Joe Hand Promotions, Inc. v. Labonte II, No. 1:2010cv02164 - Document 14 (E.D. Cal. 2011)

Court Description: FINDINGS and RECOMMENDATIONS on 12 Plaintiff's Motion for Default Judgment recommending that Plaintiff's motion for default judgment be GRANTED; Judgment be entered in this action against Defendant Albert Joseph Labonte II, individually a nd dba Tony Romas as follows: a) $10,000 statutory damages for violation of 47 U.S.C. § 605;b) $5,000 enhanced statutory damages for violation of 47 U.S.C. § 605; andc) $1,300 for the tort of conversion. Matter referred to Judge O'Neill; Objections to F&R due within fifteen (15) days of service of this recommendation; signed by Magistrate Judge Sheila K. Oberto on 5/6/2011. (Timken, A)
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Joe Hand Promotions, Inc. v. Labonte II Doc. 14 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA – FRESNO DIVISION 10 11 JOE HAND PROMOTIONS, INC., 12 13 CASE NO. 1:10-cv-02164-LJO-SKO Plaintiff, FINDINGS AND RECOMMENDATIONS ON PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT v. 14 15 ALBERT JOSEPH LABONTE II, INDIVIDUALLY and d/b/a TONY ROMAS, (Docket No. 12) OBJECTIONS, IF ANY, DUE WITHIN 15 DAYS 16 Defendant. 17 / 18 19 I. INTRODUCTION 20 On March 25, 2011, Plaintiff Joe Hand Promotions, Inc. (“Plaintiff”) filed the present motion 21 for default judgment against Defendant Albert Joseph Labonte II, individually and dba Tony Romas 22 (“Defendant”). (Doc. 12.) The motion was referred to this Court pursuant to 28 U.S.C. § 23 636(b)(1)(B) and Local Rule 302. 24 II. FACTUAL BACKGROUND 25 Plaintiff filed the instant action on November 19, 2010. (Doc. 1.) The complaint alleges 26 violations of 47 U.S.C. §§ 605 and 553, as well as causes of action for conversion and for violation 27 of the California Business and Professions Code section 17200, et. seq. The suit is based on 28 Defendant’s alleged unlawful interception, receipt, and exhibition of “Ultimate Fighting 1 Championship 106: Tito Ortiz v. Forrest Griffin II” (the “Program”), a mixed martial arts match, 2 including all under-card bouts and fight commentary, that was telecast nationwide on November 21, 3 2009. (Doc. 1, ¶¶ 9, 12.) According to the complaint, Plaintiff was the exclusive commercial 4 distributor of the Program. (Doc. 1, ¶ 9.) 5 Count I of the complaint asserts a violation of 47 U.S.C. § 605 (Unauthorized Publication 6 or Use of Communications) alleging that Defendant knowingly intercepted, received, and exhibited 7 the Program for purposes of direct or indirect commercial advantage or private financial gain. (Doc. 8 1, ¶¶ 8-17.) Plaintiff seeks $100,000 in statutory damages as well as attorneys’ fees and costs. (Doc. 9 1, ¶ 17.) Count II alleges a violation of 47 U.S.C. § 553 (Unauthorized Reception of Cable Services) 10 based upon the same allegations. (Doc. 1, ¶¶ 18-22.) Plaintiff requests $60,000 in statutory 11 damages, as well as attorneys’ fees and costs. (Doc. 1, ¶ 22.) Count III states a claim for conversion 12 alleging that Defendant tortiously obtained possession of the Program and wrongfully converted it 13 for his own benefit. (Doc. 1, ¶¶ 23-26.) As to Count III, Plaintiff seeks compensatory damages, 14 exemplary damages and punitive damages. (Doc. 1, ¶ 26.) Count IV of the complaint alleges a 15 violation of the California Business & Professions Code § 17200, et. seq. (Doc. 1, ¶¶ 27-36.) As 16 to Count IV, Plaintiff seeks restitution, declaratory relief, injunctive relief, attorneys’ fees, and costs 17 of suit. (Doc. 1, ¶¶ 35-36.) 18 On January 26, 2011, the summons as to Defendant Albert Joseph Labonte II was returned 19 showing that service of the summons and complaint was executed on January 4, 2011. (Doc. 5.) 20 Defendant failed to respond to the complaint by the January 25, 2011, due date. On February 22, 21 2011, pursuant to Plaintiff’s request, the Clerk entered default against Defendant. (Doc. 9.) On 22 March 25, 2011, Plaintiff filed this motion for default judgment against Defendant. (Doc. 12.) 23 Defendant did not oppose the motion. 