G & G Closed Circuit Events, LLC v. Olvera ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 G & G CLOSED CIRCUIT EVENTS, No. 2:18-cv-02467 MCE AC LLC, 12 Plaintiff, 13 FINDINGS AND RECOMMENDATIONS v. 14 FELIPE JR. OLVERA, et al., 15 Defendants. 16 17 18 Plaintiff, G & G Closed Circuit Events, LLC, has the “exclusive nationwide commercial 19 distribution (closed-circuit) rights to Gennady Golovkin v. Saul Alvarez IBF World Middleweight 20 Championship Fight Program, telecast nationwide on Saturday, September 16, 2017” (“the 21 Program”). Complaint (ECF No. 1) ¶ 16. Plaintiff’s complaint alleges that defendants 22 unlawfully intercepted the Program and showed it in their business establishment to customers. 23 Id. at ¶ 19. Plaintiff seeks a default judgment. ECF No. 12. Plaintiff served the notice and 24 motion on defendants. ECF No. 12 at 4. Defendants did not respond, and the matter was taken 25 under submission. ECF No. 14. 26 I. BACKGROUND 27 Plaintiff filed its complaint against (1) Felipe Jr. Olvera, individually and d/b/a Plush 28 Sacramento, and (2) Antigua Cantina Grill, LLC, d/b/a Plush Sacramento, on September 10, 1 2019. ECF No. 1. Plaintiff alleges violations of (1) and (2) The Communications Act of 1934, as 2 amended, 47 U.S.C. §§ 553 & 605, (3) Conversion, and (4) Cal. Bus. & Prof. Code § 17200. On 3 April 4, 2019, plaintiff filed proof of service on both defendants. ECF Nos. 8 & 9. On August 4 28, 2013 and August 30, 2013, plaintiff properly served both defendants by substituted service 5 pursuant to Cal. Civ. Proc. Code § 415.20(b), as permitted by Fed. R. Civ. P. 4(e)(1). See ECF 6 Nos. 8 & 9. Plaintiff left the summons and complaint with a person apparently in charge, at 7 defendants’ business at 1424 21st St., Sacramento, CA 95811, and subsequently mailed the items 8 to the same address. ECF Nos. 8 & 9. 9 On July 26, 2019, the Clerk entered a default against both defendants. ECF No. 11. On 10 February 19. 2020, plaintiff filed the current motion for a default judgment to be entered against 11 both defendants. ECF No. 12. Defendants did not respond. 12 II. LEGAL STANDARDS 13 A. Motion for Default Judgment 14 It is within the sound discretion of the district court to grant or deny an application for 15 default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In making this 16 determination, the court may consider the following factors: 17 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, 18 (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning the material facts, (6) whether the default 19 was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring 20 decisions on the merits. 21 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). The court exercises caution in 22 exercising this discretion, fully aware of the seventh factor, “the strong policy underlying the 23 Federal Rules of Civil Procedure favoring decisions on the merits.” See id. 24 “‘The general rule of law is that upon default the factual allegations of the complaint, 25 except those relating to the amount of damages, will be taken as true.’” TeleVideo Systems, Inc. 26 v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United Financial Group, 27 559 F.2d 557, 560 (9th Cir. 1977)). However, “necessary facts not contained in the pleadings, 28 //// 1 and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. 2 of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992). 3 B. The Communications Act of 1934 4 Plaintiff sues under 47 U.S.C. §§ 553 and 605. Both sections are provisions of the 5 Communications Act of 1934, as amended, 47 U.S.C. §§ 151-622. 6 Section 553 prohibits the unauthorized interception of “any communications service 7 offered over a cable system.” 47 U.S.C. § 553(a)(1). The court is authorized to award damages 8 measured by plaintiff’s “actual damages” along with “any profits” defendants made by the 9 violation, as well as statutory damages of $250 to $10,000. 47 U.S.C. § 553(c)(3)(A)(i), (ii). If 10 the violation was willful and done for “commercial advantage or private financial gain,” the court 11 can add up to $50,000 in addition to the actual or statutory damages. Id. § 553(c)(3)(B). 