Court Won't Let Government Screw Forfeiture Victim Out Of Legal Fees

from the no,-WE'LL-decide-how-this-case-is-dimissed dept

The government has made one last attempt to screw over a victim of an IRS bank account seizure. The screwing began in December of 2014, when the IRS -- despite stating it would not perform forfeitures if there was no clear evidence of wrongdoing -- lifted $107,000 from convenience store owner Lyndon McLellan. This was yet another one of the IRS's "structuring" cases, predicated solely on the fact that multiple deposits under $10,000 were made. ($10,000 triggers automatic reporting to the federal government.)

After the IRS announced it would not be pursuing questionable structuring seizures -- thanks mainly to several rounds of negative press -- it still continued to pursue McLellan's case, despite IRS Commissioner John Koskinen telling a Congressional subcommittee that this was exactly the sort of case the IRS would no longer be pursuing.

The prosecutor in charge of McLellan's case was less than enthused about the public discussion of the McLellan "investigation." He claimed the public discussion only made IRS investigators angrier and more likely to act vindictively (I'm paraphrasing) and claimed the "final offer" would only be 50% of the seized funds.

The "final offer" turned out not to be all that "final." The IRS eventually dropped the case and returned all $107,000 to McLellan. However, it did not feel McLellan was entitled to compensation for legal fees because he did not "substantially prevail" in his case against the IRS seizure.

The government's argument against the awarding of fees was basically nothing more than it illustrating how easy it is for it to rig the game. All it takes is a more sympathetic -- or less attentive -- judge.

The government tried to dismiss the case without prejudice, knowing that caselaw would side with it on the denial of fees.

Under CAFRA (Civil Asset Forfeiture Reform Act), a claimant can recover his reasonable attorney fees and litigation costs only if he has "substantially prevailed" in a civil forfeiture proceeding. 28 U.S.C. § 2465(b)(1 ). A number of courts have held that a claimant has not substantially prevailed where the forfeiture proceeding was voluntarily dismissed without prejudice.

[...]

Indeed, this court can find no examples of any court reaching the opposite conclusion. Those courts that have considered the issue primarily rely on the Supreme Court's rationale regarding fee-shifting provisions found in Buckhannon Bd & Care Home,. Inc. v. W Va. Dept of Health & Human Res., 532 U.S. 598 (2001). In Buckhannon, the Court held that prevailing party status requires an "alteration in the legal relationship of the parties." Id at 605. Thus, an enforceable judgment on the merits and a court-ordered consent decree carry the necessary "judicial imprimatur" to convey prevailing party status, while a voluntary change in a party's conduct -- despite being inspired by a lawsuit -- does not.

The government argued in its brief that the case should only be dismissed without prejudice, raising several of its own claims as apparent legal strawmen, but refusing to address the solitary argument raised by McLellan -- that dismissal without prejudice would preclude him from seeking legal fees.

The court, fortunately, repays the government's refusal to address McClellan's sole argument by refusing to entertain its unrelated defense of its "dismissed without prejudice" strategy.

Certainly, the damage inflicted upon an innocent person or business is immense when, although it has done nothing wrong, its money and property are seized. Congress, acknowledging the harsh realities of civil forfeiture practice, sought to lessen the blow to innocent citizens who have had their property stripped from them by the Government. Through CAFRA, Congress provided for relief in such cases. This court will not discard lightly the right of a citizen to seek the relief Congress has afforded...

[...]

Therefore, a voluntary dismissal without prejudice would likely preclude prevailing party status under CAFRA, depriving Claimants of their right to bring a claim under that statute. Further, the court considers this likelihood of deprivation great enough to constitute a substantial legal prejudice. Accordingly, this action is DISMISSED with prejudice.

Last-minute screwing averted. McLellan has a chance to recover $22,000 in legal fees along with any interest accrued on the $107,000 while in the government's possession. The Institute of Justice, which took on McLellan's case, is hoping this decision will aid them in its battle to recover fees from another questionable IRS seizure.

The Institute Justice is seeking CAFRA compensation in a similar structuring case involving Carole Hinders, an Iowa restaurant owner who got her money back after I.J. took up her cause. The U.S. Court of Appeals for the 8th Circuit will hear oral argument in that case next Tuesday. "The government cannot turn a citizen's life upside down and then walk away as if nothing happened," says Wesley Hottot, an I.J. attorney who is representing Hinders. "Now that Lyndon has been vindicated, we look forward to holding the government to account in Carole's case as well."

Hinders' interest recovery should certainly be larger, if not the legal fees themselves. All told, the IRS seized $315,000 from the owner of a small, cash-only restaurant -- again, based on nothing more than sub-$10,000 deposits that traced back to a wholly legal enterprise.

