1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Joe Hand Promotions Incorporated, No. CV-21-00966-PHX-DJH
10 Plaintiff, ORDER
11 v.
12 Jose Alfonso Velasco Hernandez, et al.,
13 Defendants. 14 15 Pending before the Court is Plaintiff’s Motion for Default Judgment (Doc. 16). 16 Defendants have not filed a response, nor have they appeared or otherwise defended this 17 action. For the following reasons the Court will grant Plaintiff’s Motion in part. 18 I. Background 19 As alleged in the Complaint, Defendant JR Mexican Food LLC and its “officer, 20 director, shareholder, member or principal,” Defendant Jose Alfonso Velasco Hernandez 21 (“Hernandez”), are Arizona residents who obtained and willfully played a television 22 program (the “Program”) in their restaurant without Plaintiff’s authorization on July 20, 23 2019. (Doc. 1 at ¶¶ 5–7, 10). 24 The Complaint brings two claims. The first is under the Federal Communications 25 Act for satellite and cable piracy under 47 U.S.C. §§ 553 and 605. (Id. at ¶¶ 17–20). The 26 second is for copyright infringement under 17 U.S.C. §§ 106 and 501. (Id. at ¶¶ 21–24). 27 For damages, the Complaint sought up to $110,000.00 for willful violation of § 605 and 28 up to $60,000.00 for willful violation of § 553, and up to $150,000 for a willful violation 1 of § 501, in addition to attorney fees and costs. (Id. at 7). Plaintiff’s Motion for Default 2 Judgment, however, only seeks $30,000 under § 605(e)(3)(C), plus attorney fees and costs. 3 On September 2, 2021, the Clerk entered default against Defendants under Federal 4 Rule of Civil Procedure 55(a). (Doc. 15). 5 II. Legal Standard 6 Courts strongly prefer to decide cases on their merits, but they may use their 7 discretion to enter default judgment. Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986); 8 see also Fed. R. Civ. P. 55. If default judgment is sought against a party that failed to plead 9 or otherwise defend, courts must determine they have subject matter jurisdiction over the 10 matter and personal jurisdiction over the party. In re Tuli, 172 F.3d 707, 712 (9th Cir. 11 1999). If there is jurisdiction, courts must then consider several factors to determine 12 whether default judgment is appropriate: “(1) the possibility of prejudice to the plaintiff, 13 (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the 14 sum of money at stake in the action; (5) the possibility of a dispute concerning material 15 facts; (6) whether the default was due to excusable neglect, and (7) the strong policy 16 underlying the Federal Rules of Civil Procedure favoring decisions on the merits.” Eitel, 17 782 F.2d at 1471–72. Upon default, a complaint’s factual allegations are taken as true, 18 except for those relating to damages. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th 19 Cir. 1977). 20 III. Jurisdiction and Eitel Analysis 21 Because the Complaint invokes federal causes of action, piracy and copyright 22 infringement, the Court has original jurisdiction over this matter. See 28 U.S.C. § 1331. 23 Defendants, alleged to be Arizona residents (Doc. 1 at ¶ 6–7), are at home in this 24 jurisdiction and, therefore, subject to the Court’s personal jurisdiction. See Int’l Shoe Co. 25 v. State of Wash., 326 U.S. 310, 317 (1945). Having found subject matter jurisdiction and 26 personal jurisdiction over Defendants, the Court proceeds to the Eitel factors. 27 a. Possibility of Prejudice to Plaintiff 28 Without a judgment against Defendants, Plaintiff’s alleged injury would lack a 1 remedy. Therefore, this factor favors entry of default judgment. 