Court Rulings on Industry Attorney Fees

Depending on the circumstances and the law, parties on either side of an entertainment suit may ask a court for an award of attorney fees. Following are court rulings from recent months that deal with this and related concerns. In future issues, Entertainment Law & Finance will report on such relevant rulings in Attorney-Fee Updates.

Contempt Actions: The U.S. District Court for the Northern District of Illinois, Eastern Division, awarded attorney fees for work done on behalf of record companies in a contempt proceeding against the Aimster peer-to-peer file-sharing service. In Re: Aimster Copyright Litigation, Master File No. 01 c 8933, Multi District Litigation # 1425. The district court had issued a preliminary injunction to shut Aimster down but later found Aimster in contempt of the injunction. The court noted that it had broad discretion to award attorney fees and costs to the plaintiffs. The record companies were represented in the contempt action by their regular piracy firm, Mitchell Silberberg & Knupp of Los Angeles, and by two attorneys from the Chicago office of Katten Muchin Zavis Rosenman. The plaintiffs asked the court to reimburse them for a total of 460.6 hours attorney and paralegal work. The district court first agreed that the submission of the hours, but not the dates, each attorney worked on the matter was sufficient, given the finite time of the contempt proceeding. The court also noted that the legal work had been made more time consuming by the pro se status of Aimster founder John Deep, and that the multi-district status of the Aimster litigation “made it both reasonable and necessary for Plaintiffs to retain local and national counsel.” However, the court reduced by half the award for the time that the plaintiffs' paralegals spent monitoring the defendants violation of the preliminary injunction and declined to award travel costs for a Mitchell Silberberg attorney given that the contempt action was litigated through written briefs and by oral advocacy from the plaintiff's national and local lead counsel. The court awarded the plaintiffs a total of award of $103,851, of which $99,682.25 was for attorney fees.

Interpleader Actions: The U.S. District Court for the Southern District of New York awarded EMI Music Publishing $10,000 in attorney fees and costs incurred in filing an interpleader action over royalties due from the music of Duke Ellington. The Estate of Ellington v. EMI Music Publishing, 03-2911. The dispute involved a claim by Ellington's children to a 40-percent share of the royalties generated from Ellington compositions that EMI Music administered. The district court based its award under 28 U.S.C. Secs. 1335 and 2361 and under Rule 22 of the Federal Rules of Civil Procedure on the fact that EMI was a disinterested stakeholder that had deposited the royalty funds with the court and received a discharge from the dispute. The court also noted that a related state court action would determine the Ellington children's royalty claim. EMI had originally sought $37,000 in attorney fees and costs, but the district court found that excessive for this type of interpleader action.

Sec. 505 and Default Judgments; Lanham Act Fees: The U.S. District Court for the Northern District of California awarded Sec. 505 attorney fees and costs to a plaintiff in a copyright infringement action following entry of a default judgment and statutory damages against the defendant. Jackson v. Sturkie, 255 F. Supp. 2d 1096. Fred Jackson had claimed that the defendant's song and recording “Man in the Middle” infringed on Jackson's composition “Cross in the Middle.” In awarding Jackson $9,342.20 in attorney fees, including for legal assistant work, the court noted, “Here, plaintiff's success is complete and unquestioned … Plaintiff's claims clearly cannot be characterized as frivolous … Although defendant's apparent unwillingness to defend himself has limited plaintiff's opportunities to present arguments on his own behalf, those arguments have been reasonable, given the nature of the infringing conduct alleged.” The district court also found that the $150 hourly rate charged by Jackson's counsel was “below that normally charged by counsel in the intellectual property field, and in particular below that charged by experienced attorneys.” In addition, Jackson's lawyer had represented the plaintiff on a contingency basis “and so has actually spent a greater number of hours on the case than reflected in plaintiff's attorney fee request,” the court pointed out. But the court declined to award attorney fees for Jackson's Lanham Act and California unfair-trade-practices claims given that there was no evidence that Jackson's lawyer had spent additional time pursuing those claims or that the case was “exceptional” within the meaning of the Lanham Act.

