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Texas Woman Seeks Millions In Royalties From “Fifty Shades of Grey”

By Barry Shlachter Fort Worth Star-Telegram

FORT WORTH

An Arlington woman claims in a lawsuit filed in Fort Worth that she was duped out of millions in royalties from the erotic romance novel, Fifty Shades of Grey, asserting that her Australian partner cut her out of the e-publishing business that originally released the bestseller.

Jennifer Pedroza of Arlington asserts that in 2010 she co-founded Writer's Coffee Shop, which sold 250,000 e-book and print-on-demand paperback versions of Fifty Shades, but was fraudulently deprived of any proceeds from its sale to Random House in March of 2012 by Amanda Hayward of Dural, a Sydney suburb. Reports put the deal at $1 million.

Afterward, British author E.L. James and a business set up by Hayward evenly split royalties of $95 million paid by Random House over a 12-month period ending June 2013, the lawsuit says, quoting an article in Forbes magazine. The suit says there were likely millions more paid to Hayward before and after.

The suit, filed May 29 in Fort Worth's 153rd District Court, alleges that Hayward set up an Australian firm, TWCS, to sign the Random House deal, telling her partners it was done for "tax purposes."

Also suing Hayward is another Arlington resident, Christa Beebe, a Writer's Coffee Shop employee who asserts that Hayward personally "guaranteed" a year's employment in an email when Beebe was offered a teaching job in March 2012. Beebe was terminated five months later, after both she and Pedroza were forced to sign "service agreements" with TWCS, it says.

Pedroza, who handled marketing for Fifty Shades, is seeking her share of the royalties, which could easily amount to $10 million or perhaps more than $20 million, said her attorney, Mike Farris of Dallas. Beebe is requesting around $45,000 in lost wages in addition to punitive damages, Farris said.

James, the Fifty Shades author, is not named in the suit. Similarly, two Writer's Coffee Shop partners, a North Texan and an Australian, were not named as defendants.

Farris said he is arranging to have Hayward served with a copy of the suit in Australia. He said he had informed her Sydney lawyer, Gaurav de Fontgalland, of the litigation by email.

It was de Fontgalland who threatened Pedroza and Beebe with legal action in February, after the Fort Worth Weekly published a lengthy article about the Fifty Shades dispute.

The Australian lawyer's cease-and-desist letter claimed the Arlington women leaked confidential information to the Weekly and further violated their TWCS agreement by contacting a client about creating a limited edition soap in connection with her upcoming novel.

Pedroza and Beebe started Soap Barista after their firing. De Fontgalland did not respond to an email seeking comment on the Fort Worth lawsuit.

Farris has requested Judge Susan Heygood McCoy to issue a temporary restraining order to prevent Hayward from spending any payments from Random House, Amazon or other sources, or receiving further amounts from the sale of Fifty Shades. He asked that the funds be held by the court.

Writer's Coffee Shop was launched in 2009 by Pedroza, Hayward and Waxahachie resident Jennifer McGuire as a blog site in 2009.

The three women had formed online friendships though a fan fiction website. McGuire did the design on the blog, Pedroza uploaded contributor's writing and Hayward worked with authors, the suit says. In May 2011, it published Fifty Shades, followed by two sequels of the trilogy in 2011 and 2012.

Pedroza not only handled marketing for the runaway bestseller, she also packed the print-on-demand copies in her home for shipment. Beebe joined in January 2012 to help with marketing and distribution, first as an unpaid volunteer then as a salaried employee, it said.

In August 2011, an Australian named Lea Dimovski became a partner when the for-profit venture hit money problems.

The lawsuit acknowledged that the two Texans, Pedroza and McGuire, and two Australians, Hayward and Dimovski, never signed a prepared partnership agreement. But Writer's Coffee Shop in 2011 filed a partnership income tax return in 2011, naming Pedroza as a general partner, it said.

In February, Random House's Vintage imprint said the series had sold 100 million copies -- 45 million in the United States alone.

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