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

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.

Intraoperative

You can almost hear the audible snap of latex gloves and the scrape of a scalpel on a stainless steel tray as the judge begins his Discussion:

Malibu Media is reputedly the biggest filer of copyright litigation in the country. See Gabe Friedman, The Biggest Filer of Copyright Lawsuits? This Erotica Web Site, New Yorker, May 14, 2014. At any rate, it is a prolific filer. In 2014, Malibu Media filed 1,780 copyright cases, over 41.5% of all copyright suits filed nationwide. Matthew Sag, IP Litigation in U.S. District Courts: 1994-2014, 101 Iowa L. Rev. 1065, 1078 & n.43 (2016). A search for dockets with “Malibu Media” as a party revealed over 500 cases filed in this district alone since 2012.Approximately 39 of these have been assigned to my docket, and about two thirds of those were closed within six months of being filed. No new cases have been filed since March 31, 2016.¹”

It is in footnote 1 that his Honor reveals that he is up to date with the Eastern Front and Western Front Battle currently taking place in Florida and California between Malibu Media and its former general counsel, and he sums it up in a John Grishamesque manner:

The reason for the lull may be the legal dispute between Malibu Media and attorney Michael Keith Lipscomb. See Malibu Media, LLC, v. Lipscomb, Eisenberg & Baker, PL, Civ No. 16—4715 (C.D. Cal. filed June 28, 2016); Lipscomb, Eisenberg & Baker, PL, et al, v. Malibu Media LLC, 2016—0 14947—CA—U 1 (Fla. Miami-Dade County Ct. filed June 10, 2016). In Malibu Media’s complaint filed in the United States District Court for the Central District of California, Lipscomb’s law firm is described as the “general counsel” of its “entire copyright enforcement program.” Civ No. 16—4715 (ECF No. 1 ¶ 10) (C.D. Cal. June 28, 2016). Malibu Media alleges that Lipscomb’s firm stopped sending them money gained from the myriad copyright lawsuits it filed or had others file on Malibu’s behalf. (Id. ¶J 13—15) Lipscomb allegedly wrote in an email that “Malibu is winding its copyright campaign down because it is no longer profitable.” (Id. ¶ 19) Allegedly, no retainer agreement was ever signed with Lipscomb’s firm before they set out to flood the nation with copyright actions. (Id. ¶j 11—12, 32.d, 37—39)

Next the judge goes on to cite various decisions/opinions, which have been covered in this blog and elsewhere, decrying the “unscrupulous tactics,” “the danger of copyright trolls,” and noting that Malibu Media “is essentially an extortion scheme.” All his cites point to prior Malibu Media lawsuits.

With the patient fully anesthetized, the judge observes that:

Because thousands of similar cases have been filed, we know there are a number of meritorious defenses that defendants may assert. Those defenses, however, largely depend on the facts of the case and require knowledge specific to the defendant. I cannot simply speculate that there may be facts that a defendant could use to defend himself from this complaint. Instead I will review the complaint to assess whether the factual allegations, taken as true, suffice to plead copyright infringement. See Chanel, Inc. v. Matos, 133 F. Supp. 3d 678, 683 (D.N.J. 2015) (“prior to entering a judgment of default, a court must determine: … (2) whether the unchallenged facts present a legitimate cause of action”) My independent review of the record, accepting the factual allegations as true, suggests that the defendant could mount a meritorious defense as to at least some of the allegedly infringed works.

The judge goes on to decide that, given the technology Malibu Media employs, the allegations are “plausible” only with respect to 6 of the 132 Malibu Media’s allegedly infringed works. ¹

However, the judge finds that the allegations about the other 127 works contained in the siterip folder are not plausible:

But the allegation that the same size bit also establishes that 127 separate unauthorized copies were on Nowobilski’s computer within file #1 requires more factual allegations to explain how one bit can identify separate works. It has not been alleged whether the bit that Malibu Media alleges identifies 127 works is a piece of any one work or pieces of all 127 (or if there is some other method of identification).

