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:

• Fraud: four separate counts against Malibu Media, Colette Pelissier, Brigham Field, and Christopher Fiore;
• Violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law;
• RICO (ask Ken “Popehat” White about this claim — it will make him happy);
• Punitive damages.

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.

Motion to disqualify

Shortly after answering, the defendant renewed his attempt to disqualify Fiore as Malibu’s attorney. In addition to the accusation of Fiore concealing the massive distribution of the flicks, the defendant mentioned the quarrel between Malibu and its former main counsel Keith Lipscomb:

At all times relevant, attorney Fiore proceeded at the supervision and direction of attorney Lipscomb. It is upon information and belief that the missing funds are in part shared between attorney Lipscomb and attorney Fiore, creating a serious potential conflict between attorney Fiore, Plaintiff, and other Third-party Defendants.

(Fast forward: the judge did not rely on this accusation in his decision.)

What is “watermark”?

Malibu opposed on 9/9, claiming that the massive deliberate spreading of its porn is irrelevant because the pornographers didn’t authorize bittorent distribution. One noteworthy remark in that opposition was:

Further, the X-Art videos and clips Plaintiff posted always contained copyrighted notices, X-Art watermarks, or both.

The term “watermark” has two meanings. If the plaintiff was talking about the X-Art logo displayed in the lower-right corner, than this statement does not make any sense: the same logo can be found on the movies that paying X-Art’s subscribers legally download.

The other meaning of “watermark” is the way of digitally signing movie files, so the owner can track a leaked version to the subscriber who initially downloaded it. This is a relatively cheap technology, and if X-Art’s statement was about this type of watermarking, then why did not they use it to catch the initial seeder? In the past, some defense attorneys raised a suspicion that people in the troll food chain — most likely the Germans — were responsible for the leaks. This suspicion is reinforced by the fact that the porn purveyors essentially admitted that they mastered this technology when dealing with tube sites, while refusing to use it to track initial seeders.

The order

On 10/25, Judge Conner issued his order granting the defendant’s disqualification motion. The judge found Fiore’s opposition unpersuasive (emphasis added):

[…] Malibu and Pelissier Field’s potential theories of defense — including any argument that they relied on advice of their counsel in taking the challenged actions — would directly implicate Attorney Fiore, pitting counsel’s and clients’ interests against one another. Under such circumstances, the court cannot but conclude that attorney Fiore’s contemporaneous representation of his codefendant clients and himself contravenes Rule 1.7.

Attorney Fiore also contends, arguendo, that his clients have waived any conflict of interest as contemplated by Rule 1.7(b). The defects in this contention are twofold. First, given the nature of the conflicts sub judice, the court harbors serious doubt whether Attorney Fiore could “reasonably believe” that his personal interests will not diversely affect his representation of Malibu and Pelissier Field. […] Indeed, conflicts of this nature have been deemed to be “so egregious that a client cannot agree to waive them.” […]

Second, there is no indication in Pelissier Field’s conclusory waiver of “any and all conflicts” that Attorney Fiore actually obtained informed consent as defined by the Rules. […] Pelissier Field and Attorney Fiore neither assert nor imply that Attorney Fiore explored the conflict of interest, its implications and risks, or potential alternatives with Pelissier Field […]. The court rejects Attorney Fiore’s contention that the instant conflict falls within the exception to the general prohibition of concurrent conflicts established by Rule 1.7(b).

Additionally, the court finds that Rule 3.7 of the Rules of Professional Conduct would separately disqualify Attorney Fiore as counsel to Malibu and Pelissier Field in this action. Rule 3.7 bars a lawyer from acting as an advocate at trial in any matter “in which the lawyer is likely to be a necessary witness,” subject to a handful of exceptions not applicable here. […] Given the allegations lodged by John Doe against Attorney Fiore, Malibu, and Pelissier Field, it is all but certain that Attorney Fiore will be called to testify as a fact witness at trial. Attorney Fiore’s continued participation as counsel in this matter is Impermissible for this additional reason. […]

Conclusion

Malibu has a history of running away once it stumbles upon a competent defense. Also, the fact that the defense attorney works for a university suggests that the defendant is a student, and therefore not likely a juicy target to milk. So, it would not be a stretch to speculate that in this case a walk-away settlement was offered and rejected. In any case, the troll can’t unilaterally dismiss the case because the defendant counterclaimed.

It is an interesting case to watch: the near-term popcorn is about who will be the attorney willing to taint his or her reputation by representing the troll. I would recommend a couple of Pennsylvania attorneys that I know, and to whom “integrity” is a foreign word, but alas, they represented Malibu defendants in the past.

Updates

3/3/2017

Since this post was published, there were many interesting events in this case, and I still plan to write a quick overview once I have a chance.

However, today’s judge’s order rendered these events less significant. Today the judge dismissed all the defendant’s counterclaims, finding Malibu, its owner Colette Pelissier and Christopher Fiore immune under the Noerr-Pennington doctrine. The order is an interesting read: in my opinion, it points to many mistakes the defendant made. For example, as a gift to the shakedown cartel (and I expect the troll to start touting this opinion immediately), judge Conner explicitly said that “Malibu isn’t Prenda”:

Hansmeier and Steele allegedly formed “sham entities” to obtain copyrights to pornographic videos, then uploaded those videos directly to torrent websites with intent to induce consumers to illegally download them. Id. Hansmeier and Steele purportedly engaged in a host of “extortionate” settlement tactics, threatening downloaders with embarrassing and costly litigation if they did not pay the demand. Id. But Hansmeier and Steele are not Malibu, and the court will not impute their conduct to taint the validity of Malibu‟s claim herein.

Moreover, John Doe does not allege that Malibu itself uploaded videos to torrent websites for entrapment purposes, a fact material to the Hansmeier indictment.

“John Doe does not allege” line is found more than once throughout the order. A clue for the defense bar.