G&G Closed Circuit Events, LLC v. GCF Enterprises LLC et al
Filing
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ORDER GRANTING IN PART 9 Motion for Default Judgment Signed by Judge Kathleen Cardone. (mn)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
EL PASO DIVISION
G&G CLOSED CIRCUIT EVENTS,
LLC, as Broadcast Licensee of the
April 20, 2013 Saul Alvarez v. Austin
Trout Fight Program,
Plaintiff,
v.
1) GCF ENTERPRISES LLC,
individually, and d/b/a EL TEXANO
and d/b/a EL TEXANO MEXICAN
RESTAURANT and d/b/a EL
TEXANO RESTAURANT AND
CANTINA; and
2) GASTON CARLOS FLORES a/k/a
GASTON C. FLORES, individually,
and d/b/a EL TEXANO and d/b/a EL
TEXANO MEXICAN RESTAURANT
and d/b/a EL TEXANO
RESTAURANT AND CANTINA,
Defendants.
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EP-15-CV-00111-KC
ORDER
On this day, the Court considered Plaintiff’s Motion for Final Default Judgment & Brief
in Support (the “Motion”), ECF No. 9, in the above-captioned case. After considering Plaintiff’s
arguments, the record, and the applicable law, the Court GRANTS the Motion in part.
I.
BACKGROUND
Plaintiff is a licensing company with the exclusive right to sub-license the closed-circuit
telecast of the April 20, 2013, “Saul Alvarez. v. Austin Trout Fight Program,” including
undercard or preliminary bouts, (collectively “the Event”) at closed-circuit locations throughout
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Texas. Pl.’s Original Compl. 3, ECF No. 1; see also Mot. Ex. A-1, at 13, ECF No. 9-1.1
Broadcasts of the Event can only be exhibited in a commercial establishment if the establishment
enters into a contractual relationship with Plaintiff. Compl. 3.
On April 20, 2013, the night of the event, Defendants GCF Enterprises LLC and Gaston
Carlos Flores (“Flores”) owned, operated, and supervised El Texano Restaurant and Cantina (the
“Establishment”). Id. at 2. Defendants displayed the Event to patrons in the Establishment
without contracting with Plaintiff, without authorization and without paying the proper licensing
fee. Id. at 4. Furthermore, Plaintiff alleges that the telecast was transmitted via satellite and was
electronically coded, or “scrambled,” so that Defendants had to decode it using electronic
decoding equipment in order to view it clearly. Id. at 3-4; see also Mot. Ex. A, at 6-7, ECF No. 9-1.
Plaintiff filed suit on April 16, 2015. See generally Compl. Plaintiff alleges in the
Complaint that Defendants violated the Federal Communications Act (“FCA”), 47 U.S.C. §§ 553
and 605, by unlawfully and willfully intercepting and publishing the telecast of the Event on
April 20, 2013. Compl. 3-4. Plaintiff seeks statutory damages under either 47 U.S.C. §§ 553 and
605. Id. at 5. Specifically, Plaintiff seeks up to $10,000.00 for Defendants’ unauthorized
reception of cable service under 47 U.S.C. § 553(c)(3)(A)(ii), and up to $50,000.00 for
Defendants’ allegedly willful, unauthorized reception of cable service under 47 U.S.C. §
553(c)(3)(B). Id. Further, Plaintiff requests up to $10,000.00 for Defendants’ allegedly
unauthorized publication or use of communications pursuant to 47 U.S.C. § 605(e)(3)(C)(i)(II),
and up to $100,000.00 for Defendants’ allegedly willful and commercially advantageous
publication or use of communications pursuant to 47 U.S.C. § 605(e)(3)(C)(ii). Id.
Plaintiff also seeks an award for full costs and expenses of this action, including
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In order to assist the reader, the Court cites to the page numbers generated by the Court’s
electronic docketing system.
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attorneys’ fees pursuant to 47 U.S.C. §§ 553(c)(2)(C) and 605(e)(3)(B)(iii), in the amount of onethird of recovery, or alternatively the hourly time presented, along with attorneys’ fees for posttrial and appellate services. Id.; see Mot. Ex. B, at 35-39, ECF No. 9-1
Finally, Plaintiff seeks a permanent injunction to prevent Defendants from exhibiting any
unauthorized or unlicensed programs in violation of the FCA. Compl. 5.
