Tuesday, August 7, 2012

Publish America class action suit

The Publish America class-action lawsuit.
Plaintiffs response to PA's motion to dismiss.
Plaintiffs are inexperienced authors duped by defendant Publish America's bait-andswitch
scam that purports to offer traditional, royalty-paying book-publishing services but
instead — after authors assign their publishing rights to defendant — requires them to purchase
publishing services. Plaintiffs assert claims for declaratory relief, unjust enrichment and
violation of Maryland's Consumer Protection Act, which defendant now seeks to dismiss.
Defendant's motion to dismiss presents five principal questions:
1) Do inexperienced authors have standing as consumers to sue their
publisher under the Maryland Consumer Protection Act (MCPA) even if
they theoretically could earn royalties on their book sales?
The Maryland Legislature directs the Court to consider Federal Trade Commission (FTC)
decisions. The FTC uniformly treats fraudulent get-rich-quick and home-business schemes as
consumer fraud, and courts in other jurisdictions have reached similar conclusions under
consumer-fraud laws that have standing requirements similar to Maryland's. The Court
therefore should find that plaintiffs are consumers for the purposes of the MCPA.
See infra at
2) Did Publish America mislead and injure plaintiffs?
Publish America represents itself to plaintiffs as a "traditional publisher" that markets its
books and pays royalties to its authors, rather than a "vanity" or "publish-on-demand" publisher
that charges authors for services and book copies. Relying on these misrepresentations, plaintiffs
granted Publish America publishing rights to their manuscripts for at least seven years. But only
then did plaintiffs learn that Publish America required them to pay for editing, marketing and
other "traditional publisher" services, that Publish America marketed plaintiffs' books primarily
to plaintiffs and their family and friends, and that Publish America required plaintiffs to pay
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hundreds of dollars to regain publishing rights to their manuscripts. Publish America also
misrepresented the quality and nature of the marketing and other services for which it required
payment from plaintiffs.
See infra at 16-24.
3) Should the Court strike as "scandalous" allegations in the class-action
complaint regarding third parties' experiences with Publish America that
mirror plaintiffs' own experiences?
For the purposes of a motion to strike, the word "scandalous" refers to "any allegation
unnecessarily reflects on the moral character of an individual …." A court should not strike
allegations that are relevant to the action. Publish America seeks to strike from plaintiffs' classaction
complaint allegations showing that its misconduct is widespread and recurring with other
authors that, like plaintiffs, granted exclusive publishing rights to Publish America. The
allegations also do not disparage any individual associated with defendant and largely reproduce
commentary that is easily available on the internet from major publications like the
and the LA Times. The complaint properly contains these allegations. See infra at 24-27.
4) Should the Court dismiss plaintiffs' declaratory-judgment claim simply
because it addresses the same core issue as their MCPA damages claim?
Recognizing the potential procedural advantages of a declaratory action, the Federal
Declaratory Judgment Act and Rule 57 of the Federal Rules of Civil Procedure both provide that
plaintiffs may pursue a declaration of their rights along with other, overlapping remedies. The
Court therefore should not dismiss plaintiffs' declaratory-judgment claim.
See infra at 27-30.
5) When plaintiffs have alleged fraud in forming and maintaining their
contract, should this Court dismiss their claims for unjust enrichment?
Even when a contract exists, Maryland allows parties to assert unjust-enrichment claims
if they properly pled fraud in forming or maintaining the contract. Regardless of plaintiffs'
standing under the MCPA, plaintiffs have alleged facts sufficient to support fraud in forming
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their contract with Publish America. The Court therefore should allow plaintiffs to pursue their
unjust-enrichment claim for lost publication rights and lost payments made to defendant under
the contract.
See infra at 30-32.
Plaintiffs are inexperienced authors who are suing their publisher, Publish America, on
behalf of themselves and a class of similarly situated authors. ¶ 1.
1 They seek a declaratory
judgment that Publish America misrepresents the nature of its publishing businesses and promotes
fraudulent services in violation of the Maryland Consumer Protection Act, restoration of
their publishing rights, return of all fees for services paid to defendant, and punitive damages.
¶¶ 1, 112-29.
A. Defendant Portrays Itself as a Traditional Publisher That Makes its Money Selling
Books, But It Preys on its Own Authors with Hidden Fees and Fraudulent
Defendant Publish America LLLP is a book publisher that portrays itself as "a traditional,
royalty paying publisher," but unlike traditional publishers, which profit from the sale of books,
defendant profits from its own clients,
i.e., the authors who submit works for publication by
defendant. Defendant lures these authors in by promising to publish their book at no cost, and it
makes false and misleading representations that it will promote their books and support the
authors' efforts to sell their own books. ¶ 2. Once the authors sign the contract and grant
defendant exclusive rights to their books for seven to ten years, Publish America does nothing
constructive to promote their books but instead offers various promotion packages on a fee-forservice
e.g., sending the book to a book fair, sending it to the National Library of Scotland
for inclusion in their collection, sending it to best-selling author J.K. Rowling for review, and the
"¶ __" refers to paragraphs of the Class Action Complaint, Dkt. No. 1, unless otherwise
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like. These services, which are either misrepresented or never carried out, are not reasonably
designed to promote class members' books. Defendant provides poor or non-existent editing
services and it routinely overprices the books it publishes. This is no accident. Publish America
charges a substantial fee to correct errors in published manuscripts or lower the price of its
clients' books to a competitive rate. ¶¶ 5, 88. Each of the plaintiffs has had a similar experience
with defendant.
B. Plaintiff Darla Yoos Relied on Publish America Because it was a Local Company
and Described Itself as a Traditional Publisher, but Her Trust was Misplaced.
Darla Yoos signed up with defendant this year to publish her first book. She chose
Publish America because she wanted a local publisher and defendant purported to be a traditional
publisher. She expected Publish America to get her book into the bookstores, or at a minimum
improve the chances that a bookstore would stock it. She purchased many costly services from
defendant to promote the book, including:
Breaking News Publicity Package
$399, with tax and shipping
My Own Literary Agent
$99, with tax and shipping $109.93;
Kindle, Nook, Google publication
$149, with tax and shipping
1500 Bookstores Promotion
$149, with tax and shipping $164.93;
All Conventions Promotion
$149, with tax and shipping $164.93;
Hollywood Resources Promotion
$69, with tax and shipping
Author Efficiency Package
$59, with tax and shipping $67.53;
Screenplay Promotion
$89, with tax and shipping $99.33;
Softcover Option
$79, with tax and shipping $88.73; and
Big Cities Promotion
$29, with tax and shipping $35.73. [¶ 77.]
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Plaintiff objected to shipping-and-handling service charges, since these services did not involve
any shipping. Defendant did not respond to her objections, so she paid the fees to obtain the
Ms. Yoos realized too late she had been conned. It seemed odd to her that defendant
asked her to write her own synopsis for the back cover. The fact that defendant charged for so
many services also seemed inappropriate, but she was unfamiliar with the publishing world.
