Case 1:18-cv-01196-AJN-KHP Document 150 Filed 02/26/21 Page 1 of 9
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`Christian Charles,
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`Plaintiff,
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`–v–
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`Jerry Seinfeld, et al.,
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`Defendants.
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`2/26/2021
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`18-cv-1196 (AJN)
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`OPINION & ORDER
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`ALISON J. NATHAN, District Judge:
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`After fending off claims that his one-time collaborator Christian Charles owned
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`copyrights in the television show Comedians in Cars Getting Coffee, comedian Jerry Seinfeld
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`now seeks to recoup his attorneys’ fees. The Court referred Seinfeld’s motion for fees to the
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`Honorable Katharine H. Parker, who recommended it be denied. Though the Court agrees with
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`much in Judge Parker’s Report and Recommendation, it disagrees that Charles had a reasonable
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`basis for his claim. The Court finds that a fee award is appropriate. It thus sustains Seinfeld’s
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`objections to the Report and Recommendation and grants his motion for fees.
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`I.
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`Background
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`In Charles’s telling, he and Seinfeld worked together on various projects since the 1990s.
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`Charles v. Seinfeld, 410 F. Supp. 3d 656, 657 (S.D.N.Y. 2019). Charles produced a treatment for
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`Comedians in Cars Getting Coffee and worked with Seinfeld to shoot the pilot, but Seinfeld
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`insisted Charles’s involvement would be limited to no more than a work-for-hire directing role.
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`Id. at 657–58. Seinfeld repeatedly rejected Charles’s requests for backend compensation on the
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`project in 2011, and he paid Charles’s production company a bit over $100,000 the following
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`year for preproduction expenses. Id. at 658. Seinfeld went on to produce and distribute the show
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`without crediting Charles. Id. at 658, 660. The pilot premiered in 2012.
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`But Charles didn’t sue in 2012. Or within the following three years after Seinfeld refused
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`his requests for backend compensation and made clear that Charles would receive no credit on
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`the show. Only in late 2017, after learning that Seinfeld had reached a hundred-million-dollar
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`distribution deal with Netflix, did Charles contact Seinfeld and demand he participate in
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`mediation over Charles’s claimed interest in the show. Second Amended Complaint, Dkt. No.
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`70, ¶¶ 96–97. In February 2018, Charles sued Seinfeld and several companies associated with
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`the show’s production and distribution.
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`Charles initially brought this suit without an attorney. See Dkt. No. 1. At that time,
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`Seinfeld’s attorneys wrote a letter to Charles explaining that his claim could not succeed because
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`he did not file suit before the Copyright Act’s statute of limitations had elapsed. Dkt. No. 125-2.
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`The letter warned that Seinfeld would seek to recoup his attorneys’ fees if Charles did not
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`voluntarily dismiss his lawsuit. Charles did not voluntarily dismiss his lawsuit. Seinfeld then
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`moved to dismiss, contending that Charles’s suit was untimely. Dkt. No. 21.
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`Charles hired an attorney and amended his complaint in June 2018. Dkt. No. 46.
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`Seinfeld again moved to dismiss, contending that Charles’s suit was untimely. Dkt. No. 49.
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`Seinfeld’s attorneys wrote to Charles, this time through his new attorney, and warned that
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`Seinfeld would seek to recoup his attorneys’ fees if Charles did not voluntarily dismiss his
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`lawsuit. Dkt. No. 125-3. Charles did not voluntarily dismiss his lawsuit. Again, Charles filed a
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`new, amended complaint (his third in total) in August 2018. Dkt. No. 67. Seinfeld again moved
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`to dismiss. Dkt. No. 73. Charles’s opposition to that motion exceeded the page limit, requiring
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`Seinfeld’s attorneys to file yet another motion to strike the overlength submission. Dkt. No. 82.
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`The Court dismissed Charles’s claims as untimely. See Charles, 410 F. Supp. 3d 656.
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`The Copyright Act imposes a three-year limitations period for civil actions. Id. at 659; 17 U.S.C.
