Disney Enterprises, Inc. et al v. Hotfile Corp. et al

Filing 141

REPLY to Response to Motion re 108 Plaintiff's MOTION to Compel RESPONSES TO SUBPOENA TO THIRD PARTY LEMURIA COMMUNICATIONS, INC. filed by Columbia Pictures Industries, Inc., Disney Enterprises, Inc., Twentieth Century Fox Film Corporation, Universal City Studios Productions LLLP, Warner Bros. Entertainment Inc.. (Attachments: # 1 Exhibit 1-Declaration of Duane C. Pozza in Support of Reply Memorandum in Support of Motion to Compel from Lemuria, # 2 Exhibit A to Declartion of Duane C. Pozza, # 3 Exhibit B to Declaration of Duane C. Pozza)(Stetson, Karen)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-20427-JORDAN/O’SULLIVAN

DISNEY ENTERPRISES, INC.,
TWENTIETH CENTURY FOX FILM CORPORATION,
UNIVERSAL CITY STUDIOS PRODUCTIONS LLLP,
COLUMBIA PICTURES INDUSTRIES, INC., and
WARNER BROS. ENTERTAINMENT INC.,
Plaintiffs,
v.
HOTFILE CORP., ANTON TITOV, and
DOES 1-10.
Defendants.
/
PLAINTIFFS’ REPLY MEMORANDUM IN SUPPORT OF THEIR MOTION TO
COMPEL RESPONSES TO SUBPOENA TO THIRD PARTY LEMURIA
COMMUNICATIONS, INC.
Lemuria goes to great lengths to exaggerate the scope of plaintiffs’ document requests,
resorting to implausible claims that the requests at issue include documents about “weekend
plans, families, hobbies, humor, or rally car racing,” Opp. at 6, or “car mechanics,” id. at 8, or
“cars or vacations,” id. at 10, or other topics that have nothing to do with Hotfile. Lemuria has
not suggested that communications about such personal topics between Lemuria and Hotfile
even exist. Regardless, plaintiffs have always made clear in their meet-and-confer process and in
their motion that they are seeking documents “about Hotfile’s operations.” Mot. at 7. Behind its
hypotheticals about broad categories, Lemuria is in fact attempting unduly narrow the scope of
documents it will produce (unreasonably limiting the category to documents related to “hosting
services”) in an effort to avoid producing key documents in its possession about Hotfile and its
involvement with Hotfile.
Lemuria is not a disinterested or unrelated third party. It is wholly owned and controlled
by defendant Anton Titov, services no customer or website other than Hotfile, apparently was

established to shield Hotfile from the consequences of its copyright infringement, and operates
exclusively through mail drop boxes, without any office or personnel to speak of (other than
those who also work for Hotfile). Mot. at 2-3. Despite Lemuria’s assertion that it complies with
routine corporate formalities, Opp. at 3, 15, Lemuria does not operate at arms-length with
defendants.
The discovery plaintiffs seek from Lemuria is directly relevant to Hotfile’s activities and
liability. Based upon its active involvement with Hotfile and its principals, Lemuria knows more
about Hotfile than any typical arms-length hosting provider. Additionally, it has become clear
that Lemuria has greater involvement in the operation and support of Hotfile than its admitted
function as a provider of website hosting services. Lemuria protests that there is no hard
evidence of a more extensive relationship. But, at this stage, plaintiffs do not need further proof
of Lemuria’s involvement – they are entitled to discovery to obtain evidence about the
relationship. See Armor Screen Corp. v. Storm Catcher, Inc., No. 07-81091-Civ, 2009 WL
455428, at *3 (S.D. Fla. Feb. 23, 2009) (ordering production of communications and agreements
between defendant and non-party).1
Moreover, plaintiffs’ contentions as to Lemuria’s close involvement with Hotfile are
hardly unfounded:
1. Third party PayPal produced information about payments to Lemuria from unidentified
Hotfile entities. The PayPal records show payments of over $20 million dollars,
including $3 million a month in two months just prior to PayPal’s production of the
records. See Mot. at 2; Pozza Ex. E (Dkt. # 109-6).2 Moreover, approximately weekly,
Lemuria makes multiple PayPal transfers on the same day (the recipients of which are not
1

