Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 1 of 31 Page ID #:134 1 2 3 4 5 6 7 8 9 10 Morgan E. Pietz (SBN 260629) THE PIETZ LAW FIRM 3770 Highland Avenue, Suite 206 Manhattan Beach, CA 90266 mpietz@pietzlawfirm.com Telephone: (310) 424-5557 Facsimile: (310) 546-5301 Drew E. Pomerance (SBN 101239) Anne S. Kelson (SBN 257851) Jesse B. Levin (SBN 268047) ROXBOROUGH, POMERANCE, NYE & ADREANI 5820 Canoga Avenue, Suite 250 Woodland Hills, CA 91367 dep@rpnalaw.com ask@rpnalaw.com jbl@rpnalaw.com Telephone: (818) 992-9999 Facsimile: (818) 992-9991 11 12 13 14 15 16 17 18 19 20 21 22 Attorneys for Plaintiff John Blaha, Individually and on Behalf of Others Similarly Situated UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA John Blaha,* individually and on behalf of others similarly situated, Plaintiff, v. Rightscorp, Inc., a Nevada corporation, f/k/a Stevia Agritech Corp.; Rightscorp, Inc., a Delaware corporation; Christopher Sabec; Robert Steele; Craig Harmon; Dennis J. Hawk; BMG Rights Management (US) LLC; Warner Bros. Entertainment Inc.; and John Does 1 to 10, 23 24 25 26 Case No.: 2:14-cv-9032-DSF-(JCGx) Assigned to: Hon. Dale S. Fischer United States District Judge Referred to: Hon. Jay C. Gandhi United States Magistrate Judge FIRST AMENDED CLASS ACTION COMPLAINT FOR: (1) Violations of the Telephone Consumer Protection Act (47 U.S.C. § 227) (2) Abuse of Process (Under Federal and California Law) Defendants. [*Previously captioned with Karen J. Reif and Isaac Nesmith as lead plaintiffs] AND DEMAND FOR JURY TRIAL 27 28 -1- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 2 of 31 Page ID #:135 11 Plaintiff John Blaha, individually and on behalf of others similarly situated 22 (“Plaintiff”), brings this class action complaint against defendants Rightscorp, Inc., 33 a Nevada corporation, formerly known as Stevia Agritech Corp., and Rightscorp, 44 Inc., a Delaware corporation (together, “Rightscorp”); Christopher Sabec, Robert 55 Steele, Craig Harmon, and Dennis J. Hawk, who are all individuals (the “Individual 66 Defendants”); and clients of Rightscorp, namely BMG Rights Management (US) 77 LLC; Warner Bros. Entertainment Inc.; and John Does 1 to 10, and hereby allege as 88 follows: NATURE OF THE CASE 99 1010 1. Rightscorp describes itself to investors as a “leading provider of 1111 monetization services” for copyright owners. Rightscorp’s business model involves 1212 using federal legal process and the threat of statutory damages for copyright 1313 infringement to engage in what some call “speculative invoicing” of consumers who 1414 it accuses of having engaged in file sharing. 1515 2. As part of its ongoing efforts to leverage “settlements” for purported 1616 claims of copyright infringement from consumers, Rightscorp has unlawfully made 1717 extensive and repeated use of an automatic telephone dialing system and/or a 1818 prerecorded or artificial voice (a “Robo-Caller”), to call Plaintiff on his cell phone, 1919 in violation of the Telephone Consumer Protection Act (47 U.S.C. § 227) 2020 (“TCPA”). 2121 3. To identify potential consumers to target, Rightscorp has willfully 2222 misused this Court’s subpoena power by issuing at least 142 special DMCA 2323 subpoenas, per 17 U.S.C. § 512(h), to various Internet Service Providers (“ISPs”). 2424 These subpoenas, which were issued on this Court’s authority, but procured outside 2525 of an adversarial proceeding and without any judicial review, are so clearly legally 2626 invalid as to be a sham and abuse of the legal process. Rightscorp has known since 2727 at least 2012, when its issuance of DMCA subpoenas was challenged in this Court, 2828 that current law does not allow the DMCA subpoena procedure it wished to utilize. -2- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 3 of 31 Page ID #:136 11 See Telscape Comm’s, Inc. v Rightscorp, Inc., C.D. Cal. No. 2:2012-cv-8833-JSF- 22 (JCGx), ECF No. 12, 11/8/2012 (Fischer, J.) (granting ISP’s motion to quash 33 Rightscorp DMCA subpoena after Rightscorp failed to oppose). Despite conceding 44 its position and declining to argue that the law should be changed back in 2012, 55 Rightscorp continued to obtain DMCA subpoenas—at least 142 of them—from the 66 Clerk of this Court, and continued to serve them on smaller to medium-sized ISPs1. 77 More recently, after a Texas ISP again moved to quash one of the 142 DMCA 88 subpoenas issued on this Court’s authority, Rightscorp withdrew that subpoena, 99 again seeking to avoid judicial review of its plainly unlawful use of this Court’s 1010 subpoena power. See In re Subpoena Issued to Grande Com’n. Net’s., LLC, W.D. 1111 Tx. No. 1:14-mc-00848, ECF No. 3, 9/10/14 (notice to court that Rightscorp 1212 withdrew its subpoena); see also id. at ECF No. 1, 9/5/14 (ISP’s motion to quash). 1313 Nevertheless, even after tacitly conceding its position and declining to argue for a 1414 change in the law a second time, Rightscorp continued to issue dozens of new 1515 DMCA subpoenas to ISPs on this Court’s authority thereafter. See, e.g., In re 1616 Subpoena Issued to US Internet Corp., C.D. Cal. No. 2:14-mc-864-UA, 10/14/14. 4. 1717 Accordingly, Plaintiff prays for class relief against all defendants, 1818 including damages under the TCPA, punitive damages for abuse of process, in 1919 addition to compensatory and special damages, restitution, attorneys’ fees, costs, and 2020 injunctive relief to stop Rightscorp’s unlawful practices, including its continued 2121 issuance of sham DMCA subpoenas. PARTIES 2222 2323 5. Plaintiff John Blaha is an individual residing in Cedar Rapids, Iowa. 2424 6. Defendant Rightscorp, Inc. is a Nevada corporation with its 2525 headquarters and principal place of business located within the Western Division of 2626 2727 1 Rightscorp knew better than to issue such subpoenas to large ISPs, which would have refused to comply with them and/or moved to quash them, since the largest ISPs, which have in-house legal 2828 departments focused on subpoenas, all know that DMCA subpoenas are clearly invalid as to them. -3- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 4 of 31 Page ID #:137 11 this Judicial District at 3100 Donald Douglas Loop North, Santa Monica, CA 90405 22 (“Rightscorp Nevada”). On information and belief, prior to July 15, 2013, 33 Rightscorp Nevada was formerly known as Stevia Agritech Corp. 44 7. Defendant Rightscorp, Inc. is a Delaware corporation with its 55 headquarters and principal place of business located within the Western Division of 66 this Judicial District at 3100 Donald Douglas Loop North, Santa Monica, CA 90405 77 (“Rightscorp Delaware”). On information and belief, Rightscorp Delaware is a 88 wholly owned subsidiary of Rightscorp Nevada. 99 8. On information and belief, there existed and there continues to exist a 1010 unity of interest between Rightscorp Nevada and Rightscorp Delaware, such that any 1111 individuality and separateness between them has ceased, and the two companies are 1212 alter egos of one another. On information and belief, one of the companies has 1313 complete control and domination over the business and financial dealings of the 1414 other company. Adherence to the fiction of a separate existence of the two 1515 Rightscorp companies would be an abuse of limited liability protection and would 1616 promote injustice such that the two entities should be treated as one and the 1717 corporate veil between them should be pierced. 1818 9. Defendant Christopher Sabec, an individual, is the CEO of Rightscorp. 1919 On information and belief, he resides within the Central District of California. Mr. 2020 Sabec is also an attorney. 2121 10. Defendant Robert Steele, an individual, is the CTO and COO of 2222 Rightscorp. On information and belief, he resides within the Central District of 2323 California. 2424 2525 2626 2727 11. Defendant Craig Harmon is, on information and belief, the “General Counsel” of Rightscorp and a member of the company’s “management.” 12. Together, Mr. Sabec, Mr. Steele, and Mr. Harmon are the “Management Defendants.” 2828 -4- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 5 of 31 Page ID #:138 11 13. Defendant Dennis J. Hawk, an individual, is an attorney who, like 22 Rightscorp, also maintains his office at 3100 Donald Douglas Loop North, Santa 33 Monica, CA 90405. Mr. Hawk purports to be affiliated with the “Business Law 44 Group”. Mr. Hawk signed and filed the “Declaration[s] Pursuant to 17 U.S.C. § 55 512(h)” that were used to obtain the clerk-stamped DMCA subpoenas that underlie 66 the abuse of process claim, as more fully alleged below. 