Bridgeport Music Inc v. WB Music Corp ( 2008 )


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  •                           RECOMMENDED FOR FULL-TEXT PUBLICATION
    Pursuant to Sixth Circuit Rule 206
    File Name: 08a0123p.06
    UNITED STATES COURT OF APPEALS
    FOR THE SIXTH CIRCUIT
    _________________
    X
    Plaintiff-Appellant, -
    BRIDGEPORT MUSIC, INC.,
    -
    -
    -
    No. 06-5420
    WESTBOUND RECORDS, INC., et al.,
    ,
    Plaintiffs, >
    -
    -
    -
    v.
    -
    Defendants, -
    WB MUSIC CORP., et al.,
    -
    -
    UNIVERSAL-POLYGRAM INTERNATIONAL                       -
    -
    Defendant-Appellee. -
    PUBLISHING, INC.,
    N
    Appeal from the United States District Court
    for the Middle District of Tennessee at Nashville.
    No. 01-00706—Todd J. Campbell, Chief District Judge.
    Argued: January 29, 2008
    Decided and Filed: March 25, 2008
    Before: GUY, GILMAN, and McKEAGUE, Circuit Judges.
    _________________
    COUNSEL
    ARGUED: Richard S. Busch, KING & BALLOW, Nashville, Tennessee, for Appellant. Russell
    J. Frackman, MITCHELL, SILBERBERG & KNUPP, Los Angeles, California, for Appellee.
    ON BRIEF: Richard S. Busch, KING & BALLOW, Nashville, Tennessee, for Appellant. Russell
    J. Frackman, Marc E. Mayer, MITCHELL, SILBERBERG & KNUPP, Los Angeles, California,
    Philip M. Kirkpatrick, STEWART, ESTES & DONNELL, Nashville, Tennessee, for Appellee.
    _________________
    OPINION
    _________________
    McKEAGUE, Circuit Judge. Plaintiff-Appellant Bridgeport Music, Inc. (“Bridgeport”)
    appeals from the district court’s order awarding attorneys’ fees and costs to Defendant-Appellee
    Universal-Polygram International Publishing, Inc. (“UPIP”) as a prevailing party under 17 U.S.C.
    § 505. This court had vacated an earlier award of fees and costs to UPIP and remanded to the
    1
    No. 06-5420              Bridgeport Music Inc., et al. v. WB Music Corp., et al.                             Page 2
    district court for further consideration. Bridgeport Music, Inc. v. Rhyme Syndicate Music, 
    376 F.3d 615
    (6th Cir. 2004). On remand, the district court awarded the same amount of fees and costs to
    UPIP. Bridgeport argues that the district court abused its discretion. For the reasons set forth below,
    we affirm.
    I1
    This is one of a large number of cases brought by Bridgeport and three sister companies
    (collectively referred to as “Bridgeport”) against various defendants in the music-publishing
    industry. In the original complaint, Bridgeport alleged nearly 500 counts against approximately 800
    defendants for copyright infringement and other state-law claims arising from music sampling. The
    amended complaint in this case, filed after the district court severed the original case into 476
    separate actions, was based on the allegation that the rap song “99 Problems” sampled the opening
    three-note chord from the musical composition “Get Off Your Ass and Jam” (“Get Off”), which was
    written and recorded by George Clinton, Jr. and the Funkadelics in the mid-1970s. Bridgeport
    asserts that it owns the composition “Get Off.”
    Tracy Marrow (p/k/a Ice-T) co-wrote and performed the song “99 Problems” for release on
    the album “Home Invasion.” Priority Records released the album on March 23, 1993. More than
    a year later, UPIP obtained an interest in the composition through its predecessor, PolyGram
    International Publishing, Inc., by assignment from Marrow. On January 7, 1998, Bridgeport notified
    UPIP, Warner/Chappell Music (which was listed on the copyright registration as a claimant to “99
    Problems”) and others of its sampling claim and demanded that Bridgeport be granted a 33.33%
    ownership interest in the musical composition. UPIP did not respond, but Warner/Chappell Music
    denied that any samples were used on the “Home Invasion” album.
