Attorney’s Fees — Because Rule 54 Requires a Motion No Later Than 14 Days after Entry of Judgment, Motion May Be Filed Prior to Judgment — § 1927 Sanctions Require Conduct Akin to Bad Faith in 2d Circuit

16 Casa Duse, LLC v.Merkin, 2015 U.S. App. LEXIS 11053 (2d Cir. June 29, 2015):

V. Fees and Sanctions

Merkin and Reichman argue that the district court made legal errors in awarding fees and costs to Casa Duse under the Copyright Act, 17 U.S.C. § 505, and imposing sanctions against Reichman in the form of fees and costs under 28 U.S.C. § 1927. We disagree.

The district court did not err in granting Casa Duse's motion for attorney's fees even though the motion was filed prior to the entry of judgment. A motion for attorney's fees must "be filed no later than 14 days after the entry of judgment." Fed. R. Civ. P. 54(d)(2)(B)(i) (emphasis added). "'Prompt filing . . . enables the court in appropriate circumstances to make its ruling on a fee request in time for any appellate review of a dispute over fees to proceed at the same time as review on the merits of the case.'" Weyant v. Okst, 198 F.3d 311, 314 (2d Cir. 1999) (ellipsis in original) (quoting Fed. R. Civ. P. 54 Advisory Committee Note (1993)). But although the 14-day filing limit runs from the entry of a final judgment, see id., Merkin and Reichman have not explained why the district court could not grant a motion that was filed prior to a final judgment.

Nor [*37]  did the court err in concluding that the Copyright Act allows a party that has not registered a copyright to recover costs and fees under specified circumstances. Under the Act, a court may, in its discretion, "allow the recovery of full costs by or against any party other than the United States or an officer thereof" in "any civil action under [the Copyright Act]" and "award a reasonable attorney's fee to the prevailing party as part of the costs." 17 U.S.C. § 505. Another section of the Act, entitled "Registration as prerequisite to certain remedies for infringement," limits recovery in infringement actions, barring recovery for infringement that occurred prior to registration:

   In any action under this title, [with exceptions not relevant here], no award of statutory damages or of attorney's fees, as provided by . . . [section] 505, shall be made for (1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or (2) any infringement of copyright commenced after first publication of the work and before the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.

17 U.S.C. § 412. Merkin argues that this [*38]  section of the law prohibits Casa Duse, which did not register a copyright in the film, from collecting fees and costs. But Casa Duse has not brought an "infringement action." It seeks instead a declaratory judgment that it has not infringed on Merkin's putative copyright. "[T]here is nothing in the statute that prohibits fee awards in cases, like this one, of non infringement." Latin Am. Music Co. v. Am. Soc'y Of Composers, Authors & Publishers (ASCAP), 642 F.3d 87, 90 (1st Cir. 2011) (emphasis in original) (concluding that a defendant in an infringement action may obtain fees and costs under section 505 despite not having registered a copyright).

Reichman also argues that the district court erred by finding him jointly and severally liable with Merkin for costs and fees, because the Copyright Act allows for the imposition of costs and fees only against a "party," not against a party's attorney. 17 U.S.C. § 505. But the court awarded costs and fees to Casa Duse under both the Copyright Act and 28 U.S.C. § 1927. The latter statute allows a court to require an attorney to "satisfy personally" costs and fees. 28 U.S.C. § 1927. The district court's allocation of costs and fees was not contrary to law.

Merkin and Reichman finally argue that even if fees and costs were available under these statutes, the district court abused its discretion in awarding them [*39]  to Casa Duse under 17 U.S.C. § 505 and 28 U.S.C. § 1927. As to the former, a district court determining whether to exercise its discretion to award fees under the Copyright Act "may consider such factors as (1) the frivolousness of the non-prevailing party's claims or defenses; (2) the party's motivation; (3) whether the claims or defenses were objectively unreasonable; and (4) compensation and deterrence." Bryant v. Media Right Prods., Inc., 603 F.3d 135, 144 (2d Cir. 2010). As to the latter, "[s]anctions may be imposed . . . only when there is a finding of conduct constituting or akin to bad faith . . . . [A]n award under § 1927 is proper when the attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose such as delay." In re 60 E. 80th St. Equities, Inc., 218 F.3d at 115 (internal quotation marks omitted).

Merkin and Reichman argue that their copyright theory was not "objectively unreasonable," see Bryant, 603 F.3d at 144 (noting that this factor should be accorded "substantial weight"), let alone "so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose such as delay," In re 60 E. 80th St. Equities, Inc., 218 F.3d at 115 (internal quotation marks omitted), because it was based on their reading of the Copyright Office's website. We have concluded, in the context of Casa Duse's tortious [*40]  interference with business relations claim, that the appellants were not evidently motivated solely by the desire to harm Casa Duse. We have also concluded that the defendants' copyright claims are without merit. Given our remand to the district court, which may reconsider its grant of costs and fees and its imposition of sanctions in light of our reversal of the tortious interference judgment, we need not determine whether Merkin's and Reichman's reliance on the Copyright Office website was objectively unreasonable, nor whether other factors weigh in favor of granting fees to Casa Duse under the Copyright Act, nor whether Reichman's conduct was "akin to bad faith" sufficient to sustain the sanctions entered against him. Id. The district court may consider these contentions on remand if and when it is required to calculate costs and fees with respect to the copyright claims only, without reference to the tortious interference claim, which we conclude is without merit.

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