Filed: Feb. 16, 2016
Latest Update: Mar. 02, 2020
Summary: 14-3123-cv CBS Broadcasting v. FilmOn.com Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2015 (Argued: August 31, 2015 Decided: February 16, 2016) Docket No. 14-3123-cv _ CBS BROADCASTING INC., NBC STUDIOS, INC., UNIVERSAL NETWORK TELEVISION, LLC, NBC SUBSIDIARY (KNBCTV), INC., TWENTIETH CENTURY FOX FILM CORPORATION, FOX TELEVISION STATIONS, INC., ABC HOLDING COMPANY, INC., DISNEY ENTERPRISES, INC., NBC STUDIOS LLC, NBC SUBSIDIARY (KNBCTV) LLC, AMERICAN BROADCASTING COMP
Summary: 14-3123-cv CBS Broadcasting v. FilmOn.com Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2015 (Argued: August 31, 2015 Decided: February 16, 2016) Docket No. 14-3123-cv _ CBS BROADCASTING INC., NBC STUDIOS, INC., UNIVERSAL NETWORK TELEVISION, LLC, NBC SUBSIDIARY (KNBCTV), INC., TWENTIETH CENTURY FOX FILM CORPORATION, FOX TELEVISION STATIONS, INC., ABC HOLDING COMPANY, INC., DISNEY ENTERPRISES, INC., NBC STUDIOS LLC, NBC SUBSIDIARY (KNBCTV) LLC, AMERICAN BROADCASTING COMPA..
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14‐3123‐cv
CBS Broadcasting v. FilmOn.com Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2015
(Argued: August 31, 2015 Decided: February 16, 2016)
Docket No. 14‐3123‐cv
________________________________________________________________________
CBS BROADCASTING INC., NBC STUDIOS, INC., UNIVERSAL NETWORK TELEVISION,
LLC, NBC SUBSIDIARY (KNBCTV), INC., TWENTIETH CENTURY FOX FILM
CORPORATION, FOX TELEVISION STATIONS, INC., ABC HOLDING COMPANY, INC.,
DISNEY ENTERPRISES, INC., NBC STUDIOS LLC, NBC SUBSIDIARY (KNBCTV) LLC,
AMERICAN BROADCASTING COMPANIES, INC., BIG TICKET TELEVISION, INC., CBS
STUDIOS INC., OPEN 4 BUSINESS PRODUCTIONS LLC,
Plaintiffs‐Appellees,
‐ v. ‐
FILMON.COM, INC.,
Defendant‐Appellant,
ALKIVIADES DAVID,
Respondent‐Appellant.
________________________________________________________________________
1
Before:
HALL, LIVINGSTON, and LOHIER, Circuit Judges.
Appeal from a judgment of the United States District Court for the
Southern District of New York (Buchwald, J.) holding Defendant‐Appellant
FilmOn.com, Inc. and Respondent‐Appellant Alkiviades David in contempt,
sanctioning FilmOn.com, Inc. $90,000, and awarding Plaintiffs‐Appellees
attorneys’ fees. Appellants argue that the district court abused its discretion
when it held them in contempt because the injunction was not clear and
unambiguous and they diligently attempted to comply with the injunction in a
reasonable manner. Appellants further contend that the district court abused its
discretion by imposing criminal sanctions and by awarding attorneys’ fees. The
district court did not abuse its discretion when holding both FilmOn.com, Inc.
and David in contempt, sanctioning FilmOn.com, Inc., and awarding attorneys’
fees.
AFFIRMED.
RYAN G. BAKER,
Baker Marquart LLP, Los Angeles, CA, for
Defendant‐Appellant FilmOn.com Inc. and
Respondent‐Appellant Alkiviades David.
ROBERT ALAN GARRETT,
Peter L. Zimroth (on the brief), Arnold &
Porter LLP, New York, NY, for Plaintiffs‐
Appellees CBS Broadcasting et al.
Julie A. Shepard and Paul M. Smith (on the
brief), Jenner & Block LLP, Washington,
DC, for Plaintiffs‐Appellees Twentieth Century
Fox Film Corporation and Fox Television
Stations, Inc.
