J&J SPORTS PRODUCTIONS, INC. v. ALLEN et al

Filing 28

MEMORANDUM AND OPINION. SIGNED BY HONORABLE MARK A. KEARNEY ON 3/13/18. 3/13/18 ENTERED & E-MAILED.(fdc)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

J&J SPORTS PRODUCTIONS, INC.

CIVIL ACTION

v.
NO. 17-4046
TIMOTHY ALLEN, et al

KEARNEY,J.

March 13, 2018
MEMORANDUM

Federal law prohibits stealing encrypted pay-per-view telecasts. Congress defines the
available measure of damages, including statutory damages, enhanced damages and reasonable
attorney's fees and costs. Failing to answer a complaint admits liability and allows an award of
reasonable attorney's fees and costs to the prevailing party against the defaulting party under the
statute. But we must evaluate the proofs for statutory and enhanced damages.

When, as here,

the lawful distributor of the encrypted telecast does not pursue discovery or offer specific
damages demonstrating its losses or the violator's profits, we review statutory and enhanced
damages based on factors including the fee which should have been paid, evidence of a cover
charge and willfulness against the persons responsible for the piracy.

In the accompanying

Judgment, we award statutory damages equal to the fee plus the aggregate cover charge as a
profit with a 33% enhancement based on advertising against the entity responsible for promoting
and presenting the pirated telecast.

Absent evidence the managing member of the offending

entity actually controlled the entity or knew of the piracy, we cannot impose personal liability on
a person possibly owning interests in the entity or designated as a managing member.

I.

Facts adduced in sworn pleadings and our noticed hearing.

J&J Sports Productions, Inc. purchased proprietary rights to distribute "Floyd
Mayweather Jr. v. Andre Berto WBA/WBC Welterweight Championship Fight Program"
("Fight") by interstate pay-per-view encrypted transmission. 1 In turn, J&J signed licensing
agreements with commercial establishments to exhibit the Fight. J&J encrypts its interstate
transmission to ensure the Fight is available only to J&J's customers who pay a defined fee
based on the capacity of the space being used for commercial purposes.
A fictitious entity UE Radio advertised, and then intercepted and showed the encrypted
transmission of the Fight without purchasing rights from J&J. 2 UE Radio is a fictitious name
owned and operated by UE Kitchen, LLC. 3 Timothy Allen is the managing member of UE
Kitchen, LLC d/b/a UE Radio and allegedly has "an obvious and direct financial interest in the
activities of UE Radio." 4 Mr. Allen allegedly supervised UE Radio's employees and directed
them to intercept the signal and show the Fight without paying for licensing fees. 5
At a noticed hearing, we reviewed an Instagram post announcing UE Radio would show
the Fight at 2217 N. American Street. 6 The undisputed evidence confirmed the capacity of this
facility is approximately 100 persons. 7 Under the "rate card", a commercial entity seeking to
televise the Fight in a room with a capacity of approximately 100 people based on its fire code
occupancy is required to pay a $2,000 fee to J&J. 8
Alerted by the advertising, J&J's private investigator went to 2217 N. American Street on
Fight night and paid a $20 cover charge. The facility contained four 46" televisions showing
these boxing matches. 9 The investigator swore the capacity of the banquet hall is approximately
100 people and she estimated between 64 and 73 persons present when she attended. 10 While the
investigator described a "chef station along the rear wall cooking waffles and chicken," she did

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not identify whether the patrons paid for this food or other evident expenses.

Assuming UE

Radio did not incur an expense, it would earn a $1,460 profit ($20 from 73 patrons) from pirating
the pay-per-view telecast of the Fight. We have no evidence of the number of persons attending
because of the pirated Fight.
It is undisputed neither UE Kitchen, LLC, d/b/a UE Radio nor Timothy Allen, paid J&J

for the right to show the September 12, 2015 pay-per-view telecast of the Fight. J&J concedes it
lacks evidence of UE Kitchen, LLC, UE Radio, or Timothy Allen ever pirating pay-per-view
telecasts other than showing the Fight.
J&J sued Timothy Allen, individually and d/b/a UE Radio and UE Kitchen, LLC d/b/a

UE Radio.

