Case 2:12-cv-02144-GMS Document 101 Filed 11/25/13 Page 1 of 38

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Court Reporter: For the Movant: Appearances: David Harris,

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

AF Holdings, L.L.C., a St. Kitts and Nevis limited liability company, Plaintiff, vs.

Defendant.

) ) ) ) ) ) ) ) ) ) ) )

No. CV 12-2144-PHX-GMS Phoenix, Arizona July 19, 2013 11:21 a.m.

REPORTER'S TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE G. MURRAY SNOW (Show Cause Hearing) Steven J. Goodhue, Esq. LAW OFFICES OF STEVEN JAMES GOODHUE 9375 E. Shea Blvd. Suite 100 Scottsdale, Arizona 85260 (480) 214-9500 Mr. David Harris 4632 E. Caballero St. #1 Mesa, Arizona 85205 (480) 297-9546 Paul D. Ticen, Esq. KELLEY WARNER, P.L.L.C. 404 S. Mill Avenue, Suite C201 Tempe, Arizona 85281 (480) 331-9397 Gary Moll 401 W. Washington Street, SPC #38 Phoenix, Arizona 85003 (602) 322-7263

For the Plaintiff:

For the Defendant:

Proceedings taken by stenographic court reporter Transcript prepared by computer-aided transcription

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 answered. THE COURT: THE CLERK:

P R O C E E D I N G S

Please be seated. This is CV 12-2144, AF Holdings v. Harris, Counsel, please announce.

on for show cause hearing. MR. GOODHUE: AF Holdings.

Your Honor, Steve Goodhue on behalf of

Sitting with me is Mark Lutz, manager of

AF Holdings, L.L.C. THE COURT: All right. Is Mr. Harris present? This hearing has been duly
11:21:58

Mr. Harris is not present. noticed and we will proceed with it.

Mr. Goodhue, I've indicated questions that I wanted You filed some pleadings with some information, and

I have some questions with regard to that information as well. Do you want to proceed? MR. GOODHUE: I'm willing to proceed, Your Honor.
11:22:17

I would just like to mention to the Court I just came in last night, and the weather here has not made me feel all that great, so if I'd be allowed to sit rather than stand, it would help me a great deal. THE COURT: All right. That will be fine. I want to
11:22:37

you pull the microphone over and get as close to it as you can so that we can hear everything. MR. GOODHUE: THE COURT: Thank you. Mr. Ticen, are you here for
11:23:00

All right.

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those who are seeking to intervene? MR. TICEN: THE COURT: seat. All right. You've signed a pleading, Mr. Goodhue, I guess I
11:23:12

(Nodding). Please come -- you can come take your

with respect to Raymond Rogers and Alan Cooper. adequately know your position with that.

Saltmarsh is a trustee whose trust is Mr. Lutz? MR. GOODHUE: THE COURT: Mr. Lutz is -11:23:35

I mean a trust whose trustee is Mr. Lutz? Mr. Lutz is trustee of the Saltmarsh

MR. GOODHUE:

trust, which is a member of AF Holdings, as I understand it. The trust, I guess, has gone through a name change. It's now the AF Trust. THE COURT: AF Holdings? MR. GOODHUE: THE COURT: AF Trust? MR. GOODHUE: THE COURT: MR. TICEN: THE COURT: AF Holdings? AF Trust, Your Honor.
11:24:10

Are there any other members of

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No, Your Honor.

So what's the new name of the trust?

AF Trust is the sole -Beneficiary. Well, AF -- AF Trust is the sole member of

Is that correct? Yes.

MR. TICEN:

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 at all. Mr. Lutz?

THE COURT:

And is there any other entity that has any

interest in AF Holdings? MR. TICEN: THE COURT: No. And the only beneficiaries of AF Trust
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are -- has present nonexistent persons? MR. TICEN: THE COURT: Yes. And did you receive Exhibit B from

Exhibit B to the complaint? MR. GOODHUE: I received Exhibit B through an attorney

for Mr. Lutz. THE COURT: Are you aware if Mr. Lutz or any of his

business associates used the screen name Sharkmp4? MR. GOODHUE: I'm not aware with -- aware of Sharkmp4

THE COURT:

All right.

To the extent that the

11:25:17

previous -- the plaintiff previously sought and received the discovery of the identities of the persons involved in the Internet swarm in the district court action that was brought in the District of Columbia, why should I reauthorize that here? MR. GOODHUE: Like I stated in our -- in our
11:25:36

memorandum, Your Honor, it's seeking -THE COURT: Well, when you file a memorandum five

minutes before a hearing, don't expect me to be able to read it before the hearing. MR. GOODHUE: I understand, sir.
11:25:48

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it as to.

