Music Download Lawsuit - John Deep v. RIAA, Boies, et al. - Music Download Inventor Sues His Lawyer David Boies, Music Labels & Movie Studios

Judges Torruella, Lynch and Howard - United States Court of Appeals for the First Circuit

John Deep — Wed, 12 Mar 2008 11:19:08 -0600

Appellant John A. Deep has appealed from an October 2, 2006 order entered in parallel district court actions. In re Compact Disc Minimum Adver. Price Antitrust Litigation, 456 F.Supp. 2d 131 (D. Me. 2006). (Appeals Nos. 06-2576 and 06-2708). He has also appealed the denial of three postjudgment motions filed pursuant to Fed. R. Civ. P. 60(b). (Appeals Nos. 07-1439; 07-1668; 07-1669). Finally, Deep has appealed an order, dated June 26, 2007, that dismissed a third action and imposed sanctions and an injunction. Deep v. Boies, 493 F. Supp. 2d 88 (D. Me. 2007). (Appeal No. 07-2004). We affirm these district court orders in all respects.

Many of the claims raised in the district court have been abandoned by Deep and, thus, waived, as he has not addressed them in his appellate briefs. As to the remaining claims, we review, de novo, the grant of a motion to dismiss. Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 95 (1^st Cir. 2007). The district court was clearly correct in determining that Deep’s claims are unrelated to the claims previously settled in In re Compact Disc Minimum Adver. Price Antitrust Litigation, 292 F. Supp. 2d 184 (D. Me. 2003). And, we reject, as unfounded, Deep’s contention that he was unfairly surprised by the court’s ruling on this issue. There was also no error in the district court’s determination that Deep’s claims against the defendant Lawyers do not demonstrate a fraud on the court. Nor are we persuaded by Deep’s argument that his failure on this claim resulted from the defendants’ conduct.

There was neither error of law nor abuse of discretion in denying any of Deep’s three Rule 60(b) motions. See Roger Edwards LLC v. Fiddes & Son Ltd., 427 F.3d 129, 132 (1^st Cir. 2005) (reciting standard of review). We do not consider Deep’s argument that the district court should not have abstained from deciding the state law claims against the defendant Lawyers or the claim against Trans World Entertainment Corporation for allegedly aiding and abetting the Lawyers’ alleged breach of fiduciary duty, as we lack appellate jurisdiction over the district court’s discretionary decision to abstain pursuant to § 1334(c)(1). 28 U.S.C. § 1334(d). See, e.g., In re Cody, Inc. 338 F.3d 89, 97 (2d Cir. 2003). There was no abuse of discretion in the district court’s vacatur of a February 2005 preservation order.

Finally, there was no error in the district court’s determination that it lacked subject matter jurisdiction over the third action filed in March 2007. See Johansen v. United States, 506 F.3d 65, 68 (1^st Cir. 2007) (reciting standard of review). Nor was there an abuse of discretion in the imposition of the sanction and injunction order.

John A . Deep v. RIAA, Boies - Opinion of Judge D. Brock Hornby

John Deep — Wed, 04 Oct 2006 06:47:32 -0500

The plaintiff, John Deep, is proceeding in this court without a lawyer. He filed the first of these two lawsuits, 05-cv-118, as an adversary proceeding in Bankruptcy Court for the Northern District of New York in 2004. Compl., In re Deep, Adv. Proc. No. 04-90037 (Bankr. N.D.N.Y Feb. 11, 2004). District Judge Kahn withdrew the bankruptcy reference, Deep v. Recording Indus. Ass’n of America, No. 04-mc-055 (N.D.N.Y. Feb. 7, 2005). Deep then amended his complaint. The MDL Panel transferred the lawsuit here on June 21, 2005. Deep v. Recording Indus. Ass’n of America, No. 05-cv-205 (N.D.N.Y. Jun. 21, 2005). Deep then amended his complaint once again, adding new parties. Second Am. Compl., No. 05-cv-118 (Docket Item 34).