2
HALL, Circuit Judge:
FilmOn.com, Inc. (“FilmOn”) and FilmOn’s Chief Executive Officer,
Alkiviades David (“David”), appeal from an August 15, 2014 judgment entered
in the United States District Court for the Southern District of New York
(Buchwald, J.) pursuant to a decision holding FilmOn and David in contempt of
an August 8, 2012 Consent Order of Judgment and Permanent Injunction (the
“Injunction”). The Injunction prohibited FilmOn from distributing copyrighted
content owned by Plaintiffs‐Appellees (collectively, the “Plaintiffs”)—a group of
television networks including CBS Broadcasting Inc., NBC Studios LLC, Fox
Television Stations, Inc., and ABC Holding Company Inc. On July 7, 2014, the
district court ordered FilmOn and David to show cause why the district court
should not hold FilmOn in contempt for violating the Injunction because FilmOn
had used its Teleporter technology (“Teleporter System”) to distribute the
Plaintiffs’ copyrighted television programs without the Plaintiffs’ permission.
The district court found that FilmOn had violated the Injunction and held both
FilmOn and David in civil contempt, sanctioned FilmOn $90,000, and awarded
the Plaintiffs attorneys’ fees. On appeal, FilmOn and David argue that the district
court abused its discretion when it held them in contempt, sanctioned FilmOn,
3
and awarded the Plaintiffs attorneys’ fees. For the reasons stated below, we
affirm the district court’s decision.
I. BACKGROUND
In 2010, FilmOn launched a service that allowed subscribers to use a
computer or mobile device to stream an assortment of television stations over the
Internet. The Plaintiffs sued FilmOn for copyright infringement and sought a
temporary restraining order. In response, FilmOn argued that it was operating as
a cable system and therefore it qualified for a Section 111 compulsory license
under the Copyright Act, 17 U.S.C. § 111.1 The district court granted the
temporary restraining order, and in July 2012 the parties entered into a
settlement agreement (the “2012 Settlement Agreement”) which was executed by
David in his personal capacity and on behalf of FilmOn. The district court
1 Section 111(c)(1) of the Copyright Act provides that “secondary transmissions
to the public by a cable system of a performance or display of a work embodied
in a primary transmission made by a broadcast station licensed by the Federal
Communications Commission [“FCC”] . . . shall be subject to statutory
licensing.” 17 U.S.C. § 111(c)(1). If the FCC determines that FilmOn is a cable
system under the Copyright Act then FilmOn will qualify for a Section 111
license and be entitled to transmit the Plaintiffs’ copyrighted content, subject to
fees and restrictions imposed on Section 111 license holders.
4
approved the 2012 Settlement Agreement and then entered it as a stipulated
consent judgment and the Injunction.
The Injunction prevents FilmOn and its “affiliated companies, and all of its
officers, directors, agents . . . from infringing, by any means, directly or
indirectly, any of plaintiffs’ exclusive rights under Section 106(1)‐(5) of the
Copyright Act, including but not limited to through the streaming over mobile
telephone systems and/or the Internet.” App. 175. The injunction explicitly
provides that any violation of its provisions would expose FilmOn to “all
applicable penalties, including contempt of Court.” Id.
After consenting to the Injunction, FilmOn began offering its subscribers a
video on demand (VOD) service which allowed users to access an archive of
previously televised programs for streaming at any time. In July 2013, the
Plaintiffs sought an order to show cause why FilmOn should not be held in
contempt for violating the Injunction. The district court found FilmOn and David
in contempt for the unauthorized VOD streaming of the Plaintiffs’ programming.
The district court issued a contempt judgment (“2013 Contempt Judgment”) that
required defendants to agree not to use the VOD system to stream any of the
Plaintiffs’ copyrighted programming and to remove all broadcast programming
5
identified by the Plaintiffs. In addition, the 2013 Contempt Judgment awarded
the networks $115,046.10 in attorneys’ fees and provided that “any further failure
to comply with the Injunction [] shall be punishable by a penalty of $10,000 per
day of noncompliance.” App. 269.
