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

Filing 168

MEMORANDUM of Law re 162 Plaintiff's MOTION FOR A CASE MANAGEMENT ORDER DEFERRING DAMAGES DISCOVERY re 133 Scheduling Order, Order Referring Case to Mediation, Order Referring Case to Magistrate Judge,,,,,, In Opposition to Plaintiffs' Motion to Defer Damages Discovery by Hotfile Corp.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(Munn, Janet)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-20427-WILLIAMS-TURNOFF

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.
/
HOTFILE CORP.,
Counterclaimant,
v.
WARNER BROS. ENTERTAINMENT INC.,
Counter-Defendant.
/
MEMORANDUM OF LAW OF DEFENDANTS HOTFILE CORP. AND ANTON TITOV
IN OPPOSITION TO PLAINTIFFS’ MOTION TO DEFER DAMAGES DISCOVERY
INTRODUCTION
Plaintiffs movie Studios’ motion seeks a one-sided and unfair advantage. While the
motion pretends to seek a “straightforward” and “sensible” deferral of all damages discovery, it
is neither. Only by turning to the proposed order is it clear that Plaintiffs really seek to limit

CASE NO. 11-20427-WILLIAMS-TURNOFF
Defendants Hotfile Corp. and Anton Titov (“Defendants” or “Hotfile”) from testing the Studios’
copyright liability claims. The order would allow Defendants to contest liability solely on the
basis of the 175 carefully selected works set forth in Complaint to maximize the Studios chances
of success. It would preclude Hotfile from introducing any evidence in defense of the copyright
claims with respect to the “thousands” of other works Plaintiffs now also claim are infringed.1
Further, Plaintiff’s motion would not apply to postpone damages discovery and summary
judgment issues related to Defendant Hotfile’s counterclaim. Plaintiffs thus seek to put off their
obligation to provide discovery and prove damages during the so-called liability phase with
respect to their claims while insisting that Hotfile provide discovery and prove all elements of its
counterclaim, including injury and damages.
As Hotfile has maintained from the first time Plaintiffs made this lopsided proposal
months ago, there must be a level playing field. Either all damages discovery is deferred (but not
liability discovery on any of Plaintiff’s alleged infringing works) or none should be deferred.
PROCEDURAL BACKGROUND
Plaintiffs represent that they “have been operating under the understanding that the Court
had adopted their proposals sub silento.” Motion, p. 2. There is no colorable basis for such an
assumption. The Court’s Order Setting Schedule, Requiring Mediation, and Referring Certain
Motions, which issued on August 30, 2011 (D.E. 133), set December 23, 2011 as the date by
which “all discovery including expert discovery is completed.” While the parties had presented
their competing views on Plaintiffs’ one-sided proposal, most recently in an Updated Joint
1

Plaintiffs pointedly do not explain—either in their motion or in conversations with counsel for
Defendants—what would happen if Defendants prevail on summary judgment of no copyright
liability: are Plaintiffs conceding that they would be foreclosed from asserting copyright
infringement for the “thousands” of other works? Similarly, what would be the outcome if
Plaintiffs prevail on 25 of the 175 selected works? On just 5 works? Their silence on these issues
demonstrates both the one-sided nature of their requested relief and why it is unworkable.

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CASE NO. 11-20427-WILLIAMS-TURNOFF
Scheduling Conference report on July 15, the August 30, 2011 Order says nothing about the
damages bifurcation issue. Accordingly, Defendants have been preparing their damages case for
the counterclaim and recently provided their expert report on those damages as required by that
scheduling order. Plaintiffs cannot credibly maintain that the Court somehow “adopted” their
proposal by silence—indeed that is undoubtedly why they filed this motion.
Defendants do not now and have never opposed a simple postponement of all damages
discovery—on Plaintiffs’ claims and Hotfile’s counterclaim—as long as it applies evenhandedly. The parties made this joint statement in their latest Joint Conference Report:
The parties also propose that all discovery prior to the discovery cut-off date
proposed above shall be limited to discovery relevant to liability, and that
discovery related only to damages shall be postponed until such time as the Court
has the opportunity to conduct a status conference, following the Court’s ruling(s)
on all of the parties’ summary judgment motions on liability.
See D.E.. 101-1, at 6.
But neither the Joint Report nor the proposed order stated that liability could turn only on
Plaintiffs’ selected works listed in the Complaint or that the postponement of damages discovery
would not apply to Hotfile’s Counterclaims.2 Plaintiffs have no basis to assume that Defendants
(but not Plaintiffs) would be prevented from conducting any discovery on the thousands of other
works that Plaintiffs contend are infringing or that any postponing of damages discovery would
only apply to Plaintiffs’ (but not Defendants’) claims. Upon receipt of this motion therefore,
2

