Lahiri v. Universal Music And Video Distribution Corp.

• Decision Date: 07 June 2010
• Docket Number: No. 09-55111.,09-55111.
• Citation: 606 F.3d 1216
• Parties: Bappi LAHIRI, an individual; Saregama India Limited, Plaintiffs,Anthony Kornarens, Esquire, Movant-Appellant,v.UNIVERSAL MUSIC AND VIDEO DISTRIBUTION CORPORATION, a Delaware corporation; Interscope Records, a corporation; Aftermath Records, a business entity form unknown; Andre Ramelle Young, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

606 F.3d 1216

Bappi LAHIRI, an individual; Saregama India Limited, Plaintiffs,Anthony Kornarens, Esquire, Movant-Appellant,v.UNIVERSAL MUSIC AND VIDEO DISTRIBUTION CORPORATION, a Delaware corporation; Interscope Records, a corporation; Aftermath Records, a business entity form unknown; Andre Ramelle Young, Defendants-Appellees.

No. 09-55111.

United States Court of Appeals Ninth Circuit.

Argued and Submitted April 9, 2010.

Filed June 7, 2010.

COPYRIGHT MATERIAL OMITTED

Curtis A. Cole, Matthew Levinson, Cole Pedroza, LLP, Pasadena, CA, for the movant-appellant.

Russell J. Frackman, Mitchell Silberberg & Knupp, LLP, Los Angeles, CA, Jeffrey D. Goldman, Loeb & Loeb, LLP, Los Angeles, CA, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California, Otis D. Wright II, District Judge, Presiding. D.C. No. 2:02-cv-08330-ODW-CT.

Before HARRY PREGERSON and ROBERT R. BEEZER, Circuit Judges, and SUZANNE B. CONLON,^* District Judge.

CONLON, District Judge:

Anthony Kornarens is an attorney specializing in copyright law. Kornarens was severely sanctioned by the district court for his five-year bad faith pursuit of a frivolous copyright infringement claim. In its 21-page order, the district court awarded defendants $247,397.28 in attorneys' fees and $10,808.76 in costs, under 28 U.S.C. § 1927 ¹ and the court's inherent sanctioning power. Kornarens appeals, contending the sanctions were unwarranted and excessive.² We disagree and affirm.

I

We have jurisdiction under 28 U.S.C. § 1291. A district court's imposition of sanctions is reviewed for abuse of discretion, and its findings of fact for clear error. Pac. Harbor Capital, Inc. v. Carnival Air Lines, Inc., 210 F.3d 1112, 1117 (9th Cir.2000). An attorney who unreasonably and vexatiously “multiplies the proceedings” may be required to pay the excess fees and costs caused by his conduct. 28 U.S.C. § 1927. Recklessness suffices for § 1927 sanctions, but sanctions imposed under the district court's inherent authority require a bad faith finding. See B.K.B. v. Maui Police Dep't, 276 F.3d 1091, 1107-08 (9th Cir.2002) (attorney's knowing and reckless introduction of inadmissible evidence was tantamount to bad faith and warranted sanctions under § 1927 and the court's inherent power); Fink v. Gomez, 239 F.3d 989, 993-94 (9th Cir.2001) (attorney's reckless misstatements of law and fact, combined with an improper purpose, are sanctionable under the court's inherent power).

The parties dispute whether a bad faith finding must be supported by clear and convincing evidence. This court has not addressed the burden of proof required for a sanctions award. See, e.g., In re Lehtinen, 564 F.3d 1052, 1061 n. 4 (9th Cir.2009) (declining to address burden because clear and convincing evidence of misconduct supported bad faith finding and imposition of sanctions under the court's inherent authority); F.J. Hanshaw Enters., Inc. v. Emerald River Dev., Inc., 244 F.3d 1128, 1143 n. 11 (9th Cir.2001) (same). The burden of proof issue need not be resolved here because the district court's bad faith finding is supported by clear and convincing evidence.

II

Kornarens represented Bappi Lahiri, who in 1981 composed the song Thoda for an Indian movie. Lahiri composed Thoda for compensation under an agreement with the film's producer, Pramod Films. The parties agreed the law of India controls the underlying copyright issues. Under Indian law, Pramod Films, not Lahiri, owned the Thoda copyright as a work for hire. Pramod Films later assigned its Thoda rights to Saregama India Limited (“Saregama”).

Twenty-one years later, Kornarens filed suit on Lahiri's behalf, claiming defendants Universal Music & Video Distribution Corporation, Interscope Records, Aftermath Records and Andre Ramelle Young (“defendants”) used unauthorized excerpts of Thoda in violation of the Lanham Act, 15 U.S.C. § 1125(a), and engaged in unfair competition under parallel California law for failure to credit Lahiri's authorship. Kornarens, a copyright specialist, did not include a copyright infringement claim in the original complaint.

