MP3.COM SUES FOR BAD ADVICE

MP3.com has filed a malpractice, fraud and breach of fiduciary duty suit against former legal counsel Cooley Godward LLP. The complaint says the firm failed to warn the netco of the legal consequences of its locker service, gave misleading information in the place of promised "expert testimony" and then covered up its negligence at its client’s expense.

The music service provider was sued by the major labels for copyright infringement and paid massive damages prior to being purchased by Vivendi Universal last year (see story, 5/21/01).

In a complaint filed in Los Angeles Superior Court by new counsel Browne & Woods LLP, the netco asks for damages "in excess of $175 million" for starters (and an unspecified further amount in punitive damages "to be proven at trial") on the grounds that Cooley misled MP3.com on the legality of its My.MP3.com service.

The service, which was initially offered free to the site's users, allowed music fans to place tracks from their CDs in secure online lockers. Unlike competing locker service Myplay (itself later purchased by Bertelsmann), however, My.MP3.com didn't simply let consumers upload the music directly. In an avowed attempt not to enable piracy, MP3.com created a database of CDs, then used its "Beam-It" application to authenticate manufacturing codes on user discs.

The music on the CD would then go in the user's locker from the database, a faster (and presumably more copyright-friendly) protocol than direct uploading.

Unfortunately, this purportedly well-intentioned database was created without the permission of copyright holders, and formed the basis of the multiple lawsuits MP3.com weathered after launching the service (see stories, 9/6/00 and 11/14/00, among others).

The suit against Cooley alleges that the law firm, having promised to furnish expert testimony on the likelihood of legal action against the service, "represented, falsely… that there were strong and viable defenses to any legal challenge alleging copyright infringement." It further charges that Cooley attorney Michael Rhodes "represented to MP3[.com], falsely, that Cooley had secured expert opinion testimony" to that effect.

MP3.com’s complaint repeatedly insists that had Cooley’s advice been bona fide, it "would not have proceeded to launch the My.MP3.com service in the manner it did."

More controversially, the litigation asserts that after making these inaccurate representations, Cooley covered up evidence of its "negligence" and urged the company not to waive attorney-client privilege—though the District Court decision against MP3.com in the infringement suit seems to suggest that discovery of attorney neglect could have been exculpatory.

As a result, the suit charges, Cooley "abused and violated the trust and confidence of MP3" and engaged in "oppressive, fraudulent and malicious" conduct "with the intent to injure MP3." It’s unclear whether the alleged malice was a result of the alleged need to cover up the alleged misrepresentations.

"To my knowledge, this is the largest legal malpractice case ever filed in California," Browne partner Allan Browne told the L.A. Times.

"We view the claims to be wholly at odds with the facts," reads a quote from firm partner and CEO Mark Pitchford in a Reuters report on the case. "We intend to aggressively defend (the suit)."

Will this one go to trial? Stay tuned for more purdy
lawyer talk.