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Supreme Court Reverses Appellate Decision on Freelance Settlement

March 3, 2010. There’s big news in our freelance electronic database class action.  Yesterday, the U.S. Supreme Court overturned an appellate court ruling that the settlement, entered into in 2005, was impermissible because it encompassed unregistered as well as registered freelance works.  The Supreme Court opinion is here. (Please note: this is a separate action from our Google lawsuit.)

The freelance settlement, valued at up to $18 million, would resolve the copyright infringement claims of freelance writers against database and media companies, such as Dow Jones, the New York Times and the owners of Lexis-Nexis, which had made digital use of the writers’ articles without permission.  Plaintiffs include individual freelancers as well as three associational plaintiffs — the Authors Guild, the American Society of Journalists and Authors and the National Writers Union.  After federal court in Manhattan approved the agreement in September 2005, a group of freelance writers appealed, arguing that the settlement failed to allot sufficient funds to the claims of authors of unregistered works.

In a surprising ruling, a federal appellate court in November 2007 reversed the district court’s approval of the settlement on grounds that no one had raised.  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 believe, to the requirement that one file a complaint in order to get into court — lawyers on both sides believed the settlement could resolve infringement claims for both registered and unregistered works.)

The Supreme Court, in its ruling yesterday in Reed Elsevier v. Muchnick, disagreed with the appellate court.  The Court held that a settlement of claims for infringement of copyright in unregistered works can be adjudicated by a federal court.  The appellate court, which hadn’t rendered an opinion on the fairness of the settlement terms, is now expected to review the settlement on its merits.

We’ll keep you updated on the progress of the freelance electronic database settlement through the 2nd Circuit.  For more information about this class action, please visit the official settlement website