Tim Foley, Individually, Connie Foley, Individually, Defendants-Cross-Claimants-Appellees v. Mahaleel Lee Luster, Individually, D.B.A. Go Diamond Productions, D.B.A. Lustervision, Defendant-Cross-Defendant-Appellant

Citation: 249 F.3d 1281Docket: 99-14123

Court: Court of Appeals for the Eleventh Circuit; May 14, 2001; Federal Appellate Court

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The case revolves around a legal dispute involving Tim Foley, Connie Foley, and other high-level distributors of the Amway Corporation, alongside videographer Mahaleel Lee Luster. The primary issue is whether a state common law claim for indemnification against Luster is preempted by the federal Copyright Act. Luster was sued for including copyrighted songs in promotional videos without permission, leading to a settlement with recording companies. The distributors sought indemnification from Luster, claiming he was solely responsible for the infringement.

The Eleventh Circuit Court of Appeals affirmed the district court's denial of Luster's motion for judgment as a matter of law on three grounds: the preemption claim, the clarity of jury instructions, and the apportionment of damages among potentially liable parties. The court clarified that Section 301 of the Copyright Act preempts state causes of action that are equivalent to rights granted under the Act, with limited exceptions. The case highlights the legal complexities of copyright liability and indemnification in the context of promotional activities tied to multi-level marketing.

State common law or statutes can be exempt from federal copyright preemption under 17 U.S.C. 301(b)(3) if they address activities that do not infringe exclusive rights specified in section 106 of the Copyright Act. The Act preempts only state rights that could be violated by acts that would infringe federal copyright. This principle has led to the "extra element" test, established in Bateman v. Mnemonics, Inc., determining that if a state law cause of action requires an additional element beyond reproduction or distribution, then it is not preempted. 

However, in the current case concerning indemnity, the issue does not relate to copyright holder rights but rather the responsibility among copyright infringers. The indemnity question regarding Luster's responsibility for settlement and legal fees does not equate to any exclusive copyright rights under section 106, making the "extra element" test inapplicable. Therefore, general preemption principles must be employed.

Federal law, under Article VI of the U.S. Constitution, prevails over conflicting state law. Preemption can be explicit, conflict-based, or field-based, depending on Congress's intent. After examining Luster's indemnity claim, it is determined that it is not preempted by the Copyright Act, as it does not fall under the explicit preemption outlined in section 301 for claims that infringe the rights defined in sections 102 and 103.

The excerpt outlines key points regarding copyright law and the applicability of indemnity suits in the context of copyright infringement. It details the rights granted to copyright holders under 17 U.S.C. § 106, which include reproduction, preparation of derivative works, distribution, public performance, public display, and digital audio transmission of copyrighted works. The text asserts that Congress intended to protect copyright holders rather than to restrict indemnity claims between infringers, stating that 17 U.S.C. § 301 does not explicitly preempt such suits.

The analysis of conflict preemption indicates that indemnity suits do not obstruct congressional intent, as they can coexist with copyright infringement claims. Furthermore, field preemption is addressed, clarifying that while federal regulation may dominate certain areas, it does not encompass common law indemnity, allowing such claims to proceed.

Regarding jury instructions, it is noted that Luster's request for judgment is based on alleged confusion between federal copyright liability and Florida indemnity law. The court affirms that the jury instructions were appropriate and did not mislead the jury. Lastly, the excerpt defines a two-part test for common law indemnification in Florida, requiring that the indemnity-seeking party be faultless and that indemnity must be sought from a party at fault.

Indemnity requires that the party seeking it must be without fault; any assessment of the relative fault of tortfeasors is irrelevant in this context (Houdaille Indus. Inc. v. Edwards). Luster contends that the jury was improperly instructed on vicarious liability, arguing that the instruction allowed the jury to find for the distributors despite their potential partial fault. However, the district court clarified that a finding of fault against Luster would preclude indemnity. For plaintiffs to obtain indemnification, they must prove: 1) they were without fault; 2) their liability was solely vicarious, arising from Luster's actions; and 3) Luster was solely at fault. If a plaintiff is found at fault or Luster is not at fault, the verdict should favor Luster.

The jury understood these instructions, as evidenced by their finding for Luster against two distributors, indicating they believed Luster was not entirely at fault. Luster also argued that the distributors failed to properly apportion damages among him and other videographers, asserting he should only be liable for his share of the damages related to the videos he created. However, the court clarified that Luster was sued for indemnity, not contribution, emphasizing that indemnity shifts the entire loss from one party without fault to another who is at fault. The jury's finding that Luster was wholly responsible for the damages was upheld, and the district court correctly denied Luster's motion for judgment as a matter of law on this issue.

The distributors' claim for indemnification was upheld, as it was not preempted by the relevant Act, leading to the district court's denial of judgment as a matter of law on that issue being deemed correct. The jury's instructions were found to be adequate, and the jury determined that Luster was entirely responsible for the copyright infringement, as confirmed by their verdict. Consequently, the court affirms the lower court's decision. Luster's argument regarding the involvement of other videographers in creating the disputed videos was dismissed, as the facts were viewed favorably toward the non-moving party. The appeal primarily concerns the verdicts in favor of the Andersons, Haugens, and Grabills, as Luster successfully defended against claims from the Foleys and the Gooches. Additionally, the reasoning aligns with previous rulings in patent law, which indicate that once infringement litigation is resolved, patent laws become irrelevant to state indemnity claims. Although it was noted that Luster could have pursued indemnity claims against other videographers by joining them as co-defendants, he did not take this action.