Tuesday, August 21, 2012

PA's Response to Plaintiffs' Response to PA's Motion to Dismiss the Class-Action Lawsuit

Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 1 of 22
The CPA prohibits sellers from "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).
A. Plaintiffs Have Failed To Allege That they Are Consumers
In their Opposition, Plaintiffs argue that have standing to bring a claim under the
Maryland Consumer Protection Act
1 ("CPA") because they acquired consumer services from
PA. Opp'n at 12-16. "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). Plaintiffs argue that they are "consumers" of PA's
publishing services because they published their book for personal and family purposes.
According to them, they sought "personal fulfillment" rather than "business" income. Opp'n to
16. Although they admit that they had an economic incentive for entering into the contract,
i.e. "the outside possibility of significant royalty payments", Plaintiffs argue that this commercial
purpose was "merely incidental" to their personal "goal of seeing their works in print and
available to friends, family and other readers." Id. Defendants imply that their secondary
commercial purpose should not be considered when determining whether they are consumers for
the purposes of the Maryland CPA. Id. at 15-16 (citing Hofstetter v. Fletcher 95 F.2d 897 (6
Cir. 1988)).
Plaintiffs reliance on Hofstetter is misplaced. In that case, the Sixth Circuit applied the
Ohio Consumer Sales Practices Act to a tax planner's ("Fletcher") advice.
Fletcher [told] potential investors [that they] could drastically
reduce and even eliminate their federal income tax liability by
purchasing a life insurance policy in conjunction with the
formation of a home-based business. Fletcher informed the
investors that they could write off almost all of their household
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 2 of 22
expenses and attribute them to deductible business expenses.
Fletcher also promised to assist the investors in the filing of their
annual income tax forms. In order to participate in this
tax/insurance program, the investor was required to purchase life
insurance policies from Fletcher by paying annual premiums equal
to one-half of the client's income tax for the previous year. The
client was also required to become involved in a home-based
business and to invest the equivalent of the other half of the
preceding year's tax payment in the home based business.
Hofstetter, 95 F.2d at 900.
In his defense, Fletcher argued that the Ohio Consumer Sales Practices Act did not apply
to the transaction because his "services were directed at plaintiff's home based business and thus
were not provided for [the plaintiff's] personal use." Hofstetter, 95 F.2d at 906 (defining
consumer transaction as "the sale of goods or services 'to an individual for purposes that are
primarily, personal, family, or household'") (emphasis added). The Court rejected that argument
because "the defendant's tax planning program was directed at reducing the plaintiff's personal
income tax liability. . . . The creation and operation of a home-based business was merely
incidental to the overall goal of eliminating her personal tax liability." Id. In fact, the defendant
did not sell a home-business opportunity at all. Instead, he only recommended that the customer
enter into a home-based business as part of his tax planning advice and sale of life insurance.
The customer had complete control over what type of home-business to enter and how to invest
in it. Id. (noting that life insurance premiums were automatically deducted from the plaintiff's
checking account every month but that the capital for the home-business remained in plaintiff's
account until invested by the customer). The tax planner defendant only used information
relating to the home business when calculating the customer's personal income tax deductions.
Since the home-business plan was only an undefined part of the tax planner's advice and was not
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 3 of 22
a product sold by the tax planner, the Court reasoned that it was outside the scope of the Ohio
consumer protection act, which covers only "sale[s] of goods and services".
Furthermore, the customer made it clear that she was complaining only about the faulty
tax planning advice and not any business planning advice. For example, the customer never
complained about the profitability of the business set up by her. Rather, she "alleged that she
had been promised zero tax liability and that she had been damaged by the fact that she was now
being assessed additional taxes along with . . . penalties and interest" in an amount exceeding
$70,000. Hofstetter, 95 F.2d at 901. Since the customer alleged harm only to her personal
income tax liability, the court reasoned that her claim concerned only consumer services, i.e.
personal income tax advice.
