Case 1:10-cv-02249-LJO-JLT Document 24 Filed 10/15/12 Page 1 of 10
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`UNITED STATES DISTRICT COURT
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`EASTERN DISTRICT OF CALIFORNIA
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`Case No.: 1:10-cv-02249 - LJO - JLT
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`FINDINGS AND RECOMMENDATIONS
`GRANTING PLAINTIFF’S MOTION FOR
`DEFAULT JUDGMENT
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`(Docs. 19, 23)
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`J & J SPORTS PRODUCTIONS, INC.,
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` Plaintiff,
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`JOSE ALFREDO GOMEZ, et al.,
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`Defendants.
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`J & J Sports Productions, Inc., (“Plaintiff”) seeks the entry of default judgment against Aurelio
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`Cortez, individually and doing business as Los Manajares Restaurant (“Defendant”). (Doc. 19). The
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`motion is unopposed. For the following reasons, the Court recommends Plaintiff’s motion for default
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`judgment be GRANTED.
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`I.
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`Procedural History
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`On December 3, 2010, Plaintiff filed its complaint against Jose Alfredo Gomez and Silvia C.
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`Gomez, individually and doing business as Los Manjares Restaurant. (Doc. 1). Upon application of
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`Plaintiff, default was entered against these defendants pursuant to Fed. R. Civ. P. 55(a) for their failure
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`to answer. (Docs. 9-10). However, Jose Gomez and Silvia Gomez filed a “Notice of Filing
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`Bankruptcy” on April 20, 2011. (Doc. 13).
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`Plaintiff filed its First Amended Complaint against Jose Gomez, Silvia Gomez, and Aurelio
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`Cortes, individually and doing business as Los Manjares Restaurant on May 17, 2011. (Doc. 14).
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`Case 1:10-cv-02249-LJO-JLT Document 24 Filed 10/15/12 Page 2 of 10
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`According to Plaintiff, the company secured nationwide commercial exhibition rights to broadcast
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`“Oscar De La Hoya v. Manny Pacquiao Welterweight Championship Fight Program” (the “Program”).
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`(Doc. 14 at 4). However, Plaintiff contends the Program was broadcast in Los Manjares Restaurant
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`without the purchase of a proper sublicense. Id. at 5.
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`Defendant Aurelio Cortes was properly served with the First Amended Complaint, but failed to
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`respond within the time prescribed by the Federal Rules of Civil Procedure. Upon application of
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`Plaintiff, default was entered against Defendant pursuant to Fed. R. Civ. P. 55(a) for his failure to
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`answer on April 16, 2012. (Doc. 18). On July 19, 2012, Plaintiff filed the motion now pending before
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`the Court seeking default judgment against Defendant. (Doc. 19).
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`The Court reviewed the motion on August 21, 2012, and observed Plaintiff sought default
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`judgment on a claim arising under the Federal Communications Act of 1934, arising under 47 U.S.C. §
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`605. (Doc. 22). Noting this claim is not present in Plaintiff’s First Amended Complaint, which
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`alleges violations of the Copyright Act, the Court directed Plaintiff to file supplemental briefing is
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`required on the alleged violations of the Copyright Act and the award amount requested by Plaintiff.
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`Id. at 2-3. Accordingly, Plaintiff filed a brief on September 4, 2012, and addressed the Copyright Act
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`and conversion claims. (Doc. 23).
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`II. Legal Standards for Default Judgment
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`The Federal Rules of Civil Procedure govern the entry of default judgment. When default was
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`entered because “a party against whom a judgment for relief is sought has failed to plead or otherwise
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`defend,” the party seeking relief may apply to the court for a default judgment. Fed. R. Civ. P. 55(a)-
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`(b). Upon the entry of default, well-pleaded factual allegations regarding liability are taken as true,
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`but allegations regarding the amount of damages must be proven. Pope v. United States, 323 U.S. 1,
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`22 (1944); see also Geddes v. United Financial Group, 559 F.2d 557, 560 (9th Cir. 1977). In addition,
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`“necessary facts not contained in the pleadings, and claims which are legally insufficient, are not
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`established by default.” Cripps v. Life Ins. Co. of North Am., 980 F.2d 1261, 1267 (9th Cir. 1992)
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`(citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)).
