HELYANE SEIDMAN, Plaintiff, -v- AUTHENTIC BRANDS GROUP LLC, Defendant.
19-cv-8343 (LJL)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
April 21, 2020
LEWIS J. LIMAN, United States District Judge
USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: DATE FILED: 4/21/2020
LEWIS J. LIMAN, United States District Judge:
Defendant Authentic Brands Group LLC (“ABG” or “Defendant“) moves for an order requiring Plaintiff Helayne Seidman (“Seidman” or “Plaintiff“) to post a bond. For the following reasons, that motion is denied.
BACKGROUND
Plaintiff is a professional photographer in the business of licensing her photographs to online and print media for a fee. (Dkt. No. 19 ¶ 5.) Many years ago, she photographed a mask sculpture at an art show (the “Photograph“). (Id. ¶ 11, Exhibit A.) She licensed the Photograph to the New York Post, which published it on February 16, 2010 in an article entitled “Shaq‘s in the paint with new art show.” (Id. ¶¶ 8-9.)
Plaintiff now alleges that Defendant, a foreign limited liability company that operates Shaquille O‘Neal‘s Facebook page, ran the Photograph on the Facebook page without obtaining a license from her or her consent. (Id. ¶¶ 6, 10-11.) It is apparently not disputed that Defendant published the Photograph on or about March 9, 2012. (Id., Exhibit D; Dkt. No. 28 at 3.) Plaintiff alleges she first discovered the Facebook post in July 2019. (Dkt. No. 19 ¶ 14.) She registered the Photograph with the United States Copyright Office on or about August 3, 2019.
On March 5, 2020, ABG served an Offer of Judgment (the “Offer“) on Plaintiff, pursuant to
DISCUSSION
Local Civil Rule 54.2, titled “Security for Costs,” states as follows:
The Court, on motion or on its own initiative, may order any party to file an original bond for costs or additional security for costs in such an amount and so conditioned as it may designate. For failure to comply with the order the Court may make such orders in regard to noncompliance as are just, and among others the following: an order striking out pleadings or staying further proceedings until the bond is filed or dismissing the action or rendering a judgment by default against the noncomplying party.
Courts consider several factors when determining whether a bond is appropriate, including: “(1) the financial condition and ability to pay of the party at issue; (2) whether that party is a nonresident or foreign corporation; (3) the merits of the underlying claims; (4) the extent and scope of discovery; (5) the legal costs expected to be incurred; and (6) compliance with past court orders.” Rice v. Musee Lingerie, LLC, 2019 WL 2865210 at *1 (S.D.N.Y. July 3, 2019); Cruz v. American Broadcasting Companies, Inc., 2017 WL 5665657 at *1 (S.D.N.Y. Nov. 17, 2017); Gary Friedrich Enterps. LLC v. Marvel Enterps., Inc., 2010 WL 3452375 at *2 (S.D.N.Y. Sept. 1, 2010); Johnson v. Kassovitz, 1998 WL 655534 at *1 (S.D.N.Y. Sept. 24, 1998).
“[T]he primary purpose of the bond requirement is to insure that whatever assets a party does possess will not have been dissipated or otherwise have become unreachable by the time . . .
The parties here disagree over a number of issues, including: whether ABG has offered sufficient evidence of Plaintiff‘s financial condition to justify a bond; whether it is dispositive that Plaintiff is not a non-resident or foreign corporation; whether the imposition of sanction awards on Plaintiff‘s counsel in other cases should be imputed to Seidman in this case (where neither she nor her counsel has been sanctioned); and whether the Court should consider anything other than the fifth and sixth Rice factors in a copyright case of this type.
The Court deems it unnecessary to reach any of those issues. The most critical, and ultimately dispositive, issue here is what legal costs are expected to be incurred. ABG does not argue that any of the bond factors would be satisfied here if the legal costs expected to be incurred were limited to filing fees and court reporter costs (which are typically covered by
- ABG prevails and Rule 68 shifts ABG‘s post-Offer costs, including fees, to Plaintiff;
- Plaintiff prevails and is awarded an amount lower than the Offer, such that Rule 68 shifts ABG‘s post-Offer costs, including fees, to Plaintiff;
- ABG prevails and is awarded fees via
Section 505 of the Copyright Act (apart fromRule 68 ).
The Court discusses Rule 68 first and then whether a bond is appropriate under the Copyright Act.
Rule 68
Turning first to scenario (2) above, ABG argues that it is entitled to a bond that includes ABG‘s post-Offer attorneys’ fees because, even if Seidman prevails in this case, the Offer exceeds the size of any damages award she is likely to receive. Analysis of that argument requires the Court to consider the language of
If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.