The holding in Hofstetter is inapplicable here because the commercial aspects of
Plaintiffs' contracts are central (and not incidental) to this case when the contract is viewed
objectively as it should. Dennis v. Fire & Police Employees' Retirement Sys., 390 Md. 639,
656-58, 890 A.2d 737, 747-48 (2006) (rejecting party's subjective interpretation of contract
when contract terms are clear and unambiguous). Unlike the customer in Hofstetter, PA did not
simply recommend that Plaintiffs participate in commercial activity. PA actually "sold"
commercial services to Plaintiffs; specifically PA agreed to sell Plaintiffs' books internationally
"as the market demands" and pay a portion of the proceeds from those sales to Plaintiffs as
royalties. Compl., Exs. 1-3 ¶¶1-3 (granting PA the right to sell their books in the United States,
Canada and "in all foreign countries"). Plaintiffs cannot defeat the conclusion that they acquired
commercial services by claiming that their subjective reason for entering into the contract was
"personal fulfillment". If a person could transform a commercial contract into a consumer one
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 4 of 22
by declaring that they were personally fulfilled by it, then every single contract could be
effectively brought under the umbrella of the CPA at the subjective whim of the buyer. The
CPA should not be manipulated so easily.
In any event, Plaintiffs have absolutely failed to plead that they had a subjective
noncommercial reason for entering into their publishing contracts with PA. See Opp'n at 12-16
(failing to cite a single paragraph from the Complaint for the proposition that they published
their books for "personal fulfillment" rather than commercial gain). Instead, the Complaint
exclusively criticizes PA's performance of the commercial aspects of their contracts. They gripe
about the sales opportunities they lost because of PA's inability to "promote" the book to the
"general public". Compl. ¶¶2, 3, 7, 25, 27, 117, 128. PA's deficient promotion allegedly
includes an inability to get Plaintiffs' books (1) stocked on bookstore shelves or (2) reviewed by
critics. Compl. ¶¶19, 30, 32. Plaintiffs also chastise PA for the "perfunctory press
announcements" issued by it to the "general public". Compl. ¶¶37, 38. They further express
frustration about their inability to schedule book signing events in bookstores. Compl. ¶¶26, 28,
37. All of these complaints concern marketing conduct that would improve the chances of
Plaintiffs' books being commercial successes. While Plaintiffs may obtain "personal
fulfillment" from a profitable book, that does not make them "consumers" of PA's commercial
publishing services for the purposes of the Maryland CPA.
Plaintiffs emphasized the commercial nature of their discontent by devoting over 15
pages of their Complaint to criticizing specific promotional programs offered by PA. See id. ¶39
(claiming PA "withhold[s] the services that any reputable publisher would do . . . if it was
genuinely interested in promoting book sales"); Compl. ¶¶40-45. In section III.C.2. of the
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 5 of 22
Complaint, they complain about services offered by PA that are not "reasonably designed to
promote" book sales. Compl. ¶¶46-55. In section III.C.3. of the Complaint, Plaintiffs complain
that PA "falsely represented" the promotional services that it provides. Compl. ¶¶56-71.
Clearly, promotion and marketing is the core of their complaint. Compl. ¶¶8-10 (emphasizing
only the "promotion[al]" aspects of Plaintiffs' contracts with PA when describing the terms
thereof). What Plaintiffs wanted was to make their books widely available so as to maximize
their income stream. Compl. ¶18 (implying that PA does not "Open doors for an aspiring writer,
hoping to be picked up by a mainstream publisher one day"); see also id. ¶80 (Ms. Yoos
admitting that she entered into publishing contract to "compete with other books by first-time or
little known authors"). This was not a consumer purpose under the CPA even if the chances of
commercial success were small.
Furthermore, each of the Plaintiffs individually admit that widespread promotion was an
integral facet of their relationship with PA. Compl. id. ¶93 (Mr. McCall alleging that purpose of
contract was to "promote his book" to the general public); id. ¶96 (Ms. Levine claiming she
worked hard to "promote" her book, including in Germany). Ms. Yoos, for example, exclusively
focuses her claims on the sufficiency of PA's promotional work. Compl. ¶77-80. If Ms. Yoos
truly only wanted to make her book available to friends and family (and did not care about
whether she profited from this venture), Opp'n at 16, it would have been unnecessary for her to
purchase what she calls "many . . . promot[ional]" services. Compl. ¶77; see also Opp'n at 4. In
order to make her book available to family or friends, all she had to do was sign the contract and
submit the manuscript. Once she did that, PA would (and actually did) make her book available
for purchase around the world–for free. Compl., Ex. 1 ¶¶1-2. Ms. Yoos does not deny that PA
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 6 of 22
fulfilled its obligation to make her book available and sell copies as the market demands. See
generally Compl. Instead, she complains because PA failed to conduct business activities that
would increase market demand for her book. Clearly, Plaintiffs' primary complaints are
commercial and not consumer in nature.
Implicitly recognizing that their claims are truly commercial in nature, Plaintiffs argue
that the Maryland CPA can cover some commercial transactions. Plaintiffs cite to cases decided
under the Federal Trade Commission Act ("FTCA") to support this argument. Opp'n at 12-16. .