24 25 III. DISCUSSION A. Legal Standard 26 Federal Rule of Civil Procedure 55(b)(2) provides that judgment may be entered as follows: 27 By the Court. In all other cases, the party must apply to the court for a default judgment. A default judgment may be entered against a minor or incompetent person only if represented by a general guardian, conservator, or other like fiduciary who has 28 2 1 appeared. If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing. The court may conduct hearings or make referrals–preserving any federal statutory right to a jury trial–when, to enter or effectuate judgment, it needs to: 2 3 4 (A) (B) (C) (D) 5 conduct an accounting; determine the amount of damages; establish the truth of any allegation by evidence; or investigate any other matter. 6 Upon default, the well-pleaded allegations of the complaint relating to liability are taken as 7 true. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987); Dundee Cement Co. 8 v. Highway Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983). 9 “Factors which may be considered by courts in exercising discretion as to the entry of a 10 default judgment include: (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s 11 substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; 12 (5) the possibility of a dispute concerning material facts; (6) whether the default was due to 13 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring 14 decisions on the merits.” Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). 15 B. Analysis 16 Service of summons and complaint in this action was made on Defendant on January 4, 2011. 17 A copy of the Proof of Service was filed with this Court on January 26, 2011. Defendant failed to 18 respond to the complaint or otherwise appear in the action. The Clerk of the Court entered default 19 against Defendant on February 22, 2011. Defendant is not an infant or incompetent person, and is 20 not in the military service or otherwise exempted under the Soldiers’ and Sailors’ Civil Relief Act 21 of 1940. (Doc. 12-2, ¶ 3.) 22 In its motion, Plaintiff seeks default judgment and an award of damages pursuant to 23 47 U.S.C. § 605(e)(3)(C)(i)(II) (statutory damages) and 47 U.S.C. § 605(e)(3)(C)(ii) (enhanced 24 statutory damages) in the amount of $110,000 against Defendant for unlawfully intercepting, 25 receiving, and exhibiting the Program on November 21, 2009, at his restaurant/bar. Plaintiff also 26 seeks damages in the amount of $1,300 for its state law conversion claim. 27 28 3 1 1. Statutory Damages Pursuant to 47 U.S.C. § 605(e)(3)(C)(i)(II) and Enhanced Statutory Damages Pursuant to 47 U.S.C. § 605(e)(3)(C)(ii) 2 Plaintiff seeks statutory damages pursuant to 47 U.S.C. § 605(e)(C)(i)(II) and enhanced 3 statutory damages pursuant to Section 605(e)(3)(C)(ii). (Doc. 12-1, 11:15-16; 15:1-2.) Pursuant to 4 Section 605(a), “no person receiving, assisting in receiving, transmitting, or assisting in transmitting, 5 any interstate or foreign communication by wire or radio shall divulge or publish the existence, 6 contents, substance, purport, effect, or meaning thereof, except through authorized channels of 7 transmission of reception. . . .” Those who violate this Section are subject to the following civil 8 penalty: 9 10 11 12 13 [T]he party aggrieved may recover an award of statutory damages for each violation of subsection (a) of this section involved in the action in a sum of not less than $1,000 or more than $10,000, as the court considers just, and for each violation of paragraph (4)1 of this subsection involved in the action an aggrieved party may recover statutory damages in a sum not less than $10,000, or more than $100,000, as the court considers just. 47 U.S.C. § 605(e)(3)(C)(i)(II). 14 Plaintiff attests that it is a closed-circuit distributor of sports and entertainment programming 15 that purchased and retained the exclusive commercial exhibition licensing rights to the Program. 16 (Doc. 12-4, ¶ 3.) Plaintiff marketed the sub-licensing (commercial exhibition) rights in the Program 17 to its commercial customers. (Id.) Plaintiff contends that persistent signal piracy of its programming 18 costs the company, its customers, and the community millions of dollars annually. (Id. at ¶ 12.) 