77 14. Defendant BMG Rights Management (US) LLC is a Delaware limited 88 liability company (“BMG”). On information and belief, BMG is a client of 99 Rightscorp and it maintains a principal place of business at 1745 Broadway, New 1010 York, NY 10019. On information and belief, Rightscorp was acting on behalf of 1111 BMG, as its actual and ostensible agent, in doing the wrongful acts alleged in this 1212 complaint. BMG has admitted in a court pleading filed in the Eastern District of 1313 Virginia that Rightscorp was its agent in certain relevant respects. 1414 15. Defendant Warner Bros. Entertainment Inc. is a Delaware corporation 1515 (“Warner Bros.”). On information and belief, Warner Bros. is a client of 1616 Rightscorp and it maintains a principal place of business at Warner Brothers Studios, 1717 3400 Riverside Drive, Burbank, CA 91522. On information and belief, Rightscorp 1818 was acting on behalf of Warner Bros., as its actual and ostensible agent, in doing the 1919 wrongful acts alleged in this complaint. 2020 16. Defendants John Does No. 1 to 10 are other unknown clients of 2121 Rightscorp, on whose behalf Rightscorp was acting, as an actual and ostensible 2222 agent, in doing the wrongful acts alleged in this complaint. The true identities of the 2323 John Doe defendants are presently unknown to Plaintiff but can be ascertained 2424 through discovery. Plaintiff will amend the complaint to include the true names of 2525 the appropriate John Doe defendants after their identities have been ascertained. 2626 2727 17. The John Doe defendants, together with BMG, and Warner Bros., are the “Rightscorp Clients.” 2828 -5- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 6 of 31 Page ID #:139 11 22 18. Clients are the “Defendants.” JURISDICTION AND VENUE 33 44 Together, Rightscorp, the Individual Defendants, and the Rightscorp 19. This Court has federal question subject matter jurisdiction over the 55 TCPA cause of action, which clearly arises under federal law, pursuant to 28 U.S.C. 66 § 1331. See Mims v. Arrow Fin. Servs., LLC, 132 S. Ct. 740 (2011) (TCPA claims 77 are subject to federal question jurisdiction). 88 99 20. This Court also has federal question subject matter jurisdiction over the abuse of process cause of action, per 28 U.S.C. §§ 1331 and 1338, because “even 1010 though state law creates [Plaintiff’s] cause of action” for abuse of process, the cause 1111 of action still ‘“arise[s] under’ the laws of the United States” because this “well- 1212 pleaded complaint establish[es] that its right to relief under state law requires 1313 resolution of a substantial question of federal law in dispute between the parties.” 1414 See Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 13, 103 S. 1515 Ct. 2841, 77 L. Ed. 2d 420 (1983). Specifically, the adjudication of the abuse of 1616 process cause of action requires this Court to determine whether the 142 DMCA 1717 subpoenas Rightscorp has issued comply with federal copyright law as enunciated at 1818 17 U.S.C. § 512(h) et seq., and whether this Court’s federal legal process has been 1919 abused. 2020 21. In the alternative, this Court has supplemental subject matter 2121 jurisdiction over the abuse of process cause of action, per 28 U.S.C. § 1367, because 2222 the abuse of process is so related to the other federal claim as to form part of the 2323 same case or controversy under Article III of the U.S. Constitution. 2424 22. This Court has personal jurisdiction over the defendants Rightscorp 2525 Nevada and Rightscorp Delaware because they have their principal headquarters in 2626 Santa Monica, CA, and regularly conduct business in the State of California. 2727 2828 23. Each of the Individual Defendants have continuous and systematic contacts with the State of California, by virtue of their close involvement with -6- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 7 of 31 Page ID #:140 11 Rightscorp, such that this Court has personal jurisdiction over them. On information 22 and belief, Mr. Sabec, Mr. Steele, and Mr. Hawk also reside within the State of 33 California. 24. 44 Mr. Harmon purposefully established significant contact with the State 55 of California by doing repeated, “general counsel” type work for Rightscorp, which 66 he knew was based in California. On information and belief, Mr. Harmon 77 purposefully entered into a contract with Rightscorp, which is activity directed at 88 this forum, and which created continuing obligations between himself and 99 Rightscorp, a resident of this forum. On information and belief, Mr. Harmon 1010 advised Rightscorp as to activity that he knew would be conducted in California, and 1111 would have an effect on residents of the State of California. Further, the claims 1212 against Mr. Harmon arise directly out of his work for Rightscorp. In addition, on 1313 information and belief, Mr. Harmon files a tax return in the State of California every 1414 year. 1515 25. On information and belief, this Court has personal jurisdiction over 1616 each of the Rightscorp Clients because they have continuous and systematic 1717 business contacts with the State of California. In addition, the activities of the 1818 Rightscorp Clients, namely their purposeful engagement of Rightscorp to act as their 1919 agent to perform services within California that would have an effect on residents of 2020 the State of California, specifically gave rise to the claims at issue. 2121 26. Venue is proper in this judicial district pursuant to 28 U.S.C. 1391(b)(1) 2222 and (b)(2), because Rightscorp resides in this judicial district, and a substantial part 2323 of the events giving rise to the claim, including the issuance of invalid subpoenas, 2424 and the making of Robo-Calls, occurred in and originated from this judicial district. 2525 27. Assignment within this judicial district to the Western Division is 2626 appropriate, because defendant Rightscorp resides in Santa Monica, CA, which is in 2727 the Western Division. 2828 -7- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 8 of 31 Page ID #:141 COMMON FACTUAL ALLEGATIONS 11 22 (a) Background on Rightscorp’s Copyright “Settlement” Business 33 28. According to a September 2014 marketing presentation Rightscorp 44 included in its Securities and Exchange Commission disclosures, Rightscorp 55 describes its business as follows: “Rightscorp is a leading provider of monetization services for artists and holders of copyrighted Intellectual Property (IP). The Company has a patent-pending, proprietary technology for solving copyright infringement by collecting payments from illegal distributors via notifications sent to their Internet Service Providers (ISPs).” 66 77 88 99 1010 29. Rightscorp’s “proven” solution to collect payments from “infringers” 1111 has four steps: “[1] Crawl P2P networks such as BitTorrent accessed by The Pirate 1212 Bay; [2] Send automated settlement offers to infringers via their ISPs for $20 per 1313 infringement vs. $150,000 legal liability per infringement if they do not settle; [3] 1414 Identify non-responsive repeat infringers; [4] ISPs can terminate repeat infringers to 1515 reduce ISP’s potential liability.” 1616 30. Rightscorp collects “daily payments from infringers accepting 1717 settlement offers” on which there is a “50/50 Split on collections to copyright 1818 holders.” Rightscorp claims to have “closed over 100,000 cases on 140+ ISPs to 1919 date;” it has “80,000+ copyrights active in our system;” and it “[r]ecently received 2020 approval to collect on over 1.5 million copyrights.” 2121 31. According to Rightscorp’s 2013 10-K report dated March 25, 2014, in 2222 the section that explains how revenue is recognized, Rightscorp “generates revenue 2323 from the sale of a service to copyright owners under which copyright owners retain 2424 the Company to identify and collecting [sic] settlement payments from Internet users 2525 who have infringed on their copyrights. Revenue is recognized when the ISP’s 2626 subscriber pays the fee [.]” 