12 Section 605 “prohibits the unauthorized receipt and use of radio communications for one’s 13 ‘own benefit or for the benefit of another not entitled thereto.’” DirecTV, Inc. v. Webb, 545 F.3d 14 837, 844 (9th Cir. 2008) (quoting 47 U.S.C. § 605(a)). “[T]he ‘communications’ protected by 15 § 605(a) include satellite television signals.” Id. 16 [L]iability under section 605 requires proof that a defendant has “(1) intercepted or aided the interception of, and (2) divulged or 17 published, or aided the divulging or publishing of, a communication transmitted by the plaintiff.” 18 19 California Satellite Systems v. Seimon, 767 F.2d 1364, 1366 (9th Cir. 1985) (quoting National 20 Subscription Television v. S & H TV, 644 F.2d 820, 826 (9th Cir. 1981)).1 21 The court is authorized to award the same damages available for violation of Section 553, 22 except that the minimum statutory damages is $1,000, and the court may add $100,000 in 23 enhanced statutory damages if the violation was willful and for commercial or private financial 24 gain. See 47 U.S.C. § 605(e)(3)(C)(i)(I), (II), (ii). 25 //// 26 1 Plaintiff here is not alleged to have “transmitted” the Program, but it was the exclusive licensee 27 of the (unidentified) transmitter. It has standing to sue as an “aggrieved person” under the statute. See 47 U.S.C. § 605(d)(6) (“aggrieved person” includes “any person with proprietary rights in the 28 intercepted communication”). 1 III. ANALYSIS 2 Given defendants’ complete failure to participate in this lawsuit, the only Eitel factors that 3 need real discussion here are the merits of the claim, including the sufficiency of the complaint, 4 and the sum of money at stake in the action. There is no “prejudice” to defendants from granting 5 the default judgment since they have been given the opportunity to participate in the lawsuit. 6 There is no dispute regarding the events at issue; defendants did not answer, respond to the 7 motion for default judgment, or otherwise appear to contest plaintiff’s allegations. Defendants 8 have offered no excuse for their lack of participation, and the case cannot be tried without 9 defendants’ participation. 10 A. The Merits 11 1. 47 U.S.C. § 605 12 Plaintiff seeks entry of default judgment on its claim for violation of 47 U.S.C. § 605(a). 13 The complaint alleges that Plaintiff held the exclusive right to broadcast the Program. Complaint 14 ¶ 16. It further alleges that defendants unlawfully intercepted the broadcast of the Program and 15 showed it at their commercial establishment in Citrus Heights, California located at 7942 Arcadia 16 Drive, Citrus Heights, California 95610, willfully and for increased profits for that establishment. 17 Complaint ¶¶ 19-20. These facts, taken as true pursuant to TeleVideo and Geddes, establish 18 defendants’ violation of 47 U.S.C. § 605, and plaintiff’s entitlement to statutory damages. 19 Plaintiff does not allege any amount of actual damages in its complaint, and in its brief for 20 default judgment, plaintiff elects to seek only statutory damages. Application for Default 21 Judgment (“Motion”) at 10-12. Plaintiff argues that the statute is intended to deter this type of 22 “piracy.” Motion at 14.2 Accordingly, plaintiff seeks “$10,000 in statutory damages and $50,000 23 in enhanced statutory damages, for a total statutory award of $60,000.” Id. 24 District courts consider many factors in assessing statutory damages under the 25 Communications Act. Courts should assess an amount sufficient to deter but not so great as to 26 destroy the defendant business. See Kingvision Pay-Per-View Ltd. v. Lake Alice Bar, 168 F.3d 27 2 The court notes that the statute not only creates a private right of action for the aggrieved party, it also makes such piracy a felony, punishable by $50,000 and 2 years in prison for the first 28 offense. See 47 U.S.C. § 605(e)(2) (if done for commercial or private financial gain). 