Richard N. Bell v. Charles Lantz

In the
United States Court of Appeals
For the Seventh Circuit
No. 15-2341
RICHARD N. BELL,
Plaintiff-Appellant,
v.
CHARLES LANTZ,
Defendant-Appellee.
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:13-cv-00035-TWP-DKL— Tanya Walton Pratt, Judge.
ARGUED JANUARY 19, 2016 — DECIDED JUNE 17, 2016
Before EASTERBROOK, ROVNER, and SYKES, Circuit Judges.
ROVNER, Circuit Judge. This appeal concerns an award of
attorney’s fees by the district court to Charles Lantz, who was
the defendant in a suit brought by Richard Bell under the
Copyright Act, 17 U.S.C. § 501 et seq., which was later volun-
tarily dismissed. Bell does not challenge the court’s decision to
award fees, but contests the amount of fees awarded.

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2 No. 15-2341
The original copyright infringement action was filed by
Bell, a practicing attorney and professional photographer,
against forty-seven defendants including Lantz. Bell had taken
a photograph of the Indianapolis skyline (the “Indianapolis
Photo”), and alleged that each of the defendants violated the
Copyright Act in publishing his photograph on their websites.
Lantz filed an answer denying all allegations of copyright
infringement of the Indianapolis Photo. Through responses to
interrogatories, Bell confirmed that Lantz had not infringed his
copyright, and the district court granted Bell’s motion to
voluntarily dismiss his copyright infringement claim with
prejudice.
In light of that dismissal with prejudice, Lantz filed a
motion as the prevailing party for costs and attorney’s fees
under 17 U.S.C. § 505 of the Copyright Act. That provision
allows the district court in its discretion to permit the recovery
of all costs of litigation in any copyright civil action, including
an award of reasonable attorney’s fees. The district court
considered the nonexclusive factors outlined in Fogerty v.
Fantasy, Inc., 510 U.S. 517, 534 n. 19 (1994), and chose to
exercise its discretion to award fees. As to those factors, the
district court determined: (1) that the action was frivolous
because Bell had no evidence to support his claim against
Lantz; (2) that Bell’s motivation in filing the action was
questionable in that Bell had filed a multiplicity of suits, each
involving the same or similar infringement allegations with
quick settlements, and improperly joined defendants in such
actions thus saving extensive filing fees, including the action
against Lantz involving forty-seven defendants; (3) that the
action was objectively unreasonable because he lacked any

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No. 15-2341 3
evidence to support it; and (4) that awarding fees would
advance the considerations of compensation and deterrence.
On appeal, Bell does not challenge the court’s determination to
award fees under those factors. Instead, Bell argues that the
court erred in its determination as to the amount of fees to
award.
Bell first argues that the district court erred in refusing to
reduce the fee award based on Lantz’s failure to mitigate his
costs and fees. Relying on our decisions in Dubisky v. Owens,
849 F.2d 1034, 1037 (7th Cir. 1988), and Leffler v. Meer, 936 F.2d
981, 987 (7th Cir. 1991), Bell asserts that all parties and their
counsel have a continuing obligation to mitigate costs and fees
by immediately taking action to terminate a case where
possible. Bell asserts that in this case Lantz ran up fees rather
than informing Bell early in the litigation that he had sued the
wrong defendant.
Bell’s argument, although captioned as a mitigation
requirement, comes very close in this case to imposing an
affirmative burden on the defendant to disprove plaintiff’s
case—an argument which lacks any support in precedent. But
we need not address the legal issue presented by Bell as to the
extent of a defense counsel’s duty to mitigate fees by seeking
rapid termination of a defective case because Bell’s argument
fails first on the facts. The crux of Bell’s argument regarding
Lantz’s dilatory conduct is Bell’s contention that defense
counsel Paul Overhauser was informed as early as March 4,
2013 that Lantz did not publish the Indianapolis Photo, and
that Overhauser failed to convey that information to Bell. In
fact, Bell indicates that Lantz affirmatively sought to evade
revealing that information by avoiding a response when

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4 No. 15-2341
questioned. At oral argument, we explored the basis for Bell’s
factual claim because the citations to the record did not provide
a factual basis for the claim. The parties subsequently filed
supplementary responses as to that and another issue, but
those responses similarly do not support Bell’s contention. Bell
relies on the following responses by Overhauser:
Q What do you mean you disagree? When is
the first—when did you inform me that your
client did not publish the photograph?
A On March 4, 2013, Mr. Lantz filed his answer
to the complaint.
Q And you think that is sufficient?
A Yes.
That cursory discussion is the only record support that Bell
identifies for his contention that Overhauser knew on March 4,
2013 that Lantz did not publish the photograph yet withheld
that factual information from Bell. Yet that colloquy reveals
nothing as to what Overhauser knew about the matter. In fact,
it indicates that the answer contained all of the information he
knew.
Overhauser merely directed Bell to his client’s answer
which denies the allegations of the complaint. In that answer,
Lantz specifically denied the following allegations: (1) that each
defendant published the “Indianapolis Photo” on a website
they created even though they had no rights or authority to
publish; (2) that Lantz was located in Indianapolis, Indiana,
and created and operated a website with the domain name of
lantzusa.com and conducted business in this district; (3) that