It's seeking different discovery of different infringers. THE COURT: How do I know that? There isn't anything

in your request that indicates that you are seeking different discovery of different infringers. MR. GOODHUE: Well, I think in the motion for
11:25:59

authorization it does speak to that as to what we were seeking. THE COURT: And it does not specify who you're seeking

MR. GOODHUE: an identity? THE COURT:

Well, we cannot -- you mean in terms of

11:26:16

That's correct. Well, that's what we're seeking is the

MR. GOODHUE: identity -THE COURT:

No, it just says:

Plaintiff, AF Holdings,

11:26:25

through its undersigned counsel, hereby moves this Court for an authorizing issuance of subpoenas granting limited discovery to identify defendant David Harris' co-conspirators. you say. MR. GOODHUE: Your Honor. THE COURT: Well, that's true, there is more to it, I think there was a little more to it,
11:26:44

That's all

but where do you identify in it specific -MR. GOODHUE: THE COURT: You mean the specific IP -11:26:57

-- IP addresses that you want the

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identities for?

Or ISP addresses.

And where is it that you inform me how and why it isn't duplicative of discovery that you already sought and obtained of the same Internet swarm in a different action? MR. GOODHUE: It maybe isn't clear in -- in
11:27:13

distinguishing between the D.C. case and this case. THE COURT: And so it would authorize duplicative

discovery that you've already obtained. MR. GOODHUE: Well, it certainly wasn't the intent to
11:27:30

seek duplicative discovery, sir. THE COURT: Um-hum. To the extent that the plaintiff

has now reasserted the same claims resulting from the same swarm in a different court, where those previous settlements have caused plaintiff to forfeit or otherwise affect plaintiff's current claims in this case, certainly as it pertains to seeking statutory special -- or statutory damages? MR. GOODHUE: Your Honor, I believe we're seeking
11:27:56

different individuals than were in the District of Columbia case -THE COURT: Well, that doesn't matter, does it? The
11:28:16

statute, I have it here in front of me, the statute refers to, as it pertains to statutory damages: The copyright owner may

elect at any time before final judgment is rendered to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action with
11:28:37

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respect to any one work for which any one infringer is liable individually or for which any two or more infringers are liable jointly and severally. And that's -- that's telling me that's

a limit for everyone involved in that swarm. So you've gone out and settled your case with certain persons who were involved in that swarm. statutory damages any more, can you? MR. GOODHUE: I don't -- I don't believe that the I believe
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You can't seek

statute speaks to limiting damages within a swarm. it limits damages within a particular case, and -THE COURT: that make?

That doesn't -- well, what difference does

In this case, you're seeking to recover damages

against Mr. Harris for multiple infringements in the same swarm. MR. GOODHUE: Well, it wasn't the same -- it's not the
11:29:32

same swarm in the Harris case as it is in the D.C. case. THE COURT: You know, that's baloney. I looked this

morning at Mr. Harris as being identified in the D.C. case with the very same swarm at the very same time that you're seeking to recover against him in this case. MR. GOODHUE: THE COURT: Mr. Harris what?
11:29:51

How in the world can you tell me that's a

different swarm by any definition? MR. GOODHUE: Because I admit that Mr. Harris was
11:30:02

identified in the D.C. case, but the --

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THE COURT: in this swarm.

And for participation in the same swarm,

MR. GOODHUE: THE COURT:

Well, the swarm is a growing entity --

Okay. -- and the discovery is -11:30:14

MR. GOODHUE: THE COURT:

It doesn't matter, though, because you

pled joint and several liability to everyone involved in the swarm. MR. GOODHUE: Well, we -- we haven't elected whether
11:30:24

it's statutory damages or actual damages -THE COURT: I understand that. And my question: Is

because you've already settled this case with some of the participants in the same swarm, how can you now get anything other than actual damages from Mr. Harris? MR. GOODHUE: Well, I think the -- the Lime Wire case
11:30:40

speaks directly to that, and that -THE COURT: Which case is that? It's the case out of the Southern

MR. GOODHUE: District of New York -THE COURT:

Oh, the Kimba Wood case that you -Yes, sir. I didn't get through your

11:30:48

MR. GOODHUE: THE COURT:

-- referred to?

whole pleading, but I saw that. Well, that doesn't provide any precedent to me whatsoever. I am of the same authority as Judge Wood, am I
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not? MR. GOODHUE: I understand, but it speaks directly to

this, in my view, that we're not -- we're not speaking to a settlement in the swarm, we're speaking to a settlement within a case, and -THE COURT: Well, you are speaking -- you made a
11:31:10

settlement with individuals who -- who infringed your copyright as a result of their participation in the same swarm in which Mr. Harris participated, is that not correct? MR. GOODHUE: THE COURT: He was identi -11:31:27

Just yes or no, is that not correct? I don't have personal knowledge of that.

MR. GOODHUE: I understand -THE COURT:

Is it your understanding that you have -11:31:39

that your client, AF Holdings, has settled claims for infringements that resulted from the same swarm in which Mr. Harris participated? MR. GOODHUE: THE COURT: Yes, Your Honor. So why is it, again, your

All right.

position that you're not -- your position more or less relies on the Judge -- Judge Wood's case out of the Southern District of New York? MR. GOODHUE: THE COURT: right to do? Yes, Your Honor.

