Opinion ID: 772794
Heading Depth: 2
Heading Rank: 1

Heading: Failure to Provide a Hearing or Other Opportunity to Submit Evidence

Text: 15 Section 505 of the Copyright Act provides that [i]n any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs. 16 17 U.S.C. § 505. In Fogerty v. Fantasy, 510 U.S. 517, 534 (1994), the Supreme Court refused to apply a direct analogy to its fee-shifting decisions under the Civil Rights Act and instead held that, under section 505, the standard governing the award of attorneys' fees is identical for prevailing plaintiffs and prevailing defendants. The Court, while stressing that the decision to award fees rests in the court's equitable discretion, also approved in dicta several nonexclusive factors courts could consider when awarding fees, namely, 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. Id. at 534 n.19 (internal quotation marks omitted). Such factors may be used so long as... [they] are faithful to the purposes of the Copyright Act. Id. 'The primary objective of copyright is... [t]o promote the Progress of Science and useful Arts. To this end, copyright assures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work.' Id. at 527 (quoting Feist Publ'ns Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 349-50 (1991) (quoting U.S. CONST. art. I, § 8, cl. 8)). 17 Although the District Court rightly attempted to apply these factors, it did so without first giving Crescent an opportunity to present (1) its objections to PEI's billing records, and (2) relevant evidence, including evidence as to its motivations for filing suit. We find that the District Court exceeded its allowable discretion in proceeding in this manner when there were indications in the record of disputes of material fact. While not required in every case, an evidentiary hearing, or at the very least an opportunity to submit evidence, is necessary to determine the propriety of a fee award and the amount of such award if it is evident that the material facts necessary for those determinations are genuinely in dispute and cannot be resolved from the record. See Smith v. Philadelphia Housing Auth., 107 F.3d 223, 225 (3d Cir. 1997) (noting that if hourly rates are disputed, the district court must hold a hearing); Love v. Deal, 5 F.3d 1406, 1409 (11th Cir. 1993) (holding that district court abused its discretion by not providing an evidentiary hearing, although one was not requested, when there was a dispute of material fact that could not be resolved from the record); Daggett v. Kimmelman, 864 F.2d 1122, 1128 (3d Cir. 1989) (hearing required when directly contradictory facts averred); Sablan v. Department of Fin. of N. Mariana Is., 856 F.2d 1317, 1322 (9th Cir. 1988) (Fee awards therefore need not be preceded by an evidentiary hearing if the record and supporting affidavits are sufficiently detailed to provide an adequate basis for calculating an award, and if the material facts necessary to calculate the award are not genuinely in dispute) (internal citations omitted); City of Detroit v. Grinnell Corp., 495 F.2d 448, 473 (2d Cir. 1974), abrogated on other grounds by Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000); cf. Walz v. Town of Smithtown, 46 F.3d 162, 170 (2d Cir. 1995) (district court did not exceed its discretion in failing to provide a hearing; noting that we are informed of nothing that would be developed in such a hearing that would alter the outcome); In re Thirteen Appeals Arising Out Of San Juan Dupont Hotel Fire Litig., 56 F.3d 295, 303 (1st Cir. 1995) (When the written record affords an adequate basis for a reasoned determination of the fee dispute, the court in its discretion may forgo an evidentiary hearing.). 18 In this case, there were several potential disputes of material fact raised by Crescent in its submissions to and conduct before the District Court. As to the propriety of awarding fees, while Crescent asserted during the pre-trial conference that it had brought the instant complaint with a good faith belief that it had acquired copyright ownership, it was not provided the opportunity to explain in detail the basis for that belief prior to the District Court's awarding fees. In its motion for reconsideration, Crescent again alluded to the dearth of evidence in the record before the District Court when the fee order was issued and suggested that, were the record developed, Crescent could provide evidence that its claim was non-frivolous. In its memorandum in opposition to PEI's affirmation in support of costs, Crescent asserted that Retna had indicated it was the exclusive agent for the photograph, that there is a general understanding in the publishing industry that stock houses often sell copyrightable interests, and that there was a handwritten note on the delivery memorandum that suggested to Crescent it had obtained such an interest. At this stage of the proceeding, however, only the amount of the award was at issue. Because Crescent presented indications that there are disputes of material fact, it is entitled to place on the record any evidence it has before the District Court chooses to award fees. Once Crescent submits its evidence on remand, the District Court may find that such evidence does not outweigh the plain language of the license. However, the District Court may not make that determination without at least affording Crescent the opportunity to submit evidence. 19 As to the amount of the fee award, Crescent was unable to challenge PEI's assertions because PEI did not submit copies of its billing records until long after Crescent's opposition papers had been filed. The records submitted were vague and often barely legible, yet the District Court apparently accepted the number of hours represented therein at face value. Further, Crescent challenged the hours PEI allocated to this action because PEI's counsel had consolidated its billing with that of another copyright action pending between the parties. Crescent also offered proof that the hours properly attributed to this litigation were far less than the number claimed by PEI or awarded by the District Court -- a dispute the District Court recognized in its opinion. Finally, the District Court noted that [t]hroughout this litigation, the parties have made repeated bitter references in their submissions to the Court to the merits and status of other actions, many of them completely irrelevant.... 2000 WL 669638, at . 4 This observation raises the question of whether all the hours the District Court credited PEI were truly reasonable. See Hensley v. Eckerhart, 461 U.S. 424, 434 (1983) (The district court... should exclude from this initial fee calculation hours that were not 'reasonably expended' on the litigation.) (quoting S. Rep. No. 94-1011, p. 6 (1976)). 20 Crescent also contested the reasonableness of the rate PEI's counsel asserted and argued that the District Court could not award fees without evidence of the actual billing arrangement between PEI and its counsel. 5 As we explain below, while the actual billing arrangement does not necessarily establish a ceiling on the rate attributed to private counsel under the Copyright Act, we believe it is a significant factor in determining what rate is reasonable. Therefore, the District Court should permit the parties on remand to submit evidence on this factor as well. 21 It is understandable that the District Judge felt compelled to manage his docket efficiently, especially in light of the many conclusory allegations that were submitted by Crescent and Crescent's delay between filing the complaint and seeking the documentary evidence to support its claim of copyright ownership. We are also mindful of the Supreme Court's warning that [a] request for attorney's fees should not result in a second major litigation. Hensley, 461 U.S. at 437. However, while individually many of these instances of potentially unresolved issues are insufficient to find that the District Court exceeded its allowable discretion, when those instances are viewed together, it is clear that Crescent should have been afforded the opportunity to develop the evidentiary record before any determinations as to the propriety and amount of any fee award were made. If the written record developed on remand affords an adequate basis for a reasoned determination as to these issues, the District Court, may, in its discretion, choose to forgo an evidentiary hearing. See In re Thirteen Appeals, 56 F.3d at 303. 22 Although we are remanding to the District Court for further proceedings, we are not intimating any view on the merits of the decision to award fees. It may well be that the District Court, upon receiving Crescent's evidence, will again choose to award costs and attorneys' fees to PEI. All we are holding is that Crescent is entitled to submit evidence on this issue and on the amount to be awarded if the District Court so chooses, because the filings Crescent submitted below indicate the existence of genuine disputes. Parties would be well advised, however, to indicate clearly to the district courts what evidence, if any, they feel reveals genuine disputes of material fact. 23