Capitol Records, LLC v. Redigi Inc.

Filing 253

TRANSCRIPT of Proceedings re: Conference held on 6/29/2016 before Judge Richard J. Sullivan. Court Reporter/Transcriber: Kelly Surina, [phone]. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 8/15/2016. Redacted Transcript Deadline set for 8/25/2016. Release of Transcript Restriction set for 10/24/2016.(Siwik, Christine)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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CAPITOL RECORDS, LLC, et al.,

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Plaintiffs,

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v.
REDIGI INC., et al.,
Defendants.

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12 CV 0095 (RJS)

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New York, N.Y.
June 29, 2016
10:30 a.m.

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Before:
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HON. RICHARD J. SULLIVAN,
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District Judge
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APPEARANCES
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COWAN, LIEBOWITZ & LATMAN, P.C.
Attorneys for Plaintiffs
BY: RICHARD STEPHEN MANDEL
JONATHAN ZACHARY KING
ADELMAN MATZ P.C.
Attorneys for Defendant Redigi Inc.
BY: GARY PHILIP ADELMAN
SARAH MICHAL MATZ

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SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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(Case called)

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THE COURT:

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Good morning.

So I don't have anybody

here representing the individuals; right?

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MR. ADELMAN:

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THE COURT:

Not that we're aware of, no.

In one of your letters to me, Mr. Adelman

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or Ms. Matz, you mentioned that the lawyers on the appeal would

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be BakerHostetler.

MR. ADELMAN:

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Is that what you said?
That is correct.

representative from BakerHostetler here.

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THE COURT:

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MR. WARSHAVSKY:

Who is that?

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not yet been engaged.

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discussions.

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retainer.

Oren Warshavsky, your Honor.

As of late last night, there is still no

We expect to be very shortly.

THE COURT:

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MR. WARSHAVSKY:

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THE COURT:

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MR. WARSHAVSKY:

For the appeal?
For the appeal.

But not for this action?
We're also discussing if they'd like

us to appear.
THE COURT:

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That's good to know.

Thanks for being

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here.

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court reporter so she can get the correct spelling.

If you could just at the end maybe give a card to the

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MR. WARSHAVSKY:

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THE COURT:

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We have

We expect to be, and we've had

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There is a

Yes.

I guess we're here principally on the

contemplated motion of the plaintiffs for attorneys' fees.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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So I received pre-motion letters on that issue, which

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is an interesting issue.

It seems to me that probably the

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plaintiff's case got a little easier with the Supreme Court's

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Kirtsaeng decision, but I'm not sure it's a slam dunk.

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Obviously, I think we're going to have briefing on this.
As with all pre-motion conferences, I like to kick the

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tires a bit.

That's the reason we have these.

They're helpful

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for me, and I hope they're not wasteful to the parties.
Here it's a little more complicated because defense

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counsel is trying to get out of this case.

So I guess

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everything you do is potentially wasteful if you're not getting

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paid.

So that's the principal purpose we're here.
There's also then a motion to withdraw by counsel for

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the defendants and a contemplated motion to register the

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judgment in other districts, which I don't think anybody has

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responded to.

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Right, Mr. Adelman?

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MS. MATZ:

Ms. Matz?

No, your Honor.

We sent a letter last

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night.

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us to seek an extension of their time to respond to the

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pre-motion conference letter so that they could consult other

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counsel.

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We apologize for the late hour of it.

THE COURT:

The client asked

With respect to the registering of the

judgment?
MS. MATZ:

Yes, your Honor.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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THE COURT:

So I think really we're going to spend

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most of our time talking about the attorneys' fees motion.

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guess I'm inclined to grant a little bit of time with respect

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to the motion to register, but I want to hear from plaintiffs

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as to how they're being prejudiced.

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You're concerned, Mr. Mandel, that assets are
dissipating as we speak?
MR. MANDEL:
what's going on.

We have concerns that -- we're not sure

I mean, obviously, the defendants were unable

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to post a bond which would have been the preferable way to

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proceed here.

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I

That raises questions.

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about their financial condition.

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withdraw.

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in other districts.

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THE COURT:

We've had concerns all along
We now have counsel trying to

We don't see why we shouldn't be allowed to register

I guess it would require at least some

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showing that there is property in other districts.

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preliminary investigation, we know that one of the defendants

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owns a home in Massachusetts.

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New York.

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From

They're not located here in

So any assets, I think, are, by definition, not going

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to be here.

Mr. Rogel is employed as a professor at MIT.

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has a home in Massachusetts.

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Redigi was based --

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THE COURT:

He lives in Massachusetts.

So you would want to register in

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

He

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Massachusetts?

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MR. MANDEL:

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THE COURT:

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MR. MANDEL:

Massachusetts for sure.
Where else?
To be honest, we're having some problems

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determining what the status is with respect to Mr. Ossenmacher.

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He appears to reside in California from what we can tell from

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investigations.

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Florida.

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some challenges, frankly, in being able to enforce it.

There are other addresses that he's had in

He uses post-office boxes for addresses.

