Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_04-cv-06664/USCOURTS-caed-1_04-cv-06664-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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1

 UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

GARDEN CITY BOXING CLUB, INC.,

Plaintiff,

vs.

JOSE LUIZ RAZO ALVARADO and

HORTENCIA ALVARADO,

individually, jointly and dba

ALVARADO 7 CORONA’S DEN,

Defendants.

 /

1:04-cv-06664-AWI-SMS

FINDINGS AND RECOMMENDATION

GRANTING MOTION FOR DEFAULT

JUDGMENT (Doc. 19)

Plaintiff is proceeding with an action for statutory damages

for a violation of the Communications Act of 1934, 47 U.S.C.

§§ 553 and 605. Pending before the Court is Plaintiff’s

application for default judgment against Defendants Jose Luiz

Alvarado and Hortencia Alvarado, individually and doing business

as Alvarado & Corona’s Den. The matter has been referred to the

Magistrate Judge pursuant to 28 U.S.C. § 636(b) and Local Rule

72-302(c)(19).

I. Procedural History

Plaintiff filed a complaint on December 7, 2004, for

statutory damages, costs, and attorney’s fees pursuant to 47

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U.S.C. §§ 553 and 605 for an unauthorized and wilful interception

of a licensed interstate communication of a sporting event.

Defendant Hortensia Alvarado was personally served on

January 3, 2005. A Summons was served on Jose Luiz Razo Alvarado

on April 23, 2005, when the Summons and Complaint were left at

his dwelling with Ray Hurtado, brother-in-law of Jose Luiz Razo

Alvarado. The defendants failed to answer or otherwise respond

as required. Plaintiff requested that defaults of the Defendants

be entered. The Clerk entered Default as to Jose Luiz Razo

Alvarado on June 15, 2005, and against Hortencia Alvarado on

June 24, 2005. 

On February 26, 2007, Plaintiff filed a notice of

motion and motion for default judgment against the Defendants; a

memorandum of points and authorities; and affidavits of Marcus W.

Corwin, Cory Westbury, and attorney Martin B. Greenbaum. Proofs

of service show that these documents were served by mail on Jose

Luis Ruiz Alvarado at 5804 West Cromwell, Fresno, CA, 93722, and

on Hortensia Alvarado at 27699 Avenue 13, Madera, CA, 93637, on

February 22, 2007. 

Plaintiff’s application for default judgment against

Defendants came on regularly for hearing on March 30, 2007 at

9:30 a.m. in Courtroom No. 7 before the Honorable Sandra M.

Snyder, Chief United States Magistrate Judge. Martin B.

Greenbaum, Esq., of Greenbaum Law Group, LLP, appeared

telephonically on behalf of Plaintiff, and argued on Plaintiff’s

behalf. Defendants were personally present in the courtroom and

were apprised of the status of the case. The matter was

submitted for preparation of findings and recommendations.

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II. Claims Presented

The Complaint alleges that Plaintiff entered into a

closed-circuit license agreement to exhibit the closed-circuit

telecast on September 14, 2002, of the championship boxing match

between Oscar De La Hoya and Fernando Vargas from the Mandalay

Bay Hotel and Casino in Las Vegas including the preliminary bouts

and all related bouts (collectively “the Event”). According to

state law the Event was legally available to the public only

through a commercial establishment such as a bar or restaurant

only after the establishment entered into a contractual agreement

with Plaintiff to do so. Residential cable subscribers could

view the event only by purchasing it for an additional fee

through a residential pay-per-view cable system.

Commercial establishments which contracted with the

Plaintiff were required to pay a sublicense fee. Defendants,

individuals doing business as Alvarado & Corona’s Den, did not

contract with Plaintiff to exhibit the Event. It was alleged

that on September 14, 2002, without authorization, Defendants

wilfully intercepted and/or received, or assisted interception or

receipt of the interstate communication of the Event; they then

transmitted and published, or assisted in the transmission or

publication of the communication to patrons within Defendants’

premises at Alvarado & Corona’s Den without authorization to do

so. Plaintiffs alleged that the Defendants thus misappropriated

Plaintiff’s licensed exhibition of the Event, infringed upon

Plaintiff’s exclusive rights which avoided proper payment, and

permitted patrons of Defendants to view the Event without

Defendants’ or patrons’ being authorized to do so. 