Filed Under: doj, forfeiture, irs, legal fees, lyndon mclellan

Charles Carreon Has To Pay $46K In Legal Fees

from the boom dept

Charles Carreon may not be having a very good day. As you may recall, Carreon "represented" an internet site, Funnyjunk, that threatened Matthew Inman over an Oatmeal cartoon that made fun of that client. When Inman hit back with a (very successful) IndieGoGo campaign to raise money for charity, Carreon, ridiculously, sued Inman, IndieGoGo and the charities. After realizing the case had almost no chance of succeeding, Carreon dropped the lawsuit. However he (along with his wife) have since had an ongoing campaign attacking anyone (including us) who has mocked or criticized the Carreons over the whole Inman/Oatmeal fiasco. In one case, Carreon threatened a satirical, mocking blogger, even promising to wait until the public interest was gone to sue at a later date.

In response, the blogger filed for declaratory judgment that his actions were legit. Carreon responded by literally hiding from being served while also trying to intimidate the blogger, even contacting and threatening to sue his employer. After finally getting served, Carreon basically caved on every point, effectively settling the case. Except, Charles Carreon, brilliant legal mind, apparently didn't realize that he was still subject to having to pay legal fees. Over the past few months Carreon has done everything possible to avoid having to pay those legal fees, lashing out at the lawyers involved, demanding they submit to discovery and depositions, and even claiming that Paul Levy and Cathy Gellis, the lawyers representing the blogger, were involved in some sort of conspiracy against him, while simultaneously arguing (no joke) that he has a First Amendment right to make vexatious legal threats.

Despite all that impressive tap-dancing, it appears the court was not moved. Carreon has been told to pay $46,100.25. The court is not at all impressed by Carreon's legal "theories." Here's a sample snippet, trashing Carreon's reasoning:

Defendant first opposes plaintiff’s motion, arguing the traditional American Rule applies, in which litigants “pay their own attorneys’ fees, regardless of the outcome of the proceedings.” ... He contends this case not be found to be an exception to that traditional rule, as the action was filed under the Declaratory Judgment Act, 28 U.S.C. § 2201, which does not have a fee-shifting provision. While declaratory relief was the remedy sought, the claim for relief arose under the Lanham Act. Indeed, this Court would not have jurisdiction over this matter without the presence of a federal question, in the form of the Lanham Act. Defendant offers no support for the proposition that the statute supporting the underlying claim should be ignored in favor of the statute providing for the legal remedy. He has pointed to no authority to suggest that when only declaratory relief is sought, as opposed to damages or injunctive relief, the Declaratory Judgment Act supersedes the act providing for the underlying claim for relief. Without such authority, it defies logic to ignore the fee-shifting provision provided by the Lanham Act in favor of the Declaratory Judgment Act.

As for his first amendment claim, and the suggestion that this lawsuit was a SLAPP suit designed to silence him... the court is again, not impressed, noting that this is a standard declaratory judgment case filed over Carreon's own threatening email, and pointing out that under Carreon's reading, any declaratory judgment against a threat could be seen as an anti-SLAPP case, which makes no sense. Finally, Carreon tried to argue that no fees should be awarded because the case is not "exceptional", while also arguing that the blogger had intent to profit because "it contained two links to websites that are operated for-profit." The court, again, doesn't see how this makes the case Carreon thinks it makes, noting that two links to commercial websites does not make the original site a for-profit entity. As for the claim that this case is not "exceptional," well, there's where the judicial smackdown comes in. No, the court says, the case wasn't exceptional, until Carreon went nutty:

While defendant’s threatened claims were not “exceptional” at the outset of this case, defendant’s actions throughout the litigation certainly transformed this case into an “exceptional” matter, deserving of an award of attorney fees. The Ninth Circuit has stated that “bad faith or other malicious conduct satisfies the exceptional circumstances requirement.” Boney, 127 F.3d at 827. Evidence supports a finding of malicious conduct during the course of this case. Defendant first went to great lengths, imposing unnecessary costs on plaintiff, to avoid service. Then, in response to this motion for attorney fees under the Lanham Act, defendant engaged in unnecessary, vexatious, and costly tactics in preparation of his opposition to the motion. The Ninth Circuit discourages major litigation with respect to attorney fees. See, e.g., Camacho, 523 F.3d at 981; Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“A request for attorney’s fees should not result in a second major litigation.”). Defendant’s serving of interrogatories and taking of plaintiff’s deposition amounted to a mini-trial on plaintiff’s motion for fees. Indeed, plaintiff incurred an additional $37,650.25 in fees and costs after his motion was filed. Despite this additional discovery, defendant has presented no evidence to support his initial contention that plaintiff’s attorney is on a mission to “turn Internet gripe sites into profit centers for him and Public Citizen Law Group.” Doc. #45, at 4. Defendant has failed to show that his additional discovery efforts led to anything other than additional frustration for plaintiff and his attorneys. Accordingly, plaintiff’s efforts to respond to defendant’s litigation tactics merit the imposition of a fees award.

