Umg Recordings, Inc. v. Grande Commc'ns Networks, LLC

384 F.Supp.3d 743

UMG RECORDINGS, INC., Capitol Records, LLC, Warner Bros. Records, Inc., Sony Music Entertainment, Arista Records, LLC, Arista Music, Atlantic Recording Corporation, Capitol Christian Music Group, Inc., Elecktra Entertainment Group, Inc., Fonovisa, Inc., Fueled by Ramen, LLC, LaFace Records, LLC, Nonesuch Records, Inc., Rhino Entertainment Company, Roadrunner Records, Inc., Roc-A Fella Records, LLC, Tooth & Nail, LLC, and Zomba Recording, LLC, Plaintiffs,

v.GRANDE COMMUNICATIONS NETWORKS, LLC, Defendant.

No. 1:17-CV-365-DAE

United States District Court, W.D. Texas, Austin Division.

Signed March 15, 2019

Jonathan E. Missner, Michael A. Petrino, Pasquale A. Cipollone, Philip J. O'Beirne, Robert B. Gilmore, Stein Mitchell Cipollone Beato & Missner LLP, Washington, DC, Paige Arnette Amstutz, Daniel C. Bitting, Scott, Douglas & McConnico, L.L.P., Austin, TX, for Plaintiffs.

Diana L. Nichols, J. Stephen Ravel, John R. Johnson, Kelly Hart & Hallman LLP, Austin, TX, Jennifer E. Hoekel, Margaret R. Szewczyk, Richard L. Brophy, Zachary C. Howenstine, Nicholas B. Clifford, Armstrong Teasdale LLP, St. Louis, MO, for Defendant.

ORDER: (1) ADOPTING REPORT AND RECOMMENDATIONS (DKTS. ## 240, 241); (2) GRANTING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO GRANDE'S DMCA SAFE HARBOR DEFENSE (DKT. # 127); (3) GRANTING IN PART AND DENYING IN PART GRANDE'S MOTION FOR SUMMARY JUDGMENT (DKT. # 140); (4) DENYING GRANDE'S MOTION FOR SANCTIONS (DKT. # 156); AND (5) DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AS TO LIABILITY (DKT. # 172).

David Alan Ezra, Senior United States District Judge

Before the Court are two Report and Recommendations, both filed by Magistrate Judge Andrew W. Austin on December 12, 2018. (Dkts. ## 240, 241.) Pursuant to Local Rule CV-7(h), the Court finds this matter suitable for disposition without a hearing. After careful consideration and review, the Court—for the reasons that follow—(1) ADOPTS the Report and Recommendations (Dkts. ## 240, 241); (2) GRANTS Plaintiffs' Motion for Partial Summary Judgment as to Grande's DMCA safe harbor defense (Dkt. # 127); (3) GRANTS IN PART AND DENIES IN PART Grande's Motion for Summary Judgment (Dkt. # 140); (4) DENIES Grande's Motion for Sanctions (Dkt. # 156); and DENIES Plaintiff's Motion for Summary Judgment as to Liability (Dkt. # 172).

BACKGROUND

Plaintiffs in this case are record companies that produce commercial sound recordings and distribute them throughout the United States. (Dkt. # 1 at 2.) Remaining Defendant Grande Communications Networks, LLC ("Grande") is an internet service provider ("ISP"), providing internet access to customers in Texas. (Id.) Former Defendant Patriot Media Consulting, LLC ("Patriot") provided and continues to provide various management services to Grande. (Id. at 6.) Plaintiffs originally filed suit against both Grande and Patriot. (Id. at 1.) Plaintiffs asserted that Defendants received over one million notices of direct copyright infringement allegedly committed by Grande's customers. (Id. at 2, 11–12.) Plaintiffs allege that these customers directly infringed on Plaintiffs' copyrights through the use of various of file sharing applications, including BitTorrent. (Id. at 2, 8–12.) Plaintiffs' complaint asserted claims for secondary copyright infringement under 17 U.S.C. § 101 et seq. against both defendants, alleging Defendants continued to provide infringing customers with internet access after receiving the notices of infringement. (Id. at 13, 15, 17.)

On April 19, 2017, Defendants filed separate motions to dismiss under Federal Rule of Civil Procedure 12(b)(6). (Dkts. ## 28, 29.) On March 26, 2018, the Court adopted a Report and Recommendation from Magistrate Judge Austin recommending Patriot's motion be granted in its entirety and Grande's motion be granted as to Plaintiffs' claims for vicarious secondary infringement.¹ (Dkts. ## 72 at 21; 77 at 3.) Patriot was thus dismissed as a defendant from this action. (See id. ) Therefore, the only remaining claim in this case is for contributory secondary copyright infringement against Grande.

