J & J Sports Productions, Inc. v. Golden Penny Industries, LLC

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 * * * 4 J & J Sports Productions, Inc., Case No. 2:18-cv-00748-JAD-BNW 5 Plaintiff, Report & Recommendation 6 v. 7 Golden Penny Industries, LLC, et al., 8 Defendants. [9] 10 In this signal piracy case, plaintiff J&J Sports Productions, Inc. moves for summary 11 judgment against defendant Jerome Kosak. ECF No. 27.1 The motion is unopposed. The Court 12 believes that J&J has carried its summary judgment burden on the first of its two claims, and the 13 Court therefore recommends that the motion be granted in part and denied in part. 14 I. Procedural background 15 J&J brought its complaint against Kosak and Golden Penny Industries, LLC (“GPI”). ECF 16 No. 1 at 1. J&J asserts two claims under the Communications Act: (1) Count I is for violation of [17] 47 U.S.C. § 605 , and (2) Count II is for violation of 47 U.S.C. § 553 . Id. at 4, 7 . 18 Apart from Kosak’s answer to J&J’s complaint and response to the Court’s order to show 19 cause, see ECF Nos. 4 and 16, neither defendant has participated in this case. This case, further, 20 is stayed as it pertains to GPI, which filed for Chapter 7 bankruptcy in July 2019. ECF No. 23. 21 J&J filed its unopposed motion for summary judgment in December 2019. ECF No. 27. 22 The Court notes that Kosak provided a notice of change of address in October 2018. ECF No. 16. 23 J&J duly served its summary judgment motion and other relevant documents upon Kosak at that [27] 1 The motion for summary judgment was referred to the undersigned magistrate judge for a report 1 address by depositing the same in a sealed envelope, postage prepaid, in the United States Mail. 2 See Fed. R. Civ. P. 5(b)(2); ECF No. 27 at 24; ECF No. 34 at 2.2 3 II. Undisputed facts 4 A. J&J and “the Program” 5 J&J is a closed-circuit distributor of sports and entertainment programming. (ECF No. 6 27-2 (Gagliardi Aff. ¶ 3, Ex. 2)). In April 2015 J&J purchased the exclusive commercial 7 exhibition licensing rights to a program entitled “The Fight of the Century,” Floyd Mayweather, 8 Jr. v. Manny Pacquiao Championship Fight Program (the “Program”). Id. The Program, which 9 aired on May 2, 2015, included the main event bout between the Program’s eponymous boxers, 10 the undercard bouts preceding the main event, and the commentary expressed in the Program’s 11 television broadcast. Id. J&J’s exclusive licensing rights are set forth in a written agreement 12 between J&J and the Program’s promoters. Id. Ex. 1 (the “Agreement”). 13 J&J marketed and sublicensed the right to broadcast the Program to commercial 14 establishments, including casinos, racetracks, bars, and nightclubs. Id. ¶ 3 . In exchange for the 15 ability to lawfully broadcast the program, commercial establishments were required to pay a 16 commercial sublicense fee to J&J. Id. ¶ 12 . The fee amount was based on the commercial 17 establishment’s capacity. Id. ¶ 12 ; id. Ex. 3. [20] 2 The Court further notes that the record lacks a proof of service certifying that Kosak was duly 21 served with the complaint. The defenses of insufficient process and insufficient service of process can be raised in a responsive pleading or motion. Fed. R. Civ. P. 12(b)(4)–(5). If these defenses are raised by 22 motion, the motion must be made “before pleading if a responsive pleading is allowed.” Id. A defendant waives these specific defenses if she fails to raise them in a motion under Rule 12, responsive pleading, or [23] amendment allowed by Rule 15(a)(1). Fed. R. Civ. P. 12(h)(1). “[I]n the absence of proper service of process, the district court has no power to render any judgment against the defendant’s person or property [24] unless the defendant has consented to jurisdiction or waived the lack of process.” S.E.C. v. Ross, 504 25 F.3d 1130 , 1138–39 (9th Cir. 2007) (emphasis added). Here, Kosak filed a responsive pleading and did not raise a defense for insufficient process or insufficient service of process. The time for Kosak to amend 26 his responsive pleading has lapsed, see Fed. R. Civ. P. 15(a)(1), and Kosak can no longer raise the defense by motion, see Fed. R. Civ. P. 12(h)(1). Kosak has therefore waived these defenses and the Court may 27 exercise personal jurisdiction over him. See Schnabel v. Lui, 302 F.3d 1023 , 1033–34 (9th Cir. 2002) (explaining that a defendant “waived any defense of lack of personal jurisdiction, insufficiency of process, 1 The satellite signal containing the Program was not available to or intended for use by the 2 general public. Id. ¶ 15. Thus, to safeguard against the unauthorized receipt or interception of 3 the Program, the satellite transmission containing the Program was encrypted or scrambled. Id. 4 If J&J authorized an establishment to receive the program, J&J would direct the establishment’s 5 cable or satellite provider to unscramble the satellite signal. Id. Because J&J held the exclusive 6 commercial distribution rights to the Program, the Program was not available to commercial 7 establishments except through agreement with J&J. Id. ¶ 3. 