Opinion
02 cv 5481 (GBD)
June 3, 2003
MEMORANDUM OPINION ORDER
Plaintiff brought suit against defendant on July 16, 2002, alleging violations of the Copyright Act, 17 U.S.C. § 101, et seq., in connection with 100 illustrations that he created, including a "Beaver Cartoon." Plaintiff sought monetary damages and a declaratory judgment that he is the sole and exclusive author and owner of the copyright to the illustrations and the "Beaver Cartoon." Plaintiff then filed a Notice of Voluntary Dismissal without prejudice on January 29, 2003. This Court so ordered that Notice of Voluntary Dismissal without prejudice on January 31, 2003. Defendant now moves for attorney's fees pursuant to 17 U.S.C. § 505 and Fed.R.Civ.P. 54. For the following reasons, defendant's motion is denied.
The Copyright Act provides that a court, in its discretion, may award attorney's fees to a prevailing party. See 17 U.S.C. § 505. "Generally, the prevailing party is one who succeeds on a significant issue in the litigation[.]" Warner Bros., Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1126 (2d Cir. 1989). A party's success on a claim that is `purely technical or de minimus' does not qualify him as a `prevailing party.' Id.
Where the case terminates because the plaintiff filed a Notice of Voluntary dismissal, a court must examine the circumstances surrounding the voluntary dismissal to determine if the defendant may properly be considered a "prevailing party;"
Certainly, it cannot be said that a defendant always prevails when a plaintiff voluntarily dismisses his lawsuit without prejudice. It would be incorrect and illogical, however, to hold that a defendant never prevails upon such a voluntary dismissal. The answer, we believe, lies in examining the circumstances surrounding the voluntary dismissal. For example, where the complaint is clearly frivolous or there have been proceedings on the merits or substantial discovery, defendants have a stronger argument that they prevail when plaintiff voluntarily discontinues suit. On the other hand, where it has not been shown that the complaint is frivolous and there have been no proceedings on the merits nor substantial pre-trial proceedings, the argument must necessarily be less persuasive.Great Am. Fun Corp. v. Hosung N.Y. Trading, Inc., No. 96 cv 2986, 1997 WL 129399, at *2 (S.D.N.Y. March 21, 1997), quoting Fernandez v. Southside Hosp., 593 F. Supp. 840, 843 (E.D.N.Y. 1984). A defendant is not considered a "prevailing party," where for example, the plaintiff voluntarily dismissed because, for tactical decisions, it chose to bring its claims in state court rather than federal court, or where discovery of adverse facts or a change in the law caused the plaintiff to voluntarily dismiss. See Espada v. Rosado, No. 00cv6469, 2001 WL 1020549, at *2 (S.D.N.Y. Sept. 5, 2001). "Where, however, a `calculating' plaintiff obtains a dismissal in order to avoid an adverse ruling on the merits, the case for the defendant becomes more compelling. . . . [A] plaintiff should not be able to avoid paying attorney's fees by bringing a frivolous claim and then obtaining a dismissal before a ruling on the merits." Id.
In this case, it can not be said that the defendant here is a "prevailing party." The complaint was filed on July 16, 2002. Defendant, thereafter, filed a motion to stay, transfer venue, or in the alternative to dismiss, and oral argument was scheduled for October 30, 2002. However, nine days before oral argument, plaintiff sent a letter to this Court joining in defendant's application for a stay. On October 25 2002 this Court issued an Order granting the joint application for a stay. When the stay was issued, no rulings on the merits nor substantial discovery had taken place.
In fact, plaintiff joined in defendant's request for a stay to streamline the litigation process and avoid duplicative motion practice. In or about August 2002, defendant had commenced arbitration proceedings in Arizona against plaintiff pursuant to an arbitration clause in an agreement dated July 27, 1994 between plaintiff and defendant's predecessor in interest. The arbitration, which has not yet concluded, will determine whether plaintiff validly transferred his copyrights with respect to the 100 illustrations, including the "Beaver Cartoon," to defendant's predecessor in interest. The arbitration proceeding, therefore, will resolve the issues raised in the federal action.