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In the first claim, Plaintiffs alleged that they were

persons aggrieved by Defendants’ conduct, which violated the

Communications Act of 1934, 47 U.S.C. § 553, which prohibits the

interception, receipt, or assistance of reception or receipt, of

any communications service offered over a cable system unless

specifically authorized to do so by a cable operator or as

specifically authorized by law.

In the second claim, Plaintiffs alleged that they were

persons with a proprietary right in the communication and thus

were aggrieved by Defendants’ conduct, which violated the

Communications Act of 1934, 47 U.S.C. § 605, which prohibits the

unauthorized interception and publication, or assistance therein, 

of any interstate radio communication for the benefit of the

person intercepting and publishing the communication or for the

benefit of another who is not entitled to such benefits. 

Plaintiff seeks statutory damages under both 47 U.S.C.

§§ 553(c)(3)(A)(ii)& (B) and 605(e)(3)(C)(i)(II) & (C)(ii), costs

and attorneys fees as provided in both aforementioned sections. 

III. Evidence Submitted in Support of the Motion

In an affidavit dated July 22, 2005, (Motion, Ex. A),

Marcus W. Corwin, President of Secure Signal, Inc., for Plaintiff

Garden City Boxing Club, Inc., restated the general allegations

of the complaint. He stated that the Event was legally available

to commercial establishments in California only through a

contractor agreement with Plaintiff, pursuant to which the

establishments were required to pay to Plaintiff a sublicense fee

to receive the Event. The sublicense fee was based on the

capacity of the establishment. The fee was based on $20 times

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the maximum fire code occupancy of the commercial establishment

purchasing the Event. To safeguard against unauthorized

interception or receipt of the Event, the interstate satellite

transmission of the Event was electronically coded or scrambled

and was not available to or intended for the use of the general

public. If a commercial establishment was authorized by

Plaintiff to receive the Event, the establishment was provided

with the electronic decoding equipment and/or the satellite

coordinates necessary to receive the signal.

On September 14, 2002, without authorization, the

Defendants, Jose Luiz Razo Alvarado and Hortencia Alvarado,

individually and jointly and dba Alvarado & Corona’s Den

intercepted and received or assisted in the interception and

receipt of the transmission of the Event and broadcast or

assisted in the broadcast of the Event. On the night of the

Event, and investigator employed by Plaintiff observed the Event

being telecast to patrons of Defendant’s commercial

establishment. 

In negotiating sublicenses, Plaintiff represented to

commercial establishments the location of other authorized

commercial establishments licensed to receive the broadcast;

thus, unauthorized interception and exhibition of closed-circuit

programming such as the Event resulted in an impression that

Plaintiff had misrepresented the number and location of other

broadcasts. Thus, Plaintiff suffered a loss of reputation and

goodwill, as well as a further indirect consequence of loss of

future business from legitimate commercial establishments which

would refuse to pay sublicense fees because of the difficulty or

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impossibility of competing with unauthorized commercial

establishments which pirated programs without having to pay a

fee. Further, Defendants’ patrons purchased food and/or drinks

while viewing the Event. But for the Defendants’ pirating,

Defendants’ patrons would have had to view the Event at an

authorized commercial establishment. Defendants’ broadcast

caused authorized establishments to lose patrons and thus to fail

to recover the amounts of the sublicense fees paid by the

authorized establishments. Further, each of Defendants’ patrons

was lost as a patron of an authorized broadcast, and Defendants’

customer base was eroded.