In the cases cited by Plaintiffs, federal courts applied the FTCA to deceptive statements about
"work-at-home business opportunities". Id. Plaintiffs reason that the federal courts'
interpretation of the FTCA is applicable to this court's interpretation of the Maryland CPA
because both statutory schemes are similar. Opp'n at 12 (arguing that both the MCPA and the
FTCA regulate "practices that may cause consumers injury"). In fact, both statutes prohibit
"unfair or deceptive acts or practices". Compare Md. Code Ann., Comm. Law § Md. Ann. Code,
Comm. Law § 13-301(1) with 15 U.S.C. §45(a)(1). Furthermore, both are designed to protect
consumers. Compare Md. Code Ann., Comm. Law § 13-303 with infra n.3 Since "work-athome"
contractors are considered consumers under the FTCA even though they have a profit
motive for entering into their contracts, Plaintiffs conclude that they can be consumers under the
Maryland CPA despite their "pecuniary incentive", presumably because they wrote their books
at home. Opp'n at 12-16.
Plaintiffs' argument is fatally flawed. It assumes that courts are authorized to consider
the FTCA's definition of "consumer" when applying that same term under the Maryland CPA.
Plaintiffs, however are wrong. In fact, the Maryland CPA authorizes courts to give
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 7 of 22
consideration to one, and only one, term under the FTCA: "It is the intent of the General
Assembly that in construing the term 'unfair or deceptive trade practices', due consideration and
weight be given to the interpretations of § 5(a)(1) of the [FTC] Act by the [FTC] and the federal
courts." Md. Code. Ann., Comm. Law § 13-105 (emphasis added). By expressly authorizing
Courts to use one FTCA term when construing the Maryland CPA, i.e. "unfair and deceptive
trade practices", the General Assembly created the presumption that courts were not authorized
to use other FTCA definitions, e.g. the definition of consumer. Comptroller of the Treasury v.
Blanton, 390 Md. 528, 537, 890 A.2d 279, 285 (2006) ("Maryland has long accepted the
doctrine of expressio (or inclusio) unius est exclusio alterius, or the expression of one thing is the
exclusion of another").
The Maryland General Assembly's exclusion of the term "consumer" from section 13-
105 was no accident considering that the term is applied very broadly under the FTCA.
[The FTCA] did not define "consumer." That the term was
narrowly defined in Magnunson-Moss does not mean . . . that
Congress intended to import that definition into the FTCA, with its
different and broader legislative goals. When Congress wants to
limit consumer protection, it does so explicitly as it did in
Magnuson-Moss and in the Electronic Signature in Global and
National Commerce Act. There, Congress defined consumer as
'an individual who obtains, through a transaction, products or
services which are used primarily for personal, family, or
household purposes. It would not have been a difficult feat of
draftsmanship for Congress in subsection (n) to have restricted the
operation of the FTCA to those unfair practices that affect
individuals purchasing household goods for personal use. The text
and the legislative history of the 1994 Amendment to the FTCA
demonstrate that Congress' intent was to limit the Commission's
authority to proscribe unfair acts and practices not through a
restrictive definition of 'consumer,' but rather through
subsection(n)'s requirement that an unfair practice must cause
substantial harm that is not reasonably avoidable or outweighed by
countervailing benefits to consumers or competition.
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 8 of 22
Plaintiffs suggest that the FTCA applies only to consumer injury. Opp'n at 12 (citing to
15 U.S.C. § 45(n) for the proposition that the "FTCA's scope is limited to acts or practices 'that
are likely to cause substantial injury to consumers'"). This is not true; the FTCA has been
"repeatedly and historically applied . . . to situations not involving consumer". Penn-Plax, Inc. v.
L. Schultz, Inc., 988 F. Supp. 906, 911 n. 11 (D. Md. 1997); see also IFC Credit Corp., 543 F.
Supp.2d at 935 (noting that FTCA protects consumers as well as competitors); see infra n.4
(noting that reference to consumers in section 45(n) was added decades after FTCA was
enacted). In fact, the limitation to consumers in section 45(n) only applies to claims based upon
acts or practices that are unfair. With respect to deceptive practices, there is no consumer
requirement set forth on the face of §45(n). FTC v. Cantkier, 767 F. Supp. 2d 147 (D.D.C. 2011)
(noting that § 45(n) applied only "to unfairness cases" and not deception cases)
The limitation to consumers was not placed in the FTCA until 1994, well after the CPA
was enacted. FTC v. IFC Credit Corp., 543 F. Supp.2d 925, 937 (N.D. Ill. 2008). Accordingly,
the meaning of that term under federal law is not persuasive when interpreting the Maryland
CPA, which was enacted first. Wallace H. Cambell & Co. v. MCHR, 202 Md. App. 650, 33
A.2d 1042 (2011) ("[W]here the purpose and language of a federal statute are substantially the
same as that of a later state statute, interpretations of the federal statute are ordinarily
persuasive") (emphasis added).