11:32:05

And so what are you saying you have a

Elect statutory damages with respect to some

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individuals and actual damages with respect to others involved in the same swarm, even though you're asserting joint and several liability against all participants in the swarm? MR. GOODHUE: No. Under the interpretation by
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Judge Wood of 504 in speaking about a case, it's a particular case, and it's not speaking to the swarm, and -THE COURT: How can that be, when you have pled joint

and several liability against Mr. Harris for all other participants in that swarm and you have settled your claim against other participants in that swarm? MR. GOODHUE: damages, and it's -THE COURT: Well, that's my question. Why haven't Well, we've pled alternatively actual
11:32:53

your settlements resulted in the fact that you now must pursue Mr. Harris for actual damages only? MR. GOODHUE: Well, again, as I understand it, Your
11:33:11

Honor, the issue of settlements can be taken into account at the time of -- by the trier-of-fact at the time of an award of damages. THE COURT: Well, okay, I appreciate that, and that But why can't I take it into
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seems to make logic to me.

account now when you've previously done this discovery, at least to some extent, in the district -- action that you filed in District of Columbia, and other actions, perhaps, that I don't know about -11:33:43

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Sir, who are you? MR. HARRIS: THE COURT: I'm David Harris for the defense. Please take your seat. You need to be

here on time, Mr. Harris. MR. HARRIS: THE COURT: I'm sorry. All right. Sorry I'm late. Where were we?
11:33:52

MR. GOODHUE: THE COURT:

I'm sorry, Your Honor. Here's where we're at.

All right.

You indicated that I could take that into account once we got to the damages phase, and I'm asking you why is it that I can't take it into account now, when you're seeking to get all kinds of discovery related to those who may have participated with Mr. Harris in a -- in what you allege he is joint and severally liable for when you've already settled some of those claims? And so doesn't that make irrelevant the extent to which there may have been other participants in those claims? MR. GOODHUE: I certainly see the Court's point, but I
11:34:25 11:34:06

would respectfully disagree that it's -THE COURT: Well, I understand that, too. But you're
11:34:43

asking me to authorize subpoenas to go out to, as far as I know, thousands and thousands of individuals that are ongoing, many of which you've already discovered, in a -- on a basis for which that may be completely irrelevant. And as you yourself
11:34:58

have acknowledged, that is disruptive both to the providers and

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to the individuals. So I'm expecting some resolution or some position from you that would justify that kind of discovery in this case, and that would not limit your case against Mr. Harris to only the actual damages that he may have caused you due to his infringement. MR. GOODHUE: Well, I guess from a practical
11:35:18

standpoint, Your Honor, at this point trying to subpoena those records would be a fruitless exercise, since the information has probably been destroyed by the ISPs. It's my understanding
11:35:34

that they keep this information for maybe six months, and after that it's no longer available. THE COURT: to my point. All right. But my point -- let me go back

Your client, and as I -- I've indicated, I'm

aware of a number of actions that they filed in various jurisdictions. It seems to me that they can file one action,

and to the extent they have subpoenas that involve other ISP providers in other jurisdictions, they can do what everybody else does when they subpoena information against other ISP providers, and they can subpoena that information in a miscellaneous action in the appropriate jurisdiction. If then the swarm is ongoing, it isn't shut down, it seems to me they can renew those subpoenas. You've already had I
11:36:23 11:36:10

that opportunity at least once in your Washington action.

don't know how many other actions you may have filed involving

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this same Internet swarm.

But you've settled those cases, or

at least it's your understanding that you've settled those cases, and it's my understanding, based on pleadings that you filed both here and that your client filed in the D.C. court, that you settled some of those cases with individual providers. Now you want discovery of that same information because you're alleging that they're joint and severally liable with Mr. Harris and you can discover them. But I -- I guess
11:36:38

before I'm going to give you that information you have to persuade me that there is some basis on which your client hasn't already precluded themselves from seeking anything other than actual damages against Mr. Harris because of their previous settlements of same persons in this same Internet swarm that were involved in the same action. And I guess what it comes down to is you're telling me that the -- the relevant authority that you provided me that I should review is Judge Wood's order in the Southern District of New York. MR. GOODHUE: THE COURT: Yes, Your Honor, and I think it -11:37:24 11:37:10 11:36:54

And -- and so if I agree with Judge Wood,

then let's -- let's go down this decision tree, since you're here. I'm not saying that I will agree with Judge Wood, and I

think, as you can tell, I have some skepticism that I will, but -- but I'm not saying I won't. carefully what she's written. I have to consider
11:37:41

Or he's written; I'm not sure

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whether Kimba's a man or a woman, I apologize. MR. GOODHUE: It's a woman, Your Honor. She was the

Clinton appointee for -THE COURT: Yeah. -- attorney general.

MR. GOODHUE: THE COURT: wasn't positive. written.

I thought she was a woman, but in any case So I'll read carefully what she's

Okay.

