Mango v. Democracy Now! Prods., Inc.
| Decision Date | 24 July 2019 |
| Docket Number | 18cv10588 (DLC) |
| Parties | GREGORY MANGO, Plaintiff, v. DEMOCRACY NOW! PRODUCTIONS, INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
For the plaintiff:
Richard Liebowitz
Liebowitz Law Firm, PLLC
11 Sunrise Plaza, Suite 301
Suite 305
Valleystream, NY 11580
For the defendant:
Thomas McKee Monahan
Sheppard, Mullin, Richter & Hampton
30 Rockefeller Plaza
New York, NY 10112
Following the rejection of its Rule 68 offer, defendant Democracy Now! Productions, Inc. ("Democracy Now") seeks a second bond in this copyright action. It seeks a bond of $100,000 in addition to the bond of $10,000 already posted by the plaintiff. For the following reasons, the defendant is entitled to an additional bond of $50,000.
Plaintiff Gregory Mango ("Mango") took a photograph of Kellyanne Conway and her husband George Conway (the "Photograph") on March 17, 2017. Mango asserts that Democracy Now used the Photograph in a March 20 news article published on its website. The Photograph was registered with the United States Copyright Office on March 26.
Attorney Richard Liebowitz filed this action on behalf of Mango on November 13, 2018. This is the fifteenth lawsuit the firm has filed on behalf of Mango since January 2017. Five of these were filed since this lawsuit began. Democracy Now was served on November 16.
On December 10, Democracy Now made an offer of judgment pursuant to Rule 68, Fed. R. Civ. P., for an amount that Democracy Now describes as "five times Plaintiff's typical photo licensing fee for editorial use" and which included the estimated cost of Mango's attorney's fees incurred as of the time of the offer. Mango rejected the Rule 68 offer.
At a pretrial conference held on March 1, 2019, Mango, via his counsel, was ordered to post a bond with the Clerk of Court in the amount of $10,000 on or before March 4. Liebowitz posted this bond on behalf of Mango on March 1. Fact discovery in this case is scheduled to conclude on September 17. A motion for summary judgment or pretrial order is due on October 8.
On May 14, Democracy Now filed a second motion for bond, seeking to increase Mango's bond by $100,000 to a total of $110,000. This motion was fully submitted on June 4. For the reasons that follow, this motion is granted in part.
The principal legal dispute between the parties is whether Democracy Now may be awarded costs that include the attorney's fees it has incurred following its Rule 68 offer. Resolution of this legal question requires consideration of the interplay of Rule 54, Local Civil Rule 54, the damages provisions of the Copyright Act, and Rule 68 itself. After a description of the legal principles that will govern this motion, the defendant's application for a bond will be addressed.
Pursuant to Rule 54(d), Fed. R. Civ. P., an award of costs does not ordinarily include attorney's fees. That rule states, "[u]nless a federal statute, these rules, or a court order provides otherwise, costs -- other than attorney's fees -- should be allowed to the prevailing party." The Copyright Act provides one of the exceptions recognized by Rule 54(d). Attorney's fees may be awarded under the Copyright Act "to a prevailing party as part of the costs." Adsani v. Miller, 139 F.3d 67, 71 (2d Cir. 1998) (citation omitted).
Where costs awarded in an action may include an award of attorney's fees, our district's local rules allow a bond to include consideration of those attorney's fees. Local Civil Rule 54.2 provides, in relevant part:
The Court, on motion or on its own initiative, may order any party to file an original bond for costs or additional security for costs in such an amount and so conditioned as it may designate.
S.D.N.Y. Local Civ. R. 54.2 (emphasis supplied). Thus, "security of attorney's fees may be included in a bond of costs" under Rule 54.2 when a party is potentially entitled to attorney's fees by statute. Klipsch Group, Inc. v. ePRO E-Commerce Ltd., 880 F.3d 620, 635 (2d Cir. 2018) (Lanham Act). See also Selletti v. Carey, 173 F.3d 104, 110 (2d Cir. 1999) (Copyright Act).
A court considers the following factors in determining whether to require a bond under Local Civil Rule 54.2:
the financial condition and ability to pay of the party at issue; whether that party is a non-resident or foreign corporation; the merits of the underlying claims; the extent and scope of discovery; the legal costs expected to be incurred; and compliance with past court orders.
Cruz v. American Broadcasting Companies, Inc., No. 17cv8794, 2017 WL 5665657, at *1 (S.D.N.Y. Nov. 17, 2017) (citing Selletti v. Carey, 173 F.R.D. 96, 100 (S.D.N.Y. 1997) (Chin, J.), aff'd, 173 F.3d 104 (2d Cir. 1999)).