FTC v. IFC Credit Corp., 543 F. Supp.2d 925, 937 (N.D. Ill. 2008) (referring to consumer in 15
U.S.C. § 45(n)
2). Since the definition of consumer under the FTCA is broader than the definition
of consumer under the CPA, and is not limited to sales of goods for personal, household or
family use, it would have been inappropriate for the General Assembly to incorporate the
FTCA's interpretation of that term in the CPA even if it could have.
3 Id., at 937 (N.D. Ill. 2008)
("[n]othing in the purpose or text of the [FTCA] supports the thesis that Congress intended that
only individuals purchasing goods or services normally used for personal or household purposes
were within [its] protective ambit") (emphasis in original). Otherwise, it would have rendered
the limitations of that term under the Maryland CPA nugatory.
This result is validated by the judicial precedent interpreting other states' consumer
protection laws. Although some other states apply their state consumer protection laws to
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 9 of 22
Morrison v. YTB Int'l, 649 F.3d 533, 538-39 (7th Cir. 2011) (applying Illinois Consumer
Fraud and Deceptive Business Practices Act to pyramid scheme even though some or all of the
victims "sought financial gain"); Kentucky v. North American Van Lines, Inc., 600 S.W. 2d at
459 (misrepresentations were allegedly made by a trucking company when it tried to obtain new
owner operators for a "business on wheels" program); Zorba Contractors, Inc v. Housing Auth.
Of Newark, 660 A.2d 550, 552 (N.J. Super. Ct. App. Div. 1995) (misrepresentations were made
during public housing authority's acquisition of roofing materials for three housing complexes).
commercial activity,
4 those states' laws were drafted broadly like FTCA. For example, the Court
of Appeals of Kentucky specifically rejected the argument that the Kentucky CPA was limited to
"merchandising of goods or services intended [solely] for personal, family or household use."
Id. at 462. In support of that position, it noted that there was no definition of consumer under the
Kentucky CPA and thus no statutory reason to limit the Kentucky CPA to acquisitions of goods
or services for personal, family or household use. Id. at 460, 61. This rationale, of course, could
easily be applied to the FTCA; the FTCA is also open to a broad interpretation since it also fails
to define "consumer". A broad interpretation is not appropriate in this case, which is based upon
a much more narrowly drafted CPA.
The term "consumer" is also more than capable of a broad definition that includes
commercial activity. Like the FTCA and Kentucky CPA, New Jersey's Consumer Fraud Act
does not expressly define "consumer". Zorba Contractors, Inc v. Housing Auth. Of Newark,
660 A.2d 550, 552 (N.J. Super. Ct. App. Div. 1995). Also like the FTCA and the Kentucky
CPA, New Jersey Courts interpret the term "consumer" very broadly: The "generally recognized
meaning [of the word consumer] is 'one who uses (economic) goods, and so diminishes or
destroys their utilities.'" Id. at 552. Since this term is not expressly limited to noncommercial
"depletion" of economic goods, it can include commercial consumption too. Although the broad
New Jersey definition may be appropriate under the FTCA and Kentucky CPA, both of which
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 10 of 22
fail to place any limitations on the term "consumer", it is inappropriate here considering that the
plain language of the Maryland CPA excludes commercial activity.
Furthermore, the FTCA cases cited by Plaintiffs support PA's position that the definition
of consumer in the FTCA is much broader than the definition of consumer in the Maryland CPA.
In fact, the definition of consumer under the FTCA is so broad that none of Plaintiffs' cases even
address whether the injured parties were consumers; they simply assumed that they were. FTC
v. Febre, 128 F.3d 530 (7
th Cir. 1997) (reviewing damages assessed against seller of "work-athome
opportunities"); FTC v. Medical Billers Network, Inc., 543 F. Supp. 2d 283 (S.D.N.Y.
2008) (determining whether misrepresentations were actionable); FTC v. Medicor, LLC, 217 F.
