State Bar still reviewing grievances against Righthaven

A federal judge’s comment that Las Vegas-based copyright enforcer Righthaven LLC likely engaged in deceitful and dishonest conduct has not gone unnoticed by the State Bar of Nevada.

The State Bar regulates attorneys. Since September or earlier, it has been looking into multiple grievances involving Righthaven and its CEO, Las Vegas attorney Steven Gibson. Righthaven says it has obtained copyrights from the Las Vegas Review-Journal and the Denver Post and has filed 274 infringement lawsuits over those copyrights since March 2010.

Gibson hasn’t responded to a request for comment on the State Bar inquiry.

A Bar spokesman said "two or possibly three" grievances were pending as of Wednesday.

While disciplinary action by the State Bar is not inevitable, the chances of that happening may have increased Tuesday when Roger Hunt, chief U.S. District Court judge for Nevada, issued an order dismissing a Righthaven copyright infringement lawsuit against the Democratic Underground over a Las Vegas Review-Journal story.

In what legal observers are calling an extraordinary "shock and awe" type of ruling, Hunt wrote in his dismissal order that:

-- "The court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the court."

-- A Righthaven claim it controls Review-Journal copyrights "is flagrantly false -- to the point that the claim is disingenuous, if not outright deceitful."

-- Righthaven’s failure to disclose that Review-Journal owner Stephens Media LLC was an interested party in its lawsuits was a "flagrant misrepresentation."

The nature of the grievances under review by the State Bar hasn’t been disclosed, but its investigators are monitoring Righthaven’s lawsuits in federal court in Las Vegas over Review-Journal and Denver Post material.

"The matter is under investigation and we’re following the matters pending in court," said Phillip Pattee, assistant bar counsel at the State Bar.

In tracking the Righthaven lawsuits, the State Bar will likely pay close attention to sanctions that Hunt is likely to impose on Righthaven.

Court records suggest the State Bar in reviewing the Righthaven litigation is focusing on two broad areas:

-- Whether Righthaven and its attorneys have engaged in champerty and barratry – generally defined as the improper incitement and prosecution of lawsuits by parties with no real interest in the outcome – and that hope to profit by such lawsuits.

Attorneys for one of the Righthaven defendants, Thomas DiBiase, for instance, have charged: "DiBiase asserts that the purported copyright assignment from Stephens Media to Righthaven is a sham and that Righthaven is engaged in champerty and barratry by filing litigation on copyrights that it does not own."

-- Whether Righthaven and its attorneys have made misrepresentations to the court. If true, that would appear to be a violation of the Nevada Supreme Court’s Rules of Professional Conduct.

These rules say, in part, "It is professional misconduct for a lawyer" to "engage in conduct involving dishonesty, fraud, deceit or misrepresentation." The rules also say, "A lawyer shall not knowingly make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer."

While Gibson hasn’t commented on the State Bar investigation, he told the Review-Journal for a story Wednesday that "certainly there was no intent" to be dishonest with the court.

"It's important to recognize that Righthaven respects the judiciary and respects judicial decisions," he told the R-J.

And Shawn Mangano, a Las Vegas attorney representing Righthaven, said today:

"In what regard has Righthaven been dishonest and deceitful? By submitting a clarification to the SAA (Righthaven/Stephens Media copyright contract) that was not considered by the court? I, along with more than one of the top copyright lawyers in this country, believe the issues presented were not fully appreciated - particularly in view of the rather fundamental transactional structure of an assignment and (copyright) license back. As of today, Righthaven maintains that it, and not Stephens Media, holds ownership of all copyrighted works assigned to it."

Righthaven observer Eric Johnson, an associate professor of law at the University of North Dakota who tracks copyright issues, said Hunt’s ruling details multiple potential violations of the Nevada Rules of Professional Conduct.

"This is a remarkable order," Johnson said. "It could mean serious personal repercussions for those most intimately involved in Righthaven."

Johnson noted Hunt’s extraordinary "outright deceitful" comment in his ruling.

"This is strong language for a federal court. It's the kind of stuff that, if you are on the wrong side of it, would likely cause all the blood to rush to your stomach. Courts deliver defeats to parties all the time, but they rarely use language like this," Johnson said. "With this kind of pronouncement, and others elsewhere in the order, I would not be surprised if the State Bar of Nevada brought up the attorneys that founded Righthaven on professional ethics charges. In fact, this could ultimately end in disbarment for one or more lawyers."

