Posts Tagged ‘x-art’

Nearly every motion authored by Jason Sweet or Dan Booth is a treat. Once in a while the treat is so good I can’t help sharing the joy with others.

Booth Sweet fights two Ohio cases against Malibu Media/Lipscomb. I wrote about one of them — Malibu Media v. John Doe (OHSD 14-cv-00493). Certain interesting things happened since the last update.


Yousef Faroniya

After an Ohio Judge Timothy Black scolded the plaintiff for its sleazy litigation practices in two other OHSD cases back in May, the troll, represented by a young and sloppy lawyer Yousef Faroniya did what submissive puppies normally do: dropped belly up and peed on the floor. Not only were those two lawsuits voluntarily dismissed, but also the troll cut and ran from the instant case. By “cut and ran” I mean a voluntary dismissal without prejudice, which usually leaves a defendant without a prospect of recovering attorney fees. The de-facto absence of any downside for the plaintiff and unconstitutionally high statutory damages are the main two reasons vermin such as M. Keith Lipscomb parasitize on the US judiciary.

However, usually doesn’t mean always, and thus Jason Sweet has asked the court to consider 28 U.S.C. § 19 sanctions, as well as to exercise its inherent sanction authority and punish Malibu Media and Yousef Faroniya for their frivolous conduct:

A court must temper a plaintiff’s right of voluntary dismissal with consequences when it used not in good faith, but rather as a tactical tool to frustrate due process and in such a way that prejudices a defendant’s rights.

Malibu of course disagreed, which prompted the defendant’s reply in support of sanctions — the subject of this story.

This reply is hilarious, and you should read it in its entirety. I only want to emphasize two points.

1

The Malibu Trolling Algorithm (aptly named “Greed over Guilt”) presented in this motion should be made a PowerPoint slide in the mandatory field manual for attorneys and judges exposed to the trolling virus:

  1. Use a sliver of evidence as the basis for suit and move for early discovery.
    [At which point, defendant is notified by his ISP of suit.]
  2. Wait for defendant or his counsel to initiate contact and inquire about a settlement.
    [Defendant is then notified of the statutory maximum and Plaintiff’s willing to settle for the minimum. Defendant is now faced with three choices: 1) financial ruin he loses; 2) financial ruin and humiliation if he litigates; 3) fight.]
  3. If no settlement agreement is reached, amend the complaint to name the defendant.
    [Defendant, regardless of guilt, must now contend with the stress that friends, family or employers may stumble across this public filing]
  4. Move to extend the time to complete service repeatedly.
    [This serves two purposes in hopes of facilitating settlement: 1) to hang the suit over defendant’s head; and 2) to draw out defendant’s litigation expenses.]
  5. Serve the defendant. If defendant does not default, move on to discovery.
  6. Discovery tactics include: 1) move to extend the time to complete expert reports repeatedly; 2) depose neighbors.
    [Again, the extensions are to draw out the litigation. The depositions are to publicly shame a defendant.]
  7. Voluntarily dismiss the matter at any point before trial.

(In between 5 and 6 I would insert frivolous motions to strike the defendant’s affirmative defenses. These motions are filed in nearly 100% of cases after the defendant answers, and they have no purpose other than to multiply proceeds and delay an inevitable dismissal, thus buying more time to apply pressure.)

(In between 6 and 7 I would insert a slimy tactics of stretching the facts to accuse the defendant in spoliation and perjury if no X-Art’s obscenities were detected on the hard drives.)

2

The second important point is, as the headline states, a request to declare Malibu Media a vexatious litigant:

Included among the Court’s inherent authority is the ability to impose pre-filing restrictions on harassing and vexatious litigators. […] Plaintiff and its counsel have filed hundreds of cases, including this one, in this District alone. None have gone to trial. Rather, most are voluntarily dismissed or end in default judgments of one kind or another. More so, all are brought without regard to guilt, but rather to harass and extort settlement. Given the sheer volume of cases brought, this Court would be well within its power, should it chose, to declare Malibu Media to be a harassing and vexatious litigator and impose restrictions.

Hard to add anything and hard to disagree: I’m actually wondering why defense attorneys and judges didn’t consider protecting courts and public from the Malibu judicial plague this way.

Again, read the whole motion and enjoy:

 

Jason Aaron Kotzker

Colorado attorney Jason Aaron Kotzker filed about 450 shakedown lawsuits on behalf of a “barely legal” pornography purveyor X-Art/Malibu Media in New York and Colorado. In October 2014 he abruptly stopped working for the Miami Troll Central (Michael Keith Lipscomb and his firm — the people who, together with the German Mafia, steer thousands of similar extortion actions across the US). No new Malibu lawsuits were filed since then in Colorado (and Lipscomb currently employs another local attorney in New York). All but two Colorado lawsuits, COD 2013-cv-02385 and 2013-cv-03358 (I wrote about the latter case recently), are currently closed.

Apparently, in addition to scamming alleged file-sharers out of money, Kotzker ran another con, mugging the most needy — desperate people who lived from paycheck to paycheck and used payday loan services as a last resort to make ends meet.

According to the complaint filed on 8/7/2015 by the Federal Trade Commission (NVD 15-cv-01512), two entities that were largely controlled by Kotzker — Sequoia One LLC and Gen X Marketing Group LLC — had been knowingly selling consumer data to criminals:

From at least 2011 to at least 2013, Defendants operated as data brokers, collecting and selling sensitive consumer information from consumer payday loan applications to non-lenders.

In particular, Defendants sold this information to at least one non-lender, Ideal Financial Solutions, Inc. and its subsidiaries (collectively, “Ideal Financial”), knowing or having reason to know that Ideal Financial used the information to make unauthorized debits from the consumers’ bank accounts.

Washington Post wrote a story about this news on 8/12/2015:

The FTC said Sequoia One and Gen X Marketing Group, which both primarily operated out of Florida, supplied Ideal Financial with account information from at least 500,000 people who applied for payday loans, leading to more than $7 million being taken from those consumers’ bank accounts without their consent.

