Capitol Records, LLC v. Redigi Inc.
Filing
146
TRANSCRIPT of Proceedings re: CONFERENCE held on 12/2/2013 before Judge Richard J. Sullivan. Court Reporter/Transcriber: Steven Griffing, (212) 805-0300. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 1/16/2014. Redacted Transcript Deadline set for 1/27/2014. Release of Transcript Restriction set for 3/27/2014.(Rodriguez, Somari)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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CAPITOL RECORDS, LLC,
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Plaintiff,
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v.
12 Civ. 95 (RJS)
REDIGI, INC.; JOHN
OSSENMACHER; and LARRY
RUDOLPH, also known as
Lawrence S. Rogel,
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Defendants.
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New York, N.Y.
December 2, 2013
6:10 p.m.
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Before:
HON. RICHARD J. SULLIVAN,
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District Judge
APPEARANCES
COWAN LIEBOWITZ & LATMAN
Attorneys for Plaintiff
BY: RICHARD S. MANDEL
JONATHAN Z. KING
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ADELMAN MATZ
Attorneys for Defendant Redigi, Inc.
BY: GARY P. ADELMAN
SARAH M. MATZ
HAUSFELD, LLP
Attorneys for Defendants John Ossenmacher
and Larry Rudolph
BY: JAMES J. PIZZIRUSSO
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(Case called)
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MR. MANDEL:
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MR. KING:
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Jonathan King, also from Cowan Liebowitz &
Latman.
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Richard Mandel, Cowan Liebowitz & Latman.
THE COURT:
Mr. King good afternoon to you.
defendants.
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MS. MATZ:
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MR. ADELMAN:
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MR. PIZZIRUSSO:
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For the
Sarah Matz for Redigi.
Gary Adelman also for Redigi.
Your Honor, James Pizzirusso for the
individual defendants, John Ossenmacher and Larry Rudolph.
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THE COURT:
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were waiting on someone else.
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MR. PIZZIRUSSO:
other courtroom.
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You are for both of them.
Just me, your Honor.
I thought we
I was in your
This is my first time I've been here.
THE COURT:
You were in 318 where I had the trial.
That's because the marshals told you to go there.
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MR. PIZZIRUSSO:
They did.
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THE COURT:
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Thank you all for your patience.
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As Mr. Pizzirusso knows, I've got a criminal trial
Sorry for all that.
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going.
It's an insider trading case.
It's interesting, but
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it's been time consuming.
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seem to have half a dozen things we need to talk about, which
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is what happened today.
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your patience.
So whenever I let the jury go we
My apologies to you.
Thank you for
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I asked you to come in because there is sort of a
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barrage of letters going back and forth on a variety of issues,
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including discovery issues.
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about where we have been and where we are now.
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obviously, that has a fair amount of history.
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situation where several months ago plaintiffs asked to amend
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and that would have been up to me as to whether I would allow
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an amendment and it is up to me.
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But it seems to me we should talk
This is a case,
We also have a
I allowed it.
But in part I allowed it because of the
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representations made by Mr. Adelman.
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making false statements, but they turn out not to be accurate
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statements, not to have been accurate statements.
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I'm not suggesting he was
So my principal question was whether amending was
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going to require additional discovery and a lot of additional
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time and effort on a case where I had already ruled on a motion
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for summary judgment on what are important issues and legal
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issues that were well briefed and well argued.
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And when I asked that question Mr. Adelman certainly
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didn't think there was going to be any need for additional
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discovery.
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representations I allowed the amendment.
Mr. Mandel agreed.
And so on the basis of those
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We have the amendment and it turns out that Mr.
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Adelman and Ms. Matz are not representing the individual
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defendants, so they have new counsel.
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defendants are pursuing some of the same defenses and some new
And the individual
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defenses and also are seeking discovery that is above and
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beyond what was the subject up until the first summary judgment
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motion.
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The plaintiffs have wanted to amend had they known we were
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going to go down this road.
So that sort of prompts me to say, is this worth it.
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Mr. Mandel.
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MR. MANDEL:
Yes.
We do want to amend and we think we
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have valid claims against the individuals.
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what we think has happened is, new counsel has come into the
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case and is using it as an opportunity to try and just invent
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anything under the sun that they can unearth defenses out of,
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many of which I think have already been ruled upon.
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THE COURT:
Some of which have been ruled upon.
Fair
use is one I ruled upon.
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MR. MANDEL:
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THE COURT:
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But unfortunately
The first sale doctrine.
First sale doctrine.
Those are the two
principal ones, right?
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MR. MANDEL:
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THE COURT:
Correct.
There are some additional defenses that
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plaintiffs argue Redigi could have raised earlier and did not
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and that the individual defendants should be foreclosed from
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bringing those.
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elsewhere, principally the Second Circuit, In Re Teltronics and
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Kreager.
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And you cite cases from the Second Circuit and
I think the posture in those cases was a little
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different in that there was already was a judgment in those
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cases as opposed to here where we don't have a final judgment.
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We are doing discovery now on damages.
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could do that pretty quickly and then tee this whole thing up
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for the circuit sooner rather than later.
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And the thought was we
I think those cases are different.
I think that the
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reasoning might apply, but those are cases which involve
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collateral estoppel where there has been a judgment.
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my reason for suggesting that probably had I started from
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scratch and known this is where we are going, I would have
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denied the motion to amend.
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the individual defendants, and we would have then gone forward
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on two tracks.
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almost done by now as opposed to us being kind of mired in
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discovery disputes and motions practice.
