Arlington woman wins $11.5 million in Fifty Shades of Grey lawsuit

Dakota Johnson, left, and Jamie Dornan appear in a scene from the film, Fifty Shades of Grey.
Dakota Johnson, left, and Jamie Dornan appear in a scene from the film, Fifty Shades of Grey. AP

Five years after Fifty Shades of Grey became an international bestseller, Jennifer Pedroza of Arlington is getting closer to cashing in on the erotic novel’s success with an $11.5 million payday.

Saying it was time to “put the case to bed,” Tarrant County District Judge Susan McCoy signed an order Thursday awarding Pedroza $10,634.587 in royalties. A jury said last year that Pedroza was cheated out of her portion of the earnings by Amanda Hayward of Australia, a partner in a business that originally published the book.

Including pre-judgment interest of $888,643 assessed from the day the lawsuit was filed in May 2014, Pedroza could receive $11.5 million. McCoy also ordered Hayward to pay Pedroza’s $1.7 million in attorney fees.

Pedroza released a statement praising her attorneys and thanking friends and family for their support. “My family and I feel relieved and vindicated with the outcome of the trial and the judgment signed today,” she said.

Hayward’s attorneys are preparing an appeal, which means Pedroza won’t be collecting the judgment since they will argue that she is not entitled to it.

“We do not believe Texas law justifies a partnership by conduct on these facts,” said David Keltner, the Fort Worth attorney who will handle Hayward’s appeal.

McCoy’s order ends this chapter of a legal tale that sometimes seemed as tortured as the plot to The New York Times bestseller, which inspired a movie of the same name. The courtroom fight stretched all the way to a suburb of Sydney.

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.

While 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 fight over the money revealed that the relationship between Pedroza, Hayward and several other women was fifty shades of complicated.

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

McGuire did design work for the blog, Pedroza uploaded contributors’ writing, and Hayward worked with the authors. Later, Christa Beebe of Arlington joined and helped with marketing and distribution.

By 2010, Pedroza and Hayward had the Coffee Shop operating as a publishing house. And in 2011 it published Fifty Shades of Grey, which was written by British author E.L. James, as an e-book and print-on-demand full-length book.

The company published the sequels, Fifty Shades Darker and Fifty Shades Freed, in 2011 and 2012. The trilogy became a sensation, selling 250,000 copies through e-book 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. Pedroza received a one-time payment of $100,000 after the Random House contract was signed, but she was never told of the full terms of the transaction. Random House was not named in the lawsuit.

While Pedroza’s lawsuit acknowledged that she and Hayward never signed a prepared partnership agreement - but Pedroza said in the suit she was due 25 percent of the net profits - it showed that in 2011 their business filed a partnership income tax return naming Pedroza as a general partner.

In the lawsuit Pedroza and Beebe filed in May 2014, they contended that in 2012, Hayward had secretly converted the Coffee Shop into a company she alone owned, cutting them out of the partnership’s earnings.

Beebe settled her claims against Hayward in December 2014. After a four-day 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.

Eventually, an audit revealed that the books made about $40 million and that Pedroza was due $10.6 million. In recent months, attorneys have been haggling over fees and interest.

It’s possible Pedroza and Hayward will try to reach an out-of-court settlement.

Max B. Baker: 817-390-7714, @MaxbakerBB

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