Usherson v. Bandshell Artist Management

Facts

Ps filed a copyright action on behalf of Usherson on July 10, 2019. The complaint alleges that D infringed on Usherson's copyright for a photograph of musician Leon Redbone (the 'Photograph') and that at the time the complaint was filed the Photograph was registered with the U.S. Copyright Office under Copyright Registration Number VAu 1-080-046 (the '046 Registration'). The Photograph was not registered. Usherson had provided Ds with a CD-ROM containing the photographs registered pursuant to the 046 Registration before the complaint was filed and this CD-ROM did not contain the Photograph. Sometime after July 10, 2019 - the date the complaint was filed - Usherson sent Ps another CD-ROM containing photographs that he had not yet registered. This collection included the Photograph. The firm proceeded to register the photographs on the second CD-ROM on August 22, 2019. Unaware that the Photograph had not yet been registered, the district court issued two orders on July 15, 2019, soon after the complaint was filed. The first set the initial pretrial conference for October 10, 2019. The second referred the case to the court-annexed Mediation Program and required the parties to conduct a mediation pursuant to the Program's procedures by September 26, 2019, two weeks before the initial pretrial conference. The order required Ps to file proof of service of the summons and complaint within three days of service being effected and to produce limited discovery related to the licensing of the Photograph. The filing of proof of service was untimely and Ps failed to produce the required discovery. They also failed to participate in the mediation by the required date. One week after the deadline for mediation had passed, Ps filed a letter suggesting the mediation had not taken place because of the Mediation Office's failure to assign a mediator. P requested leave to hold a telephonic mediation. The district court criticized P for his attempt to blame the Mediation Office for his failure to meet the mediation deadline but concluded that mediation was still potentially valuable. The district court, therefore, adjourned the pretrial conference and ordered: 'the parties shall conduct the in-person mediation no later than October 31, 2019.' The parties agreed to a mediation and neither P nor his client, Usherson, appeared. Instead, two associates from Ps, neither of whom had entered an appearance in the case, were sent in P’s place. The lead associate, James Freeman stated that P had apprised him of the existence of the matter only the night before the mediation. The second associate was P's sister, a newly admitted lawyer attending only to 'shadow' Freeman and to learn about the process. No agreement was reached at the mediation, a result that the Mediator later attributed in part to the failure of P and Usherson to attend. D moved for sanctions. P claimed that he and Usherson had received permission from the Mediator not to appear in person. D's counsel, Newberg, indicated on behalf of D that 'virtually everything in P's statement is false' and that Newberg had 'warned P against filing a false statement regarding the scheduled mediation with the Court.' At the November 14 pretrial conference, P, appearing as principal trial counsel, stuck by this story, stating that the Mediator had given permission for Usherson to appear by telephone. P also made clear that he had personally advised the Mediator, by telephone, that Usherson would not appear in person, and that the Mediator 'said that was okay.' D then learned that Usherson had filed a copyright registration after the complaint was filed. D requested discovery. P argued against limited discovery on the registration issue, urging the court to let proceedings continue in the normal course, in the hope of 'get[ting] to a settlement number.' P was ordered to file a formal opposition to the sanctions motion. P submitted a sworn declaration affirming that he 'sought and received approval from . . . the assigned mediator[] for Mr. Usherson to attend the mediation via telephone and for my associate James Freeman to appear who had full knowledge of the case. I obtained [the Mediator's] consent via telephone.' The Mediator maintained that he had not given approval for a telephonic appearance in this case. The Mediator issued a sworn declaration that what P said was false. The Mediator denied that he had given permission for Usherson to appear by telephone. The Mediator did note, however, that P had sent an associate in his stead on at least one other occasion and that his clients had appeared by telephone in other mediations conducted by the Mediator without incident. On December 17, 2019, the court issued an order scheduling the hearing. Two days later, P filed a stipulation of voluntary dismissal signed by both parties. The parties agreed that the case should be dismissed with prejudice and that each side would bear its costs and attorney's fees. At a sanction hearing, it was determined that the suit was taken and the Photograph had not been registered until after the suit. P admitted in his declaration that he had conducted no investigation into the matter. This was despite Usherson's statement that he had sent the firm a CD-ROM prior to the filing of the complaint which included all the photographs that had been registered pursuant to the registration identified in the complaint. P claimed that he had relied on the firm's internal case-tracking system and that he had no role in filing for the Photograph's registration in August 2019. He asserted that he did not realize that the Photograph was not properly registered until after the sanctions hearing in January 2020. The district court found that P violated no fewer than six of the district court's orders and that these violations were willful. The district court found that P repeatedly lied to the court, including under oath, about receiving permission for Usherson to appear by telephone at the mediation. The district court concluded, by clear and convincing evidence, that P brought and maintained the case in bad faith by willfully disregarding the fact that the Photograph was not properly registered at the time the complaint was filed. Judge Furman concluded that Liebowitz knew the Photograph was not properly registered at least as of August 22, 2019, when his firm registered the Photograph. In any event, he should have known and he failed to conduct a reasonable investigation of his client's statements. Judge Furman concluded that $83,517.49 was an appropriate fee for the work D's lawyers performed in connection with the mediation and the sanctions motion and that the sum would be payable to the court. Judge Furman ordered Ps to pay to the court an additional sanction of $20,000 for falsely alleging in the complaint that the Photograph was registered and for not conducting a reasonable investigation either before the lawsuit was filed or after they were put on notice of the potential defect in their pleadings. Ps appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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