G & G Closed Circuit Events, LLC v. Port City Sports Bar and Grill, LLC ( 2023 )

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, LLC No. 2:22-cv-1059-JAM-KJN 12 Plaintiff, FINDINGS AND RECOMMENDATIONS 13 v. (ECF No. 31) 14 EVERETT HUNTER, et al., 15 Defendants. 16 17 Presently pending before the court is plaintiff’s G & G Closed Circuit Events, LLC’s 18 motion for default judgment against defendants Everett Hunter, Port City Sports Bar and Grill, 19 and Port City Sports Bar and Grill, LLC.1 (ECF No. 31.) To date, defendants have not opposed 20 plaintiff’s motion or otherwise made an appearance in this action. (ECF Nos. 21, 22, 26, 27.) 21 The undersigned recommends plaintiff’s motion for default judgment be GRANTED IN 22 PART, and that plaintiff be awarded final judgment in the total amount of $6,900.00. 23 /// 24 /// 25 /// 26 /// 27 1 This motion is referred to the undersigned by Local Rule 302(c)(19) for the entry of findings 28 and recommendations. See 28 U.S.C. § 636(b)(1)(B). 1 I. BACKGROUND2 2 G & G Closed Circuit Events, LLC brought an action against defendants Everett Hunter, 3 Port City Sports Bar and Grill, and Port City Sports Bar and Grill, LLC for misappropriation of a 4 boxing event (Manny Pacquiao versus Yordenis Ugas) that was telecast nationwide on Saturday, 5 August 21, 2021 (hereinafter the “Program”). (ECF No. 17.) Plaintiff alleges defendants 6 unlawfully intercepted, received, and thereafter exhibited the Program at the time of its 7 transmission at the address of the commercial establishment operated by defendants, located at 8 222 N. El Dorado St., Ste. J, Stockton, CA 95202. (Id. at 7.) Defendants required a $10.00 cover 9 charge from their patrons on the night of the Program. (Id. at 6.) Defendants’ actions were 10 observed by investigator Gary Gravelyn, who was present at the commercial establishment on the 11 evening the Program was airing. (ECF No. 31 at ¶¶ 10, 19, and 29-31.) 12 Plaintiff’s claims against defendants arise out of Title 47 U.S.C. §§ 605 and 553, as well 13 as state law claims for Conversion and violation of California Business and Professions Code 14 § 17200. (ECF No. 17.) Defendants Port City and Hunter were served with process but failed to 15 answer, so the clerk of the court entered default against them. (ECF Nos. 21, 22, 26, 27.) 16 II. LEGAL STANDARD 17 Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party 18 against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend 19 against the action. See Fed. R. Civ. P. 55(a). However, “[a] defendant’s default does not 20 automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans, 21 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 22 (9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment is 23 within the district court’s discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). 24 In making a default judgment determination, the court considers the following factors: 25 1. the possibility of prejudice to the plaintiff, 2. the merits of plaintiff’s substantive claim and the sufficiency of the complaint; 26 3. the sum of money at stake in the action; 4. the possibility of a dispute concerning material facts; 27 28 2 All facts derive from the first amended complaint unless otherwise noted. (See ECF No. 17.) 1 5. whether the default was due to excusable neglect, and 6. the strong policy underlying the Federal Rules of Civil Procedure favoring decisions 2 on the merits. 3 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily 4 disfavored. Id. at 1472. 5 As a general rule, once default is entered, well-pleaded factual allegations in the operative 6 complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. 7 v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. 8 Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs, 9 285 F.3d 899, 906 (9th Cir. 2002). In addition, although well-pleaded allegations in the 10 complaint are admitted by a defendant’s failure to respond, “necessary facts not contained in the 11 pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. 12 Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 13 1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 14 2007) (stating that a defendant does not admit facts that are not well-pled or conclusions of law). 15 A party’s default conclusively establishes that party’s liability, but it does not establish the 16 amount of damages. Geddes, 559 F.2d at 560. 17 III. DISCUSSION 18 A. Appropriateness of the Entry of Default Judgment Under the Eitel Factors 19 The undersigned finds the Eitel factors weigh in favor of the entry of a default judgment 20 against defendants and recommends default judgment be entered with respect to liability. 