Defendant GCF was served with the summons in this case on June 2, 2015. See
Summons in a Civil Action 2, ECF No. 6. Defendant Gaston Carlos Flores was also served on
June 2, 2015. Id. at 4. As of the date of this Order, Defendants have not answered or filed a
responsive pleading. Plaintiff now seeks a default judgment pursuant to Federal Rule of Civil
Procedure 55. See Mot.; Fed. R. Civ. P. 55.
II.
DISCUSSION
A.
Standard
The clerk of the court shall enter default if a party fails to plead or otherwise defend, and
the moving party shows that failure by affidavit or otherwise. Fed. R. Civ. P. 55(a). After the
clerk enters default, a party may move for a default judgment. See Fed. R. Civ. P. 55; see also N.
Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). A court enters default judgment only
if there is “a sufficient basis in the pleading for the judgment entered.” Nishimatsu Constr. Co. v.
Hous. Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).
“The defendant, by his default, admits the plaintiff’s well-pleaded allegations of fact, is
concluded on those facts by the judgment, and is barred from contesting on appeal the facts thus
established.” Id. When reviewing a motion for default judgment, a court takes the plaintiff’s
well-pleaded factual allegations as true, but not damages. United States ex rel. M-CO Constr.,
Inc. v. Shipco Gen., Inc., 814 F.2d 1011, 1014 (5th Cir. 1987).
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Rule 55(b) gives a court discretion to convene an evidentiary hearing on the issue of
damages. Fed. R. Civ. P. 55(b)(2)(B). Generally, a court should hold an evidentiary hearing to
ascertain the amount of damages. James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993); United
Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979). However, a hearing is not
necessary if “the amount claimed is a liquidated sum or one capable of mathematical
calculation.” Freeman, 605 F.2d at 857.
B.
The Federal Communications Act
By the Complaint, Plaintiff contends that Defendants violated § 553 of the FCA by
intercepting the communication of the Event on April 20, 2013. Compl. 3-5. Plaintiff further
asserts that Defendants published the Event to patrons within Defendants’ Establishment, thereby
violating § 605 of the FCA. Mot. 4.; See Compl. 5.
Section 553 of the FCA punishes any person who “intercept[s] or receive[s] or assist[s] 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.” 47 U.S.C. § 553(a)(1). Section 605 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.” Id. § 605(a). Though these statutory provisions seemingly cover the same conduct,
§ 553 prohibits interception of a communication “offered over a cable system,” while § 605
prohibits interception of any “radio communication.” See id. §§ 553(a)(1), 605(a). This
distinction is significant, as communicating “by wire” and “by radio” are distinct and separately
defined means of transmission. See J&J Sports Prods., Inc. v. Mandell Family Ventures, L.L.C.,
751 F.3d 346, 351-53 (5th Cir. 2014). Accordingly, Ҥ 605 deals with communications traveling
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through the air (via radio), and § 553 covers communications traveling over cable wire.” Id. at
352-53 (all alterations removed).
Thus, to recover for a violation under § 605 of the FCA, a plaintiff must prove that a
defendant, without authorization, intercepted or otherwise unlawfully appropriated a radio
communication and published it to any person. See 47 U.S.C. § 605; Mandell Family, 751 F.3d at
352-53. To recover for a violation under § 553, however, a plaintiff must show that a defendant,
without authorization, intercepted or received communications over a cable system. See 47
U.S.C. § 553(a)(1); Mandell Family, 751 F.3d at 352-53. Under either section, a plaintiff can
request additional fines if it shows that a defendant committed these violations willfully and for
purposes of commercial advantage. See 47 U.S.C. §§ 553(b)(2), 605(e)(3)(C)(ii).
Defendants’ default serves as an admission of well-pleaded facts. See Nishimatsu Constr.
