Bridgeport Music, Inc. v. London Music, U.K.

NOT RECOMMENDED FOR PUBLICATION
File Name: 07a0223n.06
Filed: March 28, 2007

Nos. 05-5045/5046/5047/5048/5049/5050/5051/5052/5053/5054/5055/5056/5057/5058

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

BRIDGEPORT MUSIC, INC. et al., )
)
Plaintiffs-Appellees, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
LONDON MUSIC, U.K. et al., ) MIDDLE DISTRICT OF TENNESSEE
)
Defendants-Appellants. )
) OPINION

Before: NORRIS, GILMAN, and McKEAGUE, Circuit Judges.

RONALD LEE GILMAN, Circuit Judge. Bridgeport Music, Inc. and Southfield Music,

Inc. (collectively, Bridgeport) filed suit against approximately 800 defendants involved in the record

and music-publishing business, alleging various claims of copyright infringement. Several years

later, Bridgeport moved to voluntarily dismiss with prejudice its actions against the 14 defendants

involved in this appeal. The district court entered the parties’ “Stipulation of Dismissal with

Prejudice,” but only after noting on the stipulation that “[t]he entry of this stipulation shall constitute

the judgment in this action.”

Believing that the dismissals made them the “prevailing parties” under 17 U.S.C. § 505 (the

relevant section of the Copyright Act), the defendants filed a motion for costs and attorney fees.

Bridgeport filed a cross-motion, requesting that the district court deny the defendants’ motion. The

-1-
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

court agreed with Bridgeport, reasoning that (1) the defendants were not the prevailing parties within

the meaning of Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and

Human Resources, 532 U.S. 598 (2001), and (2) even if they were the prevailing parties, the court

would exercise its discretion to deny their motion. On appeal, the defendants contest both of these

alternative rulings. For the reasons set forth below, we AFFIRM the judgment of the district court.

I. BACKGROUND

Bridgeport’s initial complaint, filed in May of 2001, was nearly one-thousand pages long and

contained approximately 500 separate counts set forth in more than 5,200 paragraphs. Deeming the

case in its original form “unmanageable,” the district court ordered the action severed into 477

separate actions, only 14 of which are at issue in this appeal. These 14 actions were among the

nearly 110 separate complaints served on the defendants and their affiliates in September of 2001.

Intensive litigation among all of the parties—replete with multiple discovery requests, court

appearances, and motions for summary judgment—continued until February of 2002, when the

district court ordered a stay to allow for the resolution of the first 10 cases, none of which are at issue

here.

The district court lifted the stay approximately one year later as to 40 additional actions,

including the 14 cases presently at issue, to allow for further discovery. In March of 2004,

Bridgeport offered to voluntarily dismiss each of the 14 cases in question, “but only on the condition

that Defendants waive their right to seek attorneys’ fees and costs under the Copyright Act.” The

defendants successfully persuaded Bridgeport to abandon this condition and, in April of 2004, the

--2--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

parties stipulated to voluntary dismissals with prejudice pursuant to Rule 41(a)(1) of the Federal

Rules of Civil Procedure, but subject to the defendants’ “express reservation of [the] right to seek

fees and costs.” On April 9, 2004, the district court entered the stipulated dismissals as “the

judgment in this action.”

Believing that they were the “prevailing parties” within the meaning of 17 U.S.C. § 505, the

defendants subsequently filed identical motions seeking costs and attorney fees. The district court

denied these motions, setting forth its reasoning in a fairly lengthy memorandum opinion that

encompasses two alternative rulings. Bridgeport Music, Inc. v. London Music, U.K., 345 F. Supp.

2d 836 (M.D. Tenn. 2004). Although the district court rendered this opinion only in the “low-

numbered case,” the court denied the defendants’ identical motions in the other 13 cases at issue in

this appeal simply by referring to its initial opinion.

The district court first concluded that the defendants were not the prevailing parties despite

having obtained a voluntary dismissal with prejudice. Id. at 842. Because only prevailing parties

are entitled to seek attorney fees under 17 U.S.C. § 505, the court denied the defendants’ motions.

The court’s prevailing-party determination relied exclusively on the Supreme Court’s decision in

Buckhannon.