We envision

What is clear is that there doesn't seem to be any

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ability to go after any assets that we're aware of here in

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New York.

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this judgment at all, it's clear we're going to have to go to

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other jurisdictions where these defendants are actually located

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and where they presumably have whatever assets they do have.

To the extent that we're going to be able to enforce

So that's the reason for the motion.

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We really don't

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see any reason why we shouldn't be allowed to go and do that.

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The judgment is final.

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appeal.

If they want to appeal, they can

They can avoid all this by just posting a bond for

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$3.5 million.

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think we should be able to go ahead and enforce it if we're

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able to.

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That doesn't seem like it's going to happen.

THE COURT:

We

I think what I'm inclined to do is

dispense with the pre-motion letter response and allow you to
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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make the motion.

I expect the motion would include a

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declaration for something to indicate where there is property

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and the basis for believing there's property in other places,

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and then I'll give defendants some time in which to respond,

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but I don't want to drag this out indefinitely.

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there's any reason to prevent you from filing the motion now.

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MR. MANDEL:

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THE COURT:

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I don't think

Thank you, your Honor.
How long do you think it will take you to

file that motion?
MR. MANDEL:

If we could get it on file by the end of

next week.

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THE COURT:

That's fine.

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MR. MANDEL:

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THE COURT:

July 8 I think.
July 8.

And then, Mr. Adelman or

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Ms. Matz, do you have a sense as to when the other counsel will

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be in this thing?

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MS. MATZ:

Candidly, your Honor, we don't.

It sounds

like a lot of this has to do with the individual defendants.

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THE COURT:

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MS. MATZ:

Yes.
We don't represent them, and we don't have

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any information as to that that would allow us to respond in

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any substance.

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MR. ADELMAN:

As we made clear in our motion,

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your Honor, we're not going to speak to it.

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information.

We have no

We were actually told that they were already
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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engaged.
THE COURT:

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Who knows.

you.
MR. ADELMAN:

THE COURT:

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MR. ADELMAN:

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We would like to ask the Court to at

least allow us to decide our motion prior to --

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Decide the motion to withdraw you mean?
Decide the motion to withdraw prior to

the Defendants Redigi having to answer on this motion.
THE COURT:

To respond to the motion?

MR. ADELMAN:

Yes.

We're kind of in a weird limbo.

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We've been discharged.

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we're here following the law.

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odd legal limbo.

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It's not a fair question for

Yet, as we know, we know the law, and
But we continue to be in this

We wouldn't know what to do at that point.

THE COURT:

I think perhaps what I should have done

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today is made the individual defendants show up and just make

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sure they're aware of your motion, make sure they understand

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the consequences of that motion, make sure they understand that

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corporations have to be represented by attorneys and that if

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they're not, then they're basically in default and inquire as

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to whether they're planning to retain new counsel or they're

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planning to represent themselves as individuals.

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I think that's probably what I ought to do.

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should have done that today.

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pieces in this case.

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near term.

Perhaps I

There are a lot of different

So maybe I will end up doing that in the

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. ADELMAN:

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You can put it in an order, your Honor.

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In addition, we're a little different because we had

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represented the entity.

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here.
THE COURT:

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So the entity needs counsel to appear

Yes.

The principals would be the ones who

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would be in the best position to know if they need to retain

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counsel on behalf of the corporation.
MR. ADELMAN:

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That's why I circle back that we request

our motion be granted or at least decided before Defendant

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Redigi be required to answer.

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THE COURT:

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MR. ADELMAN:

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Yes.
I just wanted to put it on the record.

I hope you don't mind.
THE COURT:

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I would likely grant the motion, but it

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would be good to know whether or not there's counsel coming in

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and they plan to respond to the attorneys' fees motion,

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for example, and the motion to register the judgment or not.

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Those would be good things to know.

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MR. ADELMAN:

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THE COURT:

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So I may drag the defendants right back

here.
MR. ADELMAN:

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Yes.

I appreciate that, your Honor.

Thank

you.
THE COURT:

So let's now talk about attorneys' fees,

the main event, as we'd like to call it.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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I've reviewed the pre-motion letters, and I've read

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the relevant and recent case law on this.
Mr. Mandel, it's your motion.

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This might have been a

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tougher sell before the Supreme Court slapped down the Second

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Circuit.

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situation; right?

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But at the same time, this was a pretty novel

This is a case that was watched closely in the press

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and certainly among folks in the technology press.

It was a

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one in which a lot of people had strong views on which this

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case ought to go.

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my reasoning.

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the statute, but it seems others disagreed, including some very

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smart people.

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I ruled, and I think I was pretty clear in

It seems to me this is clearly a violation of

MR. MANDEL:

I think Kirtsaeng is very much relevant.

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In Kirtsaeng obviously the defendant had lost in the Second

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Circuit and got three justices to vote, and the plaintiff got

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three justices to vote with them in the Supreme Court.

