Court Opinion

ID: 7806914
Source: CourtListenerOpinion
Date Created: 2022-09-07 15:00:25.808078+00
Date Added: 2024-06-11T16:30:20.466009
License: Public Domain

USCA11 Case: 21-10978      Date Filed: 09/07/2022    Page: 1 of 18

                                                      [PUBLISH]
                             In the
         United States Court of Appeals
                  For the Eleventh Circuit

                    ____________________

                          No. 21-10978
                    ____________________

ANTHONY CAMPBELL,
professionally known as Rackboy Cam,
                                                Plaintiff-Appellee,
versus
RAYSHAWN LAMA BENNETT,
professionally known as YFN Lucci, et al.,

                                                      Defendants,

JUNE JAMES,

                                             Defendant-Appellant.
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21-10978               Opinion of the Court                        2

                     ____________________

           Appeal from the United States District Court
              for the Northern District of Georgia
              D.C. Docket No. 1:18-cv-01064-CAP
                    ____________________

Before WILSON, BRANCH, and LAGOA, Circuit Judges.
BRANCH, Circuit Judge:
       In 2015, Plaintiff Anthony Campbell wrote and recorded a
song “Everything Be Lit,” which he later copyrighted. Then, in
2018, Campbell filed suit against June James, Rakim Allen,
Rayshawn Bennett, and Think It’s a Game Records (TIG) for
copyright infringement based on Bennett’s recording and release
of a similar song “Everyday We Lit.” James and Allen failed to
respond to the initial complaint and the district court entered a
default against them. Campbell later filed an amended complaint,
requesting among other forms of relief, actual profits, jointly and
severally, from the defendants. The district court ultimately
entered a default judgment against James and Allen, awarding over
$1 million in profits, jointly and severally, prejudgment interest, a
permanent injunction, a perpetual 50% running royalty against
future infringement, and costs to Campbell.
        James raises several issues on appeal, including that the
district court erred in using Campbell’s amended complaint as the
basis for the default judgment because the amended complaint
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21-10978                  Opinion of the Court                             3

stated a new claim for relief, and Campbell failed to serve the
amended complaint on James as required by the Federal Rules of
Civil Procedure. We agree that the amended complaint stated a
new claim for relief, and therefore, the district court erred in
concluding that Campbell did not have to serve the amended
complaint on James.1 Accordingly, we vacate the default judgment
and remand for further proceedings.
                             I.       Background
       In April 2015, Campbell wrote, recorded, and released the
song “Everything Be Lit,” which he included in an album he
released. In February 2017, he registered a copyright of the
recording with the United States Copyright Office. Before the
release of his album and his copyright registration, Campbell
uploaded his recording of “Everything Be Lit” to various websites,
the song was played on some radio stations, and he performed the
song in various cities. Notably, on one occasion, defendant Allen
joined Campbell onstage for a performance of the song.
       Then in December 2016, defendant Bennett, a music artist
with TIG, released the single “Everyday We Lit,” and included it in
a subsequent, very successful album. According to Campbell,
“Everyday We Lit” had “striking similarities” to “Everything Be
Lit,” and Campbell contacted TIG about the similarities. A

1
  Because we agree that, under the circumstances, the district court erred in
relying on the amended complaint as the basis for the default judgment, we
do not reach Campbell’s other issues on appeal.
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21-10978               Opinion of the Court                        4

representative of TIG acknowledged that the songs sounded
similar, but TIG continued to distribute “Everyday We Lit.”
       Campbell then filed suit for copyright infringement under
17 U.S.C. §§ 106 and 501. In his initial complaint, Campbell alleged
that Bennett and Allen “jointly came up with [the] song ‘Everyday
We Lit’” and that James “is credited as the producer of ‘Every Day
We Lit’” and “as the creator of the music.” He also alleged that
James “is a producer and musician signed to [TIG].” Campbell
requested “an award of . . . actual damages, trebled, as well as all
profits Defendants derived from infringing the Plaintiff’s Copyright
in the Work,” statutory damages, and injunctive relief.
       Defendants James and Allen did not answer the initial
complaint. On June 8, 2018, Campbell moved for entry of a default
against James. The Clerk entered a default against James on June
12, 2018.
      Thereafter, on July 6, 2018, Campbell filed an amended
complaint, requesting for the first time an award of actual damages
in the form of “all profits Defendants derived, jointly and
severally,” from the infringing work. Campbell also omitted his
request for statutory damages. James and Allen did not respond.
Campbell ultimately settled with the other defendants, and they
were dismissed from the action.
      In February 2019, James moved to set aside the default,
arguing that he was not properly served with the initial complaint,
and that he established good cause to set aside default. The district
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21-10978                 Opinion of the Court                            5