If I disagree, then you would agree with me that

you're not getting the subpoenas unless and until you can reverse my decision on appeal. If I agree with her, why should I authorize information that you've already received in the D.C. action, and how can you -- and how would you specify to me those persons, or those entities, those ISP addresses that you didn't already receive in the D.C. action? And it seems to me if you're going to do these things efficiently, you do this discovery once. And if you need to
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renew it, you renew it in the same action for -- for additional participants. But that's going to require that you elect
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between statutory and actual damages before you settle a claim, isn't it? MR. GOODHUE: That may be, Your Honor. I guess you

have to look at this from a practical standpoint, and sort of the -THE COURT: I agree. And I don't think that it's
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unfair -- I mean, I don't think it's unfair to consider the fact that your client does have some sort of copyright infringement claim. But if we're talking about fairness, I

think we also have to consider the extent to which your client may be taking what is at best an extremely aggressive stance vis-a-vis persons who are unaware of their legal rights, and at worst it may be extortion if they go out and represent that they still have a right to recover $150,000 against individuals they no longer have such a right to recover against. Do you understand what I'm saying? MR. GOODHUE: I understand that completely, Your
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Honor, and I guess I look at it as when the D.C. case was filed, I think there were estimated to be 10,000 participants in the swarm, and to try to do discovery on 10,000 ISPs, or IP addresses, is a huge burden on everyone. What they did, it
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seems to me, they took, you know, a tenth of that. You look at today, I understand the Game of Thrones had a -- had a swarm population of 10 million within a week. mean, I don't really know the answer to how to handle those types of cases under a Copyright Act that had had no understanding or no anticipation that you could have these types of copyright infringements. THE COURT: legislation. MR. GOODHUE: No, Your Honor. I'm just saying from a
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Well, you're not asking me to rewrite the

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practical standpoint, I'm not sure how else you can do this, other than to sort of take it down in parts. And I understand

you don't want to do duplicative discovery; I understand you don't want to collect damages where you are barred for statutory damages, at least, under the Copyright Act. But at the same time, I think Judge Wood's opinion gives a pretty good perspective on how that -- how the Copyright Act and Section 504 should be interpreted. THE COURT: Well, did you provide a copy of your
11:41:08 11:40:48

pleading to Mr. Harris so that he can respond? MR. GOODHUE: I haven't. I provided it to Mr. Ticen,

but I have a copy with me. THE COURT: All right.

So basically, whether or not -- there is no question about whether the action against Mr. Harris proceeds, and you seem to want to proceed against it. question: Let me ask one other
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To the extent that there are actual damages that

you're -- that you have to proceed against Mr. Harris under an actual damage basis, as opposed to a statutory damage basis, is there any basis on which you could claim that those with whom he participated in the BitTorrent swarm have any relevance to the actual damages he caused your client? MR. GOODHUE: THE COURT: I don't believe so, no, Your Honor. So really, this is a question
11:42:01 11:41:42

All right.

we're going to have to resolve first.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this?

MR. GOODHUE:

And Your Honor, like I said, from a

practical -- I hate to just keep repeating myself -- from a practical matter, getting the discovery, that time has probably passed. Pursuing Mr. Harris -THE COURT: So do you wish to then continue to urge
11:42:16

You can let Mr. Ticen's clients out of the case right

now if as a practical matter it makes no difference, and you can pursue your claim for actual damages against Mr. Harris. And I suppose that he wants to conduct discovery to determine whether or not your client actually uploaded this, was the person that upload -- at least I've read -- what I've read is that your client was the person who uploaded this movie in the BitTorrent swarm in the first place, which would have some effect on his actual damages. But we can proceed -- if you want to let Mr. Ticen's clients out and drop your request for the subpoena, we can proceed on your actual damages claim against Mr. Harris. MR. GOODHUE: That would certainly be our position. I
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think -- the opportunity to pursue Mr. Ticen's clients or people in similar positions is really no longer available. THE COURT: All right. So you're dismiss -11:43:06

MR. GOODHUE:

And he was -- they were never joined.

I'm not exactly sure what his clients -THE COURT: I think they're only here because you
11:43:19

sought the subpoenas against them.

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Is that correct, Mr. Ticen? MR. TICEN: THE COURT: Yes, Your Honor. All right. So if the subpoena request is

dropped, is there any reason for your further participation in this case? MR. TICEN: Yes, Your Honor, because it's our position
11:43:32

that the subpoena was issued in bad faith. THE COURT: MR. TICEN: THE COURT: MR. TICEN: THE COURT: That the what? Subpoena was issued in bad faith. And so what would you want? Our attorneys' fees. Okay. So basically, what would be left
11:43:40

would be your attorneys' fees claim? MR. TICEN: THE COURT: Correct. But you're not then claiming any right to
11:43:48

participate in the substance -- substantive resolution for the resolution of this case? MR. TICEN: MR. HARRIS: clarification? THE COURT: You know, Mr. Harris, let me tell you, you I have allowed No, Your Honor. Your Honor, could I ask for a little
11:44:02

certainly can, and you're a party to this suit. Mr. Goodhue to remain seated. Mr. Ticen to remain seated -MR. HARRIS: I apologize, Your Honor.

I shouldn't have allowed

11:44:11

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THE COURT:

-- and ask them to come to the podium.

