Opinion
19 Civ. 1093 (JPC) (GWG)
08-23-2022
TANISIA N. BAKER, Plaintiff, v. CARL WEBER, et al., Defendants.
REPORT AND RECOMMENDATION
GABRIEL W. GORENSTEIN, United States Magistrate Judge
Plaintiff Tanisia Baker initiated this action against several publisher defendants seeking unpaid royalties from the sale of books authored by Baker. See Complaint, filed Feb. 6, 2019 (Docket # 5) (“Comp.”). While some defendants have settled, three - Vickie Stringer, Vickie Stringer Publishing LLC, and Vickie Stringer Agency LLC - have defaulted. The matter has been referred to the undersigned for a damages inquest. For the following reasons, Baker should not be awarded any damages.
I. BACKGROUND
On August 19, 2003, Baker registered a copyright for a book she authored, titled “Sheisty.” See Sheisty Copyright Registration, annexed as Ex. 9 to Comp.; Declaration of Tanisia N. Baker, filed May 9, 2022 (Docket # 142) (“Baker Decl.”), ¶ 2. On November 1, 2003, Baker entered into a contract (the “Publishing Agreement”) with Triple Crown Publications, a corporation headed by Vickie Stringer and registered under the names Vickie Stringer Agency LLC and Vickie Stringer Publishing LLC. See Publishing Agreement, annexed as Ex. 1 to Baker Decl.; Comp. ¶ 21. The agreement conferred on Triple Crown Publications all rights in Baker's books entitled “Sheisty” and “Still Sheisty” (together, “the Works”). See Publishing Agreement ¶ 1. The agreement provided that Baker would receive as a royalty 10% of the retail price of all books sold. See Id. ¶ 3.
Between March 2004 and April 2007, Baker received a total of $151,413 from Triple Crown Publications for the sales of the Works. See Baker Decl. ¶¶ 27-28; Sheisty Royalty Statement, annexed as Ex. 2 to Baker Decl.; Still Sheisty Royalty Statement, annexed as Ex. 3 to Baker Decl. Baker has not submitted on this motion any evidence of what royalty payments Triple Crown Publications made to Baker between April 2007 to 2009.
Baker abruptly stopped receiving royalty payments some time in 2009. See Baker Decl. ¶ 29. Eventually, in 2011, Baker learned that Triple Crown Publications had dissolved. Id. ¶ 18. Stringer informed Baker and other authors published by Triple Crown Publications that the company's rights in their works had been transferred to another corporate entity affiliated with Triple Crown Publications. Id. ¶ 21. On October 10, 2011, Baker sent Stringer a notice of termination of the Publishing Agreement. See id. ¶ 19; Letter from T.N. Baker, dated Oct. 10, 2011, annexed as Ex. 23 to Comp.
The Publishing Agreement provides that Baker may terminate the agreement if Triple Crown files for bankruptcy, makes an assignment for the benefit of creditors, or liquidates its business for any cause. See Publishing Agreement ¶ 26.
On October 20, 2014, notwithstanding Baker's purported termination of the Publishing Agreement, Triple Crown Publications entered into a licensing agreement with Urban Books, LLC, which covered 15 books including the Works. See Baker Decl. ¶¶ 24-25; Declaration of Carl Weber, filed Mar. 15, 2021 (Docket # 98) (“Weber Decl.”), ¶¶ 2-4; Licensing Agreement, dated Oct. 20, 2014, annexed as Ex. 13 to Comp. Between 2015 and 2018, Urban Books, LLC published the Works. See Weber Decl. ¶¶ 6-7. Carl Weber, the owner and operator of Urban Books, LLC, represents that the combined net royalties from the Works, as well as a volume entitled The Sheisty Saga which is not mentioned in the complaint, were $5,081.67 between January 2015 and December 2018, and $219.64 for 2019. See id. ¶¶ 6-8, 15.
