New UnSettlement Reality Show: The C Reduction

Oh, to have been a fly on the wall today inside the hallowed Manhattan offices of such tony law firms as Proskauer Rose (outside counsel for LexisNexis). The UnSettlement is spinning out of control.

The agent of this crisis is the so-called "C Reduction." By the plaintiffs' and the defendants' joint account, 99-plus percent of the infringements involve works by freelancers whose copyrights weren't registered, or weren't registered in a timely way. Under the settlement, the unregistereds' already piddling claim awards ($5 - $60) can be canceled if the total pool of claims overloads the settlement fund.

The trigger for the C Reduction is $11.8 million, including claims of both registered and unregistered works. But only the unregistereds would get touched -- could even get reduced to nothing at all -- if the settlement fund is busted. (Why only $11.8 million, you ask? Because the other $6.2 million of the $18 million fund is already spoken for by lawyers' fees, the cost of mediation, and the costs of notice to the class and claims administration.)

On May 25 the plaintiffs and the defendants filed separate briefs opposing our appeal of Judge Daniels' approval of the class-action copyright settlement. Both opposition briefs said the C Reduction was out of the range of practical possibility because "prima facie valid claims" total $10,762,904. They said:

“It would be absurd to reverse class certification on this ground, since the claim period expired last September and the submitted claims as reported by the claims administrator make plain that there will be no C reduction whatever, even if every claim asserted were valid.”

Then the objectors asked if all the claims for registered works that didn't have a registration document were counted as registered for the "prima facie valid claims" calculation, or were counted as unregistered. The claims administration memorandum appended to the settlement agreement explicitly mandated the latter.

They didn't answer this simple question for more than a week.

Today they admitted that the $10.76 million number is wrong, for the very reason we suspected. They will withdraw their statements. They say they don’t know if the C Reduction will apply or not.

It's damn near impossible to believe that the mention of the $10.76 million figure slipped into the briefs due to a clerical error. In fact, the statement containing it was itself a blatant violation of the rules of appellate briefing, which prohibit the introduction of new information from outside the original district court record. Big law firms such as the ones involved here know these rules very well, and they have lots of hands and minds editing and revising and offering input. They don't like to get caught doing something sleazy.

But caught they have been, ladies and gentlemen. The "inconceivable," the C Reduction, might happen. Or already has happened.

Have a happy Fourth of July weekend. When it's over, we strongly suggest that you ask your writers' organizations, in no uncertain terms, to take responsibility for what they and their lawyers have just done to you.

UnSettlement Parties' Shuck-and-Jive Act

As we all process the meaning of the latest "Emily Latella" ploy by the lawyers -- Oh sorry, we didn't mean what we said in the claim-defect mailing of last week, never mind -- I'm reminded of another Second Circuit Court of Appeals copyright case from earlier this year, Dallal v. New York Times. (See our earlier post at http://freelancerights.blogspot.com/2006/05/second-circuit-rules-for-photographer.html and the Graphic Artists Guild's complete info at http://www.gag.org/activities/advocacy_materials/dallal_vs_nytimes2.php.)

For those whose eyes glaze over at legalese, let's talk for a moment in plain English about what this is all about. In the amicus curiae, or friend of the court, brief in support of Dallal, the American Society of Media Photographers said:

This case is about more than just a violation of basic copyright law. It is about a defendant with deep pockets and tremendous clout in the publishing industry who repeatedly and willfully violated not only copyright law, but also trade customs and practices that had been established and unquestioned for decades. When this defendant's actions were deemed infringing by the U.S. Supreme Court, it promptly changed its tune and argued that it never knew there was a problem.

Claims Administrator Changes Its Tune, Deadline; Registration Docs Not Needed

We interrupt our investigative series on named plaintiffs Mary Sherman and Paula "Pinocchio" McDonald -- hereinafter iconically known as the Category B Goldust Twins -- to report that the claims administration team has backed off somewhat from its aggressive June 16 mailing to many claimants telling them that their earlier claims submissions were defective.