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So that's
You could have then filed against
But I think the track against Redigi would be
MR. MANDEL:
No.
I understand.
But I do think, your
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Honor, that there is law that has applied collateral estoppel
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to partial summary judgments.
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beyond, even if you assume that these defenses are eligible to
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be asserted, on the factual record that exists already, it
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seems very plain that there is actually no possible basis for
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any of them in terms of just what's already been found.
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And I believe even if you look
In terms of the DMCA defense, I think there is a
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reason Redigi asserted that in the answer.
We moved in our
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partial summary judgment motion, actually addressed it in our
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moving papers.
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response.
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They didn't even see fit to address it in
That's how little they thought of that defense.
THE COURT:
The fact that one defendant thinks little
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of a defense and another thinks better of it is not
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dispositive.
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there are repercussions that flow from that.
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am not sure I'm prepared to say that.
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I think if it's a frivolous motion, then I guess
At this point I
And there is a motion to dismiss now that's pending.
And I am not supposed to be delving into the record with
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respect to the motions to dismiss.
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record with respect to Redigi which has already passed stage 1
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of motions for summary motion.
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additional summary judgment on the remaining issues, including
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damages.
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this point.
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You are talking about a
There is a contemplation of
But we are kind of moving on a different tract at
MR. MANDEL:
I guess so.
I guess what confusing me is
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the factual record really is the same.
These individuals, the
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only question that's really left in terms of their individual
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liability is whether they participated in this conduct that's
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been found to be infringing.
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THE COURT:
That's what I thought the use was going to
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be for purposes of the amended complaint against the
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individuals and that's certainly what was represented to me.
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And I can quote from the transcript if necessary.
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The only defense that could potentially be available
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is somehow they didn't have enough personal involvement to be
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individually liable.
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basically agreed with that, that that would be the issue.
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so that certainly I think would be relevant when we get to
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summary judgment.
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We are at a motion to dismiss for the individual defendants.
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They are seeking discovery with respect to other issues that
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were not contested by Redigi, but I don't know, are they
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estopped?
That's Mr. Mandel.
I think Mr. Adelman
And
Right now we are not at summary judgment.
I think part of it is a factual issue as to how much
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of the individual defendants were involved in running the
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Redigi litigation, right?
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MR. MANDEL:
I don't think there is much of a dispute
about that.
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THE COURT:
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MR. MANDEL:
I don't know.
They are the only witnesses who were
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identified in initial disclosures.
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showed up at the preliminary injunction hearing, at every
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deposition, at every mediation.
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other shareholders, they objected and said it was irrelevant.
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If there is anybody else who controlled this litigation, I
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don't know who they are or where they were.
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They are the people who
When we asked to even identify
We certainly haven't heard anything but these two
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people who founded this business.
This was their brainchild.
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They thought it was legal.
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case and submitted declarations explaining why a preliminary
They came in from the outset of the
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injunction shouldn't be issued.
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on the basis of their testimony and only their testimony.
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The company was found liable
This, to me, is really a classic case of people who
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participated actively.
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participated on behalf of Redigi with the defense.
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literally no other person I can think of who had any
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involvement whatsoever.
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THE COURT:
to that.
They are the only people who
That may be true.
There is
I don't know the answer
But I'm talking about the specific issue under
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Teltronics as to whether or not the individual defendants
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should be estopped.
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30(b)(6) witness can then be added in a case and they are
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estopped from asserting any defenses because having been
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designated as a 30(b)(6) witness they are involved in the
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litigation.
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MR. MANDEL:
You wouldn't take the position that a
Not entirely.
I think if you look at the
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couple of cases we cited, in both of them the courts talked
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about the fact that they were the principal witness, that they
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were there at the trial, that they had submitted declarations.
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These are the kind of facts that the Court looked at in those
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cases.
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only two individuals who have been there from the outset.
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If you look at our situation, these really were the
THE COURT:
It's not clear to me how the courts in the
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cases you've cited were in the position to make those
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pronouncements about the state of the record because the
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posture of the case wasn't such that I think it was in the
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record.
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at what some of the district court submissions and filings
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were, but I don't know that that's dispositive on the issues.
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They kind of cherrypicked the circuit data and looked
MR. MANDEL:
I think in this case I would like to hear
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if there is somebody else who effectively controlled or
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participated.
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They have never been identified.
THE COURT:
I've got a lawyer for the individuals and
I've got a lawyer for the corporate defendant here, somebody
else who is running this company.
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Who retained you, Mr. Adelman?
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MR. ADELMAN:
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THE COURT:
John Ossenmacher.
And who gives you direction now as to how
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the corporate defendant should be pursuing this case?
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tell me the substance of communications, but the individual
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who --
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MR. ADELMAN:
Don't
Primarily, we talked to John Ossenmacher
and Larry Rudolph.
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THE COURT:
Mr. Pizzirusso, what is the defense here
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with respect to those individuals not joined at the hip with
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the corporate defendant?
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MR. PIZZIRUSSO:
Certainly, your Honor.
I understand
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there is a history here and I have not been involved in that
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history.
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Capital decided on the eve of trial that they wanted to name my
I'm coming in as an outsider at the end of case when
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clients.
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THE COURT:
I don't know if it was the eve of trial.
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MR. PIZZIRUSSO:
It was near the end of discovery and
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the case was pretty much -- partial summary judgment obviously
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had been granted.
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Redigi had enough money, so they wanted to name the individual
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defendants, too.
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paragraph 37 in the amended complaint, that says:
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Ossenmacher and Larry Rudolph controlled the company and,
And then they decided that they didn't think
And they dropped in one conclusory paragraph,
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therefore, they are liable, too.
