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Case 1:09-cv-03955 Document 35 Filed 12/01/2009 Page 1 of 10

IN THE UNITED STATES DISTRICT COURT


FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

David Blockowicz, Mary Blockowicz, and Lisa )


Blockowicz, individuals, )
) Civil Action No. 1:09-cv-03955
Plaintiffs, )
) Judge Holderman
v. )
) Magistrate Judge Cox
Joseph David Williams and Michelle Ramey, )
individuals, )
)
Defendants. )

SUR-SURREPLY BRIEF IN SUPPORT OF MOTION FOR


THIRD PARTY ENFORCEMENT OF INJUNCTION

Xcentric’s arguments in its surreply suffer from several fatal flaws. First, Xcentric

misstates the meaning of “privity” under Rule 65(d), and defines Rule 65(d) in a way that

conflicts with controlling Seventh Circuit law. Second, Xcentric confuses the scope of Rule 65

with separate and distinct due process questions. Third, Xcentric continues to argue that there is

“no evidence” as to whether the Defendants in this case are the ones who made the offending

postings, when in fact the record contains ample evidence that the Court has already considered,

but Xcentric ignores. Xcentric cannot ignore either controlling Seventh Circuit law or the facts

of record, and has not raised a due process argument of any merit. Accordingly, the Court

should order that Xcentric is obligated to provide reasonable assistance in removing the

defamatory postings, including reasonable efforts to remove copies of those postings from search

engine results.

I. Xcentric Misinterprets “Privity” In Relation To Rule 65(d).

“Privity,” in the context of Rule 65(d), is not as limited as Xcentric argues in its surreply.

Xcentric attempts to narrow the scope of Rule 65(d) to cover only “active, deliberate conduct…

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to show that Xcentric and Defendants have conspired together or that one represents the other.”

But Rule 65(d) does not use the word “conspire,” and surely the drafters of the Rule knew to use

that word if it was intended. Instead, they used the words “active concert or participation,” with

participation encompassing a much lower standard than “conspiracy.” Moreover, Xcentric’s

“conspiracy” formulation of Rule 65(d) directly conflicts with Seventh Circuit precedent.

“[O]rdinarily a court may find a nonparty in contempt if that person has actual knowledge of the

court order and either abets the party named in the court order or is legally identified with him.”

S.E.C. v. Homa, 514 F.3d 661, 674 -675 (7th Cir. 2008) (emphases added).

Thus, Xcentric’s heavy reliance on an opinion issued by a 35-year old opinion from a

district court outside of the Seventh Circuit, Petersen v. Fee Int’l, Ltd., 435 F.Supp. 938

(W.D.Okla. 1975), is misplaced. Petersen speaks only to the “legally identified” standard and

not the “abetting” standard. The Petersen court found that “the degree of privity required…is

that the named defendant and respondent be so identified in interest as to represent the same

legal right.” Petersen, 435 F.Supp. at 943–44. This formulation is only half of the standard set

forth by the Seventh Circuit, which covers those who are identified in interest with the enjoined

part as well as those who aid and abet the enjoined party. Homa, 514 F.3d at 674-75.

Under Xcentric’s approach, a third party who helped an enjoined party avoid an

injunction in exchange for a simple cash payment would not fall under Rule 65(d). This is a

clearly inappropriate result, as the entire purpose of the “active concert and participation”

language of Rule 65(d) is to prevent exactly this kind of behavior. The Seventh Circuit’s

formulation includes those people who assist an enjoined party in avoiding an injunction, even if

those people act in their own interest. In short, if a person has knowledge of an injunction, and

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helps and enjoined party avoid that injunction, then they are “abetting” or are in “active concert

and participation” with the enjoined party.

