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Energy Intelligence Group, Inc. v. Kayne Anderson Capital Advisors, LP

United States District Court, S.D. Texas, Houston Division

May 2, 2018

ENERGY INTELLIGENCE GROUP, INC. and ENERGY INTELLIGENCE GROUP UK LIMITED, Plaintiffs,
v.
KAYNE ANDERSON CAPITAL ADVISORS, LP and KA FUND ADVISORS, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          SIM LAKE, UNITED STATES DISTRICT JUDGE.

         Energy Intelligence Group, Inc. and Energy Intelligence Group (UK) Limited (together, "Plaintiffs" or "EIG") sued Kayne Anderson Capital Advisors, LP and KA Fund Advisors, LLC (together, "Defendants" or "Kayne") for violations of the Copyright Act, 17 U.S.C. § 106, and the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. §§ 12 02-03. Pending before the court are Defendants' Motion for Attorney's Fees and Costs ("Kayne's Motion for Fees and Costs") (Docket Entry No. 287), Plaintiffs' Motion for Post-Judgment Relief (Docket Entry No. 289), and Plaintiffs' Application for Attorney's Fees ("EIG's Fee Application") (Docket Entry No. 290). For the reasons stated below, Plaintiffs' Motion for Post-Judgment Relief will be denied; EIG's Fee Application will be granted in part and denied in part; and Kayne's Motion for Fees and Costs will be denied.

         I. Background

         A detailed history of the parties' business relationship as related to the present litigation is provided in a prior opinion.[1] In short, EIG alleged that Kayne copied and distributed Oil Daily, a subscription newsletter published by EIG, in violation of EIG's subscription agreements.[2] From at least 2004 to 2013 Kayne purchased a single annual subscription to Oil Daily for a Kayne employee, Jim Baker. That subscription was routinely forwarded to Kayne employees and others who were not subscribers. In 2013 Kayne entered into a multi-user license agreement with EIG, paying for five Kayne employees to receive Oil Daily. But EIG alleged that Kayne continued to distribute unauthorized copies of Oil Daily until at least May 21, 2014. EIG filed this action against Kayne for copyright infringement and for DMCA violations on July 8, 2014.

         This case was the subject of a four-day jury trial held from December 4-7, 2017.[3] The jury found that Kayne infringed 1, 646 individual Oil Daily works between December 29, 2004, and July 8, 2014, and awarded $15, 000 in statutory damages for each work infringed.[4] The jury found that EIG knew or should have known on or before July 8, 2011, that Kayne was infringing its copyrights of Oil Daily, -[5] that Kayne fraudulently concealed its copying of Oil Daily and that EIG failed to discover the copying despite exercising due diligence;[6] but that EIG failed to mitigate their damages[7] and could have avoided 1, 607 acts of infringement had EIG used reasonable diligence to mitigate damages.[8] With respect to EIG's DMCA claims, the jury found that Kayne intentionally removed or altered copyright management information for Oil Daily a total of 425 times having reasonable grounds to know that it would induce, enable, facilitate, or conceal copyright infringement.[9]The jury did not find that Kayne distributed Oil Daily knowing that the copyright management information had been removed or altered without EIG's permission, [10] or that EIG knew or should have known on or before July 8, 2011, that Kayne was intentionally removing or altering copyright management information for Oil Daily or distributing Oil Daily knowing that the copyright management information had been removed or altered without EIG's permission.[11]The jury awarded $2, 500 in statutory damages for each of Kayne's 425 violations of the DMCA.[12] The jury also found that EIG failed to mitigate their DMCA damages, [13] and that EIG could have avoided all 425 DMCA violations had reasonable diligence been used to mitigate damages.[14]

         II. EIG's Rule 59 Motion for Post-Judgment Relief

         EIG moves the court to alter or amend judgment pursuant to Federal Rule of Civil Procedure 59(e) by (1) striking the jury verdict and questions relating to the affirmative defense that EIG failed to mitigate its damages, and (2) entering judgment against defendants, jointly and severally, for statutory damages under 17 U.S.C. § 504(c)(2) in the sum of $24, 690, 000 ($15, 000 x 1, 646 infringements), plus statutory damages under 17 U.S.C. § 1203(c)(3)(B) in the sum of $1, 062, 500 ($2, 500 x 425 DMCA violations).[15] Alternatively, EIG asks the court to enter a judgment of $15, 000 for each of the 670 works infringed and $2, 500 for each of the 4 9 DMCA violations that occurred during the three years immediately preceding the filing of this suit.[16] As other alternatives EIG moves the court to grant a new trial pursuant to Federal Rule of Civil Procedure 59(a) because of improper jury-instructions and verdict questions, or to grant a new trial on the issue of failure to mitigate damages for Kayne's DMCA violations.[17]

         Kayne opposes EIG's requests for post-judgment relief arguing that the jury correctly found that EIG failed to mitigate their damages, [18] EIG's other challenges to the jury charge are baseless and were waived, [19] and judgment should not be rendered as EIG requests because EIG's DMCA claims failed as a matter of law, the jury's verdict leads to a fair and reasonable outcome --an award of damages in EIG's favor of $585, 000.00, and EIG's requests for judgment would be unconstitutionally excessive.[20]