¶ 79.
Most aggravating was the pitiful press release she purchased for $400 as part of
defendant's "Breaking News Publicity Package." It took almost a month to arrive, and it was
almost verbatim what she had written for the back cover of her book.
Id. The rest of the release
was a plug for defendant's services, not for her book. She also had to instruct Publish America
where to send the release and she is reasonably certain that it was not sent to all of the
newspapers on her list. Her local newspaper, which takes a special interest in works by local
authors, would have contacted her if they had received the release.
The only other sign of the "Breaking News Publicity Package" was a single, generic
email on March 8. Ms. Yoos contacted the point of contact for the package by the only means
available (email) and received no responses. From her "literary agent," she received only a
single email on March 7, purportedly showing that her book was being presented to a publisher
in Athens, Greece, which did not seem reasonably likely to promote her book. She was provided
no contact number and received no other responses from her purported literary agent.
She received a single generic response on March 19 from the Hollywood Resources
Promotion and one from the Screenplay Promotion on March 21. Otherwise, she received no
updates or status confirmations from any other promotions.
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By late March, Ms. Yoos also realized that defendant had overpriced her book at $24.95,
which was too high to compete with other books by first-time or little-known authors. Defendant
informed her that it would charge her $399 to lower her book price to $10.95, and that it would
charge her twice to cover both the printed and ebook editions. Ms. Yoos objected to the charge.
She also disputed whether the promotions she purchased had been performed and asked to be
released from her contract so that she could pursue a genuine traditional publisher. ¶ 80.
Defendant chastised her:
No, what you say is false. All services that you paid for have
either been performed, or are being performed. You will not be
given any refund, at all. Please do not ask us again. [¶ 81.]
Finding that her relationship with Publish America was more harmful than good, Ms. Yoos asked
to be released from her contract. Even though she had already paid $1500 to defendant, Publish
America demanded further payment — with "shipping and handling," a total of $320.93 to
release from her contract. ¶¶ 82-85. Ms. Yoos seeks repayment of all sums she paid defendant
because defendant misrepresented itself and the services it provides. ¶ 86.
C. Edwin McCall Believed That Publish America Valued His Manuscript, But He Soon
Learned That Was a Pretext to Extort Money From Him.
Plaintiff Edwin McCall was initially thrilled when Publish America agreed to publish his
short-story collection. He believed defendant was a traditional publisher and that it was
competent, trustworthy, and would do its part to promote his book. ¶ 87. Defendant represented
that it would perform all the essentials: publishing, promoting, and marketing. His only
responsibility was to email family and friends about how to order his book, and he did so. ¶ 89.
But his excitement was short-lived. Mr. McCall first learned about defendant's hidden
fees after he signed the contract, when defendant sent him the proofs of his book. Defendant
instructed him to make sure that there were no errors and to return the corrections as soon as
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possible. He found multiple errors on 40 pages, and submitted them to defendant. Publish
America refused to correct the errors unless he paid a considerable fee:
If you insist on us making these changes anyway, we must charge
you $99 for rescheduling text department assignments. For that
fee we will be able to make up to 5 pages of changes. You have
submitted more than 5 pages. Please let us know if you wish to
have all of the pages considered, so we can let you know the cost.
Please let us know how you would like us to proceed. If you opt
for having the change implemented, we will call you for your
credit card information. [¶ 88.]
Naturally, Mr. McCall objected. He had pointed out these errors
before defendant published the
book. When defendant sent the proofs, he expected it to make the necessary changes so they
could publish a finished product. When defendant refused, Mr. McCall was forced to publish his
work with errors on over 40 pages. ¶ 87.
Mr. McCall had trusted that Publish America was a traditional publisher with an interest
in selling his books. Instead, he soon found that defendant continuously solicited him with
promotional offers that involved buying his own books. ¶ 91. Again Mr. McCall objected. He
told defendant he was displeased with all of the solicitations for services because Publish
America had represented itself as a traditional publisher and had led him to believe that the
services were included and that it paid its authors, not the other way around. ¶ 90. He had also
been told that he would have his own personal representative to answer any questions he might
have, which never happened. Nor did he receive any direct answers from defendant's
representative. For example, when he pointed out that defendant had listed his book in the
wrong category at its online bookstore, defendant never bothered to respond. ¶ 90.
Despite his best efforts, he could not market the book with so many errors. ¶¶ 90, 94.
Mr. McCall is deeply disappointed with the whole experience. He seeks the return of his
publication rights. ¶ 95.
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D. Plaintiff Kerri Levine Believed in Publish America Because It Appeared to Be a
Traditional Publisher That Valued its Authors, But She Also Was Mistaken.
Kerri Levine owns a small business with her husband in St. Louis, Missouri. In 2003 she
published her first book with a self-publisher called AuthorHouse. While AuthorHouse did
exactly what it said it would for exactly the price quoted, Ms. Levine wanted a different
approach for her second book. What struck her the most about Publish America was that it
seemed to be a small business, which she appreciated, and it seemed genuinely interested in
developing a partnership with the authors, working together for a common goal. At defendant's
website she found nothing but glowing accounts about defendant from other authors. ¶ 96.
She was thrilled – initially – when Publish America accepted her manuscript in April
2010. Her expectations were simple. It struck her that Publish America was taking a huge risk
with her work because the subject matter — atheism — is a controversial subject. Because she
paid no money up front, she expected that she would have to do a lot of work herself to get the
word out and arrange book signings and other types of events. But she was perfectly happy to do
the hard work to promote her book and build a mutually beneficial relationship.
See id.
But the charges rolled in. At first, when she learned there would be charges to correct
typographical errors, for example, she accepted it. She agreed to purchase four books to get
some of the errors corrected. She rationalized it because defendant had not charged her any costs
up front. As time went on, it became harder to justify why defendant sent her up to fifteen offers
a day on her business computer's e-mail with various promotional offers. But she did accept two
other offers in 2010. To lower the price of her book, which was overpriced at $24.99, she agreed
to buy five books to lower the price to $7.99. She also bought six books so that her book would
be promoted at the book fair in Germany.
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Her internet service was interrupted for a period of time, during which she did not track
the progress of her book. Then in January 2012, Ms. Levine learned from friends, who tried to
order her book that the price was still listed at $24.99. She immediately wrote to defendant to
demand that it correct the price, as promised. Defendant ignored her request and instead
suggested she pay another fee to "convert" her softcover book to a hardback. ¶ 98. When she
persisted, defendant blocked her emails.
Soon after that she learned on the internet that her experience was not unusual and there
were many unhappy Publish America authors. She asked defendant to release her from her
contract and to provide proof that her book was featured at the book fair in Germany or that the
publication errors in her book were corrected. Defendant responded with the subject line "Kerri
Levine: nonsense email ignored / cannot backup her own words," and claimed that the posts on
the internet about Publish America are "all lies and half-lies."
Id. Defendant referred her to its
website with 100% positive testimonials: "Over 4,000 now, unsolicited. That, of course, is the
real story."
