Sullivan, Amy v. Flora, Inc. et al

Filing 377

ORDER IT IS ORDERED that: 1. The court holds that the new trial in this case must include both the number of individual works at issue and the amount of statutory damages for each work.2. The court certi fies this issue for interlocutory appeal under 28 U.S.C. § 1292(b) because the issue is a controlling question of law as to which there is substantial ground for difference of opinion and an immediate appeal from the order may materially advance the ultimate termination of the litigation. 3. In accordance with § 1292(b), this case is stayed for ten days to allow the parties to file an interlocutory appeal, or until the appeal is resolved, whichever is later. 4. If no party file s an interlocutory appeal within ten days, the clerk of court is directed to schedule a conference with Magistrate Judge Stephen Crocker to set deadlines for motions in limine and other trial materials and to set new dates for a trial and final pretrial conference. Signed by District Judge James D. Peterson on 10/23/2023. (voc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

AMY LEE SULLIVAN d/b/a DESIGN KIT,
Plaintiff,
v.

OPINION and ORDER
15-cv-298-jdp

FLORA, INC.,
Defendant.

Plaintiff Amy Lee Sullivan is suing Flora, Inc. for infringing her copyright on
illustrations that Sullivan created for Flora as part of two advertising campaigns. Sullivan says
that Flora exceeded the scope of its license by using her work beyond the two campaigns. The
case has been remanded to determine some issues related to statutory damages. But the scope
of the issues to be resolved isn’t completely clear. In this opinion, the court will do its best to
determine the scope of the outstanding issues. And, somewhat reluctantly given the already
complicated procedural history of the case, it will authorize an interlocutory appeal to get
guidance from the court of appeals.

BACKGROUND
A contested issue throughout this case has been the number of individual works that
Sullivan created for Flora. The creative work at issue consists of two digital animations which
include 33 separate component illustrations. Sullivan says that there are 33 separate works;
Flora says that there are two. This matters because statutory damages for copyright
infringement are awarded for each work, up to $150,000 if the infringement was willful. 17
U.S.C. § 504(c).

At trial, the district court sided with Sullivan and instructed the jury that each
illustration was “an independent, copyrighted work.” Dkt. 254, at 2. The jury ultimately
awarded $3.6 million in statutory damages. Dkt. 257.
On appeal, the court of appeals held that an illustration is a separate work only if it has
“independent economic value” apart from the collection in which it is included. Sullivan v.
Flora, Inc., 936 F.3d 562, 571 (7th Cir. 2019) (Sullivan I). That is not the test the district court
had applied, and the court of appeals determined that it couldn’t apply the test itself on “the
record as it presently stands.” Id. at 572. So the court of appeals remanded the case to the
district court “to structure the proceedings to enable the requisite findings pertinent to
statutory damages.” Id.
On remand, the district court invited briefing and then concluded as a matter of law
that each of the 33 illustrations was a separate work. Dkt. 356. The court upheld the original
statutory damages awarded by the jury. Id.
On the second appeal, the court of appeals held that there were genuine issues of
material fact regarding how many separate works were at issue, so the district court should have
allowed a jury to decide the question. Sullivan v. Flora, Inc., 63 F.4th 1130, 1140 (7th Cir.
2023) (Sullivan II). The court of appeals again remanded the case and directed the district
court to hold a new trial. Id. at 1145. The case was reassigned to a new judge pursuant to
Circuit Rule 36.
As they did after the first remand, the parties dispute what issues need to be decided
on the second remand. Sullivan says that the sole question for the jury is how many individual
works are included in the two collections. Once the jury makes that determination, Sullivan
contends, determining statutory damages involves simply multiplying the new jury’s number

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by $109,090.909, which represents one thirty-third of the first jury’s statutory damages award.
Flora says that the jury must determine both the number of works and the amount of statutory
damages.
The court held a video conference to determine how to resolve the dispute. Based on
the discussion with the parties and the court’s own initial review, it appeared that there was no
obvious resolution of the issue in dispute. So the court decided on the following course of
action. First, the parties would flesh out their positions in briefs. Second, after reviewing the
briefs, the court would decide what the scope of the trial would be. Third, regardless of which
position the court adopted, the court would certify the issue for an interlocutory appeal under
28 U.S.C. § 1292(b). That’s an unusual step, but it makes sense under the circumstances. If
this court were to proceed directly to trial without an interlocutory appeal, it could result in
needing to try the case a third time, if the court of appeals later determined that the scope of
the trial should have been broader or narrower. The parties agreed with that approach, and the
court set a briefing schedule.
The court has reviewed the briefs, and the issue is now ready for decision.

ANALYSIS
The court continues to believe that both parties have reasonable arguments rooted in
the opinion in Sullivan II. But the court is persuaded that the question of the number of works
necessarily affects the amount of statutory damages, so the new trial must include both issues.
Each side relies on different passages from the court of appeals’ decision. Sullivan’s
strongest support is the following sentence: “The scope of our remand (and the trial) is narrow
and is limited to determining whether Sullivan's illustrations ‘constitute 33 individual works

