Old Market Group Holdings Corp.

UNITED STATES BANKRUPTCY COURT 	NOT FOR PUBLICATION
SOUTHERN DISTRICT OF NEW YORK
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In re 	) 	Chapter 11
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OLD MARKET GROUP HOLDINGS 	)
CORP., et al., 	) 	Case No. 20-10161 (PB)
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Debtors.1 	) 	(Jointly Administered)
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Memorandum Decision and Order
Denying Katzman’s Motion for Reconsideration
A P P E A R A N C E S :
WOLLMUTH MAHER & DEUTSCH LLP
Counsel for VSM NY Holdings LLC,
VSM NY Distribution LLC and Village
Super Market, Inc.
500 Fifth Avenue
New York, New York 10110
By: Paul R. DeFilippo, Esq.
James N. Lawlor, Esq.
Joseph F. Pacelli, Esq.
METZ LEWIS BRODMAN
MUST O’KEEFE LLC
Counsel for VSM NY Holdings LLC,
1 The Debtors in these chapter 11 cases, along with the last four digits of each of their federal tax identification
number, are as follows: Old Market Bakery LLC (4129); Old Market Broadway LLC (8591); Old Market Chelsea
LLC (0288); Old Market Construction Group, LLC (2741); Old Market Douglaston LLC (2650); Old Market East
86th Street LLC (3822); Old Market eCommerce LLC (3081); Old Market Georgetowne LLC (9609); Old Market
Greenwich Street LLC (6422); Old Market Group Central Services LLC (7843); Old Market Group Plainview LLC
(8643); Old Market Hudson Yards LLC (9331); Old Market Kips Bay LLC (0791); Old Market Store LLC (9240);
Old Market Pelham LLC (3119); Old Market Pelham Wines & Spirits LLC (3141); Old Market Red Hook LLC
(8813); Old Market Stamford LLC (0738); Old Market Stamford Wines & Spirits LLC (3021); Old Market Staten
Island LLC (1732); Old Market Uptown LLC (8719); and Old Market Westbury LLC (6240). The location of the
Wind Down Estates corporate headquarters is 2284 12th Avenue, New York, New York 10027. Old Market
Community Foundation Inc., a charitable organization, owned by Old Market Group Holdings Corp., is not a debtor
in these proceedings.
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VSM NY Distribution LLC and Village
Super Market, Inc
535 Smithfield Street, Suite 800
Pittsburgh, Pennsylvania 15222
By: Barry I. Friedman, Esq.
DONIGER / BURROUGHS
Counsel for Ferguson &
Katzman Photography, Inc.
231 Norman Avenue, Suite 413
Brooklyn, New York 11222
By: Scott Alan Burroughs, Esq.
Michael D. Steger, Esq.
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Plan Administrator
767 Fifth Avenue
New York, New York 10153
By: Sunny Singh, Esq.
Jared R. Friedmann, Esq.
Honorable Philip Bentley
U.S. Bankruptcy Judge
By this motion [ECF No. 1286] (the “Motion”), Ferguson & Katzman Photography, Inc.
(“Katzman”) moves for reconsideration, under Federal Rules of Bankruptcy Procedure 9023 and
9024 and Federal Rules of Civil Procedure 59(e) and 60(b), of the September 21, 2022 decision
[ECF No. 1282] (the “Order”) of this Court. That decision, by Judge James L. Garrity, Jr., granted
the motion of Village Super Market, Inc. and several of its affiliates (collectively, “Village”) to
enforce the April 20, 2020 sale order in these chapter 11 proceedings [ECF No. 449] (the “Sale
Order”), by which the Debtors sold five stores and certain related assets to Village. Specifically,
the Order held that the Sale Order bars Katzman’s continued prosecution of its pending copyright
action against Village.
Motions for reconsideration under Rules 59(e) and 60(b) are subject to a stringent standard.
As the Second Circuit has held with regard to motions under Rule 59(e), “[t]he standard for
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granting such a motion is strict, and reconsideration will generally be denied unless the moving
party can point to controlling decisions or data that the court overlooked.” Shrader v. CSX Transp.,
70 F.3d 255, 257 (2d Cir. 1995). “It is well-settled that Rule 59 is not a vehicle for relitigating old
issues, presenting the case under new theories, securing a rehearing on the merits, or otherwise
taking a ‘second bite at the apple . . . .’” Sequa Corp. v. GBJ Corp., 156 F.3d 136, 144 (2d Cir.
1998).
The standards governing motions under Rule 60(b) are similarly strict. While a court may
use Rule 60(b) to correct its own legal errors if it so chooses, the rule is “a mechanism for
‘extraordinary judicial relief’ invoked only if the moving party demonstrates ‘exceptional
circumstances.’” Ruotolo v. City of N.Y., 514 F.3d 184, 191 (2d Cir. 2008) (citations omitted).
Katzman advances five arguments for reconsideration of the Order. None of them satisfy
the governing standards under either Rule 59(e) or Rule 60(b). Regrettably, most of the arguments
advanced by Katzman simply ignore, or misstate, the clearly stated rationale of Judge Garrity’s
decision.
