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Microsoft word - westlaw_document_06_11_07.doc

Slip Copy, 2007 WL 1655647 (E.D.N.Y.)
(Cite as: 2007 WL 1655647 (E.D.N.Y.))
Only the Westlaw citation is currently available.
GARDEN CITY BOXING CLUB, INC., Plaintiff, FOCUSED ENTERPRISES, LTD. d/b/a Brown Sugar Club, and Gregory Jordan, Sr., and No. 06-CV-4874 (FB)(RER).
Paul J. Hooten, Esq. Paul J. Hooten & Associates Mt. Sinai, NY, for the Plaintiff. MEMORANDUM AND ORDER
BLOCK, Senior District Judge.
*1 On May 9, 2007, Magistrate Judge Reyes issued a Report and Recommendation ("R &
R") recommending that a default judgment of $2,825 be entered in favor of
plaintiff, Garden City Boxing Club, Inc. ("Garden City"), and against defendant
Focused Enterprises, Ltd. d/b/a Brown Sugar Club. The R & R recited that "[a]ny
objections to the recommendations made in this report must be filed with the Clerk
of the Court and the Honorable Frederic Block within ten business days of receipt,"
R & R at 8, and that "[f]ailure to file timely objections may waive the right to
appeal the District Court's Order." Id. Garden City's counsel served a copy of the
R & R on May 11, 2007, see Docket Entry # 16 (Certificate of Service), making
objections due by May 31, 2007. See Fed.R.Civ.P. 6. To date, no objections have
been filed.
Where, as here, clear notice has been given of the consequences of failure to
object, and there are no objections, the Court may adopt the R & R without de novo
review. See Thomas v. Arn, 474 U.S. 140, 149-50 (1985); Mario v. P & C Food Mkts.,
Inc., 313 F.3d 758, 766 (2d Cir.2002) ("Where parties receive clear notice of the
consequences, failure timely to object to a magistrate's report and recommendation
operates as a waiver of further judicial review of the magistrate's decision.").
The Court will excuse the failure to object and conduct de novo review if it
appears that the magistrate judge may have committed plain error, see Spence v.
Superintendent, Great Meadow Corr. Facility, 219 F .3d 162, 174 (2d Cir.2000).
As no error appears on the face of the R & R, the Court adopts it without de novo
review; however, the Court declines to direct entry of judgment because Garden
City's claims against defendants Gregory Jordan, Sr., and Judy Jordan-- who have
not been served with the complaint--remain pending. Accordingly, Garden City shall,
within twenty (20) days of the date of this Memorandum and Order, either
voluntarily dismiss its claims against the Jordans pursuant to Federal Rule of
Civil Procedure 41(a)(1), or show cause why those claims should not be dismissed
for failure to perfect service within 120 days of filing the complaint, as required
by Federal Rule of Civil Procedure 4(m).
SO ORDERED.
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655647 (E.D.N.Y.)
(Cite as: 2007 WL 1655647 (E.D.N.Y.))
REPORT & RECOMMENDATION RAMON E. REYES, JR., U.S.M.J.
Plaintiff Garden City Boxing Club, Inc. ("plaintiff" or "Garden City") seeks an
award of damages against defendant Focused Enterprises doing business as Brown
Sugar Club ("defendant" or "Brown Sugar Club") for alleged violations of the
Federal Communications Act of 1934, as amended, 47 U.S.C. §§ 553(a)(1) and 605(a)
("FCA"). See Complaint at ¶ 1. As a result of defendant's failure to answer the
complaint, Garden City moved for default judgment and the Honorable Frederic Block
referred the matter to me for a report and recommendation on the issue of damages.
For the reasons that follow, I respectfully recommend that plaintiff be granted
judgment in the amount of $2,825 against defendant.
I. Background
A. Procedural History
*2 Garden City filed its complaint on September 6, 2006, and claims to have served
Brown Sugar Club on October 20, 2006. [FN1] Docket Entry 2. Almost twelve weeks
later, Brown Sugar Club had not yet responded to the complaint, and Garden City
filed a motion for default judgment. Docket Entry 4. The Clerk noted Brown Sugar
Club's default on February 2, 2007. Docket Entry 6. Judge Block granted the default
judgment against Brown Sugar Club and referred the matter to me for a report and
recommendation on damages and costs. Docket Entry 7. A hearing was held on March
27, 2007, and on that day Garden City submitted a memorandum of law is support of
its request for damages.
FN1. Plaintiff did not submit proof of service on individual defendants Gregory Jordan, Sr. And Judy Jordan. Judge Block granted the default judgment with respect to Brown Sugar Club only. Docket Entry 6. B. Facts Garden City is a California-based corporation that obtains licenses to distribute pay-perview events to commercial establishments. Complaint ¶¶ 4, 8- 9. As part of its business, Garden City enters into sublicensing agreements with various commercial establishments to allow them to exhibit certain broadcast events to their patrons via closed circuit television and encrypted satellite signal. Complaint ¶¶ 10-11. The particular pay-per-view broadcast at issue in this suit included the "De La Hoya/Hopkins" boxing match of September 18, 2004, and other fights on the undercard that night (the "Event"). Complaint ¶ 8. On September 18, 2004, Willie Murray, Jr. ("Murray") observed the Event being telecast in the Brown Sugar Club. Plaintiff's Memorandum of Law in Support of Request for Judgment by Default ("Pl's Br.") at 3. According to Murray, there were approximately 20 patrons on the premises of Brown Sugar Club. Id. There is no mention of any advertising in or near the establishment. II. Discussion A. Liability Upon the entry of default, a party concedes all well pleaded factual allegations, except those relating to damages. Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655647 (E.D.N.Y.)
(Cite as: 2007 WL 1655647 (E.D.N.Y.))
Corp., 973 F.2d 2155, 158 (2d Cir.1992) (citing Flaks v. Koegel, 504 F.2d 702, 707
(2d Cir .1974); Fed.R.Civ.P. 8(d)). Garden City's complaint establishes defendant's
liability under only one of the statutory provisions cited in the complaint, 47
U.S.C. § 605. [FN2] Section 605 prohibits the unauthorized interception and
publication or divulgence of "any radio communication." See 47 U.S.C. § 605(a).
Because Garden City alleges that the Event was conveyed via satellite transmission,
it has properly pleaded a claim under § 605(a). See Int'l Cablevision v. Sykes, 75
F.3d 123, 131 & n. 5 (section 605(a) applicable to cable theft where intercepted
broadcast originated as a radio transmission); Mama Zee, at *2.
FN2. Plaintiff failed to state a claim under 47 U.S.C. § 553. Section 553 provides that "No person shall intercept or receive . any communications service offered over a cable system, unless specifically authorized." 47 U.S.C. § 553(a)(1). The complaint, however, fails to allege that there was an unauthorized interception of cable signals.
B. Damages
Notwithstanding the default, Garden City must still prove its damages if they are
neither "susceptible of mathematical computation" nor liquidated as a consequence
of the default. Greyhound Exhibitgroup, Inc., 973 F.2d at 158 (citations omitted);
see Fed.R.Civ.P. 55(b)(2). To determine the appropriate amount of damages, courts
have "the discretion to rely on detailed affidavits or documentary evidence in lieu
of an evidentiary hearing." DirecTV, Inc. v. Perrier, 2004 WL 941641, *2 (W.D.N.Y.
March 15, 2004) (citations omitted).
*3 A claimant who has established liability under § 605(a) may elect to recover
either actual damages plus the defendant's profits, if any, or an amount in a
statutorily-defined range. Id. § 605(e)(3)(C)(I). Garden City has elected the
latter. The statutory range for such damages is $1,000 to $10,000 per violation.
See id . The statute commits to the court's discretion the determination of the
specific amount within that range to be awarded. See id.; Mama Zee, 2002 WL
2022522, at *3. In addition, where a violation was "willful" and "for purposes of
direct or indirect commercial advantage or private financial gain," the court can
award up to an additional $100,000 in enhanced damages for each violation of §
605(a).
1. Statutory Damages
In determining the proper amount of statutory damages, a court may consider such
factors as "the pecuniary loss sustained by the victim as a result of the offense,
the financial resources of the defendant, . the financial needs and earning
ability of the defendant . as well as the burden that a damage award would impose
on the defendant relative to the burden alternative relief would impose."
Cablevision Sys. Corp. v. De Palma, No. 87-CV-3528, 1989 WL 8165, at *6 (E.D.N.Y.
Jan. 17, 1989) (quoting Cablevision Sys. Dev. Co. v. Cohen, No. 84-CV-1155, slip.
op. at 4-5 (E.D.N.Y. May 20, 1988)).
Some courts have awarded flat amounts when calculating damages. See Home Box
Office v. Champs of New Haven, 837 F.Supp. 480, 484 (D.Conn.1993) (awarding $10,000
in statutory damages); Kingvision Pay-Per-View Ltd. v. Brito, No. 05 Civ. 1042,
2006 WL 728408, at *2 (S.D.N.Y. Mar. 20, 2006) (awarding $5,000 in statutory
damages); Kingvision Pay-Per-View, Ltd. v. Ruiz, No. 04 Civ. 6566, 2005 WL589403,
at *2-3 (S.D.N.Y. Mar. 9, 2005) (awarding $5,000 in statutory damages). Other
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655647 (E.D.N.Y.)
(Cite as: 2007 WL 1655647 (E.D.N.Y.))
courts have assessed damages by multiplying the number of patrons who viewed the
event by the amount an individual would pay to view the program at home on a pay-
per-view channel. See Time Warner Cable of New York City v. Taco Rapido Rest., 988
F.Supp. 107, 111 (E.D.N.Y.1997) (awarding statutory damages of $50 per patron);
Cablevision Systems Corp. v. 45 Midland Enterprises, 858 F.Supp. 42, 45
(S.D.N.Y.1994) (same).