Although served, no Defendant answered the Complaint.

The Clerk of Court

entered default and we scheduled a hearing on the damages to be awarded in a judgment. We
ordered J&J to personally serve each Defendant. It did so. 11 Neither Defendant appeared at our
noticed hearing. J&J presented affidavits and oral argument at our long-scheduled hearing. J&J
elected not to request discovery for our damages hearing.
J&J argued we should award damages against UE Kitchen, LLC and against Timothy

Allen, individually because Mr. Allen is the managing member of UE Kitchen, LLC. We asked
J&J what evidence it adduced to show Mr. Allen received a financial benefit from showing the

Fight to support the award of damages. J&J argued we should award damages against Mr. Allen
because Mr. Allen admitted the allegation he managed UE Kitchen, LLC by defaulting. J&J
further argued we are impeding it from getting statutory damages when J &J does everything
asked of it and Defendants refuse to answer the summons and in our equitable powers we should
permit him to recover against Mr. Allen, individually, without evidence of a financial benefit.

3

Absent discovery, J&J argues we should enter its requested amount of damages simply
because it seeks them and the Defendants do not oppose. We appreciate the statutory purposes
including deterring this piracy, but we cannot abandon fundamental principles of evidence and
proof of damages. If J&J wants to maximize deterrence through substantial damages against
those it deems responsible for the piracy, it can seek discovery before proceeding on a hearing
seeking a money judgment and then present admissible evidence warranting enhanced damages.
II.

Analysis
While a default admits liability, J&J must demonstrate its damages against Timothy

Allen, individually and d/b/a UE Radio and UE Kitchen, LLC d/b/a UE Radio. J&J seeks
statutory damages in lieu of actual damages, enhanced damages due to the willfulness of the
piracy and to deter further piracy and attorney's fees and costs. We ordered J&J to file a posthearing affidavit demonstrating the reasonableness of its attorney's fees and out-of-pocket costs.
A. We award $3,460 in statutory damages against UE Kitchen, LLC d/b/a UE
Radio.
J&J may elect statutory damages in lieu of actual damages. 12 Our statutory damages

award must be at least $1,000 but no more than $10,000 per violation. 13 "The statutory damages
provision authorizes courts to use their discretion to fashion factors to estimate, rather than
compute actual damages." 14 Our statutory damages estimate includes two categories: (1) the
amount the violator would have paid had he or she paid for a license; and (2) the violator's
profits to the extent they are attributable to the violation. 15 In estimating profits, we consider:
(1) the size of the establishment;
(2) the number of patrons at the establishment, taken, to the extent
possible, as the number of patrons present because of the
interception (to which evidence of advertising to attract customers
may be relevant);

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(3) the number, size, and position of screens displaying the
broadcast (a factor to be considered in conjunction with (1) and (2)
as an indication of who might be there specifically to watch);
(4) any cover charge levied because of the interception;
(5) what additional money patrons spent because of the
interception (i.e., the amounts spent by those who otherwise would
not have come, plus any other premiums or greater spending by
those who would have come anyway); and
(6) any such other factors as may appear relevant in the case before
the court. 16
The evidence is undisputed.

J&J charges $2,000 for licensing this telecast at a facility

with a capacity of 100 persons. J&J elected not to take discovery and did not offer evidence as
to UE Radio's profits. While we could cap those profits at $1,460, we lack evidence as to who
attended to watch the pirated Fight.
But in applying the factors, J&J adduced evidence of four televisions with a 46" flat
screen television and three televisions in the bar area showing the pirated Fight. We do not
know the size of the facility housing the 73 patrons and at least one hostess. We do not know
whether the patrons spent other money while there. The undisputed evidence is a $20 cover
charge for 73 persons.
We calculate statutory damages of $3,460 representing the fee which should have been
paid for the telecast and the maximum profit of $1,460. We have no evidence to award more in
statutory damages. We award $3,460 statutory damages against UE Kitchen LLC because it
owns and operates UE Radio. 17
B. We award 33 % in enhanced damages against UE Kitchen, LLC.

