J&J Sports Productions Inc v. Hinojosa
MEMORANDUM OPINION. For the reasons explained, the court finds in defendant's favor on plaintiff's § 553(a)(1) and § 605(a) claims and dismisses this action by judgment filed today. (Ordered by Judge Sidney A Fitzwater on 3/9/2018) (Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
J&J SPORTS PRODUCTIONS, INC.,
as Broadcast Licensee of the May 4, 2013
Floyd Mayweather, Jr. v. Robert Guerrero
WBC Welterweight Championship
JUAN HINOJOSA a/k/a JUAN M.
HINOJOSA, Individually, and d/b/a
TAQUERIA ZACAPU a/k/a TAQUERIA §
ZACAPU MITCH 2 a/k/a TAQUERIA
ZACAPU MICH 2/JH AUTO SALES,
Civil Action No. 3:16-CV-1194-D
This cable piracy lawsuit requires the court to decide whether the defendant was
specifically authorized by his cable operator to receive the telecast in question, thereby
falling within 47 U.S.C. § 553(a)(1)’s safe harbor provision. Following a bench trial, and
for the reasons that follow,1 the court finds that the defendant proved that the safe harbor
The court sets out in this memorandum opinion its findings of facts and conclusions
of law. See Fed. R. Civ. P. 52(a)(1). Although the court has carefully considered the trial
testimony and exhibits, this memorandum opinion has been written to comply with the level
of detail required in this circuit for findings of fact and conclusions of law. See, e.g., Century
Marine Inc. v. United States, 153 F.3d 225, 231 (5th Cir. 1998) (discussing standards). The
court has not set out its findings and conclusions in punctilious detail, slavishly traced the
claims issue by issue and witness by witness, or indulged in exegetics, parsing or declaiming
every fact and each nuance and hypothesis. It has instead written a memorandum opinion
that contains findings and conclusions that provide a clear understanding of the basis for the
provision applies. Accordingly, the court dismisses this action with prejudice.
Plaintiff J&J Sports Productions, Inc. (“J&J”) is a media company that markets and
licenses commercial broadcasts of pay-per-view boxing matches.2 J&J follows a particular
business model. It purchases the exclusive rights to sublicense the commercial broadcast of
a particular boxing match from the promoter. J&J does so by entering into a licensing
agreement that gives it the exclusive authority to sublicense public viewing locations of the
fight. Any bar, restaurant, or other establishment intending to show the fight to the public
purchases the rights to the live broadcast from J&J at rates determined by the establishment’s
seating capacity. To order the match, these establishments are typically referred to J&J
through their cable or satellite television provider. J&J’s sublicense only covers commercial
viewings; it does not license residential or private viewings of the fights.
One of the commercial broadcasts that J&J sublicensed was the May 4, 2013 fight
between Floyd Mayweather and Robert Guerrero (“the Fight”). Under its sublicensing
agreement, J&J held “the exclusive licensing to exhibit” the live broadcast of the Fight “only
at commercial closed-circuit television exhibition outlets, such as theaters, cars, clubs,
lounges, restaurants and the like[.]” P. Ex. 1. The agreement did not cover residential
broadcasts of the Fight. It did, however, provide J&J with “the exclusive right to commence
or settle any claim or litigation arising out of the alleged piracy, use or proposed use of the
Unless otherwise noted, the facts in this section are undisputed.
closed circuit television telecast.” Id. at 4.