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And John
defendant and changed it to defendants.
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And then this did a find all
And so then they said, well, this was the complaint
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against your clients.
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order.
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hold my clients responsible based on one conclusory paragraph
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because they say there is this entire record where they
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submitted declarations and did all these other things, but I
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have to go by the complaint that's in front of me.
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go by what's been pled against my clients.
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filed a motion to dismiss because we think it is wholly
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conclusory under Twombly and under Iqbal and don't really
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understand the allegations made against my client.
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them don't make any sense.
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We have these partial summary judgment
Your clients are also liable.
They basically tried to
I have to
And that's why we
A lot of
When they say defendants, defendants users did this
and this and this.
Obviously, my clients don't have users.
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Redigi does, but the individuals don't.
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that you could merely name individuals in a copyright case,
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every copyright case the executives of the company would be
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liable, but that's not the law.
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So we are kind of floundering.
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conclusory complaint that pleads very little against our
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clients and have to assert at the same time discovery defenses
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and potential summary judgment motions that we want to file.
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But we still aren't even sure what they are alleging against
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If it were the case
That's not what the law says.
We are left with this very
our client.
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What's the direct financial interest that my clients
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have?
What are the acts that each one of them individually did
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that contributed or that caused the copyright infringement of
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this case?
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company and that's it.
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have said we might have defenses.
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have not seen a real complaint.
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alleges information against our client.
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of alert, what are all of the possible defenses that we could
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have based on what we think the allegations are probably trying
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to say against us?
They can't just say, well, you're in charge of the
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THE COURT:
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That's not what the law says.
So we
We don't know yet because we
We don't think that adequately
So we have had to sort
the songs at issue?
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Including whether there is copyright in
MR. PIZZIRUSSO:
Yes.
Because, your Honor,
interestingly enough, we went through every single copyright
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registration they produced, and we made a chart and we said,
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which songs have they asserted copyright claims against and
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which songs have they provided actual copyright registrations.
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And it was probably less than 20 percent that they actually
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provided registrations for.
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judgment issue.
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We said, well, that's a summary
They have not proved their case.
So even though Mr. Mandel asserts discovery is over,
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in the last week we have received over 3,000 pages of
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additional discovery, approximately 3,000 pages of additional
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discovery from his client after we said we are going to file
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summary judgment on this and after he has said, no more
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discovery.
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So we have got thousands of pages of additional
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documents that were just sprung on us over the Thanksgiving
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holiday that we have not even had a chance to review yet while
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he is asserting that we don't get any discovery against his
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client.
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them for what they are.
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But here are the documents, you just have to accept
THE COURT:
Here is the question I have in connection
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with the motion to amend.
If amending to add them, your
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clients, is not going to require any additional discovery, then
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I think I will probably allow it.
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additional discovery then I am not so sure.
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Mr. Mandel, he didn't think there would be any additional
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discovery, and Mr. Adelman agreed.
But if it's going to require
I asked
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So why would your clients not be bound by that?
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MR. PIZZIRUSSO:
Mr. Adelman didn't represent my
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clients at the time.
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litigation.
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they have brought in new counsel, may have new ideas or may
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want to do things differently, I don't know why Redigi did the
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things that they did.
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They weren't named as defendants in the
Now that the Court has allowed an amendment and
I don't know their strategy.
But my clients are now being asked to be joint and
severally liable for potentially millions of dollars.
And they
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have a due process right to take discovery, to find out what
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the claims are being asserted against them and don't think that
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they are bound by representations on behalf of people who did
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not represent them personally, that no discovery is needed
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here.
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THE COURT:
There is case law, slightly different
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procedural context, though, that basically bars the principals
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of a corporate defendant from asserting claims and making
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arguments that were or could have been made by the corporate
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defendant.
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them, right?
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You're familiar with those cases.
MR. PIZZIRUSSO:
You've seen
I have seen the cases that Mr. Mandel
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cited, and I agreed with your Honor's initial assessment that
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they took place in generally different contexts than what we
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have here.
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THE COURT:
They are different contexts, but it's not
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clear to me why the rationale would be any different at this
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stage of this proceeding.
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You are not asserting that somebody else is who ran
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the litigation and somebody else is who is responsible for the
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corporate defendant defending himself, right?
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somebody else?
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MR. PIZZIRUSSO:
Is there
There are other shareholders of the
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company, your Honor.
There is inside counsel.
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just these two individuals.
There aren't
If Mr. Mandel wants to have some
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additional discovery after he is saying that no additional
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discovery is needed, we can go into that.
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to take the complaint that we have against us and respond to
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that.
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has that talk about how my clients have run the show from day
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one and are really responsible here, and he has got this great
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discovery record.
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complaint.
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unquote, eve of trial, the 11th hour, the close of discovery
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and he is saying, you don't get any more discovery, you're
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essentially liable.
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think the complaint should be dismissed with prejudice, but, at
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the very least, if not, he should have to replead and allow us
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to answer.
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I think we have got
He hasn't asserted any of these facts that he claims he
I think it should have been in the
It wasn't.
So now here we are on the, quote
And we think that's prejudicial and we
But I do agree that the cases should be severed.
We
could proceed right now against Redigi and go to trial and let
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him proceed separately against my clients so they can assert
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what they believe are their rights to take discovery on issues
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that were never raised.
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about, your Honor, are not issues that were asserted by Redigi.
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THE COURT:
Most of the issues that we are talking
That's the whole point, though.