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`§ 507(b). For claims that turn on who owns a copyright, the clock begins to run when the
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`claimant receives notice that someone else claims sole authorship or ownership of the disputed
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`work. Charles, 410 F. Supp. 3d at 659–60 (citing Kwan v. Schlein, 634 F.3d 224, 228–29 (2d
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`Cir. 2011)). Charles received such notice in 2011 when Seinfeld refused him backend
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`compensation and again in 2012 when Seinfeld began to distribute the show without giving him
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`credit. Id. at 660. Yet Charles did not file suit until 2018, more than five years later. Because
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`Charles had waited longer than the Copyright Act’s three-year limitations period to sue, the
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`Court held that his claims were time-barred. Id. at 661.
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`Charles appealed. The Second Circuit affirmed this Court’s judgment in a summary
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`order. See Charles v. Seinfeld, 803 F. App’x 550 (2d Cir. 2020). It agreed that Charles had
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`notice that Seinfeld claimed ownership of the show no later than 2012 and rejected Charles’s
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`attempts to recast the dispute as about something other than ownership of copyrights in the show.
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`Charles filed a petition for writ of certiorari in the Supreme Court, which the Supreme Court
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`denied. Charles v. Seinfeld, No. 20-661, 2020 WL 7327869 (U.S. Dec. 14, 2020).
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`Seinfeld now seeks to recover the attorneys’ fees he incurred litigating this case.
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`II.
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`Discussion
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`District courts may refer consideration of a motion to a magistrate judge for a report and
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`recommendation. If a party timely objects to the findings or recommendations of the magistrate
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`judge, as Seinfeld has done here, the Court must “make a de novo determination of those
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`portions of the report or specified proposed findings or recommendations to which objection is
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`made.” 28 U.S.C. § 636(b)(1).
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`Section 505 of the Copyright Act authorizes a court to require the losing party in a
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`copyright case to pay the attorneys’ fees of the prevailing party. 17 U.S.C. § 505. An award of
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`fees is not automatic. A court has discretion to decide if a fee award is appropriate in a given
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`case. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994). However, courts must treat prevailing
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`plaintiffs and prevailing defendants alike when deciding whether to award fees. Id.
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`The Supreme Court has outlined several factors courts should consider when deciding
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`whether to award fees in a copyright case. Court’s must give “substantial weight” to the
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`objective reasonableness of the losing party’s position. Kirtsaeng v. John Wiley & Sons, Inc.,
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`136 S. Ct. 1979, 1988 (2016); Matthew Bender & Co. v. W. Pub. Co., 240 F.3d 116, 122 (2d Cir.
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`2001). That is, courts will more often award fees against a party whose arguments lack a factual
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`or legal basis. TufAmerica Inc. v. Diamond, No. 12-cv-3529 (AJN), 2016 WL 1029553, at *2
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`(S.D.N.Y. Mar. 9, 2016). Fees are less likely to be appropriate in a close case. Courts may also
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`consider whether the losing party’s claims were frivolous, the losing party’s motivation in
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`bringing suit, and “the need in particular circumstances to advance considerations of
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`compensation and deterrence.” Kirtsaeng, 136 S. Ct. at 1985 (quoting Fogerty, 510 U.S. at 534
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`n.19). These considerations help ensure that fee awards will promote the purposes of the
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`Copyright Act. Id. at 1986; Matthew Bender, 240 F.3d at 122.
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`A. Seinfeld is Entitled to Attorneys’ Fees
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`The Court finds that a fee award is appropriate based on the factors set out in Fogerty,
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`510 U.S. at 534 n.19. It first considers whether Charles’s claims were objectively reasonable. It
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`concludes that they were not.
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`Section 507 of the Copyright Act requires a claim for copyright infringement to be filed
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`within three years of the date the claim accrues. 17 U.S.C. § 507(b). Claims of infringement
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`ordinarily accrue on the date of the infringing conduct. However, if a claim turns on who owns a
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`copyright, rather than whether copying occurred, the claim accrues when the person asserting
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`ownership learns that their claim of ownership is disputed. Kwan, 634 F.3d at 228–29. Thus, if
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`a “dispute involves who wrote [the work] in the first place,” a person claiming authorship must
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`file their lawsuit within three years from when the dispute over authorship arose. Otherwise,
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`§ 507 bars their claims.
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`As both this Court and the Second Circuit held, the allegations in Charles’s complaint
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`reflect that he leaned no later than 2012 that Seinfeld disputed his claimed interest in the show.
