1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 INNOVATIVE SPORTS MANAGEMENT, Case No. 22-cv-07136-JSC INC., 8 Plaintiff, ORDER GRANTING IN PART AND 9 DENYING IN PART PLAINTIFF’S v. MOTION FOR DEFAULT JUDGMENT 10 FERNANDO VASQUEZ NUNEZ, et al., Re: Dkt. No. 26 11 Defendants.
12 13 Innovative Sports Management, Inc., d/b/a Integrated Sports Media (“Plaintiff”) alleges 14 Fernando Vasquez Nunez (“Nunez”), Humberto Vasquez (“Vasquez”), and Emelina’s Peruvian 15 Restaurant (“Emelina’s”) (collectively, “Defendants”) violated Plaintiff’s domestic commercial 16 exhibition rights when Defendants broadcast the Peru v. Ecuador Soccer Match (the “Program”) 17 on Tuesday, February 1, 2022 at Emelina’s Peruvian Restaurant in San Carlos, California. (Dkt. 18 No. 1.) 1 19 Plaintiff’s motion for default judgment is now pending before the Court. (Dkt. No. 26.) 20 After carefully considering Plaintiff’s written submission, the Court GRANTS Plaintiff’s motion 21 for default judgment against Defendants. Specifically, the Court GRANTS relief under 47 U.S.C. 22 § 553 as to Emelina’s and holds Nunez and Vasquez jointly and severally liable. The Court also 23 GRANTS Plaintiff’s request for relief for conversion as to Emelina’s, but DENIES Plaintiff’s 24 request for relief for conversion as to Nunez and Vasquez. Plaintiff must file its motion for 25 attorneys’ fees and costs within 14 days of the entry of judgment. 26 27 1 BACKGROUND 2 A. Complaint Allegations 3 Emelina’s is a restaurant in San Carlos, California. (Dkt. No. 1 ¶ 7.) Nunez is Chief 4 Executive Officer (“CEO”) and Director of Emelina’s. (Id. ¶ 10.) Vasquez is Emelina’s Chief 5 Financial Officer (“CFO”). (Id. ¶ 12.) 6 Plaintiff, a New Jersey Corporation, distributes sports and entertainment programming. 7 (Dkt. No. 1 ¶¶ 6, 21.) Plaintiff holds the exclusive nationwide commercial distribution rights to 8 the Program. (Id. ¶ 21.) Commercial entities license limited exhibition rights from Plaintiff. (Id. 9 ¶ 22.) 10 Plaintiff used a satellite uplink to transmit the program to cable and satellite companies, 11 who in turn transmitted the Program to the sublicensees. (Id. ¶ 25.) Plaintiff alleges Defendants 12 knowingly intercepted and then displayed the Program at Emelina’s Peruvian Restaurant, or 13 instructed or allowed the employees of Emelina’s Peruvian Restaurant to do so, without 14 authorization. (Id. ¶ 15.) Accordingly, Plaintiff brings claims for violation of the Federal 15 Communications Act, 47 U.S.C. § 605, the Cable & Television Consumer Protection and 16 Competition Act, 47 U.S.C. § 553, California Business & Professions Code § 17200, and 17 conversion under state law. (Id. ¶¶ 20-52.) Plaintiff ‘s default motion seeks statutory and 18 enhanced damages under §605, damages resulting from conversion, attorney’s fees, and costs. 19 (Dkt. No. 26 at 3.) 20 In support of its motion for default judgment, Plaintiff submits declarations and exhibits 21 which bear on the merits of Plaintiff’s claims and the sufficiency of its complaint for purposes of 22 default judgment. (Dkt. Nos. 26-2; 26-3; 26-4.) “Rule 55 gives the court considerable leeway as 23 to what it may require as a prerequisite to the entry of default judgment.” TeleVideo Systems, Inc. 24 v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Accordingly, the Court exercises its 25 discretion to consider this additional evidence. 26 Erika Galvez declares they viewed the Program at Emelina’s Peruvian Restaurant on 27 February 1, 2022. (Dkt. No. 26-2.) Doug Jacobs, president of Innovative Sports Management, 1 mistakenly, innocently, or accidentally intercepted. (Dkt. No. 26-4 ¶¶ 7, 9.) Plaintiff also submits 2 exhibits from the California Secretary of State website, the California Department of Alcoholic 3 Beverage Control, and the City of San Carlos Public Information Business Records. (Dkt. No. 26- 4 3 at 4-23.) These exhibits show the various connections Nunez and Vasquez have to Emelina’s 5 including their statuses as CEO and CFO respectively. (Id.) 6 B. Procedural Background 7 Plaintiff filed the Complaint on November 14, 2022. (Dkt. No. 1.) Nunez and Vasquez 8 were served on January 26, 2023 and Emelina’s was served on January 30, 2023. (Dkt. Nos. 13- 9 15.) On March 8, 2023, the clerk entered default against Defendants. (Dkt. No. 21.) Plaintiff 10 now seeks default judgment against Defendants. (Dkt. No. 26.) 