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J & J Sports Productions, Inc. v. Big Daddy's Theme Palace, Inc.

United States District Court, E.D. New York

December 12, 2014

J & J SPORTS PRODUCTIONS, INC., Plaintiff,
v.
BIG DADDY'S THEME PALACE, INC. d/b/a, CLUB 632 and GAETANA LISANTI, Defendants

For Plaintiff: Paul J. Hooten, Esq., The Law Firm of Paul J. Hooten & Associates, Mount Sinai, New York.

REPORT AND RECOMMENDATION

JOAN M. AZRACK, UNITED STATES MAGISTRATE JUDGE.

On May 2, 2014, J & J Sports Productions, Inc. (" plaintiff"), filed suit against Big Daddy's Theme Palace, Inc. d/b/a Club 632 (" Big Daddy's") and Gaetana Lisanti (" Lisanti" and collectively with Big Daddy's, the " defendants") alleging violations of the Federal Communications Act of 1934, as amended, 47 U.S.C. § § 553 and 605. Big Daddy's was properly served on May 19, 2014, (Aff. of Service, ECF No. 4), and Lisanti was properly served on May 28, 2014, (Aff. of Service, ECF No. 5). On June 27, 2014, the Clerk of the Court issued a certificate of default for both defendants. (ECF No. 8.)

Plaintiff now moves for a default judgment against defendants pursuant to Fed.R.Civ.P. 55(b). (Mot. for Default, ECF No. 9.) The Honorable John Gleeson referred plaintiff's motion to me for a report and recommendation. (July 9, 2014 Order.) For the reasons that follow, I respectfully recommend that the Court grant plaintiff's motion and enter a default judgment against defendants in the amount of $15, 236.50, comprised of $4, 945.50 in statutory damages, $9, 891.00 in enhanced damages, and $400.00 in costs.

I. BACKGROUND

According to the complaint, plaintiff entered into a closed-circuit television licensing agreement to broadcast the May 5, 2012, WBA World Light Middleweight Championship Fight and preliminary bouts (collectively the " event") at locations throughout the New York region. (Compl. ¶ 7, ECF No. 1.) The purpose of the agreement was to allow plaintiff to distribute the event to various business establishments in exchange for a fee. (Id. ¶ ¶ 8, 10.) Pursuant to the licensing agreement, the event could only be shown in a commercial establishment if said establishment was contractually authorized by plaintiff to show the event. (Id. ¶ 9.) When an establishment contracted with plaintiff to exhibit the event, plaintiff would provide the establishment with electronic decoding equipment and information for it to receive and decode the scrambled transmission. (Id. ¶ ¶ 11-13.)

Lisanti is the principal of Big Daddy's, a bar located on Midland Avenue in Staten Island, New York. (Id. ¶ 5.) Lisanti had the " right and ability to supervise the infringing activities" on the night of the event. (Id.) Big Daddy's did not contract with plaintiff to obtain the rights to exhibit the event. (Id. ¶ 18.) Plaintiff's investigator, Robert Taylor (" Taylor"), observed the event being televised on May 6, 2012, at 12:23 A.M., at Big Daddy's.[1] (Aff. of Robert Taylor (" Taylor Aff.") at 1, Pl.'s Mem. in Supp. for J. by Default (" Pl.'s Mem.") Ex. A., ECF No. 11.) After observing the event, Taylor prepared an affidavit detailing his findings. According to Taylor, there were a maximum of 90 patrons in the bar observing the event. (Taylor Aff. at 1.) Plaintiff alleges that defendants willfully intercepted and assisted in receipt of the event, enabling the patrons of Big Daddy's to view the event, and that defendants did so for their own financial gain and commercial advantage. (Compl. ¶ ¶ 14-16.)

II. DISCUSSION

A. Liability

A default amounts to an admission of liability, and all well-pleaded allegations in the complaint pertaining to liability are deemed true. See Greyhound Exhibit Grp., Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Lyons P'ship, L.P. v. D & L Amusement & Entm't, Inc., 702 F.Supp.2d 104, 109 (E.D.N.Y. 2010). However, the court must, nonetheless, determine whether the allegations establish, as a matter of law, the non-moving party's liability. See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (citing Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981)).