Lemuria cannot credibly argue that plaintiffs have already had five months of discovery to
probe the relationship between Hotfile and Lemuria. Over four months after responsive
documents were due, Lemuria has yet to produce almost all the categories of documents that it
claims it will produce; its production has consisted almost entirely of takedown notices related
infringing materials. Further, the “2.8 million pages” of emails produced by defendants is a
mirage, as plaintiffs have explained in the reply in support of their motion to compel (at 1), filed
contemporaneously with this memorandum. There too, defendants have produced very few
categories of documents, and as for documents about Lemuria, defendants have stated that they
do not intend to produce any documents other than those Lemuria produces in response to this
subpoena.

2

Lemuria in its opposition, Opp. at 14, appears to acknowledge that these monthly payments all
relate to Hotfile.
2

identified) in increments of precisely $100,000 – some days totaling a half million dollars
or more. See Pozza Ex. F (Dkt. #109-7). This level of suspicious cash activity, which
plaintiffs only learned about through a subpoena to PayPal, strongly suggests that
Lemuria is involved with Hotfile in ways other than website hosting or that Lemuria is
being used as some sort of conduit to funnel Hotfile cash to undisclosed recipients.
2. The newly disclosed fact that “Hotfile has asked Lemuria to forward funds from Hotfile
to its U.S. attorneys for their services,” Opp. at 8 n.5, further undermines any claim of an
arms-length relationship. Left unexplained is how it could be easier for Hotfile to send
funds to its U.S. hosting provider (Lemuria) than to its U.S. attorneys. Also studiously
avoided is whether Hotfile is reimbursing Lemuria for these payments and whether these
“pass through” payments are documented and accounted for. This sort of commingling
of funds between supposedly separate corporations is quintessential evidence of an alter
ego relationship where one corporation acts as a mere instrumentality of the other. See
Raber v. Osprey Alaska, Inc., 187 F.R.D. 675, 679 (M.D. Fla. 1999); Nationwide
Advantage Mortg. Co. v. Fed. Guar. Mortg. Co., No. 09-20372-CIV, 2010 WL 2652496,
at *6 (S.D. Fla. Feb. 26, 2010).
3. Titov further uses his Lemuria email account to conduct Hotfile business. See Mot. at 8.
Lemuria refers to this as a couple of emails, Opp. at 9, but that of course ignores the fact
that both Lemuria and defendants are stonewalling the production of Titov’s emails,
which are now four months overdue. Plaintiffs only obtained the cited Titov emails by
happenstance from another third party to whom the emails had been forwarded.
Likewise, documents just produced by another third party include emails in which an
employee conducts business in the name of Lemuria and Hotfile simultaneously, listing
“Lemuria Communications/Hotfile Corp.” in his signature block when conducting
business. Reply Declaration of Duane C. Pozza, dated Sept. 9, 2011 (“Pozza Reply
Decl.”) (attached as Ex. 1), Ex. A.
4. Titov’s story explaining why he founded Lemuria (so that Hotfile could have U.S. IP
addresses, see Opp. at 4) is plainly pretextual. At the time Titov formed Lemuria, Hotfile
already had U.S. IP addresses. Hotfile was previously hosted by a U.S. internet service
provider named Webazilla, which received the copyright infringement complaints about
Hotfile that, plaintiffs contend, led Titov to start Lemuria to shield Hotfile. Mot. at 2-3;
3

