Capitol Records, LLC v. Redigi Inc.

Filing 226

LETTER addressed to Judge Richard J. Sullivan from Richard S. Mandel dated June 13, 2016 re: Pre-Motion Letter Re: seeking attorney's fees. Document filed by Capitol Christian Music Group, Inc., Capitol Records, LLC, Virgin Records IR Holdings, Inc..(Mandel, Richard)

COWAN
LIEBOWITZ
LAYMAN t

Cowan, Liebowitz & Latman, P.C.
1133 Avenue of the Americas
New York, NY 10036
(
212)790-9200 Te]
(
212)575-0671 Fax
www.cll.com
Richard S. Mandel
(
212)790-9291
[e-mail]

June 13, 2U 16
By E-mail (sullivannysdchambers(t~nysd.uscourts.~ov)
Hon. Kichard J. Sullivan, i1.S.D.J.
Thurgood Marshall United States Courthouse
40 Foley Syuare
New York, NY 10007
Re:

Capitol Records, LLC v. ReDi~i Inc., 12 cv. 0095 (RJS~

Dear Judge Sullivan;
We represent Plaintiffs in the above-captioned action and write in accordance with Rule
2,A of the Court's Individual Practices and Paragraph 6 of the Stipulated Final Judgment Subject
to Reservation of Right to Appeal endorsed by the Court on June 3, 2016(Docket No. 22)
(
"Judgment"), Paragraph 6 of the Judgment provides that Plaintiffs "shall have the right under
this Judgment to move for an award of attorneys' fees" up to five hundred thousand dollars.
Plaintiffs submit this pre-motion letter in connection with their proposed motion for an award of
attorneys' fees in this amount. Pursuant to Fed. R. Civ. P. 54(d)(2)(B), a party must seek
attorney's fees within 14 days after the entry ofjudgment unless a statute or Cvurt order provides
otherwise. Insofar as the Court's Individual Practices require an exchange of pre-motion letters
and a conference in advance of filing of any such motion, Plaintiffs respectfully request that the
Court treat this letter as satisfying the timing requirements of Rule 54 and request leave to file
the contemplated motion by July 1, ZQ16 or such other date as the Court deems appropriate.
Pursuant to 17 U.S.C. §505, the Court may award reasonable attorneys' fees to the
prevailing party in a copyright case. There is no dispute that Plaintiffs have prevailed on their
direct and secondary copyright infringement claims. When assessing a fees motion in a
copyright case, Courts in the Second Circuit consider• "(1) the frivolousness of the non-prevailing
party's claims or defenses;(2)the party's motivation;(3) whether the claims or defenses were
objectively unreasonable; and (4)compensation and deterrence." Bryant v. Media Right Prods.,
Inc., 603 F.3d 135, 144(2d Cir. 2010). Attorneys' fees are warranted in the instant matter based
on the willful nature of Defendants' infringement and Defendants' assertion of objectively
unreasonable legal and factual positions during the course of these proceedings.
"
The Second Circuit has held that it is appropriate to award attorneys' fees where the
infringement was willful." Broad_Music, Inc. v. Prang Hospitalit~Inc., 2016 WL 280317, at
* 11 (S.D.N.Y. Jan. 21, 2016)(citing Kepner-Tregoe, Inc, v. Vroom, 186 P.3d 283, 289(2d Cir.
1999)). Reckless disregard of a plaintiff's copyright interest constitutes evidence of willfulness.