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So, clearly, there's a case where you would say that

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should be dispositive of the fact that it was a reasonable

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position, nonetheless, the Supreme Court felt compelled to send

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it back and to say that while objective unreasonableness is

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certainly a substantial fact, you have to look at the whole

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situation.

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I think that certainly bears looking at here because
part of what we're really focused on is we think that -- we
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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understand that there were issues that the defendants wanted to

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address and thought that they had a right to do.

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it was pretty clear that they were wrong about that.

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We think that

Also we think that the opinion on summary judgment

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sets that out.

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after the individual defendants came into the case and were

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represented by counsel who is no longer here where they really

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followed a course that was designed to prolong the case, we

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feel to litigate unnecessarily and unreasonably.

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There was a course of conduct in particular

They weren't focused on -- if they really had a

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legitimate issue about whether or not the for-sale doctrine

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applied, that's one thing.

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time arguing first with a motion to dismiss, then a

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re-arguement motion.

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But, instead, they spent a lot of

This was suing the individuals who were the principal

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founders of the company and claiming that they didn't know what

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they were accused of after they had litigated the case to a

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summary judgment conclusion.

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They then served voluminous discovery asking for all

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kinds of things that had no potential relevance to anything,

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things like our audit history with respect to musical

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compositions, none of which was remotely at issue in this case.

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They were basing it on totally implausible affirmative

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defenses that Redigi, to their credit, didn't even assert

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because they would have been frivolous.

There was a lot of

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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cost and time lost in that conduct.

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aspect of the reason for our motion.

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So that's one principal

I think, when you look at the litigation conduct, it

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went well beyond just what we think was a fair defense of

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arguably litigable issues and amounted to conduct that was not

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appropriate and was reasonably the subject of an attorneys'

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fees application.

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We also believe that there is case law that says a

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willful infringement is grounds for attorneys' fees, and we

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believe that your Honor's ruling on summary judgment, while it

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didn't expressly say it's willful, that you line up the factors

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that you found, the factual findings that were made, and

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compare it to what the Second Circuit has said with respect to

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willfulness, we had argued in limine motions that we actually

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were entitled to a ruling that there's already been a willful

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infringement.

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Now, I understand that was never ruled upon and the

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case settled.

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as a matter of law there was a willful infringement just based

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on the law of the case and the findings and the summary

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judgment motion.

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We stand by the arguments we made that we think

We think that's also relevant here.

The other thing is we are, by agreement, limited in

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the amount we can seek.

The amount we are seeking is really

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less than half the total fees that our client incurred.

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think it is a reasonable exercise here for us to be able to
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

We

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recover the amount that we're seeking.
THE COURT:

Tell me about what you think the effect of

Kirtsaeng is with respect to the Second Circuit principle.
MR. MANDEL:

Well, I think what Kirtsaeng was saying

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is that there was a tendency to say if there's an objectively

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reasonable position, it's almost dispositive, that that's in

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practice what was coming out of what the Second Circuit and

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courts applying it were doing.

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What the Supreme Court said is that's going too far.

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Objective reasonableness is important.

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factor, but they actually used language that says it's not

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controlling, and it's certainly not dispositive.

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It's a substantial

They had concerns that it had evolved to almost

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becoming dispositive because, looking at the actual results,

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what you're finding is every case in which the Court finds that

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there was a reasonable litigation position, the fees award is

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being denied, and the Supreme Court said that doesn't

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necessarily follow.

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THE COURT:

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So I should give due consideration to all

other circumstances relative to granting fees.

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MR. MANDEL:

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THE COURT:

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MR. MANDEL:

Correct.
That's a big help.
I understand.

I think that courts have

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always been under the impression, under the Second Circuit

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precedence, looked at litigation conduct.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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THE COURT:

What litigation conduct?

You're saying

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after the individual defendants came in, they made lots of

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discovery requests.

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characterizations of the technology here?

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What about the sort of changing

Initially, it was sort of copied to a cloud, but

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that's okay.

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like a train.

Then it was no, no.

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MR. MANDEL:

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THE COURT:

It's being migrated, sort of

Right.
And in reality, it was copied.

It was

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really just copying a file and destroying a file that appeared

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on the original hard drive.

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MR. MANDEL:

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quite frankly, they came in.

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said things in their answer, and they clearly tried to

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backtrack and come up with a different story.

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We think that's relevant too because,
They made their admissions.

Obviously, it didn't matter legally in the end, but it

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did cost additional time, efforts, in discovery and at the

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depositions having to probe into it.

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THE COURT:

MR. MANDEL:

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THE COURT:

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Presumably they knew what their technology

was; right?

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They

Presumably.
Presumably they understood that it wasn't

migrating a file.
MR. MANDEL:

One would think that they did know that

and that as a result, we retained an expert that we actually
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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put in on summary judgment in response to their motion.
We always maintained that the statute spoke for itself

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and that this was in the end irrelevant.

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was a distraction.

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inappropriate.

But, obviously, it

It was litigation conduct that we feel was

This case could have been a lot simpler.