And I'll just tell you, Mr. Harris, Mr. Goodhue asked to remain seated because, as you are at least vaguely aware, he has had some health issues, which has resulted in the resumption of this hearing. He apparently lives in Colorado
11:44:22

and the heat's a little much for him, which is understandable. So Mr. Ticen, Mr. Goodhue, without any prejudice to you, if you're going to address me and I recognize you, I'm going to ask you to come to the podium and speak in the microphone. So Mr. Ticen, do you have anything further to say? And then Mr. Harris, we'll hear from you. MR. TICEN: As far as the attorneys' fee issue, do you
11:44:36

want us to address that in motion form and -THE COURT: Well, first, I guess what I want to know
11:44:47

In light of the fact that you are going to seek your

attorneys' fees, Mr. Goodhue, I take it that doesn't necessarily change your position that you no longer seek to subpoena the third parties? MR. GOODHUE: THE COURT: No, Your Honor. So you still don't want to subpoena
11:44:59

Okay.

the third parties and you drop that request. MR. GOODHUE: THE COURT: Correct, Your Honor.

Which in any case, I think I've denied

without prejudice, but you're not going to be renewing it.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. motion.

MR. GOODHUE: THE COURT: MR. TICEN: THE COURT: MR. TICEN:

Correct, Your Honor. So Mr. Ticen.

All right.

Yes, Your Honor. Now, what were you going to ask me? As far as the request for attorneys' fees,
11:45:14

I'm assuming that you want that by motion and -THE COURT: MR. TICEN: Yes. -- if so, do you want a -- is a deadline

going to be set, either right now or -- or by order? THE COURT: such a motion? MR. TICEN: THE COURT: MR. TICEN: THE COURT: I would think at least 14 days -All right. -- 21 days. I'll give you 14 days to file such a
11:45:38

How long is it going to take you to file

11:45:29

You might look to the local Rules of Civil

Procedure -- I think it's 54.2; it's in the 54s -- about what you're going to need to do to request your attorneys' fees, including the form of the affidavit and other matters. right? I'll ask you to follow that. MR. TICEN: THE COURT: this time, Mr. Ticen? MR. TICEN: There is nothing else, no. No, Your
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All
11:45:54

Okay, Your Honor.

Thank you.

Anything else that you want to take up at

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THE COURT:

All right.

Thank you.

Mr. Harris, please come forward. MR. HARRIS: Mr. Ticen? him. I have a -- I'd like clarity on the --

Mr. Ticen, his clients and -- and the subpoena for

His -- his clients are part of -- were not part of the

original D.C. case, correct? THE COURT: MR. HARRIS: I have no idea. Well, if you check the dates on the --

the subpoena, which were issued to the ISPs, the dates were late last year-early this year. THE COURT: MR. HARRIS: THE COURT: MR. HARRIS: All right. Okay. I don't -- I just simply don't know. I just want to bring it to the Court's
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So it's possible.

attention that of -- of those 308, I have already been approached by one of these co-conspirators. the telephone. They called me on

I guess my name is on the subpoenas. Yes, your name's on the subpoenas because

THE COURT:

the case is titled in your name. MR. HARRIS: Okay. I just want it on the record of
11:47:02

the inherent danger I've been put in, due to these subpoenas that -- I believe the Court didn't give him leave to actually -- he filed before he actually filed a motion for -THE COURT: Right, but he has -- but those subpoenas
11:47:21

are now quashed, unless you have an objection, Mr. Goodhue.

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MR. GOODHUE: THE COURT:

No, Your Honor. I'm going to enter an order

Okay.

quashing all of those subpoenas to the extent they're still outstanding. Are they still outstanding? MR. TICEN: Mr. Ticen?
11:47:30

The last I heard from the ISPs, they are

waiting for an actual further court order on what to do. THE COURT: All right. Thank you. So in the absence

of any objection by Mr. Goodhue, I'm going to issue an order quashing all of those subpoenas, so they are -- those subpoenas are canceled -MR. HARRIS: THE COURT: MR. HARRIS: Okay. -- for all practical purposes, Mr. Harris. I would also like to address the
11:48:01 11:47:51

perception of -- of my incivility in this court -THE COURT: MR. HARRIS: All right. -- which I have been sanctioned for, but

I would like to wait until the end of this hearing for -THE COURT: MR. HARRIS: THE COURT: All right. -- to do that. Well, I think the hearing is, for all
11:48:12

practical purposes, over, except for I want to explain to you how the case now stands as I understand it, based on my conversation with Mr. Goodhue, and you were only here for part of it.
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Mr. Goodhue is now -- Mr. Goodhue and his client are now only pursuing you -- they're not pursuing you for the statutory damage option under the statute; they are suing you for the actual damages that your infringement costs them. Is that a correct understanding, Mr. Goodhue? MR. GOODHUE: THE COURT: Yes, Your Honor. And it's also my understanding
11:48:42

All right.

from my conversation with Mr. Goodhue that they do not any longer take the position in this lawsuit that you -- your actual dam -- that the extent to which others participated in the same BitTorrent swarm in which you may have participated has any bearing on the actual damages that you cost their client. Is that also correct, Mr. Goodhue? MR. GOODHUE: THE COURT: Yes, Your Honor. So what that means is they're
11:49:18 11:49:03

All right.

