-KJN (TEMP) J & J Sports Productions, Inc. v. Juarez, No. 2:2010cv01071 - Document 16 (E.D. Cal. 2011)
Court Description: FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Kendall J. Newman on 1/20/11 Recommending that Plaintiff's Application for default against defendant 11 be granted. The Court award statutory damages in the amount of $10,000 and enh anced statutory damages in the amount of $15,000, for a total award of $25,000 to Plaintiff; and This action be closed. These Findings and Recommendations are submitted to U.S. District Judge William B. Shubb. Within fourteen days after being served with these Findings and Recommendations, any party may file written objections with the Court and serve a copy on all parties.(Mena-Sanchez, L)
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-KJN (TEMP) J & J Sports Productions, Inc. v. Juarez Doc. 16 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 J & J SPORTS PRODUCTIONS, INC., 11 Plaintiff, 12 13 No. 2:10-1071 WBS KJN (TEMP) v. VICTORIA ELIZABETH JUAREZ d/b/a VICTORIA’S MEXICAN FOOD 14 Defendant. FINDINGS AND RECOMMENDATIONS 15 / 16 Presently before the court is plaintiff’s application for default judgment.1 This 17 18 matter was submitted without oral argument on January 14, 2011. (Dkt. No. 15.) The 19 undersigned has fully considered the briefs and record in this case and, for the reasons stated 20 below, recommends that plaintiff’s application for default judgment be granted. 21 //// 22 //// 23 //// 24 //// 25 1 26 This action proceeds before the undersigned pursuant to Eastern District of California Local Rule 302(c)(19) and 28 U.S.C. § 636(b)(1). 1 Dockets.Justia.com 1 I. BACKGROUND2 2 Plaintiff, a California corporation, is a closed-circuit distributor of sports and 3 entertainment programming. (Pl.’s Compl. ¶ 6, Dkt. No. 1; Gagliardi Aff. ¶ 3, Dkt. No. 12.) 4 Pursuant to a contract, plaintiff acquired exclusive commercial exhibition licensing rights to a 5 televised boxing match titled “The Battle of East and West”: Manny Pacquiao v. Ricky Hatton, 6 IBO Light Welterweight Championship Fight Program (“Program”) (Pl.’s Compl. ¶ 9; Gagliardi 7 Aff. ¶ 3.) Thereafter, plaintiff entered into sublicensing agreements with various commercial 8 entities across North America, through which it granted limited public exhibition rights to the 9 entities for the benefit and entertainment of the patrons within the entities’ respective 10 establishments (e.g., casinos, racetracks, bars, restaurants, nightclubs). (Pl.’s Compl. ¶ 10; 11 Gagliardi Aff. ¶ 3.) Plaintiff made transmission of the Program available only to its customers, 12 which were commercial entities that had paid plaintiff a commercial sublicense fee to broadcast 13 the Program. (Gagliardi Aff. ¶ 8; see also Pl.’s Compl. ¶ 10.) For example, for permission to 14 exhibit the Program in a commercial establishment that had a fire code occupancy of seventy-two 15 persons, the commercial sublicense fee would have been $1,600. (Gagliardi Aff. ¶ 8 & Ex. 1.) 16 Defendant is alleged to be the owner, operator, licensee, or person in charge of the 17 commercial establishment doing business as Victoria’s Mexican Food. (Pl.’s Compl. ¶ 7; 18 Haverty Aff. at 2, Dkt. No. 11, Doc. 11-3.) Victoria’s Mexican Food is located at 526 W. 19 Benjamin Holt Dr., Suite G, in Stockton, California. (Pl.’s Compl. ¶ 7; Haverty Aff. at 2.) 20 Defendant did not obtain a license to exhibit the Program from plaintiff. 21 On May 2, 2009, plaintiff’s investigator, Jessica Haverty, entered Victoria’s 22 Mexican Food and observed the unauthorized broadcast of a portion of the Program on one 23 nineteen-inch television and also on a projected image on a large pull down screen. (Haverty 24 Aff. at 2.) Haverty’s affidavit approximates Victoria’s Mexican Food’s seating capacity at 72 25 2 26 These background facts are taken from plaintiff’s complaint and the affidavits submitted in support of plaintiff’s application for default judgment. (Dkt. Nos. 1, 11, 12.) 2 1 people, and states that Haverty observed approximately 75 patrons inside the subject 2 establishment and approximately 15 people standing outside the doorway watching the Program. 3 (Id.) 4 On April 30, 2010, plaintiff filed this action alleging that defendant unlawfully 5 intercepted and intentionally broadcast the Program at Victoria’s Mexican Food for the purpose 6 of direct or indirect commercial advantage and/or private financial gain. (See generally Pl.’s 7 Compl.) Plaintiff alleges four claims for relief, which are labeled as “Counts” in the complaint. 