Court Opinion

ID: 199783
Source: CourtListenerOpinion
Date Created: 2011-02-07 04:37:37+00
Date Added: 2024-06-11T13:16:16.640764
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 00-2290

                      JUAN R. ORTIZ-GONZALEZ,

                       Plaintiff, Appellee,

                                v.

                             FONOVISA,

                       Defendant, Appellant.

No. 01-1004

                      JUAN R. ORTIZ-GONZALEZ,

                       Plaintiff, Appellee,

                                v.

              DISTRIBUIDORA NACIONAL DE DISCOS, INC.,

                       Defendant, Appellant.

          APPEALS FROM THE UNITED STATES DISTRICT COURT

                  FOR THE DISTRICT OF PUERTO RICO

        [Hon. Juan M. Pérez-Giménez, U.S. District Judge]

                              Before

                        Boudin, Chief Judge,

                 Kravitch,* Senior Circuit Judge,

    *   Of the Eleventh Circuit, sitting by designation.
and Torruella, Circuit Judge.
     Irene M. Vera, with whom Alfredo Castellanos was on brief
for appellant.

     Rafael E. Silva-Almeyda, with whom Jésus R. Rabell-Méndez
was on brief for appellee.

                       January 17, 2002
                  KRAVITCH, Senior Circuit Judge.            In these consolidated

cases          involving     copyright       infringement,      defendant-appellant

Distribuidora Nacional de Discos, Inc., (“Distribuidora”), a

distributor, appeals from the district court’s judgment awarding

statutory          damages,       raising    the    following   issues:    whether    a

distributor            can   be   liable     for    copyright   infringement   where

plaintiff has not established that the producer was guilty of

copyright infringement, and whether it violated due process for

a defaulting party to not be notified of a trial date or to not

have       a    damages      hearing.        Defendant-appellant     Fonovisa,      the

producer,          appeals the district court’s denial of its motion

requesting attorney’s fees.

                                        I.    BACKGROUND

                  Juan R. Ortiz-Gonzalez allegedly authored and composed

two songs, entitled “Si Así Tu Eres” and “Soy La Peregrina.”

These songs were included, without his permission, in an album

entitled “De Vuelta Al Sabor” that was produced by Fonovisa, a

Latin          music   record     label.      Fonovisa    licensed   the    right    of

distribution of the album to Distribuidora, which then licensed

the right to Distribuidora Aponte, Inc. (“Aponte”).*                       After the

album was distributed, Ortiz-Gonzalez filed a cause of action

against Fonovisa, Distribuidora, and Aponte, alleging copyright

       *Aponte is not a party in this appeal.

                                              -4-
infringement under the Copyright Act, 17 U.S.C. § 101 et seq.

(2001), and violations of the Lanham Act, 15 U.S.C. § 1051 et

seq. (2001).

          Fonovisa answered the complaint, but Distribuidora and

Aponte never responded.          Ortiz-Gonzalez proceeded to trial;

Distribuidora and Aponte were not notified of the trial date.

At   trial,    Ortiz-Gonzalez      presented       his   evidence,   then

voluntarily    dismissed   the   case    against    Fonovisa.   Instead,

Ortiz-Gonzalez pursued his cause of action against Distribuidora

and Aponte, both of whom were in default.**          Concomitant with the

dismissal, the parties entered into an agreement that Fonovisa

would not collect any award of attorney’s fees or costs.             The

court found Fonovisa’s request for attorney’s fees moot due to

the agreement.

          Following the trial, Ortiz-Gonzalez filed a post-trial

memorandum on the liability of Distribuidora and Aponte and

requested an award of damages.           Distribuidora first made an

appearance at this stage, filing a reply to plaintiff’s post-

trial memorandum; Aponte did not reply.            Having determined that

no hearing on damages was necessary, the court awarded the

     **Default was entered after the defendants failed to make
an appearance or respond to the complaint within the appropriate
time period; as to Fonovisa, the entry of default was later set
aside by the court.

                                   -5-
plaintiff $9,500.00 in statutory damages against Distribuidora

and $6,756.79 in actual damages against Aponte.                  Distribuidora

appeals from the court’s award of statutory damages.                    Fonovisa

appeals the district court’s denial of its motion requesting

attorney’s fees.     These cases were consolidated on appeal.