8 B. The Bar 9 J&J did not sublicense the Program to Kosak, GPI, or its commercial establishment: Rebel 10 Republic, then-located at 3540 West Sahara Avenue, Suite E1, Las Vegas, Nevada 89102 (the 11 “Bar”). Id. ¶ 3. Kosak admitted to being the owner and operator of GPI and the Bar and to 12 having dominion, control, oversight, and management over the Bar. ECF No. 4 at 1–2. 13 J&J hired four investigators to visit the Bar on the night the Program aired. ECF No. 27 at 14 3. None of the investigators paid a cover charge. See ECF No. 34-1. 15 Investigator Gerald Andrews arrived at the Bar first, at around 5:45 PM, and he counted 16 eight patrons. Id. at 15. Andrews counted close to twenty televisions, including four above the 17 Bar’s service bar. Id. According to Andrews, the Program began at 6:00 PM with a copyright 18 warning and introductory commentary by the Program’s announcers. Id. Andrews left the bar at 19 6:10 PM. Id. 20 Investigator Lawrence Sanchez was next, and he counted approximately 28 patrons in the 21 Bar at 6:45 PM. Id. at 9. Sanchez attests that the Bar’s capacity was 125 persons and that there 22 were 17 televisions throughout the establishment. Id. He observed an undercard bout, noted the 23 screens showing the Program were experiencing connection issues, and counted 40 patrons when 24 we left the Bar at 7:10 PM. Id. at 10. 25 Investigator Magic Sixx followed. ECF No. 34-1 at 4. Ms. Sixx arrived at 7:40 PM and 26 observed a large banner advertising the Program affixed to the Bar’s front roof. Id. Ms. Sixx 27 counted 50 customers and 18 televisions—all approximately 40 inches—inside the Bar. Id. at 1 those televisions tuned to the Program, the signal reception was “poor” and the lower area of the 2 televisions listed a “contact Dish” prompt. Id. The images on the television would freeze for 3 around ten seconds approximately every two minutes before becoming heavily pixelated and 4 disjointed. Id. The Bar’s customers complained about the poor picture quality, and the Bar 5 explained that this was due to too many persons receiving the satellite signal. Id. The televisions 6 not depicting the program lacked similar reception issues. Id. 7 Ms. Sixx observed one of the Program’s undercard bouts. Id. She took two more 8 headcounts before departing the bar: there were 65 customers in the Bar at 8:29 PM and 80 at 9 8:34 PM. Id. 10 Ms. Pamela Purdy was the final auditor to enter the bar. Id. at 12. She arrived at 8:53 PM 11 and likewise counted eighteen screens, which included seventeen televisions and a screen 12 projected onto a wall adjacent to the Bar’s exit. Id. Ms. Purdy noted that each television was 13 marked with a number tag, and by her count there were nine screens showing the Program. Id. at 14 12. Like Ms. Sixx, Ms. Purdy observed that the screens depicting the Program “kept freezing.” 15 Id. 16 Ms. Purdy noted that the Bar’s capacity was 120 persons. Id. at 13. Ms. Purdy counted 17 the Bar’s patrons three times before she left at 9:27 PM. Id. She counted 108, 108, and 115 18 patrons. Id. 19 Based on the Bar’s capacity, the price for a sublicensing fee to broadcast the Program was 20 $6,000.00. ECF No. 27-2, Ex. 3. 21 III. Legal standard 22 Summary judgment is appropriate when “the pleadings, depositions, answers to 23 interrogatories, and admissions on file, together with the affidavits, if any, show there is no 24 genuine issue as to any material fact,” therefore entitling the movant to judgment as a matter of 25 law. See Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ. P. 56(a). The movant 26 bears the initial responsibility of articulating the basis for its motion and identifying the portions 27 of the record that the movant believes demonstrate the absence of a genuine issue of material fact. 1 nonmovant to “produce evidence of a genuine dispute of material fact that could satisfy its burden 2 at trial.” Sonner v. Schwabe N. Am., Inc., 911 F.3d 989, 992 (9th Cir. 2018). To resolve a 3 summary judgment motion, the Court views all facts and draws all inferences in the light most 4 favorable to the nonmoving party. Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d 5 1100, 1103 (9th Cir. 1986). 6 The Ninth Circuit has made clear that the trial court may not grant a summary judgment 7 motion merely because it is unopposed. Heinemann v. Setterberg, 731 F.3d 914, 917 (9th Cir. 8 2013). Instead, the nonmovant’s failure to respond to a fact asserted in the motion “permits a 9 court to consider the fact undisputed.” Id. (citing Fed. R. Civ. P. 56(e)(2)). 10 If summary judgment is sought against a pro se defendant, the court considers the 11 defendant’s contentions offered in motions and pleadings, so long as the contentions are made on 12 personal knowledge, set forth facts that would be admissible as evidence, and were made under 13 penalty of perjury. Xue Bao Chen v. Viduarri, No. 2:12-cv-2163-JAD-PAL, 2014 WL 5307928 , 14 at *2 (D. Nev. 2014) (citing Jones v. Blanas, 393 F.3d 918, 923 (9th Cir. 2004)). Finally, pro se 15 filings are liberally construed. Erickson v. Pardus, 551 U.S. 89, 94 (2007). 