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United States v. Dallmann

United States District Court, E.D. Virginia, Alexandria Division

January 15, 2020

UNITED STATES OF AMERICA
v.
KRISTOPHER LEE DALLMANN, et al., Defendants.

          MEMORANDUM OPINION

          T. S. EILLS. III UNITED STATES DISTRICT JUDGE

         At issue in this criminal copyright infringement case is the government's motion (i) to order defendants to declare before trial whether they will assert an advice-of-counsel defense and (ii) to confirm waiver of the attorney-client privilege with respect to a memorandum Mr. Dallmann allegedly received from an attorney. The indictment in this case charges eight defendants[1] with conspiracy to commit criminal copyright infringement, in violation of 18 U.S.C. § 371, through the operation of Jetflicks, an online, subscription-based service that permitted users to stream copyrighted works without permission from the copyright owners.[2]The government alleges that Jetflicks was an illegal version of Netflix, namely a service where defendants obtained infringing digital copies of copyrighted television shows from pirate sites, processed and renamed those works, and then streamed and distributed them on an unlimited basis to paying subscribers.

         Willfulness is the mens rea that the government must establish for each of the criminal copyright infringement offenses that have been charged in this case.[3] See, e.g., United States v. Liu, 731 F.3d 982, 989 (9th Cir. 2013). A defendant's assertion of the advice-of-counsel defense is a way to "negate[] the element of willfulness." United States v. Westbrooks, 780 F.3d 593, 595-96 (4th Cir. 2015). Accordingly, the government has filed the instant motion because of concerns that one or more of the defendants may seek to assert an advice-of-counsel defense at trial, and that if a defendant asserts the advice-of-counsel defense during trial without providing advance notice or discovery to the government, such an assertion would require a delay mid-trial so that the government could conduct the necessary discovery and review of the attorney's advice.

         For the reasons that follow, the government's motion is granted in part and denied in part. Specifically, the government's motion to order defendants to declare before trial whether they will assert an advice-of-counsel defense is granted, but the government's motion is denied to the extent it seeks to compel defendants to declare their intent now, long before trial. Accordingly, any defendant who intends to assert an advice-of-counsel defense must provide notice and discovery, but not until ten days prior to trial. The government's motion to confirm waiver of the attorney-client privilege with respect to a memorandum Mr. Dallmann allegedly received from an attorney is denied, without prejudice to the government's ability to renew the motion in the event additional evidence is presented concerning Mr. Dallmann's specific disclosures to the FBI.

         I.

         As an initial matter, it is necessary to set forth the factual background pertinent to the disposition of the government's motion. According to the government, at least three pieces of information indicate that Mr. Dallmann, and potentially other defendants, may intend to assert the advice-of-counsel defense at trial.

         First, the government claims that during a November 16, 2019 interview between Mr. Dallmann and the FBI, Mr. Dallmann said that he paid $3, 000 to an unidentified attorney for legal advice regarding Jetflicks' streaming services. According to Mr. Dallmann, the attorney provided three categories under which Mr. Dallmann could operate Jetflicks, and Mr. Dallmann stated that a memo from the attorney that detailed these three permissible categories of operation would be among the records seized by the FBI. During the execution of search warrants at Mr. Dallmann's residences, the FBI did find a hard copy document that was marked as privileged. To date, neither the government nor the FBI has reviewed this document, but the government did produce the document in discovery.

         Second, during that same November 16, 2019 interview with the FBI, Mr. Dallmann told agents that Jetflicks received a cease and desist letter from the Motion Picture Association of America (MPAA) around November 2012. Mr. Dallmann claimed that he brought this letter to the unidentified attorney, the attorney told Mr. Dallmann to ignore the letter, and Mr. Dallmann followed the attorney's advice.

         Third, the government has learned that in 2012 or 2013 an attorney may have visited Jetflicks and opined on the legality of some part of the operation in the presence of Mr. Dallmann and other defendants. The government does not know whether this attorney is the same person as the attorney Mr. Dallmann described in his interview with the FBI.

