G & G Closed Circuit Events, LLC v. Miranda

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 G & G CLOSED CIRCUIT EVENTS, LLC, Case No. 20-cv-07684-SVK

8 Plaintiff, ORDER FOR REASSIGNMENT TO A DISTRICT JUDGE 9 v.

10 ISMAEL M. MIRANDA, et al., REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION FOR 11 Defendants. DEFAULT JUDGMENT 12 Re: Dkt. No. 22

13 The Clerk of Court entered default against Defendants Ismael M. Miranda individually and 14 d/b/a El Agave Restaurant and El Agave Restaurant, Inc., an unknown business entity d/b/a El 15 Agave Restaurant (collectively, “Defendants”), after Defendants failed to appear or otherwise 16 respond to the Summons and Complaint within the time prescribed by the Federal Rules of Civil 17 Procedure. Dkt. 19. Plaintiff G&G Closed Circuit Events, LLC subsequently filed a motion for 18 default judgment. Dkt. 22. The Court denied the motion for default judgment without prejudice 19 on the grounds that Plaintiff had failed to show proper service of the summons and complaint on 20 Defendant Miranda because the original proof of service failed to establish that service was made 21 at the correct address. Dkt. 24. Plaintiff subsequently filed an amended proof of service that 22 included the service address. Dkt. 25. The Court then issued an order stating that it would 23 consider the previously-filed motion for default judgment based on the amended proof of service 24 (Dkt. 26), and it will now proceed to do so. 25 Defendants have not appeared in this action to date and have not opposed the motion for 26 default judgment. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter for suitable for 27 resolution without oral argument. 1 of the Defendants has consented. Accordingly, the Court directs the Clerk of Court to 2 REASSIGN this case to a District Judge, with the following RECOMMENDATION that 3 Plaintiff’s motion for default judgment be GRANTED IN PART AND DENIED IN PART for 4 the reasons that follow. If all Defendants later consent to magistrate judge jurisdiction, the case 5 may be reassigned to the undersigned. 6 I. BACKGROUND 7 Plaintiff is a commercial distributor and licensor of closed-circuit sports and entertainment 8 programming. Dkt. 1 (Complaint) ¶ 21; Dkt. 22-2 (Gagliardi Decl.) ¶ 3. Plaintiff alleges that it 9 was granted the exclusive nationwide commercial exhibition (closed-circuit) rights to the Saul 10 “Canelo” Alvarez v. Sergey Kovolev Championship Fight Program on November 2, 2019, 11 including all under-card bouts and fight commentary (collectively, the “Program”). Dkt. 1 ¶ 18; 12 Dkt. 22-2 ¶¶ 3-4 and Ex. 1. Plaintiff then sublicensed the right to publicly exhibit the Program to 13 various commercial entities throughout California and North America. Dkt. 1 ¶ 19; Dkt. 22-2 ¶ 3. Plaintiff alleges that Defendants unlawfully intercepted and exhibited the Program at their 14 commercial establishment, El Agave Restaurant, located at 2270 Monterey Highway, San Jose, 15 California 95112. Dkt. 1 ¶¶ 8, 23-24; Dkt. 22-2 ¶¶ 3, 7, 9-11. 16 On October 31, 2020, Plaintiff filed this action for violation of 47 U.S.C. §§ 553 and 605, 17 conversion, and violation of California Business and Professions Code §§ 17200 et seq. Dkt. 1. 18 In the present motion for default judgment, however, Plaintiff seeks remedies only under 47 19 U.S.C. § 605 and for conversion. Dkt. 22-1 at 5. 20 II. LEGAL STANDARD 21 After entry of default, a court may, in its discretion, enter default judgment. See Fed. R. 22 Civ. P. 55; Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Before entering default 23 judgment, the Court must assess the adequacy of the service of process on the party against whom 24 default is requested. See Trustees of ILWU-PMA Pension Plan v. Coates, No. C-11-3998 EMC, 25 2013 WL 556800, at *4 (N.D. Cal. Feb. 12, 2013). The Court must also determine whether it has 26 subject matter jurisdiction over the action and personal jurisdiction over the defaulted defendant. 