RIAA Defendant Challenges Statutory Damages - Problems of Proof and Availability as Reproduction

by: Nancy Sims, Associate Editor, MTTLR

In 2003, the RIAA began a campaign to protect the music of its members by bringing infringement suits directly against individual users of file-sharing software.¹   In the four years since, the RIAA has approached over 20,000 individuals regarding file-sharing activities,² but few related cases have reached the courts because most targets of such suits settle.³  A few individuals have challenged file-sharing charges,⁴ and some have even been awarded attorney's fees.⁵   In the first jury trial in an individual-defendant music filesharing case,⁶ recently held in Northern Minnesota,⁷ the jury found defendant Jammie Thomas liable for 24 counts of infringement, and awarded statutory damages of $9,250 per song, for a total of $222,000 in damages.⁸   Thomas and her lawyer soon announced their intention to appeal the verdict.⁹

Thomas and her defense team initially announced that her appeal would focus on jury instruction no. 15,¹⁰ which stated that the act of making files available on a peer-to-peer network was infringement of the distribution right, "regardless of whether actual distribution has been shown."¹¹   Other commentators agree that this is a key, and legally unsettled, issue.¹²   However, it appears that Thomas and her team have tabled the direct challenge to the jury instruction for now.¹³  They instead filed a notice of remittitur, asking that the jury award be reduced as grossly excessive in violation of the Due Process clause.¹⁴

As Thomas' motion acknowledges,¹⁵ case law and legislative history show that deterrence and punishment are legitimate purposes of statutory damages.¹⁶   Thomas claims, however, that the punitive damages must be limited under substantive due process analysis.¹⁷   Thomas argues that BMW of North America v. Gore¹⁸   and State Farm v. Campbell¹⁹   are applicable to "any grossly excessive monetary award that is imposed for the purposes of punishment and deterrence."²⁰   Since no damages were shown, Thomas argues, the full amount of the award should be considered punitive.²¹   This is at least somewhat supported by statements of one of the Thomas jurors that they wanted to "send a message" by choosing the amount they did, "that you don't do this, that you have been warned."²²

Thomas also argues in the alternative that even if Gore and Campbell are not applicable to statutory damages, the award can be reviewed to determine whether it is "so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable."²³   This assertion gains some support from class action cases: courts have sometimes refused to grant class certification where aggregate statutory damages would not be punitive, but might be grossly disproportionate to the harms caused.²⁴   Although courts prefer to grant class certification even in the face of such difficulties, they acknowledge that they can reduce damages if necessary under due process.²⁵

Both of Thomas' arguments depend on the judge making some sort of calculation of proportionality of awarded damages to actual harms. Thomas' motion suggests that record companies' recoup approximately $0.70 of the average $0.99/song price of online music sales, and argues that, "pretending that defendant’s downloading went to someone other than plaintiffs’ agents," the total damages for the 24 files in question would have been $16.80.²⁶   Citing Gore and Campbell, they suggest that 10 times actual damages should be the maximum cap on statutory damages, for a maximum award in this case of about $151.20.²⁷   Alternatively, they point out that plaintiffs acknowledge that the price of an individual CD is about $20, and contend that, even if this much higher amount is the actual damages suffered by plaintiffs, the ratio of actual to statutory damages still far exceeds that suggested in Gore and Campbell.²⁸

A major justification of statutory damages is that they are provided for when actual damages are difficult to prove or calculate.²⁹   It is clear in this case that actual damages are difficult to prove for both parties, and that this fact cuts against arguments on both sides. Thomas' calculation of the actual damages appears to be based on an assumption that at most one person other than the plaintiffs' representatives downloaded any of the files she made available.³⁰   It is unlikely that she can prove this. On the other hand, even assuming that the recording industry does suffer actual damages of $20 per download, each song would have to have been downloaded 462 times to make the $9,250 per song award exactly proportionate. Such a volume of downloading was not shown in the trial, with jury instruction no. 15 allowing for judgment against Thomas regardless of proof of actual distribution.³¹   With no knowledge of the actual number of downloads (if any), the question of proportionality will be a difficult one for the judge to resolve. Since Thomas' motion to reduce the damages obliquely revolves around the question of actual damages, which have not been proven, further appeal or retrial seems likely.