As usual these people zig and zag more than a World Cup set piece, so I'd best try not to interpret for all of you all of the new information now posted at http://copyrightclassaction.com. (The same full text is at the bottom of this blog post, for your reference.)

But this does seem to be a small but significant victory for the harried freelancers who first had been misled by the writers' organizations into thinking that claims approval would be a snap, and then were thrown into outrage and some understandable panic upon being told that they had to provide this and that piece of paper, and make it snappy!

Specifically, with apologies "for any confusion the June 16 letter [stating lots of things to the contrary] may have caused":

* In most cases copyright registration numbers are sufficient. You don't have to produce the actual copyright certificate or a printout from the Copyright Office website.

* You now have until August 31 -- not July 17 -- to cure various other alleged defects in your claims submissions.

Still left dangling is what the settlement parties meant, in their recent, second-year-law-school-level-shoddy filings in opposition to our appellate brief, by their calculation of "prima facie valid claims."

Also, what the craven "associational plaintiff" AG, ASJA, and NWU are up to. Jeepers, even with the extension to August 31, many freelancers are certain to miss the new deadline because they're away for the summer or for other reasons. These organizations should be shouting updates from rooftops, instead of hiding out and pretending this mess -- by which I mean not just the current confusion but also the whole messy UnSettlement -- never happened.

Stay with us as our staff of Kremlinologists studies the new settlement website info (which I can already tell you is still not duplicated at the 1-800-330-0516 administrator's toll-free phone line). And as we continue to press for answers.

**********

IMPORTANT ANNOUNCEMENT

On June 16, 2006, the Claims Administrator mailed out letters to class members who submitted claims, asking for further information, or advising that certain claims were ineligible. The letter that you did not include sufficient documentation concerning copyright registration has raised some questions, and in some respects did not accurately describe the registration documentation requirements. This Announcement clarifies those letters with respect to the proof of claim requirements for registered Subject Works, as well as with respect to other issues.

1. If you supplied a registration number on your Claim Form, then the Claims Administrator will attempt to verify your registration on the U.S. Copyright Office web site, and you do not need to do anything else at this time. However, because the U.S. Copyright Office web site is incomplete (not containing pre-1978 registrations), or in case you provided the wrong number, you may be required to provide proof of registration in the manner described in the June 16 letter. If the Claims Administrator needs proof of registration, you will be notified. In short, you do not need to provide any documentation at this time unless and until you are again notified that proof of registration is required.

2. If you failed to provide a registration number, then you will need to do so, and you should proceed to do so now. If after you provide the registration number the Claims Administrator is unable to verify it on the U.S. Copyright Office website, then you will be asked to provide proof of registration in the forms described in the June 16 letter. In short, once you have provided the registration number(s) to the Claims Administrator, you do not need to provide any documentation at this time unless and until you are again notified that proof of registration is required.

3. The December 31 2002 deadline to register Subject Works applies only to Category B claims, not Category A claims. Your Subject Works are eligible for Category A awards if they were registered either before publication or first infringement, or not more than three months (90 days) after first publication. This is the case regardless of whether the registration was before or after December 31, 2002.

4. Works Made For Hire. If the June 16 letter told you that certain of your works are ineligible because you stated they were works made for hire, and if you now believe that they were not works made for hire, then you should, by August 31, 2006, send the Claims Administrator a letter correcting that designation. Please note that this August 31, 2006 deadline extends the deadline set forth on the June 16 letter.

5. If the June 16 letter sent to you requires you to provide further information other than registration documentation, then you must provide it no later than August 31, 2006.

Please visit this site for updates concerning the settlement and the claims process. You may also contact plaintiffs' lead counsel at mboni@kohnswift.com, drice@hosielaw.com or ajd@girardgibbs.com.

