McDermott v. Monday Monday, LLC
Filing
21
OPINION AND ORDER......The defendants January 30 application to compel the plaintiff to pay attorneys fees and costs is denied. (Signed by Judge Denise L. Cote on 2/22/2018) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
MATTHEW MCDERMOTT,
:
:
Plaintiff,
:
:
-v:
:
MONDAY MONDAY, LLC,
:
:
Defendant.
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:
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17cv9230(DLC)
OPINION AND ORDER
Appearances:
For the plaintiff:
Richard P. Liebowitz
Liebowitz Law Firm, PLLC
11 Sunrise Plaza, Suite 305
Valley Stream, NY 11580
For the defendant:
Valerie K. Ferrier
Law Offices of Nolan Kelin
39 Broadway, Suite 2250
New York, NY 10006
DENISE COTE, District Judge:
Plaintiff Matthew McDermott commenced this copyright action
on November 23, 2017.
After the defendant moved to dismiss for
lack of personal jurisdiction, the plaintiff voluntarily
withdrew his action without prejudice to refiling.
The
defendant asserts that it is a prevailing party and has moved to
compel the plaintiff to pay attorney’s fees and costs in
defending against this lawsuit.
motion is denied.
For the following reasons, the
BACKGROUND
On November 23, 2017, plaintiff filed this action,
asserting that the defendant displayed the plaintiff’s
copyrighted photograph on the defendant’s website.
The
complaint acknowledged that the defendant is an Idaho limited
liability company based in Idaho.
The complaint asserts
personal jurisdiction exists over the defendant because the
defendant “transacts business in New York.”
On November 28, an
initial conference was scheduled to occur on February 2, 2018.1
The defendant was served with plaintiff’s complaint on or about
November 30.2
On January 2, 2018, the defendant served an offer of
judgment on the defendant in the amount of $1,000.
Then, on
January 17, defendant filed a motion to dismiss for lack of
The notice of the initial pretrial conference contains explicit
language that the plaintiff is to “notify all attorneys in this
action by serving upon each of them a copy of” the notice and
the Court’s individual practices. The plaintiff is “to file
proof of such notice with the Court.” The plaintiff failed to
comply with this notice; the electronic case filing system
(“ECF”) contains no entry indicating that the plaintiff duly
served defendant’s counsel with the notice. This is not the
first such failure on the part of plaintiff’s counsel before
this Court and other courts in this district. See, e.g.,
Steeger v. JMS Cleaning Services, LLC, 2018 WL 671382,
17cv8013(DLC), at *1 (S.D.N.Y. Jan. 26, 2018).
1
The defendant noted the date of service in a December 13, 2017
letter motion requesting an extension of time to answer or
otherwise respond to the complaint. The plaintiff never filed
an affidavit of service on ECF.
2
2
personal jurisdiction.3
Defendant, an Idaho-based business, is a
digital newspaper that does not charge a fee for its content or
sell anything through its website.
It argued that the simple
presence of an informational website, without opportunity for
sales or other internet-based business transactions, was not
enough to establish that the defendant had sufficient contacts
with the forum in order to justify personal jurisdiction under
either the New York long arm statute or the Due Process Clause.
It asserted that the plaintiff had “apparently filed in this
District for his own convenience, but has utterly failed to
allege any facts sufficient to establish personal jurisdiction
over an Idaho company.”
Opposition to the motion to dismiss was due February 7, in
the event the plaintiff did not amend his complaint in response
to the motion.
Plaintiff did not file any amended complaint or
oppose the motion.
on January 30.
Instead, he voluntarily dismissed his suit
The same day, defendant filed a letter motion to
compel the plaintiff to pay attorney’s fees and costs.
He
sought fees and costs incurred after January 2 pursuant to Fed.
R. Civ. P. 68 due to its $1,000 offer of judgment, and he sought
all of this costs and attorney’s fees in the action pursuant to
the Copyright Act, 17 U.S.C. § 505.
On December 14, the defendant’s request to extend its time to
respond to the complaint to January 18, 2018 was granted.
3
3
Plaintiff opposed, arguing that the defendant is not a
“prevailing party” under the standard set forth in Buckhannon
Bd. and Care Home, Inc. v. West Virginia Dpt. of Health and
Human Resources, 532 U.S. 598 (2001), and that Rule 68 does not
apply since judgment was not entered for the defendant.