Corwin also stated that because the Event was broadcast

to Defendants’ patrons, Defendant’s only purpose and intent in

exhibiting the Event was to secure a private financial gain and

direct commercial purposes by misappropriating Plaintiff’s

licensed exhibitions and infringing upon Plaintiff’s rights while

avoiding proper payment to Plaintiff. Corwin characterized

Defendants as willful violators of the statute who must be held

accountable for a substantial amount above the market value of

the sublicense fees; otherwise, other commercial establishments

would be encouraged to violate the law, knowing the full extent

of its liability would not exceed what they would have to pay for

a license on the open market. Corwin stated that the award of

damages must be sufficiently significant to deter Defendants and

other unauthorized commercial establishments from pirating

protected communications.

//

/ 

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In the affidavit of Kory Westbury (Motion, Ex. B),

Westbury indicates that he entered the establishment on Saturday,

September 14, 2002 at (time illegible) and observed approximately

70 people in the bar. There was one television provided for

viewing by the patrons. This television was located in a

secondary room inside the bar to the left of the entry. Westbury

states that a preliminary bout between Miguel Cotto and John

Brown was in progress at the Mandalay Bay Resort in Las Vegas and

was being displayed at Alvarado and Corona’s Den while he was

observing. He observed two announcers, Jim Lampley and George

Foreman, discussing the fight card. There was a “promotion

poster” at the door indicating the De La Hoya/Vargas fight, and a

$5.00 per person cover charge was being collected from entering

customers by a female employee who was sitting at the entrance

door. Westbury did not indicate how long he remained in the

establishment, did not state the maximum fire code capacity of

the establishment nor the number of vehicles in the parking lot.

Martin B. Greenbaum, attorney for Plaintiff, submitted

a Declaration in Support of Request for Attorneys Fees (Motion,

Ex. C). He states the schedule of default attorney fees shows a

total of $5,820.00 in attorneys fees, however, no such schedule 

was submitted with the motion or his subsequent declaration filed

on April 30, 2007 (Doc. 24). He further asks for damages in the

sum of $110,000.00.

IV. Default Judgment

A court has the discretion to enter a default judgment

against one who is not an infant, incompetent, or member of the

armed services where the claim is for an amount that is not

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certain on the face of the claim and where (1) the defendant has

been served with the claim; (2) the defendant’s default has been

entered for failure to appear; (3) if the defendant has appeared

in the action, the defendant has been served with written notice

of the application for judgment at least three days before the

hearing on the application; and, (4) the court has undertaken any

necessary and proper investigation or hearing in order to enter

judgment or carry it into effect. Fed. R. Civ. P. 55(b); Alan

Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392 (9th

Cir. 1988). Factors that may be considered by courts in

exercising discretion as to the entry of a default judgment

include the nature and extent of the delay, Draper v. Coombs, 792

F.2d 915, 924-925 (9 Cir. 1986); the possibility of prejudice th

to the plaintiff, Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th

Cir.1986); the merits of plaintiff's substantive claim, id.; the

sufficiency of the allegations in the complaint to support

judgment, Alan Neuman Productions, Inc., 862 F.2d at 1392; the

amount in controversy, Eitel v. McCool, 782 F.2d at 1471-1472;

the possibility of a dispute concerning material facts, id.;

whether the default was due to excusable neglect, id.; and, the

strong policy underlying the Federal Rules of Civil Procedure

that favors decisions on the merits, id.

A default judgment generally bars the defaulting party

from disputing the facts alleged in the complaint, but the

defaulting party may argue that the facts as alleged do not state

a claim. Alan Neuman Productions, Inc. v. Albright, 862 F.2d

1388, 1392. Thus, well pleaded factual allegations, except as to

damages, are taken as true; however, necessary facts not

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contained in the pleadings, and claims which are legally

insufficient, are not established by default. Cripps v. Life

Ins. Co. of North America, 980 F.2d 1261, 1267 (9 Cir. 1992); th

TeleVideo Systems, Inc. av. Heidenthal, 826 F.2d 915, 917 (9th

Cir. 1987).

