Over the past several years, adult entertainment company Malibu Media has been one of the most active copyright litigants in the United States. Targeting large numbers of alleged file-sharers, the company has received potentially huge sums in cash settlements.
But while the company usually makes the headlines for its file-sharing cases, a dispute with a former business partner is now shining a light behind the scenes. This week, Florida-based The Lomnitzer Law Firm sued California-based Malibu Media over their business dealings.
According to the lawsuit, in May 2017 Lomnitzer and Malibu entered into an agreement for the former to provide legal services to the latter.
While the precise details are to be submitted under seal, the outline is that Lomnitzer would coordinate Malibu’s litigation against pirates across the United States, receive settlements and pay them into a trust account, pay court filing fees, pay process server fees and investigators, and pay expenses related to the deposition of Malibu.
The law firm claims that it issued invoices to Malibu on a regular basis, using money in the trust account to pay some while dispensing settlement funds back to Malibu. However, the lawsuit claims that a date currently unknown, Malibu “began a program of circumventing the agreement.”
According to the complaint, this came in the form of instructing attorneys in other jurisdictions, that were previously instructed by Lomnitzer, to “bypass” the law firm. This involved sending settlement money directly to Malibu rather than Lomnitzer, “while still expecting the Firm to pay court filing fees, process server fees, etc., all incurred for and on behalf of and for the benefit of Malibu.”
Faced with these circumstances, on August 30, 2019, Lomnitzer terminated its representation of Malibu. Since then it claims to have received invoices from third-parties incurred as a result of its representation of Malibu while its own invoices to Malibu itself (totaling more than $262,500) remain unpaid.
The bottom line according to Lomnitzer’s suit is that Malibu owes the law firm $280,05.32 plus additional interest accruing after December 31, 2019. It is demanding a judgment from the court to that end, an order allowing it to use funds in the trust account towards that amount, plus an order “confirming the Firm’s lien against all proceeds of all pending litigation in which Malibu is a Plaintiff.”
To address the allegations that other law firms are paying settlements directly to Malibu rather than Lomnitzer, Malibu’s former legal team are also seeking an order to prevent Malibu from “disbursing any settlement monies from any and all pending litigation nationwide to anyone other than the Firm.”
On top, of course, Lomnitzer is demanding attorney fees and costs plus any other relief the court deems “just and proper”.
The lawsuit filed by Lomnitzer against Malibu can be found here (pdf)