I guess
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the initial issue then is whether your client should be barred
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from asserting defenses and arguments that could have been
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asserted previously by the corporate defendant.
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MR. PIZZIRUSSO:
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applicable to them, like laches.
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here at the end of the case.
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Redigi.
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They have defenses that are solely
Like them only being named
That clearly wouldn't apply to
That's a different as to Redigi.
Your Honor, in your opinion itself, said that fair use
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is really a case-by-case equitable doctrine.
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look at the specific instances of the case at hand and there
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may be, again, particular fair use issues as to the individual
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defendants that weren't applicable to Redigi.
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THE COURT:
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MR. PIZZIRUSSO:
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You've got to
Like what?
I have not seen a complaint that I
could fairly respond to yet, so I don't know, but there may be.
THE COURT:
I am not sure why that the answer to that
22
question turns on the complaint.
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a defense.
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cross motions, I guess, by Redigi and by the plaintiffs.
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I mean, fair use is obviously
I addressed it in the summary judgment motion,
And so in what way would your fair use and first sale
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defense be different from what was asserted previously by the
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corporate defendant?
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MR. PIZZIRUSSO:
The first sale defense, your Honor, I
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think your Honor pretty clearly covered.
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would disagree, respectfully, with the opinion.
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Obviously, my clients
But with regard to fair use, to the extent that they
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are being deemed individually liable, I think the equities
8
might weigh more in their favor on a fair use defense just
9
because these are individuals who had meetings with Capital,
10
who encouraged their use of this technology, who, you know, we
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think, gave implied consent to it.
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supportive of them.
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the fair use defense, it may weigh more in their favor because
14
of the individual liability trying to be imposed on them by
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Capital.
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THE COURT:
that proposition.
There were people who were
So we think when you weigh the equities of
I would love to see some authority for
It doesn't sound right to me.
(Continued on next page)
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THE COURT:
complaint or sever the defendants.
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MR. MANDEL:
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THE COURT:
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So, you're not looking then to dismiss the
I'm sorry?
You're not looking to sever the defendants
or dismiss the amended complaint and go forward on the old one.
MR. MANDEL:
No.
And I don't think we should have to.
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I really believe, with all due respect, that this is a bit of a
8
smoke screen.
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founded this company came in arguing vociferously that what
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they were doing was legal, don't know what they are charged
11
with, it's ridiculous.
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founded a company, they founded a business model, they
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developed the technology, they did all of the acts that were
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found to be infringing.
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They did it.
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people who put it into motion, who completed the business
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modeled and who did all of the acts at issue.
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I mean the idea that these two individuals who
I mean of course they know.
They
It's not like somebody else did it.
This was their brainchild, and they are the
Now, the idea that they would somehow have a different
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fair use defense makes no sense under the four factors we are
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looking at.
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looking at the exact same analysis.
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defense is no different.
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We are looking at the same exact things.
We are
Of course their fair use
There is also just no factual basis for any of these
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defenses.
They are so far afield from anything that I honestly
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don't think they could be asserted consistent with Rule 11.
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For example, unclean hands, they are asking questions about the
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mechanical royalties that Capitol pays to its artists with whom
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it has contracts, and their theory is that maybe Capitol has
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somehow underpaid these artists, then that would create an
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unclean hands defense for them.
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these artists.
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are not in a position to assert anything.
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turn it into a trial about whether we paid the right royalties,
9
what audits have been done, whether these audits have been
They have nothing to do with
They have no contractual relationship.
They
And they want to
10
properly paid?
11
nothing to do with this.
12
And our business relationship with our artists has nothing to
13
do with this case.
14
unclean hands defense.
15
They are just outside infringers who have
This has nothing to do with them.
It can't possibly set the grounds for an
They also talk about latches.
Mr. Ossenmacher's own
16
deposition testimony -- and I would ask Mr. Pizzirusso to read
17
it at pages 104 to 110 in his deposition -- he basically says
18
that he couldn't get a meeting with Capitol; capitol wouldn't
19
meet with him.
20
other record labels, they refused to hear what I had to say.
21
They were too busy to meet with me, and then after the RA sent
22
a claim letter I got to meet with every other label but Capitol
23
refused."
24
going to give rise to laches, where you have to have reasonable
25
prejudicial reliance on what the plaintiff did?
"They took an uneducated view.
Unlike the
How is that possibly under any factual scenario
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The plaintiff made clear, they sued Redigi within
2
three months of its launch, and they want to say that they
3
somehow reasonably relied that it was OK for them to go forward
4
in the face of Capitol having filed a suit against their
5
company for infringement, that somehow they thought they had
6
assurances that what they were doing was legal or Capitol
7
approved of it?
8
these things.
9
10
There is no possible basis to assert any of
THE COURT:
there yet.
11
That's a Rule 11 point, and we're not
Right?
MR. MANDEL:
I guess the question is in terms of
12
discovery, it's not true -- we're willing to be reasonable
13
about discovery.
14
thought that no real discovery was necessary, was because all
15
of the issues relate to the defendant's own conduct.
16
solely within their knowledge.
17
discovery they could really want from Capitol on whether they
18
personally participated, what they did.
19
clear what they did, and they know what they did.
20
The reason we thought, both Mr. Adelman and I
THE COURT:
It was
And we didn't understand what
I think that it's
So, you are not seeking additional
21
discovery to establish the point whether they controlled the
22
company.
23
MR. MANDEL:
No.
We think the record is clear, as it
24
is now, as to their participation in the acts.
