On December 10, Jammie Thomas-Rasset filed a petition for a writ certiorari with the U.S. Supreme Court (meaning that she seeks review of an intermediate appellate court’s ruling against her) asking to have a jury verdict reduced on the grounds that the award is excessive and violates her due process rights. Thomas-Rasset shared 24 songs on Internet, committing copyright infringement. That much is not in dispute. But do statutory damages become punitive if they no longer plausibly reflect actual injury? How much is too much, way too much, of a penalty for copyright infringement?
(Update August 24, 2012): As previously predicted by Minnesota Litigator, Camtek challenged the order for $1.2 million in sanctions. On Camtek’s motion for relief from judgment under Fed. R. Civ. Pro. 60(b), U.S. District Court Judge John Tunheim (D. Minn.), the newly assigned judge in the case (U.S. District Chief Judge Michael Davis (D. Minn.), recused himself ), gave Camtek a massive sanctions-reducing haircut.
As a refresher, back in March, Chief Judge Davis held that Camtek had flagrantly flouted court orders and ordered it to pay $645,946 for contempt of court. To discourage future similar misconduct and “as a stern warning to a party which has shown a clear lack of respect” to the court, the judge awarded double damages and increased the sanctions to over $1.2 million. Thereafter, Camtek sought relief from the imposition of sanctions and the holding that it was in contempt.
Judge Tunheim reduced the sanctions because double damages were not imposed to compensate August Technology and, because Chief Judge Davis doubled damages to validate the court’s authority, the punitive nature of the sanctions required stepped up due process protections. According to International Union, United Mine Workers of America v. Bagwell, contempt sanctions are considered criminal if they are punitive or to “to vindicate the authority of the court.” As such, criminal sanctions are afforded “the protections that the Constitution requires of criminal proceedings. Continue reading
Particularly given the fact that attorneys’ fees often eat into plaintiff’s recoveries, it is a bitter pill when a plaintiff wins on liability but is awarded a fraction of its damages.
Such was the case in Hyundai Motor Finance Co. v. McKay (below) in which the Arkansas jury agreed that defendant McKay breached its financing agreement with Hyundai but, instead of awarding the $819,000 of damages, awarded only $276,000.
Adding to Plaintiff’s challenge, the Eighth Circuit found that Hyundai’s Rule 50 motions for judgment as a matter of law pre- and post-verdict were insufficient and thus reviewed the jury verdict under the highly deferential “manifest injustice” standard of review.
In a variant of the classic game show, Let’s Make a Deal, after a jury returned a $100,000 verdict for plaintiff, Judge Ericksen gave plaintiff the choice between a reduced verdict (“remittitur”) of $50,000 or another jury trial on the issue of damages.
Plaintiff opted for “Jury #2″ and the jury came back with damages of $0.00.
Plaintiff asked for the judgment to be altered or amended to the initial $100,000 verdict, which, predictably, the Court rejected. The Court did award plaintiff nominal damages of $1.00, which would appear to trigger the prevailing party status and entitlement to an award of attorneys’ fees.
Some lawyers and clients over-focus on the liability aspect of cases and they short-change the damages side. Almost all civil litigation is about money — it’s ultimately about the damages — but liability — “who’s at fault?” — is more graspable and sometimes it is the better handled part of litigation.
In U.S. Salt, Inc. v. Broken Arrow, Inc., the plaintiff was awarded summary judgment on liability for breach of contract with damages to be tried before a jury (before Judge Kyle, D. Minn.). Plaintiff’s damages expert was a prominent local damages expert who first estimated the damages at $1.8 million. In deposition, he admitted that he had started his analysis only two to three days before his report was filed; that the primary factual bases for his first report were the assumptions and estimates he was provided by a witness (a non-expert); and that he did not do any independent analysis of the local market to determine profit margins and the like. A few days later, U.S. Salt’s expert filed a supplemental expert report adjusting his opinion to be that US Salt had suffered damages in the range of $677,000 to $1,060,000.
The Trial Court judge excluded testimony from Plaintiff’s damages expert. The Court found the expert had conducted no analysis of the relevant salt market and had relied “almost exclusively”–and without verification–on a witness’ unsupported assumptions and estimates. Plaintiff U.S. Salt was given another chance to provide evidence of damages. The Trial Court found that it failed to come forward with any persuasive evidence of damages. The court dismissed US Salt’s breach of contract claim for failure to submit admissible evidence to prove damages and the Eighth Circuit affirmed.
U.S. Salt, Inc. v. Broken Arrow, Inc., Civ. Nos. 08-2423/2465 (8th Cir., April 20, 2009).
Bores v. Domino’s Pizza, LLC, Civ. No. 05-2498 (RHK/JSM) (D. Minn. 10/27/2008)
RICHARD H. KYLE, United States District Judge
Franchisees brought a breach of contract action against Domino’s Pizza. It appears they lost on summary judgment, which Domino’s, though the victor, appealed and, at the Eighth Circuit, the Appeals Court held that Domino’s motion to dismiss at the start of the litigation should have been granted.
Domino’s sought attorneys’ fees against the franchisee-plaintiffs pursuant to a fee-shifting provision in the franchise agreement. Domino’s sought $1.2 million in legal fees. Judge Kyle knocked that down to less then half that: $450,000 pointing out, among other things, that Domino’s used a DC fifth year associate who billed out at $480/hour when its local counsel, a Gray Plant partner with 20 years of franchise law experience, charged $425/hour.
Takeaway: (1) courts in this region consistently give a very hard look at attorneys’ fees claims; (2) Minnesota courts tend to be proud of the Minnesota bar (justifiably, if I say so myself) and will often look askance at the fee requests for out-of-town high-priced hired guns (perhaps particularly junior lawyers charging local market partner rates).