Innovative Sports Management, Inc. v. Huaman

Background

Innovative Sports Management, Inc. (ISM) alleged that it owned exclusive nationwide distribution rights to the Peru v. Bolivia soccer match telecast on October 10, 2021. ISM alleged that the match was shown without authorization at Jess’s Place, a commercial establishment, and sued Zenon Huaman under 47 U.S.C. § 605, 47 U.S.C. § 553, common-law conversion, and California Business and Professions Code § 17200. ISM did not seek default judgment on its § 553 claim because it acknowledged that it could not recover under both § 605 and § 553.

Huaman was served with the complaint but did not appear or respond. The clerk entered default. ISM then applied for default judgment. A magistrate judge recommended granting default judgment and awarding $1,100 in statutory damages under § 605, but recommended denying enhanced damages and conversion damages. ISM asked the district court to award $3,000 in statutory damages, $18,000 in enhanced damages, and $550 in conversion damages.

Court’s Analysis

Because ISM did not object to the recommendation to enter default judgment, the court reviewed that recommendation for clear error or a legal mistake and accepted it. The court found that default judgment was proper under the factors used to decide whether a default judgment should be entered, including the merits of the claim, the sufficiency of the complaint, the possibility of factual disputes, and the defendant’s failure to respond.

The court conducted a fresh review of the challenged damages issues. Under § 605, statutory damages may range from $1,000 to $10,000 for each violation. The court awarded $1,100, reasoning that the evidence showed no cover charge, no required purchase of food or drinks, no advertising, one television, and about 20 patrons. The court also noted that ISM presented no evidence or factual allegation that Huaman was a repeat offender.

The court rejected enhanced damages. It held that ISM did not need to prove that Huaman actually profited to obtain enhanced damages, but concluded that ISM still had not shown that the violation was committed willfully for commercial advantage or private financial gain. The evidence did not show prior violations, significant earnings by Jess’s Place that night, or advertising intended to draw a larger crowd.

The court granted conversion damages. Conversion is the wrongful taking or misuse of another’s property, including certain intangible property rights. The court accepted ISM’s allegations that it owned the match’s distribution rights, that Huaman misappropriated those rights by intercepting the transmission, and that ISM suffered damages. Because ISM showed that it would have charged $550 for a sublicense, the court awarded $550 in conversion damages.

Disposition

The court granted ISM’s Application for Default Judgment. It granted in part and denied in part ISM’s Motion for Determination of Dispositive Matter Referred to Magistrate Judge. ISM received a total award of $1,650: $1,100 in statutory damages under 47 U.S.C. § 605 and $550 in conversion damages. The court denied enhanced damages and ordered judgment entered accordingly.