Capitol Records, Inc. v. Thomas-Rasset

• Citation: 100 U.S.P.Q.2d 1183,799 F.Supp.2d 999
• Decision Date: 22 July 2011
• Docket Number: Civil File No. 06–1497 (MJD/LIB).
• Parties: CAPITOL RECORDS, INC., et al., Plaintiffs, v. Jammie THOMAS–RASSET, Defendant.
• Court: U.S. District Court — District of Minnesota

100 U.S.P.Q.2d 1183

799 F.Supp.2d 999

CAPITOL RECORDS, INC., et al., Plaintiffs,

v.Jammie THOMAS–RASSET, Defendant.

Civil File No. 06–1497 (MJD/LIB).

United States District Court, D. Minnesota.

July 22, 2011.

Andrew B. Mohraz, David A. Tonini, and Timothy M. Reynolds, Holme Roberts & Owen, LLP; Felicia J. Boyd, Barnes & Thornburg, LLP; and Matthew J. Oppenheim, Oppenheim Group, LLP; for Plaintiffs.

Joe Sibley and K.A.D. Camara, Camara & Sibley, LLP, and Brant D. Penney and Garrett D. Blanchfield, Jr., Reinhardt Wendorf & Blanchfield, for Defendant.

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

MEMORANDUM OF LAW & ORDER

MICHAEL J. DAVIS, Chief Judge.I. INTRODUCTION

This matter is before the Court on Plaintiffs' Motion to Amend Judgment [Docket No. 435] and Defendant's Motion to Alter or Amend the Judgment and Renewed Motion for Judgment as a Matter of Law [Docket No. 437].

II. SUMMARY OF THE COURT'S OPINION

The Court grants Thomas–Rasset's motion and reduces the damages award to its constitutional maximum of $2,250 per song—three times the statutory minimum.

The Court is intimately familiar with this case. It has presided over three trials on this matter and has decided countless motions. It has grappled with the outrageously high verdict returned in a case that was the first of its kind to go to trial. The Court is loath to interfere with the jury's damages decision. However, the Constitution and justice compel the Court to act.

The Court concludes that an award of $1.5 million for stealing and distributing 24 songs for personal use is appalling. Such an award is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable. In this particular case, involving a first-time willful, consumer infringer of limited means who committed illegal song file-sharing for her own personal use, an award of $2,250 per song, for a total award of $54,000, is the maximum award consistent with due process.

This reduced award is punitive and substantial. It acts as a potent deterrent. It is a higher award than the Court might have chosen to impose in its sole discretion, but the decision was not for this Court to make. The Court has merely reduced the jury's award to the maximum amount permitted under our Constitution.

The Court further grants Plaintiffs' request to amend the Judgment to include a permanent injunction, but declines to enjoin Defendant from making available Plaintiffs' works because, as the Court previously held, the Copyright Act does not provide a making-available right.

III. 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–Rasset 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.

The first trial on this matter began on October 2, 2007. On October 4, 2007, the jury found that Thomas–Rasset had willfully infringed 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] The total damages award was $222,000. 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 September 24, 2008, the Court vacated the verdict and granted a new trial based on its conclusion that it had erred in giving Jury Instruction No. 15, which addressed the existence of a making-available right. [Docket No. 197] The Court made no findings regarding the constitutionality of the damages award.

The second trial of this matter began on June 15, 2009. On June 18, 2009, the jury returned a verdict finding that Thomas–Rasset had willfully infringed all 24 sound recordings and awarding statutory damages in the amount of $80,000 for each song, for a total verdict of $1,920,000. [Docket No. 336] On June 19, 2009, the Court entered judgment on the jury's verdict. [Docket No. 338]

Thomas–Rasset filed a motion requesting that the Court set aside the award of statutory damages and provided three alternative bases: 1) the statutory damages provision of the Copyright Act, as applied to Thomas–Rasset, violated the due process clause of the U.S. Constitution; therefore, Plaintiffs must accept a $0 verdict; 2) the jury's application of the statutory damages provision of the Copyright Act was excessive and shocking so the Court should remit the verdict to the minimum statutory damages of $750 per sound recording infringed; or 3) the jury's application of the statutory damages provision of the Copyright Act was excessive and shocking so the Court should grant a new trial. Thomas–Rasset also raised issues related to the sufficiency of the evidence to sustain the verdict and the Court's evidentiary rulings. Plaintiffs requested that the Court amend the June 19, 2009 Judgment to include a permanent injunction.

