ITN Flix et al v. Univision Holdings et al

Filing 128

MEMORANDUM DECISION AND ORDER denying 90 Motion for Rule 11 Sanctions; finding as moot 120 Motion for Leave to File. Signed by Magistrate Judge Dustin B. Pead on 5/31/18 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
ITN FLIX, LLC, ,
MEMORANDUM DECISION AND ORDER
DENYING DEFENDANTS’ MOTION FOR
RULE 11 SANCTIONS

Plaintiff,
v.

Case No. 2:15-cv-00736-DN-DBP
UNIVISION TELEVISION GROUP, INC.,
UNIVISION HOLDINGS, INC., UNIVISION
COMMUNICATIONS, INC., and EL REY
NETWORK, LLC,

District Judge David Nuffer
Magistrate Judge Dustin B. Pead

Defendants.
This matter was referred to the court under 28 U.S.C. § 636(b)(1)(A). (ECF No. 3.) The
case involves allegations of copyright violations related to the film Machete. (See ECF No. 46.)
Defendants filed a “Motion for Rule 11 Sanctions” seeking dismissal of all claims against
Univision Salt Lake City, LLC, Univision Communications Inc., and Univision Holdings, Inc.
(collectively “Univision Defendants”), as well as attorney fees expended defending this action.
(ECF No. 90). The Motion is fully briefed and ready for the court’s decision. (See ECF Nos. 90,
96, 107). The court declines the parties’ requests for oral argument, finding no good cause to
entertain a hearing.
STANDARD OF REVIEW
By signing, filing, submitting, or advocating a written submission to the court, counsel
represents “the factual contentions have evidentiary support or, if specifically so identified, will
likely have evidentiary support after a reasonable opportunity for further investigation or
discovery.” Fed. R. Civ. P. 11(b)(3). This requires an attorney to conduct an objectivelyreasonable investigation of the facts before signing a document filed with the court. See

Adamson v. Bowen, 855 F.2d 668, 673 (10th Cir. 1988). Reasonableness of counsel’s conduct
necessarily depends upon the prevailing facts and circumstances of a given case. See Garth O.
Green Enterprises, Inc. v. Harward, No. 2:15-cv-556, 2017 WL 213787, at *7 (D. Utah Jan. 18,
2017) (discussing relevant factors mentioned in the advisory committee notes to Rule 11). The
court enjoys broad discretion in determining whether Rule 11 sanctions are appropriate.
Adamson at 673.
PARTIES’ ARGUMENTS
Defendants contend Rule 11 sanctions are warranted because the Univision Defendants
did not broadcast Machete at any time, but Plaintiff alleges they have done so every year since
2010. (ECF No. 90 at 8–9 1). Defendants point out that Plaintiff has not identified any facts to
support its allegation that Univision Defendants broadcast Machete, despite discovery requests
seeking such information. (Id. at 10). Defendants contend Plaintiff’s investigation of the
underlying facts was unreasonable under the six factors applied in Garth O. Green Enterprises v.
Harward, No. 2:15-cv-556, 2017 WL 213787, *7 (D. Utah Jan. 18. 2017). (Id. at 11–17).
Plaintiff’s former counsel at Parr Brown Gee & Loveless (“Parr Brown”) argues Rule 11
sanctions are not warranted simply because certain factual allegations are ultimately proven
untrue, so long as there was some evidentiary basis supporting Plaintiff’s claims when they were
alleged. (ECF No. 96 at 4). Parr Brown contends it adequately investigated the allegations
against the Univision Defendants and found those allegations adequately supported by client
testimony and circumstantial evidence. (Id. at 5–15). Parr Brown also contends the motion is
procedurally improper insofar as it seeks dismissal with prejudice. (Id. at 15–17). Finally, Parr
Brown requests an award of its attorney fees incurred in defending the motion. (Id. at 17).
1

The court’s references to the parties’ briefs use the numbering convention ascribed by the
parties rather than the court’s automated electronic system.
Page 2 of 8

