Opinion
3:20-cv-01171-JR
05-07-2021
G&G CLOSED CIRCUIT EVENTS, LLC, a California limited liability company, Plaintiff, v. ISMAEL LOPEZ MARIN, aka Ismael Lopez, individually, and dba Al Estilo Michoacan Taqueria, Defendant.
FINDINGS AND RECOMMENADTION
Jolie A. Russo United States Magistrate Judge
Defendant Ismael Lopez Marin, doing business as Al Estilo Michoacan Taqueria (the “Restaurant”), and plaintiff G&G Closed Circuit Events, LLC cross-move for summary judgment pursuant to Fed.R.Civ.P. 56(a). In the alternate, plaintiff opposes defendant's motion under Fed.R.Civ.P. 56(d) . For the reasons set forth below, the parties' motions are granted in part and denied in part.
To the extent plaintiff and defendant attack each other's recitation of facts, this Court is not bound by either party's characterization of the evidence and instead independently reviews the record and any relevant legal authority to determine whether summary judgment is appropriate. Only the facts sustained by the record are recounted herein.
At some unspecified time, plaintiff purchased the exclusive closed-circuit exhibition and distribution rights to “Gennady Golovkin v. Saul Alvarez IBF World Middleweight Championship Fight Program” (the “Fight”). Gagliardi Decl. ¶¶ 4-5 & Ex. 1 (doc. 37). Plaintiff subsequently entered into sublicensing agreements regarding distribution of the Fight with various cable and/or satellite television service providers. Id. at ¶ 6. Commercial establishments, including those in Oregon, could purchase rights to broadcast the Fight for $2, 800. Id. at ¶¶ 8-9.
Mr. Marin owns and operates the Restaurant, located in Beaverton, Oregon. Marin Decl. ¶ 2 (doc. 29-1). Mr. Marin's adult daughter, Dulce Lopez, purchased a residential license from a Comcast store in relation to the Fight. Lopez Decl. ¶ 3 (doc. 29-2). On September 14, 2018, Ms. Lopez promoted the Fight via the Restaurant's Facebook page. Id. at ¶ 4. There was also an advertisement for the Fight placed on the door of the Restaurant. Kemppainen Aff. pg. 1 (doc. 36).
On September 15, 2018, Ms. Lopez brought her personal cable box into the Restaurant and hooked it up to the Restaurant's television/cable system. Lopez Decl. ¶ 5 (doc. 29-2). The Fight was displayed on two television screens and a number of patrons were present. Kemppainen Aff. pg. 1 (doc. 36). Ms. Lopez was subsequently hired as an employee at the Restaurant. Lopez Decl. ¶ 2 (doc. 29-2).
On July 20, 2020, plaintiff filed a Complaint in this Court against defendant, alleging federal piracy claims pursuant to 47 U.S.C. § 553 and 47 U.S.C. § 605, as well as trespass to chattel under Oregon law.
STANDARD
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, affidavits, and admissions on file, if any, show “that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed R. Civ. P. 56(a). Substantive law on an issue determines the materiality of a fact. T.W. Elec. Servs., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of the dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts that show a genuine issue for trial. Id. at 324.
Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec., 809 F.2d at 630.
DISCUSSION
Plaintiff seeks summary judgment as to liability in regard to its 47 U.S.C. § 553 claim, arguing that “the undisputed facts establish . . . the Program was broadcast to the patrons of Defendant without a license from Plaintiff to do so.” Pl.'s Mot. Partial Summ. J. 9 (doc. 35). In addition, plaintiff requests a determination of liability and “damages in the amount of $2, 800” - i.e., the cost of a commercial subscription to the Fight - as to its trespass to chattel claim. Id. at 2, 13. Alternatively, plaintiff asserts that, because Mr. Marin's declaration is vague concerning his actions and/or knowledge of Ms. Lopez's activities on the night in question, summary judgment should be deferred to allow for depositions and discovery into “ who was at the establishment.” Pl.'s Resp. to Mot. Summ. J. 13-16 (doc. 38).
Defendant, in contrast, argues that summary judgment is warranted in his favor for three reasons. First, defendant maintains § 605 is “inapplicable to this case” because there is no evidence that a satellite signal, as opposed to a cable signal, was intercepted. Def.'s Mot. Summ. J. 5-8 (doc. 29). Second, according to defendant, no federal liability can attach in light of his “complete lack of involvement with the interception of the cable signal carrying the program coupled with [his] ignorance of the fact that the Program was going to be displayed at the restaurant by Ms. Lopez.” Id. at 8-9. Third, defendant contends that plaintiff's trespass to chattel claim fails as a matter of law because his actions cannot be characterized as intentional and a cable signal does not qualify as “tangible, movable, personal property.” Id. at 9-10.