Sec. 505, Lanham Act and Attorney Work Documentation: The U.S. Court of Appeals for the Fifth Circuit remanded an award of attorney fees under the Copyright and Lanham Acts for a more precise determination of the value of the services of the plaintiffs' counsel. Alameda Films v. Authors Rights Restoration Corp., 331 F.3d 472. Mexican film producers had obtained a favorable jury verdict in their suit over distribution of their films in the United States. The plaintiffs submitted no time records or documentation of their lawyers' work on the case. Instead, a single witness who had reviewed the files of the plaintiffs' three law firms concluded that the award for attorney fees and costs should be $900,000. The jury then awarded the plaintiffs $984,000. The appeals court noted, however, “Without more, the award appears plainly arbitrary. After all, the function of fee-shifting statutes is to provide for actual reimbursement, not additional compensation.”

Sec. 505 and Limitations Bar: The U.S. District Court for the Middle District of Tennessee, Nashville Division, awarded Sec. 505 attorney fees and costs to copyright infringement defendants following dismissal of a suit on statute of limitations grounds. Bridgeport Music Inc. v. Lorenzo, 255 F. Supp.2d 795. In this one of several hundred similar cases filed by the plaintiffs against various record industry defendants, the court noted, “One of the consequences of the plaintiffs' choice to sue hundreds of defendants all at the same time, regardless of the strength of the individual claims, was that the plaintiffs' dragnet inevitably swept up parties against whom they had little or no chance of succeeding. Such is the case here. While the ultimate decision to dismiss the claims against this defendant rested on the statute of limitations, the plaintiffs' claims for contributory infringement and negligence were based on shaky facts and even shakier legal arguments.” The court then based its award of $64,371.23 in attorney fees to the defendants on what it concluded was a reasonable $225 Nashville hourly market rate for the copyright work done by lead defense counsel Richard Frank III. But the court reduced the hourly rate for a defense associate counsel, citing a lack of information about the associate's copyright law expertise. The court also deducted 20% from the total attorney fees award to account for work on defending against the negligence claim, for which there is no fee-shifting statute.

Sec. 505 and Objective Unreasonableness: The U.S. District Court for the Eastern District of Pennsylvania denied a defense request for a Sec. 505 award following a grant of summary judgment in the defendants' favor. Cottrill v. Spears, 02-3646. The plaintiffs had claimed that the Britney Spears recording “What U See Is What U Get” infringed on the copyright for the plantiffs' song “What You See Is What You Get.” According to the court, “As defense counsel noted, the initial facts that spurred the filing of this lawsuit seemed like uncanny coincidence. … Discovery relating to the creation of Defendants' song proved to be particularly crucial. … Plaintiffs were not objectively unreasonable to bring their claims or maintain the suit … [In addition,] Plaintiffs' counsel conducted a reasonable investigation of their clients' claims, including evaluating the songs with a musicologist before filing suit.”

Sec. 505 “Prevailing Parties”: The U.S. District Court for the Southern District of New York denied a motion by record company defendants for attorney fees under Sec 505 of the Copyright Act. Chambers v. Time Warner Inc., 00-2839. A group of recording artists had filed suit against several major labels and MP3.com alleging copyright infringement, trademark violations and state law claims over the Internet licensing of sound recordings featuring the plaintiffs. The Manhattan district court dismissed the suit on the merits, but the case was reversed and remanded by the U.S. Court of Appeals for the Second Circuit on the ground that the district court had considered matters outside the pleadings. The artists then amended their complaint to assert only state law claims against the labels. The artists and the labels soon entered into a stipulation of dismissal for lack of federal subject matter jurisdiction over the label defendants. Upon court approval, the labels moved for attorney fees and costs as “prevailing parties” under Sec. 505. The U.S. Supreme Court has held that, to qualify as a prevailing party for purposes attorney fee purposes, a legal action must result in a judgment on the merits or a court-ordered consent decree. Buckhannon Bd. and Home Care v. W. Va. Dept. of Health and Human Serv., 532 U.S. 598, 605, 121 S. Ct. 1835 (2001). That the recording artists in the Chambers case voluntarily withdrew their copyright claims against the labels in amending their complaint didn't involve a judicial determination, the district court noted. In addition, the district court emphasized that judicial approval of the stipulation of dismissal involved “no determination whatever regarding the copyright claims.”

Sec. 505 and Production of Evidence: In another of the Bridgeport Music cases (See “Sec. 505 and Limitations Bar” above), the Nashville federal court denied a Sec. 505 request by the defendants. Bridgeport Music Inc. v. Songs of All Nations, 261 F. Supp. 2d 968. The district court cited the defendants' failure to timely produce a license they had received to use the copyrighted work in question. The court also noted that the parties should have conducted more productive settlement talks, “instead of incurring a further run-up in fees in preparation for trial.”

