Free Reply to Response to Motion - District Court of Arizona - Arizona

1 C. Mark Kittredge (#013907) Scott S. Minder (#023367) 2 PERKINS COIE BROWN & BAIN P.A. 3 2901 North Central Avenue Post Office Box 400 4 Phoenix, Arizona 85001-0400 (602) 351-8000 5 [email protected] 6 [email protected] 7 Attorneys for Defendant Arizona Academy for the Performing Arts, Inc. 8 9 10 11 Johan de Meij, d/b/a Amstel Music, BV, 12 13 14 v. Plaintiff, REPLY IN SUPPORT OF APPLICATION FOR SECURITY FOR COSTS No. CIV 04-0341 PHX RCB UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

15 Tempe Union High School District, Corona Del 16 Sol Band Boosters, Great Video Productions, Arizona Music Educators Assoc., Arizona 17 Academy for the Performing Arts, Inc., Mark D. Richardson, William J. Richardson and Chris 18 Evans, 19 Defendants. 20 21 22 23

Introduction Defendant Arizona Academy for the Performing Arts ("the Academy") filed a

24 simple Application for Security for Costs pursuant to LRCiv. 54.1(c) because Plaintiff is 25 not a resident of the District of Arizona and, as prosecuted, this is a needlessly complex 26 and costly case to defend. Indeed, Plaintiff is not even a resident of the United States. 27 Plaintiff does not dispute his residency, nor does he attempt to argue that he has assets in 28 Arizona sufficient to satisfy any award of costs that might be made in this action. Rather,
Case 2:04-cv-00341-RCB Document 156 Filed 09/16/2005 Page 1 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Plaintiff filed an 8-page everything-but-the-kitchen-sink brief arguing that: (i) attorneys' fees cannot be included within LRCiv. 54.1; (ii) he is going to win and, therefore, should not have to post security; (iii) the amount sought is not reasonable; (iv) he cannot afford to post the requested bond; (v) any judgment received by Plaintiff will dramatically exceed the offers of judgment; and (vi) fees can never be awarded against Plaintiff under the Copyright Act. Plaintiff's principal argument, repeated throughout his brief, is the second argument identified above, that he should not have to post security because he is going to win. This assertion is not relevant to the instant motion and, more importantly, not true. However, Plaintiff is litigating this case with the clear attitude that he has nothing to lose, either because he believes his own rhetoric or, more likely, because he realizes he is beyond the authority of the court. This is precisely why security is so necessary in this case. We will address each of Plaintiff's arguments in turn below. The Academy notes at the outset, however, that Plaintiff never filed or served the threatened motion for sanctions that was discussed during the status conference on August 22, 2005. Accordingly, pursuant to the Court's Order (dated August 22, 2005), oral argument on this Application is not necessary. The Academy is happy to address this Application at oral argument, however, if the Court prefers. Argument A. In This Case, "Costs" Under LRCIV. 54.1(c) Necessarily Includes Attorneys' Fees.

LR 54.1(c) unambiguously provides for security for "costs" as that term is understood within Fed. R. Civ. P. 54 and the other relevant rules of civil procedure. The federal rule itself expressly acknowledges that, in appropriate cases, "costs" include attorneys' fees. See Fed. R. Civ. P. 54(d); and WRIGHT, MILLER & KANE Federal Practice & Procedure: Civil 3d § 2675.2 (noting that certain statutes (including the Copyright Act) allow the court to award attorneys' fees as costs under Rule 54).
Document 156 Filed 09/16/2005 Page 2 of 12

Case 2:04-cv-00341-RCB

-2-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

attorney's fee[s] to the prevailing party as part of the costs." 17 U.S.C. § 505 (emphasis added). It should not need to be said that the award of fees as "costs" under § 505 are awarded. See NIMMER ON COPYRIGHTS § 14.10[D], p. 14-186 (noting that Fed. R. Civ. P. 54 governs motions for fees awardable under 17 U.S.C. § 505). Finally, under Fed. R. Civ. P. 68, "costs" includes attorney's fees when the

