Opinion ID: 4549821
Heading Depth: 3
Heading Rank: 1

Heading: The claims validity hearings

Text: IPG, the SDC, and MPA did not participate in the Phase I proceedings but successfully petitioned to participate in Phase II. See 78 Fed. Reg. 50,113, 50,114 (Aug. 16, 2013) (cable retransmissions); 78 Fed. Reg. 50,114, 50,115 (Aug. 16, 2013) (satellite retransmissions). On December 8, 2014, the Copyright Royalty Judges held a five-day evidentiary hearing to resolve disputes over the validity and categorization of claims. They heard live testimony from five witnesses and admitted 180 exhibits.
The SDC argued that IPG should be disqualified from participating, or at least denied the presumption of validity, because one of the claims advanced by IPG was a fraudulent one on behalf of “Tracee Productions,” a fictitious entity. IPG had purported to represent Tracee Productions in an earlier proceeding and the Copyright Royalty Judges denied IPG’s proffered claims the presumption of validity. In response to the fraudulent Tracee Productions claim in the proceeding at issue here, the Judges stopped short of debarring IPG from representing claimants, instead again denying a presumption of validity to IPG’s certification of its authority to represent claimants. The Judges based that decision on two grounds: IPG’s failure to purge its filing of false claims and the Judges’ 1 The Motion Picture Association was formerly the “Motion Picture Association of America,” or MPAA. The Judges and other parties commonly refer to it this way, although the correct term now seems to be “MPA.” See Intervenors’ Br. i. 7 sua sponte conclusion that Raul Galaz, IPG’s principal witness, gave false testimony concerning a document IPG produced in discovery. The fraudulent “Tracee Productions” claim has a history in which Galaz played a prominent role. Galaz in 2002 was criminally convicted of defrauding the Copyright Office in order to obtain cable retransmission royalties belonging to others, and among the criminal acts to which he admitted was fraudulent filing in several proceedings on behalf of the nonexistent “Tracee Productions.” See U.S. Copyright Royalty Judges, In re Distribution of 1998 and 1999 Cable Royalty Funds, No. 2008-1 CRB CD 98-99 (Phase II), Ruling and Order Regarding Claims 3 (June 18, 2014) (2014 Claims Ruling); Judgment and Commitment, United States v. Galaz, No. 02-cr-230 (HHK) (D.D.C. Dec. 23, 2002). Before that fraud came to light, Galaz had filed a fraudulent claim on behalf of Tracee Productions as part of his claims to the 1999 cable royalty funds for devotional programming. 2014 Claims Ruling at 3. The fraudulent 1999 filing was not part of his criminal conviction but, by the time the Phase II proceedings for the 1998 and 1999 cable royalty funds for devotional programming commenced in 2008, the facts surrounding Galaz’s conviction were available to the Copyright Royalty Judges and IPG had not withdrawn the fraudulent Tracee Productions filing. The Judges therefore denied IPG the presumption of validity in the 1998 and 1999 proceedings because of its failure to withdraw its 1999 fraudulent Tracee Productions claim before or during those proceedings. Id. at 5- 11. In the instant proceedings, the Judges found especially troubling IPG’s proffer of a Tracee Productions claim in its 1999 satellite retransmission filing because the 1998 and 1999 proceedings put it on notice that it must purge Tracee Productions from its claim submissions. 8 The Judges’ second ground for denying the presumption of validity was Galaz’s false testimony about IPG’s 2008 satellite claims filing. IPG filed separate lists of claims for satellite retransmissions and cable retransmissions. It argued that both lists of claims were identical. But while IPG produced in discovery a copy of its cable claim with consecutive numbers of 1 to 10, it produced a copy of its satellite claim that appeared incomplete, as indicated by pages numbered 1 to 3 and 6 to 8. Noting the missing pages, MPA and the SDC had moved to dismiss the claims of the 39 claimants listed on the cable claims filing but not included in the satellite claims filing. When questioned at the claims hearing, Galaz sought to blame the Copyright Royalty Board (CRB or the Board) 2 for the missing pages. He testified that he personally had gone to the Board’s records office to obtain a copy of the claims filing and received from the Board in its incomplete condition the version that IPG produced in discovery. See Claims Hrg. Tr. vol. 2, 104:18-105:16. Galaz testified that he was “certain” IPG had originally filed a complete version with the Board, and that it was the Board that had lost the missing pages after IPG filed its claims but before Galaz retrieved the copy from the Board that (Galaz testified) IPG then produced in discovery in the Phase II proceeding. Id. vol. 5, 201:8. The Judges concluded that Galaz testified falsely because the evidence showed that the incomplete copy he claimed to have received from the Board and that IPG submitted in discovery could not in fact have come from the Board. The Copyright Royalty Board inscribes a sequential number on the first page of any received claims filing. MPA obtained a 2 The Copyright Royalty Board is the institutional entity in the Library of Congress that houses the Copyright Royalty Judges and their staff. 