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Sued by Lingua Franca
A defendant wonders, when a magazine goes bankrupt, can it take down its freelance contributors with it?- February 4, 2004
It's a cold Tuesday in lower Manhattan, with that hard Manhattan canyon-wind that gets inside your cuffs and chills your temples. It's cold, briefly, and I'm walking from the new PATH station, at the bottom of the World Trade Center site, toward the Museum of the American Indian, on Bowling Green. I've got a lot of research to do there, for a couple of different projects, and it's good when you live outside the city to be able to stack up errands. Except the other errand today involves a small door near the museum's main entrance, which American Indians find either funny or not funny, depending on which Indians you ask. It's a door labeled "Bankruptcy Court," and I've been summoned there to give back the money Lingua Franca paid me for an article—plus interest and court costs.
Leaving aside the gargantuan something-ness of having the U.S. Bankruptcy Court for the Southern District of New York share quarters with the Museum of the American Indian (a guy in a parka was taking an ironic snapshot of the façade as I arrived), the visit reminded me of an old, troublesome term that people have rightly stopped using but that I'm going to bring back for a moment: "Indian giving."
The lawsuit is unprecedented, and the announcement sent a medium-grade shockwave through the freelance community in New York. It seeks to take back money paid to 27 freelance writers and designers, using it to reimburse investors in University Business LLC, the former parent company of Lingua Franca and University Business magazines. The big question is: If a magazine goes bust—as magazines do all the time—can they take their freelancers down with them? Can they, or rather their receivers, benefit from our work, yet take back the fees they pay after the articles have run and the checks have been cashed and spent? One should hope not, but, as a series of increasingly shrill letters made clear, the law firm of Robert Geltzer, University Business LLC's bankruptcy attorneys, felt otherwise. In an effort not to lose our (long-spent) piece fees, a chosen few from the University Business fold would have the privilege of being crash test dummies.
Arriving at the building, you enter that small door next to the museum entrance, go through some post-9/11 security in the handsome, prewar lobby, head up the elevator, and that's where the machine lives that shakes change out of creditors' pockets. "I'm looking for the courtroom," I said to the guy at the front door examining my Zippo for explosives. "Which one?" he asked. "The, uh, bankruptcy one," I said. "We got Enron, Worldcom..." he recited jovially. "What case you got?" I was starting to feel important. He pointed me through the lobby and up the elevator. "Judge Beatty," he said. "Seventh floor."
The courtroom was modern and architectural, with proper, courtroomy wooden benches and wainscoting. It was about a quarter filled with people in dark, lawyerly suits, none of whom looked bankrupt. I chatted with Mark Bruh, the lawyer for Geltzer, et al. It was very collegial; he reminded me of Steve Buscemi. Judge Beatty appeared—a Congressional-looking woman of about 50, with a bright red coiffure, who radiated the toughness you'd expect from a federal bankruptcy judge. She seemed clearly to be a woman who'd heard it all. "OK, whatta we got today?" she began. I was starting to feel like a defendant.
In fact, I was the first defendant, at least in New York. (There had previously been a hearing in Boston.) It all started back in October 2001, when I'd done an article for Lingua Franca on an alternate theory of human evolution (Elaine Morgan's "aquatic hypothesis"). A couple of weeks after it had gone through edits and fact-checking, and after the galleys had been sent off, I was poking around online and saw a small news item that LF had ceased publication—that its staff had been notified and the office vacated the day before. I called the office and no one answered. Lingua Franca was there one day, gone the next. One imagined an office with Aeron chairs still slowly spinning, half a sandwich on one desk, a cup of coffee and a donut on another.
But that final issue, November 2001, eventually appeared, and my article was in it. I didn't get any further communication from the magazine, and certainly not a paycheck. Other writers said that the editor-in-chief, Jeffrey Kittay, had contacted them promising to pay for their articles, so I sent him an email asking if I could please get paid, too. Soon a check arrived for $1,000 of my $1,500 fee, with a document saying that I could make a claim against the estate for the rest of the money. (I decided to let the other $500 go.) And that's how I got sued.
"Bankruptcy law is weird," a friend of mine explained. "It's screwed up and inconsistent, and that's why there are always calls to reform it. It's not like other branches of law." The hook that Geltzer is trying to hang freelancers on is the issue of "preferential payments." If a company facing bankruptcy makes strange payments outside the normal realm of business, the law says that—but this is liable to get boring. Essentially, such payments are suspicious, because the company might have been trying to hand over its assets to cronies instead of paying its legitimate debts. The law provides that such payments can be recouped. The Geltzer firm is trying to use that law to take money back from freelancersexcept, of course, the payments weren't "preferential" at all; they were normal, everyday fees for articles and design work. Moreover, a large portion of the money received will go toward repaying "unsecured loans" from wealthy investors in University Business—including the company's financial backer, Donald Sussman, and Jeffrey Kittay and his family.
I want to drive that point home a little bit. If this gambit works, a lot of the money collected will flow from freelance writers and designers to the personal accounts of Jeffrey Kittay—wealthy from birth, a privileged man who, as far as evidence shows, has never had to worry which wine he could better afford with dinner, let alone the weekly grind of rent, repast, and utilities, in which a thousand dollars can be an impossible sum to scare up from nothing.
