J & J SPORTS PRODUCTIONS, INC. v. MARTINEZ, et al
Filing
37
MEMORANDUM OPINION, ORDER, AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE L. PATRICK AULD signed on 5/16/2013, RECOMMENDING that Plaintiff's Motion for Default Judgment by the Court (Docket Entry 32 ) be granted in part, in that judgment should be entered against Defendant La Hacienda, Inc. for violation of the Cable Act in the total amount of $9,812.50, which includes $2,200.00 in statutory damages, $6,600.00 in enhanced damages, and $1,012.50 in co sts and attorneys' fees. It is ORDERED that Defendant Javier Medina's Motion to Vacate the Entry of Default (Docket Entry 26 ) is GRANTED. FURTHER that Defendant Medina's Motion to Dismiss (Docket Entry 21 ) is deemed timely filed as of May 16, 2013 and Plaintiff shall file any response by June 10, 2013. (Daniel, J)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
J & J SPORTS PRODUCTIONS, INC., )
)
Plaintiff,
)
)
v.
)
)
OSCAR MARTINEZ, TAVIER ADOLFO
)
MEDINA, and LA HACIENDA, INC., )
)
Defendants.
)
1:11CV754
MEMORANDUM OPINION, ORDER AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
The instant matter comes before the undersigned United States
Magistrate Judge on Defendant Javier Adolfo Medina’s Motion to
Dismiss Plaintiff’s Complaint pursuant to Fed. R. Civ. P. 12(b)(5)
and 12(b)(6) (Docket Entry 21),1 Defendant Medina’s Motion to
Vacate the Entry of Default pursuant to Fed. R. Civ. P. 55(c)
(Docket Entry 26), and Plaintiff’s Motion for Default Judgment by
the Court (Docket Entry 32).
(See Docket Entries dated Jan. 16,
2013, and Mar. 4, 2013.)2
For the reasons that follow, the
1
Defendant Medina indicated that “[t]he case caption and
[C]omplaint improperly identified [Defendant] Medina as ‘Tavier
Adolfo Medina.’ The correct spelling of his name is Javier Adolfo
Medina.” (Docket Entry 21 at 1 n.1.)
2
The entry of default (and thus the decision to set aside
or to leave in effect such an entry) constitutes a pretrial matter
that does not dispose of any claim or defense; as a result, courts
have treated motions of this sort as subject to disposition by a
magistrate judge under 28 U.S.C. § 636(b)(1)(A). See, e.g., Bailey
v. United Airlines, 279 F.3d 194, 204 (3d Cir. 2002); L & M Cos.,
Inc. v. Biggers III Produce, Inc., No. 3:08CV309-RJC-DCK, 2010 WL
1439411, at *8 & n.3 (W.D.N.C. Apr. 9, 2010) (unpublished). Under
these circumstances, the undersigned Magistrate Judge will enter an
undersigned will grant Defendant Medina’s Motion to Vacate the
Entry of Default and will treat Defendant Medina’s Motion to
Dismiss as timely filed as of the effective date of this Order.
Furthermore, the Court should grant Plaintiff’s Motion for Default
Judgment by entering judgment against Defendant La Hacienda, Inc.
in the amount of $9,812.50.
I.
Plaintiff,
a
BACKGROUND
corporation
based
in
Campbell,
California,
brought the instant action against Defendants Medina and Oscar
Martinez individually, and, along with Defendant La Hacienda, Inc.,
as
owners
and/or
operators
of
La
Hacienda,
a
commercial
establishment located in Chapel Hill, North Carolina.
Entry 1, ¶¶ 5-9.)3
(Docket
According to the Complaint, Plaintiff had
exclusive nationwide distribution rights to the program “Number
One”: Floyd Mayweather, Jr. v. Juan Manuel Marquez Championship
Fight Program (“the Program”), airing on September 19, 2009.
¶ 11.)
the
(Id.
The Complaint further alleges that Defendants intercepted
Program
and
exhibited
it
at
their
establishment
without
order rather than a recommendation on the instant Motion to Vacate
the Entry of Default.
By contrast, “[a] motion for default
judgment is a dispositive motion for purposes of the Magistrate
Judges Act.” Baltimore Line Handling Co. v. Trophy, 771 F. Supp.
2d 531, 534 (D. Md. 2011). Further, because the instant Motion to
Dismiss is not ripe for a recommendation on the merits, as
discussed below, the undersigned addresses it by order for
procedural purposes only.
3
Plaintiff voluntarily dismissed all
Defendant Fabiola Sherman. (Docket Entry 11.)
-2-
claims
against
authorization
from
Plaintiff.
(Id.
¶
14.)