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`Granting or denying a motion for default judgment is within the discretion of the Court.
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`Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The entry of default “does not automatically
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`entitle the plaintiff to a court-ordered judgment. Pepsico, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172,
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`1174 (C.D. Cal 2002), accord Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986). The Ninth
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`Circuit opined:
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`Factors which may be considered by courts in exercising discretion as to the entry of a
`default judgment include: (1) the possibility of prejudice to the plaintiff, (2) the merits
`of plaintiff’s 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
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`Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). As a general rule, the issuance of default
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`judgment is disfavored. Id. at 1472.
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`III. Plaintiff’s Factual Allegations
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`The factual assertions of Plaintiff are taken as true because default has been entered against
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`Defendant. See Pope, 323 U.S. at 22. Plaintiff alleges that by contract, it was granted exclusive
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`domestic commercial distribution rights to the Program. (Doc. 14 at 4). Pursuant to that contract,
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`Plaintiff reports the company entered into sublicensing agreements with various commercial entities
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`throughout North America to broadcast the Program within their establishments. Id.
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`According to Plaintiff, each defendant “is an owner, and/or operator, and/or licensee, and/or
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`permittee, and/or person in charge, and/or an individual with dominion, control, oversight and
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`management of the commercial establishment doing business as Los Manjares Restaurant...” (Doc. 14
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`at 3). Plaintiff alleges Defendant broadcast the Program in the establishment without purchasing a
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`proper sublicense. Id. at 4-5. For this act, Plaintiff alleged violations of the Copyright Act and
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`conversion. Id. at 3-7.
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`IV. Application of Eitel Factors
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`Applying the factors articulated by the Ninth Circuit in Eitel, the Court finds factors weigh in
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`favor of granting Plaintiff’s motion for default judgment.
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`A. Prejudice to Plaintiff
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`The first factor considers whether the plaintiff would suffer prejudice if default judgment is not
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`entered, and potential prejudice to a plaintiff militates in favor of granting a default judgment. See
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`Pepsico, Inc., 238 F.Supp.2d at 1177. In general, where default has been entered against a defendant,
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`Case 1:10-cv-02249-LJO-JLT Document 24 Filed 10/15/12 Page 4 of 10
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`a plaintiff has no other means by which to recover damages. Id.; J & J Sports Prods. v. Rodriguez,
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`2010 U.S. Dist. LEXIS 20288, at * 7 (E.D. Cal. March 5, 2010). Therefore, the Court finds Plaintiff
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`would be prejudiced if default judgment is not granted.
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`B. Merits of Plaintiff’s claims and sufficiency of the complaint
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`Given the kinship of these factors, the Court considers the merits of Plaintiff’s substantive
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`claims and the sufficiency of the complaint together. See J & J Sports Productions v. Hernandez,
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`2010 U.S. Dist. LEXIS 48191, at *3, n. 4 (E.D. Cal. May 17, 2010). The Ninth Circuit has suggested
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`that, when combined, these factors require a plaintiff to “state a claim on which the plaintiff may
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`recover.” Pepsico, Inc., 238 F.Supp.2d at 1175 (citing Kleopping v. Fireman’s Fund, 1996 U.S. Dist.
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`LEXIS 1786, at *6 (N.D. Cal. Feb. 14, 1996)).
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`1.
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`Copyright Act Violation
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`“Under copyright law, only copyright owners and exclusive licensees of copyright may enforce
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`a copyright or a license.” Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1144 (9th Cir.
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`2008) (citing 17 U.S.C. § 501(b)) (conferring standing only to the “legal or beneficial owner of an
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`exclusive right who is entitled . . . to institute an action for any infringement . . . while he or she is the
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`owner of it” (internal quotation marks omitted)). An owner of a copyright has the exclusive rights to
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`authorize reproductions of the copyrighted work, prepare derivative works, display the copyrighted
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`work publicly, and distribute copies “by sale or other transfer of ownership, or by rental, lease, or
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`lending.” 17 U.S.C. § 106. To establish a claim for copyright infringement, a plaintiff: (1) “must
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`show ownership of the allegedly infringed material” and (2) “demonstrate that the alleged infringer[]
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`violate[d] at least one exclusive right granted to copyright holders.” A&M Records, Inc. v. Napster,
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`Inc., 239 F.3d 1004, 1013 (9th Cir. 2001).
