Opinion

Innovative Sports Management, Inc. v. Paisa's Truck, LLC

Court
District Court, S.D. Texas
Filed
Feb 14, 2024
Cited by
0 cases
Authority
More cited than 32.0%

“The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact, is concluded on those facts by the judgment, and is barred from contesting on appeal the facts thus established.”

How later courts described this case

  • “The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact, is concluded on those facts by the judgment, and is barred from contesting on appeal the facts thus established.”

Written by the judges who cited it.

The opinion

□ Southern District of Texas

ENTERED

. February 14, 2024

IN THE UNITED STATES DISTRICT COURT Nathan Ochsner. Clerk

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

INNOVATIVE SPORTS MANAGEMENT, — §

INC., d/b/a INTEGRATED SPORTS MEDIA §

as Broadcast Licensee of the November 17, §

2020 Uruguay v. Brazil Soccer Game, §

§

Plaintiff, §

VS. § CIVIL ACTION NO. 4:22-cv-04105

§

PAISA’S TRUCK LLC, individually, and d/b/a §

PAISA’S TRUCK RESTAURANT; 2) JOSE §

MARQUEZ RAMIREZ a/k/a JOSE §

MARQUEZ, individually, and d/b/a PAISA’S

TRUCK RESTAURANT,

Defendants.

ORDER

Pending before the Court is a Motion for Default Judgment filed by Plaintiff Innovative

Sports Management, Inc. (“Plaintiff or “Innovative”). (Doc. No. 13). Defendants Paisa’s Truck

LLC, d/b/a Paisa’s Truck Restaurant, Jose Marquez Ramirez a/k/a Jose Marquez, and Paisa’s

Truck Restaurant (collectively, “Defendants”) have been served, have not appeared in the case,

and have not filed a response of any kind. Nevertheless, for the reasons explored below, the Court

hereby DENIES Plaintiff's motion.

I. Background

Plaintiff's Complaint alleges that it is the broadcast licensee of the November 17, 2020

Uruguay v. Brazil soccer game. Plaintiff alleges that it is the license company that was exclusively

authorized to sub-licensed the closed-circuit telecast of the game at theaters, arenas, bars, clubs,

lounges, and restaurants in Texas. Plaintiff claims that Defendants “willfully intercepted or

received the interstate communication” of the game telecast, misappropriating Plaintiff's licensed

exhibition of the game and infringing on Plaintiff's exclusive rights while avoiding payment. (Doc.

No. 13 at 11). Plaintiff states a cause of action against Defendants under 47 U.S.C. § 553 or § 605

and demands a judgment against Defendants jointly and severally for:

A. Statutory damages in an amount up to Ten Thousand Dollars ($10,000.00) pursuant to

47 US.C. § 553(c)3)A)Gi);

B. Statutory damages for willfulness in an amount up to Fifty Thousand Dollars

($50,000.00), pursuant to 47 U.S.C. § 553(c)(3)(B);

C. Statutory damages in an amount up to Ten Thousand Dollars ($10,000.00) pursuant to

ATUS.C. § 605(e)3B)(OMUD;

D. Statutory damages in an amount up to One Hundred Thousand Dollars ($100,000.00)

pursuant to 47 U.S.C. § 605(e)(3)(C)(ii);

E. Full costs and expenses of this action, including reasonable attorney’s fees, pursuant to

47 U.S.C. §§ 553(c)(2)(C) and 605(e)(3)(B) (iii);

F. Pre and post-judgment interest at the highest rate permitted by law; and

G. Such other and further relief to which Plaintiff is entitled.

(Doc. No. 1 at 5).

Despite having been served with process, Defendants have not appeared in the case or filed

any responsive pleadings. On April 13, 2023, the clerk entered the Defendants’ default. (Doc. No.

15). Plaintiff also moved for default judgment pursuant to Federal Rules of Civil Procedure 55(b).!

Il. Legal Standard

After default is entered, a plaintiff may seek default judgment under Federal Rule of Civil

Procedure 55(b). See N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (Sth Cir. 1996). The plaintiff

must submit evidence supporting that the defendant has been properly served with the summons,

complaint, and the default judgment motion. James Avery Craftsman, Inc. v. Sam Moon Trading

‘On August 8, 2023, Plaintiff filed a “Notice of Filing Order” (Doc. No. 17) and attached an Order signed by Senior

United States District Judge Terry J. Hatter, Jr. directing Plaintiff to cease prosecuting all pending lawsuits in other

courts due to the revocation of Plaintiff's New Jersey certificate of incorporation in 2015 for failure to pay the fees

associated with its annual reports. This Court then ordered Plaintiff to show cause why the Clerk’s Entry of Default

should not be set aside, why this case should not be dismissed, and/or why counsel for Plaintiff should not be

sanctioned. (Doc. No. 18). Plaintiff responded, asserting that Plaintiff has taken the necessary steps and actions to

secure compliance with the reinstatement requirements in New Jersey and that Plaintiff was restored to a corporation

in good standing by the New Jersey Department of the Treasury on August 22, 2023. (Doc. No. 19).

