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.

Congratulations to Cashman Law Firm, PLLC “Call of the Wild v. Does 1-331” Clients, Now Severed and Dismissed.

Congratulations to the Cashman Law Firm, PLLC defendants of the Call of the Wild Movie, LLC v. Does 1-331 (Case No. 1:10-cv-00455 in the U.S. District Court for the District of Columbia) case, now severed and dismissed. This is not a complete dismissal, as 14 defendants still remain and the case remains alive.

The history surrounding this dismissal is that Judge Beryl Howell, a now known former copyright lobbyist has been putting pressure on the plaintiff attorneys that they should either name defendants who are within the court’s jurisdiction (e.g., living in the District of Columbia), or they should dismiss them. This dismissal submitted to the court yesterday appears to me to be a gesture of good faith which was submitted along with a motion to extend time to serve or dismiss the defendants still remaining in the case. My guess is that these defendants reside in the District of Columbia.

Consequently, as a result of this dismissal, the judge allowed the case as to the other defendants to continue, at the very least until August 15th, 2011. There is no doubt that Dunlap, Grubb & Weaver will attempt to elicit settlements from the remaining D.C. defendants now that the other defendants have been dismissed.

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Congratulations to the Cashman Law Firm’s “Future Blue v. Does 1-300” clients, now severed and dismissed.

Congratulations to our clients and to all defendants in the “Future Blue, Inc. v. Does 1-300” case (1:10-cv-06256), dismissed in the US District Court for the Northern District of Illinois. See attached order below.

As you can see by the order, the case has been severed and dismissed because of improper joinder.  The interesting caveat to keep an eye on, however, is Judge Conlon’s opening to Steele Hansmeier to file an amended complaint by July 11, 2011. While we have already notified our clients of the dismissal, we will continue to monitor this case to determine whether there is any residual activity that might bring this old dog back to life.

For now, it appears as if the “future” is not so “blue” after all…

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Northern District of Illinois Judge Steeles The Life From A Second Torrent Case

[4/13/2011 UPDATE: I have not had time to update this article, but the same day as the Millennium TGA, Inc. v. Does 1-800 case was dismissed, that same judge ALSO dismissed the Lightspeed Media Corp. v. Does 1-1000 case for the same reasons. That would make 3.]

Congratulations to our clients who were recently severed and dismissed in the Millennium TGA, Inc. v. Does 1-800 case (US District Court for the Northern District of Illinois; Case# 1:10-cv-05603). Many of you have been defendants in this case since it began last September.

More importantly, even more of you have spoken to me about your case in the last few weeks since prior to Judge Manning’s dismissal of the case, the plaintiff attorneys appear to have stepped up their attempts to secure and acquire the contact information for the various John Doe defendants through their attempts to subpoena the ISPs for the various Doe subscribers.

In short, the Judge’s reason for dismissing the was because Millennium TGA has failed to show that the copyright infringement claims “arise out of the same transaction, occurrence, or series of transactions or occurrences.” In other words, the lists of allegedly infringing IP addresses spread weeks if not months apart were not considered by the judge to be “the same transaction or occurrence” in the commission of the crime.

The judge further went on to comment that “merely committing the same type of violation in the same way does not link defendants together for purposes of joinder,” and ruled that Federal Rules of Civil Procedure (FRCP) Rule 20(a)(2)(A) was not satisfied.

The interesting thing about this case is that contrary to other cases, the judge explicitly stated that she is dismissing the case because “potential defendants [are] located all over the country with no discernible ties to this district” (emphasis added). This is the ‘third rail’ “no jurisdiction” (Dear Court, I was sued in Illinois, I live in New Jersey) argument judges have been afraid to concede in previous dismissals.

In addition, contrary to the DC judge in the Dunlap, Grubb & Weaver cases who denied the validity of geolocation tools to ascertain the likely location of potential John Doe Defendants, this judge acknowledged the validity of these tools and used them to conclude that “many (if not all) of the defendants” do not reside in the state of Illinois.

These are two very welcome acknowledgements by the judge neatly wrapped up in an Northern Illinois case dismissal.

Last, but not least, I wanted to point out that this is the second case that has been outright dismissed in the US District Court for the Northern District of Illinois, and as we discussed previously, I have no doubt that this will continue to have a ripple effect across the remaining cases in that district.

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