Id. Defendant reports that she has sold just three books and refuses to release her
from her contract.
E. Plaintiffs' Experiences Are Typical: Many Other Publish America Authors Report
Similar Experiences.
The truth about Publish America's disreputable service is emerging, having been featured
recently in several publications including the
Washington Post, the LA Times, and Publishers
. ¶¶ 23, 26, 29-30, 47, 56-57. One industry reviewer recently described Publish America
as "at best, a company with a ridiculously inflated view of what they can do for the many
thousands of authors who publish with them every year, and at worst, PublishAmerica
prosecute[s] a deliberately skewed and misleading model of 'traditional publishing.'" ¶ 35. The
reviewer concludes that Publish America is not a traditional publisher even if it does not charge
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its authors an upfront fee, rather this is a deception "fueled by the ignorance and naivety of
authors combined with the greed and ignorance of a publisher."
Id. At the same time, defendant
is also not a vanity press or author-solutions service because it lacks transparency and is "not
even equipped with the paid-services better author solutions services offer, like a competitively
priced book; a prescribed and effective template of marketing aid for an author; a properly
developed network of both physical and online distribution and availability; a contract based on
non-exclusive terms; a strategy that has properly considered the advent of e-books; and most
importantly of all, a reputation that is remotely salvageable in the book publishing and retail
industries." ¶ 46.
"Plainly and simply; PublishAmerica [is] just a bad publisher." ¶ 35. Rather
than correcting its practices, Publish America continues to lure unsuspecting first-time authors
by the thousands.
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the complaint, not the
2 Rule 12(b)(6) sets a "low bar of stating a claim for relief."3 When a court rules on a
12(b)(6) motion to dismiss, all well-pleaded allegations are accepted as true, and all reasonable
inferences are drawn in favor of the plaintiff.
4 A plaintiff must allege "only enough facts to
state a claim to relief that is plausible on its face."
5 When the allegations in a complaint do not
"raise a claim of entitlement to relief," the court will dismiss the complaint.
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008).
Cleveland Constr., Inc. v. Fireman's Fund Ins. Co., 2009 U.S. Dist. LEXIS 104982,
at *5 (W.D.N.C. Nov. 5, 2009).
Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Id. at 558, 570.
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A. Publish America's Deception Violated the Maryland Consumer Protection Act
Because It Provides its Publishing Services to Consumers and Plaintiffs are
Consumers Who Were Deceived by Publish America.
Publish America seeks to deny plaintiffs protection under the MCPA, asserting that
plaintiffs cannot plead a cause of action because they are parties to a commercial contract to sell
books to the public. Publish America relies on
Morris v. Osmose Wood Preserving,7 which
rejected claims by consumers against the defendant plywood manufacturer because the
manufacturer did not produce the plywood for consumption by consumers and the false
statements were directed to the home builders, not the consumers. Defendant relies on
for the proposition that its duties under the MCPA are limited to its interactions with book
purchasers, not its authors. But unlike the plywood manufacturer, Publish America's clients are
not businesses; they are ordinary consumers. Plaintiffs allege that Publish America's business is
attracting inexperienced writers, like plaintiffs, and selling
them bogus promotional services or
them to buy their own books. For purposes of a motion to dismiss, Plaintiffs have
alleged sufficient facts to bring their claims within the MCPA.
1. Publish America mischaracterizes the allegations of the complaint:
plaintiffs' relationship with defendant is not a commercial venture exempt
under the MCPA.
Plaintiffs are individual consumers who contracted with Publish America to publish their
manuscripts. ¶¶ 8-10, 104. They are not commercial booksellers or even professional writers.
¶¶ 77, 87, 91. Publish America directs its website and advertising to consumers interested in
being published, not to consumers interested in purchasing books. ¶¶ 40, 53. Publish America is
not selective about whom it publishes; it accepts virtually any manuscript. ¶ 22. Indeed, a
Morris v. Osmose Wood Preserving, 667 A.2d 624, 635-36 (1995).
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"bestseller" at Publish America is a book that sells a couple hundred copies.
8 It has no viable
promotion and distribution scheme. ¶ 46. It is the authors themselves and their family and
friends who purchase the vast majority of Publish America books sold. ¶¶ 25, 30, 38, 90.
2. It is no defense that plaintiffs theoretically stood to profit from the publishing
The MCPA must "be construed and applied liberally to promote its purpose" and courts
are instructed to look to the Federal Trade Commission and the federal courts' interpretations of
"unfair or deceptive trade practices," under the Federal Trade Commission Act (FTCA) for
9 Like the MCPA, the FTCA regulates practices that may cause consumers injury.10
Plaintiffs are unaware of any federal court decision interpreting the FTCA – defendant certainly
cites none – that would support Publish America's contention that an author is not entitled to
protection against the deceptive practices of a company offering to provide publishing services
merely because the author may obtain royalties from the book's publication. In fact, courts
addressing similar facts under similar laws specifically reject defendant's arguments. The
Seventh Circuit noted in
Morrison v. YTB Int'l, Inc.,11 that "[m]any decisions hold that
purchasers of home-business packages are 'consumers' for the purpose of the Federal Trade
Commission Act."
See Susan Pagani, Paperback Writer, San Antonio Current (June 24, 2004),
(cited in Complaint).
MD. CODE ANN COM. LAW § 13-105. Section 13-105 references § 5(a)(1) of the FTCA,
which prohibits "unfair or deceptive acts or practices in or affecting commerce." 15 U.S.C.
§ 45(a)(1).
The FTCA's scope is limited to an "act or practice that causes or is likely to cause
substantial injury to consumers which is not reasonably avoidable by consumers themselves and
not outweighed by countervailing benefits to consumers or to competition." 15 U.S.C. § 45(n).
Morrison v. YTB Int'l, Inc., 649 F.3d 533, 538-39 (7th Cir. 2011) (collecting cases and
rejecting defendants' argument that, for the purposes of the Illinois Consumer Protection Act,
plaintiffs were not consumers because they "sought financial gain" under defendants' pyramid
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For example, in
FTC v. Febre,12 the Seventh Circuit affirmed an order granting
permanent injunctive relief under the FTCA against a corporation "engaged in deceptive
business practices by advertising, promoting, offering for sale, selling, or inducing consumers to
participate in work-at-home opportunities in which consumers would use the Ace programs to
earn money." In doing so, the
Febre court held that purchasers and participants in work-at-home
business opportunities were "consumers" for FTCA purposes, acknowledging that the FTCA's
very purpose was "to protect consumers from economic injuries."
13 Similarly, in FTC v.
Freecom Communications, Inc
.,14 the Tenth Circuit held that the FTC presented evidence that
defendants had violated the FTCA by promoting business opportunities to consumers using
atypical, false, and/or inapplicable success stories and testimonials to reflect the ordinary
experiences of satisfied consumers and providing fraudulent income projections to consumers in
various infomercials, print ads, and seminars.
