J & J Sports Productions, Inc. v. Ortega et al, No. 1:2015cv00506 - Document 19 (E.D. Cal. 2015)
Court Description: FINDINGS and RECOMMENDATIONS Granting Plaintiff's Motion for Default Judgment (Doc. 17). Referred to Judge Mendez; within fourteen (14) days of service of this recommendation, any party may file written objections to these findings and recommendations with the Court and serve a copy on all parties. signed by Magistrate Judge Barbara A. McAuliffe on 12/16/2015. (Herman, H)
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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 EASTERN DISTRICT OF CALIFORNIA 7 8 9 10 11 12 13 ) ) Plaintiff, ) ) v. ) ROGELIO ORTEGA, individually and d/b/a ) ) TACO GUEY; and ORG DIAMOND, INC., ) an unknown business entity d/b/a TACO ) GUEY, ) Defendants. ) ) J & J SPORTS PRODUCTIONS, INC., Case No.: 1:15-cv-00506-JAM-BAM FINDINGS AND RECOMMENDATIONS GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT (Doc. 17) FOURTEEN-DAY DEADLINE 14 15 INTRODUCTION 16 On November 10, 2015, J & J Sports Production, Inc. (“Plaintiff”) filed the instant motion for 17 default judgment against Defendants Rogelio Ortega, individually and doing business as Taco Guey, 18 and Org Diamond, Inc., an unknown business entity doing business as Taco Guey (“Defendants”). 19 (Doc. 17.) Defendants have not responded to the motion or otherwise appeared in this lawsuit. The 20 motion was referred to this Court pursuant to 28 U.S.C. § 636(b)(1)(B) and Local Rule 302. The 21 Court deemed the matter suitable for decision without oral argument pursuant to Local Rule 230(g), 22 and vacated the hearing scheduled for December 18, 2015. Having considered the moving papers, the 23 briefing, and the Court’s file, the Court RECOMMENDS that Plaintiff’s motion for default judgment 24 be GRANTED and judgment be entered in the amount of $5,400 against Defendants. 25 FACTUAL BACKGROUND 26 On April 1, 2015, Plaintiff filed its complaint against Defendants, alleging violations of 47 27 U.S.C. § 605, et seq., and 47 U.S.C. § 553, et seq., as well as claims under California state law. As 28 alleged in the Complaint, Plaintiff was granted the exclusive nationwide commercial distribution 1 1 (closed-circuit) rights to Manny Pacquiao v. Timothy Bradley, II Welterweight Championship Fight 2 Program (the “Program”) telecast nationwide on Saturday, April 12, 2014. Compl. ¶ 16.) Plaintiff 3 entered into sublicensing agreements granting public exhibition rights to various commercial entities 4 throughout the United States, and within the State of California. (Compl. ¶ 17.) Plaintiff expended 5 substantial monies marketing, advertising, promoting, administering, and transmitting the Program to 6 these commercial entities. (Compl. ¶ 18.) 7 On Saturday, April 12, 2014, Jonathan Browne (“Browne”) entered Taco Guey in Tulare 8 California, at approximately 9:31 p.m. See Affidavit of Jonathan Browne (“Browne Decl.”) (Doc. 17- 9 3 at 1.) Defendants did not charge a cover to enter the establishment. While in Taco Guey, Browne 10 noted one 40-42” flat screen television showing the Program. He estimated the establishment’s 11 capacity as 50 people, and counted 4 patrons at three separate times before leaving. (Browne Decl. at 12 1.) 13 Plaintiff alleges that Defendants knowingly and unlawfully intercepted, received, published, 14 divulged, displayed, and/or exhibited the Program at the time of its transmission at the commercial 15 establishment, Taco Guey, owned and operated by Defendants. (Compl. ¶ 19.) Plaintiff further 16 alleges Defendants did so willfully and for purposes of direct and/or indirect commercial advantage 17 and/or private financial gain, in violation of 47 U.S.C. § 605, et seq. (Compl. ¶¶ 20-21.) Plaintiff 18 seeks statutory damages for each violation in the amount of $10,000 pursuant to 47 U.S.C. § 19 605(e)(3)(C)(i)(II), statutory damages for each willful violation in the amount of $100,000 pursuant to 20 47 U.S.C. § 605(e)(3)(B)(iii), and attorneys’ fees and costs pursuant to 47 U.S.C. § 605(e)(3)(B)(iii). 21 (Compl. ¶ 24.) 22 On September 11, 2015, after Defendants failed to file an answer, Plaintiff requested entry of 23 default against Defendants, which was entered by the Clerk of the Court on that same day. (Docs. 13, 24 14, 15.) On November 10, 2015, Plaintiff filed the present motion for default judgment. (Doc. 17.) 25 Plaintiff’s motion requests that the Court enter default judgment against Defendants for damages in the 26 amount of $112,200.00. Defendants have not appeared or otherwise defended this action. 