Wednesday, July 18, 2012
PublishAmerica's Dubious Response to Class Action Lawsuit
PublishAmerica's dubious response to the class-action filed against them
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND
DARLA YOOS, et al. )
v. ) Case No. 12-cv-1696
PUBLISH AMERICA, LLLP )
MEMORANDUM IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS AND TO
Pursuant to Fed. R. Civ. Proc. 12, Defendant Publish America, LLLP ("PA"), moves to
dismiss the complaint for failure to state a claim and to strike immaterial allegations therein.
The Court should dismiss the claims brought by Plaintiffs under the Maryland Consumer
Protection Act ("CPA") because Plaintiffs are not consumers; they have entered into a
commercial enterprise with PA pursuant to which they split the proceeds from sales of their
literary work made by PA. This profit sharing relationship is not a relationship that is protected
by the ("CPA"). Plaintiffs' declaratory judgment count should also be dismissed since the
underlying CPA claim is defective. Furthermore, Plaintiffs are not entitled to quasi-contract
remedies for unjust enrichment because their claims arise from contractual relationships with
PA. For these reasons and others, as more fully explained below, this case should be dismissed.
I. PROCEDURAL BACKGROUND
Defendant PublishAmerica, LLLP ("PA") is a book publisher who put its "trust in the big
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Plaintiffs have referenced parts of PA's website in its Complaint. PA hereby proffers
other portions of that website to provide a complete picture of that electronic document.
Blankenship v. Manchin, 471 F.3d 523, 525 n.1 ( 4th Cir. 2006) (allowing defendant to attach
documents to its motion to dismiss if those documents are referenced in the Complaint).
league of unknown authors." Ex. A.
1 When it formed in 1999, its founders "had been around in publishing for many years and had seen firsthand, the hardships involved with getting a publisher interested in an unknown author's book." Id. They figured that they could "serve as many as a thousand new authors" if they "took full advantage of the latest printing technology. . .
." Ex. A; see also Ex. B (noting that PA uses "digital printing technology, aka
"). This technology allowed PA to eliminate waste by printing copies of books as they
are ordered rather than in large batches (that may ultimately remain unsold) at the time its books are released. Ex. B. From this background, PA was founded as a "traditional, royalty paying publisher."Compl. ¶21. PA defines "traditional publishing" on its website to mean "full availability to all bookstores, through the best distribution channels (Ingram, Baker&Taylor, etc.), top quality books, first rate art design, individual author support and attention, and of course no publishing fees in the contract at any time." Ex. A. PA does not include marketing to the public at large as part of its definition of traditional publisher. Instead, it only mentions that it markets its authors' books "to the industry's wholesale and distribution channels for full availability through all bookstores at home and abroad". Compl. ¶21.
PA's innovations to the publishing industry have proved to be widely popular. According to its website, it has served almost 50,000 authors since its formation in 1999. Ex. A.
These authors select PA despite being warned that it has "lower acceptance barriers than any
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other traditional publisher", Ex. C, that its books are not returnable, Ex. D, and that success is far from certain. In fact, the contract is explicitly based upon "the mutual understanding that neither party has guaranteed, or is to guarantee, the sale of any specific number of copies of the Work, it being impossible to predict, before publication, what success any book may attain." Compl., Exs. 1-3 ¶¶21. PA also discloses on its website that "[b]ookstores do
not automatically put a book on their shelves. All stores have full access to our books, but in order to actually stock them, they must believe that the book will sell. Author: there is work to be done." Ex. C (emphasis in original). With respect to its authors' obligations under the contract, PA indicates on its website that the author has one major responsibility: "to provide us with the completed final-version manuscript." Compl. ¶22. Nevertheless, PA admonishes authors that they should not "sit on [their] hands after signing the contract." Id. "We expect the author to actively promote the book whenever and wherever possible." Compl. ¶22. PA went into great detail on its website regarding the promotional activities authors should consider taking:
Now, a word of caution is in order. Bookstore availability is not necessarily the same as bookstore shelf display. For a book to be stocked by a bookstore, someone high in the hierarchy must decideto order it. . . .
This is why it is so important that authors turn themselves into the center of all local attention. Face it, you're no John Grisham or Nora Roberts, not yet. So you must not only beat the drum, but be the drum major as well. All successful marketing begins at home. Many authors are very creative at this. There are book signings with PublishAmerica authors in bookstores all over the fruited plain, every week. . . . Some authors become very accomplished public speakers about their book's topic, or about book writing in
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in general. Others carry flyers and business cards around that they hand out anywhere they go. And then there are some whose efforts get a big boost when they discovery that a movie star has agreed to a reading of their book as a potential movie script, or that their book has actually made it to the big screen.
Today's author must be active, and he must be innovative.
Ex. C (emphasis in original).