16 IV. Discussion 17 A. Whether J&J had the right to sublicense the Program’s distribution in Clark 18 County 19 The Agreement between J&J and the Program’s promoters grants J&J the exclusive 20 license to exhibit the Program in the United States but specifically excludes “exhibition rights in 21 Clark County, Nevada.” ECF No. 27-2 at 11.3 J&J argues, however, that it and the promoters 22 modified the contract to lift the territorial restriction on J&J’s rights. ECF No. 27 at 12. 23 According to J&J, the territorial restriction was imposed to protect ticket sales to 24 Program-related events in Las Vegas, Nevada, including the live event at the MGM Grand 25 Garden Arena. ECF No. 27-2 ¶ 7. Following the ratification of the Agreement, the Program26 [27] 3 Joseph M. Gagliardi, president of J&J, affirmed that the contract appended to his affidavit is a 1 related events enjoyed substantial ticket sales, which obviated the purpose for the territorial 2 restriction. Id.; ECF No. 27 at 12. Thus, the promoters authorized J&J to license the Program’s 3 exhibition to commercial establishments in Las Vegas. ECF No. 27-2 ¶ 7. J&J did so. Id. 4 To determine whether J&J in fact had the legal right to license the exhibition of the 5 Program in Las Vegas, the Court must resolve whether the J&J and the promoters waived the 6 territorial restriction. The Agreement contains no choice-of-law provision. Under the 7 Restatement (Second) of Conflict of Laws, the Court applies the law of the state which has “the 8 most significant relationship to the transaction.” Commercial Ins. Co. of Newark, N.J. v. Pacific9 Peru Const. Corp., 558 F.2d 948, 952 (9th Cir. 1977).4 The most significant relationship is 10 analyzed according to the following criteria: (1) the place of contracting, negotiating, and 11 performance of the contract; (2) the location of the contract’s subject matter; and (3) the domicile, 12 nationality, place of incorporation, and place of business of the parties. Id. 13 Here, the Agreement provides that the promoters are located in Nevada, that J&J is 14 located in California, and that the Program’s bouts were set to occur in Las Vegas. ECF No. 27-2 15 at 11. It is evident to the Court that the Restatement points to either California or Nevada law, but 16 the Court need not resolve that question because the result is the same under either state’s law. 17 It is well settled that under California law a contracting party may waive “conditions” or 18 “provisions” placed in a contract “solely for the party’s benefit.” Wyler Summit Partnership, 135 19 F.3d 658, 662 (9th Cir. 1998) (citing Sabo v. Fasano, 201 Cal. Rptr. 270, 271 (2d Dist. 1984); 20 Doryon v. Salant, 142 Cal. Rptr. 378, 381 (2d Dist. 1977)) (citations omitted). The inquiry on 21 whether a provision was originally included in the contract for a party’s benefit focuses on the 22 parties’ intent at the time of contacting. Id. at 663. 23 Here, J&J represents in a sworn affidavit by its president that the territorial limitation was 24 included in the Agreement to protect ticket sales for the Program’s promoters. The court believes 25 the territorial limitation plainly protects the Program’s promoters, who were able to sell tickets to [26] 27 4 Because the Court has federal-question jurisdiction, the Court applies federal common law to determine which choice-of-law rule applies. Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997 (9th 1 Program-related events without competing with Clark County commercial establishments 2 showing the Program at their places of business. The supposed waiver of the territorial limitation 3 plainly benefitted J&J, which was then able to earn money by sublicensing the exhibition of the 4 Program to commercial establishments in Clark County. Further, J&J represents that it 5 sublicensed the Program in Clark County “with the [promoters’] full knowledge, authorization, 6 and consent.” ECF No. 27-2 ¶ 7. The Court, therefore, believes that the territorial limitation was 7 included solely for the promoters’ benefit and that under California law the Program’s promoters 8 effected a waiver of the territorial limitation. Accordingly, to the extent California law governs 9 the Agreement, J&J did in fact have the ability to license the Program’s exhibition to commercial 10 establishments in Clark County. 11 The result is the same under Nevada law, which provides that contracting parties “may 12 mutually consent to enter into a valid agreement to modify a former contract,” and that the 13 modification can be “implied from conduct consistent with an asserted modification.” Clark 14 Cnty. Sports Enters. v. City of Las Vegas, 606 P.2d 171, 172 (Nev. 1980). Here, J&J states that 15 once the promoters sold enough tickets to the Program’s live event, it began to license the 16 Program’s exhibition to establishments in Clark County. J&J provided a list of nineteen 17 establishments that entered into a licensing agreement with J&J for the Program’s exhibition. 