Defendant Juan Hinojosa (“Hinojosa”) owned and did business as Taqueria Zacapu
(sometimes referred to as “the restaurant”), a now-closed Mexican restaurant located in
Irving, Texas. Hinojosa ordered the broadcast of the Fight at Taqueria Zacapu from the
restaurant’s cable provider, Time Warner Cable (“TWC”). Taqueria Zacapu, however, was
a subscriber to a cable account that TWC classified as “residential.” The account for the
cable signal received at Taqueria Zacapu was in Hinojosa’s name. Consequently, when
Hinojosa contacted TWC to order the Fight for showing at Taqueria Zacapu, TWC did not
refer him to J&J as it would a commercial cable customer. Instead, TWC provided Hinojosa
the channel number for viewing the Fight and it billed him at the standard residential, or
private viewing, rate for the Fight.3
Hinojosa then showed the Fight’s live broadcast on Taqueria Zacapu’s two
televisions. The parties dispute whether the restaurant was open to the public during the
Fight. Hinojosa did not advertise that the restaurant was broadcasting the Fight, and the
broadcast itself occurred after the restaurant’s normal business hours. A private investigator
hired by J&J entered the restaurant and witnessed the conclusion of the Fight on restaurant’s
J&J filed this suit against Hinojosa, alleging that he violated either 47 U.S.C. § 553(a)
or § 605(a) by pirating the live broadcast of the Fight. The parties tried the case in a bench
The private viewing rate was $59.99. Had Hinojosa ordered the Fight at the
commercial rate through J&J, he would have been charged $2,200.
Because J&J concedes in its post-trial briefing that § 605(a) does not apply to this
case, the court only considers J&J’s claim under § 553(a).4
47 U.S.C. § 553(a)(1) provides that “[n]o 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.” Before May 2014, district courts in the Fifth Circuit applied a basic
strict liability test to § 553 claims that turned on the permission of the license owner. The
plaintiff licensor only had to prove that (1) the defendant showed the program for which the
plaintiff had an exclusive exhibition license and (2) the license owner had not authorized the
defendant to do so. See J & J Sports Prods., Inc. v. Flor De Cuba, TX, Inc., 2014 WL
6851943, at *3 (S.D. Tex. 2014) (Rosenthal, J.) (collecting cases). But in J & J Sports
Productions, Inc. v. Mandell Family Ventures, L.L.C., 751 F.3d 346 (5th Cir. 2014), the
Fifth Circuit held that § 553 “includes an essential exclusion, often referred to as a ‘safe
47 U.S.C. § 605(a) provides that “[n]o 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.”
It covers communications traveling through air via radio signal, while § 553 applies only to
cable-borne communications. J & J Sports Prods., Inc. v. Mandell Family Ventures, L.L.C.,
751 F.3d 346, 352-53 (5th Cir. 2014). Here, the parties agree that the broadcast of the Fight
was transmitted over cable. Therefore, only § 553 applies.
harbor,’ that precludes the imposition of liability on the majority of cable
recipients—customers of cable providers.” Id. at 348. “The text [of § 553] unambiguously
states that the liability extends only to the receipt of cable service not authorized by a cable
operator.” Id.(emphasis added). Thus a customer “need only receive authorization from a
cable operator for the cable services it receives” to ensure that he is not liable under
§ 553(a)(1). Id.
Hinojosa does not contest that the traditional elements of a § 553(a) violation are
present here. He admits showing the Fight at the restaurant and that neither he nor any
employee of the restaurant ordered the Fight from J&J. Instead, Hinojosa seeks the shelter
of § 553’s safe harbor provision.
No court has decided which party shoulders the burden of proving that § 553(a)(1)’s
safe harbor does or does not apply. Most safe harbor provisions are construed as a form of
an affirmative defense for which the defendant has the burden of proof. See, e.g., Capitol
Records, LLC v. Vimeo, LLC, 826 F.3d 78, 94 (2d Cir. 2016) (holding that service provider’s
entitlement to safe harbor under Digital Millennium Copyright Act is viewed as affirmative
defense, and therefore must be raised by defendant); United States v. Davis, 132 F.3d 1092,
1094 (5th Cir. 1998) (rejecting argument that, to obtain conviction under Anti-Kickback
statute, government must prove nonexistence of statute’s safe harbor).
The text of
§ 553(a)(1) also supports this interpretation. The safe harbor follows the offense itself, is
separated from the offense by a comma, and is preceded by “unless.” See 47 U.S.C.
§ 553(a)(1). Nevertheless, because the court finds that—regardless which party has the
burden of proof—a preponderance of the evidence demonstrates that the safe harbor applies,
the court will assume arguendo that Hinojosa has the burden of proving that his conduct falls
within the safe harbor of § 553(a)(1).