Kittay is, according to quotes in the press, against the lawsuits, and, legally, he has no control over them. But despite being on the money-receiving end of things, he's said nothing to anyone enmeshed in the affair. There's been no vote of support, no attempt at well-wishing, no hint that he's committed to ensuring that everything comes out okay in the end. There've been no hints (even) as to what the defendants should reasonably think or expect. Calls have gone unreturned; emails have fallen into a void. Kittay has been a cold, distant moon, plying his orbit on his own behalf.
I'm not going to do to Jeffrey what people would likely do to me if I were in his position. I'm not going to yell out, "Kittay, you dick!" and spill a beer on his shoes. I'll simply point out that the suit breaks a serious compact between writers and editors, wherein we writers are expected to hold up our end—doing research, advancing our expenses, sourcing and writing articles—while editors are there to take care of business on the other end. The problem here is, unfortunately, one of bad generalship—or, in strictest terms, one of writers being hung out to dry at the editor's expedience. This is bad for both sides.
It's more than that, though. I'll explain.
I am perhaps the least likely person to sue, at least if you want to get money. I don't have any, for one thing. I'm also stubborn, and scrappy in print, and a whole lot of other things that in aggregate make me a very small, spiny hedgehog for lawyers to dine upon. I was also the least attractive quarry of the first batch of New York defendants, with a single article fee in hazard ($1,500, lowballed from the outset, and only two-thirds paid). And I also showed up to court, which was clearly not what the plaintiffs wanted or expected.
They expected to fire off summonses and see who wouldn't fight. The refined and scholarly Caleb Crain was sued, but he was one of several defendants not properly summonsed; he didn't come to this court date. Copy editor Joel Bernstein got an adjournment. Siddartha Deb, the novelist, was in India and didn't come. A graphic design firm settled before the case came up, as did at least two other defendants.
The crash test dummies in attendance were myself and a nice, tweedy and academically bearded gentleman named Ron Feemster, who wrote for University Business. Cynthia Cotts had a great account of the proceedings in her Village Voice column on January 14, and I'll quote her quoting Judge Beatty. Ron and myself had just testified that we wrote articles, got paid for them, et cetera. And Judge Beatty got very large.
"Did you listen to what they just said?" the judge snapped at Geltzer associate Mark Bruh. "One got paid 30 days later, and one got paid 90 days later.... It's known as payment in the ordinary course of business." She called the lawsuits "trashy" and told Bruh to settle them with anyone who showed up in court, adding, "Ten cents on the dollar would be a good deal for you. You can make your money on the ones that don't show."
Judge Beatty hasn't the power, at this stage of the game, to dismiss the suits outright, but her feelings toward them have been made rather stunningly clear. And her proposal seems pretty good until you count up the people who didn't show, and the ones who settled, and until you figure in legal fees and the basic human hassle involved. (The Authors Guild has generously given legal assistance, while another advocacy organization has said that they could help repay any money lost.) It's pretty good until you consider that this could happen any time a magazine or media company goes bankrupt.
There are 27 freelancers involved in this case, and if Geltzer's strategy pays off (as it so far has), it doesn't matter whether it's right or wrong, legally tenable or not—or whether judges issue smackdowns from the bench, as Judge Beatty did. There's almost no cost in shotgunning summonses to 27, or 100, or 300 people, to see who balks or breaks out the checkbook. If suing 27 mostly small-time freelancers is worthwhile, then any other major magazine that goes under could leave a swath of destruction behind. Good sense tells me not to be too didactic or to sharpen the point too sharply, but that's not the way things are supposed to work in journalism.
In my first chat with Bruh, Geltzer's attorney, I called him up at the office and tried to reason with him. "Mark," I said, "you don't want to do this, because it's going to be a big problem for everyone. Jeffrey Kittay doesn't want it, and there's going to be press, and people's feelings are probably going to get hurt—and really, there's nothing much to be gained." And he said he understood, but that he'd see me in court.
So, there I was, seeing him in court. I was up on the stand, leafing around in my notebook and combing my hair with my fingers. "Mr. McNett," Judge Beatty said from her oaken battlement at the front of the room, "tell me about this article you wrote." "It was—," I began, but the P.A. system was sounding bloaty and strange. "Can't hear," said the stenographer. "Is this better?" I said, adjusting the mike. "I'll lean into it a bit." "That's better," said someone in the audience. "It was an article for a magazine called Lingua Franca," I began, conscious of the microphone and my voice through it. "And the relationship between Lingua Franca and the University Business company was always a little shadowy." I had wanted to say that my job was long done, and that University Business's legal flailings were none of my affair, and that indeed I was a rankled traveler passing through on my way to other things—and, by the way, there are such wonderful riches in the museum next door, and how fortunate it is to have the court date right here, in the same building. But you don't say such things in chancery, and I didn't. Judge Beatty only wanted to know about the money: How much was it, what was it for, when was it paid?
But I don't really care about those financial details, per se, and I think few of the defendants do. I think most people involved care mostly about fairness, no matter what privation might come from leveling one's bank balance to help repay wealthy people's pet investments. I understand Jeffrey's side, I think, and I'd wager he's probably a good guy. I also didn't see him in court, when his troops were under fire there. And that's what has to happen, if such a situation ever brews up again. Plying a distant, cold orbit while others navigate the consequences of one's mistakes is, if not financially, then certainly ethically, bankrupt.
Gavin McNett has written for The New York Times, The Washington Post, and a magazine called Lingua Franca.
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