Monday, April 03, 2006


Attorney Charles D. Chalmers has filed the objectors' brief with the Second Circuit Court of Appeals. I'll get the whole document up at our website later today. Meanwhile here's the full text of the "Summary of the Argument":

The settlement grants the Defendants and an extensive, but partially unknown, list of Publishers an irrevocable license to class member copyrights, including the right to license others and to allow those others to license to others. Class representatives are limited, by Rule 23, and the requirements of Due Process, to the disposition of pending claims. The license can not be upheld as a release because it fails the identical factual predicate doctrine. The doctrine limits class action releases to claims based on the facts that underlie the action. Approving this license was an error of law.

The litigation was initiated for owners of registered copyrights. More than 99% of the class own unregistered copyrights, for which registration is a precondition to suit. The unregistered owners were incorporated into the settlement at the demand of the Defendants. The class representatives hold registered copyrights. Class certification was an abuse of discretion, as a matter of law, because the plaintiffs are not adequate representatives to represent the unregistered copyrights. This inadequacy is confirmed by settlement provisions, particularly the C Reduction and the compensation structure for unregistered owners. It is necessary to establish a structural assurance of fair and adequate representation for the unregistered copyright owners. This requires that they be defined as a subclass, with separate class representatives holding typical claims, and separate counsel, who understand that their role is to represent the members of that subclass.

The C Reduction and the C compensation structure are unfair and unreasonable on their face. The parties’ justification for the C Reduction confirms that the class representatives placed the entire risk that claims would exceed the settlement fund on the unregistered owners.

The Agreement and the Notice deny compensation to certain claims while releasing those claims and granting a license for the use of those copyrights. After objections the parties said these claims would not be released. The final order is a voluntary dismissal of these claims. The explanations are inherently unbelievable. These actions show that the plaintiffs are inadequate.. The dismissal was an error of law because it did not comply with Rule 23(e).

The approval procedures denied Due Process. Preliminary approval was granted without any showing the settlement was adequate. Since there was no litigation, and no pleadings in the court file, class members had no information before the deadline for opting out or objecting. Efforts by the objectors to obtain information were denied. The Notice required any class member wishing to present an objection to appear, in person or through counsel, at the fairness hearing.

The district court failed to provide any analysis of certification or settlement approval, and did not reveal its reasons for rejecting the objections. The district court’s discretion can not be reviewed without such a record.

If this matter is remanded for proceedings regarding this settlement the objectors should be granted discovery on three subjects: (1) negotiation of the settlement; (2) the damage study on which the settlement is based, and; (3) the contingent compensation of the mediator.


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