2727 2828 32. Also according to the 2013 10-K Report, one of the “touch points” for Rightscorp’s “Growth Strategy” was to grow revenue, “[b]y increasing response -8- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 9 of 31 Page ID #:142 11 rates (the number of subscribers who have received notices and agree to settle.) We 22 may seek to do this through public relations, through examples in the press of 33 infringers who were sued by copyright owners, by improving the educational and 44 motivational aspects of the notice, web site and payment process and by having 55 ISP’s terminate repeat infringers until they settle.” 66 33. Rightscorp further explained in its 2013 10-K that “[u]nder our business 77 model, the copyright owner signs a simple agreement authorizing us to monitor the 88 P2P networks and collect settlement payments on its behalf.” 99 34. Notably absent from Rightscorp’s 10-K and from other similar 1010 securities filings is any claim that it has taken assignment to any copyrights, or 1111 secured an exclusive license to any of the copyrighted content in its “monetization 1212 system.” Rather, Rightscorp’s investor materials discuss threatening ISP subscribers 1313 with disconnection of their Internet service if they refuse to pay on claims for 1414 alleged infringement supposedly owed to third party content owners. 1515 35. Accordingly, Plaintiff is informed and believes that Rightscorp is not 1616 the owner or exclusive licensee for any of the copyright rights that it has “ingested” 1717 into its “proprietary copyright monetization system.” Rather, Plaintiff is informed 1818 and believe the copyright rights Rightscorp seeks to “monetize” are owned and/or 1919 exclusively licensed by third-party content creators who are Rightscorp's clients. 2020 Thus, Plaintiff is informed and believe that Rightscorp actually has no standing or 2121 legal right to sue anyone for copyright infringement in relation to the copyrights it 2222 has “ingested” into its “monetization” system. 2323 36. Rightscorp emails settlement offer to consumers’ ISPs, which 2424 Rightscorp asks the ISPs to forward to their subscribers. Rightscorp’s “Sample 2525 Settlement Offer” is described by Rightscorp in a slide from its September 2014 2626 investor presentation, as follows: 2727 2828 -9- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 10 of 31 Page ID #:143 11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616 37. 1717 By clicking on a link that purports to redirect to a “secure” payment 1818 site, consumers who receive emails similar to the foregoing “Sample Settlement 1919 Offer” are invited to pay by credit card or other means to “settle” a copyright 2020 infringement claims against them. As Rightscorp explains in its 2013 10-K, 2121 “The user who receives the notice reads that they could be liable for $150,000 in damages, but if they click on the link supplied, they can enter a credit card and they can will settle the matter between them and the copyright owner for $20 per music infringement.” 2222 2323 2424 2525 (a) Rightscorp’s Issuance of Special DMCA Subpoenas From This Court Per 17 U.S.C. § 512(h) 2626 2727 2828 38. As a representative example, on August 14, 2014, attorney Dennis J. Hawk filed three case-initiating documents in the U.S. District Court for the Central -10- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 11 of 31 Page ID #:144 11 District of California, in case number 2:14-mc-635-UA: (a) 22 A “Declaration Pursuant to 17 U.S.C. § 512(h)2”, a true and 33 correct copy of which is attached hereto as Exhibit A (C.D. Cal. No. 14-mc-635- 44 UA, ECF No. 1). The declaration recited that Mr. Hawk was a California attorney 55 “associated with Businesses Law Group (“Business Law Group”), counsel for 66 Rightscorp, Inc. (“Rightscorp”), a representative of various copyright owners. 77 Business Law Group is authorized to act on behalf of Rightscorp and the copyright 88 owners it represents on matters involving infringement of their copyrighted sound 99 recordings. This declaration is made in support of the accompanying Subpoena. . .” (b) 1010 A “Notice of Lodging of Summary Spreadsheet and DMCA 1111 Notifications,” a true and correct copy of which is attached hereto as Exhibit B 1212 (C.D. Cal. No. 14-mc-635-UA, ECF No. 2). The notice specified that two 1313 documents were included on a CD lodged with the Court (but which are not 1414 available on PACER): (i) “Excel Summary Spreadsheet”; and (ii) “Notices from 1515 June 7, 2014 to August 6, 2014”. (c) 1616 A “Subpoena to Produce Documents, Information, or Objects, or 1717 to Permit Inspection of Premises in a Civil Action,” a true and correct copy of 1818 which is attached hereto as Exhibit C (C.D. Cal. No. 14-mc-635-UA, ECF No. 3). 1919 The subpoena contained the Seal of the U.S. District Court for the Central District of 2020 California and was stamped by a deputy clerk as of August 14, 2014. The subpoena 2121 was directed to Greenfield Communications, Inc. (“Greenfield”) and demanded 2222 production of “Information, including name, address, telephone number, and email 2323 address sufficient to identify the alleged infringers of copyrighted sound recordings, 2424 identified by IP addresses in the notices attached as Exhibit A to this subpoena.” 2525 No “Exhibit A” was actually attached to the version of the subpoena e-filed with this 2626 2727 2 17 U.S.C. § 512(h) was added to the Copyright Act by a subpart of the Digital Millennium Copyright Act of 1998 (“DMCA”) called the Online Copyright Infringement Liability Limitation 2828 Act. Section 512 often is referred to as the “safe harbor” provision of the DMCA. -11- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 12 of 31 Page ID #:145 11 Court. The subpoena demanded production of the requested information by 22 September 15, 2014. 33 39. On information and belief, Greenfield is an ISP based in Dana Point, 44 California, that provides cable and fiber optic Internet services to residential Internet 55 subscribers, and is not one of the nation’s top ten largest ISPs. 66 40. There are at least 141 other, similar sets of subpoena papers that Mr. 77 Hawk has filed in the Central District of California on behalf of Rightscorp and its 88 clients. A PACER report showing each of Rightscorp’s miscellaneous subpoena 99 proceedings is attached hereto as Exhibit D. As shown in that PACER report, 1010 Rightscorp began initiating these miscellaneous actions on February 27, 2014, and 1111 has continued to file multiple new miscellaneous actions every month since then. 1212 41. On information and belief, each of the other miscellaneous actions 1313 initiated by Rightscorp in the Central District of California, including the actions 1414 listed in Exhibit D, are the same as the Greenfield subpoena action, in the following 1515 ways: (i) they all utilize the same or similar set of papers (Exhibits A to C), filed by 1616 Mr. Hawk on behalf of Rightscorp and its clients, excepting the different ISPs to 1717 which the subpoenas are directed; (ii) like Greenfield, each of the other ISP 1818 subpoena recipients are also smaller to medium sized ISPs; (iii) as in the Greenfield 1919 action, no adversary ever appeared in this Court to contest the subpoena or any other 2020 issues; (iv) as in the Greenfield action, no Judge of this Court was ever assigned to 2121 review the subpoenas (all the case numbers have a “UA” suffix); rather, the deputy 2222 clerk stamped the subpoena upon filing of the action, and the action was closed 2323 shortly thereafter; (v) as in the Greenfield action, the clerk-stamped subpoena recites 2424 that it is accompanied by an Exhibit A thereto, but no Exhibit A was e-filed on the 2525 Court’s docket as an attachment to the subpoena. 2626 42. Rightscorp served the clerk-stamped subpoena, Exhibit C, on 2727 Greenfield, and Greenfield made a return on the subpoena to Rightscorp, thus 2828 providing personally identifiable information about the subscribers and transactional -12- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 13 of 31 Page ID #:146 11 information about their Internet accounts to Rightscorp. The total number of 22 Greenfield subscribers who were targeted by the Greenfield subpoena and who were 33 identified by Greenfield is presently unknown to Plaintiff, because there was no 44 Exhibit A to the subpoena filed on the public docket. 43. 