`United States Court of Appeals
`FOR THE DISTRICT OF COLUMBIA CIRCUIT
`
`
`
`Decided July 21, 2020
`
`Argued April 22, 2020
`
`
`No. 18-1337
`
`INDEPENDENT PRODUCERS GROUP,
`APPELLANT
`
`v.
`
`COPYRIGHT ROYALTY BOARD AND LIBRARIAN OF CONGRESS,
`APPELLEES
`
`AMAZING FACTS, INC., ET AL.,
`INTERVENORS
`
`
`
`Consolidated with 19-1116
`
`
`On Appeals from the Copyright Royalty Judges
`
`Brian D. Boydston argued the cause and filed the briefs for
`appellant.
`
`
`Martin V. Totaro, Attorney, U.S. Department of Justice,
`argued the cause for appellees. With him on the brief was
`Daniel Tenny, Attorney. Mark R. Freeman, Attorney, entered
`an appearance.
`
`
`
`
`
`
`
`
`2
`Matthew J. MacLean, Jessica T. Nyman, Michael A.
`Warley, Gregory O. Olaniran, Lucy Holmes Plovnick, Daniel
`A. Cantor, R. Stanton Jones, Michael Kientzle, Philip R.
`Hochberg, and Jeremy W. Dutra were on the brief for
`intervenors in support of appellees.
`
`
`Before: GRIFFITH and PILLARD, Circuit Judges, and
`SILBERMAN, Senior Circuit Judge.
`
`Opinion for the Court filed by Circuit Judge PILLARD.
`
`
`
`PILLARD, Circuit Judge: Under the Copyright Act, when
`a cable or satellite company retransmits programs initially aired
`on broadcast stations, the Register of Copyrights collects
`royalty fees under a compulsory licensing scheme and later
`redistributes the fees to the appropriate copyright owners. The
`Copyright Royalty Judges (the Judges) preside over royalty
`distribution proceedings and settle disputes among royalty fee
`claimants. Appellant Worldwide Subsidy Group LLC dba
`Independent Producers Group (IPG), an agent for royalty
`claimants in these proceedings, challenges a series of decisions
`by the Copyright Royalty Judges denying most of its clients’
`royalty fee claims for programming in the devotional and
`program suppliers’ categories that was retransmitted by cable
`for 2004-2009 and by satellite for 1999-2009. IPG lost the
`right to pursue many of its clients’ claims as a result of a
`discovery sanction and because, after the Judges held that IPG
`was not entitled to a “presumption of validity” for either its
`representative role or the validity of the royalty claims it
`proffered, IPG failed to establish for certain claims that it was
`a duly appointed agent pressing valid claims. IPG challenges
`the factual grounds for those determinations and contends they
`are so disproportionately harsh as to be an abuse of discretion.
`It also challenges as arbitrary the Judges’ final distribution
`
`
`
`
`
`3
`methodologies for allocating the royalties to all eligible
`claimants.
`
`We affirm the Copyright Royalty Judges on all three
`challenges: the revocation of the presumption of validity, the
`imposition of discovery sanctions, and the final distribution of
`royalties.
`
`I. Background
`
`
`A. Statutory Structure
`
`Congress has prescribed a centralized clearinghouse
`system for collecting royalty fees from anyone who retransmits
`a copyrighted television program and for distributing the fees
`to the program’s copyright holder. The Copyright Act allows
`cable and satellite operators to retransmit copyrighted
`programs without permission, requiring only that the operators
`deposit a statutorily prescribed royalty fee with the Register of
`Copyrights every six months for programs retransmitted during
`that period. See 17 U.S.C. § 111(c), (d) (cable); id. § 119(a),
`(b) (satellite). The Copyright Royalty Judges annually decide
`how to distribute the resulting pool of funds to the relevant
`copyright holders. Id. § 801(b)(3).