27 /// 28 /// 2 LEGAL STANDARD 1 2 Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party against 3 whom a judgment for affirmative relief is sought who fails to plead or otherwise defend against the 4 action. See Fed. R. Civ. P. 55(a). However, “[a] defendant’s default does not automatically entitle the 5 plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 6 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)). Instead, the 7 decision to grant or deny an application for default judgment lies within the district court’s sound 8 discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In making this determination, the 9 court considers the following factors: 12 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 13 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily disfavored. 14 Id. at 1472. 10 11 15 Generally, once default is entered, well-pleaded factual allegations in the operative complaint 16 are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. v. Heidenthal, 17 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Group, 559 F.2d 557, 18 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th 19 Cir. 2002). 20 defendant’s failure to respond, “necessary facts not contained in the pleadings, and claims which are 21 legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 22 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)); accord 23 DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (stating that a defendant does not 24 admit facts that are not well-pled or conclusions of law); Abney v. Alameida, 334 F. Supp. 2d 1221, 25 1235 (S.D. Cal. 2004) (“[A] default judgment may not be entered on a legally insufficient claim.”). A 26 party’s default conclusively establishes that party’s liability, but it does not establish the amount of 27 damages. Geddes, 559 F.2d at 560. 28 /// In addition, although well-pleaded allegations in the complaint are admitted by a 3 DISCUSSION 1 2 1. Adequacy of Service of Process 3 As a general rule, the Court considers the adequacy of service of process before evaluating the 4 merits of Plaintiff’s Motion for Default Judgment. See BR North 223, LLC v. Glieberman, No. 1:10- 5 cv-02153 LJO-BAM, 2012 WL 639500, at *3 (E.D. Cal. Feb. 27, 2012). According to Plaintiff’s 6 allegations, Defendant Rogelio Ortega is an officer of Org Diamond, Inc, which owns and operates the 7 commercial establishment doing business as Taco Guey operating at 250 E. Cross Avenue, Tulare, 8 California 93274. (Compl. ¶ 7.) Defendant Rogelio Ortega is the individual specifically identified on 9 the California Alcoholic Beverage and Control license issued for Taco Guey (ABC #536003). 10 11 (Compl. ¶ 8.) Under Federal Rule of Civil Procedure 4(e), an individual, such as Defendant Rogelio Ortega, 12 may be served by: 13 (1) jurisdiction in the state where the district court is located or where service is made; or 14 15 16 following state law for serving a summons in an action brought in courts of general (2) doing any of the following: (A) personally; or 17 18 (B) (C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process. 21 22 leaving a copy of each at the individual’s dwelling or usual place of abode with someone of suitable age and discretion who resides there; or 19 20 delivering a copy of the summons and of the complaint to the individual Fed. R. Civ. P. 4(e). 23 Plaintiff contends that service of the summons and complaint in this action was made on 24 Defendant Rogelio Ortega by personal service pursuant to federal law on August 19, 2015. Plaintiff’s 25 proof of service indicates that process server Robert Hall served Rogelio Ortega at 643 South Olive 26 Street, #421, Los Angeles, California 90014, at 3:02 p.m. A true and correct copy of the Proof of 27 Service was filed with this Court on August 22, 2015. (Doc. 11.) Based on the Proof of Service, 28 4 1 Plaintiff effectuated service on Defendant Rogelio Ortega pursuant to Federal Rule of Civil Procedure 2 4(e)(2)(A). Under Federal Rule of Civil Procedure 4(h), a corporation, such as Org Diamond, Inc., may be 3 4 served: (1) 5 in a judicial district of the United States: 6 (A) in the manner prescribed by Rule 4(e)(1) for serving an individual; or 7 (B) by delivering a copy of the summons and of the complaint to an officer, a 8 managing or general agent, or any other agent authorized by appointment or by 9 law to receive service of process and—if the agent is one authorized by statute and the statute so requires—by also mailing a copy of each to the defendant. 