UMG Recordings, Inc. v. Vital Pharm., Inc.
UMG Recordings, Inc. v. Vital Pharm., Inc.
2022 WL 18023239 (S.D. Fla. 2022)
August 11, 2022

Hunt, Patrick M.,  United States Magistrate Judge

Exclusion of Witness
In Camera Review
Sanctions
Adverse inference
Video
Spoliation
Failure to Preserve
Bad Faith
Social Media
Failure to Produce
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Summary
The Court found that Defendants had a duty to preserve the videos, and that their failure to do so constituted bad faith. As a result, Plaintiffs were entitled to an adverse inference as to the viewership of the videos, and a rebuttable presumption that the videos had the same reach as an average or comparable post. This highlights the importance of preserving ESI, as failure to do so can result in sanctions and adverse inferences.
Additional Decisions
UMG Recordings, Inc.; Capitol Records, LLC; Universal Music Corp.; Universal Music – Z Tunes LLC; Universal Musica, Inc.; PolyGram Publishing, Inc.; Songs of Universal, Inc.; and Universal Music – MGB NA LLC, Plaintiffs,
v.
Vital Pharmaceuticals, Inc., d/b/a Bang Energy; and Jack Owoc, an individual, Defendants
Case No. 21-60914-CIV-DIMITROULEAS/HUNT
United States District Court, S.D. Florida
Signed August 11, 2022

Counsel

Brendan Stuart Everman, Stroock Stroock & Lavan LLP, Miami, FL, Tyler Joseph Rauh, Mase Mebane, P.A., Miami, FL, James George Sammataro, Pryor Cashman LLP, Miami, FL, for Plaintiffs.
Joseph Thomas Kohn, Quarles, Brady LLP, Naples, FL, Andrew R. Schindler, Eric Robert Thompson, Gordon Rees Scully Mansukhani, Miami, FL, Jill J. Ormond, Pro Hac Vice, Gordon Rees Scully Mansukhani LLP, Phoenix, AZ, Joel E. Tragesser, Pro Hac Vice, Quarles & Brady LLP, Indianapolis, IN, Johanna M. Wilbert, Pro Hac Vice, Kevin M. Long, Pro Hac Vice, Peter P. Klepacz, Pro Hac Vice, Shauna D. Manion, Pro Hac Vice, Quarles & Brady, LLP, Milwaukee, WI, Susan B. Meyer, Pro Hac Vice, Gordon Rees Scully Mansukhani LLP, Rapid City, SD, for Defendant Vital Pharmaceuticals, Inc.
Joseph Thomas Kohn, Quarles, Brady LLP, Naples, FL, Andrew R. Schindler, Eric Robert Thompson, Gordon Rees Scully Mansukhani, Miami, FL, Joel E. Tragesser, Pro Hac Vice, Quarles & Brady LLP, Indianapolis, IN, Johanna M. Wilbert, Pro Hac Vice, Kevin M. Long, Pro Hac Vice, Peter P. Klepacz, Pro Hac Vice, Shauna D. Manion, Pro Hac Vice, Quarles & Brady, LLP, Milwaukee, WI, for Defendant Jack Owoc.
Hunt, Patrick M., United States Magistrate Judge

