Opinion
1:22-cv-05683 (JMF) (SDA)
03-08-2023
Eric Johnson, Plaintiff, v. Ray Tennyson, et al., Defendants.
THE HONORABLE JESSE M. FURMAN, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION
STEWART D. AARON UNITED STATES MAGISTRATE JUDGE
Plaintiff Eric Johnson (“Plaintiff” or “Johnson”) filed this action under the Copyright Act, 17 U.S.C. § 101, et seq.; the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 1201, et seq.; and New York common law against Defendants Ray Tennyson (“Tennyson”), Ray Tennyson LLC (“RT LLC”) and Amazing Paint Party LLC (“APP”) (collectively, “Defendants”) arising out of Defendants' creation, sale and distribution of unauthorized reproductions and/or derivative works of Plaintiff's copyrighted photograph of the late recording artist and actress Aaliyah (the “Aaliyah Photograph”). (See Compl., ECF No. 1, ¶¶ 2, 18, 22, 41-118.) On November 22, 2022, the Honorable Jesse M. Furman issued a default judgment against Defendants and referred the action to the undersigned to conduct an inquest into damages. (See Default Judg., ECF No. 40; Order of Ref., ECF No. 41.)
For the reasons set forth below, I respectfully recommend that Plaintiff be awarded $150,000.00 in statutory damages against Defendants, jointly and severally, under the Copyright Act; $35,000.00 in statutory damages against Tennyson and APP, jointly and severally, under the DMCA; $50,000.00 in damages against Defendants, jointly and severally, for breach of contract; $16,787.50 in attorneys' fees and $402.00 in costs against Defendants, jointly and severally; and prejudgment interest only on his breach of contract claim.
RELEVANT FACTS
I. Parties
Johnson is an award-winning photographer and artist whose work includes photographic portraits of musicians and artists. (Compl. ¶ 13.) APP and RT LLC are limited liability companies engaged in the business of designing, manufacturing, marketing, selling and distributing “paint kit” products that include paints and paintbrushes, pre-drawn outlined canvases and instructions for customers to use to paint reproductions of various images (the “Paint Kits”). (Id. ¶¶ 11-12, 23.) Tennyson is the principal and sole or majority owner of both APP and RT LLC. (Id. ¶¶ 10, 38.) At all relevant times, Tennyson was the primary moving force behind each of APP's and RTT LLC's business activities, had the right and ability to supervise each of APP's and RT LLC's activities and was responsible for the overall operation of each of APP's and RTT LLC's businesses and day-today operations. (Id. ¶ 39.) Tennyson reaped substantial financial benefits from his ownership and control of APP and RT LLC and their business activities, including both financial and non-monetary benefits earned by APP and RT LLC, as well as financial and non-monetary benefits earned by him personally. (Id. ¶ 40.)
II. The Aaliyah Photograph And Defendants' Infringing Activities
In June 2021, Johnson created the Aaliyah Photograph. (Compl. ¶ 18.) He secured a U.S. copyright registration covering the Aaliyah Photograph, U.S. Copyright Reg. No. VA 1-910-544. (Id. ¶ 22.) Johnson is and has been the sole owner of all copyright rights in the Aaliyah Photograph at all times since its creation (Id. ¶ 21.)
Defendants created unauthorized reproductions and/or derivative works of the Aaliyah Photograph (“Infringing Works”). (Compl. ¶ 41.) Defendants manufactured, produced, marketed, promoted, sold and/or distributed Paint Kits designed for the specific purpose of producing Infringing Works (the “Infringing Paint Kits”). (Id. ¶ 47.) Defendants distributed and publicly displayed Infringing Works for the purpose of advertising, marketing and promoting their products and services. (Id. ¶ 49.) Defendants distributed and/or publicly displayed copies of the Aaliyah Photograph for the purpose of advertising, marketing and promoting their products and services, including Infringing Paint Kits. (Id. ¶ 51.)
