Opinion
2018 Civ. 8749 (LLS)
2023-05-22
BROADCAST MUSIC, INC., Petitioner, v. NORTH AMERICAN CONCERT PROMOTERS ASSOCIATION, as licensing representative of the promoters listed on Exhibit A to the Petition, Respondent.
Alison Bonelli, Levine Lee LLP, New York, NY, Andrew Leighton Porter, Christopher James Gaspar, Thomas A. Arena, Atara Miller, Scott Alexander Edelman, Milbank LLP, New York City, NY, for Petitioner. Benjamin Ely Marks, David Efrem Yolkut, Camilla Brandfield-Harvey, Elizabeth McLean, Sarah Michelle Sternlieb, Weil, Gotshal & Manges LLP, New York, NY, Joseph Richard Wetzel, Jr., Latham & Watkins LLP, San Francisco, CA, for Respondent.
Alison Bonelli, Levine Lee LLP, New York, NY, Andrew Leighton Porter, Christopher James Gaspar, Thomas A. Arena, Atara Miller, Scott Alexander Edelman, Milbank LLP, New York City, NY, for Petitioner. Benjamin Ely Marks, David Efrem Yolkut, Camilla Brandfield-Harvey, Elizabeth McLean, Sarah Michelle Sternlieb, Weil, Gotshal & Manges LLP, New York, NY, Joseph Richard Wetzel, Jr., Latham & Watkins LLP, San Francisco, CA, for Respondent. OPINION LOUIS L. STANTON, United States District Judge
After a five-week trial and entry of final judgment, BMI moves this court for an award of pre- and post-judgment interest. For the reasons that follow, the motion is denied as to pre-judgment interest but granted as to post-judgment interest.
I. Background
The Court assumes the parties' familiarity with the matter and recounts only what is necessary for adjudication.
Under the BMI Consent Decree, BMI must offer any applicant a license to perform any song in its repertoire. United States v. Broadcast Music, Inc., 1966 Trade Cas. (CCH) ¶ 71, 941 (S.D.N.Y. Dec. 29, 1966), amended by, United States v. Broadcast Music, Inc., 1996-1 Trade Cas. ¶ 71, 378 (S.D.N.Y. Nov. 18, 1994) ("BMI Consent Decree"). If BMI and the applicant cannot agree on a reasonable licensing fee, either party can petition this Court to determine a reasonable rate. Id. After years of unsuccessful negotiations between BMI and NACPA, that is exactly what happened.
The Court held a five-week trial to set a final reasonable rate for two blanket licenses, one that spanned from January 1, 2014 through June 30, 2018 and the other that ran from July 1, 2018 through December 31, 2022. The Court adopted BMI's proposed rate for the first period. Broad. Music, Inc. v. N. Am. Concert Promoters Ass'n, No. 2018 CIV. 8749, 664 F.Supp.3d 470, 473-74 (S.D.N.Y. Mar. 28, 2023). For the second period, the reasonable rate was set at 0.5% of Gross Ticket Revenues, which include the face value of the ticket, revenues received by the promoter for any tickets sold in the first instance directly onto the secondary market, ticketing servicing fees, and revenue received by the promoter for box suite or VIP tickets. Id. at 473-74, 485-86.
In 2014, NACPA agreed to pay BMI, for the pendency of the negotiations and trial, an interim rate of .3% of the face value of the ticket for concerts held in venues with 9,999 or fewer seats and .15% for those in venues with 10,000 or more seats. See Dkt. No. 121 Ex. C ("NACPA's Proposed Findings of Fact") ¶ 169; Dkt. No. 124 Ex. A ("Parties' Agreed Findings of Fact") ¶¶ 50, 56. The Agreement provided that the final reasonable rate set by the Court may be applied retroactively from January 1, 2014 forward.
BMI is thus entitled to receive the difference between the interim fee NACPA actually paid and the reasonable fee the Court decided it ought to have paid. Because the Court determined that the reasonable rate for the requested license should be higher and should be applied to an expanded revenue base, BMI is owed significantly higher fees for the entire period. Accordingly, BMI—for the first time and after entry of final judgment—moves pursuant to Federal Rule of Civil Procedure Rule 59(e) to amend the Opinion to include an award of pre-judgment and post-judgment interest.
