Monday, June 23, 2014

LLC’s Member Held Personally Liable for the LLC’s Copyright Violations

LLC’s 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 summary judgment.

            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.”

           The 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 liability." 

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