Many district courts have enjoined businesses and individuals who likewise have
engaged in fraud in the sale or promotion of at-home business opportunities. For example, the
courts in
FTC v. Financial Resource Unlimited, Inc.16 and FTC v. Cruz,17 issued injunctions
against defendants under the FTCA to bar them from selling "work-at-home" business
FTC v. Febre, 128 F.3d 530, 532 (7th Cir. 1997).
Id. at 536.
FTC v. Freecom Comm'ns, Inc., 401 F.3d 1192, 1197 (10th Cir. 2005).
The FTC sued several corporations and individual defendants, and settled with all but one
defendant, who prevailed at trial and was awarded attorneys' fees. On appeal the FTC
challenged the award of attorneys' fees and prevailed. The appeals court specifically found that
the FTC had evidence that defendants violated the Federal Trade Commission Act by making
material misrepresentations likely to deceive ordinary consumers.
Id. at 1204.
FTC v. Financial Resource Unlimited, Inc., 2006 U.S. Dist. LEXIS 27630, at *5, *10
(N.D. Ill. Apr. 25, 2006).
FTC v. Cruz, 2010 U.S. Dist. LEXIS 4568, at *4 (D.P.R. Jan. 19, 2010).
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opportunities to consumer purchasers, which they promoted falsely. Similarly, in
FTC v.
Medical Billers Network, Inc
.,18 the court held that a permanent injunction under FTCA was
warranted against defendant who "made misrepresentations to consumers for years" with respect
to sales of "work-at-home medical billing opportunities." In
FTC v. Medicor, LLC,19 the court
enjoined defendants from selling an electronic-claims-processing package to customers who
wished to work from home part- or full-time by submitting medical bills from doctors to benefits
programs because they falsely represented consumers' potential income consumers and work
opportunities, and the company's refund policy. Finally, in
FTC v. Para-Link Int'l, 20 the court
enjoined defendants who lured potential purchasers into buying a work-at-home kit with
deceptive promises that defendants would train purchasers to become a paralegal and receive
case referrals from the defendants.
Federal appellate courts interpreting states' consumer-protection laws also conclude that
a consumer does not lose protection by entering into a service contract for purposes of financial
gain. Plaintiffs in
Morrison v. YTB Int'l, Inc.,21 alleged that defendants engaged in a pyramid
scheme that targeted consumers interested in working part-time or full-time in the travel
industry. Like Maryland, Illinois limits its consumer-protection law to consumer transactions.
FTC v. Medical Billers Network, Inc., 543 F. Supp. 2d 283, 323 (S.D.N.Y. 2008).
FTC v. Medicor, LLC, 217 F. Supp. 2d 1048, 1050-51 (C.D. Cal. 2002).
FTC v. Para-Link Int'l, 2001 U.S. Dist. LEXIS 17372, at *5-6, *19-20 (M.D. Fla. Feb. 28,
Morrison, 649 F.3d at 538-39. See also Morrison v. YTB Int'l, Inc., 641 F. Supp. 2d 768,
773 (S.D. Ill. 2009),
vacated, 649 F.3d 533 (7th Cir. 2011).
815 ILCS 505/1(e) ("[t]he term 'consumer' means any person who purchases or contracts
for the purchase of merchandise not for resale in the ordinary course of his trade or business but
for his use or that of a member of his household");
Durst v. Ill. Farmers Ins. Co., 2006 U.S. Dist.
LEXIS 2870 (N.D. Ill. Jan. 12, 2006) ("[a] plaintiff in a [Illinois Consumer] Fraud Act suit must
also be a consumer, as defined under the statute").
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Relying in part on FTC home-business-scam cases, the Seventh Circuit rejected defendants'
argument that because individual plaintiffs "sought financial gain" from their relationship with
defendant, they were businesses who lacked standing to bring a claim under the Illinois
Consumer Fraud Act.
So too in
Rice v. Snarlin, Inc.,24 where, much like Publish America's scam, the defendant
company offered advertising contracts to young models, falsely claiming that it would publish
their names, addresses, and phone numbers in a model directory that would be sent to 500
companies. The court ruled that the plaintiff mother, on behalf of her minor daughter, stated a
cause of action under the Illinois Consumer Fraud Statute for deception and that she fit within
the definition of a "consumer."
Hofstetter v. Fletcher,26 the Sixth Circuit rejected a similar argument under the Ohio
Consumer Sales Practices Act, which, like Maryland's act, applies only to transactions that are
primarily for personal, family or household use. Defendants argued that their activities, which
included encouraging creating and operating a home-based business, did not fall within the
definition of a "consumer transaction" because such activities did not involve the sale of goods
or services "'to an individual for purposes that are primarily personal, family, or household.'"
The court disagreed, finding "defendants' tax planning program was directed at reducing the
Morrison, 649 F.3d at 539. The court also noted that the Illinois Consumer Fraud Act
expressly bans pyramid schemes.
Id. at 538.
Rice v. Snarlin, Inc., 266 N.E.2d 183 (Ill. App. Ct. 1970).
Id. at 187.
Hofstetter v. Fletcher, 905 F.2d 897, 905 (6th Cir. 1988) (quoting OHIO REV. CODE ANN.
1345.01(A) (1987) (defining "consumer transaction" to mean a sale or other transfer involving a
good or service to "an individual for purposes that are primarily personal, family, or household,
or solicitation to supply any of these things").
Id. at 906.
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plaintiff's personal-income-tax liability. The creation and operation of a home-based business
was merely incidental to the overall goal of eliminating [plaintiff's] personal tax liability."
Like these defendants, Publish America directed its deceptive conduct at individuals
seeking personal fulfillment, not businesses. Plaintiffs' economic incentive — the outside
possibility of significant royalty payments from the sales of their books — is merely incidental to
the goal of seeing their works in print and available to friends, family and other readers.
In reply, Publish America may assert
Holland v. Psychological Assessment Resources,29
to argue that an author may never be a consumer for the purposes of the MCPA. But the
court never reached that question because the plaintiff in that case chose not to pursue the claim.
Even assuming the
Holland plaintiff would been barred, the case is distinguishable because he
had published a "groundbreaking" work that had been "used by over twenty million people and
translated into twenty-five languages,"
30 whereas here, plaintiffs and members of the proposed
class have published works that were purchased primarily by themselves, their family and
friends. ¶¶ 25, 30, 38, 90. These allegations support a MCPA consumer-deception claim.
B. Publish America Misled and Injured Plaintiffs.
To prevail on a MCPA claim, a private plaintiff must prove that defendant engaged in an
unfair and deceptive practice expressly prohibited by the CPA and that he or she sustained an
injury as a result.
31 For the purposes of a consumer-deception claim, "the meaning of any
statement or representation is determined not only by what is explicitly stated, but also by what
Holland v. Psychological Assessment Resources, 482 F. Supp. 2d 667, 682 (D. Md. 2007).
Id. at 668-69.
Citaramanis v. Hallowell, 613 A.2d 964, 967 (Md. 1992).