Supp. 2d 1048 (C.D. Cal. 2002) (determining whether misrepresentations were actionable); FTC
v. Para-Link Int'l, Inc., 2001 WL 1701537 (M.D.. Fla. 2001) (finding that seller of "work-athome
paralegal opportunities" made misrepresentations). In two of Plaintiffs' FTC cases, the
defendants did not even bother to contest liability, let alone that they were consumers. FTC v.
Cruz, 2008 WL 5277735 (D.P.R. 2008) (granting default judgment against seller of "work-athome
envelope stuffing opportunities"); FTC v. Financial Resources Unlimited, Inc., 2006 WL
1157612 (N.D. Ill. 2006) (seller of work-at-home opportunities consenting to judgment and to
contempt). In one other case, the defendant successfully defended liability without ever raising
whether the it was a consumer. FTC v. Freecom Communications, Inc., 401 F.3d 1192 (10
th Cir.
2005) (vacating attorneys' fees awarded to defendant). If none of these cases even addressed the
consumer issue, the standard for being a consumer under the FTCA must be extremely liberal or
even nonexistent. In any event, these cases barely pass as dicta considering that they do not
address the central issue in the case sub judice, i.e. the definition of consumer.
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 11 of 22
Morrison v. YTB Int'l, 649 F.3d 533 (7
th Cir. 2011) lends no support to Plaintiffs'
argument. That case applied the Illinois Consumer Fraud and Deceptive Business Practices Act
to victims of a pyramid scheme even though the victims had a profit motive. When rejecting the
argument that the victim's economic incentive placed them outside the scope of the consumer
protection act, the Seventh Circuit noted that pyramid schemes were specifically covered by the
Illinois consumer protection act. Ill. Comp. Stat. 505/2A(2)
. Thus, that court never even had to
determine whether the term "consumer" generally covered home business opportunities under
Illinois law because this specific "business opportunity" was explicitly covered by the act: If the
plaintiffs' profit motive "makes a person a 'business,' however, then the statutory ban on
pyramid schemes is a dead letter. The circumstances that define a venture as a pyramid scheme
also would define the participants as 'businesses,' which would put them outside the Act." Id. at
538. Although the Morrison also cited to the FTCA home-business opportunity cases in support
of the proposition that people with profit motives could be consumers under the Illinois
consumer protection act, it did so without any comparison of the two statutory schemes. Since
this analysis was completely superficial, it would be inappropriate for this Court to rely on
Morrison for the proposition that Maryland courts would also adopt FTCA cases when
construing the definition of "consumer" under the Maryland CPA.
B. Plaintiffs Failed to Allege That they Were Deceived
1. Mr. McCall's Subjective Interpretation of the Contract Is Unreasonable
Mr. McCall complains about typographical errors in his book. Compl. ¶¶87-89. These
mistakes were contained in the final manuscript that he submitted to PA after he signed the
contract. Mr. McCall discovered these mistakes after PA got the book ready for print by
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 12 of 22
converting the manuscript into page proofs. Opp'n at 20 (Mr. McCall discovered the errors . . .
when defendant sent him the proofs to review"). Since Mr. McCall agreed that his final
manuscript could not be changed after it was submitted, PA refused to make the changes
requested by Mr. MrCall in the page proofs.
Although he does not allege any harm from these mistakes (or even that this number of
errors is unusual in the publishing industry), Mr. McCall claims that PA's failure to correct the
mistakes was a breach. According to him, PA should have at least let him fix those
typographical errors because traditional publishers like PA are more than a "photocopy or
printing" shop. Opp'n at 20. Mr. McCall's expectations are entirely unreasonable. The contract
unambiguously states that no changes may be made after the final manuscript is submitted and
that is how it should be construed and enforced. Accordingly, PA's decision to enforce the plain
language in paragraph 8 of the contract should trump Mr. McCall's subjective interpretation,
which is based on terms that are not even in the contract. Otherwise his contract would not be
worth the paper on which it is written. Call Carl, Inc. v. BP Oil Corp., 554 F.2d 623, 631-32 (4
Cir. 1977)
Mr. McCall tries to confuse the issue by arguing that PA would not be harmed by giving
him an opportunity to edit his book.
This is not a case where an author discovered errors after
publication and the cost of withdrawing the books from the market
would be cost-prohibitive. Defendant's books do not even exist
until defendant processes an order from a bookseller. Further, Mr.
McCall discovered the errors before the book went 'into
print'–whatever that actually means for a print-on-demand
book–when defendant sent him the proofs to review. It is entirely
reasonable for Mr. McCall (and others like him) to expect
defendant to make the corrections for free, or at a very minimum
allow Mr. McCall to correct his manuscript and resubmit it for
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 13 of 22
publication without charge.
