United States District Court, D. Colorado
REGAS CHRISTOU, R.M.C. HOLDINGS, L.L.C. d/b/a The Church, BOUBOULINA, INC. d/b/a Vinyl, MOLON LAVE, INC. d/b/a 2 A.M., CITY HALL, LLC, 1037 BROADWAY, INC. d/b/a Bar Standard f/k/a The Shelter, 776 LINCOLN ST., INC. d/b/a Funky Buddha Lounge, and 1055 BROADWAY, INC. d/b/a The Living Room, Plaintiffs,
BEATPORT, LLC, BRADLEY ROULIER, and BMJ&J, LLC d/b/a Beta Nightclub and Beatport Lounge, Defendants.
R. BROOKE JACKSON, District Judge.
Defendants Bradley Roulier and BMJ&J, LLC, d/b/a Beta Nightclub move post-trial for an award of attorney's fees and "excess costs" against plaintiffs and one of their lawyers, claiming that plaintiffs' claims were groundless and pursued in bad faith. The motion is granted in part and denied in part.
The Court has summarized the basic facts of this case in several pretrial orders. The story starts in the 1990's. Regas Christou founded several nightclubs in Denver's South of Colfax Nightlife District. Two of his clubs, The Church and Vinyl, developed prominence both locally and nationally in the electronic dance music scene. This is a type of music wherein disc jockeys mix songs on expensive synthesizers and other computer based equipment; perform for live audiences; and develop national, even international, reputations and followings in their own right. Each year DJ Magazine produces a list of the "Top 100" DJ's in electronic dance music. These DJ's, sometimes referred to by the parties here as "A-List DJ's, " charge substantial sums for a performance. But because they attract larger audiences and add prestige to the location, clubs compete with other clubs, concert halls, and other venues to book their performances.
Mr. Christou employed Bradley Roulier as a "talent buyer" for a short time in 1998 and again from 2001 to 2007. The responsibility of the talent buyer includes developing relationships with DJ's and their agents and booking them for performances. Mr. Roulier was good at it and had a significant role in Mr. Christou's success. While still working for Mr. Christou, Mr. Roulier and others conceived of the idea of creating an online marketplace for promoting and selling electronic dance music. Mr. Christou liked the idea and provided both financial and promotional support to Mr. Roulier and his partners. This idea led to the creation of Beatport, LLC in 2003. Beatport has grown to become the largest online site that deals exclusively with electronic dance music.
Although anyone can buy music through the Beatport website, the tracks sold there are designed especially for DJ's. They are free of "Digital Rights Management" which means they can be mixed and re-mixed on the types of equipment used by DJ's. They are meant to be played at loud volume on expensive, high fidelity equipment that is available in the venues in which these DJ's work. Accordingly, the average cost of a single track is higher than tracks that can be downloaded on mass-market sites such as Apple's iTunes. Although many of the same DJ's do sell tracks on iTunes and various other online sites, Beatport considers itself to set the standard in the market that it serves.
Mr. Roulier hoped to purchase one of Mr. Christou's clubs, but their negotiations on a price were not successful. In 2007 Mr. Roulier left Mr. Christou, and in 2008 he founded his own competing club in the Lower Downtown area of Denver. The two former colleagues and friends had a bitter falling out, culminating in the filing this lawsuit on December 1, 2010. In addition to Mr. Christou, the plaintiffs included his two clubs that featured electronic dance music - R.M.C. Holdings, LLC, d/b/a The Church; and Bouboulina, Inc., d/b/a Vinyl - and five other nightclubs that Mr. Christou owned in Denver. Named as defendants were Beatport, LLC; Mr. Roulier; Mr. Roulier's club, BMJ&J, LLC, d/b/a Beta Nightclub and Beatport Lounge; and an agency that dealt with a number of the top DJ's, AM Only Inc.
Plaintiffs originally asserted nine claims for relief: (1) illegal tying in violation of section one of the Sherman Act against all defendants; (2) monopolization (section two of the Sherman Act against defendants Beta and Mr. Roulier; (3) attempt to monopolize against Beta and Mr. Roulier; (4) conspiracy to monopolize against all defendants; (5) conspiracy to eliminate competition by unfair means in violation of section one of the Clayton Act; (6) theft of trade secrets; (7) violation of the Racketeer Influenced and Corrupt Organizations Act; (8) intentional interference with prospective business expectancies against Mr. Roulier; and (9) civil conspiracy against all defendants. As discussed below, by the time the case was presented to a jury in the summer of 2013 only the first three claims (tying, monopolization and attempt to monopolize) were left.