Plaintiff seeks the maximum statutory damage award of $10,000. Pl's Br. at 14. I
find that such an award is disproportionate to the violation of the statute at
issue here. Plaintiff has failed to submit any evidence regarding the amount it
would have cost defendant to legally exhibit the Event. However, in a case
involving similar facts plaintiff alleged it would have cost the defendant $600 to
exhibit the Event in a commercial establishment with approximately 60 patrons. See
Garden City Boxing Club, Inc. v. 704 Nostrand Corp., No. 06 CV 4875(CBA)(RER)
(February 5, 2007). I find that an award of $2,000 in statutory damages is
appropriate. This amount takes into account the pecuniary loss of plaintiff--$600--
and the financial resources, needs, and earning ability of the defendant, as well
as the burden that a greater damage award would impose on the defendant. Given the
default, while there is little information in the record to assess defendant's
financial circumstances, I am sure that the defendant does not have the financial
ability to afford a higher statutory damage award. This amount, while slightly
less, is in line with other statutory damage awards I have recommended and other
courts have awarded.
2. Enhanced Damages
*4 Garden City also seeks enhanced damages of $20,000 on the ground that the
violation was committed "willfully and for purposes of direct or indirect
commercial advantage or private financial gain." 47 U.S.C. § 605(e)(3)(C)(ii); Pl's
Br. at 17. It appears to base this assertion not on any evidence, but rather on the
theory that the Brown Sugar Club could not have managed to display the Event
without some affirmative act, and that it exhibited the Event with the "purpose and
intent . to secure a private financial gain." Pl's Br. at 16.
As a threshold matter, Garden City's assertion that the violation was willful is
not established by virtue of the default, because willfulness is an issue of
damages only, not liability. See J & J Sports Productions, Inc. v. Louisias, No.
06-CV-339 (ERK)(RER), 2006 WL 1662608, at *4 & n. 6 (E.D.N.Y. May 16, 2006).
Moreover, as I have pointed out in another case involving a similarly situated
plaintiff:
[w]hile plaintiff alleges that defendants could only receive the Event through illegal means, this Court is not so convinced. In other cases involving this plaintiff and others, counsel has admitted that, not infrequently, cable and satellite television providers knowingly connect commercial establishments to cable service and then bill them at residential rates without any affirmatively misleading conduct from the establishments themselves. Thus, it is quite possible that these defendants signed up for cable television legitimately, and through no fault of their own, were charged a residential, as opposed to commercial, rate. Id. at * 4 (emphasis added). Further, while in some cases involving restaurants or lounges courts have awarded enhanced damages based on the suspected increase in patrons and sales of food and beverages because of the unauthorized exhibition of a boxing event, the same logic does not follow in this case. Plaintiff has not submitted an affidavit by Murray 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655647 (E.D.N.Y.)
(Cite as: 2007 WL 1655647 (E.D.N.Y.))
and thus the Court has no basis to conclude that defendant secured any financial
gain from the unlawful exhibition of the Event by charging a cover fee, or selling
food or beverages. Thus, there is no evidence that defendant made any money as a
result of exhibiting the Event, much less enough money to justify an enhanced
damages award of $20,000.
In any event, I believe an award of enhanced damages is unnecessary as the
statutory damage award of $2,000 will sufficiently punish defendant and deter it,
and others, from engaging in such conduct in the future.
C. Attorneys' Fees and Costs
The FCA mandates the award of reasonable attorneys' fees and costs to a prevailing
party. See 47 U.S.C. § 605(e)(3)(B)(iii). A request for attorneys' fees must be
supported by "contemporaneous time records that show 'for each attorney, the date,
the hours expended, and the nature of the work done.' " DirectTV v. Meinecke, No.
03 Civ. 3731(JGK)(GWG), 2004 WL 1535578, at *4. (S.D.N.Y. July 9, 2004) (citing New
York Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1147 (2d
Cir.1983)). In support of its request for attorneys' fees, Garden City has
submitted an affidavit from counsel setting forth the hours expended and rates
charged by counsel.
*5 Plaintiff's counsel asserts he spent 6.25 hours on this case (4.25 attorney
hours and 2 paralegal hours) during the pendency of this action. Attorney's
Affidavit of Costs and Fees ("Atty's Aff.") ¶ 4. The amount of time counsel claims
to have spent, while not large, is too great for work that consists of submissions
of boilerplate forms. Therefore, I respectfully recommend that counsel's fees be
reduced by half. The hourly rates charged by counsel--$200 per hour for counsel and
$75 per hour for a paralegal--seem reasonable and in line with the rates charged
for comparable work in this area. See, e.g., Garden City Boxing Club, Inc. v.
Rosado, No. 05 CV 1037, 2005 WL 3018704, at *6 (E.D.N.Y. October 6, 2005).
Accordingly, I respectfully recommend that counsel be awarded $500 in attorney's
fees.
I also recommend that Garden City be awarded $350 in costs for bringing this
action. See, e.g., Louisas, 2006 WL 1662608, at *6. [FN3]
FN3. Without explanation plaintiff also seeks an award of $4,500 in interest (at 9%) from September 18, 2004. See Atty's Aff. ¶ 5. Putting aside that there is no discussion of why plaintiff is entitled to interest of this amount, I note that pre-judgment interest is not recoverable under § 605(a). See Kingvision Pay-Per-View, Ltd. v. Autar, 426 F.Supp.2d 59, 65 (E.D.N.Y.2006). Accordingly, I recommend that plaintiff's request for interest be denied.
III. Recommendation
For the reasons set forth above, I respectfully recommend that the Court grant
Garden City damages in the amount of $2,850. Any objections to the recommendations
made in this Report must be filed with the Clerk of the Court and the Honorable
Frederic Block within ten business days of receipt hereof. Failure to file timely
objections may waive the right to appeal the District Court's Order. See 28 U.S.C.
§ 636(b)(1); FED. R. CIV. P. 6(a), 6(e), 72; Small v. Secretary of Health & Human
Servs., 892 F.2d 15, 16 (2d Cir.1989). Plaintiff is hereby directed to serve copies
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655647 (E.D.N.Y.)
(Cite as: 2007 WL 1655647 (E.D.N.Y.))
of this Report and Recommendation upon defendant by May 15, 2007 at its last known
address, and to file proof of service with the Clerk of the Court.
Slip Copy, 2007 WL 1655647 (E.D.N.Y.)
END OF DOCUMENT
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
Only the Westlaw citation is currently available.
In re INSURANCE BROKERAGE ANTITRUST LITIGATION. MDL Docket No. 1663.
Civ. No. 04-5184 GEB.
MEMORANDUM OPINION
BROWN, Chief Judge.
*1 This matter comes before the Court upon the motion of Class Counsel for an
award of attorneys fees, reimbursement of expenses and incentive award payments in
connection with a settlement reached with defendant Zurich Financial Services,
Zurich American Insurance Company, Steadfast Insurance Company, Fidelity and
Deposit Company of Maryland, Empire Fire and Marine Insurance Company, American
Guarantee and Liability Insurance Company, Empire Indemnity Insurance Company, and
Assurance Company of America (collectively, the "Zurich Defendants"). The Court has
reviewed and fully considered the parties' submissions and has decided the motion
without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the
reasons set forth below, Class Counsel's motion for an award of attorneys fees,
reimbursement of expenses and incentive award payments is granted.
I. BACKGROUND
This MDL docket involves various class actions filed against various insurance
brokers and insurers. In August 2005, the Zurich Defendants were added to the class
actions as defendants. The class actions allege violations of federal and state
antitrust laws, the Racketeer Influenced and Corrupt Organizations Act ("RICO") and
common law. These class actions have been consolidated into the present action. On
October 14, 2005, the Zurich Defendants and Plaintiffs entered into a Memorandum of
Understanding (the "MOU") setting forth the principal terms of a settlement of the
action. The MOU provided for a resolution of all claims for the class period of
August 26, 1994 through September 1, 2005, as well as for the creation of a
settlement fund of $100,000,000 payable to Settlement Class Members. The MOU was
contingent upon several events, including successful resolution of the Governmental
Investigations and successful negotiation and execution of a stipulation of
settlement by the Zurich Defendants and Plaintiffs.
Through the Settlement Agreement and the Multi-State Agreement, Zurich Defendants
created a $121,800,000 settlement fund. The Settlement Agreement requires the
Zurich Defendants to pay $100,000,000 to policyholders who fall within the
definition of the Settlement Class. However, some of the potential Settlement Class
Members (those identified in the Three-State Agreement) might receive settlement
relief under the Three-State Agreement rather than under the Settlement Agreement.
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
Therefore, the Settlement Agreement provides that the Zurich Defendants would
initially fund the class action settlement in the amount of $70,100,000 and would
be required to fund the balance of the $100,000,000 settlement amount
(i.e.$29,900,000) only if the Zurich Defendants failed to distribute at least that
amount to policyholders (all of whom fall within the definition of the Settlement
Class) pursuant to the Three-State Agreement. The Zurich Defendants have committed
to pay $29,900,000 to policyholders (all of whom would otherwise be Settlement
Class Members) under the Three-State Agreement. The Multi-State Agreement requires
the Zurich Defendants to create a $51,700,000 settlement fund that will be
distributed in conjunction with the fund created under the Settlement Agreement.
Thus, the Zurich Defendants will create a settlement fund pursuant to the
Settlement Agreement and Multi-State Agreement in the amount of $121,800,000 and
have committed to pay $29,900,000 to policyholders who fall within the definition
of Settlement Class, but who have elected to receive relief pursuant to the Three-
State Agreement rather than under the Settlement Agreement.