court denied James’s motion to set aside the default, concluding
that he was properly served with the initial complaint and that he
had not established good cause for setting aside the default.2
Importantly, the district court concluded that, because James
defaulted prior to the filing of the amended complaint, the
amended complaint—which did “not allege or request new or
additional relief from Allen and James”—was not required to be
served on him under Federal Rule of Civil Procedure 5.
       Campbell moved for entry of a default judgment against
James and Allen “jointly and severally” and requested an award of
actual damages in the form of profits with prejudgment interest,
injunctive relief, and a running royalty of 50%. James opposed the
motion, arguing that he had not been properly served with the
amended complaint, which requested for the first time “joint and
several liability” against James. James maintained that because the
amended complaint contained a new form of relief, it had to be
served on James under Rule 5, and it was not.
       The district court construed James’s response as a second
request to set aside the June 2018 default and denied it, stating that
it stood by its earlier decision and reasoning that Rule 5 did not
apply. The district court further reasoned that Campbell’s request
was not a new claim for purposes of Rule 5 because James was on

2
   James acknowledges that he is not challenging the district court’s
determination that he was properly served with the initial complaint or the
district court’s denial of his motion to set aside the default.
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21-10978                       Opinion of the Court                          6

notice of the possibility that he could face joint and several liability
given that the copyright statute authorizes such relief for statutory
damages under 17 U.S.C. § 504(c).
      Following a hearing on damages, the district court
determined that James and Allen were partners and were jointly
and severally liable for $1,447,720 in profits. The district court also
awarded Campbell prejudgment interest, a permanent injunction,
a perpetual 50% running royalty, and costs in the amount of
$4,578.62. James appealed. 3
                                   II.     Discussion
       James argues that the amended complaint contained a new
claim for relief—joint and several liability for profits—and
therefore the amended complaint needed to be served on him
under Federal Rule of Civil Procedure 5. Accordingly, he argues
that the district court erred in concluding that service of the
amended complaint was not required and in basing the default
judgment on the amended complaint. 4

3
    Allen is not a party to this appeal.
4
  “A default judgment must not differ in kind from, or exceed in amount, what
is demanded in the pleadings.” Fed. R. Civ. P. 54(c). Therefore, James argues
that the district court erred in relying on the amended complaint as the basis
for the default judgment because in the amended complaint Campbell, for the
first time, demanded joint and several liability for profits, which was outside
the scope of the relief requested in the initial complaint.
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21-10978                Opinion of the Court                         7

        Generally, a pleading filed after the initial complaint must
be served on the defendants. Fed. R. Civ. P. 5(a)(1)(B). However,
service of a pleading filed after the initial complaint is not required
on a party who is in default for failing to appear. Id. Rule 5(a)(2).
“But a pleading that asserts a new claim for relief against such a
party must be served on that party . . . .” Id.
        We addressed Rule 5’s reference to a “new claim for relief”
in Varnes v. Local 91, Glass Bottle Blowers Ass’n of U.S. & Canada,
674 F.2d 1365 (11th Cir. 1982). In that case, the amended complaint
contained a claim for attorney’s fees that was not present in the
initial complaint, and the plaintiff did not serve the amended
complaint on the defaulted defendant. Id. at 1367–68. In
determining whether service of the amended complaint on the
defaulted party was required under Rule 5, we explained that if the
statute under which the plaintiff was seeking relief authorized a
claim for attorney’s fees, then it was not a new claim for purposes
of Rule 5 because the parties should have known that they could
have been liable for such fees. Id. at 1368–69. But if such fees were
not authorized by the statute, then the fee claim was a new claim
for relief of which the defaulting party was entitled to proper
notice. Id. We concluded that because such fees were not
authorized by statute, the claim for attorney’s fees in the amended
complaint was a new claim for relief, and Rule 5 required that the
amended complaint be served on the defaulted party. Id. at 1369.
In other words, our holding in that case established that, under
Rule 5, service of an amended complaint on a defaulted party is
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21-10978               Opinion of the Court                        8

required if it contains a new claim for relief of which the defendant
would not be on notice of via the allegations in the original
complaint or the statutes charged therein.
     Here, the district court determined that the amended
complaint did not contain a new claim, reasoning that:
      the amended complaint is virtually identical to the
      original complaint. It asserts no further allegations
      against Allen and James and seeks no further relief
      than that of the original complaint. And Allen and
      James already defaulted before the amended
      complaint was filed. Accordingly, the court finds that
      Rule 5 applies such that plaintiff was not required to
      serve them with the amended complaint. And
      because the amended complaint does not allege or
      request new or additional relief from Allen and James,
      entering a default judgment does not provide the
      plaintiff with more or a different kind of relief than
      that requested in the original complaint.

