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Nunes v. Rushton

United States District Court, D. Utah

March 9, 2018

RACHEL NUNES Plaintiff,
v.
TIFFANIE RUSHTON Defendant.

          MEMORANDUM DECISION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT AND MOTIONS IN LIMINE

          JILL N. PARRISH, UNITED STATES DISTRICT COURT JUDGE

         Rachel Nunes sued Tiffanie Rushton for copyright infringement, defamation, and a number of additional causes of action. Before the court are cross-motions for summary judgment brought by Rushton and Nunes. Rushton brings a motion for partial summary judgment as to actual damages under the copyright claim and for summary judgment as to the defamation, defamation per se, false light, business disparagement, tortious interference with economic relations, electronic communication harassment, false advertising, and Utah deceptive trade practices claims. [Docket 172]. Rushton also moves to exclude several of Nunes's expert witnesses. [Docket 158, 168, 169, 170, 171]. Nunes seeks summary judgment on her copyright claim [Docket 218], defamation claims [Docket 228], electronic communication harassment claim [Docket 229], false advertising claims [Docket 230], and tortious interference claim. [Docket 231]. Nunes also brings separate motions for summary judgment as to Rushton's insanity defense [Docket 160] and her affirmative defenses of unclean hands, comparative fault, bad faith, failure to mitigate damages, estoppel, and laches. [Docket 161].

         The court grants partial summary judgment in favor of Nunes on the issue of liability for copyright infringement and partial summary judgement in favor of Rushton on the issue of actual damages under the copyright claim. The court also grants summary judgment in favor of Rushton on the defamation, defamation per se, false light, business disparagement, tortious interference with economic relations, electronic communication harassment, false advertising, and Utah deceptive trade practices claims. Finally, the court grants Nunes's motions for summary judgment on Rushton's affirmative defenses and denies as moot Rushton's various motions in limine. Thus, the only issue remaining for trial is the amount of the statutory damages award for copyright infringement.

         BACKGROUND

         Nunes is a writer who has authored more than fifty novels. She published her novel A Bid for Love in 1998. Nunes registered her copyright to A Bid for Love with the U.S. Copyright Office on September 8, 1998.

         Rushton is also a writer who has published three novels under her pen name, Sam Taylor Mullens. She published her most recent novel, The Auction Deal, between May and July 2014 by distributing between 80 and 90 free copies to reviewers and bloggers for promotional purposes. With the exception of the addition of sex scenes, The Auction Deal is substantially similar to A Bid for Love and shares the same dialog, scenes, characters, themes, settings, and plot.

         In May 2014, Rushton created about fifteen “sock puppet” accounts on Google.com, Yahoo.com, Goodreads.com, and Facebook.com. Rushton registered these accounts under usernames that did not identify her as the individual controlling the accounts. Rushton used her sock puppet accounts to post positive reviews of her previous two novels, Hasty Resolution and Hold You Again. In addition to giving herself positive online reviews, Rushton also posted negative reviews of Nunes's book. In April 2014, Rushton posted a negative Amazon review of A Bid for Love under her own name. In May 2014, Rushton posted three more negative Amazon reviews of A Bid for Love, one under her own name and two under sock puppet names.

         On August 1, 2014, a reader of both A Bid for Love and one of the promotional copies of The Auction Deal contacted Nunes and reported that the two novels were very similar. Other readers subsequently contacted Nunes to notify her of the similarities.

         After Nunes learned of The Auction Deal, she attempted to obtain a copy by requesting it from one of Rushton's sock puppet accounts. In response, Rushton sent Nunes a series of private comments through Goodreads.com. On August 4, 2014, Rushton called Nunes “petty” and her conduct “ridiculous.” On August 5, 2014, Rushton called Nunes's behavior “extremely unprofessional and inappropriate” and threatened to start a protest campaign on the sidewalks of bookstores.

         Rushton pulled The Auction Deal from sale on Amazon.com after Nunes contacted her. Before Rushton stopped selling the book, she purchased two copies for herself. No. other copies of the novel were ever sold to the public.

