UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
November 6, 2012
J&J SPORTS PRODUCTIONS, INC.,
TU MINH NGUYEN, ET AL,
The opinion of the court was delivered by: Lucy H. Koh United States District Judge
ORDER GRANTING MOTION FOR DEFAULT JUDGMENT
United States District Court For the Northern District of California
On June 15, 2012, the Clerk of the Court entered default against Defendant Tu Mihn Nguyen a/k/a Tu V. Nguyen, individually and doing business as 2 Lua a/k/a Sao Bien Vietnamese 19 Restaurant ("Defendant" or "Nguyen"), after Defendant failed to appear or otherwise respond to 20 the Summons and Complaint in this case within the time prescribed by the Federal Rules of Civil 21 Procedure. See ECF No. 7. Before this Court is the Motion for Default Judgment filed by J&J 22 Sports Productions, Inc. ("Plaintiff"). See Mot. Default J. ("Mot."), ECF No. 12. Defendant, not 23 having appeared in this action to date, has not opposed the motion. Pursuant to Civil Local Rule 7-24 1(b), the Court finds this matter appropriate for determination without oral argument. Accordingly, 25 the hearing and the case management conference set for November 8, 2012, are VACATED. For 26 the reasons discussed below, Plaintiff's Motion for Default Judgment is GRANTED.
Plaintiff J&J Sports Productions, Inc. is a distributor of sports and entertainment 3 programming, and alleges that it secured the domestic commercial distribution rights to broadcast 4 "The Manny Pacquiao v. Shane Mosley, WBO Welterweight Championship Fight Program" 5 ("Program"), telecast nationwide on May 7, 2011. See Compl. ¶ 14, ECF No. 1. Plaintiff then 6 entered into sub-licensing agreements with various commercial entities throughout the United 7 States, wherein it granted limited public exhibition rights to these entities in exchange for licensing 8 fees. Mot. at 2. On May 7, 2011, investigator Jeff Kaplan observed the Program being displayed 9 at Defendant's commercial establishment, 2 Lua a/k/a Sao Bien Vietnamese Restaurant, located in 10 San Jose, California. Compl. ¶ 17; Mot. at 2. Plaintiff alleges that Defendant intercepted the 11 Program unlawfully and intentionally exhibited it for the purpose of direct or indirect commercial advantage. Compl. ¶¶ 17--18. 13
On May 4, 2012, Plaintiff filed this action against Defendant for: (1) violating the Federal Communications Act of 1934, as amended, 47 U.S.C. §§ 605, et seq.; (2) violating the Cable and 15 Television Consumer Protection and Competition Act of 1992, as amended, 47 U.S.C. §§ 553, et 16 seq.; (3) conversion; and (4) violating California Business and Professions Code §17200. Plaintiff 17 then served Defendant with a copy of the Summons, Complaint, and related documents on May 22, 18 2012. ECF No. 5. Pursuant to Rule 12(a)(1)(A)(i) of the Federal Rules of Civil Procedure, 19 Defendant was required to file and serve his responsive pleading on Plaintiff no later than June 12, 20 2012. However, Defendant failed to appear and failed to file any responsive pleading. See 21 Supplemental Decl. Thomas P. Riley Supp. Pl.'s Appl. Default J. ("Riley Decl. 2") ¶ 24, ECF No. 22 12-4. On June 15, 2012, pursuant to Plaintiff's request, the Clerk of the Court entered default 23 against Defendant. ECF No. 7. Plaintiff now moves this Court for entry of default judgment 24 pursuant to Rule 55(b) of the Federal Rules of Civil Procedure. ECF No. 12. 25
When a defendant fails to timely answer a complaint, a plaintiff may move the court for an entry of default judgment. Fed. R. Civ. P. 55(b)(2). The district court's decision whether to enter a default judgment is discretionary. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980) (per 2 curiam). The entry of default "does not automatically entitle the plaintiff to a court-ordered 3 judgment." PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002), 4 accord Draper v. Coombs, 792 F.2d 915, 924--25 (9th Cir. 1986). When deciding whether a 5 default judgment is warranted, a court may consider the following factors: 6 substantive claim, (3) the sufficiency of the complaint, (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 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.