Defendants sold and distributed Infringing Paint Kits to third party customers. (Compl. ¶ 53.) Defendants sold and distributed Infringing Paint Kits to wholesale customers with the expectation and understanding that such wholesale customers would engage in downstream resale of such Infringing Paint Kits to retail customers. (Id. ¶ 56.) Defendants provided their wholesale customers with digital Infringing Works to reproduce, distribute and publicly display on their websites and social media pages for marketing, advertising and promotional purposes. (Id. ¶ 59.) Tennyson was the moving force behind, and personally participated in, all of APP's and RT LLC's aforementioned infringing activities, had the right and ability to supervise and control such activities and financially benefitted from such activities. (Id. ¶ 64.)
Defendants knowingly and willfully falsified copyright management information (“CMI”) in connection with the Infringing Works by placing their signatures and/or company trademarks upon Infringing Works displayed and distributed on their web sites and social media pages for the purpose of concealing the infringing nature of the Infringing Works and thereby inducing, enabling and/or facilitating their customers' infringements of the Aaliyah Photograph by using the Infringing Paint Kits to produce further Infringing Works. (Compl. ¶ 65.) Defendants never were licensed, authorized or given permission by Johnson or any authorized agent to engage in any use of the Aaliyah Photograph, or to place any of their signatures or company trademarks upon the Aaliyah Photograph or any derivative works based thereupon. (Id. ¶ 66.)
III. Prior Lawsuit, Settlement Agreement And Breach of Settlement Agreement
Johnson first brought legal action against Tennyson and APP in connection with their above-described infringing activities in the civil action Johnson v. Amazing Paint Party LLC, et al., Case No. 21-CV-03659 (VEC), filed in this Court on April 26, 2021 (the “Prior Lawsuit”). (Compl. ¶ 75.) On April 8, 2022, Johnson entered into a contractual settlement agreement with Tennyson and APP intended to resolve his claims against them asserted in the Prior Lawsuit (the “Settlement Agreement”). (Id. ¶ 76.)
Pursuant to Section 1[d] of the Settlement Agreement, the parties agreed for the Prior Lawsuit to be dismissed as against Tennyson and APP without prejudice following execution of the Settlement Agreement. (Compl. ¶ 77.) On April 11, 2022, the parties filed a Stipulation of Voluntary Dismissal without prejudice of Plaintiff's claims against Tennyson and APP in the Prior Lawsuit, and the Court issued an order dismissing Johnson's claims against Tennyson and APP in the Prior Lawsuit without prejudice. (Id. ¶ 78.)
Section 1[a] of the Settlement Agreement provides that Tennyson and APP would pay or cause to be paid to Johnson the sum of $75,000.00, to be paid in twelve equal, monthly payments of $6,250.00 each, with the first payment of $6,250.00 to be made on or before June 1, 2022, and each subsequent payment of $6,250.00 to be made on the first calendar day of each of the subsequent eleven months. (Compl. ¶ 79.) Under Section 1[b] of the Settlement Agreement, Tennyson personally guaranteed the $75,000.00 to be paid to Plaintiff under Section 1[a] of the Settlement Agreement. (Id. ¶ 80.) Under Section 1[f] of the Settlement Agreement, Tennyson and APP acknowledged and agreed that time was of the essence with respect to their payment obligations to Johnson, and that timely and complete satisfaction of their payment obligations to Johnson was a material provision of the Settlement Agreement. (Id. ¶ 81.) Pursuant to Section 2[a] of the Settlement Agreement, Plaintiff released APP and Tennyson from claims arising out of alleged use of the Aaliyah Photograph, subject to Section 3 of the Settlement Agreement. (Id. ¶ 82.) In turn, Section 3 provided that, in the event that APP and Tennyson failed to timely satisfy any payment obligation under Section 1 of the Settlement Agreement, Johnson was entitled, in his sole discretion, to declare his release of APP and Tennyson under Section 2 of this Agreement null and void and to bring or pursue any claim within the scope of the release under Section 2. (See id. ¶ 83.)
Tennyson and APP failed to satisfy their first payment obligation of $6,250.00 to Johnson that was due on June 1, 2022. (Compl. ¶ 85.) On June 8, 2022, Johnson provided Tennyson and APP with notice, pursuant to Section 3 of the Settlement Agreement, that he declared his release of Tennyson and APP under Section 2 of the Settlement Agreement null and void. (Id. ¶ 89.) As of January 11, 2023, APP and Tennyson had not paid any amounts due under the Settlement Agreement. (See Johnson Decl., ECF No. 48, ¶ 27.)
