Castillo v. G&M Realty L.P.

• Decision Date: 20 February 2020
• Docket Number: Nos. 18-498-cv (L),August Term 2019,18-538-cv (CON),s. 18-498-cv (L)
• Citation: 950 F.3d 155
• Parties: Maria CASTILLO, James Cochran, Luis Gomez, Bienbenido Guerra, Richard Miller, Carlo Nieva, Kenji Takabayashi, Nicholai Khan, Plaintiffs-Appellees, Jonathan Cohen, Sandra Fabara, Luis Lamboy, Esteban Del Valle, Rodrigo Henter De Rezende, William Tramontozzi, Jr., Thomas Lucero, Akiko Miyakami, Christian Cortes, Carlos Game, James Rocco, Steven Lew, Francisco Fernandez, Plaintiffs-Counter-Defendants-Appellees, Kai Niederhausen, Rodney Rodriguez, Plaintiffs, v. G&M REALTY L.P., 22-50 Jackson Avenue Owners, L.P., 22-52 Jackson Avenue LLC, ACD Citiview Buildings, LLC, Gerald Wolkoff, Defendants-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

950 F.3d 155

Maria CASTILLO, James Cochran, Luis Gomez, Bienbenido Guerra, Richard Miller, Carlo Nieva, Kenji Takabayashi, Nicholai Khan, Plaintiffs-Appellees,Jonathan Cohen, Sandra Fabara, Luis Lamboy, Esteban Del Valle, Rodrigo Henter De Rezende, William Tramontozzi, Jr., Thomas Lucero, Akiko Miyakami, Christian Cortes, Carlos Game, James Rocco, Steven Lew, Francisco Fernandez, Plaintiffs-Counter-Defendants-Appellees,Kai Niederhausen, Rodney Rodriguez, Plaintiffs,

v.G&M REALTY L.P., 22-50 Jackson Avenue Owners, L.P., 22-52 Jackson Avenue LLC, ACD Citiview Buildings, LLC, Gerald Wolkoff, Defendants-Appellants.

Nos. 18-498-cv (L)

18-538-cv (CON)

August Term 2019

United States Court of Appeals, Second Circuit.

Argued August 30, 2019

Decided February 20, 2020

Amended February 21, 2020

Eric M. Baum (Juyoun Han, Eisenberg & Baum, LLP, New York, NY, Christopher J. Robinson, Rottenberg Lipman Rich, P.C., New York, NY, on the brief), Eisenberg & Baum, LLP, New York, NY, for Plaintiffs-Appellees.

Meir Feder (James M. Gross, on the brief), Jones Day, New York, NY, for Defendants-Appellants.

Before: PARKER, RAGGI, and LOHIER, Circuit Judges.

BARRINGTON D. PARKER, Circuit Judge:

Defendants-Appellants G&M Realty L.P., 22-50 Jackson Avenue Owners, L.P., 22-52 Jackson Avenue LLC, ACD Citiview Buildings, LLC, and Gerald Wolkoff (collectively "Wolkoff") appeal from a judgment of the United States District Court for the Eastern District of New York (Frederic Block, J. ). The court concluded that Wolkoff violated the Visual Artists Rights Act of 1990, 17 U.S.C. § 106A ("VARA"), by destroying artwork of Plaintiffs-Appellees, artists who created and displayed their work at the 5Pointz site in Long Island City, New York. We hold that the district court correctly concluded that the artwork created by Appellees was protected by VARA and that Wolkoff’s violation of the statute was willful. Furthermore, the damages awarded involved no abuse of discretion. Accordingly, we affirm the judgment below.

The facts as found by the district court established that in 2002, Wolkoff undertook to install artwork in a series of dilapidated warehouse buildings that he owned in Long Island City, New York. Wolkoff enlisted Appellee Jonathan Cohen, a distinguished aerosol artist, to turn the warehouses into an exhibition space for artists. Cohen and other artists rented studio spaces in the warehouses and filled the walls with aerosol art, with Cohen serving as curator. Under Cohen’s leadership, the site, known as 5Pointz, evolved into a major global center for aerosol art. It attracted thousands of daily visitors, numerous celebrities, and extensive media coverage.

"Creative destruction" was an important feature of the 5Pointz site. Some art at the site achieved permanence, but other art had a short lifespan and was repeatedly painted over. An elaborate system of norms—including Cohen’s permission and often consent of the artist whose work was overpainted—governed the painting process. Cohen divided the walls into "short-term rotating walls," where works would generally last for days or weeks, and "longstanding walls," which were more permanent and reserved for the best works at the site. During its lifespan, 5Pointz was home to a total of approximately 10,650 works of art.

In May 2013, Cohen learned that Wolkoff had sought municipal approvals looking to demolish 5Pointz and to build luxury apartments on the site. Seeking to prevent that destruction, Cohen applied to the New York City Landmark Preservation Commission to have 5Pointz designated a site of cultural significance. The application was unsuccessful, as were Cohen’s efforts to raise money to purchase the site.

