J & J Sports Productions, Inc. v. Segura
Filing
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ORDER granting in part and denying in part 12 Motion for Default Judgment - Said motion is granted in large part, including a damages award, attorneys' fees, and costs, and denied only as to plaintiff's claim for recovery also for the tort of conversion. Signed by District Judge Louise Wood Flanagan on 04/09/2013. (Baker, C.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:12-CV-241-FL
J & J SPORTS PRODUCTIONS, INC.,
Plaintiff,
v.
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)
)
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)
VICTOR SEGURA,
INDIVIDUALLY and formerly d/b/a
STUDIO 440 LOUNGE NIGHT CLUB,
a/f/k/a ZONA ROSA
Defendant.
)
)
)
)
)
)
)
ORDER
This matter is before the court on plaintiffs motion for default judgment (DE# 12) For
reasons given, said motion is granted in large part, including a damages award, attorneys' fees, and
costs, and denied only as to plaintiffs claim for recovery also for the tort of conversion.
BACKGROUND
Plaintiff is a California corporation and commercial distributor of sporting events. Plaintiff
contracted to obtain the exclusive nationwide commercial distribution rights to "The Floyd
Mayweather, Jr. v. Shane Mosley, Welterweight Championship Fight Program" telecast nationwide
on May 1, 2010 ("the program"). After obtaining the distribution rights, plaintiff entered into sublicensing agreements with various entities throughout North America, including in North Carolina,
through which it granted these entities limited sub-licensing rights- namely, the rights to publicly
show the program within their respective establishments (e.g., hotels, racetracks, casinos, bars, etc.).
Plaintiff names as defendant Victor Segura ("Segura"), individually and formerly doing
business as Studio 440 Lounge Night Club, also formerly known as Zona Rosa, an establishment
located in Raleigh, North Carolina. Plaintiff asserts that defendant did unlawfully intercept, receive,
and thereafter exhibit the program at the time of its transmission at his establishment. Plaintiff
further alleges that this exhibition was done willfully and for purposes of commercial advantage or
financial gain. 1
Plaintiff filed complaint for damages on April30, 2012, raising claims in counts one and two
for violations of 47 U.S.C. §§ 605 and 553, and in count three for common law conversion.
Defendant was served with summons, as confirmed at docket entry number four, yet defendant did
not file answer or otherwise appear. On December 11, 2012, plaintiff filed request for entry of
default, which request the clerk granted by order entered January 11,2013. On February 14, 2013,
plaintiff filed the instant motion for default judgment.
DISCUSSION
A.
Plaintiffs Motion for Default Judgment
As noted above, the clerk has entered default against defendant. A defendant, by default,
admits a plaintiffs well-pleaded allegations of fact, is concluded on those facts by the judgment, and
is barred from contesting on appeal the facts thus established. Ryan v. Homecomings Financial
Network, 253 F.3d 778, 780 (4th Cir. 2001)(quotingNishimatsu Constr. Co .. Ltd. v. HoustonNat'l
Bank, 515 F .2d 1200, 1206 (5th Cir. 197 5)). The defaulting defendant is not, however, held to admit
1
See Compl. ~ 11 ("With full knowledge that the Program was not to be intercepted, received and exhibited by entities
unauthorized to do so, each and every of the above named defendant and/or their agents, servants, workmen or employees
did unlawfully publish, divulge and exhibit the Program at the time of its transmission at their former Raleigh, North
Carolina location ... Said unauthorized interception, publication, exhibition and divulgence by the defendant were done
willfully and for purposes of direct or indirect commercial advantage or private fmancial gain.").
2
conclusions oflaw. Id. Further, "the allegations of the complaint regarding the amount of damages
suffered are not controlling." Joe Hand Promotions. Inc. v. Coaches Sports Bar, 812 F. Supp. 2d
702,703 (E.D.N.C. 2011). Thus, thecourtmustfirstdeterminewhetherthewell-pleadedallegations
of the complaint establish defendant's liability, and second, whether and to what extent plaintiff is
entitled to recover damages.
1.
Alleged Violations of 42 U.S. C. §§ 553 and 605
a.