Based
on
these
allegations, the Complaint seeks relief under 47 U.S.C. §§ 553 and
605 (the “Cable Act”), as well as for conversion under North
Carolina law.
(See id. ¶¶ 10-27.)
On December 5, 2011, Plaintiff filed a Motion for Entry of
Default (Docket Entry 9) against Defendant La Hacienda, Inc. “on
the grounds that [La Hacienda, Inc.] have [sic] failed to appear or
otherwise respond to the Summons and Complaint within the time
prescribed by the Federal Rules of Civil Procedure” (id. at 1).
The Clerk of Court entered default against Defendant La Hacienda,
Inc. on December 6, 2011.
(Docket Entry 10.)
On November 15,
2012, Plaintiff filed a Motion for Entry of Default (Docket Entry
19) against Defendant Medina on similar grounds (id. at 1).
The
Clerk of Court entered default against Defendant Medina on November
16, 2012.
(Docket Entry 20.)
Defendant Medina filed the instant Motion to Dismiss (Docket
Entry 21) on December 4, 2012, and he filed the instant Motion to
Vacate (Docket Entry 26) on December 7, 2012.
Plaintiff responded
to each Motion (Docket Entries 30 and 31, respectively), to which
Defendant Medina replied (Docket Entries 35 and 36, respectively).
Plaintiff filed the instant Motion for Default Judgment (Docket
Entry 32) solely against Defendant La Hacienda, Inc., which failed
to respond (see Docket Entries dated Jan. 9, 2013, to present).
-3-
II.
MOTION TO VACATE ENTRY OF DEFAULT
The Federal Rules of Civil Procedure provide that “[t]he court
may set aside an entry of default for good cause . . . .”
Civ. P. 55(c).
Circuit
has
Fed. R.
The United States Court of Appeals for the Fourth
set
forth
the
relevant
factors
to
make
this
determination as follows:
When deciding whether to set aside an entry of default,
a district court should consider [1] whether the moving
party has a meritorious defense, [2] whether it acts with
reasonable promptness, [3] the personal responsibility of
the defaulting party, [4] the prejudice to the party, [5]
whether there is a history of dilatory action, and [6]
the availability of sanctions less drastic.
Payne v. Brake, 439 F.3d 198, 204-05 (4th Cir. 2006).
The Court
must liberally construe Rule 55(c) “to provide relief from the
onerous consequences of defaults and default judgments,” Lolatchy
v. Arthur Murray, Inc., 816 F.2d 951, 954 (4th Cir. 1987) (internal
quotation
marks
omitted),
because
the
Fourth
Circuit
has
“repeatedly expressed a strong preference that, as a general
matter, defaults be avoided and that claims and defenses be
disposed of on their merits,” Colleton Prep. Acad., Inc. v. Hoover
Universal, Inc., 616 F.3d 413, 417 (4th Cir. 2010).
1.
Meritorious Defense
“A meritorious defense requires a proffer of evidence which
would permit a finding for the defaulting party . . . .”
Augusta
Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808,
812 (4th Cir. 1988); see also United States v. Moradi, 673 F.2d
-4-
725, 727 (4th Cir. 1982) (“[A]ll that is necessary to establish the
existence of a ‘meritorious defense’ is a presentation or proffer
of evidence, which if believed would permit either the Court or the
jury to find for the defaulting party.”); Maryland Nat’l Bank v.
M/V Tanicorp I, 796 F. Supp. 188, 190 (D. Md. 1992) (“The mere
assertion of a meritorious defense is not enough, Defendant must
state the underlying facts to support the defense.”).
Defendant Medina states that “Plaintiff seeks to hold [him]
liable based on his purported ownership interest in La Hacienda,
Inc.[] However, [Defendant] Medina is not currently an owner of La
Hacienda. In fact, [Defendant] Medina sold his entire share of the
Corporation to Defendant Oscar Martinez in May 1999, more than ten
years prior to the occurrence of the alleged events that form the
basis of Plaintiff’s claims.”
original).)
hold
[him],
(Docket Entry 27 at 4 (emphasis in
Therefore, Defendant Medina argues, “Plaintiff cannot
a
former
shareholder,
liable
for
acts
of
the
Corporation, which allegedly took place years after he sold his
share.”
(Id. at 4-5.)
Defendant Medina further asserts that
“Plaintiff has failed to plead any facts showing how [Defendant]
Medina could face personal liability in this action” (id. at 5) and
that “Plaintiff did not serve [Defendant] Medina until more than
more than [sic] two months after the expiration of the Court’s
deadline for service and more than one year after it filed the
Complaint” (id. (emphasis in original)).
