A US court has ordered the former operators of pirate IPTV service Nitro TV to pay more than $100m in piracy damages to broadcaster DISH. While the defendants are likely to be somewhat upset, major Hollywood studios are absolutely fuming. Despite their lawsuit against Nitro being filed months earlier, it's still not over, allowing DISH to strike first against any available cash.
According to the complaint, Alex, Anna, Martha and Osvaldo Galindo were behind the unlicensed streaming service which obtained its content from DISH satellite broadcasts and Sling’s internet-based programming.
Documents obtained by the plaintiffs revealed the sale of at least 100,363 subscriptions (‘device codes’) which allowed Nitro customers to receive live TV programming and a movie/TV show VOD service at discount prices. Two accounts at Wells Fargo and Chase operated by Alex and Martha received at least $5.5m relating to the IPTV service.
DISH and the other plaintiffs claimed that the defendants were responsible for mass violations of the DMCA’s anti-circumvention provisions and the Federal Communications Act (FCA). Since none of the defendants appeared in court, these allegations went unchallenged.Default Judgment and Massive Damages
In February 2022, DISH, Sling and NagraStar filed a motion for default judgment, demanding over $100m in damages for FCA violations and a broad injunction for violations of the FCA and DMCA.
An order handed down by District Judge Jeffrey Vincent Brown last week acknowledged the defendants’ failure to appear and granted the plaintiffs’ motion for default, finding the Galindos liable for violations of 47 U.S.C. §§ 605(a), 605(e)(4), and 17 U.S.C. § 1201(a)(1)(a).
DISH and NagraStar were awarded $100,363,000 in statutory damages against the defendants, jointly and severally, for their violations of the Federal Communications Act. Via a permanent injunction, the Galindos were also restrained from infringing DISH and Sling’s rights by operating a similar IPTV platform in future, or being involved in the sale of devices or subscriptions that exploit their programming.
The judgment (pdf) appears to give DISH everything it asked for, including a huge damages award that will hurt the defendants, if the broadcaster is able to track them down. That is a big ‘if’ but DISH has a reputation for not letting such things go.
While these types of piracy awards are usually considered a win for the broader entertainment industry due to the deterrent message they send, the plaintiffs in a separate piracy lawsuit filed against Nitro TV are far from happy. Their irritation in that action is now palpable, with the studios’ legal team directing criticism at Alex Galindo’s lawyer, much to his consternation.Lawsuit Filed By ACE Members Against Nitro
In April 2020, around 16 months before DISH filed their lawsuit against the Galindos, a coalition of entertainment companies led by Universal, Paramount, Columbia, Disney and Amazon filed a copyright infringement complaint against Nitro’s operators.
Unlike the DISH lawsuit, the action brought by these members of the Alliance for Creativity against Alex and Anna Galindo, YouTuber ‘Touchtone‘, and others, was more complex.
Galindo said that he was concerned that the civil lawsuit could later turn into a criminal prosecution and for their part, the plaintiffs refused to rule that out. Therefore, when discovery was supposed to take place, Galindo asserted his Fifth Amendment rights not to self-incriminate. The plaintiffs said this amounted to a discovery abuse so demanded sanctions and a default judgment.
Alex Galindo’s attorney Steven Vondran later accused the plaintiffs of allowing the case “to drag on” after they sought additional time to serve Martha Galindo. Vondran also asked for the entire case to be dismissed, noting that Alex had previously agreed to accept a default judgment, a proposal the studios rejected.
The response from the studios pulled no punches. Using terms such as “outright lies” and “frankly laughable” it was clear that the supply of patience was drying up. The plaintiffs had discovered that Nitro had processed $7 million through accounts maintained by Martha Galindo and they Wanted access to that money.Nitro Boss Stops Paying His Attorney,
After Alex reportedly refused to cooperate with the plaintiffs who were trying to find Martha and get access to the money, he later stopped paying Vondran and ended communications. A “complete breakdown” of the attorney-client relationship ensued so Vondran asked the court’s permission to withdraw from the case.
With a hearing scheduled for June 30, the studios say that allowing Vondran to withdraw now would create a risk of “yet further prejudicial delay”, hindering their efforts to bring the case to a conclusion. They also believe that it’s unlikely that Alex Galindo will appear in person, since he previously missed a court-ordered appearance in April.
But if patience was in short supply late last year, it now appears to have completely dried up. The studios are now suggesting that Vondran is in some way responsible for his client’s alleged misconduct – a client that owes him money and isn’t returning his calls.Delays Reduce Chances of Recovering Damages
“While Plaintiffs to date have refrained from seeking sanctions against Mr. Vondran, virtually all of the conduct underlying the Sanctions Motion (e.g., destruction of evidence, false discovery responses provided under oath, failure to produce a single document, and violation of a court order compelling responses and production) occurred under his watch,” a studio filing dated June 10 reads.
“Plaintiffs have done everything in their power to bring this matter to a conclusion in a manner that vindicates their rights and does not reward Defendant for his gross misconduct and complete disregard for his obligations to this Court,” they continue.
“Importantly, these are obligations that Defendant affirmatively opted to take on by choosing to defend against the allegations against him not once, but twice — and always while represented by Mr. Vondran.”
It’s at this point the studios make a direct reference to the DISH lawsuit, the relative ease with which it has just concluded in favor of the plaintiffs, and the early jump DISH has on the Nitro money.
“To put a fine point on it, the plaintiffs in the Texas action, who filed suit over a year after Plaintiffs filed this action and after the Sanctions Motion was filed, have obtained a judgment on the same misconduct at issue here, and are now able to start enforcing their judgment against Defendant while Plaintiffs are still awaiting ruling on the Sanctions Motion,” a statement in opposition to Vondran’s withdrawal reads.Vondran Doesn’t Appreciate Plaintiffs’ Tone
In a response filed less than a day after the studios’ most recent filing, Steven Vondran describes the allegations against him as “unprofessional and unsubstantiated character attacks” that imply he was somehow involved in discovery abuses.
“There was no need for them to make these unfounded insinuations,” Vondran informs the court.
“There is absolutely no evidence anything was done improper by Defense counsel and in nearly 18 years of legal practice and having handled several hundred litigations (mostly federal court) I have never been accused of such abuses as they are now insinuating.”
Vondran then references the “very large” DISH judgment, which in his opinion leaves the Hollywood plaintiffs with “no likely way to ever recoup their alleged damages.”
He believes this is entirely down to the plaintiff’s refusal to clarify the full nature and extent of the infringements at Nitro. If they had done so, the case would’ve gone to default long ago.
“In other words, it appears they are now upset because they are now in second position due to their prolonged delay.”
Vondran concludes by asking the court to grant his motion to withdraw, noting that there would be no way to effectively defend Alex without potentially affecting his Fifth Amendment rights, even if he hadn’t abandoned all contacts with Vondran and his company.
Update: After the latest exchange in the case, Judge Gail J. Standish issued a 27-page report (pdf) which recommends the district judge to find that Alex Galindo willfully violated court orders, failed to cooperate in discovery, should be held liable for infringement, and should pay $181,080 in attorneys’ fees and costs to the plaintiffs.