DOJ again intervenes to defend statutory damages from constitutional attack; and just what about Ray Beckerman's favorite cases?

The Department of Justice has again sought to intervene in defense of the constitutionality of statutory damages in a case called Sony v. Cloud, filing a brief very similar to the one it recently filed in the Joel Tenenbaum case.

Once again, anti-label litigator Ray Beckerman notes that DOJ brief does not cite his preferred legal authorities, which he cited in an amicus brief he filed on behalf of the Free Software Foundation in the Tenenbaum case:

Like the Tenenbaum brief, this brief likewise ignores Parker v. Time Warner, Napster, UMG v. Lindor, and Atlantic v. Brennan, and the Georgetown and University of Texas Law Review Articles, all cited in the amicus curiae brief of the Free Software Foundation in Tenenbaum.

I obviously can't read the minds of the DOJ attorneys who drafted the briefs, so I can't say for sure why they didn't cite Beckerman's authorities. But I can come up with some pretty good reasons why I probably wouldn't have cited them had I drafted the briefs myself.

First, especially for the non-lawyer readers, a little background on citing authorities ("authorities" being a blanket term that covers cases, statutes, law review articles -- and even blog postings). First, lawyers usually cite authorities that support their argument. Beckerman believes his authorities support his argument -- but they aren't helpful to the government's position (or to the labels'). Lawyers sometimes -- but far from always -- cite authorities that may on the surface appear harmful to their case, usually to distinguish them away or explain why they're not relevant or controlling. Several factors determine whether to cite such negative authority, including: 1) how closely related ("on point") is the case to the one being litigated; 2) whether the case is from the same jurisdiction; 3) how important is the court that issued the opinion (Supreme Court, Court of Appeals, District Court, etc.); 4) whether the case was published or unpublished; and 5) in the case of a law review article, which law review (Yale counts more than Podunk U.), and who wrote it (prominent professor, no-name professor, or student). The only instance I'm aware of where an attorney is actually required to cite contrary authority is where the case is from a controlling jurisdiction, and is directly adverse to the attorney's position.

So how do Beckerman's authorities fare under those factors? Not terribly well. Let's take a closer look:

Parker v. Time Warner, 331 F.3d 13 (2d. Cir. 2003) is a case from the Second Circuit, so it is not binding on the court in the Tenenbaum case (which is in the District of Massachusetts, in the First Circuit) or the Cloud case (in the Eastern District of Pennsylvania, in the Third Circuit). Neither the Tenenbaum nor Cloud courts have any obligation to follow Parker. Moreover, Parker is not a copyright case; rather, it was a case under the Cable Communications Policy Act of 1984 and several state consumer protection laws, regarding allegations of "selling and disclosing personally identifiable subscriber information to third parties." The opinion followed an interlocutory appeal of an order regarding class certification. And here's what the Second Circuit actually said:

And it may be that in a sufficiently serious case the due process clause might be invoked, not to prevent [class] certification, but to nullify that effect and reduce the aggregate [statutory] damage award. Cf. State Farm Mutual Auto. Ins. Co. v. Campbell, ___ U.S. ___, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) ("The Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor."); BMW of North America, Inc. v. Gore,517 U.S. 559, 580, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) (noting that the "most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff."). At this point in this case, however, these concerns remain hypothetical. There has been no class certification motion filed nor any actual evidence presented that raises a reasonable possibility that principles of due process may restrict an ultimate damages award. Accordingly, we decline to consider what limits the due process clause may impose.

Note that the Parker court did not hold that the limits BMW and State Farm impose on punitive damages apply to statutory damages (it used only a "cf." (i.e., "only kinda sorta on point") citation); it explicitly declined to reach that issue as "hypothetical."

In re Napster, Inc. Copyright Litigation, 2005 WL 1287611 (N.D. Cal. 2005) is a copyright case. But it is an unpublished district court opinion from outside the First or Third Circuits, and thus of very limited precedential value in Tenenbaum or Cloud. And, like Parker, it is about class certification -- and just like in Parker, the Napster court did not hold that BMW/State Farm limit statutory damages. Instead, the court held that concerns about excessive damages were "speculative" at the class certification stage, and refused to address the issue: the "attempt to introduce concerns about excessive statutory damages into the class certification process [is] impracticable as well as logically flawed..."

UMG v. Lindor, 2006 WL 3335048 (E.D.N.Y.) -- which Beckerman himself litigated -- is also an unpublished district court opinion from outside the First or Third Circuits. In Lindor, the court granted the defendant's leave to amend her answer, rejecting at this early stage the record label plaintiffs' argument that a proffered affirmative defense challenging the constitutionality of large statutory damages awards was barred as a matter of law. As the court said, its task was very preliminary: "at this juncture, the court need only determine whether the an affirmative defense alleging that statutory damages are unconstitutionally excessive is frivolous." Because the labels had not cited law foreclosing the possible success of defendant's affirmative defense, and the defendant had introduced some pricing evidence in support of its argument, the court held that such a defense was "not frivolous," and thus that her answer could be amended. To be clear: the Lindor opinion does not hold that the BMW line of cases applies to copyright statutory damages; it merely held that such an argument was "not frivolous."