    More than three years later, Bridgeport commenced this action against UPIP,
    Warner/Chappell Music and other defendants. The district court referred the case to a magistrate
    judge. Defendants Warner/Chappell Music and WB Music (the “Warner defendants”) moved for
    summary judgment on several grounds. The magistrate judge concluded that summary judgment
    should be granted. He determined that the infringement claims against the Warner defendants were
    barred both by a release as part of a settlement of prior litigation and by the applicable three-year
    statute of limitation. Although the Warner defendants had issued a license for the release of “99
    Problems” in 1993, the only acts by the Warner defendants within the limitations period were the
    receipt of royalties on the sale of the album. Recognizing that there was no case law on the question,
    the magistrate judge concluded that the receipt of income from the sale of infringing products within
    the limitations period by a party who does not manufacture, distribute, or sell the infringing product
    (but who did provide a license) would not constitute direct or contributory infringement.
    UPIP had also moved for summary judgment, arguing, inter alia, that Bridgeport’s claims
    were barred, or alternatively, limited by the statute of limitation. While the motion was pending,
    UPIP wrote to Bridgeport:
    We have reviewed your Rule 72 Objections to Judge Brown’s R&R to Judge
    Higgins. Judge Brown’s R & R was thoughtfully analyzed and well-reasoned, and
    we fully anticipate that Judge Higgins will adopt it as the order of the Court. We
    understand you have also indicated you intend to appeal this issue to the Sixth
    Circuit. With that in mind, we propose and request that Bridgeport stipulate to
    judgment in favor of Universal Polygram International Publishing, Inc. (“UPIP”) in
    Case 706 based upon Judge Brown’s R&R. This would preserve the parties’ and the
    1
    Following is a synopsis of the factual and procedural background of this case and related litigation. A more
    extensive background can be found at Rhyme 
    Syndicate, 376 F.3d at 618-20
    , 627.
    No. 06-5420              Bridgeport Music Inc., et al. v. WB Music Corp., et al.                            Page 3
    Court’s resources and avoid unnecessary expenditures of time, effort, and expense
    because the cases against both Warner-Chappell and UPIP would proceed
    simultaneously.
    Bridgeport did not respond.
    Over Bridgeport’s objections, the district court adopted the magistrate judge’s report and
    recommendation and granted summary judgment to the Warner defendants on September 16, 2002.
    UPIP then obtained leave to supplement its motion for summary judgment. Bridgeport responded
    in opposition on October 4, 2002. The district court granted summary judgment to UPIP on
    November 7, 2002, finding that Bridgeport failed to demonstrate direct, contributory, or vicarious
    infringement by UPIP within the limitations period.
    In a post-judgment motion, UPIP moved for an award of $297,292.60 in attorneys’ fees and
    $16,119.22 in nontaxable costs as a prevailing party under 17 U.S.C. § 505. The district court
    determined that Bridgeport had pursued an objectively reasonable legal theory that the receipt of
    royalties alone constituted an infringing act; however, the theory became unreasonable once the
    district court granted summary judgment on the identical issue to the Warner defendants. Because
    Bridgeport pursued its claim even though its legal theory had purportedly become objectively
    unreasonable, the district court awarded UPIP $79,340.94 in attorney fees and $3,409.35 in costs,
    which represented fees and costs incurred by UPIP after September 16, 2002.
    On appeal, this court vacated the award. The court faulted the district court for its
    inconsistency regarding the reasonableness of Bridgeport’s legal theory: “The district court
    explicitly found that Bridgeport’s receipt of royalties theory was objectively reasonable. This
    objectively reasonable theory did not suddenly become objectively unreasonable (factually and
    legally) once it became apparent that the district court would most likely reject it and enter summary
    judgment in UPIP’s favor.” Rhyme 
    Syndicate, 376 F.3d at 628
    . The court concluded that it was an
    abuse of discretion to award fees and costs based on an erroneous determination that the theory had
    become unreasonable. 
