United States District Court, N.D. Illinois, Eastern Division
Jeffrey Cole Magistrate Judge.
MEMORANDUM OPINION AND ORDER
Fryer has moved for an award of attorney's fees under
§505 of the Copyright Act, totaling $57, 365 for work
done on the appeal of this case ($45, 745) and in pursuit of
fees ($11, 620), and expenses in the amount of $643.53.
[See Dkt. ## 91, 93, 94]. In his companion motion,
he is seeking an additional $133, 817.30 in restitution.
[Dkt. #96]. To fully understand this case, its history must
be reviewed. It is compendiously summarized in Alliance
for Water Efficiency v. Fryer, 808 F.3d 1153
(7th Cir. 2015), which reversed this court's
decision in Alliance for Water Efficiency v. Fryer,
2015 WL 102166 (N.D.Ill. 2015). It is also discussed below
and in the companion Memorandum Opinion and Order dealing
with Mr. Fryer's motion for restitution. See Alliance
for Water Efficiency v. Fryer, WL (N.D.Ill. 2017). [Dkt.
Alliance had hired Mr. Fryer, an environmental scientist, to
research and write a report on the extent to which water
demand elasticity during future droughts would be affected by
urban water agencies' conservation programs. The Alliance
organized the financing for the study through several
sponsors, as well as providing the largest funding
contribution itself. When Mr. Fryer submitted his draft
report, the Alliance was dissatisfied, as were most of the
sponsors - according to the Alliance's complaint. The
exception was the California Department of Water Resources
(“CDW”). The Alliance wanted the report
refocused, while Mr. Fryer did not, and the dispute made its
way to federal court in the form of the Alliance's
four-count Complaint, which sought relief under the
Declaratory Judgment Act and charged Breach of Contract,
Unjust Enrichment/Restitution, and Copyright Infringement.
Alliance claimed that it had all legal and tangible rights to
the study and the report, including an ownership interest in
the files and documents relating to the study. In Count IV,
the Alliance alleged that Mr. Fryer's report was a
“work made for hire, ” and that the Alliance
owned the copyright to it. The Alliance claimed that Mr. Fryer had
infringed on its copyright by speaking about the report at a
public forum/seminar. [Dkt. #5, at ¶¶70-74]. On
January 15, 2014, Judge Shadur, whom the Seventh Circuit has
called “a jurisdiction-hound, ” Newman-Green,
Inc. v. Alfonzo-Larrain R., 854 F.2d 916, 940
(7th Cir. 1988), concluded on his own that there
might be a defect in the way diversity jurisdiction had been
pled, but that any deficiency probably could be cured. Thus,
he issued an ex-parte order giving the plaintiff the
opportunity to cure the allegations of diversity
jurisdiction. [Dkt. ##3, 4]. Nothing was said about Count IV
or subject matter jurisdiction under the Copyright
on January 17, 2014, the plaintiff filed an Amended Complaint
alleging diversity jurisdiction in a manner that it was
thought would satisfy Judge Shadur's diversity concerns.
It was and again charged that the report was “a work
for hire” under the Copyright Act. [Dkt. #5]. On
February 14, 2014, Mr. Fryer's counsel filed a motion to
dismiss in which he charged that there was no diversity
jurisdiction and that there was no subject matter
jurisdiction under Count IV. [Dkt. ## 7, 8]. Mr. Fryer argued
that the Amended Complaint failed to properly allege that the
report had been a “work made for hire” because it
stated Mr. Fryer was an independent contractor rather than an
employee and failed to allege that the parties had a written
agreement designating the report as a work made for hire.
[Dkt. #8, at 10, 12].
the motion to dismiss was responded to by the plaintiff or
ruled on by Judge Shadur, the parties asked him to refer the
matter for a settlement conference. He did so on February 21,
2014. [Dkt. #16]. When the parties were again before Judge
Shadur on February 26, 2014, he denied that portion of Mr.
