Broadcast Music, Inc., et al v. Meadowlake Ltd., et al

Filing

OPINION and JUDGMENT filed : The judgment of the district court is AFFIRMED. Decision for publication. Danny J. Boggs, Jeffrey S. Sutton (AUTHORING), and Helene N. White, Circuit Judges.

Case: 13-3933

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 14a0118p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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BROADCAST MUSIC, INC., et al.,
Plaintiffs-Appellees,
v.

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No. 13-3933

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MEADOWLAKE, LTD., et al.,
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Defendants, │
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ROY E. BARR,
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Defendant-Appellant. │
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Appeal from the United States District Court
for the Northern District of Ohio at Akron.
No. 5:12-cv-01024—George J. Limbert, Magistrate Judge.

Decided and Filed: June 6, 2014
Before: BOGGS, SUTTON and WHITE, Circuit Judges.
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COUNSEL
ON BRIEF: Robert E. Chudakoff, ULMER & BERNE LLP, Cleveland, Ohio, for Appellees.
Roy E. Barr, Canton, Ohio, pro se.
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OPINION
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SUTTON, Circuit Judge.

A restaurant played live and recorded music without

permission of the copyright holders. At stake is whether the Copyright Act imposes vicarious
liability on the owners of the restaurant for the infringement.

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Roy Barr and his son Philip own Meadowlake, a limited liability company that runs
Rafters Bar and Grill, a golf-course restaurant in Canton, Ohio. Roy owns 95% of the company
and makes all “significant decisions” about the restaurant. R. 32-4 at 3. Philip owns 5% of the
company and manages the restaurant from day to day.
Rafters offers music and dancing for its customers. Known for its taste for rock, the
restaurant plays everything from Queen and Pink Floyd to ZZ Top and Lynyrd Skynyrd—
sometimes turning on a recording, sometimes bringing in live performers. Less known for its
taste for compliance with the copyright laws, it hosts performances of the music without getting
the copyright owners’ permission. These performances violated the copyright owners’ exclusive
right “to perform the copyrighted work[s] publicly.” 17 U.S.C. § 106(4). Rafters’ lapses came
to the attention of Broadcast Music, Inc., an organization of songwriters and composers that
licenses music and collects royalties on behalf of its members. Over three years, BMI sent
Rafters more than a score of letters, warning the restaurant not to infringe its copyrights and
offering to license its music. It got no response. BMI sued Roy for copyright infringement.
(It sued Meadowlake and Philip as well, but these defendants escaped the lawsuit by declaring
bankruptcy.) The parties consented to have a magistrate judge handle the case. The district
court granted summary judgment to BMI.
The one wrinkle in the case, and the key source of Roy’s appeal, is that he did not
perform any of the copyrighted music. The bands that played at the restaurant and the people
who turned on the recordings did that. In interpreting the Copyright Act against its common law
background, however, courts have developed a handful of doctrines that make people liable for
copyright infringement committed by others. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster,
545 U.S. 913, 930 (2005). Under one of these doctrines, a defendant 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.” Id.; see Gordon v. Nextel Commc’ns, 345 F.3d 922, 925 (6th
Cir. 2003).
Under these precedents, Roy is vicariously liable for the pervasive copyright
infringement at his restaurant. The first half of the test for vicarious liability asks whether the
defendant had “the right and ability to supervise the infringing conduct.” Gordon, 345 F.3d at

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925. Roy does not dispute that, as the company’s chief (95%) owner and the restaurant’s
ultimate decisionmaker, he had the right and ability to supervise the infringing performances.
The second half of the test asks whether the defendant had “an obvious and direct financial
interest in the infringement.” Id. Roy does not dispute that he had a financial interest in the
infringing performances, which drew more customers to his restaurant. That makes him liable.
This case indeed falls within the heartland of vicarious liability.

In the canonical

illustration of the doctrine, the owner of a dance hall became vicariously liable when an orchestra
hired to play music for the customers performed a copyrighted work. See Sony Corp. of America
v. Universal City Studios, Inc., 464 U.S. 417, 437 n.18 (1984). Substitute “restaurant that offers
dancing” for “dance hall,” and you have this case.
It makes no difference that Philip, not Roy, managed the restaurant from day to day.
What matters is whether Roy had “the right and ability” to supervise the infringement, not
whether he in fact supervised it. Gordon, 345 F.3d at 925 (emphasis added). Higher than Philip
in the restaurant’s chain of command, Roy unquestionably could have supervised and hence
stopped the infringement. He instead let the infringement go on while reaping the profits from it.
Keep in mind, moreover, a key purpose of vicarious liability. A copyright holder can seldom
identify (let alone get relief from) the guitarist who strummed his tune or the bartender who
turned on his recording. Vicarious liability responds to this reality by shifting the costs of
copyright enforcement from the holder of the copyright to those in a better position to police the
infringing conduct. That rationale applies not just to the restaurant’s on-the-scene manager but
also to its off-the-scene owner. The restaurant owner can monitor the infringement better than
the blameless copyright holder, and “our judgment will simply encourage [him] to do so, thus
placing responsibility where it can and should be effectively exercised.” Shapiro, Bernstein &
Co. v. H.L. Green Co., 316 F.2d 304, 308 (2d Cir. 1963).
It makes no difference that Roy claims to have known nothing about the infringing
performances. A defendant’s ignorance about the infringement or the performances does not
blunt vicarious liability. Gordon, 345 F.3d at 925. The point of the doctrine is to encourage
people like Roy to police performances at their restaurants in the first place.

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It makes no difference that, in some cases, courts have declined to make an owner
vicariously liable for infringements involving his business—for example where the owner has a
“nominal title” but “no real authority.” Brunswick Beacon, Inc. v. Schock-Hopchas Pub. Co.,
810 F.2d 410, 414 (4th Cir. 1987). This case involves no such quirks. Roy had full authority
over the restaurant, as he acknowledged when he admitted that Philip had no power “to make
significant decisions” without his approval. R. 32-4 at 3.
What, finally, of the reality that Roy owns the restaurant through a limited liability
company? In one sense, the form of the business makes a difference. The legal structure of a
business—corporation, limited liability company, partnership, what have you—may affect
whether a defendant satisfies the test for vicarious liability in the first place. Business form
might affect a defendant’s right to police the infringement or his financial interest in the
infringement. But this case involves none of these complications. Roy does not suggest that the
structure of his business sapped his authority over, or dulled his financial interest in, the
prohibited performances.
In another sense, however, the form of the business does not make a difference. Once a
defendant meets the test for vicarious liability, the classification of his business does not (at least
in general) exempt him from liability. It thus does not matter whether Ohio’s laws on limited
liability companies would make Roy personally liable for wrongs committed by or at his
restaurant. Either way, Roy profited from infringement at his restaurant while refusing to
exercise his right to stop it. And so either way, Roy remains vicariously liable. See, e.g.,
Pinkham v. Sara Lee Corp., 983 F.2d 824, 834 (8th Cir. 1992); 3 M. Nimmer, Copyright § 12.04
(2014); 6 W. Patry, Copyright § 21.81 (2014).
Roy, who represents himself, makes a handful of other arguments against the district
court’s judgment. We have considered them all, and find merit in none of them. We also deny
Roy’s motions for appointment of counsel and for summary judgment.
For these reasons, we affirm.