Co., 515 F.2d at 1206. Consequently, Defendants’ default serves to admit that Plaintiff had the
exclusive right to sub-license the Event on April 20, 2013. Compl. 3. Defendants, by their
default, also admit that they intercepted and published the Event without authorization, and that
they acted willfully and for purposes of commercial advantage. Id. at 4; see 47 U.S.C. §§
553(b)(2), 605(e)(3)(C)(ii). Defendants additionally admit that the Event was communicated via
an interstate satellite transmission. Compl. 3; Mot. 4.
Further, Plaintiff’s evidence establishes that Defendants sold beverages and/or food during
the Event and charged an entrance fee for direct commercial advantage. Mot. Ex. A, at 8; Mot. Ex.
A-2, at 16, 24, ECF No. 9-1; see J & J Sports Prods., Inc. v. Palma, Civil Action No. 3:11-CV01776-L, 2012 WL 1853519, at *1 (N.D. Tex. May 21, 2012) (accepting both the facts in the
complaint and evidence supporting the plaintiff’s motion for default judgment as true); Santana
v. First Am. Solutions, LLC, No. EP-11-cv-186-PRM, 2011 WL 3666591, at *1 (W.D. Tex. June
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27, 2011) (stating a court has the discretion to rely on evidence to determine whether or not to
grant a default judgment). In sum, the undisputed facts and evidence provide a sufficient basis to
hold that Defendants unlawfully intercepted and published without authorization an interstate satellite
transmission. The radio communications protected under § 605 include transmissions by satellite.
DirectTV, Inc. v. Seijas, 508 F.3d 123, 125 (3rd Cir. 2007); DirectTV, Inc. v. Webb, 545 F.3d 837, 844
(9th Cir. 2006). The Court therefore finds that Defendants violated § 605 of the FCA. See
Nishimatsu, 515 F.2d at 1206 (“There must be a sufficient basis in the pleadings for the judgment
entered.”). Plaintiff has not, however, pleaded sufficient facts to show that Defendants
intercepted or received communications over a cable system as required for liability under §
553.2 See 47 U.S.C. § 553(a)(1); Mandell Family, 751 F.3d at 352-53. Therefore, the Court
grants Plaintiff’s request for default judgment against Defendants under § 605 of the FCA only.
C.
Plaintiff’s Requested Damages
Having determined that Defendants violated § 605 of the FCA, the only remaining
question is the appropriate amount of damages. The Court finds that a hearing is unnecessary on
the issue of damages because they are capable of mathematical calculation from Plaintiff’s
exhibits and affidavits. See Freeman, 605 F.2d at 857. Moreover, the amount of attorneys’ fees
and costs is likewise calculable from Plaintiff’s attorney’s affidavit. See id.
When a plaintiff meets the burdens of proving violations of § 605, a plaintiff may choose
to collect either actual or statutory damages. 47 U.S.C. § 605(e)(3)(C)(i). For violations of §
605, a plaintiff can collect a statutory amount ranging from $1,000 to $10,000. Id. §
605(e)(3)(C)(i)(II). A court uses its discretion to determine the specific amount that a plaintiff
recovers. Id. A court also has discretion to increase these statutory damages by an amount not
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The Court notes that while the Complaint seeks damages under both § 553 and § 605, Plaintiff’s Motion only seeks
a default judgment under § 605. Compare Compl. 5, with Mot. 4.
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more than $100,000 for each unauthorized communications violation if it “finds that the violation
was committed willfully and for purposes of direct or indirect commercial advantage or private
financial gain.” Id. § 605(e)(3)(C)(ii). A prevailing plaintiff can also recover full costs,
including reasonable attorneys’ fees. Id. § 605(e)(3)(B)(iii).
Here, Plaintiff’s Complaint seeks the maximum amount of $10,000 in statutory damages
under § 605. Compl. 4. For willful and commercially advantageous damages, the Complaint
also seeks the maximum amount of $100,000. Id. Plaintiff further requests a permanent injunction
enjoining Defendants from “any future exhibition of unauthorized or unlicensed programs and
any violation of 47 U.S.C. §§ 553 or 605.” Id. at 5. Finally, the Complaint asks for full costs
and expenses, including reasonable attorneys’ fees. Id.
1.