In addition to Kotzker, three other individuals were accused, but they have recently conditionally settled, apparently throwing their former brother-in-scams under the bus. While someone should repay those seven million dollars, The Washington Post doubts that those who were robbed will ever get their money back:

The Bartholomews agreed to settle with the FTC for $7.1 million but that will be suspended after they pay $15,000. McDonnell agreed to a $3.7 million settlement, but that is suspended because of his inability to pay. Although both judgments could be due immediately if the defendants misrepresented their financial status, it seems unlikely that consumers will be getting their money back through this case.

This is certainly a disbarment grade offence, and Mr. Kotzker deserves to lose his license, to be financially ruined and even criminally prosecuted (I wonder why this is a civil case to begin with). The only thing that doesn’t let my glee reign is the fact that Kozker has three kids, who are too young and innocent to realize how badly their father failed them.

FTC Press release

 

Malibu Media v. Michael Harrison (INSD 12-cv-01117) lasted for 3 years and amassed almost 400 documents — more than any other porn copyright trolling lawsuit by a large margin. Two weeks ago this case was moving full throttle towards a first jury trial of this kind¹ (set to take place in September). The defendant, represented by Gabriel Quearry, was bombarded by clusters of motions in limine. The entire Troll Central in Miami worked hard to bury the young attorney in paperwork. Not trusting his local Paul Nicoletti, Keith Lipscomb even took the matters in his own hands by appearing in a distant jurisdiction. According to Lipscomb, the evidence of the defendant’s guilt (including perjury and spoliation of evidence) was overwhelming.

And suddenly, on 8/11/2015 the case abruptly ended with a walk-away settlement (which means that both parties are left to bear their own fees and costs).

 

Those who follow tech media are aware of some of the recent developments. Ars Technica and TechDirt ridiculed some Malibu’s motions in limine — a lame attempt to keep the yet-to-be selected jury in the dark about the public’s not-so-flattering opinion about the porn shakedown business in general, as well as about the existence of this blog in particular (Die Troll Die’s too). The troll even moved to shield the jury from hearing certain unflattering terms (“copyright troll,” “extortionist,” and even “pornographer”), which was also widely ridiculed.

Earlier this year this case was also in the news: Magistrate Dinsmore surprisingly ruled that the defendant had destroyed his failed hard drive not in bad faith, thus no sanctionable spoliation took place².

On 7/20/2015 Lipscomb moved to sanction the defendant for his “proven perjury.” The troll claimed that

The version of Internet Evidence Finder Mr. Paige used at the time of his original examination was unable to parse out certain data such as shellbags and “jump list dest. list entries”. Using an updated version of the software, Mr. Paige located six (6) network storage locations (a/k/a drives) that were not identified or produced.

In other words, Lipscomb attempted to introduce new evidence on the eve of the trial, which is regarded as “litigation by ambush” and is universally frowned upon. The claim by a disgraced forensic expert Patrick Paige was also highly questionable: the software in question started supporting shellbags and jump lists a year ago: on 8/7/2014 and 6/18/2014 respectively. There is no explanation why Paige “found” new information just recently: this motion indeed looked like an ambush.

Why?

So why did Lipscomb and Co. abandon a seemingly strong case and forfeit hundreds of thousands in attorney fees, which would be undoubtedly awarded if the troll won the case?

While the exact answer to this question will probably never be known (due to usual settlement confidentiality), we have been watching these cases long enough to make an educated guess. In my opinion, Lipscomb was too scared to lose this lawsuit: such loss would definitely slow down his well-oiled extortion machine. In other words, a win in the jury trial lottery was far less valuable than the consequences of a loss.

While I don’t possess a magic crystal ball and can’t tell how the trial would play out, the prospect of Malibu’s loss was more than real: Indiana is a rather conservative state, and it is not unthinkable that a jury would find little love for an obscenity purveyor, especially the one involved in extortionate practices aimed to pad its already filthy wealth by driving struggling fellow middle class families into huge debt. Just look at Lipscomb’s word dance in his proposed jury selection questions.

The above-mentioned attempt to ambush the defendant with new evidence could also play a role. This “newly” discovered data didn’t produce any smoking gun: the plaintiff’s motion only alleged that the defendant was not truthful in his disclosures concerning his hard drives. However, no traces of Malibu’s obscenities were ever found.

So…

This event may be considered not so newsworthy by the media: I understand that stories about copyright troll asking not to be called “copyright troll” generate more interest. However, to those people who closely follow the developments in the US copyright trolling landscape it is huge news.

Essentially, the most prolific copyright troll in the US history agreed to the critics’ accusation that it has absolutely no intention to try thousands of its shakedown cases in front of a jury, and uses (read: abuses) US courts solely as a part of the money-making machine. Not really news, but this bold confirmation is very important.

Some judges understand what’s going on, yet, alas, a critical mass is nowhere near. I’m sure it’s a matter of time. It took four years for IARDC to start the proceeds against Prenda. Guardaley trolls (including Lipscomb/Malibu Media) are more cautious, and while they are not really different from Prenda, generally they don’t resort to outright fraud, so, unfortunately, it will take much more time to eradicate this particular species of parasites.

Last but not least

In one of the status reports (can’t currently locate) Lipscomb/Nicoletti called the defense attorney Gabe Quearry “difficult” and “unreasonable.” Normally, these words have a negative connotation, but not in this case: “reasonable” in Lipscomb’s vocabulary evidently means cooperating with his racket by talking a client into settling. It is my strong belief that “difficult” people (in this sense) are those who cause the change for the better: Gabe Quearry chose to fight for his client and the cause, and made this world a better place. Not that the price was low: of course three years of unneeded stress left scars — both emotional and financial. I wish Gabe and Michael all the best.

Coverage

 


¹ Lipscomb touts so-called “Bellwether trial” as a valid precedent, “the first Bittorent case that was tried.” This is beyond laughable. I don’t know any attorney (except for the trolls) who took this de facto settlement conference seriously: all the defendants settled prior to what was formally a bench trial, no cross-examination of witnesses took place… Two years later Lipscomb threw a couple of bones to then defense attorney A. Jordan Rushie, apparently for not interfering with this miscarriage of justice. It was clearly a show directed by Lipscomb, and it was aimed at ramping up future settlement demands. Even judges have been scoffing at this travesty.