`
`Every July, copyright owners (or their agents) who assert
`entitlement to certain royalties for transmission of their
`programming during the preceding year file claims with the
`Judges. Id. § 111(d)(4)(A); 37 C.F.R. § 360.3. Each filing
`entity must certify that it is authorized to file the claim. See
`U.S. Copyright Royalty Judges, In re Distribution of 2004,
`2005, 2006, 2007, 2008, & 2009 Cable Royalty Funds, In re
`Distribution of 1999, 2000, 2001, 2002, 2003, 2004, 2005,
`2006, 2007, 2008, & 2009 Satellite Royalty Funds, Nos. 2012-
`6 CRB CD 2004-09 (Phase II); 2012-7 CRB SD 1999-2009
`
`
`
`
`
`
`
`4
`(Phase II), Memorandum Opinion and Ruling on Validity and
`Categorization of Claims 5 (Mar. 13, 2015) (Claims Ruling).
`Absent any challenge to that certification, the Judges afford the
`filed claim a “presumption of validity,” meaning they treat the
`claim as facially valid and the filer as duly authorized. Id. The
`Judges review these claims and “determine whether there exists
`a controversy concerning the distribution of royalty fees.” 17
`U.S.C. § 111(d)(4)(B). If there are no disputed claims, the
`Judges authorize the Librarian of Congress to distribute the
`fees to the claimants on a proportional basis. Id. Only if there
`is a controversy must the Judges conduct a proceeding to
`resolve disputes regarding the appropriate distribution. Id.
`
` A
`
` copyright royalty distribution proceeding has two
`phases. During Phase I, the claimants group themselves into
`categories based on the type of retransmitted broadcasting. See
`37 C.F.R. § 351.1(b)(2)(i)(B); id. § 351.1(b)(ii)(C). The two
`categories relevant here are “program suppliers” and
`“devotional” programming. Claims Ruling at 1. The Judges
`then calculate the total market value of all programming in each
`category during the relevant year and, based on its relative
`value, assign each category a percentage of the annual pool of
`royalty fees. See id. § 351.1(b)(2)(i)(B). During Phase II, at
`issue here, the Judges subdivide the fees due to a particular
`category among the individual claimants in that category. Id.
`
`Each phase follows the same set of procedures, designed
`to promote expeditious and amicable resolution among the
`claimants. After the Judges announce the commencement of
`distribution proceedings in the Federal Register, 17 U.S.C.
`§ 803(b)(1)(A)(i), claimants petition to participate, see id.
`§ 803(b)(1). A claimant may file an individual petition or join
`with other claimants and share representation. 37 C.F.R.
`§ 351.1(b)(2). The Act imposes a three-month “voluntary
`negotiation period” during which participating claimants must
`
`
`
`
`
`5
`attempt to reach agreement on their relative shares. 17 U.S.C.
`§ 803(b)(3).
`
`As to disputes the claimants are unable to resolve through
`negotiation, the Judges accept written submissions, oversee a
`period for discovery, and order a post-discovery settlement
`period. See id. § 803(b)(6)(C); 37 C.F.R. §§ 351.4-351.7. For
`Phase I, discovery usually
`involves expert
`testimony
`categorizing programs and their market shares. For Phase II,
`discovery involves both proof that individual claimants in fact
`represent the copyright holders and expert testimony proposing
`methodologies for subdividing fees among claimants in
`specific program categories.
` After
`the post-discovery
`settlement period, the Judges hear any remaining disputes and
`issue final determinations on the merits. See 17 U.S.C.
`§ 803(c)(1); 37 C.F.R. §§ 351.8-351.12. The Librarian of
`Congress publishes those determinations in the Federal
`Register and distributes the royalty fees accordingly. 17 U.S.C.
`§ 803(c)(6).
`
`B. Procedural History
`
`As noted at the outset, at issue here are royalty fees for
`retransmission of programming in the devotional and program
`suppliers categories by cable providers during 2004-2009 and
`by satellite providers during 1999-2009. There are three repeat
`players who claim to represent the copyright holders of
`programs retransmitted via both cable and satellite in these
`categories: Appellant IPG, claiming royalties for programs in
`both categories; Intervenors Settling Devotional Claimants
`(SDC), claiming only for devotional programming; and
`
`
`
`
`
`
`
`6
`Intervenors Motion Picture Association (MPA),1 claiming only
`in the program suppliers category.
