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Riviera Distributors, Inc. v. Jones

August 25, 2006

RIVIERA DISTRIBUTORS, INC. AND LARRY L. HARTLEY, PLAINTIFFS,
v.
TIMOTHY S. JONES AND MIDWEST ELECTRONIC SPECIALTIES, INC., DEFENDANTS.



The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

This matter is now before the Court on Defendants' Motion for Attorney's Fees and Bill of Costs. For the reasons set forth below, the Motion for Attorney's Fees [#60] is DENIED, and costs are awarded in favor of Defendants in the amount of $1,082.21.

DISCUSSION

I. Motion for Attorney's Fees

In granting Plaintiffs' Motion to Voluntarily Dismiss this case, Defendants requested an award of attorney's fees. The Court declined to award fees, finding that the record did not warrant such an award. Undaunted by the Court's ruling, Defendants now seek an award of fees pursuant to 17 U.S.C. § 505, which provides in relevant part:

In 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.

Factors to be considered in determining whether to award fees are frivolousness, motivation, objective unreasonableness, and the need in particular circumstances for compensation and deterrence. Fogerty v. Fantasy, Inc., 510 U.S. 517, 535 (1994).

In support of their request, Defendants argue that they are prevailing parties and that Plaintiffs' case was frivolous. However, in making this argument, Defendants rely on an erroneous interpretation of the Court's March 14, 2006, Order, as well as a skewed interpretation of the history of this case.

In dismissing this case with prejudice, the Court did not in any way pass on the merits of the litigation. Rather, the Court simply found that under the procedural posture of the case and the provisions of Rule 41, Plaintiffs could not voluntarily dismiss the case without prejudice without Defendants' consent. Not surprisingly, Defendants declined to consent to dismissal without prejudice, resulting in the granting of Plaintiffs' alternative request for voluntary dismissal with prejudice. As in National Conference of Bar Examiners v. Multistate Legal Studies, Inc., 692 F.2d 478, 488 (7th Cir. 1982), there has been no evidence of lack of merit to Plaintiffs' copyright infringement claims and no finding with respect to the merits of the case. The Court therefore does not believe that Defendants are entitled to prevailing party status on the facts of this case.

Moreover, even assuming that Defendants could be deemed prevailing parties, they would still not be entitled to fees under the Fogerty factors. Defendants' argument is essentially that because they were meritorious in their defense, Plaintiffs have admitted that their claims were baseless. As previously noted, Defendants were not found to have a meritorious defense. To the contrary, Plaintiffs' claims survived a motion to dismiss and made a plausible showing of copyright infringement. The case would presumably be proceeding to trial had Plaintiffs not elected to voluntarily dismiss their case after they realized that they had unintentionally omitted certain allegations from their Complaint and received notice that key pieces of evidence had been destroyed by the repository through no fault of the Plaintiffs. Accordingly, the Court rejects the suggestion that Plaintiffs' pursuit of this action was frivolous, baseless, or objectively unreasonable.

In support of their assertion that this litigation was improperly motivated, Defendants offer the self-serving speculation that "Plaintiffs brought this suit to obtain from Defendants, Plaintiffs' chief competitors, copies of Defendants' trade secret code for the accused Stars and Stripes game." However, Plaintiffs' conduct belies this assertion. In response to Defendants' confidentiality concerns, Plaintiffs agreed to a protective order that limited access to attorneys only. Defendants then stated that they were reluctant to turn over the code to counsel because counsel was "closely affiliated" and had a longstanding relationship with Plaintiffs. Plaintiffs then proposed that the code be turned over to another attorney and pre-approved expert who did not have prior relationships with Plaintiffs. Defendants still refused to turn over the requested discovery. Accordingly, Defendants' claims of improper or bad faith motivation are nothing more than conjecture that is simply not supported by the record.

Nor can the Court find any need for deterrence or compensation in this case, as Plaintiffs' claim was based on objectively reasonable claims supported by some evidence that Plaintiffs were denied the opportunity to test by Defendants' delay in responding to legitimate discovery and abrupt abandonment of the mediation efforts without prior notice. The Court would also note that in moving to voluntarily dismiss this case, Plaintiffs invoked the safe harbor provision of Rule 11, and an award of fees under the circumstances of this case would frustrate the goals and purposes of that provision.

For all these reasons, this case is readily distinguishable from the presumptive entitlement situation addressed in Assessment Technologies of WI, LLC v. Wire Data, Inc., 361 F.3d 434, 436 (7th Cir. 2004). Thus, the balance of the Fogerty factors indicate that the Court should exercise its discretion to decline Defendants' ...


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