² Three months ago Magistrate Dinsmore ruled the opposite way in Malibu Media v. Tashiro (INSD 13-cv-00205), finding that spoliation did occur, which led to a default judgment — a rare remedy in an actively litigated case. Lipscomb is now asking for $630,000 in damages (no, it was not a typo). As a result, the family of a nurse and a sales manager is being driven into bankruptcy by a stone-hearted obscenity purveyor, a pathological liar and a law breaker Colette Field, who claims that “We do not want to cause anyone hardship.”

When a porn copyright shakedown factory Malibu Media / X-Art resumed its operations in New York after a two-year hiatus, it raised many brows because this state has proven to be very hostile to copyright trolls in the past: to my understanding, in 2012 New York Southern and Eastern districts amassed the largest number of court rulings scolding trolls one way or another.

Astonishingly, this time the troll lawyers (Lipscomb, Eisenberg and Baker, via a local Jacqueline M. James) managed to stay afloat and fleece New York citizens for almost a year, with very few setbacks. To date, Malibu Media filed 253 cases (NYSD: 200, NYED: 53).

Alvin K. Hellerstein
US Federal Judge
Alvin K. Hellerstein

This may change after today’s Order and Opinion issued by a district judge Alvin K. Hellerstein in Malibu Media v. John Doe (NYSD 15-cv-04369). Malibu’s motion for ex parte early discovery was denied, thus the case was effectively dismissed.

This order was built upon findings and opinions by other judges, and it is both significant and unique because of the number of citations from troll-busting New York, Wisconsin and Ohio rulings.

Citing a wide known “Copyright Trolling, An Empirical Study” by a Chicago law professor Matthew Sag, the judge started with describing the trolls’ modus operandi:

Recent empirical studies show that the field of copyright litigation is increasingly being overtaken by “copyright trolls,” roughly defined as plaintiffs who are “more focused on the business of litigation than on selling a product or service or licensing their [copyrights] to third parties to sell a product or service.”

Quoting last month’s OSC by an OHSD Judge Timothy Black, Judge Hellerstein effectively called Malibu “copyright troll,” despite Lipscomb’s comical effort to deny the obvious.

And after stating that

In 2012, judges in the Southern District and across the country began awakening to the danger of copyright trolls, especially in the context of pornography,

Judge Hellerstein continued with the most damning quotes from orders by judges Marrero, McMahon, Baer, Brown, Fox, Black, Oetken, Conley, Randa and others. Again, I never saw an order based on such a thorough research. (We covered the majority of the cases cited in this order — follow the links in the previous sentence.)

In denying Malibu’s motion for ex parte discovery, the judge analyzed the factors allowing this type of exceptional relief, and in the judge’s opinion, none of these factors were favorable to Malibu: a nice reminder that the phrases “ex parte discovery” and “rubber stamp” are spelled differently.

Citing Judges Marrero and Oetken, Judge Hellerstein time and again reiterated the simple fact that an IP address is not equal to a person, thus concluding that Malibu didn’t show a prima facie claim:

[t]he fact that a copyrighted work was illegally downloaded from a certain IP address does not necessarily mean that the owner of that IP address was the infringer. Indeed, the true infringer could just as easily be a third party who had access to the internet connection, such as a son or daughter, houseguest, neighbor, or customer of a business offering internet connection.

Moreover,

And even if Plaintiff could definitively trace the BitTorrent activity in question to the IP-registrant, Malibu conspicuously fails to present any evidence that John Doe either uploaded, downloaded, or even possessed a complete copyrighted video file.

Finally, Plaintiffs assertion that there is no alternative means of obtaining the desired information is inadequate. The only support for it comes from the declaration of Patrick Paige who, as Magistrate Judge Fox found in a different case, lacks personal knowledge of the methodology used by ISPs to match the IP address with its registrant. […] The Paige declaration that Judge Fox found deficient nearly three months ago is identical to the Paige declaration submitted in support of this motion. It fares no better this time.

The judge didn’t forget about the most egregious troll’s conduct, specifically:

When courts have attempted to place restrictions on the subpoena to prevent Malibu from abusing the process to extort defendants, Malibu has flagrantly disregarded them. For example, after one court issued “two orders unambiguously ordering [Malibu] to file [the identified IP-registrant’s name] under seal,” Malibu filed it publicly anyway. […].

And in the Eastern District of New York, Magistrate Judge Gary Brown took additional precautions to protect John Doe’s identity by explicitly instructing that “the subpoenaed information be sent directly to the Court, ex parte and under seal.” Patrick Collins, Inc. v. Doe 1 […]. Malibu instead served subpoenas that requested the identifying information be sent directly to Plaintiffs counsel.

The conclusion was devastating to the plaintiff (emphasis is mine):

In light of Malibu’s history of abuse of court process and its failure to show “good cause,” I decline to give it the benefit of an exception to the normal rules of discovery. Plaintiff’s motion for leave to serve a subpoena on Time Warner Cable is denied. The case will proceed in normal fashion.

I really hope that other New York Judges will adopt this extremely well-researched opinion and oust the abuser from their state, this time for good:

 

Coverage
Timothy Black
US Federal Judge
Timothy Black

An Ohio Judge Timothy Black clearly understands the shakedown nature of the Malibu Media/XArt pornotrolling cases, and he is irritated. Judge Black admonished the troll on more than one occasion in the past, and I find it astonishing that Malibu’s local, telephonophob Yousef Faroniya, and his puppeteers in Miami continue playing games with this judge.

Today Judge Black issued orders to show cause in two Malibu Media v. Doe cases assigned to him (OHSD 14-cv-00707 and 14-cv-00718). This is the third OSC in each case. The first one was about Malibu not serving the defendants timely. The second OSC dealt with Malibu’s delay to apply for entry of default. And the third one was issued today — to show cause why these two cases shouldn’t be dismissed for failure to timely move for default judgement — despite explicit orders to file such motions within 21 days.

