Malibu Media, LLC v. Doe
Filing
40
MEMORANDUM OPINION. Signed by Judge Marvin J. Garbis on 9/18/14. (jnls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
MALIBU MEDIA, LLC
Plaintiff
v.
*
*
*
Case No. 14-cv-00223-MJG
JOHN DOE subscriber assigned IP address *
173.64.119.92
*
Defendant
*
MALIBU MEDIA, LLC
Plaintiff
v.
*
*
*
Case No. 14-cv-00257-RWT
JOHN DOE subscriber assigned IP address *
71.200.143.209
*
Defendant
*
MALIBU MEDIA, LLC
Plaintiff
v.
*
*
*
JOHN DOE subscriber assigned IP address *
76.100.228.15
*
Defendant
*
*********
Case No. 14-cv-00263-PWG
MEMORANDUM OPINION
Malibu Media, LLC (“Malibu”) has filed various copyright infringement lawsuits in this
and other districts against individual “John Doe” defendants who are alleged to have used the
BitTorrent file distribution network to download adult pornographic films in violation of
copyrights held by Malibu. See ECF No. 1.1 When it initiates the lawsuits, Malibu is only able to
identify the alleged infringers by reference to the Internet Protocol address (“IP address”)
through which the copyrighted work was downloaded. In order to seek to identify the person
who committed the infringement, Malibu filed a “Motion to Expedite Discovery” in each case,
requesting leave of the Court to serve a Rule 45 subpoena on the Internet Service Provider
(“ISP”) in order to identify the account subscriber assigned the relevant IP address on the date of
the downloading of the copyrighted work. ECF No. 4.
The fact that an IP address was assigned to a particular ISP subscriber at the time it was
used for infringement does not itself necessarily imply infringement by that subscriber. Rather,
Malibu would need to pursue discovery to seek to establish whether the subscriber, rather than
someone else, used the IP address to commit the infringement at issue.
Because this Court was aware of allegations that Malibu had engaged in abusive
settlement negotiations in other jurisdictions, the Court fashioned a unique procedure that Malibu
must follow in order to pursue this discovery. See ECF No. 6. The Court’s standard order in
these cases (1) creates a procedure for ISP subscribers to anonymously move to quash the
subpoena served on the ISP, (2) includes provisions prohibiting Malibu from contacting
unrepresented John Does for settlement negotiations, and (3) specifies other protections for
subscribers. To the best of this Court’s knowledge, Malibu has complied with these procedures
and this Court is unaware of any allegations of abuse in this district.
1
References to the docket refer to Case No. 14-cv-00223-MJG. Identical filings were made in all three cases.
2
In the three above-captioned cases, after the Court had granted the motions to expedite
discovery, subscribers’ counsel in all three cases filed, on March 28, 2014, the two motions at
issue here: First, a Motion to: (1) Intervene Anonymously; (2) Consolidate Malibu Media Cases;
and (3) Temporarily Stay Outstanding Subpoenas (ECF No. 7, “Mot. Intervene”) and Second, a
Motion for Order to Show Cause as to Why All Evidence and Data from Tobias Fieser and His
Company IPP Should Not be Precluded and These Cases Dismissed (ECF No. 8, “Mot. OSC”).
Malibu filed responses in opposition to each motion, ECF Nos. 18, 19, and the subscribers
replied, ECF Nos. 23, 27.2 On July 30, 2014, the Court held a hearing on the pending motions.
ECF No. 39. For the reasons that follow, the Court will deny both of the ISP subscribers’
motions.
I.
Subscribers’ Motion to Intervene
Each ISP subscriber argues that he is entitled to intervene of right pursuant to
Fed. R. Civ. P. 24(a)(2) because he “claims an interest relating to the property or transaction that
is the subject of the action, and is so situated that disposing of the action may as a practical
matter impair or impede [his] ability to protect [his] interest,” and existing parties do not
adequately represent that interest. Mot. Intervene at 15 (quoting Fed. R. Civ. P. 24(a)).
In Houston Gen. Ins. Co. v. Moore, 193 F.3d 838, 839 (4th Cir. 1999), the Court
concluded that:
Applicants to intervene as of right must meet all four of the following
requirements: (1) the application to intervene must be timely; (2) the applicant
must have an interest in the subject matter of the underlying action; (3) the denial
of the motion to intervene would impair or impede the applicant’s ability to
protect its interest; and (4) the applicant’s interest is not adequately represented by
the existing parties to the litigation.
2
On April 28, 2014, Malibu filed a Motion to Strike Declaration of Morgan E. Pietz. ECF No. 17. The subscribers
responded in opposition, ECF No. 24, and Malibu replied. ECF No. 31.
