ACEMLA de Puerto Rico, Inc. et al v. Banco Popular de Puerto Rico, Inc. et al

Filing 119

OPINION AND ORDER: Plaintiffs' 104 Motion for Reconsideration of 103 Order Awarding Attorneys' Fees lacks merit as to the first two grounds in support of reconsideration. Court to rule on third ground in support of reconsideration once it receives the information required from law firms (1) Saldana, Carvajal & Velez-Rive, PSC and (2) Pietrantoni, Mendez & Alvarez, due by 8/18/2017. Signed by Judge Carmen C. Cerezo on 7/26/2017. (mld)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
ACEMLA DE PUERTO RICO, INC.;
LATIN AMERICAN MUSIC
COMPANY, INC.
Plaintiffs
vs
BANCO POPULAR DE PUERTO
RICO, INC.; FUNDACION BANCO
POPULAR, INC.; COMPANIES A
to Z; JOHN DOE
Defendants

CIVIL 13-1822CCC

OPINION AND ORDER
On September 30, 2015, the Court issued an Order granting a Motion for
Summary Judgment filed by defendants Banco Popular de Puerto Rico (BPPR)
and Fundación Banco Popular (Fundación) on January 20, 2015 (d.e. 32) and
opposed by plaintiffs on March 13, 2015 (d.e. 50). Judgment was entered on
that same date (d.e. 81). On October 30, 2015, the Court issued its Statement
of Reasons: Findings of Fact and Conclusions of Law (d.e. 84) in which it found
that plaintiffs’ claims were barred by the statute of limitations with regard to the
pre-2010 Christmas Specials and by res judicata/collateral estoppel as to
the 2010 and 2012 Christmas Specials. Plaintiffs contended that songs (1)
through (10) listed at page 2 of our Statement of Reasons were used in the
1995-2005 Christmas Specials, that the eleventh song, “Ojos Chinos,” was
used in the 2010 Christmas Special and the twelfth song, “Boricua en la Luna,”
was used in the 2012 Christmas Special. The limitations period established by
the Copyright Act, 17 U.S.C. § 507(b), requires that a copyright claim must be

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commenced within three years after its accrual. A copyright claim accrues,
pursuant to caselaw cited in the Statement of Reasons, when an infringing act
occurs.
Regarding the limitations period as to songs (1) though (10), the Court
reached the following conclusion:
More importantly, plaintiffs have not controverted defendants’
factual assertion regarding the sales of the Christmas Specials
during the limitations period. They did not submit any evidence
that the 1995, 2001, 2004, and 2005 Christmas Specials were
sold during the period from October 28, 2010, which is the
earliest date for which they could recover for infringement.
Given that plaintiffs’ evidence of infringing conduct is all dated
earlier than October 28, 2010, their infringement claims related to
the 1995, 2001, 2004, and 2005 Christmas Specials are
time-barred.
d.e. 84, p. 6. (Emphasis ours).
Regarding the claim preclusion/issue preclusion as to songs (11)
and (12), the Court found that the decisions of this District in Latin Am. Music
Co. v. Archdiocese of San Juan, 135 F. Supp. 2d 284, 303 (D.P.R. 2001) aff’d
in part, rev’d in part Latin Am. Music Co., 499 F.3d 32 (1st Cir. 2007), barred
re-litigation of the issue of plaintiffs’ standing to sue for infringement of the
song “Ojos Chinos” and that plaintiffs were precluded by the doctrine of
collateral estoppel from suing defendants for its infringement. Additionally, it
was there noted that the Latin Am. Music Co. case had already been cited as
a bar to a prior claim between plaintiff ACEMLA and Banco Popular for
infringement of that same song, “Ojos Chinos.”

See Banco Popular v.

Latin Am. Music Co., Civil No. 01-1142, October 14, 2008 Opinion and Order,
affirmed by the First Circuit in Banco Popular v. Asociación de Compositores