Pozza Ex. G (Dkt. # 109-8). Again, third party documents produced the day before this
filing confirm that Webazilla threatened to terminate Hotfile’s IP address if Hotfile did
not quickly remove infringing content. Ex. 1 (Pozza Reply Decl.), Ex. B. Moreover,
Titov’s convenient story does not explain why Titov took the highly unusual step of
setting up his own private internet hosting company rather than continuing to contract for
hosting services, as Hotfile previously had done and as most websites do. Clearly,
Lemuria and defendants are entitled to their story. However, they cannot use a selfserving and untested story to foreclose the very discovery that would rebut it.
Indeed, if Lemuria were not more intertwined with Hotfile and its principals, Lemuria
would simply confirm that it does not have any Hotfile-related documents beyond those related
to the provision of hosting services. But it has never said that, despite repeated requests for such
clarification.
Lemuria proposes to produce a sanitized set of documents – those limited to Lemuria’s
provision of hosting services to Hotfile. By definition, such documents would merely confirm
the picture Lemuria wants to paint of itself as simply “one of Defendant Hotfile’s suppliers.”
Opp. at 2. But the record and interrelationships strongly suggest there is much more to the story.
Lemuria does not argue that the requested discovery would be unduly burdensome or should be
denied on the basis of confidentiality of privilege (other than one set of documents not called for
and that can readily be exempted). Instead, Lemuria conjures up unrealistic interpretations of the
subpoena to distract from the fact that defendants and Lemuria are aggressively trying to conceal
how Lemuria is being used to further the infringing activities of defendants and the other
identified Hotfile-related entities and principals. Both to obtain relevant discovery as to
defendants and their operation of Hotfile, and also to determine Lemuria’s true involvement with
Hotfile in order to determine if Lemuria should properly be made a defendant in this action,
respectfully, plaintiffs’ motion should be granted.
I.

There is No Basis for Limiting Certain Categories of Documents Produced By
Lemuria to Those Involving Hosting Services.
Even beyond imagining interpretations of plaintiffs’ requests as calling for documents

about “hobbies” and “families” that Lemuria knows full well plaintiffs do not want, Lemuria
greatly exaggerates the reach of plaintiffs’ motion to compel. Plaintiffs are not moving to
compel documents “in twenty-three subcategories,” as Lemuria charges. Opp. at 5. Rather,
plaintiffs seek to compel production of documents in three discrete subcategories of Request No.
4

1, No. 1(a) (regarding communications with defendants or another Hotfile operator), 1(b)
(regarding Lemuria’s role in operating the Hotfile website), and 1(d) (regarding contracts or
agreements pertaining to defendants or Hotfile), and two discrete subcategories of Request No. 2,
No. 2(d) (regarding agreements or contracts with any other Hotfile operator) and 2(e) (discussed
in Section II). These are the only subcategories raised and discussed in plaintiffs’ motion. Each
of these subcategories seeks relevant and important documents regarding Hotfile’s activities and
liability, and Lemuria’s involvement with Hotfile.
Plaintiffs have never suggested that these requests seek documents unrelated to Hotfile,
and Lemuria has not suggested that such documents even exist. Plaintiffs remain perfectly
willing to confirm that the requested documents are limited to those related to Hotfile or its
business, to address Lemuria’s professed concerns about “weekend plans” or “car mechanics.”
However, in the meet-and-confer process, Lemuria insisted that the request was overbroad
because other services besides hosting service that Lemuria provided to Hotfile should be
excluded as irrelevant. See Opp. Ex. C, at 5-6. Thus, Lemuria demanded a narrowing that
would exclude all documents except those that supported its self-serving version of its
involvement with Hotfile. That is the central dispute here.
As discussed above, Lemuria’s involvement with Hotfile and its principals plainly
extends well beyond the role of arms-length provider of hosting services. Supra at 1-4.
Under Lemuria’s proposed narrowing, for example, documents that demonstrate that Lemuria is
immersed in the operations of Hotfile and equally responsible for its infringement would be
excluded. Likewise, Lemuria would exclude documents demonstrating that Lemuria is simply
an alter ego of Hotfile (or some other Hotfile Entity). If Lemuria is acting as a conduit to
disburse Hotfile revenues (as it appears), Lemuria’s proposal would exclude those documents as
well. And, if Titov used his Lemuria email account to discuss Hotfile’s business plans,
suggesting strategies for Hotfile that would enable it to benefit from massive copyright
infringement, Lemuria would exclude those documents as well.
Lemuria’s objections and proposed “compromises” are all designed to allow Lemuria to
conceal its true involvement with Hotfile:
•