We may award enhanced damages of up to $100,000 for each willful violation committed
"for purposes of direct or indirect commercial advantage or private financial gain." 18 Our award

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of enhanced damages may reflect an amount we consider appropriate to deter the prohibited
conduct. 19 Willfulness requires evidence of "intent and either knowledge of or reckless disregard
for the illegality of the conduct, and not mere negligence. " 20
Our court of appeals has not defined the factors for an appropriate amount of enhanced
damages. Our colleagues have adopted alternative measures to calculate an amount necessary to
deter the prohibited conduct. In measuring enhanced damages, some courts apply a multiplier of
at least three to six times the award of statutory or actual damages. 21 In deciding an appropriate
multiplier, we may consider factors such as whether the violator is a repeat offender.
Alternatively, courts will apply a series of factors in determining enhanced damages.

We will

not apply a multiplier in this case due to a lack of evidence of actual damages or other piracy of
encrypted broadcasts by UE Radio. 22
Instead, in a case where we have no evidence of repeated conduct, we find the deterrence
goals of enhanced damages can be evaluated through factors described in Joe Hand Promotions,

Inc. v. Michelina Enterprises, Inc. 23 We analyze "(1) whether the defendant has intercepted
unauthorized broadcasts repeatedly and over an extended period of time; (2) whether it reaped
substantial profits from the unauthorized exhibition in question; (3) whether the plaintiff suffered
significant actual damages; (4) whether the defendant advertised its intent to broadcast the event;
and (5) whether the defendant levied a cover charge or significant premiums on its food and
drink because of the broadcast. " 24
As in Michelina, J&J adduced no evidence of UE Kitchen, LLC or Mr. Allen being
repeat offenders. We also have no evidence of specific profits. But we have evidence of a $20
cover charge. While we have no evidence of substantial profits, we can fairly find profits from
between 64 and 73 people paying a $20 cover charge. J&J adduced evidence of advertising

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through an Instagram post by "bread_like_dat" announcing UE Radio would show the "Floyd
Mayweather Jr. v. Andre Berto WBA/WBC Welterweight Championship Fight Program." We
have no idea of who he is or his relationship to UE Radio, UE Kitchen, LLC, or Mr. Allen. We
also have no evidence of J&J's actual damages.
On balance, we find willfulness from the advertising which we cannot discount simply
because the social media came from an unknown "bread_like_dat." UE Radio is prominently
mentioned in the advertisement. The undisputed evidence is between 64 and 73 people attended
this exhibition. But the other four factors do not warrant a substantial premium of the statutory
damages. Our evaluation of the adduced evidence, and our allegiance to the statutory purposes
of deterrence, requires we award $1,141.80 as enhanced damages, representing a 33% enhanced
premium of the statutory damages.

C. J&J did not adduce evidence to hold Timothy Allen liable for the statutory and
enhanced damages.
J &J seeks to impose liability for statutory and enhanced damages upon Timothy Allen
individually. Mr. Allen can be individually liable if he "(l) has the right and ability to supervise
the violative activity, although [he] need not actually be supervising, because [he] need not know
of the violative activity, and (2) has a direct financial interest in the violation, i.e., financial
benefits, even if not proportional or precisely calculable, that directly flows from the violative
activity."2s
Mr. Allen's liability is shown by more than mere conclusory allegations, as in Michelina.
Mr. Allen, by defaulting, admitted he is the managing member of UE Kitchen, LLC. But this is
it. Unlike Chauca, J&J adduced no evidence of Mr. Allen ordering the telecast, advertising the
telecast or his presence in the facility for the showing. 26

J&J admittedly cannot show Mr. Allen

engaging in this type of conduct before or after the pirated Fight.