Second, the district court concluded that “even if the defendants were found to be prevailing

parties in this matter, the Court opts to exercise its discretion by declining to award them fees and

costs.” Id. This alternative holding was based on the court’s application of the governing

multifactor standard for the discretionary award of attorney fees set forth in Fogerty v. Fantasy, Inc.,

510 U.S. 517 (1994).

--3--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

The defendants timely appealed, arguing that each of these two rulings was erroneous.

II. ANALYSIS

A. Standard of review

Section 505 of the Copyright Act provides that a district court “may, in its discretion, award

costs, including reasonable attorney fees, to the prevailing party in a civil suit.” Bridgeport Music,

Inc. v. Dimension Films, 410 F.3d 792, 807 (6th Cir. 2005) (citing 17 U.S.C. § 505). This court

accordingly reviews the denial of § 505 attorney-fee awards under the abuse-of-discretion standard.

Id. “A district court abuses its discretion when it relies on clearly erroneous factual findings,

improperly applies the law, or uses an erroneous legal standard.” Id.

Under the abuse-of-discretion standard, “this court must review the district court’s legal

conclusions de novo.” Taubman Co. v. Webfeats, 319 F.3d 770, 774 (6th Cir. 2003). The district

court’s threshold prevailing-party determination in the present case is one such legal conclusion. See

Bailey v. Mississippi, 407 F.3d 684, 687 (5th Cir. 2005) (“Post-Buckhannon, every Circuit to address

the issue has determined that the characterization of prevailing-party status for awards under fee-

shifting statutes . . . is a legal question subject to de novo review.”).

B. Prevailing-party determination under Buckhannon

The district court concluded, as an initial matter, that the defendants were not the prevailing

parties as defined by the Supreme Court in Buckhannon. In Buckhannon, the Court confronted a

procedurally different issue presented by the “catalyst theory”—namely, whether a plaintiff attains

prevailing-party status after the defendant voluntarily ceases the conduct that gave rise to the lawsuit.

--4--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

532 U.S. at 601. The Court held that only a party that has secured a judgment on the merits or a

court-ordered consent decree is “prevailing” within the meaning of the various federal fee-shifting

statutes to use that term. Id. at 604. Although the plaintiff in Buckhannon had achieved “the desired

result,” id. at 600, the defendant’s voluntary cessation did not effect the requisite “material alteration

of the legal relationship of the parties.” Id. at 604. Absent “the necessary judicial imprimatur on the

change” in the parties’ relationship, said the Court, the plaintiffs could not be considered the

prevailing parties. Id. at 605.

The defendants in the present case spent the majority of their brief insisting that Buckhannon

did nothing to “overrule the unbroken line of precedent, including under the Copyright Act, that

[voluntary] dismissals [with prejudice] constitute judgments on the merits, and the beneficiaries of

such dismissals are prevailing parties.” Moreover, to the extent that Buckhannon did establish a new

test for prevailing-party status, they argue that a voluntary dismissal with prejudice satisfies “the

foundational requirements” of that test. Specifically, the defendants assert that “there is a judgment

on the merits; there is a change in the legal relationships between the parties; that change has a

judicial imprimatur; and the res judicata effect of the dismissal is enforceable by the court.”

These arguments are supported by the only two appellate courts that to date have considered

whether a voluntary dismissal with prejudice satisfies the Buckhannon prevailing-party test. Both

decided the issue in the defendants’ favor. One is the Federal Circuit, which in Highway Equipment

Company v. FECO, Ltd., 469 F.3d 1027, 1035 (Fed. Cir. 2006), “conclude[d] that as a matter of

patent law, the dismissal with prejudice . . . has the necessary judicial imprimatur to constitute a

judicially sanctioned change in the legal relationship of the parties.” The other is the Seventh

--5--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

Circuit, which in Claiborne v. Wisdom, 414 F.3d 715 (7th Cir. 2005), affirmed an award of attorney

fees to the defendants under the Fair Housing Act, reasoning as follows:

In arguing that a voluntary dismissal fails the Buckhannon test, Claiborne is looking
at the wrong end of the telescope. The critical fact is not what prompted the district
court to act; it is instead what the district court decided to do. Here, the language of
the district court’s judgment makes it clear that a decision on the merits has been
rendered: Claiborne’s claims were dismissed with prejudice.