A. Status of Parties, Service, Notice, Entry of Default

Defendant Hortensia Alvarado was personally served on

January 3, 2005. A Summons was served on Jose Luiz Razo Alvarado

on April 23, 2005, when the Summons and Complaint were left at

his dwelling with Ray Hurtado, brother-in-law of Jose Luiz Razo

Alvarado. The declaration of due diligence of the process server

shows attempted service on two occasions on Jose Luiz Razo

Alvarado, after which the processor employed substituted service

on April 23, 2005. Bonita Packing Co. v. O’Sullivan, 165 F.R.D.

610, 613 (C.D.Cal. 1995); Espindola v. Nunez, 199 Cal.App.3d

1389, 1391-92 (1988). Both parties are persons at least eighteen

years of age, and thus are not infants. Neither is an

incompetent or a member of the armed forces. 

The Court finds that the service here satisfies

Fed.R.Civ.P. § 4(e) and Cal.Civ.Proc.Code § 415.20(b), and that

Defendants were both properly served with process. However,

Defendants did not respond to the complaint. Further, the Court

finds that they were served with the default entered by the

Clerk.

Defendants were also served with Plaintiff’s motion for

default judgment and thus received notice of Plaintiff’s

application for a default judgment. In addition, the notice was

adequate pursuant to Fed. R. Civ. P. 55(d) and 54(c), which

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require that a judgment by default shall not be different in kind

from or exceed in amount that prayed for in the demand for

judgment. Plaintiff expressly alleged in the complaint that

Plaintiff sought damages resulting from the interception and

exhibition and that the total amount of damages sought was

$60,000.00 plus costs and fees for the first claim, and

$110,000.00 plus costs and fees for the second claim. Thus,

Plaintiff gave adequate notice of its claim for an amount that

exceeds the amount that is recommended to be awarded.

B. Sufficiency of the Complaint

“Upon default, the well pleaded allegations of the

complaint relating to liability are taken as true.” Dundee

Cement Co. v. Highway Pipe and Concrete Products, 722 F.2d 1319,

1323 (7th Cir. 1983); Televideo Systems, Inc. v. Heidenthal, 826

F.2d 915, 917 (9th Cir. 1987). Thus, “[a]t the time of entry of

default, the facts alleged by the plaintiff in the complaint are

deemed admitted.” 10 J. Moore, Moore's Federal Practice §55.11

(3d ed. 2000). 

Rule 55(b)(2) of the Federal Rules of Civil Procedure

provides, in pertinent part, that judgment by default may be

entered by the Court, as follows:

If, in order to enable the court to enter judgment

or to carry it into effect, it is necessary to

take an account or to determine the amount of

damages or to establish the truth of any averment

by evidence or to make an investigation of any

other matter, the court may conduct such hearings

or order such references as it deems necessary and

proper and shall accord a right of trial by jury

to the parties when and as required by any statute

of the United States.

//

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At the hearing on the motion for default judgment on

March 30, 2007, the Court questioned Plaintiff about the

propriety of proceeding pursuant to both §§ 553 and 605, and

after discussion, counsel was directed to advise the court

whether Defendants pirated the Event by use of cable or satellite

reception in order for the court to properly assess damages. In

his response filed on April 30, 2007, Plaintiff stated that “this

information is beyond the percipient knowledge of Plaintiff and

solely within the percipient knowledge of defendants. Plaintiff

knows the signal was pirated but does not know how the scheme was

perpetrated. Both statutes fix statutory penalty from $10,000 up

to $100,000, and Plaintiff requests the lowest of the two

penalties based on the information already submitted.” (Decl.,

4/30/07, p.l:28 - 2:1-3).

The allegations of the complaint establish that

Defendants received the program but were not authorized to do so. 

Further, Defendants admitted to the violation when they made an

appearance on March 30, 2007. Thus, the Court finds that

Defendants have violated § 553(a)(1). Home Box Office v. Gee-Co

Inc., 838 F.Supp. 436, 439 (E.D.Mo. 1993).

