MySpace Tries To Play Dead To Avoid Lawsuits

from the hide-and-seek dept

Yes, let's get this out of the way already, so you don't need to make this joke in the comments: as a social network, MySpace is considered pretty damn dead already. It lost its cool many, many years ago. And I do still love to point out this 2007 article suggesting that MySpace's dominant position in the social networking market was almost impossible to crack (that didn't age well). But that's not what this post is about. You see, MySpace, still does exist -- you can even visit it and double their traffic for the day. Even as the punchline in bad jokes, MySpace exists and (believe it or not) Time Inc. actually owns it, having bought the company, Viant, that owned it previously.

This story, however, is about how, soon after Time took over MySpace, its lawyers literally tried to hide the company from a plaintiff (and the court) by having the company play dead -- even though it was very much alive. I'm not exaggerating. Time Inc. appeared to play a bunch of legal shenanigans to pretend that MySpace no longer existed, even as the company kept operating -- to the point that Viant's CEO was publicly hyping MySpace. Hell, months after Time Inc. tried to pretend MySpace was dead, Time's CEO was talking up how amazing MySpace was in the press.

The background here: years ago, a guy named Stephen Aguiar was arrested and convicted for drug distribution. He's in prison, serving 25 years. Sometime after his conviction he discovered that some of the evidence against him, that was supplied by MySpace (way back when MySpace was still a big thing), quite likely violated the Stored Communications Act.

Additional background: We've written about the Stored Communications Act before. It's a part of the Electronic Communications Privacy Act (ECPA) that controls what kind of electronic information can be given up without a warrant. As we've also discussed for years, ECPA is woefully out of date for a variety of reasons including the fact that it says that all communications stored on a server for more than 180 days should be considered abandoned and no longer need a warrant to access. But communications less than 180 days do require a warrant.

Back to Aguiar. In late 2013 he discovered that back in 2009, the DEA sent an administrative subpoena to MySpace, under the Stored Communications Act, asking for certain content related to his MySpace account. An administrative subpoena is not a warrant. As we've described in the past, it's basically a fishing expedition by law enforcement, in which they send an official looking document asking for information they may not actually have the rights to. MySpace, back in 2009, apparently had lawyers who fell for this and handed over basically all of Aguiar's account info, despite at least some of it being protected under the SCA and requiring an actual warrant (which would require probable cause and a judge's review).

Thus, in 2014, he sued MySpace for violating the Stored Communications Act, representing himself (pro se). At this point, MySpace was owned by Viant and it hired some lawyers to defend the case. All well and good. But, within weeks of Time Inc. buying Viant, something sketchy started happening. Without telling anyone, Time claims that it changed the name of its "MySpace LLC" subsidiary to "Legacy Vision LLC." Then, it "transferred" all of MySpace's assets to Viant. Four days later, it registered a brand new company... also called MySpace LLC. While this was happening, Time/MySpace basically told no one about this. The people operating MySpace had no idea and nothing changed. Even the lawyers who were representing MySpace in the case knew nothing about it and continued to represent the company for months -- only to be told about six months later that the company they were representing stopped existing months earlier.

Prior to this MySpace had moved to dismiss the lawsuit, and was denied. So the case was supposed to move forward and MySpace was supposed to file an answer to the complaint. Except... it didn't. It didn't do anything at all. The magistrate judge, Patrick Walsh, demanded that the lawyer representing MySpace, Jane Rheinheimer, show up in court leading to a hearing last December with a fairly incredible transcript. Some excerpts:

RHEINHEIMER: My name is Jane Rheinheimer, I’m former counsel, well, counsel for the former MySpace LLC.

THE COURT: Okay. And who’s the representative from MySpace or Legacy?

RHEINHEIMER: There is none, your honor.

THE COURT: Why not?

RHEINHEIMER: Neither MySpace nor Legacy Vision LLC exists as an operating entity anymore, your honor.

THE COURT: Well that sounds like a lawyer talking, like as an operating an entity. Somebody signed a change in the name change in the spring.

RHEINHEIMER: It’s my understanding, your honor. And- My understanding is that Legacy Vision LLC currently exists only in name with the secretary of state. There is no management; there is no employees; there is no asset; there is no anything; there is no operating entity there, your honor.

Got that? There's a sneaky game being played here. Effectively, it appears that Time is claiming that the MySpace that was sued became Legacy Vision, but that Legacy Vision shut down and isn't operating at all. And that this operating MySpace is someone else entirely. The judge was... not impressed, leading to this crazy exchange between the judge and Aguiar (again, representing himself in court, where the judge is helping by explaining what's going on):

THE COURT: Okay. All right, Mr. Aguiar, what do you want to do?