Judge’s patience is surprising, borderline frustrating, but as we read past the first three pages, it becomes clear that his patience is so thin that the next violation, no matter how small, will be disastrous for Faroniya and Lipscomb. What started as a narrow, case-related stuff, developed into a holistic, damning description of the troll’s modus operandi:

The Court does not view Malibu Media’s conduct in this action in isolation. Rather, the Court views it as part of an unmistakable pattern that has emerged in other actions before this Court and in context of observations made by multiple other federal judges in cases involving Malibu Media.

This Court has observed the conduct of Malibu Media and its counsel of record in over 60 cases filed in this District in the past twelve months. This is not the first case in which Malibu Media has filed a summons return well after the date of service. Counsel appears to have made a misrepresentation in seeking an extension of time to complete service in two cases. The Court also issued an order to show cause after counsel publicly filed a defendant’s name in direct violation of two orders unambiguously ordering counsel to file that information under seal.

Judge Black outlines every questionable conduct he is aware of (and makes a note that it may be just a tip of the iceberg):

The Court is not blind to the reality that these allegations likely substantially underrepresent the amount of misconduct that goes unreported by defendants who simply pay Malibu Media’s settlement demand rather than face the prospect of expensive and extensive litigation regarding their purported interest in pornography.

The judge unapologetically calls Malibu Media ”copyright troll” amid Lipscomb’s comical protestations and his reliance on Judge Baylson’s “not a troll” indulgence issued during the shameful Bellwether Settlement Conference:

The Court is aware that Malibu Media, through separate local counsel, has filed thousands of similar cases in federal courts across the country. A copyright troll has been defined as “an owner of a valid copyright who brings an infringement action not to be made whole, but rather as a primary or supplemental revenue stream.” […] Under this definition, Malibu Media certainly qualifies. However, Malibu Media generally responds to this allegation by pointing to comments of the trial judge in the so-called bellwether trial as unassailable proof that its intentions and tactics differ from other entities that bring copyright infringement actions related to pornographic movies. […] The greater weight of experience suggests otherwise.

Judge Black calls out at length Malibu’s abusive tactics of filing inadmissible, scandalous “third party infringement evidence” — the infamous “Exhibit C,” for which Malibu and its local Mary K. Schulz were sanctioned twice in Wisconsin.

It is heartwarming to see that this judge can recognize when Lipscomb adapts his tactics ostensibly to comply with orders, but in reality — to smuggle the old sleaze under the guise of novel approaches:

Malibu Media is a sophisticated litigant, so it should not be allowed to avoid sanctions simply by adapting its tactics after being questioned by multiple federal judges.”

As an example of such “adaptation,” the judge presents his own experience of striking certain paragraphs from a complaint, having found those paragraphs to be “Exhibit C” in disguise:

Instead of attaching Exhibit C, Malibu Media adapted its practice and now made an explicit reference to a document with “additional evidence” that the defendant had distributed a large number of third-party files through BitTorrent. Malibu Media disingenuously offered to produce this document to the Court with the seemingly off-handed remark that “many of the titles to the third party works may also be relevant to proving Defendant is the infringer because they correlate to the Defendant’s hobbies, profession, or other interests.” Id. Citing the two Wisconsin district court cases that imposed sanctions for attaching Exhibit C, the Court struck the offending paragraphs from the complaint and ordered Malibu Media to file a conforming amended complaint forthwith. Two months later, Malibu Media voluntarily dismissed the action without filing an amended complaint.

In one of the cases Judge Black also threatens Rule 11 sanctions for apparent false statements about the service (this is not the first Malibu service-related lie):

The affidavit of process server Kevin Allen states that he personally served Defendant at Defendant’s home on January 26, 2015. This directly contradicts counsel’s representation in the February 10, 2015 motion that “despite the process server’s efforts, the Defendant has not been served.”

The harsh language of these orders suggests that if young Faroniya and/or his Miami curators manage to annoy this judge just a bit more, the force of his hammer descending on the troll’s head will be as large as his enormous patience.

 

 

Thanks to Raul for recapping the documents (OSC 14-cv-00707 Doc 17; OCS 14-cv-00718 Doc 15).

Remember the case where defendant’s identity was revealed in violation of the court order? On the same day Judge Black addressed three pending issues there, and while he ruled essentially in favor of the plaintiff, the tone was basically the same as in the orders discussed above (“further games won’t be tolerated”). Scroll down to the 5/27/2015 update.

Coverage
  • TechDirt: Ohio Judge Fed Up With Malibu Media: Appears To Give Copyright Troll One Last Chance
  • Reuters (paywalled): Judge says ‘copyright troll’ shoe fits porn producer Malibu Media

    Keith Lipscomb, Malibu Media’s general counsel and founder of the Miami firm Lipscomb Eisenberg & Baker, said in an interview that there have been many other judges who have “rejected the accusations” that Malibu Media used abusive tactics.

    Didn’t John Steele say something similar a couple of years ago?

    In the one case that has gone to trial so far, in which three defendants admitted liability, U.S. District Judge Michael Baylson in Pennsylvania said in 2013 that the company was not a troll. “Rather,” Baylson said, “Malibu is an actual producer of adult films.”

    This is astonishing: Judge Black specifically referred to “so-called bellwether trial” (Black’s words) as “is of little relevance to the present inquiry,” and Lipscomb continues to stubbornly pound that table. Facepalm.

  • Law360: Porn Co. Malibu Media Looks Like ‘Troll’ To Ohio Judge
Update

6/9/2015

Well, well… One day after the deadline (of course!) the troll responded to Judge Black’s scolding Orders to Show Cause.

If you have neither law nor facts on your side, and pounding the table would inevitably prompt judge’s wrath, run with your tail between the legs.

Embarrassing, to put it charitably…

 

Followup

8/31/2015

Last month I wrote about a default judgement in a Malibu Media case: an Illinois judge expressed a concern that all these lawsuits are designed to be a secondary revenue stream for rightsholders rather than a legitimate recovery of lost sales. As a result, he awarded the minimum amount allowed by law, $750 per work, $9,000 in total (plus attorney’s fees).

Regarding the “per work” part of the law, I noted that

[…] Lipscomb found a bonanza in the fact that for the purpose of the statutory award the law doesn’t differentiate between a multi-million full-budget movie and a cheap, plotless porno flick illegally filmed at the pornographers’ home in a course of hours. Thus, the judge couldn’t award less even if he wanted. This loophole guarantees that the shakedown business stays profitable no matter what.

