Congratulations to the Cashman Law Firm, PLLC clients who have been dismissed from the Hard Drive Productions, Inc. case.

Congratulations to the Cashman Law Firm, PLLC clients who have been dismissed from the Hard Drive Productions, Inc. v. Does 1-1,000 (Case No. 1:10-cv-05606) case filed in the US District Court for the Northern District of Illinois.

There is really nothing exciting to say about this. There were no juicy facts or news which prompted the dismissals, and the dismissals were done voluntary (meaning Steele filed the dismissal himself) and without prejudice (meaning that he can still sue these defendants in their home courts). This is not anything surprising, because Steele’s Hard Drive Productions, Inc. client has been suing people in smaller numbers in their home states for some time now.

Because Steele has already course-corrected and has started suing defendants in their home courts, it appears to me that there was no reason for him to keep this monster of a case alive, especially because it implicated out-of-state John Doe defendants (whereas the court has already dismissed Steele’s cases for implicating out-of-state defendants), and the case was fraught with joinder problems up the wazoo.

So congratulations on your dismissal. Enjoy it for the time being, and remember, he still has three years from the alleged date of infringement to bring suit against defendants in their home courts.

PS – The only interesting fact is that there is one Doe left. Who this Doe is, or what their intentions are in keeping this Doe as a putative defendant, we’ll just have to wait and see.

Now that my bittorrent case is dead… What to do about the settlement letters?!?

A majority of the calls into our office these past few days have essentially been, “I was dismissed from XYZ case, but the plaintiff has started sending me scare letters telling me that I must settle by a certain date or else they are going to sue me again in my home state. I see they have started suing people in smaller numbers in different states. Can they really take me to court?!? Will they take me to trial if I don’t settle?!? What should I do?!? Should I settle?!?

Up front, almost every knowledgeable plaintiff copyright “troll” attorney has shifted from suing thousands of defendants in one lawsuit to suing smaller numbers of defendants in smaller lawsuits (e.g., v. Does 1-23, v. Does 1-56, etc.) in many cases in the defendants’ home states. However, the filing of the lawsuits themselves — even against smaller groups of Does or against individuals — do not suggest that the plaintiff attorneys have any intention of moving against those particular Does. Over the past year, a number of plaintiff attorneys have sued individuals, but the lawsuits then just sit there for months at a time.

I have a strong suspicion that the follow-up lawsuits are merely second chances for the plaintiff attorneys to prove that they “are serious” about moving forward against formerly dismissed defendants. I would be unimpressed if people got named, sued, and served, and then another one of their settlement “scare” letters arrived at the repeat defendant’s home stating, “We’re ready to move against you today if you would like. However, if you would like to settle, we’re willing to extend an olive branch of $X thousand dollars,” (that amount being significantly higher than the $3,500-$4,500 they are currently trying to extort from defendants.)

The reason it is so easy for them to name and serve a defendant is because plaintiff attorneys know that the burden to hire an attorney and to file an answer within 20 days falls on the accused defendant, and if he misses this deadline, he defaults in his case and the plaintiff automatically wins. Once the default happens (e.g., by not hiring an attorney and timely filing an answer), this becomes yet one more opportunity for the plaintiff to write a “you defaulted on your case; pay us $X thousand dollars or else we will file a default judgement against you where we might get a $30,000 judgement, or possibly even a $150,000 judgement against you.”

As for whether the plaintiffs have the manpower or the resources to take their cases to trial, my opinion is that [with few exceptions,] they probably do NOT have the resources to do so. Copyright infringement lawsuits are expensive to defend, and they are just as expensive to prosecute. Remember, the burden here is on the plaintiff to prove guilt, not on the Doe Defendant to prove he didn’t do it. The MPAA and the RIAA tried taking defendants to trial a few years back and you see how ineffective that strategy was (they have since abandoned the business model of suing downloaders, [as their former multi-million dollar judgements have been recently reduced to pennies on the dollar]).