AGUIAR: I’m kind of out of my area of expertise, your honor. My understanding was that the name changed in March. Weren’t the parties obligated to notify either me or the court?

THE COURT: Of course they were. This is middle school stuff, right?

AGUIAR: Right.

THE COURT: This is how four year olds play hide-and-go seek. When you tell them to go hide and go seek, they cover their eyes, and they think you can’t see them, right?

AGUIAR: Right.

THE COURT: So MySpace changed its name to Legacy and they’re like, “There’s no more MySpace, Court.” Okay, here’s what I’m going to do. I’m adding Legacy. I’m going to give you a default... and you can do what you want with it. All right?

In other words, the court was making it clear that it wasn't buying this game. Of course, that same transcript included the court refusing to let MySpace's former lawyer withdraw from the case, even as she was pointing out that she no longer has a client to pay her, because her "client" claims the company no longer exists:

THE COURT: We’ll be entering the default and you make your motion for default judgment. Ms. Rheinheimer, I understand you’re in a tough spot, but your request to withdraw as counsel is denied, okay? Corporations cannot proceed in the federal court without a lawyer and there’s no good reason for you to be off this case. I think it’s just gamesmanship that’s going on with Legacy and MySpace and Mr. Lee, and I’m not letting you off. We’re going forward. He’s going to file a motion for default judgment and if you don’t want to fight that, don’t fight it. I’ll enter the default judgment, okay? And you can go back…

RHEINHEIMER: Very well, your honor. There is no entity to pay me. I have no way of, I have no way of getting paid. There is noth…

THE COURT: I want to tell you I’ve been in this- as a law clerk, I worked at DOJ at the US attorney’s office and I’ve been a Judge for 15 years. I want to tell you what I understand what’s always been the practice since 1984, when I externed for Judge Layton at the federal district court in Chicago. We’re not here, we’re not bill collectors. The fact that you can’t get paid, the rules don’t provide ‘you have to represent your client diligently unless you client is not paying you’. And our local rules don’t require, don’t allow you to get out from under a case because your client isn’t paying you. That’s something you have to- I’m not in the middle of those negotiations. You need to call up Mr. Lee and say, “Hey Judge Walsh is leaving me on this case. I need to get paid.” And I think you should get paid, okay? I’m on your side there, but you’re not flipping the district court upside down because you’re not getting paid. All right?

Soon after this, a few things happened. First, the "new" MySpace got angry at being added to this case, and hired some new lawyers who filed to "intervene" in the case (even though they should already be in the case as it's the same MySpace) in order to try to fight the ruling. The filing is a work of art if legal bullshit were an artform. It insists that MySpace LLC is some totally unrelated company to the MySpace LLC in the lawsuit and acts positively shocked that anyone might think they are the same:

Plaintiff’s Motion constitutes his latest attempt to obtain a default judgment against a company that: (1) never had any dealings with Plaintiff; (2) was never named as a party to this lawsuit; (3) did not exist until well after the conduct complained of in Plaintiff’s complaint occurred; and (4) is both factually and legally a separate entity from the “Myspace LLC” identified in Plaintiff’s complaint which Plaintiff admits now operates under the name Legacy Vision LLC (hereinafter “Judgment Debtor”).

In a separate filing, MySpace attempts to argue that when Time bought Viant/MySpace it structured a complicated agreement in which it was buying the assets, not the liabilities -- and thus the complicated shell corporation and asset movement was really about fulfilling that agreement.

Second, Aguiar got legal representation from lawyer Caleb Mason, who some of you may recognize as a partner of Ken "Popehat" White's. Mason then opposed the intervention and detailed much of the history I summarized above -- including pointing out that despite the name changes and new corporations, MySpace hasn't changed. The same lawyer who accepted service for the original lawsuit is still VP of legal affairs. The same lawyer representing the firm now represented the firm earlier in other cases. The same CEO of Viant/MySpace is still CEO of Viant/MySpace (now a Time Inc. subsidiary).

