CLEAR SKIES NEVADA, LLC v. DOES 1-30
MEMORANDUM Opinion and Order signed by the Honorable Virginia M. Kendall on 8/23/2017. The Court dismisses this case with prejudice and orders an award of attorneys fees to Defendant to be determined upon receipt of further briefing. The Court direct s the Defendant to submit a brief justifying what she believes is the appropriate fee amount within twenty-one days of this order, including any precedent that may exist for adjusting the "lodestar" upward in accordance with the market rate. Plaintiff shall have 14 days thereafter to object. Plaintiff's failure to object to the proposed fees within 14 days will constitute a waiver of any objection to those fees. Mailed notice(lk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
CLEAR SKIES NEVADA, LLC,
No. 15 C 6708
Judge Virginia M. Kendall
MEMORANDUM OPINION AND ORDER
On July 31, 2015, Plaintiff Clear Skies Nevada, LLC, sued thirty Doe defendants,
alleging that each Defendant distributed copies of the film Good Kill over the Internet, thereby
infringing on Plaintiff’s copyright of the film. (Dkt. 1.) Plaintiff alleged that each Doe owned an
IP address involved in the BitTorrent “swarm” that distributed copies of the film. (Id.) By early
this year, claims against twenty-nine of the Does were either settled or voluntarily dismissed.
Defendant Hancock was the only Defendant to defend against the claim.
The Court ordered this case dismissed on April 27, 2017, following Plaintiff’s request to
voluntarily dismiss under Rule 41(a)(2).1 (Dkt. 87.) Defendant objected to the case being
dismissed without prejudice. Upon the Court’s request, Defendant filed a submission explaining
why the case should be dismissed with prejudice and why she should be awarded her attorneys’
fees. (Dkt. 90.) Plaintiff filed a simultaneous submission requesting that the Court dismiss
without prejudice and award no fees. (Dkt. 89.) Plaintiff further requests that if the Court
Plaintiff’s motion to dismiss pursuant to FRCP 41(a)(2) does not describe its reasons for seeking voluntary
dismissal, (Dkt. 84.), nor did counsel suggest a reason for seeking this dismissal in the hearing on this motion. (Dkt.
conditions dismissal of this case on an award of attorneys’ fees, that it be allowed to withdraw its
voluntary dismissal. (Id.)
For the reasons stated below, this case is dismissed with prejudice and fees will be
awarded to Defendant.
I. Dismissal with prejudice
The Court may deny a motion to dismiss without prejudice when some of the following
factors are present: 1) the defendant has gone to great efforts and expense in preparation for trial,
2) the plaintiff has caused excessive delay, 3) the plaintiff provides insufficient explanation for
the need for a dismissal, and 4) the defendant has filed a motion for summary judgment. Pace v.
S. Express Co., 409 F.2d 331, 334 (7th Cir. 1969). There is no precise formula by which to
balance these factors, but the Court must weigh them to avoid imposing “plain legal prejudice”
as a result of a voluntary dismissal. Wojtas v. Cap. Guardian Tr. Co., 477 F.3d 924, 927 (7th Cir.
2007); see also Tyco Labs., Inc. v. Koppers Co., 627 F.2d 54, 56 (7th Cir. 1980) (“The
enumeration of factors to be considered in Pace is not equivalent to a mandate that each and
every factor be resolved in favor of the moving party before dismissal is appropriate. It is rather
simply a guide for the trial judge, in whom the discretion ultimately rests.”). Accordingly, when
a court allows a voluntary dismissal, it may exercise its discretion to dismiss with prejudice, so
as to avoid causing the defendant to suffer prejudice. See Marlow v. Winston & Strawn, 19 F.3d
300, 303 (7th Cir. 1994) (holding that a court may condition a Rule 41(a)(2) dismissal on
whatever terms and conditions it “deems necessary to offset possible prejudice defendant may
otherwise suffer from plaintiff dismissing his complaint with prejudice.”).
Here, three of the Pace factors are satisfied. With respect to the first factor, Defendant
and her attorneys have spent a great deal of time and money litigating this case (according to the
Defendant, over 150 billable hours at $285 per hour). (Dkt. 90, Ex. A, Clay Dec. ¶ 11.) However,
as of the date of dismissal, no depositions had been taken and no motions for summary judgment
had been filed. Nonetheless, Pace indicates that a defendant can satisfy this factor by showing
that it has completed “considerable discovery” at “substantial cost.” Pace, 409 F.2d at 334.
