J & J Sports Productions Incorporated v. Margaillan et al

Filing 18

ORDER granting in part 15 Motion for Default Judgment. Default judgment is awarded in favor of J & J Sports and against Margaillan and Lamco in the amount of $4,200.00. The Clerk of Court shall enter judgment in this case and shall then close its file in this matter. Signed by Judge Cindy K Jorgenson on 12/17/13. (KAH)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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J & J SPORTS PRODUCTIONS, INC., )
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Plaintiff,
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vs.
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LUIS HECTOR MARGAILLAN, et al., )
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Defendants.
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No. CIV 13-312-TUC-CKJ
ORDER

Pending before the Court is Plaintiff’s Application for Default Judgment by the Court
(Doc. 15). The Clerk of the Court has entered default.

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Factual and Procedural Background
Plaintiff J & J Sports Productions, Inc., (“J & J Sports”) filed a Complaint in this
Court on May 4, 2013.

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In its Complaint, J & J Sports alleges Defendant Luis Hector Margaillan

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(“Margaillan”), an individual specifically identified on the Arizona Department of Liquor

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Licenses and Control license issued for the commercial establishment doing business as

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Shooters Sportsbar (“Shooters”), located at 1123 G Avenue, Douglas, 85607, is a managing

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member of Lamco Enterprises, LLC (“Lamco”), which owns and operates Shooters.

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J & J Sports alleges that on May 5, 2012, Margaillan had the right and ability to

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supervise the activities of Shooters, which included the unlawful interception of Floyd

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Mayweather, Jr. v. Miguel Cotto, WBA Super World Light Middleweight Championship

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Fight Program (“the Program”). J & J Sports alleges it was granted, pursuant to contract,

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the exclusive nationwide commercial distribution (closed-circuit) rights to the Program. J

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& J Sports alleges Margaillan specifically directed Shooters employees to unlawfully

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intercept and broadcast the Program at Shooters or that the actions of the employees of

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Shooters are directly imputable to Margaillan by virtue of his acknowledged responsibility

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for the actions of Shooters.

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J & J Sports alleges Margaillan as managing member of Lamco Enterprises, LLC and

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as an individual specifically identified on the liquor license for Shooters, had an obvious and

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direct financial interest in the activities of Shooters, which included the unlawful interception

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of the Program. J & J Sports further alleges that the unlawful broadcast of the Program, as

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supervised and/or authorized by Margaillan resulted in increased profits for Shooters

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Sportsbar. J & J Sports further alleges Margaillan, as an individual specifically identified on

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the liquor license for Shooters, had the obligation to supervise the activities of Shooters,

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which included the unlawful interception of Program, and, among other responsibilities, had

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the obligation to ensure that the liquor license was not used in violation of law.

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J & J Sports also alleges that Lamco is an owner, and/or operator, and/or licensee,

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and/or permittee, and/or person in charge, and/or an individual with dominion, control,

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oversight and management of Shooters.

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J & J Sports alleges Margaillan and Lamco violated 47 U.S.C. § 605 by their

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unauthorized publication or use of communications (i.e., the transmission of the Program for

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which J & J Sports had the distributing rights). J & J Sports alleges the conduct of

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Margaillan and Lamco was done willfully and for purposes of direct commercial advantage

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and/or private financial gain. For this violation, J & J Sports asserts it is entitled to the

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following from each Defendant:

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(a) Statutory damages for each willful violation in an amount to $100,000.00 pursuant
to Title 47 U.S.C. 605(e)(3)(C)(ii), and also

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(b) the recovery of full costs, including reasonable attorneys’ fees, pursuant to Title
47 U.S.C. Section 605(e)(3)(B)(iii).
Complaint, Doc. 1, p. 6.
J & J Sports also alleges Margaillan and Lamco violated 47 U.S.C. § 553 by their
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unauthorized interceptions, reception, publication, divulgence, display, and/or exhibition of

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the Program. For this violation J & J Sports asserts it is entitled to the following from each

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Defendant:

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(a) Statutory damages for each violation in an amount to $10,000.00 pursuant to Title
47 U.S.C. § 553(c)(3)(A)(ii); and also

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(b) Statutory damages for each willful violation in an amount to $50,000.00 pursuant
to Title 47 U.S.C. § 553(c)(3)(B); and also

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(c) the recovery of full costs pursuant to Title 47 U.S.C. Section 553 (c)(2)(C); and
also

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[(d)] and in the discretion of this Honorable Court, reasonable attorneys’ fees,
pursuant to Title 47 U.S.C. Section 553 (c)(2)(C).
Complaint, Doc. 1, p. 7.

