Capitol Records, Inc. v. Thomas

579 F.Supp.2d 1210

CAPITOL RECORDS INC., a Delaware corporation; Sony BMG Music Entertainment, a Delaware general partnership; Arista Records LLC, a Delaware limited liability company; Interscope Records, a California general partnership; Warner Bros. Records Inc., a Delaware corporation; and UMG Recordings, Inc., a Delaware corporation;, Plaintiffs, v. Jammie THOMAS, Defendant.

Civil No. 06-1497 (MJD/RLE).

United States District Court, D. Minnesota.

September 24, 2008.

COPYRIGHT MATERIAL OMITTED

Donald B. Verrilli, Jr., Jenner & Block; Andrew B. Mohraz, David A. Tonini, and Timothy M. Reynolds, Holme Roberts & Owen, LLP; and Felicia J. Boyd, Kara L.B. Barrow, and Mary Andreleita Walker, Faegre & Benson LLP; for Plaintiffs.

Brian N. Toder and Bryan L. Bleichner, Chestnut & Cambronne, PA, Counsel for Defendant.

Adam D. Kirschner, United States Department of Justice, and Gregory G. Brooker, Assistant United States Attorney, Counsel for Intervenor United States of America.

Corynne McSherry, Electronic Frontier Foundation, and Rachel C. Hughey, Carlson Caspers Vandenburgh & Lindquist, Counsel for Amicus Electronic Frontier Foundation.

Prentiss E. Cox, University of Minnesota Law School, Counsel for Amicus Copyright Law Professors.

Carl E. Christensen, Christensen Law Office, PLLC, Counsel for Amicus The Intellectual Property Institute at William Mitchell College of Law.

Christine L. Nessa and Marie L. van Uitert, Oppenheimer Wolff & Donnelly LLP, and Eleanor M. Lackman and Robert Alan Garrett, Arnold & Porter LLP, Counsel for Amicus Motion Picture Association of America, Inc.

Tracey Holmes Donesky, Leonard Street and Deinard, PA, Counsel for Amicus The Progress & Freedom Foundation.

MEMORANDUM OF LAW & ORDER

MICHAEL J. DAVIS, Chief Judge.

I. INTRODUCTION

This matter is before the Court on Defendant's Motion for New Trial, or in the Alternative, for Remittitur. [Docket No. 109] Defendant Jammie Thomas asserts that the amount of the statutory damages award is excessive and in violation of the due process clause of the United States Constitution. Also before the Court is Plaintiffs' Motion to Amend Judgment. [Docket No. 116] The Court has sua sponte raised the issue of whether it erred in instructing the jury that making sound recordings available for distribution on a peer-to-peer network, regardless of whether actual distribution was shown, qualified as distribution under the Copyright Act. [Docket No. 139] The Court heard oral argument on August 4, 2008.

II. BACKGROUND

Plaintiffs are recording companies that owned or controlled exclusive rights to copyrights in sound recordings, including 24 at issue in this lawsuit. On April 19, 2006, Plaintiffs filed a Complaint against Defendant Jammie Thomas alleging that she infringed Plaintiffs' copyrighted sound recordings pursuant to the Copyright Act 17 U.S.C. §§ 101, 106, 501-505, by illegally downloading and distributing the recordings via the online peer-to-peer file sharing application known as Kazaa. Plaintiffs sought injunctive relief, statutory damages, costs, and attorney fees.

Trial on this matter began on October 2, 2007. The jury instruction regarding the definition of distribution under the Copyright Act was submitted as Plaintiffs' Proposed Jury Instruction No. 8. Thomas opposed inclusion of the instruction. After argument by the parties, the Court decided to give Plaintiffs' proposed jury instruction number 8, which became final Jury Instruction No. 15.

In Jury Instruction No. 15, the Court instructed: "The act of making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners' exclusive right of distribution, regardless of whether actual distribution has been shown."

On October 4, 2007, the jury found that Thomas had willfully infringed on all 24 of Plaintiffs' sound recordings at issue, and awarded Plaintiffs statutory damages in the amount of $9,250 for each willful infringement. [Docket No. 100] On October 5, the Court entered judgment on the jury's verdict. [Docket No. 106]

On October 15, Defendant filed a Motion for New Trial, or in the Alternative, for Remittitur, based solely on the issue of the constitutionality of the Copyright Act's statutory damages provision in the case. [Docket No. 109]

On October 19, Plaintiffs filed an unopposed Motion to Amend Judgment [Docket No. 116] asking that the Court enter an injunction barring Thomas from further infringement and requiring Thomas to destroy all infringing copies of Plaintiffs' sound recordings in her possession.