18 ECF No. 27-2 at 19. J&J represents that these agreements were possible only because of the 19 promoters’ “prior authorization for such [agreements].” ECF No. 27 at 13. Thus, the Court 20 believes that, under Nevada law, J&J’s and the promoters’ conduct evinces they mutually 21 consented to modify the Agreement to allow J&J to license the Program’s exhibition to 22 commercial establishments in Clark County. Accordingly, whether Nevada or California law 23 applies, J&J was authorized to sublicense the Program’s exhibition in Clark County. 24 The Court turns now to whether J&J has established liability. 25 B. 47 U.S.C. §§ 553 and 605 26 Section 553 is a provision of the Communications Act that “prohibits both illegally 27 receiving cable programming and helping others to illegally receive cable programming by 1 without authorization.” 47 U.S.C. § 553 (a)(1); J&J Sports Prods., Inc. v. Johns, 2015 WL 2 13236876, at *2 (E.D. Cal. Dec. 4, 2015). 3 Section 605, in turn, “prohibits the unauthorized receipt and use of radio communications 4 for one’s own benefit or for the benefit of another” not entitled to receipt. DirecTV, Inc. v. Webb, [5] 545 F.3d 837, 844 (9th Cir. 2008) (citing 47 U.S.C. § 605 (a)). There are “potentially intricate 6 issues of overlap and distinction” between §§ 553 and 605. Kingvision Pay-Per-View Ltd. v. 7 Lake Alice Bar, 168 F.3d 347 , 349 n.1 (9th Cir. 1999). But the term “communications” has been 8 authoritatively construed in our circuit to “include satellite television signals.” Id. (citing Sosa v. 9 DIRECTV, Inc., 437 F.3d 923, 926 (9th Cir. 2006); Nat’l Satellite Sports, Inc. v. Eliadis, Inc., 253 10 F.3d 900 , 911–12 (6th Cir. 2001)). 11 Sections 553 and 605 each provide a private civil cause of action against violators. 47 12 U.S.C. §§ 553 (c)(1), 605(e)(3)(A). “Both are strict liability statutes.” Johns, 2015 WL 13236876 13 at *3.5 And most courts have found that § 553 speaks to interception of signals broadcast through 14 coaxial cable systems, while § 605 speaks to interception through the air via radio and satellite. 15 Kingvision Pay Per View, Ltd. v. Guzman, 2008 WL 1924988 , at *1 (D. Ariz. Apr. 30, 2008). 16 There is a split of authority regarding whether a violation of § 553(a)(1) can likewise 17 constitute a violation of § 605(a). J&J Sports Prods., Inc. v. Torres, 2011 WL 6749817 , at *4 18 (E.D. Cal. Dec. 22, 2011). The Court, however, need not resolve that issue because J&J asks the 19 Court to find that Kosak violated § 605(a).6 Therefore, the Court will recommend to the district 20 judge that she deny the motion for summary judgment on J&J’s § 553 claim. 21 … 22 … 23 … [24] 25 5 Accord G&G Close Circuit Events, LLC v. Castillo, 327 F. Supp. 3d 1119, 1128 (N.D. Ill. 2018) (construing § 605); Joe Hand Promotions, Inc. v. Yakubets, 3 F. Supp. 3d 261, 274 (E.D. Pa. 2014) 26 (construing § 553); J&J Sports Prods., Inc. v. Allen, 2014 WL 12567151 , at *5 (E.D. Tex. June 27, 2014) (collecting cases on both § 553 and 605). [27] 6 Moreover, two of J&J’s investigators observed that the Bar’s television screens prompted the 1 C. Section 605(a) liability 2 a. Individual liability under § 605(a) 3 As discussed above, this matter is stayed as it pertains to GPI. Therefore, Kosak is the 4 only defendant against whom J&J moves for summary judgment. To establish individual liability 5 against Kosak under § 605(a), J&J must show that Kosak “had a right and ability to supervise the 6 violations and that he had a strong financial interest in such activities.” J&J Sports Prods., Inc. v. 7 Mikhael, 2016 WL 2984191 , at *2 (C.D. Cal. May 19, 2016) (quotations omitted). 8 Here, in his answer to J&J’s complaint, Kosak admitted that on the night of the Program’s 9 exhibition he owned and had “dominion, control, oversight[,] and management” over the Bar. 10 ECF No. 4 (admitting to ECF No. 1 ¶¶ 6, 13 and part of ¶ 8 (J&J’s compl.)).7 Further, because 11 Kosak was the Bar’s owner, it follows that as a “consequence of everyday business incentives,” 12 he reaps the benefit of “enhanced profits earned from attracting patrons with a bootlegged 13 program.” Joe Hand Promotions, Inc. v. Tickle, 2016 WL 393797 , at *14 (M.D. Pa. Feb. 2, 14 2016). Thus, to the extent that there exists a § 605(a) violation, the Court recommends that 15 Kosak be found individually liable because he had the ability to supervise the violations and had a 16 direct financial interest in those violations.8 17 … 18 … [20] 7 A statement in an answer is a judicial admission. American Title Ins. Co. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988). Judicial admissions “are formal admissions in the pleadings which have the 21 effect of withdrawing a fact from issue and dispensing wholly with the need for proof of the fact.” Id. These admissions are “conclusively binding on the party who made them” and can support summary 22 judgment. Id.; Bd. of Tr. Of the Ken Lusby Clerks & Lumber Handlers Pension Fund v. Piedmont Lumber & Mill Co., 2015 WL 5461561, at *4 (N.D.C Cal. Sept. 16, 2015) (holding that there was no genuine 23 issue regarding ownership of certain property because defendant admitted to that fact in her answer). 