    Id. The court
    remanded the case for the district court to consider in its
    discretion whether an award or partial award was warranted based on a weighing of one or more
    relevant factors or because an award would otherwise further the purposes of the Copyright Act.
    
    Id. at 628-29.
             On remand, the magistrate judge recommended that a partial award of attorneys’ fees and
    costs continued to be warranted. Bridgeport Music, Inc. v. Universal-Polygram Int’l Publ’g, Inc.,
    No. 3:01-0706, R&R at 7 (M.D. Tenn. Oct. 20, 2005) (the “R&R”). He recommended that the
    district court award the same amount of fees and costs. 
    Id. Over the
    parties’ objections, the district
    court adopted the report and recommendation.2
    Bridgeport timely appealed.
    II
    A.       Attorneys’ Fees and Costs under the Copyright Act
    We review the district court’s decision to award attorneys’ fees and costs to UPIP for abuse
    of discretion. Rhyme 
    Syndicate, 376 F.3d at 625-26
    . There is an abuse of discretion “if the district
    court relied on erroneous findings of fact, applied the wrong legal standard, misapplied the correct
    legal standard when reaching a conclusion, or made a clear error of judgment.” Nafziger v.
    2
    Because the district court adopted in full the magistrate judge’s report and recommendation, the report is
    referred to herein as the district court’s opinion.
    No. 06-5420            Bridgeport Music Inc., et al. v. WB Music Corp., et al.                       Page 4
    McDermott Int’l, Inc., 
    467 F.3d 514
    , 522 (6th Cir. 2006) (brackets and internal quotation marks
    omitted), cert. denied, 
    127 S. Ct. 2886
    (2007).
    The Copyright Act provides that in civil suits the district court, in its discretion, may award
    costs, including reasonable attorneys’ fees, to the prevailing party. 17 U.S.C. § 505. This discretion
    must be exercised in an evenhanded manner with respect to prevailing plaintiffs and prevailing
    defendants, and in a manner consistent with the primary purposes of the Copyright Act. Fogerty v.
    Fantasy, Inc., 
    510 U.S. 517
    , 534 (1994). The grant of fees and costs “is the rule rather than the
    exception and [they] should be awarded routinely.” Positive Black Talk Inc. v. Cash Money
    Records, Inc., 
    394 F.3d 357
    , 380 (5th Cir. 2004); see also Thoroughbred Software Int’l, Inc. v. Dice
    Corp., 
    488 F.3d 352
    , 362 (6th Cir. 2007) (same).
    Rejecting both a “dual standard” under which a prevailing defendant is required to show
    frivolousness or bad faith and the “British Rule” of automatic recovery of attorneys’ fees and costs
    by the prevailing party, the Fogerty Court explained: “There is no precise rule or formula for making
    these determinations, but instead equitable discretion should be exercised in light of the
    considerations we have 
    identified.” 510 U.S. at 534
    (internal quotation marks and citation omitted).
    The Court approved several nonexclusive factors to weigh when considering a request for fees and
    costs, including “frivolousness, motivation, objective unreasonableness (both in the factual and legal
    components of the case) and the need in particular circumstances to advance considerations of
    compensation and deterrence.” 
    Id. at 534
    n.19 (internal quotation marks and citation omitted). The
    factors need not all weigh in favor of an award in order to grant fees to a prevailing party and other
    factors may be considered. Bridgeport Music, Inc. v. Diamond Time, Ltd., 
    371 F.3d 883
    , 894 (6th
    Cir. 2004).
    B.      Weighing the Factors
    On remand, the district court reiterated that Bridgeport’s royalty-receipt theory was
    objectively reasonable: “The novelty of Bridgeport’s theory and the contentiousness of both sides
    throughout this litigation continue to weigh against a full award of fees and costs to UPIP . . . .”
