G&G Closed Circuit Events LLC v. Ayala

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 G & G Closed Circuit Events, LLC, No. CV-22-01803-PHX-DJH 10 Plaintiff, ORDER 11 v. 12 Eleazar Ayala, et al., 13 Defendants. [14] Plaintiff G & G Closed Circuit Events, LLC (“Plaintiff”) has filed a Motion for [15] Default Judgment (Doc. 15) against Defendants Eleazar Ayala, Paloma Ayala, and Jesus [16] Ruiz, all individually and d/b/a Cayomango; and Cayomango LLC, an unknown business [17] entity d/b/a Cayomango (collectively the “Defendants”). The Motion is unopposed, and [18] the time to file a response has passed. See LRCiv 7.2(c). The Court will grant Plaintiff’s [19] Motion for the reasons below. [20] I. Background [21] This case arises from Defendants showing the “Saul Alvarez v. Caleb Plant boxing [22] event” (the “Event”) in Defendants’ commercial establishment without paying for the [23] Event. (Doc. 15-1 at 2). Plaintiff owned the rights to the Event. (Id.) [24] Plaintiff is a California limited liability corporation, with its principal place of [25] business in Las Vegas, Nevada. (Doc. 1 at ¶ 6). Plaintiff is “a commercial distributor and [26] licensor of sporting events.” (Id. at ¶ 32). Defendants Eleazar Ayala, Paloma Ayala, and [27] Jesus Ruiz are identified as “Member(s) and Manager(s) of Cayomango LLC.” [28] 1 (Id. at ¶¶ 8–10). Defendant Cayomango LLC is an Arizona limited liability corporation 2 identified as owning and operating “the commercial establishment doing business as 3 Cayomango” in Phoenix, Arizona. (Id.) 4 On October 20, 2022, Plaintiff filed its Complaint, alleging the Defendants violated 5 two federal acts: (1) the Communications Act of 1934, 47 U.S.C. § 605 et seq.; and (2) the 6 Cable and Television Consumer Protection and Competition Act of 1992, 47 U.S.C. § 553 7 et seq. (Id. at ¶¶ 1, 28–46). Plaintiff seeks statutory damages under these federal acts. 8 (Doc. 15-1 at 10). Plaintiff served Defendants between November 17, 2022, and November 9 22, 2022. (See Docs. 7; 8; 10; 11; 12 at 2); see also Fed. R. Civ. P. 4(m) (service must take 10 place within 90 days of complaint’s filing). None of the Defendants responded or appeared 11 by the prescribed deadline. See Fed. R. Civ. P. 12(a)(1)(A)(i). 12 On December 28, 2022, Plaintiff requested this Court enter default judgment against 13 Defendants. (Doc. 12). The Clerk entered default against Defendants the next day. 14 (Doc. 13). On February 15, 2023, Plaintiff filed an Application for Default Judgment 15 against Defendants. (Doc. 15). Defendants did not file a response. 16 II. Legal Standard 17 Federal Rule of Civil Procedure 55(b)(2) governs applications for default judgment. 18 The Court possesses discretion whether to enter a default judgment. Aldabe v. Aldabe, 616 19 F.2d 1089 , 1092 (9th Cir. 1980). Before analyzing the merits of Plaintiff’s Application for 20 Default Judgment, the Court “has an affirmative duty to look into its jurisdiction over both 21 the subject matter and the parties.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (citing 22 Williams v. Life Sav. and Loan, 802 F.2d 1200, 1203 (10th Cir. 1986)). 23 If jurisdiction is established, the Court should then consider: [24] (1) the possibility of prejudice to the plaintiff, (2) the merits of 25 the plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the 26 possibility of a dispute concerning material facts, (6) whether 27 the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure 28 favoring decisions on the merits. 1 Eitel v. McCool, 782 F.2d 1470 , 1471–72 (9th Cir. 1986). “The general rule of law is that 2 upon default the factual allegations of the complaint, except those relating to the amount 3 of damages, will be taken as true.” Geddes v. United Fin. Grp., 559 F.2d 557 , 560 (9th 4 Cir. 1977) (citing Pope v. United States, 323 U.S. 1, 12 (1944)). 