55 On information and belief, each of the 142 ISPs targeted in the 66 miscellaneous actions listed in Exhibit D have also been served by Rightscorp with 77 clerk-stamped subpoenas issued to them, and some of these ISPs (exactly which 88 ones is presently unknown to Plaintiff) have made returns on those subpoenas, thus 99 providing personally identifiable information about the subscribers and transactional 1010 information about their Internet accounts to Rightscorp. 44. 1111 On information and belief, Rightscorp’s miscellaneous court actions 1212 that it used to issue 142 subpoenas, as identified in Exhibit D, have sought to obtain 1313 personally identifiable information and Internet transaction information for what 1414 probably totals, in aggregate, at least several thousand Internet subscribers, given all 1515 of the different ISPs targeted by Rightscorp with subpoenas. The total number of 1616 ISP subscribers targeted by Rightscorp in this manner may well exceed one hundred 1717 thousand people. 1818 (b) 1919 2020 2121 All Of Rightscorp’s 142 DMCA Subpoenas Are Invalid; Rightscorp has Conceded This Point and Declined to Argue for a Change in the Law Twice, But Nevertheless Continued to Issue New DCMA Subpoenas Here 45. Like Greenfield, Grande Communications Networks, LLC (“Grande”) 2222 was another of the many smaller to medium sized ISPs that was served with a 512(h) 2323 subpoena issued by Rightscorp on this Court’s authority. Exhibit D at p. 3 (C.D. 2424 Cal. No. 14-mc-627-UA). 2525 46. On September 5, 2014, Grande, which is based in Texas, through 2626 counsel who routinely represents larger national ISPs, moved to quash Rightscorp’s 2727 512(h) subpoena in the Western District of Texas. In re Subpoena Issued to Grande 2828 Comm’n. Net’s., LLC, W.D. Tx. No. 1:14-mc-00848, ECF No. 1, 9/5/14. -13- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 14 of 31 Page ID #:147 11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616 1717 1818 1919 2020 2121 2222 2323 2424 2525 2626 2727 2828 47. Grande argued convincingly in its motion to quash Rightscorp’s section 512(h) subpoena as follows, “It has been well-established for a decade that subpoenas may not be issued under 17 U.S.C. § 512(h) to ISPs merely acting as conduits for electronic communications. In re Charter Commc 'ns, Inc., 393 F.3d 771, 776-78 (8th Cir. 2005) (finding that Section 5 12(h) does not authorize the issuance of subpoenas to ISPs acting as mere conduits for communications between Internet users and vacating order issued by district court enforcing improperly issued Section 512(h) subpoenas); Recording Indus. Assoc. of Am. v. Verizon Internet Svcs., Inc., 351 F.3d 1229, 1236-39 (D.C. Cir. 2003) (Section 512(h) inapplicable where Internet service provider acted as conduit for alleged peer-to-peer file sharing between Internet users). As the federal courts have explained, any request for the issuance of a subpoena under Section 512(h) must include a copy of a notification of claimed infringement" that must have been sent to the service provider, which notification must include: "Identification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material." 17 U.S.C. § 51 2(c)(3)(A), (h)(2)(A) (requiring "a copy of a notification described in subsection (c)(3)(A)" as a prerequisite to the issuance of a subpoena under Section 5 12(h)). This requirement plainly contemplates a situation where accused material is stored by a service provider in such a way that a copyright holder may notify such service provider of the accused infringing material and the location of that material, and the service provider may then remove the accused material or block access to the accused material. 17 U.S.C. § 512(c), (h). The Section 512 notification-and-takedown process is inapplicable as to a conduit ISP, because the ISP could never "locate" a file that does not reside on its systems but rather was merely transmitted by the ISP. The "notifications" that Rightscorp presumably filed in this action are invalid, never resulted in any notice to subscribers, and could not serve the function required by the statute, as the courts have also explained. See In re Charter Commc 'ns, 393 F.3d at 777; Verizon Internet Svcs., 351 F.3d at 1235-36 ("any notice to an ISP concerning its activity as a mere conduit does not satisfied the condition of § 51 2(c)(3)(A)(iii) and is therefore ineffective"). -14- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 15 of 31 Page ID #:148 The reasoning of the federal appellate courts in In re Charter and Verizon has been uniformly adopted in the federal district courts. See, e.g, Order Granting in Part Mot. For Expedited Disc. and for Extension of Time to Serve Defs., at 2 n.1, Combat Zone Corp. v. John/Jane Does 1-2, 12-cv-0142 (N.D. Miss. Dec. 6, 2012), ECF No. 18 (noting that the issuance of a §512(h) subpoena to an ISP acting as a conduit is not supported by the statute);3 Interscope Records v. Does 1-7, 494 F.Supp.2d 388, 391 (E.D. Va. Jul. 12, 2007); In re Subpoena to University of North Carolina at Chapel Hill, 367 F.Supp. 2d 945, 95256 (M.D.N.C. 2005) (providing extensive statutory analysis); see also Maximized Living, Inc. v. Google, Inc., No. 1 1-cv-80061, 2011 WL 6749017, at *5..*6 (N.D. Cal. Dec. 22, 2011) (explicitly agreeing with the D.C. Circuit's decision in Verizon). Grande is not aware of any case law since the In re Charter and Verizon decisions that would support Rightscorp's issuance of a subpoena under 17 U.S.C. § 5 12(h) to an ISP acting as a mere conduit. Because the Subpoena may not be properly issued to Grande under 17 U.S.C. § 512(h), it should be quashed as unduly burdensome, even without regard to the actual amount of burden that would be involved in complying. See AF Holdings, LLC [v. Does 1-1,058], 752 F.3d [990,] 995 (D.C. Cir. 2014) (where a subpoena "compels disclosure of information that is not properly discoverable, then the burden it imposes, however slight, is necessarily undue: why require a party to produce information the requesting party has no right to obtain?"); cf Compaq Computer Corp. v. Packard Electronics, Inc., 163 F.R.D. 329, 335-36 (N.D. Cal. 1995) (noting that, "if the soughtafter [discovery is] not relevant nor calculated to lead to the discovery of admissible evidence, then any burden whatsoever imposed upon [a third party] would be by definition 'undue.") (emphasis in original). 11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616 1717 1818 1919 2020 2121 2222 2323 2424 In re Subpoena Issued to Grande Comm’n. Net’s., LLC, W.D. Tx. No. 1:14-mc00848, ECF No. 1, 9/5/14 at pp. 4–6 (Grande’s motion to quash). Grande also made other arguments about the burden of compliance, and lack of compliance with other legal requirements. 2525 2626 48. One business day after Grande’s foregoing motion to quash was filed, Rightscorp withdrew its subpoena to Grande, via email. See id. at ECF No. 3-1, 2727 2828 3 A copy of the Combat Zone decision was attached as an Exhibit to the ISPs motion to quash. -15- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 16 of 31 Page ID #:149 11 9/10/14 (copy of the 9/8/14 email from Mr. Hawk withdrawing the subpoena). Mr. 22 Hawk explained to Grande’s attorney that, 33 “We are in receipt of your recent filing in Texas. Although we have had considerable success in obtaining compliance by ISP's across the country, it appears that you will counsel your clients to deny our client’s requests which we believe are in full compliance with the DMCA. Accordingly, we will seek alternative remedies available to our client and hereby formally withdraw our subpoena. Any questions, please feel free to contact our office.” Id. 44 55 66 77 88 49. 