The Los Angeles Times featured a story about the legal saga that has enveloped the Christian bestseller The Shack:
"The Shack," William Paul Young’s novel about a man rediscovering lost faith after the murder of his 5-year-old daughter, started out as a manuscript no one would touch. Finally, pastors Wayne Jacobsen and Brad Cummings discovered the book and created a start-up, Windblown Media, to publish it. The novel sold a million copies for them in the first year, eventually ending up at No. 1 on the New York Times’ trade paperback bestseller list.
Then Hachette Book Group got involved. In May 2008, the publishing conglomerate — one of the largest in the country — cut a deal with Windblown Media to market and distribute the book. In the two years since, "The Shack" has become a 12-million-copy-selling phenomenon and the biggest Christian publishing sensation in decades.
But unlike Cinderella — at least in the Disney version — there’s no happy ending in sight for Young, or for the two men, Jacobsen and Cummings, he once called friends and business partners.
For nearly eight months, the trio have been mired in a series of lawsuits, accusations flying over improper accounting practices, millions of dollars in missing royalties, contract breaches and copyright disputes. Hachette, meanwhile, just wants to know to whom it owes money — and how much.
I suppose none of them are in the mood for a reminder about that camel passing through the eye of a needle, not when — according to the federal interpleader complaint filed by Hachette — there’s nearly a million dollars in royalties per quarter at stake.
Let’s see if the lawyers can provide some balance and perspective on the case:
"In all of my 30 years of practice, Young’s lawsuit is the most ridiculous I have ever seen," said Windblown Media’s legal representative, Martin Singer, a partner with Lavely Singer. He claimed that Young’s lawsuit was a "complete misrepresentation" of the author’s financial state, with no mention of the more than $10.5 million Young had earned from "The Shack" to date.
Young’s legal representative, Michael Anderson of Anderson & Loeb, scoffed at the countersuit. "They agreed in a written contract that Young was the sole author of ‘The Shack,’" he said by telephone. "Back before the work was known to be a bestseller, both parties filed a copyright notice indicating that Young was the sole author. For three years Windblown has been publishing the book under Young’s name. [The federal court] action is a belated attempt by [Jacobsen and Cummings] to take credit for a book they didn’t write."
Apparently not. Regular readers will delight in seeing Martin Singer make another appearance on these pages; his gift for hyperbole is unparalleled.
In essence, there are three claims, filed in this order:
- Young sued Jacobsen and Cummings in state court for breach of contract;
- Jacobsen and Cummings sued Young in federal court to obtain joint control of the copyright for The Shack;
- Hachette filed an interpleader in federal court asking the court to take control of the money that keeps rolling in from sales of The Shack.
Let’s look at the merits of each.
Starting with Young’s state-law breach of contract allegations, "creative" accounting is common in Hollywood and in the music industry, so why not in the book industry, too? Young likely has little ability to monitor or police the transactions entered into by Windblown or Hachette, and in many instances — particularly with movies — the transactions at issue are not so much explicit fraud as they are bad faith. That is to say, there’s nothing obviously fraudulent about the defendant’s conduct, it’s just not within the spirit of the party’s agreement. That often leads to longer, more drawn-out litigation, since nobody sees themselves as being caught red-handed, they see the dispute as a difference of opinion.
Looking at Jacobsen’s and Cummings’ federal-law copyright allegations, it is indeed possible that the co-authors to a work, for reasons of convenience (and money), chose not to list themselves as "author" of the work either in the contracts or in the copyright registration. Those facts certainly make it harder for them to prove authorship in front of a jury, but they don’t necessarily close the courthouse doors. Consider the Seventh Circuit’s opinion in Janky v. Lake County Convention & Visitors Bureau, 576 F. 3d 356 (7th Cir. 2009):
This over-litigated case, involving a song by a doo-wop group, comes to us with 18 district court orders and memorandum opinions spread over a combined 239 pages. The district court’s 46-page docket contains a staggering 371 entries. And the briefs of the parties on appeal are a bit unfocused to say the least. But although it’s a tough job, someone has to do it, so with shoulder to the wheel, we forge on. …
Under 17 U.S.C. § 201(a), "[t]he authors of a joint work are co-owners of copyright in the work." In other words, "the joint authors hold undivided interests in [the] work, despite any differences in each author’s contribution." Erickson, 13 F.3d at 1068. The benefits of co-authorship are therefore significant: each author may use or license the joint work. Id. But when does a song qualify as a "joint work"? Section 101 of the Copyright Act defines a joint work as "a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole." 17 U.S.C. § 101. In Erickson, we determined that this language requires (1) intent to create a joint work; and (2) contribution of independently copyrightable material.
Since biblical analogies seem to go so well with this case, let’s add another: the Synoptic Gospels, i.e. the Gospels of Matthew, Mark and Luke.