11 DISCUSSION 12 Generally, after entry of default, a party is entitled to apply to the court for default 13 judgment when a party has failed to plead or defend. Fed. R. Civ. P. 55(b)(2). First, courts have a 14 duty to examine subject matter jurisdiction, personal jurisdiction, venue, and service of process as 15 to claims against a non-appearing party where default judgment is sought. In re Tuli, 172 F.3d 16 707, 712 (9th Cir. 1999). Second, the court may exercise its discretion in deciding whether to 17 enter default judgment based on the factors in Eitel v. McCool, 782 F.2d 1470, 72 (9th Cir. 1986). 18 Third, a plaintiff’s request for statutory damages, enhanced damages, and attorneys’ fees must not 19 differ or exceed what is sought in the pleadings and must be available as a matter of law. Fed. R. 20 Civ. P. 54(c). The Court addresses each issue in turn. 21 I. JURISDICTION & SERVICE OF PROCESS 22 This Court has jurisdiction over Plaintiff’s claims and service of process was proper. 23 A. Subject Matter and Personal Jurisdiction 24 Courts have a duty to examine both subject matter and personal jurisdiction as to claims 25 against a non-appearing party when default judgment is sought. In re Tuli, 172 F.3d at 712 26 (“When entry of judgment is sought against a party who has failed to plead or otherwise defend, a 27 district court has an affirmative duty to look into its jurisdiction over both the subject matter and 1 (Dkt. No. 1 at 8-13.) Thus, the Court has federal subject matter jurisdiction over those claims. 28 2 U.S.C. § 1331. As a result, the Court can exercise supplemental jurisdiction over the remaining 3 state law claims, counts three and four, because they arise from the same controversy. 28 U.S.C. § 4 1367(a); (Dkt. No. 1 at 13-16). Personal jurisdiction exists because Defendants’ alleged actions 5 took place in San Carlos, California. See International Shoe Co. v. Washington, 326 U.S. 310, 6 316 (1945); (Dkt. No. 1 at 2.) 7 B. Service Of Process 8 Defendant was properly served with notice of the action. See Penpower Tech. Ltd. v. 9 S.P.C. Tech., 627 F. Supp. 2d 1083, 1088 (N.D. Cal. 2008). An individual may be served by 10 following state law in the state where the court is located or where service is made. Fed. R. Civ. 11 P. 4(e)(1). After exercising reasonable diligence to effectuate personal service, California allows 12 for substitute service at a usual place of business on a person apparently in charge, and 13 subsequently mailing service to the address. Cal. Civ. Proc.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 INNOVATIVE SPORTS MANAGEMENT, Case No. 22-cv-07136-JSC INC., 8 Plaintiff, ORDER GRANTING IN PART AND 9 DENYING IN PART PLAINTIFF’S v. MOTION FOR DEFAULT JUDGMENT 10 FERNANDO VASQUEZ NUNEZ, et al., Re: Dkt. No. 26 11 Defendants.
12 13 Innovative Sports Management, Inc., d/b/a Integrated Sports Media (“Plaintiff”) alleges 14 Fernando Vasquez Nunez (“Nunez”), Humberto Vasquez (“Vasquez”), and Emelina’s Peruvian 15 Restaurant (“Emelina’s”) (collectively, “Defendants”) violated Plaintiff’s domestic commercial 16 exhibition rights when Defendants broadcast the Peru v. Ecuador Soccer Match (the “Program”) 17 on Tuesday, February 1, 2022 at Emelina’s Peruvian Restaurant in San Carlos, California. (Dkt. 18 No. 1.) 1 19 Plaintiff’s motion for default judgment is now pending before the Court. (Dkt. No. 26.) 20 After carefully considering Plaintiff’s written submission, the Court GRANTS Plaintiff’s motion 21 for default judgment against Defendants. Specifically, the Court GRANTS relief under 47 U.S.C. 22 § 553 as to Emelina’s and holds Nunez and Vasquez jointly and severally liable. The Court also 23 GRANTS Plaintiff’s request for relief for conversion as to Emelina’s, but DENIES Plaintiff’s 24 request for relief for conversion as to Nunez and Vasquez. Plaintiff must file its motion for 25 attorneys’ fees and costs within 14 days of the entry of judgment. 26 27 1 BACKGROUND 2 A. Complaint Allegations 3 Emelina’s is a restaurant in San Carlos, California. (Dkt. No. 1 ¶ 7.) Nunez is Chief 4 Executive Officer (“CEO”) and Director of Emelina’s. (Id. ¶ 10.) Vasquez is Emelina’s Chief 5 Financial Officer (“CFO”). (Id. ¶ 12.) 6 Plaintiff, a New Jersey Corporation, distributes sports and entertainment programming. 