Here, plaintiff alleges that Lisanti and Big Daddy's violated 47 U.S.C. § § 553 and 605, and plaintiff seeks damages under both statutes. However, " when a defendant's conduct has violated both sections 553 and 605, an aggrieved cable operator is 'entitled to only one, non-duplicative recovery.'" J & J Sports Prods., Inc. v. Alvarez, No. 02-CV-5173, 2009 WL 3096074, at *4 (S.D.N.Y. Sept. 25, 2009) (quoting J & J Sports Prods., Inc. v. Dehavalen, No. 06-CV-1699, 2007 WL 294101, at *1 (S.D.N.Y. Jan. 30, 2007)). Where a defendant's liability can be established pursuant to both sections 553 and 605, " the court should award damages pursuant to Section 605." Innovative Sports Mtkg., Inc. v. Aquarius Fuente De Soda, No. 07-CV-2561, 2009 WL 3173968, at *5 (E.D.N.Y. Sept. 30, 2009); see also Joe Hand Promotions, Inc. v. Elmore, No. 11-CV-3761, 2013 WL 2352855, at *4 (E.D.N.Y. May 29, 2013); J & J Sports Prods., Inc. v. 291 Bar & Lounge, LLC, 648 F.Supp.2d 469, 472 (E.D.N.Y. 2009); Time Warner Cable of New York City v. Barnes, 13 F.Supp.2d 543, 548 (S.D.N.Y. 1998).

Section 605(a) of the Communications Act prohibits the unauthorized interception of satellite communications. See Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996). Courts in the Eastern District " have held that where . . . at least part of the [e]vent's transmission was produced by satellite, the defendant's interception of the [e]vent violates [§ 605(a)]." Traffic Sports USA v. La Camisa Negra Restaurant and Bar Corp., No. 11-CV-1475, 2012 WL 3064129, at *2 (E.D.N.Y. May 23, 2012) (Ross, J., adopting report and recommendation of Mann, M.J.) (collecting cases).

1. Liability of Big Daddy's

The complaint alleges that defendants willfully intercepted and received the event and then " transmitted, divulged, and published" the event to patrons of Big Daddy's. (Compl. ¶ 14.) The complaint does not allege that defendants intercepted a satellite signal, but the complaint does allege that electronic decoding equipment and satellite coordinates were necessary to receive the signal for the event. (Compl. ¶ ¶ 11, 13.) This allegation is sufficient to establish that Big Daddy's is liable under Section 605. See J & J Sports Prods., Inc. v. Onyx Dreams Inc., No. 12-CV-5355, 2013 WL 6192546, at *4 (E.D.N.Y. Nov. 26, 2013); 291 Bar & Lounge, LLC, 648 F.Supp.2d at 473.

2. Liability of Lisanti

Plaintiff alleges that Lisanti is individually liable for violating 47 U.S.C. § § 553 and 605. " [I]ndividual liability under the Cable Act requires that the individual authorize the underlying violations." 291 Bar & Lounge, LLC, 648 F.Supp.2d at 473. " Put differently, the complaint must establish that the individual had a 'right and ability to supervise' the violations, as well as an obvious and direct financial interest in the misconduct." Id. (citing Softel, Inc., v. Dragon Med. & Scientific Commc'ns, Inc., 118 F.3d 955, 971 (2d Cir. 1997)).

The complaint alleges that Lisanti was the principal, officer, director, and/or shareholder of Big Daddy's; that he had the right and ability to supervise the events on the night of May 5, 2012; and that he had an " obvious and direct financial interest" in broadcasting the event. (Compl. ¶ ¶ 5, 15, 32.) Therefore, Lisanti is individually liable. See J& J Sports Prods. v. Benson, No. 06-CV-1119, 2007 WL 951872, at *7 (E.D.N.Y. Mar. 27, 2007).

Accordingly, I respectfully recommend that Lisanti and Big Daddy's be held jointly and severally liable for the violation of 47 U.S.C. § 605(a).

B. Damages

Although all well-pleaded allegations pertaining to liability are accepted as true on a default, the same is not true for damages. See Finkel, 577 F.3d at 83 n.6. The burden is on the plaintiff to establish, by a reasonable certainty, their entitlement to the relief requested. See Greyhound, 973 F.2d at 158. To determine damages, the court may conduct an inquest, see Fed.R.Civ.P. 55(b)(2), or may rely upon affidavits and other documentary evidence provided by plaintiffs, obviating the need for a hearing on damages. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Co., 109 F.3d 105, 111 (2d Cir. 1997) (" We have held that, under Rule 55(b)(2), it [is] not necessary for the District Court to hold a hearing, as long as it ensure[s] that there [is] a basis for the damages specified in the default judgment.").