I. Federal Claims
Sections 553 and 605 both target cable programming piracy. See Kingvision Pay Per View, Ltd. v. Owens, 982 F.Supp. 803, 805 (D. Kan. 1997) (“[c]ourts generally have held that section 605 applies to interception or receipt of cable television signals before they begin to travel through the cable, while section 553 applies to the interception or receipt of cable service transmissions at the point in the system that the transmission is carried by coaxial cable or wire”) (citations and internal quotations omitted). Although a defendant may be liable under both §§ 553 and 605, the aggrieved party may only recover damages under one section. See, e.g., G&G Closed Circuit Events, LLC v. Alexander, 2020 WL 1904628, *3 (D. Ariz. Apr. 17, 2020); Joe Hand Promotions, Inc. v. Phillips, 2020 WL 3404964, *4 (S.D. Fla. June 19, 2020).
Plaintiff recognizes that it would “be appropriate for this Court to deem moot [its] claim for relief under 47 U.S.C. § 605 for broadcasts by satellite” if judgment is entered under § 553 based on defendant's concession that the Fight “was broadcast in his Establishment by use of a residential cable box.” Pl.'s Resp. to Mot. Summ. J. 13 (doc. 38). Accordingly, the Court's analysis focuses on § 553. See J&J Sports Prods., Inc. v. Silva, 2017 WL 5632659, *2 (D. Or. Nov. 20, 2017) (where there is no evidence of the method of piracy, courts in this district “more commonly apply § 553”) (citation and internal quotations omitted).
It is well-established that 47 U.S.C. § 553 is a strict-liability statute. See, e.g., id.; Joe Hand, 2020 WL 3404964 at *4. The plaintiff need only show that: (1) it owns the program; and (2) the defendant infringed on one of more of its exclusive rights by broadcasting the program in its commercial establishment. Kingvision Pay-Per-View Ltd. v. Lake Alice Bar, 168 F.3d 347, 349 (9th Cir. 1999). In other words, liability attaches at summary judgment irrespective of whether the “defendant knew of or intended” the infringement. Joe Hand Prods., Inc. v. Dubois, 2020 WL 4342216, *2 (S.D. Ala. July 27, 2020).
Here, plaintiff has demonstrated that it was the exclusive distributor of the Fight to commercial viewing locations in Oregon and elsewhere in the United States. Gagliardi Decl. ¶¶ 4-6, 9 (doc. 37). It is equally undisputed that the Restaurant broadcasted the Fight without a commercial license on September 15, 2018.
Specifically, the defendant submitted an affidavit signed by its investigator, Kenneth Kemppainen, stating that he personally observed the Restaurant exhibit the Fight on two television screens. Kemppainen Aff. pg. 1 (doc. 36). He also personally observed an advertisement for the Fight on the Restaurant's door. Id. Mr. Kemppainen estimated that the Restaurant had a capacity of about 75 people and noted there were 40-45 individuals present on the night in question. Id. Mr. Kemppainen took video from inside the Restaurant showing the televisions and crowd. Orr Decl. Ex. 1, at 3-5 (doc. 39). The declarations of Ms. Lopez and Mr. Marin tacitly acknowledge that the Fight was displayed in the Restaurant on September 15, 2018, and was promoted and advertised in advance. Marin Decl. ¶¶ 3-8 (doc. 29-1); Lopez Decl. ¶¶ 4-8 (doc. 29-2).
Similarly, Ms. Lopez and Mr. Marin acknowledge that a commercial sublicensing fee was not paid in association with the Fight. Id. Consistent therewith, Nicholas Gagliardi, President of G&G Closed Circuit Events, LLC, submitted a declaration stating that defendant did not pay the commercial sublicensing fee to receive the Fight transmission through its cable or satellite provider and, thus, plaintiff neither authorized defendant to exhibit the Fight nor did it notify defendant's cable provider to allow the Restaurant to receive the Fight. Gagliardi Decl. ¶¶ 7-8 (doc. 37). Given these undisputed facts, the Court must conclude that the Restaurant infringed on defendant's exclusive rights under 47 U.S.C. § 553 .
