Kennedy Stock, LLC v. NLS N.Y. Inc.

KENNEDY STOCK, LLC, Plaintiff, v. NLS NEW YORK INC., Defendant.

No. 18-CV-4991 (PGG) (BCM)

United States District Court, S.D. New York

November 18, 2019

THE HON. PAUL G. GARDEPHE

REPORT AND RECOMMENDATION

BARBARA MOSES UNITED STATES MAGISTRATE JUDGE

Plaintiff Kennedy Stock, LLC (Kennedy Stock), a Missouri limited liability company owned and operated by professional photographer Stephen Kennedy, filed this action under the Copyright Act, 17 U.S.C. § 106, et seq., and the Digital Millennium Copyright Act, 17 U.S.C. § 1201 et seq. (DMCA), after defendant NLS New York Inc. (NLS) used six of Kennedy's copyrighted photographs on its website without permission, license, or payment. On January 10, 2019, the Hon. Paul G. Gardephe, United States District Judge, granted plaintiff's motion for entry of a default judgment against NLS and referred the action to me to conduct an inquest into damages. (Dkt. Nos. 27, 28.)

For the reasons that follow, I respectfully recommend that plaintiff be awarded $60, 000 in statutory damages under the Copyright Act and $2, 918 in attorneys' fees and costs.

I.BACKGROUND

A. Factual History

Kennedy Stock has "an exclusive license covering all rights to photographs created by Stephen Kennedy." Compl. (Dkt No. 1) ¶ 29. Kennedy Stock, in turn, is the "sole distributor and exclusive licensor" of Kennedy's images, id. ¶ 4, including the six photographs at issue here (the Photographs), which plaintiff made available for licensing on its website at www.kennedystock.com (the Kennedy Stock Website). Id. ¶¶ 13-14 & Ex. 1. Like the other images displayed on the Kennedy Stock Website, the Photographs are professional portraits of unnamed men and women of assorted ages and races. Id. Ex. 1.^[1] Each Photograph contains a distinctive yellow watermark on the lower right-hand corner, reading "Stephen Kennedy Stock," and bears a copyright notice underneath the image, reading "© Stephen Kennedy. All Rights Reserved." Id. ¶¶ 14, 41 & Ex. 1. Kennedy owns the copyrights in the Photographs and registered them prior to defendant's infringing use. Id. ¶¶ 28, 30-31.

Defendant NLS is a business that provides chauffeur services. Compl. ¶ 7. NLS owns and/or operates the website www.nlsnewyork.com (the NLS Website), through which it markets and conducts its business. Id. ¶ 8. On or before March 20, 2018, NLS copied, published, and displayed the Photographs on the NLS Website without first requesting or obtaining a license. Id. ¶¶ 16-20 & Ex. 2.^[2] In displaying the Photographs on the NLS Website, defendant removed or digitally obscured plaintiff's watermark, or cropped the Photographs so as to effectively remove the watermark, thereby "removing critical copyright management information" and "conceal[ing] . . . its unauthorized use of the Photographs." Id. ¶¶ 41-42.

On or about March 20, 2018, Kennedy Stock's counsel sent a cease and desist letter to NLS, demanding that it remove the unauthorized copies of the Photographs from the NLS Website. Compl. ¶ 21. NLS removed the Photographs, but did not further respond to Kennedy Stock's inquiries or cooperate with Kennedy Stock's investigation of the matter, except to "contend that the [NLS] Website is 'under construction.'" Id. ¶ 22.^[3] This action followed.

B. Procedural History

Kennedy Stock filed suit on June 5, 2018. It alleges in Count I that NLS violated the Copyright Act, 17 U.S.C. § 106, by copying, publishing and displaying the Photographs on the NLS Website, without permission or a license, for commercial purposes. Compl. ¶¶ 27-38. In Count II, plaintiff alleges that NLS violated the DMCA, 17 U.S.C. § 1202(b), by stripping Kennedy's watermark and copyright notice to conceal its unauthorized use of the Photographs. Compl. ¶¶ 39-44.

On September 10, 2018, Kennedy Stock served NLS via the New York Secretary of State. See Aff. of Service filed Sept. 24, 2018 (Dkt. No. 11), at 1. NLS did not appear, answer, or otherwise respond. On October 15, 2018, at Kennedy Stock's request (Dkt. No. 14), the Clerk of Court issued a Certificate of Default (Dkt. No. 15), and on November 28, 2018, also at Kennedy Stock's request, Judge Gardephe ordered NLS to show cause "why a Judgment of Default should not be entered in favor of Plaintiff for the relief requested in the Complaint." Order to Show Cause (Dkt. No. 24) at 1. Kennedy Stock promptly served the Order to Show Cause and supporting papers on NLS via the Secretary of State. (Dkt. No. 25.) Despite an adjournment of the show cause hearing from December 20, 2018, to January 10, 2019, (Dkt. No. 26), NLS failed to respond or appear. Judge Gardephe thereupon granted plaintiff's motion and referred the case to me for a damages inquest.