Opp'n at 20. This analysis, however, is the exact reason why the unambiguous terms of a
contract must control over one party's subjective interpretation thereof. Mr. McCall seems to
believe that the costs to edit his final manuscript would have been minimal and that he could
have spared PA the expense by doing the work himself. However, Mr. McCall's assumption is
contradicted by real life. PA does not in fact act like a photocopy shop. Instead, it spent
considerable time and resources converting (typesetting) Plaintiffs' final manuscript into page
proofs, which could then be manufactured and sold in book form; it did not want to incur
unnecessary expense repeating this formatting work. Ex. A. Nor did it have any reason to
believe that Mr. McCall (a) was qualified to format the revised version of the work himself; or
(b) even knew what the book publishing industries' formatting specifications were.
Here, however, there is no reason for this Court or a jury to weigh either party's
subjective expectations about the contract or what either party believes is fair. The contract
specifically states in unambiguous terms that no changes could be made after the final
manuscript was submitted. Mr. McCall's request to disregard this plain and unambiguous term
is just unreasonable. There is just no reason for the Court to go beyond the face of the contract
and consider either Mr. McCall's or PA's fairness evidence.
2. Ms. Yoos and Ms. Levine Have Failed to Plead that They Were Entitled to
Free Promotional Services
Ms. Yoos and Ms. Levine's fraud claim is also defective. According to them, PA's
"publishing contract and its representations on its website and other promotional materials
falsely claim or convey the false impression that defendant will engage in reasonable marketing
efforts and provide reasonable support to its authors in their efforts to promote their works."
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 14 of 22
Opp'n at 17 (quoting Compl. ¶117). This claim, however, is completely speculative. Nowhere
do Plaintiffs identify the particular promotional efforts that PA should have taken. The
posibilities are endless and could have included: (a) press releases; (b) newspaper or magazine
advertisements; (c) in-store product placement; (d) Google advertising; (e) publicity and
advertising through online social network websites like facebook; (f) book tours and/or book
signings; (g) sending advanced reader or review copies to critics. Yet plaintiffs make no effort
to identify with any factual specificity the types and extent of advertising that they believe would
have been reasonable under the circumstances. By simply stating that they expected
"reasonable" promotional efforts, without describing what efforts were required, Plaintiffs have
set forth their claims in a completely conclusory fashion; this is insufficient under rule 12(b)(6).
Flanagan v. Anne Arundel County, 593 F. Supp. 2d 803, 808 (D. Md. 2009).
The speculative nature of Plaintiffs' claims is illustrated by their haphazard pleadings.
For example, Plaintiffs identify a number of promotional activities offered by PA, some of which
they purchased. See Compl. ¶77 (Ms. Yoos identifying 10 promotional services bought by her);
see also id. ¶96. Yet Plaintiffs do not allege that PA should have performed any of these
particular services (or any other services) for free or why. Instead, they complain about the
quality of PA's performance and/or the utility of certain promotional offers. See Compl. ¶¶79-
80, 97-98 (alleging that some of PA's services are not reasonably designed to promote book
sales). Confusing the issue even more, Plaintiffs admit that PA did provide some free
promotional services. Compl. ¶¶37-38, 92 (admitting PA does press releases for its authors).
These allegations are just unrelated to their claim that PA should have provided reasonable
marketing services for free and do not provide the factual elaboration necessary to make that
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 15 of 22
For the same reason, Plaintiffs' claim that PA's books are overpriced is speculative.
They fail to identify any facts supporting such a claim, e.g. statistical information about book
prices, what factors a publisher should consider when setting book price, how much leeway a
publisher has when setting book prices, or even a reference to the prices of comparable books;
nor do they allege what the price of their book should have been or how they arrived at that
conclusion. Compl. ¶98 (alleging that Ms. Levine paid to reduce her book price to $7.99 but not
that PA was required to sell all of its books at that price). It is like Plaintiffs have no clue what
the industry standards are. Plaintiffs' failure to set forth sufficient facts to make their claim
plausible probably stems from the fact that the price of their books was well within industry
standards. Compare Compl ¶80 (admitting that her hardcover book was priced at $24.95) with
Exs. B to E (showing hardcover and softcover books priced similarly to hers). This was
explained to Ms. Yoos when she asked PA to reduce her book price. Compare Compl. ¶80 with
Ex. F (PA explaining that its price was proper under the market). In fact, PA does not keep its
book prices secret. Ex. G (PA website offering hardcover for sale at $24.95 before Ms. Yoos
signed her contract with PA).
claim plausible.