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is reasonably implied."
32 Defendant seeks to dismiss the MCPA claims based on a
misconception of plaintiffs' claim and an unreasonably narrow construction of its contract
provisions and the statements on its current website. Publish American's argument also fails
because it applies the wrong standard to consumer deception and because it fails to construe all
reasonable inferences in plaintiffs' favor.
1. Publish America deceived plaintiffs and the Class in forming their contracts
by claiming to be a traditional publisher that would publish them for free.
Plaintiffs claim that Publish America fraudulently induced them and members of the
proposed class to enter into a publishing contract with Publish America through misleading
representations on its website and other promotional materials. These materials falsely claim or
convey the false impression that the company will engage in reasonable marketing efforts and
provide reasonable support to its authors in their efforts to promote their works. Plaintiffs also
claim that Publish American misled them and class members because its website, promotional
materials and contract did not disclose to its authors that it would only promote their works on a
fee-for-service basis. ¶¶ 3, 8-11, 21, 41, 117, 119. This is not mere "puffery" - Publish America
misrepresents specific services it would provide plaintiffs and the scores of individuals
referenced in their complaint.
34 Publish America also deceives consumers by stripping all
negative reviews from its website and disparaging its critics. ¶ 34. For the purposes of a motion
Golt v. Phillips, 517 A.2d 328, 332 (Md. 1986).
Cf., Hartford Accident & Indem. Co. v. Scarlett Harbor Assocs., 674 A.2d 106, 118 (Md.
Ct. Spec. App. 1996) ("The Council alleged that the Purchase Agreements falsely stated that the
Condominium would conform to plans and specifications. We cannot say, as a matter of
undisputed, material fact, that the alleged misrepresentation does not have the capacity to
mislead consumers.").
Cf., McGraw v. Loyola Ford, Inc., 723 A.2d 502, 512 (Md. Ct. Spec. App. 1999) (finding
no deception because customers could not reasonably have relied on such vague and customary
sales talk as "the most outstanding value").
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dismiss, plaintiffs have satisfactorily alleged a "representation of any kind which has the
capacity, tendency, or effect of deceiving or misleading consumers[.]"
2. Defendant has failed to show that plaintiffs' claims of deception are
At this stage, plaintiffs need only allege facts that plausibly support their claim. The web
pages central to their claim do not render plaintiffs' claims implausible. Rather, they help to
demonstrate defendant's deception,
i.e., by the false or misleading statements that Publish
America does not want to take the authors' money,
36 that its contract does not charge publishing
37 that it is in no way a vanity press or subsidy publishing[] and has nothing in common with
38 that the defendant "knows the venues of how to inform the rest of the world," and that
once the author has completed his or her work, Publish America will "take it from there."
Publish America's statement that it offers "special post-publication promotion opportunities at a
fee" is also confusing and deceptive because it does not plainly state it provides no marketing at
all unless paid to do so. Defendant also represents that "[e]lectronic publishing rights are part of
every book's publishing rights" and that "Publish America has converted thousands of e-books
for Amazon's Kindle, Barnes and Noble's Nook and Google's e-book store," but it does not
acknowledge that this is a
free service available through these booksellers, but Publish America
charges its authors for it.
MD. CODE ANN., COM. LAW § 13-301 (2012).
Def.'s Ex. B.
Def.'s Ex. A (twice), Ex. B (twice).
Def.'s Ex. B.
Def.'s Ex. C.
Def.'s Ex. B.
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a. Mr. McCall makes a plausible claim he was deceived by defendant's
representations and reasonably expected defendant to correct the
errors he discovered in his manuscript before it was published.
Plaintiff McCall believed Publish America's representation that it was a traditional
publisher, that it was interested in selling his book and that it would do its part to promote it.
¶¶ 87, 91. He was misled in this belief because defendant published his manuscript with scores
of errors on over 40 pages, ¶ 88, and defendant failed to support his marketing efforts, especially
by refusing to correct the errors, ¶¶ 88-89, 91-93.
Defendant appears to argue that Mr. McCall should have realized from his contract that
Publish America was free to publish his work without proofing it. Defendant is wrong and its
reliance on
Call Carl, Inc. v. BP Oil Corp.41 is misplaced. That court held that plaintiffs could
not avoid the parol-evidence rule merely by claiming that defendants fraudulently induced them
to sign the contract.
42 Call Carl's reasoning does not apply here because the contract does not
refute Mr. McCall's expectations under the contract, expectations that Publish America itself
created and encouraged by misrepresenting itself as a traditional publisher that did not charge its
authors except for extraordinary services and by deleting negative comments from its website, so
that Mr. McCall (and others like him) was not warned of the possibility that Publish America
would publish an author's manuscript knowing that it contained multiple errors.
Paragraph 8 of the contract merely states that the "Author agrees to provide Publish
America a final version of the manuscript and that once it is in final form, no changes are to be
made except to correct Publish America's errors."
43 But this statement cannot be considered in
isolation. First, Publish America represented itself as a reputable
publisher — not a mere
Call Carl, Inc. v. BP Oil Corp., 554 F.2d 623 (4th Cir. 1977).
Id. at 630-31.
Compl., Ex. C, ¶ 8.
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photocopy shop. Mr. McCall relied on this representation and reasonably expected defendant to
share his desire to sell his book and to intend to publish his work reasonably free of errors — in
contrast to a photocopy or printing shop that raises no expectations of a shared interest in the
final product's content quality. The contract does not contradict these representations.
Second, 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-ondemand
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 himself to correct his manuscript and resubmit it for publication
without charge. Plaintiffs are entitled to that reasonable inference on this motion.
Defendant's reliance on the contract's marketing provision fares no better. The contract
provides that all marketing decisions are left to Publish America's discretion.
44 This, too, is misleading.
A consumer could reasonably assume that objective factors, like a product's marketability,
would determine how much marketing Publish America would do. The contract did not
notify Mr. McCall that Publish America would exercise its "discretion" under the contract only if
he paid more money. These allegations are sufficient at the pleading stage.
b. It is plausible that Ms. Yoos and Ms. Levine were deceived by
defendant's claim to be a traditional publisher but still pay for its
"special" marketing services.
Plaintiffs Yoos and Levine, like thousands of other aspiring authors who signed up with
Publish America, were deceived because they relied on its representation that it was a traditional
Id., Exs. A, B, and C, ¶ 8.
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publisher, when in fact the publishing relationship turned out to be a pretext to sell promotional
services. ¶¶ 7, 77, 96. Publish America asserts Ms. Yoos and Ms. Levine could not both be
deceived by its misrepresentations in forming the contract, which granted defendant exclusive
publishing rights to their books for at least seven years, and still have paid for its "special"
marketing services.
45 But this is a trial argument — defendant fails to demonstrate it is implausible
for plaintiffs to sign with defendant based on defendant's representations, and then end up
paying hidden fees when Publish America essentially held their books hostage. Defendant
owned the books' publication rights
and it appeared their books would never be marketed unless
they paid the fees. Only by defendant's perverse logic could such extorted payments be deemed
a "waiver."
