to which the court gave preliminary approval on March 31. The settlement totals a minimum of $10 million and a maximum of $18 million, less $3.8 million for lawyer's fees and administrative costs. After the 120-day claim period ends (start date to be scheduled by the final court approval hearing on July 28), no further claims by any freelance writers can be made against the database companies or publishers named for covered infringement of electronic rights.
The settlement was filed under "In re Literary Works in Electronic Databases Copyright Litigation," MDL No. 1379, in federal court in the Southern District of New York with U.S. District Judge George M. Daniels presiding. Originally there were three cases, but the court ordered the cases consolidated into one complaint and one group of payments in September 2001 after the Supreme Court's decision in the Tasini case.
The amount to be paid to writers under the settlement plan depends on a number of factors, including copyright registration, the original fee paid, the year published, and whether the writer permits future use of articles in databases. The "class" in this class action suit is defined as "all persons who hold the copyright to an English language written work that, at any time after August 14, 1997, was made available in electronic format (e.g., online, on CD-ROM, or in any other electronic format) without the person's permission by at least one of the defendant databases or participating publishers."
The settlement establishes three categories of claimants. Category A covers claimants who registered copyright with the U.S. Copyright Office after publication but before infringement or within 3 months after first publication. These claimants will receive $1,500 for each of the first 15 eligible works written for any single publisher, $1,200 each for the next 15, and $875 for each article over 30. Category B covers claimants who published from 1995 through 2002 and who did not register copyright until after 3 months past first publication. They will receive $150 per eligible work or 12.5 percent of the original sale price, whichever is greater. Category C covers claimants who did not register their copyright at all. Category C payments for each eligible work would run up to $60 for a work that originally sold for $3,000 or more and down to $5 for one sold for less than $249.
For all these categories, 65 percent of the payment compensates for past infringement and 35 percent for future electronic use. If claimants decide not to grant future electronic rights, they only receive 65 percent of the compensation amounts. The same reduction applies to those authors who have signed retrospective approvals but still want recompense for past infringement. Works created before 1985 have reductions ranging from 5 to 50 percent.
Claimants queue for the money in category order. For example, the Category C rate schedule could become moot if the Category A and Category B claimants use up all the settlement money. (The higher payments to authors registering their copyrights within 3 months stems from statutory language in copyright laws.) Kay Murray, general counsel for the Authors Guild, believes that, by far, most writers will fall into Category C.
Getting the word out to all affected members of the class is part of the settlement, as Murray described it. Many publishers participating in the suit have agreed to publish notices in their publications for cost (no advertising fees) as part of the settlement. Many thousands of authors will receive notices in the mail, according to Murray. A claims administrator will handle the notification process and the check-cutting—at last.
Database companies involved in the lawsuit include Reed Elsevier (operating LexisNexis), Thomson Corp. (Dialog, Gale Group, West Group), Dow Jones (Factiva), Knight-Ridder (former owner of Dialog), Mediastream, NewsBank, ProQuest, and EBSCO. Some 36 publishers were listed in the suit, most from the news and trade press arena, e.g., The New York Times Co., McClatchy Co., The Washington Post Company, Forbes, Gannett Co., etc.
The three associations representing writers in the lengthy litigation were the National Writers Union, a United Auto Workers local with 3,400 members; the American Society of Journalists and Authors (ASJA) with more than 1,100 members; and the Authors Guild, oldest and largest of the three, with more than 8,000 members. Writers seeking compensation from the settlement can go to http://www.freelancerights.com, a joint Web site set up by the three organizations that worked out the terms of the Class Notice sent to the court, to review the complex settlement terms and to file claims. The Class Notice describes benefits under the settlement, identifies included and excluded articles, and explains authors' rights. (Details of the settlement appear in the FAQ section of the site, located at http://www.freelancerights.com/disc.htm.)
The current president of the National Writers Union, Gerard Colby, saluted the settlement, saying: "Individual awards for individual articles could add up to big money for writers who had more than one article published electronically without their consent, and who take action to file proper claims."
Nick Taylor, president of the Authors Guild, applauded the resolution of the case, stating: "This is a substantial settlement, and, if approved, it will vindicate freelance writers who deserve compensation and control for their work in the electronic marketplace. It proves our contention all along that access and online advertising revenues shouldn't all go into the pockets of big media, but should be shared with the creators."
"ASJA has long preached to freelancers that they demand extra pay for extra uses," said Jim Morrison, ASJA's president from 2001 to 2003 and the organization's representative in the settlement negotiations. "Today, we have an $18 million validation of how valuable electronic rights are to publishers. Freelance writers should remember that when negotiating their contracts."
The New York Times Co. released a statement saying it was "pleased that this issue has been resolved and believes the agreement is fair to all parties involved." ProQuest also stated that it was "pleased that publishers and authors have come together for a settlement regarding electronic use of copyrighted materials."
So Is That It?
Have the aftershocks from the Tasini case finally ceased? Are any information industry firms still at risk? Do any authors still suffer from infringement fever?
It's not quite over.
The lawsuit filed by the writers was against the database firms. According to Murray, it was the database firms that drew the 36 publishers into the fray, relying somewhat on the indemnification clauses in their contracts. Once claims for the settlement have been paid, no freelance author can sue either the database firms or the 36 publishers named in the suit for the material covered. Failure to take advantage of the claim process in the 120-day time period will vitiate the rights of any writers to further legal action against those parties. However, as Murray pointed out, publishers not named in the suit would still be vulnerable.
What about other kinds of writers (e.g., scholars) who do not get paid for the articles they write? (Scientific studies were explicitly excluded from the settlement.) Could scholars take legal action? Murray did not see why not. Although the current settlement agreement focused on the money authors lost from infringement, Murray thought one could make a case for suing for the profits infringing publishers might have made. In law, the concept is called "unfair enrichment."
One set of parties remains without remedy. Consumers still turn to databases expecting comprehensive coverage and do not receive it, since articles have been removed or were never entered into the files. Murray hoped that the settlement would encourage authors to allow publishers and database firms to incorporate missing material into their databases. Since failure to grant future electronic rights permission knocks 35 percent off the fees paid to claimants, the authors should have sufficient motivation.
Now, if we could only guarantee that publisher and database firms would rise to the occasion.
UPDATE - April 13, 2005
A NewsBreak reader alerted us to possible confusion in one aspect of our coverage of the freelance author's settlement arrangements. I had cited Kay Murray, general counsel for the Authors Guild, as the source for the assertion that the terms would prevent writers from pursuing legal action against parties named in the suit after completion of the settlement process. In a follow-up interview, Murray responded, "I stand by my statement." She pointed out that "if people want to opt out, they can retain their right to litigate. Methods for opting out will be clearly set forth in the notice to be published and mailed." Murray also referred to the option to retain future publishing rights, as described in the NewsBreak ("65 percent of the payment compensates for past infringement and 35 percent for future electronic use. If claimants decide not to grant future electronic rights, they only receive 65 percent of the compensation amounts. The same reduction applies to those authors who have signed retrospective approvals but still want recompense for past infringement.") Murray had mentioned the "opt-out" terms in the original interview.