Plaintiffs fail to specify the "reasonable" promotional efforts that PA should have made
for free because they have no clue what, if anything, is customary for publishers like PA.
Plaintiffs could have identified marketing efforts made by other comparable publishers and
alleged that PA should have performed those services. But they do not do that. They do not
even identify any publishers who are comparable to PA. Compl. ¶¶4, 17 (identifying the "largest
publishers" like Random House and Penguin Group, as well as vanity presses like Vantage Press
and Dorrance, but failing to identify any publishers similar to PA). Not surprisingly then,
Plaintiffs only vaguely allude to the promotional work PA should have performed without any
detail: "Traditional publishers . . . come up with a marketing plan for the[ir] books." See Compl.
¶16. They make no effort to describe what those marketing plans should have included or how
PA failed to comply with those requirements. The speculative and conclusory way that Plaintiffs
alleged their claims–particularly when Plaintiffs have heightened pleading standards under Rule
9(b)–makes these claims farfetched.
5 Flanagan, 593 F. Supp. 2d at 808 ("[t]he plausibility
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 16 of 22
standard requires the complaint to 'amplify a claim with some factual allegations . . . . that will
'raise a right to relief above the speculative level'").
Instead of specifying the promotional work that PA should have done under the contract,
Plaintiffs identify the promotional work they could have done purchased for themselves if they
did not enter into their contracts with PA:
Had they not been deceived, plaintiffs and class members
could have explored better, alternative options to bring a finished
book of good quality to the reading public. . . . [P]laintiffs could
have gone with a reputable, established self-publisher, like
Vantage, that provides expert editing services (both style and
form) and high-quality promotion for a fee. Less selective and
cheaper self-publishers also exist with varying options to market
the finished product. . . .
Plaintiffs also [sic] have printed their works at a local
printer or book binder at little cost and without losing control over
the marketing of their book. Writers can also post and sell their
work as an electronic book (e.g. Kindle) on Amazon or at Barnes
and Nobel for free.
Opp'n at 23. This speculation about what services they could have purchased from vanity
publishers does nothing to cure Plaintiffs' failure to identify with particularity the promotional
efforts, if any, PA should have made as a traditional publisher.
Plaintiffs must have been reluctant to identify the promotional services that PA should
have performed for free because PA never promised them free promotional services. First,
nothing in the contract supports Plaintiffs' position. Compl., Exs. 1-3 ¶13 (granting PA absolute
discretion when it came to promotion). Second, PA's website does not create the inference that
PA would provide free promotional services to the general public simply because it was a
traditional publisher. Rather, PA represented that traditional publishing included "full
availability to all bookstores, through the best possible distribution channels (Ingram,
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 17 of 22
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." Mot. to Dismiss, Ex. A.
This definition mentioned nothing about marketing. The only promotion PA promised to make
on its website was "to the industry's wholesale and distribution channels for full availability
through all bookstores at home and abroad". Ex. B (fact 6). PA undeniably complied with this
obligation, making Plaintiffs books available in bookstores across the country. Furthermore, PA
explicitly notified authors that they were expected to do their own promotional work. Compl.
¶22. Accordingly, it was unreasonable for Plaintiffs to expect any particular promotional
services from PA for free.
Plaintiffs try to save their claims by alleging that PA never should have offered or sold
any services to her for a fee. Opp'n at 21 (claiming PA's relationship with plaintiffs was a
"pretext to sell promotional services"). According to Plaintiffs, they did not purchase those
services voluntarily but only did so under duress. Opp'n at 22. Since PA held Plaintiffs' book
rights for seven years, Plaintiffs argue that PA was holding their book "hostage", leaving them
with no choice but to pay PA's "extort[ionate]" promotional fees or watch their book languish on
the market without support. Opp'n at 21 ("Defendant owned the books' publication rights and it
appeared their books would never be marketed unless they paid the fees").
Plaintiffs, of course, had plenty of options to promote their book other than using PA's
services. They could have hired a publicist; they could have placed advertisements in
newspapers; they could have promoted their book on the internet. Nothing in the contract
prevented them from promoting their own work. In fact, PA specifically notified Plaintiffs on
the website that Plaintiffs were expected to promote their own works: "Does this mean that the
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 18 of 22
author must sit on his/her hands after signing the contract? Not exactly. We expect the author to
actively promote the book whenever and wherever possible." Compl. ¶22. Thus, when Ms. Yoos
and Ms. Levine decided to pay PA to promote their works, it was totally voluntary.