`
`
`1. The claims validity hearings
`
`
`
`IPG, the SDC, and MPA did not participate in the Phase I
`proceedings but successfully petitioned to participate in Phase
`II. See 78 Fed. Reg. 50,113, 50,114 (Aug. 16, 2013) (cable
`retransmissions); 78 Fed. Reg. 50,114, 50,115 (Aug. 16, 2013)
`(satellite retransmissions).
` On December 8, 2014, the
`Copyright Royalty Judges held a five-day evidentiary hearing
`to resolve disputes over the validity and categorization of
`claims. They heard live testimony from five witnesses and
`admitted 180 exhibits.
`
`
`a. Presumption of validity
`
`
`
`The SDC argued that IPG should be disqualified from
`participating, or at least denied the presumption of validity,
`because one of the claims advanced by IPG was a fraudulent
`one on behalf of “Tracee Productions,” a fictitious entity. IPG
`had purported to represent Tracee Productions in an earlier
`proceeding and the Copyright Royalty Judges denied IPG’s
`proffered claims the presumption of validity. In response to the
`fraudulent Tracee Productions claim in the proceeding at issue
`here, the Judges stopped short of debarring IPG from
`representing claimants, instead again denying a presumption of
`validity to IPG’s certification of its authority to represent
`claimants. The Judges based that decision on two grounds:
`IPG’s failure to purge its filing of false claims and the Judges’
`
`
`1 The Motion Picture Association was formerly the “Motion Picture
`Association of America,” or MPAA. The Judges and other parties
`commonly refer to it this way, although the correct term now seems
`to be “MPA.” See Intervenors’ Br. i.
`
`
`
`
`
`7
`sua sponte conclusion that Raul Galaz, IPG’s principal witness,
`gave false testimony concerning a document IPG produced in
`discovery.
`
`
`The fraudulent “Tracee Productions” claim has a history
`in which Galaz played a prominent role. Galaz in 2002 was
`criminally convicted of defrauding the Copyright Office in
`order to obtain cable retransmission royalties belonging to
`others, and among the criminal acts to which he admitted was
`fraudulent filing in several proceedings on behalf of the
`nonexistent “Tracee Productions.” See U.S. Copyright Royalty
`Judges, In re Distribution of 1998 and 1999 Cable Royalty
`Funds, No. 2008-1 CRB CD 98-99 (Phase II), Ruling and
`Order Regarding Claims 3 (June 18, 2014) (2014 Claims
`Ruling); Judgment and Commitment, United States v. Galaz,
`No. 02-cr-230 (HHK) (D.D.C. Dec. 23, 2002). Before that
`fraud came to light, Galaz had filed a fraudulent claim on
`behalf of Tracee Productions as part of his claims to the 1999
`cable royalty funds for devotional programming. 2014 Claims
`Ruling at 3. The fraudulent 1999 filing was not part of his
`criminal conviction but, by the time the Phase II proceedings
`for the 1998 and 1999 cable royalty funds for devotional
`programming commenced in 2008, the facts surrounding
`Galaz’s conviction were available to the Copyright Royalty
`Judges and IPG had not withdrawn the fraudulent Tracee
`Productions filing. The Judges therefore denied IPG the
`presumption of validity in the 1998 and 1999 proceedings
`because of its failure to withdraw its 1999 fraudulent Tracee
`Productions claim before or during those proceedings. Id. at 5-
`11. In the instant proceedings, the Judges found especially
`troubling IPG’s proffer of a Tracee Productions claim in its
`1999 satellite retransmission filing because the 1998 and 1999
`proceedings put it on notice that it must purge Tracee
`Productions from its claim submissions.