Moreover, the Copyright Act expressly provides for the "award [of] reasonable

necessarily refers to Fed. R. Civ. P. 54, the rule that defines how and when costs and fees

underlying statute permits an award of attorney's fees as part of the "costs." Marek v. Chesney, 473 U.S. 1, 9 (1985). Indeed, the Supreme Court in Marek reached its decision with respect to Rule 68 based on a review of the statutory history for Rule 54, which clearly indicated that "costs" includes attorney's fees when the relevant statute so provides. Id. at 8. Under Plaintiff's analysis, "costs" would mean something different under Rule 68 than it means under Rule 54--an absurd and untenable result. B. Plaintiff's Histrionics Aside, There Is No Reasonable Probability That Plaintiff Will Prevail On His Claims Against The Academy.

Plaintiff argues throughout his response that he is going to win his copyright infringement case against the Academy and, therefore, he should not have to post security pursuant to LRCiv 54.1(c). However, there is no basis in the plain language of the rule, or in case law interpreting the rule, suggesting that the Court has to undertake the burden of trying to determine which party will prevail on the merits before it can order that Plaintiff post security. Indeed, because such security is typically sought early in the litigation (as in this case),1 it would be impractical for the Court to undertake this burden. In any event, there simply is no reasonable probability that Plaintiff will prevail on its claims against the Academy. First, the Academy simply was not involved in the allegedly infringing activities that are the subject of this suit. [Decl. of M. Richardson, While this case has been pending since February 2004, the Academy was not brought into the suit until the Second Amended Complaint, which was not served on the Academy until March 2005.
Document 156 Filed 09/16/2005 Page 3 of 12
1

Case 2:04-cv-00341-RCB

-3-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

¶ 7, Ex. 1 to the Academy's Statement of Facts in Support of Its ... Cross-Motion for Summary Judgment (filed August 18, 2005)] Indeed, Plaintiff has already acknowledged the truth of that declaration and that he "was in error" when he sued the Academy for "preparation, copying and distribution" of the allegedly infringing work. [Plaintiff's Reply to the Academy's Response to Plaintiff's Motion for Summary Judgment (filed September 6, 2005), at 6] Plaintiff now seeks leave to, yet again, amend his complaint in light of Mr. Richardson's declaration and plead some new claim against the Academy. [Id.] Whatever new theory Plaintiff contrives, Mr. Richardson's declaration is clear: the Academy had nothing to do with the allegedly infringing activities that are the subject of this case. [Decl. of M. Richardson, ¶ 7] It is true that after completion of all of the allegedly infringing acts, Mark and Bill Richardson arranged to have Mark Richardson's compensation from the school paid through the Academy. That act, however, does not support a claim for copyright infringement. infringement).2 Hence, Plaintiff's assertion (at 3) that his "infringement claim against the [Academy] is concrete" is false. C. The Security Sought Is More Than Reasonable. 17 U.S.C. § 106 ("sale" is not

The Academy has requested security in the amount of $50,000 to cover its costs, including attorney's fees, in this case. Plaintiff argues that this is inappropriate because this is just a simple copyright case and the requested bond is "inflated." Both arguments are simply wrong.

A "sale" may be incident to, or evidence of, "distribution," which can be an infringement. However, Plaintiff acknowledges that the Academy was not involved in the "distribution" at issue in this case. Hence, it is inconceivable what his claim might be.
2

Case 2:04-cv-00341-RCB

Document 156

-4-

Filed 09/16/2005

Page 4 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

1.

Unfortunately, As Presented and Litigated by Plaintiff, This is Not Just a Simple Copyright Case.

Plaintiff insists that this case is simple and will be inexpensive to defend because "Plaintiff's claim against the [Academy] . . . is limited to copyright infringement." [Response at 4 (emphasis in original)] This is demonstrably false. Plaintiff has also asserted an unfair competition claim against the Academy. [Second Amended Complaint, Count 2] This claim is based on an allegation that the Academy "creat[ed] a truncated, distorted and mutilated version of the [allegedly infringing work]," which source of the work." Such claims are typically rebutted through the presentation of expert witness and survey evidence. caused "confusion in the public and amongst the students themselves regarding the