ANALYSIS
As an initial matter, the court notes Defendants’ request for dismissal pursuant to Rule 11
is now moot because Judge Nuffer dismissed Plaintiff’s claims. (ECF No. 127) The court turns
now to the second portion of Defendants’ request for sanctions: an award of attorney fees to
Univision Defendants.
a. The court denies Defendants’ request for attorney-fee sanctions because
Defendants have not established a violation of Rule 11
The court declines to award Univision Defendants their attorney fees because
Defendants have not shown Plaintiff’s claims lacked evidentiary support or that counsel
failed to reasonably investigate Plaintiff’s claims. “[T]he court should not ordinarily have
to explain its denial of a motion for sanctions.” Fed. R. Civ. P. 11, advisory committee
note. Nonetheless, the court does so here because it believes an explanation may benefit
future parties and counsel when they consider whether to file Rule 11 motions.
Univision Defendants take issue with the following allegations in the Second
Amended Complaint:
35. Defendants actively promoted, displayed, broadcasted and distributed
Machete to the public.
36. Defendants showed Machete publicly on their respective networks, all to the
detriment of Plaintiff, thereby infringing on Plaintiff’s copyrights.
37. Machete, as reproduced, performed, distributed and displayed to the public by
Defendants, is strikingly and substantially similar to the copyrighted and
protected elements of Vengeance as illustrated and alleged in the following
paragraphs.
…
66. Beginning in 2010 and each year thereafter, Defendants infringed upon said
copyright by distributing, displaying and placing upon the public market Machete,
which was largely copied from Plaintiff’s copyrighted movie.
…
70. Defendants supported, committed, promoted and participated in copyright
violations by showing and airing Machete on their public airwaves.
71. Plaintiff suffered resulting damages from Defendants’ perpetuation of these
copyright infringements by the broadcasting of Machete.
…
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76. Since 2010, Defendants have been televising, broadcasting, advertising, and
otherwise marketing Machete, and have thereby been engaging in unfair trade
practices and unfair competition against Plaintiff to Plaintiff’s irreparable damage.
Defendants have not demonstrated that Plaintiff’s claims lacked an adequate evidentiary
basis or that counsel failed to reasonably investigate the claims. Rule 11 requires a party to have
evidentiary support for any claims, and requires counsel to conduct an objectively reasonable
investigation of the facts, before signing a document filed with the court. See Fed. R. Civ. P.
11(b)(3); Adamson v. Bowen, 855 F.2d 668, 673 (10th Cir. 1988). Here, Parr Brown sets forth
several facts to demonstrate it conducted an adequate investigation and that the claims in the
Second Amended Complaint had adequate evidentiary support.
As an initial matter, Defendants appear to take issue with a narrow subset of Plaintiff’s
allegations. Defendants concede they promoted or advertised Machete by placing trailers and
cast interviews on YouTube in 2010. See (ECF No. 107 at 5–6). While Defendants argue these
claims have statute-of-limitations issues, they raise no issue that presents a Rule 11 problem.
Instead, Defendants appear most concerned with Plaintiff’s allegations that Univision
Defendants broadcast Machete in its entirety.
The court finds Plaintiff’s allegations do not run afoul of Rule 11, primarily based on two
pieces of evidence that support a claim that Univision Defendants broadcast Machete. One, it is
undisputed that El Rey broadcast Machete and has contracted to again broadcast the movie in
May 2018. (ECF No. 96 at xi). Two, “Univision[ 2] . . . promotes El Rey on Univision’s websites
and lists El Rey as one of its own networks.” (ECF No. 96 at xiii, 10). These facts provide
Plaintiff with the necessary information to file a claim that Defendants collectively broadcast
Machete. Relying on these facts alone, an outsider could reasonably conclude that Univision

2

Parr Brown defines Univision to include the Univision Defendants. (ECF No. 96 at vi).
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Defendants broadcast Machete on the El Rey network, which Univision Defendants’ websites
indicate is one of their own networks. Plaintiff’s counsel could reasonably conclude from
Univision Defendants’ own website that those entities were responsible for broadcasting
Machete. Plaintiff then needed discovery to learn the nature and extent of Univision Defendants’
relationship with El Rey. 3
In addition to these facts, which appear undisputed, Parr Brown contends it learned
additional corroborating evidence. For example, Univision Defendants entered a partnership with
the creator of Machete that allowed Univision Defendants to invest in, control, manage, and
operate El Rey. (ECF No. 96 at 10). Discovery later revealed that Univision Defendants exert
significant influence over El Rey and have a direct financial interest in El Rey’s business and
operations. (Id. at xii). Parr Brown also learned Univision Defendants advertised and promoted
Machete on their television and online channels. (Id.) These facts provided adequate support for
the allegations that Defendants collectively broadcast, promoted and advertised Machete.
1. Defendants improperly rely on hindsight to justify sanctions
Plaintiff’s allegations are not transformed into sanctionable conduct even if Machete was
only broadcast on Defendant El Rey’s network. “Hindsight may well reveal that additional
research or investigation would have avoided litigation, and yet the rule is not violated.” Foster
v. Michelin Tire Corp., 108 F.R.D. 412, 415 (C.D. Ill. 1985). Defendants seek sanctions because
they believe the allegation is factually incorrect. They assert Univision Defendants never aired
Machete. The allegation may be factually incorrect. 4 Nonetheless, a fact alleged in a pleading

3

Defendants’ reply focuses on Plaintiff’s allegation that Defendants broadcast Machete on their
“respective” networks. This word appears in a single paragraph of the Second Amended
Complaint (number thirty-six). The court addresses this allegation below. Infra Part I.b.1.
4