PA also makes it clear that its own promotional activity is completely optional:
Sales promotion, advertising and publicity of the work shall be at the Publisher's election and discretion as to the extent, scope and character thereof and in all matters pertaining thereto. . . . The Publisher may also distribute, at its discretion, for purposes of publicity and/or review, promotional information pertaining to said literary Work, to publications throughout the United States and/or Canada, or elsewhere. Compl., Exs. 1-3 ¶¶13 (giving PA discretion to create a website for advertising Plaintiff's book). True to its word, PA issues contracts that contain no author fees. See generally Compl., Exs. 1-3. Those contracts typically require authors to transfer the publishing rights to their literary works for 7 years. Compl. Ex. 1-3 ¶1 (setting contract term at 10 years for Ms. Yoos); id. ¶22 (setting forth conditions of reversion). After the contract is signed, the author is required to submit a final manuscript within 15 days. Id. ¶¶8 (Ms. Levine's contract allowed her 75 days to submit her manuscript). The parties agree that "[a]fter the author's submission of the Completed Manuscript, no changes and/or corrections shall be made except to correct Publisher errors". Id. The contract also requires PA to pay authors an advance of $1 and royalties on specified sales of its authors' books. Id. ¶¶3,8.
Plaintiffs each entered into a contract with PA. Compl. Exs. 1-3. Although Plaintiffs were not required to purchase any services from PA, some of them voluntarily did so. Compl.
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¶¶77-111. They each now claim that PA should have provided them with more services because
PA held itself out as a traditional publisher. E.g. Compl. ¶128.
II. LEGAL DISCUSSION
A. Legal Standards
"A motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief
can be granted is a challenge to the legal sufficiency of a complaint." Federal Trade Comm'n v.
Innovative Marketing, Inc., 654 F. Supp. 2d 378, 384 (D. Md. 2009). To survive a 12(b)(6)
motion, a Complaint must contain a "short and plain statement of the claim showing that the
pleader is entitled to relief." Fed. R. Civ. Proc. 8(a)(2). When reviewing challenges to the
adequacy of a Complaint, "courts construe the pleading . . . liberally and accept all well-pleaded
allegations in the complaint as true and draw all reasonable inferences from those facts in the
plaintiff's favor." Innovative Marketing, Inc., 654 F. Supp. 2d at 384-85 (complaint should not
be dismissed unless it "appears beyond doubt that plaintiff can prove no set of facts in support of
his claim which would entitle him to relief"). In order to be well pled, a complaint must set forth
sufficient facts to state a claim that is "plausible on its face"; detailed factual allegations are
unnecessary but "formulaic recitation of the elements of a cause of action" are insufficient. Id. at
385. When determining whether an inference is reasonable, courts are not allowed to institute a
"probability requirement"; neither should they accept farfetched "possibilities". Id. Rather
courts must draw upon judicial experience and common sense when determining what inferences are reasonable based upon the context of the case. Id.
B. Plaintiffs Have Failed To Allege A Claim Under the Consumer Protection Act
The Court should dismiss Plaintiff's claim for damages under the Consumer Protection
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Act ("CPA"). Compl., Count II. "[T]he Maryland General assembly enacted the CPA "to
provide protection against deceptive practices in consumer transactions." Citaramanis v.
Hallowell, 328 Md. 142, 150, 613 A.2d 964, 968 (1992) (emphasis added). In addition to public
enforcement through the Division of Consumer Protection of the Office of the Attorney General,
"the Legislature has provided for a private action for damages by a consumer who has been
subjected to a practice prohibited by the CPA." Id., at 150-51, 613 A.2d at 968; see also Md.
Ann. Code, Comm. Law § 13-408.
1. Plaintiffs' Cannot Bring a Claim Under the CPA Because They Are Not
Consumers Plaintiffs' claims are not within the scope of the CPA. "The Act prohibits certain unfair and deceptive trade practices 'in the sale . . .of any consumer goods or services. . . . '" Morris v. Osmose Wood Preserving, 340 Md. 519, 536, 667 A.2d 624, 633 (1995) (citing Md. Code Ann.,
Comm. Law § 13-303); Md. Code Ann., Comm. Law § 13-101(I). "Consumer goods [and
services] are defined by the Act as goods [and services] 'which are primarily for personal,
household, family, or agricultural purposes." Md. Ann. Code, Comm. Law § 13-101(d).
A sale is covered by the CPA only if the purchaser in that specific transaction intends to
use the goods or services for personal or household reasons. Morris, 340 Md. at 539, 667 A.2d
at 634 The only reasonable definition of consumer goods is goods sold or offered for sale to persons who [themselves] intend to use them primarily for personal, family, household, or agricultural purposes." A sale of consumer goods under the CPA is, therefor, a
sale in which the buyer intends to use the goods primarily for thesepurposes. Consequently, the deceptive trade practice must occur in the sale or offer for sale to the consumer.
Id., at 540-41, 667 A.2d at 635 (emphasis added). In other words, it is insufficient that the goods
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or services are "eventually intended to be for personal, household or family purposes." If the
buyer himself does not intend to use a good or service for personal or household uses, but only
intends to resell it to a consumer (or incorporate the good into another product which will later
be resold to consumers), the CPA is not implicated. The Court of Appeals' decision in Morris is instructive. There: the allegedly deceptive practices occurred entirely during the
marketing of the plywood to the builders. Essentially, the [plywood manufacturers] represented in advertising targeted to builders that their products were suitable for roofing, and
[homeowners] claim this representation is untrue. There is no allegation that the manufacturers were in any way involved in selling . . . the townhouses that the plaintiffs bought. Nor is there
any allegation that defendants attempted to influence the homeowners to purchase townhomes containing their brand of plywood. The only effect the alleged misrepresentation had on the
sale of the townhouses was the creation of a possibly erroneous belief on the part of the builders which caused them to include allegedly inferior products in the townhouse. This remote effect
on the sale of consumer realty is not sufficient for us to conclude that the deceptive trade practice actually occurred in that sale.