After the 2013 Contempt Judgment was entered, FilmOn X2—FilmOn’s
sister company—deployed a new Teleporter technology which FilmOn alleges
was specifically designed to comply with the Injunction and this Circuit’s
decision in Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008)
(“Cablevision”) while still providing copyrighted content to users. In Cablevision
we held that a remote storage DVR system allowing users to record and store
programming on hard drives did not violate the public performance rights of
copyright owners. Id. at 140. FilmOn’s Teleporter System leveraged this remote
storage DVR technology to allow consumers to view television content over the
Internet at essentially the same time that the content was being broadcast over
the airwaves.
2 We refer to FilmOn.com, Inc. and FilmOn X collectively as “FilmOn” because
FilmOn X is an “affiliated compan[y]” and is thus subject to the terms of the
Injunction. App. 175.
6
Other companies began using similar technology in an attempt to comply
with the law and to deliver copyrighted content to users over the Internet. The
television networks challenged the use of this technology—this time by suing the
company Aereo, Inc.—and this Court determined that the technology did not
infringe upon the networks’ copyrights because the technology was analogous to
the technology in Cablevision. WNET, Thirteen v. Aereo, Inc., 712 F.3d 676, 696 (2d
Cir. 2013) (“Aereo II”). Because FilmOn’s Teleporter System is essentially the
same as Aereo’s technology, this decision arguably made clear that FilmOn could
deploy its Teleporter System to distribute copyrighted material throughout the
geographic scope of the Second Circuit.
In an attempt to prevent FilmOn from deploying this technology
nationwide, the Plaintiffs filed copyright infringement actions in California and
in the District of Columbia. The California District Court enjoined FilmOn from
using the Teleporter technology within the Ninth Circuit, Fox Television Stations,
Inc. v. BarryDriller Content Sys., PLC, 915 F. Supp. 2d 1138, 1151 (C.D. Cal. 2012),
and on September 5, 2013, the D.C. District Court issued another injunction
enjoining FilmOn from deploying the Teleporter technology nationwide, Fox
Television Stations, Inc. v. FilmOn X LLC, 966 F. Supp. 2d 30, 52 (D.D.C. 2013). Due
7
to our decision in Aereo II, the D.C. District Court’s nationwide injunction
explicitly did not apply within the geographic boundaries of the Second Circuit.
Id. After deployment of the Teleporter System within the First Circuit, the D.C.
District Court held FilmOn in contempt for violating its order. The D.C. District
Court warned that it would impose a fine of $20,000 per day for any further
violations of the injunction, noting that FilmOn had once violated the underlying
Injunction in this case. The D.C. Court’s contempt order was never appealed.
On June 25, 2014, the Supreme Court, in American Broadcasting Companies,
Inc., v. Aereo, Inc., reversed this Court’s decision that had arguably demarcated
the Second Circuit as a safe haven for using the Teleporter technology. 134 S. Ct.
2498 (2014) (“Aereo III”). The Supreme Court agreed with the broadcast
networks, including the Plaintiffs, that “Aereo ‘performs’ petitioners’
copyrighted works ‘publicly,’ as those terms are defined in the Transmit Clause.”
Id. at 2511 (alteration omitted). The Court held that the use of the remote storage
DVR technology constituted a public performance of the petitioners’ protected
programming and determined that Aereo’s technology, which was previously
permissible within the geographic scope of the Second Circuit, was now
prohibited under the Copyright Act. Id. at 2507.
8
On June 28, 2014, a few days after the Supreme Court’s decision in Aereo
III, Aereo, Inc. ceased using the prohibited technology. FilmOn, however,
continued to operate its Teleporter System throughout the Second Circuit. On
July 3, 2014, the Plaintiffs filed the underlying Order to Show Cause. Four days
later FilmOn canceled operations of its Teleporter System.
The Plaintiffs argue that, after the Supreme Court’s decision in Aereo III,
FilmOn violated the injunction by using its Teleporter System to broadcast the
Plaintiffs’ copyrighted content within the Second Circuit. The Plaintiffs also
contend that FilmOn transmitted the copyrighted programming to regions
outside the Second Circuit. The district court agreed with the television networks
and held FilmOn and David in civil contempt, sanctioned FilmOn $90,000, and
awarded attorneys’ fees. This appeal followed.