Thank you for your cooperation, and we apologize for any confusion the June 16 letter may have caused.

Why Do I Call Her Paula 'Pinocchio' McDonald?

I refer to Paula McDonald as "Pinocchio" because, if she were that fictional character, she would have grown a very protuberant proboscis on the basis of the easily established fabrications in her declaration to the court of last September. For details, go to http://freelancerights.blogspot.com/2005/09/paula-pinocchio-mcdonald.html.

One more thing -- for now. McDonald is the only plaintiff who actually told the court she supported the settlement.

Named Plaintiff Paula 'Pinocchio' McDonald -- No. 2 of the Category B Goldust Twins

Paula McDonald is a named plaintiff. As was explained with Mary Sherman in the previous post, it is reasonable to consider that McDonald's attorneys might have been keeping her apprised of developments in mediation, including what wound up being set as a 12/31/02 registration cutoff date for Category B.

On October 10, 2000, according to my notes from Copyright Office records, McDonald filed seven omnibus registrations covering 94 works:

- 9 contributions from 1993 for various publications
- 26 contributions from 1994 for various publications
- 27 contributions from 1995 for various publications
- 10 contributions from 1996 for various publications
- 7 contributions from 1997 for various publicatons
- 9 contributions from 1998 for various publications
- 6 contributions from 1999 for varous publications

In addition, the Copyright Office records show that on November 1, 2002, McDonald filed a registration entitled "January Baja events and other contributions." In all likelihood, this is another omnibus registration, but the online record fails to list the individual works, so we don't know how many there are for that one.

Named Plaintiff Mary Sherman -- No. 1 of the Category B Goldust Twins

In the previous blog we explained the tremendous advantages to infringed writers of having claims in Category B. We also scratched our heads over why the settlement agreement has such a category, whose December 31, 2002, cutoff date for registration of copyright is capricious on its face.

Now here's some of the rest of the story.

Mary Sherman is a named plaintiff. That means that it is reasonable to consider that her attorneys might have been keeping her apprised of developments in mediation, including what wound up being set as a 12/31/02 registration cutoff date for Category B.

On December 13, 2002, according to my notes from Copyright Office records, Sherman filed eight omnibus registrations covering 286 works:

- 3 contributions from 1990 (Boston Globe)
- 14 contributions from 1994 (Boston Herald)
- 47 contributions from 1995 (Boston Herald)
- 48 contributions from 1996 (Boston Herald)
- 50 contributions from 1997 (Boston Herald)
- 47 contributions from 1998 (Boston Herald)
- 50 contributions from 1999 (Boston Herald)
- 27 contributions from 2000 (Boston Herald)

Named Plaintiffs Mary Sherman and Paula 'Pinocchio' McDonald -- The Category B Goldust Twins (Introduction)

"It wasn't about money," [named plaintiff] James Gleick said. "Well," he added, "of course it's about money." -- New York Observer, April 4, 2005

The settlement agreement, whose approval the objectors have appealed, created a curious third category of subject works. It was intuitive that there would be Categories A (for works whose copyrights were registered prior to the filing of the copyright class actions in August 2000) and C (for works whose copyrights were not registered by then). Category B, however, is not intuitive: it covers works registered before December 31, 2002.

The differences in the settlement in claim awards for regular non-pre-registered works (C's) and for the puzzlingly defined Category B's are substantial. The range of C awards, depending on the original sale price, is from $5 to $60; the range of B awards is the greater of $150 or 12.5 percent of the original sale price.

There's also the complicated C Reduction provision, which makes C claim awards uniquely vulnerable to being lowered or even eliminated altogether if the volume of claims busts the $10-million-to-$18-million settlement fund (a sum that is also to include attorneys' fees and administration costs).

Category B claimants are further advantaged by a hastily thrown together amendment to the settlement agreement. This confers Category A status (with claim awards scaling down from $1,500 to $875) on all Category B works whose registrations were secured prior to first infringement by HighBeam or Amazon, two brands added to the Defense Group.