For example, persuaded by Publish America's representations, Ms. Yoos assigned it the
publishing rights to her book. With exclusive publishing rights on her book locked up, Publish
America pitched marketing "services" to her, which she purchased. And with none of its own
resources invested in her book, Publish America also priced the book at $24.95, too high to
compete with other books by first-time or unknown authors. When Ms. Yoos asked defendant to
drop the price to make it more competitive, it told her she would have to pay $399 to lower the
price for printed editions and another $399 for the ebook edition. ¶¶ 77-80. Fed up, she asked
Publish America to release publishing rights to her book back to her — for which defendant
charged her another $320.93. ¶¶ 81-85. Ms. Yoos did not know when she signed her contract
assigning publishing rights to Publish America that it intentionally overpriced its books so that
authors like her would later have to pay it to lower the book price. Neither did Ms. Yoos know
beforehand that she would have to incur so many hidden costs that she would spend another
Def.'s Br. at 13-14.
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$320.93 for release from her contract. Her payment of these fees for purported marketing and
other services, while Publish America possessed exclusive publishing rights to her book, do not
show it is more plausible she accepted the fees were proper and thus "waived her objection" to
them rather than that she paid only under duress. These allegations are sufficient to withstand a
motion to dismiss.
Publish America's authorities do not demonstrate it is implausible for plaintiffs to have
paid fees that were unexpected when they first granted defendant exclusive publishing rights to
their books.
Lloyd v. GMC, merely holds that plaintiffs must prove reliance,47 which plaintiffs
do not dispute. Plaintiffs plead reliance: they selected defendant because it purported to be a
traditional publisher; they assigned exclusive publishing rights to defendant for seven years or
longer; they paid for the services because they had little choice and they thought Publish
America was helping them market the books. Defendant's only other authority,
Casualty Ins. Co. v. Ehrhardt
,48 recites an insurance-law principle that an insurance company
may waive its contractual rights (to reinstate coverage) if it acts inconsistently (by accepting
premium). Plaintiffs are unaware of any authority that would imply waiver as a matter of law to
consumers under the facts of this case.
3. These deceptions injured plaintiffs because plaintiffs granted exclusive
publishing rights to Publish America.
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. For example, if
Plaintiff Levine's circumstances are similar. ¶¶ 96-102. Plaintiffs respond separately that
Publish America deceived them by misrepresenting the marketing and other services they could
See infra at 24-24.
Lloyd v. GMC, 916 A.2d 257, 277 (Md. 2007).
Progressive Cas. Ins. Co. v. Ehrhardt, 518 A.2d 151, 157 (Md. Ct. Spec. App. 1986).
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their work was accepted and they were willing to pay a substantial fee, plaintiffs 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. ¶ 17. Less selective and cheaper
self-publishers also exist with varying options to market the finished product.
Id. Because
Publish America portrays itself as a traditional publisher deceived plaintiffs, they lost this opportunity,
thereby saddling them with a flawed and/or overpriced product. ¶¶ 2-3, 7, 24. Their only
remedy is to pay Publish America a steep price to correct the flaws (typographical only) or drop
the price. Publish America charges hundreds of dollars for these services. It offered, for
example, to correct just five of the 40 pages of errors in Mr. McCall's book for $99. ¶ 88.
Plaintiffs also 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. ¶ 52. Publish
America eliminates this option for authors when they sign the contract; they must pay defendant
a substantial fee — up to a couple hundred dollars for the privilege of taking part in this service,
which is free to others.
Id. These allegations satisfy the MCPA's injury requirement.49
Plaintiffs McCall and Levine also seek the return of their publication rights.
50 Defendant
claims that a reversion of rights is rescission, which is not allowed under the MCPA. But
defendant misreads its cases. In
Golt v. Phillips,51 the court held that plaintiff was entitled to
compensatory damages consisting of restitution of the rent that he paid for three months for an
uninhabitable apartment and consequential damages, such as the cost of moving from the
MD. CODE ANN., COM. LAW § 13-408 (2012).
Plaintiff Yoos paid Publish America to return her rights; she seeks to recover that payment
and all other payments she made for Publish America's fraudulent services.
See supra at 6.
Golt v. Phillips, 517 A.2d 328, 333 (Md. 1986).
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premises and the additional cost of substitute housing for the remainder of the term of the lease
he had entered with Phillips Brothers.
Golt makes clear, however, that compensation is not
limited to refunding the payment to defendant, but may also include other losses caused by the
fraud, which in this case includes reverting publication rights to their rightful owners.
4. After they had assigned publication rights to their books to Publish America,
plaintiffs were injured further because they paid Publish America for
services that it did not provide or falsely portrayed.
Plaintiffs also allege that Publish America sent them many false or misleading offers.
False claims include its offer to promote its authors' books at the Edinburgh book festival (for a
fee), when it was never signed up as a participant, or when it claimed to present its authors'
books to J.K. Rowling (for a fee), when it made no such arrangements with Ms. Rowling, who
publicly disavowed any connection with Publish America. Misleading claims include all offers
to promote its authors at any book fair, trade fair or in dealings with movie studios and the like,
because it lacks the reputation, skills and connections to provide effective marketing services.
¶¶ 56-71, 117-18, 120. These claims satisfy the requirement of alleging a "representation of any
kind which has the capacity, tendency, or effect of deceiving or misleading consumers[.]"
Plaintiff Yoos spent around $1500 and Plaintiff Levine also spent hundreds of dollars for
unfulfilled or worthless services. ¶¶ 77, 96. These allegations satisfy the injury requirement.
C. The Court Should Deny Publish America's Motion to Strike Because Publish
America Cannot Demonstrate Harm From the Articles and Blogs Cited in the
Id. at 334. Defendant's other citations stand for the uncontroversial assertions that the
MCPA requires injury and reliance.
Luskin's, Inc. v. Consumer Prot. Div., 726 A.2d 702, 713
(Md. 1999) (noting that a material misrepresentation involves information that is important to a
consumer's choice of services or products);
McGraw v. Loyola Ford, Inc., 723 A.2d 502, 512
(Md. Ct. Spec. App. 1999) (misrepresentation must be the cause of any injury or loss).
MD. CODE ANN., COM. LAW § 13-301 (2012).
MD. CODE ANN., COM. LAW § 13-408 (2012).
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Complaint, When the Allegations Are Relevant to the Claims Asserted and Are
Neither Repulsive Nor Beneath the Court's Dignity.
Publish America moves to strike "disparaging statements about PA that were made by
third parties" and class allegations. These statements by various authors and industry spokespeople
are taken from articles and blog posts that describe Publish America's deceptive
practices. The motion should be denied.
The Court may strike from any pleading "redundant, immaterial, impertinent or scandallous
55 Striking a portion of a pleading is a drastic and generally disfavored remedy.56
None of Publish America's authorities justify striking the allegations in question.
