With sales of the erotic trilogy Fifty Shades of Grey topping 100 million worldwide, the deal that made its English author E.L. James and Australian publisher Amanda Hayward wealthy women has erupted into a bitter legal dispute.
Two Texas women who claim to have helped make the books global bestsellers have filed a lawsuit in a US county court seeking a share of advances and royalties they claimed they were tricked out of by Hayward, their Sydney business partner.
In dispute is tens of millions of dollars likely paid by Random House for the publishing rights to Fifty Shades of Grey, and its sequels Fifty Shades Darker and Fifty Shades Freed. The stories of a virginal college student and her sexually corrupted boyfriend are currently being made into a film starring Dakota Johnson.
Jennifer Lynn Pedroza of Arlington, Texas, says she was a partner with Hayward in The Writers Coffee Shop (TWCS), which started as a library of free online fan fiction stories in 2009, and was the first to put Fifty Shades into e-book format.
But the ''self-dealing'' Hayward, ''fraudulently'' restructured TWCS under the guise of tax minimisation, without the knowledge of the partners, so payments from the Random House deal, signed in March 2012, flowed exclusively to herself.
According to the complaint, Pedroza, who says she issued press releases, made speaking engagements and packed and mailed paperback books for the partnership, received a one-off payment of $100,000 from the initial Random House advance.
She was subsequently persuaded to sign an individual contractor agreement after Hayward swore on her own ''daughters' lives'' she would never terminate her services. She was sacked in January 2013.
The second complainant, Christa Beebe, was brought into the fold January 2012 to help with marketing and distribution of books including the erotic trilogy. Her unpaid position ''soon morphed into a salaried position''.
It's alleged Beebe relied on promises from Hayward of full time employment, rejected a teaching job, and was then also sacked.
The women's lawsuit claims Hayward has already spent some of the proceeds from the Random House deal on a $5 million home in north western Sydney as well as a gymnastics gym.
Their lawyer, Mike Farris, of Dallas firm Vincent Lopez Serafino Jenevein told Fairfax it was the women's contention that the Australian company set up by Hayward under Australian law did not own the publishing rights to the Fifty Shades trilogy.
''I believe that the law, the facts and the equities are in our favour, although I never like to speculate on the outcome of the case. However, I like our chances in front of a jury," Farris said.
Farris did not expect either E.L. James or Random House to become parties to the law suit. .
But the court petition raises the possibility Hayward defrauded E.L. James, a pseudonym for Erika Leonard, and publishers Random House in signing an agreement on behalf of a company that did not own the publishing rights. Random House Australia has declined to comment.
By last month, Fifty Shades of Grey had spent 112 weeks on The New York Times top 20 bestseller list, including an entire year at number one.
James topped Forbes magazine's list of highest earning authors with earnings of $95 million for the 12 months to June 2013, besting John Grisham, Dan Brown and Stephen King.
Hayward, who is TWCS' chief executive, has refused to comment.
The lawsuit asks the court to recognise that TWCS is an ongoing partnership and, as a partner, Pedroza is entitled to 25 per cent of the profits.
Pedroza and Beebe are seeking ''equitable relief, including injunctive relief, the imposition of a constructive trust, damages, and to trap funds not yet paid by Random House''.
Pedroza is seeking monetary relief in excess of $1 million. The court has temporarily restrained Hayward from collecting any additional proceeds from the books' sales. A hearing date of June 12 has been set down for the women's application for a temporary injunction.