Sony BMG Music Entm't v. Tenenbaum

• Decision Date: 23 August 2012
• Docket Number: CIVIL ACTION NO. 07-11446-RWZ
• Parties: SONY BMG MUSIC ENTERTAINMENT, et al. v. JOEL TENENBAUM
• Court: U.S. District Court — District of Massachusetts

SONY BMG MUSIC ENTERTAINMENT, et al.

v.JOEL TENENBAUM

CIVIL ACTION NO. 07-11446-RWZ

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

August 23, 2012

ORDER

ZOBEL, D.J.

This copyright infringement case is before me on remand from the First Circuit. See Sony BMG Music Entm't v. Tenenbaum, 660 F.3d 487 (1st Cir. 2011). Plaintiffs, recording companies Sony BMG Music Entertainment, Warner Brothers Records, Inc., Atlantic Recording Corporation, Arista Records LLC, and UMG Recordings, Inc. (collectively, "Sony"), brought this action for statutory damages and injunctive relief under the Copyright Act, 17 U.S.C. § 101 et seq. They alleged that defendant, Joel Tenenbaum, willfully infringed the copyrights of thirty music recordings by using peer-to-peer file-sharing software to illegally download and distribute such works. For brevity, I incorporate the First Circuit's discussion of the factual and procedural history, id. at 490-96, and summarize only that which is relevant to disposition of the issues on remand.

I. Background

After a five-day jury trial, District Judge Nancy Gertner partially granted Sony's motion for judgment as a matter of law, holding that plaintiffs owned the thirty copyrights at issue and that Tenenbaum infringed those copyrights through his downloading and distribution activities. The jury found that Tenenbaum's infringement was willful as to each of the thirty copyrighted works, and returned a verdict within the statutory range¹ of $22,500 per infringement, for a total damages award of $675,000.

Tenenbaum moved for a new trial or remittitur, arguing that the court should remit the award to the statutory minimum because its excessiveness both offended due process and merited common law remittitur. Judge Gertner bypassed the issue of common law remittitur, and reduced the jury award by a factor of ten on the basis that the award was unconstitutionally excessive under the standard for evaluating punitive damage awards enumerated in BMV v. Gore, 517 U.S. 559 (1996).² See Sony BMG Music Entm't v. Tenenbaum, 721 F.Supp.2d 85, 103 (D. Mass. 2010).

The First Circuit affirmed Judge Gertner's findings on liability and the grant of injunctive relief.³ It also rejected Tenenbaum's arguments "that the Copyright Act isunconstitutional under Feltner [v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998)], that the Act exempts so-called 'consumer copying' infringement from liability and damages, that statutory damages under the Act are unavailable without a showing of actual harm, that the jury's instructions were in error, and his various trial error claims."⁴ Tenenbaum, 660 F.3d at 515. The court of appeals vacated Judge Gertner's ruling that the damages award violated due process, however, holding that the doctrine of constitutional avoidance required the district court to consider whether common law remittitur was appropriate before it considered Tenenbaum's due process challenge. Id. at 490, 515. It reinstated the original damages award, and remanded "for consideration of defendant's motion for common law remittitur based on excessiveness." Id. at 515. Tenenbaum filed a petition for writ of certiorari, which was denied on May 12, 2012. Tenenbaum v. Sony BMG Music Entm't, 132 S.Ct. 2431 (2012).

II. Discussion

A. Common Law Remittitur

Remittitur is appropriate only if the award exceeds "any rational appraisal or estimate of the damages that could be based on the evidence before the jury," where such evidence is reviewed in the light most favorable to the prevailing party. Smith v. Kmart Corp., 177 F.3d 19, 30 (1st Cir. 1999) (quoting Milone v. Moceri Family, Inc., 847 F.2d 35, 36 (1st Cir. 1988)). See also E. Mountain Platform Tennis, Inc. v. Sherwin-Williams Co., Inc., 40 F.3d 492, 502 (1st Cir. 1994). "'[T]he obstacles which stand in the path of' such claims of excessiveness 'are formidable ones.'" Kmart, 177 F.3d at 30 (quoting Wagenmann v. Adams, 829 F.2d 196, 215 (1st Cir. 1987)). A damage award must stand unless 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)); Kmart, 177 F.3d at 30.

