The Estate of Joe Brown v. ARC Music Group, et al.
Filing
134
MEMORANDUM OPINION AND ORDER: Signed by the Honorable Harry D. Leinenweber on 8/17/2012:Mailed notice(wp, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ESTATE OF JOE BROWN,
Plaintiff,
Case No. 10 C 7141
v.
Hon. Harry D. Leinenweber
ARC MUSIC GROUP, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Before the Court are the Arc and Frederick Defendants’ Motions
for Attorney’s Fees under the Copyright Act. The Motions are granted
as to liability.
in regards
to
Arc Defendants’ Motion is denied without prejudice
apportionment.
Both
sanctions under 28 U.S.C. § 1927.
I.
Defendants’ also
moved for
Those Motions are denied.
BACKGROUND
Plaintiff, the Estate of Joe Brown, brought an action against
the following Defendants:
Arc Music Group and Opus 19 Music, LLC
(the “Arc Defendants”), Music Sales Corporation (“Music Sales”),
Frederick
Music
Company
and
Vincent
Brandom
(the
“Frederick
Defendants”), and Katrina Music Company and Willie C. Cobbs (the
“Katrina Defendants”).
Plaintiff
copyright
conspiracy.
brought
infringement,
claims
against
fraud,
unjust
the
Arc
Defendants
enrichment
and
for
civil
Plaintiff also sought an accounting and a constructive
trust. Plaintiff alleged that, without authority, the Arc Defendants
filed copyright registrations and collected funds for compositions
owned by the Plaintiff. The Court granted the Arc Defendants’ Motion
to Dismiss, dismissing for failure to state a claim the copyright
infringement, fraud, constructive trust, and civil conspiracy claims
with prejudice in an order dated November 22, 2011.
dismissed
the
unjust
enrichment
and
accounting
The Court
claims
without
prejudice to allow the Plaintiff to replead those claims.
From the Frederick Defendants, Plaintiff sought to recover for
copyright infringement, trademark infringement, common law fraud, and
conspiracy.
Plaintiff alleged that the Frederick Defendants failed
to pay royalties owed to the Plaintiff under a publishing agreement.
Plaintiff’s
Second
Amended
Complaint
voluntarily
dismissed
its
copyright and trademark infringement claims against the Frederick
Defendants, and added claims of breach of fiduciary duty, unjust
enrichment, accounting, and constructive trust.
The Court granted
the Frederick Defendants’ Motion to Dismiss, dismissing all claims
with prejudice.
The Arc and Frederick Defendants now move for attorneys’ fees
pursuant to the Copyright Act (17 U.S.C. § 505) and for sanctions
under 28 U.S.C. § 1927.
Familiarity with the Court’s order of
November 22, 2011 is presumed, and further facts are discussed below
where relevant.
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II.
A.
ANALYSIS
Attorneys’ Fees Under the Copyright
Act, 17 U.S.C. § 505
The Copyright Act provides that a court has discretion to award
the prevailing party reasonable attorneys’ fees.
17 U.S.C. § 505
(2006). For this provision, prevailing plaintiffs and defendants are
treated alike.
Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994).
The defendant is considered the prevailing party when the action is
dismissed with prejudice. Riviera Distribs., Inc. v. Jones, 517 F.3d
926, 928 (7th Cir. 2007).
The Supreme Court in Fogerty listed four non-exclusive factors
that courts use to guide their discretion regarding attorneys’ fees.
These factors are frivolousness, motivation, objective factual and
legal unreasonableness, and the need in particular circumstances to
advance considerations of compensation and deterrence.
Fogerty, 510
U.S. at 534 n. 19 (citing Lieb v. Topstone Indus., Inc., 788 F.2d
151, 156 (3d Cir. 1986)).
The Seventh Circuit has further streamlined the Fogerty factors
into
just
two
important
considerations:
the
strength
of
the
prevailing party’s case and the amount of the relief obtained by the
prevailing party.
Assessment Techs. of WI, LLC v. WIREData, Inc.,
361 F.3d 434, 436-437 (7th Cir. 2004).
When the claim is frivolous
and the prevailing party is a defendant who has not otherwise
obtained
damages
(through
a
counterclaim,
for
example),
presumption to award attorneys’ fees is “compelling.”
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Id.
the
The prevailing party entitled to attorneys’ fees on a particular
claim can only recover attorneys’ fees in defending against that one
claim or any related claims, but not for unrelated claims.