Fryer's motion to dismiss for lack of personal
jurisdiction, and he entered and continued the portion of the
motion that had argued that the court lacked jurisdiction
under the Copyright Act. [Dkt. #20]. The parties were before
me on February 28, 2014, asking that I set a settlement
conference. [Dkt. #21]. The settlement conference proceeded
less than two weeks later on March 13, 2014. On that day, the
parties reached a settlement, and their lawyers stated the
material terms on the record. It was agreed that contract
formation had occurred that day, that there was a binding
settlement agreement, and that the ultimate execution of the
contemplated written agreement was not a precondition to
contract formation. [Dkt. #26 See also Dkt. #48].
Under their agreement, if the parties could not agree on a
written document, what was read into the record on the
13th would serve as the settlement agreement. That
same day, the parties also consented in writing to my
jurisdiction. [Dkt. # 25].
the Alliance put its version of the agreement in writing,
however, Mr. Fryer refused to sign, although he admittedly
agreed with many of its provisions. The same was true of the
Alliance. The Alliance's stance was that Mr. Fryer had
agreed on the 13th that he couldn't name
certain organizations without their prior permission as it
would falsely suggest that his separate report (for himself
and CDW) had the Alliance's imprimatur, when it did not.
Alliance for Water Efficiency, 808 F.3d at 1157. Mr.
Fryer's position was that under the settlement on the
13th he had not agreed to exclude the funders
(other than the Alliance), and it was his prerogative to
credit those who had provided funding and data. An exchange
of drafts and counterdrafts followed, but “complete
written agreement was never reached . . . [leaving] the March
13 exchange as the definitive settlement.” Alliance
for Water Efficiency v. Fryer, 808 F.3d at 1155.
Alliance filed a motion to enforce its version of the
settlement agreement, which was, in effect, a request for a
mandatory injunction. Resolution Trust Corp. v.
Ruggiero, 994 F.2d 1221, 1225 (7th Cir. 1993). There
followed briefing and argument on the scope of the settlement
reached on the 13th and the effect of the ensuing
meetings and drafts. In the end, I concluded - erroneously as
it turned out - that the settlement read into the record on
March 13th contained an implied term that Mr.
Fryer would not include references in his report to PAC
members who had not first contacted him and expressed a
desire to participate in his report. Alliance for Water
Efficiency v. Fryer, 2105 WL 102166, at **6-8 (and
footnotes); [Dkt. #48]. He did not dispute that he had agreed
in the settlement agreement not to mention the Alliance in
his contemplated report.
October 27, 2014, following a telephone conference with the
parties, it was agreed that nothing in the March
13th settlement agreement or the ensuing orders
precluded Mr. Fryer from making reference in his separate
report to the fact that Santa Rosa and/or one or more members
of the PAC contributed data to Mr. Fryer's study. [Dkt.
#52]. After some additional haggling about the Santa Rosa
data, I concluded and the parties agreed that further
discussion would not be productive, and the parties were
instructed to comply with the terms set forth in the
Memorandum Opinion and Order of January 7, 2015. [Dkt. #62].
January 7, 2015, form AO 450, captioned Judgment In A Civil
Action, was filed with the clerk of court dismissing the
case. [Dkt. #62]. Mr. Fryer appealed. [Dkt.#63].
argument, the Seventh Circuit pointed out that although
injunctive relief was contemplated, there was no document
that complied with Fed.R.Civ.P. 65(d)(1). The parties then
returned here and obtained a self-contained order that
complied with the Court's concerns and Rule 65.
Alliance for Water Efficiency, 808 F.3d at 1155.
