J&J Sports Productions, Inc. v. Chance Club Corporation et al

Filing 34

ORDER GRANTING MOTION FOR INTERLOCUTORY DEFAULT JUDGMENT...granting 31 Motion for Default Judgment, filed by J&J Sports Productions Inc. The Court also concludes that J&J is entitled to reasonable attorneys' fees. [see Order for specifics] (Ordered by Judge Terry R Means on 7/20/2011) (klm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
J&J SPORTS PRODUCTIONS, INC.

§
§
VS.
§
§
CHANCE CLUB CORPORATION, et al. §

CIVIL ACTION NO. 4:10-CV-294-Y

ORDER GRANTING MOTION FOR
INTERLOCUTORY DEFAULT JUDGMENT
Before the Court is the Motion for Interlocutory Default
Judgment (doc. 31) filed by plaintiff J&J Sports Productions, Inc.
(“J&J”). By the motion, J&J seeks a default judgment on its claims
against defendant Chance Club Corporation (“Chance”) for alleged
violations of the Federal Communications Act (“FCA”).

After

review, the Court will grant the motion.

I.

Background
J&J markets and licenses commercial exhibitions of pay-per-

view prizefight events.

(App. 5.)

One such event took place on

May 5, 2007, featuring world-famous boxers Oscar De La Hoya and
Floyd Mayweather Jr. (“the Event”).1

Pursuant to a licensing

agreement with the Event’s promoter, J&J was granted an exclusive
license to exhibit and sublicense the video presentation of the
Event at “closed-circuit” locations throughout the State of Texas,
such as theaters and restaurants.

1

(Id. at 5, 11-17.)

The Event also included a number of preliminary fights known as
“undercard bouts.” (App. 5-6, 19.)

To safeguard against unauthorized video showings of the Event,
its interstate satellite video transmission was electronically
coded.

(Id.)

Authorized establishments were provided with the

electronic-decoding equipment and satellite coordinates necessary
to

receive

the

establishment

video

was

signal

also

of

charged

Event.2

(Id.)

sublicense

fee

the
a

proportionate to the capacity of the establishment.3

Each
roughly

(Id. at 6.)

Despite these safeguards, Chance, doing business as “Monte
Carlos,”

broadcast

establishment

on

May

a

video

5,

even

sublicense from J&J to do so.

depiction
though

of

it

the

had

(Id. at 6, 19-21.)

Event

not

at

its

obtained

a

And according to

J&J, Chance could not have broadcast the Event without making an
intentional effort to intercept the satellite transmission.
J&J, therefore, filed the instant lawsuit on April 28, 2010,
alleging violations of sections 553 and 605 of the FCA.
U.S.C.A. §§ 553 and 605 (West 2011).4

See 47

Chance was served with

process on August 6, 2010, via personal service on its registered
agent (doc. 4).

After Chance failed to plead or otherwise defend,

the clerk entered Chance’s default on December 16, 2010, upon J&J’s
2

To be precise, for certain authorized establishments, J&J simply
contacted the establishments’ satellite providers, rather than providing decoding
equipment. (App. 5-6.)
3

The customary fee for receiving transmission of the Event was calculated
by multiplying the relevant establishment’s maximum-fire-code capacity by twenty
(20). (App. 23.)
4

Also named as defendants in this case were James Andrew Lloyd and
Barbara Dale Lloyd. But because neither of these defendants is in default, J&J
is not seeking judgment against them by the instant motion.

2

request (doc. 13).

That same day, however, counsel appeared for

Chance and filed an unopposed motion for leave to file an answer
(doc. 12).

The Court granted the motion and set aside the clerk’s

December 16 entry of default (docs. 14, 15).

Chance then filed an

answer on December 28 (doc. 16).
But on January 24, 2011, the Court entered an order granting
Chance’s attorney leave to withdraw as counsel of record (doc. 20).
In that order, the Court informed Chance that it could not proceed
in federal court without an attorney and gave Chance fourteen (14)
days to obtain replacement counsel.

See Memon v. Allied Domecq

QSR, 385 F.3d 871, 873 (5th Cir. 2004).

The Court warned Chance

that failure to obtain counsel would result in entry of default
against it.
After Chance failed to meet that deadline, the Court entered
a show-cause order (doc. 21) and gave Chance additional time to
obtain replacement counsel.

The Court once again warned Chance

that failure to obtain counsel would result in entry of default
against

it.

Nevertheless,

Chance

failed

to

obtain

counsel,

prompting the Court to enter an Order to Obtain New Counsel (doc.
23).

In that order, the Court gave Chance its final extension of

time to obtain counsel and its third warning concerning default.
Despite these admonitions, Chance never obtained counsel.
Consequently, the Court entered an Order for Entry of Default (doc.
25) on April 5, 2011, and the clerk entered Chance’s default that

3

same day. In light of those events, J&J now seeks an interlocutory
default judgment on its claims against Chance.5

II.

Discussion
A.

Default-Judgment Standard

Securing a default judgment under Federal Rule of Civil
Procedure 55 is a three-step process.

See Fed. R. Civ. P. 55; N.Y.

Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996).

First,

the movant must establish the adverse party’s default by showing
that the adverse party has failed to plead or otherwise defend.
See Fed. R. Civ. P. 55(a); N.Y. Life Ins., 84 F.3d at 141.

Second,

upon such a showing, the clerk must enter the adverse party’s
default.
141.

See

Fed. R. Civ. P. 55(a); N.Y. Life Ins., 84 F.3d at

And finally, once default has been entered, the movant may

apply for a judgment based on the adverse party’s default.

See

Fed. R. Civ. P. 55(b); N.Y. Life Ins., 84 F.3d at 141.
In evaluating the merits of a motion for default judgment, the
Court treats the well-pleaded facts in the movant’s complaint as
true.

See Nishimatsu Constr. Co. v. Hous. Nat’l Bank, 515 F.2d

1200, 1206 (5th Cir. 1975) (noting that “[t]he defendant, by his
default, admits the plaintiff’s well-pleaded allegations of fact”).

5
The default judgment that J&J seeks is interlocutory because, if
granted, it will not dispose of the entire case.
There are two individual
defendants whose defenses will not be adjudicated by the instant order. See
supra note 4.

4

Those allegations, along with any additional evidence presented by
the movant, must be sufficient to support the requested judgment.
See id. (“[A] defendant’s default does not in itself warrant the
court in entering a default judgment.

There must be a sufficient

basis in the pleadings for the judgment entered.”).
B.

Analysis

The record establishes that Chance is in default and that the
clerk has entered that default in accordance with Rule 55(a).
Fed. R. Civ. P. 55(a).

See

Thus, the inquiry before the Court is

whether J&J’s well-pleaded allegations and supporting evidence are
sufficient to support the requested judgment.

J&J’s complaint

asserts claims against Chance under sections 553 and 605 of the
FCA.
“Section 553(a)(1) [of the FCA] provides that ‘no person shall
intercept or receive or assist in intercepting or receiving any
communications

service

offered

over

specifically authorized to do so.’”

a

cable

system,

unless

Prostar v. Massachi, 239 F.3d

669, 673 (5th Cir. 2001) (quoting 47 U.S.C.A. § 553(a)(1) (West
2011)). Similarly, section 605 of the FCA states that “[n]o person
not being entitled thereto shall receive or assist in receiving any
interstate

or

foreign

communication

by

radio

and

use

such

communication (or any information therein contained) for his own
benefit or for the benefit of another not entitled thereto.”
U.S.C.A. § 605(a).

47

“In addition, section 605 prohibits anyone

5

unlawfully

receiving

publishing

the

such

information

communications
or

from

transmission.

divulging

or

Both

sections

contemplate civil (and criminal) enforcement measures.”

Prostar,

239 F.3d at 673 (citing 47 U.S.C.A. §§ 553(b)-(c); 605(a),(e)).
J&J’s well-pleaded allegations, along with the affidavits and
other evidence submitted by J&J in support of the instant motion,
establish that Chance unlawfully intercepted the video transmission
of the Event. While J&J has not presented direct evidence that J&J
intercepted

the

transmission,

“[c]ircumstantial

evidence

can

support a finding that a communication was intercepted, even absent
direct evidence.”

DIRECTV, Inc. v. Robson, 420 F.3d 532, 537 (5th

Cir. 2005) (footnote omitted).

The record indicates that Chance

exhibited the video presentation of the Event at its establishment,
Monte

Carlos,

and

that

it

did

so

without

first

obtaining

authorization from J&J, the holder of the exclusive right to
sublicense video transmission of the Event to Texas commercial
venues.6

(App. 5-6, 11-17, 19-21.)

This is sufficient to support

a finding of liability under sections 553 and 605.
Moreover, it is evident that Chance’s interception of the
Event’s

video

transmission

was

willful

commercial advantage and private gain.

and

for

purposes

of

As one court noted,

“[s]ignals do not descramble spontaneously, nor do television sets
6
According to the affidavit of investigator Guy C. Connelly IV
(incorporated into the affidavit of Thomas P. Riley as Exhibit B), Connelly
observed Chance show the undercard bout between boxers Rey Bautista and Sergio
Medina to approximately thirty (30) patrons. (Ex. B., App. 19-20.)

6

connect themselves to cable distribution systems.”

Time Warner

Cable v. Googies Luncheonette, Inc., 77 F. Supp. 2d 438, 442
(S.D.N.Y.

1999).

And

“[w]hile

[Chance]

may

not

have

been

well-versed in the statutory restrictions on the unauthorized
interception of satellite transmissions, the Court finds that there
must have been some knowledge on the part of [Chance] that such
interception could not be had for free.”

Kingvision Pay-Per-View,

Ltd. v. Valles, No. EP-00-CA-179-DB, 2001 WL 682205, at *3 (W.D.
Tex. Mar. 30, 2001).
In view of these findings, the Court concludes that J&J is
entitled to the two types of damages set out in 47 U.S.C.A. §
605(e)(3)(C). With regard to the first type, § 605(e)(3)(C)(i)(II)
provides for statutory damages “in a sum of not less than $1,000 or
more than $10,000, as the court considers just.”
605(e)(3)(C)(i)(II).

