It is unfair, but it will cost you far more than $919.32 to fight it. If you are intent on not paying the $919.32, the you might try this, but keep in mind, that the goal of counsel is to protect their client's copyrights and trademarks, so they do not need to compromise. Write a certified letter, explaining that you do not have $919.32, that you purchased the item from seller ID No. on EBAY, and provide proof; that you had no idea the set was counterfeit, and am surprised to hear that because the labels appeared authentic, the discs played perfectly, and you paid a fair price. State that you agree never to sell a Zumba product on or off ebay, and that you would be happy to put that in writing, but that you sell on ebay to make ends meet, and you just can't pay them. Maybe it will work.
Copyright and trademark infringement are "strict liability" offenses, which means that what you knew and intended and didn't know and didn't intend doesn't matter at all. And it may feel unfair, but consumers are responsible for knowing what they sell, and IP owners can hold sellers liable if they infringe. So while you may be an "innocent" infringer, and you didn't make any claims about genuineness, you're still an infringer who sold a counterfeit product, and the courts have wide discretion in imposing damages against infringers.
The firm you're dealing with, Johnson & Pham, who represents Zumba, knows, even if they didn't buy your 1 copy and have it examined for authenticity, that you're an infringer because they know when the Zumba company made and sold authentic Zumba products, and they know that yours aren't authentic and you still bought it (which isn't illegal) and then re-sold that same counterfeit copy (which is a violation of federal law), thus impacting their client's legitimate market for the sales and putting these fakes in the market which of of course they're trying very aggressively to stop.
$919.32 does seem like a lot for 1 sale and some large multiple of your actual profit on the sale, but they want to make sure to punish you enough to make you stop. Ypou can try to negotiate them down to something more reasonable, and agree as they want not to sell their products again. Make sure any settlement paperwork you sign says that they ALLEGE it's counterfeit, and admit no liability, but simply a settlement to avoid the expense and uncertainty of litigation.
PLEASE READ THIS BEFORE YOU COMMENT, EMAIL ME OR PHONE ME. I'm only licensed in CA. This answer doesn't make me your lawyer, and neither do follow-up comments and/or emails and/or phone calls, and you shouldn't expect me to respond to your further questions if you haven't hired me. We need an actual agreement confirmed in writing before any attorney-client relationship is formed. This answer doesn't constitute legal advice, and shouldn't be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue.
Here is your problem---you broke the law when you sold a fake box set of Zumba DVDs on e--bay. Further, I disagree with my colleague one one point---you also broke the law when you purchased these fake DVDs on e-bay. You say you that the goods were counterfeit, but this misses the point. You also did not know that the goods were authentic. Anyone who buys and sells goods on e-bay or from any other source has a duty to make sure that the goods that you buy are authentic. One step that a buyer can take is to require the seller to warrant and represent as party of a written agreement that the goods are authentic and to agree to indemnify and defend you if you get sued by the copyright owners for infringement. If the seller is a legitimate business selling legitimate goods, it should be willing to provide indemnification. But if the seller does not provide indemnification, than the buyer purchases the goods at its own risk--and assumes the risk of getting sued because the goods are not authentic. That is what happened to you here.
Is this fair? Sure it is. Anyone who can read a newspaper understands that it is illegal to purchase or download counterfeit DVDs, music, movies, etc. Thus, when you buy or sell goods, you have a duty to make sure that the goods are authentic. Otherwise you risk being sued for copyright infringement. Although you may not have known that the DVDs were fake, you surely knew that it was illegal to buy or sell counterfeit goods on e-bay. It was your fault that you did not take steps to assure that you were engaging a legitimate transaction. If you don't know whether goods are legitimate, then don't buy or sell them. By the way--one sure sign that the goods may be fake is if they are sold at a substantial discount----if the price seems too good to e true, then there is probably a problem with authenticity.
You should know that the law firm is letting you off easy here. Statutory damages for a wrongful purchase or sale of counterfeit goods in violation of copyright law range from $750 to up to $150,000 for each item. If your infringement is deemed accidental, the court can award damages no greater than $35,000 for each work, but if you are found to have engaged in willful copyright infringement, the Court can assess punitive damages against you of up to $150,000 for each DVD that you wrongly bought or sold. Further, the copyright law allows the court to grant attorneys fees to the copyright owner to compensate the copyright owner for the fees and expenses incurred in protecting his intellectual property rights. A settlement of less than $1000 can be viewed as a bargain compared to the liability you probably would face if plaintiff was forced to litigate the case in a federal court.
There really are only two possible defenses that you could assert in a court case--(1) that you didn't buy or sell the goods (but you admit that you did so this won't fly here, or (2) the goods were in fact authentic (but they clearly were not authentic, so this also won't fly here). Thus, you have no real defense other than the rather lame assertion that you didn't know the goods were counterfeit. You didn't know because you didn't take steps to assure that the goods were authentic. Ignorance and/or willful indifference to your legal obligations is no excuse.