United States District Court, E.D. Virginia, Alexandria Division
BMG RIGHTS MANAGEMENT U.S. LLC, and ROUND HILL MUSIC LP, Plaintiffs,
COX COMMUNICATIONS, INC., and COXCOM, LLC, Defendants. Attorney Law Firm Years Experience Hourly Rate Claimed ViennaMetro: Range Hours Claimed Individual Lodestar Calculation
O'Grady United States District Judge.
an extended litigation battle and a two-week trial, a jury
found Defendants Cox Communications, Inc. and Coxcom, LLC
("Cox") liable for willful contributory copyright
infringement. The jury awarded Plaintiff BMG Rights
Management ("BMG") $25 million in damages, and the
Court denied both parties' post-trial motions for relief.
(Dkt. No. 794). Now pending before the Court are the
parties' motions for costs and attorney's fees.
Specifically, BMG has filed for attorney's fees and costs
against Cox, (Dkt. Nos. 819, 827) and Cox, in turn, has filed
for fees and costs against Round Hill Music LP ("Round
Hill") (Dkt. Nos. 822, 836). For the reasons that
follow, BMG's motions are hereby GRANTED IN PART and
DENIED IN PART. Cox's motions are hereby DENIED.
facts of this case have been set forth in the Court's
previous memorandum opinions, and will only be summarized
briefly here. See Dkt. Nos. 703, 794. Defendant Cox
provides high-speed internet services to customers
nationwide. Plaintiffs BMG and Round Hill are the putative
owners or administrators of approximately 1, 400 musical
composition copyrights. Plaintiffs initially alleged that
Cox's subscribers were using peer-to-peer
("P2P") file sharing to illegally upload and
download copyrighted music files. The parties' dispute
came to a head in October 2014, when BMG and Round Hill
brought claims of contributory copyright infringement and
vicarious copyright infringement against Cox.
lengthy period of discovery, the parties filed cross-motions
for summary judgment in September 2015. These motions raised
two primary questions: (1) do plaintiffs own the copyrights
at issue?; and (2) is Cox eligible for the DMCA safe-harbor
defense under §512(i) of the DMCA? See 17
U.S.C. § 512(i). MSJ Mem. Op. at 9 (Dkt. No. 703). On
the ownership issue, the Court ruled in favor of BMG, finding
that it had conclusively established ownership of the
asserted copyrights. With regard to Round Hill, however, the
Court found that the company was hired "to provide
services related to copyrights it did not own and that this
employment did not result in any assignment of rights to
Plaintiff." Id. at 23 (internal citations and
quotations omitted). Accordingly, the Court dismissed Round
Hill from the case because it did not have statutory standing
to bring the infringement action.
the DMCA issue, the Court found that Cox had not reasonably
implemented a repeat infringer policy as required to receive
the protections of the DMCA. Specifically, the evidence
showed that Cox did not terminate access for repeat
infringers under appropriate circumstances, and that, before
2012, the company had an informal policy of consistently
reinstating infringing users. See Id. at 31-42. Cox
continued these actions in spite of the fact that it
"had knowledge that at least some of its account holders
were intentionally and repeatedly infringing."
Id. at 42. As such, the Court granted BMG's
motion for summary judgment and denied Cox's
corresponding motion for the protections of the DMCA
case culminated a two-week jury trial in December 2015. On
December 17, 2015, the jury found that Cox was liable for
contributory infringement, but that it was not liable for
vicarious infringement. See Dkt. No. 754. It awarded
BMG $25 million in statutory damages. After this victory, BMG
sought a permanent injunction to prevent Cox from future
infringement. It also sought judgment as a matter of law on
its vicarious infringement claim. Cox responded with its own
motion for judgment as a matter of law, or alternatively, for
a new trial. In a Memorandum Opinion dated August 8, 2016,
the Court denied all of the parties' post-trial motions
and entered a final judgment on the verdict. Post-Trial Mem.
Op. at 2, Dkt. No. 794. Cox filed its notice of appeal on
August 19, 2016.
that remain before the Court are the parties' motions for
attorney's fees and costs. The law firm of Steptoe &
Johnson LLP and local counsel Hausfeld LLP represented both
BMG and Round Hill in this action. Fenwick & West LLP and
the Law Offices of Craig C. Reilly represented Cox. BMG has
moved to recover on its bill of costs (Dkt. No. 819), and its
motion for attorney's fees (Dkt. No. 827). In support of
those motions, BMG submitted declarations from Michael J.