Statutory damages pursuant to 47 U.S.C. § 605(e)(3)(C)(i)(II)
As noted above, Plaintiff seeks $10,000.00 in statutory damages under §
605(e)(3)(C)(i)(II). Id. at 4; Mot. 5. “[C]ourts have developed two approaches for determining
statutory damages under this provision.” Joe Hand Promotions, Inc. v. Garcia, 546 F. Supp. 2d
383, 386 (W.D. Tex. 2008). “The first is to award damages based on the number of patrons in
the establishment at the time of the violation, and the second is to award a flat sum for damages.”
Id. To calculate a damage amount under the first approach, a court normally trebles the
broadcasting fee to account for “money saved by not complying with the law, as well as any
profits made from food and drink sales associated with customers who stayed and watched the
fight.” Id.
Plaintiff’s evidence shows that its licensing fee for the Event was based on the venue’s
seating capacity. Mot. Ex. A, at 7; Mot. Ex. A-3, at 31, ECF No. 9-1. Here, the seating capacity
of the venue is 150 patrons, with approximately as many as 127 patrons present on the evening
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of the Event. Mot. 5; Mot. Ex. A-2, at 17, 25. Venues which seat between 101 to 200 patrons
were required to pay a licensing fee of $1,200.00 show the Event. Mot. Ex. A-3, at 31. Thus,
the Court finds that Plaintiff is entitled to at least $1,200.00 in statutory damages. See Garcia,
546 F. Supp. 2d at 386.
As in Garcia, where the defendants sold food and drink to approximately 65-80 people
during the illegally obtained telecast, see id., here, Defendants sold beverages and charged an
entry fee to a sizeable number of patrons during the Event, as many as 127 at one point in the
evening. See Mot. Ex. A-2, at 16-17, 24-25. Accordingly, the Court finds that trebling the
licensing fee to account for “profits made from food and drink sales associated with customers
who stayed and watched the fight,” as well as for profits from the entry fee, is appropriate in the
instant case. See Garcia, 546 F. Supp. 2d at 386. Therefore, the Court finds that a total award of
$3,600 reflects Plaintiff’s statutory damages under § 605(e)(3)(C)(i)(II). See 47 U.S.C. §
605(e)(3)(C)(i)(II) (noting that a party may collect a sum between $1,000 and $10,000 for each
violation “as the court considers just”).
2.
Willfulness damages pursuant to 47 U.S.C. § 605(e)(3)(C)(ii)
Plaintiff also requests $100,000.00 in additional damages under § 605(e)(3)(C)(ii) because
Defendants’ conduct was committed “willfully and for purposes of direct or indirect commercial
advantage or private financial gain.” Mot. 5; 47 U.S.C. § 605(e)(3)(C)(ii). Defendants have
admitted Plaintiff’s allegation of willful and commercially advantageous conduct by her default.
See Mot. 7-8; Nishimatsu Constr. Co., 515 F.2d at 1206. Further, Plaintiff’s evidence supports
the finding that Defendants’ actions were willful. It is highly unlikely that Defendants
accidentally intercepted the transmission of the Event, since the transmission was electronically
coded. See Compl. 3-4. After all, “signals do not descramble spontaneously, nor do television
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sets connect themselves to cable distribution systems.” Garcia, 546 F. Supp. 2d at 385 (citing
Time Warner Cable of N.Y.C. v. Googies Luncheonette, Inc., 77 F. Supp.2d 485, 490 (S.D.N.Y.
1999)). Thus, Defendants likely intended to intercept and display the transmission.
Plaintiff’s evidence also supports its allegation that Defendants’ actions were for purposes
of direct or indirect commercial advantage. The evidence indicates that Defendants’
Establishment displayed the Event on four televisions, and projected it on two seventy-two inch screens.
See Mot. Ex. A-2, at 16, 24; Joe Hand Promotions, Inc. v. Alima, Civil Action No. 3:13-CV0889-B, 2014 WL 1632158, at *5 (N.D. Tex. Apr. 22, 2014) (considering number and size of
televisions as evidence of willfulness). In addition, Plaintiff’s evidence establishes that
Defendants sold food and drinks during the Event. See Mot. 5; Mot Ex. A-2, at 16. Vending
food and/or beverages is evidence of commercial advantage. See, e.g., J&J Sports Productions, Inc.
v. Cotorra Cocina Mexicana & Bar LLC, 2012 WL 1098446, at *3 (S.D. Miss. Mar. 30, 2012).