Id., at 541-42, 667 A.2d at 636.
Here, Plaintiffs cannot establish that they purchased consumer goods and services.
Rather, they entered into a complex commercial arrangement with PA. On the one hand they
transferred an intangible property interest to PA; they authorized PA to manufacture and publish internationally the books that they authored. Compl., Ex. 1-3 ¶¶1. In exchange, PA agreed to share the proceeds that it earned from sales of Plaintiffs' books by paying royalties to Plaintiffs on specified sales. Id. ¶¶3. In fact, Plaintiffs admitted in their Complaint that they entered into their publishing contracts with PA for the purpose of earning income and promoting their works to the public at large and not for personal or household use. See Compl. ¶80 (Ms. Yoos
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admitting that she entered into publishing contract to "compete with other books by first-time or little known authors"); id. ¶93 (Mr. McCall alleging that purpose of contract was to "promote his book" to the general public); id. ¶117 (Plaintiffs admitting that they primarily object to PA's
efforts to market and promote their works to the public); id. ¶128 (plaintiffs complaining
because PA's policies "make the books unmarketable to the general public"). Thus, they are not
consumers within the scope of the CPA as a matter of law. This conclusion is not contradicted by the fact that PA produces a product that is ultimately purchased by consumers, i.e. books. Plaintiffs are not the buyers in the transactions where PA sells books to customers for household use. Rather, they are more akin to a materialman, who supplies PA with one of the components (book content) integrated into the inished product (along with paper, ink and adhesive) sold by PA. Nor are Plaintiffs complaining about deceptive practices directed at customers who purchase PA's books for the home. Rather, they complain about the commercial marketing activities that they expected PA to perform on their behalf, i.e. marketing their books to the public. See Compl. ¶13 (alleging that PA "convey[s] the false impression that [it] will engage in reasonable marketing efforts and will provide reasonable support to its authors in their efforts to promote their works"). In other words, Plaintiffs complain because they expected PA to do more work to make their books profitable. This is not a consumer expectation; it is a commercial one.
2. Plaintiffs Failed To Identify Any Deception
Plaintiffs have failed to identify any conduct that violates the CPA. A representation is
deceptive under the CPA if it is false and has the capacity to mislead consumers. Md. Ann.
Code, Comm. Law § 13-301(1); see also id. §§ 13-301(2). A failure to disclose material facts is
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deceptive if the seller omitted or concealed the fact "with the intent that a consumer rely on the
same in connection with the promotion or sale of any consumer goods." Id. § 13-301(9). A
representation is material if it is "likely to affect [a consumer's] choice of a product". Luskins,
Inc. v. Consumer Protection Division, 353 Md. 335, 726 A.2d 702 (1999).
A statement can only be deceptive if it is likely to mislead consumers acting reasonably
under the circumstances. Luskins, Inc., 353 Md at 347, 354, 726 A.2d at 708, 711. Indefinite
generalities, "puffing", and "sales talk" are not actionable under the CPA. McGraw v. Loyola
Ford, Inc., 124 Md. App. 560, 582, 723 A.2d 502, 512-13 (1999). "As we see it, this is the sort
of speech that is 'offered and understood as an expression of the seller's opinion only, which is
to be discounted as such by the buyer, and on which no reasonable person would rely." Id., 124
Md. App. at 582-84, 723 A.2d at 512-13 ("the use of the term 'perfectly safe' . . . was so
extravagant . . . indefinite and elusive . . . that [it] would fall within the category of a puff").
"There can be no recovery for deceit, for example for a statement that the plaintiff is being
offered an exceptionally good bargain, that he would be foolish not to take advantage of the
offer." Id., at 582, 723 A.2d at 513. Furthermore, "a private party suing under the CPA must establish actual injury or loss." Lloyd v. GM Corp., 397 Md. 108, 142-43, 916 A.2d 257, 277 (2007); Citarmanis, 328 Md. at
151-52, 61 A.2d at 968. "The injury must be objectively identifiable. In other words, the
consumer must have suffered an identifiable loss, measured by the amount the consumer spent or
lost as a result of his or her reliance on the sellers' misrepresentation." Lloyd, 397 Md. at 143,
148, 916 A.2d at 277, 281. This limitation was put in place out of "fear" that "the powerful
weapon given consumers in the form of the private remedy 'was capable of being used
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improperly for harassment and improper coercive tactics". Citarmanis, 328 Md. at 152, 61
A.2d at 968; Lloyd., 397 Md. at 143, 148, 916 A.2d at 277, 281. The "private remedy is purely
compensatory; it contains no punitive component." Golt v. Phillips, 308 Md. 1, 12, 517 A.2d
328, 333 (1986).
a. Edwin McCall Has Failed To Allege That He Was Deceived
Mr. McCall has failed to state a claim for relief against PA under the CPA. Nowhere in
the Complaint does he allege that he suffered any damages or injury. Compl. ¶¶87-95 (admitting
that he paid no money to PA whatsoever). Since he is not entitled to any restitution, he has
failed to plead a necessary element to his case. Lloyd v. GM Corp., 397 Md. 108, 142-43, 916
A.2d 257, 277 (2007). Nor can he correct that defect by asking for rescission, Compl. ¶95, or
punitive damages, id., ad damnum clause, since those remedies are not available under the CPA.