The court then laughs off Carreon's suggestion that legal fees should be merely $200, by noting that Carreon provides no explanation for why, and that this ignores all the time and effort Levy and Gellis had to put in. As for the breakdown of the fees, it's $8,450 for the initial case... and the other $37,650.25 all stems from Carreon's crazy fight against attorney fees. All of this from a case that came about because of his own ridiculous legal threats.

So... the question remains: will Charles Carreon stop digging?

Update: Paul Levy has posted his own analysis, noting that while it's good, it is not a complete victory for consumers:

The opinion is not a perfect one, from a consumer perspective. The Ninth Circuit does not limit fee awards to those who successfully defend against frivolous trademark claims; under Ninth Circuit law, it is enough that the suit be “groundless or unreasonable.” On the other hand, the fact that Judge Seeborg drew a different distinction in the context of trademark claims that were only threatened, and never actually made the basis for a complaint, allows future successful defendants to argue that the “groundless or unreasonable” standard still applies in that sort of case.

He also points out that the old adage of lawyers representing themselves holds true:

First, it reminds us of the adage that a lawyer who represents himself has a fool for a client. Carreon did himself a disservice by representing himself after we sought a declaratory judgment. A good lawyer would have counseled him not to duck service, and he could have given Carreon good advice about his offer of judgment — we would have been happy to discuss a compromise on fees at that point of the litigation, and indeed it does not appear to me that Carreon understood, when he sent the offer of judgment, that it was going to subject him to an award of fees by making Recouvreur a prevailing party. And a lawyer would likely have advised him not to embark on the course of frivolous and abusive discovery. I urged Carreon on more than one occasion to get himself a lawyer, if not to negotiate with me then at least to give him an objective opinion about what he was facing. This was particularly important because Carreon is a sole practitioner who does not have colleagues off whom he can bounce ideas, and because he rejected private advice from at least one lawyer who has told me of his efforts to help Carreon to steer himself into safer waters. And a document that Carreon showed Recouvreur during his deposition makes clear that he actually was talking to another lawyer when he made his first threat to Register.com.

Carreon made clear at various points in the fee proceedings, that he had made his threats out of anger at the public obloquy he was facing, making independent judgment from a lawyer he could respect particularly important. He seemed to be asking me to put myself in his shoes and take pity. On a human level, I can understand how this could happen, and there is no way that Carreon would be facing this judgment if he had obtained independent counsel. But it is not an excuse for what he put Recouvreur through.

Separately, he points out that in the whole fight over whether or not Carreon could engage in discovery, demanding information from Levy, the judge warned Carreon not to go overboard, and then used Carreon's excessive discovery against him in the ruling. As Levy notes, "be careful what you ask for, because you might get it."

Filed Under: carreon effect, cathy gellis, charles carreon, legal fees, paul levy, vexatious litigation

Veoh Wins Important Case Against Universal Music Over DMCA Safe Harbors Again; But Is Still Dead Due To Legal Fees

from the a-sad-tale-of-copyright-destroying-innovation dept

We've written a few times about the sad case of Veoh. Veoh was a YouTube-like site, funded by Hollywood insiders like Michael Eisner, but who got sued by Universal Music Group, claiming copyright infringement (using more or less the same theories used by Viacom against YouTube). Technically, Veoh sued first (filing for declaratory judgment after receiving a threat letter from UMG, but UMG quickly followed with its own lawsuit). UMG played dirty, not just suing the company but directly suing its investors as well. This was a pure intimidation technique, designed to scare major investors into either pulling investment or ordering the company to change course, even if what they were doing was legal. While the court dismissed the charges against the investors (and scolded UMG in the process), the intimidation might have worked. In the middle of all of this, Veoh shut down, because it ran out of money, mainly due to the lawsuit. It sold off its assets to another party, and somehow scraped together a little money to keep the lawsuit, and just the lawsuit, going.