Allan, Walter D. Kelley, N. Thomas Connally, III, Stephanie
Roberts, and Jeremy D. Engle, as well as detailed billing
records and an itemized bill of costs. Relying on its success
in dismissing Round Hill as a plaintiff, Cox has also filed a
bill of costs (Dkt. No. 822) and a motion for attorney's
fees (Dkt. No. 836). In support, it has filed similar
documentation, including declarations from Jedediah
Wakefield, Craig C. Reilly, and Andrew P. Bridges.
BMG'S MOTION FOR ATTORNEY'S FEES
the Supreme Court's admonition that applications for
attorney's fees "should not result in a second major
litigation, " the petitions in this case have generated
hundreds of pages of filings and now present an array of
legal questions for the court to consider in awarding fees
and costs. Kirtsaengv. John Wiley & Sons, Inc.,
136 S.Ct. 1979, 1988 (2016) (internal quotations and
citations omitted). After setting forth the general legal
standard for awarding fees under § 505, the Court will
address the discrete legal questions raised by the
parties' respective motions. Upon consideration of the
parties' briefing and the relevant caselaw, the Court
will GRANT BMG's motion for attorney's fees, but
reduce the requested fee award by 20%. Relatedly, the Court
will DENY BMG's motion as it relates to nontaxable
litigation expenses. Next, it will GRANT BMG's bill of
costs, but will exclude certain costs and reduce it by 10%.
Finally, the Court will DENY Cox's motions for
attorney's fees and costs in full because it is not a
"prevailing party" under § 505.
505 of the Copyright Act of 1976 provides that "the
court in its discretion may allow the recovery of full costs
... [and] a reasonable attorney's fee to the prevailing
party as part of the costs ..." 17 U.S.C. § 505.
Interpreting this statute, the Supreme Court has explained
that prevailing plaintiffs and prevailing defendants are
equally eligible to receive fee awards. Fogerty v.
Fantasy, Inc., 510 U.S. 517, 527 (1994). That said, fees
are not awarded as a matter of right, and courts "must
make a... particularized, case-by-case assessment" when
deciding whether they should be awarded. Kirtsaeng,
136 S.Ct. at 1985. The key principle underlying this
assessment is whether awarding fees would further the
essential goals of the Copyright Act by "enriching the
general public through access to creative works."
Fogerty, 510 U.S. at 527.
Fourth Circuit has provided the following factors for
district courts to consider when deciding whether or not to
award fees: (1) the motivation of the parties; (2) the
objective reasonableness of the parties' legal and
factual positions; (3) the need to advance considerations of
compensation and deterrence; and (4) any other relevant
factor. Rosciszewski v. Arete Associates,
Inc., 1 F.3d 225, 234 (4th Cir. 1993); see also
Kirtsaeng, 136 S.Ct. at 1985 (listing similar
non-exclusive factors). Of these factors, "objective
reasonableness" is often given more weight than other
considerations; however, it is not the controlling factor,
and courts should consider the circumstances of the case as a
whole in making its decision. See Kirtsaeng, 136
S.Ct. at 1988. At the end of the day, the trial court
maintains broad discretion in awarding fees. Id.
court has determined that a fee award is appropriate, it must
then use the lodestar method to determine the amount to be
awarded. See Gisbrecht v. Barnhart, 535 U.S. 789,
801 (2002) (stating that, in assessing fees, "the
lodestar figure has, as its name suggests, become the guiding
light"). Once calculated, there is "a strong
presumption that the lodestar represents the reasonable
fee." City of Burlington v. Dague, 505 U.S.
557, 562 (1992) (internal quotation marks omitted).
Fourth Circuit employs a three-step methodology in
calculating the appropriate fee award. "First, the court
must determine the lodestar figure by multiplying the number
of reasonable hours expended times a reasonable rate."
McAfee v. Boczar, 738 F.3d 81, 88 (4th Cir. 2013).
In determining the reasonable number of hours and a
reasonable rate, the court should consider the twelve-factors
set out in Johnson v. Georgia Highway Express Inc.:
(1) The time and labor expended; (2) the novelty and
difficulty of the questions raised; (3) the skill required to
properly perform the legal services rendered; (4) the
attorney's opportunity costs in pressing the instant
litigation; (5) the customary fee for like work; (6) the
attorney's expectations at the outset of the litigation;
(7) the time limitations imposed by the client or
circumstances; (8) the amount in controversy and the results
obtained; (9) the experience, reputation, and ability of the
attorney; (10) the undesirability of the case within the
legal community in which the suit arose; (11) the nature and
length of the professional relationship between attorney and
client; and (12) attorneys' fees awards in similar cases.
