A Far Cry from the Same Injury: Judge Rebuffs Class Action Against Copyright “Settlement Fraud”

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
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Ever since the entertainment industry figured out how to use IP addresses to bring copyright infringement lawsuits against illegal downloaders, defendants and critics have been calling these plaintiffs “trolls”.  But name-calling wasn’t enough  for Dmitriy Shirokov.  He wanted payback, and brought a class action lawsuit against his persecutors.  However, according to an order issued earlier this week by Judge George O’Toole of the Federal District Court for Massachusetts, Mr. Shirokov will have to figure out another way to vindicate his rights.

The story is a familiar one.  The U.S. Copyright Group (“USCG”) got together with a film production company and acquired the IP addresses of bit torrent downloaders who had allegedly illegally downloaded the film Far Cry, a thriller based on the first-person shooter video game of the same name.  USCG then filed a copyright infringement lawsuit against 2,094 anonymous John Does connected to those IP addresses, and used the subpoena power of the court to obtain their identities from their internet service providers.  Upon obtaining the identities, USCG sent a demand letter to each downloader, demanding $1,500 to settle the claim, increasing to $2,500 if not paid promptly.  In the aggregate, the demands are high enough to make the lawsuit profitable, but each individual demand is low enough so that most defendants just pay up instead of going through the added expense of retaining counsel and fighting it.

But Shirokov did retain counsel, and not just to defend himself against the allegation of copyright infringement.  In November 2010, he initiated a class action lawsuit against USCG on behalf of a class of 4,577 individuals who had received such demand letters.  The complaint described the USCG’s actions as “settlement fraud,” and brought twenty-five counts including for conspiracy, extortion and violation of consumer protection laws.  Essentially, Shirokov argued that USCG committed fraud because it had no intention of ever litigating any of the copyright infringement suits. Rather, according to Shirokov, the whole scheme was just a stickup. 

Unfortunately for Shirokov, however, on March 26, 2013, the court held that he had not properly identified a class.  Federal Rule of Civil Procedure 23(a) requires a plaintiff seeking class certification to establish that:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

According to Judge O’Toole, the class proposed by Shirokov was numerous enough, but it did not fulfill the  rule’s other requirements because all of the class members did not suffer the same injury.  Some were allegedly injured when they paid the amount demanded by USCG, while other were allegedly injured by the legal expenses incurred in fighting the demand.  Thus, the court held that the commonality and typicality requirements were not satisfied. 

No word yet on whether Shirokov will seek to amend his complaint in order to narrow the class.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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