7

We cannot reach so far as to

find a person who is the managing member of a limited liability company made the decision to
pirate this telecast or supervised the activities this evening.

J&J may have adduced this

evidence but elected not to try. We will not impose personal liability on a business owner for
this piracy unless we have some evidence of his control over the offending entity or knowledge
of this offense.
D.

J&J did not adduce evidence of Timothy Allen doing business as UE Radio.

In its caption to the Complaint, J&J sued Timothy Allen d/b/a UE Radio.2 7 J&J does not
allege Timothy Allen is actually doing business as UE Radio. Instead, J&J alleges Mr. Allen is
the managing member of UE Kitchen, LLC d/b/a UE Radio and Mr. Allen supervised and
directed UE Radio's employees. 28
J&J's caption naming Timothy Allen d/b/a UE Radio, without more, is not enough for us
to impose personal liability upon him for statutory and enhanced damages as the owner of UE
Radio. In Joe Hand Promotions, Inc. v. Murray, Joe Hand sued Jane Murray d/b/a Brucekies
Pub in the caption. 29 The district court found "aside from the caption, the Complaint offered no
allegations that Jane Murray was actually doing business as Brucekies Pub" and instead, only
alleged Ms. Murray is the managing member of the limited liability company doing business as
Brucekies Pub. 30 The court found the name in the caption is not sufficient evidence to impose
liability against Jane Murray d/b/a Brucekies Pub. 31
J&J only named Timothy Allen as doing business as UE Radio in its caption and, as in

Murray, there are not sufficient allegations to impose liability where the only allegations are Mr.
Allen managed the limited liability company doing business as UE Radio and supervised and
directed UE Radio's employees. We do not award damages against Timothy Allen d/b/a UE

8

Radio because J&J fails to allege Mr. Allen does business as UE Radio. Absent a defaulted
allegation or proof at our noticed hearing, we cannot find Mr. Allen does business as UE Radio.
E. We award J&J's reasonable attorney's fees and costs against all Defendants.
Congress directs us to award full costs and reasonable attorneys' fees to "an aggrieved
party who prevails."32 The Supreme Court described "prevailing party" as a legal term of art and
cited Black's Law Dictionary's definition of "[a] party in whose favor a judgment is rendered,
regardless of the amount of damages awarded <in certain cases, the court will award attorney's
fees to the prevailing party>.-Also termed successful party."33
We award costs and attorneys' fees to J&J as the prevailing party against both UE
Kitchen, LLC and Timothy Allen.

While we only award statutory and enhanced damages

against UE Kitchen, LLC, J&J prevailed as to liability against both UE Kitchen, LLC and
Timothy Allen because we rendered judgment against both parties in favor of J&J. J&J is the
prevailing party against Timothy Allen "regardless of the amount of damages awarded. " 34
J&J submitted detailed unredacted invoices of its counsel's time and out of pocket
expenses incurred in pursuing Defendants.
attorneys' fees.

J&J requests $2,061.72 in costs and $7,382.00 in

We carefully reviewed the time entries and find they are reasonable in the

amount and allocation of hours among attorneys and paralegals.
The hourly rates for experienced attorneys in this District are also reasonable and
consistent with our earlier findings of reasonable rates in commercial matters. The billed hourly
rates of J&J's national ($500) and local ($400) counsel are reasonable for attorneys of their
experience in this District. Absent objection, we consider the present billing rates for attorneys
in this District since 2015 known in this Court. 35 Principally relying upon our independent

9

evaluation of reasonable hourly rates for attorneys practicing commercial litigation in this Court,
we find J&J's requested attorney's fees and costs are reasonable and necessary.

III.

