J & J Sports Productions, Inc. v. Enriquez

UNITED STATES DISTRICT COURT NOT FOR PUBLICATION

EASTERN DISTRICT OF NEW YORK

J & J Sports Productions, Inc.,

Plaintiff, MEMORANDUM & ORDER

– against –

Marcelino Enriquez, individually and d/b/a 1:19-cv-2384 (ERK)

Tu Ranchito Restaurant; and Tu Ranchito

Restaurant Corp., an unknown

business entity d/b/a Tu Ranchito Restaurant,

Defendants.

KORMAN, J.:

Plaintiff J & J Sports Productions, Inc. (“J & J”) commenced this action against defendants

Tu Ranchito Restaurant Corp. (“Ranchito”) and Marcelino Enriquez on April 24, 2019, alleging

that the defendants intercepted a telecast of the boxing event “Saul Alvarez v Liam Smith, WBO

World Super Welterweight Championship Fight Program” (the “Program”) and exhibited it at their

restaurant in violation of the Federal Communications Act of 1934 (“FCA”), codified as amended,

47 U.S.C. §§ 553 and 605. Compl. ¶¶ 14, 19, 30, 35, 42, ECF No. 1. Ranchito is alleged to be a

“Domestic Business Corporation organized and existing under the laws of the State of New York”

that “owned and operated the commercial establishment doing business as Tu Ranchito Restaurant

operating at 635 Bay Street Staten Island NY 10304.” Id. ¶¶ 7, 9. Enriquez is alleged to have been

the “Principal” of Ranchito. Id. ¶¶ 9, 10, 13.

J & J’s service of process on Ranchito was valid under Fed R. Civ. P. 4(e)(1), because it

complied with New York Business Corporation Law § 306(b)(1). Aff. of Service, ECF No. 5. J &

J’s service of process on Enriquez was likewise valid, because it complied with N.Y. C.P.L.R. §

308(4). Aff. of Service, ECF No. 6. Specifically, the process server did his due diligence by visiting

Enriquez’s dwelling as “[c]onfirm[ed]” by “Records of the New York State Dept. of Motor

Vehicles” on three nonconsecutive days—a Monday afternoon, Saturday morning, and Monday

evening—before resorting to the “nail and mail” method of service. Id.; see JPMorgan Chase

Bank, N.A. v. Szajna, 898 N.Y.S.2d 524 (N.Y. App. Div. 2010); Kandov v. Gondal, 783 N.Y.S.2d

57, 57–58 (N.Y. App. Div. 2004); Hickman v. Beretta, 64 N.Y.S.3d 873, 876 (N.Y. Sup. Ct. 2017).

Defendants have failed to appear or otherwise defend in this action, and, upon plaintiff’s

application, ECF No. 8, the Clerk of Court noted their default pursuant to Fed. R. Civ. P. 55(a) on

July 24, 2019, ECF No. 9. On August 2, 2019, J & J moved pursuant to Fed. R. Civ. P. 55(b) for

a default judgment and damages for its claim under 47 U.S.C. § 605, but not for its claim under 47

U.S.C. § 553. Pl.’s Appl. Default J., at 3, ECF No. 10; Pl.’s Mem. Supp. Appl. Default J., at 4, 11,

ECF No. 10-1.

DISCUSSION

Because “default has been entered, the allegations of the Complaint that establish the

defendant’s liability are accepted as true, except for those relating to the amount of damages.” J&J

Sports Prods. Inc. v. Tequilitas 2, Inc., 2019 WL 919551, at *1 (E.D.N.Y. Feb. 25, 2019); see

Greyhound Exhibitgroup, Inc., v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). “[A]ll

reasonable inferences” must be drawn in the plaintiff’s favor. Finkel v. Romanowicz, 577 F.3d 79,

84 (2d Cir. 2009). “Nevertheless, 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 conclusions of

law.” J & J Sports Prods., Inc. v. Tellez, 2011 WL 6371521, at *1 (E.D.N.Y. Dec. 20, 2011); see

Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981) (“[A] district court . . . need not

agree that the alleged facts constitute a valid cause of action . . . .”).

Under 47 U.S.C. § 605(a), “[n]o person not being authorized by the sender shall intercept

any radio communication and divulge or publish the existence, contents, substance, purport, effect,

or meaning of such intercepted communication to any person.” The Second Circuit has interpreted

this prohibition to cover the interception of cable communications that originated as satellite or

other radio communications. See Int’l Cablevision, Inc. v. Sykes (“Sykes II”), 75 F.3d 123, 131 n.

5, 133 (2d Cir. 1996); Cmty. Television Sys., Inc. v. Caruso, 284 F.3d 430, 435 (2d Cir. 2002)

(following Sykes II); see also DIRECTV Inc. v. Rodriguez, 2007 WL 1834676, at *1 (E.D.N.Y.

