LLC Members Beware, There Can Be Personal Liability for the LLC’s Violation of Copyright Law

LLC Members Beware, There Can Be Personal Liability
for the LLC’s Violation of Copyright Law

      A recent decision from a Federal District Court in Alabama serves as a useful reminder that, notwithstanding that members of an LLC enjoy limited liability from its debts and obligations, those same members can be held liable when the LLC violates federal copyright law. Joe Hand Promotions, Inc. v. Alburl, Case No.: 5:18-CV-1935-LCE, 2020 WL 836844 (N.D. Ala. Feb. 20, 2020). 

       Joe Hand Promotions, Inc. (“JHP”) held the rights to distribute the Mayweather v. McGregor boxing match that took place in August, 2017. The Sidelines Pub & Grub, it owned by Sidelines33, LLC, broadcast the fight to its patrons without having entered into an appropriate licensing agreement with payment of the licensing fee. That it would be broadcasting the fight was publicized by Sidelines on its Facebook page. JHP brought suit against the LLC and against each of its owners, Scott Alburl (“Alburl”) and Angie Alburl (“Angie”), alleging that each was liable for the copyright violation. Neither the LLC nor Alburl responded to the complaint, and default was entered against them. Angie, who previously had been married to Scott but, in the meantime, had divorced him, did respond, and this decision addressed her argument that as she was only a 10% member in the LLC, she could not be held personally liable for its copyright violation. 

      Liability for breach of copyright law can extend beyond the business organization itself to its constituent owners and other representatives. As quoted in this decision, vicarious liability for copyright violations can extend to:

A person, “including a corporate officer, who has the ability to supervise infringing activity and has a financial interest in that activity, or who personally participates in that activity is personally liable for the infringement,” Southern Belle Tel. & Tel. Co. v. Associated Tel. Directory Publishers, 756 F.2d 801, 811 (11^th Cir. 1985) (citation omitted).

      Angie would allege that Alburl had complete control over the business and operations of the company, her activity being limited to occasionally serving as a daytime manager and bartender and that:

all of the unlawful activity alleged in the complaint fell under the purview of Scott R. Alburl and was orchestrated and carried out by him without her knowledge or assent. [Angie] also stated that, even if she had known about her former husband’s activities with respect to the [Mayweather v. McGregor match] she would not of been able to stop him because, she says, Alburl was abusive and deceitful towards her in their marriage. 2020 WL 836844, *4.

From there, the court characterized the issue as: 

Assuming that [Angie’s] allegations are true, this Court must determine whether, despite her alleged limited ownership and control of Sidelines33, LLC, she can still be held vicariously liable for the infringing conduct of Alburl and Sidelines, LLC.  Id.

      The court would hold that Angie’s relatively small 10% interest in Sidelines33, LLC was not a limiting factor or a basis for denying summary judgment with respect to liability for the copyright violation. In consequence, summary judgment as to liability was granted. The determination of damages will await a jury trial.