Train House, Inc. v. Broadway Ltd. Imps
., LLC,57 Schultz v. Braga,58 and Xerox Corp. v.
ImaTek, Inc
.,59 did not strike allegations because they were scandalous. The allegations were
stricken instead because they were inadequately pled
60 or irrelevant.61
For the purposes of a motion to strike, the word "scandalous" refers to "any allegation
unnecessarily reflects on the moral character of an individual or states anything in repulsive
language that detracts from the dignity of the court."
62 "It is not enough that the matter offends
the sensibilities of the objecting party if the challenged allegations describe acts or events that
Fed. R. Civ. P. 12(f).
Waste Mgmt. Holdings v. Gilmore, 252 F.3d 316, 347 (4th Cir. 2001).
Mike's Train House, Inc. v. Broadway Ltd. Imps., LLC, 2011 U.S. Dist. LEXIS 62054 (D.
Md. June 10, 2011).
Schultz v. Braga, 290 F. Supp. 2d 637 (D. Md. 2003), aff'd, 455 F.3d 470 (4th Cir. 2006).
Xerox Corp. v. ImaTek, Inc., 220 F.R.D. 244, 245 (D. Md. 2004).
Mike's Train House, Inc., 2011 U.S. Dist. LEXIS 62054, at *10-11; Schultz, 290 F. Supp.
2d at 655.
Xerox Corp., 220 F.R.D. at 245.
Pigford v. Veneman, 215 F.R.D. 2, 4 (D.D.C. 2003) (emphasis added).
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are relevant to the action."
63 Motions to strike are not typically granted absent a showing of
significant prejudice.
64 Any doubt as to striking of matter in pleading should be resolved in
favor of the pleading.
As an example of scandalous allegations, the court in
Pigford v. Veneman struck
unfounded and irrelevant statements directed at opposing counsel.
66 As another example, Morse
v. Weingarten
67 struck references to a party's criminal conviction and his income level, which
had no bearing on the case and served no purpose except to inflame the reader. None of the
elements of a scandalous allegation are present here. Publish America does not claim that its
counsel or any of its principals have been personally disparaged or that the Complaint frames the
allegations at issue in repulsive language that detracts from the Court's dignity. And while it
disputes the allegations themselves,
i.e., its deceptive practices, it does not dispute the evidentiary
basis for these allegations,
i.e., the multiple articles and blogs describing these practices.
Publish America also fails to identify how it is prejudiced, and it is hard to see how it
would be — interested readers can easily find the articles and blogs quoted and summarized in
the complaint,
e.g., LA Times, Washington Post, and Frederick News-Post articles are found on
the internet and in libraries across the country. Publish America also acknowledges that these
allegations describe authors' experiences with defendant.
See Def.'s Br. at 16.
Gitto v. Worcester Telegram & Gazette Corp., 2005 U.S. Dist. LEXIS 7918, at *29 n.9
(D. Mass. May 2, 2005) (quoting 5C W
D. § 1382 (2004)).
McKinney v. Bayer Corp., 2010 U.S. Dist. LEXIS 69247 (N.D. Ohio July 12, 2010).
Lacey v. Braxton, 2011 U.S. Dist. LEXIS 84313, at *18-19 (W.D. Va. Aug. 1, 2011).
Pigford, 215 F.R.D. at 4.
Morse v. Weingarten, 777 F. Supp. 312, 319 (S.D.N.Y. 1991).
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Defendant's remaining objections are also easily resolved. It complains that some of the
articles were written before plaintiffs' claims arose. But allegations of past and recurring
conduct are relevant to establish Publish America's intent to deceive.
68 The experiences of the
authors described in the articles and blogs about Publish America are strikingly similar to the
plaintiffs' experiences, which thus are clearly relevant to establish class allegations. ¶ 106.
Defendant also seeks to strike class allegations and narrow them to the precise conduct
directed at the named plaintiffs. But the scope of the proposed class and the adequacy of the
named plaintiffs to represent the class are questions "better left for the class certification
69 Defendant's attempt to refute the allegations by referring to statements on its website is
misplaced. Allegations in a complaint cannot be stricken simply because a defendant challenges
their factual basis.
D. Plaintiffs May Pursue a Declaration of Their Rights Along with Other, Overlapping
Publish America asks the Court to dismiss plaintiffs' declaratory judgment claim on the
same grounds that it moved to dismiss the MCPA claim.
71 Because plaintiffs have established
that they are consumers for the purpose of the MCPA and have adequately pled the elements of a
MCPA claim, the request should be rejected.
See supra at 11-24.
See SEC v. Treadway, 2011 U.S. Dist. LEXIS 73950, at *6-9 (S.D.N.Y. June 29, 2011);
Tierco Md., Inc. v. Williams
, 849 A.2d 504 (Md. 2004) (punitive damages based on deceit
require proof that the defendant knew that its representations were false).
Lantz v. Am. Honda Motor Co., 2008 U.S. Dist. LEXIS 3556, at *10 (N.D. Ill. Jan. 17,
Colodny v. Iverson, Yoakum, Papiano & Hatch, 838 F. Supp. 572, 575 (M.D. Fla. 1993).
Def.'s Br. at 16-18.
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Defendant next argues that the Court should strike the claim because plaintiffs do not
seek to clarify whether their conduct is legal. But declaratory judgments serve many purposes.
Other purposes relevant to this lawsuit are the "judicial efficiency by avoiding multiple
proceedings" and the "alternative to injunctive relief with a lesser showing than is required to
obtain an injunction."
73 The Declaratory Judgment Act does not impose a higher threshold for
justiciability than the basic Article III requirement that federal courts shall only decide cases or
controversies: (i) an injury in fact; (ii) a causal connection between the injury and the conduct
complained of; and (iii) the likelihood that a favorable decision will redress the injury.
Defendant does not dispute justiciability.
Defendant's other arguments fare no better. Publish America asks the Court to dismiss
the claim because it asks the Court to resolve the same issues identified in their MCPA damages
75 Defendant's argument is rebutted by the very text of the Federal Declaratory Judgment
Act, which provides: "upon filing of appropriate pleading, [federal courts ] may declare the
rights and other legal relations of any interested party seeking such declaration,
whether or not
further relief is or could be sought
." 76 Likewise, Rule 57 of the Federal Rules of Civil
Procedure, which governs declaratory actions, provides: "The existence of another adequate
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 138 (2007).
Def.'s Br. at 19.
28 U.S.C. § 2201 (emphasis added).
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does not preclude a declaratory judgment that is otherwise appropriate."77 Publish
America's authority does not suggest otherwise.
The decision in
Gallant v. Deutsche Bank National Trust Co.78 turned not on the
availability of other claims — indeed the court found that she had no cognizable claims against
the bank — but rather on redressability. Since the house had already been foreclosed, the court
dismissed the declaratory judgment claim seeking to declare the sale void.