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`He therefore had only three years from 2012 to file his lawsuit. But instead he waited over five
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`years. Under controlling Second Circuit precedent, his claims were plainly untimely. This was
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`not a close case.
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`Charles all but concedes that controlling Second Circuit precedent squarely foreclosed his
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`claims. In his opposition to Seinfeld’s fees motion, he does not dispute his case was a dead end
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`in the Second Circuit. See Dkt. No. 130. Instead, he hangs his case for objective reasonableness
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`on a single decision from a different circuit decided after this Court dismissed his suit and the
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`Second Circuit heard argument in his appeal. Id. He contends that under the Sixth’s Circuit’s
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`decision in Everly v. Everly, 958 F.3d 442 (6th Cir. 2020), his claims would have been allowed
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`to proceed, and thus the Sixth Circuit’s decision in Everly is evidence that his claims were not
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`objectively unreasonable. In her report and recommendation, Judge Parker correctly concluded
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`that Charles’s claims would be deemed objectively unreasonable in the absence of the Sixth
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`Circuit’s decision in Everly. See Report & Recommendation, Dkt. No. 139, at 12. But the Court
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`disagrees that Everly demonstrates that Charles’s claims were reasonable. Everly simply does
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`not hold what Charles claims it does.
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`The Court must first provide some background on the types of disputes that may arise
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`under the Copyright Act. In perhaps the most typical case, the ownership of a copyright is not in
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`dispute. Instead, the question is whether someone copied—for example, whether an allegedly
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`infringing song is too similar to one that came before. See Kwan, 634 F.3d at 229. In other
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`cases, the issue is ownership. Two singers might dispute who wrote a song, or a record company
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`might claim the person who wrote it sold away their rights to it. See id. Finally, the Copyright
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`Act grants authors of works a so-called “termination-of-transfers” right. See Penguin Grp.
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`(USA) Inc. v. Steinbeck, 537 F.3d 193, 197 (2d Cir. 2008). This right allows an author—that is,
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`the original creator of a copyrighted work—the opportunity to reclaim their copyright after a
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`lengthy term (usually thirty-five years) has passed, even if they previously sold or gave it to
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`someone else. See 17 U.S.C. § 203. Thus, in a narrow category of disputes—those concerning
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`an author’s invocation of their termination-of-transfers right—the key question will not be who
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`currently owns the copyright, but rather who was the original author of the copyrighted work.
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`In an effort to evade the rule that an ownership claim accrues when the person claiming
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`ownership learns that their claim is disputed, Charles seeks to recast his claim as one about
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`authorship rather than ownership. This is nothing more than an attempt to substitute jargon for
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`substance. Charles sued Seinfeld for copyright infringement. To enforce a copyright, one must
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`own it. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). Authorship here
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`matters only as an avenue to ownership. The Second Circuit’s foundational case on claim
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`accrual for ownership claims involved nearly identical facts. See Kwan, 634 F.3d at 229. The
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`plaintiff in that case, like Charles, claimed that she was “the author and therefore owner of the
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`copyright.” Id.
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`And so Charles turns to Everly, a recent Sixth Circuit case that he contends created a new
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`rule for claims of “authorship.” In Everly, a divided panel of the Sixth Circuit held that a claim
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`asserting an author’s termination-of-transfers right does not accrue until another person
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`repudiates the claimant’s status as an author. Everly, 958 F.3d at 452–53. In this context,
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`another person’s claim to own the copyright does not start the clock, because it does not
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`necessarily give the author notice that their claim of authorship is disputed. Id. Abe might own
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`the copyright today, while Beth, the original author, could invoke her termination-of-transfers
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`right tomorrow. Thus, only Abe’s claim that he is the work’s author (not merely the current
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`copyright owner) puts Beth on notice that her claim of authorship is disputed.
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`But Everly does not hold that the rules for claim accrual change just because someone
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`throws out the word “authorship.” Its holding applies only to “an authorship claim without a
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`corresponding ownership claim.” Id. at 453. Phil Everly’s claim was “for authorship qua
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`authorship, relevant only for the termination rights available under 17 U.S.C. §§ 203(a), 304(c).”