Embedded to the right is diagram of the shared content among those gospels — shared content that includes the line about the camel passing through the eye of a needle, which shows up verbatim in all three — explained as follows on Wikipedia:
The Gospel of Matthew, the Gospel of Mark, and the Gospel of Luke are known as the Synoptic Gospels because they include many of the same stories, often in the same sequence, and sometimes the exact same wording. This degree of parallelism in content, narrative arrangement, language, and sentence structures can only be accounted for by literary interdependence. Scholars believe that these gospels share the same point of view and are clearly linked.
In light of the nature of the similarities, most scholars believe the Gospel of Matthew and the Gospel of Luke were based on the Gospel of Mark and a lost, hypothetical gospel called Q.
Which raises a question pertinent to the lawsuit: assuming Matthew and Luke contributed, respectively, only 20% and 35% of their own Gospels, would that be sufficient to be "independently copyrightable material" that could make them joint authors of the overall Synoptic Gospels? (Let’s put aside divine inspiration; that might make the whole thing a work-for-hire, with copyright going to the person who contracted for the work.)
Probably so; "the essence of copyrightability is originality of artistic, creative expression." Ets-Hokin v. Skyy Spirits, Inc., 225 F. 3d 1068 (9th Cir. 2000). Adding text, or substantially re-writing an existing text — as The Shack apparently acknowledges Jacobsen and Cummings really did — is generally enough to make the contribution copyrightable.
As you can imagine, everybody wants their own suit to go first while everyone else’s suit waits its turn. The Anti-Injunction Act, however, precludes both District Courts from enjoining the state court from hearing Young’s breach of contract claim:
In Atlantic Coast, the Court emphasized an order directed at a state court proceeding must be necessary in aid of jurisdiction — "it is not enough that the requested injunction is related to that jurisdiction." 398 U.S. at 295, 90 S.Ct. 1739. Acknowledging the language is nonetheless broad, the Court elaborated: an injunction is necessary in aid of a court’s jurisdiction only if "some federal injunctive relief may be necessary to prevent a state court from so interfering with a federal court’s consideration or disposition of a case as to seriously impair the federal court’s flexibility and authority to decide that case." Id.
Without more, it may not be sufficient that prior resolution of a state court action will deprive a federal court of the opportunity to resolve the merits of a parallel action in federal court. "The traditional notion is that in personam actions in federal and state court may proceed concurrently, without interference from either court, and there is no evidence that the exception to § 2283 was intended to alter this balance." Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 642, 97 S.Ct. 2881, 53 L.Ed.2d 1009 (1977) (plurality opinion). In ordinary actions in personam, "[e]ach court is free to proceed in its own way and in its own time, without reference to the proceedings in the other court. Whenever a judgment is rendered in one of the courts and pleaded in the other, the effect of that judgment is to be determined by the application of the principle of res adjudicata by the court in which the action is still pending…." Kline v. Burke Constr. Co., 260 U.S. 226, 230, 43 S.Ct. 79, 67 L.Ed. 226 (1922). Therefore, it may not be sufficient that state actions risk some measure of inconvenience or duplicative litigation. In re Baldwin-United Corp., 770 F.2d 328, 337 (2d Cir.1985). An injunction may issue, however, where "the state court action threatens to frustrate proceedings and disrupt the orderly resolution of the federal litigation." Winkler v. Eli Lilly & Co., 101 F.3d 1196, 1202 (7th Cir.1996). In other words, the state action must not simply threaten to reach judgment first, it must interfere with the federal court’s own path to judgment.
In re Diet Drugs, 282 F. 3d 220 (3rd Cir. 2002).
Although the federal courts have jurisdiction over the copyright and interpleader claims, they don’t have jurisdiction over Young’s breach of contract claim (since he didn’t bring it there and the defendants didn’t remove it to federal court), and so can’t enjoin the state court from moving forward on it.
Moreover, there’s no reason that all of these suits can’t be litigated at the same time — of all of them, Hachette might have the most urgent claim in the form of the interpleader, since it doesn’t know to whom it should pay that million dollars — up until the point of trial. In a case of this nature, the parties have ample resources to persue multiple actions at once, and the copyright claim is indeed a separate and distinct claim from the breach of contract claim.
That said, I think a District Court will likely look very suspiciously at Jacobsen’s and Cummings’ federal copyright claim. Even if their claim is meritorious, it plainly was a tactical move prompted by Young’s state-law breach of contract claim. That’s not necessarily wrong but it’s also not very compelling; the District Court may decide to "abstain" from hearing the case or, more likely, to "stay" the case pending the conclusion of Young’s case.
Nonetheless, the copyright claim obviously impacts the resolution of Young’s claim, and the core issue in that copyright — who owns the rights to The Shack — won’t be wholly resolved by Young’s case, which revolves around the method of payments. There may be some judicial efficiency in having it run a parallel course, since the controversy is unlikely to go away on the resolution of Young’s claim alone.
For any law students out there struggling through their Federal Courts class, take a peek at the briefs linked above — they’ll tell you as much about Younger and Colorado River abstention as anything else.