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Bell, Rogers & MPA’s Pirate IPTV Lawsuit is a Slow-Motion Money Pit Nightmare
After obtaining an injunction and an invasive search and seizure order at Canada's Federal Court, teams from Bell, Rogers, Disney, Paramount, Columbia, and Warner Bros. targeted the alleged operators of IPTV service SmoothStreams at their homes in Canada. The defendants were charged with contempt of court when they failed to comply with the terms of the order. Two years later, the defendants are paying a heavy price and the main case hasn't even started.
Pirate IPTV providers have a tendency to come and go, and some struggle to provide consistently high-quality streams.
Through reliability, stability and quality, subscribers were attracted to the SmoothStreams brand; the availability of masses of unlicensed content was obviously the main reason to stay.
SmoothStreams had been under investigation since 2018 and in the summer of 2022, major entertainment industry companies were at Canada’s Federal Court aiming to bring it all crashing down.
After filing a complaint mid-June, by the end of the month Bell Media, Rogers Media, Columbia Pictures, Disney Enterprises, Paramount Pictures, Universal City Studios, Universal City Studios Productions, and Warner Bros., had the permission they needed.
An interim order containing an interim injunction, required SmoothStreams’ alleged operators, Marshall Macciacchera and Antonio Macciacchera, to shut down the entire SmoothStreams system and hand control of its infrastructure to an independent supervising solicitor (ISS).
The order enjoined the men from dissipating, transferring, or concealing assets, and required them to authorize banks and other financial entities to disclose details of their assets. Court authorization, which allowed the plaintiffs to search premises linked to Marshall and Antonio and seize evidence – without having to give any prior warning – arrived courtesy of a controversial Anton Piller order.
Details of the operation, which spanned the homes of the defendants and other locations, appear in our earlier coverage.
Yet despite those events taking place over two years ago, the lawsuit against Marshall and Antonio Macciacchera (dba SmoothStreams), plus companies allegedly under one or the other’s control – Arm Hosting Inc., Star Hosting Limited, and Roma Works Limited – has thus far focused on the alleged conduct of the defendants during the raids, not necessarily the alleged conduct that led to the raid taking place.
Contempt of Court (Antonio): Serious and Expensive
As reported late 2023, after failing in various ways to comply with the Court’s orders in 2022, both defendants faced the prospect of being held in contempt.
By “steadfastly refusing” to permit the Independent Supervising Solicitor (ISS) to enter his home and execute the order, and after he “deliberately deprived the plaintiffs of the element of surprise,” on December 13, 2023, Antonio Macciacchera was found in contempt of court and ordered to pay the plaintiffs over US$70,800 in legal fees and other costs.
Even before this decision, the costs of defending the lawsuit in general were clearly taking their toll. Precise figures are unknown but even if close to the costs being incurred by the plaintiffs, legal bills of hundreds of thousands of dollars are a massive burden for most defendants. For the plaintiffs, still relatively small change, when all things are considered.
Marshall Macciacchera, who is said to have controlled SmoothStreams support companies Arm Hosting Inc., Star Hosting Limited (Hong Kong), and Roma Works Limited (Hong Kong), faced allegations that he failed to comply with the terms of the order which contained, among other things, the Anton Piller order and a range of injunctive relief.
An order handed down by Justice Rochester at the Federal Court in Ontario last month, made available to the public in the last few days, paints a grim picture of what has become a slow-motion nightmare for all parties, and a potentially ruinous money pit for the defendants.
Contempt of Court (Marshall): Serious and Horrendously Expensive
Following the execution of the interim order in 2022, the plaintiffs sought an order charging Marshall Macciacchera, and three of the corporate defendants (Arm Hosting Inc., Star Hosting Limited, and Roma Works Limited) with contempt for refusing to comply with many aspects of the order.