`
`
`
`
`
`
`8
`The Judges’ second ground for denying the presumption
`of validity was Galaz’s false testimony about IPG’s 2008
`satellite claims filing. IPG filed separate lists of claims for
`satellite retransmissions and cable retransmissions. It argued
`that both lists of claims were identical. But while IPG
`produced in discovery a copy of its cable claim with
`consecutive numbers of 1 to 10, it produced a copy of its
`satellite claim that appeared incomplete, as indicated by pages
`numbered 1 to 3 and 6 to 8. Noting the missing pages, MPA
`and the SDC had moved to dismiss the claims of the 39
`claimants listed on the cable claims filing but not included in
`the satellite claims filing. When questioned at the claims
`hearing, Galaz sought to blame the Copyright Royalty Board
`(CRB or the Board)2 for the missing pages. He testified that he
`personally had gone to the Board’s records office to obtain a
`copy of the claims filing and received from the Board in its
`incomplete condition the version that IPG produced in
`discovery. See Claims Hrg. Tr. vol. 2, 104:18-105:16. Galaz
`testified that he was “certain” IPG had originally filed a
`complete version with the Board, and that it was the Board that
`had lost the missing pages after IPG filed its claims but before
`Galaz retrieved the copy from the Board that (Galaz testified)
`IPG then produced in discovery in the Phase II proceeding. Id.
`vol. 5, 201:8.
`
`The Judges concluded that Galaz testified falsely because
`the evidence showed that the incomplete copy he claimed to
`have received from the Board and that IPG submitted in
`discovery could not in fact have come from the Board. The
`Copyright Royalty Board inscribes a sequential number on the
`first page of any received claims filing. MPA obtained a
`
`
`2 The Copyright Royalty Board is the institutional entity in the
`Library of Congress that houses the Copyright Royalty Judges and
`their staff. 37 C.F.R. § 301.1.
`
`
`
`
`
`9
`certified copy of the claims filing from the Board and produced
`it in discovery. The copy submitted by IPG in discovery and
`the certified copy obtained by MPA from the Board, both
`lacking pages 4 and 5, differed in only one respect: MPA’s
`Board-certified copy contained a handwritten “193” on the first
`page, whereas the copy IPG produced did not. Claims Ruling
`at 8. The Judges therefore concluded that Galaz could not have
`received the incomplete version submitted by IPG from the
`Board’s files, because a true copy would have included the
`Board’s handwritten number, as shown by the certified copy
`obtained by MPA. Instead, the Judges concluded, Galaz must
`have received it elsewhere, “most likely IPG’s own records.”
`Id. On that basis, the Judges concluded that IPG had failed to
`submit claims on which it later sought to recover, and that
`Galaz testified falsely to the contrary.
`
`IPG filed a motion for modification to contest the Judges’
`conclusion that Galaz gave false testimony by submitting
`Copyright Royalty Board records that contained certain
`irregularities. The Judges rejected the motion, noting that
`IPG’s new evidence showed that the Board placed numbers on
`each of 237 satellite claim filings from 2008, so did “nothing
`more than prove the point: the CRB numbers every claim that
`it accepts for filing.” U.S. Copyright Royalty Judges, In re
`Distribution of 2004, 2005, 2006, 2007, 2008, & 2009 Cable
`Royalty Funds, In re Distribution of 1999, 2000, 2001, 2002,
`2003, 2004, 2005, 2006, 2007, 2008, & 2009 Satellite Royalty
`Funds, Nos. 2012-6 CRB CD 2004-09 (Phase II); 2012-7 CRB
`SD 1999-2009 (Phase II), Order on IPG Motions for
`Modification 2 (Apr. 9, 2015) (Modification Ruling I).
`
`
`b. Discovery sanction
`
`The SDC also argued that IPG’s royalty claims on behalf
`of Creflo Dollar Ministries (Creflo Dollar), Benny Hinn
`
`
`
`
`
`
`
`10
`Ministries (Benny Hinn), and Eagle Mountain International
`Church, dba Kenneth Copeland Ministries (Eagle Mountain),
`should be struck as a discovery sanction for IPG’s failure to
`produce to the SDC a particular email responsive to an SDC
`discovery request. The SDC sought correspondence between
`IPG and devotional programming claimants relating to
`representation agreements. The withheld 2005 email, from a
`lawyer named David Joe to an IPG representative, concerns
`representation agreements between Joe’s “clients” and IPG. E-
`mail from David R. Joe, Brewer Anthony & Middlebrook PC,
`to Annie Lutzker, et al. (Nov. 23, 2005) (J.A. 2037).