In his Second Amended Complaint, Deep covers a number of newsworthy topics of the past few years, including Attorney David Boies’s representation of Vice President Al Gore in Bush v. Gore, Compl. ¶ 2; the Napster litigation, id.; investigations of Tyco, Adelphia and accounting firm Deloitte & Touche, id. ¶¶ 19, 26; kickbacks and payola in the music industry extending to “a major chain of radio stations,” Clear Channel, id. ¶ 112; investigations by New York Attorney General Elliot Spitzer, id. ¶¶ 113-14; congressional testimony of singer Sheryl Crow before the late Congressman Sonny Bono, id. ¶ 135; bootlegging of CDs and DVDs, id. ¶¶ 107-09; proper accounting rules for the recording industry, id. ¶¶ 121-31; and the controversy over an arrangement by which Attorney David Boies and his related law firms allegedly steered client business to a litigation support company, Amici LLC, without disclosing his or his family’s ownership of Amici, id. ¶¶ 11-20.

Deep describes an alleged conspiracy by which “Labels and Studios” schemed to inflate their revenue and profits by paying kickbacks to Trans World, a distributor. The conspiracy allegedly involved bribes, slush funds, fraudulent accounting practices, bid-rigging, kickbacks, and other devices, id. ¶¶ 93-96 ff.; phantom credits and other practices by which the “Labels and Studios” defrauded artists of their rightful royalties, id. ¶¶ 132-40; and a variety of other apparently sordid dealings (for example, “a massive fraud in which consumers, investors and artists are deceived,” id. ¶ 104). Deep claims the following relationship to the events he describes. He says that he invented a method of determining the price a consumer is willing to pay for an item online, a method that Deep says can be used successfully for “targeted marketing of discounted prices,” id. ¶ 31; in another part of the complaint, the invention becomes one for downloading video-on-demand, id. ¶ 396; and he also refers to it as “sharing with buddies,” id. ¶ 78. At the time, Deep called his invention Aimster. Deep shopped the invention to Trans World and in September 2000 obtained a meeting with Trans World. Attending were Trans World CEO Robert Higgins, Trans World CFO John Sullivan, and Boies-Schiller lawyer Michael Endler. Id. ¶ 78. During the meeting, Higgins introduced Deep to a person named Bill Duker. Id. ¶ 79. After the meeting, “in a private discussion,” Higgins told Deep that he would ask Bill Duker to represent Higgins in purchasing an interest in Deep’s invention. Id. ¶ 80. Duker and Deep met later accordingly, and discussed how Deep’s invention could be used and the structure for benefiting Higgins. “Bill Duker then advised [Deep] that [Deep] engage Boies-Schiller as [Deep’s] lawyers.” Id. ¶ 88. Duker agreed to contact attorney David Boies on Deep’s behalf. Id. “[A]s a result of Bill Duker’s promise to [Deep] in September 2000 . . . David Boies sent his letter to [Deep] dated November 15, 2000,” thereby allegedly agreeing to represent Deep. Id. ¶ 89. Deep now claims that David Boies and related law firms had an undisclosed conflict of interest because they were representing Trans World at the same time in the In re Compact Disc Litigation in this court. Compl. ¶ 163.

According to Deep, that undisclosed conflict infected all that followed, including how Deep paid Boies (allegedly in part through an ownership option in Aimster that ended up in a company controlled by Boies’s family); the structuring of Deep’s deal with Trans World; concealed payments by Boies to Duker, who then allegedly used the money to buy Deep’s assets on behalf of Trans World and the Labels and Studios, Compl. ¶ 3, or according to later allegations, on behalf of all these entities and Boies as well, id. ¶¶ 5, 10; the use of these and other payments in creating Amici, id. ¶ 11, which Boies or Boies’s family allegedly controlled; Amici’s unauthorized use of Deep’s Aimster technology to conduct Amici’s business of litigation support services, id. ¶¶ 12- 13 (which, without the benefit of Deep’s involvement, was defective, id. ¶ 19); all resulting in a conspiracy “to manipulate the market for digital music and movies by fraudulently financing and controlling [Deep’s] business using undisclosed kickbacks and earn outs,” id. ¶ 22. The scheme or conspiracy allegedly continued into Deep’s bankruptcy proceedings. Id. ¶ 23. According to Deep, the named lawyers/law firms conspired with other lawyers and with one of Deep’s accountants, as a result of which these others received excessive and undisclosed compensation, id. ¶ 24; and they concealed litigation from Deep (here Deep refers to the notorious Tyco and Adelphia disputes, matters of national media interest), and in particular the settlement of In re Compact Disc Litigation in this District, id. ¶ 26.

Deep claims to have lost and seeks to recover over $1 billion because of the settlement of the In re Compact Disc Litigation in this District; over $10 million in an undescribed controversy with AOL; over $1.02 billion in the In re Aimster Copyright Litigation in the Northern District of Illinois; $10 million paid by Tyco and Adelphia to Amici; $40 million paid by other Boies-Schiller clients to Amici; and unknown other amounts. Id. ¶ 30.