Enters., Ltd, No. 16-CV-463, 2018 WL 4688778, at *3 (W.D. Tex. July 5,

2018) (citing Bludworth Bond Shipyard, Inc. v. M/V Caribbean Wind, 841 F.2d 646, 649-51 (Sth

Cir. 1988)); Hazim v. Schiel & Denver Book Grp., No. H-12-1286, 2013 WL 2152109, at *1 (S.D.

Tex. May 16, 2013); S.D. TEX. LOCAL R. 5.5 (“Motions for default judgment must be served on

the defendant-respondent by certified mail (return receipt requested).”). Absent proper service, a

district court does not have personal jurisdiction over the defendant, and any default judgment is

void. See Recreational Props., Inc. v. Sw. Mortg. Serv. Corp., 804 F.2d 311, 314 (Sth Cir. 1986).

A “party is not entitled to a default judgment as a matter of right.” Lewis v. Lynn, 236 F.3d

766, 767 (Sth Cir. 2001) (per curiam) (quoting Ganther v. Ingle, 75 F.3d 207, 212 (Sth Cir. 1996)).

“Defaults are ‘generally disfavored.’” Koerner v. CMR Constr. & Roofing, L.L.C., 910 F.3d 221,

225 (Sth Cir. 2018) (quoting Mason & Hanger-Silas Mason Co. vy. Metal Trades Council of

Amarillo & Vicinity, AFL-CIO, 726 F.2d 166, 168 (Sth Cir. 1984)). The Fifth Circuit favors

“resolving cases on their merits.” Sindhi v. Raina, 905 F.3d 327, 331 (Sth Cir. 2018) (quotation

omitted). “This policy, however, is ‘counterbalanced by considerations of social goals, justice and

expediency, a weighing process that lies largely within the domain of the trial judge’s

discretion.’”” Rogers v. Hartford Life & Accident Ins. Co., 167 F.3d 933, 936 (5th Cir.

1999) (alterations omitted) (quoting Pelican Prod. Corp. v. Marino, 893 F.2d 1143, 1146 (10th

Cir. 1990)). The court may enter default judgment where “the adversary process has been halted

because of an essentially unresponsive party.” Sun Bank of Ocala v. Pelican Homestead & Savings

Ass'n, 874 F.2d 274, 276 (Sth Cir. 1989) (quoting H.F. Livermore Corp. v. Aktiengesellschaft

Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970)).

“A default judgment is unassailable on the merits but only so far as it is supported by the

well-pleaded allegations, assumed to be true.” Wooten v. McDonald Transit Assocs., Inc., 788 F.3d

490, 496 (Sth Cir. 2015) (quoting Nishimatsu Constr. Co., Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200,

1206 (Sth Cir. 1975)). “There must be a sufficient basis in the pleadings for the judgment

entered.” Nishimatsu Constr. Co., 515 F.2d at 1206. For the court to enter default judgment, the

complaint must satisfy Federal Rule of Civil Procedure 8. See Wooten, 788 F.3d at 497-98. “On

appeal, the defendant, although he may not challenge the sufficiency of the evidence, is entitled to

contest the sufficiency of the complaint and its allegations to support the judgment.” Nishimatsu

Constr. Co., 515 F.2d at 1206.

Rule 8(a) requires “a short and plain statement of the claim showing that the pleader is

entitled to relief.” FED. R. CIV. P. 8(a)(2). A complaint must contain “enough facts to state a claim

to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 573 (2007).

Rule 8 “does not require ‘detailed factual allegations,’ but it demands more than an

‘unadorned, the defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (citing Twombly, 550 U.S. at 555). “A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Jd. (citing Twombly, 550 U.S. at 556). “The plausibility

standard is not akin to a “probability requirement,’ but it asks for more than a sheer possibility than

a defendant has acted unlawfully.” Jd. (citing Twombly, 550 U.S. at 556).

III. Analysis

Courts in the Fifth Circuit have developed a three-part test to determine whether a default

judgment should be entered. First, the court must consider whether the entry of default judgment

is “procedurally warranted.” Nasufi v. King Cable Inc., No. 3:15-CV-3273-B, 2017 WL 6497762,

at*1 (N.D. Tex. Dec. 19, 2017) (citing Lindsey v. Prive Corp., 161 F.3d 886, 893 (Sth Cir. 1998)).