-5-
Plaintiff does not refute Defendant Medina’s first argument,
except to say that his Motion to Dismiss, to which Defendant Medina
directs the Court for further details concerning his ownership
interest (or lack thereof) in La Hacienda, Inc., is not properly
before the Court.
(Docket Entry 31 at 4.)
Similarly, Plaintiff
does not directly address the timeliness of its service (see id. at
4-6) or Defendant Medina’s attacks on the sufficiency of the
Complaint (id. at 4).
Defendant Medina has asserted a meritorious defense. In order
to hold an individual liable under the Cable Act, “[the] plaintiff
must show that the individual defendant authorized the violations
set forth in the complaint.”
J & J Sports Prods., Inc. v. Benson,
2007 WL 951872, at *7 (E.D.N.Y. Mar. 27, 2007) (unpublished)
(internal quotation marks omitted).
Defendant Medina stated in a
declaration that, since he sold his share of La Hacienda, Inc. in
1999, he has “had no involvement in the management, supervision or
operation of La Hacienda.”
(Docket Entry 23, ¶ 2.)
If true, these
facts would appear to foreclose individual liability by Defendant
Medina for the alleged violation.
Furthermore, Defendant Medina
has indicated that Plaintiff served him with the Summons and
Complaint more than two months after the deadline set by the Court
had passed.
(Docket Entry 27 at 5.)
This factor thus weighs in
favor of setting aside the entry of default.
-6-
2.
Reasonable Promptness
“Whether a party has taken ‘reasonably prompt’ action, of
course, must be gauged in light of the facts and circumstances of
each occasion . . . .”
Moradi, 673 F.2d at 727.
Defendant Medina
filed his motion to set aside the entry of default on December 7,
2012, less than two months after service of the Complaint and 21
days after the Clerk entered a default.
20, 26.)
(See Docket Entries 18,
Other courts in this Circuit have weighed this factor in
favor of the defaulting party where the defaulting party waited
longer to move to set aside the default.
See, e.g., Vick v. Wong,
263 F.R.D. 325, 330 (E.D. Va. 2009) (finding that reasonable
promptness factor weighed in favor of setting aside default where
moving party did not respond for more than two months after clerk
entered default, but did respond a few weeks after plaintiff filed
motion for entry of default judgment); Wainwright’s Vacations, LLC
v. Pan Am. Airways Corp., 130 F. Supp. 2d 712, 718 (D. Md. 2001)
(concluding that moving party acted with reasonable promptness by
making motion to vacate default slightly more than a month after
entry of default).
Furthermore, Plaintiff concedes that this
factor likely weighs in favor of Defendant Medina.
Entry 31 at 5.)
(See Docket
Under these circumstances, the second factor
supports setting aside the entry of default.
-7-
3.
Personal Responsibility
Defendant Medina argues that he “never received a copy of the
Summons and Complaint and did not become aware of the deadline for
a response until he received notice of the motion for entry of
default.”
(Docket Entry 27 at 7; see also Docket Entry 28, ¶¶ 2-
4.) Further, Defendant Medina contends, and supports by affidavit,
that “his granddaughter (who purportedly was served by the process
server) has no recollection of receiving a copy of the Summons and
Complaint and never provided any such documents to [Defendant]
Medina.”
(Docket Entry 27 at 7; see also Docket Entry 29, ¶¶ 3-4.)
The Proof of Service, which indicates that the process server
served the Summons on Defendant Medina’s granddaughter (Docket
Entry 18 at 1), establishes a prima facie showing of proper service
under North Carolina law. See Crabtree v. City of Durham, 136 N.C.
App. 816, 818, 526 S.E.2d 503, 505 (2000) (“When [a] return of
service on its face shows legal service by an authorized officer,
that return is sufficient, at least prima facie, to show service in
fact.”).
“The prima facie evidence established by a valid return
of service may be rebutted only by producing affidavits of more
than one person showing unequivocally that proper service was not
made upon the person stated in the return of service.” Id. (citing
Grimsley v. Nelson, 342 N.C. 542, 545, 467 S.E.2d 92, 94 (1996)
(italics provided by Crabtree)).
-8-
The affidavits of Defendant Medina and his granddaughter rebut
Plaintiff’s prima facie evidence of proper service.
Entry 28, ¶¶ 2-4; Docket Entry 29, ¶¶ 3-4.)
(See Docket
The Court therefore
cannot determine whether Defendant bears responsibility for the
entry of default.
See, e.g., Turpin v. Wellpoint Cos., Inc., No.
3:10CV850-HEH, 2011 WL 1086482, at *2 (E.D. Va. Mar. 23, 2011)
(unpublished) (recognizing that “personal responsibility” factor
can turn on whether proper service occurred).
This factor thus
does not weigh in favor of or against setting aside the entry of
default.