Plaintiffs may argue in Reply that Hotfile did not file its counterclaim (because Plaintiff
Warner delayed in providing the needed discovery) until after the date of the Joint Report. But
Hotfile’s counsel had made clear both in the Report itself (e.g., pp. 4 and 16-17) and to
Plaintiff’s counsel that a counterclaim would soon be filed. Plaintiffs knew that the counterclaim
would be filed when they made this proposal. There is no reason to justify delaying only
Plaintiffs’ damages discovery and not comparable discovery on Defendants’ counterclaim.

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CASE NO. 11-20427-WILLIAMS-TURNOFF
Roderick M. Thompson, Esq., lead counsel for Defendants contacted Steven B. Fabrizio, Esq.,
lead counsel for Plaintiffs to be sure that the motion really is intended to seek such one-sided
relief. Regrettably, it is; and Defendants are forced to file this opposition.
ARGUMENT
The motion inaccurately suggests that Defendants are only “now, for reasons
inexplicable” opposing Plaintiff’s remarkably unfair proposal. Hotfile’s opposition has been
loud and consistent for the first. And it is hardly inexplicable. Defendants’ portion of the
Updated Joint Scheduling Conference Report [D.E. 101-1], for example, made this position
plain:
Although Plaintiffs suggest that Hotfile should be limited in filing its summary
judgment motion “to a small sample of copyrighted works chosen by plaintiffs,”
Plaintiffs argue that they should be entitled to unlimited discovery with respect to
(and indeed have already filed motions to compel) “thousands” of unidentified
copyrighted works they hope to find on Hotfile’s website. Plaintiffs cannot have
it both ways – either they are limiting this case to the 175 works identified in
the Complaint or they are asserting infringement of “thousands” of works.”
The one-sidedness of Plaintiffs’ proposal flouts basic due process.
Plaintiffs cannot justifiably attempt to establish liability based on 175 works
hand-picked by Plaintiffs after more than one year of pre-filing investigation –
and then deem liability presumed as to “thousands” of other works for purposes of
proceeding to the “damages phase” of discovery. If Plaintiffs intend to assert
“thousands” of known copyrighted works against Hotfile, they should do so

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CASE NO. 11-20427-WILLIAMS-TURNOFF
now, and not unjustifiably force Hotfile to litigate thousands of works in the
confines of damages discovery.
[D.E. 101-1, p. 10] [Emphasis added.]
Shortly thereafter, in granting in part Defendants’ motion to compel discovery, the Court
(Jordan, J.) agreed that Plaintiffs cannot have it both ways. The Court ordered production of
documents and an interrogatory response by Plaintiffs with respect to “all files available on
hotfile.com that the movie studios allege infringe their copyrights.” Id., p. 2.

The Court

specifically rejected the argument the Studios stubbornly repeat here—that Plaintiffs should be
required to produce only discovery (but again without a corresponding reduction on Hotfile’s
discovery obligations) limited to “those files that the movie studios have legally alleged in their
complaint to have infringed.” Id., n. 3. The Court ordered Plaintiffs to produce discovery on all
allegedly infringing files, not just those allegedly infringing the narrow subset of works listed in
the Complaint.
Hotfile’s position remains unchanged. If Plaintiffs are now limiting their entire claim to
the 175 works selected for inclusion in the complaint, they are free to dismiss the rest of their
claims and eliminate discovery obligations. Absent such a concession, they should not be
allowed to prevent or delay discovery into all allegedly infringed works until after the Court
determines liability summary judgment motions. Nor should they be allowed to dictate which
works the Court should or should not consider in ruling on summary judgments. The unfairness
and potential prejudice to Defendants is manifest.
Notwithstanding Plaintiffs’ representation that their one-sided proposal has been
“routinely adopted” in other copyright infringement cases, they quote from a single specific
order—Columbia Pictures Indus., Inc. v. Bunnell No. 06-cv-01093 (C.D. Cal.) D.E. # 117 (cited

