Opinion
21-CV-0532 (JLR) (BCM)
12-08-2023
GLOBAL REFINING GROUP, INC., Plaintiff, v. PMD ANALYSIS INC. a/k/a ANALYSE PMD INC., et al., Defendants.
HON. JENNIFER L. ROCHON JUDGE
REPORT AND RECOMMENDATION
BARBARA MOSES, United States Magistrate Judge.
Before the Court for report and recommendation is plaintiff's motion for an award of attorneys' fees and expenses following the entry of a default judgment against all defendants. (Dkt. 165.) For the reasons that follow, I recommend that plaintiff be awarded $204,601.16 in attorneys' fees and $9,322.00 in costs, for a total of $213,923.16.
I. BACKGROUND
The background of this case is set forth more fully in my August 15, 2023 report and recommendation, recommending the entry of a default judgment in the amount of approximately $20.2 million. Glob. Ref. Grp., Inc. v. PMD Analysis Inc., 2023 WL 5733968, at *19 (S.D.N.Y. Aug. 15, 2023), report and recommendation adopted, 2023 WL 5734171 (S.D.N.Y. Sept. 5, 2023). For purposes of the present report and recommendation, the following recitation will suffice.
Global Refining Group, Inc. (Global) is a Virginia corporation in the business of recycling catalytic converters ("Cats"). As a part of its business, Global performs expensive tests on thousands of Cats and maintains a database with information on the scrap value of over 15,000 particular models, which it licenses to its customers. Defendants Robert Turcotte and Monica Armstrong owned and operated defendant PMD Analysis Inc a/k/a Analyse PMD Inc. (PMD), which operated a rival catalytic converter database. In June 2020, Turcotte gained access to Global's database when he entered into an agreement to sell Cats to Global. Turcotte and Armstrong then copied proprietary photographs and information from Global's database and posted that material on PMD's website. Defendants copied 8,079 photographs from Global's website over a period of months, removed their watermarks and other Global copyright management information (CMI), superimposed the address of their own competing website, and then reposted the altered images to that website, which they marketed to their own customers for $30 per month, or $300 per year. See Glob. Ref. Grp., 2023 WL 5733968, at *4-5. On January 21, 2021, Global commenced this action, asserting, inter alia, claims under of the Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836, and the Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 1202, against all three defendants.
Six weeks later, Turcotte commenced a separate action against Global (the Turcotte Action), which he filed in the Eastern District of Virginia, but which was later transferred to the Southern District of New York and designated as related to this action. See Compl. (Dkt. 1), Turcotte v. Global Refin. Grp., Inc., No. 21-CV-09182 (S.D.N.Y. Mar. 3, 2021). Turcotte alleged, inter alia, that Global breached its agreement with Turcotte. Global counterclaimed in the Turcotte Action on various contract and tort theories.
In the case at bar, the parties engaged in motion practice and vigorous discovery before defendants defaulted. For instance, plaintiff fully briefed a motion for preliminary injunction (Dkts. 27-31; 35-38); litigated discovery motions (Dkt. 44, 67-69); took and defended depositions, see Lewis Decl. (Dkt.166-1) at 7; defeated defendants' motion for judgment on the pleadings (Dkts. 73, 88); moved successfully to amend the complaint (Dkts. 84-86, 92), and filed its First Amended Complaint (FAC) on May 21, 2022. (Dkt. 106.) In July 2022, following the completion of discovery, the district judge scheduled a bench trial for February 2023 (Dkt. 127), and plaintiffs began to prepare for trial. See Lewis Decl. ¶ 9.
Thereafter, defendants stopped responding to the Court's orders and, on October 26, 2022, the Court permitted defendants' counsel to withdraw from the action because defendants were not paying their legal bills or communicating with their attorneys. (Dkt. 144.) On December 6, 2022, Global requested Certificates of Default on its claims in this action (and on its counterclaims in the Turcotte Action), and on December 7, 2022, the Clerk of Court entered the Certificates. (See Dkts. 149-51.)
