Spooner v. EEN, INC.

United States Court of Appeals
For the First Circuit

No. 10-2393

JASON SPOONER,

Plaintiff, Appellee,

v.

EEN, INC. AND DAN EGAN,

Defendants, Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. George Z. Singal, U.S. District Judge]

Before

Howard, Selya and Thompson,
Circuit Judges.

Robert Edmond Mittel, with whom MittelAsen, LLC was on brief,
for appellants.
Adam S. Taylor, with whom André G. Duchette and Taylor,
McCormack & Frame, LLC were on brief, for appellee.

July 5, 2011
 SELYA, Circuit Judge. After prevailing at trial in this

copyright infringement case, the plaintiff sought and recovered

substantial attorneys' fees. The defendants contest the fee award.

Concluding that the district court acted within the realm of its

discretion, we affirm.

I. BACKGROUND

The relevant facts are easily catalogued. On August 8,

2008, plaintiff-appellee Jason Spooner filed a complaint in the

district court alleging that a gaggle of defendants — Dan Egan,

EEN, Inc. (Egan's media production company),1 the Sugarloaf/USA ski

resort, and its hierarchs — had engaged in "blatant and

unauthorized use" of the plaintiff's protected musical composition,

in violation of the Copyright Act, 17 U.S.C. § 106. The "use"

occurred when EEN included a song composed, copyrighted, and

performed by the plaintiff in a commercial advertisement prepared

for television and internet display on behalf of Sugarloaf. The

plaintiff had not authorized this use.

Dismayed by the infringement of his copyright, he sought

an injunction, statutory damages, and costs (including attorneys'

fees) under the Copyright Act. What followed was the litigation

equivalent of hand-to-hand combat.

1
The original complaint erroneously named a predecessor
entity, but the plaintiff corrected the bevue early in the
litigation. For ease in reference, we use the shorthand "EEN"
throughout this opinion.

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 It would serve no useful purpose to recite book and

verse. It suffices to say that the parties engaged in frenetic

motions practice, conducted extensive discovery, and squabbled over

a plethora of issues (large and small). During this pretrial

period, the protagonists struggled to reach a global settlement.

That effort proved unavailing but, in October of 2008, the

plaintiff settled with the Sugarloaf defendants for $30,000,

dismissing the claims against those parties. See Fed. R. Civ. P.

41(a)(1)(A)(ii). Shortly thereafter, Egan and EEN (hereinafter,

the defendants) made a $10,000 offer of judgment under Federal Rule

of Civil Procedure 68. This offer encompassed both damages and

costs (including attorneys' fees). The plaintiff rejected it.

At a meeting held on November 17, 2008, the defendants

offered the sum of $20,000 in full settlement. This second offer,

which was not tendered under the aegis of Rule 68, went unrequited.

After settlement negotiations fizzled, the case was tried

to the court. The plaintiff prevailed: the court found that the

defendants had willfully infringed the protected work and that Egan

had failed to act celeritously in response to the plaintiff's

request to retire the Sugarloaf commercial. Spooner v. EEN, Inc.

(Spooner I), No. 2:08-cv-00262, 2010 WL 1930239, at *7-8 (D. Me.

May 11, 2010). Accordingly, the court granted the plaintiff both

injunctive relief and statutory damages in the amount of $40,000.

Id. at *8-9. Because all of the parties originally sued were

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jointly and severally liable for the statutory damages, the court

set off the amount paid in the Sugarloaf settlement, leaving the

plaintiff with a net additional recovery of $10,000 in statutory

damages. Id. at *9. Finally, the court determined that the

plaintiff should recover attorneys' fees pursuant to 17 U.S.C.

§ 505. Id. at *10.

A satellite proceeding ensued. After reviewing the

plaintiff's request and the defendants' opposition, the court

awarded the plaintiff fees of $98,745.80. Spooner v. EEN, Inc.

(Spooner II), No. 2:08-cv-00262, 2010 WL 4286358, at *5 (D. Me.

Oct. 28, 2010). The plaintiff's request for costs (other than

attorneys' fees) was denied without prejudice. See id.

The plaintiff filed an amended request for costs (other

than attorneys' fees). That matter was still unresolved when the

defendants appealed from the order awarding attorneys' fees.