"Based on (Hunt’s order), Righthaven definitely appears headed for sanctions. But I suspect that's the tip of the iceberg for Righthaven's woes from here on out," Johnson said.

In a blog post today, Johnson wrote: "I don’t know that Gibson or other attorneys committed misconduct. That is up to the State Bar of Nevada to determine. I certainly can say at this point that there is strong reason to believe serious misconduct has occurred, and it’s more than enough for an investigation. Gibson and others should, of course, have the opportunity to defend and explain themselves. But the matter should, at least, be taken seriously by the bar. That is especially the case where many people have been hurt and public confidence in the legal profession may justifiably be undermined if nothing is done."

Internet bloggers, in the meantime, are making similar suggestions.

Former Righthaven defendant Michael Leon today advised Righthaven attorney Steven Ganim: "Run and don't walk to the U.S. Attorney's office and tell them you want full immunity as a cooperating witness against Righthaven LLC and (attorney Shawn) Mangano. I don't think you realize how serious being part of a conspiracy to repeatedly lie in federal court is."

Similarly, the Crime & Federalism blog commented: "One would hope that the State Bar of Nevada would begin an investigation asking why a federal judge `believes that Righthaven has made multiple inaccurate and likely dishonest statements to the court,’ involving at least one 'flagrant misrepresentation.'"

The State Bar of Nevada investigation is just one of many problems facing Righthaven.

On top of that, for Righthaven, Stephens Media and MediaNews Group, owner of the Denver Post:

--Attorneys are considering filing a class-action claim against Righthaven on behalf of defendants that settled with Righthaven with the understanding that Righthaven had standing to sue. That understanding was mistaken, according to Hunt's ruling.

--A class-action counterclaim is pending in federal court in Denver against Righthaven on behalf of Denver Post defendants.

--A state court lawsuit has been filed in South Carolina against Righthaven, Stephens Media, MediaNews and several current and former Righthaven attorneys.

--Stephens Media remains a defendant in three counterclaims filed by Righthaven defendants.

Righthaven, in the meantime, this week was called a "vampire" for its conduct in its lawsuit against retired Denver-area military nurse Denise Nichols.

The case involves veterans advocates and defendants Leon of Fitchburg, Wisc., and Nichols of Wheat Ridge, Colo., who were sued by Righthaven in Las Vegas over allegations material from both the Review-Journal and the Denver Post was posted on the veteranstoday.com website.

The suit was dismissed against Leon because he was not served in time and it was dropped against Nichols after she was served with the wrong version of the suit – a version not naming her as a defendant.

Nichols’ case also attracted attention because she’s a retired military nurse with health problems and she complained some Righthaven lawsuits were showing disrespect to veterans while the case against her was further endangering her health.

Nichols has now filed papers demanding Righthaven pay her $1,500 to $1,600 in attorney’s fees and costs.

Righthaven is balking at paying Nichols’ legal costs, saying it dismissed her case with prejudice, meaning it can’t sue her again over her alleged infringement. Righthaven also acknowledged her "extensive prior military service to the United States of America" and "her apparent medical condition."

In its latest filing against Nichols on June 6, Righthaven complained: "Nichols’ motion should also be denied because it is nothing short of an attempt at trying to extract blood money in the form of an attorney’s fee award to which she is not entitled."

Nichols fired back this week, commenting " Righthaven is the one that is the vampire. Righthaven buys articles well after the articles are printed. So what right do they have to do this?"

"I am arguing that this court has within in its authority and discretion to award me attorney’s fees and costs incurred for Righthaven’s admitted mistakes and outright dishonesty demonstrated in this matter," Nichols wrote in a letter to U.S. District Court Judge Gloria Navarro.

She also objected to the "blood money" comment.

"This is an offensive and foolish statement that deserves condemnation. Righthaven caused me great stress while I am dealing with critical medical issues that are serious!," Nichols wrote in her letter.

Navarro hasn’t indicated when she may rule on Nichols’ request for recovery of her costs; as well as a request by an attorney representing Leon that the attorney be paid as well.

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Discussion 9 comments

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  1. Anything that gets the Nevada Bar to actually take action *must* be serious, they issue rulings about as often as the sun rises in the West.

  2. "Oh! what a tangled web we weave. When first we practise to deceive!" ...
    Sir Walter Scott.

    We reap what we sow...and it is reapin' time for Stevie & Shermie...and those who were foolish enough to attatch themselves to their CON GAME.
    The jig is up & the news is out, fellas!!!

