J & J Sports Productions, Inc. v. Prado et al, No. 1:2014cv01343 - Document 22 (E.D. Cal. 2015)
Court Description: FINDINGS and RECOMMENDATIONS Regarding Plaintiff's Application for Default Judgment re 19 ; ORDER Directing Clerk of Court to Assign Fresno District Court Judge to Instant Matter, signed by Magistrate Judge Michael J. Seng on 5/14/15. Fourteen Day Objection Deadline. Case is assigned to District Judge Anthony W. Ishii and Magistrate Judge Michael J. Seng; The New Case Number is: 1:14-cv-01343-AWI-MJS. (Gonzalez, R)
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1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 J & J SPORTS PRODUCTIONS, INC., 12 Plaintiff, 13 v. FINDINGS AND RECOMMENDATIONS REGARDING PLAINTIFF’S APPLICATION FOR DEFAULT JUDGMENT 14 15 JOSE LUIS PRADO, et al., 16 Defendant. 17 18 19 20 21 22 23 24 25 I. Case No. 1:14-cv-01343 - MJS ORDER DIRECTING CLERK OF COURT TO ASSIGN FRESNO DISTRICT COURT JUDGE TO INSTANT MATTER INTRODUCTION On March 17, 2015, Plaintiff J & J Sports Productions, Inc. (“Plaintiff”) filed a motion for default judgment against Defendants Jose Luis Prado, Jose A. Mendoza, and Roberto Prado, individually and d/b/a El Agave Night Club, or in the alternative, El Agave Night Club, an unknown business entity (“Defendants”). (See generally Motion, ECF No. 19.) The motion was referred to this Court pursuant to 28 U.S.C. § 636(b)(1)(B) and Local Rule 302. This motion for default judgment has been scheduled for hearing on May 29, 26 2015. (Minute Order, ECF No. 21.) However, the Court deems the matter suitable for 27 decision without oral argument, and for the reasons set forth below, RECOMMENDS 1 28 1 2 3 4 5 6 7 8 9 10 that Plaintiff's motion for default judgment be GRANTED. II. BACKGROUND Plaintiff filed this civil action on August 28, 2014. (See Compl., ECF No. 1.) The Complaint alleges Defendants violated the Communications Act of 1934 (47 U.S.C. § 605, et seq.) and the Cable & Television Consumer Protection and Competition Act of 1992 (47 U.S.C. § 553, et seq.). (Id. at 5-9.) Plaintiff also alleges a state law claim of conversion and a violation of California Business and Professions Code section 17200, et seq. (Id. at 9-11.) The suit is based on Defendants’ alleged unlawful interception, receipt, and exhibition of the "The One" Floyd Mayweather, Jr. v. Saul Alvarez WBC Light 11 Middleweight Championship Fight Program, telecast nationwide on Saturday, September 12 14, 2013 (the “Program”). (Compl., ECF No. 1 at 6.) According to the Complaint, Plaintiff 13 was the exclusive commercial distributor of closed-circuit rights to the Program. (Id.) 14 Since Defendants operate a commercial establishment and exhibited the Program there, 15 they could not have lawfully obtained the Program without contracting with Plaintiff. 16 Defendants did not so contract, and thus necessarily must have wrongfully intercepted, 17 received, and broadcasted the Program. 18 Plaintiff, in its application for default, only requests relief as to counts one 19 (violation of the Communications Act) and three (conversion) of the Complaint. (Mot., 20 ECF No. 19-2 at 2.) Count one of the Complaint asserts a violation of 47 U.S.C. § 605 21 (Unauthorized Publication or Use of Communications) alleging that Defendants 22 knowingly intercepted, received, and exhibited the Program for purposes of direct or 23 indirect commercial advantage or private financial gain. (Id.) Plaintiff prays for 24 $60,000.00 in statutory damages. (Id.) Count three alleges Defendants tortuously 25 obtained possession of the Program and wrongfully converted it for its own benefit. (Id.) 26 Plaintiff requests an award of $4,200 in compensatory damages for the alleged 27 conversion. (Id.) 28 2 1 2 3 4 5 6 7 8 9 10 11 12 Defendants were served with the summons and Complaint on December 28, 2014. (ECF Nos. 13-16.) Defendants have not filed any response to the Complaint. (ECF No. 17.) On February 16, 2015, Plaintiff requested default be entered against Defendants, and on February 18, 2015, the Clerk entered said default. (ECF Nos. 17 and 18.) On March 17, 2015, Plaintiff filed the present motion for default judgment against Defendants. (Mot., ECF No. 19.) Despite being served with the application by United States Mail, Defendants have filed no opposition to the motion or otherwise sought to appear in this action. (Id.) III. DISCUSSION A. Legal Standard Federal Rule of Civil Procedure 55(b)(2) provides that judgment may be entered by the Court on a party's motion for default judgment and authorizes the Court to: 13 conduct hearings or make referrals-preserving any federal statutory right to 14 a jury trial-when, to enter or effectuate judgment, it needs to: 15 (A) conduct an accounting; 16 (B) determine the amount of damages; 17 (C) establish the truth of any allegation by evidence; or 18 (D) investigate any other matter. 