ALLIANCE FOR WATER EFFICIENCY v. JAMES FRYER
No. 17-1326
United States Court of Appeals For the Seventh Circuit
ARGUED NOVEMBER 9, 2017 – DECIDED JUNE 5, 2018
Before RIPPLE, MANION, and SYKES, Circuit Judges.
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 14 C 115 — Jeffrey Cole, Magistrate Judge.
SYKES,
The parties’ disputes center on their obligations under the settlement. Years ago the district court ordered Fryer to turn over certain data sets to the Alliance and refrain from acknowledging a number of organizations in his study. On appeal we reversed solely on the acknowledgment issue. Alliance for Water Efficiency v. Fryer, 808 F.3d 1153 (7th Cir. 2015). Fryer then returned to the district court and sought restitution for injuries caused by the court‘s erroneous injunction. He also moved for attorney‘s fees under
We affirm. Fryer does not present genuine claims for restitution; he seeks to relitigate unrelated claims for breach of the settlement. His request for attorney‘s fees is also unsuccessful because he did not prevail on the Alliance‘s copyright claim as
I. Background
In 2011 James Fryer and the Alliance for Water Efficiency began to collaborate on a report about the economic effects of drought in the western United States. The Alliance agreed to corral funding and other organizations to support the project, and Fryer led the research team to produce the study. Both sides carried out their respective duties for a time. The Alliance amassed a number of funders and sponsors, and Fryer collected and analyzed reams of data from various public water utilities.
Regrettably, the partnership collapsed. In April 2013 Fryer circulated a draft of the report, but the Alliance expressed concern with the analysis and methodology. Months of negotiations ensued and the parties were still unable to resolve their differences. As a result, the Alliance sought to remove Fryer from the study and continue on without him. Fryer strongly objected. He claimed sole ownership of the report and refused to turn over his work product, including the underlying data he had collected.
The Alliance responded in federal court and sued Fryer under the Copyright Act, alleging it was the rightful owner of both the report and the utility data under the “work made for hire” doctrine. See Billy-Bob Teeth, Inc. v. Novelty, Inc., 329 F.3d 586, 591 (7th Cir. 2003). Fryer moved to dismiss, but the district court never had occasion to issue a ruling. The parties reached an oral settlement in a hearing before a magistrate judge on March 13, 2014. Now more than four years later and on their second appeal, the parties continue to litigate their obligations under the agreement.
The settlement‘s provisions are cobbled together from a hearing transcript. Three of them are relevant here. First, Fryer agreed to turn over his data sets from the public utilities in exchange for $25,000. If any utility had disclosed its data pursuant to a confidentiality agreement, the Alliance was required to secure a release before Fryer had to comply. Second, Fryer was allowed to publish his own report, but he could not acknowledge the Alliance‘s involvement. The Alliance was similarly permitted to issue its own study so long as it didn‘t mention Fryer or the California Department of Water Resources. Third, the parties agreed to enter a joint stipulation to dismiss the Alliance‘s suit with prejudice upon “execution” of the settlement. But because the parties have litigated virtually nonstop ever since, they have not yet entered this stipulation. The district court where this suit was first filed has continued to exercise jurisdiction over the case.
Over the next several months, both sides thought the other was shirking its duties under the settlement. Fryer refused to turn over data he acquired from the City of Santa Rosa, California, because the Alliance hadn‘t yet secured the relevant release. The Alliance disagreed and demanded the data because the City had never negotiated a confidentiality agreement. Fryer also sought to acknowledge sponsors other than the Alliance in his report, but this time the Alliance refused to play ball. It had originally recruited these organizations and was worried their support could imply the Alliance‘s tacit approval of Fryer‘s project. Fryer found this concern to be beside the point. He had agreed to omit mention of the Alliance, not anyone else. Fryer further claimed he never would have agreed to a broad nondisclosure term. As a matter of academic integrity, he
The parties were unable to resolve these disputes and entered motions to enforce the settlement before the magistrate judge. The judge ruled in favor of the Alliance on both issues. He concluded that the Alliance was entitled to the Santa Rosa data and that Fryer was bound by the settlement to refrain from acknowledging the disputed organizations unless they contacted him first and asked to be recognized. The ruling was memorialized in an opinion on October 22, 2014, and final judgment was entered on January 7, 2015.