`
`The parties dispute whether Joe is in fact an agent of any
`relevant “clients,” but whether or not these producers are
`accurately described as Joe’s “clients,” this email appears to
`refer to agreements between IPG and Benny Hinn, Creflo
`Dollar, and Eagle Mountain. In the email itself Joe described
`the “matter at hand” as “the 1999 cable distribution,” and
`identified the agreements that were “the subject of this
`discussion” as “the sole agreement with Hinn and Creflo, and
`the second of two agreements with Copeland.” Id. Joe wrote
`that “I could easily support the position that these agreements
`are not in effect because they have been breached, if you think
`they have not been unequivocally terminated,” and noted that
`any plan on IPG’s part to represent these clients at the
`distribution proceeding “needs to be put to rest immediately,
`and after it is, you should, in all candor, expect that the
`termination provisions will be invoked.” Id.
`
`The SDC claimed that the email was responsive to its
`discovery request. The Judges agreed, finding that IPG had
`failed to produce discovery “relating to claimants’ attempted
`termination(s) of IPG’s agency,” and disallowed IPG’s claims
`on behalf of the mentioned claimants, Creflo, Benny Hinn, and
`Eagle Mountain. Claims Ruling at 39. In contrast to the denial
`
`
`
`
`
`11
`of the presumption of validity, which was not a sanction but a
`refusal to afford IPG a presumption that its conduct suggested
`it did not deserve, the Judges dismissed these claims as a
`sanction for IPG’s discovery violation.
`
`IPG twice moved to modify the discovery sanction,
`arguing that the email was irrelevant and the sanction too harsh.
`The Judges twice denied IPG’s motions, bolstering their
`decision by identifying additional discovery requests to which
`the email was responsive, yet was never produced.
`
`
`2. Distribution methodologies hearings
`
`From April 13 to 17, 2015, the Judges held another hearing
`in which they received evidence and expert testimony
`regarding appropriate distribution methodologies for the
`royalties in the program suppliers and devotional programming
`categories. MPA offered a methodology for computing
`relative royalty shares in the program suppliers category, the
`SDC offered one for the devotional programming category, and
`IPG submitted a methodology that it contended should be used
`for both categories. The Judges faulted MPA and the SDC’s
`methodologies as supported by insufficient data, and faulted
`IPG’s methodology for “its reliance on volume, time of day,
`fees paid and number of subscribers as measurements of value”
`U.S. Copyright Royalty Judges, In re Distribution of 2004,
`2005, 2006, 2007, 2008, & 2009 Cable Royalty Funds, In re
`Distribution of 1999, 2000, 2001, 2002, 2003, 2004, 2005,
`2006, 2007, 2008, & 2009 Satellite Royalty Funds, Nos. 2012-
`6 CRB CD 2004-09 (Phase II); 2012-7 CRB SD 1999-2009
`(Phase II), Order Reopening Record and Scheduling Further
`Proceedings 6 (May 4, 2016) (Order Reopening Record). The
`Judges declined to adopt any of the offered methodologies and
`directed that the record be reopened. Id. at 8. The Judges “set
`aside” all submissions, evidence, and testimony from the April
`
`
`
`
`
`
`
`12
`2015 hearing and ordered the parties to submit new evidence
`for a new hearing. Id.