         A. EIG Is Not Entitled to Rule 59(e) Relief

         1. Applicable Law

         "'Under Rule 59(e), amending a judgment is appropriate (1) where there has been an intervening change in the controlling law; (2) where the movant presents newly discovered evidence that was previously unavailable; or (3) to correct a manifest error of law or fact.'" Alexander v. Wells Fargo Bank, N.A., 867 F.3d 593, 597 (5th Cir. 2017). EIG has not cited an intervening change in controlling law and has not presented newly discovered evidence. Instead, EIG argues that the instruction that EIG could not recover statutory damages for any copyright infringement or DMCA violation that EIG could have avoided was a manifest error of law.[21] A "'[m]anifest error [of law]' is one that is 'plain and indisputable, and that amounts to a complete disregard of the controlling law.'" Guy v. Crown Equipment Corp., 394 F.3d 320, 325 (5th Cir. 2004). "The district court has considerable discretion in deciding whether to reopen a case under Rule 59(e)." Edward H. Bohlin Co., Inc. v. Banning Co., Inc., 6 F.3d 350, 355 (5th Cir. 1993). Nevertheless, "[t]he court must strike the proper balance between two competing imperatives: (1) finality, and (2) the need to render just decisions on the basis of all the facts." Id.

         2. Application of the Law to the Facts

         (a) EIG Fails to Show Manifest Error of Law EIG argues that the portions of the jury instructions and verdict form questions stating that EIG "'may not recover for any item of damage that could have [been] avoided through reasonable efforts' constituted legal error, "[22] and that Kayne's mitigation defense was improperly accounted for more than once.[23] Kayne responds that the mitigation defense applies to copyright claims, the jury was correctly instructed on mitigation, and the jury correctly found that EIG failed to mitigate their damages.[24]

(1) EIG Has Not Shown that Mitigation Instructions or Questions Were a Manifest Error of Law
EIG argues that the jury charge improperly instructed that Plaintiffs may not recover for any item of damage that they could have avoided through reasonable effort. If you find Defendants have proved by a preponderance of the evidence that Plaintiffs unreasonably failed to take advantage of an opportunity to lessen their damages, you should deny them recovery for those damages that they would have avoided had they taken advantage of the opportunity.[25]

         Asserting that Kayne's mitigation defense relied on arguments that EIG could have stopped the infringement in January of 2007 by notifying Kayne that its actions constituted infringement and that infringement can cause legal and financial consequences, EIG argues that this instruction and related verdict questions constitute manifest error because Kayne's mitigation defense conflicts with the Copyright Act's specific notice requirements, which allow reduced statutory damages, and conflicts with the DMCA, which has no notice requirements.[26] Asserting that statutory damages are not meant solely to compensate copyright owners for their injuries but also to deter future infringement, EIG also argues that this instruction and related verdict questions constitute manifest error because statutory damages are available for infringement and violation of the DMCA regardless of whether actual damages are suffered or could have been mitigated.[27]

         Kayne responds that "there is nothing in the Copyright Act that addresses, much less eliminates, the general requirement that an injured plaintiff has a duty to mitigate damages, "[28] and that EIG cites no authorities that have adopted its overly-expansive interpretation of the Copyright Act's notice provision as an "exclusive "duty to warn' in copyright cases."[29] Acknowledging that the DMCA has no formal notice requirement, Kayne argues that EIG offers "no authority for their huge leap in logic seeking to turn statutory silence on notice requirements into an affirmative provision preempting generally-applicable defenses such as mitigation, "[30] and that "[c]ontrary to [EIG]'s argument, several courts have recognized the failure to mitigate defense when a plaintiff does not send notice requesting the infringer to stop its conduct."[31] Kayne argues that its

mitigation defense was not just a "failure to warn" defense, the defense was based on [EIG]'s taking no action over the course of many years to protect its own interest and products. It is true that [EIG] did not warn Kayne Anderson after learning of the infringement in 2007, which is significant because Kayne Anderson stopped its infringement immediately after receiving [EIG]'s cease and desist letter in May 2014. See Tr. Vol. 4 at 49-52. It is also clear that [EIG] never took action to protect their products, choosing instead to invest in litigation and litigation software, rather than the inexpensive technology that could have protected [EIG]'s works and stopped the infringement sooner. See Tr. Vol. 4 at 51-52.[32]

         Kayne also argues that none of the cases on which EIG relies

address the reasons why the mitigation doctrine applies to almost all claims - plaintiffs should not be encouraged to use litigation to generate windfall profits when they can avoid harm through reasonable efforts. See Maiibu Media, LLC v. Doe, [No. 2:13-cv-135-RCM-JEM, ] 2014 WL 1031336 at *2 [N.D. Ind. March 17, 2014] (cited by [EIG] at 12-13) (admitting that " [n]one of those cases [striking mitigation defenses] discuss in depth the reasoning for that conclusion."). There is nothing inconsistent with applying these principles in the context of a copyright infringement claim, including one seeking statutory damages. Congress could not possibly have intended for a litigious plaintiff to game the system by using the Copyright Act's statutory damage provisions as a means of generating revenues far in excess of what the copyright holder could have obtained through selling its own work in the open market.[33]