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or instead are parts of two compilations.” Sullivan II, 63 F.4th at 1145. Read in isolation, that
sentence seems to resolve the dispute in Sullivan’s favor. But reading other portions of the
opinion calls that conclusion into question.
First, the court of appeals noted that its previous opinion had “vacated the jury’s
statutory damages award,” id. at 1144, which means that the court of appeals nullified that
award, Vacate, Black’s Law Dictionary (11th ed. 2019), suggesting that any new trial must
decide statutory damages anew. Second, the court also stated that “[d]etermining whether the
individual works are part of a compilation is a threshold statutory damages question.” Sullivan
II, 63 F.4th at 1145 (emphasis added). This suggests that a new decision on the number of
works leads to reconsideration of the amount of statutory damages as well. Third, the court
stated when describing the scope of the remand that “[t]his case will now proceed to trial on
the question of damages,” id., suggesting that the court understood that the issue of the number
of works was simply the first step in determining a new statutory damages award.1 Fourth, the
court identified the issues that could not be relitigated on remand: infringement and joint
authorship. Id. The court did not say that it had taken the amount of statutory damages away
from the second jury.
These other portions of the court of appeals’ decision are not so clear that they leave
no room for doubt. But what tips the scales in favor of Flora is that Sullivan doesn’t explain
how a jury could render a decision about the number of works without also deciding the
amount of statutory damages for each work. The two issues are inextricably intertwined. How

Sullivan says that the court of appeals’ reference to a “trial on the question of damages” can’t
be taken literally because that would mean that a new trial is also required on actual damages
and compensatory damages. But the court of appeals vacated only the award of statutory
damages, so it is clear from context that the court wasn’t suggesting a retrial of actual damages.

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a jury decides which illustrations or group of illustrations have “independent economic value”
could also affect how the jury determines what an appropriate statutory damages award is. In
fact, some of the factors relevant to determining statutory damages, such as profits earned and
revenues lost, could also be relevant to determining an illustration’s economic value. See
Seventh Circuit Pattern Instruction 12.8.4.
Sullivan’s belief that the two issues can be separated is based on her view that the first
jury already determined the amount that Sullivant is entitled to receive for each illustration or
collection of illustrations that qualifies as one work. That’s incorrect. The sole question on the
special verdict form about statutory damages asked the jury to decide the total amount of those
damages. Dkt. 257. The jury was not asked to decide the amount of damages for a each work
individually, and Sullivan points to nothing to support a legal presumption that statutory
damages for each work in a collection would be the same.
It seems highly unlikely that the jury actually determined that Sullivan should be
awarded the same amount for each illustration, for two reasons. First, as already noted, dividing
the jury’s total statutory damages award ($3,600,000) by the number of illustrations (33) does
not generate a whole number. It would be surprising that the jury would determine that each
illustration was worth a number that could not even be awarded individually. Second, there is
evidence that not all the illustrations have equal value. As the court of appeals observed, some
of the illustrations are “background textures” and are just one solid color. Sullivan, 63 F.4th at
1145. Sullivan doesn’t explain why it would be appropriate to assume that the jury awarded
the same statutory damages for those illustrations as others that included more content.
Instead of relying on a finding by the jury, Sullivan cites Judge Conley’s June 29, 2018
opinion and order in which he wrote that “it appears that the jury awarded roughly $110,000

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per work.” Dkt. 327, at 11. But that was said in the context of concluding that the jury must
have found that Flora acted willfully because a jury may not award more than $30,000 per
work for nonwillful violations. That was simple arithmetic, not a finding regarding the amount
of damages that the jury had assigned to any particular illustration.
For similar reasons, the court is not persuaded by Sullivan’s waiver argument. Sullivan
says that Flora waived its right to challenge using $109,090.909 as the “per work” amount of
statutory damages to be awarded in this case because Flora did not raise that issue with the
court of appeals. But neither the jury nor Judge Conley found that each illustration was worth
$109,090.909, so there was nothing for Flora to waive. This is really a new issue that arises
because a trial on the number of independent works is required. The number of works is a
threshold determination. The court of appeals recognized that “[i]ssues that arise anew on
remand are generally within the scope of the remand.” Sullivan II, 63 F.4th at 1139.
The court of appeals did not explicitly address the question of whether a new trial on
the number of works requires a new trial on the amount of damages for each work. But, for
reasons explained here, this court’s conclusion is that the two issues cannot be separated, so a
new trial on both issues is required. However, the court will certify this decision for an
interlocutory appeal because it involves a controlling issue of law for which there is a substantial
ground for difference of opinion. An immediate appeal may materially advance the ultimate
termination of the litigation because, if this court’s conclusion is incorrect, it could require this
case to be tried yet a third time.
One final point. In arguing that siding with Flora would lead to a sprawling trial,
Sullivan suggests that a new trial on statutory damages necessarily requires a new trial on
willfulness. The court does not agree. As Judge Conley observed, the first jury implicitly decided

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that Flora’s infringement was willful. Dkt. 327, at 11. So the second jury should be instructed
that Flora acted willfully. But the court agrees with Sullivan that evidence on willfulness will
need to be presented again to inform the second jury’s determination regarding what amount
is necessary to deter and punish because that is a relevant factor to determining the amount of
statutory damages. If there is disagreement between the parties on that issue, they may wish
to seek guidance from the court of appeals in their interlocutory appeal.

ORDER
IT IS ORDERED that:
1. The court holds that the new trial in this case must include both the number of
individual works at issue and the amount of statutory damages for each work.
2. The court certifies this issue for interlocutory appeal under 28 U.S.C. § 1292(b)
because the issue is a controlling question of law as to which there is substantial
ground for difference of opinion and an immediate appeal from the order may
materially advance the ultimate termination of the litigation.
3. In accordance with § 1292(b), this case is stayed for ten days to allow the parties to
file an interlocutory appeal, or until the appeal is resolved, whichever is later.
4. If no party files an interlocutory appeal within ten days, the clerk of court is directed
to schedule a conference with Magistrate Judge Stephen Crocker to set deadlines for
motions in limine and other trial materials and to set new dates for a trial and final
pretrial conference.
Entered October 23, 2023.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

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