`
`On motion from MPA and the SDC, the Judges excluded
`all of IPG’s evidence from the new hearing for two reasons:
`First, IPG asserted without explanation that its sole witness,
`economic expert Dr. Cowan, could not appear at the hearing
`and so would not be subject to cross-examination. Second, the
`Judges’ rules require that a party wishing to rely on the
`testimony of a witness from a prior proceeding must designate
`the complete testimony of that witness and include a copy of it,
`37 C.F.R. § 351.4(b)(2), but IPG failed to do so. IPG’s only
`evidence aside from Dr. Cowan’s written testimony consisted
`of citations to testimony from witnesses in past distribution
`proceedings. IPG failed to include transcripts of the designated
`testimony, in violation of the Judges’ rules. See Final
`Distribution Determination: Distribution of 2004, 2005, 2006,
`2007, 2008, and 2009 Cable Royalty Funds; Distribution of
`1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008,
`and 2009 Satellite Royalty Funds, 84 Fed. Reg. 16,038, 16,040
`(Apr. 17, 2019) (Final Distribution Determination). The
`Judges nevertheless allowed IPG to use Dr. Cowan’s written
`testimony and IPG’s other exhibits in cross-examining MPA
`and the SDC’s witnesses. Id. The Judges denied MPA and the
`SDC’s motion for summary disposition, instead conducting a
`hearing with live testimony to afford IPG the opportunity to
`cross-examine the witnesses. Id.
`
`Following the new hearing in the reopened proceeding, the
`Judges concluded that MPA and the SDC had fixed the paucity
`of data identified in the earlier hearing. Id. at 16,043, 16,046.
`The Judges adopted MPA’s methodology and proposed
`percentages for the program suppliers category, id. at 16,045,
`and adopted the SDC’s for the devotional category, id. at
`16,048.
`
`
`
`
`
`13
`
`II. Analysis
`
`
`A. Standard of Review
`
`
`
`We review decisions of the Copyright Royalty Judges to
`determine whether they are arbitrary, capricious, contrary to
`law or unsupported by substantial evidence. See 17 U.S.C.
`§ 803(d)(3) (incorporating by reference 5 U.S.C. § 706). “Our
`review
`is
`‘highly deferential.’”
` Settling Devotional
`Claimants v. CRB, 797 F.3d 1106, 1114 (D.C. Cir. 2015)
`(quoting Intercollegiate Broad. Sys., Inc. v. CRB, 571 F.3d 69,
`79 (D.C. Cir. 2009)). Objections to the Judges’ procedural and
`evidentiary orders “merge[] into and [are] reviewable” as part
`of the final determination. Id.. We review the Judges’
`determinations
`that a claimant violated
`its discovery
`obligations “with ‘extreme deference’ because the ‘conduct
`and extent of discovery in agency proceedings is a matter
`ordinarily entrusted to the expert agency in the first instance.’”
`Indep. Producers Grp. v. Librarian of Cong., 792 F.3d 132,
`138-39 (D.C. Cir. 2015) (quoting Hi-Tech Furnace Sys., Inc. v.
`FCC, 224 F.3d 781, 789 (D.C. Cir. 2000)). When reviewing
`royalty
`distribution
`decisions,
`including
`distribution
`methodologies, “we ask only whether the Royalty Judges’
`assigned allocation percentages are ‘within a zone of
`reasonableness.’” Settling Devotional Claimants, 797 F.3d at
`1114 (quoting Christian Broad. Network, Inc. v. Copyright
`Royalty Tribunal, 720 F.2d 1295, 1304 (D.C. Cir. 1983)).
`
`B. Presumption of Validity
`
`IPG does not question the Judges’ authority to determine
`when the presumption of validity applies, but challenges their
`withholding of the presumption here as an abuse of discretion
`for want of substantial evidence that Galaz lied. IPG further
`contends that it received constitutionally inadequate process to
`
`
`
`
`
`
`
`14
`contest the denial of the presumption that it was an authorized
`representative pressing valid claims.
` Neither of these
`arguments has merit.
`
`IPG produced evidence that the Copyright Royalty Board
`sometimes makes mistakes, but nothing called into question the
`evidence that the Board numbered every satellite filing it
`received for 2008, the IPG filing on record with the Board
`contained such numbering, and the version IPG produced did
`not. IPG identifies a handful of instances in which the Board
`lost an entire filing or failed to number one, and it is certainly
`“not inconceivable over the course of six years for the [Board]
`to have misplaced a handful of pages from a single claim filed
`by IPG.” Appellant’s Br. 46 (emphasis added). But the
`mismatch between the claims number on the Board’s certified
`copy of IPG’s claims and that number’s absence on the copy
`produced by IPG is substantial evidence of the falsity of
`Galaz’s testimony that IPG originally filed a complete copy,
`and only received the incomplete copy in discovery from the
`Board.