Third, the original MySpace/Viant lawyer filed a declaration to the court more or less burning MySpace/Viant for telling her to stop doing anything on the case in September way after all the shell games happened, and then completely ignoring her every time she tried to contact them about things moving forward in the case (including the court refusing to let her withdraw):

As is set forth in more detail in the Motion to Withdraw and Declaration of Jane A. Rheinheimer which is filed concurrently with the instant Declaration of Inability to File Opposition or Notice of Non- Opposition, all communication from Viant, Inc. and/or MYSPACE, LLC has ceased. I was advised by the previous corporate counsel for Viant, Inc. on September 16, 2016, that my firm’s services would no longer be required in connection with this matter. Additional written communications from my office on September 16, December 20, December 21, December 22, December 27, and December 29, 2016 and January 10, January 31, February 1, and February 3, 2017 have gone unanswered. I have sent corporate counsel copies of all pleadings, motions, and minute orders of this Court. All of these communications were sent via electronic mail, none of which have been returned.

Given all that, a few days ago the judge, James Otero, ruled in the case... and to say that he's less than pleased with Time Inc./MySpace's games here would be an understatement. The ruling denies "MySpace LLC"'s request to intervene, because the judge notes it was already a party to the case and just chose to ignore it. All the maneuvering is written off as "gamesmanship and evasion." This is the kind of thing you generally don't want to hear a judge saying about your actions in a case:

The Court agrees that this is not a run-of-the-mill motion for default judgment. Although it claims otherwise, MySpace has been actively opposing the motion and has concealed material information or otherwise muddied its representations to the Court.

As for the claim that Time only bought the assets and not the liabilities, the court isn't buying it:

Through a complicated series of transactions not previously disclosed to the Court, Proposed Intervenor argues that a Time, Inc. subsidiary transferred MySpace's assets–but none of its liabilities–to Proposed Intervenor, which currently operates under the same.... MySpace fails to provide any documentation to support these purported transactions.

Also, as to the claims in MySpace's attempt to "intervene" that MySpace LLC didn't exist prior to all of this, the judge points out, wryly, some oddities if that's the case:

A search of "MySpace LLC" on the California Secretary of State website reveals that it has the same address as the headquarters of Time, Inc., the parent company of Viant.... A search of "Legacy Vision LLC" on the website shows that Legacy Vision filed a Statement of Information on November 2, 2015–four months before Defendant MySpace allegedly changed its name to Legacy Vision–with the following information: the limited liability company name is listed as "MYSPACE LLC"; the manager of the entity is "Viant Technology Inc."; and the "AUTH PERSON" who completed the form was Timothy C. Vanderhook, Chief Executive Officer of MySpace LLC and Viant Technology LLC.... "Viant Technology Inc." is listed as the "Manager" of Legacy Vision, and has an address that matches that of Viant Technology LLC's headquarters in Irvine, California....

Moreover, Proposed Intervenor's counsel, LTL Attorneys LLP ("LTL"), was counsel of record for MySpace LLC in another action in the District of Delaware, captioned FO2GO LLC v. MySpace LLC, No. CV 15-00095 RGA (the "Delaware Action"), filed January 27, 2015.... In other words, assuming Proposed Intervenor did not exist until March 2016, it was somehow represented by the same firm over a year before.

The court further calls out attempts by this MySpace to also pretend that Viant Technology LLC and Viant Technology Inc. are somehow different companies (they are not). It goes on and on along these lines, including pointing out that the company had a legal obligation to update the court and the plaintiff in the case to changes in ownership to the defendant -- and eventually orders MySpace to pay Aguiar $1,000 for violating his rights under the SCA, but also to pay nearly $75,000 in Aguiar's legal fees.

What a mess. This kind of bullshit gamesmanship — having Time Inc. pretend that MySpace is dead just to avoid a court case — is the reason lawyers (especially corporate lawyers) have such a bad reputation among so many people. Thankfully it's not always so easy to get away with.


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  • icon
    Ninja (profile), 12 May 2017 @ 9:13am

    Let me guess, Prenda is representing Time?

    reply to this | link to this | view in chronology ]

  • identicon
    tonylurker, 12 May 2017 @ 9:46am

    All this for $1000?

    "and eventually orders MySpace to pay Aguiar $1,000 for violating his rights under the SCA, but also to pay nearly $75,000 in Aguiar's legal fees."

    They went through all of this nonsense to avoid a judgement that was only in the thousands of dollars? Time ain't exactly a small company.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 May 2017 @ 1:05pm

      Re: All this for $1000?