On May 15, 2008, the Court issued an Order stating that it was contemplating granting a new trial on the grounds that it had committed a manifest error of law in giving Jury Instruction No. 15. [Docket No. 139] The Court ordered the parties to brief the issue and also permitted the filing of amicus briefs. Five parties sought and gained permission to file amicus briefs: the Electronic Frontier Foundation, Public Knowledge, United States Internet Industry Association, and Computer & Communications Industry Association; the Copyright Law Professors; The Intellectual Property Institute at William Mitchell College of Law; the Motion Picture Association of America, Inc.; and The Progress & Freedom Foundation.

III. DISCUSSION

A. Standard for Motion for a New Trial

"After giving the parties notice and an opportunity to be heard, the court may grant a timely motion for a new trial for a reason not stated in the motion." Fed. R.Civ.P. 59(d). After Thomas filed a timely motion for a new trial, the Court gave the parties notice of the possible alternative grounds for a new trial. The Court accepted additional briefing by the parties and by amici and also heard oral argument on Jury Instruction No. 15. Under Rule 59, the Court has the power to grant a new trial on the alternative grounds.

The authority to grant a new trial is within the discretion of the district court. Federal Rule of Civil Procedure 59 confirms the trial court's historic power to grant a new trial based on its appraisal of the fairness of the trial and the reliability of the jury's verdict. A new trial is appropriate when the first trial, through a verdict against the weight of the evidence, an excessive damage award, or legal errors at trial resulted in a miscarriage of justice. [The appellate court] review[s] the trial court's denial of a new trial under an abuse of discretion standard.

Gray v. Bicknell, 86 F.3d 1472, 1480-81 (8th Cir.1996) (citations omitted).

"In reviewing a substantive challenge to jury instructions, the pertinent query is whether the instructions, taken as a whole and viewed in light of the evidence and applicable law, fairly and adequately submitted the issues in the case to the jury." Horstmyer v. Black & Decker, (U.S.) Inc., 151 F.3d 765, 771 (8th Cir. 1998) (citation omitted). "The key question is whether a new trial should have been granted to avoid a miscarriage of justice." Harrison v. Purdy Bros. Trucking Co., Inc., 312 F.3d 346, 351 (8th Cir. 2002) (citation omitted).

B. Prejudicial Effect of Any Error of Law

1. Standard

Thomas argues that if the Court erred in giving Jury Instruction No. 15, it must grant a new trial because the Special Verdict Form did not specify whether the jurors had found an actual distribution or not. Therefore, the jurors might have found that Thomas infringed by making a copyrighted song available even if there was no actual distribution. Plaintiffs assert that, even if the Court erred in its instruction, that error had no effect on the jury verdict, because Thomas violated the reproduction right and because Plaintiffs proved that their agent, MediaSentry, downloaded songs from Thomas.

The Court "will reverse a jury verdict only if the erroneous instruction affected a party's substantial rights, and thus a new trial is necessary only when the errors misled the jury or had a probable effect on the jury's verdict." Slidell, Inc. v. Millennium Inorganic Chems., Inc., 460 F.3d 1047, 1054 (8th Cir.2006) (citation omitted). "[W]hen it is impossible to know, in view of the general verdict returned, whether the jury imposed liability on a permissible or an impermissible ground, the judgment must be reversed . . . ." Exxon Shipping Co. v. Baker, ___ U.S. ___, 128 S.Ct. 2605, 2615 n. 3, 171 L.Ed.2d 570 (2008) (citation omitted).

2. Reproduction Right

Plaintiffs argue that regardless of the correctness of Jury Instruction No. 15, Plaintiffs had an indisputably valid reproduction claim, so even an erroneous instruction did not mislead the jury or prejudice Thomas.

The Special Verdict Form provides no insight as to whether the jurors found Thomas liable because of Jury Instruction No. 14, dealing with Plaintiffs' reproduction right, or because of Jury Instruction No. 15, dealing with Plaintiffs' distribution right. The Court cannot know whether the jury reached its verdict on permissible or impermissible grounds. Additionally, even if Thomas were liable under the reproduction right, there is no way for the Court to determine if the jury would have granted the same high statutory damage award based solely on violation of the reproduction right.

3. Distribution to MediaSentry

The parties agree that the only evidence of actual dissemination of copyrighted works was that Plaintiffs' agent, Media-Sentry, copied songs. Plaintiffs argue that even if distribution requires an actual transfer, the trial evidence established transfers of copyrighted works to Media-Sentry. Thomas retorts that dissemination to an investigator acting as an agent for the copyright owner cannot constitute infringement.

"It is well-established that the lawful owner of a copyright cannot infringe its own copyright." Olan Mills, Inc. v. Linn Photo Co., 23 F.3d 1345, 1348 (8th Cir. 1994) (citation omitted). However, the Eighth Circuit holds that a copyright owner's...