3
Each subscriber argues that his motion is timely because the facts “only came to [l]ight recently,
and this particular case is just getting started.” Mot. Intervene at 16. The determination of
timeliness is in the Court’s discretion. See Gould v. Alleco, Inc., 883 F.2d 281, 286
(4th Cir. 1989) (citing NAACP v. New York, 413 U.S. 345, 365–66 (1973)). Each subscriber
claims an interest in the action because he “will be directly and immediately affected by the
litigation in the form of being burdened with having his deposition taken by plaintiff,” and
because Malibu has allegedly pursued damages against subscribers in prior cases even when the
subscriber was not the likely infringer. Mot. Intervene at 16–17. Each subscriber argues that
denial of the motion would impair his interest because it would deprive him of the opportunity to
challenge the basis for the suit prior to submitting to a deposition and/or providing Malibu with
discovery. Id. at 17. Finally, each argues that his interests are not represented by the existing
parties to the action. Id. In the alternative, each subscriber argues that he should be allowed to
intervene under Fed. R. Civ. P. 24(b) because his defense to infringement shares “a common
question of law or fact” with the issue in this case, that is, “the contingent fee agreement with
IPP” is arguably relevant to all Malibu cases in this district. Mot. Intervene at 18.
Malibu, in turn, disputes that each subscriber satisfies this standard, arguing, among other
things, that this is not the proper stage of the litigation for a subscriber to raise these issues.
Plaintiff’s Opposition to the Motion to Intervene, ECF No. 23 (“Opp’n Intervene”) at 4-5. The
Court agrees and need not address each of the Houston General factors because intervention is
not warranted. Malibu is proceeding against a known but unidentified defendant. The Complaint
identifies the defendant as “John Doe subscriber assigned IP address 173.64.119.92,” and Malibu
was granted permission to take discovery from each subscriber’s ISP because it could not
identify and serve the Defendant without that information. ECF Nos. 1, 6. This is distinct from
4
procedures in some state courts in which a plaintiff seeking to identify an unknown party may
initiate a special proceeding against the person from which discovery is to be taken, in which the
“Doe” would be an intervener rather than a party. See, e.g., Pub. Relations Soc’y of Am., Inc. v.
Road Runner High Speed Online, 799 N.Y.S.2d 847 (Sup. Ct. N.Y. Cnty. 2005). The procedures
established by this Court’s orders granting Malibu’s Motion to Expedite Discovery fully protect
the ability of the ISP subscriber to participate anonymously and without the need for
intervention. The subscribers need not, therefore, intervene under Rule 24 to proceed in this
Court, and their motions will be denied.3
II.
Subscribers’ Motion for Order to Show Cause
The motions for an order to show cause request that Malibu be ordered to show cause
with regard to the following issues:
(1) Confirm whether IPP and Fieser were engaged as contingent fee witnesses and
detail the nature and extent of the relationship; (2) given the substantial
documentary evidence suggesting otherwise, explain the statement made on the
record to Judges Titus and Grimm denying that IPP is a front for Guardaley, and
the apparent attempts to disguise Guardaley’s behind-the-scenes role in these
cases; (3) explain the conflicting statements about whether it was IPP or Excipio
software used to collect the data this case is based on; and (4) assuming that IPP
and Fieser do or did have contingent interest in the outcome of this litigation and
that IPP is really a front for Guardaley, and that Malibu has been less than
forthright about all this, address what effect such champertous arrangements and
lack of candor should have on this and other similarly situated cases, in view of
Movant’s arguments and the Motion for an OSC that preclusion and dismissal
should result.
Mot. OSC at 23-24. The subscribers’ primary argument is that Malibu is paying a contingent fee
to its expert, Tobias Fieser, whose declaration has been attached to each of Malibu’s complaints.
The subscribers rely on Maryland law holding that expert witness contingent fees are not
permissible and that a witness who is receiving a contingent fee cannot be called to testify. See,
3
The Court will also deny the subscribers’ motion to consolidate cases. To the extent the Court has granted requests
to stay litigation in other Malibu cases pending a decision on these motions, those stays will be lifted.
5
e.g., Accrued Fin. Servs., Inc. v. Prime Retail, Inc., 298 F.3d 291, 300 (4th Cir. 2002) (“[W]e
also conclude that the arrangements are against public policy insofar as they provide for
supplying expert testimony for a contingent fee.”); see also Accrued Fin. Servs. Inc. v. Prime
Retail, No. JFM-99-2573, 2000 WL 976800, *3 (D. Md. June 19, 2000) (“[T]he Maryland Rules
of Professional Conduct applicable to members of the bar recognize that ‘[t]he common law rule
in most jurisdictions is that it is improper to pay an occurrence witness any fee for testifying and
that it is improper to pay an expert witness a contingent fee.’” (quoting Md. Rules 16-812, Md.
Lawyers’ Rules of Prof’l Conduct 3.4 cmt (2000)). The motions seek to exclude the information
relied upon by Malibu and to dismiss all of Malibu’s pending cases.4
It is likely that an expert paid a contingent fee could not serve as a witness in a case in
this district. See Farmer v. Ramsay, 159 F. Supp. 2d 873, 883 (D. Md. 2001) (striking report of
expert receiving contingent fee); but see United States v. Holloman, 238 F.3d 416 (4th Cir. 2000)
and United States v. Levenite, 277 F.3d 454 (4th Cir. 2002) (criminal cases allowing contingent
fee witness testimony and holding that reliability of witness is a credibility issue to be
determined by a jury). And it may well be such a fee agreement itself is unenforceable as
contrary to public policy. See Accrued Fin. Servs., 298 F.3d at 300. However, Malibu makes a
strong argument that there is no reason why it cannot have a contingent fee contract with an
expert who is not testifying. Opp’n OSC at 20 (stating that should the case go to trial, Malibu
would call a different witness, Michael Patzer, to testify). In addition, Malibu disputes that Fieser
4
The subscribers also allege that Malibu violates the Anti-Gratuity Statute, 18 U.S.C. § 201 which prohibits
knowingly paying a person to testify. Mot. OSC at 31. This criminal statute likely has not been violated as there is
no evidence that the witness has been directly paid for any testimony and is nevertheless not relevant at this stage of
the proceedings. Opp’n OSC at 24.
