Premier Dealer Servs. v. Allegiance Adm'rs

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PREMIER DEALER SERVICES, INC., Plaintiff, v. ALLEGIANCE ADMINISTRATORS, LLC, et al., Defendants.

No. 2:18-cv-735

United States District Court, S.D. Ohio, Eastern Division

March 28, 2023

Chelsey M. Vascura Magistrate Judge

OPINION AND ORDER

EDMUND A. SARGUS, JR. UNITED STATES DISTRICT JUDGE

This matter is before the Court for consideration of Plaintiff Premier Dealer Services, Inc.'s Motion for Prejudgment Interest (ECF No. 242), Motion for Permanent Injunction (ECF No. 243), Motion for Attorneys' Fees (ECF No. 248) Motion to Compel Expert Fees and for Attorneys' Fees (ECF No. 257), and Defendant Allegiance Administrators, LLC's Motion to Stay Briefing on Premier's Motion for Expert Deposition Costs (ECF No. 258). For the reasons set forth below, the Court GRANTS Premier's Motion for Prejudgment Interest, GRANTS Premier's Motion for Permanent Injunction GRANTS Premier's Motion for Attorneys' Fees, GRANTS in part and DENIES in part Premier's Motion to Compel Expert Fees and for Attorneys' Fees, and DENIES as moot Allegiance's Motion to Stay Briefing on Premier's Motion for Expert Deposition Costs.

I. BACKGROUND

The Court set forth the facts giving rise to this case in its Opinion and Order granting Premier summary judgment on its copyright infringement claim against Allegiance (ECF No. 128), as well as in its Opinion and Order finding Premier entitled to receive $441,239 in lost profits for Allegiance's copyright infringement of Premier's LPLP Certificates (ECF No. 241). For ease of reference, the facts set forth in the Court's August 25, 2022, Opinion and Order are largely restated below:

A. Facts

Plaintiff Premier Dealer Services, Inc. (“Premier”) and Defendant Allegiance Administrators, LLC (“Allegiance”) compete as administrators of automobile service contracts and loyalty programs. Automobile dealerships offer loyalty programs to encourage customers to return to that dealership for maintenance in exchange for a discounted rate. Allegiance and Premier administer loyalty programs by enrolling customers and handling customer claims in the programs.

Tricor Automotive Group (“Tricor”), which is not a party to this case, was the obligor in all service contracts and loyalty programs relevant to this lawsuit. Tricor offers Canadian automobile dealerships various service contracts and loyalty programs that those dealerships sell to customers buying new and used vehicles. From 2001 to May 29, 2018, Premier served as Tricor's administrator of service contracts and loyalty programs. One program is called the “Lifetime Powertrain Loyalty Program (LPLP).” To sign up for the LPLP, customers or Premier representatives completed an administrative form called the LPLP Certificate-which is the subject of Premier's copyright infringement claim. Premier has two copyrights registered with the U.S. Copyrights Office for its LPLP Certificates.

After Premier stopped working with Tricor in 2018, Allegiance began administering service contracts and loyalty programs for Tricor. Tricor sent Allegiance the Canadian LPLP Certificates that Premier created for Tricor's use and represented that the LPLP Certificates were Tricor's. Allegiance made minor changes to the LPLP Certificates. The language and appearance of the documents, however, remained nearly identical to the LPLP Certificates Premier created.

Premier filed suit against Allegiance in the Franklin County Court of Common Pleas on June 4, 2018, alleging copyright infringement of its LPLP Certificates, misappropriation of trade secrets, and violations of Ohio tort law. Allegiance removed the case to federal court. On summary judgment, this Court held Allegiance liable for copyright infringement of Premier's LPLP Certificates. (Op. & Order, ECF No. 128.) The Court held a bench trial to determine Premier's copyright infringement damages, finding Premier entitled to receive $441,239 in lost profits. (Minute Entries, ECF Nos. 227, 228; Op. & Order, ECF No. 241.)

B. Subsequent Procedural Background

Shortly after the Court issued its Opinion and Order finding Premier entitled to an award of lost profits, Premier filed a Motion for Prejudgment Interest and a Motion for Permanent Injunction (ECF Nos. 242, 243, respectively). Allegiance opposes both motions (ECF Nos. 244, 246, respectively), to which Premier has replied (ECF Nos. 245, 250, respectively). On September 30, 2022, Premier filed a Motion for Attorneys' Fees (ECF No. 248), prompting Allegiance's opposition (ECF No. 251) followed by Premier's reply (ECF No. 252.)

On January 20, 2023, Premier filed a Motion to Compel Expert Fees (ECF No. 257), which Allegiance opposes (ECF No. 263).^[1]Premier timely replied to Allegiance's opposition. (ECF No. 265.)