488 F.2d 714, 717-19 (5th Cir.1974).
the lodestar figure is calculated, "the court must
subtract fees for hours spent on unsuccessful claims
unrelated to successful ones." McAfee, 738 F.3d
at 88. Finally, the court "award[s] some percentage of
the remaining amount, depending on the degree of success
enjoyed by the plaintiff." Id. This three-step
process determines the final amount of fees to which the
prevailing party is entitled.
is Entitled to Fees
seeks a total of $10, 479, 335.08 in attorney's fees. As
an initial matter, the parties do not dispute that BMG is a
"prevailing party" under § 505. The Supreme
Court has defined a prevailing party as "a party in
whose favor a judgement is rendered, regardless of the amount
of damages awarded ..." Buckhannon Bd. and Care
Home, Inc. v. West Virginia Dept. of Health and Human
Resources, 532 U.S. 598, 603 (2001). Although it did not
succeed on all of its claims, BMG was awarded a $25 million
jury verdict and Cox was found liable for willful
contributory infringement. This favorable verdict plainly
satisfies the "prevailing party" standard.
this initial concession, Cox relies on Kirtsaeng to
argue that, because its positions were objectively reasonable
and served to clarify an important and novel area of the law,
its litigation ultimately advanced the interests of the
Copyright Act. Therefore, when weighed with the other
Rosciszewski factors, Cox asserts that BMG should
not be entitled to any attorney's fees. The Court
disagrees for two reasons. First, although Cox appropriately
defended its novel legal position in the abstract, it also
made specific arguments that were objectively unreasonable as
a matter of fact and of law. Second, the remaining
Rosciszewski factors all cut against Cox. Together,
these considerations dictate the conclusion that BMG is
entitled to fees.
Court acknowledges the importance of Cox's overall
defense in light of the complex legal issues at play in this
case. It further recognizes that neither party embodied a
perfect model of civility or reasonableness in this case,
particularly in the discovery phase of the
litigation. That recognition, however, does not extend
to Cox's positions with regard to its DMCA defense, which
lacked a basis in fact and was therefore objectively
objective reasonableness of a party's position is an
important factor in deciding whether to award fees. See
Kirtsaeng, 136 S.Ct. at 1988. In a hard-fought
litigation battle such as this one, discovery disputes and
fierce briefing are to be expected, and they should not be
held too harshly against either party. Nonetheless, there are
a few instances in which Cox's advocacy crossed the line
of objective reasonableness. In particular, both Cox's
attempts to obscure its practice of reinstating infringing
customers, and its subsequent assertions of a deeply flawed
DMCA defense evince a meritless litigation position that Cox
highlights a number of Cox's alleged discovery abuses in
its briefing. Of these, four serve as useful examples of
Cox's attempts to obstruct BMG from obtaining facts
regarding its actual DMCA-related abuse practices. First, Cox
provided an unqualified 30(b)(6) witness who did not have
knowledge of the company's abuse practices, despite the
fact that those practices were a principal subject of
BMG's inquiry. See Allan Decl. ¶ 43, Ex. 4
at 45:18-46:20. Second, Cox's Senior Lead Abuse Manager,
Joseph Sikes, revealed a selective recollection of the term
"soft termination." See Allan Decl. ¶
40, Ex. 2 at 191:20-192:3, 192:15-193:10. Specifically,
almost immediately after stating that he was "not
familiar with that term", Mr. Sikes was presented with
evidence showing that he had personally used the term in
instant-message conversations. Id. Only after being
confronted with that evidence did Mr. Sikes explain what a
"soft termination" meant. Id. Third, Cox
significantly delayed the production of documents relating to
its abuse policy. See Allan Decl. ¶¶
21-26. Finally, Cox submitted a declaration from Mr.
Roseblatt who bluntly attempted to categorize Cox's soft
terminations and customer reinstatements as "occasional
variations" in spite of the overwhelming evidence to the
contrary. Roseblatt Decl. ¶ 118 (Dkt. No. 390).
these factual issues came to a head in the legal dispute over
Cox's DMCA defense at the summary judgement phase.
Although Cox's DMCA defense cannot be categorized as
frivolous or in bad faith, the Court found that "[t]he
record conclusively establishes that before the fall of 2012,
Cox did not implement its repeat infringer policy. Instead,
Cox publicly purported to comply with its policy, while
privately disparaging and intentionally circumventing the
DMCA's requirements." Mem. Op. at 31 (Dkt. No. 703).