7 (Dkt. No. 1 ¶¶ 6, 21.) Plaintiff holds the exclusive nationwide commercial distribution rights to 8 the Program. (Id. ¶ 21.) Commercial entities license limited exhibition rights from Plaintiff. (Id. 9 ¶ 22.) 10 Plaintiff used a satellite uplink to transmit the program to cable and satellite companies, 11 who in turn transmitted the Program to the sublicensees. (Id. ¶ 25.) Plaintiff alleges Defendants 12 knowingly intercepted and then displayed the Program at Emelina’s Peruvian Restaurant, or 13 instructed or allowed the employees of Emelina’s Peruvian Restaurant to do so, without 14 authorization. (Id. ¶ 15.) Accordingly, Plaintiff brings claims for violation of the Federal 15 Communications Act, 47 U.S.C. § 605, the Cable & Television Consumer Protection and 16 Competition Act, 47 U.S.C. § 553, California Business & Professions Code § 17200, and 17 conversion under state law. (Id. ¶¶ 20-52.) Plaintiff ‘s default motion seeks statutory and 18 enhanced damages under §605, damages resulting from conversion, attorney’s fees, and costs. 19 (Dkt. No. 26 at 3.) 20 In support of its motion for default judgment, Plaintiff submits declarations and exhibits 21 which bear on the merits of Plaintiff’s claims and the sufficiency of its complaint for purposes of 22 default judgment. (Dkt. Nos. 26-2; 26-3; 26-4.) “Rule 55 gives the court considerable leeway as 23 to what it may require as a prerequisite to the entry of default judgment.” TeleVideo Systems, Inc. 24 v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Accordingly, the Court exercises its 25 discretion to consider this additional evidence. 26 Erika Galvez declares they viewed the Program at Emelina’s Peruvian Restaurant on 27 February 1, 2022. (Dkt. No. 26-2.) Doug Jacobs, president of Innovative Sports Management, 1 mistakenly, innocently, or accidentally intercepted. (Dkt. No. 26-4 ¶¶ 7, 9.) Plaintiff also submits 2 exhibits from the California Secretary of State website, the California Department of Alcoholic 3 Beverage Control, and the City of San Carlos Public Information Business Records. (Dkt. No. 26- 4 3 at 4-23.) These exhibits show the various connections Nunez and Vasquez have to Emelina’s 5 including their statuses as CEO and CFO respectively. (Id.) 6 B. Procedural Background 7 Plaintiff filed the Complaint on November 14, 2022. (Dkt. No. 1.) Nunez and Vasquez 8 were served on January 26, 2023 and Emelina’s was served on January 30, 2023. (Dkt. Nos. 13- 9 15.) On March 8, 2023, the clerk entered default against Defendants. (Dkt. No. 21.) Plaintiff 10 now seeks default judgment against Defendants. (Dkt. No. 26.) 11 DISCUSSION 12 Generally, after entry of default, a party is entitled to apply to the court for default 13 judgment when a party has failed to plead or defend. Fed. R. Civ. P. 55(b)(2). First, courts have a 14 duty to examine subject matter jurisdiction, personal jurisdiction, venue, and service of process as 15 to claims against a non-appearing party where default judgment is sought. In re Tuli, 172 F.3d 16 707, 712 (9th Cir. 1999). Second, the court may exercise its discretion in deciding whether to 17 enter default judgment based on the factors in Eitel v. McCool, 782 F.2d 1470, 72 (9th Cir. 1986). 18 Third, a plaintiff’s request for statutory damages, enhanced damages, and attorneys’ fees must not 19 differ or exceed what is sought in the pleadings and must be available as a matter of law. Fed. R. 20 Civ. P. 54(c). The Court addresses each issue in turn. 21 I. JURISDICTION & SERVICE OF PROCESS 22 This Court has jurisdiction over Plaintiff’s claims and service of process was proper. 23 A. Subject Matter and Personal Jurisdiction 24 Courts have a duty to examine both subject matter and personal jurisdiction as to claims 25 against a non-appearing party when default judgment is sought. In re Tuli, 172 F.3d at 712 26 (“When entry of judgment is sought against a party who has failed to plead or otherwise defend, a 27 district court has an affirmative duty to look into its jurisdiction over both the subject matter and 1 (Dkt. No. 1 at 8-13.) Thus, the Court has federal subject matter jurisdiction over those claims. 28 2 U.S.C. § 1331. As a result, the Court can exercise supplemental jurisdiction over the remaining 3 state law claims, counts three and four, because they arise from the same controversy. 28 U.S.C. § 4 1367(a); (Dkt. No. 1 at 13-16). Personal jurisdiction exists because Defendants’ alleged actions 5 took place in San Carlos, California. See International Shoe Co. v. Washington, 326 U.S. 310, 6 316 (1945); (Dkt. No. 1 at 2.) 