Sony Bmg Music Ent. v. Tenenbaum

721 F.Supp.2d 85

SONY BMG MUSIC ENTERTAINMENT; Warner Bros. Records Inc.; Atlantic Recording Corp.; Arista Records LLC; and UMG Recordings, Inc., Plaintiffs,

v.Joel TENENBAUM, Defendant.

Civil Action No. 07cv11446-NG.

United States District Court,D. Massachusetts.

July 9, 2010.

Daniel J. Cloherty, Victoria L. Steinberg, Dwyer & Collora LLP, Boston, MA, Eve G. Burton, Holme Roberts & Owen LLP, Denver, CO, Timothy M. Reynolds, Holme Roberts & Owen LLP, Boulder, CO, Matthew Oppenheim, Potomac, MD, Pro Hac Vice, for Plaintiffs.

Charles Nesson, Harvard Law School, Cambridge, MA, Matthew H. Feinberg, Matthew A. Kamholtz, Feinberg & Kamholtz, Boston, MA, for Defendant.

MEMORANDUM & ORDER RE: DEFENDANT'S MOTION FOR NEW TRIAL OR REMITTITUR

GERTNER, District Judge:

+-----------------+
¦TABLE OF CONTENTS¦
+-----------------¦
+-----------------+
 

+--------------------------------------------------+
¦I.  ¦INTRODUCTION                              ¦87¦
+----+------------------------------------------+--¦
+----+------------------------------------------+--¦
¦II. ¦BACKGROUND                                ¦90¦
+----+------------------------------------------+--¦
+----+------------------------------------------+--¦
¦III.¦TENENBAUM'S CHALLENGE TO THE DAMAGES AWARD¦91¦
+--------------------------------------------------+
 

+-----------------------------------------------------------------------------+
¦¦A.¦Tenenbaum's Constitutional Challenge to the Jury's Award must Be      ¦91¦
¦¦  ¦Addressed                                                             ¦  ¦
++--+----------------------------------------------------------------------+--¦
¦¦B.¦Tenenbaum's Due Process Challenge                                     ¦95¦
+-----------------------------------------------------------------------------+
 

+-----------------------------------------------------------------------------+
¦¦¦1.¦What standard should the Court employ in evaluating Tenenbaum's      ¦95¦
¦¦¦  ¦constitutional challenge?                                            ¦  ¦
+-----------------------------------------------------------------------------+
 

+-----------------------------------------------------------------------------+
¦¦¦¦a.¦Williams                                                           ¦95 ¦
++++--+-------------------------------------------------------------------+---¦
¦¦¦¦b.¦The Supreme Court's Punitive Damages Jurisprudence                 ¦95 ¦
++++--+-------------------------------------------------------------------+---¦
¦¦¦¦c.¦Is the Supreme Court's recent punitive damages jurisprudence       ¦100¦
¦¦¦¦  ¦relevant to this case?                                             ¦   ¦
+-----------------------------------------------------------------------------+
 

+----------------------------+
¦¦¦2.¦The BMW Guideposts ¦103¦
+----------------------------+
 

+-----------------------------------+
¦¦¦¦a.¦The Third BMW Guidepost  ¦103¦
++++--+-------------------------+---¦
¦¦¦¦b.¦The Second BMW Guidepost ¦111¦
++++--+-------------------------+---¦
¦¦¦¦c.¦The First BMW Guidepost  ¦115¦
+-----------------------------------+
 

+-----------------------------------------------------------------------------+
¦¦¦3.¦What is the maximum constitutionally permissible damages award in   ¦116¦
¦¦¦  ¦this case?                                                          ¦   ¦
+-----------------------------------------------------------------------------+
 

+----------------------------+
+---+--------------------+---¦
¦IV.¦MISCELLANEOUS ITEMS ¦118¦
+----------------------------+
 

+-----------------------------------------+
¦¦A.¦Fair Use                         ¦118¦
++--+---------------------------------+---¦
¦¦B.¦Tenenbaum's Evidentiary Challenge¦119¦
+-----------------------------------------+
 

+------------------+
+--+-----------+---¦
¦V.¦CONCLUSION ¦121¦
+------------------+
 

I. INTRODUCTION

This copyright case raises the question of whether the Constitution's Due Process Clause is violated by a jury's award of $675,000 in statutory damages against an individual who reaped no pecuniary reward from his infringement and whose individual infringing acts caused the plaintiffs minimal harm. I hold that it is.