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¹  Electronic Frontier Foundation, RIAA v. The People: Four Years Later 2 (2007), available at http://w2.eff.org/IP/P2P/riaa_at_four.pdf.
²  Id.
³  Id. at 6.
⁴  See Atlantic Recording Corp., et al. v. Tanya Andersen, No. 05-933 (D. Ore 2005) (resolved when parties stipulated to a dismissal with prejudice).
⁵  Capitol Records, Inc. v. Foster, 2007 U.S. Dist. LEXIS 29131 (W. D. Okla. 2007) (finding defendant was prevailing party after a court-ordered dismissal with prejudice, and awarding fees), order available at http://www.eff.org/files/filenode/Capitol_v_Foste/order_granting_fees.pdf), reconsideration denied by Capitol Records, Inc. v. Foster, 2007 U.S. Dist. LEXIS 33227 (W.D. Okla., Apr. 23, 2007); but see Interscope Records v. Leadbetter, 2007 U.S. Dist. LEXIS 65955 (W. D. Wash. 2007) (denying fees when record company voluntarily dismissed case against defendant.
⁶  Eric Bangerman, First RIAA trial gets under way with jury selection, opening statements, Ars Technica, Oct. 2, 2007, http://arstechnica.com/news.ars/post/20071002-first-riaa-trial-gets-under-way-with-jury-selection.html; 16-2 Mealey's Litig. Rep. Intell. Prop. 24 (2007).
⁷  Capitol Records Inc., et al. v. Jammie Thomas, No. 06-cv-1497 (D. Minn. 2007)
⁸  Special Verdict Form at 2-8, Capitol v. Thomas, available at http://www.muddlawoffices.com/RIAA/Virgin%20Thomas/100%20Special%20Verdict%20Form.pdf; 16-2 Mealey's Litig. Rep. Intell. Prop. 24 (2007).
⁹  Eric Bangerman, Thomas to appeal RIAA's $222,000 file-sharing verdict, Ars Technica, Oct. 8, 2007, http://arstechnica.com/news.ars/post/20071008-thomas-to-appeal-riaas-222000-file-sharing-verdict.html.
¹⁰  Id.
¹¹  Jury instructions at 18, Capitol Records Inc., et al. v. Jammie Thomas, No. 06-cv-1497 (D. Minn. 2007), available at http://blog.wired.com/27bstroke6/files/jury_instructions.pdf.
¹²  Bangerman, supra note 9; Fred von Lohmann, Capitol v. Thomas: The Key Appeal Issue, Deeplinks, Oct. 9, 2007, http://www.eff.org/deeplinks/2007/10/capitol-v-thomas-key-appeal-issue.
¹³  Bangerman, Appeal in RIAA case to focus on "unconstitutionally excessive" punishment, Ars Technica, Oct. 15, 2007, http://arstechnica.com/news.ars/post/20071015-appeal-in-riaa-case-to-focus-on-unconstitutionally-excessive-punishment.html
¹⁴  Id.
¹⁵  Motion for Remittitur at 2, Capitol v. Thomas, available at http://blog.wired.com/27bstroke6/files/remittiturMot.pdf [hereinafter Motion for Remittitur].
¹⁶  Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 852 (11th Cir. 1990) (citing Warner Bros., 877 F.2d at 1126). See also Fitzgerald Publishing Co., 807 F.2d at 1117; F.W. Woolworth Co., 344 U.S. at 233.
¹⁷  Motion for Remittitur, supra note 15 at 7, (citing Mo. Pac. Ry. v. Humes, 115 U.S. 512, 523 (1885))
¹⁸  BMW of N. Am. v. Gore, 517 U.S. 559 (1996).
¹⁹  State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003).
²⁰  Motion for Remittitur at 9.
²¹  Motion for Remittitur at 11.
²²  David Kravets, RIAA Juror: 'We Wanted to Send a Message', Threat Level, Oct. 9, 2007, http://blog.wired.com/27bstroke6/2007/10/riaa-juror-we-w.html.
²³  Zomba Enterprises v. Panorama Records, Inc., 491 F.3d 574 (6th Cir. 2007) (citing St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 66-67 (1919)).
²⁴  Murray v. New Cingular Wireless Servs., 232 F.R.D. 295, 303 (D. Ill. 2005) (citing In re Trans Union, 211 F.R.D. at 347-5).
²⁵  Id. at 304 (citing Parker v. Time Warner Entm't Co., L.P., 331 F.3d 13, 22 (2d Cir 2003)).
²⁶  Motion for Remittitur at 2.
²⁷  Id.
²⁸  Id. at 3.
²⁹  Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 850-51 (11th Cir. 1990) (citing F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 231-33 (1952); Warner Bros. Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1126 (2d Cir. 1989)).
³⁰  See Motion for Remittitur at 2.
³¹  Motion for Remittitur at 3.