Joe Hand Promotions Inc v. 2 Tacos Bar & Grill LLC et al

Filing 16

MEMORANDUM OPINION AND ORDER granting 14 Motion for Partial Default Judgment. (Ordered by Chief Judge Barbara M.G. Lynn on 1/26/2017) (ran)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
JOE HAND PROMOTIONS, INC.,
Plaintiff,
vs.
2 TACOS BAR & GRILL, LLC, et al.,
Defendants.

§
§
§
§
§
§
§
§
§
§

Civil Action No. 3:16-CV-01889-M

MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff Joe Hand Promotions, Inc.’s Motion for Partial Default
Judgment against 2 Tacos Bar & Grill, LLC, d/b/a 2 Tacos Bar & Grill (“2 Tacos”), and Jesus M.
Hinojosa (“Hinojosa”) [ECF No. 14]. For the reasons provided below, the Motion is
GRANTED.
I.

BACKGROUND1
This is an anti-piracy case brought under the Federal Communications Act of 1934, as

amended, 47 U.S.C. §§ 553, 605, (“FCA”). Plaintiff distributes sports and entertainment
programming, and purchased and retained the commercial exhibition rights to all undercard
bouts and the main prizefight of “UFC 162: Silva v. Weidman,” broadcasted on July 6, 2013 (the
“Event”). Pl. Ex. B. Hand Aff. ¶ 4. Plaintiff then sold commercial distribution rights to its
customers, including casinos, racetracks, bars, restaurants, and nightclubs. Id. On July 6, 2013,
Plaintiff alleges that the Event was broadcast on multiple televisions at the 2 Tacos establishment

1
The Court accepts as true the facts alleged by Plaintiff in its Complaint and supporting affidavits, as 2
Tacos and Hinojosa have failed to answer. See Nishimatsu Constr. Co. v. Hous. Nat'l Bank, 515 F.2d
1200, 1206 (5th Cir. 1975).
1

without Plaintiff’s prior approval or payment of the proper commercial sublicense fee to exhibit
the Event. Id. ¶ 9.
On June 29, 2016, Plaintiff filed its Complaint against 2 Tacos and its owners, Hinojosa
and Abel Jimenez (“Jimenez”), alleging that Defendants were liable for violating the FCA and
seeking statutory damages and attorney’s fees. Compl. ¶¶ 2–4, 16–19. Jimenez was served on
July 9, 2016. ECF No. 6. Hinojosa and 2 Tacos were served on July 14, 2016. ECF Nos. 5, 7.
On August 1, 2016, Jimenez, acting pro se, filed his answer and generally denied each allegation
in the Complaint. ECF No. 8. Neither 2 Tacos nor Hinojosa have answered or otherwise
responded to the Complaint. On August 11, 2016, the Clerk of Court entered default against 2
Tacos and Hinojosa. ECF No. 12.
II.

LEGAL STANDARD
Rule 55 governs applications for default and default judgment. Fed. R. Civ. P. 55. Three

steps are required to obtain a default judgment: (1) default by the defendant; (2) entry of default
by the Clerk's office; and (3) entry of a default judgment. N.Y. Life Ins. Co. v. Brown, 84 F.3d
137, 141 (5th Cir. 1996). A default occurs when a defendant has failed to plead or otherwise
respond within the time required by the Federal Rules of Civil Procedure. Id. The Clerk will
enter a default when the party's default is established by an affidavit or otherwise. Id. After the
entry of default, a plaintiff may apply to the court for a default judgment. Id.
Default judgment is a drastic remedy, resorted to only in extreme situations. Sun Bank of
Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir.1989). However, it is a
remedy generally committed to the discretion of the district court. Mason v. Lister, 562 F.2d
343, 345 (5th Cir. 1977). In determining whether to enter default judgment, district courts
should examine: (1) whether material issues of fact are at issue; (2) whether there has been

2

substantial prejudice; (3) whether grounds for default are clearly established; (4) whether default
was caused by good faith mistake or excusable neglect; (5) the harshness of the default
judgment; and (6) whether the court would feel obligated to set aside a default on the defendant's
motion. Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).
III.

