BMG Rights Mgmt. (US) LLC v. Cox Commc'ns, Inc., Civil No. 1:14–cv–1611

• Citation: 234 F.Supp.3d 760
• Decision Date: 14 February 2017
• Docket Number: Civil No. 1:14–cv–1611
• Parties: BMG RIGHTS MANAGEMENT (US) LLC, and Round Hill Music LP, Plaintiffs, v. COX COMMUNICATIONS, INC., and Coxcom, LLC, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

234 F.Supp.3d 760

BMG RIGHTS MANAGEMENT (US) LLC, and Round Hill Music LP, Plaintiffs,

v.COX COMMUNICATIONS, INC., and Coxcom, LLC, Defendants.

Civil No. 1:14–cv–1611

United States District Court, E.D. Virginia, Alexandria Division .

Signed February 14, 2017

Jeremy David Engle, Paul Gennari, Steptoe & Johnson LLP, Walter DeKalb Kelley, Jr., Hausfeld LLP, Washington, DC, for Plaintiffs.

Craig Crandall Reilly, Law Office of Craig C. Reilly, Alexandria, VA, for Defendants.

MEMORANDUM OPINION

Liam O'Grady, United States District Judge

After an extended litigation battle and a two-week trial, a jury found Defendants Cox Communications, Inc. and Coxcom, LLC ("Cox") liable for willful contributory copyright infringement. The jury awarded Plaintiff BMG Rights Management ("BMG") $25 million in damages, and the Court denied both parties' post- trial motions for relief. (Dkt. No. 794). Now pending before the Court are the parties' motions for costs and attorney's fees. Specifically, BMG has filed for attorney's fees and costs against Cox, (Dkt. Nos. 819, 827) and Cox, in turn, has filed for fees and costs against Round Hill Music LP ("Round Hill") (Dkt. Nos. 822, 836). For the reasons that follow, BMG's motions are hereby GRANTED IN PART and DENIED IN PART. Cox's motions are hereby DENIED.

I. BACKGROUND

The facts of this case have been set forth in the Court's previous memorandum opinions, and will only be summarized briefly here. See Dkt. Nos. 703, 794. Defendant Cox provides high-speed internet services to customers nationwide. Plaintiffs BMG and Round Hill are the putative owners or administrators of approximately 1,400 musical composition copyrights. Plaintiffs initially alleged that Cox's subscribers were using peer-to-peer ("P2P") file sharing to illegally upload and download copyrighted music files. The parties' dispute came to a head in October 2014, when BMG and Round Hill brought claims of contributory copyright infringement and vicarious copyright infringement against Cox.

After a lengthy period of discovery, the parties filed cross-motions for summary judgment in September 2015. These motions raised two primary questions: (1) do plaintiffs own the copyrights at issue?; and (2) is Cox eligible for the DMCA safe-harbor defense under § 512(i) of the DMCA? See 17 U.S.C. § 512(i). MSJ Mem. Op. at 9 (Dkt. No. 703). On the ownership issue, the Court ruled in favor of BMG, finding that it had conclusively established ownership of the asserted copyrights. With regard to Round Hill, however, the Court found that the company was hired "to provide services related to copyrights it did not own and that this employment did not result in any assignment of rights to Plaintiff." Id. at 23 (internal citations and quotations omitted). Accordingly, the Court dismissed Round Hill from the case because it did not have statutory standing to bring the infringement action.

As for the DMCA issue, the Court found that Cox had not reasonably implemented a repeat infringer policy as required to receive the protections of the DMCA. Specifically, the evidence showed that Cox did not terminate access for repeat infringers under appropriate circumstances, and that, before 2012, the company had an informal policy of consistently reinstating infringing users. See id. at 31–42. Cox continued these actions in spite of the fact that it "had knowledge that at least some of its account holders were intentionally and repeatedly infringing." Id. at 42. As such, the Court granted BMG's motion for summary judgment and denied Cox's corresponding motion for the protections of the DMCA safe-harbor.

The case culminated a two-week jury trial in December 2015. On December 17, 2015, the jury found that Cox was liable for contributory infringement, but that it was not liable for vicarious infringement. See Dkt. No. 754. It awarded BMG $25 million in statutory damages. After this victory, BMG sought a permanent injunction to prevent Cox from future infringement. It also sought judgment as a matter of law on its vicarious infringement claim. Cox responded with its own motion for judgment as a matter of law, or alternatively, for a new trial. In a Memorandum Opinion dated August 8, 2016, the Court denied all of the parties' post-trial motions and entered a final judgment on the verdict. Post–Trial Mem. Op. at 2, Dkt. No. 794. Cox filed its notice of appeal on August 19, 2016.