Compare Md. Ann. Code, Comm. Law § 13-408; Golt, 308 Md. at 12, 517 A.2d at 333.
Even if rescission was available under the CPA, Mr. McCall is still not entitled to it
because he has failed to allege that he reasonably relied upon any misrepresentations. Lloyd,
397 Md. at 143, 148, 916 A.2d at 277, 281. Although he complains about typographical errors in
his book, Compl. ¶¶88-89, he does not allege that PA ever led him to believe that it would fix his
mistakes before publication. This is not surprising since the parties agreed that PA had no
obligation to edit Mr. McCall's book. According to the contract, the manuscript submitted by
Mr. McCall was final–no changes would be made to it after it was submitted. Compl., Ex. 2 ¶8
("Author agrees to deliver to Publisher the final version of the manuscript . . . within 15 days of
the Effective Date" and that upon his "submission of the Completed Manuscript, no changes
and/or corrections shall be made except to correct Publisher errors"). Thus, Mr. McCall knew
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Mr. McCall also claims that PA breached a promise to "provide him a "website type
page'" for the promotion of his book. Compl. ¶93. This expectation was also explicitly
contradicted by the contract. Compl., Ex. 2 ¶13 (granting PA the option to "create . . . a separate
domain on the Internet, exclusively dedicated to promoting the said literary Work" at "the
Publisher's sole expense and discretion").
when he submitted his manuscript that he (not PA) was obligated to ensure it was error free. See Call Carl, Inc. v. BP Oil Corp., 554 F.2d 623, 632 (4
th Cir. 1977) (rejecting plaintiff's fraud claim "in the face of plainly contradictory contractual language"); McGraw, 124 Md App. at 580, 723 A.2d at 511-12 (holding that plaintiff could not establish reliance on false statement that was inconsistent with subsequent documents containing accurate statements).
Mr. McCall also claims that PA breached its obligation to take "reasonable steps" to
promote his book. Compl. ¶41. According to him, he expected PA to take unspecified steps to
promote his book because it called itself a"traditional publisher". Id. ¶¶41, 87, 92 (alleging his
"underst[anding] that it was the publisher's job to present the book to the media"). Again, his
expectations were directly contradicted by the contract. According to that contract, PA's
obligation to promote Mr. McCall's book was nonmandatory: "Sales promotion, advertising and
publicity of the Work shall be at the Publisher's election and discretion as to the extent, scope
and character thereof and in all matters pertaining thereto." Compl., Ex. 2 thereto ¶13 (emphasis
added). Thus, PA had wide latitude when deciding how, when or even if to market Mr. McCall's
2 Mr. McCall's alleged expectations were also contradicted by PA's website. Nowhere on
that site did PA promise to market his book other than to the "industry's wholesale and
distribution channels for full availability through all bookstores". Compl. ¶21; see also Ex. C.
That is not to say that PA had absolute freedom to exercise its discretion under paragraph
13. Pursuant to the implied covenant of good faith and fair dealing, PA was precluded from
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"acting in such a manner as to prevent [Mr. McCall] from performing his [own] obligations
under the contract. Eastern Shore Markets, Inc. v. J.D. Assocs LP, 213 F.3d 175, 182-83, 184
th Cir. 2000) (noting that parties were precluded from "frustrating" other party's performance)).
For example, if PA decided to exercise its discretion and promote Mr. McCall's book, it could
not spitefully disparage him with the intent to hurt sales. Id. at 183 (noting implied duty "to
refrain from destructive competition"). However, nothing in the implied covenant of good faith
or fair dealing obligated PA "to take affirmative actions that [it was] clearly not required to take
under the contract." Id., at 182 (implied duty of good faith "is not understood to interpose new
obligations about which the contract is silent"). Since Mr. McCall's contract does not specify
any particular promotional services that PA is obligated to take, the implied covenant of good
faith and fair dealing cannot be used to interpose any such obligations on PA.
In fact, Mr. McCall admits that his current expectations about promotion evolved after
the contract was formed. According to him, he originally believed that it was his obligation to
help PA promote his book. Compl. ¶90 (admitting that he promoted his own book because it
"fulfilled his end of the contract"). Indeed, PA encourages authors on its website to promote
their own books. Compl. ¶21 ("We expect the author to actively promote the book whenever
and wherever possible"); see also Ex. C. In furtherance of his understanding, Mr. McCall
expended considerable efforts promoting his book, sending hundreds of e-mails to family and
friends, as well as newspapers, magazines, radio and TV stations. Compl. ¶¶90, 92. Although
he later questioned the value of his own marketing efforts, id. ("Mr. McCall found the process
counterproductive"), these second thoughts are based upon his evaluation of PA's performance
rather than his reliance on any representation made by PA before the contract was formed.
