J&J Sports Productions, Inc. v. Maria L. Diaz De Leon

Filing 14

ORDER granting 11 Motion for Default Judgment. Further it is hereby ORDERED AND ADJUDGED that Plaintiff shall have and recover jointly and severally from separate defendants, judgment in the the total of $17,235.25. The judgment amount shall bear interest at the prevailing legal rate of 0.24% per annum from date of entry of this order until paid. Signed by Honorable P. K. Holmes, III on January 11, 2012. (lw)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FORT SMITH DIVISION
J&J SPORTS PRODUCTIONS, INC.
as Broadcast Licensee of the
May 1, 2010 Mayweather/Mosley
Broadcast
v.

PLAINTIFF
Case No. 2:11-CV-02051

MARIA L. DIAZ DE LEON, Individually, and d/b/a
EL COYOTE, a/k/a COYOTE SPORTS BAR, a/k/a
EL COYOTE SPORTS BAR

DEFENDANTS

DEFAULT JUDGMENT
Plaintiff J&J Sports Productions, Inc. (“J&J”) brought this action alleging that Defendant
Maria L. Diaz de Leon (“de Leon”), individually, and El Coyote a/k/a Coyote Sports Bar a/k/a El
Coyote Sports Bar (“El Coyote”), knowingly and willfully violated the Communications Act of
1934, as amended, 47 U.S.C. §§ 553 and 605, by unlawfully intercepting and exhibiting the
Mayweather/Mosley Program (“the Program”) on May 1, 2010. Defendants have failed to appear
in this action, and the Clerk entered default (Doc. 12) against them on May 19, 2011. Currently
before the Court are Plaintiff’s Motion for Default Judgment (Doc. 11) and various documents filed
in support.
I. Background
“Upon default, the factual allegations of a Complaint (except those relating to the amount
of damages) are taken as true.” Murray v. Lene, 595 F.3d 868, 871 (8th Cir. 2010). Therefore, the
Court views the facts in this case as set forth in Plaintiff’s Complaint (Doc. 1) as true as a
consequence of Defendants’ default. Plaintiff has established in the Complaint and through the
Affidavit of J&J’s President, Joseph Gagliardi, (Doc. 11-1) that Plaintiff owns the distribution rights

