Tempest Publ'g, Inc. v. Hacienda Records & Recording Studio, Inc.

• Decision Date: 21 October 2015
• Docket Number: Civil Action No. H–12–736.
• Citation: 141 F.Supp.3d 712
• Parties: TEMPEST PUBLISHING, INC., Plaintiff, v. HACIENDA RECORDS AND RECORDING STUDIO, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

141 F.Supp.3d 712

TEMPEST PUBLISHING, INC., Plaintiff,

v.HACIENDA RECORDS AND RECORDING STUDIO, INC., et al., Defendants.

Civil Action No. H–12–736.

United States District Court, S.D. Texas, Houston Division.

Signed Oct. 21, 2015.

Joshua R. Leal, Showalter Law Firm, Richmond, TX, for Plaintiff.

Roland Garcia, Greenberg Traurig LLP, Houston, TX, for Defendants.

MEMORANDUM AND ORDER

LEE H. ROSENTHAL, District Judge.

Tempest Publishing, Inc., sued Hacienda Records and Recording Studio, Inc., Hacienda Records, L.P., and Latin American Entertainment, LLC (together, "Hacienda"), alleging infringement of the copyrights to four songs under the federal Copyright Act, 17 U.S.C. § 101 et seq. The court granted Hacienda's motion for partial summary judgment, dismissing Tempest's claims to two of the songs, Buscando un Cariño and Morenita de Ojos Negros. (Docket Entry No. 103). The court held a bench trial on the remaining two songs, Mi Amor es Tuyo and Somos Dos Gatos. At the close of Tempest's case, the court granted a directed verdict in Hacienda's favor on one of the songs, Mi Amor es Tuyo. The court found that Hacienda infringed Tempest's copyright for Somos Dos Gatos, that the infringement was not innocent and was willful, and that Hacienda owed Tempest $5,000 in damages. (Docket Entry No. 129).

The court entered judgment on March 18, 2015. (Docket Entry No. 130). Tempest moved for an award of costs, (Docket Entry No. 131), which Hacienda opposed, (Docket Entry No. 133). Hacienda also moved for an award of costs, (Docket Entry No. 132), which Tempest opposed, (Docket Entry No. 134). On August 31, 2015, Tempest filed an amended bill of costs, (Docket Entry No. 138), which Hacienda opposed, (Docket Entry No. 139). The motions raise questions about awarding costs under § 505 of the Copyright Act.

Based on the parties' arguments and submissions, and the applicable law, the court grants Tempest's motions in part and denies Hacienda's motion, awarding $7,701.35 in costs to Tempest. The reasons are explained below.

I. The Applicable Law on Costs

"Unless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party." FED. R. CIV. P. 54(d)(1). "[T]he word ‘should’ makes clear that the decision whether to award costs ultimately lies within the sound discretion of the district court." Marx v. Gen. Revenue Corp., –––U.S. ––––, 133 S.Ct. 1166, 1172, 185 L.Ed.2d 242 (2013). Even if a federal statute does not specifically authorize recovery of costs in a particular case, "Rule 54(d)(1) independently authorizes district courts to award costs to prevailing parties" unless a statute or rule precludes it. Id. at 1174 n. 5. The Rule "does not require courts to award costs to prevailing [parties]." Id. at 1178 n. 9. Rather, it gives the court discretion based on the circumstances each case presents.

A federal statute "defines the term ‘costs' as used in Rule 54(d)." Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441, 107 S.Ct. 2494, 96 L.Ed.2d 385 (1987). Under 28 U.S.C. § 1920, a district court may tax as costs:

(1) Fees of the clerk and marshal;

(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;

(3) Fees and disbursements for printing and witnesses;

(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;

(5) Docket fees under section 1923 of this title; [and]

(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.

28 U.S.C. § 1920.

If the party against whom costs are sought does not object, a presumption arises that the costs were necessarily incurred and will be taxed. See Embotelladora Agral Regiomontana, S.A. de C.V. v. Sharp Capital, Inc., 952 F.Supp. 415, 417 (N.D.Tex.1997) ("[I]n the absence of a specific objection, deposition costs will be taxed as having been necessarily obtained for use in the case."). An objection shifts that burden to require the party seeking costs to show that the costs were necessary. Jerry v. Fluor Corp., No. 10–1505, 2012 WL 4664423, at *2 (S.D.Tex. Oct. 2, 2012) (citing Fogleman v. ARAMCO, 920 F.2d 278, 286 (5th Cir.1991) ).