Baker filed this action on February 5, 2019. See Complaint, filed Feb. 5, 2019 (Docket # 1). Baker alleged that Carl Weber, through the publishing entities Urban Books, LLC, Urban Books Media, LLC, and Kensington Publishing Corporation (the “Weber defendants”), and Vickie Stringer, through the publishing entities Vickie Stringer Publishing, LLC and Vickie Stringer Agency LLC (the “Stringer defendants”), failed to pay Baker under the Publishing Agreement. See Comp. at 1-2. Baker's complaint brought claims for copyright infringement by the Weber defendants, id. ¶¶ 68-85; fraud by Stringer, id. ¶¶ 86-92; civil conspiracy to commit fraud by all defendants except Stringer, id. ¶¶ 93-102; unjust enrichment by all defendants, id. ¶¶ 103-05; breach of contract by Vickie Stringer Publishing LLC, Urban Books, and Kensington Publications, id. ¶¶ 106-114; a claim for accounting against all defendants, id. ¶¶ 115-21; and a claim for the creation of a constructive trust, id. ¶¶ 122-29. Baker also sought a declaratory judgment pursuant to 28 U.S.C. §§ 2201-02 that the Publishing Agreement was terminated and that defendants did not have the right to publish her work. See id. ¶¶ 59-67.
Baker eventually settled with the Weber defendants and voluntarily dismissed her claims against them. See Stipulation of Voluntary Dismissal, filed Dec. 27, 2021 (Docket # 122). The Stringer defendants never responded to the complaint and have not appeared in this action. On June 17, 2019, the Clerk issued a Certificate of Default against the Stringer defendants. See Certificate of Default, dated June 17, 2019 (Docket # 45). On December 8, 2021, Baker filed a motion for a default judgment against the Stringer defendants. See Motion for Default Judgment, filed Dec. 8, 2021 (Docket # 113). The district court granted the motion, finding the Stringer defendants liable for breach of contract, unjust enrichment, and fraud. See Transcript of March 22, 2022 Conference, filed Apr. 12, 2022 (Docket # 138) (“Default Transcript”), at 19-20.
This Court directed Baker to file proposed findings of fact and conclusions of law. See Scheduling Order for Damages Inquest, filed Mar. 24, 2022 (Docket # 137) (“Scheduling Order”). On May 9, 2022, Baker filed the required proposed findings of fact and conclusions of law, along with other materials. See Proposed Findings of Fact and Conclusions of Law, filed May 9, 2022 (Docket # 140) (“Proposed Findings”); Memorandum of Law in Support of Proposed Findings, filed May 9, 2022 (Docket # 141) (“Pl. Mem.”); Baker Decl. The Stringer defendants have not filed any response.
II. DISCUSSION
In performing a damages inquest, “[t]he district court must . . . conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999). This inquiry requires the district court to: (1) “determin[e] the proper rule for calculating damages on . . . a claim,” and (2) “assess[] plaintiff's evidence supporting the damages to be determined under this rule.” Id. “[I]t is well established that [w]hile a party's default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission of damages.” Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors Inc., 699 F.3d 230, 234 (2d Cir. 2012) (punctuation omitted). Plaintiff bears the burden of establishing her entitlement to the amount of damages she seeks. See Trs. of Local 813 Ins. Tr. Fund v. Rogan Bros. Sanitation Inc., 2018 WL 1587058, at *5 (S.D.N.Y. Mar. 28, 2018). “[A] plaintiff is entitled to all reasonable inferences in [her] favor based upon the evidence submitted.” HTV Indus., Inc. v. Agarwal, 317 F.Supp.3d 707, 717 (S.D.N.Y. 2018).
