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J & J Sports Productions, Inc v. Domingo Tellez

December 20, 2011

J & J SPORTS PRODUCTIONS, INC., PLAINTIFF,
v.
DOMINGO TELLEZ, INDIVIDUALLY, AND AS OFFICER, DIRECTOR, SHAREHOLDER, AND/OR PRINCIPAL OF TULCINGO CAFE CORP., D/B/A TULCINGO CAFE BAR, A/K/A TULCINGO CAFE, A/K/A EL TULCINGO CAFE AND TULCINGO CAFE CORP., D/B/A TULCINGO CAFE BAR, A/K/A TULCINGO CAFE, A/K/A EL TULCINGO CAFE DEFENDANTS.



The opinion of the court was delivered by: Gold, S., U.S.M.J.:

Memorandum & Order

INTRODUCTION

Plaintiff J & J Sports Productions, Inc. alleges that defendants Tulcingo Cafe Corporation, d/b/a Tulcingo Cafe Bar, a/k/a Tulcingo Cafe, a/k/a El Tulcingo Cafe ("Tulcingo") and Domingo Tellez unlawfully intercepted and exhibited the Pacquaio/Margarito boxing match ("the event") on November 13, 2010 in violation of the Federal Communications Act of 1934 ("FCA"), codified as amended, 47 U.S.C. §§ 553 and 605.*fn1 Compl. ¶¶ 16-33, Docket Entry 1. Tulcingo is an inactive corporation, dissolved as of February 5, 2009, almost two years before the event was shown. See New York State, Department of State, Division of Corporations, http://appext9.dos.state.ny.us/corp_public/corpsearch.entity_search_entry. Tellez is alleged to be an "officer, director, shareholder, and/or principal" of Tulcingo. Compl. ¶ 8. Upon plaintiff's application and defendants' failure to appear or otherwise defend in this action, the Clerk of Court entered the default of defendants. Docket Entry 9. The plaintiff further moved for a default judgment on August 24, 2011. Docket Entry 8. On consent of the plaintiff under 28 U.S.C. § 636(c) and pursuant to Chief District Judge Carol Bagley Amon's November 17, 2011 Order, the case has been reassigned to me for all purposes. Docket Entry 15. For the reasons stated below, I find that plaintiff is entitled to default judgment.

DISCUSSION

a.Liability

Once a default judgment is entered, a defendant is deemed to have admitted all of the well-pleaded allegations in the complaint pertaining to liability. See Greyhound Exhibitgroup, Inc., v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Montcalm Pub. Corp. v. Ryan, 807 F. Supp. 975, 977 (S.D.N.Y. 1992). "Nevertheless, it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit conclusions of law." See Labarbera v. ASTC Labs., Inc., 752 F. Supp. 2d 263, 270 (E.D.N.Y. 2010) (internal quotation marks omitted). See also Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981) (recognizing the court's authority, even after default, to determine whether plaintiff has stated a cause of action).

Section 605(a) provides that "[n]o person not being authorized by the sender shall intercept any radio communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to any person." 47 U.S.C. § 605(a). In the Second Circuit, section 605(a), which by its express terms prohibits unauthorized interception of interstate wire communications, has been held applicable to thefts of cable communications, provided that the cable programming originated as a radio or satellite communication. Cmty. Television Sys. Inc. v. Caruso, 284 F.3d 430, 435 (2d Cir. 2002); Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996). Cf. TKR Cable Co. v. Cable City Corp., 267 F.3d 196, 207 (3d Cir. 2001) (holding that § 605 applies only to theft of satellite broadcasts intercepted prior to distribution over a cable system).

i. Liability of the corporate defendant

As noted above, defendant Tulcingo was dissolved before the broadcast at issue in this case. A dissolved corporation may be held liable for actions taken before its dissolution, but may only be held liable for post-dissolution acts in limited circumstances. See N.Y. BUS. CORP. §

