Latin American Music Company, Inc. v. Spanish Broadcasting System, Inc.

Background

Latin American Music Company, Inc. (LAMCO) and Asociación de Compositores y Editores Musica Latinoamericana de Puerto Rico, Inc. (ACEMLA) brought a copyright-infringement action against Spanish Broadcasting System, Inc. (SBS). They alleged that SBS broadcast 13 copyrighted songs on its Spanish-language radio stations without obtaining licenses.

The court previously granted SBS summary judgment in part, ruling that claims involving seven songs were time-barred while allowing claims involving six songs to proceed to trial. After a bench trial, the court granted SBS judgment on partial findings under Federal Rule of Civil Procedure 52(c). It concluded that the plaintiffs had not proved ownership of the songs and that Raul Bernard’s testimony—the only evidence of infringement—was not credible. The court entered judgment for SBS, and the Second Circuit affirmed.

SBS then sought attorneys’ fees under Section 505 of the Copyright Act, which permits a court to award reasonable fees to the prevailing party in a copyright action. SBS also relied alternatively on Federal Rules of Civil Procedure 11, 26, and 37 and the court’s inherent authority. SBS requested fees for both the district-court litigation and the appeal.

Reasons for the Fee Award

The court found that the plaintiffs’ claims were objectively unreasonable because they lacked support for both required elements of copyright infringement: ownership of a valid copyright and copying of original parts of the work. At trial, Bernard admitted that his sister-in-law, rather than LAMCO, owned the rights to the songs. The court also found that the plaintiffs lacked reliable evidence that SBS copied or broadcast the songs.

The court separately found the claims frivolous because the plaintiffs asserted ownership without a factual basis. It also concluded that the plaintiffs had acted in bad faith, reasoning that Bernard’s testimony and his admission about ownership suggested that the plaintiffs knowingly pursued litigation without adequate evidence.

The court further considered compensation, deterrence, and litigation misconduct. It found that an award would compensate SBS for defending the claims and discourage similar unreasonable copyright actions. The court also found that Bernard and his attorneys failed to produce recordings in discovery, represented that the recordings had been destroyed by malware, and later disclosed that Bernard possessed them. The plaintiffs acknowledged that they had failed to produce the recordings and had misled the court about their existence.

The court reached the same conclusion regarding fees for the appeal. It found the appeal unreasonable and frivolous because the plaintiffs did not own the copyrights, lacked evidence of copying, and did not challenge the district court’s factual findings in their opening appellate brief.

Calculation of Fees and Costs

The court calculated a presumptively reasonable fee by considering reasonable hourly rates and reasonable hours. It capped the hourly rate for Hughes Hubbard & Reed LLP partner James C. Fitzpatrick at $750, associate rates at $465, and paralegal rates at $200. It reduced Stroock & Stroock & Lavan LLP’s district-court fees by 7 percent and reduced Hughes Hubbard’s district-court and appellate fees by 30 percent, with an additional 7 percent reduction to Hughes Hubbard’s district-court fees.

The court excluded fees for work devoted to SBS’s contractual indemnification dispute with Broadcast Music, Inc. It also excluded fees attributable solely to work for Broadcast Music, Inc. or to time entries too vague to determine their purpose. The court did not reduce the award for travel by SBS’s Miami-based attorneys, finding that retaining longtime counsel and using lower hourly rates reasonably offset the travel expenses. It also declined to reduce the award based on the plaintiffs’ claimed financial hardship.

Ruling

Judge Richard J. Sullivan granted SBS’s application for attorneys’ fees. The court awarded $824,562.24 in attorneys’ fees: $448,532.13 for Stroock’s district-court work, $41,317.26 for Stroock’s appellate work, $290,453.81 for Hughes Hubbard’s district-court work, and $44,259.04 for Hughes Hubbard’s appellate work. The court also awarded $13,543.66 in costs paid by Stroock and $6,935.05 in costs paid by Hughes Hubbard, totaling $845,040.95 in fees and costs. The Clerk was directed to terminate the motion pending at document number 215.