Innovative Sports Management, Inc. v. Mazatlan Enterprises, LLC et al

Filing 22

ORDER GRANTING Plaintiff's 20 Motion for Default Judgment. Damages awarded. IT IS FINALLY ORDERED that Plaintiff's request for a permanent injunction is DENIED. Signed by Judge Sam Sparks. (klw)

FILED
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS29I4 FEB 28 PM
AUSTIN DIVISION
US !)Tt
CLERK

,,EST[

INNOVATIVE SPORTS MANAGEMENT, INC.,
as Broadcast Licensee of the September 11, 2010
"Mexican Fiesta:" Morales v. Limond Event dibla
Integrated Sports Media,
Plaintiff,

DSTtCI

3:

OF

01

1EXIS

B

Case No. A-13-CA-785-SS

-vs-

MAZATLAN ENTERPRISES, LLC, Individually
and a/k/a Taqueria Mazatlan d/b/a Mazatlan

Enterprises, LLC d/b/a Mazatlan Enterprises;
ALFREDO PALENCIA, Individually and a/k/a
Aifredo Plascencia-Leon d/b/a Taqueria Mazatlan
d/b/a Mazatlan Enterprises, LLC
d/b/a Mazatlan Enterprises; and OSCAR
HERNANDEZ Individually and a/k/a Oscar A.
Hernandez d/b/a Taqueria Mazatlan d/b/a
Mazatlan Enterprises, LLC d/b/a Mazatlan
Enterprises,
Defendants.

ORDER
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and

specifically Plaintiff Innovative Sports Management, Inc.'s Motion for Default Judgment [#20].
Having reviewed the documents, the governing law, and the file as a whole, the Court now enters
the following opinion and orders.

Background
This is an anti-piracy case involving the Federal Communications Act of 1934 (the

Communications Act). Plaintiff Innovative Sports Management, Inc. (Innovative) is a license

I-,

company, which was authorized to sub-license the closed-circuit telecast of the September 11, 2010

"Mexican Fiesta: Morales v. Limond" Event, including undercard or preliminary bouts (collectively,
the Event), at closed-circuit locations such as theaters, arenas, bars, clubs, lounges, and restaurants
throughout Texas. Defendants allegedly exhibited the event in Defendants' establishment, Taqueria

Mazatlan Enterprises (the Establishment), without paying the required licensing fee to Innovative
and without Innovative's authorization.

If true, the Defendants would be in violation of the Federal Communications Act of 1934,
47 U.S.C.

U.S.C.

§

§

553, 605. Innovative seeks the maximum statutory damages of $10,000.00 under 47

605(e)(3)(C)(i)(II), $50,000.00 for a "willful" violation under 47 U.S.C. § 605(e)(3)(C)(ii),

attorneys' fees and costs, and a permanent injunction enjoining Defendants from ever intercepting
or exhibiting an unauthorized program in violation of the Federal Communications Act.

Defendants have failed to plead, respond, or otherwise defend themselves in this action, and
Innovative brings this Motion for Default Judgment.

Analysis
I.

Legal

StandardDefault Judgment

When a party defaults by failing to appear or defend a claim, the Court may enter a final

judgment without conducting a trial on liability. See FED.
disfavored, and should only be granted sparingly. Rogers

R.

v.

Civ. P. 55(b). Default judgments are

HarifordLife & Accident Ins. Co., 167

F.3d 933, 936 (5th Cir. 1999). However, that policy is "counterbalanced" by otherjudicial interests

such as justice and expediency, such that granting a default judgment is generally a matter of

discretion of the Court. See id. The Second Circuit has noted the threat of default judgment

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encourages parties to timely file pleadings, and discourages dilatory tactics. See Enron Oil Corp.
v.

Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993).
Obtaining a defaultjudgment is a three-step process, involving (1) default by the defendant,

(2) an entry of default, typically by the clerk of court, and (3) the default judgment itself, issued by

the court. See N.Y. Life Ins. Co.

v.

Brown, 84 F.3d 137, 141 (5th Cir. 1996). However, there is no

default, and the clerk of court cannot enter default, when the defendant has not been served. Pinaud
v.

Cnty.

of Suffolk, 52 F.3d 1139, 1152

n.1 1 (2d Cir. 1995). The plaintiff bears the burden

of

showing the summons and complaint were served upon the defendant on a certain date. See 0 'Brien
v.