Relying on our decision in Varnes, the district court further
reasoned that Campbell’s claim for joint and several liability was
not a new claim for purposes of Rule 5 because James was on notice
of the possibility that he could face joint and several liability
because the copyright statute authorizes joint and several liability
for statutory damages. The district court erred in so holding.
       A copyright owner may recover actual damages suffered as
well as any profits made by the defendant that result from the
infringement, or, in the alternative, statutory damages. See 17
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21-10978                       Opinion of the Court                            9

U.S.C. § 504(a)–(c); see also Yellow Pages Photos, Inc. v. Ziplocal,
LP, 795 F.3d 1255, 1283 (11th Cir. 2015) (explaining that a plaintiff
must elect between actual and statutory damages and may not
recover both). The Copyright Act provides expressly for the
possibility of joint and several liability for statutory damages. See
17 U.S.C. § 504(c). 5 In contrast, § 504(b), which provides for actual
damages and profits, says nothing about the possibility of joint and
several liability. 6 Id. § 504(b). Thus, the Copyright Act put James

5
    Section 504(c) of the Copyright Act provides that
          (1) Except as provided by clause (2) of this subsection, the
          copyright owner may elect, at any time before final judgment
          is rendered, to recover, instead of actual damages and profits,
          an award of statutory damages for all infringements involved
          in the action, with respect to any one work, for which any one
          infringer is liable individually, or for which any two or more
          infringers are liable jointly and severally, in a sum of not less
          than $750 or more than $30,000 as the court considers just. For
          the purposes of this subsection, all the parts of a compilation
          or derivative work constitute one work.

17 U.S.C. § 504(c).
6
    Section 504(b) provides:
          The copyright owner is entitled to recover the actual damages
          suffered by him or her as a result of the infringement, and any
          profits of the infringer that are attributable to the infringement
          and are not taken into account in computing the actual
          damages. In establishing the infringer’s profits, the copyright
          owner is required to present proof only of the infringer’s gross
          revenue, and the infringer is required to prove his or her
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21-10978                   Opinion of the Court                              10

on notice that he could be subject to joint and several liability, but
only as to statutory damages. Id. § 504(c). James had no notice that
joint and several liability was possible under the Copyright Act as
to actual damages and profits.
       Campbell did not request joint and several liability as to
actual damages and profits in his initial complaint. Instead, he
requested this relief for the first time in the amended complaint.
And contrary to the district court’s conclusion, the Copyright Act
did not put James on notice that he could be subject to joint and
several liability for actual damages and profits. Thus, Campbell’s
claim for actual damages plus profits, jointly and severally,
constituted a new claim for relief. Varnes, 674 F.2d at 1368–69.
Therefore, under Rule 5, the amended complaint needed to be
served on James even though he was in default. Consequently, the
amended complaint could not serve as the basis for the default
judgment if it was not served, and the district court did not address
whether the amended complaint was properly served. 7

       deductible expenses and the elements of profit attributable to
       factors other than the copyrighted work.

17 U.S.C. § 504(b).
7
 Although Campbell asserts that he served the amended complaint on James
and James disputes such service, the district court did not address Campbell’s
allegations of service because it concluded, albeit erroneously, that service of
the amended complaint was not required. The district court may consider the
parties’ arguments related to service on remand.
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21-10978           Opinion of the Court                     11

Accordingly, we vacate the default judgment and remand for
further proceedings.
      VACATED AND REMANDED.
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21-10978               Lagoa, J., Concurring                       1

