This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.
Monday, June 23, 2014
LLC’s Member Held Personally Liable for the LLC’s Copyright Violations
Member Held Personally Liable for the LLC’s Copyright Violations
A recent decision out of Ohio has
addressed the personal liability of an LLC’s member for copyright violations
that occurred at the LLC’s restaurant.The takeaway is that the LLC’s liability shield will not protect the
member from vicarious liability for the copyright violations.Broadcast
Music, Inc. v. Meadowlake, Ltd., ___ F.3d ___, 2014 WL 2535384 (6th
Cir. June 6, 2014).
Meadowlake owned a restaurant at which recorded and live
music was commonly played. The LLC was owned 5% by Philip Barr and 95% by
Philip’s father Roy.While Philip was
the on-site manager, all “significant decision” required Roy’s consent.
Notwithstanding a score of letters sent over several years insisting that
Meadowlake, no license was acquired.Finally BMI sued the LLC, Philip and Roy.The LLC and Philip extricated themselves from
the suit by seeking bankruptcy protection, leaving only Roy to answer the
suit.A magistrate judge awarded BMI
On appeal, Roy (it appears he was
proceeding pro se) argued that he was not liable for copyright infringement in
that it was not he who played the songs.If there was infringement, “The bands that played at the restaurant and
the people who turned on the recording did that.”
court was having none of that.Rather,
citing Gordon v. Nextel Commc’ns, 345
F.3d 922 (6th Cir. 2003), it
held that Roy “becomes vicariously liable for a direct infringement of a
copyright ‘by profiting from [the] infringement while declining to exercise a
right to stop or limit it.’”
Turning to the fact that the
restaurant was owned by an LLC was of no import. Roy had the right to stop or
limit the infringement – he was the 95% owner.
"Once a defendant meets the test for vicarious liability, the
classification of his business does not (at least in general) exempt him from