Second, the court assesses the substantive merits of the plaintiff's claims to determine whether

there is a “sufficient basis in the pleadings for the judgment.” Id. at *2 (citing Nishimatsu Constr.

Co., 515 F.2d at 1206). Third, the court determines “what form of relief, if any, the [plaintiff]

should receive.” /d. (alteration in original) (quoting United States v. 1998 Freightliner VIN #:

1FUYCZYB3WP8&86986, 548 F. Supp. 2d 381, 384 (W.D. Tex. 2008)). The Court will address

each step in turn.

Whether the entry of default judgment is procedurally warranted depends on the following

factors identified by the Fifth Circuit:

[1] whether material issues of fact are at issue; [2] whether there has been substantial prejudice;

[3] whether the grounds for default are clearly established; [4] whether the default was caused

by a good faith mistake or excusable neglect; [5] the harshness of a default judgment; and [6]

whether the court would think itself obliged to set aside the default on the defendant's motion.

Lindsey, 161 F.3d at 893.

First, Defendants have not filed an answer or any responsive pleadings since being served

in this case; consequently, there are no material facts in dispute. See Nishimatsu Constr. Co., 515

F.2d at 1206 (“The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact,

is concluded on those facts by the judgment, and is barred from contesting on appeal the facts thus

established.”). Second, Defendants’ “failure to respond threatens to bring the adversary process to

a halt, effectively prejudicing Plaintiffs interests.” Ins. Co. of the W. v. H & G Contractors, Inc.,

No. C—10-390, 2011 WL 4738197, at *3 (S.D. Tex. Oct. 5, 2011). Third, grounds for default are

clearly established given that, as reflected by the record and noted in the Clerk's Entry of Default,

“Defendants failed to plead or otherwise defend in this case as required by law.” (Doc. No. 15).

Fourth, there is no indication that Defendants’ silence is the result of a “good faith mistake or

excusable neglect.” Lindsey, 161 F.3d at 893. Fifth, Plaintiff seeks only the relief to which it is

entitled under the law, mitigating the harshness of a default judgment against Defendants. See id.

While there were some questions concerning the sixth factor, Plaintiff adequately

responded to this Court’s Order to Show Cause (Doc. No. 18) by assuring this Court that it had

been restored to a corporation of good standing in New Jersey. The Court therefore is not

concerned about whether it was authorized to enter into contracts during the period in which its

certificate of incorporation had been revoked.

Nevertheless, even if default judgment were procedurally warranted, Plaintiff has failed to

provide a “sufficient basis” for entering default judgment. Nasufi, 2017 WL 6497762, at *2. The

Media Rights Agreement between Pitch International, LLP and Innovative Sports Management,

Inc. shows that Innovative had exclusive transmission rights for soccer games that the National

Senior Team of Brazil plays as a home team during the South American qualifiers of the 2022

FIFA World Cup. (Doc. No. 13-1 at 17). The Agreement explicitly commenced on June 3, 2021

and continued “through a period of seventy-two (72) hours following the later of (a) March 29,

2022 and (b) the delivery to ISM of all Games, unless terminated earlier[.]” (/d.). This Agreement

was attached to Plaintiff's Motion for Default Judgment as Exhibit A-1. Plaintiff alleges, however,

that the unauthorized interception and broadcast by Defendants occurred on November 17, 2020.

That game predates the contract by over six months. Plaintiff does not provide any evidence that

it possessed the broadcast rights for the Uruguay v. Brazil soccer game on November 17, 2020.

Plaintiff alleges in its motion that it possessed the proprietary rights to exhibit and sublicense the

game and therefore that the game was legally available to commercial establishments in Texas

“only through an agreement with Plaintiff;” however, the only Agreement attached to the Motion

has an effective date of June 3, 2021.

Given that Plaintiff has failed to provide a sufficient basis to show that it actually possessed

the propriety rights to exhibit and sublicense the November 17, 2020 Uruguay v. Brazil soccer

game, the Court hereby DENIES Plaintiff's Motion for Default Judgment. The Court further

ORDERS Plaintiff to show cause why this Court should not order the Clerk to set aside the Entry

of Default against all Defendants and why this Court should not dismiss this case because it fails

to state a claim upon which relief can be granted. Plaintiff has until March 1, 2024 to file such a

response.

Signed at Houston, Texas, on this the /+# day of February 2024.

DAI

Andrew S. Hanen

United States District Judge

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

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