Sunday, January 24, 2010

Did Judge Davis have the authority to remit the Thomas-Rasset award? Authority is remarkably thin.

Since juries last summer returned the huge verdicts against Jammie Thomas-Rasset and Joel Tenenbaum for their use of peer-to-peer networks to download and "share" music, attention has been focused on the question whether the massive awards ($1.92 million and $675,000, respectively) were unconstitutionally excessive. That is, did these awards of statutory damages pass muster under the Supreme Court's limits on punitive damages established in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), or the more deferential standard in St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63 (1919)?

It was thus a bit of a surprise that last week's decision by Chief Judge Michael Davis of the District of Minnesota reducing the Thomas-Rasset award by 97 percent -- from $80,000 per song down to $2,250 -- rested on the common-law doctrine of remittitur, avoiding the constitutional issue altogether. But did the court actually have the authority to employ remittitur to reduce an award of copyright statutory damages within the range established by 17 U.S.C. § 504(c)? I admit I haven't done much independent research on this issue. But having read the cases cited in support of the authority for remittuitur here, in both Thomas-Rasset's briefs and the court's order, I was struck by the extremely thin support for the notion that a court may remit an award of copyright statutory damages within the statutory range.

Thomas-Rasset's 13-page post-trial motion to reduce the award devotes a single paragraph to the issue. See Br. at 10. This paragraph cites two cases regarding remittitur, and highlights their holdings that "Remittitur is appropriate where the result on a verdict 'is monstrous or shocking.'" Id. (citing Thorne v. Welk Investment, Inc., 197 F.3d 1205, 1211–12 (8th Cir. 1999); Jenkins v. McLean Hotels, Inc., 859 F.2d 598, 600 (8th Cir. 1988)). But Thorne (a sexual harassment case) and Jenkins (a personal injury case), neither of which involved statutory damages, let alone copyright statutory damages, do not address the issue here: whether, where Congress has established a statutory damages range, and the jury's award falls within it, the court has the authority to reduce an award it finds excessive. The Department of Justice's brief defending the Thomas-Rasset award on constitutional grounds also takes the position that the court has the power to remit on common-law grounds. See Br. at 7-8. DoJ's brief cites a copyright case, Superior Form Builders, Inc. v. Chase Taxidermy Supply Co., 74 F. 3d 488, 496-97 (4th Cir. 1996), in support of this argument. But I think Superior Form Builders is weak authority for this point. First, that case merely seems to assume, but does not actually analyze whether, a judge may reduce a jury's award that falls within the statutory range. And it notes that "if the jury was presented with evidence justifying a finding of willful infringement, it is given broad discretion to award up to $100,000 [then the statutory maximum] for each work copied." Moreover, it declines to reduce the award.

The labels' brief in defense of the Thomas-Rasset award does argue that the court lacks the authority to remit a copyright statutory damages award. See Br. at 21-22. Their argument is that the Supreme Court's Feltner opinion clearly held that the jury -- not the judge -- determines the proper amount of statutory damages within the range established by Congress:
Feltner does not hold nor contemplate that a judge has the right to alter a jury’s statutory damage award if that award falls squarely within the statutory damage range prescribed by Congress. See also SESAC, Inc. v. WPNT, Inc., 327 F. Supp. 2d 531, 532 (W.D. Pa. 2003) (rejecting request for remittitur of statutory damages for copyright infringement because "[t]he court should not interfere lightly with a carefully crafted statutory scheme by substituting its judgment for that of the legislature").
Their brief notes, however, that "Plaintiffs might accept a remittitur under certain circumstances," including adequate recognition of Thomas-Rasset's wrongdoing, in the interest of "finality." Id. at 22-24. Thomas-Rasset's reply brief does not even mention remittitur, focusing solely on the constitutional issues.

