If Righthaven Declares Bankruptcy, Expect Lawyers To Go After Stephens Media, Media News, And Righthaven Principals

from the limited-liability? dept

There are lots of rumors swirling about a possible Righthaven bankruptcy, but that doesn’t seem to worry those pushing for class action lawsuits against the company. Lawyer Todd Kincannon, whose been leading the charge against Righthaven on that front, apparently told law professor Eric Johnson that he’ll keep going after other parties:

?I always knew Righthaven would file bankruptcy if things got rough,? Kincannon told me by e-mail. ?They were set up as a limited liability company just so they could do that. Fortunately, Stephens Media, MediaNews Group, Sherman Frederick, Steve Gibson, and Dickinson Wright all seem to have plenty of money.?

Of course, Righthaven, being a limited liability company, may make that more difficult. And as awful a company as I think Righthaven has been, I’m a bit wary of breaking down the walls of a limited liability company. If it can be shown that Righthaven was set up by folks knowing that the effort was fraudulent, and that the sole purpose of Righthaven was to protect those who knew that what they were doing was illegal, that may open the window for pursuing other parties further. But, if they honestly believed that this was a legit operation and setup, I’m really not convinced that the pursuit should go beyond Righthaven — especially to folks like Steve Gibson. I could see going after Stephens Media and MediaNews Group as one could argue they were really the driving forces behind the lawsuits. But taking on individuals seems like going too far.

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Companies: medianews, righthaven, stephens media

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Comments on “If Righthaven Declares Bankruptcy, Expect Lawyers To Go After Stephens Media, Media News, And Righthaven Principals”

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59 Comments
Spaceboy (profile) says:

Re: Re:

Why would it matter if they knew it was illegal or not? The companies involved set it up to limit their own liability in case something backfired. Then they only transferred the ability to sue to Righthaven, and nothing else. This has been proven. This makes the whole Righthaven setup illegal.
Ignorance of the law is no excuse.

Go after them all.

out_of_the_blue says:

Boy, you always pull your punches on corporations, Mike.

After milking this for over a year, I suppose you feel kind of grateful for all the posts, but these gangster/lawyers really need to be punished proportionally to what they tried to inflict on others, without merit. — I’m for doing away entirely with this “limited liability” crap, it only shields criminals.

“Righthaven Principles”? — Those can’t be worth much.

Scote (profile) says:

No double standards.

“But, if they honestly believed that this was a legit operation and setup, I’m really not convinced that the pursuit should go beyond Righthaven”

Please, no double standards for liability Mike. Right haven sued individuals for $150,000 plus their web domain. Individuals can’t claim the protections Righthaven set up for itself. Right haven has balked at paying even the smaller judgments against it and claims that paying 34,000 would risk bankruptcy. They shouldn’t get to have it both ways, where they never have to pay out anything because of the likey underfunded, assets shifted LLC but they ruthlessly prosecute vulnerable individuals, including the ill and mentally challenged for high dollar amounts.

Righthaven’s principles and their conspirators should be individually liable for the consequences of their deliberate actions.

That Anonymous Coward (profile) says:

The people who were the beneficiaries of the lawsuits, should have to return those funds to Rightshaven so they can be returned to the people Rightshaven wronged.
They played fast and loose with the law and committed fraud upon the court by not owning what they claimed to own. The individuals created a company to collect the money and then take the fall when it all went south, this is a premeditated act.
The willfully abused the law to create lawsuits in which Rightshaven had no standing at all, but was a paper tiger to do the dirty work and collect the money.

I think everyone involved with Rightshaven should have their assets frozen until every penny can be accounted for and returned to the people they ripped off. Rightshaven should be seized and every document should be examined to show exactly how rotten the apple was, then based on that charges and liability should be pressed against the companies and possibly the owners of those companies depending on what the review of records reveals.

They stood and claimed copyright was so very important, and then successfully twisted the law in a scheme to net “free money” where they did not own the copyright. They did an end run around the process set out by law, and went right to suing for much more than they could possibly get. This is not people being lead astray, this is people trying to get as much as they can in a quasilegal way.

Trails (profile) says:

Not sure I agree

While the protections offered by a LLC are useful, when an org is setup to shake people down, knowing full well that it’s nothing more than an extortion operation, sorry, I disagree. These guys should face personal repercussions. The people they’ve extorted have certainly had to deal with deep personal impacts as a result of this unconscionable behaviour.

ken (profile) says:

I support Todd Kincannon

Limited liability only protects individuals from being held personally accountable for a failed business. It does not protect illegal activities. Steve Gibson and others must be held personally responsible for what they have done.

I support what Todd Kincannon is doing. Righthaven needs to be held as an example so other would be scam artists and trolls will think twice about ever attempting something similar again.

Angry Puppy (profile) says:

Re: I support Todd Kincannon

I’m not so sure any person will be convicted of any crime. The US system is designed to allow almost any activity by a corporation with no consequences to those in charge.

A good example is General Electric’s long history of bribes, fraud, and corruption including the Pittsfield operation’s 40 years of dumping an estimated 500,000 to 1.5 million pounds of PCB-saturated insulating oil into the Hudson river. No one individual has been convicted, jailed, or fined for anything.

