Broadcast Music, Inc. et al v. CTR Hotel Partners, LLC et al

Filing 30

MEMORANDUM OPINION AND ORDER Denying Plaintiffs' 24 Motion for Default Judgment as to Christopher B. Schultz and Granting in Part and Setting Hearing on Plaintiffs' 24 Motion for Default Judgment as to Defendants CTR Hotel Partner, LLC d/b/a Quality Hotel & Conference Center and Ronald E. Marcus: Evidentiary Hearing set for 4/30/2013 09:30 AM in Martinsburg District Judge Courtroom, 2nd Floor before District Judge Gina M. Groh. Signed by District Judge Gina M. Groh on 3/21/2013. (cmd)

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF WEST VIRGINIA
MARTINSBURG

BROADCAST MUSIC, INC., et al.,
Plaintiffs,
v.

CIVIL ACTION NO. 3:12-CV-59
(JUDGE GROH)

CTR HOTEL PARTNERS, LLC d/b/a
QUALITY HOTEL & CONFERENCE CENTER;
RONALD E. MARCUS, and
CHRISTOPHER B. SHULTZ,
each individually,
Defendants.

MEMORANDUM OPINION AND ORDER DENYING PLAINTIFFS’ MOTION FOR
DEFAULT JUDGMENT AS TO CHRISTOPHER B. SHULTZ AND
GRANTING IN PART AND SETTING HEARING ON PLAINTIFFS’ MOTION FOR
DEFAULT JUDGMENT AS TO DEFENDANTS CTR HOTEL PARTNERS, LLC, d/b/a
QUALITY HOTEL & CONFERENCE CENTER and RONALD E. MARCUS
On this day, the above-styled matter came before this Court for consideration of
Plaintiffs Broadcast Music, Inc. (“BMI”), et al.’s Motion for Default Judgment [Doc. 24], filed
December 5, 2012. For the reasons that follow, the Court finds that the motion should be
GRANTED IN PART AND DENIED IN PART as to Defendants CTR Hotel Partners, LLC
d/b/a Quality Hotel & Conference Center (“CTR”) and Ronald E. Marcus, individually
(“Marcus”). However, the Motion for Default Judgment is DENIED WITHOUT PREJUDICE
to Defendant Christopher B. Shultz (“Shultz”) due to insufficient service of process and lack
of personal jurisdiction.

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I. Factual Background
This is an action for copyright infringement arising from Defendants’ public
performance, or Defendants causing the public performance, of copyrighted musical
compositions at the Quality Hotel & Conference Center located at 4328 William L.
Wilson, FWY, Harpers Ferry, WV, 25425. On October 3, 2012, Plaintiffs moved for
default judgment against the Defendants. [Doc. 11].
Plaintiffs initially filed this action on June 26, 2012, alleging copyright
infringements under Title 17 of the United States Code. A summary of the alleged
violations are set forth in Exhibit 1, “Song Schedule,” attached to the Complaint.
Plaintiffs maintain four claims of willful copyright infringement, based upon “Defendants’
unauthorized public performance of music compositions from the BMI repertoire.” [Doc.
1], p.4. Defendant Marcus, in his individual capacity, was personally served on June
29, 2012 at 741 E. Washington Street, Charles Town, WV 25414. Defendant CTR was
personally served on its managing member on June 29, 2012 at 741 E. Washington
Street, Charles Town, WV 25414. However, Defendant Shultz, in his individual
capacity, was allegedly served by serving the summons on his supervisor, Defendant
Marcus on June 29, 2012 at 741 E. Washington Street, Charles Town, WV 25414.
On October 31, 2012, the Court denied without prejudice Plaintiffs’ Motion for
Default Judgment against Defendants because Plaintiffs had not sought an entry of
default under Rule 55(a) of the Federal Rules of Civil Procedure, which is a prerequisite
for an entry of judgment under Rule 55(b)(1) or Rule 55(b)(2). [Doc. 14]. On November
2, 2012, Plaintiffs requested the Clerk to enter default pursuant to Rule 55(a) of the