Sheri Polster Chappell
US Federal Judge
Sheri Polster Chappell

It seems that I was too pessimistic: today Judge Sheri Chappell awarded a $6,000 default judgement (plus $1,657.00 in fees and costs) for 47 “works” in Malibu Media v. Danford (FLMD 14-cv-00511). She reasonably ignored the overblown claim of multiple infringements, thus patching a loophole Keith Lipscomb has been abusing for years. In addition, the judge questioned the “lost revenue” hype copyright trolls are so accustomed to pulling out of thin air (emphasis is mine):

Malibu Media asserts in this instant case, the infringement was committed willfully. Specifically, Malibu Media seeks $1,500 per work in statutory damages. Since Malibu Media alleged Danford infringed 47 works, Malibu Media seeks a total of $70,500 in statutory damages. Malibu Media argues this amount is reasonable because Danford aided other participants through the BitTorrent system to infringe its copyright and caused the lost sales of its content which likely exceed lost sales of $70,500 or more.

The Court, however, finds a statutory award of damages of $70,500 would provide Malibu Media a windfall and therefore is not warranted here. Clever Cover s, Inc., 554 F. Supp. 2d at 1313 (“statutory damages are not intended to provide a plaintiff with a windfall recovery.”) […]. Here, Malibu Media failed to provide any evidence of its own lost sales, profits, or licensing fees as a result of the infringement to assist the Court in determining the appropriate amount of statutory damages to award.

Similarly situated courts addressing statutory damages where a defendant has downloaded copyrighted materials through a BitTorrent system have assessed damages of approximately $6,000 based on an inference of willfulness.

The judge refers to three non-porn cases where there was an award of $6,000 per a single movie, and concludes:

Nothing about this case materially distinguishes it from cases in which damages in the range of $6,000 have been awarded. In light of the facts and circumstances in this case as well as other similarity situated cases within this district, the Court finds a statutory award of $6,000 is appropriate.

I hope that this is the beginning of a pattern that will bring more or less reasonable numbers into the game, thus rendering the shakedown business model less profitable.

It is worth repeating that while in this particular case the default judgement was far less than a typical settlement demand in a Malibu Media case, relying on a favorable default is not a good idea. We saw default judgments that exceeded $100K.

 

Coverage
Updates

5/27/2015

Surprise, surprise… Lipscomb moves for reconsideration. “Your Honor, please, please don’t destroy our gravy train; I was so clever to discover that four dozens of plotless, cheap, criminally produced home clips depicting teenagers having unprotected sex should be treated separately for statutory purposes. Each of this shitty clips is equal to a blockbuster.” You think I’m exaggerating? Lipscomb indeed said this (emphasis is original):

The cases cited indeed assessed damages at $6,000.00, but each such case involved only one copyrighted work.

[…]

Since Countryman Nevada, TCYK, Thompson, and Bait Production each involved only one copyrightable work, the $6,000.00 award granted in those cases was within the permissible per work range of $750.00 and $150,000.00.

[…]

Your Honor overlooked, however, that Defendant infringed not merely one (1), but forty seven (47), of Plaintiff’s works. Adopting the $6,000.00 per work analysis utilized in Countryman Nevada, TCYK, Thompson, and Bait Production, the proper award here would be $282,000.00.

This default judgment is an existential threat to shakedown artists, so I expected this missive to be filed sooner rather than latter.

6/3/2015

The judge says “oops” and sides with Lipscomb

This order could put an end to Lipscomb’s extortion racket, but at the same time it looked too good to be true. Some attorneys I talked to were skeptical that this order would stay. Alas, they were correct: yesterday the judge reconsidered her order and increased the award to $35,250 (statutory minimum per title) from the original $6,000.

Despite the odds, I hoped that Judge Chappell would stick to her order, arguing that the copyrights-in-suit can be interpreted as “compilation” for the statutory purposes according the language of the 17 U.S. Code § 504 (c)(1):

Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

I think that the ease of the change of judge’s opinion was partially due to the fact that it was a default judgment, i. e. Lipscomb’s motion for reconsideration was uncontested. In other words, Lipscomb came for the defendant — and there was no one left to speak for the defendant.

The racket continues.

We don’t want to ruin someone’s life,” Field asserted. “I do not want to cause anyone financial hardship.

From X-Art’s owner Colette Field’s interview (9/27/2014)

 

Piece of shit
“Barely legal” porn troll
Patrick J. Cerillo
(New Jersey)

This is a situation when I feel obliged to say something, but I don’t know what… I’m out of words and emotions. A pro se defendant’s Request for pro bono attorney in Malibu Media v Andrew Days (NJD 14-cv-05337) is just two paragraphs. However, those two paragraphs tell volumes about the unbearable pain lawbreaking pornographers, greedy attorneys and their German friends continue inflicting upon US citizens and residents.

I am requesting a Pro Bono attorney because I am unemployed and on Medicaid. For the last 28 years I have been suffering from chronic Lyme disease and now cancer as well. I cannot afford an attorney and this case has been causing me a great deal of additional emotional stress. Please help.

I am willing to provide tax returns and any doctor’s documents showing the state of affairs that I’m in. Keep in mind I am not even the subscriber of the IP address in question.

Best,
Andrew Days

You know what… I don’t have an illusion that the crooks will drop this lawsuit. This is not the first time a disgrace like this happened (and continues to happen). Sure, according to Keith Lipscomb, “Prenda’s story [is] not Malibu Media’s story by any stretch.”

Or is it?

Update

5/7/2015

Today the crooks let this guy go. Did this post help? I don’t know… While I hope it is the case, it is rather irrelevant: what’s important is that the nightmare is over for Andrew. I wish him all the best.

On Friday 4/24/2014, ILND Judge Robert M. Dow Jr granted the plaintiff’s motion for default judgement¹ in Malibu Media v. Jack Funderburg (ILND 13-cv-02614). While default judgments are (sadly) not really big news these days (such outcomes are an integral part of XArt’s secondary revenue stream), this order stood out for a couple of reasons.

The good
Robert M. Dow Jr.
US Federal Judge
Robert M. Dow Jr.