In addition to stating only half of the applicable standard, Petersen is distinguishable on

its facts. Petersen is a patent case, and under patent law the Plaintiff could have simply filed a

separate cause of action for infringement against Mitsubishi, i.e., the third party accused of being

in privity with the enjoined party. See 35 U.S.C. § 271 (establishing cause of action for anyone

who sells a patented invention). Mitsubishi also had a distinct property interest in the goods it

had already purchased and, as a result, applying the injunction to Mitsubishi would have

implicated far greater due process concerns than exist here, where Xcentric cannot have a

legitimate property interest in Defendants’ defamatory statements, notwithstanding any license

rights Xcentric may have in Defendants’ copyrights. Moreover, the injunction in Petersen arose

from a settlement agreement, and it is unclear why the parties did not address the inventory of

the accused infringer’s customers, including Mitsubishi, in the settlement agreement or the

agreed injunction. Petersen is simply not binding, not persuasive, and not on point.

II. Xcentric Is Aiding And Abetting The Defendants.

The “privity” alleged here is not the “legal identity”1 type of privity discussed in

Petersen, but rather the “aiding and abetting” type of privity that the Seventh Circuit

characterized in Homa as within the scope of Rule 65. To that end, Xcentric’s Terms of Service

are significant not merely because they establish the existence of a contract, but also because the

terms of that contract are essentially a promise to aid and abet the Defendants in continuing

defamation regardless of any court orders.

1
Though Plaintiffs note that Xcentric is doing its best to avail itself of all of the benefits of “legal identity” with the
Defendants, by raising substantive defenses on the Defendants’ behalf.

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Xcentric’s relationship with Defendants is more than simply the sale of goods that

occurred sometime in the past. Xcentric operates under a permanent, exclusive copyright license

from Defendants. The ongoing nature of that license is illustrated by the fact that Xcentric has

even enforced these copyright rights in Federal Courts. Xcentric Ventures, LLC v. Stanley, No.

CV-07-954-PHX-GMS, 2009 WL 113563 (D. Ariz. Jan. 16, 2009) (Ex. S). And the indemnity

agreement between Defendants and Xcentric is completely unlimited in either time or scope;

indeed, there are no limitations to that indemnification clause in Xcentric’s Terms of Service.

Xcentric could bring a cause of action today against Defendants for their costs incurred in this

very action, based on that agreement and based on Defendants’ breach of their warranties and

representations that they would not post defamatory statements. And Xcentric has made a

significant, ongoing promise to Defendants in exchange for those rights – it promised to continue

publishing the defamatory statements indefinitely.

Indeed, it is the indefinite, ongoing nature of these promises that places Xcentric in

privity with the Defendants. Imagine if, in Petersen, Mitsubishi had promised the enjoined party

that Mitsubishi would continue infringing the Defendants’ patents indefinitely. The result in that

case surely would have been different, because the promise to continue the infringing act

regardless of any court ruling would transform a mere prior sale of goods into an ongoing

scheme to avoid court judgments. This is exactly what Xcentric proposes that this Court should

allow. Furthermore, Xcentric plans, in turn, to extract money from those who are defamed,

through its Corporate Advocacy Program or through its new alleged “mediation” program.2

2
While Xcentric claimed at oral argument that it was rolling out this program, Plaintiffs have still not received any
such offer to participate in such a program from Xcentric, and its website remains devoid of mention of any such
program. In any event, the mediation program was not available at the time this lawsuit was filed and appears to
still be unavailable.

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The quid pro quo in Xcentric’s business model is that users can post whatever they want

and Xcentric will never take it down; the provision in its Terms of Service requiring users to post

accurate statements is mere lip service. Based on Plaintiffs’ research, Xcentric has never

enforced the “accuracy” language of its Terms of Service, and apparently has no intention of

enforcing that language in this case. Xcentric promised the Defendants that it would never

remove defamatory statements, even if the Defendants themselves asked for their own

defamatory statements to be removed. This unique provision is no accident. Xcentric has

deliberately included this provision to declare to the world that it is a “safe haven” for defamers.

III. Xcentric Continues To Confuse Due Process Arguments With Rule 65(d).

While courts should certainly consider the due process implications of enforcing

injunctions against third parties, Xcentric inappropriately attempts to import these due process

concerns into Rule 65(d) itself. Particularly, Xcentric relies heavily on language from other

cases which speaks more to due process than to Rule 65, but then treats that language as if it was

from Rule 65 itself. The problem with this approach is that due process concerns vary greatly

from case to case; one cannot simply copy a court’s language from a due process-related case

and apply it here. Rather, due process needs to be considered separately on the facts of this case.