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For the same reason, Mr. McCall's complaint, that PA "listed" his book in the wrong
category on its website, Compl. ¶90, and required him to pay a fee in order to terminate the
contract, id. ¶95, also fail to support a CPA claim. These claims are not based upon Mr.
McCall's reliance upon any misrepresentation made by PA. With respect to placing the Book in
the wrong category, that is based upon his observations of PA's performance rather than reliance on any misrepresentation. As for termination, Mr. McCall had no right to demand termination. See generally Compl. Ex. 2. Accordingly, he should have expected that PA might require him to pay a fee in order to rescind the contract by mutual assent.
Accordingly, they cannot support a CPA claim.
3 Lloyd., 397 Md. at 143, 148, 916 A.2d at 277,
281 (requiring CPA plaintiff to prove that he relied upon misrepresentation). By failing to
identify any promotional services that PA was obligated to provide, Mr. McCall failed to meet
his pleading requirements under the CPA. Fed. R. Civ. Proc. 9(b) (circumstances constituting
fraud must be stated with particularity).
b. Darla Yoos Has Failed To Allege That She Was Deceived
Ms. Yoos has failed to establish that she is entitled to restitution of the promotional
services that she allegedly purchased from PA. Compl. ¶77. According to her, PA led her to
believe that it would not offer her promotional services for a fee because it represented that it
was a traditional publisher. Based upon this interpretation of the term "traditional publisher",
she claims that she was induced to enter into the publishing contract. As with Mr. McCall, the
contract and the website dispel any reasonable implication that PA would provide any specific
promotional services. See supra part II.B.2.a. Even if they did not dispel that implication as a
matter of law, Ms. Yoos' conduct is fatally inconsistent with such a claim.. Assuming she truly
believed at the time the contract was formed that PA was barred from offering her promotional
services for a fee, she waived her objection by voluntarily purchasing 10 different marketing
services after the contract was formed. Compl. ¶77. To proceed with those purchases in the face
of such knowledge amounts to a voluntary relinquishment of a known right and rebuts any
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For the same reason, she cannot recover the fee that she paid to terminate the contract.
Compl. ¶85. By voluntarily paying that fee she waived any right to subsequently recover it.
inference that she reasonably relied on her post hoc interpretation of the phrase "traditional
4 Progressive Casualty Ins. v. Ehrhardt, 69 Md. App. 431, 443, 518 A.2d 151, 157
On the other hand, if she was not "aware" of PA's obligation to perform promotional
services for free at the time that she purchased them from PA, then she cannot establish a
violation of the CPA. In order to state a claim under the CPA, she has to establish that PA led
her to believe such services were included in the contract at the time the contract was formed. If
she was not aware of PA's obligation to perform such services for free when she purchased those
services (after the contract was formed), then she could not have relied upon such
representations when entering into the contract. Lloyd., 397 Md. at 143, 148, 916 A.2d at 277,
281 (requiring CPA plaintiff to prove that he relied upon misrepresentation). In fact, what Ms.
Yoos really seems upset about is not that PA asked her to pay for these services, but the quality
of PA's performance. Compl. ¶79 (complaining that she was dissatisfied with the amount of
work PA did for her payment–not that PA never should have offered her these services in the
Ms. Yoos has also failed to allege that she was harmed by PA's offer to lower the price of
her book. Compl. ¶80. Since she never paid PA to lower the price, she suffered no damage.
Accordingly, she failed to allege a necessary element to her claim. Lloyd, 397 Md. at 142-43,
916 A.2d at 277.
c. Kerri Levine Has Failed To Allege That She Was Deceived
As with Ms. Yoos, Kerri Levine has also failed to establish that she is entitled to
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Ann Crispin's complaints are contradicted by PA's contract. Compl. ¶24 (claiming PA's
reversion clause and advance are unreasonable) with Compl. Exs. 1-3 ¶¶8, 22 (fully disclosing
amount of author's advance ($1) and right to reversion).
restitution for the services that she purchased. If she honestly believed that PA was prohibited
from offering these services to her, then she waived any breach of contract claim by voluntarily
purchasing them; on the other hand, if she did not believe that PA was prohibited from offering
those services until some point after the contract was formed, then PA's use of the term
"traditional" publisher did not deceive her into entering that contract as a matter of law.
d. Plaintiffs Cannot Save Their Claims By Smearing PA
Plaintiffs try to cure the defects in their claims by citing to disparaging statements about
PA that were made by third parties. Compl. ¶¶23-35. These statements, however, are
completely immaterial. Many were made well outside the time frame alleged in this Complaint.
Compare Compl. ¶¶23, 29, 30 (identifying derogatory newspaper articles from 2004 to 2006)
with Compl. ¶104 (seeking restitution for all people who have "purchased [PA's] promotion[al]
services within the last three years"). Some are directly contradicted by PA's website.