The issues that ultimately had to be resolved -- we

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came into court from the beginning, and one of the reasons

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everybody thought we could do this on a very expedited basis

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was there really wasn't much of a dispute about what the

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technology was.
The question was what's the legal impact of that, and

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then perhaps based on the preliminary injunction hearing and

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getting a look at your Honor's first read on what the law meant

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and how it applied to that, suddenly the story changed, and it

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became more complicated than it needed to be.

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that's relevant to the attorneys' fees application.

So we think

Again, the same thing with the individual defendants'

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conduct.

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appropriately and realistically said that no additional

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discovery would be required because there wasn't anything more

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that anybody needed to know.

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probably two years or more litigating side issues that never

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should have been introduced regarding affirmative defenses that

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had no merit whatsoever.

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Mr. Adelman at the first conference I think quite

And yet, nonetheless, we spent

So, you know, all of that together, we think there is
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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on this record a very legitimate basis for seeking attorneys'

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fees.

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THE COURT:

With respect to willfulness, do you think

I'm in a position to rule on that or find that?
MR. MANDEL:

I think you are.

We did brief this on

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the in limine motions.

And, as I said, I recognize that that

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didn't get resolved.

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has said willfulness is, reckless disregard of consequences

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clearly constitutes that.

If you look at what the Second Circuit

I don't think there's any doubt on

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the summary judgment opinion that the defendants knew or should

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have known that the conduct was infringing.

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THE COURT:

I guess the issue, the standard, is

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whether the defendant had knowledge that its conduct

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represented infringement or perhaps recklessly disregarding the

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possibility.

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MR. MANDEL:

I think your Honor's rulings on it shows

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there was a reckless disregard for the likelihood of

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infringement.

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THE COURT:

Who is carrying the ball for the defense?

Ms. Matz.
MS. MATZ:

Thank you, your Honor.

So I apologize to

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the Court.

I don't represent the individual defendants.

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can't speak to some of the arguments that Mr. Mandel has made

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with regard to them, but I will address some of the points he

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just made.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

So I

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THE COURT:

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Mr. Mandel, you're seeking attorneys' fees

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from all the defendants, not just the corporate defendants?

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All the defendants?
MR. MANDEL:

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Yes.

One thing I'm not certain -- I

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thought Mishcon de Reya did represent the individual

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defendants.

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the individual defendants.

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be discharged.

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sure.

I thought they put in appearances that included

They don't seem to be here today.

THE COURT:

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I recognize that they also asked to
So I'm not

They don't seem to be here today.

I'm

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looking through my order to see if there was some ambiguity as

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to who needed to be here.

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They seem to be acting as though I granted their motion to

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withdraw, which I haven't.

I'm not sure why they're not here.

So I'll issue an order to show cause as to why they

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should not be sanctioned for not being here.

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to accomplish as much without them being here.

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to you.

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Go ahead, Ms. Matz.

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MS. MATZ:

We're not going
That's not fair

Just to start, I think the Kirtsaeng

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decision is important, and it clarified some of the existing

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Second Circuit -- courts that are within the Second Circuit,

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some of the rulings that are important to this case.

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One of the issues that the case clearly addressed was
the promotion of not granting attorneys' fees where a case is
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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going to clarify the boundaries of copyright law, which is

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something that other courts in this district have addressed

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repeatedly, since one of the goals of the Copyright Act is

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broad access to public works, that the courts should not grant

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attorneys' fees in cases that are novel or close because it

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could potentially have a chilling effect.
In a recent Supreme Court case, Kirtsaeng argued that

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the attorneys' fees should be awarded in hard and novel cases

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because it would essentially encourage clarification in the

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law.
The Supreme Court actually went to some great length

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in explaining why they thought that that might not actually be

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the effect of it and that it could actually have a deterrent

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effect on parties from asserting objectively reasonable

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defenses and vigorously both defending and prosecuting claims

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that are going to clarify the copyright law.

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So within that context, I think that the question

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your Honor asked at the beginning was isn't it pretty clear

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that this is a novel case.

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repeatedly acknowledged by all parties.

The answer is yes.

That was

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There weren't any cases out there that dealt with this

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specific issue of applying the for-sale doctrine to the type of

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technology that we were dealing with.

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I also think that when you look at the way objective
unreasonableness is defined under the law, that there wasn't a
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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lack of legal support or a factual basis for the defenses that

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Redigi asserted.

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the law that there was liability.

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tantamount to a finding of objectively unreasonableness.

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Ultimately the court disagreed and found on
But the liability isn't

Here I think Redigi did act in good faith.

The

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parties completed discovery, at least Redigi's portion of

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liability discovery, in a very short time frame.

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motions for summary judgment.

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together.

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There were

The parties have always worked

At the same time as this was going on, there were

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ongoing settlement negotiations.

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able to avoid the expense of a trial by agreeing to the amount

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of damages and certain other items.

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Ultimately, the parties were

I think all of this shows a course of conduct that
everyone was trying to get to a resolution in this case.
THE COURT:

What about the sort of shifting

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characterizations of the technology which is pretty stark, I

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have to say.

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about "Star Trek" and transporting as opposed to cloning.