Depending on the circumstances and the law, parties on either side of an entertainment suit may ask a court for an award of attorney fees. Following are court rulings from recent months that deal with this and related concerns. In future issues, Entertainment Law & Finance will report on such relevant rulings in Attorney-Fee Updates.

Contempt Actions: The U.S. District Court for the Northern District of Illinois, Eastern Division, awarded attorney fees for work done on behalf of record companies in a contempt proceeding against the Aimster peer-to-peer file-sharing service. In Re: Aimster Copyright Litigation, Master File No. 01 c 8933, Multi District Litigation # 1425. The district court had issued a preliminary injunction to shut Aimster down but later found Aimster in contempt of the injunction. The court noted that it had broad discretion to award attorney fees and costs to the plaintiffs. The record companies were represented in the contempt action by their regular piracy firm, Mitchell Silberberg & Knupp of Los Angeles, and by two attorneys from the Chicago office of Katten Muchin Zavis Rosenman. The plaintiffs asked the court to reimburse them for a total of 460.6 hours attorney and paralegal work. The district court first agreed that the submission of the hours, but not the dates, each attorney worked on the matter was sufficient, given the finite time of the contempt proceeding. The court also noted that the legal work had been made more time consuming by the pro se status of Aimster founder John Deep, and that the multi-district status of the Aimster litigation “made it both reasonable and necessary for Plaintiffs to retain local and national counsel.” However, the court reduced by half the award for the time that the plaintiffs' paralegals spent monitoring the defendants violation of the preliminary injunction and declined to award travel costs for a Mitchell Silberberg attorney given that the contempt action was litigated through written briefs and by oral advocacy from the plaintiff's national and local lead counsel. The court awarded the plaintiffs a total of award of $103,851, of which $99,682.25 was for attorney fees.

Interpleader Actions: The U.S. District Court for the Southern District of New York awarded EMI Music Publishing $10,000 in attorney fees and costs incurred in filing an interpleader action over royalties due from the music of Duke Ellington. The Estate of Ellington v. EMI Music Publishing, 03-2911. The dispute involved a claim by Ellington's children to a 40-percent share of the royalties generated from Ellington compositions that EMI Music administered. The district court based its award under 28 U.S.C. Secs. 1335 and 2361 and under Rule 22 of the Federal Rules of Civil Procedure on the fact that EMI was a disinterested stakeholder that had deposited the royalty funds with the court and received a discharge from the dispute. The court also noted that a related state court action would determine the Ellington children's royalty claim. EMI had originally sought $37,000 in attorney fees and costs, but the district court found that excessive for this type of interpleader action.

Sec. 505 and Default Judgments; Lanham Act Fees: The U.S. District Court for the Northern District of California awarded Sec. 505 attorney fees and costs to a plaintiff in a copyright infringement action following entry of a default judgment and statutory damages against the defendant. Jackson v. Sturkie , 255 F. Supp. 2d 1096. Fred Jackson had claimed that the defendant's song and recording “Man in the Middle” infringed on Jackson's composition “Cross in the Middle.” In awarding Jackson $9,342.20 in attorney fees, including for legal assistant work, the court noted, “Here, plaintiff's success is complete and unquestioned … Plaintiff's claims clearly cannot be characterized as frivolous … Although defendant's apparent unwillingness to defend himself has limited plaintiff's opportunities to present arguments on his own behalf, those arguments have been reasonable, given the nature of the infringing conduct alleged.” The district court also found that the $150 hourly rate charged by Jackson's counsel was “below that normally charged by counsel in the intellectual property field, and in particular below that charged by experienced attorneys.” In addition, Jackson's lawyer had represented the plaintiff on a contingency basis “and so has actually spent a greater number of hours on the case than reflected in plaintiff's attorney fee request,” the court pointed out. But the court declined to award attorney fees for Jackson's Lanham Act and California unfair-trade-practices claims given that there was no evidence that Jackson's lawyer had spent additional time pursuing those claims or that the case was “exceptional” within the meaning of the Lanham Act.

