J&J Sports Productions, Inc. v. Basto et al

Filing 17

ORDER by Judge Phyllis J. Hamilton granting 13 Motion for Default Judgment; terminating 16 Report and Recommendations. (hlk, COURT STAFF) (Filed on 6/6/2011)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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J & J SPORTS PRODUCTIONS, INC.,
Plaintiff,

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ORDER GRANTING MOTION FOR
DEFAULT JUDGMENT

v.
CARMINA BASTO, et al.,

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For the Northern District of California

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United States District Court

No. C 10-5122 PJH

Defendants.
_______________________________/

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Before the court is the motion of plaintiff J & J Sports Productions, Inc. for default

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judgment against defendants Carmina Basto, individually and doing business as Manila

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Garden Restaurant, and J & C Basto Co., Inc., an unknown business entity doing business

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as Manila Garden Restaurant. Plaintiff alleges that defendants unlawfully intercepted and

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broadcasted a boxing match, for which plaintiff owned the commercial exhibition rights, in

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violation of 47 U.S.C. § § 605(a) and 553. Plaintiff now moves for default judgment against

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defendants.

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BACKGROUND

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Plaintiff J & J Sports Productions, Inc. contracted for the exclusive nationwide

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commercial distribution rights to broadcast the "Firepower": Manny Pacquiao v. Miguel

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Cotto Championship Fight Program telecast nationwide on Saturday, November 14, 2009

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(the “Program”). Complaint ¶ 10. The Program included the main event (between Manny

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Pacquiao and Miguel Cotto), under-card (preliminary) bouts and fight commentary. Id.

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Plaintiff thereafter entered into sublicensing agreements with commercial entities

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throughout the United States by which plaintiff granted limited public exhibition rights to

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these entities within their respective establishments (e.g., hotels, racetracks, casinos,

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taverns, bars, restaurants, social clubs, etc.). Id. ¶ 11.

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Defendants Basto and J & C Basto Co., Inc. are each an owner, operator, and/or

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individual with control over Manila Garden Restaurant, a commercial establishment doing

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business in Hayward, California. Id. ¶¶ 7-8. Plaintiff alleges that defendants and/or their

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agents or employees illegally intercepted and/or exhibited the Program for commercial

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advantage and/or private financial gain. Id. ¶¶ 13-14. On November 14, 2009, an

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investigator hired by plaintiff visited Manila Garden Restaurant and observed the unlawful

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exhibition of the Program there on a 42-inch LCD television. Doc. nos. 13-3 at 2
(Declaration of Affiant) and 13-5 ¶ 7 (Plaintiff’s Affidavit) (representing that the part of the

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For the Northern District of California

United States District Court

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program observed by the investigator was the under-card bout between Santos and

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Foreman). The investigator counted 79 and 87 people at defendants’ establishment at two

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different times and approximated the capacity at 150 people. Doc. no. 13-3 at 2. The

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license fee to exhibit the Program in a commercial establishment of that size would have

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been $4,200.00. Doc. no. 13-5 ¶ 8.

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On November 12, 2010, plaintiff filed this action against defendants Carmina Basto,

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individually and d/b/a Manila Garden Restaurant; and J & C Basto Co., Inc., an unknown

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business entity d/b/a Manila Garden Restaurant. The complaint asserts four causes of

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action: violation of the Federal Communications Act of 1934, 47 U.S.C. § 605; violation of

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the Cable Television Consumer Protection and Competition Act of 1992, 47 U.S.C. § 553;

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common-law claim of conversion; and violation of California Business and Professions

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Code section 17200. The complaint seeks statutory and enhanced damages of $110,000

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for violation of section 605 and $60,000 for violation of section 553, compensatory

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damages for conversion, and attorneys’ fees and costs.

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Plaintiff served the complaint on defendants on January 5, 2011. Doc. nos. 4 and 5.

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Neither defendant filed an answer or any other responsive pleading to plaintiff’s duly served

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complaint. Accordingly, on February 3, 2011, upon plaintiff’s request, the clerk of the court

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entered default against defendants in this action. Doc. no. 7. On March 1, 2011, plaintiff
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filed the instant motion for default judgment and served the notice of motion on defendants

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by mail. Doc. no. 13. Neither defendant has filed an opposition to the motion for default

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judgment.

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Plaintiff’s motion seeks the maximum statutory damages and enhanced damages for

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willful violations of 47 U.S.C. § 605. Doc. no. 13-1 at 11, 14-15. See 47 U.S.C.

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§§ 605(e)(3)(C)(i)(II) and 605(e)(3)(C)(ii). Plaintiff also seeks damages for conversion in

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the amount of $4,200, equivalent to the sublicense fee that defendants would have been

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required to pay. Doc. no. 13-1 at 20.