2 b. Merits of Substantive Claim and Sufficiency of Complaint 3 “Under an Eitel analysis, the merits of plaintiff’s substantive claims and the 4 sufficiency of the complaint are often analyzed together.” Dr. JKL Ltd. v. HPC IT Educ. 5 Ctr., 749 F. Supp. 2d 1038, 1048 (N.D. Cal. 2010). The Complaint’s § 605 claim requires 6 Plaintiff show Defendants received and used a television program for its benefit without 7 Plaintiff’s authorization. § 605(a); DirecTV, Inc. v. Webb, 545 F.3d 837, 844 (9th Cir. 8 2008). The Complaint’s allegations establish that Defendants received the Program 9 without Plaintiff’s permission and played it at their restaurant. (Doc. 1 at ¶¶ 11–16).1 The 10 Complaint’s copyright infringement claim requires Plaintiff show ownership of a valid 11 copyright and that Defendants violated one or more of Plaintiff’s rights as the copyright 12 owner. UMG Recordings, Inc. v. Augusto, 628 F.3d 1175, 1178 (9th Cir. 2011). The 13 Complaint adequately alleges that Plaintiff was the Program’s copyright owner, and that 14 Defendants’ unauthorized distribution of the program violated Plaintiff’s rights. (Doc. 1 15 at ¶¶ 5, 9–24). 16 The Court finds that the Complaint has merit and would sufficiently put Defendants 17 on notice of the claims at issue. This factor favors entry of default judgment. 18 c. Sum at Stake 19 Here, the Court considers the amount of money at stake in relation to the seriousness 20 of a defendant’s conduct. See Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1176 21 (C.D. Cal. 2002). “If the sum of money at stake is completely disproportionate or 22 inappropriate, default judgment is disfavored.” Gemmel v. Systemhouse, Inc., 2008 WL 23 65604, at *4 (D. Ariz. Jan. 3, 2008).
24 1 Because Plaintiff raises this point in its Motion, the Court notes that Hernandez may be held individually liable for § 605 violations at his business. (Doc. 16 1 at 15). Courts in 25 the Ninth Circuit have found that individual liability for § 605 violations when an individual “had a right and ability to supervise the violations and that he had a strong 26 financial interest in such activities.” J & J Sports Prods., Inc. v. Mikhael, 2016 WL 2984191, at *2 (C.D. Cal. May 19, 2016) (cleaned up). The Court must accept the 27 Complaint’s allegation that Hernandez had the “right and ability to supervise and an obvious and direct financial interest” in the restaurant. (Doc. 1 at ¶ 8). Because he has 28 supervisory authority and a strong financial interest, Hernandez may be held individually liable for the § 605 claim. 1 Plaintiff seeks $30,000 in addition to attorney fees and costs because Defendants 2 pirated the Program on July 20, 2019. For reasons explained below, the Court finds this 3 amount excessive and will only award half that amount. Nonetheless, the amount at stake 4 is significant and Defendants actions are serious enough to warrant mandatory statutory 5 damages. See § 605.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Joe Hand Promotions Incorporated, No. CV-21-00966-PHX-DJH
10 Plaintiff, ORDER
11 v.
12 Jose Alfonso Velasco Hernandez, et al.,
13 Defendants. 14 15 Pending before the Court is Plaintiff’s Motion for Default Judgment (Doc. 16). 16 Defendants have not filed a response, nor have they appeared or otherwise defended this 17 action. For the following reasons the Court will grant Plaintiff’s Motion in part. 18 I. Background 19 As alleged in the Complaint, Defendant JR Mexican Food LLC and its “officer, 20 director, shareholder, member or principal,” Defendant Jose Alfonso Velasco Hernandez 21 (“Hernandez”), are Arizona residents who obtained and willfully played a television 22 program (the “Program”) in their restaurant without Plaintiff’s authorization on July 20, 23 2019. (Doc. 1 at ¶¶ 5–7, 10). 24 The Complaint brings two claims. The first is under the Federal Communications 25 Act for satellite and cable piracy under 47 U.S.C. §§ 553 and 605. (Id. at ¶¶ 17–20). The 26 second is for copyright infringement under 17 U.S.C. §§ 106 and 501. (Id. at ¶¶ 21–24). 27 For damages, the Complaint sought up to $110,000.00 for willful violation of § 605 and 28 up to $60,000.00 for willful violation of § 553, and up to $150,000 for a willful violation 1 of § 501, in addition to attorney fees and costs. (Id. at 7). Plaintiff’s Motion for Default 2 Judgment, however, only seeks $30,000 under § 605(e)(3)(C), plus attorney fees and costs. 