At that point, Cohen, joined by numerous 5Pointz artists, sued under VARA to prevent destruction of the site. VARA, added to the copyright laws in 1990, grants visual artists certain "moral rights" in their work. See 17 U.S.C. § 106A(a). Specifically, the statute prevents modifications of artwork that are harmful to artists’ reputations. Id. § 106A(a)(3)(A). The statute also affords artists the right to prevent destruction of their work if that work has achieved "recognized stature" and carries over this protection even after the work is sold. Id. § 106A(a)(3)(B). Under §§ 504(b) and (c) an artist who establishes a violation of VARA may obtain actual damages and profits or statutory damages, which are enhanced if the artist proves that a violation was willful.

Early in the litigation, Plaintiffs applied for a temporary restraining order to prevent the demolition of the site, which the district court granted. See Cohen v. G&M Realty L.P. , 988 F. Supp. 2d 212, 214 n.1 (E.D.N.Y. 2013). As the TRO expired, Plaintiffs applied for a preliminary injunction. On November 12, 2013, the court denied the application in a minute order but told the parties that a written opinion would soon follow. See id. at 214.

That night, Wolkoff began to destroy the artwork. He banned the artists from the site and refused them permission to recover any work that could be removed. Several nights later (and before the district court’s written opinion could issue), Wolkoff deployed a group of workmen who, at his instruction, whitewashed the art.

On November 20, 2013, the district court issued its opinion denying the preliminary injunction. Judge Block concluded that, although some of the 5Pointz paintings may have achieved recognized stature, resolution of that question was best reserved for trial. The court also decided that, given the transitory nature of much of the work, preliminary injunctive relief was inappropriate and that the monetary damages available under VARA could remediate any injury proved at trial.

Following the destruction of the art, nine additional artists sued Wolkoff. The two lawsuits were consolidated for trial, which would primarily address whether the artwork had achieved recognized stature and, if it had, the value of the art Wolkoff destroyed. The three-week trial included testimony from 29 witnesses and saw the admission of voluminous documentary evidence.

Although Plaintiffs had initially demanded a trial by jury, near the conclusion of the trial, the parties agreed to waive a jury, and the district court converted it to an advisory jury. On November 15, 2017, the advisory jury returned its verdict. It made individualized findings as to each artist and work and found violations of VARA as to 36 of the 49 works that were whitewashed. More precisely, the advisory jury found that 28 works had achieved recognized stature and had been unlawfully destroyed and that 8 other works had been mutilated or distorted to the detriment of the artists’ reputations. It recommended an award of $545,750 in actual damages and $651,750 in statutory damages.

On February 12, 2018, the district court issued its findings of fact and conclusions of law. Drawing on a vast record, the court found that 45 of the works had achieved recognized stature, that Wolkoff had violated VARA by destroying them, and that the violation was willful. More specifically, the court observed that the works "reflect[ed] striking technical and artistic mastery and vision worthy of display in prominent museums if not on the walls of 5Pointz." S. App’x at 13. The findings emphasized Cohen’s prominence in the world of aerosol art, the significance of his process of selecting the artists who could exhibit at 5Pointz, and the fact that, while much of the art was temporary, other works were on display for several years. Judge Block credited the artists’ evidence of outside recognition of the 5Pointz works and expert testimony as to the works’ stature. The court declined to impose liability with respect to the four remaining works because they had not achieved long-term preservation, were insufficiently discussed outside of 5Pointz, and were not modified to the detriment of the artists’ reputations.

Where a violation of VARA is established, the statute permits the injured party to recover either actual damages and profits or statutory damages. 17 U.S.C. § 504. The statute fixes statutory damages between $750 and $30,000 per work but authorizes damages of up to $150,000 per work if a litigant proves that a violation was "willful." Id. § 504(c). There was extensive expert testimony as to actual damages. Elizabeth Littlejohn, the artists’ expert, testified that each of the works in question had a substantial monetary value, employing a complex formula that attempted to scale that value to account for the relative merit and recognition of each work. On the other hand, Christopher Gaillard, Wolkoff’s expert, testified that, given the difficulties of removing and selling the 5Pointz paintings and the 5Pointz artists’ limited sales history, the destroyed works did not have a reliable market value. Ultimately, the district court concluded that it could not reliably fix the market value of the destroyed paintings and, for that reason, declined to award actual damages. The court said that Littlejohn’s formula was flawed and that Gaillard credibly testified to challenges that would impede calculation of a market value.

Nonetheless, the court did award statutory damages. It determined that statutory damages would serve to sanction Wolkoff’s conduct and to vindicate the policies behind VARA. In addition, and in accord with the advisory jury’s verdict, the court found that Wolkoff had acted willfully. This finding was based on Wolkoff’s awareness of the ongoing VARA litigation and his refusal to afford the artists the 90-day opportunity provided by the statute to salvage their artwork, some of which was removable. See 17 U.S.C. § 113(d)(2)(B). Judge Block was unpersuaded by Wolkoff’s assertion that he whitewashed the artwork to prevent the artists from engaging in disruption and disorderly behavior at the site. Instead, he found that Wolkoff acted out of "pure pique and revenge for the nerve of the plaintiffs to sue to attempt to prevent the destruction of their art."...