Small Justice LLC v. Xcentric Ventures LLC , 873 F.3d 313 ( 2017 )

United States Court of Appeals
For the First Circuit
Nos. 15-1506, 16-1085
SMALL JUSTICE LLC; RICHARD A. GOREN; CHRISTIAN DUPONT,
d/b/a Arabianights-Boston, Massachusetts
Plaintiffs, Appellants,
v.
XCENTRIC VENTURES LLC,
Defendant, Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Denise J. Casper, U.S. District Judge]
Before
Torruella, Kayatta, and Barron,
Circuit Judges.
Richard A. Goren, with whom Law Office of Richard Goren was
on brief, for appellants.
Daniel G. Booth and Maria Crimi Speth, with whom Booth Sweet
LLP and Jaburg & Wilk, P.C. were on brief, for appellee.
Paul Alan Levy, Public Citizen Litigation Group, Christopher
Bavitz, Berkman Center for Internet and Society, Mitch Stoltz, Kit
Walsh, Corynne McSherry, on brief for amici curiae Public Citizen,
Inc. and Electronic Frontier Foundation.
October 11, 2017
BARRON, Circuit Judge. These consolidated appeals
concern a lawsuit that involves a number of claims arising under,
respectively, federal copyright law, state tort law, and
Massachusetts's catch-all consumer protection statute, Mass. Gen.
Laws ch. 93A ("chapter 93A"). The defendant in the suit is
Xcentric Ventures, LLC ("Xcentric"), which operates a website, the
RipoffReport.com ("Ripoff Report"). The named plaintiffs are
Richard Goren ("Goren"), a Massachusetts attorney; Small Justice
LLC ("Small Justice"), a corporate entity that Goren created; and
Christian DuPont ("DuPont").1 The plaintiffs' claims all pertain
to a dispute arising from two reports that DuPont authored and
then posted on the Ripoff Report and that are highly critical of
Goren, who had provided legal representation to a plaintiff in an
unrelated matter in which DuPont was the defendant.
In the first of these appeals, we affirm the District
Court's decision to dismiss the plaintiffs' claims under
1 We note that, on September 2, 2013, the plaintiffs filed an
amended complaint that added DuPont to the case caption as a
plaintiff and that described DuPont as a party to the suit. The
amended complaint, however, did not reference DuPont in the prayer
for relief, even though it did reference Goren and Small Justice.
Xcentric contends on appeal that DuPont was not validly made a
party to the case through the amendment to the complaint. For
reasons that we will explain, we need not decide whether DuPont is
properly a party and so, like the District Court, we simply refer
to the "plaintiffs."
We also acknowledge the helpful amicus brief filed by Public
Citizen, Inc. and Electronic Frontier Foundation.
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Massachusetts law for libel and intentional interference with
prospective contractual relations, and to bar portions of the
plaintiffs' multi-faceted chapter 93A claim from going forward.
We also affirm the District Court's decision to grant summary
judgment to Xcentric as to the remaining claims. In the second
appeal, we affirm the District Court's decision to award attorney's
fees and costs to Xcentric.2
I.
Despite the meandering path of this case, the facts that
give rise to these consolidated appeals are not contested. We
thus begin by laying out the facts found by the District Court in
its rulings on Xcentric's motion to dismiss and on Xcentric's
motion for summary judgment. We then briefly recount the facts
relevant to our resolution of the second appeal, which concerns
the District Court's award of attorney's fees to Xcentric.
A.
Xcentric operates a website called the Ripoff Report.
The website's purpose is to permit consumers "to post free
complaints, called 'reports,' about companies and individuals whom
[sic] they feel have wronged them in some manner." The website
works as follows for one who wishes to post a report on it.
2Throughout the opinion, our discussion of "fees" refers to
both the costs and attorney's fees available under 17 U.S.C. §
505, as well as the costs and attorney's fees discussed in Federal
Rule of Civil Procedure 54(d).
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Before submitting a report to be posted on the website,
the would-be poster must click through a series of screens. Those
screens ask the user to describe and to categorize the nature of
the complaint that the user wishes to post as a report.
Ultimately, a user attempting to post a report
encounters a final screen that is captioned, "Submit your Report."
Below that caption is a text box. That text box is separately
captioned, "Terms and Conditions," and contains a vertical scroll
bar on the right side. Without employing the vertical scroll bar,
a user who encounters this screen can see the very beginning --
but only the very beginning -- of what is a longer list of terms
and conditions.
One of the "Terms and Conditions" -- which, according to
the District Court, is "not visible unless a user employs the
scroll bar" -- provides: "[b]y posting information or content to
any public area of [the Ripoff Report], you automatically grant,
and you represent and warrant that you have the right to grant, to
Xcentric an irrevocable, perpetual, fully-paid, worldwide
exclusive license to use, copy, perform, display and distribute
such information and content . . . ." As the District Court noted,
in order to post a report, a user is not required to click on a
box indicating that the user has read and agreed to the text set
forth in the text box captioned, "Terms and Conditions."
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Underneath the text box captioned "Terms and
Conditions," there is additional text that appears without any
caption above it. As is relevant here, at the time in question,
that text stated:
By posting this report/rebuttal, I attest this report is
valid. I am giving Rip-off Report irrevocable rights to
post it on the website. I acknowledge that once I post
my report, it will not be removed, even at my request.
Of course, I can always update my report to reflect new
developments by clicking on UPDATE.
Adjacent to this text is a check box. The parties agree that, to
submit a report to be posted on the website, a user of the Ripoff
Report must click on this check box. The user must then click on
the "continue" button at the bottom of the same screen.
B.
Several years ago, Goren was the subject of two negative
reports that had been posted on the Ripoff Report. The person who
posted the two reports, DuPont, had been the defendant in a lawsuit
in which Goren was representing a party suing DuPont. In the two
postings, DuPont leveled a number of criticisms regarding Goren's
character and conduct.
In response, Goren filed suit in Massachusetts state
court, under Massachusetts state law, for libel and intentional
interference with prospective contractual relations. Goren sought
both money damages and injunctive relief in the form of an order
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"enjoining [DuPont] from continuing to publish" the reports that
DuPont had posted.