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It was all sort of interesting and all.

You may remember at various times we were talking

It turns out

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that what this technology really did is pretty clear, pretty

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clear from the outset.

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To suggest that it was migrating or transporting the

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way the "Star Trek" folks get from the Enterprise to the planet

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is not really what was going on here.

Right?

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MS. MATZ:

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THE COURT:

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MS. MATZ:

4

Okay.
Obviously, your Honor, as you may recall,

we didn't actually represent Redigi.
THE COURT:

5
6

Well, I actually disagree with that.

So I don't think you were there for all of

those arguments.
MS. MATZ:

7

I will just say that one of the purposes

8

obviously of discovery is to get to the issue of how things

9

work.

To the extent that Redigi's previous attorney made

10

statements in the memo of law -- we argued this at length in

11

the summary judgment motion -- that the plaintiffs argued were

12

different and your Honor is saying are somewhat different, I

13

think that the issue is that the parties were very clear, as

14

discovery was going on, how the technology worked.

15

The plaintiff asked to look at the code at the

16

depositions, and it was explained to them.

17

back and say, well, we didn't know, and we had to get this

18

expert that they themselves acknowledged was essentially

19

irrelevant, I don't think that shows any bad faith.

20

THE COURT:

For them to come

It was the initial hearing; right?

21

had to be briefed and litigated.

22

then started us down the road of discovery.

23

Mr. Mandel a chance to respond to that when you finish.

That

That's sort of what I think
I'll give

24

It sounded to me like this was really going to be an

25

issue as to what the technology was; that once you folks came
SOUTHERN DISTRICT REPORTERS, P.C.
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in, it became clear as to what the technology was and the legal

2

theory then changed is not a criticism of you.

3

great job.

4
5

But I do think it suggests some amount of bad faith
perhaps on the part of the defendants here.

6

MR. ADELMAN:

7

THE COURT:

8

MR. ADELMAN:

9

You folks did a

If I may respond to that.

She's doing good.
I just want to add this part because

these are the conversations I initially had with the clients

10

when we were first retained.

Without dealing with

11

attorney-client privilege, it appeared to us, and without

12

disparaging the prior attorney, that the prior attorney did not

13

delve into the technology aspect of how the system worked.

14

And after having conversations -- and, in fact, Larry

15

Rudolph's Rogel's affidavit explains in great detail -- and he

16

is an MIT scientist -- exactly how the system works.

17
18
19
20

So I don't think that -- if there was not an order to
show cause at that point, the technology -THE COURT:

His affidavit in connection with the

preliminary injunction or in connection with summary judgment?

21

MR. ADELMAN:

The summary judgment motion.

22

THE COURT:

23

MR. ADELMAN:

24

exactly how the system works.

25

a specific reason, and it's because I asked detailed questions

That was a long time later.
If you look at his affidavit, it details
It was obviously under seal for

SOUTHERN DISTRICT REPORTERS, P.C.
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of exactly how it works.
My process and so forth is to be skeptical, and he

2
3

convinced me that that was the code that he wrote and the

4

process that he made.

5

previous injunction hearing, the papers were written very

6

quickly.

7

don't think it was explained to his attorney adequately at the

8

time.

9

I don't think that the previous -- the

Obviously, the time to do that was very quickly.

I

So I do not think there's any bad faith here.
THE COURT:

I have to go back and take a look.

I seem

10

to recall that some of the representations made to the public

11

were very consistent with what the lawyer was saying.

12

MR. ADELMAN:

I don't recall that.

From what I do

13

recall, I don't think it was inconsistent.

14

Nevertheless, I don't think there's bad faith here.

15

I think like you gave us a very short time period to

16

do discovery.

17

depositions within that time period.

18

I do not.

We did all the discovery.

We did all the

I don't think there was any extraneous work that

19

needed to be done by the plaintiffs to do this, as Ms. Matz

20

just said.

21

basically -- I don't think it would add anything to their

22

summary judgment motion.

23

If you look at the experts' report, it's

The fact that you concluded differently than what we

24

argued is a different story.

But all I'm arguing is I don't

25

think there was bad faith as we're suggesting here.
SOUTHERN DISTRICT REPORTERS, P.C.
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I don't think that even today -- Redigi's position

1
2

today is still that the file migrates.

I believe that based on

3

the patent, if you look at the patent and other things, I think

4

that bears it out.

5

Again, this is a pre-motion conference.

6

whoever comes in will explain that in more detail in their

7

papers.

8

at the summary judgment and you mentioned the little

9

back-and-forth we had about the "Star Trek" factor and all

10

I just wanted to -- since I had the argument with you

that.

11

THE COURT:

12

MR. ADELMAN:

13

I think that

That's right.
I thought that was a very good and

spirited argument.
THE COURT:

14

Ms. Matz, what about willfulness?

I guess

15

willful infringement does frequently generate an award of

16

attorneys' fees.

17

so far.