29503/003/2090954.1

Cowan,Liebowitz & L,atrnan, P.C.
Hon. Richard J. Sullivan, U.S.D.J.
June 13, 2016
Page 2
See Beastie Roys v. Monster F,nergy Co,, 112 r. Supp. 3d 31, 43 (S.D.N.Y. 2015)("Courts have
awarded fees based on willfulness even where the infringement was reckless rather than
knowing")(collecting cases); Manno v. Tenn. Prod. Ctr., I_nc., 657 F. Supp. 2d 425, 435
(
S.D.N.Y. 2009)(defendant's "willful disregard of[plaintiff's] copyright interests"). Moreover,
where a defendant ignores repeated warnings of copyright infringement, such "willful blindness"
favors an award of attorneys' fees. See Broad. Music Inc v Wexford INR LLC,2014 WL
4626454, at *8-12(N.D.N.Y. Sept. 15, 2014).
This Court has already found as a matter of law that ReDigi and its officers were aware
of their infringing conduct. 7n finding ReDigi liable for contributory copyright infringement, the
Court held that ReDigi "knew or should have known that its service would encourage
infringement." March 31.2013 Memorandum and Order (Docket No. 109)("SJ Order") at 15.
Among other facts, Defendants warned investors that the ReDigi service might be infringing,
received acease-and-desist letter that its website violated Plaintiffs' copyrights, knew that
copyrighted content was being sold on the website, and "understood the likelihood that use of
ReDigi's service would result in infringement." Id. These determinations constitute the law of
this case, see Spencer v. Int'1 Shoppes, Inc., 902 F. Supp. 2d 287, 288 n.2(E.D.N.Y. 2012)
(
factual findings on summary judgment decision were "the law of the case"), and establish that
ReDigi and the individual defendants acted knowingly and with reckless disregard for Plaintiffs'
copyrights. An award of fees against this willful infringement will serve the policy purposes of
the Copyright Act to "deter future infringers who will be put on notice that they may be called
upon to compensate plaintiffs for the expenses" incurred in enforcing legitimate rights. Miro lio
S.P.A. v. Conway Stores, Inc., 629 F. Supp. 2d 307, 311 (S.D.N.Y. 2009).
The third factor cited by the Second Circuit in assessing fees —objective
unreasonableness—should likewise "be given substantial weight." Br ant, 603 F.3d at 144.
"
Indeed, many courts in this district have found that the objective unreasonableness of a party's
claims or defenses is sufficient to subject a party to an award of attorney's fees under § 505
`without regard to any other equitable factor."' Harrell v, Van Der Plas, 2009 WL 3756327, at
*3(S.D.N.Y. Nov. 9, 2009). Here, while Defendants frequently cast this dispute as posing
"
novel" issues of copyright law, they have defended this case in an objectively unreasonable
manner, backpedaling on key factual admissions, variously abandoning and resuscitating
pointless defenses, and seeking absurd discovery designed only to inflict expense. For example,
while ReDigi conceded during the preliminary injunction phase of the case that its system
"
copied" and "deleted" music files during the uploading process, it disavowed that admission nn
summary judgment with its fanciful "data migration" theory, requiring Capitol to engage an
expert to make sense of a transparent semantic play. See SJ, Order at 14 n. 7(rejecting "data
migration" theory and noting "ReDigi made numerous admissions to the contrary at the
preliminary injunction stage"). ReDigi similarly maintained various facially absurd affirmative
defenses from its preliminary injunction papers only to abandon them after Plaintiffs were put to
the task of briefing them on summary judgment. See id. at 3-4 n. 4("ReDigi's arguments in this
round of briefing differ markedly from those it asserted in opposition to Capitol's motion for a
preliminary injunction," including its abandoned essential step, fair use "storage", and DMCA
defenses). ReDigi likewise repeatedly sought to excise from this case music files uploaded and
29503/UO3/20)0954.1

Cowan,Liebowitz & Latman,P.C.
Hon. Richard J. Sullivan, U.S.D.J.
June 13, 2016
Page 3
offered for sale, despite the Court's repeated and abundantly clear admonitions that such uploads
were clearly violations of the reproduction right. See, sme ., Docket No. 186("The Court agrees
with Plaintiffs that Plaintiffs may introduce evidence about recordings that were uploaded to the
ReDigi server and offered for sale").
This pattern of wasteful litigation conduct multiplied after Plaintiffs amended their
complaint to add ReDigi's officers based on defense counsel's representation that the
amendment would not require significant additional discovery. Those individuals proceeded to
make a groundless motion to dismiss, followed by an equally groundless motion for
reconsideration, both ignoring the very law upon which the Court permitted the amendment
adding them in the first place. After the Court predictably denied both motions, see Docket Nos.
148 and 155, the individual defendants then asserted some thirty affirmative defenses, the bulk of
which had either been waived or abandoned by ReDigi or were on their face already determined
adversely, including the first sale defense, the essential step defense, and fair use. See Individual
Defendants' Answer to Second Amended Complaint(Docket No. 163). They concomitantly
sought far-reaching discovery on such remote topics as audits of Plaintiffs' royalty payments
regarding musical compositions and various unrelated digital agreements. After they again
backpedaled, insisting that they would not after all press defenses expressly rejected on summary
judgment, the Court held that they were likewise barred from asserting defenses ReDigi had
itself waived. See Docket No. 175. The net result was that the progress of the case was delayed
and Plaintiffs were put to months of briefing and dispute that had no reasonable basis. These
kinds of inconsistent, wasteful, and objectively unreasonable machinations supply an additional
and independent ground for an award offees. See Harrell, 2009 WL 3756327, at *4 (awarding
fees where defendant filed "largely frivolous" motion to dismiss and advanced new defense
inconsistent with previous position); Miroglio, 629 F. Supp. 2d at 311 (awarding fees where
defendants had adopted unreasonable litigation positions that "forced [the plaintiff) to pursue this
lengthy litigation in the face of an obviously losing position on the part of defendants").
For the forgoing reasons, Plaintiffs seek $500,000 in attorney's fees, which amount
constitutes less than half the actual fees expended by Plaintiffs in this case, but will at least serve
the policies of the Copyright Act and act as a deterrence against the kind of wasteful litigation
conduct engaged in by Defendants. We thank the Court for its attention to the foregoing.
Respectfully,

Richard S. Mandel
cc: Gary Adelman, Esq.(via email)
Sarah Matz, Esq.(via email)
Michael DeVincenzo, Esq.(via email)
Mark Raskin, Esq.(via email)

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