Summary
finding plaintiffs had no other practicable remedy at law, and money damages would not prevent future infringement, as evidence showed defendants did not take their infringing activity seriously
Summary of this case from Bulbs 4 E. Side, Inc. v. RicksOpinion
No. EP-05-CA-267-PRM.
October 18, 2005
ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT JUDGEMENT
On this day, the Court considered Plaintiffs WB Music Corp., Ain't Nothing But Funkin' Music, Music of Windswept, Blotter Music, Elvis Mambo Music, Zomba Enterprises, Inc., EMI April Music Inc., Famous Music Corporation, and Stuck in the Throat Music's (collectively "Plaintiffs") "Motion for Default Judgment" ("Motion") against Defendants Big Daddy's Entertainment, Inc. and Victor H. Ordonez (collectively "Defendants"), filed on September 23, 2005 in the above-captioned cause. After due consideration, the Court is of the opinion that Plaintiffs' Motion should be granted for the reasons set forth below.
I. FACTUAL AND PROCEDURAL BACKGROUND
All Plaintiffs are members of the American Society of Composers, Authors, and Publishers ("ASCAP") and have given ASCAP a nonexclusive right to licence nondramatic public performances of their copyrighted musical compositions. Pls.' Mot. 2. Defendants own and operate an establishment offering musical entertainment to the public, known as Big Daddy's. Pls.' Mot. 2. Plaintiffs allege that on the night of April 30, 2005, Defendants knowingly and intentionally infringed upon four of Plaintiffs' copyrighted musical compositions, namely, "In Da Club," "Baby One More Time," "Get Busy," and "Get the Party Started." Pls.' Compl. ¶ 12, Schedule A.
Plaintiffs offer the following evidence in support of their Motion. Beginning in January 2004, ASCAP repeatedly offered Defendants a licencing agreement that would allow Defendants to legally perform music in the ASCAP repertory. Pls.' Mot., Jones Aff. ("Jones Aff.") ¶ 7; Pls.' Mot., Ex. A ("Ex. A"). Accordingly, Defendants have been aware since at least January 2004 that they are not licenced to perform any copyrighted music in the ASCAP repertory and that such performance could subject Defendants to liability for copyright infringement. Jones Aff. ¶ 7; Ex. A. Despite repeated offers and warnings, Defendants refused to obtain a license. Jones Aff. ¶ 8; Ex. A. On the evening of April 30, 2005, a private investigator hired by ASCAP observed Big Daddy's publicly perform copyrighted music from the ASCAP repertory. Jones Aff. ¶¶ 10-11; Pls.' Mot., Ex. B, Investigator's Report. Plaintiffs also submit that Defendants have "saved" $2,324.00 in licensing fees through their refusal to obtain a license. Jones Aff. ¶ 13; Ex. A. In addition, ASCAP has incurred $602.92 of costs investigating Defendants' allegedly infringing conduct. Jones Aff. ¶ 13.
On July 11, 2005, Plaintiffs filed their Complaint in this Court alleging four separate violations of the United States Copyright Right Act, 17 U.S.C. § 101 et seq., stemming from the unauthorized public performance of Plaintiffs' copyrighted musical compositions at Defendants' establishment. On July 16, 2005, Defendants were properly served with process in the above-captioned cause. Defendants did not file an answer or otherwise make an appearance by the August 5, 2003 deadline. See FED. R. CIV. P. 12(a)(1)(A) (requiring a defendant to serve an answer "within 20 days after being served with the summons and complaint"). Furthermore, as of the date of this Order, Defendants still have not filed any pleadings or motions with the Court. Therefore, on August 29, 2005, the District Clerk entered default against Defendants. The Court now considers Plaintiffs' present Motion for Default Judgment.
II. ANALYSIS
Prior to discussing what form of relief, if any, Plaintiffs should receive, it is appropriate to assess whether default judgment is procedurally warranted. See, e.g., Lindsey v. Prive Corp., 161 F.3d 886, 892-93 (5th Cir. 1998) (analyzing a motion for entry of default judgment by generally considering the procedural requirements, substantive merits, and appropriate relief).
