District court denies motion to reconsider dismissal of claims that OpenAI removed copyright management information in violation of Digital Millenium Copyright Act, holding that inconsistency between dismissal order and ruling in another action in consolidated multidistrict litigation does not amount to "extraordinary circumstance" required for reconsideration of final order.
News organizations Raw Story Media Inc. and AlterNet Media Inc.
brought suit against OpenAI Inc. and related entities, alleging
OpenAI's chatbot ChatGPT was trained on a "scrape" of
the internet that includes thousands of their copyrighted works of
journalism stripped of their copyright management information
(CMI), and that removal of their CMI from plaintiffs' works
prior to training ChatGPT violated the Digital Millennium Copyright
Act (DMCA).
In November 2024, Judge Colleen McMahon granted defendants'
motion to dismiss and denied plaintiffs' motion for leave to
replead without prejudice, holding that plaintiffs lacked Article
III standing because they failed to allege any harm stemming from
the alleged DMCA violation. Specifically, the district court held
that plaintiffs could not show that they suffered a concrete
injury-in-fact that had a close historical or common law analogue
to a harm traditionally recognized as a basis for a lawsuit in
American courts. (Read our summary of the district court's
decision here.)
Following the dismissal order, the case was transferred to Judge
Sidney Stein in the same district for inclusion in a multidistrict
litigation (MDL), where plaintiffs moved for reconsideration of
Judge McMahon's order. In the MDL, plaintiffs argued that Judge
McMahon's ruling was inconsistent with a decision that Judge
Stein had issued on the same legal issue in another action in the
MDL, New York Times v. Microsoft Corp. In that decision,
the court found that traditional copyright law provided a
sufficient historical analogue for claims under the DMCA,
supporting plaintiffs' standing. (Read our summary of the
court's decision here.) Plaintiffs argued that the
inconsistency between the two rulings warranted reconsideration
under Federal Rule of Civil Procedure 60(b)(6), which allows relief
from a final judgment in "extraordinary
circumstances."
The district court denied the motion for reconsideration, holding
that although Judge McMahon's order was inconsistent with Judge
Stein's ruling in New York Times v. Microsoft Corp.,
that inconsistency alone does not justify reconsideration. The
court explained that because Judge McMahon's ruling is a final
order, the strict standard of Rule 60(b) applied to the
reconsideration motion. By contrast, reconsideration of nonfinal
orders is considered under Federal Rule of Civil Procedure
54(b)'s more permissive standard. The court noted that a number
of the cases plaintiffs cited involved motions for reconsideration
of nonfinal orders and were therefore inapplicable to
plaintiffs' motion for reconsideration of a final order under
Rule 60(b).
In applying the strict Rule 60(b) standard, the court rejected plaintiffs' argument that the inconsistency between the district court rulings constituted an extraordinary circumstance, as plaintiffs' remedy was to appeal Judge McMahon's order to the Second U.S. Circuit Court of Appeals. The court distinguished this case from others where extraordinary circumstances were present, such as where procedural barriers prevented appellate review of a district court's decision. The court also rejected plaintiffs' argument that the interest in consistency in the MDL context specifically warranted reconsideration. While consistency is a valid concern in MDL proceedings, the court explained, it does not override the stringent requirements of Rule 60(b)(6). As a result, the district court held that an appeal to the Second Circuit from Judge McMahon's order, rather than reconsideration, is the appropriate way to resolve the inconsistency between the district courts.
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