It looks like Random House isn't quite done paying for James Frey's inability to tell the truth. Following the disclosure in January that Frey had fabricated just about all the significant details in his "memoir" A Million Little Pieces, consumers in several states filed class-action lawsuits claiming they'd been victims of fraud. Now, a source with detailed knowledge of the proceedings tells Radar a deal to make them go away is imminent. "It looks like the case is getting settled," says the source. "A memo of understanding is circulating among the various plaintiffs right now."

Under the proposed plan, readers who bought the book before Random House publicly admitted its falsity will be eligible for a full refund.

That doesn't mean, however, that the publisher will have to cough up the price of all 3 million-plus copies it sold: the guidelines for making a claim will almost certainly require a dated receipt, something few buyers are likely to have preserved. "The whole settlement will not be large," says the source.

That helps to explain why Random House, which did not return calls for comment, is even considering settling what some legal observers consider to be a long shot suit. Moreover, the possible cost of losing goes far beyond whatever damages a judge might award to Frey's quote-unquote victims, says Frank Dehn, an attorney who specializes in media, libel and intellectual property law. With such a precedent in place, Random House—and every other publisher—would suddenly have to worry about the accuracy of every non-fiction book it publishes, memoir and otherwise. Adds Dehn, "The likelihood is it would bring all kinds of class-action lawyers out of the woodwork every time an author's claims are challenged."