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

Filing 41

Memorandum and Order: For the foregoing reasons, the Magistrate denies the Motion to Dismiss subject to the following conditions: (1) Plaintiff shall join Top Rank as a party-plaintiff within 15 days; (2) Disposition of the Motions for Sum mary Judgment will be stayed pending any amendments to the pleadings and completion of any additional discovery. (3) A telephone status conference will be held on Friday, August 1, 2014 at 11:30 a.m.. Magistrate Judge Vernelis K. Armstrong on 6/20/2014. (B,TM)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
WESTERN DIVISION
J & J SPORTS PRODUCTIONS, INCORPORATED,
Plaintiff,

:

Case No. 3:12 CV 1873

:

v.

:

KSD, INCORPORATED, individually and as the
alter ego of Six Pack Bar & Grill, et al.,

:
:

MEMORANDUM AND ORDER

Defendants.

I. INTRODUCTION
The parties have consented to have the undersigned Magistrate enter final judgment in this antipiracy case arising under the Communications Act of 1934, codified at 47 U. S.C. § 605; the Cable
Communications Policy Act, codified at 47 U.S.C. § 553 as amended, and a state law prohibition
against conversion. Pending are cross-Motions for Summary Judgment, Defendant’s Motion to Dismiss
and Response to Plaintiff’s Motion for Summary Judgment and Plaintiff’s Reply Brief (Docket Nos.
26, 38 and 40). For the reasons that follow, the Magistrate denies the Motion to Dismiss and stays
disposition of the cross-Motions for Summary Judgment pending joinder of a party-plaintiff and the
close of any extended discovery period.

II. THE FACTS.
Top Rank, Incorporated (Top Rank), a Nevada corporation, is a boxing promoter that owned
the copyright to Manny Pacquiao v. Shane Mosley, WBO Welterweight Championship Fight Program
(Program) that was closed-circuit telecast nationwide on May 7, 2011.
Plaintiff, a California corporation whose principal place of business is in South Pasadena,
California, marketed and licensed commercial exhibitions of this pay-per-view prizefight event. By
and through its president, Joseph Gagliardi, Plaintiff obtained the exclusive commercial broadcast
rights to the Program and certain undercard bouts effective January 10, 2011. Pursuant to the Close
Circuit Television License Agreement, the event was legally available to commercial establishments
only through a sub-licensing agreement with Plaintiff (Docket No. 26-1, ¶ 3; pp. 15-20 of 22). To
prevent unauthorized interception or receipt of the Program, the interstate satellite transmission of the
Event was electronically coded or scrambled and broadcast of the Program was not available to or
intended for the general public (Docket No. 16, § 9). Mr. Gagliardi averred that to the best of his
knowledge, there was no way to accidentally, mistakenly or innocently intercept the Program (Docket
No. 26, ¶ 9; Docket No. 26-1, ¶ 6). To “pirate” the Program, an establishment would have to use
electronic decoding equipment to obtain the satellite coordinates necessary to expropriate the signal
(Docket No. 26-1, ¶ 9A, B, C, D, E).
Defendant Kypros Diacou, the sole shareholder of Defendant KSD, an Ohio corporation, and
Defendant KSD are owners and operators of Defendant Six Pack Bar & Grill (Six Pack), a sports bar,
which has a principal place of business at 3223 West Sylvania, Toledo, Ohio (Docket No. 1, ¶s 7 & 8;
Www2.sos.state.oh.us.; Docket No. 38, p. 6 of 18). Neither Defendant Diacou, KSD nor Six Pack
purchased a sub-licensing agreement to broadcast the fight or any of the undercard bouts from Plaintiff

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(Docket No. 26-1, ¶ 3).
Prior to Saturday, April 30, 2011, Jackie Cortez, Director of Investigations for the Law Office
of Thomas P. Riley, disseminated a “save the date” notice to piracy investigators to locate offenders
of the anti-piracy regulations during the Program (Docket No. 37, pp. 91 of 99). Robert J. Patterson
obtained a request from his stepfather who was employed as an investigator for M.B. Scurto &
Associates, to visit Defendant Six Pack on May 7, 2011, observe his surroundings and make an
affidavit containing the details of what he saw (Docket No. 35, pp. 18-20 of 41). Mr. Patterson and
his sister Tara averred that at approximately 10:45 P.M., they observed the unlawful broadcast of the
undercard fight between Jorge Arce and Wilfredo Vasquez, Jr., on all of the televisions in Defendant
Six Pack (Docket No. 26-1, pp. 9-10 of 22; Docket No. 35, pp. 19, 21-22 of 41).
Mr. Gagliardi claims that Defendants’ unauthorized interception of the signal also was
prohibited under 47 U. S. C. § 605 and 47 U. S. C. § 553. For a commercial establishment with a
maximum fire code occupancy of 135 people, the commercial sublicense fee would have been $6,200
(Docket No. 26-1, ¶ 8; p. 22 of 22). Plaintiff seeks an award of statutory damages exceeding $100,000,
the costs of the suit and attorney fees.
PROCEDURAL BACKGROUND.
Plaintiff filed a Complaint for damages against Defendants Diacou and KSD and a Corporate
Disclosure Statement and Defendants Diacou and KSD filed an Answer (Docket Nos. 1, 2 and 8).
Plaintiff filed a Motion for Summary Judgment in which it asserts entitlement to judgment as a matter
of law for reasons that
(1)
(2)