10 11 Fed. R. Civ. P. 4(h). 12 Plaintiff contends that service of the summons and complaint in this action was made on 13 Defendant Org Diamond, Inc. by personal service on Rogelio Ortega, an officer of the entity and agent 14 for service of process, pursuant to federal law on August 19, 2015. Plaintiff’s proof of service 15 indicates that process server Robert Hall served Rogelio Ortega, as agent for service of process for 16 Org Diamond, Inc. at 643 South Olive Street, #421, Los Angeles California 90014 at 3:02 p.m. A true 17 and correct copy of the Proof of Service was filed with this Court on August 22, 2015. (Doc. 12.) 18 Based on the proof of service, Plaintiff effectuated service on Defendant Org Diamond, Inc. pursuant 19 to Federal Rule of Civil Procedure 4(h)(1)(B). 20 Defendants are not infants, incompetent persons, or persons in military service or otherwise 21 exempted from default judgment under the Soldiers’ and Sailors’ Civil Relief Act of 1940. (Riley 22 Decl., Doc. 13-1, ¶ 5.) Accordingly, the Court finds that Plaintiff properly served the summons and 23 complaint in this matter. 24 2. The Eitel Factors Favor Entry of Default Judgment 25 The Court finds the Eitel factors weigh in favor of granting Plaintiff’s application for default 26 judgment. With regard to the first Eitel factor, if Plaintiff’s application for default judgment were to 27 be denied, it would leave Plaintiff without a remedy and Plaintiff would be prejudiced. This factor 28 5 1 therefore weighs in favor of default judgment. See J & J Sports Prods, Inc. v. Concepcion, No. C-10- 2 CV-05092 WHA, 2011 WL 2220101 at *2 (N.D. Cal. June 7, 2011). 3 As to the second and third Eitel factors, Plaintiff’s substantive claims appear meritorious and 4 the complaint is sufficiently pled. Plaintiff has alleged that Defendants violated sections of Title 47 5 and set forth the activities supporting substantive violations. Plaintiff also set forth the applicable laws 6 pursuant to which the court may provide relief. These factors weigh in favor of default judgment. 7 As to the fourth factor, the damages in this case cannot exceed the amounts specified in 47 8 U.S.C. § 605 and the maximum amount allowable for the tort of conversion. Accordingly, statutory 9 damages cannot exceed $10,000, and enhanced damages may not exceed $100,000. See 47 U.S.C. §§ 10 605(e)(3)(C)(i)(II), 605(e)(3)(C)(ii). Plaintiff is seeking a total of $110,000 in statutory and enhanced 11 damages, along with $2,200 in damages for conversion (or the amount Defendants would have been 12 required to pay to order the Program). Although Plaintiff seeks the maximum statutory and enhanced 13 damages available, the relatively small sum of money at stake, as explained more fully below, and the 14 Court’s discretion in awarding enhanced damages weigh in favor of granting default judgment. As to the fifth factor, there is no dispute of material fact since Defendants failed to respond to 15 16 either the Complaint or this motion. This factor weighs in favor of default judgment. 17 As to the sixth factor, it is unlikely that default was the result of excusable neglect. Defendants 18 were properly served and have not appeared in this case. (See Docs. 11, 12.) This factor weighs in 19 favor of default judgment. 20 Finally, the seventh factor supports a default judgment because “although federal policy favors 21 decisions on the merits, Rule 55(b)(2) permits entry of default judgment in situations such as this 22 where defendants refuse to litigate.” Concepcion, 2011 WL 2220101, at *2. Therefore, this general 23 policy is outweighed by the more specific considerations, and the motion to enter default judgment 24 will be granted. Accordingly, the Court RECOMMENDS that Plaintiff's Motion for Default Judgment be 25 26 GRANTED. 27 /// 28 /// 6 1 3. Calculation of Damages 2 Plaintiff requests $10,000 in statutory damages for violation of 47 U.S.C. § 605(a) and 3 $100,000 in enhanced damages for willful violation pursuant to 47 U.S.C. § 605(e)(3)(C)(ii). (See 4 Doc. 17-1 at 11-19.) 