8 The Court also notes that the Nevada Secretary of State’s website reflects that Kosak is the Bar’s [24] registered agent and the sole member of its owner, GPI. ECF No. 34-1 at 18–20. The Nevada Secretary 25 of State’s record is “not subject to reasonable dispute because it can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Pennel v. Am. Addiction Ctrs., 2020 26 WL3046535, at *1–2 (citing Fed. R. Evid. 201(b)(2)). The Court may therefore take judicial notice of Kosak’s status as GPI’s sole member and registered agent because it is set forth in a public record. See id. 27 (citing Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741 , 746 n.6 (9th Cir. 2006)). Individual liability has been found possible where a defendant was a member and registered agent of an LLC that 1 b. Whether a § 605(a) violation occurred 2 To establish a § 605(a) violation, J&J must show: (1) that they are “a person aggrieved” 3 under § 605; (2) that the Program was exhibited in the Bar; (3) that J&J did not authorize the 4 exhibition of the Program; and (4) that the Program was shown to at least one other person. 47 5 U.S.C. §§ 605 (a), (e)(3)(A); Joe Hand Promotions, Inc. v. Ok Cha Vanhoozer, 2014 WL 6 12543019, at *2 (W.D. Tex. Apr. 30, 2014). 7 Here, J&J has offered competent evidence to establish all four elements of a § 605(a) 8 violation. For the first element, a “person aggrieved” includes “any person with proprietary rights 9 in the intercepted communication.” 47 U.S.C. § 605 (d)(6). To establish this, J&J offers the 10 Agreement, which plainly states that J&J was granted “the exclusive license” to exhibit the 11 Program at commercial exhibition outlets, “such as bars, clubs, lounges, restaurants[,] and the 12 like.” ECF No. 27-2 at 11. The Court has already found that J&J’s exclusive commercial 13 distribution rights encompass Clark County. Because J&J held the exclusive commercial 14 distribution rights for the Program, J&J had “proprietary rights” in the Program. Therefore, J&J 15 is an “aggrieved person” under § 605(a). J&J Sports Prods., Inc. v. De La Cerda, 2013 WL 16 5670877, at *4, 6 (E.D. Cal. Oct. 16, 2013) (finding plaintiff to be an “aggrieved person” under § 17 605(a) because it had the “exclusive nationwide distribution rights” to an intercepted program). 18 Further, the Court finds that J&J has established that the Program was exhibited at the 19 Bar. For this, J&J relies on the sworn and detailed affidavits of four investigators who, from 5:45 20 PM to 9:27 PM on May 2, 2015, visited the Bar and observed the Program being displayed on 21 approximately 9 of the Bar’s 18 televisions. This is sufficient to carry J&J’s burden at summary 22 judgment. Joe Hand Promotions, Inc. v. Albright, 2013 WL 2449500 , at *4 (E.D. Cal. June 5, 23 2013) (finding a single investigator’s affidavit sufficient to establish that a program was exhibited 24 at defendant’s commercial establishment). 25 Third, J&J has established that the Program was aired at the Bar without J&J’s 26 permission. Because J&J had the exclusive ability to license the Program’s exhibition at 27 commercial establishments, the only means for the Bar to exhibit the program was through a 1 Thus, when the Bar aired the Program on May 2, 2015, it did so without J&J’s permission. 2 Moreover, two of J&J’s investigators observed poor signal reception on the televisions depicting 3 the Program. ECF No. 34-1 at 5, 7. There were no reception issues on the televisions depicting 4 something other than the Program. Id. at 5–6. And, on those televisions depicting the Program, 5 investigators noted a blue panel prompting viewers to contact “Dish” (id. at 5–6, 9), which is a 6 direct-satellite supplier (ECF No. 27-2 at 13, 21).9 The Court believes based on this evidence that 7 the Bar received the Program, without permission, via “Dish,” a direct-satellite supplier. 8 The Court further believes that the receipt of satellite service at the bar, coupled with the 9 absence of an authorization by J&J for the Bar to exhibit the Program, is sufficient to establish 10 that J&J intercepted the Program via satellite service without J&J’s authorization. Other courts 11 have found similarly. See, e.g., Joe Hand Promotions, Inc. v. Roseville Lodge No. 1293, 161 F. 12 Supp. 3d 910, 915 (E.D. Cal. 2016) (“The undisputed evidence—specifically, the lack of 13 Plaintiff’s authorization and the satellite service at Defendant’s establishment—is sufficient to 14 establish Defendant’s unauthorized interception . . . via satellite service.”); J&J Sports Prods., 15 Inc. v. Thang, 161 F. Supp. 3d 910, at *3 (E.D. Cal. Jan. 30, 2018) (“It is undisputed that Plaintiff 16 had the exclusive commercial distribution rights to the Program and that Defendants showed the 17 program at their establishment without receiving authorization from or paying the licensing fee to 18 Plaintiff. . . . That circumstantial evidence is enough to establish a violation of § 605.”). 