ORDER

*1 THIS MATTER is before this Court upon multiple discovery motions. The Honorable William P. Dimitrouleas referred the Motions to the undersigned for determination. See ECF No. 17; see also 28 U.S.C. § 636(b); S.D. Fla. L.R., Mag. R. 1. Upon thorough review of the Motions, Responses, and any Replies thereto, as well as the arguments of counsel at an August 9, 2022, hearing, the record, and applicable law, the undersigned hereby ORDERS as outlined below.
As background, Defendants are accused of using songs owned by Plaintiffs without Plaintiffs’ permission in advertising on online social media platforms. To most efficiently address the many motions before this Court, each motion will be taken up in the order it was filed.[1]
I. Plaintiffs’ Motion for Sanctions (ECF No. 147)
This Motion concerns what, if any, sanctions should be imposed on Defendants for deleting or otherwise withholding a significant number of videos from various social media accounts. The Motions were briefed prior to the Court's summary judgment order, which found that Plaintiffs owned the songs used in videos that are not the subject of this motion, and held Defendants liable. ECF No. 203 at 8-9. Defendants contend that a large bulk of the relief requested here by Plaintiffs in this Motion was functionally already granted by the Summary Judgment Order, and that further sanctions are not necessary. There are two separate, but related, issues in this Motion.
The first issue concerns what Plaintiffs call the “100 Additional Infringing Videos,” allegedly infringing videos that were either deleted or turned over well after discovery closed, and which are in addition to the 140 videos that were at issue at the summary judgment. Plaintiffs were made aware of these videos only after their Motion for Summary Judgment was filed and the videos were therefore not addressed in that Motion. Plaintiffs now ask this Court to impose an adverse inference regarding these videos, because, Plaintiffs argue, Defendants at best deleted or withheld the videos knowing they were the subject of litigation, and at worst did so to hide evidence.
Defendants make several arguments against the adverse inference. First, Defendants argue that Plaintiffs are attempting to earn a free pass at summary judgment on these videos, as Plaintiffs have not proven ownership of the songs in the videos. Defendants also argue that the videos at issue were not located earlier because they were only vaguely defined in Plaintiffs’ discovery requests. Finally, Defendants argue that instead of giving Plaintiffs an adverse inference, this Court should instead simply allow Plaintiffs to file another lawsuit regarding these videos, keeping them separate from the current case.
The moving party carries the burden of proof to establish spoliation. To do so, “the party seeking sanctions must prove several things; first, that the missing evidence existed at one time; second, that the alleged spoliator had a duty to preserve the evidence; and third, that the evidence was crucial to the movant being able to prove its prima facie case or defense.” Penick v. Harbor Freight Tools, USA, Inc., 481 F. Supp. 3d 1286, 1291–92 (S.D. Fla. 2020) (citations omitted). However, even when these elements are met, a party's actions only merit sanctions when the spoliation comes about as the result of bad faith. Id. “Courts in this district have interpreted ‘bad faith’ in the spoliation context to not require a showing of malice or ill-will, but rather conduct evidencing more than mere negligence.” Id. at 1293 (collecting cases).
*2 The undersigned finds that Defendants’ conduct here was in bad faith, so defined. Defendants were well aware of their duty to retain the videos, having been asked to do so as far back as December 2020. Defendants not only failed to preserve these videos, as they were required to do, but also essentially strung Plaintiff along regarding their existence, admitting to their loss only after Plaintiffs’ summary judgment motions were filed.
The undersigned does note that since the filing of the sanctions motion, Defendants have apparently found 38 of the allegedly lost videos. This does little to change the analysis, as even those videos were produced so late and under such circumstances as to essentially deprive Plaintiffs of a meaningful opportunity to include them in this case. Such actions deprived Plaintiff of crucial evidence to which they were entitled and caused them severe prejudice, as they cannot adequately address them in this case – which they are clearly entitled to do. The undersigned finds that Defendants’ actions, taken as a whole, more than satisfy the bad faith standard for spoliation regarding the deleted videos.
A plaintiff asserting a copyright infringement claim must show: “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Feist Publ'ns, Inc. v. Rural Telephone Serv. Co., Inc., 499 U.S. 340, 361 (1991). Plaintiffs at the hearing maintained that they could, and would, prove ownership of the songs in question at trial. The undersigned finds that this is appropriate, and thus would not impose an adverse inference as to this element. However, Plaintiffs’ ability to prove the second element has been utterly compromised by Defendants’ actions, and Plaintiff is entitled to an adverse inference as to this element.
Plaintiffs also maintain that they are entitled to an adverse inference for each video in which Defendants have not produced a corresponding “Video Analysis” document. Specifically, Plaintiffs seek an adverse inference that each of the outstanding videos was viewed as many times as Defendants’ most popular videos on the social media platform TikTok, which would amount to more than four million times each. Defendants respond that, even if sanctions were warranted, any adverse inference should be limited to the reach of an average or comparable post by the specific account on which the alleged infringing videos were posted.
The undersigned finds that the same reasoning that applies to the deleted and late-produced videos also applies to the video analysis documents. Plaintiffs have been deprived of any meaningful opportunity to incorporate them into this case, solely through Defendants’ actions, and Defendants have failed to justify their actions in any way that would deter this Court from finding those actions in bad faith. Plaintiffs are therefore entitled to an adverse inference as to the viewership of the videos. However, the Court agrees with Defendants that such an inference is appropriately limited to the reach of an average or comparable post by the specific account on which the alleged infringing videos were posted.