The Supreme Court has held that “all costs properly awardable in an action are to be considered within the scope of Rule 68 ‘costs.‘” Marek v. Chesny, 473 U.S. 1, 9 (1985) (emphasis added); Wilson v. Nomura Sec. Int‘l, Inc., 361 F.3d 86, 89 (2d Cir. 2004) (restating Marek definition). By the same token, where the underlying statute precludes recovery of attorneys’ fees, such fees may not be included as costs for purposes of
The Court begins with Marek. In that case, a Section 1983 plaintiff rejected a
The Supreme Court “granted certiorari to decide whether attorney‘s fees incurred by a plaintiff subsequent to an offer of settlement under Federal Rule of Civil Procedure 68 must be paid by the defendant under
To determine whether the plaintiff was barred from recouping attorneys’ fees, Marek focused on the language and intent of
Against that backdrop, the Court now turns to the “relevant substantive statute” in this case. Id. at 9.
In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. 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.
Courts are divided on the interaction between Rule 68 and Section 505. See 6 William F. Patry, Patry on Copyright § 22:215 (2020 ed.) (noting “a split in the circuits“); 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 14.10 (2019 ed.) (describing different circuit court positions). The Seventh and Ninth Circuits have held that only prevailing parties in
Looking outside of Copyright Act cases, the First Circuit has adopted the same animating principle that attorneys’ fees are only recoverable under Rule 68 if they are recoverable by that party under the terms of the underlying statute. See Crossman v. Marcoccio, 806 F.2d 329 (1st Cir. 1986), cert denied, 481 U.S. 1029 (1987). In Crossman, the First Circuit rejected the following “deceptively simple syllogism“:
- Rule 68 requires appellants to pay appellees’ post-offer costs;
- Rule 68 costs, according to Marek, are determined by looking to . . . the underlying substantive statute governing costs;
- [The underlying statute] permits the recovery of attorney‘s fees as part of costs;
- Rule 68, therefore, requires appellants to pay appellees’ post-offer attorney‘s fees.
Id. at 133. The Crossman court acknowledged that “the logic of this syllogism [was] appealing” but concluded that “the second and third steps . . . distort[ed] the law governing the relationship between Rule 68 and [the underlying statute] by ignoring the two crucial words that serve to qualify the holding of the Marek case.” Id. Those two crucial words are: “properly awardable.” Id. (citing Marek, 473 U.S. at 9) (”Marek states that ‘the term ‘costs’ in Rule 68 was intended to refer to all costs properly awardable under the relevant substantive statute or other authority.‘“)
Crossman confronted the question that had escaped scrutiny in Marek. That question was “whether prevailing civil rights plaintiffs must pay their opponents ’ . . . attorney‘s fees after refusing to accept a pretrial offer of judgment that exceeds the amount they ultimately recover at trial.” Id. at 330 (emphasis added). The underlying statute permitted (but did not require) an award of attorneys’ fees “only to a ‘prevailing party‘” and only to a defendant if “the plaintiff‘s action was ‘frivolous, unreasonable, or without foundation.‘” Id. at 334. Because the defendants had not “prevailed” and because there was “no reason to believe that appellants’ case was frivolous or meritless,” the Crossman court concluded that “attorney‘s fees were not ‘properly awardable’ costs as defined by [the statute] and, therefore, were not part of the costs shifted to plaintiff by the operation of Rule 68.” Id. “To hold otherwise,” the court explained, “would fly in the face of the Supreme Court‘s carefully crafted decision in Marek.” Id.
That is a popular understanding of Rule 68 and Marek. In Hescott v. City of Saginaw, the Sixth Circuit joined “all but one of [its] sister circuits” in “concluding that a losing civil-rights defendant cannot recover its post-offer attorneys’ fees under Rule 68 because such a party does not satisfy the requirements for a fee award under [the underlying statute].” 757 F.3d 518, 528 (6th Cir. 2014) (citing First, Third, Fifth, Seventh, Eighth, and Ninth Circuit decisions). As the Sixth Circuit explained, “We cannot force through the back-door of a court rule what Congress and the Supreme Court expressly barred at the front gates.” Id. at 529.2
The Second Circuit has not addressed this issue in the Copyright Act context. This Court acknowledges that several district courts in this circuit have adopted the Jordan approach. See Baker v. Urban Outfitters, Inc., 431 F. Supp. 2d 351, 361 (S.D.N.Y. 2006), aff‘d, 249 F. App‘x 845 (2d Cir. 2007) (“[W]hen the plaintiff [in a copyright action] recovers less than the defendant‘s formal offer of judgment[,] . . . Rule 68 . . . requires an award to defendant of its fees incurred after that offer.“) (internal quotation omitted) (citing Jordan, 111 F.3d at 104-05); Rice, 2019 WL 2865210 at *3 (agreeing with Baker and Jordan, and collecting additional cases); Lee v. W Architecture & Landscape Architecture, 2019 WL 2272757 at *4 (E.D.N.Y. May 28, 2019) (agreeing with Baker); but see Boisson v. Banian Ltd., 221 F.R.D. 378, 381 (E.D.N.Y. 2004) (“If prevailing party status is a prerequisite to [an attorneys’ fees] award [pursuant to the underlying statute], a defendant who has not “prevailed” within the meaning of the statute, may not recover attorneys’ fees as part of a Rule 68 award.“).
