J & J Sports Productions, Inc v. Hernandez

Filing 23

ORDER GRANTING DEFAULT JUDGMENT by Judge Jon S. Tigar granting 15 Motion for Default Judgment. (wsn, COURT STAFF) (Filed on 6/6/2013)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 J & J SPORTS PRODUCTIONS, INC., Case No. 12-cv-05773-JST Plaintiff, 8 v. ORDER GRANTING DEFAULT JUDGMENT 9 10 MENERVA HERNANDEZ, Re: ECF No. 15 Defendant. United States District Court Northern District of California 11 12 Plaintiff J & J Sports Productions, Inc. (“Plaintiff”) brings a motion for default judgment 13 14 against Defendant Menerva Hernandez, individually and doing business as El Milagro Restaurant 15 (“Defendant”). Notice of Application and Application for Default Judgment by the Court 16 (“Motion”), ECF No. 15. 17 The Court heard this matter on June 6, 2013. Attorney Thomas Riley appeared for 18 Plaintiff, and neither Defendant nor any representative of Defendant appeared. After considering 19 the papers and the arguments made by counsel at the hearing, and good cause appearing, the Court 20 hereby GRANTS the motion and awards damages as described herein. 21 I. BACKGROUND 22 A. Factual Background 23 Plaintiff alleges that on November 11, 2011, Defendant intercepted and rebroadcast the 24 Manny Pacquiao v. Juan Manuel Marquez III WBO Welterweight Championship Fight Program 25 (“the Program”), to which Plaintiff owns the exclusive commercial distribution rights. Complaint, 26 at ¶¶ 9-12, ECF No. 1. 27 28 Plaintiff alleges that Ms. Hernandez is an “an owner, and/or operator, and/or licensee, and/or permittee, and/or person in charge, and/or an individual with dominion, control, oversight 1 and management of the commercial establishment doing business as El Milagro Restaurant” in 2 Seaside, California. Id. at ¶ 7. Plaintiff alleges that Defendant has not acquired a license to 3 broadcast the Program. Declaration of Joseph M. Gagliardi (“Gagliardi Decl.”), at ¶ 3; ECF No. 4 20. On November 11, 2012, Investigator Irene Calderon observed the Program being exhibited on 5 three televisions at Defendant’s commercial establishment. Declaration of Affiant, ECF No. 15-3 6 (“Calderon Decl.”). Ms. Calderon recorded the capacity of the establishment as approximately 7 100 people, and she observed 26-30 patrons inside the establishment at various times during the 8 broadcast. Id. She did not record observing mechanisms for transmitting a satellite signal. Id. 9 The investigator also did not record there being a cover charge for the event, did not observe that the establishment increased the price of food of drinks during the event, and did not describe 11 United States District Court Northern District of California 10 whether the defendant had promoted the event. Id. 12 B. Procedural History 13 Plaintiff commenced this action on November 9, 2012, asserting four cause of action: (1) 14 violation of 47 U.S.C. § 605 (“Section 605”), which prohibits unauthorized interception of “wire 15 or radio” communications, (2) violation of 47 U.S.C. § 553 (“Section 553”), which prohibits 16 authorized interception of cable broadcasts, (3) the tort of conversion, and (4) violations of 17 California’s “Unfair Competition Law,” Cal. Bus. & Prof. Code § 17200, et seq. Complaint. The 18 complaint was served on Defendant on February 1. ECF No. 10. Defendant failed to answer the 19 Complaint by the required deadline and has not otherwise appeared. Declaration of Thomas P. 20 Riley (“Riley Decl.”), ECF No. 15-2, at ¶ 2. The Clerk entered default against Defendant on 21 March 13. ECF No. 12. Plaintiff filed this motion for default judgment on March 19, seeking to 22 recover judgment of $110,000 for the violation of 47 U.S.C. § 605 and $4,200 for the tort of 23 conversion. Id.at ¶¶ 5 & 6. 24 C. 25 Jurisdiction This Court has federal-question jurisdiction over Plaintiff’s first two causes of action 26 pursuant to 28 U.S.C. § 1331, since those counts arise under federal statutes. Since the remaining 27 causes of action are “so related to claims in the action within such original jurisdiction that they 28 form part of the same case or controversy,” the Court may, and hereby does, exercise 2 1 supplemental jurisdiction over those claims. 28 U.S.C. § 1367(a). 