Righthaven LLC v. Vote For The Worst, LLC et al

Filing 33

MOTION to Dismiss for Lack of Jurisdiction by Defendants David J. Della Terza, Nathan E. Palmer, Vote For The Worst, LLC. Responses due by 5/4/2011. (Attachments: # 1 Declaration of J. Malcolm DeVoy, # 2 Exhibit A)(DeVoy, James)

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Marc J. Randazza (Admitted Pro Hac Vice)
J. Malcolm DeVoy IV (Nevada Bar No. 11950)
RANDAZZA LEGAL GROUP
7001 W. Charleston Boulevard, #1043
Las Vegas, Nevada 89117
Telephone: [phone]
Facsimile: [phone]
Randazza.com
Attorneys for Defendants,
Vote for the Worst, LLC,
Nathan E. Palmer,
and David J. Della Terza

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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RIGHTHAVEN, LLC, a Nevada limited-liability
company
vs.

Plaintiff,

Case No.: 2:10-cv-01045-KJD-RJJ
DEFENDANTS’ MOTION TO
DISMISS FOR LACK OF SUBJECT
MATTER JURISDICTION

VOTE FOR THE WORST, LLC, an Utah
limited-liability company; NATHAN E.
PALMER, an individual; and DAVID J. DELLA
TERZA, an individual,

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Defendants.

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DEFENDANTS’ MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION

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Defendants Vote for the Worst, LLC, Nathan E. Palmer, and David J. Della Terza

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(collectively, “VFTW,” or the “Defendants”), by and through their counsel, move to dismiss

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Plaintiff Righthaven, LLC’s (hereinafter “Righthaven[’s],” or the “Plaintiff[’s]”) Complaint

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(Doc. # 1) filed on June 28, 2010 for lack of subject matter jurisdiction, pursuant to Federal Rule

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of Civil Procedure 12(b)(1) and Local Rule 7.2.

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I. Introduction

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Plaintiff filed this lawsuit against the Defendants on June 28, 2010, which VFTW

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responded to with a Motion to Dismiss for lack of personal jurisdiction on August 16, 2010

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Randazza
Legal Group
7001 W Charleston Blvd
#1043
Las Vegas, NV 89117
[phone]

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(Doc. # 14). Righthaven filed an opposition to the Defendants’ motion on September 1, 2010

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(Doc. # 15) and the Defendants replied on September 13, 2010 (Doc. # 17).

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subsequently denied the Defendants’ motion on March 30, 2011 (Doc. # 28) and the Defendants

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filed an Answer to the Complaint on April 13, 2011 (Doc. # 32).

The Court

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Pursuant to this Court’s April 14, 2011 Order in Righthaven LLC v. Democratic

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Underground LLC, Case No. 2:10-cv-01356, Doc. # 93 (D. Nev., filed Apr. 14, 2011), new

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evidence regarding Righthaven’s relationship with Stephens Media LLC (hereinafter “Stephens

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Media”) has been unsealed and released to the public. On April 15, 2011, an unredacted version

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of the Defendants’ Supplemental Memorandum Addressing Recently Produced Evidence

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Relating to Pending Motions in the Democratic Underground case was made available on the

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Public Access to Court Electronic Records (“PACER”) system, as well as this court’s CM/ECF

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system. Case No. 2:10-cv-01356 Doc. # 79 (D. Nev., filed Mar. 9, 2011). See Decl. of J.

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Malcolm DeVoy ¶¶ 2-3. A true and correct copy of Exhibit A to Doc. # 79 in Democratic

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Underground is attached to this Motion as Exhibit A as well, for consistency. DeVoy Decl. ¶¶ 4-

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5; Exh. A.

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This document clearly reveals that Righthaven lacked the rights to bring this suit, and

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thus this court lacks jurisdiction over this matter.

Under Rule 12(b)(1), subject matter

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jurisdiction is an essential element to every lawsuit, and must be present for any court to hear a

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dispute. In this case, Righthaven does not have sufficient rights in the work putatively assigned

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to it by Stephens Media to bring – or maintain – its case against VFTW. As such, the Court

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should dismiss Righthaven’s suit.