5 Defendants allegedly would have been required to pay Plaintiff for a commercial sublicense to 6 publicly exhibit the Program. (Doc. 17-1 at 20.) Plaintiff also seeks $2,200 in conversion damages, the minimum amount 7 A. Statutory Damages 8 Plaintiff requests $10,000 in statutory damages as a result of the alleged violation of 47 U.S.C. 9 § 605(a), which “prohibits commercial establishments from intercepting and broadcasting to its 10 patrons satellite cable programming.” J & J Sports Prods., Inc. v. Ro, No. 09-CV-02860, 2010 WL 11 668065 at *3 (N.D. Cal. Feb. 19, 2010) (quoting J & J Sports Prods., Inc. v. Guzman, No. 08-CV- 12 05469, 2009 WL 1034218 at *2 (N.D. Cal. Apr. 16, 2009)). The statute provides statutory damages 13 ranging from $1,000 to $10,000 for each violation. 47 U.S.C. § 605(e)(3)(C)(i)(II). 14 Plaintiff alleges that Defendants violated Section 605 because “[w]ith full knowledge that the 15 Program was not to be intercepted, received, published, divulged, displayed, and/or exhibited by 16 commercial entities unauthorized to do so, . . . Defendants . . . did unlawfully intercept, received, 17 publish, divulge, display, and/or exhibit the Program at the time of its transmission at their commercial 18 establishment....” (Compl. ¶ 19) (italics in original). However, Plaintiff fails to identify the means of 19 signal transmission, which is necessary to determine whether Plaintiff should be awarded maximum 20 statutory damages pursuant to Section 605. See J & J Sports Prods., Inc. v. Deleon, No. 5:13-CV- 21 02030-EJD, 2014 WL 121711, at *3 (N.D. Cal. Jan. 13, 2014). Indeed, Plaintiff admits that it “cannot 22 determine the precise means that the Defendant used to receive the Program unlawfully.” (Doc. 17-1 23 at 8) (italics in original). Further, the declaration of Plaintiff’s affiant, Jonathan Browne, does not state 24 whether the establishment had a satellite dish or a cable box. (See Browne Decl. at 1.) Despite these 25 facts, Plaintiff contends the court has discretion to award significant damages “[e]ven in . . . cases of 26 commercial signal piracy where there has been no egregious circumstances noted[.]” (Doc. 17-1 at 27 12.) 28 7 1 Here, it is undisputed that Defendants did not charge a cover for patrons to enter Taco Guey to 2 watch the Program, and there is no evidence that Defendants increased prices or required food and 3 drink purchases. 4 broadcasting the Program. (See Browne Decl. at 1.) Plaintiff also presents no evidence Defendants 5 are repeat offenders. Given these facts, the Court in its discretion finds the minimum statutory damage 6 amount to be appropriate. See, e.g., J & J Sports Prods., Inc. v. Pinon, No. 5:13-cv-05559-BLF, 2014 7 WL 3593629, at *3 (N.D. Cal. Jul. 18, 2014) (awarding statutory minimum where defendant was first- 8 time offender, displayed the program on one television, did not charge a cover fee and there were at 9 most eleven people in the establishment); J & J Sports Prods., Inc. v. Salgadobarajas, No. 5:13-cv- 10 05557-BLF, 2014 WL 3053485, at *3 (N.D. Cal. Jul. 3, 2014) (awarding statutory minimum where 11 defendant was first-time offender, displayed the program on one television in a room that 12 accommodated one-hundred people, did not charge a cover and there were at most sixty-nine people in 13 the establishment); Deleon, 2014 WL 121711, at *3 (finding minimum statutory amount appropriate 14 where no cover charge, increased prices, or required food purchase, very few patrons and three 15 televisions and projector broadcasting program). 16 17 Additionally, there were very few patrons in the bar and only one television Accordingly, the Court RECOMMENDS that Plaintiff be awarded the minimum statutory damages allowed, $1,000. 18 B. Enhanced Damages 19 Plaintiff also requests enhanced damages pursuant to Section 605(e)(3)(C)(ii). (Doc. 17-1 at 20 14-19.) This section authorizes the Court to award up to $100,000, in its discretion, upon finding that 21 the violation “was committed willfully and for purposes of direct or indirect commercial advantage or 22 private financial gain.” 47 U.S.C. § 605(e)(3)(C)(ii). 23 The Ninth Circuit has not set forth controlling factors for the determination of when enhanced 24 damages are appropriate in this context, but various factors specific to this unique line of cases have 25 been considered by district courts. These include the “use of cover charge, increase in food price 26 during programming, presence of advertisement, number of patrons, number of televisions used, and 27 impact of the offender’s conduct on the claimant.” Concepcion, 2011 WL 2220101, at *4. Enhanced 28 damages have also been awarded when the defendant has violated Section 605 on previous occasions. 8 1 See J & J Sports Prods., Inc. v. Paniagua, No. 10-CV-05141-LHK, 2011 WL 996257, at *2 (N.D. Cal. 2 Mar. 21, 2011). 