This is an interesting article in that it appears to attempt to put a pro-RIAA spin on this whole debacle.
The verdict in the first case was thrown out in part because the judge (as of his own statements) deemed the penalty imposed to be excessive and cruel. The jury in this case is supposed to be awarding compensatory damages, not punitive, which means it should reflect the real harm done.
It's not illegal to have mp3's on your computer. It's not even illegal to make those mp3's available, although the RIAA is trying to create a precedent for that. What's illegal is the actual distribution. It's a fine point, perhaps, but I believe it's an important one. The 'making available' argument is ludicrous -- under that precedent, Google can be sued if a page they link to contains copyrighted material.
Jammie Thomas is not the best example of a doe-eyed innocent and therefore not the best case to rally around. Other evidence not mentioned within this article indicates a strong possibility that she may be guilty of perjury, among other things. Regardless, if she settles it'll likely be because she can't afford to continue litigation, given that the odds of this verdict standing are slim to none.
The RIAA is engaging Mediasentry as a private watchdog to help them prosecute, which may also be illegal. Whether or not Mediasentry has the right to take the investigative tactics they have is a question that's still in doubt, although it would appear that for the purposes of Ms. Thomas' case their evidence is being allowed.
They can't fabricate a case, because there are lawyers on both side of the argument and court proceedings are a matter of public record. They have to have an actual case that goes to trial and results in a victory. Thomas makes for a good candidate, precisely because she's not a terribly sympathetic character. The decisions clearly show this.
The part that really baffles me in all this is that it seems to me that regardless of the decision, the major labels still lose. They're attempting to litigate technology out of existence. History shows that this simply doesn't work, but rather than adapt to the new landscape, they keep trying to fight progress. I find it difficult to imagine that so many people could be so ignorant, yet the evidence is right in front of me.
Further reading:
Copyrights & Campaigns: The Jammie Thomas Re-trial: Frequently Asked Questions
Recording Industry vs. The People