seeking to recover damages as -- from you, the actual damages that they allege they suffered due to the fact that they allege that you downloaded a copy of their copyrighted movie. So what is going to be relevant going on is whether in fact you did download a copy of their copyrighted movie, what in fact you may have done with that copyrighted movie in the future, and then I take it from the previous pleadings that you filed you have -- you may wish to conduct discovery into whether or not they, that meaning AF Holdings or their agent,
11:49:54 11:49:35

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was actually the party that uploaded a copy of the movie on the BitTorrent program in the first place. Those all may have

bearing on the extent to which you actually caused AF Holdings damage. Do you understand what I'm saying? MR. HARRIS: THE COURT: MR. HARRIS: THE COURT: MR. HARRIS: Yeah, your -Do you have -So they -Do you feel --- at some point they'll -- they will
11:50:20 11:50:16

offer some evidence, other than -THE COURT: MR. HARRIS: THE COURT: Well, let me explain part of this. -- an IP address. I don't mean to suggest that you're not a
11:50:32

smart person, it seems to me that you are, but there is a whole process that goes on in federal court here, and there is a process now of this lawsuit that remains against you personally in which we will schedule a period called "discovery." Discovery is a period in which under the federal rules they are allowed to ask you questions and you're required to answer. They can even notice up what's called your deposition,

11:50:53

and then you have to go and under oath answer certain questions. They can request documents from you. They can also

request, if they can demonstrate to me that it's relevant, looking at your computer to trace what you may have done
11:51:11

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with -- whether or not their copyrighted program existed -exists or existed on your computer, and what you would have done with it. MR. HARRIS: THE COURT: MR. HARRIS: THE COURT: MR. HARRIS: know, these -THE COURT: MR. HARRIS: THE COURT: I don't mean to shut you -It's a matter of record and -You can say -- you can say what you wish,
11:51:34

Yeah, well, I must object to that. Well, you'll have the right -It's a process, but -You'll have the right to object when -It's a matter of dirty hands with -- you
11:51:24

Mr. Harris, but let me tell you that you may allege that they have dirty hands, but while they're doing discovery against you, you also have the right to do discovery against them to demonstrate that it is a matter of dirty hands. But I am not, in the discovery period, going to make the determination whether AF Holdings has dirty hands or not, because they have a -- what discovery does is allows them to collect evidence against you to make their case, and at the same time it allows you to conduct discovery against them to make yours. When you all have your evidence and put it in front of me, then I can make a determination as to whether or not they do have dirty hands, but I have to let them conduct their
11:52:20 11:52:05 11:51:48

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discovery to determine whether they do. I would also be, I think, remiss, though, in fairness both to you and to AF Holdings, not to observe that unless you've done something -- unless in fact you are responsible and have done something with their copyrighted film to allow others to reproduce it, I think that the actual damages you would have cost them, I mean, the case law suggests that we start out with the actual market value of that film. So what we're talking
11:52:36

about here is a very limited amount of money, an extremely limited amount of money, which may not merit them going forward or you going forward. But that's a decision that you're
11:52:55

allowed to make and that they're allowed to make. MR. HARRIS: THE COURT: MR. HARRIS: Okay. All right. I guess at this time, in response to
11:53:07

that, I'd like to bring up a case where they -- a default judgment was found against a -- one of the original 1140 in the D.C. case. That was here in Arizona, case He got a default
11:53:34

number CV 12-0213-PHX-GMS, a Brian Trottier. judgment, it's been satisfied, for $7500. court of Judge Murray Snow. THE COURT: MR. HARRIS: Yes.

And that was in the

So -- so that would sort of offset

whatever a -- the cost of a smut film costs. THE COURT: Okay.

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MR. HARRIS: said what I -THE COURT:

That is my understanding of what you just

Well, if you go back and look at the One is they have a -11:54:03

statute you'll see a couple of things.

they have a right -- it's part of the discussion that I was just having with Mr. Goodhue. AF Holdings has a right to

pursue claims for their copyright infringement against everyone who has infringed their copyright, and -- and you've just listed someone who they at least claimed infringed their copyright. When they bring a copyright action, they have the right to elect, in many circumstances, at least, if they haven't otherwise forfeited it, they have a right to elect whether or not they will seek statutory damages or whether they'll seek actual damages. When they settled their previous claim against that person they had not yet made such an election, he had merely allowed them to take a default judgment, and then they sought statu -- you know, they sought an award based on the potential that they could receive under statutory damages. was made. MR. HARRIS: THE COURT: MR. HARRIS: THE COURT: But was -I will tell you that in your case -I was part of -You need to wait, Mr. Harris, especially
11:55:06 11:54:41 11:54:24

So an award

11:54:57

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when I'm talking, because even though you don't wish to be impolite, I get to talk first and then you can talk, too. I'll let you talk, I promise. They no longer have the right to seek statutory damages against you, so the ceiling is no longer the statutory limit set forth in the statute of $150,000 or even $30,000; it is what they can prove they lost because you copied their movie. And as I said, if you didn't do anything with the movie, it doesn't seem likely, although I can't say for sure, it doesn't seem likely that we're talking any kind -- you know, that kind of a range of money. But any party has the right to settle a suit early, and they can settle for more dollars than they would have otherwise received in a claim. And if they don't defend the
11:56:00 11:55:40 11:55:20

And

suit -- as you are now doing, you're defending the suit -- but if somebody doesn't defend the suit, then they end up getting an award because somebody didn't defend the suit. But that suit in this setting doesn't really any longer have much relation to your suit because, as you've heard Mr. Goodhue say, they're no longer arguing that you're responsible for what anybody else did or for any other infringements that occurred in the same swarm that -- in which you allegedly participated. You understand what I'm saying?
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MR. HARRIS:

I -- yes, I -- I understand.