DuPont did not defend the lawsuit, and Goren, after first
voluntarily dismissing those counts of the state court complaint
that sought money damages, successfully obtained a default
judgment. The state court granted Goren certain equitable relief
in connection with that default judgment. Specifically, the state
court enjoined DuPont from "continuing to publish or republish"
the two reports that DuPont had posted. The state court also
transferred to Goren "all rights in and to ownership of the
copyright" for each of the two reports that DuPont had posted.
Finally, the state court appointed Goren as DuPont's attorney-in-
fact in order to "execute and deliver a conveyance, transfer, and
assignment of all rights in and to ownership" of DuPont's copyright
in each posting to Goren. Thereafter, Goren assigned to himself
the copyright in the reports that DuPont had posted, which Goren
then assigned to Small Justice.
C.
The plaintiffs next proceeded to file this lawsuit in
federal court in Massachusetts against Xcentric, the owner of the
Ripoff Report. As amended, the plaintiffs' complaint claimed,
with respect to copyright law, a right to a declaration of Small
Justice's ownership of the copyright to the two reports that DuPont
had posted, and copyright infringement. The amended complaint
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also made claims under Massachusetts state law for libel,
intentional interference with prospective contractual relations,
and violations of chapter 93A.
The amended complaint sought both damages and equitable
relief. With respect to equitable relief, the amended complaint
sought a declaratory judgment regarding Small Justice's ownership
of the copyright to each of the postings at issue. The amended
complaint also sought preliminary and permanent injunctions that
would bar Xcentric from "continuing to publish, and/or from
republishing all or any part" of the two reports about Goren that
DuPont had posted on the Ripoff Report, and that would order
Xcentric "to take all steps necessary or appropriate to cause
Google, Yahoo and Bing to delete all cached copies of or links to"
the two negative posts.
Xcentric moved to dismiss the amended complaint in its
entirety. The District Court partially granted that motion.
Specifically, the District Court held that the Communications
Decency Act ("CDA"), 47 U.S.C. § 230, immunized Xcentric from
liability for the plaintiffs' Massachusetts law tort claims, for
libel and intentional interference with prospective contractual
relations, as well as from certain theories of liability set forth
in the plaintiffs' chapter 93A claim.
Section 230 of the CDA provides in part: "No provider
or user of an interactive computer service shall be treated as the
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publisher or speaker of any information provided by another
information content provider." 47 U.S.C. § 230(c)(1) (emphasis
added). Section 230 defines an "interactive computer service"
("ICS") as "any information service, system, or access software
provider that provides or enables computer access by multiple users
to a computer server." Id. § 230(f)(2). Subsection 230(f)(3)
then defines an "information content provider" ("ICP") as "any
person or entity that is responsible, in whole or in part, for the
creation or development of information provided through the
Internet or any other interactive computer service."
Xcentric argued in its motion to dismiss that it was
entitled to immunity under the CDA as an ICS. Xcentric contended
that the claims at issue -- all of which were related to the Ripoff
Report continuing to display DuPont's postings -- treated Xcentric
as a "publisher or speaker of . . . information provided by another
information content provider," see id. § 230(c)(1), namely,
DuPont.
In responding to Xcentric's motion, the plaintiffs did
not dispute that Xcentric was an ICS. The plaintiffs argued
instead that Xcentric was also the ICP with respect to DuPont's
postings by virtue of Xcentric having held itself out as a
copyright holder of DuPont's postings and having "direct[ed]"
internet search engines to display copies of those postings. Thus,
the plaintiffs contended, Xcentric could not assert the immunity
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conferred by the CDA as to the claims at issue, because Xcentric,
as an ICS, was not being treated by those claims as the publisher
of information provided by another ICP. Rather, the plaintiffs
argued, Xcentric was being treated, at most, as the publisher of
information content for which Xcentric itself was the ICP.
In addressing these arguments, the District Court
explained that, under our decision in Universal Commc'n Sys., Inc.
v. Lycos, Inc., 478 F.3d 413, 418 (1st Cir. 2007), in order for
Xcentric "[t]o avail itself of [the] immunity" set forth in
§ 230(c)(1), "(1) Xcentric must be a provider or user of an [ICS];
(2) the Plaintiffs' claim is based on information provided by
another [ICP]; and (3) the claim would treat Xcentric as the
publisher or speaker of that information." The District Court
then ruled that Xcentric had made the requisite showing to trigger
CDA immunity as to each of the plaintiffs' claims that Xcentric's
motion to dismiss targeted, save for the plaintiffs' chapter 93A
claim. The District Court ruled that, due to CDA immunity, the
chapter 93A claim could go forward on only one of the three grounds
for finding liability that the District Court determined that the
plaintiffs had identified in that count of their amended complaint.
In finding CDA immunity, the District Court explained
that Xcentric was not properly considered to be an ICP with respect
to DuPont's postings because Xcentric did not "specifically
encourage[] the development of the offensive content" at issue.
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The District Court concluded that the mere acquisition of copyright
to content created by another party -- or the holding of oneself
out as the copyright holder of such content -- does not suffice to
make an entity an ICP under § 230(f)(3). The District Court
similarly concluded that "instructing Google [and other search
engines] to use, or at least by not precluding Google from using,
its automated program to acquire cached copies of the [postings]
. . . does not rise to the level of the 'creation or development
of information' that would render Xcentric an 'information content
provider' under the CDA."
Following the District Court's ruling on the motion to
dismiss, Xcentric filed a one-count breach-of-contract
counterclaim against DuPont. The case then proceeded to discovery
on that counterclaim and also on the plaintiffs' remaining claims,
which consisted of the two copyright-related claims (for,
respectively, a declaration of copyright ownership and a finding
of copyright infringement) and, in part, the chapter 93A claim.
D.
In due course, Xcentric moved for summary judgment on
the plaintiffs' remaining claims. The District Court granted that
motion in full.3
3 Subsequent to the District Court's summary judgment order,
Xcentric moved for, and was granted, dismissal of its breach of
contract counterclaim.
