By Kim Pawlak, TAA Executive Director

Following ​a ​$20.9 million settlement of a class action lawsuit ​o​ver allegedly underpaid ​author royalties​, ​Cengage is now seeking to engage with its authors regarding new Digital Royalty Allocations (DRA) of royalties from digital courseware relating to their titles. Catherine Schnurr, the publisher’s director of product strategy and operations, sent letters to Cengage authors in March, asking them to contact their Author Relations Managers to schedule a meeting to discuss how the publisher has calculated their DRA in the past and how they will calculate it going forward.

In the letter, Schnurr states: “Your active participation in this process is valued and will help ensure your voice is heard, and your past efforts and future contributions are recognized.” She also said that Cengage is “now focused on strengthening our close partnership with authors,” and “intends to be as transparent as possible” about past and future DRA calculations. She added that “depending on your individual circumstances, the new calculation could result in an increase or decrease to your DRA.”

A TAA member who received the letter and reached out to his Author Relations Manager last week, said this is the reply he received: “We are looking forward to working with you on your DRA calculation. Currently, we are in the process of gathering the data that we need to have these discussions.” She said they would be reaching out to schedule a time to discuss within the next few months, and “are prioritizing conversations with authors who have an upcoming revision, but we will be talking with everyone.”

The member reached out to TAA after receiving his letter to ask for advice regarding any DRA calculations discussions with Cengage. Brenda Ulrich, an intellectual property attorney with Archstone Law Group, who has represented many textbook authors, noted that it’s good for authors to keep open lines of communication with their publishers. Brenda also stressed that authors are not obligated to accept proposed changes to their contract, and should actively participate in the discussions, rather than passively accept what is put in front of them. She also emphasized that any change in contractual terms must be agreed to by both parties: “You should make clear to your publisher that any changes to your royalty terms will need to be captured in a written amendment to the contract signed by both parties.”

Zick Rubin, also an intellectual property attorney with Archstone Law Group, reacted to Cengage’s statement in the letter that “depending upon your individual circumstances, the new calculation could result in an increase or decrease to your DRA.” Rubin noted that the authors’ class action complaint alleged that, with its current DRA formulas, Cengage was breaching the covenant of good faith and fair dealing that is an implied part of every contract. To avoid going to trial on that claim, he said, Cengage agreed to the $20.9 million settlement payment to the authors. That payment covers only past royalties, said Rubin, not future royalties: “If Cengage were to continue using the same or equivalent formulas, it would be risking future litigation, which it wants to avoid. So in the large majority of cases, I would expect any new contract or amendment to increase your current DRA. I would look very closely at any proposed new calculation that would decrease your DRA.”

The settlement came after five years of litigation in a long-running lawsuit, Bernstein v. Cengage Learning, Inc, brought on behalf of Cengage textbook authors by the class action law firm Susman Godfrey. Bernstein v. Cengage Learning, Inc.. (Read this article by attorneys Zick Rubin and Brenda Ulrich of Archstone Law with more information about the class action lawsuit.)

If you are a Cengage author and have received this letter from Cengage and would like to share your experience with TAA, or have any questions, please contact me at Kim.Pawlak@TAAonline.net.