Antitrust Law Daily Wrap Up, ANTITRUST—D. Colo.: Prevailing party awarded attorney fees for improper conduct following jury verdict in antitrust case, (Apr 2, 2014)

By Linda O’Brien, J.D., LL.M.

A nightclub owner was entitled to attorney fees as the prevailing party following a jury verdict on antitrust claims filed by a competing nightclub owner due to the competitor’s improper conduct in asserting multiple claims beyond the core restraint of trade antitrust claims for the purpose on financially harming the nightclub owner, a federal district court in Denver has held. An evidentiary hearing was ordered to determine the award of fees and excessive costs (Christou v. Beatport, LLC, March 31, 2014, Jackson, R.).

The nightclub owner, Regas Christou, owns several nightclubs in Denver, including The Church and Vinyl, which featured performances by “A-List DJs” of Electronic Dance Music (EDM), DJs recognized in the list of “Top 100” DJs published annually by DJ Magazine. Christou and his competitor, Bradley Roulier, previously worked together, and Roulier, with Christou’s assistance, founded a website called Beatport that provided music downloads that catered to DJs. The tracks had characteristics, such as lack of digital rights management and the option to purchase them in WAV format, that distinguished them from tracks offered by other music download sites. Beatport was very successful, and became the largest online site that caters exclusively to producers and consumers of EDM.

Roulier later founded a competing nightclub, called Beta, that also featured performances by A-List DJs. Christou filed suit on behalf of himself and his seven nightclubs against Roulier, Beatport, and Beta, asserting tying and monopoly claims, among other claims. Christou alleged that Roulier began threatening those DJs that their tracks would not be promoted on Beatport if they performed at Christou’s clubs. This conduct permitted Roulier to take over the Denver market for performances by those DJs. Roulier’s motion to dismiss antitrust claims by Christou individually was granted. However, Roulier’s motion for summary judgment regarding the plaintiff clubs’ antitrust claims was denied. A jury rendered a verdict in favor of the defendants on all remaining claims. The defendants moved for an award of attorney fees and excess costs, asserting that the plaintiffs’ claims were groundless and pursued in bad faith.

The court determined that Christou undertook the litigation in part with “bad intent or improper motive” and an award of attorneys fees and/or costs was appropriate. An action may be considered exceptional when a party has acted in bad faith, vexatiously, wantonly, or for oppressive purposes. According to the court, the inclusion of Christou as an individual plaintiff with respect to his antitrust claims was no substantially without justification. The primary dispute in the case was between Christou and Roulier. Although the economic injury appeared to have been sustained by Christou’s clubs rather than by him individually, the issue was technical and fair to argue.

Additionally, even though the remaining claims of Christou and five of his clubs were weak and abandoned during trial, the defendants presented no evidence of the marginal cost to them in defending against these plaintiffs. Those plaintiffs, that were voluntarily dismissed, were peripheral to the core issues of the case and not shown to have added any significant litigation burden to the defense. Moreover, the withdrawal of the conspiracy to monopolize, theft of trade secrets, civil conspiracy, and intentional interference with business advantage claims during trial did not indicate that the claims were brought in bad faith, unreasonably, or vexatiously. Parties and counsel are expected to reevaluate claims during the course of a case and dismissal based on the evidence presented at that point was not indicative of bad faith. Finally, the jury’s rejection of the plaintiffs’ theory at trial did not mean that the claims were utterly devoid of evidentiary support.

However, the court found that some award of sanctions was appropriate. The defendants presented evidence that Christou and another promoter extensively discussed to use of litigation as a strategy to financially harm Roulier and that Christou stated he was unwilling to amicably resolve the dispute with Roulier. The court noted that Christou’s complaint mirrored the strategy of asserting multiple claims, including several of which were marginal and Christou employed a team of attorneys to carry on expensive litigation with Roulier. Thus, it was reasonable to infer that Christou knew the strategy was improper when he pursued it. Since there was no evidence showing what fees and costs were incurred as a result of the improper conduct as distinguished from the defense of the core antitrust claims, the court concluded that an evidentiary hearing was required to determine an award of attorneys fees and costs.

The case is No. 10-cv-02912-RBJ-KMT.

Attorneys: Dale R. Harris (Davis Graham & Stubbs, LLP) for R.M.C. Holdings, LLC and Bouboulina, Inc. Lisha Renee McKinley (Silver & DeBoskey, PC) for Bradley Roulier and BMJ&J, LLC.

Companies: R.M.C. Holdings, LLC; Bouboulina, Inc.; Molon Lave, Inc.; City Hall, LLC; 1037 Broadway, Inc.; 776 Lincoln St., Inc.; 1055 Broadway, Inc.; Beatport, LLC; BMJ&J, LLC.

Cases: Antitrust ColoradoNews