U.S. Supreme Court Clarifies Standard for Awarding Attorneys’ Fees to Successful Copyright Litigants.

On June 16, 2016, the U.S. Supreme Court in a unanimous decision, clarified the standard for awarding attorneys’ fees under the Copyright Act.

This is the second time the case of Kirtsaeng v. John Wiley & Sons, Inc, No. 15-375, has come before the Supreme Court.  Kitrsaeng was sued by respondent John Wiley & Sons, Inc., a textbook publisher. Kirtsaeng won the first Supreme Court appeal, which resulted in a clarification of the “first sale” doctrine.  Having prevailed, Kirtsaeng sought more than $2 million in attorney’s fees under § 505 of the Copyright Act.  The Second Circuit affirmed the district court’s denial of this request, finding that Wiley had taken reasonable positions throughout litigation, and awarding fees would not serve the Copyright Act’s underlying purpose—enriching the public through access to creative works.

Although the Copyright Act gives the district court discretion to award attorneys’ fees, the Supreme Court emphasized that the discretion must be exercised under set standards to increase the predictability of the result for both plaintiffs and defendants.

The Supreme Court noted that the Second Circuit appeared to focus solely on the objective reasonableness of the parties’ litigation positions, which is an important factor, but not the only factor to be considered.   By focusing too narrowly on the parties’ litigation positions, a court may lose sight of the goals of the Copyright Act. The Court acknowledged the fundamental nature of litigation, that “both plaintiffs and defendants can (and sometimes do) make unreasonable arguments,” a fact which “favors plaintiffs because a losing defendant will virtually always be found to have done something culpable.” Slip op. at 9 (emphasis in original).

In addition to the objective reasonableness of the parties’ litigation positions, the Supreme Court held that lower courts should address “a range of considerations,” including, frivolousness, motivation, objective reasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence.  “Although objective reasonableness carries significant weight, courts must view all the circumstances of a case on their own terms, in light of the Copyright Act’s essential goals.” Slip op. at 11.

Because it was unclear if the Second Circuit (or district court) considered all of these factors, the Supreme Court vacated and remanded, emphasizing, however, that it was not suggesting that any different outcome would necessarily occur in this case.

For more information regarding the Copyright Act or Kirtsaeng v. John Wiley & Sons, Inc, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

 

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Federal District Judges May Recall Discharged Civil Jury To Correct Errors, Supreme Court Holds

Eschewing an old common-law rule for practicality, the U.S. Supreme Court held today in Dietz v. Bouldin, No. 15-458, that federal district judges may recall a civil jury it has discharged to correct errors in certain circumstances.  In the case, an automobile accident trial in the federal district court in Montana, the jury was tasked with determining if the plaintiff was entitled to additional damages over the $10,136 in medical expenses the parties stipulated were reasonable.  The jury returned a verdict for $0 and the district judge discharged the jurors before realizing that the verdict was “legally impossible” because of the parties’ stipulation.  At common law, when jurors were always formally sequestered, once a court discharged the jury, its only option to correct an error was to call for a new trial.

This bright-line rule should give way to modern trial practice, the Supreme Court held in a 5-2 decision.  Writing for the Court, Justice Sotomayor noted that district judges have the inherent authority to control the proceedings before them, including the analogous ability to amend interlocutory orders at any time before final judgment.  Although judges should exercise their inherent authority cautiously, the recall of a discharged jury may be appropriate if the court is confident that the jurors were not “tainted” by outside influences.  Federal district judges should look to factors such as the length of time between discharge and recall, whether the jurors spoke to anyone about the verdict in person or on their smart phones, and the reaction to the verdict in the courtroom—a gasp or sob in the gallery might cause the jurors to question their decision and affect the jurors’ impartiality.  Finally, the majority limited its holding to civil juries.  The Court left the issue of whether the rule should extend to criminal juries for a different day because criminal jury practice raises different issues, such as whether double jeopardy would attach.

With respect to Dietz, the Court affirmed the district court’s decision to recall the discharged jury because the jurors had only left the courtroom minutes before and only one had left the building (to retrieve a hotel receipt).  When questioned, the jurors indicated that they had not spoken to anyone about the case.

“All judges make mistakes. (Even us.),” Justice Sotomayor quipped. Although district judges must exercise their authority cautiously, they should retain the ability to correct a civil jury verdict error even if the jury has already been discharged.

