Tvt Records v. Island Def Jam Music Group

279 F.Supp.2d 413

TVT RECORDS and TVT Music, Inc., Plaintiffs, v. The ISLAND DEF JAM MUSIC GROUP and Lyor Cohen, Defendants.

The Island Def Jam Music Group, a Division of UMG Recordings, Inc., Counterclaimant, v. TVT Records, Inc. and Steve Gottlieb, Counterclaim-Defendants.

No. 02 CIV. 6644(VM).

United States District Court, S.D. New York.

September 2, 2003.

James E. d'Auguste, James Philip Chou, Akin, Gump, Strauss, Hauer & Feld, L.L.P., New York, NY, Peter L. Haviland, Rhonda R. Trotter, Akin Gump Strauss Hauer & Feld, LLP, Los Angeles, CA, Tuneen E. Chisolm, Akin, Gump, Strauss Hauer & Feld, L.L.P., New York, NY, for TVT Records, TVT Music, Inc.

Michael T. Mervis, Proskauer Rose LLP, Mary Mulligan, Esq., Universal Music Group, New York, NY, for the Island DEF Jam Music Group.

Robert J. Eddington, Proskauer Rose LLP, Michael T. Mervis, Alexander Kaplan, Proskauer Rose LLP, Mary Mulligan, Esq., Universal Music Group, Matthew S. Dontzin, James M La Rossa, New York, NY, for Lyor Cohen.

DECISION AND ORDER

MARRERO, District Judge.

TABLE OF CONTENTS
                                                                           Page
                                                                           ----
  I. BACKGROUND ............................................................416
 II. THE VERDICT ...........................................................416
III. DEFENDANTS' CHALLENGE .................................................417
     A. THE LARGER DEBATE ..................................................417
        1. History .........................................................418
        2. Functions and Distinctions of Remedial Damages ..................422
        3. Enduring Concerns Over Punitive Damages .........................426
           a. Lower Protective Standards ...................................426
           b. Minimal Jury Guidance ........................................427
           c. Improper Considerations ......................................428
           d. Windfalls ....................................................428
           e. Encouraging or Prolonging Unnecessary Litigation .............429
           f. Overdeterrence ...............................................429
           g. Defendant's Wealth ...........................................430
           h. Indemnification ..............................................430
           i. Limitations of Judicial Review ...............................430
           j. Punitive Damages "Crisis" ....................................431
     B. PUNITIVE DAMAGES JURISPRUDENCE .....................................432
        1. Reprehensibility ................................................437
           a. Misconduct ...................................................437
           b. Injuries .....................................................438
           c. Nature of the Parties and Their Relationship .................438
        2. Proportionality .................................................440
        3. Aggravating or Mitigating Circumstances .........................440
           a. Similar or Related Misconduct ................................440
           b. Penalties in Comparable Cases ................................440
     C. APPLICATION OF PUNITIVE DAMAGES DOCTRINE TO THE
         INSTANT CASE ..................................................441
        1. The Jury Instructions ...........................................441
        2. Application of Functions and Variables ..........................442
           a. Reprehensibility .............................................442
              (i) Misconduct ...............................................442
             (ii) Injuries .................................................443
            (iii) Relationships ............................................444
           b. Proportionality ..............................................449
           c. Aggravating or Mitigating Circumstances ......................452
              (i) Other Related Conduct ....................................452
             (ii) Litigation Costs .........................................453
            (iii) Penalties in Comparable Cases ............................454
           d. Conclusion ...................................................455

IV. REMITTITUR ............................................................456
     A. COHEN'S NET WORTH AND ABILITY TO PAY ...............................456
     B. REMITTITUR AS TO COHEN .............................................461
     C. REMITTITUR AS TO IDJ ...............................................461
 V. ORDER .................................................................461

I. BACKGROUND

In a bifurcated trial of this action, the jury returned a verdict in favor of plaintiffs TVT Records and TVT Music, Inc. (collectively "TVT") finding liability against defendant The Island Def Jam Music Group ("IDJ") for breach of contract and against IDJ and its Chairman, Lyor Cohen ("Cohen," and collectively with IDJ, the "Defendants") for tortious interference with contractual relations, fraud by fraudulent concealment, and willful copyright infringement. The same jury, at the damages phase, assessed compensatory and punitive damages against Defendants in the aggregate amount of approximately $132 million.

Defendants filed post-trial motions for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(b), and for a new trial and/or remittitur pursuant to Fed.R.Civ.P. 59. By Decision and Order titled TVT Records v. The Island DEF Jam Music Group, ___ F.Supp.2d ___, 2003 WL 22056304, No. 02 Civ. 6644(VM), slip op. (S.D.N.Y. September 2, 2003) (the "Post-Trial Motions Decision"), issued simultaneously with and accompanying the instant ruling, the Court denied the motions for judgment as a matter of law and for a new trial.¹ Defendants' motions for remittitur are addressed separately in this decision. For the reasons discussed below, Defendants' motions for remittitur are GRANTED.

II. THE VERDICT

The facts and events that gave rise to this litigation and upon which the jury's determination of liability and damages is predicated are summarized in the accompanying Post-Trial Motions Decision, supra, addressing the parties' other post-trial requests for relief, as well as in numerous prior rulings of this Court resolving other aspects of the case.² Portions of this background are recited below as necessary for the purposes of the motions at hand.

The compensatory and punitive damages awards the jury returned in respect of TVT's various claims are summarized in the following chart:

-------------------------------------------------------------------------------------------------------
|            CLAIMS              |          COMPENSATORY           |              PUNITIVE            |
|                                |---------------------------------|----------------------------------|
|                                |      IDJ       |       Cohen    |         IDJ      |     Cohen     |
|--------------------------------|----------------|----------------|------------------|---------------|
| 1. Breach of Contract:         | $     126,720  |  $    N/A      |   $   1,000,000  |  $     N/A    |
|                                |                |                |                  |               |
|    General Damages:    $50,994 |                |                |                  |               |
|                                |                |                |                  |               |
|    Special Damages:            |                |                |                  |               |
|                                |                |                |                  |               |
|      Lost Profits:      30,290 |                |                |                  |               |
|                                |                |                |                  |               |
|      Goodwill:          45,436 |                |                |                  |               |
|                                |                |                |                  |               |
| 2. Tortious Interference with  |                |                |                  |               |
|    Contractual Relations:      |     22,358,713 |     22,358,713 |       50,000,000 |    50,000,000 |
|--------------------------------|----------------|----------------|------------------|---------------|
|    General Damages:         $0 |                |                |                  |               |
|                                |                |                |                  |               |
|    Special Damages:            |                |                |                  |               |
|                                |                |                |                  |               |
|      Lost Profits:  10,358,713 |                |                |                  |               |
|                                |                |                |                  |               |
|      Goodwill:      12,000,000 |                |                |                  |               |
|                                |                |                |                  |               |
| 3. Fraudulent Concealment:     |      1,011,313 |      1,011,313 |        1,000,000 |     6,000,000 |
|                                |                |                |                  |               |
| 4. Copyright Infringement:3    |                |                |                  |               |
|                                |                |                |                  |               |
|    "The Rain"                  |        409,375 |        409,375 |           N/A    |          N/A  |
|                                |

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