(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's Eitel v. McCool, 782 F.2d 1470, 1471--72 (9th Cir. 1986). In general, default judgments are 10 disfavored as "[c]ases should be decided upon the merits whenever reasonably possible." Id. at 1472. 12
Here, many of the Eitel factors favor entry of default judgment. For instance, Plaintiff will 13 be prejudiced if default judgment is not entered. Because Defendant has refused to take part in the 14 litigation, Plaintiff will be denied the right to adjudicate the claims and obtain relief if default 15 judgment is not granted. See PepsiCo, Inc., 238 F. Supp. 2d at 1177. In addition, there is no 16 indication that Defendant's default is due to excusable neglect or that the material facts are subject 17 to dispute since Defendant has not presented a defense or otherwise communicated with the Court. 18 Furthermore, even though strong public policy favors decisions on the merits, see Pena v. Seguros 19 La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985), it does not appear that litigation of the 20 merits will be possible due to Defendant's refusal to litigate. 21 In contrast, the large amount of money that Plaintiff is requesting-maximum statutory 22 damages-weighs against granting an entry of default judgment, particularly because the amount 23 requested appears disproportionate to the harm alleged. See Eitel, 782 F.2d at 1472. Given that the 24 Court may address the reasonableness of Plaintiff's request when deciding the question of 25 damages, however, the Court need not deny default judgment on this basis alone. See, e.g., Joe 26 Hand Promotions, Inc. v. Mujadidi, No. 11-5570, 2012 WL 3537036, at *3 (N.D. Cal. Aug. 14, 27 2012) (noting that a request for maximum possible statutory damages "is not enough on its own to 28 bar a default judgment (at least in this case) as it may be addressed by the Court in deciding what 2 damages should be awarded, assuming that a default judgment is otherwise appropriate."). 3
In addition, the Court finds that Eitel factors two and three, which involve the merits of Plaintiff's substantive claim and the sufficiency of the complaint, warrant closer examination. 5 Although Plaintiff's complaint alleges violations of 47 U.S.C. § 605 and 47 U.S.C. § 553, as well 6 as violations of California's law against conversion and California Business and Professions Code 7 §17200, Plaintiff's pending Motion for Default Judgment only seeks damages under Section 605 8 and for conversion. Compare Compl. at 9--10, with Decl. Thomas P. Riley Supp. Pl.'s Appl. 9 Default J. ("Riley Decl. 1") ¶ 6, ECF No. 12-2. 10 Section 605 of the Federal Communications Act of 1934 "prohibits the unauthorized receipt and use of radio communications for one's 'own benefit or for the benefit of another not entitled thereto.'" DirecTV, Inc. v. Webb, 545 F.3d 837, 844 (9th Cir. 2008) (citing 47 U.S.C. § 605(a)). 13
"[T]he 'communications' protected by § 605(a) include satellite television signals." Id. In contrast, Section 553 of the Cable and Television Consumer Protection and Competition Act of 15 1992 prohibits the unauthorized reception or interception of "any communications service offered 16 over a cable system, unless specifically authorized to do so . . . ." 47 U.S.C. § 553(a)(1) (emphasis 17 added). The maximum statutory damages permitted for each willful violation of Section 605 is 18 $100,000.00, see 47 U.S.C. § 605(e)(3)(C)(ii), whereas the maximum statutory damages permitted 19 for each willful violation of Section 553 is $50,000.00, see 47 U.S.C. § 553(c)(3)(B). Generally, "a 20 plaintiff may not recover under both § 605 and § 553 as it is highly unlikely that a pirate used a 21 satellite dish and a cable box to broadcast a single program simultaneously." Mujadidi, No. 11-22 5570, 2012 WL 3537036, at *3 (internal citations omitted). 23
Here, Plaintiff alleges that Defendant violated Section 605 because, "[w]ith full knowledge 24 that the Program was not to be intercepted . . . displayed, and/or exhibited by commercial entities 25 unauthorized to do so, . . . Defendant . . . did unlawfully intercept . . . display, and/or exhibit the 26 Program at the time of its transmission at his commercial establishment . . . ." Compl. ¶ 17. 27 Notably, Plaintiff fails to allege the means of signal transmission used, which determines whether 28 Plaintiff has sufficiently stated a claim pursuant to either Section 605 or Section 553.