I've --

doesn't make sense to me, but I understand. THE COURT: Yeah. And I realize that you may feel

like you're striking out for justice more than just your own -in your own cause, but I will tell you, regrettably, that the only case that is before me now, whether or not you believe and whether or not in fact I made mistakes in previous cases, the only case that is before me now is your case, and I will do my best to be fair to both sides. MR. HARRIS: Okay. And there's -- okay. There's
11:57:12 11:56:54

quite a few things I could still -- quite a few ducks I could get in a row as well as, you know, as far as still actually being the first one to upload -THE COURT: MR. HARRIS: THE COURT: MR. HARRIS: copyright, so -THE COURT: MR. HARRIS: that's okay. THE COURT: Mr. Harris, all of those things may be And all of those things --- secured the copyright, so I imagine
11:57:36

Well, let me -Or -- or, you know, evidence of it. Yes. But that was before he owned the
11:57:28

relevant to your case, but you're going to have to discover them in a way that they can be admitted in my case. MR. HARRIS: Well, they are -- they've been admitted
11:57:47

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in your case, and they were discovered and admitted as -- and cited as documents and findings in other court cases. THE COURT: MR. HARRIS: right? All right. Let me just --

And that -- that's admissible evidence,

Findings of other courts? THE COURT: Well, when you said it's complex, it is

complex.

Occasionally, rulings by other courts are dispositive

of what happens in -MR. HARRIS: THE COURT: MR. HARRIS: other courts. THE COURT: Evidence that has been submitted in other Sometimes
11:58:27

Or --- this court. Or evidence that has been submitted in

courts is not necessarily admissible in this court.

judgments are preclusive in this court, but evidence is not necessarily admissible in this court. There are rules of civil procedure, there are rules of evidence, and those govern what is admissible in this court. And simply because something was admitted in another court in another case does not make it admissible in this case. That doesn't prevent you from being aware of it, and as long as you're being sued by AF Holdings, from requiring them to disclose it to you in a way that will be admissible in this court, and -- but you have to follow the rules. So one of the things that you might want to consider,

11:58:41

11:59:00

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you might even confer with Mr. Ticen about an appropriate attorney for you to hire if you wish to pursue this case. will be beneficial to you. that. But you need to understand, and please do so, and we'll talk about your civility in a second, I understand that there's a common Internet phrase calling people "trolls" that do what you believe AF Holdings is doing. But as I think you
11:59:13

It

It's also expensive, I understand

understand, I'm not going to let you call AF Holdings and I'm not going to let you call Mr. Goodhue trolls in this court. And nor am I going to let you address me in a tone that isn't respectful. Now, I realize that you may think that's egotistical and unfair, and maybe it is. But I do promise you that I'm
11:59:45 11:59:33

going to try to be as fair to you as I can be, and I'm also going to require that -- and I'm going to try to be as fair to AF Holdings as I can be, but I'm going to require that we deal in these proceedings in a civil manner. Do you understand what I'm saying? MR. HARRIS: THE COURT: Yeah, I'll -- I'll do my best. I appreciate it. I realize that this is a I suspect AF Holdings

12:00:00

matter that you feel strongly about. feels no less strongly.

Now, you indicated you wanted to address that, the issue of your civility, and I think you should be allowed to.
12:00:12

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MR. HARRIS:

I'm going to hold off on it, Your Honor.

Because I can make my point as it stands now, as the case stands now. After the -- the initial claim has been settled

and -- and I feel I can address it. As far as getting an attorney, I would -- I would really like to have one in this part of the -- I will have one when it comes to the counterclaim, I will have an attorney. I'm sure I'd able to find one -THE COURT: MR. HARRIS: THE COURT: MR. HARRIS: THE COURT: All right. -- that will work on a contingency -Well --- you know. -- my advice would be, and I don't know if
12:00:52 12:00:37

he's willing to talk to you, but Mr. Ticen has indicated in other pleadings that he's had dealings with Mr. Goodhue in other cases. So I'm not recommending Mr. Ticen to you
12:01:01

necessarily, but I suspect that he's someone who might have an idea, if he's willing to talk to you, that could give you the realities of a lawyer and what this case is about, if you haven't understood what I've said, so you can evaluate all that. But I would tell you, just because an attorney is familiar with the rules and how things go here, it could be beneficial to you. That doesn't mean that if you can't hire an And I'll
12:01:31 12:01:18

attorney that I won't listen to you, because I will.