37 C.F.R. § 301.1. 9 certified copy of the claims filing from the Board and produced it in discovery. The copy submitted by IPG in discovery and the certified copy obtained by MPA from the Board, both lacking pages 4 and 5, differed in only one respect: MPA’s Board-certified copy contained a handwritten “193” on the first page, whereas the copy IPG produced did not. Claims Ruling at 8. The Judges therefore concluded that Galaz could not have received the incomplete version submitted by IPG from the Board’s files, because a true copy would have included the Board’s handwritten number, as shown by the certified copy obtained by MPA. Instead, the Judges concluded, Galaz must have received it elsewhere, “most likely IPG’s own records.” Id. On that basis, the Judges concluded that IPG had failed to submit claims on which it later sought to recover, and that Galaz testified falsely to the contrary. IPG filed a motion for modification to contest the Judges’ conclusion that Galaz gave false testimony by submitting Copyright Royalty Board records that contained certain irregularities. The Judges rejected the motion, noting that IPG’s new evidence showed that the Board placed numbers on each of 237 satellite claim filings from 2008, so did “nothing more than prove the point: the CRB numbers every claim that it accepts for filing.” U.S. Copyright Royalty Judges, In re Distribution of 2004, 2005, 2006, 2007, 2008, & 2009 Cable Royalty Funds, In re Distribution of 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, & 2009 Satellite Royalty Funds, Nos. 2012-6 CRB CD 2004-09 (Phase II); 2012-7 CRB SD 1999-2009 (Phase II), Order on IPG Motions for Modification 2 (Apr. 9, 2015) (Modification Ruling I).
The SDC also argued that IPG’s royalty claims on behalf of Creflo Dollar Ministries (Creflo Dollar), Benny Hinn 10 Ministries (Benny Hinn), and Eagle Mountain International Church, dba Kenneth Copeland Ministries (Eagle Mountain), should be struck as a discovery sanction for IPG’s failure to produce to the SDC a particular email responsive to an SDC discovery request. The SDC sought correspondence between IPG and devotional programming claimants relating to representation agreements. The withheld 2005 email, from a lawyer named David Joe to an IPG representative, concerns representation agreements between Joe’s “clients” and IPG. E- mail from David R. Joe, Brewer Anthony & Middlebrook PC, to Annie Lutzker, et al. (Nov. 23, 2005) (J.A. 2037). The parties dispute whether Joe is in fact an agent of any relevant “clients,” but whether or not these producers are accurately described as Joe’s “clients,” this email appears to refer to agreements between IPG and Benny Hinn, Creflo Dollar, and Eagle Mountain. In the email itself Joe described the “matter at hand” as “the 1999 cable distribution,” and identified the agreements that were “the subject of this discussion” as “the sole agreement with Hinn and Creflo, and the second of two agreements with Copeland.” Id. Joe wrote that “I could easily support the position that these agreements are not in effect because they have been breached, if you think they have not been unequivocally terminated,” and noted that any plan on IPG’s part to represent these clients at the distribution proceeding “needs to be put to rest immediately, and after it is, you should, in all candor, expect that the termination provisions will be invoked.” Id. The SDC claimed that the email was responsive to its discovery request. The Judges agreed, finding that IPG had failed to produce discovery “relating to claimants’ attempted termination(s) of IPG’s agency,” and disallowed IPG’s claims on behalf of the mentioned claimants, Creflo, Benny Hinn, and Eagle Mountain. Claims Ruling at 39. In contrast to the denial 11 of the presumption of validity, which was not a sanction but a refusal to afford IPG a presumption that its conduct suggested it did not deserve, the Judges dismissed these claims as a sanction for IPG’s discovery violation. IPG twice moved to modify the discovery sanction, arguing that the email was irrelevant and the sanction too harsh. The Judges twice denied IPG’s motions, bolstering their decision by identifying additional discovery requests to which the email was responsive, yet was never produced.