Guardaley | Voltage

Why the FBI should investigate the Guardaley racket

Last week DieTrollDie published a letter from a Spokane attorney Christopher Lynch to a Guardaley’s copyright troll David Lowe. In that letter Mr. Lynch indicated that his client wouldn’t cave in to troll’s evidence-free demands and was prepared to fight and win. Surprisingly or not, the troll backed off and dropped the defendant (LHF Productions v Doe 1 et al, WAWD 16-cv-01017). This story was picked up by the tech media (TorrentFreak, Techdirt). So, given the coverage, I won’t elaborate on the obvious — that the trolls are cry-bullies, who tend to run away once they smell the trouble of a competent defense. However, I want to dig a bit deeper into one of the reasons behind the troll’s hasty retreat. Particularly, I’d like to elaborate on a mind-boggling fraud that the Guardaley network committed upon the US federal courts in 2012-13, an FBI-probe-worthy fraud that outdid the infamous Prenda’s forgery:

We will also seek discovery of the relationship of Messrs. Macek and Arheidt to the fictitious “Darren M. Griffin.” […]

We have a spreadsheet of over 600 federal cases where parties related to your client’s foreign representatives filed a declaration of “Darren M. Griffin.” Most of these declarations are verbatim copies of the 21 paragraph Macek and Arheidt declarations filed by your firm claiming the witness was “retained as a consultant” by Maverickeye or Crystal Bay Corporation “in its technical department.” Most of the 600+ Griffin declarations do not state any education or work experience sufficient to admit the typed-up charts of alleged infringement. But, interestingly, the 42 “Darren M. Griffin” declarations filed in the WD WA claim “Darren M. Griffin” has “a degree in computer science.” This is at odds with the APMC playbook I discovered where the apparent goal is to downplay the declarant’s credentials “hoping the judge won’t question his qualifications too much.” It was bold of your client’s foreign representatives to tell the Judges of our Western District of Washington in 42 declarations that a fictitious declarant has a college degree – just like it was bold to tell Judge Rice that “Darren M. Griffin” is a former investigator for Crystal Bay Corporation. If we go forward, we will expect cooperation on discovery of how LHF witnesses Messrs. Arheidt and Macek are connected to “Darren M. Griffin” and to Crystal Bay Corporation.

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Guardaley | X-Art

Because of defendant’s counterclaim, judge disqualifies Malibu Media’s attorney Christopher Fiore

Copyright troll lawyers are a highly motivated and somewhat resourceful bunch, yet their ranks are small compared to the sheer number of citizens those attorneys have been shaking down for years. While most defendants pay the ransom, many chose to fight back, and with every new pushback fresh defense attorneys bring new ideas, and some of those ideas are statistically destined to success.

US Federal Judge
Christopher C. Conner

To my observation, the Middle District of Pennsylvania was not a source of interesting developments — until the last week. On 10/25/2016, Chief Judge Christopher C. Conner granted the defendant’s motion to disqualify X-Art/Malibu Media’s attorney Christopher Fiore in Malibu Media v John Doe (PAMD 15-cv-0228):

The court finds sufficient grounds to disqualify Attorney Fiore based on the conflict of interest and lawyer-as-witness provisions of the Pennsylvania Rules of Professional Conduct.

In short, Fiore, along with Malibu Media and its owners Brigham Field and Colette Pelissier Field, became a counter-defendant due to John Doe’s counterclaims, and the judge didn’t see a possibility of Fiore diligently representing Malibu under the circumstances.

I’ll get back to the judge’s reasoning later, after a brief discussion of the counterclaims, which led to the disqualification.

Counterclaims

This lawsuit is one of the 5,000+ shakedown actions a “barely legal” hardcore porn purveyor X-Art filed across the country over the last four years. It was ill-conceived 11 months ago with a cookie-cutter complaint and a subsequent motion for ex-parte discovery, which judges across the country jollily rubberstamp. As soon as the defendant found out that he (or she) was sued, he retained Aaron Brooks, an attorney at Penn State University’s Student Legal Services department.

