Music Producer Sherman Nealy’s U.S. Supreme Court Victory Affirms Ability to Recover Copyright Damages in Case Against Warner Chappell Music

On May 9, 2024, the U.S. Supreme Court ruled in favor of Cravath client Sherman Nealy, affirming the U.S. Court of Appeals for the Eleventh Circuit’s ruling that the Copyright Act entitles a copyright owner to obtain damages for any timely filed infringement claim, regardless of when the infringement occurred. The Supreme Court’s decision resolves a split between the Ninth and Eleventh Circuits and the Second Circuit and holds that Nealy may seek damages for copyright infringement claims against Warner Chappell Music.

Nealy, a music producer, originally filed suit in Florida federal court in 2018 alleging Flo Rida’s 2008 song “In the Ayer” included an unlicensed sample of “Jam the Box,” a composition Nealy owns, and seeking damages for copyright infringement. Under the Copyright Act, a plaintiff must file suit “within three years after the claim accrued.” The Courts of Appeals interpret that limitations provision to mean that a claim accrues when a plaintiff discovers, or with due diligence should have discovered, the infringing act, rather than when an infringing act occurs. That “discovery rule,” Nealy argued, made his claims timely because he filed suit within three years of discovering the infringement upon his release from prison.

The Southern District of Florida accepted that the discovery rule governed the timeliness of Nealy’s claims, but relying on a decision from the Second Circuit, concluded that even if Nealy could sue under the discovery rule for infringements going back to 2008, he could recover damages only for infringements occurring within the three years prior to filing his suit. On appeal, the Eleventh Circuit—citing the Ninth Circuit’s decision in Starz v. MGM, which Cravath successfully litigated—overturned that ruling, rejecting the Second Circuit’s decision that there was a three-year damages bar for an otherwise timely claim, and ruling that Nealy could recover damages going back to 2008. Defendants filed a petition for certiorari to the U.S. Supreme Court, and Cravath assumed representation for Nealy after the petition was granted and handled the merits briefing in the Supreme Court.

Cravath partner Wes Earnhardt, who argued Starz before the Ninth Circuit, delivered arguments on Nealy’s behalf at the Supreme Court in February 2024. In a 6‑3 opinion authored by Justice Kagan, the Supreme Court, assuming without deciding that the discovery rule governs the timeliness of the limitations period, affirmed the Eleventh Circuit’s decision. The Court reasoned that the Copyright Act states without qualification that an infringer is liable for damages and profits without time limitation, and that the Second Circuit’s contrary view on top of having no textual support was self‑defeating. While the Second Circuit’s rule would recognize a discovery rule, enabling some copyright owners to sue for infringing acts occurring more than three years earlier, it also would impermissibly take away any ability to recover damages for those older infringements. Nealy, invoking the discovery rule to bring claims for infringing acts occurring more than three years before he filed suit, may obtain damages for all timely claims.

The Cravath team was led by partners Wes Earnhardt, who argued the appeal, and Antony L. Ryan, and included associates Dean M. Nickles, Ming‑Toy A. Taylor and Brian P. Golger. Nicholas Shepard also worked on the matter.

The case is Warner Chappell Music, Inc., et al. v. Nealy et al., No. 22‑1078 (U.S.).