Fryer promptly appealed to this court. At oral argument we noted that the magistrate judge‘s January 2015 order did not satisfy the requirements for an injunction under
We therefore limited our review to the acknowledgement issue and reversed the magistrate judge in a December 2015 opinion. First, we concluded that the Alliance‘s underlying copyright claim did not confer federal-question jurisdiction because it was so poorly pleaded. The Alliance did not allege the necessary predicate of a work-made-for-hire claim: that the disputed work product was “either the output of an employee” or “produced under a written instrument ... that [says] the work shall be considered a work made for hire.” Alliance for Water Efficiency, 808 F.3d at 1156 (internal quotation marks omitted). Nonetheless, we concluded that subject-matter jurisdiction was secure under the diversity jurisdiction: diverse parties presented a contract dispute that exceeded the amount-in-controversy requirement. We then moved to the merits. In our view the March 2014 oral settlement was plain. Fryer had agreed to forgo acknowledging the Alliance and no one else. He was free to mention any other funder or sponsor.
Fast forward to this appeal. Fryer was not content to win his case and publish his report as he desired. Rather he went back to the magistrate judge to request restitution for injuries allegedly caused by the erroneous injunction. He also sought attorney‘s fees under
II. Discussion
Our review is limited. We set aside a ruling on a motion for restitution only if the judge abused his discretion. See Miles v. Indiana, 387 F.3d 591, 598 (7th Cir. 2004). The same is true of a decision to deny attorney‘s fees. See Budget Cinema, Inc. v. Watertower Assocs., 81 F.3d 729, 731 (7th Cir. 1996). “An abuse of discretion occurs if the district court reaches erroneous conclusions of law or premises its holding on a clearly erroneous assessment of the evidence.” Gastineau v. Wright, 592 F.3d 747, 748 (7th Cir. 2010) (internal quotation marks omitted).
District courts are overturned now and again. When that happens, the victorious appellant might seek to recover what he lost while living under an erroneous judgment. In some circumstances, federal law provides a restitutionary remedy. District courts can order restitution “so far as possible to correct what has been wrongfully done.” Baltimore & O.R. Co. v. United States, 279 U.S. 781, 786 (1929). This is “one of the equitable powers[] inherent in every court of justice.” Arkadelphia Milling Co. v. St. Louis Sw. Ry. Co., 249 U.S. 134, 145–46 (1919).
Restitution is a limited form of relief, though. The court simply returns to the appellant what the appellee gained by virtue of the now-vacated order. See id. at 145 (“[A] party against whom an erroneous judgment or decree has been carried into effect is entitled ... to be restored by his adversary to that which he has lost thereby.“); Thomas v. UBS AG, 706 F.3d 846, 853 (7th Cir. 2013) (noting restitution is appropriate when “the defendant has received something that of rights belongs to the plaintiff“). This is not an opportunity to relitigate grievances unrelated to what was incorrectly decided.
Yet that‘s exactly what Fryer endeavors to achieve here. He has gussied up unrelated contract disputes in a motion for restitution and thus seeks relief beyond what we have power to give. And even if we overlooked this fatal flaw, Fryer‘s claims are dubious and unsubstantiated. The magistrate judge did not abuse his discretion when he rejected these arguments and denied the motion for restitution.
Fryer‘s first argument relies heavily on the timeline of this litigation. He claims he was ready to publish his report sometime in 2014, but he was barred from doing so until we reversed the injunction in December 2015. This gave the Alliance over a year to publish its report without any competition, and it ultimately did so in late July 2015. Fryer now seeks over $105,000 in “restitution” for having lost the opportunity to publish his report first.
This is not a genuine claim for restitution. The magistrate judge did not prohibit Fryer from publishing his report; we certainly never identified or addressed such an order on appeal. The injunction below merely instructed Fryer to forgo certain acknowledgments if he decided to issue his study. If Fryer lost anything, it was the right to publish a report with various acknowledgments for much of 2015.