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J & J Sports also alleges Margaillan and Lamco, by their interception, reception,

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publication, divulgence, display, and/or exhibition of the Program at Shooters, tortiously

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obtained possession of the Program and wrongfully converted the Program for their own use

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and benefit. J & J Sports alleges these acts of Margaillan and Lamco were willful, malicious,

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egregious, and intentionally designed to harm J & J Sports by depriving it f the commercial

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license fee to which J & J Sports was rightfully entitled to receive from Margaillan and

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Lamco, and in doing so, Margaillan and Lamco subjected J & J Sports to severe economic

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distress and great financial loss. Therefore, J & J Sports asserts it is entitled to both

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compensatory, as well as punitive and exemplary damages, from Margaillan and Lamco for

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their egregious conduct, theft, and conversion of the Program and deliberate injury to J & J

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Sports.

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On August 27, 2013, J & J Sports filed Declarations of Service as to Margaillan (Doc.
8) and Lamco (Doc. 9).
On September 10, 2013, J & J Sports filed a Request to Enter Default (Doc. 10). The
Clerk of Court entered default on September 11, 2013 (Docs. 11 and 13).

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On November 4, 2013, J & J Sports filed a Notice of Application and Application for

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Default Judgment by the Court (Doc. 15). The Notice states a hearing may be scheduled for

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J & J Sports to present its Application to the Court. The Court finds the documents and
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records present the issues sufficiently and declines to set this matter for a hearing.1

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Adequacy of Service of Process

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As a preliminary matter, the Court addresses the adequacy of the service of process

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on Margaillan and Lamco. See e.g., Carimi v. Royal Carribean Cruise Line, Inc., 959 F.2d

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1344, 1345 (5th Cir. 1992) (Where default "is based on a void judgment under rule 60(b)(4),

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the district court has no discretion-the judgment is either void or it is not. If a court lacks

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jurisdiction ... because of insufficient service of process, the judgment is void and the district

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court must set it aside.); Mason v. Genisco Tech. Corp., 960 F.2d 849, 851-52 (9th Cir. 1992)

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(finding that where a plaintiff "failed to serve [defendant] properly ... the default judgments

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[wa]s void").

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Based on the Declarations of Service (Docs. 8 and 9) and the Affidavits in Support

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of J & J Sports’ Requests to Enter Default (Docs. 10-1 and 12-1), it appears that the

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Complaint was properly served on Margaillan and Lamco. Additionally, the Requests to

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Enter Default and the Notice of Application for Default Judgment by the Court were mailed

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to Margaillan and Lamco (Docs. 10, 12, and 15).

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Default Judgment and Eitel Factors

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Because service of the Complaint appears to have been proper, the Court now

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addresses the merits of J & J Sports’ application for default judgment. After entry of a

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default, a court may grant a default judgment on the merits of the case. See Fed.R.Civ.P. 55.

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The "district court's decision whether to enter a default judgment is a discretionary one."

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Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir.1980). Factors that a court may consider in

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exercising that discretion include:

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(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive

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J & J Sports also filed a response to the Court’s order to show cause why this matter
should not be dismissed for failure to prosecute. The Court finds J & J Sports has presented
cause; the Court declines to dismiss this matter.
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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.