6
has received a contingent fee because he is a salaried employee of the company receiving the fee,
IPP, and does not directly benefit from any contingent fee arrangement. Opp’n OSC at 10.5
These issues have little relevance at the pleading stage of this litigation because there is
no requirement that Malibu present at this stage actual evidence to support the merits of its
infringement allegations. See Fed. R. Civ. P. 11(b)(3). If Malibu’s counsel has a good faith basis
to believe that it will be able to obtain and present evidence to show that a subscriber is the
proper defendant, Malibu need not have that evidence in hand to commence an action. In any
event, Malibu asserts that it no longer has a contingent fee agreement, and now has a fixed fee
agreement with IPP. Opp’n OSC at 14.
The subscribers’ other arguments in their motions are either premature or far too
speculative for the Court to consider at this stage in the litigation. For example, each subscriber
argues that Malibu is engaged in a course of deception and fraud. The subscribers rely heavily on
parallels to Ingenuity 13, LLC v. John Doe, No. 2:12-cv-8333-ODW(JCx), 2013 WL 1898633
(C.D. Cal. May 6, 2013). However, Ingenuity 13 involved actual and documented fraud,
misrepresentations to the Court, and clearly improper activity. Although the subscribers try to
allege similar improprieties on Malibu’s part, there is not presently before the Court any
indication that Malibu has done anything improper or fraudulent in these cases.
Each subscriber also relies heavily on Accrued Fin. Servs., 298 F.3d 291, in which a
company was assigned certain causes of action possessed by commercial tenants in exchange for
a percentage of any damages or settlement obtained in those suits. The court dismissed the case
on public policy grounds, finding that the assignments of the causes of action were champertous,
5
Malibu also argues that even if a contingency agreement existed, it could not cause human bias in the data because
the data showing infringement can’t be manipulated by individuals at IPP. In addition, the data is independently
verifiable so it doesn’t matter if Fieser, Patzer, or any other uncompensated individual were to testify to its
reliability. Id. at 7–13.
7
and the Fourth Circuit affirmed.6 Id. However, the above-captioned Malibu cases do not appear
to be cases involving champerty. Even if each subscriber is correct that IPP is helping Malibu to
“stir up” litigation, there is no indication that anyone other than Malibu is directing the litigation
and the Fourth Circuit expressly stated that it would be permissible for an expert to offer
consulting services to help a party pursue legal claims. Id. at 300.
Finally, each subscriber alleges that Malibu’s expert, IPP, apparently uses techniques that
do not reliably determine whether a given IP address has downloaded a particular file, that
Malibu has obfuscated as to precisely what techniques were used to identify the Doe subscribers,
and that the software used is subject to manipulation. Mot. OSC at 52–56. In addition, IPP is
alleged to be the successor to a German firm called Guardaley, which German courts have found
is not reliable in copyright cases. Id. at 42. Malibu strongly disputes the subscribers’
characterization of the facts. Opp’n OSC at 16. The subscribers’ allegations of misrepresentation
seem to be based largely on speculation and the Court has seen no direct evidence of impropriety
on the part of Malibu in these cases. In any event, the degree to which this information is reliable
is not particularly relevant at the pleading stage. The subscribers will have an opportunity to take
discovery and raise these issues, if they are meritorious, at a later stage in the litigation.
III.
Conclusion
For the foregoing reasons, the Court will deny the ISP subscribers’ motions to intervene
and motions for the court to issue an order to show cause. The motions to strike the declaration
of the subscribers’ counsel, Morgan Pietz, will be denied as moot. The unopposed motions to
unseal the declaration of Gabriel Quearry will be granted. Finally, any stays that have been
6
Notably also, in Accrued Financial, the Court dismissed the Complaint based on a Rule 12(b)(6) motion whereas
here, the subscribers ask the court to do so based on its general “supervisory power, in order to protect the integrity
of the judicial process and forestall ethical violations, or as a sanction.” Mot. OSC at 37.
8
granted in these and other cases pending a ruling on the above-referenced motion will be lifted.
Separate Orders follow.
Date: September 18, 2014
/s/
ROGER W. TITUS
UNITED STATES DISTRICT JUDGE
Date: September 18, 2014
/s/
MARVIN J. GARBIS
UNITED STATES DISTRICT JUDGE
Date: September 18, 2014
/s/
PAUL W. GRIMM
UNITED STATES DISTRICT JUDGE
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