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

Filing 24

OPINION & ORDER: (1) Castillo's 8 and 15 Motions to Dismiss are DENIED. (2) Castillo's alternative 15 Motion for Leave to File an Answer is GRANTED, and the Clerk shall FILE Castillo's tendered Amended Answer 19 . (3) Rios, Inc 's 17 Motion for Leave to File an Answer to J&J's Amended Complaint is GRANTED, and the Clerk shall FILE Rios' tendered Amended Answer 18 . Signed by Judge Karen K. Caldwell for Judge Karl S. Forester on March 27, 2014. (AWD) cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON

CIVIL ACTION NO. 13-cv-377-KSF
J & J SPORTS PRODUCTIONS, INC.

v.

PLAINTIFF

OPINION & ORDER

MINERVA R. CASTILLO, individually
and d/b/a EL RANCHO TAPITIO, and
RIOS, INC., an unknown business entity d/b/a
EL RANCHO TAPITIO

DEFENDANTS

**********

Currently before the Court are the motions of the Defendant, Minerva R. Castillo, to dismiss
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure [DE #8, 15]. Also before the
Court is the motion of the Defendant, Rios Inc., for leave to file an answer to J & J’s Amended
Complaint [DE #17]. These motions are ripe for review.
I.

FACTUAL AND PROCEDURAL BACKGROUND
The Plaintiff, J & J Sports Productions, Inc. (“J & J”), filed this cable piracy action on

November 6, 2013 pursuant to the Communications Act of 1934, as amended, 47 U.S.C. § 605, et
seq. and the Cable and Television Consumer Protections Competition Act of 1992, as amended, 47
U.S.C. § 553, against the Defendants, Minerva R. Castillo, individually and d/b/a El Rancho Tapatio,
and Rios Inc., an unknown business entity d/b/a/ El Rancho Tapatio. J & J alleges that it was granted
the exclusive nationwide commercial distribution rights to the Manny Pacquiao v. Juan Michael

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Marquez III WBO Welterweight Championship Fight Program (the “Program”) telecast nationwide
on Saturday, November 12, 2011. Nevertheless, J & J alleges that the Defendants unlawfully
intercepted and publically exhibited the Program without payment or authorization. Accordingly,
J & J now seeks statutory damages as well as attorneys’ fees and costs.
Castillo filed her first motion to dismiss pursuant to Rule 12(b)(6) on January 4, 2014 [DE
#8]. In her motion, Castillo contends that J & J has failed to establish that she had the requisite
supervision authority or financial interest to warrant individual liability in this case. She also argues
that J & J’s state law conversion claim against her fails under Rule 8(a) of the Federal Rules of Civil
Procedure because J & J failed to allege any facts showing that Castillo actually participated in any
act of conversion.
On January 25, 2014, J & J filed its First Amended Complaint as a matter of course [DE #
11]. Under Rule 15(a)(1)(B) of the Federal Rules of Civil Procedure, no leave of court was required
for the filing of this amended pleading, and under Rule 15(a)(3) of the Federal Rules of Civil
Procedure, the Defendants were required to respond to this amended pleading within 14 days of
service. The Defendants failed to timely respond to J & J’s Amended Complaint. On February 21,
2014, the Court entered its Order requiring the parties to file a Joint Status Report of the status of
this matter [DE #14]. In response to this Order, Castillo filed her renewed motion to dismiss, or in
the alternative, for leave to file an answer [DE #15], and Rios filed its motion for leave to file its
answer, along with a tendered Answer to the First Amended Complaint [DE #17]. These motions
are now ripe for review.

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II.

CASTILLO’S MOTIONS TO DISMISS THE FEDERAL CLAIMS WILL BE
DENIED
A.