4.
Prejudice
The Fourth Circuit has found prejudice lacking under the
following circumstances:
There was no missing witness in the case whose testimony
was made unavailable by the delay; there was similarly no
dead witness; neither were there any records made
unavailable by the delay, nor was there any evidence for
the plaintiff which could have been presented earlier,
the presentation of which was prevented by the delay.
. . . So the record shows without contradiction that the
plaintiff suffered no prejudice on account of the delay.
Lolatchy, 816 F.2d at 952-53. Defendant Medina argues that “[e]ach
of these factors is present here and there would be no prejudice to
Plaintiff in vacating the entry of default.”
7-8.)
(Docket Entry 27 at
Plaintiff, on the other hand, contends that “[Defendant
Medina’s] actions, including his disregard for properly effectuated
service, indicates that there will be increased difficulties in
discovery.”
(Docket Entry 31 at 7.)
-9-
However, the prejudice
Plaintiff asserts is purely speculative and unrelated to any delay
by Defendant Medina in responding to the Complaint.
Thus, this
factor weighs in favor of setting aside the entry of default.
5.
History of Dilatory Action
This case is in an early stage of litigation and, separate
from the delayed response to the Complaint, the record does not
reflect evidence of dilatory conduct by Defendant Medina.
This
factor therefore favors setting aside the entry of default.
6.
Defendant
Medina
Less Drastic Sanctions
contends
that
“the
Court
can
certainly
consider various other less drastic sanctions. . . . Accordingly,
this factor weighs in favor of vacating the entry of default.”
(Docket Entry 27 at 9.) Plaintiff, in turn, requests that, “to the
extent the Court is inclined to set aside the default, . . . it be
permitted to submit its costs and attorneys’ fees related to
obtaining the default and defending against Defendant’s Motion to
Set Aside.”
(Docket Entry 31 at 8.)
The Parties therefore
apparently agree that sanctions less drastic than default exist and
thus this factor weighs in favor of setting aside default.4
In sum, factors one, two, four, five and six identified by the
Fourth Circuit in Payne support setting aside the entry of default
and factor three does not weigh in favor of or against so doing.
4
Given the conflict in the evidence regarding service, the
Court declines to order any cost-shifting at this time.
-10-
Furthermore, the Fourth Circuit has stated a strong preference that
“defaults be avoided and that claims and defenses be disposed of on
their merits.” Colleton Prep. Acad., 616 F.3d at 417. Under these
circumstances, good cause exists to set aside the entry of default
as to Defendant Medina.
III.
MOTION TO DISMISS
Federal Rule of Civil Procedure 55(a) states that, “[when a
party against whom a judgment for affirmative relief is sought has
failed to plead or otherwise defend, and that failure is shown by
affidavit or otherwise, the clerk must enter the party’s default.”
“The general effect of the entry of default under Rule 55(a) is
that the defaulting party loses his standing in court, his right to
receive notice of the proceedings, and his right to present
evidence at the final hearing.”
Hartford Fire Ins. Co. v. Sundeck
Transp. Grp., Inc., No. 2:10cv191, 2011 WL 2938466, at *2 (E.D. Va.
June 29, 2011) (unpublished) (citing Clifton v. Tomb, 21 F.2d 893,
897 (4th Cir. 1927)); see also Transamerica Life Ins. Co. v.
Shubin,
2012
WL
5364645,
at
*2
(E.D.
Cal.
Oct.
31,
2012)
(unpublished) (holding court could not consider stipulation of
defendants in default); Kiesgen v. St. Clair Marine Salvage, Inc.,
724 F. Supp. 2d 721, 728 (E.D. Mich. 2010) (striking defendant’s
third party complaint because defendant filed it after default).
Defendant Medina therefore did not have standing to file his
instant Motion to Dismiss (Docket Entry 21), given the entry of
-11-
default in place at the time (see Docket Entry 20).
However, in
light of the Court’s disposition of Defendant Medina’s instant
Motion to Vacate the Entry of Default, the Court will treat his
instant Motion to Dismiss as timely filed as of the date of this
Order.
IV.
MOTION FOR DEFAULT JUDGMENT BY THE COURT
Plaintiff next seeks a default judgment against Defendant La
Hacienda, Inc. (Docket Entry 32.) Federal Rule of Civil Procedure
55 provides for the entry of a default judgment against a party
that has failed to plead or defend against a claim for affirmative
relief.
“For a default judgment, well-pleaded factual allegations
are sufficient to establish a defendant’s liability.”
Joe Hand
Promotions, Inc. v. Coaches Sports Bar, 812 F. Supp. 2d 702, 703
(E.D.N.C.