RI

O'Brien & Assocs., 998 F.2d 1394, 1398 (7th Cir. 1993). Judgment cannot be rendered

against a defendant unless the defendant has been served with process, or has otherwise appeared
or waived service of process. See Omni Capital Int'l

v.

Rudolf Wolff& Co., 484 U.S. 97, 104

(1987).

II.

Application
The three-step process for obtaining a default judgment has been satisfied in this case.

Defendants have been served. Defendants have failed to plead, respond, or otherwise defend
themselves in this action, and they have, therefore, defaulted. The clerk of the court has entered
default against Defendants. See Clerk's Entry of Default [#21]. Now, Innovative moves this Court
for default judgment, and the Court, in granting the motion, considers the claim and the amount of
damages.
A.

Liability
As relevant to this case, the Communications Act combats piracy of television signals by

prohibiting the unauthorized interception and broadcast of satellite or cable transmissions. 47 U.S.C.
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§

553, 605. The Communications Act is a strict liability statute. To establish liability under the

Communications Act, Innovative must establish (1) the Event was shown in Defendants'

Establishment, and (2) the exhibition was not authorized by Innovative. See King Vision Pay-PerView Ltd.

v.

Lake Alice Bar, 168 F.3d 347, 349 (9th Cir. 1999) (finding a bar showed a preliminary

bout required judgment in favor of plaintiff); see also Joe Hand Promotions, Inc.

v.

Macias, No. H-

11-1773,2012 WL 950157, at *2 (S.D. Tex. Mar. 19, 2012) ("The FCA is a strict liability statute,
and the plaintiff is required only to prove the unauthorized exhibition of the intercepted

transmission.").
The undisputed evidence, which consists of affidavits, establishes Defendants' liability in

this case. Innovative had the rights to exhibit and sublicense the right to exhibit the Event. Pl.'s
Mot. Default J. [#20-1], Ex. A (Riley Aff.), at ¶J 4-6. Defendants broadcast the Event in their

establishment for their patrons to view. Id. at ¶ 8; Id., Ex. A-2 (Giese Aff.). Defendants were not
authorized by Innovative to broadcast the Event and had not paid the appropriate commercial
licensing fee to Innovative. Riley Aff. ¶ 9.

Accordingly, the Court finds Defendants violated 47 U.S.C.

§sS

553 and 605 by showing,

without authorization, the closed-circuit telecast of the "Mexican Fiesta: Morales v. Limond" Event,
including undercard or preliminary bouts on September 11, 2010.
B.

Statutory Damages
The Communications Act allows the aggrieved party to elect to recover either its actual

damages plus the violator's profits attributable to the violation, or statutory damages of at least
$1,000.00 but not more than $10,000.00, as the court considers just. 47 U.S.C.

§

605(e)(3)(C)(I).

Innovative has elected to seek statutory damages, and requests the maximum amount of$ 10,000.00.

The Court finds the maximum statutory damage amount to be a just award in this case. Defendants
could have licensed the Event and shown the fight in their establishment but did not do so.

Innovative's actual damages would be difficult, if not impossible, to prove. As a starting point,
Innovative lost both potential customers and potential licensing revenue when Defendants illegally
broadcast the Event. Riley Aff. ¶J 12-13. Pirate broadcasters also threaten the vitality of the entire
pay-per-view industry, including Innovative, because at least some businesses are unwilling to
compete with the pirates by paying licensing fees. Id. ¶ 12. Congress specifically amended the

Communications Act to address the problem of satellite and cable piracy, stiffening the penalties and
expanding standing to sue in order to thwart the piracy it deemed a threat to the long-term viability

of the industry. United States v. Harrell, 983 F.2d 36, 39-40 (5th Cir. 1993) (citing 1988 U.S. Code
Cong. & Admin. News 5577, 5657-5 8). Congress felt an award of $10,000.00 would prove

sufficient to deter unauthorized broadcasts, and the Court finds $10,000.00 is ajust amount in this
case.
C.