19 Finally, for the fourth element, the Court believes that the Bar exhibited the Program to its 20 patrons, which ranged anywhere from 8–115 persons throughout the night. 21 Because the Court believes that J&J has met all four elements, the Court will recommend 22 to the district judge that she find that J&J has established the existence of a § 605(a) violation. 23 Further, because Kosak had supervisory authority over the Bar during the Program’s exhibition 24 and a direct financial incentive in that exhibition, the Court will recommend to the district judge 25 that she find Kosak individually liable for this violation. [27] 9 The Court notes that J&J’s motion refers to a photograph of a satellite dish on the Bar’s roof, but 1 D. Damages 2 A § 605(a) damages analysis has two parts. At the first part, the Court may award—“at 3 the election of the aggrieved party”—either actual or statutory damages. 47 U.S.C. 4 § 605(e)(3)(c)(i). At the second part, if the Court finds that the § 605(a) violation was done 5 “willfully and for purposes of direct or indirect commercial advantage or financial gain,” the 6 Court, “in its discretion,” may increase the award of damages by an amount of not more than 7 $100,000 for each violation. Id. § 605(e)(3)(c)(ii). 8 1. Statutory damages 9 Section 605 authorizes an award of statutory damages of “not less than $1,000 or not more 10 than $10,000” for each violation of § 605(a), “as the Court considers just.” 11 Id. § 605(3)(3)(c)(i)(II). J&J seeks the maximum $10,000 amount for Kosak’s violation of 12 § 605(a). 13 The court in Kingvision Pay-Per-View, Ltd. v. Blackman, 102 F. Supp. 2d 1196 , 1198 14 (N.D. Cal. 2000) awarded the $1,000 minimum, based on its conclusion that “distributors should 15 not be overcompensated and statutory awards should be proportional to the violation.” The court 16 noted that “a higher statutory award may be justified in cases where defendants are repeat 17 offenders who have pirated similar Programs on previous occasions, and who need an especially 18 severe financial deterrent.” Id. at 1198–99. But “in the absence of unusual or particularly 19 egregious circumstances under which a defendant broadcasts the fights . . . it would be 20 inappropriate to award the statutory maximum.” Don King Prods./Kingvision v. Maldonado, [21] 1998 WL 879683 (N.D. Cal. Dec. 11, 1998) (citing Joe Hand Promotions v. Burg’s Lounge, 955 22 F. Supp. 42, 44 (E.D. Pa. 1997)). 23 The Court notes that, based on J&J’s evidence, the price for a license to exhibit the 24 Program in the Bar was $6,000. ECF No. 27-2 at 21. J&J urges, however, that a statutory award 25 equal to the amount of the licensing fee would undercompensate J&J. 26 The Court agrees. A damages award “based exclusively on the licensing fees would 27 undercompensate the plaintiff because the availability of unauthorized access to the program 1 Per-View, Ltd. v. Jasper Grocery, 152 F. Supp. 2d 438, 442 (S.D.N.Y. 2001). Thus, the Court 2 finds that the $6,000 licensing fee is an appropriate starting point but insufficient to compensate 3 J&J. See J&J Sports Prods. v. Lorenzana, 2014 WL 3044566 , at *3 (M.D. Cal. May 13, 2014) 4 (“the Court may consider the cost of commercial license for the program at issue”). 5 Some courts have calculated damages based in part on a desire to effect general and 6 specific deterrence. See, e.g., Joe Hand Promotions, Inc. v. Gamino, 2011 WL 66144 , at *4 (E.D. 7 Cal. Jan. 10, 2011) (“the amount of damages awarded should be in an amount that is adequate to 8 deter these defendants and others from committing similar acts in the future.”). Here, the Court 9 recommends to the district that she, in her discretion, find that an award of $8,000 in statutory 10 damages is just because it sufficiently compensates plaintiff and acts as a deterrent against future 11 unlawful conduct. Ultimately, the Court declines to recommend the $10,000 maximum figure 12 because the record lacks any indication that Kosak or the Bar are repeat offenders or that Kosak 13 charged a cover or a premium for food and drinks.10 14 In McCausland—which J&J relies on in part for its $10,000 request—the Court awarded 15 the maximum $10,000 statutory amount because of “the apparent need” to send a strong deterrent 16 signal. McCausland, 2012 WL 113786 at *3. However, the Court’s recommendation here for 17 $8,000 in statutory damages already accounts for the need for a deterrent signal. Further, the 18 Court in McCausland “merely accept[ed] plaintiff’s request for $10,000 in statutory damages,” [19] id., which the Court declines to do here. 20 The Court turns now to the propriety of enhanced statutory damages. 