Under this stringent standard, there is no basis for common law remittitur. The jury was given a list of non-exhaustive factors to consider in issuing its award, including:

the nature of the infringement; the defendant's purpose and intent, the profit that the defendant reaped if any, and/or the expense that the defendant saved; the revenue lost by the plaintiff as a result of the infringement; the value of the copyright; the duration of the infringement; the defendant's continuation of infringement after notice or knowledge of copyright claims and the need to deter this defendant and other potential infringers.

Tenenbaum, 660 F.3d at 503-04. Tenenbaum did not object to these instructions. In light of these factors, a rational appraisal of the evidence before the jury,

viewed in the light most favorable to the verdict, supports the damages award. The jury learned that music recording companies' primary source of revenue stems from their exclusive rights to copy and distribute the musical works of their contracted artists. Id. at 491. It learned about the operation of peer-to-peer file-sharing networks and how such networks facilitated "the unauthorized and illegal downloading and distribution of copyrighted materials - especially music recordings. . . ." Id. The jury also heardevidence from which it could rationally conclude that the value of a blanket license to upload music recordings to the internet for public consumption would be "enormous." Id. at 491 and n.3 (quoting testimony by a representative from Universal Music Group which suggested the grant of a such a license would result in the record companies losing complete control over their assets and drive them out of business). See also Kmart, 177 F.3d at 30 ("Translating legal damage into money damages is a matter 'peculiarly within a jury's ken'. . . .").

There was further evidence about the scope and scale of Tenenbaum's infringement activities. His illegal conduct lasted for at least eight years, from 1999 to 2007. Id. at 492-93. During that time, he not only downloaded but also distributed thousands of copyrighted works to users of peer-to-peer file-sharing networks. Id. at 493.

The trial evidence also supports the jury's determination that Tenenbaum willfully infringed plaintiffs' copyrights. He conducted his infringing activities while knowing that lawsuits were being brought against individuals who downloaded and distributed music without authorization. Id. He personally received multiple warnings from various sources - including his father in 2002, his college in 2003, and plaintiffs in 2005 - and he was warned that his activities could subject him to liability of up to $150,000 per infringement. Id. at 493-94. In spite of these warnings, he continued to download and distribute copyrighted materials; indeed, even after receiving Sony's 2005 cease and desist letter, trial evidence shows that defendant continued his activities for two more years, until Sony filed this lawsuit against him. Id. at 495.

Plaintiffs' 2005 letter also informed Tenenbaum about the impact of his activities on the music industry and instructed him to preserve all evidence of his activities, including any recordings he made available for distribution; yet in spite of these instructions, Tenenbaum had his operating system on his laptop reinstalled and its hard drive reformatted. Id. at 494-95 and n.7. Furthermore, as the First Circuit noted, "[s]trong evidence established that Tenenbaum lied in the course of these legal proceedings in a number of ways." Id. at 495. At trial, Tenenbaum admitted that he lied in responding to Sony's discovery requests about the scope of his conduct using online media distribution systems, his use of peer-to-peer networks, and the installment of such networks on his computer. Id. When he was confronted at trial with his attempts to shift blame for his actions to others - including a foster child living in his family's home, his sisters, a family house guest, and burglars - Tenenbaum finally admitted responsibility. Id. at 496. In short, there was ample evidence of willfulness and the need for deterrence based on Tenenbaum's blatant contempt of warnings and apparent disregard for the consequences of his actions. In spite of the overwhelming evidence from which the jury could conclude that Tenenbaum's activities were willful, the award of $22,500 per infringement not only was at the low end of the range - only 15% of the statutory maximum - for willful infringement, but was below the statutory maximum for non-willful infringement. Considering all of the aforementioned evidence, the jury's damage award was not so excessive as to merit remittitur.

B. Due Process Challenge

I turn now to defendant's due process challenge. See Tenenbaum, 660 F.3d at515 n.28 ("If the district court determines that the jury's award does not merit common law remittitur, the court and the parties will have to address the relationship between the remittitur standard and the due process standard for statutory damage awards, should the issue continue to be raised.").

1. Standard

The First Circuit vacated the earlier due process analysis and strongly suggested, without deciding, that the standard for evaluating the constitutionality of statutory damages established in St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63 (1919) - rather than the Gore standard - should govern analysis of the constitutional issue. It noted that, in Gore, the Supreme Court did not overrule Williams, and that the Supreme Court has not "suggested that the Gore guideposts [for evaluating punitive damage awards] should extend to constitutional review of statutory...