2 D. Legal Standard Rule 55(b)(2) of the Federal Rules of Civil Procedure permits a court, after entry of 3 4 default, to enter default judgment against a defendant. “The district court’s decision whether to 5 enter a default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 6 1980). “Factors which may be considered by courts in exercising discretion as to the entry of a 7 default judgment include: (1) the possibility of prejudice to the plaintiff, (2) the merits of 8 plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in 9 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 11 United States District Court Northern District of California 10 Procedure favoring decisions on the merits.” Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 12 1986). “With respect to the determination of liability and the default judgment itself, the general 13 rule is that well-pled allegations in the complaint regarding liability are deemed true.” Fair Hous. 14 of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). “A default judgment must not differ in kind from, or exceed in amount, what is demanded 15 16 in the pleadings.” Fed. R. Civ. Pro. 54(c). 17 II. DISCUSSION 18 A. Default Judgment 19 20 21 22 23 Since the Court takes the well-pled allegations of the complaint as true, the second, third, and fifth Eitel factors weigh in favor of default judgment. The first factor weighs in favor of default judgment because if the motion were denied, the plaintiff would be without a remedy. As to the fourth factor, the Eitel court upheld the denial of default judgment in part because 24 $2.9 million was at stake. 782 F.2d at 1472. While the $114,200 sought in this case is a 25 significant amount, it is not an amount sufficient to weigh against granting a motion for default 26 judgment. 27 28 Defendant appears to have been validly served in this action, which has been pending for six months. Since there is no reason to believe that default was due to excusable neglect, the sixth 3 1 Eitel factor also weights in favor of default judgment. 2 Finally, the final Eitel factor would seem to weigh against default judgment in every case. 3 However, when a defendant’s inaction is the sole obstacle precluding a decision on the merits, the 4 factor must necessarily be of very little weight. After careful consideration, the Court finds that the entry of default judgment is 5 6 appropriate. 7 B. Plaintiff only seeks an award of damages on two of its causes of action: for the tort of 8 9 Scope of Relief conversion and for the violation of Section 605. Riley Decl., at ¶ 7. 1. 11 United States District Court Northern District of California 10 Damages for Conversion In California, “[t]o establish . . . [the] tort [of conversion], a plaintiff must show 12 ‘ownership or right to possession of property, wrongful disposition of the property right and 13 damages.’” Kremen v. Cohen, 337 F.3d 1024, 1029 (9th Cir. 2003) (quoting G.S. Rasmussen & 14 Assocs., Inc. v. Kalitta Flying Serv., Inc., 958 F.2d 896, 906 (9th Cir. 1992)). Under California 15 statute: 16 17 18 19 20 21 22 23 24 25 The detriment caused by the wrongful conversion of personal property is presumed to be: First--The value of the property at the time of the conversion, with the interest from that time, or, an amount sufficient to indemnify the party injured for the loss which is the natural, reasonable and proximate result of the wrongful act complained of and which a proper degree of prudence on his part would not have averted; and Second--A fair compensation for the time and money properly expended in pursuit of the property. Cal. Civ. Code § 3336. The factual allegations pled support a cause of action for conversion.. Plaintiff seeks conversion damages of $4,200. In support, it has submitted evidence that the commercial sublicense fee to display the Program is $2,200 for an establishment with a “minimum seating” of “0-100,” and $4,200 for an establishment with a “minimum seating” of “100-200.” Exh. 1 to Gagliardi Decl. Presumably “minimum seating” really means “maximum capacity,” but it still unclear what the fee is for an establishment with a maximum capacity of exactly 100. 26 Plaintiff’s inspector recorded the “capacity” of the restaurant to be “approximately 100.” 27 Calderon Decl. After reviewing the photographs provided by Plaintiff, the Court finds that the 28 4 1 2 3 maximum capacity of the establishment is likely to be less than 100. Plaintiff’s evidence therefore demonstrates its entitlement to $2,200 in damages for conversion. 2. 