Saturday, January 30, 2010

Class action vs. record labels over peer-to-peer suits hanging by a thread

Last summer, when Kiwi Camara and Joe Sibley took over the defense of Jammie Thomas-Rasset, they vowed not only to get her off the hook, but to launch a counter-attack to "get the $100 million that [the labels] stole" in the course of their litigation campaign against individual peer-to-peer users. They, along with Harvard Law School professor Charles Nesson, would do that, Camara told Ars Technica, by "fil[ing] a class-action lawsuit against the industry at some point after the conclusion of the Thomas-Rasset case in an effort to make the labels pay back all monies taken in from settlements with file-sharers." Well, the Thomas-Rasset case isn't over yet (and may never be), and the Camara/Sibley/Nesson class action has yet to materialize (though Camara told Ars last week that it's still coming).

But little noticed is that a whole separate putative class action lawsuit attacking the labels' litigation tactics has been winding its way through federal court in Portland, Oregon. And due to a series of rulings over the past few months, the case appears to be on its last legs.

The case, Andersen v. Atlantic Recording Corp., started out routinely. As with all of their lawsuits, the labels first had to identify the proper target. They began only with an IP address and the KaZaA user ID "gotenkito," detected by investigators at MediaSentry, who spied this user "sharing" 1,288 song files. The labels then sued the "Doe" assigned to that IP address, and issued a subpoena to Verizon, the ISP that provided the Internet service to that subscriber. Verizon coughed up the name Tanya Andersen, and the labels filed a new lawsuit against her in her home state of Oregon.

Unlike the vast majority of defendants, Andersen didn't settle. She's "absolutely, positively, 100% innocent," her attorney Lory Lybeck told me back in November, when I wrote about this case for Billboard. The labels took depositions and examined her computer, but they couldn't definitively tie Andersen to the illegal downloading. And so they dropped the case, just before their opposition to her summary judgment motion was due. The judge, obviously miffed that the labels had put Andersen through the wringer but couldn't prove their claims, awarded her $103,175 in attorneys' fees -- one of only two cases in which the labels have had to make such payments.

But Andersen still wouldn't let go. She sued the labels (plus the RIAA and MediaSentry) right back, alleging a massive conspiracy to abuse the federal courts by suing innocent individuals with no probable cause. And she sought class action status, purporting to represent all of those "who were sued ... or were threatened with suit by [the major labels], for copyright infringement . . . who have not engaged in violation of copyright laws." Andersen's theory was that an IP address coupled with a folder "sharing" songs is insufficient evidence even to file a complaint, let alone prevail. (Here's the operative Fourth Amended Complaint.)

Judge Anna Brown dealt a major blow to Andersen's case last November 12, when she granted summary judgment for the defendants on all claims arising out of the allegedly wrongful investigation and initiation of their claims against her in the underlying lawsuit. The evidence gathered by the labels and MediaSentry "was strong enough to support 'a chance' that the defendants had correctly identified an individual engaged in wrongful activity," she wrote, citing the relevant legal standard. And more broadly, "The court ... concludes on this record that plaintiff has not established defendants filed a series of lawsuits based on a policy of initiating legal proceedings without regard to the merits," wrote Brown. Still left, however, were claims that the labels had continued to maintain their suit past the point they allegedly knew they were targeting the wrong person -- in other words, that they should have dismissed sooner.

The labels won another round earlier this month when Judge Brown denied Andersen's motion for class certification -- eliminating, at least for now, the possibility of a huge judgment against them -- and also rejected her attempt to file a Fifth Amended Complaint to add new class representatives. Andersen is seeking to file a new motion for class certification (the motion for leave has been filed under seal), presumably based on a purported class of individuals against whom the labels continued to litigate after they should have dropped the cases. I'm extremely skeptical that a court could properly certify such a class; individualized issues of what happened in each particular case would certainly predominate, making a class action a poor vehicle for litigating such claims. And the labels have asked for permission to file a summary judgment motion on Andersen's remaining claims, for abuse of process and negligence under Oregon law, related to their conduct after their suit against Andersen was filed. In their preview of their actual summary judgment arguments, the labels argue, persuasively in my view, that they were acting within the law to protect their copyrights, and cannot be held liable for exercising their right to litigate (even if they ultimately lost). (And even if the labels were to lose on the remaining claims, it's unclear what damages Andersen could recover, given that she has already been awarded her attorneys' fees in the underlying case.)

So could Camara and his team file a separate class action based on a similar theory, even if, as I expect, the labels ultimately prevail in the Andersen case? My understanding is that the answer is yes; principles of res judicata or collateral estoppel wouldn't bar new plaintiffs from bringing the same claims. But the Andersen experience, and the precedent it has established, very likely would lead to the same result. And it's hard to imagine the attorneys would want to take on such a case, while they are likely not being paid along the way, faced with such uncertain prospects of recovery.


  1. While I think a class action is not possible given the nature of the claim, I think, I think the claim for attorney fees and atleast over-zealous prosecution is meritorious. The courts have the tough burden of balancing the industry's loses with an individual's contribution to that lose. Until congress passes legislation to protect individuals who file-share, then defendants must rely on the court. Currently, the law permits the industry to treat individuals like international pirates even though that was not the statute's underlying policy.

    Sharmil McKee | Business Attorney | Philadelphia

  2. Sharmil -

    As an attorney, you should have no difficulty then, supporting your statement by showing any evidence that the statutory damages regime was never intended to apply to non-commercial infringers.

  3. Ah, but did the recording industry loose anything?

    This is a damned if you do, damned if you don't proposition, because I don't think it is possible to prove lose, and without proof of lose, how do you define damages?

    As a recording engineer, who does work for independent artists, my view is going to be wildly different than the recording industry. My artists retain full control over their recordings, so in theory Sound Exchange should be paying them the 50% that is reserved for the holder of the copyright of the recording.

    This leaves the artist in far better shape than a deal with one of the big four. So we (myself as a recording engineer and background musician, and my customers as singers, musicians, and songwriters) don't need the big four.

    The big four can scream as loud as they like. We don't care. We don't need them. We don't want them. And we damned well aren't going to make their mistakes.

    But I was talking about lose. Based on our experiences the more tracks we offer online, the higher the sales. So we aren't seeing any lose. Oh, CD sales maybe be down for the RIAA companies, but we are doing fine thank you, and you have to wonder if the lose in sales that they are suffering is because of the vigorous legal attacks they are making against people that they have accused of file sharing - if they are a reaction to a group of companies who have spent the last ten years acting in a manner to destroy their brands.

    Oh, and in the nature of good news, we've just cut a new CD. This is a One Off for sale in a charity auction in England, and we hope if raises good money for the charity.

    The commercial CD I am doing the engineering for right should be ready for release in March, assuming that the artist survives her trip to England next week ;)


Comments here are moderated. I appreciate substantive comments, whether or not they agree with what I've written. Stay on topic, and be civil. Comments that contain name-calling, personal attacks, or the like will be rejected. If you want to rant about how evil the RIAA and MPAA are, and how entertainment companies' employees and attorneys are bad people, there are plenty of other places for you to go.