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Joe Hand Promotions, Inc. v. Yakubets

United States District Court, Third Circuit

September 16, 2013



GENE E.K. PRATTER United States District Judge

Before the Court is Plaintiff Joe Hand Promotions, Inc.’s Motion for Default Judgment, filed on July 3, 2013 (Docket No. 7), for damages pursuant to 47 U.S.C. § 605 and for the tort of conversion. Joe Hand filed its Complaint on August 9, 2012 (Docket No. 1), and properly served Defendants, Victor Yakubets and Café Nostalgie, Inc., by process server on October 24, 2012 (Docket Nos. 4 & 5). After Defendants failed to answer or otherwise respond to the Complaint, Joe Hand requested the entry of default, which the Clerk of Court entered on January 24, 2013.

For the reasons that follow, Joe Hand’s Motion for Default Judgment will be denied, although it may still move for judgment and damages for conversion and pursuant to 47 U.S.C. § 553, the remaining cause of action set out in the Complaint.

I. Background

Joe Hand Promotions, Inc., is an international closed-circuit distributor of sports and entertainment programming. Joe Hand purchased the exclusive nationwide commercial distribution rights to broadcast a particular boxing match, “The Big Challenge”: Adamek v. Grant (“the Match”), on August 21, 2010. In turn, Joe Hand entered into sublicensing agreements with various commercial entities that granted those parties rights to publicly exhibit the Match. According to the affidavit of investigator Daniel Szlezak, on August 21, 2010, Mr. Szlezak entered Café Nostalgie and observed an unlawful exhibition of the Match on four televisions. Joe Hand argues that because it had exclusive rights to distribute the Match, Defendants could only have lawfully exhibited it if they had contracted with Joe Hand. Thus, Joe Hand argues, the interception of the Match was not only unlawful, it was also willful. Compl., Docket No. 1, ¶ 24. Joe Hand did not allege whether the Defendants had intercepted the Match via cable or satellite. Based on this single unlawful showing of the Match as observed by Mr. Szlezak, Joe Hand alleges three counts in its Complaint: (1) violation of 47 U.S.C. § 605; (2) violation of 47 U.S.C. § 553; and (3) conversion.

II. Discussion

In its Motion for Default Judgment, Joe Hand asks for full statutory and enhanced damages under 47 U.S.C. § 605, in the aggregate amount of $110, 000, as well as $500 for the tort of conversion. Because the returned summonses indicate that the Defendants were properly served, the Court must next consider whether Joe Hand’s Complaint states causes of action under § 605 and the tort of conversion. See Pope v. United States, 323 U.S. 1, 12 (1944) (“[U]pon default, . . . the court determines that the unchallenged facts shown of record establish a legally binding obligation; it adjudicates the plaintiff’s right of recovery and the extent of it, both of which are essential elements of judgment.” (citations omitted)); Chanel, Inc. v. Gordashevsky, 558 F.Supp.2d 532, 536 (D.N.J. 2008) (“[B]efore granting a default judgment, the Court must first ascertain whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.” (internal quotation marks omitted)). Because default was entered, the Court accepts as true the well-pleaded factual allegations of Joe Hand’s Complaint and treats those allegations as though they were established by proof, except those relating to damages. See Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990). But the Court need not accept Joe Hand’s legal conclusions: “Even after default, . . . it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.” 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane § 2688, at 63 (3d ed. 1998); see Pope, 323 U.S. at 12; Gordashevsky, 558 F.Supp.2d at 536; cf. Thomson v. Wooster, 114 U.S. 104, 113 (1885) (“[A] decree pro confesso is not a decree as of course according to the prayer of the bill, nor merely such as the complainant chooses to take it; but that it is made (or should be made) by the court, according to what is proper to be decreed upon the statements of the bill assumed to be true.”).

A. Joe Hand’s Cause of Action Under 47 U.S.C. § 605

Although Joe Hand moves for default judgment under 47 U.S.C. § 605, its Complaint alleges violations of both 47 U.S.C. §§ 553 and 605. To determine whether Joe Hand is entitled to damages under § 605, the Court must assess whether, as a matter of law, § 605 should apply at default judgment where a plaintiff has pled facts which, when taken as true, must as a logical matter support a violation of either § 605 or § 553, but prove neither as an individual claim.

Section 553 prohibits the unauthorized interception and transmission of cable communications, whereas § 605 prohibits the unauthorized interception and transmission of encrypted satellite cable programming. J&J Sports Prods., Inc. v. Moody, No. 08-5225, 2009 WL 1515749, at *1 n.1 (E.D. Pa. May 28, 2009); see 47 U.S.C. §§ 553, 605(a).[1] Indeed, § 605 is “applicable only to satellite transmissions insofar as they are actual airborne transmissions.” TKR Cable Co. v. Cable City Corp., 267 F.3d 196, 205 (3d Cir. 2001).

Here, however, nothing in Joe Hand’s Complaint or Mr. Szlezak’s affidavit establishes how the signal was intercepted. For example, Mr. Szlezak does not mention observing either a satellite dish or a cable box when he visited Café Nostalgie. In fact, as Joe Hand acknowledges, it “cannot determine the precise means that the Defendants used to receive the Program unlawfully.” Mem., Docket No. 7, at 8.

At the motion to dismiss stage, where the plaintiff is permitted to plead alternative theories of liability, Joe Hand’s Complaint can state causes of action under both §§ 553 and 605. See, e.g., J&J Sports Prods., Inc. v. 4326 Kurz, Ltd., No. 07-3850, 2008 WL 4630508 (E.D. Pa. Oct. 17, 2008), at *3-4 & n.3; see also Circuito Cerrado, Inc. v. Katuran, No. 10-4343, 2011 WL 3925245 (E.D. Pa. Sept. 6, 2011), at *2 & n.13. But at the default judgment stage, although a court must treat a plaintiff’s factual allegations as true, the allegations taken as proven must show an entitlement to relief and proof of damages under a stated cause of action. In this case, Joe Hand’s allegations-qua-facts, combined with the evidence it offers in affidavits, is unable to show that the Defendants intercepted any satellite transmission. Consequently, Joe Hand has not carried its burden of proof under § 605.

Of course, Joe Hand is not without recourse. Instead, this Court must first answer the peculiar question that arises at default judgment when a plaintiff’s allegations-qua-facts prove neither of his alternative theories of relief, but logic dictates that they must prove one or the other. A further premise is that no further development of the facts will allow the court to determine which provision should apply. Here, in other words, as a matter of syllogistic logic, the Defendants must have violated one of either § 605 or § 553 based on the allegations-qua-facts: (1) the Match was broadcast, and therefore could have been intercepted, only by cable and satellite;[2] and (2) the Defendants intercepted the signal.[3] Through which provision, if not both, should Defendants’ claims be channeled?

In the only part of his briefing that can be read to address this problem, counsel argues that Joe Hand “should not be prejudiced because it cannot isolate the precise means of signal transmission the Defendants used” “because the Defendants have failed to respond, ” and therefore moves for damages pursuant solely to § 605. Mem., Docket No. 7, at ...

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