         On December 15, 2019, the government asked counsel for the six remaining defendants to advise the government whether they intend to assert an advice-of-counsel defense at trial. Each counsel that responded to the government advised that they remain uncertain whether they will assert an advice-of-counsel defense. In addition, defendant Felipe Garcia's counsel reportedly expressed disagreement with the principle that assertion of an advice-of-counsel defense will constitute a waiver of the attorney-client privilege. On December 26, 2019, the government filed the instant motion (i) to order defendants to declare long before trial whether they will assert an advice-of-counsel defense, [4] and (ii) to confirm that the circumstances and content of Mr. Dallmann's FBI interview waived his attorney-client privilege with respect to a memorandum Mr. Dallmann allegedly received from an attorney. On January 9, 2020, Mr. Garcia filed a response to the government's motion, arguing that the defendants should not be required to provide pretrial notice of their intent to rely on the advice-of-counsel defense. Subsequently, defendants Dallmann, Vaillant, and Jaurequi filed motions to adopt Mr. Garcia's response as their own.

         II.

         As noted, willfulness is the mens rea that the government must establish for each of the criminal copyright infringement offenses that have been charged in this case. See, e.g., United States v. Liu, 731 F.3d 982, 989 (9th Cir. 2013). And a defendant's assertion of the advice-of-counsel defense is a way to "negate[] the element of willfulness." United States v. Westbrooks, 780 F.3d 593, 595-96 (4th Cir. 2015). In other words, the advice-of-counsel defense may be relevant if "the defendant, on the basis of counsel's advice, believed his conduct to be lawful and thus could not be found to have had unlawful intent." United States v. Beach-Nut Nutrition Corp., 871 F.2d 1181, 1194 (2d Cir. 1989).

         As an initial matter, it is constitutionally permissible to place on a defendant the burden of producing some evidence to establish the advice-of-counsel defense. See Westbrooks, 780 F.3d at 596 (finding that "a burden of production to establish a prima facie defense is distinct from the ultimate burden of proving an element of an offense beyond a reasonable doubt" in reference to the advice-of-counsel defense). Yet, it is important to note that this in no way shifts the ultimate burden of proof, which remains on the prosecution. It is equally important to note that "the law places no burden on any defendant to prove an affirmative defense beyond a reasonable doubt." United States v. Gonzalez, 58 F.3d 506, 512 (10th Cir. 1995). To the contrary, the defendant need only produce "more than a scintilla of evidence" regarding such a defense, while the burden remains on the government to prove beyond a reasonable doubt every element of the offenses charged. See United States v. Sligh, 142 F.3d 761, 762 (4th Cir. 1998) (discussing affirmative defense of entrapment). Put simply, "the government must prove the element of willfulness, [but] the court may require the defendant to produce evidence supporting the advice-of-counsel defense." Westbrooks, 780 F.3d at 596. Thus, the defendant bears the initial burden of production, but the prosecution always retains the burden of persuasion, namely the burden of proving the defendant's guilty state of mind beyond a reasonable doubt.

         Accordingly, to establish the advice-of-counsel defense, defendants must produce some evidence-more than a scintilla-showing that:

(i) the advice was sought and received before taking action, (ii) they in good faith sought the advice of a professional whom they considered competent, (iii) the purpose of securing advice was to determine the lawfulness of future conduct, (iv) a full and accurate report was made to the professional of all material facts which the defendants knew and (v) they acted strictly in accordance with the advice of the professional who had been given a full report.

United States v. O'Connor, 158 F.Supp.2d 697, 727-28 (E.D. Va. 2001) (citing United States v. Polytarides, 584 F.2d 1350, 1352 (4th Cir. 1978)). More recently, the Fourth Circuit consolidated these five elements into two, namely (i) full disclosure of all pertinent facts to an attorney, and (ii) good faith reliance on the attorney's advice. United States v. Powell, 680 F.3d 350, 356 (4th Cir. 2012) (citing United States v. Butler, 211 F.3d 826, 833 (4th Cir. 2000) (citing United States v. Miller, 658 F.2d 235, 237 (4th Cir. 1981)); see also United States v. O'Connor, 158 F.Supp.2d 697, 728 (E.D. Va. 2001).

         If any defendant produces more than a scintilla of evidence that that defendant disclosed all pertinent facts to an attorney and relied on that attorney's advice in good faith, and therefore asserts an advice-of-counsel defense, then whether that defendant's advice-of-counsel defense negates the willfulness requirement is a matter to be considered by the jury in determining whether the government has proven defendant's guilt beyond a reasonable doubt. See United States v. Thaggard,477 F.2d 626, 632 (5th Cir. 1973) ("Advice of counsel, when given on full disclosure of all the facts and followed in good faith, may be a matter to be considered by the jury in determining the appellant's guilt."); Miller v. United States,277 F. 721, 726 ...


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