While a court must “take the necessary steps to establish damages with reasonable certainty,” Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997), a court need not hold a hearing “as long as it ensure[s] that there [is] a basis for the damages specified in [the] default judgment,” Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989) (“By its terms, [Rule] 55(b)(2) leaves the decision of whether a hearing is necessary to the discretion of the district court”); accord Bricklayers & Allied Craftworkers Loc. 2 v. Moulton Masonry & Const., LLC, 779 F.3d 182, 189 (2d Cir. 2015) (Rule 55(b)(2) “allows but does not require the district judge to conduct a hearing.”). Here, the Court's scheduling order notified the parties that the Court might conduct the inquest into damages based upon the written submissions of the parties, but that any party could seek an evidentiary hearing. See Scheduling Order ¶ 3. No party has requested a hearing, and no hearing is necessary because no party has disputed the factual material submitted by Baker.
In Baker's proposed findings, she seeks damages solely for her claims of breach of contract and unjust enrichment. See Proposed Findings ¶¶ 41-42. We discuss each next.
A. Breach of Contract Claim
Baker's breach of contract claim is premised on the Stringer defendants' failure to make royalty payments due under the Publishing Agreement from January 1, 2010 through October 10, 2011. See Proposed Findings ¶¶ 38-41. The Publishing Agreement provides that it “shall be interpreted according to the laws of the State of Ohio, applicable to agreements made and to be performed therein.” See Publishing Agreement ¶ 29. Accordingly, we apply Ohio law in determining damages.
To establish a breach of contract claim under Ohio law, “a plaintiff must prove (1) the existence of a contract, (2) plaintiff fulfilled his or her contractual obligations, (3) defendant failed to fulfill his or her contractual obligations, and (4) due to this failure plaintiff incurred damages.” Roberts v. McCoy, 88 N.E.3d 422, 430 (Ohio Ct. App. 2017); accord Cap. Real Est. Partners, LLC v. Nelson, 2019 WL 2498720, at *2 (Ohio Ct. App. June 17, 2019). “Money damages awarded in a breach of contract action are designed to place the aggrieved party in the same position it would have been in had the contract not been violated.” State ex rel. Stacy v. Batavia Loc. Sch. Dist. Bd. of Educ., 829 N.E.2d 298, 305 (Ohio 2005). A plaintiff “bears the burden of proving the nature and extent of his damages in order to be entitled to compensation.” Jayashree Rests., L.L.C. v. DDR PTC Outparcel, L.L.C., 2016 WL 4441870, at *2 (Ohio Ct. App. Aug. 23, 2016). “As a general rule, an injured party cannot recover damages for breach of contract beyond the amount that is established by the evidence with reasonable certainty, and generally, courts have required greater certainty in the proof of damages for breach of contract than in tort.” Textron Fin. Corp. v. Nationwide Mut. Ins. Co., 684 N.E.2d 1261, 1266 (Ohio Ct. App. 1996). Although damages “must be proven with certainty,” damages “are not rendered uncertain because they cannot be calculated with absolute exactness. It is sufficient if a reasonable basis of computation is afforded, although the result be only approximate.” Jayashree Rests., 2016 WL 4441870, at *2 (quoting Eastman Kodak Co. v. S. Photo Materials Co., 273 U.S. 359, 379 (1927)).
The Publishing Agreement provides that Baker is to receive a royalty of 10% of the retail price from all sales of the Works. See Publishing Agreement ¶ 3. Because she did not receive any royalties after 2009, Baker seeks breach of contract damages beginning January 1, 2010 and continuing through October 10, 2011, the date Baker terminated the Publishing Agreement. See Proposed Findings ¶¶ 10, 18, 41. Of course, Baker was entitled to royalties only if Triple Crown actually sold copies of the Works. See Publishing Agreement ¶ 3.
Triple Crown was entitled to determine “the number of copies to be printed,” and had “sole discretion” to “discontinue publishing, distributing and selling” the Works. Id. ¶¶ 11, 13.