         EIG has made their mitigation arguments and the court has rejected them multiple times before and during trial. The court first addressed Kayne's failure-to-mitigate defense in the Memorandum Opinion and Order signed on January 24, 2017.[34] EIG moved for partial summary judgment on Kayne's failure-to-mitigate- damages affirmative defense by arguing that the record was devoid of any facts to support that defense.[35] Citing Interplan Architects, Inc. v. C.L. Thomas, Inc., Civil Action No. 4:08-03181, 2010 WL 4366990, at *47-*48 (S.D. Tex. Oct. 7, 2010), the court found that failure to mitigate damages is an affirmative defense to infringement, and held that

[a]lthough Kayne has not proven that EIG knew of the alleged infringement as a matter of law for limitations purposes . . . [b]ecause a reasonable fact-finder could infer EIG's actual or constructive knowledge from the available evidence and that the subsequent alleged infringement could have been avoided, Kayne's mitigation defense survives summary judgment.[36]

         On April 7, 2017, the parties submitted Proposed Jury Instructions in which EIG objected to Kayne's proposed mitigation instruction by arguing that "statutory damages, unlike actual damages, cannot be 'mitigated.'"[37] In addition, EIG submitted Plaintiffs' Memorandum of Law, which included three pages of argument and citations to case law in support of EIG's argument that statutory damages cannot be mitigated.[38] See, e.g., Malibu Media, LLC v. Doe, Civil Action No. RWT 13-0512, 2015 WL 1402286, at *2 (D. Md. March 25, 2015) ("Defendant's proffered defenses of failure to mitigate or prove damages are not properly pled where, as here, Malibu has elected to recover only statutory damages instead of an award of actual damages and profits."); Malibu Media, LLC v. Doe, No. 1:13-CV-30, 2013 WL 4048513, at *2 (N.D. Ind. August 9, 2013) ("Having elected statutory damages, [the plaintiff] has given up the right to seek actual damages, thereby making a failure-to-mitigate defense inapplicable."); Malibu Media, LLC v. Batz, No. 12-cv-01953-WYD-MEH, 2013 WL 2120412, at *3 (D. Colo. April 5, 2013) ("The Court agrees that a copyright plaintiff's exclusive pursuit of statutory damages invalidates a failure-to-mitigate defense."), report and recommendation adopted, 2013 WL 2115236 (D. Colo. May 15, 2013).

         EIG made similar arguments in Plaintiffs' Omnibus Motion in Limine to Exclude Certain Testimony and Materials from Trial filed on April 7, 2017, [39] which was considered at a May 11, 2017, hearing .[40]

         On October 12, 2017, the court held docket call during which the court set trial for December 4, 2017, conducted a charge conference on Kayne's mitigation of damages defense, and overruled EIG's objections to Kayne's proposed mitigation instruction, but asked the parties to submit additional authority in support of their opposing positions on the mitigation defense.[41]

         On October 20, 2017, the parties submitted additional case law requested by the court at the October 12, 2017, charge conference. Neither party identified any binding precedent. Citing Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962 (2014), EIG argued that the court's mitigation instruction conflicted with the Supreme Court's recognition that the Copyright Act's three-year limitations period "allows a copyright owner to defer suit until she can estimate whether litigation is worth the candle. She will miss out on damages for periods prior to the three-year look-back. ..." Id. at 1976. Kayne presented case law showing that courts are split on whether failure to mitigate damages is available as a defense when, as here, plaintiff seeks only statutory damages. To counter cases that EIG had cited in its April 7, 2017, Memorandum of Law holding that a plaintiff's exclusive pursuit of statutory damages invalidates a failure to mitigate defense, Kayne cited several cases including Malibu Media, LLC v. Reeves, l:12-cv- 00841-SEB-MJD, 2013 WL 5487424, at *2-3 (S.D. Ind. September 27, 2013), in which the court denied a plaintiff copyright owner's motion to strike a failure to mitigate defense explaining:

This Court is given a very broad discretion to determine how to award statutory damages. F.E.L. Publications, Ltd. v. Catholic Bishop of Chicago, 754 F.2d 216, 219 (7th Cir. 1985) . While the plaintiff may opt for statutory damages, the court may consider plaintiff's actual damages in making its determination. F.W. Woolworth Co. v. Contemporary Arts, 73 S.Ct. 222 (1952) . In determining Plaintiff's actual damages, it is reasonable for the court to consider the actions Plaintiff took to mitigate such damages. Therefore, the Court will allow the defense.

Id. at *3. See also Luxottica Group, S.p.A. v. Airport Mini Mall, LLC, 186 F.Supp.3d 1370, 1378 (N.D.Ga. 2016) (declining to strike mitigation defense in a Trademark suit based on split in authority regarding applicability of mitigation defense to claims for statutory damages in copyright cases); BMG Rights Management (US) LLC v. Cox Communications, Inc., 149 F.Supp. 3D 634, 676-77 (E.D. Va. 2015) ("District courts are divided on the question of whether a plaintiff's election of statutory damages invalidates a failure-to-mitigate defense. The Court agrees with those courts to hold that it does not. A plaintiff's actual damages are a relevant consideration in determining statutory damages under the Copyright Act. See [Guastaferro, 2015 WL 4603065, at *5] . Because actual damages are relevant, so too are the actions a plaintiff took to mitigate those damages."), aff'd in part, rev'd in part, vacated and remanded on other grounds, 881 F.3d 293 (4th Cir. 2018).