21 1. Possibility of Prejudice to the Plaintiff 22 The first Eitel factor considers whether plaintiff would suffer prejudice if default 23 judgment were not entered, as prejudice to a plaintiff weighs in favor of a default judgment. See 24 PepsiCo, Inc., 238 F. Supp. 2d at 1177. Here, plaintiff was unsuccessful in its attempts to press 25 its claims against defendants Port City and Hunter for their alleged piracy and airing of the 26 Program. Defendants have been silent in this matter, so plaintiff would be left without any other 27 recourse against defendants should default not be entered. Accordingly, the first Eitel factor 28 favors the entry of default judgment. 1 2. Merits of Plaintiff’s Substantive Claims and Sufficiency of the Complaint 2 The second and third factors (the merits of the substantive claims and the sufficiency of 3 the complaint) are considered in tandem, due to the relatedness of the two inquiries. The court 4 must consider whether the allegations in the complaint are sufficient to state a claim that supports 5 the relief sought. See Danning, 572 F.2d at 1388; PepsiCo, Inc., 238 F. Supp. 2d at 1175. 6 Based on the foregoing analysis, the court finds these factors weigh in favor of entering 7 default judgment against defendants. 8 Title 47 U.S.C. § 605 9 The Federal Communications Act prohibits commercial establishments from intercepting 10 and exhibiting satellite cable programming. See 47 U.S.C. § 605; see also DirecTV, Inc. v. 11 Webb, 545 F.3d 837, 844 (9th Cir. 2008). 12 Here, plaintiff’s complaint alleges that plaintiff owned the exclusive rights to the Program 13 (ECF No. 17 at 6) and that defendants—who were not plaintiff’s sub-licensees—intercepted, 14 received, published, divulged, displayed, and exhibited the Program to their patrons at the time of 15 its transmission in willful violation of § 605. (ECF No. 17 at 7.) Taking these allegations as true, 16 the court concludes that plaintiff has sufficiently pled a violation of 47 U.S.C § 605. 17 While the above is sufficient to hold Port City Sports Bar and Grill liable, whether Hunter 18 may be held liable for the violation of § 605 in his individual capacity must be examined. A 19 defendant is vicariously liable and therefore jointly liable for a violation of § 605 if he “(1) . . . 20 had a right and ability to supervise the infringing activities and (2) had an obvious and direct [] 21 financial interest in those activities.” J & J Sports Prods., Inc. v. Walia, 2011 WL 902245 at *3 22 (N.D. Cal. Mar. 14, 2011). Plaintiff alleges that Hunter was a member or manager of the limited 23 liability company Port City Sports Bar and Grill and therefore had the right, ability, and 24 obligation to supervise the activities of the establishment on the night of the Program at issue. 25 (ECF No. 17 at 3-4.) Plaintiff further alleges that Hunter directed or permitted the employees of 26 Port City Sports Bar and Grill to unlawfully intercept, receive, and publish plaintiff’s Program. 27 (Id.) Finally, plaintiff alleges that as a member/manager of the LLC, Hunter had a direct financial 28 interest in the activities of Port City Sports Bar and Grill and that the broadcast of plaintiff’s 1 Program, as supervised by him, resulted in increased profits for Port City Sports Bar and Grill. 2 (Id. at 5.) Taking these well-pleaded allegations as true, the undersigned finds them sufficient to 3 establish vicarious liability for Hunter. See, e.g., G & G Closed Cir. Events, LLC v. Pacheco, 4 2020 WL 13469799, at *2 (S.D. Cal. Jan. 7, 2020) (applying the above standard to hold 5 individual owner/defendant vicariously liable for a 47 U.S.C. § 605 violation). 6 Title 47 U.S.C § 553 7 The Cable & Television Consumer Protection and Competition Act, 47 U.S.C. § 553(a) 8 prohibits any person from intercepting or receiving or assisting “in intercepting any 9 communications service offered over a cable system, unless specifically authorized to do so by a 10 cable operator or as may otherwise be specifically authorized by law.” 47 U.S.C. § 553. 11 The complaint alleges that plaintiff owned the rights to the Program and defendants 12 intercepted, received, published, divulged, displayed, and/or exhibited the Program in violation of 13 § 553.2. (ECF No. 17 at 1-2, 6, 8-9.) Taking these allegations as true, the court concludes that 14 plaintiff has sufficiently pleaded a violation of 47 U.S.C § 553 against defendants. See, e.g., 15 Innovative Sports Mgmt. v. Gutierrez, 2023 U.S. Dist. LEXIS 109006, at *8 (N.D. Cal. June 23, 16 2023) (applying the above standard to hold individual defendant, who was a manager, vicariously 17 liable for a violation of 47 U.S.C. § 553). 