Foley v. Luster

• Decision Date: 02 May 2001
• Docket Number: No. 99-14123,99-14123
• Citation: 249 F.3d 1281
• Parties: (11th Cir. 2001) Tim FOLEY, individually, Connie Foley, individually, et al., Defendants-Cross-Claimants-Appellees, v. Mahaleel Lee LUSTER, individually, d.b.a. Go Diamond Productions, d.b.a. Lustervision, Defendant-Cross-Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1281

249 F.3d 1281 (11th Cir. 2001)

Tim FOLEY, individually, Connie Foley, individually, et al., Defendants-Cross-Claimants-Appellees, v. Mahaleel Lee LUSTER, individually, d.b.a. Go Diamond Productions, d.b.a. Lustervision, Defendant-Cross-Defendant-Appellant.

No. 99-14123.

United States Court of Appeals Eleventh Circuit.

May 2, 2001.

May 14, 2001.

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Appeal from the United States District Court for the Middle District of Florida.(No. 96-00175-CIV-ORL-3A), David A. Baker, Magistrate Judge.

Before BIRCH and HULL, Circuit Judges, and TIDWELL^*, District Judge.

BIRCH, Circuit Judge:

In this opinion, we decide whether a state common law claim for indemnification is preempted by the Copyright Act, whether a jury instruction was confusing, and whether the claimants in an indemnity action were required to apportion damages among defendant Luster and others that potentially played a role in the copyright infringement. The district court denied judgment as a matter of law on all three issues and we AFFIRM.

I. BACKGROUND

The Amway Corporation ("Amway") is a multi-level distributorship of products. Distributors are paid based on the products they sell and, more importantly, the sales of any distributors they recruit (their "down-line"). Therefore, the larger the down-line, the more money a distributor makes. In order to recruit a down-line distributor, high-level distributors hold promotional events ("functions") where they show videotapes of promotional materials, including portraits of the lifestyle of high-level distributors.

The defendants in the original consolidated cases were a group of high-level Amway distributors ("distributors") and Luster, a videographer who made videos for their functions. When Luster made these videos,¹ he included copyrighted songs without permission from the copyright owners. A group of recording industry companies sued the distributors and Luster, and settled the case before trial. At the same time, one group of defendants filed a cross-claim against Luster for indemnification on the ground that he was solely responsible for the copyright infringement. This indemnification case went to trial, and the jury found that Luster had to indemnify some of the distributors for their share of the settlement fund and attorneys' fees.² Luster filed a motion for judgment as a matter of law, claiming that the Copyright Act, 17 U.S.C. §§ 101. et seq. ("the Act"), preempted the claim for indemnification under state common law, that the jury instructions were confusing, and that the distributors failed to establish a prima facie case of damages. The district court denied the motion, and Luster appeals.

II. DISCUSSION

We review the denial of a motion for judgment as a matter of law de novo, applying the same standards as the district court, and viewing the evidence and all reasonable inferences in favor of the non-movant. Montgomery v. Noga, 168 F.3d 1282, 1289 (11th Cir.1999).

A. Preemption

Section 301 of the federal Copyright Act ("the Act") preempts all state causes of action based on a right found in the Act or an equivalent to such a right. The Act states that,

all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, ... are governed exclusively by this title.... [N]o person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.

17 U.S.C. § 301(a). A short list of specific exceptions is delineated in section "(b)", resulting in a generally broad scope of preemption. One of those exceptions is for state common law or statutes "with respect to ... (3) activities violating legal or equitable rights that are not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106." 17 U.S.C. § 301(b)(3). The result of this subsection is that the Act "preempts only those state law rights that may be abridged by an act which, in and of itself, would infringe one of the exclusive rights provided by federal copyright law." Computer Assoc. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir.1992) (quotations omitted).

Section 301(b)(3) has led to the development of the "extra element" test, which we adopted in Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1549 (11th Cir.1996). Under this test, "if an extra element is required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action, then the right does not lie within the general scope of copyright and there is no preemption." Altai, 982 F.2d at 716 (quotations omitted). Along these lines, "[a] state law claim is not preempted if the extra element changes the nature of the action so that it is qualitatively different from a copyright infringement claim." Id. (quotations omitted). For example, awareness and intent are not considered to be qualitatively different elements substantial enough to serve as an "extra element." See id. at 717. In Mnemonics, we applied this test to Florida trade secret law, and recognized that the breach of duty essential to a trade secret case is an extra element that qualitatively distinguishes those claims from copyright claims. Mnemonics, 79 F.3d at 1549 (quoting Altai, 982 F.2d at 717). Accordingly, in Mnemonics, the plaintiff's trade secret cause of action based on alleged infringements of computer software and hardware copyrights was not preempted.

It is important to understand why this extra element test is not applicable to the case before us. The extra element test was developed to protect the "exclusive rights" of copyright holders. See Altai, 982 F.2d at 716. The Act establishes a comprehensive set of rights and remedies to protect copyrights, and preempts most state actions so that the rights and remedies will be consistent for all copyright holders. The indemnity case before us, however, does not concern the rights of a copyright holder. Rather, it concerns the allocation of responsibility between copyright infringers. Whether or not Luster indemnifies the distributors for their share of the settlement fund and attorneys' fees is "not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106." 17 U.S.C. § 301(a). Because the question before us does not fall within this provision of the Act, the exception found in § 301(b)(3) is irrelevant, and, therefore, the extra element test does not apply.³ Instead, we apply general preemption law to determine whether an indemnity case brought pursuant to Florida common law is preempted by the Act.

Under Article VI of the U.S. Constitution, federal law is the "supreme Law of the Land," and any state law that is in conflict with a federal law is preempted. See Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 2128-29, 68 L.Ed.2d 576 (1981). In an effort to explain preemption, the Supreme Court has clarified that

Congress' intent may be explicitly stated in the statute's language or implicitly contained in its structure and purpose. In the absence of an express congressional command, state law is pre-empted if that law actually conflicts with federal law, or if federal law so thoroughly occupies a legislative field as to make reasonable inference that Congress left no room for the States to supplement it.

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407 (1992) (quotations and citations omitted). These bases for preemption are commonly referred to as explicit preemption, conflict preemption, and field preemption. When determining whether a state law is preempted under one of these bases, we look to the intent of Congress in passing the federal law. Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1190, 55 L.Ed.2d 443 (1978) (" 'The purpose of Congress is the ultimate touchstone' " of preemption.) (quoting Retail Clerks v. Schermerhorn, 375 U.S. 96, 103, 84 S.Ct. 219, 223, 11 L.Ed.2d 179 (1963)). By applying each basis for preemption to Luster's argument, we find that an indemnity claim under the common law of Florida is not preempted by the Act.

1. Explicit Preemption

Explicit preemption is evident when "Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose." Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977). Section 301 explicitly preempts all claims that are covered under § 106 of the Act, if they come within the subject matter of §§ 102 and 103.⁴ These include violations of the following rights:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

17 U.S.C. § 106. It is evident that the congressional intent in § 106 was to protect the rights of copyright holders, not to govern cases between infringers. Nothing in the language of § 301 explicitly prohibits indemnity suits, nor is...