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II. Legal Standard

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Subject matter jurisdiction is an essential element to every lawsuit and must be

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demonstrated “at the successive stages of the litigation.” Chapman v. Pier 1 Imports (U.S.), Inc.,

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631 F.3d 939, 954 (9th Cir. 2011) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561

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(1992)). The existence of subject matter jurisdiction is an ongoing inquiry that a court must

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conduct sua sponte in order to continue the case. Chapman, 631 F.3d at 954; Bernhardt v.

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Randazza
Legal Group
7001 W Charleston Blvd
#1043
Las Vegas, NV 89117
[phone]

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County of Los Angeles, 279 F.3d 862, 868 (9th Cir. 2002). Where subject matter jurisdiction is

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absent, a court has no discretion and must dismiss the case. Chapman, 631 F.3d at 954.

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A central component to subject matter jurisdiction is the question of standing, which

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requires that the party experience actual or imminent harm. Lujan, 504 U.S. at 561 (citing

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Whitmore v. Ark., 495 U.S. 149, 155 (1990)). A party’s standing to bring a case is not subject to

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waiver, and can be used to dismiss the instant action at any time. Fed. R. Civ. P. 12(h)(3); U.S. v.

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Hays, 515 U.S. 737, 742 (1995); Chapman, 631 F.3d at 954.

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III. Argument
A.

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Righthaven Has No Standing to Bring This Case

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Righthaven is neither the owner nor exclusive holder of any rights in the copyrighted

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work underlying this lawsuit. As such, Righthaven has suffered no injury or other cognizable

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harm required for it to have standing under Lujan. Absent this very basic requirement of

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standing, there is no subject matter jurisdiction in this case, and it must be dismissed.

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For a plaintiff to sue for copyright infringement, it must have an exclusive right in a

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copyright. Silvers v. Sony Pictures Entm’t, Inc., 402 F.3d 881, 885 (9th Cir. 2005); see

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Sybersound Records v. UAV Corp., 517 F.3d 1137, 1144 (holding that only owners and

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“exclusive licensees” may enforce a copyright or license). Without such exclusivity, a plaintiff

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has no standing to enforce a copyright. Sybersound, 517 F.3d at 1144. As status as a copyright

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owner or exclusive licensee is prerequisite for enforcing such a right, a plaintiff with neither

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lacks standing to pursue an infringement claim on that copyright, as it cannot experience the

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injury requisite for Article III standing under Whitmore and Lujan.

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Randazza
Legal Group
7001 W Charleston Blvd
#1043
Las Vegas, NV 89117
[phone]

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Righthaven lacks sufficient rights under Silvers and Sybersound to bring this lawsuit.

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The Strategic Alliance Agreement (hereinafter, the “Agreement”) between Stephens Media and

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Righthaven found in Exhibit A obviates the need to examine the copyright assignment for the

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work at issue in this case.1 Indeed, the Agreement makes it abundantly clear that Righthaven

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actually has no rights in the copyrights it claims.

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Agreement, Exhibit A, provides as follows:

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Most importantly, Section 7.2 of the

Despite any such Copyright Assignment, Stephens Media shall retain (and is
hereby granted by Righthaven) an exclusive license to Exploit the Stephens
Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven
shall have no right or license to Exploit or participate in the receipt of
royalties from the Exploitation of the Stephens Media Assigned Copyrights
other than the right to proceeds in association with a Recovery. To the extent
that Righthaven's maintenance of rights to pursue infringers of the Stephens
Media Assigned Copyrights in any manner would be deemed to diminish
Stephens Media's right to Exploit the Stephens Media Assigned Copyrights,
Righthaven hereby grants an exclusive license to Stephens Media to the greatest
extent permitted by law so that Stephens Media shall have unfettered and
exclusive ability to Exploit the Stephens Media Assigned Copyrights. Righthaven
shall have no Obligation to protect or enforce any Work of Stephens Media that is
not Stephens Media Assigned Copyrights.