18

There hasn't been a specific finding of that

Is that something that I should be doing now based on

19

what was presented in connection with the summary judgment

20

motion as a basis for determining whether attorneys' fees

21

should be awarded?

22

MS. MATZ:

As your Honor rightly stated, there was

23

never a finding of willfulness.

24

that the Court should be engaging in now.

25

I don't think that's something

At the end of the day, that was an issue that was
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going to be decided at trial.

2

the issue of damages and specifically dispense --

3
4
5

THE COURT:

The parties were able to resolve

Isn't it relevant to this issue of

attorneys' fees?
MS. MATZ:

I think if there had been a finding of

6

willfulness in the case, it would be relevant.

7

it necessarily would be dispositive.

8
9
10
11

I don't think

I don't think that, given the fact that the parties
were able to resolve the issue and there has never been a
summary judgment where that was decided, that issue.
I know that the plaintiffs raised it on their motion

12

in limine and whether or not that was a proper issue on a

13

motion in limine or whether or not that needed to be decided at

14

summary judgment or at trial, it hasn't been.

15

I'm not sure that it makes sense for there to be an

16

additional type of briefing on factual determinations that the

17

parties were ultimately able to dispense with.

18

THE COURT:

They were able to dispense with it for

19

purposes of a settlement.

20

it seems like you folks agreed to disagree.

21

MS. MATZ:

But for purposes of attorneys' fees,

I actually think they were able to dispense

22

with it for the purposes of efficiency and to save everybody

23

the resources of having to actually try the issue.

24
25

THE COURT:

So what would need to be done to resolve

the issue of willfulness in your view?
SOUTHERN DISTRICT REPORTERS, P.C.
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MS. MATZ:

I think that it would have needed to be

2

determined at trial.

3

That issue was -- it was one of the issues as listed as going

4

to be decided at trial.

5

also think here it would be difficult -- I understand

6

Mr. Mandel's argument.

7

THE COURT:

That's what the posture of the case was.

Ultimately, there was no trial.

Right.

I

But to award attorneys' fees, you

8

think I need to have a trial with a jury to decide facts that

9

are relevant for purposes of determining attorneys' fees?

10

Do you think Kirtsaeng is contemplating that courts

11

will have trials by a jury to decide certain facts that would

12

be relevant to an attorneys' fees calculation?

13

MS. MATZ:

No.

I think that Kirtsaeng is

14

contemplating that the Court is going to look at the case and

15

the findings that were made in the case and is going to weigh

16

the various factors and putting emphasis on whether or not

17

there was objectively unreasonable conduct, keeping in mind the

18

goals of the Copyright Act and the potential deterrent effect

19

that attorneys' fees awards could have, and that the Court

20

would make a decision in its discretion.

21

But I don't think that there would be an argument

22

hinging on a finding of willfulness when there hasn't been a

23

finding of willfulness in this case.

24
25

One of the issues that we raised in opposition to the
motion in limine that contemplate a finding of willfulness at
SOUTHERN DISTRICT REPORTERS, P.C.
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this juncture is the application that a jury would use to find

2

whether there was in the range of damages between 750 and

3

30,000 or whether there was willfulness, there are a lot of

4

subjective elements and how they apply to various factors

5

they're supposed to consider.
I think at this juncture, there hasn't been a finding

6
7

of willfulness.

So I don't think plaintiffs can hinge an

8

argument that there should be an attorneys' fees award when

9

there has been no finding of willfulness.

10

THE COURT:

11

MR. MANDEL:

Mr. Mandel, let's hear you.
If I can just respond very briefly.

What

12

we're saying is there was in effect a finding of willfulness.

13

It wasn't addressed as being a finding of willfulness expressly

14

because it wasn't necessary at the summary judgment stage, but

15

the findings that were made at that summary judgment opinion,

16

if you look at what those findings were and you apply the law

17

of wilfulness to them, they amount to willfulness as a matter

18

of law.

19

So we don't think it's necessary to have a new factual

20

hearing or any new evidence.

21

your Honor already.

22

summary judgment findings and rulings and the applicable law on

23

willfulness.

24
25

It's all been put in front of

I think all we need to look at is your

We think that provides the answer.

That's really what we argued in the pretrial
submissions and why we were saying that we didn't think
SOUTHERN DISTRICT REPORTERS, P.C.
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willfulness was an issue for the jury, that it had already been

2

determined, in effect, by the summary judgment opinion so that

3

that was why we believed that it really shouldn't even go to

4

the jury.

5

I recognize that issue your Honor didn't decide, but

6

there's no reason why you can't decide that issue, which was

7

briefed once in the context of this motion.

8
9
10
11

THE COURT:

Well, you don't think I'm going to need to

consider live testimony?

You don't think I'm going to need to

consider additional declarations and things like that?
MR. MANDEL:

I don't think so.

Our position is that

12

the findings that were made at summary judgment applied against

13

the applicable law speak for themselves and amount to

14

willfulness.

15

THE COURT:

16

resolve this today.

17

think my inclination is to award attorneys' fees.

18

I don't think I'm going to be able to
I think it's a close call.

