On November 24, 2024, the federal district court in New York granted preliminary approval to a $20,990,000 settlement of claims of royalty underpayment by Cengage Learning, Inc., in a long-running lawsuit brought on behalf of Cengage textbook authors by the class action law firm Susman Godfrey. There is a January 22, 2025 deadline for any authors wish to opt out of the class or to object to the settlement.

Cengage authors have asked us various questions about the settlement. Zick Rubin, attorney at the  Archstone Law Group and long-time TAA member (zrubin@archstonelaw.com), has provided some answers. Zick is not involved in the litigation and what follows is not an official statement or legal advice. We expect the next TAA Newsletter to include an article by Zick and his colleague Brenda Ulrich reporting more fully on the Cengage class action lawsuit and a similar class action lawsuit, still pending, against McGraw Hill. (Read their previous article, “Court Certifies Class of Textbook Authors in Class Action Against Cengage.”)

Q: What are the claims that are being settled?

A: The claims are that Cengage unilaterally prorated its proceeds from MindTap versions (enhanced digital versions) of textbooks and from Cengage Unlimited subscriptions, such that the authors were paid their royalties on an unfairly small portion of the proceeds.

Q: Are all Cengage authors members of the class that is receiving the payment?

A: The class consists by Cengage authors whose books have been sold in MindTap versions or through the Cengage Unlimited subscription program. That includes a substantial proportion of Cengage textbook authors.

Q: Have the class members been notified?

A: At the end of December, the Cengage authors in the class were sent postcard notices of the settlement. The postcard included a link to a website maintained by the Settlement Administrator, containing detailed information.

Q: I am a Cengage author and assume I am in the author class but didn’t receive the postcard. Or I tossed it away with my junk mail. What should I do?

A: I suggest that you call the Settlement Administrator at (833) 915-1142 to make sure you’re on the list.

Q: If I want to be included in the settlement, what should I do?

A: You don’t have to do anything. If you don’t opt out, you will automatically be included in the settlement. In return, you will be bound by the settlement and will give up any related claims that you may have against Cengage.

Q: What if I want to opt out?

A: Then you need to send a letter to the Settlement Administrator, stating that you are opting out. It must be postmarked no later than January 22, 2025.

Q: If I don’t opt out, does that mean I can never sue Cengage in the future for any perceived transgression?

A: No. It means that you can’t sue for the claims in the lawsuit – underpayment of royalties on MindTap and Cengage Unlimited sales  – and any other “related claims” that could have been brought in the same lawsuit. You do not give up the right to sue for any claims based on claims after the final approval of the Settlement Agreement. The final Fairness Hearing is scheduled for February 26, 2025 (3 p.m. Eastern).

Q: How will the $21 million be divided among individual authors?

A: After payment of fees and certain litigation expenses to the class action lawyers, the settlement proceeds are to be shared by the class members in proportion to the size of their claims. As part of the court-supervised proceedings, Cengage has provided royalty information to the authors’ class action lawyers. That information will be used to compute the distribution of the settlement amount among individual authors.

Q: Can I complain that $21 million is probably not enough to make authors whole?

A: Yes, you can object to the settlement at the Fairness Hearing. Any objection must be filed with the court by January 22, 2025. However, the chances of success with such an objection are quite small. This was a hard-fought settlement (and, as is typical in the settlement of a lawsuit, the defendant does not admit any liability).

Q: What percent of the royalties that I am owed will I get?

A: The parties disagree strongly about what royalties the authors are “owed.”(Cengage’s position is that you are not owed anything!) However, I believe that the settlement amount is roughly 50% of the amount that the authors’ lawyers were claiming.

Q: When will I get paid?

A: The class action lawyers hope that the payments will be made this coming summer. But litigation is a long haul, even after settlement. The lawyers advise, “Please be patient.”

Q: Will Cengage now have to change the way royalties are allocated from MindTap and Cengage Unlimited sales?

A: No. The settlement does not address future royalties. If Cengage continues to allocate royalties as it has in the past, it will leave itself open to future objections and lawsuits. Perhaps Cengage will make some changes in its royalty accounting to try to avoid this. Either way, it is always a good idea to carefully review your royalty statements.