Then, the next question is whether Dunlap Grubb & Weaver, PLLC (now sending letters as another law firm, *how deceptive*) with Ellis Bennett, Nicholas Kurtz, and the other attorneys has the manpower to bring these cases to trial, I believe the answer is no. I have no doubt they might sue people individually. I have no doubt they might spend the few thousand dollars to hire a digital forensics expert to take a mirror image of the accused downloaders’ hard drives, and even to do a few depositions on the defendants themselves. However, beyond that — beyond a summary judgement motion where the plaintiff would ask the court to find the defendants guilty or not guilty as a matter of law based on the evidence gathered by the forensics team and by the depositions — I doubt they have the manpower or resources to move forward to trial, and I would be the first to hop on a plane and watch the case firsthand with popcorn in my hands if they did.

Now as for whether you should settle. Up front, each defendant’s risk tolerance of being named and sued is different, and the effects of being sued differ based on each defendant’s financial situation and whether they are set up to be protected from such a loss. People with assets which are unprotected should obviously take being sued more seriously than someone without assets, or than someone who’s assets are properly shielded (e.g., either through umbrella liability insurance, various asset protection strategies, or through the use of corporate entities or trusts). That being said, let’s chat about the risk of being sued.

In short, there is a website — http://www.rfcexpress.com which lists all the cases which are filed in each of the federal courts across the US. You can easily do a search for Copyright cases in your particular court, or in any or all federal courts. The best search is to list either the plaintiff’s name, e.g., “West Coast Productions”, “Hard Drive Productions”, or “Liberty Media Holdings”, or you can see the newer lawsuits filed against various does by doing a search for “Does 1-” which brings up most of the bittorrent cases.

Then there is the question of can they even sue you? The answer is yes, but the analysis should not be one of fear or “maybe they will, maybe they won’t,” but a cold, calculated analysis of RISK. Most federal courts require that an out-of-state attorney hire local counsel before filing suit against defendants. Thus, if you look in your state and you do not see any lawsuits from your plaintiff (or your plaintiff attorney), then chances are they do not have local counsel yet in your state and the risk of being sued is low, and the need to settle is also correspondingly low. That being said, if you see that your plaintiff attorneys have sued defendants in your state (or if you see that their office is physically in your state), then that means that they can sue you themselves and they do not need local counsel, or that they have likely hired local counsel in your state — in either case, the risk of being sued skyrockets, and the need to settle also becomes quite high. As to whether to wait to be sued and then settle, or to settle proactively, you know that you have a better chance of negotiating if you do not have a lawsuit with a deadline looming like a gun at your forehead. Thus, if you are going to settle, it is best to settle proactively and before you get sued. If you wait until after you are sued, 1) there may be no settlement then, or 2) there may be a ridiculously high settlement after they sue you.

Lastly, should you run off and settle your case on your own? Bad idea. It is better to have an attorney negotiate your settlement because 1) they could probably get a better deal than you because of increased negotiating power from other clients or a former relationship from past negotiations, 2) your attorney will not identify you during the negotiation process and thus your settlement negotiations are anonymous, 3) your attorney will not incriminate you with their discussions while you might, and 4) your attorney has the power to negotiate the settlement agreement to properly protect your interests whereas a defendant calling the plaintiff will probably be railroaded and will probably be told to either “take the contract as it is or leave it,” — not to mention that without an attorney, you do not know the clauses that need to be in the contract to protect your interests, e.g., from being sued later for attorney fees and costs. Last, but not least, it goes without saying that as soon as your attorney tells the plaintiff attorney that they are representing you, the plaintiff attorneys are NO LONGER ALLOWED TO CONTACT YOU, AND ALL COMMUNICATIONS MUST GO THROUGH YOUR ATTORNEY. Thus, no more settlement solicitation calls, no more midnight voicemails, no more scare letters, no more threats, and no more harassment. Everything goes through your attorney’s office.

In sum, these plaintiff attorneys will no doubt try to push the envelope and sue individuals and/or smaller groups, and as potential defendants, settling should not immediately be your first inclination. There are factors to consider, and there are terms to negotiate if you do decide to settle. Missing the step of negotiating your settlement can get you sued for something you thought you settled, or can get you hit with fees and costs you did not realize you agreed to in the contract. Caveat emptor. Beware and vigilantly protect your interests when settling, or do not settle in the first place. And for G-d’s sake, do not visit the plaintiff’s website and log on to see your settlement, and then not settle. You must assume they are tracking you. If you are going to settle anyway, the last thing you want to sign is a boilerplate settlement agreement which has every term in their favor and none in yours. Be cautious.