1006(b) (providing that the "dissolution of a corporation shall not affect any remedy available to or against such corporation, its directors, officers or shareholders for any right or claim existing or any liability incurred before such dissolution" (emphasis added)). Specifically, dissolved corporations may be the subject of suits for post-dissolution actions where they remain a de facto corporation. See Bruce Supply Corp. v. New Wave Mech., Inc., 773 N.Y.S.2d 408, 410 (2d Dep't 2004) (noting that a "corporation may be held liable on a cause of action that accrues after dissolution if the corporation continued its operations, operated its premises, and held itself out as a de facto corporation, notwithstanding its dissolution") (internal citations omitted); Ludlum Corp. Pension Plan Trust v. Matty's Superservice, 548 N.Y.S.2d 292, 293 (2d Dep't 1989) (defining a de facto corporation as one "where a corporate term of existence has expired but the corporation carries on its affairs and exercises corporate powers as before"); see also GMA Accessories, Inc. v. Elec. Wonderland, Inc., 2011 WL 5155202, at *1 (S.D.N.Y. Oct. 13, 2011) (finding liability for actions taken after dissolution in a default case); Briarpath Ltd. L.P. v. Thomas, 265 F. Supp. 2d 219, 223 (S.D.N.Y. 2003) (finding that, where a former corporation continued to act 10 years after dissolving, its "dissolution [did] not insulate it from liability"). But cf. Linzer v. EMI Blackwood Music, Inc., 904 F. Supp. 207, 213 (S.D.N.Y. 1995) (finding that the Court did not have jurisdiction over a dissolved corporation where "the allegations . . . involve[d] actions taken subsequent to its dissolution").

Tulcingo may be held liable for any violations of Section 605 on November 13, 2010, despite the fact that it was dissolved in February of 2009. Plaintiff claims that Tulcingo continued to act as a de facto corporation more than a year after its dissolution, stating in its supplemental memorandum that the defendant establishment was "open for business and operating as a restaurant/bar" in November, 2010 and that Tulcingo's liquor license remains valid today. Pl. Supp. Mem. at 2-3, Docket Entry 14. This contention is supported by the affidavit of J & J Sports' auditor that 85 people were present in the bar, watching the fight on a television "right above the bar near the rear of the establishment." Ex. C., Docket Entry 8-1. Given the plaintiff's allegations that Tulcingo continued to function as a bar and represented itself as a corporation to the New York State Liquor Authority, it appears that it was a de facto corporation at the time of the fight and that it may be held liable for any unauthorized broadcasts under the Cable Act despite its dissolution. See Bruce Supply Corp., 773 N.Y.S.2d at 410.

The plaintiff has also sufficiently pled the factual allegations establishing that Tulcingo violated Section 605(a). J & J Sports has demonstrated that it held rights to distribute the event in question on November 13, 2010. Compl. ¶ 17; Affidavit of J & J Sports' President, Joseph Gagliardi ("Gagliardi Aff."), Docket Entry 8, ¶ 3 and Ex. A. The fight was broadcast "via closed circuit television and via encrypted television signal." Compl. ¶ 17. The defendants did not obtain authorized access to the event through the plaintiff. Id. ¶ 21; Gagliardi Aff., Ex. B. The plaintiff further asserts that an auditor it hired to visit businesses not authorized by plaintiff to show the fight observed the event being shown in Tulcingo to approximately 85 people. Gagliardi Aff. ¶ 5-7; id., Ex. C. Given the encryption and other methods of protecting the broadcast, the plaintiff asserts that, although it cannot determine the precise means by which the defendants intercepted the broadcast, the event must have been unlawfully obtained.*fn2 Compl. ¶ 21. Given the defendants' default and the resulting duty of this Court to take all of the plaintiff's well-pleaded allegations as true, plaintiff has adequately demonstrated that the defendant business, Tulcingo, violated 47 U.S.C. § 605(a).

ii. Liability of the individual defendant

Plaintiff has also alleged that Mr. Tellez is individually liable for the violations of the FCA at Tulcingo. Compl. ΒΆ 8-11. Establishing individual liability under Section 605(a) requires a showing either of "contributory infringement," which arises when the individual "authorize[d] the violations," or "vicarious liability," which arises when the individual "had a right and ability to supervise the infringing activities and had an obvious and direct financial interest in the exploitation of [the] copyrighted materials." J & J Sports Prods. v. LDG Williams, LLC, 2011 WL 5402031,at *5-6 (E.D.N.Y. Nov. 7, 2011) (citing Kingvision Pay-Per-View Ltd. v. Olivares, 2004 WL 744226, at *5 (S.D.N.Y. Apr. 5, 2004) (internal quotation marks omitted)). Courts have found, in default cases, that an allegation that the individual in question had the "supervisory capacity and control over activities occurring within the Establishment" on the relevant date was sufficient to establish individual liability. See also J & J Sports Prods., Inc. v. Shafik, 2011 WL 1240559, at *2 (E.D.N.Y. Feb. 11, 2011) (finding individual liability where the plaintiff alleged that the individual "supervised and controlled the operating procedures of [the business] . . . and received a financial gain from the operation of [the] establishment"). By contrast, simple allegations of ownership of the establishment without more are generally not sufficient to establish individual liability. See J & J Sports Prods., Inc. v. 291 Bar & Lounge, 648 F. Supp. 2d 469, 473 (E.D.N.Y. ...


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