Court Opinion

ID: 4221527
Source: CourtListenerOpinion
Date Created: 2017-11-17 16:00:27.933547+00
Date Added: 2024-06-11T14:41:43.264451
License: Public Domain

16-2922(L)
Reach Music Publ’g, Inc. v. Protoons Inc.

                            UNITED STATES COURT OF APPEALS
                                FOR THE SECOND CIRCUIT

                                            SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

       At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 17th day of November , two thousand seventeen.

Present:
            ROBERT A. KATZMANN,
                  Chief Judge,
            RAYMOND J. LOHIER, JR.,
            CHRISTOPHER F. DRONEY,
                  Circuit Judges.
___________________________________________

REACH MUSIC PUBLISHING, INC., DAVID
REEVES,

        Plaintiffs-Counter-Defendants–Appellees, Cross-Appellants,

MICHAEL CLOSTER, REACH GLOBAL, INC.,

        Counter-Defendants–Appellees, Cross-Appellants,

                 v.                                              Nos. 16-2922 (Lead),
                                                                      16-3070 (XAP)
PROTOONS INC.,

     Defendant-Counter-Claimaint–Appellant, Cross-Appellee,

WARNER/CHAPPELL MUSIC, INC.,

      Defendant.
___________________________________________

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For Plaintiff-Counter-Defendant–Appellee-              ANDREW H. BART, Jenner & Block LLP,
Cross-Appellant Reach Music Publishing,                New York, NY.
Inc. and Counter-Defendants–Appellees-
Cross-Appellants Michael Closter and
Reach Global, Inc.:

For Plaintiff-Counter-Defendant–Appellee               Edward P. Grosz, Brian D. Caplan, Reitler
-Cross-Appellant David Reeves:                         Kailas & Rosenblatt LLC, New York, NY.

For Defendant-Counter-Claimant–                        ELLIOT L. BIEN, Bien & Summers, San
Appellant-Cross-Appellee:                              Rafael, CA.

       Appeal from a judgment of the United States District Court for the Southern District of

New York (Forrest, J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

       This appeal arises from litigation initiated by Reach Music Publishing, Inc. (“Reach”)

and David Reeves against Protoons, Inc. (“Protoons”), in which Protoons successfully defended

against Reach and Reeves’ claims and prevailed on its counterclaims for breach of contract and

tortious interference with contract. Protoons now appeals the judgment of the district court

(Forrest, J.), which declined to award the attorney’s fees Protoons incurred in pursuing its

tortious interference counterclaim and denied Protoons punitive damages. 1 We assume the

parties’ familiarity with the underlying facts, the procedural history of the case, and the issues on

appeal. We affirm the district court’s judgment.

       In 1988 and 1989, Reeves, a songwriter, executed a series of agreements (the “Songwriter

Agreements”) that transferred his entire interest in certain songs (the “Compositions”) to a

non-party music publishing company that later assigned that interest to Protoons. Reeves

subsequently entered into an agreement purporting to transfer an interest in the Compositions to

1
  Cross-appellants Reach, Reeves, Michael Closter, and Reach Global, Inc. have withdrawn their
cross-appeal.

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Reach, and thereafter Reach and Reeves brought a series of actions against Protoons. In the

instant case, Reach and Reeves sought a declaration of their interests in the Compositions, and

Protoons counterclaimed for breach of contract against Reeves and tortious interference with

contract against Reach.

       Reach and Reeves’ claims were dismissed with prejudice in 2010. In 2014, the district

court granted summary judgment to Protoons on its counterclaim for breach of contract,

concluding that the Songwriter Agreements were enforceable and that Reeves had surrendered

his copyright interest in the Compositions. Protoons later prevailed on its tortious interference

counterclaim following a bench trial. Upon Protoons’ motion for damages, the district court

awarded Protoons the attorney’s fees it incurred in defending against the actions brought by

Reach and Reeves, as well as those it incurred in pursuing its breach of contract counterclaim.

However, the court declined to award the fees Protoons incurred in pursuing its tortious

interference counterclaim, and it did not award punitive damages.

       “The standard of review of an award of attorney’s fees is highly deferential to the district

court.” Mautner v. Hirsch, 32 F.3d 37, 39 (2d Cir. 1994). “What constitutes a reasonable fee is

properly committed to the sound discretion of the district court, and will not be overturned absent

an abuse of discretion, such as a mistake of law or a clearly erroneous factual finding.”