Furthermore, plaintiff's lawsuit is the second of three related actions filed in this Court alleging copyright infringement of the illustrations and/or "Beaver Cartoon." The third lawsuit, Silberstein v. Digital Art Solutions, Inc., 02 cv 8187 (GBD), was filed in this Court by plaintiff Ivy Silberstein against defendant Digital on October 16, 2002, nine days before the stay was issued in the instant case. InSilberstein v. Digital, Silberstein alleged that Szafarczyk authorized her to create derivative works based on the "Beaver Cartoon" in June 1999, and that they retroactively memorialized their agreement in writing on July 8, 2002. Silberstein further alleged that Digital violated the Copyright Act and infringed on her copyrights to the "Beaver Cartoon."
The first lawsuit, Silbertstein v. Fox Enter. Group, Inc., 02 cv 1131 (GBD), was brought by Ivy Silberstein on February 13, 2002 against Fox Entertainment. In that suit, Silberstein alleged that Szafarczyk had assigned his copyrights in the "Beaver Cartoon" to her, and that Fox Entertainment infringed on her copyrights in the cartoon. That case is still pending before this Court.
Before filing the third suit, Silberstein filed a motion to intervene as a party plaintiff in this case. However, defendant opposed that motion. Before that motion was decided, Silberstein filed her separate complaint against Digital. Silberstein later filed a Notice of Voluntary Dismissal without prejudice in that action which this Court so ordered on January 31, 2003.
In the instant action, as noted earlier, plaintiff joined in defendants' request for a stay to avoid duplicative litigation. There has been no showing that the complaint was frivolous. No proceedings on the merits or substantial discovery had taken place. It can not be said, therefore, that defendant is a "prevailing party" for the purposes of an award of attorney's fees.
However, even if the defendant were a "prevailing party," this Court will not exercise its discretion to award defendant attorney's fees. An award of attorney's fees is within a court's sound discretion. See Warner Bros., Inc., 877 F.2d at 1126. "In exercising its discretion under 17 U.S.C. § 505, a court should consider factors such as 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." Ackerman v. Pascal, No. 01 cv 10791, 2002 WL 31496206, at *2, (S.D.N.Y. 2002 Nov. 7, 2002). The Second Circuit has given the "objective reasonableness" factor substantial weight in the calculus.See Matthew Bender Co., Inc. v. West Publ's Co., 240 F.3d 116, 121 (2d Cir. 2001); Ackerman, 2002 WL 31496206, at *2.
In his complaint, plaintiff asserted that defendant violated his copyrights in the illustrations and the "Beaver Cartoon." Defendant does not dispute that plaintiff, prior to the agreement dated July 27, 1994, had valid copyrights in the illustrations and the "Beaver Cartoon." It was a question of fact, therefore, as to whether plaintiff then later validly assigned his rights to defendant's predecessor in interest. Consequently, plaintiffs complaint was not frivolous, and it was "objectively reasonable" for plaintiff to file his lawsuit against defendant alleging copyright infringement. Once the arbitration proceeding in Arizona commenced and once Silberstein filed her complaint against Digital, there was no need for plaintiff to independently pursue his claim in this Court, as the issues regarding defendant's alleged copyright infringement could be effectively litigated in both the Arizona arbitration and/or the Silberstein v. Digital action.
The arbitrator in the Digital v. Szafarczyk arbitration issued an Order on January 30, 2003 declaring, inter alia, that: 1) the issue of copyright ownership of the "Beaver Cartoon" is subject to arbitration; and 2) pursuant to the 1994 agreement, Digital became the owner of the copyright in the "Beaver Cartoon" after July 27, 1999. However, on March 13, 2003, the arbitrator granted Szafarczyk's motion to reargue these issues. The arbitrator set a schedule for the exchange of pre-hearing memoranda, and a hearing date for June 5 and 6, 2003.
Therefore, defendant's motion for attorney's fees pursuant to 15 U.S.C. § 505 and Fed.R.Civ.P. 54 is DENIED.
In any event, defendant's motion is likely time-barred. Fed.R.Civ.P. 54 provides that: "Unless otherwise provided by statute or order of the court, the motion [for attorney's fees] must be filed and served no later than 14 days after entry of judgment[.]" FED. R. Civ. P. 54(d)(2)(B). Here, the Notice of Voluntary Dismissal without prejudice was so ordered on January 31, 2003 and docketed on February 4, 2003. However, defendant filed its motion for attorney's fees on March 12, 2003, more than 14 days after entry of judgment, and without obtaining an extension of time to file.