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Emphasis added; “Exploit” defined in Exhibit A, Schedule 1. Thus, while Stephens Media gives

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Righthaven the illusory rights for Righthaven to be recognized as the copyright holder of the

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works at issue in its lawsuits, it does not provide any transfer any of the rights in 17 U.S.C. § 106

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that must be transferred to make a valid copyright assignment or license, and thus grant the

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assignee the right to sue. See Silvers, 402 F.3d at 885. The “assignment” is a transparent sham

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that is designed to make Righthaven appear to be a copyright assignee for the purposes of filing

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suit, meanwhile the actual rights at issue are governed by this Agreement, which renders the

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assignment meaningless. (Exh. A.) The Agreement even specifically precludes Righthaven from

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Randazza
Legal Group
7001 W Charleston Blvd
#1043
Las Vegas, NV 89117
[phone]

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Judge Hunt ordered this document to be made public in Righthaven LLC v. Democratic Underground LLC, Case
2:10-cv-1356 Order, Doc. # 93 (D. Nev., filed Apr. 14, 2011). His rationale included the fact that the contents of
this document would have an impact on all Righthaven cases. “As I have read these and other motions in this case,
and considered the multitude of cases filed by Righthaven, on the claimed basis that Righthaven owns the copyrights
to certain Stephens Media copy, it appears to the Court that there is certainly an interest and even a right in all the
other defendants sued by [Righthaven] to have access to this material.” Id. at 4.

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the most basic of assignee rights and prohibits Righthaven from “Exploit[ing]” (Exh. A,

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Schedule 1) the copyrighted works through distribution, publication or licensing. In the end,

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Stephens Media is the only party to the Agreement with any exclusive rights in the copyrighted

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content.

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But that is not the full extent of the sham and the fraud that has been perpetrated upon

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this court hundreds of times – as a right of reversion is also included in the Agreement. As seen

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in Section 8 of the Agreement, Exhibit A:

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Stephens Media shall have the right at any time to terminate, in good faith, any
Copyright Assignment (the "Assignment Termination") and enjoy a right of
complete reversion to the ownership of any copyright that is the subject of a
Copyright Assignment; provided, however, that if Righthaven shall have
commenced an action to prosecute an infringer of the Stephens Media Assigned
Copyrights, Stephens Media shall be exclusively responsible for effecting
termination of such action including, without limitation, all Losses associated
with any dismissal with prejudice.
In addition to Stephens Media having the exclusive license to use the copyrights for everything
but Righthaven’s lawsuits, it also retains the ability to reclaim those rights at any time.
Righthaven does not even acquire the exclusive right to sue, as the full text of Section 8, found in
Exhibit A, specifically contemplates Stephens Media litigating the infringement of the copyrights
it assigns to Righthaven.
This is not a true copyright ownership that Righthaven has acquired, nor is it even an

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exclusive license – it is simply an attempt to illegally assign a copyright claim. And it is exactly

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that narrow, exploitative interest that the Ninth Circuit held flew in the face of the Copyright Act,

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and clearly stated could not be the basis of a copyright infringement lawsuit, in Silvers. 402 F.3d

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at 890; see also Sybersound, 517 F.3d at 1144.

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B.

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Righthaven fought mightily to keep this evidence from the public and from all defendants

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in its legion of cases brought in this District. See Righthaven LLC v. Democratic Underground

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LLC, Case No. 2:10-cv-1356.

Righthaven has Willfully Deceived this Court

An examination of the document and its implications for

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Randazza
Legal Group
7001 W Charleston Blvd
#1043
Las Vegas, NV 89117
[phone]

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Righthaven’s business model make the reason plain – it reveals the unlawful nature of

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Righthaven’s actions before this court and renders all of its lawsuits null and void. For this

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reason, the Court has an independent justification for dismissing this case.

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This Court has the inherent power to dismiss an action when a party has “willfully

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deceived” the Court and “engaged in conduct utterly inconsistent with the orderly administration

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of justice.” Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983); Phoceene Sous-

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Marine, S.A. v. U.S. Phosmarine, Inc., 682 F.2d 802, 806 (9th Cir. 1982). Such conduct is

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inimical to the proper and equitable use of not only this Court’s resources, but the justice system

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as a whole. There is little doubt, though, that this is exactly what Righthaven has done in this

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case.