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The court referred the motion for default judgment for a report and recommendation,
which was issued on May 16, 2011. The court has reviewed the report and

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For the Northern District of California

United States District Court

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recommendation and declines to adopt it. The court rules on the motion for default

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judgment de novo as follows.

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DISCUSSION
I.

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Jurisdiction
Before entering default judgment, a court must determine whether it has subject

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matter jurisdiction over the action and personal jurisdiction over the defendant. In re Tuli,

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172 F.3d 707, 712 (9th Cir. 1999).

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A.

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The court has subject matter jurisdiction over this action because plaintiff’s claims

Subject Matter Jurisdiction

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arise under the Federal Communications Act of 1934, 47 U.S.C. § 605, and the Cable

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Television Consumer Protection and Competition Act of 1992, 47 U.S.C. § 553.

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B.

Personal Jurisdiction

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Defendants Basto and J & C Basto Co., Inc. own and operate a business known as

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Manila Garden Restaurant in Hayward, California. Complaint ¶¶ 7-8. The court has

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personal jurisdiction over defendants.

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II.

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Default Judgment
Federal Rule of Civil Procedure 55(b)(2) authorizes the court to enter judgment

against a defendant against whom a default has been entered. Generally, default
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judgments are disfavored because “[c]ases should be decided upon their merits whenever

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reasonably possible.” Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986).

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"The general rule of law is that upon default the factual allegations of the complaint,

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except those relating to the amount of damages, will be taken as true." Geddes v. United

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Financial Group, 559 F.2d 557, 560 (9th Cir. 1977) (citing Pope v. United States, 323 U.S.

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1, 12 (1944)). In exercising its discretion to grant default judgment, the court may consider

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the following factors: (1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff's

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substantive claims; (3) the sufficiency of the complaint; (4) the sum of money at stake in the

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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

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For the Northern District of California

United States District Court

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Procedure favoring decisions on the merits. Eitel, 782 F.2d at 1471-72. Upon entry of

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default, the factual allegations of the complaint are taken as true, except for those relating

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to damages. See Televideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir.1987).

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A.

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In its motion for default judgment, plaintiff seeks judgment only on its claims for

Merits and Sufficiency of Complaint

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violation of 47 U.S.C. § 605(a) and conversion. The Federal Communications Act prohibits

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the unauthorized interception of radio and satellite (rather than cable) transmissions. 47

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U.S.C. § 605(a). Section 553(a) prohibits the unauthorized interception of cable signals.

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47 U.S.C. § 553(a)(1). See J & J Sports Productions, Inc. v. Manzano, 2008 WL 4542962

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*2 (N.D. Cal. September 29, 2008) (“A signal pirate violates section 553 if he intercepts a

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cable signal, he violates section 605 if he intercepts a satellite broadcast.”). To state a

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claim for conversion, the allegations must show “ownership or right to possession of

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property, wrongful disposition of the property right and damages.” G.S. Rasmussen &

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Associates, Inc. v. Kalitta Flying Service, Inc., 958 F.2d 896, 906 (9th Cir.1992).

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With respect to the alleged section 605 violation, plaintiff was not able to ascertain

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the precise means that defendants used to intercept the Program. Doc. no. 13-1 at 8. The

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inspector noted that neither a cable box nor a satellite dish was visible. Doc. no. 13-3 at 2.

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As another judge of this court has noted, if plaintiff wanted to prove that defendants
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intercepted radio or satellite signals in violation of section 605(a), plaintiff “could have filed

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a third party subpoena or requested an order for inspection.” J & J Sports Productions, Inc.

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v. Ro, 2010 WL 668065 *3 (N.D. Cal. Feb. 19, 2010). Because neither a cable box nor

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satellite dish was visible at defendants’ establishment, the court follows the reasoning of

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other judges in this district who have entered judgment and awarded damages under

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section 553 rather than section 605 based on the understanding that cable boxes are more

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easily hidden than satellite dishes and more likely to be the source of transmission. J & J

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Sports Productions, Inc. v. Juanillo, 2010 WL 5059539 *2 (N.D. Cal. Dec. 6, 2010); J & J

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Sports Productions, Inc. v. Guzman, 2010 WL 4055934 *2 (N.D. Cal. Oct. 14, 2010).
Although plaintiff seeks liability pursuant to section 605 in its motion for default judgment,

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For the Northern District of California

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the court determines that the allegations of the complaint are sufficient to establish

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defendants’ liability under section 553(a)(1).

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To satisfy the second and third Eitel factors, plaintiff’s substantive claims for violation

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of section 553 and for conversion appear to have merit and the allegations of the complaint

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are well-pleaded and sufficient to state those claims. The complaint alleges that plaintiff

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had purchased exclusive distribution rights to the Program and that defendants intercepted

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transmission of the Program without authorization. The allegations against defendants are

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deemed admitted by virtue of defendants' default and the court is not required to make

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detailed findings of fact. See Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir.

