When I first started the #notchilled hashtag, I said that I was going to use it to tweet harsh things that I believed were true. Here is a conclusion that I think is demonstrably true, but also extremely harsh: Tina Engler is economically irrational, and an economically irrational person is absolutely frightening to have in charge of a company.
No, I’m not going to talk about the Streisand effect, nor do I even refer to the dismal probability of success that this lawsuit has. I’m talking about the fact that it makes absolutely no economic sense to pursue the lawsuit at this point.
Here’s the thing: You can get some schmo of a lawyer to file a barely competent complaint for very little money–my guess would be under $5,000. And this is not always a terrible tactic (in the economic sense; it can be morally bankrupt even if economically sensible), because most people don’t have the money to respond to a lawsuit and so they back down very easily.
Winning a lawsuit defended by competent counsel is a completely different affair. 
If Ellora’s Cave intends to keep up with the suit–responding to discovery, filing for protective motions, writing responsive briefs in reply to motions for summary judgment–it’s almost certainly going to have to spend as much as Jane. And the Dear Author war chest is around $75,000 at present and still growing (Jane’s $20,000 + $53,000 to date in the DA fund + money donated outside the DA fund). As this is America, each party pays for its own attorney.
This only makes sense as a rational response if Ellora’s Cave expects that the damages in this case will exceed the amount they will have to spend on attorneys’ fees.
So what are the chances that Ellora’s Cave will come near that $75,000 mark?
The complaint itself only asks for “…an amount no less than $25,000, plus punitive damages.”
We can guess at how much they might be able to claim. They are (supposedly) losing money because they are losing contracts with authors as a result of Jane’s blogpost. How much do they make on contracts with authors? Well, in the words of Ellora’s Cave:
…the drastic drop in sales has resulted in large net short-term variable production losses and slow and often negative return on investment for EC on almost every new book we publish, with the exception of a handful of the highest sellers.
So by their own claim, Jane’s blogpost has caused Ellora’s Cave to lose contracts that lose them money. If that’s the case, Jane did Ellora’s Cave a favor.
I don’t see how Ellora’s Cave can prove damages of $5,000, let alone the $25,000 claimed in the suit. And that’s to say nothing of the $75,000 minimum mark to make this case economically rational–even if it had no effect on their reputation.
So why is Tina Engler pursuing an economically irrational case?
If Ellora’s Cave were flush with cash, I might not be so critical. But that does not appear to be the case. Whether authors, artists, and editors have been paid or not, Ellora’s Cave shows all the hallmarks of a business with serious cash flow problems. There are the multiple unpaid tax liens. They let almost all their contracted editors and cover artists go. They no longer have a person doing social media. By their own admission, they are losing money creating the products that are their bread and butter. And that’s not even counting signs like this lawsuit, filed in 2011, claiming that Jasmine Jade failed to pay on the lease of business equipment and owed $180,000.
Given all of that admitted evidence, Ellora’s Cave’s choice to spend $75,000 on a lawsuit is particularly bizarre. Do you know what a publisher could do with $75,000 to help turn things around? They could:
- Hire a consultant to advise them on the current state of the digital marketplace.
- Buy 150 BookBub ads in the erotic romance category.
- Repackage all their old books where their cover no longer meets Amazon’s current standards–something that is almost certainly a factor in their current situation.
- Repackage the backmatter to cross-sell all their books.
- Run giveaways to bring readers back to Ellora’s Cave books.
I’m sure we could come up with a lengthy list of all the ways to spend $75,000 to save a company that is, by all appearances, struggling with a cash-flow problem that appears to be an existential threat.
Instead of actually trying to survive, Ellora’s Cave is earmarking whatever liquidity it has to prosecute a lawsuit that is ruining its online reputation, making it so that bloggers and readers actively try not to publicize their books, and which will almost certainly be revenue negative.
So someone tell me: Why is Tina Engler choosing to spend her $75,000 on a lawsuit that amounts to little better than a fit of pique, instead of saving her business? And why should any author ally themselves with a company run by someone whose decisions are not based on business savvy?
 In order for Ellora’s Cave to win this lawsuit, they’re going to have to have a full evidentiary hearing on the temporary restraining order, a lengthy discovery period, motions for protection orders within discovery, various motions for subpoenas (which will be fought vigorously if EC tries to get the commenters’ personal information) and motions to quash subpoenas, depositions, motions for summary judgment on multiple grounds, jury selection, the trial itself, motions for directed verdicts… Once you go from “threatening” to “prosecuting” attorney hours go from on the order of thousands to on the order of tens, if not hundreds of thousands. And this is not counting in the many, many things that could happen–for instance, denying or granting the temporary restraining order is appealable, so add the cost of litigating at least one appeal.