A. Procedural Requirements Necessary for Default Judgment
Federal Rule of Civil Procedure 55 sets forth certain conditions under which default may be entered against a party, as well as the procedure by which a party may seek the entry of default judgment. If a party "against whom a judgment for affirmative relief is sought" fails to "plead or otherwise defend" a case, and "that fact is made to appear by affidavit or otherwise, the clerk [of the court] shall enter the party's default." FED. R. CIV. P. 55(a). Once a default is entered, "the party entitled to a judgment by default" may move the Court for entry of default judgment. FED. R. CIV. P. 55(b). The Fifth Circuit has concisely summarized the steps leading to default judgment.
A default occurs when a defendant has failed to plead or otherwise respond to the complaint within the time required by the Federal Rules. An entry of default is what the clerk enters when the default is established by affidavit or otherwise. FED. R. CIV. P. 55(a). After defendant's default has been entered, plaintiff may apply for a judgment based on such default. This is a default judgment.New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996).
"Default judgments are a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations." Sun Bank of Ocala v. Pelican Homestead Sav. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989) (footnote omitted). In accord with this policy, "[a] party is not entitled to default judgment as a matter of right, even where the defendant is technically in default." Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (citing Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996)). Rather, a default judgment is normally committed to the sound discretion of the district court. Yu v. Perry, 82 Fed. Appx. 993, 994 (5th Cir. 2003) (per curiam) (unpublished opinion); Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977). In determining whether to enter a judgment of default, a court may look to the following factors for guidance:
Though Yu is an unpublished opinion, the Court finds that its reasoning and logic persuasively apply to the instant case. 5TH CIR. R. 47.5.4 (stating "[a]n unpublished opinion may . . . be persuasive").
whether material issues of fact are at issue, whether there has been substantial prejudice, whether the grounds for default are clearly established, whether the default was caused by a good faith mistake or excusable neglect, the harshness of a default judgment, and whether the court would think itself obliged to set aside the default on the defendant's motion.Lindsey, 161 F.3d at 893.
The facts in the present case evidence that Defendants are clearly in default and the Clerk's entry of default against Defendants was proper. The Clerk of the Court is permitted to enter default against a party who has "failed to plead or otherwise defend." FED. R. CIV. P. 55(a). Plaintiffs properly effected service of process on Defendants on July 16, 2005. Proof of this service was filed with the Court on July 18, 2005. The Federal Rules of Civil Procedure permitted Defendants twenty days to file a reply to the complaint. FED. R. CIV. P. 12(a)(1)(A). Despite the time restriction, Defendants defaulted by "fail[ing] to plead or otherwise defend." FED. R. CIV. P. 55(a). On August 29, 2005, the District Clerk properly entered default against Defendants, following the guidelines of Rule 55(a). Id. Further, as of the date of this Order, Defendants have offered no suggestion that their reticence is the product of "a good faith mistake or excusable neglect." Lindsey, 161 F.3d at 893. Plaintiffs submitted various records and affidavits in support of their complaint for copyright infringement. Also, Defendants' failure to respond does not place any material issues of fact into dispute. See Nishimatsu Const. Co. v. Houston Nat. Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (noting that "[t]he defendant, by his default, admits the plaintiff's well pleaded allegations of fact"). Therefore, the Court is satisfied that the procedural prerequisites to entering default judgment are satisfied. Defendants defaulted, and the Clerk's entry of default was proper. Therefore, default judgment is procedurally warranted.
B. Plaintiffs Entitlement to Relief
Plaintiffs are seeking permanent injunctive relief, statutory damages, and reasonable attorneys' fees and costs. The Court will consider each of Plaintiffs' requests in turn.
1. Injunctive Relief
Plaintiffs request the Court to permanently enjoin Defendants from publicly performing any and all compositions in the ASCAP repertory at any establishment owned and operated by Defendants. Under the Copyright Act, a court may "grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright." 17 U.S.C. § 502(a). Permanent injunctive relief is not lightly given. Playboy Enters., Inc. v. Webbworld, Inc., 991 F. Supp. 543, 561 (N.D. Tex. 1997), aff'd, 168 F.3d 486 (5th Cir. 1999). To demonstrate entitlement to permanent injunctive relief, the movant must establish the following: "(1) actual success on the merits; (2) no adequate remedy at law; (3) that the threatened injury outweighs any damage to the defendant; and (4) that the injunction will not disserve the public interest." Id. (citing DSC Comms. Corp. v. DGI Tech., Inc., 81 F.3d 597, 600 (5th Cir. 1996), for the proposition that the Fifth Circuit applies traditional preliminary injunction factors in copyright infringement cases).