3 On September 2, 2021, the Clerk entered default against Defendants under Federal 4 Rule of Civil Procedure 55(a). (Doc. 15). 5 II. Legal Standard 6 Courts strongly prefer to decide cases on their merits, but they may use their 7 discretion to enter default judgment. Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986); 8 see also Fed. R. Civ. P. 55. If default judgment is sought against a party that failed to plead 9 or otherwise defend, courts must determine they have subject matter jurisdiction over the 10 matter and personal jurisdiction over the party. In re Tuli, 172 F.3d 707, 712 (9th Cir. 11 1999). If there is jurisdiction, courts must then consider several factors to determine 12 whether default judgment is appropriate: “(1) the possibility of prejudice to the plaintiff, 13 (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the 14 sum of money at stake in the action; (5) the possibility of a dispute concerning material 15 facts; (6) whether the default was due to excusable neglect, and (7) the strong policy 16 underlying the Federal Rules of Civil Procedure favoring decisions on the merits.” Eitel, 17 782 F.2d at 1471–72. Upon default, a complaint’s factual allegations are taken as true, 18 except for those relating to damages. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th 19 Cir. 1977). 20 III. Jurisdiction and Eitel Analysis 21 Because the Complaint invokes federal causes of action, piracy and copyright 22 infringement, the Court has original jurisdiction over this matter. See 28 U.S.C. § 1331. 23 Defendants, alleged to be Arizona residents (Doc. 1 at ¶ 6–7), are at home in this 24 jurisdiction and, therefore, subject to the Court’s personal jurisdiction. See Int’l Shoe Co. 25 v. State of Wash., 326 U.S. 310, 317 (1945). Having found subject matter jurisdiction and 26 personal jurisdiction over Defendants, the Court proceeds to the Eitel factors. 27 a. Possibility of Prejudice to Plaintiff 28 Without a judgment against Defendants, Plaintiff’s alleged injury would lack a 1 remedy. Therefore, this factor favors entry of default judgment. 2 b. Merits of Substantive Claim and Sufficiency of Complaint 3 “Under an Eitel analysis, the merits of plaintiff’s substantive claims and the 4 sufficiency of the complaint are often analyzed together.” Dr. JKL Ltd. v. HPC IT Educ. 5 Ctr., 749 F. Supp. 2d 1038, 1048 (N.D. Cal. 2010). The Complaint’s § 605 claim requires 6 Plaintiff show Defendants received and used a television program for its benefit without 7 Plaintiff’s authorization. § 605(a); DirecTV, Inc. v. Webb, 545 F.3d 837, 844 (9th Cir. 8 2008). The Complaint’s allegations establish that Defendants received the Program 9 without Plaintiff’s permission and played it at their restaurant. (Doc. 1 at ¶¶ 11–16).1 The 10 Complaint’s copyright infringement claim requires Plaintiff show ownership of a valid 11 copyright and that Defendants violated one or more of Plaintiff’s rights as the copyright 12 owner. UMG Recordings, Inc. v. Augusto, 628 F.3d 1175, 1178 (9th Cir. 2011). The 13 Complaint adequately alleges that Plaintiff was the Program’s copyright owner, and that 14 Defendants’ unauthorized distribution of the program violated Plaintiff’s rights. (Doc. 1 15 at ¶¶ 5, 9–24). 16 The Court finds that the Complaint has merit and would sufficiently put Defendants 17 on notice of the claims at issue. This factor favors entry of default judgment. 18 c. Sum at Stake 19 Here, the Court considers the amount of money at stake in relation to the seriousness 20 of a defendant’s conduct. See Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1176 21 (C.D. Cal. 2002). “If the sum of money at stake is completely disproportionate or 22 inappropriate, default judgment is disfavored.” Gemmel v. Systemhouse, Inc., 2008 WL 23 65604, at *4 (D. Ariz. Jan. 3, 2008).