On April 9, 2018, Grande filed their answer to the complaint. (Dkt. # 80.) Among other affirmative defense, Grande pled the safe harbor provision of the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 512(i). § 512(i) protects ISPs like Grande from liability for the copyright infringement of their customers if the ISP "has adopted and reasonably implemented, and informs subscribers and account holders of the service provider's system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers[.]" 17 U.S.C. § 512(i)(1)(A).

On August 8, 2018, Plaintiffs filed a motion for summary judgment as to Grande's affirmative defense of the DMCA safe harbor provision. (Dkt. # 127.) On December 18, 2018, Judge Austin issued a Report and Recommendation (the "Safe Harbor Report") recommending Plaintiffs' motion be granted as to the safe harbor issue.² (Dkt. # 241.) On January 23, 2019, Grande filed written objections. (Dkt. # 251.) On January 23, 2019, Plaintiffs filed a response to Grande's objections.

Additionally, on August 18, 2018, Grande filed a motion for summary judgment as to the issues of liability and damages. (Dkt. # 140.) On September 11, 2018, in their response in opposition to Grande's motion for summary judgment, Plaintiffs cross moved for summary judgment as to liability. (Dkt. # 172.) On December 18, 2018, Judge Austin issued a Report and Recommendation (the "Liability Report") recommending Grande's motion for summary judgment be granted as to Grande's alleged liability for infringing Plaintiffs' reproduction rights under 17 U.S.C. § 106(1) and public performance rights under 17 U.S.C. § 106(6). (Dkt. # 240.) The Liability Report also recommends denying Grande's motion in all other respects and denying Plaintiffs' motion for summary judgment in its entirety. (Id.) Both Plaintiffs and Grande filed objections to the Liability Report on January 9, 2019. (Dkts. ## 250, 252.) Plaintiffs filed a response to Grande's objections on January 23, 2019. (Dkt. # 257.) Grande filed a response to Plaintiffs' objections on the same day. (Dkt. # 258.) On January 30, 2019, Plaintiffs filed a reply in support of their objections. (Dkt. # 259.)

The Safe Harbor Report and the Liability Report and the parties' objections thereto are currently before the Court.

LEGAL STANDARD

I. Review of the Magistrate Judge's Report and Recommendations

Any party who desires to object to a Magistrate Judge's findings and recommendations must serve and file written objections within 14 days after being served with a copy of the findings and recommendation. Fed. R. Civ. P. 72(b)(2). The Court conducts a de novo review of any of the Magistrate Judge's conclusions to which a party has specifically objected. See 28 U.S.C. § 636(b)(1)(C) ("A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made."). Findings to which no specific objections are made do not require de novo review; instead, the Court need only determine whether the memorandum and recommendation is clearly erroneous or contrary to law. United States v. Wilson, 864 F.2d 1219, 1221 (5th Cir. 1989). As the parties have timely filed objections to the Magistrate Judges Report and Recommendations, the Court reviews de novo those portions of the reports to which objections have been raised.

II. Summary Judgment

Summary judgment is proper if "there is no genuine dispute as to any material fact" and the moving party "is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Meadaa v. K.A.P. Enters., L.L.C., 756 F.3d 875, 880 (5th Cir. 2014). A dispute is genuine only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party bears the initial burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets this burden, the nonmoving party must come forward with specific facts that establish the existence of a genuine issue for trial. Distribuidora Mari Jose, S.A. de C.V. v. Transmaritime, Inc., 738 F.3d 703, 706 (5th Cir. 2013) (quoting Allen v. Rapides Parish Sch. Bd., 204 F.3d 619, 621 (5th Cir. 2000) ). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.’ " Hillman v. Loga, 697 F.3d 299, 302 (5th Cir. 2012) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ).

In deciding whether a fact issue has been created, the court must draw all reasonable inferences in favor of the nonmoving party, and it "may not make credibility determinations or weigh the evidence." Tiblier v. Dlabal, 743 F.3d 1004, 1007 (5th Cir. 2014) (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ). At the summary judgment stage, evidence need not be authenticated or otherwise presented in an admissible form. See Fed. R. Civ. P. 56(c) ; Lee v. Offshore Logistical & Transp., LLC, 859 F.3d 353, 355 (5th Cir. 2017). However, "[u]nsubstantiated assertions, improbable inferences, and unsupported speculation are not sufficient to defeat a motion for summary judgment." United States v. Renda Marine, Inc., 667 F.3d 651, 655 (5th Cir. 2012) (quoting Brown v. City of Hous., 337 F.3d 539, 541 (5th Cir. 2003) ).

Finally, when, as here, "parties file cross-motions for summary judgment, [the court] review[s] each party's motion independently, viewing the evidence...