Defendant and her attorneys have done that in the course of this litigation and thus satisfy the
Regarding the second Pace factor, Plaintiff has caused significant delays, which have
extended the course of this litigation to two years. (Dkt. 85 at 8.) These delays include repeated
failure to respond to communications from defense counsel, delays producing documents in
discovery, and a request to extend the deadline to complete discovery. (Dkt. 83.) Moreover,
Plaintiff has never taken the opportunity to depose Defendant or do forensic analysis of her
computer, despite Defendant’s willingness to make herself and her computer available for those
purposes ostensibly to prove that Plaintiff’s claim against her fails. (Dkt. 85 at 8.) The Court is
sympathetic to the personal matters that have consumed Plaintiff’s counsel’s attention for the
past several months, which likely contributed to some of these delays. However, the Court is also
sympathetic to the ongoing effects on Defendant as a result of lingering litigation. (See Dkt. 86 at
6.) If the Court were to allow a dismissal without prejudice, Plaintiff would be able to bring the
same claim again, subjecting Defendant to further turmoil—all over a claim that is likely only
worth between $2.99 and $14.99. 2 (Dkt. 90, Ex. 2.)
This amount in controversy is so insignificant because Plaintiff is not entitled to statutory damages because the
alleged infringement made on Defendant’s IP address took place on April 5, 2015, (Dkt. 1, Ex. B), one day before
the effective date of its copyright registration, April 6, 2015. (Dkt. 1, Ex. A.) According to Plaintiff, the damages
amounts of $2.99–$14.99 represent the range of prices at which a consumer would have been able to legally
With respect to the third factor, Plaintiff has provided no explanation regarding its
reasons for requesting a dismissal. (See Dkt. 86; Dkt. 89.) Defendant compellingly suggests that
Plaintiff moved for voluntary dismissal so as to avoid ever having its claim judged on the merits
knowing it had a low likelihood of success. (Dkt. 90 at 5.) This is likely an accurate assessment
of Plaintiff’s strategy in moving for voluntary dismissal given that discovery closed on April 27
and Plaintiff’s counsel has not done any discovery. Dismissal with prejudice has been upheld
where the Plaintiff has provided a meritless excuse for dismissal. Ratkovich By & Through
Ratkovich v. Smith Kline, 951 F.2d 155, 158 (7th Cir. 1991) (affirming dismissal with prejudice
where plaintiff’s lack of diligence failed to produce evidence of causation after two years of
discovery). Here, Plaintiff has failed to provide any explanation.
Regarding the fourth factor, Defendant has not filed a motion for summary judgment.
However, Defendant has averred that she was in the early stages of drafting such a motion when
Plaintiff moved to dismiss the case. (Dkt. 90, Ex. 2 at ¶ 19.)
Given the significant expense to which Defendant has gone in litigating this case, the
repeated delays caused by Plaintiff, and Plaintiff’s failure to provide reason for its seeking this
dismissal, the Court sees no reason to allow Plaintiff to subject Defendant to future litigation
over the same claim.
Three of the Pace factors being satisfied, it is appropriate for the Court to dismiss with
prejudice. See Ratkovich, 951 F.2d at 158 (affirming conversion of a voluntary 41(a)(2) dismissal
into a dismissal with prejudice because of plaintiff’s lack of diligence in pursuing the case and
producing evidence); Guider v. Schiff Hardin LLP, No. 05 C 3695, 2006 WL 2699338, at *1 n.1
purchase or rent a copy of Good Kill at the time of the alleged infringement. (Dkt. 90, Ex. D at 7.) Defendant’s
expert estimates that the statutory damages, under 17 U.S.C. § 504, would have been either $200 or $750 if Plaintiff
had registered its copyright prior to the date of alleged infringement. (Id. at 8.)
(N.D. Ill. Sept. 18, 2006) (dismissing with prejudice after extensive efforts were expended during
discovery and plaintiff’s “complete failure to explain the need for dismissal”).
II. Attorneys’ Fees
Under 17 U.S.C. § 505, attorneys’ fees may be awarded to the prevailing party in a
copyright case at the Court’s discretion. Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994).
