5Pointz case stayed pending petition to U.S. Supreme Court

Posted on: June 12, 2020 by

A nearly seven-year long legal battle over the rights of aerosol artists that played out before the New York courts and resulted in a $6.75 million judgment in favor of the artists has taken yet another turn. In 2018, a ground-breaking judgment was handed down against a group of New York developers for willful removal of the artists’ work from the walls of the famous 5Pointz complex that had long been known for its internationally-acclaimed aerosol art.

The lower court denied a motion to set aside its findings and conclusions and grant a new trial or, alternatively, to vacate the judgment, or for remittitur (a procedure to reduce an award considered to be excessive). Then, in February this year, three judges sitting in the Second Circuit Court of Appeals denied the developers’ request to reverse the judgment. The artists successfully proved violations of their moral right to prevent destruction of their art under the Visual Artists Rights Act of 1990 (“VARA”).[1] For a summary of the previous developments in this case, see our prior blog posts here, here and here.

Now, however, the developers – Gerald Wolkoff and several ‘Developer Entities’ alleged to have been owned or controlled by him – have indicated their intent to appeal the multi-million dollar verdict again.[2] They successfully secured a three-month stay from the Second Circuit to allow time to file their petition for certiorari to the U.S. Supreme Court.[3]

View of 5Pointz (Image credit: Ezmosis CC BY-SA 3.0 via Wikimedia Commons)

‘Substantial questions’ and ‘good cause’ alleged for Supreme Court review

The motion for stay required the developers to show that a petition for certiorari to the Supreme Court would present a ‘substantial question’ and that ‘good cause’ exists for a stay.[4]

The motion focused on: (i) the meaning and constitutionality of VARA’s ‘recognized stature’ standard (it was the application of this standard which brought the destroyed art within the remit of VARA, making its destruction a violation of the artists’ moral rights);[5] and (ii) a potential due process infringement (this related to the finding that Wolkoff willfully destroyed the art and was subject to maximum statutory damages of $150,000 per piece destroyed).[6]

Whether the ‘recognized stature’ standard is unconstitutionally vague

It is claimed, for Wolkoff and the Developer Entities, that there are ‘substantial questions’ relating to the ‘recognized stature’ standard which could eliminate their liability, thereby providing ‘good cause’ for a stay.[7] Noting that VARA does not define ‘recognized stature’, they proposed that the term’s “intended meaning and application” are “open to argument and judicial resolution”.[8] The single Second Circuit decision cited in support simply noted that “‘recognized stature’ under VARA may give rise to some difficult cases.”[9]

The artists contended that the Appellants did not cite “any decision at any level for the contention that the standard is unconstitutionally vague”.[10] Pressing this point, they argued that the term ‘recognized stature’ had been competently addressed by the courts for decades, and that the Second Circuit’s analysis of that term in the 1995 case of Carter v. Helmsley-Spear, “has been generally adopted and applied by district and appellate courts across the United States”[11]:

“[T]he Carter court found that the statute, and the term ‘stature’ in particular, ‘have a common sense, easily understood meaning that should be apparent to all parties reviewing VARA,’ and that it was therefore not unconstitutionally vague.”[12]

U.S. Supreme Court Building (Image Credit: Joe Ravi CC BY-SA 3.0 via Wikimedia Commons)

Whether the statutory damages award violates due process

The Second Circuit had found that Wolkoff willingly assumed the ‘risk’ of the current damages award he is attempting to appeal:

“As the district court properly found, Wolkoff, a sophisticated real estate developer, was ‘willing to run the risk of being held liable for substantial statutory damages rather than to jeopardize his multimillion dollar luxury condo project.’”[13]

In opposing the constitutionality of that damages award, Wolkoff and the Developer Entities cited a 2006 district court opinion to support their argument that “excessive statutory damages might […] violate the Due Process Clause.”[14] In that opinion, the court had discussed the proposition that “in a proper case, a court may extend its current due process jurisprudence prohibiting grossly excessive punitive jury awards to prohibit the award of statutory damages mandated under the Copyright Act if they are grossly in excess of the actual damages suffered.”[15] The motion did not address what constitutes a ‘proper case’ or the inability in this case to calculate actual damages.