Defendant's argument that he did not “intercept” or “receive” the Fight transmission because it “traveled through Comcast's cable television system to a cable box, which was registered to and controlled by Ms. Lopez, ” is specious. Def.'s Reply to Mot. Summ. J. 5-8 (doc. 41); Def.'s Resp. to Mot. Partial Summ. J. 5 (doc. 42). It is undisputed the Restaurant's television system was configured for cable, which Ms. Lopez directly accessed and over which the Fight was displayed. The case law discussed herein controverts defendant's assertion that courts have limited liability for non-subscribers to circumstances where there is an affirmative act of interception. See J&J Sports Prods., Inc. v. Marini, 2017 WL 3284306, *3-4 (E.D. Cal. Aug. 2, 2017) (“[d]isplaying the Program for bar patrons” is sufficient to establish unauthorized interception or receipt where no commercial license was obtained).
The absence of any individual effort by Mr. Marin to intercept the Fight's cable transmission does not alter the Court's analysis for three reasons. First, as addressed herein, § 553 is a strict-liability statute with no good-faith defense; evidence of willfulness or intent, or a lack thereof, is relevant only to damages:
There are no mens rea or scienter elements for a non-willful violation of 47 U.S.C. § 605(a), or its counterpart governing unauthorized interception of cable service under 47 U.S.C. § 553(a) . These are strict liability offenses with no good faith defense. Intent is immaterial to liability, but intent is relevant to the calculation of plaintiff's remedies with regard to the augmented amounts for liquidated damages for willful violations. Both statutes impose liability even when the violator was not aware and had no reason to believe that his acts constituted a violation.Joe Hand Promotions, Inc. v. Easterling, 2009 WL 1767579, *4 (N.D. Ohio June 22, 2009) (internal citations and quotations omitted).
Second, defendant operates the Restaurant as a sole proprietorship. Second Am. Answer ¶ 8 (doc. 18). The Court notes that case law generally distinguishes between the liability of the legal entity and the individual members/shareholders in the context of multiple-member limited liability companies. See G&G Closed Circuit Events, LLC v. Single, LLC, 2020 WL 5815050, *2-5 (W.D. Wash. Sept. 30, 2020) (summary judgment proper as to the business entity but not the individual members where the plaintiff failed to prove they profited from or had supervisory authority over the infringement of the Fight); Joe Hand Prods. v. Holmes, 2015 WL 5144297, *5-7 (D. Or. Aug. 31, 2015) (an individual's status as owner, operator, or shareholder “does not, on its own, subject him to personal liability [for an establishment's piracy] because the entity is a limited liability corporation”); but see Alexander, 2020 WL 1904628 at *3 (managing member with operational control vicariously liable for the limited liability company's infringement of the Fight: “It is not necessary that Mr. Alexander violated the law himself or that he was present for the violation [because he] was part-owner of the business, which in this context is sufficient”).
Yet defendant has not cited to, and the Court is not aware of, any authority that has made an analogous distinction in the context of sole proprietorships. This is likely because a sole proprietorship has no legal existence separate from its owner (even where the sole proprietorship operates under a fictitious business name). Sharemaster v. U.S. Sec. & Exchange Comm'n, 847 F.3d 1059, 1066 n.4 (9th Cir. 2017). Thus, unlike limited liability companies, corporations, etc., an individual does not create a separate legal entity by doing business as a sole proprietor - rather, the individual and the sole proprietorship are legally indistinguishable, such that the individual remains personally responsible for the business's liabilities. See Brown & McAlpin v. Dep't of Revenue, 3 O.T.R. 481, 486-88 (Or. Tax Ct. 1969) (incorporation provides individual taxpayers with a limit of personal liability such that separate legal entities should not be held to sole proprietorship standards for tax purposes); see also White v. Amedisys Holding, LLC, 2012 WL 7037317, *5 (D. Or. Dec. 18, 2012), adopted by 2013 WL 489674 (D. Or. Feb. 7, 2013) (no personal liability exists for aiding and abetting employment discrimination “if the employee is legally equivalent to the employer, as in a sole proprietorship”).
Third, the record before the Court suggests that Ms. Lopez possessed apparent authority to act as Mr. Marin's agent. “Classically, an agency relationship results from the manifestation of consent by one person to another that the other shall act on behalf and subject to his control, and consent by the other so to act.” Eads v. Borman, 351 Or. 729, 735-36, 277 P.3d 503 (2012) (citation and internal quotations omitted). This relationship “can arise either from actual consent (express or implied) or from the appearance of such consent.” Id. at 736. In either instance, the principal is “responsible for the actual or apparent agent's acts only if the acts are within the scope of what the agent is actually or apparently authorized to do.” Id.