Titov undeniably uses his Lemuria email to conduct some Hotfile business. Lemuria
professes that it is willing to provide emails regarding Lemuria’s communications “with
Hotfile users.” Opp. at 9 (emphasis added). But what about Titov’s communications
5

with other Hotfile principals about Hotfile’s business using his Lemuria email? Lemuria
proposes to exclude those communications – yet they are likely to be some of the more
revealing communications that Lemuria possesses.
•

Lemuria engages in linguistics gymnastics to argue that the definition of “Hotfile Entity”
in plaintiffs’ Requests means that “all of Mr. Titov’s document pertaining to himself – or
all of his documents” – would have to be produced. Opp. at 6. While that interpretation
would not be reasonable under any circumstances, here, in their motion, plaintiffs more
narrowly defined “Hotfile Entity” to mean “Hotfile Corp., Hotfile, Ltd., or any other
entity involved in the operation of Hotfile.” See Mot. at 7; Proposed Order at 1 (Dkt.
#108-1). That eliminates the basis of defendants’ strained objection, as the narrowed
category does not come close to encompassing Titov’s documents “pertaining to
himself.” And as noted above, plaintiffs have made clear that the requests more narrowly
seek documents related to Hotfile. Plaintiffs’ definition is also altogether reasonable
given that plaintiffs know very little about other entities involved in operating Hotfile and
defendants have continued to refuse to produce documents related to other entities
involved with Hotfile’s operations.

•

Lemuria argues that plaintiffs’ discovery from Lemuria should be limited to matters
alleged in the Complaint specifically about Lemuria. That is simply an incorrect
statement of the scope of discovery. See Echostar Satellite v. Viewtech, Inc., No. 1060069-MC, 2010 WL 2822109, at *3 (S.D. Fla. July 16, 2010) (ordering discovery from
non-parties who were not implicated in the Complaint). The discovery plaintiffs seek is
directly relevant to Hotfile’s liability for copyright infringement, and thus it should be
permitted. Further, at a stage when neither Lemuria nor defendants have provided any
meaningful discovery on the topic, plaintiffs have provided considerable evidence that
Lemuria is more closely involved with Hotfile beyond the provision of arms-length
hosting services. Supra at 1-4. Plaintiffs should be permitted to pursue their “Doe”
discovery to determine whether Lemuria should be a party defendant. United States ex
rel. Heater v. Holly Cross Hosp., Inc., 510 F. Supp. 2d 1027, 1036 (S.D. Fla. 2007)
(plaintiffs may conduct discovery to identify Doe defendants).3

3

Lemuria attempts to distinguish Heater on the grounds that it permitted only ninety days of
discovery at the outset of the case to identify potential Doe defendants. Opp. at 11. However,
6

II.

The Requested Financial Documents Regarding Lemuria and Hotfile Should Be
Produced.
Lemuria exaggerates the scope of plaintiffs’ requests for financial documents. Plaintiffs’

requests are in fact quite narrow: plaintiffs seek documents related to financial arrangements,
revenue sharing, and accountings between Lemuria and any entity involved in the operation of
Hotfile (Request 2(e)), as well as documents sufficient to show Lemuria’s income related in any
way to Hotfile (Request 11). Request 2(e), thus, does not seek sweeping financial information as
Lemuria claims, see Opp. at 12-13, but rather is narrowly tailored to discover financial
arrangements between Lemuria and those that operate Hotfile. Likewise, in seeking documents
about Lemuria’s Hotfile-related income, plaintiffs deliberately limited their request to only
documents “sufficient to show” such income. Such evidence is clearly relevant to understanding
the scope of Lemuria’s involvement with Hotfile, as discussed above. Supra at 1-4.
Lemuria’s only real objection is that the request is overbroad, based primarily on its
assertion that the request would call “for production of all of Lemuria’s and Hotfile’s legal bills,
attorney timesheets, and payment records in this litigation,” Opp. at 12, because Lemuria pays
Hotfile’s legal fees in this case. That interpretation is simply not reasonable. The “arrangement”
by which Lemuria pays Hotfile’s legal bills, and whether there is proper corporate
documentation and repayment by Hotfile, is clearly relevant to whether Lemuria operates as a
mere instrumentality of Titov and Hotfile. Beyond that, Lemuria simply manufactures a concern
that additional, privileged documents such as detailed legal bills to Hotfile would be
encompassed by the request, and in any event, any materials that related to the arrangement and
that remained privileged plainly could be carved out of any production.4