So the significance of the 12/31/02 date is manifest. But the rationale for it is mysterious. Copyright law provides for levels of damages for works that were registered upon publication or within three months of publication, or before first infringement, and levels of damages for works that were not. Copyright law does not provide for "almost pregnant" registration scenarios.

What's up? Here was the explanation of mediator Kenneth Feinberg:

All mediation participants were concerned that without an express registration cutoff date, class members could take advantage of the announced settlement and attempt to register works in order to enjoy the benefits of the settlement. The negotiated date of December 31, 2002 was designed with this concern in mind, to prevent anybody from "gaming the system" by taking advantage of the announced settlement.

As our appeal heads for consideration by the Second Circuit, it is gratifying to behold how the cutoff date prevented insiders from gaming the system. Especially two particular insiders: named plaintiffs Mary Sherman and Paula McDonald. For details on how these two writers profited from the creation of Category B, from securing registrations of old works before the Category B cutoff date, and perhaps from the 11th hour settlement agreement amendment that converted some or many of their B claims into A claims, read on.

ASJA -- American Society of Jumbled Advice

More than a year ago, shortly after this blog was launched, we suggested that ASJA -- the American Society of Journalists and Authors -- instead go by the initials LTECR, for "Let Them Eat Copyright Registrations." A new analysis of the role of this so-called "associational plaintiff" in the copyright class action sellout/giveaway offers still more sad insights.

Last week many class members received claims-defect notices from the settlement administrator, with new mid-July deadlines for curing those defects. Some of the alleged defects contradict the advice given by a September 2005 edition of ASJA's Contracts Watch email bulletin (which we reproduced at the time and is still viewable at http://www.asja.org/cw/cwfiles/cw050907.php). See in particular the following two paragraphs:

2. You DO NOT have to have documentation to back up your claim. Fill out the form to the best of your knowledge. You do not need pay stubs or contracts. You do not need to cite an exact publication date.

3. It is up to the defendants to challenge a claim. The presumption lies with the writer. When in doubt, file a claim.

It is interesting, at the very least, to try squaring that with what happened to the writers who took ASJA's advice. (And remember, ASJA was directly involved in the UnSettlement; this is not arm's-length commentary.)

But try this additional twist. The "CLAIMS ADMINISTRATION MEMO" that is Exhibit B of the settlement agreement (viewable at http://copyrightclassaction.com/settlement.php3) contradicts the idea that the burden is on the defendants to challenge claims. To the contrary, it suggests that the defendants fought hard for, and the plaintiffs acceded, to the appointment of a company of hard-assed bureaucrats to administer claims.

I'm not going to cite the provisions chapter-and-verse; some of them are contradictory and, in any case, they need to be evaluated in full context. Read the whole document for yourself. The point is that ASJA's blue-skies assurances to the freelance community that claims submission would be a piece of cake were clearly irresponsible. As was its entire role as an "associational plaintiff," from which it helped lead the negotiations that produced the UnSettlement.

The key ASJA figure in all this was former president Jim Morrison (jimmor@aol.com). ASJA's current president is Jack El-Hai; you can probably let him know what you think about the American Society of Jumbled Advice by using the email form at http://www.asja.org/contact22.php?torecipient=Jack%20El-Hai.

What's Your Screwy Claims Administrator Story?

"On Monday I received a form letter citing one 'Work' as incomplete. It stated that I neglected to indicate if I had registered this one work with the Copyright Office. When I looked at the photocopies of I'd sent in, there is clearly no way one could have missed the checked box, indicating no copyright registration. I promptly answered the form, photocopied it, and mailed it back with a copy of my copy of the original form. I [then] emailed a friend 'claimant' and -- whaddya know! -- she, too, had received a form letter to the same bogus tune. As, it turned out, did many of her friends."