II. ANALYSIS

We review a district court's award of attorneys' fees for

abuse of discretion. Hutchinson ex rel. Julien v. Patrick, 636

F.3d 1, 13 (1st Cir. 2011). Under this rubric, "we will set aside

a fee award only if it clearly appears that the trial court ignored

a factor deserving significant weight, relied upon an improper

factor, or evaluated all the proper factors (and no improper ones),

but made a serious mistake in weighing them." Gay Officers Action

League v. Puerto Rico, 247 F.3d 288, 292-93 (1st Cir. 2001); see

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Latin Am. Music Co. v. Am. Soc'y of Composers, Authors &

Publishers, ___ F.3d ___, ___ (1st Cir. 2011) [No. 10-1780, slip

op. at 6]. In all events, a material error of law constitutes an

abuse of discretion. Torres-Rivera v. O'Neill-Cancel, 524 F.3d

331, 336 (1st Cir. 2008).

In the American justice system, the parties customarily

bear the responsibility for paying their own lawyers. Alyeska

Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975).

But this general rule, like virtually every general rule, admits of

exceptions. The Copyright Act creates such an exception: it

authorizes a district court "in its discretion" to "award a

reasonable attorney's fee to the prevailing party" in a copyright

action.2 17 U.S.C. § 505; see Fogerty v. Fantasy, Inc., 510 U.S.

517, 533-34 (1994). A "prevailing party" is one who "has prevailed

on the merits of at least some of his claims." Buckhannon Bd. &

Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S.

598, 603 (2001) (quoting Hanrahan v. Hampton, 446 U.S. 754, 758

(1980) (per curiam)). This definition applies in the precincts

2
In considering whether to exercise its discretion to grant
attorneys' fees to a prevailing party under the Copyright Act, a
court may consider a wide swath of factors, including
"frivolousness, motivation, objective unreasonableness (both in the
factual and in the legal components of the case) and the need . . .
to advance considerations of compensation and deterrence." Fogerty
v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994) (quoting Lieb v.
Topstone Indus., Inc., 788 F.2d 151, 156 (3d Cir. 1986)).

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patrolled by section 505. See Torres-Negrón v. J&N Records, LLC,

504 F.3d 151, 164 & n.9 (1st Cir. 2007).

The defendants acknowledge (as they must) that the

plaintiff is a prevailing party. They nonetheless challenge the

fee award for two reasons. First, they argue that the plaintiff's

fee request was so excessive that the district court ought not to

have awarded any fees at all. Second, they argue that, even if an

award was warranted, the court should have limited it to work

performed prior to November 17, 2008 (the date on which the

plaintiff rejected the defendants' $20,000 settlement offer).

After pausing to clear away a jurisdictional obstacle, we discuss

these claims sequentially.

A. The Jurisdictional Obstacle.

There is a jurisdictional question in this case.

Although the defendants' notice of appeal was directed exclusively

at the order granting an award of attorneys' fees, the plaintiff's

request for other costs remained pending in the district court. As

a general rule, a post-verdict fee award is treated as distinct

from an award of costs and, therefore, the fee award may be

appealed even if the question of costs is unresolved. See Fed. R.

Civ. P. 54(d); see also Marek v. Chesny, 473 U.S. 1, 8 (1985).

Copyright cases, however, require the use of a different

template. The Copyright Act authorizes a court to "award a

reasonable attorney's fee to the prevailing party as part of the

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costs." 17 U.S.C. § 505 (emphasis supplied). When a statute

specifies that attorneys' fees are a part of costs in a particular

class of cases, an inquiring court must honor that directive. See

Marek, 473 U.S. at 9. This taxonomy has practical consequences,

one of which is that as long as the overall question of costs

remains unresolved, an award of attorneys' fees — itself a

component of the total recoverable costs — does not constitute a

final and appealable order. See 28 U.S.C. § 1291; see also García-

Goyco v. Law Envtl. Consultants, Inc., 428 F.3d 14, 18 (1st Cir.

2005) (explaining, in case where district court denied section 505

request for fees without prejudice, that an initial order granting

plaintiff a specific period within which to refile is typically not

considered final).

A court is duty-bound to notice, and act upon, defects in

its subject matter jurisdiction sua sponte. McCulloch v. Vélez,

364 F.3d 1, 5 (1st Cir. 2004). Thus, even though the parties had

not questioned appellate jurisdiction, we raised the point at oral

argument.

Jurisdictional defects sometimes can be remedied by

corrective measures even after an appeal is filed. See Kossler v.