By Order dated January 11, 2019 (Dkt. No. 29), I directed Kennedy Stock to file its Proposed Findings of Fact and Conclusions of Law no later than February 10, 2019, including all affidavits and documentary evidence necessary to support its proposed damages amount, and to serve its inquest papers on defendant by mail "at its last known address." Id. ¶ 7. Plaintiff submitted its Proposed Findings on February 11, 2019 (Dkt. No. 30), supported by a declaration from its counsel, Nathaniel Kleinman (Dkt. No. 31), and a Certificate of Service (Dkt. No. 32) showing that it served NLS by mail at 2357 East 83d Street, East Elmhurst, New York 11370, which is the address listed for NLS on the website of the New York Department of State, Division of Corporations. Kleinman Decl. Ex. 2. Plaintiff seeks statutory damages under the Copyright Act, 17 U.S.C. § 504(c), in the amount of $900, 000, attorneys' fees in the amount of $2, 268, and costs in the amount of $650. See Prop. Findings ¶¶ 11, 21; Kleinman Decl. ¶ 17.

Once again, NLS failed to respond.

Since neither party has requested a hearing on the issue of damages, and since defendant did not submit any written materials, I have conducted the inquest based solely upon the materials submitted by plaintiff. See Action S.A. v. Marc Rich & Co., 951 F.2d 504, 508 (2d Cir. 1991) ("affidavits, evidence, and oral presentations by opposing counsel" constitute a "sufficient basis from which to evaluate the fairness of the . . . sum" without the need for a hearing on damages) (internal citations omitted); De Lage Landen Fin. Servs., Inc. v. Universal Wilde, Inc., 2019 WL 4195441, at *3 n.2 (S.D.N.Y. Aug. 15, 2019) (finding that a hearing was not required because plaintiff's sworn declarations were a sufficient basis on which to make a damages calculation).

II. JURISDICTION AND VENUE

Subject matter jurisdiction is properly based on 28 U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1338(a) (copyright jurisdiction). See Compl. ¶ 9.

I am also satisfied as to personal jurisdiction over the defendant, which is "a necessary prerequisite to entry of a default judgment." Sheldon v. Plot Commerce, 2016 WL 5107072, at *6 (E.D.N.Y. Aug. 26, 2016), report and recommendation adopted, 2016 WL 5107058 (E.D.N.Y. Sept. 19, 2016). The Copyright Act does not contain its own personal jurisdiction or service provision. Thus, I must first "determine whether the defendant is subject to jurisdiction under the law of the forum state - here, New York," and then "consider whether the exercise of personal jurisdiction over the defendant comports with the Due Process Clause of the United States Constitution." Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 224 (2d Cir. 2014). These questions are both easily answered.

NLS is a New York corporation with its principal place of business in Queens, New York. Compl. ¶ 6. The website of the New York Division of Corporations corroborates this allegation. Kleinman Decl. Ex. 2. Because NLS is incorporated in New York and has its principal place of business in Queens, New York, it is amenable to general personal jurisdiction throughout the state. N.Y. C.P.L.R. § 301; Magdalena v. Lins, 123 A.D.3d 600, 601, 999 N.Y.S.2d 44, 45 (1st Dep't 2014). Similarly, because NLS is "at home" in New York, the exercise of such jurisdiction comports with the requirements of the Due Process Clause. Sonera Holding, 750 F.3d at 225 (quoting Daimler AG v. Bauman, 134 S.Ct. 746, 760 (2014)) ("the place of incorporation and the principal place of business" are the "paradigm bases" for determining that a corporation is "at home" and therefore "amenable to all-purpose jurisdiction").

"Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied." Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987). See also 5B Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure, § 1353 (3d ed. 2019) (service of process is "the means by which a federal court gives notice to the defendant and asserts jurisdiction over him"). Where the defendant has defaulted, the plaintiff must establish adequate service in order to obtain a default judgment. See Sheldon, 2016 WL 5107072, at *6 ("failure to adequately prove proper service of court documents . . . bars the entry of a default judgment"); Lliviganay v. Cipriani 110 LLC, 2009 WL 1044606, at *1 (S.D.N.Y. Apr. 14, 2009) (lack of proof of proper service "is an independent obstacle to a default judgment").

Service may be made on a domestic or foreign corporation by following state law in the state where the district court is located. Fed.R.Civ.P. 4(h)(1)(A), 4(e)(1). New York law permits service on a domestic corporation by personal delivery of the required papers (together with the statutory fee) to the Secretary of State, or any person authorized by the Secretary to receive such service, in Albany, New York. N.Y. C.P.L.R § 311(a); N.Y. Bus. Corp. L. § 306(b)(1). Service is complete when the...