Love and Madness, Inc. v. Claire's Holdings LLC.

CourtDistrict Court, S.D. New York
DecidedOctober 5, 2022
Docket1:21-cv-01913
StatusUnknown

This text of Love and Madness, Inc. v. Claire's Holdings LLC. (Love and Madness, Inc. v. Claire's Holdings LLC.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Love and Madness, Inc. v. Claire's Holdings LLC., (S.D.N.Y. 2022).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK LOVE AND MADNESS, INC.,

Plaintiff,

-v-

CIVIL ACTION NO.: 21 Civ. 1913 (SLC) CLAIRE’S HOLDINGS, LLC, et al.,

OPINION AND ORDER Defendants.

SARAH L. CAVE, United States Magistrate Judge.

I. INTRODUCTION After multiple settlement conferences with the Court, Plaintiff Love and Madness, Inc. (“L&M”) and Defendant Claire’s1 reached a settlement resolving this copyright action (the “Settlement”). The parties consented to Magistrate Judge jurisdiction, and now ask the Court to approve their settlement agreement and enter final judgment. (ECF No. 131 (the “Settlement Motion”)). Barton LLP (“Barton”), former counsel for L&M, previously asserted a charging lien against L&M’s recovery in this action, (see generally ECF Nos. 81; 92; 133 ¶ 4), and has now renewed its motion for a charging lien against the funds that L&M is to receive as part of the Settlement. (ECF No. 136 (the “Fee Motion”, with the Settlement Motion, the “Motions”)). For the reasons set forth below, the Settlement Motion is GRANTED, and the Fee Motion is GRANTED IN PART and DENIED IN PART.

1 Claire’s refers collectively to Claire’s Holdings LLC, Claire’s Inc., CBI Distributing Corp. d/b/a “Claire’s”, “Icing”, “Claire’s Accessories”, and “Icing by Claire’s,” Claire’s Accessories UK Ltd., and Claire’s Stores Inc. (See ECF No. 1 at 1). II. BACKGROUND The factual and procedural background of this action is set forth in the Court’s Opinion and Order dated October 4, 2021, and is incorporated by reference. Love & Madness, Inc. v.

Claire’s Holdings, LLC, No. 21 Civ. 1913 (AT) (SLC), 2021 WL 4554058, at *1–2 (S.D.N.Y. Oct. 4, 2021) (“L&M I”). As is relevant here, according to an engagement letter dated February 7, 2020 (the “Engagement Letter”), L&M engaged Barton to provide legal representation in intellectual property and other matters, with the principal attorneys designated as Laura-Michelle Horgan

(“Horgan”) and Maurice Ross (“Ross”). See L&M I, 2021 WL 4554058, at *1 & n.1 (citing ECF Nos. 84 ¶ 3; 89; 91). Horgan and Ross agreed to reduce their hourly rates to $400 and $550, respectively. L&M I, 2021 WL 4554058, at *1 (citing ECF No. 89 at 2). On March 4, 2021, L&M, represented by Barton, filed the original complaint against Claire’s asserting claims for copyright infringement of five of L&M’s designs under the Copyright Act, 17 U.S.C. § 101 et seq. (the “Copyright Claims”), unfair business practices in violation of New York General Business Law

§ 349 and unjust enrichment (the “State Law Claims”). (ECF No. 1 ¶¶ 75–130 (the “Complaint”)). On May 18, 2021, L&M filed an amended complaint (the “FAC”) adding claims based on four additional L&M designs, and on June 2, 2021, filed a second amended complaint (the “SAC”), based on the same nine L&M designs as in the FAC. (ECF Nos. 42; 44; see ECF No. 58 at 8–11 (comparing Complaint, FAC, and SAC)). On July 29, 2021, Claire’s moved to dismiss the State Law Claims as preempted by the Copyright Act based on well-settled Second Circuit authority, and for

failure to state a claim. (ECF Nos. 57; 58 (the “MTD”)). On August 9, 2021, while the MTD was pending, Doniger/Burroughs (“Doniger”) informed Barton that L&M had engaged Doniger to represent it going forward, and asked Barton to execute a substitution of counsel form and deliver L&M’s client file. L&M I, 2021 WL 4554058, at *1 (citing