IV. RT LLC's Activities Subsequent To Settlement Agreement
Subsequent to entering into the Settlement Agreement, Tennyson and APP engaged in a concerted and illicit effort to avoid meeting their obligations to Johnson under the Settlement Agreement by shifting assets and business operations to RT LLC, which was not a signatory to the Settlement Agreement. (Compl. ¶ 91.) RT LLC owned and operated an e-commerce website, www.raytennyson.com (the “RT Website”), on which it marketed, offered and sold certain products and services to customers throughout the United States, including in the State of New York and in this District. (Id. ¶ 92.)
Subsequent to execution of the Settlement Agreement, RT LLC engaged in sales and distribution of the Infringing Paint Kits previously sold and distributed by APP. (Compl. ¶ 95.) Product listing/sale pages and links on the APP Website for products previously offered, sold and distributed by APP were altered to direct to corresponding product listing/sale pages on the RT Website offering for sale and distribution the same products previously offered for sale and distribution by APP on the APP Website. (Id. ¶ 96.) Tennyson and/or RT LLC marketed, advertised and promoted the Infringing Paint Kits previously marketed and sold by APP, which were available for sale and distribution by RT LLC, on Tennyson's and/or RT LLC's social media pages. (Id. ¶ 103.) The infringing activities undertaken by RT LLC were taken or directed by Tennyson (in his capacity as principal of APP and RT LLC) and/or persons acting under his direction, control and/or agency. (Id. ¶¶ 99, 102, 104, 106.)
APP exists only as a shell company and conducts no business, and RT LLC has stepped into the shoes of APP and continued the business operations previously carried out by APP, resulting in, in substance, a consolidation of APP and RT LLC. (Compl. ¶ 107.) A continuity of ownership and management exists between APP and RT LLC, through Tennyson as owner and manager. (Id. ¶¶ 108-09.)
PROCEDURAL BACKGROUND
On July 5, 2022, Plaintiff commenced this action by filing his Complaint. (See Compl.) On July 29, 2022, Defendants filed Answers to the Complaint. (See Defs.' Answers, ECF Nos. 17-19.) By Order, dated October 14, 2022, the Court granted the motion by Defendants' counsel to withdraw. (See 10/14/22 Order, ECF No. 36.) The October 14, 2022 Order granted APP and RT LLC until October 28, 2022 to obtain new counsel and granted Tennyson until October 28, 2022 to either (1) obtain new counsel or (2) file a letter indicating that he intends to defend this suit without counsel. (See id.) The Order further provided that, if new counsel did not appear for APP and RT LLC by October 28, 2022, Plaintiff was to file a motion to strike their Answers and to enter a default judgment against them. (See id.) Finally, the Order provided that, if new counsel did not appear for Tennyson and Tennyson did not file the required letter, Plaintiff was to file a motion to strike Tennyson's Answer and to enter a default judgment against him (consolidated, as appropriate, with any such motion as to the APP and RT LLC). (See id.)
On November 10, 2022, Plaintiff timely filed a motion to strike Defendants' Answers and to enter a default judgment against them. (See Pl.'s 11/10/22 Not. of Mot., ECF No. 37.) On November 22, 2022, the Court entered a Default Judgment against Defendants. (See Default Judg.) Pursuant to the Default Judgment, Defendants were found to be jointly and severally liable to Plaintiff for direct and contributory copyright infringement in violation of 17 U.S.C. § 501 et seq.; Defendant Tennyson was found to be liable to Plaintiff for vicarious copyright infringement in violation of 17 U.S.C. § 501 et seq.; Defendants Tennyson and APP were found to be liable to Plaintiff for falsification of copyright management information in violation of 17 U.S.C. § 1202; Defendants Tennyson and APP were found to be liable to Plaintiff for breach of contract; and Defendant RT LLC was found to be liable to Plaintiff for Defendant APP's breach of contract liability under principles of successor liability. (See id. ¶¶ 1-5.) The Default Judgment also provided that an inquest be conducted to determine the monetary awards which Defendants must pay to Plaintiff. (See id. ¶ 7.)