         Rushton, however, continued to post negative comments about Nunes and her books. On August 6, 2014, Rushton posted another negative review of A Bid for Love under her own name and nine more negative reviews of Nunes's books from sock puppet accounts. Rushton also used sock puppets to give multiple one-star ratings of Nunes's books on Goodreads.com. Rushton made several public comments about Nunes on Facebook, including:

• “I have lost a lot of respect for Rachel Nunes as an author and a person. She harassing [sic] readers/reviewers online. In my eyes, she obviously does not have the character trait of being kind, caring, understanding or compassionate. I have lost a lot of respect for Rachel. Sad day.”
• “Ask your attorneys if in your quest to investigate and have people rally around you if you are guilty of harassment. I think the answer is yes.”
• “I have been harassed by Nunes and her assistant for not supplying her with an ARC [advance review copy].”
• “To ask for a copy from reviewers relentlessly is a form of harassment.”
• “Nunes was pretty mad when she didn't get her way and then sent her minions after Sam [Rushton's pen name] and reviewers.”

         After Nunes discovered the identity of the person who had written and published The Auction Deal, she decided to sue Rushton. Nunes started a GoFundMe.com fundraiser to finance her lawsuit. Rushton posted several comments on Nunes's GoFundMe.com page using sock puppet accounts, including:

• “A best selling author doesn't need to solicit funds from people. This is fraud!”
• “This is a scam! Ms. Nunes may have a far fetched case with plagiarism, but she is also facing a harassment suit. She needs money for representation since Covenant Publishers will not back her! You need to get your hard earned money back!”
• “This ‘fund me' has got to be a hoax or scam. A publisher would be backing this if it were a real claim.”
• “This is scam people!”

         Nunes subsequently sued Rushton for copyright infringement, defamation, and a number of additional claims. During a deposition, Rushton conceded that she used Nunes's novel as a starting point for her own novel. Rushton further admitted that she added some material- including sex scenes-deleted some material, changed some of the words from Nunes's novel, and then distributed the resulting novel as her own original work. Rushton also acknowledged that her novel was substantially similar to Nunes's novel.

         APPLICABLE LAW AND LEGAL STANDARDS

         A federal court exercising supplemental jurisdiction over state-law claims “applies the substantive law, including choice of law rules, of the forum state.” BancOklahoma Mortg. Corp. v. Capital Title Co., 194 F.3d 1089, 1103 (10th Cir. 1999) (citation omitted). Because all of the relevant conduct occurred in Utah, the court applies Utah's substantive law to the claims for defamation, defamation per se, false light, business disparagement, tortious interference with prospective business relations, electronic communication harassment, and deceptive trade practices under the Utah Truth in Advertising Act. Federal law applies to Rushton's copyright infringement and false advertising claims because they arise under federal statutes.

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A fact is material if, under the governing law, it could have an effect on the outcome of the lawsuit. A dispute over a material fact is genuine if a rational jury could find in favor of the nonmoving party on the evidence presented.” Schneider v. City of Grand Junction Police Dep't, 717 F.3d 760, 767 (10th Cir. 2013) (citation omitted). On a motion for summary judgment, the court “consider[s] the evidence in the light most favorable to the non-moving party.” Conroy v. Vilsack, 707 F.3d 1163, 1170 (10th Cir. 2013) (citation omitted). However, “[w]hen the moving party has carried its burden under rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts . . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.'” Scott v. Harris, 550 U.S. 372, 380 (2007) (alterations in original) (citation omitted).

         ANALYSIS

         I. COPYRIGHT INFRINGEMENT

         Both Nunes and Rushton move for partial summary judgment on Nunes's cause of action for copyright infringement. The court addresses each motion separately.

         A. Nunes's Motion for Partial Summary Judgment

         Nunes seeks summary adjudication on two issues. First, she argues that that she is entitled to a summary adjudication on the issue of liability for copyright infringement because Rushton does not contest that a significant portion of her novel, The Auction Deal, was copied from Nunes's novel, A Bid for Love. Second, Nunes argues that the court should summarily adjudicate that Rushton's infringement “was committed willfully” within the meaning of 17 U.S.C.A. § 504(c)(2).

         1) Liability for copyright infringement

         The owner of a copyright has the exclusive right to reproduce and distribute the copyrighted work as well as the right to prepare derivative works. 17 U.S.C. § 106. “Anyone who violates any of the exclusive rights of the copyright owner as provided by section[] 106 . . . is an infringer of the copyright . . . .” 17 U.S.C. § 501(a). “To establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 361 (1991).