Atlantic v. Brennan, 534 F. Supp. 2d 278 (D. Conn. 2008), is published, but outside the First and Third Circuits. And the opinion addressed a motion for default judgment -- a very preliminary stage where arguments (and evidence) had not been developed. The court merely held that a constitutional due process challenge to statutory damages is one of several issues that had "possible merit" -- a far cry from an actual embrace of that argument.

Lastly, both of the law review articles Beckerman cites -- J. Cam Barker, Grossly Excessive Penalties in the Battle Against Illegal File-Sharing: The Troubling Effects of Aggregating Minimum Statutory Damages for Copyright Infringement, 83 Texas L. Rev. 525 (2004) and Blaine Evanson, Due Process in Statutory Damages, 3 Geo. J.L. & Pub. Pol’y 601 (2005) -- were written by law students. With all respect to the authors, courts generally accord little if any weight to student-written law review articles, and it is not at all surprising that DOJ did not cite them.

So, in sum, I see no good reason why DOJ (or the plaintiffs) should have cited the authorities Beckerman mentions. Of course I don't blame Beckerman for citing them -- they aid his cause, however marginally -- but his opponents were under no obligation to address them.

So, then what is the real state of the law on the application of the BMW/State Farm punitive damages doctrine to copyright statutory damages? The best summary is probably from the Sixth Circuit, in a 2007 case called Zomba Enters, Inc. v. Panorama Records, Inc., 491 F.3d 574 (6th Cir. 2007): "uncertain[]." Explained the court:

The Supreme Court has not indicated whether Gore and [State Farm v.] Campbell apply to awards of statutory damages. We know of no case invalidating such an award of statutory damages under Gore or Campbell, although we note that some courts have suggested in dicta that these precedents may apply to statutory-damage awards. See, e.g., Parker v. Time WarnerEntm't Co., 331 F.3d 13, 22 (2d Cir.2003) (suggesting that "in a sufficiently serious case," due process may require courts to reduce a statutory-damage award in a class action, and citing both Campbell and Gore); Leiber v. Bertelsmann A G (In re Napster, Inc. Copyright Litig.), Nos. C MDL-00-1369 MHP & C 04-1671 MHP, 2005 WL 1287611, at *10 (N.D.Cal. June 1, 2005) (unpublished) (citing Gore and Campbell); DirecTV v. Gonzalez, No. Civ.A.SA-03-1170 SR, 2004 WL 1875046, at *4 (W.D.Tex. Aug. 23, 2004) (unpublished) (citing Campbell); but see Lowry's Reports, Inc. v. Legg Mason, Inc., 302 F.Supp.2d 455, 459-60 (D.Md.2004) (concluding that Gore and Campbell do not limit statutory damages in copyright cases).

Regardless of the uncertainty regarding the application of Gore and Campbell to statutory-damage awards, we may review such awards under St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 66-67, 40 S.Ct. 71, 64 L.Ed. 139 (1919), to ensure they comport with due process. In such cases, we inquire whether the awards are "so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable." Id. at 67, 40 S.Ct. 71. This review, however, is extraordinarily deferential—even more so than in cases applying abuse-of-discretion review.Douglas v. Cunningham, 294 U.S. 207, 210, 55 S.Ct. 365, 79 L.Ed. 862 (1935) (Congress's purpose in enacting the statutory-damage provision of the 1909 Copyright Act and its delineation of specified limits for statutory damages "take[] the matter out of the ordinary rule with respect to abuse of discretion"); Broad. Music, Inc. v. Star Amusements, Inc., 44 F.3d 485, 487 (7th Cir.1995) (interpreting the modern Copyright Act and noting "that the standard for reviewing an award of statutory damages within the allowed range is even more deferential than abuse of discretion").

***

If the Supreme Court countenanced a 113:1 ratio in Williams, we cannot conclude that a 44:1 ratio is unacceptable here. We acknowledge the Supreme Court's preference for a lower punitive-to-compensatory ratio, as stated in Campbell, but emphasize that this case does not involve a punitive-damages award. Until the Supreme Court applies Campbell to an award of statutory damages, we conclude that Williams controls, not Campbell, and accordingly reject Panorama's due-process argument.

Bottom line: I know of no case, from any jurisdiction, that has actually held that the BMW/State Farm doctrine limits statutory damages, let alone one that invalidated an award of copyright statutory damages (or foreclosed the possibility of such an award) as constitutionally excessive.