LAGOA, Circuit Judge, concurring:
       I concur in full with the majority opinion. I write separately
to discuss three issues raised by James on appeal that warrant
consideration by the district court on remand: (1) the four-factor
test for a permanent injunction; (2) awarding both a permanent
injunction and a running royalty; and (3) Federal Rule of Civil
Procedure 54(c)’s limitation for default judgments. These three
issues are addressed in turn.
           I.   Four-Factor Test for a Permanent Injunction
        Under 17 U.S.C. § 502(a) “[a]ny court having jurisdiction of
a civil action arising under this title may . . . grant temporary and
final injunctions on such terms as it may deem reasonable to
prevent or restrain infringement of a copyright.” But the Supreme
Court “has consistently rejected invitations to replace traditional
equitable considerations with a rule that an injunction
automatically follows a determination that a copyright has been
infringed.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392–
93 (2006) (citing cases). Therefore, the traditional four-factor test
that governs injunctive relief—i.e., “(1) that the plaintiff has
suffered an irreparable injury; (2) that remedies available at law,
such as monetary damages, are inadequate to compensate for that
injury; (3) that, considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is warranted; and (4)
that the public interest would not be disserved by a permanent
injunction”—applies to an injunction for copyright infringement.
Broad. Music, Inc. v. Evie’s Tavern Ellenton, Inc., 772 F.3d 1254,
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21-10978                Lagoa, J., Concurring                         2

1261 (11th Cir. 2014) (quoting eBay, 547 U.S. at 391) (alterations
omitted). And the Supreme Court has cautioned that, in applying
this four-factor test, “traditional equitable principles do not permit
such broad classifications.” eBay, 547 U.S. at 393.
     There are two takeaways from eBay and its progeny that
may be relevant on remand.
       First, the district court should apply the traditional four-
factor test in determining whether to award a permanent
injunction. Below, the district court failed to consider whether
Campbell had an adequate remedy at law. On remand, the district
court should consider that factor along with the other “traditional
equitable considerations” for injunctive relief. Id. at 391, 393–94;
see Broad. Music, 772 F.3d at 1261.
        Second, the district court should avoid making “broad
classifications” in applying the four-factor test for a permanent
injunction. eBay, 547 U.S. at 393. Below, the district court held
that because “copyright infringement is presumed to give rise to
irreparable injury,” Campbell met his burden for establishing
irreparable injury. This Court has declined “to decide whether . . .
a presumption of irreparable injury” conflicts with the Supreme
Court’s decision in eBay. See N. Am. Med. Corp. v. Axiom
Worldwide, Inc., 522 F.3d 1211, 1228 (11th Cir. 2008). And this
Court has noted that “the particular circumstances of the instant
case” may “bear substantial parallels to previous cases such that a
presumption of irreparable injury is an appropriate exercise of . . .
discretion in light of the historical traditions.” Id. (citing eBay, 547
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21-10978               Lagoa, J., Concurring                       3

U.S. at 394–97 (concurring opinions of Chief Justice Roberts and
Justice Kennedy, representing the views of seven Justices)).
        In presuming irreparable harm below, however, the district
court did not consider whether a presumption of irreparable injury
is appropriate based on the particular circumstances of this case
and, instead, found that irreparable injury categorically occurs in
all copyright infringement cases. Contra eBay, 547 U.S. at 393
(“[T]raditional equitable principles do not permit . . . broad
classifications.”). Assuming, without suggesting, that courts may
presume irreparable injury in copyright infringement cases post-
eBay, on remand the district court should, at least, consider
whether that presumption applies, or can be rebutted, given the
particular circumstances of this case.
           II.   Permanent Injunction and Running Royalty
       This Court has not addressed whether courts may award a
running royalty as equitable relief for copyright infringement. But
some of our sister circuits have recognized that “a district court
may impose a running royalty to remedy possible future
infringement.” TD Bank N.A. v. Hill, 928 F.3d 259, 282 (3d Cir.
2019); see Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1314
(Fed. Cir. 2007). In so doing, however, our sister circuits have
stated that a running royalty may be awarded “[a]s a condition of
denying a permanent injunction.” TD Bank, 928 F.3d at 282
(emphasis added); see also Paice, 504 F.3d at 1314 (“Under some
circumstances, awarding an ongoing royalty for patent
infringement in lieu of an injunction may be appropriate.”); see also
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21-10978               Lagoa, J., Concurring                       4