All that remain before the Court are the parties' motions for attorney's fees and costs. The law firm of Steptoe & Johnson LLP and local counsel Hausfeld LLP represented both BMG and Round Hill in this action. Fenwick & West LLP and the Law Offices of Craig C. Reilly represented Cox. BMG has moved to recover on its bill of costs (Dkt. No. 819), and its motion for attorney's fees (Dkt. No. 827). In support of those motions, BMG submitted declarations from Michael J. Allan, Walter D. Kelley, N. Thomas Connally, III, Stephanie Roberts, and Jeremy D. Engle, as well as detailed billing records and an itemized bill of costs. Relying on its success in dismissing Round Hill as a plaintiff, Cox has also filed a bill of costs (Dkt. No. 822) and a motion for attorney's fees (Dkt. No. 836). In support, it has filed similar documentation, including declarations from Jedediah Wakefield, Craig C. Reilly, and Andrew P. Bridges.

II. BMG'S MOTION FOR ATTORNEY'S FEES

Despite the Supreme Court's admonition that applications for attorney's fees "should not result in a second major litigation," the petitions in this case have generated hundreds of pages of filings and now present an array of legal questions for the court to consider in awarding fees and costs. Kirtsaeng v. John Wiley & Sons, Inc. , ––– U.S. ––––, 136 S.Ct. 1979, 1988, 195 L.Ed.2d 368 (2016) (internal quotations and citations omitted). After setting forth the general legal standard for awarding fees under § 505, the Court will address the discrete legal questions raised by the parties' respective motions. Upon consideration of the parties' briefing and the relevant caselaw, the Court will GRANT BMG's motion for attorney's fees, but reduce the requested fee award by 20%. Relatedly, the Court will DENY BMG's motion as it relates to nontaxable litigation expenses. Next, it will GRANT BMG's bill of costs, but will exclude certain costs and reduce it by 10%. Finally, the Court will DENY Cox's motions for attorney's fees and costs in full because it is not a "prevailing party" under § 505.

A. Legal Standard

Section 505 of the Copyright Act of 1976 provides that "the court in its discretion may allow the recovery of full costs ... [and] a reasonable attorney's fee to the prevailing party as part of the costs ..." 17 U.S.C. § 505. Interpreting this statute, the Supreme Court has explained that prevailing plaintiffs and prevailing defendants are equally eligible to receive fee awards. Fogerty v. Fantasy, Inc. , 510 U.S. 517, 527, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). That said, fees are not awarded as a matter of right, and courts "must make a ... particularized, case-by-case assessment" when deciding whether they should be awarded. Kirtsaeng , 136 S.Ct. at 1985. The key principle underlying this assessment is whether awarding fees would further the essential goals of the Copyright Act by "enriching the general public through access to creative works." Fogerty , 510 U.S. at 527, 114 S.Ct. 1023.

The Fourth Circuit has provided the following factors for district courts to consider when deciding whether or not to award fees: (1) the motivation of the parties; (2) the objective reasonableness of the parties' legal and factual positions; (3) the need to advance considerations of compensation and deterrence; and (4) any other relevant factor. Rosciszewski v. Arete Associates, Inc. , 1 F.3d 225, 234 (4th Cir. 1993) ; see also Kirtsaeng , 136 S.Ct. at 1985 (listing similar non-exclusive factors). Of these factors, "objective reasonableness" is often given more weight than other considerations; however, it is not the controlling factor, and courts should consider the circumstances of the case as a whole in making its decision. See Kirtsaeng , 136 S.Ct. at 1988. At the end of the day, the trial court maintains broad discretion in awarding fees. Id.

Once a court has determined that a fee award is appropriate, it must then use the lodestar method to determine the amount to be awarded. See Gisbrecht v. Barnhart , 535 U.S. 789, 801, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002) (stating that, in assessing fees, "the lodestar figure has, as its name suggests, become the guiding light"). Once calculated, there is "a strong presumption that the lodestar represents the reasonable fee." City of Burlington v. Dague , 505 U.S. 557, 562, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992) (internal quotation marks omitted).

The Fourth Circuit employs a three-step methodology in calculating the appropriate fee award. "First, the court must determine the lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate." McAfee v. Boczar , 738 F.3d 81, 88 (4th Cir. 2013). In determining the reasonable number of hours and a reasonable rate, the court should consider the twelve-factors set out in Johnson v. Georgia Highway Express Inc. :

(1) The time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation, and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys' fees awards in similar cases.

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