18 Conversion 19 Conversion requires ownership or a right to possession of property, wrongful disposition 20 of the property right, and damages. G.S. Rasmussen & Assocs., Inc. v. Kalitta Flying Service, 21 Inc., 958 F.2d 896, 906 (1992) (citing Tyrone Pacific Int’l, Inc. v. MV Eurychili, 658 F.2d 664, 22 666 (9th Cir. 1981)). It is alleged that by the acts of interception, reception, publication, 23 divulgence, display, and/or exhibition of the Program at Port City Sports Bar and Grill, 24 defendants tortuously obtained possession of the broadcast and wrongfully converted it for their 25 own use and benefit without paying plaintiff the commercial licensing fee that it was rightfully 26 entitled to receive from them. (ECF No. 17 at 10.) Taking these allegations as true, the court 27 concludes plaintiff has sufficiently alleged a conversion claim. 28 /// 1 California Business and Professions Code 2 California Business and Professions Code § 17200 includes any unlawful, unfair or 3 fraudulent business act or practice. Plaintiff alleges defendants and their agents, servants, 4 workmen or employees broadcasted the Program in a commercial establishment for financial gain 5 to the detriment and injury of plaintiff and its business enterprise and constituting unlawful, unfair 6 and deceptive trade practices. (ECF No. 17 at 11-12.) Taking these allegations as true, the court 7 concludes that plaintiff sufficiently alleged a § 17200 violation. See, e.g., Pacheco, 2020 WL 8 13469799, at *3 (S.D. Cal. Jan. 7, 2020) (finding a § 17200 violation part and parcel with 9 plaintiff’s claims for signal piracy and conversion). 10 3. Sum of Money at Stake 11 In weighing the fourth Eitel factor, “the court must consider the amount of money at stake 12 in relation to the seriousness of the defendant’s conduct.” PepsiCo, Inc., 238 F.Supp.2d at 1176- 13 77. This factor weighs against default judgment when a large sum of money is at stake. Eitel, 14 782 F. 2d. at 1472. Here, plaintiff seeks $5,200 in statutory damages and $25,000 in enhanced 15 damages under Section 605. (ECF No. 31 at 3.) Plaintiff also seeks $1,300 in compensatory 16 damages for conversion, an amount equal to the sublicensing fee. (Id.) The court finds this is a 17 moderate sum of money that does not weigh against default judgment. Further, courts are granted 18 discretion in awarding damages, and the undersigned recommends a reduced amount, as 19 discussed below. As such, this factor does not weigh against default judgment. 20 4. The Possibility of a Dispute Concerning Material Facts 21 The facts of this case are relatively straightforward, and plaintiff has provided the court 22 with well-pleaded allegations and documentation supporting its claims. The court may assume 23 the truth of well-pleaded facts in the complaint (except as to damages) following the clerk’s entry 24 of default, and thus, there is no likelihood that any genuine issue of material fact exists. See, e.g., 25 Elektra Entm’t Group Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005) (“Because all 26 allegations in a well-pleaded complaint are taken as true after the court clerk enters default 27 judgment, there is no likelihood that any genuine issue of material fact exists.”); PepsiCo, Inc., 28 238 F. Supp. 2d at 1177. In addition to the allegations in the complaint, plaintiff has provided a 1 signed copy of an investigator’s affidavit as well as its closed-circuit television license agreement, 2 all of which attest to plaintiff’s claims. (See ECF No. 31 at 29-31, 49, 79.) The undersigned 3 finds this factor favors the entry of a default judgment. 4 5. Whether the Default was Due to Excusable Neglect 5 Upon review of the record before the court, the undersigned finds the default was not the 6 result of excusable neglect. Pepsi Co, Inc., 238 F. Supp. 2d at 1177. Defendants Port City and 7 Hunter were properly served with the summons and complaint but failed to respond. (See ECF 8 Nos. 21 and 22.) Plaintiff also served defendants with the motion for default judgment after the 9 court ordered this service and opportunity to respond to the default judgment motion. (ECF Nos. 10 31 at 76-79; 33). Accordingly, there is no indication defendants’ default resulted from excusable 11 neglect; this factor favors the entry of a default judgment. 12 6. Policy of Deciding Cases on the Merits 13 “Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782 14 F.2d at 1472. However, this policy, standing alone, is not dispositive, especially where a 15 defendant fails to appear or defend itself in an action. PepsiCo, Inc., 238 F. Supp. 2d at 1177; see 16 also e.g., Craigslist, Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039, 1061 (N.D. Cal. 2010). 