[See Dkt.#85]. The parties then returned to the
Court of Appeals, which determined that Mr. Fryer and the
Alliance had not come to a mutual accord on a final written
agreement, and therefore that what was read into the record
by them on March 13, 2014, was the operative settlement
agreement - as the parties had agreed. Alliance for Water
Efficiency, 808 F.3d at 1157. The Seventh Circuit
vacated the injunction “because it contains terms on
which the parties have not agreed.” Id.
to its discussion on the scope of the March 13 settlement
agreement, the Seventh Circuit addressed the question of
jurisdiction, saying: “Fryer contends that this
injunction creates a prior restraint that violates the First
Amendment. Before we tackle that subject, however, we must
decide whether the suit is properly in federal court.”
Alliance for Water Efficiency, 808 F.3d at 1156. If
there had been no independent jurisdictional basis for
AWE's suit, dismissal, the Seventh Circuit said, rather
than adjudication of the appeal would have been the
appropriate action. Cf. Blue Cross Blue Shield v.
American Express, 467 F.3d 634 (7th Cir.
2006); Lynch, Inc., 279 F.3d at 491-92. But the
Amended complaint properly pled diversity jurisdiction, and
that the Court of Appeals said rendered the suit
“independently within federal jurisdiction, even if the
original suit would have failed on the merits or should have
been dismissed.” Alliance for Water
Efficiency, 808 F.3d at 1157.
parties decided to settle, and why they settled under the
terms they did on March 13 is unknown. The Seventh Circuit
did not even hazard a guess. It merely noticed that
settlements involve “compromise” in which no one
gets all of what it wants. Alliance for Water
Efficiency, 808 F.3d at 1157. Since Judge Shadur had
deferred the Alliance's response to and his consideration
of the Fryer motion to dismiss Count IV for failure to state
a claim, the Alliance had not responded to it. The case was
in the earliest stages of the pleadings, and no discovery had
been taken. Thus, nothing supports Mr. Fryer's
tendentious speculation that the Alliance settled because it
knew it ultimately was going to lose on the merits of its
suit. It is as likely that Mr. Fryer settled because he
feared what the evidence would reveal as it is that the
Alliance settled out of fear of defeat or exposure that its
suit was frivolous. All that can be said with certainty is,
as the Court of Appeals pointed out, “instead of
defending, Fryer struck a bargain with the Alliance.”
808 F.3d at 1157.
assume that one purpose of the fee-shifting provision in
§505, like that in other fee shifting statutes, is
“to deter the bringing of lawsuits without
foundation” and that like them, §505 should be
interpreted as allowing fees whenever the plaintiff's
“claim was frivolous, unreasonable, or groundless,
” CRST Van Expedited, Inc., 136 S.Ct. 1642,
1652, it cannot be said on this record that Mr. Fryer is a
prevailing party within the meaning of the Copyright Act. He
won in the Court of Appeals on the construction to be given
to a settlement agreement, not on an issue that advanced the
Act's goals or because there was any decision or evidence
that Count IV would ultimately be found frivolous or
Court of Appeals' concern with how Count IV was pled was
jurisdictional, for absent jurisdiction the case would have
to be dismissed. Jurisdiction is a matter to be taken quite
seriously. See e.g., Tisza v. Communications Workers of
America, 953 F.2d 298, 300 (7th Cir. 1992)
(“Jurisdiction is the first question in every
case.”). See also In re UAL Corp., 408 F.3d
847, 849 (7thCir.2005)(“Appellate
jurisdiction is the initial question.”); Sonii v.
General Elec. Co., 359 F.3d 448, 449 (7th
Cir. 2004); Lucille v. City of Chicago, 31 F.3d 546,
548 (7th Cir. 1994)(“Although McCall-Bey
v. Franzen...held that a district court may not enforce
a settlement agreement unless there is an independent basis
of federal jurisdiction, the district judge did not discuss
this initial hurdle ... ‘Enforcement of [a] settlement
agreement...is more than just a continuation or renewal of
the dismissed suit, and hence requires its own basis of
determining that there was jurisdiction because diversity had
been sufficiently pled, the Court of Appeals turned to the
“merits, ” on which it promised brevity. The
Court vacated the injunction “because it contains terms
on which the parties have not agreed.” 808 at 1157. The
“injunction [went] beyond what the parties agreed [to]
on March 13, 2014. It takes the Alliance's later drafts
as if they were a signed contract, which they aren't. On
March 13 Fryer promised to remove the Alliance's name
from his report. He did not promise to omit the sponsors'
names.” 808 F.3d at 1157.
