Bernstein v. Cengage Learning, Inc.

Background

Douglas Bernstein, Elaine Ingulli, Terry Halbert, Edward Roy, Louis Penner, and Ross Parke, as personal representative of the Estate of Alison Clarke-Stewart, sued Cengage Learning, Inc. on behalf of themselves and others similarly situated. The complaint asserted a breach-of-contract claim. The plaintiffs alleged that Cengage violated publishing agreements by failing to pay authors for use of their works as required by those agreements and by failing to pay certain royalties.

The plaintiffs moved under Federal Rule of Civil Procedure 23(g)(3) to appoint Susman Godfrey L.L.P. as interim class counsel. Interim class counsel may represent a proposed class before the court decides whether to certify the case as a class action. Cengage opposed the motion.

Legal Standard

The court stated that it generally considers the factors used to evaluate whether class counsel is adequate under Rule 23(g)(1)(A):

Court’s Analysis

The court found that Susman Godfrey satisfied all four factors. Before filing suit, the firm reviewed Cengage’s securities filings and publishing agreements, interviewed textbook authors, analyzed royalty statements, and consulted industry experts about Cengage’s royalty-payment practices. The firm continued those investigative efforts after filing the complaint.

The court also found that Susman Godfrey had extensive experience litigating class actions and complex commercial disputes, including breach-of-contract cases in the media industry. The court concluded that the firm had the necessary knowledge and experience to serve effectively as interim class counsel.

For resources, Susman Godfrey represented that it could commit substantial resources to the case, including resources for document and deposition discovery and experts if needed. The firm had approximately 100 attorneys in four offices and had assigned four experienced litigators to the case.

Cengage argued that appointment was unnecessary because only one firm represented the plaintiffs and no other related actions were pending. Cengage also argued that appointment was premature. The court acknowledged that two similar actions against Cengage were no longer pending, but concluded that their recent existence showed that additional similar cases were possible. The court found that appointing interim counsel would reduce the risk of duplicative filings and help the court coordinate related filings. It also rejected the prematurity argument.

Ruling and Scope

The court granted the plaintiffs’ motion to appoint Susman Godfrey L.L.P. as interim class counsel and designated the firm as interim class counsel under Rule 23(g)(3).

The order made interim class counsel generally responsible for coordinating pretrial proceedings. Its listed duties included presenting the plaintiffs’ and proposed classes’ positions to the court and opposing parties; coordinating discovery, including interrogatories, document requests, and depositions; conducting settlement negotiations; entering necessary litigation stipulations; and performing other duties related to coordinating pretrial activities or authorized by later court order.

The order applies to each related class action pending or later filed in or transferred to the Southern District of New York. The Clerk of Court was directed to close the docket entry for the motion.