19 Plaintiff believes that the continued signal piracy is caused, in part, from the perceived lack of 20 consequences (including nominal or minimal damage awards by the courts who hear its cases) for 21 such unlawful interception and exhibition by the commercial signal pirates. (Id.) As such, Plaintiff 22 requests that it be awarded the maximum allowance for statutory violations, totaling $10,000. 23 Plaintiff contends that significant enhanced statutory damages should be awarded under 24 Section 605(e)(3)(C)(ii) because Defendant’s actions were willful and done for a commercial 25 advantage. Section 605(e)(3)(C)(ii) provides that where “the court finds that the violation was 26 27 28 1 Paragraph 4 relates to persons who manufacture, assemble, modify, import, export, sell, or distributed any device or equipment knowing that the equipment is primarily of assistance in the unauthorized description of satellite cable programming. Plaintiff does not assert that Paragraph 4 is applicable in this case. 4 1 committed willfully and for purposes of direct or indirect commercial advantage or private financial 2 gain, the court in its discretion may increase the award of damages, whether actual or statutory, by 3 an amount of not more than $100,000 for each violation of subsection (a) of this section.” 4 Emphasizing the need for deterrence as to this Defendant and others, Plaintiff requests that it be 5 awarded $100,000 in enhanced statutory damages. 6 Here, the summons and the complaint were properly served upon Defendant, his default was 7 properly entered, and the complaint is sufficiently well-pled. See Eitel, 782 F.2d at 1471-72. By 8 his default, Defendant admitted to willfully violating Section 605 for the purposes of commercial 9 advantage. See TeleVideo Sys., Inc., 826 F.2d at 917-18. The facts before the Court indicate that 10 Defendant’s establishment had a maximum capacity of 200 people. (Doc. 12-3.) Dominique 11 Vargas, Plaintiff’s investigator, noted that there were four large, flat screen televisions on the night 12 the Program was broadcast. (Id.) All four were located on the walls of the bar, toward the top. (Id.) 13 Vargas conducted three head-counts in the bar while she was there, with fifty people in the first 14 count, fifty-five people in the second count, and fifty-five people in the last count. (Id.) 15 The amount of damages awarded should be in an amount that is adequate to deter this 16 Defendant and others from committing similar acts in the future. Therefore, the Court recommends 17 that the maximum allowable statutory damages be awarded pursuant to 47 U.S.C. 18 § 605(e)(3)(C)(i)(II) in the amount of $10,000. 19 With regard to enhanced statutory damages, several factors militate against a substantial 20 award. There is no evidence that Defendant (1) advertised the broadcast of the Program to entice 21 a larger crowd, (2) charged a cover to enter the establishment, or (3) charged a premium for food and 22 drinks on the night the broadcast was shown. Further, the headcounts during the Program indicate 23 approximately fifty-five people were present in the establishment, approximately one-quarter of the 24 establishment’s capacity. (Doc. 12-3.) Moreover, Defendant has not been shown to be a repeat 25 offender with regard to signal piracy. 26 Plaintiff contends that the courts have placed undue weight on the promotion of the program 27 rather than the exhibition of the program, arguing that pirates do not generally advertise that they will 28 exhibit programming unlawfully, do not generally increase the price of food and drinks, and do not 5 1 generally charge a cover so as to undercut establishments who do broadcast the program lawfully. 2 (Doc. 12-4, ¶¶ 14-17.) The Court has considered these arguments and finds that there is an impact 3 based on Defendant’s conduct and limited enhanced damages will produce the appropriate deterrent 4 effect. There is no evidence that Defendant’s financial resources would require a large judgment to 5 achieve the desired deterrent effect. However, the Court is also mindful that minimal damage 6 awards may result in a perceived lack of consequences for signal piracy. (See Doc. 12-4, ¶¶ 11-13.) 