[fjtorres]

Originally Posted by BeccaPrice

Jane at Dear Author has an excellent analysis of this.

Indeed.
The suit claims that Harlequin's swiss operation is not a real publisher but merely a tax-dodge (and author rip-off) front and that the real party to the contract is Harlequin enterprises.

To prevail, they need to prove that Harlequin Switzerland is just an alias.
Not trivial.

But there is precedent so the case is not frivolous or hopeless.

While not pled as a Piercing the Corporate Veil suit, that is essentially what it is.

What is Piercing the Corporate Veil?

This is a legal doctrine that allows the plaintiffs to tear aside Swiss 2′s corporate identity and put HQE in its place. A good case to consider when evaluating this claim is the 2008 decision of NetJets Aviation, Inc. v. LHC Communications LLC, 537 F. 3d 168 (2nd Cir. 2008) In NetJets, the Second Circuit (Circuit where NY resides) had to evaluate whether LHC was the alter ego for another entity. NetJets is a company that offers essentially timeshares of private planes. It entered into an agreement to provide access to a private plane with a company called LHC Communications. LHC Communication severed the contract after a year and NetJets wanted LHC to pay up. LHC declared it had no money. NetJets pursued Laurence S. Zimmerman personally, asserting that Zimmerman was LHC’s alter ego and thus responsible for its debts.

This is the standard for proving the alter ego claim set forth by NetJets and fairly close to what the Authors will have to prove against HQE and Swiss 1 and 2. (All citations removed to make it easier to read)


To prevail under the alter-ego theory of piercing the veil, a plaintiff need not prove that there was actual fraud but must show a mingling of the operations of the entity and its owner plus an “overall element of injustice or unfairness.”
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NetJets was able to show that Zimmerman and LHC were essentially the same entity and that Zimmerman was using LHC to avoid debts.

One thing this suit *will* do is shine a searchlight on Harlequin's acceptance, contracting, and accounting practices. So they need to get this out of public view ASAP.

Even if Harlequin wins they lose 'cause their defense is "yeah, we gave away your ebook rights. So what?"

Not a good position to take if you intend to convince new writers to sign up with you.