Free Response to Motion - District Court of Arizona - Arizona

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R. Buck McKinney Texas Bar #: 00784572 LAW OFFICE OF BUCK MCKINNEY PO Box 6231 Austin, Texas 78762-6231 Telephone: (512) 236-0150 Facsimile: (512) 444-1879 ATTORNEY FOR PLAINTIFF UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA PHOENIX DIVISION JOHAN DE MEIJ, d/b/a AMSTEL MUSIC, BV Case No.: No. CIV 04-0341 PHX RCB PLAINTIFF, vs. TEMPE UNION HIGH SCHOOL DISTRICT, CORONA DEL SOL BAND BOOSTERS, GREAT VIDEO PRODUCTIONS, ARIZONA MUSIC EDUCATORS ASSOC., ARIZONA ACADEMY FOR THE PERFORMING ARTS, INC., MARK D. RICHARDSON, WILLIAM J. RICHARDSON AND CHRIS EVANS DEFENDANTS PLAINTIFF'S RESPONSE TO DEFENDANT ARIZONA ACADEMY FOR THE PERFORMING ARTS' APPLICATION FOR SECURITY FOR COSTS

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On August 17, 2005, pursuant to Rule 54.1(c) of the Rules of Practice of the United
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States District Court for the District of Arizona ("Local Rules"), Defendant Arizona Academy for the Performing Arts filed an application asking the Court to order Plaintiff to post a security bond in the remarkable sum of $50,000. Plaintiff files this response. I. MEMORANDUM

The AAPA's application seeks the imposition of a $50,000 bond against Plaintiff to
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cover its costs of defense in this matter, including attorney's fees. In a one-and-a-half page memorandum bereft of any legal support, the AAPA asks this Court to assume that Local Rule

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54.1(c) allows the imposition of a bond including attorney's fees, and to accept the AAPA's bald assertion that its costs and attorney's fees will exceed $50,000. The court should

recognize this "gambit" for what it is ­ a tool of harassment intended solely to vex Plaintiff and
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strain this court's already limited resources. A. Security for Attorney's Fees is not Provided by Local Rule 54.1(c) Local Rule 54.1(c) provides that a court may, in its discretion, order "security for costs." It makes no provision for security for "attorney's fees." Presumably, the drafters of the rule understood the difference between costs and attorney's fees. Indeed, "costs" are

specifically defined by both federal statute and the Local Rules, and they do not include "attorney's fees." 28 U.S.C. § 1920; Local Rule 54.1(e). And while the AAPA has correctly noted that "costs" may sometimes include "attorney's fees" for purposes of an offer of judgment under Rule 68 of the Federal Rules of Civil Procedure, it hasn't cited to a single case for the proposition that the same rule applies to security bonds under Local Rule 54.1(c). B. Imposition of Bond Cannot Be Predicated Solely Upon Residential Status The AAPA's second leap of logic suggests that the only factor this Court need consider in order to impose a security bond is whether Plaintiff is a "resident." Although there is a paucity of case law interpreting Rule 54.1(c) of the Arizona Local

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Rules,1 there are ample cases construing similar local rules from other federal districts. Those cases clearly demonstrate the following: that while a decision to order security for costs is within the sound discretion of the court, the decision cannot be predicated solely upon the determination that Plaintiff is a "nonresident." Rather, a court must carefully consider the facts and circumstances before it, including the degree of probability of Plaintiff's success on the

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Plaintiff could not find a single reported case even invoking the rule.

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merits, the reasonableness of the requested amount, and the Plaintiff's wherewithal to post such a bond. See, e.g., Aggarwal v. Ponce School of Medicine, 745 F.2d 723, 727-28 (1st Cir. 1984) ("tollbooths cannot be placed across the courthouse doors in haphazard fashion"); Farmer v.