Hinojosa maintains that this case falls squarely within the safe harbor of § 553(a)(1).
He posits that he ordered the Fight through the restaurant’s TWC account, paid TWC for the
Fight, and received it through TWC’s broadcast. Hinojosa therefore reasons that he was
“specifically authorized” by his cable operator to show the Fight in the restaurant. J&J
contends that 553(a)(1)’s safe harbor is inapposite because Hinojosa’s restaurant ordered the
Fight through a residential—rather than a commercial—cable account. And it alleges that
the restaurant obtained a residential account through fraud and misrepresentation.
Mandell’s facts and holding indicate that the safe harbor provision is an objective
standard. In Mandell the defendant restaurant subscribed to a commercial cable account
from TWC. When the restaurant ordered the fight, however, TWC mistakenly gave the
restaurant access to the fight instead of directing them to the fight’s commercial license
holder (J&J, the same licensor as in the instant case). The restaurant therefore ordered the
fight at the private viewing rate, not the commercial rate. The district court granted
summary judgment in favor of J&J, Mandell, 751 F.3d at 347, holding that J&J only had to
prove that the event was shown and that J&J had not authorized the exhibition of the event,
id. at 348, i.e., it applied a strict liability standard. But the Mandell panel reversed, holding
that there was a disputed issued of material fact whether the safe harbor provision applied.
Id. at 350. The panel held, in pertinent part, that “in order for a cable customer to ensure that
it is not criminally or civilly liable under § 553(a)(1), it need only receive authorization from
a cable operator for the cable services it receives.” Id. at 348.5
Since Mandell, district courts have primarily applied the safe harbor in circumstances
where an establishment that had a commercial cable TV account was mistakenly given the
residential rate for a fight. See, e.g., J&J Sports Prods., Inc. v. Tienda y Taqueria “La
Frontera,” LLC, 2017 WL 3166734, at *7 (M.D. La. July 25, 2017) (dismissing § 553 claim
under safe harbor because defendant restaurant “had a commercial account with [cable
operator] and paid [cable operator] for the Program via pay-per-view”). Neither the
language nor reasoning of Mandell, however, limits its holding to such circumstances.
The safe harbor provision has also been applied where a commercial establishment
accessed a fight at the private viewing rate because its account was misclassified. In J&J
While neither Mandell nor § 553(a)(1) defines the term “authorized,” its application
in Mandell indicates it is the equivalent of “[t]o formally approve; to sanction.” Authorize,
Black’s Law Dictionary 153 (9th ed. 2009) (second definition). Compare id., with Authorize,
Black’s Law Dictionary 153 (9th ed. 2009) (first definition) (“[t]o give legal authority; to
empower”). TWC formally approved the restaurant’s ordering the Fight at the private
viewing rate, although it lacked the legal authority to do so under the respective licensing
Sports Productions, Inc. v. Madrid Night Club L.L.C., 2017 WL 3841911, at *1 (M.D. La.
Sept. 1, 2017), the defendant night club mistakenly subscribed to a “business” account rather
than a “hospitality” account. As a result, when the night club contacted its cable provider
to order the fight in question, it was not directed to the fight’s commercial license holder
(J&J, the same licensor as in the instant case). Instead, it was able to purchase the broadcast
of the fight at the cheaper private viewing rate. J&J maintained that “the Defendants were
not authorized to show the fight to nightclub patrons because they did not purchase the fight
under a hospitality account.” Id. at *6. But the Madrid Night Club court rejected this
position, concluding that the safe harbor provision applied:
The Fifth Circuit clearly stated in Mandell that § 553 does not
require cable customers “to take additional steps” to ensure that
the cable providers are authorized to distribute a program. If
cable customers are not required to verify the cable provider’s
authority to deliver programming, a fortiori, a cable customer
cannot be held to a duty to verify that the cable provider
properly classifies their category of service.
Id. (quoting Mandell, 751 F.3d at 348-49) (emphasis added).