7 B. Service Of Process 8 Defendant was properly served with notice of the action. See Penpower Tech. Ltd. v. 9 S.P.C. Tech., 627 F. Supp. 2d 1083, 1088 (N.D. Cal. 2008). An individual may be served by 10 following state law in the state where the court is located or where service is made. Fed. R. Civ. 11 P. 4(e)(1). After exercising reasonable diligence to effectuate personal service, California allows 12 for substitute service at a usual place of business on a person apparently in charge, and 13 subsequently mailing service to the address. Cal. Civ. Proc. Code § 415.20(b). Two or three 14 attempts at personal service establish reasonable diligence. Bein v. Brechtel-Jochim Grp., Inc., 6 15 Cal. App. 4th 1387, 1391-92 (1992). “The evident purpose of Code of Civil Procedure section 16 415.20 is to permit service to be completed upon a good faith attempt at physical service on a 17 responsible person . . .. Service must be made upon a person whose relationship with the person to 18 be served makes it more likely than not that they will deliver process to the named party.” Hearn 19 v. Howard, 177 Cal. App. 4th 1193, 1202–03 (2009) (cleaned up). 20 Here, service of process was valid because Plaintiff effectuated substitute service at 21 Defendants’ usual place of business with a person apparently in charge. Plaintiff attempted to 22 serve Vasquez and Nunez at Emelina’s Peruvian Restaurant twice. (Dkt. Nos. 13-14 at 4.) Both 23 attempts at service resulted in the cashier informing Plaintiff that Nunez and Vasquez were not at 24 the restaurant. (Id.) After two unsuccessful attempts, Plaintiff served Patricia Salazar, a 55-year- 25 old waitress at Emelina’s, on January 26, 2023, at 3:08pm. (Id.) The process server declared 26 Salazar was a person apparently in charge at the time of service. (Id.) Similarly, after 27 unsuccessfully attempting to serve Emelina’s three times, substitute service was effectuated by 1 2023, at 2:09pm. (Dkt. No. 15 at 3-5.) The process server declared Isaula was a person 2 apparently in charge at the time of service. (Id.) The documents were subsequently mailed as 3 required by rule 415.20(b). (Dkt. Nos. 13-15.) A cashier and waitress at Emelina’s are 4 sufficiently responsible people who would likely deliver process to Defendants and inform them 5 of the pending action. Therefore, Defendants were properly served with notice of the action under 6 California law. See Joe Hand v. Bernal, No. 1:12-CV-01512-AWI, 2013 WL 1402464 at *2 (E.D. 7 Cal. Apr. 5, 2013). Defendants were also served with notice of the default on March 10, 2023, by 8 mail sent to Emelina’s restaurant. (Dkt. No. 23.) 9 II. DEFAULT JUDGMENT 10 After entry of default, the Court may grant default judgment on the merits of the case. 11 Fed. R. Civ. P. 55. “The district court’s decision whether to enter a default judgment is a 12 discretionary one,” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980), guided by the 13 following factors:
14 (1) the possibility of prejudice to the plaintiff[;] (2) the merits of plaintiff’s substantive claim[;] (3) the sufficiency of the complaint[;] 15 (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to 16 excusable neglect[;] and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 17 18 Eitel, 782 F.2d at 1471–72. Here, the Court finds the Eitel factors weigh in favor of granting 19 default judgment. 20 A. Possibility of Prejudice to Plaintiff 21 The first Eitel factor considers the possibility and extent to which Plaintiff will suffer 22 prejudice, such as being left without a legal remedy, if the Court declines to enter default 23 judgment. Here, as a result of Defendants’ failure to respond to Plaintiff’s Complaint, the only 24 recourse for its claims is default judgment. See, e.g., Amazon.com, Inc. v. Expert Tech Rogers Pvt. 25 Ltd., No. 20-CV-07405-PJH-JSC, 2021 WL 4461601, at *4 (N.D. Cal. Sept. 22, 2021). 26 B. Merits of Plaintiff’s Substantive Claim and Sufficiency of the Complaint 27 The second and third factors consider the merits and sufficiency of Plaintiff’s claims. 1 assumed to be true. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Plaintiff 2 seeks default judgment on two claims: (1) the unauthorized publication or use of communications 3 under § 605 and (2) conversion. (Dkt. No. 26 at 3.) 