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y Editores de Música Latinoamericana, 678 F.3d 102 (1st Cir. 2012). As to the
song “Boricua en la Luna,” the Court also found that plaintiffs were collaterally
estopped from relitigating an infringement claim since their copyright ownership
over this song had been litigated before and decided against them by way of
a binding final judgment. Plaintiffs were, therefore, collaterally estopped from
relitigating that same issue.
The Statement of Reasons also points out that plaintiffs did not provide
evidence that would be different from that already presented in earlier failed
attempts to establish ownership and/or standing to sue regarding “Ojos Chinos”
and “Boricua en la Luna.” The Court concluded that, even if plaintiffs could
muster new evidence to establish an ownership claim, they would still have to
establish that such new evidence was unavailable in the prior litigation. It
noted that plaintiffs had not even identified what different evidence they could
submit in this litigation to show ownership and standing to sue over these two
songs.
This brings us to the matter of attorney’s fees pursuant to 17 U.S.C.
§ 505. Defendants BPPR and Fundación requested that the Court award them
reasonable attorney’s fees for the work done by two law firms plus the cost of
translations. The Court’s award order made reference to the Fogerty factors
set forth in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994), which states
factors that may be considered, among others, when awarding attorney’s fees
under

the

Copyright

Act:

“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

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compensation and deterrence.” The Court also made reference to First Circuit
cases that had applied the Fogerty factors, even in the absence of frivolity or
bad faith when the claim was simply “objectively weak.” Invessys, Inc. v.
McGraw-Hill, Cos., Ltd., 369 F.3d 16,

20-21

(1st Cir. 2004) and Mathews v.

Freedman, 157 F.3d 25, 29 (1st Cir. 1998). This notion of an “objectively
weak” copyright infringement claim, in the context of an award of attorney’s
fees, was also discussed in Garcia-Goyco v. Law Environmental Consultants,
Inc., 428 F.3d 14, 20-21 (1st Cir. 2005).
The September 26, 2016 Order awarding attorney’s fees (d.e. 103) made
reference to the fact that ten of the copyright claims were time barred and two
were precluded by res judicata and collateral estoppel. It specifically stated
that the reasons for plaintiffs’ copyright claims not surviving summary judgment
“were readily accessible to plaintiffs well before the conclusion of discovery,”
yet the litigation lasted nearly three years.
Although plaintiffs did not file a separate Motion for Reconsideration, they
submitted a Memorandum in Support of Motion for Reconsideration of Order
Awarding Attorney’s Fees on October 31, 2016 (d.e. 104) which raises the
following arguments: (1) that the Court failed to apply the proper legal standard
in deciding the motion for attorney’s fees, (2) did not consider the effect that its
ruling could have on plaintiffs’ business and (3) improperly failed to consider
whether defendants’ billing rates were reasonable. Citing Kirtsaeng v. John
Wiley & Sons, Inc., 136 S.Ct. 1979 (2016), plaintiffs invite the Court to consider
the reasonableness of its position stating as an example of this that they “had
a good faith basis to assert that there were ongoing and continuing sales of

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each Christmas Special that took place long after the year in which the special
originally air[ed], and that those sales continued after the 2010 limitations date
[and their] claims as to the ten songs precluded on statute of limitations
grounds were thus neither objectively unreasonable nor frivolous.” d.e. 104,
at p. 6. They also assert that they had “good faith arguments in favor of their
infringement claims for “Ojos Chinos” and “Boricua en la Luna” and restate
their positions in opposition to summary judgment in support thereof. Id.
In Kirtsaeng, the Court discussed objective reasonableness as “an
important factor in assessing fee applications – not the controlling one.”
Kirtsaeng, 136 S.Ct. at p. 1988. It referred to the other factors adopted in
Fogerty v. Fantasy, Inc., 114 S.Ct. 1023 (1994) to guide a district court in
awarding attorney’s fees under section 505 of the Copyright Act, 17 U.S.C.
§ 505: frivolousness, motivation, objective unreasonableness and the need in
particular circumstances to advance considerations of compensation and
deterrence.

Thus, all of these factors must be considered beyond the

reasonableness of the parties’ litigation positions.
Plaintiffs claim that the Court did not conduct an analysis of the objective
reasonableness of their litigation position in its award of attorney’s fees. As the
Kirtsaeng Court observed in its discussion of objective reasonableness as an
important yet not controlling factor in assessing fee applications in Copyright
Act cases: “A district court that has ruled on the merits of a copyright case can
easily assess whether the losing party advanced an unreasonable claim or
defense.” Id., at p. 1987.

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The Court did not have before it any novel issues of fact or law in this
case. Its Statement of Reasons: Findings of Fact and Conclusions of Law are
strictly based on dates in which songs (1) through (10) were produced and
broadcast on television during the 1995, 2001, 2004 and 2005 Christmas
Seasons and dates when they were later sold by Banco Popular. d.e. 84,
pp. 3-4.