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`Here, Plaintiff alleges the company held “the exclusive nationwide commercial distribution
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`(closed-circuit) rights” for the Program broadcast on December 6, 2008. (Doc. 14 at 4). In addition,
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`Plaintiff asserts that it was “the assignee of the copyright to the Program for enforcement purposes.”
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`Id. Thus, Plaintiff contends the company is “the party with lawful standing to prosecute claims of
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`piracy and infringement against the legal operators of commercial investments who are identified
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`exhibiting the Program without the requisite closed-circuit (commercial) license.” Id. Because
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`Case 1:10-cv-02249-LJO-JLT Document 24 Filed 10/15/12 Page 5 of 10
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`Plaintiff alleges it held the exclusive rights to the national broadcast, the company may enforce an
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`alleged copyright violation. See Sybersound Records, 517 F.3d at1144.
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`Plaintiff alleges Defendant infringed upon the company’s exclusive rights by intercepting the
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`Program transmission and publicly exhibiting the Program without authorization from Plaintiff. (Doc.
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`15 at 5). In addition, Plaintiff contends Defendant made a secondary transmission of the Program,
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`which infringed upon Plaintiff’s rights pursuant to 17 U.S.C. § 111(b). Id. Thus, Plaintiff alleges
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`Defendant violated its exclusive right publicly broadcast, or distribute, the Program. Consequently,
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`Plaintiff has alleged facts supporting the claim of a violation of the Copyright Act.
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`2.
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`Conversion
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`As recognized by the Ninth Circuit, conversion has three elements under California Law:
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`“ownership or right to possession of property, wrongful disposition of the property right and
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`damages.” G.S. Rasmussen & Assoc., Inc. v. Kalitta Flying Services, Inc., 958 F.2d 896, 906 (9th Cir.
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`1992); see also Greka Integrated, Inc. v. Lowrey, 133 Cal.App.4th 1572, 1581 (2005) (“elements of a
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`conversion are the plaintiff’s ownership or right to possession of the property at the time of the
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`conversion; the defendant’s conversion by a wrongful act or disposition of property rights; and
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`damages”). Possession of the “[e]xclusive right to distribute a broadcast signal to commercial
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`establishments constitutes a ‘right to possession of property’ for purposes of conversion.” G & G
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`Closed Circuit Events, LLC v. Saddeldin, 2010 U.S. Dist. LEXIS 77585, at *10 (E.D. Cal. Aug. 2,
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`2010) (citing Don King Prods./Kingsvision v. Lovato, 911 F. Supp. 429, 423 (N.D. Cal. 1995)).
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`Therefore, to state a claim for conversion, Plaintiff is required to have the exclusive ownership of, or
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`the exclusive right to license, the broadcasting of the Program.
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`Given that Plaintiff established it held the exclusive distribution right, Plaintiff held a “right to
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`possession of property.” In addition, Plaintiff has alleged Defendant engaged in signal piracy by
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`broadcasting the program without purchasing a sublicense from Plaintiff. The rate sheet attached to
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`the affidavit of Joseph Gagliardi, President of J & J Sports Productions, indicates a sublicense would
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`have cost $2,200 for an establishment with the capacity of Los Manjares Restaurant. (Doc. 20, Exh.
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`1). Consequently, Plaintiff has established monetary damages and stated a claim for conversion
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`against Defendant.
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`Case 1:10-cv-02249-LJO-JLT Document 24 Filed 10/15/12 Page 6 of 10
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`C.