Attorney Brooks started with a motion to quash, which was unsurprisingly denied. However, the judge allowed the defendant to stay pseudonymous. The next step was rather unusual: the defense moved to disqualify Malibu’s long-time local, Christopher Fiore, arguing that the defendant planned to counter-sue Malibu, its principals, and Fiore, which would create a conflict of interest. On 3/21/2016 this motion was denied as premature.

On 4/14 the troll filed an amended complaint, and on 7/21 defendant answered denying any wrongdoing. The answer was followed by affirmative defenses a handful of counterclaims. The premise of these counterclaims was:

[…] Plaintiff willingly entered into business partnerships with third-party websites (hereinafter “Free-sites”), which offer free performance, copying, and distribution of Plaintiff’s copyrighted materials. Plaintiff advertises itself as a producer of free content for numerous Free-sites. Said Free-sites post hundreds of Plaintiff’s videos for free download and sharing. Defense has identified more than 133,000,000 “hits” on Plaintiff’s videos with potentially as many downloads and re-distributions through its business partners’ websites. […]

The defendant listed a plethora of examples of X-Art deliberately distributing its flicks on tube sites — the very same flicks it later sued alleged file-sharers over. The answer/counterlaim was supplemented by 24 exhibits, which are unfortunately not available: the judge ordered to seal any pornographic screenshots.

The counterclaims:

As for Fiore, the defendant accused Malibu’s local of knowingly concealing the information about the massive free distribution of X-Art’s porn on tube sites:

Christopher Fiore, Esq., is an experienced litigator in copyright infringement actions and knows that disclosure of the material information could potentially adversely affect whether a judge would grant an ex-parte motion for early discovery prior to a Rule 26(f) conference.

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Guardaley | X-Art

Malibu Media claims it wants to catch the initial seeder: why this claim sounds shallow

A new “veritable orgy of lawsuits”

I predicted that the divorce between long-time sweethearts Keith Lipscomb and Malibu Media would result in the latter winding down its operations. While it would be unreasonable to expect a mass dismissal of the existing lawsuits, I didn’t think the troll would start filing new cases. I was wrong.

Contrary to my expectations, on 7/21/2016 Malibu Media/X-Art, via its new counsel Pillar Law Group, powered by former Lipscomb, Eisenberg and Baker’s employees — two attorneys and two paralegals — resumed the shakedown. At the time of this post, 136 lawsuits were filed in six jurisdictions:

Truly, greed is a powerful drug, and I should have never underestimated the corrupting power of addiction to easy cash.

In addition, from an email sent by Angela Lipscomb to Lipscomb, Eisenberg and Baker’s (LEB) insurer, we learn that

[LEB’s Malibu Media] work stopped after a new investor became involved […]

Yes, “investor.” Malibu’s attorneys (both old and new) don’t wear a mask of righteous defenders of poor porn purveyor’s copyrights any longer: it’s all business, a heartless business of monetizing people’s anxiety and misery.

Usual suspects and something new

In the past, when Lipscomb was Malibu’s general counsel, the troll always waited one month from the lawsuit inception to the discovery motion. I still don’t understand the significance of this delay. This tradition was seemingly preserved, and we had the first opportunity to review the motions and the exhibits only on 8/22/2016.

One of the “experts” who filed a declaration accompanying discovery motions was Tobias Fieser of IPP International. Two years ago, after Malibu’s Illinois local Mary K. Schulz recklessly revealed IPP’s contingency interest, IPP was “replaced” by another Guardaley’s shell, Excipio 2. Fieser and IPP are now back as if the contingency scandal never took place.

The other declarant was also from the painfully familiar past: Patrick Paige, a former police investigator who was fired from the police force five years ago — after he was caught procuring illegal drugs while using his undercover identity.

Yet it was something new in the ex-parte application bundle: a declaration of one Erin Sinclair, purportedly a COO for Malibu Media from its inception (surprisingly, we never heard this name until now). Nothing really to see there — same usual hogwash such as “piracy kills our business,” except for the following statement that caught my attention:

We want to stop the infringement of Malibu Media’s movies. To further facilitate this goal, Malibu is opening investigations with law enforcement to stop the seeding of its movies. Our goal is to stop the prolific infringer responsible for initially seeding the “Unauthorized Packs.”