On November 22, 2022, the Court entered an Order of Reference to a Magistrate Judge referring this action to the undersigned for the purpose of an inquest after default/damages hearing. (See Order of Ref.) On November 23, 2022, the undersigned entered a Scheduling Order for Damages Inquest requiring that Plaintiff serve proposed findings of fact and conclusions of law or a memorandum of law concerning all damages and other monetary relief permitted under the entry of default judgment. (See Scheduling Order, ECF No. 42.)Following two extensions, on January 11, 2023, Plaintiff filed his proposed findings of fact and memorandum of law and supporting declarations. (See Pl.'s Mem., ECF No. 47; Johnson Decl.; Chong Decl., ECF No. 49; Malbin Decl., ECF No. 50.) On January 12, 2023, Plaintiff filed proof of service. (Cert. of Service, ECF No. 54.) Defendants did not file any response. Accordingly, the matter is ripe for resolution.
The Scheduling Order notified the parties that the Court may conduct the inquest based solely upon the written submissions of the parties. (Scheduling Order ¶ 5 (citing Bricklayers & Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v. Moulton Masonry & Const., LLC, 779 F.3d 182, 189 (2d Cir. 2015); Cement & Concrete Workers Dist. Council Welfare Fund, Pension Fund, Annuity Fund, Educ. & Training Fund & Other Funds v. Metro Found. Contractors Inc., 699 F.3d 230, 234 (2d Cir. 2012)).) In addition, the Order provided that, “[t]o the extent that any party [sought] an evidentiary hearing on the issue of damages, such party must set forth in its submission the reason why the inquest should not be conducted based upon the written submissions alone, including a description of what witnesses would be called to testify at a hearing and the nature of the evidence that would be submitted.” (Id.)
Plaintiff filed a motion to seal certain exhibits to the Malbin Declaration. (See Pl.'s Ltr. Mot. to Seal, ECF No. 50.) The undersigned shortly will enter a separate Order with respect to that motion.
LEGAL STANDARDS ON INQUEST
Following a default, the Court must accept all the well-pleaded factual allegations in the Complaint as true, except those relating to damages. See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009). If the well-pleaded allegations establish the defaulting party's liability, the only remaining issue is whether the plaintiff has provided adequate support for its requested relief. See Gucci Am., Inc. v. Tyrrell-Miller, 678 F.Supp.2d 117, 119 (S.D.N.Y. 2008) (citing Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)).
The Court has determined that no hearing is necessary to determine damages (no party has requested one), and that the determination of damages can be made on the submissions and prior proceedings. See Bricklayers, 779 F.3d at 189; Cement & Concrete Workers, 699 F.3d at 234.
JURISDICTION
The Court has both subject matter jurisdiction over this case and personal jurisdiction over the Defendants. Federal subject matter jurisdiction exists over Plaintiff's copyright infringement and DMCA claims pursuant to 28 U.S.C. § 1331 (federal question jurisdiction) and § 1338 (jurisdiction over trademark, copyright and patent claims). In their Answers, Defendants admitted that the Court had personal jurisdiction over them. (See Defs.' Answers ¶ 7.)
DAMAGES
I. Copyright Act
A. Legal Standards
The Court already has found that Defendants are liable to Plaintiff for copyright infringement. (See Default Judg. ¶¶ 1-2.) Under the Copyright Act, an infringer of a copyright is liable for either the copyright owner's actual damages and any additional profits of the infringer or statutory damages. 17 U.S.C. § 504(a). Section 504(c) of the Copyright Act permits a court to award statutory damages “with respect to any one work . . . in a sum of not less than $750 or more than $30,000 as the court considers just.” 17 U.S.C. § 504(c)(1). If the court finds willful infringement, “the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000.” Id. § 504(c)(2).
No proof of actual damages or, in fact, any damages, is necessary for the award of statutory damages. See All-Star Mktg. Grp., LLC v. Media Brands Co., 775 F.Supp.2d 613, 626 (S.D.N.Y. 2011) (quoting Nat'l Football League v. PrimeTime 24 Joint Venture, 131 F.Supp.2d 458, 472 (S.D.N.Y. 2001)). Where a defendant has defaulted, a complaint's allegations of willfulness may be taken as true. See Rovio Ent., Ltd. v. Allstar Vending, Inc., 97 F.Supp.3d 536, 546 (S.D.N.Y. 2015) (citing All-Star Mktg., 775 F.Supp.2d at 621-22).
