Class action complaint filed against Cengage alleging unfair, deceptive royalty-reporting practices

A class action lawsuit was filed today in the United States District Court for the District of Massachusetts against Cengage, one of the leading publishers of educational textbooks, alleging that its unfair and deceptive royalty-reporting practices violate Massachusetts’ Consumer Protection Law.

The lawsuit, filed by Slarskey LLC and Casner & Edwards LLP on behalf of art history author Fred Kleiner and similarly-situated individuals, alleges that Cengage’s practices are designed to conceal that Cengage systematically underpays royalties due to authors in the range of 10-30 percent. 

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Will aggregated textbook products shift more risk to authors?

In a post on October 20, I described decisions made by the Southern District of New York in a lawsuit between authors and Cengage. The authors had alleged breach of contract as well as bad faith dealings by Cengage in regard to their products Cengage Unlimited and MindTap. Read about it here.

This is more of a thought piece—generated in part by an aspect of the authors’ allegations—about what would constitute goodfaith in a publisher’s interactions with authors. I ask this not as a legal matter, about which I am not qualified to opine, but as an ethical one.

The authors’ allegations stem from an uncontested aspect of both the MindTap and Cengage Unlimited royalty allocation models. In both products, Cengage counts a portion of each sale as non-royalty-bearing income. In the case of MindTap, that non-royalty-bearing portion is called ‘ancillary materials’ encompassing “tests, studies guides, exercises”. For Cengage Unlimited, this portion is called ‘courseware’ but apparently includes the same ancillary materials as MindTap.

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Authors’ suit against Cengage hits snags

In October 2019, six authors, intending to form a class action together with other Cengage authors, filed a lawsuit against Cengage alleging that Cengage’s royalty accounting for proceeds from distribution of their products through the MindTap and Cengage Unlimited business models breached the publisher’s royalty arrangements with authors. In addition to the breach of contract claim, the authors alleged that Cengage acted in bad faith towards authors regarding the two products. Before a trial could get underway, Cengage responded by asking for all counts to be dismissed, and that the attempt to form a class action be denied.

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MindTap and Cengage Unlimited under fire from two new class action lawsuits

On August 12, 2019 the law firm of Susman Godfrey LLC filed a class action lawsuit against Cengage Learning on behalf of Douglas Bernstein and four other authors. Three days later, a similar suit was filed by Slarskey LLC on behalf of Grafton H. Hull.

Both cases reflect elements of a 2018 lawsuit against Cengage Learning by authors David Knox and Caroline Schacht, which was handled by Slarskey’s firm. At issue in all of these cases are Cengage’s emerging publishing practices and royalty calculations associated with its digital MindTap platform and the Cengage Unlimited subscription service.

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Cengage authors begin to receive royalty statements under Cengage Unlimited plan

While some Cengage authors are still waiting for their first royalty statements under the company’s new Cengage Unlimited plan, which, launched in August 2018, offers students access to its database of textbooks and other online content for a flat fee, several have received their statements and shared how the new plan has affected their royalties.

TAA President and Cengage author Mike Kennamer said royalties from CU were included on the most recent statement for one of his three Cengage titles.

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Cengage announces launch of new ‘Author Relations Team’

Cengage announces the launch of its new three-member “Author Relations” team, which will be responsible for working with its higher education authors on their business-specific needs and questions related to contracts and royalties.

According to a post on their blog that answered questions posed by TAA last fall, “The AR team will take lead on working with authors regarding royalties across the board. Each author will have an AR rep that they can call directly with questions of that nature.”

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