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Arista Records, Inc. v. Flea World

October 10, 2006


The opinion of the court was delivered by: Simandle, District Judge


This matter comes before the Court upon the motion of Defendants Columbus Flea World, LLC and Columbus Farmers Market, LLC to certify this Court's March 31, 2006 Opinion and Order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). For the reasons discussed below, Defendants' motion will be denied.


Because the parties to this case are familiar with its underlying facts, the Court will include only a brief summary of the relevant facts. Plaintiffs are fourteen member companies of the Recording Industry Association of America, a not-for-profit trade association whose member companies create, manufacture and/or distribute approximately 90 percent of all legitimate sound recordings sold in the United States. The defendants in this motion are Columbus Flea World, LLC and Columbus Farmers Market LLC (the "Defendants").*fn1 The Defendants own and/or operate the Columbus Farmers Market in Burlington County, New Jersey. In a complaint filed in 2003, Plaintiffs allege that the flea market is a "pirate bazaar" where many of the flea market's vendors sell pirate and counterfeit compact discs ("CDs") and cassette tapes in violation of the Copyright Act, 17 U.S.C. §§ 101 et seq. Plaintiffs allege that the Defendants (and others) are legally responsible for the direct infringement by the third-party vendors because the defendants (a) had knowledge of and materially contributed to the vendors' infringing activity (contributory infringement) or (b) had the ability to supervise and control the direct infringement and financially benefitted from it (vicarious liability).

In 2005, both Plaintiffs and Defendants moved for summary judgment. On March 31, 2006, this Court issued an Opinion and Order (the "March Opinion and Order") granting Plaintiffs' motion for summary judgment in part and denying Defendants' motion for summary judgment, holding that Defendants (Columbus Flea World, LLC and Columbus Farmers Market, LLC) are liable for contributory and vicarious copyright infringement. See Arista Records, Inc. v. Flea World, Inc., No. 03-2670 Slip Op. at 1 (D.N.J. March 31, 2006). Defendants now move this Court to certify the Court's March Opinion and Order for interlocutory review.


Under 28 U.S.C. § 1292(b), interlocutory review is appropriate (1) if the appeal involves a controlling question of law; (2) there is a "substantial ground for difference of opinion" about that question of law; and (3) immediate appeal may materially advance the ultimate termination of the litigation.*fn2

See Katz v. Carte Blanche Corp., 496 F.2d 747, 754 (3d Cir. 1974). This test is inclusive; to be successful a moving party must demonstrate that all three criteria are met. Interlocutory appeal under Section 1292(b), however, is to be "used sparingly" and only in "exceptional circumstances" that justify a departure from the basic policy of postponing review until the entry of the final order. Hulmes v. Honda Motor Co., 936 F. Supp. 195, 208 (D.N.J. 1996) aff'd 141 F.3d 1154 (3d Cir. 1998)(citing 16 Charles A. Wright, et al., Federal Practice and Procedure, § 3929 at 132 (1977)). As such, even if a moving party meets all three criteria under Section 1292(b), the district court may still deny certification as the decision is entirely within the district court's discretion. See Bachowski v. Usery, 545 F.2d 363, 368 (3d Cir. 1976).

A. Controlling Question of Law

The Court must first address whether Defendants have established the existence of a "controlling question of law." In the Third Circuit, a "controlling question of law" is one that either: (1) if decided erroneously, would lead to reversal on appeal; or (2) is "serious to the conduct of the litigation either practically or legally." See Katz, 496 F.2d at 755 (citations omitted); see Public Interest Research Group of N.J., Inc. v. Hercules, Inc., 830 F. Supp. 1549, 1554 (D.N.J. 1993). Courts in this District have held that, although a question may appear to be a controlling question of law, questions about a district court's application of the facts of a case to established legal standards are not controlling questions of law for purposes of Section 1292(b). See Link v. Mercedes-Benz of N. Am., Inc., 550 F.2d 860, 863 (3d Cir. 1977)(Section 1292 "is not designed for review of factual matters but addresses itself to a 'controlling question of law.'"); Kapossy v. McGraw-Hill, Inc., 942 F. Supp. 996, 1001 (D.N.J. 1996). Specifically, the Hulmes court held that "Section 1292(b) was not designed to secure appellate review . . . of the application of the acknowledged law to the facts of a particular case . . . ." 936 F. Supp. at 210.

Defendants argue that they present three controlling questions of law: (1) whether the Court properly adopted the standard of vicarious liability for copyright infringement established in Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996)(hereafter "Fonovisa") and UMG Recordings, Inc. v. Sinnott, 300 F. Supp.2d 993 (E.D. Cal. 2004)(hereafter "Sinnott"); (2) whether the Court properly adopted the Ninth Circuit's standard for determining contributory copyright infringement (also in Fonovisa); and (3) whether the Court properly found the two Defendants liable for contributory infringement for works seized in the November 7, 2002 raid. (Def.'s Br. at 3-4.) According to Defendants, these three issues are controlling questions of law "because the viability of Plaintiff's theories of liability rest on the Court's determination that Fonovisa and Sinnott control the outcome of this case." (Id. at 4.)

This Court disagrees and holds that Defendants have failed to present a controlling question of law. Defendants do not take issue with the applicable legal standards this Court applied regarding either vicarious liability or contributory copyright infringement. For example, with respect to the Court's analysis of Defendants' vicarious liability, Defendants do not dispute that the Court applied the well-settled standard for liability ---(1) that defendant has the right and ability to control the infringing activity and (2) that the defendant has a direct financial interest in such activities --- established in Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963) and Gershwin Publ'g. Corp. v. Columbia Artists Mgmt, Inc., 443 F.2d 1159, 1161 (2d Cir. 1971). With respect to the standard of contributory infringement, again, Defendants do not appear to dispute that the Court applied the Third Circuit's legal standard that a defendant must (a) have knowledge of infringing activity and (b) "induce, cause, or materially contribute to the infringing conduct of another." Gershwin Publ. Corp., 443 F.2d at 1162; see also Columbia Pictures Indus., Inc. v. Redd Horne, Inc., 749 F.2d 154, 160 (3d Cir. 1984). Instead, Defendants take issue with Court's application of the legal standard to the facts of this case (i.e., applying the requirements for secondary liability to the owners and operators of a flea market where vendors sell counterfeit CDs and cassettes). Section 1292(b), however, may not be invoked to obtain review of whether a trial court properly applied the law to the facts.

Second, Defendants appear to be of the opinion that there is some type of law applicable to flea markets that is different from well-established principles of vicarious liability and contributory infringement. There is not. Neither the Ninth Circuit's holding in Fonovisa nor the Eastern District of California's holding in Sinnott adopted a new standard for vicarious liability or contributory infringement. Fonovisa, 76 F.3d at 263; Sinnott, 300 F. Supp.2d at 1001-02. ...

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