Defendant's Liability
Plaintiff alleges that defendant violated 47 U.S.C. §§ 553 and 605. Section 553 was enacted
as part of the Cable Communications Policy Act of 1984 and prohibits unauthorized interception or
reception of cable communication services. 47 U.S.C. § 553(a). 2 In turn, Section 605, originally
enacted as part of the Communications Act of 1934, prohibits unauthorized individuals from
intercepting "radio communication" and divulging or publishing the "existence, contents, substance,
purport, effect, or meaning of such intercepted communication to any person." 4 7 U.S. C. § 605(a). 3
Among other things, "Section 605(a) prohibits the unauthorized interception and broadcast of
satellite transmissions." J & J Sports Productions. Inc. v. Centro Celvesera La Zaona. LLC, 5: 11-
2
Section 553(a)(l) provides: "No person shall intercept or receive or assist in intercepting or receiving any
communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as
may otherwise be specifically authorized by law."
3
Section 605(a) provides in relevant part: " ... No person not being authorized by the sender shall intercept any radio
communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted
communication to any person. No person not being entitled thereto shall receive or assist in receiving any interstate or
foreign communication by radio and use such communication (or any information therein contained) for his own benefit
or for the benefit of another not entitled thereto. No person having received any intercepted radio communication or
having become acquainted with the contents, substance, purport, effect, or meaning of such communication (or any part
thereof) knowing that such communication was intercepted, shall divulge or publish the existence, contents, substance,
purport, effect, or meaning of such communication (or any part thereof) or use such communication (or any information
therein contained) for his own benefit or for the benefit of another not entitled thereto ..."
47
u.s.c. § 605.
3
CV-00069-BR, 2011 WL 5191576, at *1 (E.D.N.C. Nov. 1, 2011). Finally, sections 553 and 605
permit a "person aggrieved" by a violation of the respective section to bring a civil action in federal
district court. 47 U.S.C. §§ 553(c)(l) and 605(e)(3).
The well-pleaded factual allegations ofthe complaint, which defendant admits by his default,
establish defendant's violation of section 553 and/or section 605. Plaintiff obtained the exclusive
rights to nationwide commercial distribution of the program. Compl. ~ 8. Defendant did not enter
into a sublicensing agreement with plaintiff to exhibit the program at Studio 440 Lounge Night Club.
Gagliardi Aff. ~ 7. Plaintiff, without the benefit of discovery due to defendant's default, cannot
determine whether the program was intercepted through cable transmission, satellite transmission,
or both. However, plaintiffs owner, Joseph Gagliardi, affirms in affidavit that the company's
programming could not be accidentally intercepted, and he postulates several means of interception,
including but not limited to: use of a "blackbox" installed on a cable line, use of a "smartcard"
installed on a DSS satellite receiver line, or use of an illegal unencryption device. Id.
at~
9.
Where plaintiffs private investigator informs that he was at defendant's establishment on
the date the program aired, and where plaintiffs owner affirms in affidavit that defendant did not
contract with plaintiff to display the program and that such program could not be "innocently"
intercepted, the well-pleaded facts establish that defendant violated section 553, section 605, or both.
See Centro Celvesera, 2011 WL 5191576, at fn. 1 (E.D.N.C. Nov. 1, 2011). 4 Further, defendant's
statutory violation was willful and for commercial advantage. See Gagliardi Aff. ~ 9 (insisting that
defendant could not have mistakenly, innocently, or accidentally intercepted the program).
4
("While plaintiffs signal was apparently transmitted via satellite ... it is not evident how the signal was intercepted
and the Program in tum broadcasted because there are multiple methods for illegally doing so ... Section 553 and 605
contain common elements in so far as liability is concerned, and therefore, it is not fatal that plaintiff does not have
evidence of exactly how its signal was intercepted").
4
b.
Statutory and Enhanced Damages
At plaintiffs election, and because calculation of actual damages is not possible, the court
will award statutory damages. Section 605 allows an aggrieved party to "recover an award of
statutory damages for each violation ... in a sum of not less than $1,000 or more than $10,000, as
the court considers just ... " 47 U.S.C. § 605(e)(3)(C)(i)(Il). If the court finds that the violation
"was committed willfully and for purposes of direct or indirect commercial advantage or private
financial gain, the court may increase the award of damages ... by an amount of not more than
$100,000 for each violation ... " Id. § 605(e)(3)(C)(ii). Section 553, though similar, provides for
a range of "not less than $250 or more than $10,000, as the court considers just" and a willfulness
increase "by an amount of not more than $50,000." ld. §§ 553(c)(3)(A)(ii), (B).