Crisanti, 564 F.3d 181, 186 (3d Cir. 2009) (en banc) (explaining

that parties cured initial jurisdictional defect caused by lack of

final judgment by stipulating to entry of judgment on all claims

that remained open in the district court); see also Grupo Dataflux

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v. Atlas Global Grp., 541 U.S. 567, 573 (2004). Mindful of this

possibility, we informally stayed the proceedings while the parties

attended to this jurisdictional defect. In rapid sequence, the

parties stipulated to the amount of the recoverable costs (other

than attorneys' fees), the district court entered an appropriate

order (taxing those costs against the defendants in the amount of

$3,413.05), and the clerk of the district court certified that

result to us. This corrective action left nothing open in the

district court. Consequently, it cured the jurisdictional defect

and rendered the fee award final and appealable.

B. The Fee Request.

The defendants' principal claim is that the plaintiff's

request for fees reflects such a degree of extravagance that the

only appropriate response to it was an outright denial of any fees.

To put this claim into perspective, we first describe the

conventional framework that courts use in fashioning fee awards:

the lodestar method.3 See, e.g., Perdue v. Kenny A. ex rel. Winn,

130 S. Ct. 1662, 1672 (2010); Lipsett v. Blanco, 975 F.2d 934, 937

(1st Cir. 1992). This approach requires the district court to

ascertain the number of hours productively expended and multiply

that time by reasonable hourly rates. Hensley v. Eckerhart, 461

3
The lodestar method is the gold standard for calculating fee
awards under a broad array of federal fee-shifting statutes. The
case law under these statutes is, insofar as it pertains to
constructing and applying the lodestar, generally interchangeable.
See, e.g., Hensley v. Eckerhart, 461 U.S. 424, 433 n.7 (1983).

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U.S. 424, 433 (1983); Gay Officers Action League, 247 F.3d at 295.

The obligation to support both the time and rate components rests

with the party seeking the award, Hensley, 461 U.S. at 433, but the

opposing party may proffer countervailing evidence, see Foley v.

City of Lowell, 948 F.2d 10, 20-21 (1st Cir. 1991). Appropriate

supporting documentation includes counsel's contemporaneous time

and billing records and information establishing the usual and

customary rates in the marketplace for comparably credentialed

counsel. Gay Officers Action League, 247 F.3d at 295-96; see

United States v. One Star Class Sloop Sailboat, 546 F.3d 26, 40

(1st Cir. 2008).

Once the parties have made their submissions, the court

determines how much compensable time counsel spent on the case,

deleting any "duplicative, unproductive, or excessive hours." Gay

Officers Action League, 247 F.3d at 295. The court then applies

prevailing rates in the community to arrive at the lodestar. Id.

Although the lodestar amount "represents a presumptively reasonable

fee," Lipsett, 975 F.2d at 937, the court may adjust it up or down

for other factors, say, a significant gap between the relief

requested and the result obtained. See, e.g., De Jesús Nazario v.

Morris Rodríguez, 554 F.3d 196, 207 (1st Cir. 2009).

In this instance, the district court faithfully followed

the lodestar method. The plaintiff requested fees totaling

$175,714.30. The court noted the defendants' argument that this

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request was so exorbitant that it warranted an outright denial of

fees, Spooner II, 2010 WL 4286358, at *2, but chose not to go down

that road. Instead, it undertook a methodical appraisal of the fee

request.

The court observed approvingly that the plaintiff had

pared down his fee request before filing it, writing off more than

100 hours. Id. at *3. It trimmed the request even further,

winnowing out hours that it deemed "readily attributable" to the

plaintiff's claims against the Sugarloaf defendants. Id.

Similarly, it deleted hours relating to the plaintiff's quixotic

endeavor to secure a pretrial attachment of Egan's property. Id.

It then adjusted the time spent to reflect the plaintiff's

unsuccessful attempt to split his infringement claim into two

pieces (one relating to composition and the other to recording),

deducting time attributable to that failed initiative. Id. at *4.

With respect to rates, the court reported that the

defendants had offered nothing to show that the rates proposed by

the plaintiff were unreasonable. Id. at *3. Noting that these

rates were lower than those awarded for work done by the same

lawyers in a recent case in the District of Maine, the court

pronounced them reasonable. Id. It proceeded to multiply the

reduced hours by the approved rates to fashion the lodestar —

$98,745.80. Id. at *4.

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 The court freely acknowledged that this dollar figure far

exceeded both the statutory damages that the plaintiff had

recovered ($40,000) and the lesser amount that he stood to collect

after setting off the Sugarloaf settlement ($10,000). Id. at *4 &

n.5. But the court explained that the defendants had willfully

infringed the plaintiff's copyright and, moreover, that the

plaintiff had secured a permanent injunction, which "may have more

value . . . than the statutory damage award." Id. at *4.