Whether they
25
are collaterally estopped, or whether you want to relook at it,
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the record is such that we have no doubt that we can establish
2
as a matter of law that they are personally liable.
3
Now, it's true if they want to take discovery into
4
ownership -- because that was something that Mr. Adelman didn't
5
want to pursue; we talked about it during the second discovery
6
period after the summary judgment opinion -- look, that's fair
7
game.
8
something they want to pursue, you know, we just identified the
9
universe of songs at the end of discovery.
I think that's a legitimate point, and if that's
It was somewhat
10
complicated because they had to run a program to figure out
11
which ones had been uploaded through Redigi 1.0.
12
THE COURT:
13
You're talking about ownership of --
MR. MANDEL:
-- our copyrights in the universe of
14
recordings that we were able to finally figure out through the
15
discovery process and isolate those recordings at the end of
16
discovery.
17
before your Honor, that we had fully through getting the charts
18
that Redigi compiled, through the program that Mr. Rudolph ran,
19
where we were able to say these are the recordings that went up
20
through Redigi 1.0.
21
changed the universe.
22
recordings, and so obviously if you want to start digging into
23
the record of contracts on every one of those, that's fine.
24
mean we're not saying that they shouldn't be allowed to do
25
that.
So, it wasn't really until August, when we came
And we eliminated some recordings, and we
You know, there are 500 some odd
Mr. Adelman wasn't interested in doing that, but we
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understand that they are entitled to take discovery on that.
2
So, we are now producing that voluminous record because they
3
asked for it, and we're putting it together.
4
Frankly, there probably are a couple of recordings
5
that we would even drop, and we might even need to add some
6
subsidiaries, because as we are going through the chain of
7
title, if you really are going to dig into it and take that
8
discovery, some of these copyrights are owned by wholly owned
9
subsidiaries of Capitol.
10
of the analysis.
It doesn't change anything in terms
It would be the same witness --
11
THE COURT:
12
MR. MANDEL:
Would it require an amended pleading?
It might, actually.
But we had always
13
said from the outset of the case management schedule that the
14
universe of recordings was dynamic, and it was going to take a
15
little bit of work to figure that out, and to hone in on what
16
they are, to isolate them, and also because of a lot of change
17
that is going on at our client with changes in corporations
18
because they have now been merged together with the Universal
19
Music Group, there are company names that are changing, there
20
are things that have changed even since July, you know, I think
21
it's a technical point.
22
Christian Music Group that owns the copyright, that's a wholly
23
owned subsidiary of Capitol Records, we would like to clear
24
that up.
25
If it turns out that it's now Capitol
We would certainly be willing to work with defendants
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to make sure they get anything they need if they really do want
2
to mount a challenge to whether we own each of those
3
recordings.
4
5
THE COURT:
That's with respect to the individual
defendants only, in your opinion.
6
MR. MANDEL:
Or Redigi.
If Redigi is now interested
7
in doing that, I think that's sort of related to damages, and
8
they are all jointly and severally liable.
9
on trying to say that that's not fair game in terms of
I am not standing
10
determining the full scope of recordings that we can collect a
11
damage award for.
12
The problem that Capitol has is to be hit with massive
13
discovery requests, that ask about things that are completely
14
tangential to any issue in the case, that have nothing to do
15
with the underlying causes of action, that are being offered in
16
front of defenses that even counsel didn't think enough to
17
assert because there wasn't a basis for them, there really
18
wasn't.
19
20
THE COURT:
I think he's complimenting you, Mr.
Adelman.
21
MR. ADELMAN:
22
THE COURT:
23
MR. ADELMAN:
24
25
Excuse me?
I think he's complimenting you.
I think he is, but I still would like to
address it.
THE COURT:
I will give you a chance.
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MR. ADELMAN:
2
MR. MANDEL:
Thank you, your Honor.
So, that's really where we are.
The
3
problem is that if it's going to be turned into an accounting
4
about how we pay royalties to our artists on every one of these
5
500 recordings, how we digitally exploit them all, every piece
6
of correspondence we have had with anybody, I mean that is not
7
reasonably related to any issue that remains in the case at
8
this point, in our view.
9
THE COURT:
And the discovery with respect to damages,
10
what we launched on before the amended complaint, or I guess
11
contemporaneous with the contemplation of the amended
12
complaint, where are you with that?
13
MR. MANDEL:
Well, from our perspective we are done
14
with discovery.
15
If the individuals defendant and/or Redigi wants to take a
16
deposition of our 30(b)(6) witness and go through the chain of
17
title and talk about ownership, we don't have a problem with
18
that; we are prepared to produce somebody.
19
the documents.
20
they say they want that, that's fine.
21
I mean Capitol doesn't need anymore discovery.
We are producing
We have been producing the documents.
Since
Beyond that, I mean if they want us to answer some
22
interrogatories that explain to them why they are individually
23
liable, I mean we think it's pretty obvious from the opinion
24
and from their deposition testimony, but obviously we can
25
answer that.
The real problem is if they want to turn it into
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a fishing expedition, to look for defenses that the record
2
absolutely clearly establishes have no possible basis -- I mean
3
in terms of the DMCA defense, they are not even registered as
4
an agent as required by the statute.
5
could not assert a DMCA defense, you know, separate and apart
6
from anything else.
As a matter of law they
7
And the court's opinion found that they had a
8
financial interest, that Redigi had a financial interest, that
9
the elements of control and financial benefit were both
10
11
satisfied, so that would also defeat the defense under 512.