Compare Compl. ¶¶23, 26-27 (complaining that (a) PA does little copy editing; (b) does not
make its books returnable; (c) uses print on demand technology; (d) has "relatively few of their
11,000 titles" stocked on "store shelves"; and (e) fails to distribute review copies) with Compl.,
Exs. 1-3 ¶¶8, 13 (making editing and distribution of review copies optional), Ex. A (disclosing
its use of print-on-demand technology, Ex. C (warning authors that PA's books are not
necessarily stocked on shelves), and Ex. D (noting that its books are "non-returnable"). Some
have absolutely nothing to do with the objections raised by Plaintiffs. Compl. ¶30 (third parties
accusing PA of selling books to which it has no rights). Other are just hopelessly confusing or
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hypothetical. Compl. ¶31 (quoting author as saying: "If they would just say, buy your books up
front and pay X amount and we'll give you X, Y, and Z, then that would be one thing" . . . but
they don't). These articles are simply incapable of supporting Plaintiffs' claims as a matter of
In fact they are so scandalous that they should be stricken from the Complaint so as not
to prejudice the fact finder and unnecessarily confuse the issues in the case. Fed. R. Civ. Proc.
12(f). Although motions to strike are "disfavored", the Courts are "granted considerable
discretion . . . especially if the allegations in the complaint will cause prejudice at a later date in
the litigation." Schultz v. Braga, 290 F. Supp. 2d 637, 654 (D. Md. 2003); Xerox Corp. v.
Imatek, Inc., 220 F.R.D. 244 at * 245 (D. Md. 2004) (noting that allegations must be both
immaterial and prejudicial). "Furthermore, the disfavored character of Rule 12(f) is relaxed in
the context of scandalous allegations, i.e. those that improperly cast a derogatory light on some
one." Mike's Train House, Inc. v. Broadway Limited Imports, LLC, 2011 WL 2415014 at * 2
(D. Md. 2011). Similarly, the Court should strike the promotional offers criticized by Plaintiffs
in the Complaint but which they did not purchase. Compl. ¶¶40-41, 47-53, 56-71. They add
nothing to Plaintiffs' claims.
C. The Court Should Dismiss Plaintiffs' Declaratory Judgment Action (Count I)
The Court should dismiss Plaintiffs' declaratory judgment claim (Count I) for the same
reasons that the CPA claim is defective. "The Declaratory Judgment Act [("DJA")] is designed
to afford parties, threatened with liability, but otherwise without a satisfactory remedy, an early
adjudication of an actual controversy." Collin County, Tx. v. Homeowners Association for
Values Essential to Neigborhoods, 915 F.2d 167, 170, 172 (5
th Cir. 1990); Stamicarbon, N.V. v.
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Chemical Constr. Corp., 355 F. Supp. 228, 232-33 (D. Del. 1973) ("a declaratory judgment
action . . . permits a party to determine his rights immediately instead of waiting to be sued").
"What is litigated in such a situation is 'the precise issue which could have been litigated in
federal court" had the declaratory defendant filed a coercive action rather than just threaten one.
Lowe v. Ingalls Shipbuilding, 723 F.2d 1173, 1179, 1180 (5
th Cir. 1173). "In other words, the
declaratory judgment procedure is an alterative to pursuit of . . . arguably illegal activity."
Hipage Co. v. Access2Go, Inc. 589 F. Supp. 2d 602, 614, 615 (E.D. Va. 2008); see also Benitec
Australia, LTD v. Nucleonics, Inc., 495 F.3d 1340, 1344 (Fed. Cir. 2007).
Since declaratory relief is "designed to declare rights so that parties can conform their
conduct to avoid future litigation", it "is unavailable in situations where claims and rights
asserted have fully matured, and the alleged wrongs have already been suffered." Gallant v.
Deutsche Bank Nat'l Trust, 766 F. Supp. 2d 714, 719 (W.D. Va. 2011); Tapia v. U.S. Bank,
N.A., 718 F. Supp. 2d 689, 695 (E.D. Va. 2010); Hipage Co., 589 F. Supp. 2d at 615. When a
claim has already accrued, the injured party should seek traditional forms of relief as an
alternative to a declaratory judgment. Johnson v. D&D Home Loans Corp, 2007 WL 4355278 at
*4 (E.D. Va. 2007) ("the remedy ought to be refused if another remedy would be more
appropriate or effective").
When it comes to declaratory relief, it is important to emphasize that it is only
procedural. "Congress enlarged the range of remedies available in the federal courts but did not
extend their jurisdiction." Lowe, 723 F.2d at 1179; see also Skelly Oil Co. v. Phillips Petroleum
Co., 339 U.S. 667, 671-72 (1950); Plimpton v. Cooper, 141 F. Supp. 2d 573, 576 (W.D.N.C.