21 2. Enhanced statutory damages 22 The Communications Act permits the court to award enhanced statutory damages in its 23 discretion and in an amount “not more than $100,000” if it finds that the § 605(a) violation was [25] 10 J&J asks the Court to consider that when J&J’s investigator inquired about whether the Bar intended to show the Program, a Bar employee answered that “they had been ‘blocked from showing the 26 fight, but they were still showing it.’” ECF No. 34-1 at 4. However, this statement is hearsay because it was not made by the declarant and J&J offers it to prove the truth of the matter asserted. Fed. R. Evid. 27 801(c). J&J offers no hearsay exception. Therefore, the statement “is inadmissible hearsay evidence and cannot be considered on a motion for summary judgment.” Smith v. Pacific Bell Telephone Co., Inc., 649 1 done “willfully and for purposes of direct or indirect commercial advantage or private financial 2 gain.” 47 U.S.C. § 605 (e)(3)(C)(ii). To make this determination, the court weighs a nonexclusive 3 list of factors (i.e., the “Kingvision factors”): (1) whether defendant is a repeat violator of the 4 Communications Act, (2) the extent of defendant’s unlawful monetary gains, (3) actual damages 5 to the plaintiff, (4) whether defendant advertised the broadcast of the intercepted program, (5) 6 whether defendant charged a cover to enter the establishment to view the intercepted program, 7 and (6) whether defendant charged a premium for food or drinks during the event. Joe Hand 8 Promotions, Inc. v. Gonzales, 2015 WL 507397 , at *5 (E.D. Cal. Feb. 6, 2015) (citation omitted). 9 As an initial (and practical) matter, the Court notes that satellite signals typically “do not 10 descramble spontaneously.” See Joe Hand Promotions, Inc. v. Wing Spot Chicken & Waffles, 11 Inc., 920 F. Supp. 2d 659, 668 (E.D. Va. 2013) (citing Time Warner Cable v. Googies 12 Luncheonette, 77 F. Supp. 2d 485, 490 (S.D.N.Y, 1999)).11 Instead, when a commercial 13 establishment exhibits an intercepted program to its patrons at no cost, this is sufficient for the 14 Court to conclude “that the defendant acted willfully for commercial advantage and private 15 financial gain.” Id. That is precisely what happened here. The Court therefore believes that— 16 like the interception in Wing Spot—the interception of the Program here required “an affirmative 17 action by the defendant,” and that this action was done for commercial advantage or private 18 financial gain See id.; see also J&J Sports Prods. v. Betancourt, 2009 WL 3416431 , at *4 (S.D. 19 Cal. Oct. 20, 2009) (“an establishment seeks to attract patrons by broadcasting the fight, which 20 results in increased food and drink sales. By displaying entertainment . . . the owner . . . is clearly 21 acting for commercial gain.”). 22 Further, after considering the Kingvision factors, the Court believes that $30,000 in 23 enhanced statutory damages are warranted. For the first factor, however, the record does not 24 evince that Kosak is a repeat offender of the Communications Act. [26] 27 11 See also J&J Sports Prods. v. Montecinos, 2010 WL 144817 , at *5 (N.D. Cal. Jan. 11, 2010) (“enhanced damages are appropriate given the impossibility that plaintiff’s signal could be innocently or 1 For the second factor, J&J has not provided evidence with its motion to show the extent of 2 Kosak’s unlawful monetary gains. J&J’s investigators observed that toward the end of the 3 Program’s exhibition the Bar hosted 115 patrons and was therefore nearly at its 120- or 1254 person capacity. This amount of patrons gestures toward unlawful monetary gains. However, the 5 record lacks any evidence that would allow the Court to compare the Bar’s patronage on the night 6 of the Program’s telecast to any other comparable evening at the Bar. Thus, the Court is unable 7 to assess the extent of the Bar’s monetary gains and this factor cuts against enhanced damages. 8 Turning to the third factor, J&J has established that based on the Bar’s 120- or 125-person 9 capacity, J&J’s actual damages are at least $6,000, which was the price for a sublicense to exhibit 10 the Program at the Bar. This is a significant sum. Further, the Court again acknowledges that in 11 the context of signal piracy, “the availability of unauthorized access to the program reduces 12 demand and depresses the prices that [plaintiff] can charge for sublicenses.” Kingvision Pay-Per13 View, Ltd. v. Jasper Grocery, 152 F. Supp. 2d 438, 442 (S.D.N.Y. 2001). Thus, this factor 14 weighs in favor of enhanced statutory damages. 15 The fourth factor weighs heavily in favor of enhanced statutory damages. J&J’s 16 investigators observed that the Bar advertised the Program using signage outside its establishment 17 that showed images of the Program’s main-event fighters and included the invitation “Welcome 18 Fights Fans.” ECF No. 27 at 8. Adjacent to the Bar’s front door, the Bar placed a full-sized, 19 standing cardboard cutout that likewise depicted the fighters. Id. The Bar’s tables were adorned 20 with promotional table tents advertising the Program. Id. And one of J&J’s investigators 21 identified an online Facebook post by the Bar advertising its intent to show the Program “that 22 evening[].” ECF No. 34-1 at 15. It is clear to the Court that this advertising required volitional 23 action, and that these actions were taken in hopes of attracting patrons to the Bar. The Court 24 therefore believes that the fourth factors weighs heavily in favor of enhanced statutory damages. 