17 Here, although the undersigned is cognizant of the policy in favor of decisions on the merits— 18 that policy is unavailable here because defendants have not responded. This factor does not 19 weigh against entry of default judgment. 20 B. Relief Sought 21 Pursuant to the above analysis, the Eitel factors weigh in favor of entering default on 22 liability against the defendants. 23 Plaintiff asks for $5,200 in statutory damages plus an additional $25,000 in “enhanced” 24 statutory damages, for a total award of $30,200 under 47 U.S.C § 605. In addition, plaintiff seeks 25 $1,300 in compensatory damages for its conversion claim, along with an award of attorneys’ fees 26 and costs. (See ECF No. 31 at 3.) 27 Each violation of Section 605 allows a plaintiff to recover an award of statutory damages 28 “in a sum of not less than $1,000 or more than $10,000, as the court considers just.” 47 U.S.C. 1 § 605(e)(3)(C)(i)(II). The statute further provides that enhanced damages may be awarded up to 2 $100,000, where the court finds that “the violation was committed willfully and for purposes of 3 direct or indirect commercial advantage or private financial gain.” 47 U.S.C. 605(e)(3)(C)(ii). 4 Courts maintain their discretion in determining the appropriate amount of damages. Kingvision 5 Pay-Per-View, Ltd. v. Backman, 102 F.Supp.2d 1196, 1198 (N.D. Cal. 2000). 6 1. Statutory Damages 7 Plaintiff’s motion for default judgment requests $5,200 in statutory damages. (ECF No. 8 31 at 3.) Regarding damages for signal piracy, courts often consider the following factors when 9 determining statutory damages: promotional advertising by the defendant, the capacity of the 10 establishment, the number of patrons present at the time of the broadcast, a cover charge, the 11 number and size of televisions used for the broadcast, and whether a premium was charged on 12 food and drink. See, e.g., Integrated Sports Media, Inc. v. Naranjo, 2010 WL 3171182, at *4 13 (E.D. Cal. Aug. 11, 2010); G. v. La Placita RM Rest. Inc., 2023 U.S. Dist. LEXIS 137940, at *9 14 (E.D. Cal. Aug. 7, 2023). Courts also consider whether the defendants are repeat offenders. 15 Backman, 102 F. Supp. 2d at 1198. Courts weigh all factors, awarding statutory damages 16 “according to the totality of the relevant circumstances.” G & G Closed Cir. Events, LLC v. 17 Olvera, 2020 WL 1503376, at *3 (E.D. Cal. Mar. 30, 2020). 18 Here, plaintiff submitted evidence establishing that there were between thirty to thirty-five 19 patrons watching the Program on one sixty-inch television at the location of Port City Sports Bar 20 and Grill, which has an approximate capacity of fifty people; additionally, patrons paid a $10.00 21 cover charge to enter the establishment to view the Program. (ECF No. 31 at 19-20, 29-31.) 22 Conversely, plaintiff provided no evidence that defendants imposed a premium charge on food 23 and drinks, that the defendants engaged in signal piracy on previous occasions, or that defendants 24 advertised the Program to attract more patrons. 25 Under these circumstances, the undersigned recommends an award of statutory damages 26 in the amount of $2,600—twice the amount defendants would have paid for a license. The 27 amount is proportional to the violation, while serving as a deterrence of future violations as 28 Section 605 intended. In addition, it aligns with statutory damages awarded in similar 1 circumstances in this district. See, e.g., G & G Closed Circuit Events, LLC v. Barajas-Quijada, 2 2020 WL 64782, at *5 (E.D. Cal. Jan. 7, 2020) (recommending “award of $5,600—which is 3 twice the cost of a proper sublicense” where 54 patrons were present, first-time-offender 4 defendant advertised, and collected a cover charge); J & J Sports Productions, Inc. v. Carranza, 5 2015 WL 12681674, at *2 (E.D. Cal. Dec. 29, 2015) (“[P]laintiff has not demonstrated any 6 damages greater than the loss of the $1,400 licensing fee and the facts do not warrant statutory 7 damages in excess of $1,400”); La Placita RM Rest. Inc., 2023 U.S. Dist. LEXIS 137940, at *9 8 (awarding $3,000 in statutory damages without enhanced damages where defendant advertised, 9 and the program was shown on a single sixty-inch television); Naranjo, 2010 WL 3171182, at *6 10 (awarding $1,000 in statutory damages without enhanced damages where the capacity of the 11 restaurant was forty, the number present ranged from 12 to 20, no admission fee was charged, and 12 the program was displayed on a single television). 