27 1 If the Court concludes that the defaulted defendant was properly served and that the Court 2 has jurisdiction, the Court must next consider whether default judgment is appropriate, 3 considering seven factors set forth by the Ninth Circuit: (1) the possibility of prejudice to the 4 plaintiff; (2) the merits of plaintiff’s substantive claims; (3) the sufficiency of the complaint; 5 (4) the sum of money at stake in the action; (5) the possibility of dispute concerning material facts; 6 (6) whether default was due to excusable neglect; and (7) the strong policy under the Federal 7 Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 8 1471-72 (9th Cir. 1986). In considering these factors, the Court takes all well-pleaded factual 9 allegations in the complaint as true, except those concerning damages. Televideo Sys., Inc. v. 10 Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). 11 III. DISCUSSION 12 A. Service and Jurisdiction 13 As discussed above, “[i]n deciding whether to grant or deny default judgment, the Court 14 must first assess the adequacy of the service of process on the party against whom default is 15 requested because, if service were improper, that may well explain the failure of a defendant to 16 appear in a lawsuit.” Folkmanis, Inc. v. Uptown Toys LLC, No. 18-cv-00955-EMC, 2018 WL 17 4361140, at *2 (N.D. Cal. Sep. 13, 2018) (internal quotation marks and citation omitted). Plaintiff 18 filed a proof of service of the summons and complaint on Defendant El Agave Restaurant and an 19 amended proof of service on Defendant Ismael Miranda. Dkt. 16, 25. A sworn proof of service 20 constitutes “prima facie evidence of valid service which can be overcome only by strong and 21 convincing evidence.” S.E.C. v. Internet Solutions for Business, Inc., 509 F.3d 1161, 1166 (9th 22 Cir. 2007) (internal quotation marks and citations omitted). Accordingly, based on the sworn 23 proofs of service filed by Plaintiff, the Court concludes that service was proper. 24 When a plaintiff seeks entry of default judgment against a party who has failed to plead or 25 otherwise defend, “a district court has an affirmative duty to look into its jurisdiction over both the 26 subject matter and the parties.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). The Court has 27 subject matter jurisdiction over this matter because federal statutes are at issue, and the Court can 1 requirement of personal jurisdiction is satisfied as to both Defendants because the Complaint and 2 public records submitted with the present motion indicate that Defendant El Agave Restaurant 3 operates in San Jose, California and is the licensee identified on a California Department of 4 Alcoholic Beverage Control license. Dkt. 1 ¶ 8; Ex. 1 to Dkt. 22-4. Defendant Ismael M. 5 Miranda is identified in public records as the President of El Agave Restaurant, Inc. Dkt. 1 ¶¶ 7, 6 9; Exs. 1-3 to Dkt. 22-4.1 7 B. Eitel Factors 8 Having concluded that the threshold requirements of service and jurisdiction are met, the 9 Court next considers the Eitel factors and concludes that the majority of those factors weigh in 10 favor of entering default judgment against Defendants. Declining to enter default judgment 11 against the defaulted Defendants would prejudice Plaintiff (first factor) because Plaintiff has no 12 other recourse against Defendants. Plaintiff’s claims against Defendants are adequately pled and 13 sufficient to find liability on the facts alleged, which must be taken as true, as discussed in further 14 detail below (second and third factors). Plaintiff asks the Court to award the not-insubstantial sum 15 of $23,600. Dkt. 22-5. Although entry of default judgment may not be appropriate where a large 16 sum of money is at stake (fourth factor), here the damages sought are statutory and the amount is 17 left to the Court’s discretion. There is no indication that Plaintiffs’ failure to respond is due to 18 excusable neglect or that there is any indication of a dispute concerning material facts (fifth and 19 sixth factors). Although public policy strongly favors decisions on the merits (seventh factor), in 20 light of Defendants’ refusal to litigate, it does not appear that litigation of the merits will be 21 possible in this case. Accordingly, the Court RECOMMENDS GRANTING Plaintiff’s motion 22 for entry of default judgment. 23 24