In calculating the appropriate statutory damages award, the Second Circuit has held that a court should consider the following factors:
(1) the infringer's state of mind; (2) the expenses saved, and profits earned, by the infringer; (3) the revenue lost by the copyright holder; (4) the deterrent effect on the infringer and third parties; (5) the infringer's cooperation in providing evidence concerning the value of the infringing material; and (6) the conduct and attitude of the parties.Bryant v. Media Right Prods., Inc., 603 F.3d 135, 143-44 (2d Cir. 2010) (citation omitted); accord Psihoyos v. John Wiley & Sons, Inc., 748 F.3d 120, 127 (2d Cir. 2014); Hollander Glass Tex., Inc. v. Rosen-Paramount Glass Co., 291 F.Supp.3d 554, 559 (S.D.N.Y. 2018). “[W]illfulness in the context of statutory damages for copyright infringement means that the infringer either had actual knowledge that it was infringing the plaintiffs' copyrights or else acted in reckless disregard of the high probability that it was infringing plaintiffs' copyrights.” Nat'l Football League, 131 F.Supp.2d at 475 (internal quotation marks and citation omitted; alteration in original) (citing cases).
B. Application
Plaintiff seeks maximum statutory damages for willful infringement-i.e., $150,000.00. (See Pl.'s Mem. at 8-15.) Considering the relevant factors, the Court finds that an award of $150,000.00 in damages for copyright infringement against Defendants is appropriate. With respect to the first factor, by virtue of their default, Defendants are deemed to be willful infringers. See Rovio Entm't, 97 F.Supp.3d at 546. In addressing factors two and three, the Court cannot determine from the record in this case the expenses saved or the profits earned by Defendants, nor the revenue lost by the Plaintiff, since Defendants defaulted before discovery commenced. However, evidence obtained from the limited discovery conducted in the Prior Lawsuit, as well as Plaintiff's and his counsel's own investigation, reflect that the likely profits and benefits reaped by Defendants as a result of their infringing activities were significant. (See Malbin Decl. ¶ 14 & Ex. 7; see also Pl.'s Mem. at 9-13.) Regardless, “it is clear that the Defendants profited substantially from their infringing conduct, while the Plaintiff[ ] suffered losses” in part “because [the Defendants] bore none of the costs of creating any of the copyrighted works, yet profited from their unauthorized sale.” See Cengage Learning v. Shi, No. 13-CV-07772 (VSB) (FM), 2015 WL 5167775, at *5 (S.D.N.Y. Sept. 3, 2015); see also id. (“despite investing heavily in the creation of the copyrighted works, the Plaintiffs have seen no profits from the Defendants' sales”).
The fourth factor regarding the deterrent effect on the infringers and third parties also weighs in Plaintiff's favor. “[C]ourts have repeatedly emphasized that defendants must not be able to sneer in the face of copyright owners and copyright laws.” Tu v. TAD Sys. Tech. Inc., No. 08-CV-03822 (SLT) (RM), 2009 WL 2905780, at *6 (E.D.N.Y. Sept. 10, 2009) (quoting N.Y. Chinese TV Programs, Inc. v. U.E. Enterprises, Inc., No. 89-CV-06082 (KAR), 1991 WL 113283, at *4 (S.D.N.Y. Jun. 14, 1991) (internal quotation marks omitted)). In the case of “coordinated . . . and extensive copyright infringement,” a substantial statutory damage award can “act as a specific deterrent to the [defendant] and a general deterrent to other like-minded infringers.” Cengage Learning v. Bhargava, No. 14-CV-03174 (DAB) (RLE), 2017 WL 9802833, at *5 (S.D.N.Y. Aug. 22, 2017), report and recommendation adopted, 2018 WL 1989574 (S.D.N.Y. Apr. 25, 2018).
The last two factors weigh in Plaintiff's favor as well, given that Defendants' “default and subsequen[t] silence shows a lack of cooperation in determining damages.” Hollander Glass, 291 F.Supp.3d at 559. In addition to making any damages calculation more difficult, Defendants' lack of cooperation in this action has ensured that the full scale of their infringement and the resulting damage to Plaintiff will remain unknown.