         Kayne also presented case law showing that some courts have recognized knowing failure to stop ongoing copyright infringement as a failure to mitigate. See Tingley Systems, Inc. v. HealthLink, Inc., 509 F.Supp.2d 1209, 1219 (M.D. Fla. 2007) (finding dispute about whether copyright holder sent warning letter to defendant constituted genuine issue of material fact in defense of failure to mitigate damages); Interplan Architects, 2010 WL 4366990, at ¶ 7-48 (same); Frank Betz Associates, 2010 WL 2253541, at *18-19 (same). But see Home Design Services, Inc. v. Trumble, No. 09-cv-00964-WYD-CBS, 2011 WL 843900, at *3 (D. Colo. March 8, 2011) ("Even if [plaintiff] was aware of possible infringements of its copyrights . . ., [plaintiff] had no duty to preemptively warn individuals like the [defendants] not to violate copyright law.") . On the second day of trial, the court provided the parties a draft jury charge explaining that it reflected "the rulings I made at the October 12th, 2017, charge conference, and based on authorities you submitted after that."[42]

         On December 6, 2017, Kayne filed Defendants' Objections to the Proposed Jury Instructions and Verdict Form (Docket Entry No. 266). Asserting that "the Court's proposed verdict form has omitted any questions on Defendants' defense that Plaintiffs failed to mitigate their damages, even though the Instructions to the Jury recognize and address this claim on pages 24 & 25, "[43] Kayne asked the court to add the following questions to the verdict form:

12. Do you find that Plaintiffs failed to mitigate their damages?
13. If you answered "Yes" to question 12, state the number of copyright infringement violations that Plaintiffs could have avoided if it had used reasonable diligence to mitigate their damages.
14. If you answered "Yes" to question 12, state the number of violations of the Digital Millennium Copyright Act that Plaintiffs could have avoided if it had used reasonable diligence to mitigate their damages.[44]

         After the evidence closed on the third day of trial, EIG renewed its objections to Kayne's attempt to use its mitigation defense as an absolute bar to recovery, [45] and to inclusion of the mitigation defense in the instructions twice.[46] The court overruled EIG's objections and added jury questions 6 and 7 with respect to Copyright Act infringement, and Questions 13 and 14 with respect to violation of the DMCA:

6. Do you find that Plaintiffs failed to mitigate their damages?
ANSWER: YES___ NO___
If you answered "YES" to Question 6, continue on to Question 7. If you answered "NO" to Question 6, skip to Question 8.
7. How many acts of infringement could Plaintiffs have avoided if they had used reasonable diligence to mitigate their damages?
ANSWER: ______.[47]
13. Do you find that Plaintiffs failed to mitigate their damages under the Digital Millennium Copyright Act?
ANSWER: YES___ NO___
If you answered "YES" to Question 13, continue on to Question 14. If you answered "NO" to Question 13, do not answer the remaining questions.
14. How many violations of the Digital Millennium Copyright Act could Plaintiffs have avoided if they had used reasonable diligence to mitigate their damages?
ANSWER:_____ [48]

         The court explained its ruling to EIG's counsel by stating: "You presented arguments on that and they presented arguments, and I found their arguments more persuasive . . . They had a mitigation on damages and mitigation as affirmative defense in the whole case . . . They had better law on it."[49]

         EIG's argument that the court's instruction to the jury on mitigation of damages constitutes a manifest error of law is not based on any intervening change in controlling law or any new evidence. EIG's argument is, instead, simply a restatement of the arguments that the court considered and denied before and during trial. As shown in the preceding summary of the court's consideration of the parties' arguments on mitigation before and during trial, the court has addressed EIG's mitigation arguments on several previous occasions. Because the case law the parties rely on now is the same case law they relied on before and during trial, [50] and because that case law shows a split of authority on this issue, the court concludes that EIG has failed to establish that the court's jury instruction on mitigation of damages constitutes a manifest error of law that entitles EIG to Rule 59(e) relief. See Forsythe v. Saudi Arabian Airlines Corp., 885 F.2d 285, 289 (5th Cir. 1989) (Rule 59(e) motion should not be used to relitigate matters that simply have been resolved to the movant's dissatisfaction).

         (2) EIG Has Not Shown that "Double Counting" of Kayne's Mitigation Defense Was a Manifest Error of Law

         EIG argues that the jury instructions improperly "double-counted" Kayne's failure to mitigate defense "first as a factor when assessing the amount of statutory damages to be awarded per work infringed, and second as an absolute bar to any statutory damage award."[51] EIG argues that

[b]oth of these instructions together are contradictory and give undue weight to the affirmative defense. If failure to mitigate damages is a factor in determining the amount of damages awarded per work, it should not also serve as a bar to recovering damages as well.[52]

         Although EIG objected at trial to submission of mitigation both as an element of the statutory damage analysis and as a stand-alone affirmative defense, [53] then, as now, EIG failed to cite any authority in support of this objection. Moreover, EIG now acknowledges that the mitigation instruction proposed by Kayne and submitted to the jury was nearly identical to the Fifth Circuit Model Jury Instruction 15.5, [54] and that mitigation was properly submitted as a factor to be considered in assessing the amount of statutory damages to be awarded for each work infringed.[55] The verdict questions about which EIG complains asked whether "Plaintiffs failed to mitigate their damages, " and, if so, "[h]ow many acts of infringement could Plaintiffs have avoided if they had used reasonable diligence to mitigate their damages?"[56] Because EIG cites no authority holding that instructing a jury that mitigation of damages is a factor to be considered when assessing statutory damages and also submitting stand-alone questions on the mitigation defense as a complete bar to recovery constitutes an improper "double-counting" of the mitigation defense, the court is not persuaded that double counting mitigation of damages was a manifest error of law that entitles EIG to Rule 59(e) relief.