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`Sum of money at stake
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`In considering this factor, the Court “must consider the amount of money at stake in relation to
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`the seriousness of Defendant’s conduct.” Pepsico, Inc., 238 F.Supp.2d at 1176. Here, Plaintiff prays
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`for statutory damages of $150,000 for the violation of the Copyright Act. (Doc. 23 at 9). This amount
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`represents the maximum amount Plaintiff would be permitted to recover under the statute, including
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`enhanced damages. Id. In addition, Plaintiff seeks compensatory damages in the amount of $2,200
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`for Defendant’s tortuous conversion of Plaintiff’s property. Id. at 14.
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`Given the substantial amount of money at stake, this factor weighs against the entry of default
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`judgment. See, e.g., Joe Hand Promotions v. Streshly, 655 F.Supp.2d 1136 (S.D. Cal. 2009)
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`(proposed award amount of $100,975 was “manifestly excessive under existing law”); J & J Sports
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`Productions. v. Cardoze, 2010 U.S. Dist. LEXIS 74606, at * 12-13 (N.D. Cal. July 9, 2010) (“a large
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`sum of money at stake would disfavor default damages,” such as damages totaling $114,200); see also
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`Board of Trustees of the Sheet Metal Workers v. Vigil, 2007 U.S. Dist. LEXIS 83691, at *5 (N.D. Cal.
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`Nov. 1, 2007) (“default judgment is disfavored if there were a large sum of money involved”); but see
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`Hernandez, 2010 U.S. Dist. LEXIS 48791, at *15 (“the statutes involved contemplate such an award
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`under certain circumstances,” and the factor did not weigh against default judgment).
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`D. Possibility of dispute concerning material facts
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`Generally, there is little possibility of dispute concerning material facts because (1) based on
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`the entry of default, the Court accepts allegations in Plaintiff’s Complaint as true and (2) though
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`properly served, Defendants have failed to defend their case. See Pepsico, Inc., 238 F.Supp.2d at
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`1177. Therefore, this factor does not weigh against entry of default judgment.
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`E. Whether default was due to excusable neglect
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`Generally, the Court will consider whether Defendant’s failure to answer is due to excusable
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`neglect. See Eitel, 782 F.2d at 1472. Here, Defendant was served with the Summons and Complaint,
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`as well as the motion for default judgment and the supplemental brief. (See Doc. 19-1 at 23, Doc. 23
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`at 15). Given these circumstances, it is unlikely that Defendant’s inaction was the result of excusable
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`neglect. See Shanghai Automation Instrument Co., Ltd. v. Kuei, 194 F.Supp.2d 995, 1005 (N.D. Cal.
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`2001) (finding no excusable neglect because the defendants “were properly served with the Complaint,
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`Case 1:10-cv-02249-LJO-JLT Document 24 Filed 10/15/12 Page 7 of 10
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`the notice of entry of default, as well as the papers in support of the instant motion”). As a result, this
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`factor does not weigh against default judgment.
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`F.
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`Policy disfavoring default judgment
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`As noted above, default judgments are disfavored because “[c]ases should be decided on their
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`merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. Defendant’s failure to answer the
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`Complaint makes a decision on the merits impractical. Consequently, the policy underlying the
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`Federal Rules of Civil Procedure favoring decisions on the merits does not weigh against Plaintiff.
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`V. Default Judgment against a Single Defendant
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`Plaintiff seeks judgment against Aurelio Cortez, although other defendants remain1 in the
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`action. Thus, the question arises as to whether the Court should enter default judgment against less
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`than all of the defendants. Under the Federal Rules of Civil Procedure, “[w]hen an action presents
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`more than one claim for relief . . . or when multiple parties are involved, the court may direct entry of
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`a final judgment as to one or more, but fewer than all claims or parties only if the court expressly
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`determines that there is no just reason for delay.” Fed. R. Civ. P. 54(b). Therefore, the Court has
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`discretion to deny entry of default judgment where a just reason exists to delay entry of a final
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`judgment as to defendant Aurelio Cortez. Id.; see also Shanghai, 194 F.Supp.2d at 1005.