On January 20, 2023, Global moved for a default judgment on its claims in this action. (Dkt, 155.) It also moved for a default judgment on its counterclaims in the Turcotte Action, and for an order dismissing Turcotte's claims in that action for failure to prosecute. Defendants did not respond to Global's motions. On March 1, 2023, the Hon. Jennifer L. Rochon, United States District Judge, referred the motions to me for report, recommendation, and an inquest into damages. (See, e.g., Dkt. 161.)
In this action, I recommended that Global's motion for default judgment be granted and that judgment be entered against all three defendants. Global Ref. Grp., 2023 WL 5733968, at *19. In assessing statutory damages under the DMCA, I found that defendants' conduct was "both willful and protracted, warranting 'a significant statutory damages award.'" Glob. Ref. Grp., 2023 WL 5733968, at *15 (quoting Bus. Casual Holdings, LLC v. TV-Novosti, 2023 WL 1809707, at *11 (S.D.N.Y. Feb. 8, 2023), report and recommendation adopted, 2023 WL 4267590 (S.D.N.Y. June 28, 2023)). I recommended awarding $2,500, the minimum statutory award under 17 U.S.C. § 1203(c)(3)(B), for each violation of the DMCA. Id. Because defendant copied and altered 8,079 photographs, I recommended an award of $20,197,500. Id. On September 6, 2023, after Judge Rochon adopted my recommendation, see Glob. Ref. Grp., 2023 WL 4267590 (S.D.N.Y. June 28, 2023), the Clerk of Court entered judgment on Global's DMCA and DTSA claims, awarding plaintiff "$20,197,500 in statutory damages under the DMCA, [to be] assessed jointly and severally against all Defendants, together with post-judgment interest at the statutory rate," as well as injunctive relief. (Dkt. 175.)
In accordance with an earlier scheduling order (Dkt. 163), Global timely filed its fee application in this action on April 4, 2023, and served the motion on April 5, 2023. (Dkt. 170.) Global did not file any fee motion in the Turcotte Action. Global seeks $256,855.45 in attorneys' fees and $10,397.00 in costs. See Lewis Decl. at 1. No defendant has appeared or otherwise responded to the motion. On September 6, 2023, Judge Rochon amended my reference to include the fee motion. (Dkt. 174.)
II. DISCUSSION
A. Legal Standards
Under the DMCA, as under the Copyright Act, a court may, "in its discretion," award "reasonable" attorneys' fees to the prevailing party. 17 U.S.C. § 1203(b)(5); see also Bus. Casual Holdings, 2023 WL 1809707, at *14. The DTSA likewise permits an award of reasonable attorneys' fees and costs to the prevailing party. 18 U.S.C. § 1836(b)(3)(D).
Global did not register any of the copyrights underlying its DMCA claims until well after defendants' infringement began. See FAC ¶¶ 37, 141; id. Ex. C. However, as explained in my August 15, 2023 report and recommendation, 17 U.S.C. § 412(2), which prohibits a plaintiff from recovering statutory damages pursuant to § 504 or attorneys' fees pursuant to § 505 for any "infringement of copyright" that was "commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work," does not apply where, as here, the plaintiff sought and won statutory damages under the DMCA, 17 U.S.C. § 1203(c)(3)(B). See Glob. Ref. Grp., 2023 WL 5733968, at *15 n. 14.
