Thursday, November 29, 2007

Statement by Objectors' Attorney Charles Chalmers on the Appellate Court Ruling

1. Everyone should understand that the objectors did not raise the jurisdictional issue on which two of the three judges decided that the settlement could not stand. The objectors agreed with the defendants and the plaintiffs that the district court had jurisdiction to approve a settlement encompassing unregistered copyrights.

2. The judges raised the jurisdiction issue themselves. The majority opinion, and the dissent, discuss the jurisdiction issue in much greater depth than any of the parties to the appeal did in responding to the court’s inquiry on this issue. While it is too early to characterize the two conflicting opinion as exhaustive, they would appear to be so. The judges on a federal Court of Appeal each have two or three law clerks who are recent graduates of the finest law schools with outstanding abilities. Such positions for the judges of the Second Circuit fall only a tiny distance, if any, below clerking for a justice the Supreme Court. Undoubtedly the skills of several such clerks were employed in developing these two opinions.

3. This decision is likely to be of great significance to class action law, and possibly copyright law. It has potentially important impact in a broad range of situations outside those two areas. It is early to make this judgment, pending a through review of the opinions; but the arguments of the parties, and the dissenting opinion suggest that this is the case.

4. I have already heard from a reporter a comment attributed to one of plaintiffs’ counsel. I won’t repeat it because the report may not be accurate. However, if anyone should suggest that the objectors ended up causing the C class, or the unregistered copyright owners (keeping in mind that the C class included registrations after 2002), to get nothing, there are several important points to consider. One, unregistered can register and obtain recovery. Two, because of the “C-Reduction” it is not clear that the C class was going to get anything anyway. Judge Walker, in his dissent, noted the objectors’ argument that the C class was not adequately represented as presenting a serious problem because, among other reasons, the C class might not get anything. Before Judge Daniels in the district court the plaintiffs and defendants contended that there was no chance that there would be a reduction to the already modest C compensation. In the Court of Appeal they admitted this was not the case and that there either was, or might be, a reduction. They have had more than year to tell everyone the outcome of the claims procedure, but they have not done so.

5. The C class, not to mention the much better paid B and A classes, were only getting compensation because they purported to bargain away the copyrights of those freelancers, from virtually every country in the world, who did not receive notice of the settlement, or understand what it was doing. The objectors found this to be an unprincipled action, and they are pleased that for whatever reason it will not happen.

6. As the majority opinion describes at some length, and we could describe at even greater length, the plaintiffs, including the organizations, knew that defendants were prepared to resist any recovery for unregistered owners right from the beginning. However, the defendants made clear that those holding registered claims could be well compensated, and the plaintiffs’ counsel could be well compensated, so long as they quietly included unregistered, as well as those who registered after 2002. Did anyone ever hear these plaintiffs and organizations getting the word out that benefiting from the litigation would be greatly increased if freelancers registe

7. The first step for all participants in this proceeding (plaintiffs, defendant and objectors) is to consider, and prepare if appropriate, a petition for rehearing or rehearing en banc. We have 14 days to do that. I will focus my energies on that issue exclusively over the near future.


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