This order effects a material alteration of her legal relationship with the other parties,
because it terminates any claims she may have had against them arising out of this
set of operative facts. If she were to try to bring the same claim in the future, the
defendants would be entitled to rely on a claim of preclusion or res judicata defense.

Id. at 719 (emphasis in original).

But the defendants’ focus on the prevailing-party determination by the district court in the

present case is misplaced. That allegedly erroneous ruling was neither the end of the court’s analysis

nor dispositive of the defendants’ motion. If it had been, the district court would not have proceeded

to decide that the defendants were not entitled to attorney fees pursuant to the factors set out in

Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). A favorable prevailing-party determination means

only that the relevant party is not precluded from seeking attorney fees. Whether, and to what extent,

that party will in fact be awarded attorney fees remains subject to the sound discretion of the district

court. In its memorandum opinion, the court below could not have been clearer on this very point:

Alternatively, even if the defendants were found to be prevailing parties in this
matter, the Court opts to exercise its discretion by declining to award them fees and
costs in this matter. The Supreme Court has made clear that fees are awarded to
prevailing parties under the Copyright Act only as a matter of the court’s discretion.

--6--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

London Music, 345 F. Supp. 2d at 842 (citing Fogerty, 510 U.S. at 534). By its own terms,

therefore, the district court’s order denying the defendants’ motion for costs and fees did not turn

solely on its prevailing-party determination.

Reversing the prevailing-party determination and remanding the case to the district court, in

short, would have no effect on the ultimate outcome of this appeal. We accordingly decline to do

so. This approach is consistent with prior decisions of this court, especially United States v. Alpha

Medical, Inc., 102 F. App’x 8 (6th Cir. 2004). In Alpha Medical, the court confronted a legal

question that is virtually identical to the one at issue in the present case and chose a similarly

cautious tack in not resolving it:

There is no clear precedent, particularly in this circuit, as to whether a plaintiff’s
voluntary dismissal with prejudice, motivated by pure practicality rather than by any
merit in the defendant’s position, makes the defendant a “prevailing party” for
purposes of an award of costs. However, we need not resolve that question at this
time because, even if it is assumed that [the defendant] is a prevailing party, as the
district court determined in this case, the denial of costs is properly affirmed.

Id. at 10 (emphasis added). Because the district court in the present case similarly made clear that

it would deny the defendants’ motion for attorney fees “even if [they] . . . were found to be prevailing

parties,” London Music, 345 F. Supp. 2d at 842, we conclude that any Buckhannon error, assuming

without deciding that it exists, was harmless.

C. Fogerty analysis

The only material question on appeal, then, is whether the district court abused its discretion

in denying the defendants’ motion for attorney fees. To reiterate, “such abuse exists if the district

court relied on erroneous findings of fact, applied the wrong legal standard, misapplied the correct

--7--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

legal standard when reaching a conclusion, or made a clear error of judgment.” Nafziger v.

McDermott Int’l, Inc., 467 F.3d 514, 522 (6th Cir. 2006) (brackets and quotation marks omitted).

Neither party disputes that the multifactor standard set forth by the Supreme Court in Fogerty

governs discretionary attorney-fees determinations under the Copyright Act. See Bridgeport Music,

Inc. v. Dimension Films, 383 F.3d 390, 404-05 (6th Cir. 2004) (adopting Fogerty as the prevailing

standard for attorney-fees-award determinations). “‘There is no precise rule or formula for making

these determinations,’ but instead equitable discretion should be exercised ‘in light of the

considerations we have identified.’” Fogerty, 510 U.S. at 534 (quoting Hensley v. Eckerhart, 461

U.S. 424, 436-37 (1983)). These include the following “nonexclusive factors”: “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.”

Fogerty, 510 U.S. at 534 n.19.