4 1. Unauthorized Publication or Use of Communications 5 a. Liability Under Section 553 Rather Than Section 605 6 While the complaint seeks judgment under § 553 and § 605, under § 605 commercial 7 establishments are prohibited “from intercepting and broadcasting to its patrons satellite cable 8 programming.” J & J Sports Prods., Inc. v. Mosley, No. 10–5126, 2011 WL 2066713, at *3 (N.D. 9 Cal. Apr. 13, 2011); see also 47 U.S.C. § 605. In contrast, 47 U.S.C. § 553 “prohibits a person 10 from intercepting or receiving or assisting in intercepting or receiving any communications service 11 offered over a cable system.” Id. “A signal pirate violates Section 553 if he intercepts a cable 12 signal, [but] he violates [Section] 605 if he intercepts a satellite broadcast.” J & J Sports Prods., 13 Inc. v. Manzano, No. 08–01872, 2008 WL 4542962, at *2 (N.D. Cal. Sept. 29, 2008). “Plaintiff 14 may not recover under both § 605 and § 553” because it is not possible to intercept both a cable 15 signal and a satellite broadcast in a single act. Id. 16 Here, Plaintiff alleges Defendants unlawfully intercepted and published the Program. 17 (Dkt. No. 1 ¶ 26-28.) Erika Vanessa Galvez witnessed the Program presented at Emelina’s 18 Peruvian Restaurant. (Dkt. No. 26-2.) Plaintiff’s allegation, when taken as true and considering 19 the attached declaration, sufficiently states a claim for the unauthorized publication or use of 20 communications. 21 But Plaintiff does not allege how Defendants obtained the program. (Dkt. No. 1.) The 22 Complaint only alleges the Program originated via satellite uplink and was transmitted to both 23 cable systems and satellite companies as per Plaintiff’s sub-licensing agreements, and does not 24 mention the method of interception and resulting transmission. (Dkt. No. 1 ¶ 25.) Additionally, 25 “that violations of both 605 and 553 were alleged in the Complaint indicates that Plaintiff is 26 unable to specify the type of transmission.” J & J Sports Prods., Inc. v. Coria, No. C 12-05779 27 JSW, 2015 WL 1089044, at *4 (N.D. Cal. Feb. 27, 2015). 1 In light of Plaintiff’s allegations and supporting declaration, that Defendants used a cable 2 system is much more likely because a cable box is much easier to hide than a satellite dish. See G 3 & G Closed Cir. Events, LLC v. Macias, No. 20-CV-02916-BLF, 2021 WL 2037955, at *4 (N.D. 4 Cal. May 21, 2021). The allegations and declaration do not support judgment under § 605. While 5 Plaintiff did not move for default judgment under § 553, the Court will construe Plaintiff’s motion 6 as doing so rather than denying the motion without prejudice to renewal to seek judgment under 7 § 553. The Court grants relief under § 553 as the method of interception and transmission is 8 unknown as a result of Defendants’ non-appearance and cable is a more likely method than 9 satellite. See Mosley, No. C-10-5126 CW EMC, 2011 WL 2066713, at *4 (collecting cases). 10 b. Vicarious Liability Under Section 553 11 The Court finds the copyright standard of vicarious liability applies to violations of § 553 12 and the allegations as to Nunez and Vasquez meet this standard. 13 i. The Copyright Standard Applies to Section 553 14 The Court finds Vasquez and Nunez are vicariously liable if they “(1) . . . had a right and 15 ability to supervise the infringing activities and (2) had an obvious and direct financial interest in 16 those activities.” This standard is borrowed from the copyright context. Joe Hand Promotions, 17 Inc. v. Yakubets, 3 F. Supp. 3d 261, 293 (E.D. Pa. 2014). In the copyright context the Supreme 18 Court has noted, “[a]lthough [t]he Copyright Act does not expressly render anyone liable for 19 infringement committed by another, these doctrines of secondary liability [(vicarious and 20 contributory)] emerged from common law principles and are well established in the law.” Metro– 21 Goldwyn–Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930–31 (2005) (cleaned up); see 22 also, Innovative Sports Mgmt., Inc. v. Valenzuela, No. 19CV02785JSWJCS, 2021 WL 5238592 23 (N.D. Cal. Aug. 30, 2021), report and recommendation adopted, No. 19-CV-02785-JSW, 2021 24 WL 5238591 (N.D. Cal. Oct. 8, 2021) (collecting cases applying copyright standard of individual 25 liability to § 553). 