In addition to the attorney fees ($2,525), the judge awarded the minimum statutory damages possible: $750 per work ($9,000 total), despite the fact that the plaintiff asked for three times more. The explanation of why the plaintiff doesn’t deserve more is heartwarming (citations omitted, emphasis is mine):

Plaintiff requests $27,000 in statutory damages, which amounts to $2,250 per film. It argues that this request is reasonable, as Defendant’s alleged willful infringement permits the Court to impose statutory damages as great as $150,000. See 17 U.S.C. § 504(c)(2). In addressing Plaintiff’s request, the Court notes growing judicial concern with “the rise of so called ‘copyright trolls’ in the adult film industry, meaning copyright holders who seek copyright infringement damages not to be made whole, but rather as a primary or secondary revenue stream and file mass lawsuits against anonymous Doe defendants with the hopes of coercing settlements.” As an actual producer of pornographic films, Malibu Media is unlikely a non-producing troll that purchases the right to bring lawsuits against alleged infringers. As an enforcer of pornographic copyrights, however, Plaintiff is among the entities that courts are concerned may be “inappropriately using the judicial system to extract quick and quiet settlements from possibly innocent defendants paying only to avoid embarrassment.” The Court is aware of Plaintiff’s extensive history of litigation in the last three years alone. Without drawing any conclusions as to this Plaintiff’s business model, the Court considers the concerns that other courts have expressed in evaluating requests to enter large damage awards with no relationship to actual damages sustained by a plaintiff. To the extent that these concerns reflect industry-wide trends, they counsel against awards that are triple the statutory minimum, as a default judgment imposing significant statutory damages may overcompensate plaintiffs in these circumstances.

The first good thing is that the judge clearly articulated a concern regarding Malibu Media’s abuse of the court system — the abuse that another judge called much less politely: “essentially an extortion scheme.” Judge Dow specifically called Malibu Media / XArt a “troll” (albeit not a “non-producing troll”), a title Lipscomb & Co and their “clients” so comically claim doesn’t apply to them.

The second good thing is that given his concern about “overcompensation,” the judge seemingly remembers that the rationale behind the statutory damages is to approximate real losses (when it is difficult to assess them) — the fact that many judges forget about.

The bad

There are two bad things I want to mention, and both are not related to this particular ruling, but to every default judgement in Malibu Media cases.

The first is the default judgement per se. Judgements like this make me sad because defaults are easily avoidable. While in this particular case the judgement is approximately equal to a typical Malibu’s ransom demand, playing this lottery is dangerous for defendants: default judgements around the country lack consistency, and there were cases when some judges awarded more than $100,000.

The second bad is that Lipscomb found a bonanza in the fact that for the purpose of the statutory award the law doesn’t differentiate between a multi-million full-budget movie and a cheap, plotless porno flick illegally filmed at the pornographers’ home in a course of hours. Thus, the judge couldn’t award less even if he wanted. This loophole guarantees that the shakedown business stays profitable no matter what.

The ugly

Now, the worst part of this order. For some unexplainable reason Judge Dow decided to resurrect the zombie of contributory infringement (citations omitted, emphasis is mine):

Lastly, Plaintiff also asks the Court to (a) permanently enjoin Defendant from directly or contributorily infringing Plaintiff’s copyrights under federal or state law […]

[…]

Plaintiff also states a plausible claim for contributory copyright infringement. “A defendant is liable for contributory copyright infringement when it with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another.” Plaintiff alleges that Defendant contributed to the infringing conduct of other BitTorrent users by participating in the BitTorrent swarm—a group of users uploading and downloading bits from each other simultaneously. Plaintiff contends that Defendant’s knowledge can be inferred from his use of the platform, as it is frequently used to share unlicensed content, and the fact that the film was free. Based on these allegations, Plaintiff alleges a plausible claim of contributory copyright infringement.

The eye-popping fact here is that the plaintiff never pled contributory infringement (here is the amended complaint).

The only explanation I can think about is that Judge Dow’s clerk, while preparing this order, dropped all his papers, and the pages from different complaints by different plaintiffs ended up shuffled.

Interestingly (while not surprisingly), the blog LiveTrollLive, supposedly run by Libscomb’s associate, couldn’t miss this opportunity:

Once again the courts continue to extend liability for BitTorrent infringement to the account holders and subscribers. The lesson: If you pay the bill, make sure no one is using BitTorrent.

[…]

The Judge appears to have brought an alternative finding of contributory infringement to this opinion on their own based on the evidence.

I have no idea what evidence the author is talking about, and the card sharping here is astonishing: it’s an impossible stretch from “contributing” by actively participating in a swarm as the judge said (essentially directly infringing) to an Orwellian notion that those who pay the bill have a duty toward porn purveyors and may be held liable.

I understand that Lipscomb would be happy to be able to shake down account holders without a need to prove anything… However, I think that this strange paragraph in the judge’s order is an isolated hiccup, most likely an error, and not a trend: any defense attorney will be able to kill the contributory infringement zombie for good in adversarial proceedings… which brings us to the same conclusion over and over again:

If a lawsuit is filed against you, ignoring it won’t make it go away, and you may end up dealing with collection agencies, which have much sharper teeth than our petty extortionists.

 


¹ This motion was submitted by Lipscomb’s local Mary K. Schulz, and the signature block indicated a non-existent “Schulz Law, P.C.,” a law firm involuntarily dissolved half a year prior to this filing. That’s OK because the law is obviously written only for defendants while trolls can lie to the court and get away with it.

As a Malibu Media docket grows longer, the probability of accusing defendant of evidence spoliation or perjury approaches 1.

Lipscomb’s Law

 

Copyright trolls “litigate” by what in boxing is called “below the belt.” It’s an undisputed fact. Abusing antiquated local laws, soliciting laypeople to incriminate themselves by filling “exculpatory evidence forms,” filing inadmissible “third party infringements” lists to embarrass defendants, asking eye-popping irrelevant questions in interrogatories, ambushing neighbors, making defendants’ names public in violation of protective orders. The list can go on and on. In their servitude to Mammon, shakedown artists don’t respect any ethical (and often legal) barriers. Once in a while we witness a sleaze never seen before.