* * *

"Something underhanded appears to be going on.... Repeatedly the Claims Administrator (or whoever) has garbled the titles of my stories and my late husband's. If the Claims Administrator does not use the correct titles I sent, how can they investigate if the stories were used without permission. (I think the point is, they can't.) The titles don't even make sense. If garbling the story titles is a deliberate attempt to deprive the writers of money that's due us, it should be exposed...."

Whom To Complain To

Michael J. Boni
Kohn, Swift & Graf
mboni@kohnswift.com

A.J. De Bartolomeo
Girard Gibbs & De Bartolomeo
ajd@girardgibbs.com

Diane Rice
Hosie McArthur
drice@hosielaw.com

Paul Aiken
Executive Director
Authors Guild
staff@authorsguild.org

Kay Murray
General Counsel
Authors Guild
(oh, never mind that one -- she now works for the Tribune Company)

Jim Morrison
American Society of Journalists and Authors
jimmor@aol.com

Gerard Colby
President
National Writers Union
GcolbyVT@aol.com

'They Don't Want to Pay Any Freelancers Anything'

A sampling of the feedback received here:

"I received one of those [claim-defect] letters yesterday, rejecting the nine books and one article I submitted, even though I followed all the instructions and wasted hours doing the submission. It seems that for all my books, some going back to the seventies, I have to submit the copyright registration certificates, which had of course been done by my publishers (several of whom are now out of business). I can apparently get copies of the certificates from the Library of Congress for a fee (I don't know what the fee is), but this all looks so iffy I doubt it's worth it. It looks to me as if they don't want to pay any freelancers anything."

* * *

"It looks to me as if the tactic is to make it even more difficult for claimants to register a claim: if this is widespread, and IF there truly are multiple mistakes in these notices, then it would certainly appear that this is a strategy to get rid of as many claims as possible, since -- given the puny amount of money some of us will receive anyway -- there certainly will be those who just throw up their hands.Which would also mean they can't prohibit use of their material elsewhere, and all those articles will then be freed up to be used, without payment, over and over again."

* * *

"It's like we're the defendants.... They want to give us nothing."

How to Find Your Copyright Office Registration Listings

Don't take this to the bank -- the lawyers and plaintiffs supposedly working in your interests keep throwing curveballs. The associational plaintiff organizations told everyone we didn't need to have primary documentation of our copyright registrations, only the easily-verified registration numbers themselves. But now the mass mailing of defect notices by the claims administrator is saying otherwise.

Anyway, for those of you who don't want to wait and see how the whole confusing big picture plays out, and simply want to cure your alleged claims defects right now, and one of the alleged claims defects is lack of registration documentation, we're pretty sure that a printout from the Copyright Office website showing the registration is sufficient.

To do that, go to http://www.copyright.gov/records/cohm.html.

Follow the interactive instructions there, which are simple. I recommend printing out the full registration record, not just the thumbnail.

But mostly I recommend raising holy hell with the named plaintiffs and organizations and lawyers, and helping us finish the job of undoing this sellout settlement.

UnSettlement Heads Deep Into Marvin Gaye Country

Mother, mother
There's too many of you crying....

Talk to me
So you can see
What's going on
Ya, what's going on
Tell me what's going on?


I didn't know that the clowns managing the UnSettlement were Motown fans. But with cries of confusion and outrage reverberating through cyberspace over the claims administrator's wholesale mailing of ambiguous, inaccurate, and gratuitous defect notices, the president of the "associational plaintiff" National Writers Union, Gerard Colby, felt he had to do something. He doesn't exactly tell us "What's Going On" -- but in all fairness he obviously doesn't know himself. So he does what he does best: announce a throat-clearing project to create a new "database" of useless information.

Sorry, I'm getting ahead of myself. Below is the full text of Colby's message, which went out to "past and current members" of the NWU and got forwarded to your humble blogger. (As a past member myself, I received such bulletins up until very recently, but apparently have been expunged from the "database.")