For more information regarding Dietz v. Bouldin, No. 15-458, or jury practice please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

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U.S. Supreme Court Reaffirms that Only “Humans and Corporations,” Not Unincorporated Entities Like a Trust, May Assert Their Own Citizenship for Purposes of Federal Diversity Jurisdiction

In a unanimous March 7, 2016 opinion authored by Justice Sotomayor, Americold Realty Trust v. Congra Foods, Inc., et al., , the U.S. Supreme Court affirmed an oft-confused holding relating to diversity jurisdiction: the citizenship of any non-incorporated artificial entity is determined by considering all of the entity’s “members,” not of the state where the entity is formed.

Americold removed its lawsuit to the federal district court in Kansas, which resolved the lawsuit on its merits.  On appeal, however, after supplemental briefing ordered sua sponte by the Court, the Tenth Circuit found that Americold, as an unincorporated real estate investment trust, or REIT, was a citizen of the states of its members.   The Supreme Court granted certiorari to resolve a circuit split regarding the citizenship of unincorporated entities.

Affirming the Tenth Circuit, Supreme Court reiterated its “oft-repeated rule” that diversity jurisdiction in a suit by or against an entity depends on the citizenship of all of its members.  Individuals are citizens of the states in which they reside.  The Supreme Court created an early exception in the 19th century—one which was later codified by Congress:  based on the tradition of treating corporations as separate juridical “persons,” corporations are considered to be citizens of their state of incorporation, and, Congress later added, also of the state where it has its principal place of business. 28 U.S.C. § 1332(c).

This exception was never expanded to unincorporated entities, whose citizenship, the Court reaffirmed, is determined based on the citizenship of its “members.”   The Court previously identified the members of a joint-stock company (as its shareholders), the members of a partnership (as its partners), and the members of a union (as the workers affiliated with it).  With respect to a REIT, the Court found that because Americold is not a corporation, it possesses its members’ citizenship.  Looking at the law of the REIT’s state of organization, Maryland, the court held that, “for purposes of diversity jurisdiction, Americold’s members include its shareholders.”  The Court also found that the entity’s membership cannot be restricted to its trustees simply because the entity “happens to call itself a trust.”

Absent action by Congress, one must consider to look at the citizenship of the members of various unincorporated entities such as LLCs and Trusts, to determine the existence of federal diversity jurisdiction.

For more information regarding federal diversity jurisdiction or the Court’s decision in Americold, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

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U.S. Supreme Court to Alabama: Full Faith and Credit Must Be Given to Out-of-State Adoption

In a unanimous, per curiam opinion in V.L. v. E.L., the U.S. Supreme Court has reversed the Supreme Court of Alabama’s refusal to enforce a Georgia adoption order.  V.L. and E.L., two women, were involved in a 25-year relationship. E.L. gave birth to three children over the course of several years. The couple rented a house in Georgia and formalized the relationship between the children by V.L. petitioning for an order of adoption.  A Georgia court entered a judgment of adoption and recognized that V.L. and E.L. were the legal parents of the children.

After V.L. and E.L. ended their relationship in 2011, V.L. sued in Alabama arguing that E.L. had denied her access to the children.  The Supreme Court of Alabama however, refused to recognize the Georgia judgment as valid, reasoning that Georgia law precluded Georgia’s courts from recognizing two legal parents after one parent consented to the adoption.  The case was decided in the context of a broader political controversy brewing over Alabama state courts’ refusal to grant marriage certificates to same-sex couples in the face of the U.S. Supreme Court’s ruling last year in Obergefell v. Hodges

After staying the Alabama Supreme Court’s judgment in December, the U.S. Supreme Court took three months and six pages to summarily reverse the judgment.  Although a state need not afford full faith and credit to another state’s judgment if that state’s courts did not have subject matter jurisdiction, the Supreme Court reasoned, “[t]hat jurisdictional inquiry . . . is a limited one.”  The state court must only look to see “[i]f the judgment on its face appears to be a record of a court of general jurisdiction, such jurisdiction over the cause and the parties is to be presumed unless disproved by extrinsic evidence, or by the record itself.” Slip. Op. at 3 (quotations and citations omitted).  Because under Georgia law, the state superior court has exclusive jurisdiction over adoption matters, the Supreme Court held, Alabama courts were required to enforce the Georgia judgment.  Whether the Georgia judge erred in applying Georgia adoption law did not strip that court of jurisdiction.

The unanimity of the Supreme Court’s decision is a reminder that the diverse views of the various “laboratories of democracy”  does not permit one state to ignore a valid court order entered in another.

For more information regarding the Full Faith and Credit Clause or the Court’s decision in V.L. v. E.L., please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

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