  3. "In what regard has Righthaven been dishonest and deceitful?" - Shawn Mangano

    What part of the following from Judge Hunt's ruling does Mangano fail to understand?

    "Frankly, if receiving 50% of litigation proceeds minus costs (Dkt. #79, SAA Section 5) does not create a pecuniary interest under Local Rule 7.1-1, the Court isn't sure what would. Making this failure more egregious, not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the Court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this District." - From Hunt's ruling, page 15, lines 10 - 16

    There are other areas in the ruling, but that one is the most direct. The only possible defense is that Righthaven thought that only Federal Rule 7.1 and not the Local Rules for the Federal District need be observed. (But if that was the case, what does that say about the level of competence at Righthaven?)

  4. It appears that Gibson and his band of misfit layers are in complete denial mode about the predicament they are in. Gibson is still spouting off how they plan to continue filing lawsuits and there is no doubt about there standing even though Judge Hunt said in his ruling that the changes Righthaven and Stephens Media made were merely cosmetic. Being sanctioned by the court may be the easy part. Disbarment and ultimately prosecuted for fraud and/or other criminal charges is looking more and more likely.

  5. I guess those boys at RH better hit the crap tables on the strip to see if their fortunes change. It sure hasn't worked for them in the federal courts. I wonder if the Dickinson-Wright law firm will ask Gibson to leave? They may not want that baggage.

  6. Gibson could have more worries. I just went over the SAA again after reading the filing that was the basis for it being unsealed. The filing specifically mentions that the document referred to in paragraph 2 of the SAA had yet to be turned over in discovery proceedings.

    Here is the first sentence from paragraph 2 of the SAA:

    "The Parties hereby covenant that this Agreement is part of an integrated transaction with the transaction (the "Righthaven Transaction") represented by the formation of Righthaven and the corresponding Operating Agreement by and amongst Net Sortie Systems, LLC, a Nevada limited-liability company ("Net Sortie"), Righthaven and the Stephens Media's affiliated company, SI Content Monitor LLC, an Arkansas limited-liability company (said latter entity known herein as the "Stephens Media Affiliate" and said Operating Agreement known herein as the "Operating Agreement")."

    Paragraph 2 goes on to state that "Stephens Media further convenants, represents and warrants that ... the Operating Agreement is being executed by the parties to the Operating Agreement simultaneously with the execution by the Parties of this Agreement ..."

    Combine this with Sherman Fredrick's statement that Stephens Media "grubstaked" Righthaven and one has to wonder just what the "Righthaven Transaction" has to say. It might be possible that not only did Righthaven (or its attorneys) fail to comply with the stricter standard set by Local Rule 7.1-1, but might even have failed to comply with the looser general Federal Rule 7.1 referred to by Judge Hunt. (That rules set standards about disclosure of entities with a 10% ownership stake.)

    All told, the SAA makes for fascinating reading.

  7. Chunky says:

    Chunky don't dance but this news and series of events has him doing a happy little Chunkadelic boogie!

    He'd love to be there watching Mr. Gibson squirming in his chair and hopefully the look on his face if they convict him.

    Why did it take the Bar 18 months and a judges ruling to finally come out on this? Probably now just to save face after letting it slide for so long. Champerty and barratry were brought up over a year ago.

    That's what Chunky thinks!

  8. I would be happy to take the drive down to Las Vegas to attend the criminal trial of Steve Gibson. One can only hope.

  9. Things were bad enough for Gibson, and Righthaven with just the business plan because disbarment for Gibson and classification of Righthaven as a vexatious litigant were the likely end of the road for them if they were not careful. But the SAA makes things much much worse -- as botfx points out. They have essentially lied to federal judges -- and Stephens is a party to it through the SAA.

    Further, since the SAA does not confer ownership on Righthaven, its' applications for copyrights were false and (a) the resulting copyrights are subject to cancellation, and (b) the statements in those applications can be argued to be knowingly false, which could be the basis for (1) prosecution under 17 U.S. Code Section 506e, and (2) disbarment for moral turpitude.

    Now, whether it actually comes to that is another question. In the infamous Qualcomm v. Broadcom litigation, Qualcomm and its counsel were found to have hidden documents and repeatedly lied to a federal judge. Nineteen counsel were named in an Order to Show Cause which extensively detailed their transgressions. But no one was ever disbarred or even suspended by the California Bar, which is active on discipline matters. So maybe this will fade away as well. (But, Stephens Media ought to take note that Qualcomm's patents involved in that case were invalidated.)