Under the DMCA, the district court's discretion to award attorneys' fees is "broad," albeit "not without limit." Zuma Press, Inc. v. Getty Images (US), Inc., 845 Fed.Appx. 54, 59 (2d Cir. 2021) (summary order) (discussing fees under the Copyright Act and the DMCA). In determining whether to exercise its discretion to award fees under these statutes, a district court ordinarily considers "the non-prevailing party's 'frivolousness, motivation, objective unreasonableness' (both in the factual and legal components of the case), together with the need in particular circumstances to advance considerations of compensation and deterrence." Bus. Casual Holdings, 2023 WL 1809707, at *15 (quoting Zuma Press, 845 Fed.Appx. at 59). However, where a defendant has defaulted - thus abandoning whatever defenses it had - the court need not analyze whether, if litigated, they would have been reasonable. See, e.g., Bus. Casual Holdings, 2023 WL 1809707, at *15 (recommending an award of maximum statutory damages of $25,000 per violation for three DMCA violations and $134,785.64 in fees, in light of defendant's "willful misconduct," as set forth in the complaint, "and the limited deterrent value of the limited statutory damages awarded"); Farrington v. Sell It Soc., LLC, 2020 WL 7629453, at *3 (S.D.N.Y. Dec. 21, 2020) (awarding $2500 in statutory damages for a single violation under the DMCA and $350 in attorneys' fees, in light of "Defendant's willful conduct and default"). Under the DTSA, fees may be awarded if (as relevant here) "the trade secret [was] willfully and maliciously misappropriated[.]" 18 U.S.C. § 1836(b)(3)(D).
If fees are awarded, the touchstone for assessing the amount of the award is reasonableness. A "reasonable" fee is one "that is sufficient to induce a capable attorney to undertake the representation of a meritorious . . . case." Perdue v. Kenny A., 559 U.S. 542, 552-53 (2010). In calculating a presumptively reasonable fee, courts begin with "the lodestar - the product of a reasonable hourly rate and the reasonable number of hours required by the case." Millea v. Metro- North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011). In determining a reasonable hourly rate, district "courts should generally use the hourly rates employed in the district in which the reviewing court sits." Restivo v. Hessemann, 846 F.3d 547, 590 (2d Cir. 2017) (citation omitted); see Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998) (courts consider "the market rates 'prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation'") (quoting Blum v. Stenson, 465 U.S. 886, 896 n.11 (1984)). To determine reasonable hours, courts conduct "a conscientious and detailed inquiry" of the number of hours expended on the case, and may reduce the award for excessive, redundant, unnecessary, or unclear billing. Haley v. Pataki, 106 F.3d 478, 484 (2d Cir. 1997); see also Quaratino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir. 1999). Ultimately, the district court has "considerable discretion" in in determining the amount of the award. Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 190 (2d Cir. 2008).
B. Attorneys' Fees
In this case, given defendants' "willful conduct," Farrington, 2020 WL 7629453, at *3, as well as their aggressive litigation strategy, followed by their default shortly before trial, fees should be awarded under both the DMCA and the DTSA. Consequently, I turn to the reasonableness of plaintiff's requested rates and hours.
1. Reasonable Hourly Rates
Plaintiff seeks fees for nine legal professionals at Lewis & Lin, LLC (L&L), which represented it throughout this action: one partner, two senior associates, five associates, and one paralegal. Lewis Decl. ¶ 10. The hourly rates sought range from $450 to $475 for the partner; $330 to $425 for senior associates; $225 to $295 for other associates; and $180 for the paralegal. Id. ¶ 18. These are "the rates actually charged to, and paid by, Global in this case," id., which supports a finding that they are reasonable. See, e.g., Pichardo v. C.R. Bard, Inc., 2015 WL 13784565, at *6 (S.D.N.Y. Jan. 26, 2015) ("[T]he fact that defendants were actually charged the rates set forth in their attorneys' contemporaneous timesheets submitted with this fee application provides additional evidence that the rates are reasonable.") (collecting cases). Additionally, the requested rates are (for most positions) within the ranges customarily approved by courts in this district in similar matters. See, e.g., Smart Team Glob. LLC v. Humbletech LLC, 2022 WL 1785389, at *2-3 (S.D.N.Y. June 1, 2022) (Nathan, J.) (awarding fees at the rate of $440 to $825 for partners; $330 to $555 for associates; and $100 for paralegals).