         (b) EIG Has Not Shown Manifest Error of Fact

         EIG argues that the jury's finding that it could have mitigated its damages is against the clear weight of the evidence because the evidence at trial showed not only that EIG was not aware of Kayne's copyright infringement and DMCA violations, but also that Kayne actively concealed its infringing activity from EIG thus proving that EIG was not capable of mitigating its damages.[57]

         Kayne argues that there was ample evidence to support the jury's mitigation findings.[58]

         The facts of this case were vigorously contested. The court is very familiar with the facts of the case from presiding over the trial, conducting multiple hearings, and issuing several lengthy opinions.[59] The court is persuaded that all of the jury's answers are supported by the evidence and that EIG has failed to demonstrate a manifest error of fact that entitles EIG to Rule 59(e) relief. Moreover, the court is not persuaded that there is any inconsistency in the jury's verdict. Kayne's mitigation defense focused on whether EIG had taken sufficient, reasonable action to protect its own rights. In contrast, EIG's fraudulent concealment defense focused on Kayne's actions in concealing its copying, as well as the extent to which EIG actually discovered Kayne's specific acts of infringement. The jury found that EIG knew or should have known of Kayne's infringement on or before July 8, 2011.[60]

         (c) EIG Fails to Show that Applying Mitigation Defense to Prevent EIG from Recovering Damages for Three-Year Period Prior to Filing Suit Was a Manifest Error of Law

         Alternatively, EIG asks the court to "enter a judgment of $15, 000 for each of the 670 works infringed, and $2, 500 for each of the 4 9 DMCA violations that occurred in the three year period immediately preceding filing of the suit."[61] Asserting that Kayne's failure-to-mitigate defense is based on an argument that EIG unreasonably delayed filing suit --an argument based on the same facts as Kayne's statute of limitations defense -- EIG argues that the court erred by instructing the jury that the mitigation defense prevents EIG from recovering for infringements and DMCA violations that occurred within three years of filing suit because that instruction runs afoul of the Supreme Court's holdings in Petrella, 134 S.Ct. at 1973-74, and SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S.Ct. 954, 961 (2017).[62] EIG argues that the court's mitigation instruction constitutes a manifest error of law because in both of those cases "the Supreme Court held that Congress's express guidelines as reflected in the statute of limitations cannot be 'overruled' by an essentially 'gap-filling' equitable defense."[63] Kayne responds that the Supreme Court's holdings in Petrella and SCA Hygiene neither limit nor preclude Kayne's mitigation defense.[64]

         Petrella and SCA Hygiene held that the equitable defense of laches cannot be invoked to bar lawsuits filed within the express limitations periods provided by the Copyright and Patent Acts. See Petrella, 134 S.Ct. at 1972-74 (Copyright Act); SCA Hygiene Products, 137 S.Ct. at 959, 967 (Patent Act). In both cases the Supreme Court reasoned that "[w]hen Congress enacts a statute of limitations, it speaks directly to the issue of timeliness and provides a rule for determining whether a claim is timely enough to permit relief." SCA Hygiene Products, 137 S.Ct. at 960. See also Petrella, 134 S.Ct. at 1967 ("courts are not at liberty to jettison Congress' judgment on the timeliness of claims") . Because Kayne has not asserted laches as an affirmative defense, the express holdings in these cases have no bearing here. In Petrella, however, the Supreme Court recognized that common law doctrines may apply even when Congress has spoken on an issue. For example, the Court recognized that although Congress provided a three-year limitations period for copyright claims, see 17 U.S.C. § 507, most federal circuit courts allow that period to be extended by the discovery rule. Petrella, 134 S.Ct. at 1969 n.4. Similarly, in appropriate cases the Fifth Circuit applies the doctrine of fraudulent concealment to extend limitation periods. See Aspen Technology, Inc. v. M3 Technology, Inc., 569 Fed.Appx. 259, 264 (5th Cir. 2014) . Although EIG has relied on the common law doctrine of fraudulent concealment to avoid a limitation bar, it argues that Kayne cannot rely on the common law doctrine of mitigation of damages to bar EIG's recovery of statutory damages for the three-year period immediately preceding the filing of this lawsuit.[65]Because EIG has not cited any controlling authority in support of its contention that the mitigation defense cannot bar recovery of statutory damages for the three-year period immediately preceding the filing of a copyright action, for the reasons cited in § II.A.2(a)(1), above, the court concludes that EIG has failed to establish that the court's jury instruction on mitigation of damages constitutes a manifest error of law that entitles EIG to Rule 59 (e) relief.