2001). Thus, the Declaratory Judgment Act "does not create an independent cause of action, it
Case 1:12-cv-01696-MJG Document 10-1 Filed 07/18/12 Page 17 of 23
only provides a form of relief previously unavailable." E.g., Alvidrez v. Ridge, 311 F. Supp. 2d
1163, 1165 (D. Kan. 2004); see also Davis v. United States, 499 F.3d 590, 594 (6
th Cir. 2007);
Mead Corporation v. United States, 490 F. Supp. 405, 407 (D.D.C. 1980); Laws v. Priority
Trustee Services of N.C., LLC, 610 F. Supp. 2d 528, 532 (W.D.N.C. 2010). In order to acquire
jurisdiction under the declaratory judgment act, then, there must be "an underlying legal cause of
action that the declaratory defendant could have brought or threatened to bring, if not for the fact
that the declaratory plaintiff has preempted it" by bringing his own action. E.g. Benitec
Australia, LTD, 495 F.3d at 1344; Chevron Corp. v. Naranjo, 667 F.3d 232, 244 (2d Cir. 2012).
Thus, a declaratory judgment action is "barred to the same extent that the claim for substantive
relief on which it is based would be barred." International Ass'n of Machinists & Aerospace
Workers v. Tennessee Valley Auth., 108 F. 3d 658, 667-68 (6
th Cir. 1997).
1. Plaintiffs Cannot Save their Defective Consumer Protect Act Claim by
Bootstrapping It To A Claim for Declaratory Judgment
The Court should dismiss Plaintiffs' request for declaratory relief because their
underlying substantive claim is fatally defective. Plaintiffs' declaratory judgment action is based
exclusively on alleged violations of the Consumer Protection Act. Specifically, Plaintiffs seek
"a declaratory judgment that defendant's publishing contracts violate the Maryland Consumer
Protection Act". Compl. ¶113. Since Plaintiffs cannot, as a matter of law, prosecute a coercive
claim for relief under the CPA, see supra Part II.B, neither can they seek declaratory relief under
that statute. Chevron Corp., 667 F.3d at, 244; International Ass'n of Machinists & Aerospace
Workers, 108 F. 3d at 667-68. The Declaratory Judgment Act simply does not provide them
with an independent cause of action. Davis, 499 F.3d at 594.
Case 1:12-cv-01696-MJG Document 10-1 Filed 07/18/12 Page 18 of 23
2. It Would Be Inappropriate for the Court to Declare Rights That Are Fully
Matured When Alternative Remedies Are Available
Even if there were an independent basis to exercise jurisdiction over Plaintiffs'
declaratory judgment action, the claim would still be defective because the underlying purpose
of the DJA is not served. Plaintiffs are not seeking to test claims threatened by PA. Lowe, 723
F.2d at 1179, 1180. Nor are they seeking to clarify whether their own conduct is legal. Hipage
Co., 589 F. Supp. 2d at 614, 615. Instead, they have articulated claims for damages against PA
and asked for rescission of their contracts. In other words, they are simply prosecuting their own
coercive, fully matured claims for deception under the CPA. This is an inappropriate ground for
declaratory relief. Tapia, 718 F. Supp. 2d at 695. In fact, declaratory relief is completely
unnecessary. Plaintiffs could "more effective[ly] resolve all of the issues identified in their
declaratory judgment count using traditional remedies like a damage action. Eaton Vance Mgt.
v. Forstmannleff Assocs, LLC, 2006 WL 2331009 2331009 at *3 (S.D.N.Y. 2006); see also
Johnson, 2007 WL 4355278 at *4.
3. Plaintiffs Should Not Be Permitted to Use the Declaratory Judgment Act as a
Device To Avoid Analysis Under The Class Action Predominance Test
Plaintiffs have certainly manufactured a declaratory judgment claim in order to obtain a
procedural advantage when they seek class certification. According to class action Rule 23(b),
Plaintiffs must show that issues common to the class predominate over individual issues when
money damages is the primary relief requested; that requirement is relaxed where the relief
sought is predominately declaratory. Compare Fed. R. Civ. Proc. 23(b)(2) with id. 23(b)(3);
Thorn v. Jefferson-Pilot Life Ins., 445 F.3d 311, 329-30 (4
th Cir. 2006).
Here, Plaintiffs cannot establish that issues common to the class predominate over
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individual issues. On the one hand, there are some similarities between Plaintiffs' claims.
Generally speaking, Plaintiffs allege that PA was precluded from charging certain fees to them
because PA held itself out as a "traditional publisher". Compare Compl. ¶16 (alleging that
traditional publishers do not "take money from the author"). However, any similarities between
these claims are far outweighed by the differences.
For example, Both Ms. Yoos and Ms. Levine complain about PA's offer to reduce the
price of their respective books for a fee but Mr. McCall does not. Compare Compl. ¶80 with
Compl. ¶¶87-95, and Compl. ¶98. Furthermore, Ms. Levine and Ms. Yoos relied on PA's offer
to reduce the prices of their respective books differently. Ms. Yoos objected to paying any fee
and Ms. Levine voluntarily paid it. See supra Parts II.B.2.b & II.B.2.c. The factual differences
between these two claims is further evidenced by the communication history between PA and
these two authors, which are significantly different. Compare Compl. ¶¶80-84 with id. ¶¶98, 99-
101. Other aspects of their claims are also factually and legally distinguishable. Compare.
Compl.¶¶ (Ms. Yoos complaining about promotional packages that she purchased but not
editing), and id. ¶¶87-94 (Mr. McCall complaining that PA did not sufficiently edit or promote
his book but admitting that he purchased no promotional or editing packages from PA), with id.