Sec. 505, Lanham Act and Attorney Work Documentation: The U.S. Court of Appeals for the Fifth Circuit remanded an award of attorney fees under the Copyright and Lanham Acts for a more precise determination of the value of the services of the plaintiffs' counsel. Alameda Films v. Authors Rights Restoration Corp. , 331 F.3d 472. Mexican film producers had obtained a favorable jury verdict in their suit over distribution of their films in the United States. The plaintiffs submitted no time records or documentation of their lawyers' work on the case. Instead, a single witness who had reviewed the files of the plaintiffs' three law firms concluded that the award for attorney fees and costs should be $900,000. The jury then awarded the plaintiffs $984,000. The appeals court noted, however, “Without more, the award appears plainly arbitrary. After all, the function of fee-shifting statutes is to provide for actual reimbursement, not additional compensation.”

Sec. 505 and Limitations Bar: The U.S. District Court for the Middle District of Tennessee, Nashville Division, awarded Sec. 505 attorney fees and costs to copyright infringement defendants following dismissal of a suit on statute of limitations grounds. Bridgeport Music Inc. v. Lorenzo , 255 F. Supp.2d 795. In this one of several hundred similar cases filed by the plaintiffs against various record industry defendants, the court noted, “One of the consequences of the plaintiffs' choice to sue hundreds of defendants all at the same time, regardless of the strength of the individual claims, was that the plaintiffs' dragnet inevitably swept up parties against whom they had little or no chance of succeeding. Such is the case here. While the ultimate decision to dismiss the claims against this defendant rested on the statute of limitations, the plaintiffs' claims for contributory infringement and negligence were based on shaky facts and even shakier legal arguments.” The court then based its award of $64,371.23 in attorney fees to the defendants on what it concluded was a reasonable $225 Nashville hourly market rate for the copyright work done by lead defense counsel Richard Frank III. But the court reduced the hourly rate for a defense associate counsel, citing a lack of information about the associate's copyright law expertise. The court also deducted 20% from the total attorney fees award to account for work on defending against the negligence claim, for which there is no fee-shifting statute.

Sec. 505 and Objective Unreasonableness: The U.S. District Court for the Eastern District of Pennsylvania denied a defense request for a Sec. 505 award following a grant of summary judgment in the defendants' favor. Cottrill v. Spears, 02-3646. The plaintiffs had claimed that the Britney Spears recording “What U See Is What U Get” infringed on the copyright for the plantiffs' song “What You See Is What You Get.” According to the court, “As defense counsel noted, the initial facts that spurred the filing of this lawsuit seemed like uncanny coincidence. … Discovery relating to the creation of Defendants' song proved to be particularly crucial. … Plaintiffs were not objectively unreasonable to bring their claims or maintain the suit … [In addition,] Plaintiffs' counsel conducted a reasonable investigation of their clients' claims, including evaluating the songs with a musicologist before filing suit.”

Sec. 505 “Prevailing Parties”: The U.S. District Court for the Southern District of New York denied a motion by record company defendants for attorney fees under Sec 505 of the Copyright Act. Chambers v. Time Warner Inc., 00-2839. A group of recording artists had filed suit against several major labels and MP3.com alleging copyright infringement, trademark violations and state law claims over the Internet licensing of sound recordings featuring the plaintiffs. The Manhattan district court dismissed the suit on the merits, but the case was reversed and remanded by the U.S. Court of Appeals for the Second Circuit on the ground that the district court had considered matters outside the pleadings. The artists then amended their complaint to assert only state law claims against the labels. The artists and the labels soon entered into a stipulation of dismissal for lack of federal subject matter jurisdiction over the label defendants. Upon court approval, the labels moved for attorney fees and costs as “prevailing parties” under Sec. 505. The U.S. Supreme Court has held that, to qualify as a prevailing party for purposes attorney fee purposes, a legal action must result in a judgment on the merits or a court-ordered consent decree. Buckhannon Bd. and Home Care v. W. Va. Dept. of Health and Human Serv. , 532 U.S. 598, 605, 121 S. Ct. 1835 (2001). That the recording artists in the Chambers case voluntarily withdrew their copyright claims against the labels in amending their complaint didn't involve a judicial determination, the district court noted. In addition, the district court emphasized that judicial approval of the stipulation of dismissal involved “no determination whatever regarding the copyright claims.”

Sec. 505 and Production of Evidence: In another of the Bridgeport Music cases (See “Sec. 505 and Limitations Bar” above), the Nashville federal court denied a Sec. 505 request by the defendants. Bridgeport Music Inc. v. Songs of All Nations , 261 F. Supp. 2d 968. The district court cited the defendants' failure to timely produce a license they had received to use the copyrighted work in question. The court also noted that the parties should have conducted more productive settlement talks, “instead of incurring a further run-up in fees in preparation for trial.”