8 Plaintiff’s first claim for relief alleges that defendants engaged in the unauthorized publication or 9 use of communications in violation of the Federal Communications Act of 1934, 47 U.S.C. §§ 10 605 et seq.3 (Pl.’s Compl. ¶¶ 8-17.) The second claim alleges that defendant engaged in the 11 unauthorized interception, reception, divulgence, display, and exhibition of the Program in 12 violation of 47 U.S.C. §§ 553 et seq.4 (Pl.’s Compl. ¶¶ 18-22.) Plaintiff’s third claim alleges a 13 common law claim of conversion. (Id. ¶¶ 23-26.) The fourth claim for relief alleges a violation 14 of California Business and Professions Code §§ 17200 et seq. (Pl.’s Compl. ¶¶ 28-37.) 15 A declaration of service filed with the court demonstrates that defendant was 16 properly served through substituted service on July 16, 2010. (Dkt. No. 5.) On August 11, 2009, 17 the Clerk of this Court entered a certificate of entry of default against defendant. (Dkt. No. 8.) 18 On December 16, 2010, plaintiff filed the motion for default judgment that is presently before the 19 court and which was served on defendant. (Dkt. No. 11.) The application seeks judgment on 20 plaintiff’s claims for violation of 47 U.S.C. § 605 and 47 U.S.C. § 553, and for common law 21 //// 22 //// 23 3 24 Title 47 U.S.C. § 605 and provisions that follow prohibit the unauthorized use of wire or radio communications, including interception and broadcast of pirated cable or broadcast programming. 25 4 26 Title 47 U.S.C. § 553 and related provisions prohibit the unauthorized interception or receipt, or assistance in the intercepting or receiving, of cable service. 3 1 conversion.5 Plaintiff requests judgment in the amount of $111,600.6 No response to the motion 2 has been filed. 3 II. LEGAL STANDARDS 4 Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a 5 party against whom a judgment for affirmative relief is sought who fails to plead or otherwise 6 defend against the action. See Fed. R. Civ. P. 55(a). However, “[a] defendant’s default does not 7 automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans, 8 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 9 (9th Cir. 1986)); see Fed. R. Civ. P. 55(b) (governing the entry of default judgments). Instead, 10 the decision to grant or deny an application for default judgment lies within the district court’s 11 sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In making this 12 determination, the court may consider the following factors: 13 (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. 14 15 16 17 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily 18 disfavored. Id. at 1472. 19 As a general rule, once default is entered, well-pleaded factual allegations in the 20 operative complaint are taken as true, except for those allegations relating to damages. 21 TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing 22 5 23 24 25 26 The application does not specifically request judgment on plaintiff’s claim that defendants violated California Business and Professions Code §§ 17200 et seq., and plaintiff’s memorandum in support of the application does not address this claim. Accordingly, the undersigned does not address this claim. 6 Although plaintiff also seeks attorney’s fees and relevant costs, it has provided no legal argument or evidentiary support for its request for fees and costs. Accordingly, the undersigned does not address those requests. 4 1 Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); see also Fair 2 Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Although well-pleaded 3 allegations in the complaint are admitted by a defendant’s failure to respond, “necessary facts not 4 contained in the pleadings, and claims which are legally insufficient, are not established by 5 default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning 6 v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Huynh, 503 F.3d 847, 7 854 (9th Cir. 2007) (“[A] defendant is not held to admit facts that are not well-pleaded or to 8 admit conclusions of law” (citation and quotation marks omitted).); Abney v. Alameida, 334 F. 9 Supp. 2d 1221, 1235 (S.D. Cal. 2004) (“[A] default judgment may not be entered on a legally 10 insufficient claim.”). A party’s default conclusively establishes that party’s liability, although it 11 does not establish the amount of damages. Geddes, 559 F.2d at 560; cf. Adriana Int’l Corp. v. 12 Thoeren, 913 F.2d 1406, 1414 (9th Cir. 1990) (stating in the context of a default entered pursuant 13 to Federal Rule of Civil Procedure 37 that the default conclusively established the liability of the 14 defaulting party). 