`
`The Judges’ decision to deny IPG the presumption of
`validity based on Galaz’s false testimony and the fraudulent
`Tracee Productions claim was not so severe as to be an abuse
`of discretion. The presumption allows efficient distribution of
`royalties; without it, the Judges would have to verify agent-
`client
`relationships
`and make
`copyright-ownership
`determinations for each filer seeking copyright royalties.
`When they are able to rely on the presumption, the Judges need
`only resolve the particular disputes, if any, that parties may
`raise concerning the distribution of royalty fees. The relative
`efficiency of such a system requires the good faith of its
`participants but is seriously threatened by fraud or other abuse
`of the presumption. The system accommodates the Judges’
`excuse of good-faith mistakes, but it certainly does not require
`
`
`
`
`
`15
`the Judges to treat every irregularity as a good-faith error. The
`Judges’ denial of the presumption to claims pressed by
`claimants who appear not to have acted in good faith and, in
`the absence of evidence supporting claims bereft of the
`presumption, their grant of royalties only to unquestioned
`claims and claimants is reasonable and non-arbitrary.
`
`The only effect on IPG of the Judges’ setting aside the
`presumption was to place a burden on IPG to establish its
`authority to represent the copyright holders on whose behalf it
`claimed royalties. “To maintain the viability of this claims
`distribution process,
`to preserve
`the reliability of
`the
`information presented to the Judges and to prevent the abuse of
`asymmetric information by participants, the elimination of the
`presumption of prima facie validity as to the claims IPG
`purports to represent constitutes a measured and proper
`response.” 2014 Claims Ruling at 11. Indeed, the Judges’
`response was mild in view of IPG’s repeat filing of fraudulent
`claims for a “client” previously found to be fictional and
`Galaz’s obfuscatory testimony about IPG’s faulty filing. IPG’s
`loss of a large number of claims is no draconian sanction but
`rather the predictable and reasonable result of IPG’s failure to
`document its authority to represent the copyright holders, its
`failure to file a complete set of claims on their behalf, and
`Galaz’s attempt to cover up the latter failure by blaming the
`Board.
`
`There is no question here that the process IPG received
`was constitutionally adequate. IPG received notice that the
`presumption might be denied from both the MPA and the
`SDC’s written submissions requesting that relief. IPG had the
`opportunity at a hearing to testify and present evidence in
`support of its position. The Judges further considered IPG’s
`position as urged in its motion for modification. IPG had all
`
`
`
`
`
`16
`the process it was due. See Indep. Producers Grp., 792 F.3d at
`139 n.5.
`
`C. Discovery Sanction
`
`IPG argues that its failure to produce the David Joe email
`was not a violation of any discovery obligation and that, even
`if it were, the sanction of dismissing the claims of the three
`producers IPG purported to represent was an abuse of
`discretion. It also argues that the Judges could not, consistent
`with due process principles, impose anything other than a
`monetary sanction without prior notice to IPG and a finding of
`prejudice to the SDC. We hold that the sanction, while harsh,
`was not arbitrary and capricious and did not violate due
`process.