26 Similarly, § 553 does not expressly render individuals liable for the violations of others; 27 however, it follows that common law principles may apply in this context as well. Copyright is 1 damages for willful infringement, and reduced damages for accidental, nonnegligent infringement, 2 and does so with a similar structure and similar wording.” Yakubets, 3 F. Supp. 3d at 294; see 17 3 U.S.C. § 504(b), (c). Therefore, the Court applies the same standard to the violation of § 553. 4 ii. Nunez and Vasquez are Individually Liable 5 To establish individual liability under this standard, a plaintiff must allege: “(1) the right 6 and ability to supervise the infringing conduct and (2) a direct financial interest in the infringing 7 activity.” Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 802 (9th Cir. 2007). “[A] 8 plaintiff must allege more than an officer’s mere right and ability to supervise the corporation’s 9 conduct generally” and “. . . must allege that the defendant had supervisory power over the 10 infringing conduct itself.” Netbula, LLC v. Chordiant Software, Inc., No. C 08-00019 JW, 2009 11 WL 750201, at *3 (N.D. Cal. Mar. 20, 2009). 12 Here, the Complaint states Nunez was the CEO, Director, and stockholder of Emelina’s 13 and as such had the right and ability to supervise the activities of Emelina’s Peruvian Restaurant. 14 (Dkt. No. 1 ¶ 10.) The Complaint also alleges Vasquez had a right and ability to supervise the 15 infringing activities because Vasquez was the Chief Financial Officer (“CFO”) of Emelina’s 16 Peruvian Restaurant and as such had the right and ability to supervise the activities of Emelina’s 17 Peruvian Restaurant. (Id. ¶ 12.) Further, the Complaint contends Nunez and Vasquez 18 “specifically directed or permitted the employees… to unlawfully intercept, receive and publish” 19 the Program “or intentionally intercepted, received, and published the Program… themselves.” 20 (Id. ¶ 15) (cleaned up). Plaintiff alleges both a general ability to supervise based on their positions 21 as CEO and CFO and a specific ability to supervise the infringing conduct itself. The Court finds 22 when taken together these allegations establish the supervision requirement. 23 The Complaint also alleges the unlawful broadcast resulted in increased profits for 24 Emelina’s Peruvian Restaurant. (Id. ¶ 18.) This allegation, when considering the California 25 Secretary of State Statement of Information listing Nunez and Vasquez as CEO and CFO 26 respectively, creates a reasonable inference financial benefits flowed to them as a result of the 27 violation. (Dkt. No. 26-3.); see Yakubets, 3 F. Supp. 3d at 300. Thus, Plaintiff’s allegations 1 activities by virtue of their alleged positions as CEO and CFO and the alleged increased profits the 2 Program created for Emelina’s Peruvian Restaurant. See Ellison v. Robertson, 357 F.3d 1072, 3 1078-79 (9th Cir. 2004) (holding financial benefit need not be substantial to establish financial 4 interest). While these allegations are largely formulaic, when taken as fact they create a 5 reasonable inference of both elements of vicarious liability. See Yakubets, 3 F. Supp. 3d at 294. 6 Therefore, the Court finds Defendants are each liable under Plaintiff’s § 553 claim and thus 7 Plaintiff’s allegations sufficiently state a claim as to each. 8 2. Conversion 9 Plaintiff sufficiently states a claim for conversion. A California claim for conversion 10 requires a plaintiff to show ownership or right to possession of property, wrongful act or 11 disposition of the property right, and damages. Tyrone Pac. Int’l, Inc. v. MV Eurychili, 658 F.2d 12 664 (9th Cir. 1981); Cal. Civ. Code § 3336. Here, Plaintiff alleges ownership of the exclusive 13 nationwide commercial distribution rights to the Program. (Dkt. No. 1 ¶ 21.) Plaintiff also alleges 14 Defendants wrongfully intercepted and published the Program at Emelina’s Peruvian Restaurant. 15 (Id. ¶ 26.) The attached declaration states Erika Vanessa Galvez witnessed the Program as it was 16 published at Emelina’s Peruvian Restaurant. (Dkt. No. 26-2.) Additionally, Plaintiff has 17 requested damages for conversion in the amount of the value of the property at the time of 18 conversion, $550.00. (Dkt. No. 26 at 3.) Thus, Plaintiff’s allegations, when taken as fact and 19 considering the attached declaration, sufficiently state a claim for conversion. 