Defendants unlawfully intercepted and broadcast the program in their commercial
establishment; and
Defendants are liable for statutory and enhanced damages as permitted under 42 U.S.C.
§ 605 and attorney fees and costs (Docket No. 26).
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Defendants filed a Motion to Dismiss Plaintiff’s Complaint for failing to join a necessary party.
Defendants’ Motion for Summary Judgment is based on two claims:
(1)
(2)

Plaintiff failed to establish any basis for asserting liability against Defendant Diacou.
Plaintiff erroneously relied on the Patterson Affidavit (Docket No. 38).
ANALYSIS.

The Magistrate must necessarily rule on the Motion to Dismiss first as the remaining questions
presented require consideration of facts and resolution of legal principles that may bear on the essential
relationship between the parties and the adjudication on the merits.
Fed. R. Civ. P. 12(b) (7) provides for dismissal for “failure to join a party under Rule 19.”
Whenever feasible, the persons materially interested in the subject of any action should be joined as
parties so that they may be heard and a complete disposition made. Glancy v. Taubman Centers,
Incorporated, 373 F.3d 656, 664 (6th Cir.2004). FED. R. CIV. P. 19 addresses this problem by providing
guidance for the joinder of persons needed for just adjudication. Id. The guidelines determine when
it is proper to dismiss a case because a person or entity has an interest in the outcome of the litigation
that could be impaired in the absence of that person or entity, and when joinder of the person or entity
will deprive the court of subject matter jurisdiction. Id. The “essence of Rule 19 is to balance the
rights of all those whose interests are involved in the action.” Id.
Courts in this Circuit use the following process for determining joinder under Rule 19. 7172
Columbia, Incorporated v. Ventas, Incorporated, 2013 WL 3822120, *1 (N.D.Ohio,2013) (citing
United States v. City of Detroit, 712 F.3d 925, 948 (6th Cir.2013) (citation omitted)). The Court
examines whether the party is necessary pursuant to Rule 19(a). Id. (citing See FED.R.CIV.P. 19(a)
(citation omitted). If the absent party is deemed necessary under Rule 19(a), the Court next considers

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the issues of personal jurisdiction and indispensability. Id. (citing Keweenaw Bay Indian Community
v. Michigan, 11 F.3d 1341, 1345–1346 (6th Cir.1993)). “If personal jurisdiction is present, the party
shall be joined; however, in the absence of personal jurisdiction or if venue as to the joined party is
improper, the party cannot properly be brought before the court.” Id. (citing Keweenaw, 111 F. 3d at
1345-1346). If the party cannot be part of the proceedings, the Court considers the factors in Rule 19(b)
to determine if it “may proceed without the absent party or, to the contrary, must dismiss the case due
to the indispensability of that party.” Id. (See FED. R. CIV. P. 19(b) (citation omitted). When
conducting its analysis, the Court must be mindful that the rules should “not be applied in a rigid
manner,” but should be “governed by the practicalities of the individual case.” Id. (citing Keweenaw
Bay, 11 F. 3d at 1146).
In the instant case, joinder would not affect the Court’s subject matter jurisdiction considering
the diversity of the parties. Plaintiff is a California corporation and Defendant is an Ohio corporation.
Adding Top Rank, a Nevada corporation, would not upset complete diversity found at 28 U. S. C. §
1332. Critical to this analysis, however, is whether in Top Rank’s absence, the Court can accord
complete relief among existing parties. To make that finding requires essentially interpreting the terms
of the television license agreement between Top Rank and Plaintiff.
In determining which law to apply, the Magistrate considers that the applicable rules of
interpretation are left to Ohio law since: (1) the license agreement does not contain a forum selection
clause; (2) Defendants are subject to personal jurisdiction in this Court; (3) the alleged injury took place
in Ohio; (4) the place where the conduct causing the injury is in Ohio; and (5) neither party argues that
there is another jurisdiction with more significant contacts. Under Ohio law, when confronted with an
issue such as the one before this Court, the intent of the parties will be given deference. Eastham v.