         Rushton concedes in her response to Nunes's motion for summary judgment that she copied elements of Nunes's novel, A Bid for Love, when she wrote The Auction Deal and that she tried to pass Nunes's work off as her own. And Rushton does not contest that A Bid for Love was an original work. Rushton argues, however, that Nunes is not entitled to summary adjudication on the issue of infringement for two reasons: (1) Nunes has not proven that she owns the copyright to A Bid for Love because the copyright registration she provided must be excluded under Federal Rule of Evidence 602 and (2) Rushton's copying of A Bid for Love constituted fair use.

         Rushton's objection to Nunes's copyright registration is overruled. Perplexingly, Rushton bases her objection to the document on Rule 602, which provides: “A witness may testify to a matter only if evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.” Fed.R.Evid. 602. The admissibility of witness testimony is not at issue here. Rather, it is the admissibility of a document. Rule 602, therefore, does not apply.[1]

         Rushton's fair use argument also fails. Rushton never pleaded a fair use defense in her answer. Because fair use is an affirmative defense, she waived it by failing to plead it. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590 (1994) (“[F]air use is an affirmative defense . . . .”); Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 561 (1985) (“The drafters [of section 107] . . . structured the provision as an affirmative defense requiring a case-by-case analysis.”); Bentley v. Cleveland Cty. Bd. of Cty. Comm'rs, 41 F.3d 600, 604 (10th Cir. 1994) (“Failure to plead an affirmative defense results in a waiver of that defense.”). Rushton may not raise the fair use defense for the first time in a motion for summary judgment after the close of discovery.

         Because Rushton's arguments fail and there is no dispute of fact as to her liability for copyright infringement, Nunes is entitled to summary adjudication in her favor on this issue.

         2) Willfulness of Rushton's infringement

         “[A]n infringer of copyright is liable for either (1) the copyright owner's actual damages . . . or (2) statutory damages . . . .” 17 U.S.C. § 504(a). The copyright owner may elect to receive statutory damages “any time before final judgment is rendered.” Id. § 504(c)(1). Ordinarily, statutory damages may be awarded “in a sum of not less than $750 or more than $30, 000.” Id. But if the copyright infringer sustains the burden of proving that infringement “was committed willfully, ” statuary damages may be awarded in an amount not to exceed $150, 000. Id. § 504(c)(2). Conversely, “[i]n a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200.” Id.

         Nunes asserts that Rushton's infringement was willful as a matter of law. Nunes argues that there is no dispute of material fact on this issue and cites evidence that The Auction Deal is a blatant copy, that Rushton has a history of copyright infringement, that she was aware of copyright laws, and that she retaliated against Nunes for defending Nunes's copyright. Notably, however, Nunes does not cite any evidence that Rushton “confessed” that her infringement was willful within the meaning of section 504(c)(2).

         As is often the case, Nunes has presented only circumstantial evidence of Rushton's state of mind when she infringed Nunes's copyright. See DeSpain v. Uphoff, 264 F.3d 965, 975 (10th Cir. 2001) (“Because it is difficult, if not impossible, to prove another person's actual state of mind, whether an official had knowledge may be inferred from circumstantial evidence.”); Borchardt Rifle Corp. v. Cook, 727 F.Supp.2d 1146, 1163 n.9 (D. N.M. 2010) (“Rarely is there direct evidence of scienter, and generally scienter is proved by circumstantial evidence.”). While Nunes has presented evidence that permits an inference that Ruston's infringement was willful, a permissible inference derived from circumstantial evidence does not eliminate the need for a trial on the issue of Rushton's scienter. Indeed, “[s]ummary judgment is particularly inappropriate where the inferences which the parties seek to have drawn deal with questions of motive, intent and subjective feelings and reactions.” Helf v. Chevron U.S.A. Inc., 361 P.3d 63, 75 (Utah 2015) (alteration in original) (citation omitted). Moreover, there is at least some evidence that Rushton believed that she had not infringed Nunes's copyright. In an email to Nunes, Rushton insisted that she could not be held liable for infringement because, in her mind, she never published The Auction Deal by selling copies to the public.

         Accordingly, the issue of whether Rushton's infringement was willful may not be resolved on summary judgment. The court denies Nunes's motion for summary adjudication on the issue of the willfulness of Rushton's infringement.