*2 On November 8, 2006, the Court entered an Order preliminarily approving the
Zurich Settlement. The Zurich Defendants filed a motion for final approval of the
class action settlement on January 22, 2007. On January 23, 2007, Plaintiffs filed
a motion for final approval of the Settlement and Class Counsel filed the current
motion for fees in connection with the Settlement reached with the Zurich
Defendants (hereinafter, "Settlement"). A fairness hearing was held on January 26,
2007. On February 16, 2007, this Court approved the class action settlement between
Class Counsel and the Zurich Defendants. The Court did not address Class Counsel's
motion for fees, but will do so at this time.
In addition to and separate from the Settlement Fund, the Zurich Defendants have
agreed to pay $29,950,000 for attorneys' fees, expense reimbursement and incentive
awards for the named plaintiffs. If approved by the Court, these payments will not
diminish the Settlement Fund. The total common fund recovery to the Settlement
Class is no less than $129,950,000. [FN1] Through July 31, 2006 (the month the
Settlement Agreement was reached), Class Counsel contends that they expended nearly
200,000 hours litigating the action with a lodestar amount in excess of $73
million. [FN2] Class Counsel claims that these hours were comprised of professional
services rendered by over fifty law firms, including the services of over six
hundred attorneys and paralegals. Class Counsel also claims that over seventy
attorneys and paralegals expended more than one thousand hours each by July 31,
2006. Class Counsel explains that there are twenty-six defendant groups in the
commercial action (each group comprised of as many as seventeen individually named
subsidiaries or member companies), which are represented by over forty defense
firms. Class Counsel also submits that one hundred-fifty attorneys performed
services for the Defendants. Class Counsel notes that they engaged in litigation
with a number of law firms representing third parties.
FN1. According to Class Counsel, this amount excludes the millions of dollars paid and to be paid by the Zurich Defendants for the costs of Notice and Settlement Administration and interest of over $750,000, which has already been earned on the Settlement Fund. FN2. Since July 31, 2006, Class Counsel contends that they have expended nearly an additional 100,000 hours of time litigating this matter as part of their ongoing litigation against the Non-Settling Defendants as well as certain confirmatory discovery and settlement related work as to Zurich. This resulted in an additional lodestar of $28,551,415. However, the Court notes 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
that "[a]ttorney time spent on the case post-settlement . is not included in the lodestar calculation and is not subject to adjustments for risk or quality." Dekro v. Stern Bros. & Co., 571 F.Supp. 97, 106 (W.D .Mo.1983). Thus, the Court will utilize July 31, 2006 as the cut-off date for performing the lodestar cross-check. See, infra Section D. Class Counsel claims that they have not received any compensation for the work they have done for over two years while litigating the Settlement Class' claims. Through July 31, 2006, Class Counsel advanced just under $4 million in out-of-pocket expenses. Class Counsel claims that the "requested fee award amounts to a negative risk multiplier." Pl.'s Br. at 3 (citing Nichols v. SmithKline Beecham Corp., No. 00-6222, U.S. Dist. LEXIS 7061 (E.D.Pa. Apr. 22, 2005) (multiplier of over 3.15 awarded to class counsel)). Class Counsel submits that while millions of settlement notices were mailed out in connection with the Zurich Settlement and the notice was also published in over fifty newspapers and industry magazines, only eight objections were filed opposing the fee petition. [FN3] According to Class Counsel, the fee petition seeks an award which is at most 23% of the minimum recovery attributable to their efforts. Class Counsel asks this Court to apply the awards as follows: $3,957,000 for reimbursement of litigation expenses; $150,000 for payment of incentive awards to fifteen Plaintiffs; and $25,803,000 for attorneys fees incurred in the prosecution of this litigation. Class Counsel contend that upon subtraction of the reimbursement of expenses and incentive awards, Class Counsel's fee would amount to 19.9% of the minimum recovery attributable to the efforts of Class Counsel.
*3 In response to this motion for fees, several objections were filed by various
parties. [FN4] The crux of the Objectors' arguments can be summarized into a few
points, namely, that: (1) the value of benefits to class members is lower than
stated by Class Counsel based on the participation of several attorneys general;
(2) Class Counsel's fee request is based on time spent on non-Zurich Settlement
related matters; (3) Class Counsel has violated its gatekeeper function; (4) the
fees are exorbitant; and (5) the $10,000 class representative fee is too high.
FN4. In response to the motion for final approval of the Zurich Settlement, the following Objectors submitted objections regarding attorneys fees: Romero General Construction Corp.; Scott Schmelter and Freedom Rent-A-Car; Iaad O. Trustee of 8 Pacific Street Trust and Zorkess, LLC; Anderson Excavating Company; William J. Ackers, Esq., Harold B. Wolfe, The Chaba Law Group, LLC; Dan C.D. Sturdevant; Shapiro & Lodwick Co. LPA, Sports & Spine Physical Therapy Inc., Irene Pekoe, Hoffman Legal Group, LLC, Lacy Redd and Sir and Cross; and Harold Folsom Jensen, Palomar Grading and Paving, Inc., and Emerald Financial Group, Inc. ("Kennedy Objectors"). In response to the present motion for attorneys fees, four new objections were submitted by: Van Enterprises, Inc.; Dan C.D. Sturdevant; Iaad O. Inc., Trustee of 8 Pacific Trust and Zorkess LLC; and Shapiro & Lodwick Co. LPA, et al.
II. DISCUSSION
A. Standard for Judicial Approval of Fees
Class Counsel seeks approval of its application for attorneys' fees and expenses
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
in the amount of $29,950,000, which represents 23% of the combination of the
$100,000,000 created by the MOU and the Settlement Agreement and the $29,950,000
for fees and expenses (that the Zurich Defendants must pay separately). The
awarding of fees is within the discretion of the court, so long as the court
employs the proper legal standards, follows the proper procedures, and makes
findings of facts that are not clearly erroneous. In re Cendant Corp. PRIDES
Litig., 243 F.3d 722, 727 (3d Cir.2001).
District courts are given great deference in determining whether a request for
attorneys' fees should be granted. Notwithstanding this deferential standard, a
district court is required to clearly articulate the reasons which support its
conclusion. In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 301 (3d Cir.2005). The
Third Circuit identified several factors that a district court should consider.
These factors include:
(1) the size of the fund created and the number of persons benefitted; (2) the presence or absence of substantial objections by members of the class to the settlement terms and/or fees requested by counsel; (3) the skill and efficiency of the attorneys involved; (4) the complexity and duration of the litigation; (5) the risk of nonpayment; (6) the amount of time devoted to the case by plaintiff's counsel; and (7) the awards in similar cases. Rite Aid, 396 F.3d at 301 (citing Gunter v. Ridgewood Energy Corp., 223 F.3d 190,
195 n. 1 (3d Cir.2000)). The district court need not apply these fee award factors
in a formulaic way. Certain factors may be afforded more weight than others. Rite
Aid, 396 F.3d at 301. The Third Circuit emphasized in Rite Aid, however, that the
district court must engage in a robust assessment of these factors. Rite Aid, 396
F.3d at 302; see also Gunter, 223 F.3d at 196 (vacating district court's ruling
because the fee-award issue was resolved in a "cursory and conclusory" fashion).
Although this Settlement is not strictly a common fund, Class Counsel contends
that where defendants have agreed to pay an amount certain for fees and costs in
addition to the amount designated to go to the class members directly, the analysis
is analogous to that performed to the common fund doctrine. See Varacallo v.
Massachusetts Mutual Life Ins. Co., 226 F.R.D. 207, 249 (D.N.J.2005). "Relevant law
evidences two basic methods for evaluating the reasonableness of a particular
attorneys' fee request--the lodestar approach and the percentage-of-recovery
approach. Each has distinct attributes suiting it to particular types of cases."
Id. (citing In re Prudential Ins. Co. of America Sales Practices Litig. (Prudential
I), 962 F.Supp. 450, 478 (D.N.J.1997). The percentage-of-recovery method is used in
common fund cases as Courts have determined that "class members would be unjustly
enriched if they did not adequately compensate counsel responsible for generating
the fund." Varacallo, 226 F.R.D. at 249 (quoting In re AremisSoft Corp. Sec.
Litig., 210 F.R.D. 109, 128 (D.N.J.2002)). "While either the lodestar or
percentage-of-recovery method should ordinarily serve as the primary basis for
determining the fee, the Third Circuit has instructed that it is sensible to use
the alternative method to double check the reasonableness of the fee." Varacallo,
226 F.R.D. at 249 (Prudential I, 962 F.Supp. at 478).
B. Zurich's Agreement to Pay Attorneys Fees, Expenses and Incentive Awards
*4 At the outset, Class Counsel notes that the Zurich Defendants have agreed to
pay the requested attorneys' fees in addition to the Settlement Fund. Class Counsel
submits that Plaintiffs had claims against the Zurich Defendants for statutory
attorneys' fees and costs under the antitrust laws (15 U.S.C. § 15) [FN5] and
RICO. Class Counsel claims that this means without the Settlement, if they were
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
successful on the merits, they would have had a significant claim to attorneys'
fees against the Zurich Defendants. Class Counsel contends that they commenced
negotiations with the Zurich Defendants for payment of attorneys fees after the
consideration to the Settlement Class was agreed upon.
FN5. "[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefore . shall recover threefold the damages by him sustained, and the cost of suit, including reasonable attorney's fee ."
C. Relevant Factors
The Court finds that the totality of the Gunter factors weighs strongly in favor
of approval of the fee award for the same reasons provided in this Court's previous
analysis of the Girsch factors. [FN6] Given the similarity and overlap of the
Girsch factors with the factors the Court must consider here, the Court
incorporates by reference the reasons given for approval of the Settlement. The
Court will now discuss additional reasons that support approval of attorneys' fees
in this matter.