See J. THOMAS MCCARTHY, MCCARTHY ON

TRADEMARKS AND UNFAIR COMPETITION, Fourth Edition, § 32:158 (2005) (describing the use of expert survey evidence to prove "subjective mental associations" in unfair competition cases). At present, the Academy is taking Plaintiff's allegations seriously and anticipates that it will have to incur such expenses. Moreover, the Academy cannot simply ignore the multiple allegations and claims asserted against the other defendants. For example, Plaintiff's proposed Third Amended Complaint, asserting federal RICO claims against Mark Richardson, Bill Richardson, Chris Evans and the AMEA, is replete with inflammatory allegations against the Academy. [See, e.g., Exhibit A to Plaintiff's Motion for Leave to File Third Amended Pleading, ¶ 37 ("Defendants Mark Richardson, Bill Richardson and Chris Evans, in their respective capacities as Executive Director, Secretary and Percussion Arranger of the [Academy], violated § 1961(c) of the Racketeering Influenced and Corrupt Organization's Act"), ("The [Academy] . . . is an `enterprise' as that term is defined in the RICO Act")] Obviously, the Academy cannot simply ignore these allegations but will have to expend considerable resources investigating and responding to the same.

Case 2:04-cv-00341-RCB

Document 156

-5-

Filed 09/16/2005

Page 5 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

2.

It is Beyond Reasonable Dispute That This Case Will Cost More Than the Requested Security to Litigate Through Trial. [Response at 4]

Plaintiff challenges the requested security as "inflated."

Tellingly, however, Plaintiff does not make any assertion that reasonable costs in this case, including attorney's fees, will not exceed $50,000. Nor could he. It is well documented that even simple copyright cases typically cost hundreds of thousands of dollars to litigate through trial. A recent survey of the American Intellectual Property Law Association notes that the average cost for litigating simple copyright infringement cases like this one averaged $200,000 in 2001 and $249,000 in 2003. [See Exhibit A, excerpts from AIPLA Report of the Economic Survey 2003] Thus, even if this is treated as a simple copyright case, as Plaintiff falsely asserts, the requested security is more than reasonable. A simple review of the docket, by itself, demonstrates how complicated Plaintiff has made this case and how expensive it will be to defend. Since filing the action, Plaintiff has filed numerous motions and unnecessary or improper pleadings. [See, e.g., Plaintiff's Second Response to ... Motion to Dismiss (filed on May 4, 2005); and Plaintiff's Motion to Strike (filed on June 14, 2005)]. Indeed, since his original

Complaint, Plaintiff has filed two Amended Complaints, a motion for leave to file yet a Third Amended Complaint and, most recently, has requested leave to file yet another Amended Complaint. Judgment at 6 ("request[ing] leave to amend his complaint," yet again)] [See Plaintiff's Reply . . . to Plaintiff's Motion for Summary

Finally, to the extent it is necessary to support this modest request, the Academy expects that deposition testimony will be necessary, at a minimum, from the following: Plaintiff; Plaintiff's licensing agent; Defendant Mark Richardson (who, according to the complaint, is central to the allegations against the Academy;

Case 2:04-cv-00341-RCB

Document 156

-6-

Filed 09/16/2005

Page 6 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28



Defendant Bill Richardson (who, according to the complaint, is central to the allegations against the Academy); Defendant Chris Evans (who, according to the complaint, is central to the allegations against the Academy); A representative of the Tempe Union High School District (who the Plaintiff alleges purchased an allegedly infringing work from the Academy);



and each of the three expert witnesses identified by Plaintiff to date.

Significant attorney time and deposition costs will be required for each deposition. The deposition of Plaintiff will be especially problematic because Plaintiff is refusing to come to the forum state for deposition, insisting that an international telephonic deposition be arranged and that defendants arrange and pay for an interpreter. And, of course, the Academy will need to retain and present at least one expert to rebut Plaintiff's experts. In addition, to date Plaintiff has identified 20 specific persons and 5 additional categories of witnesses with discoverable relevant information in this case. [See Plaintiff's Initial Disclosures served June 16, 2005]3 Presumably, Plaintiff will choose to depose many of these witnesses, necessitating attorney time and transcript costs by the Academy. D. Plaintiff's Response Demonstrates That He Can Afford A Substantial Bond.