DannyB (profile) says:

Re: Re: I support Todd Kincannon

If I remember correctly . . . When documents revealed Ford thought it was cheaper to pay settlements to people who would continue to be killed in rear end gas tank explosions rather than recall and fix the defective cars, the DOJ said they would go after the directors personally for manslaughter if they did not issue the recall.

ken (profile) says:

I support Todd Kincannon

Limited liability only protects individuals from being held personally accountable for a failed business. It does not protect illegal activities. Steve Gibson and others must be held personally responsible for what they have done.

I support what Todd Kincannon is doing. Righthaven needs to be held as an example so other would be scam artists and trolls will think twice about ever attempting something similar again.

Rich Fiscus (profile) says:

Here’s why I think you’re wrong on this one Mike. It’s a point I’ve made here before. Despite all their supposed professional duties, we hold lawyers to a ridiculously low standard we would never accept for an MD, CPA, or equivalent professional.

While it’s true we need to allow some leeway when it comes to using an unusual or downright strange legal theory, if there is significant caselaw showing an issue is already decided, which there is when it comes to transferring copyrights, a lawyer should have a professional duty not to mislead the court by suggesting there isn’t. Otherwise the legal system is a farce in which a party with the funds to pay a lawyer to make specious arguments for a few months or years has a decided advantage over the average person.

What Gibson did in setting up Righthaven was equivalent to an accountant trying to write off hookers and blow on a client’s tax return. He could argue about his theories on tax law all he wants, but in the end he’s held responsible for what he should know. Gibson should be held to the same standard. If he didn’t know the copyright assignments weren’t valid, as a lawyer he has a duty to do the basic research which would have made it clear. Either it was fraud or failure to meet his basic responsibilities. In either case he should be punished.

Anonymous Coward says:

“”But taking on individuals seems like going too far.””

Wow, could the masnik have flip flopped faster, doesnt he “hate” those people sueing folks for “downloading” songs and talks about how bad making them pay $675,000 per song is, and now this, he feels the “individuals” behind the company set up shouldn’t be sued for what they allowed to happen, hypocrite much????

Bob Dowling (profile) says:

Limitation of liability may not apply

The reason LLCs put LLC after their names is to inform principals choosing to enter contract with them that they are protected by liability limitations. If I choose to buy a fridge from an LLC and it goes BK after taking my money I know that I have a low chance of getting my money back. And I knew that when I chose to give them my money.

Righthaven went after people without giving them any choice. The sued parties never had an option of “shall I be sued by an LLC or another sort of company”. I think the limitation of liability may not apply here.

(Certainly I think it should not apply but that’s just me.)

Beech (profile) says:

So, if I want to mug someone, but want to get away with it, I can form an LLC company called “Mughaven,” and hire people to beat and rob people in the streets. Then, when someone inevitably sues, I can just say, “Well, I didn’t KNOW mugging was wrong!” and walk away unscathed?

Even in a case where the “crime” is more grey than that, if you use the guise of a company to break the law, yes, you should be held accountable for that. The guys from napster? Sure they should be held liable. What about the guys in charge of BP, should they be held liable for the oil spill? I’d say so. In fact, it would be one of the better ways to keep companies accountable if every time they did something horribly wrong the fines and fees came out of the CEOs pocket. Then they’d be a lot more careful about making decisions.

G Thompson (profile) says:

Were Righthaven taking civil legal action with enough monies held in a Trust (escrow) to cover contingencies up to and including having a case go against them with prejudice?

IF not then that is basically the same as knowingly trading whilst insolvent, knowingly accruing debts that you knowingly can not repay. We call that fraud, and any directors, whether they are other companies or individuals/partners/directors can be held personally and also vicariously liable for any debts.

That’s my take on the matter, and personally I couldn’t think of a more fitting punishment since they have brought both themselves and the courts into disrepute, also I think at a minimum professional development classes in fundamental ethics should be given to the lawyers involved on Righthaven’s side.

Anonymous Coward says:

I’m really not convinced that the pursuit should go beyond Righthaven — especially to folks like Steve Gibson. I could see going after Stephens Media and MediaNews Group as one could argue they were really the driving forces behind the lawsuits. But taking on individuals seems like going too far.

How do you stop the bastards from doing this again it you do not go after them?

The bastards tried to do a copyright shakedown, fuckem.

hmm (profile) says:

What I'd say

I’d say NO correctly founded LLC should end in personal liability HOWEVER if the LLC was set up purely as a barrier to protect someone from illegal activity then personal liability SHOULD come into play.

i.e. person A sets up a PC repair business, goes bankrupt due to cashflow/lack of customers. No liability on the owner because he TRIED to run a successful business but it just didn’t work out.

person B sets up an LLC just to act illegally then use the company as a ‘shield’ against comeback that he’d experience if he did the same actions as an individual. Then he should face liability as there was no intention that the LLC be a sustainable/workable business.

MD says:

Liability and Limits

The prime movers behind any action should not be able to escape responsibility by saying they were oly working for a company. WHile the front line soldiers of the LLC corporation should not be liable, anyone who gave orders, initiated or directed action and policy, should be liable if their activity was blatantly unethical, repeated and continued in the face of obvious signs that they were pursuing activities that could have repercussions. They can’t just blame it all on the faceless corporation.

That also goes for willful blindness by someone who knew the situation, participated in intitiating it, and allowed it to continue, whether they took an active part or not after the start.

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