Department of Labor: 05 118

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Case 2:05-cv-00118-DBH Document 91 Filed 10/02/2006 Page 1 of 58� UNITED STATES DISTRICT COURT DISTRICT OF MAINE ] IN R E COMPACT DISC M INIMUM ] ADVERTISED P RICE ANTITRUST ] L ITIGATION ] ] MDL DOCKET NO. 1361 (This Document Applies to John A. Deep v. Recording Industry Ass’n of of America, Inc., et al., Nos. 2:05cv118 and 2:05cv149) ORDER ON PENDING MOTIONS I. INTRODUCTION The Multidistrict Litigation Panel transferred these two lawsuits here because of the pendency of MDL No. 1361 (In r
    Case 2:05-cv-00118-DBH Document 91 Filed 10/02/2006 Page 1 of 58� UNITED STATES DISTRICT COURT DISTRICT OF MAINE] MDL D OCKET  N O . 1361I N R E C OMPACT  D ISC M INIMUM ] (This Document Applies to John A. A DVERTISED P RICE A NTITRUST  ] Deep v. Recording Industry Ass’n of  L  ITIGATION ] of America, Inc., et al., Nos. 2:05cv118 ] and 2:05cv149) ORDER ON PENDING MOTIONSI. I NTRODUCTION  The Multidistrict Litigation Panel transferred these two lawsuits herebecause of the pendency of MDL No. 1361 (In re Compact Disc Litigation). Alldefendants have moved to dismiss both complaints.I G RANT  the motions to dismiss all the federal claims for failure to state aclaim upon which relief can be granted (05-cv-118, Counts I-III, V-VII). 1  Thatdismissal is with prejudice. I G RANT  the Lawyer defendants’ motion to dismissall the remaining claims against them on grounds of abstention. Thatdismissal is without prejudice, and applies to all remaining counts in bothlawsuits. I G RANT  the other defendants’ motions to dismiss all the state lawclaims against them on the merits and with prejudice in both lawsuits exceptas to two counts against Trans World, Count XI in 05-cv-118, and Count V in05-cv-149 (Aiding and Abetting Breach of Fiduciary Duty). There, thedismissal is on grounds of abstention and without prejudice. At the end of thisopinion, I also resolve a handful of related motions. 1 Each claim is styled: “First Cause of Action,” “Second Cause of Action,” etc. I find it easier torefer to the claims as “Count I,” “Count II,” etc.    Case 2:05-cv-00118-DBH Document 91 Filed 10/02/2006 Page 2 of 58� II. P ROCEDURAL  B ACKGROUND  The plaintiff, John Deep, is proceeding in this court without a lawyer. Hefiled the first of these two lawsuits, 05-cv-118, as an adversary proceeding inBankruptcy Court for the Northern District of New York in 2004. Compl., In reDeep, Adv. Proc. No. 04-90037 (Bankr. N.D.N.Y Feb. 11, 2004). District JudgeKahn withdrew the bankruptcy reference, Deep v. Recording Indus. Ass’n of America, No. 04-mc-055 (N.D.N.Y. Feb. 7, 2005). Deep then amended hiscomplaint. The MDL Panel transferred the lawsuit here on June 21, 2005.Deep v. Recording Indus. Ass’n of America, No. 05-cv-205 (N.D.N.Y. Jun. 21,2005). Deep then amended his complaint once again, adding new parties.Second Am. Compl., No. 05-cv-118 (Docket Item 34).Deep filed the second lawsuit, 05-cv-149, as a complaint in New YorkState Court, Albany County, in 2005. Compl., Deep v. Record Indus. Ass’n of America, No. 50-05 (N.Y. Sup. Ct. May 4, 2005). He later removed it to theNorthern District of New York under 28 U.S.C. § 1452 (removal of state courtactions arising in or related to bankruptcy proceedings). Notice of Removal,Deep v. Recording Indus. Ass’n of America, No. 05-cv-693 (N.D.N.Y. Jun. 3,2005). The MDL Panel transferred it here on August 1, 2005. Deep v.Recording Indus. Ass’n of America, No. 05-cv-693 (N.D.N.Y. Aug. 1, 2005)(order transferring case). Deep then amended the complaint in this court,adding new parties. First Am. Compl., No. 05-cv-149 (Docket Item 8). The complaint in the first lawsuit is now 128 pages and 551 paragraphslong. In it, Deep has named over 30 different defendants. Second Am. Compl. The second lawsuit asserts the same state law claims as the first lawsuit, but 2    Case 2:05-cv-00118-DBH Document 91 Filed 10/02/2006 Page 3 of 58� no federal claims. First Am. Compl. Both complaints name as defendants alawyer and two law firms: David Boies, Esq.; Boies, Schiller & Flexner, LLP;and Straus & Boies, LLP (“the Lawyers”); Trans World Entertainment Corp.