UMG Recordings, Inc. v. Vital Pharm., Inc.
UMG Recordings, Inc. v. Vital Pharm., Inc.
2022 WL 18023249 (S.D. Fla. 2022)
September 30, 2022
Dimitrouleas, William P., United States District Judge
Summary
The Court found that Defendants acted in bad faith by not preserving the social media videos, and as a result, imposed a rebuttable presumption that the videos contained the music in question and that Defendants were liable for its use, as well as a rebuttable presumption that the videos had the same reach as an average post.
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
v.
Vital Pharmaceuticals, Inc., d/b/a Bang Energy; and Jack Owoc, an individual, Defendants
CASE NO. 21-cv-60914-CIV-DIMITROULEAS/SNOW
United States District Court, S.D. Florida
Signed September 30, 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.
Dimitrouleas, William P., United States District Judge
ORDER DENYING APPEAL OF MAGISTRATE JUDGE'S ORDER ON SANCTIONS
*1 THIS CAUSE is before the Court upon Defendants’ Objection to, Appeal from, and Request for Clarification of Magistrate Judge's Order on Sanctions [DE 268] (the “Appeal”). The Court has carefully considered the Appeal [DE 268], Magistrate Judge Hunt's August 11, 2022 Order [DE 261] (the “Sanctions Order”), Judge Hunt's August 30, 2022 Order [DE 270] (the “Order of Clarification”), Plaintiffs’ Response to Defendants’ Objection to Magistrate Judge's Report [DE 272], the record in this case, and is otherwise fully advised in the premises.
A magistrate judge is permitted to hear and determine any non-dispositive pretrial matter pending before the court, and the decision of the magistrate judge is a final decision. 28 U.S.C. § 636(b)(1)(A). If a party objects to the magistrate judge's order, a district court may set aside or modify the order only if the district court finds that the magistrate's order is “clearly erroneous or contrary to law.” 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a); S.D. Fla. Mag. R. 4(A). A finding is clearly erroneous when “although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Pullman-Standard v. Swint, 456 U.S. 273, 285 n. 14 (1982); see also Johnson v. Hamrick, 296 F. 3d 1065, 1074 (11th Cir. 2002). The question for the reviewing court is not whether the finding is the best or only conclusion that can be drawn from the evidence. Instead, the test is whether there is evidence in the record to support the lower court's findings, and whether its construction of that evidence is a reasonable one. Heights Comty. Congress v. Hilltop Realty, Inc., 774 F. 2d 135, 140-41 (6th Cir. 1985). Additionally, to the extent that the parties consider Judge Hunt's Sanctions Order [DE 261] to be a report and recommendation, a party seeking to challenge the findings in a report and recommendation of a United States Magistrate Judge must file “written objections which shall specifically identify the portions of the proposed findings and recommendation to which objection is made and the specific basis for objection.” Macort v. Prem, Inc., 208 F. App'x 781, 783 (11th Cir. 2006) (quoting Heath v. Jones, 863 F.2d 815, 822 (11th Cir. 1989)). “It is critical that the objection be sufficiently specific and not a general objection to the report.” Macort, 208 F. App'x at 784 (citing Goney v. Clark, 749 F.2d 5, 7 (3d Cir. 1984)). If a party makes a timely and specific objection to a finding in the report and recommendation, the district court must conduct a de novo review of the portions of the report to which objection is made. Macort, 208 F. App'x at 783-84; see also 28 U.S.C. § 636(b)(1). The district court may accept, reject, or modify in whole or in part, the findings or recommendations made by the Magistrate Judge. Macort, 208 F. App'x at 784; 28 U.S.C. § 636(b)(1).
*2 This civil action involves claims by Plaintiffs that Defendants, and influencers paid by Defendants for commercial advertising purposes, used songs owned by Plaintiffs without Plaintiffs’ permission in commercial advertising of Defendants’ Bang energy drink products in hundreds of video posts on social media. Plaintiffs filed a Motion for Spoliation Sanctions [DE 147] on June 14, 2022, which was referred to Magistrate Judge Hunt pursuant to this Court's general discovery referral. Therein, Plaintiffs argued that approximately 100 additional infringing videos were either deleted or turned over well after discovery closed and after Plaintiffs’ summary judgment motion was filed. Plaintiffs argued that, as a sanction for this behavior, the Court should impose an adverse inference regarding these videos because Defendants deleted or withheld the videos knowing they were the subject of litigation and/or to hide evidence.
On August 9, 2022, Judge Hunt held a hearing on Plaintiffs’ Motion for Spoliation Sanctions. See [DE 279]. Following the hearing, on August 11, 2022, Judge Hunt entered an Order which, inter alia, granted in part and denied in part Plaintiffs’ request for spoliation sanctions. See [DE 261] (the “Sanctions Order”). Therein, Judge Hunt found that Defendants acted in bad faith:
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.
[DE 261] at pp. 3-4.
Judge Hunt held that Plaintiffs were entitled to spoliation sanctions, as follows:
[T]o 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.
[DE 261] at p. 8.
On August 23, 20222, Defendants filed their Objection to, Appeal from, and Request for Clarification of Magistrate Judge's Order on Sanctions [DE 268]. On August 30, 2022, Judge Hunt entered the Order of Clarification, which clarified the Sanctions Order [DE 261] with regard to thirty-eight (38) of the approximately 100 videos at issue in the Sanctions Order, which Defendants noted had been found and turned over prior to the issuance of the Sanctions Order. See [DE 270]. Junge Hunt “clarifie[d] that the liability presumption does not apply if Defendants turned over the allegedly infringing video prior to the issuance of the Order, and the reach presumption likewise does not apply if Plaintiffs were given the actual reach data prior to that Order.” [DE 270] at p. 2.
Upon this Court's de novo and independent review, and having carefully considered the parties’ arguments and relevant case law, the Court affirms Magistrate Judge Hunt's August 11, 2022 Sanctions Order [DE 261], as clarified by Judge Hunt's August 30, 2022 Order of Clarification [DE 270]. First, the Court disagrees with Defendants’ contentions that the rebuttable presumptions set forth in Judge Hunt's Orders are case-dispositive sanctions and/or are equivalent to entering a default judgment against Defendants. Rather, the Court finds that imposing a rebuttable presumption solely as to copying, which is merely one element of a copyright infringement claim, for the social media videos that Defendants failed to preserve was an entirely appropriate, reasonable, and proper sanction for Defendants’ bad faith discovery conduct, their spoliation of critical evidence in this case. Defendants will have the opportunity to rebut the second element of copyright infringement (copying) at trial. Second, the Court rejects Defendants’ circular and absurd argument that Plaintiffs should have to file a new lawsuit or adjourn the trial in this case as a result of the how late in the litigation of this action the insertion of the additional infringing videos has occurred. Had Defendants complied with their obligations to preserve and produce this evidence, rather than acting in bad faith, the additional infringing videos would have been part of discovery and motion practice. Accordingly, the Court will deny the Appeal and affirm Judge Hunt's Order.
*3 Based upon the foregoing, it is ORDERED AND ADJUDGED as follows:
1. The Appeal [DE 268] is DENIED;
2. Magistrate Judge Hunt's August 11, 2022 Sanctions Order [DE 261], as clarified by Judge Hunt's 30, 2022 Order of Clarification [DE 270], is hereby AFFIRMED.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida, this 30th day of September, 2022.