1 347, 350 (9th Cir. 1999). The amount of money the defendant would have had to pay the plaintiff 2 to broadcast the program lawfully is also relevant. Id. An enhanced statutory damages award 3 may be warranted where the defendant engaged in promotional advertising or charged a premium 4 for food or drinks. J & J Sports Productions, Inc. v. Sorondo, 2011 WL 3917391 at *4 (E.D. 5 Cal. 2011) (Snyder, M.J.). It is also relevant whether the customers were present primarily to 6 watch the broadcast or had come for another purpose while the program was being aired, and 7 whether the defendants were “repeat offenders.” Id. The statutory maximum award is 8 inappropriate “in the absence of unusual or particularly egregious circumstances under which a 9 defendant broadcast the fight.” Don King Productions/Kingvision v. Maldonado, 1998 WL 10 879683 (N.D. Cal. 1998). In past cases, the undersigned and other magistrate judges in this 11 district have considered and weighed some or all of these factors, and have recommended awards 12 of statutory damages according to the totality of the relevant circumstances.3 13 Here, plaintiff attests that defendants would have had to pay $12,500 to broadcast the 14 Program lawfully. Motion at 16. Plaintiff has submitted an affidavit from its investigator, who 15 visited defendants’ establishment the night of the Program. ECF No. 12-3. The affidavit 16 establishes that there was a $30.00 cover charge on the night of the broadcast; the investigator 17 bought beer; the establishment had eleven mounted flat screen televisions and a large projection 18 televisions showing a fight with an “HBO PPV” logo in the corner and no cable box visible; the 19 capacity of the establishment is about 500 people; and between 53 and 62 patrons were present at 20 any given time while the investigator was in the establishment. Id. at 4. 21 //// 22 3 See, e.g., J & J Sports Productions, Inc. v. Valencia, 2014 WL 2918884 (E.D. Cal. 2014) 23 (Claire, M.J.) (in similar circumstances, recommending statutory damages of $5,000, and no enhanced statutory damages); J & J Sports Productions, Inc. v. Torres, 2013 WL 417748 (E.D. 24 Cal. 2013) (Claire, M.J.) (in similar circumstances, but where defendant was alleged to be a serial repeat offender, recommending statutory damages of $5,000.00 and enhanced damages of 25 $25,000); J & J Sports Productions, Inc. v. Rodriguez, 2010 WL 796942 (E.D. Cal. 2010) (Drozd, M.J.) (in similar circumstances, recommending combined statutory and enhanced damages 26 totaling $5,000); see also, Joe Hand Promotions, Inc. v. Carranza, 2009 WL 4254460 (E.D. Cal. 2009) (Beck, M.J.) (where plaintiff’s investigator found the establishment had “approximate 27 capacity of 250 persons,” was located in “a relatively urban city,” had “nine flat LCD televisions and one big screen projector,” and had a “$10.00 cover charge,” recommending $10,000.00 in 28 statutory damages and an additional $90,000.00 in enhanced damages). 1 Here, there is no evidence of promotional advertising or repeat offender status, and no 2 evidence that defendants charged a premium for drinks or food in relation to the broadcast. 3 However, the broadcase set-up itself (televisions showing the “HBO PPV” logo and no cable box 4 visible) indicates willfulness. The relatively high cover charge, particularly in light of the 5 venue’s capacity and the number of screens, establishes that defendants acted for commercial or 6 financial gain. Accordingly, enhanced statutory damages are appropriate. 7 Having weighed all the above factors, the undersigned will recommend granting 8 plaintiff’s request for statutory damages of $10,000 plus enhanced statutory damages of $50,000. 9 The court notes that this assessment, which awards half the maximum enhanced statutory 10 damages available under Section 605, accounts for the willfulness of the violation and pursuit of 11 commercial gain, while also recognizing the absence of repeat offender status and the lack of 12 advertising. 13 2. 47 U.S.C. § 553 14 Plaintiff states a claim under § 553 but acknowledges that it may only recover under one 15 section of the Communications Act, and makes its argument for damages under § 605. ECF No. 16 12-1 at 8, n.1. The undersigned will recommend no damages under this provision. 