         B. Rushton's Motion for Partial Summary Judgment on Actual Damages

         Nunes claims that she is also entitled to actual damages resulting from Rushton's infringement. But Nunes does not argue that the infringement caused the sales of her existing novels to suffer. Nor does Nunes contend that Rushton obtained any ill-gotten gains that must be disgorged because Rushton never sold any copies of her infringing novel to the public. Instead, Nunes alleges that Rushton's copyright infringement caused her mental anguish. She further contends that this mental state prevented her from writing for a period of time and that she lost the benefit of two novels that she would have otherwise written during this timeframe. Nunes asserts that she is entitled to the revenue these two unwritten novels would have generated as actual damages for copyright infringement.

         Rushton moves for partial summary judgment on Nunes's claim for actual damages. Rushton argues, among other things, that the actual damages claimed by Nunes stem from her emotional distress and that the Copyright Act of 1976 does not permit the recovery of emotional distress damages as actual damages.

         The Copyright Act's actual damages provision states: “The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages.” 17 U.S.C. § 504(b). The question before the court is whether the term “actual damages” as used in this statute includes damages caused by the copyright owner's emotional response to the infringement.

         The U.S. Supreme Court has held that the term “actual damages” cannot be given a universal definition applicable to all federal statutes. FAA v. Cooper, 566 U.S. 284, 292-94 (2012). The Court noted that the term has been understood by some courts to include compensation for emotional distress in the context of the Fair Housing Act and the Fair Credit Reporting Act. Id. at 292-93. “In other contexts, however, the term has been used or construed more narrowly to authorize damages for only pecuniary harm.” Id. at 293. Thus, lower courts have defined “actual damages” in the Copyright Act of 1909 and the Securities Exchange Act of 1934 to include only economic injury.[2] Id. “Because the term ‘actual damages' has this chameleon-like quality, [courts] cannot rely on any all-purpose definition but must consider the particular context in which the term appears.” Id. at 294.

         This court, therefore, must first look to the language and context of the Copyright Act of 1976 to determine whether the term “actual damages” encompasses emotional distress damages. The language and structure of 17 U.S.C. § 504 indicate that the Act provides for only economic damages. Subsection (a) states that an infringer is liable for “the copyright owner's actual damages and any additional profits of the infringer.” 17 U.S.C. § 504(a) (emphasis added). Subsection (b) further explains that a “copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages.” Id. § 504(b). This language clarifies an ambiguity found in the Copyright Act of 1909 by explicitly stating that a copyright holder may recover both the economic loss caused by the infringement and the economic gain obtained by the infringer, but only to the extent that double counting is avoided. 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 14.01[A] (Rev. Ed. 2017). “Where the defendant's profits are nothing more than a measure of the damages suffered by the copyright owner, it would be inappropriate to award damages and profits cumulatively, since they amount to the same thing.” Id. (quoting the House Report for the Copyright Act of 1976, H.R. Rep. No. 94-1476, at 161 (1976)). Within this rubric, the “actual damages” suffered by the copyright owner and the profits reaped by the infringer are two sides of the same coin. Thus, the explicit provision for the recovery of the infringer's economic profits in the Act strongly suggests that the copyright owner's “actual damages” must similarly be economic in nature.

