Holiday Update on Copyright Class-Action Scenarios

As we approach the holidays in the third year of the copyright class-action objections, let’s review where things stand as a result of the November 29 ruling by the Second Circuit Court of Appeals.

In a 2-1 decision, the court said the settlement approved by the district court (which we were and are appealing) was invalid because the settlement included the claims of holders of unregistered copyrights. Infringements of unregistered copyrights constitute more than 99% of all potential claims. In this case, they are called “C” claims.

The jurisdiction question was not part of our objections; it was raised by the judges on their own initiative. When asked to brief the court on this issue, we argued that unregistered copyright holders – who do not have standing to sue – do have standing to be part of a settlement. The defendants and the plaintiffs made the same argument. Every other circuit court on record agrees with our position, but two of the three judges on the three-judge panel did not. One, Judge Walker, issued a strong dissent.

All of the parties to the appeal are now working, separately and together, to reverse this decision, which would prohibit not only this settlement but any comprehensive settlement. The next step in these efforts will take one of two forms: either a request for reconsideration by the three-judge panel or a motion for a hearing “en banc,” by all the circuit judges. (There are 13 active judges and nine semi-retired senior judges.) If those efforts fail, an appeal to the U.S. Supreme Court is contemplated.

This development may take a year or more to play out.

If this decision is not ultimately reversed, class members with “C” claims could register their works and become part of new actions against the defendants – individual, mass action, or class action. For that reason, we strongly encourage all freelancers to register all of the works included in the now in-limbo settlement.

If this decision is reversed, the Second Circuit will go back to dealing with the issues of our appeal. We assert that the settlement is fatally flawed for various reasons, which have been well developed on this blog. I will return to one of those reasons in the next post.