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First, the District Court concluded that the plaintiffs'
copyright infringement claim failed because the District Court
determined that DuPont had "transferred copyright ownership to
Xcentric by means of an enforceable browsewrap agreement."4
According to the District Court, DuPont made that transfer pursuant
to the Ripoff Report's terms and conditions, which provided, in
part, that a user of the site agreed to "grant . . . to Xcentric
an irrevocable, perpetual, fully-paid, worldwide exclusive license
to use, copy, perform, display and distribute" the user's posting.
Even though DuPont may not have seen the full terms and conditions
prior to submitting his postings (given the configuration of the
website), the District Court reasoned, DuPont was on inquiry notice
of those terms and conditions because of the vertical scroll bar
to the right of the text box, which was captioned "Terms and
Conditions", and because of the "conspicuously visible" hyperlinks
at the bottom of each page in the submission process to the
website's "terms of service."
4 As described by the District Court: "There are two types of
contracts formed online: 'clickwrap' and 'browsewrap' agreements.
Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175-76 (9th Cir.
2014). In a clickwrap agreement, users must select a check box or
radio button to indicate that they agree to the website's terms
and conditions. Id. In contrast, browsewrap agreements do 'not
require the user to manifest assent to the terms and conditions
expressly. A party instead gives his assent simply by using the
website.' Id. at 1176."
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In addition, the District Court granted summary judgment
to Xcentric on the plaintiffs' claim for a declaratory judgment
that Small Justice owned the copyright to DuPont's two postings.
Finally, the District Court addressed what remained of
the plaintiffs' chapter 93A claim. Specifically, on the sole
remaining theory of chapter 93A liability, the plaintiffs
contended that it was a violation of chapter 93A § 11 for Xcentric
to inform users that it would never take down a posting for any
reason, and simultaneously to market a program, known as the
Corporate Advocacy Program ("CAP"), through which Xcentric offered
to assist customers in changing their "search engine listings . . .
from a negative to a positive."5 The plaintiffs also alleged, in
support of this ground for suing under chapter 93A, that Xcentric
marketed an "arbitration" program, through which Xcentric offered
to redact false statements contained in postings on the Ripoff
Report website. In granting summary judgment to Xcentric as to
this remaining theory of chapter 93A liability, the District Court
concluded that the plaintiffs had not shown that either the CAP or
the arbitration program caused them any injury.
5 Chapter 93A § 11 provides a private cause of action for
"[a]ny person who engages in the conduct of any trade or commerce
and who suffers any loss of money or property . . . as a result of
the use or employment by another person who engages in any trade
or commerce of an unfair method of competition or an unfair or
deceptive act or practice." The plaintiffs do not dispute the
applicability of Section 11 to the chapter 93A count of their
amended complaint.
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Subsequent to issuing this initial summary judgment
ruling, however, the District Court appended a footnote to that
ruling that further addressed the nature of the intellectual
property interest that DuPont had conveyed to Xcentric. The
footnote first explained that insofar as 17 U.S.C. § 204 required
"a written and signed conveyance" for DuPont to transfer a
copyright to Xcentric, then DuPont's checking of the box on the
"Submit your Report" page did not suffice to effect the transfer
of the copyright in the postings from DuPont to Xcentric.6
Accordingly, and notwithstanding the District Court's initial
ruling -- issued prior to its adding of the footnote -- that
appeared to hold the opposite, the District Court found "Xcentric
was not the owner of the copyright to [DuPont's postings]."7
The footnote went on to hold, however, that when DuPont
checked the box on the "Submit your Report" page he conveyed an
irrevocable nonexclusive license to "display [his postings] in
perpetuity" to Xcentric, because 17 U.S.C. § 204's requirement for
617 U.S.C. § 204 provides, in part, that a transfer of
copyright must be effected by an "instrument of conveyance, or a
note or memorandum of the transfer . . . in writing and signed by
the owner."
7In the subsequently appended footnote, the District Court
did not separately address the plaintiffs' declaratory judgment
claim, wherein the plaintiffs sought to have Small Justice declared
the owner of the copyright, presumably because the District Court's
ruling granting summary judgment regarding copyright infringement
obviated the need to resolve that issue.
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a "written and signed conveyance" does not apply to a nonexclusive
license.8 Because Xcentric possessed an irrevocable nonexclusive
license to display DuPont's postings, the District Court found,
DuPont had "waived his right to sue Xcentric for infringement where
its use did not exceed the scope of that license."
E.
We still have one more aspect of this saga to recount.
Following the District Court's order granting Xcentric's summary
judgment motion, which was issued on March 27, 2015, Xcentric moved
on April 10, 2015 to recover attorney's fees and costs from the
plaintiffs under 17 U.S.C. § 505. Section § 505 permits the
"prevailing party" in a copyright suit to recover costs, which
include a "reasonable attorney's fee." 17 U.S.C. § 505.
Before the District Court had ruled on that motion,
however, the plaintiffs, on April 24, 2015, filed a notice of
appeal from the summary judgment order, and we docketed that appeal
as case number 15-1506. Thereafter, on September 30, 2015, the
District Court denied Xcentric's April 10 fees award motion, but
did so "without prejudice to refilling [sic] with supporting
documentation."
8 As 17 U.S.C. § 101 makes clear, such a license does not
constitute a transfer of copyright ownership, which is the subject
of 17 U.S.C. § 204.
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Following that order on September 30, Xcentric, on
October 20, 2015, filed a renewed fees motion. The District Court
then granted that renewed motion on December 31, 2015, awarding
Xcentric over $123,000 in attorney's fees and over $1,000 in costs.
On the same date, the District Court also granted Xcentric's
separate motion, filed on October 23, 2015, in which Xcentric
requested that the plaintiffs be required to post a $30,000 appeal
bond for case number 15-1506, pursuant to Rule 7 of the Federal
Rules of Appellate Procedure, in order to proceed with that appeal.