The partner involved in this case, B.E. Lewis, who had more than 20 years of experience at the time this action was filed, including intellectual property litigation, billed at rates ranging from $450 per hour (in 2020) to $475 per hour (in 2022). See Lewis Decl. Ex. C (Dkt. 166-4).These rates are within the range of billing rates recently accepted in this district for partners in intellectual property disputes. See, e.g., Reiffer v. NYC Luxury Limousine Ltd., 2023 WL 5052034, at *2 (S.D.N.Y. Aug. 8, 2023) (finding $450 per hour reasonable for partners in a relatively straightforward copyright case resolved on summary judgment); Aquavit Pharmaceuticals, Inc. v. U-Bio Med, Inc., 2021 WL 4312579, at *28 (S.D.N.Y. July 16, 2021) (finding hourly rates of $575 and $600 reasonable "for work on complex intellectual properties"), adopted as modified, 2021 WL 3862054 (S.D.N.Y. Aug. 30, 2021); Latin Am. Music Co., Inc. v. Spanish Broadcasting System, Inc., 2020 WL 2848232, at *6 (S.D.N.Y. June 1, 2020) ("[C]ourts in this district have generally found hourly rates of $400 to roughly $750 to be appropriate for partners in copyright and intellectual property cases[.]"). Since the requested rate for attorney Lewis is reasonable, I do not recommend reducing this rate.
L&L staffed seven associates on this matter, two senior and five junior. For senior associate J.H. Mercer, plaintiff requests an hourly rate of $330 for 2020 and $360 for 2021. In 2022 the firm staffed senior associate J. Jaang on the case, at an hourly rate of $425. For junior associates, plaintiff requests hourly rates ranging from $225 to $285 in 2021 and from $250 to $295 in 2022. The requested rates are comparable to those awarded in this district for cases of similar complexity. See, e.g., Wealth Management Associates LLC, 2019 WL 5725044, at *10 (approving associates' rates of $220 to $450 per hour); Manhan v. Roc Nation, LLC, 2016 WL 4718018, at *2 (S.D.N.Y. Sept. 9, 2016) (approving associates' hourly rates ranging from $300 to $553). Accordingly, I recommend approving the requested rates.
Finally, for the one paralegal staffed on the matter, J. Machlin, L&L requests an hourly rate of $180. This rate is towards the high end of rates typically awarded for paralegals and other non-lawyer professionals in this district, where courts have concluded that $200 per hour is the upper limit for experienced paralegals and $75 per hour is standard. See Smart Team Glob., 2022 WL 1785389, at *2-3 (reducing rate for paralegals to $100); KCG Holdings, Inc. v. Khandekar, 2020 WL 7053229, at *6 (S.D.N.Y. Dec. 2, 2020) (reducing hourly rate for paralegals to $75 and for experienced e-discovery team to $200 in trade secret misappropriation action), report and recommendation adopted, 2021 WL 623927 (S.D.N.Y. Feb. 17, 2021); but see Reiffer, 2023 WL 5052034, at *2 (finding $175 to $200 per hour is "commensurate with the hourly rate charged by paralegals in intellectual property cases in this district"); Capitol Recs., LLC v. ReDigi Inc., 2022 WL 3348385, at *4 (S.D.N.Y. Aug. 12, 2022) (reducing fee for paralegals on a copyright infringement case to $200 per hour) (collecting cases). Beyond representing that this is the rate typically charged to clients in similar matters, L&L provides no justification for the requested rate. Consequently, I recommend reducing the rate for the L&L paralegal to $100 per hour. See Smart Team Glob., 2022 WL 1785389, at *3.
2. Reasonable Hours Billed
The party seeking attorneys' fees must submit records that enable the Court to determine whether the fee sought is reasonable. See Hensley v. Eckerhart, 461 U.S. 424, 433-34 (1983). Thus, the prevailing party must submit, for each attorney, contemporaneous billing records documenting the date on which work was done, the hours expended, and the nature of the work. See id.; Scott v. City of New York, 626 F.3d 130, 132 (2d Cir. 2010).
