The US Court of Appeals for the Eleventh Circuit reversed a default judgment and monetary award in favor of the plaintiff, which was issued in a case where the plaintiff filed (but never served) an amended complaint in a copyright infringement action. The Court concluded that the amended complaint stated a new claim for relief but was not properly served on the defendants in accordance with the Federal Rules of Civil Procedure. Anthony Campbell v. Rayshawn Bennett et al., Case No. 21-10978 (11th Cir. Sept. 7, 2022) (Wilson, Branch, Lagoa, JJ.) (Lagoa, J. concurring)
In 2015, Anthony Campbell (professionally known as Rackboy Cam) wrote and recorded a song called “Everything Be Lit,” and registered his copyright with the US Copyright Office in February 2017. Later, in 2018, Rackboy Cam filed suit against June James, Rakim Allen, Rayshawn Bennett (professionally known as YFN Lucci) and Think It’s a Game Records (TIG) for copyright infringement based on Bennett’s 2016 recording and release of a similar song, “Everyday We Lit.” The complaint alleged infringement under 17 U.S.C. §§ 106 and 501 and sought “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.
James and Allen failed to respond to the initial complaint and the district court entered a default against them. Rackboy Cam later 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. In the amended complaint, Rackboy Cam did not request statutory damages. As before, James and Allen did not respond. Rackboy Cam ultimately settled with the other defendants, and they were dismissed from the action.
The district court ultimately entered a default judgment against James and Allen, awarding almost $1.5 million in profits, jointly and severally, as well as prejudgment interest, a permanent injunction, a perpetual 50% running royalty against future infringement and costs to Rackboy Cam.
James moved the district court to set aside the default, arguing that he was not properly served with the initial complaint—an argument rejected by the district court. The district court concluded that because James defaulted prior to the filing of the amended complaint, and since the amended complaint did “not allege or request new or additional relief from Allen and James,” the plaintiff was not required to have served it on James under Fed. R. Civ. P. 5. Rackboy Cam then moved for entry of a default judgment and requested the above award. The district court granted the motion and James appealed.
The issue before the Eleventh Circuit was whether the amended complaint contained a new claim for relief—joint and several liability for profits—and whether Rackboy Cam was therefore required to serve the amended complaint.
Under Rule 5, service of a pleading filed after the initial complaint is not required on a party who is in default for failing to appear, unless the pleading asserts a new claim for relief. (See: Fed. R. Civ. P. 5(a)(2).) The district court determined that the amended complaint did not contain a new claim because the defendants were on notice that the new claim for joint and several liability was possible because the copyright statute authorizes joint and several liability for statutory damages. The Eleventh Circuit disagreed, finding that Rackboy Cam added the joint and several liability claim for the first time in the amended complaint. Because no such claim was made in the initial complaint, the Court held that it was not possible for the defendants to have been on notice. In finding that Rackboy Cam’s claim for actual damages plus profits, jointly and severally, constituted a new claim for relief, the Court held that the unserved amended complaint could not serve as the basis for the default judgment. The Court vacated the default judgment and remanded for further proceedings.
In a concurring opinion, Judge Lagoa faulted the district court for failing to make the four-factor findings required by the Supreme Court in its 2006 ruling in eBay Inc. v. MercExchange, L.L.C., which are required prior to issuing injunctive relief. Judge Lagoa also questioned the propriety of awarding both an injunction and a running royalty, noting that although the issue has not yet been resolved in the Eleventh Circuit, sister circuits only award a running royalty in the context of denying an injunction. Finally, Judge Lagoa faulted the district court for awarding, in the context of a default judgment, relief beyond that sought in the pleadings.