2011)
(citing
Fed.
R.
Civ.
P.
55(a)
and
Ryan
v.
Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001)). “The
defaulting defendant is not, however, held to admit conclusions of
law.
Further, ‘the allegations of the complaint regarding the
amount of damages suffered are not controlling.’”
J & J Sports
Prods., Inc. v. Segura, No. 5:12-CV-241-FL, 2013 WL 1498963, at *1
(E.D.N.C. Apr. 10, 2013) (unpublished) (quoting Coaches Sports Bar,
812 F. Supp. 2d at 703) (internal citation omitted).
As an initial matter, Plaintiff has presented prima facie
evidence that Defendant La Hacienda, Inc. was properly served with
a copy of the Complaint and Summons.
-12-
The Summons lists Peter
Cabrera as the Registered Agent for Defendant La Hacienda, Inc.
(Docket Entry 3-3 at 1.)
The executed Proof of Service indicates
that the process server in fact served Peter Cabrera.
Entry 8 at 1.)
(Docket
As discussed in Section II.3., the Proof of Service
establishes a prima facie showing of proper service under North
Carolina law.
See Crabtree, 136 N.C. App. at 818.
Hacienda, Inc. has not rebutted this presumption.
Defendant La
Thus, Plaintiff
properly served Defendant La Hacienda, Inc.
The
Complaint
alleges
that
Defendant
La
Hacienda,
Inc.
violated 47 U.S.C. § 533 (see Docket Entry 1, ¶¶ 19-23), which
“prohibits unauthorized interception or reception of cable in
communication services,” Segura, 2013 WL 1498963, at *2, and 47
U.S.C. § 605 (see Docket Entry 1, ¶¶ 10-18), which “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,” Segura, 2013 WL 1498963, at *2 (internal quotation
marks omitted). The factual allegations in the Complaint establish
that Defendant La Hacienda, Inc. violated the Cable Act.
Specifically, the Complaint alleges that Plaintiff obtained
exclusive distribution rights to the Program (Docket Entry 1,
¶ 11), that it granted various commercial entities the rights to
exhibit the Program publicly (id. ¶ 12), and that it expended
significant monies to do so (id. ¶ 13).
-13-
It further asserts that
Defendant La Hacienda, Inc. exhibited the Program publicly without
Plaintiff’s permission.
(Id. ¶ 14.)
Plaintiff further provides
uncontested affidavits in support of its Complaint which aver that:
(1) Plaintiff bought the rights to the Program (Docket Entry 32-3,
¶ 3); (2) no individual or organization licensed the Program from
Plaintiff
for
exhibition
at
Defendant
La
Hacienda,
Inc.’s
establishment (id. ¶ 7); (3) the Program was exhibited at La
Hacienda (Docket Entry 32-2 at 1); and (4) there exist various
means by which an individual can gain access to the Program
illicitly, either via cable or satellite connections, none of which
likely would occur mistakenly or accidentally (Docket Entry 32-3,
¶ 9).
Based on these facts, Defendant La Hacienda Inc. violated
the Cable Act.
See International Cablevision, Inc. v. Sykes, 75
F.3d 123, 132-33 (2d Cir. 1996); see also Segura, 2013 WL 1498963,
at *2 (“Where plaintiff’s private investigator informs that he was
at defendant’s establishment on the date the program aired, and
where plaintiff’s 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.”).5
5
“Section[s] 553 and 605 contain common elements in so far
as liability is concerned, and therefore, it is not fatal that
[P]laintiff does not have evidence of exactly how its signal was
intercepted.” J & J Sports Prods., Inc. v. Centro Celvesera La
Zaona, LLC, No. 5:11-CV-00069-BR, 2011 WL 5191576, at *2 n.1
-14-
“Both § 553 and § 605 allow plaintiff to elect to recover
either actual damages and lost profits or statutory damages.” Time
Warner Cable of New York City v. Googies Luncheonette, Inc., 77 F.
Supp. 2d 485, 489 (S.D.N.Y. 1999).
Plaintiff in the instant case
has opted for statutory damages.
(See Docket Entry 33 at 1.)
“Where a defendant is liable under both § 553 and § 605, a
plaintiff is entitled to have damages awarded under 605 which
provides for greater recovery.”
Googies Luncheonette, 77 F. Supp.
2d at 489; see also Segura, 2013 WL 1498963, at *3 (“Although
plaintiff has demonstrated defendant’s violation of section 553 or
605, recovery under both sections is improper. . . . Plaintiff, on
motion for default judgment, requests damages under only section
605.
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.” (internal citations omitted)).
Section 605 provides for statutory damages of not less than $1,000
and
not
more
than
$10,000
for
each
violation.