Katzman argues, first, that “[t]he Order’s fundamental issue [sic] is that it conflates
ownership of Fairway’s physical ‘Store Furnishings,’ which the Order found to include the
physical copies of the Katzman photographs, with the attendant copyrights for those photographs.”
(Motion at 4, emphasis in original; see also id. at 11.) But Judge Garrity’s decision carefully
distinguished between the physical assets that Fairway sold, including the photographs that
incorporated Katzman’s work, and the right to use those photographs. The Order specifically stated
that the Debtors did not transfer to Village any license to use the photographs — and indeed, that
the Debtors could not have done so, because the Katzman license expired prior to the date of the
sale. (Order at 24–26.)
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As the Order explains, its basis for enjoining Katzman’s suit is not that, by acquiring
Katzman’s photographs, Village thereby acquired a license to display them. Instead, the Order
finds that the Sale Order bars Katzman’s suit for a two-fold reason: (i) the Sale Order, by its terms,
enjoins all claims “in any way relating to . . . the Acquired Assets or the Debtors’ businesses prior
to the Closing Date” (Order at 21; see also id. at 26–29); and (ii) as a matter of copyright law,
Village’s display of Katzman’s photographs gave rise not to a new claim that accrued post-sale
based on Village’s conduct, but instead to a continuation of the copyright infringement claim that
had arisen pre-sale based on the Debtors’ conduct. (Id. at 21, 34–38.) As just noted, claims of this
sort are expressly barred by the Sale Order.
Katzman’s second argument (Motion at 7–9) fails for similar reasons. The argument
appears to be, once again, that Section 363 cannot shield Village from suit for its use of the
photographs, because the assets it purchased from the Debtors did not include the transfer of any
copyrights. But as just noted, the Order specifically acknowledges that the sale did not transfer any
copyright license to Village. The Order’s basis for enjoining Katzman’s suit is entirely different.
Katzman’s third argument (Motion at 9–10) is that the publication notice of the Sale Order
provided by the Debtors did not give Katzman “notice that Fairway was selling a license,
copyright, or other intellectual property right to Village.” This is true but irrelevant, since no such
license was sold. What is dispositive is that the Sale Order (of which Katzman does not dispute it
received proper notice) expressly enjoined all claims in any way related to the Debtors’ pre-sale
businesses. As discussed below, the law governing whether Katzman’s claims against Village did
in fact relate to and arise out of the Debtors’ pre-sale businesses, instead of post-sale
circumstances, is sparse, and Katzman may have a colorable argument on appeal that the
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Bankruptcy Court erred in finding these claims arose pre-sale. But Katzman has no basis to
challenge the adequacy of the notice that was provided.
Katzman’s fourth argument (Motion at 10) is that the Order misapplied the Copyright Act’s
definition of what it means to “publicly” perform or display a work, see 17 U.S.C. § 101.
According to Katzman, the Order mistakenly applied the second, rather than the first, of the
statute’s two alternate definitions of this term and held “that Village’s display of the Katzman
photographs in its stores is not a public display.” (Motion at 10.) In fact, the Order held just the
opposite on both points. It correctly ruled that the first, not the second, of these two statutory
definitions applies to this case, and that Village’s display of Katzman’s photographs is a public
display. (See Order at 36–37.)
Katzman’s fifth argument (Motion at 11) is that the Order “reverse[d] the burden of proof”
by failing to require Village to present evidence that it had acquired a valid license to display
Katzman’s photographs. Like Katzman’s first three arguments, this ignores the Order’s clear
statement that no license was transferred to Village and that the Order’s injunction rests on entirely
different grounds.
Katzman’s final argument is that the Order is unprecedented: “[N]o other court has ever
reached the conclusion that the Order reaches, namely that when a party buys a copyrighted work
in a bankruptcy proceeding it can continue to infringe on the artist’s rights in that work by simply
infringing in the same manner as the predecessor.” (Motion at 11; emphasis in original.) This may
be true. The precise issue addressed in the Order — the effect of a Section 363 sale order on the
buyer’s liability for continuing copyright infringement — appears to be an issue of first impression.
Even on the analogous issue on which Judge Garrity based his ruling — whether for statute of
limitations purposes the continued display of a copyrighted work gives rise to a new copyright
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infringement claim — there appears to be little precedent, and none of it is controlling. There may
be fair grounds for disagreement as to the Bankruptcy Court’s resolution of this issue, and Katzman
is free to challenge the ruling on appeal. But the ruling certainly did not overlook controlling
precedent or involve clear error of any sort. Disagreement over a court’s resolution of a novel
issue, without more, is not a basis for reconsideration under Rule 59 or Rule 60.
For these reasons, the Court DENIES the motion for reconsideration.
IT IS SO ORDERED.
Dated: New York, New York
October 19, 2022
/s/ Philip Bentley
Honorable Philip Bentley
United States Bankruptcy Judge
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