Since then, there have been a series of rulings that have repeatedly found Veoh to be legal and protected under the DMCA's safe harbor. The district court found in Veoh's favor, as did the 9th Circuit appeals court. Yesterday, the appeals court ruled again on the issue, with a superseding opinion that, once again, says that Veoh was legal. Even though it's still dead. The ruling not only reiterates the importance of DMCA's safe harbor protections for user-generated sites like Veoh, but also shows how that still applies even given the 2nd Circuit's slightly weaker view of the DMCA safe harbors.

The court goes through a nicely detailed explanation for why Universal Music's interpretation of the DMCA doesn't make any sense at all and would not only create internal conflict within the law, but also make the safe harbors effectively meaningless. Specifically, Universal Music tries, ridiculously, to argue that DMCA safe harbors aren't supposed to apply to any service that makes files accessible to the public. As the court points out, if that were the case, the law would be silly, since copyright holders would never learn about that infringement anyway, since the works wouldn't be available for them to find. The court points out it's ridiculous to think that DMCA safe harbors were only meant to apply to backup services.

We do not find persuasive UMG’s effort to reconcile the internal contradictions its reading of the statute creates by positing that Congress must have meant § 512(c) to protect only “web hosting” services. Web hosts “host” websites on their servers, thereby “mak[ing] storage resources available to website operators.” The thrust of UMG’s argument seems to be that web hosts do not undertake the sorts of accessibility-facilitating functions that Veoh does, and thus the services they perform “fit within the ordinary meaning of ‘storage,’” and thereby “harmoniz[e]” with the notice and takedown procedures. UMG’s theory fails to account for the reality that web hosts, like Veoh, also store user-submitted materials in order to make those materials accessible to other Internet users. The reason one has a website is so that others may view it. As amici note, these access activities define web hosting – if the web host only stored information for a single user, it would be more aptly described as an online back-up service.

The court also rejects a theory -- popular among some of our maximalist commenters -- that the DMCA was only intended for purely "web hosting" companies, rather than being broadly applied across various online services such as user-generated service providers. As the court noted, if Congress wanted to limit the safe harbors in that manner, it would have said so: "Had Congress intended to include such a limitation, it would have said so expressly and unambiguously."

The next damaging part for Universal Music: Veoh was really good at taking down videos when it received DMCA notices. UMG tried to argue that Veoh had knowledge of infringing works on its site that it didn't remove. This argument is the crux of the YouTube/Viacom case as well: is "actual knowledge" from DMCA notices, or what kind of knowledge creates "red flag" awareness. The DMCA can be read in self-contradictory ways at points. For example, it says that a provider only has to takedown content if it receives a DMCA notice that follows somewhat strict procedures. But, then, also talks about if there's "red flag" awareness. Take both literally, and you could, for example, wonder what happens if someone sends an improperly structured DMCA notice (say, missing certain elements), but indicates infringing works, nonetheless. Is that "red flag" knowledge? Here, as in the YouTube case, though, UMG relies on a much broader definition of red flag knowledge, in which it kind does a "but they must have known!" sort of thing. It's basic argument: there was music on Veoh, and Veoh had to know that was infringing. The court is not buying it. First of all, just because there's music, it doesn't mean it's infringing.

As an initial matter, contrary to UMG’s contentions, there are many music videos that could in fact legally appear on Veoh. “Among the types of videos subject to copyright protection but lawfully available on Veoh’s system were videos with music created by users and videos that Veoh provided pursuant to arrangements it reached with major copyright holders, such as SonyBMG.” Further, Congress’ express intention that the DMCA “facilitate making available quickly and conveniently via the Internet . . . movies, music, software, and literary works” – precisely the service Veoh provides – makes us skeptical that UMG’s narrow interpretation of § 512(c) is plausible. S. Rep. No. 105-190, at 8. Finally, if merely hosting material that falls within a category of content capable of copyright protection, with the general knowledge that one’s services could be used to share unauthorized copies of copyrighted material, was sufficient to impute knowledge to service providers, the § 512(c) safe harbor would be rendered a dead letter: § 512(c) applies only to claims of copyright infringement, yet the fact that a service provider’s website could contain copyrightable material would remove the service provider from § 512(c) eligibility.

Later on, the court makes a key point that we've reiterated over and over again -- every time copyright holders and maximalists insist that service providers need to become copyright cops -- that the service can't become copyright cops because they have no idea if stuff is actually authorized or not:

Copyright holders know precisely what materials they own, and are thus better able to efficiently identify infringing copies than service providers like Veoh, who cannot readily ascertain what material is copyrighted and what is not.

That message is something that the various lawyers representing MPAA and RIAA affiliated companies should be forced to write on a blackboard over and over again until the point is driven home.