The plaintiffs then separately appealed the rulings on
the fees and appeal bond orders. We docketed this appeal as case
number 16-1085. However, on the same day that the plaintiffs filed
their fees appeal, the plaintiffs also filed motions with the
District Court seeking to stay the fees award order pending their
appeal and to vacate the bond order. We, thereafter, notified the
plaintiffs that the notice of appeal for 16-1085 would not become
effective until the District Court disposed of the post-judgment
motions.
On May 2, 2016, the District Court denied the plaintiffs'
motions to stay the fees award and vacate the bond order. The
District Court also issued additional findings in which it further
addressed the discretionary factors identified in Fogerty v.
Fantasy, 510 U.S. 517, (1994), in support of the District Court's
December 31, 2015 fees award. That same day, the plaintiffs'
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notice of appeal in case number 16-1085 became effective. On June
1, 2016, the plaintiffs amended their notice of appeal in case
number 16-1085 to add appellate review of the denial of their
motions to stay the fees award pending appeal and to vacate the
bond order, as well as the issuance of the May 2, 2016 additional
findings in support of the fees award.9
We then, for purposes of oral argument, consolidated
this appeal with appellate case number 15-1506. We now consider
each appeal in turn.
II.
We start with the portion of the first appeal in which
the plaintiffs challenge the District Court's ruling granting
Xcentric's motion to dismiss as to the plaintiffs' libel and
intentional interference with prospective contractual relations
claims, as well as to certain aspects of the plaintiffs' chapter
93A claim.10 The District Court premised its ruling granting the
9 On January 4, 2017, this Court entered an order affirming
the District Court's order imposing an appeal bond and denying the
plaintiffs' motion to vacate the appeal bond. We, therefore, do
not address the appeal bond herein.
10 Xcentric contends that the plaintiffs' appeal is limited
to the specific order they noticed in the notice of appeal filed
on April 24, 2015 -- the District Court's summary judgment
decision, rather than its earlier decision to grant, in part,
Xcentric's motion to dismiss on the basis of immunity under the
CDA. We need not decide this issue, however. See Parkview
Adventist Med. Ctr. v. United States, 842 F.3d 757, 760 (1st Cir.
2016) (non-Article III jurisdictional defects may be bypassed if
the merits clearly favor the party asserting the defect).
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motion on the immunity that it found that § 230 of the CDA conferred
on Xcentric. We review that ruling de novo, asking "whether the
well-pleaded factual allegations, viewed in the light most
favorable to the plaintiff, state a claim for which relief can be
granted." Germanowski v. Harris, 854 F.3d 68, 71 (1st Cir. 2017)
(citing Ocasio-Hernández, v. Fortuño-Burset, 640 F.3d 1, 7 (1st
Cir. 2011)). For the reasons that follow, we affirm.
The plaintiffs appear to concede that the Ripoff Report
qualifies as an ICS under § 230 and, thus, that Xcentric enjoys
immunity under that section from claims that would treat it "as
the publisher or speaker of any information provided by another
[ICP]," 47 U.S.C. § 230(c)(1). See Klayman v. Zuckerberg, 753
F.3d 1354, 1358 (D.C. Cir. 2014) ("[A] website does not create or
develop content when it merely provides a neutral means by which
third parties can post information of their own independent
choosing online."). However, the plaintiffs contend that Xcentric
may not claim CDA immunity under § 230 because the plaintiffs
contend that those postings do not constitute "information
provided by another [ICP]." 47 U.S.C. § 230(c)(1).
According to the plaintiffs, Xcentric became the ICP
with respect to those postings in either of two ways. First,
Xcentric allegedly became the ICP by claiming "ownership of the
exclusive rights of copyright" in DuPont's postings and -- pursuant
to that claimed copyright -- "initially publish[ing], and
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continu[ing] to publish, [DuPont's] defamation on its Ripoff
Report website." Second, Xcentric allegedly became the ICP of the
information at issue because, "even assuming the initial
publication to be immune, Xcentric authorizes and directs Google
and other search engines to make copies of [the postings]." The
plaintiffs thus argue that Xcentric became an ICP when those
"search engines display copies of the defamation on their servers."
We do not agree. As we explained in Lycos, immunity
under § 230 should be "broadly construed." 478 F.3d at 418-19.
In fact, we noted there that Congress has expressed a "policy
choice . . . not to deter harmful online speech through
the . . . route of imposing tort liability on companies that serve
as intermediaries for other parties' potentially injurious
messages." Id. at 418(quoting Zeran v. Am. Online, Inc., 129 F.3d
327, 330-31 (4th Cir. 1997))(omissions in original). Given that
legislative policy choice, we do not see how we can construe the
CDA's definition of an ICP -- which provides that an ICP is a
"person or entity that is responsible . . . for the creation or
development of information[,]" 47 U.S.C. § 230(f)(3) -- to
encompass Xcentric in this case.
Such a construction of this statutory definition of an
ICP would flout Congress's intent by wrongly preventing an ICS
like Xcentric from claiming immunity. Lycos, 478 F.3d at 418. As
the plaintiffs recognize, Xcentric did not alter the content of
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the information DuPont posted such that Xcentric could be said to
have been "responsible for . . . creat[ing] or develop[ing]" that
content by reason of having actually authored it, whether in whole
or in part. In addition, as the District Court found, nothing in
the amended complaint indicates that Xcentric, simply by holding
itself out as the copyright holder of the postings or by directing
search engines to cache DuPont's postings on their websites,
"specifically encourage[d]" the content set forth in DuPont's
postings.
In fact, a sister circuit has rejected the view that an
ICS, by merely providing such direction to search engines with
respect to information the ICS has not altered, becomes an ICP of
that information. See Kimzey v. Yelp! Inc., 836 F.3d 1263, 1270-
71 (9th Cir. 2016) ("Yelp is not liable for disseminating . . .
[user-generated] content in essentially the same format to a search
engine, as this action does not change the origin of the third-
party content." (citing Ascentive, LLC v. Op. Corp., 842 F. Supp.