Hinojosa has proved by a preponderance of the evidence6 that his restaurant (Taqueria
Zacapu) was a subscriber to a residential account with TWC, that he ordered the Fight on
The court bases the following findings in part on Hinojosa’s trial testimony, which
the court finds to be credible.
this account, and that he was billed for the Fight at the residential rate.7 Hinojosa also
proved that he was unaware that his restaurant was a subscriber via a residential account, and
that he told TWC he was ordering the Fight for a restaurant. He also proved that TWC
representatives visited his restaurant in relation to the TWC account at least twice: once
when the account was set up at the restaurant, and once after the Fight. This cable account
was active at the restaurant from 2010 until the restaurant closed in 2017.8 The court
therefore finds from a preponderance of evidence that TWC specifically authorized Hinojosa
to receive the cable signal for the Fight. Hinojosa’s restaurant was a subscriber to a TWC
cable account. TWC installed the cable account in Hinojosa’s restaurant, and allowed
Hinojosa to order the Fight through the restaurant’s TWC cable account. His cable bill
reflected the charge. His cable operator, therefore, specifically authorized him to receive the
broadcast of the Fight.
J&C attempts in several ways to distinguish this case from Mandell and the postMandell district court decisions cited above. J&J first maintains that safe harbor is only
applicable to establishments with commercial cable accounts—i.e., cases that essentially
There is no evidence that Hinojosa did not pay his cable bill in full for the month
during which the Fight was shown at his restaurant.
The evidence also demonstrates that Hinojosa showed the Fight in his restaurant
outside of normal business hours. The restaurant sold no food or drinks to customers during
the Fight, and charged no admission fee or cover charge. In fact, the only invited guests were
Hinojosa’s family and friends. The door was left open and unmonitored, however, allowing
others to enter the restaurant and observe the broadcast of the Fight.
mirror specifically the facts of Mandell. Although the present case has some factual
distinctions, the court discerns no persuasive basis to decline to apply Mandell’s reasoning
or result. There is nothing in the language of § 553(a)(1) or in the reasoning or result of
Mandell to suggest that the safe harbor only applies when a commercial account holder is
mistakenly specifically authorized to receive a communications service offered over a cable
system. To escape liability, the defendant “need only receive authorization from a cable
operator for the cable services it receives.” Mandell, 751 F.3d at 348. And Hinojosa proved
by a preponderance of the evidence that he received authorization from TWC, his cable
operator, to receive the Fight broadcast.
J&J also contends that Hinojosa cannot prove that he was specifically authorized to
receive the Fight broadcast without pointing to language in his contract or terms of service
with TWC. The court disagrees. J&J is correct that courts applying § 553(a)(1)’s safe
harbor often cite relevant cable contracts and service agreements. See, e.g., Madrid Night
Club, 2017 WL 3841911, at *5. While such evidence certainly can be probative and assist
the trier of fact when determining whether a cable operator specifically authorized the
interception or receipt of a communications service, Mandell demonstrates this proof is not
required. In determining the safe harbor provision’s applicability, the panel noted that the
defendant submitted affidavits that demonstrated that “TWC authorized the receipt of the
broadcast despite the language in the Service Agreement.” Mandell, 751 F.3d at 350
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(emphasis added).9 In the instant case, the trial testimony and the cable bills are adequate
proof for the court to find from a preponderance of the evidence that Hinojosa ordered the
Fight through his restaurant’s cable account. In other words, he “receive[d] authorization
from a cable operator for the cable services [he] receive[d].” Id. at 348.
J&J also complains that Hinojosa should not have been able to receive cable TV
service for his restaurant via a residential account. The court is not suggesting by its
decision today that a defendant can rely on the safe harbor of § 553(a)(1) where he has
obtained specific authorization from a cable operator through fraud or deceit. Cf. Mandell,
751 F.3d at 350 (applying safe harbor when defendant “did not steal, intercept, or obtain the
broadcast under false pretenses”). But here there is little, if any, proof that TWC’s
authorization was rooted in any misrepresentation. The court finds that Hinojosa did not
know that his restaurant account was classified as residential, and none of the restaurant’s
cable bills introduced at trial label the restaurant’s account as “residential.”10 Moreover,
TWC’s agents had seen the premises of Hinojosa’s restaurant multiple times. Hinojosa also
testified credibly that he told the TWC representative that he was ordering the Fight for the
The defendant in Mandell introduced affidavits from both TWC officials and the
restaurant owner as summary judgment evidence. See Mandell 751 F.3d at 349-50.