    R&R at 6 (emphasis in original). Other factors, however, weighed in favor of a partial award of fees
    and costs to UPIP:
    [T]he fact remains that, while not objectively unreasonable as a matter of law,
    Bridgeport’s pursuance of its claims against UPIP after September 16, 2002, without
    any new facts to offer which might cast doubt upon the outcome, was patently futile
    and thus factually (if not legally) frivolous, especially in light of the lack of evidence
    noted by the Sixth Circuit. The undersigned concludes that these particular
    circumstances present the need “to advance considerations of compensation and
    deterrence” in favor of UPIP. . . . [T]he undersigned deems Bridgeport’s pressing of
    a futile claim to be one more example of the overly aggressive litigation tactics
    which underscored the Court’s prior, vacated award of fees. Indeed, it seems that in
    forcing the additional, fruitless expenditure of efforts and fees associated with trial
    preparation, Bridgeport’s motive must certainly have been retribution, and/or an
    effort to extract settlement dollars without any basis for doing so.
    
    Id. at 6-7.
           This case presents one of the rare instances in which a district court orders a party to pay
    attorneys’ fees and costs in spite of finding that the party advanced an objectively reasonable legal
    claim or theory. As this court explained in Rhyme Syndicate, “[I]t generally does not promote the
    purposes of the Copyright Act to award attorney fees to a prevailing defendant when the plaintiff
    has advanced a reasonable, yet unsuccessful 
    claim.” 376 F.3d at 628
    (citing Matthew Bender & Co.
    No. 06-5420               Bridgeport Music Inc., et al. v. WB Music Corp., et al.                               Page 5
    v. West Publ’g Co., 
    240 F.3d 116
    , 122 (2d Cir. 2001); Lotus Dev. Corp. v. Borland Int’l, Inc., 
    140 F.3d 70
    , 75 (1st Cir. 1998)). Yet, other than being a prevailing party under the Copyright Act, there
    is no single factor that must weigh in favor of an award of fees and costs—i.e., no factor is a
    necessary condition. Diamond 
    Time, 371 F.3d at 894
    (“The district court in this case correctly
    observed that because the Fogerty factors are nonexclusive, not every factor must weigh in favor
    of the prevailing party and other factors may be considered as well.”). The court recognized this
    when it remanded the case in spite of the district court’s earlier finding that Bridgeport’s theory was
    objectively reasonable. Thus, the question boils down to the following: despite the objective
    reasonableness of Bridgeport’s royalty-receipt theory, are there other factors that are sufficiently
    weighty to justify the award against Bridgeport?
    The district court specifically pointed to Bridgeport’s “pressing of a futile claim” as another
    part of the pattern of the company’s “overly aggressive litigation tactics” which the district court had
    identified in its earlier opinion. R&R at 7. Other parts of this pattern include: filing a single
    complaint over 900 pages long with hundreds of separate claims and defendants; engaging in
    discovery abuses; abusing the summary judgment process by submitting massive statements of
    disputed facts which included legal conclusions and immaterial and argumentative assertions; and
    engaging in sharp pre-trial practices. This court has approved prior awards of fees and costs against
    Bridgeport in companion cases for similar reasons. See Bridgeport Music, Inc. v. Dimension Films,
    
    410 F.3d 792
    , 809 (6th Cir. 2005) (affirming award based on deterrence and compensation);
    Diamond 
    Time, 371 F.3d at 896
    (affirming award based in part on improper motivation of
    Bridgeport and deterrence); cf. Bridgeport Music, Inc. v. Sony Music Entm’t, Inc., 114 F. App’x 645,
    651-53 (6th Cir. 2004) (unpublished) (explaining that deterrence is a “particularly relevant factor
    to be considered” but that it was an abuse of discretion to base the award solely on Bridgeport’s
    voluminous pleadings and conduct of counsel).
    As the district court reiterated on remand, Bridgeport’s theory had some support in law and
    in fact—it was objectively reasonable. The district court’s negative evaluation of the theory in the
    case against the Warner defendants did not somehow dissolve the theory’s legal and factual merits
    with regard to UPIP. That is, in essence, what the court held in Rhyme Syndicate.