99 On September 10, 2014, Grande then filed an advisory to the Western 1010 District of Texas, explaining that Rightscorp had “made a hasty retreat” by 1111 withdrawing the subpoena via the above-described email, which was attached to the 1212 advisory as an exhibit. Id. at ECF No. 3, 9/10/14. Grande’s advisory further noted 1313 that, “Under the circumstances, this Court or the U.S. District Court for the Central District of California may consider ordering Rightscorp and its counsel to show cause why they should not be sanctioned for misusing the federal court’s subpoena powers. . . . If Rightscorp believed it had a good faith basis for the Subpoena, it would have asserted its position before [the Texas] Court.4 But Rightscorp must know that its position and practice would not survive judicial review. If Grande had not challenged the Subpoena, Rightscorp would have improperly obtained the personally identifiable information of hundreds (or thousands) of Texas Internet subscribers using an invalid procedure, without the notice to any of them that would have followed from the court order that Rightscorp refused to seek to obtain, and without the slightest requirement of any showing to the California court whose signature Rightscorp improperly utilized. It appears clear that Rightscorp and its counsel are playing a game without regard for the rules, and they are playing that game in a 1414 1515 1616 1717 1818 1919 2020 2121 2222 2323 2424 2525 2626 4 As Grande argued in a footnote: “In all likelihood, if asked, Rightscorp and its counsel would not 2727 be able to identify a single instance in which they argued to a court in an adversarial proceeding 2828 that any of the numerous subpoenas issued by them to Internet service providers acting as a conduit is proper under 17 U.S.C. § 512(h).” -16- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 17 of 31 Page ID #:150 manner calculated to avoid judicial review. Hopefully, they will not be permitted to continue much longer.” Id. at pp. 2–3. 11 22 33 50. As detailed in Exhibit D, since beating the hasty retreat out of Texas on 44 September 8, 2014 while being accused of sanctionable conduct in the issuance of 55 512(h) subpoenas, Mr. Hawk, on behalf of Rightscorp and its unidentified clients, 66 continued issuing new Section 512(h) subpoenas out of the Central District of 77 California. Indeed, as indicated on Exhibit D, dozens of new Section 512(h) 88 subpoenas were issued by Rightscorp out of the Central District of California to 99 various different ISPs after September 15, 2014. 1010 51. It further appears that Grande’s fairly recent motion to quash a 1111 Rightscorp Section 512(h) subpoena is not the only instance of an ISP challenging a 1212 Rightscorp subpoena, only for Rightscorp to then give up without attempting to 1313 justify itself in a signed court pleading. The first entry on Exhibit D, unlike all of 1414 the other entries which are from 2014, is Telscape Comm’s, Inc. v Rightscorp, Inc., 1515 2:2012-cv-8833-JSF-(JCGx). A review of that docket reveals that on October 15, 1616 2012, Telscape Communications, Inc. (“Telscape”) filed a motion to quash a 1717 Rightscorp Section 512(h) subpoena, raising many of the same arguments made 1818 more recently by Grande. Id. at ECF No. 1. Rightscorp failed to file an opposition, 1919 so, on November 8, 2012, Judge Fischer issued an order in which the Court 2020 “deem[ed] the lack of opposition to be consent to the motion,” and thus granted 2121 Telscape’s motion to quash. Id. at ECF No. 12. 2222 52. On information and belief, like Grande and Telscape, every ISP listed 2323 in Exhibit D was acting merely as a “conduit” for the allegedly infringing data at 2424 issue such that issuing a Section 512(h) subpoena to each such ISP was legally 2525 invalid and a sham. Accordingly, Mr. Hawk, Rightscorp and the Management 2626 Defendants (two of whom are lawyers) have known that it was objectively baseless 2727 to rely on Section 512(h) to issue these subpoenas, for the reasons explained by 2828 Grande and Telscape in their motion to quash, yet they have continued to issue them. -17- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 18 of 31 Page ID #:151 11 22 (c) Rightscorp Obtained John Blaha’s Contact Information Using An Invalid DMCA 512(h) Subpoena And Then Began Repeatedly Robo-Calling and Texting Mr. Blaha’s Cell Phone Over A Period Of Several Months 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616 1717 1818 1919 2020 2121 2222 2323 2424 2525 2626 2727 2828 53. Defendant John Blaha subscribes to residential Internet service through an ISP called Imon Communications LLC (“Imon”). 54. On information and belief, in or around early April of 2014, Rightscorp forwarded certain email notices of infringement to “Ed.Smith@imon.net.” These notices were in the form of the “Sample Settlement Offer” taken from the Rightscorp investor presentation, as described above. 55. On May 7, 2014, Mr. Hawk, “on behalf of Rightscorp and the copyright owners it represents,” filed paperwork with the U.S District Court for the Central District of California so as to issue a DMCA section 512(h) subpoena to Imon. In Re: Subpoena to IMON Communications LLC, C.D. Cal. No. 2:14-mc-277-UA; see also Exhibit D at 2. 56. On information and belief, Rightscorp did issue a clerk-stamped subpoena to Imon, and, at some point prior to July 2, 2014, Imon made a return on that subpoena and provided Rightscorp with personal and transactional information about Mr. Blaha’s Internet account, as well as information about other unnamed class members. Imon never provided Mr. Blaha and the others with any notice or an opportunity to respond to Rightscorp’s DMCA subpoena. 57. After obtaining Mr. Blaha’s contact information in this manner, Rightscorp then used a pre-recorded message, artificial voice, and/or a system capable of auto-dialing numbers, to make repeated robo-calls to Mr. Blaha’s cell phone. For example, Mr. Blaha repeatedly received a message, in what sounded like an artificial or pre-recorded voice, which stated: “This is an urgent message from Rightscorp regarding your Internet account. We have evidence that one or more of our clients’ copyrighted materials has been illegally distributed through your Internet connection in violation of U.S. Federal Law 17 U.S.C. 106. To -18- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 19 of 31 Page ID #:152 settle this urgent matter you can reach one of our agents by pressing any number on your phone keypad now. Or, you can call us at 888851-3801 between 8 a.m. and 8 p.m. Pacific Standard Time. This urgent message is from Rightscorp.” 11 22 33 44 58. Mr. Blaha also received many other calls from Rightscorp to his 55 cellular phone that said similar things, both from what sounded like human 66 collections agents, as well as the same automated message. The robo-calls to Mr. 77 Blaha’s cell phone continued at the interval of around once per day starting in 88 approximately early July of 2014, and continued at about that frequency for around 99 two months, but then tapered off to more like one or two per week through October 1010 of 2014. These calls came in from a variety of different numbers, from different 1111 area codes all over the country. 1212 59. At certain times, Rightscorp also utilized a slightly different robo-caller 1313 message, which Mr. Blaha also received multiple times to his cell phone. It stated, 1414 in what sounds like an artificial or prerecorded voice: 1515 “[Artificial chime] Hello this message is from Rightscorp, notifying you that you have one more copyright infringements. Please call us at 310-751-7510 between 8 am and 8 pm Pacific Time. Again that number is 310-751-7510. This message is from Rightscorp. [Message, including the artificial chime, repeats in full one more time].” 1616 1717 1818 1919 60. On information and belief, Rightscorp obtained Mr. Blaha’s cellular 2020 telephone number via the invalid subpoena to Imon, and then began attempting to 2121 contact him repeatedly at that number, even though Rightscorp knew it was a cell 2222 phone number. 2323 61. In addition to the voice Robo-Calls, Rightscorp also sent Mr. Blaha text 2424 messages to his cellular telephone, indicating that Rightscorp knew it was 2525 attempting to contact a cellular telephone. For example, on August 28, 2014, 2626 Rightscorp sent a text message to Mr. Blaha’s cellular telephone, which stated, 2727 2828 “(1/2) URGENT: Your internet service could be interrupted due to copyright infringement. Please call or text (424) 248-7510 immediately -19- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 20 of 31 Page ID #:153 to resolve this issue. CB#: 2487510 16:06 (2/2) Rightscorp 16:06” 11 22 33 44 55 62. Blaha’s cellular telephone, from the same number, on October 1, 2014. 66 77 88 63. 