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Federal Rules of Civil Procedure. [Doc. 15]. On November 7, 2012, at Plaintiffs’
request, the Clerk of this Court entered default. [Doc. 19]. On December 5, 2012,
Plaintiffs moved for entry of default judgment pursuant to Federal Rule of Civil
Procedure 55(b).
II. Applicable Law
Although the Federal Rules of Civil Procedure and the Fourth Circuit Court of
Appeals encourage dispositions of claims on their merits, trial judges have discretion to
enter default judgments. Reizakis v. Loy, 490 F.2d 1132, 1135 (4th Cir. 1974).
Federal Rule of Civil Procedure 55 authorizes the entry of a default judgment “when a
defendant fails to plead or otherwise defend in accordance with the Rules.” United
States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982). The Clerk of the Court’s “entry of
default” pursuant to Rule 55(a) of the Federal Rules of Civil Procedure provides notice
to the defaulting party prior to the entry of default judgment by the court. Carbon Fuel
Co. v. USX Corp., No. 97-1995, 1998 WL 480809, at *2 (4th Cir. Aug. 6, 1998). After
the entry of default, the non-defaulting party may move the court for “default judgment”
under Federal Rule of Civil Procedure 55(b). Id.
Under Rule 55(b)(1), “[i]f the plaintiff’s claim is for a sum certain or a sum that
can be made certain by computation, the clerk–on the plaintiff’s request, with an
affidavit showing the amount due–must enter judgment for that amount and costs
against a defendant who has been defaulted for not appearing . . . .” FED. R. CIV. P.
55(b)(1). However, as in this case, when the sum is not certain, default can only be
made by the Court. FED. R. CIV. P. 55(b)(2).

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Upon default, all of the well-pleaded facts alleged in the Complaint, as to liability,
are deemed admitted, but the amount of damages are not. Ryan v. Homecoming Fin.
Network, 253 F.3d 778, 780 (4th Cir. 2001). However, Federal Rule of Civil Procedure
54© limits the court’s discretion in entering default judgment: “[a] default judgment must
not differ in kind from, or exceed in amount, what is demanded in the pleadings.” FED.
R. CIV. P. 54©.
III. Analysis
The Court must analyze three separate issues. First, whether Defendants were
properly served. Second, whether Plaintiffs have proved copyright infringement by an
unauthorized public performance. Last, if Plaintiffs prove Defendants’ liability, whether
Plaintiffs’ requested damages are a sum certain sufficient for this Court to award
damages without conducting an evidentiary hearing.
A. Proper Service
Plaintiffs seek a default judgment against all three Defendants: Ronald E. Marcus
and Christopher B. Shultz, in their individual capacities, and CTR. Defendant Marcus
was personally served on June 29, 2012 at 741 E. Washington Street, Charles Town,
WV 25414. [Doc. 9]. Therefore, Defendant Marcus, as an individual, was served in
accordance with Federal Rule of Civil Procedure 4(e)(2)(A), which provides that an
individual may be served in a judicial district by “delivering a copy of the summons and
of the complaint to the individual personally.”
CTR was personally served through its managing member, Defendant Marcus,
on June 29, 2012 at 741 E. Washington Street, Charles Town, WV 25414. [Doc. 8].