Judge Davis' order addresses the issue of his authority to remit on pages 7-8. It does not cite any cases holding that a judge has the power to remit a copyright statutory damages award. Rather, it simply notes Feltner, acknowledges that deference must be paid to the jury's decision, and concludes that "there is no authority for Plaintiffs’ assertion that the Court does not have the power to remit an award of statutory damages." The order then cites Thorne and Corpus v. Bennett, 430 F.3d 912, 917 (8th Cir. 2005) (Section 1983 police excessive force case) as authority for the proposition that a judge may remit a jury's damages award even where the plaintiff has a Seventh Amendment right to a jury trial. (Feltner's holding was based on the Seventh Amendment.) But again, I don't think this answers the question whether a judge has the authority to reduce a jury's award where that award falls within a statutory range specifically spelled out by Congress. Neither Thorne nor Corpus involved a statutory damages range.

The bottom line is that, as far as I am aware, Judge Davis' decision is without precedent; it stands alone as the first and only decision ever to reduce an award of copyright statutory damages, on any ground, common-law or constitutional. I realize it's hard to prove a negative (i.e., that there are no other such decisions), but the failure of either Thomas-Rasset's highly competent attorneys, or Judge Davis, to find one, is telling. See Pls.' Br. at 17 ("In fact, Plaintiffs have not located a single case, in the nine decades since Williams was decided, in which a court relied on Williams to reduce or eliminate an award of statutory damages because of a due process violation. See, e.g., Colleen P. Murphy, Judicial Assessment of Legal Remedies, 94 Nw. U. L. Rev. 153, 202 (1999) (noting that in the context of the Copyright Act, '[n]o reported decision has reduced a litigated award that was within the appropriate statutory range')").

The labels now have some difficult decisions to make. Do they take their $54,000, declare victory, and go home? That might be the best PR move, but it would appear to result in their forfeiting of the right to appeal the damages ruling. See Donovan v. Penn Shipping Co., 429 U.S. 648 (1977) (noting "settled rule that a plaintiff who has accepted a remittitur may not appeal to seek reinstatement of the original verdict."). Or do they reject it, so that they can argue to the Eighth Circuit that Judge Davis lacked authority to remit? From a long-term strategic perspective, it is surely not helpful to have a case on the books holding that a trial judge does have the authority to reduce a jury's statutory damages award. (Pursuant to Judge Davis' order, the labels have until Friday, Jan. 29 to decide whether to accept the reduced award or head back to Minnesota for a third trial.)

It will also be interesting to see what the labels argue in their brief in opposition to Joel Tenenbaum's motion seeking a reduction in the jury's award against him. Tenenbaum's brief barely even mentions common-law remittitur; it discusses the issue only in a short paragraph at the very end, see Br. at 25-26, which cites two cases, neither of which is about copyright or statutory damages. See Correa v. Hosp. San Francisco, 69 F.3d 1184, 1197 (1st Cir. 1995) (claim under Emergency Medical Treatment and Active Labor Act (EMTALA), 42 U.S.C. § 1395dd); Milone v. Moceri Family, Inc., 847 F.2d 35, 37 (1st Cir. 1988) (maritime personal injury case). Judge Gertner will surely have read Judge Davis' opinion, and no doubt will be tempted to follow its mode of analysis, i.e., to declare that the award shocks her conscience, and thus to remit on common-law grounds, thus avoiding the constitutional issue. The labels' brief, in which they are likely to try to convince her otherwise, is due this Thursday, January 28.

Update: Thomas-Rasset's counsel Kiwi Camara sent me the following email, which he gave me permission to post here:
Ben:

I read your two blog posts on Judge Davis's order. Another interesting point: we challenged statutory damages as unconstitutional all the way to the minimum. We argued that even if Judge Davis were to remit to the minimum, the resulting statutory damages would still be unconstitutional. See M. at 4.

This means that the RIAA cannot avoid the constitutional issue even if they accept the remittitur. Of course, accepting the remittitur may put them in a better position to defend the constitutionality of the award of statutory damages on appeal since the reduced award is less objectionable than the original award, though still in our view unconstitutional.

Kiwi
Camara also told me that if the labels accept the reduced award, Thomas-Rasset still intends to appeal on the grounds that the award of $2,250 per work is unconstitutionally excessive.

12 comments:

  1. I was just watching a show about a very old criminal trial where the jury found the defendant guilty of capital murder but recommended life in prison. The judge overruled the jury and sentenced the defendant to death.

    Now it seems to me if a judge can *increase* the penalty in a criminal trial, then why couldn't he decrease the award in a civil trial.