Thus, I recommend that Plaintiff be awarded statutory damages for copyright infringement against Defendants in the amount of $150,000.00.
II. DMCA
A. Legal Standards
The Court already has found that Defendants Tennyson and APP are liable to Plaintiff for falsification of CMI in violation of the DMCA. (See Default Judg. ¶ 3.) Under the DMCA, “[a]t any time before final judgment is entered, a complaining party may elect to recover an award of statutory damages for each violation of section 1202 in the sum of not less than $2,500 or more than $25,000.” 17 U.S.C. § 1203(c)(3)(B). Because the Copyright Act and the DMCA protect against different injuries, a court may appropriately award damages under both statutes, so long as it “properly distinguishes among these injuries when it sets the amount of the award under each statute,” avoiding duplication. Reilly v. Commerce, No. 15-CV-05118 (PAE) (BCM), 2016 WL 6837895, at *8 (S.D.N.Y. Oct. 31, 2016); see also Mango v. BuzzFeed, Inc., 356 F.Supp.3d 368, 378 (S.D.N.Y. 2019) (courts strive to “avoid[ ] duplicating compensation for similar conduct” under the Copyright Act and the DMCA), aff'd, 970 F.3d 167 (2d Cir. 2020). In awarding statutory damages under the DMCA, courts “consider [several] factors . . ., namely, the difficulty of proving actual damages, the circumstances of the violation, whether [d]efendants violated the DMCA intentionally or innocently, and deterrence.” Agence France Presse v. Morel, No. 10-CV-02730 (AJN), 2014 WL 3963124, at *10 (S.D.N.Y. Aug. 13, 2014).
B. Application
Plaintiff seeks statutory damages of $5,000.00 for each of seven DMCA violations. (See Pl.'s Mem. at 18.) Plaintiff has established at least seven instances of Tennyson and/or APP distributing Infringing Works on the internet bearing Tennyson's signature and/or conveyed with APP's name, logo and/or website address, in violation of the DMCA, since the Infringing Works contained false CMI.(See Malbin Decl. ¶¶ 15-20, 22-23 and Exs. 8-13, 15 & 16; Johnson Decl. ¶ 29 and Ex. H.) The Court finds that Plaintiff's request for an award of statutory damages of $5,000 per violation is appropriate, particularly since it is the lower range of permissible damages that typically is awarded for a single violation, rather than the multiple violations that occurred here. See Southall v. ASG Partners LLC, No. 20-CV-09103 (PKC), 2021 WL 1199472, at *2 (S.D.N.Y. March 30, 2021) (awarding $5,000 in statutory damages for single violation of DMCA). Thus, I recommend that Plaintiff be awarded statutory damages against Tennyson and APP in the amount of $5,000.00 for each of the seven DMCA violations, for a total of $35,000.00.
The DMCA prohibits the removal or alteration of CMI, as well as the distribution of false CMI. CMI includes the name of, and other identifying information about, the author or copyright owner of a work, “the information set forth on a notice of copyright,” the “[t]erms and conditions for use of the work,” and “links to such information.” 17 U.S.C. §§ 1202(c)(1), (2), (3), (6), (7).
III. Breach Of Contract
A. Legal Standards
The Court already has found that Defendants are liable to Plaintiff for breach of the Settlement Agreement. (See Default Judg. ¶¶ 4-5.) “[T]he general rule for measuring damages for breach of contract has long been settled. It is the amount necessary to put the plaintiff in the same economic position he would have been in had the defendant fulfilled his contract.” Adams v. Lindblad Travel, Inc., 730 F.2d 89, 92 (2d Cir. 1984); see also Merrill Lynch & Co. v. Allegheny Energy, Inc., 500 F.3d 171, 185 (2d Cir. 2007) (“A party injured by breach of contract is entitled to be placed in the position it would have occupied had the contract been fulfilled according to its terms”). Under New York law, which governs the Settlement Agreement, absent an acceleration clause, an aggrieved party to a contract for the payment of money in fixed installments may not obtain acceleration by a claim of anticipatory breach. See Apostolou v. Mut. of Omaha Ins. Co., 72 A.D.2d 781, 781 (2d Dep't 1979).