II. DISCUSSION
a. FilmOn’s Contempt Order
We first address whether the district court abused its discretion when it
held FilmOn in contempt. “[B]ecause the power of a district court to impose
contempt liability is carefully limited, our review ‘of a contempt order for abuse‐
of‐discretion is more rigorous than would be the case in other situations in which
9
abuse of discretion review is conducted.’” E.E.O.C. v. Local 638, 81 F.3d 1162, 1171
(2d Cir. 1996) (quoting United States v. Local 1804‐1, Int’l Longshoremen’s Ass’n, 44
F.3d 1091, 1096 (2d Cir. 1995)). We review the district court’s interpretation of the
terms of a consent decree de novo and the factual findings that were the basis for
the contempt order for clear error. Perez v. Danbury Hosp., 347 F.3d 419, 423 (2d
Cir. 2003).
The contempt power serves to “protect[] the due and orderly
administration of justice and [to] maintain[] the authority and dignity of the
court.” Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980). A court may hold a
party in contempt if (1) the order the party failed to comply with is clear and
unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the
party has not diligently attempted to comply in a reasonable manner. Paramedics
Electromedicina Commercial, Ltd. v. GE Med Sys. Info. Techs. Inc., 369 F.3d 645, 655
(2d Cir. 2004).
The Injunction prohibits FilmOn, its “affiliated companies,” “officers,” and
others:
from infringing, by any means, directly or indirectly,
any of plaintiffs’ exclusive rights under Section 106 (1)‐
(5) of the Copyright Act including but not limited to
10
through the streaming over mobile telephone systems
and/or the Internet of any of the broadcast television
programming in which any plaintiff owns a copyright.
App. 144.
i. Clear and Unambiguous
An injunction is sufficiently clear and unambiguous if it leaves “no doubt
in the minds of those to whom it was addressed . . . precisely what acts are
forbidden.” Drywall Tapers & Pointers v. Local 530, 889 F.2d 389, 395 (2d Cir. 1989).
Here, a violation of the Injunction is conditioned on any violation of the
Copyright Act. App. 144. Whether the Injunction is clear and unambiguous is
thus directly related to whether the Plaintiffs’ exclusive rights under the
Copyright Act were clear and unambiguous. We hold that they were.
FilmOn, nevertheless, argues that the Injunction is unclear and ambiguous
because the Plaintiffs’ exclusive rights under the Copyright Act were in flux and
were uncertain. In particular, FilmOn contends that Aereo III destroyed the state
of clarity surrounding the Plaintiffs’ copyrights and created confusion as to
whether their Teleporter System now qualified for a Section 111 license. Given
this confusion, it was unclear whether FilmOn’s continued deployment of the
Teleporter System would infringe on the Plaintiffs’ rights. Because Aereo’s
11
technology and FilmOn’s technology are nearly identical, FilmOn argues that
dicta in the Aereo III decision comparing Aereo to a cable company cast doubt on
whether the current regulatory regime is properly classifying their technology.
FilmOn’s arguments are unpersuasive. Regarding Section 111, we note that
at no point in time has FilmOn obtained a Section 111 license. Although at some
point in the future FilmOn’s technology may eventually qualify for a Section 111
license, under the current law of the Second Circuit “Internet retransmission
services do not constitute cable systems under § 111.” WPIX, Inc. v. ivi, Inc., 691
F.3d 275, 284 (2d Cir. 2012) (“ivi”).3 And whatever future door Aereo III may have
opened regarding Section 111 licensing, there is no doubt that the Supreme
Court’s holding explicitly slammed shut the possibility that FilmOn could
continue deploying the Teleporter System throughout the Second Circuit, absent
3 To the extent that Aereo III calls our holding in ivi into question, we note, as the
district court did, that the Court in Aereo III did not address ivi or its holding and
therefore it remains controlling precedent. See United States v. Mason, 412 U.S.
