Court: District Court, S.D. Texas; March 26, 2014; Federal District Court
The court addresses a motion for partial summary judgment in an anti-piracy action under the Federal Communications Act, where Plaintiff Joe Hand Promotions, Inc. accuses multiple defendants associated with Bronx Grill of illegally intercepting and exhibiting a closed-circuit telecast of the Ultimate Fighting Championship 103 event without authorization or payment of licensing fees. Under Federal Rule of Civil Procedure 56(c), summary judgment is granted when there is no genuine issue of material fact, meaning the evidence, when viewed favorably to the nonmovant, supports the moving party's claim as a matter of law. The burden initially lies with the movant to identify evidence showing the absence of a genuine issue, while the nonmovant must then present competent evidence supporting its claims and demonstrating genuine factual disputes. Conclusory allegations or unsupported assertions are insufficient to prevent summary judgment; there must be specific factual evidence to substantiate claims. A minimal factual dispute does not negate a properly supported summary judgment motion, and the evidence must be substantial enough to allow a reasonable jury to find in favor of the plaintiff.
The Fifth Circuit mandates that a nonmovant must present substantial probative evidence to oppose a summary judgment motion. Evidence that is merely colorable or not significantly probative can lead to summary judgment being granted. The court is obligated to consider all evidence and interpret it in favor of the nonmovant. Under Federal Rules of Civil Procedure, Rule 26(a) requires parties to disclose specific information shortly after the Rule 26(f) conference, with certain exemptions. Rule 26(e) obligates parties to timely supplement disclosures or responses if they become aware of any incomplete or incorrect information. For expert witnesses, this duty extends to both the report and deposition information, with any changes needing disclosure by the time of pretrial disclosures. Rule 37(c)(1) stipulates that failure to provide required information or identify witnesses precludes their use in motions or trials unless justified or harmless. The Plaintiff's Amended Motion for Summary Judgment includes evidence such as an affidavit from Thomas P. Riley, the Distributorship Agreement giving exclusive licensing rights for the Event, an affidavit from Hugo Flores documenting the Event's exhibition, and the Rate Card for the Event.
Exhibit B includes the affidavit and resume of David M. Diaz related to attorney fee awards. Exhibit C presents a video from Plaintiff's investigator, Yolanda E. Cuellar, evidencing the Event's broadcast in the Defendants' establishment. Exhibits D through I consist of various Defendants’ admissions in response to Plaintiff's First Requests for Admission, specifically for Defendant 152 Bronx L.P., 152 Bronx G.P. LLC, Eddie Owidi, Lloyd Dobson, Michael Taubin, and Shahab Hashemi. Exhibits J and K contain the Defendants’ responses to Plaintiff's First Set of Interrogatories for the same entities.
The Plaintiff asserts that the Defendants do not dispute the Event's broadcast but claim to have believed they had the right to show it due to purchasing it from their television provider. However, this defense is invalid under the Communications Act, as established in case law. Even if the Defendants argue there was no 'interception' because they were authorized to receive the Event on a pay-per-view basis, they still violated the Act by broadcasting it to patrons without proper authorization. The statute does not require interception of a cable transmission to establish a violation; it prohibits unauthorized use of communications received legally. Notably, purchasing the Event does not protect the Defendants from liability for unauthorized public display. To establish a violation of the Communications Act, the Plaintiff must demonstrate that the Event was shown in the Defendants’ establishment and that the Plaintiff did not authorize this exhibition.
Sections 553 and 605 of the Communications Act prohibit aiding third parties in intercepting unauthorized communications. Individuals can be held vicariously liable if they had (1) the right and ability to supervise the unauthorized activities and (2) a direct financial interest in those activities. In this case, Defendant 152 Bronx LP admitted it held the TABC liquor permit for the establishment during the event, making it liable for the illegal broadcast. The liquor license holder must maintain exclusive control over the establishment's operations, which includes supervising all activities, such as the use of televisions for broadcasts.