That can‘t be the basis for restitution. Setting aside Fryer‘s failure to address this point, it‘s entirely speculative what the Alliance might have gained because of the injunction. See TAS Distrib. Co. v. Cummins Engine Co., 491 F.3d 625, 631 n.8 (7th Cir. 2007). A determination of that sort would require us to evaluate a counterfactual: a world in which Fryer published his report and the Alliance was conferred some comparative advantage by virtue of weakened competition. But all we have is the Alliance‘s publication and Fryer‘s silence. Perhaps the Alliance reaped an even greater benefit as a result, but we cannot redress Fryer‘s self-inflicted wound. See Moran Foods, Inc. v. Mid-Atl. Mkt. Dev. Co., LLC, 476 F.3d 436, 440 (7th Cir. 2007).
Fryer continues to resist the premise rather than dispute the conclusion. He argues that even if he was never barred from publishing his study, we should construe the injunction to be an equally weighty practical impediment to publication. We decline to do so. Fryer‘s primary “evidence” to support this contention is a series of citations to his own declaration in
Finally, even if we entertained Fryer‘s claim, he gives us no reasonable sense of what he‘s entitled to. His $105,000 figure misses the mark; it reflects allegedly unpaid work Fryer performed for the Alliance back in 2011. We fail to see the relevance of this to Fryer‘s restitution claim, and Fryer is noticeably silent on the matter. Ultimately this underscores what should now be clear: Fryer‘s request for restitution extends far beyond whatever gain the injunction conferred on the Alliance. He isn‘t really seeking restitution at all.
Fryer‘s remaining grounds for relief suffer from the same flaw. He next seeks roughly $26,000 because the injunction ordered him to turn over the Santa Rosa data. The judge concluded that the order was sound, but we needn‘t go that far. Our opinion in the first appeal never resolved the fight over the Santa Rosa data. In fact we had no authority to consider the question because “no such requirement appear[ed] in the injunction or in any judgment satisfying
Fryer‘s last complaint is that the Alliance unduly delayed in paying him once he finally handed over the Santa Rosa data. He seeks over $1,100 as “restitution” for interest he might have received absent the delay. This claim is even farther afield of what an appropriate restitution claim should look like. Fryer first presented the interest issue to the magistrate judge in his motion for restitution, meaning it arose only after our decision in the first appeal. It therefore could not have been the subject of a lower-court order we later reversed. Moreover, even if the magistrate judge had originally addressed the question, we did not. Our review was limited to the acknowledgment question, so the same must be true of claims for restitution. Fryer cannot revive a waived claim via a motion for restitution.
B. Attorney‘s Fees
Federal courts have discretion to award attorney‘s fees to the prevailing party on a copyright claim.
No matter, Fryer claims. He assures us he prevailed in the settlement because he beat back the copyright claim and secured the right to publish his report. This argument also falls flat. A defendant does not prevail under
C. Rule 38 Sanctions
We have one final matter to address. The Alliance moved for sanctions against Fryer under Rule 38 of the Federal Rules of Appellate Procedure. Sanctions are appropriate if an appeal is frivolous, meaning “the arguments made are merely cursory,” Duff v. Cent. Sleep Diagnostics, LLC, 801 F.3d 833, 844 (7th Cir. 2015); “wholly undeveloped,” Smeigh v. Johns Manville, Inc., 643 F.3d 554, 566 (7th Cir. 2011); or “lacking in substance and foreordained to lose,” Berwick Grain Co. v. Ill. Dep‘t of Agric., 217 F.3d 502, 505 (7th Cir. 2000) (internal quotation marks omitted).
This does not strike us as such an appeal. The scope of restitution in this context is rarely litigated; this was not a case where the appellant ran bullheaded into battle, helplessly exposed to obvious slings. See Mars Steel Corp. v. Cont‘l Bank N.A., 880 F.2d 928, 938–39 (7th Cir. 1989) (en banc). In fact, the Alliance failed to recognize some of the critical arguments that ultimately decide this case. With attorney‘s fees, for example, the Alliance eschewed any discussion of judicial imprimatur and instead insisted that Fryer did not prevail because he secured precious little from the settlement. The Alliance also argued that the magistrate judge properly denied fees even if Fryer had prevailed. Both of these questions present much closer calls, especially since a prevailing
AFFIRMED.