391, 395 (1973). We decline to speculate on whether the Supreme Court or the
Federal Communications Commission will, in the future, determine whether this
technology qualifies as a cable system under Section 111 of the Copyright Act,
and we decline to revisit our holding in ivi absent a case or controversy that
presents us with that issue. The issue before us is not whether FilmOn is entitled
to a Section 111 license; it is whether the Plaintiffs’ exclusive rights under the
Copyright Act were clear and unambiguous so as to allow the district court to
hold FilmOn in contempt for violating those rights.
12
a license, without violating the Copyright Act. Aereo III explicitly held that this
type of technology “performed” petitioner’s copyrighted works “publicly” and
therefore violated the Copyright Act. Aereo III at 2511. The injunction, sufficiently
clear and unambiguous on its own, became even more so after Aereo III such that
there should have been “no doubt in the minds of those to whom it was
addressed” that deploying the Teleporter System was “forbidden.” Drywall, 889
F.2d at 395.
ii. Clear and Convincing Proof of Noncompliance
The district court did not err when it determined that the proof of
FilmOn’s noncompliance was supported by clear and convincing evidence. Aereo
III made clear that deploying the Teleporter System within the Second Circuit
would violate the Plaintiffs’ copyright. FilmOn admits that it deployed its
Teleporter System in the Second Circuit between June 28, 2014 and July 7, 2014.
This admission belies any claim of error.
iii. Diligent Attempt to Comply in a Reasonable Manner
The district court also did not err when it found that FilmOn did not
diligently attempt to comply with the Injunction in a reasonable manner. FilmOn
correctly understood that Aereo III materially changed the Plaintiffs’ exclusive
13
copyrights under the Injunction. FilmOn incorrectly took it upon itself to
interpret that change. If FilmOn, being already subject to an injunction barring it
from infringing the Plaintiffs’ copyrights, wanted to ensure that it remained in
compliance with the Injunction, it “could have petitioned the District Court for a
modification, clarification or construction of the order.” McComb v. Jacksonville
Paper Co., 336 U.S. 187, 192 (1949). Instead, it “undertook to make [its] own
determination” of what the Plaintiffs’ rights were. Id. Rather than petitioning the
district court for clarification, FilmOn issued a press release announcing its plans
to file for a Section 111 license, to continue deploying the Teleporter System in
New York and to expand its use nationwide.
Irrespective of whether FilmOn will eventually qualify for a Section 111
license, the fact that it applied for a license is not evidence that it acted in a
reasonable manner under the circumstances. As noted above, FilmOn did not
possess a Section 111 license at the time it deployed its Teleporter System, nor
did it even apply for one until after the Plaintiffs filed the underlying Order to
Show Cause. Moreover, because the district court had already rejected FilmOn’s
Section 111 argument before the Injunction was initially issued, the only prudent
14
decision would have been to approach the District Court and argue that the law
had changed in FilmOn’s favor. FilmOn took no such action.
Considering FilmOn’s history of misreading changes in federal copyright
law and being held in contempt for violating multiple federal injunctions both in
this Circuit and in the D.C. Circuit, a response by FilmOn to the Aereo III decision
that diligently attempted to comply with the Injunction should have included
proceeding with caution. Rather than following Aereo Inc.’s lead and
suspending operations, however, FilmOn cavalierly doubled down and
continued deploying the Teleporter System throughout the Second Circuit with
plans to expand. Although it is true that Aereo III may have altered the Plaintiffs’
exclusive rights under the Copyright Act, FilmOn’s response to this change was
not a diligently reasonable attempt to comply with the Injunction under which it
was already required to operate. We conclude that the district court did not
abuse its discretion by holding FilmOn in civil contempt.
b. David’s Contempt Order
We next address whether the district court abused its discretion when it
held Mr. David in contempt. The Injunction not only enjoins FilmOn but also “all
of its officers, directors, agents, servants and employees.” App. 175. A command
15
to a company is in “effect a command to those who are officially responsible for
the conduct of its affairs.” NLRB v. Hopwood Retinning Co., 104 F.2d 302, 305 (2d
Cir. 1939) (“Hopwood”) (quoting Wilson v. United States, 221 U.S. 361, 376 (1911)).
