Sunday, September 25, 2005

Objectors' Brief: 'If This Settlement Is Approved It Will Be Appealed'

This brief was filed on Friday by Charles D. Chalmers, attorney for the objectors.

MEMORANDUM IN SUPPORT OF MOTIONS FOR: LEAVE TO FILE SUPPLEMENTAL OBJECTIONS; LEAVE TO OBTAIN ADDITIONAL DISCOVERY BEYOND THAT ALREADY REQUESTED, and; LEAVE TO FILE RESPONSE TO LEGAL ARGUMENTS ADVANCED BY PLAINTIFFS AND DEFENDANTS IN SUPPORT OF FINAL APPROVAL

I. ADDITIONAL OBJECTIONS.

These class members wish to present objections based on new information presented with plaintiffs’ Motion For Final Settlement Approval. This is particularly relevant to the damage information now presented by plaintiffs. This information was not available before now. The class members request that the court provide a date, possibly one week after the Fairness Hearing, by which new objections could be presented. The class members need adequate time to study the extensive papers.

The following are examples of objections the class members will, and do, make.

1. The damage analysis stops with data for 2001. Thus the settlement does not take into account the defendants’ royalties and revenues for 2002 to 2005.

2. There is no time value of money component included in the damage analysis. Copyright law allows recovery of interest.

3. There is no consideration of the right of a portion of the class to recover statutory damages in the damage analysis upon which the settlement is based.

4. There is no justification presented for the category amounts. While the presentation argues that there is no justification for amounts actually provided for the different Categories. So far as the final presentation shows, these amounts are arbitrary.

5. The damage study reveals that it is substantially, if not totally based on information volunteered by defendants, through their counsel. Some information, such as defendant revenues, is estimated by the expert when it should have been obtained by discovery.

II. DISCOVERY.

The final presentation presents new reasons for discovery, as well as reinforcing the need for discovery already requested. Examples are stated below.

1. The Leitzinger damage studies rely heavily on estimates of the percent that freelance articles represent in the content provided to the databases. It is stated the estimate is based on information from 15 “content providers” but they are not identified. There is a suggestion that they may be major newspapers, or magazines. It is important to determine if their data is sufficiently representative of the 26,000 content providers (or more) that are covered by this settlement. It might be that large publications rely more on paid staff, while smaller publications, or those that do not publish as frequently as newspapers or magazines, rely more heavily on freelance writers.

2. The estimated percentage of freelance articles is based, in an unexplained way, on a “circulation weighted” calculation. The meaning is not clear. There is a suggestion that this would give greater weight to the freelance percentage of large circulation publications, which again might be more likely to rely on paid staff writers.

3. Figures called “Total Revenues” for the database defendants play a major part in the damage analysis, but they are undefined. It is not clear that they include all the revenues that should be included. For instance, while they presumably include database revenues from sale of articles individually, do they all include revenues for subscriptions to the databases, including subscriptions for a single price which include access to the freelance materials, or some of them, within the single price. Also, do they include revenues from licensing of the databases to other database operations, such as the licenses to FindArticles, Highbeam and Amazon which have been disclosed in this action?

4. Plaintiffs argue that the objectors fail to show any evidence that any B claims are prejudiced by the exclusive “step-up” provided to some B claims by the amendment. The information necessary to show which Bs are actually prejudiced is in the possession of the defendants, and possibly the plaintiffs based on their investigation. The information consists of the dates when databases, or publishers, conveyed their articles to a second or subsequent database, just as happened with the HighBeam and Amazon situations. Thus plaintiffs’ argument shows that the objectors should be given discovery to find this information, or to eliminate the possibility of prejudice.

5. The plaintiffs submit the declaration of Mr. Feinberg to describe the terms of his engagement. This underscores the need for discovery to see what the agreement is. His testimony about the terms is not the best evidence. If there is nothing prejudicial about the agreement there is simply no reason for it to be withheld.

6. The final presentation indicates that the information from the defendants upon which the negotiations were based is a limited body of documents. Leitzinger references a series of letters from defense counsel. This information should be made available under a protective order to counsel for the objectors, and he should be given an opportunity to direct questions to the expert.

7. Plaintiffs argue the length of the mediation, four years, eliminates the likelihood of collusion which would exist if the settlement was agreed early, and elsewhere they have explained that the settlement was agreed in early 2003. They can not have it both ways, and this underscores the need for the discovery of the negotiations that has been requested.

8. Defendants have submitted one of their mediation briefs. This virtually proves the value of production of all mediation briefs, which these class members have requested.

III. BRIEFING

If this settlement is approved it will be appealed. These class members believe they could assist the court in understanding a number of important issues on which the plaintiffs have now, for the first time, stated their view of the law. These include most significantly the License by Default, the copyright law on damages, and adequacy of representation. An opportunity to respond to the plaintiffs’ motion is requested. It violates civil procedure to have a motion to which no response is permitted and which is heard 8 days after the motion is filed.

Dated: September 23, 2005

_____S/_______________________
Charles D. Chalmers

Attorney for Irvin Muchnick, Charles Schwartz, Abraham Zaleznik, Jack Sands, Todd Pitock, Judith Stacey, Judith Trotsky, Christopher Goodrich and Kathy Glicken

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