Case3:05-cv-04047-MJJ Document26 Filed03/22/06 Page1 of 7
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`BROADCAST MUSIC INC., et al.,
`Plaintiff,
`
` v.
` JAVIER MENDEZ, et al.,
`Defendants.
` /
`
`No. C-05-04047 MJJ (EDL)
`REPORT AND RECOMMENDATION
`RE: PLAINTIFF’S MOTION FOR
`DEFAULT JUDGMENT
`
`On October 6, 2005, Plaintiffs filed this action against Defendants Javier Mendez and
`Michelle Khanbabian, doing business as B Street Billards, for copyright infringement. After entry
`of default on January 4, 2006, Plaintiff filed a motion for default judgment, which was referred to
`the undersigned Magistrate Judge pursuant to Civil Local Rule 72-1. The motion came on for
`hearing on March 21, 2006. Attorney Karen Frank appeared for Plaintiff. Defendants did not file an
`opposition to Plaintiff’s motion and did not appear at the hearing.
`Background
`Plaintiff Broadcast Music Inc. (“BMI”) has been granted the right to license the public
`performance rights in approximately 4.5 million copyrighted musical compositions, including those
`which are alleged to have been infringed in this case. Compl. ¶ 3. The other Plaintiffs are the
`owners of the copyrights in the musical compositions which are the subject of this lawsuit. Id. ¶ 4.
`Defendants Javier Mendez and Michelle Khanbabian own, operate, maintain and control B Street
`Billiards, a bar/restaurant establishment located at 164 South B Street, San Mateo, California 94401.
`Id. ¶¶ 5-8. Both Defendants have the right and ability to supervise the activities at B Street Billiards
`and have a direct financial interest in the establishment. Id. ¶¶ 9-10.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`For the Northern District of California
`
`United States District Court
`United States District Court
`
`

`
`Case3:05-cv-04047-MJJ Document26 Filed03/22/06 Page2 of 7
`
`B Street Billiards regularly features live and recorded music performances, including music
`compositions from Plaintiff BMI’s catalog. Compl. ¶¶ 5-6. Defendants have never obtained a
`license from BMI to perform those compositions. Id. ¶ 17; Declaration of Lawrence Stevens ¶¶ 5,
`11.
`
`On April 24, 2003, BMI sent a letter to B Street Billiards advising Defendants that a license
`was required to perform the musical compositions in BMI’s catalog, and including an informational
`brochure and license agreement. Compl. ¶ 18; Stevens Decl. ¶ 4, Ex. C. Having received no
`response, BMI sent letters and agreements to both Defendants on May 5, 2003, May 29, 2003, June
`24, 2003, August 5, 2003, August 21, 2003, December 23, 2003, March 22, 2004, June 3, 2004, July
`12, 2004, August 2, 2004, February 15, 2005, March 1, 2005 and March 10, 2005. Compl ¶ 18;
`Stevens Decl. ¶ 6, Ex. C. BMI also sent letters without agreements on August 23, 2004, November
`16, 2004, June 1, 2005 and August 26, 2005. Compl. ¶ 18; Stevens Decl. ¶ 7. On August 23, 2004,
`BMI sent Defendant Mendez an Airborne overnight letter instructing him to cease all use of BMI
`licensed music at B Street Billiards. Stevens Decl. ¶ 8; Ex. C. In addition during this time, BMI
`licensing personnel telephoned B Street Billiards on thirty-four occasions and left messages on the
`voice mail and spoke to Defendant Khanbabian and other person associated with the establishment’s
`operation. Compl. ¶ 18; Stevens Decl. ¶¶ 9-10. Defendants did not respond to the letters or
`telephone calls, and have not purchased a license.
`BMI authorized Christopher K. Pisano to visit B Street Billiards on January 13, 2005 and
`August 5, 2005, and to make written reports of the music being played there. Stevens Decl. ¶ 12;
`Ex. B. The reports contain each of the eleven unauthorized performances of musical compositions
`from BMI’s repertoire that are alleged in the complaint. Compl. ¶ 12; Ex. A; Stevens Decl. Ex. B.
`On March 11, 2005, BMI sent DHL overnight letters dated March 10, 2005 to Defendants Mendez
`and Khanbabian advising them of the investigation and offering to furnish them with a license.
`Stevens Decl. ¶ 13; Ex. C. Defendants did not respond to those letters. Stevens Decl. ¶ 13.
`Default Judgment
` Federal Rule of Civil Procedure 55(b)(2) authorizes the Court to enter judgment against a
`defendant against whom a default has been entered, assuming that defendant is not an infant, is not
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`2
`
`For the Northern District of California
`
`United States District Court
`
`