Discerning no reason to make further adjustments to the lodestar,

the court awarded the plaintiff attorneys' fees of $98,745.80. Id.

at *5.

Against this backdrop, we turn to the defendants' plaint

that the amount of the fee request was so excessive that the court

should have refused to award any fees at all.4 It is obvious that

the amount of fees requested by the plaintiff is quite large in

relation to the statutory damages recovered (whether those damages

are viewed before or after the Sugarloaf set-off). The law,

however, does not demand strict proportionality between fees and

damages. See City of Riverside v. Rivera, 477 U.S. 561, 574 (1986)

(plurality op.); cf. Hensley, 461 U.S. at 436 (explaining that

"[t]here is no precise rule or formula" for calculating the impact

4
The defendants' complaint about excessiveness compares the
amount of the plaintiff's request for fees to the amount of damages
recovered. See Appellants' Br. at 7, 10. The defendants do not
claim a fatal imbalance between the amount of fees requested and
the amount awarded by the district court.

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of plaintiff's degree of success on the amount of a reasonable fee

award).

This rule makes eminently good sense: a strict

proportionality requirement would overlook entirely the value of

other important litigation goals. That kind of rigidity would

frustrate the core purpose that underlies many fee-shifting

statutes, which are designed to afford private parties the

opportunity to vindicate rights that serve some broad public good.

See City of Riverside, 477 U.S. at 578. Copyright cases are a

prime example of a situation in which obtaining non-monetary relief

or establishing a principle may be worth considerably more than the

damages recovered.

The defendants assert that this case does not involve any

issues of significant societal importance. That assertion rings

hollow. Attorneys' fees are made available to prevailing parties

in copyright cases in order to "vindicat[e] the overriding purpose

of the Copyright Act: to encourage the production of original

literary, artistic, and musical expression for the public good."

Mag Jewelry Co. v. Cherokee, Inc., 496 F.3d 108, 122 (1st Cir.

2007) (alteration in original) (quoting Lotus Dev. Corp. v. Borland

Int'l, Inc., 140 F.3d 70, 73 (1st Cir. 1998)). The plaintiff's

suit serves precisely this purpose.

We do not mean to imply that, once a party prevails in a

case that falls within the compass of a federal fee-shifting

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statute, the sky is the limit with respect to a request for

attorneys' fees. If the requested fees are gluttonously high, a

court has discretion to deny fees entirely. See First State Ins.

Grp. v. Nationwide Mut. Ins. Co., 402 F.3d 43, 44 (1st Cir. 2005)

(per curiam); Fair Hous. Council of Greater Wash. v. Landow, 999

F.2d 92, 96 (4th Cir. 1993); Lewis v. Kendrick, 944 F.2d 949, 958

(1st Cir. 1991). That is especially true in a copyright

infringement action, where winning in itself does not automatically

entitle the prevailing party to an award of attorneys' fees. See,

e.g., Fogerty, 510 U.S. at 534; see also note 1, supra.

Be that as it may, denying fees altogether because of an

overly ambitious fee request is a drastic step. Such a step is

powerful medicine, to be administered sparingly and in only the

most egregious cases. See Lewis, 944 F.2d at 958. Should a court

find that a fee request has been outrageously inflated or that an

attorney is logging unnecessary hours in order to capitalize on

prevailing party status, it might well consider such a step. But

more often, a court that is faced with a fee request that seems

inordinately high can do justice between the parties by the simple

expedient of shrinking the request down to an appropriate size.

See Foley, 948 F.2d at 19-20 ("Often, when the amount sought is

large but the actual recovery is small, fees may be reduced

somewhat.").

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 Of course, the trial court is in the best position to

gauge the bona fides of a request for fees. Where, as here, the

trial court makes manifest that it understands the extent of its

discretion, yet decides not to deny attorneys' fees completely to

a prevailing plaintiff on the basis of an excessive request, it is

hard to imagine that an appellate court will interfere. Cf. Latin

Am. Music, ___ F.3d at ___ [slip op. at 6] (noting the exceptional

degree of deference that courts of appeals afford district courts'