ECF No. 63). (See ECF No. 136-7 at 3–5). Barton declined to deliver the file until L&M paid outstanding legal fees and costs totaling $104,641.58 (the “Initial Fees”). L&M I, 2021 WL 4554058, at *1 (citing ECF Nos. 63–64). On August 18, 2021, Doniger moved for an order substituting itself as L&M’s counsel and directing Barton to deliver L&M’s file. L&M I, 2021 WL 4554058, at *2 (citing ECF No. 63 (the “Doniger Motion”)). Barton countered by asking the Court

to order L&M to pay the Initial Fees or post a bond, which the Court interpreted as a motion to assert a lien pursuant to New York Judiciary Law § 475 (“Section 475”). (ECF No. 64).2 See L&M I, 2021 WL 4554058, at *1–2. At a hearing on September 10, 2021 (the “Hearing”), the Court held that L&M had not shown that it discharged Barton “for [] cause” and, therefore, Barton had “a valid right to retain [L&M’s] files[,]” but urged L&M and Barton to agree to a payment schedule that would “stop[]

the litigation [from] being held hostage.” L&M I, 2021 WL 4554058, at *2 (quoting ECF No. 78 at 15:12–20, 17:4–11). After L&M and Barton were unable to resolve the fee dispute, on September 24, 2021, Barton filed a supplemental letter “explaining why it believed the amount of the [Initial] Fees was reasonable and reiterating its request that L&M be required to post a bond before

2 In a letter to the Honorable Analisa Torres dated August 18, 2021, Barton responded to the Doniger Motion and requested a hearing to address both Doniger’s request to substitute as L&M’s counsel and Barton’s demand that L&M pay the Initial Fees, but submitted no evidentiary support for the Initial Fees, apart from attaching Barton’s August 12, 2021 letter to Doniger asserting the amount Barton believed L&M owed. (ECF Nos. 64 (the “August 18 Letter”); 64-1). Judge Torres then referred the matter. (ECF No. 65). Barton would turn over the client file.” L&M I, 2021 WL 4554058, at *2 (citing ECF No. 81 (the “September 24 Letter”)). Barton submitted 85 pages of invoices (the “Invoices”) for the Court’s in camera review, but did not attach declarations from Horgan or Ross, attorney biographies, or

any other evidence in support of the Initial Fees. (See ECF No. 81; 84; 84-1 – 84-4). Doniger’s subsequent response quantified the legal fees that L&M had already paid Barton, accused Barton of “facially excessive billing[,]” and urged the Court to deny the request for bond. L&M I, 2021 WL 4554058, at *4 (citing ECF No. 83). Heather McAvoy, L&M’s Chief Executive Officer (“McAvoy”), submitted a declaration attesting that a medical condition since 2018 prevented her

from working, quantifying the fees she had paid Barton in this action and an unrelated Social Security matter, and describing her financial status. (ECF No. 84 (the “McAvoy Declaration”)).3 On October 4, 2021, in L&M I, the Court: (i) held that, “[b]ecause L&M did not discharge Barton ‘for cause,’ Barton ha[d] the right to assert a charging or retaining lien” under Section 475; (ii) denied Barton’s request for a retaining lien and ordered Barton to deliver L&M’s client file to Doniger; (iii) exercised its discretion to defer the determination of the amount of any charging

lien until a later stage of the action (the “Charging Lien”); (iv) denied Barton’s request to require L&M to post a bond; and (v) substituted Doniger as L&M’s counsel. 2021 WL 4554058, at *4–5.4 On October 6, 2021, L&M filed a notice of voluntary dismissal without prejudice of the State Law Claims. (ECF No. 102 (the “Notice of Dismissal”)). On November 10, 2021, Claire’s filed

3 Doniger also submitted an attorney declaration from Laura M. Zaharia, Esq., attesting to her calculations of amounts that Barton recorded for various tasks according to the Invoices. (ECF No. 85 (the “First Zaharia Declaration)). 4 Because, in L&M I, the Court “made no determination as to whether, if at all, [L&M] would be entitled to recover attorneys’ fees and costs,” the Court denied as unnecessary Claire’s request for clarification that 17 U.S.C. § 412(b) of the Copyright Act prevented an award of fees to L&M under 17 U.S.C. § 505. (ECF Nos. 103; 104).

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Love and Madness, Inc. v. Claire's Holdings LLC., Counsel Stack Legal Research, https://law.counselstack.com/opinion/love-and-madness-inc-v-claires-holdings-llc-nysd-2022.