                              II.   DISCUSSION

                                     A.

            Distribuidora appeals the order of the district court

awarding    Ortiz-Gonzalez      statutory       damages     after   a     default

judgment    for   copyright    infringement         under   17   U.S.C.    §   504

(2001).     The defendant asserts it was error for the court: (1)

to   find   Distribuidora      liable      as   a   distributor     where      the

plaintiff had not established that the producer was guilty of

infringement; (2) to hold a trial and award damages against

Distribuidora where the plaintiff had not notified Distribuidora

of the trial date; and (3) to not hold a hearing on damages.

            Whether a distributor can be found liable for copyright

infringement where the plaintiff has not established that the

producer is guilty of infringement is a question of law that is

reviewed de novo.      Liberty Mut. Ins. Co. v. Metro. Life Ins.

Co., 260 F.3d 54, 61 (1st Cir. 2001).                The issue of notice of

the trial after defaulting is also a question of law reviewed de

                                     -6-
novo.        Id.    As to a hearing on damages, the need for such a

hearing is vested with the district court and reviewed for abuse

of discretion. HMG Prop. Investors, Inc. v. Parque Indus. Rio

Canas, Inc., 847 F.2d 908, 919 (1st Cir. 1988).

1. Distributor Liability

               Distribuidora contends that a distributor’s liability

for     copyright      infringement    is    derived   from   a   producer’s

liability.***        The Copyright Act, however, states that “the owner

of a copyright under this title has the exclusive rights to do

and to authorize any of the following: . . . (3) to distribute

copies or phonorecords of the copyrighted work to the public by

sale or other transfer of ownership, or by rental, lease, or

lending.”          17 U.S.C. § 106 (2001).     Section 106(3) explicitly

grants to the copyright owner the exclusive right to distribute

copies of the copyrighted work.              See 2 Melville B. Nimmer &

David Nimmer, Nimmer on Copyright § 8.11[A] (2001); see also

Cable/Home Communication Corp. v. Network Prods., Inc., 902 F.2d
829, 843 (11th Cir. 1990).            The Copyright Act further provides

that     “anyone who violates any of the exclusive rights of the

       ***
        Distribuidora contends that Ortiz-Gonzalez must proceed
under a theory of contributory liability, and that where there
is no primary infringer there can be no secondary infringer.
Because the producer, Fonovisa, was not found to be an infringer
of Ortiz-Gonzalez’s copyright, Distribuidora argues that it
cannot face liability as a distributor. This is premised on an
inaccurate conception of the law.

                                       -7-
copyright owner . . . is an infringer of the copyright.”                              17

U.S.C. § 501(a) (2001); Cable/Home Communication Corp., 902 F.2d

at 843 (“Public distribution of a copyrighted work is a right

reserved to the copyright owner, and usurpation of that right

constitutes      infringement.”);             2    Nimmer   &     Nimmer,    supra,    §

8.11[A].     Thus, if Distribuidora distributed copies of Ortiz-

Gonzalez’s copyrighted work, the act of distribution is a direct

infringement itself, not an act of contributory or vicarious

infringement.

            In     his      complaint,            Ortiz-Gonzalez        alleged     that

Distribuidora distributed throughout Puerto Rico unauthorized

reproductions of his copyright protected songs.                         Distribuidora,

having   failed        to   appear      or    respond,      was    in    default.      A

defaulting party “is taken to have conceded the truth of the

factual allegations in the complaint as establishing the grounds

for liability as to which damages will be calculated.”                            Franco

v. Selective Ins. Co., 184 F.3d 4, 9 n.3 (1st Cir. 1999).

Therefore,       the    district     court         was   correct    to     have   found

Distribuidora          liable      to        Ortiz-Gonzalez         for     copyright

infringement.

2. Notice

            Distribuidora complains that it was never notified of

the trial date in this case.                       Although it was a defaulting

                                             -8-
party, Distribuidora contends it had a due process right to be

given notice of the trial.

              Federal Rule of Civil Procedure 55(b)(2)**** states that

notice is required before application to the court for entry of

a judgment by default when a party has appeared in an action.

It follows that if judgment can be entered against a defendant

without notice where the party has failed to appear,***** then due

process cannot require a higher standard for notice of the trial

date in the same situation.