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`The Supreme Court warned that “absurdity might follow” in instances where a court “can
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`lawfully make a final decree against one defendant . . . while the cause was proceeding undetermined
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`against the others.” Frow v. De La Vega, 82 U.S. 552, 554 (1872). The Ninth Circuit has summarized
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`the Frow standard as follows: “[W]here a complaint alleges that defendants are jointly liable and one
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`of them defaults, judgment should not be entered against the defaulting defendant until the matter has
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`been adjudicated with regard to all defendants.” In re First T.D. & Investment, 253 F.3d 520, 532 (9th
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`Cir. 2001) (citing Frow, 82 U.S. at 554). The rule is designed to avoid inconsistent judgments against
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`defaulting defendants and the remaining defendants. Shanghai Automation Instrument Co., Ltd., v.
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`Kuei, 194 F.Supp.2d 995 (N.D.Cal.2001) citing Frow, 82 U.S. at 554–55. Here, however, all
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`1 These Defendants filed a “Notice of Filing Bankruptcy” on May 17, 2011. (Doc. 14) Given this, the Court
`sought additional clarification from Plaintiff whether it still intended to pursue its claims against these defendants. (Doc.
`22) In doing so, the Court advised Plaintiff that, generally, entry of default judgment against fewer than all defendants is to
`be avoided. Id. at 3.
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`Case 1:10-cv-02249-LJO-JLT Document 24 Filed 10/15/12 Page 8 of 10
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`defendants have already had default entered. Thus, the policy considerations of Rule 54(b) do not
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`apply. Therefore, there is no risk of inconsistent results among the Defendants and the Court sees no
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`just reason to delay these proceedings.
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`VI. Damages
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`The Copyright Act, pursuant to 17 U.S.C. §§ 504 (a) and (c), permits a copyright owner to
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`recover: (1) actual damages and any additional profits of the infringer, or (2) statutory damages
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`amounting to a minimum of $750 and maximum of $30,000 per copyright infringement, as the Court
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`considers just. 17 U.S.C. §§ 504(a), (c). “[W]here a copyright owner sustains the burden of proving,
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`and the court finds, that infringement was committed willfully, the court in its discretion may increase
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`the award of statutory damages to a sum of not more than $150,000.” 17 U.S.C. § 504(c)(2). Here,
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`Plaintiff seeks an award of statutory damages, arguing that “it would be impossible to calculate the full
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`extent of the profits lost by Plaintiff and the additional damages sustained by Plaintiff as a result of the
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`Defendant’s unlawful actions.” (Doc. 23 at 8).
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`The Court has “wide discretion” in its award of statutory damages for a violation of the
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`Copyright Act. Harris v. Emus Records Corp., 734 F.2d 1329, 1335 (9th Cir. 1984). The Supreme
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`Court explained factors include: “the nature of the copyright [and] the circumstances of the
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`infringement.” F. W. Woolworth Co. v. Contemporary Arts, 344 U.S. 228, 233 (1952) (citation
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`omitted). In addition, the Court may consider factors such as the seating capacity of the establishment,
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`the number of patrons present at the time of the broadcast, whether there was a cover charge, whether
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`the Defendant advertised the broadcast, the number and size of televisions used for the broadcast, and
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`whether a premium was charged on food or drink. See J & J Sports Prods. v. Brown, 2011 U.S. Dist.
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`LEXIS 142711, at *11-12 (E.D. Cal. Dec. 11, 2011) (observing the structures of the Copyright Act
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`and the Communications Act “are closely parallel,” and using the above factors to determine an
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`appropriate award); see also Kingvision Pay Per View, Ltd. v. Boom Town Saloon, Inc., 98 F. Supp. 2d
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`958, 963 (N.D. Ill. 2000) (recognizing that the same conduct can violate both the Copyright Act the
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`Communications Act, and that the remedial structures of the two statutes are analogous).
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`Ramon Simon, Plaintiff’s investigator, noted Los Manajares advertised the fight with a four-
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`foot banner on the walkway, with pictures of Oscar de Hoya and Panny Pacquiao, as well as a poster
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`Case 1:10-cv-02249-LJO-JLT Document 24 Filed 10/15/12 Page 9 of 10
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`on the doors of the restaurant. (Doc. 19-3 at 3). Mr. Ramon reported there was not a cover charge, but
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`did not note whether a premium was charged for food or drink. Id. at 3. The Program was displayed
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`on two television sets, one of which Mr. Ramon described as “a big screen.” Id. Although he did not
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`state the capacity of the establishment, Mr. Ramon estimated there were “approximately 40 persons
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`inside.” Id. at 2. Finally, Plaintiff has not presented evidence that Defendant is a repeat offender.