Whether sanctions against Evan Stone were appropriate.

Someone asked me to comment on Judge Godbey’s order in the Mick Haig Productions, e.K., v. Does 1-670 (Case No. 3:10-cv-1900-N) in the US District Court for the Northern District of Texas sanctioning Evan Stone $10,000 for sending subpoenas to ISPs before getting permission from the court.

As eloquently quoted on EFF.org’s Deeplinks Blog,

“To summarize the staggering chutzpah involved in this case: Stone asked the Court to authorize sending subpoenas to the ISPs. The Court said “not yet.” Stone sent the subpoenas anyway. The Court appointed the Ad Litems to argue whether Stone could send the subpoenas. Stone argued that the Court should allow him to – even though he had already done so – and eventually dismissed the case ostensibly because the Court was taking too long to make a decision. All the while, Stone was receiving identifying information and communicating with some Does, likely about settlement. The Court rarely has encountered a more textbook example of conduct deserving of sanctions.” (Order, p.12)

I actually heard about this from other plaintiff attorneys as it was happening, and I am not surprised that it happened. One thing that a plaintiff attorney needs to be when suing thousands of defendants each in dozens of cases is ORGANIZED. Not only do they need to keep track of the various hearings and deadlines (this isn’t so complicated to do) to keep up the appearance that they actually intend to move forward in their cases, but remember most of these so-called “copyright trolls” are concurrently running a huge marketing campaign — the main goal of their entire marketing scheme — trying to scare people into settling for thousands of dollars under the threat of “naming” them as a defendant in their lawsuit (or in a follow-up lawsuit in the defendant’s home court).

So the judge essentially said “no” (or, “not yet”), Stone went ahead anyway and sent the subpoenas, and then apparently sent settlement letters to the Does as the ISPs complied with the subpoenas. Really in my opinion this sounds like mindless disorganization rather than malice. This is what happens when an attorney tries to sue too many people at the same time; they simply get sloppy. As we know, many of these plaintiff attorney firms are merely “a guy in a room,” and Evan Stone has been reported as being “a guy in two rooms, one empty, one full of files.” (See Dallas Observer’s Evan Stone’s Battle Against Porn Pirates article, 4/21/2011). Am I surprised he slipped up? Not really. Was this really an intentional act? Maybe.

Now as far as the sanctions goes, I am unimpressed by the $10,000 sanction amount. This seems like pennies to an attorney who is bringing in $2,500 per settlement at what he claims is a 45% settlement rate. (see Order, footnote 7) Ten thousand dollars is merely the equivalent of FOUR settlements. With the hundreds of letters that went out, even if he is lying about the settlement rate, don’t you think he made at MANY TIMES that amount? Think about it. There is nothing punitive about this order.

Assume Evan Stone merely sent out 100 letters and had only a 20% success rate at $2,500 per settlement. This alone amounts to $50,000. The Mick Haig Productions case had *670* defendants. In short, while $10,000 may be a lot to a starving attorney, my opinion is that the sanctions wouldn’t even cover the IRS’ federal income taxes Mick Haig Productions would pay on the settlements they received from this misstep.

So again, I must shrug my shoulders. This was going to happen eventually to someone. It makes sense that it happened to Evan Stone. The other plaintiff attorneys don’t even like him, and they try to distinguish themselves from him. Maybe next time this happens, the sanctions will be $100,000 rather than $10,000. As far as I am concerned, $10,000 will not serve to be any deterrence at all. Not to Evan Stone; not to any of the other plaintiff attorneys who are laughing at him now as we speak.

Which will be the bittorrent lawsuits of tomorrow?

With the larger cases from Dunlap Grubb & Weaver, PLLC heading off into the bittorrent litigation graveyard, the plaintiff attorneys have not yet learned their lesson about the dangers of filing John Doe lawsuits with thousands of Does sued together. Below are just a few cases filed by the same plaintiff attorneys — newer cases — which thus far have not achieved much traction. No doubt we’ll be seeing more of these in the coming months.

