Opinion
99 CIV. 11710 (SAS)
March 1, 2001
Frederick F. Greenman, Jr., Esq., New York, NY, For Plaintiff.
Scott L. Baker, Esq., New York, NY, for Defendant Windswept Pacific Entertainment and EMI Virgin Music, Inc.
Howard Gotbetter, Esq., New York, NY, for Defendant Richard Rosenblatt.
OPINION AND ORDER
On December 1, 1999, Susan Ackoff-Ortega, Cele Ackoff, and Jon Ackoff (collectively "the Ackoffs") filed an action seeking a declaratory judgment that Ackoff-Ortega — not defendants — owns the share of the renewal copyright in "Mony, Mony" attributable to Robert Ackoff. On October 11, 2000, this Court issued an Opinion and Order granting Windswept Pacific Entertainment Co. (Inc.) and EMI Virgin Music, Inc. (collectively "Windswept") judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c). See Ackoff-Ortega v. Windswept Pac. Entm't Co., 120 F. Supp.2d 273, 285 (S.D.N.Y. 2000) ("Ackoff I"). That decision held that the general release (the "Release") provided by Richard Rosenblatt to Windswept discharged plaintiffs' claims against Windswept, including their claim to Robert Ackoff's share of the renewal copyright in "Mony, Mony". In late October 2000, Rosenblatt and the Ackoffs filed separate motions for reconsideration and motions to alter and amend the Court's final judgment. While reconsideration was granted to both movants, with one exception, I adhered to my prior ruling. See Ackoff-Ortega v. Windswept Pac. Entm't Co., No. 99 Civ. 11710, 2000 WL 1808572 (S.D.N.Y. Dec. 11, 2000) ("Ackoff II").
Throughout this Opinion, I will refer to each motion for reconsideration and to alter and amend the Court's final judgment as a "motion for reconsideration."
At Rosenblatt's urging, footnote 15 of the Opinion was deleted. See Ackoff II, 2000 WL 1808572, at *5.
The prevailing defendants now move, pursuant to 17 U.S.C. § 505 and Federal Rule of Civil Procedure 54(d), to recover the attorneys' fees and costs they incurred in (1) defending against plaintiffs' declaratory judgment action, (2) responding to Rosenblatt's opposition to Windswept's Rule 12(c) motion, and (3) opposing the Ackoffs' and Rosenblatt's motions for reconsideration. For the foregoing reasons, Windswept's motion is denied.
I. BACKGROUND
The facts relevant to this dispute are set forth in detail in this Court's prior opinions, familiarity with which is assumed.
The pertinent facts were discussed extensively in the Court's first opinion in this case, which denied Rosenblatt's motion to dismiss or stay plaintiffs' claims against him, see Ackoff-Ortega v. Windswept Pac. Entm't Co., 98 F. Supp.2d 530, 531-33 (S.D.N.Y. 2000), and in Ackoff I, 120 F. Supp.2d at 274-78.
II. DISCUSSION
A. Legal Standard
The Copyright Act of 1976 (the "Copyright Act") grants a court discretion to award reasonable attorneys' fees and costs in cases arising under the Copyright Act. See 17 U.S.C. § 505. The Supreme Court has held that attorneys' fees should be equally available to prevailing plaintiffs and prevailing defendants under this provision. See Fogerty v. Fantasy, Inc., 510 U.S. 517, 533(1994). In Fogerty, the Supreme Court also rejected the "British rule" which automatically awards attorneys' fees to prevailing parties, and instructed that attorneys' fees should be awarded "only as a matter of the court's discretion." Id. at 534. The Court then set forth a non-exclusive list of factors to guide the court's exercise of discretion, including "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in the particular circumstances to advance considerations of compensation and deterrence." Id. at 533 n. 19 (quotation marks omitted). However, "such factors may be used only `so long as [they] are faithful to the purposes of the Copyright Act.'"Matthew Bender Co., Inc., v. West Publ'g Co., No. 00-7070, 00-7029, 2001 WL 50857, at *4 (2d Cir. Jan. 23, 2001) (quoting Fogerty, 510 U.S. at 534). The two principal purposes behind the Copyright Act are securing a fair return for an author's creative labor and stimulating artistic creativity for the general public good. See Fogerty, 510 U.S. at 526.
Section 505 provides, in relevant part, that "[i]n any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party. . . Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs." 17 U.S.C. § 505.