Three months later the Supreme Court granted certiorari in Dastar Corp. v. Twentieth Century Fox Film Corp., 537 U.S. 1099, 123 S.Ct. 816, 154 L.Ed.2d 767 (2003). The central issue in Dastar was whether Lanham Act false designation claims were limited to producers of tangible goods, and excluded Lanham Act protection for authors of ideas, concepts or communications embodied in the goods. An adverse decision by the Supreme Court would clearly jeopardize Lahiri's Lanham Act and parallel unfair competition claims.

Three months after the Supreme Court granted certiorari in Dastar, Lahiri registered a copyright in Thoda with the United States Copyright Office. On June 2, 2003, the Supreme Court issued its opinion limiting Lanham Act false designation claims to producers of tangible goods. Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 37, 123 S.Ct. 2041, 156 L.Ed.2d 18 (2003). Three weeks later, Kornarens amended Lahiri's complaint to add a Thoda copyright infringement claim under the United States copyright issued a few months earlier. This became Lahiri's sole claim on August 15, 2003, when the district court dismissed his Lanham Act and parallel unfair competition claims under Dastar.

Meanwhile, based on Pramod Films' assignment of the Thoda copyright, Saregama sued defendants for infringement. Lahiri and Saregama's lawsuits, asserting conflicting claims of a Thoda copyright, ultimately were consolidated before the United States District Court for the Central District of California. Defendants moved to stay the consolidated cases and proposed to submit the competing copyright ownership claims by Lahiri and Saregama to an Indian court for resolution. Alternatively, defendants moved for summary judgment against Lahiri on the ground that he did not own a valid copyright in Thoda; defendants argued that Saregama owned the copyright under Indian law. Lahiri and Saregama filed cross-motions for summary judgment on their conflicting claims to ownership of a Thoda copyright.

After the district court requested supplemental briefing on whether the consolidated cases should be stayed, Kornarens submitted an agreement that he mischaracterized as resolving the issue of copyright ownership between Lahiri and Saregama, purporting to moot the need for a stay and the cross-motions for summary judgment between Lahiri and Saregama. The district court credited Kornarens' characterization of the agreement as resolving conflicting copyright ownership claims. Contrary to Kornarens' representations, Lahiri and Saregama agreed to a 30/70% (respectively) split of any copyright infringement recovery from defendants, and the agreement explicitly referred to co-ownership of the Thoda copyright only for purposes of these consolidated cases. Relying on the purported co-ownership settlement agreement, the district court erroneously concluded Lahiri was the co-owner of the Thoda copyright. This error resulted in the denial of defendants' summary judgment motion against Lahiri predicated on the meritorious contention Lahiri lacked a copyright interest in Thoda. Defendants' argument that Saregama owned the Thoda copyright under Indian law was rejected by the district court without analysis. Contentious litigation ensued for three more years, resulting in an additional 233 docket entries and three rounds of trial preparation.

On August 9, 2007, the district court granted defendants' renewed summary judgment motion against Lahiri. After a thorough analysis, the district court concluded Lahiri did not have a copyright interest in Thoda under Indian law. Lahiri v. Universal Music & Video Distrib., Inc., 513 F.Supp.2d 1172 (C.D.Cal.2007).³ Defendants then moved for $800,752.00 in attorneys' fees and $93,787.44 in costs under § 1927 and the court's inherent authority to sanction attorney misconduct. The sanctions issues were fully briefed and the district court held a hearing before issuing its detailed 21-page order granting defendants' motion, but substantially reducing the award defendants sought.

III

Kornarens argues the district court abused its discretion by sanctioning him for knowingly and recklessly pursuing a frivolous copyright infringement claim and litigating that claim in bad faith. The record supports the district court's findings and imposition of sanctions. The parties agreed that resolution of Thoda's ownership is governed by the Indian Copyright Act, 1957, and the Indian Supreme Court's interpretation of the act in Indian Performing Right Soc'y Ltd. v. E. Indian Motion Pictures Ass'n and Others (“ IPRS ”), A.I.R.1977 S.C. 1443. Unequivocally, the law of India vests a copyright in a movie score composed for compensation in the film company; the composer has no copyright interest absent an agreement to the contrary. Had Kornarens, a self-described experienced copyright lawyer, made even a cursory investigation into the circumstances of Lahiri's 21-year old composition of Thoda, he would have known Lahiri had no copyright interest in music he composed for hire.

On appeal, Kornarens argues he reasonably relied on an expert in Indian law, as well as his unsupported assertion that Lahiri represented he owned the Thoda copyright. The district court did not abuse its discretion in rejecting similar arguments. The law of India is straightforward and the IPRS decision is in English. Indeed, there is nothing legally remarkable or unique about applicable Indian law that would reasonably require expert advice. Generally, a composer who creates a film score for hire forfeits a copyright interest in his work. See, e.g., 17 U.S.C § 101 (a work made for hire includes a work specially ordered or commissioned for use as part of a motion picture if the parties expressly agree in a signed, written instrument that the work shall be considered a work made for hire), § 201(b) (the...