         B. EIG Is Not Entitled to Relief Under Rule 59(a)

         EIG moves the court to grant a new trial pursuant to Federal Rule of Civil Procedure 59(a) because of improper jury instructions and verdict questions, or to grant a new trial on the issue of failure to mitigate damages for Kayne's DMCA violations.[66] EIG argues that a new trial is warranted because the jury instructions and verdict form did not include a fraudulent concealment instruction and question as to mitigation of damages, [67] and because Kayne presented no evidence that EIG could have mitigated damages resulting from Kayne's DMCA violations.[68]

         1. Applicable Law

         Rule 59(a) states that "[t]he court may, on motion, grant a new trial on all or some of the issues -- and to any party --as follows: . . . after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court." Fed.R.Civ.P. 59(a)(1)(A). A Rule 5 9(a) motion for new trial may be granted if the jury's verdict was against the great weight of the evidence, the trial was unfair, or some prejudicial error was committed during the trial. See Smith v. Transworld Drilling Co., 773 F.2d 610, 613 (5th Cir. 1985) . The Fifth Circuit has held that erroneous jury instructions are grounds for a new trial. See Hartsell v. Doctor Pepper Bottling Co. of Texas, 207 F.3d 269, 272-74 (5th Cir. 2000). An erroneous jury instruction merits a new trial if (1) the charge as a whole creates substantial and ineradicable doubt whether the jury has been properly guided in its deliberations, and (2) the challenged instruction affected the outcome of the case. Id. at 272. When considering a Rule 59(a) motion, courts view the evidence "in the light most favorable to the jury verdict." Seidman v. American Airlines, Inc., 923 F.2d 1134, 1140 (5th Cir. 1991) . "The determination of a trial judge to grant or deny a motion for a new trial is reviewable under an abuse of discretion standard." Conway v. Chemical Leaman Tank Lines, Inc., 687 F.2d 108, 112 (5th Cir. 1982).

         2. Application of the Law to the Facts

         (a) A New Trial Is Not Warranted by the Lack of a Fraudulent Concealment Instruction and Verdict Form Question as to Mitigation of Damages

         EIG argues that the jury instructions and verdict questions were erroneous because the court should have submitted fraudulent concealment as a defense to Kayne's mitigation defense.[69] EIG argues that

[t]he jury was correctly instructed that if it found that Kayne Anderson fraudulently concealed its infringement, the statute of limitations would be tolled, but no corresponding instruction and question was presented with respect to Kayne Anderson's otherwise identical failure to mitigate defense. The jury did in fact find that Kayne Anderson committed an affirmative act to conceal its infringement of Oil Daily, and the jurors should have been provided with a similar instruction with respect to Kayne Anderson's failure to mitigate defense.[70]

         Kayne responds that this argument has no merit because EIG never asked the court to instruct the jury on fraudulent concealment as a defense to Kayne's mitigation of damages defense and, therefore, failed to preserve error as required by Federal Rule of Civil Procedure 51(d) (1) (A) .[71] The court agrees.

         EIG fails to cite any instruction or verdict form question that it asked the court to submit to the jury and the court failed to submit, and fails to cite any objection made to the absence of an instruction or question on this issue in the court's jury-charge. In the proposed jury instructions submitted before trial EIG only requested that fraudulent concealment be submitted in response to Kayne's statute of limitations defense.[72] During the charge conference held on October 12, 2017, EIG failed to request submission of fraudulent concealment as a defense to mitigation.[73]Moreover, when the court told the parties that the mitigation of damages instruction would be submitted to the jury, EIG did not request submission of fraudulent concealment as a defense to the defense.[74] Nor has EIG cited any authority recognizing fraudulent concealment as a defense to mitigation.[75] By failing to submit an instruction or question for the court to consider before or during trial, EIG has waived this issue. Simon v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990) ("Defenses not raised or argued at trial are ordinarily waived by the parties failing to raise them.").

         (b) A New Trial Is Not Warranted by a Lack of Evidence that EIG Could Have Mitigated Damages for DMCA Violations

         Asserting that EIG only learned of Kayne's DMCA violations through discovery after filing suit, EIG argues that a new trial should be granted because Kayne presented no evidence at trial that EIG knew or should have known of Kayne's DMCA violations before filing suit, or that EIG could have mitigated damages resulting from those violations.[76] As evidence that EIG could not have mitigated damages for the DMCA violations, EIG argues that Kayne's "own witnesses admitted that they concealed their activities from EIG."[77] Thus, EIG argues that if the court does not otherwise order a new trial, the court should set aside the DMCA portion of the jury's verdict and order a new trial on that one issue.[78]

         As the court has already explained in § II.A.2(b), above, in support of its conclusion that EIG has failed to show a manifest error of fact, the court is persuaded that all of the jury's answers are supported by the evidence and is not persuaded that there is any inconsistency in the jury's verdict. Kayne's mitigation defense focused on EIG's failure to take reasonable action to protect its rights in light of knowledge that infringement could be used to increase revenue through litigation.[79] In contrast, EIG's fraudulent concealment defense focused on Kayne's actions to conceal the extent of copying, coupled with EIG's discovery of specific acts of infringement. The jury found that EIG knew or should have known of Kayne's infringement before July 8, 2011, [80] and also found that Kayne concealed the copying of Oil Daily and that EIG failed to discover the copying despite exercising due diligence.[81] Because Kayne's mitigation defense and EIG's fraudulent concealment defense focused on different acts, there is no inconsistency in the jury's findings that "EIG knew or should have known on or before July 8, 2011, that Defendants were infringing the copyrights in Oil Daily, "[82] and that "Defendants concealed their copying of Oil Daily, and that Plaintiffs failed to discover the copying despite exercising due diligence."[83]