A party can request an award for interest on a Rule 59 motion to alter or amend the judgment, even where, as here, it was not expressly requested at trial. See Foresco Co., Ltd. v. Oh, 337 F. Supp. 3d 304, 306 (S.D.N.Y. 2018) (citing Osterneck v. Ernst & Whinney, 489 U.S. 169, 175-76, 109 S.Ct. 987, 103 L.Ed.2d 146 (1989)); In re FKF 3, LLC, 2018 WL 5292131, *12 (S.D.N.Y. Oct. 24, 2018).
II. Legal Standards
When, as here, pre-judgment interest is not mandated by statute, the district court has the discretion to so award it, if the award would "be a function of (i) the need to fully compensate the wronged party for actual damages suffered, (ii) considerations of fairness and the relative equities of the award, (iii) the remedial purpose of the statute involved, and/or (iv) such other general principles as are deemed relevant by the court." Wickham Contracting Co. v. Loc. Union No. 3, Int'l Bhd. of Elec. Workers, AFL-CIO, 955 F.2d 831, 834 (2d Cir. 1992). Courts have granted or denied awards of pre-judgment interest on "the basis of one or more of these enumerated considerations." Id. Crucially, "[a]wards of prejudgment interest must not result in over-compensation of the plaintiff." Id.
Post-judgment interest "shall be allowed on any money judgment in a civil case recovered in a district court" and "shall be calculated from the date of the entry of the judgment." 28 U.S.C. § 1961(a). The Second Circuit has "consistently held that an award of postjudgment interest is mandatory." Schipani v. McLeod, 541 F.3d 158, 165 (2d Cir. 2008).
III. Analysis
A. BMI Is Not Entitled to Pre-Judgment Interest
As is natural, each party conceives the question of the amount of prejudgment interest to be paid on the difference between the rate of the interim fee and the "reasonable fee" finally determined by the Court from the standpoint of the party's benefit. Each party misses the mark but in different ways.
BMI sees its proposed pre-judgment interest as a cure for its years of receiving underpayments, the amounts below what the Court found to be the reasonable rate. Dkt. No. 215 at 2-3. NACPA sees that application as an afterthought, unconsidered at trial, designed to "retroactively inflate the Court's determination of a reasonable rate." Dkt. No. 216 at 8-9.
Actually, the issue's solution lies in the Consent Decree. Article XIV establishes the framework for how BMI is to be compensated pending the completion of negotiations or rate court proceedings over the final reasonable fee. NACPA has the "right to use any, some or all of the compositions in [BMI]'s repertory to which its application pertains, without payment of any fee or other compensation." United States v. Broad. Music, Inc., No. 64 CIV. 3787, 1994 WL 901652, at *1 (S.D.N.Y. Nov. 18, 1994) (Article XIV of the BMI Consent Decree). Article XIV allowed either BMI or NACPA to petition this Court "to fix an interim fee pending final determination of what constitutes a reasonable fee." Id. at XIV(B). If the Court fixes such interim fee, the applicant "shall accept a license providing for the payment of a fee at such interim rate from the date the applicant requested a license" until the reasonable fee is set by this Court and becomes "retroactive to the date the applicant requested a license." Id.
Although neither party petitioned the Court to set the interim fee, choosing instead to negotiate an interim fee themselves, the Court sees no reason to ignore the relationship between the interim fee and final fee as outlined in the Consent Decree. Article XIV clearly states that the interim fee controls until the final fee is determined and can be retroactively applied. That calls for a simple substitution of the interim rate by the new rate, not a new rate plus interest, as though the new higher rate had been known since back then.
The interim fee rate is correct for the time it is in effect: it is not a down payment on some larger amount. Indeed the "reasonable" fee might be smaller, and BMI might then owe rebates. No Debtor-creditor relationship is established, with its concomitant interest arrangements, by the Consent Decree. It makes no mention of any need for the Court to compensate any party more fully.
