Harcourt Brace Jovanovich, Inc. v. Goldwater
532 F.Supp. 619, 1982 U.S. Dist. LEXIS 10891, 8 Media L. Rep. (BNA) 1217 (1982)
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Rule of Law:
A publisher, under a contract requiring a manuscript to be 'satisfactory to the publisher in form and content,' has an implied obligation to engage in appropriate editorial work with the author and cannot reject a manuscript arbitrarily or in bad faith.
Facts:
- In early 1977, a proposal for the publication of Barry Goldwater's memoirs, with Stephen Shadegg as the writer, was submitted to Harcourt Brace Jovanovich (HBJ) by literary agents Oscar and Lisa Collier.
- On January 26, 1977, HBJ signed a contract with Stephen Shadegg and Barry Goldwater, agreeing to pay a $200,000 advance (with $65,000 paid at signing) for the memoirs, which included a clause stating the manuscript must be 'satisfactory to the publisher in form and content.'
- In February 1977, HBJ editor Carol Hill exchanged letters with Goldwater, offering vigorous editing, which Goldwater explicitly welcomed.
- On June 22, 1977, Shadegg sent Hill a draft of seven chapters, approximately 30,000 words, and requested comments and suggestions, but Hill did not communicate directly with either Shadegg or Goldwater in response.
- In September 1977, Hill provided general negative comments about the draft to Oscar Collier but, after a Washington Post item implied Goldwater was seeking a ghostwriter, wrote a letter to the authors reassuring them of her enthusiasm for the book.
- On July 13, 1978, Goldwater submitted 24 chapters to Hill, explicitly requesting her honest opinion and suggestions for further writing, but Hill made no attempt to communicate with the authors or provide specific editorial feedback.
- On September 29, 1978, the full manuscript was submitted to HBJ, but on August 31, 1978 (before the contract deadline, but after the full manuscript was actually submitted), HBJ rejected it as unacceptable and demanded the return of the $65,000 advance.
- Following HBJ's rejection, the same manuscript was acquired by William Morrow & Company, where editor Howard Cady found it fascinating, worked collaboratively with Shadegg through a normal editorial process, and published it as 'With No Apologies,' which became a bestseller in the fall of 1979 with minimal additions.
Procedural Posture:
- Harcourt Brace Jovanovich, Inc. (plaintiff) filed a lawsuit against Barry Goldwater and Stephen Shadegg (defendants) in the United States District Court for the Southern District of New York.
- The case was tried to the court without a jury.
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Issue:
Does a publisher, under a contract provision requiring a manuscript to be 'satisfactory to the publisher in form and content,' breach its contract by failing to engage in any editorial work with the authors before rejecting the manuscript?
Opinions:
Majority - GRIESA, District Judge
Yes, HBJ breached its contract with Shadegg and Goldwater by willfully failing to engage in any rudimentary editorial work or effort. The court concluded that a publisher, under a contract requiring a manuscript 'satisfactory to the publisher in form and content,' does not have unfettered license to act arbitrarily. There is an implied obligation for the publisher to engage in appropriate editorial work with the author, a principle supported by custom of the trade and necessary to prevent an illusory contract. This work must involve reasonable communication, an interchange about specific desired changes, identified faults, and suggestions for omissions or additions, to give the author a reasonable opportunity to perform. HBJ utterly failed in this duty, providing no detailed comments directly to the authors, despite their explicit requests, and instead demonstrated a desire to replace Shadegg. The fact that the same manuscript, with normal editorial input from another publisher, became a bestseller underscored that HBJ did not act in good faith when it claimed the manuscript was unsatisfactory. The court referenced Random House, Inc. v. Gold as affirming the good faith requirement in such contracts and noted that HBJ’s conduct demonstrated a lack of good faith.
Analysis:
This case significantly clarifies the implied duty of good faith in contracts containing 'satisfaction clauses,' particularly within the publishing industry. It establishes that a publisher's discretion to reject a manuscript as 'unsatisfactory' is not absolute but is constrained by an obligation to provide reasonable editorial support and feedback. This precedent serves to protect authors from arbitrary rejections and ensures that publishing contracts are not rendered illusory by a publisher's unilateral and unexercised right to dissatisfaction. The ruling underscores the importance of a collaborative relationship in creative endeavors and may influence the interpretation of similar subjective satisfaction clauses across other contractual domains.