After a careful review of the evidence and authority, the Court is of the opinion that permanent injunctive relief is appropriate. The finding of default against Defendants is tantamount to actual success on the merits. Arista Records, Inc. v. Kabani, No. Civ. 303CV1191-H, 2004 WL 884445, at *4 (N.D. Tex. Apr. 23, 2004). Plaintiffs have no other practicable remedy at law. Money damages in this case will not prevent future infringing activity by Defendants. The evidence in this case suggests that Defendants do not take seriously their infringing activity. Absent injunctive relief, Plaintiffs might be faced with the unpleasant prospect of having to repeatedly file suit any time Defendants infringe in the future. The grant of a permanent injunction appears the only adequate remedy to prevent the continuing threat of copyright infringement. The burden imposed on Defendants by a permanent injunction prohibiting the unauthorized public performance of ASCAP members' music would appear slight in comparison to the injury suffered by Plaintiffs' business should Defendants be allowed to continue to infringe. Defendants should not consider it a burden to be required to follow the law. In addition, the public interest is advanced by enforcing faithful compliance with the laws of the United States. See Playboy, 991 F. Supp. at 561 (stating that "the public interest, to the extent that it is involved at all in this private business matter, is affirmatively served by requiring continuing, strict adherence to intellectual property law").
Plaintiffs have submitted affidavit evidence and reports which establish that Defendants have been aware since January 2004 that the public performance of ASCAP members' music would subject Defendants to liability for copyright infringement. Nonetheless, on April 30, 2005, Defendants knowingly infringed on Plaintiffs' copyrights. Defendants have refused to respond to Plaintiffs' repeated requests to deal with matters extra-judicially. Furthermore, Defendants' failure to answer or otherwise appear in this case indicates that they choose not to handle this matter through legally supervised processes as well.
Recognizing that plaintiffs in these actions constructively represent all of ASCAP's members, recent courts have enjoined defendants from publicly performing any ASCAP members' music absent permission or a licence. See, e.g., Swallow Turn Music v. Wilson, 831 F. Supp. 575, 581 (E.D. Tex. 1993) (noting that "piecemeal prohibitions against continued, knowing violations of law squander scarce judicial resources"); Jobete Music Co. v. Hampton, 864 F. Supp. 7, 9 (S.D. Miss. 1994). For the aforementioned reasons, the Court finds that a permanent injunction prohibiting Defendants from publicly performing any and all compositions in the ASCAP repertory absent permission or a license is warranted.
2. Statutory Damages
Under the Copyright Act, the copyright owner may elect to recover statutory damages instead of actual damages. 17 U.S.C. § 504(c)(1). Statutory damages range from $750 to $30,000 per work infringed, as a court deems just. 17 U.S.C. § 504(c)(1); Broadcast Music, Inc. v. Xanthas, Inc., 855 F.2d 233, 236 (5th Cir. 1988). A court may increase the damage award to no more than $150,000 if it finds the infringing conduct was committed willfully. 17 U.S.C. § 504(c)(2). Indeed, district courts are afforded broad discretion in determining the size of statutory damage awards in copyright infringement actions. Fermata Int'l Melodies, Inc. v. Champions Golf Club, Inc., 712 F. Supp. 1257, 1263 (S.D. Tex. 1989), aff'd, 915 F.2d 1567 (5th Cir. 1990). A court may consider both restitution and deterrence when formulating the "just" amount of damages. F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233 (1952); Fermata, 712 F. Supp. at 1263.
17 U.S.C. § 504(c)(1) reads in its entirety:
Except as provided by clause (2) of this subsection, 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. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.