*fn1 In such a 2 situation, there appears to be a split of authority regarding whether to apply Section 553 or Section 3 605 in the context of an application for default judgment. Compare J&J Sports Prods., Inc. v 4 Ayala, No. 11-05437, 2012 WL 4097754, at *2 (N.D. Cal. Sept. 17, 2012) ("Because sufficient 5 facts have not been alleged, nor has Plaintiff presented any affidavit evidence of a satellite, the 6 Court holds that 47 U.S.C. § 605 does not apply" and instead "construes this motion as solely 7 seeking damages under § 553"), and Mujadidi, No. 11-5570, 2012 WL 3537036, at *3 (denying 8 Plaintiff's motion for default judgment as to Section 605 but granting it as to Section 553 because, 9 "[i]n the absence of any evidence indicating that a satellite dish was used, the Court [could only] 10 conclude that [Plaintiff] . . . established at most interception through use of a cable box.), with G&G Closed Circuit Events, LLC v. Castro, No. 12-01036, 2012 WL 3276989, at *2 (N.D. Cal. Aug. 9, 2012) (concluding that, when "there is an insufficient basis to conclude with certainty 13 which of the two statutes would support an award of statutory damages" it is "unsatisfactory" to 14 presume a violation of Section 553 as opposed to Section 605 where the plaintiff has not sought 15 damages under Section 553). 16
The Court need not resolve this issue here as Plaintiff's allegations suffice to demonstrate that Defendant violated either Section 553 or Section 605, and both statutes provide a discretionary 18 range of possible damage awards that are, in part, overlapping. Therefore, for the purposes of this 19 particular cause of action, "[a]ny uncertainty as to whether [Defendant] in fact violated § 605 is 20 immaterial in light of the fact that a statutory award in the same amount is equally appropriate in 21 the event [Defendant] actually violated § 553." G&G Closed Circuit Events, No. 12-01036, 2012 22 WL 3276989, at *3; see infra Part II.B (discussing Plaintiff's request for damages). 23 24
In addition, the Court concludes that default judgment on Plaintiff's conversion claim is 2 appropriate. The elements of conversion are: 1) ownership of a right to possession of property; 2) 3 wrongful disposition of the property right of another; and 3) damages. See G.S. Rasmussen & 4 Assoc. v. Kalitta Flying Serv., Inc., 958 F.2d 896, 906 (9th Cir. 1992). Here, Plaintiff alleges 5 ownership of the distribution rights to the Program, misappropriation of those rights by 6 Defendant's unlawful interception, and damages. See Compl. ¶¶ 28--31. Therefore, Plaintiff's 7 well-pleaded allegations regarding liability, which are taken as true in light of the Clerk's entry of 8 default, are sufficient to entitle Plaintiff to damages. 9
Accordingly, the Court GRANTS Plaintiff's Motion for Default Judgment.
B.Requests for Relief
While a court must assume that all well-pleaded allegations regarding liability are taken as true once the Clerk of Court enters default, this same presumption does not apply to a plaintiff's 13 request for damages. See Geddes v. United Financial Group, 559 F.2d 557, 560 (9th Cir. 1977); 14 see also Pope v. United States, 323 U.S. 1, 12 (1944) ("It is a familiar practice and an exercise of 15 judicial power for a court upon default, by taking evidence when necessary or by computation from 16 facts of record, to fix the amount which the plaintiff is lawfully entitled to recover and to give 17 judgment accordingly."). Here, Plaintiff requests $10,000.00 in statutory damages for violation of 18 47 U.S.C. § 605(e)(3)(C)(i)(II), and $100,000.00 in enhanced damages for willful violation of 47 19 U.S.C. § 605(e)(3)(C)(ii). Mot. at 11, 14. With respect to its conversion claim, Plaintiff seeks 20 $2,200.00, the amount Defendant would have been required to pay had he ordered the Program 21 from Plaintiff. Mot. at 20. 22
Plaintiff requests maximum statutory damages available under Section 605, noting that the court has discretion to aware significant damages "even in . . . cases of commercial signal piracy 25 where there has been no egregious circumstance noted." Mot. at 11. Section 605(e)(3)(C)(i)(II) 26 provides that an aggrieved party may recover a sum of not less than $1,000 and not more than 27 $10,000 for each violation of § 605(a), as the Court considers just. Cf. 47 U.S.C. § 553(c)(3)(A)(ii) 28 $10,000 for each violation of Section 553(a)(1)). "A traditional method of determining statutory 2 damages is to estimate either the loss incurred by the plaintiff or the profits made by the 3 defendants." Joe Hand Promotions v. Kim Thuy Ho, No. 09-01435, 2009 WL 3047231, at *1 4 (N.D. Cal. Sept. 18, 2009) (internal quotation marks and citations omitted). 5
Plaintiff submits evidence that a commercial license for the broadcast of the Program would 6 have cost Defendant approximately $2,200.00, based on the 50-person capacity of Defendant's 7 commercial establishment. See Supp. Aff. Joseph M. Gagliardi ¶ 8, ECF No. 14. Alternatively, as 8 to Defendant's potential profit, Plaintiff submits evidence that three separate head counts, 9 conducted within a four-minute window, revealed that the total number of patrons was 30, 30, and 10 30, and that there was no cover charge. See Decl. of Affiant, ECF No. 12-3. As there is no evidence of how much Defendant made during the unlawful exhibition of theProgram, the Court shall base statutory damages on the cost of the commercial license.13
Accordingly, the Court finds that Plaintiff is entitled to $2,200.00 in statutory damages.