Even when corporate officers are not a party to the original action, if they
“prevent compliance or fail to take appropriate action within their power for the
performance of the corporate duty, they, no less than the corporation itself, are
guilty of disobedience, and may be punished for contempt.” Hopwood, 104 F.2d at
305.
According to his own statement opposing the district court’s order, David
had the ability to prevent FilmOn from deploying the Teleporter System. In
addition, FilmOn’s Chief Technology Officer, Mykola Kutovyy, stated in a
declaration that David, as CEO, had previously directed him to limit the
geographic scope in which the technology could function. This evidence
supports the district court’s conclusion that David both had the power to force
FilmOn to comply and failed to “take appropriate action within [his] power” to
prevent FilmOn from violating the injunction. Id. at 305. The district court did
not abuse its discretion by holding David in contempt for FilmOn’s violation of
the injunction.
16
c. Sanctions
We now turn to the issue of sanctions. We review the district court’s award
of sanctions for abuse of discretion. United States v. Seltzer, 227 F.3d 36, 39 (2d Cir.
2000) (“This Court reviews all aspects of a District Court’s decision to impose
sanctions for abuse of discretion.” (internal quotation omitted)). A “court’s
interest in protecting the integrity of [a consent] decree justifies any reasonable
action taken by the court to secure compliance.” NLRB v. Local 3, Int’l Bhd. of
Elect. Workers, 471 F.3d 399, 406 (2d Cir. 2006) (“Local 3”) (quoting United States v.
Local 359, 55 F.3d 64, 69 (2d Cir. 1995)). This “inherent power” to enforce a
consent judgment extends “beyond the remedial contractual terms agreed upon
by the parties.” Id. (internal quotation omitted). This power, however, has limits.
A district court cannot impose criminal sanctions without affording a defendant
the constitutional procedural protections of a jury trial. Int’l Union, United Mine
Workers of Am. v. Bagwell, 512 U.S. 821, 837–38 (1994) (“Bagwell”). FilmOn argues
that the district court imposed criminal sanctions which transformed the civil
contempt into a criminal contempt, and thus that the sanctions could not be
17
imposed absent a jury trial. We must now determine whether the district court’s
sanctions were criminal or civil in nature. 4
The nature of a contempt “turns on the character and purpose of the
sanction” issued in response to the contemptuous conduct. New York State Nat’l
Org. for Women v. Terry, 159 F.3d 86, 93 (2d Cir. 1998). Criminal sanctions “are
intended primarily to punish the contemnor and vindicate the authority of the
court.” Id. Civil sanctions have two purposes: to coerce compliance with a court
order and to compensate a plaintiff. Local 28 of Sheet Metal Workers’ Int’l Ass’n v.
E.E.O.C., 478 U.S. 421, 443 (1986). A sanction coerces a defendant when it
“force[s] the contemnor to conform his conduct to the court’s order.” Terry, 159
F.3d at 93. Where, as here, a sanction does not compensate the party for an injury
caused by the contemptuous act, a sanction is civil only if its purpose is to coerce
the contemnor into compliance. Id. at 95.5
4 Even though the district court stated its intention to issue civil sanctions to
coerce the defendant into compliance with the Injunction, the district court’s
stated purpose is not dispositive of the nature of the contempt. See Bagwell, 512
U.S. at 838.
5 Whether a sanction compensates an injured party becomes irrelevant when
“there is no contention that the fines are intended as compensatory” because
“those facts are no more indicative of a punitive intent than of an intent to coerce
compliance.” Terry, 159 F.3d at 95.
18
In Bagwell, the Supreme Court delineated the nature of coercion in civil
contempts and determined that a hallmark of coercive sanctions was that “the
contemnor is able to purge the contempt and obtain his release by committing an
affirmative act, and thus ‘carries the keys of his prison in his own pocket.’” 512
U.S. at 828 (quoting Gompers v. Buck’s Stove & Range Co., 221 U.S. 418, 442 (1911)).
