RWA Letter Regarding Ellora’s Cave

Update: Please note a clarification at bottom of post.

Recent Romance Writers of America Letter Regarding Ellora’s Cave

(Permission received to post here)

Allison Kelley, CAE  | Executive Director
Allison.kelley@rwa.org

RWA has no standing in relation to contracts between authors and Ellora’s Cave. Therefore, RWA’s role is limited to advocating for fair treatment of authors, and RWA has been in correspondence with Ellora’s Cave, repeatedly, regarding allegations that Ellora’s Cave has failed to make payments due and failed to revert rights to authors.

Contracts offered by Ellora’s Cave Publishing state “Publisher shall pay Author royalties in accordance with a schedule to be determined at Publisher’s discretion but in no event shall payment be made less frequently than three (3) calendar months.” The problem with this clause is the lack of specified period for which royalties will be paid. RWA continues to receive complaints from authors who report they have not received royalty statements or payments for many months.

Several authors who contacted the publisher about missing payments and have requested their rights be reverted have received the following response from Ellora’s Cave:

Dear author or agent,

I’m sorry, you have misinterpreted the contract the author chose to sign. Breach of clause 16 regarding royalties payments (or any other contract clause) does not void the contract nor revert book rights to you. When a contract is breached, the party claiming breach has the option of waiting for the other party to correct the situation or may pursue legal action to gain correction of the situation. In such case, the court would typically set a deadline by which time the situation must be corrected (“cured”), and if not corrected the court would decide on further action.

The only conditions set forth in the contract for reversion of rights are in clause 1.1. If your book qualifies (meets all the conditions listed), you may send a request for reversion of rights, stating it is based on clause 1.1.

Therefore your request for reversion of rights is not granted. Ellora’s Cave continues to hold all publishing rights to the contracted books. The author has no rights to distribute or sell these books in any format or channels.

I am sorry, we in Contracts have no information on royalties payments. We can only advise you to email Royalties@ellorascave.com.

In September 2015, RWA contacted Patty Marks who admitted “currently we are not as up to date with royalties as we want to be and will be,” and added that the company is trying to catch up.

Failure to pay authors in a timely manner is a violation of RWA’s Code of Ethics for Industry Professionals.  Violations of this Industry Professional Code of Ethics may result in loss of privileges such as (but not limited to) listing in Market and Agent Updates, participation in workshops and pitch sessions, and the opportunity to advertise in RWA’s publications.

Allison Kelley notified Ms. Marks in September 2015 that Ellora’s Cave must refrain from contacting members or chapters regarding new submissions and refrain from participation in any RWA or chapter event until the company has achieved satisfactory resolution of the Code of Ethics violation.

Ellora’s Cave continues to be banned from RWA programs and services.

RWA has repeatedly contacted management at Ellora’s Cave to demand payment to authors. RWA has also requested that the publisher revert rights if it is unable to pay authors in full. The response we received was a letter signed by Steve Mastrantonio, attorney for Ellora’s Cave, in which he states, “any premature comment by RWA that Ellora’s Cave is in breach of their agreements is reckless, false and Defamatory.” Mr. Mastrantonio asserts that Ellora’s Cave is paying authors as it should, and “any false comments by RWA to harm his clients reputation will be dealt with in a forceful manner.”

Further actions considered:

There is little anyone can do without proof. In September 2015, Allison Kelley contacted an auditor who specializes in royalty reviews to get an idea of what would be involved in order for the board to consider funding an audit.

 

The following challenges were identified:

 

• An audit would not be comprehensive—RWA could provide funding (in the form of a grant) to conduct audit/s for one or two author/s who requested to have earnings audited.
• Accounting records maintained by Ellora’s Cave would have to be auditable. In the past, RWA funded an audit, and all we learned was that the publisher did not follow any kind of standard bookkeeping or accounting practices. Sales were difficult to determine, so there was no way to prove if royalties had been paid properly or not.
• We saw how vigorously the attorneys for Ellora’s Cave fought to keep the books from being audited during the lawsuit against Jane Litte.

RWA also requested legal advice related to authors’ rights to cancel agreements for ongoing uncured breaches of contract. We were told the issue would depend on Ohio state law, and the likelihood of success would depend on the outcome of an audit. Again, RWA has no standing to conduct an audit, and audits can only be done upon author request, and the findings would apply to authors whose earning had been audited.

 

Governing policy regarding use of funds:

3.11.2.       Legal Reserve.

3.11.2.1.    This fund includes a specified amount set aside by the Board to enable RWA to defend or act on behalf of a class of members who might be harmed by activities of others or to defend RWA if litigation occurs. The Board shall consider the following criteria when assessing whether RWA should assist in the payment of legal costs:

3.11.2.1.1.       Importance of the Case to the Industry and Membership. RWA should only support cases that are of importance to the romance writers industry and to the RWA membership as a whole, and not merely to one or a small number of members. However, this shall not preclude RWA from assisting in the payment of legal costs for cases in which one or more parties are RWA members.

3.11.2.1.2.       Relationship of the Case to the RWA Mission. RWA should support cases that relate not merely to matters of interest to the broader business community, but rather relate to the core of the RWA mission and purpose. Unless a case has a special impact on the romance writers industry beyond its application to business entities generally, there is no particular need for support by RWA.

3.11.2.1.3.       Assessment of Chances of Success. RWA should support cases with a reasonable likelihood of success. The facts specific to a case should be evaluated to ensure that the key issues that RWA is hoping to affect are not diluted by ambiguous or inappropriate facts, or the presence of irrelevant issues that divert attention from those considered key.

3.11.2.1.4.       Cost. Support of cases should not pose an undue financial burden on RWA; the anticipated benefits of supporting a case must be weighed against the financial costs. Consideration should be given to establishing limits on financial support and whether the case is likely to proceed if RWA withdraws financial support. Consideration also shall be given to an expression of intent by RWA members—independent of any members who may be parties to the case—to contribute some or all of the costs, as well as to counsel’s willingness to undertake the work for a reduced (or no) cost.

3.11.2.1.5.       Cooperation with Other Interested Entities. The interest of other organizations in supporting the case, if any, should be explored.

3.11.2.1.6.       Consideration of Requests. Requests for support of legal costs shall be considered by the Board. The Board may consult with legal counsel as necessary to evaluate the facts, issues, and status of the case, and with such other relevant individuals or entities as the Board may determine necessary for evaluation of RWA’s support of a case in accordance with this Policy.

3.11.2.1.7.       Approval Threshold. A decision to contribute toward legal costs must be approved by the affirmative vote of a majority of a quorum of the Board.

UPDATE May 23, 2016

As Per  Allison Kelley, RWA – “I have no idea if the accounting records at Ellora’s Cave are kept in compliance with GAAP and are up-to-date. Hopefully, they are. The comment cited below pertains to another publisher. I felt I had to include that disclaimer so authors would be aware that audits do not always yield the information desired.”

To clarify this section: ·   “Accounting records maintained by Ellora’s Cave would have to be auditable. In the past, RWA funded an audit, and all we learned was that the publisher did not follow any kind of standard bookkeeping or accounting practices. Sales were difficult to determine, so there was no way to prove if royalties had been paid properly or not.”

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Allison Kelley, CAE  | Executive Director
Allison.kelley@rwa.org