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J&J Sports Production, Inc. v. Niyakan

United States District Court, W.D. Texas, San Antonio Division

January 9, 2018




         To the Honorable Senior United States District Judge David A. Ezra:

         This Report and Recommendation concerns the Motion for Final Default Judgment filed by Plaintiff J&J Sports Productions Inc. (“J&J Sports”). See Dkt. No. 7. This motion has been referred to the undersigned for report and recommendation pursuant to Federal Rule of Civil Procedure 72 and Rules CV-72 and 1(c) & (d) to Appendix C of the Local Rules for the United States District Court for the Western District of Texas.[1] Plaintiff's lawsuit arises under the Federal Communications Act of 1934, as amended, 47 U.S.C. §§ 553, 605 (the “FCA”), and therefore the District Court has federal question jurisdiction over this action, see 28 U.S.C. § 1331. The undersigned has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For the reasons set forth below, the undersigned recommends that the Motion for Final Default Judgment, Dkt. No. 7, be GRANTED IN PART as specified herein.

         I. Background

         J&J Sports alleges in its Complaint that Defendant Ebrahim Reza Niyakan, a/k/a Ebrahim Reza Niyakan, Jr., individually, and d/b/a Bottoms Up Sports Bar & Grill a/k/a Bottoms Up Sports Bar (“Niyakan”) illegally intercepted and exhibited at Bottoms Up Sports Bar the closed-circuit telecast of the October 12, 2013 Timothy Bradley v. Juan Manual Marquez WBO Welterweight Championship Fight Program. See Dkt. No. 1. J&J Sports properly served Niyakan with its Complaint on November 7, 2016. Service was returned executed on November 9, 2017. See Dkt. No. 5. Niyakan did not answer or file any other responsive pleading within the time required, and he still has not filed a responsive pleading as of the date of this order. See Fed.R.Civ.P. 12(a)(1)(A). On August 17, 2017, J&J Sports requested entry of default, see Dkt. No. 6, and the Clerk complied later that day with an entry of default on the docket. See Dkt. No. 8.

         J&J Sports now seeks a final default judgment on its claim under § 605 of the FCA. Although J&J Sports cites FCA § 553 in its Complaint, it does so in the context of raising a claim for relief under whichever of either § 605 or § 553 properly applies, but not both. It is clear that only § 605 could apply here because § 605 applies to the unauthorized interception of signals through radio or satellite, but not cable, communications. See J&J Sports Prods., Inc. v. Mandell Family Ventures, L.L. C., 751 F.3d 346, 351 (5th Cir. 2014). Section 553 applies in the opposite scenario, which is not at issue here. See Dkt. No. 7 (“The transmission of the Event originated via satellite.”). The undersigned, therefore, construes the present motion seeking entry of a final default judgment as confirming that J&J Sports only raises a claim for relief under § 605.

         As part of the requested default judgment, J&J Sports also seeks an award of:

(1) statutory damages in the amount of $10, 000, see 47 U.S.C. § 605(e)(3)(C)(i)(II);
(2) additional damages in the amount of $50, 000 for Niyakan's alleged willful acts, see 47 U.S.C. § 605(e)(3)(C)(ii); (3) attorneys' fees in the amount of one-third of J&J Sports' total recovery or, in the alternative, a lodestar award of $1, 000; and (4) costs and post-judgment interest.

         II. Analysis

         Default. Niyakan failed to answer or otherwise defend against J&J Sports' claims, as demonstrated by the affidavit of J&J Sports' attorney David M. Diaz, which is included with J&J Sports' motion for entry of default. See Dkt. No. 6, Ex. A. Diaz also includes a sworn statement with affidavit, explaining that “Defendant is not believed to be a minor, incompetent or on active duty in the military service of the United States of America.” See 50 U.S.C. § 3931(b)(1); Fed.R.Civ.P. 55(b)(2). The rules provide that “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). Accordingly, the Clerk properly entered default.

         Default Judgment. Once default has been entered, and upon a party's motion, a court may enter a default judgment. Fed.R.Civ.P. 55(b); N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). “[A] party, ” however, “is not entitled to a default judgment as a matter of right, even where the defendant is technically in default.” Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (quotation marks omitted). Rather, “[t]here must be a sufficient basis in the pleadings for the judgment entered.” Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). In considering whether such a basis is presented, a court accepts as true the complaint's well-pleaded factual allegations-except regarding damages-and must determine whether those pleaded facts state a claim upon which relief may be granted. See id.; see also United States ex rel. M-Co. Constr., Inc. v. Shipco Gen., Inc., 814 F.2d 1011, 1014 (5th Cir. 1987). Accordingly, J&J Sports will be entitled to a default judgment if facts alleged in the Complaint state a claim upon which relief may be granted. They do.

         Section 605 of the FCA prohibits an unauthorized person from “receiv[ing] or assist[ing] in receiving any interstate or foreign communication by radio and us[ing] such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto.” 47 U.S.C. § 605(a). Section 605 further prohibits anyone unlawfully receiving such communications from divulging or publishing the information or transmission. Id. The FCA affords a private right of action to “[a]ny person aggrieved by any violation of” the Act. 47 U.S.C. § 605(e)(3)(A). Further, “[t]he FCA is a strict liability statute, and the plaintiff is required only to prove the unauthorized exhibition of the intercepted transmission.” Joe Hand Promotions, Inc. v. Macias, No. H-11-1773, 2012 WL 950157, at *2 (S.D. Tex. Mar. 19, 2012). Thus, to state a claim for a violation under § 605(a), a plaintiff must allege that the defendant “intercepted or otherwise unlawfully appropriated [the plaintiff's] transmission” or that the defendant exhibited an intercepted transmission without authorization. DIRECTV Inc. v. Robson, 420 F.3d 532, 537 (5th Cir. 2005).

         J&J Sports alleges in its Complaint that it is the “license company exclusively authorized to sublicense the closed-circuit telecast” of the Bradley-Marquez Championship Fight in Texas and that the fight could only be exhibited in a Texas commercial establishment if contractually authorized by J&J Sports. Dkt. No. 1 ¶¶ 5-6. J&J Sports further alleges that, pursuant to its authority to sublicense the fight, it “contracted with various establishments throughout Texas and granted such establishments the right to broadcast the [fight] in exchange for a fee.” Id. ¶ 7. Defendant Niyakan did not contract with J&J Sports or any of its agents to obtain the rights to broadcast the fight. Id. ¶ 9. J&J Sports further alleges in the Complaint that transmission of the fight “originated via satellite and was electronically coded or ‘scrambled'” such that “[i]n order for the signal to be received and telecast clearly, it had to be decoded with electronic decoding equipment.” Id. ¶ 8. Only establishments that contracted with J&J Sports were provided the capability for receiving and decoding the signal. Id. ΒΆ 10. Finally, according ...

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