The cover page of the documents produced by TWC lists the account as residential.
But the cover page was produced for use at trial. There is no evidence that Hinojosa was
ever presented with, or saw, this cover page before ordering the Fight.
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restaurant.11 And yet TWC did not recategorize the restaurant’s cable account or otherwise
alert Hinojosa that the account was incorrectly classified.
Moreover, the safe harbor of § 553(a)(1) does not assign to Hinojosa any duty to
ensure that his account is classified correctly. As the Mandell panel explained, “[t]he statute
does not hinge liability on the cable customer taking additional steps or the cable operator
being licensed to distribute a broadcast: The exclusion from liability simply applies to those
who receive authorization from a cable operator.” Mandell, 751 F.3d at 348-49. The court
is persuaded by the reasoning in Madrid Night Club: whether the cable operator’s error is
in giving the improper rate as in Mandell, or is in misclassifying the cable account, the
customer does not have a statutory duty to take additional steps. See Madrid Night Club,
2017 WL 3841911, at *6. Nor has the court been presented with any contractual or terms
of service language that would point to such a burden.12
J&J appears to maintain that the fact that a restaurant was receiving cable service
In light of this evidence, and because the restaurant itself was a sole proprietorship,
the fact that the restaurant’s account was in Hinojosa’s name is unpersuasive of any intent
to defraud. All of the restaurant’s utility accounts were in Hinojosa’s name.
For example, courts have refused to apply § 553(a)(1)’s safe harbor provision when
the terms of service alert the cable customer that the cable operator does not have the right
to distribute certain pay-per-view programming. See, e.g., J & J Sport Prods., Inc. v.
Brewster “2” Café, LLC, 2014 WL 4956501, at *3-4 (E.D. Ark. Oct. 2, 2014) (refusing to
apply safe harbor when Comcast Terms and Conditions stated “Comcast does not have the
absolute right to distribute pay-per-view video programming . . . to commercial
establishments” and required customer to get written authorization); Joe Hand Promotions,
Inc. v. Phoenix Promotions LLC, 2012 WL 3025107, at *3 (E.D. Mich. July 24, 2012)
(same); J & J Sports Productions, Inc. v. TCOS Enters., Inc., 2012 WL 124482, at *2 (E.D.
Pa. Jan. 13, 2012) (same). No such contractual provision has been proved in the present case.
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through a residential account is per se evidence of subscriber fraud and dishonesty. The
court disagrees. A cable operator could misclassify an account by mistake. See, e.g.,
Madrid Night Club, 2017 WL 3841911, at *6. A miscreant employee of a cable operator
could also knowingly miscategorize an account without the subscriber’s knowledge, perhaps
to bolster overall subscriber numbers by signing up customers at residential rates who
otherwise would have declined to subscribe at commercial rates. The court need not
speculate concerning what happened in the case of Hinojosa’s restaurant. But there is no
evidence that TWC classified the Taqueria Zacapu restaurant as a residential account due to
Hinojosa’s fraud or other misconduct. The misclassified cable account in this case is not
sufficient evidence of fraud.
J&J provides no other evidence of fraud or deceit by Hinojosa.13 Examples of
evidence it could have presented abound. For instance, J&J did not point to any contractual
language that placed a burden on Hinojosa to ensure that his restaurant’s cable account was
properly classified. Neither did J&J produce a TWC representative or TWC documents to
counter Hinojosa’s testimony. Instead, J&J conclusorily asserted that the residential account
itself was evidence of fraud. As the court has explained, this fact is not alone sufficient. For
these reasons, the court finds that Hinojosa—despite his misclassified cable account—“did
not steal, intercept, or obtain the broadcast under false pretenses.” Mandell, 751 F.3d at 350.
