Fort Worth teacher settles ‘Fifty Shades of Grey’ lawsuit

Five years after the smutty novel Fifty Shades of Grey became an international bestseller, the two women fighting over its riches have finally put the case to bed.

Jennifer Pedroza, a Fort Worth elementary schoolteacher, is settling out-of-court with Amanda Hayward, her former Australian partner in the business that originally published the book, for an undisclosed amount.

Earlier this year, Tarrant County State District Judge Susan McCoy signed an order awarding Pedroza $11.5 million in royalties and interest. She also ordered Hayward to pay $1.7 million in attorneys fees. On Wednesday, McCoy signed an order setting aside that judgment as part of the settlement.

The attorneys called the deal, which came after months of negotiations and as the case was being prepared for an appeal, the best outcome for both parties. Terms of the settlement were not disclosed.

“All I can tell you is that everyone is satisfied with the settlement,” said Michael Farris, the attorney representing Pedroza, who lives in Arlington. “I can’t comment on what she is getting, one way or the other.”

David Keltner, an attorney representing Hayward, wouldn’t talk about the total amount paid.

“It is a good settlement from both parties’ standpoint,” Keltner said.

Court records do show that Pedroza is getting at least $1.7 million — most of it from the last royalty payment from Random House that had been paid into a court registry in May. On the other hand, Hayward got back the deeds to property in Australia that had been turned over to satisfy the $11.5 million judgment.

Although records on the royalties have been sealed, court testimony and documents revealed that the novel made at least $40 million for the partners, about $3 million since the lawsuit was filed.

The behind-closed-doors settlement is the afterword in a tortured business tale that sometimes seemed as twisted as the plot to The New York Times bestseller, which inspired a movie of the same name.

In 2014, Pedroza sued Hayward, her partner in an e-publishing business that originally produced Fifty Shades of Grey, saying she had been defrauded out of royalties that the novel and its two sequels had earned since it was released in 2011.

Pedroza, a teacher at Sam Rosen Elementary School in Fort Worth, and Hayward, who lived in Dural, a Sydney suburb, were partners along with another woman in The Writer’s Coffee Shop, which started out as an online blog in 2009. Visitors to the fan-based website discussed books and wrote “fan fiction” stories.

Pedroza uploaded contributors’ writing, and Hayward worked with the authors.

By 2010, Pedroza and Hayward had the Coffee Shop operating as a publishing house. And in 2011 it published Fifty Shades of Grey, after Hayward had hired British author E.L. James to write it as an e-book and print-on-demand paper book.

The company eventually published two sequels, Fifty Shades Darker and Fifty Shades Freed, in 2011 and 2012. While critics found the trilogy lacking, it became a sensation that sold 250,000 copies through e-book purchases and print-on-demand, with an additional 20,000 print copies.

In 2012, Random House made a deal with Hayward and James to publish the books and Pedroza received a one-time payment of $100,000. But she was never told of the full terms of the transaction.

While Pedroza’s lawsuit acknowledged that she and Hayward never signed a prepared partnership agreement, Pedroza contended that in 2012 Hayward secretly converted the Coffee Shop into a company she alone owned, cutting her out of the partnership’s earnings.

Keltner was preparing an appeal of the earlier ruling saying that since a partnership agreement was never signed that spelled out terms such as how money was to be distributed — that it was a partnership by conduct only — the arrangement violated the statute of frauds.

Two other women were involved in the enterprise. Neither one claimed to be a partner. One never sued and the other settled out of court with Hayward prior to trial.

In February 2015, a jury determined that there was a partnership between Pedroza and Hayward. But the jury did not set a dollar amount for an award, leaving that to McCoy after an audit of the firm’s finances. The audit resulted in a protracted fight over Hayward’s assets, most of them in Australia.

This story was originally published September 15, 2016 at 1:08 PM with the headline "Fort Worth teacher settles ‘Fifty Shades of Grey’ lawsuit."