The district court in the present case explicitly based its attorney-fees ruling on the

Fogerty factors. Its analysis applying those factors is set forth below:

Early in this case the Court evaluated the First Amended Complaint and found that
it adequately pleaded violations of federal law against the defendants. While the
defendants continue to maintain that the plaintiffs’ claims were factually
unreasonable for a variety of reasons, they do not dispute that the plaintiffs wrote to
them prior to filing suit in a effort to inquire into the very facts at issue, and that the
defendants did not respond. As the Court indicated at the October 12, 2004 hearing
on this matter, there is certainly no legal requirement that the defendants work with
a potential plaintiff to clarify copyright issues. Refusal to do so, however, does tend
to undercut their claims regarding the plaintiffs’ motivations and unreasonableness.

This refusal also bolsters the Court’s conclusion, discussed above, that the deterrence
and compensation factors do not carry the day for the defendants. Perhaps when a
defendant has documents in hand or simple explanations that could spare it the

--8--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

months of litigation and tens of thousands of dollars in costs of which it now
complains, it bears some of the risk for refusing to produce them. The Western
District of Texas would apparently agree, as evidenced by its own analysis in a
copyright action under similar circumstances . . . .

London Music, 345 F. Supp. 2d at 843 (citations omitted).

Notwithstanding this seemingly unassailable factor-by-factor analysis, the defendants insist

that the district court abused its discretion by effectively “rel[ying] on erroneous findings of fact.”

See Nafziger, 467 F.3d at 522. Specifically, the defendants contend that the lone “fact” on which

the district court based its analysis of each of the Fogerty factors—namely, the defendants’ failure

to respond to Bridgeport’s pre-lawsuit letters—was not entirely true. The defendants allege that

“[t]here was no demand letter sent to Defendants in at least nine of the 14 cases.” (Emphasis in

original.) Moreover, they insist that “[i]n the few cases where a demand letter had been sent,

Defendants responded to the letter, a settlement was reached between Bridgeport and other interested

parties that included Defendants, or the letter was sent many years after the purported infringement

had ceased.” (Citations omitted.)

The district court’s error, according to the defendants, was therefore its decision to apply its

Fogerty analysis in one case to each of the remaining 13 cases involved in this appeal via wholesale

incorporation. This “indiscriminate analysis,” in the defendants’ words, runs afoul of the “fact-

specific,” case-by-case analysis mandated by Fogerty. The defendants’ argument has initial

plausibility. Most notably, Bridgeport itself concedes in its brief that the district court’s decision to

import its refusal-to-respond finding in one case to all 14 cases was factually erroneous, noting that

“before suit, Appellees wrote to Universal in seven of the fourteen cases.” (Emphasis added.)

--9--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

Because one of the recognized grounds for finding an abuse of discretion is the district

court’s “rel[iance] on erroneous findings of fact,” Nafziger, 467 F.3d at 522, this concession by

Bridgeport would warrant a reversal of the district court’s decision unless we determine that the

erroneous finding was harmless. The dispositive question, then, is whether the partially erroneous,

refusal-to-respond finding in fact constituted the entirety of the district court’s Fogerty analysis as

the defendants claim.

Viewed through this lens, the defendants’ argument weakens. The district court certainly

referenced the refusal-to-respond finding multiple times—once in support of each of the four

Fogerty factors that the court discussed. London Music, 345 F. Supp. 2d at 843. But in arguing that

the court’s analysis therefore “did not take into account the numerous other factors,” the defendants

conflate the Fogerty factors with the facts pertinent to an analysis of each of those factors. There

is no law, of course, that prohibits a judge from considering the same fact under multiple categories.

The refusal-to-respond finding, moreover, was not the sole fact on which the district court

relied in performing its Fogerty analysis. Regarding the alleged frivolousness and objective

unreasonableness of Bridgeport’s claims, for example, the court reiterated its earlier conclusion that

“the First Amended Complaint . . . adequately pleaded violations of federal law against the

defendants.” London Music, 345 F. Supp. 2d at 843. Although the defendants correctly noted at oral

argument that properly pleading a cause of action does not alone make it objectively reasonable,

counsel for Bridgeport responded by pointing out that the district court was also aware that

Bridgeport has prevailed in the only two of its cases that have reached trial to date, one of which

included a multimillion-dollar punitive-damage award against related defendants. This court,

--10--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

moreover, has made clear that “because the Fogerty factors are nonexclusive, not every factor must

weigh in favor of the prevailing party.” Bridgeport Music, Inc. v. Diamond Time, Ltd., 371 F.3d 883,

894 (6th Cir. 2004).