First and foremost, Ira Siegel’s new case, Digital Sin, Inc. v. Does 1-5,698 (Case No. 4:11-cv-04397-LB) filed in the US District Court for the Northern District of California. Apparently it did not occur to his client that suing 5,698 defendants is the easiest way for a case to achieve scrutiny.

Also by Ira Siegel is his SRO Pictures, Inc v. Does 1-3036 (Case No. 5:11-cv-04220-PSG) case, his Discount Video Center, Inc. v. Does 1-5,041 (Case No. 5:11-cv-02694-PSG) case, his Zero Tolerance Entertainment, Inc. v. Does 1-2,943 (Case No. 3:11-cv-02767-EDL) case, each filed in the same California court as Digital Sin.

We are already hearing from Doe Defendants on Ira Siegel’s Third Degree Films, Inc. v. Does 1-3,577 (Case No. 4:11-cv-02768-LB) and most notorious, his Patrick Collins, Inc. v. Does 1-2590 (Case No. 3:11-cv-02766-MEJ) case, also in the same California court.

Next, filed by Thomas Dunlap himself (of Dunlap Grubb & Weaver, PLLC) is CineTel Films, Inc. dba Family of the Year Productions, LLC v. Does 1-1,052 (Case No. 8:11-cv-02438-JFM) filed in the US District Court for the District of Maryland. This one should be fun. This same plaintiff has had Dunlap sue in his home US District Court for the District of Columbia, the Cinetel Films Inc. et al v. Does 1-1,951 (Case No. 1:11-cv-01334-RLW) case. Same plaintiff, different jurisdiction. My guess is that Ellis Bennett or Nicholas Kurtz will be the on the paperwork for these since they have to date handled Dunlap Grubb & Weaver’s older cases.

In the District of Columbia (where most of Dunlap Grubb & Weaver’s cases are filed,) to everyone’s surprise is the AF Holdings, LLC v. Does 1-1,140 (Case No. 1:11-cv-01274-RBW) case, apparently using Timothy Anderson of Anderson & Associates, PC as the local counsel. The funny thing about this one is that AF Holdings, LLC is John Steele of Steele Hansmeier PLLC’s clients (where Steele Hansmeier has sued a bunch of AF Holdings, LLC v. Does smaller cases across the country already), so this Tim Anderson guy is probably another one of Steele’s local counsel puppets (sorry Tim).

Then, there is Evan Stone’s FUNimation Entertainment v. Does 1-1,427 (Case No. 2:11-cv-00269-DF) filed in the US District Court for the Eastern District of Texas. I haven’t heard much about this case yet, but Evan Stone is the attorney who was the plaintiff attorney over the LFP Internet Group, LLC v. Does [LFP a.k.a. “Larry Flint Productions”] lawsuit that had over 6,000 defendants in total dismissed last year. Maybe he’s back in the game with a case that won’t be immediately dismissed.

Last, but not least, there is a set of triplet lawsuits filed by an unknown McDaniel Law Firm plaintiff (probably a copycat attorney who has watched these bittorrent cases develop and now has decided to try his hand and sue) in the US District Court for the District of New Jersey. Both of them go by the same name, Baseprotect UG, Ltd. v. John Does 1-X (Case No. 2:11-cv-03621, Case No. 2:11-cv-02021, and Case No. 2:10-cv-06806 respectively). The deceptive part is that the “Does 1-X” title appears to suggest that there are just a few defendants, so the case is hoped to stay under the radar. Nope. In one case, I believe there are over 300+ John Doe defendants implicated, and in the other case, I believe there are over 1,500 John Doe defendants. Funny enough, I hear that Baseprotect does not even own the Polish copyrights they assert, and that they have merely questionably acquired a limited right to sue on these copyrights. This will be fun to watch.

So in short, with the demise of the famous DC cases (Maverick Entertainment, Call of the Wild, and now West Coast Productions, Inc.), there are a whole new generation of cases who hope to achieve exactly the same purpose as their predecessors. Make a profit before getting dismissed into oblivion.