Jacqueline M. James
Porn troll Jacquline M. James

This time Lipscomb’s local representative in New York, Jacqueline M. James, “on behalf” of a serial filer of shakedown lawsuits, purveyor of illegally filmed “barely legal” pornography Malibu Media/ XArt, did something so overreaching that I think that the involvement of civil liberty groups such as EFF is warranted.

I don’t know if it was Ms. James’s idea or something cooked in the Miami kitchen, but a few weeks ago she started faxing and mailing proposed orders to the NYSD courts where more than a hundred of Malibu Media cases were pending.

The orders in question directed putative defendants to preserve evidence. Some law clerks and judges rightfully ignored such blatant shortcut attempts, but other lazy ones simply signed them without even reading (otherwise I can’t explain how a legal professional can possibly miss the last paragraph — I’ll get to it shortly).

To say that the language of these orders is grossly overreaching is an understatement. First of all, such orders are not necessary because any defendant, once aware of a lawsuit against him or her, already has a duty to preserve all the relevant evidence. So one of the apparent goals of smuggling this travesty was inducing FUD on the Does, innocent or not, strong-arming them to settle out-of-court.

Historically courts were more or less lenient to individual parties who continued using their computers during the course of litigation. Only specific, deliberate spoliation was frowned upon. For example, recently in Malibu Media v. Harrison (INSD 12-cv-117), Judge Dinsmore ruled that because the defendant destroyed his hard drive without intent to conceal his wrongdoing, he didn’t deserve sanctions:

[…] the Court concludes that Defendant did not destroy the hard drive in bad faith. No direct testimony establishes that Defendant did so, and the circumstances of the destruction as outlined above do no warrant an inference that Defendant destroyed the hard drive for the purpose of hiding adverse information. As such, Plaintiff has not carried its burden to prove bad faith destruction of evidence, and Plaintiff’s motion for sanctions is DENIED.

In any case, it is a common sense that good faith in preserving the data doesn’t require a Doe to stop using his computers, phones and other electronic devices. It would be simply unthinkable in this day and age. And the quote above indicates that even if a spoliation is alleged, it’s the plaintiff who bears the burden of proof.

Yet read one of the identical preservation orders smuggled by James. According to it, a Doe, innocent or not, should either pay thousands for hiring an imaging expert (or even tens of thousands if he/she has many devices/hard drives — more than a typical Malibu’s settlement offer!), or such an innocuous operation as deleting a browser cookie might result in sanctions.

 

But that’s not all. The most egregious is the last paragraph:

Defendant is also ordered to provide Plaintiff of a complete inventory of all Hard Drives and third party cloud storage services in Defendant’s possession, custody, or control.

This is nothing else but a discovery order issued prior to the Rule 26(f) conference. And that runs afoul of the Rule 26(d):

(d) TIMING AND SEQUENCE OF DISCOVERY.
    (1) Timing. A party may not seek discovery from any source before the parties have conferred as required by Rule 26(f), except in a proceeding exempted from initial disclosure under Rule 26(a)(1)(B), or when authorized by these rules, by stipulation, or by court order.
    (2) Sequence. Unless, on motion, the court orders otherwise for the parties’ and witnesses’ convenience and in the interests of justice:
            (A) methods of discovery may be used in any sequence; and
            (B) discovery by one party does not require any other party to delay its discovery.

Both conferring requirement and, more importantly, the motion requirement were ignored. This is mega overreaching. Arguably, the early discovery order exempts Malibu Media from the conferring requirement, but it is a stretch. In any case, such an Order has to be motioned: an answer has to have been filed (issue joined), so a Doe Defender can oppose such a motion for interrogatories.

In any case, this is inherently unfair. The order was issued when the Doe didn’t have a notice about a lawsuit filed against him yet, so he could violate it before even knowing it. Franz Kafka is rolling in his grave.

It is fair to note that at least one judge (or his clerk) paid attention to what was submitted via a back door: Judge Karas removed the offending paragraph before signing:

 

At this moment I don’t have time and energy to enumerate all the cases, in which this poisonous order was injected, maybe I will post an update tomorrow.

Shame to the judges and law clerks for signing this overreach, brazen orders. Shame… well, I almost automatically wrote “…to Lipscomb and James,” but stopped short: it would assume these guys have a quantum of dignity. They don’t.

Thanks to Raul and the community for contributing ideas/research/explanations for this post.

Malibu Media v. John Doe (OHSD 14-cv-00493) is one of the cases I list on the “Cases to watch” page. A mere fact that the defendant is represented by Jason Sweet means that it is worth attentively watching how this case progresses.

I wrote about this lawsuit half a year ago. That post was mainly about the defendant’s argument that the plaintiff didn’t need to know the Doe’s identity because his/her attorney would happily accept the service. The motion exchange revealed that Malibu’s local Yousef Faroniya is merely a stooge who files shakedown lawsuits and forwards email to/from the troll center in Miami. Not surprisingly, he avoids talking to the opposite party’s attorneys at all costs; hence I named the post “Copyright troll Yousef Faroniya and his telephonophobia.”

Normally I would edit the post to append a new information, but because at least three major events happened since my last update, a new article is appropriate. These events are:

  • the judge’s order denying the defendant’s motion to quash, and striking parts of the plaintiff’s complaint;
  • the defense’s motion to dismiss for failure to timely serve;
  • the plaintiff’s violation of the court’s order and the resulting motion to show cause.

 

The judge denies the motion to quash yet expresses concerns
Timothy Black
US Federal Judge
Timothy Black

Unfortunately, Judge Timothy Black was not persuaded by Sweet’s argument and on 1/21/2015 ruled that the plaintiff is entitled to know the defendant’s identity. Nonetheless, while the judge didn’t explicitly order not to identify the defendant publicly at that time, the tone of the order suggested the assumption that the defendant would proceed pseudonymously.

Denying the motion to quash didn’t mean that Judge Black was happy with the plaintiff’s conduct. The following paragraphs from the complaint piqued his attention:

25. IPP’s software also logged Defendant’s IP address being used to distribute third party files through BitTorrent. This evidence indicates that Defendant engaged in BitTorrent transactions associated with 2732 files between 06/23/2013 and 05/13/2014. Collectively, this evidence is referred as the “Additional Evidence”.