To be sure, the district court did reference the defendants’ refusal to respond to the demand

letter from Bridgeport, holding that it “undercut” their “claims regarding the plaintiffs’ motivations

and unreasonableness.” London Music, 345 F. Supp. 2d at 843. The defendants attack this portion

of the court’s analysis by arguing that their “purported failure to respond to a demand letter cannot

logically make otherwise unreasonable claims ‘objectively reasonable.’” But this argument is

contrary to the district court’s determination. The court made clear that Bridgeport’s claims, in its

opinion, were “otherwise” reasonable. This was the background presumption against which the

defendants were working—not the other way around.

The district court’s analysis of the deterrence and compensation factors is even more telling.

Regarding those factors, the court stated that “[t]his refusal [to respond to the plaintiffs’ letter] also

bolsters the Court’s conclusion, discussed above, that the deterrence and compensation factors do

not carry the day for the defendants.” Id. at 843. These words incorporate by reference the district

court’s multipage, policy-based compensation-and-deterrence analysis set forth earlier in its

memorandum opinion. See id. at 841-42 (noting, among other things, that “there are other forces

at play [beside attorney fees] to minimize if not eliminate” the risk that “rogue plaintiffs might

intentionally file frivolous complaints and subject defendants to lengthy litigation”). The court thus

explicitly determined that its refusal-to-respond finding “bolster[ed]” its prior analysis without

actually substituting for it. Accordingly, the defendants’ characterization of the court’s Fogerty

--11--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

analysis as giving “conclusive effect to a single fact” (i.e., the refusal-to-respond finding) is

incorrect. To the extent that the district court treated the refusal-to-respond finding as an additional

factor unto itself, nothing in Fogerty prevents the court from having done so. The list of relevant

factors appears in a footnote in Fogerty, and, as noted above, the Fogerty Court specifically deemed

the list to be “nonexclusive.” 510 U.S. at 534 n.19.

Nor did the district court commit “a clear error of judgment” in denying the defendants’

motion. See Nafziger, 467 F.3d at 522. This was a factually complex case that the court deemed

“unworkably extensive,” London Music, 345 F. Supp. 2d at 837, initially involving nearly 800

defendants and a complaint that was almost one-thousand pages in length. Laudably, the district

court played a proactive role throughout the course of the ensuing five years of litigation by paring

the case down to 477 more manageable parts. Even at this stage of the proceedings—where the

parties have submitted 14, multihundred-page joint appendices and unusually long briefs—it remains

beyond the ordinary scope of federal cases.

This court’s parting words in Alpha Medical bear repeating:

This was a lengthy and complex case with which the district court was closely
familiar. Upon careful consideration, the district court concluded that it was
appropriate to decline to award costs to Alpha in this case. This conclusion was
based upon the context in which the government’s voluntary dismissal occurred.
Alpha’s counter-arguments are insufficient for us to find an abuse of discretion.

102 F. App’x at 10. This is not to say, of course, that a district court can never abuse its discretion

where the case is “lengthy and complex.” But where, as here, the court employs the proper legal

standard and specifically and thoroughly states the reasons for its decision, that decision is entitled

to considerable deference. The fact that the very same district judge involved in this appeal has

--12--
Nos. 05-5045, 5046, 5047, 5048, 5049, 5050, 5051, 5052, 5053, 5054, 5055, 5056, 5057, and 5058
Bridgeport Music, Inc. et al. v. London Music, U.K. et al.

awarded attorney fees to other defendants in related cases further supports the conclusion that he

employed his discretion soundly in the present case. See Dimension Films, 410 F.3d at 807-10

(citing “deterrence” and “the manner in which the plaintiffs litigated this action” as the principal

factors militating in favor of affirming the district court’s award of attorney fees to the defendants

in that appeal); Diamond Time, 371 F.3d at 894-96 (affirming the district court’s award of attorney

fees because it was, among other things, “in the interest of justice and in furtherance of the objectives

of the Copyright Act”).

III. CONCLUSION

For all of the reasons set forth above, we AFFIRM the judgment of the district court.

--13--