Defendant replied on January 31.
DISCUSSION
Section 505 of the Copyright Act permits a “prevailing
party” to recover its reasonable attorney’s fees.
505.
17 U.S.C. §
“Before deciding whether an award of attorney’s fees is
appropriate in a given case . . . a court must determine whether
the party seeking fees has prevailed in the litigation.”
CRST
Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642, 1646 (2016).
While there are various statutes that award attorney’s fees to a
“prevailing party,” the Supreme Court has interpreted the term
in a consistent manner across those statutes.
Id.
In the context of determining whether a plaintiff has
prevailed, the “touchstone” of the prevailing party inquiry is
whether there was a “material alteration of the legal
relationship of the parties.”
Id. (citation omitted).
change must be marked by judicial imprimatur.”
omitted).
“This
Id. (citation
A prevailing defendant may recover “fees expended in
frivolous, unreasonable, or groundless litigation when the case
4
is resolved in the defendant’s favor, whether on the merits or
not.”
Id. at 1652.
“The congressional policy regarding the exercise of
district court discretion in the ultimate decision whether to
award attorney’ fees does not distinguish between merits-based
and non-merits based judgments.”
Id.
Indeed, “one purpose of
the fee-shifting provision is to deter the bringing of lawsuits
without proper foundation.”
Id. (citation omitted).
The
defendant has “fulfilled its primary objective” when the
“plaintiff’s challenge is rebuffed, irrespective of the precise
reason for the court’s decision.”
Id. at 1651.
Defendants can
be prevailing parties “even if the court’s final judgment
rejects the plaintiff’s claims for a nonmerits reason.”
Id.
In copyright cases, “[p]revailing 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.”
(1994).
Fogerty v. Fantasy, Inc., 510 U.S. 517, 534
In determining whether to award attorney’s fees, a
court may consider factors such as
frivolousness, motivation, objective unreasonableness (both
in the factual and in the legal components of the case) and
the need in particular circumstances to advance
considerations of compensation and deterrence . . . so long
as such factors are faithful to the purposes of the
Copyright Act and are applied to prevailing plaintiffs and
defendants in an evenhanded manner.
5
Id. at 534 n.19.
matter of course”.
However, a “court may not award fees as a
Kirtsaeng v. John Wiley & Sons, Inc., 136 S.
Ct. 1979, 1985 (2016)(citation omitted).
Nor can a court “treat
prevailing plaintiffs and prevailing defendants differently.”
Id. (citation omitted).
Fee awards in copyright cases should “encourage the types
of lawsuits that promote” the purpose of the copyright law,
which is to “enrich the general public through access to
creative works.”
Id. (citation omitted).
This requires a court
to strike a “balance between . . . encouraging and rewarding
authors’ creations while also enabling others to build on that
work.”
Id.
Accordingly, in determining whether an award of
fees is appropriate, to either a prevailing plaintiff or
defendant, a court should give substantial weight to the
objective reasonableness of the party’s position.
Id. at 1986.
This standard “encourages parties with strong legal positions to
stand on their rights and deters those with weak ones from
proceeding with litigation.”
Id.
“[W]hen a person . . . has an
unreasonable litigating position, the likelihood that he will
have to pay two sets of fees discourages legal action.”
1986-87.
Id. at
Applying these principles to plaintiffs, the Court
observed that a “copyright holder with no reasonable
infringement claim has good reason not to bring suit in the
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first instance (knowing he cannot force a settlement and will
have to proceed to judgment).”
Id. at 1987.
On the other hand, because the objective reasonableness
inquiry is only one factor, albeit an important one, the
objective reasonableness of a party’s position does not control
the decision on whether an award of fees is appropriate.
1988.
Id. at
“[A] court may order fee-shifting because of a party’s
litigation misconduct, whatever the reasonableness of his
claims.”
Id. at 1988-89.
Similarly, an award may be
appropriate “to deter repeated instances of . . . overaggressive
assertions of copyright claims.”
Id.
Rule 41, Fed. R. Civ. P, permits a plaintiff, without a
court order, to dismiss an action by filing a notice of
dismissal “before the opposing party serves either an answer or
Id. at Rule 41(a)(1)(A)(i).
a motion for summary judgment.”