Although plaintiff has demonstrated defendant's violation of section 553 or 605, or both,
recovery under both sections is improper. See Coaches Sports Bar, 812 F. Supp. 2d at 704 ("Even
if a proper claim were made under section 553, where defendants have defaulted and courts have
found liability under both section 605 and section 553, damages are usually awarded only under
section 605"); J & J Sports Productions. Inc. v. Great Latin Restaurants. L.C., 1: 11-CV-459, 2011
WL5873071, *4(E.D. Va. Sept.15,2011)reportandrecommendationadopted. 1:11-CV-459,2011
WL 5873093 (E.D. Va. Nov. 22, 2011) ("Although plaintiff has set forth the elements of liability
under both Sections 553 and 605, courts have held that recovery under both sections is improper.").
Plaintiff, in motion for default judgment, requests damages under only section 605. Pl.'s
Mot.~
5. Other courts in this district have proceeded under section 605 when it is not possible to
conclude whether section 605 or section 553 has been violated.
See,~.
Centro Celvesera, 2011
WL 5191576, at *2. As in Centro Celvesera, the court finds here that the distinction between the
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two sections as to damages is ultimately immaterial, where the court will award plaintiff an amount
falling within the ranges encompassed by both section 553's and section 60S's damages provisions.
See id.
Plaintiff seeks damages under section 605 in "an amount to be determined by the Court after
its review of the case and applicable precedent, up to the maximum permissible by statute .... "
Section 605 affords the court substantial discretion in determining the amount of statutory damages,
instructing only that "the party aggrieved may recover an award of statutory damages for each
violation ... in a sum of not less than $1,000 or more than $10,000, as the court considers just."
47 U.S.C. § 605(e)(3)(C)(i)(II)(emphasis added). The undersigned notes that other courts in this
district, in determining a "just" amount of statutory damages, have looked to the maximum
occupancy of the establishment, Coaches Sports Bar, 812 F. Supp. 2d. at 704, the actual number of
patrons present at the time of exhibition, see Las Reynas, 2007 WL 2700008, at *2 (considering, but
ultimately rejecting this approach), and the amount the plaintiff would have charged the defendant
establishment to sub-license the program, Centro Celvesara, 2011 WL 5191576, at *2.
Here, defendant's establishment had an occupancy of approximately five people and a
maximum occupancy of seventy-five (75) people. See Sanders Aff. 1. Plaintiffs owner stated in
affidavit that the commercial sublicense fee for an establishment of this size would have been
$4,200.00. Gagliardi Aff. -o 8. This amount, $4,200.00, is a just award of statutory damages under
§ 605(e)(3)(C)(i)(II).
Next, the court must determine whether plaintiff is entitled to enhanced damages under
§ 605(e)(3)(C)(ii), which provides for additional damages "of not more than $1 00,000" for each
violation that was committed willfully. Plaintiffs owner testifies in affidavit that defendant could
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not have mistakenly, innocently, or accidentally intercepted the program. Gagliardi Aff. ~ 9. Thus,
enhanced damages due to defendant's willful violation are appropriate.
Again, section 605 affords the court considerable discretion in determining the amount of
additional damages to be awarded due to defendant's willful violation. 47 U.S.C. § 605(e)(3)(C)(ii)
(" ... the court in its discretion may increase the award of damages ... ") (emphasis added). District
courts in the Fourth Circuit consider several factors in determining an appropriate amount of
enhanced damages:
With respect to addition.al damages, "[c]ourts have evaluated the appropriate amount
of enhanced damages by assessing factors such as 'repeated violations over an
extended period of time; substantial unlawful monetary gains; significant actual
damages to plaintiff; defendant's advertising for the intended broadcast of the event;
and defendant's charging a cover charge or charging premiums for food and drinks."'