Of course, in the YouTube case, with the original district court ruling, there were similarly strong statements, but the 2nd circuit walked it back somewhat, suggesting that a different standard need apply to "red flag" knowledge. Here the court points out that, even if that's true, Universal Music would need to show a lot more to prove any red flag knowledge.

Of course, a service provider cannot willfully bury its head in the sand to avoid obtaining such specific knowledge. See Viacom Int’l v. YouTube.... Even viewing the evidence in the light most favorable to UMG as we must here, however, we agree with the district court there is no evidence that Veoh acted in such a manner. Rather, the evidence demonstrates that Veoh promptly removed infringing material when it became aware of specific instances of infringement. Although the parties agree, in retrospect, that at times there was infringing material available on Veoh’s services, the DMCA recognizes that service providers who do not locate and remove infringing materials they do not specifically know of should not suffer the loss of safe harbor protection.

The ruling goes on in this nature. It's definitely a good ruling that lays out, yet again, why the DMCA safe harbors protect internet companies, and blasts holes in the silly theories of some of the big legacy players that have tried to wipe out those safe harbors. It does send one small issue back to the lower court -- an exploration of whether or not Veoh is due certain fees (excluding attorneys fees). This is more of a procedural issue than anything else.

So, once again, Veoh has proven that internet services like it are protected by the DMCA from being blamed for users infringing. And yet, the fact that it had to effectively shut down and just sell off its assets, is a reminder of just how much the big copyright players can stifle and kill off innovative services via copyright law, even when they have no case.

Filed Under: actual knowledge, copyright, dmca, legal fees, red flag, safe harbors, secondary liability, service provider, user generated content
Companies: umg, universal music group, veoh, viacom, youtube

Charles Carreon Keeps Digging; Now Targeting Lawyer Who Is Seeking Legal Fees [Updated]

from the digging-digging-digging dept

If you haven't had your Charles Carreon fill in a while, here you go. Last we'd heard, despite promising to go after a parody blogger who was mocking Carreon (and threatening the blogger's employer), when that blogger filed for declaratory judgment, Carreon first avoided being served, and upon finally being served almost immediately capitulated and promised not to sue. However, what Carreon did not apparently realize was that he left himself open to having to pay the legal fees from the other side, which has led to an ongoing fight in which the lawyers, Paul Levy and Cathy Gellis, are seeking upwards of $40,000 -- a number that seems to keep going up the more and more Carreon tries to fight their every move.

The latest is that Carreon has asked the court for a 120-day extension in responding to Levy's motion for fees. Asking for an extension is not uncommon, and it's often granted -- but the reasoning here is a bit out of the ordinary (which, perhaps, should not be unexpected given who is involved). Rather than citing significant other cases or workload that might get in the way, or highlighting why the basic requirements in responding to the motion require more time, Carreon seems to be trying to smear Paul Levy and his employer, Public Citizen (full disclosure: Levy is a friend, and has, at times, represented this site against threats). Much of Carreon's argument is this bizarre conspiracy theory suggesting that Levy trolls the internet seeking cases where he can file for declaratory judgment, and then tries to cash in on legal fees. He cites two (two!) cases where Levy has, in the past, sought legal fees and lost. And then suggests he needs more time to research all of this more, including seeking discovery from Levy and finding groups to file amicus briefs ("friend of the court" briefs) on his behalf.

To put it mildly, this is crazy. Carreon seems to be trying to turn a case in which he was clearly the initial bully, and got called on it, into one where he tries to sift through documents concerning the lawyer who called his bluff. Basically, it's back to Carreon's game plan throughout this mess: when in trouble, keep digging -- and, as part of that digging, accuse everyone against you of somehow doing something nefarious. In the past, this has included accusations against bloggers and press who were covering his saga (including threats to sue some of them), and now it's extended to threats to drag Levy into a time consuming and meaningless discovery process. Levy filed a short response, noting that he has no problem giving Carreon a 30 day extension, but going on a fishing expedition via discovery makes no sense as they're just trying to settle whether or not Carreon needs to pay legal fees. Furthermore, the search for amici to support him is no excuse for asking for an extension.

Carreon then responded not by countering any of the legal points that Levy raised concerning the extension or discovery, but simply by playing a weird game of "gotcha" in which he wants to call the court's attention to the fact that, in his reply, Levy decided not to even bother responding to Carreon's silly assertions about Levy deliberately trolling the internet for cases where he could seek legal fees (based on the two cases Carreon found where Levy sought legal fees).

Plaintiff’s counsel’s silence regarding the judicial rebuffs his arguments suffered in the Eleventh and Fourth Circuits speaks volumes.