26. Plaintiff has the Additional Evidence on a document and can produce it.

27. The Additional Evidence demonstrates that Defendant is a persistent BitTorrent user.

28. Many of the titles to the third party works may also be relevant to proving Defendant is the infringer because they correlate to the Defendant’s hobbies, profession, or other interests.

Those who follow these cases remember that Malibu Media and its attorney Mary K. Schulz was sanctioned twice in Wisconsin for filing an infamous irrelevant and scandalous “exhibit C” — the list of filenames, many of which are embarrassing, purportedly shared from the defendant’s IP address. The judge thought that the above paragraphs from the complaint are nothing but a concealed “Exhibit C,” so he sua sponte ordered to strike this travesty:

Finally, the Court sua sponte raises what appears to be a remnant of one of Plaintiff’s particularly controversial litigation practices. Plaintiff’s complaint makes the seemingly off-hand allegation that IPP International UG logged Defendant’s IP address distributing 2,732 third-party files through BitTorrent. Plaintiff euphemistically describes this as “additional evidence” that Defendant is a persistent BitTorrent user and that “[m]any of the titles to the third party works may also be relevant to proving Defendant is the infringer because they correlate to the Defendant’s hobbies, profession, or other interests.” Plaintiff advises that it has this “additional evidence” on a separate document and gratuitously offers to produce it upon request.

Plaintiff presumably did not attach this document to its complaint because its lawyers have been sanctioned for the same. This attachment, the sequentially numbered Exhibit C, “consistently includes far more disturbing lewd, unusual and unredacted titles of pornographic films allegedly downloaded by the defendant than those belonging to plaintiff.” Courts concluded that the sole purpose of this exhibit was to “harass and intimidate defendants into early settlements by use of the salacious nature of others’ materials, rather than the merit of its own copyright claims.”

Although Plaintiff did not attach Exhibit C to its complaint, references to its existence and thinly-veiled threats of its production demonstrate that “these cases are fraught with circumstances that could embarrass the putative defendant should they become public and strongly influence his or her decision to settle even a meritless suit just to make the case go away before being publicly associated with their client’s film.” The alleged infringement of third-party copyrights is “immaterial to the allegations in the complaint.” Further, “the exhibit is merely a list of filenames, and it likely constitutes ‘immaterial, impertinent, or scandalous matter’ that should be stricken from the complaint.”

[…]

Accordingly, the Court STRIKES paragraphs 25-28 from the complaint.

Service games and motion to dismiss for failure to serve

The judge’s order also gave the plaintiff additional 38 days to serve the defendant.

The troll got a hold on the defendant’s identity on 2/2/2015. A reasonable bystander would think that Malibu would rush to serve, right? Wrong. The defendant was not served by the 2/28/2015 deadline. Why? Maybe because Lipscomb’s back office is not that good with the logistics, maybe because the trolls are spoiled by the majority of gullible judges who rubberstamp extensions without asking questions, or maybe because Lipscomb was scared of the prospect of the defendant answering the complaint, which would close the backdoor of the voluntary dismissal cut-and-run.

Moreover, after an email sent to the defense attorney strategically on Friday night before the deadline, the troll had an audacity to ask the judge for another extension.

On 3/11/2015 Jason Sweet filed a motion to dismiss for failure to effectuate the service:

 

Note that this motion lists seven other Malibu cases from this district in which the deadlines to serve passed.

What judge immediately did is encouraging: not only did he sua sponte expedite the briefing of this motion, setting a tight schedule (troll’s memorandum contra due by 3/18/2015; defense’s reply memorandum — by 3/23/2015), he also issued an order to show cause in one of other Malibu cases assigned to him, in which the defendants were not served past deadline.

The troll reveals the defendant’s name and address in violation of the judge’s order

Two days after the defendant’s motion to dismiss, on 3/13/2015, Malibu filed an amended complaint, and the exhibits, purposefully or not, displayed the defendant’s name and address, which was a clear violation of the 2/26/2015 judge’s order granting plaintiff’s motion to file the amended complaint and summons:

[…]The Clerk is DIRECTED to issue the summons under seal. The Court establishes the following procedure to balance Defendant’s privacy interests with the presumption of open judicial proceedings. Simultaneously with filing its proposed summons under seal, Plaintiff shall also file a Reference List and an amended complaint. The Reference List, which shall be filed under seal, must contain Defendant’s name and any other identifying information that Plaintiff deems necessary to the prosecution of its case, as well as an appropriate identifier that uniquely corresponds to each item listed. See Fed. R. Civ. P. 5.2(g). The amended complaint and all subsequent filings shall be publicly filed and must refer to Defendant only as John Doe and use the identifier provided in the Reference List for other identifying information. The Court reaffirms the other directives set forth in the 1/21/15 Order. (Doc. 20 ).

Fortunately, thanks to the judge’s clerk’s sharp eye, the documents were sealed immediately. Nonetheless, defendant’s attorney was understandably furious, and yesterday he asked the judge to sanction Malibu’s counsel.

In his motion, Jason Sweet claimed that what happened was not a mistake, but a deliberate premeditated action:

On March 13, 2015, Plaintiff, in violation of the Court’s repeated Orders, filed an unredacted summons and reference list with John Doe’s name and address plainly visible. See Docs. 24 & 25. By choosing to file these documents at 8:00 PM on a Friday evening, Plaintiff intentionally chose a time when it would be difficult to correct, and the embarrassment alone might cause John Doe to seek a non-trial disposition just to end the matter. More so, the documents are dated March 12, 2015, further compounding the inference that Plaintiff intentionally waited until Friday evening to file them. Nor is this the first time Plaintiff has indicated a willingness to employ this tactic against Does who refuse to settle.

To substantiate his claims, Sweet listed three other Lipscomb’s cases, in which the defendants’ identities were “mistakenly” publicized.

Judge Black didn’t procrastinate, and today he issued an order to show cause why the troll shouldn’t be sanctioned for a blatant violation of the court’s order:

 

Stay tuned for updates.

 

Media coverage

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