The nub of Deep’s allegations appears to be his claim that his invention, Aimster, was worth a lot of money; but that the Lawyers, Trans World, Duker, and the “Labels and Studios” all stole it from him or prevented its success (for varying reasons), and were wrongly enriched at his expense. He makes claims of fraud on this court in the In re Compact Disc Litigation settlement and on other courts in other cases; claims under federal antitrust laws, Sarbanes- Oxley, federal RICO, and federal bankruptcy law (automatic stay and fraudulent transfer); claims under New York antitrust and consumer protection law and New York common law involving breach of fiduciary duty, aiding and abetting the fiduciary breach, breach of contract, negligence, conspiracy, tortious interference with business relations, piercing the corporate veil, declaratory and injunctive relief, and constructive trust for unjust enrichment.

Aimster Litigation: Background

John Deep — Fri, 21 Apr 2006 21:28:40 -0500

IN THE SUPREME COURT OF THE UNITED STATES
Date: October 28, 2003

Statement
John Deep, Petitioner, studied classical music performance at Harvard (B.A. '79), and is an author of seven books and of more than a dozen CD-ROM software products, whose work merging audio and video with e-books for education received the Smithsonian Award for Innovation in 1998, App. 121a; and also, an innovator featured in the Sunday Washington Post, Feb. 25, 2001, p. A1, App. 106a, and named one of Time Magazine's Innovators of the Year in Music in 2001,Time Magazine, May 28, 2001, P. 73, for his creation of Aimster; and recently, a provider of Aimster Internet service, incorporated as a venture for online retail of music and movies, with various co-shareholders including First Albany Corp., App. 111a, and TransWorld Entertainment, Corp., one of the largest specialty retailers of compact discs, prerecorded audio cassettes, prerecorded videocassettes, digital versatile discs ("DVDs") and related products in the United States, with sales of $1.41 billion. TransWorld Entertainment Corp. Annual Report, 10K, May 4, 2001 at "Business: General, Branding"

Petitioner, whom the court below called "Aimster," App. 2a, developed the Internet service at issue ("Aimster Internet service") in August 2000 and entered into an online retail venture with TransWorld Entertainment in late January 2001, see App 74-75a, which included corporations BuddyUSA, Inc. and AbovePeer, Inc. (the "Corporations"), App 26a.

Petitioner prays that in the present case this Court may hear other authors, innovators and providers similarly situated to Petitioner.

Respondents are the Recording Industry Association of America, Inc., et al., numerous plaintiffs, who among them, as the court below said, appear to own most subsisting copyrights on American popular music, App. 2a.

District Court Decision. Petitioner requested discovery of Respondents' anti-competitive actions and again requested an evidentiary hearing. But on July 18, the district court denied Petitioner the evidentiary hearing, App. 43a, and on September 4, 2002, granted an injunction and ordered Respondents to draft the injunction, App. 81a, and then adopted Respondents' language for a broad injunction verbatim. App. 82a.

Attorney Withdraws. Petitioner did not disclose details of his venture with TransWorld Entertainment until November 2002, when the district court granted his attorney's motion to withdraw (which cited potential conflict of interest), after denying the attorney's first motion. But once this key evidence came to light, certain speculative statements of the district court were proven to be plain error, namely: (1) "At issue is a service whose very raison d'etre appears to be the facilitation of and contribution to copyright infringement on a massive scale." App. 24a. (2) "Defendants manage to do everything but actually steal the music off the store shelf and hand it to Aimster's users" App. 53a

Instead, Petitioner proved that he did everything solely to sell music from the shelves of his co-shareholder TransWorld, his very raison d'etre to promote the online retail venture of music and movies, as a review of the record shows. Indeed, Petitioner submitted the actual TransWorld exclusive licensing agreement, (in which TransWorld is referrd to as the "Purchaser") and some important provisions are:

Scope:Aimster will develop a customized version of the software, and the Content is defined as "music, movies and videogames."
Absolute Right to Permit File-Sharing:File-sharing "shall not be deemed to violate the Purchaser's exclusive rights."
Right to Use and Exclusivity:TransWorld will have the exclusive right both to sell Content and to "exclusive hosting."