24 1 Because Plaintiff raises this point in its Motion, the Court notes that Hernandez may be held individually liable for § 605 violations at his business. (Doc. 16 1 at 15). Courts in 25 the Ninth Circuit have found that individual liability for § 605 violations when an individual “had a right and ability to supervise the violations and that he had a strong 26 financial interest in such activities.” J & J Sports Prods., Inc. v. Mikhael, 2016 WL 2984191, at *2 (C.D. Cal. May 19, 2016) (cleaned up). The Court must accept the 27 Complaint’s allegation that Hernandez had the “right and ability to supervise and an obvious and direct financial interest” in the restaurant. (Doc. 1 at ¶ 8). Because he has 28 supervisory authority and a strong financial interest, Hernandez may be held individually liable for the § 605 claim. 1 Plaintiff seeks $30,000 in addition to attorney fees and costs because Defendants 2 pirated the Program on July 20, 2019. For reasons explained below, the Court finds this 3 amount excessive and will only award half that amount. Nonetheless, the amount at stake 4 is significant and Defendants actions are serious enough to warrant mandatory statutory 5 damages. See § 605. Therefore, this factor favors entering default judgment. 6 d. Possibility of Dispute 7 The time has passed for Defendants to dispute the Complaint’s allegations. At this 8 stage, the allegations are taken as true. See Geddes, 559 F.2d at 560. Therefore, the 9 possibility of dispute is low. This factor favors entering default judgment. 10 e. Excusable Neglect 11 The record shows that both Defendants were served on June 28, 2021, (Doc. 10) 12 and on July 8, 2021 (Doc. 11). Therefore, there is a low possibility that their failure to 13 appear is due to excusable neglect. This factor favors entering default judgment. 14 f. Policy Favoring Decisions on the Merits 15 The Court is unable to reach the merits of this case because Defendants have failed 16 to plead or otherwise defend this action. Therefore, this factor weighs against granting 17 default judgment. 18 Overall, the Court finds the Eitel factors support an entry of default judgment 19 against Defendant. 20 IV. Damages Analysis 21 Having found default judgment proper, the Court must determine what damages 22 Plaintiff is entitled to. Damages may not differ in kind or exceed what was demanded in 23 the pleadings. Fed. R. Civ. P. 54(c). This is so a defendant may know from the complaint 24 what the potential award may be, and the defendant may then decide whether a response is 25 worthwhile. See Silge v. Merz, 510 F.3d 157, 160 (2d Cir. 2007). Courts may conduct 26 hearings to determine what damages are available. Fed. R. Civ. P. 55(b)(2). In this 27 instance, a hearing is not necessary because Plaintiff has submitted sufficient evidence for 28 the Court to ascertain the damages. See Garden City Boxing Club, Inc. v. Aranda, 384 F. 1 App’x 688, 689 (9th Cir. 2010) (holding that an evidentiary hearing to determine damages 2 for a § 605 claim was not necessary because the plaintiff had submitted sufficient evidence 3 to calculate damages). 4 Plaintiff seeks over $30,000 in statutory damages under § 605. By statute, Plaintiff 5 may seek an award of damages for “each violation” of § 605(a) “in a sum of not less than 6 $1,000 or more than $10,000, as the court considers just . . . .” § 605(e)(3)(C). If, however, 7 “the court finds that the violation was committed willfully and for purposes of direct or 8 indirect commercial advantage or private financial gain, the court in its discretion may 9 increase the award of damages, whether actual or statutory, by an amount of not more than 10 $100,000” for each violation of § 605(a). Id. This statutory range of awards aims to create 11 an award that would deter further unauthorized use of television programs, but it is not 12 intended to destroy small businesses. Kingvision Pay-Per-View Ltd. v. Lake Alice Bar, 168 13 F.3d 347, 350 (9th Cir. 1999) (“Depending on the circumstances, a low five figure 14 judgment may be a stiff fine that deters, while a high five figure judgment puts a bar out of 15 business.”). 