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to the May 1, 2010 Mayweather/Mosley Program which was broadcast either by closed circuit
television or by encrypted satellite signal. Commercial establishments wanting to legitimately receive
an unscrambled signal in order to provide their patrons with the opportunity to view the Program
were required to contract with Plaintiff and pay a fee.
In order to combat illegal exhibition of the Program by commercial establishments who had
not contracted with Plaintiff and paid the required fee, Plaintiff hired investigative agencies to send
undercover auditors to various Fort Smith locales on the night of May 1, 2010 to catch any
establishments engaging in such signal piracy. One of the auditors so dispatched, Cara Trembly,
went to El Coyote, located at 2917 Midland Blvd., at approximately 9:40 P.M. on the night in
question. Trembly, recording her observations by way of a concealed camera, observed two
television sets airing the Program. Trembly was not assessed a cover charge to enter El Coyote. She
counted about 30 patrons and estimated the capacity of El Coyote to be 50-100 people. Plaintiff has
submitted an affidavit signed by Trembly (Doc. 11-1, pp. 17-18), as well as the undercover video
recording taken by Trembly (Exh. D to Doc. 11-1), to substantiate Trembly’s claims.
Defendants failed to answer the Complaint despite being appropriately served (see proof of
service, Doc. 6). Plaintiff reported to the Court that Defendant de Leon sent a letter to Plaintiff’s
counsel on April 22, 2011, though the letter is dated April 18, 2011. (Doc. 9, p. 4). In the letter,
Defendant de Leon apologized “for all the inconvenience that I have caused,” said she was “willing
to pay some of the debt,” but felt “that it was not my fault.” Id. Defendant de Leon did not file the
letter with the Court. Plaintiff’s counsel avers that she sent a communication to Defendant de Leon
on April 25, 2011, requesting that Defendant de Leon contact Plaintiff’s counsel to discuss the
matter. Doc. 9, pp. 1-2. In any event, Defendants never answered the Complaint or appeared in any
manner before the Court in this litigation, and Defendant de Leon’s private communication with
Plaintiff’s counsel shall not be deemed by the Court to be an answer to the Complaint. Accordingly,
Defendants are in default, and it is now the Court’s task to enter an appropriate judgment.
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II. Discussion
Plaintiff alleges that Defendants violated both 47 U.S.C. § 553 and 47 U.S.C. § 605, but
without the benefit of discovery or an admission from Defendants, Plaintiff is unable to determine
exactly how Defendants intercepted its signal. Courts have been divided as to when to apply § 553
of the FCA and when to apply § 605. Some courts have even allowed recovery under both statutes.
See e.g., Joe Hand Promotions, Inc. V. TL Productions, LLC, 2010 U.S. Dist. LEXIS 57889 (E.D.
Mo. 2010)(awarding statutory damages for signal piracy under both § 553 and § 605). Other courts
have explicitly stated that a plaintiff may not simultaneously pursue relief under both sections,
because the sections target two distinct types of piracy. See e.g., United States v. Norris, 88 F.3d 462
(7th Cir. 1996)(holding that unauthorized interception of television programming transmitted by
satellite is governed by § 605, whereas unauthorized interception of programming transmitted
through cable network is governed by § 553).
Although alleging a violation of both statutes, Plaintiff seeks damages only under § 605. Due
to Defendants’ default, Plaintiff cannot conclusively determine how Defendants pirated the Program
on May 1, 2010. However, Plaintiff asserts that Defendants failed to lawfully obtain the Program
by contracting with Plaintiff and paying the required fee and, therefore, must have taken some
unlawful action in order to intercept and receive the Program. Based on Plaintiff’s Complaint and
exhibits in support of its Motion for Default (Doc. 11), the Court finds that Defendants must have
pirated the event through use of any one of many possible illegal methods. Because the Court must
accept the factual allegations of the Complaint as true due to Defendants’ default, the Court further
finds that Defendants pirated the event in violation of 47 U.S.C. § 605 as clearly alleged in the
Complaint. Although Plaintiff also alleges a violation of § 553, Plaintiff is not seeking damages
under that section, and the Court, therefore, declines to address whether an award of damages under
both section §553 and § 605 may be appropriate or allowable in this or any other case.
Personal liability against Defendant de Leon is appropriate in this case based upon the
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allegations of the Complaint, which states that upon information and belief, de Leon had supervisory
capacity and control over, and received a financial benefit from, the activities occurring within El
Coyote on May 1, 2010 (Doc. 1, ¶¶ 9-11). See Joe Hand Promotions, Inc. v. Ewer et al., 2009 U.S.
DIST LEXIS 100415 at *4-*5 (E.D. Wis. 2009) (finding individual who was officer, director,
shareholder, and/or principal of corporation that operated bar personally liable in his individual
capacity under § 605 for bar’s unlawful interception and exhibition of pay-per-view UFC fight,
where he admitted by default that he had control over interception and received financial benefits
therefrom) (citing J&J Sports Prods., Inc. v. Ribeiro, 562 F. Supp. 2d 498 (S.D.N.Y.)). A corporate
officer “who has the ability to supervise [the intercepting] activity and has a financial interest in that