The problem for Baker is that she offers no evidence that Triple Crown printed and sold any copies of the Works between 2010 and 2011. Instead, Baker has provided one-page royalty statements from Triple Crown for each book for the period identified on the statement as “June 2007 - December 2007.” See Sheisty Royalty Statement; Still Sheisty Royalty Statement. The statements each contain information on “runs” before 2007, going back to 2004. See Sheisty Royalty Statement; Still Sheisty Royalty Statement. The statements show that Triple Crown printed and sold 8 “runs” of Sheisty and 7 “runs” of Still Sheisty between 2004 and 2007. See Sheisty Royalty Statement; Still Sheisty Royalty Statement. Thus, the statements contain no information about sales in 2010 or 2011.
To support her claim for damages in 2010-2011, Baker refers to the royalties she received between 2004 and 2007 and asks the Court to assume that Triple Crown's sales of the Works, and thus the amount of royalties owed to Baker, were the same during the two periods. Specifically, Baker points to the entries on the royalty statements showing that between March 2004 and April 2007, she received a total of $77,278.50 in royalties from the Stringer defendants for sales of Sheisty and that between December 2004 and October 2006, she received a total of $74,134.50 in royalties from the Stringer defendants for sales of Still Sheisty. See Proposed Findings ¶¶ 38, 39; Sheisty Royalty Statement; Still Sheisty Royalty Statement. Baker divides these amounts by the number of months they were paid to arrive at average monthly royalty payments of $2,033.64 and $3,223.24 for Sheisty and Still Sheisty, respectively, for a combined total of $5,256.88 per month. See Proposed Findings ¶¶ 38, 39. Baker argues that she is entitled to royalties at the same monthly rate for the months spanning January 1, 2010 to October 10, 2011, resulting in a total of $115,651.44 in unpaid royalties. See Id. ¶ 41.
But Baker's sales from 2004 to 2007 provide only a speculative basis for calculating damages in 2010 and 2011. The information provided on this inquest shows that sales of the Works were highest in 2004 and 2005, and that sales fell precipitously after those years. See Sheisty Royalty Statement; Still Sheisty Royalty Statement. Looking at the two royalty statements from 2007, which purport to show all royalty payments through December 2007, the Sheisty Royalty Statement shows that an April 2007 run of 2500 books, for which Baker was due royalties of $3,049.50, was the only printing of Sheisty between July 2006 and December 2007. See Sheisty Royalty Statement. The Still Sheisty Royalty Statement shows that there were no print runs of Still Sheisty for the entire period of November 2006 through December 2007, and that the last print run, in October 2006, resulted in a royalty due of only $3,195.00. See Still Sheisty Royalty Statement. This information on print runs and sales does not allow a finding that sales in 2010 and 2011 occurred at all, let alone at the rate sought by plaintiff. See generally Living the Dream Films, Inc. v. Aloris Ent., LLC, 2021 WL 4342700, at *10 (S.D.N.Y. Sept. 24, 2021) (declining to base damages award for breach of contract on initial sales data) (citing cases).
Furthermore, the modest sales of the Works after Triple Crown licensed them to Urban Books in 2014 belies Baker's argument for damages as high as $5,256.88 per month. Urban Books licensed the Works from Triple Crown Publications beginning in 2014 and generated only $5,081.67 in royalties for the entire four-year period of January 2015 through December 2018. See Weber Decl. ¶ 15. Urban Books' net royalties for 2019 totaled only $219.64. See id.
Moreover, although Baker asks this Court to calculate damages using figures from the royalty statements prepared by Triple Crown for the years 2004 to 2007, Baker has herself cast doubt on the accuracy of those statements. Baker's complaint alleged that she “had to explain to the IRS how Stringer used her Companies to inflate author royalty statements to evade taxes.” Comp. ¶ 30. Baker further alleged that “[i]n multiple instances the royalty statements had verifiable inaccuracies which Plaintiff brought to her publisher's attention.” Id. ¶ 25.