Mr. Levy is simply engaging in a form of forum shopping, eagerly seeking and recruiting clients who create gripe sites to file preemptive declaratory relief actions in various venues, hoping to coerce settlements from vulnerable defendants, or perhaps to lead some court into error by failing to disclose his prior defeats on the very same issue in other jurisdictions

Of course, this ignores a much more plausible scenario (one that happens to be true). As is Public Citizen's charter, Levy and others in the Public Citizen litigation group have a core focus, which is that the group "specializes in cases involving regulation, consumer rights, access to the courts, open government, and the First Amendment, including Internet free speech." Basically, they look for cases that help promote the public good on those particular issues. As such, they are certainly one of the leading groups that people reach out to when they are threatened unfairly. And, based on that, it's not surprising that, at times, this leads to cases in which it is appropriate to seek legal fees. Sometimes they will get those legal fees, and sometimes they will not.

What that has to do with whether or not Carreon should pay up legal fees for his actions is anybody's guess.

Oh, and I think that we (and a few other sites still talking about Carreon) get a bit of a backhanded mention in this one:

Defendant is not a public figure, no issue of public importance has been addressed, and the matter has not been found newsworthy except in online publications desperate for pseudo-legal content.

Are we an "online publication desperate for pseudo-legal content"? We have more than enough content, honestly, and I could do without any more Carreon filings, but he just keeps digging, so the topic just keeps flowing.

Oh, and despite Carreon's claims that Levy is all too eager to jump into these kinds of cases, filing declaratory judgments and then seeking legal fees, I will note that my own personal experience with Levy was that he has, multiple times, steered me away from going that route. If his ultimate goal was to file as many such cases as possible, I doubt that would be the case.

Update: And... between me writing this story and publishing it, the judge has quickly rejected most of Carreon's arguments, giving him 60 days as an extension but saying no to the discovery request, saying simply:

Defendant’s request for extensive discovery would amount to a mini-trial on plaintiff’s motion for attorneys’ fees. Such extensive discovery is unnecessary and a waste of resources.

"Unnecessary and a waste of resources" seems like a phrase that can be applied to an awful lot of Charles Carreon's recent activities.

Filed Under: carreon effect, charles carreon, legal fees, paul levy

New Zealand Court Releases $4.83 Million To Kim Dotcom

from the another-loss-for-the-doj dept

The US government keeps having setback after setback after setback in its legal fight against Kim Dotcom and Megaupload. If the US had its way, all of Dotcom's assets would have been frozen, he would be stuck in jail with no opportunity to be bailed out, and New Zealand would have already rubber stamped extradition papers. But none of that has happened.

The latest is that, against the wishes of the US and the New Zealand governments, the court has granted Dotcom the use of $4.83 million out of the assets that were frozen in order to pay some of his legal expenses (though, not for his US lawyer, Ira Rothken). The order also says that the released funds cannot be used for Dotcom's co-defendants. The ruling, embedded below, is pretty thorough and suggests (yet again) that the US-driven prosecution of Dotcom is mostly focused on trying to railroad him, rather than allow him to mount an adequate defense. He may very well be guilty, but it's pretty shameful that the steps taken by the US and New Zealand governments seem designed to not even give him a chance to properly defend himself. At least the New Zealand court has recognized that's not right, and will allow him access to some funds, with specific limits, so that he can put together his defense.

Mr Dotcom's rights under the NZBORA and the International Covenant on Civil and Political Rights further tip the balance in his favour. The State's contingent interest in the restrained property is of punitive nature and limited to depriving Mr Dotcom of the fruits of his alleged offending. In contrast, Mr Dotcom's access to counsel is supported by his rights to natural justice, to be presumed innocent until proven guilty, and to consult and instruct a lawyer and to have adequate time and facilities to prepare a defence. It is generally assumed that the right to access defence counsel includes the right to counsel of the defendant's choice....

Filed Under: kim dotcom, legal fees, new zealand
Companies: megaupload

Court Rejects Righthaven's Attempt To Stall About Paying Legal Fees

from the on-the-hook dept

We recently wrote about Righthaven trying to get the appeals court to drop the requirement that it put up a $34k bond to cover legal fees owed in the Hoehn case, as it argued it needed the money for its other cases. The appeals court didn't buy the argument. As you can see below, it denied the "emergency motion" with no real commentary, other than to point to a few previous cases. So, Righthaven now just has a short period of time to find $34k to put up for bond, or it may expose itself to contempt charges or other sanctions.

