Cadkin v. Loose

• Citation: 569 F.3d 1142
• Decision Date: 26 June 2009
• Docket Number: No. 08-55311.,08-55311.
• Parties: Emil CADKIN, an individual; Lila Cadkin, as trustee of the Cadkin Trust, Plaintiffs-Appellants, v. Irma LOOSE, an individual; May-Loo Music Inc., a California corporation; Terence Loose, as trustee of the William Loose Family Trust, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

569 F.3d 1142

Emil CADKIN, an individual; Lila Cadkin, as trustee of the Cadkin Trust, Plaintiffs-Appellants, v. Irma LOOSE, an individual; May-Loo Music Inc., a California corporation; Terence Loose, as trustee of the William Loose Family Trust, Defendants-Appellees.

No. 08-55311.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 8, 2009.

Filed June 26, 2009.

Marty O'Toole, Law Offices of Marty O'Toole, Los Angeles, CA, for the plaintiffs-appellants.

Sandra Levin (argued), Michael A. Morguess, Colantuono & Levin, P.C., Los Angeles, CA, for defendant-appellee Terrance Loose, as Trustee of the William Loose Family Trust.

George M. Belfield, Greenberg Traurig, LLP, Santa Monica, CA, for defendants-appellees Irma Loose and May-Loo Music, Inc.

Appeal from the United States District Court for the Central District of California, James V. Selna, District Judge, Presiding. D.C. No. CV-03-01591-JVS.

Before: B. FLETCHER, RAYMOND C. FISHER and RONALD M. GOULD, Circuit Judges.

FISHER, Circuit Judge:

This appeal concerns whether a defendant is entitled to attorney's fees as a prevailing party under § 505 of the Copyright Act, 17 U.S.C. § 505, when a plaintiff voluntarily dismisses without prejudice a lawsuit containing copyright claims. In Corcoran v. Columbia Broadcasting System, Inc., 121 F.2d 575, 576 (9th Cir.1941), we held a defendant in a copyright suit was a prevailing party and was entitled to attorney's fees when the plaintiff voluntarily dismissed the complaint without prejudice after the district court granted defendant's motion for more definite statement. The Supreme Court, in the context of the Fair Housing Amendments Act (FHAA), has since held prevailing party status turns on whether there has been a "material alteration of the legal relationship of the parties," Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 604, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001) (internal quotation marks omitted), and we have held dismissal without prejudice does not alter the legal relationship of parties for the purposes of entitlement to attorney's fees under a comparable fee shifting statute, see Oscar v. Alaska Dep't of Educ. & Early Dev., 541 F.3d 978, 981 (9th Cir. 2008).

We conclude Corcoran is clearly irreconcilable with Buckhannon and no longer good law. We therefore overrule Corcoran and hold Buckhannon's material alteration test applies to § 505 of the Copyright Act. See Miller v. Gammie, 335 F.3d 889, 893 (9th Cir.2003) (en banc) (holding thee-judge panel can reject prior panel opinion that is "clearly irreconcilable" with intervening Supreme Court authority). Because the plaintiffs in this lawsuit remained free to refile their copyright claims against the defendants in federal court following their voluntary dismissal of the complaint, we hold the defendants are not prevailing parties and thus not entitled to the attorney's fees the district court awarded them.¹

I. BACKGROUND

From about 1959 until the 1970s, Emil Cadkin, sometimes solely and sometimes with William Loose, created and recorded thousands of music cues, which are short musical works used in television and movies. These cues were administered by GRH Music ("GRH"), a partnership owned by Emil Cadkin and William Loose. In the 1960s, Emil Cadkin authorized William Loose to license the music cues to third parties. At some point, Emil Cadkin formed the Cadkin Trust as owner of all his copyright interests, appointing Lila Cadkin as trustee.

William Loose incorporated May-Loo Music, Inc. to license music he controlled. The proceeds of May-Loo Music, Inc. are split between Irma Loose, William Loose's spouse, and the William Loose Family Trust, which William Loose formed to benefit his children. Terrence Loose is the trustee of the William Loose Family Trust.

In October 2003, Emil Cadkin and Lila Cadkin (as trustee of the Cadkin Trust) (collectively "the Cadkins") filed a complaint in federal district court against Terrence Loose (as trustee of the William Loose Family Trust) ("the Trust") and Irma Loose and May-Loo Music, Inc. (collectively "May-Loo"). The complaint alleged William Loose had removed Emil Cadkin's name as author and GRH's name as publisher from cues Emil Cadkin had composed (on his own or jointly with William Loose), incorporated those cues into the May-Loo music library with William Loose credited as the sole author and then registered those cues with the U.S. Copyright Office, thereby allowing William Loose to obtain the full royalty from the cues' use. The allegations implicated over 5000 cues. The complaint contained numerous claims for relief, including copyright infringement, false designation of origin (trademark) and various California state law claims.