June 26, 2007) (“[R]adio communications . . . includes satellite signals.” (citing Int’l Cablevision,

Inc. v. Sykes (“Sykes I”), 997 F.2d 998, 1008 (2d Cir. 1993)). Thus, in this circuit, “a plaintiff need

not allege how the defendant actually received the signal,” but only that the intercepted

communication “originated via satellite” or other radio communication. J & J Sports Prods., Inc.

v. Abdelraouf, 2019 WL 457719, at *3 (E.D.N.Y. Feb. 5, 2019); see also Sykes II, 75 F.3d at 131–

33; Joe Hand Promotions, Inc. v. Terranova, 2014 WL 1028943, at *4 (E.D.N.Y. Mar. 14, 2014).

A. Ranchito’s Liability

J & J has pled factual allegations that adequately establish Ranchito’s violation of Section

605(a). According to the Complaint, J & J held exclusive distribution rights for the Program,

Compl. ¶¶ 19, 21; the Program “originated via a satellite uplink and was subsequently re-

transmitted to cable systems and satellite companies via satellite signal,” id. ¶ 24; the transmission

was “scrambled” such that “[i]n order for the signal to be received and telecast clearly, it had to be

decoded with electronic decoding equipment,” which was provided to establishments authorized

by J & J to receive the Program, id. ¶¶ 24, 25; on September 17, 2016, “without the authorization

or approval” of J & J, Ranchito “broadcast the Program on two (2) television screens,” thereby

divulging and publishing the Program “to patrons within Tu Ranchito Restaurant,” id. ¶¶ 26, 30,

31. “Given the defendants’ default and the resulting duty of this Court to take all of the plaintiff’s

well-pleaded allegations as true,” Tellez, 2011 WL 6371521, at *3, J & J has adequately

demonstrated that Ranchito violated 47 U.S.C. § 605(a). See id.; see also Abdelraouf, 2019 WL

457719, at *3.

B. Enriquez’s Liability

J & J’s factual allegations also adequately establish that Enriquez is liable in his individual

capacity. When a corporation violates Section 605(a), establishing individual liability “requires a

showing either of contributory infringement . . . or vicarious liability.” Tellez, 2011 WL 6371521,

at *3 (quotation marks omitted).

1. Contributory Infringement

An individual defendant is liable for contributory infringement when he or she authorizes

an infringement. See id.; see also EMI Christian Music Grp., Inc. v. MP3tunes, LLC, 844 F.3d 79,

99–100 (2d Cir. 2016) (“A contributory infringer is one who, with knowledge of the infringing

activity, induces, causes or materially contributes to the infringing conduct of another.” (quotation

marks omitted)).

Here, the well-pled factual allegations in the Complaint give rise to a reasonable inference

that Enriquez authorized the interception and exhibition of the Program. J & J alleges that “[a]t all

times relevant hereto, Defendant Marcelino Enriquez was the sole individual identified on the On

Premises Liquor License (License Serial No. 1255645) issued to Tu Ranchito Restaurant Corp. for

. . . Tu Ranchito Restaurant . . . .” Compl. ¶ 11. J & J further alleges, upon information and belief,

that, on September 17, 2016, “Enriquez specifically directed the employees of Tu Ranchito

Restaurant to unlawfully intercept, receive and broadcast Plaintiff’s Program at Tu Ranchito

Restaurant or intentionally intercepted, and/or published the Program at Tu Ranchito Restaurant

himself.” Id. ¶ 14.

J & J was entitled to base this latter allegation on information and belief. “The Twombly

plausibility standard . . . does not prevent a plaintiff from pleading facts alleged upon information

and belief where the facts are peculiarly within the possession and control of the defendant, or

where the belief is based on factual information that makes the inference of culpability plausible.”

Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (quotation marks and citations

omitted). The details of who physically operated the equipment to put the Program on the

restaurant’s TV screens, and at whose behest, would be facts “peculiarly within the possession and

control of the defendant.” Id.; cf. Joe Hand Promotions, 2014 WL 1028943, at *4 (“As the

defendants’ default has deprived the plaintiff of the opportunity to discover the specific

surreptitious method the defendants used to intercept the broadcast, the allegations are sufficient

to establish that the signal was intercepted by the defendants without authorization from the

plaintiff.”). Moreover, J & J’s belief that Enriquez either did it himself or directed the restaurant’s

employees to do it is supported by some factual information: the liquor license specifically

identified in the Complaint that lists Enriquez, and no other person, as the restaurant’s “Principal”

(Compl. ¶ 10; N.Y. STATE LIQUOR AUTH., https://sla.ny.gov/public-license-query (follow “Search

by License Number” hyperlink; then search “1255645”) (last visited Oct. 7, 2019)); and the fact

that two televisions in the restaurant were showing the program on the night that it was aired

(Compl. ¶¶ 26, 41; Aff. Steven Aimetti, Ex. 5 of Decl. Pl.’s Counsel Supp. Appl. Default J., ECF.

No. 10-3).