FN6. See Court's Memorandum Opinion, filed February 16, 2007 [Docket No. 1004], at 8-21. In Girsh, the Third Circuit identified nine factors that a district court should consider when determining whether a proposed class action settlement warrants approval. Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir.1975). These factors include: (1) "the complexity, expense and likely duration of the litigation"; (2) "the reaction of the class to the settlement"; (3) "the stage of the proceedings and the amount of discovery completed"; (4) "the risks of establishing liability"; (5) "the risks of establishing damages"; (6) "the risks of maintaining the class action through the trial"; (7) "the ability of the defendants to withstand a greater judgment"; (8) "the range of reasonableness of the settlement fund in light of the best possible recovery"; (9) "the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation." Id. at 157.
1. Size of the Fund Created and Number of Persons Benefitted
With regard to the size and nature of the common fund and the number of persons
benefitted by the Settlement, Class Counsel were able to obtain a sizeable result,
$121,800,000, on behalf of the Class despite the risks they faced in establishing
liability. Further, the number of persons benefitting from this award is expected
to be large considering the Notices of Settlement were sent to millions of
Settlement Class Members. This award will not be reduced by attorneys' fees and
expenses. This factor weighs in favor of approval.
2. Presence or Absence of Substantial Objections by Members of the Class to
Settlement Terms and/or Fees Requested by Counsel
First, the absence of substantial objections by class members to the fees
requested by Class Counsel strongly supports approval. The Objectors contend that:
(1) the value of benefits to class members is lower than stated by Class Counsel
based on the participation of several attorneys general; (2) that Class Counsel's
fee request is based on time spent on non-Zurich Settlement related matters; (3)
Class Counsel has violated its gatekeeper function; (4) the fees are exorbitant;
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
and (5) the $10,000 class representative fee is too high.
The majority of the objectors oppose the attorneys' fees because they claim that
the requested fee is based on an exaggeration of the benefits secured by Class
Counsel. For example, one Objector claims that Class Counsel achieved the first
$100 million of the Settlement which will total approximately $210 million
($121,800,000 under the Multi-State and Zurich settlements plus $88 million under
the Three-State Agreement). Iaad O Inc. Obj. [Docket No. 1035], at 2. The Objectors
contend that the attorneys general achieved an additional $110 million above the
$100 million contained in the MOU, and Class Counsel were forced to cede
$29,900,000 to the Three-State Settlement to make the overall agreement work. The
Objectors submit that Class Counsel is only entitled to take credit for $70 million
of the overall settlement, as they claim the Notice states that Zurich agreed to
pay $51.7 million as part of the settlement with the attorneys general and that
amount was added to the $70 million Class Counsel obtained. [FN7] Id. The Objectors
also claim that it is "reversible error" to base an attorney's fee award to class
counsel on settlement benefits created by governmental agencies. Iaad O Inc. Obj.
[Docket No. 1035], at 3; In re Prudential Ins. Co. America Sales Practice Litig.,
148 F.3d 283, 338 (3d Cir.1998).
FN7. Other objectors make similar arguments regarding the percentage of the Settlement that Class Counsel may receive credit for negotiating-ranging from $30 to 70 million. See, e.g. Shapiro Objection [Docket No. 1039]; Dan C.D. Sturdevant Objection [Docket No. 1033]; Iaad O Inc. Objection [Docket No. 1035].
*5 In response to this objection, Class Counsel explains that the Objectors
misunderstand the Settlement's economics and misrepresent the negotiation history.
According to Class Counsel, the Zurich Defendants executed the MOU with the Class
Plaintiffs on October 14, 2005, which was seven months before Zurich settled with
the attorneys general and other regulators in March 2006. Pl.'s Reply Br ., at 3-4.
Class Counsel also points out that the MOU with Zurich was "contingent upon several
events, including successful resolution of the Governmental Investigations." Id.
Class Counsel maintains that it was a requirement under the MOU negotiated and
entered into by Class Counsel that Zurich settle with the attorneys general. Class
Counsel contends that it based its fee request on the $100,000,000 guaranteed to
Class Members plus the $29,950,000 in separate fees and expenses payable directly
by Zurich under the settlement, or 23% of the entire settlement amount. Class
Counsel claims that it is not taking credit for the additional $58,100,000 that
Zurich will pay under the Three-State Agreement or the $51,700,000 Zurich will pay
under the Multi-State Agreement. Because no portion of their fee is based upon
benefits created by governmental agencies, Class Counsel contends that it does not
violate In re Prudential Ins. Co. Am. Sales Practice Litig. as alleged by the
Objectors.
Based on details of the Settlement Agreements, it does not appear that Class
Counsel has run afoul of this Circuit's prohibition of collecting fees based on the
work of governmental agencies. Accordingly, this objection does not persuade this
Court to make a downward adjustment of the attorneys' fees or reject the negotiated
amount requested by Class Counsel.
The next objection set forth is that Class Counsel should not recover fees for its
work on non-Zurich-related issues. Objectors cite to case law involving a 42 U.S.C.
§ 1988 claim, under which plaintiff had to be the prevailing party to recover
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
attorney's fees. See Iaad O Inc.Obj., at 5-6 (citing Hensley v. Eckerhart, 461 U.S.
424, 439 (1983)). In Hensley, the Court stated that "the hours spent on the
unsuccessful claims should be excluded in considering the amount of a reasonable
fee." Id. at 439. However, Hensley also stood for the proposition that "[t]he
congressional intent to limit awards to prevailing parties requires that these
unrelated claims be treated as if they had been raised in separate lawsuits, and
therefore no fee may be awarded for services on the unsuccessful claim." Id. at
435. The Court in Hensley found that there are situations where "the plaintiff's
claims for relief will involve a common core of facts or will be based on related
legal theories" and that "[m]uch of counsel's time will be devoted generally to the
litigation as a whole, making it difficult to divide the hours expended on a claim-
by-claim basis." Id. Accordingly, the Court is not persuaded that Class Counsel
must segregate the time spent on the Zurich Settlement from the time spent on
litigating other related claims. See also In re Worldcom, Inc. Sec. Litig., No. 02-
3288, 2004 U.S. Dist. LEXIS 22992, *78-79 (S.D.N.Y. Nov. 16, 2004).
*6 Objectors also contend that Class Counsel has failed to perform its gatekeeper
function by including the claimed lodestars of forty-four law firms without any
evidence that most of that time contributed anything to the Zurich Settlement. The
Objectors generally suggest that the fees are excessive, and that documentation
should be provided to substantiate the award. The Objectors question the work
performed by these law firms and whether the work actually benefitted the class.
Objectors ask this Court to closely scrutinize Class Counsel's time records. Class
Counsel responds to this objection by stating that fee requests should not be
converted into full-blown trials, and that it is within the Court's discretion to
review time records where fees are based on a percentage of the recovery rather
than a lodestar calculation. Class Counsel contends that it has reviewed every
Class Counsel firm's detailed billing record and specifically established controls
in this action to minimize the amount of time billed to the case and effectively
coordinate all Class Counsel so as to prevent unnecessary work and duplication of
efforts. Class Counsel also claims that since the requested fee amount is no more
than a fraction of the total lodestar and the fee is being paid separately from the
settlement fund, the Class will not be harmed by approval of this fee.
The Objectors also contend that the requested fees are exorbitant based on the
anticipated benefit provided to the class and the amount of work performed by Class
Counsel. The Objectors attempt to re-calculate and reduce the amount actually
recovered for Plaintiffs by Class Counsel. As stated above, this Court concluded
that there is no basis to reduce the recovery amount as attributable to a
governmental agency. The Objector's arguments that the fee percentages are too high
based on a reduced amount and that Class Counsel violated it gatekeeping function
are not persuasive. With respect to the class representative fee, the Objectors
claim that the $10,000 fee is too high. The Objectors contend that because of the
variable nature of the benefits to the class and the amount of work performed by
various levels of state governments, this fee is exorbitant. However, the Objectors
fail to put forth any authority to support this argument, and this Court is not
persuaded.
Accordingly, the Court concludes that based on the small number of objections to
the attorneys' fees and the above analysis of the merits of those objections, this
factor does not weigh against approving this fee application.
3. Skill and Efficiency of Attorneys
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
The factor concerning the skill and efficiency of the attorneys prosecuting the
action also favors approval of the fee award. Class Counsel are highly skilled
attorneys with experience in antitrust, class actions and RICO litigation. The
substantial Settlement amount negotiated by Class Counsel further evidences their
competence. In re Warfarin Sodium Antitrust Litig, 212 F.R.D. 231, 261
(D.Del.2002)(class counsel "showed their effectiveness . through the favorable
cash settlement they were able to obtain"). Moreover, the Zurich Defendants were
represented by highly skilled attorneys from a prominent firm with experience in
these matters. In re Warner Communications Sec. Litig., 618 F.Supp. 735, 749
(S.D.N.Y.1985)("The quality of opposing counsel is also important in evaluating the
quality of plaintiffs' counsel's work.").
4. The Complexity and Duration of the Litigation
*7 As noted in the Court's previous Opinion approving the Settlement, this factor
weighs strongly in favor of approval. This action involves federal and state
antitrust laws, RICO and common law. An antitrust action is clearly a complex
action to prosecute. In re Linerboard Litig., MDL 1261, 2004 U.S. Dist. LEXIS
10532, *34 (E.D. Pa. June 2, 2004). The claims involve alleged conspiracy
violations by dozens of large brokerage and insurance companies with highly complex
legal and factual issues. Class Counsel have engaged in extensive discovery and
motion practice, and while negotiating with the Zurich Defendants also coordinated
their efforts with the Settling Attorneys General and Settling Insurance
Regulators. To proceed with litigation of this matter would have undoubtedly become
a costly and lengthy process for all parties. See In re Warfarin Sodium Antitrust
Litig., 391F.3d 516, 535-36 (3d Cir.2004).