To say that the case was hard-fought would be an understatement, perhaps evidenced by the fact that the electronic file of the case now contains 303 separate entries. Included were motions to dismiss, motions for summary judgment, Daubert motions, discovery disputes, sanctions motions, and many others. Without recounting the history of the case in detail, the following landmarks occurred along the way.
Plaintiffs' claims against AM Only Inc. were settled following a joint settlement conference and, therefore, were dismissed.
In an extensive written order issued March 14, 2012 [ECF No. 146] the Court granted defendants' motion to dismiss for failure to state a claim upon which relief could be granted pursuant to Fed.R.Civ.P. 12(b)(6) as to the antitrust claims asserted by Mr. Christou individually and as to plaintiffs' RICO claims. The Rule 12(b)(6) motion was denied in all other respects. The Court also denied a motion for Rule 11 sanctions against plaintiffs' attorney Jeffrey Vail that had been filed by Beatport.
In a written order issued January 23, 2013 [ECF No. 190] the Court denied defendants' motion for summary judgment; defendants' "Daubert" motions to exclude plaintiffs' experts Owen R. Phillips and Jay F. Freedberg; and another motion for Rule 11 sanctions filed by Beatport.
On March 26, 2013 plaintiffs filed an unopposed motion to dismiss their claims against defendant Beatport with prejudice, following the settlement of those claims. [ECF No. 199]. That motion was granted. [ECF No. 217].
On the same day, March 26, 2003, plaintiffs moved to dismiss, with prejudice, the remaining claims of Mr. Christou individually and the claims of his five nightclubs other than The Church and Vinyl. [ECF No. 200]. The Local Rule 7.1.A certification indicated that the remaining defendants, Mr. Roulier and BMJ&J, LLC, did not oppose the motion provided that they received costs as prevailing parties and preserved their right to seek attorney's fees after final judgment. The motion was granted with the indication that the Court would address costs and attorney's fees at the end of the case. [ECF No. 218].
On June 4, 2013 the Court issued another omnibus order addressing numerous motions filed by both sides. [ECF No. 259]. Among other things the Court largely (but not entirely) denied defendants' efforts to exclude various categories of plaintiffs' anticipated evidence.
The case was tried to a jury June 24-28 and July 1-3 and 8-10, 2013. During the course of the trial the plaintiffs narrowed their claims to two alternative "tying" claims, monopolization and attempt to monopolize. On July 10, 2013 the jury rendered its verdict in favor of the defendants on all remaining claims.
On July 17, 2014 the Court entered its final judgment in favor of defendants Bradley Roulier and BMJ&J, LLC and against R.M.C. Holdings, Inc. (The Church) and Bouboulina, Inc. (Vinyl). The Court awarded defendants costs pursuant to Fed.R.Civ.P. 54(d)(1) and D.C.COLO.LCivR 54.1. [ECF No. 296].
The pending motion for attorney's fees and "excess costs and expenses" was filed by defendants Brad Roulier and BMJ&J, LLC on July 31, 2013.
On the same day, July 31, 2013 those defendants also filed a Bill of Costs seeking an award of costs in the amount of $42, 101.23. [ECF No. 298].
On August 19, 2013 plaintiffs filed a document stipulating to the award against them of $6, 717.68 in costs but objecting to the remaining $35, 383.55 of costs requested by the defendants. [ECF No. 299].
On August 21, 2013 the Clerk of Court taxed costs in favor of the two defendants and against the two plaintiffs in the amount of $19, 258. [ECF No. 302].
The prevailing party in civil cases is generally entitled to an award of costs under Fed.R.Civ.P. 54(d)(1). See also D.C.COLO.LCivR 54.1. However, under the "American Rule, " absent statutory or contractual authorization, the prevailing party ordinarily cannot recover his attorney's fees against the loser. Hall v. Cole, 412 U.S. 1, 5 (1973). This rule is based on the belief that individuals with potentially valid claims or defenses might refrain from pursuing them for fear that if they lose the case, they would face not only the burden of their own attorney's fees but the opponent's fees as well. See Kornfeld v. Kornfeld, 393 F.App'x 575, 578 (10th Cir. 2010).
There is, however, a narrow exception to the American rule. If a federal court finds that a party has acted "in bad faith, vexatiously, wantonly or for oppressive reasons, " it can award attorney's fees to the successful party. Hall, 412 U.S. at 5; Kornfeld, 393 F.App'x at 578. In the Tenth Circuit there is a "high bar" for awards under this bad faith exception, and at a minimum the trial court must make a finding of "bad intent or improper motive." Mountain West Mines, Inc. v. Cleveland-Cliffs Iron Co., ...