MOTION TO DISMISS STANDARD

The standard for ruling on a motion to dismiss is that a complaint must plead “enough facts
to state a claim to relief that is plausible on its face.” Bell Atlantic Co. v. Twombly, 550 U.S. 544,
570 (2007), abrogating Conley v. Gibson, 355 U.S. 41 (1957). Specifically, the Supreme Court
stated in Twombly:
While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
detailed factual allegations, a plaintiff’s obligation to provide the grounds of his
entitlement to relief requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do. Factual allegations must
be enough to raise a right to relief above the speculative level.
Id. at 555 (internal citations and quotation marks omitted).
In ruling upon a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), all
of a plaintiff’s allegations are presumed true, and the complaint is construed in the light most
favorable to the plaintiff. Hill v. Blue Cross and Blue Shield of Michigan, 409 F.3d 710, 716 (6th Cir.
2005). A district court may not grant a Rule 12(b)(6) motion because it does not believe the
allegations. Wright v. MetroHealth Medical Center, 58 F.3d 516, 519 (6th Cir. 1995). However,
“[c]onclusory allegations or legal conclusions masquerading as factual allegations will not suffice”
Bishop v. Lucent Technologies, Inc., 520 F.3d 516, 519 (6th Cir. 2008). See also New Albany Tractor
Inc. v. Louisville Tractor, Inc., 650 F.3d 1046, 1050 (6th Cir. 2011)(“[C]ourts may no longer accept
conclusory legal allegations that do not include specific facts necessary to establish the cause of
action”). “Although we must accept all of the complaint’s factual allegations as true, we ‘need not
accept as true legal conclusions or unwarranted factual inferences.’” Gahafer v. Ford Motor Co., 328

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F.3d 859, 861 (6th Cir. 2003)(quoting Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir.
1987).
B.

THE FEDERAL STATUTES

J & J’s piracy claims are based on two federal statutes. The first statute, section 553(a)(1)
makes it illegal to intercept or receive without authorization any communications service offered
over a cable system. 47 U.S.C. § 553(a)(1). Under this statute, a party may recover actual damages,
or, in the alternative, an award of statutory damages for all violations involved in the action in an
amount not less than $250 but not greater than $10,000. 47 U.S.C. § 553(a)(3)(A)(i) and (ii).
Because there is no mens rea or scienter requirement for a violation of § 553, intent is immaterial
to liability. Joe Hand Promotions, Inc. v. Easterling, 2009 WL 1767579 , at *4 (N.D. Ohio June 22,
2009). However, where the court finds that the violation was committed willfully and for purposes
of commercial advantage or private financial gain, the court, in its discretion, may increase the award
of damages, either actual or statutory, by an amount not more than $50,000. 47 U.S.C. §
553(c)(3)(B). Section 553 also provides for an award of costs and reasonable attorney’s fees. 47
U.S.C. § 553(c)(2)(C).
The second statute, section 605(a), prohibits the unauthorized interception of radio
communications. 47 U.S.C. § 605. Courts have construed this statute as outlawing satellite signal
piracy. Cablevision of Michigan, Inc. v. Sports Palace, Inc., 1994 WL 245584 , at *3 (6th Cir. June
6, 1994). Under § 605, an aggrieved party may recover actual damages or statutory damages of not
less than $1,000 or more than $10,000 for each violation. 47 U.S.C. § 605(e)(3)(C)(i)(l) and (ll).
Section 605 is a strict liability statute. See Easterling, 2009 WL 176569 at *4. Additionally, where
the court finds that the violation was committed willfully and for purpose of commercial advantage
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or private financial gain, the court, in its discretion, may increase the award of actual or statutory
damages by an amount not to exceed $100,000. 47 U.S.C. § 605(e)(3)(c)(ii). Section 605 also
permits an award of costs and reasonable attorney’s fees. 47 U.S.C. § 605(e)(3)(B)(iii).
Although Sections 553 and 605 are facially similar, Section 605(a) has been explained as
outlawing satellite signal piracy, which Section 553 bans only the theft of programming directly from
a cable system. While these statutes are based on different modalities of cable theft, J & J cannot
recover damages under both sections for the same conduct. However, at this stage of the litigation,
J & J is permitted to proceed on these separate theories of liability. See Fed.R.Civ.P.
8(d)(3)(permitting a party to “state as many separate claims . . . as it has, regardless of consistency”).
C.

ANALYSIS

Castillo seeks dismissal of J & J’s federal claims against her on the grounds that she cannot
be held individually liable merely as an owner without any evidence that she personally participated
or aided in the statutory violation. While the parties agree that an individual may be held liable if
they “had a right and ability to supervise the violations, and . . . a strong financial interest in such
activities,” see e.g. Joe Hand Promotions, Inc. v. Hurley, 2001 WL 6727989, *2 (S.D. Ill. Dec. 21,
2011)(quotation omitted), they disagree as to whether the allegations in this case are sufficient.
J & J’s Amended Complaint makes the following allegations:
14.

