Capitol Records, Inc. v. MP3tunes, LLC

48 F. Supp. 3d 703, 112 U.S.P.Q. 2d (BNA) 1638, 2014 U.S. Dist. LEXIS 140139, 2014 WL 4851719
District Court, S.D. New York·Decided September 29, 2014·No. No. 07cv9931·Published·Cited by 11 cases

Opinion

MEMORANDUM AND ORDER

WILLIAM H. PAULEY III, District Judge:

Defendant Michael Robertson1 moves for judgment as a matter of law, or alternatively a new trial, and for remittitur following a jury verdict in favor of Plaintiffs.2 Plaintiffs, consisting of record companies (“Labels”) and music publishers (“Publishers”), filed this federal and state law copyright and unfair competition action alleging Robertson and Defendant MP3tunes, LLC, made infringing copies of copyrighted songs and cover art available to users of the MP3tunes service. The jury returned a verdict awarding Plaintiffs $48,061,073 in damages.

While the world has moved beyond the free-MP3-download craze, the parties in this case have not. This hard-fought litigation spans 7 years and 628 docket entries. Numerous substantive motions were heard. And decisions by this Court did not deter the parties from revisiting the same issues time and again. As trial approached, the parties launched salvos of motions in limine seeking to resurrect discovery disputes, relitigate prior motions, and level an impressive array of claims and defenses.

A primary function of pre-trial litigation is to distill claims. Ultimately, the goal is to make a dispute understandable to a lay person. Despite this Court’s efforts to winnow the issues, the parties insisted on an 82-page verdict sheet on liability and a 331-page verdict sheet on damages that included dense Excel tables, -necessitating at least one juror’s use of a magnifying glass. While the jury did its best, their assignment was beyond all reasonable scale.

To understand how this happened, one must look at the impetus for this litigation. Robertson created a business model designed to operate at the very periphery of copyright law. He encouraged users of his service to copy any MP3 they found on the Internet onto MP3tunes’ servers. The Labels and Publishers viewed Robertson’s activities as a threat to their continued viability. Just as Robertson tried to turn the Digital Millennium Copyright Act (“DMCA”) against the Labels and Publishers, they sought to use it to destroy him by bringing a theater-wide assault with claims for thousands of works.

While Robertson’s business practices sometimes infringed copyrights, many of the Plaintiffs’ claims were just too big to [711]*711succeed. Plaintiffs’ evidence on their most significant theories of liability — red flag knowledge and willful blindness — was sparse. And Robertson — by his words, actions, and demeanor — came across as unworthy of belief. That led the jury to rely on something other than the evidence in reaching portions of its verdict. For the following reasons, Robertson’s motions are granted in part and denied in part.

BACKGROUND

MP3tunes provided an integrated music service through two websites: MP3tunes.com and Sideload.com. MP3tunes.com offered online storage “lockers” where users could store music and stream or download it from the locker to any computer with an Internet connection. Sideload.com was a search engine that allowed users to search for free music downloads. Sideload users could install the sideload plugin to their Internet browser and, when navigating to a website with MPS flies, use the plugin to sideload the file. Sideloading is similar to downloading except that the destination of the file was not the user’s computer, rather, it was the user’s MP3tunes locker and Side-load. (See Tr. at 278-92 (Horowitz).) Once an MP3 file was sideloaded, it was available to anybody who visited Sideload.

More information regarding the operation of Robertson’s MP3tunes business model is available in this Court’s earlier Memoranda & Orders. See Capitol Records, Inc. v. MPStunes, LLC, 28 F.Supp.3d 190, 2014 WL 2431295 (S.D.N.Y. Apr. 7, 2014) (ruling on jury charge); Capitol Records, Inc. v. MPStunes, LLC, 07 Civ. 993KWHP), 2014 WL 503959 (S.D.N.Y. Jan. 29, 2014) (ruling on motions in li-mine ); Capitol Records, Inc. v. MPStunes, LLC, 07 Civ. 9931(WHP), 2013 WL 1987225 (S.D.N.Y. May 14, 2013) (ruling on summary judgment after Viacom) (“MPStunes II”), reconsidering Capitol Records, Inc. v. MPStunes, LLC, 821 F.Supp.2d 627 (S.D.N.Y.2011) (ruling on summary judgment before Viacom) (“MPStunes I ”); Capitol Records, Inc. v. MPStunes, LLC, 07 Civ. 9931(WHP), 2009 WL 3364036 (S.D.N.Y. Oct. 16, 2009) (ruling on motion to dismiss).

In the liability phase, the jury sat attentively through a 12-day trial. The jurors found MP3tunes directly liable for infringement of Plaintiffs’ reproduction and public display rights in cover art and for unfair competition with respect to pre-1972 sound recordings. Concluding that MP3tunes acted with both red flag knowledge and willful blindness, the jurors found MP3tunes secondarily liable for infringements by MP3tunes’ users, third-party websites, and MP3tunes’ Executives. Finally, the jury did not find MP3tunes secondarily liable for violating Plaintiffs’ distribution rights. While the jury did not hold Robertson contributorily liable for MP3tunes’ failure to remove certain works from lockers in response to takedown notices, it imposed secondary liability on Robertson for every other claim on which it held MP3tunes liable. (Sacks Deck Ex. B, at 1-18.)

During the damages phase, the jury found MP3tunes and Robertson acted willfully as to all infringing acts except for MP3tunes’ failure to remove works from lockers. The jury awarded Plaintiffs $48,061,073 in damages. (Def. Robertson’s Br. at 1.)

DISCUSSION

I. Judgment as a Matter of Law

A. Legal Standard

A Rule 50(b) motion for judgment as a matter of law must be granted if the court concludes “there is such a com-[712]*712píete absence of evidence supporting the verdict that the jury’s findings could only have been the result of sheer surmise and conjecture, or there is such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded [jurors] could not arrive [at that verdict.]” Bucalo v. Shelter Island Union Free Seh. Dish, 691 F.3d 119, 127-28 (2d Cir.2012) (citations omitted). The court is not permitted to “weigh[ ] the credibility of the witnesses or otherwise consider[ ] the weight of the evidence.” This Is Me, Inc. v. Taylor, 157 F.3d 139, 142 (2d Cir.1998). It must also “draw all reasonable inferences in favor of the nonmoving party” and “disregard all evidence favorable to the moving party that the jury is not required to believe.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150-51, 120 S.Ct. 2097,147 L.Ed.2d 105 (2000).

B. Plaintiffs’ Theories of Liability

1. Robertson’s Vicarious Liability

To find Robertson vicariously liable for MP3tunes’ copyright infringement through its Executives, the jury was required to find that “(1) Robertson had the right and ability to supervise the infringing activity of MP3tunes, and (2) Robertson received a financial benefit directly attributable to the infringing activity of MP3tunes.”3 (Decl. of Ira Sacks dated May 1, 2014, Ex. A: Liability Charge (“Charge”), ECF No. 613-1, at 24; see Arista Records LLC v. Usenet.com. Inc.,

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Capitol Records, Inc. v. MP3tunes, LLC, 48 F. Supp. 3d 703, 112 U.S.P.Q. 2d (BNA) 1638, 2014 U.S. Dist. LEXIS 140139, 2014 WL 4851719 (S.D.N.Y. 2014).

48 F. Supp. 3d 703 (Capitol Records, Inc. v. MP3tunes, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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