C. Damages

Title 47 U.S.C. § 553 provides for actual or statutory

damages; statutory damages are for all violations involved in the

action and are in a sum of not less than $250 or more than

$10,000 as the court considers just. 47 U.S.C. § 553(c)(3)(A)(ii).

If the Court finds that the violation was committed willfully and

for purposes of commercial advantage or private financial gain,

the court in its discretion may increase the award of damages,

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whether actual or statutory, by an amount of not more than

$50,000. § 553 (c)(3)(B).

Evidence as to damages must be provided even though the

judgment is based on a default. See TeleVideo Systems, Inc. v.

Heidenthal, 826 F.2d 915, 917-18 (9 Cir. 1987). th

Under § 553, Plaintiff seeks statutory damages in the

amount of $10,000 [§ 553(c)(3)(A)(ii)], and statutory damages for

wilfulness in the amount of $50,000 [§ 553(c)(3)(B)].

Plaintiff contends that the Defendants only purpose and

intent in exhibiting the Event was to secure private financial

gain and direct commercial purposes. Here, while the Event was

broadcast in a commercial setting, there is no evidence of

significant “commercial advantage or private financial gain.” 

Plaintiff alleges that Defendants charged a cover charge to enter

the establishment, but the evidence is unclear as to whether or

not all of the estimated 70 patrons of the establishment paid the

cover charge of $5.00. The evidence does not reveal the size or

capacity of the secondary room where the television was located,

or give an estimate of how many patrons were viewing the Event in

the secondary room. There is no evidence that the Defendants

charged a premium for drinks or other services. In response to

the question regarding advertising or promotion of the Event,

Westbury states that a poster was at the front door indicating

the De La Hoya/Vargas fight. There is no evidence as to how

large the sign was, or how long it had been in place. The

existence of such a sign, without more, is not an indication of

active or blatant promotion of the Event to the surrounding

community. While Defendants clearly violated the provisions of

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§ 553, because the cover charge was minimal, the advertising less

than effective, and no premium charges were shown to be in effect

for food and drink, Plaintiff has failed to prove a substantial

wilful violation in this case. 

Here, there is only one violation. The award cannot

precisely reflect the financial loss that Plaintiff suffered with

reference to the fee that Plaintiff could have charged because

the declarations do not provide evidence of the capacity of the

establishment. Corwin’s affidavit (p. 2, ¶ 7) only refers to a

fire occupancy capacity of 150 persons by way of example, and not

as the actual characteristic of the Defendants’ establishment. 

Thus, even if the Court accepts that the formula for the fee is

20 times the capacity, there is no evidentiary basis to calculate

the claimed loss.

Plaintiff seeks additional compensation to account for

any profits gained by the Defendants for meals and/or drinks sold

to the patrons as an indirect result of their unlawful acts. 

Plaintiff has not provided the Court with the maximum allowable

capacity nor is there any evidence that the Defendants charged a

premium for the food and drink served. The advertising was

minimal with no evidence of any advertising at any time prior to

the Event. As a result, the Court has little or no basis for

computing precisely the claimed loss.

Likewise, because of an absence of facts concerning the

volume of Plaintiff’s business or the effect of Defendants’ acts

on that volume, Plaintiff’s claim for the loss of goodwill or the

indirect loss of profits from Defendants’ broadcast is

speculative. Cf. Kingvision Pay-per-View, Ltd. v. Backman, 102

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This Court is unaware of the existence of any court schedule of

attorneys fees based upon the amount of damages awarded. 

14

F.Supp.2d at 1198; Entertainment by J & J, Inc. v. Perez, 2000 WL

890819 at *2 (N.D. Cal. 2000). 