Of the factors enumerated by the Supreme Court, "objective reasonableness" is to be accorded "substantial weight." Matthew Bender, 2001 WL 50857, at *4; see also Adsani v. Miller, No. 94 Civ. 9131, 1996 WL 531858, at *13 (S.D.N Y Sept. 19, 1996) (collecting cases holding that objective unreasonableness is sufficient to support a fee award). The emphasis on objective reasonableness is firmly rooted in the Court's admonition that an award of attorneys' fees must comport with the purposes of the Copyright Act. "As such, the imposition of a fee award against a . . . [party] with an objectively reasonable litigation position will generally not promote the purposes of the Copyright Act."Matthew Bender, 2001 WL 50857, at *5. Indeed, a court should not award attorneys' fees where the case is novel or close because such a litigation clarifies the boundaries of copyright law. See Lotus Dev. Corp. v. Borland Int'l, Inc., 140 F.3d 70, 75 (1st Cir. 1998) ("When close infringement cases are litigated, copyright law benefits from the resulting clarification of the doctrine's boundaries. But because novel cases require a plaintiff to sue in the first place, the need to encourage meritorious defenses is a factor that a district court may balance against the potentially chilling effect of imposing a large fee award on a plaintiff, who, in a particular case, may have advanced a reasonable, albeit unsuccessful, claim."); see also Fogerty, 510 U.S. at 527 ("Because copyright law ultimately serves the purpose of enriching the general public through access to creative works, it is peculiarly important that the boundaries of copyright law be demarcated as clearly as possible.")
B. Awarding Fees Against the Ackoffs
With respect to the Ackoffs, Windswept contends that plaintiffs' declaratory judgment action was objectively unreasonable because Windswept had previously been granted a broad general release. See Memorandum of Law of Defendants Windswept Pacific Entertainment Co. and EMI Virgin Music, Inc. in Support of Motion for Costs and Attorneys' Fees ("Def. Mem.") at 2-3. Although the Release was held to bind the Ackoffs, it was executed by Rosenblatt, not the Ackoffs. Additionally, the Ackoffs advanced two arguments against interpreting the Release to bar their action: (1) that the parties to the Release did not contemplate releasing the claim to Robert Ackoff's share of the renewal copyright in "Mony, Mony"; and (2) that Rosenblatt had no authority to release their claims because the 1989 Agreement, which purportedly assigned Cele and Jon Ackoffs' expectancies in renewal copyrights to Rosenblatt, was unconscionable. Neither argument was objectively unreasonable.
With respect to their first contention, the Ackoffs relied on Cahill v. Regan, 5 N.Y.2d 292, 299(1959), which held that the "meaning and coverage" of a release necessarily depend upon the controversy being settled and the purpose for which the release was given. Although I found that Cahill was not controlling, plaintiffs' reliance on it was not objectively unreasonable.
With respect to the Ackoffs' second contention, I held that any unconscionability claim was time-barred. This holding was certainly not a foregone conclusion. Because the 1989 Agreement transferred a future expectancy of renewal copyrights, the question of whether the statute of limitations commenced upon the signing of the contract or upon the vesting of the future expectancy presented a novel question of law. Indeed, at the time that plaintiffs asserted their unconscionability claim, the only prior authority was an oral decision by Justice Alice Schlesinger, who held that the statute of limitations for the Ackoffs' unconscionability claim commenced when the renewal copyright vested. In short, plaintiffs' declaratory judgment action was not objectively unreasonable. See Procter Gamble Co. v. Colgate-Palmolive Co., No. 96 Civ. 9123, 1999 WL 504909, at *2 (S.D.N.Y. July 15, 1999) ("[T]he question at hand is not whether there was a sufficient basis for judgment in favor of defendants, but whether the factual and legal support for plaintiff's position was so lacking as to render its claim frivolous or objectively unreasonable."); see also CF Co. v. Burger King Corp., No. 92 Civ. 1488, 1995 WL 29488, at *1 (S.D.N.Y. Jan. 26, 1998) ("[N]ot all unsuccessfully litigated claims are objectively unreasonable. The infirmity of the claim, while falling short of branding it as frivolous or harassing, must nonetheless be pronounced.")
Justice Schlesinger presides over the 1998 lawsuit Rosenblatt filed against the Ackoffs in New York State court.
Nor should Windswept be awarded attorneys' fees based on plaintiffs' motion for reconsideration. The Second Circuit recently emphasized that a court generally should not punish a party for the exercise of a right granted to it by the Federal Rules of Civil Procedure — such as the right to move for reconsideration:
[T]he only "misconduct" specifically identified by the District Court is [defendant's] filing of a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1). . . . The District Court's award essentially punishes [defendant] for availing itself of a right provided by the Federal Rules, namely, moving to dismiss the plaintiff's complaint. To allow fees on this basis would be to deter the exercise of rights afforded to litigants in federal court. of course, if [defendant's] motion had been frivolous, lacking any plausible merit, an award of attorneys' fees may have been an appropriate sanction. However, the District Court did not find . . . that the motion was frivolous. Indeed, the District Court deemed it necessary to hold an evidentiary hearing before deciding the motion.Matthew Bender, 2001 WL 50857, at *9.
Plaintiffs' motion for reconsideration was neither frivolous nor objectively unreasonable. Plaintiffs principally argued that the Court had overlooked key extrinsic evidence suggesting that Rosenblatt attempted to insert language limiting the scope of the Release. This issue was addressed on reconsideration, where this Court emphasized that "the extrinsic evidence provided by plaintiffs . . . suggests that Rosenblatt took some initial action to limit the scope of the release, but that he ultimately failed to limit its scope." Ackoff II, 2000 WL 1808572, at *4. Once again, plaintiffs' argument was not objectively unreasonable. Indeed, although the Court primarily adhered to its prior ruling, it granted reconsideration to both plaintiffs and Rosenblatt. See Ackoff II, 2000 WL 1808572, at *5.