DISCUSSION
a. DEFAULT JUDGMENT
Neither 2 Tacos nor Hinojosa answered or otherwise responded within the twenty-one

days allotted under the Federal Rules, which Plaintiff demonstrated by affidavit. Fed. R. Civ. P.
12(a)(1)(A)(i); ECF No. 11-1 ¶ 4. Therefore, the Clerk’s entry of default against 2 Tacos and
Hinojosa was proper. Plaintiff now seeks for default judgment against 2 Tacos and Hinojosa.
Here, after considering the record as a whole, the Court finds that a partial default
judgment against 2 Tacos and Hinojosa is warranted. First, as a corporation, 2 Tacos is neither a
minor nor an incompetent person, nor can it be active in military service. See Fed. R. Civ. P.
55(b)(2); 50 U.S.C. § 3931. The record before the Court further indicates that Hinojosa is not a
minor, incompetent, or in active military service. See ECF Nos. 11-1 at 2; 11-2 at 1 
In determining whether partial default judgment is appropriate, the Court next turns to the
factors outlined in Lindsey. 161 F.3d at 893. These factors favor granting default judgment
against 2 Tacos and Hinojosa. There are no material issues of fact at issue here; because 2 Tacos
and Hinojosa have both failed to respond, this Court takes the facts from Plaintiff's pleading as
true. See Nishimatsu, 515 F.2d at 1206. There has been no substantial prejudice against 2 Tacos
and Hinojosa; all Defendants were properly served, the grounds for default against 2 Tacos and
Hinojosa were clearly established, and the Clerk properly entered default against them. There is
nothing before the Court indicating that 2 Tacos’ and Hinojosa’s failure to appear was a good

3

faith mistake or excusable neglect. Entering default judgment against 2 Tacos and Hinojosa,
who have taken no action to respond to this action, is not “harsh.” See Lindsey, 161 F.3d at 893.
Defendants 2 Tacos and Hinojosa have had over six months to respond to Plaintiff’s Complaint,
and over three months to respond to Plaintiff’s Motion for Partial Default Judgment, which
mitigates the harshness of a default judgment. See John Perez Graphics & Design, LLC v.
Green Tree Inv. Grp., Inc., 2013 WL 1828671, at *3 (N.D. Tex. May 1, 2013) (Lynn, J.).
Furthermore, there appears to be sufficient basis in the pleadings to support a default
judgment, and damages can be calculated with reasonable certainty without a hearing. Lindsey,
161 F.3d at 893; James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993). Plaintiff’s Complaint alleges
that Defendants, “[b]y unauthorized satellite transmission or, alternatively, by unauthorized
receipt over a cable system, . . . willfully intercepted or received the interstate communication”
of the Event and then “unlawfully transmitted, divulged and published said communication” to
patrons. Pl. Compl. ¶ 12. Through these acts, Plaintiff alleges, Defendants “pirated Plaintiff’s
licensed exhibition of the [Event] and infringed upon Plaintiff’s exclusive rights while avoiding
proper authorization and payment to Plaintiff.” Id. ¶ 14. Defendants’ actions, Plaintiff alleges,
violate 47 U.S.C. §§ 605, for which Plaintiff has standing to bring a private right of action. Id.
¶ 17–19.
A person violates § 605 when he “intercept[s] any radio communication . . . or receive[s]
or assist[s] in receiving any interstate or foreign communication by radio and use[s] such
communication . . . for his own benefit or for the benefit of another not entitled thereto.”
47 U.S.C. § 605(a). Similarly, one violates § 553 by “intercept[ing] and receiv[ing] or assist[ing]
in intercepting or receiving any communications service offered over a cable system” without
authorization. Id. § 553(a)(1). The unauthorized interception of satellite or cable transmissions

4

violates both §§ 553 and 605. Enmt. By J & J Inc. v. Al-Waha Enters., Inc., 219 F. Supp. 2d 769,
774 (S. D. Tex. 2002).
The Court concludes that Plaintiff’s Complaint contains facts sufficient to establish the
necessary elements of its § 605 violation claims against 2 Tacos and Hinojosa. The pleadings
establish that the Event was transmitted via satellite uplink, and subsequently transmitted
interstate to cable systems and satellite television companies via satellite signal. Pl. Compl. ¶ 9.
The pleadings further establish that Defendants intercepted the communication of the Event
without authorization and broadcasted to patrons at 2 Tacos for their own commercial benefit.
Id. ¶ 12–14. For evidence, Plaintiff relies on the uncontroverted affidavit of Dennis Burns to
support its allegation that Defendants committed a violation of 47 U.S.C. §§ 553 and 605. Pl.
Mot. Ex. B(3), ECF No. 15-5. Burns’s affidavit states that, on July 6, 2013, he observed a
broadcast of the Event over thirteen flat screen televisions at 2 Tacos in the presence of
approximately 70 patrons. Id. at 1. Plaintiff also attaches the affidavit of its President, Joe H.
Hand, which establishes that 2 Tacos did not pay a commercial sublicense fee to broadcast the
Event. ECF No. 15-2 ¶ 8. Plaintiff’s uncontroverted evidence has, therefore, established a
viable claim for relief under § 605 of the FCA.
b. DAMAGES
Having so concluded, the Court must determine whether damages can be calculated
without a hearing, pursuant to Rule 55(b)(2). Fed.R.Civ.P. 55(b)(2). In the default judgment
context, damages may “be entered without a hearing” if “the amount claimed is a liquidated sum
or one capable of mathematical calculation.” United Artists Corp. v. Freeman, 605 F.2d 854,
857 (5th Cir.1979). That is, a hearing is not necessary where the amount of damages can be
determined with certainty, by reference to the pleadings and supporting documents, and where a