Irrespective of whether Ms. Lopez had actual authority to act on Mr. Marin's or the Restaurant's behalf, she appeared to have such authority. Although defendant's motion for summary judgment does not acknowledge Ms. Lopez as Mr. Marin's daughter, and their respective declarations conspicuously avoid the nature of their working relationship, the record plainly demonstrates that Ms. Lopez had access and permission to post on the Restaurant's social media pages. Lopez Decl. ¶ 4 (doc. 29-2). Staff clearly understood Ms. Lopez to have authorization to use the Restaurant's facilities and property, including its televisions and cable systems, and she was hired as an employee after the Fight was aired. Id. at ¶¶ 2, 6-8. Moreover, Mr. Marin does not deny being at the Restaurant on September 15, 2018, or having knowledge that the Fight was being broadcast - rather, he merely attests that, prior to September 15, 2018, he had no knowledge that any “employee, staff member, or other individual” intended to display the Fight at the Restaurant or had purchased a license of any kind related thereto. Marin Decl. ¶¶ 3-6 (doc. 29-1).
Plaintiff explicitly argues that it is “entitled to an inference based upon [Mr. Marin's] declaration that he did know of the illegal broadcast [at] the time it was broadcast in his Establishment.” Pl.'s Mot. Partial Summ. J. 11-12 (doc. 35); Pl.'s Resp. to Mot. Summ. J. 10-11 (doc. 38). Defendant's briefs are silent as to this issue, despite having the repeated opportunity to address it; at no point does defendant directly assert that he was not at the Restaurant or aware, at the time the Fight was displayed, of his daughter's actions. See generally Marin Decl. (doc. 29-1); Def.'s Reply to Mot. Summ. J. (doc. 41); Def.'s Resp. to Mot. Partial Summ. J. (doc. 42); see also Justice v. Rockwell Collins. Inc., 117 F.Supp.3d 1119, 1134 (D. Or. 2015), aff'd, 720 Fed.Appx. 365 (9th Cir. 2017) (“if a party fails to counter an argument that the opposing party makes in a motion, the court may treat that argument as conceded”) (citation and internal quotations and brackets omitted). At most, Mr. Marin states he did not provide permission or authorization “to any employee or Restaurant staff member” to broadcast the Fight - the omission of the “any other individual” or “volunteer” language, which appears in earlier portions of his declaration, is telling given that Ms. Lopez was not employed by the Restaurant at the time of the transmission. Marin Decl. ¶¶ 7-8 (doc. 29-1).
The only reasonable inference is that Mr. Marin implicitly consented to allow Ms. Lopez to act for him and/or the Restaurant in regard to the commercial broadcast of the Fight. See Eads, 351 Or. at 736-37 (actions give rise to an agency relationship where the principal “take[s] some affirmative step [that he or she] should realize likely would cause a third party to believe that the putative agent has authority to act, ” even if those steps are “not . . . witnessed directly by or made directly to the third party”) (citations and internal quotations omitted); see also Vaughn v. First Transit, Inc., 346 Or. 128, 137-39, 206 P.3d 181 (2009) (agency relationship exists if the principal “retains control over the details of the manner in which [the non-employee agent] performs its duties” - that is, where “the principal authorized or intended the agent to act on its behalf with respect to the conduct that gave rise to the third party's claim”) (citations and internal quotations omitted).
In sum, given the applicable legal standard and Mr. Marin's role as sole proprietor, coupled with the uncontroverted evidence concerning the nature of Ms. Lopez's personal and professional relationship with Mr. Lopez and the Restaurant, the legal distinctions that defendant attempts to draw between their actions are not material. Plaintiff's motion should be granted as to liability in regard to its § 553 claim.
II. State Claim
To demonstrate trespass to chattel, the plaintiff must support each element of a conversion claim. The only difference is the extent of the interference, as the tort allows recovery “for interferences with the possession of chattels which are not sufficiently important to be classed as conversion.” Morrow v. First Interstate Bank, N.A., 118 Or.App. 164, 168, 847 P.2d 411 (1993) (citation and internal quotations omitted). Conversion, in turn, is defined as “an intentional exercise of dominion and control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel.” Id. at 171 (citation and internal quotations omitted).