25 The fifth and sixth factors weigh against enhanced statutory damages because it does not 26 appear that the Bar charged a cover nor a premium for its food or drinks. 27 After weighing the Kingvision factors, the Court recommends that the district judge award 1 outside our circuit. The Court’s judgment in Joe Hand Promotions, Inc. v. Juarez, provides an 2 analogous example. 2011 WL 284503 , at *3–4 (E.D. Cal. Jan. 26, 2011). There, the Court 3 awarded $40,000 in enhanced statutory damages (in addition to $10,000 in statutory damages) 4 after finding that defendant displayed an intercepted program on 2 screens, that defendant’s 725 person-capacity bar drew 60 patrons on the night of the program, and that defendant was a repeat 6 violator. Id. Here, the Bar had a 120- or 125-person capacity and was approximately 92–95% 7 full by the Program’s end. Further, the Bar displayed the Program on 9 screens, which is nearly 8 five times as many as the 2 screens used by the Juarez defendant. And although J&J did not 9 establish that Kosak was a repeat violator, it did establish that the Bar advertised the Program, 10 which is something that the Juarez plaintiff apparently did not do. 11 A similar award for enhanced statutory damages is found in Joe Hand Promotions, Inc. v. 12 Wing Spot Chicken & Waffles, Inc., 920 F. Supp. 2d 659 (E.D. Va. 2013). There, the Court 13 awarded $27,000 in enhanced statutory damages after it found that the cost to exhibit the 14 intercepted program was $1,100. Id. at 668–69. Further, the Wing Spot defendant exhibited the 15 program to 37–41 patrons—which was less than 60% of its 75-person capacity—and defendant 16 was not a repeat violator, did not experience substantial financial gain, and did not advertise or 17 charge a cover or premium for food or drinks. Id. Here, J&J has similarly failed to establish 18 substantial financial gain, a cover charge, or a premium for food or drinks. However, J&J’s 19 sublicense fee for the Program was greater than the fee in Wing Spot, and the Bar here had a 20 larger capacity and hosted a numerically and proportionally larger number of patrons. Further, 21 unlike in Wing Spot, J&J has established that the Bar here advertised the intercepted Program. 22 A final example is found in J&J Sports Prods., Inc. v. McCausland, 2012 WL 113786 23 (S.D. Ind. Jan. 13, 2012). The McCausland court awarded plaintiff $30,000 in enhanced statutory 24 damages after it found that the violation occurred in a 50-person-capacity bar, the intercepted 25 program was shown to 12–17 patrons on a single 60-inch screen, and defendant was not a repeat 26 violator, did not charge a cover or premium for food or drinks, and did not advertise an intent to 27 show the program. Id. at 2–4. In contrast, the Program here was shown on substantially more 1 || defendant, Kosak is not a repeat violator and he did not charge a cover or premium for food or 2 || drinks. And unlike the McCausland defendant, the Program here was advertised online and at the 3 || Bar, which makes Kosak’s conduct more egregious. 4 In sum, the Court recommends an award to J&J of $30,000 in enhanced damages. 5 E. Attorneys’ fees 6 J&J also moves for an award of costs and reasonable attorneys’ fees. The 7 || Communications Act provides that the Court “shall direct the recovery of full costs, including 8 || awarding reasonable attorneys’ fees to an aggrieved party who prevails.” 47 U.S.C. 9 || § 605(e)(3)(B)Gil). Based on the Court’s recommendations, the Court will recommend to the 10 || district judge that J&J be granted the opportunity to submit its request for costs and attorneys’ 11 || fees within 14 days from entry of judgment. See LR 54-1; LR 54-14. 12} V. Conclusion 13 IT IS THEREFORE RECOMMENDED that J & J Sports Productions, Inc.’s motion for 14 |) summary judgment be GRANTED in part and DENIED in part. 15 IT IS RECOMMENDED that as to Count I, summary judgment be GRANTED in favor of 16 || plaintiff and against Kosak in the total amount of $38,000. 17 IT IS RECOMMENDED that as to Count II, summary judgment be DENIED. 18 IT IS RECOMMENDED that plaintiff be granted an opportunity to submit its request for 19 || costs and attorneys’ fees within 14 days from entry of judgment. 20 DATED: September 11, 2020. Gx Las BRENDA WEKSLER 22 UNITED STATES MAGISTRATE JUDGE 23 NOTICE 24 This report and recommendation (“R&R’’) is submitted to the United States district judge 25 || assigned to this case under 28 U.S.C. § 636 (b)(1). A party who objects to this R&R may file a 26 || written objection supported by points and authorities within fourteen days of being served with 27 || this R&R. Local Rule IB 3-2(a). Failure to file a timely objection may waive the right to appeal 28 || the district court’s order. Martinez v. YIst, 951 F.2d 1153, 1157 (9th Cir. 1991),