United States District Court, S.D. New York
September 12, 2005.
U2 HOME ENTERTAINMENT, INC., Plaintiff,
LAI YING MUSIC & VIDEO TRADING, INC., and WEI PING YUAN, Defendants.
The opinion of the court was delivered by: DENISE COTE, District Judge
OPINION AND ORDER
On May 25, 2005, this Court issued an Opinion and Order (the
"Opinion") granting summary judgment to plaintiff U2 Home
Entertainment, Inc. ("U2"), and awarding U2 $7,050,000 in
statutory damages and $300,000 in civil contempt fines in this
copyright infringement action. U2 Home Entm't, Inc. v. Lai Ying
Music & Video Trading, Inc., No. 04 Civ. 1233 (DLC), 2005 WL
1231645, at *9 (S.D.N.Y. May 25, 2005).*fn1 The Clerk of
Court entered judgment on May 31. On June 10, defendants filed a motion
to amend, modify, or withdraw the judgment pursuant to Rule 59,
Fed.R.Civ.P.*fn2 That motion was fully submitted on
August 26 after this Court granted the defendants' untimely
request to extend their reply date. For the following reasons,
the motion is denied.
Rule 59(e) "does not prescribe specific grounds for granting a
motion to alter or amend an otherwise final judgment." Munafo v.
Metro. Transit Auth., 381 F.3d 99, 105 (2d Cir. 2004). Within
the Second Circuit, "district courts may alter or amend judgment
to correct a clear error of law or prevent manifest injustice."
Id. (citation omitted). The standard for a motion to alter or
amend a judgment under Rule 59(e), Fed.R.Civ.P., is the same
as the standard for a motion for reconsideration under Local
Civil Rule 6.3. See Cohen v. Koenig, 932 F. Supp. 505, 506
(S.D.N.Y. 1996). Thus, a motion pursuant to Rule 59(e) should be
granted only where the moving party demonstrates that the Court
has overlooked factual matters or controlling decisions that were
presented to it on the underlying motion and that could change
the conclusion reached by the court. See Local Rule 6.3;
Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995).
Courts narrowly construe this standard and apply it strictly
against the moving party so as to "dissuade repetitive arguments
on issues that have already been considered fully by the court."
Caleb & Co. v. E.I. DuPont De Nemours & Co., 624 F. Supp. 747, 748
(S.D.N.Y. 1985). Generally, the moving party may not "advance new
facts, issues or arguments not previously presented to the
Court." Morse/Diesel, Inc. v. Fidelity & Deposit Co. of
Maryland, 768 F. Supp. 115, 116 (S.D.N.Y. 1991). The decision to
grant or deny the motion, however, is within the sound discretion
of the district court. See Devlin v. Transp. Communications
Int'l Union, 175 F.3d 121, 132 (2d Cir. 1999).
The defendants do not address the standard that applies to
their Rule 59 motion. It is worth noting that the defendants not
only make new arguments in their Rule 59 motion that were not
made in their opposition to U2's summary judgment motion; as
discussed below, they again make new arguments in their reply to
U2's opposition to this motion. "New arguments first raised in
reply papers in support of a motion will not be considered."
Domino Media, Inc. v. Kranis, 9 F. Supp. 2d 374, 387 (S.D.N.Y.
The Opinion held that "the importation of copies into the
United States of a work manufactured in a foreign country can
form the basis for a copyright infringement claim by an exclusive
licensed U.S. distributor without regard to the first sale
doctrine." U2, 2005 WL 1231645, at *4 (citing Quality King
Distribs. v. L'anza Research Int'l, Inc., 523 U.S. 135, 148, 152
(1998)). The defendants, citing a concurrence,*fn3 contend
that the Opinion misinterpreted Quality King. The defendants made no
arguments relating to the first sale doctrine during summary
judgment practice, and never cited Quality King. In any event,
defendants merely suggest that the portion of Quality King on
which the Opinion relied was dicta; they do not advance any
argument why the Opinion's analysis on this point, which extended
beyond merely citing Quality King, was clear error.
The defendants contend that the unauthorized imported copies of
films were manufactured by the Chinese copyright holder, and
therefore are "authorized." They did not make this argument
during summary judgment practice, and indeed, they admitted that
their copies had not been lawfully obtained for resale in the
United States. U2, 2005 WL 1231645, at *5.