5 III. Discussion 6 The Court will first assess whether it has subject matter jurisdiction over the case 7 and personal jurisdiction over Defendants. The Court will then evaluate the merits of 8 Plaintiff’s Motion for Default Judgment under the Eitel factors. 9 A. Jurisdiction 10 As to subject matter jurisdiction, Plaintiff’s Complaint asserts two claims under 11 federal laws—the Communications Act of 1934 and the Cable and Television Consumer 12 Protection and Competition Act of 1992. (Doc. 1 at ¶ 1); see 47 U.S.C. §§ 553 , 605. The 13 Court therefore has federal question jurisdiction under 28 U.S.C. § 1331 . 14 The Court also finds it has personal jurisdiction over the establishment and the 15 individual Defendants. Defendant Cayomango LLC’s (“Cayomango”) domicile state is 16 Arizona, as indicated by Arizona Corporation Commission records. (Doc. 1 at ¶¶ 8–10). 17 The Complaint also alleges the individual Defendants are operating the commercial 18 establishment where the alleged violations of federal law occurred at 2851 W. Valencia 19 Road, Phoenix, Arizona 85746. (Id.); see Goodyear Dunlop Tires Operations, S.A. v. 20 Brown, 564 U.S. 915, 924 (2011) (“For an individual, the paradigm forum for the exercise 21 of general jurisdiction is the individual’s domicile; for a corporation, it is an equivalent 22 place, one in which the corporation is fairly regarded as at home.”). Thus, because each of 23 the individual Defendants are domiciled in Arizona, and the corporation they operate is in 24 Arizona, the Defendants are “at home” and the Court finds it has personal jurisdiction over 25 the matter and parties.1 26 / / / 27 1 Plaintiff did not allege where the individual Defendants were domiciled. (Doc. 1). Nonetheless, the three proof of service documents indicate the individual Defendants were 28 served at their usual place of abode, all of which were located within Arizona. The Court thus finds the individual Defendants to be domiciled in Arizona. (Docs. 7; 8; 10). 1 B. Eitel Factors 2 Having found jurisdiction, the Court will assess the Eitel factors to determine the 3 merits of Plaintiff’s Motion for Default Judgment. As an initial matter, although the 4 Complaint contains two counts, in Plaintiff’s Motion for Default Judgment, it seeks 5 damages as to only Count I. (Doc. 15-1 at 16).2 6 The Court finds the majority of the factors weigh in favor of entering default. 7 1. Possible Prejudice to Plaintiff 8 The first Eitel factor weighs in favor of entering default judgment against 9 Defendants. Plaintiff served all Defendants and received no response. (See Docs. 7; 8; 10; 10 11). Because “Plaintiff has no alternative means by which to resolve its claims,” potential 11 prejudice is high. Castro v. C&C Verde LLC, 2019 WL 13244384 , at *2 (D. Ariz. July 9, 12 2019). Therefore, the first factor favors default judgment. 13 2. Merits of Plaintiff’s Claims and Sufficiency of Complaint 14 The second and third Eitel factors are often considered together. See Dr. JKL Ltd. 15 v. HPC IT Educ. Ctr., 749 F. Supp. 2d 1038, 1048 (N.D. Cal. 2010). They “require that 16 plaintiff[’s] allegations ‘state a claim on which the [plaintiff] may recover.’” Kloepping v. 17 Fireman’s Fund, 1996 WL 75314 , at *2 (N.D. Cal. Feb. 13, 1996) (quoting Danning v. 18 Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)). 19 Plaintiff seeks relief under 47 U.S.C. § 605 . (Doc. 1 at ¶ 1). 20 a. Count I: Violation of 47 U.S.C. Section 605 (a) 21 Section 605(a) applies to satellite television signals. DirecTV, Inc. v. Webb, 545 22 F.3d 837, 844 (9th Cir. 2008). To be held liable for a violation of Section 605, Plaintiff 23 must plead Defendants were (1) not authorized by the sender, (2) intercepted a radio 24 communication, and (3) divulged or published the protected communication to any person. [25] 47 U.S.C. § 605 (a); Nat’l Subscription Television v. S & H TV, 644 F.2d 820 , 826 (9th Cir. 26 1981). The statute further provides that for any violation that “was committed willfully 27 and for purposes of direct or indirect commercial advantage or private financial gain, the 28 2 Plaintiff notes in its Motion that it requests liability only under Count I. (Id. at 4). Because the Court enters judgment under Count I, it will dismiss Count II. 1 court in its discretion may increase the award of damages, whether actual or statutory, by 2 an amount of not more than $100,000 for each violation.” 47 U.S.C. § 605 (e)(3)(C)(ii). 3 Plaintiff alleges it possessed exclusive rights to the Event. (Doc. 1 at ¶ 29). Plaintif 4 alleges the Event was nationally televised on November 6, 2021, and required certain 5 “sublicensing agreements” to be publicly displayed by a commercial establishment. (Id. at 6 ¶ 29–31). Plaintiff alleges the Event “originated via satellite uplink and was subsequently 7 re-transmitted to cable systems and satellite companies via satellite signal to Plaintiff’s 8 lawful sub-licensees.” (Id. at ¶ 33). 9 Plaintiff further alleges Defendants (1) did not have Plaintiff’s permission, (2) 10 willfully intercepted the licensed Event on November 6, 2021, and (3) divulged or 11 published the Event to patrons of Cayomango at 4333 West Indian School Road, Phoenix, 12 AZ 85031 . (Id. at ¶¶ 34–35). Plaintiff alleges the interception and publication of the Event 13 was “for purposes of direct and/or indirect commercial advantage and/or financial gain.” 14 (Id. at ¶¶ 21, 36). Plaintiff also alleges Defendants advertised the Event on Cayomango’s 15 public Facebook and Instagram pages. (Id. at ¶¶ 26–27; see also Doc. 15-4 at 18, 20 16 (screenshot exhibits supporting the allegations)). Plaintiff supports its allegations with a 17 sworn piracy affidavit of Investigator Sarah Jennings (“Investigator Jennings”), who was 18 present at Cayomango on November 6, 2021, and witnessed the Event being displayed to 19 patrons on several televisions. (Doc. 15-2 at 1–3). 20 Considering the above allegations as true, Plaintiff has properly pled Defendants 21 violated Section 605(a). The second and third Eitel factors weigh in favor of default 22 judgment. 23 3. Money at Stake 24 The fourth Eitel factor concerns “the sum of money at stake in the action.” Eitel, [25] 782 F.2d at 1471 . “[T]he court must consider the amount of money at stake in relation to 26 the seriousness of Defendant[s’] conduct.” PepsiCo, Inc. v. California Sec. Cans, 238 F. 27 Supp. 2d 1172, 1176 (C.D. Cal. 2002). “If the sum of money at stake is completely 28 disproportionate or inappropriate, default judgment is disfavored.” Gemmel v. 1 Systemhouse, Inc., 2008 WL 65604 , at *4 (D. Ariz. Jan. 3, 2008). However, if “the amount 2 sought is directly proportional to the harm a plaintiff incurred, this factor does not preclude 3 entry of default judgment.” Mountains of Spices LLC v. Lafrenz, 2023 WL 1069696 , at *8 4 (D. Ariz. Jan. 27, 2023) (citing NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 617 (9th 5 Cir. 2016)). 6 In its Complaint, Plaintiff seeks $110,000.00 plus attorneys’ fees and costs for 7 Count I. (Doc. 1 at 12). At first glance, this amount seems disproportionate to the harm 8 suffered. This is because the Complaint states, “[t]he Commercial fee for an establishment 9 the size of [Defendant Cayomango] to broadcast the Program lawfully was $1,250.00.” 