This Court agrees with the Seventh and Ninth Circuits and respectfully disagrees with most of the district court cases cited above. The most faithful reading of Marek,
This is the result that most accords with the logic of Marek as well as the Copyright Act. In crafting the fee-shifting provision of the Copyright Act, Congress was careful to limit the right to attorneys’ fees only to prevailing parties and to provide a single standard for the award of fees that would apply equally to a prevailing plaintiff and a prevailing defendant. See Fogerty, 510 U.S. at 527 (explaining Congress‘s intent that “defendants who seek to advance a variety of meritorious copyright defenses should be encouraged to litigate them to the same extent that plaintiffs are encouraged to litigate meritorious claims of infringement“). In so doing, Congress presumably recognized that the law it passed would allow any creator whose work was infringed on even a single occasion to bring a lawsuit. It would allow that lawsuit even if the plaintiff could not prove damages (she may still be eligible to receive statutory damages, see
Under the statute Congress passed, there are deterrents against litigating a weak case, but those do not include the risk that a prevailing plaintiff will have to pay the attorneys’ fees of the
Rule 68, as interpreted by Marek, affects the balance struck in Section 505-but only to a limited extent. Under Marek, a prevailing plaintiff whose judgment is less than a rejected offer cannot recover her own attorneys’ fees. See Harbor Motor Co., 265 F.3d at 647 (“[A] judgment less favorable than the offer requires that a plaintiff . . . forego entitlement to its own attorney‘s fees.“). The Marek Court reached that result because it concluded that it was the only way to give “meaning to each word in both Rule 68 and [the underlying statute].” 473 U.S. at 9. The Rulemakers used the word “costs” in Rule 68 (“the offeree must pay the costs incurred after the offer was made“) and Congress defined “a reasonable attorney‘s fee as part of the costs” that “may” be reimbursable to a “prevailing party” under
The Court also rejects the possibility that that ABG would be entitled to fees if ABG prevailed. Naturally, if ABG prevailed, that would solve the “prevailing parties” issue previously discussed. But in Delta Air Lines, Inc. v. August, the Supreme Court held that Rule 68 “applies only to offers made by the defendant and only to judgments obtained by the plaintiff”
The Copyright Act
ABG also argues that it deserves a bond even putting aside its Rule 68 offer. It highlights that under Section 505, the Court has discretion to award attorneys’ fees to a prevailing party. ABG argues that it will be successful in this case either because the Photograph is only questionably entitled to copyright or because the statute of limitations would bar Plaintiff from recovering actual or statutory damages for an infringing act in 2012. For her part, Seidman responds with caselaw that photographs of three-dimensional objects such as sculptures are copyrightable and that the statute of limitations began to run only when she discovered, or with due diligence should have discovered, the infringement—which she alleges was in July 2019.
The Court need not tarry long over these arguments. Defendant may well be right at the end of the day that the Photograph lacks sufficient originality for copyright protection. Defendant might also or alternatively be right that Plaintiff could have discovered the infringement with the exercise of due diligence. But Defendant has not (yet) put those issues before the Court in a motion to dismiss or a motion for summary judgment and it would be
Finally, the Court notes Defendant‘s argument that the value of the photograph is less than $300, that its only use occurred over eight years ago, and that Plaintiff did not complain about it for nearly a decade. (Dkt. No. 28 at 6.) If all of those statements are true, Plaintiff‘s victory-while legally sufficient to prevent a fees award to Defendant—might well be a hollow one. She will be entitled to little, if anything, in statutory damages and may well not receive an award to cover attorneys’ fees. See Otto v. Hearst Commc’ns, Inc., 345 F. Supp. 3d 412, 435 (S.D.N.Y. 2018). That is how the Copyright Act intended to prevent a plaintiff from pursuing a marginal claim.
CONCLUSION
For the foregoing reasons, Defendant‘s motion for an order requiring Plaintiff to post a bond is DENIED. The Clerk of Court is respectfully directed to close Dkt. No. 27.
SO ORDERED.
Dated: April 21, 2020
New York, New York
LEWIS J. LIMAN
United States District Judge