19 Upon default, the well-pleaded allegations of liability in the Complaint are taken as 20 true. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987); Dundee 21 Cement Co. v. Highway Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 22 1983). “Factors which may be considered by courts in exercising discretion as to the 23 entry of a default judgment include: (1) the possibility of prejudice to the plaintiff, (2) the 24 merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of 25 money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) 26 whether the default was due to excusable neglect, and (7) the strong policy underlying 27 the Federal Rules of Civil Procedure favoring decisions on the merits.” Eitel v. McCool, 28 3 1 2 3 782 F.2d 1470, 1471–72 (9th Cir. 1986). B. Analysis 1. Default Judgment 4 Service of the summons and Complaint in this action was effected on December 5 28, 2014. (ECF No. 13-16.) A copy of the Proof of Service was filed with this Court on 6 January 12, 2015. (ECF No. 13-16.) Defendants have not responded to the Complaint or 7 to this motion (of which Defendants were given notice) or otherwise appeared in the 8 action. (ECF No. 17.) The Clerk of the Court entered default against Defendants on 9 February 18, 2015. (ECF No. 18.) According to the Declaration of Plaintiff's counsel in 10 support of Plaintiff's Request to Enter Default, Defendants are not infants, incompetent, 11 in the military service, or otherwise exempted under the Service members Civil Relief Act 12 of 2003. (Decl. of Thomas P. Riley, ECF No. 19-2 at 1.) 13 The Court finds that Plaintiff's Complaint properly and credibly alleges all material 14 facts and elements necessary to the claims asserted and to the relief sought, and it 15 reflects a meritorious substantive claim. Defendants have chosen not to respond to or 16 contest the action or this motion. There is no basis to conclude that Plaintiff will be 17 prejudiced by this case proceeding via default judgment rather than trial. Inasmuch as 18 default serves as an admission of Plaintiff's well-pled allegations of fact, Danning v. 19 Lavine, 572 F.2d 1386,1388 (9th Cir.1978), it must be concluded that there is no dispute 20 as to any material fact. 21 It appears that Defendants simply elected to allow this matter to proceed through 22 default; default was not caused by excusable neglect. Although the Court favors 23 resolving cases on the merits after adversarial proceedings, it cannot force Defendants 24 to participate. Thus, the only factor weighing against default judgment in this case is the 25 relatively large amount of money Plaintiff seeks in damages. However, as discussed 26 below, the actual award made by the Court is not of such an amount as to militate 27 against proceeding by default judgment. 28 4 1 2 3 Accordingly, the Court recommends that default judgment be entered against the Defendants. 2. Statutory and Enhanced Damages 4 Plaintiff seeks a default judgment and an award of damages pursuant to 47 5 U.S.C. § 605(e)(3)(C)(i)(II) (statutory damages) and 47 U.S.C. § 605(e)(3)(C)(ii) 6 (enhanced statutory damages) in the amount of $60,000 against Defendants for 7 unlawfully intercepting, receiving, and exhibiting the Program and $4,200 damages for 8 conversion. (Mot., ECF No. 19-2 at 2.) 9 Section 605(a) provides that “no person receiving, assisting in receiving, 10 transmitting, or assisting in transmitting, any interstate or foreign communication by wire 11 or radio shall divulge or publish the existence, contents, substance, purport, effect, or 12 meaning thereof, except through authorized channels of transmission of reception....” 13 Those who violate this Section are subject to the following civil penalty: 14 15 16 17 18 [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) 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). 