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CASE NO. 11-20427-WILLIAMS-TURNOFF
at p. 7 of the motion)—which turns out to be an Ex Parte Order drafted by these same lawyers
and signed by that court without change. See Exhibit A, attached hereto.3 The only reasoned
precedent of which we are aware was cited to the Court in the Updated Joint Scheduling
Conference. The court in UMG Recordings, Inc. v. Escape Media Group, Inc., No. 100152/10
(N.Y. App. Div. June 9, 2010) (attached as Exhibit B hereto), considered and rejected Plaintiffs’
proposed approach. The UMG court found that bifurcated discovery of liability and damages
was inappropriate “since the issues involved are all intertwined” and “that discovery should not
be restricted to a representative sample” of works “since defendant is entitled to assert specific
affirmative defenses.” Id. at 3; 4. Plaintiffs’ similar approach proposed here, which would limit
discovery to only the selected subset of works listed in the Complaint that are not even asserted
to be “representative” of all works, should be denied here for similar reasons.
CONCLUSION
The Court should reject Plaintiffs unfair and unprecedented proposal. A proposed Order
is attached to this motion as Exhibit C.

Respectfully submitted,

3

The motion also lists the Grokster, Fung and Lime Group cases without citation to any specific
decision or order, providing no information as to the issues presented or decided in those cases.

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CASE NO. 11-20427-WILLIAMS-TURNOFF
DATED: November 21, 2011

By: s/ Roderick Thompson_____________
Roderick M. Thompson (admitted pro hac vice)
Email: [e-mail]
Andrew Leibnitz (admitted pro hac vice)
Email: [e-mail]
Anthony P. Schoenberg (admitted pro hac vice)
Email: [e-mail]
Deepak Gupta (admitted pro hac vice)
Email: [e-mail]
Janel Thamkul (admitted pro hac vice)
Email: [e-mail]
FARELLA BRAUN + MARTEL LLP
235 Montgomery St.
San Francisco, CA 94104
Telephone: [phone]
Telecopy: 415.954.4480
And
By: s/ Janet T. Munn___________________
Janet T. Munn, Fla. Bar No. 501281
Email: [e-mail]
Rasco Klock
283 Catalonia Avenue, Suite 200
Coral Gables, Fl 33134
Telephone: [phone]
Telecopy: 305.476.7102
Counsel for Defendants Hotfile Corp. and Anton
Titov

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CASE NO. 11-20427-WILLIAMS-TURNOFF

CERTIFICATE OF SERVICE
I hereby certify that on November 21, 2011, I filed the foregoing document with the
Clerk of the Court in the conventional manner. I also certify that the foregoing document is
being served this day on all counsel of record or pro se parties identified below in the manner
specified, either via transmission of Notices of Electronic Filing generated by CM/ECF or in
some other authorized manner for those counsel or parties who are not authorized to receive
electronically Notices of Electronic Filing.
By:

GRAY-ROBINSON, P.A.
Karen L. Stetson, Fla. Bar No.: 742937
Email: [e-mail]
1211 Brickell Avenue
Suite 1600
Miami, FL 33131
Phone: [phone]
Fax: [phone]
JENNER AND BLOCK, LLP
Steven B. Fabrizio (Pro Hac Vice)
Email: [e-mail]
Duane C. Pozza (Pro Hac Vice)
Email: [e-mail]
Luke C. Platzer (Pro Hac Vice)
Email: [e-mail]
1099 New York Ave, N.W.
Suite 900
Washington, DC 20001
Phone: [phone]
Fax: [phone]

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s/Janet T. Munn
Janet T. Munn