Goldberger v. Integrated Res., Inc., 209 F.3d 43, 47 (2d Cir. 2000) (citation omitted). We review

a district court’s denial of punitive damages for an abuse of discretion. See Payne v. Jones, 711
F.3d 85, 97–98 (2d Cir. 2013).

       Protoons contends that the district court erred by failing to impose attorney’s fees as a

sanction against Reach and Reeves for bad-faith litigation conduct. See Chambers v. NASCO,

Inc., 501 U.S. 32, 45–46 (1991) (“[A] court may assess attorney’s fees when a party has acted in

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bad faith, vexatiously, wantonly, or for oppressive reasons.” (internal quotation marks omitted)).

Specifically, Protoons argues that by not discussing its inherent power to impose such a sanction

in its damages opinion, the district court erroneously concluded that it lacked that power. We

disagree. Protoons raised the issue of the district court’s inherent authority when it moved for

damages, and the district court later stated that it “rendered [its damages decision] on the basis of

the full panoply of the materials that were presented at the appropriate time.” App’x 179. We

infer from the district court’s decisions that it found that the demanding standard for bad-faith

fees was not satisfied, rather than that it lacked authority to impose them. We further conclude

that the district court did not abuse its discretion in declining to impose sanctions under the

circumstances of this case. Cf. Chambers, 501 U.S. at 46 (“[I]f a court finds that fraud has been

practiced upon it, or that the very temple of justice has been defiled, it may assess attorney’s fees

. . . .” (internal quotation marks omitted)).

        Protoons also argues that it was entitled to attorney’s fees for its tortious interference

counterclaim pursuant to Section 505 of the Copyright Act. See 17 U.S.C. § 505 (“In any civil

action under this title, the court in its discretion may . . . award a reasonable attorney’s fee to the

prevailing party . . . .”). The district court concluded that Section 505 did not authorize such an

award because Protoons’ continued litigation of its tortious interference counterclaim was not

“necessary to” vindicate Protoons’ interest in the Compositions. App’x 164–66 (quoting

InvesSys, Inc. v. McGraw-Hill Cos., 369 F.3d 16, 20 (1st Cir. 2004)). For the purposes of this

appeal, the parties agree that InvesSys properly states the standard under Section 505 for

awarding fees on non-copyright claims. Assuming (without deciding) that it does, we conclude

that the district court did not err in declining to award fees under Section 505 for the tortious

interference counterclaim. Once the district court’s summary judgment decision established the

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validity of the transfers of Reeves’ interest in the Compositions, Protoons’ pursuit of its tortious

interference counterclaim no longer implicated issues that were necessary to resolve its interests

in the copyrights at issue.

       Finally, we reject Protoons’ contention that the district court abused its discretion by

declining to award punitive damages. Under New York law, which the parties agree applies here,

“[p]unitive damages are awarded in tort actions where the defendant’s wrongdoing has been

intentional and deliberate, and has the character of outrage frequently associated with crime,”

Prozeralik v. Capital Cities Commc’ns, Inc., 82 N.Y.2d 466, 479 (1993) (internal quotation

marks omitted), and such damages are “recoverable in a contract action only if necessary to

vindicate a public right,” TVT Records v. Island Def Jam Music Grp., 412 F.3d 82, 94 (2d Cir.

2005) (internal quotation marks omitted). Protoons’ assertion that the district court improperly

failed to consider the public interest in this regard is incorrect: the district court explicitly found

that “punitive damages are not necessary in this case to vindicate any public interest that

consequential damages would inadequately address.” App’x 166. Our decision in Universal City

Studios, Inc. v. Nintendo Co., cited by Protoons, does not suggest that this finding was erroneous,

as the instant case did not involve a similar use of inconsistent litigating positions or feature the

same “deliberate, systematic campaign to coerce all . . . third party licensees.” 797 F.2d 70, 78

(2d Cir. 1986). In sum, we cannot conclude that the district court’s decision not to impose

punitive damages under the circumstances here amounted to an abuse of discretion.

       We have considered all of the parties’ contentions on appeal and have found in them no

basis for reversal. For the foregoing reasons, the judgment of the district court is AFFIRMED.

                                                       FOR THE COURT:
                                                       Catherine O’Hagan Wolfe, Clerk

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