    Just askin,
    Randy

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  2. @Randy:

    I guess this is a good illustration of why you shouldn't rely on TV for your legal education. Only a jury -- not a judge -- can impose the death penalty. See Ring v. Arizona, 536 U.S. 584 (2002). http://www.law.cornell.edu/supct/html/01-488.ZO.html

    As I explained in my post, there's no doubt that in many circumstances, a court may reduce a jury's damages award under the common-law doctrine of remittitur. But the question raised here is whether a judge has that power where Congress has enacted a statute that sets out a specific range of acceptable damages awards.

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  3. Even after remittitur, Chief Judge Davis's damages award of $2,250 per work falls within the statutory range set out by Congress. That being the case, why should it matter that this is a statutory damages scheme?

    The Seventh Amendment does not bar remittitur as a common-law practice, so the objection can't be constitutional. Unless Congress specifically set out to bar remittitur in the Copyright Act, it's hard to see how this general common-law practice would be prohibited. In fact, the language of the Act expressly left the award of damages to the trial judge in the first instance, a directive only invalidated by the Supreme Court in Feltner. But that decision did not purport to wipe out remittitur. I understand this may be a situation with little preexisting case law, but I don't see the substantive objection.

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  4. @Anonymous:

    I don't think it's right to say that "the language of the [Copyright] Act expressly left the award of damages to the trial judge in the first instance." The Act expressly gave the authority to "the court," not "the trial judge."

    I think the best argument against the application of common-law remittitur in a case of copyright statutory damages would be that, in a typical common-law case, the jury can pick any damages number out of the ether, and so the judge should be able to step in and reduce a truly irrational award. But in the case of copyright statutory damages, the jury's discretion is already bounded by a range specifically set by Congress. Almost by definition, a choice within that range isn't irrational; it's merely the implementation of what Congress has chosen, and it's not the place of a judge to substitute his judgment for Congress'. I'm not sure that's ultimately a winning argument (as I said in the post, I haven't done much original research), but I think there's considerable force to it.

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  5. The really interesting question here is - if the judge believed the jury's choice of statutory damages was unreasonable, and therefore subject to remittitur, why is his decision of $2250 any more or less reasonable or arbitrary under the facts? And, more importantly, what chilling effect does this have on the right to a jury trial in a copyright statutory damages scheme when the judge can simply usurp the jury's judgment with his or her own, despite the fact that the jury acted within the de facto reasonable statutorily-prescribed damage boundaries authorized by Congress?

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  6. I think Ben is exactly right on this point. When the amount is in the STATUTORY range, it cannot be considered the type of uncontemplated award needed for remittitur. I think Feltner is pretty clear authority for the lack of the court's power to do so.
    I also didn't understand the Judge's Hobson's choice to the plaintiffs that if they rejected the remittitur, they could take a third trial. That is absurd. He's said that he would never allow an award above the amount he just set--he says it is the maximum allowable award for the jury to find in his view. So, if a third jury exceeded $2250, he'd still lower it again. Finally, remittitur is not supposed to be arbitrary based on his feelings of what is fair or some calculation of triple minimum that he comes up with--it is supposed to be compared to what other juries have found, which is not $2250. The labels should, to the extent they can, go straight to appeal pointing out that the Judge did something prohibited by law that the other side didn't even seriously ask for. Similarly, if Camara and co. want the Constitutional question decided and not just a remittitur opinion, they should push for that on appeal as well. All Judge Davis did here was make work for the parties and the appeals court.

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  7. Hi Ben,

    All I can say here is "wow"! Since when has a sole district judge been allowed to annoint himslef or herself "king" and start establishng new rules of law rather than interpretating and acting upon existing laws to reach a fair resolution in a case?

    As you know, I spend far too much of my time around copyight lawyers practically every day, but I try my best to reach my conclusions based on "logical thinking" and "common sense" as well, not just legal precedents.

    Who in this country will EVER take jury duty seriously again if outlaw judges such as this are allowed to roam around freely, and make up law as they wander in and out of legal circles with immunity. This is a slap in the face to all common law-abiding citizens who take our laws, and jury duties, seriously, in my view.