In support of its fee motion, L&L submitted all of its monthly invoices to Global, dated September 2020 through December 2022. Lewis Decl. Ex. B-1 (Dkt. 166-3). The invoices document, by date, the hours expended and the nature of work for "all of the work done by the Firm on Global's behalf," including "work on Global's behalf but not specific to this case" - for instance, hours spent litigating the Turcotte Action. Lewis Decl. ¶ 16. By my calculation, L&L invoiced a total of 1189.71 hours on both cases, amounting to $419,795.45 in attorneys' fees charged to and paid by Global. See Lewis Decl. Ex. B-1.
However, plaintiff did not move for fees in the Turcotte Action, and the instant application does not request fees invoiced for work on the Turcotte Action or otherwise unrelated to the case at bar. See Lewis Decl. ¶ 16. Additionally, for purposes of the instant fee application, the firm has removed costs for contract workers employed by the firm; limited the time dedicated to internal discussions and telephonic meetings among firm attorneys; and limited the fees to the period ending on December 7, 2022, when the Clerk of Court entered default against the defendants. See Lewis Decl. ¶ 17. Thus, plaintiff requests fees corresponding to only a portion of the total hours L&L invoiced to Global.
That portion is reflected in a chart titled "Monthly Fees by Timekeeper," Lewis Decl. Ex. C, which, by my calculation, lists 727.31 hours, or roughly three-fifths of the total hours invoiced to Global. The chart corroborates plaintiff's assertion that it does not seeks fees for contract workers, or for work performed after December 7, 2022. But because the chart simply lists each timekeeper's monthly fees, in hours and in dollars, I cannot determine precisely which time entries, for which tasks, are included in the chart. This is analogous to block billing, which "impedes a court's effective review of the fee application" and thus "warrants a reduction of the claimed time." Deisgn Pics Inc. v. PBH Network, Inc., 2020 WL 8413512, at *7 (E.D.N.Y. Oct. 27, 2020), report and recommendation adopted in relevant part, rejected in part sub nom. Design Pics Inc. v. PBH Networks, Inc., 2021 WL 74088 (E.D.N.Y. Jan. 8, 2021); see also, e.g., Riley v. City of New York, 2015 WL 9592518, at *3-4 (E.D.N.Y. Dec. 31, 2015) (citing Hines v. City of Albany, 613 Fed.Appx. 52, 55 (2d Cir. 2015) (affirming 30% reduction for block billing)). Although I have no particular reason to doubt that this action required more attorney hours than the Turcotte Action, some reduction in the claimed time is warranted due to plaintiff's decision to present the necessary information in a manner that prevents precise judicial review. I therefore recommend reducing the requested fees by 20% across the board.
There appear to be minor tabulation errors in the chart. For example, in the month ending May 31, 2022, attorneys B.E. Lewis, J.H. Mercer, and S. Wang billed $4,085, $2,325, and $150, respectively. Lewis Decl Ex. C at 5. Thus, by my calculation, the May 2022 monthly subtotal should be $6,560, yet the chart lists a subtotal of $7,035. Id. Moreover, while the "MONTHLY SUBTOTAL" column purports to collate the data listed in the preceding column titled "TOTAL FEES INCURRED AT MONTHLY RATES," when I calculate the sum of former, I get $257,218.45, while the sum of the later comes to $256,855.45. However, because plaintiff requests the lesser amount, I have made no further attempt to reconcile the figures shown in the chart. My calculations start with plaintiff's requested award of $256,855.45.