The Copyright Act provides that, in any infringement action, "the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof.... [T]he court may also award a reasonable attorney's fee to the prevailing party as part of the costs." 17 U.S.C. § 505. Only a prevailing party may recover costs under § 505. Alameda Films S.A. de C.V. v. Authors Rights Restoration Corp. Inc., 331 F.3d 472, 484 n. 37 (5th Cir.2003). "The touchstone of the prevailing party inquiry must be the material alteration of the legal relationship of the parties in a manner which Congress sought to promote in the fee statute." Tex. State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792–93, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989). A material alteration must have the "necessary judicial imprimatur." Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 605, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). Enforceable judgments on the merits are sufficient for prevailing-party status. Id. at 604, 121 S.Ct. 1835. "Prevailing plaintiffs and prevailing defendants are to be treated alike" under § 505. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994).

II. Who Is the Prevailing Party?

Tempest and Hacienda both argue that they are the prevailing party. Tempest obtained a judgment that Hacienda infringed Tempest's copyright to Somos Dos Gatos and was awarded $5,000 in damages. Hacienda obtained a judgment that it had not infringed the copyright in the other three songs, Buscando un Cariño, Morenita de Ojos Negros, and Mi Amor es Tuyo. In its Memorandum and Opinion setting out proposed findings of fact and conclusions of law, the court did not decide which party prevailed and instead found, after weighing the Lieb factors, that neither Tempest nor Hacienda should be awarded attorney's fees. (Docket Entry No. 129 at p. 22–30).¹ This is a case in which the plaintiff has succeeded on some of its claims but not others.

Rule 54(d)(1) governs "[u]nless a federal statute ... provides otherwise." The first question is who is the prevailing party under Rule 54(d)(1). The second question is whether § 505"provides otherwise" and mandates a different outcome than the Rule.

A. Who Is the Prevailing Party Under Rule 54(d)(1) ?

Interpreting Rule 54(d)(1), the Fifth Circuit has held:

A party need not prevail on all issues to justify a full award of costs.... Usually the litigant in whose favor judgment is rendered is the prevailing party for purposes of Rule 54(d). A party who has obtained some relief usually will be regarded as the prevailing party even though he has not sustained all his claims. Cases from this and other circuits consistently support shifting costs if the prevailing party obtains judgment on even a fraction of the claims advanced.

United States v. Mitchell, 580 F.2d 789, 793 (5th Cir.1978) (alterations omitted) (citations omitted) (quotation marks omitted), superseded by statute on other grounds, 42 U.S.C. § 3614. As the Federal Circuit has explained, Rule 54(d)(1)"unambiguously limits the number of prevailing parties in a given case to one because the operative term, ‘prevailing party,’ is singular." Shum v. Intel Corp., 629 F.3d 1360, 1367 (Fed.Cir.2010). That conclusion "is reinforced by the use of the definite article ‘the’ before ‘prevailing party’ [instead of] [a]lternatives like ‘a,’ ‘any,’ or ‘some,’ ... [which] could be read to suggest that it is possible to have more than one prevailing party in an action." Id.

Other circuits follow this approach. See Barber v. T.D. Williamson, Inc., 254 F.3d 1223, 1234 (10th Cir.2001) (the magistrate judge clearly erred in finding both the plaintiff and the defendant to be the prevailing parties under Rule 54(d)(1), even though the plaintiff won nominal damages on one claim and the defendant successfully defeated the plaintiff's two other claims); Head v. Medford, 62 F.3d 351, 354–55 (11th Cir.1995) (per curiam) (recognizing and adopting the Fifth Circuit's rule in Mitchell ); Lytle v. Comm'rs of Election of Union Cty., 541 F.2d 421, 425 n. 6 (4th Cir.1976) ( "The [defendants'] contention that to be the ‘prevailing party’ [the plaintiff] must win on all issues is clearly without merit."); Lewis v. Pennington, 400 F.2d 806, 820 (6th Cir.1968) ("Although the [plaintiffs] prevailed on only one of the two grounds advanced, they are to be deemed ‘prevailing parties.’ "). Leading treatises take a similar view. 10 Wright & Miller, FEDERAL PRACTICE & PROCEDURE § 2667 (3d ed. 2010) ("[A] claimant who has obtained some relief usually will be regarded as the prevailing party even though the party has not sustained all his claims." (emphasis added)); 10 James Wm. Moore, MOORE'S FEDERAL PRACTICE § 54.101[3] (3d ed. 2010) ("[T]he prevailing party is the party in whose favor judgment was entered, even if that judgment does not fully vindicate the litigant's position in the case.").²

Hacienda points to Johnson v. Big Lots Stores, Inc., 639 F.Supp.2d 696 (E.D.La.2009), to support its argument that it and Tempest could both be prevailing parties. Johnson involved a FLSA collective action. The defendant, Big Lots, won decertification. Forty-two former collective-action members had their claims dismissed with prejudice under Rule 41. Three proceeded to a bench trial, and two were awarded damages for FLSA violations. The other plaintiff's claim was dismissed with prejudice under Rule 41. Id. at 700. The district court determined that the two plaintiffs were entitled to prevailing-party status because they won an enforceable...