2d 450, 476 (E.D.N.Y. 2011))); see also Ayyadurai v. Floor64, Inc.,
No. 17-10011-FDS, 2017 WL 3896668, *17 (D. Mass. Sept. 6, 2017)
(analyzing cases from other circuits which determined that
"republishing and commenting upon user generated content, does not
constitute 'creation or development.'" (citation omitted)). And
we do not see why that conclusion should differ if the ICS also
represents that it holds the copyright. Nor are we aware of any
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precedent that requires a contrary conclusion. Accordingly, we
affirm the District Court's ruling on the motion to dismiss.
III.
We now consider the District Court's order granting
summary judgment to Xcentric. Our review here, too, is de novo.
Santos-Rodríguez v. Seastar Sols., 858 F.3d 695, 697 (1st Cir.
2017). In undertaking that review, we must assess "the record in
the light most favorable to the nonmovant and resolv[e] all
reasonable inferences in that party's favor." Id.A.
We start with the portion of the summary judgment order
concerning the plaintiffs' two copyright claims. As to the
copyright infringement claim, the District Court concluded,
through the footnote that it appended to its initial ruling
granting summary judgment to Xcentric, that Xcentric could not be
liable for infringement due to the nonexclusive license that
Xcentric had received from DuPont. The District Court concluded
that "DuPont conveyed a nonexclusive, irrevocable license to
Xcentric to display the [two postings]" when DuPont clicked the
check box next to the accompanying text stating that a user who
posts on the Ripoff Report agrees to give an "irrevocable right[]"
to Xcentric to display his postings on the Ripoff Report website.
As a result, the District Court held, even if Xcentric was not
"the owner of the copyright to [DuPont's postings]," Xcentric could
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nevertheless "display them in perpetuity" without infringing
DuPont's copyright.
In arguing otherwise, the plaintiffs do not dispute that
"[u]ses of the copyrighted work that stay within the scope of a
nonexclusive license are immunized from infringement suits." John
G. Danielson, Inc. v. Winchester-Conant Props., Inc., 322 F.3d 26,
40 (1st Cir. 2003) (citing Graham v. James, 144 F.3d 229, 236 (2d
Cir. 1998)). The plaintiffs also do not contend, at least in their
opening brief, that Xcentric exceeded the scope of the nonexclusive
license, insofar as Xcentric had that license.11 Instead, the
plaintiffs contend that Xcentric did not obtain a valid
nonexclusive license to display DuPont's postings for two reasons.
First, the plaintiffs argue that Xcentric offered no
consideration for the irrevocable nonexclusive license that the
District Court ruled Xcentric had been given by DuPont. The
plaintiffs thus argue that, in consequence, no valid contract
11 In their reply brief, for the first time, the plaintiffs
argue the scope of the nonexclusive license was only "to post [the
defamatory report] on the website" and that Xcentric exceeded that
scope of the license by "add[ing] its notice of copyright ownership
to each report, tag[ging] the report with codes and instructions
to allow Google and other third-party search engines to index and
also to display copies of it extrinsic to the website." But,
arguments developed for the first time in a reply brief are waived.
See Braintree Labs., Inc. v. Citigroup Glob. Markets Inc., 622
F.3d 36, 44 (1st Cir. 2010) (finding waived an argument cursorily
mentioned in appellant's opening brief, as even "[t]he slight
development in the reply brief does nothing to help matters, as
arguments raised there for the first time come too late to be
preserved on appeal").
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existed that could have conveyed the license to Xcentric. In
support of this contention, the plaintiffs point to the website's
terms and conditions, which the plaintiffs contend were "subject
to change by Xcentric, at any time" and without notice to DuPont,
and that "it is undisputed that Xcentric [has redacted information]
from posted reports and has removed reports upon the request of
the author." The plaintiffs thus argue that the only possible
promises that Xcentric made to give something in consideration for
the license were "illusory" and, thus, in fact "Xcentric promised
nothing" and, therefore, "gave no consideration."
The problem with this argument, however, is that, even
if consideration is necessary in order for a party to grant an
irrevocable nonexclusive license, see 3 Nimmer on Copyright § 10.03
(Rev. ed. 2017)(explaining that "consideration is necessary to
render a nonexclusive license irrevocable"), performance can
itself constitute consideration sufficient to establish a binding
contract. And, in this case, the plaintiffs concede that Xcentric
did actually post the reports at issue. Thus, given that
performance, the plaintiffs offer no authority or persuasive
argument as to why there is insufficient consideration for the
conveyance of the irrevocable nonexclusive license in this case.
See 3 Williston on Contracts § 7:15 (4th ed. 2008) ("[T]hat the
purported consideration is invalid will not cause a subsequent
performance to be likewise invalid . . . . [A] performance which
- 22 -
has been rendered needs no consideration though the promise to
give it originally did. Since the performance has been rendered
. . . and . . . received as the consideration for the promise, the
promise thereby becomes binding.").
Second, the plaintiffs contend that the irrevocable
nonexclusive license is unenforceable on public policy grounds.
The plaintiffs' argument here is that Xcentric's promise not to
remove any postings -- even if the postings are libelous -- is
contrary to the public policy "against per se libel." But, while
the plaintiffs contend that there is a "strong public policy
against per se libel[,]" the plaintiffs offer no basis for
concluding that this public policy provides a reason to hold the
nonexclusive license itself invalid. The fact that one holds such
a license does not in and of itself protect one from liability for
libeling another. Furthermore, even assuming that DuPont's
postings were per se libelous, no aspect of copyright law protects
the holder of such a license from liability for libel, and nothing
in the District Court's opinion suggests otherwise. Thus, the
plaintiffs' assertion that there is a public policy against per se
libel fails to show that this nonexclusive license may not be
enforced.