Indeed, it was due process concerns, and not Rule 65, that dictated the result in Petersen.

The Petersen court’s statements such as “[t]his is because the non-party is entitled to his day in

court” are due process arguments, not Rule 65 arguments. And the facts discussed above which

make Petersen distinguishable, such as the third party’s distinct property interest in the goods,

are due process facts.

In this case, the question of due process concerns should be considered separately from

Rule 65, and according to the specific facts of this case, rather than attempting to import

language from decisions addressing completely separate due process concerns in other cases.

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Xcentric has no property rights here, as even its license rights in the Defendants’ defamatory

statements are worthless because further reproducing or publishing those statements outside the

context of the CDA’s safe harbor provision would amount to Xcentric’s own publication. The

only discernable due process argument that Xcentric has made is that a ruling in Plaintiffs’ favor

in this case will somehow cause “hundreds or thousands” of unscrupulous plaintiffs to run to

court, obtain improper default judgments, and then use those judgments to demand that Xcentric

take down content that is not, in fact, defamatory. This argument is facetious. It assumes that

courts will serve as mere rubber stamps for “hundreds or thousands” of unscrupulous plaintiffs,

who supposedly will sue nonexistent people to dishonestly obtain default judgments. Just as this

Court considered all of the facts presented before ruling on Plaintiffs’ claims, all courts would

review any facts presented by the imaginary “hundreds or thousands” of plaintiffs. Xcentric’s

supposed future harm is speculative and meritless.

IV. The CDA Does Not Provides Absolute Immunity.

Xcentric engages in a sort of ipse dixit when discussing the CDA – it argues that the Rule

65 relief sought here is the same as injunctive relief simply because Xcentric says it is. Nothing

in Xcentric’s surreply addresses the many ways that Plaintiffs have pointed out in which the Rule

65 relief sought here is different from an actual injunction. Particularly, Xcentric does not

address the fact that it is free to make its own statements; does not address the fact that it has no

duty to police its site for additional false statements; and does not address the fact that none of

the CDA cases it relies upon discuss Rule 65. Plaintiffs are not requesting injunctive relief

against Xcentric. Nor are Plaintiffs attempting to “plead around” the CDA. Indeed, there is

nothing to “plead around” in the CDA. Rather, this is exactly the proper procedure under the

CDA – Plaintiffs did not treat Xcentric as the speaker or publisher of the statements, but instead

sued the proper Defendants, and are now merely requesting Xcentric’s assistance.

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Requiring Xcentric to provide reasonable assistance in removing statements that

Defendants themselves refuse to remove is not treating Xcentric as a “speaker or publisher” of

those statements in contravention of the CDA. Rather, it is treating Xcentric as the mere

incidental custodian of those statements, no different than a bookstore would be a mere custodian

of defamatory statements contained in books for which both the speaker (author) and publisher

would be liable, but the bookstore would not.

V. Xcentric Continues To Ignore The Established Facts Of This Case.

Finally, Xcentric repeats the tired argument that Plaintiffs purportedly have not shown

that the Defendants made the defamatory statements at issue here, or that the Defendants had

actual notice of the injunction. Defendants claim that an evidentiary hearing is needed, implying

that the Court merely “rubber stamped” Plaintiffs’ request for default judgment without

supporting evidence.

These arguments are meritless. Xcentric’s repeated statements that there is “no

evidence” on these matters are especially disappointing. Plaintiffs filed a detailed memorandum

of law and supporting affidavits along with their Motion for Preliminary Injunction and

Complaint. Those pleadings laid out detailed a chronology of the defamatory statements alleged

to have been posted by the Defendants – for the very purpose of proving that Plaintiffs had in

fact named the proper parties. The chronology establishes without a doubt that the Defendants

are behind the postings. The entire chronology need not be repeated here, but it includes among

other things audio recordings of Defendant Williams’ voice mails. These voice mails are still

available on the Internet today, and they could only have come from Defendant Williams.