An opportunity to purge is essential; “[t]hus a flat, unconditional fine totaling
even as little as $50 announced after a finding of contempt is criminal if the
contemnor has no subsequent opportunity to reduce or avoid the fine through
compliance.” Id.at 829. “[A] noncompensatory fine is civil, and thus may
ordinarily be imposed in the absence of a criminal trial only if the contemnor is
afforded an opportunity to purge.” People v. Operation Rescue Nat’l, 80 F.3d 64, 68
n. 7 (2d Cir. 1996) (internal quotation omitted).
Since Bagwell, other courts have applied the opportunity to purge
requirement to serial contemnors. In situations similar to the facts in this case—
where there is an initial injunction, the injunction was violated, there was a
subsequent contempt order that outlined a future per diem fee schedule for
further violations, there was a subsequent violation of the injunction, and then
the contemptuous conduct was purged before the parties appeared before the
19
court—courts have recognized that previous court orders afforded the defendant
an opportunity to purge before entry of the contempt order in dispute. See
Salazar ex rel. Salazar v. District of Columbia, 602 F.3d 431, 438 (D.C. Cir. 2010)
(“Salazar”); NLRB v. Ironworkers Local 433, 169 F.3d 1217, 1221 (9th Cir. 1999)
(“Local 433”).6 Within this context, a court’s sanction does not become criminal
even if the court does not afford the party an additional opportunity to purge
because the sanctions were “prompted by [the] party’s previous failure to
purge.” Local 433, 169 F.3d at 1221. To hold otherwise would negate the coercive
purpose of prospective fee schedules, and “compliance with laws or orders could
never be brought about by fines in civil contempt proceedings.” Id. (quotation
omitted). Recognizing that repeated findings of contempt, with proper notice of
daily prospective fees, provides the defendant with an adequate opportunity to
purge comports with Bagwell’s underlying concern of protecting “the due process
rights of parties and prevent[ing] the arbitrary exercise of judicial power.”
Bagwell, 512 U.S at 834.
6 Although many civil contempt cases post‐Bagwell involve administrative
agencies exercising their statutory authority to issue civil sanctions and the
Bagwell Court confined itself to limiting an Article III court’s inherent civil
contempt power, Bagwell, 512 U.S. at 838, these cases are instructive as to the
coercive character of prospective per diem fee schedules.
20
Additional factors illuminate the punitive or coercive nature of sanctions
and highlight the concerns connected to a court’s exercise of its inherent
contempt authority. The sheer size of the sanction is indicative of whether the
sanction is intended to punish or to coerce a contemnor and whether there is a
“need for the protection of the defendant in the adjudication process.” Terry, 159
F.3d at 94. Further, a district court’s civil contempt power waxes when the
contemptuous act occurs in its presence and wanes when the act occurs outside
of court. Bagwell, 512 U.S. at 833–34. The dangers related to the abuse of judicial
authority are of particular concern when the contempt involves “out‐of‐court
disobedience to complex injunctions [because they] often require elaborate and
reliable factfinding.” Id. When the contempt involves a simple disobedient act,
however, the “risk of [an] erroneous deprivation from the lack of a neutral
factfinder” is diminished, and a court’s ability to exercise its inherent civil
contempt power is amplified. Id. at 834. Determining the purpose of a sanction is
a fact‐specific inquiry that must be understood in the context of each individual
case. See Terry, 159 F.3d at 94 (analyzing the purpose of sanctions “in the context
of this case”). Within this framework, and considering these factors, we now
address the district court’s sanctions.
21
We hold that the district court’s sanctions were civil in nature because the
purpose of the sanctions was to coerce FilmOn into future compliance. The
district court sanctioned FilmOn $90,000 for violating the Injunction. It calculated
the sanction amount by using the $10,000 per day fee schedule from the 2013
Contempt Judgment and by fining FilmOn for every day that it had deployed the
Teleporter System after Aereo Inc. had ceased deploying its analogous
technology. Although the district court’s stated rationale is not dispositive of the
issue, Bagwell, 512 U.S. at 838, the district court here noted FilmOn’s repeated
disregard for federal injunctions and recognized the heightened importance of
ensuring FilmOn’s compliance.