Likewise, the Court highlighted that plaintiffs did not offer any

evidence to controvert the assertions made by Banco Popular that “the audio
and/or film versions of the Christmas Specials were withdrawn from sale at
bank branches and that Banco Popular had not sold the 1995, 2001, 2004
and 2005 Christmas Specials since before October 28, 2010 which is three (3)
years before the filing of the complaint.” The Court specifically made a factual
finding that plaintiffs “had offered no evidence that the 1995, 2001, 2004
and 2005 Christmas Specials were sold within the three-year term immediately
preceding the filing of the complaint.” Id., at pp. 4-4. As to the statement by
Raul Bernard that they have asked the Court to consider in determining the
reasonableness of their litigation position, the Statement of Reasons in support
of summary judgment expressly pointed out that “the Bernard statement
(d.e. 50-1) is unsigned . . . neither Bernard who appears as the intended
signatory nor anyone else has declared under penalty of perjury as to the facts
mentioned in the statement.” That unsigned Declaration of Raúl Bernard was
filed on March 13, 2015 (d.e. 50-1). In conclusion, at page 6 of its Statement
of Reasons, the Court determined that “given that plaintiffs’ evidence of
infringing conduct is all dated earlier than October 28, 2010, their infringement

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claims related to the 1995, 2001, 2004 and 2005 Christmas Specials are time
barred.”
The same fact-specific analysis based on the three-year statute of
limitations was also conducted by the Court on the claim preclusion/issue
preclusion as to songs (11) and (12), “Ojos Chinos” and “Boricua en la Luna”,
in the 2010 and 2012 Christmas Specials. The factual foundation of the
preclusion argument is set forth in detail at pages 8 through 10 of the
Statement of Reasons: Findings of Fact and Conclusions of Law (d.e. 84).
Regarding the defense of res judicata or collateral estoppel, again the Court
found that plaintiffs had not provided new evidence to establish their ownership
claim nor had shown that new evidence was unavailable at the time of the first
judgment in the previous cases in which they litigated and lost their ownership
claim over “Boricua en la Luna.” The Court also found that plaintiffs were
barred from relitigating the issue of their standing to sue for infringement of
“Ojos Chinos.” These findings and the supporting reasons are set forth in
detail, with citations to the prior cases litigated, at pages 8 through 11 at docket
entry 84.
Accordingly, the Court’s assessment is that plaintiffs did not advance a
reasonable claim in this case. Additionally, as acknowledged in Kirtsaeng,
another factor to be taken into account beyond the reasonableness of the
parties’ litigating positions is the need to deter repeated instances of copyright
claims as has happened in this case. Having considered the relevant factors
of deterrence and the unreasonableness of plaintiffs’ litigation position, the
Court reaffirms its award of attorney’s fees in favor of defendants.

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We now address the two additional arguments which plaintiffs refer to as
the Court’s failure to consider the effect that this ruling could have on plaintiffs’
business and the failure to consider whether defendants’ billing rates were
reasonable. As to the first, plaintiffs disregard the fact that they did not raise
in their Opposition to Defendants’ Motion for Attorney’s Fees filed on May 9,
2016 (d.e. 98) “their ability to pay the award without incurring financial ruin.”
They raise for the first time in their Memorandum of Law in Support of Motion
for Reconsideration of Order Awarding Attorneys’ Fees filed on October 31,
2016 (d.e. 104) the Court’s failure to take into account plaintiffs’ “financial
capacity.” Despite not raising such a claim, they protest as to the Court’s lack
of consideration of such a factor. To make things worse, plaintiffs have now
resubmitted the Bernard’s statement which they had previously filed on
March 13, 2015 as docket entry 50-1, unsigned, in support of their opposition
to defendants’ Motion for Summary Judgment. The Bernard Declaration filed
on March 13, 2015 as docket entry 50-1 is identical as to its content and date
(March 12, 2015) as the Bernard Declaration refiled on October 31, 2016 as
docket entry 104-1.

The only difference is that his Declaration filed as

docket entry 104-1 bears his signature which was affixed 19 months later. In
addition to these irregularities, the Bernard Declaration, now touted as
evidence that “both plaintiffs operated at a loss during their most recent
accounting year” (Motion for Reconsideration, d.e. 104 at p. 7), contains no
such affirmation.