So, a lot of these defenses, honestly, you know, it's
12
going to end up being very expensive, wasting a lot of time and
13
effort, and, you know, if we have to pursue this, we are going
14
to hear about it at the end of the day when there is an
15
attorney fee motion, because there is no way these defenses can
16
stand, and they really shouldn't be asserted.
17
THE COURT:
All right.
But, so what you are seeking
18
then is this:
19
discovery until I rule on that, and then allow for I guess what
20
would be styled as a motion for summary judgment with respect
21
to the Teltronics issue?
22
Rule on the motion to dismiss, basically stay
MR. MANDEL:
Is that right?
Well, I think what I would propose is not
23
staying discovery, because regardless of what the issue is on
24
the motion to dismiss -- I mean obviously if your Honor grants
25
the motion to dismiss and that's the end of it, then of course
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that's one thing.
2
something that's going to happen.
3
But we're pretty confident that that's not
We think that if they want to pursue discovery, we
4
certainly think ownership discovery we should go forward with;
5
we should do everything that needs to be done.
6
probably ask permission to maybe amend at the end of that so
7
that we all are operating on a clear understandings of what the
8
recordings are, who the plaintiffs are, so there can be no
9
dispute about that.
10
We would
But I think that this other discovery, in terms of the
11
issues that we complained about in our letter, we would be
12
fighting about that, and I don't even know how we could comply
13
with that.
14
know, every accounting and every deal that we've done for every
15
one of these recording artists, it's going to be a massive
16
undertaking and I think toward no end.
17
If we are going to have to start producing, you
THE COURT:
I understand that, but certain defenses
18
would be off the table, depending on how I resolve the issue of
19
what we will call the Teltronics issue, right?
20
21
22
MR. MANDEL:
So, your Honor is proposing having a
separate briefing on the Teltronics issue.
THE COURT:
Well, I think that depending on how that
23
gets resolved, then the defendants basically are stripped down
24
to the same defenses that are asserted by the corporate
25
defendant.
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MR. MANDEL:
I suppose we could do that.
I mean I
2
guess the issue I have is I'm still assuming that if the motion
3
to dismiss is denied, and they have to come in with an answer,
4
they have an extensive factual record, they have deposition
5
testimony that I have just cited them to, I assume they will
6
look at that before they sign a pleading that asserts some of
7
these defenses separate and apart from Teltronics.
8
THE COURT:
Right.
Well, that's the reason for my
9
suggestion, that I rule on the motion to dismiss first, and
10
then they have to answer, and depending on what they answer,
11
then there are certain defenses that would require additional
12
discovery and others that wouldn't.
13
MR. MANDEL:
Right.
And that's fine.
I think the
14
point I was making is regardless of what happens, I think the
15
one thing is if they are intent on pursuing chain of title and
16
delving into ownership, then that's going to have to take
17
place, and there is no reason to hold off on that; we are
18
prepared to allow that and to cooperate with that.
19
THE COURT:
Well, I don't know if it prevents
20
additional discovery, but I may otherwise not require the
21
parties to produce discovery where there is a dispute as to
22
whether such discovery should be had at all.
23
what you are really arguing, right?
24
25
MR. MANDEL:
Yes, I think so.
That seems to be
If we stayed discovery
on the issues that we are fighting about, went forward on the
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ownership interests, that would be fine.
2
3
THE COURT:
Mr. Adelman, you have been waiting
patiently.
4
MR. ADELMAN:
Thank you, your Honor.
5
And notwithstanding Mr. Mr. Mandel's compliment to me,
6
there is one thing I take issue with, and that is that we were
7
not interested in the ownership issue.
8
not interested.
9
2012 we asked all contracts, agreements, assignments, any
10
In fact, in our initial demands in March of
documents evidencing or concerning --
11
12
It's not that we were
THE COURT:
OK.
But then we went to summary judgment
without that being disputed, right?
13
MR. ADELMAN:
14
THE COURT:
No, for the purposes of that motion.
Well, I mean, wait a minute.
The purpose
15
of that motion was that you folks were teeing it up for me, but
16
it wasn't like if you lose you get to make repeated additional
17
motions, right?
18
19
MR. ADELMAN:
prove in damages that ownership of copyright.
20
21
22
No, but they certainly still have to
THE COURT:
We are in damages discovery now; I get
that.
MR. ADELMAN:
That's all I'm talking about.
But this
23
is a continuing demand, which means they have to provide the
24
ownership materials continuing.
25
discovery ended August 8, and they've had the lists.
And, as far as I'm concerned,
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list was generated in early June of 2013.
2
generated in June of 2012.
3
THE COURT:
4
granted it.
5
The first list was
I ruled on the summary judgment.
I
discovery.
6
Then we said we are going to have damages
MR. ADELMAN:
That's what I am talking about, your
7
Honor.
8
8, yet what we maintained in our letter is that they have not
9
proved ownership in many of their copyrights, and all of a
10
sudden in the last four or five days we get 3,000 pages of
11
ownership.
12
Damages discovery for Redigi corporate closed on August
We maintain that they're precluded, and that certainly
13
goes to the issue of damages, because any copyright that they
14
cannot prove reduces any potential damage to us.
15
take issue that we don't care about it.
16
any ownership documents that were not produced by the end of
17
disclosure for Redigi corporate are precluded at this point.
18
19
20
THE COURT:
All right.
So, I would
Our position is that
So you want to take back all
the nice things you said about him?
MR. MANDEL:
No.
I mean I think his choice of what
21
defenses to assert was proper and reasonable, and is what I
22
would have done, so I stand by that.
23
THE COURT:
No, the issue is he is saying that you're
24
out of time on discovery.