47 U.S.C.A. §

In addition, § 605(e)(3)(C)(ii) allows the

Court to increase the damages award “[i]n 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.”7

47

U.S.C.A.

§

605(e)(3)(C)(ii).

J&J

seeks

$10,000 in statutory damages and $50,000 in additional damages.
After review of J&J’s documentary evidence and the affidavit of

7

“The legislative history associated with section 553 and the amendments
to section 605 reveals that one of Congress's principal objectives was to
discourage theft of cable services. To that end, Congress articulated a variety
of penalties and remedies to protect the . . . television cable companies from
unauthorized reception of their transmissions.”
Prostar, 239 F.3d at 673
(footnotes omitted) (internal quotation marks omitted).

7

Thomas P. Riley, the Court concludes that these sums are reasonable
and should be awarded.8

See J&J Sports Prods., Inc. v. Gomez, No.

H-10-871, 2010 WL 3154829, at *2 (S.D. Tex. Aug. 9, 2010) (awarding
$10,000 in statutory damages and $50,000 in additional damages in
a case involving similar facts).
The Court also concludes that J&J is entitled to reasonable
attorneys’ fees.

See 47 U.S.C.A. § 605(e)(3)(B)(iii) (“The court

. . . shall direct the recovery of full costs, including awarding
reasonable attorneys’ fees to an aggrieved party who prevails.”).
As J&J points out, this Court has considered it reasonable in antipiracy cases to award attorneys’ fees in the amount of one-third of
the total damages recovery.

See, e.g, Entm’t by J&J, Inc. v. Nuno,

No. 3:01-CV-0631-H, 2001 WL 896941, at *1 (N.D. Tex. Aug. 1, 2001)
(Sanders, J.).

Consistent with those cases, and after review of

the affidavit of John W. Bowdich and the factors set out in Johnson
v. Ga. Highway Express, Inc., 488 F.2d 714, 717-719 (5th Cir.
1974), overruled on other grounds by Blanchard v. Bergeson, 489
U.S. 871 (1989), the Court concludes that J&J should recover
attorneys’ fees in the amount of one-third of the damages recovery
in this case.

Further, in the event that Chance files any

8

J&J contends, and the Court agrees, that it would be difficult to
determine the actual damages that J&J sustained as a result of Chance’s unlawful
exhibition of the Event.
Whenever an unauthorized establishment exhibits a
closed-circuit program, companies like J&J not only miss out on licensing fees,
but also sustain more indirect forms of damages. This includes “los[ing] as
customers legitimate commercial establishments[,] which are unwilling and
financially unable to compete with those unauthorized commercial establishments.”
(App. 7.)

8

unsuccessful post-judgment motions or institutes any unsuccessful
appellate proceedings that require additional legal work by J&J’s
counsel, J&J should recover fees for that work as well.
Finally,

the

injunctive relief.

Court

concludes

that

J&J

is

entitled

to

Pursuant to § 605(e)(3)(B)(i), the Court “may

grant temporary and final injunctions on such terms as it may deem
reasonable.”

47 U.S.C.A. § 605(e)(3)(B)(i).

In the Court’s view,

given Chance’s actions in this case, it is appropriate to enjoin
Chance

from

future

unlawful

interceptions

of

J&J’s

satellite

transmissions.

III.

Conclusion
Therefore, in view of the foregoing, the Court GRANTS J&J’s

motion for default judgment.

Chance is hereby ENJOINED, absent

prior authorization from J&J, from intercepting the transmission of
any closed-circuit program with respect to which J&J possesses the
rights to sublicense and exhibit.

In addition, J&J shall recover

$10,000 in statutory damages; $50,000 in additional damages for
willful violations of § 605; and $20,000 in attorneys’ fees. Postjudgment interest shall accrue on these amounts at a rate of .16%
per annum.

See 28 U.S.C.A. §

1961(a).

In addition, the Court enters this conditional award of
attorneys’ fees:
(1) J&J shall recover an additional $10,000 in the event that
Chance files any unsuccessful post-trial motions.
9

(2) J&J shall recover an additional $15,000 in the event that
Chance files an unsuccessful appeal to the United States
Court of Appeals for the Fifth Circuit.
(3)

J&J shall recover an additional $5,000 in the event that
Chance files a petition for writ of certiorari to the
United States Supreme Court if the petition is denied or
if the resultant proceedings do not lead to reversal of
at least a portion of the judgment entered by this Court.

(4)

J&J shall recover an additional $10,000 in the event that
it files a petition for writ of certiorari to the United
States Supreme Court if the writ is granted and if the
subsequent proceedings result in the complete restoration
of the judgment entered by this Court.

(5)

J&J shall recover an additional $2,500 for the collection
of the judgment entered in this case, should J&J obtain
a writ of execution, writ of garnishment, writ of
attachment, or other similar method of collection.

SIGNED July 20, 2011.
____________________________
TERRY R. MEANS
UNITED STATES DISTRICT JUDGE

10