19 Plaintiff attests that it is a closed-circuit distributor of sports and entertainment 20 programming that purchased and retained the exclusive commercial exhibition licensing 21 rights to the Program. (Mot., ECF No. 19-1 at 7.) Plaintiff marketed the sub-licensing 22 (commercial exhibition) rights in the Program to its commercial customers. (Id.) Plaintiff 23 seeks substantial damages as a deterrent to Defendants and others continuing to pirate 24 and commercially exhibit such broadcasts. (Id. at 14-16.) Plaintiff contends that 25 persistent signal piracy of Plaintiff's programming costs the company, its customers, and 26 the community millions of dollars annually. (Id.) Plaintiff asserts that continued signal 27 piracy is caused, in part, by the perceived lack of consequences as reflected in part by 28 5 1 2 3 nominal or minimal damage awards by courts, for such unlawful interception and exhibition. (Id.) As such, Plaintiff requests that it be awarded $10,000 allowance for statutory violations. (Id. at 14.) 4 Plaintiff also seeks an award of significant enhanced statutory damages under 5 Section 605(e)(3)(C)(ii) because Defendants’ action in this case was willful—the 6 technology is such that it cannot occur inadvertently or innocently-and done for 7 commercial advantage. (Mot., ECF No. 19-1 at 15.) Section 605(e)(3)(C)(ii) provides that 8 where “the court finds that the violation was committed willfully and for purposes of direct 9 or indirect commercial advantage or private financial gain, the court in its discretion may 10 increase the award of damages, whether actual or statutory, by an amount of not more 11 than $100,000 for each violation of subsection (a)....” Emphasizing the need for 12 deterrence as to these Defendants and others, Plaintiff requests that it be awarded 13 $50,000 in enhanced statutory damages. (Id. at 14.) 14 Here, the summons and the Complaint were properly served upon Defendants, 15 their default was properly entered, and the Complaint is sufficiently well-pled. See Eitel, 16 782 F.2d at 1471–72. By default, Defendants admitted to willfully violating Section 605 17 for the purposes of commercial advantage. See TeleVideo Sys., Inc., 826 F.2d at 917– 18 18. The facts before the Court indicate that Defendants’ establishment was in good 19 condition, in an incorporated part of Tulare County. (Aff. of Alan Meindersee & Jeff Lang, 20 ECF No. 20 at 2-3.) There were four color televisions displaying the Program on 21 September 14, 2013, two flat screen televisions approximately 42 to 45 inches, and two 22 additional “projection type units” approximately 60 to 70 inches. (Id.) According to the 23 Plaintiff’s investigator, Defendants’ establishment had an approximate capacity of 150 24 people. (Id.) Three head-counts revealed over 45 people in the facility at the time the 25 investigators were present, and another 10 to 12 people waiting to enter. (Id.) 26 Photographs of the establishment indicate that Defendants advertised the broadcast of 27 the Program with posters. (Id.) Furthermore, Defendants required a $20.00 cover charge 28 6 1 2 for entrance to the establishment, which was manned by a security guard. (Id.) The amount of damages awarded should be in an amount that is adequate to 3 deter Defendants and others from committing similar acts in the future. The Court 4 recommends that the maximum allowable statutory damages be awarded pursuant to 47 5 U.S.C. § 605(e)(3)(C)(i)(II) in the amount of $10,000. 6 Defendants’ conduct, whether particularly profitable for Defendants or not, has an 7 adverse impact on Plaintiff and the industry. Plaintiff stresses the significant adverse 8 effect piracy has had on its industry, the need for deterrence, and the perception that the 9 courts have placed undue weight on whether Defendants promote the program. 10 The Court is also mindful that minimal damages awards may result in a perceived 11 lack of consequence for signal piracy. The facts before the Court indicate that 12 Defendants acted willfully in violating the referenced statutes and for the purpose of 13 financial gain. While the Defendants’ establishment was filled to less than half its 14 capacity, 45 to 60 people is a significant number of patrons. Defendants advertised the 15 showing of the Program and required a cover charge for entrance. It is reasonable to 16 assume the number of customers was greater because of broadcast of the Program than 17 it would have been without the broadcast. 