Conclusion

Following a hearing, we find J&J is entitled to default and finding of liability against
Defendants which permits an award of reasonable attorney's fees and costs as the prevailing
party. We also award statutory damages and enhanced damages against UE Kitchen, LLC. We
recognize Congress' purpose in stopping this piracy and agree an effective way of doing so
would include damages against the individual who is named as a managing member of the
limited liability company which pirated the Fight and charged a $20 cover to watch the Fight.
But the lawful distributor of the telecast rights must adduce evidence to allow findings of
substantial enhanced damages and personal liability of the individual owning the business.
elected not to do so here.

In the accompanying Judgment, we enter a damages judgment of

$14,045.52 against UE Kitchen, LLC. and $9,443.72 against Timothy Allen.

1

ECF Doc. No. 1, ,-r 15.

2

Id. ,-r 11.

3

Id. ,-r 7.

4

Id. ,-r,-r 8, 12.

5

Id. ,-r 11.

6

ECF Doc. No. 13-2 at 4.

7

Id. at 3.

8

ECF Doc. No. 14, ,-r 8.

9

It

ECF Doc. No. 13-2 at 2.
10

lo Id. at 3.
11

J&J's lawyer cited his client's expenses in ensuring repeated notice as an additional burden.
We view notice of our Orders, particularly scheduling matters affecting property rights, as
fundamental to our obligations before entering judgment. These are costs of litigation
recoverable today under our Order.
12

47 U.S.C. § 605(e) (3)(C)(i).

13

47 U.S.C. § 605(e) (3)(C)(i)(II).

14

J & J Sports Prods., Inc. v. Cruz, No. 14-2496, 2015 WL 2376051, at *5 (E.D. Pa. May 18,
2015) (citing Joe Hand Promotions, Inc. v. Yakubets, 3 F. Supp. 3d 261, 277 (E.D. Pa. 2014)).
15

Id. (quoting 47 U.S.C. § 605(e) (3)(C)(i)(I)).

16

Id. (quoting Yakubets, 3 F. Supp. 3d at 280).

17

ECF Doc. No. 1, i! 7.

18

47 U.S.C. § 605(e)(3)(C)(ii).

19

J & J Sports Prods., Inc., 2015 WL 2376051, at *5.

20

Id. (quoting Yakubets, 3 F. Supp. 3d at 282-83).

21

Id. at *7.

22

J&J Sports Prods., Inc. v. Chauca, No. 14-6891, 2015 WL 7568389, at *3 (E.D. Pa. Nov. 25,
2015).
23

No. 16-1880, 2017 WL 3581674 at *4 (M.D. Pa. Aug. 18, 2017).

24

Id. at *4 (citing Joe Hand Promotions, Inc. v. Waldron, No. 11-849, 2013 WL 1007398, at *7
(D.N.J. Mar. 13, 2013)).

25

Chauca, 2015 WL 7568380, at *5 (quoting Yakubets, 3 F.Supp. 3d at 296 (emphasis omitted)).

26

Id. (individual owner/manager admitted he ordered the pirated telecast, advertised the telecast
and was inside the room showing the telecast the same night).
27

ECF Doc. No. 1 at 4.

28

Id.

i!il 8, 11-12.

11

29

No. 15-5631, 2016 WL 3903205 at *4 (E.D. Pa. July 18, 2016).

30

Id

31

Id.

32

47 U.S.C. § 605(e)(3)(B)(iii).

33

Buckhannon Bd & Care Home, Inc. v. W Virginia Dep't of Health & Human Res., 532 U.S.
598, 603 (2001) (quoting Black's Law Dictionary 1145(7th ed. 1999).

34

Id (quoting Black's Law Dictionary 1145(7th ed. 1999).

35

See DVComm, LLC v. Hotwire Communications, LLC, No. 14-5543, ECF Doc. No. 149 (E.D.
Pa. Feb. 16, 2016).

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