Plaintiff also requests enhanced damages pursuant to Section 605(e)(3)(C)(ii). Section 605(e)(3)(C)(ii) authorizes the Court to award up to $100,000, in its discretion, upon finding that 17 the violation "was committed willfully and for purposes of direct or indirect commercial advantage 18 or private financial gain." Cf. 47 U.S.C. § 553(c)(3)(B) (authorizing the Court to award up to 19 $50,000, in its discretion). 20
Here, Plaintiff has not submitted any evidence of significant "commercial advantage or private financial gain." While Plaintiff has presented evidence that Defendant had six flat screen 22 televisions in its commercial establishment and was displaying the Program on all of them while 23 there were approximately thirty patrons present, see ECF No. 12-3 at 1, there is no evidence that 24 Defendant advertised the fight, assessed a cover charge, or had a minimum purchase requirement. 25 See Kingvision Pay-Per-View, Ltd. v. Backman, 102 F.Supp.2d 1196, 1198 n.2 (N.D. Cal. 2000) 26 ("An establishment that does not promote itself by advertising the Program, does not assess a cover 27 charge, and does not charge a special premium for food and drinks hardly seems like the willful 28 perpetrators envisioned by the statute's framers."); but cf. J&J Sports Prods., Inc. v. Mosley, No. 10-5126, 2011 WL 2066713, at *5 (N.D. Cal. Apr. 13, 2011) (awarding $2,500 based on plaintiff's 2 actual losses and $2,500 in enhanced damages under Section 553, where 17 patrons were present 3 and no cover charge was incurred). 4
Nevertheless, Plaintiff has submitted evidence that Defendant is a repeat offender, which is 5 another factor indicating that Defendant's actions were willful, and thus justifying an award of 6 enhanced damages. See, e.g., Kingvision Pay-Per-View, Ltd., 102 F. Supp. 2d at 1198--99 (noting 7 that "a higher statutory award may be justified in cases where defendants are repeat offenderswho 8 have pirated similar Programs on previous occasions, and who need an especially severe financial 9 deterrent."). Specifically, Plaintiff has submitted evidence that three additional actions have been 10 brought against Defendant for commercial signal piracy, all of which have resulted in an entry of default judgment against the Defendant. See Riley Decl. 2 ¶¶ 4--5 & Exs. 1--3. Defendant's repeated violations evidence a willfulness that warrants a greater enhanced damages award. 13
Nevertheless, the Court does not agree with Plaintiff that the maximum damages award is warranted. Although Plaintiff cites to two out-of-district cases to support its request for the 15 maximum enhanced damages possible, Plaintiff has not cited any binding precedent or identified 16 any specific circumstances that justify such a high award. 17
Therefore, the Court GRANTS Plaintiffs' request for enhanced damages, but concludes that an award of $4,400-approximately two times the cost of the estimated licensing fee-is more 19 than adequate and just to compensate Plaintiff for lost profits and to deter Defendant's future 20 infringement. 21
3.Damages for Conversion
Plaintiff also seeks $2,200 in damages for conversion under California Civil Code §3336. Damages for conversion are based on the value of the property at the time of conversion. 24 See Tyrone Pac. Intern., Inc. v. MV Eurychili, 658 F.2d 664, 666 (9th Cir. 1981). As noted 25 previously, the commercial license would have cost Defendants $2,200.00, and thus Plaintiff's 26 request is appropriate. ECF No. 14. Accordingly, Plaintiff is entitled to $2,200.00 in damages for 27 conversion. 28
For the reasons detailed above, Plaintiff's Motion for Default Judgment is GRANTED.
Judgment shall be entered in favor of Plaintiff J&J Sports Productions, Inc. and against Defendant 4 Tu Mihn Nguyen a/k/a Tu V. Nguyen, individually and doing business as 2 Lua a/k/a Sao Bien 5
Vietnamese Restaurant. Plaintiff shall recover $8,800.00 in total damages.*fn2 The Clerk shall close 6 the file. 7
IT IS SO ORDERED.