Justice Rochester describes Marshall as the president of Arm Hosting Inc. and the sole director of the other companies [corporate defendants]. In 2022, Justice Lafrenière concluded that Marshall and the corporate defendants had, on a prima facie basis, failed to comply with the order by “deliberately failing to make the required financial disclosures, refusing to answer numerous questions regarding their assets, various login credentials, and certain unauthorized streaming services.”
Marshall and the corporate defendants were charged and a contempt hearing took place in April 2023 before Justice Rochester, with further submissions filed up until January 2024.
Defendants Alleged Bias
The plaintiffs alleged that the defendants “lied, concealed and attempted to conceal evidence” and all remained in breach.
The defendants appear to have built their defense on the alleged misconduct of the independent supervising solicitor; searches that “robbed” Marshall of his dignity, allegations that the ISS is not independent but is biased and therefore lacks integrity, met similar claims including doubts over expert evidence, even suggestions that the Court may not be impartial.
These allegations were examined in detail, but it’s clear from the order they were poorly received.
“The Charged Defendants have failed to call into question ISS Drapeau’s independence and integrity. There is no indication that anything untoward occurred, despite the Charged Defendants attempts to make it appear that way,” Justice Rochester’s order reads.
“Allegations of bias or a lack of independence against a member of the legal profession acting as an independent supervising solicitor should not be made lightly. Such allegations strike at the very core of the duties incumbent on an ISS. In the present case, I consider that not only were they made lightly, considerable Court time was used seeking to call into question the integrity of ISS Drapeau when there was no foundation for doing so.”
Allegations that the Court acted with “partiality, unfairness, and in essence, bias,” faired no better. Justice Rochester notes that the defendants provided “no cogent evidence” and relied on “bald allegations” instead.
Breaches of the Interim Order
Justice Rochester’s 80-page order is detailed; in respect of the details surrounding the execution of the order in 2022, oftentimes excruciatingly so for the defense. The full order is linked below and the Judge’s key findings follow:
• Marshall failed to disclose the required technical information associated with SSTV Services
• Defendants failed to provide credentials for the required accounts, domains, subdomains and servers
• Marshall provided login credentials for the registrar account of armhosting.ca
• Marshall did not provide credentials for live247.tv or credentials for the Live247 streaming server
• Court satisfied that Marshall is able to access the required credentials to comply with the order
• Marshall intentionally failed to disclose information relating to the two Hong Kong companies
• Star Hosting Limited and Roma Works Limited intentionally failed to comply
• Marshall intentionally failed to disclose assets, accounts, and details of overseas cryptocurrency
• Marshall intentionally failed to disclose his computer password
“Having found that the requisite elements of contempt have been established beyond a reasonable doubt, I nevertheless retain a discretion to find the Charged Defendants not guilty of contempt,” Justice Rochester notes.
“I am not satisfied that a finding of guilt would be an injustice in the present case.”
Costs and Penalties
Having found the defendants guilty of contempt of the interim order, the next stage is a hearing to determine the appropriate penalty. But before that takes place, the issue of the plaintiff’s costs needed to be addressed.
“The Plaintiffs seek an all-inclusive lump sum in the amount of $375,312.93 [~US$277,000], payable forthwith, comprised of (i) 50% of their total legal fees incurred for the contempt proceedings; and (ii) their reasonable disbursements,” the order reads.
When deciding the actual amount to be awarded, many factors are considered, including the conduct of the parties involved. The defendants argued they should pay no costs given the manner in which the interim order was executed. Justice Rochester’s order delivers the bad news in a paragraph (item 6).
The Charged Defendants are, jointly and severally, liable to the Plaintiffs for costs, payable forthwith, in a lump sum amount of $375,312.93, which is inclusive of legal fees, disbursements, and taxes thereon.
With costs of US$277,000 for contempt alone and the “appropriate penalty” yet to be decided, how this case continues to its ultimate conclusion is currently unknown.
SmoothStreams reportedly made around US$1.1 million per year, which sounds like a lot, at least until the unknown costs of the next year, or years, are factored in.