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Arabian American Oil Co., 285 F.2d 720, 722 (2nd Cir. 1960) (imposition of a security bond predicated solely upon the domiciliary status of the defendant "would go far in making the federal court only for rich litigants"). Indeed, it has been suggested that a failure to address these factors may be unconstitutional. Aggarwal, 745 F.2d at 727; see also Adsani v. Miller, 139 F.3d 67, 78-79 (2nd Cir. 1998) (addressing constitutionality of imposition of appeal bonds). Fatally, the AAPA fails to discuss any of these factors. Inasmuch as none of them favor the AAPA, perhaps that is not surprising. Regarding the "merits," Plaintiff's infringement claim against the AAPA is concrete. Indeed, it is predicated upon direct and uncontroverted evidence;2 specifically, an AAPA invoice for the sale of an unlicensed "music arrangement" of Plaintiff's work. (See Exhibit C to the AAPA's Cross Motion for Summary Judgment, Docket # 136). A more compelling basis for the imposition of liability could hardly be imagined. The AAPA has not only acknowledged the document in question, it has attached it to its own Cross-Motion for Summary Judgment as summary judgment proof and has specifically acknowledged that the

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invoice was issued in order to consummate the sale of the unauthorized arrangement. (Id; Exhibit "1" to AAPA's Cross Motion for Summary Judgment, ¶ 8). To put it mildly, the AAPA would be playing games with this Court if it contended that Plaintiff's claim of copyright infringement is somehow meritless despite this "smoking gun." Regardless, the central issue is that the AAPA simply hasn't advanced any argument regarding the merits.

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For clarity, the AAPA controverts the conclusions drawn by Plaintiff from the evidence, but not the evidence itself. See AAPA's Response to Plaintiff's Statement of Facts, p. 2.

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Without same, this Court cannot grant the application for security bond. See N'Jai v. New York State Higher Educ. Servs. Corp., 214 F.R.D. 251, 251-52 (E.D.N.Y.2003) (refusing to order bond where defendant failed to set forth reasons why plaintiff's claim was without merit).

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As to the inflated surety in question, again, the AAPA's application omits any analysis of the facts or law. The AAPA merely surmises that it will be entitled to attorney's fees in this cause of action, that those fees will be significant, and that this justifies imposition of a bond in the amount of $50,000. (AAPA's Application at p. 2-3). However, as explained above, Local Rule 54.1(c) does not provide security for attorney's fees. Even if it did, the AAPA's bald assertion that its fees will equal $50,000 is hardly sufficient. The AAPA must actually outline the bases for such fees (i.e., the number of expected depositions, length of trial, etc.). N'Jai, 214 F.R.D. at 252. Here, the AAPA has merely asserted that "this case should be nothing more than a simple copyright infringement action," and that Plaintiff has unnecessarily increased the AAPA's cost of defense by asserting additional claims. (AAPA's Application at p. 2-3). That, however, is a gross and misleading characterization of Plaintiff's claim against the AAPA, which in fact is limited to copyright infringement. The AAPA simply hasn't explained how or why that claim will inflate the AAPA's attorney's fees to $50,000. Absent same, there is nothing in the record on which to predicate a security bond in said amount. Id.

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Finally, Plaintiff's ability to prosecute this lawsuit would be severely prejudiced were he ordered to pay a $50,000 security bond. (See Plaintiff's Statement Pursuant to 28 U.S.C. 1746, attached as Exhibit "A.") Neither his annual income nor his available assets would allow him to come up with that kind of money, and in the event the Court were to order the posting of such a bond, Plaintiff would almost certainly be forced to abandon his lawsuit. Id. In short,

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the imposition of a $50,000 bond would be tantamount to barring Plaintiff's access to this Court. B. The AAPA Cannot "Bootstrap" Attorney's Fees into Local Rule 54.1(c) through Rule 68 Presumably because Local Rule 54.1(c) does not provide security for attorney's fees, the AAPA argues that it can "bootstrap" them into the security bond under Rule 68 of the