Filed Under: hoehn, legal fees, randazza, shawn mangano
Companies: righthaven

Righthaven Still Trying To Avoid Paying Any Legal Fees Of Those It Illegally Sued

from the of-course dept

Last we heard about Righthaven, district court judge Philip Pro had given it a tiny bit of breathing room, giving the company 30 days extra to come up with the bond to prove that it could pay the attorneys fees ordered (a little over $34,000) in the Hoehn case. While Hoehn's lawyers (Randazza Group) had sought immediate payment earlier, Judge Pro said that Righthaven could wait out the appeal... if it could post bond. Folks in our comments pointed out that it was unlikely that Righthaven would post the necessary bond... and, indeed, it has filed an "emergency" request with the court, trying to avoid posting the bond. In the filing, Righthaven lawyer Shawn Mangano explains that no one seems willing to post a bond unless Righthaven forks over the entire amount due. In other words, no one believes that Righthaven has any shot of winning this case or of remaining solvent for very long.

Righthaven has attempted to secure a bond as required by the district court to stay the Judgment pending appeal. To date, Righthaven has been unable to secure a bond. The terms required by the bonding companies that Righthaven’s counsel has investigated and/or contacted are an impediment to meeting the district court’s stay requirement. The bonding companies are requiring what amounts to a full cash bond. In sum, the bonding companies ask for full cash payment, certain forms of collateral held by the company or irrevocable letters of credit be posted to obtain a bond in the amount requested. To date, Righthaven has been unable to satisfactorily meet these requirements in a manner acceptable to a bonding company. Due to the pending appeals and the stay of certain active litigation matters, Righthaven’s operating capital is being utilized to service its monthly operating expenses. As such, it is presently unable to allocate more than $34,000 toward the bond required by the district court to stay the Judgment pending appeal.

The Randazza Legal Group wasted little time in responding and pointing out the interesting choice of language by Righthaven. It's not that Righthaven says it can't pay, but it seems to suggest it would prefer to use that money towards appeals. Randazza compares Righthaven to the title character in Herman Melville's Bartleby the Scrivener:

In Herman Melville’s classic, Bartleby the Scrivener, an attorney finds frustration with his scrivener, Bartleby. Any time Bartleby is directed to perform a task, he replies with the classic refrain: “I would prefer not to.” Initially infuriated, but beguiled by Bartleby’s charmingly passive insolence, the narrator tolerates Bartleby’s masterfully eccentric defiance, but eventually fires him. Once fired, Bartleby’s behavior becomes stranger, and he refuses to leave the premises of his employer, who finds Bartleby’s stubbornness to be an immoveable object. Bartleby’s defiance, as effective as it is, eventually leads to his undoing. Bartleby’s preference leads to his imprisonment and starvation, as he finally encounters both men and forces of nature who are unmoved by his antics.

They go on to point out that Righthaven brought this upon itself -- proactively suing hundreds. The filing notes that Righthaven has been losing consistently and has not won anything since the details of its arrangement with the two newspaper partners it had became public.

The time has come for Righthaven’s shenanigans to end. Righthaven picked this fight. Righthaven, created and operated by an attorney, should have known better. Righthaven could have changed course at any time. Righthaven preferred not to. The consequence for Righthaven’s actions is now at its door, and whether it would prefer to or not, the law requires it to comply. Preferring not to comply with a lawfully issued court order is no emergency, and Righthaven should be compelled to answer for its transgressions. Even Bartleby, charming as he was, eventually suffered the inevitable consequences of his irrational intransigence. Righthaven must as well.

The filing calls into question Righthaven's claim that it cannot put forth $34,000, noting that it's either lying, or isn't going to be able to pay for the appeals it has filed. The suggestion is that Righthaven is trying to use up its remaining funds to avoid paying anyone else:

Righthaven has provided no statement of its operating expenses, and it appears that Righthaven’s sole expenses are paying its CEO, who hatched and profited from this illegal scheme, and paying its attorneys in order to file frivolous motions and avoid paying lawful judgments. It is clear that Righthaven’s plan is to consume its remaining capital by transferring money to those who least deserve it, exhausting its funds until it is in a state of bankruptcy. The courts, thus far, have been unwittingly complicit in this scheme by their failure to take a definitive and stand against the ongoing fraudulent transfers. It must stop here.

Righthaven’s mass litigation model now descends upon the Court of Appeals, and it has brought no fewer than five appeals before this Court – all of which are currently pending. Beyond this case, Righthaven is also the appellant in Realty One Group, Incorporated, Case No. 11-15714 (9th Cir., filed Mar. 24, 2011); Jama, Case No. 11-16358 (9th Cir., filed June 2, 2011); DiBiase, Case No. 11-16776 (9th Cir., filed July 22, 2011); and DU, Case No. 11-17210 (9th Cir., filed Sept. 19, 2011). Righthaven also appealed a loss to the Tenth Circuit. Wolf, Case No. 11-1469 (10th Cir., filed Oct. 11, 2011). Six appeals pending, yet Righthaven claims that being required to post a mere $34,045.50 bond is an “emergency.” Righthaven mocks the definition of the word and mocks this court by bringing this frivolous motion.

