Summary
holding that swarm joinder technically satisfies Rule 20 but severing anyway because of the risk of inappropriate settlement leverage
Summary of this case from Cell Film Holdings LLC v. McCrayOpinion
No. C 12-3858 EMC (MEJ)
12-06-2012
THIRD DEGREE FILMS, INC., Plaintiff, v. DOES 1-178, inclusive Defendants.
ORDER RE: MOTION TO QUASH
REPORT & RECOMMENDATION RE: MOTION TO SEVER
Re: Dkt. Nos. 20, 39
Plaintiff Third Degree Films, Inc. ("Plaintiff") brings this case against 178 Doe Defendants accused of using BitTorrent technology to illegally download copyrighted files from the Internet. Currently before the Court is Doe Defendant 106's ("Defendant") Motion to Quash Subpoena and Motion to Sever. The Court finds this matter suitable for disposition without oral argument and hereby VACATES the January 3, 2013 hearing. Civil Local Rule 7-1(b). For the reasons explained below, the Court DENIES Defendant's Motion to Quash. The undersigned RECOMMENDS that the Court GRANT Defendant's Motion to Sever.
BACKGROUND
Plaintiff is a motion picture production company with its principal place of business in Chatsworth, California. Compl. ¶¶ 5, 10, Dkt. No. 1. It is the owner of copyrights in the motion picture titled Illegal Ass 2, which was produced by Plaintiff and released on December 5, 2006 as a DVD available through various vendors. Id. ¶¶ 10, 11. Illegal Ass 2 was registered with the Copyright Office on March 2, 2007, in Plaintiff's name. Id. ¶ 11, Ex. B.
Plaintiff alleges that Defendant used BitTorrent, an internet peer-to-peer ("P2P") file sharing network, to illegally reproduce and distribute Plaintiff's copyrighted work in violation of the Copyright Act, 17 U.S.C. § 101 et seq. Id. at ¶¶ 9-20. Plaintiff further alleges that by using the BitTorrent program to download and distribute Plaintiff's content, Defendant is liable for negligence, contributory infringement, and vicarious copyright infringement. Id. at ¶¶ 21-39. Because the alleged infringement occurred on the Internet, Plaintiff states that the Defendant acted under the guise of Defendant's Internet Protocol ("IP") address rather than Defendant's real name. Nicolini Decl. ¶ 35, Dkt. No. 4-2. As a result, Plaintiff contends that it cannot determine Defendant's true identity without procuring the information from Defendant's Internet Service Provider ("ISP"), which can link the IP addresses to a real individual or entity. Id. at ¶ 36.
On August 20, 2012, Plaintiff filed an Ex Parte Application for Early Discovery, requesting that the Court grant it expedited discovery to issue subpoenas to the relevant ISPs so that the ISPs would produce identifying information for each Doe Defendant. Dkt. No. 4. On August 29, 2012, the Court granted Plaintiff's request. Dkt. No. 8. The Court found that Plaintiff: (1) provided sufficient information demonstrating that the Doe Defendants are real persons or entities who may be sued in federal court; (2) made a good faith effort to comply with the requirements of service of process and specifically identify the Doe Defendants; (3) made a prima facie showing that the Complaint would withstand a motion to dismiss; (4) demonstrated that there is a reasonable likelihood that the requested discovery would lead to the identification of the Doe Defendants such that it may effect service of process; and (5) established that permissive joinder of the 178 Doe Defendants is proper under Federal Rule of Civil Procedure ("Rule") 20(a)(2). Id. Accordingly, the Court permitted Plaintiff to serve immediate discovery on Does 1-178's ISPs by serving a Rule 45 subpoena that seeks information sufficient to identify the Doe Defendants, including the name and address of Does 1-178. Id. at 10.
On November 8, 2012, Defendant filed the present Motion to Quash and Motion to Sever. Dkt. No. 20. Plaintiff filed an Opposition on November 26, 2012. Dkt. No. 36. On November 20, 2012, the Honorable Edward M Chen referred the Motion to the undersigned for resolution of the Motion to Quash and to prepare a report and recommendation on the Motion to Sever. Dkt. No. 34.
DISCUSSION
A. Motion to Quash
Defendant raises three arguments in support of her Motion to Quash. The Court shall consider each in turn.
1. Whether the Subpoena is Abusive, Harassing, and Subjects Defendant to Undue Burden
Defendant first argues that the subpoena should be quashed because it is abusive, harassing, and subjects both the ISP and Defendant to undue burden. Mot. at 8. Defendant contends that Plaintiff "is using the subpoena to abuse the discovery process with no intention of litigating this case on the merits." Id. Specifically, Defendant argues that Plaintiff is using the subpoena power as a "tactical weapon" to extract a $3,500 pre-suit payment from each Doe Defendant, and that this risk of extortionate settlements creates an undue burden. Id. at 9.