1111 1212 1313 1414 1515 1616 A true and correct copy of a screenshot from Mr. Blaha’s phone showing the unsolicited and unconsented text messages he received from Rightscorp is attached hereto as Exhibit E. 99 1010 Rightscorp later sent an essentially identical text message to Mr. 64. Mr. Blaha never gave “prior express consent” to receive autodialed, prerecorded or artificial voice calls or text messages from Rightscorp to his cellular phone. Further, Mr. Blaha never provided his cellular telephone numbers to the copyright owner creditors who Rightscorp purports to represent in connection with any underlying transaction. (d) Class Action Allegations 65. Mr. Blaha brings the TCPA claims on behalf of a class of others similarly situated and defines the class as follows (the “TCPA Class”): 1717 All natural persons residing in the United States, who, during the period four years prior to the date of filing this action, Rightscorp called or caused to be called at their cellular telephone number(s), using: (i) an artificial or pre-recorded voice; and/or (ii) equipment with the capacity to dial numbers without human intervention. Excluded from this class are Defendants, any entity in which Defendants have a controlling interest or which has a controlling interest in Defendants, and Defendants’ agents, legal representatives, predecessors, successors, assigns, and employees. Also excluded from the class are the judge and staff to whom this case is assigned, and any member of the judge’s immediate family. 1818 1919 2020 2121 2222 2323 2424 2525 2626 2727 2828 66. Mr. Blaha brings the Abuse of Process claims on behalf of a class of others similarly situated and defines the class as follows (the “Abuse of Process Class”): -20- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 21 of 31 Page ID #:154 All natural persons residing in the United States who, during the period two years prior to the date of filing this action, were the target of a subpoena to their ISP, ostensibly authorized under 17 U.S.C. § 512(h), issued by Rightscorp, including each of those subpoenas listed in Exhibit D attached hereto, and their personal or transactional information was disclosed by their ISP to Rightscorp in connection such a subpoena. Excluded from this class are Defendants, any entity in which Defendants have a controlling interest or which has a controlling interest in Defendants, and Defendants’ agents, legal representatives, predecessors, successors, assigns, and employees. Also excluded from the class are the judge and staff to whom this case is assigned, and any member of the judge’s immediate family. 11 22 33 44 55 66 77 88 99 1010 67. Numerosity. For each of the classes, i.e., the TCPA Class and the 1111 Abuse of Process Class (together, the “Classes”), there are so many members of 1212 each class that joinder of all members of that class is impracticable. On information 1313 and belief, there are likely at least one thousand members of each of the Classes. 1414 68. Commonality. Common questions of fact and law exist as to all 1515 members of the Classes and predominate over questions affecting only individual 1616 members of the Classes. The predominant questions include: 1717 1818 (a) Whether Rightscorp’s telephone system constituted an “automatic telephone dialing system” under the meaning of 47 U.S.C. § 227(a)(1); 1919 (b) 2020 cellular telephone numbers; 2121 (c) Whether Rightscorp’s Robo-Caller system violated the TCPA; 2222 (d) Whether and to what extent the “clients”/creditors who hired The manner in which Rightscorp obtained the class members’ 2323 Rightscorp as their “DMCA Agent,” on whose behalf Rightscorp purported to be 2424 acting, are liable under the TCPA for Rightscorp’s unlawful phone calls; 2525 (e) Whether Rightscorp’s issuance of special DMCA subpoenas to 2626 various ISPs, ostensibly per 17 U.S.C. § 512(h), was a willful and improper use of 2727 the legal process done for an improper purpose; and 2828 (f) Whether and to what extent the “clients”/copyright owners who -21- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 22 of 31 Page ID #:155 11 hired Rightscorp as their “DMCA Agent,” on whose behalf Rightscorp purported to 22 be acting, are liable on the abuse of process claim against Rightscorp. 33 69. Typicality. Mr. Blaha’s claims are typical of the claims of the other 44 members of the TCPA Class and the Abuse of Process Class. Mr. Blaha is not 55 different in any relevant way from any other members of each of the respective 66 Classes he represents, and the relief sought is common to each Class member. 77 70. Adequate Representation. Mr. Blaha has agreed to and will fairly and 88 adequately represent and protect the interests of the other members of the Classes. 99 Mr. Blaha’s interests do not conflict with the interests of the other members of the 1010 Classes. Mr. Blaha has retained counsel who are competent and experienced in 1111 complex class actions, and who are knowledgeable about copyright enforcement and 1212 the DMCA. 1313 71. Rule 23(b)(2) Certification: Injunctive Relief. As required by Fed. R. 1414 Civ. P 23(b)(2), the Classes are appropriate for certification because Defendants 1515 have acted or refused to act on grounds generally applicable to the Classes, thereby 1616 making appropriate final injunctive relief or corresponding declaratory relief with 1717 respect to the Class as wholes. The policies of the Defendants challenged herein 1818 apply and affect members of the Classes uniformly, and Plaintiff’s challenge of 1919 these policies hinges on Defendants’ conduct, not on facts or law applicable only to 2020 Plaintiff. Further, Defendants continue to engage in the improper practices 2121 discussed above. Injunctive relief is necessary and appropriate to enjoin Defendants’ 2222 conduct and to prevent irreparable harm to Plaintiff and the members of the Classes 2323 for which they have no adequate remedy at law. 2424 72. Rule 23(b)(3) Certification: Predominance and Superiority. As 2525 required by Fed. R. Civ. P. 23(b)(3), the Classes alleged in this Complaint are 2626 appropriate for certification because class proceedings are superior to all other 2727 available methods for the fair and efficient adjudication of this controversy. The 2828 damages suffered by each member of the Classes will likely be relatively small, -22- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 23 of 31 Page ID #:156 11 especially given the burden and expense of individual prosecution of the complex 22 litigation necessitated by Defendants’ actions. It would be virtually impossible for 33 members of the Classes to individually obtain effective relief from Defendants’ 44 misconduct. Even if members of the Classes themselves could sustain such 55 individual litigation, it would still not be preferable to a class action, because 66 individual litigation would increase the delay and expense to all parties due to the 77 complex legal and factual controversies presented in this complaint. By contrast, 88 class actions present far fewer management difficulties and provide the benefits of 99 single adjudication, economy of scale, and comprehensive supervision by a single 1010 Court. Economies of time, effort, and expense will be fostered and uniformity of 1111 decisions will be ensured. 1212 73. Nature of Contemplated Notice to Proposed Class. The proposed class 1313 may be contacted by email, using the same email addresses utilized by Rightscorp, 1414 and/or by mail, using the mailing addresses utilized by Rightscorp and the various 1515 ISPs. In addition, more detailed notice and information can be provided using a 1616 website created for the purpose of allowing putative class members to learn about 1717 the case and consider their options. The details of the form of notice, as well as any 1818 procedures necessary to ensure appropriate claim administration, will be further 1919 explained in connection with class certification. 2020 FIRST CAUSE OF ACTION 2121 Violations of the Telephone Consumer Protection Act (47 U.S.C. § 227) 2222 By Mr. Blaha Individually And On Behalf of the TCPA Class 2323 Against Rightscorp, the Management Defendants, and the Rightscorp Clients 2424 2525 2626 2727 74. Plaintiff hereby incorporates by reference the allegations contained in all preceding paragraphs of this complaint. 75. As relevant here, the TCPA prohibits Defendant from making telephone calls “using any automatic telephone dialing system or an artificial or prerecorded 2828 -23- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 24 of 31 Page ID #:157 11 voice … to any telephone number assigned to a … cellular telephone service….” 47 22 U.S.C. § 227(b)(1)(A)(iii). 