Alliance for Water Efficiency v. Fryer

• Decision Date: 18 January 2017
• Docket Number: No. 14 C 115,14 C 115
• Parties: ALLIANCE FOR WATER EFFICIENCY, Plaintiff, v. JAMES FRYER, Defendant.
• Court: U.S. District Court — Northern District of Illinois

ALLIANCE FOR WATER EFFICIENCY, Plaintiff, v. JAMES FRYER, Defendant.

No. 14 C 115

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

January 18, 2017

Magistrate Judge Jeffrey Cole

MEMORANDUM OPINION AND ORDER

INTRODUCTION

Mr. Fryer has moved for an award of attorney's fees under §505 of the Copyright Act, totaling $57,365 for work done on the appeal of this case ($45,745) and in pursuit of fees ($11,620), and expenses in the amount of $643.53. [See Dkt. ## 91, 93, 94]. In his companion motion, he is seeking an additional $133,817.30 in restitution. [Dkt. #96]. To fully understand this case, its history must be reviewed. It is compendiously summarized in Alliance for Water Efficiency v. Fryer, 808 F.3d 1153 (7^th Cir. 2015), which reversed this court's decision in Alliance for Water Efficiency v. Fryer, 2015 WL 102166 (N.D.Ill. 2015). It is also discussed below and in the companion Memorandum Opinion and Order dealing with Mr. Fryer's motion for restitution. See Alliance for Water Efficiency v. Fryer, ___ WL___ (N.D.Ill. 2017). [Dkt. #116].¹

I.FACTUAL BACKGROUND

The Alliance had hired Mr. Fryer, an environmental scientist, to research and write a report on the extent to which water demand elasticity during future droughts would be affected by urban water agencies' conservation programs. The Alliance organized the financing for the study through several sponsors, as well as providing the largest funding contribution itself. When Mr. Fryer submitted his draft report, the Alliance was dissatisfied, as were most of the sponsors - according to the Alliance's complaint. The exception was the California Department of Water Resources ("CDW"). The Alliance wanted the report refocused, while Mr. Fryer did not, and the dispute made its way to federal court in the form of the Alliance's four-count Complaint, which sought relief under the Declaratory Judgment Act and charged Breach of Contract, Unjust Enrichment/Restitution, and Copyright Infringement. [Dkt. #1].

The Alliance claimed that it had all legal and tangible rights to the study and the report, including an ownership interest in the files and documents relating to the study. In Count IV, the Alliance alleged that Mr. Fryer's report was a "work made for hire," and that the Alliance owned the copyright to it.² The Alliance claimed that Mr. Fryer had infringed on its copyright by speaking about the report at a public forum/seminar. [Dkt. #5, at ¶¶70-74]. On January 15, 2014, Judge Shadur, whom the Seventh Circuit has called "a jurisdiction-hound," Newman-Green, Inc. v. Alfonzo-Larrain R., 854 F.2d 916, 940 (7^th Cir. 1988), concluded on his own that there might be adefect in the way diversity jurisdiction had been pled, but that any deficiency probably could be cured. Thus, he issued an ex-parte order giving the plaintiff the opportunity to cure the allegations of diversity jurisdiction. [Dkt. ##3, 4]. Nothing was said about Count IV or subject matter jurisdiction under the Copyright Act.³

Thereafter, on January 17, 2014, the plaintiff filed an Amended Complaint alleging diversity jurisdiction in a manner that it was thought would satisfy Judge Shadur's diversity concerns. It was and again charged that the report was "a work for hire" under the Copyright Act. [Dkt. #5]. On February 14, 2014, Mr. Fryer's counsel filed a motion to dismiss in which he charged that there was no diversity jurisdiction and that there was no subject matter jurisdiction under Count IV. [Dkt. ## 7, 8]. Mr. Fryer argued that the Amended Complaint failed to properly allege that the report had been a "work made for hire" because it stated Mr. Fryer was an independent contractor rather than an employee and failed to allege that the parties had a written agreement designating the report as a work made for hire. [Dkt. #8, at 10, 12].

Before the motion to dismiss was responded to by the plaintiff or ruled on by Judge Shadur, the parties asked him to refer the matter for a settlement conference. He did so on February 21, 2014. [Dkt. #16]. When the parties were again before Judge Shadur on February 26, 2014, he denied that portion of Mr. Fryer's motion to dismiss for lack of personal jurisdiction, and he entered and continued the portion of the motion that had argued that the court lacked jurisdiction under the Copyright Act. [Dkt. #20]. The parties were before me on February 28, 2014, asking that I set a settlement conference. [Dkt. #21]. The settlement conference proceeded less than two weeks lateron March 13, 2014. On that day, the parties reached a settlement, and their lawyers stated the material terms on the record. It was agreed that contract formation had occurred that day, that there was a binding settlement agreement, and that the ultimate execution of the contemplated written agreement was not a precondition to contract formation. [Dkt. #26 See also Dkt. #48]. Under their agreement, if the parties could not agree on a written document, what was read into the record on the 13^th would serve as the settlement agreement. That same day, the parties also consented in writing to my jurisdiction. [Dkt. # 25].

