Hollywood Docket: Megaupload Wants Dismissal; News Corp. Sued by Shareholders

A roundup of legal news in the entertainment industry.
Kim Dotcom

Megaupload's attorney says that the U.S. government can't proceed with its criminal prosecution against the company because it hasn't served papers -- and can't -- to the foreign company.

The filing came on May 30 in Virginia federal court and says, "A corporation such as Megaupload cannot be brought within the jurisdiction of this Court for criminal proceedings absent its consent."

VIDEOS: 6 Outrageous Kim Dotcom Moments

The reason cited by Megaupload's lawyers is that the Federal Rules of Criminal Precedure have specific requirements for serving a criminal summons on corporate defendants. A motion to dismiss the case against Megaupload says that on January 5, U.S. authorities indicted Megaupload, seized all its assets and forced "the company into extinction without serving—or even attempting to serve—the company in any way, shape or form."

Arrest warrants were later issued to Megaupload's employee-defendants including leader Kim Dotcom, but allegedly not the company itself. A possible reason? "The Federal Rules do not contemplate service of a criminal summons on a wholly foreign corporation without an agent or offices in the United States," says the motion.

If Megaupload is dismissed from the case, Dotcom and others could still potentially be extradited and brought to trial, but the company itself might escape. Attorneys for Megaupload have been attempting to regain seized assets for months.

In other entertainment law news:

  • News Corp. has been hit with another shareholder lawsuit. A new proposed class action in Delaware court comes from a Swedish pension firm that wants to enjoin the company from suspending half of the voting rights of its non-American shareholders. The company announced the changes in April in an effort to come into compliance with the Federal Communications Act limiting foreign investor ownership in broadcast stations to 25 percent. The shareholders suing insist the move was really made for the benefit of the Murdochs.
  • A judge is allowing the Authors Guild as well as a group representing photographers to pursue a class action over the Google's scanning of books. The web giant had argued that the Author's Guild had lacked standing and raised a procedural issue over the relief sought. The company believed that individual book authors needed to show infringement and proof of damage, but the judge says, "it would be unjust to require that each affected association member litigate his claim individually."
  • Wayne Newton has struck back after being sued by a developer for fraud, sexual harassment, and mistreatment of animals at the singer's 40-acre Las Vegas estate. Steve Kennedy allegedly purchased the estate in 2010 and wants to turn the home into a museum. Newton has been unwilling to move out and now has gotten a judge to issue a restraining order against Kennedy.
  • That was quick: We're told that the lawsuit filed last week against Netflix and Relativity over the distribution on home video of the 2011 film Atlas Shrugged has settled. Terms are not being disclosed.