5

hearing would not be beneficial. T–Mobile USA Inc. v. Shazia & Noushad Corp., No. CIV 3:08–
cv–00341, 2009 WL 2003369, *3 (N.D. Tex. July 10, 2009) (citing James v. Frame, 6 F.3d 307,
310 (5th Cir.1993)).
i. STATUTORY DAMAGES
For its injuries associated with Defendants’ alleged violation of § 605 of the FCA,
Plaintiff seeks statutory damages, including interest, costs, and attorney’s fees. Compl. ¶ 19. A
person injured by a violation of § 605 may be awarded actual or statutory damages. 47 U.S.C.
§ 605(e)(3)(C)(i). Statutory damages for each violation of the section must be awarded in an
amount no less than $1,000 and no more than $10,000, as the Court in its discretion finds just.
Id. § 605(e)(3)(C)(i)(II). If the Court finds that a violation was committed “willfully and for
purposes of direct or indirect commercial advantage or private financial gain,” it may, in its
discretion, increase the damage awarded by an amount of not more than $100,000. Id.
§ 605(e)(3)(C)(ii). An aggrieved party who prevails shall receive full costs, including reasonable
attorney's fees. Id. § 605(e)(3)(B)(iii).
Plaintiff seeks statutory damages in the amount of $10,000.00, the statutory maximum.
ECF No. 14 ¶ 21. Plaintiff argues that “it would be impossible to determine the full extent of the
profits lost” and damage sustained as a result of Defendants’ violation. Id. ¶ 24. Further,
Plaintiff maintains that it should receive compensation because it has been deprived of the
“value, benefits and profits derived” from the unauthorized broadcast of the Event, as well as the
value of “business investment, business opportunities, reputation, and goodwill.” Id. ¶ 29. In an
affidavit, Plaintiff’s president describes how unauthorized broadcasts cause “serious erosion” of
Plaintiff’s sales, resulting in a decrease in revenue and also of Plaintiff’s customers, who may be
unwilling or unable to compete with unauthorized broadcasters. ECF No. 15-2 at 2–6. 

6

Courts consider various factors, including the number of patrons in the establishment at
the time of the violation and the licensing fee, in assessing statutory damages for violations of
§ 605. See Joe Hand Promotions, Inc. v. Alima, No. 3:13-cv-0889, 2014 WL 1632158, at *4
(N.D. Tex. Apr. 22, 2014) (awarding base statutory damages of $5,000 when the licensing fee
would have been approximately $1,500); J & J Sports Prods., Inc. v. Beck, No. L–13–57, 2013
WL 5592333, at *2 (S.D. Tex. Oct. 9, 2013) (awarding base statutory damages of $5,000 when
the licensing fee would have been between $1,200 and $1,600); J & J Sports Prods., Inc. v. Q
Café, Inc., No. 3:10–CV–2006–L, 2012 WL 215282, at *1 (N.D. Tex. Jan. 25, 2012) (awarding
base statutory damages of $10,000 when licensing fee would have been $1,600); Al–Waha
Enters., 219 F. Supp. 2d at 777 (awarding base statutory damages of $5,000 when the sublicense
fee would have been at least $1,500).
The uncontroverted evidence indicates that there were 70 patrons at 2 Tacos at the time
of the violation. ECF No. 15-5 at 1. Plaintiff’s rate card for the Event further indicates that for a
maximum occupancy of 165 people, the capacity of 2 Tacos, it would have cost $1,300 to legally
broadcast the Event. ECF No. 15-4 at 1. The Court finds it reasonable, therefore, to award base
statutory damages in the amount of $5,000. See Beck, 2013 WL 5592333, at *2 (“[T]o
adequately deter piracy, the cost of piracy must be significantly higher than the cost of buying a
license.”).
ii. ADDITIONAL DAMAGES
Plaintiff also seeks additional damages of $50,000, pursuant to 47 U.S.C.
§ 605(e)(3)(C)(II), alleging that 2 Tacos’ and Hinojosa’s actions were willful and “for purposes
of direct or indirect commercial advantage or private financial gain.” ECF No. 14 at 19. To
deter pirating of cable and satellite broadcasts, court have awarded in damages multipliers of

