Saturday, January 22, 2011

The Mystery of the Missing $Millions in Claims, Part 1

In this first of two parts, objector Anita Bartholomew reviews the history of the "Freelance" settlement parties' deceptive representations to the Second Circuit Court of Appeals on claims data.

In 2006, the plaintiffs' attorney in the Freelance Class Action, Michael Boni, erroneously told the court that the total claims in the case equaled $10.76 million.

This number, if it weren’t in error, would have been good news. If total claims amounts exceeded $11.8 million, all those who hadn’t registered their works (C claims) would get reduced payments for the infringement of their writings. (For background, see:

Boni apparently wanted to prove to the court that C claims’ payments wouldn’t be reduced. Most writers have only C, unregistered, claims. Any reduction would mean that most writers would get screwed. How screwed would depend on the actual totals.

But Boni had to rescind the claims total almost immediately, and admit that people who had unregistered articles – almost everyone in the class – might see their claims reduced.

What happened? The claims administrator was calculating registered articles as if they were unregistered. The $10.76 million figure was based on a preliminary calculation by the administrator that calculated at least hundreds, and perhaps more, registered (A and B category) articles at a fraction of their actual value. (According to figures given to the court, the average A claim is valued at about
$1,316.00; the average C claim is valued at about $14.50.)

Why the flawed calculations? Due to a mix-up: Boni had told at least one associational plaintiff's representative (and the representative told writers) that writers didn’t need to send in documents with their claims. So, writers didn’t.

Meanwhile, the claims administrator sent letters to all the writers who followed the flawed instructions, that it had ONLY counted as registered those claims sent WITH registration documents, even if writers included their registration numbers on their claims.

On one private online forum alone, numerous people mentioned getting such letters, concerning as many as 100 of a single writer’s registered works.

The $10.76 million figure was way low.

We were never told what the claims total was after writers with registered articles sent in their registration documentation, and the administrator re-calculated the totals, but knew the totals would be higher. Maybe $millions higher.

Fast-forward to June/July of last year. Defendants hadn't yet conducted an audit; challenges, when they're done, can theoretically bring down the total value of the claims. And remember that the total HAD to be FAR HIGHER than the artificially low $10.76 million. Perhaps high enough to require a significant reduction in the pay-outs to all those with unregistered articles.

Yet, the NEW claims amount total that Boni presented to the appeals court this summer, with no explanation, was $8.9 million.

That’s right: the claims total, which should have risen by some large but unknown number had, instead, mysteriously dropped by $1.86 million!

Where did all the claims go? Nobody is saying. Well, actually, one person did give what appears to be a bogus explanation for the disappearing $millions. We believe it’s bogus for two reasons: 1) the settlement doesn’t provide for the kind of action this person claims occurred; 2) the defense group’s key spokesperson claims no knowledge of the explanation given.

I’ll let you ponder what the above might mean, before I tell you about the latest strangeness with the claims totals, in Part 2 of THE MYSTERY OF THE MISSING $MILLIONS IN CLAIMS. Yes, there’s more. Much more. And it involves $millions more.

If you’re a writer with a claim in this case, this should concern you.

- Anita Bartholomew


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