Although courts routinely considered trespass to chattel claims in conjunction with allegations of piracy under 47 U.S.C. § 553 and 47 U.S.C. § 605, there exists minimal, if any, published case law within the Ninth Circuit pertaining to cable signals or signal distribution rights. However, in the context of a default judgment, this District has resolved “[t]he exclusive right to distribute a broadcast signal to commercial establishments constitutes a right to possession of property for purposes of conversion or its sister tort, trespass to chattel.” J&J Sports Prods., Inc. v. Gonzalez, 2017 WL 6945169, *3 (D. Or. Sept. 19, 2017), adopted by 2018 WL 411341 (D. Or. Jan. 11, 2018) (citations and internal quotations and brackets omitted). This interpretation has been recently adopted by at least one other court within the Ninth Circuit at summary judgment to impose “liabil[ity] for trespass to chattel” in regard to the Fight. Single, 2020 WL 5815050 at *5; see also Holmes, 2015 WL 5144297 at *6 (“[a]lthough appellate courts do not appear to have addressed the issue, Oregon district courts have interpreted ‘chattels' to include broadcast licenses”) (collecting cases).
The reasoning of these cases is persuasive. This is especially true in light of the Oregon Supreme Court's decision in Powerex Corp. v. Dep't of Revenue, 357 Or. 40, 346 P.3d 476 (2015). Powerex held that “electricity is tangible personal property for the purposes of ORS 314.665” - i.e., Oregon's Uniform Division of Income for Tax Purposes Act - because it “is perceptible to the senses [and] can be physically located within a state and shipped from one state to another.” Powerex, 357 Or. at 66 . The Court therefore concludes “chattel” can be comprised of a cable or satellite signal.
Finally, defendant has not cited to, and the Court is not aware of, any Oregon authority expressly defining the intent requirement to correspond with a deliberate violation of the law. See Def.'s Reply to Mot. Summ. J. 8-9 (doc. 41) (arguing that Mr. Marin “did not act intentionally with regard to the broadcast's public display, as he did not authorize it or know in advance that it was going to be shown in his restaurant”). Rather, while trespass to chattel and conversion claims fall broadly under the umbrella of “intentional torts, ” the intent requirement has been interpreted to encompass both negligent and intentional aspects: “[i]n character or degree, conversion may occur on a spectrum from the most outright, blatant kind of theft to what may be regarded as innocent conversion.” In re Conduct of Martin, 328 Or. 177, 185, 970 P.2d 638 (1998) (citation and internal quotations omitted). Stated differently, the intent requirement is met “even if the actor innocently acquires the property from a knowing converter.” Id. at 185-85 (internal citations omitted).
As such, in the context of pirated cable or satellite signals, “the defendant's action in controlling the chattel must be willful, although he or she need not intend the consequences or have knowledge that the property at issue belongs to another.” J&J Sports Prods., Inc. v. Rivera, 2014 WL 2809844, *5 (D. Or. June 18, 2014); see also Holmes, 2015 WL 5144297 at *6 (“[t]he plaintiff need not show an intent to commit conversion, because a defendant may commit conversion even where that person mistakenly believes that he or she is legally entitled to the property, or otherwise acted in good faith”) (citations and internal quotations omitted); Gagliardi Decl. ¶¶ 10-12 (doc. 37) (explaining the encryption process and methods of piracy to conclude that the Fight “cannot be mistakenly, innocently or accidentally intercepted”) (emphasis removed). For the reasons discussed in Section I, that standard has been met in the case at bar.
Nevertheless, the Court finds plaintiff's request for $2, 800 in damages premature. In particular, plaintiff's § 553 claim targets the same underlying conduct - i.e., the unauthorized broadcast of the Fight. Compare Compl. ¶¶ 15-23, 30 (doc. 1), with id. at ¶¶ 35-36. Accordingly, awarding plaintiff damages on its trespass to chattel claim without determining the measure of damages available under 47 U.S.C. § 553 risks a duplicative and excessive award. Gonzalez, 2017 WL 6945169 at *4; see also Single, 2020 WL 5815050 at *5 (collecting recent cases declining to award trespass to chattel damages as duplicative of those available under §§ 553 or 605). Plaintiff's motion should be granted as to liability but not damages in relation to its trespass to chattel claim, and defendant's motion should be denied.
RECOMMENDATION
For the reasons stated herein, defendant's Motion for Summary Judgment (doc. 29) should be granted as to plaintiff's 47 U.S.C. § 605 claim and denied in all other respects. Plaintiff's Motion for Partial Summary Judgment (doc. 35) should be granted as to liability associated with its 47 U.S.C. § 553 and trespass to chattel claims, and denied in all other respects. Plaintiff's alternate request for Rule 56(d) relief should be denied as moot. The parties' requests for oral argument are denied as unnecessary. Damages shall be determined following the District Judge's Order.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.