`
`Case3:05-cv-04047-MJJ Document26 Filed03/22/06 Page3 of 7
`
`incompetent or in military service. Defendants here are not unrepresented minors, incompetent or in
`military service. Declaration of Karen Frank ¶ 10.
`“The general rule of law is that upon default the factual allegations of the complaint, except
`those relating to the amount of damages, will be taken as true.” Geddes v. United Financial Group,
`559 F.2d 557, 560 (9th Cir. 1977) (citing Pope v. United States, 323 U.S. 1, 12 (1944)). In
`exercising its discretion to grant default judgment, the court may consider the following factors: (1)
`the possibility of prejudice to the plaintiff; (2) the merits of plaintiff’s substantive claims; (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. See
`Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Generally, upon entry of default, the
`factual allegations of the complaint are taken as true, except for those relating to damages. See
`Televideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir.1987).
`Here, the Eitel factors weigh in favor of default judgment. Most importantly, the substantive
`claims in the complaint appear to have merit and the complaint is sufficient to state those claims. A
`claim for copyright infringement relating to the unauthorized public performance of musical works
`has five elements: (1) originality and authorship of the copyrighted works involved; (2) compliance
`with the formalities of the Copyright Act; (3) proprietary rights in the copyrighted works involved;
`(4) public performance of the compositions involved; and (5) lack of authorization for public
`performance. See Broadcast Music. Inc. v. Pine Belt Inv. Developers, Inc., 657 F. Supp. 1016, 1020
`(S.D. Miss. 1987). Moreover, vicarious liability for copyright infringement exists when: “(1) a
`defendant has the right and ability to supervise the infringing conduct and (2) the defendant has an
`obvious and direct financial interest in the infringement.” Abode Systems Inc. v. Canus
`Productions, Inc., 173 F. Supp. 2d 1044 (C.D. Cal. 2001) (citing Shapiro, Bernstien & Co. v. H.L.
`Green Co., 316 F.2d 304, 307 (2d Cir. 1963), Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259,
`262 (9th Cir. 1996)); see also 17 U.S.C. § 501(a) (“. . . anyone who violates the exclusive rights of
`the copyright owner . . . is an infringer of the copyright.”).
`In its complaint, Plaintiff BMI alleges that, in compliance with the Copyright Act, the
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`3
`
`For the Northern District of California
`
`United States District Court
`
`

`
`Case3:05-cv-04047-MJJ Document26 Filed03/22/06 Page4 of 7
`
`Plaintiff copyright owners granted to BMI the right to license the public performance rights for the
`musical compositions at issue in this case. Compl. ¶¶ 3-4, 15; Declaration of Judith Saffer ¶ 5; Ex.
`A. BMI also alleges some musical compositions in BMI’s repertoire were performed without a
`license or other authority to do so. Compl. ¶ 17; Stevens Decl. Ex. B. Defendants Javier Mendez
`and Michelle Khanbabian control B Street Billiards and have primary responsibility for the
`operation and management of the establishment, including the right and ability to supervise the
`activities there. Compl. ¶¶ 5-8. Further, Plaintiff allege that both Defendants have a direct financial
`interest in the establishment. Compl. ¶¶ 9-10. Therefore, Plaintiff has alleged sufficient facts to
`state a claim for vicarious liability for copyright infringement based on the unauthorized public
`performance of copyrighted musical compositions.
`The remaining Eitel factors also weigh in favor of granting default judgment. First, if the
`motion were denied, BMI would be prejudiced because it would likely be without a remedy; BMI
`attempted to reach a compromise with Defendants but was unsuccessful. See Stevens Decl. ¶¶ 3, 6-
`10, 12-13; see Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002) (“If
`Plaintiffs’ motion for default judgment is not granted, Plaintiffs will likely be without other recourse
`for recovery.”). Second, the amount of money sought is not disproportionate or unreasonable given
`the number of copyrighted works that were publicly performed. Finally, because Defendants did not
`file an answer to the complaint, there is little to suggest that there is a possibility of a dispute
`concerning material facts. Nor is it likely that Defendants’ default was due to excusable neglect.
`BMI sent numerous letters to Defendants regarding the need for a license before filing suit.
`Accordingly, the motion for default judgment should be granted. The remaining issue is the
`amount of the judgment.
`Damages for copyright infringement
`Plaintiff BMI is the attorney-in-fact for the musical works owned by the other Plaintiffs and
`therefore may prosecute copyright infringement actions and recover damages in its own name.
`Saffer Decl. ¶ 6. Defendants are liable for the acts of infringement that occurred at B Street Billiards
`because once a copyright has been validly obtained, the owner of the copyright has the exclusive
`right to perform the copyrighted work publicly or to authorize public performance of the
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`4
`
`For the Northern District of California
`
`United States District Court
`
`