Joel Tenenbaum (“Tenenbaum”), the defendant in this action, was accused of using file-sharing software to download and distribute thirty copyrighted songs belonging to the plaintiffs. The plaintiffs are a group of the country's biggest recording companies. ¹ Their lawsuit against Tenenbaum is one of thousands that they have brought against file sharers throughout the country. Tenenbaum, like many of the defendants in these suits, was an undergraduate when his file-sharing was detected.

Although the plaintiffs presented evidence that Tenenbaum illegally downloaded and shared thousands of recordings, the trial focused on his infringement of the plaintiffs' copyrights in thirty songs. As to these songs, Tenenbaum's liability for infringement was not seriously in question. Since he admitted engaging in conduct that clearly constituted copyright infringement at trial, I directed judgment in the plaintiffs' favor on this issue. The only questions for the jury were whether Tenenbaum's infringements were willful and what amount of damages was appropriate.

In Tenenbaum's case, the plaintiffs chose statutory damages over actual damages as the remedy. See 17 U.S.C. § 504(a), (c)(1). “Statutory damages” are damages specially authorized by Congress that may be obtained even in the absence of evidence of the harm suffered by the plaintiff or the profit reaped by the defendant. Under the relevant statute, the jury's award could be no less than $750 for each work that Tenenbaum infringed and no more than $30,000 or $150,000, depending on whether the jury concluded that Tenenbaum's conduct was willful. Id. § 504(c)(1)-(2). The jury did find that Tenenbaum willfully infringed the plaintiffs' copyrights and imposed damages of $22,500 per song, yielding a total award of $675,000.

While that award fell within the broad range of damages set by Congress, Tenenbaum challenged it as far exceeding any plausible estimate of the harm suffered by the plaintiffs and the benefits he reaped. He filed a motion for new trial or remittitur, raising both common law and constitutional grounds. ² In addition to the plaintiffs opposing Tenenbaum's motion, the United States government also intervened and filed a memorandum in support of the constitutionality of 17 U.S.C. § 504(c) as applied in this case. (Electronic Order Granting United States' Mot. to Intervene, March 25, 2009, Case No. 03-cv-11661-NG); see also 28 U.S.C. § 2403(a) (providing that the Attorney General of the United States must be notified of, and may intervene in, any case in which the constitutionality of a federal statute is questioned); Fed.R.Civ.P. 5.1.

Significantly, the common-law doctrine of remittitur would have enabled this Court to entirely avoid the constitutional challenge, always the better choice. Remittitur permits a court to review a jury's award to determine if it is “grossly excessive, inordinate, shocking to the conscience of the court, or so high that it would be a denial of justice to permit it to stand.” Correa v. Hosp. San Francisco, 69 F.3d 1184, 1197 (1st Cir.1995) (quoting Segal v. Gilbert Color Sys., Inc., 746 F.2d 78, 81 (1st Cir.1984)). If the court so finds, it may reduce the damages, but only if the plaintiffs accept the reduced amount; if they do not, the court is obliged to grant a new trial.

The plaintiffs in this case, however, made it abundantly clear that they were, to put it mildly, going for broke. They stated in open court that they likely would not accept a remitted award. And at a retrial on the issue of damages, I would again be presented with the very constitutional issues that the remittitur procedure was designed to avoid. I am thus obliged to deal with Tenenbaum's constitutional challenge.

For many years, businesses complained that punitive damages imposed by juries were out of control, were unpredictable, and imposed crippling financial costs on companies. In a number of cases, the federal courts have sided with these businesses, ruling that excessive punitive damages awards violated the companies' right to due process of law. These decisions have underscored the fact that the Constitution protects not only criminal defendants from the imposition of “cruel and unusual punishments,” U.S. Const. amend. VIII, but also civil defendants facing arbitrarily high punitive awards.

While this body of law is not entirely clear or consistent, it has both a procedural and substantive component. It prevents the awarding of damages without adequate procedural protections, but it also seeks to define the outer limits of what excessive punishment is. Thus, the Supreme Court has held that punitive damages awarded against BMW were grossly excessive, and therefore unconstitutional, in a lawsuit claiming that the manufacturer failed to disclose that the plaintiff's new luxury car had been repainted prior to sale. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996). More recently, the Court found unconstitutional damages awarded against the insurance company State Farm in a case claiming it had engaged in bad faith claim settlement practices. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003).

To be sure, Tenenbaum's case is different in several respects from the Court's punitive damages jurisprudence. Since the jury's award fell within the range set by Congress, Tenenbaum was arguably on notice of the amount of damages that might be awarded to the plaintiffs. But that fact-notice-does not preclude constitutional review. While the parties disagree as to the content of the review of an award of statutory damages, they agree that some form of constitutional review is appropriate.

In reviewing the jury's award,...