47
U.S.C.
§ 605(e)(3)(C)(i)(II).
It further leaves the determination of damages within that
range to the discretion of the Court.
See id. (“[T]he party
(E.D.N.C. Nov. 1, 2011) (unpublished). The fact that Defendant La
Hacienda, Inc.’s default impeded Plaintiff’s ability to obtain
evidence on this point provides further grounds for reaching this
conclusion. See, e.g., Segura, 2013 WL 1498963, at *2; Joe Hand
Prod., Inc. v. Behari, No. 2:12-cv-1522 KJM AC, 2013 WL 1129311, at
*4 (E.D. Cal. Mar. 18, 2013) (unpublished).
-15-
aggrieved may recover an award of statutory damages for each
violation of subsection (a) of this section involved in the action
in a sum of not less than $1,000 or more than $10,000, as the court
considers just . . . .” (emphasis added)); see also J & J Sports
Prods.,
Inc.
(TSE/IDD),
v.
2011
Lara
WL
Sport
4345114,
House
at
*5
Corp.,
(E.D.
No.
Va.
1:10-cv-01369
Aug.
26,
2011)
(unpublished) (“In determining the amount of damages that can be
imposed for each violation, § 605 leaves the decision within the
sound discretion of the court.”).
Our neighboring court to the
east has observed that:
Courts in this circuit have used two approaches to
exercising their discretion in awarding damages.
The
first approach involves multiplying a certain amount by
either the number of patrons observed in the defendant’s
establishment at the time the program was shown or by the
maximum occupancy of the establishment.
The second
approach is to award a flat sum per violation.
Coaches Sports Bar, 812 F. Supp. 2d at 704 (internal citations
omitted).
Plaintiff points out that “this action would not have been
brought
had
[]
Defendant
paid
Plaintiff
the
$2,200.00
applicable to their 100-person capacity establishment.”
fee
(Docket
Entry 33 at 11; see also Docket Entry 32-3 at 10 (showing license
rate by capacity); Docket Entry 32-2 at 1 (noting capacity of La
Hacienda “is approximately 100 people”).)
Plaintiff therefore
contends that “this fee should establish the very minimum base
amount from which this Court should calculate damages in this
-16-
action.”
(Docket Entry 33 at 11.)
It goes on to argue that, as a
result of exhibiting the Program, Defendant likely gained “good
will” from the patrons who viewed the Program at La Hacienda rather
than at a licensed establishment (id.) and that those patrons
likely would frequent La Hacienda again, further harming other
licensed establishments (id. at 11-12).
Plaintiff also emphasizes
the need for greater damages as a deterrent to Defendant and to
others who would seek to intercept similar programs.
16.)
(Id. at 12-
Plaintiff therefore asks for the maximum statutory award.
(Id. at 16.)
Plaintiff’s investigator averred that he counted 37 patrons in
La Hacienda at the time of the Program.
(Docket Entry 32-2 at 1.)
Courts that use the first approach identified in Coaches Sports Bar
to calculate the statutory award (i.e., multiplying the number of
patrons present or the capacity by a certain amount) typically use
a multiplier that represents the fee a patron would have paid had
he or she bought the telecast from home.
See Benson, 2007 WL
951872, at *5 (“In cases where there is uncontradicted evidence of
the number of patrons viewing the match in an establishment, courts
have used the first approach and multiplied the number of patrons
by a set sum, plus any cover charges or other profits attributable
to the unauthorized viewing.
This is based on the theory that the
patrons who watched the unauthorized broadcast would have ordered
it
individually
for
residential
-17-
use.”
(internal
citations
omitted)); see also Googies Luncheonette, 77 F. Supp. 2d at 490
(multiplying number of patrons present by $50 because plaintiff
“charged
residential
customers
approximately
$50
to
view
match”).
In the instant case, Plaintiff asserts that “[t]here is
no applicable per-person rate for the Program . . . .”
Entry
33
at
11.)
However,
a
court
addressing
a
the
(Docket
licensing
disagreement that involved the same Plaintiff and the same Program
as in the instant case determined that “[a]n award of $54.95 per
patron, the ‘typical’ purchase price for a pay-per-view broadcast
of this nature,” was appropriate.
J & J Sports Prods., Inc. v.
Welch, No. 10-CV-0159 (KAM), 2010 WL 4683744, at *4 (E.D.N.Y. Nov.
10, 2010) (unpublished) (quoting J & J Sports Prods., Inc. v.
Arhin, No. 07 CV 2875(SJ), 2009 WL 1044500, at *1 (E.D.N.Y. Apr.
