Alliance for Water Efficiency v. James Fryer, 892 F.3d 280

Background

Fryer and the Alliance for Water Efficiency collaborated on a drought economic study but disputes arose after Fryer circulated a draft in 2013.
The Alliance sued Fryer under the Copyright Act claiming ownership via work-made-for-hire; the parties reached an oral settlement in March 2014 resolving various rights and duties.
Settlement required Fryer to deliver certain utility datasets (with releases for confidential data), permitted both parties to publish separate reports, and prohibited Fryer from acknowledging the Alliance (and vice versa for Fryer/CA DWR); parties agreed to file a joint stipulation to dismiss upon execution.
The magistrate judge later ordered Fryer to turn over disputed Santa Rosa data and enjoined Fryer from acknowledging or contacting certain sponsors unless they first contacted him; judgment entered January 2015.
On appeal the Seventh Circuit reversed only the injunction’s acknowledgment restriction (December 2015), held copyright claim was poorly pleaded for federal-question jurisdiction but sustained diversity jurisdiction on the contract dispute; litigation over settlement obligations continued.
Fryer sought restitution (lost publishing opportunity, unpaid fees, interest) and attorney’s fees under 17 U.S.C. § 505 after the first appeal; the magistrate denied both and the Seventh Circuit affirmed.

Issues

Issue	Plaintiff's Argument (Fryer)	Defendant's Argument (Alliance)	Held
Availability of restitution for harms caused by the erroneous injunction	Injunction delayed Fryer’s publication, costing him first-to-publish advantage and fees; seeks monetary restitution for lost opportunity and unpaid work	Relief is beyond restitution’s narrow scope; harms alleged are speculative or unrelated to the specific vacated injunction	Denied — restitution limited to returns of gains from the vacated order; Fryer relitigated unrelated contract claims and failed to show non-speculative gains by Alliance
Restitution for Santa Rosa data and related delay/interest	Seeks ~$26,000 for producing Santa Rosa data and ~$1,100 interest for delayed payment	The appellate opinion did not disturb the Santa Rosa data ruling; interest claim arose post-appeal and was waived	Denied — Santa Rosa ruling was not reversed on appeal, and interest claim is outside restitution for a vacated order
Entitlement to attorney’s fees under 17 U.S.C. § 505 for prevailing on appeal	Argues he prevailed because the copyright claim was found insufficient for federal-question jurisdiction and he secured right to publish	Settlement resolved the copyright claim; no judicial decision entered on the copyright claim itself — settlement alone doesn’t create prevailing-party status under § 505	Denied — no judicial imprimatur or judgment on the copyright claim; settlement/voluntary change isn’t enough for § 505 fees
Rule 38 sanctions for frivolous appeal	(implicit) Fryer’s appeal was meritorious	Alliance moved for sanctions claiming frivolous arguments	Denied — appeal raised debatable legal issues (restitution scope and fee standards); not frivolous enough for sanctions

Key Cases Cited

Baltimore & Ohio R.R. Co. v. United States, 279 U.S. 781 (1929) (restitutionary relief to correct what was wrongfully done by a prior order)
Arkadelphia Milling Co. v. St. Louis S.W. Ry. Co., 249 U.S. 134 (1919) (equitable power of courts to require restitution following erroneous judgments)
Thomas v. UBS AG, 706 F.3d 846 (7th Cir. 2013) (restitution appropriate when defendant retains something that belongs to the plaintiff)
TAS Distrib. Co. v. Cummins Engine Co., 491 F.3d 625 (7th Cir. 2007) (courts should avoid speculative awards based on counterfactual benefits)
Moran Foods, Inc. v. Mid-Atl. Mkt. Dev. Co., LLC, 476 F.3d 436 (7th Cir. 2007) (limitations on relief for self-inflicted business setbacks)
Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep’t of Health & Human Res., 532 U.S. 598 (2001) (prevailing party requires judicially sanctioned change in legal relationship)
Evans v. Jeff D., 475 U.S. 717 (1986) (fees may be awarded after settlement when entered as a consent decree)
Riviera Distribs., Inc. v. Jones, 517 F.3d 926 (7th Cir. 2008) (prevailing-party analysis for fee awards where court granted dismissal)
Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (1998) (courts must address subject-matter jurisdiction before merits)
Miles v. Indiana, 387 F.3d 591 (7th Cir. 2004) (abuse-of-discretion standard for restitution rulings)
Budget Cinema, Inc. v. Watertower Assocs., 81 F.3d 729 (7th Cir. 1996) (abuse-of-discretion standard for attorney’s-fee denials)