              Here, Distribuidora did not make an appearance until

the    motion for post-trial judgment; therefore, it was not

entitled to the benefits granted in Rule 55.                  This does not

violate Distribuidora’s due process rights; in fact, the purpose

of Rule 55 is to protect the rights of parties like Ortiz-

Gonzalez.       See   H.F.   Livermore     Corp.   v.   Aktiengesellschaft

Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970)(“[T]he

diligent      party   must   be   protected   lest      he   be   faced   with

      ****
        “If the party against whom judgment by default is sought
has appeared in the action, the party . . . shall be served with
written notice of the application for judgment at least 3 days
prior to the hearing on such application.”      Fed. R. Civ. P.
55(b)(2) (2001).
      *****
         See Taylor v. Boston & Taunton Transp. Co., 720 F.2d
731,   733  (1st   Cir.   1983);  H.F.   Livermore    Corp.   v.
Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir.
1970); 10A Charles Alan Wright, Arthur R. Miller, & Mary Kay
Kane, Federal Practice and Procedure § 2687 (3d. ed. 1998).

                                     -9-
interminable delay and continued uncertainty as to his rights.

The default judgment remedy serves as such a protection.”).                    We

conclude that by failing to respond or appear, Distribuidora

lost its right to notice of the trial date.

 3. Damages Hearing

               Distribuidora    argues   that    it   was    never   given    the

opportunity to be heard, not even on the issue of damages.******

In   this      case,   Ortiz-Gonzalez     elected     to    receive,   and    was

awarded, statutory damages against Distribuidora pursuant to 17

U.S.C. § 504(c)(1) (2001) (“ . . . the copyright owner may

elect,    at    any    time   before   final    judgment     is   rendered,    to

recover, instead of actual damages and profits, an award of

statutory       damages   for    all   infringements        involved   in     the

action.”).        After considering the record, the district court

      ******
          Distribuidora does not appeal the amount of the
statutory damages granted, but instead argues that Ortiz-
Gonzalez should be considered ineligible to receive statutory
damages; had there been a hearing on statutory damages,
Distribuidora contends it would have been able to demonstrate
that such damages were not justified because Ortiz-Gonzalez was
unable to prove his claim of infringement against the
defendants,   Fonovisa   and   Distribuidora.     As   discussed
previously, there is no basis for this claim because
Distribuidora had defaulted and was found to be liable as a
direct infringer.      As an infringer, Distribuidora faced
statutory damages.      Although a party may demand a jury
determination of the amount of statutory damages to be awarded,
Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 355
(1998), Distribuidora never made such demand.

                                       -10-
decided that no hearing was necessary and awarded statutory

damages within the prescribed range.

               Both    Section   504(c)(1)        and   Rule     55    grant   wide

discretion to the district court.                A copyright owner may elect

to recover in statutory damages a “sum of not less than $750 or

more than $30,000 as the court considers just.”                        17 U.S.C. §

504(c)(1); see also Fed. R. Civ. P. 55(b)(2).*******                  Discretion as

to the judgment or the need for a hearing on damages is vested

with the district court.             Pope v. United States, 323 U.S. 1, 12

(1944) (“It is a familiar practice and an exercise of judical

power   for      a    court   upon    default,    by    taking    evidence     when

necessary or by computation from facts of record, to fix the

amount which the plaintiff is lawfully entitled to recover and

to give judgment accordingly.”).               The discretion granted to the

d i s t r i c t          c o u r t        w a s         n o t          a b u s e d .

                                         B.

     *******
          If, in order to enable the court to enter judgment or
to carry it into effect, it is necessary to take an account or
to determine the amount of damages or to establish the truth of
any averment by evidence or to make an investigation of any
other matter, the court may conduct such hearings or order such
references as it deems necessary and proper and shall accord a
right of trial by jury to the parties when and as required by
any statute of the United States.
Fed. R. Civ. P. 55(b)(2) (2001).

                                        -11-
            Fonovisa appeals the district court’s denial of its

motion requesting attorney’s fees pursuant to the Copyright Act,

17 U.S.C. § 505.********   Fonovisa argues that the district court

erred in holding that its motion requesting attorney’s fees was

moot.   Mootness is a jurisdictional question and is reviewed de

novo.    Verhoeven v. Brunswick Sch. Comm., 207 F.3d 1, 5 (1st

Cir. 1999).

