The key argument seems to be this:
Quote:
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Plaintiffs assert that HEL should “be understood as the assignee of the Publishing Agreements” because it “exercised all the rights and responsibilities of the Publisher.” (Opp. 19.) But plaintiffs do not identify any “rights and responsibilities” exercised by HEL that go beyond the broad delegation provision in the Publishing Agreements—which did not provide for any change in the definition of “Publisher” or the royalty calculation. (See D. Mem. 7, 18.) Moreover, even if plaintiffs had adequately pled an assignment—which was also expressly provided for in the Publishing Agreements without any effect on the definition of “Publisher” or the royalty formula (see id.)—plaintiffs cite no authority that would support finding that HEL was the “Publisher” for purposes of calculating royalties.
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Harlequin says "they signed a contract with HEBV and/or HBSA, so they have no grounds to sue HEL because HEL is not their publisher." They do some interesting skipping over the concept that one-or-more of those entities is a dummy corp, and keep coming back to that.
They claim that the authors' allegations--"that HEL established its affiliates for tax purposes and handled the drafting, negotiation, and administration of the agreements (Opp. 16)—do not begin to address the standards for
alter ego liability set forth in the case law," and therefore the authors are stuck with however HEBV/HBSA decides to manage the money.
They also say "Indeed, it is unclear in what way plaintiffs believe they were wronged," because of course, getting paid 4% when they expected 25% of cover price is not a wrong. (Apparently, that's covered under the "all other rights" bit of the contract, and authors should just suck it up.)
They make the fascinating claim that "even if plaintiffs had sufficiently pled an
alter ego theory against HEL, that would have no bearing on the proper definition of Publisher for purposes of calculating plaintiffs' royalties." Because if the plaintiffs had proof that they signed with dummy corporations whose sole existence had the purpose of filtering money away from authors, those are still the corporation they signed with.
Um. I don't know about the standards for
alter ego, but I'm hoping a judge is clear enough to say, "no, if you made a fake corporation, with no independent authority, then authors did not actually contract with that corporation; their contract is with the organization that controls the publishing of their books. They get paid according to that corporation's net, not your filter-company's income."