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give you a chance to be heard and participate but you have to follow the rules. And if you don't follow the rules, then you

suffer the consequences. Do you understand what I'm saying? MR. HARRIS: Yes, there was -- there was one point in
12:01:44

these -- in all the motions that I -- I did mention that I was not guilty of this charge, and that -- that motion had been struck. THE COURT: MR. HARRIS: the lack of civility. Well -I mean, the full -- the whole motion for Okay. There's plenty of motions out
12:01:54

there that haven't been filed yet, and -THE COURT: MR. HARRIS: THE COURT: That's all right. You have --

I'll work on that. -- been treated by me throughout as if -12:02:06

with the presumption that you're not yet guilty, because AF Holdings has the burden of proving their case, as you will have the burden of proving any counterclaims. proved their case. They haven't yet

And so I'm presuming that, you know, I'm

presuming, until they demonstrate otherwise, that you're not responsible. MR. HARRIS: I -- I don't have the computer that I had

in the -- the middle of 2011. THE COURT: MR. HARRIS: Well -And -- you know, I wish I did.
12:02:39

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do we? Yes, sir.

THE COURT: MR. HARRIS: compound crash. THE COURT: MR. HARRIS: THE COURT:

Well -It crashed on me. It was a

You know, that's a matter -Everything went --- that's going to be the -- probably the
12:02:47

topic of discovery if this case goes forward, and perhaps requests by AF Holdings to draw adverse inferences and other things that I'll consider at the time. But I'll tell you what's going to happen next. I did
12:03:05

notice in the file that you have filed your initial disclosure statement. MR. HARRIS: THE COURT: complaint? MR. HARRIS: Have I answered the complaint? Yes. Yes, sir. And I believe -- have you answered the
12:03:13

THE COURT:

All right.

So what's going to happen now

is we're going to set a discovery conference. Have you cooperated with Mr. Goodhue in filing the -Mr. Goodhue, we don't have a discovery schedule here,
12:03:22

MR. GOODHUE: order issued. Mr. Harris.

Your Honor, there was a case management

It did not include the participation of

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THE COURT:

I recall that now.

Mr. Harris, you didn't participate and so I entered the order as Mr. Goodhue requested. That has time limits in it

in which you conduct what I have referred to as discovery. Discovery is described in the Federal Rules of Civil Procedure. You can obtain those either on this Court's website
12:03:53

as well as the local rules that supplement those rules, or you can find them at your local library. But those describe what

I've told you about depositions, about written questions, about document production requests and other requests. Mr. Goodhue then is entitled to file them against you, you're entitled to file them against him, during the period set forth in the complaint -- or in the case management order, but you're not allowed to do those after the case management order expires. MR. HARRIS: THE COURT: filed the pleading. Do you know offhand when that expires? I don't, but it's on the case docket and I If you wish, I can run off a copy of the
12:04:26 12:04:11

case management order and -MR. HARRIS: THE COURT: MR. HARRIS: me, but -THE COURT: If you have a copy you need to read it
12:04:42

I --- have it sent out to you. I've got a cop -- I don't have it with

12:04:36

carefully, because it is an order of this Court, and I do try

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my very best, and most often succeed, in following my own orders. All right? take up at this time? MR. HARRIS: THE COURT: No. Mr. Goodhue, anything further that you
12:04:56

Is there anything further that you wish to

wish to take up at this time? MR. GOODHUE: THE COURT: MR. TICEN: THE COURT: Have a nice weekend. MR. GOODHUE: mentioned a shark 49? THE COURT: Yes. Is that what it was called, shark 49?
12:05:13

No.

Thank you, Your Honor. Mr. Ticen, anything else?

All right.

No, Your Honor. All right. I thank all three of you.

Oh, excuse me, Your Honor.

You had

MR. GOODHUE: THE COURT:

It's just a screen name that came up in

one of the mo -- one of the pleadings filed by Mr. Harris. MR. GOODHUE: THE COURT: Okay.
12:05:22

Essentially, the pleading in which

Mr. Harris suggested that Mr. Steele was uploading the -MR. GOODHUE: THE COURT: The honeypot.

I'm sorry? The honeypot.

MR. GOODHUE: THE COURT:

Right.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 well. clerk.)

(Off-the-record discussion between the Court and the

THE COURT:

I'm just going to put on the record,

unless you have an objection, Mr. Goodhue, I'm going to print off a copy of the scheduling order and have a copy given to Mr. Harris right now. MR. GOODHUE: That's fine, or I can provide him one as
12:05:44

Whatever the Court wants to do I'm -THE COURT: We'll just provide him a copy now, and
12:05:54

that way, the record will reflect that he received a copy of the scheduling order. MR. GOODHUE: THE COURT: MR. TICEN: Okay. Thank you, Your Honor.

Thank you all. Thank you.

(Proceedings concluded at 12:06 p.m.)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 s/Gary Moll 2013. DATED at Phoenix, Arizona, this 25th day of November, I, GARY MOLL, do hereby certify that I am duly appointed and qualified to act as Official Court Reporter for the United States District Court for the District of Arizona. I FURTHER CERTIFY that the foregoing pages constitute a full, true, and accurate transcript of all of that portion of the proceedings contained herein, had in the above-entitled cause on the date specified therein, and that said transcript was prepared under my direction and control. C E R T I F I C A T E