The Interim Agreement as negotiated by the parties also makes no mention of prejudgment interest. Rather, it echoed the interplay between the interim and final fees as laid out in the Consent Decree. In their Interim Agreement, the parties agreed that they would operate "on an interim basis, pursuant to terms of the Agreement applicable to 2013, including but not limited to its payment and music use reporting terms." See Dkt. No. 121 Ex. C ("NACPA's Proposed Findings of Fact") ¶ 169 ("June 10, 2014 Letter between BMI and NACPA"). They decided that "[o]nce final license rates and terms are agreed to, . . . the final rates and terms may be applied retroactively." See June 10, 2014 Letter between BMI and NACPA. There is no mention of interest. Similarly, the underlying 2013 Agreement, whose licensing rate was adopted by the Interim Agreement, deals with a whole matter of fees (and contains a provision for penalizing late payments) but makes no mention of interest.
The Court's determination of the final fee amount was designed to be the entire embodiment of what constitutes a reasonable fee, not merely some figure to which additional embellishments, such as interest, could be attached. An award of prejudgment interest at this juncture would overcompensate BMI at NACPA's expense.
BMI's request for prejudgment interest is therefore denied.
B. BMI Is Entitled to Post-Judgment Interest
NACPA argues that BMI is not entitled to post-judgment interest as the Court's determination of a "reasonable fee" is not a "money judgment" subject to 28 U.S.C. § 1961(a) because a definite and certain designation of the amount owed cannot be ascertained from the Order.
The Court takes no position on whether a reasonable fee determination constitutes a money judgment if the rate is for a license that governs present or future time periods. That is not the present issue.
Here, the licenses are retroactive, governing songs that have already been performed live. Of course, it is impossible to know in advance the reasonable fee owed to BMI from any particular concert, but because the concerts at issue have already occurred, NACPA can definitively calculate the amount it owes from the Court's Order. The Court did not simply rule that NACPA owed a reasonable fee. It specified how much should be apportioned to BMI from a clearly defined revenue base, producing a lump-sum amount that BMI was entitled to as of the date of entry of judgment. The fact that those calculations will take effort on the part of NACPA does not make the final sum owed unknowable. The Court's Order is thus a money judgment.
The majority of courts follow this approach of granting post-judgment interest "from the date the right to the amount is fixed, even if such a judgment does not establish the exact amount owed." Auto. Club of New York, Inc. v. Dykstra, No. 04 CIV 2576, 2010 WL 3529235, at *5 (S.D.N.Y. Aug. 24, 2010); see Associated Gen. Contractors of Ohio, Inc. v. Drabik, 250 F.3d 482, 495 (6th Cir. 2001); La. Power & Light Co. v. Kellstrom, 50 F.3d 319, 332 (5th Cir. 1995), cert. denied, 516 U.S. 862, 116 S.Ct. 173, 133 L.Ed.2d 113 (1995); Friend v. Kolodzieczak, 72 F.3d 1386 (9th Cir. 1995); BankAtlantic v. Blythe Eastman Paine Webber, Inc., 12 F.3d 1045, 1052-53 (11th Cir. 1994); Jenkins by Agyei v. Missouri, 931 F.2d 1273, 1277 (8th Cir. 1991), cert. denied, 502 U.S. 925, 112 S.Ct. 338, 116 L.Ed.2d 278 (1991); Mathis v. Spears, 857 F.2d 749, 760 (Fed. Cir. 1988). But see Nat. Organics, Inc. v. Nutraceutical Corp., 2009 WL 2424188, at *10 (S.D.N.Y. Aug. 6, 2009) (noting that the Third, Seventh, and Tenth Circuits have adopted the minority approach that post-judgment interest is only mandated by 28 U.S.C § 1961 from the date the amount, rather than the right, is fixed).
This approach aligns with the purpose of post-judgment interest, which is "to compensate the plaintiff for the delay it suffers from the time damages are reduced to an enforceable judgment to the time the defendant pays the judgment." Andrulonis v. United States, 26 F.3d 1224, 1230 (2d Cir. 1994). NACPA will not be prejudiced " 'from any delay in quantifying the award because it has use of the money in the interim and because the statutory interest rate is tied to the U.S. Treasury Bill rate.' " Auto. Club of New York, Inc., 2010 WL 3529235, at *5.
Therefore, BMI is awarded post-judgment interest, to be calculated from when final judgment was entered on March 28, 2023 until payment is made.
IV. Conclusion
BMI's Motion to Amend the Judgment is denied as to pre-judgment interest. It is granted as to post-judgment interest, which is awarded in accordance with 28 U.S.C § 1961 at a rate of 4.456%.
So Ordered.