7

three to eight (3 to 8) times the statutory damages as additional damages. Q Café, Inc., 2012 WL
215282, at *5.
To prove willfulness, Plaintiff argues that the Event’s broadcast could not have been
accessed innocently, and points to the affidavit of its president, Joe Hand, who established that
Plaintiff’s programming cannot be “mistakenly, innocently, or accidentally intercepted.” ECF
No. 15-2 ¶ 11. Instead, Hand’s affidavit states, intercepting the Event’s broadcast would require
an act, such as use of a box or card to unscramble the signal, misrepresentation of a commercial
establishment as a residential property, use of an illegal cable drop or splice, or other illegal
unencryption devices. Id. Plaintiff argues that interception of the Event transmission was of
sufficient complexity that Defendants could not have acted by mistake. ECF No. 14 at 20.
Further, for proof that 2 Tacos and Hinojosa acted for commercial advantage, Plaintiff points to
the Texas Limited Sales, Excise and Use Tax Permit issued to 2 Tacos, which was active on the
date of the Event, as well as a Facebook page advertising the Event at 2 Tacos. ECF No. 15-1 at
1; ECF No. 15-7 at 1.
The Court concludes that 2 Tacos and Hinojosa acted willfully. Given “the limited
methods of intercepting closed circuit broadcasting of pay-per-view events and the low
probability that a commercial establishment could intercept such a broadcast merely by chance,”
courts have held that conduct such as that of 2 Tacos and Hinojosa in this case to be willful and
for the purposes of commercial advantage. E.g., Al-Waha Enters., 219 F. Supp. 2d at 777 (citing
cases); Beck, 2013 WL 5592333 (“[I]t is obvious that commercial establishments show sports
programs to draw business, not out of charity.”). However, the Court notes that there was no
cover charge imposed to attend the Event, and Plaintiff does not allege that 2 Tacos was a repeat
offender in broadcasting the Event. Taking those facts into consideration, therefore, the Court in

8

its discretion will only award total damages of $15,000, or three times the base award amount.
Al-Waha, 219 F. Supp. 2d at 766 (awarding treble damages in a similar case); Beck, 2013 WL
5592333 (same); see also Alima, 2014 WL 1632158, at *5 (awarding four times the base
statutory damages in additional damages when a cover was charged to view the unauthorized
broadcast). Plaintiff is thus entitled to a statutory damages pursuant to 47 U.S.C.
§ 605(e)(3)(C)(i)(II) from 2 Tacos and Hinojosa, jointly and severally, in the amount of $5,000
and additional damages pursuant to 47 U.S.C. § 605(e)(3)(C)(ii) from 2 Tacos and Hinojosa,
jointly and severally, in the amount of $15,000. Plaintiff is entitled to total damages in the
amount of $20,000.
iii. ATTORNEY’S FEES AND COSTS
Under the FCA, the Court is required to order the recovery of full costs, including
attorney’s fees, to an aggrieved party who prevails. 47 U.S.C. § 605(e)(3)(B)(iii). The Court
awards Plaintiff $610.00 in costs, which reflect $400.00 in filing fees for the Complaint and
$210.00 in service of process fees for 2 Tacos and Hinojosa.2 See ECF No. 15-10 at 1–3.
With regards to fees, Plaintiff seeks a one-third contingent fee or, alternatively, the hourly
fees for the time presented in the affidavit of Plaintiff’s counsel. ECF No. 14 at 24. The Court
determines that the hourly rate is the appropriate method of determining an attorney’s fee award,
and therefore must determine whether the requested amount is reasonable. The determination of
a fees award is a two-step process: first, the court calculates the “lodestar,” which is equal to the
number of hours reasonably expended multiplied by the prevailing hourly rate in the community
for similar work, excluding all time that is excessive, duplicative, or inadequately documented.