Nor is the affidavit submitted by Xcentric sufficient to show a factual dispute. The

affidavit is woefully incomplete. While the affidavit admits that Xcentric records the IP (Internet

Protocol) address of each user, Xcentric notably failed to mention what that IP address

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information revealed. This is a telling omission. An IP address is a unique address that normally

can be used to determine the general location of the user.3 Since Xcentric elected not to include

that information, it is likely that it does not favor Xcentric’s position. Likewise, Xcentric has

failed to reveal the information it gathered for the other posts on its website (such as the posts

regarding Defendant Williams’ daughter), which are described in Plaintiffs’ pleadings.

Assuming Xcentric even has the right to contest the fact of the proper Defendants’ identity, the

Court should reject this transparent attempt to create a fact dispute through ipse dixit while

simultaneously withholding other highly relevant information.

Xcentric likewise argues that there is “no” evidence of actual notice of the injunction,

once again ignoring the fact that Plaintiffs provided proof of service (at the same email address

otherwise used for Defendants) with their reply brief in support of the present motion. (Ex. P.)

Xcentric seems to be ignoring these facts because they undermine Xcentric’s theme that,

if relief is granted here, it will purportedly be inundated with claims from unscrupulous

plaintiffs. This case is clearly not a matter of unscrupulous plaintiffs filing lawsuits against

imaginary Defendants. Plaintiffs have adequately shown the Defendants to be the speakers

behind the defamatory postings and have shown the Defendants to have notice of this lawsuit

and the Court’s orders through service on the Defendants’ known email address.

VI. Conclusion

Xcentric is in privity with the Defendants. It has an ongoing contractual relationship with

the Defendants, and the terms of that contractual relationship include a promise never to remove

postings even if a Court orders the Defendants to do so. That is precisely the type of “privity”

3
A traceroute (tracert) command can trace the internet path back to an IP address. While the last few steps in the
path are usually private, the public steps in the path give one an idea where the signal is heading. For example, the
undersigned counsel has a home IP address of 71.201.57.212. Using a common internet “tracert” tool, the last
public node on the traceroute results is <po-85-ur07.homewood.il.chicago.comcast.net>, which correctly indicates
that the IP address is a Comcast IP address and is located near Homewood, Illinois.

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or “aiding and abetting” that, according to the Seventh Circuit, is within the scope of Rule 65.

Xcentric is not shielded by the CDA because the relief sought treats Xcentric as a mere custodian

of the defamatory statements, rather than as a publisher or speaker of those statements. And

Xcentric’s continued efforts to pretend as if the Defendants’ identity is somehow unknown

ignores the record, including the Court’s previous orders. Accordingly, the Court should order

Xcentric to immediately remove the reports identified in the proposed order, and insert the

necessary “noindex” and “noarchive” meta tags necessary to clear these defamatory statements

from search engines.

Dated: December 1, 2009 /s/ Cameron M. Nelson


Cameron M. Nelson
Kevin J. O’Shea
Greenberg Traurig, LLP
77 West Wacker Drive, Suite 3100
Chicago, IL 60601
Telephone: 312-456-8400
Facsimile: 312-456-8435
Attorneys for Plaintiffs

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CERTIFICATE OF SERVICE

The undersigned hereby certifies that on December 1, 2009 this SUR-SURREPLY


BRIEF IN SUPPORT OF MOTION FOR THIRD PARTY ENFORCEMENT OF INJUNCTION
was filed via the Court’s CM/ECF System which will provide notice to the following parties by
email:

Matthew Patrick Connelly


Garrett Cleland Carter
Connelly, Roberts & McGivney
55 W. Monroe Street
Suite 1700
Chicago , IL 60603
(312) 251-9600
Email: mpconnelly@crmlaw.com
Email: gcarter@crmlaw.com
ATTORNEY TO BE NOTICED

With additional copies by email to:

Michelle Ramey and Joseph David Williams


loyalpatriot@gmail.com

Dated: December 1, 2009 By:/s/ Cameron M. Nelson


Cameron M. Nelson
GREENBERG TRAURIG, LLP
77 West Wacker Drive
Suite 3100
Chicago, IL 60601

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