Courts have recognized three different types of adverse inferences:
(1) a jury may be instructed that certain facts are deemed admitted and must be accepted as true;
(2) the Court may impose a mandatory, albeit rebuttable, presumption; or
(3) the jury must presume that the lost evidence is relevant and favorable to the innocent party, but also consider the spoliating party's rebuttal evidence, and then decides whether to draw an adverse inference.
*3 Penick, 481 F. Supp. 3d at 1295 (citation omitted).
The undersigned finds that the second kind of adverse inference is most appropriate here. This allows Plaintiffs the rebuttable presumption that, should song ownership be proven, Plaintiffs have also established the second element of a copyright infringement claim, copying of constituent elements of the work that are original. Plaintiffs are also entitled to a rebuttable presumption that the videos had the same reach as an average or comparable post by the account on which the video was posted. That the presumption can be rebutted by Defendants alleviates any concerns over an attempt at a “back-door” summary judgment, but adequately addresses the legitimate concerns that Plaintiffs raise over Defendants’ behavior.
The undersigned declines to award monetary sanctions at this time.[2]
II. Defendants’ Motion to Compel Deposition (ECF No. 209)
The undersigned now turns to Defendants’ Motion to Compel the deposition of two of Plaintiffs’ experts, Valerie Folkes and John Plump. Defendants argue they are entitled to depose Plaintiffs’ experts, even at this late date, because of prior agreements with Plaintiffs’ counsel. Plaintiffs respond that the request is untimely, in that Defendants slept on their ability to take the depositions, and it is now too late and too prejudicial to trial preparation to allow the depositions to go forward.
The undersigned notes that while counsel may agree among themselves to conduct discovery outside discovery deadlines, they should not expect the Court to resolve any disputes that arise after those deadlines. The undersigned agrees that Defendants’ Motion, filed July 19, 2022 – less than a month before trial, and well after all expert motions and challenges were due – is untimely. Despite Defendants’ protest that no specific expert discovery deadline was given, it is simply unreasonable to expect that expert witnesses be produced for deposition at this point. Defendants’ Motion to Compel is denied.
III. Defendants’ Motion in Limine (ECF No. 222)
The undersigned has also been referred Defendants’ Motion in Limine regarding undisclosed expert options. Defendants ask this Court “to exclude any statement of opinion offered by any expert that is not disclosed in that expert's report provided pursuant to Fed.R.Civ.P. 26 26(a)(2)(B)(i).” Plaintiffs respond that Defendants produced over 24,000 pages of documents after the deadline to submit expert reports, and contend that Plaintiffs’ experts should not be precluded from using these belatedly produced documents to support and further refine the opinions previously disclosed in their reports.
At the hearing, Plaintiffs assured this Court that there would be no substantive changes to their experts’ opinions, but that the additional documents merely might be used to bolster and support their previously disclosed opinions. Given such assurances, as well as the late production of the documents, the undersigned sees no reason to limit the experts’ testimony. Should the testimony not, in fact, stay within such limits, the Parties should address the issue with the District Judge at that time. Defendants’ Motion in Limine will be denied.
IV. Plaintiffs’ Motion to Compel Compliance (ECF No. 235)
*4 Finally, the undersigned turns to Plaintiffs’ request that Defendants be ordered to turn over dozens of documents Plaintiffs contend relate to Defendants’ legal due diligence or innocent infringement defense. This Court previously ordered Defendants to turn over “any communication regarding Defendants’ belief that its infringement was permissible,” and that “all communications, privileged or not, relating to Defendants’ legal due diligence or innocent infringement defense” fell under the Order's ambit. ECF No. 196.
All Parties agreed to an in-camera review, which this Court undertook. Having reviewed the documents in question, the undersigned finds good cause to clarify the previous order. As to the remaining emails, Defendants shall turn over any email received prior to the commencement of this lawsuit in which they are put on notice of potential copyright violations, regardless of the claimant. Defendants shall also turn over any discussions prior to the commencement of this lawsuit regarding the social media platforms’ licensing of copyrighted music. Defendants need not disclose settlement discussions or internal communications in which legal responses to copyright claims are formulated. The documents shall be turned over on or before August 12, 2022.
Accordingly, it is hereby ORDERED and ADJUDGED that:
Plaintiffs’ Motion for Sanctions, ECF No. 147, is GRANTED IN PART and DENIED IN PART. It is granted to the extent that should Plaintiffs adequately demonstrate ownership of the songs at issue, Plaintiffs are entitled to a rebuttable presumption that the videos in question contained the music in question, and that Defendants are liable for its use. Plaintiffs are also entitled to a rebuttable presumption that the videos had the same reach as an average or comparable post by the account on which the video was posted. The Motion is otherwise denied.
Defendants’ Motion to Compel Deposition, ECF No. 209, is DENIED.
Defendants’ Motion in Limine, ECF No. 222, is DENIED.
Plaintiffs’ Motion to Compel, ECF No. 235, is GRANTED to the extent that Defendants shall on or before August 12, 2022, turn over those emails received prior to the commencement of this lawsuit in which they are put on notice of potential copyright violations, regardless of the claimant. Defendants shall also turn over discussions prior to the commencement of this lawsuit regarding the social media platforms’ licensing of copyrighted music. The Motion is otherwise DENIED.
DONE and ORDERED at Fort Lauderdale, Florida, this 11th day of August 2022.

Footnotes

The undersigned notes that Plaintiffs’ Motion for Attorney's Fees, ECF No. 211, has been amicably resolved by the Parties. ECF No. 242. The Court will enter the agreed order separately from this Order.
Should either Party object to these findings, such objections should be lodged prior to the start of trial, and the District Court may then interpret these findings as a Report and Recommendation.