    I am like millions and millions of creative entreprenuers who have developed a busines based on the protections we are granted in both the U.S. Constitution and in the current statutes approved into law by Congress and our Executive Branch.

    Since when do federal judges get to change all of these rules simple because Ms. Thomas-Rasset is a single mom, or perhaps they never liked "Blue Suade Shoes" in the first place?

    I hope the RIIA challenges this ruling and a closer critical eye is kept on this particlar judge going forward. Something simply does not make sense here.

    The one thing all of us non-lawyers know we can count on from the folks in robes ... surprise!

    Sure wish that answer was "following the law"!

    As I referenced in one of my earlier posts, when the U.S. courts start taking copyright infringement, digital piracy, and counterfeiting, less seriously than the courts in Asia and Europe, Katie bar the door!

    What idiot would keep developing copyighted works if our courts won't hold the people who steal them consistently accountable?

    George Riddick
    Imageline, Inc.

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  8. "What idiot would keep developing copyighted works if our courts won't hold the people who steal them consistently accountable?"

    Lots of them actually. :(

    Oh wait, I meant :)

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  9. Maybe I'm not getting it, but in the deferential St. Louis case you bring up in the first paragraph, the awards in question were within the statutory limits of not less than $50, not more than $300, and a reasonable attorney's fee.

    The justices ruled "the states still possess a wide latitude of discretion in the matter, and that their enactments transcend the limitation only where the penalty prescribed is so severe and oppressive as to be wholly disproportioned to the offense, and obviously unreasonable."

    So that's the constitutional standard, if I read correctly. "So severe and oppressive as to be wholly disproportioned to the offense, and obviously unreasonable."

    Now, in his ruling, the judge makes two statements that stand out to me...

    "The Court has labored to fashion a reasonable limit on statutory damages awards against noncommercial individuals who illegally download and upload music such that the award of statutory damages does not veer into the realm of gross injustice."

    And...

    "It was the jury’s province to determine the award of statutory damages and this Court has merely reduced that award to the maximum amount that is no longer monstrous and shocking."

    If we're talking spirit of the law, it sounds like the judge has applied the rule that the award cannot be "wholly disproportioned to the offense, and obviously unreasonable."

    But rather than couch it as a constitutional issue, he took another route to justify the reduction.

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  10. @Ben:

    Assuming that any damages award within the statutory range is per se "rational" is a serious stretch. For willful violators, the available damages range from $750 to $150,000 per work -- with no actual damages requirement or, for that matter, other detailed guidance from Congress. Whatever one's views of copyright protection, it is not difficult to imagine an award in this range that appears irrational when set against the facts of an individual case. Conversely, to assume that any award in the statutory range is per se rational is to say that $150,000 per work would be a reasonable penalty for any willful violator.

    Nor is it clear that the vast statutory range is more limited than causes of action carrying non-statutory damages. For many other types of claims (i.e., non-copyright), the available damages are limited by proof of actual damages and the constitutional cap on any punitive add-on. To the extent that deterrence is one of the criteria for copyright damages, it conceivably functions as a far more elastic punitive damages provision than the Constitution permits these days.

    All in all, Congress hardly provided a finely tuned or infallible statutory damages scheme in the Copyright Act. Consequently, the possibility of an unreasonable or irrational jury award doesn't appear any more remote than in other types of cases.

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  11. @Anonymous:

    I think this really comes down to a debate about who decides what is a rational award: Congress, which set the range of appropriate damages, or a single judge, who effectively decides that Congress' judgment was wrong under these particular facts. I think there's a pretty good argument that the Seventh Amendment reserves this judgment to the jury (bounded by the statute):

    "In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law."

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  12. @Ben:

    But the Seventh Amendment doesn't bar remittitur generally, at least it hasn't for the last two centuries, so I don't see why the amendment would operate with any greater force in the case of statutory damages. In fact, Feltner relied on the fact that copyright was originally a common-law cause of action; and remittitur would have been part and parcel of that same common-law package.

    Remittitur, on these terms, would remain available unless Congress explicitly said otherwise in the statute, just like common-law defenses remain available absent a congressional directive to the contrary (for example, fair use before it was codified by Congress).

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