Rule 45 provides that the court from which the subpoena was issued "shall quash or modify the subpoena if it . . . subjects a person to undue burden." Fed. R. Civ. P. 45(c)(3)(A)(iv). The individual or entity seeking relief from subpoena compliance bears the burden of demonstrating that a subpoena should be modified or quashed. Linder v. Dep't of Def., 133 F.3d 17, 24 (D.C.C. 1998). Limiting discovery and quashing subpoenas, however, "goes against courts' general preference for a broad scope of discovery." N. Car. Right to Life, Inc. v. Leake, 231 F.R.D. 49, 51 (D.D.C. 2005) (citations omitted).
When evaluating whether the burden of subpoena compliance is "undue," the Court balances the burden on the recipient of the subpoena, the relevance of the information sought to the claims or defenses at issue in the lawsuit, the scope or breadth of the discovery request, and the party's need for the information. Id.; Linder, 133 F.3d at 24 ("Whether a burdensome subpoena is reasonable must be determined according to the facts of the case, such as the party's need for the documents and the nature and importance of the litigation.") (citation and internal quotation marks omitted). The "undue burden" test also requires the Court to be "generally sensitive to the costs imposed on third-parties." In re Micron Tech., Inc. Sec. Litig., 264 F.R.D. 7, 9 (D.D.C. 2010) (citation and internal quotation marks omitted).
Here, the Court finds that Defendant is not faced with an undue burden because the subpoena is directed at the ISP and not the Defendant. See Third Degree Films, Inc. v. Does 1-118, 2011 WL 6837774, at *3 (D. Md. Dec. 28, 2011); Malibu Media, LLC v. John Does 1-15, 2012 WL 3089383, at *8 (E.D. Pa. July 30, 2012). It is the ISP that is compelled to disclose the information, and thus, its prerogative to claim an undue burden. First Time Videos, LLC v. Does 1-500, 276 F.R.D. 241, 250 (N.D. Ill. 2011); Malibu Media, 2012 WL 3089383, at *8. In this case, there is no burden on Defendant to produce any information.
Although the Court recognizes that in these types of cases Doe defendants may have standing to quash or modify subpoenas on the grounds that the subpoena requires disclosing potentially privileged or otherwise protected matter, such standing is not applicable where, as here, defendants argue that the subpoenas must be quashed to avoid Rule 45's undue burden restriction. Third Degree Films, Inc. v. Does 1-108, 2012 WL 669055, at *2-3 (D. Md. Feb. 28, 2012) ("[The] argument that the subpoena presents an undue burden is unavailing because the subpoena is directed toward the ISPs and not the Doe Defendants and accordingly does not require [the Doe Defendants] to produce any information or otherwise respond.") (internal citation and quotations omitted); see also Call of the Wild Movie v. Smith, 274 F.R.D. 334, 338 (D.D.C. 2011) ("The plaintiff has issued subpoenas to the putative defendants' ISPs, not to the putative defendants themselves. Consequently, the putative defendants face no obligation to produce any information under the subpoenas issued to their respective ISPs and cannot claim any hardship, let alone undue hardship."). Accordingly, the Court denies Defendant's motion on this ground.
2. Whether the Discovery Sought will not Identify the Alleged Infringers
Defendant next argues that the discovery sought will not identify the alleged infringers. Mot. at 10. Defendant contends that "in this day of ubiquitous wireless home networks and network routers that support multiple users, an IP address does not correspond to any single individual and simply cannot identify the people alleged to have made an unauthorized copy of Plaintiff's film." Id. Defendant maintains that the subpoena cannot identify her as the alleged infringer because she did not download the Plaintiff's film, does not have a device with BitTorrent software on it, was not using her computer at the time of the alleged infringement, and her internet service was publicly accessible to any person within range of her unsecured wireless network. Id. at 11. The Court finds that this argument also fails.