Both the unsigned and signed Bernard Declarations

(d.e. 50-1 and d.e. 104-1) contain declarations of Raúl Bernard as president
of ACEMLA and LAMCO strictly aimed at defeating the Motion for Summary

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Judgment filed by defendants. The Bernard Declaration, signed or unsigned,
has nothing to do with the “devastating impact on plaintiffs’ business” which
they raise for the first time in reconsideration of the Court’s Order awarding
attorney’s fees. Therefore, their argument that “the October 3 Order’s failure
to take this into account mandates reconsideration of that Order” (Motion for
Reconsideration, d.e. 104 at p. 9) is meritless.
We reach plaintiffs’ last ground in support of reconsideration, that is, that
“the October 3 Order fails to properly determine whether defendants’ billing
rates were reasonable. Id., at p. 8. In this case, there are six attorneys listed
at paragraph 5 of the Statement Under Penalty of Perjury in support of Motion
for Attorney’s Fees (d.e. 91-1) who worked in this case as attorneys for
defendants Banco Popular de Puerto Rico and Fundación Banco Popular:
(1) Nestor Méndez-Gómez, (2) María D. Trelles-Hernández, (3) Mariana
Muñiz-Lara, (4) Bibiana Sarriera, (5) Diego Segurola and (6) Cristina
Hernández. All of these are attorneys from Pietrantoni, Méndez & Alvarez,
LLC (PMA). There are three paralegals from PMA listed: (1) Nory Sánchez,
(2) Perla Campos and (3) Viviana Román.
There is a separate Unsworn Statement Under Penalty of Perjury
(d.e. 91-3) filed on March 30, 2016 by Saldaña, Carvajal and Vélez-Rivé, PSC,
signed by attorney Luis M. Saldaña-Román, as legal representative for Banco
Popular de P.R. He states that attorney Miguel J. Ortega-Núñez, a junior
partner at the law firm, was the counsel assigned to defend BPPR and that “the
rates which we customarily charge for legal services of this nature are proper
and reasonable.” d.e. 91-3, paragraph 9.

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When the Court initially awarded attorney’s fees, it noted that plaintiffs
had raised no opposition to the reasonableness of the hourly rate reported by
either law firm. Upon closer scrutiny of the statements filed by each law firm,
the Court notes that the six attorneys from PMA who billed for services in this
case, except for Segurola-Hernández, have claimed based on hourly rates
ranging from a low to a higher fee. For example, Néstor M. Méndez-Gómez,
Esq. billed a total of 50 hours and used three different hourly rates, that is, he
billed 27.9 hours at $235/hour, 8.2 hours at $245/hour and 15 hours
at $330/hour for different tasks, for a total amount of attorney’s fees claimed
of $13,152.50. María D. Trelles-Hernández, Esq., who signed the Declaration
Under Penalty of Perjury (d.e. 91-1), billed based on an hourly fee range
from $200/hour to $225/hour; specifically she billed 61.20 hours at $200/hour,
56.90 at $210/hour, 184.5 hours at $215/hour and 28.8 hours at $225/hour for
a total of attorney’s fees claimed of $70, 336.50. Attorney Bibiana-Sarriera
reported a lowest hourly fee of $180/hour and the higher fee at $190/hour;
160.9 hours were billed at $80/hour and 29.60 hours at $190/hour, for a total
amount claimed as attorney’s fees for Ms. Sarriera of $34,016.00. Attorney
Mariana Muñiz claimed attorney’s fees from a range of $175/hour to $190/hour.
She reported having worked 76.7 hours at $175/hour, 9.50 hours at $180/hour
and 1.30 hours at $190/hour., for a total amount of attorney’s fees claimed of
$15,399.50 for her legal work.

Attorneys Diego Segurola and Cristina

Hernández, first-year associates at the law firm, described their work as
providing assistance with research for the motion for attorney’s fees. They
reported 3.2 hours for Mr. Segurola and 9.1 hours for Ms. Hernández in

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research related to the motion for attorney’s fees at a fixed rate of $135/hour
for each and a total amount claimed for their attorney’s fees in the sum
of $1,660.50.
Attorney Trelles-Hernández’ Statement Under Penalty of Perjury
(d.e. 91-1) contains a blanket statement at paragraph 19 which reads:
The
rates
described
for
Mr.
Mendez-Gomez,
Ms. Trelles-Hernandez, Ms. Muniz-Lara, Ms. Sarriera,
Mr. Segurola and Ms. Hernandez are reasonable and are lower
than or equivalent to the rates charged by similar law firms for
attorneys of this background and experience in this type of case.
As to the hourly rate, the unsworn Statement Under Penalty of Perjury
signed by Mr. Luis M. Saldaña-Román (d.e. 91-3) also contains a general
reference as to the reasonableness of the hourly rate charged. Paragraph 9
of that Statement reads:
9.