         Caselaw interpreting the damages clause of the Copyright Act of 1976 confirms that emotional distress damages are not compensable. Circuit courts have held that the phrase “actual damages” means the copyright owner's economic loss caused by infringement. See, e.g., Fitzgerald Pub. Co. v. Baylor Pub. Co., 807 F.2d 1110, 1118 (2d Cir. 1986) (“Although the Act itself does not define what constitutes actual damages, the primary measure of recovery is the extent to which the market value of the copyrighted work at the time of the infringement has been injured or destroyed by the infringement.”); Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 512 (9th Cir. 1985) (quoted by FAA v. Cooper, 566 U.S. at 293) (“‘Actual damages' are the extent to which the market value of a copyrighted work has been injured or destroyed by an infringement.”). Although few courts have specifically addressed the question of whether emotional distress damages can be awarded as damages under the Copyright Act of 1976, the courts that have addressed the question have answered in the negative. In Mackie v. Riser, for example, the Ninth Circuit held that “hurt feelings” have no place in the actual damages calculus for a Copyright claim. 296 F.3d 909, 917 (9th Cir. 2002). Additionally, in Stern v. Does a copyright plaintiff sought damages for emotional distress, insomnia, and other stress-related ailments, such as pain and loss of mobility in his hip. 978 F.Supp.2d 1031, 1050 (C.D. Cal. 2011). The court ruled that “[t]heir dubiousness aside, none of these claims are compensable under the Copyright Act.” Id. Finally, Kelley v. Universal Music Group, No. 14 Civ. 2968(PAE), 2015 WL 6143737 (S.D.N.Y. Oct. 19, 2015) is particularly relevant to the present case. The plaintiff if Kelley claimed that the alleged infringement of a song that he helped to write caused him to experience mental anguish. In particular, the plaintiff alleged that he “suffered from feelings of distress, anxiety and depression, which interfer[ed] with his creative ability, hinder[ed] his inspiration to write and consequently stagnate[d] his income.” Id. at *6. The Kelley court dismissed the emotional distress claim, ruling that the plaintiff's emotional distress and stress-related ailments arising from the alleged infringement are not compensable under the Copyright Act.[3] Id. at *7.

         Finally, courts have also looked to the purposes animating a particular statute when deciding whether the term “actual damages” includes emotional distress damages. For example, in determining that the actual damages provision of the Fair Credit Reporting Act (FCRA) provided for emotional distress damages, courts have noted the Act's objective of protecting consumers. See Johnson v. Department of Treasury, IRS, 700 F.2d 971, 984 (5th Cir. 1983) (“[I]n the Fair Credit Reporting Act, Congress specifically found that there was “a need to ensure that consumer reporting agencies exercised their grave responsibilities with . . . a respect for the consumer's right to privacy.” (alteration in original)); Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir. 1995) (“These consumer oriented objectives [of the FCRA] support a liberal construction of the FCRA”). Similarly, in Anderson v. United Finance Co. the term “actual damages” under the Equal Credit Opportunity Act (ECOA) was interpreted to include damages for “mental anguish, humiliation or embarrassment.” 666 F.2d 1274, 1277 (9th Cir. 1982). In so holding, the Ninth Circuit pointed out that “[t]he purpose of the ECOA is to eradicate credit discrimination waged against women, especially married women whom creditors traditionally refused to consider for individual credit.” Id. Furthermore, Seaton v. Sky Realty Co. held that the actual damages provision of the Fair Housing Act authorizes damages for humiliation, noting that the plaintiff in that case “was subjected to a racial indignity which is one of the relics of slavery which 42 U.S.C. § 1982 was enacted to eradicate.” 491 F.2d 634, 636 (7th Cir. 1974).

         No such purpose to protect consumers, prevent discrimination, or eradicate racial prejudice can be attributed to the Copyright Act. Thus, the policy considerations that some courts have relied upon to hold that statutory actual damages provisions encompassed emotional distress damages do not apply to 17 U.S.C. § 504(b).

         For the foregoing reasons, the court agrees with the result achieved by the Mackie, Stern, and Kelley decisions and concludes that those cases are consistent with the language and context of the Copyright Act of 1976. Copyright holders may not recover emotional distress damages caused by infringement. In this case, Nunes seeks compensation for her emotional distress as actual damages under the Copyright Act. Her claim for lost sales for the two unwritten books is based entirely upon her assertion that Rushton's infringement caused her emotional distress, which prevented her from writing the two novels. These claimed emotional distress damages may not be recovered under the actual damages provision of the Copyright Act. See Kelley, 2015 WL 6143737 at *6 (rejecting a claim for lost income where the plaintiff claimed that copyright infringement induced anxiety and interfered with his creative process). Because Nunes has not presented any evidence of compensable actual damages, the court grants Rushton's motion for partial summary judgment on the issue of actual damages.

         C. Issues Remaining for Trial

         In summary, the court concludes that Rushton is liable for copyright infringement and that Nunes's claim for actual damages fails as a matter of law. The only copyright issues that remain to be resolved by the jury are whether the infringement was willful and the amount of the statutory damage award. See Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 355 (1998) (“[W]e hold that the Seventh Amendment provides a right to a jury trial on all issues pertinent to an award of statutory damages under § 504(c) of the Copyright Act, including the amount itself.”).

         II. ...


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