15 III. 16 ANALYSIS A. Appropriateness of the Entry of Default Judgment Under the Eitel Factors 17 1. Factor One: Possibility of Prejudice to Plaintiff 18 The first factor set forth by the Ninth Circuit in Eitel considers whether the 19 plaintiff would suffer prejudice if default judgment is not entered, and whether such potential 20 prejudice to the plaintiff militates in favor of granting a default judgment. See PepsiCo, Inc., 238 21 F. Supp. 2d at 1177. Here, plaintiff would potentially face prejudice if the court did not enter a 22 default judgment. Absent entry of a default judgment, plaintiff would be without another 23 recourse for recovery. Accordingly, the first Eitel factor favors the entry of default judgment. 24 2. Factors Two and Three: The Merits of Plaintiff’s Substantive Claims and the Sufficiency of the Complaint 25 26 The undersigned considers the merits of plaintiff’s substantive claims and the 5 1 sufficiency of the complaint together below because of the relatedness of the two inquiries. The 2 undersigned must consider whether the allegations in the complaint are sufficient to state a claim 3 that supports the relief sought. See Danning, 572 F.2d at 1388; PepsiCo, Inc., 238 F. Supp. 2d at 4 1175. 5 Plaintiff seeks entry of default judgment on its claims brought pursuant to 47 6 U.S.C. § 605(a) and 47 U.S.C. § 553(a).7 The Federal Communications Act prohibits 7 commercial establishments from intercepting and broadcasting radio communications to its 8 patrons. See 47 U.S.C. § 605(a). Under section 605, statutory damages may be awarded 9 between $1,000 and $10,000 for violation of the Federal Communications Act, and up to 10 $100,000 when the violation “was committed willfully and for purposes of direct or indirect 11 commercial advantage or financial gain.” 47 U.S.C. § 605(e)(3)(C)(I)-(ii). Satellite television 12 signals are covered communications under 47 U.S.C. § 605(a). DIRECTV, Inc. v. Webb, 545 13 F.3d 837, 844 (9th Cir. 2008). Section 553(a) provides, in relevant part: “No person shall 14 intercept or receive or assist in intercepting or receiving any communications service offered over 15 a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be 16 specifically authorized by law.” 47 U.S.C. § 553(a)(1).8 17 18 Although some courts have concluded that section 605(a) applies exclusively to broadcasts obtained by way of a satellite television signal whereas section 553 applies 19 20 21 22 23 24 25 26 7 The undersigned does not address the merits of, or sufficiency of the allegations in support of, plaintiff’s state law claim for conversion. As discussed more fully below, the undersigned need not reach plaintiff’s conversion claim because the recommended statutory damages, if awarded, will sufficiently compensate plaintiff such that an award for conversion damages would be duplicative. 8 Section 553 carries lower minimum statutory damages and lower enhanced damages than section 605. Compare 47 U.S.C. §§ 605(e)(3)(C)(i)(II) and 605(e)(3)(C)(ii) (providing for the award of statutory damages of not less than $1,000 and no more than $10,000, and under certain circumstances enhanced damages of up to $100,000 per violation), with 47 U.S.C. § 553(c)(3)(A)(ii) (providing for the award of statutory damages of not less than $250 and not more than $10,000, and under certain circumstances enhanced damages of up to $50,000 per violation). 6 1 exclusively to transmission over a cable system, plaintiff has been precluded from conducting 2 discovery to ascertain the means of transmission of the Program by defendant due to defendant’s 3 failure to defend this action. See United States v. Norris, 88 F.3d 462, 466-69 (7th Cir. 1996) 4 (sections 553(a) and 605(a) are not “overlapping statutes” and are thus mutually exclusive); cf. 5 Intel Cablevision, Inc. v. Sykes, 75 F.3d 123, 132-33 (2d Cir. 1996) (holding that section 605 and 6 section 553 are not completely overlapping); see also TAR Cable Co. v. Cable City Corp., 267 7 F.3d 196, 204-07 (3d Cir. 2001) (recognizing the disagreement between the holdings in Norris 8 and Sykes, and holding “that § 605 encompasses the interception of satellite transmissions to the 9 extent reception or interception occurs prior to or not in connection with, distribution of the 10 service over a cable system, and no more.”). At a minimum, however, plaintiff’s complaint and 11 evidence support a conclusion that defendant intercepted, without authorization, a transmission 12 of the Program and broadcast it to its patrons. Plaintiff should not be prejudiced by defendant’s 13 failure to appear or defend itself in this action and statutory damages should therefore be awarded 14 under section 605. 15 3. Factor Four: The Sum of Money at Stake in the Action 16 Under the fourth factor cited in Eitel, “the court must consider the amount of 17 money at stake in relation to the seriousness of Defendant’s conduct.” PepsiCo, Inc., 238 F. 18 Supp. 2d at 1177; see also Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 19 500 (C.D. Cal. 2003). Here, plaintiff seeks a significant amount of damages, i.e., $111,600. 