Af Holdings, LLC v. Doe

• Decision Date: 27 May 2014
• Docket Number: No. 12–7135.,12–7135.
• Citation: 752 F.3d 990
• Parties: AF HOLDINGS, LLC, Appellee v. DOES 1–1058, Appellees Cox Communications, Inc., et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

752 F.3d 990

AF HOLDINGS, LLC, Appellee

v. DOES 1–1058, AppelleesCox Communications, Inc., et al., Appellants.

No. 12–7135.

United States Court of Appeals, District of Columbia Circuit.

Argued April 14, 2014.

Decided May 27, 2014.

Appeal from the United States District Court for the District of Columbia (No. 1:12–cv–00048).

Benjamin J. Fox argued the cause for appellants. With him on the briefs were Deanne E. Maynard, Bart W. Huffman, Hugh S. Balsam, John D. Seiver, Ronald G. London, Leslie G. Moylan, and Lisa B. Zycherman. Marc A. Hearron entered an appearance.

Corynne McSherry argued the cause for amici curiae Electronic Frontier Foundation, et al. in support of appellants. On the brief were Mitchell L. Stoltz, Arthur B. Spitzer, Catherine Crump, and Paul Alan Levy.

Paul A. Dufy argued the cause and filed the brief for appellee AF Holdings, LLC.

Before: TATEL, Circuit Judge, and SILBERMAN and SENTELLE, Senior Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

Generally speaking, our federal judicial system and the procedural rules that govern it work well, allowing parties to resolve their disputes with one another fairly and efficiently. But sometimes individuals seek to manipulate judicial procedures to serve their own improper ends. This case calls upon us to evaluate—and put a stop to—one litigant's attempt to do just that.

I.

Appellee AF Holdings, a limited liability company formed in the Caribbean islands of Saint Kitts and Nevis, sued and then sought discovery regarding more than a thousand unknown individuals who it claimed had illegally shared a copyrighted pornographic film. This interlocutory appeal arises from a district court order granting AF Holdings's discovery requests.

A full understanding of this case requires knowing some things about the lawyer and “law firm” that initiated it. AF Holdings is represented by attorney Paul A. Duffy. Until very recently, Duffy was associated with “Prenda Law,” an organization that, since representing AF Holdings in the district court, appears to have disbanded and then reconstituted itself in a similar form. See Ben Jones, Prenda Suffers More Fee Award Blows, TorrentFreak (August 9, 2013), http:// torrentfreak. com/ prenda- suffers- more- fee- award- blows- 130809.

Prenda Law, as Judge Otis Wright II put it in a case similar to this, was a “porno-trolling collective.” Ingenuity 13 LLC v. John Doe, No. 2:12–cv–8333, 2013 WL 1898633, at *1, 2013 U.S. Dist. LEXIS 64564, at *3 (C.D.Cal. May 6, 2013). According to Judge Wright, Duffy and the other principals of Prenda Law were “attorneys with shattered law practices” who, “[s]eeking easy money, ... formed ... AF Holdings,” acquired “several copyrights to pornographic movies,” then initiated massive “John Doe” copyright infringement lawsuits. Id. at *2, 2013 U.S. Dist. LEXIS 64564, at *5–6. These suits took advantage of judicial discovery procedures in order to identify persons who might possibly have downloaded certain pornographic films. Such individuals, although generally able to use the Internet anonymously, are, like all Internet users, linked to particular Internet Protocol (IP) addresses, a series of numbers assigned to each Internet service subscriber. Internet service providers like Appellants can use IP addresses to identify these underlying subscribers, but not necessarily the individuals actually accessing the Internet through the subscribers' connections at any given time. Confronted with these realities, Prenda Law's general approach was to identify certain unknown persons whose IP addresses were used to download pornographic films, sue them in gigantic multi-defendant suits that minimized filing fees, discover the identities of the persons to whom these IP address were assigned by serving subpoenas on the Internet service providers to which the addresses pertained, then negotiate settlements with the underlying subscribers—a “strategy [that] was highly successful because of statutory-copyright damages, the pornographic subject matter, and the high cost of litigation.” Id. at *2, 2013 U.S. Dist. LEXIS 64564, at *6–7;see also Claire Suddath, Prenda Law, the Porn Copyright Trolls, BloombergBusinessweek (May 30, 2013), http:// www. businessweek. com/ articles/ 2013- 05- 30/ prenda- law- the- porn- copyright- trolls (recounting Prenda Law's history and litigation tactics). If an identified defendant sought to actually litigate, Prenda Law would simply dismiss the case. See Ingenuity 13 LLC, 2013 WL 1898633, at *2,2013 U.S. Dist. LEXIS 64564, at *6–7. As Duffy acknowledged at oral argument, of the more than one hundred cases that AF Holdings has initiated, none has proceeded to trial or resulted in any judgment in its favor other than by default. Oral Arg. Rec. 30:09–20. Nevertheless, according to one article, Prenda Law made around $15 million in a little less than three years. See Kashmir Hill, How Porn Copyright Lawyer John Steel Has Made a ‘Few Million Dollars' Pursuing (Sometimes Innocent) ‘Porn Pirates', Forbes (Oct. 15, 2012), http:// www. forbes. com/ sites/ kashmirhill/ 2012/ 10/ 15/ how- porn- copyright- lawyerjohn- steele- justifies- his- pursuit- of- sometimes- innocent- porn- pirates.