“Prevailing plaintiffs and prevailing defendants are to be treated alike, but attorney’s fees are to
be awarded to prevailing parties only as a matter of the court’s discretion.” Id. at 534. When a
court dismisses a copyright case with prejudice, the defendant in such a suit is the prevailing
party for purposes of fee-shifting under § 505. Riviera Distribs., Inc. v. Jones, 517 F.3d 926, 927
(7th Cir. 2008). The prevailing party in copyright litigation is presumptively entitled to
reimbursement of its attorney’s fees. See id. (prevailing defendant against a claim of
infringement of video game source code is entitled to attorney fees); Woodhaven Homes &
Realty, Inc. v. Hotz, 396 F.3d 822, 824 (7th Cir. 2005) (prevailing defendant against a claim of
infringement of copyright of architectural drawings is entitled to reasonable fees); Assessment
Tech. of Wis., LLC v. WIREdata, Inc., 361 F.3d 434 (7th Cir. 2004) (prevailing defendant against
a claim of infringement of copyright of real estate software is entitled to attorney fees). “This is
no less true . . . where the dismissal is on plaintiff’s own motion.” Mostly Memories, Inc. v. For
Your Ease Only, Inc., 526 F.3d 1093, 1099 (7th Cir. 2008); see also Riviera Distribs., Inc., 517
F.3d at 928.
In evaluating whether to exercise its discretion to award attorneys’ fees under § 505, this
Court applies the four Fogerty factors: 1) that the action was frivolous because plaintiff had no
evidence to support its claim; 2) that plaintiff’s motivation in filing suit was questionable
because it filed a multiplicity of suits, each involving similar infringement allegations with quick
settlements and improperly joined defendants; 3) that the action is objectively unreasonable
because it lacks evidence to support it; and 4) that awarding fees would advance the
considerations of compensation and deterrence. Bell v. Lantz, 825 F.3d 849, 850 (7th Cir. 2016).
Finally, the Court also considers the extent to which parties will be able to utilize their attorneys’
work product in future litigation. Cauley v. Wilson, 754 F.2d 769 (7th Cir. 1985).
At the pleading stage, this action was neither frivolous nor objectively unreasonable
because Plaintiff claimed to have observed an infringement of Good Kill’s copyright coming
from Hancock’s Internet Protocol (“IP”) address. (Dkt. 31 ¶ 14.) However, Defendant has
produced forensic evidence showing that the infringement may not have come from her IP
address and that the methods used by Plaintiff to identify infringers are flawed. (Dkt. 90, Ex.
2(A)). Given that Plaintiff has not, at this late stage in the litigation process, made any attempt to
examine Defendant’s computer nor produced any evidence to show that Defendant herself
engaged in the alleged BitTorrent activity (Dkt. 90 at 2), any continued litigation beyond this
stage would be frivolous and objectively unreasonable. Accordingly, the first and third Fogerty
lean in favor of Defendant.
With respect to the second Fogerty factor, Plaintiff’s motivation in this case is
questionable given the multiplicity of suits each involving quick settlements, especially when
considering the amount of damages it would be entitled to if successful. Defendant’s expert, Eric
Fruits, explains that Plaintiff’s lawsuit is in keeping with a “sue-then-settle” strategy, by which it
seeks to settle lawsuits because it expects to lose money by going to trial, given the small amount
in controversy. (Dkt. 90, Ex. D.) This case began as a lawsuit against the owners of thirty
different IP addresses. (Dkt. 1, Ex. B.) The other defendants either settled out of court or had the
cases against them voluntarily dismissed by Plaintiff. This litigation strategy thus hews closely to
the concern evinced by the second Fogerty factor given Plaintiff’s overriding desire to settle
these small claims out of court.
Finally, the fourth Fogerty factor also weighs in favor of granting fees. That is, granting
fees may deter similarly situated plaintiffs from bringing weak claims with the hope of settling
them and not awarding fees may incentivize those same plaintiffs continue the practice requiring
future potentially innocent defendants to settle rather than exhaust copious resources defending
themselves in court.
Given that the Court is dismissing this claim with prejudice, Defendant will not be able to
utilize her attorneys’ work product in future litigation of this claim because there will be no
future litigation. Plaintiff relies on Cauley to recommend that the Court deny Defendant’s
requests for fees. Cauley, 754 F.2d at 772-773. However, that case is distinguishable from the
instant one because the Cauley court denied fees knowing that the defendant would utilize its
attorneys’ work product in subsequent litigation that the plaintiff intended to pursue in another
forum. Id. at 772. Here, there is no indication from Plaintiff that it intends to bring this claim in
another jurisdiction, so Defendant will have no future opportunity to utilize this work product.