Plaintiff is seeking: (1) statutory damages pursuant to 47 U.S.C. § 605(e)(3)(C)(i)(II); (2) enhanced damages pursuant to 47 U.S.C. § § 605(e)(3)(C)(i)(II) and 605(e)(3)(C)(ii); (3) prejudgment interest at a rate of nine percent per annum beginning from May 5, 2012; and (4) costs pursuant to 47 U.S.C. § 605(e)(3)(B)(iii). (Pl.'s Mem. at 1-18, ECF No. 11.) Although plaintiff originally sought attorney's fees, (Compl. ¶ ¶ 40-43), plaintiff is no longer seeking to recover those fees, (Pl.'s Mem. at 18).

1. Statutory Damages

Section 605(e)(3)(C)(i) entitles plaintiff to recover either statutory damages or actual damages. Plaintiff has expressed a preference for statutory damages. (Affirm. of Paul Hooten (" Hooten Affirm.") ¶ 14, ECF No. 10.) Statutory damages may be awarded " for each violation of subsection (a) of this section involved in the action in a sum of not less than $1, 000 or more than $10, 000, as the court considers just." 47 U.S.C. § 605(e)(3)(C)(i)(II). Most courts have treated " the showing of any event on a single night as one violation" for purposes of the statute. J & J Sports Prods., Inc. v. Potions Bar & Lounge, Inc., No. 08-CV-1825, 2009 WL 763624, at *5 (E.D.N.Y. Mar. 23, 2009).

There are two methods for determining statutory damages. First, the court may award " a flat amount based on the licensing fee defendants would have paid to show the [e]vent legally . . . ." Joe Hand Promotions, Inc. v. Soviero, No. 11-CV-1215, 2012 WL 3779224, at *7 (E.D.N.Y. July 31, 2012) (Garaufis, J., adopting report and recommendation of Pollak, M.J.). Second, the court may award damages by multiplying the number of patrons present during the event by a set amount, typically the amount each individual would have had to pay to see the event at home on a pay-per-view channel. See generally Onyx Dreams, Inc., 2013 WL 6192546, at *5. Courts typically award damages under one of these two approaches, but not both. J & J Sports Prods., Inc. v. La Ruleta, Inc., No. 11-CV-4422, 2012 WL 3764062, at *4 (E.D.N.Y. Aug. 7, 2012); Soviero, 2012 WL 3779224, at *7; J & J Sports Prods., Inc. v. Tellez, No. 11-CV-2823, 2011 WL 6371521, at *5 (E.D.N.Y. Dec. 20, 2011). I will calculate damages under both approaches and recommend an award of the higher of the two. See J & J Sports Prods., Inc. v. Chulitas Enter. Corp., No. 12-CV-3177, 2014 WL 917262, at *5 (E.D.N.Y. Mar. 10, 2014).

Under the first approach, plaintiff would have charged Big Daddy's a licensing fee of, at most, $4, 200.00 to exhibit the event legally. (See Hooten Affirm. ¶ 18; Aff. of Joseph M. Gagliardi (" Gagliardi Aff.") ¶ 8, Pl.'s Mem. Ex. B, ECF No. 11; Pl.'s Mem. Ex. 1.) Under the second approach, plaintiff asserts that if the 90 patrons present had each purchased the event on pay-per-view, they collectively would have paid approximately $4, 945.50. (Hooten Affirm. ¶ 19.) Although plaintiff does not present any evidence of the current fee for non-commercial customers, dividing $4, 945.50 by 90 results in a per-patron cost of $54.95, which is the pay-per-view price most courts apply. See Chulitas, 2014 WL 917262, at *5 n.2; Onyx, 2013 WL 6192546, at *5; Tellez, 2011 WL 6371521, at *5. Based on the foregoing, I respectfully recommend that the Court award statutory damages of the greater of the two amounts--$4, 945.50.

Plaintiff also seeks $2, 000 for its " loss of goodwill, reputation, and future revenue." (Pl. Mem. at 13; Hooten Affirm. ¶ 21.) Plaintiff, however, has not provided any legal authority for this separate award. Therefore, I decline to recommend an award of this amount. I will, however, consider this contention in conjunction with plaintiff's request for enhanced damages, discussed below.

Finally, plaintiff further requests that the cover charge Big Daddy's collected from patrons be included in the statutory damages calculation. (Pl.'s Mem. at 10-11.) I decline to do so because the cover charge will be taken into account when calculating enhanced damages. To count the cover charge twice would be duplicative.