13 2. Enhanced Damages for § 605 Claim 14 Plaintiff seeks enhanced damages in the amount of $25,000. (ECF No. 31 at 3.) Plaintiff 15 asserts defendants’ unlawful actions were committed willfully and for financial gain. (ECF No. 16 17 at 7.) While it is true that the complaint’s factual allegations are taken as true, the same cannot 17 be said for allegations relating to damages. Geddes, 559 F.2d at 560 (“The general rule of law is 18 that upon default the factual allegations of the complaint, except those relating to the amount of 19 damages, will be taken as true.”). 20 Here, plaintiff’s only evidence in support of enhanced damages is a cover charge of 21 $10.00. (ECF No. 31 at 19-20, 29-31.) This court has observed that “[a]n award of enhanced 22 damages is appropriate where the defendant imposes a cover charge or admission fee.” J & J 23 Sports Prods., Inc. v. Mendoza, 2015 WL 5009000, at *4 (E.D. Cal. Aug. 20, 2015) (awarding 24 $10,000 in enhanced damages where defendants advertised the programming and required a cover 25 charge). However, there is no evidence indicating that defendants advertised the Program, that 26 food or drink prices were increased because of the broadcasting of the Program, or that the 27 number of the patrons was larger than usual or attributable to the playing of the broadcast. See, 28 e.g., Joe Hand Promotions, Inc. v. Burleson, 2011 WL 4905631, at *5 (E.D. Cal. Oct. 14, 2011) 1 (awarding $3,000 in enhanced damages where patrons were told they could either “pay a [$5] 2 cover charge to watch the fight or order a plate of ‘all you can eat wings for $11.99’”). 3 Accordingly, the court finds it appropriate to award a reduced amount of $3,000 in 4 enhanced statutory damages under 42 U.S.C § 605(e)(3)(C)(ii), for a total statutory award of 5 $5,600 under 47 U.S.C § 605. 6 3. Damages for Conversion 7 Plaintiff requests $1,300 in damages for its conversion claim. Under California Civil 8 Code § 3336, a plaintiff in action for conversion may recover the value of the property at the time 9 of conversion. Kruger v. Bank of America, 145 Cal. App. 3d 204, 215 (1983); Cal. Civ. Code. 10 § 3336. An establishment the size of Port City would have been required to pay $1,300 to obtain 11 a commercial sublicense to broadcast the Program. (ECF No. 31 at 62.) Accordingly, the court 12 concludes that an award of $1,300 in compensatory damages for the conversion claim is 13 appropriate. 14 4. Attorneys’ Fees and Costs 15 Title 47 U.S.C. § 605 mandates an award of costs and attorneys’ fees to an aggrieved 16 party. Specifically, the section states that the court “shall direct the recovery of full costs, 17 including awarding reasonable attorneys’ fees to an aggrieved party who prevails.” 47 U.S.C. 18 § 605(e)(3)(B)(iii). Plaintiff requests fourteen (14) days from the entry of judgment to submit its 19 motion for costs and attorneys’ fees. 20 The court finds the request appropriate and recommends plaintiff be allowed to submit 21 such request within fourteen (14) days of entry of judgment. 22 RECOMMENDATIONS 23 Accordingly, it is HEREBY RECOMMENDED that: 24 1. Plaintiff’s motion for default judgment be GRANTED IN PART, with reductions in the 25 total sought damages; 26 2. Judgment be entered in favor of plaintiff and against defendants in the total amount of 27 $6,900.00, as follows: 28 a. $2,600.00 in damages pursuant to 47 U.S.C. § 605(e)(3)(C)(i)(II); ] b. $3,000.00 in damages pursuant to 47 U.S.C. § 605(e)(3)(C)(ii); 2 c. $1,300.00 in damages for plaintiff's state tort claim for conversion; and 3 3. Plaintiff be ordered to submit a motion for costs and attorneys’ fees within fourteen (14) 4 days from the date of entry of judgment. 5 These findings and recommendations are submitted to the United States District Judge 6 || assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within seven (7) days 7 || after being served with these findings and recommendations, any party may file written 8 || objections with the court and serve a copy on all parties. Such a document should be captioned 9 || “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections 10 || shall be served on all parties and filed with the court within seven (7) days after service of the 11 || objections. The parties are advised that failure to file objections within the specified time may 12 || waive the right to appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 455 (9th 13 | Cir. 1998); Martinez v. YIst, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 14 | Dated: October 20, 2023 Aectl Aharon 16 KENDALL J. NE UNITED STATES MAGISTRATE JUDGE 17 SD/AZ, winn.1140 18 19 20 21 22 23 24 25 26 27 28 1]