I believe it is time for the State Bar of Nevada to begin an attorney misconduct investigation of Righthaven CEO Steve Gibson and, perhaps, other lawyers at the center of the Righthaven enterprise.
When I first read about the Righthaven lawsuits, I thought what Righthaven was doing was morally deplorable, but I assumed that Righthaven was on solid legal footing. I believed, as apparently did many judges, that Righthaven had become the legitimate owner of the copyrights upon which it was suing.
Righthaven’s acquisition of those copyrights from Stephens Media – mostly to stories from the Las Vegas Review-Journal – were prerequisites to being able to sue hapless bloggers and other individuals, and then threaten them with $150,000 statutory damage awards for having reposted articles or photos. By doing this, Righthaven got many individuals to settle for a few thousand dollars each, allowing Righthaven to do a volume business of minor shakedowns. The Righthaven business model, while vile, appeared to be perfectly allowable under the law.
But now we know that was not actually true. This week, Judge Roger Hunt of the U.S. District Court for the District of Nevada issued an order [pdf] in the case of Righthaven v. Democratic Underground that paints a withering portrait of plaintiff conduct in the case. We now know the assignments of copyrights by newspaper owner Stephens Media to Righthaven were, in fact, sham transactions. And because of Righthaven’s failure to be candid about the underlying arrangements with Stephens Media, it is now clear, as the court found, that Righthaven made material misrepresentations to the court.
Based on the federal court’s findings, this looks to be egregious attorney misconduct.
The federal court appears to be on the verge of sanctioning Righthaven. But the State Bar of Nevada can go much further. The bar has the ability to subject Gibson and other lawyers at the center of the enterprise to professional discipline, including, if warranted, disbarment.
I very much regret suggesting a misconduct investigation against any attorney, but this situation appears to be one with many real-life victims, and the behavior at issue, based on Judge Hunt’s findings, is wholly incompatible with the ethical standards expected of lawyers.
Consider what has happened: Righthaven lawyers constructed a sham transaction, and then made multiple misrepresentations to courts and third parties in order to hide the sham nature of the transaction. This was done in a bid to get a number of unsophisticated, unrepresented defendants to fork over substantial settlement payments, largely out of fear or because of their financial inability to mount a defense.
The potential to pervert our civil justice system in this way is one of the most important reasons attorneys are required to demonstrate a high moral character as a prerequisite to receiving a license to practice law. Righthaven’s behavior, in my opinion, is incompatible with that standard.
Let’s look at the Nevada Rules of Professional Conduct. Rule 3.3, called “Candor Toward the Tribunal,” states that “A lawyer shall not knowingly … Make a false statement of fact or law to a tribunal … ” Another provision, Rule 8.4, states, “It is professional misconduct for a lawyer to … Engage in conduct involving dishonesty, fraud, deceit or misrepresentation; [or] Engage in conduct that is prejudicial to the administration of justice[.]”
Those rules appear to have been violated in substantial ways. Consider the following quote from this week’s order from pages 10 and 11, discussing the Strategic Alliance Agreement (“SAA”), between Righthaven and Stephens Media:
As the undersigned issued one of the orders Righthaven cites for this argument, the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles. Righthaven did not disclose the true nature of the transaction by disclosing the SAA or Stephens Media’s pecuniary interests. As the SAA makes abundantly clear, Stephens Media retained the exclusive rights, never actually transferring them to Righthaven regardless of Righthaven’s and Stephens Media’s current contentions. Further, Righthaven also failed to disclose Stephens Media in its certificates of interested parties, despite Stephens Media’s right to proceeds from these lawsuits. (Dkt. #79, Ex. 1, SAA Section 5 (granting Stephens Media a fifty percent interest in any recovery, minus costs).) … [T]hose orders were tainted by Righthaven’s failure to disclose the SAA and Stephens Media’s true interest …
And on page 15 of the order:
As shown in the preceding pages, the Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court. Here, however, the Court will only focus on the most factually brazen: Righthaven’s failure to disclose Stephens Media as an interested party in Righthaven’s Certificate of Interested Parties. … 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.
Based on these findings, it appears that Rule 3.3 was violated multiple times by one or more attorneys on the Righthaven side. Moreover, again, based on Judge Hunt’s findings, Rule 8.4 was violated in a very significant way in the Democratic Underground case. Of course, Rule 8.4 was likely additionally violated in many other Righthaven cases as well, if not all of them.
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.