5. The Risk of Non-Payment
Class Counsel submits that they undertook this action on a contingent fee basis,
assuming a substantial risk that they might not be compensated for their efforts.
Class Counsel contends that courts recognize the risk of non-payment is a major
factor in considering an award of attorneys' fees. In re Prudential-Bache Energy
Income P'ships Sec. Litig., No. 888, 1994 U.S. Dist. LEXIS 6621, *16 (E.D.La. May
18, 1994) (stating that "[c]ounsel's contingent fee risk is an important factor in
determining the fee award. Success is never guaranteed and counsel faced serious
risks since both trial and judicial review are unpredictable."). Class Counsel
invested a substantial amount of time and effort to reach this point and obtain the
favorable Settlement. Class Counsel accepted the responsibility of prosecuting this
class action on a contingent fee basis and without any guarantee of success or
award. Accordingly, this factor weighs in favor of approval.
6. The Amount of Time Devoted to the Litigation
Class Counsel claims that they have devoted a tremendous amount of time to
litigate this action. Specifically, Class Counsel submits that through July 31,
2006, they spent nearly 200,000 hours in prosecuting this case on behalf of the
Settlement Class for an aggregate lodestar of nearly $74,000,000 and have incurred
nearly $4,000,000 in expenses. Over fifty law firms were involved on behalf of
Plaintiffs, with the work allocated to specific firms to avoid duplication and deal
with specific areas of the litigation. Class Counsel maintains that this Settlement
is with one of twenty-six Defendant groups in this action, and litigation continues
against the Non-Settling Defendant groups. Based on the amount of time expended on
this matter and the number of attorneys involved in the negotiation and ongoing
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
litigation, this factor weighs in favor of approval.
7. Awards in Similar Cases
The Court must also take into consideration amounts awarded in similar actions
when approving attorneys' fees. Specifically, the Court must: (1) compare the
actual award requested to other awards in comparable settlements; and (2) ensure
that the award is consistent with what an attorney would have received if the fee
were negotiated on the open market. In re Remeron Direct Purchaser Antitrust
Litig., No. 03-0085, 2005 U.S. Dist. LEXIS 27013, *42-46 (D.N.J. Nov. 9, 2005).
"Courts within the Third Circuit often award fees of 25% to 33 1/3% of the
recovery." Id. at 44 (citing In re Linerboard Antitrust Litig., 2004 U.S. Dist.
LEXIS 10532 (E.D. Pa. June 2, 2004) (approving 30% fee of a $202 million settlement
in an antitrust class action); Rite Aid, 396 F.3d at 306-307 (review of 289
settlements demonstrates "average attorney's fees percentage [of] 31.71% with a
median value that "turns out to be one-third"); In re General Motors Corp. Pick-Up
Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 822 (3d Cir.1995) (in common fund
cases "fee awards have ranged from nineteen percent to forty-five percent of the
settlement fund"); Cullen v. Whitman Medical Corp., 197 F.R.D. 136, 150
(E.D.Pa.2000) ("the award of one-third of the fund for attorneys' fees is
consistent with fee awards in a number of recent decisions within this district");
In re Linerboard Antitrust Litig., 2004 U.S. Dist. LEXIS 10532, *43 (citing with
approval "a recent Federal Judicial Center study that found that in federal class
actions generally median attorney fee awards were in the range of 27 to 30
percent.").
*8 According to Class Counsel, the requested award in this matter is 19.9% (after
deducting expenses and awards to plaintiffs). [FN8] This percentage is within the
range found acceptable in this district.
FN8. Class Counsel also provides that based on the $100,000,000 award to class members plus the $29,950,000 in separate fees and expenses payable directly by Zurich under the Settlement, the percentage of the attorneys' fees is 23%. The second part of this analysis involves whether the requested fee is consistent with a privately negotiated contingent fee in the marketplace. The percentage-of-the-fund method of awarding attorneys' fees in class actions should approximate the fee which would be negotiated if the lawyer were offering the services in the private marketplace. In re Remeron Direct Purchaser Antitrust Litig., 2005 U.S. Dist. LEXIS 27013, * 46. "The object . is to give the lawyer what he would have gotten in the way of a fee in an arm's length negotiation, had one been feasible." In re Continental Illinois Sec. Litig., 962 F.2d 566, 572 (7th Cir.1992); In re Synthroid Marketing Litig., 264 F.3d 712, 718 (7th Cir.2001) ("When deciding on appropriate fee levels in common-fund cases, courts must do their best to award counsel the market price for legal services, in light of the risk of nonpayment and the normal rate of compensation in the market at the time."). To determine the market price for an attorney's services, the Court should look to evidence of negotiated fee arrangements in comparable litigation. Continental Illinois Sec. Litig., 962 F.2d at 573 (stating that the judge must try to simulate the market "by obtaining evidence about the terms of retention in similar suits, which differ only because, as they are not class actions, the market fixes the terms"). "Attorneys regularly contract for contingent fees between 30% and 40% with their clients in non-class, commercial litigation." In re Remeron Direct Purchaser Antitrust Litig., 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
2005 U.S. Dist. LEXIS 27013, * 46. See, e.g. In re Ikon Office Solutions, Inc. 194
F.R.D. 166, 194 (E.D.Pa.2000); In re Orthopedic Bone Screws Products Liability
Litig., No. 97-381, 2000 U.S. Dist. LEXIS 15980, *7 (E.D.Pa. Oct. 23, 2000); Durant
v. Traditional Invest., Ltd., No. 88-9048, 1992 U.S. Dist. LEXIS 12273, *4 n. 7
(S.D.N.Y. Aug. 12, 1992). Accordingly, Class Counsel's requested fee amount is
within the range of privately negotiated contingent fees.
8. Conclusion
In sum, for all the reasons stated above, the Court concludes that the requested
fee by Class Counsel is fair and reasonable according to the Gunter factors.
D. Lodestar Cross-Check
The Third Circuit has articulated that when an award is based on percentage of
recovery, it is sensible to confirm the reasonableness of the award using the
lodestar method. Rite Aid, 396 F.3d at 305-06. The lodestar analysis is performed
by "multiplying the number of hours reasonably worked on a client's case by a
reasonable hourly billing rate for such services based on the given geographical
area, the nature of the services provided, and the experience of the attorneys."
Id. at 305. When performing this analysis, the court "should apply blended billing
rates that approximate the fee structure of all the attorneys who worked on the
matter." Id. at 306. Thus, the lodestar multiplier is equal to the proposed fee
award divided by the product of the total hours and the blended billing rate. If
the lodestar multiplier is large, the award calculated under the percentage-of-
recovery method may be deemed unreasonable, and a trial judge may consider a
reducing the award appropriately. Id. at 306.
*9 The multiplier, however, "need not fall within any pre-defined range, provided
that the [d]istrict [c]ourt's analysis justifies the award." Id. at 307. Further,
the court is not required to engage in this analysis with mathematical precision or
"bean-counting." Id. at 306. Instead, the court may rely on summaries submitted by
the attorneys, and is not required to scrutinize every billing record. Id. at 306-
07.
In the present case, the proposed fee award presented by Lead Counsel is 23% of
the proposed settlement, or $29,950,000. [FN9] Class Counsel submits that the total
number of hours expended by the attorneys and paraprofessionals in this case is
279,843 hours. See Exhibit A to Class Counsel's Br., [Docket No. 942]. The Court
further notes that this lodestar value is based on the blended billing rates of all
attorneys and paraprofessionals who were involved with this case. Accordingly, the
Court accepts these calculations as the basis for performing the lodestar cross-
check.
FN9. Or 19.9% after deducting expenses and awards to plaintiffs. Class Counsel claims that its lodestar through July 31, 2006 (the month in which the Zurich Settlement was reached) was $73,884,807 and $102,396,258 through November 20, 2006. [FN10] Class Counsel submits that this results in a multiplier of .4 or .3, respectively. This multiplier is within an accepted range. See, e.g. In re Cendant Corp. PRIDES Litig., 243 F.3d at 734, 742 (approving a suggested multiplier of 3 and stating that multipliers "ranging from one to four are frequently awarded in common fund cases when the lodestar method is applied"); Nichols, 2005 U.S. Dist. LEXIS 7061 (approving a multiplier of 3.15); In re 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
Linerboard Antitrust Litig., 2004 U.S. Dist. LEXIS 10532 (approving a 2.66
multiplier).
FN10. The Court will rely upon the July 31, 2006 settlement date in performing the lodestar cross-check. See Varacallo v. Mass. Mut. Life Ins. Co., 226 F.R.D. 207, 252 (D.N.J.2005) (fee award will be sole compensation for counsel "despite the continuing responsibilities [counsel] will have in responding to Class Member inquiries, assisting the Claim Evaluator, consulting on individual cases, and any post-judgment proceedings and appeals."); In re Remeron Direct Purchaser Antitrust Litig., 2005 U.S. Dist. LEXIS 27013 (D.N.J.2005) ("Class Counsel will likely incur hundreds of additional hours in connection with administering the settlement, without prospect for further fees.").
The reasonable attorney rate is determined by reference to the marketplace.
Missouri v. Jenkins, 491 U.S. 274, 285 (1989) ("we have consistently looked to the
marketplace as our guide to what is 'reasonable' "). The Third Circuit, as well as
other courts, have held that an attorney's customary billing rate is the proper
starting point for calculating fees. Cunningham v. City of McKeesport, 753 F.2d
262, 268 (3d Cir.1985). However, the Third Circuit has determined that once a party
meets its prima facie burden of establishing the "community market rate," and the
opposing party does not produce contradictory evidence, the trial court does not
have discretion to adjust the requested rate downward. Washington v. Philadelphia
County Court of Common Pleas, 89 F.3d 1031, 1035 (3d Cir.1996).