There remains only the other copyright claim to address:
the declaratory judgment claim in which the plaintiffs argue the
copyright to DuPont's two postings belongs to Small Justice and
- 23 -
not to Xcentric. The plaintiffs contend that the District Court
erred insofar as it granted summary judgment to Xcentric on the
ground that Xcentric had acquired the copyright to each of DuPont's
postings.12 But the plaintiffs advance this argument only in
connection with their claim that there was no agreement that ever
effected a valid transfer of copyright and, thus, that DuPont and
not Xcentric "retained ownership of the exclusive rights of
copyright to the defamatory postings".13 We thus deemed waived any
independent contention that the District Court erred in not issuing
a ruling as to whether Small Justice validly holds copyright to
DuPont's postings. See United States v. Zannino, 895 F.2d 1, 17
12In light of the District Court's subsequently appended
footnote, it is not clear that the District Court actually issued
a ruling as to whether Small Justice, in fact, holds the copyright
to DuPont's postings. Rather, the District Court appears to have
concluded only that Xcentric is not the copyright holder.
13
The plaintiffs' only request for a declaration of ownership
in their amended complaint was a request for a declaration
confirming Small Justice's ownership of the copyright to each of
the two posts at issue. After the District Court's summary
judgment ruling and appended footnote issued, DuPont moved to
further amend the complaint to include a request for a declaration
that DuPont owned the copyright for each of the postings or,
alternatively, a declaration that the nonexclusive license DuPont
allegedly granted Xcentric was unenforceable as contrary to public
policy. The District Court denied DuPont's motion, as judgment
had already entered and DuPont failed to provide an adequate reason
for his delay in seeking the amendment, which was prejudicial to
Xcentric, "given that the Plaintiffs were aware of the facts
underlying their claim when they filed their first two complaints."
The plaintiffs did not appeal the denial of the motion to amend.
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(1st Cir. 1990). And, therefore, we need not consider this issue
further.14
B.
We turn, then, to the last remaining portion of the
plaintiffs' summary judgment challenge. This portion concerns the
plaintiffs' claim that, contrary to the District Court's ruling,
Xcentric violated chapter 93A § 11 by "advertising and operation
of its reputation restoration business." In briefing to the
District Court, the plaintiffs described the chapter 93A claim
more particularly as one that seeks to hold Xcentric liable for
its "solicitation of victims who have been defamed by works that
Xcentric has published under color of its [claimed copyright]
ownership to pay Xcentric to restore their reputation on search
engines." To support this contention on appeal, the plaintiffs
point to Xcentric's "alternative commercial fee based solutions
for the subjects of false and/or defamatory reports" -- the CAP
and the arbitration program -- "whereby for some undisclosed fee
14 We thus need not address the question of whether the
Massachusetts state court decision violated Rule 54(c) of the
Massachusetts Rules of Civil Procedure, which requires that "[a]
judgment by default shall not be different in kind from . . . that
prayed from in the demand for judgment," nor whether that court's
judgment transferring DuPont's copyright to Goren pursuant to a
default judgment is a valid transfer of copyright under 17 U.S.C.
§ 201(e). We likewise need not address whether a browsewrap
agreement may satisfy the writing requirement in 17 U.S.C. § 204.
- 25 -
Xcentric would 'restore [a subject's] reputation," "by redaction
or removal of a defamatory report."
The problem for the plaintiffs, however, is that, as the
District Court correctly ruled, causation -- both "factual" and
"proximate" -- is a required element of a chapter 93A claim. Walsh
v. TelTech Sys., Inc., 821 F.3d 155, 160 (1st Cir. 2016) (citing
Hershenow v. Enterprise Rent-A-Car Co. of Bos., 840 N.E.2d 526,
535 (Mass. 2006), and McCann v. Davis, Malm & D'Agostine, 669
N.E.2d 1077, 1079 (Mass. 1996)). Moreover, as the plaintiffs
concede, with respect to a chapter 93A § 11 claim, plaintiffs must
demonstrate a causal link between Xcentric's allegedly "unfair or
deceptive" business practices and a "loss of money or property" by
the plaintiffs. Mass. Gen. Laws ch. 93A § 11. Yet the plaintiffs
do not explain how the CAP or the arbitration program caused them
any such loss.
In particular, the plaintiffs do not point to any
evidence in the record that DuPont's initial postings were
motivated or in any other way caused by the existence of CAP or
the arbitration program. Nor do the plaintiffs point to any
evidence in the record that Xcentric's Ripoff Report business
depends on individuals in Goren's position paying to participate
in one or both of the programs. Thus, the plaintiffs do not link
the money or property that they allegedly lost due to the postings
themselves to the CAP or to the arbitration program. In addition,
- 26 -
the plaintiffs do not challenge the District Court's finding that
they did not incur the cost of participating in either Xcentric's
CAP or its arbitration program. Accordingly, we see no error in
this aspect of the District Court's summary judgment ruling.15
IV.
We turn, then, to the second of the consolidated appeals
at issue. In this appeal, the plaintiffs challenge the District
Court's decision to award over $123,000 in attorney's fees and
over $1,000 in costs to Xcentric. The plaintiffs argue that the
District Court erred in three different ways in awarding fees to
Xcentric. First, the plaintiffs contend, pursuant to Federal Rule
of Civil Procedure 54(d)(2)(B), that Xcentric's fees motion was
untimely. Next, the plaintiffs contend that Xcentric is not a
"prevailing party" under 17 U.S.C. § 505 and thus is not entitled
to a fees award. Third, the plaintiffs argue that the District
Court incorrectly applied the factors the Supreme Court identified
15 In support of their contention that the District Court
erred in granting summary judgment with respect to their chapter
93A claim, the plaintiffs appear to argue that a misrepresentation
at one point in the litigation by Xcentric regarding the specific
text stating the terms of the clickwrap agreement, though later
corrected, should be added to the analysis of pre-suit acts
referred to in the amended complaint for motion to dismiss
purposes. As an initial matter, and especially in light of the
correction, it is not clear that Xcentric's conduct, as alleged,
constitutes bad faith. But in any event, and more importantly, we
fail to see how Xcentric's litigation conduct, which is clearly
outside the scope of the amended complaint constitutes an
actionable claim under chapter 93A as pleaded.
- 27 -
in Fogerty, to guide analysis of whether fees should be awarded in
a particular instance.