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2002).
Remaining Eitel Factors

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B.

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The remaining Eitel factors, on balance, weigh in favor of granting default judgment.

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First, if the motion for default judgment were denied, plaintiff would likely be without a

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remedy. See Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal.

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2002). Second, because defendants did not file an answer or otherwise respond to the

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complaint, there is little to suggest that there is a possibility of a dispute concerning material

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facts. The factual issues whether defendants broadcast the Program without authorization

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or sublicense from plaintiff are straightforward and easily ascertainable. Third, there is no
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evidence in the record that would tend to show that defendants' default was due to

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excusable neglect. Fourth, although policy favors judgment on the merits, should a

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defendant fail to answer or appear, a decision on the merits is "impractical, if not

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impossible." Elektra Entertainment Group, Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal.

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2005). This factor, though it weighs against a default judgment, does not preclude such a

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judgment.

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Finally, a large sum of money at stake would disfavor default judgment. Eitel, 782

damages requested by plaintiff, $114,200.00, and determines an amount of damages that

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is not completely disproportionate or unreasonable. This factor therefore does not weigh

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For the Northern District of California

F.2d at 1472. As discussed below, however, the court declines to award the full amount of

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United States District Court

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against default judgment.

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Given defendants' failure to appear and the significant risk of prejudice to plaintiff by

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unauthorized interception of closed-circuit broadcasts, the sufficiency of plaintiff’s

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complaint, the apparent merit of plaintiff’s substantive claims, and the lack of disputed

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issues of fact, the court determines that default judgment against Carmina Basto and J & C

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Basto Co., Inc. is appropriate.

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C.

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Plaintiff seeks the maximum statutory damages under section 605, which provides

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that a court may award statutory damages of “not less than $1,000 or more than $10,000"

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for a violation of section 605(a) and may award enhanced damages of up to $100,000 if the

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“violation was committed willfully and for purposes of direct or indirect commercial

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advantage or private financial gain.” 47 U.S.C. § 605(e)(3)(C)(i)(II), (e)(3)(C)(ii). As

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discussed above, the court determines that the complaint supports liability under section

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553, which provides for statutory damages of “not less than $250 or more than $10,000" for

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a violation of section 553(a) and enhanced damages up to $50,000 for a willful violation.

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47 U.S.C. § 553(c)(3)(A)(ii), (B).

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Damages

The court takes judicial notice of other cases identified by plaintiff in which these
same defendants were held liable for similar violations of commercial signal piracy. In J & J
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Sports Prod. v. Basto, et al., C09-1023 MMC, the parties settled the action which the court

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dismissed on January 29, 2010. In J & J Sports Prod. v. Basto, et al., C10-1803 SI, the

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court entered default judgment against defendants in the amount of $5,800.00 on February

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14, 2011. In J & J Sports Prod. v. Basto, et al., C10-5455 CRB, the court entered default

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against defendants and plaintiff has filed a motion for default judgment. Plaintiff has

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demonstrated that defendants are not first-time offenders but have illegally intercepted

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several different transmissions. Because the interception challenged in this action occurred

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before dismissal or judgment was entered in the other lawsuits, plaintiff has not

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demonstrated that the adverse outcome of its other enforcement actions have failed to
deter defendants from further illegal activity so as to warrant the maximum award of

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For the Northern District of California

United States District Court

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damages.

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Plaintiff’s inspector’s affidavit demonstrates that defendants did not require a cover

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charge on the evening of the illegal interception and the number of patrons averaged 83.

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Doc. no. 13-3 at 2. The court determines that statutory damages in the amount of $5,000

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for violation of section 553(a) are appropriate here to serve as a deterrent from future

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piracy. The court further determines that plaintiff has demonstrated repeated and willful

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conduct by defendants for purposes of commercial advantage to support enhanced

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damages of $2,000. See doc. no. 13-5 ¶¶ 9, 13.

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Plaintiff also seeks $4,200 in compensatory damages for conversion. Pursuant to

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Cal. Civ. Code § 3336, defendants are liable for the value of the property at the time of the

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conversion. Plaintiff has shown that the commercial sublicense fee for defendants to

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broadcast the Program legally would have been $4,200. Doc. no. 13-5 ¶ 8 and Ex. 1.

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Accordingly, the court awards damages for conversion in the amount of $4,200.

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CONCLUSION
For the foregoing reasons, the court GRANTS plaintiff’s motion for default judgment

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against Carmina Basto and J & C Basto Co., Inc. The court awards $11,200 in damages to

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plaintiff.

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IT IS SO ORDERED.

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Dated: June 6, 2011

______________________________
PHYLLIS J. HAMILTON
United States District Judge

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For the Northern District of California

United States District Court

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