From the information provided, I can confidently review the allocation of work between timekeepers. Of the hours requested, 257.1 were billed by the firm's partner; 456.41 by the associates (at all levels); and 13.8 by the firm's paralegal. Lewis Decl. Ex. C. Although the firm assigned multiple lawyers to the case, only one partner - and one senior associate at any given time - worked on the matter. As for the junior associates, it appears that they were staffed as needed, with at most three junior associates (but more typically one or two) billing time in any given month. Id. Accordingly, there is no need to reduce the hours further due to overstaffing. Cf. Smart Team Glob., 2022 WL 1785389, at *3; Vista Outdoor Inc., 2018 WL 3104631, at *9.
In sum, I recommend awarding plaintiff $204,601.16 in attorney's fees.
To calculate the award, I reduced the requested fee ($256,855.45) by $80 per hour for each of the 13.8 hours billed by L&L's paralegal, a reduction of $1,104, and then reduced the remainder by 20%. Expressed in simplified form: ($256,855.45 - $1,104) * 0.8 = $204,601.16.
C. Costs
Finally, plaintiff requests reimbursement for $10,397.00 in costs, consisting of $270.25 in computerized legal research costs; $402 in court fees; $1,075.00 in copyright registration fees; $525.79 in process server fees; and $8,123.97 in transcription costs. Plaintiff has provided appropriate documentation for each claimed cost, see Lewis Decl. Exs. D-G, but not all are recoverable.
Plaintiff may recover legal research costs, court fees, process server fees, and transcription costs. See Arbor Hill, 369 F.3d at 98; Smart Team Glob., 2022 WL 1785389, at *3 (citing Arbor Hill and Philpot v. Music Times LLC, 2017 WL 9538900, at *7 (S.D.N.Y. Mar. 29, 2017)). However, copyright registration fees are expended "to obtain additional rights," coincidentally including the right to sue, Stern, 978 F.Supp.2d at 1050, and are not recoverable as litigation costs. See Lucky Break Wishbone Corp. v. Sears, Roebuck & Co., 2009 WL 86491, at *2 (W.D. Wash. Jan. 9, 2009) ("plaintiff has absolutely no basis for seeking reimbursement of its copyright registration fees"), aff'd, 373 Fed.Appx. 752 (9th Cir. 2010); Bly v. Banbury Books, Inc., 638 F.Supp. 983, 989 (E.D. Penn. 1986) (denying plaintiff's request for reimbursement of copyright registration fees because those fees are "not properly considered a cost of prosecuting this action for copyright infringement"); Healthplan Servs., Inc. v. Dixit, 2021 WL 4927434, at *24 (M.D. Fla. May 27, 2021) ("HealthPlan should not recover its copyright registration fees") (citing Stern and Bly), report and recommendation adopted, 2021 WL 4926752 (M.D. Fla. July 22, 2021); Triple Canopy, Inc. v. Greyside Glob., LLC, 2013 WL 12090119, at *1 (E.D. Va. Mar. 27, 2013) (awarding "attorney's fees in the amount of $21,249.25 and costs of $777.50 (total costs requested minus the copyright registration fee)").
Accordingly, I recommend awarding $9,322.00 in costs.
III. CONCLUSION
For the foregoing reasons, I recommend awarding plaintiff $204,601.56 in attorneys' fees and $9,322.00 in costs, for a total of $213,923.16.
Global is directed to promptly serve a copy of this Report and Recommendation on Turcotte, Armstrong, and PMD at their last known mailing addresses, and to file proof of such service on the docket.
NOTICE OF PROCEDURE FOR FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen days from the service of this report and recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d). A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Any such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the Hon. Jennifer L. Rochon at 500 Pearl Street, New York, NY 10007. Any request for an extension of time to file objections must be directed to Judge Rochon. Failure to file timely objections will result in a waiver of such objections and will preclude appellate review. See Thomas v. Arn, 474 U.S. 140, 155 (1985); Frydman v. Experian Info. Sols., Inc., 743 Fed.Appx. 486, 487 (2d Cir. 2018) (summary order); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).