Pressure mounted Friday on Righthaven LLC CEO Steven Gibson to explain how the firm can continue to operate while at the same time failing to pay off more than $216,000 owed to creditors.
Effforts to locate Righthaven's cash were initiated in court Friday by a second Righthaven copyright lawsuit defendant, Thomas DiBiase, whose attorneys are also investigating whether Righthaven has been involved in alleged "fraudulent transfers" of its funds.
Las Vegas-based Righthaven is the copyright enforcement partner of the Las Vegas Review-Journal and formerly of the Denver Post, which didn’t renew its Righthaven contract.
After filing 275 no-warning copyright infringement lawsuits since March 2010, Righthaven is struggling with legal setbacks in which judges either threw out lawsuits on fair use grounds or dismissed suits because Righthaven lacked standing to sue.
Righthaven based its lawsuits on copyrights from newspapers, but six federal judges have found those copyright assignments were invalid for lawsuit purposes.
That’s because the newspapers maintained control of the material Righthaven was suing over.
Righthaven said the lawsuits were needed to deter rampant online infringement of newspaper content. Critics said the suits were frivolous, involved dubious legal claims and that their no-warning nature showed they were part of a legal shakedown scheme.
After defendants DiBiase, Wayne Hoehn, and Leland Wolf defeated Righthaven in court, courts ordered Righthaven to pay their attorney’s fees totaling $216,355.
Righthaven has failed to pay any of these judgments and fees, saying it’s short of cash because of its legal setbacks and can’t allocate funds for paying off the debts.
Attorneys for Hoehn obtained a court order requiring the U.S. Marshals Service to seize Righthaven assets to cover his $63,720 in fees. After the Marshals Service executed a judgment writ on a Righthaven bank account containing less than $1,000, Hoehn’s attorneys asked that Gibson and his wife appear for a judgment debtor’s examination and this month asked that a receiver be appointed to auction Righthaven assets, including the copyrights it uses for lawsuits.
As of Friday, the court had not acted on these requests and Righthaven had not filed any response in court to those requests.
However, the Marshals Service filed paperwork on Friday saying it had also served a judgment writ on the law office of Shawn Mangano, an outside attorney for Righthaven who may hold money from Righthaven in his trust account. The paperwork didn’t indicate how much money, if any, is affected by the service upon Mangano.
Attorneys for DiBiase, in the meantime, filed their own motion Friday requesting that Gibson appear before a U.S. magistrate judge for a debtor’s examination concerning the $119,488 owed for DiBiase’s legal fees.
DiBiase is represented by attorneys at the digital freedom group the Electronic Frontier Foundation, who said in their request that Gibson should be required to appear in court for the examination, as opposed to doing it privately outside of court.
“The supervision of a magistrate is necessary since Righthaven and its chief executive officer, Mr. Gibson, have had a history of unreasonably and vexatiously refusing to respond to discovery in this litigation based on unreasonable objections,” the DiBiase motion said.
A request for comment on these assertions was placed with Righthaven.
DiBiase’s attorneys also asked that Righthaven be required to turn over to them detailed financial information about the company as they’re trying to determine how Righthaven can continue to pay rent for Las Vegas office space and to pay outside attorneys to litigate in other cases — expenses that easily exceed the money that was identified in the seized bank account.
"If Righthaven is continuing to operate it must have another source of funds," DiBiase’s attorneys said in their filing.
“Mr. DiBiase is entitled to discover where Righthaven’s funds are located, and whether any transfers of those funds were fraudulent,” the filing said.
While Righthaven has not yet responded to this filing, in the past it has attempted to avoid paying the attorney’s fees of opposing attorneys by appealing the fee awards.
With Righthaven appealing the underlying dismissals of lawsuits involving DiBiase and Wolf (owed $33,147 for his fees) it’s also likely to appeal the attorney’s fee awards in both cases.
The attorney’s fees awarded against Righthaven so far, however, are just the beginning of its financial troubles.
It and R-J owner Stephens Media LLC face a much larger potential fee award in Righthaven’s heavily litigated lawsuit against the Democratic Underground, while fees are also possible against Righthaven in numerous other open cases including seven lawsuits that remain open over Denver Post material in federal courts in Colorado and South Carolina.
Separately, three more Righthaven cases have been closed in recent weeks, but not on the merits of the copyright infringement claims against the defendants.
A suit over a Denver Post photo against David Rozzell of Katy, Texas, was voluntarily dismissed Nov. 7 under a joint stipulation in which each party agreed to bear its own legal fees and costs. Terms of the stipulation were not disclosed.
Another suit against Rod Brooks of Victoria, British Columbia, who has a website geared toward 911 dispatchers, was similarly voluntarily dismissed the same day. That case involved a Review-Journal story.
And a suit against Goff Associates in the United Kingdom involving a Review-Journal story was dismissed by a judge Wednesday after Righthaven failed to show it had served the defendant by the court’s deadline.