determinations vis-à-vis fee awards in copyright cases); Lipsett,

975 F.2d at 937 (similar).

The facts of this case do not remotely suggest a need for

us to usurp the district court's province. After all, the

plaintiff voluntarily surrendered some hours before submitting his

fee request, and the district court had no apparent difficulty in

separating wheat from chaff with respect to the remainder. The

court skillfully adjusted the number of hours downward and

carefully explained its reasoning for each reduction. As to the

time allowed, the defendants have not shown (indeed, they have made

no effort to show) that any particular hours were improvidently

included. By the same token, they have not shown (indeed, they

have made no effort to show) that the rates requested were

esurient. These failures are a testament to the fairness of the

district court's tamisage. See Hutchinson, 636 F.3d at 14-15

(remarking that defendants' failure to submit evidence opposing fee

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request undercut their argument that the district court abused its

discretion in awarding plaintiffs the full amount sought). And,

finally, the amount of fees requested does not seem grossly

disproportionate to the intrinsic value of the relief obtained.

The short of it is that the district court determined, at

least implicitly, that the plaintiff's request for fees, though

high, was not so outrageous as to call for a total denial. The

defendants have not come within a country mile of showing that this

determination constituted an abuse of discretion. The defendants'

first claim of error is, therefore, unavailing.

C. The Settlement Offer.

The defendants next argue that even if the plaintiff was

entitled to a fee award, the district court should have limited

that award to work performed prior to November 17, 2008 (when the

plaintiff rejected the defendants' $20,000 settlement offer). In

support, the defendants cite French v. Corporate Receivables, Inc.,

489 F.3d 402 (1st Cir. 2007). Their reliance on French is

misplaced.

French involved a denial of fees to plaintiffs who had

achieved limited success following their rejection of a more

munificent offer. Id. at 404. In that case, however, the rejected

settlement was in the form of an offer of judgment pursuant to Rule

68. Id. at 403. There is a significant difference between the

consequences of rejecting a Rule 68 offer of judgment and the

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consequences of rejecting a garden-variety settlement offer. We

explain briefly.

"The plain purpose of Rule 68 is to encourage settlement

and avoid litigation." Marek, 473 U.S. at 5. As a means to

accomplishing this purpose, Rule 68 lays out specific procedures

that make offers of judgment thereunder unique. The rule "allows

a defendant to make a firm, non-negotiable offer of judgment,"

which includes costs accrued to that point, leaving the plaintiff

two options: either accept or reject the offer within a set period.

Util. Automation 2000, Inc. v. Choctawhatchee Elec. Coop., Inc.,

298 F.3d 1238, 1240 (11th Cir. 2002); see Fed. R. Civ. P. 68(a).

If the plaintiff does neither, the offer is deemed to be withdrawn.

Fed. R. Civ. P. 68(b). A rejected Rule 68 offer, not improved upon

at trial, obligates the plaintiff to pay the defense costs incurred

subsequent to the rejection. Fed. R. Civ. P. 68(d). In that

situation, the plaintiff cannot reasonably expect to recover his

own subsequently incurred fees.

Rule 68, however, is sui generis. A garden-variety

settlement offer made without resort to Rule 68 affords the offeror

no similar protection; he cannot reasonably expect to gain the

benefits that Rule 68 confers. See Coutin v. Young & Rubicam P.R.,

Inc., 124 F.3d 331, 341 & n.8 (1st Cir. 1997).

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 The $20,000 offer on which the defendants rely was not

made pursuant to Rule 68.5 Given that missing link, the

defendants' claim of error collapses. It is only a Rule 68 offer

of judgment, more generous than the judgment ultimately secured,

that operates to cut off a plaintiff's entitlement to fees. See

French, 489 F.3d at 403-04; Coutin, 124 F.3d at 341.

III. CONCLUSION

We need go no further.6 For aught that appears, the

district court thoughtfully considered the question of fees,

faithfully applied the lodestar method, and gave a plausible

rationale for the amount of the award. The defendants have not

challenged the reasonableness of either the hours allowed or the

rates applied. Instead, they have staked their appeal on two

claims of error, which (as we explained above) are meritless.

Affirmed.

5
The defendants did make an earlier offer of judgment under
Rule 68, but that offer was in the amount of $10,000. The
defendants do not assert that the plaintiff's rejection of that
earlier offer operated to cut off his entitlement to fees.
6
In his brief, the plaintiff asks that we award him fees on
appeal. An application for an award of fees on appeal should be
filed as a separate motion within 30 days of the entry of final
judgment in this court. See 1st Cir. R. 39.1. If the plaintiff
wishes to pursue his quest for fees on appeal, he must follow that
procedure.

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