Entm’t
Research Grp. v. Genesis Research Grp., 122 F.3d 1211, 1230 (9th Cir.
1997).
1.
Plaintiff’s
Defendants
copyright
centered
on
the
Arc Defendants
infringement
following
action
against
compositions:
the
Arc
“This
New
Generation,” “Dark Road Blues,” and seventy-seven others attached in
a list to the Complaint.
filed copyright
Plaintiff alleged that the Arc Defendants
registrations,
filed
renewal
registrations,
and
collected funds for these compositions without authorization.
Plaintiff’s pleadings regarding “This New Generation” conceded
that James Oden (“Oden”) was a co-author of the composition.
Oden’s
joint author status can be seen from Joe Brown’s own copyright
registration, which lists Oden as a co-author. Plaintiff’s Complaint
attempted to establish sole authorship by alleging that Oden was an
employee at Lawn Music Co. (“Lawn”), a company Brown owned. (Brown’s
estate is the successor to Lawn.) Even though Plaintiff pleaded that
Oden was “work for hire under Lawn,” he did not allege sufficient
facts in support such a relationship.
Plaintiff additionally argued that Oden’s original registration
was invalid because of Brown’s previous original registration.
However, as the Court previously found, Oden was identified as a
claimant in the original registration and could, therefore, file
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another
registration
in
his
own
name.
See
37
C.F.R.
§ 202.3(b)(11)(ii) (2006).
The Arc Defendants, as successors of Oden, could not be liable
to Plaintiff for copyright infringement because each author of a
joint work holds an undivided interest in it.
(2006).
See 17 U.S.C. § 201(a)
The joint authors of a copyright are akin to tenants in
common, and each may use or license the joint work.
Erickson v.
Trinity Theatre, Inc., 13 F.3d 1061, 1068 (7th Cir. 1994).
joint
authors
cannot
be
liable
to
each
other
for
While
copyright
infringement, each must account to the other for a share of profits
stemming from individual use or licensing.
F.3d 644, 652 (7th Cir. 2004).
Gaiman v. McFarlane, 360
However, when joint authorship is
conceded, as the Court found that it was here, the “appropriate
remedy is a state law suit for accounting of profits.”
Estate of Joe
Brown v. Arc Music Grp., 830 F.Supp.2d 501, 517 (N.D. Ill. 2011)
(citing
Gaiman,
360
F.3d
at
652).
Plaintiff
did
not
allege
sufficient facts to provide the Arc Defendants with notice of a state
law accounting claim based on co-ownership.
The Court granted leave
to the Plaintiff to replead an accounting action under a copyright
co-ownership theory within thirty days of the Order.
However,
Plaintiff did not do so.
With respect to “Dark Road Blues,” Plaintiff’s pleadings again
conceded
that
songwriter
Brown
Floyd
co-authored
Jones
the
(“Jones”).
work,
in
this
Brown
filed
a
case
with
copyright
registration for this composition in 1961 that listed Brown and Jones
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as claimants.
Plaintiff again tried to establish sole ownership of
the composition by alleging that Jones, in 1953, and Metric Music
Company, in 1970, assigned Brown their interest in a composition
called “On the Road Again.”
“On the Road Again” was a separate work
from “Dark Road Blues,” so neither of these assignments would have
given Brown sole authorship rights in “Dark Road Blues.”
The Arc Defendants, as successors of Jones, could not be sued
for copyright infringement by Plaintiff as the co-author of “Dark
Road Blues.” Again, however, leave was granted to replead accounting
actions, which was not done.
With respect the additional seventy-seven works attached to its
Complaint, Plaintiff failed to attach any copyright registration
certificates
or
even
plead
registered by Plaintiff.
that
these
copyright
of
claim
this
information,
because
had
been
Plaintiff also failed to even allege that
it owned the copyrights to those songs.
alleging any
compositions
Copyright
The Court held that without
Plaintiff failed
registration
is
to
a
state
well-known
statutory prerequisite to filing a suit under the Copyright Act.
U.S.C. § 411(a) (2006).
a
17
Plaintiff also could not have credibly
brought the infringement action without being the copyright owner of
the listed songs.
See 17 U.S.C. § 501(b)(2006).
As noted above, the presumption for awarding attorneys fees to
the prevailing party in a frivolous action who otherwise receives no
damages is very strong in the Seventh Circuit. Here, the presumption
was not rebutted as the Arc Defendant’s defense was exceedingly
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strong.