5 Plaintiff has brought causes of action under two different sections of Chapter 5 of Title 47 6 of the United States Code. Section 605 governs “communication by wire or radio.” This section 7 applies to satellite broadcasts. See, e.g., California Satellite Sys. v. Seimon, 767 F.2d 1364, 1366 8 (9th Cir. 1985). Section 553, on the other hand, governs “communications . . . offered over a 9 cable system.” 47 U.S.C.A. § 553(a). The two sections have different damages provisions. Most 10 notably for purposes of this motion, Section 605 permits a maximum statutory damages award of 11 United States District Court Northern District of California 4 $110,000, while Section 553 permits a maximum of $250- $60,000. Compare 47 U.S.C. § 12 553(c)(3)(A)(ii) & (c)(3)(B) with 47 U.S.C.§ 605(e)(3)(B)(iii) & (c)(ii). 13 14 Damages under Chapter 5 of Title 47 a. Section 605 vs. Section 553 The Court is aware that some courts have awarded damages under both sections in issuing 15 default judgment orders. See, e.g., Joe Hand Promotions, Inc. v. Tidmarsh, Case No. 1:09-cv- 16 00097 LJO GSA, 2009 WL 1845090, at *3 (E.D. Cal. June 26, 2009). But other courts have held 17 that, where a plaintiff provides no evidence that satellite technology was used, and an inspector 18 did not observe a satellite dish on the premises, damages should be assessed only pursuant to 19 Section 553. See J&J Sports Productions, Inc. v. Juanillo, Case No. 3:10-cv-01801-WHA, 2010 20 WL 5059539, at *2 (N.D. Cal. Dec. 6, 2010). 21 Plaintiff’s memorandum does not discuss why damages should be assessed under Section 22 605, except to say that it should not be prejudiced by Defendant’s nonappearance, which is the 23 main reason Plaintiff cannot discover the method through which Plaintiff intercepted the Program. 24 Memorandum of Points and Authorities in Support of Plaintiff’s Application for Default Judgment 25 (“Memorandum”), ECF No. 15-1, at 8:21-27. That fact certainly should not prejudice Plaintiff in 26 the sense of denying Plaintiff recovery. The Court assumes that Defendant violated one of the two 27 statutes, notwithstanding Plaintiff’s inability to demonstrate all of the elements of its specific 28 cause of action. But in determining which of the two damages provisions to apply, the Court has 5 1 no basis to assume that Defendant used satellite technology. While the Court accepts the truth of 2 the well-pled factual allegations in the Complaint, the Complaint makes no specific allegations 3 that Defendant used satellite technology, even after Plaintiff sent an investigator into Defendant’s 4 establishment to observe the broadcast. The Court will therefore proceed to assess damages pursuant to Section 553, but it will 5 6 consider the arguments made by Plaintiff in its memorandum and at oral argument as arguments to 7 apply the maximum statutory award of $60,000. b. 8 Actual Damages vs. Statutory Damages Plaintiff’s first option under Section 553 is to recover “the actual damages suffered by him 10 as a result of the violation and any profits of the violator that are attributable to the violation which 11 United States District Court Northern District of California 9 are not taken into account in computing the actual damages.” 47 U.S.C. § 553(c)(3)(A)(i). As 12 Plaintiff acknowledges, “[s]tatutory damages are appropriate where actual damages are difficult to 13 prove.” Memorandum, at 9:21. However, beyond an ipse dixit assertion that “it would be 14 impossible to calculate the full extent of the profits lost . . . and the additional damages 15 16 17 18 sustained . . . as a result of Defendant’s unlawful actions,” and despite Plaintiff’s promise that it would discuss the issue more fully elsewhere in its memorandum, Plaintiff does not explain why it cannot calculate its actual damages to some rough degree of accuracy. Id., at 9:25-27. The Court considers this as a factor in deciding whether to exercise its discretion to assess statutory damages at all. 19 c. Statutory and Enhanced Damages 20 The alternative to actual damages is statutory damages of between $250 and $10,000. 47 21 U.S.C. § 553(c)(3)(A)(ii). The Court also has discretion to assess an additional amount of no 22 more than $50,000 “[i]n any case in which the court finds that the violation was committed 23 willfully and for purposes of commercial advantage or private financial gain.” 47 U.S.C. § 24 553(c)(3)(B).1 This second category is often referred to as “enhanced damages.” 