17 3. Conversion 18 Plaintiff also brings a cause of action for conversion. In California, “[c]onversion is the 19 wrongful exercise of dominion over the property of another. The elements of a conversion are (1) 20 the plaintiff's ownership or right to possession of the property at the time of the conversion; (2) 21 the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages.” 22 Greka Integrated, Inc. v. Lowrey, 133 Cal. App. 4th 1572, 1581 (2005) (internal quotation marks 23 omitted); see also G.S. Rasmussen & Assocs., Inc. v. Kalitta Flying Serv., Inc., 958 F.2d 896, 906 24 (9th Cir. 1992). “Because conversion is a strict liability tort, questions of the defendant’s good 25 faith, lack of knowledge, motive, or intent are not relevant.” Gilman v. Dalby, 176 Cal. App. 4th 26 606, 615, n. 1 (2009). Exclusive right to distribute a broadcast signal to commercial 27 establishments constitutes a “right to possession of property” for purposes of conversion. See 28 Don King Prods./Kingvision v. Lovato, 911 F. Supp. 419, 423 (N.D. Cal. 1995); see also 1 DIRECTV, Inc. v. Pahnke, 405 F. Supp. 2d 1182, 1189 (E.D. Cal. 2005) (concluding that the 2 “right to distribute programming via satellite” constituted a “right to possession of personal 3 property” for purposes of a conversion claim under California law). 4 In this case, defendants were displaying the Program, operating a midsize to large 5 establishment, and charging for entry. Plaintiff was granted the exclusive domestic commercial 6 exhibition licensing rights to the Program, and thus had the right to possession of the property at 7 the time of the conversion. Declaration of Nicolas J. Gagliardi at ¶ 3. Defendants did not legally 8 purchase the Program, which constituted defendants’ conversion by a wrongful act or disposition 9 of property rights. Id. at ¶ 7. Finally, plaintiff has submitted testimony that the commercial 10 license fee for an establishment similar in size to defendants for the program would have been 11 $12,500. Id. at ¶ 8. Thus, Plaintiff is entitled to damages for conversion in the amount of 12 $12,500.00. 13 B. Sum of money at stake 14 Plaintiff requests statutory and enhanced statutory damages totaling $60,000, less than the 15 maximum available under the Communications Act, as well as $12,500.00 in conversion 16 damages, plus costs and reasonable fees as mandated by § 605. Because the court finds these 17 damages well related to the violations of law at issue and not excessive in light of the venue and 18 event description, the sum of money at stake weighs in favor of default judgment. 19 IV. CONCLUSION 20 For the reasons stated above, IT IS HEREBY RECOMMENDED that: 21 1. Plaintiff's motion for default judgment (ECF No. 12) be GRANTED; 22 2. The court enter judgment against defendant on plaintiff's claims brought pursuant to 47 23 U.S.C. § 605 and the tort of conversion; 24 3. The court award to plaintiff statutory and enhanced damages in the amount of 25 $60,000.00 for the violation of § 605 and $12,500.00 in damages for the tort of conversion; and 26 4. This case be closed. 27 These findings and recommendations are submitted to the United States District Judge 28 assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within twenty-one (21) 1 | days after being served with these findings and recommendations, any party may file written 2 || objections with the court and serve a copy on all parties. Such a document should be captioned 3 || “Objections to Magistrate Judge's Findings and Recommendations.” Any response to the 4 | objections shall be filed and served within fourteen (14) days after service of the objections. 5 || Failure to file objections within the specified time may waive the right to appeal the District 6 || Court’s order. Turner v.Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. YIst, 951 F.2d 7 | 1153, 1156-57 (9th Cir. 1991). 8 || DATED: March 27, 2020 . ? Cthren— 10 ALLISON CLAIRE UNITED STATES MAGISTRATE JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28