To establish a market rate, the prevailing party must offer evidence that the
attorney's usual rate is in line with the market rate in the community. Blum v.
Stenson, 465 U.S. 886, 896 n. 11 (1984). This evidence takes the form of affidavits
from other counsel attesting to their rates or the prevailing market rate, Glover
v. Johnson, 934 F.2d 703, 716 (6th Cir.1991), and a court may not vary the rates
competently set forth in uncontested affidavits. Black Grievance Comm. v.
Philadelphia Elec. Co., 802 F.2d 648, 657 (3d Cir.1986) (vacated on other grounds,
483 U .S. 1015 (1987). The market rate to be used is the current prevailing market
rate at the time the request for fees is made. Lanni v. New Jersey, 259 F.3d 146,
149-50 (3d Cir.2001).
*10 While Class Counsel submitted a summary detailing the hours, costs and
lodestar through both July 31, 2006 and November 30, 2006, Class Counsel did not
provide declarations in support of any particular hourly rate. It appears that the
hourly rate being used by Class Counsel is approximately $365. [FN11] The
Objections submitted in the matter take issue with the amount of the Settlement
that Class Counsel negotiated and took credit for, not the reasonableness of the
hourly rate. Therefore, based on the lack of objections and the experience of Class
Counsel, this Court will consider the approximate hourly rate of $365 reasonable.
FN11. The Court arrived at this rate by dividing the total lodestar amounts by the total hours worked. Through November 30, 2006, the total hours worked were 279,843 and the lodestar provided was 102,396,258.15. The result is a rate of $365.90 per hour.
E. Reimbursement of Expenditures
Class Counsel also requests reimbursement for expenses incurred during this
litigation in the amount of $3,956,830 through July 31, 2006 and a total of
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652303 (D.N.J.)
(Cite as: 2007 WL 1652303 (D.N.J.))
$6,143,560 through November 30, 2006. Class Counsel's Br., at 26 and Exh. A.
"Counsel for a class action is entitled to reimbursement of expenses that were
adequately documented and reasonably and appropriately incurred in the prosecution
of the class action." In re Safety Components, Inc. Sec. Litig., 166 F.Supp.2d 72,
108 (D.N.J.2001) (citing Abrams v. Lightolier, Inc., 50 F.3d 1204, 1225 (3d
Cir.1995)). Class Counsel contends that these expenses reflect costs expended for
the purposes of litigating this action, including fees for experts, costs
associated with creating and maintaining electronic document databases, travel and
lodging expenses, copying, mail, telephone and the costs of deposition transcripts.
Class Counsel's Br., at 26-27. The Court concludes that while Class Counsel did not
submit declarations detailing the exact expenditures, based on the summary
provided, these expenses were reasonably and appropriately incurred during the
prosecution of this case. Consequently, the Court approves Class Counsel's request
for reimbursement.
F. Incentive Awards for Named Plaintiffs
Class Counsel also requests that the Court approve the payment of incentive awards
for named plaintiffs in the amount of $10,000 each, totaling $150,000. Class
Counsel contends that the Plaintiffs spent a significant amount of their own time
and expense litigating these cases for the benefit of the absent members of the
Settlement Class, and should be compensated for their efforts. See, e.g. In re
Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369, 400 (D.D.C .2002)
("Incentive awards are 'not uncommon in class action litigation and particularly
where . a common fund has been created for the benefit of the entire class.' ").
Class Counsel claims that the amount requested for the class representatives is
similar to awards in analogous settlements. See, e.g. Nichols, 2005 U.S. Dist.
LEXIS 7061 (approving $5,000 to each third-party payor named plaintiff, $2,500 to
each consumer named plaintiff); In re Linerboard Antitrust Litig., 2004 U.S. Dist.
LEXIS 10532, *58 (approving $25,000 to each representative of the classes).
*11 Only one objection was made to the requested fee, and as discussed above,
lacked any supporting case law or a thorough explanation why this fee should be
considered excessive. Accordingly, this Court will approve the $10,000 payment of
incentive awards for each named Plaintiff, totaling $150,000.
III. CONCLUSION
For the foregoing reasons, the Court grants the application of Class Counsel for
an award of attorneys' fees, reimbursement of expenses and incentive award
payments. The appropriate form of Order accompanies this Memorandum Opinion.
Slip Copy, 2007 WL 1652303 (D.N.J.)
END OF DOCUMENT
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652015 (W.D.Ky.)
(Cite as: 2007 WL 1652015 (W.D.Ky.))
Only the Westlaw citation is currently available.
United States District Court, W.D. Kentucky, Donald Ray LUCAS, All Residents of Vision of Hope, Plaintiffs Robert GLENN, Director Vision of Hope, Defendants. Civil Action No. 3:06CV-530-S.
Donald Ray Lucas, Louisville, KY, pro se. MEMORANDUM OPINION
CHARLES R. SIMPSON, III, Judge.
*1 Plaintiff Donald Ray Lucas filed the instant pro se civil action on his own
behalf and on behalf of all residents of Vision of Hope. As Defendants, he names
Vision of Hope (presumably, a halfway house or some similar facility) and Robert
Glenn, its Director. Plaintiff alleges money fraud, a violation of the First
Amendment, and violations of "constitu[t]ional rights" and "any federal statu[t]es
that go under this."
Plaintiff claims that on June 19, 2006, he was placed in Vision of Hope, and
Robert Glenn gave him a urine test, which was positive. Plaintiff contends that he
tried to explain to Glenn that he does not use drugs, but Glenn cursed him "up and
down" and said Plaintiff was lying. On July 6, 2006, Plaintiff gave Glenn
$1,200.00, and on the next day the lights were turned off. Plaintiff further claims
that upstairs the residents did not have a place to keep food fresh. According to
Plaintiff, Glenn said that he was working on it, but he never did. Plaintiff also
alleges that thieving was going on at the facility, but Glenn never did anything
about that either.
Plaintiff additionally reports that on August 28, 2006, Glenn advised the
residents that Vision of Hope was being shut down and that "the board wasnt letting
him work there no more." Glenn gave Plaintiff a check for $375.00 knowing that he
still owed Plaintiff $225.00. When Plaintiff complained to Glenn about the money
deficit, Glenn told Plaintiff to take it up with the board.
On October 15, 2006, Glenn called Plaintiff about Plaintiff's suing him and cursed
Plaintiff. According to Plaintiff,
[Glenn] always cussed me he also was very rasic with me because I was only white person in the program! they did everything they could to get me to go off! All he ever did was shot game! ever body got hud but me for rent payments and I was on S.S.I. All the staff was black. and I feel they never liked me from the being. but I made it through that hell they put on me! Robert never wanted to talk about nothing when I told him about the prombles going on at Vision of Hope! He crussed me a lot and said all I do is shot game when he was the one shotting game on us! also He dont like white people I'm white! Glenn should be put in jail for all this Fraud lie's and cheating people. since then he talks to everybody but me what's that tell you! but I think [Glenn's] got Hud on me if he did he owe's me $1200.00. 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652015 (W.D.Ky.)
(Cite as: 2007 WL 1652015 (W.D.Ky.))
In addition to seeking Glenn's incarceration, Plaintiff also seeks damages for
mental pain and asks that Glenn "give up the right to be (Dir) in any program!"
Initial Review
Because Plaintiff is proceeding without the prepayment of fees, or in forma
pauperis, this Court must review the complaint pursuant to 28 U.S.C. § 1915(e) and
McGore v. Wrigglesworth, 114 F.3d 601 (6th Cir.1997). Upon review, the Court must
dismiss a case if it determines that the action is frivolous or malicious, fails to
state a claim upon which relief may be granted, or seeks monetary relief from a
defendant who is immune from such relief. 28 U.S.C. § 1915(e)(2)(B). For the
reasons that follow, the Court concludes that the instant action must be dismissed.
All residents of Vision of Hope
*2 Title 28, United States Code, section 1654 provides, "In all courts of the
United States the parties may plead and conduct their own cases personally or by
counsel as, by the rules of such courts, respectively, are permitted to manage."
That statute, however, "does not permit plaintiffs to appear pro se where interests
other than their own are at stake." Shepherd v. Wellman, 313 F .3d 963, 970 (6th
Cir.2002); Gonzales v. Wyatt, 157 F.3d 1016, 1021 (5th Cir.1998) ("[I]n federal
court a party can represent himself or be represented by an attorney, but cannot be
represented by a nonlawyer."); Eagle Assocs. v. Bank of Montreal, 926 F.2d 1305,
1308 (2d Cir.1991) (advising that § 1654 " 'does not allow for unlicensed laymen to
represent anyone else other than themselves' ") (citation omitted). " 'That a non-
lawyer
may not represent another person in court is a venerable common law rule
based on the strong state interest in regulating the practice of law .' " Cavanaugh
v. Cardinal Local Sch. Dist., 409 F.3d 753, 756 (6th Cir.2005) (citation omitted).
For these reasons, Plaintiff, a non-attorney, cannot bring this action on behalf
of all residents of Vision of Hope. Therefore, the claims asserted on behalf of the
other residents will be dismissed without prejudice.