    Recognizing that the royalty-receipt theory was, is, and will remain objectively reasonable
    regardless of the ultimate outcome, however, does not mean that Bridgeport’s continued reliance
    on the theory in this instance was necessarily nonsanctionable. Objective reasonableness is not an
    impenetrable shield against fees and costs. As the district court    noted, once it had rejected the
    theory under similar factual circumstances in a companion case,3 it was fruitless in a practical sense
    for Bridgeport to pursue that same theory before the same judge and thereby force UPIP to incur
    expenses preparing for trial. As it has in several companion cases, Bridgeport failed to weed out
    those claims and theories for which it “had little hope of recovering” from the claims and theories
    that arguably have merit. Dimension 
    Films, 410 F.3d at 809
    (“The district court’s criticisms go
    beyond just [the length and number of claims], however, and are tied to conduct that complicated
    rather than streamlined the issues and contributed to the multiplication of fees for the defendant.”).
    3
    Bridgeport argues on appeal that there were significant factual differences between its case against the Warner
    defendants and its case against UPIP. As Bridgeport admits, however, “the district court found that Bridgeport had not
    offered any evidence, beyond the receipt of royalties, of infringing acts occurring within the limitations period.”
    Bridgeport’s Reply Br. at 14 (emphasis added). Moreover, this court earlier found “a complete absence of proof
    connecting UPIP either to the distribution and sale of the album or to the performance of the allegedly infringing work
    within the limitations period.” Rhyme 
    Syndicate, 376 F.3d at 622
    . While Bridgeport’s factual allegations against UPIP
    may have differed somewhat from those against the Warner defendants, it has not shown that the evidence it offered in
    opposition to summary judgment against both companies differed in any material way.
    No. 06-5420                Bridgeport Music Inc., et al. v. WB Music Corp., et al.                                 Page 6
    To be clear, Bridgeport did not act irresponsibly by pursuing the royalty-receipt theory
    against UPIP at the outset or on appeal. It was and remains an objectively reasonable theory. Yet,
    it made little practical sense for Bridgeport to continue to pursue vigorously its claim before the
    district court when it was on notice that the judge was virtually certain to reject its sole theory of
    recovery.
    Bridgeport points out that it had the right to pursue its legal remedies to conclusion. Correct
    enough, but it could have done so by agreeing to UPIP’s suggestion that the parties stipulate to
    dismissal of the claim on the same basis as the one against the Warner defendants. The cases could
    then have both been appealed and consolidated for review by this court.
    Viewed in isolation, Bridgeport’s continued pursuit of the claim before the district
    court—while futile given the judge’s rejection of the royalty-receipt theory—might not alone have
    warranted an award of fees and costs. As this court explained in Rhyme Syndicate, it would be
    improper to “sanction a party simply for electing to await decision on a pending 
    motion.” 376 F.3d at 628
    . Yet, when viewed as part of the larger landscape of Bridgeport’s litigation strategy, an
    award was justified. “The unique posture of this case as one of hundreds brought in the same
    manner and asserting parallel claims, makes deterrence a particularly relevant and appropriate
    consideration.” Dimension 
    Films, 410 F.3d at 809
    . The district court’s interest in motivating
    Bridgeport to sort through its claims applies with equal force to claims that become futile during the
    course of litigation as it does to claims that are objectively unreasonable at the outset. Cf. 
    id. (“It is
    not the deterrence of objectively reasonable good faith claims, but the interest in motivating
    plaintiffs to sort through the objectively unreasonable ones and prosecute this at best cumbersome
    litigation in a way that discriminates between parties and claims.”); Diamond 
    Time, 371 F.3d at 895
    (“While the district court certainly did not mince words, the harsh criticism of the plaintiffs’
    litigation strategy was clearly focused on the resulting failure of plaintiffs to weed out stale claims
    against defendants like Diamond Time.”).
    Bridgeport contends that the district court is simply doing in deed what this court held it
    could not do in word, namely award fees and costs because the theory had become objectively
    unreasonable. But as the defendants did in another companion case, Bridgeport Music, Inc. v.