17, 2009) (unpublished)). Another court reviewing a case involving
the same Plaintiff and the same Program took note of the $2,200
licensing fee the establishment in question would have had to pay
and, without discussing the rationale, awarded statutory damages in
the flat amount of $6,000, indicating such amount, “when combined
with
enhanced
damages
and
attorneys’
reflection of actual damages.”
J &
fees
.
.
.
is
a
fair
J Sports Prods., Inc. v. El
Molcajete, Inc., No. 7:11-cv-2435-TMC, 2012 WL 366519, at *4
(D.S.C. Jan. 18, 2012) (unpublished).
In the instant case, using a “typical” per person fee of
$54.95 multiplied by 37 (the number of patrons observed in the
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establishment at the time of the Program’s broadcast (see Docket
Entry 32-2 at 1)) would result in a statutory award of $2,033.15.
However, because an award in this amount would not cover the $2,200
licensing fee Plaintiff lost, the Court should adopt another
measure for statutory damages.
See EMI April Music Inc. v.
Rodriguez, 691 F. Supp. 2d 632, 636 (M.D.N.C. 2010) (Schroeder, J.)
(“At a minimum, it should cost no less to violate the statute than
to comply with it.”).
Plaintiff has presented evidence that it
suffered $2,200 in damages and has asserted that this figure
“should establish the very minimum base amount from which this
Court should calculate damages in this action” (Docket Entry 33 at
11).
Plaintiff claims no other actual damages, aside from costs
and attorneys’ fees, but rather points to speculative harm to
Defendant
La
Hacienda
Inc.’s
competitors
and
the
need
for
deterrence of future violations (see id. at 11-16), arguments
better suited to the determination of enhanced damages.
Under
these circumstances, the Court should adopt $2,200 as the base
statutory damages in this case.
See J & J Sports Prods., Inc. v.
Tejada, No. 3:12-CV-467-RJC-DCK, 2013 WL 171598, at *3 (W.D.N.C.
Jan.
16,
2013)
(unpublished)
(finding
plaintiff
entitled
to
statutory damages equal to program fee charged to establishments of
defendant’s size where, “[a]side from costs and attorneys’ fees,
Plaintiff’s only actual damages claims are the [program fee]”).
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“In 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, the court in its
discretion may increase the award of damages, whether actual or
statutory,
by
an
amount
violation . . . .”
whether
the
of
not
more
than
$100,000
47 U.S.C. § 605(e)(3)(C)(ii).
[d]efendant[’s]
conduct
was
for
each
“In determining
willful
and
enhanced
damages are justified, courts typically consider certain factors,
including (1) repeated violations over an extended period of time;
(2)
substantial
unlawful
monetary
gains;
(3)
advertising
the
broadcast; and (4) charging an admission fee or charging premiums
for food and drinks.”
J & J Sports Prods., 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) (unpublished) (citing J & J
Sports Productions, Inc. v. Guzman, 553 F. Supp. 2d 195, 199
(E.D.N.Y. 2008)).
Plaintiff’s Complaint and the evidence presented in support of
its instant Motion establish that Defendant La Hacienda Inc. acted
willfully.
“Signals do not descramble spontaneously, nor do
television sets connect themselves to cable distribution systems.”
Googies Luncheonette, 77 F. Supp. 2d at 490; see also Time Warner
Cable of New York City v. Taco Rapido Rest., 988 F. Supp. 107, 111
(E.D.N.Y. 1997) (“In order . . . to receive the closed-circuit
broadcast, [the defendant] had to have engaged in some deliberate
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act, such as using an unauthorized decoder or altering the cable
service in some way so as to receive and view the scrambled
transmission.”). Furthermore, “[i]t is clear that [the] violation,
taking place in a commercial establishment rather than a residence,
was
committed
for
advantage . . . .”
purposes
of
direct
or
indirect
commercial
Tejada, 2013 WL 171598, at *4.
However,
Plaintiff has presented no evidence of any of the other abovelisted aggravating conduct.
not charged a cover fee.
Notably, Plaintiff’s investigator was
(Docket Entry 32-2 at 1.)
Nevertheless, the undersigned recognizes the need to deter
such willful activity in the future, a goal that the base statutory
damages award would not necessarily accomplish.
Pay-Per-View,
Ltd.
v.
Las
Reynas,
No.
