Accused File-Sharer Can Challenge Music Industry Collection Efforts

A woman who was sued for allegedly sharing copyrighted music files over the Internet can proceed with two of her claims against a company retained by the Recording Industry Association of America to collect "settlements" from accused file-sharers, a federal judge in Seattle has ruled.

The Western District of Washington's Ruling

U.S. District Judge Ricardo S. Martinez, in an Aug. 22 ruling, allowed plaintiff Dawnell Leadbetter to amend two of her claims - for fraud and violation of the Washington Collection Agency Act - against Settlement Support Center LLC, which assists the RIAA in collecting money from people who have been sued for file-sharing.

Judge Martinez dismissed the remainder of the suit, which included claims by Leadbetter against her Internet service provider, Comcast Cable Communications Inc., for disclosing her identity to the RIAA. Leadbetter's attorney, Lory R. Lybeck of Lybeck Murphy LLP in Mercer Island, Wash., said his client will appeal those portions of Judge Martinez's ruling to the U.S. Court of Appeals for the 9th Circuit.

Many states have laws regulating debt collection practices, so this decision could be important for cases in Washington and elsewhere that seek to rein in SSC's activities, Lybeck said in an e-mail message. He said his firm is investigating potential claims against SSC in several states.

Record labels, led by their trade association the RIAA, have filed thousands of lawsuits against people for using "peer to peer" file-sharing software to trade copyrighted music files over the Internet.

As Judge Martinez's ruling explains, several record labels filed suit against Leadbetter in the U.S. District Court for the Eastern District of Pennsylvania, although initially only "John Doe" was named as the defendant, because the labels had only Leadbetter's Internet protocol address, a series of numbers that identified her computer.

Lybeck said the record companies routinely file such "John Doe" suits and then obtain court orders to force Internet service providers to disclose the Does' identities.

The labels, through SSC, then contact the individuals and demand payment of damages for allegedly infringed songs. In the cases of those who do not pay, or contact SSC to negotiate, the labels typically dismiss the "John Doe" cases and refile, naming the identified individuals as defendants, Lybeck said.

Here, as Judge Martinez's ruling explains, the Leadbetter case was one of some 11,000 such lawsuits the music industry has brought around the country. The cases that were filed in the Eastern District of Pennsylvania have been assigned to one judge, who has ordered that in each of the cases the defendants' ISPs turn over their identities to the plaintiffs.

The labels suing Leadbetter used this order to obtain her name, address, telephone number and other personal information from Comcast. They dropped the Pennsylvania case and refiled in the U.S. District Court for the Western District of Washington.

Leadbetter responded by filing her own suit, also in the Western District of Washington, naming Comcast and SSC as defendants.

According to her complaint, Leadbetter received a letter from SSC inviting her to settle the case for $4,500 and warning her that if she did not agree, the lawsuit against her would proceed and the plaintiffs could seek "hundreds of thousands of dollars" in damages. The labels claimed she infringed copyrights in eight songs, but Leadbetter contends she is not the one who downloaded the songs.

The Western District of Washington's Reasoning

The complaint alleged fraud, civil conspiracy, violations of the Washington Consumer Protection Act, the Washington Collection Agency Act and the federal Fair Debt Collection Practices Act. The defendants moved to dismiss the case.

Judge Martinez agreed that all the allegations against Comcast should be dismissed because the company was complying with a valid court order.

With respect to SSC, the judge dismissed the Consumer Protection Act claim because Leadbetter could not show that she suffered any injury to her "business or property," a requirement under the law.

He also tossed out the Fair Debt Collection Practices Act claim because the money SSC is seeking is not a "debt" as that term is defined in the law. Leadbetter is under no obligation to pay the money now and never will if she successfully defends herself in the labels' lawsuit against her, the judge said.

Judge Martinez did allow Leadbetter to amend her Washington Collection Agency Act claim. She alleges SSC's violations of the statute amount to "unfair or deceptive trade practices" and she should have an opportunity to more fully explain this position, he said.

He also said Leadbetter's allegations could potentially support a fraud claim and she should be allowed to amend that claim as well.

Noerr-Pennington Doctrine

SSC also argued that all of the allegations against it should be dismissed under the Noerr-Pennington doctrine, which shields companies from legal liability for activities involving "petitioning the government," including lobbying and the filing of lawsuits, even if the company had an improper purpose for engaging in the activity.

Here, it argued, it was acting as the agent for the labels in their suit against Leadbetter, so its activities should be protected by the doctrine. Judge Martinez noted that the doctrine does not immunize the filing of a lawsuit by a plaintiff who knows the case is baseless when it is filed. It is not yet clear whether the labels' suit against Leadbetter is "sham" litigation, he said.

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Leadbetter v. Comcast Cable Communications Inc. et al., No. 05-0892, 2005 WL 2030799, notice of appeal filed (W.D. Wash. Sept. 14, 2005).

Courtesy of Donna Higgins of Andrews Publications.