20 Plaintiff’s Complaint establishes conversion liability for Emelina’s, but not as to Nunez 21 and Vasquez. “Directors or officers of a corporation do not incur personal liability for torts of the 22 corporation merely by reason of their official position, unless they participate in the wrong or 23 authorize or direct that it be done.” United States Liab. Ins. Co. v. Haidinger-Hayes, Inc., 1 Cal. 24 3d 586, 595 (1970). 25 Here, Plaintiff’s Complaint alleges Nunez and Vasquez “specifically directed or permitted 26 the employees” to engage in the illegal conduct. (Dkt. No. 1 ¶ 15.) However, these allegations are 27 conclusory and do not allege facts plausibly supporting an inference Nunez and Vasquez 1 requires specific direction or permission. This standard is higher than the standard of individual 2 liability in the copyright context where an ability to supervise is all that is required. While, as 3 discussed above, the allegations taken in conjunction with the California Secretary of State 4 Statement of Information listing Nunez and Vasquez as CEO and CFO may create a reasonable 5 inference they had the ability to supervise, they do not sufficiently allege they authorized the 6 unlawful conduct. (Dkt. No. 26-3.) As such, Nunez and Vasquez may not be found liable merely 7 by virtue of their official positions without factual allegations establishing their direction or 8 authorization. See United States Liab. Ins., 1 Cal. 3d at 595. Therefore, only Emelina’s is liable 9 under Plaintiff’s conversion claim and thus Plaintiff’s allegation sufficiently states a claim for 10 conversion as to Emelina’s. 11 C. Sum of Money at Stake 12 The fourth Eitel factor considers the sum of money at stake in relation to the seriousness of 13 the defendant's conduct. Eitel, 782 F.2d at 1471–72. The factor weighs against default judgment 14 when the amount of money is unreasonably large considering the defendant’s actions. Tech. LED 15 Intell. Prop., LLC v. Revogi, LLC, No. 18-CV-03827-JSC, 2019 WL 2716610, at *4 (N.D. Cal. 16 June 27, 2019). “Conversely, default judgment may be appropriate where it is tailored to the 17 defendant's specific misconduct.” Id. (internal quotation marks and citation omitted). The Court 18 need not accept as true allegations related to damages. Geddes v. United Fin. Grp., 559 F.2d 557, 19 560 (9th Cir. 1977). In California, conversion damages are based on the value of the property at 20 the time of the conversion. Cal. Civ. Code § 3336. 21 Here, under § 605, Plaintiff requests $3,000 in statutory damages and $21,000 in enhanced 22 statutory damages. (Dkt. No. 26 at 3.) Plaintiff also requests reasonable costs and attorney’s fees 23 under the statute. (Id.) Additionally, Plaintiff requests $550.00 in conversion damages, the 24 amount Defendants would have had to pay to broadcast the program lawfully. (Id.) “The 25 requested statutory damages are tailored—by the legislatures—to the underlying 26 misconduct.” Vera v. FlexShopper, LLC, No. 22-CV-01797-JSC, 2022 WL 4472069, at *6 (N.D. 27 Cal. Sept. 26, 2022). Therefore, the requested damage amount under § 605 is tailored to the 1 amount it would cost to broadcast lawfully, thus the damages are appropriate. As a result, the sum 2 of money at stake is reasonable and thus this factor weighs in favor of granting default judgment. 3 D. Possibility of Dispute Concerning Material Facts 4 There is no indication the material facts are in dispute. The well-pleaded allegations in the 5 Complaint as to liability are deemed admitted. See Geddes v. United Fin. Grp., 559 F.2d 557, 560 6 (9th Cir. 1977). Additionally, Plaintiff’s motion is strengthened by the declarations and affidavit 7 attached to the motion for default judgment. (Dkt. No. 26-2-4.) Therefore, this factor weights in 8 favor of default judgment. 9 E. Whether the Default was Due to Excusable Neglect 10 “This factor favors default judgment where the defendant has been properly served or the 11 plaintiff demonstrates that the defendant is aware of the lawsuit.” Wecosign, Inc. v. IFG Holdings, 12 Inc., 845 F. Supp. 2d 1072, 1082 (C.D. Cal. 2012). Here, Defendants were properly served and 13 there are no other indications Defendant’s default was due to excusable neglect. Therefore, this 14 factor weighs in favor of default judgment. 15 F. Policy Favoring Decisions on the Merits 16 “Our starting point is the general rule that default judgments are ordinarily disfavored. 