Given that 1) this attorney work product will be of no ongoing utility to Defendant, 2)
Plaintiff’s litigation strategy is questionable under Fogerty, and 3) further litigation of this claim
would be frivolous and objectively unreasonable, the Court will not override the presumption
that the prevailing party in a §505 case is entitled to an award of fees under Riviera Distribs. See,
e.g., Assessment Tech. of Wis., LLC, 361 F.3d at 437 (“When the prevailing party is the
defendant, who by definition receives…no award, the presumption in favor of awarding fees is
very strong.”); Budget Cinema, Inc. v. Water Tower Assocs., 81 F.3d 729, 733 (7th Cir 1996)
(holding that defendant is entitled to an award of attorneys’ fees when plaintiff’s infringement
action is objectively unreasonable under Fogerty). Because the Court is dismissing the case with
prejudice, Defendant is the prevailing party. Accordingly, the Court will award some amount of
reasonable attorneys’ fees.
Defendant has submitted a proposed fee calculation of $92,851.98 to the Court. This
figure accounts for the hourly rates charged by both of Defendant’s attorneys, her experts’ fees,
and incidental expenses, all multiplied by a “lodestar” of 1.5. (Dkt. 90 at 10.) However,
Defendant provides no precedent for a court adjusting upward an hourly rate simply because the
rate charged is lower than the market rate, nor is she necessarily entitled to all of the fees
purportedly billed by her attorneys. Accordingly, the Court directs the Defendant to submit a
brief justifying what she believes is the appropriate fee amount within twenty-one days of this
order, including any precedent that may exist for adjusting the “lodestar” upward in accordance
with the market rate. Plaintiff shall have 14 days thereafter to object. Plaintiff’s failure to object
to the proposed fees within 14 days will constitute a waiver of any objection to those fees.
III. Withdrawal of Voluntary Dismissal
In the event the Court conditions dismissal of this case on payment of attorneys’ fees,
Plaintiff requests that it be permitted to withdraw its motion for voluntary dismissal. (Dkt. 89 at
15.) Rule 41(a)(2) allows the Court to impose conditions on a voluntary dismissal, but the
plaintiff has the option of withdrawing its dismissal if the Court’s conditions are “too onerous.”
Marlow, 19 F.3d at 304. Under Marlow, an award of attorneys’ fees is not a condition that is too
onerous; rather it is “an entirely appropriate condition” that a district court may impose in the
exercise of its discretion. Id. at 306.3 However, because the Court is dismissing the case with
Plaintiff’s misstates the Marlow rule when it says “in the event the Court conditions a dismissal in this case on
payment of Defendant’s attorney’s fees/costs, Plaintiff should be given an opportunity to withdraw the motion and
reinstate the case.” (Dkt. 89 at 15.) In fact, Marlow held that a reasonable award of attorney’s fees was not so
onerous as to require courts to give plaintiffs the opportunity to withdraw their 41(a)(2) motions. Dismissing a case
prejudice following a Rule 41(a)(2) motion, Marlow requires that the Court allow Plaintiff a
reasonable time to withdraw its motion. Id. at 305. See also Babcock v. McDaniel, 148 F.3d 797,
799 (7th Cir. 1998) (“[A] district court may not dismiss the action with prejudice without first
providing the plaintiff a reasonable opportunity to withdraw his motion.”). That being said, all
Marlow requires is that the Court give the moving party an opportunity to withdraw their motion.
Marlow, 19 F.3d at 306. The Court has done that in the instant case. On April 27, 2017, the
Court granted the Plaintiff’s motion to dismiss the case against the Defendant and told the
Plaintiff that it was not inclined to allow this case to be dismissed without prejudice and put
Defendant’s life on hold forever. (Dkt. 86 at 7.) The Court then set a briefing schedule on the
question of whether the case should be dismissed with or without prejudice which is the basis for
this opinion. Therefore, the Plaintiff was given notice that the Court was inclined to convert this
voluntary dismissal into a dismissal with prejudice and the Plaintiff had from that date—April
27, 2017—more than three months—to withdraw its motion for dismissal, and has not done so.
Given that Plaintiff has already had ample opportunity to withdraw this motion and has declined
to do so, the Court denies Plaintiff’s request to be given additional time to withdraw.
For the foregoing reasons, the Court dismisses this case with prejudice and orders an
award of attorneys’ fees to be determined upon receipt of further briefing.
Hon. Virginia M. Kendall
United States District Judge
Date: August 23, 2017
with prejudice after a 41(a)(2) motion does, however, trigger the Court’s obligation to afford Plaintiff a reasonable
opportunity to withdraw.
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