plaintiffs here acted expeditiously to serve discovery to identify those defendants – plaintiffs
served discovery requests to defendants regarding other entities involved in the operation of
Hotfile on the first day of discovery, and served this subpoena on Lemuria just a few days later.
Plaintiffs have been forced to move to compel on the request for documents regarding other
entities involved in Hotfile’s operation (see Dkt. #110 at 12-14) and to move for documents
related to Lemuria here. Lemuria further cites Micro Motion, Inc. v. Kane Steel Co., 894 F.2d
1318, 1327 (Fed. Cir. 1990), to argue that no additional discovery is warranted, but in that case,
the party was seeking discovery to add claims not alleged in the complaint. Here plaintiffs have
alleged the existence of other potential operators of Hotfile.
4

Lemuria’s additional claim that defendants’ litigation counsel would be deemed a “Hotfile
Entity” because it represents and counsels Hotfile (and therefore is “involved with the operation
of the Hotfile Website”), Opp. at 12, is facially implausible – counsel’s representation of
7

Lemuria claims that it offered plaintiffs adequate compromises on those requests.
However, those compromises were designed to conceal important information.
•

Lemuria offered to produce documents showing payments to and from three Hotfile
entities (Hotfile Corp., Hotfile, Ltd., and Hotfile S.A.). Opp. at 13. However, defendants
and Lemuria have aggressively concealed whether other entities are involved in the
operation of Hotfile – and Lemuria’s refusal to include payments to and from other
entities involved in the operation of Hotfile strongly suggests that there are such entities
that Lemuria is trying to conceal. Lemuria also would exclude Lemuria’s income related
to Hotfile that does not come from one of those three entities. That information is
relevant to showing the extent of Lemuria’s involvement in Hotfile’s activities or the use
of Lemuria to further Hotfile’s activities. Mot. at 9-10.

•

Lemuria also argues that Request No. 11 “has already been discharged” by the records
plaintiffs received from PayPal. Opp. at 14. However Lemuria is careful not to itself
represent that those PayPal records constitute all income Lemuria has received related to
Hotfile. Instead, curiously, Lemuria asserts that plaintiffs have so “attest[ed]” to this, id.,
which plainly is not true as plaintiffs are not in a position to know whether Lemuria has
received income by means other than PayPal. In any event, the PayPal data is facially
incomplete; it does not indicate the source of any income or provide a month-by-month
breakdown, and it is not current. It is not a substitute for a response from Lemuria.5
Because plaintiffs’ requests are narrowly tailored on their face to target directly relevant

information about Lemuria’s (and other entities’) involvement in the operation of Hotfile,
Lemuria’s objections should be overruled.
III.

Documents Related to Lemuria’s Operation Should Be Produced.
Lemuria’s only objection to producing documents “sufficient to show” services provided

to individuals or entities other than Hotfile is relevance. Opp. at 14-15. Plaintiffs previously
explained that these documents were probative of Titov’s creation of Lemuria for the express
purpose of shielding Hotfile’s copyright infringement. Mot. at 11. Lemuria suggests that there
defendants in the present litigation about the Hotfile Website clearly does not qualify as
involvement in the operation of the Hotfile Website.
5