2
In its Motion, Plaintiff seeks $280.00 for service of process on all Defendants, including Jimenez who
has appeared. Because Plaintiff seeks only partial default judgment against 2 Tacos and Hinojosa, the
Court does not now award costs associated with serving Jimenez.
9

Jimenez v. Wood Cty., Tex., 621 F.3d 372 (5th Cir. 2010) (citing Rutherford v. Harris Cty., 197
F.3d 173, 192 (5th Cir. 1999)). Once the lodestar amount is calculated, the court may adjust it
based on the twelve factors set forth in Johnson v. Ga. Highway Express, Inc., 488 F.2d 714,
717–19 (5th Cir. 1974).3
In her affidavit, Plaintiff’s counsel estimates her fee to be $2,950.00, based on 11.8 hours
of work at a rate of $250.00 per hour. ECF No. 15-8 at 3. The Court accepts her determination
of the lodestar to be reasonable given the description of her time spent on the case and her rates
considering her experience with anti-piracy cases. Id. at 3–4. The Court sees no reason to make
any adjustment to this figure.
Plaintiff also seeks attorney’s fees for post-trial or appellate services. ECF No. 14 at 24.
In support of this request, Plaintiff’s counsel provides an affidavit making estimates related to
attorney’s fees necessary in the event, for example, a Defendant files a post-judgment motion or
appeal. ECF No. 15-8 at 3. At this time, the Court grants the following conditional awards of
attorney’s fees for post-trial and appellate services: $2,500.00 for collection of a judgment
rendered in this case in the event that Plaintiff obtains a writ of execution, writ of garnishment,
writ of attachment or other process; $5,000.00 in the event that 2 Tacos or Hinojosa files a postjudgment or pre-appeal motion; and $15,000.00 in the event 2 Tacos or Hinojosa files an appeal
to the Federal Court of Appeals for the Fifth Circuit.
IV.

CONCLUSION

3
The Johnson factors are (1) time and labor required for the litigation; (2) novelty and difficulty of the
questions presented; (3) skill requisite to perform the legal services properly; (4) preclusion of other
employment; (5) customary fee; (6) whether the fee is fixed or contingent; (7) limitations imposed by the
client or circumstances; (8) amount involved and the result obtained; (9) experience, reputation, and
ability of the attorneys; (10) “undesirability” of the case; (11) nature and length of the professional
relationship with the client; and (12) awards in similar cases. 488 F.2d at 717–19.
10

For the foregoing reasons, the Court GRANTS Plaintiff’s Motion for Partial Default
Judgment against 2 Tacos and Hinojosa. It is, therefore, ORDERED, ADJUDGED, and
DECREED that, with respect to defendants Jesus M. Hinojosa and 2 Tacos Bar & Grill, LLC,
d/b/a 2 Tacos Bar & Grill:
1. Plaintiff recover statutory damages pursuant to 47 U.S.C. § 605(e)(3)(C)(i)(II) from
defendants Hinojosa and 2 Tacos, jointly and severally, in the amount of $5,000.00.
2. Plaintiff recover additional damages pursuant to 47 U.S.C. § 605(e)(3)(C)(ii) from
defendants Hinojosa and 2 Tacos, jointly and severally, in the amount of $15,000.00.
3. Plaintiff recover attorneys’ fees from Defendants, jointly and severally, in the amount of
$2,950.00, which the Court finds to be reasonable and necessary, plus taxable court costs
of $610.00.
4. Plaintiff recover the following conditional awards of attorney’s fees for post-trial and
appellate services, from defendants Hinojosa and 2 Tacos, jointly and severally, in the
following circumstances:
a. $2,500.00 for collection of a judgment rendered in this case in the event that
Plaintiff obtains a writ of execution, writ of garnishment, writ of attachment or
other process;
b. $5,000.00 in the event that Hinojosa or 2 Tacos files a post-judgment or preappeal motion; and
c. $15,000.00 in the event 2 Tacos or Hinojosa files an appeal to the Federal Court
of Appeals for the Fifth Circuit.
5. All sums awarded above shall bear post-judgment interest at the rate of 0.82% per annum
until paid.

11

6. All writs and process for the enforcement and collection of this Judgment may issue as
necessary. In connection with any Writ of Execution in this case, the Court directs the
United States Marshals Service to use any means or force reasonably necessary to satisfy
this Judgment.
SO ORDERED.
January 26, 2017.

_________________________________
BARBARA M. G. LYNN
CHIEF JUDGE

12