Recently, the Claim Administrator in the electronic rights class action settlement has been in touch with some members who filed claims, disputing their claims on the basis of alleged incomplete claim forms. Since I onlyknow of such challenges when members contact me, it is vitally important that we make up our oun database of NWU members, current and past, who have filed claims so that we can keep them informed of developments and bring these challenges to the attention of the attorneys representing NWU member, past and current. If you have filed a claim in the settlement of In re: Literary Works in Electronic Databases Copyright Litigation, ...please email us your name, address, email address and phone number ASAP to settlement@nwu.org. Thank you.

In solidarity,
Jerry

Gerard Colby
President
National Writers Union, UAW Local 1981

Claims Info Manipulation: New Hanky-Panky From the UnSettlement Parties?

The briefing has been completed in the objectors' appeal to the Second Circuit Court of Appeals, and we have all the documents available for viewing. Our appeal brief, as noted previously, was filed April 3 and is at http://www.muchnick.net/AppealBrief.pdf. The plaintiffs' opposition brief, filed May 25, is at http://www.muchnick.net/PlaintiffsAppealBrief.pdf. The defendants' opposition brief, also filed May 25, is at http://www.muchnick.net/DefendantsAppealBrief.pdf. Our consolidated reply brief, filed June 12, is at http://www.muchnick.net/AppellantsReplyBrief.pdf.

In due course I'll have some things to say about the disgracefully shoddy legal arguments on display here by the opposition in an attempt to blunt our objections. But first I want to report on an even newer development and begin discussing what it might mean.

Yesterday, Monday, at least four of the ten objectors, including myself, received letters from the claims administrator asserting that the claims we submitted last summer were deficient in one or more technical ways. We've been told that we have until July 17 to correct them.

Since these are form letters, we can only guess that many, many, many fellow class members got similarly dinged, and we'd like to hear from you (info@muchnick.net). In a day or two I'll go into more detail on the alleged deficiencies in the claims packages of our objector group, and why we think those assertions are full of it from here to Bologna, and why -- even more importantly -- they expose the purportedly simple claims procedures for being hopelessly ambiguous and confusing.

But that's not all, folks. The oppositions' briefs and this flurry of claims-deficiency notices suggest that the other side -- which we believe has colluded in this settlement and tried to screw the freelance writers' community -- might just have found a way to sink to an even lower level of desperation and sleaze.

As you'll see when you read the opposition briefs, the defendants argue that it would be "absurd" to find that the settlement structure threatened to kick in a provision whereby the claims awards for Category C class members (those whose infringed works did not have registered copyrights) could be reduced, even reduced to zero. (Earlier the risk was described variously as "exceedingly remote," "inconceivable," and something which "as a factual matter" has "no chance" and "[n]o basis in reality.")

The settlement parties attempt to prove this in a way that is as odd and illogical as it is illegally and outrageously manipulative: they release for the first time, to the appellate court, interim claims information along with a slapdash analysis of it. Specifically, they state that there is a total of $10.76 million in "prima facie valid claims," so -- voila! -- they fell a million-and-change short of having to resort to the C Reduction.

For the sake of brevity with what is the opening blog of a series, I'll defer until later an evisceration of the ridiculousness of this line. Right now I'd like my fellow class members to focus on two things. First, it's a blatant violation of appellate rules to introduce into appellate briefs new information from outside the original district court record. (Much less to introduce it in such a drib-and-drab fashion.)

Second, there are all those claims-deficiency notices that went out last Friday and started landing in mailboxes yesterday. Did these nitpicks fall under "prima facie valid claims" or "prima facie invalid claims"? Were the two tactics -- the illegal piecemeal disclosure of post-district court record data, and the mailing of these notices -- part of a coordinated campaign to cook the books?

See you shortly with further thoughts and more specifics. In the meantime, help us out if you can with info about similar communications that you received.