J & J Sports Prods .. Inc. v. Lara Sport House Corp.. No. 1:10-cv-01369, 2011 WL
4345114, *6 (E.D.Va. Aug. 26, 2011) (citation omitted) (report and
recommendation), adopted. 2011 WL 4345098 (E.D.Va. Sept. 14, 2011).
Centro Celvesera, 2011 WL 5191576 at *2.
Defendant charged a five dollar ($5.00) cover charge on the night of the event. See Sanders
Aff. 1, Plaintiff has not presented evidence, however, that defendant advertised the intended
broadcast of the event, nor has it asserted defendant charged any cover on the night of the event. See
Davis Aff. 1. Further, there is no allegation defendant is a repeat offender. However, in an effort
to deter future piracy, the court awards enhanced damages, adhering to an approach found
appropriate in other, similar cases in this district. By multiplying in this case the§ 605(e)(3)(C)(i)(II)
statutory damages figure by a willfulness factor of three (in effect applying treble damages), the court
reaches under the circumstances presented an appropriate final amount. See Coaches Sports Bar,
812 F. Supp. 2d at 705; Las Reynas, 2007 WL 2700008, at *3; G&G Closed-Circuit Events. LLC
v. Patel. et al., No. 5:11-CV-633, (E.D.N.C. July 6, 2012) (order granting in part motion for default
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judgment).
c.
Attorneys' Fees and Costs
Section 605 provides that the court "shall direct the recovery of full costs, including awarding
reasonable attorneys' fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii)
(emphasis added). Plaintiff is therefore entitled to collect attorneys' fees and costs. Plaintiffs
counsel, Jeremy Todd Browner, submits declaration in which he states he worked 4.5 hours on this
case and charges $225.00 per hour, yielding total feesof$1,012.50. Browner Decl. ~~ 8-10. Having
considered the necessary factors, the court determines this amount is reasonable, and grants
plaintiffs request for recovery of these fees, together with costs.
2.
Plaintiffs Pendent State Law Conversion Claim
Plaintiff, in Count Three of its complaint, asserts a common law cause of action for
conversion and seeks compensatory damages "in an amount according to proof against defendant."
Compl. 7. Other courts in this circuit "have considered the request for an award of damages for the
tort of conversion, in addition to statutory and enhanced damages under Section 605 or Section 553
of Title 47, as a double recovery. Under such circumstances, these courts have denied the request
for damages." Joe Hand Promotions, Inc. v. Hanaro Bethesda, Inc., CIV.A. WGC-11-191, 2012 WL
2366378, at *7 (D. Md. June 20, 2012). See also J & J Sports Productions. Inc. v. Romenski, 845
F.Supp.2d 703, 707 (W.D.N.C. 2012); J & J Sports Productions. Inc. v. J.R. 'Z Neighborhood Sports
Grille. Inc., No. 2:09-03141-DCN-RSC, 2010 WL 1838432, at *2 (D.S.C. Apr. 5, 2010). Consistent
with these opinions, and where the court's award of damages pursuant to 47 U.S.C. § 605 serves
both to compensate plaintiff and to deter defendant's future violations, the court denies in this
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instance plaintiffs request for conversion damages. 5
CONCLUSION
Consistent with the foregoing, the court awards $4,200.00 in statutory damages, pursuant to
47 U.S.C. § 605(e)(3)(C)(i)(II), which figure represents the commercial sublicense fee plaintiff
would have charged a commercial establishment, like defendant's establishment, and an additional
$12,600.00 in enhanced damages, pursuant to § 605(e)(3)(C)(ii), which figure was reached by
trebling the statutory damages of$4,200.00, for a total damages award of$16,800.00. Plaintiff is
awarded attorneys' fees of$1,012.50, together with the costs of this action. Also for the reasons
given, plaintiffs claim for recovery for the tort of conversion is denied. The court dispenses with
hearing.
SO ORDERED, this the qTH day of April, 2013.
United States District Judge
5 Similarly, the undersigned did not award damages for conversion in G&G Closed-Circuit Events. LLC v. Patel. et al.,
No. 5:11-CV-633, (E.D.N.C. July 6, 2012) (order granting in part motion for default judgment).
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