B. Application
Plaintiff seeks breach of contract damages in the amount of $75,000.00, i.e., the full amount due under the Settlement Agreement or, in the alternative, asks the Court “to retain jurisdiction permitting Plaintiff to apply to the Court to amend the judgment, to add the additional outstanding portions of the total settlement amount if and when they are not paid to Plaintiff by Defendants as contemplated by the Settlement Agreement.” (See Pl.'s Mem. at 1821.) The record before the Court reflects that Defendants did not pay the eight installments of $6,250.00 due under the Settlement Agreement for the period June 1, 2022 through January 1, 2023. (See Johnson Decl. ¶ 27 (as of Jan. 11, 2023 date of Declaration, no payments had been made).) Thus, based upon the record currently before the Court, I recommend that Plaintiff be awarded against the Defendants for breach of contract the sum of $50,000.00. I further recommend that the Court retain jurisdiction to amend the judgment, upon an application made by Plaintiff after May 1, 2023 (i.e., the date the last installment is due), to include additional amounts due under the Settlement Agreement. See New York Univ. v. Galderma Lab'ys, Inc., No. 12-CV-08169 (AKH), 2013 WL 12202520, at *2 (S.D.N.Y. Nov. 1, 2013) (“The Agreement provides for periodic payments of installments and, because there is no acceleration clause, each failure to pay an installment is a separate breach of the Agreement. I will retain jurisdiction over any future breaches.”).
ATTORNEYS' FEES AND COSTS
Plaintiff also seeks awards of attorneys' fees and costs under the Copyright Act and the DMCA, both of which permit such awards. 17 U.S.C. §§ 504, 1203(b)(4)-(5). An award of fees “lies within the sole and rather broad discretion of the Court.” Baker v. Urban Outfitters, Inc., 431 F.Supp.2d 351, 357 (S.D.N.Y. 2006). In exercising that discretion, courts should consider “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Zalewski v. Cicero Builder Dev., Inc., 754 F.3d 95, 108 (2d Cir. 2014) (citation omitted). Given Defendants' willful misconduct, together with its failure to offer any defense to Plaintiff's claims, attorneys' fees should be awarded in this case.
Plaintiff also seeks recovery of attorneys' fees under the Settlement Agreement. (See Pl.'s Mem. at 21 (citing Settlement Agreement ¶ 14).) Contracts like the Settlement Agreement, which are governed by New York law, may provide for recovery of attorneys' fees. See In re Refco Sec. Litig., 890 F.Supp.2d 332, 340 (S.D.N.Y. 2012).
Plaintiff requests fees in the amount of $16,787.50, plus $402.50 in costs (see Pl.'s Mem. at 22), and has submitted the Declaration of Attorney Alexander Malbin (see Malbin Decl. ¶¶ 33-37 and Exs. 24 & 25) to substantiate those amounts. “The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cty. of Albany, 522 F.3d 182, 186 (2d Cir. 2008) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). The burden is on the fee applicant to provide evidence that “the requested hourly rates are the prevailing market rates.” Farbotko v. Clinton, 433 F.3d 204, 209 (2d Cir. 2005). “A reasonable rate is generally the ‘prevailing market rate[ ] for counsel of similar experience and skill to the fee applicant's counsel.'” Williams v. Epic Sec. Corp., 368 F.Supp.3d 651, 656 (S.D.N.Y. 2019) (citing Farbotko, 433 F.3d at 209). “In deciding what constitutes a reasonable rate, a court may consider ‘rates awarded in prior cases and the court's own familiarity with the rates prevailing in the district.'” Id.
Attorney Malbin, who has practiced law for more than 10 years, and who is Counsel at his law firm, seeks an hourly rate of $425.00. (See Malbin Decl. ¶ 31, 33.) The Court finds that Attorney Malbin's hourly rate is reasonable. See Charles v. Seinfeld, No. 18-CV-01196 (AJN), 2022 WL 889162, at *5 (S.D.N.Y. Mar. 25, 2022) (“Courts have found associate rates of between $200 and $575 to be reasonable in copyright cases.”).
