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Heritage Capital Corporation v. Christie's, Inc.

United States District Court, N.D. Texas, Dallas Division

January 12, 2018

HERITAGE CAPITAL CORPORATION, et al., Plaintiffs,
v.
CHRISTIE'S, INC., et al. Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER, UNITED STATES DISTRICT JUDGE

         The instant motion for attorney's fees presents the question whether a party who succeeds in compelling arbitration of a copyright infringement claim can qualify as a “prevailing party” under 17 U.S.C. § 505. Concluding that the party cannot qualify as a “prevailing party, ” the court denies the motion.

         I

         Because this case is the subject of a prior memorandum opinion and order, see Heritage Capital Corp. v. Christie's, Inc., 2017 WL 1550514 (N.D. Tex. May 1, 2017) (Fitzwater, J.) (“Heritage I”), the court will only recount the background facts and procedural history that are pertinent to this decision.

         Plaintiffs Heritage Capital Corporation, Heritage Auctioneers & Galleries, Inc., Heritage Numismatic Auctioneers, Inc., Heritage Auctions, Inc., Heritage Vintage Sports Auctions, Inc., Currency Auctions of America, Inc., and Heritage Collectibles, Inc. (collectively, “Heritage”) operate the website www.HA.com (“HA.com”), which hosts sales and auctions of collectibles. Heritage alleged that defendants Christie's, Inc. and Collectrum, Inc. (“Collectrum”) (collectively, “Christie's, ” unless otherwise indicated) had downloaded some or all of HA.com's listings using an advanced computer code. Heritage traced this activity to Christie's, discovered that some of the downloaded listings had appeared on the Collectrum website, and filed the instant lawsuit alleging seven federal- and state-law claims, among them copyright infringement under 17 U.S.C. §§ 106 and 501.[1] Christie's moved to dismiss and compel arbitration based on the arbitration clause in Heritage's Website Use Agreement.[2] In Heritage I the court held that Heritage's claim fell under the Use Agreement's broad scope, granted the motion to compel arbitration, and dismissed the action with prejudice. Heritage I, 2017 WL 1550514, at *6.

         Christie's now moves for an award of attorney's fees under 17 U.S.C. § 505, a provision of the Copyright Act, alleging that it is a “prevailing party” under the statute. Heritage opposes the motion.

         II

         “As a general rule, litigants must pay their own attorney's fees.” Stover v. Hattiesburg Pub. Sch. Dist., 549 F.3d 985, 997 (5th Cir. 2008) (citing Alyeska Pipeline Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975)). “The ‘American Rule' is the starting point for fee awards: Even prevailing litigants are ordinarily not entitled to attorneys' fees from the losing party.” Blue Skies Alliance v. Tex. Comm'n on Envtl. Quality, 265 Fed.Appx. 203, 206 (5th Cir. 2008) (per curiam). A party may recover attorney's fees, however, if authorized by statute or contract. See Buckhannon Bd. & Care Home, Inc. v. W.Va. Dep't of Health & Human Res., 532 U.S. 598, 602 (2001).

         Under 17 U.S.C. § 505, “[i]n any civil action under this title . . . the court may [] award a reasonable attorney's fees to the prevailing party as part of the costs.” 17 U.S.C. § 505 (emphasis added). “Awarding attorney's fees to a prevailing party pursuant to § 505 is the rule rather than the exception, and fees should be rewarded routinely.” PAR Microsystems v. Pinnacle Dev. Corp., 995 F.Supp. 655, 656 (N.D. Tex. 1997) (Fitzwater, J.) (citing Micromanipulator Co. v. Bough, 779 F.2d 255, 259 (5th Cir. 1985)). Although the recovery of attorney's fees is routine under § 505, it is not automatic; they are “‘to be awarded to prevailing parties only as a matter of the court's discretion.'” Virgin Records Am., Inc. v. Thompson, 512 F.3d 724, 726 (5th Cir. 2008) (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994)).

         III

         The question whether Christie's can recover attorney's fees under § 505 turns on whether Christie's qualifies as a “prevailing party.”

         A

         “[A] ‘prevailing party' is one who has been awarded some relief by the court[.]” Buckhannon, 532 U.S. at 603.[3] “The touchstone of the prevailing party inquiry . . . [is] the material alteration of the legal relationship of the parties in a manner which Congress sought to promote in the fee statute.” Sole v. Wyner, 551 U.S. 74, 82 (2007) (quoting Tex. State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792-93 (1989)) (citing Buckhannon, 532 U.S. at 605). Although the Fifth Circuit has not yet directly interpreted the term “prevailing party” in § 505, under analogous statutes a prevailing party must “(1) obtain actual relief that (2) materially alters the legal relationship between the parties and (3) modifies the [opposing party's] behavior in ...


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