The court will assume for purposes of this motion that the only broadcast of Machete by
defendants occurred on Defendant El Rey’s network exclusively.
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does not become Rule 11 violation simply because it is later disproved. The court’s inquiry here
is limited to whether there was an adequate factual basis and whether counsel conducted a
reasonable investigation into the facts. Defendants have not persuaded the court that Plaintiff’s or
counsel’s conduct merits sanctions here.
b. Even assuming the court found that Plaintiff or its counsel violated Rule 11, the
court would not award attorney fees to Univision Defendants
First, because “the purpose of Rule 11 sanctions is to deter rather than to compensate, the
rule provides that, if a monetary sanction is imposed, it should ordinarily be paid into court as a
penalty.” Fed. R. Civ. P. 11, advisory committee note. Also, while the court has the ability to
award attorney fees to a moving party, such awards “should not exceed the expenses and
attorneys’ fees for the services directly and unavoidably caused by the violation . . . .”
Defendants have not identified any attorney fees directly and unavoidably caused by any
violation because they implicitly acknowledge Plaintiff could have amended its claims to allege
vicarious or contributory infringement. Plaintiff’s reply suggests Plaintiff has alleged only direct
copyright infringement without any mention of vicarious liability or theories of contributory
infringement. (ECF No. 107 at 9–10). Yet, even crediting Defendants’ argument that a theory of
vicarious liability must be set forth as a separate claim, Defendants’ argument suggests merely
that the Complaint is inartfully pled; it does not establish Plaintiff lacked a proper basis to allege
Univision Defendants are liable for copyright violations. Defendants do not suggest Plaintiff
filed claims against an unrelated innocent bystander with no connection to this matter. Instead,
Defendants suggest Plaintiff filed claims against entities that played a more minor role than was
described in Plaintiff’s various complaints. Accordingly, Defendants fail to show that they have
incurred fees as a direct an unavoidable result of a Rule 11 violation. Instead, Defendants appear

Page 6 of 8

to suggest they were forced to defend an inartful pleading, perhaps one that needs to be amended.
Rule 11 sanctions in the form of attorney fees are not warranted in these circumstances.
1. Defendants identify, at most, only a minor violation
Additionally, the court finds a fee award unwarranted in the present circumstances
because it is disproportionate to the purported violation. At most, Defendants’ briefing suggests
Plaintiff should not have used the word “respective” in paragraph 36 of the Second Amended
Complaint, and perhaps otherwise clarified that Univision Defendants did not individually
broadcast Machete. “Rule 11 motions should not be made or threatened for minor,
inconsequential violations of the standards prescribed by subdivision (b).” See Agjunction LLC v.
Agrian Inc., No. 14-cv-2069, 2015 WL 416440, at *8 (D. Kan. Jan. 30, 2015) (quoting advisory
committee note to Rule 11). Even assuming discovery revealed to Plaintiff that it had no basis to
include the word “respective” in paragraph 36, such a violation is relatively minor in the scheme
of this case. Plaintiff’s counsel suggests Univision Defendants may still be found vicariously and
contributorily liable for copyright infringement. (ECF No. 96 at 3). As discussed in the preceding
paragraph, Defendants suggest Plaintiff needed to amend its claims, not dismiss them entirely.
c. The court declines to award Parr Brown its attorney fees
Parr Brown requests an award of its attorney fees expended in resisting Defendants
motion under Rule 11(c)(2). While the court finds Plaintiff’s apparently-unsupported allegation
that Defendants broadcast Machete on their respective networks insufficient to support an award
of attorney-fee sanctions under Rule 11; the court finds the allegations provided Defendants an
adequate basis to bring the present motion. Defendants’ motion is unsuccessful, but that lack of
success does not justify an award of Parr Brown’s attorney fees.

Page 7 of 8

d. The court declines to impose sanctions against David W. Brown
While only Parr Brown timely submitted a response to Defendants motion, their response
demonstrates there was an adequate factual basis for Plaintiff’s claims. This showing likewise
convinces the court that prior counsel David W. Brown had an adequate factual basis to sign the
initial complaint. Indeed, Mr. Brown enjoyed even less benefit of discovery than did Parr Brown.
Accordingly, the court finds sanctions against Mr. Brown unwarranted. 5
Further, the court admonishes Defendants that their zealous attempts to convince the
court to ignore Mr. Brown’s tardy filings serve no useful purpose. In the future, Defendants’
counsel is encouraged to accommodate a party or respondent who misses a response deadline,
particularly when Defendants’ counsel is asking the court to impose sanctions. While the court
strongly prefers counsel make all filings timely, the court is likewise highly averse to imposing
sanctions without hearing from the individual who may be sanctioned.
ORDER
Based on the foregoing, the court hereby, DENIES Defendants’ Motion for Rule 11
Sanctions (ECF No. 90).
Further, the court FINDS MOOT Defendants’ Motion to file Sur-Reply. (ECF No. 120).
IT IS SO ORDERED.
Dated this 31st day of May 2018.

Dustin B. Pead
United States Magistrate Judge

5

The court finds it need not reach the merits of Univision Defendants’ motion to file surreply
(ECF No. 120) because Mr. Brown’s reply is not material to the court’s decision to decline to
award sanctions. Accordingly that motion is moot.
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