Baker states that she received royalty payments from the Stringer defendants in 2008 and 2009, but provides no information as to the amounts of these payments, attributing this gap to the fact that the Stringer defendants “did not remit any sort of accounting.” Baker Decl. ¶ 29; see Proposed Findings ¶ 40. But in light of the complete lack of information about sales in 2008 and 2009, we cannot use the mere fact that Baker received “royalty payments” to calculate damages in 2010 and 2011.
While it was not presented as part of her application for a default judgment, Baker filed with her complaint a 1099-MISC form for 2009, which indicates that Triple Crown Publications paid her only $8,363.32 for royalties in that year as to all books sold. See 1099-MISC Form, annexed as Ex. 21 to Comp.
In light of the evidence that there were no sales records of the books for the latter two-thirds of 2007 for “Sheisty” and all of 2007 for “Still Sheisty,” and the lack of any other evidence that even a single book was sold between 2010 and 2011, it would be speculative for the Court to find that a particular number of sales took place and thus that a resulting royalty was due. In sum, there is insufficient evidence to allow the Court to calculate with “reasonable certainty” plaintiff's contract damages. Credit Lyonnais Sec. (USA), Inc., 183 F.3d at 155.
B. Unjust Enrichment Claim
Because subject matter jurisdiction over plaintiff's claims arises under the diversity statute, 28 U.S.C. § 1332, we look to New York choice of law rules to determine what jurisdiction's law governs Baker's unjust enrichment claim. See Zoll v. Ruder Finn, Inc., 2004 WL 42260, at *4 (S.D.N.Y. Jan. 7, 2004). Under New York law, “the first question to resolve in determining whether to undertake a choice of law analysis is whether there is an actual conflict of laws.” Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 393 (2d Cir. 2001).
Baker invokes only New York law when discussing her unjust enrichment claim. See Pl. Mem. at 3-4. Although Baker was living in New York when she first signed the Publishing Agreement and began receiving royalties, see Baker Decl. ¶¶ 8-9, she began living in North Carolina in mid-2005, and therefore did not live in New York for the period of her unjust enrichment claim, October 2011 to October 2014, see id. ¶ 10. As for Triple Crown Publications, plaintiff alleges that it was registered in Ohio and operated by Stringer from her home in Ohio, apparently during all relevant dates. Proposed Findings ¶¶ 2, 15.
Under New York law, “the measure of damages for an unjust enrichment claim is based on the amount of benefit retained by the defendants], rather than by a plaintiff's loss.” Swan Media Grp., Inc. v. Staub, 841 F.Supp.2d 804, 809-10 (S.D.N.Y. 2012). Similarly, under Ohio law, “damages for unjust enrichment are the amount the defendant benefited.” Meyer v. Chieffo, 950 N.E.2d 1027, 1039 (Ohio Ct. App. 2011) (punctuation omitted). Because we discern no actual conflict in the law between these two states on this point, we proceed without resolving which state's law governs Baker's unjust enrichment claim. See Fieger, 251 F.3d at 393 (“when it can be said that there is no actual conflict[,] New York will dispense with a choice of law analysis” (quoting Curley v. AMR Corp., 153 F.3d 5, 11 (2d Cir. 1998))). Any other distinctions between the two states' damages laws are not relevant here inasmuch as Baker has not proven damages to a reasonable degree of certainty under either.