The evidence supporting this conclusion was overwhelming, and
it included "smoking gun" email conversations.
See generally Id. at 31-42 (detailing the evidence
of Cox's informal policies to reinstate infringing
users). The most memorable of these contained Cox's own
abuse manager stating: "F ... the dmca!!!"
See BMG's Mem. in Supp. Fees at 5 (quoting
PX-1392.0001). Therefore, although Cox's defensive
arguments may have been reasonable as an abstract legal
theory, when viewed in light of the actual facts of the case,
they evince an objectively unreasonable litigation position
that was nonetheless vigorously defended.
parties' motivation is determined by a variety of
factors, including the nature of the infringement and any bad
faith by the defendant. Rosciszewski, 1 F.3d at 234.
Along those lines, courts have noted that willful
infringement "is an important factor favoring an award
of fees." Historical Research v. Cabral, 80
F.3d 377, 379 (9th Cir. 1996). In part, this is because
"defendants must not be able to sneer in the face of
copyright owners and copyright laws", and willful acts
suggest that deterrence is necessary to prevent further
violations. Cable/Home Comm'n Corp. v. Network
Prods., Inc., 902 F.2d 829, 851 (11th Cir. 1990)
(internal quotations omitted). As such, courts frequently
award fees where willfulness was an element of liability.
Id; see also Superior Form Builders, Inc. v. Dan Chase
Taxidermy Supply Co., 74 F.3d 488, 498 (4th Cir. 1996).
Indeed, Cox can only cite to one case in which the jury found
willful infringement but the court did not award fees.
See Lowry 's Reports, Inc. v. Legg Mason, Inc.,
302 F.Supp.2d 455, 463-64 (D. Md. 2004).
willfulness cannot seriously be contested. As the Court has
previously noted, the jury was appropriately instructed that
BMG needed to establish "by a preponderance of the
evidence that Cox had knowledge that its subscribers'
actions constituted infringement of BMG's copyrights,
acted with reckless disregard for the infringement of
BMG's copyrights, or was willfully blind to the
infringement of BMG's copyrights." Post-Trial Mem.
Op. at 32 (Dkt. No. 794). As detailed in the post-trial
Memorandum Opinion, the jury had ample evidence to support
its finding of willfulness, and it did so unequivocally in
its verdict. See Id. In other words, the jury found
that Cox knew, or should have known, that its behavior was
wrong and continued in spite of that awareness. Therefore,
its motivations can be seriously questioned, and fees are
appropriate in order to deter future violations.
Deterrence and Compensation
considerations blend into each of the Rosciszewski
factors. Put into more direct terms, however, the jury found
that Cox engaged in a willful and large-scale practice of
contributory infringement and, as a result, Cox should be
incentivized to change its behavior. Quantum Sys.
Integrators, Inc. v. SprintNextel Corp., No. CIV.A.
1:07-CV-491, 2009 WL 3423848, at *3 (E.D. Va. Oct. 16, 2009)
("[A]warding attorney's fees and costs in copyright
infringement actions likely will have a deterrent effect on
present and future infringers."). As a practical matter,
this change in behavior could take the form of a more robust
and effective DMCA program, or perhaps a different response
to infringement notices from companies like Rightscorp.
However Cox decides to address its users' repeat
infringement, it is clear that the company should be given a
proper financial incentive to change its policies and
procedures. For a company as large and as profitable as Cox,
responsibility for attorney's fees will help to initiate
that change and deter future violations.
compensation, Cox argues that the jury verdict is sufficient
compensation and that any attorney's fees would
"amount to a double recovery." Cox Opp'n at 18.
This argument misses the mark. Indeed, Cox's position is
foreclosed by the language of the Copyright Act itself, which
allows prevailing parties to recover both fees and costs. 18
U.S.C. § 505. The statute contemplates three separate
inquiries: (1) liability; (2) fees; and (3) costs. In this
case, the jury did not know how much it cost to litigate this
case and it was not instructed to consider attorney's
fees in its verdict. As such, finding that the verdict fully
remunerated BMG would undermine the separate fees and costs
inquiries, which were designed to compensate parties for
their enforcement of infringement laws, and which are a basis
for recovery apart from the statutory penalties available
under the Copyright Act.
case, the jury awarded $25 million in damages for
infringement. Separately, BMG incurred more than $10 million
in attorney's fees. Therefore, without an attorney's
fees award, the cost of litigating this case would erode
approximately 40% of the verdict. See Chi-Boy Music v.