The contemporaneous time records submitted reflect a total of 39.5 hours billed by Attorney Malbin. (See Fee Stmt., ECF No. 50-24.) Based upon its review of the hours billed, the Court finds these hours to be reasonable. Plaintiff also is entitled to be awarded the $402.00 filing fee paid. I therefore recommend that Plaintiff be awarded $16,787.50 in attorneys' fees and $477.50 in costs.
PREJUDGMENT INTEREST
Finally, Plaintiff seeks prejudgment interest on its statutory damages and breach of contract damages. (See Pl.'s Mem. at 22.) As set forth below, while prejudgment interest on Plaintiff's statutory damages is not appropriate, Plaintiff is entitled by statute to an award of prejudgment interest on his contract damages.
I. Statutory Damages Under Copyright Act And DMCA
“The Copyright Act neither allows nor prohibits an award of pre-judgment interest.” Capitol Records, Inc. v. MP3tunes, LLC, No. 07-CV-09931 (WHP), 2015 WL 13684546, at *4 (S.D.N.Y. April 3, 2015). “The DMCA is similarly silent.” Miller v. Netventure24 LLC, No. 19-CV-07172 (LGS) (BCM), 2021 WL 3934262, at *8 (S.D.N.Y. Aug. 6, 2021), report and recommendation adopted, 2012 WL 3931928 (S.D.N.Y. Sept. 2, 2021). District courts consistently find, however, that they have the discretion to award or not award pre-judgment interest when awarding damages in copyright and cases where other federal law is similarly neutral. See Capitol Records, 2015 WL 13684546 at *4. As the Capitol Records court explained, “[s]ome courts have declined to award pre-judgment interest for willful copyright infringement, finding that pre-judgment interest should be reserved for ‘exceptional' circumstances, and concluding that damages for willfulness have already been factored into an award of maximum statutory damages.” Capitol Records, 2015 WL 13684546 at *4 (citations omitted).
In the present case, Plaintiff's request for prejudgment interest comes as a cursory paragraph at the end of his memorandum. (See Pl.'s Mem. at 22.) Plaintiff adduces no evidence that this case is “exceptional” so as to warrant an award of pre-judgment interest, particularly on top of an award of enhanced damages under the Copyright Act. Thus, I decline to recommend prejudgment interest on Plaintiff's statutory damages award.
II. Breach Of Contract Claim
Under New York law, pre-judgment interest “shall be recovered upon a sum awarded because of a breach of performance of a contract.” N.Y. C.P.L.R. § 5001(a); see also U.S. Naval Institute v. Charter Communications, Inc., 936 F.2d 692, 698 (2d Cir. 1991) (“a plaintiff who prevails on a claim for breach of contract is entitled to prejudgment interest as a matter of right”). The statutory rate of prejudgment interest prescribed by New York law is nine percent. N.Y. C.P.L.R. § 5004(a).
In the present case, Plaintiff is entitled to recover 9% prejudgment interest from each of the dates that Plaintiff has failed to pay amounts due under the Settlement Agreement. Thus, Plaintiff should be awarded 9% interest on $6,250.00 from each of the following dates: June 1, 2022; July 1, 2022; August 1, 2022; September 1, 2022; October 1, 2022; November 1, 2022; December 1, 2022; and January 1, 2023.
CONCLUSION
For the foregoing reasons, I respectfully recommend that Plaintiff be awarded (1) $150,000.00 in statutory damages against the Defendants, jointly and severally, under the Copyright Act; (2) $35,000.00 in statutory damages against Tennyson and APP under the DMCA; (3) $50,000.00 in damages against all the Defendants, jointly and severally, for breach of contract; (4) $16,787.50 in attorneys' fees and $402.00 in costs against all the Defendants, jointly and severally; and (5) prejudgment interest on the contract damages awarded, as set forth above. I further recommend that the Court retain jurisdiction to amend the judgment, upon an application made by Plaintiff after May 1, 2023, to include additional amounts due under the Settlement Agreement.
No later than March 10, 2023, Plaintiff shall serve a copy of this Report and Recommendation on Defendants at their last known addresses and shall file proof of such service.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen days after being served with a copy. Fed. R. Civ. P. 72(b)(2). Any requests for an extension of time for filing objections must be addressed to Judge Furman.
FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).