When the Alliance put its version of the agreement in writing, however, Mr. Fryer refused to sign, although he admittedly agreed with many of its provisions. The same was true of the Alliance. The Alliance's stance was that Mr. Fryer had agreed on the 13^th that he couldn't name certain organizations without their prior permission as it would falsely suggest that his separate report (for himself and CDW) had the Alliance's imprimatur, when it did not. Alliance for Water Efficiency, 808 F.3d at 1157. Mr. Fryer's position was that under the settlement on the 13^th he had not agreed to exclude the funders (other than the Alliance), and it was his prerogative to credit those who had provided funding and data. An exchange of drafts and counterdrafts followed, but "complete written agreement was never reached . . . [leaving] the March 13 exchange as the definitive settlement." Alliance for Water Efficiency v. Fryer, 808 F.3d at 1155.

The Alliance filed a motion to enforce its version of the settlement agreement, which was, in effect, a request for a mandatory injunction. Resolution Trust Corp. v. Ruggiero, 994 F.2d 1221, 1225 (7th Cir. 1993). There followed briefing and argument on the scope of the settlement reached on the 13^th and the effect of the ensuing meetings and drafts. In the end, I concluded - erroneously as it turned out - that the settlement read into the record on March 13^th contained an implied termthat Mr. Fryer would not include references in his report to PAC members who had not first contacted him and expressed a desire to participate in his report. Alliance for Water Efficiency v. Fryer, 2105 WL 102166, at **6-8 (and footnotes); [Dkt. #48]. He did not dispute that he had agreed in the settlement agreement not to mention the Alliance in his contemplated report.

On October 27, 2014, following a telephone conference with the parties, it was agreed that nothing in the March 13^th settlement agreement or the ensuing orders precluded Mr. Fryer from making reference in his separate report to the fact that Santa Rosa and/or one or more members of the PAC contributed data to Mr. Fryer's study. [Dkt. #52]. After some additional haggling about the Santa Rosa data, I concluded and the parties agreed that further discussion would not be productive, and the parties were instructed to comply with the terms set forth in the Memorandum Opinion and Order of January 7, 2015. [Dkt. #62].

On January 7, 2015, form AO 450, captioned Judgment In A Civil Action, was filed with the clerk of court dismissing the case. [Dkt. #62]. Mr. Fryer appealed. [Dkt.#63].

At oral argument, the Seventh Circuit pointed out that although injunctive relief was contemplated, there was no document that complied with Fed.R.Civ.P. 65(d)(1). The parties then returned here and obtained a self-contained order that complied with the Court's concerns and Rule 65. Alliance for Water Efficiency, 808 F.3d at 1155. [See Dkt.#85]. The parties then returned to the Court of Appeals, which determined that Mr. Fryer and the Alliance had not come to a mutual accord on a final written agreement, and therefore that what was read into the record by them on March 13, 2014, was the operative settlement agreement - as the parties had agreed. Alliance for Water Efficiency, 808 F.3d at 1157. The Seventh Circuit vacated the injunction "because it contains terms on which the parties have not agreed." Id.

Prior to its discussion on the scope of the March 13 settlement agreement, the Seventh Circuit addressed the question of jurisdiction, saying: "Fryer contends that this injunction creates a prior restraint that violates the First Amendment. Before we tackle that subject, however, we must decide whether the suit is properly in federal court." Alliance for Water Efficiency, 808 F.3d at 1156. If there had been no independent jurisdictional basis for AWE's suit, dismissal, the Seventh Circuit said, rather than adjudication of the appeal would have been the appropriate action. Cf. Blue Cross Blue Shield v. American Express, 467 F.3d 634 (7^th Cir. 2006); Lynch, Inc., 279 F.3d at 491-92. But the Amended complaint properly pled diversity jurisdiction, and that the Court of Appeals said rendered the suit "independently within federal jurisdiction, even if the original suit would have failed on the merits or should have been dismissed." Alliance for Water Efficiency, 808 F.3d at 1157.

Why the parties decided to settle, and why they settled under the terms they did on March 13 is unknown. The Seventh Circuit did not even hazard a guess. It merely noticed that settlements involve "compromise" in which no one gets all of what it wants. Alliance for Water Efficiency, 808 F.3d at 1157. Since Judge Shadur had deferred the Alliance's response to and his consideration of the Fryer motion to dismiss Count IV for failure to state a claim, the...