activity, or who personally participated in that activity, is personally liable for the [interception].”
Joe Hand Promotions, Inc. v. Kaczmar et al, 2008 U.S. DIST LEXIS 88199 at *2 n. 1 (N.D. Ill.
2008) (alterations in original) (internal quotations omitted).
A claimant entitled to relief under § 605 may elect actual or statutory damages pursuant to
§ 605(e)(3)(C)(I). Plaintiff has elected statutory damages, which range from a minimum of $1,000
to a maximum of $10,000 “as the court considers just.” 47 U.S.C. § 605(e)(3)(C)(i)(II). In addition,
enhanced damages of up to $100,000 are permitted, in the discretion of the court, “[i]n any case in
which the court finds that the violation was committed willfully and for purposes of direct or indirect
commercial advantage or private financial gain.” 47 U.S.C. § 605(e)(3)(C)(ii). The undisputed
evidence shows that Defendants violated 47 U.S.C. § 605 by knowingly and willfully intercepting
the Program, and offering the Program to patrons of their establishment for private financial gain or
commercial advantage. “[I]ntentional acts are required to pirate a closed-circuit broadcast; the
unscrambled airwaves or cable transmission do not just happen.” Joe Hand Promotions, Inc. v. Cat’s
Bar, Inc., 2009 U.S. DIST LEXIS 20961 at *6 (C.D. Ill. 2009). Commercial advantage or financial
gain can also reasonably be inferred from the facts. Given that El Coyote is a commercial
establishment, it may be reasonably inferred that Defendants’ actions in airing the Program were for
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purposes of direct or indirect commercial advantage by drawing customers into the business. In
addition, “the court may draw an inference of willfulness from a defendant’s failure to appear and
defend an action in which the plaintiff demands increased statutory damages based on allegations
of willful conduct.” J&J Sports Prods., Inc. v. Acevedo et al, 2010 U.S. DIST LEXIS 48341 at *8
(E.D. Ark. 2010)(citations omitted). Thus, the Court may award enhanced damages, bringing the
potential range for total damages to $1,000 to $110,000.
Courts have gone about calculating statutory and enhanced damages for violations of § 605
in various ways, considering “both the nature of the violation in light of the statutory scheme
involved, as well as the particular circumstances concerning the defendant[s’] actions.” DirecTV, Inc.
v. Schulien, 401 F. Supp. 2d 906, 915 (N.D. Ill. 2005) (citations omitted). In the instant matter, the
auditor hired by Plaintiff estimated the capacity of El Coyote to be 50-100 people. Plaintiff alleges
that Defendants would have paid approximately $4,200 to purchase the program properly, based
upon the estimated capacity of the establishment. See Doc. 11-1, p. 15. In addition, Defendants
should disgorge any profits realized from increased sales of food and beverages due to increased
patronage of people wanting to see the fight. On May 1, 2010, the auditor hired by Plaintiff counted
from 25-30 patrons at El Coyote at the time the Program was being shown. No cover was charged,
nor is there any evidence that Defendants had previously engaged in signal piracy. Plaintiff has
likewise presented no evidence that Defendants advertised the showing of the Program in order to
draw in customers. The overall profit gained as a result of the illegal showing of the Program was
likely, therefore, minimal to moderate. However, the goal of deterring future signal piracy should
also be considered, as well as the loss of goodwill that Plaintiff suffers when paying customers see
potential patrons lost to establishments that have illegally obtained the Program for free. Finally,
Plaintiff is entitled to an award of enhanced damages due to the Court’s finding that Defendants’
conduct was willful and for financial gain.
The amount of statutory damages to be awarded is left to the court’s discretion. In order to
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arrive at an appropriate sum to be awarded as damages, the Court has reviewed analogous cases. All
the facts and circumstances of this case considered, the Court finds that Plaintiff should be awarded
a total of $15,000. This amount includes $5,000 in statutory damages, to include lost revenues to
Plaintiff as well as some disgorgement of profits gained by Defendants as a result of exhibiting the
Program. The total award amount further includes $10,000 in enhanced damages, using a multiplier
of two from the base statutory damages, for Defendants’ willful violation. This penalty should be
sufficient to deter future signal piracy without being so harsh as to seriously impair the viability of
Defendants’ business.
Finally, an award of attorney’s fees and costs is mandatory where the Court finds a violation
of § 605. 47 U.S.C. § 605(e)(3)(B). Plaintiff has substantiated costs and fees totaling $2,235.25,
which the Court finds to be reasonable. The Court therefore awards Plaintiff $2,235.25 for
attorney’s fees and costs.
For the reasons set forth above, the Court hereby GRANTS Plaintiff’s Motion for Default
Judgment (Doc. 11). It is hereby ORDERED AND ADJUDGED that Plaintiff J&J Sports
Productions, Inc. shall have and recover jointly and severally from separate defendants Maria L.
Diaz de Leon, and El Coyote a/k/a Coyote Sports Bar a/k/a El Coyote Sports Bar, judgment in the
total amount of $17,235.25. The judgment amount shall bear interest at the prevailing legal rate of
0.24% per annum from the date of entry of this order until paid. See 28 U.S.C. § 1961.

IT IS SO ORDERED AND ADJUDGED this 11th day of January, 2012.

/s/P. K. Holmes, III
P.K. HOLMES, III
UNITED STATES DISTRICT JUDGE
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