25 Plaintiff has demonstrated that Defendant in all likelihood violated the law willfully and 26 27 28 1 A similar structure exists in Section 605, with higher maximums. See 47 U.S.C. § 605(e)(3)(C)(i) & (e)(3)(C)(ii). 6 1 for commercial advantage. See Gagliardi Decl., at ¶ 9. This satisfies a necessary condition for 2 assessing enhanced damages, but it provides no guidance to the Court as to what amount of 3 damages is appropriate. In making that determination, courts typically consider whether the defendant 4 establishment has charged a cover charge, whether the establishment increased the price of food of 6 drinks during the event, whether the defendant has promoted the event, the number of televisions 7 used and patrons served, and whether the defendant is a repeat offender. See, e.g., J&J Sports 8 Productions, Inc. v. Herrera, Case No. 1:10-cv-02090-AWI-SKO, 2011 WL 643413, at *4 (E.D. 9 Cal. Feb. 17, 2011). Plaintiff argues that the Court should ignore many of these factors, since in 10 the opinion of its management defendants rarely increase their food and drink prices and usually 11 United States District Court Northern District of California 5 advertise the event surreptitiously in order to avoid detection. Gagliardi Decl, at ¶¶15-17. Even if 12 these facts are true, however, Plaintiff still provides no useful guidance about how egregious this 13 particular defendant’s offense was relative to others. There is no evidence that defendant is a 14 repeat offender, and Plaintiff has not argued that the number of televisions used or patrons served 15 make this a particularly extreme case.2 At oral argument, Mr. Riley offered no further arguments 16 about why this case deserved the maximum penalty beyond reminding the Court that that that 17 penalty is available under the law. 18 In this district, the average award in similar cases comes nowhere near the statutory 19 maximum. See J&J Sports Productions, Inc. v. Concepcion, Case No. 3:10-cv-5092-WHA, 2011 20 WL 2220101, at *3 (N.D. Cal. June 7, 2011) (collecting cases and calculating average awards). 21 Plaintiff cites numerous cases awarding significant damage awards in similar cases, but in only 22 two of those cases did the court award the maximum penalty Plaintiff seeks in this case. 23 2 24 25 26 27 In fact, the available case law would suggest that it was not an extreme case. Joe Hand Promotions, Inc. v. Wing Spot Chicken & Waffles, Inc., Case No. 4:12-cv-64, 2013 WL 394000 (E.D. Va. Jan. 30, 2013) (broadcast shown on six televisions); Joe Hand Promotions, Inc. v. Tu Minh Nguyen, Case No. 10–CV–3504–LHK, 2011 WL 1642306 (N.D. Cal. May 2, 2011) (same); Joe Hand Promotions, Inc. v. SST Enterprises LLC, Case No. 4:11–1624–TLW–KDW, 2012 WL 2178820 (D.S.C. Apr. 3, 2012) (same) report and recommendation adopted, 2012 WL 2178708 (D.S.C. June 13, 2012). 28 7 1 Memorandum, at 18:20-19:2. Plaintiff does not argue that those cases are comparable to this one. 2 Id. Especially in default judgment cases, courts rely upon counsel to act as an officer of the 3 4 court and advise the Court not just of the damage awards their clients hope to receive, but also of 5 the damages amounts that are appropriate relative to other similar cases. The Court does not 6 accept the suggestion that defendant’s action in this case is unusually deserving of the maximum 7 penalty under law. The Court recognizes its obligation to effectuate Congress’ intent in enacting these 8 9 statutes: to deter commercial piracy. It is for that reason that statutory damages are available to increase a plaintiff’s recovery well above its actual damages. The Court finds that an 11 United States District Court Northern District of California 10 enhanced/statutory damages award in the amount of $2,200 - more than eight times the statutory 12 minimum, and providing Plaintiff twice the value of its property - should be sufficient to serve as 13 a punitive deterrent for a first-time violator. 14 III. 15 CONCLUSION The Court hereby GRANTS Plaintiff’s motion for default judgment. Plaintiff will be 16 awarded $2,200 in conversion damages, and $2,200 in statutory/enhanced damages under Section 17 553. Judgment will be entered separately in favor of Plaintiff and against Defendant in the amount 18 of $4,400. 19 20 21 22 IT IS SO ORDERED. Dated: June 6, 2013 ______________________________________ JON S. TIGAR United States District Judge 23 24 25 26 27 28 8

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