The Righthaven LLC copyright infringement litigation took a bizarre turn Monday when Righthaven's court-appointed receiver moved to fire Righthaven CEO Steven Gibson.
The receiver, Lake Tahoe-area attorney Lara Pearson, filed papers in federal court in Las Vegas saying Gibson has been taking actions to harm the company, that she is terminating him and that she plans to have Righthaven sue him for malpractice.
Gibson didn't say Monday if he would formally contest Pearson’s actions, but he made it clear he opposes them.
"I do not think it appropriate to litigate this matter in the press, but you can note that there is certainly disagreement," said Gibson, a Las Vegas attorney.
Las Vegas-based Righthaven is a partnership between Gibson and an affiliate of Stephens Media LLC, owner of the Las Vegas Review-Journal.
In 2010 and 2011, it filed 275 no-warning lawsuits against bloggers, message-board posters and website owners around North America and Europe.
The suits alleged the defendants had, without authorization, copied and re-posted material online from the R-J and the Denver Post.
Righthaven's lawsuits stopped last year after federal judges ruled it lacked standing to sue because of flawed or ineffective copyright assignments it had obtained from the newspapers for lawsuit purposes.
In some cases, Righthaven lost on fair use grounds.
After its legal setbacks, Righthaven essentially shut down except to pursue appeals of some of its court setbacks.
Righthaven hasn’t disclosed how it's managing to pay an outside attorney for pursuing its appeals while at the same time it's been telling creditors it lacks cash to pay them. It’s believed its ongoing legal expenses have been funded by capital infusions from one or both of its owners.
Defendants who had defeated Righthaven in court won more than $318,000 in attorney’s fees judgments against the company.
Saying it couldn’t pay these judgments or other debts, Righthaven saw a federal judge seize its assets and turn them over to Pearson, who was appointed receiver last year.
The assets included Righthaven's website, trademark and the copyrights it used for lawsuits. So far, just the website and trademark have been sold for the benefit of creditors for a total of $4,325.
No one bid for the copyrights at an auction amid questions about their value, if any, given rulings by judges that the copyrights were invalid for lawsuit purposes.
In the latest development, Pearson filed a report with U.S. District Judge Philip Pro in Las Vegas on Monday saying:
• "Instead of satisfying Righthaven’s substantial judgments, Gibson apparently has elected to allocate Righthaven funds that have been concealed from me to pursue appeals over rights that Righthaven no longer owns and has done so in a manner that further imperils what is left of Righthaven’s assets with additional attorneys' fees awards and sanctions."
• That on Monday, she formally notified Gibson and his wife, Raisha "Drizzle" Gibson, chief operating officer of Righthaven, that they had been terminated "from any position with Righthaven."
• That on Monday she ordered Righthaven's new counsel for appeals purposes, attorney Erik Syverson of the law firm Miller Barondess LLP in Los Angeles, to cease all work for Righthaven.
• She also told told Miller Barondess to report to her how much money from Righthaven is in its trust account "so that I may order any such fund transferred to me for disbursement.''
Her actions, if upheld, could prevent Gibson from pursuing Righthaven's appeals.
Pursuing appeals, however, is a bad idea for Righthaven, Pearson said in her court brief.
That’s because the appeals potentially subject the company to additional attorney’s fee awards against it should the appeals fail, which is likely, Pearson said.
"It is for this reason that I have also ordered that the appeals be terminated immediately, so as to stem additional losses to the receivership estate," Pearson wrote in her filing.
In a letter to Gibson, Pearson said she has placed him on notice that the company she claims to control, Righthaven, "will be taking legal action against you for your ultra vires acts (acts he lacked authority to take) as well as for claims of legal malpractice, which led the company to its current state."
Pearson, in her court filing, asked Pro to ratify her actions. The judge hasn’t yet indicated when or if he’ll act on the request.
''The receiver's job is to take control of a mismanaged organization, to make sure that it isn't looted before legitimate creditors get paid,'' said Marc Randazza, a Las Vegas attorney who has represented Righthaven defendants in multiple cases – including the case that resulted in Pearson being appointed as receiver.
''It is good to see Ms. Pearson doing that. This is why the court appointed her to run Righthaven's affairs,'' he said. ''I'm really looking forward to Righthaven v. Gibson. I won't be counsel in it, but I'll have a comfy chair and a nice drink in my hand as I enjoy the spectacle.''
The bad blood between Righthaven and the attorneys suing it relate to claims by defense attorneys that Righthaven employed abusive litigation tactics in its lawsuits and that the suits threatened defendants' free speech rights. Righthaven and Stephens Media, however, say the suits were needed to deter rampant online copyright infringment involving newspaper industry material.