Baker's unjust enrichment claim is based on her contention that the Stringer defendants “benefited at the Plaintiff's expense by selling Plaintiff[']s Works without providing her with any compensation.” Comp. ¶ 104. Her complaint does not allege how or when the Stringer defendants did so, however. Baker's inquest papers allege that “[a]fter the Publishing Agreement was terminated in 2011, and prior to improperly entering into a Licensing Agreement in 2014 with Urban Books, LLC and Kensington Publishing Corporation[,] . . . the Defaulting Defendants continued to commercially exploit the Works without compensating Ms. Baker.” See Pl. Mem. at 3. Baker further alleges that the defaulting defendants “were enriched through the improper publication and distribution of the Works . . . between 2011 and 2014.” See id. at 3-4. Baker's proposed calculation of damages for that time period uses the same methodology as her breach of contract claim: she takes the average monthly payment from 2004 to 2007, $5,256.88, and multiplies it by 36, the number of months between her termination of the Publishing Agreement in October 2011 and the execution of the Licensing Agreement in October 2014. Proposed Findings ¶ 42. However, as was true for her breach of contract claim, Baker has no evidence showing that the defaulting defendants actually exploited the Works during the 2011-2014 period, and thus no evidence that they derived any improper gains from her Works. To be sure, Baker states in a declaration that “from October 10, 2011 until the Defaulting Defendants entered into the Licensing Agreement on October 20, 2014, the Defaulting Defendants were unjustly enriched through sales of the Works without remitting royalty payments to me.” Baker Decl. ¶ 31. But this statement is conclusory and Baker provides no detail on the nature or the volume of these sales. Thus, for the same reasons we have already explained, we cannot find that the defaulting defendants were enriched by any sales of Baker's books.
Baker also refers to gains from “receipt of advances and royalties from the Weber Defendants,” id. at 3, but her memorandum of law and proposed findings cite to no evidence in support of any such claim.
Additionally, Baker's complaint alleged that the Works “had been out of print years before” Triple Crown licensed the Works to Urban Books. Comp. ¶ 50; see also id. ¶ 67 (“the Works had been out of print years before the Licensing Agreement was executed”). As noted, the licensing agreement was executed on October 20, 2014. See Licensing Agreement. The allegation that the Works were out of print for years prior to that date is inconsistent with Baker's argument that Triple Crown was enriched by selling them at all (let alone to the tune of more than $5,000 per month). In short, Baker has failed to prove her entitlement to damages to a reasonable degree of certainty.
The deficiency of Baker's submissions is rendered all the more glaring by the fact that at the hearing granting Baker default judgment, the district judge identified this problem with Baker's damages calculations and suggested that additional explanation would be beneficial. Default Transcript at 20-21. Nevertheless, Baker's memorandum of law is virtually identical to her earlier memorandum seeking default judgment. Compare Memorandum of Law in Support of Motion for Default Judgment, filed Dec. 8, 2021 (Docket # 116), with Pl. Mem. Baker's proposed findings of fact do not expand on her damages calculations either. Neither filing attempts to reconcile the available evidence in the record suggesting that sales of the Works declined over time.
Where a plaintiff is unable to establish damages to a reasonable degree of certainty, even where that failure is attributable in part to the unavailability of records from a defaulting defendant, courts will decline to award damages. See Ramgoolie v. Ramgoolie, 2022 WL 669868, at *5 (S.D.N.Y. Mar. 4, 2022); Forthill Const. Corp. v. Blue Acquisition, LLC, 2020 WL 1878192, at *7 (S.D.N.Y. Jan. 28, 2020), adopted, 2020 WL 949256 (S.D.N.Y. Feb. 27, 2020); Lenard v. Design Studio, 889 F.Supp.2d 518, 538 (S.D.N.Y. 2012); Guanghong Int'l (HK) Ltd. v. Ultimate Fin. Sols. LLC, 2012 WL 1228085, at *6 (S.D.N.Y. Mar. 26, 2012), adopted, 2012 WL 2402902 (S.D.N.Y. June 26, 2012). Thus, no damages should be awarded on the unjust enrichment claim.
III. CONCLUSION
For the foregoing reasons, the Court should award Baker no damages on her claims for breach of contract and unjust enrichment against the defaulting defendants.
PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See also Fed.R.Civ.P. 6(a), (b), (d). A party may respond to any objections within 14 days after being served. Any objections and responses shall be filed with the Clerk of the Court. Any request for an extension of time to file objections or responses must be directed to Judge Engelmayer. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).