         C. Kayne's Arguments Are Moot and Unfounded

         Kayne argues that if the court decides to set aside its jury instructions, questions, or findings on mitigation, judgment should not be rendered as EIG requests because EIG's DMCA claims failed as a matter of law, EIG's request for the court to enter judgment at $15, 000 per infringement for 1, 646 infringements cannot stand, and EIG's requests for judgment would be unconstitutionally excessive.[84]Because for the reasons stated above in §§ II.A and II.B the court has concluded not to set aside the jury instructions, questions, or findings, Kayne's arguments are moot. Nevertheless, because Kayne's arguments are also unfounded, the court will briefly address each of them.

         1. Kayne Has Not Shown that EIG's DMCA Claims Fail as a Matter of Law

         Kayne argues that EIG's DMCA claims fail as a matter of law because they are not supported by the law or the evidence.[85] This argument is unfounded because whether Kayne violated the DMCA involved factual issues that were contested, submitted to the jury, and resolved in EIG's favor.[86] For the reasons stated in § II.A.2(b), above, the court is persuaded that the jury's answers are all supported by the evidence.

         2. Kayne's Assertions that the Relief EIG Seeks Cannot Be Sustained is Unfounded

         Kayne argues that EIG's request for the court to enter judgment at $15, 000 per infringement for 1, 646 infringements cannot stand because the jury's determination of the amount of statutory-damages to be awarded for each infringement was inflated by an erroneous jury instruction that allowed EIG to recover for unprotected elements of its work.[87] Kayne's unsupported contention that certain elements of Oil Daily are not protected is irrelevant because undisputed evidence presented at trial shows that Kayne made unlawful copies of EIG's publications in their entirety.[88]Thus, even if the copied issues of Oil Daily were factual compilations, EIG would still have copyright protections in the selection and arrangement of the factual content, and Kayne would still be wholly liable because it made copies of the entire publication.[89] See Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 111 S.Ct. 1282, 1289 (1991).

         3. EIG's Requested Judgment Would Not Be Constitutionally Excessive

         Kayne argues that EIG's requests for judgment would be unconstitutionally excessive because the judgment would be over 44 times the jury's intended verdict, over 85 times the actual damages EIG sustained, more than ten times EIG's average yearly sales revenue for Oil Daily, and more than the entire revenue EIG received for selling Oil Daily on the open market over a ten-year period of time.[90] Kayne argues that such an enormous award would be constitutionally excessive, a violation of due process, against the great weight of the evidence, and shocking to the conscience.[91]EIG responds that the relief requested would not be constitutionally excessive because an award of $15, 000 per work only represents half of the maximum statutory damage award for nonwillful infringement and one-tenth of the maximum for willful infringement, and Kayne's conduct was indisputably willful.[92]

         A statutory damage award within the range set by Congress may violate due process only when the award is "so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable." St. Louis, I.M. & S. Ry. Co. v. Williams, 40 S.Ct. 71, 73 (1919). See also Sony BMG Music Entertainment v. Tenenbaum, 719 F.3d 67, 70 (1st Cir. 2013) (holding that the standard articulated by Williams governs review of statutory damage awards under the Copyright Act). Kayne's comparison of EIG's requested relief to the amount of actual damages assumes that Kayne's expert opinion of EIG's economic loss resulting from Kayne's infringement, which was disputed at trial, was proven. Kayne is a billion-dollar hedge fund, and therefore the relief requested by EIG is far from sufficiently "severe and oppressive" such as to trigger due process concerns. Moreover, courts have rejected the argument that statutory damages must bear some relation to actual damages in the due process analysis. Williams, 40 S.Ct. at 73; Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899, 909 (8th Cir. 2012), cert, denied, 133 S.Ct. 1584 (2013) ("The Supreme Court in Williams, however, disagreed that the constitutional inquiry calls for a comparison of an award of statutory damages to actual damages caused by the violation."). The protection of copyrights is a vindication of the public interest, and the statutory penalty for copyright infringement is intended not just to compensate the copyright owner, but to deter Kayne and others like them from committing copyright infringement. Id. at 910 (citing F.W. Woolworth Co., 73 S.Ct. at 233). Courts have therefore awarded and upheld statutory damage awards far in excess of the actual harm suffered by the copyright owner when warranted by the circumstances. See, e.g., Capitol Records, 692 F.3d at 907-08 ("It makes no sense to consider the disparity between 'actual harm' and an award of statutory damages when statutory damages are designed precisely for instances where actual harm is difficult or impossible to calculate."). Accordingly, Kayne's argument that EIG's requests for judgment would be unconstitutionally excessive have no merit.