Furthermore, when Plaintiffs voluntarily purchased those services, it amounted to the
relinquishment of a known right. According to Plaintiffs, they formed the belief that PA was
prohibited from charging fees at the time the contract was entered. Opp'n at 17 (Plaintiffs
basing their claim on fraudulent inducement, which necessarily occurred before their contracts
were formed). Thus, when they purchased services from PA subsequently, they did it knowing
that PA's actions were inconsistent with their own construction of the contract. This is sufficient
to support Plaintiffs' waiver claim as a matter of law. Foundation Software Laboratories, Inc. v.
Digital Equip. Corp., 807 F. Supp. 1195 (D. Md. 1992) (plaintiffs' decision to renew contract
with defendant 5 months after defendant defined terms under original contract amounted to
waiver of plaintiffs' claims based upon an inconsistent interpretation of the contract).
Plaintiffs also weakly challenge the truthfulness of individual promotional offers sent by
PA. Opp'n at 24. This claim is primarily defective because Plaintiffs were not injured by most
of these alleged misrepresentations. Lloyd v. GM Corp., 397 Md. 108, 142-43, 916 A.2d 257,
277 (2007) ("a private party suing under the CPA must establish actual injury or loss" ). This
includes promotional packages that were allegedly offered to Plaintiffs but which they did not
purchase. Compl. ¶¶40-76. As for the promotional services purchased by Ms. Yoos, she does
not even bother to identify the substance of the alleged misrepresentations, let alone why they
were untruthful. This makes her claims fatally defective. Fed. R. Civ. Proc. 9(b); Grinage v.
Mylan Pharmaceuticals, Inc., 840 F. Supp. 2d 862, 872 (Rule 9(b) requires plaintiff to plead
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 19 of 22
Contrary to Plaintiffs' argument, Opp'n at 27, PA did not move to strike Plaintiffs' class
allegations. See Mot. to Dismiss at Conclusion (identifying paragraphs that it sought to strike).
time, place, and contents of false representations, as well as the identity of the person making the
misrepresentation and what he obtained thereby) (emphasis added).
In fact, the Court should even strike the allegations about any promotional packages that
were not purchased by Plaintiffs because they are irrelevant and prejudicial.
6 Opp'n at 25
(agreeing that "irrelevant" allegations may be stricken). It would not be fair to require PA to
defend fraud allegations that do not support Plaintiffs' claims. This is also true about the
negative media reports quoted in paragraphs 23 to 35 of the Complaint. Contrary to Plaintiffs
ipse dixit statements otherwise, Opp'n at 26-27, these allegations have nothing to do with their
own claims. See Mot to Dismiss at 15-16. For example, Plaintiffs quote a Washington Post
article, in which PA authors complained in 2005 about the fact that PA offered to sell them
copies of their own book at a discount. Compl. ¶26. Plaintiffs, however, do not base their own
claims on any offer by PA to sell them books. Nor could Plaintiffs complain about such offers
considering that their very own contracts contain a clause in which they acquired the right to
purchase books from PA at a discount. Compl., Exs. 1-3 ¶¶4.
C. Plaintiffs' Declaratory Judgment Claim Is Defective
Plaintiffs' declaratory judgment action must fall because the underlying CPA claim is
defective. In any event, the circumstances of this case do not support declaratory relief for the
reasons already explained in PA's original motion.
D. Plaintiffs' Unjust Enrichment Claim Is Defective
Plaintiffs unjust enrichment claim is defective because they have not adequately pled
Case 1:12-cv-01696-MJG Document 15 Filed 08/20/12 Page 20 of 22
fraud. Although unjust enrichment claims are generally barred where an express contract exists,
courts "may allow an unjust enrichment claim where there is a contract if there is evidence of
fraud or bad faith." Kwang Dong Pharmaceutical Co. v. Han, 205 F. Supp. 2d 489, 497 (D. Md.
2002). "However, this requires the plaintiff to plead fraud or bad faith in the formation of the
contract that would otherwise govern." Id. Here, Plaintiff has purported to plead only one claim
for fraud, i.e. violation of the Maryland CPA. Compl., Count I; see also Opp'n (identifying only
one claim for fraud). Since that claim fails, see supra, so too must the unjust enrichment claim.
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.
Respectfully Submitted,
Victor E. Cretella III
230 E. Patrick St.
Frederick, MD 21701
Bar No. 13459
Counsel for PublishAmerica

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