3 The Court does not find an award of maximum damages under Section 605 appropriate. There 4 is no evidence of significant “commercial advantage or private financial gain” in this instance. 5 Plaintiff has presented evidence that Defendants had only one television set in the commercial 6 establishment that displayed the Program, and the affiant asserts that there were only four patrons 7 present during the entirety of the investigation. 8 discussed, there is no evidence that Defendants assessed a cover charge, required a minimum purchase 9 from patrons, or had a special premium on food and drinks on the night of the fight. See Kingvision 10 Pay-PerView, Ltd. v. Backman, 102 F. Supp. 2d 1196, 1198 n.2 (N.D. Cal. 2000) (stating that “[a]n 11 establishment that does not promote itself by advertising the Program, does not assess a cover charge, 12 and does not charge a special premium for food and drinks hardly seems like the willful perpetrators 13 envisioned by the statute’s framers.”). Plaintiff has also failed to present evidence that Defendants 14 have violated Section 605 on prior occasions. (See Browne Decl. at 1.) Further, as already 15 In light of the above mentioned facts, the Court does not agree that the maximum enhanced 16 damages award is warranted. Although Plaintiff cites primarily to several out-of-district cases to 17 support its request for maximum enhanced damages (see Doc. 17-1 at 14-18), Plaintiff has not cited 18 any binding precedent or identified any specific circumstances that justify such a high award here. 19 Accordingly, the Court concludes that an award of $2,200—the value of the commercial license to air 20 the program—is more than adequate and just to compensate Plaintiff for lost profits and to deter 21 Defendants’ future infringement. See, e.g., Joe Hand Promotion, Inc. v. Munoz, No. 5:13-CV-05926- 22 EJD, 2014 WL 4100724, at *3 (N.D. Cal. Aug. 20, 2014) (awarding enhanced damages equal to the 23 value of the commercial license where defendant did not charge a cover, there was no evidence of 24 increased prices or required purchases, two televisions displayed the event and 50 patrons were 25 present); Deleon, 2014 WL 121711, at *4 (awarding enhanced damages equal to the value of the 26 commercial license where no evidence of cover charge, minimum purchase or special premium, 27 program displayed on three televisions and one projector, and between 9 to 23 patrons present). 28 Therefore, the Court RECOMMENDS that Plaintiff be awarded $2,200 in enhanced damages. 9 1 C. 2 Plaintiff also seeks $2,200 in damages for conversion under California Civil Code § 3336. 3 (Doc. 17-1 at 20.) Damages for conversion are based on the value of the property at the time of 4 conversion. See Tyrone Pac. Intern., Inc. v. MV Eurychili, 658 F.2d 664, 666 (9th Cir. 1981). Here, 5 Plaintiff has shown that it owns the right to distribute the Program at issue and has properly alleged the 6 misappropriation of the right to distribute the Program. As to damages, the “value of the property” 7 was the commercial sublicense fee amount Defendants would have been required to pay, or $2,200. 8 (Affidavit of Plaintiff, Doc. 17-4, ¶ 8 and Ex. 2.) 9 10 Damages for Conversion Accordingly, the Court RECOMMENDS that Plaintiff be awarded $2,200 in damages for conversion. CONCLUSION AND RECOMMENDATIONS 11 12 Based on the foregoing, IT IS HEREBY RECOMMENDED that Plaintiff’s application for 13 default judgment (Doc. 17) be GRANTED and judgment be entered in favor of Plaintiff and against 14 Defendants in the amount of $5,400 in total damages. 15 These findings and recommendations are submitted to the district judge assigned to this action, 16 pursuant to 28 U.S.C. § 636(b)(1)(B) and this Court's Local Rule 304. Within fourteen (14) days of 17 service of this recommendation, any party may file written objections to these findings and 18 recommendations with the Court and serve a copy on all parties. Such a document should be 19 captioned “Objections to Magistrate Judge’s Findings and Recommendations.” 20 advised that failure to file objections within the specified time may result in the waiver of the “right to 21 challenge the magistrate’s factual findings” on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th 22 Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)). 23 IT IS SO ORDERED. 24 25 Dated: /s/ Barbara December 16, 2015 A. McAuliffe The parties are _ UNITED STATES MAGISTRATE JUDGE 26 27 28 10
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