Premier's motions are fully briefed and ripe for review.

II. PREMIER'S MOTION FOR PREJUDGMENT INTEREST

Premier asserts that an award of prejudgment interest is appropriate in this matter, and it requested the same in its Second Amended Complaint. (Premier Mot. Prejud. Interest, ECF No. 242; 2d Am. Compl. at 16, ECF No. 46.)

The leading Sixth Circuit case on prejudgment interest under the Copyright Act is Robert R. Jones Assocs., Inc. v. Nino Homes, 858 F.2d 274, 282 (6th Cir. 1988). In Robert R. Jones, Judge Martin, writing for a unanimous panel, stated:

The Copyright Act neither expressly allows nor prohibits awarding prejudgment interest in copyright infringement cases. As we stated in Bricklayers', “in the absence of legislative direction, the Supreme Court directed that the decision to grant or deny prejudgment interest should hinge on whether to do so would further the congressional purposes underlying the obligations imposed by the statute in question.”

Robert R. Jones, 858 F.2d at 282 (citations and alterations omitted). While the Sixth Circuit did not explicitly identify the “congressional purposes underlying” the Copyright Act, in vacating the district court's award of prejudgment interest, the Circuit panel's decision turned on two considerations: (1) whether the measure of damages, without accounting for prejudgment interest, suffices to promote innovation; and (2) whether the measure of damages, without accounting for prejudgment interest, deters future copyright infringement. Id. (“We believe the measure of damages applied in this case is clearly sufficient to promote innovation in architectural design and deter unauthorized exploitation of someone else's creative expressions.”)

Two other district courts in this Circuit have tackled the issue of prejudgment interest under the Copyright Act. In Shell v. Lautenschlager, the Northern District of Ohio declined to award prejudgment interest after finding the plaintiff entitled to statutory damages. 2018 U.S. Dist. LEXIS 166573, *11-12 (N.D. Ohio Sep. 27, 2018). In rejecting the plaintiff's request for prejudgment interest, the court first noted that “[w]hen courts have granted prejudgment interest, the underlying awards were based, in full or in part, on actual damages and/or profits, not on statutory damages alone.” Id. at 11 (quoting Broad. Music, Inc. v. Nortel Grill, Inc., 1991 U.S. Dist. LEXIS 18391, *6 (N.Y.W.D. Aug. 27, 1991)). The court then cited approvingly to Murray v. Shaw Indus., Inc., 990 F.Supp. 46, 48 (D. Mass. 1997). Id. at 11-12. In Murray, the Massachusetts District Court declined to award prejudgment interest where the plaintiff did not suffer any direct economic damages (i.e., lost profits or diminution in the value of plaintiff's intellectual property), explaining that “[p]rejudgment interest compensates the plaintiff for the loss of the use of money that would have been hers but for the wrongful conduct of the defendant.” Murray, 990 F.Supp. at 48.

The other district court decision from the Sixth Circuit that addresses prejudgment interest under the Copyright Act is Goldman v. Healthcare Mgmt. Sys., 559 F.Supp.2d 853 (W.D. Mich. June 5, 2008). In Goldman, the Western District of Michigan answered the fundamental question of whether the Copyright Act even permitted a prejudgment interest award. Id. at 863-865. After acknowledging that a majority of federal circuits have found such awards permissible, coupled with the Sixth Circuit's Robert R. Jones decision that “does not clearly and unambiguously state that prejudgment interest is not allowed,” the court concluded that an award of prejudgment interest is appropriate in the following circumstance:

In the event that actual damages, profits, costs and attorney fees are insufficient to provide the sort of deterrent intended by Congress, this Court should be able to award prejudgment interest.

Goldman, 559 F.Supp.2d at 865.

Before the Court is such a case. Following the Court's Order granting summary judgment in Premier's favor on its copyright infringement claim, Allegiance continued to exploit Premier's certificate:

Q. Now, this product that we've been talking about, Tricor has continued to distribute it and Allegiance has continued to administer it since the Court's ruling on July 29th, 2022 -- or '21, excuse me; right?

A. Correct.

(Murphy Dep. at 67:19-24, ECF No. 191-1.)

In Robert R. Jones, the Sixth Circuit reversed and vacated the district court's award of prejudgment interest because the measure of damages was “clearly sufficient to promote innovation” and “deter unauthorized exploitation of someone else's creative expressions.” Robert R. Jones, 858 F.2d at 282. In contrast to Robert R. Jones, the Court's monetary award here is clearly in sufficient to deter Allegiance from exploiting Premier's “creative expressions”-namely, Premier's LPLP Certificates. Allegiance's corporate representative's deposition testimony demonstrates that, despite the Court finding Allegiance liable for copyright infringement Allegiance...