I respectfully submit that the rates which we customarily
charge for legal services of this nature are proper and
reasonable, and consistent with rates charged by others
experienced in federal litigation and the field of copyright
infringement litigation.

The Court limits its scrutiny to the reasonable hourly rate issue since this
is the only matter regarding the fee award that has been raised by plaintiffs in
their Memorandum in Support of Motion for Reconsideration. Plaintiffs argue
at page 9 of said Motion that our October 3, 2016 Order “fails to engage in any
evaluation of the ‘reasonable hourly rate’ or the ‘community’s prevailing hourly
billing rate’ for similarly-experienced attorneys.”

Plaintiffs also point to

defendants having provided “absolutely no evidence of what the hourly billing
rate is “for similarly situated attorneys beyond conclusory and self-interested

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statements in their Declaration that the rates they were charging are
reasonable.
Hourly rates are measured against the customary rate in the marketplace
for comparably credentialed counsel. Spooner v. EEN, Inc., 644 F3d 62, 68
(1st Cir. 2011), citing Gay Officers Action League v. Puerto Rico,
247 F3d 288, 295-296 (1st Cir. 2001), United States v. One Star Class Sloope
Sailboat Built 1930, 546. F3d 26, 40 (1st Cir. 2008). See also Blum v. Stenson,
465 U.S. 886, 895 (1984); Missouri v. Jenkins BY Agyei, 491 U.S. 274,
286 (1989).
In Bordanaro v. McLeod, 871 F2d 1151, 1168 (1st Cir. 1989), the Court
stated:
We believe that Blum v. Stenson, [465 U.S. 886, 895 (1984)]
places a burden on a party requesting attorneys’ fees to establish
– by evidence other than his own attorneys’ affidavits – the
prevailing hourly rate in the community for comparable legal
services.
It expanded on the Blum opinion quoting:
To inform and assist the Court in the exercise of its discretion, the
burden is on the fee applicant to produce satisfactory evidence- in
addition to the attorney’s own affidavit – that the requested rates
are in line with those prevailing in the community for similar
services by lawyers of reasonably comparable skill, experience and
reputation. A rate determined in this way is normally deemed to be
reasonable, and is referred to - for convenience – as the prevailing
market rate.
The First Circuit cited the cases in which it had “consistently followed that
teaching.” Bordanaro, 871 F.2d at 1168. After Bordanaro, the Court decided
Martinez Velez v. Rey Hernandez, 506 F3d 32, 47 (1st Cir. 2007) reaffirming
the Blum teaching.

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Since the movants for attorney’s fees, the law firms of PMA and SCVR,
did not provide any information in the discharge of their burden of proving the
prevailing market rates in our community, referring to the customary rates in
the marketplace for comparably credentialed counsel, that is, rates prevailing
for similar services by lawyers of comparable skills, experience and reputation,
this information is necessary in order to reassess the reasonableness of the
hourly rates of the different attorneys who billed for legal services to defendant.
The law firms PMA and SCVR shall submit the necessary evidence that would
allow the Court to make a ruling as to the reasonableness of the prevailing
rates in the community in order to recalculate the lodestar amount. As to the
seven attorneys who worked in this case for the firm PMA and the one attorney
who provided services in the law firm SCVR, they are expressly admonished
that the information necessary for the Court to make the prevailing market rate
determination within the standard established above has to be provided
individually by such party and that they are not to provide ranges of hourly rate
from a lower to a higher but simply the prevailing hourly rate that would apply
in the case of each attorney without including different rates for one same
attorney. This is not a case in which differences in hourly rate result from
out-of-court/in-court time since the case was disposed of by way of summary
judgment without oral argument. The information required from each attorney
shall be provided to the Court by AUGUST 18, 2017.
The Motion for Reconsideration (d.e. 104) lacks merit as to the grounds
based on the reasonableness of plaintiffs’ litigation position and the alleged
failure of the Court to consider the economic impact upon plaintiffs of the fees

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award. The third ground in support of reconsideration, the Court’s failure to
consider the reasonableness of the hourly rate charged by the attorneys, shall
be ruled upon after the Court receives the information on prevailing market
rates for similar work by comparably credentialed counsel.
SO ORDERED.
At San Juan, Puerto Rico, on July 26, 2017.

S/CARMEN CONSUELO CEREZO
United States District Judge