`
`Case3:05-cv-04047-MJJ Document26 Filed03/22/06 Page5 of 7
`
`copyrighted work, and any person who violates any of the exclusive rights of the copyright owner is
`“an infringer” of the copyright. 17 U.S.C. §§ 106(4); 501(a).
`BMI requests statutory damages in the amount of $33,000, or $3,000 for each of the eleven
`unauthorized performances of musical compositions. See 17 U.S.C. § 504(c)(1) (providing for
`statutory damages between $750 and $30,000 per work). Plaintiff argues that it made substantial
`efforts to secure a licensing agreement with Defendants; representatives from BMI initiated
`approximately fifty-eight contacts with Defendants. These contacts were by telephone and by letter,
`and often included a sample license agreement and informational brochures, all of which were
`designed to inform Defendants of the need to purchase a license with BMI. Yet Defendants
`continued to perform copyrighted music without a license.
`An award of damages for copyright infringement is within the discretion of the Court. 17
`U.S.C. § 504(c). Factors the Court may consider in determining the amount of damages are: (1) the
`expense saved by the defendant in avoiding a licensing agreement; (2) profits reaped by defendant in
`connection with the infringement; (3) revenues lost to the plaintiff; and (4) the willfulness of the
`infringement. Cross Keys Publishing Co., Inc. v. Wee, Inc., 921 F. Supp. 479, 481 W.D. Mich.
`1995) (citing Boz Scaggs Music v. KND Corp., 491 F. Supp. 908, 914 (D. Conn. 1980)).
`Here, it appears that Defendants have saved approximately $4,000 in licensing fees from
`May 2003 through April 2005. See Stevens Decl. Ex. C (March 10, 2005 letter). Plaintiff also
`appears to have incurred costs associated with Mr. Pisano’s investigative services. Id. Considering
`the amount of the license fee that Defendants avoided paying, and the fact that Defendants continued
`to infringe even after receiving Plaintiff’s numerous communications, the Court recommends
`awarding statutory damages of $3,000 per song, for a total of $33,000.
`Injunctive relief
`The Copyright Act provides for injunctive relief to restrain future infringement. 17 U.S.C. §
`502. In this case, Plaintiff BMI has provided evidence that Defendants infringed eleven songs, yet
`BMI seeks injunctive relief against unauthorized performance of any BMI-licensed music. The
`threat of continued infringement is real based on Defendants’ failure to respond to BMI’s numerous
`oral and written notices of infringement, or to stop infringing. And there is no indication that future
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`5
`
`For the Northern District of California
`
`United States District Court
`
`

`
`Case3:05-cv-04047-MJJ Document26 Filed03/22/06 Page6 of 7
`
`infringement would be limited to the eleven songs at issue in this case. Therefore, the Court
`recommends permanently enjoining Defendants from publicly performing or causing the public
`performance of the eleven musical compositions at issue in this case or any musical composition
`licensed through BMI.
`Attorney’s fees and costs
`Finally, Plaintiff BMI seeks reimbursement of the attorney’s fees and costs that it has
`incurred in the prosecution of this action. 17 U.S.C. § 505. Plaintiff has submitted the declaration
`of Karen Frank, which details the amount of time spent and the hourly rate of the lawyer and legal
`assistant who worked on this case. A total of 4.5 hours of attorney time at the rate of $375.00 per
`hour and 10.4 hours of legal assistant time at the rate of $175.00 per hour was spent in researching
`and preparing the complaint, preparing an application for and obtaining entry of default and
`preparing the motion for default judgment. The total amount of fees sought is $3,508.00. Plaintiff
`also seeks $396.97 is costs, including the filing fee and the cost of serving Defendants. The amount
`of time spent and the hourly rates are reasonable, and therefore the Court recommends awarding
`Plaintiff $3,508.00 in fees and $396.97 in costs.
`Conclusion
`The Court recommends granting Plaintiff’s motion for default judgment in the total amount
`of $36,904.97 and issuing a permanent injunction. Any party may serve and file specific written
`objections to this recommendation within ten (10) business days after being served with a copy. 28
`U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); Civil Local Rule 72-3 . Failure to file objections within
`the specified time may waive the right to appeal the District Court’s order.
`Dated: March 22, 2006
`
`
`ELIZABETH D. LAPORTE
`United States Magistrate Judge
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`6
`
`

`
`Case3:05-cv-04047-MJJ Document26 Filed03/22/06 Page7 of 7
`
`7
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court