The complaint states that Action Lab’s agreements with creators promised that their works would be published in print, not just digitally, that Action Lab would actively promote their work, and that creators would be provided with quarterly sales reports. In fact, the plaintiffs allege, Action Lab failed to do any of these things, and as a result, some creators were never paid the royalties they were owed. Furthermore, the suit says, Action Lab kept creators in the dark about production delays, hampering their own marketing efforts and leaving them out of pocket for expenses, and “failed to do the bare minimum to drum up retailer support.” Several creators alleged that when they tried to get their rights back, Action Lab responded by demanding large sums of money, which it claimed was repayment for Diamond’s expenses or the cost of promoting the books.
The lawsuit also alleges that in late 2019, “Defendant Seaton apparently stepped away from his duties at [Action Lab] without telling any Creators, and left Shawn Pryor in charge of daily operations.” Then, the suit alleges, Seaton told the creators that Pryor was “incapable of handling the company” and had left in January 2020. Several times after that, Seaton said he was about to step down, but the lawsuit alleges he is still running the company.
After this list of general allegations, the individual plaintiffs set out their complaints of late payments, missing or inaccurate financial statements, delayed print releases, mismanaged digital marketing, interference with outside contracts, and poor production quality.
In three separate counts, the suit requests that the court find Action Lab in breach of their contracts, declare the contracts null and void, and award monetary damages from Action Lab and punitive damages from Seaton.
Action Lab was founded in 2010 and has been through several restructurings, one in 2015, when President Kevin Freeman stepped down and was replaced by Action Lab co-founder David Dwonch (see “Action Lab Restructures”). In 2017 another co-founder, Shawn Pryor, returned to the company as President of Creative Relations, and Dwonch stepped back from his position as President of Marketing and Development (see “Action Lab Executive Shifts”).