It is a well-established principle that "no matter what reason is given for why a Doe Defendant could not have been the infringer . . . such general denials of liability cannot serve as a basis for quashing a subpoena." Third Degree Films v. Does 1-108, 2012 WL 669055, at *3 (citing First Time Videos, LLC v. Does 1-76, 276 F.R.D. 254, 256 (N.D. Ill. 2011) (listing cases articulating this principle)); see also Voltage Pictures, LLC v. Does 1-5,000, 818 F. Supp. 2d 28, 34-35 (D.D.C. 2011); Call of the Wild Movie, 274 F.R.D. at 338. While defendants are free to present evidence to corroborate their denial of liability, and then move to dismiss the claims asserted against them, the Court cannot quash a subpoena on these grounds. Achte/Neunte Boll Kino Beteiligungs Gmbh & Co. v. Does 1-4,577, 736 F. Supp. 2d 212, 215 (D.D.C. 2010) (stating "denial of liability may have merit, [but] the merits of this case are not relevant to the issue of whether the subpoena is valid and enforceable. In other words, they may have valid defenses to this suit, but such defenses are not at issue at the [discovery] stage of the proceedings"); Fonovisa, Inc. v. Does 1-9, 2008 WL 919701, at *8 (W.D. Pa. Apr. 3, 2008) (stating that if a defendant "believes that it has been improperly identified by the ISP, [the defendant] may raise, at the appropriate time, any and all defenses, and may seek discovery in support of its defense"). Thus, although Defendant argues that the subpoena cannot identify her as the alleged infringer because she did not download the Plaintiff's film, does not have a device with BitTorrent software on it, and was not using her computer at the time of the alleged infringement, the Court finds that this argument is premature.
3. Whether Plaintiff's Complaint is Likely to Survive a Motion to Dismiss
Finally, Defendant argues that the subpoena should be quashed because Plaintiff's Complaint is not likely to survive a motion to dismiss. Mot. at 11. Defendant contends that Plaintiff's Complaint "is no more than threadbare recitals of the elements of a copyright claim and is thus insufficient." Id. at 12. Defendant further argues that the Complaint is deficient because it concedes that the Doe Defendants "may have been merely the subscribers on accounts associated with the listed IP addresses and not the users who did the alleged copying," and that the Complaint "fails to allege facts showing that any actual unauthorized copying occurred." Id. at 12-13.
In its Complaint, Plaintiff has asserted a federal copyright infringement claim. To state a claim for copyright infringement, Plaintiff must establish: (1) ownership of a valid copyright, and (2) copying of constituent elements of the copyrighted work that are original. Rice v. Fox Broad. Corp., 330 F.3d 1170, 1174 (9th Cir. 2003) (citing Feist Publ'n, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)). "To be liable for direct infringement, one must 'actively engage in' and 'directly cause' the copying." Online Policy Group v. Diebold, Inc., 337 F. Supp. 2d 1195, 1199 (N.D. Cal. 2004).
Reviewing Plaintiff's Complaint, Plaintiff has adequately alleged that Illegal Ass 2 is the subject of a valid Certificate of Registration issued by the United States Copyright Office and that Plaintiff is the exclusive rightsholder of the distribution and reproduction rights of the film. Compl. ¶¶ 10-11. Plaintiff has also alleged that the Defendants reproduced and distributed Illegal Ass 2 via BitTorrent to numerous third parties. Compl. ¶ 15. Additionally, Plaintiff has alleged that Defendants actively engaged in or directly caused the copying by completing each of the steps in the BitTorrent file-sharing protocol, including intentionally downloading a torrent file particular to Illegal Ass 2, loading that torrent file into the BitTorrent client, entering a BitTorrent swarm particular to Illegal Ass 2, and ultimately, downloading and uploading pieces of a Illegal Ass 2 file to eventually obtain a whole copy of the file. Id. at ¶¶ 15-16. Based on these allegations, the Court finds that Plaintiff has pled a prima facie case of copyright infringement.
Plaintiff has also made a prima facie showing that the Complaint would withstand a motion to dismiss for lack of personal jurisdiction. The Complaint alleges that the ISP associated with each Doe Defendant is located in California; thus, the allegations of the Complaint support an inference that all of the Doe Defendants reside in California. At this stage in the proceedings, this is a sufficient showing. Accordingly, Plaintiff has set forth sufficient supporting facts to survive a motion to dismiss and Defendant's motion is denied on this ground.
4. Disposition
Based on this analysis, the Court finds that Defendant has failed to establish that the subpoena should be quashed. Accordingly, Defendant's motion is DENIED.
B. Motion to Sever
Defendant next argues that the Court should sever the claims against her. The Court previously addressed the issue of joinder in its August 29, 2012 order granting expedited discovery. Dkt. No. 8 at 5-9. In that order, the Court found that, at this preliminary stage in the proceedings, Plaintiff met the requirements of permissive joinder under Rule 20(a)(2). Id. at 9. The Court found that putative defendants are not prejudiced but likely benefitted by joinder, and severance would debilitate Plaintiff's efforts to protect its copyrighted material and seek redress from the Doe Defendants who have allegedly engaged in infringing activity. Id. Defendant requests that the Court revisit the issue of joinder based on three arguments: (1) the exploitative nature of Plaintiff's litigation-based business model; (2) Plaintiff's "common swarm" allegation does not establish that Defendants acted in concert in the same transaction or occurrence; and (3) individual factual differences will predominate in this case. Mot. at 14-21.