Because Defendants did not have authorization to

intercept or exhibit the Event, their conduct was willful in the

sense that it evinced a disregard for the governing statute and

an indifference for its requirements. See ON/TV v. Julien, 763

F.2d 839, 844 (7 Cir. 1985). The Court concludes that despite th

the lack of aggravating circumstances surrounding the Defendants’

violation, the violation itself falls squarely within the scope

of the statute and is contrary to the policies underlying the

Federal Communications Act. See Home Box Office v. Gee-Co, Inc.,

838 F.Supp. 436, 439 (E.D.Mo. 1993). Justice requires the

imposition of statutory damages which are not excessive, and

which yet are not insubstantial. Thus, Plaintiff should be

awarded $2,500.00 in statutory damages for the violation. 

D. Attorney Fees and Costs

Title 47 U.S.C. § 553(c)(2)(C) provides that the Court

may direct the recovery of full costs, including awarding

reasonable attorneys’ fees, to a prevailing aggrieved party. 

Here, Plaintiff has prevailed. The declaration of

Attorney Greenbaum requests attorney fees in the amount of

$5,820. In his Motion Greenbaum states: “Based on the amount of

damages requested, the default attorneys fees per the courts

schedule is $5,820.00.” (Motion, p. 22:23-24) 1

//

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At the March 30, 2007, hearing, the Court informed

Plaintiff’s attorney that no schedule setting forth a basis for

awarding attorney fees had been provided to the Court. 

Plaintiff’s attorney was directed to provide a proper request for

attorney fees in detail, setting forth the hours expended and the

hourly rate charged, along with a proper claim for costs incurred

on behalf of Plaintiff. This information was to be provided in

further briefing to be filed on or before April 30, 2007. The

Plaintiff’s Declaration Re Motion for Default filed on April 30,

2007 makes no reference whatsoever to either attorneys fees or

costs. Thus, despite the fact that counsel was afforded a second 

opportunity to provide the proper documents to support an award

of discretionary attorney fees and costs, he has not done so. 

For these reasons, the Court, in its discretion, declines to

award attorney fees and costs. 

V. Recommendation

Accordingly, it is RECOMMENDED that:

1. Plaintiff’s application for default judgment

against Defendants JOSE LUIZ RAZO ALVARADO and HORTENCIA ALVARADO

be GRANTED; 

2. Judgment against Defendants JOSE LUIZ RAZO

ALVARADO and HORTENCIA ALVARADO, individually and doing business

as Alvarado & Corona’s Den, in the combined amount of $2,500.00

statutory damages be ENTERED, but that the motion otherwise be

DENIED; 

3. The request for attorney fees and costs be DENIED;

and;

//

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4. Defendants Jose Luiz Razo Alvarado and Hortensia

Alvarado, who appeared at the March 30, 2007, hearing be served

with a courtesy copy of these Findings and Recommendations as

follows:

Jose Luiz Razo Alvarado

Hortensia Alvarado

P.O. Box 601

Biola, CA 93606

These findings and recommendation is submitted to the United

States District Judge assigned to the case, pursuant to the

provisions of 28 U.S.C. § 636 (b)(1)(B) and Rule 72-304 of the

Local Rules of Practice for the United States District Court,

Eastern District of California. Within thirty (30) days from the

date of service of this order, any party may file written

objections with the court and serve a copy on all parties. Such

a document should be captioned “Objections to Magistrate Judge’s

Findings and Recommendation.” Replies to the objections shall be

served and filed within ten (10) court days (plus three days if

served by mail) after service of the objections. The Court will

then review the Magistrate Judge’s ruling pursuant to 28 U.S.C.

§ 636 (b)(1)(C). The parties are advised that failure to file

objections within the specified time may waive the right to

appeal the District Court’s order. Martinez v. Ylst, 951 F.2d

1153 (9th Cir. 1991).

IT IS SO ORDERED.

Dated: May 11, 2007 /s/ Sandra M. Snyder 

icido3 UNITED STATES MAGISTRATE JUDGE

Case 1:04-cv-06664-AWI -SMS Document 25 Filed 05/11/07 Page 16 of 16