Plaintiff is informed and believes, and alleges thereon that on November 12, 2011
(the night of the Program at issue herein, . . . ), Defendant Minerva R. Castillo, as the
President of Rios, Inc. and as the sole director of Rios, Inc., was a moving and active
conscious force behind the operation, advertising, and promotion of El Rancho
Tapatio, and had the right and ability to supervise the activities of El Rancho Tapatio,
which included the unlawful interception and exhibition of Plaintiff’s Program.

15.

Plaintiff is informed and believes, and alleges thereon that on November 12, 2011,
. . . , Defendant Minerva R. Castillo, as the President of Rios, Inc., and as the sole
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director of Rios, Inc., had the obligation to supervise the activities of El Rancho
Tapatio, and is responsible for all activities that occurred therein, which included the
unlawful interception and exhibition of Plaintiff’s Program.
16.

Plaintiff is informed and believes, and alleges thereon that on November 12, 2011,
. . . , Defendant Minerva R. Castillo, as President of Rios, Inc., and as the sole
director of Rios, Inc., specifically directed the employees of El Rancho Tapatio to
unlawfully intercept and broadcast Plaintiff’s Program at El Rancho Tapatio or that
the actions of the employees of El Rancho Tapatio are directly imputable to
Defendant Minerva R. Castillo by virtue of her position as President of Rios, Inc.

17.

Plaintiff is informed and believes, and alleges thereon, that the unlawful broadcast
of Plaintiff’s Program was supervised and/or authorized by Defendant Minerva R.
Castillo, either personally or through instruction to the employees of Rios, Inc. d/b/a/
El Rancho Tapatio, and that the broadcast of the Program, resulted in income and a
financial benefit for El Rancho Tapatio.

[DE #11].
As is evident from the parties’ briefs, there is a division of authority on whether allegations
such as the ones at issue in this case are sufficient to survive a motion to dismiss. For instance,
several cases have approved the adequacy of allegations similar to those in this case. See e.g. J &J
Sports Productions, Inc. v. L & J Group, LLC, 2010 WL 816719(D.Md. Mar. 4, 2010); J & J Sports
Productions, Inc. v. Q Café, Inc., 2012 WL 215282, at *4 (N.D. Tex. Jan. 25, 2012)(holding
defendant individually liable solely “due to her ownership of the Establishment liquor license”);
J & J Sports Productions, Inc. v. Carvajal, 2011 WL 4499156, at *2 (D.Mass. Sept. 26,
2011)(“While it is certainly possible for the complaint to have been more precise in its wording, it
is nonetheless sufficient to withstand a motion to dismiss”); Joe Hand Productions, Inc. v. La
Nortena Restaurant, Inc., 2011 WL 1594827, at “*3 (E.D.N.Y. Mar. 28, 2011)(“As it is . . .
undisputed that Luna owned La Nortena, she had ‘the requisite control and financial interest to be
held vicariously liable for the violation’”)(internal citation omitted); J & J Sports Productions, Inc.