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Guardaley | Voltage

Magistrate judge declines to award copyright troll attorney fees because copyright trolling fees does not advance the purposes of The Copyright Act

Lawyer — One skilled in the circumvention of the law.
Ambrose Bierce

On August 10, 2016 Magistrate Judge Stacie F. Beckerman handed down an Opinion and Order that denied a copyright troll attorney attorney’s fees because such an award would not advance the purposes of The Copyright Act under the “totality of the circumstances.” This post will briefly outline the underlying lawsuit and each of the circumstances that the judge found warranted a denial of attorney’s fees as being counterproductive to the purposes of The Copyright Act.

Background

It should be noted as a preliminary matter that the copyright troll attorney, Carl Crowell, has met several setbacks in Judge Beckerman’s courtroom recently including a sua sponte dismissal of a direct copyright infringement claim.

Stacie BeckermanUS Magistrate Judge
Stacie Beckerman

The lawsuit that is the subject of this post is Glacier Films (USA) Inc. v. Turchin (ORD 15-cv-01817-SB), and was filed on September 25, 2015.The lawsuit involves the alleged copyright infringement of the cinematic masterpiece American Heist. Later on February 17, 2015 plaintiff filed its amended complaint naming the defendant and the defendant was served approximately one month later. The defendant neglected to answer and the plaintiff moved for a default judgement and the judge appointed David Madden as pro bono counsel for the defendant to fight the lawsuit. After some back and forth on July 8, 2016 the parties agreed to settle the case with a stipulated consent judgment whereby the defendant agreed to pay the statutory minimum of $750 and also agreed that the Court should award “reasonable attorney’s fees and costs,” in accordance with 17 U.S.C. § 505 and pursuant to Rule 54. Afterwards on July 20, 2019 Crowell moved for attorney’s fees and costs which defendant opposed to a degree. On August 10, 2016 Judge Beckerman handed down an Opinion and Order declining to award attorney’s fees (despite the July 8, 2016 stipulation) because under the “totality of the circumstances” such an award “… would render an inequitable outcome that is inconsistent with the policies served by the Copyright Act.”

The judge notes that such an award is not unprecedented in her district:

Recently, another court in this district denied a motion for attorney fees in a similar BitTorrent copyright case, in part because “[l]itigation conduct that needlessly increases the expense of resolving copyright disputes neither encourages innovation nor appropriately rewards an author’s creation.” See Countryman Nevada, LLC v. Doe-73.164.181.226,—F. Supp. 3d—,No. 3:15-cv-433-SI, 2016 WL 3437598, at *8 (D. Or. June 17, 2016) (“[U]nder the totality of the circumstances presented, the Court exercises its discretion to deny Plaintiff any attorney’s fees, notwithstanding the fact that Plaintiff has prevailed on the merits of its copyright claim.”).

Let us take a look at each of these three circumstances with the last weighing most heavily that influenced the judge’s Opinion and Order.
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Guardaley | X-Art

Malpractice insurer alleges that Lipscomb lied on the application, sues to rescind the coverage

Keith Lipscomb/Malibu Media breakup brings more and more interesting tidbits. Yesterday it came to my attention that Markel Insurance Company (MIC), a malpractice insurer for Lipscomb, Eisenberg and Baker (LEB), asked the federal court to rescind Lipscomb’s firm’s current professional liability insurance policy (Markel Insurance Company v LEB, M. Keith Lipscomb, and Malibu Media, FLSD 16-cv-23234).

The insurer, represented by a Miami firm Kaplan Zeena LLP, accused M. Keith Lipscomb of knowingly entering false information in the policy renewal application, which he signed on May 10, 2016.

According to the complaint, this assertion was false because

LEB did not disclose on the Application that LEB and Lipscomb had knowledge of circumstances that would likely result in a professional liability claim or suit by Malibu Media.

Numerous emails were exchanged between Lipscomb and Pillar Law prior to May 10, 2016 that show that LEB and Lipscomb had knowledge of circumstances that could result in a professional liability claim or suit by Malibu Media.

