A Texas judge has told lawyers for an Australian woman and her publishing company to set aside $10 million for a former business partner who says she was defrauded out of her rightful share from the sale of the erotic best-seller "Fifty Shades of Grey" and two companion novels.
State District Judge Susan McCoy said Wednesday that she wants the money deposited in a court registry by Sept. 25 as attorneys seek to negotiate a judgment amount for Jennifer Pedroza, who lives in the Dallas suburb of Arlington.
A jury earlier this year determined that Amanda Hayward, one of Pedroza's former business partners in e-book publisher The Writers Coffee Shop, cut Pedroza out of her share of royalties from the $40 million sale of the EL James trilogy to Random House. Hayward reached a settlement with another woman involved in the venture. The terms of that deal were sealed.
The trilogy's first volume flew off of the shelves when it was released in 2011, and the three books have sold more than 125 copies worldwide and spawned a movie starring Jamie Dornan and Dakota Johnson, with two sequels also planned.
According to court records, Pedroza says Hayward used "chicanery" to cheat her out of her rightful share. Accountants have determined that Pedroza's 25 percent stake in the online publishing venture was worth approximately $10.7 million.
Pedroza's attorney, Michael Farris, said Hayward restructured the venture to effectively make Pedroza an independent contractor and then fired her. He said Pedroza has had to return to teaching, and now works at a Fort Worth elementary school.
One of Hayward's attorneys, Dallas lawyer Robert Kantner, said Thursday that Hayward plans to appeal but he declined to comment further about the case. The Fort Worth Star-Telegram reported that Hayward's attorneys have said she doesn't have $10 million in cash, and that the judge noted Wednesday that Hayward's most valuable asset is her home in a Sydney suburb.
Even though Hayward plans to appeal, her lawyers must negotiate a judgment amount with Pedroza's side. The two sides are expected to return to court in late September, when McCoy may determine whether to approve of the terms, Farris said.
Farris speculated that any appeal may contend that The Writers Coffee Shop wasn't a partnership and so Pedroza wasn't a partner eligible for royalties.
"Typically disputes over royalties have to do with the accounting of the royalties, as opposed to who's a member of the company that's entitled to get paid," Farris said.