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Federal Rules of Procedure. The argument has no substance. First, the AAPA hasn't cited any legal authority. Second, the AAPA hasn't addressed the merits of its offer of judgment. Again ­ this is not surprising since there is absolutely no prospect that the AAPA will prevail on that issue. The AAPA has tendered two separate offers of judgment under Rule 68 ­ each in the "clever" amount of $2,501.00.3 The AAPA correctly notes that, "under Rule 68: `[i]f the judgment finally obtained by the [plaintiff] is not more favorable than the offer, the offeree must pay the costs incurred after making the offer.'" (AAPA's Application at p. 2). However, under the facts of this case, it is simply inconceivable that Plaintiff would be entitled to any

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judgment in this lawsuit that is "less-favorable" than the AAPA's offer. To begin with, in order for Plaintiff to be obligated to pay costs under Rule 68, he must actually prevail on the merits. Delta Air Lines, Inc. v. August, 450 U.S. 346, 352 (1981). In other words, if Plaintiff doesn't obtain a judgment in his favor, Rule 68 simply will not come into play. Id. Accordingly, for purposes of determining the AAPA's alleged entitlement to

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attorney's fees under Rule 68, the Court must assume that Plaintiff will prevail on the merits.

The offer is clearly predicated upon the AAPA's assumption that Plaintiff's actual damages will be limited to his standard license fee of $2,500.

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Having reached that conclusion, it becomes clear that the AAPA's offer of judgment will not have any effect in this case. To wit, under Rule 68, the "judgment finally obtained by the offeree" must include both the jury verdict and the fees and costs incurred by Plaintiff prior

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to the offer of judgment. FED.R.CIV.P. 68; Goos v. National Ass'n of Realtors, 68 F.3d 1380, 1382, n. 1 (D.C. Cir. 1995). As the AAPA has acknowledged, for purposes of Rule 68 "costs" in this case include attorney's fees. (AAPA's Application at p. 2); see also, Grosevnor v. Brienen, 801 F.2d 944, 948 (7th Cir. 1986) (Plaintiff's pre-offer attorney's fees are to be included as "costs" in determining whether Rule 68 applies); Scheeler v. Crane Co., 21 F.3d 791 (8th Cir. 1994). It should not surprise this Court or the AAPA that in the nearly two years that Plaintiff has prosecuted this matter, and in the year in which he has prosecuted a claim for infringement directly against the AAPA, he has incurred costs (including attorney's fees) dramatically in excess of $2,501. As such, Plaintiff's costs already exceed the AAPA's offer, and accordingly, there is absolutely no basis for the AAPA's assertion that its offer of judgment in the amount of $2,501 will somehow exceed Plaintiff's damages and pre-offer costs in this lawsuit.4 In turn, the AAPA's attempt to bootstrap attorney's fees into Local Rule 54.1(c) simply vaporizes. C. The AAPA Cannot "Bootstrap" Attorney's Fees into Local Rule 54.1(c) through the Copyright Act Finally, the AAPA asserts that it can bootstrap attorney's fees into Local Rule 54.1(c) via the Copyright Act. (AAPA's Application at p. 2). However, the AAPA has ­ again ­ failed

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Moreover, if need be, Plaintiff notes that the "costs" referenced in the AAPA's offer were not limited to "costs accrued" at the time of the offer. As such, Plaintiff's ultimate recovery for purposes of comparison with the offer of judgment must include costs through trial. See Holland v. Roeser, 37 F.3d 501, 504 & n. 1 (9th Cir. 1994). In light of the AAPA's lengthy discussion of the expense of this suit, including attorney's fees, it simply cannot be denied that Plaintiff's costs (including attorney's fees) will dwarf the AAPA's offer of $2,501 by the time of trial.

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to provide any legal support for such a bootstrapping, nor any argument as to how it might recover fees under the Copyright Act. Again, the AAPA's failure to address these issues is not surprising inasmuch as the facts and law are so clearly stacked against it.