20 However, plaintiff’s request for statutory damages and damages for conversion are tailored to 21 defendants’ specific wrongful conduct. Plaintiff seeks statutory damages under the federal 22 statutes implicated by its claims and, although plaintiff requests $110,000 in statutory damages, 23 the statutes involved contemplate such an award under certain circumstances.9 Under these 24 circumstances, the undersigned concludes that this factor favors the entry of default judgment. 25 9 26 Whether plaintiff is entitled to an award of this size is a different issue, which the undersigned addresses in greater detail below. 7 1 4. 2 The facts of this case are relatively straightforward, and plaintiff has provided the 3 court with well-pleaded allegations supporting its statutory claims and affidavits in support of its 4 allegations. Here, the court may assume the truth of well-pleaded facts in the complaint (except 5 as to damages) following the clerk’s entry of default and, thus, there is no likelihood that any 6 genuine issue of material fact exists.10 See, e.g., Elektra Entm’t Group Inc. v. Crawford, 226 7 F.R.D. 388, 393 (C.D. Cal. 2005) (“Because all allegations in a well-pleaded complaint are taken 8 as true after the court clerk enters default judgment, there is no likelihood that any genuine issue 9 of material fact exists.”); accord Philip Morris USA, Inc., 219 F.R.D. at 500; PepsiCo, Inc., 238 10 Factor Five: The Possibility of a Dispute Concerning Material Facts F. Supp. 2d at 1177. 11 5. Factor Six: Whether the Default Was Due to Excusable Neglect 12 Upon review of the record before the court, the undersigned finds that the default 13 was not the result of excusable neglect. See PepsiCo, Inc., 238 F. Supp. 2d at 1177. Plaintiff 14 made numerous attempts to personally serve defendant with the summons and complaint and 15 ultimately effectuated substituted service of those documents on defendant. Moreover, plaintiff 16 served defendant by mail with notice of its application for default judgment. Despite ample 17 notice of this lawsuit and plaintiff’s intention to seek a default judgment, defendant has not 18 appeared in this action to date. Thus, the record suggests that defendant has chosen not to defend 19 this action, and not that the default resulted from any excusable neglect. Accordingly, this Eitel 20 factor favors the entry of a default judgment. 21 6. Factor Seven: The Strong Policy Underlying the Federal Rules of Civil Procedure Favoring Decisions on the Merits 22 23 24 “Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. However, district courts have concluded with regularity that this policy, 25 10 26 Defendant’s failure to file an answer in this case further supports the conclusion that the possibility of a dispute as to material facts is minimal. 8 1 standing alone, is not dispositive, especially where a defendant fails to appear or defend itself in 2 an action. PepsiCo, Inc., 238 F. Supp. 2d at 1177; see also Craigslist, Inc. v. Naturemarket, Inc., 3 ___ F. Supp. 2d ___, No. C 08-5065 PJH, 2010 WL 807446, at *16 (N.D. Cal. Mar. 5, 2010); 4 ACS Recovery Servs., Inc. v. Kaplan, No. C 09-01304, 2010 WL 144816, at *7 (N.D. Cal. Jan. 5 11, 2010) (unpublished); Hartung v. J.D. Byrider, Inc., No. 1:08-cv-00960 AWI GSA, 2009 WL 6 1876690, at *5 (E.D. Cal. June 26, 2009) (unpublished). Accordingly, although the undersigned 7 is cognizant of the policy in favor of decisions on the merits—and consistent with existing policy 8 would prefer that this case be resolved on the merits—that policy does not, by itself, preclude the 9 entry of default judgment. 10 Upon consideration of the Eitel factors, the undersigned concludes that plaintiff is 11 entitled to the entry of default judgment against defendant and will make a recommendation to 12 that effect. What remains is the determination of the amount of damages to which plaintiff is 13 entitled. 