16 At this stage, the Court accepts as true the allegation that Defendants willfully 17 violated § 605(a) once for economic gain. (Doc. 1 at ¶ 13). Therefore, Plaintiff is entitled 18 to up to $110,000 in statutory damages. To determine what amount of damages are just, 19 courts in this Circuit have considered several factors, including: “(1) the size of the 20 establishment, (2) the number and size of screens displaying the broadcast, (3) advertising 21 to attract customers, (4) cover charges, (5) premium prices for food and drink, (6) the need 22 to deter future violations, (7) the difficulty in detecting piracy, and (8) the widespread loss 23 that occurs through piracy.” J & J Sports Prods., Inc. v. Arvizu, 2018 WL 905139, at *2 24 (D. Ariz. Feb. 15, 2018). 25 In support of its requested award, Plaintiff submits the affidavit of Amanda Hidalgo, 26 who states that the Defendants’ restaurant has a capacity of 30 people and, on the night 27 July 20, 2019, had the Program playing on a forty-two-inch television in the corner. (Doc. 28 16-5 at 1). Ms. Hidalgo states she was not charged a cover to enter and that she bought a 1 soda for $1. (Doc. 16-5 at 1). She does not mention how many other patrons were at the 2 restaurant with her or whether the Program was advertised. (Id.) For a restaurant of this 3 size, Plaintiff avers that Defendants would have been charged $1,475 for authorization to 4 play the Program. (Doc. 16-4 at 1). 5 As Plaintiff argues, Defendants likely saw some increased profits from patrons who 6 came to the restaurant to view the Program, putting those who paid for authorization at a 7 comparative disadvantage and, therefore, making it more likely that others will forego 8 authorization in the future. (Doc. 16-1 at 11–12). However, Ms. Hidalgo’s affidavit 9 portrays the restaurant as a small business, which was not charging a cover for entry or 10 unusually high prices for drinks. The Program itself was being played on one television to 11 an audience of at least Ms. Hidalgo, but there is no indication that anyone else was present 12 or that Defendants were advertising the Program. 13 Taking all this into consideration, the Court finds that statutory damages of $5,000 14 under § 605(e)(3)(C)(i)(II) and $10,000 under § 605(e)(3)(C)(ii) are appropriate. A total 15 award of $15,000 will both compensate Plaintiff and deter Defendants and others from 16 similar behavior. 17 V. Costs and Attorney Fees 18 Plaintiff also seeks an award of costs and attorney fees. Because Plaintiff is the 19 prevailing party, it is entitled to its costs. Fed. R. Civ. P. 54(d)(1). Therefore, the Court 20 will award $672 in costs. Plaintiff may file a motion for attorney fees within fourteen days 21 of the day of this Order’s entry. See LRCiv 54.2(b)(2). Any motion for attorney fees shall 22 comply with the requirements set forth in this District’s Local Rules. 23 VI. Conclusion 24 The Court will grant Plaintiff’s Motion in part and enter default judgment against 25 Defendants in the amount of $15,672. 26 Accordingly 27 IT IS HEREBY ORDERED that Plaintiff’s Application for Entry of Default 28 Judgment (Doc. 16) is granted in part. Default judgment shall be entered in favor of 1|| Plaintiff and against Defendants in the amount of $15,672. 2 IT IS FURTHER ORDERED that Plaintiff is awarded post-judgment interest and 3 || the applicable federal rate pursuant to 28 U.S.C. § 1961 (a). 4 IT IS FURTHER ORDERED that Plaintiff may file a motion for attorney fees 5 || pursuant to Local Rule of Civil Procedure 54.2 no later than fourteen (14) days after this 6 || Order’s entry. 7 IT IS FINALLY ORDERED that the Clerk of Court shall terminate this matter. 8 Dated this 2nd day of September, 2022. 9 10 oC. . fo □ norable' Diang4. Huretewa 2 United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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