Defendants also charged an entrance fee, an obvious indicator of commercial activity. See
Kingvision Pay-Per-View, Ltd. v. Zalazar, 653 F.Supp.2d 335, 342 (S.D.N.Y. 2009).
In light of these admissions and evidence, the Court finds that Defendants committed
FCA violations “willfully and for purposes of direct or indirect commercial advantage or private
financial gain.” 47 U.S.C. § 605(e)(3)(C)(ii). Therefore, Plaintiff deserves an enhanced award.
However, the Court finds that Plaintiff’s requested damages of $100,000.00 are clearly
excessive under the circumstances of this case. In selecting the appropriate amount of enhanced
damages to be applied for willfulness, the Court is mindful that the purpose of these damages is
to discourage would-be pirates, including Defendant, from engaging in piracy in the future. See
Garcia, 546 F. Supp. 2d at 386. However, the Court also recognizes that the purpose of these
damages is not to drive Defendants out of business. See id. Considering the number of people in
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attendance, the collection of the entrance fee, the number of televisions and screens, as well as
the sale of beverages, the Court finds that an award of $7,200.00 suffices in deterring Defendants
from violating the FCA again, while taking into account Defendants’ willful and commercially
advantageous actions. See id.
3.
Attorneys’ fees
Plaintiff requests attorneys’ fees amounting to one-third of the actual and additional
damages awarded to Plaintiff for the prosecution of this FCA violation. See Mot. 11; Mot. Ex. B,
at 33-39. Alternatively, Plaintiff requests the hourly rate for prosecution of the case. Mot. 10;
Mot. Ex. B, at 36-38. Under § 605(e)(3)(B)(iii), a court “shall direct the recovery of full costs,
including awarding reasonable attorneys’ fees to an aggrieved party who prevails.” 47 U.S.C. §
605(e)(3)(B)(iii). The Court finds that fees are warranted in this case, but finds that one-third of
the actual and additional damages that Plaintiff requests is excessive. See Garcia, 546 F. Supp.
2d at 386 (expressing that attorneys’ fees must be reasonable to be granted). Under this
calculation, the attorneys’ fees would amount to $3,600.00, one-third of the $10,800.00
combined statutory and enhanced damages award. Instead, the Court calculates the fee award
using the lodestar method with the attorney’s hourly rate of $250.00. See Mot. Ex. B, at 36-37.
Because Plaintiff’s evidence shows that its attorney spent four hours working on this matter, the
Court awards $1,000.00 in attorneys’ fees. See id.
4.
Injunctive relief
Finally, Plaintiff requests a permanent injunction under § 605(e)(3)(B)(i). Compl. 5; Mot.
11. Under this section, the Court has the authority to “grant temporary and final injunctions on
such terms as it may deem reasonable to prevent or restrain violations” of unauthorized
publication or use of radio communications. 47 U.S.C. § 605(e)(3)(B)(i). An injunction is an
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extraordinary remedy that should only be granted if Plaintiff suffered an irreparable injury and
the legal remedies available are inadequate. Weinberger v. Romero-Barcelo, 456 U.S. 305, 312
(1982). An irreparable injury is defined as one which “cannot be undone through monetary
remedies.” Deerfield Med. Ctr. v. City of Deerfield Beach, 661 F.2d 328, 338 (5th Cir. 1981).
District courts within the Fifth Circuit often grant requests for permanent injunctions in
this type of case, holding such “relief to be reasonable.” See KingVision Pay-Per-View, Ltd. v.
Guerra, Civil Action No. H-07-1822, 2007 WL 3001659, at *2 (S.D. Tex. Oct. 12, 2007); see
also J & J Sports Prods., Inc. v. Flores, Civil Action No. H-09-2220, 2009 WL 4801520, at *2
(S.D. Tex. Dec. 11, 2009). Further, district courts outside the Fifth Circuit have found that
monetary damages alone are inadequate to prevent future piracy. See Dish Network L.L.C. v.