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A defendant is not entitled to attorney's fees under the Copyright Act unless he is a "prevailing party."5 17 U.S.C. § 505. For the reasons adequately set forth above, there simply is no basis for the assertion that the AAPA might be a "prevailing party" in this litigation. But even is there were, that in-and-of-itself would not entitle the AAPA to attorney's fees. To the contrary, an award of attorney's fees under the Copyright Act is always left to the court's discretion, taking into consideration factors such as the alleged "frivolousness" or "objective unreasonableness" of Plaintiff's claims. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, n. 1, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994).6 And while these factors are normally considered after judgment on the merits, because the AAPA is predicating its request for a $50,000 security bond on its alleged entitlement to attorney's fees, this Court must consider these factors at the present. Aggarwal, 745 F.2d at 727-28; Farmer, 285 F.2d at 722; N'Jai, 214 F.R.D. at 251-52. In short, the AAPA's "bootstrap" comes full-circle to the issue of merits ­ an issue the AAPA hasn't addressed, and dare not address since it is so clearly stacked against it. Having failed to do so, the AAPA has also rendered its application fatally deficient.

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Obviously, were the AAPA to be a "prevailing party," it would not be entitled to costs under Rule 68 ­ providing yet a fifth reason why its claim for costs under that Rule would be unavailing.
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Indeed, a review of the cases favorably cited in Fogerty, and interpretation of Fogerty since it was decided, suggests that courts never award attorney's fees to a defendant unless there has been some showing of bad faith or objective unreasonableness on the part of the plaintiff. Fogerty, 510 U.S. 529, n. 14; see also Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434 (7th Cir. 2004).

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II.

CONCLUSION

The imposition of a security bond (or failure to impose such bond) must be predicated upon a careful review of several factors, including (1) the merits of Plaintiff's case, (2) the

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reasonableness of the bond requested, and (3) the Plaintiff's wherewithal. The AAPA ­ disingenuously or not ­ has failed to advance any of these arguments. As such, its application for security bond should be denied outright. In the alternative, the AAPA's request should be denied because ­ on the law and facts ­ the foregoing factors weigh decisively in Plaintiff's favor, and/or because Local Rule 54.1(c) does not provide security for attorney's fees. Dated this 6th day of September, 2005.

s/ R. Buck McKinney________________ R. Buck McKinney, Esq. LAW OFFICE OF BUCK McKINNEY Texas Bar No. 00784572 P.O. Box 6231 Austin, Texas 78762-6231 Telephone (512) 236-0150 Facsimile (512) 444-1879 ATTORNEY FOR PLAINTIFF JOHAN DE MEIJ d/b/a AMSTEL MUSIC, BV

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CERTIFICATE OF SERVICE I certify that on September 6, 2005, a copy of the attached document was electronically transmitted using the CM/ECF System for electronic filing and transmittal of a notice of electronic filing to the following CM/ECF registrants: Garrick L. Gallagher [email protected] Debora L. Verdier [email protected] Sanders and Parks, PC 3030 N. Third Street, Suite 1300 Phoenix, AZ 85012-3099 Francis G. Fanning [email protected] Law Offices of Francis G. Fanning 500 E. Southern Ave., Suite B Tempe, AZ 85282-5211 Martin P. Clare [email protected]; [email protected]; [email protected] Campbell, Yost, Clare, & Norell, P.C. 101 North First Avenue, Suite 2500 Phoenix, AZ 85003 C. Mark Kittredge [email protected]; [email protected]; [email protected] Scott S. Minder [email protected]; [email protected] Perkins Coie Brown & Bain, P.A. 2901 North Central Avenue Post Office Box 400 Phoenix, AZ 85001-0400 Thomas K. Irvine [email protected] Irvine Law Firm, PA 1419 N. Third St, Ste. 100 Phoenix, AZ 85004

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I certify that on September 6, 2005 a copy of the attached document was served on the following parties via U.S. mail: J. Gregory Osborne Tolman & Osborne, P.C. 1920 E. Southern Ave., Ste.104 Tempe, AZ 85282

s/ R. Buck McKinney________________

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