2. Enhanced Damages

Plaintiff also seeks enhanced damages because defendants' actions were willful. (Pl.'s Mem. at 14.) Willfulness means " disregard for the governing statute and an indifference to its requirements." Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 127, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985); accord Premium Sports, Inc. v. Alzate, No. 10-CV-1982, 2011 WL 1240558, at *8 (E.D.N.Y. Feb. 25, 2011). Plaintiff correctly notes that the intercepting and broadcasting of the event, without authorization, is a deliberate act, and therefore establishes willfulness. J & J Sports Prods., Inc. v. Welch, No. 10-CV-0159, 2010 WL 4683744, at *4 (E.D.N.Y. Nov. 10, 2010) (citing Time Warner Cable of New York City v. Taco Rapido Rest., 988 F.Supp. 107, 111 (E.D.N.Y. 1997)). Therefore, based on the foregoing, defendants' conduct was willful.

To determine whether willful conduct warrants an award of enhanced damages, courts typically consider, inter alia, " whether there is evidence of (i) repeated violations; (ii) significant actual damages suffered by the plaintiff; (iii) substantial unlawful monetary gains by defendant; (iv) defendant's advertising of the event; and (v) defendant's collection of a cover charge or premiums for food and drinks." Chulitas, 2014 WL 917262, at *5 (quoting J & J Sports Prods., Inc. v. Hot Shots, Inc., No. 09-CV-1884, 2010 WL 3522809, at *2 (E.D.N.Y. Apr. 27, 2010)); Onyx, 2013 WL 6192546, at *7 (applying same factors); Welch, 2010 WL 4683744, at *4 (same).

Plaintiff provides evidence that defendants collected a cover charge of $10.00, (Taylor Aff. at 1), which, when combined with defendants' willful interception and transmission of the event, supports an award of enhanced damages. Furthermore, plaintiff's claim of damage to its reputation and goodwill also supports an award of enhanced damages. See Traffic Sports USA, 2012 WL 3064129, at *5. Based on the foregoing, plaintiff is entitled to enhanced damages.

Typically, the appropriate amount of enhanced damages is a multiple of the basic statutory damages award. See Elmore, 2013 WL 2352855, at *8. In this district, recent court opinions examining this issue have decided that double the statutory damages is the appropriate award for enhanced damages. Chulitas, 2014 WL 917262, at *6; Onyx, 2013 WL 6192546, at *7; La Camisa Negra, 2012 WL 3064129, at *6. I agree and respectfully recommend that the Court award plaintiff enhanced damages of $9, 891, which is two times the statutory damages. This award is sufficient to compensate plaintiff for its loss of reputation and goodwill. See Chulitas, 2014 WL 917262, at *6-7.

3. Costs and Prejudgment Interest

Section 605(e)(3)(B)(iii) requires the court to " direct the recovery of full costs, including reasonable attorneys' fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii). Plaintiff seeks $520.00 in costs, consisting of $400.00 for the filing fee and $120.00 dollars for process server fees. (See Mot. for Default J., Aff. for J., ECF No. 9.) I will take judicial notice of the $400.00 filing fee in the Eastern District of New York and recommend an award of that amount. Plaintiff, however, has failed to submit adequate documentary evidence in support of its request for $120.00 in service costs. See Li Ping Fu v. Pop Art Int'l Inc., No. 10-CV-8562, 2011 WL 4552436, at *5 (S.D.N.Y. Sept. 19, 2011) (" The Court takes judicial notice of the Court's own filing fee amount, but plaintiff has not provided supporting documentation as to the service costs and therefore that amount is not recoverable.") (Cote, J., adopting in relevant part the report and recommendation of Peck, M.J.).

Plaintiff also requests prejudgment interest. Most courts in this district that have addressed this issue have declined to award prejudgment interest, reasoning that " [s]tatutory damages under the Communications Act are analogous to punitive damages in that they are designed to deter others from similar infringing activity." La Ruleta, 2012 WL 3764062, at *5 (quoting Hot Shots Inc., 2010 WL 3522809, at *2); see also Chulitas, 2014 WL 917262, at *6; Onyx, 2013 WL 6192546, at *7. I see no reason to depart from this precedent and recommend that the Court deny plaintiff's request for prejudgment interest.

III. CONCLUSION

For the reasons stated herein, I respectfully recommend that the Court enter default judgment against Big Daddy's and Lisanti, jointly and severally, in the total amount of $15, 236.50, comprised of $4, 945.50 in statutory damages, $9, 891.00 in enhanced damages, and $400.00 in costs.

Plaintiff is directed to serve a copy of this report and recommendation on each of the defendants and to promptly file proof of service by ECF. Any objections to this report and recommendation must be filed with the Clerk of the Court, with a copy to the undersigned, within fourteen (14) days of receipt of this report. Failure to file objections within the specified time waives the right to appeal the District Court's order. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 72.

SO ORDERED.


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