Plaintiff Lucas
Plaintiff alleges money fraud and seeks Glenn's imprisonment. The authority to
initiate a criminal complaint, however, "rests exclusively with state and federal
prosecutors." Sahagian v. Dickey, 646 F.Supp. 1502, 1506 (W.D.Wis.1986); United
States v. Nixon, 418 U.S. 683, 693 (1974) ("[T]he Executive Branch has exclusive
authority and absolute discretion to decide whether to prosecute a case.");
Williams v. Luttrell, No. 03-5950, 2004 WL 1193955, at *2 (6th Cir. May 27, 2004)
("[A]s a private citizen, Williams has no authority to initiate a federal criminal
prosecution of the defendants for their alleged unlawful acts."); Saro v. Brown,
No. 00-5384, 2001 WL 278284, at *1 (6th Cir. Mar. 15, 2001) ("A private citizen has
no authority to initiate a federal criminal prosecution; that power is vested
exclusively in the executive branch."). Accordingly, Plaintiff's money
fraud/imprisonment claims must be dismissed.
Plaintiff further alleges a violation of the First Amendment, yet he has failed to
allege, much less demonstrate, any free speech or free exercise violation
actionable under the First Amendment. Additionally, he asserts a broad violation of
his constitutional rights and federal statutes, but allegations such as these,
which are premised upon mere conclusions and opinions, fail to state an adequate
claim. Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987). Bare and
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1652015 (W.D.Ky.)
(Cite as: 2007 WL 1652015 (W.D.Ky.))
conclusory allegations that Defendants personally deprived Plaintiff of
constitutional or statutory rights are simply insufficient to state a cognizable
claim. Hall v. United States, 704 F.2d 246, 251 (6th Cir.1983).
*3 Even if the Court were to construe Plaintiff's allegations as asserting an
equal protection claim, such a claim would fail. "The Equal Protection Clause of
the Fourteenth Amendment commands that no State shall 'deny to any person within
its jurisdiction the equal protection of the laws,' which is essentially a
direction that all persons similarly situated should be treated alike." City of
Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 439 (1985). Plaintiff claims that
he is white, that all of the staff are black, and that Glenn is a racist. These
facts alone are insufficient to state a cognizable equal protection claim. And the
only allegation made by Plaintiff that he was treated differently than any other
resident is when he claims that "ever body got hud but me for rent payments and I
was on S.S.I." This allegation, however, is simply too conclusory to show any
discriminatory intent or purpose, and there is no causal connection to Glenn or
Vision of Hope. Deaton v. Montgomery County, 989 F.2d 885, 889 (6th Cir.1993)
("Congress did not intend § 1983 liability to attach where causation is absent.").
Moreover, in failing to specify the capacity in which he is suing Defendants,
Plaintiff's claims for damages are barred by the Eleventh Amendment.
Finally, Plaintiff's request for Glenn to give up the right to be director in any
program in the future must also be dismissed. " 'In order to obtain either a
preliminary or permanent injunction, [a party] must demonstrate that failure to
issue the injunction is likely to result in irreparable harm.' " United States v.
Miami Univ., 294 F.3d 797, 816 (6th Cir.2002) (quoting Kallstrom v. City of
Columbus, 136 F.3d 1055, 1068 (6th Cir.1998)) (alteration in Miami Univ.). Because
Plaintiff is no longer housed at Vision of Hope or under the direction of Glenn,
the Court's failure to issue the requested injunctive relief will not result in
irreparable harm.
This Court recognizes that pro se pleadings are to be held to a less stringent
standard than formal pleadings drafted by lawyers, Haines v. Kerner, 404 U.S. 519,
520-21 (1972); Jourdan v. Jabe, 951 F.2d 108, 110 (6th Cir.1991), but "the duty to
be 'less stringent' with pro se complaints does not require us to conjure up unpled
allegations." McDonald v. Hall, 610 F.2d 16, 19 (1st Cir.1979) (citation omitted);
see generally Wells v. Brown, 891 F.2d 591, 594 (6th Cir.1989). And this Court is
not required to create a claim for Plaintiff. Clark v. Nat'l Travelers Life Ins.
Co., 518 F.2d 1167, 1169 (6th Cir.1975). To command otherwise would require this
Court "to explore exhaustively all potential claims of a pro se plaintiff, [and]
would also transform the district court from its legitimate advisory role to the
improper role of an advocate seeking out the strongest arguments and most
successful strategies for a party." Beaudett v. City of Hampton, 775 F.2d 1274,
1278 (4th Cir.1985).
*4 Because Plaintiff Lucas has failed to state a claim upon which relief may be
granted, the claims brought on his behalf must be dismissed.
The Court will enter an Order consistent with this Memorandum Opinion.
Slip Copy, 2007 WL 1652015 (W.D.Ky.)
END OF DOCUMENT
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655666 (E.D.N.Y.)
(Cite as: 2007 WL 1655666 (E.D.N.Y.))
Only the Westlaw citation is currently available.
WARNER BROS. ENTERTAINMENT INC., Plaintiff, No. 06 CV 2676(NG)(RLM).
Alexandra N. Deneve, Loeb & Loeb, LLP, New York, NY, for Plaintiff. ORDER
GERSHON, United States District Judge.
*1 By order dated October 26, 2006, the court granted default judgment in favor of
plaintiff and referred the matter to the Honorable Roanne L. Mann, United States
Magistrate Judge, for a report and recommendation concerning the relief, if any,
that should be granted to the plaintiff. On May 9, 2007, Judge Mann issued a report
and recommendation recommending that the defendant be permanently enjoined from
infringing plaintiff's copyrights and that the plaintiff be awarded $6,000 in
statutory damages, $735 in attorney's fees, and $575.81 in costs. Defendant has not
filed any objections.
The unopposed Report and Recommendation of Magistrate Judge Mann is hereby adopted
by the court. For the reasons stated by Judge Mann, an injunction will be entered
enjoining defendant from infringing plaintiff's copyrights, and defendant is
directed to pay the plaintiff damages in the amount of $6,000, attorney's fees in
the amount of $735, and costs in the amount of $575.81, for a total award of
$7,310.81.
The Clerk of Court is directed to enter judgment against the defendant in the sum
of $7,310.81 and to enter a permanent injunction as follows:
Defendant shall be and is hereby enjoined from directly or indirectly infringing
plaintiff's rights under federal or state law in the copyrighted motion picture
Million Dollar Baby, and any other motion picture, whether now in existence or
later created, that is owned or controlled by plaintiff (or any parent, subsidiary,
or affiliate of parent) ("Plaintiff's Motion Pictures"), including without
limitation by using the Internet or any online media distribution system to
reproduce (i.e., download) any of Plaintiff's Motion Pictures, to distribute (i.e.,
upload) any of Plaintiff's Motion Pictures, or to make any of Plaintiff's Motion
Pictures available for distribution to the public, except pursuant to a lawful
license or with express authority of plaintiff. Defendant also shall destroy all
copies of Plaintiff's Motion Pictures that defendant has downloaded onto any
computer hard drive or server without plaintiff's authorization and shall destroy
all copies of those downloaded recordings transferred onto any physical medium or
device in defendant's possession, custody, or control.
SO ORDERED.
2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655666 (E.D.N.Y.)
(Cite as: 2007 WL 1655666 (E.D.N.Y.))
REPORT AND RECOMMENDATION
ROANNE L. MANN, United States Magistrate Judge. Plaintiff Warner Bros. Entertainment Inc. ("plaintiff") commenced this copyright infringement action on May 30, 2006, against defendant Ralph Carsagno ("Carsagno" or "defendant"). On October 26, 2006, the Honorable Nina Gershon ordered that a default judgment be entered against defendant (who had not appeared in the action) and referred the matter to the undersigned magistrate judge for an inquest on damages. For the reasons explained below, this Court recommends that judgment be entered against defendant in the total amount of $7,310.81, and that defendant be permanently enjoined from infringing plaintiff's copyrights. BACKGROUND
*2 Plaintiff produces, acquires and distributes motion pictures, to which it holds
the United States copyright and exclusive rights under copyright. See Complaint
("Compl.") ¶¶ 4-5. Specifically, plaintiff owns the copyright and exclusive rights
under copyright to the film "Million Dollar Baby" ("MDB"), which film is the
subject of a valid Certificate of Copyright Registration, No. PA-1-250-671, dated
January 27, 2005, issued by the Register of Copyrights. Id. ¶ 8; Declaration of
Alexandra N. DeNeve in Support of Application for Entry of Default Judgment by the
Court ("DeNeve Decl.") Ex. 3. In addition, MDB contains a copyright notice advising
the viewer that the film is protected by copyright law. Compl. ¶ 9.
Plaintiff retained MediaSentry, a company that provides online anti-piracy and
copyright protection services, to identify direct infringers of plaintiff's
copyrights on peer-to-peer ("P2P") networks. See DeNeve Decl. ¶ 3; see also
Declaration of Thomas Carpenter in Support of Application for Entry of Default
Judgment by the Court ("Carpenter Decl.") ¶ 1. Plaintiff provided MediaSentry with
a list of copyrighted motion pictures--including MDB--that it believed were being
offered for distribution on P2P networks. Carpenter Decl. ¶ 4. On June 27, 2005,
MediaSentry identified files on a P2P network [FN1] that lexically matched those
on plaintiff's list, and downloaded MDB from the internet protocol ("IP") address
24.199.66.115. [FN2] DeNeve Decl. ¶ 4; Carpenter Decl. ¶ 5. Based on the IP
address, MediaSentry was able to identify Earthlink, Inc. ("Earthlink") as
defendant's Internet Service Provider. Carpenter Decl. ¶ 8.
FN1. Plaintiff's submissions do not identify the specific P2P network. FN2. An IP address is "a unique numerical identifier that is automatically assigned to a user by his or her [Internet Service Provider] each time he or she logs on to the network." Carpenter Decl. ¶ 8. Plaintiff then filed a John Doe action against defendant in the Northern District of Georgia, the jurisdiction in which Earthlink is located. DeNeve Decl. ¶ 5. The court granted plaintiff's motion for leave to serve a subpoena on Earthlink seeking defendant's identity, which subpoena plaintiff served on Earthlink on August 26, 2005. Id. ¶ 6. Earthlink subsequently identified Carsagno as the individual using the IP address at the time of infringement. Id. ¶ 7. Because Carsagno did not reside within the jurisdiction of the Northern District of Georgia, plaintiff dismissed that suit without prejudice. Id. ¶ 8. Plaintiff's attempts to negotiate an out-of-court settlement with defendant were unsuccessful. Id. Plaintiff commenced the instant action on May 30, 2006. See Compl. As evidenced by 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655666 (E.D.N.Y.)