As the district court explained, the sanctions were issued in response to
FilmOn’s repeated violation of the Injunction and similar injunctions throughout
the country. FilmOn received notice in the 2013 Contempt Judgment that any
further violation of the Injunction would result in daily sanctions. Accordingly,
the Fee Schedule was a coercive tool to keep FilmOn in compliance. Once
FilmOn disobeyed the Injunction, the district court gave effect to this coercive
tool by sanctioning FilmOn. Moreover, the fact that the Injunction will continue
to remain in effect further suggests that the purpose of the sanctions was to
22
ensure future compliance with the Injunction. See Local 433, 169 F.3d at 1221
(“[F]ines for completed conduct still have a remedial purpose when the court
order remains in place and future compliance is sought.”). The district court’s
“civil contempt powers are particularly adapted to curb recidivist offenders”
where future noncompliance is a well‐founded concern. Id. FilmOn’s history of
aggressively pushing the bounds of the Injunction and of repeatedly neglecting
to petition the district court for clarifications further highlights the sanction’s
coercive purpose and effect.
The fact that the sanctions were issued after FilmOn had ceased violating
the Injunction does not transform them into retrospective, punitive penalties
because FilmOn had the opportunity to purge its contemptuous conduct. First,
FilmOn violated the Injunction through its dissemination of the VOD service.
Then, FilmOn was held in contempt in 2013 and was given notice of the
prospective fee schedule, after which it had an opportunity to purge its conduct.
FilmOn in fact arguably purged its conduct by deploying the Teleporter System
in an attempt to comply with this Circuit’s interpretation of the Copyright Act’s
public performance provision. See Cablevision 536 F.3d at 140; Aereo II, 712 F.3d at
705. After Aereo III, however, FilmOn’s use of the technology clearly violated the
23
Injunction. FilmOn did not come into compliance until nine days after Aereo Inc.
had halted its activities. The series of contempt orders, containing notice of daily
prospective fines, was followed by a clear violation of the Injunction. FilmOn
was afforded an opportunity to purge its conduct after Aereo III, but did not do
so. See Salazar, 602 F.3d at 438; Local 433, 169 F.3d at 1221. The district court was
not required to give FilmOn an additional opportunity to purge before issuing
the sanctions because these fines were prompted by FilmOn’s previous failure to
purge.
Although the contemptuous behavior occurred outside of the courtroom,
the sanctions did not pertain to “widespread, ongoing . . . violations of a complex
injunction” and the district court did not have to police FilmOn’s “compliance
with an entire code of conduct that the court itself had imposed.” Bagwell, 512
U.S at 837. The injunction was relatively simple, and although copyright law is
subject to change, the particular shift in law at issue here could be applied clearly
and predictably to FilmOn because its Teleporter System was essentially
identical to the technology that was determined to violate the Copyright Act in
Aereo III. Finally, the sanction totaled $90,000, a relatively minor amount which is
not large enough to “warrant concern with the adjudication process.” Terry, 159
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F.3d at 95. This reaffirms our conclusion that the district court’s sanctions were
civil. The district court did not abuse its discretion when it sanctioned FilmOn
$90,000 for failing to comply with the Injunction.
d. Attorneys’ Fees
Finally, FilmOn argues that the district court abused its discretion by
awarding attorneys’ fees to the appellees. This Court reviews an “award of
attorney’s fees for abuse of discretion, which occurs when (1) [the court’s]
decision rests on an error of law… or clearly erroneous factual finding, or (2) its
decision cannot be located within the range of permissible decisions.” McDaniel
v. Cnty. of Schenectady, 595 F.3d 411, 416 (2d Cir. 2010) (internal quotation
omitted). In the original 2012 Settlement Agreement the Plaintiffs, FilmOn and
David agreed that “[i]n the event of a dispute arising out of or relating to the
terms of this [2012 Settlement] Agreement or [the Injunction], the prevailing
party shall be entitled to recover its reasonable attorneys’ fees and costs.” App.
156. The plain language of this agreement allows for an award of attorneys’ fees
because this matter is related to the terms of the Injunction. We find no abuse of
discretion in the district court’s award of attorneys’ fees.
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III. Conclusion
For the foregoing reasons, we AFFIRM the district court’s decision.
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