Booth Sweet Prevails Over Motions to Dismiss and Motion for Sanctions in Far Cry Litigation.

We got some good news in the Far Cry class action lawsuit we filed back in November 2010 in federal court here in Massachusetts. The class action brought fraud and conspiracy charges against a Virginia law firm, two of its attorneys, one of its clients, and two businesses they partnered with, challenging their practice of bringing bad faith copyright claims. (Here’s our Second Amended Complaint, if you want the unabridged version.)

On March 1, 2012, two weeks after an oral hearing on the Far Cry class action defendants’ motions, Mag. Judge Jennifer C. Boal filed orders giving her report and recommendations. Judge Boal recommended that the motion for dismissal be denied in significant part. The defendants had argued that Mr. Shirokov was not entitled to sue them at all, since he wised up before paying their demands, and his claimed injuries were out-of-pocket costs of investigating the threats. They claimed that the Noerr-Pennington privilege, an antitrust doctrine, prevented any liability. And they argued that lawyers and their clients have absolute immunity for even intentional torts, or in DGW’s words: “although an attorney may be accused of defrauding opposing parties, knowingly committing discovery abuses, lying to the court, or purposely and maliciously defaming another individual, if it takes place during the course of litigation, the conduct simply is not actionable.” Just think about that one for a minute.

Judge Boal thoroughly debunked each of those claims. The fees Mr. Shirokov incurred in investigating the trumped-up copyright claims constitute an injury-in-fact that gives him standing to sue. The Massachusetts litigation privilege does not apply to threats of litigation that are not seriously contemplated in good faith. And the Noerr-Pennington antitrust doctrine did not apply outside of antitrust law, and even the First Amendment right to petition isn’t an absolute protection for litigation threats. As Judge Boal wrote:

Here, it is difficult to see how subjecting the defendants to liability for their conduct, if appropriate, would satisfy the policy objectives of the doctrine. At issue in this motion is not the defendants’ right to use demand letters as a means of encouraging settlement, but rather their use of false or misleading statements in the demand letters. If Shirokov’s allegations were to be proven at trial, punishing the defendants will not deter future use of demand letters. At best, it will encourage the defendants to investigate carefully their accusations and to be precise in the language they use when attempting to settle with suspected infringers. Accordingly, this Court finds that the Noerr-Pennington doctrine does not apply under the circumstances of this case at this time.

Judge Boal also addressed each of the specific counts for relief raised in the class action complaint. The defendants wanted all of the counts dismissed, and specifically argued against all but two counts (they never bothered to contend that the scheme alleged in the complaint did not constitute fraud). The core claims in the complaint survived those arguments: fraudulent and negligent misrepresentations and omissions, civil conspiracy; conspiracy to commit fraud, and aiding and abetting fraud; fraud on the Copyright Office; and violations of Chapter 93A (Massachusetts’ Consumer Protection Act).

It was not a total rout. Judge Boal recommended dismissing claims brought under RICO and the Computer Fraud and Abuse Act; fraud on the court; abuse of process and malicious prosecution; and claims brought on behalf of other class members under the unjust enrichment doctrine. She also recommended dismissing one defendant, GuardaLey, the company that tracked BitTorrent streams online to locate alleged infringers, finding that their involvement was “not a material element of Shirokov’s case.

On the other hand, she recommended that the defendants’ motion for sanctions against Shirokov and Booth Sweet should be dismissed in its entirety. As she wrote, ”the Court finds that the Dunlap Defendants have not presented any evidence that Shirokov and his counsel brought this case for an improper purpose. Taken as true, the allegations in the Complaint are troubling, whether or not there is an available legal remedy to the plaintiff.” One hesitates to read between the lines, when the lines themselves are so clear. But you could get the impression from reading the order that the law firm defendants overstated the case, and Judge Boal was none too impressed: ”in this Court’s opinion, none of these defenses presented the certain dismissal that the Dunlap Defendants portrayed in their motion to dismiss and their motion for sanctions.

Short version: The class action survives, the core claims make out a valid case against the law firm and its cronies, and the pursuit of justice for fraudulently harassed individuals continues. Booth Sweet was the first law firm in the U.S. to bring claims against those who practice this particular brand of two-faced litigation. Lawyers who file bogus claims under false pretenses give other lawyers a bad name.

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