February 2, 2016

The latest scintillating chapter in the Fifty Shades series is royalty fraud

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Fifty Shades of GreyNo publishing phenomenon—or really any phenomenon—can escape the tinge of litigation.

Controversy can move pretty slowly, though. It’ll probably be years before coloring book guru Johanna Basford gets sued for labor violations (for making her readers do all the work), and Marie Kondo’s inevitable confrontation with the hoarding lobby doesn’t seem particularly imminent.

But E.L. James’s Fifty Shades series has been a mega-success for years, so naturally, it was time for a lawsuit.

That time, in fact, was May 2014. That’s when Jennifer Pedroza and Christa Beebe sued Amanda Hayward, founder of The Writers Coffee Shop, the publishing house that sort of—maybe—made sadomasochism go mainstream.

TWCS began as an online fan fiction library but morphed into an independent publisher, and the 2011 publication of Fifty Shades of Grey made it that rare thing—an independent publisher with more money than it knows what to do with. Hayward’s fortune only grew after Random House bought the rights to the Fifty Shades books in 2012.

Pedroza and Beebe, though, claimed that at the peak of her success, Hayward had defrauded them out of their share of advances and royalties. Both worked for Hayward, who Pedroza claimed “fraudulently” restructured TWCS to make payments flow to . . . herself.

As the Fort Worth Star-Telegram’s Max B. Baker put it, “the fight over the money revealed that the relationship between Pedroza, Hayward and several other women was fifty shades of complicated.” My emphasis.

Beebe settled in December 2014, but Pedroza went to trial. According to the Guardian’s Amanda Holpuch,

[Texas state district judge Susan] McCoy concluded that Pedroza had been defrauded of royalties after a four-day trial in February 2015. Then, she ordered Hayward to set aside more than $10m in anticipation of the final decision, which was announced on Thursday.

“More than $10m” proved to be a good estimate. Last Thursday, McCoy ordered Hayward to pay Pedroza $10.6 million in royalties plus nearly $900,000 in pre-judgment interest, along with $1.7 million in attorneys’ fees.

That’s a big—though arguably belated—reward for being a part of publishing history.

Hayward’s lawyers are, quite reasonably, preparing an appeal, but as Baker says, Pedroza and Hayward may try to reach an out-of-court settlement.

Indeed, resolving the problem behind closed doors seems in keeping with the spirit of the books, especially because, as far as I know, there is nothing in the series about the sexiness of corporate restructuring, or the erotic appeal of royalty theft.

 

Mark Krotov is senior editor at Melville House.

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