8th Circuit Reinstates $222,000 Statutory Damages Against File Sharer

8th Circuit Reinstates $222,000 Statutory Damages Against File Sharer

ST. PAUL, Minn. - (Mealey's) Determining that a jury award of $222,000 from almost five years ago was constitutional, an Eighth Circuit U.S. Court of Appeals panel on Sep. 11 reinstated the award in favor of a group of six plaintiff record labels against a Minnesota woman accused of online file-sharing (Capitol Records, et al. v. Jammie Thomas-Rasset, No. 11-2820 and 11-2858, 8th Cir.; See August 2011, Page 4).

Without specifically ruling on whether the defendant violated the Copyright Act by making songs available on the KaZaA peer-to-peer (P2P) network, the panel found that a lower court should have enjoined her from any future such actions, calling such an injunction "lawful and appropriate."

Verdicts And Awards

The case began in April 2006 when the record labels, including Capitol Records Inc., Interscope Records and UMG Recordings Inc., sued Jammie Thomas-Rasset for copyright infringement for sharing more than 1,700 songs on the KaZaA P2P network.  At an October 2007 trial, a jury found Thomas-Rasset guilty of willfully infringing 24 songs.  Judge Michael J. Davis ordered her to pay $9,250 per infringed song, for a total award to the labels of $222,000.

Thomas-Rasset was subsequently granted a retrial in June 2009, in which a second jury found her guilty of willful infringement, this time awarding the labels statutory damages of $80,000 per song, for a total of $1.92 million. 

Remittitur

In January 2010, Judge Davis granted in part Thomas-Rasset's motion for remittitur by reducing the per-song award amount to $2,250, for a total of $54,000.  In lieu of accepting the remitted amount, the labels selected a new trial on damages, per the options presented by Judge Davis.

After a new damages trial, a jury on Nov. 3, 2010, again found Thomas-Rasset's infringement to be willful and awarded the record labels damages of $62,500 per song, for a total statutory award of $1.5 million.  Judge Davis issued judgment in accordance with the verdict.  Both sides filed post-judgment motions, with Thomas-Rasset again seeking reduction of the judgment against her.  As with the previous judgment, the labels asked Judge Davis to issue a permanent injunction to prevent any further infringing actions by Thomas-Rasset. 

Calling the jury's award "appalling" and "severe and oppressive," Judge Davis again reduced the award against Thomas-Rasset to $54,000.  Although the judge said he was "loath to interfere with the jury's damages decision," he found the award "to be wholly disproportioned to the offense" of file-sharing "and obviously unreasonable."  He also concluded that the award violated the due process clause of the Fifth Amendment to the U.S. Constitution.  Judge Davis also enjoined Thomas-Rasset from "using the Internet or any online media distribution system to reproduce . . . or distribute" any of the plaintiffs' recordings. 

Both sides appealed to the Eighth Circuit.  The labels sought a reinstatement of the first jury award of $222,000, as well as a broader injunction that would specifically bar Thomas-Rasset from making any of their recordings available for distribution to the public.  Thomas-Rasset sought a ruling stating that any statutory award is unconstitutional and a vacating of the existing award.

Broader Injunction

The panel, which comprised Judges Diana E. Murphy, Michael J. Melloy and Steven M. Colloton, declined to review earlier rulings in the case and some of the issues involved with them.  Focusing only on the District Court's final judgment, the panel reminded the parties that "this court reviews judgments, not decisions on issues."

Turning to the injunction issued by Judge Davis, the panel agreed that it was not broad enough.  The judge had declined to enjoin Thomas-Rasset from making sound recordings available for distribution, stating that the Copyright Act does not specifically preclude such activities.  Regardless of whether that conclusion is true, the panel found, the ruling was based on an error of law.  The District Court had "the authority to issue a broad injunction in cases where 'a proclivity for unlawful conduct has been shown.'"  Citing Thomas-Rasset's willful infringement, which was affirmed by three juries, and her attempts to conceal her actions by blaming them on her children and boyfriend, the panel held that she showed such proclivity.  The panel directed the District Court to modify the existing injunction to include the relief requested by the labels.

Statutory Penalties

The panel also disagreed with Judge Davis' conclusion that the third jury award violated the due process clause.  Although a damages award violates the due process clause if it is "so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable," the panel noted that Congress used a "wide latitude of discretion" in setting statutory damages guidelines in the Copyright Act.  Due process generally pertains to prohibiting excessive awards when a defendant has not received fair notice of conduct that will subject him or her to punishment.  This is not the case with statutory awards where the penalties and damages "are identified and constrained by the authorizing statute," the panel said.

Thomas-Rasset argued that the guidelines for reviewing punitive damages awards in State Farm Mutual Automobile Insurance Co. v. Campbell (538 U.S. 408, 418 [2003]) should be considered.  The panel said there is no Supreme Court precedent for applying these punitive damages guideposts to the statutory damages context. 

The panel held that $2,250 per work is appropriate for a case such as this where an infringer "demonstrated an aggravated case of willful infringement."  The panel further stated that statutory damages are "meant to achieve an important public interest" in copyright infringement cases, specifically noting the "serious problem" of piracy that has afflicted the recording industry in recent years.

The labels are represented by Paul D. Clement, Jeffrey M. Harris and Erin E. Murphy of Bancroft in Washington, D.C., Matthew J. Oppenheim of Oppenheim & Zebrak in Potomac, Md., and Timothy M. Reynolds and Eve G. Burton of Holme Roberts & Owen in Denver.  K.A.D. Camara and Michael Lee Wilson of Camara & Sibley in Houston represent Thomas-Rasset.

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State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003)

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