Candidly, I

Since defendants are not paying their own attorneys, I

19

don't think they're going to pay you, Mr. Mandel.

20

event, I'm not ruling.

21

would benefit from additional briefing.

That is my sense.

But I think this

22

So when do you want to file your motion?

23

MR. MANDEL:

24

THE COURT:

25

In any

If we could have until July 15.
That's fine.

Then we run into the same

issue with respect to the defense motion.

I do intend to

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resolve the motion to withdraw before they even file their

2

motion.
I think I'll set a date of 30 days after that.

3

So

4

that will be August 15 for the defense response and then a

5

reply in 10 days.

That's August 25.

MR. MANDEL:

6

Your Honor, can we just ask for two weeks

7

on reply, because I know I'm on vacation the week after their

8

response comes in.

9

THE COURT:

So the 29th then?

10

MR. MANDEL:

11

THE COURT:

Yes.

If we could.

That's fine.

If new counsel comes in,

12

things could get a little complicated.

But I don't want to

13

reward the defendants for not paying their counsel that

14

necessitates a change of counsel.
Then I guess I'll issue an order to show cause to the

15
16

individual defendants and their counsel for not being here

17

today.

18
19

Has anybody been in touch with them, counsel for the
individual defendants?

20

MR. ADELMAN:

21

THE COURT:

22

About this motion?

The motion for

attorneys' fees I mean.

23

MR. ADELMAN:

24

MS. MATZ:

25

We have spoken to them briefly.

I haven't.

No.

Not in the past couple of weeks, no.

The letter was signed by both.

So obviously we spoke with them

SOUTHERN DISTRICT REPORTERS, P.C.
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at the time it was being drafted.

2

Your Honor, if I can just say one other thing.

3

THE COURT:

4

MS. MATZ:

Sure.
I think there has been a little bit of

5

confusion created by the fact, without going into too much

6

detail because I think some of this is confidential, but there

7

was a representation made that incoming counsel would be

8

happening very shortly a couple of weeks ago.
So to the extent that we are able to resolve those

9
10

issues, I think that would be helpful in moving forward.

11

THE COURT:

12

MS. MATZ:

13

THE COURT:

14

MR. ADELMAN:

15

we have been confused all week.

16

counsel.

17

were told that they were paid.

18

a retainer.

19

mass confusion in the last week.

20

like this resolved as soon as possible.

21

Resolve the issues of counsel?
Yes.
I plan to do that.
I'm not going to speak for Mishcon, but
We've been told they were

Then we were told they were negotiating.

Then we were told that they had

Then we were told they didn't.

THE COURT:

Then we

It's just been a

So that's why I'm saying we'd

The docket sheet is kind of a mess because

22

it lists Mr. Raskin and Mr. DeVincenzo as being with different

23

firms, but they're both with Mishcon de Reya; right?

24

MS. MATZ:

25

THE COURT:

That's our understanding, yes.
So I'm not sure where they are and why

SOUTHERN DISTRICT REPORTERS, P.C.
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they're not here, but we'll get to the bottom of that.

2

will resolve this.
Remind me where the individual defendants are, the

3
4

individual defendants themselves, physically.

5

Massachusetts?

7

Massachusetts.

8

resides.

One is in

Is that right?

MR. ADELMAN:

6

9

So I

I believe Mr. Rudolph Rogel lives in

I have no idea where Mr. Ossenmacher presently

THE COURT:

You're local?

10

MR. ADELMAN:

11

THE COURT:

Yes.

I think I'm probably going to issue an

12

order that schedules a conference just with the defendants and

13

their counsel basically.

14

involve privileged materials, I would probably have that

15

sealed, at least for the time being, and not have plaintiffs'

16

counsel there.

Since some of that is likely to

17

Do you care, Mr. Mandel?

18

MR. MANDEL:

19
20

No, your Honor.

We would like to know

where the defendants are though.
THE COURT:

You want to know who is in and who's out.

21

I get that.

You don't really feel that you need to be involved

22

in the nitty-gritty of the decision; right?

23

MR. MANDEL:

24

THE COURT:

25

No.
I think that's what we'll do.

probably schedule something for next week on that.
SOUTHERN DISTRICT REPORTERS, P.C.
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Are you around?

2

MS. MATZ:

3

have one other appearance.
THE COURT:

4

Yes, your Honor.

I believe Thursday we

I think it's in the morning.

I'll issue an order on that.

I think

5

that's what we'll do for today.

Then obviously, if

6

BakerHostetler is coming in for everybody, so much the better

7

because they're here and know what took place today.
If not, then I guess the individual defendants are

8
9

going to have to respond on their own and represent themselves.

10

And the corporate defendant, it sounds like, is going to be in

11

default, which will have implications for all of these motions

12

and implications, perhaps, for the appeal too.

13

Who is counsel of record on the appeal?

14

MR. ADELMAN:

15

MS. MATZ:

16

MR. ADELMAN:

17

Nobody that we're aware of.

We've been advised that Baker -We've been advised that BakerHostetler

is handling the appeal.