On January 22, 2010, the Court issued an Order holding that the jury's statutory damages award of $80,000 per song infringed was shocking and unjust and remitted the damages award to $2,250 per song, three times the statutory minimum. [Docket No. 366] Because the Court reduced the damages award based on remittitur, it did not reach the question of whether the verdict was unconstitutional. The Court further denied Defendant's evidentiary objections and, conditioned upon Plaintiffs' acceptance of the remittitur, granted Plaintiffs' request for an injunction.

On February 8, 2010, Plaintiffs exercised their right to reject remittitur and request a new jury trial solely on the issue of damages. [Docket No. 371]

The case proceeded to trial for a third time on November 2, 2010. On November 3, the jury returned a verdict awarding statutory damages in the amount of $62,500 for each song, for a total verdict of $1,500,000. [Docket No. 427] On November 8, the Court entered judgment on the jury's verdict. [Docket No. 428]

Plaintiffs have now filed a Motion to Amend Judgment, seeking to include the same injunctive relief they previously sought in the final judgment. Defendant has filed a Motion to Alter or Amend the Judgment and Renewed Motion for Judgment as a Matter of Law requesting that the Court remove or reduce the award of statutory damages as unconstitutional.

IV. DISCUSSIONA. Motion to Alter or Amend the Judgment

1. Introduction

Defendant requests that this Court amend the judgment to reduce the damages award on the grounds that the award violates the due process clause of the Constitution because it bears no reasonable relationship to the actual damages caused by Defendant. Specifically, she brings an as-applied challenge to the constitutionality of the statutory damages awarded under 17 U.S.C. § 504(c).

Although, in the past, the Court endeavored to avoid unnecessary adjudication of a constitutional issue by relying upon remittitur, based on Plaintiffs' demonstrated refusal to accept remittitur, the Court must now address the constitutionality of the damages award, because, after yet another trial on damages, the Court would face the same constitutional question. Moreover, Defendant has not requested remittitur at this juncture.

“[A] court has a mandatory duty to correct an unconstitutionally excessive verdict so that it conforms to the requirements of the due process clause.” Ross v. Kansas City Power & Light Co., 293 F.3d 1041, 1049 (8th Cir.2002) (quoting Johansen v. Combustion Eng'g, Inc., 170 F.3d 1320, 1331 (11th Cir.1999)). The Court has a duty to review whether a statutory damages award conforms to the due process clause even when a jury has rendered the award. See, e.g., S.W. Tel. & Tel. v. Danaher, 238 U.S. 482, 491, 35 S.Ct. 886, 59 L.Ed. 1419 (1915) (reversing judgment entered on jury's $6,300 statutory damages award because the award “was so plainly arbitrary and oppressive as to be nothing short of a taking of its property without due process of law”). See also Seaboard Air Line Ry. v. Seegers, 207 U.S. 73, 78, 28 S.Ct. 28, 52 L.Ed. 108 (1907) (noting that the due process clause imposes “limits beyond which penalties may not go”).

2. Standard for Review of the Constitutionality of the Statutory Damages Award

The parties disagree on the applicable standard for review of the constitutionality of a statutory damages award. Plaintiffs and the Government assert that the correct standard is found in St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 67, 40 S.Ct. 71, 64 L.Ed. 139 (1919), while Defendant claims that the punitive damages standard found in BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), and State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003), applies. The Court concludes that the Williams standard applies to its analysis.

a) The Williams Standard

Under Williams, an award of statutory damages satisfies due process so long as it is not “so severe and oppressive as to be wholly disproportioned to the offense or obviously unreasonable.” 251 U.S. at 67, 40 S.Ct. 71. In Williams, the Supreme Court upheld a statutory penalty of $75 for a railroad ticket overcharge of 66 cents. The railroad alleged that the award, within the statutory range of 50 to 300 dollars, violated due process. The Supreme Court explained that the government had the power to impose fines and to permit the...