See Kingvision
4:07-CV-67-D,
2007
WL
2700008, at *1 (E.D.N.C. Sept. 11, 2007) (unpublished) (“[C]ourts
focus in the aggregate on finding a statutory damages amount that
reasonably compensates the victim and is ‘substantial enough to
help deter future violations.’” (quoting Joe Hand Promotions, Inc.
v. Phillips, No. 06 Civ. 3624(BSJ)(JCF), 2007 WL 2030285, at *4
(S.D.N.Y. Jul. 16, 2007) (unpublished))); cf. Garden City Boxing
Club, Inc. v. Polanco, No. 05 Civ. 3411(DC), 2006 WL 305458, at *5
(S.D.N.Y. Feb. 7, 2006) (unpublished) (“[A]lthough the amount of
damages should be an adequate deterrent, [a single] violation is
not
so
serious
business.”).
as
to
warrant
putting
the
restaurant
out
of
“[I]t appears that courts have awarded anywhere from
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three to six times the statutory damages award for enhanced damages
. . . .”
J.R.’Z Neighborhood Sports Grille, 2010 WL 1838432, at
*2; see also J & J Sports Prods., Inc. v. Ribeiro, 562 F. Supp. 2d
498, 502 (S.D.N.Y. 2008) (same); but see Welch, 2010 WL 4683744, at
*5 (awarding enhanced damages in an amount twice that of base
statutory award); Las Reynas, 2007 WL 2700008, at *3 (same). Given
the lack of aggravating factors in the instant case, the Court
should award enhanced damages in the amount of $6,600, three times
that of the base statutory damages award.
See J.R.’Z Neighborhood
Sports Grille, 2010 WL 1838432, at *2 (awarding enhanced damages
three
times
aggravating
greater
factors
than
base
existed);
statutory
Benson,
2007
damages
WL
where
951872,
at
no
*5
(same).6
6
Plaintiff’s Complaint also alleges a state law conversion
claim against all Defendants. (See Docket Entry 1, ¶¶ 24-27.) To
the extent Plaintiff requests this award in addition to the award
under § 605, which already significantly exceeds the requested
conversion award, it would “result in a double recovery, and [the
Court], therefore, [should] den[y] . . . recovery for the tort of
conversion.” J.R.’Z Neighborhood Sports Grille, 2010 WL 1838432,
at *2. Furthermore, North Carolina law does not recognize a claim
for conversion as to intangible property such as satellite or other
transmission signals. See J & J Sports Prods., Inc. v. Santillan,
No. 1:11CV1141, 2012 WL 6738316, at *4-5 (M.D.N.C. Dec. 28, 2012)
(unpublished), recommendation adopted, 2013 WL 179949 (Jan. 17,
2013) (Schroeder, J.); see also Norman v. Nash Johnson & Sons’
Farms, Inc., 140 N.C. App. 390, 414, 537 S.E.2d 248, 264 (2000)
(“In North Carolina, only goods and personal property are properly
the subjects of a claim for conversion. A claim for conversion
does not apply to real property. Nor are intangible interests such
as business opportunities and expectancy interests subject to a
conversion claim.” (internal citations omitted)).
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Finally,
Plaintiff
requests
attorneys’
fees
and
costs
associated with the instant case (see Docket Entry 33 at 20) and
the
Cable
Act
provides
§ 605(e)(3)(B)(iii).
for
such
recovery,
47
U.S.C.
“In determining a reasonable attorney’s fee,
the ‘most useful starting point . . . is the number of hours
reasonably expended on the litigation multiplied by the reasonable
hourly rate.’”
Welch, 2010 WL 4683744, at *5 (quoting Henley v.
Eckerhart, 461 U.S. 424, 433 (1983)).
Plaintiff provided an
affidavit from counsel outlining fees in the amount of $1012.50,
which represents 4.5 hours of work at a rate of $225/hour. (Docket
Entry 32-1, ¶¶ 8-10.) This amount is reasonable. See Tejada, 2013
WL 171598, at *4 (finding same rate and number of hours reasonable
in similar case).
V. CONCLUSION
The relevant factors weigh in favor of setting aside the entry
of default against Defendant Medina; however, Defendant Medina
filed his Motion to Dismiss at a time when he did not have standing
to do so.
Finally, Plaintiff has satisfied the requirements for a
default judgment against Defendant La Hacienda, Inc.
IT IS THEREFORE ORDERED that Defendant Javier Medina’s Motion
to Vacate the Entry of Default (Docket Entry 26) is GRANTED.
IT IS FURTHER ORDERED that Defendant Medina’s Motion to
Dismiss (Docket Entry 21) is deemed timely filed as of May 16,
2013.
Plaintiff shall file any response by June 10, 2013.
-23-
IT IS RECOMMENDED that Plaintiff’s Motion for Default Judgment
by the Court (Docket Entry 32) be granted in part, in that judgment
should be entered against Defendant La Hacienda, Inc. for violation
of the Cable Act in the total amount of $9,812.50, which includes
$2,200.00 in statutory damages, $6,600.00 in enhanced damages, and
$1,012.50 in costs and attorneys’ fees.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
May 16, 2013
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