J & J’s allegation that Enriquez either specifically directed the restaurant’s employees to

commit the violation or carried it out himself is also not conclusory. Reading the complaint as a

whole, as is required, see Cohen v. S.A.C. Trading Corp., 711 F.3d 353, 360 (2d Cir. 2013), J & J

alleges that, on the night of September 17, 2016, Enriquez intercepted the coded transmission of

the Program and showed it to patrons of Tu Ranchito restaurant on two TV screens—either by

himself or by directing the restaurant’s employees to do it. Compl. ¶¶ 14, 19, 24, 26, 30. This

amounts to more than “legal conclusions” or a “formulaic recitation of the elements” of a cause of

action. Ashcroft v. Iqbal, 556 U.S. 662, 679–81 (2009). Instead, it is “factual content” that when

“accepted as true,” “allows the court to draw the reasonable inference” that Enriquez authorized

the infringement. Id. at 678; see also BWP Media USA Inc. v. Hollywood Fan Sites, LLC, 69 F.

Supp. 3d 342, 356–57 (S.D.N.Y. 2014). Thus, J & J has adequately alleged contributory

infringement by Enriquez.

2. Vicarious Liability

An individual defendant is vicariously liable for an infringement when the individual “had

a right and ability to supervise the infringing activities and had an obvious and direct financial

interest in the exploitation of [the] copyrighted materials.” Tellez, 2011 WL 6371521, at *3

(alteration in original); EMI, 844 F.3d at 99.

The factual allegations discussed in the previous section of this opinion—together with the

allegation that Enriquez had the “right and ability to supervise the activities of Tu Ranchito

Restaurant” on the night of the telecast, Compl. ¶ 12—suffice to demonstrate that Enriquez had

the right and ability to supervise the infringing activities. Thus, the remaining issue is whether J &

J has sufficiently pled that Enriquez had an “obvious and direct financial interest” in those

activities. EMI, 844 F.3d at 99.

In EMI, the Second Circuit held that the bar is not high for financial interests to qualify as

“obvious and direct.” See id. at 99. There, an individual defendant, who “was the near-exclusive

funder” of an LLC, was found vicariously liable for copyright infringement “that drew

subscribers” to the LLC’s website. Id. The Court held that the district court had not erred in

instructing the jury that an “obvious and direct financial interest . . . may be established where

infringing material acts as a ‘draw’ to attract subscribers to a defendant’s business, even if it is not

the primary, or even a significant draw.” Id. (ellipsis in original) (emphasis added). The Court held

that there was “ample evidence” to support a finding of the required financial interest, citing

evidence that the LLC’s employees “emphasized the availability” of the infringing material “in

connection with trying to get users to” make purchases, and that, using the infringing material, the

defendant “sought to . . . attract free users . . . whom [the LLC] could thereafter ‘upsell.’” Id. The

Court did not cite evidence establishing the actual results of those efforts. Thus, under EMI,

business owners generally have an obvious and direct financial interest in infringing activities done

to attract customers to their businesses.

Here, the factual allegations in the Complaint imply Enriquez’s obvious and direct financial

interest in the alleged violation. In addition to the allegations described above, J & J alleges “the

sale of alcoholic beverages during the broadcast.” Compl. ¶ 33; see also id. ¶ 27; Aff. Steven

Aimetti (reporting the purchase of a Corona from the restaurant during the Program). J & J also

alleges that “[t]he commercial fee for an establishment the size of Tu Ranchito Restaurant to

broadcast the Program lawfully was $1,800.00 [and] [n]either [Enriquez] nor [Ranchito] paid such

a fee to Plaintiff.” Compl. ¶ 28. Assuming it is true that Enriquez was the principal of the restaurant,

and that he—either personally or through his subordinates—unlawfully showed a telecast priced

at $1,800 on two TV screens to patrons who were making purchases at the restaurant, it can

reasonably be inferred that he did it to attract patrons to the restaurant (or get them to stay longer)

in order to increase the restaurant’s sales, and thus his own income.

Thus, especially in light of the Second Circuit’s holding in EMI, J & J has sufficiently

alleged Enriquez’s obvious and direct financial interest in the alleged infringement, and has thus

stated a claim against him based on vicarious liability. See J & J Sports Prod., Inc. v. McAdam,

2015 WL 8483362, at *3 (E.D.N.Y. Dec. 9, 2015) (holding that vicarious liability was well-pled

by similar allegations and citing other cases that did the same); J & J Sports Prods., Inc. v. 1400

Forest Ave Rest. Corp., 2014 WL 4467774, at *6 (E.D.N.Y. Sept. 9, 2014) (same).

CONCLUSION

Because the alleged facts constitute legally valid causes of action under 47 U.S.C. § 605

against both Tu Ranchito Restaurant Corp. and Marcelino Enriquez, J & J’s motion for default

judgment against both defendants is GRANTED to that extent.

The case is referred to United States Magistrate Judge Cheryl L. Pollak for further

proceedings to determine and recommend the amount of damages.

Counsel for plaintiff is ORDERED to serve a copy of this Order on defendants and file an

affidavit of service with the Court.

SO ORDERED.

Brooklyn, New York Edward R. Korman

October 7, 2019 United States District Judge