Plaintiff argues (at 4) that he simply cannot afford to post a $50,000 security bond. Amazingly, however, he supports this allegation with a declaration stating that his annual gross income is approximately $85,000 US and his liquid assets are approximately $32,000 US. [Exhibit A to Plaintiff's Response] Obviously, if Plaintiff has $32,000 in liquid assets he can readily afford to post a $50,000 security bond. Bonding companies typically only require the posting party to provide a fraction of the total bond. To the To minimize the filing of needless paper, we have not attached this disclosure. However, it can be provided to the Court if necessary.
Document 156 Filed 09/16/2005 Page 7 of 12
3

Case 2:04-cv-00341-RCB

-7-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

extent Plaintiff is insisting that he will be unable to find or use an appropriate bonding company, that conclusively demonstrates the need for the requested security. The

Academy is more than reasonable, however, and is willing to revise its request for a security bond to $30,000, which is well within Plaintiff's sworn liquid assets, if Plaintiff is unable to bond the full amount. E. It Is Reasonable to Assume That Any Judgment Against The Academy Will Not Exceed The Offers Of Judgment.

Plaintiff argues (at 5-6) that the Academy's rejected offers of judgment can never support an award of fees because any judgment Plaintiff receives against the Academy will necessarily, exceed the Academy's offer. Of course, this argument again puts the cart before the horse, asking the Court to weigh the merits of the case and determine damages before any evidence has been presented. More importantly, it is simply not true. First, even under the best case scenario for Plaintiff, the Academy did not earn a single dime of profit for the alleged infringement. [Decl. of M. Richardson, ¶ 8] There simply is no claim for "profits" from the Academy. 17 U.S.C. § 504(b) (defendant's profits equal revenues minus expenses). Thus, even if Plaintiff manages to present evidence of actual damages, it is entirely possible that, in the unlikely event liability is found against the Academy, the jury will only award nominal damages. See NIMMER ON COPYRIGHTS § 14.01[C][1], p. 14-9 (noting that "prevailing plaintiffs at times recover little to nothing."). inception exceeds the offer, is not relevant. The proper measure is Plaintiff's fees for prosecuting the case against the Academy. Indeed, should the Plaintiff receive a Second, Plaintiff's argument (at 6), that his fees for prosecuting this case from

judgment that is less than the offer of judgment, the Court can readily determine that reasonable attorneys' fees for return of such a modest award are minimal or even nothing. WRIGHT, MILLER & MARCUS Federal Practice & Procedure: Civil 2d § 3006.2. In any event, the complaint was only filed a few months before the Offer of Judgment. Moreover, during that time period, Plaintiff's activities were directed at
Document 156 Filed 09/16/2005 Page 8 of 12

Case 2:04-cv-00341-RCB

-8-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

motions against and by other parties. Hence, any proper apportionment of those fees against the Academy would be minimal. 4 F. As A Prevailing party, The Academy Will Likely Be Awarded Attorneys' Fees Under The Copyright Act.

Plaintiff is correct that fees can be awarded against him if his claims are frivolous or objectively unreasonable. Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). Again, it is not appropriate to ask the court to judge these issues at this early stage, before the presentation of any evidence. However, that is precisely the situation here. Faced with his own inconsistent pleadings (see the Academy's Response to Plaintiff's Motion For Summary Judgment, at 3), Plaintiff has now admitted "error" and dropped his claim that the Academy was involved in the alleged "preparation, copying and distribution" that form the basis of all of his copyright infringement claims. [See Plaintiff's Reply ... to [His] Motion For Summary Judgment, at 8]5 Rather than seeking voluntary dismissal of his complaint against the Academy, Plaintiff seeks leave to yet again amend his Complaint to assert some new claim of infringement. This new claim for copyright infringement is based on a "sale" that allegedly occurred in December 2002, unconnected to any act of infringement. See 17