      My thoughts exactly! I got to the end and was like, wait, what? All this fraudulent activity was to avoid paying a measly $1000? They must have spent more than that on their own lawyers just in trying to avoid this case.

      reply to this | link to this | view in chronology ]

  • identicon
    YoursFaithfully, 12 May 2017 @ 10:00am

    > orders MySpace to pay Aguiar **$1,000 for violating his rights** under the SCA, but also to pay nearly **$75,000 in Aguiar's legal fees**.
    You've made an error here.
    It should be the other way around.

    reply to this | link to this | view in chronology ]

  • identicon
    YoursFaithfully, 12 May 2017 @ 10:01am

    orders MySpace to pay Aguiar $1,000 for violating his rights under the SCA, but also to pay nearly $75,000 in Aguiar's legal fees.

    You've made an error here. It should be the other way around.

    reply to this | link to this | view in chronology ]

    • icon
      Mike Masnick (profile), 12 May 2017 @ 10:08am

      Re:

      You've made an error here. It should be the other way around.

      You can read the full order to understand the reasoning here. Basically, the court noted that there was a ton of other evidence against the guy, so it's not like it was a wrongful conviction or the info MySpace provided illegally changed the outcome. Thus, it was hard for him to show actual "damages" from the violation of his rights. Thus, the court awarded a more nominal amount of $1,000 to acknowledge that his rights were violated, but that the harm of that violation was no massive.

      reply to this | link to this | view in chronology ]

  • icon
    Mike Masnick (profile), 12 May 2017 @ 10:06am

    Small edit

    Just noting that we fixed the small (confusing) error in the transcript (it previously had said "Court Walter" when it was supposed to be "Judge Walsh").

    reply to this | link to this | view in chronology ]

    • icon
      Vidiot (profile), 12 May 2017 @ 12:31pm

      Re: Small edit

      The are still a whole bunch of nonsensical "the Court"'s peppered throughout the quoted sections; looks like someone did a global search-and-replace of "Judge" with "the Court", perhaps intending only to replace one instance.

      Not that it really matters, though; we still get the idea.

      reply to this | link to this | view in chronology ]

  • identicon
    Gary, 12 May 2017 @ 10:11am

    Surely Time didn't do this just to avoid paying $1000. There must be much more at stake. At a minimum, there must be much bigger lawsuits from other people who got screwed by Time's sleight-of-hand.

    reply to this | link to this | view in chronology ]

    • icon
      Anonymous Anonymous Coward (profile), 12 May 2017 @ 10:34am

      Re:

      Time Inc. wants to minimize the concept of MySpace and maximize the concept of OurSpace so that they can continue to control IP. So denying the existence of MySpace is just one more step toward implementing OurSpace and letting the world know that the parameters of OurSpace include anything they say it is. Also, the definition of 'is' is 'is' but only when we say so.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 12 May 2017 @ 10:39am

      Re:

      This lawsuit was actually trying to get over a million dollars. But the judge decided that the guy couldn't justify damages of such an amount. $1000 is the statutory minimum for a violation of this law, so that's what the guy got.

      reply to this | link to this | view in chronology ]

    • identicon
      SpaceLifeForm, 12 May 2017 @ 10:55am

      What was at stake - precedent

      If they had gotten away with it,
      all kinds of legal hell could be
      the result with corporations always
      winning, comsumers being shafted.

      Kudos to the judge.

      reply to this | link to this | view in chronology ]

  • icon
    Ryunosuke (profile), 12 May 2017 @ 11:03am

    "The Court Walter" --- I am thinking that this means "The Court presided by Magistrate Walter"

    reply to this | link to this | view in chronology ]

  • icon
    Ben (profile), 12 May 2017 @ 12:55pm

    Bring out your dead!

    MySpace: I'm not dead yet!

    Time, Inc: You're not foolin' anybody.

    Judge: I can't take him -- he says he isn't dead!

    Time, Inc: Just wait a few and we'll make sure he's dead.

    reply to this | link to this | view in chronology ]

  • identicon
    Pixelation, 12 May 2017 @ 2:11pm

    Corpse twitches

    And we thought it couldn't get any worse for Myspace.

    reply to this | link to this | view in chronology ]

  • icon
    discordian_eris (profile), 12 May 2017 @ 2:19pm

    Tom is not amused. No, not amused at all.

    reply to this | link to this | view in chronology ]

  • icon
    Mononymous Tim (profile), 12 May 2017 @ 4:06pm

    Wow

    I was waiting for the judge to pull up myspace.com on his computer and ask where the heck it was coming from, but alas, it was not necessary.

    reply to this | link to this | view in chronology ]

  • identicon
    An-other-onymous, 13 May 2017 @ 2:59am

    Time obviously using a variation of the Hotblack Desiato approach.

    reply to this | link to this | view in chronology ]


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