(Cite as: 2007 WL 1655666 (E.D.N.Y.))
an Affidavit of Service, plaintiff served defendant personally with a copy of the
Summons and Complaint on June 12, 2006. See 6/12/06 Affidavit of Service; see also
DeNeve Decl. ¶ 10. Defendant failed to answer or otherwise respond to the
complaint, and did not reply to correspondence from plaintiff. DeNeve Decl. ¶ 11.
On August 3, 2006, plaintiff filed a request for entry of default with the Clerk of
the Court, and the Clerk noted the default on August 11, 2006. See 8/3/06 Request
to Enter Default; 8/11/06 Clerk's Notation of Default. Thereafter, Judge Gershon
granted plaintiff's motion for default and referred the matter to the undersigned
magistrate judge for a Report and Recommendation to determine the scope of relief
to be awarded, including damages, costs, and attorney's fees, if any. See 10/26/06
Order.
DISCUSSION
I. Statutory Damages
*3 Pursuant to § 504 of the Copyright Act, a plaintiff who prevails on a claim of
copyright infringement may elect to recover, in lieu of actual damages and
defendant's profits, statutory damages in a sum of not less than $750 or more than
$30,000 per work infringed. 17 U.S.C. §§ 504(a), (c)(1); [FN3] see Island Software
& Computer Serv. Inc. v. Microsoft Corp., 413 F.3d 257, 262-63 (2d Cir.2005)
[hereinafter Island Software I ]. Within these parameters, courts have broad
discretion in setting an amount of statutory damages that effectuates the "dual
purposes of the Copyright Act--compensation of copyright owners and deterrence of
potential infringers." Video Aided Instruction, Inc. v. Y & S Express, Inc., No.
96-CV-518 (CBA/RML), 1996 WL 711513, at *3 (E.D.N.Y. Oct. 29, 1996); see also F.W.
Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233 (1952) ("Even for
uninjurious and unprofitable invasions of copyright the court may, if it deems it
just, impose a liability within statutory limits to sanction and vindicate the
statutory policy [of discouraging infringement]."); Island Software I, 413 F.3d at
265 ("[W]ithin the statutory framework, a district judge has wide discretion in
setting the statutory damage award .") (citing Fitzgerald Publ'g Co. v. Baylor
Publ'g Co., 807 F.2d 1110, 1116-17 (2d Cir.1986)). Where a plaintiff proves that
the infringement was willful, the court has further discretion to award enhanced
statutory damages of up to $150,000. 17 U.S.C. § 504(c)(2); [FN4] see Island
Software I, 413 F.3d at 263.
FN3. Section 504(c)(1) provides, in pertinent part: Except as provided by clause (2) of this subsection [dealing with enhanced damages for willfulness and defenses not relevant here], the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. 17 U.S.C. § 504(c)(1). FN4. Section 504(c)(2) provides, in pertinent part: In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. 17 U.S.C. § 504(c)(2). Plaintiff requests damages in the amount of $6,000 for willful infringement of its 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655666 (E.D.N.Y.)
(Cite as: 2007 WL 1655666 (E.D.N.Y.))
exclusive rights under copyright. See Memorandum of Law in Support of Application
for Entry of Default Judgment by the Court ("Pl.Mem.") at 2-4. Plaintiff posits
that this amount is "reasonable and justified under the circumstances of this
case." Id. at 4.
Factors relevant to determining an appropriate award of statutory damages include
"the expenses saved and profits reaped by the defendants, the revenues lost by the
plaintiffs, the value of the copyright, the deterrent effect of the award on other
potential infringers, and factors relating to individual culpability." U2 Home
Entm't, Inc. v. Doe, No. 04-CV-4402 (RJD/JMA), 2005 WL 3018702, at *3 (E.D.N.Y.
Sept. 13, 2005) [hereinafter U2 Home Entm't I ] (quoting Stevens v. Aeonian Press,
Inc., No. 00-CV-6330 (JSM), 2002 WL 31387224, at *1 (S.D.N.Y. Oct. 23, 2002)); see
also N.A.S. Imp., Corp. v. Chenson Enters., Inc., 968 F.2d 250, 252 (2d Cir.1992).
Considerations of individual culpability include the willfulness of the defendant's
conduct, the defendant's cooperation in providing discovery, and the deterrent
potential of the award. See Van Der Zee v. Greenidge, 03-CV-8659 (RLE), 2006 WL
44020, at *2 (S.D.N.Y. Jan. 6, 2006); Stevens, 2002 WL 31387224, at *1.
In connection with the determination of enhanced damages under § 504, the Second
Circuit has defined "willfulness" as the defendant's actual or constructive
knowledge that his or her actions constitute an infringement; thus, "reckless
disregard of the copyright holder's rights . suffices to warrant award of the
enhanced damages." N.A.S Imp., 968 F.2d at 252 (internal quotation marks and
citation omitted); see Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 112 (2d
Cir.2001) ("Willfulness in this context means that the defendant recklessly
disregarded the possibility that its conduct represented infringement. A plaintiff
is not required to show that the defendant had knowledge that its actions
constituted an infringement.") (internal quotation marks and citations omitted).
"[W]illful infringement may . be inferred from [defendant's] failure to appear
and defend the action." Van Der Zee, 2006 WL 44020, at *3; accord Entral Group
Int'l v. Honey Café on 5th, Inc., No. 05-CV-2290 (NGG/MDG), 2006 WL 3694584, at *6
(E.D.N.Y. Dec. 14, 2006).
*4 Plaintiff asserts that at the time of the infringement in this case, MDB was
either still in theatrical release or had not yet been released in home video
format. See Declaration of Lauren Nguyen in Support of Application for Entry of
Default Judgment by the Court ("Nguyen Decl.") ¶ 5; Pl. Mem. at 5. [FN5]
Accordingly, defendant knew or should have known that he was distributing a pirated
copy of the motion picture. Pl. Mem. at 5. Further, given the presence of the
copyright notice on MDB, defendant had at least constructive knowledge, if not
actual knowledge, that the film was copyrighted and that its distribution over the
P2P network violated the Copyright Act. Cf. Castle Rock Entm't v. Carol Publ'g
Group, Inc., 955 F.Supp. 260, 267 (S.D.N.Y.1997). Based on these facts, coupled
with defendant's default, plaintiff has sustained its burden of proving that
defendant willfully infringed plaintiff's copyright, thereby warranting an enhanced
statutory award.
FN5. Although the record does not so reflect, MDB appears to have received its initial DVD release on July 12, 2005. See Million Dollar Baby (2004)--DVD details for, http://www.imdb.com/title/tt0405159/dvd (last visited May 7, 2007). The Court must next determine a just amount of enhanced statutory damages for the infringement at issue. Plaintiff's lost revenues and defendant's profits, if any, 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. Slip Copy, 2007 WL 1655666 (E.D.N.Y.)
(Cite as: 2007 WL 1655666 (E.D.N.Y.))
remain unascertainable as a result of defendant's default and the lack of pretrial
discovery. [FN6] See Video Aided Instruction, 1996 WL 711513, at *4 (awarding
enhanced statutory damages where defendants' profits and plaintiffs' lost revenue
"remain unknown" due to defendants' default). Plaintiff also contends that it
incurs considerable costs in the protection of its property rights against
defendant and other infringers (aside from its legal fees). Pl. Mem. at 8-9.
Plaintiff alleges that its costs "just to get in position to bring a lawsuit such
as this one," which requires retaining an anti-piracy consultant and filing a John
Doe lawsuit to identify the alleged infringers, range from $3,000 to $5,000. Id. at
9; Nguyen Decl. ¶ 11. Accordingly, under these circumstances, plaintiff's request
for $6,000 in statutory damages--well below the enhanced statutory limit of
$150,000--is eminently reasonable. [FN7]
FN6. Plaintiff does allege that evidence suggests that approximately 2.4 million files are exchanged per day on P2P networks (without reference to the approximate number of said files protected by copyrights held by plaintiff). See Pl. Mem. at 7; Nguyen Decl. ¶ 10. Plaintiff further posits that illegal downloading of its copyrighted works "potentially impacts ticket, home video and/or DVD sales as well as motion picture rental revenues, and, as a consequence, results in lost profits." Pl. Mem. at 8. Further, where the infringed motion picture is still in theatrical release, each download "may result in the loss of at least two sales--a ticket at the movie theater and a subsequent purchase of the DVD/home video." Pl. Mem. at 8 n. 3; Nguyen Decl. ¶ 8. FN7. See Report and Recommendation dated October 31, 2006, in Warner Bros. Entm't, Inc. v. Ferrandino, No. 06-CV-586 (DRH/ETB) (E.D.N.Y.) ($6,000 statutory damages award). Furthermore, other courts have found this amount reasonable in similar circumstances. Pl. Mem. at 4 n. 1 (listing cases in other jurisdictions).
II. Permanent Injunction
Section 502(a) of the Copyright Act provides that a court may grant "final
injunctions on such terms as it may deem reasonable to prevent or restrain
infringement of a copyright." 17 U.S.C. § 502(a). The Supreme Court has recently
reiterated that a plaintiff seeking an injunction in a copyright action must
demonstrate:

Source: http://paralegals.org/associations/2270/files/Westlaw_Document_06_11_07.pdf

Medienspiegel_20.9-4.10.2009

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