Fryer now insists that the ability to name all the funders in
his separate report without their prior permission was the
salient event in the case. [Dkt. #105, at 4]. Merely because
Mr. Fryer says it does not make it so, and a judge is not
obligated to credit it because an interested litigant says
so. See Schmude v. Tricam Industries, Inc. 556 F.3d
624, 628 (7th Cir. 2009)(Posner,
J.)(“Moreover, every judge is aware that many people
who do not have a criminal record will lie in a trial when it
is to their advantage.”). But even if true, it was not
a function of the Copyright Act, but of what his March
13th settlement agreement with the Alliance
consisted. Indeed, that crucial fact is largely ignored by
Mr. Fryer, even though it is indisputable that the injunction
was “vacated because it contains terms on which the
parties have not agreed.” Fryer, 808 F.3d at
THE STATUTORY SCHEME AND PRINCIPLES RELEVANT TO THIS
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.
17 U.S.C. § 505 (emphasis supplied). Importantly, for
our purposes, under the plain language of §505, a party
- plaintiff or defendant - must be the “prevailing
party” in a “civil action under [the Copyright
Act]” before a court is obligated to exercise its
discretion and decide whether to award fees. The Supreme
Court appears to have read §505 as only being applicable
in a “copyright infringement action” and only to
a prevailing party in such an action. Fogerty v. Fantasy,
Inc., 510 U.S. 517, 519 (1994). Congress has included
the term “prevailing party” in various
fee-shifting statutes, and the Court in another context has
said that its approach has been to interpret the term in a
consistent manner. CRST Van Expedited, Inc. v.
E.E.O.C., 578 U.S., 136 S.Ct. 1642, 1646 (2016).
cannot ignore “the text of the fee shifting
statute” under consideration, any more than they can
ignore in other contexts the words chosen by Congress.
See CRST, 136 S.Ct. at 1653. Compare Simmons v.
Himmelreich, U.S., 136 S.Ct. 1843, 1850 (2016)(courts
can't ignore the text of the statute); Octane
Fitness, LLC v. ICON Health & Fitness, Inc., U.S.,
134 S.Ct. 1749, 1755 (2014)(“Our analysis begins and
ends with the text of [the patent act].”); United
States v. Natale, 719 F.3d 719, 734 (7th Cir.
2013). Under the explicit language of §505 of the
Copyright Act, the section on which Mr. Fryer's motion is
based [Dkt. # 91, 94],  whether to award fees (even to a
prevailing party) - is left to the court's discretion. An
exercise of that discretion is guided by the list of non-
exclusive discretionary factors discussed in
Fogerty. See infra at 24; JCW
Investments, Inc. v. Novelty, Inc., 509 F.3d 339, 342
(7th Cir. 2007). That discretion is broad.
Kirtsaeng v. John Wiley & Sons, Inc.,
___ U.S. ___, 136 S.Ct. 1979, 1988 (2016); United States
v. Kluball, 843 F.3d 716 (7th Cir. 2016);
Bell v. Lantz, 825 F.3d 849, 852 (7th
Cir. 2016). And review of a fee decision is under the lenient
and deferential abuse of discretion standard. Dobbs v.
DePuy Orthopedics, Inc., 842 F.3d 1045, 1048
(7th Cir. 2016). Deferential review, however, does
not give the district court unfettered discretion. It
“still bears the responsibility of justifying its
Seventh Circuit has explained that:
the two most important considerations in deciding whether to
award fees ‘are the strength of the prevailing
party's case and the amount of damages or other relief
the party obtained. If the case was a toss-up and the
prevailing party obtained generous damages, or injunctive
relief of substantial ...