Court Opinion

ID: 804200
Source: CourtListenerOpinion
Date Created: 2012-07-12 17:17:39+00
Date Added: 2024-06-11T18:00:11.357134
License: Public Domain

Case: 11-10977   Document: 00511918506        Page: 1   Date Filed: 07/12/2012

         IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                  Fifth Circuit

                                                                   FILED
                                                                  July 12, 2012
                                No. 11-10977
                                                                  Lyle W. Cayce
                                                                       Clerk

MICK HAIG PRODUCTIONS E.K.,

                                   Plaintiff,

versus

DOES 1-670,

                                   Defendants-Appellees,

versus

EVAN STONE,

                                   Appellant.

                Appeal from the United States District Court
                     for the Northern District of Texas

Before SMITH, GARZA, and SOUTHWICK, Circuit Judges.
JERRY E. SMITH, Circuit Judge:

     Evan Stone, counsel for the plaintiff, Mick Haig Productions E.K. (“Mick
Haig”), appeals sanctions imposed on him. Because he has waived all the argu-
   Case: 11-10977     Document: 00511918506       Page: 2   Date Filed: 07/12/2012

                                   No. 11-10977

ments he raises on appeal, we affirm.

                                         I.
      Mick Haig, which produces pornographic films, identified 670 unnamed
persons who it believed had unlawfully downloaded its film Der Gute Onkel
using Bit Torrent, an online file-sharing program. Although Mick Haig had
obtained their Internet Protocol (“IP”) addresses and the names of their internet
service providers (“ISPs”), it knew no other information about those 670 persons.
Mick Haig sued them as John Doe defendants (“the Does”), alleging copyright
infringement. Mick Haig then sought permission to expedite discovery in order
to subpoena the Does’ ISPs to disclose their names and contact information
before the required Federal Rule of Civil Procedure 26(f) discovery conference.
The district court did not immediately rule on the motion but instead entered
two interim orders.
      First, the court ordered the ISPs to preserve certain potentially related
records and directed Mick Haig to serve the ISPs with the preservation order
within thirty days. Second, the court appointed attorneys from the Electronic
Frontier Foundation and Public Citizen Litigation Group (the “attorneys ad
litem”) to represent the Does in responding to the motion. Through those attor-
neys, the Does objected to Mick Haig’s motion to expedite on jurisdictional, pro-
cedural, and constitutional grounds. Before the district court could rule on the
motion to expedite, Mick Haig voluntarily dismissed its case. The notice of dis-
missal claimed that the delay in ruling on its motion foreclosed any relief, and
it criticized the court’s handling of the case.
      Just before Mick Haig dropped the case, some of the Does contacted the
attorneys ad litem because they had received notices of subpoena from their ISPs
and feared that their names had been disclosed to Mick Haig in connection with
a suit in which they were being accused of illegally downloading a pornographic

                                         2
   Case: 11-10977       Document: 00511918506         Page: 3     Date Filed: 07/12/2012

                                       No. 11-10977

film. Stone even communicated with some of the Does without the presence or
knowledge of the attorneys ad litem. After the case had been dismissed, the
Does, through the attorneys ad litem, moved for sanctions based on Stone’s “seri-
ous misconduct” in violating Federal Rules of Civil Procedure 26 and 45 by issu-
ing subpoenas to the ISPs. The Does sought interim relief until the full scope of
Stone’s misconduct could be determined. In support of their motion, the Does
claimed that Stone had sent subpoenas to at least two ISPs while Mick Haig’s
motion to expedite discovery was pending and before Mick Haig had entered a
notice of dismissal. The Does also presented evidence that the ISPs construed
the subpoena and preservation order as directives from the district court to pro-
vide the requested information.
       After over a month and a half passed with no response from Stone, the dis-
trict court granted the Does’ motion in part. The court required Stone, within
fourteen days,
       to disclose [under seal] all actions taken by him in connection with
       issuing subpoenas, including but not limited to the disclosure of:
       (1) any communications with or materials produced by any Internet
       Service Provider; (2) any issued subpoena and accompanying docu-
       ments; (3) any communications with the Defendant Does or their
       representatives, excluding the attorneys ad litem previously
       appointed by this Court; (4) any communications concerning set-
       tlement; (5) any funds received from or on behalf of any Doe
       Defendant.

       Stone partly complied with that order and confirmed that he had served
subpoenas on the ISPs.1 He also disputed the merits of the motion, claiming that
the Copyright Act permitted him to serve the subpoenas on the ISPs independ-
ently of any authorization from the district court, all the while again criticizing

       1
         Stone, however, failed to explain clearly whether he had negotiated settlements as a
result of the subpoenas. In addition, Stone filed his response ex parte rather than sealed, in
contravention of the order.

