Record labels win Ninth Circuit victory on attorneys' fees issue; voluntarily dismissed defendant is not 'prevailing party'

The Ninth Circuit has handed a significant procedural victory to the recording industry in one of its higher-profile cases against an individual alleged peer-to-infringer, ruling that the labels do not owe attorneys' fees to a defendant whose case they voluntarily dismissed. Dawnell Leadbetter had argued that the labels should have to pay her attorneys fees under 17 U.S.C. § 505, which provides that "the court in its discretion may allow the recovery of full costs [and] award a reasonable attorney's fee to the prevailing party." But, in an unpublished opinion, the Ninth Circuit upheld the District Court's refusal to award attorneys' fees, holding that Leadbetter was not the "prevailing party" because the case against her had been voluntarily dismissed without prejudice by the plaintiffs, without any "judicial relief creating a material alteration of the legal relationship of the parties." (citations and alterations omitted).

There is quite a bit of back-story to this extremely contentious case. To make a long story short, it kicked off when plaintiffs discovered that someone with the KaZaA username "dawnlead@KaZaA" (sound suspicious to you?) had 788 music files in her share folder, many of them consisting of the plaintiffs' songs. The labels sued her after settlement discussions fizzled. Through the course of discovery (during which the labels claim that Leadbetter was not forthcoming as to the downloading activities of others with access to her computers), it eventually became clear that the likely infringers were actually Leadbetter's son and fiance. The labels sued the two of them, and dismissed Dawnell Leadbetter. When Leadbetter moved for attorneys' fees, she had the support of the EFF, which argued in an amicus brief to the District Court that:

If individuals such as Leadbetter do not receive their fees, future innocent litigants will not take up this fight and the public will suffer under the misperception that such misguided theories are, in fact, the law. This would allow the RIAA to expand the scope of copyright beyond what is provided by law, effectively taking public rights and making these rights their own. Attorneys’ fees to Defendant here will defend the public’s legal rights and further the proper administration of the law.

But the District Court, and now the Ninth Circuit, were not persuaded. The Ninth Circuit's opinion is non-precedential and thus has limited binding effect beyond this case. But it does send a message to defendants in such p2p cases that they should be forthcoming with information about infringing activity on their ISP accounts early in litigation. If they resist telling the whole story, and the plaintiffs find out the truth only after a lot of expensive discovery, they cannot count on having the labels pay for their resistance.

(More litigation documents here.)