For “This New Generation” and “Dark Road Blues,” Plaintiff
alleged
copyright
infringement
against
compositions, a recognized impossibility.
a
co-author
of
the
For the listed works,
Plaintiff alleged copyright infringement without first establishing
copyright ownership or satisfying the registration prerequisite for
infringement actions.
It should have been apparent to Plaintiff that the infringement
action was without merit.
See Budget Cinema, Inc. v. Watertower
Assocs., et al., 81 F.3d 729, 732-733 (7th Cir. 1996) (reversing
district
court’s
denial
of
attorney
fees
when
plaintiff
filed
infringement action before finalizing ownership interest and before
effective date of copyright registration but still sought statutory
damages and attorneys’ fees).
If Watertower decrees that merely
jumping the gun on ownership and registration merits attorney’s fees,
then filing infringement counts against an admitted co-author for
some works and failing to even allege ownership in other works must
merit them as well.
Attorneys’
Fees
is
Accordingly, the Arc Defendants’ Motion for
granted
as
to
liability
in
defending
the
infringement action.
In
addition
to
copyright
infringement,
Plaintiff’s
claims
against the Arc Defendants also included breach of a fiduciary duty,
fraud, and civil conspiracy.
The Arc Defendants contend they are
entitled to attorneys fees for these dismissed counts as well.
For
Plaintiff’s fraud, constructive trust, and civil conspiracy claims to
be sufficiently related to the copyright infringement claim, (and
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thus merit attorneys’ fees under § 505) the claims must have arisen
out of a “common core of facts” or “related legal theories.”
Ustrak
v. Fairman, 851 F.2d 983, 988 (7th Cir. 1988).
The fiduciary duty, fraud and civil conspiracy counts were based
on
the
allegations
that
the
Arc
Defendants
filed
copyright
registrations for the Plaintiff’s compositions without authorization.
Because this was the same course of alleged conduct that gave rise to
Plaintiff’s copyright infringement action, the Arc Defendants are
entitled to fees for defending these counts as well.
The Arc Defendants concede they are not entitled to fees for the
accounting and unjust enrichment counts that were dismissed without
prejudice.
Accordingly, The Arc Defendants requested $100,000,
representing
72%
of
its
actual
fees
and
expenses
totaling
$138,936.33.
The Arc Defendants give little information regarding
how they arrived at this figure and must show where it comes from by
submitting detailed original time records and billing statements.
This Court has the discretion to ask the Arc Defendants to submit
such materials, instead of relying exclusively on their declaration.
See Entm’t Research Grp., 122 F.3d at 1230-31 (holding that district
court abused its discretion in relying exclusively on the declaration
of the party requesting attorneys’ fee to segregate time spent on
each claim) (citing Hensley v. Eckerhart, 461 U.S. 424, 436-37
(1983)).
The Court recognizes that billing records for briefs might not
indicate how
much
time was
spent
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writing
the
accounting
issue
sections versus
the
infringement
issues
sections.
If
the
Arc
Defendants are unable or unwilling to engage such hair-splitting, the
Court is prepared to award Arc Defendants 50 percent of their fees,
in recognition of the fact that the case was bifurcated along a line
between
the
meritless
infringement
meritorious accounting issues.
note,
they
must
still
issues
and
the
potentially
In any event, as the Arc Defendants
submit
documentation
demonstrating
the
reasonableness of their fees.
2.
Frederick Defendants
Plaintiff’s copyright infringement action against the Frederick
Defendants arose from a publishing agreement, where Plaintiff granted
sole and exclusive publication rights, and the rights to grant
mechanical licenses in exchange for half of royalties received.
Plaintiff
alleged
that
the
Frederick
Defendants
failed
to
pay
royalties subject to this publishing agreement since 1976.
In the Second Amended Complaint, Plaintiff voluntarily dismissed
its copyright claims against the Frederick Defendants. The Frederick
Defendants, therefore, prevailed for the purposes of 17 U.S.C. § 505
when
Plaintiff
prejudice.
voluntarily
dismissed
its
copyright
See Riviera Distribs., 517 F.3d at 928.
claim
with
Thus, the
Frederick Defendants are also presumptively entitled to attorneys’
fees, especially after looking at the strength of the Frederick
Defendants’
defense,
which
revolved
limitations.