The present lawsuit is a quintessential example of Prenda Law's modus operandi. Represented by Prenda Law, AF Holdings brought suit in the United States District Court for the District of Columbia against 1,058 unnamed Does who it alleged had illegally downloaded and shared the pornographic film Popular Demand using a file-sharing service known as BitTorrent. As an attachment to its complaint, AF Holdings listed the 1,058 IP addresses assigned to those subscribers whose Internet connections had been used to share Popular Demand, along with the specific date and time at which it, using what it described as “sophisticated and proprietary peer-to-peer network forensic software,” had observed each defendant's allegedly infringing activity. AF Holdings also attached the purported assignment agreement through which it claims to have acquired the copyright to Popular Demand. Although it has no effect on our resolution of this appeal, other courts have since concluded that at least one of the signatures on this document was forged. See Ingenuity 13 LLC, 2013 WL 1898633, at *3, 2013 U.S. Dist. LEXIS 64564, at *8;AF Holdings LLC v. Navasca, No. C–12–2396, 2013 WL 3815677, at *1, 2013 U.S. Dist. LEXIS 102249, at *3–4 (N.D.Cal. July 22, 2013); AF Holdings, LLC v. Doe(s), No. 12–1445, 2013 U.S. Dist. LEXIS 187458, at *10–12 (D.Minn. Nov. 6, 2013), vacated by AF Holdings, LLC v. Doe, No. 12–1445, 2014 WL 1285757, 2014 U.S. Dist. LEXIS 43318 (D.Minn. Mar. 27, 2014); see also Lightspeed Media Corp. v. Smith, No. 12–889, 2013 WL 6225093, at *5, 2013 U.S. Dist. LEXIS 168615, at *16 (S.D.Ill. Nov. 27, 2013) (“The [principals of Prenda] have shown a relentless willingness to lie to the Court on paper and in person, despite being on notice that they were facing sanctions in this Court, being sanctioned by other courts, and being referred to state and federal bars, the United States Attorney in at least two districts, one state Attorney General, and the Internal Revenue Service.” (internal citations omitted)).

Moving for leave to take immediate discovery, AF Holdings then sought to serve subpoenas on the five Internet service providers linked to the 1,058 IP addresses it had identified: Cox Communications, Verizon, Comcast, AT & T, and Bright House Networks. The district court granted the motion, authorizing the issuance of subpoenas compelling these providers to turn over the names, addresses, telephone numbers, and email addresses of the underlying subscribers.

The providers refused to comply. Invoking Federal Rule of Civil Procedure 45(d)(3)(A), which provides that a district court “must quash or modify a subpoena that ... subjects a person to undue burden,” they asserted that the administrativeexpense involved was necessarily an “undue burden” because AF Holdings had failed to establish that the court would have personal jurisdiction over the defendants or that venue would lie in this district. Supporting these contentions, Verizon asserted that its preliminary investigation revealed that only 20 of the 188 Verizon subscribers whose information AF Holdings sought resided in the District of Columbia. Comcast reported that only one of the 400 Comcast subscribers AF Holdings identified appeared to live in the District. And Cox, AT & T, and Bright House each stated that they had no subscribers at all in the District of Columbia; indeed, they do not even offer service here. The providers also argued that any burden was necessarily undue because AF Holdings had failed to provide any reason to think that joinder of these 1,058 defendants in one action was proper.

The district court rejected these arguments, holding that “considerations of personal jurisdiction and joinder are premature when discovery is sought before the plaintiff has named a defendant and the discovery is targeted to identify unknown individuals associated with the IP addresses.” But acknowledging that several other district courts had reached contrary conclusions in similar situations, and recognizing that a substantial ground for difference of opinion existed, the district court certified its order for immediate appeal. See28 U.S.C. § 1292(b).

The providers now reiterate the arguments they made in the district court—that the subpoenas are unduly burdensome because venue is improper, personal jurisdiction over these Doe defendants is lacking, and the defendants could not properly be joined together in one action. Our review is for abuse of discretion. See Recording Industry Ass'n of America, Inc. v. Verizon Internet Services, 351 F.3d 1229, 1233 (D.C.Cir.2003). As a “district court by definition abuses its discretion when it makes an error of law,” the “abuse-of-discretion standard includes review to determine...