As support for this proposition, plaintiffs relied on the following language in Ackoff I: "[i]f Rosenblatt did not intend to include the dispute over "Mony, Mony' within the scope of the Release, he could have — and should have — inserted limiting language." Ackoff I, 120 F. Supp.2d at 283.
Finally, a fee award against the Ackoffs would not serve the policies underlying the Copyright Act. This case involved complicated issues of fact and law and an award of attorneys' fees and costs in such a complex case would chill future lawsuits, rather than beneficially deter frivolous or objectively unreasonable lawsuits. See Procter Gamble, 1999 WL 504909, at *4.
C. Awarding Fees Against Rosenblatt
Windswept also seeks an award of attorneys' fees and costs against Rosenblatt. Windswept primarily relies on the same arguments of objective unreasonableness advanced against the Ackoffs. Specifically, Windswept contends that Rosenblatt acted unreasonably in attempting. to controvert the plain meaning of the Release and in moving for reconsideration. See Def. Mem. at 3-4. However, for the same reasons discussed earlier, see supra Part II.B, Rosenblatt's arguments and motion for reconsideration were not objectively unreasonable.
Windswept also maintains that "an award of fees is particularly important against Rosenblatt because of his litigious history against Windswept." Def. Mem. at 6. Although Windswept deserves some sympathy for defending itself against a barrage of lawsuits by Rosenblatt, two points bear emphasis. First, of the several lawsuits initiated by Rosenblatt, only one involved an attempt to recover Robert Ackoff's share of the renewal copyright in "Mony, Mony". See Ackoff I, 120 F. Supp.2d at 277. Even if Rosenblatt's other suits were brought in bad faith, an award of fees must be based on bad faith actions by Rosenblatt in this case — a proposition which Windswept has not supported. See Matthew Bender, 2001 WL 50857, at *10. Second, Rosenblatt did not bring this action against Windswept. Rather, Rosenblatt, like Windswept, was sued by the Ackoffs. Therefore, an award of fees against Rosenblatt is not justified by any need to deter him from future lawsuits and would not advance the purposes of the Copyright Act. Accordingly, Windswept's request for an award of fees against Rosenblatt is denied.
Since 1993, Rosenblatt has sued Windswept four times. See Ackoff I, 120 F. Supp.2d at 276-78.
Rosenblatt was permitted to contest Windswept's 12(c) motion because he had a serious stake in keeping Windswept in the case. See Ackoff I, 120 F. Supp.2d at 279 n. 11. Moreover, because Rosenblatt, rather than the Ackoffs, executed the Release, his intervention in opposing Windswept's motion clarified many of the issues before the Court.
I am, however, troubled by the recent threat made by Rosenblatt's counsel, Howard Gotbetter, against Windswept. Gotbetter argues that an award of attorneys' fees can only be sought in a copyright infringement case because section 505 is titled "Remedies for infringements: Costs and attorney's fees." See Memorandum of Law by Richard Rosenblatt in Opposition to Motion by Windswept Defendants for Costs and Attorneys' Fees at 4-5. Gotbetter's failure to cite any authority for this proposition underscores its futility. Nonetheless, Gotbetter writes:
Not only does section 505 provide for a fee award "[i]n any civil action under this title," 17 U.S.C. § 505, but it is well established that "[i]n general, . . . headings and titles are not meant to take the place of the detailed provisions of the statutory text." U.S. ex rel. Thistlethwaite v. Dowty Woodville Polymer, Ltd., 110 F.3d 861, 866 (2d Cir. 1997) (quotation marks and alterations omitted). Indeed, this Court has repeatedly awarded attorneys' fees for any action brought under the Copyright Act, including declaratory judgments. See, e.g., Margo v. Weiss, No. 96 Civ. 3842, 1998 WL 765185, at *3 (S.D.N.Y. Nov. 3, 1998) (awarding fees in action seeking declaration that plaintiffs are co-authors), aff'd, 213 F.3d 55 (2d Cir. 2000); Woods v. Bourne Co., 858 F. Supp. 399, 401 (S.D.N.Y. 1994) (awarding attorneys' fees in declaratory judgment action to determine entitlement to royalties in copyrighted work).
At the risk of repetition: Windswept purposely omitted the Heading of Section 505 of the Copyright Act in what should be taken as an attempt to mislead the Court. If this Court agrees, then it is submitted that Windswept violated Rule 11, F.R.Civ.P. and should be sanctioned for frivolous behavior in this fee application.Id. at 5.
Accusing Windswept and its attorneys of misleading the Court is a serious charge, and one which itself may be subject to Rule 11 sanctions. See Advisory Committee Notes, 1993 Amendments to Fed.R.Civ.P. 11 ("[T]he filing of a motion for sanctions is itself subject to the requirements of the rule and can lead to sanctions."). Although lawyers are encouraged to report misconduct by other attorneys, an attorney should not convert a meritless legal argument into a baseless claim of impropriety.
III. CONCLUSION
For the reasons stated above, Windswept's motion for costs and attorneys' fees is denied.
SO ORDERED: