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J & J Sports Productions, Inc. v. Rumors Inc.

United States District Court, D. Maryland

November 21, 2014

J & J SPORTS PRODUCTIONS, INC.,
v.
RUMORS INC. T/A RUMORS BAR & GRILL

MEMORANDUM

CATHERINE C. BLAKE, District Judge.

J & J Sports Productions, Inc. ("J & J") sues Rumors Inc. ("Rumors"), a Baltimore bar and grill, for the unauthorized broadcast of a boxing match in violation of 47 U.S.C. §§ 553, 605 and conversion. After entry of default against Rumors for failure to defend itself, J & J moved for a default judgment, seeking $151, 500 in damages. No hearing is necessary to resolve that motion. See Local Rule 105.5 (D. Md. 2014). For the reasons explained below, J & J's motion will be granted but the damages award will be adjusted downward from the exorbitant figure J & J proposes.

BACKGROUND

J & J is a California corporation that distributes sports programming. ( See Compl. 2-3, ECF No. 1.) It purchased the exclusive television distribution rights to a program featuring a boxing match between Manny Pacquiao and Timothy Bradley for the WBO Welterweight Championship, along with undercard fights and accompanying commentary (the "program"), which aired on June 9, 2012. ( See Compl. 3.) J & J subsequently entered sublicensing agreements with commercial establishments, including establishments in Maryland, authorizing those entities to exhibit the program to their patrons. ( See Compl. 3.) In an affidavit appended to J & J's complaint, a private investigator declared that early in the morning of June 10, 2012, he paid a $5 cover charge to enter Rumors, where he observed the program playing on five televisions in the establishment. ( See Compl., Attach. 1, Osgood Aff. 1, ECF No. 1-1.) The investigator estimated that 87 people were present at that time. ( See Osgood Aff. 2.) According to the rate card for the program, J & J would have charged $2, 200 to exhibit the program publically to 87 people. ( See Mot. Default J., Ex. 4, ECF No. 9-4.) That rate card, as well as J & J's initial licensing agreement, confirm that the program was transmitted via encrypted, closed-circuit television. ( See Mot. Default J., Exs. 4-5, ECF Nos. 9-4, 9-5.)

Although J & J properly served Rumors, ( see Return of Service, ECF No. 5), Rumors never answered the complaint or otherwise defended itself. The clerk accordingly entered a default, as Federal Rule of Civil Procedure 55(a) requires. ( See Order of Default, ECF No. 7.) J & J subsequently moved for a default judgment in its favor.

ANALYSIS

"[D]efault judgment is appropriate when the adversary process has been halted because of an essentially unresponsive party.'" Entrepreneur Media, Inc. v. JMD Entm't Grp., LLC, 958 F.Supp.2d 588, 593 (D. Md. 2013) (quoting SEC v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005)). "Upon default, the well-pled allegations in a complaint as to liability are taken as true, although the allegations as to damages are not." Lawbaugh, 359 F.Supp.2d at 422; see also Fed.R.Civ.P. 8(b)(6). But "[t]he defendant is not held... to admit conclusions of law.'... The court must, therefore, determine whether the well-pleaded allegations in [the] complaint support the relief sought...." Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (first omission in original) (quoting Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)).

I. Liability

J & J seeks to enforce both "sections 605 and 553 of 47 U.S.C., which are provisions of the Federal Cable Act that address different modalities of so-called cable theft.'" J & J Sports Prods., Inc. v. MayrealII, LLC, 849 F.Supp.2d 586, 588 (D. Md. 2012). Section 553 prohibits the unauthorized interception or receipt of certain cable communications, 47 U.S.C. § 553(a), while section 605 proscribes the unauthorized interception or receipt of certain "radio" communications, 47 U.S.C. § 605(a), including at least "digital satellite television transmissions, " MayrealII, 849 F.Supp.2d at 588 n.3.[1] In its complaint, J & J does not specify how Rumors intercepted the program. That omission is not fatal. "The complaint need not specify the precise method of interception, as pleading in the alternative is permitted...." Joe Hand Promotions, Inc. v. Md. Food & Entm't, LLC, Civil No. CCB-11-3272, 2012 WL 5879127, at *4 (D. Md. Nov. 19, 2012). Instead, it need only allege, as it does here, that a business entity "intercepted and displayed the Program at its establishment, without authorization from [J & J], on a particular date and at a particular time." Id. Taking those factual allegations as true, the court is satisfied J & J has established a violation of either section 553 or section 605.