14 15 B. Terms of the Judgment to Be Entered After determining that a party is entitled to entry of default judgment, the court 16 must determine the terms of the judgment to be entered. Considering plaintiff’s briefing and the 17 record in this case, including the affidavits and declarations submitted by plaintiff, the 18 undersigned concludes that plaintiff is entitled to an award of statutory and enhanced statutory 19 damages in the total amount of $ 25,000 as a result of defendant’s unlawful interception and 20 broadcast of the Program, and will recommend the same. 21 Pursuant to section 605, a court may award statutory damages of “not less than 22 $1,000 or more than $10,000” for violation of the Federal Communications Act, and may also 23 award enhanced damages of up to $100,000 if the “violation was committed willfully and for 24 purposes of direct or indirect commercial advantage or private financial gain.” 47 U.S.C. 25 § 605(e)(3)(C)(i)(II), (e)(3)(C)(ii). Similarly, where a violation of 47 U.S.C. § 553(a) is 26 concerned, a court may award statutory damages of “not less than $250 or more than $10,000,” 9 1 and may increase the award up to $50,000 if the “violation was committed willfully and for 2 purposes of commercial advantage or private financial gain.” 47 U.S.C. § 553(c)(3)(A), (B). 3 Here, plaintiff asks for statutory damages of $10,000 pursuant to 47 U.S.C. 4 § 605(e)(3)(C)(i)(II), and enhanced damages pursuant to 47 U.S.C. § 605(e)(3)(C)(ii). 5 Admittedly, defendant was not charging admission to watch the Program. However, Victoria’s 6 Mexican Food was broadcasting the Program not only on a nineteen-inch television, but also on a 7 projected image on a large pull down screen. (Haverty Aff. at 2.) It is apparent that broadcasting 8 the Program was done to enhance defendant’s business. Haverty’s affidavit approximates 9 Victoria’s Mexican Food’s seating capacity at 72 people, yet states that Haverty observed 10 approximately 75 patrons inside the subject establishment and approximately 15 people standing 11 outside the doorway watching the Program. (Id.) Additionally, plaintiff has submitted a 12 supplemental declaration wherein the court has been advised of two other actions against this 13 defendant pending in this district which allege similar violations. (Dkt. No. 11, Doc. 11-4.) 14 Therefore, it is apparent that defendant not only has been on notice that pirating a commercial 15 signal is unlawful, but has wilfully refused to terminate her illegal activities. Under these 16 circumstances, statutory damages in the amount of $10,000 and enhanced statutory damages in 17 the amount of $15,000 are appropriate. 18 Plaintiff also seeks actual damages for defendants’ alleged tortious act of 19 conversion in the amount of $1,600, which consists of the fee that defendant would have had to 20 pay to plaintiff in order to lawfully broadcast the Program through a contractual sublicense. The 21 undersigned will not recommend an award of damages with respect to plaintiff’s conversion 22 claim. The statutory damages provisions at issue serve not only a deterrent function, see J & J 23 Sports Prods. v. Orellana, No. 08-05468 CW, 2010 WL 1576447, at *3 (N.D. Cal. Apr. 19, 2010) 24 (unpublished), but also a compensatory function, which is evidenced by provisions that permit 25 the award of statutory damages or actual damages in a civil action. See 47 U.S.C. 26 § 605(e)(3)(C)(I); 47 U.S.C. § 553(c)(3)(A)(i). Here, the recommended award of statutory 10 1 damages in the amount of $10,000 and enhanced statutory damages in the amount of $15,000 2 sufficiently compensates plaintiff. Accordingly, the undersigned will recommend that plaintiff 3 be awarded no damages on its conversion claim. 4 Finally, although the prayer for relief in the complaint and the application for 5 default judgment indicate that plaintiff seeks the award of costs and attorneys’ fees, the 6 application for default judgment contains no argument or evidence in support of such a request. 7 Accordingly, the undersigned will not recommend the award of costs or attorneys’ fees. 8 IV. 9 For the reasons stated above, the court HEREBY RECOMMENDS that: 10 11 CONCLUSION 1. Plaintiff’s application for default judgment (Dkt. No. 11) against defendant be granted; 12 2. The court award statutory damages in the amount of $10,000 and 13 enhanced statutory damages in the amount of $15,000, for a total award of $25,000 to plaintiff; 14 and 15 3. This action be closed. 16 These findings and recommendations are submitted to the United States District 17 Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen 18 days after being served with these findings and recommendations, any party may file written 19 objections with the court and serve a copy on all parties. Such a document should be captioned 20 “Objections to Magistrate Judge’s Findings and Recommendations.” Failure to file objections 21 within the specified time may waive the right to appeal the District Court’s order. Turner v. 22 Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Ylst, 951 F.2d 1153, 1156-57 (9th Cir. 23 1991). 24 DATED: January 20, 2011 _____________________________________ KENDALL J. NEWMAN UNITED STATES MAGISTRATE JUDGE 25 26 J&Jsports-juarez10-1071 11
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