7 Considering these factors, the Court recommends that enhanced statutory damages be awarded 8 pursuant to Section 605(e)(3)(C)(ii) in the amount of $5,000. 9 10 11 2. Damages for Conversion Plaintiff seeks $1,300 in conversion damages – the value of the property at the time of the conversion. 12 Under California law, conversion is the wrongful exercise of dominion over the property of 13 another. The elements of conversion are, “the plaintiff’s ownership or right to possession of the 14 property at the time of the conversion; the defendant’s conversion by a wrongful act or disposition 15 of property rights; and damages.” Greka Integrated, Inc. v. Lowrey, 133 Cal. App. 4th 1572, 1581 16 (2005); see also G.S. Rasmussen & Assocs., Inc. v. Kalitta Flying Serv., Inc., 958 F.2d 896, 906 (9th 17 Cir. 1992). “Because conversion is a strict liability tort, questions of the defendant’s good faith, lack 18 of knowledge, motive, or intent are not relevant.” Gilman v. Dalby, 176 Cal. App. 4th 606, 615 n.1 19 (2009). Exclusive right to distribute a broadcast signal to commercial establishments constitutes a 20 “right to possession of property” for purposes of conversion. See Don King Prods./Kingvision v. 21 Lovato, 911 F.Supp. 419, 423 (N.D. Cal. 1995) (misappropriation of intangible property without 22 authority from owner is conversion); see also DIRECTV, Inc. v. Pahnke, 405 F. Supp. 2d 1182, 1189 23 (E.D. Cal. 2005) (concluding that the right to distribute programming via satellite constituted a right 24 to possession of personal property for purposes of a conversion claim under California law.) 25 Here, Plaintiff was granted the exclusive domestic commercial exhibition licensing rights to 26 the Program, and thus had the right to possession of the property at the time of the conversion. 27 Because Defendant did not legally purchase the Program, the exhibition of the fight in Defendant’s 28 Tony Romas restaurant on November 21, 2009, constituted conversion by a wrongful act or 6 1 disposition of property rights. Finally, the rate card2 for the Program at an establishment with a 2 seating capacity of between 151 and 200, which would apply to Defendant’s establishment, indicates 3 the sub-license fee for the Program would have been $1,300. (Doc. 12-4, ¶ 8, Exh. 1.) Thus, 4 Plaintiff is entitled to damages for conversion in the amount of $1,300. 5 IV. RECOMMENDATION 6 7 Based on a consideration of the declarations, pleadings, and exhibits to the present motion, the Court RECOMMENDS as follows: 8 1. Plaintiff’s motion for default judgment be GRANTED; 9 2. Judgment be entered in this action against Defendant Albert Joseph Labonte II, 10 individually and dba Tony Romas as follows: 11 a. $10,000 statutory damages for violation of 47 U.S.C. § 605; 12 b. $5,000 enhanced statutory damages for violation of 47 U.S.C. § 605; and 13 c. $1,300 for the tort of conversion. 14 These findings and recommendations are submitted to the district judge assigned to this 15 action, pursuant to 28 U.S.C. § 636(b)(1)(B) and this Court’s Local Rule 304. Within fifteen (15) 16 days of service of this recommendation, any party may file written objections to these findings and 17 recommendations with the Court and serve a copy on all parties. Such a document should be 18 captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The district judge 19 will review the magistrate judge’s findings and recommendations pursuant to 28 U.S.C. 20 § 636(b)(1)(C). The parties are advised that failure to file objections within the specified time may 21 waive the right to appeal the district judge’s order. Martinez v. Ylst, 951 F.2d 1153, 1156 (9th Cir. 22 1991). 23 IT IS SO ORDERED. 24 Dated: ie14hj May 6, 2011 /s/ Sheila K. Oberto UNITED STATES MAGISTRATE JUDGE 25 26 2 27 28 The rate card indicates the amount Plaintiff charges an establishment to sub-license and purchase the broadcast the Program. (Doc. 12-4, ¶ 8, Exh. 1.) The rates charged are based upon the capacity of the establishment. In this instance, for an establishment with a capacity of 151-200 people, the rate to sub-license and broadcast the Program is $1,300. (Id.) 7