33 76. “Automatic telephone dialing system” refers to any “equipment which 44 has the capacity … (A) to store or produce telephone numbers to be called, using a 55 random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 66 227(a)(1). The FCC, charged with adopting rules implementing the TCPA, has 77 clarified that an automatic telephone dialing system (“ATDS”) includes predictive 88 dialers and any other equipment that has “the capacity to dial numbers without 99 human intervention.” See Meyer v. Portfolio Recovery Assocs., LLC, 707 F.3d 1036, 1010 1043 (9th Cir. 2012), cert. denied, 133 S. Ct. 2361 (May 13, 2013) (quoting In re 1111 Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 18 FCC 1212 Rcd. 14014, 14092, ¶ 132 (2003) (“2003 FCC Order”)) (emphasis in original). 1313 77. Rightscorp used an artificial and/or prerecorded voice, such as those 1414 calls described above, in calls made to the cellular telephones of Mr. Blaha and the 1515 other members of the TCPA Class. 1616 78. On information and belief, Rightscorp caused ATDS equipment to be 1717 used to make voice telephone calls to the cellular telephones of Mr. Blaha, and the 1818 other members of the TCPA Class. 1919 79. As recently stated by the Ninth Circuit, “[i]t is undisputed that a text 2020 message constitutes a call for the purpose of this section” i.e., for the purposes of 47 2121 U.S.C. § 227(b)(1)(A)(iii). Gomez v. Campbell-Ewald Co., 768 F. 3d 871, 874 (9th 2222 Cir. 2014); citing Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 952 (9th Cir. 2323 2009) (“[W]e hold that a text message is a ‘call’ within the meaning of the TCPA.”). 2424 80. On information and belief, Rightscorp has also caused ATDS 2525 equipment to be used to send text message “calls,” such as those text message 2626 “calls” pictured in Exhibit E, to the cellular telephones of Mr. Blaha and the other 2727 members of the TCPA class. 2828 -24- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 25 of 31 Page ID #:158 11 22 33 81. Rightscorp has, therefore, violated Section 227(b)(1)(A)(iii) of the TCPA. 82. As a result of Rightscorp’s conduct and pursuant to Section 44 227(b)(3)(B) of the TCPA, Mr. Blaha and the other members of the TCPA Class 55 were harmed and are each entitled to a minimum damages of $500.00 for each 66 unlawful voice call or text message. 47 U.S.C. § 227(b)(3)(B). 77 83. Under the TCPA, “if the court finds that the defendant willfully or 88 knowingly violated this subsection or the regulations prescribed under this 99 subsection, the court may, in its discretion, increase the amount of the award to an 1010 amount equal to not more than 3 times” the baseline figure of $500 in damages for 1111 each TCPA violation. 47 U.S.C. § 227(b)(3). As relevant to the TCPA, “the term 1212 ‘willful,’ when used with reference to the commission or omission of any act, means 1313 the conscious and deliberate commission of such act, irrespective of any intent to 1414 violate the provision of this chapter.” 47 U.S.C. § 312(f)(1). 1515 84. Rightscorp consciously and deliberately used an artificial and/or 1616 prerecorded voice, and caused ATDS equipment to be used to send voice or text 1717 calls to the cellular telephones of Mr. Blaha and the other members of the TCPA 1818 Class, such that damages should be trebled to $1,500 per unlawful voice or text call. 1919 47 U.S.C. § 227(b)(3). 2020 85. On information and belief, Rightscorp’s unlawful voice and text calls to 2121 cell phones were ongoing as of the time the original complaint was filed in this 2222 action. 2323 86. Plaintiff brings this action as private attorneys general, and to vindicate 2424 and enforce an important right affecting the public interest. Plaintiff is therefore 2525 entitled to an award of attorneys’ fees under Code of Civil Procedure section 1021.5 2626 for bringing this action. 2727 2828 87. On information and belief, each of the Management Defendants manage and work at Rightscorp and had direct personal participation in or -25- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 26 of 31 Page ID #:159 11 personally authorized the actions by Rightscorp that violate the TCPA. See 22 Jackson's Five Star Catering, Inc. v. Beason, No. 10-CV-10010, 2012 WL 3205526, 33 at *6 (E.D. Mich. July 26, 2012) (“many courts have held that corporate actors can 44 be individually liable for violating the TCPA ‘where they ‘had direct, personal 55 participation in or personally authorized the conduct found to have violated the 66 statute.’’”); quoting, inter alia, Texas v. Am. Blastfax, 164 F. Supp. 2d 892, 898 77 (W.D. Tex. 2001). 88 99 88. The Rightscorp Clients are all “clients” of Rightscorp, on whose behalf Rightscorp was acting as a “DMCA Agent”, when Rightscorp made the voice and 1010 text calls that are unlawful under the TCPA. Rightscorp was acting as the actual and 1111 ostensible agents of the Rightscorp Clients, who were the principals and creditors on 1212 the alleged debt or claim that Rightscorp was trying to collect, in making the 1313 unlawful phone calls. Under the TCPA, “a creditor on whose behalf an autodialed 1414 or prerecorded message call is made to a wireless number bears the responsibility for 1515 any violation.” In re Rules & Reg's Implementing the Tel. Consumer Prot. Act of 1616 1991, 23 FCC Rcd. 559 ¶ 10 (December 28, 2007) (“2008 FCC Order”); see also 1717 Hartley-Culp v. Green Tree Servicing, LLC, 2014 U.S. Dist. LEXIS 145851, 6-7 1818 (M.D. Pa. Oct. 10, 2014) (citing 2008 FCC Order and concluding that Fannie Mae 1919 was directly liable for TCPA violations committed on its behalf and citing cases 2020 holding traditional vicarious liability is also possible under TCPA); citing, inter alia, 2121 Thomas v. Taco Bell Corp., 879 F. Supp. 2d 1079, 1084 (C.D. Cal. 2012) (vicarious 2222 liability available under TCPA); accord Gomez v. Campell-Ewald Co., 768 F.3d 871 2323 (9th Cir. 2014), (holding that third-party marketing consultant who did not actually 2424 make any calls was vicariously under principles of agency). Accordingly, the 2525 Rightscorp Clients are vicariously liable as principals for any damages caused by 2626 their actual and ostensible agent Rightscorp. 2727 2828 89. In the alternative, in doing the wrongful acts alleged in this complaint, each of the Rightscorp Clients conspired with and acted in concert with Rightscorp -26- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 27 of 31 Page ID #:160 11 and the Individual Defendants. Specifically, on information and belief, each 22 Rightscorp Client was aware that Rightscorp was making unlawful cellular 33 telephone calls; agreed with and intended that Rightscorp make such phone calls; 44 and they ordered, directed and authorized Rightscorp’s efforts in this regard. 55 Accordingly, each of the Rightscorp Clients is jointly and severally liable for all of 66 the unlawful conduct committed by Rightscorp and the Individual Defendants. 77 90. In the alternative to the vicarious liability each of the Rightscorp 88 Clients has incurred due to the acts of their agent Rightscorp, and the joint and 99 several liability they each incurred due to concerted action with Rightscorp, each 1010 Rightscorp Client is also liable to the Plaintiff for a contribution in proportion to that 1111 Rightscorp Client’s respective market share of Rightscorp’s overall business. 1212 91. WHEREFORE, on this cause of action, Mr. Blaha individually and on 1313 behalf of the TCPA Class, prays for statutory damages in the amount of at least $500 1414 per violation of the TCPA, trebled to $1,500 per violation, because the unlawful 1515 calls were “knowing or willful”; restitution; plus attorney’s fees and costs; for 1616 preliminary and permanent injunctive relief to stop Rightscorp from further TCPA 1717 violations; and for such other relief as the Court deems just and proper. 1818 SECOND CAUSE OF ACTION 1919 Abuse of Process (Under Federal and California Law) 2020 By Mr. Blaha Individually And On Behalf of the Abuse of Process Class 2121 Against All Defendants 2222 2323 2424 92. Plaintiff hereby incorporates by reference the allegations contained in all preceding paragraphs of this complaint. 