He asked for these things before he
25
decided to concede them for purposes of a summary judgment
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2
motion.
MR. MANDEL:
No, but here is the thing.
We all
3
understood on summary judgment that the actual universe of what
4
recordings were going to end up being claimed on was something
5
that we were going to have to figure out.
6
We didn't have that.
Now, what happened is Redigi on summary judgment did
7
not challenge ownership.
When we talked about what discovery
8
they wanted during Redigi post-summary judgment discovery,
9
Mr. Adelman didn't want to take a deposition, didn't seem to be
10
pursuing wanting to challenge ownership, which he hadn't
11
challenged on summary judgment.
12
they recognized that it wasn't going to be a very fruitful area
13
to see that Capitol didn't own the recordings it says it owns.
14
And that was my assumption.
15
discovery was really focused on figuring out which of the
16
recordings that actually --
17
THE COURT:
18
MR. ADELMAN:
So, my assumption was that
Most of the effort during that
Look -Your Honor, one thing.
Remember they
19
amended the complaint and added copyrights.
That was not part
20
of the complaint during the summary judgment motion.
21
were only about 111 tracks at issue during the summary judgment
22
motion, and all of those were purchased by the investigator.
23
So, there is an amended complaint, we have actually answered,
24
and we have affirmative defenses as far as ownership is
25
concerned.
There
I don't think we ever conceded ownership as to the
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tracks that they are alleging in the complaint.
2
we are arguing was whether there was an infringement or not.
3
And for the basis of the summary judgment motion, they
4
certainly owned at least one of the tracks, and I think that we
5
have stated that; but, nevertheless, my position on discovery
6
is solely as to the copyright issue.
7
THE COURT:
I think what
But you are suggesting that Mr. Mandel
8
basically did and should have understood that you wanted all of
9
this discovery with respect to ownership.
And the date of that
10
is when in relation to my summary judgment ruling, in relation
11
to the conference we had on the motion to amend?
12
date of your demand?
13
MR. ADELMAN:
14
THE COURT:
15
MR. ADELMAN:
16
THE COURT:
17
MR. ADELMAN:
What's the
The date of the demand is March.
March of 2013.
2012.
2012, OK.
So, I ruled.
So, the question you asked me at the
18
conference is as it related to the individuals, who as
19
Mr. Pizzirusso suggested -- I did not represent at the time --
20
but you asked me what I thought was an off-the-cuff request,
21
and at the time off the top of my head, as far as the
22
individuals are concerned, no, I could not think of any
23
discovery.
24
after we had that conference.
25
discovery.
But going forward discovery had already closed
August 8 was the close of
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2
THE COURT:
Damages discovery.
We all contemplated
that.
3
MR. ADELMAN:
No, not before that conference, your
4
Honor.
5
We had that conference after the close of damages discovery.
6
Damages discovery was closed prior to that conference.
MR. MANDEL:
Your Honor, if I could.
What happened is
7
it wasn't really until the end of that damage discovery
8
period -- we were racing to figure out which were the
9
recordings that actually had been uploaded through Redigi 1.0.
10
We then did a quick search of our computer systems to identify
11
which recordings we could claim on, and we came up with an
12
amended complaint.
13
It would not have been possible in that couple of
14
weeks between the time, less than two weeks really between when
15
we finalized the information to know what the recordings were,
16
to have produced contracts covering all 500 of those
17
recordings.
18
was contesting that.
19
And it wasn't my understanding that Mr. Adelman
THE COURT:
But, you know, obviously -Look, I have to say, to the extent that
20
Mr. Mandel was wrong in what he assumed, I assumed the same
21
thing.
22
a year before my summary judgment ruling was still alive and
23
that you were going to say they haven't produced.
24
25
So, I did not anticipate that the document request made
MR. ADELMAN:
Well, your Honor, the fact is that
damages discovery had closed before that conference.
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THE COURT:
Before the conference on the motion to
2
amend, you mean, in August?
3
MR. ADELMAN:
4
MR. MANDEL:
5
MR. ADELMAN:
Yes.
But it's not -So, my assumption was that discovery was
6
closed and Mr. Mandel had provided me with all the discovery
7
that he wished to.
8
9
And to the extent that Mr. Mandel knows that it's his
burden of ownership in a copyright case on damages, he should
10
have provided all the documentation.
11
to provide more documentation after that, the close of damages,
12
at the conference, he should have brought up the fact that
13
damages discovery needs to continue because we haven't provided
14
all the ownership documents, which is our burden to prove at
15
trial.
16
THE COURT:
17
MR. MANDEL:
To the extent he wanted
All right.
Well, your Honor, we did produce all the
18
registrations during the discovery period, which satisfies as
19
our burden of prima facie proof.
20
I didn't understand that Mr. Adelman -- because he had
21
didn't served new requests.
And we asked are you going to want
22
a deposition of our witness, and the answer was, no, I don't
23
want to take another deposition.
24
questions about ownership at the first deposition.
25
produced some ownership documents relating to the original
And he asked barely any
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universe of recordings.
2
So, it was not my understanding that this was a topic
3
that they were actually pursuing.
4
registrations were going to provide sufficient proof.
5
If they want to pursue it, if the individual
6
defendants want to pursue it, that's fine, we don't object to
7
that.
That I think is fair game, although --
8
9
And I thought the
THE COURT:
Well, he's saying it's too late for that.
So, the fact that you are not objecting, of course you are not
10
objecting.
He's not asking for it now; he says you are
11
precluded from producing any.