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In the Agreement, Stephens Media retains an “exclusive license” to exploit the copyrights

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allegedly assigned to Righthaven. (Exh. A § 7.2.) Righthaven has no right to receive royalties

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for the copyrighted work’s use, other than the recovery it is entitled to from litigation;

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additionally, Righthaven specifically gives Stephens Media an unspecified – but expansive2 –

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exclusive license to exploit the copyrights. (Id.) The extent to which Righthaven putatively owns

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the copyright is further undermined by Stephens Media’s right to reversion, which allows it to

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take back the copyright at almost any time (Id. § 8.)

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Meanwhile, in Righthaven’s Complaint, it deceptively claims to be the “owner” of the

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copyrighted work (Doc. # 1 ¶¶ 9, 25) and avers to have the exclusive rights to reproduce the

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work, create derivatives of the copyrighted work, distribute copies of the work and publicly

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display the work under 17 U.S.C. § 106. (Doc. # 1 ¶¶ 32-35.) All of these claims are clearly

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contradicted by Section 7.2 of the Agreement, which makes it clear that Righthaven has no rights

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to use the work for any purpose other than litigation, and is assigned the copyright solely to coat

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its lawsuits with the veneer of legitimacy. (Exh. A §§ 3.1, 3.3, 3.4, 7.1, 7.2.)

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The Agreement embodied in Exhibit A defines the full scope of Stephens Media’s

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relationship with Righthaven, rendering any analysis of an individual copyright assignment

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superfluous. It is clear from the Agreement that whatever rights Righthaven does have from

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Randazza
Legal Group
7001 W Charleston Blvd
#1043
Las Vegas, NV 89117
[phone]

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“[T]o the greatest extent permitted by law.” (Id.)

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Stephens Media are insufficient to lawfully bring its lawsuit against these defendants (and others

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as well), and that it lacks standing to do so. Righthaven willfully hid this information from the

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Court, and when one party discovered it, Righthaven fought extensively to keep the information

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from other Defendants. Now that it has seen the light of day, and this Court has opportunity to

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gaze upon it, Righthaven’s deception stands starkly revealed. This case must be dismissed.
Conclusion

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Under the law of this Circuit, Righthaven does not have the legal right to pursue its

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copyright infringement claim in this case. As seen from Exhibit A, it has acquired no rights from

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Stephens Media, and certainly not enough to claim its copyrights were infringed upon. As such,

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it has not suffered an injury cognizable by law, and its case is not properly before this Court.

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Therefore, consistent with Federal Rule of Civil Procedure 12(h)(3), this Court should dismiss

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Righthaven’s case against the Defendants.

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Dated: April 17, 2011

Respectfully Submitted,
RANDAZZA LEGAL GROUP

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Marc J. Randazza
J. Malcolm DeVoy IV

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Attorneys for Defendants,
Vote for the Worst, LLC,
Nathan E. Palmer,
and David J. Della Terza

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Randazza
Legal Group
7001 W Charleston Blvd
#1043
Las Vegas, NV 89117
[phone]

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CERTIFICATE OF SERVICE

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Pursuant to Federal Rule of Civil Procedure 5(b), I hereby certify that I am a

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representative of Randazza Legal Group and that on this 17th day of April, 2011, I caused

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documents entitled:

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DEFENDANTS’ MOTION TO DISMISS FOR LACK OF SUBJECT MATTER
JURISDICTION
to be served as follows:
[

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by depositing same for mailing in the United States Mail, in a sealed envelope
addressed to Steven A. Gibson, Esq., Righthaven, LLC, 9960 West Cheyenne
Avenue, Suite 210, Las Vegas, Nevada, 89129-7701, upon which first class
postage was fully prepaid; and/or

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Pursuant to Fed. R. Civ. P. 5(b)(2)(D), to be sent via facsimile as indicated; and/or

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to be hand-delivered;

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[X]

by the Court’s CM/ECF system.

/s/ J. Malcolm DeVoy__________
J. Malcolm DeVoy

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Randazza
Legal Group
7001 W Charleston Blvd
#1043
Las Vegas, NV 89117
[phone]

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