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J & J Sports Productions, Inc. v. Kiflu

United States District Court, District of Columbia

December 12, 2018

J & J SPORTS PRODUCTIONS, INC., Plaintiff,
v.
TESFIT KIFLU, Defendant.

          MEMORANDUM OPINION

          CHRISTOPHER R. COOPER United States District Judge.

         On May 2, 2015, Floyd “Money” Mayweather, Jr. and Manny “Pac-Man” Pacquiao squared off in a boxing match billed as “The Fight of the Century.” Unfortunately for the tens of millions of viewers around the world, it proved to be anything but. Among the likely disappointed were approximately 120 patrons at the Cloud Restaurant & Lounge in Washington, D.C., which aired the fight despite having no right to do so. Plaintiff J & J Sports Productions, Inc. (“J & J”) had exclusive rights to contract with bars, restaurants, and other establishments who sought to broadcast the match. J & J filed suit against the Cloud Lounge's owner, Defendant Tesfit Kiflu, seeking damages under the Federal Communications Act (“FCA”) for its lost revenue as well as enhanced damages for Mr. Kiflu's ostensibly willful violation of the law.

         Floyd Mayweather won a judges' decision in his fight by using what commentators called a highly defensive strategy. Here, Kiflu has employed no defense at all. Despite receiving service of process indicating that he should get ready to rumble, Kiflu declined to enter the ring. He failed to answer the suit against him and now J & J seeks a default judgment-the law's version of a technical knockout. The Court will issue a split decision. It will award J & J the amount Kiflu would have had to pay to broadcast the fight legally, as well as some attorneys' fees, but it will not award enhanced damages because J & J has not proffered sufficient evidence to justify them.

         I. Background

         The FCA prohibits unauthorized interception, receipt, publication, or use of certain types of communications, including the type of encrypted satellite signals at issue in this case. See 47 U.S.C. § 605(a).[1] The Act creates a private right of action by “[a]ny person aggrieved by any violation” of the relevant prohibition. Id. § 605(e)(3)(A). It authorizes a court to award between $1, 000 and $10, 000 in statutory damages for each violation, “as the court considers just.” Id. § 605(e)(3)(C)(i)(II). Further, it permits a court “in its discretion” to award up to $100, 000 in enhanced damages “[i]n any case in which the court finds that the violation was committed willfully and for purposes of direct or indirect commercial advantage or private financial gain[.]” Id. § 605(e)(3)(C)(ii). The FCA also allows a court to award attorneys' fees and costs to a prevailing plaintiff. Id. § 605(e)(3)(B)(iii).

         J & J obtained exclusive rights to distribute broadcasts of the Mayweather-Pacquaio bout, allowing it to charge bars, restaurants, and other establishments that sought to show the fight. See Mot. Default J. Ex. 3 (“J & J Contract”), ECF No. 11-4, at 3-9. The cost for showing the fight depended on the establishment's capacity. Id. at 1 (“Rate Card”). J & J disseminated the program to establishments with which it had contracted via closed circuit television and encrypted satellites signals. The Cloud Lounge did not contract with J & J to show the fight. But, according to an investigator's affidavit, it showed the program to its patrons anyway. See Compl. Ex. A (“Martin Affidavit”), ECF No. 1-1. Per the affidavit, the lounge was at capacity- approximately 120 people-such that it refused to allow more patrons to enter. Id. at 2-3.

         II. Legal Standards

         Default judgment requires a one-two punch. See, e.g., Amaya v Logo Enters., LLC, 251 F.Supp.3d 196, 199 (D.D.C. 2017). First, a plaintiff must request that the Clerk of the Court enter a default against an opposing party who has “failed to plead or otherwise defend[.]” Fed.R.Civ.P. 55(a). An entry of default “establishes the defaulting party's liability for the well-pleaded allegations of the complaint.” Boland v. Elite Terrazzo Flooring, Inc., 763 F.Supp.2d 64, 67 (D.D.C. 2011). Second, the plaintiff must petition the court for a default judgment against the defaulting party. Fed.R.Civ.P. 55(b)(2). This process ensures that an absentee defendant cannot escape liability simply by refusing to participate in judicial proceedings. See Amaya, 251 F.Supp.3d at 199.

         Once an entry of default establishes liability, a court has substantial discretion in determining the appropriate award for the plaintiff. It must do so through an independent assessment of the alleged damages. A court may hold a hearing or can base its evaluation on “detailed affidavits or documentary evidence” submitted by the plaintiff in support of its claims. Boland v. Providence Constr. Corp., 304 F.R.D. 31, 36 (D.D.C. 2014) (quoting Fanning v. Permanent Sol. Indus, Inc., 257 F.R.D. 4, 7 (D.D.C. 2009)). The court is not required to hold a hearing “as long as it ensures that there is a basis for the damages specified in the default judgment.” Elite Terrazzo Flooring, Inc., 763 F.Supp.2d at 67.

         III. Analysis

         The Court will first assess Kiflu's liability and then evaluate the appropriate damages.

         A. Liability

         J & J has submitted an affidavit that puts forth sufficient facts to demonstrate that the Cloud Lounge broadcast the fight. See Martin Affidavit at 2-4. J & J had exclusive rights to distribute the fight, see J & J Contract, and Cloud did not contract with J & J, see Compl. ¶¶ 12- 13. There is thus no doubt that there was a violation of the FCA.

         Determining whether Kiflu is personally liable for that violation presents a slightly thornier question. It appears that no court in this circuit has ever held a business's proprietor liable for § 605 violations by that business. See Report & Recommendation as appended to J & J Sports Prods., Inc. v. Micherie, LLC, No. 17-CV-1150 (KBJ), 2018 WL 4629301, at *4-6 (D.D.C. Sept. 27, 2018). Elsewhere, however, “a large body of cases-and, indeed, what appears to be the great weight of authority-suggests that an individual corporate officer may be held liable for a corporation's infringing acts under the FCA[.]” Joe Hand Promotions, Inc. v. Wright, 963 F.Supp.2d 26, 28 (D.D.C. 2013) (collecting cases). To establish such liability, courts have held, a plaintiff must show “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. (quoting Circuito Cerrado, Inc. v. Pizzeria y Pupuseria Santa Rosita, Inc., 804 F.Supp.2d 108, 112-13 (E.D.N.Y. 2011)). Courts often refer to this inquiry as the “benefit and control test, ” which asks whether an individual both controlled the violation and benefited from it. See Id. While some courts have questioned this test, see id. (collecting cases), and no court in this circuit appears to have decided the matter one way or the other, this Court chooses to apply it here. The Court sees little reason to prevent a plaintiff harmed by corporate violations of ยง 605 from seeking recovery from an individual who ...


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