18 Weighing all of these factors, the Court recommends that enhanced statutory 19 damages in the amount of $5,800 be awarded under Section 605(e)(3)(C)(ii). This is an 20 amount which should serve as a significant disincentive to Defendant and others to try to 21 profit directly or indirectly from the pirating, but also recognizes the absence of evidence 22 that Defendants did actually profit from the pirating. 23 24 25 3. Damages for Conversion Plaintiff seeks recovery of $4,200 as the value of the property at the time of the conversion. 26 Under California law, conversion is the wrongful exercise of dominion over the 27 property of another. “The elements of a conversion are the plaintiff's ownership or right 28 7 1 to possession of the property at the time of the conversion; the defendant's conversion 2 by a wrongful act or disposition of property rights; and damages.” Greka Integrated, Inc. 3 v. Lowrey, 133 Cal.App.4th 1572, 1581, 35 Cal.Rptr.3d 684 (2005) (internal quotation 4 and citation omitted); see also G.S. Rasmussen & Assocs., Inc. v. Kalitta Flying Serv., 5 Inc., 958 F.2d 896, 906 (9th Cir.1992). “Because conversion is a strict liability tort, 6 questions of the defendant's good faith, lack of knowledge, motive, or intent are not 7 relevant.” Gilman v. Dalby, 176 Cal.App.4th 606, 615 n. 1, 98 Cal.Rptr.3d 231 (2009). 8 The exclusive right to distribute a broadcast signal to commercial establishments 9 constitutes a “right to possession of property” for purposes of conversion. See Don King 10 Prods./Kingvision v. Lovato, 911 F.Supp. 419, 423 (N.D.Cal.1995) (misappropriation of 11 intangible property without authority from owner is conversion); see also DIRECTV, Inc. 12 v. Pahnke, 405 F.Supp.2d 1182, 1189 (E.D.Cal.2005) (concluding that the right to 13 distribute programming via satellite constituted a right to possession of personal property 14 for purposes of a conversion claim under California law.) 15 Here, Plaintiff was granted the exclusive domestic commercial exhibition licensing 16 rights to the Program. As such, Plaintiff had the right to possess the property at the time 17 of the conversion. Because Defendants did not legally purchase the Program, the 18 exhibition of the Program constituted conversion by a wrongful act or disposition of 19 property rights. The rate for the Program at an establishment such as Defendant's 20 establishment was $4,200. Accordingly, Plaintiff is entitled to damages for conversion in 21 the amount of $4,200. 22 IV. 23 24 RECOMMENDATIONS Based on a consideration of the declarations, pleadings, and exhibits to the present motion, the Court RECOMMENDS as follows: 25 1. Plaintiff's motion for default judgment be GRANTED; 26 2. Judgment be entered in this action against Defendants Jose Luis Prado, Jose 27 28 A. Mendoza, and Roberto Prado, individually and d/b/a El Agave Night Club, or 8 1 in the alternative, El Agave Night Club, an unknown business entity, as follows: 2 a. $10,000 statutory damages for violation of 47 U.S.C. § 605; 3 b. $5,800 enhanced statutory damages for violation of 47 U.S.C. § 605; 4 and 5 c. $4,200 damages for the tort of conversion; and 6 3. The Clerk of Court is hereby ordered to assign a Fresno District Court Judge to 7 the instant matter. 8 These findings and recommendations are submitted to the district judge assigned 9 to this action, pursuant to 28 U.S.C. § 636(b)(1) (B) and this Court's Local Rule 304. 10 Within fifteen (15) days of service of this recommendation, any party may file written 11 objections to these findings and recommendations with the Court and serve a copy on 12 all parties. Such a document should be captioned “Objections to Magistrate Judge's 13 Findings and Recommendations.” The district judge will review the magistrate judge's 14 findings and recommendations pursuant to 28 U.S.C. § 636(b)(1)(C). The parties are 15 advised that failure to file objections within the specified time may waive the right to 16 appeal the District Court's order. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th Cir. 17 2014). 18 19 IT IS SO ORDERED. 20 21 22 Dated: May 14, 2015 /s/ UNITED STATES MAGISTRATE JUDGE 23 24 25 26 27 28 Michael J. Seng 9
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