4 Nimmer on Copyright § 14.06(D) (2022) (“[C]ourts may decline
to issue a permanent injunction and instead mandate an ongoing
royalty payment.”).
       I find these authorities persuasive. If an infringer is
permanently enjoined from infringing a copyright in the future—
and can be held in civil contempt for violating that permanent
injunction, see McComb v. Jacksonville Paper Co., 336 U.S. 187,
191 (1949) (“Civil . . . contempt is a sanction to enforce compliance
with an order of the court or to compensate for losses or damages
sustained by reason of noncompliance”)—the need to also award a
running royalty to compensate the copyright holder for future
infringements by the infringer is often diminished or nonexistent.
This is not to say that there may not be certain circumstances when
both a permanent injunction and a running royalty may be
appropriate. For example, in an age of digital distribution, once an
infringing work is made available online it might be impossible to
enjoin the infringer in a manner that prevents all forms of future
distribution (although a court can prevent the infringer from being
the party that does the distributing). If distribution continues to
occur, without any action by the infringer, and the infringer
continues to obtain royalties from that infringement, a running
royalty in addition to a permanent injunction may be the only
complete relief—i.e., the permanent injunction prevents the
infringer from infringing the copyright, but the running royalty
compensates the copyright holder when the infringer nevertheless
continues to passively profit from the infringing work.
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21-10978                  Lagoa, J., Concurring                              5

       Below, the district court awarded both a permanent
injunction and a running royalty. In so doing, the district court
reasoned that the permanent injunction would not apply to Think
It’s A Game Records, Inc.—a record company that had reached a
settlement with Campbell—and that the permanent injunction,
alone, was an insufficient remedy because “the infringing work will
continue to be disseminated.” Notwithstanding that “persons who
are in active concert or participation” with an enjoined party may
be bound by an injunction if they receive “actual notice . . . by
personal service or otherwise,” Fed. R. Civ. P. 65(d)(2), the district
court should not have awarded a running royalty against James
based on the likelihood that a company that settled with Campbell
may continue to disseminate Campbell’s song. On remand—if
equitable relief is warranted, Campbell can meet the applicable
burdens, and neither form of relief is barred by Federal Rule of Civil
Procedure 54(c)—I believe the district court should award either a
permanent injunction or a running royalty, but not both, at least
based on the district court’s stated rationale for awarding both
remedies. 1

1
   If the district court determines that a running royalty is warranted, the
district court should “provid[e] the parties with an opportunity to negotiate a
[running royalty] rate privately,” before awarding a specific running royalty
rate. TD Bank, 928 F.3d at 282; Prism Techs. LLC v. Sprint Spectrum L.P.,
849 F.3d 1360, 1377 (Fed. Cir. 2017) (“If the court determines that a conduct-
barring injunction is not warranted, it may instruct the parties to try to
negotiate an ongoing royalty and, if the parties cannot agree, award a
royalty.”).
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21-10978                 Lagoa, J., Concurring                            6

                III.    Limitation for Default Judgments
        Under Federal Rule of Civil Procedure 54(c) “[a] default
judgment must not differ in kind from, or exceed in amount, what
is demanded in the pleadings.” By its plain language, Rule 54(c)
thereby limits a district court’s discretion, in a default judgment, to
award all forms of relief that a party may otherwise be entitled to,
by prohibiting the court from awarding remedies that “differ in
kind from, or exceed in amount,” the remedies “demanded in the
pleadings.” See Sapp v. Renfroe, 511 F.2d 172, 176 n.3 (5th Cir.
1975) 2 (“Rule 54(c) . . . has been construed liberally and under it the
demand for relief in the pleadings does not limit, except in cases of
default, the relief a court may grant when entering judgment.”
(emphasis added)); see also In re Equifax Inc. Customer Data Sec.
Breach Litig., 999 F.3d 1247, 1283 (11th Cir. 2021) (“In interpreting
a federal rule, we examine its text and give effect to its plain
meaning.”).
      Below, the district court rejected James’s argument that
Campbell’s motion for default judgment requested forms of relief
that were not demanded in Campbell’s pleadings, including
prejudgment interest. For the reasons stated in the majority
opinion, the remedies the district court awarded to Campbell will
be vacated and this case will be remanded to the district court. But

2
  Opinions issued by the former Fifth Circuit prior to October 1, 1981, are
binding precedent in our Circuit. Bonner v. City of Prichard, 661 F.2d 1206,
1207 (11th Cir. 1981) (en banc).
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21-10978               Lagoa, J., Concurring                       7

in addition to the other issues discussed in this concurrence, the
district court should be mindful of Rule 54(c)’s limitation on
awarding remedies beyond “what [Campbell] demanded in [his]
pleadings” in a default judgment. See, e.g., Silge v. Merz, 510 F.3d
157, 160 (2d Cir. 2007) (“Silge could easily have drafted a complaint
that included a distinct claim for ‘pre-judgment interest’ in the
demand clause. By operation of Rule 54(c), his failure to do so,
intentional or not, ran the risk that his damages would be limited
in the event of default.”).