Defendant 152 Bronx GP, LLC also admitted it had the right to supervise and a financial interest in the establishment's activities. Shahab Hashemi, as a manager and limited partner, similarly admitted his supervisory role and financial interest. Defendants Eddie Owidi and James Lloyd Dobson denied being owners or managers, but acknowledged their limited partnership and financial interests. Michael Taubin admitted to being a manager with supervisory rights and a financial interest. Overall, the admissions of these defendants establish their involvement and potential liability in the unauthorized broadcast activities at the establishment.
Plaintiff seeks statutory damages of $10,000 under the Communications Act for unauthorized interception and broadcast of a live event by Defendants. The Act allows recovery of statutory damages between $1,000 and $10,000 for established violations. Evidence shows Defendants intercepted and broadcast the event at their establishment, leading patrons to purchase food and drinks while viewing. Plaintiff argues for these damages due to substantial payments made for sublicensing rights, loss of business opportunities, goodwill, and the right to control broadcast fees. Additionally, Plaintiff claims damages for a willful violation, defined as actions taken with disregard for the law for commercial gain. The transmission was encrypted, indicating that Defendants required deliberate actions to access the broadcast illegally, demonstrating their awareness of wrongdoing. The Plaintiff's claims are supported by case law indicating that such violations are willful and aimed at commercial advantage.
The Court has discretion to award 'willful' damages, capped at $100,000 per violation. Factors influencing the damage award include the number of televisions used for unauthorized broadcasting, sales of food and beverages, cover charges, and the urban setting of the broadcast. The Plaintiff seeks: 1) statutory damages of $10,000; 2) $50,000 in additional damages for willful violations; 3) attorney's fees as authorized under 47 U.S.C. 605(e)(3)(B)(iii); 4) a permanent injunction to prevent future violations under 47 U.S.C. 605(e)(3)(B)(i); and 5) costs and post-judgment interest.
Following the Plaintiff's first motion for summary judgment, the Court vacated the original scheduling order due to Plaintiff's failure to produce requested discovery, allowing time for the parties to address this issue. The Defendants argue that the admission of Plaintiff's evidence is prejudicial, as it was crucial for supporting their claims, and that Plaintiff's lack of disclosure was detrimental. Despite the reopening of discovery, they assert that three of the four factors for determining the impact of the disclosure failure weigh against admitting the evidence. Additionally, Defendants argue that the Scheduling Order did not extend deadlines for expert witness designations and that the Plaintiff filed an amended motion without court permission for late designations, violating procedural rules that preclude using undisclosed evidence.
Defendants argue that four factual questions prevent summary judgment: 1) whether they intercepted the telecast on September 19, 2009; 2) whether the unauthorized exhibition was willful and for commercial gain; 3) whether $60,000 in statutory damages is appropriate for alleged violations of the Communications Act; and 4) whether the request for attorneys’ fees and costs is reasonable. They contest the affidavit of Riley, claiming it consists largely of legal conclusions and hearsay, lacking personal knowledge. Additionally, they assert that Riley's testimony regarding license agreements and damages was disclosed late, beyond the March 2, 2012 deadline. They also challenge the affidavit of attorney David M. Diaz as an expert on attorneys’ fees for similar tardiness. To counter the summary judgment motion, Defendants provide affidavits from Shahab Hashemi and Michael Taubin, stating they were unaware of any exhibition of the Event at the Bronx Grill, asserting it was not for commercial gain.
Plaintiff argues that the court's vacation of the original docket control order and extension for discovery rendered any earlier errors moot and allowed both parties additional time for motions and preparation, which mitigated any prejudice to Defendants. Citing Texas A. M, the court notes that despite late disclosures, the prejudice mentioned was negligible due to an adequate response time for contested evidence. The court acknowledges Defendants' claims of untimely expert designations but points out that they received the relevant disclosures on November 6, 2012, well before trial settings. Thus, there was no unfair surprise. Riley’s affidavit is deemed admissible, as he is the custodian of records, and it has been established that similar affidavits are competent evidence for assessing liability and the impact of cable piracy on Plaintiff's business.