         III. Motions for Fees and Costs

         Citing Federal Rule of Civil Procedure 54(d) and Local Rule 54.2, Kayne moves for an award of attorneys' fees ($4, 444, 194.00) and costs ($57, 746.59) totaling $4, 501, 940.59 under 17 U.S.C. § 505 for prevailing on EIG's copyright infringement claims, and moves for an award of attorneys' fees ($802, 408.30) and costs ($9, 923.52) totaling $812, 331.82 under 17 U.S.C. § 1203(b) for prevailing on EIG's DMCA claims.[93] Kayne argues that the fees and costs it seeks were all incurred defending EIG's claims and are all reasonable.[94]

         Asserting that "there is no dispute that the jury returned a verdict finding that Kayne had violated EIG's copyrights in at least 3 9 works of Oil Daily, and awarded EIG the sum of $585, 000, [and that a]s such, EIG was the prevailing party on the copyright claim, "[95] EIG moves for an award of attorneys' fees ($6, 525, 087.50) and costs ($637, 593.99) totaling $7, 162, 681.49, under 17 U.S.C. § 505 for prevailing on their copyright infringement claims.[96] EIG argues that the fees and costs its seeks were all incurred prosecuting this case and are reasonable.[97]

         Kayne responds that "Plaintiffs are not the prevailing party, and are thus not entitled to their attorney fees under § 505 of the Copyright Act."[98] Alternatively, Kayne argues that even if EIG is considered the prevailing party, the court in its discretion should not award fees and costs to EIG because the fees and costs that EIG seeks are unreasonable and, in some cases, inappropriate.[99]

         A. Applicable Law on Costs and Attorney's Fees

         Federal Rule of Civil Procedure 54(d)(1) independently authorizes district courts to award costs to prevailing parties" unless a statute or rule precludes it. Marx v. General Revenue Corp., 133 S.Ct. 1166, 1174 & n.5 (2013). Rule 54(d) gives courts discretion to award costs -- other than attorney's fees -- to prevailing parties based on the circumstances of the case, but "does not require courts to award costs to prevailing [parties]." Id. at 1178 n.9 (emphasis in original). The Copyright Act and the DMCA also provide courts discretion to award attorney's fees as costs to a prevailing party.

         Whether a party is the prevailing party is a threshold inquiry for an award of costs and attorney's fees. See Farrar v. Hobby, 113 S.Ct. 566 (1992) (bifurcating the legal determination of prevailing party status from the discretionary determination of whether an award of attorney's fees is reasonable) . See also Howard v. Weston, 354 Fed.Appx. 75, 77 (5th Cir. 2009) (per curiam) ("To be awarded attorney's fees and costs under Section 505 of the Copyright Act and Federal Rule of Civil Procedure 54, [one] must be a prevailing party."). Once a court has made the prevailing party determination, the court must determine what, if any, amount of attorney's fees is reasonable. Farrar, 113 S.Ct. at 572 (citing Henslev v. Eckerhart, 103 S.Ct. 1933, 1939 (1983)). " [T] he fee applicant bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates." Hensley, 103 S.Ct. at 1941.

         B. Application of the Law to the Facts

         1. EIG is the Prevailing Party

         Interpreting Rule 54(d)(1), the Fifth Circuit has held:

Usually the litigant in whose favor judgment is rendered is the prevailing party for purposes of rule 54(d). . . A party who has obtained some relief usually will be regarded as the prevailing party even though he has not sustained all his claims. . . Cases from this and other circuits consistently support shifting costs if the prevailing party obtains judgment on even a fraction of the claims advanced.

United States v. Mitchell, 580 F.2d 789, 793 (5th Cir. 1978), superseded by statute on other grounds as stated in United States v. City of Jackson, Mississippi, 359 F.2d 727, 735 (5th Cir. 2004) . The Fifth Circuit has explained that a case "must be viewed as a whole to determine who is the prevailing party, " Studiengesellschaft Kohle mbH v. Eastman Kodak Co., 713 F.2d 128, 131 (5th Cir. 1983), and that "[a] party need not prevail on all issues to justify an award of costs." Id. Whether a party is a prevailing party is a legal question subject to de novo review. Bailey v. Mississippi, 407 F.3d 684, 687 (5th Cir. 2005).

         In upholding a district court's determination that a litigant was not a prevailing party eligible to receive an award of attorney's fees under § 505 of the Copyright Act the Fifth Circuit has stated:

A prevailing party must: (1) obtain actual relief [, such as an enforceable judgment or a consent decree, ] that (2) materially alters the legal relationship between the parties and (3) modifies the defendant's behavior in such a way that benefits the plaintiff at the time of the judgment. Dearmore v. City of Garland, 519 F.3d 517, 521 (5th Cir. 2008). "To become a prevailing party, a plaintiff must obtain, at an absolute minimum, actual relief on the merits of [the] claim."

Howard, 354 Fed.Appx. at 77-78 (quoting Farrar, 113 S.Ct. at 576 (O'Connor, J., concurring). Interpreting the term "prevailing party" under analogous statutes the Fifth Circuit has explained that

[a]lthough fee-shifting statutes do not define "prevailing party, " the Supreme Court has offered guidance on the term. "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."

Davis v. Abbott, 781 F.3d 207, 213-14 (5th Cir.), cert, denied, 136 S.Ct. 534 (2015) (voting rights act) (quoting Sole v. Wyner, 127 S.Ct. 2188, 2194 (2007) (§ 1983)). The prevailing party inquiry does not turn on the magnitude of the relief obtained, Farrar, 113 S.Ct. at 5 73-74, or the amount of damages awarded. Buckhannon Board and Care Home, Inc. v. ...


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