The parties agree that we review the District Court's
rulings on the fees award for abuse of discretion. See Airframe
Sys., Inc. v. L-3 Commc'ns Corp., 658 F.3d 100, 108 (1st Cir.
2011). And, for the reasons we now lay out, we reject each of the
plaintiffs' arguments for finding such an abuse. Accordingly, we
affirm the District Court's fees award.16
A.
With respect to the plaintiffs' argument concerning the
timeliness of Xcentric's fees motion, Rule 54 requires that a
motion for attorney's fees "be filed no later than 14 days after
the entry of judgment," "unless . . . a court order provides
otherwise." Fed. R. Civ. P. 54(d)(2)(B).17 As the plaintiffs
16 The plaintiffs separately appeal the District Court's
denial of the plaintiffs' motion to stay, pending appeal, the
execution of the December 31, 2015 fees award. However, as the
only arguments that the plaintiffs make on appeal that could bear
on this issue -- insofar as it is not now moot -- concern the
merits of the fees award, we reject this challenge by the
plaintiffs for the same reasons that we reject their challenge to
the fees award.
17 The parties' assume that Rule 54(d)(2) is applicable to
Xcentric's fees motion under § 505, and we proceed on that
assumption. See Evolution, Inc. v. Suntrust Bank, No. Civ. A. 01-
2409-CM, 2005 WL 1936019, at *1 (D. Kan. Aug. 8, 2005); Video-
Cinema Films, Inc. v. Cable News Network, Inc., Nos. 98 Civ.
7128(BSJ), 98 Civ. 7129(BSJ), 98 Civ. 7130(BSJ), 2003 WL 1701904,
at *2 (S.D.N.Y. Mar. 31, 2003); Mattel, Inc. v. Radio City Entm’t,
210 F.R.D. 504, 505 (S.D.N.Y. 2002); Brewer-Giorgio v. Bergman,
985 F. Supp. 1478, 1482 (N.D. Ga. 1997).
- 28 -
concede, Xcentric first filed a motion for fees on April 10, 2015,
which was -- the plaintiffs agree -- within 14 days of the District
Court's March 27, 2015 summary judgment order. Thus, the
plaintiffs premise their challenge to the timeliness of the fees
motion on the following additional facts.
First, the plaintiffs point out, the District Court did
not rule on Xcentric's April 10 motion until September 30, 2015
and, in doing so, dismissed that motion. Second, the plaintiffs
note, Xcentric then filed a renewed fees motion on October 20,
2015, which was obviously more than 14 days after the District
Court's March 27 summary judgment order and more than 14 days after
the District Court's denial of Xcentric's April 10 fees motion.
Accordingly, the plaintiffs contend that the only operative fees
motion before us -- which is the renewed fees motion that the
District Court granted on December 31, 2015 -- was not timely filed
under Rule 54.
But the plaintiffs are clearly wrong. The District Court
denied Xcentric's timely filed April 10 fees motion in its
September 30 order "without prejudice to refilling [sic] with
supporting documentation."18 Thus, in denying the timely-filed
18Though the District Court denied the plaintiffs' motion for
a lack of "supporting documentation," notably the Advisory
Committee on the Federal Rules of Civil Procedure has stated that
Rule 54 "does not require that the [fees] motion be supported at
the time of filing with the evidentiary material bearing on the
- 29 -
April 10 fees motion, the District Court issued "a court order
provid[ing] otherwise," id., with respect to the timing for filing
a renewed fees motion. And, thereafter, Xcentric filed a renewed
motion less than a month later.
Significantly, the District Court's September 30 order
did not provide an express time limit for Xcentric to file such a
renewed fees motion. And, insofar as the September 30 order
contained an implicit reasonableness requirement as to the timing
of the filing of such a renewed fees motion, we see no basis for
concluding that Xcentric's renewed fees motion was filed so late
as to be out of compliance with any such implied deadline. We
thus reject the argument that the fees award was premised on a
motion that was untimely under Rule 54 or in any other respect.
Cf. Pierce v. Barnhart, 440 F.3d 657, 664 (5th Cir. 2006) (finding
that, where a district court denied plaintiffs' attorney's fees
motion without prejudice, but also without a stated deadline for
refiling, "the district court gave the plaintiffs the opportunity
to refile their [fees motion] at a later date, even if their
refiling[] fell outside of the fourteen-day time period prescribed
fees. This material must of course be submitted in due course,
according to such schedule as the court may direct in light of the
circumstances of the case. What is required is the filing of a
motion sufficient to alert the adversary and the court that there
is a claim for fees, and the amount of such fees (or a fair
estimate)." Advisory Committee Note to 1993 Amendment of Fed. R.
Civ. P. 54(d)(2)(B).
- 30 -
by Rule 54(d)" and "[i]n essence, the district court provided no
time limitations for the plaintiffs' second . . . attorney's fees
[motion], which was well within the court's discretion under Rule
54(d)").
B.
We also reject the plaintiffs' contention that Xcentric
is not a "prevailing party" under 17 U.S.C. § 505.19 Specifically,
the plaintiffs argue that the District Court erred in failing to
analyze whether, under the Supreme Court's construction of § 505
in Buckhannon Bd. & Care Home, Inc. v. West Virginia Dept. of
Health & Human Res., 532 U.S. 598, 604-05 (2001), a "material
alteration of the legal relationship of the parties," coupled with
a "judicial imprimatur on the change" had occurred. According to
the plaintiffs, the District Court resolved the parties' copyright
dispute on standing grounds "without reaching the merits of
ownership."
As we have observed, however, even if a "copyright case
[is] won because the defendant failed to answer the complaint or
[is] lost because of a discovery violation by the plaintiff . . .
surely the winner could claim attorney's fees and costs" under
19Section 505 provides: "In any civil action under this title,
the court in its discretion may allow the recovery of full costs
by or against any party other than the United States or an officer
thereof. Except as otherwise provided by this title, the court
may also award a reasonable attorney's fee to the prevailing party
as part of the costs." Id. (emphasis added).