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Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). As default has already been
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entered in this case, the Court must take as true all factual allegations in J & J Sports’
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Complaint except for those related to the amount of damages. See Televideo Sys., Inc. v.
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Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) ("The general rule of law is that upon
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default the factual allegations of the complaint, except those relating to the amount of
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damages, will be taken as true.") (internal quotation marks omitted); Rio Properties, Inc. v.
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Rio International Interlink, 284 F.3d 1007 (9th Cir. 2002).
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Possibility of Prejudice to J & J Sports
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The Court first considers whether the plaintiff will suffer prejudice if default judgment
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is not entered. Eitel. Based on the documents submitted by J & J Sports, it appears that
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Margaillan and Lamco do not contest that Margaillan and Lamco violated 47 U.S.C. § 605,
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violated 47 U.S.C. § 553, and committed a tortious conversion. The Court concludes J & J
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Sports would suffer prejudice if its motion for default judgment were denied because it
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would be "without other recourse for recovery." Pepsico, Inc. v. California Security Cans,
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238 F.Supp.2d 1172, 1177 (C.D.Cal. 2002).
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Merits of Plaintiff's Substantive Claim and Sufficiency of the Complaint
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The Court also considers that Eitel "require[s] that a plaintiff state a claim on which
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the [plaintiff] may recover." Philip Morris U.S.A. Inc. v. Castworld Prods., 219 F.R.D. 494,
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499 (C.D.Cal.2003) (internal quotation marks omitted).
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As to J & J Sports’ claim that Margaillan and Lamco violated 47 U.S.C. § 605 and 47
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U.S.C. § 553, these statutes provide for a private right of action. Further, J & J Sports has
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alleged claims upon which relief may be recovered. Additionally, J & J Sports has stated a
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claim for conversion on which J & J Sports may recover. See Miller v. Hehlen, 209 Ariz.
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462, 104 P.3d 193 (App. 2005) (discussing elements of conversation).

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Sum of Money at Stake in Action

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For the fourth Eitel factor, "the court must consider the amount of money at stake in

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relation to the seriousness of Defendant's conduct." Pepsico, 238 F.Supp.2d at 1176. If the

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sum of money at stake is completely disproportionate or inappropriate, default judgment is

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disfavored. In this case, J & J Sports seeks statutory damages and an award for the

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conversion equal to the cost that Margaillan and Lamco would have incurred had they

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subscribed to the Program. The Court finds the nature of the requested damages is

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appropriate.

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Possibility of Dispute Concerning Material Facts

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The Court also considers the possibility of dispute as to any material facts in the case.

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Here, there is little possibility of dispute concerning material facts because (1) based on the

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entry of default, the Court accepts all allegations in J & J Sports’ complaint as true (except

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for those relating to damages) and (2) Margaillan and Lamco have not made any attempt to

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challenge J & J Sports’ Complaint or even appear in this case.

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Whether Default Was Due to Excusable Neglect

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Usually, a court will ask whether the failure to answer is due to excusable neglect. See

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Eitel, 782 F.2d at 1472 (noting that the fact that the parties were engaged in settlement

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negotiations excused defendant from failing to answer). In the instant case, Margaillan and

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Lamco were properly served with the Summons and Complaint. Moreover, J & J Sports has

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mailed subsequently-filed documents to Margaillan and Lamco. Given these circumstances,

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it is unlikely that Margaillan’s or Lamco’s failure to answer and the resulting default were

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a result of excusable neglect. Cf. Shanghai Automation Instrument Co. v. Kuei, 194

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F.Supp.2d 995, 1005 (N.D.Cal. 2001) (concluding no excusable neglect because defendants

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"were properly served with the Complaint, the notice of entry of default, as well as the papers
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in support of the instant motion").

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Policy Underlying Federal Rules of Civil Procedure

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Generally, default judgments are disfavored because "cases should be decided upon

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their merits whenever reasonably possible." Eitel, 782 F.2d at 1472. However, because a

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discretionary standard is applied, "default judgments are more often granted than denied."

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Pepsico v. Triunfo-Mex, Inc., 189 F.R.D. 431, 432 (C.D.Cal. 1999). Indeed, the mere

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existence of Fed. R. Civ. P. 55(b) indicates that the seventh Eitel factor is not alone

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dispositive. PepsiCo, Inc. v. California Security Cans, 238 F.Supp.2d 1172, 1177 (C.D.Cal.

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2002). Moreover, Margaillan’s and Lamco’s failure to answer the Complaint makes a

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decision on the merits impractical, if not impossible. Margaillan and Lamco have failed to

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respond to the lawsuit and J & J Sports has specifically pleaded facts supporting the claims

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as discussed by the Court; therefore, the policy encouraging decisions of cases on their merits

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does not weigh against granting default judgment here.

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Summary
Based on all the Eitel factors discussed above, the Court finds J & J Sports’
Application for Default Judgment should be granted.

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Damages

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Having determined that the Application for Default Judgment should be granted, the

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Court now turns to the matter of damages. J & J Sports’ Application for Default Judgment

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seeks $ 110,000.00 for the violation of 47 U.S.C. § 605(e)(3)B)(iii) and (c)(ii) and $ 2,200.00

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for the tort of conversion. J & J Sports’ Application for Default Judgment does not seek an

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amount for the violation of 47 U.S.C. § 553.