The Supreme Court emphasized the deterrent function of statutory damage awards in copyright infringement actions as follows:
[A] rule of liability which merely takes away the profits from an infringement would offer little discouragement to infringers. It would fall short of an effective sanction for enforcement of the copyright policy. The statutory rule, formulated after long experience, not merely compels restitution of profit and reparation for injury but also is designed to discourage wrongful conduct. The discretion for the court is wide enough to permit a resort to statutory damages for such purposes. Even for uninjurious and unprofitable invasions of copyright the court may, if it deems just, impose a liability within statutory limits to sanction and vindicate the statutory policy.F.W. Woolworth, 344 U.S. at 233.
Plaintiffs contend that Defendants willfully infringed upon their copyrights. A defendant willfully infringes if "he knows his actions constitute infringement; the actions need not have been malicious." Broadcast Music, 855 F.2d at 236. A court may infer willfulness from evidence that notice of a valid copyright was provided to the defendant prior to the infringement. Malaco Inc. v. Cooper, No. CIV.A. 300CV2648P, 2002 WL 1461927, at *4 (N.D. Tex. July 3, 2002) (citing Chi-Boy Music v. Charlie Club, Inc., 930 F.2d 1224, 1227 (7th Cir. 1991)). Courts frequently grant damage awards in excess of the statutory minimum where plaintiffs demonstrate that an infringement was willful. Jobete Music Co., 864 F. Supp. at 10 (awarding $2500 per infringement where evidence demonstrated that ASCAP notified defendants of their infringing activity prior to initiating suit); Swallow Turn Music, 831 F. Supp. at 581 (finding $2500 per infringement to be a just award considering the willfulness of the violations and the need for retribution and deterrence); Crabshaw Music v. K-Bob's of El Paso, Inc., 744 F. Supp. 763, 768 (W.D. Tex. 1990) (awarding $1500 per infringement where the defendants were well aware of their infringing activity); Fermata, 712 F. Supp. at 1264 (awarding $2000 per infringement where a defendant refused to obtain an ASCAP licence despite repeated offers). Additionally, when calculating statutory damages against establishments that publicly perform musical compositions without first obtaining a license, courts frequently reach an award that is three to five times the licensing fee owed by the defendant. Broadcast Music, Inc. v. Barflies, Inc., No. Civ.A. 03-304, 2003 WL 21674470, at *2 (E.D. La. July 16, 2003) (citing several copyright infringement cases where the statutory damages awarded were equal to three to five times the licensing fees sought by the copyright owners). The intent behind such awards is to show defendants that it is more costly to infringe than to obey copyright laws. Id. The Court is persuaded by the reasoning of these district courts.
In light of the uncontradicted evidence, the Court finds that Defendants willfully infringed upon Plaintiffs' copyrights in violation of 17 U.S.C. § 504(c)(2). The affidavit and reports submitted in support of this Motion indicate that Defendants were well aware that public performance of Plaintiffs' music was an infringement of ASCAP members' copyrights. The evidence shows numerous communications by Plaintiffs, both written and oral, offering Defendants a licensing agreement and informing Defendants of their legal liability absent such agreement. Nonetheless, on April 30, 2005, Defendants knowingly infringed on Plaintiffs' copyrights. By failing to appear in this matter, Defendants offer no evidence to contradict their awareness or to suggest that this was an isolated act of infringement. As stated in Mr. Jones's affidavit, the Defendants have conserved $2,324.00 in licensing fees by electing to infringe rather than properly obtain a license. In addition, ASCAP has spent over $600 in obtaining evidence of infringement, separate and apart from the costs incurred by Plaintiffs in bringing this suit. Plaintiffs request the Court to award statutory damages in the amount of $2,500 for each of the four works infringed. The Court is of the opinion that statutory damages in the amount of $2500 per infringement, for a total award of $10,000, are just and reasonable. The award is well within the statutory range. It is between four to five times the amount of licensing fees owed by Defendants, a ratio within the bounds followed by courts addressing similar cases. Furthermore, due to Defendants' willful infringement of Plaintiffs' copyrights, the Court finds that statutory damages in excess of the statutory minimum are necessary to appropriately compensate Plaintiffs and deter Defendants from future violations.