After extended settlement discussions proved fruitless, the Trust and May-Loo in February 2007 filed motions to dismiss which the district court granted in part. The district court found the state law claims were preempted by the Copyright Act, dismissing them without prejudice; found the fraud claims were not alleged with sufficient particularity, dismissing them without prejudice; and directed the Cadkins to join certain necessary parties.

The Cadkins thereafter filed a first amended complaint, which contained three claims for relief: (1) copyright infringement, (2) false designation of origin (trademark) and (3) declaratory relief. The Trust and May-Loo again moved to dismiss. The district court, relying primarily on the Cadkins' failure to cite any legal authority in their opposition and insufficient specificity in the amended complaint's factual allegations, granted the motion with leave to amend.

The Cadkins then moved to remand the case to state court, with a second amended complaint appended. The motion admitted "none of the parties herein may own the rights in any of the musical compositions at issue." The district court denied the motion to remand, explaining that remand was not possible when the case had been initiated in federal court. Thereafter, the parties and the district court treated the second amended complaint as the operative pleading. It contained only state law claims: declaratory judgment, unjust enrichment and accounting for profits.

The Trust and May-Loo again moved to dismiss, arguing the second amended complaint should be dismissed without leave to amend because (1) all three state law claims were preempted by the Copyright Act, (2) the factual allegations lacked specificity and (3) any federal copyright or trademark claims were waived because they were not included in the amended pleading. The Cadkins opposed the motion to dismiss and lodged a notice of voluntary dismissal under Federal Rule of Civil Procedure 41(a). The district court deferred ruling on the Trust's and May-Loo's motions to dismiss until it ruled on the Cadkins' voluntary dismissal, which was eventually entered without comment on the district court docket in October 2007.

The Trust and May-Loo then sought attorney's fees and costs ($205,575 and $101,180, respectively). The Trust later sought an additional $20,000 in fees for work related to the attorney's fees motion and response. At the district court's direction, May-Loo reduced its requested fee to carve out fees attributable to work on a related lawsuit not involving the Cadkins, for a final requested amount of $63,151.20.

The district court granted both motions and entered judgment in favor of the Trust and May-Loo on December 27, 2007, awarding $225,575 to the Trust but not specifying the amount awarded to May-Loo. After denying the Cadkins' motion to reconsider, the court entered a second judgment on February 11, 2008 in favor of May-Loo, specifying an award of $63,151.20. The Cadkins timely appealed.²

II. STANDARD OF REVIEW

We review an award of attorney's fees under the Copyright Act for abuse of discretion. See Traditional Cat Ass'n, Inc. v. Gilbreath, 340 F.3d 829, 833 (9th Cir.2003). "A district court abuses its discretion when its decision is based on an inaccurate view of the law or a clearly erroneous finding of fact." Id.

III. DISCUSSION

A. Jurisdiction

Initially, we address our jurisdiction to consider the Cadkins' appeal of the order awarding the Trust attorney's fees. The Trust maintains we lack jurisdiction because the Cadkins' notice of appeal listed only the February 11, 2008 judgment (and did not explicitly list the December 27, 2007 judgment) on the line specifying the order being appealed. We reject this argument.

"When a party seeks to argue the merits of an order that does not appear on the face of the notice of appeal, we consider: (1) whether the intent to appeal a specific judgment can be fairly inferred and (2) whether the appellee was prejudiced by the mistake." Le v. Astrue, 558 F.3d 1019, 1022-23 (9th Cir.2009) (internal quotation marks omitted). "In determining whether intent and prejudice are present, we consider first, whether the affected party had notice of the issue on appeal; and, second, whether the affected party had an opportunity to fully brief the issue." Id. (internal quotation marks omitted).

The notice of appeal refers to "judgments re: costs/attorneys' fees" (emphasis added), indicating the Cadkins wished to appeal both the February 11 judgment in favor of May-Loo and the December 27 judgment in favor of the Trust. Moreover, the notice of appeal notification form filed concurrently with the notice of appeal identifies two "12/27/07" items on the line specifying the orders or judgments being appealed, and the Trust had the opportunity to fully brief the propriety of the attorney's fees award on appeal. The Trust plainly had notice the Cadkins were appealing the judgment in the Trust's favor and had ample opportunity to address the merits of that issue.

B. Attorney's Fees under the Copyright Act

Section 505 of the Copyright Act provides:

In any civil action under this title, the court in its discretion may...