Innovative Sports Management, Inc. v. Zerpa

Background

Innovative Sports Management, Inc., doing business as Integrated Sports Media (ISM), held exclusive nationwide commercial distribution rights for the soccer game Peru v. Scotland, played on May 29, 2018. Fusion Peruvian Grill Corporation (FPG) received and displayed the game by cable at its establishment without ISM’s authorization. The game was also advertised and livestreamed on FPG’s Facebook page.

ISM initially sought summary judgment—judgment without a trial when no genuine dispute of important facts exists—under 47 U.S.C. § 605 and for common-law conversion. After the defendants explained that the program was received by cable rather than satellite, ISM abandoned its Section 605 claim and instead sought summary judgment that all defendants were liable under 47 U.S.C. § 553 and for conversion. The defendants conceded FPG’s liability under Section 553 and for conversion, but disputed the personal liability of Zerpa and Martinez. They also sought summary judgment that they were not liable under California’s Unfair Competition Law, Business and Professions Code § 17200.

Section 605

The court granted the defendants’ motion for summary judgment of nonliability under Section 605. Section 605 concerns interception and broadcast of satellite programming. Because the program was received through cable, and liability was conceded under Section 553, the court concluded that liability could not also exist under Section 605.

Section 553 Liability

The court granted ISM summary judgment that FPG was liable under Section 553 because the parties did not dispute that ISM owned the commercial licensing rights, FPG received and displayed the program by cable, and ISM did not authorize the exhibition.

The court also granted ISM summary judgment that Zerpa was personally liable under Section 553. The court found that Zerpa took the steps necessary to obtain and broadcast the program, had the right and ability to supervise FPG’s activities, and had a direct financial interest in those activities. The court stated that whether Zerpa’s conduct was willful, careless, or negligent did not determine liability under Section 553.

The court denied summary judgment concerning Martinez’s Section 553 liability. The evidence created a genuine dispute about whether and when Martinez gave up his ownership rights in FPG and whether he had the supervisory authority and financial interest required for personal liability.

Willfulness and Damages

The parties disputed whether FPG and Zerpa’s violation was willful and which damages provision should apply. ISM sought enhanced damages for a willful violation; the defendants sought treatment as non-willful violators and the minimum statutory damages. The court denied both parties’ summary-judgment motions concerning willfulness and the appropriate damages cap under Section 553.

The court found factual disputes about Zerpa’s state of mind, including his claim that he did not know FPG needed an additional commercial license, the defendants’ advertising and livestreaming of the game, the fact that this appeared to be their first violation, and the absence of a cover charge or drink minimum. The court also found a dispute about the licensing cost and FPG’s seating capacity, which could affect statutory damages. The court did not decide the amount of damages.

Conversion

The court granted ISM summary judgment on its conversion claim as to FPG and Zerpa. Under California law, conversion generally requires ownership or a right to possess property, a wrongful interference with that property right, and damages. The court found that ISM owned the exclusive distribution rights, FPG had conceded conversion liability, and Zerpa actively participated in obtaining the program without authorization.

The court denied summary judgment concerning Martinez’s conversion liability because a genuine dispute of material fact remained. It also declined to decide at this stage whether conversion damages would duplicate damages awarded under Section 553, stating that issue was premature.

Unfair Competition Law

The court denied the defendants’ motion for summary judgment on ISM’s California Unfair Competition Law claim. The court explained that the claim could be based on an unlawful business practice incorporating violations of other laws. Because FPG and Zerpa were liable under Section 553 and Martinez’s liability remained disputed, the court did not grant the defendants’ motion on this claim.

Disposition

Judge Haywood S. Gilliam, Jr. granted ISM’s motion for summary judgment as to FPG and Zerpa’s liability under Section 553 and for conversion. The court denied the parties’ cross-motions concerning FPG and Zerpa’s willfulness and the appropriate damages cap, denied summary judgment concerning Martinez’s liability under Section 553 and conversion, and denied the defendants’ motion concerning the Section 17200 claim. The court granted the defendants’ motion for summary judgment of nonliability under Section 605. The parties were directed to meet and confer about settlement, file a status report by May 29, 2020, and proceed to court-connected mediation if the case was not resolved.