Attorney's fees may be awarded to either a plaintiff or adefendant in a copyright action. Section 505 of the Copyright Act provides that a district court "may . . . award a reasonable attorney's fee to the prevailing party." 17 U.S.C. § 505. For purposes of this fee-shifting provision, a prevailing party is "one who has favorably effected a material alteration of the legal relationship of the parties by court order." Manhattan Review LLC v. Yun, 919 F.3d 149, 152 (2d Cir. 2019) (citation omitted). But, a prevailing plaintiff in a copyright action is not awarded "attorney's fees as a matter of course; rather, a court must make a more particularized, case-by-case assessment." Kirtsaeng v. John Wiley & Sons, Inc., 136 S.Ct. 1979, 1985 (2016) (citation omitted).
There are public interests that favor both plaintiffs and defendants in copyright actions. "Copyright law inherently balances [] two competing public interests . . . the rights of users and the public interest in the broad accessibility of creative works, and the rights of copyright owners and the public interest in rewarding and incentivizing creative efforts." WPIX, Inc. v. IVI, Inc., 691 F.3d 275, 287 (2d Cir. 2012). The Supreme Court has explained that "copyright law ultimately serves the purpose of enriching the general public through access to creative works." Kirtsaeng, 136 S.Ct. at 1986 (citation omitted).
In order to further the balance of the range of publicinterests at stake in copyright litigation, the Supreme Court has instructed that "[p]revailing plaintiffs and prevailing defendants are to be treated alike" in awarding attorney's fees under the statute. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994). Awards of attorney's fees under Section 505 are meant to "encourage the types of lawsuits that promote" the Copyright Act's goals of "encouraging and rewarding authors' creations while also enabling others to build on that work." Kirtsaeng, 136 S.Ct. at 1986. "[A] successful defense of a copyright infringement action may further the policies of the Copyright Act every bit as much as a successful prosecution of an infringement claim by the holder of a copyright." Fogerty, 510 U.S. at 527.
In determining whether to exercise its discretion to award fees under the Copyright Act a court may consider "several nonexclusive factors," including "frivolousness, motivation, objective unreasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence." Kirtsaeng, 136 S. Ct. at 1985 (citation omitted). Although "significant weight" should be given to the objective reasonableness or unreasonableness of the losing party's litigating position, courts "must view all the circumstances of a case on their own terms, in light of the Copyright Act's essential goals." Id. at 1989.
Federal Rule of Civil Procedure 68 "is a cost-shifting rule designed to encourage settlements without the burdens of additional litigation." Stanczyk v. City of New York, 752 F.3d 273, 280 (2d Cir. 2014) (citation omitted). Rule 68 provides in relevant part:
[A] party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. . . . If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.
Fed. R. Civ. P. 68(a), (d)(emphasis supplied).
A Rule 68 offer includes any monetary relief to which a party may be entitled at the point the offer is made, including attorney's fees if a prevailing party may recover them. "[A] valid Rule 68 offer always includes costs, whether or not specified, because Rule 68 authorizes such an offer only with costs then accrued." Steiner v. Lewmar, Inc., 816 F.3d 26, 36 (2d Cir. 2016).
If a Rule 68 offer is made, it curtails the ability of a prevailing plaintiff to recover its costs, including attorney's fees, incurred after the offer is made. Rule 68 "precludes a plaintiff from recovering post-offer costs if (a) the defendant timely serves plaintiff with an offer of judgment, (b) plaintiff rejects the offer, and (c) plaintiff prevails but obtains a judgment less than the rejected offer." Stanczyk, 752 F.3d at280. This cancellation of the plaintiff's right to recover his costs incurred after the offer includes any right to recover attorney's fees incurred post-offer. Id. As the Supreme Court explained in Marek v. Chesny, 473 U.S. 1, 9 (1985), "all costs properly awardable in an action are to be considered within the scope of Rule 68 'costs.'" Id. Consequently, the Court reasoned, "where the underlying statute defines 'costs' to include attorney's fees, . . . such fees are to be included as costs for purposes of Rule 68." Id.
Marek involved the interplay between Rule 68 and 42 U.S.C. § 1988, which provides that the prevailing party in certain civil rights actions may be awarded attorney's fees "as part of the costs." 42 U.S.C. § 1988. The Court found that § 1988's attorney's fees provision was thus "subject to the cost-shifting provision of Rule 68" and concluded "[c]ivil rights plaintiffs -- along with other plaintiffs -- who reject an offer more favorable than what is thereafter...
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