Arbitrator: Marc Randazza must pay $600K+ for “clear and serious breaches of fiduciary duty” against his former client
Today I was tipped about an interim arbitration award of more than $600,000 against attorney Mark John Randazza of Las Vegas. This amount was awarded to his former employer, a gay pornography studio Corbin Fisher/Liberty Media, in a civil dispute surrounding Randazza’s August 2012 scandalous departure from this company, where he was employed as an in-house general counsel for three years¹.
The June 3, 2015 judgment was written by a former magistrate judge and currently a JAMS arbitrator Stephen E. Haberfeld. The arbitrator determined that Randazza had violated his fiduciary duties owed to the studio as its attorney and employee, committed numerous ethical violations, breached his employment contract, and caused it hundreds of thousands of dollars in damages over the course of his employment.
Those violations include an attempt to secure for himself a $75,000 bribe from an opposing party in a copyright infringement litigation (Liberty Media v. Oron), spoliation of evidence, representing potentially adversary clients (tube sites that infringe upon Liberty Media’s content) in violation of the employment contract, taking control of client funds in his trust account, and so on.
We criticized Randazza on more than one occasion. Together with German IP harvesters (Matthias Schroeder Padewet et al), Randazza committed dozens of shakedown lawsuits against alleged file sharers from June 2009 to August 2012. We covered some of these cases; tech media (Techdirt, TorrentFreak) also paid attention.
Randazza is regarded as a hero by many respected and honest people, primarily for his First Amendment work (for example, instrumenting the best anti-SLAPP law in the country). However, if you purport to do noble work, you don’t do it with your hands that dirty. Otherwise you let your allies down the big way by giving fatal ammunition to the foes.
Liberty Media’s press release.
On 6/15/2015 the studios filed a petition to confirm arbitration award in the Clark County Court in Las Vegas (search by party “Randazza” or case # A-15-719901-C). This court, like the majority of other local courts, doesn’t provide online access to documents. According to the case page, Randazza represents himself while the plaintiffs are represented by Wendy Krincek. The hearing on plantiffs’ and defendant’s motions is set to 7/23/2015.
XBiz (Rhett Pardon): Randazza Says He Will Challenge $600K Interim Arbitration Award
Interestingly, the following two paragraphs were promptly deleted and not a part of the original XBiz article anymore:
“[P]art of his settlement offer was to pay us $20,000 per bar license he is able to keep from having suspended/disbarred,” [Corbin Fisher’s vice president of business development Brian] Dunlap, said. “In other words, he offered us a bounty on his bar licenses — we’d get more of the award if we did not cooperate with bar investigators or send follow-up complaints.
“In his attorneys own words, they said they expect suspension/disbarment in [Florida], so we could expect $80,000 if none of the other four bars took action. We refused this offer because it was insulting, it was unethical — an attorney cannot offer such a bounty on their license — and because we know most all bars use reciprocal discipline — if one suspends/disbars, the others usually do as well.”
2/1-2/3/2016 Update: I received a DMCA notice from XBiz today for the pdf of the original article. Looks like Randazza is abusing copyright law once again, but this time as a censorship tool. Not wise. Although, after the amazing WordPress/Automattic legal department’s involvement, XBiz/Randazza withdrew the demand, I decided not to reinstate the pdf in question: the point was not the entire article, but the deleted paragraphs, which are already preserved for posterity here:
Also, the title of the original article was “Corbin Fisher Awarded $600K; Randazza to Challenge Interim Arbitration Decision.” Now the site shows only “Corbin Fisher Awarded $600K.”
ArsTechnica (Joe Mullin): “Bribes,” gay porn, and copyright trolls: The rise and fall of lawyer Marc Randazza
Lawyerist (Sam Glover): “First Amendment Badass” Marc Randazza Under Fire
Simple Justice (Scott Greenfield): Randazza Wrestled With A Pig (And This Time, The Pig Won)
ArsTechnica (Joe Mullin): Embattled copyright lawyer uses DMCA to remove article about himself
1701 News: Who Is Klingon Lawyer Marc Randazza?
For some unexplained reason (a typo in the docket text?) the hearing in the Clark County Court in Las Vegas initially scheduled for today took place on 7/9/2015 at 9:00 am, so this update is a bit overdue. Attorneys attended: for the plaintiff — Wendy Krincek and Ethan D. Thomas; for the defendant — Michael K. Wall (a partner in a law firm where current Nevada Lieutenant Governor Mark Hutchinson is also a partner).