Rounds, Civil Action No. 11-241 Erie, 2012 WL 1158798, at *5 (W.D. Pa. Apr. 6, 2012) (citing
DISH Network L.L.C. v. DelVecchio, No. 11-CV-06297-CJS, 2011 WL 4747848, at *6
(W.D.N.Y. Oct. 7, 2011)). These courts reason that permanent injunctions would pose a
minimal burden on defendants, since the injunction’s only function “would be to prevent
[defendants] from engaging in further illegal activity.” DelVecchio, 2011 WL 4747848, at *6.
However, a district court in the Eastern District of New York denied a request for a permanent
injunction when a plaintiff failed to affirmatively demonstrate that it was entitled to injunctive
relief. J & J Sports Prods. Inc. v. Lopez, No. 05-CV-5799 (JG) (RER), 2006 WL 2355851, at *5
(E.D.N.Y. June 8, 2006), adopted by No. 05-CV-5799 JG, 2006 WL 2375494 (Aug. 14, 2006).
That court reasoned that, without evidence showing irreparable harm or that statutory and
enhanced damages under § 605 were insufficient to deter future violations of the FCA, a plaintiff
could not satisfy the conditions for issuing a permanent injunction. Id.
This Court agrees with the reasoning in Lopez. The Court finds it difficult to believe that
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an award of $10,800.00 in damages is insufficient to make Plaintiff whole. See Fed. Deposit Ins.
Co. v. Faulkner, 991 F.2d 262, 265 (5th Cir. 1993) (stating that “the availability of a legal
remedy often indicates that an applicant’s injury is not irreparable”). Additionally, Plaintiff has
presented no evidence that it cannot be made whole by the Court’s damages award. See Lopez,
2006 WL 2355851, at *5.
Further, the Court finds that the reasoning in DelVecchio counsels against issuing a
permanent injunction, rather than supports issuing a permanent injunction. If a permanent
injunction’s only function “would be to prevent [defendants] from engaging in further illegal
activity,” then an injunction would be redundant, as the FCA already prohibits such illegal
activity. See DelVecchio, 2011 WL 4747848, at *6. The Court refuses to issue an injunction on
the presumption that § 605 of the FCA is insufficient to deter illegal conduct and must be
supplemented by a permanent injunction. There are no unusual facts in this case that would
warrant such an extraordinary remedy. Accordingly, the Court denies Plaintiff’s request for a
permanent injunction.
III.
CONCLUSION
For the foregoing reasons, the Court enters the following orders:
It is hereby ORDERED that Plaintiff’s Motion, ECF No. 9, is GRANTED in part.
IT IS FURTHER ORDERED that default judgment is ENTERED against Gaston
Carlos Flores, individually, and d/b/a El Texano and d/b/a El Texano Restaurant and d/b/a El
Texano Restaurant and Cantina as well as GCF Enterprises LLC, individually, and d/b/a El
Texano and d/b/a E; Texano Restaurant and d/b/a El Texano Restaurant and Cantina.
IT IS FURTHER ORDERED that Defendants SHALL PAY G&G Closed Circuit
Events, LLC:
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1. $3,600.00 in statutory damages pursuant to 47 U.S.C. § 605(e)(3)(C)(i)(II);
2. $7,200.00 in enhanced damages pursuant to 47 U.S.C. § 605(e)(3)(C)(ii); and
3. $1,000.00 in attorneys’ fees pursuant to 47 U.S.C. § 605(e)(3)(B)(iii).
4. In total, the court GRANTS default judgment in favor G&G Closed Circuit
Events, LLC. in the amount of $11,800.00.
IT IS FURTHER ORDERED that Defendants SHALL PAY post-judgment interest at
the rate of 0.50%, until paid in full, to be compounded annually pursuant to the provisions of 28
U.S.C. § 1961(b).
IT IS FURTHER ORDERED that the Clerk SHALL close the case.
SO ORDERED.
SIGNED this 19th day of November, 2015.
KATHLEEN CARDONE
UNITED STATES DISTRICT JUDGE
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