3. Attorneys' Fees and Costs
Plaintiffs request the Court to order Defendants to pay Plaintiffs their costs and reasonable attorneys' fees pursuant to 17 U.S.C. § 505. The Copyright Act provides for a district court, in its discretion, to award costs and attorney's fees to the prevailing party in a copyright infringement action. 17 U.S.C. § 505. While the award of attorney's fees is left to the court's discretion, attorney's fees "are the rule rather than the exception and should be awarded routinely." Positively Black Talk, Inc. v. Cash Money Records, 394 F.3d 357, 380 (5th Cir. 2004) (quoting McGaughey v. Twentieth Century Fox Film Corp., 12 F.3d 62, 65 (5th Cir. 1994)). A court's discretion may be guided by a non-exclusive list of factors formulated by the Third Circuit and approved by the Supreme Court. Id. These factors include "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Fogerty, 510 U.S. at 534 n. 19 (quoting Lieb v. Topstone Indus., Inc., 788 F.2d 151, 156 (3d Cir. 1986)).
In Fogerty v. Fantasy, Inc., the Supreme Court held that prevailing plaintiffs and prevailing defendants must be treated the same with respect to the award of attorney's fees under the Copyright Act. 510 U.S. 517, 521 (1994). In addition, the Court rejected the British Rule on attorney's fees, under which the prevailing party receives attorneys' fees as a matter of course. Id. at 533. Subsequent to this decision, the Fifth Circuit held that its "discretionary but routinely awarded" standard for attorney's fees is in accord with Fogerty in that both standards allow for judicial discretion. Hogan Systems, Inc. v. Cybresource Int'l, Inc., 158 F.3d 319, 325 (5th Cir. 1998).
Prior to the Fogerty decision, the Fifth Circuit traditionally applied the twelve factors developed in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), when assessing the award of statutorily authorized attorney's fees. Micromanipulator Co., Inc. v. Bough, 779 F.2d 255, 259 (5th Cir. 1985). The Court notes that current Fifth Circuit law approves the application of either the Lieb factors or the Johnson factors. Hogan Systems, Inc., 158 F.3d at 325-26. While the Court employs the Lieb factors, the Court observes that its decision would remain the same under a Johnson analysis.
Exercising due discretion, the Court finds no reason why the prevailing party in this case should not be awarded attorneys' fees and costs. There is no indication in the record that Plaintiffs filed this suit frivolously or prosecuted this suit with malevolent intent. On the contrary, the record indicates that Plaintiffs attempted to amicably resolve matters with Defendants for over a year and a half prior to filing suit. At the same time, "considerations of compensation and deterrence" favor the award of attorneys' fees and cost to Plaintiffs. Plaintiffs request $3,254.00 in attorneys' fees and an additional $335.00 in costs. Plaintiffs attorney, Mark Osborn, submitted an affidavit attesting to the reasonableness of this request and providing an itemized accounting of the work done on behalf of Plaintiffs. Therefore, the Court is of the opinion that Plaintiffs' requests are reasonable and should be granted.
III. CONCLUSION
Based on the foregoing analysis, the Court concludes that default judgment is proper in this case.
Accordingly, IT IS ORDERED that Plaintiffs' Motion for Default Judgment is GRANTED. IT IS FURTHER ORDERED that Plaintiffs' request for a permanent injunction is GRANTED. Defendants and their agents, servants, employees, and all persons acting under their permission or authority are hereby permanently enjoined, pursuant to 17 U.S.C. § 502(a), from performing, without license, any musical composition licensed through the American Society of Composers, Authors, and Publishers.
IT IS FURTHER ORDERED that Plaintiffs shall have and recover from Defendants, jointly and severally, the sum of $10,000 in statutory damages, pursuant to 17 U.S.C. § 504(c).
IT IS FURTHER ORDERED that Plaintiffs' request for attorneys' fees in the amount of $3,254.00 and costs in the amount of $335.00 is GRANTED. IT IS FINALLY ORDERED that the final monetary judgment issued shall bear interest from the date of entry, pursuant to 28 U.S.C. § 1961.
The Court will issue a separate final judgment in accordance with this Order.