Charlie Club, Inc., 930 F.2d 1224, 1230 (7th Cir. 1991)
("[Appellant] maintains that an award of fees would be
punitive because the plaintiffs already have been made more
than whole by the court's award of damages. We find no
merit in this argument."); see also Final
Order, Oracle USA v. Rimini Street, No. 2-10-cv-106
(D. Nev. Sept. 21, 2016) (awarding approximately $28 million
in fees in addition to a verdict of approximately $50
million). As such, the Court finds that a fees award is
necessary to properly compensate BMG for its litigation
the factors above strongly suggest that awarding fees here
would "further the policies of the Copyright Act."
Fogerty, 510 U.S. at 527. Moreover, "[i]n
determining the need for compensation, the Court may analyze
the relative size of the parties as well as the ability of a
party to be assessed with fees to pay the assessment."
Quantum Sys. Integrators, Inc. v. Sprint Nextel
Corp., No. CIV.A. 1:07-CV-491, 2009 WL 3423848, at *3
(E.D. Va. Oct. 16, 2009). Cox is a massive company with $18
billion in annual revenue. It fought this lawsuit with vigor every
step of the way, and it spared no expense in doing so. In
fighting back, BMG took huge risk and ultimately expended
more than $10 million in attorney's fees.
end, BMG was successful in asserting its copyrights.
Nonetheless, the prospect of bringing suit against Cox and
incurring millions of dollars in attorney's fees will
likely deter other potential plaintiffs from seeking to
enforce their rights. In order to continue to promote the
vindication of individuals' copyrights, therefore, BMG
(and others like it) should be rewarded for facing up against
willful infringers with deep pockets.
determined that BMG is eligible for fees, the Court's
analysis turns to the lodestar calculation. The legal
disputes over the reasonableness of the hourly rates and the
hours spent on the case will be addressed first, followed by
a table detailing the rates and hours calculated for each
individual attorney and paralegal.
general, the fee applicant has the duty to "submit
evidence supporting the hours worked and rates claimed. Where
the documentation of hours is inadequate, the district court
may reduce the award accordingly." Hensley v.
Eckerhart, 461 U.S. 424, 433 (1983). "In addition
to the attorney's own affidavits, the fees applicant must
produce satisfactory 'specific evidence of the prevailing
market rates in the relevant community' for the type of
work for which he seeks an award." Plyler v.
Evatt, 902 F.2d 273, 277 (4th Cir. 1990) (quoting
Spell v. McDaniel, 824 F.2d 1380, 1402 (4th Cir.
1987)). Specific evidence in this context will often take the
form of "affidavits of other local lawyers who are
familiar both with the skills of the fee applicants and more
generally with the type of work in the relevant
community." Robinson v. Equifax Information Servs.,
LLC, 560 F.3d 235, 245 (4th Cir. 2009); see also
Blum v. Stetson, 465 U.S. 886, 895 n.l 1 (stating that
the fee applicant has the burden "to produce
satisfactory evidence ... that the requested rates are in
line with those prevailing in the community for similar
services by lawyers of reasonably comparable skill,
experience and reputation."). "The relevant market
for determining the prevailing rate is ordinarily the
community in which the court where the action is prosecuted
sits." Rum Creek Coal Sales, Inc v. Caperton,
31 F.3d 169, 175 (4th Cir. 1994).
draws support for the reasonableness of its claimed rates
from three main sources. First, it cites the affidavits from
three separate attorneys that explain the detailed and
complex nature of the attorneys' work on this case. These
affidavits also show that the rates are customary for this
kind of litigation, and that, where they exceeded the
customary amount, they have been reduced to comport with the
customary rates of attorneys in the Alexandria area. Second,
BMG points to affidavits from Craig Reilly (Cox's local
counsel) in previous cases supporting the reasonableness of
similar rates in analogous cases. Third, BMG cites to the
matrix set forth in Vienna Metro (and the cases
adopting that matrix) to show that courts have previously
accepted analogous rates. Fees Opinion, Vienna Metro LLC
v. Pulte Home Corp., No. 1:10-cv-502, Dkt. 263 (E.D. Va.
Aug. 24, 2011) (hereinafter "Vienna
Vienna Metro matrix is reproduced below.
2011 Range of Hourly Rates in Northern Virginia
1-3 [years of experience]
4-7 [years of experience]
8-10 [years of experience]
11-19 [years of experience]
20[years of experience]