- 31 -
§ 505. InvesSys, Inc. v. McGraw-Hill Cos., 369 F.3d 16, 20 (1st
Cir. 2004); cf. CRST Van Expedited, Inc. v. EEOC, 136 S. Ct. 1642,
1646, 1951 (2016) (noting that the Court has interpreted "the term
'prevailing party' in various fee-shifting statutes [including
§ 505] . . . in a consistent manner" and holding that under a
different fees statute, a party "may prevail even if the court's
final judgment rejects [the opposing party's] claim for a nonmerits
reason"). We thus do not see how this contention by the plaintiffs
provides a basis for finding that the District Court abused its
discretion in concluding that Xcentric was a "prevailing party"
under § 505.
C.
Finally, the plaintiffs contend that the District Court
abused its discretion in applying the nonexclusive Fogerty factors
that the Supreme Court has identified to guide district courts in
awarding attorney's fees. Here, too, we disagree.
In Fogerty, the Supreme Court identified the following
"nonexclusive factors" that courts should consider in making
awards of attorney's fees under § 505, provided that "such factors
are faithful to the purposes of the Copyright Act and are applied
to prevailing plaintiffs and defendants in an evenhanded manner":
"frivolousness, motivation, objective unreasonableness (both in
the factual and in the legal components of the case) and the need
in particular circumstances to advance considerations of
- 32 -
compensation and deterrence." 510 U.S. at 534 n.19. On appeal,
the plaintiffs contend that the District Court erred in applying
these factors in several respects.
First, the plaintiffs contend that their litigation
advanced the purposes of the Copyright Act, and thus that the
District Court's application of the Fogerty factors was not
"faithful to the purposes" of that Act. The plaintiffs base this
contention on the fact that their lawsuit clarified for future
litigants that "the writing requirement of 17 U.S.C. § 204 makes
a browsewrap agreement insufficient to effectuate a transfer of
copyright." The plaintiffs further contend that this litigation
raised a number of other "novel and complex issues."20 And,
finally, the plaintiffs argue that they litigated the case in good
faith and that the District Court was wrong to conclude that the
factors of compensation and deterrence supported Xcentric's fees
award.
The Supreme Court has emphasized, however, that "§ 505
confers broad discretion on district courts and, in deciding
whether to fee-shift, they must take into account a range of
20 Those issues included (1) "[w]hether DuPont granted
Xcentric an exclusive license when he checked the box"; (2)
"[w]hether the copyright assignment from DuPont to Goren and Small
Justice pursuant to the Superior Court judgment was a valid
transfer of copyright"; (3) "[t]he scope of the copyright Xcentric
claimed to own (but did not)"; and (4) "[w]hether an [ISP] that
claims copyright ownership over defamatory content becomes
responsible for it, thus eliminating its [CDA] immunity."
- 33 -
considerations beyond the reasonableness of litigating positions."
Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct. 1979, 1988 (2016).
We, too, have explained that review of a district court's
application of the Fogerty factors is "extremely deferential,"
such that "we will set aside a fee award only if it clearly appears
that the trial court ignored a factor deserving significant weight,
relied upon an improper factor, or evaluated all the proper factors
(and no improper ones), but made a serious mistake in weighing
them." T-Peg, Inc. v. Vermont Timber Works, Inc., 669 F.3d 59,
61-62 (1st Cir. 2012) (citation and quotation marks omitted).
After all, "the trial court is in the best position to gauge the
bona fides of a request for fees." Spooner v. EEN, Inc., 644 F.3d
62, 70 (1st Cir. 2011). And, here, we conclude that with respect
to the Fogerty factors, the District Court did not abuse the broad
discretion that § 505 confers in awarding fees to Xcentric.
As in T-Peg, the District Court "provided plenty of
reasoning in support of its award" -- offering "explanation and
analysis" that was "not just reasonable but thoughtful." 669 F.3d
at 63-64. Regarding whether the plaintiffs' claims "were
objectively unreasonable under Fogerty," the District Court
explained that, although it was "not prepared to say that the
[plaintiffs'] claims were wholly without merit, or that
[p]laintiffs' appeal regarding same [was] frivolous," "the legal
and factual basis for same" was "at best questionable." And this
- 34 -
conclusion tracked the District Court's detailed analysis in its
order granting Xcentric's motion for summary judgment on the
copyright-related claims.
With regard to "[t]he Fogerty factors of compensation
and deterrence," moreover, the District Court concluded that the
fees award was supported by "[t]he protracted nature of the case,
lasting more than two years," and because "Xcentric [, as the
defendant,] litigated without the prospect of an award of damages"
and that "the award it [sought] regarding fees and costs would
vindicate its defense on the merits." The District Court further
concluded that the "degree of success Xcentric obtained also
support[ed] an award," as "Xcentric prevailed on all of
[p]laintiffs' claims," and "Xcentric's sole counterclaim was
dismissed not on the merits, but on its own motion."
The plaintiffs also contend that the fees award is
problematic because they litigated in good faith. However, we
have explained that Fogerty "expressly rejected the practice of
requiring a showing of . . . bad faith before a prevailing [party]
- 35 -
could be awarded attorney's fees." See Airframe Sys., 658 F.3d at
108. We thus affirm the fees award.21
V.
For the foregoing reasons, we affirm the District
Court's March 2014 partial grant of Xcentric's motion to dismiss,
the District Court's March 2015 grant of summary judgment in favor
of Xcentric, the District Court's December 31, 2015 fees award
order, and the District Court's May 2, 2016 orders related to the
fees award.
21
The plaintiffs separately contend that the District Court
abused its discretion by making a finding as to prevailing hourly
rates that they contend was impermissibly based solely on
Xcentric's attorneys' affidavits. The plaintiffs, however, do not
dispute that Xcentric submitted a 2013 survey done by the American
Intellectual Property Law Association documenting prevailing rates
in the Boston area, or that Xcentric referenced recent fee awards
made by federal district judges in Massachusetts. We thus conclude
that the District Court did not abuse its discretion in concluding
that the record reflects that "actual attorney rates billed were
less than prevailing rates."
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