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`Id. at 452 (emphasis added). Unlike here, the parties in that case agreed that Phil had transferred
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`his ownership rights to his brother Don. The only dispute was whether Phil qualified as an
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`author with the right to terminate that transfer. “[C]opyright ownership” simply was “not at
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`issue in this case.” Id.
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`This reasoning does not suggest a reasonable basis for Charles’s position, nor does it
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`conflict with Second Circuit precedent as he claims. Quite to the contrary, the court in Everly
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`relied extensively on Second Circuit precedent—including Kwan—that would bar Charles’s
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`claims. Cases involving the termination-of-transfers right, it explained, are different from
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`“ownership cases in which a defendant has raised a statute of limitations defense based on the
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`defendant’s repudiation of the plaintiff’s authorship.” Id. at 453 (citing Kwan, 634 F.3d at 229).
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`Outside the narrow set of cases dealing with the termination-of-transfers right, the Sixth Circuit
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`and the Second Circuit follow the same rule for the accrual of copyright claims.
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` Charles’s case was not a termination-of-transfers case. Everly addressed an entirely
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`different sort of claim and therefore does not support the reasonableness of Charles’s position.
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`The Court is quite confident that Charles’s case would have met the same end in the Sixth
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`Circuit as it did here. No matter where he had filed suit, his claims would have plainly been
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`untimely. Charles learned no later than 2012 that Seinfeld disputed Charles’s claimed ownership
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`of copyrights in the show, and without ownership of those rights—whether obtained by
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`authorship or by some other means—Charles could not maintain a claim for copyright
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`infringement.
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`The Court thus concludes that Charles lacked a reasonable legal basis for his claims. And
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`the Court stresses, for the benefit of future litigants, that his claims would be as unreasonable
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`after Everly as they were before that case was decided.
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`The Court finds that the other factors set out in Fogerty, 510 U.S. at 534 n.19, also
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`support an award of fees. Charles’s suit appears to have been opportunistic. He received a
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`substantial payment for his work on the show’s pilot and brought suit only years later once
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`Seinfeld had signed a lucrative distribution deal with Netflix. Charles, 410 F. Supp. 3d at 658.
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`In circumstances like these, the prospect of a huge payday may entice litigants to pursue claims
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`with little or no merit. Substantial deterrence is needed to counterbalance these incentives. The
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`Court also takes into account Seinfeld’s repeated—and correct—warnings that Charles’s claims
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`were time-barred and that a fee award would be likely if Charles pursued this case. See Dkt. No.
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`125. Rather than heed these warnings, Charles persisted in litigation conduct that created
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`unusually high costs, requiring Seinfeld to file three motions to dismiss and a motion to strike.
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`Considering these factors, the Court concludes that an award of fees would promote the
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`purposes of the Copyright Act by deterring plainly time-barred claims, and so will award
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`attorneys’ fees to Seinfeld.
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`B. The Court Defers Consideration of the Amount of Fees
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`In his opposition to Seinfeld’s motion for fees, Charles did not address the amount of fees
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`that Seinfeld seeks. See Dkt. No. 130. The Court has an independent obligation to conduct a
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`“conscientious and detailed inquiry” into the reasonableness of a fee award. Lunday v. City of
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`Albany, 42 F.3d 131, 134 (2d Cir. 1994); cf. Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183
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`F.3d 151, 154–55 (2d Cir. 1999) (holding that a court must assess the evidence in support of a
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`monetary award even in the case of default). In particular, the Court has concerns about whether
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`the amount of fees Seinfeld seeks is appropriate in light of “the relative financial strength of the
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`parties.” TufAmerica Inc. v. Diamond, No. 12-cv-3529 (AJN), 2018 WL 401510, at *5
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`(S.D.N.Y. Jan. 12, 2018). Adversary briefing will assist the Court in this inquiry. Thus, the
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`Court will defer consideration on the amount of the fee award pending further briefing.
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`Conclusion
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`Seinfeld’s motion for attorneys’ fees (Dkt. No. 123) is GRANTED. Within two weeks,
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`Charles shall file a brief not to exceed ten pages addressing the size of the fee award. Seinfeld
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`may file a reply not to exceed five pages within one week of that submission.
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`SO ORDERED.
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`Dated: February 26, 2021
`New York, New York
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` __________________________________
` ALISON J. NATHAN
` United States District Judge
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