17-0625-cv
16 Casa Duse, LLC v. Alex Merkin

                              UNITED STATES COURT OF APPEALS
                                  FOR THE SECOND CIRCUIT

                                       SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.



        At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
26th day of October, two thousand eighteen.

Present:         ROBERT A. KATZMANN,
                            Chief Judge,
                 AMALYA L. KEARSE,
                 ROSEMARY S. POOLER,
                            Circuit Judges.

_____________________________________________________

16 CASA DUSE, LLC,

               Plaintiff-Counter-Defendant-Appellant,

v.                                                                         No. 17-0625-cv

ALEX MERKIN,

               Defendant-Counter-Claimant-Counter-Defendant-Appellee,

MAURICE A. REICHMAN, ESQ.,

            Appellee.1
_____________________________________________________




1
    The Clerk of the Court is directed to amend the caption as above.
Appearing for Appellant:      Eleanor M. Lackman, Cowan, DeBaets, Abrahams & Sheppard
                              LLP, New York, N.Y.

Appearing for Appellees:       Maurice A. Reichman, New York, N.Y.

Appeal from the United States District Court for the Southern District of New York (Sullivan,
J.).

     ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said District Court be and it hereby is VACATED and
REMANDED.

        16 Casa Duse, LLC appeals from the Feb 17, 2017 order of the United States District
Court for the Southern District of New York (Sullivan, J.) vacating an award of attorneys’ fees
and sanctions. We assume the parties’ familiarity with the underlying facts, procedural history,
and specification of issues for review.

        In the underlying litigation, Casa Duse asserted three copyright claims, as well as state
law claims for conversion, breach of contract and tortious interference with business relations.
In an opinion dated September 27, 2013 (“Case Duse I”), the district court granted summary
judgment to Casa Duse on all claims. The district court also concluded that Casa Duse was
entitled to an award of attorneys’ fees under both 28 U.S.C. § 1927 and Section 505 of the
Copyright Act. The district court compiled a “non-exhaustive catalog of . . . colorless claims”
that supported a fee award pursuant to Section 1927, including the fact that “to argue that Merkin
did not breach the Media Agreement, Reichman ha[d] grossly mischaracterized that agreement’s
terms.” App’x at 882. The district court ultimately awarded Casa Duse $175,634 in fees related
to the copyright claims against Merkin and Reichman, as well as $9,945.65 in fees related to the
non-copyright claims against Reichman alone.

        In the initial appeal, this Court reversed the district court’s grant of summary judgment
on the tortious interference claim, and we recognized that some of our conclusions in the context
of that holding—namely, that Merkin’s copyright claims were not objectively unreasonable, nor
advanced in bad faith—could bear on the fee determination under the Copyright Act and Section
1927. 16 Casa Duse, LLC v. Merkin, 791 F.3d 247, 262-64 (2d Cir. 2015) (“Casa Duse II”). In
remanding the action, we stated that the district court “may reconsider its grant of costs and fees
and its imposition of sanctions in light of our reversal of the tortious interference judgment.” Id.
at 264.Referring to the parties’ arguments about the propriety of awarding fees, such as whether
the relevant factors weighed in favor of granting fees under the Copyright Act or whether
sanctions against Reichman were appropriate, we noted that “[t]he district court may consider
these contentions on remand if and when it is required to calculate costs and fees with respect to
the copyright claims only, without reference to the tortious interference claim, which we
conclude is without merit.” Id. The decretal language specified that the case was
“REMAND[ED] to the district court with instructions to enter summary judgment in favor of
Merkin on that claim, based thereon to reexamine its award of costs and attorney’s fees, and for
such other proceedings as are warranted.” Id. at 264-65.




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        On remand, in a decision dated March 16, 2016 (“Casa Duse III”), the district court
denied Casa Duse’s renewed motion for fees. It concluded that fees under the Copyright Act
were not warranted given this Court’s conclusions in Casa Duse II. As to sanctions pursuant to
Section 1927, the district court “note[d] that, in light of the Circuit’s opinion, any award of
attorneys’ fees and costs imposed as a sanction pursuant to § 1927 must be based on Reichman’s
conduct in connection with the ‘copyright claims only.’” Supp. App’x at 185 (quoting Casa Duse
II, 791 F.3d at 264). “Therefore,” the district court concluded, “for the same reasons that the
Court found a fee award for the copyright claims not warranted under § 505, the Court reaches
the same conclusion with respect to Plaintiff's fee request pursuant to § 1927.” Id.

        While it is understandable, given the language in Casa Duse II, that the district court
considered itself limited to imposing sanctions under Section 1927 for the “copyright claims
only,” Casa Duse II, 791 F.3d at 264, we conclude that our prior decision did not entail such a
constraint on the district court’s ability to award fees. As we understand the relevant passage of
Casa Duse II, this Court was acknowledging that the legal conclusions we reached in holding
that Casa Duse’s tortious interference claim failed as a matter of law required the district court to
reconsider the award of fees under the Copyright Act, as well as any fees awarded under Section
1927 based on the tortious interference claim. See id. This Court’s statement that a re-calculation
of fees on remand would be “with respect to the copyright claims only, without reference to the
tortious interference claim,” merely underscored that when the district court undertook the
necessary reconsideration, it could not award fees based on the tortious interference claim,
because the grant of summary judgment on that claim had been reversed. Id. It was not meant to
preclude, and did not preclude, the award of sanctions based on improper actions taken by
Reichman regarding the remaining common-law claims on which Casa Duse prevailed. Indeed,
there was no appeal taken from the grant of summary judgment in Casa Duse’s favor on the
remaining common law claims. See id. at 253 (“Casa Duse . . . asserted claims for breach of
contract, tortious interference with business relations, and conversion.”); id. at 261 (“Merkin
does not challenge the district court’s grant of summary judgment to Casa Duse on two of its
three state law claims.”). Our reading is further supported by the decretal language in Casa Duse
II, which did not suggest that a fee award on remand would be limited to copyright claims only,
but rather instructed the district court to “reexamine its award of costs and attorney’s fees” in
light of the reversal of the grant of summary judgment on the tortious interference claim. Id. at
265. Thus, the district court’s conclusion that it had discretion to award sanctions “in connection
with the copyright claims only” was in error. Supp. App’x at 185 (citation omitted). We therefore
vacate the district court’s order denying Casa Duse’s renewed motion for fees and remand for
further proceedings.

         In light of that disposition, we need not now consider whether the district court abused its
discretion when it declined to award fees under the Copyright Act on the basis of compensation
and deterrence alone, as the district court will be able to reconsider Casa Duse’s motion for fees
under the Copyright Act on remand. We note, though, that the Supreme Court has approved of a
fee award under Section 505 based primarily on considerations of compensation and deterrence,
even where a litigation position was not objectively unreasonable. See Kirtsaeng v. John Wiley &
Sons, Inc., 136 S. Ct. 1979, 1989 (2016) (“[A] court may [order fee-shifting] to deter repeated
instances of copyright infringement or overaggressive assertions of copyright claims, again even
if the losing position was reasonable in a particular case.”) (citing Bridgeport Music, Inc. v. WB



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Music Corp., 520 F.3d 588, 593-95 (6th Cir. 2008)). In our view, under the unique circumstances
of this case, a fee award in some amount may well be warranted based on those considerations.

        Accordingly, the order of the district court hereby is VACATED and REMANDED for
further proceedings consistent with this order.

                                                   FOR THE COURT:
                                                   Catherine O’Hagan Wolfe, Clerk




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