17 Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 18 1472. Thus, the seventh Eitel factor, by definition, weighs against entering default judgment. 19 Here, “Defendant's failure to answer Plaintiffs’ complaint makes a decision on the merits 20 impractical, if not impossible,” making default judgment appropriate notwithstanding the policy 21 against it. PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). 22 *** 23 In sum, all factors weigh in favor of default judgment. 24 III. SCOPE OF RELIEF 25 The Court will award damages under § 553, conversion, and costs and attorney’s fees. 26 27 1 A. Damages under Section 553 2 Under § 553(c)(3)(A), Plaintiff may elect to recover actual damages or “an award of 3 statutory damages . . . in a sum of not less than $250 or more than $10,000 as the court considers 4 just.” When the violation was committed willfully and for commercial or private gain, the court 5 may, in its discretion, increase the damages by no more than $50,000. § 553(c)(3)(B). Section 6 553 allows the recovery of full costs, including reasonable attorneys’ fees. § 553(c)(2)(C). In 7 determining damages under § 553, courts consider many factors including “use of a cover charge, 8 increase in food price during programming, presence of advertising, number of patrons, number of 9 televisions used, and impact of offender's conduct on claimant.” J & J Sports Prods., Inc. v. 10 Concepcion, No. C 10-05092 WHA, 2011 WL 2220101 (N.D. Cal. June 7, 2011). “Courts also 11 consider whether a defendant is a repeat offender. Additionally, courts look to the actual cost of a 12 commercial license, defendant's incremental profits and the need to deter piracy.” Coria, 2015 13 WL 1089044, at *4 (cleaned up). Many courts award statutory damages in an amount equal to the 14 actual loss based on the licensing fee and enhanced damages in an amount equal to double the 15 statutory award. See, e.g., id. at *5. 16 Here, Plaintiff is entitled to statutory and enhanced damages under § 553 because the 17 Complaint, when taken as true, sufficiently states a claim for recovery under the statute and 18 alleges the violation was committed willfully and for commercial gain. (Dkt. No. 1 ¶ 28; Dkt. No. 19 26-4 ¶ 9.) 20 Plaintiff states the Program was broadcast to about 20 patrons on two televisions. (Dkt. 21 No. 26-1 at 16-17.) The Court finds the violation warrants a low damages amount because there is 22 no allegation of a cover charge and the allegations do not include increased food prices and 23 advertising. (Dkt. No. 26-2 at 2.) Additionally, the small number of patrons present, the small 24 number of televisions used, and lack of alleged prior offenses also weighs in favor of a low 25 damages amount. Id. The Court accordingly awards statutory damages of $550.00 and enhanced 26 damages of $1,100, totaling $1,650 in damages plus costs and reasonable attorney’s fees. This 27 amount awards statutory damages equal to the licensing fee and enhanced damages of double the 1 licensing fee. This amount will compensate Plaintiff for the loss it suffered as well as deter 2 || Defendants from future violations. 3 B. Conversion 4 Damages for conversion are based on the value of the property at the time of the 5 conversion. Cal. Civ. Code § 3336. Here, Plaintiff seeks $550.00 in damages for conversion, the 6 || amount it would cost to broadcast the Program lawfully. (Dkt. No. 26-4 4 8.) Therefore, the 7 || requested damages as to conversion are appropriate as they are the value of the property at the 8 || time of conversion. 9 Conclusion 10 For the reasons stated above, Plaintiff's motion for default judgment is GRANTED in part 11 DENIED in part. Relief is GRANTED under § 553 for $1,650 as to Emelina’s and Nunez and 12 || Vasquez are jointly and severally liable. Additionally, Plaintiffs request for relief for conversion 13 for $550.00 as to Emelina’s is GRANTED, but Plaintiffs request for relief for conversion as to 14 Nunez and Vasquez is DENIED. Therefore, as to Emelina’s, Plaintiff is awarded total relief of 3 15 $2,200, and Nunez and Vasquez are jointly and severally liable for $1,650 of the total. Judgment a 16 || will be entered accordingly. 2 17 Plaintiff must file its motion for attorneys’ fees and costs within 14 days of the entry of Z 18 || judgment. 19 IT IS SO ORDERED. 20 || Dated: July 13, 2023
22 ne ACQUELINE SCOTT CORLE 23 United States District Judge 24 25 26 27 28