Reversal in Freelance Class-Action Settlement

We received surprising and disappointing news in our freelance class action suit this morning. The 2nd Circuit Court of Appeals reversed, in a 2-1 decision, the district court’s approval of the settlement.

That settlement, valued at up to $18 million, was to resolve the copyright infringement claims of freelance writers against database companies, such as Dow Jones and the owners of Lexis-Nexis, that had made digital use of the writers’ articles without permission. Plaintiffs and defendants had arrived at settlement in 2005.

The appellate court ruled that the district court lacked jurisdiction over claims relating to unregistered freelance articles. Copyright registration is required to bring a suit for infringement, but since registration is viewed as a formality (comparable, many of us believe, to the requirement that one file a complaint in order to get into court), lawyers on both sides thought the settlement could resolve infringement claims for both registered and unregistered works.

The settlement had been objected to and appealed by a group of freelance writers who thought it failed to allot sufficient funds to the claims of authors of unregistered works. If this decision stands, of course, such claims would be shut out entirely.

The shard of good news is that there is a substantial dissenting opinion by Judge Walker. We are considering our options at the moment. One possibility is to seek an en banc review (a review by all of the judges of the 2nd Circuit) to see whether we can persuade a majority of the court to see things our way.

To see the court’s decision, go to our website.

We’ll keep you posted.


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