Willful Violation Damages
Innovative also seeks additional damages because the Communications Act allows a court

to increase an award of damages by up to $100,000.00 for each violation "committed willfully and

for purposes of direct or indirect commercial advantage or private financial gain." 47 U.S.C.
§

605(e)(3)(C)(ii).
The willfulness of Defendants' violation is established by the undisputed evidence indicating

an unauthorized commercial establishment can only receive a broadcast of the Event through some

wrongful action, such as using an unauthorized decoder or satellite access card, or moving an

authorized cable box from its authorized location (such as a personal residence) to the commercial
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establishment. Riley Aff. ¶ 10. Defendants' intent to benefit financially is also apparent from the
record. Defendants intercepted the Event and broadcast it on two big-screen television to twelve

patrons. See Giese Aff, Accordingly, the Court finds Defendants' violation "was committed

willfully and for purposes of direct or indirect commercial advantage or private financial gain." 47
U.S.C.

§

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

The amount of "willful" damages is left to the Court's discretion, though the award cannot

exceed $100,000.00 for any single violation. Innovative requests five times the amount of statutory
damages, or $50,000.00. Pl.'s Mot. Default J. [#20], at ¶ 18. The Court finds a total damages award

of $60,000 to be excessive in this case. The commercial licensing fee for the Event is based on
seating in the establishment showing the Event; any establishment seating fifty to one-hundred

patrons would be charged the minimum rate of $1,000.00. Pl.'s Mot. Default J. [#20-1], Ex. A-3.

Innovative's eye witness to the broadcast estimated the capacity of Defendants' establishment as
approximately seventy-five people. Giese Aff. Defendants would likely have paid the minimum rate
to license the broadcast. The Court finds an additional award of $5,000.00 is sufficient to hold

Defendants accountable and discourage commercial establishments from committing similar
violations. A total damages award of$ 15,000.00 equates to fifteen times the legitimate licensing cost.
Such an award should provide an adequate disincentive for would-be future violators, and is in line

with this Court's prior treatment of similar offenders. See J&JSports Production, Inc.

v.

Candido

Lumagbas Raygon, No. A-i 1-CA-936-SS, at 5-7 (W.D. Tex. Nov. 01, 2012) (order granting
summary judgment); J&JSports Productions, Inc.

v.

Papagallos

1,

Inc., No. A-08-CA-691-SS, at

6-7 (W.D. Tex. April 17, 2009) (order granting summary judgment).

D.

Attorneys' Fees and Costs
Innovative also requests an award of attorneys' fees and costs. The Court is required to

award reasonable attorneys' fees to an aggrieved party who prevails under the Communications Act.
47 U.S.C.

§

605(e)(3)(B)(iii). The undisputed evidence establishes an award equal to one-third of

the recovery$5,000.00 in this

caseis reasonable for cases

such as this, and is frequently the

measure of attorneys' fees used in Communications Act cases by federal courts in Texas. Pl.'s Mot.

Default J. [#20-1], Ex. B (Diaz Aff.). The Court declines to make a contingent award for post-

judgment or appellate attorneys' fees, but will entertain such a request if it becomes necessary in the
future. The Court also awards Innovative such other reasonable costs as it has incurred.

E.

Injunction
Innovative finally requests an injunction essentially prohibiting Defendants from violating

the Communications Act in the future. The Court finds such an injunction would serve no purpose
or function not already provided by the statute itself, and therefore declines to issue an injunction.

Conclusion
Accordingly,
IT IS ORDERED that Plaintiff Innovative Sports Management, Inc.'s Motion for

Default Judgment [#20] is GRANTED;
IT IS FURTHER ORDERED that the Plaintiff is awarded statutory damages in the

amount of $10,000.00 and an additional award of damages for a willful violation in the
amount of $5,000.00. Plaintiff is thus awarded a total of FIFTEEN THOUSAND AND
00/100 DOLLARS ($15,000.00), plus post-judgment interest at the rate of.12 percent per

annum calculated from the date of this order;
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IT IS FURTHER ORDERED that the Plaintiff is awarded reasonable attorneys' fees
in the amount

of FIVE THOUSAND AND 00/100 DOLLARS ($5,000.00) and its costs;

IT IS FINALLY ORDERED that Plaintiff's request for a permanent injunction is

DENIED.
SIGNED this the

23 day of February 2014.

SA
IThJITED STATES DISTRICT JUDGE

785 mot def judg ordjtw.frm

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