Source: First Report of Compliance, November 12, 2002. Fortunately, on appeal the court below had before it a clear record of Petitioner's relationship with TransWorld, and did not appear to adopt the most egregious of the district court's plain error. Of course, this Court would have the same clear record for review.

Appeal. Petitioner provided Internet service to the general public, a number estimated in the millions. App. 107a. But the broad injunction granted had the effect of shutting down the Aimster Internet service entirely, App. 2a. On November 26, even without counsel, Petitioner appealed pro se, and requested an emergency stay of the unprecedented overbroadness of the injunction. However, the court below denied the stay and affirmed the grant of injunction in its opinion published on June 30, 2003, In re Aimster, 334 F.3d 643 ("In re Aimster").

Music Download Lawsuit: John Deep v. RIAA, Boies, et al.

John Deep — Tue, 18 Apr 2006 15:30:53 -0500

I, John A. Deep, plaintiff in the above-captioned matter, as and for my Complaint against defendant David Boies (“Boies”), the defendant law firms of Boies, Schiller & Flexner, LLP (“Boies Schiller”) and Straus & Boies, LLP (“Straus Boies”) (collectively, my “Lawyers”), and other defendants including the Recording Industry Association of America, Inc. (“RIAA”), Trans World Entertainment Corp. (“Trans World”) and major labels, studios and distributors (collectively, the “Labels and Studios”), allege as follows upon information and belief as to all matters:

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
Date: September 28, 2005

I. NATURE OF THE ACTION

1. Boies became my lawyer in November 2000 in return for a substantial contingent interest in my assets, commonly known as “Aimster” (“Aimster”), and in my litigation claims related to Aimster. In consideration for Boies’s promise to provide his services as my lawyer, I paid a 15% equity interest to a company called Datamine LLC. At that time Boies had a reputation as one of the best lawyers in America.

2. I relied on Boies’s reputation both as a lawyer acting as lead counsel in antitrust litigation involving Napster, and also as lead counsel in Al Gore’s litigation in Tallahassee concerning the Florida vote in the 2000 presidential election. As Boies himself represented in a letter on the letterhead of his law firm Boies Schiller, dated November 15, 2000, and signed “David Boies”:

a. Boies had “contacted Hank Barry” – which was a reference, famously, to Napster’s CEO who was preparing for that company’s antitrust and copyright misuse litigation;

b. Boies was “in Tallahassee” – which was a reference, even more famously, to Boies’s widely publicized victory the day before, when a state court in Tallahassee had granted Boies’s request to enjoin the certification of the Florida vote; and

c. Boies acknowledged “Datamine’s 15% equity interest”; understood that I was “working with Bill to set up a consulting firm”; copied the letter to “Bill Duker”; and looked forward to working with me.

3. Despite my reliance on Boies’s reputation as a lawyer and the substantial interest in my assets I gave him to be my lawyer, Boies then contrived a scheme to abuse the trust that I placed in him as my lawyer by making concealed payments to William Duker – who, acting as an agent for Trans World (and in turn for the Labels and Studios), subsequently purchased exclusive rights to my assets while fraudulently negotiating with Boies as my lawyer.

Lawyers for Defendants RIAA, Boies, et al.

John Deep — Sat, 15 Apr 2006 16:35:49 -0500

KARIN G PAGNANELLI
MITCHELL SILBERBERG & KNUPP LL
representing
ARISTA GOOD GIRLS INC
ARISTA RECORDS INC
ATLANTIC RECORDING CORPORATION
ATLANTIC RHINO VENTURES INC
BAD BOYS RECORDS
CAPITOL RECORDS INC
ELEKTRA ENTERTAINMENT GROUP INC
HOLLYWOOD RECORDS INC
INTERSCOPE RECORDS
LAFACE RECORDS INC
LONDON-SIRE RECORDS INC
MOTOWN RECORD COMPANY LP
RCA RECORDS LABEL
RECORDING INDUSTRY ASSOCIATION OF AMERICA INC
SONY MUSIC ENTERTAINMENT INC
UMG RECORDINGS INC
VIRGIN RECORDS AMERICA INC
WALT DISNEY RECORDS
WARNER BROS RECORDS INC
WEA INTERNATIONAL INC
WEA LATINA INC
ZOMBA RECORDING CORPORATION

ROBERT S. FRANK
CHARLES A. HARVEY, JR.
HARVEY & FRANK
representing
BOIES SCHILLER & FLEXNER LLP
STRAUS & BOIES LLP
DAVID BOIES