As to the second and third arguments, the undersigned finds that Defendant may eventually be meritorious with them, but "'[a]t this stage in the litigation, . . . when discovery is underway [only] to learn identifying facts necessary to permit service on Doe defendants, joinder . . . of unknown parties identified only by IP addresses is proper,' particularly where, a[s] here, the complaint contains allegations that the Doe Defendants have infringed Plaintiff's copyright through 'the same file-sharing software program [ i.e., BitTorrent] that operates through simultaneous and sequential computer connections and data transfers among the users.'" MCGIP, LLC v. Does 1-18, 2011 WL 2181620, at *1 (N.D. Cal. June 02, 2011) (quoting Voltage Pictures, 818 F. Supp. 2d 28, 38).
As to the first argument, Defendant argues that this action "is part of Plaintiff's business plan of extracting settlements under threat of subpoena while having no intention of actually litigating on the merits." Mot. at 15. Defendant cites to several cases in which courts have refused to allow joinder in such actions because it gives the plaintiff the unfair advantage needed to quickly extract exploitive settlements from a larger number of defendants. Id. In particular, Defendant cites to two other cases brought by the Plaintiff in this case. In Third Degree Films v. Does 1-108, the court found that "the risk of extortionate settlements is too great to ignore, especially when joinder is being used to that end." 2012 WL 1514807, at *4 (D. Md. Apr. 27, 2012). The court noted that "these types of cases . . . almost all end in settlement and few, if any, are resolved on their merits." Id. (citing SBO Pictures, Inc. v. Does 1-3036, at *4 (N.D.Ca. Nov. 30, 2011)). In holding that joinder was improper, the court also noted that "'the risk of inappropriate settlement leverage is enhanced in a case like this involving salacious and graphic sexual content where a defendant may be urged to resolve a matter at an inflated value to avoid disclosure of the content the defendant was accessing.'" Id. (quoting CineTel Films, Inc. v. Does 1-1,052, 2012 WL 1142272, at *4 n. 3 (D. Md. Apr. 4, 2012)).
In Third Degree Films v. Does 1-47, the court also found joinder improper, noting its concern "that the joinder mechanism is being manipulated to facilitate a low-cost, low-risk revenue model for the adult film companies." --- F. Supp. 2d ---, 2012 WL 4498911, at *8 (D. Mass. Oct. 02, 2012) (citing Christopher M. Swartout, Comment, Toward a Regulatory Model of Internet Intermediary Liability: File-Sharing and Copyright Enforcement, 31 Nw. J. Int'l L. & Bus. 499, 509-10 (2011)). "The court acknowledge[d] without reservation Third Degree's right to assert copyright protection of the Film and to sue individuals who infringe on its intellectual property. But after a careful weighing of the balance of potential injustices in this case and like cases, the [c]ourt determine[d] that any efficiency gains and cost benefits to Third Degree from joining the Doe defendants in a single action are substantially outweighed by the fairness concerns and inefficiencies at trial, the potential prejudice from what seems to be a developing pattern of extortionate settlement demands, and the evasion of thousands of dollars of filing fees." Id. at 10.
The undersigned finds the reasoning in these two cases persuasive. Although the undersigned continues to maintain that joinder is technically proper under Rule 20(a), the undersigned is also concerned that Defendant has cited to cases in which other courts have ruled against Plaintiff based upon a risk of inappropriate settlement leverage, yet Plaintiff fails to even address the issue in its Opposition to Defendant's Motion. Thus, in light of the serious concerns regarding prejudice to the Defendants as a result of joinder and Plaintiff's failure to address these concerns, the undersigned finds that the Court should exercise the broad discretion granted it under Rule 20(b) and sever the Doe defendants in this action. Given the risk of inappropriate settlement leverage and Plaintiff's failure to resolve any of these cases on the merits, it is patently unfair to permit Plaintiff to "receive a windfall, . . . securing all the necessary personal information for settlement without paying more than a one-time filing fee." Third Degree Films v. Does 1-108, 2012 WL 1514807, at *4. Accordingly, the undersigned RECOMMENDS that the Court GRANT Defendant's Motion to Sever and SEVER Does 2-178 from this action.
IT IS SO ORDERED AND RECOMMENDED. Dated: December 6, 2012
/s/_________
Maria-Elena James
Chief United States Magistrate Judge