The Licensing Agreement is admissible as a contract, which is not considered hearsay. An auditor's affidavit is valid as a sworn statement based on personal observations. The Plaintiff argues that the Defendants have not established a genuine issue of material fact, as the affidavits of Hashemi and Taubin contain only conclusory claims. The Defendants admitted to broadcasting the Event on September 19, 2009, and their vague denials do not counter the eyewitness testimony and accompanying video from Hugo Flores. An affidavit opposing summary judgment must present specific facts showing a genuine issue for trial, as established in case law. Hashemi and Taubin's claims about their management responsibilities do not allow them to testify on the intent behind the broadcast, undermining their claims of acting in good faith. Regardless of their awareness or intent, the Defendants are vicariously liable for unauthorized broadcasts, which violate the Communications Act, a strict liability statute. The Plaintiff needs to demonstrate that the Defendants had the ability to supervise the infringing activities and a direct financial interest. Intent or knowledge of infringement is not required for vicarious liability claims, meaning innocence is not a defense. The Plaintiff asserts that most Defendants had supervisory rights and abilities, with 152 Bronx, LP and 152 Bronx GP, LLC admitting to lacking any valid defense. These entities had supervisory rights and held a liquor license, while Hashemi and Taubin were involved as managers and limited partners. However, the Plaintiff acknowledges insufficient evidence regarding Owidi and Dobson's supervisory authority, despite their financial interest in the Establishment’s activities.
Owidi and Dobson are identified as members, not limited partners, of the limited liability company 152 Bronx GP, LLC. The Plaintiff has failed to provide proper documentation from the Texas Comptroller and Secretary of State to establish Owidi and Dobson's membership, thus preventing a judgment against them at this time. The Defendants are accused of willfully intercepting a broadcast for commercial gain, infringing on the Plaintiff's rights, and evading payment, regardless of whether they profited. The Court agrees with the Plaintiff that the motion to strike lacks merit, denying it, and finds that the Defendants have not met their burden of proof, whereas the Plaintiff has met theirs regarding 152 Bronx, LP, 152 Bronx GP, LLC, Hashemi, and Taubin. Consequently, the Court grants the Plaintiff's motion for summary judgment against these Defendants but denies it concerning Owidi and Dobson, allowing the Plaintiff until May 31, 2014, to provide evidence of their supervisory rights over the Establishment. The Court grants Mr. Diaz an award for attorney’s fees but opts for the lodestar method instead of a contingent fee to avoid an excessive windfall, deferring the exact amount until after the case is resolved. Injunctive relief is also deferred until the appropriate Defendants are determined. Relevant statutes, Sections 553(a)(1) and 605(a), prohibit unauthorized interception of communications, emphasizing that no one may benefit from such actions. The Plaintiff asserts that Defendant 152 Bronx LP held the necessary permits and had operational control over the Establishment.
Defendants 152 Bronx GP, LLC, Hashemi, and Taubin had the authority to oversee the Establishment's operations and held a financial stake in its activities, while defendants Owidi and Dobson were also financially invested. The court emphasized that it is not required to search the record for evidence supporting the non-movant's claims; instead, the non-movant must present specific evidence demonstrating support for their position. Under Section 605(e)(3)(C)(ii), if a violation is found to be willful and aimed at commercial or financial gain, the court may enhance the damages award up to $100,000 per violation. Courts have historically applied multipliers of three to eight times the statutory damages to deter cable and satellite broadcast piracy. The presence of multiple televisions broadcasting an event can indicate a commercial advantage. Evidence presented by the plaintiff indicated that the event was illegally shown at the Bronx Grill, corroborated by the defendant's admission. The court also noted that the display likely increased patronage and therefore profits from food and beverage sales. The plaintiff provided substantial evidence of the illegal broadcast on September 19, 2009, which the defendants acknowledged. Finally, the court highlighted that under Rule 54(b), it can address fees in a motion post-judgment, and that any potential prejudice from this process could be mitigated.