(“Trans World”); and numerous entertainment entities including recordcompanies, motion picture studios, and the Recording Industry Association of America (“RIAA”) (collectively “the Record and Movie Companies”). 2 Becausethe factual allegations and claims in the second lawsuit mirror those of the firstlawsuit (except for omitting the federal claims), I shall refer primarily to the firstlawsuit 05-cv-118, and its Second Amended Complaint. 3 In his Second Amended Complaint, Deep covers a number of newsworthytopics of the past few years, including Attorney David Boies’s representation of Vice President Al Gore in Bush v. Gore, Compl. ¶ 2; the Napster litigation, id.;investigations of Tyco, Adelphia and accounting firm Deloitte & Touche, id.¶¶ 19, 26; kickbacks and payola in the music industry extending to “a majorchain of radio stations,” Clear Channel, id. ¶ 112; investigations by New YorkAttorney General Elliot Spitzer, id. ¶¶ 113-14; congressional testimony of singer Sheryl Crow before the late Congressman Sonny Bono, id. ¶135;bootlegging of CDs and DVDs, id. ¶¶ 107-09; proper accounting rules for therecording industry, id. ¶¶ 121-31; and the controversy over an arrangement by which Attorney David Boies and his related law firms allegedly steered client 2  The complaints differ slightly in which record companies and motion picture studios arenamed as defendants. These differences do not affect the analysis. 3 I cite factual allegations in the form of “Compl. ¶ ___,” referring to the Second AmendedComplaint in 05-cv-118. I mean thereby to refer to the corresponding factual allegation(numbered differently) in the First Amended Complaint (05-cv-149) as well.3    Case 2:05-cv-00118-DBH Document 91 Filed 10/02/2006 Page 4 of 58� business to a litigation support company, Amici LLC, without disclosing his orhis family’s ownership of Amici, id. ¶¶ 11-20.Deep describes an alleged conspiracy by which “Labels and Studios” 4 schemed to inflate their revenue and profits by paying kickbacks to TransWorld, a distributor. The conspiracy allegedly involved bribes, slush funds,fraudulent accounting practices, bid-rigging, kickbacks, and other devices,id.¶¶ 93-96 ff. ; phantom credits and other practices by which the “Labels andStudios” defrauded artists of their rightful royalties, id. ¶¶ 132-40; and avariety of other apparently sordid dealings (for example, “a massive fraud in which consumers, investors and artists are deceived,” id. ¶ 104).Deep claims the following relationship to the events he describes. Hesays that he invented a method of determining the price a consumer is willingto pay for an item online, a method that Deep says can be used successfully for“targeted marketing of discounted prices,” id. ¶ 31; in another part of thecomplaint, the invention becomes one for downloading video-on-demand, id.¶ 396; and he also refers to it as “sharing with buddies,” id. ¶ 78. At the time,Deep called his invention Aimster. 5 Deep shopped the invention to Trans 4 By this term, Deep says that he means “major labels, studios and distributors,” Compl.¶ Intro., referring to businesses that produce prerecorded music or movies and distributethem, id. ¶¶ 314-15. 5  This is a narrower description than Judge Aspen provided in 2002:Aimster is a file sharing service that allows its members toidentify large numbers of similarly situated users with whom theycan transfer files in encrypted form and send instant messages.Aimster is the brain child of Defendant John A. Deep, who alsofounded Defendant BuddyUSA, Inc. . . . to develop the softwareand Defendant AbovePeer, Inc. . . . to operate the system . . . .In re Aimster Copyright Litig., 252 F. Supp.2d 634, 638 (N.D. Ill. 2002).According to Deep, Aimster performs two fundamental functions.First, it allows its users to send messages or transfer files to other (continued next page) 4
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