25 1 The Court takes judicial notice to Exhibits 1-3 to the Declaration of Thomas P. Riley (Dkt. 22-4) submitted in support of Plaintiff’s motion for default judgment because they are public records 26 capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Ev. 201(b)(2); see also J&J Sports Productions, Inc. v. 27 Medoza-Lopez, No. 17-cv-06421-YGR (JSC), 2018 WL 4676903, at *1 n.1 (N.D. Cal. Mar. 29, IV. RELIEF TO BE AWARDED 1 1. Statutory Damages Pursuant to 47 U.S.C. § 605 or § 553 2 In the Complaint, Plaintiff seeks $10,000 in statutory damages pursuant to 47 U.S.C. 3 § 605(e)(3)(C)(i)(II), $100,000 in statutory damages pursuant to 47 U.S.C. § 605(e)(3)(C)(ii), 4 $10,000 in statutory damages pursuant to 47 U.S.C. § 553(c)(3)(A)(ii), $50,000 in statutory 5 damages pursuant to 47 U.S.C. § 553(c)(3)(B), damages for conversion in an amount according to 6 proof, and restitution pursuant to California Business and Professions Code §§ 17200, et seq. in an 7 amount according to and from the Defendants for their ill-gotten gains. Dkt. 1. However, in the 8 instant motion for default judgment, Plaintiff’s request is limited to $4,200 in statutory damages 9 and $18,000 in enhanced statutory damages for violations pursuant to 47 U.S.C. 10 §§ 605(e)(3)(C)(i)(II) and (e)(3)(C)(ii) and $1,400 in damages for conversion. Dkt. 22-1 at 13-18; 11 Dkt. 22-5. 12 A threshold issue is whether to apply 47 U.S.C. § 605 or 47 U.S.C. § 553. “A signal pirate 13 violates section 553 if he intercepts a cable signal, he violates section 605 if he intercepts a 14 satellite broadcast. But he cannot violate both by a single act of interception.” J & J Sports 15 Productions, Inc. v. Man Thi Doan, No. C-08-00324 RMW, 2008 WL 4911223, at *2 (N.D. Cal. 16 Nov. 13, 2008); see also J & J Sports Productions, Inc. v. Coria, No. C 12–05779 JSW, 2015 WL 17 1089044, at *3–4 (N.D. Cal. Feb. 27, 2015) (“Plaintiff may not recover under both 47 U.S.C. § 18 605 and 47 U.S.C. § 553”)) (citations omitted). The Complaint alleges that the Program 19 “originated via satellite uplink and was subsequently re-transmitted to cable systems and satellite 20 companies to Plaintiff’s sub-licensees.” Dkt. 1 ¶ 22. Plaintiff’s affidavit in support of the motion 21 for default judgment states that “the interstate satellite transmission of the Program was 22 electronically coded or scrambled” and authorized commercial establishments were “provided 23 with the electronic decoding equipment and the satellite coordinates necessary to receive the 24 signal, or the establishment’s cable or satellite provider would be notified to unscramble the 25 reception of the Program for the establishment.” Dkt. 22-2 ¶ 11. However, neither the Complaint 26 nor Plaintiff’s affidavit alleges whether the Program was intercepted through a cable signal or a 27 satellite broadcast. The affidavit of Plaintiff’s investigator, Jason Amin, does not specify whether 1 he saw a satellite dish or cable box at the establishment. Dkt. 28. Because of the prominent 2 placement required for a satellite dish in comparison to a cable box, the Court finds this lack of 3 evidence persuasive that the programming came from a cable signal. See Man Thi Doan, 2008 4 WL 4911223, at *3; see also G&G Closed Circuit Events, LLC v. Huong Xuan Thi Nguyen, No. 5 5:10-CV-05715 EJD, 2011 WL 4536959, at *7 (N.D. Cal. Sep. 30, 2011). Accordingly, the Court 6 finds that Plaintiff has failed to state a claim for relief under Section 605 and RECOMMENDS 7 DENIAL of the motion for default judgment on the Section 605 claim. The Court will instead 8 analyze Plaintiff’s damages for Defendants’ alleged violation under Section 553. See Huong Xuan 9 Thi Nguyen, 2011 WL 4536959, at *7. 10 The Court finds that Plaintiff has sufficiently alleged a basis for relief under Section 553. 11 Through Mr. Amin’s affidavit, Plaintiff established that Defendants were exhibiting the Program 12 without permission “and thus the Court finds that Section 553 is the more likely violation.” J&J 13 Sports Productions, Inc. v. Sergura, No. C 12–01702 JSW, 2014 WL 1618577, at *4 (N.D. Cal. 14 Apr. 21, 2014) (citation omitted); Coria, 2015 WL 1089044, at *4. Under Section 15 553(c)(3)(A)(ii), Plaintiff “may recover an award of statutory damages for all violations involved 16 in the action, in a sum of not less than $250 or more than $10,000 as the court considers just.” 17 “The Court may also enhance the award of damages by up to $50,000 if it finds that the conduct 18 