[…]

Indeed, by no later than April 18, 2016 LEB and/or Lipscomb prepared documents that specifically acknowledged their awareness of Malibu Media’s threat to pursue legal action against LEB and/or Lipscomb.

And, as a result,

MIC relied on LEB’s misrepresentation in the Application in issuing the Policy.

The misrepresentation in the Application was material to the risk assumed by MIC and increased the risk of loss.

If these facts, as recited above, were known to MIC, it would not have issued the Policy and/or would not have offered coverage on the same terms and conditions and/or for the same premium.

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Guardaley | X-Art

Defendant moves for sanctions against Malibu Media and its attorneys Brenna Erlbaum and Brian Heit

Yesterday a California defendant in Malibu Media v John Doe (CAND 16-cv-01005), via attorneys Nicholas Ranallo and Bruce May, filed a powerful motion for sanctions against Malibu Media and its attorneys Brenna Erlbaum and Brian Heit. The defendant alleged that filing an amended complaint without any evidence to back up its claims is frivolous and runs afoul of the F.R.C.P. Rule 11:

This Motion is made on the following grounds: On June 1, 2016, Plaintiff MALIBU MEDIA filed a First Amended Complaint alleging violations of the Copyright Act of 1976 against Defendant, knowing that Plaintiff did not have evidentiary support for its claims against Defendant, and despite having been advised by defense counsel of the following exculpatory evidence: Defendant denied ever downloading any of Plaintiffs films; a forensic examination of Defendant’s computers found no evidence of illegal downloading; Defendant was out of town on one of the dates in question; and dozens of other people had equal access to the Defendant’s Comcast internet account allegedly used to download Plaintiffs films.

Moreover, the defendant claimed that Malibu’s attorney Brian Heit deceived the defendant’s counsel by continuing to negotiate a possible dismissal while the amended complaint was already filed by Heit’s partner Brenna Erlbaum, which the plaintiff’s attorneys allegedly kept concealing from the defense for more than a week:

Plaintiff and its counsel acted in bad faith by engaging in litigation misconduct. While pretending to consider the exculpatory evidence offered by defense counsel, Plaintiff’s attorneys Brian Heit and Brenna Erlbaum affirmatively concealed the fact that they had already filed the First Amended Complaint, without evidentiary support. The motivation of Plaintiff and its attorneys was to extort a settlement from Defendant for a baseless claim by filing the First Amended Complaint and forcing Defendant to incur the expense and embarrassment of defending a claim of illegally downloading pornography.

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Guardaley | Lipscomb | Voltage

With surgical skill judge McNulty removes 96% from a demanded $100+K default judgement and discovers a terminal case of possible Malibu Media’s fraud on the federal judiciary

Another such victory and I come back to Epirus alone.
King Pyrrhus

A short while ago I wrote about how Judge Kevin McNulty denied a Malibu Media motion for a default judgement finding that that the defendant could mount meritorious defenses, including the fact that he was being sued for invalid copyright claims. Today I want to take a look at the exploratory surgery that Judge McNulty performed on removing $96,478.50 from a demanded $100,657 default judgement and the astonishing potential fraud by Malibu Media on the federal judiciary, which was uncovered during the exploratory surgery.

Preoperative
Kevin McNultyUS District Judge
Kevin McNulty

The lawsuit (Malibu Media v Zenon Nowobilski, NJD 15-cv-02250) that was prepped for surgery was filed on March 31, 2015 and alleged that the defendant had infringed the copyrights of 132 of Malibu Media’s pornographic works. Of these 132 works, 127 were an alleged siterip or, I believe, the notorious “X-Art Unauthorized Pack #89.”

The defendant was served with a summons and complaint and failed to answer, so on December 14, 2015 Malibu Media motioned for a default judgement seeking the statutory minimum of $750 per each 132 allegedly infringed works or $99,000 plus attorney’s fees and costs in the amount of $1,675 for a grand total of $100,657. The motion laid dormant for a period until the Malibu Media local counsel (Patrick Cerillo) begged for the operation on June 15, 2016.

On July 26, 2016 the judge handed down an opinion explaining the necessary surgery.
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