Furthermore, the filing notes that Righthaven (in typical fashion) has failed to file the opening brief of its first appeal, even thought it was due nearly a month ago:

The propriety of Righthaven’s appeals is in serious doubt. Righthaven’s opening brief in its first appeal, Realty One Group, Inc., Case No. 11-15714, was due to this Court on September 19, 2011 and has yet to be filed. This appeal appears to be another stall tactic for Righthaven to deny the defendant in that case, and the First Amendment principles its fair use victory embraces, any finality. This leaves two possibilities explaining Righthaven’s financial condition: Either it has $34,000 that it can use to post a bond and it prefers not to, or it is absolutely broke and pursuing its appeals in bad faith, in order to deny prevailing defendants finality – and extract a settlement from them still.

This is like watching a train wreck in excruciatingly slow motion.

Filed Under: hoehn, legal fees, randazza, shawn mangano
Companies: righthaven

Righthaven Desperately Trying To Avoid Paying Legal Fees

from the keep-digging dept

The Righthaven saga continues. Just as it's lost in Colorado, and was told it needs to pay legal fees there as well, the company is still trying to get out of having to pay legal fees in the Hoehn case in Nevada. As you may recall, Righthaven was ordered to pay legal fees of $34,045.50 by September 14th. It did not do so. Following that, Hoehn's lawyer, Marc Randazza (whose name you're seeing a lot in these Righthaven cases), asked the court to declare Righthaven in contempt, and sought both to put the company into receivership and to allow US Marshals to seize property from Righthaven for its failure to pay. In typical plodding fashion, Righthaven has still not paid up... but has filed a motion (embedded below) asking the appeals court to put off the district court's judgment, because it believes the ruling will be overturned (ha!) and having to pay up would cause irreparable harm. The motion is worth reading. As with previous Righthaven motions we've seen, the company seems to think that mocking the district court judge is a reasonable strategy. You can feel the contempt for the judge in the filing, which I can't imagine will go over well.

That said, I wouldn't be surprised if the Appeals Court grants the stay. It's not uncommon for appeals courts to do so, and it's unclear if the Appeals Court is aware of Righthaven's continued antics in these cases. Still, in the end, I can't see Righthaven winning, so this just seems like delaying the inevitable.

Filed Under: legal fees
Companies: righthaven

Righthaven Loses Again; Told To Pay $34,045.50 In Legal Fees

from the not-a-great-business-model dept

Rightaven's summer of trouble continues. Having already lost its case against Wayne Hoehn for the same reasons it's been losing a bunch of cases lately (its sham copyright transfer), the court (as in a few similar cases) was asked to make Righthaven pay Hoehn's legal fees and, in a short and sweet ruling, Judge Philip Pro has agreed and told Righthaven to hand over $34,045.50, stating that awarding such fees seems reasonable in this case. Can't wait to see how Righthaven's Steve Gibson spins this to say that it's really just a court giving guidance to Righthaven's competitors who just aren't as sophisticated as Righthaven.

Filed Under: copyright, copyright troll, legal fees
Companies: righthaven

Righthaven Told To Pay Up Legal Fees Owed By July 25th

from the that-was-quick dept

Just this morning we wrote about how the Randazza Legal Group was pushing to get its awarded legal fees paid up as soon as possible, and how Righthaven was trying to delay its payment. Apparently judge Gloria Navarro didn't waste much time in deciding this, filing the following short decision almost immediately telling Righthaven to pay up by July 25th:

Plaintiff's Application [56] for a temporary stay of thirty (30) days relating to the entry of the Judgment [53] entered in this case on July 5, 2011, is hereby GRANTED in part and DENIED in part. Plaintiff shall have until 5:00 p.m. on July 25, 2011 to pay Defendant's fees and costs. The hearing regarding Defendant's Motion for Preliminary Injunction [54] scheduled for July 26, 2011 at 1:00 p.m. shall be vacated upon the parties' written request, as long as a Receipt of Funds signed by Defendant or his counsel is attached to the written request to vacate said hearing. Signed by Judge Gloria M. Navarro on 07-12-2011

In other words, pay up by the 25th and stop mucking around.

Filed Under: legal fees
Companies: randazza legal group, righthave