The court is not placing on J&J the burden of proving that the safe harbor is
inapplicable. As explained above, Hinojosa has proved by a preponderance of the evidence
that the safe harbor applies. A plaintiff can undermine a defendant’s safe harbor evidence
with its own evidence of fraud. J&J did not do so in this case.
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J&J contends that—Mandell’s holding aside—a ruling of no liability in this case will
undermine § 553’s policy considerations. It posits that, should the court accept Hinojosa’s
position, the safe harbor exception will swallow § 553’s rule. According to J&J, “there
would be nothing to stop business owners from setting up their accounts as residential,
ordering it through a residential account, and showing it at a commercial establishment.”
Trial Tr. 170. According to J&J, “every business customer would do that, just to get the
fight and get around the commercial licensing fee,” ultimately undermining all attempts to
enforce cable piracy laws. Id. at 169. The court disagrees that such concerns warrant
altering its application of § 553(a)(1)’s text and Mandell in this case.
These arguments presume that factors such as the negligence or complicity of cable
operators will enable commercial establishments to set up their accounts as residential at
will, just so that these commercial establishments can pay a lower price to show pay-perview programming. While this is conceivable theoretically, cable operators presumably have
their own reasons for insisting on the proper classification of customer accounts besides the
effect on pay-per-view programming, not the least of which is their own profit motive to
charge higher commercial rates for cable accounts.
Moreover, if cable operators do not adequately police how customer accounts are
established and classified, licensors like J&J are not left without a remedy. As the
Mandell panel explained, “J&J is not left without a remedy as the unauthorized cable
operator may itself be liable for its actions . . . ; the ‘safe harbor’ protects only the innocent
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recipient[.]” Mandell, 751 F.3d at 348 n.3.
In fact, applying cable piracy laws against cable operators like TWC provides
licensors like J&J an efficient way to preempt the instant case, Madrid Night Club, Mandell,
and the other instances where cable operators allow commercial establishments to receive
fights through their cable accounts rather than through J&J. The imposition of statutory
penalties could incentivize cable operators to contractually require subscribers to verify that
programming purchased via a residential account is not being received, or shown, at a
commercial establishment. Or it could motivate cable companies to take other steps to police
themselves and reduce subscription errors. Or licensors could negotiate with promoters for
protection against cable operator errors of the type at issue here. In Mandell, for example,
“TWC offered to pay J&J $2,000 in liquidated damages pursuant to TWC’s pay-per-view
broadcast agreement.” Mandell, 751 F.3d at 347 n.1. In sum, there are readily-available
methods to deter business owners from establishing their cable accounts as residential in
order to reduce their costs of receiving pay-per-view programming. The court’s decision
today does not undermine those available methods.
Finally, the hypothetical that J&J describes is fraud. Should an exclusive license
holder prove that a commercial establishment has subscribed to a residential cable account
“just to get the fight and get around the commercial licensing fee,” this would demonstrate
the intent necessary to prove fraud and negate the availability of the safe harbor.
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In the present case, a preponderance of the evidence shows that Hinojosa wanted to
receive the Fight at his restaurant, Taqueria Zacapu; he had cable TV service at the restaurant
provided by TWC; TWC classified his account as residential, a misclassification that was not
the result of Hinojosa’s fraudulent or deceitful conduct; Hinojosa contacted TWC to purchase
the Fight, he was given a channel on which to view it, and he was charged (and presumably
paid) the fee that applied to a residential account; and Hinojosa received the Fight through
his cable TV service with TWC. The court therefore finds from a preponderance of the
evidence that TWC specifically authorized Hinojosa to receive the Fight and that
§ 553(a)(1)’s safe harbor applies. J&J is not entitled to recover under § 553(a)(1).
For the reasons explained, the court finds in Hinojosa’s favor on J&J’s § 553(a)(1)
and § 605(a) claims and dismisses this action by judgment filed today.
March 9, 2018.
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE
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