Lory Lybeck offers his two (or more) cents

Lory Lybeck of Lybeck Murphy, LLP sent the following e-mail to Prof. Nesson on Sunday, March 22, 2009.

Professor Nesson:

After reading the unfortunate response from the DOJ I have a few random thoughts. First-off, the financial bailout of a select few of the corporate financial giants makes it easier to utter the “T” trillion word in the most absurd settings. The 39,000+ lawsuits in the RIAA LAWSUIT PROGRAM (with DOJ argued “noncriminal” but punitive aspects) could potentially have resulted in claims against these 39,000+ individuals totaling $5,265,000,000,000.00 (assuming each alleged file sharer had an average of 900 songs and $150,000 non-criminal but “willful” penalty were assessed).

In this scenario, the ratio to the 66 cent per song wholesale cost of argued download (even if you accept this flawed argument) is 249,000 times “actual” compensatory damages. Discussing this statute and its application to the RIAA LAWSUIT PROGRAM (as you must while applying the law to the Joel T. case), the differences between 249,000:1 and the Williams 116:1 or the Zomba 44:1 ratios are startling and ludicrous.

As is the argument that scienter is not required in order to impose the civil penalty provisions. The DOJ asserts that scienter is not required by the civil damages provision and therefore the statute must be civil rather than punitive in nature. This argument is not supported by the copyright statute damages scheme and is just backwards.

The damages scheme allows for “innocent” violations. If innocent, imposition of penalties is limited to $200 per infringement resulting in a ratio to claimed per infringement damages of 332:1. The statue also provides for other knowledgeable, perhaps intentional but “non-willful” infringement penalties of between $750 and $30,000. These lead to ratios between claimed per infringement damages and penalties of 1245:1 and 49,800:1. When proof of “willful” actions is included, the ratio jumps to the 249,000:1 noted above.

It is laughable to suggest that concepts of willful, knowledgeable but casual and innocent do not involve concepts of scienter.

The DOJ offers a hollow argument that due process protection is afforded because limitations are imposed in the amount of statutory penalties making them predictable and not arbitrary. Claiming penalty to damages ratios between 2146 to 5659 times higher than those passing due process scrutiny of the 1919 Williams court or the 9th Circuit’s Zomba analysis seems also to miss the point. Can the DOJ actually be this tone deaf to this problem with their approach here?

One also wonders whether the innocent infringer would find satisfaction in receiving the benefit of being accused of only a “non-criminal” act of infringement. This great opportunity deprives one of a right to an appointed lawyer, the presumption of innocence, the right of confrontation and protections against prosecutorial misconduct. It also reverses the burden of proof. In order to qualify for this lower innocent penalty provision one MUST PROVE THEIR OWN INNOCENCE. The additional “benefit” of the non-criminal nature of this penalty allowed to be imposed by private corporations with the authority and active complicity of the federal courts is that your financial sanctions are virtually guaranteed to be greater than any criminal court would impose. Let’s recap: with the non-criminal RIAA LITIGATION PROGRAM one has no due process protections and also has to prove the lack of scienter that would otherwise need to be proved against him. Swell!

Lastly, it is impossible to ignore the fact that the purpose of the RIAA LAWSUIT PROGRAM has been entirely punitive (again, applying this statute to the facts and circumstance of your case). The RIAA has consistently publicly asserted that it has used (rather abused) the courts in these 39,000+ cases for purposes of both “education” and “deterrence”. No possible stretch of the imagination allows a conclusion that a “program” that involves filing 39,000+ cases in federal court that otherwise barely would satisfy the jurisdiction requirement of a state small claims action (almost all are settled for $2,000 to $4,000) are prosecuted for compensatory purposes. The very purpose of the PROGRAM has been to pursue an affirmative restraint on the conduct of millions of internet users.

Second Lastly, the RIAA evaluation of a reasonable penalty based on its average settlement of around $3,000 equate to an actual penalty for an average accused “offering for distribution” infringer of approximately $3.33 per song ($3,000 for 900 songs alleged to have been captured). This “offered for distribution” ratio of penalty to claimed wholesale loss here is 5.5:1 and probably meets Gore standards. In the actual cases against individuals filed in the federal courts, the RIAA typically only specifically alleges they can prove that 10 or so songs were real songs that were actually uploaded by their cyber private detective agency. The ratio of $3,000 for 10 songs is 300:1 and neither meets Gore nor the Williams limits.

Third Lastly, the DOJ absurdly argues that statutory damages are more acceptable from a due process standpoint than punitive damages because they are legislatively limited, predictable and not subject to the uncontrollable whim of a jury to determine. The limits here are that these statutory damages can be thousands of times larger than punitive damages would ever be constitutionally allowed and a jury is free to whimsically impose penalties in any amount as long as they are between $750 and $150,000 per song.

Fourthly Lastly, in the Thomas case in Duluth, the only case among 39,000+ actually tried (and later reversed by the judge ordering a mistrial), the jury whimsically imposed statutory damages of $220,000 against Thomas for allegedly offering 24 songs for distribution on the internet. The jury returned a verdict for statutory damages with a ratio 9166:1 to compensatory damages. Afterwards, one juror was quoted as saying: “I don’t know what the fuck she was thinking , to tell you the truth.” This juror, a former snowmobiler who had never been on the internet, also explained that the verdict resulted from the fact that “[h]er defense sucked”.

Nearly Finally Lastly, the protection of statutorily predictable and limited damages scheme of the copyright scheme must have been a comfort to Ms. Thomas. Otherwise, the unbridled, unpredictable whim of a jury who would only have been constrained by Gore and its punitive damages limiting progeny and the verdict against her likely would have been more like $67.

Finally Lastly, even with its wonderful limitations and predictability, the civil damage scheme of the copyright act does nothing to prevent a collateral or subsequent criminal prosecution and additional penalties. In the real world, there rarely is proof of the infringing conduct necessary to prove a crime. This is equally true in the civil scheme unless you adopt the fiction of liability for “offering for distribution”.

Given all the advantages the DOJ suggests are provided by the copyright act and its civil damages scheme, a reasonable person might prefer indictment.

No more lastly, I invoke the 5th Amendment. Good luck.

lrl