KATHERINE B. FORREST
CRAVATH, SWAINE & MOORE LLP
representing
NEW LINE CINEMA CORPORATION
TIME WARNER ENTERTAINMENT COMPANY L P

ANDREW C. ROSE
NIXON, PEABODY LLP
representing
TRANSWORLD ENTERTAINMENT CORPORATION

THOMAS G HENTOFF
WILLIAMS & CONNOLLY
representing
COLUMBIA PICTURES INDUSTRIES, INC.
DISNEY ENTERPRISES, INC.
METRO-GOLDWYN-MAYER STUDIOS INC
NEW LINE CINEMA CORPORATION
PARAMOUNT PICTURES CORPORATION
TIME WARNER ENTERTAINMENT COMPANY L P
TWENTIETH CENTURY FOX FILM CORPORATION

Music Download Lawsuit: Summary of John Deep v. RIAA, David Boies, et al.

John Deep — Thu, 13 Apr 2006 23:53:32 -0500

My lawyers concealed their pecuniary interests with a convicted felon who was an agent for label and studio defendants and their retailer. Colluding with these defendants for their pecuniary gain, my lawyers corruptly influenced my testimony, spoiled evidence and perpetrated fraud upon this Court, other courts and the Department of Justice. I bring this independent action to recover damages caused me by this fraud.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
Date: January 4, 2006

A. Facts

I filed this action without the benefit of counsel on February 11, 2004, after I discovered that my lawyers, defendants David Boies, Boies Schiller and Straus Boies (my “Lawyers”), had concealed defendants’ fraud from me. My lawsuit, brought as an adversary proceeding in my bankruptcy, named certain label and studio creditors as defendants (“Label and Studio Defendants”). But obstructionist tactics by those defendant-creditors delayed discovery until, in February 2005, the district court granted my motion to withdraw the reference.

I then amended my complaint to add a retailer of music and movies, Trans World Entertainment Corp. (“Trans World”), which my lawyers had simultaneously represented without my knowledge or consent as a defendant before this Court. I also added specific allegations that defendants and my lawyers (1) corruptly influenced my testimony in the summer of 2001 in an antitrust investigation by the Department of Justice; and (2) spoiled evidence by willfully disobeying discovery orders issued by this Court. Defendants objected that my complaint was frivolous and vexatious, but they lost – the district court denied their motion to stay discovery and granted my application for an order preserving documents.

In June 2005, the Judicial Panel on Multi-District Litigation transferred my lawsuit to this Court. I then filed a motion requesting “the exercise of this Court’s broad power and responsibility to supervise the professional conduct of the attorneys appearing before it.” I also filed a declaration in which I swore: (1) my lawyers had concealed their (or their families’) pecuniary interests in entities called Datamine LLC and Amici LLC; and (2) my lawyers had colluded with an agent for defendants, a convicted felon known to me as “Bill Duker.”

In their July 2005 response filed in this Court, my lawyers stated, “This firm strongly disputes the allegations made in Mr. Deep’s motion and states unequivocally that his contentions of improper conduct are completely without merit.”

However, it was not long before my lawyers were forced to disclose the truth, that they (or their families) did in fact own a 50% interest in the company Datamine LLC, which in turn owned a 51% interest in Amici LLC. Moreover, my lawyers’ improper failure of disclosure of these interests in my bankruptcy may provide a reasonable basis to believe that a bankruptcy crime has been committed. As a result, my lawyers’ false statement in their letter denying their improper conduct constitutes contempt before this Court’s eyes.

At the end of August 2005, the Wall Street Journal also objectively verified what I had sworn to in this Court in June – and reported that my lawyers failed their duty to disclose their pecuniary interests with Mr. Duker. Mr. Boies said in an interview he should have fully disclosed his childrens’ ownership interests in Amici, and admitted that “I should have made certain that everyone knew about it.” The paper’s investigative report also determined that one of Amici’s founders was William F. Duker, a lawyer and former associate of Mr. Boies who pleaded guilty to four felony counts. See e.g., Laurie P. Cohen, Robert Frank, Adelphia, Boies Firm Agree to Split; Boies Clients Tied to Family Firm, Wall St. J., Aug. 30-31, 2005.

On September 25, 2005, this Court permitted me to amend my complaint (“Comp.” or my “Complaint”). I then added my lawyers as defendants, alleged fraud upon this Court and other courts, and described my lawyers’ concealed pecuniary interests specifically, alleging ...