`
`Because the Copyright Royalty Judges are closer to the
`facts at hand and better able to determine what may or may not
`fall within
`the scope of discovery, we review
`their
`determinations that a claimant has violated its discovery
`obligations with “extreme deference.” Indep. Producers Grp.,
`792 F.3d at 142 (quoting Hi-Tech Furnace Sys., 224 F.3d at
`789). Even viewing their ruling without such deference, it is
`plain that the David Joe email is responsive to several of the
`SDC’s discovery requests. For example, the SDC’s Document
`Request Number Six requested “copies of all correspondence
`between IPG and Claimants with respect to the Devotional
`Representation Agreements,” U.S. Copyright Royalty Judges,
`In re Distribution of 2004, 2005, 2006, 2007, 2008, & 2009
`Cable Royalty Funds, In re Distribution of 1999-2009 Satellite
`Royalty Funds, Nos. 2012-6 CRB CD 2004-09 (Phase II);
`2012-7 CRB SD 1999-2009 (Phase II), Settling Devotional
`Claimants’ Written Rebuttal Statement on Claims Issues Only
`15-16 & n.4 (Oct. 15, 2014) (SDC Written Rebuttal Statement),
`and the SDC’s Follow-Up Request Number Six requested
`
`
`
`
`
`
`
`17
`documents “relating to termination or attempted termination of
`IPG by any claimant,” Modification Ruling I at 5 n.5. Whether,
`as IPG contends, the David Joe email itself announced no
`termination or attempted termination is beside the point; the
`is clearly a communication “relating
`to” IPG’s
`representation agreements and their potential termination. As
`the Judges noted, the very purpose of requesting all documents
`“relating to” a disputed issue is that “[t]he producing party
`does not make a judgment call regarding what evidence might
`be probative, persuasive, or admissible.” Id. at 4. IPG’s failure
`to produce a plainly responsive document, even accounting for
`IPG’s own reading of the document as ultimately exculpatory,
`was a blatant discovery violation.
`
`Whether the imposed sanction was reasonable presents a
`closer question. We evaluate the choice of sanction under the
`same standards by which we judge other administrative
`actions, reversing only if—taking account of the nature of their
`authority and the context in which they have exercised it—
`“their decision is arbitrary, capricious, contrary to law, or not
`based on substantial evidence.” Settling Devotional Claimants,
`797 F.3d at 1114 (citation omitted). It is not for us to determine
`whether the Copyright Judges’ choice was the one we also
`would have taken. Just as they are equipped to make the factual
`determination as to whether a discovery violation has occurred,
`the Judges are better positioned to evaluate the appropriate
`severity of a sanction in the context of the discovery violation’s
`impact on the participants and the overall proceeding.
`
`IPG submits various inadmissible estimations of the
`proportion of the royalties to which these three producers might
`otherwise have been entitled, but the Copyright Royalty Board
`does not dispute that the dismissal of their claims was a
`substantial loss to IPG. IPG contends that, under the standard
`applicable when a district court dismisses a litigant’s claims as
`
`
`
`
`
`18
`a discovery sanction, the Judges’ sanction was invalid. In civil
`litigation in federal court, a sanction of claim dismissal must be
`justified by “(1) prejudice to the other party, (2) prejudice to
`the judicial system requiring the district court ‘to modify its
`own docket and operations to accommodate the delay,’ [or]
`(3) the need ‘to sanction conduct that is disrespectful to the
`court and to deter similar conduct in the future.’” Butera v.
`District of Columbia, 235 F.3d 637, 661 (D.C. Cir. 2001)
`(quoting Webb v. District of Columbia, 146 F.3d 964, 971
`(D.C. Cir. 1998)); see also id. (noting district court authority to
`sanction pursuant to Federal Rule of Civil Procedure 37(b)(2)
`and the court’s inherent power to protect the integrity of the
`judicial process).
`
`We do not think that standard is applicable here. The
`discovery and sanctions regime in federal district courts is
`materially different from discovery and claim verification in
`distribution proceedings under the Copyright Act. The
`Copyright Royalty Judges do not derive their sanctioning
`power from authorities governing Article III courts; instead,
`Congress empowered these specialist Judges to supervise
`disbursement of broadcast royalties. The Act empowers the
`Judges to “make any necessary procedural or evidentiary
`rulings” in the royalty proceedings. 17 U.S.C. § 801(c). And
`their “plenary grant of adjudicative authority” includes power
`to impose “sanctions when necessary to ensure fairness and
`maintain [the] integrity” of the copyright claims process.
`Indep. Producers Grp., 792 F.3d at 138 n.4 (citing Atl.
`Richfield Co. v. Dep’t of Energy, 769 F.2d 771, 775, 795-96
`(D.C. Cir. 1985)). In contrast to litigation in federal court, the
`copyright royalties distribution process is largely clerical,
`designed to enable good-faith participants to recover their
`royalties through a streamlined, amicable, administrative
`procedure. The administrative hearings backst
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