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around
the
statute
of
The statute of limitations under the Copyright Act in this
instance
began
to
run
when
the
royalty
payments
stopped,
and
prescribed a three-year window in which Plaintiff needed to bring its
action.
See 17 U.S.C. § 507(b) (2006).
Furthermore, the Frederick
Defendants assigned all of their rights and interests to Music Sales
Corporation
on
July
1,
1996.
This
assignment
included
the
responsibility to make royalty payments to writers and composers,
relieving the Frederick Defendants of their royalty obligation to the
Plaintiff.
Because
Plaintiff
had
far exceeded
the
statute
of
limitations for a copyright claim, the Frederick Defendants’ defense
strengthens the presumption entitling them to attorneys’ fees.
See
Bridgeport Music, Inc. v. Lorenzo, 255 F.Supp.2d 795, 799 (M.D. Tenn.
2003) (awarding attorneys’ fees when plaintiff brought claim outside
of
the
statute
of
limitations).
Accordingly,
the
Frederick
Defendants’ Motion for Attorneys’ Fees pursuant to the Copyright Act
is granted.
In addition to its copyright infringement claim against the
Frederick Defendants, Plaintiff also brought claims for trademark
infringement, fraud, conspiracy, breach of fiduciary duty, unjust
enrichment,
accounting,
and
constructive
trust.
The
trademark
infringement claim was voluntary dismissed with prejudice in the
Second Amended Complaint, and the remaining claims were dismissed
with prejudice in the November 22 order.
These claims were also
based on the publishing agreement between Plaintiff and the Frederick
Defendants.
The publishing agreement and the Frederick Defendants’
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failure to pay royalties were part of the common core of facts that
also gave rise to the copyright infringement claim.
Accordingly,
because these claims were sufficiently related to the copyright
infringement claim, and were equally outside of the statute of
limitations and without merit, the Frederick Defendants do not need
to apportion the time spent on defense of these claims.
However,
they must still submit a motion demonstrating the reasonableness of
the attorney’s fees with attachments documenting billing and time
records.
B.
The
Arc
and
Sanctions Under 28 U.S.C. § 1927
Frederick
Defendants
both
filed
Motions
for
attorney’s fees and costs pursuant to 28 U.S.C. § 1927, alleging that
Plaintiff’s motion to reconsider the Court’s November 22, 2011
Memorandum Opinion and Order dismissing Plaintiff’s Second Amended
Complaint unnecessarily, unreasonably, and vexatiously multiplied the
proceedings in this action.
An award under Section 1927 must be supported by a finding of
bad faith:
vexatiousness has been defined as either subjective or
objective bad faith.
(7th Cir. 1992).
Kotsilieris v. Chambers, 966 F.2d 1181, 1184
But Kotsilieris made clear that even objectively
unreasonable conduct does not, alone, equate to vexatiousness.
Kotsilieris, 966 F.2d at 1184.
The Court agrees that Plaintiff’s motion to reconsider was
objectively unreasonable because it largely rehashed the issues of
the motion to dismiss without reference to new facts or manifest
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errors of law, which is required in a motion for reconsideration.
Caisse Nationale de Credit Agricole v. CBA Indus., Inc., 90 F.3d
1264,
1269
(7th
objectively
Cir.
1996).
unreasonable
As
actions,
vexatiousness requirement.
Kotsilieris
alone,
do
notes,
not
however,
satisfy
the
Accordingly, Defendants’ Motions for
Attorneys’ Fees and Costs pursuant to 28 U.S.C. § 1927 is denied.
IV.
CONCLUSION
For the reasons stated herein, the Defendants’ Motions for
Sanctions
under
28
U.S.C.
§
1927
are
denied.
The
Frederick
Defendants’ Motion for Attorney’s Fees under the Copyright Act is
granted as to liability.
The Arc Defendants Motion for Attorney’s
Fees is granted as to liability, but denied without prejudice as to
apportionment.
apportionment
The
Arc
Defendants
between
the
infringement-related
accounting-related claims.
must
demonstrate
claims
proper
and
the
Alternatively, the Arc Defendants may
submit a motion for 50 percent of their fees, which will be granted.
Both the Frederick and Arc Defendants are to submit filings with the
necessary documentation demonstrating the reasonableness of the fees
to which they are entitled.
The filings are due within thirty (30)
days of entry of this order.
Plaintiff has fourteen (14) days from
that point to lodge any objections to reasonableness of the fees.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
DATE:8/17/2012
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