The confusion as to how this process identified 127 videos is heightened by Malibu Media’s Exhibit B to the complaint, which lists all 132 movies. (Am. Compi. Ex. B) The exhibit has columns including the title of the movies, the copyright registration numbers and the “Most Recent Hit UTC.” For files #2—6, the “Most Recent Hit UTC” column corresponds with the “Hit Date UTC” column in Exhibit A. (Id. Exs. A, B at 6) These columns refer to the most recent time IPP International allegedly connected with Nowobilski’s IP address to download bits from these videos. (Id. ¶J 18—19, 24) For the 127 videos allegedly in file #1, 124 share the same most recent hit date, but three have different dates. (Id. Ex. B at 6) This suggests that it is possible for a downloaded bit to identify fewer movies than the 127 allegedly in the file at one download, or that the file contains different numbers of movies at different times. Either option would refute other factual allegations necessary for Malibu Media to support its claim, namely that a file hash is unique to an entire media file and that these file hashes can be used to extrapolate from one downloaded bit that a person has a full unauthorized copy of a copyrighted work. (Id. ¶¶ 17, 21)

As to these 127 videos, I am not satisfied that the complaint establishes that Malibu Media is entitled to judgment.”

And VOILA, the judge just surgically removes $96,000 of the demanded $99,000 statutory copyright infringement damages.

Next the judge dons surgical loupes to look into the claimed $1,675 in attorney’s fees and costs, and the look is not pretty. This is because the judge finds that the itemized statement of attorney’s fees is “precisely identical to one filed by a different attorney in an entirely different Malibu media case in Indiana”:

Reviewing the itemized bill of plaintiff’s counsel, I note two catchall miscellaneous categories, one each for the attorney and the paralegals. The itemized statement block-bills 1 hour of “Case management, managing paralegals and reviewing approximately 10 e-mails; miscellaneous” by the attorney, over a 9-month period. It also lists 2.1 hours of “Case tracking and management; miscellaneous” by paralegals, over the same 9-month period. It appears that this itemized chart, down to the tenths of hours and descriptions of the work, was simply copied from another case. Except for the dates, it is precisely identical to one filed by a different attorney in an entirely different Malibu Media case in Indiana. See Declaration of Paul J. Nicoletti, Malibu Media, LLC v. Saari, Civ No. 14-860 (ECF No. 33—4 ¶ 9) (S.D. Ind. July 14, 2015). The only possibilities seem to be (a) copying or (b) a truly remarkable coincidence. There is reason to be skeptical that these numbers reflect anything that happened in this case.

Copying? Or outright fraud on the federal judiciary, you be the judge. Also, makes you wonder if this is a widespread copyright trolls’ practice. Only time will tell. Anyway, the judge is to be commended for discovering a new region in the vast universe of copyright trolling douchebaggery.

Judge McNulty does warn the troll attorney that any further billing shenanigans will likely result in the attorney being called to testify under oath as to the claimed attorney’s fees. Accordingly, the judge reduces the attorney’s fees and costs by approximately $400 to $1,178.50.

Postoperative

With $96,478.50 skillfully removed from the copyright troll’s demanded $100,657, the judge declares the surgery a success:

The motion for default judgment is GRANTED in part and DENIED in part. Statutory damages of $3,000 are awarded as well as attorney’s fees and costs of $1,178.50 for a total of $4, 178.50. Nowobilski is enjoined from infringing Malibu Media’s copyrights and ordered to destroy all unauthorized copies of Malibu Media’s works in his possession. An appropriate order will issue.

Chalk up another Pyrrhic win for Malibu Media and a good chuckle for the rest of us.

¹ I have to speculate that had the judge may have found no plausibility at all, had he been aware that on January 29, 2016 Malibu Media (via its Illinois local counsel) admitted in open court that the technology is, well, “complicated”:

There are really three main components. There is a SQL log file. It is very complicated. And I’m not going to stand here and say that I understand the technical aspects of it because it is way over my head.

And

So now they are going back and they are trying to get us to interpret the information in the three main components, the SQL file, the PCAPs, and in the spreadsheet. They are trying to get us to interpret that data for them when, first of all, I can’t do it, my client can’t do it.