                                              3
   Case: 11-10977    Document: 00511918506       Page: 4   Date Filed: 07/12/2012

                                    No. 11-10977

the court’s handling of the case.
      The court permitted the Does an opportunity to reply to Stone’s response.
Aside from his statement that the Copyright Act permitted his actions, the rec-
ord reflects no effort on Stone’s part to brief the court further on the legal issues
related to the Does’ motion. After three more months had passed, the court
granted the sanctions motion, finding that Stone had “issued subpoenas in viola-
tion of court order,” thereby “grossly abus[ing] his subpoena power.” The court
characterized Stone’s actions as a “grave” and “wanton” “abdication of responsi-
bility,” transforming the use of subpoenas “from a bona fide state-sanctioned
inspection into private snooping,” and noted that Stone has abused the subpoena
power before in other cases. Because Stone had “egregiously violated the Fed-
eral Rules” with “staggering chutzpah,” the court imposed $10,000 in sanctions
on Stone and also required the following:
      1) Stone shall serve a copy of this Order on each ISP implicated and
      to every person or entity with whom he communicated for any pur-
      pose in these proceedings.
      2) Stone shall file a copy of this Order in every currently-ongoing
      proceeding in which he represents a party, pending in any court in
      the United States, federal or state.
      3) Stone shall disclose to the Court whether he received funds,
      either personally or on behalf of Mick Haig, and whether Mick Haig
      received funds for any reason from any person or entity associated
      with these proceedings, regardless of that person’s status as a Doe
      Defendant or not, (excepting any fees or expenses paid by Mick Haig
      to Stone).
      4) Stone shall pay the Ad Litems’ attorneys’ fees and expenses rea-
      sonably incurred in bringing the motion for sanctions. The Ad
      Litems shall file an affidavit or other proof of such fees and expenses
      with the Court within thirty (30) days of the date of this Order.
      Stone may contest such proof within seven (7) days of its filing.
      Stone shall comply with these directives and supply the Court with
      written confirmation of his compliance no later than forty-five (45)
      days after the date of this Order.

                                         4
   Case: 11-10977   Document: 00511918506     Page: 5   Date Filed: 07/12/2012

                                 No. 11-10977

      The attorneys ad litem then moved for $22,040 in attorneys’ fees and costs.
While that motion was pending, Stone appealed the order granting sanctions
and responded to the Does’ pending attorneys’ fees motion, seeking only to
reduce the quantum. Stone later unsuccessfully moved the court to stay its
sanctions order pending appeal two days after the deadline for bringing such a
motion, raising a range of new arguments that he also now urges on appeal.
      The Does, through the attorneys ad litem, then moved the court to impose
further sanctions based on Stone’s failure to comply with the first sanctions
order. Three months passed, Stone filed no response, and the court granted the
motion for additional sanctions, ordering Stone to pay $500 into the court regis-
try per day “for each day he delays compliance with the Sanctions Order, begin-
ning one week after the date of this Order, unless or until Stone posts a super-
sedeas bond in accordance with this Order or the Fifth Circuit grants him a
stay.” A motions panel of this court granted Stone a stay on all sanctions and
expedited this appeal.

                                       II.
      On appeal, Stone argues that the sanctions cannot be justified under Rules
26 and 45 or under Federal Rule of Civil Procedure 11 or the inherent power of
the district court. He also contends that the attorneys ad litem lacked standing
to bring the sanctions motion and are not the proper recipients of the attorneys’
fees awarded by the district court. Stone raises this last argument for the first
time on appeal and raised the other arguments for the first time in his untimely
motion in the district court to stay sanctions pending appeal, which was filed
after this appeal was initiated. None of these arguments, thus, was preserved
for purposes of appeal, nor does Stone contend they were. Accordingly, all the
issues Stone raises on appeal have been waived. Lofton v. McNeil Consumer &
Specialty Pharm., 672 F.3d 372, 380-81 (5th Cir. 2012).

                                       5
   Case: 11-10977       Document: 00511918506           Page: 6     Date Filed: 07/12/2012

                                        No. 11-10977

       Nonetheless, Stone asserted, at oral argument and for the first time, that
this court can consider his arguments because his appeal is one of “extraordinary
circumstances,” involving only “pure question[s] of law [in which] a miscarriage
of justice would result from our failure to consider [them].” AG Acceptance Corp.
v. Veigel, 564 F.3d 695, 700 (5th Cir. 2009). We conclude, however, that no mis-
carriage of justice will result from the sanctions imposed as a result of Stone’s
flagrant violation of the Federal Rules of Civil Procedure and the district court’s
orders. Stone committed those violations as an attempt to repeat his strategy
of suing anonymous internet users for allegedly downloading pornography ille-
gally, using the powers of the court to find their identity, then shaming or intim-
idating them into settling for thousands of dollarsSSa tactic that he has
employed all across the state and that has been replicated by others across the
country.2
       The stay of sanctions is therefore VACATED, and any sanctions imposed
by the district court are AFFIRMED.

       2
        See, e.g., Raw Films, Ltd. v. Does 1-32, 2011 WL 6182025, at *3 (E.D. Va. 2011) (“This
course of conduct indicates that the plaintiffs have used the offices of the Court as an inexpen-
sive means to gain the Doe defendants’ personal information and coerce payment from them.
The plaintiffs seemingly have no interest in actually litigating the cases, but rather simply
have used the Court and its subpoena powers to obtain sufficient information to shake down
the John Does. Whenever the suggestion of a ruling on the merits of the claims appears on
the horizon, the plaintiffs drop the John Doe threatening to litigate the matter in order to
avoid the actual cost of litigation and an actual decision on the merits.”).

                                               6