Consummation Denied in Harlequin Royalties Quarrel

MANHATTAN (CN) - A federal judge closed the book on claims that Harlequin cheats its romance writers out of royalties by making licensing deals with Swiss subsidiaries.

In a July 2012 class action against the world's largest romance novel publisher, three of its writers claimed that Harlequin had improperly passed their work to Swiss subsidiaries, Harlequin Books S.A. and Harlequin Enterprises B.V., "for tax purposes," even though these companies have no publishing functions.

This contracting relationship went on between 1990 and 2004, according to the complaint led by Barbara Keiler, who wrote "Blooming All Over," "Right Place, Wrong Time."

The writers sought damages for breach of contract - a potentially large sum if the court had certified a class of more than 1,200 writers employed at Harlequin.

U.S. District Judge Harold Baer spurned the lawsuit on Tuesday, however, finding that the writers knew exactly what they were getting into.

"Plaintiffs assert that because [Harlequin Enterprises Limited] performed most publication duties and controlled the negotiation and administration of the contracts in all respects, the 'publisher' for the purposes of these contracts is HEL," the four-page opinion states. "But here, each contract states expressly that [Harlequin Books S.A.] will 'hereinafter [be] called the 'publisher.'"

Scoffing at the writers' demand for at least half of all receipts, Baer noted that the "plaintiffs do not allege any facts supporting this assertion."

"And indeed, courts have dismissed as conclusory similar unsupported allegations as to reasonable prices," the ruling continues.

Baer further nixed exploitation claims related to Harlequin's e-book sales.

"This claim is thus based on the premise that there is no provision in the publishing agreements governing the sale of e-books," the opinion states. "But here, the terms of the publishing agreements and the 'All Other Rights' clause expressly include 'all other rights exercised by publisher or its related licensees.'"

Harlequin CEO Donna Hayes said that the company was "pleased" with the decision.

"As the publishing industry evolves, we look forward to developing our author agreements further in ways that serve both of our interests," Hayes said.

David Wolf, a lawyer for the writers, told Courthouse News, "We're very disappointed with the judge's ruling, and we're considering our options."

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