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A successful plaintiff can recover statutory damages of at least $1,000 and at most

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$10,000 for a violation of 47 U.S.C. § 605(e)(3)(C)(i)(II). These damages may be increased

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by up to $100,000 if a communication was intercepted and published “willfully and for
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purposes of direct or indirect commercial advantage or private financial gain.” 47 U.S.C. §

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605(e)(3)(C)(ii). “Courts consider numerous factors when assessing whether enhanced

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damages are appropriate, including ‘prior infringements, substantial unlawful monetary

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gains, significant actual damages to the plaintiff, the defendant's advertising of the broadcast,

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and the defendant's charging a cover charge or premiums for food and drinks during the

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broadcast.’” J & J Sports Productions, Inc. v. Guzman, No. CV 12–00525–PHX–FJM, 2012

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WL 3108831 * 1 (D.Ariz. 2012), citation omitted. In another case, the court considered the

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following factors: “(1) the size of the offending establishment; (2) the number and size of

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screens displaying the pirated broadcast; (3) any evidence of advertising the pirated broadcast

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to attract customers; (4) any cover change made to patrons of the establishment broadcasting

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the pirated transmission; (5) any premium for any food and drink charged for any pirated

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transmission; (6) the need to deter future violations; (7) the difficulty in detecting the

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unlawful acquisition of the broadcast; and (8) the widespread loss that occurs through

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pirating license transmissions.”

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CV–13–00936–PHX–GMS, 2013 WL 5169667 * 1 (D.Ariz. 2013). “The need for deterrence

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is balanced against the harm to the defendant's business if significant damages are assessed.”

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Guzman, at * 1.

J & J Sports Productions, Inc. v. Stone, No.

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As default has been entered against Margaillan and Lamco, the Court accepts that

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Margaillan and Lamco admit that they published the Program to their customers without a

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license, and did so “willfully and for purposes of direct and/or indirect commercial advantage

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and/or private financial gain.” Complaint, Doc. 1, p. 5. There is no evidence of prior

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infringements, substantial unlawful monetary gains, significant actual damages to Sport,

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advertising by Margaillan and Lamco, or the charging of a cover charge or a premiums for

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food and drinks during the broadcast. Moreover, the affidavit of the investigator indicates

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he observed three employees working at the time of the broadcast and one person sitting at

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the bar watching the fight – the investigator does not clarify if any other persons were in

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Shooters at the time of the broadcast, but does states that the same people who were there

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when he arrived were there when he left. See Doc. 15-3. The investigator also listed six cars
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he observed in the parking lot and in nearby street parking spots – he does not specify if there

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were any further unidentified cars parked nearby. Id. Lastly, the investigator observed at

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least seven televisions in Shooters – he did not specify how many of the screens were

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broadcasting the Program. Id.

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The Court concludes an enhanced damages award is not appropriate. The Court finds

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statutory damages in the amount of $ 2,000.00 for the violation of 47 U.S.C. § 605 to be

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appropriate. Additionally, the Court finds an award of $ 2,200.00, the apparent cost

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Margaillan and Lamco would have incurred had they subscribed to the Program, see Doc.

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17, ¶ 8, is warranted for the tort of conversion.

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Lastly, J & J Sports requests an award of its costs and attorneys' fees. J & J Sports

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may file a bill of costs in accordance with LRCiv 54 .1 and Fed.R.Civ.P. 54(d)(1), and a

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motion for attorneys' fees pursuant to Fed.R.Civ.P. 54(d)(2).

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Accordingly, IT IS ORDERED:

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1.

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J & J Sports’ Application for Default Judgment (Doc. 15) is GRANTED IN

PART.
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Default judgment is awarded in favor of J & J Sports and against Margaillan

and Lamco in the amount of $ 4,200.00.
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The Clerk of Court shall enter judgment in this case and shall then close its file

in this matter.
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The Clerk of Court shall mail a copy of this Order to:
Luis Hector Margailan
1012 N. G Avenue, Suite 100
Douglas AZ 85607
Lamco Enterprises, LLC
1012 N. G Avenue, Suite 100
Douglas, AZ 85607

DATED this 17th day of December, 2013.

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