was ‘committed willfully and for the purposes of commercial advantage or financial gain.’” J & J 19 Sports Productions, Inc. v. Seldner, No. C10–5137 TEH, 2011 WL 2650961, at *2 (N.D. Cal. July 20 6, 2011) (quoting 47 U.S.C. § 553(c)(3)(B)). District courts consider different factors in 21 determining damages, including “use of cover charge, increase in food price during programming, 22 presence of advertisement, number of patrons, number of televisions used, and impact of the 23 offender’s conduct on the claimant.” J & J Sports Productions, Inc. v. Concepcion, No. C 10– 24 05092 WHA, 2011 WL 2220101, at *4 (N.D. Cal. June 7, 2011). Further, “[r]epeated violations 25 may also justify enhanced damages.” Id. “Additionally, courts look to the actual cost of a 26 commercial license, defendant's incremental profits and the need to deter piracy.” Sergura, 2014 27 WL 1618577, at *4. 1 establishment and there were four televisions located behind the bar and on the side walls. Dkt. 2 28. Mr. Amin’s affidavit states that the capacity of the establishment was 100 people and he 3 counted 26, 28, and 31 patrons while he was there. Id. There are no allegations in the Complaint 4 and no evidence in the record that this establishment had increased food or beverage prices as a 5 result of the Program. Further, there is no allegation that Defendants advertised the exhibition of 6 the Program or are a repeat offender. Plaintiff argues that “Defendants acted willfully and for the 7 purpose of direct or indirect commercial advantage or private financial gain.” Dkt. 22-1 at 16. 8 However, “the mere assertion that a defendant acted willfully is insufficient to justify enhanced 9 damages.” Seldner, 2011 WL 2650961, at *3 (citation omitted). Accordingly, the Court 10 RECOMMENDS Plaintiff be awarded $1,400 in statutory damages under Section 11 553(c)(3)(A)(ii), which represents the cost of the commercial sublicense fee to broadcast the 12 Program according to Mr. Gagliardi’s declaration. Dkt. 22-2 ¶ 8. 13 2. Damages for Conversion 14 As stated above, Plaintiff also seeks $1,400 in damages for conversion. Dkt. 22-1 at 18. 15 The elements of conversion are (1) ownership of a right to possession of property; (2) wrongful 16 disposition of the property right of another, and (3) damages. See G.S. Rasmussen & Assoc. v. 17 Kalitta Flying Serv., 958 F.2d 896, 906 (9th Cir. 1992). Plaintiff alleges ownership over the 18 nationwide distribution rights for the Program, Defendants’ misappropriation of this ownership 19 right through the intentional and unlawful interception of the Program, and damages. See Dkt. 1. 20 As stated previously, according to Mr. Gagliardi’s declaration, the commercial sublicense fee to 21 broadcast the Program would have cost Defendants $1,400. Dkt. 22-1 ¶ 8. Thus, Plaintiff’s 22 request is appropriate, and the Court RECOMMENDS Plaintiff be awarded $1,400 in damages 23 for conversion. 24 3. Costs and Attorney’s Fees 25 Reasonable attorneys’ fees and costs may be awarded pursuant to 47 U.S.C. § 553(c)(2). 26 Plaintiff’s motion requests the opportunity to submit evidence in support of its recovery of 27 attorneys’ fees and relevant costs. Dkt. 22-1 at 18. Accordingly, if the assigned District Judge 1 counsel be ordered to file a properly supported request for reasonable attorneys’ fees and costs 2 within 14 days of the District Court’s order. 3 || V.. CONCLUSION 4 For the reasons explained above, the Court RECOMMENDS judgment be entered in 5 favor of Plaintiff against Defendants. The Court also RECOMMENDS that Plaintiff's motion be 6 DENIED as to the claim under 47 U.S.C. § 605 and GRANTED as to the claim under 47 U.S.C. 7 § 553 and the conversion claim. The Court further RECOMMENDS Plaintiff be awarded a total 8 of $2,800 in damages jointly and severally against Defendants. 9 Any party may file objections to this report and recommendation with the district judge 10 || within 14 days after being served with a copy. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); 11 Civ. L.R. 72-3. Failure to file an objection may waive the right to review of the issue in the 12 || district court. 5 13 SO ORDERED. |} Dated: October 29, 2021

A 16 Seam SUSAN VAN KEULEN 17 United States Magistrate Judge 18 19 20 21 22 23 24 25 26 27 28