10 (Doc. 1 at ¶ 25). However, Plaintiff’s Application for Default Judgment requests a total of 11 $30,000 in statutory damages. (Doc. 15 at ¶ 5; see also Doc. 15-5 (proposed order)). 12 Considering the Plaintiff’s allegations as true, the Court finds the fourth Eitel factor 13 weighs in favor of default judgment. The $30,000 damage total falls under Section 605’s 14 statutory guidance, and Defendant’s violation of federal law was serious. 15 4. Potential Disputes of Material Fact & Excusable Neglect 16 The fifth and sixth Eitel factors also support entry of default judgment. The record 17 demonstrates that Defendants were properly served, yet did not appear or respond. (See 18 Docs. 7; 8; 10; 11). This lack of defense on the matter means no potential disputes of 19 material fact are present. Likewise, nothing in the record indicates Defendants’ lack of 20 response was due to excusable neglect. The Court finds these two factors weigh in favor 21 of entering default judgment. 22 5. Policy Favoring Decision on the Merits 23 The seventh, and final, Eitel factor stems from “the general rule that default 24 judgments are ordinarily disfavored” and “[c]ases should be decided upon their merits 25 whenever reasonably possible.” Eitel, 782 F.2d at 1472 (citing Pena v. Seguros La 26 Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)). “[T]he mere existence of Fed. R. Civ. 27 P. 55 (b) indicates that ‘this preference, standing alone, is not dipositive.’” PepsiCo, Inc., 28 238 F. Supp. 2d at 1177 (quoting Kloepping, 1996 WL 75314 , at *3). The Court is unable 1 to reach the merits of this case because Defendants have failed to plead or otherwise defend 2 this action. Therefore, this final factor weighs against granting default judgment. 3 In sum, a majority of the Eitel factors weigh in favor of entering default judgment 4 as to Plaintiff’s Section 605 claim. 5 IV. Damages 6 Plaintiff seeks statutory damages in the amount of $10,000 for the violation of 7 Section 605(e)(3)(C)(i)(II) and enhanced damages in the amount of $20,000 under Section 8 605(e)(3)(C)(ii) because the violation was willful. (Doc. 15-1 at 10). 9 A. Statutory Damages 10 Statutory damages are proper when actual damages cannot be easily proven. J & J 11 Sports Prods., Inc. v. Rubio, 2013 WL 950031 , at *1 (D. Ariz. Mar. 11, 2013). Under [12] 47 U.S.C. § 605 , an aggrieved party “may recover an award of statutory damages . . . in a 13 sum of not less than $1,000 or more than $10,000, as the court considers just.” See Section 14 605(e)(3)(C)(i)(II). An appropriate award of statutory damages “deters but does not 15 destroy” the business. Kingvision Pay—Per—View v. Lake Alice Bar, 168 F.3d 347 , 360 16 (9th Cir. 2009). 17 Here, Defendants’ establishment had a maximum capacity of 90 patrons and 18 Investigator Jennings noted the establish was at capacity while she was present. (Doc. 1519 2 at 2). Plaintiff attaches evidence to the Motion indicating the cost to lawfully show the 20 Event would have been $1,250. (Doc. 15-3 at ¶ 8; 23). Plaintiff also argues that in assessing 21 damages deterrence should be a factor. (Doc. 15-1 at 11). Based on the size of the 22 establishment, the broadcasting costs, and to sufficiently deter future violations, the Court 23 finds the maximum penalty is appropriate and will award $10,000 under 24 Section605(e)(3)(C)(i)(II). See G&G Closed Cir. Events LLC v. Venegas Alcantara, 2020 25 WL 1047058 , at *3 (D. Ariz. Mar. 4, 2020) (awarding $10,000 in statutory damages under 26 same section when defendant displayed the program to approximately 45 patrons). 27 B. Enhanced Damages 28 If the violation was committed willfully and for commercial gain, Section 1 605(e)(3)(C)(ii) provides this Court discretion to “increase the award of damages, whether 2 actual or statutory, by an amount of not more than $100,000 for each violation.” Some 3 courts have found the mere unauthorized showing of a program sufficient to award 4 enhanced damages because of the unlikelihood it was accidental and not done for profit. 5 See Entertainment By J & J, Inc. v. Al–Waha Enter., Inc., 219 F.Supp.2d 769, 776 (S.D. 6 Tex. 2002 ). 7 Here, Plaintiff provided evidence that Defendants advertised beforehand on 8 Facebook and Instagram that the Event would be shown at their establishment. (Doc. 159 2 at 4–5). This demonstrates “[t]he showing was not an accident.” See Venegas Alcantara, [10] 2020 WL 1047058 , at *3. Investigator Jennings also stated the program was displayed on 11 several televisions at the establishment, and noted the establishment was at its seating 12 capacity. (Doc. 15-2 at 2). Similar violations have resulted in similar damages awarded 13 to plaintiffs. See Venegas Alcantara, 2020 WL 1047058 , at *3 (awarding $20,000 in 14 enhanced damages under § 605(e)(3)(C)(ii) because the showing was not an accident as 15 evidenced by the establishment’s advertisement of it on Facebook beforehand). 16 C. Joint and Several Liability 17 Last, the Court finds that joint and several liability is appropriate under a theory of 18 vicarious liability. To establish vicarious liability under Section 605(a), the plaintiff must 19 show that (1) an individual had the right and ability to supervise the wrongful conduct and 20 (2) had an obvious and direct financial interest in the activities undertaken. G & G Closed 21 Circuit Events, LLC v. Miranda, 2014 WL 956235 , at *4 (D. Ariz. Mar. 12, 2014). Plaintiff 22 alleges that each of the individual Defendants was identified on the Arizona Corporation 23 Commission records for Cayomango as a Member and Manager. (Doc. 1 at ¶¶ 8–10). 24 Plaintiff further alleges the individual Defendants had “the right and ability to supervise 25 the activities of Cayomango, which included the unlawful interception, receipt, and 26 publication of Plaintiff’s program.” (Id. at ¶¶ 11–13). Plaintiff alleges the individual 27 Defendants had an “obvious and direct financial interest in the activities of Cayomango.” 28 (Id. at ¶¶ 18–20). Plaintiff alleges the individual Defendants received “increased profits” 1|| from “the unlawful broadcast of Plaintiff's Program.” (Jd. at 21). These allegations, coupled with Investigator Jennings’ affidavit that the Event was advertised on 3|| Cayomango’s Facebook and Instagram page, establish a financial benefit from the 4|| violation. 5 In sum, the Court finds Plaintiff is entitled to entry of default judgment against 6|| Defendants. The Court will award $10,000 in statutory damages, and $20,000 in enhanced || damages, for a total of $30,000. The Court will also allow Plaintiff?s Counsel to file a 8 || motion for attorneys’ fees. See Fed. R. Civ. P. 54(d)(2). 9 Accordingly, 10 IT IS HEREBY ORDERED that Plaintiff G & G Closed Circuit Events, LLC’s 11} Application for Entry of Default Judgment (Doc. 15) is granted. The Clerk of the Court is kindly directed to enter default judgment in favor of Plaintiff and against Defendants 13 || Eleazar Ayala, Paloma Ayala, and Jesus Ruiz, all individually and d/b/a Cayomango, and Cayomango LLC, jointly and severally, in the amount of $30,000. 15 IT IS FINALLY ORDERED that Plaintiff may file a motion for costs and attorneys’ fees in accordance with LRCiv 54.2 within fourteen (14) days of the entry of 17 || this Order. 18 Dated this 28th day of June, 2023. [19] 20 oC. . fe 21 norable' Diang4. Huretewa 02 United States District Fudge [28] -9-