Nora Sleeth is a JD candidate at Osgoode Hall Law School.

The National Writers Union, The Authors Guild, and the American Society of Journalists and Authors, along with 21 individual writers, have filed a class action lawsuit against several major print and electronic publications. On August 17, 2011, the US Court of Appeals for the 2nd Circuit rejected the negotiated settlement agreement. The full decision may be found here.

The plaintiffs in this case are freelance writers who sold their written works to print publications, such as the New York Times. The print publishers later began to electronically reproduce the freelancers’ works on the Internet. The electronic materials were then made available through electronic databases. The lawsuit has thus been filed against both the print and electronic publishers based on the precedent set by Jonathan Tasini (New York Times Co., Inc. v. Tasini (2001), 533 US 483 (USCA, 2nd Circuit)).

The plaintiff authors were divided into three separate categories. Category A plaintiffs had their works registered with the US Copyright Office and are entitled to statutory damages. Category B covers those plaintiffs who had their works registered but did not do so soon enough to qualify for statutory damages. Finally, Category C includes all other claims that are not registered and therefore cannot be litigated for damages. Category C represents the largest group of plaintiffs, encompassing 99% of the total number of claims.

A settlement agreement was reached, however, authors and publishers objected and requested review on the grounds that the settlement’s release provision was unfair and that the three categories of plaintiffs had been inadequately represented.

Objectors did not approve of the settlement’s prohibition of claimants “from barring future use of the subject works, including the selling and licensing of the works to third parties, unless the class member either opts out of the settlement altogether or exercises his right to bar future use.” According to the objectors, any future infringements are “distinct harms”, requiring separate relief. Further, sublicensees, who may be responsible for future infringements, are not a party to the settlement.

The Court of Appeal did not agree with the objectors on these points. The Court found that future use of the works fell within the “factual predicate underlying the author’s claims.” In addition, with regard to the issue of sublicensees, the Court found that the print publishers in the settlement had purchased the right to maintain their online databases and sublicense the materials to third parties.

The settlement was rejected by the US Court of Appeals by reason of inadequate representation of class members. The Rules of Civil Procedure require that the representative plaintiff in a class action “fairly and adequately protect the interests of the class.” In this case, the named plaintiffs only represented Categories A and B, which contain only 1% of the total claims. The Court therefore found that separate subclasses should be created with separate council and separate representative plaintiffs.

Critics of class actions, have pointed to this case as an example of the procedure’s overall inefficiency and ability to generate substantial disadvantage. The negotiation, which has been ongoing since 2002, was led by individuals who critics suggest did not have the interests of the majority of the class members in mind.