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v. Betancourt, 2009 WL 3416431, at *2 (S.D.Cal. Oct. 20, 2009). On the other hand, several other
courts have reached a different result. See e.g. J & J Sports Productions, Inc. v. 291 Bar & Lounge,
LLC, 648 F.Supp.2d 469, 473 (E.D.N.Y. 2009)(requiring more than “the conclusory and vague
charge of mere ownership of the offending entity”); Joe Hand Promotions, Inc. v. Coaches Sports
Bar, 812 F.Supp.2d 702, 703 (E.D.N.C. 2011)(“Apart from stating that Mr. Dillon is the principal
of Coaches, the complaint does not mention him); Circuito Cerrado, Inc. v. Pizzeria y Pupuseria
Santa Rosita, Inc., 804 F.Supp.2d 108, 113 (E.D.N.Y. 2011)(rejecting individual liability where sole
allegation with respect to individual defendant was “mere ownership of the violating entity”);
J & J Sports Productions, Inc. v. Walia, 2011 WL 902245, at *3-5 (N.D. Cal. Mar. 14, 2011);
J & J Sports Productions, Inc. v. Brown, 2009 WL 3157369, at *3, (W.D.Okla. Sept. 29, 2009);
J & J Sports Productions, Inc. v. Torres, 2009 WL 1774268, at *3-4, (M.D.Fla. June 22, 2009);
J & J Sports Productions, Inc. v. Daley, 2007 WL 7135707, at *3-4 (E.D.N.Y. Feb. 15, 2007).
Upon review of these cases, and those cited by the parties, this Court is persuaded that
J & J’s allegations of individual liability satisfy the pleading standard established by Rule 8 of the
Federal Rules of Civil Procedure, and as articulated by the Supreme Court in Ashcroft v. Iqbal, 556
U.S. 662 (2009). In Iqbal, the plaintiff sued John Ashcroft, the former Attorney General of the
United States, and several other high ranking federal officials, alleging their liability under 42 U.S.C.
§ 1983 for adoption of “an unconstitutional policy that subjected [plaintiff] to harsh conditions of
confinement on account of his race, religion, or national origin.” Id. at 666. The allegations in the
plaintiff’s complaint were that the defendants “‘knew of, condoned, and willfully and maliciously
agreed to subject [him]’ to harsh conditions of confinement ‘as a matter of policy, solely on account
of [his] religion, race, and/or national origin and for no legitimate penological interest.’” Id. at 679
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(quoting complaint). On review, the Supreme Court held that such “bare assertions” amounted to
“nothing more than a ‘formulaic recitation of the elements’ of a constitutional discrimination claim”
and that, as such, “the allegations are conclusory and not entitled to be assumed true.” Id. (quoting
Twombly, supra, 550 U.S. at 555). In reaching this conclusion, the Supreme Court emphasized its
earlier guidance in Twombly with respect to the federal pleading standard: “A pleading that offers
‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’
Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual
enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555, 557).
Here, however, J & J’s allegations, while partly conclusory, also allege Castillo’s personal
knowledge of and ability to supervise and control, as well as the alleged unlawful interception of the
Program. In ¶¶ 14 and 16 of the Amended Complaint, J & J alleges that Castillo “was a moving and
active conscious force” behind the unlawful interception and that she “specifically directed the
employees of El Rancho Tapatio to unlawfully intercept and broadcast” the Program [DE #11]. At
this stage of the litigation, prior to any discovery, J & J’s allegations are thus sufficient to assert
individual liability against Castillo. Accordingly, Castillo’s motions to dismiss the federal claims
will be denied.
III.

CASTILLO’S MOTION TO DISMISS J &J’S REMAINING CLAIMS WILL
ALSO BE DENIED
Castillo also argues that J & J’s conversion claim fails under Kentucky law. In Kentucky,

“conversion is the wrongful exercise of dominion and control over property of another.” State Auto.
Mut. Ins. Co. v. Chrysler Credit Corp., 792 S.W.2d 626,627 (Ky.App. 1990). Castillo argues that
J & J has failed to set forth facts warranting the imposition of personal liability against her for the

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alleged wrongs of the corporation. However, for the reasons set forth above, the Court finds that the
Amended Complaint is sufficient to state a viable claim of conversion against Castillo. Accordingly,
Castillo’s motion to dismiss J & J’s conversion claim will be denied.
Finally, Castillo argues that J & J’s complaint fails to comply with the pleading standard of
Rule 9(f) of the Federal Rules of Civil Procedure. Rule 9(f) requires “[a]n allegation of time or place
is material when testing the sufficiency of a pleading. Inasmuch as J & J’s Complaint and Amended
Complaint clearly allege a time and a place, Castillo’s argument is irrelevant and will be rejected.
IV.

MOTIONS FOR LEAVE TO FILE ANSWER
In the event that the Court denies her motions to dismiss, Castillo has filed an alternative

motion for leave to file an answer [DE #15]. In support of her motion, she argues that she failed to
answer the First Amended Complaint because she believed it was unnecessary due to the pending
motion to dismiss. The Court, finding no prejudice to J & J, will grant Castillo’s motion.
Rios has also filed its motion for leave to file its answer to J & J’s Amended Complaint [DE
#17]. In support of its motion, Rios argues that it did not believe an answer to the amended
complaint was necessary because the amended complaint did not change any allegations against
Rios, rather it merely included additional language to support its claims against Castillo. The Court,
finding no prejudice to J & J, will also grant Rios’ motion.
V.

CONCLUSION
For the reasons set forth above, the Court, being fully and sufficiently advised, hereby

ORDERS as follows:
(1)

Castillo’s motions to dismiss [DE ## 8, 15] are DENIED;

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(2)

Castillo’s alternative motion for leave to file an answer [DE #15] is GRANTED, and
the Clerk shall FILE Castillo’s tendered Amended Answer [DE# 19]; and

(3)

Rios, Inc.’s motion for leave to file its answer to J & J’s Amended Complaint [DE
#17] is GRANTED, and the Clerk shall FILE Rios’ tendered Amended Answer [DE
#18]

This March 27, 2014.

for Karl S. Forester, Senior Judge

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