Lemuria’s arguments that disclosing more “granular” information would disclose Lemuria and
defendants’ expenditures for legal representation, Opp. at 14, defies logic. Plaintiffs are seeking
an accounting of income, not expenditures.
8

may be alternative explanations for the fact that Lemuria apparently has only one customer (e.g.,
“lower cost, greater efficiency, or convenience”). Opp. at 15. Lemuria is entitled to make those
arguments, but they do not undercut the relevance of whether Lemuria provides services to other
customers.
Likewise, Lemuria does not address plaintiffs’ argument that production of corporate
board records would show whether Lemuria is engaged in any legitimate activities or is just
being used by Titov as a mere instrumentality to facilitate Hotfile’s infringing activities. See
Opp. at 15-16; Mot. at 11. Even if Lemuria filed the necessary corporate documents, appointed
an agent for service of process and reserved funds sufficient for daily operations, Opp. at 15, that
would not establish that Lemuria operates at arms-length with or other than an a mere
instrumentality of Hotfile or Titov. See Nationwide Advantage, 2010 WL 2652496, at *6 (alter
ego liability may be found where individual owner dominated corporate entity and used the
corporate entity as instrumentality for wrongdoing). Indeed, while Titov asserts that Lemuria
maintained separate financial accounts, the newfound revelation that Lemuria has been paying
Hotfile’s legal bills, Opp. at 8 n.6, suggests that funds have been commingled. Given the
circumstances by which Lemuria came into being, the common ownership, the fact that Lemuria
services only Hotfile, Titov’s use of Lemuria email for Hotfile business, the unexplained receipt
of funds far in excess of normal hosting expenses, and the admission that Lemuria is, at a
minimum, serving as a “pass through” to pay Hotfile’s legal bills, plaintiffs respectfully submit
that they are entitled to the limited requested discovery to test the assertion that Lemuria follows
corporate formalities, and is entitled to be treated as a separate corporate entity from Titov and/or
Hotfile for purposes of liability for copyright infringement.
CONCLUSION
The Court should compel a complete production of documents in response to Requests
Nos. 1(a), (b), and (d), 2(d) and (e), 4, 9, and 11.

9

Dated: September 9, 2011

Respectfully submitted,
By: /s/ Karen L. Stetson
Karen L. Stetson
GRAY-ROBINSON, P.A.
1221 Brickell Avenue
16th Floor
Miami, FL 33131
Telephone: [phone]
Facsimile: [phone]

MOTION PICTURE ASSOCIATION
OF AMERICA, INC.
Karen R. Thorland (Pro Hac Vice)
15301 Ventura Blvd.
Building E
Sherman Oaks, CA 91403
Phone: [phone]
Fax: [phone]

JENNER & BLOCK LLP
Steven B. Fabrizio (Pro Hac Vice)
Duane C. Pozza (Pro Hac Vice)
Luke C. Platzer (Pro Hac Vice)
1099 New York Ave., N.W.
Suite 900
Washington, DC 20001
Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiffs

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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 9th Day of September, 2011, I served the following
document via overnight delivery to Andrew Leibnitz, counsel for Lemuria Communications, Inc.
at his listed address on the attached service list.
In addition, I served the following document on all counsel of record on the attached
service list via the Court’s CM/ECF filing system:
Plaintiffs’ Reply Memorandum in Support of Motion to Compel Responses to
Subpoena to Third Party Lemuria Communications, Inc.
I further certify that I am admitted to the United States Court for the Southern District of Florida.
By: /s/ Karen L. Stetson
Karen L. Stetson

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SERVICE LIST
Disney Enterprises, Inc., et al. v. Hotfile Corp. et al.
CASE NO. 11-CIV-20427-JORDAN

FARELLA BRAUN + MARTEL LLP
Anthony P. Schoenberg
[e-mail]
Roderick M. Thompson
[e-mail]
N. Andrew Leibnitz
[e-mail]
Deepak Gupta
[e-mail]
Janel Thamkul
[e-mail]
235 Montgomery Street
San Francisco, CA 94104
Phone: [phone]

RASCO KLOCK
Janet T. Munn
[e-mail]
283 Catalonia Ave., Suite 200
Coral Gables, FL 33134
Phone: [phone]
Fax: [phone]
Attorney for Defendants Hotfile Corp. and
Anton Titov

Attorneys for Defendants Hotfile Corp. and
Anton Titov

BOSTON LAW GROUP, PC
Valentin Gurvits
[e-mail]
825 Beacon Street, Suite 20
Newton Centre, MA 02459
Phone: [phone]
Attorneys for Defendants Hotfile Corp. and
Anton Titov

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