¶¶ (Ms. Levine complaining about editing and promotional packages that she purchased).
Since questions of law or fact common to the class do not predominate over Plaintiffs'
individualized claims, they have a strong motive to manufacture a declaratory judgment claim.
That way, they can preserve jurisdiction over this case under the less demanding rules set forth
in Rule 23(b)(2). However, this type of procedural fencing is not acceptable. Eaton Vance Mgt.,
2006 WL 2331009 at *3. This conclusion is bolstered by the fact that Plaintiffs would not bother
Case 1:12-cv-01696-MJG Document 10-1 Filed 07/18/12 Page 20 of 23
In any event, class certification is an exercise in futility because reliance is an issue
raised by Plaintiffs' CPA claim. E.g. Broussard, 155 F.3d at 342.
to bring their claims "even in the absence of a possible monetary recovery". Edwards v.
Publishers Circulation Fulfillment, 268 F.R.D. 181, 189 (S.D.N.Y. 2010). If the purpose of a
suit is to recover money rather than change conduct, then the existence of declaratory relief in
the complaint is not sufficient to support class certification. Edwards, 268 F.R.D. at 189. Here,
declaratory relief by itself would provide Plaintiffs no incentive to prosecute their claims. The
conduct to which they object, i.e. PA's representation that it was a traditional publisher, has
already caused them all of the harm that they could conceivably incur. Thus, if the Court
ordered PA to stop using the phrase "traditional publisher", Plaintiffs would not benefit at all
unless it was coupled with another form of relief, e.g. restitution or rescission. The only people
who could conceivably benefit from that relief would be authors who are currently looking for a
new publisher. Since that class is not before the Court, any declaratory judgment regarding PA's
use of the phrase traditional publisher would be in the nature of an inappropriate advisory
D. Plaintiffs' Claim for Unjust Enrichment Is Defective
Plaintiffs have failed to state a claim for unjust enrichment. Compl., Count III. Unjust
enrichment and quantum meruit, both 'quasi-contract' causes of action, are remedies to provide
relief for a plaintiff when an enforceable contract does not exist but fairness dictates that the
plaintiff receive compensation for services provided." Dunnaville v. McCormick & Co., , 21 F.
Supp. 2d 527, 535 (D. Md. 1998)) (noting that quasi-contract claims include "quantum meruit
and unjust enrichment"). In order to establish the right to recovery for unjust enrichment,
Plaintiffs must show that they (i) conferred a benefit upon the defendant; (ii) the defendant was
Case 1:12-cv-01696-MJG Document 10-1 Filed 07/18/12 Page 21 of 23
aware of or appreciated the benefit; and (iii) the acceptance or retention by the defendant of the
benefit under the circumstances makes it inequitable for the defendant to retain the benefit
without payment for its value." Dunnaville, 21 F. Supp. 2d at 535. A "claim for unjust
enrichment may not be brought where the subject matter of the claim is covered by an express
contract between the parties." FLF, Inc. v. World Publications, Inc., 999 F. Supp. 640, 642 (D.
Here, Plaintiffs' unjust enrichment claims are defective because the subject matter is
covered by the publishing contracts between the parties. For example, the benefits that Plaintiffs
want returned include the literary rights that were explicitly transferred to PA in the contract.
Compare Compl. ¶129 with Compl., Exs. 1, 2, 3 (Darla Yoos, Edwin McCall and Kerri Levine
granting PA the rights respectively to Diary of a Demonologist, Dirty Potaotes and From
Catholic to Atheist by contract). In other words, Plaintiffs are essentially asking the Court to
rescind the contracts and return the parties to the position they were in prior to the formation of
their respective contracts. Ellerin v. Fairfax Savings Ass'n, 78 Md. App. 92, 109, 552 A.2d 918,
926 (1989) (rescission "is an equitable remedy designed to afford relief from contracts entered
into through mistake, fraud or duress") (emphasis added). Plaintiffs cannot obtain relief from
their contracts using a quasi-contract cause of action. FLF, Inc., 999 F. Supp. at 642.
Furthermore, the inequitable conduct identified by Plaintiffs is also covered by the
subject matter of the contracts. According to Plaintiffs, PA "created expectations" that it would
provide a certain level of service when it held itself out as a "traditional publisher" but "then
failed to provide" those services. Compl. ¶¶128-29 ("PA failed to provide the minimal services
that a traditional publisher would provide"). The resolution of this issue is, of course, controlled
Case 1:12-cv-01696-MJG Document 10-1 Filed 07/18/12 Page 22 of 23
by the parties' contracts because that document best defines the parties' expectations. Compl.,
Exs. 1-3 (describing conditions upon which Plaintiffs would transfer publishing rights and PA
would publish work). Since the Court cannot resolve Plaintiffs' claims without fully immersing
itself in an interpretation of the parties' contracts, it would be inappropriate to proceed under a
For the foregoing reasons, Plaintiffs' claims should be dismissed with prejudice and the
allegations in paragraphs 23-35, 40-41, 47-53, and 56-71 should be stricken.
Victor E. Cretella III