93. Dennis Hawk averred in his sworn declarations that he used to obtain 2525 the 142 DMCA subpoenas listed in Exhibit D that he was “authorized to act on 2626 behalf of Rightscorp and the copyright owners it represents on matters involving 2727 infringement of their copyrighted sound recordings.” The issuance of these clerk- 2828 -27- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 28 of 31 Page ID #:161 11 stamped subpoenas from this Court after filing a miscellaneous DMCA action 22 constitutes a use of the legal process. 33 94. Mr. Hawk, acting on behalf of both Rightscorp and the Rightscorp 44 Clients, intentionally used the special DMCA subpoena procedure to issue 55 subpoenas that are invalid. Mr. Hawk did this for an improper purpose, namely to 66 obtain personally identifiable information for members of the Abuse of Process 77 Class, that Rightscorp could then use as grist for its national “settlement” mill. On 88 information and belief, Mr. Hawk and the Management Defendants knew before 99 they began issuing them that the subpoenas were legally invalid because the ISPs 1010 they were issuing them to were “merely conduits” as defined under all of the 1111 applicable law interpreting the DMCA. As detailed above, on at least two occasions 1212 (once in 2012 before this Court and again in Texas in 2014) when Rightscorp was 1313 formally challenged as to the legality of its DMCA subpoenas, Rightscorp retreated 1414 and declined to argue for a change in the law. Nevertheless, Rightscorp continued to 1515 issue DMCA subpoenas, despite tacitly acknowledging that such subpoenas are not 1616 allowed under the current law and despite declining, twice, to argue that the law 1717 should be changed. 1818 95. Mr. Blaha and the other members of the Abuse of Process Class were 1919 harmed by Mr. Hawk and Rightscorp’s abuse of the legal process. Their personal 2020 information was released by their ISPs to Rightscorp, resulting in harm as defined 2121 by TCPA, and in them receiving a barrage of harassing and unlawful 2222 communications via phone, email and mail, and which was distressing and 2323 annoying. In addition, transactional information about their Internet accounts was 2424 improperly disclosed to Rightscorp, which violated their rights of privacy. 2525 96. Mr. Hawk’s issuance of the legally invalid DMCA subpoenas was a 2626 substantial factor in causing the harm to Mr. Blaha and the other members of the 2727 Abuse of Process Class. 2828 -28- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 29 of 31 Page ID #:162 97. 11 The legal basis for the DMCA subpoenas issued by Rightscorp, 22 including all of the subpoenas listed on Exhibit D, was objectively baseless in the 33 sense that no reasonable litigant in Rightscorp’s position could expect success on the 44 merits. Further, Mr. Hawk, the Management Defendants, and Rightscorp also had 55 an improper subjective, ulterior purpose in issuing the DMCA subpoenas, which was 66 to try and obtain information it could use to leverage “settlements” of claims that 77 none of them had any right to bring in the first place. The objective lack of merit to 88 Rightscorp’s position on the DMCA subpoenas was compounded by the fact that 99 when Rightscorp was presented with two different opportunities to potentially argue 1010 for a change or extension of the law, it declined to attempt to make such an 1111 argument, but then kept on issuing subpoenas it knew were invalid under existing 1212 law. 1313 98. Mr. Hawk, Rightscorp, and the Management Defendants acted with 1414 oppression fraud and malice in abusing the legal process. Accordingly, Mr. Blaha 1515 and the other members of the Abuse of Process Class are entitled to exemplary and 1616 punitive damages. Cal. Civ. Code § 3294. 1717 99. Since Mr. Hawk purported to be and was ostensibly acting as an agent 1818 not only on Rightscorp’s behalf, but also on behalf of undisclosed “client” 1919 principals, when he issued the invalid subpoenas, both Rightscorp and the 2020 Rightscorp Clients are vicariously liable for the torts of their ostensible agent, Mr. 2121 Hawk. On information and belief, Mr. Hawk was also the actual agent of the 2222 Rightscorp Clients, so the Rightscorp Clients are also vicariously liable for Mr. 2323 Hawk’s torts for that reason as well. In addition, the Rightscorp Clients are also 2424 vicariously liable for the torts of their actual and ostensible agent Rightscorp, who 2525 Mr. Hawk was directly representing in abusing this Court’s legal subpoena process. 2626 100. In the alternative, in doing the wrongful acts alleged in this complaint, 2727 each of the Defendants conspired together and acted in concert with one another. 2828 Specifically, on information and belief, each of the Defendants was aware that -29- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 30 of 31 Page ID #:163 11 Rightscorp was issuing DMCA subpoenas on behalf of the Rightscorp Clients; 22 agreed with and intended that Rightscorp issue such subpoenas; and ordered, 33 directed and authorized Rightscorp’s efforts in this regard. Accordingly, each 44 Defendant is jointly and severally liable for all of the unlawful conduct committed 55 by any of the other conspiring Defendants in relation to the issuance of the DMCA 66 subpoenas. 77 101. In the alternative to the vicarious liability each of the Rightscorp 88 Clients has incurred due to the acts of their agents Rightscorp and Mr. Hawk, and 99 the joint and several liability they each incurred due all Defendants concerted action, 1010 each Rightscorp Client is also liable to the Plaintiff for a contribution in proportion 1111 to that Rightscorp Client’s respective market share of Rightscorp’s overall business. 1212 102. WHEREFORE, on this cause of action, Mr. Blaha, both individually 1313 and on behalf of the Abuse of Process Class, prays for an award of damages and 1414 costs, and restitution; as well as punitive and exemplary damages; for preliminary 1515 and permanent injunctive relief prohibiting Mr. Hawk and Rightscorp from 1616 continuing to issue legally invalid DMCA subpoenas; and for such other relief as the 1717 Court deems just and proper. PRAYER FOR RELIEF ON COMPLAINT 1818 1919 NOW, THEREFORE, Plaintiff, individually and on behalf of all three 2020 Classes, prays that the Court enter judgment in their favor and against Defendants, 2121 and issue orders, as follows: 2222 A. Order certifying each of the Classes, directing that this case proceed as 2323 a class action, and appointing Mr. Blaha and his counsel to represent each of the 2424 Classes; 2525 B. Award of damages to Mr. Blaha and the other members of the TCPA 2626 Class in an amount between $500 (as a baseline) and $1,500 (upon proof of willful 2727 or knowing conduct) per violation of the TCPA, plus restitution, as proven at trial, 2828 on the TCPA cause of action; -30- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Case 2:14-cv-09032-DSF-JCG Document 22 Filed 03/09/15 Page 31 of 31 Page ID #:164 11 C. Award of damages to Mr. Blaha and the other members of the Abuse of 22 Process Class, including punitive and exemplary damages, plus restitution as proven 33 at trial, on the abuse of process cause of action; 44 55 66 D. Award of attorney’s fees and costs to Plaintiff and his counsel on the TCPA cause of action; E. Order for preliminary and permanent injunctive relief prohibiting 77 Defendants from continuing to issue legally invalid DMCA subpoenas, ostensibly 88 pursuant to 17 U.S.C. § 512(h), to ISPs that are mere conduits, and from continuing 99 to violate the TCPA, on the TCPA cause of action; and 1010 F. For such other relief as the Court may deem just and proper. DEMAND FOR TRIAL BY JURY 1111 1212 Plaintiff hereby demands a trial by jury on all issues so triable. 1313 1414 Respectfully submitted, 1515 DATED: March 9, 2015 1616 1717 THE PIETZ LAW FIRM ROXBOROUGH, POMERANCE, NYE & ADREANI 1818 /s/ Morgan E. Pietz /s/ Drew E. Pomerance 1919 Morgan E. Pietz (SBN 260629) THE PIETZ LAW FIRM 3770 Highland Avenue, Suite 206 Manhattan Beach, CA 90266 mpietz@pietzlawfirm.com Telephone: (310) 424-5557 Facsimile: (310) 546-5301 Drew E. Pomerance (SBN 101239) Anne S. Kelson (SBN 257851) Jesse B. Levin (SBN 268047) ROXBOROUGH, POMERANCE, NYE & ADREANI 5820 Canoga Avenue, Suite 250 Woodland Hills, CA 91367 dep@rpnalaw.com ask@rpnalaw.com jbl@rpnalaw.com Telephone: (818) 992-9999 Facsimile: (818) 992-9991 2020 2121 2222 2323 2424 2525 2626 2727 Attorneys for Plaintiff John Blaha, individually and on behalf of others similarly situated 2828 -31- FIRST AMENDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL