Allen v. Cooper

Fourth Circuit reverses district court’s rejection of North Carolina’s Eleventh Amendment immunity claims as defense to copyright infringement suit, holding that Copyright Remedy Clarification Act of 1990 did not validly abrogate North Carolina’s Eleventh Amendment immunity to suits in federal court for copyright infringement.

Plaintiffs Frederick Allen, a videographer, and Nautilus Productions LLC, Allen’s production company, commenced an action for copyright infringement against the state of North Carolina, the North Carolina Department of Natural and Cultural Resources, the governor of North Carolina, and six officials within the department, alleging that defendants had published or displayed on the internet without authorization plaintiffs’ video footage and still photographs of the shipwreck Queen Anne’s Revenge, manned by the infamous pirate Edward Teach, otherwise known as Blackbeard. North Carolina moved to dismiss for lack of subject matter jurisdiction and for failure to state a claim based on sovereign immunity and qualified and legislative immunity. The district court denied North Carolina’s motion to dismiss, concluding the Copyright Remedy Clarification Act of 1990 abrogated the Eleventh Amendment’s sovereign immunity. The court also held that the individual officials were not entitled to qualified immunity and that deciding legislative immunity would be “premature.”  

North Carolina filed an interlocutory appeal challenging the district court’s denial of immunity wholesale and the Fourth Circuit reversed, finding that the Copyright Remedy Clarification Act does not validly abrogate Eleventh Amendment immunity, and remanded with instructions to dismiss with prejudice the claims against defendants in their individual capacities and to dismiss without prejudice all remaining claims.

Plaintiffs’ alleged that North Carolina infringed their copyrighted works through publishing and displaying at least six infringing works on the internet without their permission, and that North Carolina had, in bad faith, enacted a statute that made public any shipwreck videos and photographs in North Carolina’s custody, in order  to “create a defense” to copyright infringement. Plaintiffs also sought a declaratory judgment that the state statute was unenforceable because it was pre-empted by the Copyright Remedy Clarification Act of 1990, which provides that anyone, including any state or instrumentality of a state, acting in their official capacity, is not immune from federal copyright suits under the Eleventh Amendment. On a motion to dismiss, North Carolina argued that the institutional and individual defendants acting within their official capacities were immunized from suit by sovereign immunity under the Eleventh Amendment, and that the officials sued in their individual capacities were entitled to qualified and legislative immunity. In opposition, Allen and Nautilus argued that North Carolina had waived sovereign immunity by entering into a settlement agreement in 2013 that sovereign immunity was abrogated by the federal Copyright Remedy Clarification Act and that injunctive relief was available under the case Ex parte Young.

Taking up these arguments on interlocutory appeal, the Fourth Circuit first considered the 2013 settlement executed between the department, Nautilus, Allen and Intersal Inc., a private research and salvage firm that first discovered the wreck of the Revenge off the coast of North Carolina and retained Allen and Nautilus to document the salvage. After Allen and Nautilus claimed that the department’s publication of Allen’s copyrighted works on the internet without his consent constituted infringement, the parties executed the 2013 settlement to clarify pre-existing agreements, including the 15-year salvage agreement between Intersal and the department, to allow the salvage operation to move forward.  

Upon review, the Fourth Circuit found that the provision providing that, in the event of breach, the parties “may avail themselves of all remedies provided by law or equity” did not constitute a waiver of Eleventh Amendment immunity. The provision made no reference to federal court, state court or any court, and fell short of “the clear statement ... required to effect a waiver of Eleventh Amendment immunity.”  

Next, the appeals court considered whether Congress validly abrogated North Carolina’s Eleventh Amendment immunity by enacting the Copyright Remedy Clarification Act, and concluded that it did not. To validly abrogate a state’s Eleventh Amendment immunity, the Fourth Circuit noted, both a clear statement of congressional intent and a valid exercise of congressional power were required. Finding the Copyright Remedy Clarification Act undoubtedly provided a clear statement of congressional intent, the question turned on whether Congress had validly enacted it. To this end, Allen and Nautilus attempted to argue that by invoking Article I’s Patent and Copyright Clause authorizing Congress to “secur[e] for limited Times to Authors and Investors the exclusive Right to their respective Writings and Discoveries,” the Copyright Remedy Clarification Act was validly enacted. The Fourth Circuit, however, agreed with defendants that the U.S. Supreme Court’s decision in Seminole Tribe and its progeny, which confirmed that Congress cannot rely on its enumerated Article I powers to abrogate Eleventh Amendment immunity and compel a state to litigate cases in federal court, expressly foreclosed those grounds. Allen and Nautilus then argued that those cases were overruled by a more recent decision in Central Virginia Community College v. Katz. Again, the appellate court rejected this notion, holding that Katz was completely distinguishable as it relied upon a “context that was unique to the Bankruptcy Clause, and the [Supreme] Court limited its holding to that Clause.”  

Allen and Nautilus subsequently argued that North Carolina’s sovereign immunity could be abrogated under Congress’s Section 5 power pursuant to the Fourteenth Amendment, but the appeals court ruled otherwise. Specifically, it held that Congress clearly relied on the Copyright Clause of Article I of the Constitution and not Section 5 of the Fourteenth Amendment in enacting the Copyright Remedy Clarification Act. Without an explicit invocation of authority under Section 5 in the text of the statute or its legislative history, the Copyright Remedy Clarification Act could not effect a valid abrogation of North Carolina’s Eleventh Amendment immunity. Furthermore, Congress did not limit the scope of the Copyright Remedy Clarification Act to the enforcement of rights protected by the Fourteenth Amendment, as it was required to do. Instead, the appeals court found that the act’s language was so broad that its “wholesale abrogation of sovereign immunity for claims of copyright infringement” was “grossly disproportionate” to any Fourteenth Amendment injury, and therefore Section 5 could not be deemed a valid means to abrogate North Carolina’s sovereign immunity.  

Comparing the U.S. Supreme Court’s decision in Florida Prepaid, the Fourth Circuit noted that the act did not employ any tailored or limited language, nor did it provide a record of unconstitutional conduct — that is, copyright infringements constituting constitutional violations. Although the district court attempted to distinguish Florida Prepaid, it failed to consider whether the examples proffered involved intentional and remedied infringement, and incorrectly looked to the number of suits filed against infringing states, rather than identifying a pattern of unconstitutional conduct before abrogating sovereign immunity. Simply put, the sparse record did not establish the “widespread and persisting deprivation of constitutional rights ... required to warrant prophylactic legislation under Section 5.” Accordingly, the Fourth Circuit held that the Copyright Remedy Clarification Act could not be sustained as a valid abrogation of North Carolina’s sovereign immunity under Section 5 of the Fourteenth Amendment.

Lastly, the Fourth Circuit concluded that the exception under Ex parte Young — allowing private citizens to sue state officials in their official capacities in federal court based on ongoing federal violations — was inapplicable to the dispute at hand. Noting it remained Allen and Nautilus’s burden to establish an ongoing violation of federal law to qualify for relief under Ex parte Young, the appeals court concluded that the infringement identified in the amended complaint had already ceased and been removed from the internet by defendants, and that Allen and Nautilus had conceded the same at oral argument. Accordingly, there were no grounds for Ex parte Young to provide Allen and Nautilus with an exception to North Carolina’s claim of sovereign immunity. 

Summary prepared by Jonathan Zavin and Mary Jean Kim