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No. 15-2341 5
each defendant downloaded or took the Indianapolis Photo
from the internet without permission from the owner; and
(4) that each defendant began publishing the photo and using
it for his or her own commercial use without paying for that
use or obtaining authorization. That response should have put
Bell on notice that Lantz contested the allegation that he
published the photograph on his website without authoriza-
tion. But the record cite does not indicate what Overhauser
knew at all and, more importantly, it reveals that his client
denied the allegations in the complaint in his answer, including
the claim that he published the Indianapolis Photo. Bell was, of
course, aware of the statements in the answer, and therefore
the record cite fails to reveal any information regarding the
claim that was withheld from him.
The district court considered Bell’s claim and rejected it for
precisely that reason. The court held that Bell could not
demonstrate that Lantz failed to timely notify him that Lantz
had not published the photo, because Lantz denied all allega-
tions of infringement when he filed his answer. Because Bell
has failed to point to evidence that Overhauser possessed
additional knowledge that was withheld to delay proceedings,
the holding by the district court was proper. In fact, the district
court found that Lantz denied liability at his first opportunity,
and that Lantz “laid low” throughout the litigation, thus
reducing the expense of the litigation, with fees increasing only
as Lantz was required to respond to Bell’s filings. The district
court noted that although defense counsel is not required to
determine and take the most economical defense strategy, it
appears that Lantz may have taken the most economical one
here. Bell has given us no reason to disturb those findings.

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6 No. 15-2341
Bell’s argument lacks factual support in that he presented no
evidence as to Overhauser’s knowledge at the time of the
filings, and the answer alerted Bell that Lantz was denying that
he published the Indianapolis Photo.
Bell next argues that the district court erred in awarding
fees for the time spent by defense counsel defending the fee
petition. Relying on Baker Botts LLP v. ASARCO LLC, 135 S. Ct.
2158 (2015), Bell asserts that a law firm cannot be awarded fees
for defending its fee petition. In Baker Botts, the Supreme Court
noted that under the American Rule, each litigant pays her
own fees unless a statute specifically authorizes otherwise. The
Court noted that statutes specifically authorizing otherwise
“tend to authorize the award of ‘a reasonable attorney’s fee,’
‘fees,’ or ‘litigation costs,’and usually refer to a ‘prevailing
party’ in the context of an adversarial ‘action.’” 135 S. Ct. at
2164. That is precisely the type of language in the Copyright
Act, which provides that “the court may also award a reason-
able attorney’s fee to the prevailing party as part of the costs.”
17 U.S.C. § 505. The Court held that statutes with such lan-
guage displace the American Rule. That contrasts with the
statute at issue in Baker Botts, which contained language
authorizing fees only for certain services provided by attor-
neys. Because only certain fees were explicitly allowed, the
Court held that the statute did not displace the American Rule
with respect to other fees incurred such as fee defense litiga-
tion. Because the language in the Copyright Act modifies the
American Rule, the limitation in Baker Botts is irrelevant and
does not provide a basis to reverse the district court’s award of
such fees. See Fogerty, 510 U.S. at 533-34 (Ҥ 505 is one situation
in which Congress has modified the American Rule to allow an

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No. 15-2341 7
award of attorney's fees in the court's discretion”); see also
Kirtsaeng v. John Wiley & Sons, Inc. No. 15-375, 2016 WL
3317564, at *4 (U.S. June 16, 2016) (reiterating that § 505 is a fee-
shifting statute); Commissioner, INS v. Jean, 496 U.S. 154 (1990)
(fee-shifting statute permits court to award fees for time spent
in litigation over fees without second finding that fees for fees
are themselves warranted).
Finally, Bell challenges the court’s calculation of the attor-
ney’s fees, asserting that the court improperly awarded an
hourly rate of $410 for defense counsel when the evidence
established that defense counsel charged Lantz only an hourly
rate of $250. The district court rejected this argument based on
its belief that Lantz produced evidence supporting his $410
rate and Bell failed to do the same for the claim that the $250
rate was proper. The district court’s entire analysis of the issue
is as follows:
Mr. Bell failed to designate any exhibits that support
his assertion that Mr. Overhauser’s rate was $250.00
per hour. He did not submit to the Court any of the
documents produced in discovery that allegedly
support his position. The exhibits designated for the
Court’s review support Mr. Lantz’s attorney’s fee
request in regard to Mr. Overhauser’s rates and the
amount of time spent on the case. Mr. Overhauser’s
deposition testimony also supports Mr. Lantz’s fee
request. Given the nature of this litigation, Mr.
Overhauser’s years of experience, and the docu-
ments provided to the Court, the Court determines
that the fees requested are reasonable.