J & J cannot, however, recover under both section 553 and section 605. To hold otherwise would violate the maxim that "courts can and should preclude double recovery...." EEOC v. Waffle House, Inc., 534 U.S. 279, 297 (2002) (quoting Gen. Tel. Co. of the Nw., Inc v. EEOC, 446 U.S. 318, 333 (1980)). Accordingly, as J & J acknowledges, ( see Mem. Supp. Mot. Default J. 5, ECF No. 9-2), "courts in this district consistently have held that a plaintiff cannot recover under both statutes for the same conduct, " J & J Sports Prods., Inc. v. Panana, LLC, Civil No. WDQ-14-2047, 2014 WL 5454323, at *2 (D. Md. Oct. 24, 2014) (magistrate judge's report and recommendation) (collecting cases). Instead, courts entering default judgment in identical situations permit recovery under section 605 alone, on the ground that it authorizes a greater award than section 553. Id.

This prohibition against double recovery also precludes J & J's conversion claim. See, e.g., J & J Sports Prods., Inc. v. Royster, Civil No. RWT-11-1597, 2014 WL 992779, at *3 (D. Md. Mar. 13, 2014). Even were it otherwise, J & J's conversion claim would fail for the alternative reason that its initial complaint does not state sufficient facts to sustain judgments even when those facts are admitted to be true. Historically, the common law tort of conversion protected only tangible property. See UBS Fin. Servs. Inc. v. Thompson, 94 A.3d 176, 185 (Md. 2014). Although Maryland courts later recognized conversion of "intangible property rights that are merged or incorporated into a transferable document, " they "refuse... to extend the tort further, to cover situations in which the relevant document itself has not been transferred." Id. (quoting Allied Inv. Corp. v. Jasen, 731 A.2d 957, 965 (Md. 1999)). Even if intangible property such as a television program transmitted via satellite or cable could be converted under Maryland law, J & J's complaint contains no allegation that tangible documents evidencing its property interest in the program were transferred to Rumors. See Joe Hand Promotions, 2012 WL 5879127, at *4. Rumors could not, by its default, admit facts never alleged in the complaint, which leaves an inadequate basis for judgment on the conversion claim.

II. Damages

J & J seeks statutory damages under 47 U.S.C. § 605(e)(3)(C)(i)(II). That provision entitles [J & J] to an award "as the court considers just, " between a range of $1, 000 to $10, 000 for each unauthorized reception and publication of a radio communication by [Rumors] in violation of section 605(a). Courts in this Circuit have used two different approaches to exercising [their] discretion in awarding damages under § 605(e)(3)(c)(i)(II). The first approach has two variations. This approach involves multiplying a certain amount by either the number of patrons observed in the defendant's establishment at the time the program was shown or by the maximum occupancy of the establishment. The first variation seeks to approximate the defendant's profits or the plaintiff's lost earnings assuming each patron would have ordered the event for residential viewing. The second variation seeks to award the license fee the defendant would have paid if it had legally purchased the event for exhibition. The other approach to calculating damages is to award a flat sum per violation.

J & J Sports Prods., Inc. v. Quattrocche, Civil No. WMN-09-3420, 2010 WL 2302353, at *2 (D. Md. June 7, 2010) (internal citations omitted). "Courts generally apply this [latter, flat-sum] approach when defendants have had repeat violations over an extended period of time." J & J Sports Prods., Inc. v. Waters, ...


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