“In the absence of any indication by the plaintiff, Rule
41(a)(1) presumes that a voluntary dismissal . . .
prejudice.”
is without
Youssef v. Thisman Const. Corp., 744 F.3d 821, 825
(2d Cir. 2014).
Such a dismissal is “without prejudice” so long
as there has been no previous dismissal based on or including
the same claim.
Fed. R. Civ. P. 41(a)(1)(B).
A second such
dismissal operates “as an adjudication on the merits.”
Id.
Accordingly, a voluntary dismissal without prejudice does not
operate as a judgment and requires no court action or approval.
7
See ISC Holding AG v. Nobel Biocare Finance AG, 688 F.3d 98, 111
(2d Cir. 2012)(“Rule 41(a)(1)(A) is the only form of dismissal
requiring no court action to be effective.”)
The parties have not cited, and this Court has not found,
cases addressing the impact the CRST decision on a defendant’s
request for attorneys’ fees following a plaintiff’s voluntary
dismissal of its copyright claims pursuant to Rule 41 in
response to a motion to dismiss.
Accordingly, courts have not
yet considered whether a defendant may be considered a
prevailing party in such circumstances.
Specifically, they have
not yet addressed whether a defendant may be a prevailing party
for purposes of a fee award under the Copyright Act where there
has been no judicial ruling favorable or unfavorable to any
party prior to the dismissal of the case.
Here, the plaintiff voluntarily dismissed his claims after
the defendant served a Rule 68 offer and filed a motion to
dismiss for lack of personal jurisdiction.
In opposition to
this motion for fees, the plaintiff does not suggest that he had
any non-frivolous reason to believe that there was personal
jurisdiction over the defendant in this district.
Based on the
record before the Court, it appears that the filing in this
district was “frivolous, unreasonable, or groundless.”
136 S.Ct. at 1652 (citation omitted).
CRST,
Plaintiff’s counsel,
Richard Liebowitz, is a known copyright “troll,” filing over 500
8
cases in this district alone in the past twenty-four months.4
Thus, whether or not an attorney’s fee award could be properly
awarded against the plaintiff under Section 505, such an award
against plaintiff’s counsel may be appropriate in an exercise of
this Court’s inherent power.
The court has inherent power to sanction parties and their
attorneys, a power born of the practical necessity that
courts be able to manage their own affairs so as to achieve
the orderly and expeditious disposition of cases. This
power may likewise be exercised where the party or the
attorney has acted in bad faith, vexatiously, wantonly, or
for oppressive reasons.
Revson v. Cinque & Cinque, P.C., 221 F.3d 71, 78 (2d Cir. 2000)
(citation omitted).
See also Fed. R. Civ. P. 11 (“[T]he court
may impose an appropriate sanction on any attorney . . . .”).
In an exercise of this Court’s discretion it declines to award
fees on this occasion.
If Mr. Liebowitz files any other action
in this district against a defendant over whom there is no nonfrivolous basis to find that there is personal jurisdiction, the
outcome may be different.
4
“In common parlance, copyright trolls are more focused on the
business of litigation than on selling a product or service or
licensing their copyrights to third parties to sell a product or
service. A copyright troll plays a numbers game in which it
targets hundreds or thousands of defendants seeking quick
settlements priced just low enough that it is less expensive for
the defendant to pay the troll rather than defend the claim.”
Creazioni Artistiche Musicali, S.r.l. v. Carlin America, Inc.,
2017 WL 33938502017, at *4 (S.D.N.Y. Aug. 4, 2017) (citation
omitted).
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Finally, the defendant’s Rule 68 argument is unavailing.
That rule clearly states: “If the judgment that the offeree
finally obtains is not more favorable than the unaccepted offer,
the offeree must pay the costs incurred after the offer was
made.”
Fed. R. Civ. P. 68(d) (emphasis added).
In this case,
there has been no judgment entered for the defendant.
While the
defendant is correct that “plaintiff has won nothing” in this
case, the defendant nevertheless has not secured a judgment, on
the merits or otherwise, and, as such, Rule 68 is inapplicable.
CONCLUSION
The defendant’s January 30 application to compel the
plaintiff to pay attorney’s fees and costs is denied.
Dated:
New York, New York
February 22, 2018
__________________________________
DENISE COTE
United States District Judge
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