12
MR. MANDEL:
That I guess I have a problem with under
13
the circumstances of how this developed.
14
defendants asked for it.
15
And the individual
We made very clear from the outset -- even though we
16
were objecting to a lot of the discovery that the individual
17
defendants were serving -- that we were absolutely going to
18
produce.
19
would produce that, and we would certainly produce a witness to
20
testify to that.
That's never been something that we have
21
sought to block.
The whole reason we got derailed with
22
discovery disputes with the individual defendants is because of
23
all these other issues that they were seeking.
24
25
If they wanted the chain of title documentation, we
MR. ADELMAN:
Your Honor, notwithstanding that, in
order to proceed with this case, he has to have ownership
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documents.
2
that they own the copyright.
3
the individual tracks.
4
He has to prove the copyright.
He has to prove
We have never conceded that as to
And during discovery there was also conversations
5
between Ms. Matz and Mr. King, which I'd like her to express,
6
if you would, your Honor.
7
THE COURT:
Look, I don't know that I'm going to need
8
to sort of peel this onion, because I don't think there is a
9
satisfactory way to do it.
10
So, what I'm prepared to do is stay all discovery now,
11
rule on the motion to dismiss -- which I will do very
12
shortly -- and then once I have done that, then we will have an
13
answer, we will have defenses that are asserted, and then you
14
can make your motion for summary judgment against the
15
individual defendants, arguing at least in part that they are
16
precluded from certain defenses, and we can I guess coordinate
17
whatever additional discovery is necessary to wrap this up.
18
And then I guess we would have additional summary judgment
19
motions on damages.
20
That's what you are contemplating, right, Mr. Mandel?
21
MR. MANDEL:
22
judgment motion on the individual defendants' liability.
23
THE COURT:
24
MR. MANDEL:
25
We are only contemplating summary
So, damages would be at trial?
Well, we are going to move for summary
judgment on the innocent infringement defense that would open
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2
3
4
up a lower category of damages.
THE COURT:
So, anyway, I think all of that happens
after I rule on the motion to dismiss.
So, to the extent you want to do informal discovery
5
between now and then, you can.
6
that discover is closed, and he is not so accepting or asking
7
for anything more, then he can take that position.
8
very likely to reopen discovery for a limited time for the
9
purpose of wrapping this up, so we can get to the finish line.
10
If Mr. Adelman is of the view
But I am
So, I think to the extent there has been confusion and
11
that there has been misunderstandings -- I'm not accusing
12
anybody of anything -- I'm just saying that certainly at the
13
time we had our conference in August, I anticipated a very
14
different way this would unfold.
15
So, I think it's not fair to Mr. Pizzirusso to be
16
asserting defenses until he knows what he's shooting at, so I
17
think I have to rule on that motion.
18
to hold off.
19
20
21
But discovery I'm going
You see the way this wind is blowing, right, Mr.
Pizzirusso?
You're a smart guy.
MR. PIZZIRUSSO:
I do.
That was going to be my next
22
question, which was:
I hear the court is inclined perhaps
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probably to deny the motion to seek an answer.
24
going to happen, we might be more inclined, my clients, to go
25
ahead with some informal discovery if that appears to be the
And if that's
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way the wind is blowing.
THE COURT:
Nobody is precluded from informal
3
discovery, but I'm certainly stopping the requirement of
4
reciprocal discovery at this point.
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Discovery is stopped unless you folks can agree.
But
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once I rule, and assuming this thing is back on a litigation
7
track, then I will almost certainly reopen discovery for a
8
limited range of issues.
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yet, and I think that will turn on what the pleadings, what the
10
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What those are exactly, I'm not sure
answer says.
So, I'm not sure that's satisfactory to everybody, but
12
I think it's the best we can do at this hour.
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I have overlooked, or anything else you think I should at least
14
keep in my brain?
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16
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MR. ADELMAN:
So,anything else
Only that we also have a letter for
summary judgment as well.
THE COURT:
Right.
Well, there certainly was talk
18
about summary judgment, and I think we should hold off on
19
summary judgment until we have concluded all discovery.
20
MR. ADELMAN:
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THE COURT:
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I agree.
So, no prejudice to your motion, but I
think we should -MR. ADELMAN:
in the mix.
No.
I was just making sure that it was
But I think your plan is a good one.
THE COURT:
And you don't always think that.
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MR. ADELMAN:
No, you're right.
And you know I'm very
2
vocal as far as whether I agree or disagree.
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a rational one, because I think there has been some confusion
4
as to where everyone is going, and I am going to say on the
5
record that I am open to discussing it with Mr. Mandel.
6
THE COURT:
Good.
But I think it's
Look, that's the goal, of course.
7
You obviously have very different positions on the law,
8
interesting case, clients who feel the importance of this.
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It's not lost on me, but there is no reason why the lawyers
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have to be acrimonious with each other.
11
suggesting they are necessarily.
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you can reach agreement, but right now the ball is in my court
13
to resolve a couple of things and get you on track.
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MR. ADELMAN:
And I am not
So, do sit down and see where
We're actually quite unacrimonious.
all get along, so it's been helpful.
We
Even Mr. Pizzirusso.
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But I appreciate your help on this one, your Honor.
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THE COURT:
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I'm not sure how much I've helped, but
anyway.
So, let's adjourn.
Let me thank the court reporter
20
for his time and his predecessor's time.
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copy of the transcript, you can take that up with the court
22
reporter, but I will be in touch with you very shortly.
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Mr. Pizzirusso, thanks for coming up.
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If anybody needs a
- - -
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OK?
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