Plaintiff miscites Holland v. Roeser, 37 F.3d 501 for the absurd argument that "Plaintiff's ultimate recovery for purposes of comparison with the offer of judgment must include costs through trial. [Response at 6, n.4 (emphasis in original)] Holland, however, involved an offer that was accepted and whether, by its terms, the offer included post acceptance costs. Holland has absolutely no bearing on this case. Plaintiff's protestations that his "error" was caused by defendants rings hollow. Before bringing suit against the Academy, Plaintiff never contacted the Academy to explore his suspicions, never conducted a single deposition (despite the fact that this case had already been pending for over a year) and somehow managed to concoct a grand conspiracy theory with the Academy at its center. [See, e.g., Second Amended Compl., ¶¶ 15, 16 alleging "A Sweetheart Deal" by and with the Academy]
5

4

Case 2:04-cv-00341-RCB

Document 156

-9-

Filed 09/16/2005

Page 9 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

U.S.C. § 106 ("sale" is not identified as an act of infringement.)6 This seems to be epitome of a frivolous claim. Conclusion For the foregoing reasons, the Academy requests this Court grant this application and order Plaintiff to post a bond with the Clerk of the United States District Court for the District of Arizona in an amount not less than $50,000.00 as security for costs. The Academy also requests that the Court order Plaintiff to deposit such security within fourteen days of issuance of the order.

Dated: September 16, 2005. PERKINS COIE BROWN & BAIN P.A.

By s/ C. Mark Kittredge C. Mark Kittredge Scott S. Minder 2901 North Central Avenue Post Office Box 400 Phoenix, Arizona 85001-0400 Attorneys for Defendant Arizona Academy for the Performing Arts, Inc.

The only theoretical allegation would be that this "sale" represents payment for the preparation that occurred many months earlier, as originally alleged in Plaintiff's Second Amended Complaint. Plaintiff has dropped that allegation, however, in light of Mark Richardson's declaration and to avoid summary judgment against him on the Academy's § 412 defense. [Plaintiff's Reply ... to [His] Motion For Summary Judgment, at 6]
6

Case 2:04-cv-00341-RCB

Document 156

- 10 -

Filed 09/16/2005

Page 10 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Case 2:04-cv-00341-RCB

CERTIFICATE OF SERVICE I hereby certify that on September 16, 2005, I electronically transmitted the attached documents to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: R. Buck McKinney [email protected] LAW OFFICE OF BUCK MCKINNEY Post Office Box 6231 Austin, Texas 78762-6231 Attorney for Plaintiff Martin P. Clare [email protected], [email protected], [email protected] CAMPBELL, YOST, CLARE & NORELL, P.C. 101 North First Avenue, Suite 2500 Phoenix, Arizona 85003-0001 Attorneys for Defendants Mark D. Richardson and William J. Richardson Francis G. Fanning [email protected] LAW OFFICES OF FRANCIS G. FANNING 500 East Southern Avenue, Suite B Tempe, Arizona 85282-5211 Attorneys for Defendant Corona del Sol Band Boosters, Inc. Garrick L. Gallagher [email protected] Debora L. Verdier [email protected] SANDERS AND PARKS 3030 North Third Street, Suite 1300 Phoenix, Arizona 85012 Attorneys for Defendant Tempe Union High School District Thomas K. Irvine [email protected] IRVINE LAW FIRM 1419 North Third Street, Suite 100 Phoenix, Arizona 85004 Attorneys for Defendant Arizona Music Educators Association

Document 156

- 11 -

Filed 09/16/2005

Page 11 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

I hereby certify that on September 16, 2005, I served the attached document by first class mail to: The Honorable Robert C. Broomfield United States District Court Sandra Day O'Connor U.S. Courthouse 401 West Washington Street, Suite 216, SPC 61 Phoenix, Arizona 85003-2118 I hereby certify that on September 16, 2005, I served the attached document by first class mail on the following, who are not registered participants of the CM/ECF System: Arizona Music Educators Association c/o John C. Faris 4312 West Royal Palm Road Glendale, Arizona 85302-6625 J. Gregory Osborne TOLMAN & OSBORNE, P.C. 1920 East Southern Avenue, Suite 104 Tempe, Arizona 85282 Attorneys for Defendant Chris Evans s/ Janet Roe
314408_1

Case 2:04-cv-00341-RCB

Document 156

- 12 -

Filed 09/16/2005

Page 12 of 12