    London Music, U.K., Bridgeport “conflate[s] the Fogerty factors with the facts pertinent to an
    analysis of each of those factors.” 226 F. App’x 491, 496-97 (6th Cir. 2007) (unpublished). Here,
    the same fact—the district court’s rejection of the identical theory in a companion case—was
    considered by the district court under more than one factor. Although the district court previously
    erred by concluding, based on this fact, that the theory was objectively unreasonable, it did not err
    by concluding, based on this same fact, that it was futile for Bridgeport to pursue the factually
    similar claim under the same theory before the same judge and thereby force UPIP to incur fees and
    costs to prepare for trial. See 
    id. (“There is
    no law, of course, that prohibits a judge from considering
    the same fact under multiple categories.”). Nor did the district court err by concluding that
    Bridgeport continued to press the theory as part of its overly aggressive litigation tactics and not in
    any hope or expectation of actually surviving summary judgment. Given the litigation history of
    Bridgeport in this and the companion cases, it was not an abuse of discretion for the district court
    to award fees and costs against the company in the hope of motivating it to litigate in a more
    responsible, realistic manner and to deter it from continuing to engage in questionable litigation
    tactics.4
    4
    Bridgeport raises two additional arguments. It contends that the district court failed to consider the parties’
    relative ability to pay. Yet, as in prior cases, Bridgeport failed to present any reliable evidence to support its argument.
    Sony Music, 114 F. App’x at 652-53 (explaining that a district court can consider the parties’ relative abilities to pay
    attorneys’ fees and costs, but that Bridgeport had failed to present any evidence on this point beyond its owner’s
    conclusory affidavit). Bridgeport also argues that UPIP was required to assert below that Bridgeport was collaterally
    estopped by the decision in the companion case. There are at least two problems with this argument. First, Bridgeport
    No. 06-5420                Bridgeport Music Inc., et al. v. WB Music Corp., et al.                                  Page 7
    C.       The Amount of the Award
    The district court’s decision to award fees and costs is “bolstered” by its significant reduction
    of the requested amount. Coles v. Wonder, 
    283 F.3d 798
    , 804 (6th Cir. 2002). As it did earlier, the
    district court considered only fees and costs incurred after September 16, 2002. The district court
    also reduced the rates of counsel and paralegal work, deducted fees for redacted or nonspecific
    entries, allocated fees between two cases against UPIP, and reduced the lodestar amount by an
    additional 25% to account for top-heavy billing by partners for work that could have been performed
    by associates. Rhyme 
    Syndicate, 376 F.3d at 627
    .
    Bridgeport argues that the district court abused its discretion in awarding fees and costs for
    work that did not contribute to UPIP’s success in this matter. The district court’s award
    encompassed work by UPIP’s legal team on the supplemental summary judgment brief as well as
    trial preparation and other expenses incurred after September 16, 2002.
    Contrary to Bridgeport’s contention, the district court was not limited to awarding fees and
    costs only for the specific matter that was successful. Rather, the award must simply be reasonable.
    Diamond 
    Time, 371 F.3d at 896
    -97. As the trial date approached, it was reasonable for UPIP to
    prepare for trial even though the district court had not yet issued its ruling on summary judgment.
    By continuing to rely on the royalty-receipt theory after the judge had rejected it in a companion
    case, Bridgeport had to bear the risk that the district court would hold it responsible for the cost of
    UPIP’s trial preparation. As the expenses were related to UPIP’s litigation defense and were limited
    in scope and time, the district court did not abuse its discretion by including in its award expenses
    beyond those associated only with the supplemental summary-judgment brief.
    III
    For the reasons set forth above, we find no abuse of discretion in the district court’s award
    of attorneys’ fees and costs. Accordingly, we AFFIRM.
    raised it for the first time in its reply brief and therefore has waived the argument. Renkel v. United States, 
    456 F.3d 640
    ,
    642 n.1 (6th Cir. 2006). Second, the district court did not find that Bridgeport was legally estopped from pursuing its
    royalty-receipt theory against UPIP, only that it was futile to do so as a matter of litigation strategy and common sense.