The defendants also argue that the Copyright Act does not apply
to this case, and that the copyright law of the People's Republic
of China should apply instead. The defendants never made this
argument during summary judgment practice; indeed, their
opposition to summary judgment assumes throughout that the
Copyright Act applies, as it cites the Copyright Act numerous
times. Regardless of this fact, the argument is manifestly
contrary to law, see 17 U.S.C. § 602(a),*fn4 and the
defendants provide no analysis to support this argument.
The defendants object to the civil contempt fine of $300,000,
equivalent to maximum statutory damages for two infringed items.
"A party may be held in civil contempt for failure to comply with
a court order if (1) the order the contemnor failed to comply
with is clear and unambiguous, (2) the proof of noncompliance is
clear and convincing, and (3) the contemnor has not diligently
attempted to comply in a reasonable manner." Paramedics
Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Techs.,
Inc., 369 F.3d 645, 655 (2d Cir. 2004) (citation omitted). Under
this standard, the contempt fine levied in the Opinion is
appropriate. The March 30, 2001 permanent injunction
("Injunction") to which the parties stipulated unambiguously
enjoined Lai Ying from infringing U2's exclusive rights in motion
pictures "including but not limited to those identified in . . .
the Complaint," as well as from "importing . . . or selling,
renting or otherwise distributing . . . any unauthorized
videocassette or videodisc copies" of U2's films. U2, 2005 WL
1231645, at *1. Proof that the defendants violated the Injunction
was clear and convincing, as it is undisputed that the U.S.
Marshals Service executed Orders of Seizure on February 18 and
August 11, 2004, and U2 investigators made purchases between
those seizures, yielding a total of 174 unauthorized copies of 49 different U2 film titles. Id. at *2.
It is beyond dispute that the defendants did not diligently
attempt to comply with the Injunction in a reasonable manner.
After U2 commenced this action and the U.S. Marshals Service
executed the first Order of Seizure, the defendants continued to
sell U2 films for months during the pendency of this lawsuit, as
evidenced by the recovery of scores of unauthorized films through
purchases by U2 investigators and a second search by the U.S.
Marshals. Id. Indeed, the two films for which the defendants
received a contempt fine "The Death Curse" and "Men Suddenly in
Black" were recovered in the August 11 seizure by the U.S.
Marshals, with copies of "Men Suddenly in Black" having been
recovered previously in the February 18 seizure and in purchases
by U2 investigators following that search. Id. at *2 nn. 1-3.
The defendants' contempt arguments center on a claim that the
compensatory contempt fines were not well calibrated to the
amount of damages that U2 suffered.*fn5 The defendants fail
to mention that the reason for assigning maximum damages was that
the defendants caused "the absence of access to [their] business
records," which made it "difficult to calibrate the sanction to
the damages suffered from the contemptuous conduct" and therefore
"appropriate to apply the statutory formula for damages as a reasonable proxy." U2, 2005 WL 1231645, at *7.*fn6 The
defendants offer no reason why this analysis is clearly
erroneous. The defendants also do not argue that they are unable
to pay the contempt fine.
The defendants admit that U2's copies came from an "authorized"
source in China, but argue that U2 does not have the right to
file applications for copyright registration on behalf of foreign
copyright holders. The defendants did not make this argument on
summary judgment, and in any event, it is manifestly contrary to
law. See 17 U.S.C. § 408(a).*fn7 To the extent that they
also argue that statutory damages are not available because U2 is
not a copyright owner, the defendants simply ignore the portion
of the Copyright Act that defines "Copyright owner" as the owner
of "any one of the exclusive rights comprised in a copyright."
17 U.S.C. § 101. Although the defendants attempt to re-argue the
issue of whether U2 demonstrated its chain of title to the
copyrights in this case, the defendants fail to draw this Court's
attention to any evidence they produced on this point during summary judgment that this Court may have overlooked. The
defendants do not take issue with the finding that, through their
failure to respond to requests to admit, they were properly
deemed to have admitted that U2 has the exclusive distribution
rights for 24 titles.
In their reply on this motion, defendants also make a number
of other arguments for the first time.*fn8 It is therefore
unnecessary to address these arguments. Finally, to the extent
that the defendants claim that they deserved an evidentiary
hearing, given their consistent refusal to participate in the
discovery process during this case, and their failure during
summary judgment practice to present admissible evidence that
raised a question of fact, such a claim is frivolous.
The defendants' motion to amend, modify, or withdraw the
judgment pursuant to Rule 59, Fed.R.Civ.P., is denied.
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