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`Given these factors, most notably, advertising the event, the Court finds an award of $12,000 is
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`appropriate.2
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`Although Plaintiff seeks separate compensation for the tort of conversion, because Plaintiff
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`chose to receive statutory damages rather than actual damages under the Copyright Act, damages for
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`conversion are subsumed into the total of $12,000. See J &J Sports Productions v. Mannor, 2011 U.S.
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`Dist. LEXIS 32367, at *7 (E.D. Cal. Mar. 28, 2011) (declining to award damages for conversion
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`because “plaintiff has been sufficiently compensated through the federal statutory scheme” where the
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`award total was $3,200 and the cost of the proper license was $2,200); J & J Sports Productions v.
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`Bachman, 2010 U.S. Dist. LEXIS 44884, at *22 (E.D. Cal. May 7, 2010) (declining conversion
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`damages statutory damages “sufficiently compensate[d]” the plaintiff).
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`VII. Findings and Recommendations
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`The Eitel factors weigh in favor of granting default judgment, and the entry of default
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`judgment is within the discretion of the Court. See Aldabe, 616 F.2d at 1092. However, the damages
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`requested are disproportionate to Defendants’ actions. The Supreme Court explained that under the
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`Copyright Act, an award of statutory damages should “not merely compel[] restitution of profit and
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`reparation for injury but also . . . discourage wrongful conduct.” F. W. Woolworth Co., 344 U.S. at
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`233. The award of $12,000, which is more than five times the cost of a proper sublicense for the
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`2 With the Communications Act, Courts in this district have found that the statutory maximum is not an
`appropriate award for a first-time offender and in the absence of aggravating factors. See, e.g., J & J Sports Productions,
`Inc. v. Morales, 2012 U.S. Dist. LEXIS 30942 (E.D. Cal. March 8, 2012) (awarding $4,400 in statutory damages where the
`sublicense cost $2,200 for the broadcast that the defendants displayed on three televisions, ranging in size up to 54”); J & J
`Sports Productions v. Sorondo, 2011 U.S. Dist. LEXIS 99951 (E.D. Cal. Sept. 6, 2011) (awarding $3,600 in statutory
`damages, an amount two times the cost of a sublicense).
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`Case 1:10-cv-02249-LJO-JLT Document 24 Filed 10/15/12 Page 10 of 10
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`
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`Program, both compensates Plaintiff for the wrongful act and is a suitable deterrent against future acts
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`of copyright violation.
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`Based upon the foregoing, IT IS HEREBY RECOMMENDED: that Plaintiff’s application
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`for default judgment (Doc. 19) be GRANTED AS FOLLOWS:
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`1.
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`Plaintiff’s request for damages for the violation of the Copyright Act and conversion be
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`GRANTED in the amount of $12,000; and
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`2.
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`Plaintiff be directed to file its application for attorney’s fees pursuant to 17 U.S.C. §
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`505 no later than fourteen days from the entry of judgment.
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`These Findings and Recommendations are submitted to the United States District Judge
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`assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 304 of the Local
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`Rules of Practice for the United States District Court, Eastern District of California. Within fourteen
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`days of the date of service of these Findings and Recommendations, any party may file written
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`objections with the court. Such a document should be captioned “Objections to Magistrate Judge’s
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`Findings and Recommendations.” The parties are advised that failure to file objections within the
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`specified time may waive the right to appeal the District Court’s order. Martinez v. Ylst, 951 F.2d
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` /s/ Jennifer L. Thurston
`UNITED STATES MAGISTRATE JUDGE
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`1153 (9th Cir. 1991).
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`IT IS SO ORDERED.
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` Dated: October 15, 2012
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`DEAC_Signature-END:
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