The artists were diametrically opposed to this position and urged that prevailing authority upholds the constitutionality of maximum statutory damages “within a specifically designated range, especially when a separate range for willfulness is clearly stated”.[16] The artists also warned of the potential for widespread impact beyond the Copyright Act if statutory damages regimes were called into question.[17]

Despite these opposing arguments, the Second Circuit found that Wolkoff and the Developer Entities met their burden and granted the requested ninety-day stay.[18] If certiorari is granted by the Supreme Court, the stay would be prolonged until final disposition of the case.[19] Conversely, if an order denying the petition is issued, a mandate would immediately follow (save for any extraordinary circumstances).[20] Upon the filing of a mandate, the appellate court’s jurisdiction is terminated, and the district court resumes its jurisdiction to follow the appellate ruling that, in this case, wholly affirmed the lower court’s judgment.

It is with great interest that we await the outcome of this next and final appeal in the saga that is 5Pointz.

[1] 17 U.S.C. § 106A.

[2] Castillo, et al v. G&M Realty L.P., et al, Case Nos.18-498-cv, 18-538-cv, Deferred Joint Appendix at 805-806.

[3] Castillo, Case No. 18-538, ECF No. 164 and Case No. 18-498, ECF No. 186, Appellants’ Opposed Motion to Stay Issuance of the Mandate.

[4] Fed. R. App. P. 41(d)(1).

[5] Castillo, Case No. 18-538, ECF No. 164 and Case No. 18-498, ECF No. 186 at 4-5.

[6] Id. at 5-7.

[7] Id. at 5.

[8] Id. at 3-4 (citing Martin v. City of Indianapolis, 192 F.3d 608, 612 (7th Cir. 1999); Cohen v. G&M Realty L.P., No. 13-CV-05612, 2017 WL 1208416 50943, at *7 (E.D.N.Y. Mar. 31, 2017)).

[9] Id. at 4 (citing Pollara v. Seymour, 344 F.3d 265, 271 (2d Cir. 2003) (Gleeson, J., concurring)).

[10] Castillo, Case No. 18-538, ECF No. 167 and Case No. 18-498, ECF No. 189, Appellees’ Opposition to Appellants’ Motion to Stay Issuance of the Mandate at 3 (emphasis in original).

[11] Id. at 2-3 (citing Carter, 861 F. Supp. 303 (S.D.N.Y. 1994), aff’d in part, vacated in partrev’d in part, 71 F.3d 77 (2d Cir. 1995)).

[12] Id. at 3 (quoting Carter, 861 F. Supp. at 326 n.14).

[13] Castillo, Case No. 18-538, ECF No. 157 and Case No.18-498, ECF No. 178; February 21, 2020 Amended Opinion at 28-29 (quoting Special Appendix at 45 n.20).

[14] Castillo, Case No. 18-538, ECF No. 164 and Case No. 18-498, ECF No. 186 at 5-6 (citing UMG Recordings, Inc. v. Lindor, No. CV-05-1096, 2006 WL 3335048 (E.D.N.Y. Nov. 9, 2006)).

[15] Id.

[16] Castillo, Case No. 18-538, ECF No. 167 and Case No. 18-498, ECF No. 189 at 6 (citing State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 417 (2003); Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899, 907-08 (8thCir. 2012) (cert denied)).

[17] Id.

[18] Castillo, May 4, 2020 Order, Case No. 18-538, ECF No. 172; Case No. 18-498, ECF No. 194.

[19] Fed. R. App. P. 41(d)(2)(B)(ii).

[20] Fed. R. App. P. 41(d)(4).