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Chesapeake Appalachia, L.L.C., 2014 WL 2535385 (6th Cir. 2014) (citing Sunoco, Incorporated ® &
M) v. Toledo Edison Company, 129 Ohio St.3d 397, 953 N.E.2d 285, 292 (Ohio 2011)). To that end,
courts should examine the contract as a whole and presume that the intent of the parties is reflected in
the plain and ordinary meaning of the language used in the contract unless another meaning is clearly
apparent from the contents of the agreement. Id. When the language of a written contract is clear, a
court may look no further than the writing itself to find the intent of the parties. Id. Courts may
examine extrinsic evidence to ascertain the parties' intent only if the contract is ambiguous. Id. (citing
Shifrin v. Forest City Enterprises, 64 Ohio St.3d 635, 597 N.E.2d 499, 501 (Ohio 1992)). A contract
is ambiguous where it cannot be given a “definite legal meaning.” Id. (citing Westfield Insurance
Company v. Galatis, 100 Ohio St.3d 216, 797 N.E.2d 1256, 1261 (Ohio 2003)). Stated differently,
“[a]mbiguity exists only when a provision at issue is susceptible of more than one reasonable
interpretation.” Id. (citing Lager v. Miller–Gonzales, 120 Ohio St.3d 47, 896 N.E.2d 666, 669 (Ohio
2008); see also 11 WILLISTON ON CONTRACTS § 30:5 (4th ed.)).
Top Rank and Plaintiff entered into a “CLOSED CIRCUIT TELEVISION LICENSE AGREEMENT” as
of January 10, 2011. The “Anti-Piracy” terms at issue in this case read as follows:
Promoter (Top Rank) and Licensee (Plaintiff), acting jointly (emphasis added), shall
have the right to commence or settle any claim or litigation arising out of the alleged
piracy, use or proposed use of the telecast in the Territory. Promoter and Licensee shall
notify each other in writing and shall consult with each other and mutually agree before
commencing or settling any such claim or litigation in the Territory. Any damages,
whether statutory, compensatory, punitive or otherwise, which Promoter or Licensee
may recover from the theft, piracy, copying, duplication, unauthorized exhibition or
transmission of the Event in the Territory, after payment of reasonable legal fees and
disbursements, shall constitute gross revenues to be shared by Promoter and License as
provided in Paragraph 1 of this agreement. Licensee shall advance all required legal
fees and disbursements, subject to recoupment from any applicable recovery. . . .
Defendants have isolated the phrase “acting jointly” as an indicator that the case should be

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dismissed for the reason that Top Rank is a necessary and indispensable party to the litigation. The
Magistrate finds that the terms “acting jointly” are not meaningless or superfluous. The plain and
ordinary meaning of this language is clearly apparent and unambiguous. Top Rank and Plaintiff have
the right to jointly commence any claim arising out of the alleged piracy use or proposed use. The next
line provides that Top Rank and Plaintiff must arrive at a mutual agreement before commencing or
settling any such claim or litigation in the Territory. Consequently, this Court cannot accord complete
relief to all parties absent Top Rank’s presence in the lawsuit.
FED. R. CIV. P. 21 provides that misjoinder of parties is not a ground for dismissing an action.
Therefore, misjoinder of parties is not a defense to this action. The rules further provide that a party
may be added or dropped by order of the court on its own initiative or on motion by any party. The
Magistrate finds that the appropriate resolution of the misjoinder issue is provided by FED. R. CIV. P.
19. Top Rank is indispensable to the right to commence a lawsuit and Rule 19(a) requires that the
Magistrate order that Top Rank be made a party. Only if Top Rank cannot be joined should the court
proceed to consider whether justice can be rendered in Top Rank’s absence or whether dismissal is an
appropriate remedy.

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CONCLUSION.
For the foregoing reasons, the Magistrate denies the Motion to Dismiss subject to the following
conditions:
(1)

Plaintiff shall join Top Rank as a party-plaintiff within 15 days;

(2)

Disposition of the Motions for Summary Judgment will be stayed pending any
amendments to the pleadings and completion of any additional discovery.

(3)

A telephone status conference will be held on Friday, August 1, 2014 at 11:30 a.m.

IT IS SO ORDERED.

/s/Vernelis K. Armstrong
United States Magistrate Judge
Date: June 20, 2014

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