            Concurrent with Ortiz-Gonzalez’s voluntary dismissal,

the parties entered into an agreement whereby Fonovisa agreed

not to collect any award of attorney’s fees or costs.     Based on

this agreement, the district court ruled that Fonovisa’s motion

for attorney’s fees was moot.      Fonovisa argues that, although

the agreement does prevent it from collecting attorney’s fees,

the agreement was structured so that Fonovisa could receive a

judgment on attorney’s fees.    Despite being unable to collect on

     ********
            Ortiz-Gonzalez   argues   that  this  court   lacks
jurisdiction because Fonovisa appealed immediately after the
denial of its motion, rather than after the final judgment was
issued. This is incorrect. “A notice of appeal filed after the
court announces a decision or order—but before the entry of the
judgment or order—is treated as filed on the date of and after
the entry.” Fed. R. App. P. 4(a)(2) (2001). This rule allows
notice of appeal from a non-final decision to operate as an
effective notice of appeal from a decision that would be
appealable upon final judgment.     FirsTier Mortgage Co. v.
Investors Mortgage Ins. Co., 498 U.S. 269, 276 (1991).
Fonovisa’s filing of its notice of appeal comports with Rule
4(a)(2) and this court, therefore, has jurisdiction to hear the
appeal.

                                -12-
such   a   judgment,     Fonovisa      contends    that    the    judgment       for

attorney’s fees would be valuable to deter other potential

plaintiffs       from    filing      frivolous     claims        for    copyright

infringement.      Thus, according to Fonovisa, the case is not moot

because    the    judgment      on   attorney’s    fees    would       be   legally

valuable.

            A federal court’s jurisdiction is restricted to the

resolution of cases or controversies. U.S. Const. Art. III, § 2;

Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990).                       A case

generally becomes moot when the controversy is no longer “live”

or   the   parties      “lack   a    legal    cognizable    interest        in   the

outcome.” Murphy v. Hunt, 455 U.S. 478, 481 (1982). “The duty of

this court, as of every other judicial tribunal, is to decide

actual controversies by a judgment which can be carried into

effect. . . .”       Mills v. Green, 159 U.S. 651, 653 (1895), cited

in Local No. 8-6, Oil, Chem. & Atomic Workers Int’l Union v.

Missouri, 361 U.S. 363, 367(1960); see also Morgan v. McDonough,

689 F.2d 265, 273 (1st Cir. 1982).

            Fonovisa admits that the court’s judgment will not be

“carried into effect” and cannot “affect the matter in issue in

the case before it,” Mills, 159 U.S. at 653, but will instead

                                       -13-
hopefully impact future cases.*********   Although possibly being of

some value in future situations, a judgment by the district

court on the issue of attorney’s fees would be superfluous

because of the agreement. Cf. Riva v. Massachusetts, 61 F.3d
1003, 1011 (1st Cir. 1995) (requiring in the context of ripeness

that “the controversy is narrowly defined and is susceptible to

specific relief, . . . and without much risk that the court’s

opinion will prove superfluous.”).        Courts are not required to

go through the symbolic step of entering a judgment which the

beneficiary has already agreed not to collect merely so that the

judgment can be waived as a red flag to serve the private

interests of the recipient in other cases.       Because there is no

actual live controversy here, the district court was correct to

dismiss the motion for attorney’s fees as moot.

                         III.   CONCLUSION

     *********
          Ortiz-Gonzalez offered to voluntarily dismiss his
claims against Fonovisa with prejudice, so long as Fonovisa did
not recover attorney’s fees or costs. According to Fonovisa, it
agreed, subject to the condition that it remain free to pursue
a judgment for attorney’s fees.      The handwritten agreement
states, “Defendant hereby will not collect from Plaintiff any
award for cost [sic] and attorney fees that may be granted by
the court.” The words of this agreement can be read to support
Fonovisa’s contention that Fonovisa could seek fees, but not
recover them.   We need not determine if this is the correct
interpretation of the agreement, however, because even assuming
Fonovisa’s position is correct, the district court would still
lack jurisdiction due to mootness.

                                -14-
         Because   we   find   no   error   in   the   district   court’s

rulings, we AFFIRM.

                                -15-