Fight for control of Righthaven to continue

CEO Gibson insists he’s owed back wages

The fight for control of Righthaven LLC will continue after a judge on Tuesday declined to immediately rule on the conflict.

The Las Vegas company is known for collecting copyrights from the Las Vegas Review-Journal and the Denver Post and then using those rights to file 275 no-warning infringement lawsuits against people, companies and organizations that re-posted content from those papers online without authorization.

The litigation campaign ended last year when federal judges in three states found the suits lacked merit because of flawed copyright assignments to Righthaven. They were flawed because the newspapers maintained control of the content Righthaven was suing over, meaning Righthaven lacked standing to sue. In some cases, defendants were cleared by the fair use concept in copyright law.

Righthaven shut down after the legal setbacks, claiming it was broke despite its backing by the deep-pocketed owner of the Review-Journal. Righthaven was ordered to pay $318,000 for legal fees of defendants that won dismissal of the suits against them, but hasn’t made those payments.

Because of its failure to pay $34,045 to one defendant, Kentucky insurance agent Wayne Hoehn, U.S. District Judge Philip Pro in Las Vegas last year appointed a receiver to collect Righthaven assets and auction them to raise money to cover some of Hoehn’s claim. Hoehn’s legal fees since then have grown by another $113,000, his attorneys say.

Despite these setbacks, Righthaven CEO and Las Vegas attorney Steven Gibson has arranged for the company to pursue an appeal to the 9th U.S. Circuit Court of Appeals of Pro’s order dismissing the Righthaven suit against Hoehn on both standing and fair-use grounds. Gibson says that winning the appeal would position Righthaven to get back into the lawsuit business.

Hoehn’s attorneys and Righthaven’s receiver have argued that appeal must be dismissed because it’s subjecting the company to further liability for fees Hoehn is incurring in defending the appeal.

Gibson and Hoehn’s attorneys argued Tuesday before Pro over whether the court-appointed receiver was within her rights to try to fire Gibson and cancel the appeal. Gibson remains the Righthaven CEO, at least on paper, and the appeal hasn’t been canceled — likely because of uncertainties over the receiver’s authority.

Pro didn’t immediately rule on the issue Tuesday because one of Righthaven’s outside attorneys, Shawn Mangano, since February has failed to participate in any Righthaven cases and has missed multiple hearings and deadlines to file briefs. That’s because of what Mangano calls personal issues.

In addition, according to Gibson, Mangano has failed to communicate with Righthaven since then. Mangano was not present at Tuesday’s hearing.

Pro ordered Mangano to communicate with Gibson and to appear at another hearing Oct. 31 so that Righthaven can be properly represented before he rules on the issue of control of the company.

In a setback for the Hoehn team, Pro declined to immediately extend his prior receivership order to give the receiver the authority to get rid of Gibson and dismiss the appeal. Hoehn’s attorneys plan to renew that request at the Oct. 31 hearing.

Pro did grant a Hoehn motion that the existing receiver, Lara Pearson, be replaced by Las Vegas attorney Ryan Hamilton. Pearson earlier successfully auctioned Righthaven’s website and trademark.

She was unable to auction its copyrights due to a lack of interest in them among would-be buyers amid uncertainty about their worth given the copyrights had failed to hold up in court for Righthaven, attorneys say.

Pearson is stepping aside as receiver because she’s changing law firms.

It’s unknown whether Mangano will participate in the Hoehn case again since he separately on Tuesday filed a motion to withdraw as Righthaven’s attorney in the Hoehn case and in another Righthaven case in Las Vegas.

In the second case, Righthaven unsuccessfully sued former federal prosecutor Thomas DiBiase for copyright infringement. The digital rights group representing DiBiase, the Electronic Frontier Foundation in San Francisco, is now trying to collect from Righthaven $119,488 in DiBiase’s attorney’s fees.

In his dismissal motion in the DiBiase case, Mangano claimed Righthaven owes him an unspecified amount of money for legal work from 2011, which contradicts statements by Gibson that Righthaven had fulfilled its financial obligations to Mangano.

Mangano also wrote in his motion that he’s in the impossible position of trying to represent Righthaven when it’s under the control of a receiver.

“My client representative has repeatedly requested that the receiver’s appointment continue to be challenged. Concurrently, the receiver has requested that I take action that has been at odds with my client representative’s desires,” Mangano wrote in his withdrawal request.

Separately, a new twist developed in the Hoehn case when Gibson asserted that besides being Righthaven’s CEO, he’s also a Righthaven creditor being owed an unspecified amount after voluntarily forgoing his “six-figure” Righthaven salary since about July 2010.

"Therefore, I have months, if not years, of unpaid wages, pursuant to Righthaven’s Operating Agreement, due to me,” Gibson told Pro in a court filing.

Gibson’s claim to be a creditor appears likely to complicate threats by Righthaven’s previous receiver to sue him for malpractice for allegedly mismanaging the company. Such a suit would be aimed at recovering funds for Righthaven creditors.

Gibson also opposed Hoehn’s motion to appoint a new receiver, saying there’s nothing to be done with Righthaven except for creditors to pick up some of its used office furniture and to wait for the 9th Circuit to rule on the Righthaven appeal.

"To take this court’s further time to prolong this process is totally unnecessary other than to perhaps satisfy Mr. Randazza’s apparently insatiable desire for publicity and apparent personal animus towards myself,” Gibson complained in a court filing of attorney Marc Randazza, who has regularly been quoted in news stories as one of the more vocal critics of Righthaven and of Gibson.

Randazza has said the Righthaven suits threatened free speech while Gibson maintains they were necessary to crack down on rampant online theft of newspaper content.

Randazza on Tuesday questioned how Gibson could be a Righthaven creditor when as the CEO he voluntarily chose to forgo a salary from his own company.

Given the $318,000 that Righthaven has failed to pay its creditors, the Hoehn legal team also ridiculed Gibson’s claim that Righthaven somehow owes him money.

"It seems almost bizarre for Gibson to seek back wages for his antics engaged in since 2010. It is akin to a captain of a ship running it aground, then diving in the water before evacuating anyone, and then asking for the dead passengers and crews’ estates to compensate him for dry-cleaning his uniform,” the Randazza team told Pro in a court filing Tuesday.

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  1. Stick a fork in Wronghaven already.

    If Gibson and Sherm really believed in Wronghaven they would have fully capitalized it amid all of the attacks. Instead they both bailed, let Wronghaven drift and run aground, and left their victims and the courts to clean up their mess.

    I wonder how Sherm's corvette is? Maybe that can be seized to pay the legal fees?