18

THE COURT:

That sounds like that's not the case.

19

MR. ADELMAN:

We have no idea.

We know that the due

20

date for the motion to appeal is close at hand, which is why

21

potentially we have this hearing or meeting with all the

22

parties on Tuesday.

23

appeal.

I think that's the last day to file an

24

THE COURT:

So there's a meeting on Tuesday?

25

MR. ADELMAN:

No.

You're issuing an order to bring us

SOUTHERN DISTRICT REPORTERS, P.C.
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all in.

2

THE COURT:

When is good for you?

3

MR. ADELMAN:

I could do it tomorrow.

4

fine with me and preferable.

5

schedule.

6

our office today, but I'm around.

7

California.

9
10

three?

Of course your Honor has his own

I would even come in Friday.

We're actually closing

Ms. Matz will be in

I'm around tomorrow or Friday or Tuesday.

THE COURT:

8

That would be

Do you have a preference between those

I'm starting a trial on Tuesday.
MR. ADELMAN:

My preference would be Thursday or

11

Friday for sure.

12

there would be no -- it would just be resolved, and I can enjoy

13

my July 4.

14

That way the issue would get resolved.

MS. MATZ:

Then

Your Honor, alternatively -- I don't know

15

if your Honor would be open to this or not.

16

that it would need to happen sooner rather than later, like

17

Gary said, we're not entirely sure where they physically are at

18

this moment -- perhaps a telephone conference.

19
20

THE COURT:

But to the extent

That's always an option.

My preference is

that people who are around can pop in.

21

MS. MATZ:

22

THE COURT:

23

MR. ADELMAN:

24

closing the office.

25

THE COURT:

Of course.
I can do Friday morning if that works.
I'm going to say it works.

We're

So I assume that nothing is scheduled.
It may be hard to get people on that date.

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1
2
3

That's my thinking.
MR. ADELMAN:
know I can be here.

It may.

MS. MATZ:

Absolutely.

5

THE COURT:

Tomorrow?

What do you think?

MR. ADELMAN:

8

THE COURT:

10
11

It's now noon.

It's 11:30.

2:30 tomorrow?

7

9

I

Ms. Matz can be on the telephone.

4

6

You're right, your Honor.

That would work.

Let's plan on that.

Yes.

Absolutely.

I'll issue an order.

If people can't make it in person, they can, I guess, dial in,
and we can do it that way.

We might as well get this resolved.

I think I'm going to grant the motion to withdraw.

I

12

don't think law firms should work for free.

13

don't think the plaintiffs will be prejudiced.

14

decide they don't want to have counsel and defaults follow, I

15

don't think that affects the plaintiffs too much.

16

At this point, I
If defendants

Whether you collect on a judgment may be harder or

17

easier, but the lack of counsel is not going to make too much

18

of a difference.

19

MR. MANDEL:

20

MS. MATZ:

21

Right.

Your Honor, if I may, may I just ask to

appear by telephone tomorrow at 2:30?

22

THE COURT:

23

So that's fine.

24
25

That's fine, your Honor.

You may.
If you want to appear telephonically,

that's fine too.
MS. MATZ:

Should we dial in for the Court's

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convenience?
THE COURT:

2

It's probably easier if you set up a call.

3

I'd rather have people present, but on one day's notice, that's

4

going to be tricky if the individual defendants are outside of

5

the state.

6

MR. ADELMAN:

7

THE COURT:

8

MR. ADELMAN:
much.

13
14
15

Very good, your Honor.

Thank you so

Good seeing you.
THE COURT:

11
12

I'll set it up as a telephone conference.

I'll issue an order, and I will set the dial-in number.

9
10

I agree, your Honor.

Is there anything else we should cover

today?
MR. MANDEL:

No, your Honor.

Not from plaintiffs'

perspective.
THE COURT:

So I'm going to issue a scheduling order

16

with respect to the two motions:

July 15 for the motion on

17

attorneys' fees, July 8 for the motion to register the

18

judgment, August 15 for the defendant's response.

19

set a response date for the motion to register.

I haven't

20

Mr. Mandel, that needs to move quickly in your view?

21

MR. MANDEL:

22
23

We think it should move quickly.

We

don't really know what basis there is to oppose it.
THE COURT:

I'm going to set a date for a response on

24

July 22, but I'm open to moving that if I hear that that's a

25

hardship for anybody.
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MS. MATZ:

Thank you, your Honor.

2

MR. ADELMAN:

3

THE COURT:

Thank you, your Honor.

I don't think I even need a reply.

If you

4

want to reply, you can ask, but I'm not going to schedule a

5

reply for that.

6

MR. MANDEL:

7

THE COURT:

8

I want to thank the court reporter for her time and

9

talents.

That's fine, your Honor.
Thanks a lot.

Always interesting.

If anybody needs a copy of the transcript, you can

10

take that up with the court reporter.

11

2:30, I'll hear from some of you.

12

And then tomorrow at

(Adjourned)

13
14
15
16
17
18
19
20
21
22
23
24
25
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]