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Defendant CTR was served in accordance with Federal Rule of Civil Procedure 4(h)(1)
because the managing member and member designated to receive service of process
on behalf of CTR, Marcus, was personally served with a copy of the summons and the
complaint.
However, Defendant Shultz was not personally served. Instead, Defendant
Shultz was allegedly served by serving the summons on Defendant Marcus. The server
listed Defendant Marcus as Defendant Shultz’s supervisor. Under the Federal Rules of
Civil Procedure, an individual may be properly served in the United States by:
(1) following state law for serving a summons in an action brought in courts of
general jurisdiction in the state where the district court is located or where service
is made; or
(2) doing any of the following:
(A) delivering a copy of the summons and of the complaint to the
individual personally;
(B) leaving a copy of each at the individual’s dwelling or usual place of
abode with someone of suitable age and discretion who resides there; or
(C) delivering a copy of each to an agent authorized by appointment or by
law to receive service of process.
FED. R. CIV. P. 4(e).
First, a copy of the summons and of the complaint was not delivered to
Defendant Shultz personally. Second, there has been no indication that 741 E.
Washington Street, Charles Town, WV is Defendant Shultz’s dwelling or usual place of
abode. In fact, 741 E. Washington Street appears to be a place of business. Thus,
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service of process is only proper if a copy of the summons and complaint were
delivered to Defendant Marcus as an agent authorized by appointment or by law to
receive service of process for Defendant Shultz, individually. The Proof of Service filed
with the Court states the following:
I served the summons on Ronald E. Marcus, supervisor, who is
designated by law to accept service of process on behalf of
Christopher B. Shultz on June 29, 2012 . . .
Christopher B. Shultz is an employee of Ronald E. Marcus.
[Doc. 10].
Pursuant to Rule 4(d)(1) of the West Virginia Rules of Civil Procedure, the only
manner of service that may be applicable here is 4(d)(1)©, which provides for service
upon an individual by “[d]elivering a copy of the summons and complaint to an agent or
attorney-in-fact authorized by appointment or statute to receive or accept service of the
summons and complaint in the individual’s behalf.” W. VA. R. CIV. P. 4. Cases dealing
with agency by appointment “indicate that an actual appointment for the specific
purpose of receiving process normally is expected. Accordingly, the mere fact that a
person acts as the defendant’s agent for some purposes does not necessarily mean
that the person has authority to receive the summons and complaint.” 4A CHARLES
ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1097 (3d. ed.
2002). Thus, the court must have some factual basis for believing that an appointment
of an agent to receive service of process has in fact taken place. See State ex rel.
Farber v. Mazzone, 584 S.E.2d 517, 522 (W. Va. 2003) (finding that a temporary
secretary who accepted service on behalf of the attorney was improper as the attorney
never authorized the secretary or any third party to serve as his agent for accepting
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service of process); McClay v. Mid-Atl. Country Magazine, 435 S.E.2d 180, 183 (W.
Va. 1993) (finding service of process was invalid where lawyer was not an agent
authorized to accept service of process on behalf of defendant). The burden is on the
plaintiff to prove that an agency relationship existed between the defendant and the
individual who accepted service. See Dunkley v. Rutgers, 2007 WL 2033927, *2
(D.N.J. 2007).
In this case, Plaintiffs have failed to sustain their burden because it is not clear to
the Court that Defendant Shultz was properly served with process. Defendant Marcus
could accept service on behalf of CTR because it is a business organization and
Defendant Marcus is an agent, by law, of the organization. However, with the facts
currently before the Court, Defendant Marcus is not an agent of Defendant Shultz that is
authorized to accept service of process. Therefore, Defendant Shultz, in his individual
capacity, was not properly served with Plaintiffs’ summons and complaint, and the
district court does not have personal jurisdiction over Defendant Shultz. Accordingly,
Plaintiffs’ Motion for Default Judgment as to Defendant Shultz is DENIED WITHOUT
PREJUDICE.
B. Liability
Multiple district courts within the Fourth Circuit have noted that for a plaintiff to
prove copyright infringement by an unauthorized public performance, the plaintiff must
make sufficient allegations regarding:
(1) the originality and authorship of the works involved; (2) compliance
with the formalities of federal copyright law; (3) rightful proprietorship of
the copyrights at issue; (4) the copyrighted works were performed publicly
for profit;[and] (5) a lack of authorization by the owner or the owner’s
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representative for the alleged infringer to publicly perform the works.
M.L.E. Music v. Kimble, Inc., 109 F. Supp. 2d. 469, 472 (S.D.W. Va. 2000). See also
EMI April Music, Inc. v. Garland Enters., LLC, Civil Action No. DKC 11-3352, 2012
WL 1986529 (June 1, 2012, D. Md.), EMI April Music, Inc. v. White, 618 F. Supp. 2d
497, 504 (E.D. Va. 2009).
In this case, Plaintiffs have alleged sufficient facts to establish the elements of
liability for purposes of default judgment. First, Plaintiffs have alleged that the four
songs at issue are original compositions created and written by specified persons.
Compl. ¶¶ 4-11, Ex. 1. Second, Plaintiffs have alleged the date of registration and
registration numbers of the four musical compositions and that the Plaintiffs have
“complied in all respects with the requirements of the Copyright Act.” Compl. ¶ 23, Ex.
1. Third, Plaintiffs owned the copyrights to the protected works at the time of
infringement. Compl. ¶ 24, Ex. 1. Last, Defendants publicly played these songs without
permission on May 29, 2010 and November 12, 2010. Compl. ¶ 25, Ex. 1. Therefore,
these factual allegations are sufficient to satisfy the five elements of Plaintiffs’ claims,
and Plaintiffs are entitled to entry of default judgment.
C. Damages
If the court determines that liability is established, then it must determine the
appropriate amount of damages. Unlike allegations of fact, “[e]ven when a default
judgment is warranted based on a party’s failure to defend, the allegations in the
complaint with respect to the amount of the damages are not deemed true.” See Credit
Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999). The court

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must make an independent determination regarding such allegations by, for example,
conducting an evidentiary hearing or referring the matter to a magistrate judge to
conduct such a hearing. FED. R. CIV. P. 55(b)(2)(B).
In this case, the Court FINDS that a sum certain sufficient to award damages on
the default judgment does not exist. Accordingly, this Court will conduct an evidentiary
hearing on damages on April 30, 2013 at 9:30 a.m. in Martinsburg, West Virginia.
IV. Conclusion
For the reasons stated above, this Court finds that the Plaintiffs’ Motion for
Default Judgment should be, and hereby is, GRANTED IN PART and DENIED IN
PART. [Doc. 24]. The Court further ORDERED an evidentiary hearing on the issues of
damages on April 30, 2013 at 9:30 a.m.
It is so ORDERED.
The Clerk is directed to transmit copies of this Order to counsel of record herein.
DATED: March 21, 2013

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