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8 No. 15-2341
The court’s determination, then, is based on the belief that
Bell failed to present any exhibits supporting his claim that the
hourly rate was $250, whereas Lantz presented evidence in
support of his attorney’s $410 rate. But the court was mistaken
in that belief. Bell in fact presented significant evidence
establishing that the actual hourly rate charged by Overhauser
to Lantz was $250. However, those exhibits were filed under
seal (although they are appended to the briefs in this appeal),
whereas the exhibits by Lantz were not, and that may explain
why the exhibits may have been overlooked by the district
court here. Those exhibits include the formal engagement letter
sent out by Overhauser to Lantz in this case, confirming the
engagement of Overhauser Law Offices, LLC, in the matter
and setting forth the basis upon which it would represent
Lantz. The engagement letter acknowledges Lantz’s Legal-
Shield contract, and indicates that Overhauser agreed to
provide those legal services at a rate of $250 per partner hour.
It further provides that Lantz will be responsible for court
costs, travel costs, expert witness fees, paralegal and secretary
fees, post-judgment relief and any other out-of-pocket expense.
The engagement letter also provides that it would direct its
invoices to LegalShield “for now,” and if and when it ex-
hausted the hours for which LegalShield was paying, it would
send its invoices directly to Lantz for payment. Bell attached
those invoices as exhibits, and with one exception they reveal
that the legal services are billed at a rate of $250 per hour.
Invoices dated February 5, 2013; March 5, 2013; June 7, 2013;
May 5, 2014; August 5, 2014; September 5, 2014; and October
10, 2014, itemizing the legal services in quarter-hour incre-
ments, all bill at an attorney rate of $250 per hour. Only the

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No. 15-2341 9
invoice dated January 27, 2015, after Lantz filed the Motion for
Fees, billed for attorney time at the $410 hourly rate.
Lantz argues that the invoices with the $250 rate were those
sent to LegalShield and copied to him because LegalShield had
an hourly cap on fees of $250, and that Lantz was liable for the
balance. There are myriad problems with that argument. First,
the engagement letter sets forth the $250 rate but never
indicates that the total rate will be $410 and that Lantz will be
responsible for the difference, despite listing a litany of other
expenses such as court costs and travel fees for which Lantz
would be responsible. Furthermore, that engagement letter
provides that Overhauser Law Offices would direct its invoices
to LegalShield “for now,” and if and when it exhausted the
hours for which LegalShield was paying, it would send its
invoices directly to Lantz for payment. If Lantz were responsi-
ble for the higher amount from the outset, then Overhauser
Law Offices would have directed its invoices to Lantz for
payment immediately. That it would do so only if the hours
limit was reached indicates that there was no gap between the
rate paid by LegalShield and the actual hourly rate charged.
Finally, the argument that the invoice reflected only a $250 rate
because that was LegalShield’s limit, not because it was the
rate actually charged, is belied by the outlier invoice dated
January 27, 2015, which appears to mirror the other invoices in
all ways except the rate. If the rate in the invoice were Legal-
Shield’s limit not the actual rate, then the January 27th invoice
would include that rate as well, not the higher $410 rate. The
inclusion of that higher rate in the January 27th invoice is
evidence that the $250 rate in the previous invoices reflected
the actual rate charged and not the LegalShield limit.

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10 No. 15-2341
Lantz’s evidence of the $410 rate is minimal. In addition to
the January 27th invoice, Lantz provided two declarations by
Overhauser, as well as testimony by Overhauser about what
Lantz agreed to pay. Bell objects to the consideration of
Overhauser’s testimony as to what Lantz agreed to pay as
hearsay, and in response Lantz has clarified that he is not
relying on any testimony to establish a reasonable attorney’s
fee, but rather is basing his claim solely on the two declarations
of Overhauser. Those declarations, however, do not address
the rate that Overhauser actually agreed to charge Lantz for his
legal services in this case. The declarations merely set forth that
Overhauser’s “present standard hourly rate for cases of this
type” is $410 per hour, and states that he has billed other
clients at that rate for the same type of work as in this case.
That would tend to prove that Overhauser could charge that
amount for cases such as this one, but the proper focus is on
what this particular client agreed to pay. In Assessment Techs.
of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 438-39 (7th Cir. 2004),
we held that in a copyright case “the best value of the lawyer’s
services is what the client agrees to pay him,” and therefore
agreed with the Third Circuit in Lieb v. Topstone Industries,
788 F.2d 151, 156 (3d Cir.1986), that the contract between a
party and his lawyer places a ceiling on what a court can
award the lawyer in such cases. Overhauser’s declarations do
not address the fees that Lantz agreed to pay it, as opposed to
fees charged to other clients for similar services, and are
therefore unhelpful.
The evidence in the record therefore provides little support
for the $410 figure. The district court never properly analyzed
that evidence, however, because it appeared to be unaware of

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No. 15-2341 11
the sealed exhibits produced by Bell. As we have discussed
above, that evidence deals a significant, and quite likely fatal,
blow to Lantz’s argument that he is entitled to an attorney’s fee
of $410 per hour as opposed to $250 per hour, and therefore a
remand is required.
Accordingly, the award of attorney’s fees is VACATED and
the case REMANDED for further proceedings consistent with
this opinion.

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