Righthaven Archives
Attorneys fighting Las Vegas copyright infringement lawsuit filer Righthaven LLC on Sunday accused the company of fraudulently paying its attorneys and CEO while failing to pay defendants who defeat Righthaven in court.
Righthaven since March 2010 has filed 275 no-warning lawsuits claiming material from the Las Vegas Review-Journal and the Denver Post was misappropriated by website operators, bloggers and message board posters.
The litigation campaign is stalled after judges in Nevada and Colorado found Righthaven lacked standing to sue because — despite Righthaven’s claims of ownership — the newspapers maintained control of the material it sued over.
In three of the cases, defendants were also found to have been protected by the fair use doctrine of copyright law in posting two Review-Journal stories and an R-J column without authorization.
As Righthaven waits for a ruling from one of the Nevada judges on whether it can start suing again under an amended Review-Journal lawsuit contract beefing up its ownership claims, the company is appealing the previous adverse court rulings.
In the meantime it’s trying to persuade the 9th U.S. Circuit Court of Appeals in San Francisco to set aside an order requiring that by Oct. 28 it post a bond to guarantee payment of $34,045 in legal fees to Kentucky message board poster Wayne Hoehn, whose attorneys defeated Righthaven on fair use and standing grounds.
In an "urgent motion" last week, Righthaven said it was unable to procure a bond and was short on cash. It told the court that due to ongoing legal expenses and a lack of lawsuit settlement revenue because of the stalled lawsuit campaign, "it is presently unable to allocate more than $34,000 toward the bond required by the district court."
Attorneys for Hoehn with Randazza Legal Group in Las Vegas fired back on Sunday, filing a brief with the court claiming Righthaven’s "urgent motion" was part of a pattern of it misleading courts about its lawsuits and its financial situation as tries to dodge paying prevailing defendants’ legal fees.
The Randazza filing covered previous findings by one of the Nevada federal judges that Righthaven had misled the court about its standing to sue, tainting earlier court victories for Righthaven, and concluded that "Righthaven’s record of conduct belies any benefit of the doubt the court (the 9th Circuit) could afford it."
"Righthaven has provided no statement of its operating expenses, and it appears that Righthaven’s sole expenses are paying its CEO (Las Vegas attorney Steven Gibson), who hatched and profited from this illegal scheme, and paying its attorneys in order to file frivolous motions and avoid paying lawful judgments," the Randazza filing said. "It is clear that Righthaven’s plan is to consume its remaining capital by transferring money to those who least deserve it, exhausting its funds until it is in a state of bankruptcy. The courts, thus far, have been unwittingly complicit in this scheme by their failure to take a definitive stand against the ongoing fraudulent transfers. It must stop here."
"It is Hoehn’s position that these constitute fraudulent transfers, executed in order to frustrate efforts to collect rightfully-granted fee awards," the Randazza filing said.
"Righthaven LLC began its litigation campaign with a roar – filing hundreds of lawsuits against defendants who acted lawfully like Mr. Hoehn, engaging in fair use. Every court that examined Righthaven’s scheme rejected it. When asked, courts grant Righthaven defendants their attorneys’ fees. When faced with the prospect of payment, Righthaven figuratively responds, “I would prefer not to,” Randazza's filing said.
"Righthaven engages in a calculated sleight of hand, seeking to avoid making an overt material misrepresentation to the court – but attempts to mislead it nonetheless. Righthaven does not state that it lacks the funds, but rather claims it cannot 'allocate' funds to post the required bond. The message is clear – 'I would prefer not to,'” the filing said.
Righthaven and Gibson have not yet responded to these assertions, but in the past they’ve said the no-warning lawsuits were needed to crack down on rampant online infringement of newspaper material.
The Hoehn attorney’s fee demand is just one of many Righthaven is likely to be hit with.
On Friday, Randazza Legal Group and other attorneys asked for $33,148 in fees for representing prevailing defendant Leland Wolf of the It Makes Sense Blog in Denver, and additional fee requests of several hundred thousand dollars have been or are likely to be made in other Righthaven cases in Colorado, South Carolina and Nevada.
Righthaven, despite its backing by the family of billionaire Arkansas investment banker Warren Stephens, owner of the Review-Journal, has said the attorney’s fees awards could push it into bankruptcy.
If there is a bankruptcy, the Randazza court filings Sunday suggest the "fraudulent transfer" claims would be asserted in bankruptcy court.
Fraudulent transfer and "preference" claims are not unusual in bankruptcy cases and typically seek the return of all or portions of certain payments made by a debtor before its bankruptcy filing.
The theory behind fraudulent transfer claims is that such payments contributed to the insolvency of a debtor and that the money should be returned to its creditors; while the theory behind preference claims is that all creditors may have a claim against the money used to make those payments.
For instance, scores of fraudulent transfer and preference cases were filed in the bankruptcies of Lake Las Vegas and the Fontainebleau resort.