Minnesota Judge Finds $1.5mm Jury Award Unconstitutional in File-Sharing Case

For the third time, Chief Judge Davis of the District of Minnesota federal court has reduced a jury’s award of statutory damages against Jammie Thomas-Rasset.  In October, 2007 the first jury awarded plaintiff record label Capital Records $222,000 based on Thomas-Rasset’s illegal sharing of 24 songs ($9,250 / song).  Judge Davis awarded a new trial because he believed he had given improper jury instructions.

In June, 2009, a second jury awarded $1,920,000 for illegally sharing the same 24 songs ($80,000 / song).  Judge Davis remitted the jury’s award down to $2,250 / song (or $54,000), but Capital Records rejected the remittitur and a third trial was held on the issue of damages.

Finally, in November, 2010, a third jury awarded $1,500,000 ($62,500 / song).  This time, realizing remittitur was not a viable option to ending the litigation, Judge Davis has held that the jury’s award violates Thomas-Rasset’s constitutional due process rights.  Specifically, Judge Davis held that “an award of $1.5 million for stealing and distributing 24 songs for personal use is appalling. Such an award is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable. In this particular case, involving a first-time willful, consumer infringer of limited means who committed illegal song file-sharing for her own personal use, an award of $2,250 per song, for a total award of $54,000, is the maximum award consistent with due process.”

Judge Davis wisely avoids the faulty logic of Judge Gertner’s similar due process analysis in Sony BMG Music Entertainment v. Tenenbaum, 721 F. Supp.2d 85 (D. Mass. 2010).  In reducing the jury’s award of $675,000 ($22,500 for each of the 30 songs at issue) to $2,250, Judge Gertner based her award on Judge Davis’ remitted award in Thomas-Rasset v.2.  She analyzed the constitutionality of the jury’s verdict under the Supreme Court’s BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (“Gore”) standard, which provides a three factor test to determine whether an award of punitive damages is constitutional.  The myriad flaws in her decision are for another post.

Judge Davis wisely adopts the Supreme Court’s standard in St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 67 (1919) (“Williams”), in which the Court established a three factor test to determine the constitutionality of statutory damages.  What is fascinating about Judge Davis’ opinion is that it appears that the jury’s verdict satisfies each of the Williams factors, and yet he still finds the award unconstitutional.

For example, the first factor is the public interest.  Here, Judge Davis concludes “There is a significant public interest in vindicating copyright.”  The second factor is the opportunities to commit the offense.  Here again, Judge Davis concludes “It is clear that there are ‘numberless opportunities for committing the offense’ of illegally downloading and distributing sound recordings online.”  Judge Davis continues, “The third Williams factor [is] ‘the need for securing uniform adherence to established passenger rates.’ The need for deterrence also exists in this case.”  So, all three Williams factors point towards plaintiff Capital Records.

Judge Davis, however, begins the final section of his opinion by stating:

“To protect the public’s interest in enforceable copyrights, to attempt to compensate Plaintiffs, and to deter future copyright infringement, Thomas-Rasset must pay a statutory damages award. Plaintiffs have pointed out that Thomas-Rasset acted willfully, failed to take responsibility, and contributed to the great harm to the recording industry inflicted by online piracy in general. These facts can sustain the jury’s conclusion that a substantial penalty is warranted. However, they cannot justify a $1.5 million verdict in this case.”

In other words, Judge Davis’ entire constitutional due process analysis appears to boil down to, “I personally think this is too high an award.”  There is no further legal support to his position.  In fact, later in the opinion he states “The Court accords deference to the jury’s verdict. Yet an award of $1.5 million for stealing and distributing 24 songs for personal use is appalling. Such an award against an individual consumer, of limited means, acting with no attempt to profit, is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.”

But the jury’s verdict is quite clearly not obviously unreasonable.  As noted above, the three juries in this case awarded damages of $9,250, $80,000, and $62,500 per song.  The jury in Tenenbaum awarded $22,500 per song.  While that range is pretty wide, the juries have awarded between 4 and 35 times as much as both Judge Davis and Judge Gertner find “obviously unreasonable.”

Congress created the statutory damages scheme of the Copyright Act to allow juries to determine awards within a range, which all three juries did in the Thomas-Rasset case.  I’m confident that the 8th Circuit will reverse the inevitable appeal.

Judge Davis’ opinion is below:
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