79 Tapia v. United
States Bank, N.A
.,80 involved the same circumstances and the court also dismissed the declaratory-
judgment claim because the house had already been foreclosed and a declaration invaliddating
the foreclosure would not have helped plaintiff, who had no legal standing to recover
against the bank for the foreclosure. The court in
Hipage Co. v. Access2Go, Inc.,81 dismissed
plaintiff's action to declare its rights under a contract when he had already been sued in another
forum for breach of contract. In such cases, while the court technically could have heard the
case, plaintiff was plainly forum shopping and allowing the claim to go forward could have led
to inconsistent results. In
Johnson v. D&D Home Loans Corp.,82 defendants did not dispute the
availability of declaratory relief as a possible remedy but objected to the stand-alone declaratoryjudgment
claim when plaintiffs had already requested declaratory relief in several of its other
claims and the court granted the request. And defendant miscites
Eaton Vance Mgmt. v.
Fed. R. Civ. P. 57 (emphasis added). See also Advisory Committee Note to 1937
Adoption to Fed. R. Civ. P. 57 (the fact that another remedy would be equally effective affords
no ground for declining declaratory relief).
Gallant v. Deutsche Bank Nat'l Trust Co., 766 F. Supp. 2d 714 (W.D. Va. 2011).
Id. at 719.
Tapia v. United States Bank, N.A., 718 F. Supp. 2d 689, 695 (E.D. Va. 2010).
Hipage Co. v. Access2Go, Inc., 589 F. Supp. 2d 602, 606, 616 (E.D. Va. 2008).
Johnson v. D&D Home Loans Corp., 2007 U.S. Dist. LEXIS 90140, at *11 (E.D. Va. Dec.
6, 2007),
aff'd, 559 F.3d 238 (4th Cir. 2009).
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ForstmannLeff Assocs
., LLC,83 which does not contain the quotation defendant ascribes to it
(Def.'s Br. at 19). Nor does it support defendant's argument. The court found the plaintiff, who
was not a party to the contract, had no standing to seek a declaration of contractual rights.
Finally, Publish America is incorrect that the class-action procedure forecloses
declaratory judgment. This is specifically contemplated by Rule 23(b)(2) of the Federal Rules of
Procedure, which addresses class actions that primarily seek injunctive or declaratory relief. If
plaintiffs proceed under that section, the notice requirements are relaxed and plaintiffs do not
need to meet Rule 23(b)(3)'s predominance requirements. Regardless, Publish America's
predominance challenge is premature, when there has been no discovery and there is no pending
class-certification motion.
85 Plaintiffs will not indulge defendant with a response to its senseless
projections of plaintiffs' alleged motives and litigation strategy.
E. Plaintiffs Have Properly Pled Their Unjust-Enrichment Claim Because They Allege
Fraud in the Formation and Maintenance of Their Contract.
The parties agree that the elements of an unjust-enrichment claim are (i) a benefit
conferred upon the defendant by the plaintiff; (ii) defendant's knowledge of the benefit
conferred; and (iii) circumstances that make it inequitable for the defendant to retain the
Eaton Vance Mgmt. v. ForstmannLeff Assocs., LLC, 2006 U.S. Dist. LEXIS 55741, at *18-
19 (S.D.N.Y. Aug. 11, 2006).
Id., 2006 U.S. Dist. LEXIS 55741, at *18-19.
See, e.g., Landsman & Funk PC v. Skinder-Strauss Assocs., 640 F.3d 72, 93 (3d Cir. 2011)
(holding that a district court's ruling on class certification on a motion to dismiss was premature,
noting that, "[p]articularly when a court considers predominance, it might have to venture into
the territory of the claim's merits and evaluate the nature of the evidence. In most cases, some
level of discovery is essential to such an evaluation"),
vacated, en banc review granted, 650 F.3d
311 (3d Cir. 2011),
order granting en banc reargument vacated, 2012 U.S. App. LEXIS 11946
(3d Cir. Apr. 17, 2012).
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86 Plaintiffs allege that Publish America obtained exclusive publishing rights to their
works and fees for bogus services, and that it has acknowledged receipt of both. ¶¶ 126-27.
Because Publish America represented itself as a traditional publisher and then failed to provide
even the minimum services of a traditional publisher, allowing it to retain the publication rights
to plaintiffs' works for seven years or more would be inequitable. For the same reason, it is
inequitable for defendant to retain payment for services related to producing and promoting of
plaintiffs' books. It is also inequitable for defendant to retain payment for services that it
misrepresented or failed to carry out. ¶ 129.
While it is generally true that a person making a claim based upon an express contract
may not also rely on the doctrine of unjust enrichment,
87 a party may proceed on a theory of
unjust enrichment where, as here, there is evidence of fraud or bad faith in forming the contract
that would otherwise govern or if rescission is otherwise warranted.
88 Plaintiffs allege just such
fraud or bad faith.
See, e.g., ¶¶ 117-19, 24-25. Publish America's reliance on FLF, Inc. v. World
89 is therefore misplaced. There, the plaintiff claimed that defendant (which had
acquired plaintiff's assets) was unjustly enriched because it failed to make severance payments
to plaintiff's employees. The court dismissed the claim because the contract under which the
defendant acquired the plaintiff's assets specifically provided that the defendant would not be
Hill v. Cross Country Settlements, LLC, 936 A.2d 343, 351 (Md. 2007); Def.'s Br. at 21-
Elderkin v. Carroll, 941 A.2d 1127, 1129 (Md. 2008).
Kwang Dong Pharm. Co. v. Myun Ki Han, 205 F. Supp. 2d 489, 497 (D. Md. 2002);
County Comm'rs of Caroline Cnty. v. J. Roland Dashiell & Sons, Inc
., 747 A.2d 600, 609 (Md.
FLF, Inc. v. World Publications, 999 F. Supp. 640 (D. Md. 1998).
Case 1:12-cv-01696-MJG Document 12 Filed 08/06/12 Page 38 of 40
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010313-11 542909 V1
liable for such payments and there were no allegations of fraud or bad faith in the formation of
the contract that would warrant rescission of that agreement.
By contrast, plaintiffs claim they were defrauded in forming the contract and ask the
Court to void it and Publish America's publishing rights to their manuscripts. ¶¶ 87, 91, 117-20,
128-29, Prayer for Relief ¶ C. These allegations state a cause of action for unjust enrichment
and, if proved, would provide the basis for repaying all the fees Publish America obtained from
Plaintiffs Yoos and Levine for the bogus services it charged to them under the publishing
agreement. Plaintiffs also have a claim for punitive damages based on their unjust-enrichment
Plaintiffs ask the Court to find that plaintiffs have standing as consumers and they have
adequately pled all of their claims. Should the Court find any of the pleadings deficient,
plaintiffs ask leave to amend. Plaintiffs also ask the Court to deny defendant's motion to strike
class allegations and third-party accounts of defendant's misconduct. These are supported
allegations, material to the claims alleged, not scandalous in nature or likely to harm defendant
unfairly with their inclusion. 

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