August 15, 2019
A recent Law 360 story by Lauraann Wood, “$200K Fee After $5K Deal ‘Makes No Sense,’ Ill. Judge Says,” reports that an Illinois federal judge granted photo agency FameFlynet Inc. $10,500 of its request for $241,000 in attorney fees after settling a copyright suit for $5,000, saying awarding anything more after two-and-a-half years of avoidable litigation “makes no sense.” FameFlynet and Jasmine Enterprises Inc. stipulated to the $5,000 in damages under the Copyright Act after U.S. District Judge Thomas Durkin ruled Jasmine was liable for publishing three photos of Nicky Hilton and James Rothschild’s wedding on a blog in 2015.
But the photo agency’s case only reached summary judgment issues because it canceled settlement talks and litigated discovery disputes after learning the parties were $1,000 apart during negotiations that happened three weeks after serving of its complaint on Jasmine, Judge Durkin said. “For FFN to then incur hundreds of thousands of dollars in fees simply makes no sense, and it should not be rewarded for what should have been a straightforward case,” Judge Durkin said. “This case exemplifies the familiar adage of cutting off your nose to spite your face,” he said.
The fee award represents a little more than the FFN incurred when it rejected Jasmine’s initial $15,000 settlement offer in November 2016 plus its filing fee and process server costs, since “the fault does not lie exclusively with FFN for failing to settle, and its early work advanced the goals of the Copyright Act,” Judge Durkin said. But awarding FFN its entire fee request “would not advance considerations of compensation and deterrence,” since Jasmine removed the infringing photos the day it received notice of infringement and hasn’t posted to the blog since 2015, he ruled.
The agency argued that declining to award it fees would deter future plaintiffs from pursuing claims, but Judge Durkin said his concerns over awarding FFN's request was different. “Far from advancing the Copyright Act’s goals, awarding FFN its requested fees would incentivize parties to reject reasonable settlement offers in hope of cashing in on enormous attorneys’ fees down the line,” he said.
Craig Sanders of Sanders Law PLLC, who represents FFN, told Law360 in an email that the judge’s decision to award fees was proper. But he “appears to have committed reversible error” by failing to comply with Seventh Circuit and Supreme Court precedent by using the so-called lodestar method to calculate a reasonable fee in the photo agency’s case, Sanders said.
Jasmine claimed its photo publication was fair use before Judge Durkin sided with FFN on liability and said Jasmine likely would not win on that defense. FFN argued that Jasmine’s defense was objectively unreasonable given “existing case law,” so fighting it warranted a fee award. But Judge Durkin disagreed, saying the agency inaccurately “conflates whether a defense was successful with whether it was reasonable.”
“Losing on the merits does not establish that a party’s position was objectively unreasonable. Otherwise, a losing defendant would ‘virtually always be found to have done something culpable,’” Judge Durkin ruled, quoting the U.S. Supreme Court’s ruling in Kirtsaeng v. John Wiley & Sons Inc.
FFN had demanded $16,000 to settle its copyright suit, and ended negotiations after Jasmine offered $15,000, according to Judge Durkin’s order. Jasmine offered $15,000 to settle the case at several other times during litigation, including after the agency filed its bulky fee bid. But assuming that constitutes poor litigation conduct would mean Jasmine’s offer was unreasonable in the first place, Judge Durkin said.