Apparently, Judge Jim Crockett doesn’t want this case to linger, he set a tight motion schedule despite defense’s objections, according to the hearing minutes:
Court reviewed the Contract between Mr. Randazza and Plaintiff and can see an agreement to Binding Arbitration. In fact, this is one of the things the parties agreed to. Ms. Krincek concurred. Mr. Wall objected for the record. Court stated this dispute is subject to Binding Arbitration and inquired of counsel if an Arbitration has taken place. Ms. Krincek stated not to her knowledge. Mr. Wall informed the Court that there was an Arbitration. Ms. Krincek stated she is here for attorney’s fees and costs, and believes the Arbitrator was going to award something for spoliation of evidence. Court stated there was back and forth discussions whether Mr. Randazza has performed some or many of the obligations that the Arbitrator ordered him to do. Court stated that would be impossible for this Court to determine from it has seen in the documents. Court queried counsel whether there has been compliance and what remains to be resolved in this case.
Court queried Mr. Wall if Mr. Randazza or he give the Court insight on what his expected challenges or objections to the Arbitration decision are. Mr. Wall stated he recently received this from this client. There is factual evidence that it will show there will be challenges to the determination themselves and understands the difficulty of the situation. He feels there have been legal Arbitration in California and may have jurisdictional challenges. They have statutory time to look into those challenges and requested time to file an Opposition as the Statute allows. Court queried counsel if California counsel is not willing to cooperate with Mr. Wall. Mr. Wall stated he is cooperating and will provide documents and act as co-counsel to the deft.
COURT ORDERED, Mr. Wall to file his brief as to why Binding Arbitration is flawed legally or jurisdictionally within 30 days of today’s date by 8/10/15. Mr. Wall objected and argued that he has 90 days pursuant to Supreme Court and the District Court does not have authority to change the 90 days. Further, his client is out of the country until after 8/10/15, requesting at a bare minimum exactly what the Statute guarantees them pursuant to Nevada Supreme Court and that is until 9/1/15 to file the document requested by the Court. Ms. Krincek objected and requested Defendant’s opposing brief to the Motion to Confirm Arbitration Award be filed in 30 days. Further argument by Mr. Wall in opposition to this Court changing the time period in which to file an opposing brief.
The Court disagrees with Mr. Wall and ORDERED, defendant’s opposition to be filed in 30 days by 8/10/15. FURTHER ORDERED, Plaintiff will have two weeks to file a Reply brief by 8/24/15, and the motion is CONTINUED to 9/3/15. Mr. Wall stated he will file his opposition, but will be filing his motion to set aside or correct the award by 9/1/15. Upon inquiry by Mr. Wall, COURT ORDERED, if Mr. Wall if going to file a Motion to Set Aside or Vacate the Award it is to be filed by 8/10/15. 9/3/15 @ 9:00 A.M. PLTF’S MOTION TO CONFIRM ARBITRATION AWARD…DEFENDANT’S MOTION TO SET ASIDE OR VACATE ARBITRATION AWARD.
On 8/28/2015 Marc Randazza filed a Chapter 11 bankruptcy petition. He listed 1-10 million as estimated assets and 10-50 million as estimated liabilities (that’s why Chapter 13 is not an option). As a result, the Clark County case (a petition to confirm the arbitration award) was automatically stayed / administratively closed. This situation is tricky: Randazza essentially declared that the arbitration is so burdensome that bankruptcy is the only choice. However, he implied it before the said arbitration was finalized, and the bankruptcy is seemingly aimed at preventing the finalization. So expect Liberty to continue pushing for the final arbitration decision (moving to resume the closed case).
As I predicted, Liberty/Excelsior moved to modify the automatic stay so the arbitration would be finalized:
Creditors Excelsior Media Corp. and Liberty Media Holdings, LLC (“E/L”) hereby move for an order modifying the automatic stay to allow the completion of the pending pre-petition arbitration between E/L and Debtor through the confirmation of all awards to a judgment entered by the Nevada State Court. That judgment will then be filed as a claim against Debtor and E/L will seek an order determining the judgment to be non-dischargeable.
As you noticed, I don’t actively follow this dispute, yet once in a while I check the docket. One recent filing deserves an update: on 7/7/2016, Liberty filed its second amended complaint. It reiterates the creditor’s previous claims, particularly asking for
[…]a decree determining that all debts determined to be owing by Defendant to Plaintiffs which are the subject of this action are deemed and adjudicated to be non-dischargeable […]
The complaint corroborates previous accusations in attorney’s unethical conduct, and makes new ones.
On 7/25/216, State Bar of Nevada initiated a disciplinary action against Randazza based on the dispute with Liberty Media: